Republic of the Philippines

SUPREME COURT
Manila
EN BANC
G.R. No. L-8936

October 2, 1915

CONSUELO LEGARDA, with her husband MAURO PRIETO, plaintiffs-appellants,

vs.
N.M. SALEEBY, defendant-appellee.
Singson, Ledesma and Lim for appellants.
D.R. Williams for appellee.

JOHNSON, J.:
From the record the following facts appear:
First. That the plaintiffs and the defendant occupy, as owners, adjoining lots in the district of Ermita in the city of Manila.
Second. That there exists and has existed a number of years a stone wall between the said lots. Said wall is located on
the lot of the plaintiffs.
Third. That the plaintiffs, on the 2d day of March, 1906, presented a petition in the Court of Land Registration for the
registration of their lot. After a consideration of said petition the court, on the 25th day of October, 1906, decreed that
the title of the plaintiffs should be registered and issued to them the original certificate provided for under the torrens
system. Said registration and certificate included the wall.
Fourth. Later the predecessor of the defendant presented a petition in the Court of Land Registration for the registration
of the lot now occupied by him. On the 25th day of March, 1912, the court decreed the registration of said title and
issued the original certificate provided for under the torrens system. The description of the lot given in the petition of
the defendant also included said wall.
Fifth. Several months later (the 13th day of December, 1912) the plaintiffs discovered that the wall which had been
included in the certificate granted to them had also been included in the certificate granted to the defendant .They
immediately presented a petition in the Court of Land Registration for an adjustment and correction of the error
committed by including said wall in the registered title of each of said parties. The lower court however, without notice
to the defendant, denied said petition upon the theory that, during the pendency of the petition for the registration of
the defendant's land, they failed to make any objection to the registration of said lot, including the wall, in the name of
the defendant.
Sixth. That the land occupied by t he wall is registered in the name of each of the owners of the adjoining lots. The wall is
not a joint wall.
Under these facts, who is the owner of the wall and the land occupied by it?
The decision of the lower court is based upon the theory that the action for the registration of the lot of the defendant
was a judicial proceeding and that the judgment or decree was binding upon all parties who did not appear and oppose
it. In other words, by reason of the fact that the plaintiffs had not opposed the registration of that part of the lot on

which the wall was situate they had lost it, even though it had been theretofore registered in their name. Granting that
theory to be correct one, and granting even that the wall and the land occupied by it, in fact, belonged to the defendant
and his predecessors, then the same theory should be applied to the defendant himself. Applying that theory to him, he
had already lost whatever right he had therein, by permitting the plaintiffs to have the same registered in their name,
more than six years before. Having thus lost hid right, may he be permitted to regain it by simply including it in a petition
for registration? The plaintiffs having secured the registration of their lot, including the wall, were they obliged to
constantly be on the alert and to watch all the proceedings in the land court to see that some one else was not having all,
or a portion of the same, registered? If that question is to be answered in the affirmative, then the whole scheme and
purpose of the torrens system of land registration must fail. The real purpose of that system is to quiet title to land; to
put a stop forever to any question of the legality of the title, except claims which were noted at the time of registration,
in the certificate, or which may arise subsequent thereto. That being the purpose of the law, it would seem that once a
title is registered the owner may rest secure, without the necessity of waiting in the portals of the court, or sitting in the
"mirador de su casa," to avoid the possibility of losing his land. Of course, it can not be denied that the proceeding for
the registration of land under the torrens system is judicial (Escueta vs. .Director of Lands, 16 Phil. Rep., 482). It is
clothed with all the forms of an action and the result is final and binding upon all the world. It is an action in rem.
(Escueta vs. Director of Lands (supra); Grey Alba vs. De la Cruz, 17 Phil. rep., 49 Roxas vs. Enriquez, 29 Phil. Rep., 31;
Tyler vs. Judges, 175 Mass., 51 American Land Co.vs. Zeiss, 219 U.S., 47.)
While the proceeding is judicial, it involves more in its consequences than does an ordinary action. All the world are
parties, including the government. After the registration is complete and final and there exists no fraud, there are no
innocent third parties who may claim an interest. The rights of all the world are foreclosed by the decree of registration.
The government itself assumes the burden of giving notice to all parties. To permit persons who are parties in the
registration proceeding (and they are all the world) to again litigate the same questions, and to again cast doubt upon
the validity of the registered title, would destroy the very purpose and intent of the law. The registration, under the
torrens system, does not give the owner any better title than he had. If he does not already have a perfect title, he can
not have it registered. Fee simple titles only may be registered. The certificate of registration accumulates in open
document a precise and correct statement of the exact status of the fee held by its owner. The certificate, in the
absence of fraud, is the evidence of title and shows exactly the real interest of its owner. The title once registered, with
very few exceptions, should not thereafter be impugned, altered, changed, modified, enlarged, or diminished, except in
some direct proceeding permitted by law. Otherwise all security in registered titles would be lost. A registered title can
not be altered, modified, enlarged, or diminished in a collateralproceeding and not even by a direct proceeding, after
the lapse of the period prescribed by law.
For the difficulty involved in the present case the Act (No. 496) providing for the registration of titles under the torrens
system affords us no remedy. There is no provision in said Act giving the parties relief under conditions like the present.
There is nothing in the Act which indicates who should be the owner of land which has been registered in the name of
two different persons.
The rule, we think, is well settled that the decree ordering the registration of a particular parcel of land is a bar to future
litigation over the same between the same parties .In view of the fact that all the world are parties, it must follow that
future litigation over the title is forever barred; there can be no persons who are not parties to the action. This, we think,
is the rule, except as to rights which are noted in the certificate or which arise subsequently, and with certain other
exceptions which need not be dismissed at present. A title once registered can not be defeated, even by an adverse,
open, and notorious possession. Registered title under the torrens system can not be defeated by prescription (section
46, Act No. 496). The title, once registered, is notice to the world. All persons must take notice. No one can plead
ignorance of the registration.
The question, who is the owner of land registered in the name of two different persons, has been presented to the
courts in other jurisdictions. In some jurisdictions, where the "torrens" system has been adopted, the difficulty has been
settled by express statutory provision. In others it has been settled by the courts. Hogg, in his excellent discussion of the
"Australian Torrens System," at page 823, says: "The general rule is that in the case of two certificates of title, purporting
to include the same land, the earlier in date prevails, whether the land comprised in the latter certificate be wholly, or
only in part, comprised in the earlier certificate. (Oelkers vs. Merry, 2 Q.S.C.R., 193; Miller vs. Davy, 7 N.Z.R., 155;

Lloyd vs. Myfield, 7 A.L.T. (V.) 48; Stevens vs. Williams, 12 V.L. R., 152; Register of Titles, vs. Esperance Land Co., 1 W.A.R.,
118.)" Hogg adds however that, "if it can be very clearly ascertained by the ordinary rules of construction relating to
written documents, that the inclusion of the land in the certificate of title of prior date is a mistake, the mistake may be
rectified by holding the latter of the two certificates of title to be conclusive." (See Hogg on the "Australian torrens
System," supra, and cases cited. See also the excellent work of Niblack in his "Analysis of the Torrens System," page 99.)
Niblack, in discussing the general question, said: "Where two certificates purport to include the same land the earlier in
date prevails. ... In successive registrations, where more than one certificate is issued in respect of a particular estate or
interest in land, the person claiming under the prior certificates is entitled to the estate or interest; and that person is
deemed to hold under the prior certificate who is the holder of, or whose claim is derived directly or indirectly from the
person who was the holder of the earliest certificate issued in respect thereof. While the acts in this country do not
expressly cover the case of the issue of two certificates for the same land, they provide that a registered owner shall
hold the title, and the effect of this undoubtedly is that where two certificates purport to include the same registered
land, the holder of the earlier one continues to hold the title" (p. 237).
Section 38 of Act No. 496, provides that; "It (the decree of registration) shall be conclusive upon and against all persons,
including the Insular Government and all the branches thereof, whether mentioned by name in the application, notice,
or citation, or included in the general description "To all whom it may concern." Such decree shall not be opened by
reason of the absence, infancy, or other disability of any person affected thereby, nor by any proceeding in any court for
reversing judgments or decrees; subject, however, to the right of any person deprived of land or of any estate or interest
therein by decree of registration obtained by fraud to file in the Court of Land Registration a petition for review
within one year after entry of the decree (of registration), provided no innocent purchaser for value has acquired an
interest.
It will be noted, from said section, that the "decree of registration" shall not be opened, for any reason, in any
court,except for fraud, and not even for fraud, after the lapse of one year. If then the decree of registration can not be
opened for any reason, except for fraud, in a direct proceeding for that purpose, may such decree be opened or set
aside in a collateral proceeding by including a portion of the land in a subsequent certificate or decree of registration?
We do not believe the law contemplated that a person could be deprived of his registered title in that way.
We have in this jurisdiction a general statutory provision which governs the right of the ownership of land when the
same is registered in the ordinary registry in the name of two persons. Article 1473 of the Civil Code provides, among
other things, that when one piece of real property had been sold to two different persons it shall belong to the person
acquiring it, who first inscribes it in the registry. This rule, of course, presupposes that each of the vendees or purchasers
has acquired title to the land. The real ownership in such a case depends upon priority of registration. While we do not
now decide that the general provisions of the Civil Code are applicable to the Land Registration Act, even though we see
no objection thereto, yet we think, in the absence of other express provisions, they should have a persuasive influence
in adopting a rule for governing the effect of a double registration under said Act. Adopting the rule which we believe to
be more in consonance with the purposes and the real intent of the torrens system, we are of the opinion and so decree
that in case land has been registered under the Land Registration Act in the name of two different persons, the earlier in
date shall prevail.
In reaching the above conclusion, we have not overlooked the forceful argument of the appellee. He says, among other
things; "When Prieto et al. were served with notice of the application of Teus (the predecessor of the defendant) they
became defendants in a proceeding wherein he, Teus, was seeking to foreclose their right, and that of orders, to the
parcel of land described in his application. Through their failure to appear and contest his right thereto, and the
subsequent entry of a default judgment against them, they became irrevocably bound by the decree adjudicating such
land to Teus. They had their day in court and can not set up their own omission as ground for impugning the validity of a
judgment duly entered by a court of competent jurisdiction. To decide otherwise would be to hold that lands with
torrens titles are above the law and beyond the jurisdiction of the courts".
As was said above, the primary and fundamental purpose of the torrens system is to quiet title. If the holder of a
certificate cannot rest secure in this registered title then the purpose of the law is defeated. If those dealing with
registered land cannot rely upon the certificate, then nothing has been gained by the registration and the expense

incurred thereby has been in vain. If the holder may lose a strip of his registered land by the method adopted in the
present case, he may lose it all. Suppose within the six years which elapsed after the plaintiff had secured their title, they
had mortgaged or sold their right, what would be the position or right of the mortgagee or vendee? That mistakes are
bound to occur cannot be denied, and sometimes the damage done thereby is irreparable. It is the duty of the courts to
adjust the rights of the parties under such circumstances so as to minimize such damages, taking into consideration al of
the conditions and the diligence of the respective parties to avoid them. In the present case, the appellee was the first
negligent (granting that he was the real owner, and if he was not the real owner he can not complain) in not opposing
the registration in the name of the appellants. He was a party-defendant in an action for the registration of the lot in
question, in the name of the appellants, in 1906. "Through his failure to appear and to oppose such registration, and the
subsequent entry of a default judgment against him, he became irrevocably bound by the decree adjudicating such land
to the appellants. He had his day in court and should not be permitted to set up his own omissions as the ground for
impugning the validity of a judgment duly entered by a court of competent jurisdiction." Granting that he was the owner
of the land upon which the wall is located, his failure to oppose the registration of the same in the name of the
appellants, in the absence of fraud, forever closes his mouth against impugning the validity of that judgment. There is no
more reason why the doctrine invoked by the appellee should be applied to the appellants than to him.
We have decided, in case of double registration under the Land Registration Act, that the owner of the earliest
certificate is the owner of the land. That is the rule between original parties. May this rule be applied to successive
vendees of the owners of such certificates? Suppose that one or the other of the parties, before the error is discovered,
transfers his original certificate to an "innocent purchaser." The general rule is that the vendee of land has no greater
right, title, or interest than his vendor; that he acquires the right which his vendor had, only. Under that rule the vendee
of the earlier certificate would be the owner as against the vendee of the owner of the later certificate.
We find statutory provisions which, upon first reading, seem to cast some doubt upon the rule that the vendee acquires
the interest of the vendor only. Sections 38, 55, and 112 of Act No. 496 indicate that the vendee may acquire rights and
be protected against defenses which the vendor would not. Said sections speak of available rights in favor of third
parties which are cut off by virtue of the sale of the land to an "innocent purchaser." That is to say, persons who had had
a right or interest in land wrongfully included in an original certificate would be unable to enforce such rights against an
"innocent purchaser," by virtue of the provisions of said sections. In the present case Teus had his land, including the
wall, registered in his name. He subsequently sold the same to the appellee. Is the appellee an "innocent purchaser," as
that phrase is used in said sections? May those who have been deprived of their land by reason of a mistake in the
original certificate in favor of Teus be deprived of their right to the same, by virtue of the sale by him to the appellee?
Suppose the appellants had sold their lot, including the wall, to an "innocent purchaser," would such purchaser be
included in the phrase "innocent purchaser," as the same is used in said sections? Under these examples there would be
two innocent purchasers of the same land, is said sections are to be applied .Which of the two innocent purchasers, if
they are both to be regarded as innocent purchasers, should be protected under the provisions of said sections? These
questions indicate the difficulty with which we are met in giving meaning and effect to the phrase "innocent purchaser,"
in said sections.
May the purchaser of land which has been included in a "second original certificate" ever be regarded as an "innocent
purchaser," as against the rights or interest of the owner of the first original certificate, his heirs, assigns, or vendee? The
first original certificate is recorded in the public registry. It is never issued until it is recorded. The record notice to all the
world. All persons are charged with the knowledge of what it contains. All persons dealing with the land so recorded, or
any portion of it, must be charged with notice of whatever it contains. The purchaser is charged with notice of every fact
shown by the record and is presumed to know every fact which the record discloses .This rule is so well established that
it is scarcely necessary to cite authorities in its support (Northwestern National Bank vs. Freeman, 171 U.S., 620, 629;
Delvin on Real Estate, sections 710, 710 [a]).
When a conveyance has been properly recorded such record is constructive notice of its contents and all interests, legal
and equitable, included therein. (Grandin vs. Anderson, 15 Ohio State, 286, 289; Orvis vs. Newell, 17 Conn., 97;
Buchanan vs. Intentional Bank, 78 Ill., 500; Youngs vs. Wilson, 27 N.Y., 351; McCabe vs. Grey, 20 Cal., 509;
Montefiore vs. Browne, 7 House of Lords Cases, 341.)

