Republic of the Philippines SUPREME COURT Manila SECOND DIVISION G.R. Nos.

L-48971 & 49011 January 22, 1980 PACIFICO GARCIA, petitioner-appellant, vs. BENJAMIN M. GOZON, TECLA GUTIERREZ, ROSARIO FELIX, PAULINO D. BUENAVENTURA, RAYMUNDO DIONISIO, VIRGILIO AUSTRIA and MARCEON VICENCIO, respondents-appellees; PHILIPPINE NATIONAL BANK, petitioner-appellant, vs. COURT OF APPEALS (Third Division), CAROLINA LAPUZ- GOZON, assisted by her husband BENJAMIN M. GOZON, TECLA GUTIERREZ, ROSARIO FELIX, PAULINO D. BUENAVENTURA, RAYMUNDO DIONISIO, VIRGILIO AUSTRIA and MARCEON VICENCIO, respondents-appellees. Agapito Mendoza & Antonio G. Ibarra for appellant Pacifico Garcia Laurel Law Office and Flores Ocampo, Dizon & Domingo for private appellees.

AQUINO, J.: This case is about the issuance of two or more transfer certificates of title to different persons for the same lots, or subdivisions thereof, due to the fact that the original title was allegedly not cancelled when the first transfer certificates of title were issued to replace the original title. The factual background is as follows: 1. On August 9, 1918, a deed of sale for two parcels of land, E and G (with a total area of more than seven hectares) of the Hacienda Maysilo, located in Malabon, Rizal and covered by Original Certificate of Title No. 983, was executed in favor of Ismael Lapus a bona fide occupant thereof. The deed was executed pursuant to an order of the Court of First Instance of Rizal in Civil Case No. 391, Negao vs. Vidal, a partition proceeding involving the said hacienda (See Bustamante vs. Tuason, 47 Phil. 433, 434). 2. The deed of sale was presented for registration at two-twenty five in the afternoon of January 15, 1920 and was recorded as Primary Entry No. 7710. That deed of sale itself contains the following entries showing that it was annotated on the back of OCT NO. 983:
Presentado en este Registro a las 2:25 de la tarde del dia de hoy segun el Asiento No. 7710 de tomo 10 del Libro Diario, Pasig, Rizal, Enero 15, 1920. Register of Deeds (Exh. B-12) Inscrito el documento que precede al dorso del certificado de Titulo Original No. 983 del Tomo A-9, de inscritor en las paginas 113 y 114 ambos del libro T-25 de registro como certificados de titulo Nos. 4910 y 4911, archivado en el legajo T-#4910. Pasig, Rizal, Enero 15, 1920.: Register of Deeds (Exh. B-1).

However, it seemed that, contrary to the foregoing entry and the official routine or standard operating procedure, the deed of sale was not annotated on OCT No. 983 and that, consequently, that title was apparently not cancelled. Why that annotation did not appear in OCT No. 983 and why there was no notation of the cancellation of that title, as it appeared in 1962, is a mystifying circumstance in this case. 3. As a result of the registration of that deed of sale, Transfer Certificate of 'Title No. 4910 was issued to Lapus for the two parcels of land, E and G, and I Transfer Certificate of Title No. 4911 was issued for the remaining five lots covered by OCT No. 983 (which embrace an area of more than two hundred fifty-eight hectares registered in the names of more than twenty-six-co-owners). TCT Nos. 4910 and 4911 contain the following entries: "Transfer from No. 983. Originally registered on the 29th day of January, in the year 1917 in Book No. A-9, page 215, of the said Province of Rizal, pursuant to a decree entered in Case No. 3850." 4. Lapus on different occasions mortgaged the two parcels of land to secure his obligations to the Philippine National Bank, the Government and the Philippine Trust Company. He died in 1951. The two parcels of land were inherited by his daughter, Carolina Lapuz-Gozon. She became the registered owner of the two lots. She subdivided them into fifty-five lots. She sold some of the subdivision lots to her co-respondents-appellees herein. Lapus and his successors-in-interest have been in possession of the two parcels even before 1910 or for more than seventy years. 5. Meanwhile, in 1962, certain. alleged heirs (collectively known as the Riveras) of the late Maria de la Concepcion Vidal filed a motion in Land Registration Cases Nos. 4429 and 4496 of the Court of First Instance of Rizal, alleging that they were deprived of their participation in the Hacienda Maysilo covered by OCT No. 983 and for other titles and that, since only OCT No. 983 was supposedly unencumbered, all the land covered by that title should be adjudicated to them. The court granted the motion. It should be stressed that OCT No. 983 appears to have remained uncancelled notwithstanding the sale to Lapus of two parcels covered by it and the fact that it had been replaced by TCT Nos. 4910 and 4911. 6. On June 7, 1963, OCT No. 983 was definitely cancelled and in lieu thereof Transfer Certificate of Title No. 112236 was issued to the Riveras. Later, Lots 5 and 7 of the said title (corresponding to parcels E and G which were sold to Ismael Lapus in 1918 as stated earlier) were assigned by Bartolome Rivera to Sergio Cruz and Pacifico Garcia and TCT Nos. 112743 and 112742 were issued to Cruz and Garcia, respectively. Thus, two sets of transfer certificates of title for Lots E and G or 5 and 7, originally covered by OCT No. 983, were issued, one to the heir of Ismael Lapus and another set to the successors-in-interest of the Riveras. 7. On October 22, 1964, Garcia subdivided Lot 7 (G) into Lots A and B. Garcia retained Lot A and obtained TCT No. 134958 for it. He assigned Lot B to Antonio Muoz on November 5, 1964. As a consequence of the assignment, TCT No. 112742 was cancelled and TCT No. 134957 was issued to Muoz. In 1965, he mortgaged Lot B to the Associated Banking Corporation to secure a loan of P200,000. 8. On the other hand, on July 17, 1964 Cruz sold to Santiago Go Lot 5 (E) covered by TCT No. 112743. TCT No. 131329 was issued to Go on August 25,1964. On December 23, 1964, Go mortgaged Lot 6 to the Philippine National Bank (PNB) to secure a loan of P50,000 which was later increased to P60,000. 9. Muoz and Go did not pay their mortgage debts. The two banks foreclosed the mortgages. The PNB bought the mortgaged lot at the auction sale held on May 4. 1967. The sheriff issued to it a certificate of sale dated May 19, 1967 but at that time there was already a notice of lis pendens

