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 acollateral proceeding 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 negligencemay 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.

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 followingdescribed 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
registrationtakes 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.
(Tylervs. 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
proceedingin 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.

[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.
DECISION
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 propertys 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 banks name. The notice of lis pendens, however, was not carried over in the certificate of title
issued in the name of TRB.
Thereafter, the Capays filed with the CFI a supplemental complaint praying for the recovery of the property
with damages and attorneys 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 separate
buyers who were issued separate 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. TRBs motion for reconsideration was similarly
denied in a Resolution dated October 12, 1983. The Courts 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. T-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
became co-owner of the property to the extent of 35% thereof as his attorneys 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. T36147, 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 attorneys 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 TRBs 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 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 REVIEW 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
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
c) The public respondent erred in not finding that PD No. 1271 had legally caused the invalidation of the
Capays property and the subsequent validation of TRBs 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 AND RIVERA 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--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 Courts
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 over 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 of their respective predecessors-ininterest 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 sellers 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, particularly in Km. 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 early 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, sir.
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 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 reassurances 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
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 and you saw the 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 respondents predecessor-in-interest, Marcial Alcantara, was no 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, Crystal 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
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
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 is 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 annotated in TRBs 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 banks
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 faith 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. x x x.[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 Rosendos possession.
Being guilty of laches, the Capays cannot invoke the ruling in Villasor vs. Camon, Levin vs. 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. InTuazon 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.
Nunez, 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 TRBs 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
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 be 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 xxx.[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]
Section 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 holding on to the foreclosed property
for twelve (12) years after consolidating title in its name. The bank is, therefore, estopped from invoking
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 TRBs 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 February 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.

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 well-established 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 14-letter 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.

RANGAY PIAPI, herein represented by its

chairman ANDRES L. LUGNASIN and
LIBERATO LARGO, RITA LARGO, SABAS
MONTECALBO, SR., CARLOS ZAMORA,
DONATA
SESICAN,
DIZAR
CASTILLO,
ALEJANDOR GICALE, SALVACION SALE,
PABLO MORASTIL, JOSE JAVELOSA, ISIDRA
BERNAL, FELIX EGHOT, CORAZON EGHOT,
ROSALINA
REMONDE,
ROA
EGHOT,
CEFERINA LAGROSA, MARIO ARANEZ,
ALBERTO CAMARILLO, BOBBY DULAOTO,
NOEL ZAMORA, MARTINO MORALLAS,
DANILO
FAILAGA,
MARITA
BRAGAT,
NATIVIDAD
LAGRAMON,
RAQUEL
GEROZAGA, SHIRLY CESAR, PIO ZAMORA,
ANDRES LUGNASIN, ELPIDIO SESICAN,
CRESENTA BORJA, CARLITO TANEZA, JR.,
MARCIAL RELLON, JEANILITO SUMALINOG,
ALBERTO ZAMORA, and LUISITO LAGROSA,

G.R. No. 138248

Present:
*

PANGANIBAN, J., Chairman,

SANDOVAL-GUTIERREZ,
CORONA,
**
CARPIO MORALES, and
GARCIA, JJ.

Petitioners,
-

versus -

IGNACIO TALIP representing the HEIRS OF

JUAN JAYAG,
Respondent.

