FIRST DIVISION

[G.R. No. 126777. April 29, 1999]

DOMINGO LAO and ERNESTO T. LAO, petitioners, vs. ESTRELLA VILLONES-LAO,
SPS. MANUEL and ANGELITA MALAN, SPS. CARLOS and SOCORRO
VILLENA, respondents.
DECISION
PARDO, J.:
The case is a petition for review on certiorari of the decision of the Court of Appeals,[1] and
its Resolution[2] reversing the decision of the trial court, and finding herein respondents Spouses
Villenas as mortgagees in good faith making their title to the property[3], subject of this petition
valid.
The facts of the case are as follows:
The spouses Domingo and Estrella Lao, during their marriage, acquired a real estate
property located at 6 Arayat St., Cubao, Quezon City, covered by TCT No.T-268732 of the
Register of Deeds of Quezon City. It has a total land area of 808 sq.m., and an estimated value of
P1,500,000.00, including the improvements. In 1974, the spouses separated. The property was at
that time still mortgaged with MetroBank and Trust Company.
However, after full payment of the loan obtained by Domingo Lao from MetroBank, Estrella
Lao was able to secure release of the title of the property and had the mortgage therein cancelled
unknown to Domingo.
Domingo Lao was leasing the subject property to Filmart at a monthly rental of
P7,000.00. Sometime in August 1982, Domingo Lao learned that the title had been cancelled and
a new one issued in the name of the respondents spouses Carlos and Socorro Patenia-
Villena. Domingo Lao came to know this when Carlos Villena, Jr. visited the premises and
informed the tenants that he (Villena) was the new owner of the property. Domingo Lao then
went to the Office of the Register of Deeds of Quezon City and inquired into the record of the
property. True enough, he was informed that his title has been cancelled and a new one issued in
favor of the Villena spouses.
Estrella, the estranged wife of Domingo Lao, was in dire financial straits and was seeking a
financial accommodation. The spouses Manuel and Angelita Malana, whom Estrella met at one
time, came to her house and represented themselves as agents of Carlos Villena. The Malanas
introduced Estrella Lao to Villena on May 22, 1980.
Upon meeting Estrella Lao, Carlos Villena Jr. indicated his willingness to grant her a loan,
but noted that the title was in the name of the spouses Estrella and Domingo and their son
Ernesto Lao. Estrella Lao must obtain a Special Power of Attorney from Domingo and Ernesto
Lao. Estrella Lao admitted this would be difficult as she and her husband had been estranged for
many years, and were not even on speaking terms. However, the Malana spouses assured her
they would help her secure the Special Power of Attorney.
After three days Estrella Lao returned to the Villenas together with the Malanas with the
Special Power of Attorney (SPA) signed by Domingo and Ernesto Lao, and duly notarized. The
spouses Villena relied on the said notarized SPA, and found nothing suspicious that it was so
easily obtained by Estrella Lao only after three days, when they were in fact aware that Estrella
and Domingo Lao were estranged from each other. Villena therefore entered into a contract of
mortgage with Estrella Lao with the 808 sq.m. land as collateral.

1
 After Estrella Lao failed to make payments on the loan, Carlos Villena Jr. effected an extra-
judicial foreclosure and sale at public auction of the property on July 27,1981[4] and the Register
of Deeds issued a new Certificate of Title in the name of the spouses Carlos and Socorro Villena.
Domingo Lao, after being appraised of what happened to the property, filed on April 27,
1983, with the Regional Trial Court Quezon City, Branch 76, a complaint for the annulment of
the special power of attorney, mortgage, extra-judicial foreclosure, and the cancellation TCT No.
290029 and reconveyance of title.[5]
On September 28,1992, the Regional trial Court, Branch 76, Quezon City rendered decision
the dispositive portion of which reads as follows:
WHEREFORE, in view of the foregoing, the court hereby declares null and void the following:
1. The special power of attorney;
2. Deed of real estate mortgage;
3. The foreclosure proceedings;
4. Transfer Certificate of Title No. 290029 in the name of the Villena spouses, and
orders the Register of Deeds of Quezon City to cancel the said title and issue a new
one in favor of Domingo Lao, Ernesto Lao, and Estrella Villones-Lao with the same
participation as appearing in TCT No. T-268732 of the Registry of Deeds of
Quyezon City, namely: Estrella Villones-Lao, 50%; Domingo Lao, 30%; and Ernesto
Lao, 20%.
The Court further orders the defendants Estrella Villones-Lao, spouses Manuel and Angelita
Malana and the spouses Carlos and Socorro Patenia Villena to pay the plaintiff, jointly and
severally, the sum of P15,000.00 as moral damages, P10,000.00 as attorneys fees, P10,000.00 as
reasonable litigation expenses and to pay the costs. Defendant Villenas are ordered to pay the
sum of P840,000.00 as unearned rentals computed at P7,000.00 a month from September 1982 to
September 1992 plus interest at 12% per annum until fully paid.
Considering that a special characteristic of a real estate mortgage is its indivisibility (Art 2089 of
the Civil Code) even through the debt secured may be divided among the debtors or creditors or
other successors in interest, the deed of real estate mortgage executed by Estrella Villones-Lao
with respect to her undivided not share in property. The nullity
notwithstanding, Villena can recover the indebtedness of Estrella Villones-Lao through an
ordinary suit.[6]
A motion to modify the judgment was filed by petitioners Domingo and Ernesto Lao, on
October 12, 1992[7], which was granted by the lower court and a modified judgement was issued
on February 11, 1993.[8] The modified judgment further orders the spouses Carlos and Socorro
Villena and their representatives and assigns to immediately vacate the premises located at
Cubao, Quezon City and that a new Certificate of Title be issued in favor of spouses Domingo
and Estrella Lao with the 20% share of Ernesto Lao annotated at the back..[9]
On February 23, 1993 respondent spouses Villena filed their notice of appeal. On February
19, 1993 the spouses Malana filed their notice of appeal.
After due proceedings, on July 11, 1996, the Court of Appeals rendered decision on July 11,
1996, reversing the lower courts decision, the dispositive portion of which reads as follows:
WHEREFORE, the trial courts decision is REVERSED and SET ASIDE, and in lieu thereof, a
new decision is hereby rendered declaring the Deed of Real Estate Mortgage dated June 17, 1980
and the foreclosure sale valid, upholding the validity of the villenas title to TCT No. 290029, and
ordering that the property be transferred in Villenas name.[10]

2
 On August 14, 1996 petitioner filed a motion for reconsideration. However the Court of
Appeals denied the motion.
Hence, this petition.
In this appeal, petitioner imputes the following errors to the Court of Appeals:
1. The respondents were mortgagees in good faith, not being privy to the forgery of the
special power of attorney; and
2. Petitioners were negligent in entrusting the original owners certificate of title to
respondent Estrella Villones-Lao.
The petitioners argue that the Villenas can not be considered as mortgagees in good faith
since at the first instance they knew that Estrella Lao and her husband Domingo Lao had been
estranged from each other. When Estrella Lao together with the Malana spouses came to him
with the Special Power of Attorney (SPA) after only three days, this should have put Villena in
doubt as to the authenticity of the SPA, after all the rule of commerce is caveat emptor.[11]
Petitioners further stress the fact that a reasonably prudent man would have been surprised at
the very least when Estrella Lao and the Malanas showed up three days later with a special
power of attorney signed by the co-owners Domingo and Ernesto Lao. While Estrella Lao was a
co-owner of the property, she was nevertheless a stranger with regard to the sale or disposition of
the shares of the other co-owners. Yet, respondent Villena never even called or inform the co-
owners of the mortgage, even if he knew their addresses. He went to the subject property once
and made no other efforts to contact or confirm the identities of Domingo and Ernesto Lao.
According to petitioners, the Court of Appeals disregarded the requirement of ordinary
prudence and diligence in the case simply because of the notarized special power
of attorney. And as such the court binds petitioners to an unauthorized transaction entered into by
his wife with regard to conjugal properties.
The ruling of the Court of Appeals that petitioners were given by the Villenas several
opportunities to redeem the property finds no support in the factual records of the case.
According to the petitioners they only met the Villenas after title was already consolidated in the
name of the Villenas. Further, it would be utterly absurd for petitioners to ratify the illegal and
unauthorized acts of Estrella Lao by redeeming the property foreclosed on the strength of their
forged signatures.
The petitioners argue that the findings of the Court of Appeals on their negligence in giving
Estrella Lao a copy of the title of the property is without basis. As a registered co-owner, Estrella
Lao was entitled to the possession of an owners copy. In fact under the provisions of P.D. 1529,
a separate duplicate may be issued to each co-owner. Hence, there was no responsibility upon
anyone to deny Estrella Lao possession of said title.
Petitioners raise in issue the fact that during the proceedings at the lower court it was proved
that the signatures of the petitioners, Domingo and Ermesto Lao were forged. Emmanuel de
Guzman, of the National Bureau of Investigation testified that upon examination and verification
of the questioned signatures of Domingo and Ernesto Lao, by comparing the sample signatures
and the signatures appearing on the special power of attorney, he concluded that the signatures
do not match.Therefore, the signatures of Domingo and Ernesto Lao were forgeries.[12]
Herein respondent Villena spouses, Malana spouses and Estrella Lao filed their separate
comment to the petition.
Respondent spouses Villena were steadfast in their claim that since they were not privy to
the forgery of the special power of attorney they can not be part of the fraud imputed by the
petitioners.

3
 According to the spouses Villena, they have exhibited the required diligence to ascertain the
veracity of the representation made by Estrella by employing several precautionary measures.
They demanded for and was given the original of the owners copy of TCT No. 268732, the
location plan and Real Estate Tax Declaration of the mortgage property. They conducted an
ocular inspection of the subject property and inquired who owns the property. They went to the
Quezon City Register of Deeds to verify the authenticity of TCT No. 266732 and found the same
to be genuine and free from liens and encumbrances. Carlos Villena even asked Estrella Lao why
she preferred mortgaging the property to him rather than to Metrobank. They inquired as to the
whereabouts of the other co-owners.[13]
To evidence their good faith and intention to help Estrella Lao, the foreclosure was done
only after six months from the last demand to give Estrella Lao an opportunity to pay her
debt. The foreclosure was published, and after consolidation of the title to their name, the
Villenas reminded Estrella Lao of her right to repurchase the property.The Villenas even offered
petitioners the option to sell the property, and whatever be the proceeds from the sale, be given
as payment for the debt and interest of Estrellas loan and whatever remains be given to the co-
owners Domingo and Ernesto Lao.
Contrary to the claims of petitioners, the spouses Villena alleged that they should not be
faulted for relying on the notarized document. Precisely, a notarized document is executed to
lend truth to the statements contained therein and to the authenticity of the signatures. Moreover
a notarized document enjoys the presumption of regularity which can be overturned only by clear
and convincing evidence. Armed with this presumption, a prudent man exercising due diligence
need only require the presentation of a duly notarized special power of attorney. He is not
expected to enlist the opinions of experts and summon all signatories before he can rely on the
notarized document.
Respondents claim that the petitioners, Domingo and Ernesto Lao should file a case for
damages against the perpetrators of the fraud, and not against them. Further the present action for
reconveyance is a collateral attack on the Villenas title, which is prohibited under Sec. 48 of
Presidential Decree 1529 of the property registration decree.
Estrella Lao on the other hand filed her separate comment to the petition. She alleges that
she never defrauded nor deceived her estranged husband, Domingo Lao. She vehemently denies
any intervention in the preparation and execution of the disputed special power of attorney
except by affixing her signature on the blank form presented to her by the other private
respondents, spouses Malana.
According to Estrella it was the Malanas who made her sign a blank special power of
attorney. She only affixed her signature at the portion of the blank document, which states, with
my marital consent, she never read the document and did not know what it contained.[14]
After three months from obtaining the loan from the Villenas she went to see them about the
payment of the loan and the redemption of the property by her friend Mr. Go. The Villenas
refused and told her that only she and her husband can redeem the property. After this encounter
whenever Estrella Lao went to see the Villenas or call them over the phone she is always told
that the couple were out and that they refused to see or talk to her.[15] In fact Estrella Lao filed a
suit against the respondent Villena spouses for violation of the Usury law and damages suffered
by Estrella Lao when the Villenas cancelled the lease contract of her lessee Mr. Ranola during
the pendency of the mortgage.
Further, according to Estrella Lao, the Malanas were agents of the spouses Villena. This was
also the conclusion of the trial court. In fact in the decision of the trial court there is a mention

4
that the Villenas were aware of the forgery. They were not simply witnesses to the document but
were aware of how the Malanas were able to obtain the special power of attorney.
According to Estrella Lao the respondent spouses Villena took advantage of her urgent need
for money and took the opportunity to get the property worth P1.5 M for only P167,000.00, the
amount that was actually given to her as loan.
The spouses Manuel and Angelita Mallana on the other hand claims that the only
participation they had in the transaction was to introduce respondent Estrella Lao to respondent
Carlos Villena in connection with her desire to secure a loan from the latter. They acted as
witnesses to the real estate mortgage executed between spouses Carlos and Soccorro Villena and
Estrella Villones-Lao. The undisputed fact remains that it was Estrella Lao who secured the loan
from the Villenas. She secured the loan by means of a forged special power of attorney from her
husband Domingo Lao and her son Ernesto Lao. The case filed by Estrella Lao against spouses
Mannuel and Angelita Malana, Carlos Villena, and Atty. Rodolfo G. Palatao (notary public who
notarized the special power of attorney, now Associate Justice, Sandiganbayan) was dismissed
for lack of merit.
We find the petition impressed with merit.
While this Court has held in several cases that a notarized instrument is admissible in
evidence without further proof of its due execution and is conclusive as to the truthfulness of its
contents, this rule is nonetheless not absolute but may be rebutted by clear and convincing
evidence to the contrary.[16] Such evidence, as the Court sees it, has been sufficiently established
in this case.
The respondents do not deny the sequence of events established on record that:
1. Estrella Lao was in extreme need of money and was looking in the neighborhood of
Nepa Q Mart for a quick loan;
2. It was the spouses Malana who went to her house to inquire if she was still interested
in a loan. In fact , they had with them the folder given by Estrella Lao to one Cora,
containing important documents pertaining to the property in question;
3. The Malanas informed her they knew of a financier (referring to Mr. Villena) who
could provide her with the loan, clearly implying that they had previous dealings
with Mr. Villena. This is borne out by the fact that prior to the actual meeting of
Estrella Lao and Mr. Villena, the Malanas already went to see Mr. Villena about the
prospective transaction. Villena admitted that he knew the Malanas and that the
Malanas approached him to be a lender;[17]
4. The Malanas were not agents of Estrella Lao. They represented themselves to be
official agents of Mr. Villena;[18] Mr. Villena upon introduction to Estrella Kao
learned important facts like: (a) the separation between her and her husband
Domingo Lao;[19] (b) the property was in the name of the spouses Lao and Ernesto
Lao, Domingos son by his first marriage; (c) that they were residing in Metro
Manila;
5. Villena informed Estrella Lao of the necessity of a power of attorney;[20] to which she
answered that it may not be possible for her to get one as she and her husband were
not on speaking terms;
6. The Malanas assured her that they would do it for her;
7. Their participation in the transaction extended far beyond being mere witnesses;
8. Villena was aware of this and was fully forewarned of what was happening;

