ISLAMIC DIRECTORATE OF THE PHILIPPINES, MANUEL F.

PEREA and SECURITIES & EXCHANGE

COMMISSION, petitioners, vs. COURT OF APPEALS and IGLESIA NI CRISTO, respondents.
HERMOSISIMA, JR., J.:
The subject of this petition for review is the Decision of the public respondent Court of Appeals, 1 dated
October 28, 1994, setting aside the portion of the Decision of the Securities and Exchange Commission
(SEC, for short) in SEC Case No. 4012 which declared null and void the sale of two (2) parcels of land in
Quezon City covered by the Deed of Absolute Sale entered into by and between private respondent
Iglesia Ni Cristo (INC, for short) and the Islamic Directorate of the Philippines, Inc., Carpizo Group, (IDP,
for short).
The following facts appear of record.
Petitioner IDP-Tamano Group alleges that sometime in 1971, Islamic leaders of all Muslim major tribal
groups in the Philippines headed by Dean Cesar Adib Majul organized and incorporated the ISLAMIC
DIRECTORATE OF THE PHILIPPINES (IDP), the primary purpose of which is to establish an Islamic Center
in Quezon City for the construction of a "Mosque (prayer place), Madrasah (Arabic School), and other
religious infrastructures" so as to facilitate the effective practice of Islamic faith in the area. 2
Towards this end, that is, in the same year, the Libyan government donated money to the IDP to
purchase land at Culiat, Tandang Sora, Quezon City, to be used as a Center for the Islamic populace. The
land, with an area of 49,652 square meters, was covered by two titles: Transfer Certificate of Title Nos.
RT-26520 (176616) 3 and RT-26521 (170567), 4 both registered in the name of IDP.
It appears that in 1971, the Board of Trustees of the IDP was composed of the following per Article 6 of
its Articles of Incorporation:
Senator Mamintal Tamano 5
Congressman Ali Dimaporo
Congressman Salipada Pendatun
Dean Cesar Adib Majul
Sultan Harun Al-Rashid Lucman
Delegate Ahmad Alonto
Commissioner Datu Mama Sinsuat
Mayor Aminkadra Abubakar 6

According to the petitioner, in 1972, after the purchase of the land by the Libyan government in the
name of IDP, Martial Law was declared by the late President Ferdinand Marcos. Most of the members of
the 1971 Board of Trustees like Senators Mamintal Tamano, Salipada Pendatun, Ahmad Alonto, and
Congressman Al-Rashid Lucman flew to the Middle East to escape political persecution.
Thereafter, two Muslim groups sprung, the Carpizo Group, headed by Engineer Farouk Carpizo, and the
Abbas Group, led by Mrs. Zorayda Tamano and Atty. Firdaussi Abbas. Both groups claimed to be the
legitimate IDP. Significantly, on October 3, 1986, the SEC, in a suit between these two contending
groups, came out with a Decision in SEC Case No. 2687 declaring the election of both the Carpizo Group
and the Abbas Group as IDP board members to be null and void. The dispositive portion of the SEC
Decision reads:
WHEREFORE, judgment is hereby rendered declaring the elections of both the petitioners 7 and
respondents 8 as null and void for being violative of the Articles of Incorporation of petitioner
corporation. With the nullification of the election of the respondents, the approved by-laws which they
certified to this Commission as members of the Board of Trustees must necessarily be likewise declared
null and void. However, before any election of the members of the Board of Trustees could be
conducted, there must be an approved by-laws to govern the internal government of the association
including the conduct of election. And since the election of both petitioners and respondents have been
declared null and void, a vacuum is created as to who should adopt the by-laws and certify its adoption.
To remedy this unfortunate situation that the association has found itself in, the members of the
petitioning corporation are hereby authorized to prepare and adopt their by-laws for submission to the
Commission. Once approved, an election of the members of the Board of Trustees shall immediately be
called pursuant to the approved by-laws.
SO ORDERED. 9
Neither group, however, took the necessary steps prescribed by the SEC in its October 3, 1986 Decision,
and, thus, no valid election of the members of the Board of Trustees of IDP was ever called. Although
the Carpizo Group 10 attempted to submit a set of by-laws, the SEC found that, aside from Engineer
Farouk Carpizo and Atty. Musib Buat, those who prepared and adopted the by-laws were not bona fide
members of the IDP, thus rendering the adoption of the by-laws likewise null and void.
On April 20, 1989, without having been properly elected as new members of the Board of Trustee of
IDP, the Carpizo Group caused to be signed an alleged Board Resolution 11 of the IDP, authorizing the
sale of the subject two parcels of land to the private respondent INC for a consideration of
P22,343,400.00, which sale was evidenced by a Deed of Absolute Sale 12 dated April 20, 1989.
On May 30, 1991, the petitioner 1971 IDP Board of Trustees headed by former Senator Mamintal
Tamano, or the Tamano Group, filed a petition before the SEC, docketed as SEC Case No. 4012, seeking
to declare null and void the Deed of Absolute Sale signed by the Carpizo Group and the INC since the
group of Engineer Carpizo was not the legitimate Board of Trustees of the IDP.
Meanwhile, private respondent INC, pursuant to the Deed of Absolute Sale executed in its favor, filed an
action for Specific Performance with Damages against the vendor, Carpizo Group, before Branch 81 of
the Regional Trial Court of Quezon City, docketed as Civil Case No. Q-90-6937, to compel said group to
clear the property of squatters and deliver complete and full physical possession thereof to INC.
Likewise, INC filed a motion in the same case to compel one Mrs. Leticia P. Ligon to produce and
surrender to the Register of Deeds of Quezon City the owner's duplicate copy of TCT Nos. RT-26521 and
RT-26520 covering the aforementioned two parcels of land, so that the sale in INC's favor may be
registered and new titles issued in the name of INC. Mrs. Ligon was alleged to be the mortgagee of the
two parcels of land executed in her favor by certain Abdulrahman R.T. Linzag and Rowaida Busran-
Sampaco claimed to be in behalf of the Carpizo Group.
The IDP-Tamano Group, on June 11, 1991, sought to intervene in Civil Case No. Q-90-6937 averring, inter
alia:
xxx xxx xxx
2. That the Intervenor has filed a case before the Securities and Exchange Commission (SEC)
against Mr. Farouk Carpizo, et. al., who, through false schemes and machinations, succeeded in
executing the Deed of Sale between the IDP and the Iglesia Ni Kristo (plaintiff in the instant case) and
which Deed of Sale is the subject of the case at bar;
3. That the said case before the SEC is docketed as Case No. 04012, the main issue of which is
whether or not the aforesaid Deed of Sale between IDP and the Iglesia ni Kristo is null and void, hence,
Intervenor's legal interest in the instant case. A copy of the said case is hereto attached as Annex "A";
4. That, furthermore, Intervenor herein is the duly constituted body which can lawfully and legally
represent the Islamic Directorate of the Philippines;
xxx xxx xxx 13
Private respondent INC opposed the motion arguing, inter alia, that the issue sought to be litigated by
way of intervention is an intra-corporate dispute which falls under the jurisdiction of the SEC. 14
Judge Celia Lipana-Reyes of Branch 81, Regional Trial Court of Quezon City, denied petitioner's motion
to intervene on the ground of lack of juridical personality of the IDP-Tamano Group and that the issues
being raised by way of intervention are intra-corporate in nature, jurisdiction thereto properly
pertaining to the SEC. 15
Apprised of the pendency of SEC Case No. 4012 involving the controverted status of the IDP-Carpizo
Group but without waiting for the outcome of said case, Judge Reyes, on September 12, 1991, rendered
Partial Judgment in Civil Case No. Q-90-6937 ordering the IDP-Carpizo Group to comply with its
obligation under the Deed of Sale of clearing the subject lots of squatters and of delivering the actual
possession thereof to INC. 16
Thereupon, Judge Reyes in another Order, dated March 2, 1992, pertaining also to Civil Case No. Q-90-
6937, treated INC as the rightful owner of the real properties and disposed as follows:
WHEREFORE, Leticia P. Ligon is hereby ordered to produce and/or surrender to plaintiff 17 the owner's
copy of RT-26521 (170567) and RT-26520 (176616) in open court for the registration of the Deed of
Absolute Sale in the latter's name and the annotation of the mortgage executed in her favor by herein
defendant Islamic Directorate of the Philippines on the new transfer certificate of title to be issued to
plaintiff.
SO ORDERED. 18
On April 6, 1992, the above Order was amended by Judge Reyes directing Ligon "to deliver the owner's
duplicate copies of TCT Nos. RT-26521 (170567) and RT-26520 (176616) to the Register of Deeds of
Quezon City for the purposes stated in the Order of March 2, 1992." 19
Mortgagee Ligon went to the Court of Appeals, thru a petition for certiorari, docketed as CA-G.R No. SP-
27973, assailing the foregoing Orders of Judge Reyes. The appellate court dismissed her petition on
October 28, 1992. 20
Undaunted, Ligon filed a petition for review before the Supreme Court which was docketed as G.R. No.
107751.
In the meantime, the SEC, on July 5, 1993, finally came out with a Decision in SEC Case No. 4012 in this
wise:
1. Declaring the by-laws submitted by the respondents 21 as unauthorized, and hence, null and
void.
2. Declaring the sale of the two (2) parcels of land in Quezon City covered by the Deed of Absolute
Sale entered into by Iglesia ni Kristo and the Islamic Directorate of the Philippines, Inc. 22 null and void;
3. Declaring the election of the Board of Directors, 23 of the corporation from 1986 to 1991 as null
and void;
4. Declaring the acceptance of the respondents, except Farouk Carpizo and Musnib Buat, as
members of the IDP null and void.
No pronouncement as to cost.
SO ORDERED.
Private respondent INC filed a Motion for Intervention, dated September 7, 1993, in SEC Case No. 4012,
but the same was denied on account of the fact that the decision of the case had become final and
executory, no appeal having been taken therefrom. 25
INC elevated SEC Case No. 4012 to the public respondent Court of Appeals by way of a special civil
action for certiorari, docketed as CA-G.R SP No. 33295. On October 28, 1994, the court a quo
promulgated a Decision in CA-G.R. SP No. 33295 granting INC's petition. The portion of the SEC Decision
in SEC Case No. 4012 which declared the sale of the two (2) lots in question to INC as void was ordered
set aside by the Court of Appeals.
Thus, the IDP-Tamano Group brought the instant petition for review, dated December 21, 1994,
submitting that the Court of Appeals gravely erred in:
1) Not upholding the jurisdiction of the SEC to declare the nullity of the sale;
2) Encouraging multiplicity of suits; and
3) Not applying the principles of estoppel and laches. 26
While the above petition was pending, however, the Supreme Court rendered judgment in G.R. No.
107751 on the petition filed by Mrs. Leticia P. Ligon. The Decision, dated June 1, 1995, denied the Ligon
petition and affirmed the October 28, 1992 Decision of the Court of Appeals in CA-G.R. No. SP-27973
which sustained the Order of Judge Reyes compelling mortgagee Ligon to surrender the owner's
duplicate copies of TCT Nos. RT-26521 (170567) and RT-26520 (176616) to the Register of Deeds of
Quezon City so that the Deed of Absolute Sale in INC's favor may be properly registered.
Before we rule upon the main issue posited in this petition, we would like to point out that our
disposition in G.R. No. 107751 entitled, "Ligon v. Court of Appeals," promulgated on June 1, 1995, in no
wise constitutes res judicata such that the petition under consideration would be barred if it were the
ease. Quite the contrary, the requisites or res judicata do not obtain in the case at bench.
Section 49, Rule 39 of the Revised Rules of Court lays down the dual aspects of res judicata in actions in
personam, to wit:
Effect of judgment. The effect of a judgment or final order rendered by a court or judge of the
Philippines, having jurisdiction to pronounce the judgment or order, may be as follows:
xxx xxx xxx
(b) In other cases the judgment or order is, with respect to the matter directly adjudged or as to any
other matter that could have been raised in relation thereto, conclusive between the parties and their
successors in interest by title subsequent to the commencement of the action or special proceeding,
litigating for the same thing and under the same title and in the same capacity;
(c) In any other litigation between the same parties or their successors in interest, that only is
deemed to have been adjudged in a former judgment which appears upon its face to have been so
adjudged, or which was actually and necessarily included therein or necessary thereto.
Section 49(b) enunciates the first concept of res judicata known as "bar by prior judgment," whereas,
Section 49(c) is referred to as "conclusiveness of judgment."
There is "bar by former judgment" when, between the first case where the judgment was rendered, and
the second case where such judgment is invoked, there is identity of parties, subject matter and cause
of action. When the three identities are present, the judgment on the merits rendered in the first
constitutes an absolute bar to the subsequent action. But where between the first case wherein
judgment is rendered and the second case wherein such judgment is invoked, there is only identity of
parties but there is no identity of cause of action, the judgment is conclusive in the second case, only as
to those matters actually and directly controverted and determined, and not as to matters merely
involved therein. This is what is termed "conclusiveness of judgment." 27
Neither of these concepts of res judicata find relevant application in the case at bench. While there may
be identity of subject matter (IDP property) in both cases, there is no identity of parties. The principal
parties in G.R. No. 107751 were mortgagee Leticia P. Ligon, as petitioner, and the Iglesia Ni Cristo, as
private respondent. The IDP, as represented by the 1971 Board of Trustees or the Tamano Group, was
only made an ancillary party in G.R. No. 107751 as intervenor. 28 It was never originally a principal party
thereto. It must be noted that intervention is not an independent action, but is merely collateral,
accessory, or ancillary to the principal action. It is just an interlocutory proceeding dependent on or
subsidiary to the case between the original parties. Indeed, the IDP-Tamano Group cannot be
considered a principal party in G.R. No. 107751 for purposes of applying the principle of res judicata
since the contrary goes against the true import of the action of intervention as a mere subsidiary
proceeding without an independent life apart from the principal action as well as the intrinsic character
of the intervenor as a mere subordinate party in the main case whose right may be said to be only in aid
of the right of the original party. 30 It is only in the present case, actually, where the IDP-Tamano Group
became a principal party, as petitioner, with the Iglesia Ni Cristo, as private respondent. Clearly, there is
no identity of parties in both cases.
In this connection, although it is true that Civil Case No. Q-90-6937, which gave rise to G.R. No. 107751,
was entitled, "Iglesia Ni Kristo, Plaintiff v. Islamic Directorate of the Philippines, Defendant," 31 the IDP
can not be considered essentially a formal party thereto for the simple reason that it was not duly
represented by a legitimate Board of Trustees in that case. As a necessary consequence, Civil Case No.
Q-90-6937, a case for Specific Performance with Damages, a mere action in personam, did not become
final and executory insofar as the true IDP is concerned since petitioner corporation, for want of
legitimate representation, was effectively deprived of its day in court in said case. Res inter alios
judicatae nullum allis praejudicium faciunt. Matters adjudged in a cause do not prejudice those who
were not parties to it. 32 Elsewise put, no person (natural or juridical) shall be affected by a proceeding
to which he is a stranger. 33
Granting arguendo, that IDP may be considered a principal party in Ligon, res judicata as a "bar by
former judgment" will still not set in on the ground that the cause of action in the two cases are
different. The cause of action in G.R. No. 107751 is the surrender of the owner's duplicate copy of the
transfer certificates of title to the rightful possessor thereof, whereas the cause of action in the present
case is the validity of the Carpizo Group-INC Deed of Absolute Sale.
Res Judicata in the form of "conclusiveness of judgment" cannot likewise apply for the reason that any
mention at all in Ligon as to the validity of the disputed Carpizo Board-INC sale may only be deemed
incidental to the resolution of the primary issue posed in said case which is: Who between Ligon and INC
has the better right of possession over the owner's duplicate copy of the TCTs covering the IDP
property? G.R. No. 107751 cannot be considered determinative and conclusive on the matter of the
validity of the sale for this particular issue was not the principal thrust of Ligon. To rule otherwise would
be to cause grave and irreparable injustice to IDP which never gave its consent to the sale, thru a
legitimate Board of Trustees.
In any case, while it is true that the principle of res judicata is a fundamental component of our judicial
system, it should be disregarded if its rigid application would involve the sacrifice of justice to
technicality. 34

The main question though in this petition is: Did the Court of Appeals commit reversible error in setting
aside that portion of the SEC's Decision in SEC Case No. 4012 which declared the sale of two (2) parcels
of land in Quezon City between the IDP-Carpizo Group and private respondent INC null and void?
We rule in the affirmative.
There can be no question as to the authority of the SEC to pass upon the issue as to who among the
different contending groups is the legitimate Board of Trustees of the IDP since this is a matter properly
falling within the original and exclusive jurisdiction of the SEC by virtue of Sections 3 and 5(c) of
Presidential Decree No. 902-A:
Sec. 3. The Commission shall have absolute jurisdiction, supervision and control over all corporations,
partnership or associations, who are the grantees of primary franchises and/or a license or permit issued
by the government to operate in the Philippines . . . .
xxx xxx xxx
Sec. 5. In addition to the regulatory and adjudicative functions of the Securities and Exchange
Commission over corporations, partnerships and other forms of associations registered with it as
expressly granted under existing laws and decrees, it shall have original and exclusive jurisdiction to hear
and decide cases involving:
xxx xxx xxx
c) Controversies in the selection or appointment of directors, trustees, officers, or managers of
such corporations, partnerships or associations. . . . .
If the SEC can declare who is the legitimate IDP Board, then by parity of reasoning, it can also declare
who is not the legitimate IDP Board. This is precisely what the SEC did in SEC Case No. 4012 when it
adjudged the election of the Carpizo Group to the IDP Board of Trustees to be null and void. By this
ruling, the SEC in effect made the unequivocal finding that the IDP-Carpizo Group is a bogus Board of
Trustees. Consequently, the Carpizo Group is bereft of any authority whatsoever to bind IDP in any kind
of transaction including the sale or disposition of ID property.
It must be noted that SEC Case No. 4012 is not the first case wherein the SEC had the opportunity to
pass upon the status of the Carpizo Group. As far back as October 3, 1986, the SEC, in Case No. 2687, 36
in a suit between the Carpizo Group and the Abbas Group, already declared the election of the Carpizo
Group (as well as the Abbas Group) to the IDP Board as null and void for being violative of the Articles of
Incorporation. 37 Nothing thus becomes more settled than that the IDP-Carpizo Group with whom
private respondent INC contracted is a fake Board.
Premises considered, all acts carried out by the Carpizo Board, particularly the sale of the Tandang Sora
property, allegedly in the name of the IDP, have to be struck down for having been done without the
consent of the IDP thru a legitimate Board of Trustees. Article 1318 of the New Civil Code lays down the
essential requisites of contracts:
There is no contract unless the following requisites concur:
(1) Consent of the contracting parties;
(2) Object certain which is the subject matter of the contract;
(3) Cause of the obligation which is established.
All these elements must be present to constitute a valid contract. For, where even one is absent, the
contract is void. As succinctly put by Tolentino, consent is essential for the existence of a contract, and
where it is wanting, the contract is non-existent. 38 In this case, the IDP, owner of the subject parcels of
land, never gave its consent, thru a legitimate Board of Trustees, to the disputed Deed of Absolute Sale
executed in favor of INC. This is, therefore, a case not only of vitiated consent, but one where consent
on the part of one of the supposed contracting parties is totally wanting. Ineluctably, the subject sale is
void and produces no effect whatsoever.
The Carpizo Group-INC sale is further deemed null and void ab initio because of the Carpizo Group's
failure to comply with Section 40 of the Corporation Code pertaining to the disposition of all or
substantially all assets of the corporation:
Sec. 40. Sale or other disposition of assets. Subject to the provisions of existing laws on illegal
combinations and monopolies, a corporation may, by a majority vote of its board of directors or
trustees, sell, lease, exchange, mortgage, pledge or otherwise dispose of all or substantially all of its
property and assets, including its goodwill, upon terms and conditions and for such consideration, which
may be money, stocks, bonds or other instruments for the payment of money or other property or
consideration, as its board of directors or trustees may deem expedient, when authorized by the vote of
the stockholders representing at least two-thirds (2/3) of the outstanding capital stock; or in case of
non-stock corporation, by the vote of at least two-thirds (2/3) of the members, in a stockholders' or
members' meeting duly called for the purpose. Written notice of the proposed action and of the time
and place of the meeting shall be addressed to each stockholder or member at his place of residence as
shown on the books of the corporation and deposited to the addressee in the post office with postage
prepaid, or served personally: Provided, That any dissenting stockholder may exercise his appraisal right
under the conditions provided in this Code.
A sale or other disposition shall be deemed to cover substantially all the corporate property and assets if
thereby the corporation would be rendered incapable of continuing the business or accomplishing the
purpose for which it was incorporated.
xxx xxx xxx
The Tandang Sora property, it appears from the records, constitutes the only property of the IDP. Hence,
its sale to a third-party is a sale or disposition of all the corporate property and assets of IDP falling
squarely within the contemplation of the foregoing section. For the sale to be valid, the majority vote of
the legitimate Board of Trustees, concurred in by the vote of at least 2/3 of the bona fide members of
the corporation should have been obtained. These twin requirements were not met as the Carpizo
Group which voted to sell the Tandang Sora property was a fake Board of Trustees, and those whose
names and signatures were affixed by the Carpizo Group together with the sham Board Resolution
authorizing the negotiation for the sale were, from all indications, not bona fide members of the IDP as
they were made to appear to be. Apparently, there are only fifteen (15) official members of the
petitioner corporation including the eight (8) members of the Board of Trustees. 39
All told, the disputed Deed of Absolute Sale executed by the fake Carpizo Board and private respondent
INC was intrinsically void ab initio.
Private respondent INC nevertheless questions the authority of the SEC to nullify the sale for being
made outside of its jurisdiction, the same not being an intra-corporate dispute.
The resolution of the question as to whether or not the SEC had jurisdiction to declare the subject sale
null and void is rendered moot and academic by the inherent nullity of the highly dubious sale due to
lack of consent of the IDP, owner of the subject property. No end of substantial justice will be served if
we reverse the SEC's conclusion on the matter, and remand the case to the regular courts for further
litigation over an issue which is already determinable based on what we have in the records.
It is unfortunate that private respondent INC opposed the motion for intervention filed by the 1971
Board of Trustees in Civil Case. No. Q-90-6937, a case for Specific Performance with Damages between
INC and the Carpizo Group on the subject Deed of Absolute Sale. The legitimate IDP Board could have
been granted ample opportunity before the regional trial court to shed light on the true status of the
Carpizo Board and settled the matter as to the validity of the sale then and there. But INC, wanting to
acquire the property at all costs and threatened by the participation of the legitimate IDP Board in the
civil suit, argued for the denial of the motion averring, inter alia, that the issue sought to be litigated by
the movant is intra-corporate in nature and outside the jurisdiction of the regional trial court. 40 As a
result, the motion for intervention was denied. When the Decision in SEC Case No. 4012 came out
nullifying the sale, INC came forward, this time, quibbling over the issue that it is the regional trial court,
and not the SEC, which has jurisdiction to rule on the validity of the sale. INC is here trifling with the
courts. We cannot put a premium on this clever legal maneuverings of private respondent which, if
countenanced, would result in a failure of justice.
Furthermore, the Court observes that the INC bought the questioned property from the Carpizo Group
without even seeing the owner's duplicate copy of the titles covering the property. This is very strange
considering that the subject lot is a large piece of real property in Quezon City worth millions, and that
under the Torrens System of Registration, the minimum requirement for one to be a good faith buyer
for value is that the vendee at least sees the owner's duplicate copy of the title and relies upon the
same. 41 The private respondent, presumably knowledgeable on the aforesaid workings of the Torrens
System, did not take heed of this and nevertheless went through with the sale with undue haste. The
unexplained eagerness of INC to buy this valuable piece of land in Quezon City without even being
presented with the owner's copy of the titles casts very serious doubt on the rightfulness of its position
as vendee in the transaction.
WHEREFORE, the petition is GRANTED. The Decision of the public respondent Court of Appeals dated
October 28, 1994 in CA-G.R. SP No. 33295 is SET ASIDE. The Decision of the Securities and Exchange
Commission dated July 5, 1993 in SEC Case No. 4012 is REINSTATED. The Register of Deeds of Quezon
City is hereby ordered to cancel the registration of the Deed of Absolute Sale in the name of respondent
Iglesia Ni Cristo, if one has already been made. If new titles have been issued in the name of Iglesia Ni
Cristo, the Register of Deeds is hereby ordered to cancel the same, and issue new ones in the name of
petitioner Islamic Directorate of the Philippines. Petitioner corporation is ordered to return to private
respondent whatever amount has been initially paid by INC as consideration for the property with legal
interest, if the same was actually received by IDP. Otherwise, INC may run after Engineer Farouk Carpizo
and his group for the amount of money paid.

SO ORDERED.







Walter, Milton, Frank, Jr., Henry and Jockson, all surnamed Liu, Rebecca Liu Shui and Pearl Liu Rodriguez,
petitioners, vs. ALFREDO LOY, JR., TERESITA A. LOY and ESTATE OF JOSE VAO, respondents.
The Case
This is a petition for review on certiorari of the Decision1 dated 13 June 2000 and the Resolution dated
14 November 2002 of the Court of Appeals which affirmed the Decision2 of the Regional Trial Court,
Branch 14, Cebu City. The Court of Appeals agreed with the trial court that the sales by the late Teodoro
Vao to respondents Alfredo Loy, Jr. and Teresita A. Loy of Lot Nos. 5 and 6, respectively, were valid. The
Court of Appeals also agreed with the trial court that the unilateral extrajudicial rescission by the late
Teodoro Vao of the contract to sell involving five lots, including Lot Nos. 5 and 6, between him and
Benito Liu (predecessor-in-interest of Frank Liu) was valid.
The Facts
On 13 January 1950, Teodoro Vao, as attorney-in-fact of Jose Vao, sold seven lots of the Banilad
Estate located in Cebu City to Benito Liu and Cirilo Pangalo.3 Teodoro Vao dealt with Frank Liu, the
brother of Benito Liu, in the sale of the lots to Benito Liu and Cirilo Pangalo. The lots sold to Benito Liu
were Lot Nos. 5, 6, 13, 14, and 15 of Block 12 for a total price of P4,900. Benito Liu gave a down
payment of P1,000, undertaking to pay the balance of P3,900 in monthly installments of P100 beginning
at the end of January 1950. The lots sold to Cirilo Pangalo were Lot Nos. 14 and 15 of Block 11 for a total
price of P1,967.50. Cirilo Pangalo gave P400 as down payment, undertaking to pay the balance of
P1,567.50 in monthly installments of P400 beginning at the end of January 1950. Meanwhile, Jose Vao
passed away.
Benito Liu subsequently paid installments totaling P2,900, leaving a balance of P1,000.4 Apparently,
Benito Liu stopped further payments because Teodoro Vao admitted his inability to transfer the lot
titles to Benito Liu. Later, in a letter5 dated 16 October 1954, Teodoro Vao informed Frank Liu6 that
the Supreme Court had already declared valid the will of his father Jose Vao. Thus, Teodoro Vao could
transfer the titles to the buyers? names upon payment of the balance of the purchase price.
When Frank Liu failed to reply, Teodoro Vao sent him another letter,7 dated 1 January 1955, reminding
him of his outstanding balance. It appears that it was only after nine years that Frank Liu responded
through a letter,8 dated 25 January 1964. In the letter, Frank Liu informed Teodoro Vao that he was
ready to pay the balance of the purchase price of the seven lots. He requested for the execution of a
deed of sale of the lots in his name and the delivery of the titles to him.
On 22 April 1966, Benito Liu sold to Frank Liu the five lots (Lot Nos. 5, 6, 13, 14 and 15 of Block 12) which
Benito Liu purchased from Teodoro Vao.9 Frank Liu assumed the balance of P1,000 for the five lots.
Cirilo Pangalo likewise sold to Frank Liu the two lots (Lot Nos. 14 and 15 of Block 11) that Pangalo
purchased from Teodoro Vao. Frank Liu likewise assumed the balance of P417 for the two lots.
On 21 March 1968, Frank Liu reiterated in a letter10 his request for Teodoro Vao to execute the deed
of sale covering the seven lots so he could secure the corresponding certificates of title in his name. He
also requested for the construction of the subdivision roads pursuant to the original contract. In the
letter, Frank Liu referred to another letter, dated 25 June 1966, which he allegedly sent to Teodoro
Vao. According to Frank Liu, he enclosed PBC Check No. D-782290 dated 6 May 1966 for P1,417, which
is the total balance of the accounts of Benito Liu and Cirilo Pangalo on the seven lots. However, Frank Liu
did not offer in evidence the letter or the check. Frank Liu sent two other letters,11 dated 7 June 1968
and 29 July 1968, to Teodoro Vao reiterating his request for the execution of the deed of sale in his
favor but to no avail.
On 19 August 1968, Teodoro Vao sold Lot No. 6 to respondent Teresita Loy for P3,930.12 The Register
of Deeds of Cebu City entered this sale in the Daybook on 24 February 1969.13