Promulgated:
September 7, 2005

x ---------------------------------------------------------------------------------------------------------------x
DECISION
SANDOVAL-GUTIERREZ, J.:
Before us is a petition for review on certiorari[1] assailing the Orders dated January 12, 1999 [2] and April
20, 1999[3] of the Regional Trial Court (RTC), Branch 18, Digos, Davao del Sur in Civil Case No. 3715 filed by
the above-named petitioners against respondent Ignacio Talip representing the heirs of Juan Jayag.
The factual antecedents as borne by the records are:
On August 28, 1998, petitioners filed with the said RTC a complaint for reconveyance and damages
with prayer for issuance of a temporary restraining order and/or writ of preliminary injunction against
respondent, docketed as Civil Case No. 3715.
The complaint alleges that petitioners and their predecessors-in-interest have been in actual, peaceful,
continuous and open possession for more than 30 years of a parcel of land consisting of 3.2 hectares situated
in Piapi, Padada, Davao del Sur. It is covered by Original Certificate of Title (OCT) No. P-(3331)-4244 of the
Registry of Deeds, same province, issued in the name of Juan Jayag and has a market value of P15,000.00.
The same land was subdivided into lots consisting of 100 square meters each, where the individual petitioners
built their houses. On the remaining portion were constructed their barangay center, multi-purpose gym and
health center. Respondent fraudulently obtained from the said Registry of Deeds a Transfer Certificate of Title
(TCT) in his name. In 1998, he paid real estate taxes and subsequently, he threatened to build a barb-wire
fence around the land.
Instead of filing an answer, respondent moved to dismiss the complaint on the ground that the RTC has
no jurisdiction over the case considering that the assessed value of the land is only P6,030.00. Respondent,
citing Section 33 (3) of BP Blg. 129, as amended by R.A. No. 7691, [4] maintains that the case falls within the
exclusive jurisdiction of the Municipal Circuit Trial Court of Padada-Kiblawan, Davao del Sur.
In their opposition to the motion to dismiss, petitioners alleged that jurisdiction is vested in the RTC
considering that the total assessed value of the property isP41,890.00, as shown by a Real Property Field
Appraisal and Assessment Sheet dated August 20, 1996 issued by Atty. Marcos D. Risonar, Jr., Provincial
Assessor of Davao del Sur.[5]
On January 12, 1999, the trial court issued an Order dismissing the complaint for lack of
jurisdiction.
Petitioners then filed a motion for reconsideration but was denied in an Order dated April 20, 1999.

Hence, petitioners directly filed with this Court the instant petition for review on certiorari assailing
the trial courts Order dismissing the complaint for lack of jurisdiction.
Petitioners contend that under Section 19 (1) of BP Blg. 129, as amended, the RTC has jurisdiction
over the complaint for reconveyance since it is incapable of pecuniary estimation.
The contention is bereft of merit. This case is analogous to Huguete vs. Embudo.[6] There, petitioners
argued that a complaint for annulment of a deed of sale and partition is incapable of pecuniary estimation, and
thus falls within the exclusive jurisdiction of the RTC. However, we ruled that the nature of an action is not
determined by what is stated in the caption of the complaint but by the allegations of the complaint and the
reliefs prayed for. Where the ultimate objective of the plaintiffs, like petitioners herein, is to obtain title to
real property, it should be filed in the proper court having jurisdiction over the assessed value of the
property subject thereof.
Indeed, basic as a hornbook principle is that the nature of an action, as well as which court or body has
jurisdiction over it, is determined based on the allegations contained in the complaint of the plaintiff,
irrespective of whether or not the plaintiff is entitled to recover upon all or some of the claims asserted therein.
[7]

Let us examine the pertinent allegations in petitioners complaint below:

xxxxxx
2. Plaintiffs by themselves and/or thru their predecessors-in-interest have been in actual
possession, in the concept of an owner, in good faith and in a manner that is open, peaceful,
uninterrupted, public, adverse and continuous, for more than 30 years, the following described
parcel of land, viz:
A parcel of land containing an area of 3.2 hectares, more of less, covered by OCT No. P(3331)-4244, in the name of Juan Jayag and situated in Piapi, Padada, Davao del Sur.
2a. The market value of the above-described land is Fifteen Thousand Pesos
(P15,000.00).
3. The respective areas that private plaintiffs occupy consisted of an average of 100
square meters on which their homes and houses are built while a large chunk of the abovedescribed property has been used or set aside for the barangay site of and other infrastructures
for Piapi, Padada, Davao del Sur.
xxxxxx
5. Defendant or his predecessor-in-interest has never been in possession, of the land in
suit and except for the year 1998, has not paid taxes thereon nor declared the same for taxation
purposes a clear index that defendants title over the same is not genuine.
6. Defendant, in procuring title to the land in suit did so by fraud, mistake and/or
misrepresentation, hence, he holds the title for the benefit and in trust of the landowner that is,
herein plaintiffs.
7. Defendant is by law under obligation to reconvey the land in suit in favor of herein
plaintiffs, x x x.
It can easily be discerned that petitioners complaint involves title to, or possession of, real property.
However, they failed to allege therein the assessed value of the subject property. Instead, what they stated is
the market value of the land at P15,000.00.
Section 19 (2) of Batas Pambansa Blg. 129, as amended provides:

SEC. 19. Jurisdiction in civil cases. Regional Trial Courts shall exercise exclusive
original jurisdiction:
xxxxxx
(2) In all civil actions which involve the title to, or possession of, real property, or
any interest thereon, where the assessed value of the property involved exceeds Twenty
thousand pesos (P20,000.00) or for civil actions in Metro Manila, where such value exceeds
Fifty thousand pesos (P50,000.00) except actions for forcible entry into and unlawful detainer of
lands or buildings, original jurisdiction over which is conferred upon the Metropolitan Trial
Courts, Municipal Trial Courts, and Municipal Circuit Trial Courts.

The Rule requires that the assessed value of the property, or if there is none, the estimated value
thereof, shall be alleged by the claimant.[8] It bears reiterating that what determines jurisdiction is the
allegations in the complaint and the reliefs prayed for. Petitioners complaint is for reconveyance of a parcel of
land. Considering that their action involves the title to or interest in real property, they should have alleged
therein its assessed value. However, they only specified the market value or estimated value, which
is P15,000.00. Pursuant to the provision of Section 33 (3) quoted earlier, it is the Municipal Circuit Trial Court
of Padada-Kiblawan, Davao del Sur, not the RTC, which has jurisdiction over the case.
WHEREFORE, the petition is DENIED. The assailed Orders dated January 12, 1999 and April 20, 1999
of the Regional Trial Court, Branch 18, Digos, Davao del Sur in Civil Case No. 3715 are hereby AFFIRMED.
Costs against petitioners.
SO ORDERED.

[G.R. No. 144773. May 16, 2005]

AZNAR BROTHERS REALTY COMPANY, petitioner, vs. LAURENCIO AYING, IN HIS OWN BEHALF AND
IN BEHALF OF THE OTHER HEIRS OF EMILIANO AYING, PAULINO AYING, IN HIS OWN BEHALF
AND IN BEHALF OF THE OTHER HEIRS OF SIMEON AYING, AND WENCESLAO SUMALINOG, IN
HIS OWN BEHALF AND IN BEHALF OF THE OTHER HEIRS OF ROBERTA AYING, respondents.

DECISION
AUSTRIA-MARTINEZ, J.:
This resolves the petition for review on certiorari seeking the modification of the Decision [1] of the Court of
Appeals (CA) dated March 7, 2000 which affirmed with modification the Decision of the Regional Trial Court