annotated on the title of the mortgaged lot. TCT Nos. 212163 and 236881 for the mortgaged lots were issued to the Associated Banking Corporation and the Philippine National Bank, respectively. 10. The Riveras and their successors-in-interest have never set foot on the disputed lots. 11. Mrs. Gozon later learned that the Riveras and their successors-in-interest had acquired the land (more than two hundred fifty-eight hectares) covered by OCT No. 983. Her lawyer and a surveyor informed her that parcels E and G, which she inherited from her father, were identical to Lots 5 and 7 which were conveyed to Cruz and Garcia. She registered adverse claims on the titles covering Lots 5 and 7. On December 27, 1965 she and the persons to whom she had transferred portions of parcels E and G filed with the Court of First Instance of Rizal at Caloocan City against the Riveras, Cruz, Muoz, Garcia, Associated Banking Corporation, PNB and others an action to quiet title and for damages. 12. A notice of lis pendens was annotated on January 25, 1966 on the titles of Garcia, Muoz and Go. The notice of lis pendens was annotated on the title of the PNB when the sale in its favor was registered on December 13, 1969. 13. The trial court in its decision of July 30, 1975 declared valid TCT Nos. 141802 to 141855 and 143512 issued to Mrs. Gozon and her co-plaintiffs. It voided TCT No. 112235 issued to the Riveras and all titles and transactions emanating therefrom insofar as those titles covered the lots embraced in plaintiffs' titles. The Riveras were ordered to pay the plaintiffs twenty thousand pesos as attorney's fees. 14. The trial court also ordered Muoz to pay the Associated Banking Corporation, in the event that the bank would be evicted from the lot covered by TCT No. 212153, two hundred sixty-five thousand seventy-two pesos and fifteen centavos with twelve percent interest per annum from the date of the eviction plus ten thousand pesos as attorney's fees. 15. Santiago Go was ordered to pay the PNB, should it be evicted from the lot covered by TCT No. 236881, the sum of sixty thousand pesos plus nine percent interest per annum from the date of the eviction and six thousand pesos as attorney's fees. 16. That judgment of the trial court was affirmed by the Court of Appeals in its decision of May 25, 1978. Garcia and the PNB appealed from that decision. The Associated Banking Corporation, now the Associated Citizens Bank, tried to appeal but it was not able to file its petition for review (L49010). Garcia contends that the Court of Appeals erred in not holding that his title is valid and that the titles of Ismael Lapus and his successors-in-interest lost their right to the disputed lots due to their negligence or inaction. The issue is whether the 1920 title issued to Lapus and the titles derived therefrom should prevail over the 1963 title issued to the Riveras and the subsequent titles derived from it. Should Lapus' title prevail even if it was not annotated by the register of deeds on the anterior or parent title which was not cancelled before 1963? It was that noncancellation which led to the issuance of the duplicative title to the Riveras and eventually to the execution of the controversial mortgages and foreclosure sales to the two banks. We hold that the two appeals have no merit. The title of Lapus and the titles derived therefrom should be given effect. The title of the Riveras and the titles springing from it are void.

There can be no doubt that Lapus was an innocent purchaser for value. He validly transmitted to his successors-in-interest his indefeasible title or ownership over the disputed lots or parcels of land. That title could not be nullified or defeated by the issuance forty-three Years later to other persons of another title over the same lots due to the failure of the register of deeds to cancel the title preceding the title issued to Lapuz. This must be so considering that Lapus and his interest remained in possession of the disputed successors in lots and the rival claimants never possessed the same. "The general rule is that in the case of two certificates of title, purporting to include the same land, the earlier in date prevail, whether the land comprised in the latter certificate be wholly, or only in part, comprised in the earlier certificate" (Hogg, Australian Torrens System 823, citing cases and cited in Legarda and Prieto vs. Saleeby, 31 Phil. 590, 595). "Where two certificates (of title) purport to include the same land, the earlier in date prevails. ... In successive registrations, where more than once certificate is issued in respect of a party estate or interest in land, the Person claiming under the prior certificate is entitled to the estate or interest; and that person is deemed to hold under the prior certificate who is the holder of, or whose claim is derived directly or indirectly from the person who was the holder of the earliest certificate issued in respect thereof " (Niblack, Analysis of the Torrens System page 237, cited in Legarda and Prieto vs. Saleeby, supra, pages 595-6). And the rule that in case of double registration the owner of the earlier certificate is the owner of the land applies to the successive vendees of the owners of such certificates. "The vendee of the earlier certificate would be the owner as against the vendee of the owner of the later certificate" (Legarda and Prieto vs. Saleeby, supra, pages 597-9). It is settled that is this jurisdiction the maxim prior est in tempore, potior est in jure (he who is first in time is preferred in right) is followed in land registration matters (La Urbana vs. Bernardo, 62 Phil. 790, 806). Appellant Garcia invokes the ruling that the mere entry of a document in the day or entry book without noting it on the certificate of title is not a sufficient registration (Bass vs. De la Rama, 73 Phil. 682, 685). That ruling was superseded by the holding in the later six cases of Levin vs. Bass, 91 Phil. 420, where a distinction was made between voluntary and involuntary registration, such as the registration of an attachment, levy upon execution, notice of his pendens, and the like. In cases of involuntary registration, an entry thereof in the day book is a sufficient notice to all persons even if the owner's duplicate certificate of title is not presented to the register of deeds. On the other hand, according to the said cases of Levin vs. Bass, in case of voluntary registration of documents an innocent purchaser for value of registered land becomes the registered owner, and, in contemplation of law the holder of a certificate of title, the moment he presents and files a duly notarized and valid deed of sale and the same is entered in the day book and at the same time he surrenders or presents the owner's duplicate certificate of title covering the land sold and pays the registration fees, because what remains to be done lies not within his power to perform. The register of deeds is duty bound to perform it. (See Potenciano vs. Dineros, 97 Phil. 196.) The instant case is not Identical to the Bass cases. Here the deed of sale in favor of Lapus, which was judicially authorized, was entered in the entry book and a new title was issued to him. As already stated, and this point should be underscored, the deed of sale in favor of Lapus contains the notation that it was annotated on the back of OCT No. 983 (presumably, the original and owner's duplicate thereof).