5
 9. The signature on the special power of attorney were poor imitations of the real
signatures of the petitioners, proof of an attempt to make them appear as genuine;
10. Estrella Lao could not be expected to be involved in the mechanics of executing the
forged power of attorney. However, she could have furnished the other respondents
with sample signatures of petitioners and the Malanas, causing the execution of the
documents in her possession;
11. It was proved that the signatures were forgeries[21]
The events show a pattern that leads this Court to conclude that the spouses Villena and
Malana were business partners in credit financing. The Villenas were the financier while the
Malanas served as their brokers or agents, who look for clients, in this case, Estrella Lao.
We agree with the trial court that Villenas feigned innocence of the flawed character of the
power of attorney is exposed not only by the above circumstances, but bolstered even by the fact
that as a legitimate businessman he is expected to be well-informed of matters dealing with
estranged wife involving a conjugal property. Why should a husband and his son execute a
power of attorney in favor of the separated wife and stepmother when they were all residing in
Metro Manila.[22]
It is therefore without doubt that the special power of attorney is a forgery. It can not be a
basis of a valid mortgage contract, its subsequent foreclosure and the consolidation of title in
favor of the spouses Villena.
A holder in bad faith of a certificate of title is not entitled to the protection of the law, for the
law can not be used as a shield for fraud.[23]
IN VIEW OF THE FOREGOING, the decision of the Court of Appeals in CA G. R. CV No.
42174 is hereby REVERSED, and that of the trial court is REVIVED and AFFIRMED.
No costs.
SO ORDERED.
Davide, Jr., C.J., Melo, Kapunan, and Ynares-Santiago, JJ., concur.

[1]
Court of Appeals Rollo, CA-G.R. CV No. 42174, Decision prom. July 11, 1996, penned by
Justice Maximiano G. Asuncion, concurred in by Associate Justices Salome A. Montoya and
Godardo A. Jacinto, pp. 379-387.
[2]
Ibid., Resolution, October 7, 1996, p. 118.
[3]
Original Record, Decision, C. A.-G. R. No. 42174, at p. 386.
[4]
Original record,, Complaint, Civil Case No. Q-38023, p.9.
[5]
Ibid., pp. 6-12.
[6]
Ibid., Decision, Civil Case No. Q-38023, pp. 357-358.
[7]
Original Record (RTC), Motion to Modify Judgment, pp. 366-371.
[8]
Ibid., Order, pp. 397-400.
[9]
Ibid., p. 399.
[10]
Court of Appeals Records, Decision, C.A. G.R. C.V. No. 42174, p. 386.
[11]
Ibid., p.16.
[12]
Original Record (RTC), Decision, p. 348.
[13]
Ibid., Comment (by respondent Villenas), p. 52.
[14]
Ibid., Comment (Estrella Villones-Lao), pp. 72-73.
[15]
Ibid., p. 74.

6
[16]
Baranda vs. Baranda, 150 SCRA 59-75, 66-67; citing Antillon vs. Barcelona, 37 PHIL 148;
and Mendezona vs. Phil. Sugar Estate Dev. Co., 41 PHIL 475; Embrado vs. Court of Appeals
233 SCRA 335-348, 343.
[17]
TSN, July 12, 1990, pp. 19-20.
[18]
Ibid., October 17, 1991, p. 24, November 4, 1991, pp. 8, 16, and 36.
[19]
Ibid., November 4, 1991, p. 9.
[20]
October 20, 1990, p. 3.
[21]
Original Record (RTC), Decision, p. 348.
[22]
Original Record (RTC), DECISION, p. 356.
[23]
Ignacio vs. Chua Hong, 52 PHIL 940; Gustilo vs. Maravilla, 48 PHIL 442.

7
SECOND DIVISION
[G.R. No. 102737. August 21, 1996]
FRANCISCO A. VELOSO, petitioner, vs. COURT OF APPEALS, AGLALOMA B.
ESCARIO, assisted by her husband GREGORIO L. ESCARIO, the REGISTER OF
DEEDS FOR THE CITY OF MANILA, respondents.
DECISION
TORRES, JR., J.:
This petition for review assails the decision of the Court of Appeals, dated July 29, 1991, the
dispositive portion of which reads:
WHEREFORE, the decision appealed from is hereby AFFIRMED IN TOTO. Costs against
appellant.[1]
The following are the antecedent facts:
Petitioner Francisco Veloso was the owner of a parcel of land situated in the district of Tondo,
Manila, with an area of one hundred seventy seven (177) square meters and covered by Transfer
Certificate of Title No. 49138 issued by the Registry of Deeds of Manila. [2] The title was
registered in the name of Francisco A. Veloso, single,[3]on October 4, 1957.[4] The said title was
subsequently canceled and a new one, Transfer Certificate of Title No. 180685, was issued in the
name of Aglaloma B. Escario, married to Gregorio L. Escario, on May 24, 1988.[5]
On August 24, 1988, petitioner Veloso filed an action for annulment of documents,
reconveyance of property with damages and preliminary injunction and/or restraining order. The
complaint, docketed as Civil Case No. 88-45926, was raffled to the Regional Trial Court, Branch
45, Manila. Petitioner alleged therein that he was the absolute owner of the subject property and
he never authorized anybody, not even his wife, to sell it. He alleged that he was in possession of
the title but when his wife, Irma, left for abroad, he found out that his copy was missing. He then
verified with the Registry of Deeds of Manila and there he discovered that his title was already
canceled in favor of defendant Aglaloma Escario. The transfer of property was supported by a
General Power of Attorney[6] dated November 29, 1985 and Deed of Absolute Sale, dated
November 2, 1987, executed by Irma Veloso, wife of the petitioner and appearing as his
attorney-in-fact, and defendant Aglaloma Escario.[7] Petitioner Veloso, however, denied having
executed the power of attorney and alleged that his signature was falsified. He also denied
having seen or even known Rosemarie Reyes and Imelda Santos, the supposed witnesses in the
execution of the power of attorney. He vehemently denied having met or transacted with the
defendant. Thus, he contended that the sale of the property, and the subsequent transfer thereof,
were null and void. Petitioner Veloso, therefore, prayed that a temporary restraining order be
issued to prevent the transfer of the subject property; that the General Power of Attorney, the
Deed of Absolute Sale and the Transfer Certificate of Title No. 180685 be annulled; and the
subject property be reconveyed to him.
Defendant Aglaloma Escario in her answer alleged that she was a buyer in good faith and
denied any knowledge of the alleged irregularity. She allegedly relied on the general power of
attorney of Irma Veloso which was sufficient in form and substance and was duly notarized. She
contended that plaintiff (herein petitioner), had no cause of action against her. In seeking for the
declaration of nullity of the documents, the real party in interest was Irma Veloso, the wife of the
plaintiff. She should have been impleaded in the case. In fact, Plaintiffs cause of action should
have been against his wife, Irma. Consequently, defendant Escario prayed for the dismissal of
the complaint and the payment to her of damages.[8]

8
 Pre-trial was conducted. The sole issue to be resolved by the trial court was whether or not
there was a valid sale of the subject property.[9]
During the trial, plaintiff (herein petitioner) Francisco Veloso testified that he acquired the
subject property from the Philippine Building Corporation, as evidenced by a Deed of Sale dated
October 1, 1957.[10] He married Irma Lazatin on January 20, 1962.[11] Hence, the property did not
belong to their conjugal partnership. Plaintiff further asserted that he did not sign the power of
attorney and as proof that his signature was falsified, he presented Allied Bank Checks Nos.
16634640, 16634641 and 16634643, which allegedly bore his genuine signature.
Witness for the plaintiff Atty. Julian G. Tubig denied any participation in the execution of
the general power of attorney. He attested that he did not sign thereon, and the same was never
entered in his Notarial Register on November 29, 1985.
In the decision of the trial court dated March 9, 1990,[12] defendant Aglaloma Escaro was
adjudged the lawful owner of the property as she was deemed an innocent purchaser for
value. The assailed general power of attorney was held to be valid and sufficient for the
purpose. The trial court ruled that there was no need for a special power of attorney when the
special power was already mentioned in the general one. It also declared that plaintiff failed to
substantiate his allegation of fraud. The court also stressed that plaintiff was not entirely
blameless for although he admitted to be the only person who had access to the title and other
important documents, his wife was still able to possess the copy. Citing Section 55 of Act 496,
the court held that Irmas possession and production of the certificate of title was deemed a
conclusive authority from the plaintiff to the Register of Deeds to enter a new certificate. Then
applying the principle of equitable estoppel, plaintiff was held to bear the loss for it was he who
made the wrong possible. Thus:
WHEREFORE, the Court finds for the defendants and against plaintiff-
a. declaring that there was a valid sale of the subject property in favor of the defendant;
b. denying all other claims of the parties for want of legal and factual basis.
Without pronouncement as to costs.
SO ORDERED.
Not satisfied with the decision, petitioner Veloso filed his appeal with the Court of
Appeals. The respondent court affirmed in toto the findings of the trial court.
Hence, this petition for review before us.
This petition for review was initially dismissed for failure to submit an affidavit of service of
a copy of the petition on the counsel for private respondent.[13] A motion for reconsideration of
the resolution was filed but it was denied in a resolution dated March 30, 1992.[14] A second
motion for reconsideration was filed and in a resolution dated Aug. 3, 1992, the motion was
granted and the petition for review was reinstated.[15]
A supplemental petition was filed on October 9, 1992 with the following assignment of
errors:
I
The Court of Appeals committed a grave error in not finding that the forgery of the power of
attorney (Exh. C) had been adequately proven, despite the preponderant evidence, and in doing
so, it has so far departed from the applicable provisions of law and the decisions of this
Honorable Court, as to warrant the grant of this petition for review on certiorari.
II
There are principles of justice and equity that warrant a review of the decision.
III

9
The Court of Appeals erred in affirming the decision of the trial court which misapplied the
principle of equitable estoppel since the petitioner did not fail in his duty of observing due
diligence in the safekeeping of the title to the property.
We find petitioners contentions not meritorious.
An examination of the records showed that the assailed power of attorney was valid and
regular on its face. It was notarized and as such, it carries the evidentiary weight conferred upon
it with respect to its due execution. While it is true that it was denominated as a general power of
attorney, a perusal thereof revealed that it stated an authority to sell, to wit:
2. To buy or sell, hire or lease, mortgage or otherwise hypothecate lands, tenements and
hereditaments or other forms of real property, more specifically TCT No. 49138, upon such
terms and conditions and under such covenants as my said attorney shall deem fit and proper.[16]
Thus, there was no need to execute a separate and special power of attorney since the
general power of attorney had expressly authorized the agent or attorney in fact the power to sell
the subject property. The special power of attorney can be included in the general power when it
is specified therein the act or transaction for which the special power is required.
The general power of attorney was accepted by the Register of Deeds when the title to the
subject property was canceled and transferred in the name of private respondent. In LRC
Consulta No. 123, Register of Deeds of Albay, Nov. 10, 1956, it stated that:
Whether the instrument be denominated as general power of attorney or special power of
attorney, what matters is the extent of the power or powers contemplated upon the agent or
attorney in fact. If the power is couched in general terms, then such power cannot go beyond acts
of administration. However, where the power to sell is specific, it not being merely implied,
much less couched in general terms, there can not be any doubt that the attorney in fact may
execute a valid sale. An instrument may be captioned as special power of attorney but if the
powers granted are couched in general terms without mentioning any specific power to sell or
mortgage or to do other specific acts of strict dominion, then in that case only acts of
administration may be deemed conferred.
Petitioner contends that his signature on the power of attorney was falsified. He also alleges
that the same was not duly notarized for as testified by Atty. Tubig himself, he did not sign
thereon nor was it ever recorded in his notarial register. To bolster his argument, petitioner had
presented checks, marriage certificate and his residence certificate to prove his alleged genuine
signature which when compared to the signature in the power of attorney, showed some
difference.
We found, however, that the basis presented by the petitioner was inadequate to sustain his
allegation of forgery. Mere variance of the signatures cannot be considered as conclusive proof
that the same were forged. Forgery cannot be presumed.[17] Petitioner, however, failed to prove
his allegation and simply relied on the apparent difference of the signatures. His denial had not
established that the signature on the power of attorney was not his.
We agree with the conclusion of the lower court that private respondent was an innocent
purchaser for value. Respondent Aglaloma relied on the power of attorney presented by
petitioners wife, Irma. Being the wife of the owner and having with her the title of the property,
there was no reason for the private respondent not to believe in her authority. Moreover, the
power of attorney was notarized and as such, carried with it the presumption of its due
execution. Thus, having had no inkling on any irregularity and having no participation thereof,
private respondent was a buyer in good faith. It has been consistently held that a purchaser in
good faith is one who buys property of another, without notice that some other person has a right

