TOPIC:
RECONSTITUTION OF LOST OR DESTROYED ORIGINAL TORRENS TITLE
REPUBLIC OF THE PHILIPPINES, Represented by the Land Registration
Authority, petitioner, vs. SPOUSES ROBERTO and MARINA
SANCHEZ, respondents.
G.R. No. 146081 July 17, 2006
Facts:
On 28 May 1996, respondents filed a petition ("LRC Case No. Q-96-8296") in the trial
court to reconstitute the original of Transfer Certificate of Title No. 252708 ("TCT No.
252708"), covering a parcel of land measuring 2,991 square meters ("Lot
1"). Respondents claimed that TCT No. 252708 was issued in the name of respondent
Marina Sanchez ("Marina") by the Register of Deeds, Quezon City. Respondents
alleged that the original of TCT No. 252708 was among the documents destroyed by
the fire which razed the Office of the Register of Deeds, Quezon City in June 1988.
Respondents sought reconstitution under Section 3(a) of Republic Act No. 265 ("RA
26") based on Marina's duplicate title.
The trial court scheduled the case for hearing on 15 August 1996. The notice of hearing
dated 30 May 1996 was published in the 8 and 15 July 1996 issues of the Official
Gazette and posted at the main entrance of the City Hall and the Hall of Justice, Quezon
City on 1 July 1996. Petitioner, the Office of the Solicitor General, the Land
Management Section, Surveys Division of the Department of Environment and Natural
Resources, the Office of the Quezon City Prosecutor, and the Register of Deeds,
Quezon City were furnished copies of the notice of hearing.
The Solicitor General filed his Comment to the petition, noting that since the petition is
based on Section 3(a) of RA 26, the trial court should defer acting on the petition until
the Land Registration Authority (LRA) has submitted its Report on the petition as
required under Land Registration Commission (now LRA) Circular No. 35 ("Circular No.
35").6
In response to the Solicitor General's Comment, respondents submitted a Report for
reconstitution of the TCT allegedly lost and destroyed, dated 5 September 1996 ("First
Report"), signed by Benjamin Bustos ("Bustos"), Chief, Reconstitution Division, LRA.
No opposition was filed thus the trial court allowed respondents to present evidence ex
parte. RTC then granted the reconsititution of TCT. No. 252708.
In a letter dated 4 November 1997, Oriel submitted to the trial court another Report,
dated 24 October 1997 ("Second Report"), also signed by Bustos. Oriel informed the
trial court that the First Report was fake. The Second Report, which recommended that
the trial court set aside the 28 October 1996 Order.
On 24 March 1998, petitioner filed a Manifestation and Motion to set aside the 28
October 1996 Order. Petitioner contended that considering the Second Report,
respondents' petition should be considered as having been filed under Section 3(f) 10 of
RA 26, that is, based on "any other document." Petitioner pointed out that under Section
1311 in relation to Section 1212 of RA 26, the notice of a petition for reconstitution of lost
or destroyed titles based on Section 3(f) should not only be published and posted but
also served on, among others, the owners of the adjoining properties. For non-
compliance with this requirement, the trial court did not acquire jurisdiction over LRC
Case No. Q-96-8296.
Respondents opposed petitioner's motion, primarily on the ground that the 28 October
1996 Order had become final. The heirs of Mario Uy ("Heirs"), whose predecessor-in-
interest allegedly owned Lot No. 12 covered by Transfer Certificate of Title No. 187042,
filed an "amicus curiae" brief disclosing that they have caused the filing of criminal
complaints against respondents for Falsification of TCT No. 252708 (Criminal Case No.
77668) and Use of Falsified Public Document (Criminal Case No. 90649).13 Mario Uy
and Maria Corazon Uy-Zalamea ("Zalamea), the latter being the alleged owner of Lot
No. 13 covered by TCT No. 187042, had earlier sued respondents in the Regional Trial
Court, Quezon City, Branch 227 ("Civil Case No. Q-96-29545") for quieting of title,
nullity of [TCT No. 252708], recovery of possession and damages. 14
In its Order of 17 July 1998 ("17 July 1998 Resolution"), the trial court set aside the 28
October 1996 Order and dismissed LRC Case No. Q-96-8296.
Issue: The question is whether the trial court acquired jurisdiction over LRC Case No.
Q-96-8296.
Ruling; NO
The Actual Notice Requirement under Section 13 in Relation
to Section 12 of RA 26 Applies Here
Respondents are correct in saying that the service of notice of the petition for
reconstitution filed under RA 26 to the occupants of the property, owners of the
adjoining properties, and all persons who may have any interest in the property is not
required if the petition is based on the owner's duplicate certificate of title or on that of
the co-owner's, mortgagee's, or lessee's. This was our ruling in Puzon v. Sta Lucia
Realty and Development, Inc., involving a petition filed with the Regional Trial Court
of Quezon City, Branch 80, ("Branch 80") for reconstitution of the original of two Torrens
certificates of title based on Puzon's duplicate certificates of title. We held in that case:
[T]he first sentence of Section 13 provides that the requirements therein
pertain only to petitions for reconstitution filed under "the preceding section,"
Section 12, which in turn governs those petitions based on specified sources.
In other words, the requirements under Sections 12 and 13 do not apply to all
petitions for judicial reconstitution, but only to those based on any of the
sources specified in Section 12, that is, "sources enumerated in Section 2(c),
2(d), 2(e), 2(f), 3(c), 3(d), 3(e), and/or 3(f) of this Act."
 In the present case, the source of the Petition for the reconstitution of title was
petitioner's duplicate copies of the two TCTs mentioned in Section 3(a).
Clearly, the Petition is governed, not by Sections 12 and 13, but by Section
10 of RA 26.
"SEC. 10. Nothing hereinabove provided shall prevent any registered
owner or person in interest from filing the petition mentioned in
Section Five of this Act directly with the proper Court of First
Instance, based on sources enumerated in Section 2(a), 2(b), 3(a),
3(b), and/or 4(a) of this Act: Provided, however, That the Court shall
cause a notice of the petition, before hearing and granting the same,
to be published in the manner stated in Section Nine hereof: And
provided, further, That certificates of title reconstituted pursuant to
this section shall not be subject to the encumbrance referred to in
Section Seven of this Act."
Nothing in this provision requires that notices be sent to owners of adjoining
lots. Verily, that requirement is found in Section 13, which does not apply to
petitions based on an existing owner's duplicate TCT.
[T]here is no question that in [petitions for] reconstitution involving
Sections 12 and 13 of RA 26], notices to adjoining owners and to the
actual occupants of the land are mandatory and jurisdictional. But in
petitions for reconstitution falling under Sections 9 and 10 of RA 26 where, as
in the present case, the source is the owner's duplicate copy, notices to
adjoining owners and to actual occupants of the land are not required. When
the law is clear, the mandate of the courts is simply to apply it, not to interpret
or to speculate on it.
However, contrary to respondents' claim, Puzon finds no application here. No report
from a pertinent government agency challenging the authenticity of Puzon's duplicate
certificates of title was presented in Puzon. Thus, when Branch 80 granted
reconstitution, Puzon's duplicate transfer certificates of title remained unchallenged. 20
In contrast, the trial court in the present case was misled into treating LRC Case No.
Q-96-8296 as having been filed under Section 3(a) based on Marina's purported
duplicate title. Thus, the trial court followed Section 10 21 in connection with Section
922 of RA 26 to publicize LRC Case No. Q-96-8296. Relying on the First Report's finding
that TCT No. 252708 "do[es] not appear to overlap previously plotted/decreed
properties in the area," the trial court granted reconstitution. However, petitioner later
informed the trial court of the First Report's spuriousness, the serious doubts on TCT
No. 252708's authenticity, and the existence of two other titles that overlapped Lot No.
1. After hearing the parties, the trial court dismissed LRC Case No. Q-96-8296 for lack
of jurisdiction as all interested parties were not actually notified of the petition as
required under Section 13 in relation to Section 12 of RA 26.
We hold that the trial court did not commit grave abuse of discretion.
We were faced with substantially the same situation in Director of Lands v. Court
of Appeals. In that case, the petition for reconstitution, as in the present case, was filed
under Section 3(a) of RA 26 based on an alleged owner's duplicate certificate of title.
However, the Director of Lands, in an adverse Report, challenged the authenticity of
the purported duplicate certificate of title. The trial court denied reconstitution but the
Court of Appeals reversed the trial court's ruling. Upon further review, we reversed the
Court of Appeals and dismissed the reconstitution petition.
Consequently, it is Section 13 in relation to Section 12 of RA 26 which applies to LRC
Case No. Q-96-8296. Hence, in addition to its posting and publication, the notice of
hearing of LRC Case No. Q-96-8296 should also have been served through mail on
the owners of the adjoining properties and all persons who may have any interest in
the property. The records show that neither Lot No. 1's adjoining owners nor the other
interested parties, namely, Mario Uy and Maria Corazon Uy-Zalamea ("Uy and
Zalamea"), in whose names TCT Nos. 187042 and 187040 were issued, were notified
of respondents' petition in LRC Case No. Q-96-8296.
The Actual Notice Requirement in Section 13 in
Relation to Section 12, RA 26 is Jurisdictional
The jurisdiction or authority of the Court of First Instance is conferred upon it by
Republic Act 26 entitled "An Act providing a special procedure for the reconstitution of
Torrens Certificates of Title lost or destroyed," approved on September 25, 1946. The
Act specifically provides the special requirements and mode of procedure that must be
followed before the court can act on the petition and grant to the petitioner the remedy
sought for. These requirements and procedure are mandatory. The petition for
reconstitution must allege the jurisdictional facts; the notice of hearing must also
be published and posted in particular places and the same sent to specified
persons. Specifically, the requirements and procedure are set forth in detail under
Sections 12 and 13 of the Act.
For non-compliance with the actual notice requirement in Section 13 in relation to
Section 12 of RA 26, the trial court did not acquire jurisdiction over LRC Case No. Q-
96-8296. The proceedings in that case were thus a nullity and the 28 October 1996
Order was void.
Void Rulings Subject to Challenge at any Time
a modification in the disposition of LRC Case No. Q-96-8296 is in order. In its 17 July
1998 Resolution, the trial court set aside the 28 October 1996 and dismissed LRC Case
No. Q-96-8296. At that time, however, the Register of Deeds, Quezon City had already
issued reconstituted TCT No. RT-115027. That title must similarly be set aside,
emanating as it did from a void ruling.
A void judgment is not entitled to the respect accorded to a valid judgment, but may be
entirely disregarded or declared inoperative by any tribunal in which effect is sought to
be given to it. It is attended by none of the consequences of a valid adjudication. It has
no legal or binding effect or efficacy for any purpose or at any place. It cannot affect,
impair or create rights. It is not entitled to enforcement and is, ordinarily, no protection
to those who seek to enforce. All proceedings founded on the void judgment are
themselves regarded as invalid. In other words, a void judgment is regarded as a nullity,
and the situation is the same as it would be if there were no judgment. It, accordingly,
leaves the parties litigants in the same position they were in before the trial.