But why in 1962 it appeared that no such annotation was found on the back of OCT No. 983, contrary to what was stated in the 1918 deed of sale, is a mystery that the trill court and the plaintiffs failed to unravel during the trial. Moreover, the title issued to Lapus contains the usual notation that it was a transfer from a previous title which in this case was OCT No. 983. It should be further observed that the deed of sale in favor of Lapus and the titles issued to him and his successors interest together with his mortgage in 1929 of the disputed lots to the PNB itself, are all a matter of public record in the registry of deeds. As stressed in Legarda and Prieto vs. Saleeby, 31 Phil. 590, 600, "the record is notice to all the world. All persons are charged with the knowledge of what it contains. All persons dealing with the land so recorded, or any portion of it, must be charged with notice of whatever it contains. The purchaser is charged with notice of every fact shown by the record and is presumed to know every fact which the record discloses. "When a conveyance has been properly recorded, such record is constructive notice of its contents and all interests, legal and equitable, included therein." "Under the rule of notice, it is presumed that the purchaser has examined every instrument of record affecting the title. Such presumption is irrefutable. He is charged with notice of every fact shown by the record and is presumed to know every fact which an examination of the record would have disclosed" (Legarda and Prieto vs. Saleeby, supra, page 600). As Justice Johnson says, "this presumption cannot be overcome by proof of innocence or good faith. Otherwise, the very purpose and object of the law requiring a record would be destroyed. Such presumption cannot be defeated by proof of want of knowledge of what the record contains any more than one may be permitted to show that he was ignorant of the provisions of the law. The rule that all persons must take notice of the facts which the public record contains is a rule of law. The rule must be absolute. Any variation would lead to endless confusion and useless litigation" (Legarda and Prieto vs. Saleeby, supra, pp. 600-601). As to the PNB's claim that it was a mortgagee and purchaser in good faith and for value, the Appellate Court held that the bank should have made an on-the-spot investigation of the lot mortgaged by Go to ascertain whether he was in possession of it or it was claimed by other persons. Its failure to do so precludes the bank from being considered as a mortgagee in good faith and for value (Gatioan vs. Gaffud, L-21953, March 28, 1969, 27 SCRA 706). On the other hand, the trial court held that the PNB was not a buyer in good faith when it bought Go's lot at the auction sale because there was already a notice of his pendens annotated on his title. In the Gatioan case, it appears that in 1935 Rufina Permison secured a Torrens title for a parcel of land on the basis of a free patent. The land was sold to Encarnacion Gatioan and Transfer Certificate of Title No. T-1212 was issued to her. She mortgaged the land three times to the PNB In 1956, the spouses Sixto Gaffud and Villamora Logan were able to secure a Torrens title for the same lot also on the basis of a free patent. They mortgaged the land also to the PNB. The Secretary of Agriculture and Natural Resources, on discovering that two Torrens titles were issued for the same land, recommended the cancellation of the later title issued to the Gaffud spouses. As the PNB refused to cancel the mortgaged executed by Gatioan, in spite of the fact that she had made full payment of the mortgage debt, she filed against the Gaffud spouses and the PNB an action to quiet title.

It was held that Gatioan's title should prevail over that of the Gaffud spouses and that the mortgage executed by them in favor of the PNB was void. The Gaffud spouse were ordered to pay damages to Gatioan. Since the applicable rule in the instant case is that the earlier certificate of title should be recognized as superior and controlling there is no justification for relying on the doctrine laid down by Justice Holmes in Eliason vs. Wilborn 281 U.S. 457, that "as between two innocent persons, one of whom must suffer the consequence of a breach of trust, the one who made it possible by his act of confidence must bear the loss." There was no breach of trust in this case. What is note. worthy in this case is that after it was recited in the registered deed of sale that sale was annotated at the back of the title covering the lots sold, it turned out that the title did not contain such an annotation and that the title was not cancelled. For that anomaly, the purchaser, Ismael Lapus, the how" of the earlier title, was not culpable or blameworthy. WHEREFORE, the judgment of the Court of Appeals, affirming the decision of the trial court, should stand. Costs against the appellants. SO ORDERED. Barredo (Chairman), Antonio, Concepcion, Jr. and Santos, JJ., concur. Abad Santos, J., took no part. Republic of the Philippines SUPREME COURT Manila EN BANC G.R. No. L-11285 May 16, 1958

VICENTE SAPTO, LAUREANA SAPTO and DORA (BAGONA), plaintiffs-appellants, vs. APOLONIO FABIANA, defendant-appellee. Rodolfo A. Ta-Asan for appellants. Napoleon B. Nidea for appellee. REYES, J.B.L., J.: Sapto (Moro), now deceased was the registered owner of a parcel of land located in Alambre, Toril, Davao City, under Transfer Certificate of Title No. T-5701 (0-28) of the Register of Deeds of Davao City. When Sapto died, he left his children Samuel, Constancio, and Ramon as heirs of the property in question. Ramon pre-deceased his two brothers, leaving no, other heirs. On June 6, 1931, Samuel and Constancio Sapto executed a deed of sale of a portion of four hectares of the land aforementioned if favor of defendant Apolonio Fabiana, in consideration of the amount of P245.00. The sale was duly approved by the Provincial Governor of Davao, but was never registered. Possession of the land conveyed was, however, transferred to Fabiana and the latter has been in the possession thereof 1931 up to the present.