Under the rule of notice, it is presumed that the purchaser has examined every instrument of record affecting the title.
Such presumption is irrebutable. He is charged with notice of every fact shown by the record and is presumed to know
every fact which an examination of the record would have disclosed. This presumption cannot be overcome by proof of
innocence or good faith. Otherwise the very purpose and object of the law requiring a record would be destroyed. Such
presumption cannot be defeated by proof of want of knowledge of what the record contains any more than one may be
permitted to show that he was ignorant of the provisions of the law. The rule that all persons must take notice of the
facts which the public record contains is a rule of law. The rule must be absolute. Any variation would lead to endless
confusion and useless litigation.
While there is no statutory provision in force here requiring that original deeds of conveyance of real property be
recorded, yet there is a rule requiring mortgages to be recorded. (Arts. 1875 and 606 of the Civil Code.) The record of a
mortgage is indispensable to its validity. (Art .1875.) In the face of that statute would the courts allow a mortgage to be
valid which had not been recorded, upon the plea of ignorance of the statutory provision, when third parties were
interested? May a purchaser of land, subsequent to the recorded mortgage, plead ignorance of its existence, and by
reason of such ignorance have the land released from such lien? Could a purchaser of land, after the recorded mortgage,
be relieved from the mortgage lien by the plea that he was a bona fide purchaser? May there be a bona fide purchaser
of said land, bona fide in the sense that he had no knowledge of the existence of the mortgage? We believe the rule that
all persons must take notice of what the public record contains in just as obligatory upon all persons as the rule that all
men must know the law; that no one can plead ignorance of the law. The fact that all men know the law is contrary to
the presumption. The conduct of men, at times, shows clearly that they do not know the law. The rule, however, is
mandatory and obligatory, notwithstanding. It would be just as logical to allow the defense of ignorance of the existence
and contents of a public record.
In view, therefore, of the foregoing rules of law, may the purchaser of land from the owner of the second original
certificate be an "innocent purchaser," when a part or all of such land had theretofore been registered in the name of
another, not the vendor? We are of the opinion that said sections 38, 55, and 112 should not be applied to such
purchasers. We do not believe that the phrase "innocent purchaser should be applied to such a purchaser. He cannot be
regarded as an "innocent purchaser" because of the facts contained in the record of the first original certificate. The rule
should not be applied to the purchaser of a parcel of land the vendor of which is not the owner of the original certificate,
or his successors. He, in nonsense, can be an "innocent purchaser" of the portion of the land included in another earlier
original certificate. The rule of notice of what the record contains precludes the idea of innocence. By reason of the prior
registry there cannot be an innocent purchaser of land included in a prior original certificate and in a name other than
that of the vendor, or his successors. In order to minimize the difficulties we think this is the safe rule to establish. We
believe the phrase "innocent purchaser," used in said sections, should be limited only to cases where unregistered land
has been wrongfully included in a certificate under the torrens system. When land is once brought under the torrens
system, the record of the original certificate and all subsequent transfers thereof is notice to all the world. That being
the rule, could Teus even regarded as the holder in good fifth of that part of the land included in his certificate of the
appellants? We think not. Suppose, for example, that Teus had never had his lot registered under the torrens system.
Suppose he had sold his lot to the appellee and had included in his deed of transfer the very strip of land now in
question. Could his vendee be regarded as an "innocent purchaser" of said strip? Would his vendee be an "innocent
purchaser" of said strip? Certainly not. The record of the original certificate of the appellants precludes the possibility.
Has the appellee gained any right by reason of the registration of the strip of land in the name of his vendor? Applying
the rule of notice resulting from the record of the title of the appellants, the question must be answered in the negative.
We are of the opinion that these rules are more in harmony with the purpose of Act No. 496 than the rule contended for
by the appellee. We believe that the purchaser from the owner of the later certificate, and his successors, should be
required to resort to his vendor for damages, in case of a mistake like the present, rather than to molest the holder of
the first certificate who has been guilty of no negligence. The holder of the first original certificate and his successors
should be permitted to rest secure in their title, against one who had acquired rights in conflict therewith and who had
full and complete knowledge of their rights. The purchaser of land included in the second original certificate, by reason
of the facts contained in the public record and the knowledge with which he is charged and by reason of his negligence,
should suffer the loss, if any, resulting from such purchase, rather than he who has obtained the first certificate and who
was innocent of any act of negligence.

The foregoing decision does not solve, nor pretend to solve, all the difficulties resulting from double registration under
the torrens system and the subsequent transfer of the land. Neither do we now attempt to decide the effect of the
former registration in the ordinary registry upon the registration under the torrens system. We are inclined to the view,
without deciding it, that the record under the torrens system, supersede all other registries. If that view is correct then it
will be sufficient, in dealing with land registered and recorded alone. Once land is registered and recorded under the
torrens system, that record alone can be examined for the purpose of ascertaining the real status of the title to the land.
It would be seen to a just and equitable rule, when two persons have acquired equal rights in the same thing, to hold
that the one who acquired it first and who has complied with all the requirements of the law should be protected.
In view of our conclusions, above stated, the judgment of the lower court should be and is hereby revoked. The record is
hereby returned to the court now having and exercising the jurisdiction heretofore exercised by the land court, with
direction to make such orders and decrees in the premises as may correct the error heretofore made in including the
land in the second original certificate issued in favor of the predecessor of the appellee, as well as in all other duplicate
certificates issued.
Without any findings as to costs, it is so ordered.
Arellano, C.J., Torrens, and Araullo, JJ., concur.

Separate Opinions

TRENT, J., dissenting:

I dissent.
In cases of double or overlapping registration, I am inclined to agree with the reasoning and authority on which it is held
in the majority opinion (first) that the original holder of the prior certificate is entitled to the land as against the original
holder of the later certificate, where there has been no transfer of title by either party to an innocent purchaser; both,
as is shown in the majority opinion, being at fault in permitting the double registration to take place; (second) that an
innocent purchaser claiming under the prior certificate is entitled to the land as against the original holder of the later
certificate, and also as against innocent purchasers from the holder of the later certificate; the innocent purchaser being
in no wise at fault in connection with the issuance of the later certificate.
But I am of opinion that neither the authorities cited, nor the reasoning of the majority opinion sustains the proposition
that the original holder of the prior certificate is entitled to the land as against an innocent purchaser from the holder of
the later certificate.
As to the text-book authorities cited in the majority opinion, it is sufficient to say that the rules laid down by both Hogg
and Niblack are mere general rules, admittedly subject to exception, and of course of no binding force or authority
where the reasoning upon which these rules are based is applicable to the facts developed in a particular case.
In its last analysis the general rule laid down in the majority opinion rests upon the proposition set forth in the last page
of the opinion wherein it is said that "it would seem to be a just and equitable rule, when two persons have acquired

equal rights in the same thing, to hold that the one who acquired it first and who has complied with all the requirements
of the law should be protected." The rule, as applied to the matter in hand, may be stated as follows: It would seem to
be a just and equitable rule when two persons have acquired separate and independent registered titles to the same
land, under the Land Registration Act, to hold that the one who first acquired registered title and who has complied with
all the requirements of the law in that regard should be protected, in the absence of any express statutory provision to
the contrary.
Thus stated I have no quarrel with the doctrine as a statement of the general rule to be applied in cases of double or
overlapping registration under the Land Registration Act; for it is true as stated in the majority opinion that in the
adjudication and registration of titles by the Courts of Land Registration "mistakes are bound to occur, and sometimes
the damage done thereby is irreparable;" and that in the absence of statutory provisions covering such cases, "it is the
duty of the courts to adjust the rights of the parties, under such circumstances, so as to minimize such damages, taking
into consideration all of the conditions, and the diligence of the respective parties to avoid them."
But like most such general rules, it has its exceptions and should not be applied in a case wherein the reasons on which
it is based do not exist, or in cases wherein still more forceful reasons demand the application of a contrary rule.
The general rule relied upon in the majority opinion is a mere application of a well settled equity rule that: "Where
conflicting equities are otherwise equal in merit, that which first occurred will be given the preference." But it is
universally laid down by all the courts which have had occasion to apply this equity rule that "it should be the last test
resorted to," and that "it never prevails when any other equitable ground for preference exists." (See 19 Cent. Dig., tit.
Equity, par. 181; and may cases cited in 16 Cyc., 139, note 57.) It follows that the general rules, that in cases of double or
overlapping registration the earlier certificate should be protected, ought not to prevail so as to deprive an innocent
purchaser under the later certificate of his title of the earlier certificate contributed to the issuance of the later
certificate. Hence the holder of the earlier certificate of title should not be heard to invoke the"just and equitable
rule" as laid down in the majority opinion, in order to have his own title protected and the title of an innocent purchaser
of a later certificate cancelled or annulled, in any case wherein it appears that the holder of the later certificate was
wholly without fault, while the holder of the issuance of the later certificate, in that he might have prevented its
issuance by merely entering his appearance in court in response to lawful summons personally served upon him in the
course of the proceedings for the issuance of the second certificate, and pleading his superior rights under the earlier
certificate, instead of keeping silent and by his silence permitting a default judgment to be entered against him
adjudicating title in favor of the second applicant.
The majority opinion clearly recognizes the soundness of the principles I am contending for by reasoning (with which I
am inclined to agree) whereby it undertakes to demonstrate that as between the original holders of the double or
overlapping registration the general rule should prevail, because both such original parties must held to have been fault
and, their equities being equal, preference should be given to the earlier title.
The majority opinion further recognizes the soundness of my contention by the reasoning whereby it undertakes to
sustain the application of the general rule in favor of the original holder of the earlier certificate against purchasers from
the original holder of the later certificate, by an attempt to demonstrate that such purchasers can in no event be held to
be innocent purchasers; because, as it is said, negligence may and should always be imputed to such a purchaser, so that
in no event can he claim to be without fault when it appears that the lands purchased by him from the holder of a duly
registered certificate of title are included within the bounds of the lands described in a certificate of title of an earlier
date.
At considerable length the majority opinion (in reliance upon the general rule laid down under the various systems of
land registration, other than those based on the torrens system) insists that a purchaser of land land duly registered in
the Land Registration Court, is charged with notice of the contents of each and every one of the thousands and tens of
thousands of certificates of registry on file in the land registry office, so that negligence may be imputed to him if he
does not ascertain that all or any part of the land purchased by him is included within the boundary lines of any one of
the thousands or tens of thousands of tracts of land whose original registry bears an earlier date than the date of the
original registry of the land purchased by him. It is contended that he cannot claim to be without fault should he buy

such land because, as it is said, it was possible for him to discover that the land purchased by him had been made the
subject of double or overlapping registration by a comparison of the description and boundary lines of the thousands of
tracts and parcels of land to be found in the land registry office.
But such ruling goes far to defeat one of the principal objects sought to be attained by the introduction and adoption of
the so-called torrens system for the registration of land. The avowed intent of that system of land registration is to
relieve the purchase of registered lands from the necessity of looking farther than the certificate of title of the vendor in
order that he may rest secure as to the validity of the title to the lands conveyed to him. And yet it is said in the majority
opinion that he is charged with notice of the contents of every other certificate of title in the office of the registrar so
that his failure to acquaint himself with its contents may be imputed to him as negligence.
If the rule announced in the majority opinion is to prevail, the new system of land registration, instead of making
transfers of real estate simple, expenditious and secure, and instead of avoiding the necessity for expensive and oftimes
uncertain searches of the land record and registries, in order to ascertain the true condition of the title before purchase,
will, in many instances, add to the labor, expense and uncertainty of any attempt by a purchaser to satisfy himself as to
the validity of the title to lands purchased by him.
As I have said before, one of the principal objects, if not the principal object, of the torrens system of land registration
upon which our Land Registration Act is avowedly modelled is to facilitate the transfer of real estate. To that end the
Legislature undertakes to relieve prospective purchasers and all others dealing in registered lands from the necessity of
looking farther than the certificate of title to such lands furnished by the Court of Land Registration, and I cannot,
therefore, give my consent to a ruling which charges a purchaser or mortgage of registered lands with notice of the
contents of every other certificate of title in the land registry, so that negligence and fault may be imputed to him should
he be exposed to loss or damages as a result of the lack of such knowledge.
Suppose a prospective purchaser of lands registered under the Land Registration Act desires to avoid the imputation of
negligence in the event that, unknown to him, such lands have been made the subject of double or overlapping
registration, what course should he pursue? What measures should he adopt in order to search out the information with
notice of which he is charged? There are no indexes to guide him nor is there anything in the record or the certificate of
title of the land he proposes to buy which necessarily or even with reasonable probability will furnish him a clue as to
the fact of the existence of such double or overlapping registration. Indeed the only course open to him, if he desires to
assure himself against the possibility of double or overlapping registration, would even seem to be a careful, laborious
and extensive comparison of the registered boundary lines contained in the certificate of title of the tract of land he
proposes to buy with those contained in all the earlier certificates of title to be found in the land registry. Assuredly it
was never the intention of the author of the new Land Registration Act to impose such a burden on a purchaser of duly
registered real estate, under penalty that a lack of the knowledge which might thus be acquired may be imputed to him
by this court as negligence in ruling upon the respective equities of the holders of lands which have been the subject of
double or overlapping registration.
On the other hand, I think that negligence and fault may fairly be imputed to a holder of a registered certificate of title
who stood supinely by and let a default judgment be entered against him, adjudicating all or any part of his registered
lands to another applicant, if it appears that he was served with notice or had actual notice of the pendency of the
proceedings in the Court of Land Registration wherein such default judgment was entered.
The owner of land who enjoys the benefits secured to him by its registry in the Court of Land Registration may
reasonably be required to appear and defend his title when he has actual notice that proceedings are pending in that
court wherein another applicant, claiming the land as his own, is seeking to secure its registry in his name. All that is
necessary for him to do is to enter his appearance in those proceedings, invite the court's attention to the certificate of
title registered in his name, and thus, at the cost of the applicant, avoid all the damage and inconvenience flowing from
the double or overlapping registration of the land in question. There is nothing in the new system of land registration
which seems to render it either expedient or necessary to relieve a holder of a registered title of the duty of appearing
and defending that title, when he has actual notice that it is being attacked in a court of competent jurisdiction, and if,
as a result of his neglect or failure so to do, his lands become subject to double or overlapping registration, he should