On 2 December 1968, Frank Liu filed a complaint against Teodoro Vao for specific performance,
execution of deed of absolute sale, issuance of certificates of title and construction of subdivision roads,
before the Court of First Instance of Davao. The case was docketed as Civil Case No. 6300.14
On 19 December 1968, Frank Liu filed with the Register of Deeds of Cebu City a notice of lis pendens on
the seven lots due to the pendency of Civil Case No. 6300.15 However, the Register of Deeds denied the
registration of the lis pendens "on the ground that the property is under administration and said claim
must be filed in court."16
On 16 December 1969, Teodoro Vao sold Lot No. 5 to respondent Alfredo Loy for P3,910.17 The
Register of Deeds of Cebu City entered this sale in the Daybook on 16 January 1970.18
On 3 October 1970, the Court of First Instance of Davao, on motion of Teodoro Vao, dismissed Civil
Case No. 6300 on the ground that Frank Liu should have filed the claim with the probate court.19 Thus,
on 17 February 1972, Frank Liu filed before the probate court a claim against the Estate of Jose Vao for
"Specific Performance, Execution of Deed of Absolute Sale, Issuance of Certificate of Title, and
Construction of Subdivision Roads."20
During the proceedings, Teodoro Vao died. His widow, Milagros Vao, succeeded as administratrix of
the Estate of Jose Vao.
On 24 February 1976, the probate court approved the claim of Frank Liu. On 5 March 1976, Milagros
Vao executed a deed of conveyance covering the seven lots in favor of Frank Liu, in compliance with
the probate court?s order.21 The deed of conveyance included Lot Nos. 5 and 6, the same lots Teodoro
Vao sold respectively to Alfredo Loy, Jr. on 16 December 1969 and to Teresita Loy on 19 August 1968.
On 19 March 1976, the probate court, upon an ex-parte motion filed by Teresita Loy, issued an Order22
approving the 16 August 1968 sale by Teodoro Vao of Lot No. 6 in her favor. Likewise, upon an ex-parte
motion filed by Alfredo Loy, Jr., the probate court issued on 23 March 1976 an Order23 approving the 16
December 1969 sale of Lot No. 5 by Teodoro Vao in his favor.
On 10 May 1976, the Register of Deeds of Cebu City cancelled TCT No. 44204 in the name of the Estate
of Jose Vao covering Lot No. 5 and issued a new title, TCT No. 64522, in the name of Alfredo Loy, Jr.
and Perfeccion V. Loy.24 Likewise, on the same date, the Register of Deeds cancelled TCT No. 44205 in
the name of the Estate of Jose Vao covering Lot No. 6, and issued TCT No. 64523 in the name of
Teresita A. Loy.25
On 3 June 1976, Milagros Vao, as administratrix of the estate, filed a motion for reconsideration of the
Orders of the probate court dated 19 and 23 March 1976. She contended that she already complied
with the probate court?s Order dated 24 February 1976 to execute a deed of sale covering the seven
lots, including Lot Nos. 5 and 6, in favor of Frank Liu. She also stated that no one notified her of the
motion of the Loys, and if the Loys or the court notified her, she would have objected to the sale of the
same lots to the Loys.
On 4 June 1976, Frank Liu filed a complaint for reconveyance or annulment of title of Lot Nos. 5 and 6.
Frank Liu filed the case in the Regional Trial Court of Cebu City, Branch 14, which docketed it as Civil
Case No. R-15342.
On 5 August 1978, the probate court denied the motion for reconsideration of Milagros Vao on the
ground that the conflicting claims regarding the ownership of Lot Nos. 5 and 6 were already under
litigation in Civil Case No. R-15342.
On 8 April 1991, the Regional Trial Court of Cebu City ("trial court"), Branch 14, rendered judgment
against Frank Liu as follows:
WHEREFORE, judgment is hereby rendered:
(1) Dismissing the complaint at bar; and
(2) Confirming the unilateral extrajudicial rescission of the contract Exhibit A by the late Teodoro Vao,
conditioned upon the refund by the Estate of Jose Vao of one-half (1/2) of what the plaintiff had paid
under that contract.
The counterclaims by the defendants Alfredo A. Loy, Jr. and Teresita A. Loy and by the defendant Estate
of Jose Vao, not having been substantiated, are hereby denied.
Without special pronouncement as to costs.
SO ORDERED.26
Frank Liu appealed to the Court of Appeals, which affirmed in toto the decision of the trial court. Frank
Liu27 filed a motion for reconsideration but the Court of Appeals denied the same.
Hence, the instant petition.
The Trial Court?s Ruling
The trial court held that the contract between Teodoro Vao and Benito Liu was a contract to sell. Since
title to Lot Nos. 5 and 6 never passed to Benito Liu due to non-payment of the balance of the purchase
price, ownership of the lots remained with the vendor. Therefore, the trial cour ruled that the
subsequent sales to Alfredo Loy, Jr. and Teresita Loy of Lot Nos. 5 and 6, respectively, were valid.
The trial court viewed the letter of Teodoro Vao dated 1 January 1995 addressed to Frank Liu as a
unilateral extrajudicial rescission of the contract to sell. The trial court upheld the unilateral rescission
subject to refund by the Estate of Jose Vao of one-half (1/2) of what Frank Liu paid under the contract.
The trial court ruled that Teodoro Vao, as administrator of the Estate of Jose Vao and as sole heir of
Jose Vao, acted both as principal and as agent when he sold the lots to Alfredo Loy, Jr. and Teresita
Loy. The probate court subsequently approved the sales. The trial court also found that Alfredo Loy, Jr.
and Teresita Loy were purchasers in good faith.
The Court of Appeals? Ruling
In affirming in toto the trial court?s decision, the appellate court found no evidence of fraud or ill-motive
on the part of Alfredo Loy, Jr. and Teresita Loy. The Court of Appeals cited the rule that "the law always
presumes good faith such that any person who seeks to be awarded damages due to the acts of another
has the burden of proving that the latter acted in bad faith or ill-motive."
The Court of Appeals also held that the sales to Alfredo Loy, Jr. and Teresita Loy of Lot Nos. 5 and 6,
respectively, were valid despite lack of prior approval by the probate court. The Court of Appeals
declared that Teodoro Vao sold the lots in his capacity as heir of Jose Vao. The appellate court ruled
that an heir has a right to dispose of the decedent?s property, even if the same is under administration,
because the hereditary property is deemed transmitted to the heir without interruption from the
moment of the death of the decedent.
The Court of Appeals held that there is no basis for the claim of moral damages and attorney?s fees. The
appellate court found that Frank Liu failed to prove that he suffered mental anguish due to the
actuations of the Loys. The Court of Appeals likewise disallowed the award of attorney?s fees. The fact
alone that a party was compelled to litigate and incur expenses to protect his claim does not justify an
award of attorney?s fees. Besides, the Court of Appeals held that where there is no basis to award moral
damages, there is also no basis to award attorney?s fees.
The Issues
Petitioners28 raise the following issues:29
1. Whether prior approval of the probate court is necessary to validate the sale of Lot Nos. 5 and 6 to
Loys;
2. Whether the Loys can be considered buyers and registrants in good faith despite the notice of lis
pendens;
3. Whether Frank Liu has a superior right over Lot Nos. 5 and 6;
4. Whether the Court of Appeals erred in not passing upon the trial court?s declaration that the extra-
judicial rescission by Teodoro Vao of the sale in favor of Frank Liu is valid;
5.Whether petitioners are entitled to moral damages and attorney?s fees.
The Court?s Ruling
The petition is meritorious.
Whether there was a valid cancellation of the contract to sell
There was no valid cancellation of the contract to sell because there was no written notice of the
cancellation to Benito Liu or Frank Liu. There was even no implied cancellation of the contract to sell.
The trial court merely "viewed" the alleged "unilateral extrajudicial rescission" from the letter of
Teodoro Vao, dated 1 January 1955, addressed to Frank Liu, stating that:
Two months, I believe, is ample for the allowance of delays caused by your (sic) either too busy, or
having been some place else, or for consultations. These are the only reasons I can think of that could
have caused the delay in your answer, unless you do not think an answer is necessary at all, as you are
not the party concerned in the matter.
I shall therefor (sic) appreciate it very much, if you will write me within ten days from receipt of this
letter, or enterprete (sic) your silence as my mistake in having written to the wrong party, and therefor
(sic) proceed to write Misters: B. Liu and C. Pangalo.30 (Emphasis supplied)
Obviously, we cannot construe this letter as a unilateral extrajudicial rescission of the contract to sell. As
clearly stated in the letter, the only action that Teodoro Vao would take if Frank Liu did not reply was
that Teodoro Vao would write directly to Benito Liu and Cirilo Pangalo. The letter does not mention
anything about rescinding or cancelling the contract to sell.
Although the law allows the extra-judicial cancellation of a contract to sell upon failure of one party to
comply with his obligation, notice of such cancellation must still be given to the party who is at fault.31
The notice of cancellation to the other party is one of the requirements for a valid cancellation of a
contract to sell, aside from the existence of a lawful cause. Even the case cited by the trial court
emphasizes the importance of such notice:
Of course, it must be understood that the act of a party in treating a contract as cancelled or resolved on
account of infractions by the other contracting party must be made known to the other and is always
provisional, being ever subject to scrutiny and review by the proper court. If the other party denies that
rescission is justified, it is free to resort to judicial action in its own behalf, and bring the matter to court.
Then, should the court, after due hearing, decide that the resolution of the contract was not warranted,
the responsible party will be sentenced to damages; in the contrary case, the resolution will be affirmed,
and the consequent indemnity awarded to the party prejudiced.32 (Emphasis supplied)
The fact that Teodoro Vao advised Frank Liu to file his claim with the probate court is certainly not the
conduct of one who supposedly unilaterally rescinded the contract with Frank Liu.33
In this case, there was prior delay or default by the seller. As admitted by Teodoro Vao, he could not
deliver the titles because of a case questioning the authenticity of the will of his father. In a letter33 to
Frank Liu dated 16 October 1954, Teodoro Vao stated:
Some time last May, if I remember correctly, you offered to settle the whole balance of your account if I
can have the Titles transferred immediately in your brother?s name, and to that of Mr. Pangalo?s. I
cannot blame you if you were disappointed then, to know that I could not have the titles transferred,
even should you have paid in full. (Emphasis supplied)
In the same letter of 16 October 1954, Teodoro Vao informed Frank Liu that the titles were ready for
transfer, thus:
However, last June 30, of this year, the Supreme Court, unanimously concurred in the reversal of the
decision of the Court of First Instance, as regard the legality of the Will of my father. Now that the Will
of my Father has been declared Legal, my opponents have lost their personality in the case, and with it
their power to harass me in court. Also, sometime in the middle of July, also this year, the Supreme
Court again declared that all the sales I have made of the properties of my Father, were Legal, and that I
should be empowered to have the Titles transferred in the buyer?s names, should they have paid in full.
A few have already received their Titles. And yours can be had too in two days time from the time you
have paid in full.
Nevertheless, the subsequent approval by the probate court of the sale of Lot Nos. 5 and 6 to Frank Liu
rendered moot any question on the continuing validity of the contract to sell.
Whether the lis pendens in the Davao case served as notice to the Loys
The lis pendens in the Davao case did not serve as notice to the Loys. The Register of Deeds of Cebu City
denied registration of the lis pendens on 19 December 1968.35 Frank Liu did not appeal to the Land
Registration Commission36 to keep alive the lis pendens. Republic Act No. 1151,37 which took effect 17
June 1954, provides:
SEC. 4. Reference of doubtful matters to Commissioner of Land Registration.? When the Register of
Deeds is in doubt with regard to the proper step to be taken or memorandum to be made in pursuance
of any deed, mortgage, or other instrument presented to him for registration, or where any party in
interest does not agree with the Register of Deeds with reference to any such matter, the question shall
be submitted to the Commissioner of Land Registration either upon the certification of the Register of
Deeds, stating the question upon which he is in doubt, or upon the suggestion in writing by the party in
interest; and thereupon the Commissioner, after consideration of the matter shown by the records
certified to him, and in case of registered lands, after notice to the parties and hearing, shall enter an
order prescribing the step to be taken or memorandum to be made. His decision in such cases shall be
conclusive and binding upon all Registers of Deeds: Provided, however, That when a party in interest
disagrees with a ruling or resolution of the Commissioner and the issue involves a question of law, said
decision may be appealed to the Supreme Court within thirty days from and after receipt of the notice
thereof. (Emphasis supplied)
Frank Liu?s failure to appeal38 the denial of the registration rendered the lis pendens ineffective. The
Court of First Instance of Davao City eventually dismissed Frank Liu?s complaint on 3 October 1970.

Whether the registration by the Loys of their contracts of sale made them the first registrants in good
faith to defeat prior buyers
The registration by the Loys of their contracts of sale did not defeat the right of prior buyers because the
person who signed the Loys? contracts was not the registered owner. The registered owner of Lot Nos. 5
and 6 was the "Estate of Jose Vao." Teodoro Vao was the seller in the contract of sale with Alfredo
Loy, Jr. The Estate of Jose Vao was the seller in the contract of sale with Teresita Loy. Teodoro Vao
signed both contracts of sale. The rule is well-settled that "one who buys from a person who is not the
registered owner is not a purchaser in good faith."39 As held in Toledo-Banaga v. Court of Appeals:40
To repeat, at the time of the sale, the person from whom petitioner Tan bought the property is neither
the registered owner nor was the former authorized by the latter to sell the same. She knew she was
not dealing with the registered owner or a representative of the latter. One who buys property with full
knowledge of the flaws and defects in the title of his vendor is enough proof of his bad faith and cannot
claim that he acquired title in good faith as against the owner or of an interest therein. When she
nonetheless proceeded to buy the lot, petitioner Tan gambled on the result of litigation. She is bound by
the outcome of her indifference with no one to blame except herself if she looses her claim as against
one who has a superior right or interest over the property. x x x.
The Loys were under notice to inquire why the land was not registered in the name of the person who
executed the contracts of sale. They were under notice that the lots belonged to the "Estate of Jose
Vao" and any sale of the lots required court approval. Any disposition would be subject to the claims of
creditors of the estate who filed claims before the probate court.41
The contracts of the Loys did not convey ownership of the lots to them as against third persons. The
contracts were binding only on the seller, Teodoro Vao. The contracts of the Loys would become
binding against third persons only upon approval of the sale by the probate court and registration with
the Register of Deeds. Registration of the contracts without court approval would be ineffective to bind
third persons, especially creditors of the estate. Otherwise, this will open the door to fraud on creditors
of the estate.
Whether the probate court?s ex-parte approval of the contracts of the Loys was valid
Section 8, Rule 89 of the 1964 Rules of Court42 specifically requires notice to all interested parties in any
application for court approval to convey property contracted by the decedent in his lifetime. Thus:
SECTION 8. When court may authorize conveyance of realty which deceased contracted to convey.
Notice. Effect of deed. ? Where the deceased was in his lifetime under contract, binding in law, to deed
real property, or an interest therein, the court having jurisdiction of the estate may, on application for
that purpose, authorize the executor or administrator to convey such property according to such
contract, or with such modifications as are agreed upon by the parties and approved by the court; and if
the contract is to convey real property to the executor or administrator, the clerk of the court shall
execute the deed. The deed executed by such executor, administrator, or clerk of court shall be as
effectual to convey the property as if executed by the deceased in his lifetime; but no such conveyance
shall be authorized until notice of the application for that purpose has been given personally or by mail
to all persons interested, and such further notice has been given, by publication or otherwise, as the
court deems proper; nor if the assets in the hands of the executor or administrator will thereby be
reduced so as to prevent a creditor from receiving his full debt or diminish his dividend. (Rule 89, 1964
Rules of Court) (Emphasis supplied)
Despite the clear requirement of Section 8 of Rule 89, the Loys did not notify the administratrix of the
motion and hearing to approve the sale of the lots to them. The administratrix, who had already signed
the deed of sale to Frank Liu as directed by the same probate court, objected to the sale of the same lots
to the Loys. Thus, as found by the trial court:
On June 3, 1976, Milagros H. Vao moved for the reconsideration of the Order issued by Judge Ramolete
on March 19, 1976 and March 23, 1976, contending that she had not been personally served with copies
of the motions presented to the Court by Alfredo Loy, Jr. and by Teresita Loy seeking the approval of the
sales of the lots in their favor, as well as the Orders that were issued by the Court pursuant thereto; that
the Court in its Order of February 24, 1976 had ordered her (Milagros H. Vao), to execute a deed of
absolute sale in favor of the plaintiff, which sale had been approved by the Court; that she had not
known of the sale of Lots 5 and 6 to any other person except to the plaintiff; that the sale of the two lots
in favor of plaintiff was made earlier, when there was yet no litigation with the Bureau of Internal
Revenue, while those in favor of the defendant Loys were made when there was already a prohibition
by the Court against any sale thereof; that the sales in favor of the Loys were made without Court
authority; and that if the approval of the sales had not been obtained ex-parte she would have informed
the Court of the complication arising therefrom, and she would not have executed the sale in favor of
plaintiff, and she would have asked the Court to decide first as to who had preference over said lots.43
The failure to notify the administratrix and other interested persons rendered the sale to the Loys void.
As explained by Justice J.B.L. Reyes in De Jesus v. De Jesus:44
Section 9, Rule 90, however, provides that authority can be given by the probate court to the
administrator to convey property held in trust by the deceased to the beneficiaries of the trust only
"after notice given as required in the last preceding section"; i.e., that "no such conveyance shall be
authorized until notice of the application for that purpose has been given personally or by mail to all
persons interested, and such further notice has been given, by publication or otherwise, as the court
deems proper" (sec. 8, Rule 90). This rule makes it mandatory that notice be served on the heirs and
other interested persons of the application for approval of any conveyance of property held in trust by
the deceased, and where no such notice is given, the order authorizing the conveyance, as well as the
conveyance itself, is completely void. (Emphasis supplied)
In this case, the administratrix, the wife of the deceased Teodoro Vao, was not notified of the motion
and hearing to approve the sale of the lots to the Loys. Frank Liu did not also receive any notice,
although he obviously was an interested party. The issuance of new titles to the Loys on 10 May 1976 by
the Registry of Deeds did not vest title to the Loys because the "conveyance itself" was "completely
void." The consequences for the failure to notify the administratrix and other interested parties must be
borne by the Loys.
Necessity of court approval of sales
Indisputably, an heir can sell his interest in the estate of the decedent, or even his interest in specific
properties of the estate. However, for such disposition to take effect against third parties, the court
must approve such disposition to protect the rights of creditors of the estate. What the deceased can
transfer to his heirs is only the net estate, that is, the gross estate less the liabilities. As held in Baun v.
Heirs of Baun:45
The heir legally succeeds the deceased, from whom he derives his right and title, but only after the
liquidation of the estate, the payment of the debts of the same, and the adjudication of the residue of
the estate of the deceased; and in the meantime the only person in charge by law to attend to all claims
against the estate of the deceased debtor is the executor or administrator appointed by the court.
In Opulencia v. Court of Appeals,46 an heir agreed to convey in a contract to sell her share in the estate
then under probate settlement. In an action for specific performance filed by the buyers, the seller-heir
resisted on the ground that there was no approval of the contract by the probate court. The Court ruled
that the contract to sell was binding between the parties, but subject to the outcome of the testate
proceedings. The Court declared:
x x x Consequently, although the Contract to Sell was perfected between the petitioner (seller-heir) and
private respondents (buyers) during the pendency of the probate proceedings, the consummation of the
sale or the transfer of ownership over the parcel of land to the private respondents is subject to the full
payment of the purchase price and to the termination and outcome of the testate proceedings. x x x
Indeed, it is settled that ?the sale made by an heir of his share in an inheritance, subject to the pending
administration, in no wise stands in the way of such administration.? (Emphasis supplied)
In Alfredo Loy?s case, his seller executed the contract of sale after the death of the registered owner
Jose Vao. The seller was Teodoro Vao who sold the lot in his capacity as sole heir of the deceased Jose
Vao. Thus, Opulencia applies to the sale of the lot to Alfredo Loy, Jr., which means that the contract of
sale was binding between Teodoro Vao and Alfredo Loy, Jr., but subject to the outcome of the probate
proceedings.
In Frank Liu?s case, as successor-in-interest of Benito Liu, his seller was Jose Vao, who during his
lifetime executed the contract to sell through an attorney-in-fact, Teodoro Vao. This is a disposition of
property contracted by the decedent during his lifetime. Section 8 of Rule 89 specifically governs this
sale:
SECTION 8. When court may authorize conveyance of realty which deceased contracted to convey.
Notice. Effect of deed. ? Where the deceased was in his lifetime under contract, binding in law, to deed
real property, or an interest therein, the court having jurisdiction of the estate may, on application for
that purpose, authorize the executor or administrator to convey such property according to such
contract, or with such modifications as are agreed upon by the parties and approved by the court; x x x
Thus, Frank Liu applied to the probate court for the grant of authority to the administratrix to convey
the lots in accordance with the contract made by the decedent Jose Vao during his lifetime. The
probate court approved the application.
In Teresita Loy?s case, her seller was the Estate of Jose Vao. Teodoro Vao executed the contract of
sale in his capacity as administrator of the Estate of Jose Vao, the registered owner of the lots. The
Court has held that a sale of estate property made by an administrator without court authority is void
and does not confer on the purchaser a title that is available against a succeeding administrator.47
Manotok Realty, Inc. v. Court of Appeals48 emphasizes the need for court approval in the sale by an
administrator of estate property. The Court held in Manotok Realty:
We also find that the appellate court committed an error of law when it held that the sale of the lot in
question did not need the approval of the probate court.
Although the Rules of Court do not specifically state that the sale of an immovable property belonging to
an estate of a decedent, in a special proceeding, should be made with the approval of the court, this
authority is necessarily included in its capacity as a probate court.
An administrator under the circumstances of this case cannot enjoy blanket authority to dispose of real
estate as he pleases, especially where he ignores specific directives to execute proper documents and
get court approval for the sale?s validity.
Section 91 of Act No. 496 (Land Registration Act) specifically requires court approval for any sale of
registered land by an executor or administrator, thus:
SEC. 91. Except in case of a will devising the land to an executor to his own use or upon some trust or
giving to the executor power to sell, no sale or transfer of registered land shall be made by an executor
or by an administrator in the course of administration for the payment of debts or for any other
purpose, except in pursuance of an order of a court of competent jurisdiction obtained as provided by
law. (Emphasis supplied)
Similarly, Section 88 of Presidential Decree No. 1529 (Property Registration Decree) provides:
SEC. 88. Dealings by administrator subject to court approval. ? After a memorandum of the will, if any,
and order allowing the same, and letters testamentary or letters of administration have been entered
upon the certificate of title as hereinabove provided, the executor or administrator may alienate or
encumber registered land belonging to the estate, or any interest therein, upon approval of the court
obtained as provided by the Rules of Court. (Emphasis supplied)
Clearly, both the law and jurisprudence expressly require court approval before any sale of estate
property by an executor or administrator can take effect.
Moreover, when the Loys filed in March 1976 their ex-parte motions for approval of their contracts of
sale, there was already a prior order of the probate court dated 24 February 1976 approving the sale of
Lot Nos. 5 and 6 to Frank Liu. In fact, the administratrix had signed the deed of sale in favor of Frank Liu
on 5 March 1976 pursuant to the court approval. This deed of sale was notarized on 5 March 1976,
which transferred ownership of Lot Nos. 5 and 6 to Frank Liu on the same date.49
Thus, when the probate court approved the contracts of the Loys on 19 and 23 March 1976, the probate
court had already lost jurisdiction over Lot Nos. 5 and 6 because the lots no longer formed part of the
Estate of Jose Vao.
In Dolar v. Sundiam,50 an heir sold parcels of land that were part of the estate of the decedent. The
probate court approved the sale. Thereafter, the probate court authorized the administrator to sell
again the same parcels of land to another person. The Court ruled that the probate court had already
lost jurisdiction to authorize the further sale of the parcels of land to another person because such
property no longer formed part of the estate of the decedent. The Court declared:
In our opinion, where, as in this case, a piece of property which originally is a part of the estate of a
deceased person is sold by an heir of the deceased having a valid claim thereto, and said piece of
property is, by mistake, subsequently inventoried or considered part of the deceased?s estate subject to
settlement, and, thereafter, with the authority and approval of the probate court, it sold once more to
another person, a receiver of the property so sold may, during the pendency of a motion to set aside the
second sale, be appointed by the court when in its sound judgment the grant of such temporary relief is
reasonably necessary to secure and protect the rights of its real owner against any danger of loss or
material injury to him arising from the use and enjoyment thereof by another who manifestly cannot
acquire any right of dominion thereon because the approving surrogate court had already lost
jurisdiction to authorize the further sale of such property. (Emphasis supplied)
Similarly, in this case, the Loys cannot acquire any right of dominion over Lot Nos. 5 and 6 because the
probate court had already lost jurisdiction to authorize the second sale of the same lots. Moreover, the
probate court?s approval of the sale to the Loys was completely void due to the failure to notify the
administratrix of the motion and hearing on the sale.
Whether the Loys were in good faith when they built on the Lots.
The Civil Code describes a possessor in good faith as follows:
Art. 526. He is deemed a possessor in good faith who is not aware that there exists in his title or mode of
acquisition any flaw which invalidates it.
He is deemed a possessor in bad faith who possesses in any case contrary to the foregoing.
Mistake upon a doubtful or difficult question of law may be the basis of good faith.
Art. 1127. The good faith of the possessor consists in the reasonable belief that the person from whom
he received the thing was the owner thereof, and could transmit his ownership.
In Duran v. Intermediate Appellate Court,51 the Court explained possession in good faith in this manner:
Guided by previous decisions of this Court, good faith consists in the possessor?s belief that the person
from whom he received the thing was the owner of the same and could convey his title (Arriola vs.
Gomez de la Serna, 14 Phil. 627). Good faith, while it is always presumed in the absence of proof to the
contrary, requires a well-founded belief that the person from whom title was received was himself the
owner of the land, with the right to convey it (Santiago vs. Cruz, 19 Phil. 148). There is good faith where
there is an honest intention to abstain from taking unconscientious advantage from another (Fule vs.
Legare, 7 SCRA 351).
The Loys were not in good faith when they built on the lots because they knew that they bought from
someone who was not the registered owner. The registered owner on the TCTs of the lots was the
"Estate of Jose Vao," clearly indicating that the sale required probate court approval. Teodoro Vao did
not show any court approval to the Loys when they purchased the lots because there was none. To
repeat, any one who buys from a person who is not the registered owner is not a purchaser in good
faith.52 If the Loys built on the lots before the court approval, then they took the risk.
Contract to sell versus contract of sale
A prior contract to sell made by the decedent prevails over the subsequent contract of sale made by the
administrator without probate court approval. The administrator cannot unilaterally cancel a contract to
sell made by the decedent in his lifetime.53 Any cancellation must observe all legal requisites, like
written notice of cancellation based on lawful cause.54
It is immaterial if the prior contract is a mere contract to sell and does not immediately convey
ownership.55 If it is valid, then it binds the estate to convey the property in accordance with Section 8 of
Rule 89 upon full payment of the consideration.
Frank Liu?s contract to sell became valid and effective upon its execution.56 The seller, Jose Vao, was
then alive and thus there was no need for court approval for the immediate effectivity of the contract to
sell. In contrast, the execution of the contracts of sale of the Loys took place after the death of the
registered owner of the lots. The law requires court approval for the effectivity of the Loys? contracts of
sale against third parties. The probate court did not validly give this approval since it failed to notify all
interested parties of the Loy?s motion for court approval of the sale. Besides, the probate court had lost
jurisdiction over the lots after it approved the earlier sale to Frank Liu. Clearly, Frank Liu?s contract to
sell prevails over the Loys? contracts of sale.
Whether petitioners are entitled to award of moral damages and attorney?s fees.
The Court upholds the ruling of the trial and appellate courts that petitioners are not entitled to moral
damages. Moral damages should not enrich a complainant at the expense of the defendant.57
Likewise, as found by the trial court and the appellate court, there is no basis to award attorney?s fees.
The policy of the law is to put no premium on the right to litigate.58 The court may award attorney?s
fees only in the instances mentioned in Article 2208 of the Civil Code. The award of attorney?s fees is
the exception rather than the rule.59 None of the instances mentioned in Article 2208 apply to this case.
Conclusion
Since the Loys have no contract of sale validly approved by the probate court, while Frank Liu has a
contract of sale approved by the probate court in accordance with Section 8 of Rule 89, Lot Nos. 5 and 6
belong to Frank Liu. The Estate of Jose Vao should reimburse the Loys their payments on Lot Nos. 5 and
6, with annual interest at 6% from 4 June 1976, the date of filing of the complaint, until finality of this
decision, and 12% thereafter until full payment.60
WHEREFORE, the Decision of the Court of Appeals is SET ASIDE and a new one is RENDERED:
1. Declaring null and void the deeds of sale of Lot Nos. 5 and 6 executed by Teodoro Vao in favor of
Alfredo Loy, Jr. and Teresita Loy, respectively.
2.Ordering the Register of Deeds of Cebu City to cancel TCT Nos. 64522 and 64523 and to issue a new
one in the name of petitioner Frank N. Liu;
3. Ordering the Estate of Jose Vao to reimburse to respondent Loys the amounts paid on Lot Nos. 5 and
6, with interest at 6% per annum from 4 June 1976 until finality of this decision, and 12% per annum
thereafter until full payment.
SO ORDERED.
