Thereafter, Constancio Sapto died without any issue, Samuel Sapto married one Dora (Bagoba) and upon his death was survived by his widow and two children, Laureana and Vicente Sapto. On October 19, 1954, the widow and children of Samuel Sapto filed this action in the Court of First Instance of Davao for the recovery of the parcel of land sold by their predecessors to defendant Apolonio Fabiana in 1931. After trial, the lower court held that although the sale between Samuel and Constancio Sapto and defendant in 1931 was never registered, it was valid and binding upon the parties and the vendors heirs, and ordered the plaintiffs to execute the necessary deed of conveyance in defendant's favor and its annotation in the certificate of title. From this judgment, plaintiffs appealed to this Court. The issue is whether the deed of sale executed by appellants' predecessors in favor of the appellee over the land in question, although never registered, is valid and binding on appellants and operated to convey title and ownership to the appellee. The question is not new. In a long line of cases already decided by this Court, we have consistently interpreted sec. 50 of the Land Registration Act providing that "no deed . . . shall take effect as a conveyance or bind the land, but shall operate only as a contract between the parties and as evidence of authority to the clerk or register of deeds to make registration" in the sense that as between the parties to a sale registration is not necessary to make it valid and effective, for actual notice is equivalent to registration (Obras Pias vs. Devera Ignacio, 17 Phil., 45; Gustilo vs. Maravilla, 48 Phil., 442; Quimson vs. Suarez, 45 Phil., 901; Winkleman vs. Veluz, 43 Phil., 609; Galasinao vs. Austria, 51 Off. Gaz. No. 6, 2874; Carillo vs. Salak, 91 Phil., 265). "The peculiar force of a title under Act No. 492", we said in Medina vs. Imaz and Warner Barnes and Co., 27 Phil., 314 (syllabus), "is exhibited only when the purchaser has sold to innocent third parties the land described in the conveyance. Generally speaking, as between vendor and vendee, the same rights and remedies exist in relation to land not so registered". In Galanza vs. Nuesa, 95 Phil., 713, we held that "registration is intended to protect the buyer against claims of third persons arising from subsequent alienations by the vendor, and is certainly not necessary to give effect as between the parties to their deed of sale". And in the recent case of Casica vs. Villaseca, G.R. No. L-9590, April 30, 1957, we reiterated that "the purpose of registration is merely to notify and protect the interests of strangers to a given transaction, who may be ignorant thereof, and the non-registration of the deed evidencing said transaction does not relieve the parties thereto of their obligations thereunder". No right of innocent third persons or subsequent transferees of the property in question is involved herein. The property has remained and still is in the possession of the vendee of appellants' predecessors, herein appellee. It is, therefore, clear that the conveyance between appellee and his vendors and valid and binding upon the latter, and is equally binding and effective against the heirs of the vendors, herein appellants. To hold otherwise would make of the Torrens system a shield for the commission of fraud by the vendors or his heirs (Gustilo vs. Maravilla, 48 Phil., 442), who would then be able to reconvey the same property to other persons. Appellants cite several cases wherein we have held that under the Torrens system, registration is the operative act that gives validity to the transfer or creates a lien upon the land. The authorities cited refer, however, to cases involving conflicting rights over registered property and those of innocent transferees who relied on the clean titles of the properties in question. These cases have, therefore, no bearing on the instant case, where the appellee has always, remained in the possession of the land in question and no subsequent transfer thereof to other persons has been made either by appellants or their prodecessors-in-interest. The appellants aver that it was error to require them to execute a deed of conveyance in favor of the plaintiff, appellee, and argue that the latter's action to obtain it had long prescribed, twenty years having elapsed since the original sale. This contention must be overruled, being predicated on the assumption that the reconveyance is sought by way of performance of the contract of sale entered into in 1931. No enforcement of the contract is in fact needed, since the delivery of possession of the land sold had consummated the sale and transferred title to the purchaser, registration of the contract not being indispensable as between the parties. Actually the action for conveyance was one to quiet title, i.e., to remove the cloud cast upon appellee's ownership by the refusal of the appellants to recognize the sale made by their predecessors. This action accrued only when appellant, initiated

their suit to recover the land in 1954. Furthermore, it is an established rule of American jurisprudence (made applicable in this jurisdiction by Art. 480 of the New Civil Code) that actions to quiet title to property in the possession of the plaintiff are imprescriptible (44 Am. Jur. p. 47; Cooper vs. Rhea, 39 L. R. A. 930; Inland Empire Land Co. vs. Grant County, 138 Wash. 439, 245 Pac. 14). The prevailing rule is that the right of a plaintiff to have his title to land quieted, as against one who is asserting some adverse claim or lien thereon, is not barred while the plaintiff or his grantors remain in actual possession of the land, claiming to be owners thereof, the reason for this rule being that while the owner in fee continues liable to an action, proceeding, or suit upon the adverse claim, he has a continuing right to the aid of a court of equity to ascertain and determine the nature of such claim and its effect on his title, or to assert any superior equity in his favor. He may wait until his possession is disturbed or his title is attacked before taking steps to vindicate his right. But the rule that the statute of limitations is not available as a defense to an action to remove a cloud from title can only be invoked by a complaint when he is in possession. One who claims property which is in the possession of another must, it seems, invoke his remedy within the statutory period. (44 Am. Jur., p. 47) Wherefore, the judgment appealed from is affirmed. Costs against appellants. So ordered. Paras, C.J., Bengzon, Montemayor, Reyes, A., Bautista Angelo, Labrador, Concepcion, Endencia, and Felix, JJ., concur. Republic of the Philippines SUPREME COURT Manila EN BANC G.R. No. L-9197 October 22, 1914