Principle: Reconstitution proceedings under RA 26 has for their purpose the restoration
in the original form and condition of a lost or destroyed instrument attesting the title of
a person to a piece of land. Thus, reconstitution must be granted only upon clear proof
that the title sought to be restored was indeed issued to the petitioner. Strict observance
of this rule is vital to prevent parties from exploiting reconstitution proceedings as a
quick but illegal way to obtain Torrens certificates of titles over parcels of land which
turn out to be already covered by existing titles.42 The social and economic costs of
such modus operandi cannot be underestimated.
TOPIC:
RECONSTITUTION OF LOST OR DESTROYED ORIGINAL TORRENS TITLE
G.R. No. 149122. July 27, 2007
HEIRS OF GREGORIO AND MARY VENTURANZA, petitioners, vs. REPUBLIC
OF THE PHILIPPINES, respondent.
FACTS: In 1965, the Republic of the Philippines through the OSG filed a complaint for
the Cancellation of TCT No. 2574 and the Reversion of the Land Described Therein to
the Republic of the Philippines with the RTC of Camarines Sur. Case was later raffled
to the RTC of Iriga City, Branch 37.
Antecedents of TCT No. 2574:
TCT No. 2574 of the Registry of Deeds of Camarines Sur — covers a vast tract of land
with a combined area of 23,944,635 square meters (2,394 hectares) located in the
Municipality of Buhi, Camarines Sur. It was issued sometime in 1959 in the name of
Gregorio Venturanza (Gregorio), married to Mary Edwards-Venturanza. The
memorandum of registration shows that TCT No. 2574 was derived from TCT No. RT-
40 (140), which is a reconstituted title issued to Florencio Mora who sold the property
to Gregorio Venturanza in 1956 for P107,730.00.
In 1964, Gregorio and Abaca Development Board entered into an agreement for
purchase and sale of the property covered by TCT No. 2574, where Gregorio agreed
to convey the property to the latter, subject to the approval of the document of sale by
the concerned government office. The final sale, however, did not materialize.
While this negotiation was ongoing, the government's negotiation committee assigned
a deputy clerk of the Land Registration Commission (LRC) to verify the true copies of
TCT No. 2574.
Per verification, TCT No. 2574 was found to be derived from RT-40 (140) in the name
of Florencio Mora (Mora) which covers Lots 1, 2 and 3 of Plan RS-383-D containing a
combined area of 23,944,635 square meters. In turn, TCT No. RT-40 (140) appears to
have been reconstituted from TCT No. 140 which was issued to one Sebastian Moll on
June 7, 1928. TCT No. 140, on the other hand, appears to be a transfer from Land
Registration Case (LRC) No. 3480 issued to one Casimiro Natividad.
Upon further investigation, it was discovered that the land subject of LRC No. 3480,
originally registered on July 28, 1911, covered a parcel of land consisting of only 451
square meters and situated in Tigaon, Camarines Sur.
The LRC deputy clerk thus made a finding that the Venturanzas' TCT No. 2574, a direct
transfer from TCT No. RT-40 (140) which was, in turn, derived from TCT No. 140,
covers only a parcel of land with an area of 451 square meters and not 23,944,635
square meters. The OSG’s complaint was thus thereafter filed.
On April 8, 1992, the RTC ruled in favor of the Republic, ordering the RD of Camarines
Sur to cancel said title and reverting land to public domain, except that already lawfully
passed to private ownership. It explained that the reconstituted title issued in the name
of Florencio Mora could have been fraudulently secured, hence, does not legally exist
and may thus be attacked at anytime.
Petitioners brought the case to the CA contending: First, TCT No. 2574 was derived is
already indefeasible on the ground that upon the lapse of one (1) year, the decision
granting reconstitution of Mora's title becomes final under section 31 of PD1529;
Second, that the decision in case CA-G.R. No. 20681-R, entitled, Florencio Mora v.
Venancio Infante, et al., which granted the petition for reconstitution of Mora's TCT No.
RT-40 (140), bars the Republic’s action due to res judicata; Third, that they were buyers
in good faith;
When the CA affirmed the RTC decision, petitioners brought the case to the CA with
the same contentions.
ISSUE: Whether or not the CA erred in affirming the cancellation of TCT No. 2574
RULING: It did not, CA is affirmed and petition is denied.
As to the first ground, Section 31 of P.D. No. 1529 reads:
“The decree of registration shall bind the land and quiet title thereto, subject only to
such exceptions or liens as may be provided by law. It shall be conclusive upon and
against all persons, including the National Government… the same being included in
the general description "to all whom it may concern.”
The above provision is not applicable considering that the land covered by TCT No.
2574 had never been within the operation of the Land Registration Act because of the
irregularities attending the issuance of the reconstituted title, as found by the RTC.
First, TCT No. 140 appears to have been surveyed on January 20, to January 31,
1953. A survey of 2,394 hectares in 11 days is quite impossible considering the rugged
terrain and the mountainous features of the area. Moreover, it covers timberland.
Second, the official map of Legaspi City shows that the land covered by TCT 140 is a
land situated in Tigaon, Camarines Sur, while the land covered by TCT No. 40 (140) is
a vast tract of land in Buhi, Camarines Sur. Third, TCT No. 40 (140) were supposedly
registered in GRLO Sp. Proceedings No. 112. However, such records refer to a
registration case in Iloilo, and not in Camarines Sur. Fourth, The Venturanzas never
materially and physically occupied the property because there are actual occupants
and possessors. They only asserted ownership over the property in papers but not in
physical possession.
Moreover, the evidence shows that TCT No. 2574, derived its existence from RT-40
(140), in the name of Florencio Mora which was a reconstituted title based on TCT No.
140, allegedly obtained by Florencio Mora during the Japanese occupation. However,
the RD of Camarines Sur does not show the land covered by TCT No. 140, nor its
decree number, date of entry of decree, OCT No., and LRC Record number. Thus, no
court could have ever acquired jurisdiction to order the reconstitution of Mora's TCT
No. RT-40 (140) over the land which has never been originally registered.
As to the second ground, no res judicata could have resulted as no court could have
acquired jurisdiction for the issuance of the reconstituted title and there was no identity
in the cause of action. The issue in CA-G.R. No. 20681-R was whether or not Mora's
evidence in Special Proceedings No. 674 and the procedures adopted by him for the
reconstitution of certificate of title alleged to have been lost or destroyed were in
conformity with the provisions of Republic Act No. 26. The OSG’s grounds in their
complaint, on the non-existence on the original title from which Mora's TCT No. RT-40
(140) was derived and the non-registrability of timberland were not tackled in CA-G.R.
No. 20681-R.

The third ground is also bereft of merit. The only way by which Mora could have
acquired ownership over the subject parcels of land and validly transfer that ownership
to the petitioners was for Mora to apply for their registration in his own name. Moreover,
subject property is part timberland, a finding not even disputed by petitioners. In
accordance with the constitution, we have ruled that a certificate of title is void when it
covers property of the public domain classified as forest or timber and mineral lands.
And any title issued on non-disposable lands even if in the hands of alleged innocent
purchaser for value, shall be cancelled.
TOPIC:
RECONSTITUTION OF LOST OR DESTROYED ORIGINAL TORRENS TITLE
REPUBLIC OF THE PHILIPPINES, petitioner, vs. CONCEPCION LORENZO,
ORLANDO FONTANILLA, SAMUEL FONTANILLA, JULIET FONTANILLA,
ELIZABETH FONTANILLA, ROSELA FONTANILLA, RENATO FONTANILLA AND
EVELYN FONTANILLA, respondents.
[G.R. No. 172338. December 10, 2012.]
The genesis of the present case can be traced back to the ling before the trial court on
February 11, 2002 of a Petition for the reconstitution of Original Certificate of Title
(OCT) No. 3980 covering a parcel of land measuring 811 square meters, situated in
Echague, Isabela.
In seeking the reconstitution of OCT No. 3980, respondents averred before
the trial court:
3. That during the lifetime of Pedro Fontanilla and herein petitioner
Concepcion Lorenzo, husband and wife, respectively, they acquired a parcel
of residential land, . . .;
4. That subject parcel of land is identical to Lot 18 of Echague Cadastre 210,
covered by and embraced under ORIGINAL CERTIFICATE OF TITLE NO.
3980 of the Land Records of Isabela, in the name of Antonia Pascua as her
paraphernal property and being the mother of Pedro Fontanilla;
5. That because of the death of Pedro Fontanilla the lot as covered by the
aforesaid title was settled and adjudicated among the herein petitioners, . . .;
6. That the OWNER'S DUPLICATE COPY OF OCT NO. 3980 was handed
and delivered unto the spouses Pedro Fontanilla and Concepcion Lorenzo
which they have been keeping only to find out thereafter that it was eaten by
white ants (Anay);
7. That the original and office file copy of said OCT NO. 3980 kept and to be
on file in the Registry of Deeds of Isabela is not now available, utmost same
was included burned and lost beyond recovery when the office was razed by
fire sometime in 1976, a certification to this effect as issued by the office is
hereto marked as ANNEX "D";
8. That for taxation purposes, the lot as covered by OCT NO. 3980, still in the
name of Antonia Pascua for Lot 18, Cad. 210, with an assessed value of
P16,920.00, . . .;
9. That no mortgagee's and/or lessee's co-owner's copy to the subject OCT
NO. 3980 was ever issued, and likewise no related documents affecting the
land covered thereby is presented and pending for registration in favor of any
person whomsoever, and henceforth, it is free from lien and encumbrance;
xxx xxx xxx
11. That in support for the reconstitution of [OCT] No. 3980, the following
documents which may constitute as source or basis for the purpose are
herewith submitted:
(a) (b) (c)
S[E]PIA PLAN with Blue Prints . . .;
Certified technical description of Lot 18, Cad. 210 . . .;
Certification by LRA as to the non-availability of a copy of DECREE NO.
650254 . . . [.]
During the trial, the testimony of co-respondent Evelyn Fontanilla-Gozum was offered
in order to prove the above-mentioned allegations in the petition. In her testimony, she
declared that she is the daughter of the late Pedro Fontanilla and co-respondent
Concepcion Lorenzo who, during their marriage, acquired a parcel of land covered and
embraced by OCT No. 3890 from her grandmother Antonia Pascua as evidenced by a
Deed of Sale. She also averred that the owner's duplicate of the said Torrens certificate
of title was later discovered to have been eaten by termites and that the original copy
of the said Torrens certificate of title on le with the Register of Deeds of Isabela was
certified to be burned and lost beyond recovery when the office was razed by fire of
unknown origin on December 4, 1976 as certified to by the Register of Deeds. Since
both the original copy on le and the owner's duplicate copy are non-existent, she and
her co-heirs, who are also co- respondents in this case, instituted the petition for
reconstitution of lost or destroyed Torrens certificate of title.
The trial court, in its Decision dated August 26, 2003, granted respondents' petition
and directed the Register of Deeds of Isabela to reconstitute OCT No. 3980 in the name
of Antonia Pascua on the basis of the deed of sale, the technical description and the
sketch plans, and to issue another owner's duplicate copy of the said Torrens certificate
of title.
Petitioner Republic of the Philippines, through the Office of the Solicitor General,
appealed the ruling to the Court of Appeals arguing that the trial court erred in granting
respondents' petition for reconstitution of Torrens title since they failed to present
substantial proof that the purported original certificate of title was valid and existing at
the time of its alleged loss or destruction, and that they failed to present sufficient basis
or source for reconstitution.
The Court of Appeals dismissed petitioners appeal in the assailed Decision dated April
17, 2006.
ISSUE:
 Whether or not the reconstitution of OCT No. 3980 was in accordance with
the pertinent law and jurisprudence on the matter.
HELD:
The petition is impressed with merit.
The relevant law that governs the reconstitution of a lost or destroyed Torrens
certificate of title is Republic Act No. 26. Section 2 of said statute enumerates the
following as valid sources for judicial reconstitution of title:
SECTION 2. Original certificates of title shall be reconstituted from such of the sources
hereunder enumerated as may be available, in the following order:
(a) The owner's duplicate of the certificate of title; 
 Ilagan, Isabela did not categorically state that the original copy of OCT No. 3980, which
(b) The co-owner's, mortgagee's, or lessee's duplicate of the certificate of title; 

(c) A certified copy of the certificate of title, previously issued by the register of deeds
or by a legal custodian thereof;
(d) An authenticated copy of the decree of registration or patent, as the case may be,
pursuant to which the original certificate of title was issued;
(e) A document, on file in the Registry of Deeds, by which the property, the description
of which is given in said document, is mortgaged, leased or encumbered, or an
authenticated copy of said document showing that its original had been registered; and
(f) Any other document which, in the judgment of the court, is sufficient and proper basis
for reconstituting the lost or destroyed certificate of title.
As borne out by the records of this case, respondents were unable to present any of
the documents mentioned in paragraphs (a) to (e) above. Thus, the only documentary
evidence the respondents were able to present as possible sources for the
reconstitution of OCT No. 3980 are those that they believed to fall under the class of
"any other document" described in paragraph (f).
As correctly pointed out by petitioner, we had emphasized in Republic v. Holazo that
the term "any other document" in paragraph (f) refers to reliable documents of the kind
described in the preceding enumerations and that the documents referred to in Section
2 (f) may be resorted to only in the absence of the preceding documents in the list.
Therefore, the party praying for the reconstitution of a title must show that he had, in
fact, sought to secure such documents and failed to find them before presentation of
"other documents" as evidence in substitution is allowed.
Furthermore, in a more recent case, this Court enumerated what should be shown
before an order for reconstitution can validly issue, namely: (a) that the certificate of
title had been lost or destroyed; (b) that the documents presented by petitioner are
sufficient and proper to warrant reconstitution of the lost or destroyed certificate of title;
(c) that the petitioner is the registered owner of the property or had an interest therein;
(d) that the certificate of title was in force at the time it was lost or destroyed; and (e)
that the description, area and boundaries of the property are substantially the same
and those contained in the lost or destroyed certificate of title.
In the case at bar, the respondents were unable to discharge the burden of proof
prescribed by law and jurisprudence for the reconstitution of lost or destroyed Torrens
certificate of title. First, respondents failed to prove that the owner's duplicate copy of
OCT No. 3980 was indeed eaten by termites while in the custody of respondent
Concepcion Lorenzo and her late husband Pedro Fontanilla who, inexplicably, did not
execute an af davit of loss as required by Section 109 of Presidential Decree No. 1529.
Second, The Certification dated April 23, 2001 issued by the Register of Deeds of
respondents alleged to be on le with said of ce, was among those destroyed by the re
that gutted the premises of said of ce on December 4, 1976. The document only stated
that said of ce "could not give any information/data involving the existence of
Original/Transfer Certificate of Title No. Lot No. 18, area 770 sq. m., located at
Taggapan, Echague, Isabela." Third, a comparison between the aforementioned
certification and the technical description and sketch plan will reveal that there was a
discrepancy in the land area of the lot allegedly covered by OCT No. 3980. What was
reflected on the former was a land area of 770 sq. m. while the latter two documents
pertained to a land area of 811 sq. m. Furthermore, respondents were not able to show
adequate proof that a Torrens certificate of title was issued covering the subject parcel
of land or that the same piece of land is what is covered by the allegedly lost or
destroyed OCT No. 3980. The Certification dated December 3, 2001 issued by the
Land Registration Authority (LRA) which indicates that Decree No. 650254 issued on
September 1, 1937 is not among the salvaged decrees on le in the LRA and is
presumed to have been lost or destroyed as a consequence of World War II does not
support respondents' assertion that OCT No. 3980 did exist prior to its loss or
destruction because said document failed to show a connection between Decree No.
650254 and OCT No. 3980. From the foregoing, it is apparent that the conclusion of
the Court of Appeals that "(t)he enumeration of the preferential documents to be
produced as provided under Section 2 of Republic Act 26 had been substantially
complied with" had no foundation based on the evidence on record.
Likewise, the deed of sale purportedly between Antonia Pascua, as seller, and Pedro
Fontanilla, as buyer, which involves OCT No. 3980 cannot be relied upon as basis for
reconstitution of Torrens certificate of title. An examination of the deed of sale would
reveal that the number of the OCT allegedly covering the subject parcel of land is clearly
indicated, however, the date when said OCT was issued does not appear in the
document. This circumstance is fatal to respondents' cause as we have reiterated in
Republic v. El Gobierno de las Islas Filipinas that the absence of any document, private
or official, mentioning the number of the certificate of title and the date when the
certificate of title was issued, does not warrant the granting of a petition for
reconstitution.