SPOUSES ANTONIO and LUCY VERA CRUZ, petitioners, vs. LUCY CALDERON, respondent.
DECISION
YNARES-SANTIAGO, J.:
Before us is a petition for review on certiorari under Rule 45 of the Rules of Court assailing the Court of
Appeals Decision[1] dated August 20, 2003 in CA-G.R. CV No. 57900 which affirmed with modifications
the Decision of the Regional Trial Court of Laguna, Branch 31. Likewise, challenged is the Resolution
dated November 10, 2003 of the Court of Appeals denying petitioners motion for reconsideration.[2]
The antecedent facts are as follows:
Lucy Calderon and Avelino Belisario, Jr. were married on January 31, 1967.[3] On October 23, 1970,[4]
they bought a parcel of land with an area of 248 square meters, located on Mabini Street, Poblacion,
Bian, Laguna, from Avelinos aunt, Margarita Arguelles. Accordingly, Transfer Certificate of Title No.
10744 was issued in the name of Avelino Belizario, Jr., married to Lucy Calderon. The spouses
separated in 1981 and Lucy resided with her children in Garcia Subdivision, San Antonio, Bian, Laguna.
On June 3, 1986, Avelino sold the subject property to petitioner spouses Antonio and Lucy Vera Cruz.[5]
The Vera Cruz spouses registered the sale on July 30, 1986 and TCT No. T-143101 was issued in their
name.[6] When Avelino died on November 20, 1993, his wife, respondent Lucy Calderon, discovered
that their conjugal property had been sold by her husband without her knowledge and consent and that
her signature on the Deed of Sale had been forged. Hence, she filed a complaint against the Vera Cruz
spouses for annulment of Deed of Absolute Sale and TCT No. T-143101 with the Regional Trial Court of
San Pedro, Laguna, Branch 31, which case was docketed as Civil Case No. B-4488.
In their answer, petitioner spouses assert that they purchased the property in good faith and for value.
In 1984, Avelino offered to lease the land to Antonios brother, Joselito Vera Cruz.[7] The latter, as
manager of the store and vice-president of VeraCruz, Inc., entered into a verbal lease agreement with
Avelino for a period of two (2) years.[8] In May 1986, at about the time the lease expired, Avelino and
Joselito visited petitioners in Marikina. Avelino offered to sell the land to them.[9] He showed them the
owners duplicate title of the property as well as the Deed of Sale executed by Margarita Arguelles,
which were both in his name. Thus, petitioners were convinced that the lot was Avelinos exclusive
property.[10] This notwithstanding, they asked Avelino to bring his wife during the execution of the
deed of sale.[11]
On June 3, 1986, Joselito and petitioner spouses, along with Avelino and a woman, whom he introduced
as his wife, Lucy Calderon, met and executed the deed of sale before Notary Public Atty. Democlito J.
Angeles.[12] Thereafter, petitioners filed the Deed of Sale with the Registry of Deeds of Laguna.
After trial, the trial court rendered a Decision in favor of respondent Lucy Calderon,[13] the dispositive
portion of which states:
WHEREFORE, judgment is hereby rendered in favor of the plaintiff and against defendants:
1. declaring null and void the Deed of Absolute Sale dated June 3, 1986 (Exhibits D and 4) as null
and void (sic) insofar as the share of plaintiff on the lot in litigation is concerned;
2. ordering the Register of Deeds of Laguna, Calamba Branch to cancel TCT No. T-14101 (Exhibits B
and 5) in the name of defendants Antonio Vera Cruz and Lucy Vera Cruz and issue a new one in lieu
thereof in the names of the said defendant spouses over the undivided share and in the name of
plaintiff over the other half of the subject lot; and
3. ordering the defendant spouses to pay plaintiff P20,000 for and as attorneys fees.
Costs against the defendants.
SO ORDERED.
In so ruling, the trial court declared that the subject parcel of land was presumed conjugal under Article
160 of the Civil Code,[14] and that petitioners were negligent in failing to inquire into the ownership of
the property purchased.
Petitioners appealed to the Court of Appeals, which affirmed the decision of the trial court with
modification, and ruled:
WHEREFORE, premises considered, the assailed decision is hereby AFFIRMED with modification. We
find the appellants purchasers in good faith and We delete the award of attorneys fees and costs:
1. Declaring null and void the Deed of Absolute Sale dated June 3, 1986 (Exhibits D and 4) as null
and void insofar as the share of plaintiff on the lot in litigation is concerned; and,
2. Ordering the Register of Deeds of Laguna, Calamba Branch to cancel TCT No. 14101 (Exhibits B
and 5) in the name of defendants Antonio Vera Cruz and Lucy Vera Cruz and issue a new one in lieu
thereof in the names of the said defendant spouses over the undivided share and in the name of the
plaintiff over the other half of the subject lot.
No costs.
SO ORDERED.
Hence this petition anchored on the sole ground that:
THE HONORABLE COURT OF APPEALS COMMITTED GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK
OR IN EXCESS OF JURISDICTION IN HOLDING THAT ALTHOUGH PETITIONERS ARE BUYERS IN GOOD FAITH
AND FOR VALUE OF THE LAND IN QUESTION, THEY ARE ONLY ENTITLED TO OWN ONE HALF PORTION
THEREOF AND THAT RESPONDENT LUCY CALDERON IS ENTITLED TO THE OTHER HALF PORTION.
As a general rule, only questions of law may be raised in a petition for review on certiorari to the
Supreme Court. Although it has long been settled that findings of fact are conclusive upon this Court,
there are exceptional circumstances which would require us to review findings of fact of the Court of
Appeals,[15] to wit:
It is well settled that the findings of facts of the Court of Appeals are conclusive on the parties and on
this Court, unless (1) the conclusion is a finding grounded entirely on speculation, surmise and
conjectures; (2) the inference made is manifestly mistaken; (3) there is grave abuse of discretion; (4) the
judgment is based on misapprehension of facts; (5) the findings of fact are conflicting; (6) the Court of
Appeals went beyond the issues of the case and its findings are contrary to the admissions of both
appellant and appellees; (7) the findings of fact of the Court of Appeals are contrary to those of the trial
court; (8) said findings of fact are conclusions without citation of specific evidence on which they are
based; (9) the facts set forth in the decision as well as in the petitioners main and reply briefs are not
disputed by the respondents; (10) the finding of fact of the Court of Appeals is premised on the
supposed absence of evidence and is contradicted by evidence on record. (Emphasis supplied)
The case at bar falls under one of the exceptions, it appearing that there was a disparity between the
findings of the trial court and those of the Court of Appeals on the issue of whether petitioners were
purchasers in good faith.
Reviewing the contradicting factual findings of the courts below, we agree with the following findings of
the Court of Appeals that petitioners are purchasers in good faith
Under the circumstances of the case, they are entitled to claim the status of innocent purchasers for
value. They exercised the necessary diligence in ascertaining the credentials of the seller, the registered
owner himself, Avelino Belisario, Jr.
We cannot charge said appellants with negligence since, at the time of the sale to them, the land was
registered in the name of the vendor and the tax declaration was also issued in the latters name. It was
also clearly indicated at the back of the transfer certificate of title that Avelino acquired ownership over
the said land by virtue of the Deed of Sale. Even appellee confirmed that they bought the property.
There is no annotation, defect or flaw in the title that would have aroused any suspicion as to its
authenticity. Such being the case, appellants had the right to rely on what appeared on the face of the
certificate of title.
Based on the records, it was the registered owner who sold the land to them. Avelino validly possessed
the title since he was the administrator thereof. Avelino presented his title as well as the deed of sale in
his favor to show how he acquired said property. It was Avelino himself who brought and introduced
another woman as Lucy Calderon. Joselito testified that Avelino and this woman were living together
as husband and wife. Even plaintiff-appellee Lucy Calderon admitted that she knew her husband was
living with another woman.[16]
Indeed, petitioners were dealing with the registered owner of the property and they had no reason to
suspect that the woman whom he introduced to them as his wife, Lucy Calderon, was an impostor.
We have long settled the rule that an innocent purchaser for value is one who buys the property of
another, without notice that some other person has a right or interest in such property and pays the full
price for the same, at the time of such purchase or before he has notice of the claims or interest of some
other person in the property.[17] A person dealing with registered land may safely rely on the
correctness of the certificate of title issued therefor and the law will in no way oblige him to go behind
the certificate to determine the condition of the property.[18]
Anent the issue that the respondents are entitled to only one half () of the portion of the conjugal
property corresponding to the share of Avelino, the pertinent provisions involved are Articles 165, 166
and 173 of the Civil Code, the law at the time the sale was contracted in 1986.
Art. 165. The husband is the administrator of the conjugal partnership.
Art. 166. Unless the wife has been declared a non compos mentis or a spendthrift, or is under civil
interdiction or is confined in a leprosarium, the husband cannot alienate or encumber any real property
of the conjugal partnership without the wifes consent. If she refuses unreasonably to give her consent,
the court may compel her to grant the same. x x x.
Art. 173. The wife may, during the marriage, and within ten years from the transaction questioned, ask
the courts for the annulment of any contract of the husband entered into without her consent, when
such consent is required, or any act or contract of the husband which tends to defraud her or impair her
interest in the conjugal partnership property. Should the wife fail to exercise this right, she or her heirs,
after the dissolution of the marriage, may demand the value of property fraudulently alienated by the
husband.
In the recent case of Heirs of Ignacia Aguilar-Reyes v. Spouses Mijares,[19] we reiterated the rule that
the husband cannot alienate or encumber any conjugal real property without the consent, express or
implied, of the wife, otherwise, the contract is voidable. To wit:
Indeed, in several cases the Court has ruled that such alienation or encumbrance by the husband is void.
The better view, however, is to consider the transaction as merely voidable and not void. This is
consistent with Article 173 of the Civil Code pursuant to which the wife could, during the marriage and
within 10 years from the questioned transaction, seek its annulment.
Likewise, in the case of heirs of Christina Ayuste v. Court of Appeals,[20] we declared that:
There is no ambiguity in the wording of the law. A sale of real property of the conjugal partnership
made by the husband without the consent of his wife is voidable. The action for annulment must be
brought during the marriage and within ten years from the questioned transaction by the wife. Where
the law speaks in clear and categorical language, there is no room for interpretation there is room only
for application.
In the present case, the deed of sale was executed on February 27, 1987. Rafael Ayuste died on October
13, 1989. However, it was only on March 2, 1990 that Christina Ayuste filed her complaint with the
lower court asking for the annulment of the sale. Although the action was filed within ten years from
the questioned transaction, it was not brought during the existence of the marriage which was dissolved
upon the death of Rafael Ayuste in 1989. Clearly, the action for annulment filed by Christina Ayuste was
barred for having been filed out of time.
The fact that Christina Ayuste only learned of the sale after the death of her husband is not material.
We affirm public respondents ruling that registration of the sale with the Register of Deeds constitutes
a notice to the whole world. Precisely, the purpose of the legislature in providing a system of
registration is to afford a means of publicity so that persons dealing with real property may search the
records and thereby acquire security against instruments the execution of which have not been revealed
to them. Since the deed of sale was registered on March 5, 1987, Christina Ayuste is presumed to have
constructive notice of the sale from such date.
This case is on all fours with the above-quoted Ayuste case. Under Article 173 of the Civil Code, an
action for the annulment of any contract entered into by the husband without the wifes consent must
be filed (1) during the marriage; and (2) within ten years from the transaction questioned. Where any
one of these two conditions is lacking, the action will be considered as having been filed out of time. In
the case at bar, while respondent filed her complaint for annulment of the deed of sale on July 8, 1994,
i.e., within the ten-year period counted from the execution of the deed of sale of the property on June
3, 1986, the marriage between her and Avelino had already been dissolved by the death of the latter on
November 20, 1993. In other words, her marriage to Avelino was no longer subsisting at the time she
filed her complaint. Therefore, the civil case had already been barred by prescription.
Actions prescribe by the mere lapse of time fixed by law.[21] The registration of the deed of sale
executed by Avelino in favor of petitioners served as constructive notice thereof. As such, respondent is
chargeable with knowledge of the sale as to let the prescriptive period run against her. Her complaint
must, therefore, be ordered dismissed.
WHEREFORE, the instant petition is GRANTED. Civil Case No. B-4488 is ordered DISMISSED on the
ground of prescription.
No pronouncement as to costs.
SO ORDERED.




SPOUSES LEONARDO P. DIMACULANGAN and LUZ DIMACULANGAN, SPOUSES NORBERTO M. VILLALUNA
and MILAGROS VILLALUNA, ROSAURO K. HERNANDEZ, SPOUSES FLORENTINO C. REYES, JR. and LOLITA
REYES, petitioners, vs. VIRGINIA AQUINO ROMASANTA, ROSALINDA A. BALAGTAS, GLORIA A. SANTOS,
REBECCA A. LEDESAMA, VALENTINA A. INOCENTES, ROMAN AQUINO, RODOLFO AQUINO and VIOLETA
A. FOJAS, substituted by ROYAL MOLUCCAN REALTY HOLDINGS, INC., respondents.
D E C I S I O N
CARPIO-MORALES, J.:
The present petition for review on certiorari seeks to set aside and nullify the January 31, 2001 decision
of the Court of Appeals in CA-GRCV. No. 58048.
The antecedents of the case culled from the records are as follows:
On November 11, 1954, Roman Aquino, owner of a parcel of land located in San Mateo, Norzagaray,
Bulacan, containing 75 hectares, 51 ares and 12 centares and registered in his name under Original
Certificate of Title No. 6 issued by the Register of Deeds of Meycauayan, Bulacan, together with his wife
Valentina Bernardo Aquino executed a Deed of Absolute Sale covering the land in favor of the spouses
Juan and Esperanza Fabella (spouses Fabella or the Fabellas) in consideration of P17,500.00. The real
agreement of the parties, however, was one of mortgage to secure the payment of a loan extended by
the Fabellas in favor of the Aquinos.
By virtue of the Deed of Absolute Sale, Juan Fabella was able to transfer the title of the land to his name,
under Transfer Certificate of Title (TCT) No. 15770.
Juan Fabella later sold the land to the siblings Saturnino, Domingo, Raymundo and Rosie D. Liwanag
(Liwanag group) in consideration of P40,000.00. TCT No. 15770 was thus cancelled and TCT No. 17592
was in its stead issued in the name of the Liwanag group.
On September 9, 1956, Valentina, on her behalf and in her capacity as administratrix of the estate of her
deceased husband Roman Aquino, filed before the then Court of First Instance of Bulacan a complaint
against the Fabellas for reformation of the Deed of Absolute Sale to Deed of Mortgage, cancellation of
TCT Nos. 15770 and 17592, and damages, which complaint was docketed as Civil Case No. 1376-M.
Valentina lost no time in causing the annotation of a Notice of Lis Pendens on the Liwanag groups TCT
No. 17592 at the local Registry of Deeds which recorded it as follows:
Entry No. 36645;
Kind: Notice of Lis Pendens; Executed in favor of: Valentina Bernardo Vda. de Aquino;Conditions: A
complaint has been filed in Court (Civil Case No.1376, Court of First Instance of Bulacan), affecting
theparcel of land herein described and now pending;Date of the Instrument: Oct. 9, 1956;Date of
Inscription: Oct. 9, 1956 at 9:40 a.m.
xxx[1]The Liwanag group moved to intervene in Civil Case No. 1376-M which was granted by the trial
court on March 4, 1961.
2. x x x xAfter Valentina rested her case in court, the defendants Fabellas, instead of presenting
evidence, filed a Manifestation dated July 17, 1968, the pertinent portion of which reads:
3. That however, in fairness to the plaintiff, herein defendants confirm plaintiffs testimony to the effect,
among others, that the true intention and real agreement between her and herein defendants with
respect to the property in litigation has always been one of mortgage to secure the payment of the
original consolidated loan of P16,500.00 pesos extended by the defendants ESPERANZA VDA. DE
FABELLA to the plaintiff and her deceased husband ROMAN AQUINO, but not a sale of said property to
defendant JUAN FABELLA;

4. x x x x
5. That with plaintiffs case already rested and on the basis of the foregoing manifestation and confession
of judgment, herein defendants respectfully submit this case for decision. x x x.[2] (Emphasis and
underscoring supplied)
The Liwanag group subsequently filed on November 21, 1968 a Manifestation stating that the
confession of judgment [contained in the partly quoted Manifestation of the Fabellas] appears to have
been executed under oath by defendants alone and does not show whether the same was prepared and
filed with the assistance and/or consent of their counsel as the latter has no signature thereon, hence,
its [Liwanag group] filing of a Manifestation in order to insure whether the confession of judgment was
prepared and filed [by the Fabellas] knowing the full meaning of the same, to afford the intervenor
[Liwanag group] opportunity to amend [its] pleadings in accordance therewith; and to determine
whether [the Fabellas] may be proceeded against for violation of the provisions of the Revised Penal
Code.[3]
On October 31, 1971, Valentina filed a Motion to Render Judgment, which was set for hearing on
February 22, 1972 on which latter date, however, the parties failed to appear despite notice, prompting
the trial court[4] to dismiss the case.[5]
Both Valentina and the Liwanag group moved to reconsider the dismissal order.
In the meantime or on August 24, 1972, Valentina died.[6]
By Order of August 31, 1972, the trial court reconsidered the February 22, 1972 order dismissing the
case.
By Order of October 31, 1972, the trial court, under a new presiding judge,[7] noted that during the
hearing of the case on October 26, 1972, only Camalayan, for the office of K. V. Faylona, appeared and
manifested that he was submitting the case for the intervenor without submission of any evidence
inasmuch as the defendant Esperanza Vda. de Fabella had confessed judgment as of July 2, 1968 in favor
of intervenor Liwanag in the amount of P15,000.00. The trial court concluded its order by stating that
if no request to submit memorandum is received, within ten days from receipt hereof, the case will be
deemed submitted for decision.
About four years later or on October 18, 1976, the trial court, under a new presiding judge,[8] issued an
order calling the parties to an annual conference and setting the same to November 13, 1976. The
parties, however, failed to appear at said scheduled conference of November 13, 1976, drawing the trial
court to, on even date, consider them as lacking interest to proceed with this case.[9] The trial court
thereupon ordered the case dismissed for failure to prosecute. Before the court adjourned its session,
the counsel of Valentina arrived and verbally moved to reconsider the order of dismissal. The trial court
thereafter issued the following order:
After the case was ordered dismissed for failure of the parties and their counsels to appear and before
the Court adjourned its session, Atty. Arsenio L. Cabrera came in to move for a reconsideration of the
order of dismissal. Considering this has been pending for twenty (20) years and the Court is now busy
trying other cases, the Court believes that the movant should better be given ten (10) days from today
to submit his written motion for reconsideration stating therein the history of the case and the reason
why the order of dismissal should be set aside. A copy of such motion should be furnished the
defendants who shall have five (5) days from receipt of a copy thereof to reply thereto, if they so desire
and thereafter, the motion for reconsideration shall be submitted for resolution.[10] (Emphasis
supplied)
It appears, however, that no written motion for reconsideration was ever filed by Valentinas counsel.
In the meantime, the Liwanag group offered to sell the property to herein petitioners spouses Leonardo
and Luz Dimaculangan, et al. Upon noting the notice of lis pendens annotated on the Liwanag groups
TCT No. 17592, petitioners imposed the condition that such annotation must first be cancelled before
they consider the offer.[11]
Lawyer-real estate broker Florentino Reyes, Jr., one of herein petitioners, thereafter helped [12] the
Liwanag group secure a certification[13] dated January 27, 1977, issued by one Spl. Deputy Clerk
Serafin R. Santos, who appears to have been a court interpreter of the Court of First Instance of Bulacan,
Branch I, reading:
This is to certify that the Order issued by this Court on November 13, 1976 [dismissing] Civil Case No.
1376-M, entitled VALENTINA BERNARDO DE AQUINO, Versus ESPERANZA VDA. DE FABELLA. et al.,
SATURNINO LIWANAG, et al., Intervenors, is already final and executory.
Issued upon request of Rosie D. Liwanag of 1167 Antipolo cor. J.A. Santos, Tondo, Manila for all legal
intents and purposes. (Emphasis and underscoring supplied)
On the basis of the above-mentioned certification, the following entry was annotated on TCT No. T-
17592:
Entry No. 3629 (M). Kind: Order of the Court of First Instance of Bulacan, Branch I, dismissing Civil Case
No. 1376-M, VALENTINA BERNARDO DE AQUINO versus ESPERANZA VDA. DE FABELLA, Defendants, for
failure to prosecute, which Order has become final and executory as per Certificate of the Deputy Clerk
of Court dated January 27, 1977, copies of which are on file with this Office. Date of Instrument:
November 13, 1976; Date of Inscription: January 27, 1977 at 10:40 a.m.[14]
On June 1, 1978, the Registry of Deeds of Meycauayan, Bulacan issued the following certification:[15]
This is to certify that according to the records available in this Office, the original of Transfer Certificate
of Title No. T-17592 (T-2942 (m), Bulacan Registry, (Meycauayan Branch), is complete and intact; and
that there are no liens and/or encumbrance appearing at the time of the issuance of this certificate.
Issued at the request of Mr. Domingo Liwanag. of Tondo Manila, who paid the certification fee of P3.00
under O.R. No. 0923146, issued on June 1, 1978. (Emphasis and underscoring supplied)
On August 10, 1978, the Liwanag group executed a Deed of Absolute Sale[16] covering the land in favor
of petitioners.
TCT No. T-17592 was thus cancelled on August 11, 1978 and TCT No. T-1702-P was in its stead issued in
the name of petitioners.[17]
On February 16, 1983, the Aquino children (respondents-heirs of Valentina) filed a motion to set aside
the order of dismissal issued on November 13, 1976 (for failure of the parties to appear for the annual
conference) at Branch 8 of the now Regional Trial Court where the case was eventually lodged,
anchored on the following grounds: x x x
7. That, the apparent reason as to why Atty. Arsenio M. Cabrera, counsel for plaintiff Valentina B.
Vda. de Aquino, was not so able to file his promised Motion to Set Aside Order of Dismissal, was that
plaintiff had already died as evidenced by her Certificate of Death, certifying that she died on AUGUST
24, 1972, EXHIBIT A of Motion for Substitution of plaintiff, and for which reasons, she was unable to
appear anymore on November 13, 1976 when so called for conference by then Honorable Fidel L.
Purisima, on which date the above-entitled case was ordered dismissed for failure to prosecute;
8. That, plaintiffs now most respectfully submit that the then plaintiff Valentina B. de Aquino had
already prosecuted her case, duly submitted and closed her case and it was then for the defendants and
intervenors to present their evidence, which by reason of technicalities of the law and dilatory tactics
resorted to by said defendants and intervenors, the above-entitled case had up to the present remained
pending;
9. That, it is further respectfully submitted that Sec. 6 of Rule 22 of the Rules of Court refers to
annual conference on pending cases, and with due respect to this Honorable Court, the said conference
is a matter of an administrative ways and means in order to justifiable termination of all cases pending
before courts of justice and does not become a ground for dismissal of any case on the basis of parties
and counsels non-appearance in said conference. x x x[18] (Emphasis and underscoring supplied)
The motion was denied by Order of June 7, 1983.
Respondents-heirs of Valentina filed a Motion for Reconsideration of said June 7, 1983 Order which was,
by Order of August 26, 1986, by again a new presiding judge,[19] granted on the ground that
respondents-heirs of Valentina did not fail to prosecute the case.[20] Said the trial court:
First for reconsideration is the issue of whether the dismissal done in open court by then Judge Purisima
has ever become final. Nowhere in the record does it show that the motion for its reconsideration
interposed immediately after the dismissal has been resolved. It is true that counsel for the plaintiffs
failed to file within the extended time the formal motion as required by then Judge Purisima in his
order, but after a scrutinizing second look at the circumstances, the court now believes that such failure
should not be held to have resulted in the cancellation or withdrawal of the standing verbal motion. A
careful perusal of said order reveals that it was not meant to disregard the oral motion but to afford the
then presiding judge, who was still unfamiliar with the progress of the case, the opportunity to be better
apprised of its history and development. Proof enough that the judge needed a briefing is the fact that
he dismissed the case for failure to prosecute when the voluminous record shows that there had
already been several incidents, and in fact, trial, particularly the presentation of evidence by the
plaintiff, and the confession of judgment by the defendant, had taken place before he became a judge of
this court. In fact, the record reveals that the plaintiff has submitted an unusual bulk of documentary
evidence consisting of thirty-nine (39) exhibits (A to Z to AA-1).[21] (Emphasis and underscoring
supplied)
On the merits of respondents-heirs of Valentinas Motion for Reconsideration of the November 13, 1976
Order of dismissal, the trial court held:
And now to the merits of the oft-repeated verbal motion for reconsideration. With respect to the
question of whether it is in order for the substituting plaintiffs to suffer dismissal of their case by the
mere tardiness of their counsel at the conference set on November 13, 1976, it should be emphasized
that this conference was called under Section 6 of Rule 22 of the Rules of Court, which reads:
Sec. 6. Annual Conference on pending cases. -At the end of one year from the day the trial proper has
commenced, and every year thereafter, if the trial has not been terminated, the judge shall call the
parties and their counsel to a conference to devise ways and means of terminating the trial. A statement
of the result of the conference, signed by the judge and counsel, shall be attached to the record,
showing the reason why the trial has not terminated, number and names of witnesses yet to be
presented by the parties; any facts stipulated during the conference; the efforts exerted to settle the
case and similar matters. Copy of the statement shall be furnished the Supreme Court and the Secretary
of Justice within ten (10) days after such conference.[22]
The trial court thus disposed:
Premises considered,
1) The order of June 7, 1983 denying the motion to set aside is hereby reconsidered in the sense that
the order dated November 13, 1976 is deemed not to have become final;
2) The said order of dismissal of November 13, 1976 is hereby reconsidered, since factually, the plaintiffs
did not fail to prosecute; and
3) The parties are hereby enjoined to move in the premises within fifteen days from receipt hereof for
whatever further proceedings that may now follow in accordance with the rules [23]
On October 4, 1988, the trial court, under still another judge,[24] finding that the contract between the
Aquinos and the Fabellas was one of equitable mortgage, rendered judgment in favor of respondents-
heirs of Valentina, the dispositive portion of which reads:
WHEREFORE, the Court hereby renders judgment as follows:
1) Declaring the Contract of Deed of Sale dated November 11, 1954, executed by the spouses Roman
Aquino and Valentina Bernardo in favor of Juan Fabella over the property covered by Original Certificate
of Title No. 6, Registry of Deeds of Bulacan, as an equitable mortgage;
2) Ordering the Register of Deeds of Malolos, Bulacan, to annul and cancel Transfer Certificate of Title
No. 15770 in the name of Juan Fabella, and Transfer Certificate of Title No. 17592 in the names of
Saturnino D. Liwanag, Domingo D. Liwanag, Raymundo D. Liwanag, and Rosie D. Liwanag, over the
property subject matter of this case, and to issue the corresponding title thereon in the names of
Spouses Roman Aquino and Valentina Bernardo;
3) Ordering the spouses Roman Aquino and Valentina Bernardo to pay the amount of P40,000.00 to the
intervenors as reimbursement of the purchase price of the land subject thereof, with legal interest of
12% per annum from October 1956 until paid, the amount of P12,000.00 as moral and exemplary
damages, and P15,000.00 as attorneys fees, plus expenses of litigation.[25] (Emphasis and underscoring
supplied)
There appears to have been no appeal taken from the above-said judgment.
Respondents-heirs of Valentina, alleging that when their counsel sought to execute the judgment, he
discovered that the Liwanag group had sold the land to petitioners, filed on August 14, 1992 before the
RTC of Bulacan a complaint,[26] docketed as Civil Case No. 534-M-92, for revocation and annulment of
title and reconveyance, against petitioners and the Liwanag group, they alleging that they (said
respondents-heirs of Valentina) have been in open, continuous possession and occupation of the land,
and that the defendants were in bad faith.
In their Answer with compulsory counterclaim,[27] petitioners denied that respondents-heirs of
Valentina have been in open, continuous possession and occupation of the land, they contending that
they were the ones who exercised ownership thereover after they bought it (on August 10, 1978) and
have been paying real estate taxes thereon; and that they are innocent purchasers for value of the land
because at the time of the purchase, there were no liens and/or encumbrances annotated on the title.
Replying,[28] respondents-heirs of Valentina denied the allegations of petitioners, they contending that
payment of real estate taxes does not accord petitioners better right to the land; that petitioners were
not in good faith and purchasers for value considering that the land has been under litigation for more
than 30 years; and that the January 27, 1977 certification issued by the Spl. Deputy Clerk that the
November 13, 1976 dismissal order of the trial court had become final and executory should have
necessarily put petitioners on guard and prompted them to determine the actual status of the land.
Claiming res judicata, the Liwanag group filed a motion to dismiss[29] the case, inviting attention to a
portion of the decision rendered in Civil Case No. 1376-M reading:
x x x x
The resolution of this Court to decide this case is not based merely on the desire to give the parties their
just due and put an end to a protracted litigation. Rather, it finds support under the assumption that the
confession of judgment made by the defendant and concurred in by the plaintiffs and the intervenors
with their corresponding rights and obligations is in the form of a compromise agreement.
x x x x
Defendants (Esperanza Vda. de Fabella, et al.) admit the claim of plaintiffs that the contested document
was in fact a mortgage and not a sale, and his liability to the intervenors (Saturnino D. Liwanag, et al.).
Plaintiffs, in exchange for having the title of the property reverted to them, will assume the liabilities of
defendants to intervenors and also waived their claim for damages. On reimbursement of the purchase
price, damages and attorneys fees without presenting evidences, but will return the title to the
plaintiffs. Although no direct confrontation or meeting was held among the parties, it is evident and
apparent that there is an agreement to settle the dispute in court. A confession of judgment which is
intended to put an end to a litigation is in the nature of a compromise. (Republic vs. Gacuy, L-21416,
Dec. 31, 1965). CONTRACT OR AGREEMENT, THEREFORE, IS PRESUMED TO HAVE BEEN ENTERED INTO.
(Underlining in the original)[30]
In respondents-heirs of Valentinas opposition[31] to the Liwanag groups motion to dismiss, they
contended that there was no identity of cause of action between Civil Case No. 1376-M and Civil Case
No. 534-M-92 as the former involved a reformation of contract while the latter involved the cancellation
of title of petitioners due to fraud and bad faith; and that the Liwanag group should not be given the
courtesy of a liberal interpretation of the Rules since they are the ones to be blamed for this second
action as they, in bad faith, sold the land.
Petitioners also filed their own motion to dismiss,[32] alleging that they are innocent purchasers for
value, it having sufficed that a certificate of title on its face is free from all liens and encumbrances, valid
and on file with the Register of Deeds at the time of purchase; and that they had been paying the real
property taxes thereon under color of a valid title for more than ten (10) years and, therefore, they are
deemed to have acquired the land by ordinary prescription, hence the complaint in Civil Case No. 534-
M-92 had long prescribed under Article 1134 of the Civil Code.
Respondents-heirs of Valentina later filed a motion for admission[33] of, to which was attached, their
amended complaint,[34] alleging that, inter alia., the certification issued by the Spl. Deputy Clerk was
illegal and improper and had no legal force and effect as he is not a lawyer and no entry of such order
appeared in the judgment book; that both petitioners and the Liwanag group concocted the strategy of
procuring said certification for they fully knew that at the time of the issuance of the dismissal order, the
case was already submitted for decision and there was a pending verbal motion for reconsideration of
the same order; and that at the time of purchase by petitioners, the land was still under litigation and
the sale should, therefore, have borne the approval of the trial court.
The Amended Complaint was admitted.
Answering the Amended Complaint,[35] petitioners raised prescription and invoked Section 48 of
Presidential Decree No. 1529 (PD1529) which provides that a certificate of title shall not be subject to
collateral attack and cannot be altered, modified or cancelled except in a direct proceeding in
accordance with law.
As defined in the trial courts Pre-trial Order, the following issues were raised:[36]
1. Whether or not the Order of the Court dismissing Civil Case No. 1376-[M] for failure to prosecute,
dated November 13, 1976, was ever entered in the Judgment Book pursuant to Sec. 9 of Rule 136 of the
Rules of Court:
2. Whether or not the certification issued by [Spl. Deputy Clerk] Serafin Santos that the Order of
Dismissal of Civil Case No. 1376-[M] had become final and executory was valid;
3. Whether or not the plaintiffs have been in open, adverse, continuous possession and occupation in
the concept of owners of the property subject matter of the instant case since the time of Roman
Aquino up to the present;
4. Whether or not the defendants Dimaculangans, et al., are buyers in good faith and for value;
5. Whether or not moral and exemplary damages as well as attorneys fees may be awarded to the
prevailing party. (Underscoring supplied)
Finding petitioners to be buyers in good faith and for value, and the cause of action for damages against
the Liwanag group to have prescribed, the trial court, by Decision[37] of June 25, 1996, dismissed the
complaint including the counterclaims of both sets of defendants for damages and attorneys fees
which are considered as mere natural consequences of a legitimate litigation not tainted with malice.
On respondents-heirs of Valentinas motion for reconsideration, the trial court,[38] holding that it is
more in accord with justice and equity to rule x x x [that] the action taken by respondents [-heirs of
Valentina] against the Liwanag group has not yet prescribed,[39] partially reconsidered its decision by
Order of August 20, 1997.
In partially reconsidering its decision, the trial court held:
As the Court has found and still finds clear from the evidence presented, it was the group of the sellers,
the defendant Liwanags, who defrauded the plaintiffs and apparently misled defendant Dimaculangans.
et al., as their innocent buyers, into believing that the case against them by plaintiffs had indeed been
already terminated for good, as attested to by the certification of the finality of the dismissal order. The
truth, however, and these defendant Dimaculangans knew about it all along, is that they had no right to
sell the property to anyone, because the court then trying plaintiffs complaint against them had already
declared that plaintiffs had a better right to the property in question.[40]
The trial court accordingly disposed as follows:
WHEREFORE, conformably with all the foregoing, the Decision of the Court dated June 25, 1996, is
hereby partially reconsidered and modified with the judgment ordering defendants Saturnino D.
Liwanag, Domingo D. Liwanag, Raymundo D. Liwanag, Rosie D Liwanag. and/or their respective lawful
heirs in case of death, to pay, jointly and severally, the herein plaintiffs the amount of P5,000,000.00 as
damages[,] including actual, moral, exemplary, and attorneys fees.
The dismissal of the case against defendant Dimaculangans, et al.. including the counterclaims, remains,
still without pronouncement as to costs.[41] (Underscoring supplied)
Respondents-heirs of Valentina and the Liwanag group appealed to the Court of Appeals.
During the pendency of the appeal or on February 15, 2000, the Court of Appeals approved the sale of
the rights and interests of respondents-heirs of Valentina to Royal Moluccan Realty Holdings, Inc. and
granted the motion for substitution of parties.
By its challenged decision,[42] the Court of Appeals, finding petitioners not to be innocent purchasers
for value, modified that of the trial court, disposing as follows:
WHEREFORE, premises considered, the Decision dated June 25, 1996 as modified by the Order dated
August 20, 1997 is further MODIFIED. Transfer Certificate of Title No. T-1702 -P(M) issued in the names
of Sps. Leonardo and Luz Dimaculangan, Sps. Norberto and Milagros Villaluna, Rosauro Hernandez and
Sps. Florentino and Lolita Reyes, Jr.. is hereby declared NULL and VOID, and the Register of Deeds of
Bulacan is ORDERED to issue a new Transfer Certificate of Title to Royal Moluccan Realty Holdings, Inc..
The award of P5,000,000.00 as damages and attorneys fees being excessive is likewise reduced to
P50,000.00. Costs against the LIWANAG GROUP.
Hence, the present petition by petitioners Dimaculangan et al. raising the following issues:
A. WHETHER OR NOT THE COURT OF APPEALS RADICALLY DEPARTED FROM JURISPRUDENCE IN
HOLDING THAT PETITIONERS ARE INNOCENT PURCHASERS FOR VALUE OF THE SUBJECT PROPERTY[;]
B. WHETHER OR NOT THE COURT OF APPEALS ACTED CONTRARY TO LAW AND JURISPRUDENCE IN
REJECTING THE PETITIONERS ARGUMENT OF PRESCRIPTION AND LACHES[; and]
C. WHETHER OR NOT THE COURT OF APPEALS ACTED CONTRARY TO LAW, JURISPRUDENCE AND
DEVIATED FROM ACCEPTED STANDARDS IN APPLYING THE DOCTRINE OF CONCLUSIVENESS OF
JUDGMENT TO PETITIONERS DESPITE THEIR BEING INNOCENT PURCHASERS FOR VALUE.
In holding that petitioners were not innocent purchasers for value, the Court of Appeals rationalized:
In the case at bar, it is undisputed that defendant-appellee Florentino C. Reyes, Jr., one of the co-owners
of the lot subject of this case, the others being Spouses Leonardo P. Dimaculangan x x x , was the lawyer
and broker in the negotiations for the purchase of the lot from appellees LIWANAG GROUP. As broker
and agent of the LIWANAG GROUP and as lawyer, consultant and broker of Leonardo Dimaculangan, et
al., it cannot be doubted that Atty. Reyes was very much aware of Civil Case No. 1376-M involving the
same land subject of the negotiations between the LIWANAG GROUP and the DIMACULANGAN GROUP,
to wit: x x x
From the foregoing admissions of Florentino C. Reyes, Jr., it can be inferred that he went over the
records of Civil Case No. 1376-M. Presumably, he read and went over the major pleadings of the parties,
the orders in said Civil case No. 1376-M and the transcripts and minutes of the proceedings. And,
assuming that Atty. Reyes did not go over the case records of Civil Case No. 1376-M by reason of the
November 13, 1976 Order of Dismissal, such failure or refusal to verify the actual status of the case
when such knowledge of the dismissal order should put him to possible defects of the title of the
LIWANAGs will not make him and the rest of the DIMACULANGAN GROUP innocent purchasers in good
faith if afterwards it turns out that such title is actually defective. The purchasers, DIMACULANGAN
GROUP, by the carry over of the notice of lis pendens from TCT No. 15770 registered in the name of
Juan Fabella and Esperanza to the title of LIWANAGs should have been put on guard of the legality and
validity of the title of the LIWANAGs since the case dates back to the title of the predecessors-in-interest
of the LIWANAGs and therefore, the title of the LIWANAGs were issued even during the pendency of
Civil Case No. 1376-M.
Moreover, as lawyer and as broker of the proposed seller and the proposed buyer, Atty. Reyes should
have conducted a thorough research and investigation of the title and rights of LIWANAG. More so that
the order of dismissal was made under Rule 22 which is not a judgment on the merits. Well-established
is the rule that a purchaser who has knowledge of the facts should put him into inquiry and investigation
as to possible defects of the title of the vendor and fails to make such inquiry and investigation cannot
claim that he is purchaser in good faith. Knowledge of prior transfer of registered property by a
subsequent purchaser makes him a purchaser in bad faith and his knowledge of such transfer vitiates his
title acquired by virtue of the later instrument of conveyance which was registered in the Registry of
Property.[43] (Citations omitted)
Petitioners contend that there is nothing in the testimony of Atty. Reyes, or any other witness, to
support the conclusion of the Court of Appeals that Atty. Reyes acted as counsel for the petitioners
and/or for the Liwanag group in the negotiations for the purchase of the land, for while he testified that
he was the only lawyer in the group, it does not follow that he acted as lawyer in the consummation of
the sale.
Petitioners also claim that no bad faith can be imputed to Atty. Reyes in proceeding with the sale as he
was armed with the dismissal order of Civil Case No. 1376-M and the certification of finality thereof
issued by the Spl. Deputy Clerk.
Invoking the ruling in Maneclang v. Baun,[44] petitioners contend that it was not incumbent upon them
to go beyond the order of dismissal, otherwise, as Maneclang held, no order of any court can be relied
upon by the parties.
In Centeno v. Court of Appeals,[45] this Court ruled:
Well settled is the rule that all persons dealing with property covered by Torrens certificate of title are
not required to go beyond what appears on the face of the title. When there is nothing on the certificate
of title to indicate any cloud or vice in the ownership of the property, or any encumbrance therein, the
purchaser is not required to explore further than what the Torrens title upon its face indicates in quest
for any hidden defect or inchoate right that may subsequently defeat his right thereto. (Underscoring
supplied)
In the present case, although at the time of purchase by petitioners, the notice of lis pendens annotated
on the Liwanag groups title was already cancelled by a subsequent annotation, they were put on notice
of a litigation involving the land as the title of the Liwanag group bore the said annotations as in fact
they even imposed as a condition before purchasing the property the cancellation thereof.
Even if petitioners were issued the certification, they should have been put on guard as to the possibility
of the existence of any defect or flaw therein since it did not mention that the judgment was entered in
the book of entries of judgments as required by the Rules of Court,[46] knowledge or awareness of
which by petitioner Atty. Reyes, a member of the legal profession, was expected. As held in Egao v.
Court of Appeals:[47]
Where a purchaser neglects to make the necessary inquiries and closes his eyes to facts which should
put a reasonable man on his guard as to the possibility of the existence of a defect in his vendors title,
and relying on the belief that there was no defect in the title of the vendor, purchases the property
without making any further investigation, he cannot claim that he is a purchaser in good faith for value.
In ruling out prescription of respondents-heirs of Valentinas cause of action, the Court of Appeals
declared:
As discussed earlier, the date of registration of the title to the names of the DIMACULANGAN GROUP on
August 11, 1978 cannot be the date when the ten (10) year prescription should be reckoned because on
that date, Civil Case No. 1376-M was still pending as per the Ligot-Telan Order. Moreover, it was only on
October 4, 1989 when Civil Case No. 1376-M was finally decided by Judge Valentin Cruz in their favor
and that the instant suit was filed on August 14, 1992 or only three (3) years since then. Therefore, in
view of such fact, the present case has not yet prescribed in the same manner that the principle of
laches cannot also be applied, for it was only when they tried to execute the final judgment in Civil Case
No. 1376-M that they discovered that the property was already sold to the DIMACULANGAN GROUP.
The provision therefore that an action for reconveyance of real property resulting from fraud prescribes
in four (4) years from the discovery of fraud or that an action based on implied constructive trust
prescribes in ten (10) years cannot be applied in the case at bar based on attendant circumstances
above stated.[48] (Underscoring supplied)
Petitioners submit that the above ruling is contrary to Section 52 of PD 1529 which reads:
SECTION 52. Constructive notice upon registration. - Every conveyance, mortgage, lease, lien,
attachment, order, judgment, instrument or entry affecting registered land shall, if registered, filed or
entered in the office of the Register of Deeds for the province or city where the land to which it relates
lies, be constructive notice to all persons from the time of such registering, filing or entering,
Petitioners argue that if the action for reconveyance is based on fraud, it prescribes in four (4) years
from discovery thereof, and if it is based on the existence of a constructive trust, it prescribes in ten (10)
years from the date of its creation. In both cases, petitioners continue, discovery of fraud and the
creation of the trust are deemed to have taken place at the time of registration, they citing
Buenaventura v. Court of Appeals [49] and Millena v. Court of Appeals. [50] They conclude that as the
instant case was filed by respondents-heirs of Valentina on August 14, 1992 or fourteen (14) years after
the title of petitioners were registered, the action had already prescribed. Petitioners thesis does not
persuade.
With the annotation of lis pendens on the spouses Fabellas title, which annotation was subsequently
carried over to the title issued to the Liwanag group, respondents-heirs of Valentina were assured that
their rights would be protected regardless of how many times ownership of the land is transferred since
the annotation would always be carried over to subsequent titles.
As Civil Case No. 1376-M was terminated only in 1988, respondents-heirs of Valentina had the right to
believe that it was only at such time that the notice of lis pendens would be cancelled and any transfer
of the subject property before 1988 would always be subject to the notice of lis pendens.
Since the cancellation of the Fabellas title while the litigation remained pending did not cancel the
notice of lis pendens as it was carried over to the subsequent titles of the Liwanag group, to consider the
prescriptive period to have run from the registration of petitioners title would result to manifest
injustice to respondents-heirs of Valentina. It bears emphasis that the rules on prescription and
constructive notice are intended to prevent, not cause, injustice.
The Liwanag groups submission in its Comment to the petition at bar that it cannot be considered guilty
of fraud in the absence of supporting evidence; and that the trial courts dismissal order in Civil Case No.
1376-M, together with the certification as to its finality and the records of the Register of Deeds, led
them to entertain the honest belief that it was already free to sell the land, does not lie. For it knew that
its predecessors, the spouses Fabella, were not the owners of the land as they were just mortgagees.
WHEREFORE, the petition is hereby DENIED.
SO ORDERED.