HERMOGENA SANTOS, plaintiff-appellant, vs. MIGUEL ROBLEDO, ET AL., defendants-appellees. Jose Santiago for appellant. Leodegario Azarraga for appellees.

TORRES, J.: In this action to recover possession of a parcel of land with three light-material warehouses and the collection of unpaid rents, together with the recovery of damages to the amount of P1,200, the plaintiff appealed by a bill of exceptions from the judgment rendered on May 6, 1913, by the Honorable Charles S. Lobingier, judge, wherein he held that the plaintiff had not established any right to the relief sought and therefore adjudged that she take nothing by her complaint and that the first two defendants recover their costs. On March 5, 1913, counsel for Hermogena Santos filed a complaint in the Court of First Instance of this city and alleged therein that on March 1, 1905, Santiago Herrera and his wife Basilia Tolentino, in an instrument ratified before a notary, deed to the plaintiff a building lot with three warehouses, the boundaries and area of the said land being described in the complaint; that the plaintiff entered into possession of this property on the date above mentioned and the same without opposition or interruption of any sort and collected the rents therefrom until January 28, 1913; that on this date, Miguel Robledo, who was found to be a creditor of the said

Santiago Herrera, prayed for the execution of the said judgment; that at the instigation of Robledo, the sheriff proceeded to seize the said lot and, after the publication of notice, sold the same at public auction on the 17th of the following month of February; that, although the plaintiff had intervened and prayed for the recall of the writ for the reason that the lot levied upon was her property, the sheriff, under security of the bond furnished by the creditor Robledo, sold the said lot and Robledo himself purchased it; that the plaintiff was thus deprived of her property and of the rents accruing therefrom from the said 28th day of January up to the date of the complaint, and that she had suffered considerable damage because she had missed the opportunity to sell the property for P1,200, the price she had been offered for it. Counsel therefore prayed that judgment be rendered for the plaintiff ordering the defendant immediately to return and deliver to her the said lot, together with the uncollected rents therefrom, and to pay an indemnity of P1,200 and the costs. Counsel for the deputy sheriff of Manila alleged that his client had no personal interest in the subject matter of the complaint nor in the remedies sought; that he only took part in the action brought by Robledo against Herrera for the purpose of executing the orders of the court; that consequently he levied on the said lot and its three warehouses belonging to Santiago Herrera and subsequently, on February 17, 1913, sold them; that the lot was awarded to Robledo, the only bidder, for the sum of P1,000, and that the plaintiff, by an affidavit dated February 5, claimed the said property as the owner thereof, but, by reason of the bond furnished by Robledo, he, the deputy sheriff, proceeded to sell the property, since, it was recorded in the property registry in the name of Santiago Herrera in August, 1901, as being free of all encumbrance and that on January 28, 1913, a record was made of the levy thereon. Said counsel therefore prayed that the defendant be absolved from the complaint, with the costs against the plaintiff. The other defendants, Robledo and Azarraga, alleged, among other things, that the plaintiff had no legal capacity to sue and that her action was improper; that, by a judgment rendered in case No. 9874, Santiago Herrera was ordered to pay to his creditor, Miguel Robledo, the sum of P1,170, with legal interest thereon at the rate of six per cent per annum from September 24, 1912, and the costs of the suit, and that, in executing the said judgment, the deputy sheriff of Manila, on January 28, 1913, levied upon the said lot, which was exclusively owned by the debtor Herrera, and upon all its improvements; that the first inscription of the aforementioned property was recorded in the property registry in August, 1901, in the name of Santiago Herrera, wherein it appears as being free of all charge and encumbrance; that on the 28th of the said month of January, 1913, the writ of execution on the aforementioned land which, together with the three warehouses thereon, was sold at public auction and knocked down to the said Robledo on February 17, 1913, for the sum of P1,000 Philippine currency, was recorded in the registry and the proper certificate of sale was issued to him by the sheriff; that the new owner, Robledo, then took possession of the property in good faith and was now peaceably holding the same; that the conveyance made to the plaintiff by Herrera and his wife Tolentino was effected by them with intent to defraud their creditors and could in no wise prevail as against the creditor Robledo, and that for this reason, the latter had suffered losses and damages to the amount of P200. These defendants therefore prayed be absolved from the complaint and that the said Hermogena Santos be ordered to pay them P200 as losses and damages, and to pay the costs. Counsel for Miguel Robledo, in a supplementary answer dated April 21, 1913, set forth that, subsequently to his original answer, Santiago Herrera sold and conveyed to him on March 24 of the same year, through a public instrument and for the sum of P85, Herrera's right to redeem the property in litigation within the period of one year counting from the 17th of February, 1913, the date of the sale of the lot at public auction; and prayed that his supplementary answer be admitted in accordance with section 105 of the Code of Civil Procedure. After a hearing of the case and the evidence submitted by both parties, the court rendered the judgment aforementioned. The question raised in the claim made by the plaintiff, Hermogena Santos, is whether or not the levy and sale of the lot and improvements in dispute, effected on petition of the creditor, Miguel Robledo, can prevail