Lastly, on the peripheral issue of whether or not the OSG should be faulted for not ling
an opposition to respondents' petition for reconstitution before the trial court, we rule
that such an apparent oversight has no bearing on the validity of the appeal which the
OSG led before the Court of Appeals. This Court has reiterated time and again that the
absence of opposition from government agencies is of no controlling significance
because the State cannot be estopped by the omission, mistake or error of its officials
or agents. Neither is the Republic barred from assailing the decision granting the
petition for reconstitution if, on the basis of the law and the evidence on record, such
petition has no merit.
TOPIC: ESTOPPEL IN ACTION FOR CANCELLATION OF TITLE
BARSTOWE PHILIPPINES CORPORATION, petitioner, vs. REPUBLIC OF THE
PHILIPPINES, respondent.
SYNOPSIS:
This case involves the conflicting titles to the same parcels of land (subject lots) of
petitioner Barstowe Philippines Corporation (BPC) and the respondent Republic of the
Philippines (Republic). Due to the fire that gutted the Office of the Quezon City Register
of Deeds on 11 June 1988 and destroyed many certificates of title kept therein, Antonio
sought the administrative reconstitution of the original copies and owner’s duplicate
copies of 2 TCTs. The Republic applied for administrative reconstitution of the same
with the LRA. It was then that the Republic came to know that another party had applied
for reconstitution which also covered the same lots. The RTC rendered judgment
declaring both BPC and Republic as buyers in good faith. But it upheld BPC’s rights
over the republic since it was registered earlier. The Ca ruled for the Republic.
FACTS:
This case involves the conflicting titles to the same parcels of land (subject lots) of
petitioner Barstowe Philippines Corporation (BPC) and the respondent Republic of the
Philippines (Republic). The subject lots have a total area of 111,447 square meters,
and are situated along the northeastern perimeter boundary of the National
Government Center in Payatas, Quezon City.
BPC traces its titles to the subject lots back to Servando Accibal (Servando) who was
supposedly issued on 24 July 1974, at 3:20 p.m., Transfer Certificates of Title (TCTs)
No. 200629 and 200630 over the subject lots. TCTs No. 200629 and 200630 were
purportedly signed by Nestor N. Pena, Deputy Register of Deeds of Quezon City. On
10 June 1988, Servando executed a Deed of Absolute Sale of the subject lots to his
son Antonio Accibal (Antonio), with the concurrence of his other heirs. Despite his prior
sale of the subject lots to Antonio, Servando, by virtue of a Deed of Conveyance, dated
8 February 1989, transferred/conveyed the subject lots to BPC in exchange for
subscription of 51% of the capital stock of BPC, such subscription supposedly
amounting to P6,000,000.00. About a year after the death of Servando on 3 October
1989, particularly on 10 October 1990, Antonio executed another Deed of Conveyance
of the subject lots in favor of BPC in exchange for subscription of 2,450 shares of its
capital stock, with an alleged total value of P49,000,000.00. Due to the fire that gutted
the Office of the Quezon City Register of Deeds on 11 June 1988 and destroyed many
certificates of title kept therein, Antonio sought the administrative reconstitution of the
original copies and owner's duplicate copies of TCTs No. 200629 and 200630 with the
Land Registration Authority (LRA). On 12 December 1990, the LRA issued TCTs No.
RT-23687 and RT-23688 (reconstituting TCTs No. 200629 and 200630, respectively),
which were transmitted to the Quezon City Register of Deeds and signed by Deputy
Register of Deeds Edgardo Castro on 19 February 1991. Also on 19 February 1991,
TCTs No. RT-23687 and RT-23688 were cancelled and in lieu thereof, TCTs No.
30829, 30830, 30831, and 30832 in the name of BPC were issued. BPC then acquired
from the Housing and Land Use Regulatory Board (HLURB) a permit to develop the
subject lots into a residential subdivision. Subsequently, BPC entered into Joint Venture
Agreements with other corporations for the development of the subject lots into a
subdivision called Parthenon Hills.
Meanwhile, according to the Republic, prior to 14 November 1979, the subject lots were
owned by First Philippine Holdings Corporation (FPHC). As evidence of its title to the
subject lots, FPHC was issued TCT No. 257672, on an undetermined date, and TCT
No. 275201, on 20 January 1981. Pursuant to a Deed of Sale, dated 14 November
1979, FPHC sold one of the subject lots, covered by TCT No. 257672, to the Republic
for P2,757,360.00. Thus, on 22 January 1981, TCT No. 257672 was cancelled and
TCT No. 275443 was issued in place thereof in the name of the Republic. FPHC
executed another Deed of Sale on 25 March 1982 in which it sold the remainder of the
subject lots, covered by TCT No. 275201, to the Republic for P9,575,920.00. On 31
May 1982, TCT No. 275201 was cancelled and was replaced by TCT No. 288417
issued in the name of the Republic. Because of the 11 June 1988 fire which razed the
Quezon City Office of the Register of Deeds and destroyed the original copies of TCTs
No. 275443 and 288417, the Republic applied for administrative reconstitution of the
same with the LRA. It was then that the Republic came to know that another party had
applied for reconstitution of TCTs No. 200629 and 200630 which also covered the
subject lots. This prompted the Republic to file before the RTC on 26 March 1992 a
petition for cancellation of title against Antonio, Servando, and BPC, docketed as Civil
Case No. Q-92-11806.
ISSUE:
Who between BPC and the Republic has a better title over the subject lots?
HELD:
Ultimately, this Court is called upon to determine which party now has superior title to
the subject lots: the Republic, BPC, the intervenors Abesamis, Nicolas-Agbulos, and
spouses Santiago, or Servando’s heirs?
BPC, the intervenors Abesamis, Nicolas-Agbulos, spouses Santiago, and Servando’s
heirs derived their title to the subject lots from Servando’s TCTs No. 200629 and
200630. This Court then is compelled to look into the validity, authenticity, and
existence of these two TCTs.
However, there is an absolute dearth of information and proof as to how Servando
acquired ownership and came into possession of the subject lots.
Relying on the findings of the LRA, it was established that TCTs No. 200629 and
200630 were forged and spurious, their reconstitution was also attended with grave
irregularities. BPC was unable to attack the authenticity and validity of the titles of the
Republic to the subject lots, and could only interpose the defense that it was a buyer in
good faith. It points out that it purchased the subject lots from Servando and registered
the same, way before the titles of Servando were declared null by the RTC. Under
Section 55 of the Land Registration Act, as amended by Section 53 of Presidential
Decree No. 1529, an original owner of registered land may seek the annulment of a
transfer thereof on the ground of fraud. However, such a remedy is without prejudice
to the rights of any innocent holder for value with a certificate of title.
A purchaser in good faith and for value is one who buys the property of another, without
notice that some other person has a right to or interest in such property, and pays a full
and fair price for the same at the time of such purchase or before he has notice of the
claim or interest of some other person in the property.
It has been consistently ruled that a forged deed can legally be the root of a valid title
when an innocent purchaser for value intervenes. A deed of sale executed by an
impostor without the authority of the owner of the land sold is a nullity, and registration
will not validate what otherwise is an invalid document. However, where the certificate
of title was already transferred from the name of the true owner to the forger and, while
it remained that way, the land was subsequently sold to an innocent purchaser, the
vendee had the right to rely upon what appeared in the certificate and, in the absence
of anything to excite suspicion, was under no obligation to look beyond the certificate
and investigate the title of the vendor appearing on the face of said certificate.
Now the question is whether BPC qualifies as an innocent purchaser for value which
acquired valid titles to the subject lots, despite the fact that the titles of its predecessor-
in-interest were found to be forged and spurious.
This Court finds in the negative.
BPC cannot really claim that it was a purchaser in good faith which relied upon the face
of Servando’s titles. It should be recalled that the Quezon City Register of Deeds caught
fire on 11 June 1988. Presumably, the original copies of TCTs were burnt in the said
fire. Servando’s heirs sought the administrative reconstitution of the TCTs. If BPC
bought the subject lots after TCTs were destroyed when the Quezon City Register of
Deeds burned down, but before the said certificates were reconstituted, then on the
face of what titles did BPC rely on before deciding to proceed with the purchase of the
subject lots? There was no showing that there were surviving owner’s duplicate copies
of TCTs.
purchaser for value, and it acquired no better titles to the subject lots than its
predecessors-in-interest, Servando and Antonio.
Principle:
The general rule is that the State cannot be put in estoppel by the mistakes or
errors of its officials or agents. However, like all general rules, this is also subject
to exceptions, viz:
"Estoppels against the public are little favored. They should not be invoked
except in rare and unusual circumstances, and may not be invoked where they
would operate to defeat the effective operation of a policy adopted to protect the
public. They must be applied with circumspection and should be applied only in
those special cases where the interests of justice clearly require it. Nevertheless,
the government must not be allowed to deal dishonorably or capriciously with
its citizens, and must not play an ignoble part or do a shabby thing; and subject
to limitations x x x the doctrine of equitable estoppel may be invoked against
public authorities as well as against private individuals."
Significantly, the other private respondents – Spouses Santos, Spouses Calaguian,
Dela Fuente and Madaya – bought such "expanded" lots in good faith, relying on the
clean certificates of St. Jude, which had no notice of any flaw in them either. It is only
fair and reasonable to apply the equitable principle of estoppel by laches against the
government to avoid an injustice to the innocent purchasers for value.

Without the original copies and owner’s duplicate copies of TCTs, BPC had to rely on
the reconstituted certificates. Under section 7 of Republic Act No. 26,57 "Reconstituted
titles shall have the same validity and legal effect as the originals thereof" unless the
reconstitution was made extrajudicially.58 In this case, TCTs were reconstituted
administratively, hence, extrajudicially. In contrast to the judicial reconstitution of a lost
certificate of title which is in rem, the administrative reconstitution is essentially ex-parte
and without notice.59 The reconstituted certificates of title do not share the same
indefeasible character of the original certificates of title for the following reason –
x x x The nature of a reconstituted Transfer Certificate Of Title of registered
land is similar to that of a second Owner's Duplicate Transfer Certificate Of
Title. Both are issued, after the proper proceedings, on the representation of
the registered owner that the original of the said TCT or the original of the
Owner's Duplicate TCT, respectively, was lost and could not be located or
found despite diligent efforts exerted for that purpose. Both, therefore, are
subsequent copies of the originals thereof. A cursory examination of these
subsequent copies would show that they are not the originals. Anyone
dealing with such copies are put on notice of such fact and thus warned to
be extra-careful. x x x.