(RTC) of Lapu-Lapu City, Branch 27 in Civil Case No. 2930-L; and the Resolution dated August 2, 2000
denying petitioners motion for reconsideration of the aforementioned decision.
The antecedent facts are as follows:
The disputed property is Lot No. 4399 with an area of 34,325 square meters located at Dapdap, LapuLapu City. Crisanta Maloloy-on petitioned for the issuance of a cadastral decree in her favor over said parcel of
land. After her death in 1930, the Cadastral Court issued a Decision directing the issuance of a decree in the
name of Crisanta Maloloy-ons eight children, namely: Juan, Celedonio, Emiliano, Francisco, Simeon, Bernabe,
Roberta and Fausta, all surnamed Aying. The certificate of title was, however, lost during the war.
Subsequently, all the heirs of the Aying siblings executed an Extra-Judicial Partition of Real Estate with
Deed of Absolute Sale dated March 3, 1964, conveying the subject parcel of land to herein petitioner Aznar
Brothers Realty Company. Said deed was registered with the Register of Deeds of Lapu-Lapu City on March 6,
1964 under Act No. 3344 (the law governing registration for unregistered land), and since then, petitioner had
been religiously paying real property taxes on said property.
In 1988, herein petitioner filed a Petition for Reconstitution of the Original Title as the original title over the
subject property had been lost during the war. On April 12, 1988, the court granted said petition, thereby
directing the Register of Deeds of Lapu-Lapu City to issue a reconstituted title in the name of the
abovementioned Aying siblings. Thus, Original Certificate of Title (OCT) No. RO-2856 was issued.
In 1991, petitioner, claiming to be the rightful owner of the subject property, sent out notices to vacate,
addressed to persons occupying the property. Unheeded, petitioner then filed a complaint for ejectment against
the occupants before the Metropolitan Trial Court (MTC), Lapu-Lapu City.
On February 1, 1994, the MTC ordered the occupants to vacate the property. The case eventually reached
this Court, docketed as G.R. No. 128102, entitled Aznar Brothers Realty Company vs. Court of Appeals, Luis
Aying, Demetrio Sida, Felomino Augusto, Federico Abing, and Romeo Augusto.[2] On March 7, 2000, a
Decision was promulgated in favor of herein petitioner, declaring it as the rightful possessor of the parcel of
land in question.
Meanwhile, herein respondents, along with other persons claiming to be descendants of the eight Aying
siblings, all in all numbering around 220 persons, had filed a complaint for cancellation of the Extra-Judicial
Partition with Absolute Sale, recovery of ownership, injunction and damages with the RTC of Lapu-Lapu City.
The complaint was dismissed twice without prejudice. Said complaint was re-filed on August 19, 1993,
docketed as Civil Case No. 2930-L.
In their amended complaint, herein respondents (plaintiffs before the RTC) alleged that: they are coowners of subject property, being descendants of the registered owners thereof under OCT No. RO-2856; they
had been in actual, peaceful, physical, open, adverse, continuous and uninterrupted possession in concept of
owner of subject parcel of land since time immemorial; their possession was disturbed only in the last quarter
of 1991 when some of them received notices to vacate from petitioner and several weeks thereafter,
earthmoving equipment entered the disputed land, bulldozing the same and destroying plants, trees and
concrete monuments (mohon); respondents discovered that such activities were being undertaken by
petitioner together with Sta. Lucia Realty and Development, Inc.; petitioner claimed to be the owner of subject
property by virtue of an extra-judicial partition of real estate with deed of absolute sale executed in petitioners
favor by the alleged heirs of Crisanta Maloloy-on; the aforementioned extra-judicial partition of real estate with
deed of absolute sale is a fraud and is null and void ab initio because not all the co-owners of subject property
affixed their signature on said document and some of the co-owners who supposedly signed said document

had been dead at the time of the execution thereof; petitioner entered subject land in bad faith, knowing fully
well that it did not have any right to the land and used force, threat and intimidation against respondents; and
they suffered moral damages.[3]
Petitioner (defendant before the RTC) filed its Answer, denying that respondents are the lawful owners of
subject parcel of land by virtue of their being descendants or heirs of the registered owners of subject property.
Instead, petitioner alleged that it had been in actual possession of subject land as owner thereof by virtue of
the extra-judicial partition of real property and deed of absolute sale executed in its favor; that in fact, it had
been paying taxes thereon religiously; that it tolerated about 6 persons to live on said land but said persons
were eventually ejected by court order. Petitioner then raised the affirmative defenses of failure to state cause
of action and prescription, as it took respondents 27 years, 10 months and 27 days to file the action to recover
subject property, when an action to recover property based on an implied trust should be instituted within 4
years from discovery of the fraud.[4]
In the Pre-Trial Order dated January 30, 1995 of the RTC, the issues were narrowed down to the
following:
1. Whether or not the plaintiffs [herein respondents] are the heirs of the registered owners of Lot No. 4399.
2. Whether or not plaintiffs are the owners of Lot No. 4399.
3. Whether or not the defendant Aznar [herein petitioner] is estopped to make any claim on Lot No. 4399.
4. Whether or not the defendant Aznar is a builder in bad faith.
5. Whether or not the defendants are liable for damages and attorneys fees in favor of the plaintiffs.
6. Whether or not the Extra-Judicial Partition of Real Estate with Deed of Absolute Sale is valid and had, in
effect, validly conveyed to defendant Aznar Lot No. 4399.
7. Whether or not the plaintiffs action has prescribed.[5]
After trial, the RTC rendered a Decision dated July 4, 1997, ruling that respondents evidence failed to
prove that the extra-judicial partition with deed of absolute sale was a totally simulated or fictitious contract and
concluded that said document is valid, thus, effectively conveying to petitioner the property in question. It
further held that respondents action had prescribed in that the action is considered as one for reconveyance
based on implied or constructive trust, it prescribed in 10 years from the registration of the deed on March 6,
1964; and if the action is considered as one for annulment of contract on the ground of fraud, it should have
been filed within 4 years from discovery of the fraud. The trial court also ruled that respondents failed to
present any admissible proof of filiation, hence, they were not able to prove that they are indeed heirs of the
eight Aying siblings who appear as the registered owners under OCT No. RO-2856.
The dispositive portion of the RTC Decision reads as follows:
WHEREFORE, judgment is hereby rendered dismissing the amended complaint on the ground of prescription,
and declaring the Extra-Judicial Partition of Real Estate with Deed of Absolute Sale dated March 3, 1964 as
valid and binding, adjudging that Lot 4399 with an area of 34,325 square meters located at Dapdap, Mactan,
Lapu-Lapu City had been validly conveyed to and in favor of Aznar Brothers Realty Company, and directing the
Register of Deeds of Lapu-Lapu City to register the above-mentioned deed in accordance with law and to