against the right of ownership she acquired by virtue of the gift made in her favor by the spouses Santiago Herrera and Basilia Tolentino. If the said lot and its improvements actually belonged to Hermogena Santos, and not to the debtor, Santiago Herrera, then it is unquestionable that the land could not be levied upon for the payment of a debt of the latter that in no wise concerned Hermogena Santos, as the latter was not a debtor of Miguel Robledo on February 17, 1913, for the sum of P1,000 Philippine currency, was recorded in the registry and the proper certificate of sale was issued to him by the sheriff; that the new owner, Robledo, then took possession of the property in good faith and was now peaceably holding the same; that the conveyance made to the plaintiff by Herrera and his wife Tolentino was effected by them with intent to defraud their creditors and could in no wise prevail as against the creditor Robledo, and that for this reason, the latter had suffered losses and damages to the amount of P200. These defendants therefore prayed that the plaintiff's petition be denied; that the said Hermogena Santos be ordered to pay them P200 as losses and damages, and to pay the costs. Counsel for Miguel Robledo, in a supplementary answer dated April 21, 1913, set forth that, subsequently to his original answer, Santiago Herrera sold and conveyed to him on March 24 of the same year, through a public instrument and for the sum of P85, Herrera's right to redeem the property in litigation within the period of one year counting from the 17th of February, 1913, the date of the sale of the lot at public auction; and prayed that his supplementary answer be admitted in accordance with section 105 of the Code of Civil Procedure. After a hearing of the case and the evidence submitted by both parties, the court rendered the judgment aforementioned. The question raised in the claim made by the plaintiff Hermogena Santos, is whether or not levy and sale of the lot and improvements in dispute, effected on petition of the creditor, Miguel Robledo, can prevail against the right of ownership she acquired by virtue of the gift made in her favor by the spouses Santiago Herrera and Basilia Tolentino. If the said lot and its improvements actually belonged to Hermogena Santos, and not to the debtor, Santiago Herrera, then it is unquestionable that the land could not be levied upon for the payment of a debt of the latter that in no wise concerned Hermogena Santos, as the latter was not a debtor of Miguel Robledo. The property acquired by the plaintiff in the said land is derived from the gift made to her by Santiago Herrera and his wife Basilia Tolentino in an instrument ratified before the notary Eugenio de Lara on March 1, 1905 (Exhibit A). In this instrument, after reciting that the contracting parties had mutually agreed to live separately and to divide the conjugal partnership property therein inventoried and appraised at P2,494, the said spouses state, in paragraph 3, that they convey to the girl Hermogena Santos the said lot with its warehouse, item No. 4 of the inventory, with the express condition that the proceeds or rents derived from the lot and warehouse so conveyed should be collected by the wife Basilia Tolentino as long as she lived. It was also provided therein, among other things, that the value of the lot and its warehouse should be deducted from the total value of the conjugal property which was to be divided between the two spouses and which amounted to P2,200, a sum that divided equally, would amount to P1,100 each. According to article 618 of the Civil Code, a gift is an act of liberality by which a person disposes gratuitously of a thing in favor of another, who accepts it. Herrera and his wife Tolentino freely and gratuitously disposed of the said lot and its improvements in favor of the plaintiff; but it does not appear, however, that the latter accepted the gift in the manner provided by law. Article 633 of the same code prescribes:

In order that a gift of real property may be valid it shall be made in a public instrument, stating therein in detail the property bestowed as a gift and the amount of the charges, which the donee must satisfy. The acceptance may be made in the same instrument bestowing the gift or in a different one; but it shall produce no effect if no made during the life of the donor. If made in a different instrument the acceptance shall be communicated to the donor in an authentic manner, and this proceeding shall be recorded in both instruments. The said instrument (p. 21 of the record) sets out the conveyance of the lot by th the donor to the donee, but the acceptance of that gift by the plaintiff Santos does not appear therein and the record reveals no other instrument that evidences such acceptance and notifies the donors thereof in an authentic manner. Therefore, the provisions of the law not having been complied with, the gift was invalid and could have no effect whatever, for the Civil Code prescribes, in article 629, that a gift does not bind the donor nor produce any effect until it has been formally accepted by the donee in accordance with law. Because of this essential defect, the gift was not perfected and the donee could not acquire any real and positive right in the warehouse (land) and its improvements. So important is the donee's acceptance with the notice to the donors of his acceptance in order that the latter may have full force and effect, that when the instrument which has been drawn up is recorded in the registry of property, the document that evidences the acceptance if this has not been made in the deed of gift should also be recorded. And in one or both documents, as the case may be, the notification of the acceptance as formally made the donor or donors should be duly set forth. These requisites, definitely prescribed at law, have not been complied with, and no proof that they have appears in the record.1awphi1.net Neither does it appear that Exhibit A, the instrument conveying the gift, was recorded in the property registry, an essential requisite of article 23 in connection with article 2 of the Mortgage Law to make it effective against third persons, but still supposing it were there recorded, even improperly, it could not produce any legal effect, inasmuch as it does not show the donee's acceptance and the proper notification thereof to the donors. Therefore, with these defects, even if the said instrument of gift had been recorded, it could not in any way legally affect Robledo's rights. So, the gift in question, as specified in Exhibit A an instrument that was executed for other purposes, to wit, conjugal separation and division of conjugal property between the parties, could not transmit to the donee any positive and effective right in the lot in litigation, to the prejudice of the donors' creditor. Furthermore, on March 1, 1905, when the said instrument was executed, Santiago Herrera had owed Miguel Robledo, from March 12, 1903, the sum of P1,170, with interest at the rate of 6 per cent per annum. For the collection of this debt the creditor had to bring suit against the debtor. As the record does not show that the donors had reserved sufficient funds or property to satisfy the debt, nor that they possessed property other than the lot given away by them, we must conclude that the conveyance or gift made to the plaintiff by the spouses Herrera and Tolentino was for the purpose of defrauding the creditor, Miguel Robledo, by preventing him from collecting his credit. Article 643 of the Civil Code prescribes: Should there be no stipulation as to the payment of debts, the donee shall be liable for them only if the gift has been made to defraud creditors.