The fact that the TCTs were reconstituted should have alerted BPC and its officers to
conduct an inquiry or investigation as might be necessary to acquaint themselves with
the defects in the titles of Servando. This Court cannot declare BPC an innocent
TOPIC: ESTOPPEL IN ACTION FOR CANCELLATION OF TITLE
REPUBLIC OF THE PHILIPPINES, (Represented by the Acting
Commissioner of Land Registration), petitioner, vs. COURT OF
APPEALS, Spouses CATALINO SANTOS and THELMA BARRERO
SANTOS, ST. JUDE'S ENTERPRISES, INC., Spouses DOMINGO
CALAGUIAN and FELICIDAD CALAGUIAN, VIRGINIA DELA FUENTE and
LUCY MADAYA, respondents.
[G.R. No. 116111. January 21, 1999.]
Facts: Defendant St. Jude's Enterprises, Inc. is the registered owner of a parcel of land
known as Lot 865-B-1 of the subdivision plan (LRC) PSD-52368, being a portion of Lot
865-B located in Caloocan City containing an area of 40,623 square meters. For Lot
865-B-1 defendant St. Jude's Enterprises, Inc. was issued TCT No. 22660 on July 25,
1966. Sometime in March 1966 St. Jude subdivided Lot No. 865-B-1 under subdivision
plan (LRC) PSD-55643 and as a result thereof the Register of Deeds of Caloocan City
cancelled TCT No. 22660 and in lieu thereof issued Certificates of Title Nos. 23967 up
to 24068 inclusive, all in the name of defendant St. Jude's Enterprises, Inc. The
subdivision of lot 865-B-1 [which was] covered [by] TCT No. 22660 was later found to
have expanded and enlarged from its original area of 40,523 square meters to 42,044
square meters or an increase of 1,421 square meters. This expansion or increase in
area was confirmed by the Land Registration Commission [to have been made] on the
northern portion of Lot 865-B-1.
Subsequently, defendant St. Jude sold the lots covered by TCT Nos. 24013 and 24014
to defendant Sps. Catalino Santos and Thelma Barreto Santos[;] TCT No. 24019 to
defendant Sps. Domingo Calaguian and Felicidad de Jesus[;] TCT No. 24022 to
defendant Virginia dela Fuente[;] and TCT No. 2402[3] to defendant Lucy Madaya.
Accordingly, these titles were cancelled and said defendants were issued the following:
TCT No. C-43319 issued in the name of Sps. Santos containing an area of 344 square
meters[;] TCT No. 55513 issued in the name of defendants Sps. Calaguian containing
an area of 344 square meters[;] TCT No. 13309 issued in the name of Sps. Santos[;]
TCT No. 24069 issued in the name of Virginia dela Fuente containing an area of 350
square meters[;] and TCT No. C-46648 issued in the name of defendant Lucy Madaya
with an area of 350 square meters.
On January 29, 1985, then Solicitor General Estelito Mendoza filed an action seeking .
. . the annulment and cancellation of the titles, principally on the ground that said
Certificates of Title were issued on the strength of [a] null and void subdivision plan
(LRC) PSD-55643 which expanded the original area of TCT No. 22660 in the name of
St. Jude's Enterprises, Inc. from 40,623 square meters to 42,044 square meters upon
its subdivision.
Virginia dela Fuente and Lucy Madaya were declared in default for failure to
file their respective answers within the reglementary period. The Sps. Santos
interposed claimed that they acquired the lots in question in good faith from
their former owner, defendant St. Jude. and for value and that the titles issued
to the said defendants were rendered incontrovertible, conclusive and
indefeasible after one year from the date of the issuance of the titles by the
Register of Deeds of Caloocan City. On the other hand, St. Jude interposed
claimed that the cause of action of plaintiff is barred by prior judgment; that
the subdivision plan submitted having been approved by the LRC, the
government is now in estoppel to question the approved subdivision plan; and
the plaintiff's allegation that the area of the subdivision increased by 1,421
square meters is without any basis in fact and in law.
RTC dismissed the Complaint. The CA affirmed the RTC.
Issues:
1. Whether or not the government is estopped from questioning the approved
subdivision plan which expanded the areas covered by the transfer certificates
of title in question.
2. Whether or not the Court of Appeals erred when it did not consider the
Torrens System as merely a means of registering title to land;
3. Whether or not the Court of Appeals erred when it failed to consider that
petitioner's complaint before the lower court was filed to preserve the integrity
of the Torrens System.
Ruling:
1. Yes. It is only fair and reasonable to apply the equitable principle of estoppel by
laches against the government to avoid an injustice to the innocent purchasers for
value.
The general rule is that the State cannot be put in estoppel by the mistakes or errors of
its officials or agents. However, this is also subject to exceptions.
"Estoppel against the public are little favored. They should not be
invoked except in rare and unusual circumstances and may not be
invoked where they would operate to defeat the effective operation
of a policy adopted to protect the public. They must be applied with
circumspection and should be applied only in those special cases
where the interests of justice clearly require it. Nevertheless, the
government must not be allowed to deal dishonorably or
capriciously with its citizens, and must not play an ignoble part or
do a shabby thing; and subject to limitations . . ., the doctrine of
equitable estoppel may be invoked against public authorities as
well as against private individuals."
In the case at bar, for nearly twenty years (starting from the issuance of St. Jude's titles
in 1966 up to the filing of the Complaint in 1985), petitioner failed to correct and recover
the alleged increase in the land area of St. Jude. Its prolonged inaction strongly militates
against its cause, as it is tantamount to laches.
Prior to the subdivision, the surveyors erred in the original survey of the whole tract of
land covered by TCT No. 22660, so that less than the actual land area was indicated
on the title. Otherwise, the adjoining owners would have complained upon the partition
of the land in accordance with the LRC-approved subdivision plan. As it is, Florencio
Quintos, the owner of the 9,146 square-meter Quintos Village adjoining the northern
portion of St. Jude's property (the portion allegedly "expanded"), even attested on
August 16, 1973 that "there [was] no overlapping of boundaries as per my approved
plan (LRC) PSD 147766 dated September 8, 1971." None of the other neighboring
owners ever complained against St. Jude or the purchasers of its property. It is clear,
therefore, that there was no actual damage to third persons caused by the resurvey
and the subdivision.
Significantly, the other private respondents — Spouses Santos, Spouses Calaguian,
Dela Fuente and Madaya — bought such "expanded" lots in good faith, relying on the
clean certificates of St. Jude, which had no notice of any flaw in them either.
Likewise time-settled is the doctrine that where innocent third persons, relying on the
correctness of the certificate of title, acquire rights over the property, courts cannot
disregard such rights and order the cancellation of the certificate. When private
respondents-purchasers bought their lots from St. Jude, they did not have to go behind
the titles thereto to verify their contents or search for hidden defects or inchoate rights
that could defeat their rights to said lots. Although they were bound by liens and
encumbrances annotated on the titles, private respondents-purchasers could not have
had notice of defects that only an inquiry beyond the face of the titles could have
satisfied.
Petitioner never presented proof that the private respondents who had bought their lots
from St. Jude were buyers in bad faith. Consequently, their claim of good faith prevails.
Furthermore, it should be stressed that the total area of 40,623 square meters indicated
on St. Jude's original title (TCT No. 22660) was not an exact area. Such figure was
followed by the phrase "more or less." This plainly means that the land area indicated
was not precise. The discrepancy in the figures could have been caused by the
inadvertence or the negligence of the surveyors. There is no proof, though, that the
land area indicated was intentionally and fraudulently increased. The property originally
registered was the same property that was subdivided. It is well-settled that what
defines a piece of titled property is not the numerical data indicated as the area of the
land, but the boundaries or "metes and bounds" of the property specified in its technical
description as enclosing it and showing its limits.
True, the Torrens system is not a means of acquiring titles to lands; it is merely a system
of registration of titles to lands. Consequently, land erroneously included in a Torrens
certificate of title is not necessarily acquired by the holder of such certificate. But in the
interest of justice and equity, neither may the titleholder be made to bear the
unfavorable effect of the mistake or negligence of the State's agents, in the absence of
proof of his complicity in a fraud or of manifest damage to third persons. First, the real
purpose of the Torrens system is to quiet title to land to put a stop forever to any
question as to the legality of the title, except claims that were noted in the certificate at
the time of the registration or that may arise subsequent thereto. Second, as we
discussed earlier, estoppel by laches now bars petitioner from questioning private
respondents' titles to the subdivision lots. Third, it was never proven that St. Jude was
a party to the fraud that led to the increase in the area of the property after its
subdivision. Finally, because petitioner even failed to give sufficient proof of any error
that might have been committed by its agents who had surveyed the property, the
presumption of regularity in the performance of their functions must be respected.
Otherwise, the integrity of the Torrens system, which petitioner purportedly aims to
protect by filing this case, shall forever be sullied by the ineptitude and inefficiency of
land registration officials, who are ordinarily presumed to have regularly performed their
duties.
WHEREFORE, the petition is hereby DENIED and the assailed Decision is AFFIRMED.

Petitioner miserably failed to prove any fraud, either on the part of St. Jude or on the
part of land registration officials who had approved the subdivision plan and issued the
questioned TCTs. Other than its peremptory statement in the Complaint that the
"expansion" of the area was "motivated by bad faith with intent to defraud, to the
damage and prejudice of the government and of public interest," petitioner did not
allege specifically how fraud was perpetrated to cause an increase in the actual land
size indicated. Nor was any evidence proffered to substantiate the allegation. That the
land registration authorities supposedly erred or committed an irregularity was merely
a conclusion drawn from the "table survey" showing that the aggregate area of the
subdivision lots exceeded the area indicated on the title of the property before its
subdivision. Fraud cannot be presumed, and the failure of petitioner to prove it defeats
its own cause.

2 & 3. No. We cannot, therefore, adhere to the petitioner's submission that, in filing this
suit, it seeks to preserve the integrity of the Torrens system. To the contrary, it is rather
evident from our foregoing discussion that petitioner's action derogates the very
integrity of the system. Time and again, we have said that a Torrens certificate is
evidence of an indefeasible title to property in favor of the person whose name appears
thereon.
TOPIC: FORMS USED IN LAND REGISTRATION & CONVEYANCE
RICKY Q. QUILALA, petitioner, vs. GLICERIA ALCANTARA, LEONORA
ALCANTARA, INES REYES and JOSE REYES, respondent.
FACTS:
On February 20, 1981, Catalina Quilala executed a "Donation of Real Property Inter
Vivos" in favor of Violeta Quilala over a parcel of land located in Sta. Cruz, Manila,
containing an area of 94 square meters, and registered in her name under Transfer
Certificate of Title No. 17214 of the Register of Deeds for Manila.
The "Donation of Real Property Inter Vivos" consists of two pages. The first page
contains the deed of donation itself, and is signed on the bottom portion by Catalina
Quilala as donor, Violeta Quilala as donee, and two instrumental witnesses. The
second page contains the Acknowledgment, which states merely that Catalina Quilala
personally appeared before the notary public and acknowledged that the donation was
her free and voluntary act and deed. There appear on the left-hand margin of the
second page the signatures of Catalina Quilala and one of the witnesses, and on
the right-hand margin the signatures of Violeta Quilala and the other witness.
The deed of donation was registered with the Register of Deeds and, in due course,
TCT No. 17214 was cancelled and TCT No. 143015 was issued in the name of Violeta
Quilala.
On November 7, 1983, Catalina Quilala died. Violeta Quilala likewise died on May 22,
1984. Petitioner Ricky Quilala alleges that he is the surviving son of Violeta
Quilala.
Meanwhile, respondents Gliceria Alcantara, Leonora Alcantara, Ines Reyes and
Juan Reyes, claiming to be Catalina's only surviving relatives within the fourth
civil degree of consanguinity, executed a deed of extrajudicial settlement of
estate, dividing and adjudicating unto themselves the above-described property.
On September 13, 1984, respondents instituted against petitioner and Guillermo T. San
Pedro, the Registrar of Deeds of Manila, an action for the declaration of nullity of
the donation inter vivos, and for the cancellation of TCT No. 143015 in the name
of Violeta Quilala.
RTC: Found that the deed of donation, although signed by both Catalina and Violeta,
was acknowledged before a notary public only by the donor, Catalina. Consequently,
there was no acceptance by Violeta of the donation in a public instrument, thus
rendering the donation null and void. Furthermore, the trial court held that nowhere
in Catalina's SSS records does it appear that Violeta was Catalina's daughter. Rather,
Violeta was referred to therein as an adopted child, but there was no positive evidence
that the adoption was legal. On the other hand, the trial court found that respondents
were first cousins of Catalina Quilala. However, since it appeared that Catalina died
leaving a will, the trial court ruled that respondents' deed of extrajudicial settlement
cannot be registered. (In Case Atty will ask about this!)
WHEREFORE, judgment is hereby rendered in favor of plaintiffs
Gliceria Alcantara, Leonarda Alcantara, Ines Reyes and Juan Reyes and
against defendant Ricky A. Quilala, as follows:
Declaring null and void the deed of donation of real property inter
vivos executed on February 20, 1981 by Catalina Quilala in favor of Violeta
Quilala (Exhs. A as well as 11 and 11-A.);
Ordering the Register of Deeds of Manila to cancel Transfer Certificate of Title
No. 143015 in the name of Violeta Quilala and to issue a transfer certificate of
title in the name of the Estate of Catalina Quilala;.
Dismissing the complaint insofar as it seeks the registration of the
deed of extrajudicial settlement (Exhs. B and B-1.) and the issuance by the
Register of Deeds of Manila of a transfer certificate of title in the names of the
plaintiffs.
CA rendered a decision affirming with modification the decision of the trial court by
dismissing the complaint for lack of cause of action without prejudice to the filing of
probate proceedings of Catalina's alleged last will and testament. MR, denied.
ISSUE: WHETHER THE DEED OF DONATION OF REAL PROPERTY INTER-VIVOS
EXECUTED BY CATALINA IN FAVOR OF VIOLETA WAS VALID.
RULING: YES. Under Article 749 of the Civil Code, the donation of an immovable
must be made in a public instrument in order to be valid, specifying therein the
property donated and the value of the charges which the donee must satisfy. As
a mode of acquiring ownership, donation results in an effective transfer of title over the
property from the donor to the donee, and is perfected from the moment the donor
knows of the acceptance by the donee, provided the donee is not disqualified or
prohibited by law from accepting the donation. Once the donation is accepted, it is
generally considered irrevocable, and the donee becomes the absolute owner of
the property. The acceptance, to be valid, must be made during the lifetime of
both the donor and the donee. It may be made in the same deed or in a separate
public document, and the donor must know the acceptance by the donee.
The Deed of Donation stipulated that the donation was made for and in consideration
of the "love and affection which the DONEE inspires in the DONOR, and as an act
of liberality and generosity." This was sufficient cause for a donation. Indeed,
donation is legally defined as "an act of liberality whereby a person disposes
gratuitously of a thing or right in favor of another, who accepts it."
 The pertinent provision is Section 112, paragraph 2 of Presidential of donation, was made in a public instrument.
Decree No. 1529, which states:
The donation, which we declare herein to be valid, will still be subjected to a test on its
Deeds, conveyances, encumbrances, discharges, powers of inofficiousness under Article 771, in relation to Articles 752, 911 and 912 of the Civil
attorney and other voluntary instruments, whether affecting registered or Code. Moreover, property donated inter vivos is subject to collation after the donor's
unregistered land, executed in accordance with law in the form of public death, whether the donation was made to a compulsory heir or a stranger, unless there
instruments shall be registrable: Provided, that, every such instrument shall is an express prohibition if that had been the donor's intention.
be signed by person or persons executing the same in the presence of at least
two witnesses who shall likewise sign thereon, and shall be acknowledged to WHEREFORE, in view of the foregoing, the petition is GRANTED.
be the free act and deed of the person or persons executing the same before
a notary public or other public officer authorized by law to take
acknowledgment. Where the instrument so acknowledged consists of two
or more pages including the page whereon acknowledgment is written,
each page of the copy which is to be registered in the office of the
Register of Deeds, or if registration is not contemplated, each page of
the copy to be kept by the notary public, except the page where the
signatures already appear at the foot of the instrument, shall be signed on
the left margin thereof by the person or persons executing the
instrument and their witnesses, and all the pages sealed with the notarial
seal, and this fact as well as the number of pages shall be stated in the
acknowledgment. Where the instrument acknowledged relates to a sale,
transfer, mortgage or encumbrance of two or more parcels of land, the number
thereof shall likewise be set forth in said acknowledgment."