not be permitted to subject an innocent purchaser, holding under the later certificate, to all the loss and damage
resulting from the double or overlapping registration, while he goes scot free and holds the land under a manifest
misapplication of the equitable rule that "where conflicting equities are otherwise equal in merit, that which first
accrued will be given the preference." It is only where both or neither of the parties are at fault that the rule is properly
applicable as between opposing claimants under an earlier and a later certificate of registry to the same land.
Of course all that is said in the briefs of counsel and the majority opinion as to the right of the holder of a certificate to
rest secure in his registered title so that those dealing with registered lands can confidently rely upon registry
certificates thereto is equally forceful by way of argument in favor of the holder of one or the other certificate in case of
double or overlapping registration. The problem is to determine which of the certificate holders is entitled to the land.
The decision of that question in favor of either one must necessarily have the effect of destroying the value of the
registered title of the other and to that extent shaking the public confidence in the value of the whole system for the
registration of lands. But, in the language of the majority opinion, "that mistakes are bound to occur cannot be denied
and sometimes the damage done thereby is irreparable. It is the duty of the courts to adjust the rights of the parties
under such circumstances so as to minimize the damages, taking into consideration all the conditions and the diligence
of the respective parties to avoid them."lawphil.net
It will be observed that I limit the exception to the general equitable rule, as laid down in the majority opinion, to case
wherein the holder of the earlier certificate of title has actual notice of the pendency of the proceedings in the course of
which the latter certificate of title was issued, or to cases in which he has received personal notice of the pendency of
those proceedings. Unless he has actual notice of the pendency of such proceedings I readily agree with the reasoning of
the majority opinion so far as it holds that negligence, culpable negligence, should not be imputed to him for failure to
appear and defend his title so as to defeat his right to the benefit of the equitable rule. It is true that the order of
publication in such cases having been duly complied with, all the world is charged with notice thereof, but it does not
necessarily follow that, in the absence of actual notice, culpable negligence in permitting a default judgment to be
entered against him may be imputed to the holder of the earlier certificate so as to defeat his right to the land under the
equitable rule favoring the earlier certificate. Such a holding would have the effect (to quote the language of the
majority opinion) of requiring the holder of a certificate of title to wait indefinitely "in the portals of the court" and to sit
in the "mirador de su casa" in order to avoid the possibility of losing his lands; and I agree with the writer of the majority
opinion that to do so would place an unreasonable burden on the holders of such certificate, which was not
contemplated by the authors of the Land Registration Act. But no unreasonable burden is placed upon the holder of a
registered title by a rule which imputes culpable negligence to him when he sits supinely by and lets a judgment in
default be entered against him adjudicating title to his lands in favor of another applicant, despite the fact that he has
actual knowledge of the pendency of the proceedings in which such judgment is entered and despite the fact that he has
been personally served with summons to appear and default his title.
"Taking into consideration all of the conditions and the diligence of the respective parties," it seems to me that there is
no "equality in merit" between the conflicting equities set up by an innocent purchaser who acquires title to the land
under a registered certificate, and the holder of an earlier certificate who permitted a default judgment to be entered
against him, despite actual notice of the pendency of the proceedings in the course of which the later certificate was
issued.
I am convinced, furthermore, that aside from the superior equities of the innocent purchaser in cases such as that now
under discussion, there are strong reasons of convenience and public policy which militate in favor of the recognition of
his title rather than that of the holder of the earlier title.
One ruling exposes all persons purchasing or dealing in registered lands to unknown, unspecified and uncertain dangers,
to guard against which all such persons will be put to additional cost, annoyance and labor on every occasion when any
transaction is had with regard to such lands; while the other ruling tends to eliminate consequences so directly adverse
to the purpose and object for which the land registration law was enacted, and imposes no burden upon any holder of a
certificate of registered lands other than that of defending his title on those rare, definite and specific occasions wherein
he has actual notice that his title is being challenged in a Court of Land Registration, a proceeding in which the cost and
expense is reduced to the minimum by the conclusive character of his certificate of title in support of his claim of

ownership. Furthermore, judgment against the innocent purchaser and in favor of the holder of the earlier certificate in
a case such as that under consideration must inevitably tend to increase the danger of double or overlapping
registrations by encouraging holders of registered titles, negligently or fraudulently and conclusively, to permit default
judgments to be entered against them adjudicating title to all or a part of their registered lands in favor of other
applicants, despite actual notice of the pendency of judicial proceedings had for that purpose, and this, without adding
in any appreciable degree to the security of thir titles, and merely to save them the very slight trouble or inconvenience
incident to an entry of appearance in the court in which their own titles were secured, and inviting attention to the fact
that their right, title and ownership in the lands in questions has already been conclusively adjudicated.
The cases wherein there is a practical possibility of double or overlapping registration without actual notice to the holder
of the earlier certificate must in the very nature of things to be so rare as to be practically negligible. Double or
overlapping registration almost invariably occurs in relation to lands held by adjoining occupants or claimants. It is
difficult to conceive of a case wherein double registration can take place, in the absence of fraud, without personal
service of notice of the pendency of the proceedings upon the holder of the earlier certificate, the statute requiring such
notice to be served upon the owner or occupant of all lands adjoining those for which application for registration is
made; and the cases wherein an adjoining land owner can, even by the use of fraud, conduct proceedings for the
registration of his land to a successful conclusion without actual notice to the adjoining property owners must be rare
indeed.
In the case at bar the defendant purchased the land in question from the original holder of a certificate of title issued by
the Court of Land Registration, relying upon the records of the Court of Land Registration with reference thereto and
with no knowledge that any part of the land thus purchased was included in an earlier certificate of title issued to the
plaintiff. The plaintiff, the holder of the earlier certificate of title, negligently permitted a default judgment to be entered
against him in the Court of Land Registration, adjudicating part of the lands included in his own certificate of title in
favor of another applicant, from whom the defendant in this action acquired title, and this despite the fact that he was
an adjoining land owner, had actual notice of the pendency of the proceedings and was personally served with
summons to appear and defends his rights in the premises. It seems to me that there can be no reason for doubt as to
the respective merits of the equities of the parties, and further that the judgment of the majority in favor of the plaintiff
will inevitably tend to increase the number of cases wherein registered land owners in the future will fail to appear and
defend their titles when challenged in other proceedings in the Courts of Land Registration, thereby enormously
increasing the possibility and probability of loss and damage to innocent third parties and dealers in registered lands
generally, arising out of erroneous, double or overlapping registration of lands by the Courts of Land Registration.
Carson, J., concurs.

Republic of the Philippines

SUPREME COURT
Manila
EN BANC
G.R. No. 5246

September 16, 1910

MANUELA GREY ALBA, ET AL., petitioners-appellants,

vs.
ANACLETO R. DE LA CRUZ, objector-appellee.
Ramon Salinas, for appellants.
Aniceto G. Reyes, for appellee.

TRENT, J.:
These petitioners, Manuela, Jose, Juan, and Francisco, surnamed Grey y Alba, are the only heirs of Doa Segunda Alba
Clemente and Honorato Grey, deceased. Remedios Grey y Alba, a sister of the petitioners, was married on the 21st day
of March, 1903, to Vicente Reyes and died on the 13th of July, 1905, without leaving any heirs except her husband. The
four petitioners, as coowners, sought to have registered the following-described property:
A parcel of land situated in the barrio of Talampas, municipality of Baliuag, Province of Bulacan, upon which are
situated three houses and one camarin of light material, having a superficial area of 52 hectares, 51 ares, and 22
centares; bounded on the north by the highway (calzada) of Talampas and the lands of Rita Ruiz Mateo; on the
east by the lands of the said Rita Ruiz Mateo, Hermenegildo Prado, Policarpo de Jesus, and a stream called
Sapang Buslut; on the south by the same stream and the lands of the capellania; and on the west by the stream
called Sapang Buslut, and the lands of Vicente de la Cruz, Jose Camacho and Domingo Ruiz Mateo.
This parcel of agricultural land is used for the raising of rice and sugar cane and is assessed at $1,000 United States
currency. The petition, which was filed on the 18th of December, 1906, was accompanied by a plan and technical
description of the above-described parcel of land.
After hearing the proofs presented, the court entered, on the 12th of February, 1908, a decree in accordance with the
provisions of paragraph 6 of section 54 of Act No. 926, directing that the land described in the petitioner be registered in
the names of the four petitioners, as coowners, subject to the usufructuary right of Vicente Reyes, widower of Remedios
Grey.
On the 16th of June, 1908, Anacleto Ratilla de la Cruz filed a motion in the Court of Land Registration asking for a
revision of the case, including the decision, upon the ground that he is the absolute owner of the two parcels of land
which are described in said motion, and which, according to his allegations, are included in the lands decreed to the
petitioners. He alleged that the decree of February 12, 1908, was obtained maliciously and fraudulently by the
petitioners, thereby depriving him of said two parcels of land. He further alleged that he was the absolute owner of the
two parcels of land, having inherited them from his father, Baldomero R. de la Cruz, who had a state grant for the same.
He therefore asked, under the provisions of section 38 of the Land Registration Act (No. 496), a revision of the case, and
that the said decree be modified so as to exclude the two parcels of land described in said motion. The Land Court upon
this motion reopened the case, and after hearing the additional evidence presented by both parties, rendered, on the
23rd of November, 1908, its decision modifying the former decree by excluding from the same the two parcels of land
claimed by Anacleto Ratilla de la Cruz. From this decision and judgment the petitioners appealed and now insist, first,
that the trial court erred in reopening the case and modifying its decree dated the 12th of February, 1908, for the reason
that said decree was not obtained by means of fraud; and, second, that the court erred in holding that the two parcels of
land described in the appellee's motion are not their property.
It was agreed by counsel that the two small parcels now in dispute forma part of the land described in the petition and
were included in the decree of February 12, 1908, and that the petitioners are the owners of the remainder of the land
described in the said decree.
The petitioners inherited this land from their parents, who acquired the same, including the two small parcels in
question, by purchase, as is evidenced by a public document dated the 26th of November, 1864, duly executed before
Francisco Iriarte, alcalde mayor and judge of the Court of First Instance of the Province of Bulacan.
Baldomero R. de la Cruz, father of the appellee, obtained in march, 1895, a state grant for several parcels of land,
including the two parcels in question. This grant was duly inscribed in the old register of property in Bulacan on the 6th
of April of the same year.
It is admitted that at the time the appellants presented their petition in this case the appellee was occupying the two
parcels of land now in question. It is also admitted that the name of the appellee does not appear in the said petition as
an occupant of the said two parcels. The petitioners insist that the appellee was occupying these parcels as their tenant

and for this reason they did not include his name in their petition, as an occupant, while the appellee contends that he
was occupying the said parcels as the absolute owner under the estate grant by inheritance.
The court below held that the failure on the part of the petitioners to include the name of the appellee in their petition,
as an occupant of these two parcels of land, was a violation of section 21 of Act No. 496, and that this constituted fraud
within the meaning of section 38 of said Land Registration Act. The trial court further held that the grant from the estate
should prevail over the public document of purchase of 1864.
The mother of the petitioners died on November 15, 1881; their father died prior to that time. Manuela, the oldest of
the petitioners, was about six years of age when their mother died. So these children were minors when the father of
the appellee obtained the estate grant.
On the 13th of June, 1882, Jose Grey, uncle and representative of the petitioners, who were then minors, rented the
land owned by the petitioners' deceased parents to one Irineo Jose for a period of three years. On the 23d of March,
1895, the said Jose Grey, as the representative of the petitioners, rented the same land for a period of six years to
Baldomero R. de la Cruz, father of the appellee. This rental contract was duly executed in writing. This land was
cultivated during these six years by Baldomero R. de la Cruz and his children, one of whom is the appellee. On the 14th
of December, 1905, Jose Grey, for himself and the other petitioners, rented the same land to Estanislao R. de la Cruz for
a period of two years. Estanislao de la Cruz on entering into this rental contract with Jose Grey did so for himself and his
brothers, one of whom is the appellee. While the appellee admits that his father and brother entered into these rental
contracts and did, in fact, cultivate the petitioners' land, nevertheless he insists that the two small parcels in question
were not included in these contracts. In the rental contract between the uncle of the petitioners and he father of the
appellee the land is not described. In the rental contract between Jose Grey, one of the petitioners, and Estanislao R. de
la Cruz, brother of the appellee, the two small parcels of land in question are included, according to the description
given therein. This was found to be true by the court below, but the said court held that as this contract was made by
Estanislao R. de la Cruz it was not binding upon Anacleto R. de la Cruz, the appellee.
The two small parcels of land in question were purchased by the parents of the petitioners in 1864, as is evidenced by
the public document of purchase and sale of that year. The same two parcels of land are included in the state grant
issued in favor of Baldomero Ratilla de la Cruz in 1895. This grant was obtained after the death of the petitioners'
parents and while they were minors. So it is clear that the petitioners honestly believed that the appellee was occupying
the said parcels as their lessee at the time they presented their application for registration. They did not act in bad faith,
nor with any fraudulent intent, when they omitted to include in their application the name of the appellee as one of the
occupants of the land. They believed that it was not necessary nor required that they include in their application the
names of their tenants. Under these circumstances, did the court below commit an error in reopening this case in June,
1908, after its decree had been entered in February of the same year?
The application for the registration is to be in writing, signed and sworn to by the applicant, or by some person duly
authorized in his behalf. It is to contain an accurate description of the land. It shall contain the name in full and the
address of the applicant, and also the names and addresses of all occupants of land and of all adjoining owners, if
known; and, if not known, it shall state what search has been made to find them. In the form of notice given by statute,
which shall be sworn to, the applicant is required to state and set forth clearly all mortgages or encumbrances affecting
said land, if any, the rights and interests, legal or equitable, in the possession, remainder, reversion, or expectancy of all
persons, with their names in full, together with their place of residence and post office addresses. Upon receipt of the
application the clerk shall cause notice of the filling to be published twice in the Official Gazette. This published notice
shall be directed to all persons appearing to have an interest in the land sought to be registered and to the adjoining
owners, and also "to all whom it may concern." In addition to the notice in the Official Gazette the Land Court shall,
within seven days after said publication, cause a copy of the notice, in Spanish, to be mailed by the clerk to every person
named in the application whose address is known; to cause a duly attested copy of the notice, in Spanish, to be posted
in a conspicuous place on every parcel of land included in the application, and in a conspicuous place on the chief
municipal building of the town in which the land is situated. The court may also cause other or further notice of the
application to be given in such manner and to such persons as it may deem proper. The certificate of the clerk that he
has served the notice as directed by the court by publication or mailing shall be conclusive proof of such service. Within