10
to, or interest in such property and pays a full and fair price for the same, at the time of such
purchase, or before he has notice of the claim or interest of some other person in the property.[18]
Documents acknowledged before a notary public have the evidentiary weight with respect to
their due execution. The questioned power of attorney and deed of sale, were notarized and
therefore, presumed to be valid and duly executed. Atty. Tubig denied having notarized the said
documents and alleged that his signature had also been falsified. He presented samples of his
signature to prove his contention. Forgery should be proved by clear and convincing evidence
and whoever alleges it has the burden of proving the same. Just like the petitioner, witness Atty.
Tubig merely pointed out that his signature was different from that in the power of attorney and
deed of sale. There had never been an accurate examination of the signature, even that of the
petitioner. To determine forgery, it was held in Cesar vs. Sandiganbayan[19](quoting Osborn, The
Problem of Proof) that:
The process of identification, therefore, must include the determination of the extent, kind, and
significance of this resemblance as well as of the variation. It then becomes necessary to
determine whether the variation is due to the operation of a different personality, or is only the
expected and inevitable variation found in the genuine writing of the same writer. It is also
necessary to decide whether the resemblance is the result of a more or less skillful imitation, or is
the habitual and characteristic resemblance which naturally appears in a genuine writing. When
these two questions are correctly answered the whole problem of identification is solved.
Even granting for the sake of argument, that the petitioners signature was falsified and
consequently, the power of attorney and the deed of sale were null and void, such fact would not
revoke the title subsequently issued in favor of private respondent Aglaloma. In the case of
Tenio-Obsequio vs. Court of Appeals,[20] it was held, viz.:
The right of an innocent purchaser for value must be respected and protected, even if the seller
obtained his title through fraud. The remedy of the person prejudiced is to bring an action for
damages against those who caused or employed the fraud, and if the latter are insolvent, an
action against the Treasurer of the Philippines may be filed for recovery of damages against the
Assurance Fund.
Finally, the trial court did not err in applying equitable estoppel in this case. The principle of
equitable estoppel states that where one or two innocent persons must suffer a loss, he who by
his conduct made the loss possible must bear it. From the evidence adduced, it should be the
petitioner who should bear the loss. As the court a quo found:
Besides, the records of this case disclosed that the plaintiff is not entirely free from blame. He
admitted that he is the sole person who has access to TCT No. 49138 and other documents
appertaining thereto (TSN, May 23, 1989, pp. 7-12). However, the fact remains that the
Certificate of Title, as well as other documents necessary for the transfer of title were in the
possession of plaintiffs wife, Irma L. Veloso, consequently leaving no doubt or any suspicion on
the part of the defendant as to her authority. Under Section 55 of Act 496, as amended, Irmas
possession and production of the Certificate of Title to defendant operated as conclusive
authority from the plaintiff to the Register of Deeds to enter a new certificate.[21]
Considering the foregoing premises, We found no error in the appreciation of facts and
application of law by the lower court that will warrant the reversal or modification of the
appealed decision.
ACCORDINGLY, the petition for review is hereby DENIED for lack of merit.
SO ORDERED.
Regalado (Chairman), Romero, Puno, and Mendoza, JJ., concur.

11
[1]
Decision, Rollo, p.59, penned by J.N. Lapea, Jr. and concurred in by J.R. Pronove and J.C.
Santiago.
[2]
Exh. A, Annex A, Records, p.12 and 155.
[3]
Exh. A-1, Ibid.
[4]
Exh. A-2, Ibid.
[5]
Exh. B, Annex B, Exh. 3, Records, pp. 15 and 157.
[6]
Records, pp. 96-97.
[7]
Records, pp. 94-95.
[8]
Answer, Records, pp. 43-47.
[9]
Order, Records, pp. 74-76.
[10]
Exh. F, Records, pp. 163-164.
[11]
Exh. H, Records, p.166.
[12]
Decision, Records, pp. 283-292.
[13]
Resolution, February 3, 1992, Rollo, p.65.
[14]
Rollo, p.72.
[15]
Rollo, p.93.
[16]
Records, pp. 96-97.
[17]
Tenio-Obsequio vs. Court of Appeals, G.R. 107967, March 1, 1994.
[18]
Bautista, et. al. vs. Court of Appeals, G.R. 106042, Feb. 28, 1994.
[19]
G.R. Nos. 54719-50, 17 January 1985.
[20]
G.R. 109767, March 1, 1994.
[21]
Decision, Records, p.291.

12
Republic of the Philippines, Supreme Court, Manila, FIRST DIVISION

SPOUSES CLARO and G.R. No. 157434

NIDA BAUTISTA,
Petitioners, Present:

PANGANIBAN, CJ., Chairperson,

- versus - YNARES-SANTIAGO,
AUSTRIA-MARTINEZ,
CALLEJO, SR. and
BERLINDA F. SILVA, CHICO-NAZARIO, JJ.
Represented by HERMES J.
DORADO, in his capacity as Promulgated:
Attorney-In-Fact, September 19, 2006
Respondent.

x------------------------------------------------x
DECISION

AUSTRIA-MARTINEZ, J.:

To establish his status as a buyer for value in good faith, a person dealing with land
registered in the name of and occupied by the seller need only show that he relied on the face of
the sellers certificate of title.[1] But for a person dealing with land registered in the name of and
occupied by the seller whose capacity to sell is restricted, such as by Articles 166 [2] and 173[3] of
the Civil Code or Article 124[4] of the Family Code, he must show that he inquired into the latters
capacity to sell in order to establish himself as a buyer for value in good faith.[5] The extent of his
inquiry depends on the proof of capacity of the seller. If the proof of capacity consists of a
special power of attorney duly notarized, mere inspection of the face of such public document
already constitutes sufficient inquiry. If no such special power of attorney is provided or there is
one but there appear flaws in its notarial acknowledgment mere inspection of the document will
not do; the buyer must show that his investigation went beyond the document and into the
circumstances of its execution.

Appealed by Petition for Review on Certiorari under Rule 45 of the Rules of Court are
the November 21, 2001 Decision[6] of the Court of Appeals (CA)in CA-G.R. CV No.
48767[7] which affirmed in toto the January 10, 1995 Decision of the Regional Trial Court (RTC)
in Civil Case No. 3091-V-89, and the February 27, 2003 CA Resolution which denied the motion
for reconsideration.

Civil Case No. 3091-V-89 is a Complaint for Annulment of Deed of Absolute Sale and
Transfer Certificate of Title (TCT) No. V-2765, Reconveyance and Damages filed with the RTC,
Branch 171, Valenzuela, Metro Manila by Berlina F. Silva (Berlina), through Hermes Dorado
(Dorado) as Attorney-in-Fact, against Spouses Claro and Nida Bautista (Spouses
Bautista). Spouses Bautista filed their Answer[8] and a Third-Party Complaint against Berlinas

13
husband, Pedro M. Silva (Pedro).[9] In an Order dated August 6, 1991, the RTC declared third-
party defendant Pedro in default for failure to file an answer to the Third-Party Complaint.[10]

The undisputed facts of the case, as found by the RTC, are as follows:

1. That Transfer Certificate of Title No. B-37189 of the Registry of

Deeds for xxx Metro Manila District III over a parcel of land (Lot 42, Block 10,
of the subdivision plan (LRC) Psd-210217, Sheet 2, being a portion of Lot 903,
Malinta Estate, LRC Record No. 5941) situated in xxx Barrio of Parada,
Valenzuela, Metro Manila, containing an area of 216 square meters, more or less,
was registered in the names of Spouses Berlina F. Silva and Pedro M. Silva on
August 14, 1980;

2. That on March 3, 1988, Pedro M. Silva, for himself and as attorney-

in-fact of his wife Berlina F. Silva, thru a Special Power of Attorney purportedly
executed on November 18, 1987 by Berlina F. Silva in his favor, signed and
executed a Deed of Absolute Sale over the said parcel of land covered by Transfer
Certificate of Title No. B-37189 in favor of defendants-spouses Claro Bautista
and Nida Bautista; and

3. That as a consequence, Transfer Certificate of Title No. 37189 was

cancelled and in lieu thereof, Transfer Certificate of Title No. V-2765 of the
Registry of Deeds for the Valenzuela Branch was issued in the names of Spouses
Claro Bautista and Nida Bautista on March 4, 1988.[11]

Based on the evidence presented, the RTC also found that the signature appearing on the
Special Power of Attorney (SPA) as that of Berlina Silva is a forgery, and that consequently the
Deed of Absolute Sale executed by Pedro in favor of Spouses Bautista is not authorized by
Berlina.[12]

The RTC rendered judgment on January 10, 1995, the decretal portion of which reads:
WHEREFORE, Judgment is hereby rendered:

1. Declaring the Deed of Absolute Sale dated March 3, 1988 executed by

Pedro M. Silva, for himself and as attorney-in-fact of Berlina F. Silva, in favor of
defendants-spouses Claro Bautista and Nida Bautista over the parcel of land,
described and covered by Transfer Certificate of Title No. B-37189 Metro Manila
District III, null and void and the resulting Transfer Certificate of Title No. V-
2765 of Valenzuela Registry in the name of Spouses Claro Bautista and Nida
Bautista cancelled and that Transfer Certificate of Title No. B-37189 reinstated.

2. Ordering defendants to reconvey the property covered by the said

Transfer Certificate of Title No. V-2765 together with the improvements thereon
to the plaintiff.

14
 3. Condemning the defendants to pay the plaintiff the sum of P5,000.00 in
the concept of reasonable attorneys fees and the costs of suit.

Defendants counterclaim is dismissed.

Judgment on default is hereby entered in favor of the third-party plaintiffs

Spouses Claro Bautista and Nida Bautista against third-party defendants Pedro M.
Silva, condemning the third-party defendant Pedro Silva to indemnify/pay third-
party plaintiffs Spouses Claro Bautista and Nida Bautista the amount of Seventy
Thousand Pesos (P70,000.00) the contract price of the sale of the property, with
interest at the legal rate from the date of the execution of the said document on
March 3, 1988 until the amount is fully paid and for whatever amount that the
thirdparty plaintiffs were adjudged and paid to the plaintiff by reason of this
decision and the costs of suit.

SO ORDERED.[13]

Spouses Bautista filed an appeal with the CA which, in its November 21, 2001 Decision,
affirmed in toto the RTC decision;[14] and, in a Resolution

dated February 27, 2003, denied the Motion for Reconsideration.[15]

Hence, the herein petition filed by Spouses Bautista praying that the CA Decision and
Resolution be annulled and set aside on the following grounds:

I. Respondent as represented by Hermes Dorado in his capacity as

attorney-in-fact has no legal authority to file action against spouses
petitioners.
II. The petitioners are considered as purchasers in good faith and for value
having relied upon a Special Power of Attorney which appears legal, valid
and genuine on its face.

III. Gratia argumenti that the special power of attorney is a forgery and the
deed of sale executed by the husband is null and void, the nullity [thereof]
does not include the one half share of the husband.[16]

The petition fails for lack of merit.

As to the first ground, petitioners argue that for lack of authority of Dorado to represent
respondent, the latters Complaint failed to state a cause of action and should have been
dismissed.[17]

The argument holds no water.

15
 True, there was no written authority for Dorado to represent respondent in the filing of
her Complaint. However, no written authorization of Dorado was needed because the Complaint
was actually filed by respondent, and not merely through Dorado as her attorney-in-fact. As
correctly observed by the CA, respondent herself signed the verification attached to the
Complaint.[18] She stated therein that she is the plaintiff in Civil Case No. 3091-V-89 and that she
caused the preparation of the Complaint.[19] Respondent also personally testified on the facts
alleged in her Complaint.[20] In reality, respondent acted for and by herself, and not through any
representative, when she filed the Complaint. Therefore, respondent being the real party in
interest, by virtue of the then prevailing Articles 166[21] and 173[22] of the Civil Code, the
Complaint she filed sufficiently stated a cause of action. The sufficiency of the Complaint was
not affected by the inclusion of Dorado as party representative for this was an obvious error
which, under Section 11 of Rule 3,[23] is not a ground for dismissal, as it may be corrected by the
court, on its own initiative and at any stage of the action, by dropping such party from the
complaint.[24]

Anent the second ground, there is no merit to petitioners claim that they are purchasers in
good faith.

That the SPA is a forgery is a finding of the RTC and the CA on a question of fact.[25] The same
is conclusive upon the Court, [26] especially as it is based on the expert opinion of the NBI which
constitutes more than clear, positive and convincing evidence that respondent did not sign the
SPA, and on the uncontroverted Certification of Dorado that respondent was
in Germany working as a nurse when the SPA was purportedly executed in 1987.
The SPA being a forgery, it did not vest in Pedro any authority to alienate the subject
property without the consent of respondent. Absent such marital consent, the deed of sale was a
nullity.[27]

But then petitioners disclaim any participation in the forgery of the SPA or in the
unauthorized sale of the subject property. They are adamant that even with their knowledge that
respondent was in Germany at the time of the sale, they acted in good faith when they bought the
subject property from Pedro alone because the latter was equipped with a SPA which contains
a notarial acknowledgment that the same is valid and authentic.[28] They invoke the status of
buyers in good faith whose registered title in the property is already indefeasible and against
which the remedy of reconveyance is no longer available.[29] In the alternative, petitioners offer
that should respondent be declared entitled to reconveyance, let it affect her portion only but not
that of Pedro.[30]

Whether or not petitioners are buyers for value in good faith is a question of fact not
cognizable by us in a petition for review.[31] We resolve only questions of law; we do not try
facts nor examine testimonial or documentary evidence on record. We leave these to the trial and
appellate courts to whose findings and conclusions we accord great weight and respect,
especially when their findings concur.[32] We may have at times reversed their findings and
conclusions but we resort to this only under exceptional circumstances as when it is shown that
said courts failed to take into account certain relevant facts which, if properly considered, would
justify a different conclusion.[33] No such exceptional circumstance obtains in the present case for
we find the conclusions of the RTC and CA supported by the established facts and applicable

16
law. However, we do not fully subscribe to some of their views on why petitioners cannot be
considered in good faith, as we will discuss below.