The second page of the deed of donation, on which the Acknowledgment appears, was
signed by the donor and one witness on the left-hand margin, and by the donee and
the other witness on the right-hand margin. Surely, the requirement under Section
112, par. 2 of PD No. 1529 that the contracting parties and their witnesses should
sign on the left-hand margin of the instrument is not absolute. The intendment
of the law merely is to ensure that each and every page of the instrument is
authenticated by the parties. The requirement is designed to avoid the falsification of
the contract after the same has already been duly executed by the parties. Hence, a
contracting party affixes his signature on each page of the instrument to certify that he
is agreeing to everything that is written thereon at the time of signing. Simply put, the
specification of the location of the signature is merely directory: The fact that one of the
parties signs on the wrong side of the page does not invalidate the document. The
purpose of authenticating the page is served, and the requirement in the above-
quoted provision is deemed substantially complied with.

The lack of an acknowledgment by the donee before the notary public does not
also render the donation null and void. The instrument should be treated in its
entirety. It cannot be considered a private document in part and a public document in
another part. The fact that it was acknowledged before a notary public converts
the deed of donation in its entirety a public instrument. The fact that the donee
was not mentioned by the notary public in the acknowledgment is of no moment. To be
sure, it is the conveyance that should be acknowledged as a free and voluntary act. In
any event, the donee signed on the second page, which contains the Acknowledgment
only. Her acceptance, which is explicitly set forth on the first page of the notarized deed
TOPIC: FORMS USED IN LAND REGISTRATION & CONVEYANCE
FELICITACION B. BORBAJO, petitioner, vs. HIDDEN VIEW
HOMEOWNERS, INC., SPS. MARCELINA A. SARCON, ELY D. SARCON,
ROBERTO ALVAREZ, CORAZON NOMBRADO, and GILBERT
ANDRALES, in their personal capacities, respondents.
[G.R. No. 152440. January 31, 2005]
Facts:
Jose B. Bontuyan, Lucy Solon, Georgina Solon, Helen Solon, and Vicente Solon, Jr.
Were the registered owners of a parcel of agricultural land (Lot 10183-A), covering an
area of 13,910 square meters situated at Barangay Bacayan, Cebu City as evidenced
by TCT No 73709 of the Register of Deeds of Cebu City. At the instance of Bontuyan,
the property was surveyed on May 19, 1991 to convert it into a subdivision. On June 6,
1991, the corresponding subdivision plan, showing 3 road lots as such, was submitted
to the Cebu City Office of the DENR. On July 24, 1991, the Regional Technical Director
of the DENR, Lands Management Sector, Region Office VII, in Cebu, approved the
subdivision plan. Meanwhile, in his own behalf and as attorney-in-fact of the Solons
and following said subdivision scheme, Bontuyan sold the lots to different individuals
as evidenced by the Deed of Absolute Sale dated June 18, 1991, among which are the
ones which later became the subject of this case (the three road lots).
The road lots were sold to petitioner Felicitiacion Borbajo, married to Danilo Borbajo,
and Prescillana Bongo, married to Patricio Bongo. However, the titles to the lots were
obtained more than a month later on July 30. Using the advance payments of the lot
purchasers, Bontuyan proceeded to develop a subdivision plan (Hidden View
Subdivision I, named by its residents and homeowners). He later applied for a secured
from the Housing and Land Use Regulatory Board a license to sell. Borbajo also
developed into a subdivision the other properties adjacent to Hidden View Subdivision
I, covered by TCT No. 127642, to be subdivided into 23 lots (ST Ville Properties). She
secured a Certificate of Registration for such project and a license to sell from the
HLURB. Another Certificate of Registration was obtained (dated August 18, 1994) for
a subdivision project called Hidden View Subdivision II, with the corresponding license
to sell. (Note: the two new subdivision projects were located at the back of Hidden View
Subdivision I)
Upon hearing reports that Borbajo had purchased the entire subdivision plan from
Bontuyan through an oral agreement, the residents and homeowners of Hidden View
Subdivision I, through Hidden VIew Homeowners, Inc. Invited Borbajo to a meeting as
they also heard that they have no right to use the road lots, which have already been
registered in Borbajo’s name. These facts were later confirmed by Borbajo. This then
prompted the former to inquire with the HLURB about the validity of the registration of
the subdivision road lots in the name of Borbajo, and asked whether she had the
necessary documents for the development of Hidden View Subdivision II and ST Ville
Properties. Regional Offcieer Antonio Decatoria, Sr. Replied that under the law, the
owner or developer of the subdivision should have legal title or right over the road lots
of the subdivision and that if the title or right is in the name of other persons, it follows
that there is failure to comply with the requirements of the law. Moreover, Hidden View
Subdivision II and ST Ville Properties had not filed an application for registration and
license to sell with the HLURB.
This then prompted the homeowners to cause the construction of a guardhouse at the
entrance of Hidden View Subdivision I and hired a security guard to prevent
unautorized persons and construction vehicles from passing through their subdivision.
This adverseley affected the residents of the subdivisions at the back, as well as
Borbajo herself.
On August 28, 1997, Borbajo filed an action for damages and injunction agaist Hidden
View Homeowners, Inc., spouses Marcelina Sarcon and Ely Sarcon, Roberto Alvarez
and Corazon Nombrano and Gilbert Andrales (respondents). She prayed for the
issuance of a TRO to maintain the status quo and to desist from preventing construction
vehicles from passing through the road lots, and that judgment be rendered making the
restraining order or preliminary injunction permanent and ordering the payment of
damages.
Trial Court: issued a TRO effective for 72 hours. After due hearing, application for a writ
of preliminary injunction was granted. Denied respondents motion to dismiss on the
ground that HLURB has jurisdiction over the case.
Court of Appeals: reversed lower court decision. Appeal granted, complaint dismissed.
Issues: Whether or not the appellate court erred:
a) In reversing the decision of the trial court which declared her to be the developer of
Hidden View Subdivision I
b) In finding that she had fraudulently secured the registration of the 3 road lots
c) In declaring that she is not entitled to injunctive relief
Ruling:
a) Yes (the CA erred). The evidence reveals that Borbajo and Bongo were issued
TCTs, all dated July 31, 1991 for the 3 road lots situated within Hidden View Subdivision
I. These titles were issued prusuant to the Deed of Absolute Sale dated June 18 which
also mentioned the road lots. As a registered co-owner of the road lots, Borbajo is
entitled to avail of all the attributes of ownership under the Civil Code -- jus utendi,
fruendi, abutendi, disponendi et vindicandi. Article 428 of the Civil Code is explicit that
the owner has the right to enjoy and dispose of a thing, without other limitations
than those established by law. A co-owner, such as Borbajo, is entitled to use the
property owned in common under Article 486 of the Civil Code, hence respondents
cannot close the road lots to prevent Borbajo from using the same.
b) It is a settled rule that a Torrens title cannot be collaterally attacked. It is a well-
known doctrine that the issue as to whether title was procured by falsification or fraud
can only be raised in an action expressly instituted for that purpose. A Torrens title can
be attacked only for fraud, within one year after the date of the issuance of the decree
of registration. Such attack must be direct, and not by a collateral proceeding. The title
represented by the certificate cannot be changed, altered, modified, enlarged, or
diminished in a collateral proceeding. The certificate of title serves as evidence of
an indefeasible title to the property in favor of the person whose name appears
therein. However, the Court is not foreclosing any future determination by appropriate
forum on the legality of Borbajo’s titles. If it is found that the titles were obtained
fraudulently, her right to the road lots ceases as well as her right-of-way by virtue of
said titles.
c) Yes. Borbajo, being a registered co-owner of the 3 road lots, is entitled to injunctive
relief. The requisites to justify this are: (1) existence of a right in esse or the existence
of a right to be protected; and (2) the act against which injunction is to be directed as a
violation of such right. A preliminary injunction order may be granted only when the
application for the issuance of the same shows facts entitling the applicant to the relief
demanded. A preliminary injunction is not proper when its purpose is to take the
property out of the possession or control of one party and transfer the same to the
hands of another who did not have such control at the inception of the case and whose
legal title has not clearly been established.
TOPIC: DEALINGS WITH UNREGISTERED LAND favor of petitioner is of no effect because the land no longer belonged to the
judgment debtor as of the time of the said execution sale.

RADIOWEALTH FINANCE CO. VS. PALILEO
GR no. 83432, May 1991
FACTS: In April 1970, defendant spouses Enrique Castro and Herminio R. Castro
(spouse Castro) sold to herein respondent Manuelito Palileo a parcel of unregistered
coconut land in Surigao del Norte. The sale is evidenced by a notarized Deed of
Absolute Sale, but the deed was not registered in the Registry of Property for
unregistered lands in the province of Surigao del Norte. Since the execution of the deed
of sale, Palileo who was then employed in Lianga, Surigao del Sur, exercised acts of
ownership over the land through his mother Rafaela Palileo, as administratrix or
overseer. Manuelito Palileo has continuously paid the real estate taxes on said land
from 1971 until the present.
In November 1976, the CFI of Manila rendered a judgment was rendered against
defendant Enrique T. Castro to pay herein petitioner Radiowealth Finance Company
(Radiowealth), the sum of P22,350.35 with interest rate of 16% per annum from
November 2, 1975 until fully paid, and upon the finality of the judgment, a writ of
execution was issued. The Provincial Sheriff Marietta E. Eviota, through defendant
Deputy Provincial Sheriff Leopoldo Risma, levied upon and finally sold at public auction
the subject land that defendant Enrique Castro had sold to Palileo in 1970. The said
Provincial Sheriff executed a certificate of sale was by the in favor of Radiowealth as
the only bidder, and upon expiration of the redemption period, she also executed a
deed of final sale. Both documents were registered with the Registry of Deeds.
Article 1544 of the Civil Code provides that in case of double sale of an immovable
property, ownership shall be transferred: (1) to the person acquiring it who in good faith
first recorded it in the Registry of Property; (2) in default thereof, to the person who in
good faith was first in possession; and (3) in default thereof, to the person who presents
the oldest title, provided there is good faith. There is no ambiguity regarding the
application of the law with respect to lands registered under the Torrens System.
Section 51 of Presidential Decree No. 1529 (amending Section 50 of Act No. 496 clearly
provides that the act of registration is the operative act to convey or affect registered
lands insofar as third persons are concerned. Thus, a person dealing with registered
land is not required to go behind the register to determine the condition of the property.
He is only charged with notice of the burdens on the property which are noted on the
face of the register or certificate of title. Following this principle, this Court has time and
again held that a purchaser in good faith of registered land (covered by a Torrens Title)
acquires a good title as against all the transferees thereof whose right is not recorded
in the registry of deeds at the time of the sale.

Learning of what happened to the land, Palileo filed an action for recovery of the subject
property. The court a quo rendered a decision in favor of Palileo, which the Court of
Appeals affirmed.

ISSUE: Who is the rightful owner of the subject property? PALILEO

RULING: The Supreme Court likewise affirmed the appellate court’s decision on this
case. There is no doubt that had the subject property been a registered land, this case
would have been decided in favor of Radiowealth since it was the company that had its
claim first recorded in the Registry of Deeds for it is the act of registration that operates
to convey and affect registered land. Therefore, a bonafide purchaser of a registered
land at an execution sale acquires a good title as against a prior transferee, if such
transfer was unrecorded.