Alinas Vs. Alinas April 14, 2008

D E C I S I O N
AUSTRIA-MARTINEZ, J.:
This resolves the Petition for Review on Certiorari under Rule 45 of the Rules of Court, praying that the
Decision[1] of the Court of Appeals (CA) dated September 25, 2002, and the CA Resolution[2] dated
March 31, 2003, denying petitioners' motion for reconsideration, be reversed and set aside.
The factual antecedents of the case are as follows.

Spouses Onesiforo and Rosario Alinas (petitioners) separated sometime in 1982, with Rosario
moving to Pagadian City and Onesiforo moving to Manila. They left behind two lots identified as Lot
896-B-9-A with a bodega standing on it and Lot 896-B-9-B with petitioners' house. These two lots are
the subject of the present petition.

Petitioner Onesiforo Alinas (Onesiforo) and respondent Victor Alinas (Victor) are brothers.
Petitioners allege that they entrusted their properties to Victor and Elena Alinas (respondent spouses)
with the agreement that any income from rentals of the properties should be remitted to the Social
Security System (SSS) and to the Rural Bank of Oroquieta City (RBO), as such rentals were believed
sufficient to pay off petitioners' loans with said institutions. Lot 896-B-9-A with the bodega was
mortgaged as security for the loan obtained from the RBO, while Lot 896-B-9-B with the house was
mortgaged to the SSS. Onesiforo alleges that he left blank papers with his signature on them to
facilitate the administration of said properties.

Sometime in 1993, petitioners discovered that their two lots were already titled in the name of
respondent spouses.

Records show that after Lot 896-B-9-A was extra-judicially foreclosed, Transfer Certificate of Title
(TCT) No. T-11853[3] covering said property was issued in the name of mortgagee RBO on November 13,
1987. On May 2, 1988, the duly authorized representative of RBO executed a Deed of Installment Sale
of Bank's Acquired Assets[4] conveying Lot 896-B-9-A to respondent spouses. RBO's TCT over Lot 896-B-
9-A was then cancelled and on February 22, 1989, TCT No. T-12664[5] covering said lot was issued in the
name of respondent spouses.

Lot 896-B-9-B was also foreclosed by the SSS and on November 17, 1986, the Ex-Oficio City Sheriff
of Ozamis City issued a Certificate of Sale[6] over said property in favor of the SSS. However, pursuant
to a Special Power of Attorney[7] signed by Onesiforo in favor of Victor, dated March 10, 1989, the latter
was able to redeem, on the same date, Lot 896-B-9-B from the SSS for the sum of P111,110.09. On June
19, 1989, a Certificate of Redemption[8] was issued by the SSS.

Onesiforo's signature also appears in an Absolute Deed of Sale[9] likewise dated March 10, 1989,
selling Lot 896-B-9-B to respondent spouses. The records also show a notarized document dated March
10, 1989 and captioned Agreement[10] whereby petitioner Onesiforo acknowledged that his brother
Victor used his own money to redeem Lot 896-B-9-B from the SSS and, thus, Victor became the owner of
said lot. In the same Agreeement, petitioner Onesiforo waived whatever rights, claims, and interests he
or his heirs, successors and assigns have or may have over the subject property. On March 15, 1993, by
virtue of said documents, TCT No. 17394[11] covering Lot 896-B-9-B was issued in the name of
respondent spouses.

On June 25, 1993, petitioners filed with the Regional Trial Court (RTC) of Ozamis City a complaint
for recovery of possession and ownership of their conjugal properties with damages against respondent
spouses.

After trial, the RTC rendered its Decision dated November 13, 1995, finding that:

1. Plaintiffs have not proven that they entrusted defendant spouses with the care and
administration of their properties. It was Valeria Alinas, their mother, whom plaintiff Onesiforo
requested/directed to take care of everything and sell everything and Teresita Nuez, his elder sister,
to whom he left a verbal authority to administer his properties.

2. Plaintiffs have not proven their allegation that defendant spouses agreed to pay rent of
P1,500.00 a month for the occupancy of plaintiffs' house, which rent was to be remitted to the SSS and
Rural Bank of Oroquieta to pay off plaintiffs' loan and to keep for plaintiffs the rest of the rent after the
loans would have been paid in full.

3. Plaintiff Onesiforo's allegation that defendants concocted deeds of conveyances (Exh. M,
N & O) with the use of his signatures in blank is not worthy of credence. Why his family would
conspire to rob him at a time when life had struck him with a cruel blow in the form of a failed marriage
that sent him plummeting to the depths of despair is not explained and likewise defies comprehension.
That his signatures appear exactly on the spot where they ought to be in Exhs. M, N & O belies his
pretension that he affixed them on blank paper only for the purpose of facilitating his sister Terry's acts
of administration.

This Court, therefore, does not find that defendant spouses had schemed to obtain title to
plaintiffs' properties or enriched themselves at the expense of plaintiffs.[12]

with the following dispositive portion:

WHEREFORE, this Court renders judgment:

1. declaring [respondents] Victor Jr. and Elena Alinas owners of Lot 896-B-9-A with the building
(bodega) standing thereon and affirming the validity of their acquisition thereof from the Rural Bank of
Oroquieta, Inc.;

2. declaring [petitioners] Onesiforo and Rosario Alinas owners of Lot 896-B-9-B with the house
standing thereon, plaintiff Onesiforo's sale thereof to defendants spouses without the consent of his
wife being null and void and defendant spouses' redemption thereof from the SSS not having conferred
its ownership to them;

3. ordering [petitioners] to reimburse [respondents] Victor Jr. and Elena Alinas the redemption
sum of P111,100.09, paid by them to the SSS (without interest as it shall be compensated with the rental
value of the house they occupy) within sixty days from the finality of this judgment;

4. ordering [respondents] to vacate the subject house within thirty days from receiving the
reimbursement mentioned in No. 3 above; and

5. reinstating TCT No. T-7248 in the name of [petitioners] and cancelling TCT No. T-17394 in the
name of [respondents].

No costs.

SO ORDERED.[13]

Only respondent spouses appealed to the CA assailing the RTC's ruling that they acquired Lot 896-B-9-B
from the SSS by mere redemption and not by purchase. They likewise question the reimbursement by
petitioners of the redemption price without interest.

On September 25, 2002, the CA promulgated herein assailed Decision, the dispositive portion of
which reads:

WHEREFORE, in view of the foregoing disquisitions, the first paragraph of the dispositive portion
of the assailed decision is AFFIRMED and the rest MODIFIED as follows:

1. declaring [respondents] Victor Jr. and Elena Alinas owners of Lot 896-B-9-A with the building
(bodega) standing thereon and affirming the validity of their acquisition thereof from the Rural Bank of
Oroquieta, Inc.;

2. declaring Onesiforo's sale of Lot 896-B-9-B together with the house standing thereon to
[respondents] in so far as Rosario Alinas, his wife's share of one half thereof is concerned, of no force
and effect;

3. ordering [petitioners] Rosario Alinas to reimburse [respondents] the redemption amount of
P55,550.00 with interest of 12% per annum from the time of redemption until fully paid.

4. ordering the [respondents] to convey and transfer one half portion of Lot 896-B-9-B unto
Rosario Alinas, which comprises her share on the property simultaneous to the tender of the above
redemption price, both to be accomplished within sixty (60) days from finality of this judgment.

5. in the event of failure of [respondents] to execute the acts as specified above, [petitioner]
Rosario Alinas may proceed against them under Section 10, Rule 39 of the 1997 Rules of Civil Procedure.

6. on the other hand, failure of [petitioner] Rosario Alinas to reimburse the redemption price
within sixty (60) days from the finality of this decision will render the conveyance and sale of her share
by her husband to [respondents], of full force and effect.

No costs.

SO ORDERED.[14]

Petitioners moved for reconsideration but the CA denied said motion per herein assailed
Resolution dated March 31, 2003.

Hence, the present petition on the following grounds:

The Honorable Court of Appeals abuse [sic] its discretion in disregarding the testimony of the
Register of Deeds, Atty. Nerio Nuez, who swore that the signatures appearing on various TCTs were not
his own;

The Honorable Court of Appeals manifestly abuse [sic] its discretion in declaring the
respondents to be the owners of Lot 896-B-9-A with the building (bodega) standing thereon when they
merely redeemed the property and are therefore mere trustees of the real owners of the property;

It was pure speculation and conjecture and surmise for the Honorable Court of Appeals to
impose an obligation to reimburse upon petitioners without ordering respondents to account for the
rentals of the properties from the time they occupied the same up to the present time and thereafter
credit one against the other whichever is higher.[15]

The first issue raised by petitioners deserves scant consideration. By assailing the authenticity of
the Registrar of Deeds' signature on the certificates of title, they are, in effect, questioning the validity of
the certificates.

Section 48 of Presidential Decree No. 1529 provides, thus:

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

Pursuant to said provision, the Court ruled in De Pedro v. Romasan Development Corporation[16] that:

It has been held that a certificate of title, once registered, should not thereafter be impugned,
altered, changed, modified, enlarged or diminished except in a direct proceeding permitted by law. x x
x

The action of the petitioners against the respondents, based on the material allegations of the
complaint, is one for recovery of possession of the subject property and damages. However, such action
is not a direct, but a collateral attack of TCT No. 236044.[17] (Emphasis supplied)

As in De Pedro, the complaint filed by herein petitioners with the RTC is also one for recovery of
possession and ownership. Verily, the present case is merely a collateral attack on TCT No. T-17394,
which is not allowed by law and jurisprudence.

With regard to the second issue, petitioners claim that it was the CA which declared respondent
spouses owners of Lot 896-B-9-A (with bodega) is misleading. It was the RTC which ruled that
respondent spouses are the owners of Lot 896-B-9-A and, therefore, since only the respondent spouses
appealed to the CA, the issue of ownership over Lot 896-B-9-A is not raised before the appellate court.
Necessarily, the CA merely reiterated in the dispositive portion of its decision the RTC's ruling on
respondent spouses' ownership of Lot 896-B-9-A.

It is a basic principle that no modification of judgment or affirmative relief can be granted to a party who
did not appeal.[18] Hence, not having appealed from the RTC Decision, petitioners can no longer seek
the reversal or modification of the trial court's ruling that respondent spouses had acquired ownership
of Lot 896-B-9-A by virtue of the sale of the lot to them by RBO.

Furthermore, the CA did not commit any reversible error in affirming the trial court's factual
findings as the records are indeed bereft of proof to support the petitioners allegations that they left
the care and administration of their properties to respondent spouses; and that there is an agreement
between petitioners and respondent spouses regarding remittance to the SSS and the RBO of rental
income from their properties. Thus, respondent spouses may not be held responsible for the non-
payment of the loan with RBO and the eventual foreclosure of petitioners' Lot 896-B-9-A.

Petitioners do not assail the validity of the foreclosure of said lot but argues that respondent
spouses merely redeemed the property from RBO. This is, however, belied by evidence on record which
shows that ownership over the lot had duly passed on to the RBO, as shown by TCT No. T-11853
registered in its name; and subsequently, RBO sold the lot with its improvements to respondent
spouses. Needless to stress, the sale was made after the redemption period had lapsed. The trial court,
therefore, correctly held that respondent spouses acquired their title over the lot from RBO and
definitely not from petitioners.

However, with regard to Lot 896-B-9-B (with house), the Court finds it patently erroneous for the
CA to have applied the principle of equity in sustaining the validity of the sale of Onesiforos one-half
share in the subject property to respondent spouses.

Although petitioners were married before the enactment of the Family Code on August 3, 1988,
the sale in question occurred in 1989. Thus, their property relations are governed by Chapter IV on
Conjugal Partnership of Gains of the Family Code.

The CA ruling completely deviated from the clear dictate of Article 124 of the Family Code which
provides:

Art. 124. The administration and enjoyment of the conjugal partnership property shall belong to
both spouses jointly. x x x

In the event that one spouse is incapacitated or otherwise unable to participate in the administration of
the conjugal properties, the other spouse may assume sole powers of administration. These powers do
not include the powers of disposition or encumbrance which must have the authority of the court or the
written consent of the other spouse. In the absence of such authority or consent the disposition or
encumbrance shall be void. x x x (Underscoring and emphasis supplied)

In Homeowners Savings & Loan Bank v. Dailo,[19] the Court categorically stated thus:

In Guiang v. Court of Appeals, it was held that the sale of a conjugal property requires the consent
of both the husband and wife. In applying Article 124 of the Family Code, this Court declared that the
absence of the consent of one renders the entire sale null and void, including the portion of the conjugal
property pertaining to the husband who contracted the sale. x x x

x x x x

x x x By express provision of Article 124 of the Family Code, in the absence of (court) authority
or written consent of the other spouse, any disposition or encumbrance of the conjugal property shall
be void. [20]

Thus, pursuant to Article 124 of the Family Code and jurisprudence, the sale of petitioners'
conjugal property made by petitioner Onesiforo alone is void in its entirety.

It is true that in a number of cases, this Court abstained from applying the literal import of a
particular provision of law if doing so would lead to unjust, unfair and absurd results.[21]

In the present case, the Court does not see how applying Article 124 of the Family Code would
lead to injustice or absurdity. It should be noted that respondent spouses were well aware that Lot 896-
B-9-B is a conjugal property of petitioners. They also knew that the disposition being made by Onesiforo
is without the consent of his wife, as they knew that petitioners had separated, and, the sale documents
do not bear the signature of petitioner Rosario. The fact that Onesiforo had to execute two documents,
namely: the Absolute Deed of Sale dated March 10, 1989 and a notarized Agreement likewise dated
March 10, 1989, reveals that they had full knowledge of the severe infirmities of the sale. As held in
Heirs of Aguilar-Reyes v. Spouses Mijares,[22] a purchaser cannot close his eyes to facts which should
put a reasonable man on his guard and still claim he acted in good faith.[23] Such being the case, no
injustice is being foisted on respondent spouses as they risked transacting with Onesiforo alone despite
their knowledge that the subject property is a conjugal property.

Verily, the sale of Lot 896-B-9-B to respondent spouses is entirely null and void.

However, in consonance with the salutary principle of non-enrichment at anothers expense, the
Court agrees with the CA that petitioners should reimburse respondent spouses the redemption price
paid for Lot 896-B-9-B in the amount of P111,110.09 with legal interest from the time of filing of the
complaint.

In Heirs of Aguilar-Reyes, the husband's sale of conjugal property without the consent of the wife
was annulled but the spouses were ordered to refund the purchase price to the buyers, it was ruled that
an interest of 12% per annum on the purchase price to be refunded is not proper. The Court elucidated
as follows:

The trial court, however, erred in imposing 12% interest per annum on the amount due the
respondents. In Eastern Shipping Lines, Inc. v. Court of Appeals, it was held that interest on obligations
not constituting a loan or forbearance of money is six percent (6%) annually. If the purchase price could
be established with certainty at the time of the filing of the complaint, the six percent (6%) interest
should be computed from the date the complaint was filed until finality of the decision. In Lui vs. Loy,
involving a suit for reconveyance and annulment of title filed by the first buyer against the seller and the
second buyer, the Court, ruling in favor of the first buyer and annulling the second sale, ordered the
seller to refund to the second buyer (who was not a purchaser in good faith) the purchase price of the
lots. It was held therein that the 6% interest should be computed from the date of the filing of the
complaint by the first buyer. After the judgment becomes final and executory until the obligation is
satisfied, the amount due shall earn interest at 12% per year, the interim period being deemed
equivalent to a forbearance of credit.

Accordingly, the amount of P110,000.00 due the respondent spouses which could be
determined with certainty at the time of the filing of the complaint shall earn 6% interest per annum
from June 4, 1986 until the finality of this decision. If the adjudged principal and the interest (or any
part thereof) remain unpaid thereafter, the interest rate shall be twelve percent (12%) per annum
computed from the time the judgment becomes final and executory until it is fully satisfied.[24]

Thus, herein petitioners should reimburse respondent spouses the redemption price plus interest at the
rate of 6% per annum from the date of filing of the complaint, and after the judgment becomes final and
executory, the amount due shall earn 12% interest per annum until the obligation is satisfied.

Petitioners pray that said redemption price and interest be offset or compensated against the
rentals for the house and bodega.

The records show that the testimonial evidence for rentals was only with regard to the
bodega.[25] However, the Court has affirmed the ruling of the RTC that Lot 896-B-9-A with the bodega
had been validly purchased by respondent spouses from the RBO and a TCT over said property was
issued in the name of respondent spouses on February 22, 1989. Testimonial evidence shows that the
bodega was leased out by respondent spouses only beginning January of 1990 when ownership had
been transferred to them.[26] Hence, any rentals earned from the lease of said bodega rightfully
belongs to respondent spouses and cannot be offset against petitioners' obligation to respondent
spouses.

As to rentals for Lot 896-B-9-B and the house thereon, respondent Victor testified that they never
agreed to rent the house and when they finally took over the same, it was practically inhabitable and so
they even incurred expenses to repair the house.[27] There is absolutely no proof of the rental value for
the house, considering the condition it was in; as well as for the lot respondent spouses are occupying.

Respondent spouses, having knowledge of the flaw in their mode of acquisition, are deemed to
be possessors in bad faith under Article 526[28] of the Civil Code. However, they have a right to be
refunded for necessary expenses on the property as provided under Article 546[29] of the same Code.
Unfortunately, there is no credible proof to support respondent spouses' allegation that they spent
more than P400,000.00 to repair and make the house habitable.

Set-off or compensation is governed by Article 1279 of the Civil Code which provides, thus:

Article 1279. In order that compensation may be proper, it is necessary:

1. That each one of the obligors be bound principally, and that he be at the time a principal
creditor of the other;

2. That both debts consist in a sum of money, or if the things due are consumable, they be of the
same kind, and also of the same quality if the latter has been stated;

3. That the two debts be due;

4. That they be liquidated and demandable;

5. That over neither of them there be any retention or controversy, commenced by third persons
and communicated in due time to the debtor.

Therefore, under paragraph 4 of the foregoing provision, compensation or set-off is allowed only
if the debts of both parties against each other is already liquidated and demandable. To liquidate means
to make the amount of indebtedness or an obligation clear and settled in the form of money.[30] In
the present case, no definite amounts for rentals nor for expenses for repairs on subject house has been
determined. Thus, in the absence of evidence upon which to base the amount of rentals, no
compensation or set-off can take place between petitioners and respondent spouses.

While the courts are empowered to set an amount as reasonable compensation to the owners for
the use of their property, this Court cannot set such amount based on mere surmises and conjecture

WHEREFORE, the petition is PARTLY GRANTED. The Decision of the Court of Appeals dated
September 25, 2002 is MODIFIED to read as follows:

1. declaring respondent spouses Victor Jr. and Elena Alinas owners of Lot 896-B-9-A with the building
(bodega) standing thereon and affirming the validity of their acquisition thereof from the Rural Bank of
Oroquieta, Inc.;

2. declaring Onesiforo's sale of Lot 896-B-9-B together with the house standing thereon to respondent
spouses null and void ab initio;

3. ordering petitioners to jointly and severally reimburse respondent spouses the redemption amount
of P111,110.09 with interest at 6% per annum from the date of filing of the complaint, until finality of
this decision. After this decision becomes final, interest at the rate of 12% per annum on the principal
and interest (or any part thereof) shall be imposed until full payment;

4. ordering the respondent spouses to convey and transfer Lot 896-B-9-B to petitioners and vacate
said premises within fifteen (15) days from finality of this Decision; and

5. in the event of failure of respondent spouses to execute the acts as specified above, petitioners may
proceed against them under Section 10, Rule 39 of the 1997 Rules of Civil Procedure.

No costs.

SO ORDERED.


































Eagle Realty Vs. Republic July 4, 2008
DECISION

NACHURA, J.:

This petition assails the Court of Appeals Decision[1] dated January 22, 2001, and Resolution[2] dated
January 8, 2002, which annulled Original Certificate of Title (OCT) No. 129 issued by the Register of
Deeds of Pasay City, and its derivative titles, the latest of which is in the name of petitioner.


The antecedents of the case are as follows:

On May 21, 1963, the spouses Casiano de Leon and Maria Socorro de Leon filed with the then Court of
First Instance (CFI) of Rizal an application for registration of Lots 1 and 2, Plan Psu-173022-B, located at
Barrio San Dionisio, Paraaque, Rizal, with an area of 57,989 square meters. The case was raffled to
Branch II presided over by Judge Pedro C. Navarro and docketed as LRC Case No. N-4140. The applicants
were represented by Atty. Domicador L. Reyes.

Several parties opposed the application, including the Heirs of Dionisio Tomas, represented by Atty.
Lorenzo Sumulong, and the Carabeo family, represented by Atty. Romulo Bobadilla.

On December 11, 1979, the CFI rendered a decision in favor of Casiano de Leon and his children, namely,
Esmeralda, Rosario Rodriguez, Bernardita, and Cesario (Maria Socorro having died on September 21,
1974). Copies of this decision (De Leon Decision, for brevity) were sent through registered mail to the
Land Registration Commission (LRC), Solicitor General, Atty. Sumulong, and Atty. Bobadilla.[3]

The Heirs of Dionisio Tomas appealed the De Leon Decision to the Intermediate Appellate Court. On
March 23, 1984, the appellate court affirmed the decision. The Heirs of Tomas elevated the case to this
Court for review, docketed as G.R. No. 66949. On June 25, 1984, this Court dismissed the petition for
having been filed out of time and for lack of merit. This judgment became final and executory on August
13, 1984.[4]

It appears that another decision, similar to the De Leon Decision but adjudicating the property to a
certain Martina G. Medina, alleged intervenor in LRC Case No. N-4140, was surreptitiously inserted in
the records of the LRC.[5] This decision (Medina Decision, for brevity) was similarly dated December 11,
1979 and purportedly signed by Judge Pedro C. Navarro. Likewise inserted in the records of the LRC was
the Order for the Issuance of the Decree dated February 14, 1980, also bearing what purports to be the
signature of Judge Pedro C. Navarro, with a Certification dated February 17, 1980 by Clerk of Court
Nicanor G. Salaysay, attesting that the decision has not been supplemented, amended or otherwise
modified. [6]

On May 30, 1983, pursuant to these documents, Hon. Oscar R. Victoriano, then Acting Land Registration
Commissioner, issued Decree of Registration No. N-188044. In accordance with this Decree, the
Register of Deeds of Pasay City issued OCT No. 129 on July 7, 1983 in the name of a Martina G.
Medina.[7]

Medina later exchanged the property for a 3,000-hectare parcel of land in Norzagaray, Bulacan owned
by Pilarita Reyes through a Deed of Exchange dated September 12, 1983. The value of each property
was approximately P451,900.00. On November 2, 1983, OCT No. 129 was canceled and Transfer
Certificate of Title (TCT) No. 74216 issued in the name of Reyes. Thereafter, through a Deed of Sale
dated February 22, 1984, Reyes sold the property to petitioner for P1,200,000.00. On March 1, 1984,
TCT No. 74216 was canceled, and TCT No. 78982 was issued in petitioners name.[8]

Meanwhile, Cesario de Leon discovered that OCT No. 129 was issued to Martina G. Medina. The De
Leons sent a letter-complaint to the LRC asking for an investigation on the matter. This was referred to
Atty. Manuel Panis, Chief of the Inspection and Investigation Division of the LRC. In a report dated July
20, 1984, Atty. Panis concluded that the Medina Decision and the Order for the Issuance of Decree
dated February 14, 1980 were fake. He then recommended that the appropriate action be filed for the
nullification of OCT No. 129 and its derivative titles TCT No. 74216 in the name of Pilarita Reyes, and
TCT No. 78982 in the name of petitioner Eagle Realty Corporation.