A holder of registered title may invoke the status of a buyer for value in good faith as a defense
against any action questioning his title.[34] Such status, however, is never presumed but must be
proven by the person invoking it.[35]

A buyer for value in good faith is one who buys property of another, without notice that
some other person has a right to, or interest in, such property and pays full and fair price for the
same, at the time of such purchase, or before he has notice of the claim or interest of some other
persons in the property. He buys the property with the well-founded belief that the person from
whom he receives the thing had title to the property and capacity to convey it.[36]

To prove good faith, a buyer of registered and titled land need only show that he relied on the
face of the title to the property. He need not prove that he made further inquiry for he is not
obliged to explore beyond the four corners of the title.[37] Such degree of proof of good faith,
however, is sufficient only when the following conditions concur: first, the seller is the registered
owner of the land; [38] second, the latter is in possession thereof;[39] and third, at the time of the
sale, the buyer was not aware of any claim or interest of some other person in the property,[40] or
of any defect or restriction in the title of the seller or in his capacity to convey title to the
property.[41]

Absent one or two of the foregoing conditions, then the law itself puts the buyer on notice
and obliges the latter to exercise a higher degree of diligence by scrutinizing the certificate of
title and examining all factual circumstances in order to determine the sellers title and capacity to
transfer any interest in the property.[42] Under such circumstance, it is no longer sufficient for
said buyer to merely show that he relied on the face of the title; he must now also show that he
exercised reasonable precaution by inquiring beyond the title.[43] Failure to exercise such degree
of precaution makes him a buyer in bad faith.[44]

In the present case, petitioners were dealing with a seller (Pedro) who had title to and possession
of the land but, as indicated on the face of his title, whose capacity to sell was restricted, in that
the marital consent of respondent is required before he could convey the property. To prove good
faith then, petitioners must show that they inquired not only into the title of Pedro but also into
his capacity to sell.

According to petitioners, to determine Pedros capacity to sell, they conducted the

following forms of inquiry: first, they inspected the photocopy of the SPA presented to them by
Pedro;[45] second, they brought said copy to Atty. Lorenzo Lucero (the notary public who
prepared the deed of sale) and asked whether it was genuine;[46] and third, they inspected the
original copy of the SPA after they advanced payment of Php55,000.00 to Pedro.[47] Essentially,
petitioners relied on the SPA, specifically on its notarial acknowledgment which states that
respondent appeared before the notary public and acknowledged having executed the SPA in
favor of Pedro.

17
 The RTC and CA, however, found such inquiry superficial. They expected of petitioners
an investigation not only into the whereabouts of respondent at the time of the execution of the
SPA[48] but also into the genuineness of the signature appearing on it.[49]

We find such requirements of the RTC and CA too stringent that to adopt them would be
to throw commerce into madness where buyers run around to probe the circumstances
surrounding each piece of sales document while sellers scramble to produce evidence of its good
order. Remember that it is not just any scrap of paper that is under scrutiny but a SPA, the
execution and attestation of which a notary public has intervened.

To what extent, therefore, should an inquiry into a notarized special power of attorney go
in order for one to qualify as a buyer for value in good faith?
We agree with one author who said:
x x x To speak of notice, as applied to the grantee, is to follow the
language of the Statue of Elizabeth. Its proviso protects the man who
purchases upon good consideration and bona fide * * * not having at the time *
* * any manner of notice or knowledge. The term notice, however, is really but
an approach to the test of good faith, and all modern legislation tends toward that
point.

Thus, some present day statutes (outside of the Uniform Law) may speak of
notice, actual and constructive, and define both terms, but they should be liberally
construed, so as to protect bona fide purchaser for value. They may require the
grantee to have knowledge of the debtors intent, but save for technical purposes of
pleading, the term is read in the light of the rules we are studying. It comes always
to a question of the grantees good faith as distinct from mere negligence. [50]

There must, indeed, be more than negligence. There must be a conscious

turning away from the subject x x x. As put by the Supreme Court, the grantee
must take the consequences if he chooses to remain ignorant of what the
necessities of the case require him to know. The search, therefore, is described
by the question, did the grantee make a choice between not knowing and
finding out the truth; or were the circumstances such that he was not faced with
that choice? (Emphasis ours)

This means that no automatic correlation exists between the state of forgery of a
document and the bad faith of the buyer who relies on it. A test has to be done whether the buyer
had a choice between knowing the forgery and finding it out, or he had no such choice at all.

When the document under scrutiny is a special power of attorney that is duly notarized,
we know it to be a public document where the notarial acknowledgment is prima facie evidence
of the fact of its due execution.[51] A buyer presented with such a document would have no
choice between knowing and finding out whether a forger lurks beneath the signature on
it. The notarial acknowledgment has removed that choice from him and replaced it with a
presumption sanctioned by law that the affiant appeared before the notary public and
acknowledged that he executed the document, understood its import and signed it. In reality, he

18
is deprived of such choice not because he is incapable of knowing and finding out but because,
under our notarial system, he has been given the luxury of merely relying on the presumption of
regularity of a duly notarized SPA. And he cannot be faulted for that because it is precisely that
fiction of regularity which holds together commercial transactions across borders and time.

In sum, all things being equal, a person dealing with a seller who has possession and title
to the property but whose capacity to sell is restricted, qualifies as a buyer in good faith if he
proves that he inquired into the title of the seller as well as into the latters capacity to sell; and
that in his inquiry, he relied on the notarial acknowledgment found in the sellers duly
notarized special power of attorney. He need not prove anything more for it is already the
function of the notarial acknowledgment to establish the appearance of the parties to the
document, its due execution and authenticity.[52]

Note that we expressly made the foregoing rule applicable only under the operative
words duly notarized and all things being equal. Thus, said rule should not apply when there is
an apparent flaw afflicting the notarial acknowledgment of the special power of attorney as
would cast doubt on the due execution and authenticity of the document; or when the buyer has
actual notice of circumstances outside the document that would render suspect its genuineness.

In Domingo v. Reed,[53] we found that the special power of attorney relied upon by the
buyers contained a defective notarial acknowledgment in that it stated there that only the agent-
wife signed the document before the notary public while the principal-husband did not. Such
flaw rendered the notarial acknowledgment of no effect and reduced the special power of
attorney into a private document. We declared the buyer who relied on the private special power
of attorney a buyer in bad faith.

In Lao v. Villones-Lao,[54] and Estacio v. Jaranilla,[55] we found that the buyers knew of
circumstances extrinsic to the special power of attorney which put in question the actual
execution of said document. In Domingo Lao, the buyer knew that the agent-wife was estranged
from the principal-husband but was living within the same city. In the Estacio case, we found
admissions by the buyers that they knew that at the time of the purported execution of the special
power of attorney, the alleged principal was not in the Philippines. In both cases we held that the
buyers were not in good faith, not because we found any outward defect in the notarial
acknowledgment of the special powers of attorney, but because the latter had actual notice of
facts that should have put them on deeper inquiry into the capacity to sell of the seller.

In the present case, petitioners knew that Berlina was in Germany at the time they were
buying the property and the SPA relied upon by petitioners has a defective notarial
acknowledgment. The SPA was a mere photocopy[56] and we are not convinced that there ever
was an original copy of said SPA as it was only this photocopy that was testified to by petitioner
Nida Bautista and offered into evidence by her counsel.[57] We emphasize this fact because it was
actually this photocopy that was relied upon by petitioners before they entered into the deed of
sale with Pedro. As admitted to by petitioner Nida Bautista, upon inspection of the photocopy of
the SPA, they gave Pedro an advanced payment of Php55,000.00; this signifies that, without
further investigation on the SPA, petitioners had agreed to buy the subject property from Pedro.

19
 But then said photocopy of the SPA contains no notarial seal. A notarial seal is a mark,
image or impression on a document which would indicate that the notary public has officially
signed it.[58] There being no notarial seal, the signature of the notary public on the notarial
certificate was therefore incomplete. The notarial certificate being deficient, it was as if the
notarial acknowledgment was unsigned. The photocopy of the SPA has no notarial
acknowledgment to speak of. It was a mere private document which petitioners cannot foist as a
banner of good faith.

All told, it was not sufficient evidence of good faith that petitioners merely relied on the
photocopy of the SPA as this turned out to be a mere private document. They should have
adduced more evidence that they looked beyond it. They did not. Instead, they took no
precautions at all. They verified with Atty. Lucero whether the SPA was authentic but then the
latter was not the notary public who prepared the document. Worse, they purposely failed to
inquire who was the notary public who prepared the SPA. Finally, petitioners conducted the
transaction in haste. It took them all but three days or from March 2 to 4, 1988 to enter into the
deed of sale, notwithstanding the restriction on the capacity to sell of Pedro.[59] In no way then
may petitioners qualify as buyers for value in good faith.

That said, we come to the third issue on whether petitioners may retain the portion of Pedro Silva
in the subject property. Certainly not. It is well-settled that the nullity of the sale of conjugal
property contracted by the husband without the marital consent of the wife affects the entire
property, not just the share of the wife.[60] We see no reason to deviate from this rule.

WHEREFORE, the petition is hereby DENIED. The Decision dated November 21,
2001 and Resolution dated February 27, 2003 of the Court of Appeal are AFFIRMED.

Costs against petitioners.

SO ORDERED.

MA. ALICIA AUSTRIA-MARTINEZ

Associate Justice

WE CONCUR:

ARTEMIO V. PANGANIBAN, Chief Justice, Chairperson

CONSUELO YNARES-SANTIAGO ROMEO J. CALLEJO, SR.

Associate Justice Associate Justice

MINITA V. CHICO-NAZARIO
Associate Justice

CERTIFICATION

20
 Pursuant to Section 13, Article VIII of the Constitution, and the Division Chairmans
Attestation, it is hereby certified that the conclusions in the above Decision were reached in
consultation before the case was assigned to the writer of the opinion of the Courts Division.

ARTEMIO V. PANGANIBAN
Chief Justice

[1]
Abad v. Guimba, G.R. No. 157002, July 29, 2005, 465 SCRA 356, 367.
[2]
Article 166. Unless the wife has been declared a non compos mentis or a spendthrift, or is
under civil interdiction or is confined in a leprosarium, the husband cannot alienate or
encumber any real property of the conjugal partnership without the wifes consent x x x.
[3]
Article 173. The wife may, during the marriage, and within ten years from the transaction
questioned, ask the courts for the annulment of any contract of the husband entered into
without her consent, when such consent is required, or any act or contract of the husband
which tends to defraud her or impair her interest in the conjugal partnership property.
Should the wife fail to exercise this right, she or her heirs, after the dissolution of the
marriage, may demand the value of the property fraudulently alienated by the husband.
[4]
Article 124. The administration and enjoyment of the conjugal partnership property shall
belong to both spouses jointly. In case of disagreement, the husbands decision shall
prevail, subject to recourse to the court by the wife for a proper remedy which must be
availed of within five years from the date of the contract implementing such decision.
In the event that one spouse is incapacitated or otherwise unable to participate in the
administration of the conjugal properties, the other spouse may assume sole powers of
administration. These powers do not include the powers of disposition or encumbrance
which must have the authority of the court or the written consent of the other spouse. In
the absence of such authority or consent, the disposition or encumbrance shall be
void. However, the transaction shall be construed as a continuing offer on the part of the
consenting spouse and the third person, and may be perfected as a binding contract upon
the acceptance by the other spouse or authorization by the court before the offer is
withdrawn by either or both offerors.
[5]
Domingo v. Reed, G.R. No. 157701, December 9, 2005, 477 SCRA 227, 242.
[6]
Penned by Associate Justice Bernardo P. Abesamis and concurred in by Associate Justices
Ramon A. Barcelona and Perlita J. Tria Tirona.
[7]
Entitled, Berlina F. Silva, represented by Hermes J. Dorado, in his capacity as Attorney-in-
Fact, Plaintiff-Appellee, versus Sps. Claro & Nida Bautista, Defendants-Appellants &
Third-Party Plaintiffs versus Pedro M. Silva, Third-Party Defendant.
[8]
Records, p. 18.
[9]
Id. at 28.
[10]
Id. at 47.
[11]
Id. at 212-213.
[12]
Id. at 214.
[13]
Id. at 201-203; 215-216.
[14]
CA rollo, p. 144.
[15]
Id. at 170.
[16]
Rollo, p. 4.

21
[17]
Rollo, pp. 8-9.
[18]
Records, p. 4.
[19]
Id.
[20]
TSN, August 8, 1991, pp. 4-25.
[21]
See note 2
[22]
See note 3.
[23]
Sec. 11. Misjoinder and non-joinder of parties. Neither misjoinder nor non-joinder of parties
is ground for dismissal of an action. Parties may be dropped or added by order of the
court on motion of any party or on its own initiative at any stage of the action and on
such terms as are just. Any claim against a misjoined party may be severed and
proceeded with separately.
[24]
Cabutihan v. Landcenter Construction & Development Corporation, 432 Phil. 927, 941
(2002).
[25]
Philippine National Oil Company v. National College of Business and Arts, G.R. No. 155698,
January 31, 2006, 481 SCRA 298, 309.
[26]
Domingo v. Reed, supra; Estacio v. Jaranilla, G.R. No. 149250, December 8, 2003, 417
SCRA 250, 259.
[27]
Heirs of Ignacia Aguilar-Reyes v. Mijares, G.R. No. 143826, August 28, 2003, 410 SCRA
97, 106; Bravo-Guerrero v. Bravo, G.R. No. 152658, July 29, 2005, 465 SCRA 244,
257. See also notes 18 and 19.
[28]
Rollo, pp. 7-8.
[29]
Rollo, pp. 6-8.
[30]
Rollo, p. 9.
[31]
Orquiola v. Court of Appeals, 435 Phil. 323, 331 (2002).
[32]
See note 21.
[33]
Francisco v. Court of Appeals, G.R. No. 118749, April 25, 2003, 401 SCRA 594,
605. Findings of fact may also be passed upon and reviewed by the Supreme Court in the
following instances: (1) when the conclusion is a finding grounded entirely on
speculation, surmises or conjecture; (2) when the inference made is manifestly mistaken,
absurd, or impossible; (3) where there is a grave abuse of discretion in the appreciation of
facts; (4) when judgment is based on a misapprehension of facts; (5) when the lower
court, in making its findings, went beyond the issues of the case and such findings are
contrary to the admissions of both appellant and appellee; (6) when the factual findings of
the Court of Appeals are contrary to those of the trial court; (7) when the findings of fact
are themselves conflicting; (8) when the findings of fact are conclusions made without a
citation of specific evidence on which they are based; (9) when the facts set forth in the
petition as well as in the petitioners main and reply briefs are not disputed by the
respondents; (10) when the findings of fact of the lower court are premised on the
supposed absence of evidence and are contradicted by the evidence on record (Misa v.
Court of Appeals, G.R. No. 97291, August, 5, 1992, 212 SCRA 217; Philippine
American General Insurance Company v. PKS Shipping Company, 449 Phil. 223, 232
(2003); Tansipek v. Philippine Bank of Communications, 423 Phil. 727 [2001]).
[34]
Sec. 32 of P.D. No. 1529 (Property Registration Decree).
[35]
Aguirre v. Court of Appeals, G.R. No. 122249, January 29, 2004, 421 SCRA 310, 321.
[36]
Heirs of Ignacia Aguilar-Reyes v. Mijares, supra note 27.