cancel Original Certificate of Title No. RO-2856, and to issue a transfer certificate of title in the name of Aznar
Brothers Realty Company upon payment of the necessary registration fees pursuant thereto.
The Writ of Preliminary Injunction issued in this case is hereby ordered dissolved.
The Motion for Contempt filed by the plaintiffs against defendants is dismissed for want of factual and legal
basis.
Costs against the plaintiffs.
SO ORDERED.[6]
Herein respondents appealed the foregoing decision to the CA and on March 7, 2000, said court
promulgated its Decision, the dispositive portion of which is reproduced hereunder:
THE FOREGOING CONSIDERED, the contested Decision while AFFIRMED is hereby MODIFIED. The heirs
of Emiliano Aying, Simeon Aying and Roberta Aying are hereby declared as the lawful owners of the contested
property but equivalent only to 3/8.
SO ORDERED.
In modifying the RTC judgment, the CA ratiocinated that an action for recovery of possession of registered
land never prescribes in view of the provision of Section 44, Act No. 496 (now Sec. 47, PD 1520), to the effect
that no title to registered land in derogation to that of a registered owner shall be acquired by prescription. The
CA further ruled that even if the action is deemed to be based on implied trust, prescription did not begin to run
since there is no evidence that positive acts of repudiation were made known to the heirs who did not
participate in the execution of the Extra-Judicial Partition of Real Estate with Deed of Absolute Sale. Thus,
striking down the RTCs ruling that the respondents complaint is dismissible on the ground of prescription, the
CA held instead that herein respondents action had not prescribed but upheld the validity of the Extra-Judicial
Partition of Real Estate with Deed of Absolute Sale, except as to the shares of the heirs of Emiliano, Simeon
and Roberta, who did not participate in the execution of said document.
Herein petitioners motion for reconsideration of the CA decision was denied per Resolution dated August
2, 2000.
Hence, the present petition for review on certiorari assailing the CA decision on the following grounds:
I
THE COURT OF APPEALS ERRED IN FAILING TO APPLY THE RULE THAT AN HEIR OF THE ORIGINAL
REGISTERED OWNER MAY LOSE HIS RIGHT TO RECOVER A TITLED PROPERTY BY REASON OF
LACHES;
II
THE COURT OF APPEALS ERRED IN FAILING TO APPLY THE RULE THAT THE ACT OF REGISTRATION
OF THE DEED OF PARTITION WITH SALE MAY BE CONSIDERED AN UNEQUIVOCAL REPUDIATION OF
THE TRUST GIVING RISE TO PRESCRIPTION;
III