Consequently, on September 6, 1984, the Republic of the Philippines, represented by the Acting Land
Registration Commissioner, filed a complaint for Annulment of Judgment and Cancellation of Decree
and Titles against Martina G. Medina, Pilarita Reyes and petitioner Eagle Realty Corporation. The
Register of Deeds of Pasay City was impleaded as a nominal party.

The complaint alleged that the LRC received a copy of the De Leon Decision but this was surreptitiously
substituted with the Medina Decision, together with the Order for the Issuance of the Decree dated
February 14, 1980, in the LRC records. It further alleged that the LRC, unaware of any irregularity, issued
OCT No. 129 to Martina Medina on the basis of these fake documents.

In her Answer, Medina averred that she purchased the property from Justino de Leon on March 5, 1973.
Justino, in turn, acquired this property from Casiano and Maria de Leon on October 29, 1971 through a
Deed of Absolute Sale. She alleged that she verified the genuineness of this Deed of Absolute Sale from
the Manila CFI Notarial Section and from Casiano de Leon himself. She immediately occupied the
properties, appointed a caretaker thereof, paid all the land taxes, and caused the transfer to her name
of LRC Survey Plan No. 13305 covering the property.[9] She claimed that, in 1979, she learned that this
property was the subject of a pending registration proceeding, commenced by Casiano and Maria de
Leon in 1966. She then filed, on September 28, 1979, a petition for intervention in said case. This
petition for intervention was allegedly granted on October 4, 1979 by the CFI of Pasig.[10]

For its part, petitioner Eagle Realty Corporation alleged, inter alia, as affirmative defenses, that (a)
the Republic of the Philippines is not the real party-in-interest since the subject property is private, (b)
the one-year prescriptive period within which to seek a review of a decree of registration has already
lapsed, and (c) it is a buyer in good faith and for value. Petitioner also filed a cross-claim against Pilarita
Reyes to seek reimbursement for the purchase price and the Register of Deeds to hold the Assurance
Fund liable in case Reyes fails to pay.[11] Later, petitioner filed a third-party complaint against the
National Treasurer of the Philippines, the public officer entrusted with the payment of claims against the
Assurance Fund.[12]

Pilarita Reyes interposed the same defenses as the petitioner. She further claimed that she had no
knowledge of any infirmity in Medinas title and that she entered into the Deed of Exchange in good
faith and for value. As for the petitioners cross-claim, she averred that she acted in good faith in selling
the property to petitioner.[13]

On February 8, 1985, respondents Heirs of Casiano and Maria de Leon filed a Motion for Leave of
Court to Intervene which the trial court granted.[14] On July 19, 1985, they filed a Complaint-in-
Intervention praying that judgment be rendered in accordance with the prayer alleged in the
complaint and, in addition, order defendants jointly and severally to pay intervenors actual, moral and
nominal damages, attorneys fees plus legal interest.[15]

On November 17, 1992, the RTC ruled in favor of the private respondents Heirs of De Leon, thus:

From all the foregoing discussion, judgment is hereby rendered as follows:

1. Declaring the decision dated December 11, 1979 and the order for the issuance of decree
dated February 14, 1980 in favor of Martina G. Medina purporting to emanate from LRC Case No. N-
4140, LRC Record No. N-24165, null and void;

2. Declaring Decree No. N-188044 and Original Certificate of Title No. 129 in the name of
Martina G. Medina, and Transfer Certificates of Title Nos. 74216 and 78982 in the name, respectively, of
Pilarita M. Reyes and Eagle Realty Corporation, null and void;

3. Ordering Eagle Realty Corporation to surrender the owners duplicate copy of Transfer
Certificate of Title No. 78982 to the Register of Deeds of Pasay City (or his successor) who is hereby
ordered to cancel this owners copy and the original copy in his files;

4. Ordering the defendants to desist from exercising or representing acts of possession or
ownership over the lots covered by the said titles;

5. Ordering the defendant Martina G. Medina to pay to the INTERVENORS the following
amounts:

a. the sum of P500,000.00 as moral damages for the sufferings said INTERVENORS have suffered
arising from the submission of the forged decision and order for the issuance of decree to the Land
Registration Commission;

b. The sum of P300,000.00 to serve as exemplary damages and thereby discourage the proliferation
of similar incidents;

6. Ordering the defendants Martina G. Medina, Pilarita Reyes and Eagle Realty Corporation
jointly and severally to pay or reimburse to the INTERVENORS attorneys fees in the sum of P250,000.00;

7. Ordering Martina G. Medina and Pilarita Reyes, jointly and severally, to refund to Eagle
Realty Corporation the following amounts:

a. The sum of P1.2 Million which Eagle Realty Corporation paid to Pilarita Reyes for the property,
with interest at the legal rate from February 22, 1984 to the time the same is fully paid;

b. The sum of P250,000.00 by way of reimbursement of attorneys fees;

c. The attorneys fees that Eagle Realty Corporation, under paragraph 6 above, may have paid to the
INTERVENORS;

8. The counterclaims interposed by the defendants are dismissed;

9. In the event that Eagle Realty Corporation is unable to collect the sum of P1.2 million with
legal interest from its co-defendants, the third-party defendant National Treasurer of the Philippines is
ordered to pay the said amount.[16]


On appeal, the CA, in its Decision dated January 22, 2001, affirmed the RTC Decision with modifications,
thus:

Wherefore, premises considered, the appeal is DISMISSED and the Decision, dated November 17, 1992,
of the Regional Trial Court of Makati, Branch 142, in Civil Case No. 8400, is AFFIRMED with the following
modifications: the liability of defendant-appellant Eagle Realty Corporation for attorneys fees under
paragraph 6 of the dispositive portion is deleted and; paragraph 9 [Id.] is also deleted. Costs against
defendants-appellants Medina and Eagle Realty Corporation.

SO ORDERED.[17]


The CA held that the complaint is actually an action for the annulment of a certificate of title, not
for annulment of judgment as alleged by petitioner; hence, the RTC properly acquired jurisdiction. It also
upheld the LRCs personality to institute the complaint based on Section 100 of Presidential Decree
(P.D.) No. 1529 in order to protect the Assurance Fund from being held accountable by the private
respondents for the erroneous issuance of a certificate of title to Medina. It dismissed the issue on
prescription, ratiocinating that an action to declare the nullity of a void title does not prescribe and,
moreover, prescription does not run against the State.[18]

According to the CA, the trial court was correct in finding that the Medina Decision and the Order for the
Issuance of Decree were both spurious and that petitioner was not an innocent purchaser for value
because it failed to make a prior inspection of the subject property which would have revealed that it
was being occupied by the private respondents. This omission amounted to a failure to exercise
diligence which prevented it from becoming an innocent purchaser for value.[19] Hence, the Assurance
Fund cannot be made liable.[20]

On January 8, 2002, the CA issued a Resolution[21] denying petitioners motion for reconsideration.
Petitioner filed this petition for review alleging the following errors:


I.

WITH ALL DUE RESPECT, THE COURT OF APPEALS ERRED IN RULING THAT THE SUBJECT MATTER OR
NATURE OF THE ACTION IS NOT ONE FOR ANNULMENT OF JUDGMENT WITHIN THE EXCLUSIVE
ORIGINAL JURISDICTION OF THE COURT OF APPEALS AND THAT THE TRIAL COURT ALLEGEDLY PROPERLY
ACQUIRED JURISDICTION OVER THE SAME.

II.

WITH ALL DUE RESPECT, THE COURT OF APPEALS ERRED IN RULING THAT THE RESPONDENT REPUBLIC IS
A REAL PARTY-IN-INTEREST AND HAS THE PERSONALITY TO FILE THE SUIT BELOW.

III.

WITH ALL DUE RESPECT, THE COURT OF APPEALS ERRED IN RULING THAT THE ONE-YEAR PRESCRIPTIVE
PERIOD PROVIDED BY LAW IS NOT APPLICABLE TO THE INSTANT CASE.

IV.

WITH ALL DUE RESPECT, THE COURT OF APPEALS ERRED IN RULING THAT PETITIONER EAGLE REALTY IS
NOT AN INNOCENT PURCHASER FOR VALUE OF THE SUBJECT PROPERTY.

V.

WITH ALL DUE RESPECT, THE COURT OF APPEALS COMMITTED A GRAVE AND SERIOUS
MISAPPREHENSION OF THE FACTS HEREIN INVOLVED AND MADE MANIFESTLY MISTAKEN, ABSURD OR
IMPOSSIBLE INFERENCES:

A.

IN UPHOLDING THE FACTUAL FINDINGS OF THE TRIAL COURT DESPITE THE GLARING EVIDENCE ON
RECORD WHICH SHOWS THAT THE DECISION DATED 11 DECEMBER 1979 IN LRC CASE NO. 4140 IN
FAVOR OF DEFENDANT-APPELLANT MEDINA IS THE GENUINE DECISION OF JUDGE PEDRO G. NAVARRO.

B.

IN FAILING TO CONSIDER THE DEEDS OF SALE EXECUTED BY CASIANO DE LEON, JUSTINO DE LEON AND
MEDINA, AS WELL AS THE PETITION FOR INTERVENTION AND SUBSTITUTION AND THE MEDINA
DECISION.

VI.

WITH ALL DUE RESPECT, THE COURT OF APPEALS GRAVELY ERRED IN RULING THAT RESPONDENT
NATIONAL TREASURER IS NOT LIABLE TO PETITIONER EAGLE REALTY UNDER THE ASSURANCE FUND.[22]


We deny the petition.

Initially, petitioner undertakes to have the case dismissed on the ground of lack of jurisdiction by the
RTC over the complaint. It insists that the complaint is an action for annulment of judgment which,
under Rule 47 of the Rules of Court is cognizable by the CA.[23]


We do not agree. The body of the pleading or complaint determines the nature of an action, not its title
or heading.[24] This is because the complaint must contain a concise statement of the ultimate facts
constituting the plaintiffs cause of action and specify the relief sought.[25] Although denominated as an
Action for Annulment of Judgment and Cancellation of Decree and Titles, the complaint is not an
action for annulment of judgment under Rule 47, but a case for cancellation of void titles.

Annulment of judgment is a remedy against a final and executory judgment. Therefore, a necessary
allegation in the complaint would be that there was in fact a judgment that has been issued by the trial
court, which judgment has become final. Here, the Complaint does not contain any averment to such
effect. On the contrary, the Complaint consistently mentions that the Medina Decision, upon which OCT
No. 129 was issued, is a fake document. The pertinent portions of the Complaint state:

8. Subsequently thereafter, without the knowledge of the Land Registration Commission as to the
contents and true import of the Decision mentioned in paragraph 6 hereof and before the said Decision,
together with the case record, could be processed and examined, there were surreptitiously inserted
and substituted in its place, in the records of the Land Registration Commission, copies of another
Decision also dated December 11, 1979 and an Order for the Issuance of Decree dated February 14,
1980, both purportedly rendered in the same land registration case and record, the dispositive portion
of said falsified decision quoted hereunder:

x x x x

13. In July 1984, upon representations of the Applicants-Heirs of Casiano B. de Leon and Maria L. de
Leon, thru Counsel Atty. Conrado M. Vasquez, Jr., and after a thorough investigation, the Land
Registration Commission found and confirmed the falsity of the decision dated December 11, 1979
adjudicating the lots in favor of defendant Martina Medina and the order of decree dated February 14,
1980 for several reasons x x x.[26]


From the allegations in the Complaint, it is evident that the action is mainly for the declaration of nullity
of the certificates of title issued as a result of the fake court decision. This is an action incapable of
pecuniary estimation; hence, the RTC properly assumed jurisdiction.

Secondly, petitioner attacks the personality of the Republic of the Philippines, represented by the
Commissioner of Land Registration, to file the Complaint. It contends that the CAs reliance on Section
100 of P.D. 1529 to justify the plaintiffs personality to file the complaint for cancellation of erroneously
or unlawfully issued titles is misplaced as this provision only gives the Register of Deeds the authority to
file such action. It is Section 32 of the same law that should apply and this provision clearly requires that
the plaintiff must have a dominical right over the property. Petitioner argues that since the subject
parcel of land is private property over which the government has no interest, the Republic of the
Philippines has no right to file the suit for cancellation of titles.

Indisputably, the government is charged with the duty to preserve the integrity of the Torrens System
and protect the Assurance Fund. The plaintiff instituted the complaint precisely to perform this duty.
The Complaint seeks the cancellation of erroneously issued titles to protect the Assurance Fund from
being made liable by the private respondents for damages in case they fail to recover the property. The
public officer specifically tasked to perform this duty is the Register of Deeds who, under Section 100 of
P.D. No. 1529, is authorized to file an action to annul a certificate of title erroneously or unlawfully
issued, thus:

SEC. 100. Register of Deeds as party in interest. When it appears that the Assurance Fund may be
liable for damages that may be incurred due to the unlawful or erroneous issuance of a certificate of
title, the Register of Deeds concerned shall be deemed a proper party in interest who shall, upon the
authority of the Commissioner of Land Registration, file the necessary action in court to annul or amend
the title.

The court may order the Register of Deeds to amend or cancel a certificate of title or to do any other
acts as may be just and equitable. (Emphasis supplied.)


Under Section 6, P.D. 1529, the Commissioner of Land Registration shall exercise supervision and control
over all Registers of Deeds. It is well understood that supervision and control includes the authority to
act directly whenever a specific function is entrusted by law or regulation to a subordinate.[27] As the
public officer having supervision and control over Registers of Deeds, the Commissioner of Land
Registration therefore also has the authority to file the action himself.

The LRC is a mere agency of the government, unincorporated, and with no separate juridical personality
from that of the Republic of the Philippines. Naming the Republic of the Philippines as plaintiff and
merely acting as its representative was not even necessary since the Commissioner of Land Registration
himself, as the superior of and exercising control over the Register of Deeds, had the authority to file the
complaint on his own. Under Section 1, Rule 3, an entity specifically authorized by law to file the action
may be a party in a civil action.

Likewise, it is not essential that the Republic of the Philippines has proprietary rights over the property
covered by the subject titles as it does not lay any claim over this property. As previously stated, the
complaint merely seeks the cancellation of erroneously issued titles in order to protect the Assurance
Fund from liability for damages that may be filed by the rightful owners under Section 95 of P.D. No.
1529.

Moreover, it should be noted that the private respondents also filed a Complaint-in-Intervention which
was granted by the RTC. The complaint in intervention reiterated the material allegations in the
complaint and prayed for the same reliefs, plus damages. Hence, even if the main action is dismissed on
the ground that the plaintiff had no personality to file the action, the complaint in intervention will
remain. Dismissal of the plaintiffs action would not necessarily result in the dismissal of the intervenors
complaint in intervention. An intervenor has the right to claim the benefit of the original suit and to
prosecute it to judgment.[28] Having been permitted to become a party in order to better protect his
interest, an intervenor is entitled to have the issues raised between him and the original parties tried
and determined.[29]

Petitioner likewise makes an issue out of the inclusion of the Register of Deeds as a party-defendant. It
contends that it would cause an absurd situation because the plaintiff and defendant would be
represented by the same counsel. Such contention is not worthy of consideration because the Register
of Deeds was only impleaded as a nominal party for purposes of enforcement, since he is the public
officer charged with the duty of registering land documents and certificates of title.[30]

Still on its bid to have the case dismissed, petitioner submits that the action to cancel OCT No. 129, and
its derivative titles, has already prescribed because under Sec. 32 of P.D. No. 1529, upon the expiration
of one year from the entry of the decree of registration, the certificate of title shall become
incontrovertible. In this case, more than one year has already lapsed since the entry of the decree of
registration on May 30, 1983. Petitioner further contends that the indefeasibility of a Torrens title binds
even the government.

The principle of indefeasibility of a Torrens title does not apply where fraud attended the issuance of the
title. The Torrens title does not furnish a shield for fraud. As such, a title issued based on void
documents may be annulled.[31] Moreover, elementary is the rule that prescription does not run
against the State and its subdivisions.[32]

As a rule, the Court cannot review the factual findings of the trial court and the CA in a petition for
review on certiorari under Rule 45 of the Rules of Court. When supported by substantial evidence,
findings of fact of the trial court, as affirmed by the CA, are conclusive and binding on the parties. As
found by both the trial court and the appellate court, Medina never intervened in the land registration
case and the Medina Decision and the Order of Registration were forged documents. These findings are
firmly grounded on the evidence on record which leaves no room for a review by this Court.

Petitioner is left with no other recourse but to pursue its claim that it is an innocent purchaser for value,
entitled to be protected by law. Petitioner asserts that a person dealing with registered land may safely
rely on the correctness of the certificate of title and need not go beyond the said title to determine the
condition of the property. It argues that it had no actual knowledge of any fact that would engender
suspicion that the sellers title is defective. It could hardly have discovered any defect in OCT No. 129
and TCT No. 72416 considering that these titles were actually issued by the Register of Deeds.

Case law has it that he who alleges that he is a purchaser in good faith and for value of registered land
bears the onus of proving such statement. This burden is not discharged by involving the ordinary
presumption of good faith.[33]

Petitioner failed to discharge this burden. In its Answer, petitioner merely alleged that it is an innocent
purchaser for value since it acquired the land from Pilarita Reyes for P1,200,000.00, without notice of
any defect in her title and after verifying the genuineness of the title in the Register of Deeds of Pasay
City and the LRC. However, petitioner did not present any proof that would substantiate this allegation
nor did it present any evidence to show that it took other steps to verify the authenticity of its
predecessors title.

Indeed, the general rule is that a purchaser may rely on what appears on the face of a certificate of title.
He may be considered a purchaser in good faith even if he simply examines the latest certificate of title.
An exception to this rule is when there exist important facts that would create suspicion in an otherwise
reasonable man (and spur him) to go beyond the present title and to investigate those that preceded
it.[34] The presence of anything which excites or arouses suspicion should then prompt the vendee to
look beyond the certificate and investigate the title of the vendor as appearing on the face of said
certificate. One who falls within the exception can neither be denominated an innocent purchaser for
value nor a purchaser in good faith, hence, does not merit the protection of the law.[35]

As correctly observed by the public respondent, the property covered by the void titles was transferred
from Medina to petitioner with unusual haste. Only 8 months lapsed since OCT No. 129 was issued on
July 7, 1983 until it was transferred to petitioner on February 22, 1984. The property was transferred to
petitioner from Reyes only more than five months after she herself acquired the property. These
circumstances, plus the fact that the subject property is a vast tract of land in a prime location, should
have, at the very least, triggered petitioners curiosity.

Moreover, petitioner is a corporation engaged in the real estate business. A corporation engaged
in the buying and selling of real estate is expected to exercise a higher standard of care and diligence in
ascertaining the status and condition of the property subject of its business transaction. Similar to
investment and financing corporations, it cannot simply rely on an examination of a Torrens certificate
to determine what the subject property, looks like as its condition is not apparent in the document.[36]

Petitioners claim against the Assurance Fund must necessarily fail. Its situation does not come within
the ambit of the cases protected by the Assurance Fund. It was not deprived of land in consequence of
bringing it under the operation of the Torrens system through fraud or in consequence of any error,
omission, mistake or misdescription in the certificate of title[37] It was simply a victim of unscrupulous
individuals. More importantly, it is a condition sine qua non that the person who brings the action for
damages against the Assurance Fund be the registered owner and, as the holders of transfer certificates
of title, that they be innocent purchasers in good faith and for value.[38] And we have already
established that petitioner does not qualify as such.

WHEREFORE, premises considered, the petition is DENIED. The Court of Appeals Decision dated January
22, 2001, and Resolution dated January 8, 2002, are AFFIRMED.


SO ORDERED.

Alejandro Ty Vs. Queen Row December 4, 2009
D E C I S I O N

CHICO-NAZARIO, J.:

This is a Petition for Review on Certiorari seeking the reversal of the Decision[1] of the Court of Appeals
dated 31 January 2005 in CA-G.R. CV No. 62610 and the Resolution of the same Court dated 29 July 2006
denying the Motion for Reconsideration. Said Decision affirmed the Joint Decision dated 18 November
1997 of the Regional Trial Court (RTC) of Imus, Cavite dismissing the separate Complaints for Declaratory
Relief filed by petitioners Alejandro B. Ty and International Realty Corporation (IRC).

The facts of the case are as follows:

Petitioner Ty is the registered owner of a parcel of land situated in Molino, Bacoor, Cavite covered by
Transfer Certificate of Title (TCT) No. T-3967. Petitioner IRC, on the other hand, is the registered owner
of three parcels of land situated in the same barangay covered by TCTs No. T-1510, No. T-3617 and No.
T-3618. The four titles were issued to petitioners sometime in 1960 and 1961.

In 1970, respondent Queens Row Subdivision, Inc. (QRSI) was issued TCTs No. T-54188, No. T-54185,
No. T-54186 and No. T-54187, covering exactly the same areas and containing the same technical
descriptions as those embraced in the titles of petitioners.

On 29 June 1971, mortgages entered into by QRSI in favor of respondent Government Service Insurance
System (GSIS) were annotated at the back of the four titles of QRSI.

In October 1973, petitioners Ty and IRC instituted with the then Court of First Instance (CFI) of Bacoor,
Cavite four Complaints for the cancellation of the four aforementioned certificates of title of QRSI,
impleading only the latter and the Register of Deeds. GSIS was not impleaded, despite the fact that the
mortgage in its favor had already been annotated in the subject titles. The Complaints were docketed as
Civil Cases No. B-44, No. B-45, No. B-48 and No. B-49. Petitioners did not move to have a notice of lis
pendens annotated in the subject titles.

On 8 December 1980, the CFI of Bacoor, Cavite, rendered a Decision declaring that Tys certificate of
title, TCT No. 3967, was validly issued, and ordering the Register of Deeds to cancel QRSIs TCT No.
54188 for being void. On 20 December 1985, the same CFI rendered a Joint Decision ordering the
Register of Deeds to cancel QRSIs TCTs No. T-54185, No. T-54186 and No. T-54187. Both Decisions were
rendered for failure of respondent QRSI to appear at pre-trial despite filing an Answer to the
Complaints.

QRSI defaulted in the payment of its mortgage indebtedness to GSIS, leading to the foreclosure of the
mortgages. The properties were sold at public auction, with GSIS emerging as the highest bidder. On 10
April 1986, Certificates of Sale were issued in favor of GSIS.

QRSI failed to redeem the foreclosed properties within the one-year redemption period, allowing GSIS
to consolidate its ownership thereof. TCTs No. T-230070, No. T-230071, No. T-230072 and No. T-225212
were, thus, issued in the name of GSIS.

Thereupon, GSIS entered into a joint venture agreement with respondent New San Jose Builders, Inc.
(NSJBI) for the development of the properties. NSJBI subsequently commenced construction and
development works thereon.

On 8 November 1993, petitioners counsel, through a letter, demanded that GSIS and NSJBI vacate the
subject properties.

On 7 August 1994, Ty and IRC each filed a Petition for Declaratory Relief to Quiet Title/Remove Cloud
from Real Property against respondents with the RTC of Imus, Cavite, this time impleading all
respondents, QRSI, GSIS, NSJBI, and the Register of Deeds of Cavite. The cases were docketed as Civil
Case No. BSC 94-2 and Civil Case No. 94-3. The cases were consolidated under Branch 20 of said court.

On 18 November 1997, the RTC of Imus, Cavite, rendered its Joint Decision dismissing the complaints.

Petitioners appealed to the Court of Appeals. The appeal was docketed as CA-G.R. CV No. 62610 and
was raffled to the Seventh Division. On 31 January 2005, the Court of Appeals rendered its Decision
affirming the Joint Decision of the RTC. On 29 June 2006, the Court of Appeals denied the Motion for
Reconsideration filed by Petitioners.

Hence, this Petition, wherein petitioners present the following issues for our consideration:

I.PRIVATE RESPONDENT GSIS, BEING A FINANCIAL INSTITUTION, IS CHARGED WITH THE DUTY TO
EXERCISE MORE CARE AND PRUDENCE IN DEALING WITH REGISTERED LANDS FOR ITS BUSINESS IS ONE
AFFECTED WITH PUBLIC INTEREST KEEPING IN TRUST MONEY BELONGING TO ITS MEMBERS AND
SHOULD GUARD AGAINST LOSSES AND, THEREFORE, CANNOT INVOKE THE PROTECTED MANTLE OF
LAND REGISTRATION STATUTE (ACT 496).

II.THE TITLE OF PETITIONERS BEING SUPERIOR TO THAT OF PRIVATE RESPONDENT QUEENS ROW, THE
PRINCIPLE OF INDEFEASIBILITY OF TITLE REMAINED UNAFFECTED AND PETITIONERS COULD NOT HAVE
BEEN GUILTY OF LACHES, ESTOPPEL, MUCH LESS PRESCRIPTION.[2]

Innocent Purchaser for Value

In the first issue raised by petitioners, they assail the finding of the Court of Appeals that GSIS was an
innocent purchaser for value. The appellate court held:

The records clearly show that the mortgages entered into by Queens Row and GSIS were already
inscribed on the formers titles on June 29, 1971 as shown by the entries appearing at the back of TCT
Nos. T-54188, T-54185, T-54186 and T-54187, even before Civil Cases Nos. B-44, 45, 48 and 49 were
instituted. In spite of this, petitioners-appellants (plaintiffs then) did not implead the GSIS as a party to
the complaints. Moreso, no adverse claim or notice of lis pendens was annotated by petitioners-
appellants on the titles of Queens Row during the pendency of these cases. To make matters worse, as
earlier stated, petitioners-appellants, after securing favorable decisions against Queens Row, did not
enforce the same for more than ten (10) years. By their inaction, the efficacy of the decisions was
rendered at naught.

Verily, a buyer in good faith is one who buys the property of another without notice that some other
person has a right to or interest in such property. He is a buyer for value if he pays a full and fair price at
the time of the purchase or before he has notice of the claim or interest of some other person in the
property. In the instant case, the GSIS clearly had no notice of any defect, irregularity or encumbrance
in the title of Queens Row when the latter mortgaged the subject property. Neither did GSIS have any
knowledge of facts and circumstances which should have put it on inquiry, requiring it to go [beyond]
the certificate of title. Obviously, GSIS was an innocent purchaser for value and in good faith at the time
it acquired the subject property.[3]


Petitioners claim that since GSIS is a financial institution, it is charged with the duty to exercise more
care and prudence in dealing with registered lands. On this basis, petitioners conclude that GSIS cannot
invoke the protection of land registration statutes insofar as they protect innocent purchasers for value.

While we agree with petitioners that GSIS, as a financial institution, is bound to exercise more than just
ordinary diligence in the conduct of its financial dealings, we nevertheless find no law or jurisprudence
supporting petitioners claim that financial institutions are not protected when they are innocent
purchasers for value. When financial institutions exercise extraordinary diligence in determining the
validity of the certificates of title to properties being sold or mortgaged to them and still fail to find any
defect or encumbrance upon the subject properties after said inquiry, such financial institutions should
be protected like any other innocent purchaser for value if they paid a full and fair price at the time of
the purchase or before having notice of some other persons claim on or interest in the property.

On this note, petitioners insist that GSIS was guilty of gross negligence in its failure to inquire and
investigate the status and condition of the property when it approved the loan of private respondent
Queens Row.[4] This allegation has no leg to stand on. Respondents allege that GSIS ascertained to its
satisfaction the existence and authenticity of the titles of its predecessor-in-interest, QRSI; and was, in
fact, able to procure true copies of the latters titles from the Registry of Deeds.[5] GSIS furthermore
conducted an ocular inspection and found that the property was not in the possession of any person
claiming an interest that was adverse to that of its predecessor-in-interest.[6] Respondents allegations
are much more convincing in light of the fact that NSJBI was able to enter the subject property by virtue
of its joint venture agreement with GSIS, and was able to commence construction and development
works thereon.

Petitioners have presented absolutely no evidence to prove their allegation of fraud on the part of QRSI
and bad faith on the part of GSIS. They want us to merely conclude the same on the ground that they
were able to secure the favorable decisions they obtained in Civil Cases No. B-44, No. B-45, No. B-48 and
No. B-49. However, as shall be discussed later, these are already stale judgments, which cannot be
executed anymore. Furthermore, these judgments were obtained ex parte, for failure of respondent
QRSI to appear at the pre-trial despite filing an Answer to the Complaints. GSIS, on the other hand, was
never impleaded in these four Complaints for cancellation filed in October 1973, despite the fact that
the mortgages in GSISs favor had been annotated on the subject titles since 29 June 1971. GSIS,
therefore, never had any notice of these proceedings.

Petitioners cannot expect GSIS to check the technical descriptions of each and every title in the Registry
of Deeds of Cavite in order to determine whether there is another title to the same property. There is
no one to blame for the failure of GSIS to have notice of such fact other than petitioners themselves. As
stated above, they did not implead GSIS in their actions for cancellation of title despite the fact that, at
the time of the filing of the cases, the mortgages in GSISs favor had already been annotated on the
subject titles. Petitioners likewise neglected to have a notice of lis pendens of the cancellation cases
annotated on the subject titles, fueling respondents suspicions that the former wanted their actions for
cancellation to be uncontested by GSIS, the party really interested in challenging the same.

Laches

Petitioners challenge the ruling of the Court of Appeals finding them guilty of laches for their failure to
execute the favorable decisions they obtained in Civil Cases No. B-44, No. B-45, No. B-48 and No. B-49,
arguing that laches cannot be raised even as a valid defense for claiming ownership of registered land,
more so, if titles are tainted with fraud in their issuances.[7] Their basis for this claim is the 1950 Court
of Appeals case Dela Cruz v. Dela Cruz.[8]

We are not persuaded.

Firstly, as discussed above, while petitioners persistently harp on their allegation of fraud in the issuance
of the title of GSIS, nevertheless, they have not presented any evidence to prove the alleged fraud on
the part of either GSIS or even QRSI.

Secondly, it must be stressed that the Decisions of this Court are the only judicial decisions that form
part of our legal system. While rulings of the Court of Appeals may serve as precedents for lower courts,
they only apply to points of law not covered by any Supreme Court decision.[9]

Thirdly, this Court has, on several occasions, already ruled that even a registered owner of a property
may be barred from recovering possession of the same by virtue of laches. Thus, in Heirs of Panganiban
v. Dayrit,[10] this Court discussed several cases wherein the principle of laches was applied against the
registered owner:

In our jurisdiction, it is an enshrined rule that even a registered owner of property may be barred from
recovering possession of property by virtue of laches. Thus, in the case of Lola v. Court of Appeals, this
Court held that petitioners acquired title to the land owned by respondent by virtue of the equitable
principles of laches due to respondents failure to assert her claims and ownership for thirty-two (32)
years. In Miguel v. Catalino, this Court said that appellants passivity and inaction for more than thirty-
four (34) years (1928-1962) justifies the defendant-appellee in setting up the equitable defense of laches
in his behalf. Likewise, in the case of Mejia de Lucas v. Gamponia, we stated that while the defendant
may not be considered as having acquired title by virtue of his and his predecessors long continued
possession for thirty-seven (37) years, the original owners right to recover possession of the property
and the title thereto from the defendant has, by the latters long period of possession and by patentees
inaction and neglect, been converted into a stale demand.