the time allowed in the notices, if no person appears and answers, the court may at once, upon motion of the applicant,
no reason to the contrary appearing, order a general default. By the description in the published notice "to all whom it
may concern," and by express provisions of law "all the word are made parties defendant and shall be concluded by the
default an order." If the court, after hearing, finds that the applicant has title, as stated in his application, a decree or
registration shall be entered.
Every decree of registration shall bind the land and quiet title thereto, subject only to the exceptions stated in
the following section. It shall be conclusive upon and against all persons, including the Insular Government, and
all the branches thereof, whether mentioned by name in the application, notice, or citation, or included in the
general description "to all whom it may concern." Such decree shall not be opened by reason of the absence,
infancy, or other disability of any person affected thereby, nor by any proceedings in any court for reversing
judgments or decrees; subject, however, to the right of any person deprived of land or of any estate or interest
therein by decree of registration obtained by fraud to file in the Court of Land Registration a petition for review
within one year. . . . (Sec. 38 of Act No. 496.)
The appellee is not included in any of the exceptions named in section 38 referred to above.
It will be seen that the applicant is required to mention not only the outstanding interest which he admits but also all
claims of interest, though denied by him. By express provision of law the world are made parties defendant by the
description in the notice "to all whom it may concern."
Although the appellee, occupying the two small parcels of land in question under the circumstances as we have set forth,
was not served with notice, he was made a party defendant by publication; and the entering of a decree on the 12th of
February, 1908, must be held to be conclusive against all persons, including the appellee, whether his (appellee's) name
is mentioned in the application, notice, or citation.
The said decree of February 12, 1908, should not have been opened on account of the absence, infancy, or other
disability of any person affected thereby, and could have been opened only on the ground that the said decree had been
obtained by fraud. That decree was not obtained by fraud on the part of the applicants, inasmuch as they honestly
believed that the appellee was occupying these two small parcels of land as their tenant. One of the petitioner went
upon the premises with the surveyor when the original plan was made.
Proof of constructive fraud is not sufficient to authorize the Court of Land Registration to reopen a case and modify its
decree. Specific, intentional acts to deceive and deprive anther of his right, or in some manner injure him, must be
alleged and proved; that is, there must be actual or positive fraud as distinguished from constructive fraud.
The question as to the meaning of the word "fraud" in the Australian statutes has been frequently raised. Two
distinctions have been noted by the Australian courts; the first is the distinction between the meaning of the word
"fraud" in the sections relating to the conclusive effect of certificates of title, and its meaning in the sections relating to
the protection of bona fide purchasers from registered proprietors. The second is the distinction between "legal,"
"equitable," or "constructive" fraud, and "actual" or "moral" fraud. In none of the groups of the sections of the
Australian statutes relating to the conclusive effect of certificates of title, and in which fraud is referred to, is there any
express indication of the meaning of "fraud," with the sole exception of that of the South Australian group. (Hogg on
Australian Torrens System, p. 834.)
With regard to decisions on the sections relating to the conclusive effect of certificates of title, it has been held
in some cases that the "fraud" there mentioned means actual or moral fraud, not merely constructive or legal
fraud. In other cases "fraud" has been said to include constructive, legal, and every kind of fraud. In other cases,
against, knowledge of other persons' right, and the deliberate acquisition of registered title in the face of such
knowledge, has been held to be "fraud" which rendered voidable the certificates of title so obtained; and
voluntary ignorance is, for this purpose, the same as knowledge. But in none of these three classes of cases was
there absent the element of intention to deprive another of just rights, which constitutes the essential

characteristics of actual as distinguished from legal-fraud. (Id., p. 835, and cases cited in notes Nos. 85, 86, 87,
88, and 89 at bottom of pages 835 and 836.)
By "fraud" is meant actual fraud-dishonesty of some sort. (Judgment of Privy Council in Assets Co. vs. Mere Roihi, and
Assets Co. vs. Panapa Waihopi, decided in March, 1905, cited by Hogg in his Supplementary Addendum to his work on
Australian Torrens System, supra.) The same meaning should be given to the word "fraud" used in section 38 of our
statutes (Act No. 496).
The question as to whether any particular transaction shows fraud, within the meaning of the word as used in our
statutes, will in each case be a question of fact. We will not attempt to say what acts would constitutes this kind of fraud
in other cases. This must be determined from the fact an circumstances in each particular case. The only question we are
called upon to determine, and have determined, is whether or not, under the facts and circumstances in this case, the
petitioners did obtain the decree of February 12, 1908, by means of fraud.
It might be urged that the appellee has been deprived of his property without due process of law, in violation of section
5 of the Act of Congress of July 1, 1902, known as the Philippine Bill," which provides "that no law shall be enacted in the
said Islands which shall deprive any person of life, liberty, or property without due process of law."
The Land Registration Act requires that all occupants be named in the petition and given notice by registered mail. This
did not do the appellee any good, as he was not notified; but he was made a party defendant, as we have said, by means
of the publication "to all whom it may concern." If this section of the Act is to be upheld this must be declared to be due
process of law.
Before examining the validity of this part of the Act it might be well to note the history and purpose of what is known as
the "Torrens Land Registration System." This system was introduced in South Australia by Sir Robert Torrens in 1857 and
was there worked out in its practicable form.
The main principle of registration is to make registered titles indefeasible. As we have said, upon the presentation in the
Court of Land Registration of an application for the registration of the title to lands, under this system, the theory of the
law is that all occupants, adjoining owners, adverse claimants, and other interested persons are notified of the
proceedings, and have have a right to appear in opposition to such application. In other words, the proceeding is against
the whole word. This system was evidently considered by the Legislature to be a public project when it passed Act No.
496. The interest of the community at large was considered to be preferred to that of private individuals.
At the close of this nineteenth century, all civilized nations are coming to registration of title to land, because
immovable property is becoming more and more a matter of commercial dealing, and there can be no trade
without security. (Dumas's Lectures, p. 23.)
The registered proprietor will no longer have reasons to fear that he may evicted because his vendor had,
unknown to him, already sold the and to a third person. . . The registered proprietor may feel himself protected
against any defect in his vendor's title. (Id., p. 21.)
The following summary of benefits of the system of registration of titles, made by Sir Robert Torrens, has been
fully justified in its use:
First. It has substituted security for insecurity.
Second. It has reduced the costs of conveyances from pounds to shillings, and the time occupied from months to
days.
Third. It has exchanged brevity and clearness for obscurity and verbiage.

Fourth. It has so simplified ordinary dealings that he who has mastered the "three R's" can transact his own
conveyancing.
Fifth. It affords protection against fraud.
Sixth. It has restored to their just value many estates held under good holding titles, but depreciated in
consequence of some blur or technical defect, and has barred the reoccurrence of any similar faults. (Sheldon on
Land Registration, pp. 75, 76.)
The boldest effort to grapple with the problem of simplification of title to land was made by Mr. (afterwards Sir
Robert) Torrens, a layman, in South Australia in 1857. . . . In the Torrens system title by registration takes the
place of "title by deeds" of the system under the "general" law. A sale of land, for example, is effected by a
registered transfer, upon which a certificate of title is issued. The certificate is guaranteed by statute, and, with
certain exceptions, constitutes indefeasible title to the land mentioned therein. Under the old system the same
sale would be effected by a conveyance, depending for its validity, apart from intrinsic flaws, on the correctness
of a long series of prior deeds, wills, etc. . . . The object of the Torrens system, them, is to do away with the delay,
uncertainty, and expense of the old conveyancing system. (Duffy & Eagleson on The Transfer of Land Act, 1890,
pp. 2, 3, 5, 7.)
By "Torrens" system generally are meant those systems of registration of transactions with interest in land
whose declared object . . . is, under governmental authority, to establish and certify to the ownership of an
absolute and indefeasible title to realty, and to simplify its transfer. (Hogg on Australian Torrens system,supra,
pp. 1, 2.)
Compensation for errors from assurance funds is provided in all countries in which the Torrens system has been enacted.
Cases of error no doubt will always occur. The percentage of errors, as compared with the number of registered dealings
in Australia, is very small. In New South Wales there were, in 1889, 209, 894 registered dealings, the average risk of error
being only 2 cents for each dealing. In Queensland the risk of error was only 1 cents, the number of registered
dealings being 233,309. In Tasmania and in Western Australia not a cent was paid for compensation for errors during the
whole time of operation, (Dumas's Lectures, supra, p. 96.) This system has been adopted in various countries of the
civilized world, including some of the States of the American Union, and practical experience has demonstrated that it
has been successful as a public project.
The validity of some of the provisions of the statutes adopting the Torrens system has been the subject of judicial
decision in the courts of the United States. (People vs. Chase, 165 Ill., 527; State vs. Guilbert, 56 Ohio St., 575; People vs.
Simon, 176 Ill., 165; Tyler vs. Judges, 175 Mass., 71.)
Act No. 496 of the Philippine Commission, known as the "Land Registration Act," was copied substantially from the
Massachussetts law of 1898.
The Illinois and Massachusetts statutes were upheld by the supreme courts of those States.
It is not enough to show a procedure to be unconstitutional to say that we never heard of it before. (Tyler vs.
Judges, supra; Hurtado vs. California, 110 U. S., 516.)
Looked at either from the point of view of history or of the necessary requirements of justice, a proceeding in
rem dealing with a tangible res may be instituted and carried to judgment without personal service upon
claimants within the State or notice by name to those outside of it, and not encounter any provision of either
constitution. Jurisdiction is secured by the power of the court over the res. As we have said, such a proceeding
would be impossible, were this not so, for it hardly would do to make a distinction between the constitutional
rights of claimants who were known and those who were not known to the plaintiff, when the proceeding is to
bar all. (Tyler vs. Judges, supra.)

This same doctrine is annunciated in Pennoyer vs. Neff (95 U. S., 714); The Mary (9 Cranch, 126); Mankin vs. Chandler (2
Brock., 125); Brown vs. Levee Commission (50 Miss., 468); 2 Freeman, Judgments, 4th ed., secs. 606, 611.
If the technical object of the suit is to establish a claim against some particular person, with a judgment which
generally, in theory at least, binds his body, or to bar some individual claim or objection, so that only certain
persons are entitled to be heard in defense, the action is in personam, although it may concern the right to or
possession of a tangible thing. If, on the other hand, the object is to bar indifferently all who might be minded to
make an objection of any sort against the right sought to be established, and if anyone in the world has a right
to be heard on the strenght of alleging facts which, if true, show an inconsistent interest, the proceeding is in
rem. (Tyler vs. Judges, supra.)
In the case of Hamilton vs. Brown (161 U. S., 256) a judgment of escheat was held conclusive upon persons notified by
advertisement to all persons interested. In this jurisdiction, by the provisions of the Code of Civil Procedure, Act No. 190,
a decree allowing or disallowing a will binds everybody, although the only notice of the proceedings given is by general
notice to all persons interested.
The supreme court Massachusetts, in the case of Tyler vs. Judges (supra), did not rest its judgment as to the conclusive
effect of the decree upon the ground that the State has absolute power to determine the persons to whom a man's
property shall go at his death, but upon the characteristics of a proceeding in rem. So we conclude that the proceedings
had in the case at bar, under all the facts and circumstances, especially the absolute lack on the part of the petitioners of
any dishonest intent to deprive the appellee of any right, or in any way injure him, constitute due process of law.
As to whether or not the appellee can succesfully maintain an action under the provisions of sections 101 and 102 of the
Land Registration Act (secs. 2365, 2366, Compilation) we do not decide.
For these reasons we are of the opinion, and so hold, that the judgment appealed from should be, and the same is
hereby reversed and judgment entered in favor of the petitioners in conformity with the decree of the lower court of
February 12, 1908, without special ruling as to costs. It is so ordered.
Arellano, C.J., Torres, Johnson and Moreland, JJ., concur.

Republic of the Philippines

SUPREME COURT
Manila
FIRST DIVISION

G.R. No. 114299 September 24, 1999

TRADERS ROYAL BANK, petitioner,
vs.
HON. COURT OF APPEALS, PATRIA, RUBY ANN, MARGARITA, ROSARIO, CYNTHIA, LINDA JOY, all surnamed CAPAY and
RAMON A. GONZALES,respondents.
G.R. No. 118862 September 24, 1999

PATRIA, RUBY ANN, MARGARITA, ROSARIO, CYNTHIA, LINDA JOY, all surnamed CAPAY, and RAMON A.
GONZALES, petitioners,
vs.
SPS. HONORATO D. SANTOS and MARIA CRISTINA S. SANTOS, SPS. CECILIO L. PE and JOSEFINA L. PE, FLORA LARON
WESCOMBE, SPS. TELESFORO P. ALFELOR II and LIZA R. ALFELOR, SPS. DEAN RODERICK FERNANDO and LAARNI
MAGDAMO FERNANDO, REMEDIOS OCA, DEVELOPMENT BANK OF THE PHILIPPINES and TRADERS ROYAL
BANK, respondents.

KAPUNAN, J.:
The present controversy has its roots in a mortgage executed by the spouses Maximo and Patria Capay in favor of
Traders Royal Bank (TRB) pursuant to a loan extended by the latter to the former. The mortgage covered several
properties, including a parcel of land, the subject of the present
dispute. 1 The loan became due on January 8, 1964 and the same having remained unpaid, TRB instituted extra-judicial
foreclosure proceedings upon the mortgaged property.
To prevent the property's sale by public auction, the Capays, on September 22, 1966, filed a petition for prohibition with
preliminary injunction (Civil Case No. Q-10453) before the Court of First Instance (CFI) of Rizal, alleging that the
mortgage was void since they did not receive the proceeds of the loan. The trial court initially granted the Capays' prayer
for preliminary injunction.
On March 17, 1967, the Capays caused to be filed in the Register of Deeds of Baguio City a notice of lis pendens over the
disputed property. Said notice was entered in the Day Book, as well as in the Capays' certificate of title.
Subsequently, the injunction issued by the trial court was lifted thus allowing the foreclosure sale to proceed.
Foreclosure proceedings were initiated and on October 17, 1968, the property was sold to TRB which was the highest
bidder at the auction sale. A sheriff certificate of sale was issued in its name on the same day. On February 25, 1970, the
property was consolidated in the name of TRB, the sole bidder in the sale. TCT No. T-6595 in the name of the Capay
spouses was then cancelled and a new one, TCT No. T-16272, 2 was entered in the bank's name. The notice of lis
pendens, however, was not carried over in the certificate of title issued in the name TRB.
Thereafter, the Capays filed with the CFI a supplemental complaint praying for the recovery of the property with
damages and attorney's fees. Trial in Civil Case No. Q-10453 proceeded and, on October 3, 1977, the CFI rendered its
decision declaring the mortgage void for want of consideration. The CFI ordered, among other things, the cancellation of
TCT No. T-16272 in the name of TRB and the issuance of new certificates of title in the name of the Capay spouses.
TRB appealed to the Court of Appeals. While the case was pending in the Court of Appeals, TRB on March 17, 1982 sold
the land to Emelita Santiago in whose name a new certificate of title, TCT No. 33774, 3 was issued, also, without any
notice of lis pendens annotated thereon. Santiago in turn divided the land into six (6) lots and sold these to Marcial
Alcantara, Armando Cruz and Artemio Sanchez, who became co-owners thereof. 4 Alcantara and his co-owners
developed the property and thereafter sold the six (6) lots to seperate buyers who issued seperate titles, again, bearing
no notice of lis pendens. 5
On July 30, 1982, the Court of Appeals rendered its decision modifying the decision of the trial court as to the award of
damages but affirming the same in all other respects.
For having been filed out of time and for lack of merit, the petition for certiorari filed by TRB before this Court 6 was
denied in a Resolution dated September 12, 1983. TRB's motion for reconsideration was similarly denied in a Resolution
dated October 12, 1983. The Court's September 12, 1983 Resolution having become final and executory on November 9,
1983, the trial court issued a writ of execution directing the Register of Deeds of Baguio City to cancel TCT No. 16272 in
the name of TRB, and to issue a new one in the name of the Capay spouses.