THE COURT OF APPEALS ERRED IN FAILING TO APPLY THE PROVISIONS OF ARTICLE 1104 OF THE
CIVIL CODE TO THE EFFECT THAT IN THE ABSENCE OF BAD FAITH OR FRAUD, THE PARTITION WITH
PRETERITION OF ANY COMPULSORY HEIR SHALL NOT BE RESCINDED.[7]
In their Comment, respondents argue that this case is an action to declare as null and void the ExtraJudicial Partition of Real Estate with Deed of Absolute Sale, hence, under Article 1410 of the Civil Code, an
action for declaration of an inexistent contract does not prescribe. Respondents further posit that the principle
of laches should be applied against petitioner and not against them, as they (respondents) had been in actual
possession of the subject property, while petitioner merely brought action to eject them more than 29 years
after the alleged execution of the Extra-Judicial Partition of Real Estate with Deed of Absolute Sale. They also
refuted petitioners arguments regarding the application of the principles of implied and constructive trusts in
this case.
At the outset, it should be stressed that not all the plaintiffs who filed the amended complaint before the
trial court had been impleaded as respondents in the present petition. The only parties impleaded are the heirs
of Emiliano, Simeon and Roberta Aying, whom the CA adjudged as owners of a 3/8 portion of the land in
dispute for not having participated in the execution of the Extra-Judicial Partition of Real Estate with Deed of
Absolute Sale.
It is significant to note that herein petitioner does not question the CA conclusion that respondents are
heirs of the aforementioned three Aying siblings. Hence, the trial court and appellate courts findings that the
Extra- Judicial Partition of Real Estate with Deed of Absolute Sale was not forged nor simulated and that the
heirs of Emiliano, Simeon and Roberta Aying did not participate in the execution thereof, are now beyond cavil.
The issues raised by petitioner for the Courts resolution are (1) whether or not respondents cause of
action is imprescriptible; and (2) if their right to bring action is indeed imprescriptible, may the principle of
laches apply.
Respondents alleged in their amended complaint that not all the co-owners of the land in question signed
or executed the document conveying ownership thereof to petitioner and made the conclusion that said
document is null and void. We agree with the ruling of the RTC and the CA that the Extra-Judicial Partition of
Real Estate with Deed of Absolute Sale is valid and binding only as to the heirs who participated in the
execution thereof, hence, the heirs of Emiliano, Simeon and Roberta Aying, who undisputedly did not
participate therein, cannot be bound by said document.
However, the facts on record show that petitioner acquired the entire parcel of land with the mistaken
belief that all the heirs have executed the subject document. Thus, the trial court is correct that the provision of
law applicable to this case is Article 1456 of the Civil Code which states:
ART. 1456. If property is acquired through mistake or fraud, the person obtaining it is, by force of law,
considered a trustee of an implied trust for the benefit of the person from whom the property comes.
In Vda. De Esconde vs. Court of Appeals,[8] the Court expounded thus:
Construing this provision of the Civil Code, in Philippine National Bank v. Court of Appeals, the Court stated:
A deeper analysis of Article 1456 reveals that it is not a trust in the technical sense for in a typical trust,
confidence is reposed in one person who is named a trustee for the benefit of another who is called the cestui
que trust, respecting property which is held by the trustee for the benefit of the cestui que trust. A constructive
trust, unlike an express trust, does not emanate from, or generate a fiduciary relation. While in an express