22
[37]
Abad v. Guimba, G.R. No. 157002, July 29, 2005, 465 SCRA 356; San Lorenzo Development
Corporation v. Court of Appeals, G.R. No. 124242, January 21, 2005, 449 SCRA 99,
117.
[38]
Aguirre v. Court of Appeals, supra note 35.
[39]
Philippine National Bank v. Militar, G.R. No. 164801, August 18, 2005, 467 SCRA 377, 387.
[40]
Erena v. Querrer-Kauffman, G.R. No. 165853, June 22, 2006; Heirs of Trinidad De
Leon Vda. De Roxas v. Court of Appeals, G.R. No. 138660, February 5, 2004, 422 SCRA
101, 116-117; Millena v. Court of Appeals, 381 Phil. 132, 143 (2000).
[41]
Occena v. Esponilla, G.R. No. 156973, June 4, 2004, 431 SCRA 116,
125; Litonjua v. Eternit Corporation, G.R. No. 144805, June 8, 2006.
[42]
See note 31.
[43]
Instrade, Inc. v. Court of Appeals, 395 Phil. 791, 802 (2000).
[44]
Castro v. Miat, G.R. No. 143297, February 11, 2003, 397 SCRA 271, 284.
[45]
TSN, August 5, 1993, pp. 5-10.
[46]
TSN, July 19, 1994, pp.. 8-9
[47]
TSN, August 5, 1993, pp. 5-6;
[48]
CA rollo, p. 138.
[49]
Records, pp. 215-216.
[50]
Garrard Flenn, Fraudulent Conveyances and Preferences (Vol. 1), 1940, pp. 531-532.
[51]
Cirelos v. Court of Appeals, G.R. No. 146523, June 15, 2006; Pan Pacific Industrial Sales
Company, Inc. v. Court of Appeals, G.R. No. 125283, February 10, 2006, 482 SCRA 164,
174; Alfarero v.Sevilla, G.R. No. 142974, September 22, 2003, 411 SCRA 387, 393.
[52]
See 2004 Rules on Notarial Practice.
[53]
See note 26.
[54]
366 Phil. 49 (1999).
[55]
Supra note 26.
[56]
Records, p. 138.
[57]
TSN, August 5, 1993, p. 7.
[58]
2004 Rules on Notarial Practice, Rule II, Section 13 and Rule VII, Section 2.
[59]
Records, pp. 118-120.
[60]
Heirs of Ignacia Aguilar-Reyes v. Mijares, supra note 27, citing Bucoy v. Paulino, 131 Phil.
790, 791 (1968).

23
 SECOND DIVISION

TITAN CONSTRUCTION G.R. No. 169548

CORPORATION,
Petitioner,
Present:

CARPIO, J., Chairperson,

- versus - BRION,
DEL CASTILLO,
ABAD, and
PEREZ, JJ.
MANUEL A. DAVID, SR. and
MARTHA S. DAVID, Promulgated:
Respondents. March 15, 2010
x-------------------------------------------------------------------x

DECISION

DEL CASTILLO, J.:

The review of factual matters is not the province of this Court.[1] The Supreme Court is not
a trier of facts, and is not the proper forum for the ventilation and substantiation of factual issues.[2]

This Petition for Review assails the July 20, 2004 Decision[3] of the Court of Appeals (CA) in
CA-G.R. CV No. 67090 which affirmed with modification the March 7, 2000 Decision[4] of the Regional
Trial Court (RTC) of Quezon City, Branch 80. Also assailed is the August 31, 2005 Resolution[5] of the
CA denying the motion for reconsideration.

Factual Antecedents
Manuel A. David, Sr. (Manuel) and Martha S. David (Martha) were married on March 25,
1957. In 1970, the spouses acquired a 602 square meter lot located at White Plains, Quezon City, which
was registered in the name of MARTHA S. DAVID, of legal age, Filipino, married to Manuel A. David
and covered by Transfer Certificate of Title (TCT) No. 156043 issued by the Register of Deeds of
Quezon City.[6] In 1976, the spouses separated de facto, and no longer communicated with each other.[7]

Sometime in March 1995, Manuel discovered that Martha had previously sold the property to
Titan Construction Corporation (Titan) for P1,500,000.00 through a Deed of Sale[8] dated April 24, 1995,
and that TCT No. 156043 had been cancelled and replaced by TCT No. 130129 in the name of Titan.

Thus, on March 13, 1996, Manuel filed a Complaint[9] for Annulment of Contract
and Recovenyance against Titan before the RTC of Quezon City. Manuel alleged that the sale executed
by Martha in favor of Titan was without his knowledge and consent, and therefore void. He prayed that
the Deed of Sale and TCT No. 130129 be invalidated, that the property be reconveyed to the spouses, and
that a new title be issued in their names.

24
 In its Answer with Counterclaim,[10] Titan claimed that it was a buyer in
good faith and for value because it relied on a Special Power of Attorney (SPA) [11] dated January 4, 1995
signed by Manuel which authorized Martha to dispose of the property on behalf of the spouses. Titan thus
prayed for the dismissal of the complaint.

In his unverified Reply,[12] Manuel claimed that the SPA was spurious, and that the signature
purporting to be his was a forgery; hence, Martha was wholly without authority to sell the property.

Subsequently, Manuel filed a Motion for Leave to File Amended Complaint[13] which was
granted by the trial court. Thus, on October 15, 1996, Manuel filed an Amended
Complaint[14] impleading Martha as a co-defendant in the proceedings. However, despite personal service
of summons[15] upon Martha, she failed to file an Answer. Thus, she was declared in default.[16] Trial then
ensued.

Ruling of the Regional Trial Court

On March 7, 2000, the RTC issued a Decision which (i) invalidated both the Deed of Sale and
TCT No. 130129; (ii) ordered Titan to reconvey the property to Martha and Manuel; (iii) directed the
Register of Deeds of Quezon City to issue a new title in the names of Manuel and Martha; and (iv)
ordered Titan to pay P200,000.00 plusP1,000.00 per appearance as attorneys fees, and P50,000.00 as
costs of suit.

The RTC found that:

1) The property was conjugal in character since it was purchased by Manuel

and Martha with conjugal funds during their marriage. The fact that TCT No. 156043 was registered in
the name of MARTHA S. DAVID x x x married to Manuel A. David did not negate the
propertys conjugal nature.

2) The SPA professing to authorize Martha to sell the property on behalf of the spouses was spurious, and
did not bear Manuels genuine signature. This was the subject of expert testimony, which Titan
failed to rebut. In addition, despite the fact that the SPA was notarized, the genuineness and due
execution of the SPA was placed in doubt since it did not contain Manuels residence certificate,
and was not presented for registration with the Quezon City Register of Deeds, in violation of
Section 64 of Presidential Decree No. 1529.[17]

3) The circumstances surrounding the transaction with Martha should have put Titan on notice of the
SPAs dubious veracity. The RTC noted that aside from Marthas failure to register the SPA with
the Register of Deeds, it was doubtful that an SPA would have even been necessary, since the
SPA itself indicated that Martha and Manuel lived on the same street in Navotas.

The dispositive portion of the trial courts Decision reads:

Wherefore, judgment is hereby rendered:

1.) Declaring the Deed of Sale dated April 24, 1995 as void
ab initio and without force and effect.

25
 2.) Declaring null and void TCT No. 130129 issued by the
Register of Deeds of Quezon City in the name of defendant Titan
Construction Corporation.
3.) Ordering defendant Titan Construction Corporation
to reconvey the subject property to plaintiff and his spouse.
4.) Ordering the Register of Deeds of Quezon City to make
and issue a new title in the name of plaintiff Manuel David and his
Spouse, Martha David.
5.) Ordering defendant to pay P200,000.00 plus P1,000.00
per appearance as attorneys fees and P50,000.00 as costs of suit.
SO ORDERED.[18]

Ruling of the Court of Appeals

In its Decision dated July 20, 2004, the CA affirmed the Decision of the trial court but deleted the
award of attorneys fees and the amount of P50,000.00 as costs.

The dispositive portion of the Decision reads:

WHEREFORE, with the MODIFICATION by deleting the award of attorneys

fees in favor of plaintiff-appellee Manuel A. David, Sr. and the amount of P50,000.00 as
costs, the Decision appealed from is AFFIRMED in all other respects, with costs against
defendant-appellant Titan Construction Corporation.[19]

Titan moved for reconsideration but the motion was denied on August 31, 2005.

Hence, this petition.

Issues

Titan raises the following assignment of errors:

A. THE COURT OF APPEALS PATENTLY ERRED IN

DECLARING THE SUBJECT DEED OF SALE NULL AND VOID AND
FAILED TO APPLY TO THIS CASE THE PERTINENT LAW AND
JURISPRUDENCE ON THE TORRENS SYSTEM OF LAND
REGISTRATION.

B. THE COURT OF APPEALS PATENTLY ERRED IN RULING

THAT TITAN WAS NOT A BUYER IN GOOD FAITH CONTRARY TO
THE STANDARDS APPLIED BY THIS HONORABLE COURT IN CASES
INVOLVING SIMILAR FACTS.

C. THE COURT OF APPEALS PATENTLY ERRED BY

DISCARDING THE NATURE OF A NOTARIZED SPECIAL POWER OF
ATTORNEY CONTRARY TO JURISPRUDENCE AND BY GIVING

26
 UNDUE WEIGHT TO THE ALLEGED EXPERT TESTIMONY VIS--VIS
THE CONTESTED SIGNATURES AS THEY APPEAR TO THE NAKED
EYE CONTRARY TO JURISPRUDENCE.

D. THE COURT OF APPEALS PATENTLY ERRED BY FAILING

TO DETECT BADGES OF CONNIVANCE BETWEEN RESPONDENTS.

E. THE COURT OF APPEALS PATENTLY ERRED BY NOT

RULING THAT ASSUMING THE SPA WAS NULL AND VOID, THE
SAME IS IMMATERIAL SINCE THE RESPONDENTS SHOULD BE
CONSIDERED ESTOPPED FROM DENYING THAT THE SUBJECT
PROPERTY WAS SOLELY THAT OF RESPONDENT MARTHA S. DAVID.

F. THE COURT OF APPEALS PATENTLY ERRED BY NOT

RULING THAT ASSUMING THE SALE WAS VOID, ON GROUNDS OF
EQUITY MARTHA S. DAVID SHOULD REIMBURSE PETITIONER OF
HIS PAYMENT WITH LEGAL INTEREST.[20]

Petitioners Arguments

Titan is claiming that it was a buyer in good faith and for value, that the property was Marthas
paraphernal property, that it properly relied on the SPA presented by Martha, and that the RTC erred in
giving weight to the alleged expert testimony to the effect that Manuels signature on the SPA was
spurious. Titan also argues, for the first time, that the CA should have ordered Martha to reimburse the
purchase price paid by Titan.

Our Ruling

The petition is without merit.

The property is part of the spouses conjugal
partnership.

The Civil Code of the Philippines,[21] the law in force at the time of the celebration of the marriage
between Martha and Manuel in 1957, provides:

Article 160. All property of the marriage is presumed to belong to the

conjugal partnership, unless it be proved that it pertains exclusively to the husband or to
the wife.

Article 153 of the Civil Code also provides:

Article 153. The following are conjugal partnership property:

27
 (1) That which is acquired by onerous title during the marriage at the expense of the
common fund, whether the acquisition be for the partnership, or for only one of the
spouses;

xxxx
These provisions were carried over to the Family Code. In particular, Article 117 thereof
provides:

Art. 117. The following are conjugal partnership properties:

(1) Those acquired by onerous title during the marriage at the

expense of the common fund, whether the acquisition be for the partnership, or
for only one of the spouses;

xxxx

Article 116 of the Family Code is even more unequivocal in that [a]ll property acquired during
the marriage, whether the acquisition appears to have been made, contracted or registered in the name
of one or both spouses, is presumed to be conjugal unless the contrary is proved.

We are not persuaded by Titans arguments that the property was Marthas exclusive property
because Manuel failed to present before the RTC any proof of his income in 1970, hence he could not
have had the financial capacity to contribute to the purchase of the property in 1970; and that Manuel
admitted that it was Martha who concluded the original purchase of the property. In consonance with our
ruling in Spouses Castro v. Miat,[22] Manuel was not required to prove that the property was acquired with
funds of the partnership. Rather, the presumption applies even when the manner in which the property
was acquired does not appear.[23] Here, we find that Titan failed to overturn the presumption that the
property, purchased during the spouses marriage, was part of the conjugal partnership.

In the absence of Manuels consent, the Deed of Sale is

void.

Since the property was undoubtedly part of the conjugal partnership, the sale to Titan required the
consent of both spouses. Article 165 of the Civil Code expressly provides that the husband is the
administrator of the conjugal partnership. Likewise, Article 172 of the Civil Code ordains that (t)he wife
cannot bind the conjugal partnership without the husbands consent, except in cases provided by law.

Similarly, Article 124 of the Family Code requires that any disposition or encumbrance of
conjugal property must have the written consent of the other spouse,otherwise, such disposition is
void. Thus:

Art. 124. The administration and enjoyment of the conjugal partnership shall belong to
both spouses jointly. In case of disagreement, the husband's decision shall prevail, subject
to recourse to the court by the wife for proper remedy, which must be availed of within
five years from the date of the contract implementing such decision.

28
 In the event that one spouse is incapacitated or otherwise unable to participate in the
administration of the conjugal properties, the other spouse may assume sole powers of
administration. These powers do not include disposition or encumbrance without
authority of the court or the written consent of the other spouse. In the absence of such
authority or consent, the disposition or encumbrance shall be void. However, the
transaction shall be construed as a continuing offer on the part of the consenting spouse
and the third person, and may be perfected as a binding contract upon the acceptance by
the other spouse or authorization by the court before the offer is withdrawn by either or
both offerors.