Said writ, however, could not be implemented because of the successive subsequent transfers of the subdivided
property to buyers who obtained separate titles thereto. Thus, a complaint for recovery of possession ownership dated
8 June 1985 was filed before the Quezon City Regional Trial Court against TRB and the subsequent transferees of the
property, the respondents in G.R. No. 118862 (hereinafter, "the non-bank respondents"). Plaintiffs in said case were
Patria Capay, her children by Maximo 7 who succeeded him upon his death on August 25, 1976, and Ramon Gonzales,
counsel of the spouses in Civil Case No. Q-10453 who become co-owner of the property to the extent of 35% thereof as
his attorney's fees (collectively, "the Capays"). On March 27, 1991, the trial court rendered its decision, the dispositive
portion of which states:
WHEREFORE, judgment is hereby rendered in favor of the plaintiffs against the defendants and
ordering the Register of Deeds for Baguio to cancel TCT No. T-36177, Books 198, Page 177 in the
names of defendants Spouses Honorato D. Santos and Maria Cristina Santos; to cancel TCT No.
36707, Book 201, Page 107 in the names of defendant Spouses Cecilio Pe and Josefina L. Pe; to
cancel TCT No. T-36051, Book 198, Page 51 in the name of Flora Laron Wescombe, married to
Kevin Lind Wescombe (now deceased); to cancel TCT No. 36147, Book 198, page 147 in the
names of Spouses Telesforo P. Alfelor II and Liza R. Alfelor; to cancel TCT No. T-36730, Book 201,
Page 130 in the names of Spouses Dean Roderick Fernando and Laarni Magdamo Fernando; to
cancel TCT No. 37437, Book 205, Page 37 in the name of Remedios Oca, and issue new ones free
from all liens and encumbrances, together with all the improvements therein in the names of
plaintiffs sharing pro indiviso as follows: 35% to Ramon A. Gonzales, married to Lilia Y. Gonzales,
of legal age, with postal address at 23 Sunrise Hill, New Manila, Quezon City 37.92% to Patria B.
Capay, of legal age, widow, Filipino; 5.41% each to Ruby Ann Capay, of legal age, Filipino married
to Pokka Vainio, Finnish citizen; Chona Margarita Capay, of legal age, Filipino, married to Waldo
Flores; Rosario Capay of legal age, Filipino, married to Jose Cuaycong, Jr.; Cynthia Capay, of legal
age, Filipino, married to Raul Flores; Linda Joy Capay, of legal age, Filipino, married to Pedro
Duran, all with postal address at 37 Sampaguita St., Capitolville Subd., Bacolod City, ordering
said defendants to vacate the premises in question and restoring plaintiffs thereto and for
defendant Traders Royal Bank to pay each of the plaintiffs moral damages in the amount of
P100,000.00, P40,000.00 in exemplary damages and P40,000.00 as attorney's fees, all with legal
interest from the filing of the complaint, with costs against defendants.
SO ORDERED. 8
TRB and the non-bank respondents appealed to the Court of Appeals. In a Decision promulgated on February 24, 1994 in
CA-G.R. CV No. 33920, the appellate court affirmed the decision of the trial court in toto. 9 It ruled that the non-bank
respondents cannot be considered as purchasers for value and in good faith, having purchased the property subsequent
to the action in Civil Case No. Q-10453 and that while the notice of lis pendens was not carried over to TRB's certificate
of title, as well as to the subsequent transferees' titles, it was entered in the Day Book which is sufficient to constitute
registration and notice to all persons of such adverse claim, citing the cases of Villasor vs. Camon, 10 Levin vs.
Bass 11 and Director of Lands vs. Reyes. 12
As regard TRB, the Court of Appeals said that the bank was in bad faith when it sold the property knowing that it was
under the litigation and without informing the buyer of that fact.
On April 26, 1994, TRB filed with this Court a petition for review to set aside the CA decision, docketed herein as G.R. No.
114299, invoking the following grounds:
I.
THE RESPONDENT HONORABLE COURT OF APPEALS COMMITTED GRAVE AND SERIOUS
ERROR OF LAW IN PROMULGATING THE DISPUTED DECISION AND THEREBY DECIDED A
QUESTION OF SUBSTANCE WHOLLY CONTRARY TO SETTLED JURISPRUDENCE AND

TOTALLY NOT IN ACCORD WITH APPLICABLE DECISION OF THIS HONORABLE SUPREME

COURT.
II.
THE RESPONDENT HONORABLE COURT OF APPEALS HAS COMMITTED SO GRAVE AND
SERIOUS ERRORS OF LAW IN SANCTIONING A DEPARTURE FROM THE USUAL AND
ACCEPTED COURSE OF JUDICIAL PROCEEDING AS TO CALL FOR THE EXERCISE OF THE
POWER OF BY THIS HONORABLE SUPREME COURT.
a) The public respondent has plainly and manifestly acted whimsically, arbitrarily,
capriciously, with grave abuse of discretion, in excess of jurisdiction tantamount to lack
of jurisdiction.
xxx xxx xxx
b) The public respondent erred in not finding that it was not the fault of petitioner when
the notice of lis pendens was not carried over to its new title.
xxx xxx xxx
c) The public respondent erred in not finding that PD No. 1271 had legally caused the
invalidation of the Capay's property and the subsequent validation of TRB's title over
the same property was effective even as against the Capays. 13
Meanwhile, the non-bank respondents moved for a reconsideration of the Court of Appeals' decision. Convinced of the
movants' arguments, the Court of Appeals in a Resolution promulgated on August 10, 1994 granted the motion for
reconsideration and dismissed the complaint as against them. The dispositive portion of the resolution states:
ACCORDINGLY, in view of the foregoing disquisitions and finding merit in the motion for reconsideration,
the same is hereby GRANTED. Consequently, the decision of this Court, promulgated on February 24,
1994, is hereby RECONSIDERED. The complaint filed against defendants-appellants with the court a
quo is hereby ordered DISMISSED, and the certificate of titles originally issued to them in their individual
names are hereby ordered restored and duly respected. We make no pronouncement as to costs.
SO ORDERED. 14
The Capays thus filed with this Court a petition for review, docketed as G.R. No. 118862 to set aside the resolution of the
Court of Appeals raising the following errors:
I
THE COURT OF APPEALS PALPABLY ERRED IN REVERSING ITSELF BY NOW HOLDING THAT TUAZON VS.
REYES, 48 PHIL. 814 ANDRIVERA VS. MORAN, 48 PHIL. 836 ARE NOT APPLICABLE HEREOF, WHILE PINO
VS. COURT OF APPEALS, 198 SCRA 436, IS APPLICABLE.
II
THE COURT OF APPEALS PALPABLY ERRED IN REVERSING ITSELF BY NOW HOLDING THAT ATUN VS.
MUNOZ, 97 PHIL. 762 AND LAROZA VS. GUIA, 134 SCRA 34, ARE NOT APPLICABLE.
III

THE COURT OF APPEALS PALPABLY ERRED IN REVERSING ITSELF BY NOW HOLDING THAT LEVIN VS. BASS,
91 PHIL. 419 VILLASOR VS. CAMON, 89 PHIL. 404 AND DIRECTOR OF LANDS VS. REYES, 68 SCRA 73, ARE
NOT APPLICABLE HEREOF.
IV
THE COURT OF APPEALS PALPABLY ERRED IN REVERSING ITSELF BY NOW HOLDING THAT PETITIONERS
ARE GUILTY OF LACHES.
V
THE COURT OF APPEALS PALPABLY ERRED IN REVERSING ITSELF BY NOW HOLDING THAT THERE IS NO
DISTINCTION IN THE REGISTRATION OF VOLUNTARY INSTRUMENTS VIS-A-VIS INVOLUNTARY
INSTRUMENTS.
VI
THE COURT OF APPEALS PALPABLY ERRED IN REVERSING ITSELF BY NOW HOLDING THAT RESPONDENTS
WHO ARE LAWYERS, RESPONSIBLE CITIZENS AND WELL-RESPECTED RESIDENTS IN THE COMMUNITY,
ARE EXEMPTED FROM THE EFFECTS OF THE CONSTRUCTIVE NOTICE ARISING FROM REGISTRATION.
VII
THE COURT OF APPEALS PALPABLY ERRED IN REVERSING ITSELF WITH REGARDS TO TRADERS ROYAL
BANK, AFTER THE LATTER HAS PERFECTED ITS APPEAL TO THE SUPREME COURT.
VIII
THE COURT OF APPEALS PALPABLY ERRED IN NOT RULING ON THE COUNTER-ASSIGNMENT OF ERROR
THAT:
B) THE LOWER COURT ERRED IN NOT HOLDING THAT DEFENDANTS ARE BOUND BY THE
DECISION IN CIVIL CASE NO. Q-10453.
Subsequently, G.R. No. 118862 was consolidated with G.R No. 114299, pursuant to this Court's Resolution dated July 3,
1996. 15
The consolidated cases primarily involve two issues: (1) who, as between the Capays and the non-bank respondents, has
a better right to the disputed property, and (2) whether or not TRB is liable to the Capays for damages.
On the first issue, we rule for the non-bank respondents.
I
First, when TRB purchased the property at the foreclosure sale, the notice of lis pendens that the Capays caused to be
annotated on their certificate of title was not carried to the new one issued to TRB. Neither did the certificate of title of
Emelita Santiago, who purchased the property from TRB, contain any such notice. When Santiago caused the property
to be divided, six (6) new certificates of title were issued, none of which contained any notice of lis pendens. Santiago
then sold the lots to Marcial Alcantara and his co-owners who next sold each of these to the non-bank respondents. The
non-bank respondents, therefore, could not have been aware that the property in question was the subject of litigation
when they acquired their respective portions of said property. There was nothing in the certificates of title or respective
predecessors-in-interest that could have aroused their suspicion. The non-bank respondents had a right to rely on what

appeared on the face of the title of their respective predecessors-in-interest, and were not bound to go beyond the
same. To hold otherwise would defeat one of the principal objects of the Torrens system of land registration, that is, to
facilitate transactions involving lands.
The main purpose of the Torrens system is to avoid possible conflicts of title to real estate and
to facilitate transactions relative thereto by giving the public the right to rely upon the face of a
Torrens certificate of title and to dispense with the need of inquiring further, except when the
party concerned has actual knowledge of facts and circumstances that should impel a
reasonably cautious man to make such further inquiry. Where innocent third persons, relying on
the correctness of the certificate of title thus issued, acquire rights over the property, the court
cannot disregard such rights and order the total cancellation of the certificate. The effect of such
an outright cancellation would be to impair public confidence in the certificate of title, for
everyone dealing with property registered under the Torrens system would have to inquire in
every instance as to whether the title has been regularly or irregularly issued by the court. Every
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 beyond the certificate to determine
the condition of the property.
The Torrens system was adopted in this country because it was believed to be the most effective
measure to guarantee the integrity of land titles and to protect their indefeasibility once the
claim of ownership is established and recognized. If a person purchases a piece of land on the
assurance that the seller's title thereto is valid, he should not run the risk of being told later that
his acquisition was ineffectual after all. This would not only be unfair to him. What is worse is
that if this were permitted, public confidence in the system would be eroded and land
transactions would have to be attended by complicated and not necessarily conclusive
investigations and proof of ownership. The further consequence would be that land conflicts
could be even more numerous and complex than they are now and possibly also more abrasive,
if not even violent. The Government, recognizing the worthy purposes of the Torrens system,
should be the first to accept the validity of titles issued thereunder once the conditions laid
down by the law are satisfied. 16
Second, the foregoing rule notwithstanding, the non-bank respondents nevertheless physically inspected the properties
and inquired from the register of Deeds to ascertain the absence of any defect in the title of the property they were
purchasing an exercise of diligence above that required by law.
Thus, respondent Aida Fernando Meeks, who bought Lot 5 for her son Dean, testified:
Q How did you come to live in Baguio City, particulary in Kim. 2.5 San Luis, Baguio City?
A In one of my visits to my sister who has been residing here for twelve (12) years now, I
got interested in buying a property here.
Q How did you come to know of this property at Asin Road where you now reside?
A My sister, Ruth Ann Valdez, sir.
Q When this particular property was bought by you, when was that?
A I do not remember the exact date, but it was in 1984, sir.
Q At the time when you went to see the place where you now reside, how did it look?

A This particular property that I bought was then a small one (1) room structure, it is a
two (2)-storey one (1) bedroom structure.
Q What kind of structure with regards to material?
A It is a semi-concrete structure, sir.
Q And aside from this two (2)-storey one (1)-room structure, how did the surrounding
area look like at the time you visited?
A There were stone walls from the road and there were stone walls in front of the
property and beside the property.
Q At the time you went to see the property with your agent, rather your sister Ruth Ann
Valdez did you come to know the owner?
A We did because at the time we went there, Mr. Alcantara was there supervising the
workers.
Q And who?
A Amado Cruz sir.
Q After you saw this property, what else did you do?
A My first concern then was am I buying a property with a clean title.
Q In regards to this concern of yours, did you find an answer to this concern of yours?
A At first; I asked Mr. Alcantara and I was answered by him.
Q What was his answer?
A That it was a property with a clean title, that he has shown me the mother title and it
is a clean title.
Q Aside from being informed that it is a property with a clean title, did you do anything
to answer your question?
A Yes, sit.
Q What did you do?
A Well, the first step I did was to go to the Land Registration Office.
Q Are you referring to the City Hall of Baguio?
A Yes, the City Hall of Baguio.
Q And what did you do in the Registry of Deeds?
A We looked for the title, the original title, sir.

Q When you say we, who was your companion?

A Mr. Alcantara and my present husband, sir.
Q The three (3) of you?
A Yes, sir.
Q What title did you see there?
A We saw the title that was made up in favor of Amado Cruz, sir.
Q And what was the result of your looking up for this title in the name of Amado Cruz?
A We had to be reassured that it was a genuine one, so we asked Atty. Diomampo who
heads the office. We showed him a copy of that title and we were also reassured by him
that anything that was signed by him was as good as it is.
Q Did this Atty. Diomampo reassure you that the title was good?
A He did.
Q After your conversation with the Register of Deeds, what did you do?
A The second step we did was to confer with our lawyer, a friend from RCBC Binondo,
Manila this is Atty. Nelson Waje.
Q What is your purpose in going to this lawyer?
A We wanted an assurance that we were getting a valid title just in case we think of
buying the property.
Q What was the result of your conference with this lawyer?
A He was absolutely certain that was a valid title.
Q Mrs. Meeks, after looking at the place, going to the Register of Deeds, looking at the
title and seeing your lawyer friend, what decision did you finally make regarding the
property?
A We wanted more reassurances, so we proceeded to Banaue, as advised by that same
lawyer, there is another office of the Bureau of Lands. I cannot recall the office but it has
something to do with registration of the old.
Q What is your purpose in going to this Office in Banaue?
A I wanted more reassuances that I was getting a valid title.
Q What was the result of your visit to the Banaue Office?
A We found the title of this property and there was reassurance that it was a clean title
and we saw the mother title under the Hilario family.

