Author: Earvin James M.

Atienza
REALTY SALES ENTERPRISE, INC. and
MACONRDAY FARMS, INC. v. INTERMEDIATE
APPELLATE COURT, ET AL. (1987)
Petitioner/Appellant: Realty Sales Enterprise, Inc. and Macondray Farms, Inc.
Respondent/Appellee: INTERMEDIATE APPELLATE COURT (Special
Third Civil Cases Division), HON. RIZALINA BONIFACIO VERA, as Judge,
Court of First Instance of Rizal, Branch XXIII, MORRIS G. CARPO, QUEZON
CITY DEVELOPMENT AND FINANCING CORPORATION, and
COMMISSIONER OF LAND REGISTRATION
Ponente: Cortes, J.

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

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

An innocent purchaser for value is one who bought the property
relying on the certificate of title of the registered owner without notice
that some other person has a right to or interest in such property and
pays a full price for the same.

It is settled that one is considered an innocent purchaser for value
only if, relying on the certificate of title, he bought the property from
the registered owner, "without notice that some other person has a
right to, or interest in, such property and pays a full and fair price for
the same, at the time of such purchase, or before he has notice of
the claim or interest of some other persons in the property." (Cui v.
Henson, 51 Phil. 606 [1928], Fule v. De Legare, 117 Phil. 367 [1963],
7 SCRA 351.) He is not required to explore farther than what the
Torrens title upon its face indicates. (Fule v. De Legare supra.).

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

x x x [I]t must be emphasized that the action filed by Carpo against
Realty is in the nature of an action to remove clouds from title to real
property. By asserting its own title to the property in question and
asking that Carpo's title be declared null and void instead, and by
filing the third-party complaint against QCDFC, Realty was similarly
asking the court to remove clouds from its own title. Actions of such
nature are governed by Articles 476 to 481, Quieting of Title, Civil
Code (Republic Act No. 386), and Rule 64, Declaratory Relief and
Similar Remedies, Rules of Court. Suits to quiet title are not
technically suits in rem, nor are they, strictly speaking, in
personam, but being against the person in respect of the res, these
proceedings are characterized as quasi in rem. (McDaniel v. McElvy,
108 So. 820 [1926].) The judgment in such proceedings is conclusive
only between the parties. (Sandejas v. Robles, 81 Phil. 421 [1948]).

FACTS:

1. Two (2) parcels of land are in dispute for allegedly being covered by
certificates of title and registration decrees under three (3) different
entities, namely Morris Carpo, Quezon City Devt. and Financing
Corp. (QCDF) and Realty Sales Enterprise, Inc. (Realty). Thus,
Carpo instituted a complaint before the CFI under Respondent Judge
Vera against Realty and Macondray Farms, Inc. (Macondray) for the
declaration of nullity of its corresponding certificate of title, on the
ground that the same was issued by a court not sitting as a land
registration court but one of ordinary jurisdiction, and that the judge
Author: Earvin James M. Atienza
had no authority since the records which was made basis of the title
was lost during the war and is pending reconstitution;
2. In reply, Realty denied the allegations and countered that the Reyes
Court which issued its title was performing a purely ministerial duty,
and that it was Carpos title that was null for having been issued
despite being covered by another title. Realty further impleaded
through a third-party complaint QCDF for nullity of its own title
covering the same subject properties;
3. In reply, QCDF filed a fourth-party complaint against Alvendia, et al.
being the source of its own title, praying therefor for the
reimbursement of its purchase price paid for the said properties.
However, the same was dismissed for QCDFs lack of interest in
prosecuting the case;
4. On January 20, 1981, the trial court rendered judgment annulling
Realtys and QCDFs titles to the property in favor of Carpo. The
same was appealed before the High Court by Realty, but the latter
resolved to refer the case the Court of Appeals for determination of
the merits; and
5. The CA in turn set aside the trial courts decision and issued a new
one in favor of Realty. However, the case was subjected to the
reorganization of the Judiciary, from which resulted a re-raffling of
the case and later on, a reversal of the prior decision through
Carpos MR. Further, the change from CA to IAC yielded a change in
Justices assigned to the case.

ISSUES:

1. WON the Special Third Civil Cases Division was conferred with
jurisdiction to try and render a decision of final resolution for the
Court;
2. WON a Petition for Certiorari was the proper remedy in the case;
3. WON Carpos title is valid as against Realtys and QCDFs, since
Realtys title was issued when the records relative thereto was
undergoing reconstitution;
4. WON Carpo was an innocent purchaser for value; and
5. WON QCDF was properly impleaded to the case.