Laches is the failure or neglect, for an unreasonable and unexplained length of time, to do that which by
exerting due diligence could or should have been done earlier.[11] The law serves those who are
vigilant and diligent, and not those who sleep when the law requires them to act.[12]

The Court of Appeals based its finding of laches on the fact that petitioners Ty and IRC failed to move for
the execution of the favorable ex parte judgments, which they obtained on 8 December 1980 and 20
December 1985, respectively. If we read Section 6, Rule 39 of the Rules of Court together with Article
1144 of the Civil Code, we would see that the winning party in litigation has a period of five years from
the date of entry of judgment to execute said judgment by motion, and another five years to execute it
by action. Section 6, Rule 39 of the Rules of Court provides that a motion for the execution of a final
judgment or order may be filed within five years from the date of its entry. After the lapse of such time,
and before it is barred by the statute of limitations, a judgment may be enforced by action:

Section 6. Execution by motion or by independent action. A final and executory judgment or order may
be executed on motion within five (5) years from the date of its entry. After the lapse of such time, and
before it is barred by the statute of limitations, a judgment may be enforced by action. The revived
judgment may also be enforced by motion within five (5) years from the date of its entry and thereafter
by action before it is barred by the statute of limitations.


The statute of limitations referred to in the above section is found in Article 1144 of the Civil Code,
which provides:

Art. 1144. The following actions must be brought within ten years from the time the right of action
accrues:

(1) Upon a written contract;

(2) Upon an obligation created by law;

(3) Upon a judgment.


While indeed, the above provisions on extinctive prescription cannot be the basis for depriving a
registered owner of its title to a property, they nevertheless prohibit petitioners from enforcing the ex
parte judgment in their favor, which can likewise be the basis of a pronouncement of laches. In Villegas
v. Court of Appeals,[13] we held that:

But even if Fortune had validly acquired the subject property, it would still be barred from asserting title
because of laches. The failure or neglect, for an unreasonable length of time to do that which by
exercising due diligence could or should have been done earlier constitutes laches. It is negligence or
omission to assert a right within a reasonable time, warranting a presumption that the party entitled to
assert it has either abandoned it or declined to assert it. While it is by express provision of law that no
title to registered land in derogation of that of the registered owner shall be acquired by prescription or
adverse possession, it is likewise an enshrined rule that even a registered owner may be barred from
recovering possession of property by virtue of laches. (Emphasis supplied.)


Petitioners neglect in asserting their rights is likewise manifested in their failure to implead GSIS in the
four Complaints for cancellation, which they filed in October 1973, despite the fact that the mortgages
in the GSISs favor had been annotated on the subject titles since 29 June 1971. It even became more
evident from the fact that petitioners failed to have a notice of lis pendens annotated on the subject
titles of the said cancellation of title cases, leading GSIS to believe that there were no other certificates
of title to the same properties when it proceeded to foreclose the subject properties in 1986. We,
therefore, find no reason to overrule the finding of the Court of Appeals that petitioners were guilty of
laches.

WHEREFORE, the instant Petition is DENIED. The Decision of the Court of Appeals dated 31 January
2005 in CA-G.R. CV No. 62610 and the Resolution of the same Court dated 29 July 2006 are hereby
AFFIRMED. No pronouncement as to costs.

SO ORDERED.














































REPUBLIC OF THE PHILIPPINES, petitioner,
vs. THE COURT OF APPEALS AND SPOUSES MARIO B. LAPIA AND FLOR DE VEGA, respondents.
Byron V. Belarmino and Juan B. Belarmino for private respondents.


BIDIN, J.:

Can a foreign national apply for registration of title over a parcel of land which he acquired by purchase
while still a citizen of the Philippines, from a vendor who has complied with the requirements for
registration under the Public Land Act (CA 141)?

The Republic would have us rule on the negative and asks this Court to nullify the decision of the
appellate court which affirmed the judgment of the court a quo in granting the application of
respondent spouses for registration over the lots in question.

On June 17, 1978, respondent spouses bought Lots 347 and 348, Cad. s38-D, as their residence with a
total area of 91.77 sq. m. situated in San Pablo City, from one Cristeta Dazo Belen (Rollo, p. 41). At the
time of the purchase, respondent spouses where then natural-born Filipino citizens.

On February 5, 1987, the spouses filed an application for registration of title of the two (2) parcels of
land before the Regional Trial Court of San Pablo City, Branch XXXI. This time, however, they were no
longer Filipino citizens and have opted to embrace Canadian citizenship through naturalization.

An opposition was filed by the Republic and after the parties have presented their respective evidence,
the court a quo rendered a decision confirming private respondents' title to the lots in question, the
dispositive portion of which reads as follows:

WHEREFORE, in view of the foregoing, this Court hereby approves the said application and confirms the
title and possession of herein applicants over Lots 347 and 348, Ap-04-003755 in the names of spouses
Mario B. Lapia and Flor de Vega, all of legal age, Filipino citizens by birth but now Canadian citizens by
naturalization and residing at 14 A. Mabini Street, San Pablo City and/or 201-1170-124 Street,
Edmonton, Alberta T5M-OK9, Canada.

Once this Decision becomes final, let the corresponding decree of registration be issued. In the
certificate of title to be issued, there shall be annotated an easement of .265 meters road right-of-way.

SO ORDERED. (Rollo, p. 25)

On appeal, respondent court affirmed the decision of the trial court based on the following
ratiocination:

In the present case, it is undisputed that both applicants were still Filipino citizens when they bought the
land in controversy from its former owner. For this reason, the prohibition against the acquisition of
private lands by aliens could not apply. In justice and equity, they are the rightful owners of the subject
realty considering also that they had paid for it quite a large sum of money. Their purpose in initiating
the instant action is merely to confirm their title over the land, for, as has been passed upon, they had
been the owners of the same since 1978. It ought to be pointed out that registration is not a mode of
acquiring ownership. The Torrens System was not established as a means for the acquisition of title to
private land. It is intended merely to confirm and register the title which one may already have
(Municipality of Victorias vs. Court of Appeals, G.R. No. L-31189, March 31, 1987). With particular
reference to the main issue at bar, the High Court has ruled that title and ownership over lands within
the meaning and for the purposes of the constitutional prohibition dates back to the time of their
purchase, not later. The fact that the applicants-appellees are not Filipino citizens now cannot be taken
against them for they were not disqualified from acquiring the land in question (Bollozos vs. Yu Tieng Su,
G.R. No. L-29442, November 11, 1987). (Rollo, pp. 27-28)

Expectedly, respondent court's disposition did not merit petitioner's approval, hence this present
recourse, which was belatedly filed.

Ordinarily, this petition would have been denied outright for having been filed out of time had it not
been for the constitutional issue presented therein.

At the outset, petitioner submits that private respondents have not acquired proprietary rights over the
subject properties before they acquired Canadian citizenship through naturalization to justify the
registration thereof in their favor. It maintains that even privately owned unregistered lands are
presumed to be public lands under the principle that lands of whatever classification belong to the State
under the Regalian doctrine. Thus, before the issuance of the certificate of title, the occupant is not in
the jurisdical sense the true owner of the land since it still pertains to the State. Petitioner further
argued that it is only when the court adjudicates the land to the applicant for confirmation of title would
the land become privately owned land, for in the same proceeding, the court may declare it public land,
depending on the evidence.

As found by the trial court:

The evidence thus presented established that applicants, by themselves and their predecessors-in-
interest, had been in open, public, peaceful, continuous, exclusive and notorious possession and
occupation of the two adjacent parcels of land applied for registration of title under a bona-fide claim of
ownership long before June 12, 1945. Such being the case, it is conclusively presumed that all the
conditions essential to the confirmation of their title over the two adjacent parcels of land are sought to
be registered have been complied with thereby entitling them to the issuance of the corresponding
certificate of title pursuant to the provisions of Presidential Decree No. 1529, otherwise known as the
Property Registration Decree. (Rollo, p. 26)

Respondent court echoed the court a quo's observation, thus:

The land sought to be registered has been declared to be within the alienable and disposable zone
established by the Bureau of Forest Development (Exhibit "P"). The investigation conducted by the
Bureau of Lands, Natural Resources District (IV-2) reveals that the disputed realty had been occupied by
the applicants "whose house of strong materials stands thereon"; that it had been declared for taxation
purposes in the name of applicants-spouses since 1979; that they acquired the same by means of a
public instrument entitled "Kasulatan ng Bilihang Tuluyan" duly executed by the vendor, Cristeta Dazo
Belen, on June 17, 1978 (Exhibits "I" and "J"); and that applicants and their predecessors in interest had
been in possession of the land for more than 30 years prior to the filing of the application for
registration. But what is of great significance in the instant case is the circumstance that at the time the
applicants purchased the subject lot in 1978, both of them were Filipino citizens such that when they
filed their application for registration in 1987, ownership over the land in dispute had already passed to
them. (Rollo, p., 27)

The Republic disagrees with the appellate court's concept of possession and argues:

17. The Court of Appeals found that the land was declared for taxation purposes in the name of
respondent spouses only since 1979. However, tax declarations or reality tax payments of property are
not conclusive evidence of ownership. (citing cases)

18. Then again, the appellate court found that "applicants (respondents) and their predecessors-in-
interest had been in possession of the land for more than 30 years prior to the filing of the application
for registration." This is not, however, the same as saying that respondents have been in possession
"since June 12, 1945." (PD No. 1073, amending Sec. 48 [b], CA NO. 141; sec. also Sec. 14, PD No. 1529).
So there is a void in respondents' possession. They fall short of the required possession since June 12,
1945 or prior thereto. And, even if they needed only to prove thirty (30) years possession prior to the
filing of their application (on February 5, 1987), they would still be short of the required possession if the
starting point is 1979 when, according to the Court of Appeals, the land was declared for taxation
purposes in their name. (Rollo, pp. 14-15)

The argument is myopic, to say the least. Following the logic of petitioner, any transferee is thus
foreclosed to apply for registration of title over a parcel of land notwithstanding the fact that the
transferor, or his predecessor-in-interest has been in open, notorious and exclusive possession thereof
for thirty (30) years or more. This is not, however, what the law provides.

As petitioner itself argues, Section 48 of the Public Land Act (CA 141) reads:

Sec. 48. The following-described citizens of the Philippines, occupying lands of the public domain
or claiming interest therein, but whose titles have not been perfected or completed, may apply to the
Court of First Instance (now Regional Trial Court) of the province where the land is located for
confirmation of their claims and the issuance of a certificate of title therefor under the Land Registration
Act, to wit:

xxx xxx xxx

(b) Those who by themselves or through their predecessors-in-interest have been in open,
continuous, exclusive, and notorious possession and occupation of agricultural lands of the public
domain, under a bona fide claim of acquisition or ownership, for at least thirty years immediately
preceding the filing of the application for confirmation of title except when prevented by wars or force
majeure. These shall be conclusively presumed to have performed all the conditions essential to a
Government grant and shall be entitled to a certificate of title under the provisions of this chapter.
(Emphasis supplied)

As amended by PD 1073:

Sec. 4. The provisions of Section 48(b) and Section 48(c), Chapter VIII, of the Public Land Act are
hereby amended in the sense that these provisions shall apply only to alienable and disposable lands of
the public domain which have been in open, continuous, exclusive and notorious possession and
occupation by the applicant himself or thru his predecessor-in-interest, under a bona fide claim of
acquisition or ownership, since June 12, 1945.

It must be noted that with respect to possession and occupation of the alienable and disposable lands of
the public domain, the law employs the terms "by themselves", "the applicant himself or through his
predecessor-in-interest". Thus, it matters not whether the vendee/applicant has been in possession of
the subject property for only a day so long as the period and/or legal requirements for confirmation of
title has been complied with by his predecessor-in-interest, the said period is tacked to his possession. In
the case at bar, respondents' predecessors-in-interest have been in open, continuous, exclusive and
notorious possession of the disputed land not only since June 12, 1945, but even as early as 1937.
Petitioner does not deny this except that respondent spouses, in its perception, were in possession of
the land sought to be registered only in 1978 and therefore short of the required length of time. As
aforesaid, the disputed parcels of land were acquired by private respondents through their
predecessors-in-interest, who, in turn, have been in open and continued possession thereof since 1937.
Private respondents stepped into the shoes of their predecessors-in-interest and by virtue thereof,
acquired all the legal rights necessary to confirm what could otherwise be deemed as an imperfect title.

At this juncture, petitioner's reliance in Republic v. Villanueva (114 SCRA 875 [1982]) deserves scant
consideration. There, it was held that before the issuance of the certificate of title, the occupant is not in
the juridical sense the true owner of the land since it still pertains to the State.

Suffice it to state that the ruling in Republic v. Villanueva (supra), has already been abandoned in the
1986 case of Director of Lands v. Intermediate Appellate Court (146 SCRA 509; and reiterated in Director
of Lands v. Iglesia ni Cristo, 200 SCRA 606 [1991]) where the Court, through then Associate Justice, now
Chief Justice Narvasa, declared that:

(The weight of authority is) that open, exclusive and undisputed possession of alienable public land for
the period prescribed by law creates the legal fiction whereby the land, upon completion of the
requisite period ipso jure and without the need of judicial or other sanction, ceases to be public land and
becomes private property. . . .

Herico in particular, appears to be squarely affirmative:

. . . Secondly, under the provisions of Republic Act
No. 1942, which the respondent Court held to be inapplicable to the petitioner's case, with the latter's
proven occupation and cultivation for more than 30 years since 1914, by himself and by his
predecessors-in-interest, title over the land has vested on petitioner so as to segregate the land from
the mass of public land. Thereafter, it is no longer disposable under the Public Land Act as by free patent
. . .

xxx xxx xxx

As interpreted in several cases, when the conditions as specified in the foregoing provision are complied
with, the possessor is deemed to have acquired, by operation of law, a right to a grant, a government
grant, without the necessity of a certificate of title being issued. The land, therefore, ceases to be of the
public domain and beyond the authority of the Director of Lands to dispose of. The application for
confirmation is mere formality, the lack of which does not affect the legal sufficiency of the title as
would be evidenced by the patent and the Torrens title to be issued upon the strength of said patent.

Nothing can more clearly demonstrate the logical inevitability of considering possession of public land
which is of the character and duration prescribed by the statute as the equivalent of an express grant
from the State than the dictum of the statute itself (Section 48 [b]) that the possessor(s) ". . . shall be
conclusively presumed to have performed all the conditions essential to a Government grant and shall
be entitled to a certificate of title ..." No proof being admissible to overcome a conclusive presumption,
confirmation proceedings would, in truth be little more than a formality, at the most limited to
ascertaining whether the possession claims is of the required character and length of time; and
registration thereunder would not confer title, but simply recognize a title already vested. The
proceedings would not originally convert the land from public to private land, but only confirm such a
conversion already affected by operation of law from the moment the required period of possession
became complete. As was so well put in Cario, ". . .(There are indications that registration was
expected from all, but none sufficient to show that, for want of it, ownership actually gained would be
lost. The effect of the proof, wherever made, was not to confer title, but simply to establish it, as already
conferred by the decree, if not by earlier law. (Emphasis supplied)

Subsequent cases have hewed to the above pronouncement such that open, continuous and exclusive
possession for at least 30 years of alienable public land ipso jure converts the same to private property
(Director of Lands v. IAC, 214 SCRA 604 [1992]; Pineda v. CA, 183 SCRA 602 [1990]). This means that
occupation and cultivation for more than 30 years by an applicant and his predecessors-in-interest, vest
title on such applicant so as to segregate the land from the mass of public and (National Power
Corporation v. CA, 218 SCRA 41 [1993]).

The Public Land Act requires that the applicant must prove that (a) the land is alienable public land and
(b) his possession, in the concept above stated, must be either since time immemorial or for the period
prescribed in the Public Land Act (Director of Lands v. Buyco, 216 SCRA 78 [1992]). When the conditions
set by law are complied with, the possessor of the land, by operation of law, acquires a right to a grant,
a government grant, without the necessity of a certificate of title being issued (National Power
Corporation v. CA, supra). As such, the land ceases to be a part of the public domain and goes beyond
the authority of the Director of Lands to dispose of.

In other words, the Torrens system was not established as a means for the acquisition of title to private
land (Municipality of Victorias v. CA, 149 SCRA 32 [1987]). It merely confirms, but does not confer
ownership. As could be gleaned from the evidence adduced, private respondents were able to establish
the nature of possession of their predecessors-in-interest. Evidence was offered to prove that their
predecessors-in-interest had paid taxes on the subject land and introduced improvements thereon
(Exhibits "F" to "F9"). A certified true copy of the affidavit executed by Cristeta Dazo and her sister
Simplicia was also formally offered to prove that the subject parcels of land were inherited by vendor
Cristeta Dazo from her father Pedro Dazo with the conformity of her only sister Simplicia (Exhibit "G").
Likewise, a report from the Bureau of Lands was presented in evidence together with a letter from the
Bureau of Forest Development, to prove that the questioned lots were part of the alienable and
disposable zone of the government and that no forestry interest was affected (CA GR No. 28953,
Records, p. 33).

In the main, petitioner seeks to defeat respondents' application for registration of title on the ground of
foreign nationality. Accordingly, the ruling in Director of Lands v. Buyco (supra) supports petitioner's
thesis.

We disagree.

In Buyco, the applicants therein were likewise foreign nationals but were natural-born Filipino citizens at
the time of their supposed acquisition of the property. But this is where the similarity ends. The
applicants in Buyco sought to register a large tract of land under the provisions of the Land Registration
Act, and in the alternative, under the provisions of the Public Land Act. The land registration court
decided in favor of the applicants and was affirmed by the appellate court on appeal. The Director of
Lands brought the matter before us on review and we reversed.

This Court, speaking through Justice Davide, Jr., stated:

As could be gleaned from the evidence adduced, the private respondents do not rely on fee simple
ownership based on a Spanish grant or possessory information title under Section 19 of the Land
Registration Act; the private respondents did not present any proof that they or their predecessors-in-
interest derived title from an old Spanish grant such as (a) the "titulo real" or royal grant (b) the
"concession especial" or especial grant; (c) the "composicion con el estado" title or adjustment title; (d)
the "titulo de compra" or title by purchase; and (e) the "informacion posesoria" or possessory
information title, which could become a "titulo gratuito" or a gratuitous title (Director of Forestry v.
Muoz, 23 SCRA 1183 [1968]). The primary basis of their claim is possession, by themselves and their
predecessors-in-interest, since time immemorial.

If indeed private respondents and their predecessors have been in possession since time immemorial,
the rulings of both courts could be upheld for, as this Court stated in Oh Cho v. Director of Lands (75
Phil. 890 [1946]):

. . . All lands that were not acquired from the Government, either by purchase or by grant, belong to the
public domain. An exception to the rule would be any land that should have been in the possession of an
occupant and of his predecessors in interest since time immemorial, for such possession would justify
the presumption that the land had never been part of the public domain or that if had been a private
property even before the Spanish conquest (Cario v. Insular Government, 41 Phil 935 [1909]; 212 U.S.
449; 53 Law. Ed., 594) The applicant does not come under the exception, for the earliest possession of
the lot by his first predecessor in interest began in 1880.

. . . alienable public land held by a possessor, personally or through his predecessors-in-interest, openly,
continuously and exclusively for the prescribed statutory period (30 years under the Public Land Act, as
amended) is converted to private property by the mere lapse or completion of said period, ipso jure.
(Director of Lands v. Intermediate Appellate Court, supra)

It is obvious from the foregoing rule that the applicant must prove that (a) the land is alienable public
land and (b) his possession, in the concept above stated, must be either since time immemorial, as ruled
in both Cario and Susi, or for the period prescribed in the Public Land Act. As to the latter, this Court, in
Gutierrez Hermanos v. Court of Appeals (178 SCRA 37 [1989]), adopted the rule enunciated by the Court
of Appeals, per then Associate Justice Hugo R. Gutierrez, Jr., . . ., that an applicant for registration under
Section 48 of the Public Land Act must secure a certification from the Government that the lands which
he claims to have possessed as owner for more than thirty (30) years are alienable and disposable. It is
the burden of the applicant to prove its positive averments.

In the instant case, private respondents offered no evidence at all to prove that the property subject of
the application is an alienable and disposable land. On the contrary, the entire property . . . was pasture
land (and therefore inalienable under the then 1973 Constitution).

. . . (P)rivate respondents' evidence miserably failed to establish their imperfect title to the property in
question. Their allegation of possession since time immemorial, . . ., is patently baseless. . . . When
referring to possession, specifically "immemorial possession," it means possession of which no man
living has seen the beginning, and the existence of which he has learned from his elders (Susi v. Razon,
supra). Such possession was never present in the case of private respondents. . . .

. . ., there does not even exist a reasonable basis for the finding that the private respondents and their
predecessors-in-interest possessed the land for more than eighty (80) years, . . .

xxx xxx xxx

To this Court's mind, private respondents failed to prove that (their predecessor-in-interest) had
possessed the property allegedly covered by Tax Declaration No. 15853 and made the subject of both
his last will and testament and the project of partition of his estate among his heirs in such manner as
to remove the same from the public domain under the Cario and Susi doctrines. Thus, (when the
predecessor-in-interest) died on 31 May 1937, he transmitted no right whatsoever, with respect to the
said property, to his heirs. This being the case, his possession cannot be tacked to that of the private
respondents for the latter's benefit pursuant to Section 48(b) of the Public Land Act, the alternative
ground relied upon in their application . . .

xxx xxx xxx

Considering that the private respondents became American citizens before such filing, it goes without
saying that they had acquired no vested right, consisting of an imperfect title, over the property before
they lost their Philippine citizenship. (Emphasis supplied)

Clearly, the application in Buyco were denied registration of title not merely because they were
American citizens at the time of their application therefor. Respondents therein failed to prove
possession of their predecessor-in-interest since time immemorial or possession in such a manner that
the property has been segregated from public domain; such that at the time of their application, as
American citizens, they have acquired no vested rights over the parcel of land.

In the case at bar, private respondents were undoubtedly natural-born Filipino citizens at the time of the
acquisition of the properties and by virtue thereof, acquired vested rights thereon, tacking in the
process, the possession in the concept of owner and the prescribed period of time held by their
predecessors-in-interest under the Public Land Act. In addition, private respondents have constructed a
house of strong materials on the contested property, now occupied by respondent Lapias mother.

But what should not be missed in the disposition of this case is the fact that the Constitution itself allows
private respondents to register the contested parcels of land in their favor. Sections 7 and 8 of Article XII
of the Constitution contain the following pertinent provisions, to wit:

Sec. 7. Save in cases of hereditary succession, no private lands shall be transferred or conveyed except
to individuals, corporations, or associations qualified to acquire or hold lands of the public domain.

Sec. 8. Notwithstanding the provisions of Section 7 of this Article, a natural-born citizen of the
Philippines who has lost his Philippine citizenship may be a transferee of private lands, subject to
limitations provided by law. (Emphasis supplied)

Section 8, Article XII of the 1987 Constitution above quoted is similar to Section 15, Article XIV of the
then 1973 Constitution which reads:

Sec. 15. Notwithstanding the provisions of Section 14 of this Article, a natural-born citizen of the
Philippines who has lost his citizenship may be a transferee of private land, for use by him as his
residence, as the Batasang Pambansa may provide.

Pursuant thereto, Batas Pambansa Blg. 185 was passed into law, the relevant provision of which
provides:

Sec. 2. Any natural-born citizen of the Philippines who has lost his Philippine citizenship and
who has the legal capacity to enter into a contract under Philippine laws may be a transferee of a private
land up to a maximum area of one thousand square meters, in the case of urban land, or one hectare in
the case of rural land, to be used by him as his residence. In the case of married couples, one of them
may avail of the privilege herein granted; Provided, That if both shall avail of the same, the total area
acquired shall not exceed the maximum herein fixed.

In case the transferee already owns urban or rural lands for residential purposes, he shall still be entitled
to be a transferee of an additional urban or rural lands for residential purposes which, when added to
those already owned by him, shall not exceed the maximum areas herein authorized.

From the adoption of the 1987 Constitution up to the present, no other law has been passed by the
legislature on the same subject. Thus, what governs the disposition of private lands in favor of a natural-
born Filipino citizen who has lost his Philippine citizenship remains to be BP 185.

Even if private respondents were already Canadian citizens at the time they applied for registration of
the properties in question, said properties as discussed above were already private lands; consequently,
there could be no legal impediment for the registration thereof by respondents in view of what the
Constitution ordains. The parcels of land sought to be registered no longer form part of the public
domain. They are already private in character since private respondents' predecessors-in-interest have
been in open, continuous and exclusive possession and occupation thereof under claim of ownership
prior to June 12, 1945 or since 1937. The law provides that a natural-born citizen of the Philippines who
has lost his Philippine citizenship may be a transferee of a private land up to a maximum area of 1,000
sq.m., if urban, or one (1) hectare in case of rural land, to be used by him as his residence (BP 185).

It is undisputed that private respondents, as vendees of a private land, were natural-born citizens of the
Philippines. For the purpose of transfer and/or acquisition of a parcel of residential land, it is not
significant whether private respondents are no longer Filipino citizens at the time they purchased or
registered the parcels of land in question. What is important is that private respondents were formerly
natural-born citizens of the Philippines, and as transferees of a private land, they could apply for
registration in accordance with the mandate of Section 8, Article XII of the Constitution. Considering that
private respondents were able to prove the requisite period and character of possession of their
predecessors-in-interest over the subject lots, their application for registration of title must perforce be
approved.

The dissenting opinion, however, states that the requirements in BP 185, must also be complied with by
private respondents. Specifically, it refers to Section 6, which provides:

Sec. 6. In addition to the requirements provided for in other laws for the registration of titles to
lands, no private land shall be transferred under this Act, unless the transferee shall submit to the
register of deeds of the province or city where the property is located a sworn statement showing the
date and place of his birth; the names and addresses of his parents, of his spouse and children, if any;
the area, the location and the mode of acquisition of his landholdings in the Philippines, if any; his
intention to reside permanently in the Philippines; the date he lost his Philippine citizenship and the
country of which he is presently a citizen; and such other information as may be required under Section
8 of this Act.

The Court is of the view that the requirements in Sec. 6 of BP 185 do not apply in the instant case since
said requirements are primarily directed to the register of deeds before whom compliance therewith is
to be submitted. Nowhere in the provision is it stated, much less implied, that the requirements must
likewise be submitted before the land registration court prior to the approval of an application for
registration of title. An application for registration of title before a land registration court should not be
confused with the issuance of a certificate of title by the register of deeds. It is only when the judgment
of the land registration court approving the application for registration has become final that a decree of
registration is issued. And that is the time when the requirements of Sec. 6, BP 185, before the register
of deeds should be complied with by the applicants. This decree of registration is the one that is
submitted to the office of the register of deeds for issuance of the certificate of title in favor of the
applicant. Prior to the issuance of the decree of registration, the register of deeds has no participation in
the approval of the application for registration of title as the decree of registration is yet to be issued.

WHEREFORE, the petition is DISMISSED and the decision appealed from is hereby AFFIRMED.

SO ORDERED.

Narvasa, C.J., Cruz, Feliciano, Padilla, Regalado, Davide, Jr., Romero, Bellosillo, Melo, Quiason, Puno,
Vitug, Kapunan, and Mendoza, JJ.,concur.

Separate Opinions

CRUZ, J., dissenting:

With all due respect, I have to dissent.

The ponencia begins by posing the issue thus:

Can a foreign national apply for registration of title over a parcel of land which he acquired by purchase
while still a citizen of the Philippines, from a vendor who has complied with the requirements for
registration under the Public Land Act (CA 141)?

There is no question that the property is private land and thus subject to registration by qualified
persons. It was really needless to elaborate on Buyco, which is clearly inapplicable here. We can agree
that the ruling case is Director of Lands v. Intermediate Appellate Court, which is not challenged in this
petition.

But I think the ponencia misses the point. The finding that the respondent spouses were natural-born
Filpinos at the time they acquired the land does not settle the question posed.

The important point is that the respondent spouses are no longer citizens of the Philippines but
naturalized Canadians. It does not follow that because they were citizens of the Philippines when they
acquired the land, they can register it in their names now even if they are no longer Filipinos.

Section 7 of Article XII of the Constitution is irrelevant because it is not disputed that the respondent
spouses were qualified to acquire the land in question when it was transferred to them.

Section 8 of the same article is not applicable either because it speaks of a transfer of private land to a
former natural-born citizen of the Philippines after he became a foreigner.

Thus it states:

Sec. 8. Notwithstanding the provisions of Section 7 of this Article, a natural-born citizen of the
Philippines who has lost his Philippine citizenship may be a transferee of private lands, subject to
limitations provided by law.

Even if it be assumed that the provision is applicable, it does not appear that the private respondents
have observed "the limitations provided by law."

The ponencia finds that all the requisites for the registration of the land in the private respondents'
name have been complied with. I do not believe so for there is no showing that B.P. 185 has also been
enforced.

The view has been expressed that we should confine ourselves to the requirements for registration
under the Public Land Act. I respectfully submit that the requirements in B.P. 185 have been read into
the Act and should also be applied.

Strict compliance is necessary because of the special privilege granted to former Filipinos who have
become foreigners by their own choice. If we can be so strict with our own citizens, I see no reason why
we should be less so with those who have renounced our country.

Feliciano, J.: concurring

I agree with the great bulk of the majority opinion written by Mr. Justice Bidin and the result reached
therein.

This separate statement is concerned only with the last two (2) paragraphs, just before the dispositive
portion, of the majority opinion. In my view, it should be stressed that B.P. Blg. 185 which took effect on
16 March 1982, does not purport to cover the set of facts before the Court in this case: i.e., the
respondent spouses became transferees (on 17 June 1978) of the land here involved while they were
natural-born Philippine citizens who happened sometime later to have been naturalized as citizens of
another country. B.P. Blg. 185, as far as I can determine, addresses itself only to a situation of persons
who were already foreign nationals at the time they became transferees of private land in the
Philippines, but who were previously natural-born Philippine citizens. It is difficult, therefore, to see how
B.P. Blg. 185 can become applicable to the present situation even at the subsequent time when the
respondent spouses would come before the Register of Deeds. B.P. Blg. 185, especially Section 6
thereof, imposes certain requirements, including a specific limitation on the quantity of land (not more
than 1,000 square meters) which may be acquired thereunder, an amount limitation which must not be
exceeded both by the land of which such foreign national becomes transferee and by such land taken
together with other land previously acquired by such foreign national. (2nd paragraph, Section 2, B.P.
Blg. 185)

B.P. Blg. 185 would, of course, apply to subsequent purchases of land by the respondent spouses, that
is, purchases made after they were naturalized as Canadian nationals.



# Separate Opinions

CRUZ, J., dissenting:

With all due respect, I have to dissent.

The ponencia begins by posing the issue thus:

Can a foreign national apply for registration of title over a parcel of land which he acquired by purchase
while still a citizen of the Philippines, from a vendor who has complied with the requirements for
registration under the Public Land Act (CA 141)?

There is no question that the property is private land and thus subject to registration by qualified
persons. It was really needless to elaborate on Buyco, which is clearly inapplicable here. We can agree
that the ruling case is Director of Lands v. Intermediate Appellate Court, which is not challenged in this
petition.

But I think the ponencia misses the point. The finding that the respondent spouses were natural-born
Filpinos at the time they acquired the land does not settle the question posed.

The important point is that the respondent spouses are no longer citizens of the Philippines but
naturalized Canadians. It does not follow that because they were citizens of the Philippines when they
acquired the land, they can register it in their names now even if they are no longer Filipinos.

Section 7 of Article XII of the Constitution is irrelevant because it is not disputed that the respondent
spouses were qualified to acquire the land in question when it was transferred to them.

Section 8 of the same article is not applicable either because it speaks of a transfer of private land to a
former natural-born citizen of the Philippines after he became a foreigner.

Thus it states:

Sec. 8. Notwithstanding the provisions of Section 7 of this Article, a natural-born citizen of the
Philippines who has lost his Philippine citizenship may be a transferee of private lands, subject to
limitations provided by law.

Even if it be assumed that the provision is applicable, it does not appear that the private respondents
have observed "the limitations provided by law."