However, a different set of rules applies in the case at bar which deals with a parcel of
unregistered land. Under Act No. 3344, registration of instruments affecting
unregistered lands is "without prejudice to a third party with a better right." The
aforequoted phrase has been held by the Supreme Court to mean that the mere
registration of a sale in one's favor does not give him any right over the land if the
vendor was not anymore the owner of the land having previously sold the same to
somebody else even if the earlier sale was unrecorded. Applying this principle, the
Court of Appeals correctly held that the execution sale of the unregistered land in
TOPIC: REGISTRATION OF CHATTEL MORTGAGES
SPOUSES CLEMENCIO C. SABITSANA, JR. and MA. ROSARIO M.
SABITSANA, Petitioners,
vs.
JUANITO F. MUERTEGUI, represented by his Attorney-in-Fact DOMINGO A.
MUERTEGUI, JR., Respondent
FACTS:
On September 2, 1981, Alberto Garcia (Garcia) executed an unnotarized Deed of
Sale5 in favor of respondent Juanito Muertegui 6 (Juanito) over a 7,500-square meter
parcel of unregistered land (the lot) located in Dalutan Island, Talahid, Almeira, Biliran,
Leyte del Norte covered by Tax Declaration (TD) No. 1996 issued in 1985 in Garcia’s
name.7
Juanito’s father Domingo Muertegui, Sr. (Domingo Sr.) and brother Domingo Jr. took
actual possession of the lot and planted thereon coconut and ipil-ipil trees. They also
paid the real property taxes on the lot for the years 1980 up to 1998.
On October 17, 1991, Garcia sold the lot to the Muertegui family lawyer, petitioner Atty.
Clemencio C. Sabitsana, Jr. (Atty. Sabitsana), through a notarized deed of absolute
sale.8 The sale was registered with the Register of Deeds on February 6, 1992. 9 TD
No. 1996 was cancelled and a new one, TD No. 5327, 10 was issued in Atty. Sabitsana’s
name. Although Domingo Jr. and Sr. paid the real estate taxes, Atty. Sabitsana also
paid real property taxes in 1992, 1993, and 1999. In 1996, he introduced concrete
improvements on the property, which shortly thereafter were destroyed by a typhoon.
When Domingo Sr. passed away, his heirs applied for registration and coverage of the
lot under the Public Land Act or Commonwealth Act No. 141. Atty. Sabitsana, in a
letter11 dated August 24, 1998 addressed to the Department of Environment and
Natural Resources’ CENRO/PENRO office in Naval, Biliran, opposed the application,
claiming that he was the true owner of the lot. He asked that the application for
registration be held in abeyance until the issue of conflicting ownership has been
resolved.
On April 11, 2000, Juanito, through his attorney-in-fact Domingo Jr., filed Civil Case
No. B-109712 for quieting of title and preliminary injunction, against herein petitioners
Atty. Sabitsana and his wife, Rosario, claiming that they bought the lot in bad faith and
are exercising acts of possession and ownership over the same, which acts thus
constitute a cloud over his title. The Complaint13 prayed, among others, that the
Sabitsana Deed of Sale, the August 24, 1998 letter, and TD No. 5327 be declared null
and void and of no effect; that petitioners be ordered to respect and recognize Juanito’s
title over the lot; and that moral and exemplary damages, attorney’s fees, and litigation
expenses be awarded to him.
In their Answer with Counterclaim,14 petitioners asserted mainly that the sale to Juanito
is null and void absent the marital consent of Garcia’s wife, Soledad Corto (Soledad);
that they acquired the property in good faith and for value; and that the Complaint is
barred by prescription and laches. They likewise insisted that the Regional Trial Court
(RTC) of Naval, Biliran did not have jurisdiction over the case, which involved title to or
interest in a parcel of land the assessed value of which is merely ₱1,230.00.
The evidence and testimonies of the respondent’s witnesses during trial reveal that
petitioner Atty. Sabitsana was the Muertegui family’s lawyer at the time Garcia sold the
lot to Juanito, and that as such, he was consulted by the family before the sale was
executed; that after the sale to Juanito, Domingo Sr. entered into actual, public, adverse
and continuous possession of the lot, and planted the same to coconut and ipil-ipil; and
that after Domingo Sr.’s death, his wife Caseldita, succeeded him in the possession
and exercise of rights over the lot.
On the other hand, Atty. Sabitsana testified that before purchasing the lot, he was told
by a member of the Muertegui family, Carmen Muertegui Davies (Carmen), that the
Muertegui family had bought the lot, but she could not show the document of sale; that
he then conducted an investigation with the offices of the municipal and provincial
assessors; that he failed to find any document, record, or other proof of the sale by
Garcia to Juanito, and instead discovered that the lot was still in the name of Garcia;
that given the foregoing revelations, he concluded that the Muerteguis were merely
bluffing, and that they probably did not want him to buy the property because they were
interested in buying it for themselves considering that it was adjacent to a lot which they
owned; that he then proceeded to purchase the lot from Garcia; that after purchasing
the lot, he wrote Caseldita in October 1991 to inform her of the sale; that he then took
possession of the lot and gathered ipil-ipil for firewood and harvested coconuts and
calamansi from the lot; and that he constructed a rip-rap on the property sometime in
1996 and 1997.
RTC: Declared the deed of sale valid but tax declaration in the name of Sabitsana
VOID. The trial court held that petitioners are not buyers in good faith. Petitioner Atty.
Sabitsana was the Muertegui family’s lawyer, and was informed beforehand by Carmen
that her family had purchased the lot; thus, he knew of the sale to Juanito. After
conducting an investigation, he found out that the sale was not registered. With this
information in mind, Atty. Sabitsana went on to purchase the same lot and raced to
register the sale ahead of the Muerteguis, expecting that his purchase and prior
registration would prevail over that of his clients, the Muerteguis. Applying Article 1544
of the Civil Code,17 the trial court declared that even though petitioners were first to
register their sale, the same was not done in good faith. And because petitioners’
registration was not in good faith, preference should be given to the sale in favor of
Juanito, as he was the first to take possession of the lot in good faith, and the sale to
petitioners must be declared null and void for it casts a cloud upon the Muertegui title.
CA: Affirmed the RTC's decision.
ISSUES:
I. THE COURT OF APPEALS ERRED IN NOT HOLDING THAT THE REGIONAL
TRIAL COURT DID NOT HAVE JURISDICTION OVER THE CASE IN VIEW OF THE
FACT THAT THE ASSESSED VALUE OF THE SUBJECT LAND WAS ONLY
₱1,230.00 (AND STATED MARKET VALUE OF ONLY ₱3,450.00).
II. THE COURT OF APPEALS ERRED IN APPLYING ART. 1544 OF THE CIVIL CODE
INSTEAD OF THE PROPERTY REGISTRATION DECREE (P.D. NO. 1529)
CONSIDERING THAT THE SUBJECT LAND WAS UNREGISTERED.
III. THE COURT OF APPEALS ERRED IN NOT HOLDING THAT THE COMPLAINT
WAS ALREADY BARRED [BY] LACHES AND THE STATUTE OF LIMITATIONS.
IV. THE COURT OF APPEALS ERRED IN AFFIRMING THE DECISION OF THE
REGIONAL TRIAL COURT ORDERING THE PETITIONERS TO PAY ATTORNEY’S
FEES AND LITIGATION EXPENSES TO THE RESPONDENT.
RULING:
The Petition must be denied.
The Regional Trial Court has jurisdiction over the suit for quieting of title.
On the question of jurisdiction, it is clear under the Rules that an action for quieting of
title may be instituted in the RTCs, regardless of the assessed value of the real property
in dispute. Under Rule 63 of the Rules of Court,29 an action to quiet title to real property
or remove clouds therefrom may be brought in the appropriate RTC.
It must be remembered that the suit for quieting of title was prompted by petitioners’
August 24, 1998 letter-opposition to respondent’s application for registration. Thus, in
order to prevent30 a cloud from being cast upon his application for a title, respondent
filed Civil Case No. B-1097 to obtain a declaration of his rights. In this sense, the action
is one for declaratory relief, which properly falls within the jurisdiction of the RTC
pursuant to Rule 63 of the Rules.
Article 1544 of the Civil Code does not apply to sales involving unregistered land.
Both the trial court and the CA are, however, wrong in applying Article 1544 of the Civil
Code. Both courts seem to have forgotten that the provision does not apply to sales
involving unregistered land. Suffice it to state that the issue of the buyer’s good or bad
faith is relevant only where the subject of the sale is registered land, and the purchaser
is buying the same from the registered owner whose title to the land is clean. In such
case, the purchaser who relies on the clean title of the registered owner is protected if
he is a purchaser in good faith for value.31
Act No. 3344 applies to sale of unregistered lands.
What applies in this case is Act No. 3344,32 as amended, which provides for the system
of recording of transactions over unregistered real estate. Act No. 3344 expressly
declares that any registration made shall be without prejudice to a third party with a
better right. The question to be resolved therefore is: who between petitioners and
respondent has a better right to the disputed lot?
Respondent has a better right to the lot.
The sale to respondent Juanito was executed on September 2, 1981 via an unnotarized
deed of sale, while the sale to petitioners was made via a notarized document only on
October 17, 1991, or ten years thereafter. Thus, Juanito who was the first buyer has a
better right to the lot, while the subsequent sale to petitioners is null and void, because
when it was made, the seller Garcia was no longer the owner of the lot. Nemo dat quod
non habet.
The fact that the sale to Juanito was not notarized does not alter anything, since the
sale between him and Garcia remains valid nonetheless. Notarization, or the
requirement of a public document under the Civil Code, 33 is only for convenience, and
not for validity or enforceability.34 And because it remained valid as between Juanito
and Garcia, the latter no longer had the right to sell the lot to petitioners, for his
ownership thereof had ceased.
Nor can petitioners’ registration of their purchase have any effect on Juanito’s rights.
The mere registration of a sale in one’s favor does not give him any right over the land
if the vendor was no longer the owner of the land, having previously sold the same to
another even if the earlier sale was unrecorded.35 Neither could it validate the purchase
thereof by petitioners, which is null and void. Registration does not vest title; it is merely
the evidence of such title. Our land registration laws do not give the holder any better
title than what he actually has.36
Specifically, we held in Radiowealth Finance Co. v. Palileo 37 that:
Under Act No. 3344, registration of instruments affecting unregistered lands is ‘without
prejudice to a third party with a better right.’ The aforequoted phrase has been held by
this Court to mean that the mere registration of a sale in one’s favor does not give him
any right over the land if the vendor was not anymore the owner of the land having
previously sold the same to somebody else even if the earlier sale was unrecorded.
Petitioners’ defense of prescription, laches and estoppel are unavailing since their claim
is based on a null and void deed of sale. The fact that the Muerteguis failed to interpose
any objection to the sale in petitioners’ favor does not change anything, nor could it
give rise to a right in their favor; their purchase remains void and ineffective as far as
the Muerteguis are concerned.
The award of attorney’s fees and litigation expenses is proper because of petitioners’
bad faith.
Petitioners’ actual and prior knowledge of the first sale to Juanito makes them
purchasers in bad faith. It also appears that petitioner Atty. Sabitsana was remiss in his
duties as counsel to the Muertegui family. Instead of advising the Muerteguis to register
their purchase as soon as possible to forestall any legal complications that accompany
unregistered sales of real property, he did exactly the opposite: taking advantage of the
situation and the information he gathered from his inquiries and investigation, he bought
the very same lot and immediately caused the registration thereof ahead of his clients,
thinking that his purchase and prior registration would prevail. The Court cannot tolerate
this mercenary attitude. Instead of protecting his client’s interest, Atty. Sabitsana
practically preyed on him.

Petitioner Atty. Sabitsana took advantage of confidential information disclosed to him

by his client, using the same to defeat him and beat him to the draw, so to speak. He
rushed the sale and registration thereof ahead of his client. He may not be afforded the
excuse that he nonetheless proceeded to buy the lot because he believed or assumed
that the Muerteguis were simply bluffing when Carmen told him that they had already
bought the same; this is too convenient an excuse to be believed. As the Muertegui
family lawyer, he had no right to take a position, using information disclosed to him in
confidence by his client, that would place him in possible conflict with his duty. He may
not, for his own personal interest and benefit, gamble on his client’s word, believing it
at one time and disbelieving it the next. He owed the Muerteguis his undivided loyalty.
He had the duty to protect the client, at all hazards and costs even to himself. 38

Petitioner Atty. Sabitsana is enjoined to "look at any representation situation from the
point of view that there are possible conflicts, and further to think in terms of impaired
loyalty, that is, to evaluate if his representation in any way will impair his loyalty to a
client."39

Moreover, as the Muertegui family’s lawyer, Atty. Sabitsana was under obligation to
safeguard his client's property, and not jeopardize it. Such is his duty as an attorney,
and pursuant to his general agency.40

Even granting that Atty. Sabitsana has ceased to act as the Muertegui family's lawyer,
he still owed them his loyalty.1âwphi1The termination of attorney-client relation
provides no justification for a lawyer to represent an interest adverse to or in conflict
with that of the former client on a matter involving confidential information which the
lawyer acquired when he was counsel. The client's confidence once reposed should
not be divested by mere expiration of professional employment. 41 This is underscored
by the fact that Atty. Sabitsana obtained information from Carmen which he used to his
advantage and to the detriment of his client.

from the foregoing disquisition, it can be seen that petitioners are guilty of bad faith in
pursuing the sale of the lot despite being apprised of the prior sale in respondent's
favor. Moreover, petitioner Atty. Sabitsana has exhibited a lack of loyalty toward his
clients, the Muerteguis, and by his acts, jeopardized their interests instead of protecting
them. Over and above the trial court's and the CA's findings, this provides further
justification for the award of attorney's fees, litigation expenses and costs in favor of
the respondent.