Q Mrs. Meeks, when you say Banaue, what particular place is this Banaue?
A It is in Banaue Street in Quezon City, sir.
Q And when you saw the title to this property and the mother title, what was the result
of your investigation, the investigation that you made?
A We were reassured that we were purchasing a valid title, we had a genuine title.
Q When you were able to determine that you had a valid, authentic or genuine title,
what did you do?
A That is when I finally thought of purchasing the property. 17
Telesforo Alfelor II, the purchaser of Lot 4, narrated going through a similar routine:
Q How did you come to know of this place as Asin Road where you are presently
residing?
A It was actually through Mrs. Flory Recto who is presently the Branch Manager of
CocoBank. She informed my wife that there is a property for sale at Asin Road, and she
was the one who introduced to us Mr. Alcantara, sir.
Q When you were informed by Mrs. Recto and when you met with Mr. Alcantara, did
you see the property that was being offered for sale?
A Yes, sir.
Q When did you specifically see the property, if you can recall?
A I would say it is around the third quarter of 1983, sir.
Q When you went to see the place, could you please describe what you saw at that
time?
A When we went there the area is still being developed by Mr. Alcantara. As a matter of
fact the road leading to the property is still not passable considering that during that
time it was rainy season and it was muddy, we fell on our way going to the property and
walked to have an ocular inspection and physical check on the area, sir.
xxx xxx xxx
Q What was the improvement, if any, that was in that parcel which you are going to
purchase?
A During that time, the riprap of the property is already there, the one-half of the riprap
sir.
Q Do you know who was making this improvement at the time that you went there?
A I would understand that it was Marcial Alcantara, sir.

Q After you saw the place riprap and you were in the course of deciding to purchase this
property, what else did you do?
A First, I have to consider that the property is clean.
Q How did you go about determining whether the title of the property is clean?
A Considering that Marcial Alcantara is a real estate broker, I went to his office and
checked the documents he has regarding the property.
Q And what was the result of your checking as to whether the title of the property is
clean?
A He showed me the copy of the title and it was clean, sir.
Q Aside from going to Mr. Alcantara to check up the title of the property, what else did
you do?
A Well, the next thing is I requested his wife to accompany me to the Bureau of Lands or
rather the Registry of Deeds, sir.
Q What registry of Deeds are you referring to?
A The Registry of Deeds of Baguio City, sir.
Q And were you able to see the Register of Deeds regarding what you would like to
know?
A Yes, and we were given a certification regarding this particular area that it was clean,
sir.
Q What Certification are you referring to?
A It is a Certification duly signed by the employee of the Registry of Deeds Adelina
Tabangin, sir.
Q Do you have a copy of that Certification?
A Yes, I have, sir. 18
The testimonies of Honorato Santos 19 and Josefina Pe 20 were to the same effect.
The non-bank respondent predecessor-in-interest, Marcial Alcantara, was less thorough:
Q And will you give a brief description of what you do?
A I normally acquire land, quite big tract of land and subdivide it into smaller lots and
sold it to some interested parties.
Q Specifically, Mr. Alcantara will you please inform the Court in what place in Baguio
have you acquired and subdivided and sold lots?

A Dominican Hill, Leonila Hill, Cristal Cave and Asin Road, sir.
Q You mentioned Asin Road, what particular place in Asin Road are you referring?
A That property I bought from Emelita Santiago, sir.
Q When you say you bought it from Emelita Santiago, how did you come to know that
Emelita Santiago is disposing of the property?
A Because of the father, he is the one who offered me the property, sir, Armando
Gabriel.
Q Is he also a resident of Baguio?
A He is from Buyagan, La Trinidad sir,
Q How did you come to know of this Armando Gabriel wanting to sell a property in
Asin?
A He approached me in the house, sir. He has acquired a title from the Traders Royal
Bank.
Q Can you inform the Honorable Court when you had this conversation with Armando
Gabriel on the sale of the property at Asin Road?
A Later part of March, 1983, sir.
Q Now, when this Armando Gabriel informed you that he wants his property to be sold,
what did you do?
A I went to the place with the agent, sir.
Q When you say you went to the place with the agent, what place?
A Kilometer 2, Asin Road sir.
Q And when you went there to see the place, did you actually go there to see the place?
A By walking, I parked my car a kilometer away, sir.
Q Is it my understanding that when you went to see the property there were no roads?
A None, sir.
xxx xxx xxx
Q Mr. Alcantara, when you went to see this place at Asin Road last week of March, 1983,
will you please briefly describe how this place looked like at that time?
A The place was mountainous, grassy, there were cogon trees, some of the roads were
eroding already, so we cannot possibly enter the property, sir.

Q At the time you entered the place, was there any visible sign of claim by anyone?
A None, sir.
Q In terms of fence in the area?
A There is no such, sir.
xxx xxx xxx
Q Aside from looking or going to the property, what else did you do to this property
prior to your purchase?
A I investigated it with the Register of Deeds, sir.
Q What is your purpose in investigating it with the Register of Deeds?
A To see if the paper in clean and there are no encumbrances, sir.
Q To whom did you talk?
A To Atty. Ernesto Diomampo, sir.
Q And when you went to the Registry of Deeds to investigate and check, did you have
occasion to talk with Atty. Diomampo?
A Yes, sir.
Q And what was the result of your talk with Atty. Diomampo?
A The papers are clean except to the annotation at the back with the road right of way,
sir.
Q After making this investigation with the Register of Deeds and talking with Atty.
Diomampo, what else transpired?
A We bought the property, sir.
Q After purchasing the property from Emelita Santiago, could you please tell the
Honorable Court what you did with that deed of sale?
A We registered it with the Register of Deeds for the Certificate of Title because at that
time when we bought the property, Emelita Santiago had it subdivided into six (6) lots,
sir.
Q Is it our understanding that prior to your purchase the property was subdivided into
six (6) parcels?
A Yes, sir.
Q Could you please inform the Honorable Court if you have any buyers in the
subdivision of this property prior to your purchase?

A Yes, I have.
Q This subdivision of this property, to what office was it brought for action?
A Bureau of Lands, San Fernando, La Union, sir.
Q Now, Mr. Alcantara, at the time that you had this property subdivided by the owner,
could you please inform the Court if there was any claim by any other party opposing
the subdivision or claiming the property?
A None, sir.
Q When the Deed of Sale was executed and you said that you presented it to the
Register of Deeds and after the subdivision already, what action did the Register of
Deeds have regarding the matter?
A They approved it and registered it already in six (6) titles, sir.
Q In whose names?
A One (1) title under my name, Amado Cruz and Dr. Sanchez, sir.
Q Initially, Mr. Alcantara, you said that you are the sole purchaser of this entire area of
One Thousand Five Hundred Ninety One (1,591) Square Meters. Now, you are informing
this Honorable Court that one Amado Cruz and one Dr. Sanchez were also issued two (2)
titles. Could you explain how these titles came into their possession?
A Actually, two (2) are our co-owners, sir.
Q So, is it our understanding that the Deed of Sale from Emelita Santiago is in favor of
these two (2) Atty. Cruz and Dr. Sanchez?
A Yes, sir. 21
Third, between two innocent persons, the one who made it possible for the wrong to be done should be the one to bear
the resulting loss. 22 The Capays filed the notice of lis pendens way back on March 17, 1967 but the same was not TRB's
title. The Capays and their counsel Atty. Ramon A. Gonzales knew in 1968 of the extra-judicial foreclosure sale of the
property to TRB and the consolidation of title in the bank's name following the lapse of the one-year period of
redemption. But in the next fifteen (15) years or so, they did not bother to find out the status of their title or whether
the liens noted on the original certificate of title were still existing considering that the property had already been
foreclosed. In the meantime, the subject property had undergone a series of transfers to buyers in good and for value. It
was not until after the land was subdivided and developed with the buyers building their houses on the other lots when
the Capays suddenly appeared and questioned the occupants' titles. At the very least, the Capays are guilty of laches.
Laches has been defined as the failure or neglect, for an unreasonable and unexplained length of time, to do that which
by exercising due diligence could nor should have been done earlier; it is negligence or omission to assert a right within a
reasonable time, warranting presumption that the party entitled to it either has abandoned it or declined to assert it. 23
Verily, the principle on prescription of actions is designed to cover situations such as the case at bar,
where there have been a series of transfers to innocent purchasers for value. To set aside these
transactions only to accommodate a party who has slept on his rights is anathema to good order.

Independently of the principle of prescription of actions working against petitioners, the doctrine of
laches may further be counted against them, which latter tenet finds application even to imprescriptible
actions. . . . 24
In De La Calzada-Cierras vs. Court of Appeals, 25 we held:
While it is true that under the law it is the act of registration of the deed of conveyance that
serves as the operative act to convey the land registered under the Torrens System (Davao
Grains, Inc. vs. Intermediate Appellate Court, 171 SCRA 612), the petitioners cannot invoke said
dictum because their action to recover Lot 4362 is barred by the equitable doctrine of laches.
The act of registering the conveyance to Rosendo was constructive notice to the whole world of
the fact of such conveyance (Heirs of Maria Marasigan vs. Intermediate Appellate Court, 152
SCRA 253).
But the petitioners' complaint to recover the title and possession of Lot 4362 was filed only on July 21,
1981, twelve (12) years after the registration of the sale to Rosendo. The petitioners failed and
neglected for an unreasonably long time to assert their right, if any, to the property in Rosendo's
possession.
Being guilty of laches, the Capays cannot invoke the ruling in Villasor vs. Camon Levin Bass and Director of Lands vs.
Reyes 26 to the effect that entry of the notice of lis pendens in the day book (primary entry book) is sufficient to
constitute registration and such entry is notice to all persons of such adverse claim. Certainly, it is most iniquitous for the
Capays who, after sleeping on their rights for fifteen years to assert ownership over the property that has undergone
several transfers made in good faith and for value and already subdivided into several lots with improvements
introduced thereon by their owners.
In the same vein, the cases cited by the Capays in their first two (2) assignment of errors, do not help them any, as the
transferees in said cases were not innocent purchasers for value and in good faith. In Tuazon vs. Reyes and
Siochi, 27 where the land involved therein was sold by Petronilo David to Vicente Tuazon, it was with a deed containing
the recital that the land was in dispute between the vendor and Roberto Siochi. Tuazon, who was merely subrogated to
the rights of the vendor was aware of the dispute and, furthermore, David did not warrant the title to the same.
In Rivera vs. Moran, 28 Rivera acquired interest in the land before the final decree was entered in the cadastral
proceedings. Rivera, the transferee, was aware of the pending litigation and, consequently, could not have been
considered a purchaser in good faith. Similarly, in Atun, et al. vs. Nuez, et al. 29 and Laroza vs. Guia, 30 the buyers of the
property at the time of their acquisition knew of the existence of the notice of lis pendens. In contrast to the cited cases,
the non-bank respondents in the case at bar acquired their respective portions of the land with clean title from their
predecessors-in-interest.
II
We come now to TRB's liability towards the Capays.
The Bank unconvincingly tries to wash its hands off the present controversy, and attempts to shift the blame on the
Capays, thus:
xxx xxx xxx
23. The petitioner Bank, during all the time that it was holding the title for over fourteen (14) years that
there was no legal impediment for it to sell said property, Central Bank regulations require that real
properties of banks should not he held for more than five (5) years:

24. The fault of the Register of Deeds in not carrying over the Notice of Lis Pendens to the new title of
the petitioner Bank should not be absorbed by the latter considering that in all good faith, it was not
aware of the existence of said annotation during all the time that said title was in its possession for
almost fourteen (14) years before the property was sold to Emelita G. Santiago. . . . 31
TRB concludes that "(t)he inaction and negligence of private respondents allowing ownership to pass for almost 15 years
constitute prescription of action and/or laches." 32
Sec. 25 of the General Banking Act, 33 provides that no bank "shall hold the possession of any real estate under mortgage
or trust, deed, or the title and possession of any real estate purchased to secure any debt due to it, for a longer period
than five years." TRB, however, admits hoding on to the foreclosed property for twelve (12) years after consolidating
title in its name. The bank is, therefore, estopped from involving banking laws and regulations to justify its belated
disposition of the property. It cannot be allowed to hide behind the law which it itself violated.
TRB cannot feign ignorance of the existence of the lis pendens because when the property was foreclosed by it, the
notice of lis pendens was annotated on the title. But when TCT No. T-6595 in the name of the Capay spouses was
cancelled after the foreclosure, TCT No. T-16272 which was issued in place thereof in the name of TRB did not carry over
the notice of lis pendens.
We do not find the Capays guilty of "inaction and negligence" as against TRB. It may be recalled that upon the
commencement of foreclosure proceedings by TRB, the Capays filed an action for prohibition on September 22, 1966
against the TRB before the CFI to stop the foreclosure sale. Failing in that attempt, the Capays filed a supplemental
complaint for the recovery of the property. The case reached this Court. Prescription or laches could not have worked
against the Capays because they had persistently pursued their suit against TRB to recover their property.
On the other hand, it is difficult to believe TRB's assertion that after holding on to the property for more than ten (10)
years, it suddenly realized that it was acting in violation of the General Bank Act. What is apparent is that TRB took
advantage of the absence of the notice of lis pendens at the back of their certificate of title and sold the property to an
unwary purchaser. This notwithstanding the adverse decision of the trial court and the pendency of its appeal. TRB,
whose timing indeed smacks of bad faith, thus transferred caused the property without the lis pendens annotated on its
title to put it beyond the Capays' reach. Clearly, the bank acted in a manner contrary to morals, good customs and public
policy and should be held liable for damages. 34
Considering however, that the mortgage in favor of TRB had been declared null and void for want of consideration and,
consequently, the foreclosure proceedings did not have a valid effect, the Capays would ordinarily be entitled to the
recovery of their property. Nevertheless, this remedy is not now available to the Capays inasmuch as title to said
property has passed into the hands of third parties who acquired the same in good faith and for value. Such being the
case, TRB is duty bound to pay the Capays the fair market value of the property at the time it was sold to Emelita
Santiago, the transferee of TRB.
WHEREFORE, the Decision of the Court of Appeals dated Frebruary 24, 1994 in CA-G.R. CV No. 33920, as modified by its
Resolution dated August 10, 1994 is hereby AFFIRMED. In addition, Traders Royal Bank is ordered to pay the Capays the
fair market value of the property at the time it was sold to Emelita Santiago.
This Decision is without prejudice to whatever criminal, civil or administrative action against the Register of Deeds and
or his assistants that may be taken by the party or parties prejudiced by the failure of the former to carry over the notice
of lis pendens to the certificate of title in the name of TRB.
SO ORDERED.
Davide, Jr., C.J., Puno, Pardo and Ynares-Santiago, JJ., concur.
Footnotes