The ponencia finds that all the requisites for the registration of the land in the private respondents'
name have been complied with. I do not believe so for there is no showing that B.P. 185 has also been
enforced.

The view has been expressed that we should confine ourselves to the requirements for registration
under the Public Land Act. I respectfully submit that the requirements in B.P. 185 have been read into
the Act and should also be applied.

Strict compliance is necessary because of the special privilege granted to former Filipinos who have
become foreigners by their own choice. If we can be so strict with our own citizens, I see no reason why
we should be less so with those who have renounced our country.

Feliciano, J.: concurring

I agree with the great bulk of the majority opinion written by Mr. Justice Bidin and the result reached
therein.

This separate statement is concerned only with the last two (2) paragraphs, just before the dispositive
portion, of the majority opinion. In my view, it should be stressed that B.P. Blg. 185 which took effect on
16 March 1982, does not purport to cover the set of facts before the Court in this case: i.e., the
respondent spouses became transferees (on 17 June 1978) of the land here involved while they were
natural-born Philippine citizens who happened sometime later to have been naturalized as citizens of
another country. B.P. Blg. 185, as far as I can determine, addresses itself only to a situation of persons
who were already foreign nationals at the time they became transferees of private land in the
Philippines, but who were previously natural-born Philippine citizens. It is difficult, therefore, to see how
B.P. Blg. 185 can become applicable to the present situation even at the subsequent time when the
respondent spouses would come before the Register of Deeds. B.P. Blg. 185, especially Section 6
thereof, imposes certain requirements, including a specific limitation on the quantity of land (not more
than 1,000 square meters) which may be acquired thereunder, an amount limitation which must not be
exceeded both by the land of which such foreign national becomes transferee and by such land taken
together with other land previously acquired by such foreign national. (2nd paragraph, Section 2, B.P.
Blg. 185)

B.P. Blg. 185 would, of course, apply to subsequent purchases of land by the respondent spouses, that
is, purchases made after they were naturalized as Canadian nationals.





































































NESTOR PAGKATIPUNAN and ROSALINA MAAGAS-PAGKATIPUNAN, petitioners, vs. THE COURT OF
APPEALS and REPUBLIC OF THE PHILIPPINES, respondents.

D E C I S I O N
YNARES-SANTIAGO, J.:

This is a petition for review of the decision[1] of the Court of Appeals nullifying the decision of the Court
of First Instance of Gumaca, Quezon[2] which confirmed petitioners title over the lots subject of the
instant petition. Petitioners further seek to annul and set aside the resolutions[3] of the Court of
Appeals denying their urgent motion to recall the judgment entered[4] in the land registration case.

The antecedent facts are as follows:

Sometime in November 1960, petitioners predecessors-in-interest, spouses Getulio Pagkatipunan and
Lucrecia Esquires, filed with the Court of First Instance of Gumaca, Quezon an application for judicial
confirmation and registration of their title to Lots 1 and 2 of Plan Psu-174406 and Lots 1 and 2 of Plan
Psu-112066, all located in San Narciso, Quezon.[5]

On May 4, 1961, the Court of First Instance entered an order of default against the whole world, except
spouses Felicisimo Almace and Teodulo Medenilla who were given ten (10) days to file their written
opposition as regards Lot No. 2 of Plan Psu-174406. Upon motion of petitioners predecessors, Lot No. 2
of Plan Psu-174406 was removed from the coverage of the application. The remaining parcel of land
covered by Lot No. 1 has an area of 3,804.261 square meters.

On June 15, 1967, the Court of First Instance promulgated a decision confirming petitioners title to the
property. On October 23, 1967, OCT No. O-12665 was issued in the name of petitioners.

Almost eighteen (18) years later, or on September 12, 1985, the Republic of the Philippines filed with
the Intermediate Appellate Court an action to declare the proceedings in LRC Case No. 91-G, LRC Record
No. N-19930 before the Court of First Instance of Gumaca, Quezon null and void, and to cancel Original
Certificate of Title No. 0-12665 and titles derived therefrom as null and void, to direct the register of
deeds to annul said certificates of title, and to confirm the subject land as part of the public domain.[6]

The Republic claimed that at the time of filing of the land registration case and of rendition of the
decision on June 15, 1967, the subject land was classified as timberland under LC Project No. 15-B of San
Narciso, Quezon, as shown in BF Map No. LC-1180; hence inalienable and not subject to registration.
Moreover, petitioners title thereto can not be confirmed for lack of showing of possession and
occupation of the land in the manner and for the length of time required by Section 48(b),
Commonwealth Act No. 141, as amended. Neither did petitioners have any fee simple title which may
be registered under Act No. 496, as amended. Consequently, the Court of First Instance did not acquire
jurisdiction over the res and any proceedings had therein were null and void.[7]

On the other hand, petitioners raised the special defenses of indefeasibility of title and res judicata.
They argued that due to the lapse of a considerable length of time, the judgment of the Court of First
Instance of Quezon in the land registration case has become final and conclusive against the Republic.
Moreover, the action for reversion of the land to the public domain is barred by prior judgment.[8]

In a decision promulgated on June 27, 1986, the Intermediate Appellate Court held that the land in
question was forestral land; hence not registrable. There was no evidence on record to show that the
land was actually and officially delimited and classified as alienable or disposable land of the public
domain. Therefore, the Court of First Instance did not acquire jurisdiction to take cognizance of the
application for registration and to decide the same. Consequently, the action to declare null and void
the June 15, 1967 decision for lack of jurisdiction did not prescribe. The dispositive portion of the
appellate courts decision reads:

WHEREFORE, judgment is rendered in favor of petitioner and against respondents, and as prayed for:

(a) The Decision dated June 15, 1967 in LRC Case No. 91-G, LRC Record No. N-19930 is hereby
declared null and void, and accordingly set aside;

(b) Original Certificate of Title No. O-12665, and Transfer Certificates of Title Nos. T-84439, T-93857
and T-117618 deriving therefrom, as well as any other derivative titles, are declared null and void;

(c) The respondent Register of Deeds for Quezon Province is ordered to cancel said titles; and

(d) The parcels of land covered thereby are ordered reverted to the State.

Without pronouncement as to costs.[9]

On July 16, 1986, petitioners moved for the reconsideration of the afore-cited decision[10] reiterating
that the land in question was agricultural because it was possessed and cultivated as such long before its
classification as timberland by the Bureau of Forestry in 1955. Petitioners and their predecessors-in-
interest have been in open, continuous, exclusive, notorious possession and occupation of said land for
agricultural and cattle raising purposes as far back as the Spanish regime. Following the doctrine in
Oracoy v. Director of Lands,[11] private interest had intervened and petitioners acquired vested rights
which can no longer be impaired by the subsequent classification of the land as timberland by the
Director of Forestry.

On August 20, 1986, the appellate court denied the motion for reconsideration for lack of merit.[12] On
December 12, 1986, the decision of June 27, 1986 attained finality and judgment was entered in the
book of entries of judgments.[13]

On April 2, 1987, petitioners filed an urgent motion to set aside entry of judgment on the ground that
Atty. Cirilo E. Doronila, petitioners counsel of record, was not furnished a copy of the resolution denying
the motion for reconsideration.[14] In the absence of such notice, the decision of the appellate court did
not become final and executory.

On October 22, 1987, the Court of Appeals set aside and lifted the entry of judgment in CA-G. R. SP No.
07115 and directed the clerk of court to furnish petitioners counsel a copy of the August 20, 1986
resolution.[15]

For petitioners inaction despite service of the August 20, 1986 resolution, the June 27, 1986 decision
became final and executory. On March 2, 1988, entry of judgment was again made in the land
registration case.

On September 4, 1995, Atty. Doronila withdrew his appearance as counsel for petitioners.[16]

On April 1, 1996, petitioners, through their new counsel, Atty. George I. Howard, filed with the Court of
Appeals an urgent motion to recall the entry of judgment,[17] which was denied by the appellate court
on December 16, 1996.[18]

The motion for reconsideration was likewise denied on the ground that it raised arguments already
discussed and resolved in the urgent motion to recall entry of judgment.[19]

Hence, the instant petition for review.[20]

Petitioners claim that their title to the land became incontrovertible and indefeasible one (1) year after
issuance of the decree of registration. Hence, the Republics cause of action was barred by prescription
and res judicata, proceedings having been initiated only after about 18 years from the time the decree
of registration was made. Contrary to the appellate courts findings, the land is agricultural and the
inclusion and classification thereof by the Bureau of Forestry in 1955 as timberland can not impair the
vested rights acquired by petitioners predecessors-in-interest who have been in open, continuous,
adverse and public possession of the land in question since time immemorial and for more than thirty
(30) years prior to the filing of the application for registration in 1960. Hence, the Court of Appeals
committed grave error when it denied their motion to set aside entry of judgment in the land
registration case.

The petition lacks merit.

Unless public land is shown to have been reclassified or alienated to a private person by the State, it
remains part of the inalienable public domain. Occupation thereof in the concept of owner, no matter
how long, cannot ripen into ownership and be registered as a title.[21]

Evidence extant on record showed that at the time of filing of the application for land registration and
issuance of the certificate of title over the disputed land in the name of petitioners, the same was
timberland and formed part of the public domain, as per certification issued by the Bureau of Forest
Development on April 1, 1985, thus:

TO WHOM IT MAY CONCERN:

This is to certify that the tract of land situated in Vigo Cantidang, San Narciso, Quezon, containing an
area of 3,804.261 square meters as described in Transfer Certificate of Title No. T-117618 x x x
registered in the name of Spouses Nestor E. Pagkatipunan and Rosalina Magas is verified to be within
the Timberland Block -B, Project No. 15-B of San Narciso, Quezon, certified and declared as such on
August 25, 1955 per BFD Map LC-1880. The land is, therefore, within the administrative jurisdiction and
control of the Bureau of Forest Development, and not subject to disposition under the Public Land Law.

This fact was even admitted by petitioners during the proceedings before the court a quo on March 10,
1986, when they confirmed that the land has been classified as forming part of forest land, albeit only
on August 25, 1955.[23] Since no imperfect title can be confirmed over lands not yet classified as
disposable or alienable, the title issued to herein petitioners is considered void ab initio.[24]

Under the Regalian doctrine, all lands of the public domain belong to the State, and the State is the
source of any asserted right to ownership in land and charged with the conservation of such patrimony.
This same doctrine also states that all lands not otherwise appearing to be clearly within private
ownership are presumed to belong to the State.[25] To overcome such presumption, incontrovertible
evidence must be shown by the applicant that the land subject of the application is alienable or
disposable.[26]

In the case at bar, there was no evidence showing that the land has been reclassified as disposable or
alienable. Before any land may be declassified from the forest group and converted into alienable or
disposable land for agricultural or other purposes, there must be a positive act from the government.
Even rules on the confirmation of imperfect titles do not apply unless and until the land classified as
forest land is released in an official proclamation to that effect so that it may form part of the disposable
agricultural lands of the public domain.[27] Declassification of forest land is an express and positive act
of Government.[28] It cannot be presumed. Neither should it be ignored nor deemed waived.[29] It
calls for proof.[30]

The court a quo found registrable title in favor of petitioners based on the Republics failure to show
that the land is more valuable as forest land than for agricultural purposes, a finding which is based on a
wrong concept of what is forest land.

There is a big difference between forest as defined in the dictionary and forest or timber land as a
classification of land of the public domain in the Constitution. One is descriptive of what appears on the
land while the other is a legal status, a classification for legal purposes. The forest land started out as
a forest or vast tracts of wooded land with dense growths of trees and underbrush. However, the
cutting down of trees and the disappearance of virgin forest do not automatically convert the land of
the public domain from forest or timber land to alienable agricultural land.[31]

The classification of forest land, or any land for that matter, is descriptive of its legal nature or status,
and does not have to be descriptive of what the land actually looks like.[32] A person cannot enter into
forest land and by the simple act of cultivating a portion of that land, earn credits towards an eventual
confirmation of imperfect title. The Government must first declare the forest land to be alienable and
disposable agricultural land before the year of entry, cultivation, and exclusive and adverse possession
can be counted for purposes of an imperfect title.[33]

As ruled in the case of Heirs of Jose Amunategui v. Director of Forestry:[34]

A forested area classified as forest land of the public domain does not lose such classification simply
because loggers or settlers may have stripped it of its forest cover. Parcels of land classified as forest
land may actually be covered with grass or planted to crops by kaingin cultivators or other farmers.
Forest lands do not have to be on mountains or in out of the way places. Swampy areas covered by
mangrove trees, nipa palms, and other trees growing in brackish or sea water may also be classified as
forest land. The classification is descriptive of its legal nature or status and does not have to be
descriptive of what the land actually looks like. Unless and until the land classified as forest is released
in an official proclamation to that effect so that it may form part of the disposable agricultural lands of
the public domain, the rules on confirmation of imperfect title do not apply.

Moreover, the original text of Section 48 (b), Chapter VIII of the Public Land Act, which took effect on
December 1, 1936, expressly provided that only agricultural land of the public domain are subject to
acquisitive prescription, to wit:

Section 48. x x x

(b) Those who by themselves or through their predecessors-in-interest have been in open,
continuous, exclusive, and notorious possession and occupation of agricultural lands of the public
domain, under a bona fide claim of acquisition of ownership, except as against the Government, since
July twenty-six, eighteen hundred and ninety-four, except when prevented by war or force majeure.
These shall be conclusively presumed to have performed all the conditions essential to a Government
grant and shall be entitled to a certificate of title under the provisions of this Chapter. (Emphasis
supplied)

Thus, it is clear that the applicant must prove not only his open, continuous, exclusive and notorious
possession and occupation of the land either since time immemorial or for the period prescribed
therein, but most importantly, he must prove that the land is alienable public land.[35] In the case at
bar, petitioners failed to do so.

Petitioners contention that the Republic is now barred from questioning the validity of the certificate of
title issued to them considering that it took the government almost eighteen (18) years to assail the
same is erroneous. It is a basic precept that prescription does not run against the State.[36] The lengthy
occupation of the disputed land by petitioners cannot be counted in their favor, as it remained part of
the patrimonial property of the State, which property, as stated earlier, is inalienable and
indisposable.[37]

In light of the foregoing, the Court of Appeals did not err when it set aside the June 15, 1967 decision of
the court a quo and ordered that the subject lot be reverted back to the public domain. Since the land
in question is unregistrable, the land registration court did not acquire jurisdiction over the same. Any
proceedings had or judgment rendered therein is void and is not entitled to the respect accorded to a
valid judgment.

Consequently, the Court of Appeals rightfully denied petitioners motion to set aside the judgment
rendered on December 12, 1986, in the land registration case.

WHEREFORE, in view of the foregoing, the decision of the Court of Appeals dated June 27, 1986 in AC-
G.R. SP No. 07115, is hereby AFFIRMED in toto.

Without pronouncement as to costs.

SO ORDERED.

REPUBLIC OF THE PHILIPPINES, petitioner, vs. DAMIAN ERMITAO DE GUZMAN, DEOGRACIAS
ERMITAO DE GUZMAN, ZENAIDA ERMITAO DE GUZMAN, ALICIA ERMITAO DE GUZMAN, SALVADOR
ERMITAO DE GUZMAN, DOMINGA ERMITAON, NATIVIDAD ENCARNACION, MELBA E. TORRES, FLORA
MANALO, SOCORRO DELA ROSA, JOSE ERMITAO, ESMERANDO ERMITAO, TRICOM DEVELOPMENT
CORPORATION and FILOMENO ERMITAO, respondents. francis

D E C I S I O N

YNARES_SANTIAGO, J.:

Before us is a Petition for Review on Certiorari of a decision of the Court of Appeals[1] affirming the
judgment of the Regional Trial Court of Tagaytay, Branch 18, in LRC Cases No. TG-362 and TG-396.[2]

The facts are simple:

Conflicting applications for confirmation of imperfect title were filed by Norma Almanzor and private
respondent Salvador De Guzman over parcels of land located in Silang, Cavite. After trial on the merits,
the lower court rendered judgment in favor of private respondent De Guzman, to wit -

"WHEREFORE, judgment is hereby rendered by this Court as follows: nigel

(1) In LRC Case No. TG-362, this Court hereby denies the application for registration of the parcels of
land mentioned therein by applicant Norma R. Almanzor for lack of factual and legal bases;

(2) In LRC Case No. 396, this Court hereby approves the petition for registration and thus places
under the operation of Act 141, Act 946 and/or P.D. 1529, otherwise known as the Property Registration
Law, the land described in Plan Psu-67537-Amd-2 and containing an area of 308,638 square meters, as
supported by its technical descriptions now forming parts of the records of these cases, in addition to
other proofs adduced in the names of petitioners Damian Ermitao De Guzman, Deogracias Ermitao De
Guzman, Zenaida Ermitao De Guzman, Alicia Ermitao De Guzman and Salvador De Guzman, all
married, of legal age and with residence and postal addresses at Magallanes Street, Carmona, Cavite,
subject to the claims of oppositors Dominga Ermitao, Natividad Encarnacion, Melba E. Torres, Flora
Manalo, Socorro de la Rosa, Jose Ermitao and Esmeranso Ermitao under an instrument entitled
'Waiver of Rights with Conformity" the terms and conditions of which are hereby ordered by this Court
to be annotated at the back of the certificates of title to be issued to the petitioners pursuant to the
judgment of this Court. brnado

SO ORDERED."[3]

As earlier mentioned, on appeal to the Court of Appeals, said judgment was affirmed and the petition
for registration of private respondents over the subject parcels of land was approved.

Hence, the instant Petition, anchored upon the following assignments of error

I

THE TRIAL COURT ERRED IN NOT FINDING THAT THE DE GUZMANS HAVE NOT SUBMITTED PROOF OF
THEIR FEE SIMPLE TITLE OR POSSESSION IN THE MANNER AND FOR THE LENGTH OF TIME REQUIRED BY
LAW TO JUSTIFY CONFIRMATION OF AN IMPERFECT TITLE. novero

II

THE TRIAL COURT ERRED IN NOT DECLARING THAT THE DE GUZMANS HAVE NOT OVERTHROWN THE
PRESUMPTION THAT THE LANDS ARE PORTIONS OF THE PUBLIC DOMAIN BELONGING TO THE REPUBLIC
OF THE PHILIPPINES.[4]

We find merit in the instant Petition.

It is not disputed that the subject parcels of land were released as agricultural land only in 1965[5] while
the petition for confirmation of imperfect title was filed by private respondents only in 1991.[6] Thus the
period of occupancy of the subject parcels of land from 1965 until the time the application was filed in
1991 was only twenty six (26) years, four (4) years short of the required thirty (30) year period
possession requirement under Sec. 14, P.D. 29 and R.A. No. 6940.

In finding that private respondents' possession of the subject property complied with law, the Court of
Appeals reasoned out that - nigel

"(W)hile it is true that the land became alienable and disposable only in December, 1965, however,
records indicate that as early as 1928, Pedro Ermitao, appellees' predecessor-in-interest, was already in
possession of the property, cultivating it and planting various crops thereon. It follows that appellees'
possession as of the time of the filing of the petition in 1991 when tacked to Pedro Ermitao's
possession is 63 years or more than the required 30 years period of possession. The land, which is
agricultural, has been converted to private property ."[7]

We disagree.

The Court of Appeals' consideration of the period of possession prior to the time the subject land was
released as agricultural is in direct contravention of the pronouncement in Almeda vs. Court of
Appeals,[8] to wit -

"The Court of Appeals correctly ruled that the private respondents had not qualified for a grant under
Section 48(b) of the Public Land Act because their possession of the land while it was still inalienable
forest land, or before it was declared alienable and disposable land of the public domain on January 13,
1968, could not ripen into private ownership, and should be excluded from the computation of the 30-
year open and continuous possession in concept of owner required under Section 48(b) of Com. Act 141.
It accords with our ruling in Director of Lands vs. Court of Appeals, Ibarra Bishar, et al., 178 SCRA 708,
that: marinella

'Unless and until the land classified as forest is released in an official proclamation to that effect so that
it may form part of the disposable lands of the public domain, the rules on confirmation of imperfect
title do not apply (Amunategui vs. Director of Forestry, 126 SCRA 69; Director of Lands vs. Court of
Appeals, 129 SCRA 689; Director of Lands vs. Court of Appeals, 133 SCRA 701; Republic vs. Court of
Appeals, 148 SCRA 480; Vallarta vs. Intermediate Appellate Court, 151 SCRA 679).

'Thus possession of forest lands, however long, cannot ripen into private ownership (Vamo vs.
Government, 41 Phil. 161 [1920]; Adorable vs. Director of Forestry, 17 Phil. 410 [1960]). A parcel of
forest land is within the exclusive jurisdiction of the Bureau of Forestry and beyond the power and
jurisdiction of the cadastral court to register under the Torrens System (Republic vs. Court of Appeals, 89
SCRA 648; Republic vs. Vera, 120 SCRA 210 [1983]; Director of Lands vs. Court of Appeals, 129 SCRA 689
[1984])." (emphasis ours)

So, too, is the Court of Appeals' reliance on the case of Director of Land Management vs. Court of
Appeals[9] misplaced. There, while the period of possession of the applicant's predecessor-in-interest
was tacked to his own possession to comply with the required thirty year period possession
requirement, the land involved therein was not forest land but alienable public land. On the other hand,
in the case before us, the property subject of private respondents' application was only declared
alienable in 1965. Prior to such date, the same was forest land incapable of private appropriation. It was
not registrable and possession thereof, no matter how lengthy, could not convert it into private
property, (unless) and until such lands were reclassified and considered disposable and alienable.[10]
alonzo

In summary, therefore, prior to its declaration as alienable land in 1965, any occupation or possession
thereon cannot be considered in the counting of the thirty year possession requirement. This is in
accord with the ruling in Almeda vs. Court of Appeals, (supra), and because the rules on the
confirmation of imperfect titles do not apply unless and until the land classified as forest land is released
in an official proclamation to that effect so that it may form part of the disposable agricultural lands of
the public domain.[11]

While we acknowledge the Court of Appeals' finding that private respondents and their predecessors-in-
interest have been in possession of the subject land for sixty three (63) years at the time of the
application of their petition, our hands are tied by the applicable laws and jurisprudence in giving
practical relief to them. The fact remains that from the time the subject land was declared alienable
until the time of their application, private respondents' occupation thereof was only twenty six (26)
years. We cannot consider their thirty seven (37) years of possession prior to the release of the land as
alienable because absent the fact of declassification prior to the possession and cultivation in good faith
by petitioner, the property occupied by him remained classified as forest or timberland, which he could
not have acquired by prescription. Further, jurisprudence is replete with cases which reiterate that
forest lands or forest reserves are not capable of private appropriation and possession thereof, however
long, cannot convert them into private property. Possession of the land by private respondents, whether
spanning decades or centuries, could never ripen into ownership. This Court is constrained to abide by
the latin maxim "(d)ura lex, sed lex".[12] iska

WHEREFORE, the instant Petition is GRANTED and the February 26, 1998 decision of the Court of
Appeals in CA-G.R. CV No. 48785 as well as that of the Regional Trial Court of Cavite, Branch 38, in LRC
Case No. TG-396 are both REVERSED. Judgment is rendered dismissing LRC Case No. 396 for failure of
the applicants therein to comply with the thirty year occupancy and possessory requirements of law for
confirmation of imperfect title. No pronouncement as to costs.

SO ORDERED.


































REPUBLIC OF THE PHILIPPINES, petitioner, vs. THE HONORABLE COURT OF APPEALS and CORAZON
NAGUIT, respondents.

D E C I S I O N

TINGA, J.:

This is a Petition for Review on Certiorari under Rule 45 of the 1997 Rules of Civil Procedure, seeking to
review the Decision1 of the Sixth Division of the Court of Appeals dated July 12, 2000 in CA-G.R. SP No.
51921. The appellate court affirmed the decisions of both the Regional Trial Court (RTC),2 Branch 8, of
Kalibo, Aklan dated February 26, 1999, and the 7th Municipal Circuit Trial Court (MCTC)3 of Ibajay-
Nabas, Aklan dated February 18, 1998, which granted the application for registration of a parcel of land
of Corazon Naguit (Naguit), the respondent herein.

The facts are as follows:

On January 5, 1993, Naguit, a Filipino citizen, of legal age and married to Manolito S. Naguit, filed with
the MCTC of Ibajay-Nabas, Aklan, a petition for registration of title of a parcel of land situated in Brgy.
Union, Nabas, Aklan. The parcel of land is designated as Lot No. 10049, Cad. 758-D, Nabas Cadastre, AP
060414-014779, and contains an area of 31,374 square meters. The application seeks judicial
confirmation of respondents imperfect title over the aforesaid land.

On February 20, 1995, the court held initial hearing on the application. The public prosecutor, appearing
for the government, and Jose Angeles, representing the heirs of Rustico Angeles, opposed the petition.
On a later date, however, the heirs of Rustico Angeles filed a formal opposition to the petition. Also on
February 20, 1995, the court issued an order of general default against the whole world except as to the
heirs of Rustico Angeles and the government.

The evidence on record reveals that the subject parcel of land was originally declared for taxation
purposes in the name of Ramon Urbano (Urbano) in 1945 under Tax Declaration No. 3888 until 1991.4
On July 9, 1992, Urbano executed a Deed of Quitclaim in favor of the heirs of Honorato Maming
(Maming), wherein he renounced all his rights to the subject property and confirmed the sale made by
his father to Maming sometime in 1955 or 1956.5 Subsequently, the heirs of Maming executed a deed
of absolute sale in favor of respondent Naguit who thereupon started occupying the same. She
constituted Manuel Blanco, Jr. as her attorney-in-fact and administrator. The administrator introduced
improvements, planted trees, such as mahogany, coconut and gemelina trees in addition to existing
coconut trees which were then 50 to 60 years old, and paid the corresponding taxes due on the subject
land. At present, there are parcels of land surrounding the subject land which have been issued titles by
virtue of judicial decrees. Naguit and her predecessors-in-interest have occupied the land openly and in
the concept of owner without any objection from any private person or even the government until she
filed her application for registration.

After the presentation of evidence for Naguit, the public prosecutor manifested that the government did
not intend to present any evidence while oppositor Jose Angeles, as representative of the heirs of
Rustico Angeles, failed to appear during the trial despite notice. On September 27, 1997, the MCTC
rendered a decision ordering that the subject parcel be brought under the operation of the Property
Registration Decree or Presidential Decree (P.D.) No. 1529 and that the title thereto registered and
confirmed in the name of Naguit.6

The Republic of the Philippines (Republic), thru the Office of the Solicitor General (OSG), filed a motion
for reconsideration. The OSG stressed that the land applied for was declared alienable and disposable
only on October 15, 1980, per the certification from Regional Executive Director Raoul T. Geollegue of
the Department of Environment and Natural Resources, Region VI.7 However, the court denied the
motion for reconsideration in an order dated February 18, 1998.81awphi1.nt

Thereafter, the Republic appealed the decision and the order of the MCTC to the RTC, Kalibo, Aklan,
Branch 8. On February 26, 1999, the RTC rendered its decision, dismissing the appeal.9

Undaunted, the Republic elevated the case to the Court of Appeals via Rule 42 of the 1997 Rules of Civil
Procedure. On July 12, 2000, the appellate court rendered a decision dismissing the petition filed by the
Republic and affirmed in toto the assailed decision of the RTC.

Hence, the present petition for review raising a pure question of law was filed by the Republic on
September 4, 2000.10

The OSG assails the decision of the Court of Appeals contending that the appellate court gravely erred in
holding that there is no need for the governments prior release of the subject lot from the public
domain before it can be considered alienable or disposable within the meaning of P.D. No. 1529, and
that Naguit had been in possession of Lot No. 10049 in the concept of owner for the required period.11

Hence, the central question for resolution is whether is necessary under Section 14(1) of the Property
Registration Decree that the subject land be first classified as alienable and disposable before the
applicants possession under a bona fide claim of ownership could even start.

The OSG invokes our holding in Director of Lands v. Intermediate Appellate Court12 in arguing that the
property which is in open, continuous and exclusive possession must first be alienable. Since the subject
land was declared alienable only on October 15, 1980, Naguit could not have maintained a bona fide
claim of ownership since June 12, 1945, as required by Section 14 of the Property Registration Decree,
since prior to 1980, the land was not alienable or disposable, the OSG argues.

Section 14 of the Property Registration Decree, governing original registration proceedings, bears close
examination. It expressly provides:

SECTION 14. Who may apply. The following persons may file in the proper Court of First Instance an
application for registration of title to land, whether personally or through their duly authorized
representatives:

(1) those who by themselves or through their predecessors-in-interest have been in open, continuous,
exclusive and notorious possession and occupation of alienable and disposable lands of the public
domain under a bona fide claim of ownership since June 12, 1945, or earlier.

(2) Those who have acquired ownership over private lands by prescription under the provisions of
existing laws.

. . . .

There are three obvious requisites for the filing of an application for registration of title under Section
14(1) that the property in question is alienable and disposable land of the public domain; that the
applicants by themselves or through their predecessors-in-interest have been in open, continuous,
exclusive and notorious possession and occupation, and; that such possession is under a bona fide claim
of ownership since June 12, 1945 or earlier.

Petitioner suggests an interpretation that the alienable and disposable character of the land should have
already been established since June 12, 1945 or earlier. This is not borne out by the plain meaning of
Section 14(1). "Since June 12, 1945," as used in the provision, qualifies its antecedent phrase "under a
bonafide claim of ownership." Generally speaking, qualifying words restrict or modify only the words or
phrases to which they are immediately associated, and not those distantly or remotely located.13 Ad
proximum antecedents fiat relation nisi impediatur sentencia.

Besides, we are mindful of the absurdity that would result if we adopt petitioners position. Absent a
legislative amendment, the rule would be, adopting the OSGs view, that all lands of the public domain
which were not declared alienable or disposable before June 12, 1945 would not be susceptible to
original registration, no matter the length of unchallenged possession by the occupant. Such
interpretation renders paragraph (1) of Section 14 virtually inoperative and even precludes the
government from giving it effect even as it decides to reclassify public agricultural lands as alienable and
disposable. The unreasonableness of the situation would even be aggravated considering that before
June 12, 1945, the Philippines was not yet even considered an independent state.

Instead, the more reasonable interpretation of Section 14(1) is that it merely requires the property
sought to be registered as already alienable and disposable at the time the application for registration of
title is filed. If the State, at the time the application is made, has not yet deemed it proper to release the
property for alienation or disposition, the presumption is that the government is still reserving the right
to utilize the property; hence, the need to preserve its ownership in the State irrespective of the length
of adverse possession even if in good faith. However, if the property has already been classified as
alienable and disposable, as it is in this case, then there is already an intention on the part of the State
to abdicate its exclusive prerogative over the property.

This reading aligns conformably with our holding in Republic v. Court of Appeals .14 Therein, the Court
noted that "to prove that the land subject of an application for registration is alienable, an applicant
must establish the existence of a positive act of the government such as a presidential proclamation or
an executive order; an administrative action; investigation reports of Bureau of Lands investigators; and
a legislative act or a statute."15 In that case, the subject land had been certified by the DENR as
alienable and disposable in 1980, thus the Court concluded that the alienable status of the land,
compounded by the established fact that therein respondents had occupied the land even before 1927,
sufficed to allow the application for registration of the said property. In the case at bar, even the
petitioner admits that the subject property was released and certified as within alienable and disposable
zone in 1980 by the DENR.16

This case is distinguishable from Bracewell v. Court of Appeals,17 wherein the Court noted that while
the claimant had been in possession since 1908, it was only in 1972 that the lands in question were
classified as alienable and disposable. Thus, the bid at registration therein did not succeed. In Bracewell,
the claimant had filed his application in 1963, or nine (9) years before the property was declared
alienable and disposable.1awphi1.nt Thus, in this case, where the application was made years after the
property had been certified as alienable and disposable, the Bracewell ruling does not apply.