The Special Power of Attorney purportedly signed by

Manuel is spurious and void.

The RTC found that the signature of Manuel appearing on the SPA was not his genuine
signature.

As to the issue of the validity or invalidity of the subject Special Power of Attorney
x x x the Court rules that the same is invalid. As aptly demonstrated by plaintiffs
evidence particularly the testimony of expert witness Atty. Desiderio Pagui, which the
defense failed to rebut and impeach, the subject Special Power of Attorney does not bear
the genuine signature of plaintiff Manuel David thus rendering the same as without legal
effect.

Moreover, the genuineness and the due execution of the Special Power of Attorney was
placed in more serious doubt as the same does not contain the Residence Certificate of
the plaintiff and most importantly, was not presented for registration with the Quezon
City Register of Deeds which is a clear violation of Sec. 64 of P.D. No. 1529.

As regards defendant Titan Construction Corporations assertion that plaintiffs failure to

verify his Reply (wherein the validity of the Special Power of Attorney is put into
question) is an implied admission of its genuineness and due execution, [this] appears at
first blush a logical conclusion. However, the Court could not yield to such an argument
considering that a rigid application of the pertinent provisions of the Rules of Court will
not be given premium when it would obstruct rather than serve the broader interest of
justice.[24]

Titan claims that the RTC gave undue weight to the testimony of Manuels witness, and that expert
testimony on handwriting is not conclusive.

The contention lacks merit. The RTCs ruling was based not only on the testimony of Manuels
expert witness finding that there were significant differences between the standard handwriting of Manuel
and the signature found on the SPA, but also on Manuels categorical denial that he ever signed any
document authorizing or ratifying the Deed of Sale to Titan.[25]

29
 We also note that on October 12, 2004, Titan filed before the CA a Manifestation with Motion for
Re-Examination of Another Document/ Handwriting Expert[26]alleging that there is an extreme
necessity[27] for a conduct of another examination of the SPA by a handwriting expert as it will materially
affect and alter the final outcome[28] of the case. Interestingly, however, Titan filed on January 6, 2005 a
Manifestation/Motion to Withdraw Earlier Motion for Re-Examination of PNP Laboratory Expert[29] this
time praying that its motion for re-examination be withdrawn. Titan claimed that after a circumspect
evaluation, deemed it wise not to pursue anymore said request (re-examination) as there is a great
possibility that the x x x [PNP and the NBI] might come out with two conflicting opinions and
conclusions x x x that might cause some confusion to the minds of the Honorable Justices in resolving the
issues x x x as well as the waste of material time and resources said motion may result.[30]

In any event, we reiterate the well-entrenched rule that the factual findings of trial courts, when
adopted and confirmed by the CA, are binding and conclusive and will generally not be reviewed on
appeal.[31] We are mandated to accord great weight to the findings of the RTC, particularly as regards its
assessment of the credibility of witnesses[32] since it is the trial court judge who is in a position to observe
and examine the witnesses first hand.[33] Even after a careful and independent scrutiny of the records, we
find no cogent reason to depart from the rulings of the courts below.[34]

Furthermore, settled is the rule that only errors of law and not of fact are reviewable by this Court
in a petition for review on certiorari under Rule 45 of the Rules of Court. This applies with even greater
force here, since the factual findings by the CA are in full agreement with those of the trial court.[35]

Indeed, we cannot help but wonder why Martha was never subpoenaed by Titan as a witness to
testify on the character of the property, or the circumstances surrounding the transaction with
Titan. Petitioners claim that she could not be found is belied by the RTC records, which show that she
personally received and signed for the summons at her address in Greenhills, San Juan. Titan neither filed
a cross claim nor made any adverse allegation against Martha.

On the Failure to Deny the Genuineness and Due

Execution of the SPA

Titan claimed that because Manuel failed to specifically deny the genuineness and due execution
of the SPA in his Reply, he is deemed to have admitted the veracity of said document, in accordance with
Rule 8, Sections 7 and 8,[36] of the Rules of Court.

On this point, we fully concur with the findings of the CA that:

It is true that the reply filed by Manuel alleging that the special power of attorney is a
forgery was not made under oath. However, the complaint, which was verified by
Manuel under oath, alleged that the sale of the subject property executed by his wife,
Martha, in favor of Titan was without his knowledge, consent, and approval, express or
implied; and that there is nothing on the face of the deed of sale that would show that he
gave his consent thereto. In Toribio v. Bidin, it was held that where the verified complaint
alleged that the plaintiff never sold, transferred or disposed their share in the inheritance
left by their mother to others, the defendants were placed on adequate notice that they
would be called upon during trial to prove the genuineness or due execution of the

30
 disputed deed of sale. While Section 8, Rule 8 is mandatory, it is a discovery procedure
and must be reasonably construed to attain its purpose, and in a way as not to effect a
denial of substantial justice. The interpretation should be one which assists the parties in
obtaining a speedy, inexpensive, and most important, a just determination of the disputed
issues.

Moreover, during the pre-trial, Titan requested for stipulation that the special
power of attorney was signed by Manuel authorizing his wife to sell the subject property,
but Manuel refused to admit the genuineness of said special power of attorney and stated
that he is presenting an expert witness to prove that his signature in the special power of
attorney is a forgery. However, Titan did not register any objection x x x. Furthermore,
Titan did not object to the presentation of Atty. Desiderio Pagui, who testified as an
expert witness, on his Report finding that the signature on the special power of attorney
was not affixed by Manuel based on his analysis of the questioned and standard
signatures of the latter, and even cross-examined said witness. Neither did Titan object to
the admission of said Report when it was offered in evidence by Manuel on the ground
that he is barred from denying his signature on the special power of attorney. In fact,
Titan admitted the existence of said Report and objected only to the purpose for which it
was offered. In Central Surety & Insurance Company v. C.N. Hodges, it was held that
where a party acted in complete disregard of or wholly overlooked Section 8, Rule 8 and
did not object to the introduction and admission of evidence questioning the genuineness
and due execution of a document, he must be deemed to have waived the benefits of said
Rule. Consequently, Titan is deemed to have waived the mantle of protection given [it]
by Section 8, Rule 8.[37]
It is true that a notarial document is considered evidence of the facts expressed therein.[38] A
notarized document enjoys a prima facie presumption of authenticity and due execution[39] and only clear
and convincing evidence will overcome such legal presumption.[40] However, such clear and convincing
evidence is present here. While it is true that the SPA was notarized, it is no less true that there were
defects in the notarization which mitigate against a finding that the SPA was either genuine or duly
executed. Curiously, the details of Manuels Community Tax Certificate are conspicuously absent, yet
Marthas are complete. The absence of Manuels data supports his claim that he did not execute the same
and that his signature thereon is a forgery. Moreover, we have Manuels positive testimony that he never
signed the SPA, in addition to the expert testimony that the signature appearing on the SPA was not
Manuels true signature.
Moreover, there were circumstances which mitigate against a finding that Titan was a buyer in
good faith.

First, TCT No. 156043 was registered in the name of MARTHA S. DAVID, of legal age,
Filipino, married to Manuel A. David but the Deed of Sale failed to include Marthas civil status, and only
described the vendor as MARTHA S. DAVID, of legal age, Filipino citizen, with postal address at 247
Governor Pascual, Navotas, Rizal. And it is quite peculiar that an SPA would have even been necessary,
considering that the SPA itself indicated that Martha and Manuel lived on the same street (379 and 247
Governor Pascual Street, respectively).

Second, Titans witness Valeriano Hernandez, the real estate agent who brokered the sale between
Martha and Titan, testified that Jerry Yao (Yao), Titans Vice President for Operations (and Titans

31
signatory to the Deed of Sale), specifically inquired why the name of Manuel did not appear on the Deed
of Sale.[41] This indicates that Titan was aware that Manuels consent may be necessary. In addition, Titan
purportedly sent their representative to the Register of Deeds of Quezon City to verify TCT No. 156043,
so Titan would have been aware that the SPA was never registered before the Register of Deeds.

Third, Valeriano Hernandez also testified that during the first meeting between Martha and Yao,
Martha informed Yao that the property was mortgaged to a casino forP500,000.00. Without even seeing
the property, the original title, or the SPA, and without securing an acknowledgment receipt from Martha,
Titan (through Yao) gave Martha P500,000.00 so she could redeem the property from the
casino.[42] These are certainly not actions typical of a prudent buyer.

Titan cannot belatedly claim that the RTC should have

ordered Martha to reimburse the purchase price.

Titan argues that the CA erred in not ruling that, even assuming the sale was void, on grounds of equity,
Martha should reimburse petitioner its payment with legal interest. We note that this equity argument was
raised for the first time before the CA, which disposed of it in this manner:

Anent defendant-appellants claim that the court a quo and this Court never considered the
substantial amount of money paid by it to Martha David as consideration for the sale of
the subject property, suffice it to say that said matter is being raised for the first time in
the instant motion for reconsideration. If well-recognized jurisprudence precludes
raising an issue only for the first time on appeal proper, with more reason should
such issue be disallowed or disregarded when initially raised only in a motion for
reconsideration of the decision of the appellate court.

Nonetheless, record shows that only defendant-appellant was initially sued by plaintiff-
appellee in his complaint for annulment of contract and reconveyance upon the allegation
that the sale executed by his wife, Martha David, of their conjugal property in favor of
defendant-appellant was without his knowledge and consent and, therefore, null and
void. In its answer, defendant-appellant claimed that it bought the property in good faith
and for value from Martha David and prayed for the dismissal of the complaint and the
payment of his counterclaim for attorneys fees, moral and exemplary damages.
Subsequently, plaintiff-appellee filed a motion for leave to file amended complaint
by impleading Martha David as a defendant, attaching the amended complaint thereto,
copies of which were furnished defendant-appellant, through counsel. The amended
complaint was admitted by the court a quo in an Order dated October 23, 1996. Martha
David was declared in default for failure to file an answer. The record does not show
[that] a cross-claim was filed by defendant-appellant against Martha David for the
return of the amount of PhP1,500,000.00 it paid to the latter as consideration for the
sale of the subject property. x x x Thus, to hold Martha David liable to defendant-
appellant for the return of the consideration for the sale of the subject property,
without any claim therefore being filed against her by the latter, would violate her
right to due process. The essence of due process is to be found in the reasonable
opportunity to be heard and submit any evidence one may have in support of his defense.
It is elementary that before a person can be deprived of his property, he should be first

32
 informed of the claim against him and the theory on which such claim is
premised.[43] (Emphasis supplied)

While it is true that litigation is not a game of technicalities,[44] it is equally true that elementary
considerations of due process require that a party be duly apprised of a claim against him before judgment
may be rendered. Thus, we cannot, in these proceedings, order the return of the amounts paid by Titan to
Martha. However, Titan is not precluded by this Decision from instituting the appropriate action against
Martha before the proper court.

WHEREFORE, the petition is DENIED. The July 20, 2004 Decision of the Court of Appeals
in CA-G.R. CV No. 67090 which affirmed with modifications the March 7, 2000 Decision of the
Regional Trial Court of Quezon City, Branch 80, and its August 31, 2005 Resolution denying the motion
for reconsideration, areAFFIRMED, without prejudice to the recovery by petitioner Titan Construction
Corporation of the amounts it paid to Martha S. David in the appropriate action before the proper court.

SO ORDERED.

MARIANO DEL CASTILLO

Associate Justice

WE CONCUR:

ANTONIO T. CARPIO
Associate Justice
Chairperson

ARTURO D. BRION ROBERTO A. ABAD

Associate Justice Associate Justice

JOSE PORTUGAL PEREZ

Associate Justice

ATTESTATION

I attest that the conclusions in the above Decision had been reached in consultation before the
case was assigned to the writer of the opinion of the Courts Division.

ANTONIO T. CARPIO
Associate Justice
Chairperson, Second Division

CERTIFICATION

Pursuant to Section 13, Article VIII of the Constitution, and the Division Chairpersons
attestation, it is hereby certified that the conclusions in the above Decision had been reached in
consultation before the case was assigned to the writer of the opinion of the Courts Division.

33
 REYNATO S. PUNO
Chief Justice

[1]
City of Naga v. Court of Appeals, 254 Phil. 12, 18 (1989).
[2]
Soriano III v. Yuzon, G.R. No. L-79520, August 10, 1988, 164 SCRA 227, 240-241.
[3]
Rollo, pp. 67-78; penned by Associate Justice Marina L. Buzon and concurred in by Associate
Justices Mario L. Guaria III and Santiago Javier Ranada.
[4]
Records, pp. 316-321; penned by Judge Agustin S. Dizon.
[5]
Rollo, pp. 20-23; penned by Associate Justice Marina L. Buzon and concurred in by Associate
Justices Mario L. Guaria III, Monina Arevalo-Zenarosa, and Estela M. Perlas-Bernabe.
Associate Justice Santiago Javier Ranada wrote a Separate Opinion, id. at 24-28.
[6]
Records, p. 7; TSN, April 3, 1997, pp. 6-7.
[7]
TSN, April 3, 1997, p. 25.
[8]
Records, pp. 12-14.
[9]
Id. at 1-5.
[10]
Id. at 34-38.
[11]
Id. at 39-40.
[12]
Id. at 42-44.
[13]
Id. at 53-55.
[14]
Id. at 56-60.
[15]
Id. at 64-65.
[16]
Id. at 84.
[17]
Amending and Codifying The Laws Relative To Registration Of Property And For Other
Purposes (1978). Section 64 provides:
Section 64. Power of attorney. Any person may, by power of attorney,
convey or otherwise deal with registered land and the same shall be registered
with the Register of Deeds of the province or city where the land lies. Any
instrument revoking such power of attorney shall be registered in like manner.
[18]
Records, p. 321.
[19]
Rollo, p. 78.
[20]
Id. at 40-41.
[21]
REPUBLIC ACT NO. 386, An Act to Ordain and Institute the Civil Code of
the Philippines (1949).
[22]
445 Phil. 282 (2003).
[23]
Id. at 293.
[24]
Records, p. 319.
[25]
TSN, April 3, 1997, pp. 12-13.
[26]
CA rollo, pp. 151-154.
[27]
Id. at 151.
[28]
Id.
[29]
Id. at 156-157.
[30]
Id. at 156.
[31]
Abapo-Almario v. Court of Appeals, 383 Phil. 933, 940 (2000).
[32]
Ferrer v. People, G.R. No. 143487, February 22, 2006, 483 SCRA 31, 50.