1 Said piece of land had been registered in the name of the Capay spouses since December 14, 1959 under TCT
No. T-695 (Exh. "J"), and is more accurately described as follows:
A parcel of land (Lot 27-A-2-A of the subdivision plan (LRC) Psd- 24029, being a portion of Lot 27-A-2, described
on plan LRC Psd-23299, LRC (GLRO) Record No.-Civ. Res. 211), situated in the Res. Sec. "L", Baguio City, Island of
Luzon. Bounded on the SE., point 3 to 4 by Lot 27-C, (LRC) Psd-10738; on the SW., points 4 to 5, by Lot 27-C (LRC)
Psd-10738, and points 5 to 1 by Lot 27-A-2-B of the Subdivision plan; and on the NW., and NE., points 1 to 3, by
Lot 27-A-2-B of the subdivision plan. . . . containing an area of ONE THOUSAND FIVE HUNDRED AND NINETY ONE
(1,591) SQUARE METERS, more or less.
2 Exhibit "K."
3 Exhibit "L."
4 TSN, March 29, 1989, p. 12.
5 Lot 27-A-2-A-1 with an area of 225 sq. meters sold to Honorato Santos, who was issued TCT No. 36177 (Exhibit
"M"). The Santoses later mortgaged said lot to the Development Bank of the Philippines.
Lot 27-A-2-A-2 with an area of 290 sq. meters was sold to Cecilio Pe, who was issued TCT No. 36707 (Exhibit "N").
Lot 27-A-2-4-3 with an area of 330 sq. meters was sold to Flora Laron Escumbre, who was issued TCT No. T36051 (Exhibit "O").
Lot 27-A-2-A-4 with an area of 280 sq. meters was sold to Telesforo Alfelor II who was issued TCT No. T-36147
(Exhibit "P"). The Alfelors later mortgaged the same to the Development Bank of the Philippines.
TCT No. T-36730 (Exhibit "Q") covering Lot 27-A-2-A-5 with an area of 235 sq. meters was issued to Dean
Roderick Fernando.
Lot 27-A-2-A-6 with an area of 231 sq. meters was sold to Remedies Oca TCT No. T-37437 (Exhibit "R") was
issued to the latter.
6 G.R. No. 62744.
7 Namely, Ruby Ann Margarita Rosario, Cynthia Linda Joy, all surnamed Capay.
8 Branch 74, presided by Judge Leonardo M. Rivera.
9 Rollo, G.R. No. 118862, pp. 49-57.
10 89 Phil. 404 (1951).
11 91 Phil. 419 (1952).
12 68 SCRA 177 (1975).
13 Rollo, G.R. No. 114299, pp. 14-17.
14 Rollo, G.R. No. 118862, p. 63.
15 Id., at 240.

16 Tenio-Obsequio vs. Court of Appeals, 230 SCRA 550 (1994).

17 TSN, March 29, 1989, pp. 22-26.
18 TSN, March 30, 1989, pp. 3-4, 6-7.
19 Id., at 22-23.
20 TSN, June 1, 1989, pp. 4-5.
21 TSN, March 29, 1989, pp. 5-6; 8-9; 10-12.
22 Bacaltos Coal Mines vs. Court of Appeals, 245 SCRA 460 (1995).
23 Republic vs. Sandiganbayan, 255 SCRA 438 (1996); Catholic Bishops of Balanga vs. Court of Appeals, 264 SCRA
181 (1996).
24 Buenaventura vs. Court of Appeals, 216 SCRA 819 (1992).
25 212 SCRA 390 (1992).
26 See Notes 10, 11, and 12.
27 48 Phil. 844 (1926).
28 48 Phil. 836 (1976).
29 97 Phil. 762 (1955).
30 143 SCRA 341 (1985).
31 Rollo, G.R. No. 114299, p. 75.
32 Ibid.
33 Republic Act No. 337, as amended.
34 Art. 21, Civil Code.

Republic of the Philippines

SUPREME COURT
Manila
SECOND DIVISION
G.R. No. L-46439 April 24, 1984

ANDREA M. MOSCOSO, petitioner,

vs.
COURT OF APPEALS and MAXIMINA L. MORON, respondents.
Jesus B. Velasco for petitioner.
Custodio P. Caete for private respondent.

GUERRERO, J.:+.wph!1
Petition for review on certiorari of the decision of the defunct Court of Appeals 1 (now the Intermediate Appellate
Court) in CAGR No. 52187-B entitled "Application for Land Registration Under Act No. 496-Andrea M. Moscoso,
applicant-appellant versus Maximina L. Moron, et al., oppositors-appellees" which affirmed the judgment of the Court of
First Instance of Tacloban City in Land Registration Case No. N 134.
Sometime on March 22, 1966, petitioner applied for land registration of a 1,147 square meters residential lot situated in
the poblacion of the municipality of Palo, province of Leyte, bounded and described in Survey Plan Psu-54699 of the
then General Land Registration Office as verified and approved under date June 16, 1927. Her application substantially
stated that petitioner is the owner in fee simple of the land and improvements thereon as her acquisition by inheritance
from her father, the late Pascual Monge y Vigera who died on June 9, 1950, and that the same parcel of land is her share
in a partial partition of estate she and her brothers and sisters executed on May 22, 1964 at Palo, Leyte (Exhibit "K");
that she and her predecessors in interest have been in continuous, public, actual and adverse possession of the land
applied for since time immemorial until the present; that at the last assessment for taxation, said lot was assessed in her
name under Tax Declaration No. 28260 dated May 24, 1964 (Exhibit H and that the taxes are fully paid up to the current
year; that to the best of her knowledge and belief, there is no incumbrance or any kind whatsoever affecting said land
nor any other person having interest therein, legal or equitable, in posession, remainder, reversion or expectancy; and
that the land is now being rented by lessees of the applicant, namely, Angel Encenares, Olanda Bribe, Timoteo Noblejas,
Felisa Adre, Celestina Solana, Baltazar Collado, all of Palo, Leyte.
After due publication of the Notice of Initial Hearing of the petition in the Official Gazette, Vol. 62, Nos. 46 and 47, issues
dated November 14 and 21, 1966 (Exhibit "C"), only the Highway District Engineer of Leyte as public oppositors, and
Concordia Lanuncia, Flaviano L. Marchadesch, Jr., and herein private respondent Maximina L. Moron as private
oppositors appeared for the initial hearing before the trial court.
The trial court summarily dismissed the opposition of the Highway District Engineer who merely sought to secure a
reservation for a road right-of-way in favor of the national government in view of petitioner's willingness to annotate
the same on the certificate of title which might issue. The opposition of the private parties thus remained.
The written opposition substantially allege that they, including one Mrs. Apolonia L. Marchadesch who died in 1963 and
survived by her only issue, oppositor Flaviano L. Marchadesch, are the illegitimate children of the late Zenona Lanuncia
and the recognized natural children of the late Pascual Monge who died in 1950 and father of applicant Andrea M.
Moscoso; that the late Zenona Lanuncia, from the age of three, became a protegee of the late spouses, Saturnino
Monge and Isidra Vigera Monge, letigimate parents of Pascual Monge and Juan Monge, now deceased; that Isidra Vigera
Monge was the original owner of the parcel of land applied for; that Isidra Monge, long before she died on April 15,
1915, and after Pascual Monge legally got married to the mother of the applicant and brother and sisters, and in order
to provide a home and subsistence to the oppositors, their sister and mother, all of which are girls, effected a verbal
partition of her lands with her sons, Pascual, Juan and with the herein oppositor, who were already at their teens, which,
by virtue of said partition, the land herein applied for registration passed to the hands of the oppositors for their home;
that the oppositors have no knowledge that this parcel of land forms part of the inheritance of the applicant and of a
partial partition among the applicant and her brother and sisters; that the oppositors have, if not legal, an equitable title
to the land as judged from the circumstances surrounding the oppositors' case; they deny the allegation that applicant

and her predecessors in interest have been in continuous, public, actual and adverse possession of the land from time
immemorial, the truth being that the oppositors exercised exclusive dominion over the land and are in actual and
continuous possession over it from time immemorial to the present and that should the verbal partition effected before
the death of Isidra Vigera Monge in 1915 being insufficient to pass title to the oppositor, then by virtue of acquisitive
prescription caused by the open, continuous, uninterrupted, peaceful and adverse possession in favor of oppositors,
they are entitled to the land invoking the benefits of Chapter VIII of Commonwealth Act No. 141. 2
Upon the termination of the hearing on the merits, the Hon. Jesus N. Borromeo, then Presiding Judge of the CFI,
Tacloban City, rendered his decision dated December 22, 1971, directing that the title over the land should not be
registered exclusively in the name of the applicant since "it has been overwhelmingly established by them (the private
oppositors) that they and their sister Apolonia, who died in 1963, are the children of Zenona Lanuncia and Pascual
Monge resulting from the relations between the two prior to the marriage of the latter with Guadalupe Oliver, mother
of herein petitioner and her brothers, Elpidio, Salvador, Remedios, Ruperto, and Abelardo (deceased), all surnamed
Monge. 3 Hence, the judgment decreed: t.hqw
IN VIEW OF ALL THE FOREGOING, judgment is hereby rendered ordering the registration of title over the
parcel of land situated in the poblacion of the municipality of Palo, Province of Leyte, as described in the
Plan Psu-54699, Exhibit "E", and the technical description Exhibit "F", in the name of the co-ownership
of: (1) Andrea M. Moscoso, Filipino citizen, of legal age, married to Salvador Moscoso, with postal
address at Bupsong, Antique for three-fourth (3/4) share; (2) Concordia Lanuncia, Filipino citizen, of
legal age, single, and a resident of Palo, Leyte, for one-twelfth (1/12) share; (3) Maximina L. Moron,
Filipino citizen, of legal age, married, and a resident of Palo, Leyte, for (1/12) share; and, (4) Flaviano L.
Marchadesch, Jr., son of the late Apolonia L. Marchadesch, for one-twelfth (1/12) share, subject to a
reservation of a road right-of-way in favor of the Government of the Republic of the Philippines.
After this judgment shall have become final, let the corresponding decree of registration be issued.
SO ORDERED. 4
The trial court ruled that the verbal donation made by Isidra Vigera Vda, de Monge in favor of Zenona Lanuncia and the
latter's daughters by Pascual Monge because they are of weaker sex, was ineffectual to transmit title of ownership over
the land in question and that their adverse claim of ownership even under extraordinary prescription of over thirty years
could not favor them because such claim is disputable due to their failure to declare the property for tax purposes in
their name after the death of Isidra Monge. The trial court, however, gave significant weight to the carbon copy of a
power of attorney executed and signed by the late Pascual Monge on February 11, 1945 (Exhibit "2", "2-A" to "2-C" in
favor of Maximina L. Moron, wherein he stated that Maximins is his daughter and appointed her as his Attorney-in-Fact
to transact with the United States Armed Forces in the Philippines in his behalf for the collection of rentals and other
war damage claims due and payable to him. The court ruled that the power of attorney was an authentic writing
wherein Maximina Lanuncia was voluntarily recognized as the daughter of Pascual Monge. As found by the trial court
thus, t.hqw
Precisely, it would appear that, in his power of attorney executed on February 11, 1945 in favor of
Maximina L. Moron, Exhibit "2", Pascual Monge stated that Maximina is his daughter. The contention of
petitioner that said power of attorney was fraudulently altered in order to inse therein the words "my
daughter . . ." does not seem to be well-taken because, from an examination of the document, the Court
does not notice concrete indications of alteration having been made in order to suit the ends of the
herein oppositors.
Thus, the Court is of the view that the late Pascual Monge, who had no impediment to marry Zenona
Lanuncia when Maximina was conceived (Art. 119, Old Civil Code; Art, 269, New Civil Code) had
voluntarily recognized Maximina Lanuncia Moron as his child when in his power of attorney executed on
February 11, 1945, he mentioned her as his daughter. ... 5

Petitioner assailed the Court's decision in his motion for reconsideration, contending that the disposition of the estate
should be governed by the Old Civil Code (Spanish Civil Code of 1889) since he died on June 9, 1950 while the New Civil
Code took effect only on August, 1950; that assuming that the New Civil Code applies in the case at bar the power of
attorney (Exhibit "2") is not an authentic document to support voluntary recognition because the words "my daughter"
reveals a clear sign of erasure and is a product of falsification as presented in the rebuttal testimony of her brother
Elpidio Monge and that said document is not even a public document because it was merely acknowledged by the
Municipal Mayor of Palo, Leyte who had no authority to authenticate writings as public documents which could be done
only by a notary public.
Acting upon the aforesaid motion for reconsideration, the Court modified its decision in the Order dated May 25, 1972
with the following dispositive portion: t.hqw
IN VIEW OF THE FOREGOING, the judgment of December 22, 1971 is hereby amended in the sense that
the Court hereby orders the registration of title over the parcel of land situated in the poblacion of the
municipality of Palo, Province of Leyte, as described in the Plan Psu-54699, Exhibit "E", and the technical
description Exhibit "F" in the name of the co- ownership of (1) Andrea M. Moscoso, Filipino citizen, of
legal age, married to Salvador Moscoso, with postal address at Bugasong, Antique, for 13/14 share; and
(2) Maximina L. Moron for for share, subject to the reservation of a road right-of-way in favor of the
government of the Philippines.
After this judgment shall have become final, let the corresponding decree of registration be issued.
SO ORDERED.1wph1.t
Not satisfied with the amended judgment, petitioner elevated the case to the defunct Court of Appeals which affirmed
the judgment of the lower court. Hence, the instant petition before Us.
Petitioner assigns practically the same errors allegedly committed by the trial court which were presented before the
respondent Court of Appeals, to wit: t.hqw
I. The lower court erred in holding that Pascual Monge voluntarily recognized Maximina Lanuncia Moron
as his natural child by virtue of the power of attorney (Exhibit "2") executed by him in favor of the latter.
II. The lower court erred in holding that said power of attorney (Exhibit "2") is not materially altered
when in fact it was erased to suit the ends of the oppositors.
III. The lower court erred in appreciating said power of attorney (Exhibit "2") as a public document.
IV. The lower court erred in making judicial pronouncements that Maximina Lanuncia Moron as the
acknowledged natural child of Pascual Monge conferring upon her legal right to inherit from the whole
estate of the late Pascual Monge who died on June 9, 1950 when her claim over the land subject of this
land registration proceeding is that it was given to their mother Zenona Lanuncia by Isidra Vigera and for
their long continuous possession acquired the same by acquisitive prescription.
V. The lower court erred in making judicial pronouncement of recognition without a formal complaint,
hearing on the merit and neither has Maximina Lanuncia Moron the status of a continuous possession of
a natural child.
VI. The lower court erred in ordering the registration of the land applied for registration in favor of the
applicant, Andrea M. Moscoso, only 13/14 share and to oppositor Maximina Lanuncia Moron 1/14 share
in co-ownership.