trust, a beneficiary and a trustee are linked by confidential or fiduciary relations, in a constructive trust, there is
neither a promise nor any fiduciary relation to speak of and the so-called trustee neither accepts any trust nor
intends holding the property for the beneficiary.[9]
The concept of constructive trusts was further elucidated in the same case, as follows:
. . . implied trusts are those which, without being expressed, are deducible from the nature of the transaction as
matters of intent or which are superinduced on the transaction by operation of law as matters of equity,
independently of the particular intention of the parties. In turn, implied trusts are either resulting or constructive
trusts. These two are differentiated from each other as follows:
Resulting trusts are based on the equitable doctrine that valuable consideration and not legal title determines
the equitable title or interest and are presumed always to have been contemplated by the parties. They arise
from the nature of circumstances of the consideration involved in a transaction whereby one person thereby
becomes invested with legal title but is obligated in equity to hold his legal title for the benefit of another. On the
other hand, constructive trusts are created by the construction of equity in order to satisfy the demands
of justice and prevent unjust enrichment. They arise contrary to intention against one who, by fraud,
duress or abuse of confidence, obtains or holds the legal right to property which he ought not, in
equity and good conscience, to hold.[10] (Emphasis supplied)
Based on such concept of constructive trusts, the Court ruled in said case that:
The rule that a trustee cannot acquire by prescription ownership over property entrusted to him until and unless
he repudiates the trust, applies to express trusts and resulting implied trusts. However, in constructive implied
trusts, prescription may supervene even if the trustee does not repudiate the relationship. Necessarily,
repudiation of said trust is not a condition precedent to the running of the prescriptive period.[11]
The next question is, what is the applicable prescriptive period?
In Amerol vs. Bagumbaran,[12] the Court expounded on the prescriptive period within which to bring an
action for reconveyance of property based on implied or constructive trust, to wit:
. . . under the present Civil Code, we find that just as an implied or constructive trust is an offspring of the law
(Art. 1456, Civil Code), so is the corresponding obligation to reconvey the property and the title thereto in favor
of the true owner. In this context, and vis--vis prescription, Article 1144 of the Civil Code is applicable.
Article 1144. The following actions must be brought within ten years from the time the right of action accrues:
(1) Upon a written contract;
(2) Upon an obligation created by law;
(3) Upon a judgment.
xxx xxx xxx
An action for reconveyance based on an implied or constructive trust must perforce prescribe in ten years and
not otherwise. A long line of decisions of this Court, and of very recent vintage at that, illustrates this rule.
Undoubtedly, it is now well-settled that an action for reconveyance based on an implied or constructive trust
prescribes in ten years from the issuance of the Torrens title over the property.[13]

It has also been ruled that the ten-year prescriptive period begins to run from the date of registration of the
deed or the date of the issuance of the certificate of title over the property, but if the person claiming to be the
owner thereof is in actual possession of the property, the right to seek reconveyance, which in effect seeks to
quiet title to the property, does not prescribe.[14]
In the present case, respondents Wenceslao Sumalinog, an heir of Roberta Aying; Laurencio Aying, an
heir of Emiliano Aying; and Paulino Aying, an heir of Simeon Aying, all testified that they had never occupied or
been in possession of the land in dispute. [15] Hence, the prescriptive period of ten years would apply to herein
respondents.
The question then arises as to the date from which the ten-year period should be reckoned, considering
that the Extra-Judicial Partition of Real Estate with Deed of Absolute Sale was registered under Act No. 3344
and not under Act No. 496 (Land Registration Act), despite the fact the land in dispute was already titled under
Act No. 496 in the names of the Aying siblings at the time the subject document was executed.
In Spouses Abrigo vs. De Vera,[16] it was held that registration of instruments must be done in the proper
registry, in order to affect and bind the land and, thus, operate as constructive notice to the world. [17] Therein,
the Court ruled:
x x x If the land is registered under the Land Registration Act (and has therefore a Torrens Title), and it is sold
but the subsequent sale is registered not under the Land Registration Act but under Act 3344, as amended,
such sale is not considered REGISTERED x x x .[18]
In this case, since the Extra-Judicial Partition of Real Estate with Deed of Absolute Sale was registered
under Act No. 3344 and not under Act No. 496, said document is deemed not registered. Accordingly, the tenyear prescriptive period cannot be reckoned from March 6, 1964, the date of registration of the subject
document under Act No. 3344. The prescriptive period only began to run from the time respondents had actual
notice of the Extra-Judicial Partition of Real Estate with Deed of Absolute Sale.
The only evidence on record as to when such prescriptive period commenced as to each of the
respondents are Wenceslao Sumalinogs (heir of Roberta Aying) testimony that about three years after 1964,
they already learned of the existence of the Extra-Judicial Partition of Real Estate with Deed of Absolute Sale;
[19]
and Laurencio Ayings (heir of Emiliano Aying) admission that he found out about the sale of the land in
dispute a long time ago and can only estimate that it must be after martial law.[20] Paulino Aying (heir of Simeon
Aying) gave no testimony whatsoever as to when the children of Simeon Aying actually learned of the
existence of the document of sale. On the other hand, petitioner did not present any other evidence to prove
the date when respondents were notified of the execution of the subject document.
In view of the lack of unambiguous evidence of when the heirs of Emiliano Aying and Simeon Aying
discovered the existence of the document of sale, it must be determined which party had the burden of proof to
establish such fact.
The test for determining where the burden of proof lies is to ask which party to an action or suit will fail if
he offers no evidence competent to show the facts averred as the basis for the relief he seeks to obtain.
[21]
Moreover, one alleging a fact that is denied has the burden of proving it and unless the party asserting the
affirmative of an issue sustains the burden of proof of that issue by a preponderance of the evidence, his cause
will not succeed.[22] Thus, the defendant bears the burden of proof as to all affirmative defenses which he sets
up in answer to the plaintiffs claim or cause of action; he being the party who asserts the truth of the matter he
has alleged, the burden is upon him to establish the facts on which that matter is predicated and if he fails to
do so, the plaintiff is entitled to a verdict or decision in his favor.[23]