Thus said, judgment must be rendered in favor of respondent to prevent the petitioners'
void sale from casting a cloud upon his valid title.
TOPIC: CONSULTAS
CONSULTA No. 441 DE LOS ABOGADOS DE SMITH, BELL & CO.,
LTD., BLOCK, JOHNSTON & GREENBAUM, appellants, vs . THE
REGISTER OF DEEDS OF LEYTE, appellee.
FACTS:
For a purported consideration, Teofilo Mejia and Casilda Martinez Mejia signed a deed
of sale to and in favor of Cristina Martinez for four parcels of land and certain personal
property. April 26, 1921, the deed was presented for registration under Act No. 2837 to
the registrar of deed of the Province of Leyte, and owing to certain defects in it,
registration was refused. Teofilo Mejia made an amendatory affidavit which was
followed by a ratification under oath of the deed of sale and the amendatory affidavit
by Casilda Martinexx de Mejia. The property was then registered in the register of lands
not registered under Act No. 496. Thereafter Smith, Bell & Co. commenced an action
in the Court of First Instance in Cebu against Sps. Mejia to recover the sum of Php
14000 and it was levied upon the four parcels of land described in the deed to Cristina
Martinez. A Judgment was rendered against the Sps. Mejia. The fourth parcel of land
described in the deed was levied upon by execution by the sheriff to satisfy the
judgment, and the fact was also noted under paragraph 16 of inscription No. 57 of the
deed. After the levy was made and the property advertised for sale, Martinez entered
a terceria with the sheriff, claiming that the property advertised for sale was her sole
property. The sheriff required petitioner to give him an indemnity bond in the sum of
Php 150,000 which was furnished, and the property sold. The sheriff executed and
presented a certificate of sale to the registrar for inscription.
Observing that this annotation was not signed by the registrar, and that the certificate
of sale was not endorsed on its margin, the attorneys of the plaintiff in the writ called
upon the registrar of deeds.
A letter setting out the foregoing facts was then addressed to the Chief of the General
Land Registration Office, who in turn submitted it to the Judge of the Branch of the CFI
of Manila, who held, first, that after the filing of the affidavits, there was no error in
registering the original deed, and, second, that the registrar had the legal right to refuse
to inscribe the sheriff’s certificate of sale for property sold at public auction which was
not registered in the name of the judgment debtor, but in the name of the third party,
and, third, refused to order registration of the deed to plaintiff in the writ, which was
executed by the sheriff under sections 429 and 466 of Act No. 190.
ISSUE:
1) W/N THE DEFECTS IN AN ORIGINAL CONVEYANCE PRESENTED
FOR REGISTRATION UNDER ACT NO. 2837 CAN BE CURED BY
AFFIDAVIT ALONE.
2) W/N A REGISTRAR OF DEEDS MAY REFUSE TO REGISTER A
SHERIFF’S DEED OF SALE, ON THE GROUND THAT THE
PROPERTY SOLD STANDS INSCRIBED IN THE REGISTRY BOOK
FOR UNREGISTERED REAL ESTATE IN THE NAME OF SOME
PERSON OTHER THAT THE JUDGMENT DEBTOR.
3) W/N FAILING TO ORDER THE REGISTRAR OF DEEDS OF LEYTE TO
ANNUL INSCRIPTION NO. 57 IN HIS REGISTER UNDER ACT NO.
2837; OR TO REQUIRE THE SAID REGISTRAR TO RECORD THE
SHERIFF’S CERTIFICATE OF SALE.
HELD:
1) No. As the Attorney-General points out, there was no material defect in the
conveyance itself, because the instrument was regular on its face, valid in
substance, and had all of the requirements provided for in section 127 of Act
No. 496, as amended.
2) Yes.
Section 429 of the Code of Civil Procedure provides:
"Real property, standing upon the records in the name of the
defendant or not appearing at all upon the record, shall be attached
by filing with the registrar of titles of land, for the province in which
the land is situated, a copy of the order of attachment, together with
a description of the property attached, and a notice that it is attached,
and by leaving a similar copy of the order, description, and notice
with an occupant of the property, if there is one.
"Real property or an interest therein, belonging to the defendant and
held by any other person, or standing on the records in the name of
any other person, shall be attached by filing with the registrar of land
titles in the province in which the land is situated, a copy of the order
of attachment, together with a description of the property, and a
notice that such real property and any interest of the defendant
therein, held by or standing in the name of such other person
(naming him) are attached; and by leaving with the occupant, if any,
and with such other person, or his agent, if known and within the
province, a copy of the order, description, and notice. The registrar
must index attachments filed under the first paragraph of this section,
in the names, both of the plaintiff and of the defendant, and must
index attachments filed under the second paragraph of this section,
in the names of the plaintiff and of the defendant and of the person
by whom the property is held or in whose name it stands on the
records."
It was under the second paragraph of this section that the property was
attached as the property of the grantors in the deed, and the attachment indexed by
the registrar as therein provided. That portion of the section deals with real property or
an interest therein belonging to the defendants in the attachment suit, which may be
held by any other person, or which stands on the record in the name of any other
person.
Under sec. 465, if the judgment debtor redeems, he is entitled to a certificate
of redemption, which must be filed with the registrar of deeds, but if the property is not
redeemed, the sheriff’s deed of the property sold must also be registered because
under the provisions of section 1 of Act No. 2837, if not registered, it would only be valid
as between the parties. Hence, it would not be of any value to the purchaser at the
sheriff’s sale

Of course, if at the time the attachment was levied the grantors in the deed,
the defendants in the attachment proceedings, did not have any right, title or interest in
the property, Smith, Bell & Co. did not acquire any title to the land by the sheriff’s deed.
But if it be a fact that at the time the attachment was levied, the grantors in the deed
did have an interest in the property at the time the attachment was levied, it follows that
Smith, bell & co. acquired that interest by and through the sheriff’s deed.

Such registration would not legally mean that Smith, Bell & Co. was the owner of the
property. It would simply mean that by the sheriff’s deed, Petitioner had acquired any
right, title or interest which the grantors had in the fourth parcel of land described in the
deed at the time the attachment was levied.

FALLO:

JUDGMENT OF THE LOWER COURT IS REVERSED, AND FOLLOWING THIS

OPINION, THE WRIT OF MANDAMUS SHALL ISSUE AS PRAYED FOR BY THE
PETITIONER. NEITHER PARTY TO RECOVER COSTS.
TOPIC: THE CONDOMINIUM ACT (RA 4726)
B. WARRANTIES AND REPRESENTATIONS
[G.R. No. 151821. April 14, 2004.]
BANK OF THE PHILIPPINE ISLANDS, as Successor-in-Interest of BPI
Investment Corporation, petitioner, vs. ALS MANAGEMENT & DEVELOPMENT
CORP., respondent.
FACTS:
Petitioner BPI Investment Corporation filed a complaint for a Sum of Money against
respondent ALS Management and Development Corporation, alleging that petitioner
and respondent executed at Makati, Metro Manila a Deed of Sale for one (1)
unfurnished condominium unit of the Twin Towers Condominium located at Ayala
Avenue, corner Apartment Ridge Street, Makati, Metro Manila designated as Unit E-4A
comprising of 271 squares meters more or less, together with parking stalls identified
as G022 and G-63. The Condominium Certificate of Title No. 4800 of the Registry of
Deeds for Makati, Metro Manila was issued after the execution of the said Deed of Sale.
Petitioner advanced the amount of P26, 300.45 for the expenses in causing the
issuance and registration of the Condominium Certificate of Title. Under the Deed of
Sale, it is stipulated that the VENDEE [respondent] shall pay all the expenses for the
preparation and registration of this Deed of Sale and such other documents as may be
necessary for the issuance of the corresponding Condominium Certificate of Title. After
the petitioner complied with its obligations under the said Deed of Sale, respondent
failed and refused to pay petitioner its legitimate advances for the expenses mentioned
above without any valid, legal or justifiable reason.
In its Answer with Compulsory Counterclaim, respondent averred among others that it
has just and valid reasons for refusing to pay [petitioner's] legal claims. In clear and
direct contravention of Section 25 of Presidential Decree No. 957 which provides that
'No fee except those required for the registration of the deed of sale in the Registry of
Deeds shall be collected for the issuance of such title', the petitioner has jacked-up or
increased the amount of its alleged advances for the issuance and registration of the
Condominium Certificate of Title in the name of the [respondent], by including therein
charges which should not be collected from buyers of condominium units. [Petitioner]
made and disseminated brochures and other sales propaganda in and before May
1980, which made warranties as to the facilities, improvements, infrastructures or other
forms of development of the condominium units (known as 'The Twin Towers') it was
offering for sale to the public.
"[Respondent] further averred that [petitioner] represented to the [respondent] that the
condominium unit will be delivered completed and ready for occupancy not later than
December 31, 1981. [Respondent] relied solely upon the descriptions and warranties
contained in the aforementioned brochures and other sales propaganda materials
when [respondent] agreed to buy Unit E-4A of the Twin Tower(s) for the hefty sum of
P2, 048,900.00 considering that the Twin Towers was then yet to be built. In
contravention of [petitioner's] warranties and of good engineering practices, the
condominium unit purchased by [respondent] suffered from defects and/or deficiencies.
RTC:
ALS must pay BPI of the amount advanced by the latter. As to the counterclaim, BPI
must fix the defect and deficiencies in the units and reimburse ALS of the amounts
spent by it due to such defects/deficiencies
CA:
Affirmed the decision of the RTC in toto.
BPI now questions the jurisdiction of RTC to hear ALS counterclaim for the first time
before the Supreme Court alleging that the jurisdiction lies with the HLURB.
ISSUES:
1. Whether or not RTC has jurisdiction over the respondent's counterclaims.
2. Whether or not BPI has been barred by estoppel from questioning such
jurisdiction.
RULING:
1. No, ALS counterclaim being one of “specific performance and damages” falls
under the jurisdiction of the HLURB.
Contending that it was the Housing and Land Use Regulatory Board (HLURB) — not
the RTC — that had jurisdiction over respondent's counterclaim, petitioner seeks to
nullify the award of the trial court.
PD No. 957 — otherwise known as "The Subdivision and Condominium Buyers'
Protective Decree" — provides that the National Housing Authority (NHA) shall have
"exclusive authority to regulate the real estate trade and business."
PD No. 1344 was later on promulgated entitled "Empowering the National Housing
Authority to Issue Writs of Execution in the Enforcement of Its Decisions under
Presidential Decree No. 957." It expanded the jurisdiction of the NHA as follows:
"SECTION 1. In the exercise of its function to regulate the real estate
trade and business and in addition to its powers provided for in Presidential
Decree No. 957, the National Housing Authority shall have exclusive
jurisdiction to hear and decide cases of the following nature:
 A. Unsound real estate business practices; in a complaint of specific performance for the delivery of a certificate of
B. Claims involving refund and any other claims filed by subdivision lot title to a buyer of a subdivision lot; for claims of refund regardless of
or condominium unit buyer against the project owner, developer, whether the sale is perfected or not; and for determining whether there is a
dealer, broker or salesman; and perfected contract of sale. (Emphases supplied.)
C. Cases involving specific performance of contractual and statutory
obligations filed by buyers of subdivision lot or condominium unit It is clear from the plain language of Section 1 of Presidential Decree No. 1344 and
against the owner, developer, broker or salesman." (Italics ours.) aforecited jurisprudence that the HLURB had exclusive jurisdiction over the complaint
And by virtue of Executive Order No. 648, the regulatory functions of the NHA were for specific performance filed by SMPI against BF Homes for the delivery of the
transferred to the Human Settlements Regulatory Commission (HSRC). Pursuant to remaining 20 TCTs.
Executive Order No. 90 dated December 17, 1986, the functions of the HSRC were
transferred to the HLURB. Thus, the board has sole jurisdiction in a complaint of
specific performance for the delivery of a certificate of title to a buyer of a subdivision
lot; for claims of refund regardless of whether the sale is perfected or not; and for
determining whether there is a perfected contract of sale. Clearly then, respondent's
counterclaim — being one for specific performance (correction of defects/deficiencies
in the condominium unit) and damages — falls under the jurisdiction of the HLURB as
provided by Section 1 of PD No. 1344.

2. Yes. Since BPI participated in the trial and only after an unlawful judgment did
it raise the issue of jurisdiction, it may no longer deny the trial court’s
jurisdiction for estoppel bars it from doing so.
The question of jurisdiction may be raised at any time, provided that such action would
not result in the mockery of the tenets of fair play. As an exception to the rule, the issue
may not be raised if the party is barred by estoppel.

In the present case, petitioner proceeded with the trial, and only after a judgment
unfavorable to it did it raise the issue of jurisdiction. Thus, it may no longer deny the
trial court's jurisdiction, for estoppel bars it from doing so.

Petitioner is also guilty of estoppel by laches for failing to raise the question of
jurisdiction earlier. From the time that respondent filed its counterclaim on November
8, 1985, the former could have raised such issue, but failed or neglected to do so. It
was only upon filing its appellant's brief with the CA on May 27, 1991, that petitioner
raised the issue of jurisdiction for the first time. Six (6) years has already passed before
it raised the issue of jurisdiction.

Thus, the defense of lack of jurisdiction is without merit, since the appellant therein
failed to raise the question at an earlier stage. It did so only after an adverse decision
had been rendered.

CITED IN SAN MIGUEL PROPERTIES V. BF HOMES: (based on the syllabus)

The Court reiterated in Bank of the Philippines Islands v. ALS Management and
Development Corporation that:

[T]he jurisdiction of the HLURB over cases enumerated in Section 1 of PD No.