The principal or decisive issue to be resolved herein is whether or not oppositor-appellee Maximina L. Moron had been
acknowledged by her illegitimate father, Pascual Monge (now deceased) in view of which, as held by the trial court and
affirmed by the respondent appellate court, being an acknowledged natural daughter, she would be entitled to 1/14
share in the land in question as her inheritance. In resolving this issue, We are guided and must comply with the wellestablished rule that findings of fact of the Court of Appeals may not be reviewed by the Supreme Court in an appeal by
certiorari where such findings are ably supported by substantial evidence on record, the same being binding, final and
conclusive. 6
Hence, the finding of the appellate court that the power of attorney, Exhibit "2", was not materially altered before the
same was presented to the court below; that it is "more likely that a mistake was committed in the preparation thereof;
that the person who typed the document had to make a slight erasure and correction in typing correctly the word
"daughter" and that t e power of attorney, as corrected, was then given to Pascual Monge and Maximina L. Moron for
their signature. As such, the correction cannot be considered a deliberate alteration or falsification as depicted by
appellant", is a finding of fact which cannot be disturbed. We agree with the court that said power of attorney is an
authentic writing wherein the father, Pascual Monge, voluntarily recognized Maximina L. Moron as his daughter, and
since Pascual Monge had the legal capacity to contract marriage at the time of the conception, Maximina is a natural
child, entitled to share in the inheritance of the property in question.
It may be so as argued by the petitioner that where the findings of the Court of Appeals are contrary to those of the trial
court, a minute scrutiny by the Supreme Court is in order and resort to the duly proven evidence becomes necessary,
citing Gonlalez vs. CA, G.R. No. 37453, May 25, 1979, 90 SCRA 183 and cases cited therein. We have in fact noted that
the trial court found no alteration in the power of attorney, Exhibit "2", when it ruled that "from an examination of the
document, the court does not notice concrete indication of alteration having been made therein in order to suit the
ends of the herein oppositor." (Decision, pp. 21-22, Record on Appeal), whereas respondent appellate court held that
"(w)e find it more likely that a mistake was committed in the preparation of the power of attorney that the person who
typed the document had to make a slight erasure and correction in typing correctly the word "daughter" and that the
power of attorney, as corrected was then given to Pascual Monge and Maximina L. Moron for their signature. As such,
correction cannot be considered a deliberate falsification, as depicted by appellant. "(CA Decision, p. 8)
We have indeed scrutinized minutely the documentary evidence in question, Exhibit "2", as We have ordered the
elevation of the original records before Us. We affirm the holding of the appellate court that "What clearly appears to be
the case, upon clear examination, is that there is no erasure of the portion whereon "my" was typed. If, really, such 14letter word was erased and in lieu thereof the word "daughter" was typed or superimposed, the erasure would be very
noticeable and visible as the word "daughter", which is shorter by six letters, cannot fully cover the space occupied by 1,
administratrix". This could be easily seen by the naked eye when the document, as in the instant case, was executed
more than 25 years ago and has turned yellow with age. But this is not the case." There is no inconsistency between the
two findings of the trial and appellate courts. Both support the authenticity of the document in ruling that there was no
deliberate falsification, which We uphold.
Petitioner's contention that the Court of First Instance, acting as a land registration court, has no jurisdiction to pass
upon the issue whether the oppositor is the acknowledged natural child of Pascual Monge, is untenable. We have a
number of cases that answer petitioner's position. Thus, in the case of Florentino vs. Encarnacion, G.R. No. L-27697, Sept.
30,1977, 79 SCRA 193, 204-205, We ruled: t.hqw
Petitioner-appellants' third assignment of error is not well taken. Firstly, the otherwise rigid rule that the
jurisdiction of the Land Registration Court, being special and limited in character and proceedings
thereon summary in nature, does not extend to cases involving issues properly litigable in other
independent suits or ordinary civil actions, has time and again been relaxed in special and exceptional
circumstances, (See Government of P.I. vs. Serafica, 61 Phil. 93 (1934); Caoibes vs. Sison, 102 Phil. 19
(1957); Luna vs. Santos, 102 Phil. 588 (1957); Cruz vs. Tan, 93 Phil. 348 (1953); Gurbax Singh Pabla and
Co. vs. Reyes, 92 Phil. 117 (1952)). From these cases, it may be gleaned and gathered that the peculiarity
of the exceptions is based not alone on the fact that the Land Registration Courts are likewise the same
Courts of First Instance, but also the following premises: (1) Mutual consent of the parties or their

acquiescence in submitting the aforesaid issues for the determination by the court in the registration
proceedings; (2) Full opportunity given to the parties in the presentation of their respective sides of the
issues and of the evidence in support thereto; (3) Consideration by the court that the evidence already
of record is sufficient and adequate for rendering a decision upon these issues. (Aglipay vs. De Los Reyes,
L-12776, March 23, 1960) ...
Upon a scrutiny of the proceedings in the trial court, We find that petitioner filed a Motion for New Trial and/or
Reconsideration wherein she assailed the ruling of the trial court that based upon Exhibit "2", the power of attorney, the
oppositor was an acknowledged natural child of the late Pascual Monge and entitled to a portion of the land subject of
the land registration proceedings. She claimed that the document was not authentic and not a public document. In
effect, petitioner acquiesced in submitting the issue as to the status of the oppositor as an acknowledged natural child
entitled to successional rights and had the full opportunity to dispute the authenticity of the document in question as in
fact, applicant's brother, Elpidio Monge, gave rebuttal testimony to support petitioner's theory that the document was a
product of a falsification, which the trial court did not believe. Moreover, the court considered and deemed the
evidence already of record sufficient and adequate for rendering a decision upon the issue thus raised. In doing so, We
find no abuse of discretion committed by the trial court.
In addition, considerations of speedy justice and avoidance of multiplicity of suits impel Us to hold and rule that under
the facts of the case at bar, the trial court, acting as a land registration court, may adjudicate the land sought to be
registered to either or both of the applicant and oppositor, in whole or in part, based on evidence submitted to the
court showing that the party has proper title for registration. (Section 37, Act 496.)
In any event, as the Supreme Court said in Nicanor T. Santos vs. Rosa Ganayo, L-31854, Sept. 9. 1972, 116 SCRA 431,
"Whether a particular matter should be resolved by the Court of First Instance in the exercise of its general jurisdiction
or of its limited jurisdiction as a special court (Probate, Land Registration, etc.) is in reality not a jurisdictional question. It
is in essence a procedural question involving a mode of p- practice which may be waived." In meeting the issue raised by
the oppositor as to her status as an acknowledged natural child as a result of her voluntary recognition appearing in
Exhibit "2", the oppositor (now the petitioner herein) had waived the procedural question and she may not be allowed
to raise the same in the present petition.
The proceedings for the registration of title to land under the Torrens system is an action in rem not in personamhence,
personal notice to all claimants of the res is not necessary to give the court jurisdiction to deal with and dispose of
the res, and neither may lack of such personal notice vitiate or invalidate the decree or title issued in a registration
proceeding, for the State, as sovereign over the land situated within it, may provide for the adjudication of title in a
proceeding in rem or in the nature of a proceeding in rem which shall be binding upon all persons, known or unknown.
(City of Manila vs. Lack et al., 19 Phil. 324, 337; Roxas vs. Enriquez, 29 Phil. 31; Director of Lands vs. Roman Catholic
Archbishop of Manila, 41 Phil. 120; Aguilar vs. Caogdan, 105 Phil. 661).
Under the above doctrine, petitioner's assailment that "(t)he judicial pronouncement (referring to the holding that the
oppositor Maximins L. Moron is the acknowledged natural child of Pascual Monge) which will become conclusive and
far-reaching and in effect binds the other heirs of Pascual Monge consisting of the brothers and sisters as well as the
nephews and nieces of the petitioner who are not parties in this prayer proceedings " is untenable.
Earlier, We have affirmed the ruling of the appellate court that Exhibit "2" which is the power of attorney is an authentic
writing wherein the father, Pascual Monge, voluntarily recognized Maximina L. Moron as his daughter, applying the
provisions of Article 278, New Civil Code, which provides that recognition shall be made in the record of birth, a will, a
statement before a court of record, or in any authentic writing. We apply Article 278, New Civil Code retroactively to the
case of Maximina L. Moron although she was born before the effectivity of the New Civil Code in view of the provisions
of Article 2260 of the New Civil Code, which states: t.hqw
Art. 2260. The voluntary recognition of a natural child shall take place according to this Code, even if the
child was born before the effectivity of this body of laws.

The reason for giving retroactive effect to Article 2260 is indicated in the Report of the Code Commission, page 169,
thus: "The liberalized mode of recognition is in harmony with the aim of the proposed code to do justice to illegitimate
children. Hence, its retroactive effect." (See Civil Code Annotated by Padilla, Vol. VII, 1975 Ed., p. 709).
In Caridad Cruz Vda. de Sy-Quia vs. Court of Appeals and Jose Pedro Reynaldo Sy-Quia, G.R. No. 62283, Nov. 25, 1983,
the Supreme Court squarely held: t.hqw
... Article 2260 of (the Civil Code of the Philippines) provides that 'the voluntary recognition of a natural
child shall take place according to this Code, even if the child was born before the effectivity of this body
of laws' or before August 30, 1950. Hence, Article 278 may be given retroactive effect (p. 169, Report of
the Code Commission, 7 Padilla, Civil Code, 1975 Ed., p. 709).
Under the Spanish Civil Code of 1889, an acknowledged natural child is entitled to ... "3. To receive the hereditary
portion determined by this Code." (Article 134). This hereditary portion is fixed under Article 840 which
states: t.hqw
Art. 840. When the testator leaves legitimate children or descendants, and also natural children, legally
acknowledged, each of the latter shall be entitled to one-half of the portion pertaining to each of the
legitimate children who have not received any betterment, provided that it may be included within the
freely disposable portion, from which it must be taken after the burial and funeral expenses have been
paid.
The same share which is one-half of the legitime of each of the legitimate children or descendants is given to each of the
acknowledged natural children under Article 895 of the New Civil Code, which reads: t.hqw
Art. 895. The legitime of each of the acknowledged natural children and each of the natural children by
legal fiction shall consist of one-half of the legitime of each of the legitimate children or descendants.
The final adjudication made by the trial court in its Order dated May 25, 1975 (affirmed by the Court of Appeals)
directed the registration of the land in question in the name of the co-ownership of petitioner Andrea M. Moscoso for
13/14 share and Maximina L. Moron, the oppositor, for 1/14 share in view of the court's realization that no
documentary evidence was presented to prove that the other oppositors, Concordia Lanuncia and Apolonia Lanuncia
(decease) and mother of oppositor Flaviano Marchadesch, Jr. were acknowledged by Pascual Monge, In the interest of
justice, We must modify the above sharing in order to give the legal share of the oppositor as an acknowledged natural
child.
Since there are six (6) legitimate children including the petitioner Andrea M. Moscoso who had previously acquired the
shares of her five (5) co-heirs, and one (1) acknowledged natural child, the oppositor Maximina L. Moron, herein private
respondent who is entitled to one-half (1/2) the share of each of the legitimate children (Article 840, Spanish Civil Code;
Article 895, New Civil Code), the proper sharing should be 12/13 to Andrea M. Moscoso and 1/13 to Maximina L. Moron.
WHEREFORE, IN VIEW OF THE FOREGOING, the decision appealed from is hereby MODIFIED in the sense that the
adjudication of the land subject of the land registration proceedings shall be in the co-ownership of petitioner-applicant
Andrea M. Moscoso for 12/13 share and to oppositor-private respondent Maximina L. Moron for 1/13 share. In all other
aspects, the decision appealed from is hereby AFFIRMED. Costs against petitioner.
SO ORDERED.1wph1.t
Makasiar, (Chairman), Concepcion, Jr., De Castro and Escolin, JJ., concur.
Abad Santos J., took no part.

Separate Opinions

AQUINO, J., concurring:

I concur. The land involved was acquired by Isidra Vigera Vda. de Monge in 1907. She died in 1915, survived by her child,
Pascual Monge, who married Guadalupe Oliver. Guadalupe died in 1941 while Pascual died on June 9, 1950 or before
the effectivity of the Civil Code. He was survived by six children named Salvacion, Elpidio, Remedios, Ruperta, Abelardo
deceased) and Andrea, the petitioner herein.
Andrea Monge Moscoso claimed the land as her own because her brother and sisters transferred their shares to her
(Exh. K).
Before his marriage to Guadalupe, Pascual had sexual relations with Zenona Lanuncia. He begot with her three children
named Maximins, Concordia and Apolonia (survived by Flaviano L. Marchadesch, Jr.).
Only Maximina Lanuncia Moron can be considered Pascual's acknowledged natural child because of the power of
attorney which he had executed in 1945 in her favor. It is a "documento publico" within the meaning of article 131 of
the old Code.
Pascual M. Monge's estate is governed by articles 840 and 942 of the old Civil Code under which each acknowledged
natural child is entitled to a one-half portion pertaining to each of the legitimate children who have not received any
betterment.
Hence, Andrea Monge Moscoso is entitled to 12/13 and Maximina Lanuncia Moron to 1/13 of the Iand

Separate Opinions
AQUINO, J., concurring:
I concur. The land involved was acquired by Isidra Vigera Vda. de Monge in 1907. She died in 1915, survived by her child,
Pascual Monge, who married Guadalupe Oliver. Guadalupe died in 1941 while Pascual died on June 9, 1950 or before
the effectivity of the Civil Code. He was survived by six children named Salvacion, Elpidio, Remedios, Ruperta, Abelardo
deceased) and Andrea, the petitioner herein.
Andrea Monge Moscoso claimed the land as her own because her brother and sisters transferred their shares to her
(Exh. K).
Before his marriage to Guadalupe, Pascual had sexual relations with Zenona Lanuncia. He begot with her three children
named Maximins, Concordia and Apolonia (survived by Flaviano L. Marchadesch, Jr.).
Only Maximina Lanuncia Moron can be considered Pascual's acknowledged natural child because of the power of
attorney which he had executed in 1945 in her favor. It is a "documento publico" within the meaning of article 131 of
the old Code.

Pascual M. Monge's estate is governed by articles 840 and 942 of the old Civil Code under which each acknowledged
natural child is entitled to a one-half portion pertaining to each of the legitimate children who have not received any
betterment.
Hence, Andrea Monge Moscoso is entitled to 12/13 and Maximina Lanuncia Moron to 1/13 of the Iand
Footnotest.hqw
1 Fifth Division, penned by Domondon, J., and concurred by Reyes, L. B. and Gutierrez, H., JJ.
2 Original Record on Appeal, pp. 2-5.
3 Original Record on Appeal, pp. 12-13.
4 Ibid, pp. 15-16.
5 Original Record on Appeal, p. 13.
6 Lucero vs. Loot, 25 SCRA 687; Ramirez Tel. Corp. vs. Bank of America, 29 SCRA 191; Chan vs. CA, 33
SCRA 737; Perido vs. Perido, 63 SCRA 97; Spouses Dalida vs. CA, 117 SCRA 480.