In the case at bar, it was petitioner, as the defendant before the RTC, which set up in its Answer the
affirmative defense of prescription. It was, therefore, incumbent upon petitioner to prove the date from which
the prescriptive period began to run. Evidence as to the date when the ten-year prescriptive period began
exists only as to the heirs of Roberta Aying, as Wenceslao Sumalinog admitted that they learned of the
existence of the document of sale in the year 1967. As to the heirs of Emiliano Aying and Simeon Aying, there
is no clear evidence of the date when they discovered the document conveying the subject land to petitioner.
Petitioner miserably failed to adduce proof of when the heirs of Emiliano Aying and Simeon Aying were notified
of the subject document. Hence, with regard to said heirs, the Court may consider the admission in the
amended complaint that they learned of the conveyance of the disputed land only in 1991 when petitioner sent
notices to vacate to the occupants of the subject land, as the date from which the ten-year prescriptive period
should be reckoned.
Respondents filed their Amended Complaint on December 6, 1993.[24] Thus, with regard to respondent
heirs of Roberta Aying who had knowledge of the conveyance as far back as 1967, their cause of action is
already barred by prescription when said amended complaint was filed as they only had until 1977 within which
to bring action. As to the respondent heirs of Emiliano and Simeon Aying, they were able to initiate their action
for reconveyance of property based on implied or constructive trust well within the ten-year prescriptive period
reckoned from 1991 when they were sent by petitioner a notice to vacate the subject property.
Evidently, laches cannot be applied against respondent heirs of Emiliano and Simeon Aying, as they took
action to protect their interest well within the period accorded them by law.
With regard to petitioners argument that the provision of Article 1104 of the Civil Code, stating that a
partition made with preterition of any of the compulsory heirs shall not be rescinded, should be applied, suffice
it to say that the Extra-Judicial Partition of Real Estate with Deed of Absolute Sale is not being rescinded. In
fact, its validity had been upheld but only as to the parties who participated in the execution of the same. As
discussed above, what was conveyed to petitioner was ownership over the shares of the heirs who executed
the subject document. Thus, the law, particularly, Article 1456 of the Civil Code, imposed the obligation upon
petitioner to act as a trustee for the benefit of respondent heirs of Emiliano and Simeon Aying who, having
brought their action within the prescriptive period, are now entitled to the reconveyance of their share in the
land in dispute.
IN VIEW OF THE FOREGOING, the petition is PARTIALLY GRANTED and the Decision of the Court of
Appeals dated March 7, 2000 is MODIFIED, as follows: The amended complaint of the heirs of Roberta Aying
is DISMISSED on the ground of prescription. However, the heirs of Emiliano Aying and Simeon Aying, having
instituted the action for reconveyance within the prescriptive period, are hereby DECLARED as the LAWFUL
OWNERS of a 2/8 portion of the parcel of land covered by Original Certificate of Title No. RO-2856.
SO ORDERED.