The gift shall always be presumed as having been made to defraud creditors when, at the time of bestowing it, the donor has not reserved to himself property sufficient to pay the debts contracted prior thereto. Although some boats, a fishing device with nets, a light-material warehouse erected on another's land, and the lot in litigation, are listed in the inventory contained in the said instrument, the fact is that when demand was made upon the debtor for the payment of his debt to Robledo, he was unable to pay it, and the said lot was levied upon and afterwards sold at public auction in satisfaction thereof. The indebtedness was contracted by Santiago Herrera in 1903, during his marriage and before he and his wife gave the said lot away; consequently, its payment is a charge against the conjugal partnership. (Civil Code, art. 1408.) Santiago Herrera was the lawful and absolute owner of the lot in litigation and his ownership is shown to have been recorded in the property registry of Manila, Tondo section, first inscription, No. 1340, in August, 1901. The entry discloses that the property was then free of all charge and encumbrance and that, on January 28, 1913, a note was therein made of the writ of execution issued against the said lot and warehouses, issued in the proceeding instituted by the creditor Robledo against the debtor Herrera, the unquestionable owner of the property levied upon. Moreover, the right of the judgment debtor to redeem the lot in litigation was purchased by the creditor Robledo for P85 on February 17, 1913, the date of the sale of the land at public auction. The appellant alleges that as she was a minor, her mother, Gregoria Tolentino, appeared before the notary to accept the said gift in the name of the appellant, and that since the execution of the instrument making such bestowal her mother has been in possession of the donated land and has been collecting the rents from the tenants occupying it. This allegation is unfounded and cannot be sustained. The instrument Exhibit A does not show that the plaintiff's mother appeared or that she accepted the said gift in the name of the plaintiff. Her verbal acceptance, if made, would not be sufficient, since the law requires that the acceptance shall be in writing either in a separate public instrument or in the instrument whereby the gift is made, requirement which do not appear to have been fulfilled in the present case. Neither is it true that the plaintiff was in possession and collected the rents of the lot in question from the tenants who were occupying it. The strangest and most peculiar feature of this case is the testimony given by Santiago Herrera himself, the husband of Basilia Tolentino, these two being the donors. This witness stated under oath of the instrument Exhibit A, although he had not read this document, because he did not know how to read and was only able to write his own name thereon; that at the time the instrument was executed, the notary Lara merely told him that the paper he was about to sign referred to the conjugal separation, and that Lara did not tell him that a gift of the lot was therein made to Hermogena Santos; that, according to the terms of the separation agreed upon between himself and his wife, he conveyed to the latter his fishing tackle and was to keep the real estate for himself; that the said tackle was then worth P300 and the lot P500; that, upon his separating from his wife on account of her infidelity, he received no money from her, and denied having received any sum whatever from the hands of Eugenio de Lara; that he did not remember having signed the instrument relative to the appointment of the property, the payment to him of P500 and the gift of the lot; that he identified his signature at page 24 of the record, but not that on page 25; that a daughter of his had by his wife was still living and that it was the latter who collected the rents of the said lot. The certificate of baptism of the girl Catalina, the daughter of the said spouses, was exhibited at the trial (Exhibit 3, p. 40 of the record). This testimony and the contents of the said instrument, if we except from this latter the agreements relating to the conjugal separation and the division of the partnership property, give rise to the presumption that this instrument with regard to all else therein contained was framed by the direction of the woman Basilia

Tolentino without the knowledge or consent of her husband, Santiago Herrera, especially with respect to the gift of the lot, the subject matter of the claim presented by the donee.lawphil.net However, leaving aside these circumstantial details which cast doubt upon a large part of the said instrument, and restricting ourselves to the matter of the gift of the lot in litigation, it is unquestionable that this gift is null and void in itself and can produce no effect whatever, since it fails to comply with the requirements of article 633 of the Civil Code, and because the said gift was made without proper consideration and for the purpose of defrauding the defendant creditor, whom it is to be presumed the donors intended seriously to prejudice when bestowing the property upon the plaintiff (arts. 643 and 1297, Civil Code). This intended injury to the defendant would be iniquitously consummated, should the plaintiff obtain a decision contrary to the judgment appealed from, which, moreover, is in accordance with the law and the merits of the case. Therefore, in consideration of the foregoing reasons whereby the errors assigned to the lower court have been refuted, the said judgment should be and is hereby affirmed, and the defendants are absolved from the plaintiff, with the costs against the appellant. Arellano, C.J., Johnson, Moreland and Araullo, JJ., concur. Republic of the Philippines SUPREME COURT Manila EN BANC G.R. No. L-803 August 27, 1948

JOSE P. SANDEJAS, plaintiff-appellant, vs. ZACARIAS C. ROBLES, ELENA C. VDA. DE ROBLES and ROSARIO Y. SINGSON, defendantsappellees. Benjamin H. Tirol, Corazon C. Miraflores and Orlando M. Jesena for appellant. W. E. Greenbaum and Luis G. Hofilena for appellee Rosario Y. Singson. M. F. Zamora and Jose C. Robles for appellee Zacarias C. Robles and Elena C. Vda. de Robles. FERIA, J.: This is an appeal from an order of the Court of First Instance of Iloilo dismissing the plaintiff's action upon motion of the defendant on the ground that it is barred by prior judgment. The pertinent facts alleged in the complaint to which a motion to dismiss on the ground that the cause of action is barred by a prior judgment is filed, are those relating to the cause of action and the parties, because if they are the same as the cause of action and the parties in the prior judgment, or though the parties are different they represent the same interest, and the court rendering the prior judgment had jurisdiction over the subject matter and the parties, the subsequent action is barred by the prior judgment and should be dismissed. In the present appeal, there is no question that the parties in the present and prior action are the same or represent the same interest, and that the cause of action in both are the same, that is, the performance or nonperformance of the terms and conditions of a contract of sale for the enforcement or resolution thereof. They only question to be determined is whether the Court which has rendered the former judgment had jurisdiction over the subject matter and the parties.