34
[33]
People v. Umali, G.R. No. 84450, February 4, 1991, 193 SCRA 493, 501.
[34]
People v. Garchitorena, G.R. No. 184172, May 8, 2009
[35]
Blanco v. Quasha, 376 Phil. 480, 491 (1999).
[36]
Sec. 7. Action or defense based on document.
Whenever an action or defense is based upon a written instrument or
document, the substance of such instrument or document shall be set forth in the
pleading, and the original or a copy thereof shall be attached to the pleading as an
exhibit, which shall be deemed to be a part of the pleading, or said copy may with
like effect be set forth in the pleading.
Sec. 8. How to contest such documents.
When an action or defense is founded upon a written instrument, copied in
or attached to the corresponding pleading as provided in the preceding section, the
genuineness and due execution of the instrument shall be deemed admitted unless
the adverse party, under oath, specifically denies them, and sets forth what he
claims to be the facts; but the requirement of an oath does not apply when the
adverse party does not appear to be a party to the instrument or when compliance
with an order for an inspection of the original instrument is refused.
[37]
Rollo, pp. 13-15.
[38]
Mendiola v. Court of Appeals, 193 Phil. 326, 335 (1981). Rule 132, Section 30 of the Rules
of Court provides:
Section 30. Proof of notarial documents. Every instrument duly
acknowledged or proved and certified as provided by law, may be presented in
evidence without further proof, the certificate of acknowledgment being prima
facie evidence of the execution of the instrument or document involved.
[39]
Gutierrez v. Mendoza-Plaza, G.R. No. 185477, December 4, 2009.
[40]
Domingo v. Robles, 493 Phil. 916, 921 (2005).
[41]
TSN, August 21, 1998, p. 7.
[42]
Id. at 3-6.
[43]
Rollo, pp. 21-22.
[44]
In Sea Power Shipping Enterprises, Inc. v. Court of Appeals, 412 Phil. 603, 611-612 (2001),
we held:
It is true that a litigation is not a game of technicalities and that the rules of
procedure should not be strictly enforced at the cost of substantial justice.
However, it does not mean that the Rules of Court may be ignored at will and at
random to the prejudice of the orderly presentation and assessment of the issues
and their just resolution. It must be emphasized that procedural rules should not
be belittled or dismissed simply because their non-observance may have resulted
in prejudice to a partys substantial rights. Like all rules, they are required to be
followed except only for the most persuasive of reasons.

35
 Republic of the Philippines, Supreme Court, Baguio City, THIRD DIVISION

SPOUSES ONESIFORO and G.R. No. 158040

ROSARIO ALINAS,
Petitioners, Present:
YNARES-SANTIAGO, J.
Chairperson,
- versus - AUSTRIA-MARTINEZ,
CHICO-NAZARIO,
NACHURA, and
REYES, JJ.
SPOUSES VICTOR and ELENA
ALINAS, Promulgated:
Respondents. April 14, 2008
x- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - x

DECISION

AUSTRIA-MARTINEZ, J.:

This resolves the Petition for Review on Certiorari under Rule 45 of the Rules of Court, praying that the
Decision[1] of the Court of Appeals (CA) dated September 25, 2002, and the CA Resolution[2] dated March
31, 2003, denying petitioners' motion for reconsideration, be reversed and set aside.

The factual antecedents of the case are as follows.

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

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

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

Records show that after Lot 896-B-9-A was extra-judicially foreclosed, Transfer Certificate of Title (TCT)
No. T-11853[3] covering said property was issued in the name of mortgagee RBO on November 13,
1987. On May 2, 1988, the duly authorized representative of RBO executed a Deed of Installment Sale of

36
Bank's Acquired Assets[4]conveying Lot 896-B-9-A to respondent spouses. RBO's TCT over Lot 896-B-9-
A was then cancelled and on February 22, 1989, TCT No. T-12664[5] covering said lot was issued in the
name of respondent spouses.

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

Onesiforo's signature also appears in an Absolute Deed of Sale[9] likewise dated March 10, 1989,
selling Lot 896-B-9-B to respondent spouses. The records also show a notarized document dated March 10,
1989 and captioned Agreement[10] whereby petitioner Onesiforo acknowledged that his brother Victor used
his own money to redeem Lot896-B-9-B from the SSS and, thus, Victor became the owner of said lot. In
the same Agreeement, petitioner Onesiforo waived whatever rights, claims, and interests he or his heirs,
successors and assigns have or may have over the subject property. On March 15, 1993, by virtue of said
documents, TCT No. 17394[11] covering Lot 896-B-9-B was issued in the name of respondent spouses.

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

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

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

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

3. Plaintiff Onesiforo's allegation that defendants concocted deeds of conveyances (Exh. M,

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

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

37
with the following dispositive portion:
WHEREFORE, this Court renders judgment:

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

2. declaring [petitioners] Onesiforo and Rosario Alinas owners of Lot 896-

B-9-B with the house standing thereon, plaintiff Onesiforo's sale thereof to
defendants spouses without the consent of his wife being null and void and
defendant spouses' redemption thereof from the SSS not having conferred its
ownership to them;

3. ordering [petitioners] to reimburse [respondents] Victor Jr. and

Elena Alinas the redemption sum of P111,100.09, paid by them to the SSS
(without interest as it shall be compensated with the rental value of the house
they occupy) within sixty days from the finality of this judgment;

4. ordering [respondents] to vacate the subject house within thirty days

from receiving the reimbursement mentioned in No. 3 above; and

5. reinstating TCT No. T-7248 in the name of [petitioners]

and cancelling TCT No. T-17394 in the name of [respondents].

No costs.

SO ORDERED.[13]
Only respondent spouses appealed to the CA assailing the RTC's ruling that they acquired Lot 896-
B-9-B from the SSS by mere redemption and not by purchase. They likewise question the reimbursement
by petitioners of the redemption price without interest.

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

WHEREFORE, in view of the foregoing disquisitions, the first paragraph of

the dispositive portion of the assailed decision is AFFIRMED and the rest MODIFIED as
follows:

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

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

38
 3. ordering [petitioners] Rosario Alinas to reimburse [respondents] the redemption
amount of P55,550.00 with interest of 12% per annum from the time of redemption
until fully paid.

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

5. in the event of failure of [respondents] to execute the acts as specified above,

[petitioner] Rosario Alinas may proceed against them under Section 10, Rule 39 of the
1997 Rules of Civil Procedure.

6. on the other hand, failure of [petitioner] Rosario Alinas to reimburse the

redemption price within sixty (60) days from the finality of this decision will render the
conveyance and sale of her share by her husband to [respondents], of full force and
effect.

No costs.

SO ORDERED.[14]

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

Hence, the present petition on the following grounds:

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

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

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

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

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

39
 Sec. 48. Certificate not subject to collateral attack. - A certificate of title shall not be subject
to collateral attack. It cannot be altered, modified, or cancelled except in a direct proceeding
in accordance with law.

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

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

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

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

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

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

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

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

40
However, with regard to Lot 896-B-9-B (with house), the Court finds it patently erroneous for the CA to
have applied the principle of equity in sustaining the validity of the sale of Onesiforos one-half share in the
subject property to respondent spouses.

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

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

Art. 124. The administration and enjoyment of the conjugal partnership property shall
belong to both spouses jointly. x x x
In the event that one spouse is incapacitated or otherwise unable to participate in the
administration of the conjugal properties, the other spouse may assume sole powers of
administration. These powers do not include the powers of disposition or encumbrance
which must have the authority of the court or the written consent of the other spouse. In the
absence of such authority or consent the disposition or encumbrance shall be
void. x x x (Underscoring and emphasis supplied)

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

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

xxxx

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

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

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

In the present case, the Court does not see how applying Article 124 of the Family Code would lead to
injustice or absurdity. It should be noted that respondent spouses were well aware that Lot 896-B-9-B is a
conjugal property of petitioners. They also knew that the disposition being made by Onesiforo is without the
consent of his wife, as they knew that petitioners had separated, and, the sale documents do not bear the
signature of petitioner Rosario. The fact that Onesiforo had to execute two documents, namely: the Absolute
Deed of Sale dated March 10, 1989 and a notarized Agreement likewise dated March 10, 1989, reveals that

41
they had full knowledge of the severe infirmities of the sale. As held in Heirs of Aguilar-Reyes v.
Spouses Mijares,[22] a purchaser cannot close his eyes to facts which should put a reasonable man on his
guard and still claim he acted in good faith.[23] Such being the case, no injustice is being foisted on
respondent spouses as they risked transacting with Onesiforo alone despite their knowledge that the subject
property is a conjugal property.

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

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

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

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

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

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

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

The records show that the testimonial evidence for rentals was only with regard to the bodega.[25] However,
the Court has affirmed the ruling of the RTC that Lot 896-B-9-A with the bodega had been validly

42
purchased by respondent spouses from the RBO and a TCT over said property was issued in the name of
respondent spouses on February 22, 1989. Testimonial evidence shows that the bodega was leased out by
respondent spouses only beginning January of 1990 when ownership had been transferred to
them.[26]Hence, any rentals earned from the lease of said bodega rightfully belongs to respondent spouses
and cannot be offset against petitioners' obligation to respondent spouses.

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

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

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

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

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

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

3. That the two debts be due;

4. That they be liquidated and demandable;

5. That over neither of them there be any retention or controversy,

commenced by third persons and communicated in due time to the debtor.

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

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

43
WHEREFORE, the petition is PARTLY GRANTED. The Decision of the Court of Appeals
dated September 25, 2002 is MODIFIED to read as follows:

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

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

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

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

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

No costs.

SO ORDERED.

MA. ALICIA AUSTRIA-MARTINEZ

Associate Justice

WE CONCUR:

CONSUELO YNARES-SANTIAGO
Associate Justice
Chairperson

MINITA V. CHICO-NAZARIO ANTONIO EDUARDO B. NACHURA

Associate Justice Associate Justice

RUBEN T. REYES
Associate Justice

ATTESTATION

I attest that the conclusions in the above Decision had been reached in consultation before the case was
assigned to the writer of the opinion of the Courts Division.

44
 CONSUELO YNARES-SANTIAGO
Associate Justice
Chairperson, Third Division

CERTIFICATION

Pursuant to Section 13, Article VIII of the Constitution, and the Division Chairpersons Attestation, it is
hereby certified that the conclusions in the above Decision had been reached in consultation before the case
was assigned to the writer of the opinion of the Courts Division.

REYNATO S. PUNO
Chief Justice

[1]
Penned by Associate Justice Josefina Guevara-Salonga, with Associate Justices Rodrigo
V. Cosico and Edgardo F. Sundiam, concurring; rollo, pp. 10-23.
[2]
Id. at 9.
[3]
Exh. 7, records, pp. 207-208.
[4]
Exh. 6, id. at 201-203.
[5]
Exh. 7-C to 7-G, id. at 209-210.
[6]
Exh. 11, id. at 222-223.
[7]
Exh. M, id. at 99-100.
[8]
Exh. Q, id. at 27.
[9]
Exh. O, id. at 101.
[10]
Exh. 9, id. at 216-217.
[11]
Exh. 15, id at 227.
[12]
Records, p. 246.
[13]
Id. at 248-249.
[14]
Rollo, pp. 60-61.
[15]
Id. at 29-30.
[16]
G.R. No. 158002, February 28, 2005, 452 SCRA 564.
[17]
Id. at 575-576.
[18]
Filinvest Credit Corporation v. Intermediate Appellate Court, G.R. No. L-65935, September 30, 1988;
Del Castillo v. Del Castillo, G.R. No. L-33186, June 27, 1988, 162 SCRA 556, 561.
[19]
G.R. No. 153802, March 11, 2005, 453 SCRA 283.
[20]
Id. at 289-291.
[21]
Solid Homes, Inc. v. Tan, G.R. Nos. 145156-57, July 29, 2005, 465 SCRA 137, 149.
[22]
457 Phil. 120 (2003).
[23]
Id. at 136-137.
[24]
Id. at 140.
[25]
TSN, June 21, 1995, pp. 17-19.
[26]
Id. at 34.
[27]
Id. at 5-6, 12.
[28]
Article 526. He is deemed a possessor in good faith who is not aware that there exists in his title or mode
of acquisition any flaw which invalidates it.

45
He is deemed a possessor in bad faith who possesses in any case contrary to the foregoing.
xxxx
[29]
Article 546. Necessary expenses shall be refunded to every possessor; but only the possessor in good
faith may retain the thing until he has been reimbursed therefor.
xxxx
[30]
Philippine Legal Encyclopedia, 2000 Reprint, p. 530.

46
 THIRD DIVISION

Spouses DANILO and G.R. No. 157701

ALBERTA DOMINGO, and
EDUARDO QUITEVES, Present:
Petitioners,
Panganiban, J.,
Chairman,
Sandoval-Gutierrez,
- versus - Carpio Morales,
Corona, and
Garcia, JJ
GUILLERMO REED, Promulgated:
Respondent.
December 9, 2005
x -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- x

DECISION

PANGANIBAN, J.:

W
hen dealing with registered land, prospective buyers are normally not required by law to
inquire further than what appears on the face of the Torrenscertificate of title on file with the
Register of Deeds. Equally settled is the principle, however, that purchasers cannot close their
eyes to known facts that should put a reasonable person on guard; they cannot subsequently
claim to have acted in good faith, in the belief that there was no defect in the vendors
certificate of title. Their mere refusal to face up to that possibility will not make them innocent
purchasers for value, if it later becomes apparent that the title was indeed defective, and that
they would have discovered the fact, had they acted with the measure of precaution required of
a prudent person in a like situation.

The Case

47
Before us is a Petition for Review[1] on Certiorari under Rule 45 of the Rules of Court, seeking to
reverse the August 27, 2002 Decision[2] and the March 20, 2003 Resolution[3] of the Court of
Appeals (CA) in CA-GR CV No. 59544. The dispositive part of the Decision reads as follows:

WHEREFORE, the decision appealed from is REVERSED and SET

ASIDE.