A different rule obtains for forest lands,18 such as those which form part of a reservation for provincial
park purposes19 the possession of which cannot ripen into ownership.20 It is elementary in the law
governing natural resources that forest land cannot be owned by private persons. As held in Palomo v.
Court of Appeals,21 forest land is not registrable and possession thereof, no matter how lengthy, cannot
convert it into private property, unless such lands are reclassified and considered disposable and
alienable.22 In the case at bar, the property in question was undisputedly classified as disposable and
alienable; hence, the ruling in Palomo is inapplicable, as correctly held by the Court of Appeals.23

It must be noted that the present case was decided by the lower courts on the basis of Section 14(1) of
the Property Registration Decree, which pertains to original registration through ordinary registration
proceedings. The right to file the application for registration derives from a bona fide claim of ownership
going back to June 12, 1945 or earlier, by reason of the claimants open, continuous, exclusive and
notorious possession of alienable and disposable lands of the public domain.

A similar right is given under Section 48(b) of the Public Land Act, which reads:

Sec. 48. The following described citizens of the Philippines, occupying lands of the public domain or
claiming to own any such land or an interest therein, but those titles have not been perfected or
completed, may apply to the Court of First Instance of the province where the land is located for
confirmation of their claims and the issuance of a certificate of title therefor, under the Land
Registration Act, to wit:

xxx xxx xxx

(b) Those who by themselves or through their predecessors in interest have been in open, continuous,
exclusive, and notorious possession and occupation of agricultural lands of the public domain, under a
bona fide claim of acquisition of ownership, for at least thirty years immediately preceding the filing of
the application for confirmation of title except when prevented by war or force majeure. These shall be
conclusively presumed to have performed all the conditions essential to a Government grant and shall
be entitled to a certificate of title under the provisions of this chapter.

When the Public Land Act was first promulgated in 1936, the period of possession deemed necessary to
vest the right to register their title to agricultural lands of the public domain commenced from July 26,
1894. However, this period was amended by R.A. No. 1942, which provided that the bona fide claim of
ownership must have been for at least thirty (30) years. Then in 1977, Section 48(b) of the Public Land
Act was again amended, this time by P.D. No. 1073, which pegged the reckoning date at June 12, 1945.
This new starting point is concordant with Section 14(1) of the Property Registration Decree.

Indeed, there are no material differences between Section 14(1) of the Property Registration Decree and
Section 48(b) of the Public Land Act, as amended. True, the Public Land Act does refer to "agricultural
lands of the public domain," while the Property Registration Decree uses the term "alienable and
disposable lands of the public domain." It must be noted though that the Constitution declares that
"alienable lands of the public domain shall be limited to agricultural lands."24 Clearly, the subject lands
under Section 48(b) of the Public Land Act and Section 14(1) of the Property Registration Decree are of
the same type.

Did the enactment of the Property Registration Decree and the amendatory P.D. No. 1073 preclude the
application for registration of alienable lands of the public domain, possession over which commenced
only after June 12, 1945? It did not, considering Section 14(2) of the Property Registration Decree, which
governs and authorizes the application of "those who have acquired ownership of private lands by
prescription under the provisions of existing laws."

Prescription is one of the modes of acquiring ownership under the Civil Code.25 There is a consistent
jurisprudential rule that properties classified as alienable public land may be converted into private
property by reason of open, continuous and exclusive possession of at least thirty (30) years.26 With
such conversion, such property may now fall within the contemplation of "private lands" under Section
14(2), and thus susceptible to registration by those who have acquired ownership through prescription.
Thus, even if possession of the alienable public land commenced on a date later than June 12, 1945, and
such possession being been open, continuous and exclusive, then the possessor may have the right to
register the land by virtue of Section 14(2) of the Property Registration Decree.

The land in question was found to be cocal in nature, it having been planted with coconut trees now
over fifty years old.27 The inherent nature of the land but confirms its certification in 1980 as alienable,
hence agricultural. There is no impediment to the application of Section 14(1) of the Property
Registration Decree, as correctly accomplished by the lower courts.l^vvphi1.net

The OSG posits that the Court of Appeals erred in holding that Naguit had been in possession in the
concept of owner for the required period. The argument begs the question. It is again hinged on the
assertionshown earlier to be unfoundedthat there could have been no bona fide claim of ownership
prior to 1980, when the subject land was declared alienable or disposable.

We find no reason to disturb the conclusion of both the RTC and the Court of Appeals that Naguit had
the right to apply for registration owing to the continuous possession by her and her predecessors-in-
interest of the land since 1945. The basis of such conclusion is primarily factual, and the Court generally
respects the factual findings made by lower courts. Notably, possession since 1945 was established
through proof of the existence of 50 to 60-year old trees at the time Naguit purchased the property as
well as tax declarations executed by Urbano in 1945. Although tax declarations and realty tax payment
of property are not conclusive evidence of ownership, nevertheless, they are good indicia of the
possession in the concept of owner for no one in his right mind would be paying taxes for a property
that is not in his actual or at least constructive possession. They constitute at least proof that the holder
has a claim of title over the property. The voluntary declaration of a piece of property for taxation
purposes manifests not only ones sincere and honest desire to obtain title to the property and
announces his adverse claim against the State and all other interested parties, but also the intention to
contribute needed revenues to the Government. Such an act strengthens ones bona fide claim of
acquisition of ownership.28

Considering that the possession of the subject parcel of land by the respondent can be traced back to
that of her predecessors-in-interest which commenced since 1945 or for almost fifty (50) years, it is
indeed beyond any cloud of doubt that she has acquired title thereto which may be properly brought
under the operation of the Torrens system. That she has been in possession of the land in the concept of
an owner, open, continuous, peaceful and without any opposition from any private person and the
government itself makes her right thereto undoubtedly settled and deserving of protection under the
law.

WHEREFORE, foregoing premises considered, the assailed Decision of the Court of Appeals dated July
12, 2000 is hereby AFFIRMED. No costs.

SO ORDERED.














































TOMAS AVERIA, JR., petitioner,
vs.
THE HONORABLE MILAGROS V. CAGUIOA, in her capacity as Judge of the Regional Trial Court, Fourth
Judicial Region, Branch LVII, Lucena City, and VERONICA PADILLO, respondents.

CRUZ, J.:

We gave due course to this petition against a decision of the Court of First Instance of Lucena City, 1
which is questioned on a pure questions of law, more specifically whether or not the court has
jurisdiction to order the registration of a deed of sale which is opposed on the ground of an antecedent
contract to sell.

The oppositor, petitioner herein, refused to participate in the hearing of the registration proceedings
below, claiming the respondent court, acting as a cadastral court, had no competence to act upon the
said case under Section 112 of Act 496, otherwise known as the "Land Registration Act." The respondent
court then held the hearing ex parte and later rendered a decision ordering the registration prayed for
on the basis of the evidence presented by the private respondent herein. 2

In his petition for certiorari and prohibition with preliminary injunction, it is argued that the lower court
had no competence to act on the registration sought because of the absence of unanimity among the
parties as required under Section 112 of the Land Registration Act. 3 The petitioner cites Fojas as v.
Grey, 4 where this Court, through Justice Serafin Cuevas, declared:

The aforequoted provision of the Land Registration Act (Sec. 112) was relied upon by appellant Apolinar
Fojas in petitioning the court a quo for the annotation of the Deed of Assignment. However, while he
had the right to have the said Deed annotated in the owner's duplicate of TCT No. T-2376, the serious
objection of Saturnina de Grey to the same raises a substantial controversy between the parties.

In a long line of decisions dealing with proceedings under Section 112 of the Land Registration Act, it has
been held that summary relief under Section 112 of Land Registration Act can only be granted if there is
unanimity among the parties, or there is no adverse claim or serious objection on the part of any party
in interest; otherwise, the case becomes contentious and controversial which should be threshed out in
an ordinary action or in any case where the incident properly belongs. 5

While this was a correct interpretation of the said provision, the same is, however, not applicable to the
instant case. The reason is that this case arose in 1982, after the Land Registration Act had been
superseded by the Property Registration Decree, which became effective on June 11, 1979.

In Section 2 of the said P.D. No. 1529, it is clearly provided that:

SEC. 2. Nature of registration proceedings; jurisdiction of courts.-Judicial proceedings for the registration
of lands throughout the Philippines shall be in rem and shall be based on the generally accepted
principles underlying the Torrens system.

Courts of First Instance shall have exclusive jurisdiction over all applications for original registration of
title to lands, including improvements and interests therein, and over all petitions filed after original
registration of title, with power to hear and determine a questions arising upon such applications or
petitions. The court through its clerk of court shall furnish the Land Registration Commission with two
certified copies of all pleadings, exhibits, orders, and decisions filed or issued in applications or petitions
for land registration, with the exception of stenographic notes, within five days from the filing or
issuance thereof.

The above provision has eliminated the distinction between the general jurisdiction vested in the
regional trial court and the limited jurisdiction conferred upon it by the former law when acting merely
as a cadastral court. Aimed at avoiding multiplicity of suits, the change has simplified registration
proceedings by conferring upon the regional trial courts the authority to act not only on applications for
"original registration" but also "over all petitions filed after original registration of title, with power to
hear and determine all questions arising upon such applications or petitions."

Consequently, and specifically with reference to Section 112 of the Land Registration Act (now Section
108 of P.D. No. 1529), the court is no longer fettered by its former limited jurisdiction which enabled it
to grant relief only in cases where there was "unanimity among the parties" or none of them raised any
"adverse claim or serious objection." Under the amended law, the court is now authorized to hear and
decide not only such non-controversial cases but even this contentious and substantial issues, such as
the question at bar, which were beyond its competence before.

It appears that the respondent court proceeded to hear the case below notwithstanding the
manifestation by the petitioner of his intention to elevate to this Court the question of jurisdiction he
had raised. 6 The trial court should have given him the opportunity to do so in the interest of due
process, pending a categorical ruling on the issue. As it happened, it arrived at its decision after
considering only the evidence of the private respondent and without regard to the evidence of the
petitioner. 7

WHEREFORE, the decision of the respondent court dated September 23, 1983, is set aside. Let a new
trial of Cadastral Case No. 1, GLRO Cad. Record No. 202, Lot No. 2810-B, Lucena Cadastre, MC No. 374-
82, be held, at which the petitioner, as well as other interested parties, shall be given the opportunity to
be heard. Our temporary restraining order of October 5, 1983, is hereby lifted except as to the
registration of the questioned deed of sale which shall depend on the outcome of the said case.

SO ORDERED.




































ASSOCIATION OF BAPTISTS FOR WORLD EVANGELISM, INC., petitioner, vs.
FIRST BAPTIST CHURCH and COURT OF APPEALS, respondents.


Review on certiorari of the Resolution* of the respondent Court of Appeals, dated 17 August 1970,
issued in G.R. No. 37022-R, entitled: "Association of Baptists for World Evangelism, Inc., petitioner-
appellee versus First Baptists Church, respondent-appellant," which dismissed petitioner's application
for cancellation of a notice of adverse claim.

The facts of the case which led to the filing of this petition are as follows:

On 30 September 1963, the parties entered into an agreement, denominated "Contract of Purchase and
Sale" wherein the petitioner agreed to sell to the respondent a parcel of land, together with the building
and improvement thereon, with an area of 735 Sq. meters, located at the corner of Leon Guinto and
Padre Faura Streets, Manila, and covered by TCT No. 62203 of the Register of Deeds of Manila, for the
amount of P293,506.25, payable in three (3) installments, as follows:

1. The First installment shall be paid by the VENDEE to the VENDOR on or before September 30,
1963 amounting to P29,350.62,

2. The Second Installment which shall be the sum of P66,038.90, shall be paid by the VENDEE to
the VENDOR on or before September 30, 1964.

3. The last and final installment which shall be the sum of P198,116.72, less the P25,000.00
deduction allowed by the VENDOR, shall be paid by the VENDEE to the VENDOR on or before September
30, 1965.

The parties further agreed that:

All the foregoing payments shall be made by the VENDEE to the VENDOR's duly authorized Resident
Agent and attorney-in-fact in Manila, Philippines.

It is hereby expressly understood and agreed that immediately upon the execution of this document and
thereafter for a period of five (5) consecutive years so long as this agreement is in force and effect, the
VENDEE shall have the right to occupy and use the property for church purposes but for no other
purpose whatsoever.

Should the VENDEE fail to pay any or all the installments when due, this agreement shall automatically
be considered as rescinded and without force and effect and the VENDEE shall, without further demand
from the VENDOR peacefully return possession of the property to the VENDOR; provided, however, that
any installment which the VENDEE may have already paid to the VENDOR shall be returned by the
VENDOR to the VENDEE.1avvphi1

Upon final and complete payment of the stipulated purchase price the VENDOR shall immediately
execute and deliver to the VENDEE a final and absolute Deed of Sale of the Property free and clear of all
liens and encumbrances. 1

The first installment of the purchase price was duly paid and the respondent took possession of the
property. However, when the second installment became due on 30 September 1964, the petitioner,
upon request of the respondent, extended the period of its payment to 30 October 1964. For this
purpose, the parties executed a document entitled: "Supplement to the Contract of Purchase and Sale
of September 30, 1963" with the stipulation that "all the provisions of the original contract of purchase
and sale of 30 September 1963 shall remain in full force and effect, except as modified and
supplemented."2 The respondent, however, failed to pay the second installment when it became due.
Neither did it return the possession of the property to the petitioner.

But, on 8 March 1965, the respondent caused to be recorded in the Office of tile Register of Deeds of
Manila a Notice of Adverse Claim on TCT No. 62203.3 Upon learning of the burden constituted on its
certificate of title, the petitioner, on 6 June 1965, filed a petition with the Court of First Instance of
Manila for the cancellation of the said notice of adverse claim, on the ground that when said notice of
adverse claim was filed, the respondent had already lost its right to or interest in the property, in view of
the automatic rescission of the contract caused by the respondent's failure to pay the second
installment of the purchase price on 30 October 1964, as agreed upon, so that the notice of adverse
claim is invalid and should be cancelled.4

The respondent filed its opposition to the petition for cancellation of notice of adverse claim5 and the
case was then set for hearing. At the hearing on 14 August 1965, the petitioner presented its evidence
consisting of the Contract of Purchase and Sale, the Supplement thereto, and the Notice of Adverse
Claim. The respondent, upon the other hand, did not submit any evidence. The court then declared the
case submi tted " however, in an Order issued on the same day, the court suspended the resolution of
the petition to cancel the notice of adverse claim "until after fifteen (15) days from today during which
time counsel for respondent should file civil action in order to thresh out the question involved in
ordinary suit. If after the lapse of said period no civil action is filed, this Court will be constrained to act
on same."6

The respondent failed to initiate the civil suit, as ordered, so that the petitioner, on 8 September 1965,
filed a motion to give due course to its petition to cancel notice of adverse claim.7 The motion was set
for hearing on 11 September 1965 and, on said date, the respondent manifested in court that it was the
prevailing opinion among its members that to file a suit against the petitioner would be "unscriptural"
and that they intend to do so only as a last recourse when it becomes absolutely necessary that it be
done.8

On 15 September 1965, the lower court issued an order directing the cancellation of the notice of
adverse claim on TCT No. 62203 on the grounds that the basis of said notice of adverse claim was no
longer in force and effect inasmuch as the same was automatically rescinded upon the failure of the
respondent to pay the second installment when it became due, and for failure of the respondent to file
the civil action, as required by the court.9

The respondent filed a motion for reconsideration of the Order claiming, for the first time, that the trial
court had no jurisdiction in that, as a land registration court, it cannot pass upon the issue of whether or
not the contract of purchase and sale has been rescinded or rendered without force and effect,10 but
the trial court denied said motion.11

Whereupon the respondent appealed to the Court of Appeals. On 25 May 1970, the appellate court
rendered judgment affirming the order of the lower court.12 This decision, however, was set aside by
the appellate court in its Resolution dated 17 August 1970 on the ground that the lower court, sitting as
a land registration court, had no jurisdiction to resolve the issues presented which should be litigated in
a regular court. Accordingly, the respondent appellate court ordered the dismissal of the petition to
cancel notice of adverse claim.13 Hence, the present recourse.

The issue raised is whether the Court of First Instance, now the Regional Trial Court, acting as a land
registration court, has jurisdiction to cancel an adverse claim based on a contract to sell or promise to
sell which can no longer be enforced because of non-payment of the agreed purchase price.

This issue had been raised in view of the findings of the respondent Court of Appeals that the court a
quo, sitting as a land registration court, has limited jurisdiction and has no authority to resolve
controversial issues which should be litigated before a court of general jurisdiction. Under existing laws,
however, this concept no longer holds. Regional Trial Courts now have exclusive jurisdiction, not only
over applications for original registration of title to lands, including improvements and interests therein,
but also over petitions filed after original registration of title, with power to hear and determine all
questions arising upon such applications or petitions. Section 2 of PD 1529, otherwise known as the
Property Registration Decree, provides, as follows:

SEC. 2. Nature of registration proceedings: jurisdiction of courts. Judicial proceedings for the
registration of lands throughout the Philippines shall be in rem and shall be based on the generally
accepted principles underlying the Torrens system.

Courts of First Instance shall have exclusive jurisdiction over all applications for original registration of
title to lands, including improvements and interests therein, and over all petitions filed after original
registration of title, with power to hear and determine all questions arising upon such applications or
petitions. The court through its clerk of court shall furnish the Land Registration Commission with two
certified copies of all pleadings, exhibits, orders, and decisions filed or issued in applications or petitions
for land registration, with the exception of sten ographic notes, within five days from the filing or
issuance thereof.

But, even under Act 496, the Land Registration Act, the court of first instance, sitting as a land
registration court, has the authority to conduct a hearing, receive evidence, and decide controversial
matters with a view to determining whether or not the filed notice of adverse clam is valid. Section 110
of Act 496 provides:

SEC. 110. Whoever claims any part or interest in registered land adverse to the registered owner, arising
subsequent to the date of the original registration, may, if no other provision is made in this Act for
registering the same, make a statement in writing setting forth fully his alleged right or interest, and
how or under whom acquired, and a reference to the volume and page of the certificate of title of the
registered owner, and a description of the land in which the right or interest is claimed.

The statement shall be signed and sworn to, and shall state the adverse claimant's residence, and
designate a place at which all notices may be served upon him. This statement shall be entitled to
registration as an adverse claim, and the court, upon a petition of any party in interest, shall grant a
speedy hearing upon the question of the validity of such adverse claim and shag enter such decree
therein as justice and equity may require. If the claim is adjudged to be invalid, the registration shall be
cancelled. If, iii any case the court after notice and hearing shall find that a claim thus registered was
frivolous or vexatious, it may tax the adverse claimant double or treble costs in its discretion.

At any rate, it appears that the disputed "Contract of Purchase and Sale" entered into by and between
the parties on 30 September 1963 had already been rescinded so that there is no more basis for the
continued annotation of the notice of adverse claim on the petitioner's TCT No. 62203. Records show
that the herein petitioner had filed an action against the respondent for the rescission of said contract of
purchase and sale on 1 August 1967 before the Court of First Instance of Manila, docketed therein as
Civil Case no. 70298, and after trial, the said contract was ordered rescinded for reasons therein stated.
On appeal to the Court of Appeals, docketed therein as CA-G.R. No. 42467-R, the judgment was
affirmed. The respondent then appealed to this Court, docketed as G.R. No. L-35008; again, its petition
was denied on 15 May 1972, "for being factual (insufficient showing that the findings of fact are
unsupported by substantial evidence) and for lack of merit." The judgment became final and executory
on 14 August 1972.

WHEREFORE, the resolution of the respondent Court, dated 17 August 1970, is hereby set aside. The
notice of adverse claim annotated on petitioner's TCT No. 62203 by virtue of the "Contract of Purchase
and Sale" entered into by and between the parties on 30 September 1963 is hereby ordered cancelled.
Without costs.

SO ORDERED.












UNIVERSITY OF THE PHILIPPINES, Petitioner, vs. SEGUNDINA ROSARIO, respondent.

The Case

This is an appeal1 from the decision of the Court of Appeals2 setting aside the order of the Regional Trial
Court, Branch 217, Quezon City which denied respondent Segundina Rosario's (hereafter, "Segundina")
motion to dismiss3 and cancelled the notice of lis pendens annotated on Transfer Certificate of Title No.
121042.

The Facts

There being no controversy as to the facts and the petition raising pure questions of law, we adopt the
findings of fact of the Court of Appeals, as follows:4

On September 7, 1971, Datu Ditingke Ramos filed with the Court of First Instance, Quezon City, an
application for registration of title covering a parcel of land situated in Quezon City, with an area of
100,000 square meters and covered by Plan (LRC) SWO-15055, as amended.5

On August 31, 1972, petitioner University of the Philippines (hereafter, "U. P.") filed with the trial court a
"motion for intervention" in the case, claiming that the land covered by the application (by Datu
Ditingke Ramos) is within its property described in Transfer Certificate of Title No. 9462.

On March 15, 1973, U.P. filed with the trial court an opposition and motion to dismiss Datu Ditingke
Ramos' application for registration.

On June 6, 1973, the trial court issued an order which reads as follows:

"Acting on the motion to dismiss filed by the University of the Philippines and considering the
certification, sketch plan (Exhibits "O" and "P") the testimony of the Acting Chief, Geodetic Engineer as
well as the written manifestation of the Land Registration Commission to the effect that the land subject
matter of this application and covered by plan SWO-15055 does not encroach on the property of the
University of the Philippines and that it is not inside any decreed - property, the motion to dismiss the
application is hereby DENIED for lack of merit.

"SO ORDERED."6

On June 8, 1973, the trial court First Instance decided the application as follows:

"IN VIEW OF THE FOREGOING, the application is hereby granted, declaring the applicant Rosario
Alcovendras Vda. de Ramos (surviving spouse of the original applicant who was substituted as party
applicant in the order of April 24, 1973) the absolute owner of the property applied for and covered by
Plan (LRC) SWO-15055, as amended, confirming her title thereto. Upon in the order of April 24, 1973)
the absolute owner of the property applied for and covered by Plan (LRC) SWO 15055, as amended,
confirming her title thereto. Upon this decision becoming final, let the required decree of registration be
issued and after payment of corresponding fees, let the certificate of title be issued in favor of Rosario
Alcovendras Vda. de Ramos, widow, Filipino and a resident of Quezon City.

"SO ORDERED."7

On March 19, 1974, the trial court8 issued an order stating:

"The decision rendered by this Court in the above-entitled case under the date of June 8, 1973 having
become final, the Commissioner of the Land Registration Commission is hereby directed to comply with
Section 21 of Act 2347."9

On May 8, 1974, the Commissioner of Land Registration issued Decree No. N-150604 in favor of Rosario
Alcovendas Vda. de Ramos, pursuant to which the Register of Deeds of Quezon City issued OCT No. 17 in
her name.

On November 21, 1976, the Register of Deeds of Quezon City cancelled OCT No. 17 and issued Transfer
Certificate of Title No. 223619 also in the name of Rosario Alcovendas Vda. de Ramos due to errors in
the technical description.10

On February 23, 1988, Rosario Alcovendas Vda. de Ramos executed a "deed of absolute sale" in favor of
Segundina Rosario (hereafter Segundina) covering the parcel of land embraced in Transfer Certificate of
Title No. 223619.

On June 11, 1988, fire razed the Quezon City Hall Building which housed the Office of the Register of
Deeds of Quezon City. Transfer Certificate of Title No. 223619 was one of the titles destroyed by the fire.

Subsequently, Segundina Rosario requested the Register of Deeds to reconstitute Transfer Certificate of
Title No. 223619 resulting in the issuance of Transfer Certificate of Title No. RT-78195 (223619).

On March 11, 1993, U.P. filed with the Regional Trial Court, Branch 21, Quezon City11 a petition for the
cancellation of Transfer Certificate of Title No. (N-126671) 367316 naming Segundina, Bugnay
Construction and Development Corporation and the Register of Deeds of Quezon City, among others, as
respondents.

On November 10, 1994, Segundina caused the registration with the Register of Deeds of the "deed of
absolute sale." Consequently, the Register of Deeds issued Transfer Certificate of Title No. 121042 in
Segundina's name, resulting in the cancellation of Transfer Certificate of Title No. RT-78195(223619).

On November 19, 1996, after the parties had presented their respective evidence, U.P. filed an
amended petition alleging that it is "the true, absolute and registered owner of a parcel of land covered
by Transfer Certificate of Title No. 9462" of the Register of Deeds of Quezon City and that the "unlawful
acts of ownership being exercised by (Segundina) and (Bugnay Construction and Development
Corporation) as well as the existence of their spurious certificates of title, create a cloud of doubt on the
title of (U.P.)."

In its third cause of action, U.P. prayed that Transfer Certificate of Title No. 121042 or the reconstituted
titles or derivatives thereof be declared null and void ab initio for being spurious and fraudulently
issued.

On May 15, 1997, Segundina filed with the trial court an "omnibus motion" for the dismissal of U. P.'s
third cause of action in the amended petition as well as the cancellation of the notice of lis pendens
annotated on TCT No. 121042

On November 10, 1997, the trial court denied Segundina's omnibus motion.

On December 30, 1997, Segundina filed with the trial court a motion for reconsideration questioning the
denial of her motion to dismiss and praying for the cancellation of the notice of lis pendens.12

On April 16, 1998, the trial court13 denied Segundina's motion for reconsideration and motion to cancel
the notice of lis pendens.14

On November 10, 1997, the trial court15 again denied Segundina's omnibus motion to dismiss and
cancel notice of lis pendens.16

On May 26, 1998, Segundina filed with the Court of Appeals17 a petition for certiorari18 assailing the
orders of the trial court denying her motion to dismiss.

On September 18, 1998, the Court of Appeals promulgated its decision in favor of Segundina. The Court
of Appeals reasoned that the third cause of action is barred by res judicata and that the trial court
committed grave abuse of discretion in denying Segundina's "motion to dismiss."19 We quote its
dispositive portion:

"WHEREFORE, the instant petition for certiorari is hereby GRANTED. Consequently, the Orders dated
November 10, 1997, and April 16, 1998, are declared NULL and VOID and SET ASIDE insofar as they deny
petitioner's Omnibus Motion to Dismiss and Cancel Notice of Lis Pendens. The Third Cause of Action in
respondent University of the Philippines' Amended Petition is ordered DISMISSED and the Notice of Lis
Pendens annotated on TCT No. 121042, CANCELLED. The writ of preliminary injunction, insofar as it
relates to the parcel of land covered by TCT No. 121042, is LIFTED.

"SO ORDERED."20

On October 26, 1998, petitioner filed with the Court of Appeals, a motion for reconsideration of the
afore-quoted decision.21

On December 17, 1998, the Court of Appeals denied petitioner's motion for reconsideration.22

Hence, this appeal.23

Petitioner's Submissions

First, U.P. contends that the Court of Appeals erroneously allowed Segundina's "motion to dismiss" as
Segundina has yet to prove in a "full-blown hearing" whether her reconstituted title traces its roots to
OCT No. 17. According to U.P., the issuance of Segundina's title was "highly anomalous."24

Second, U.P. assails the issuance of OCT No. 17 in LRC Case No. Q-239 as void ab initio. According to
U.P., the Court of First instance never acquired jurisdiction over LRC Case Q-239 as the requisite
"signature approval of the Director of Lands... over the survey plan... was nowhere to be found."25

Third, U.P. asserts that the Court of Appeals ruled on "unestablished factual issues... by admitting all the
photocopies annexed to respondent (Segundina) Rosario's petition as evidence despite the fact that
they all still remained subject to authentication and examination by the parties before the trial court."26

Fourth, U. P. attacks the verification of Segundina's petition in the Court of Appeals as defective.

The Court's Ruling

The petition is meritorious.

We outline the history of the title that Segundina holds (Title No. 121042): First, the land was originally
covered by Plan (LRC) SWO-15055, as amended, which the Court of First Instance declared as not
encroaching on the property of U.P. and as absolutely owned by Rosario Alcovendras Vda. de Ramos.
Thus, OCT No. 17 was issued in her name. Second, OCT No. 17 was cancelled and Transfer Certificate of
Title No. 223619 was issued. Third, Rosario Alcovendas Vda. de Ramos executed an "absolute deed of
sale" over the land in favor of Segundina. Fourth, Transfer Certificate of Title No. 223619 was burned in
the fire that razed the Quezon City Hall. Fifth, Title No. 223619 was reconstituted and Transfer
Certificate of Title No. RT-78195 was issued in its place. Sixth, Segundina registered the "deed of
absolute sale." Thus, Transfer Certificate of Title No. RT-78195 was cancelled and Transfer Certificate of
Title No. 121042 was issued in Segundina's name.

In LRC Q-329 the trial court declared U.P. as having no interest in the land covered by Transfer
Certificate of Title No. 121042. However, UP's contention that OCT No. 17 is void for lack of the requisite
"signature approval of the Director of Lands... over the survey plan"27 is worth looking into.

P. D. No. 152928 requires the Director of Lands to sign and approve the survey plan for the land applied
for, otherwise, the title is void.

"SECTION 17. What and where to file The application for land registration shall be filed with the
Court of First Instance of the province or city where the land is situated. The applicant shall file together
with the application all original muniments of titles or copies thereof and a survey plan approved by the
Bureau of Lands.

"The clerk of court shall not accept any application unless it is shown that the applicant has furnished
the Director of Lands with a copy of the application and all the annexes (emphasis ours)."

No plan or survey may be admitted in land registration proceedings until approved by the Director of
Lands.29 The submission of the plan is a statutory requirement of mandatory character. Unless a plan
and its technical description are duly approved by the Director of Lands, the same are of no value.30

Thus, the allegation that the signature approval for the survey plan was nowhere to be found is an
important jurisdictional fact that must be ventilated before the trial court. In Republic v. Intermediate
Appellate Court,31 this Court stated that "void ab initio land titles issued cannot ripen into private
ownership." Thus, as OCT No. 17 is void and Segundina traces her rights to OCT No. 17, her claim would
have no basis as a spring cannot rise higher than its source.32

Further, the judgment in LRC Q-329 was subject to the qualification that "If the parcel of land is found to
be inside decreed properties, this plan is automatically cancelled."33

Whether the land covered by OCT No. 17 is inside decreed property is an issue of fact that can be best
determined by the trial court after an examination of the evidence. Welfind meritorious the trial court's
rationale for denying Segundina's motion to dismiss. We quote:

"To establish their respective rights over the disputed property, both plaintiff and respondents
submitted documentary exhibits, the genuineness and authenticity of which can only be proved in a full
blown trial.

"There is no pretense that the foregoing conflicting claims entail determination of facts. It, thus, become
imperative that both parties be given their day in Court to avoid the danger of committing a grave
injustice if they were denied an opportunity to introduce evidence in their behalf.

"It is within this context that the Court considers it appropriate under the present stage of the action to
DENY the instant motion."34

Pending final ruling on the merits of the case, Segundina's motion to cancel the notice of lis pendens
must be denied.

WHEREFORE, the Court GRANTS the petition. The Court REVERSES the decision of the Court of Appeals
promulgated on September 18, 1998, in CA-G. R. SP No. 47783.

In lieu thereof, the Court orders the case REMANDED to the trial court for trial on the merits.

No costs.

SO ORDERED.















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Republic v. CA 235 scra 567
DFA v. CA nov 20 2000
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Gundola v. Ca 284 scra 617
Republic v. de guzman 326 scra574
Repuc v. nagit
Ameria v. caguiao 146 scra 459
Aasn of bapyist for world v. assn and CA july 29, 1987
UP vs. Rosario March 28, 2001