The appellants contend that the lower erred in upholding the validity of the judgment of the Court of First Instance of Iloilo during the Japanese occupation, because: (1) "The said court had no jurisdiction to try civil case No. 21, much less to render the decision in question on October 2, 1944;" and (2) "That granting for the sake of argument that the puppet Court of First Instance of Iloilo had jurisdiction, yet such decision was rendered after having deprived plaintiff of his day in court and is therefore in violation of the due process clause of the Constitution. As to the first question, the appellants do not question the ruling of this Supreme Court on the validity of the judgments rendered by the courts established in these Islands during the Japanese occupation laid down in Co Kim Cham vs. Valdez Tan Keh,1 Off. Gaz., 779; but they contend that, as the three parcels of land involved or sold in the contract of the sale resolved by the prior judgment were located in the Municipality of Passi, Province of Iloilo, and "the puppet Republic of the Philippines since the middle of the month of September, 1944, could no longer assert its authority over the major portion of the territory of Iloilo including the Municipality of Passi," then under the possession and control of the Panay guerrilla forces, the Court of First Instance of Iloilo which rendered the prior judgment had no jurisdiction over the res or the property because the action was quasi in rem, and therefore the said judgment is null and void. This contention is premised on the wrong assumption that the action for the resolution of a contract of sale of a real property is an action quasi in rem. The action instituted by the appellees to resolve the contract of sale of said parcels of land, is in personam and not quasi in rem. This Court quoted with approval in Grey Alba vs. Dela Cruz, 17 Phil., 61-62, the following definition of an action in personam: If the technical object of the suit is to establish a claim against some particular person, with a judgment which generally, in theory at least, binds his body, or to bar some individual claim or objection, so that only certain persons are entitled to be heard in defense, the action is in personam, although it may concern the right to or possession of a tangible thing. If, on the other hand, the object is to bar indifferently all who might be minded to make an objection of any sort against the right sought to be established, and if anyone in the world has a right to be heard on the strength of alleging facts which, if true, show an inconsistent interest, the proceeding is in rem. (Tyler vs. Judges, supra.). According to American Jurisprudence, Vol. I page 435, "An action in personam has for its object a judgment against the person, as distinguished from a judgment against property, to determine its status. Whether a proceeding is in rem or in personam is determined by its nature and purpose, and by these only. A proceeding in personam is a proceeding to enforce personal rights and obligations brought against the person and based on jurisdiction of the person, although it may involve his right to, or the exercise of ownership of, specific property, or seek to compel him to control or dispose of it in accordance with the mandate of the court. In the case of Banco Espanol-Filipino vs. Palanca, 37 Phil., 921, we held that "The action quasi in rem differs from the true action in rem in the circumstances that in the former an individual is named as defendant, and the purpose of the proceeding is to subject his interest therein to the obligation or lien burdening the property. All proceedings having for their sole object the sale or other disposition of the property of the defendant, whether by attachment, foreclosure, or other form of remedy, are in a general way thus designated. The judgment entered in these proceedings is conclusive only between the parties. With respect to the second question, from the prior judgment marked as Exhibit A of the motion to dismiss, it appears that the appellants had submitted themselves to the jurisdiction of the Court of First Instance of Iloilo by filing their answers to the complaint through their Atty. Benjamin H. Tirol, the same attorney who represents them now; that they were notified of the date set for the hearing of the action, but when the case was called for trial on September 29, 1944, their attorney asked and obtained permission from the court to withdraw his appearance as attorney for the appellants stating as ground therefor that it was difficult to communicate with his

clients, who went to Arevalo, a suburb of and distant of about six or seven kilometers from the Iloilo City, capital of the Province of Iloilo; that to give the appellants opportunity to be heard, the hearing was postponed and set on the afternoon of the same date; and that as they did not appear on the afternoon the case was heard and judgment was rendered on October 2, 1944, declaring the resolution of the contract between the parties and ordering the appellees to return to the appellants the sum of P5,723.60, received by the former from the latter as payment on account of the sum of P35,000 agreed upon as purchase price. And, according to the allegations in appellants' complaint, on October 25, 1944, the appellants filed a motion for reconsideration which was denied by the court, and when they tried to appeal from the decision the court denied the appeal on November 23, 1944, and declared the judgement final and executory; and, on November 29, the appellants filed a motion for reconsideration of the order denying the appeal, and up to the filing of the complaint in the present case no resolution of the motion has been received by the appellants. In view of the foregoing facts set forth in the decision Exhibit A and not contradicted or denied by the appellants, which show that the absence from the trial of the appellants was due to their own fault, appellants' contention that they were deprived of their day in court is untenable. The appeal is therefore dismissed. So ordered. Paras, Pablo, Bengzon, Briones, Padilla and Tuason, JJ., concur.

Separate Opinions PERFECTO, J., dissenting: We dissent: We are of the opinion that the appealed decision should be reversed and the lower court ordered to proceed with the case and render decision on the merits. This stand is based on the reasons stated in our opinion in Co Kim Cham vs. Valdez Tan Keh,141 Off. Gaz., 779.