1344 is exclusive. Thus, we have ruled that the board has sole jurisdiction
TOPIC: THE CONDOMINIUM ACT (RA 4726)
B. WARRANTIES AND REPRESENTATIONS
Note: This case was cited by the above case so take note of the similarities.
G.R. No. 169343, August 05, 2015
SAN MIGUEL PROPERTIES, INC., Petitioner, v. BF HOMES, INC., Respondent.
FACTS: BF Homes, Inc. (BF Homes) is the owner of several parcels of land located in
the northern portion of BF Homes Parañaque Subdivision, particularly identified as
Italia II lots.
BF Homes, represented by Florencio B. Orendain (Orendain), as rehabilitation receiver
appointed by the Securities and Exchange Commission (SEC); and SMPI, represented
by Federico C. Gonzales, President, entered into three successive Deeds of Absolute
Sale whereby the former sold to the latter a total of 130 Italia II lots with a combined
area of 44,345 square meters for the aggregate consideration of P106,247,701.00.
SMPI completed the payments for the 130 Italia II lots in December 1995.6 In
compliance with Section 37 of all the three Deeds of Absolute Sale, BF Homes
delivered the Transfer Certificates of Title (TCTs) to SMPI but only for 110 of the 130
Italia II lots purchased by SMPI.
SMPI, thru counsel, sent BF Homes a letter on May 20, 1996 demanding the delivery
of the remaining 20 TCTs. Despite receipt of the afore-mentioned letter, BF Homes
failed or refused to heed the demand of SMPI. Consequently, SMPI filed a Complaint8
for specific performance with damages before the HLURB on August 24, 2000 to
compel BF Homes to deliver the remaining 20 TCTs to SMPI. The case was docketed
as HLURB Case No. REM-082400-11183.
In its Answer (With Counterclaim),9 BF Homes alleged that the Deeds of Absolute Sale
executed in 1992 to 1993 were entered into by Orendain in his personal capacity and
without authority, as his appointment as rehabilitation receiver was revoked by the SEC
in an Order dated May 17, 1989. In support of its counterclaims, BF Homes averred
that the consideration paid by SMPI for the 130 Italia II lots was grossly inadequate and
disadvantageous to BF Homes; and that the Deeds of Absolute Sale were undated and
not notarized. Hence, BF Homes prayed that the HLURB render judgment: 1)
dismissing the complaint of SMPI; 2) declaring the sale of the 130 Italia II lots null and
void; 3) ordering SMPI to reconvey to BF Homes the titles for the [110] Italia II lots; and
4) ordering SMPI to pay BF Homes exemplary damages, attorney's fees, and cost of
suit.
SMPI, in its Reply (Answer with Counterclaim dated October 16, 2000),10 countered
that the validity of the three Deeds of Absolute Sale was already upheld by the SEC in
its Omnibus Order dated November 7, 1994, and the motion for reconsideration of BF
Homes of said Omnibus Order was denied by the SEC in its subsequent Order dated
August 22, 1995. Both Orders were deemed final, executory, and unappealable by the
SEC in another Omnibus Order dated July 31, 1996. As a result, the Deeds of Absolute
Sale were binding on BF Homes. SMPI further maintained that Orendain was
authorized to sign the Deeds of Absolute Sale for and in behalf of FBO Networks
Management, Inc. - the receiver which the SEC appointed to replace Orendain, upon
the latter's motion to convert his involvement in the receivership from an individual to a
corporate capacity. SMPI additionally asserted that absent substantiation, the
allegation of BF Homes of inadequate consideration for the sale of the Italia II lots was
self-serving; and that despite being undated and not notarized, the Deeds of Absolute
Sale were valid since they contained the essential elements of a contract. And even
assuming that the Deeds of Absolute Sale may be rescinded, SMPI argued that BF
Homes did not offer and was not prepared to return the consideration paid by SMPI,
plus interest.
BF Homes filed a Rejoinder (To Complainant's Reply)11 contending that the SEC
Omnibus Order dated July 31, 1996 has not yet become final as BF Homes assailed
the said Order in a Petition for Certiorari before the SEC. In its Decision dated May 8,
1997, the SEC neither confirmed the authority of Orendain nor cleared Orendain/FBO
Networks Management, Inc. from any liability for his/its unauthorized acts, but clarified
that the final report of the rehabilitation receiver was not yet approved and was merely
admitted as part of the records. BF Homes also stated that although the SEC Order
dated September 12, 2000 already terminated the rehabilitation proceedings because
of the improvement in the solvency status of BF Homes, BF Homes filed a Motion for
Clarification and/or Partial Reconsideration of said SEC Order and sought a resolution
of the issues relating to the receiver's irregular acts, including the sale of the Italia II
lots to SMPI. BiF Homes insisted that the transactions entered into by Orendain were
anomalous as the latter sold the 130 Italia II lots to SMPI at a price that was inadequate
and disadvantageous to BF Homes.
Housing and Land Use Arbiter Rowena C. Balasolla (Arbiter Balasolla) issued an Order
dated January 22, 200112 directing the parties to submit their respective position
papers and supporting evidence, as well as their draft decisions. Thereafter, the case
was deemed submitted for resolution.
Arbiter Decision: suspend the proceedings before the Board until the SEC shall have
resolved with finality on the issue of the authority of Mr. Orendain/FBO Networks
Management to enter into such transactions on behalf of [BF Homes]. It is inevitable
that the resolution of the issues raised in the instant complaint would be largely
influenced by the outcome of the cases pending in other tribunals which are directly
and ineluctably related to the issues brought before this Board. Thus, while this Board
may have jurisdiction over the instant complaint, the issue on whether or not Mr.
Orendain has overstepped his authority which is pending resolution by the SEC, is to
our mind a condition sine qua non, the final resolution of which by said body is a logical
antecedent to the issue involved in the instant complaint and which only the SEC has
exclusive jurisdiction to decide.
SMPI filed a petition for review with the HLURB Board of Commissioners
Ruling of HLURB Board of Commissioners: While no prejudicial question strictly arises
where one is a civil case and the other is an administrative proceeding, in the interest
of good order, it behooves the court to suspend its action on the cases before it pending
the final outcome of the administrative proceedings. The doctrine of primary jurisdiction
does not warrant a court to arrogate unto itself the authority to resolve a controversy
the jurisdiction over which is initially lodged with an administrative body [of special
competence].
SMPI appealed the foregoing Decision of the HLURB Board of Commissioners before
the OP. The basic complaint in this case is one for specific performance under Section
25 of Presidential Decree (PD) 957 - "The Subdivision and Condominium Buyers'
Protective”
OP Ruling: Ordered BF Homes, Inc., to deliver to San Miguel Properties, Inc., the
corresponding titles to the lots subject of the instant case, free from all liens aind
encumbrances, except to the subdivision restrictions referred to in the conveying deed
of sale, and to pay the latter the sum of P100,000.00 as and. by way of attorneys' fees.
All other claims and counterclaims are hereby DISMISSED.
Reason: As a matter of law, lesion or inadequacy of cause shall not invalidate a
contract, save in cases specified by law or unless there has been fraud, mistake or
undue influence (Art. 1355, Civil Code). Thus, [BF Homes'] allegation about the
inadequacy of price for the twenty (20) lots, even if true, cannot invalidate the sale in
question, absent a showing that such sale is a case exempted by law from the operation
of said article or that fraud, mistake or undue influence attended the sale.
[BF Homes'] posture regarding the invalidity of the same sales transaction owing to
Orendain's alleged lack of authority to execute the corresponding deed may be
accorded serious consideration were it not for its acceptance and retention of the
purchase price for the covered lots. As aptly argued in this appeal, citing jurisprudence,
estoppel attached to [BF Homes] when it accepted the benefits arising from the
performance of SMPI of its undertaking under the contract of sale. By the doctrine of
estoppel, a party is barred from repudiating or canceling an otherwise defective or
rescissible contract by his receipt of payments due thereunder (Republic v. Acoje
Mining Co., Inc., 7 SCRA 361; Angeles v. Calasanz, 135 SCRA 332); the bar of
estoppel also precludes one who, by his conduct, had induced another to act in a
particular manner, from adopting an inconsistent position that thereby causes prejudice
to another (Cruz vs. CA, 293 SCRA 239).
Significantly, Orendain signed the three deeds of sale adverted to covering 130 lots in
1992 and 1993, or during FBO's watch as receiver. Yet, [BF Homes] opted to fully
implement the transactions covered by two of these deeds and partially implement the
third by delivering the titles to 110 lots. In net effect, [BF Homes] did recognize the
authority of Orendain to execute those contracts. But if Orendain was indeed bereft of
authority during the time material, as [BF Homes] would have this Office believe, how
explain (sic) its inaction to recover damages against one it veritably depicts as an
impostor?
BF Homes sought recourse from the Court of Appeals by way of a Petition for Review30
under Rule 43 of the Revised Rules of Court
CA: Court of Appeals agreed with the OP that the HLURB had the primary and
exclusive jurisdiction to resolve the complaint for specific performance and damages of
SMPI and should not have suspended the proceedings until the SEC had ruled with
finality on the issue of Orendain's authority to sell the 130 Italia II lots to SMPI. The
Court of Appeals, however, differed from the OP Decision by ordering the; remand of
the case to the HLURB in recognition of the doctrine of primary jurisdiction.
SMPI now comes before SC through the instant Petition.
ISSUE:
1. Whether or not HLURB HLURB had exclusive jurisdiction over the complaint for
specific performance filed by SMPI against BF Homes for the delivery of the
remaining 20 TCTs
2. Whether or not CA was correct in remanding the case to HLURB
3. Whether or not SMPI is entitled to the delivery of the remaining 20 TCTs for the lots
it purchased from BF Homes.
SC Ruling: The Petition is meritorious.
FIRST ISSUE: Section 1 of PD No. 1344 enumerates the jurisdiction of the HLURB
Section 1. In the exercise of its functions to regulate the real estate trade and business
and in addition to its powers provided for in Presidential Decree No. 957, the National
Housing Authority shall have exclusive jurisdiction to hear and decide cases of the
following nature:
A. Unsound real estate business practices;
B. Claims involving refund and any other claims filed by subdivision lot or
condominium unit buyer against the project owner, developer, dealer, broker or
salesman; and
C.Cases involving specific performance of contractual and statutory
obligations filed by buyers of subdivision lot or condominium unit against the
owner, developer, dealer, broker or salesman." (Emphases ours.)
It is clear from the plain language of Section 1 of Presidential Decree No. 1344 and
aforecited jurisprudence that the HLURB had exclusive jurisdiction over the complaint
for specific performance filed by SMPI against BF Homes for the delivery of the
remaining 20 TCTs.
The OP and the Court of Appeals are correct that the HLURB, in the exercise of its
exclusive jurisdiction, did not have to suspend the proceedings and should have went
ahead to resolve the complaint for specific performance filed by SMPI given its statutory
mandate under Section 1 of Presidential Decree No. 1344 and its technical competence
and expertise over the subject matter. The HLURB was called upon to determine the
contractual obligations of BF Homes and SMPI, as seller and buyer of subdivision lots,
respectively, under the terms and conditions of the Deeds of Absolute Sale in relation
to the provisions of Presidential Decree No. 957. In contrast, the proceedings before
the SEC involved the receivership of BF Homes, an intra-corporate matter, as pointed
out by the Court of Appeals. While the HLURB and SEC proceedings may be related
(i.e., Orendain executed the Deeds of Absolute Sale of the 130 Italia II lots as receiver
of BF Homes), the two cases could proceed independently of one another. A ruling by
the SEC that Orendain did not have or had exceeded his authority as receiver in
executing the Deeds of Absolute Sale is not absolutely determinative of the fate of the
complaint for specific performance of SMPI before the HLURB. It would not
automatically result in the nullification or rescission of the said Deeds or justify the
refusal of BF Homes to deliver the 20 TCTs to SMPI as there would be other issues
which need to be considered, such as the good faith or bad faith of SMPI as buyer,
ratification by BF Homes of the Deeds, etc., and the HLURB is not obliged to suspend
its proceedings until all of these issues are resolved or decided by other
courts/tribunals. HLURB could already make a preliminary finding on the validity of the
Deeds of Absolute Sale executed by Orendain for the purpose of ascertaining the right
of SMPI to the delivery of the 20 TCTs.
Second Issue: No. CA erred in remanding the case to HLURB. According to SC, there
is no need to remand the case to HLURB. The case was already deemed submitted
for resolution with Arbiter Balasolla stopping short only of actually rendering a decision.
Taking into account that the necessary pleadings and evidence of the parties are
already on record, returning the instant case to the HLURB for further proceedings will
simply be circuitous and inconsistent with the summary nature of HLURB
proceedings.46 The Court keeps in mind the shared objective of Rule 1, Section 2 of
the 1996 Rules of Procedure of the HLURB, as amended, and Rule 1, Section 6 of the
Revised Rules of Court to promote a just, speedy, and inexpensive
disposition/determination of every action.
Lastly, the averment of BF Homes of inadequacy of the purchase price for the 130 Italia
II lots deserves scant consideration. Section 3(p), Rule 131 of the Revised Rules of
Court presumes that private transactions have been fair and regular. The only evidence
submitted by BF Homes in support of its claim is the appraisal report which valued the
lots at P3,500.00 and P3,000.00 per square meter. The appraisal report, however, does
not necessarily prove that the purchase price for the lots agreed upon in the Deeds of
Absolute Sale, averaged at P2,500.00 per square meter, is grossly inadequate and
disadvantageous to BF Homes. There are considerations for which sellers may agree
to sell their property for less than the market value, such as the urgent financial need
of the seller, cash or immediate payment, and/or the high number of properties
purchased at the same time. In this case, SMPI explained that it was granted a lower
purchase price because it bought the Italia II lots in volume, and BF Homes was unable
to repudiate said explanation.

Last and most important issue: Court answers affirmatively.

Section 25 of Presidential Decree No. 957 explicitly mandates that "[t]he owner or
developer shall deliver the title of the [subdivision] lot or [condominium] unit to the buyer
upon full payment of the lot or unit.”. In the case at bench, SMPI submitted adequate
proof showing full payment to and receipt by BF Homes of the purchase price for the
130 Italia II lots as fixed in the Deeds of Absolute Sale.54 BF Homes expressly admitted
receipt of some payments, while it remained silent as to the others without presenting
controverting evidence.

Upon full payment by SMPI of the purchase price for the 130 Italia II lots to BF Homes,
it became mandatory upon BF Homes to deliver the TCTs for said lots to SMPI.

To justify its refusal to deliver the remaining 20 TCTs to SMPI, BF Homes asserts that
1) the Deeds of Absolute Sale were undated and not notarized; 2) Orendain did not
have or exceeded his authority as receiver in entering into the contracts of sale of the
Italia II lots with SMPI; and 3) the consideration for the said Italia II lots were grossly
inadequate and disadvantageous for BF Homes.

The Court is not persuaded. According to SC, Deeds of Absolute Sale are enforceable.
First, the Deeds are already in writing and signed by the parties, and only lack
notarization, a formality which SMPI could compel BF Homes to comply with. As private
documents, the Deeds are still binding between the parties and the conveyance of the
130 Italia II lots by BF Homes to SMPI by virtue of said Deeds is valid. And second, the
Deeds were already ratified as BF Homes had accepted the benefits from said
contracts when it received full payment from SMPI of the purchase price for the 130
Italia II lots. The Deeds were also substantially performed considering that BF Homes
had previously delivered to SMPI the TCTs for 110 out of the 130 lots, only refusing to
deliver the TCTs for the remaining 20 lots.

Further, BF Homes cannot insist on the lack of authority of Orendain as receiver to sign
the Deeds of Absolute Sale for the 130 Italia II lots. While it is true the SEC revoked the
appointment of Orendain as rehabilitation receiver of BF Homes in 1989, the SEC
thereafter immediately appointed FBO Networks Management, Inc., in replacement as
receiver. Orendain was the Chairman of FBO Networks Management, Inc. Hence,
when Orendain signed the Deeds of Absolute Sale for the 130 Italia II lots, he did so
as Chairman of FBO Networks Management, Inc., the appointed receiver of BF Homes.