PROVISION(S): Secs. 4 & 8, BP 129; Art. 527, New Civil Code; Sec. 4, Rule
74, Rule 65, and Rule 45 of the Rules of Court; Act No. 3110; Act No. 496;
Act No. 2347;

RULING + RATIO:
1. Yes.
A reading of the law will readily show that what BP 129 prohibits is
appointment from one class of divisions to another class. For
instance, a Justice appointed to the Criminal Cases Divisions cannot
be assigned to the Civil Cases Divisions. Justice Bidin was
reassigned from the Fourth Civil Cases Division, while Justice
Camilon was reassigned from the Second Civil Cases Division. The
two therefore come from the same class of divisions to which they
were appointed. Thus, the reassignment of Justices Bidin and
Camilon to form the Special Third Civil Cases Division in view of the
voluntary inhibition of two (2) "regular" members, is still within legal
bounds. x x x
2. Yes.
There are two modes by which cases decided by the then Courts of
First Instance in their original jurisdiction may be reviewed: (1) an
ordinary appeal either to the Supreme Court or to the Court of
Appeals, or (2) an appeal on certiorari to the Supreme Court. To the
latter category belong cases in which only errors or questions of law
are involved. Each of these modes have different procedural
requirements. x x x Realty originally filed a Petition for certiorari with
this Court docketed as G.R. No. L-56471 questioning the decision of
the Vera Court, and asking that it be allowed to appeal directly to this
Court as it was raising only questions of law. However, this Court
referred the case to the Court of Appeals "in aid of its appellate
jurisdiction for proper determination on the merits of the appeal." It
may thus be observed that even this Court treated the petition first
filed as an appeal, and not as a special civil action for certiorari. After
as, a petition for review by certiorari is also a form of appeal. (People
v. Resuello L-30165, August 22, 1969, 69 SCRA 35). x x x Thus it
was error for the IAC to hold that the Decision of the Vera Court
"cannot be passed upon anymore in the Court of Appeals decision
because appeal and not certiorari was the proper remedy." Precisely,
petitioners brought the case to this Court on appeal, albeit by way of
certiorari;
3. No.
Applying the doctrine in the Nacua decision to LRC Case No.
657, the parties thereto did not have to commence a new action
but only had to go back to the preceding stage where records are
available. The land registration case itself remained pending and
the Court of First Instance of Rizal continued to have jurisdiction
over it. The records were destroyed at that stage of the case
when an that remained to be done was the ministerial duty of the
Land Registration Office to issue a decree of registration (which
would be the basis for the issuance of an Original Certificate of
Title) to implement a judgment which had become final
(See Government v. Abural, 39 Phil. 996 [1919] at 1002; Sta. Ana
v. Menla, 111 Phil. 947 [1961], 1 SCRA 1294; Heirs of Cristobal
Marcos v. De Banuvar, 134 Phil. 257 [1968], 26 SCRA 316).
Author: Earvin James M. Atienza
There are however authentic copies of the decisions of the CFI
and the Court of Appeals adjudicating Lots 1, 2 and 3 of Plan
Psu-47035 to Estanislao Mayuga. Moreover, there is an official
report of the decision of this Court affirming both the CFI and the
CA decisions. A final order of adjudication forms the basis for the
issuance of a decree of registration.;
4. No.
x x x Even Carpo himself cites no factual proof of his being an
innocent purchaser for value. He merely relies on the presumption of
good faith under Article 527 of the Civil Code. x x x Carpo bought the
disputed property from the Baltazars, the original registered owners,
by virtue of a deed executed before Iluminada Figueroa, Notary
Public of Manila dated October 9, 1970. However, it was only later,
on October 13, 1970, that the decree of registration in favor of the
Baltazars was transcribed in the Registration Book for the Province
of Rizal and that an Original Certificate of Title was issued. It was on
the same day, October 13, 1970, that the deed evidencing the sale
between the Baltazars and Carpo was inscribed in the Registry of
Property, and the Original Certificate of Title was cancelled as
Transfer Certificate of Title No. 303961 in the name of Carpo was
issued. x x x Thus, at the time of sale there was as yet no Torrens
title which Carpo could have relied upon so that he may qualify as an
innocent purchaser for value. Not being a purchaser for value and in
good faith, he is in no better position than his predecessors-in-
interest;
5. Yes.
Moreover, even as this Court agrees with QCDFC that the third-party
complaint filed against it by Realty was procedurally defective in that
the relief being sought by the latter from the former is not in respect
of Carpo's claim, policy considerations and the factual circumstances
of the case compel this Court now to rule as well on QCDFC's claim
to the disputed property. ** To rule on QCDFC's claim now is to
avoid multiplicity of suits and to put to rest these conflicting claims
over the property. After an, QCDFC was afforded fun opportunity,
and exercised its right, to prove its claim over the land. It presented
documentary as well as testimonial evidence. It was even permitted
to file a fourth-party complaint which, however, was dismissed since
it failed to prosecute its case.

DISPOSITION: Decision upholding the title of Realty Sales Enterprise, Inc.
was AFFIRMED.