The deeds of sale executed by Lolita Reed in favor of [herein Petitioner-

]spouses Danilo Domingo and Alberta Domingo and Eduardo Quiteves over
portions of the subject property covered by TCT No. 58195 registered in the name
of Lolita R. Reed, married to Guillermo Reed, are declared NULL and VOID.

The Register of Deeds of Pasig City is ordered to cancel TCT Nos. 84565 and
84567 issued in the names of [Petitioners] Eduardo Quiteves and spouses Danilo
Domingo and Alberta Domingo, respectively, covering the portions of the subject
property sold to them by Lolita Reed, and to reinstate TCT No. 58195 in the name
of Lolita Reed, married to Guillermo Reed, insofar as the same covers the
portions of the subject property sold to said [petitioners].[4]

The assailed Resolution denied petitioners Motion for Reconsideration.

The Facts

The facts were summarized by the CA as follows:

[Respondent] Guillermo Reed was an overseas contract worker from 1978

to 1986 and came home only for short vacations. He purchased from the
Government Service Insurance System [GSIS] on installment basis a 166 square
meter property located at MRR Road, Mangahan, Pasig. Because he was working
abroad, it was his wife, Lolita Reed, who paid the consideration to the GSIS.
On July 9, 1986, TCT No. 58195 covering said property was issued by the
Registry of Deeds for the Province of Rizal, Metro Manila District II in the name
of Lolita Reed, married to Guillermo Reed. Guillermo Reed had allowed his
brother, Dominador, and the latters wife, Luz, to stay in the house constructed on
his property.

In December, 1991, Dominador and Luz Reed were summoned to the

barangay in connection with the complaint for ejectment filed against them by
Eduardo Quiteves, who claimed to be the owner of the lot where their house
stands. Dominador and Luz informed Guillermo of the complaint filed against
them. Guillermo accompanied Dominador and Luz to the barangay, where they
met Eduardo Quiteves and Alberta Domingo, who both claimed ownership of the
subject property. Guillermo denied having sold his property.

48
 In view of the claims of Eduardo Quiteves and Alberta Domingo that they
bought the subject property, Guillermo Reed made a verification with the Register
of Deeds of Pasig. Guillermo discovered that his title over the subject property
had been cancelled and he was able to secure copies of the following documents,
to wit:

1. Special Power of Attorney, dated July 8, 1986, allegedly executed by

him authorizing his wife, Lolita Reed, to sell the subject property or a portion
thereof;

2. Deed of Sale of a Portion of Residential Land, dated July 14, 1986,

executed by Lolita Reed in favor of Danilo Domingo, married to Alberta Q.
Domingo covering 41.50 square meter portion of subject property;

3. Absolute Deed of Sale of a Portion of Residential Land, dated July 22,

1987, executed by Lolita Reed, as vendor and attorney-in-fact of Guillermo Reed,
in favor of Natividad R. Villanera, married to Ardaniel Villanera, covering 41.50
square meter portion of subject property;

4. Deed of Sale of a Portion of a Residential Land, dated January 10, 1989,

executed by Lolita Reed, for herself and as attorney-in-fact, in favor of Eduardo
Quiteves covering 86 square meter portion of subject property;

5. TCT No. 84565 in the name of Eduardo Quiteves;

6. TCT No. 84566 in the name of spouses Ardaniel and Natividad

Villanera; and

7. TCT No. 84567 in the name of spouses Danilo and Alberta Domingo.

On March 8, 1994, Guillermo Reed filed a complaint for reconveyance of

property against Lolita Reed, spouses Ardaniel and Natividad Villanera, spouses
Danilo and Alberta Domingo, Eduardo Quiteves and the Register of Deeds of
Pasig, Metro Manila alleging that his wife, Lolita Reed, from whom he had been
estranged, conspiring with the other [petitioners], except the Register of Deeds of
Pasig, caused the preparation of a special power of attorney, dated July 8, 1986,
wherein it was made to appear that he authorized his wife to sell the subject
property; that he did not sign the special power of attorney nor appear before the
notary public because he was working abroad; that the special power of attorney
was not submitted to the Regional Trial Court [(RTC)] in Pasig City by Notary
Public Macario C. Cruz, as stated in the letter dated April 1, 1993 of Clerk of
Court Grace S. Belvis; and that spouses Villanera and Domingo and Eduardo
Quiteves are purchasers in bad faith because they knew, at the time they
transacted with Lolita Reed, that he was working abroad and estranged from the
latter.

49
 An [A]nswer to the complaint was filed by [Petitioners] Eduardo Quiteves
and spouses Danilo and Alberta Domingo alleging that the sale of the subject
property to them by Lolita Reed was valid inasmuch as Guillermo Reed gave his
written consent thereto, as shown in a letter dated July 26, 1986; that in a
proceeding before the [b]arangay [c]hairman, Guillermo Reed admitted that he
personally signed the special power of attorney; that they have the right to rely on
the presumption of regularity of the notarized special power of attorney; and that
they are buyers in good faith and for value.

Per Sheriffs Return, Lolita Reed was not served with summons as she is
no longer residing at the given address while spouses Ardaniel and Natividad
Villanera were served with summons through Mrs. Alberta Domingo.

After trial on the merits, the court a quo rendered judgment, the
dispositive portion of which reads:

WHEREFORE, in view of the foregoing, the Court hereby

renders judgment in favor of x x x Sps. Ardaniel & Natividad
Villanera, Sps. Alberto (sic) & Dominga (sic) Domingo, Eduardo
Quiteves and the Register of Deeds of Pasig, Metro Manila, and
against [respondent] Guillermo Reed and orders the DISMISSAL
of the present case for lack of merit.

No pronouncement as to cost.[5]

Ruling of the Court of Appeals

The Court of Appeals reversed the trial court. First, it should be clear that the CA ruling
concerned two transactions entered into by Petitioner-Intervenor Lolita Reed. The first
transaction involved
the sale she executed in favor of Spouses Danilo and Alberta Domingo. To them she sold a
portion of the subject property covered by TCT No. 58195; it measured 41.5 square meters and
was located at the southwest section. The second sale was effected by the same vendor, this time
in favor of Eduardo Quiteves; it covered 86 square meters at the northern portion of the same
property. Because of these transactions, the vendees were able to have certificates of titles issued
in their respective names.

A third sale was made in favor of Spouses Ardaniel and Natividad Villanera. The CA
ruled, however, that they had not been validly served any summons. Consequently, the trial court
did not acquire jurisdiction over their persons; hence, its Decision would not affect their rights.

Second, the CA held that the vendees were not purchasers for value in good faith. It
found that Spouses Danilo and Alberta Domingo had entered into the Contract of Sale involving
conjugal property without actually seeing any Special Power of Attorney (SPA) authorizing
Lolita Reed to convey the property for and on behalf of the conjugal partnership. Also, the fact

50
that the Deed of Sale executed by them did not even mention any SPA showing that Respondent
Guillermo Reed had consented to the sale of the conjugal property rendered the transaction
questionable.

As for Eduardo Quiteves, he was faulted by the CA for not having inquired into and
investigated the authenticity and validity of the SPA shown to him by Lolita, evidencing her
husbands alleged consent to the sale of their conjugal property. The appellate court opined that
Quiteves should have been put on guard, since the acknowledgment portion of the document
stated that only Lolita had appeared before the lawyer who had notarized it. Also, considering
that it had been issued two years before the property was offered to Quiteves, he should have
taken steps to verify the validity of the document and to find out the whereabouts of Guillermo,
who had allegedly executed it.

Finally, the CA found that the SPA, from which Lolita had derived her authority to sell
the property, was a forgery. The appellate court gave credence to the consistent denial of
Guillermo that he had signed the document. It did not accept the Minutes[6] of the barangay
meeting, containing his alleged admission that he had signed the SPA. Furthermore, the CA gave
weight to the Certification[7] issued by the Office of the Clerk of Court of the Regional Trial
Court (RTC) of Pasig that the alleged SPA notarized by Atty. Macario Cruz was not the same
document submitted to that office.

Consequently, the CA declared the Deeds of Sale executed by Lolita in favor of Spouses
Danilo and Alberta Domingo and Eduardo Quiteves null and void. It also ordered the
cancellation of the Transfer Certificates of Titles (TCTs) issued in their favor; and the
reinstatement of TCT No. 58195 in the name of Lolita Reed, married to Guillermo Reed, insofar
as it covered the portions of the property sold to petitioners.

Hence, this Petition.[8]

The Issues

Petitioners submit the following issues for this Courts resolution:

I. Whether the case for reconveyance filed by respondent against

petitioners sans the trial courts acquisition of jurisdiction over the person
of Lolita Reed, an indispensable party, can prosper.

II. Whether entrenched jurisprudence assigns the onus probandi, or burden of

proof, showing forgery to the respondent after having asserted the same in
his complaint.

51
 III. Whether the case of Voluntad vs. Dizon, 313 SCRA 210-211 (26 August
1999), utilized as basis to find petitioners not purchasers in good faith can
apply to the case at bench.

IV. Whether the case of Veloso vs. Court of Appeals, 260 SCRA 594-595 (21
August 1996) is apt to the case at bench.

V. Whether the established doctrine, i.e., trial courts are in a better position to
determine questions involving credibility having heard the witnesses and
having observed their deportment and manner of testifying during the trial,
was applied by the Court of Appeals to the case.

VI. Whether the finding, assuming without admitting, that respondents signature
was falsified the right of petitioners, without any evidence as co-
conspirators of Lolita Reed in the forgery and as purchasers in good faith
over the subject properties, can be adversely affected.[9]

For her part, petitioner-intervenor submits the following:

I. Whether the conveyance of subject property in favor of Petitioners Danilo and

Alberta Domingo and Eduardo Quiteves is valid considering that the same
was executed by Petitioner-intervenor Lolita Reed and the proceeds
arising therefrom were utilized to purchase things necessary for the
support of family including education of petitioner-intervenors and
Guillermo Reeds common children pursuant to Article 161 of the Civil
Code in relation to Article 115 of the same Code.

II. Whether Guillermo Reed can recover the one-half (1/2) share of the conjugal
partnership despite that he had already donated the same to his and Lolita
Reeds common children pursuant to Article 162 of the Civil Code.[10]

The long-winded issues presented by petitioners and petitioner-intervenor can be reduced

to one procedural and three main questions. The three main issues to be resolved are as follows:
1) whether the Special Power of Attorney is authentic; 2) whether Lolita Reeds justification for
selling the subject property is tenable; and 3) whether petitioners are buyers in good faith. As to
the procedural matter, this Court will resolve whether jurisdiction over the person of Lolita has
been acquired.

52
 This Courts Ruling

The Petition and the Petition-in-Intervention have no merit.

Procedural Issue:
Jurisdiction over the Person

On the procedural question, petitioners contend that, for this case to stand, the RTC
should have first acquired jurisdiction over the person of Lolita Reed -- an allegedly
indispensable party. Petitioners argue that, since she had not been served any summons, the trial
court never acquired jurisdiction over her; consequently, there can be no final determination of
this controversy. Thus, they contend, the case should have never proceeded in the first place.

This Court need not engage itself in a discussion of whether Lolita is an indispensable
party. Although the RTC may not have acquired jurisdiction over her because she had not been
served any summons, she has already voluntarily appeared before this Court when she filed a
Petition-in-Intervention.[11] Thus, jurisdiction over her has been acquired, and she is bound by
any decision emanating from this Court.
The Rules of Court provide that the defendants voluntary appearance in the action shall
be equivalent to service of summons.[12] In fact, Lolita never questioned the Supreme Courts
alleged lack of jurisdiction over her. That she recognizes and accepts it is shown by her
voluntary appearance before this Court and her decision to participate in this appeal. Her actions
render the alleged lack of jurisdiction moot and binds her to the outcome of this case. There
should be no more obstacle to the progress of this case.

We do not see any need to remand this case to the trial court to allow it to receive
evidence on the factual allegations of Lolita. As it stands now, this Court is in a position to rule
on the merits of this case. Primarily, Lolita vouches for the authenticity of the Special Power of
Attorney that she showed to petitioners when the Deeds of Sale were executed. Significantly, she
relies on the same documents already presented by the other parties during the trial. Based on the
arguments proffered and the evidence on record, this Court can now render a determination of
the SPAs authenticity, which is one of the main issues to be resolved here, as earlier adverted to.

First Main Issue:

Authenticity of the
Special Power of Attorney

53
 Prior to determining whether petitioners are buyers in good faith, the essential question to
be answered is whether the Special Power of Attorney relied upon by the parties was indeed
authentic. Petitioners maintained before the courts below that it had not been proven to be a
forgery, so it was presumably authentic. The CA, however, held otherwise. We agree.

Most telling is the admission of Lolita that she merely sent an already typewritten SPA to
her husband, who was then working in the Middle East.[13] She further admits that when it was
brought back by her brother-in-law, it had already been signed by Guillermo.[14] Thus, it is clear
that she never saw him sign it. Furthermore, she does not have any actual knowledge of whether
he even saw the typewritten document, much less signed it.

It then becomes dubious whether the witnesses affixed their signatures to the SPA to
attest that it had been signed in their presence by the principal and the attorney-in-fact. How
could they have attested to the signing, when the principal denied it, while the attorney-in-fact
admitted having merely sent it to the Middle East for the principals signature?

This fact further explains why Notary Public Macario Cruz, in the acknowledgment
portion of the document, stated that only Lolita Reed had appeared before him. But Atty. Cruz
should have known better. Obviously, since an SPA was being notarized, there should have been
two parties to that document -- the principal and the agent who was being constituted as attorney-
in-fact.

A document should not be notarized unless the persons who are executing it are the very
same ones who are personally appearing before the notary public. The affiants should be present
to attest to the truth of the contents of the document[15] and to enable the notary to verify the
genuineness of their signature.[16]Notaries public are enjoined from notarizing a fictitious or
spurious document. In fact, it is their duty to demand that the document presented to them for
notarization be signed in their presence.[17] Their function is, among others, to guard against
illegal deeds.

Notarization is not an empty, meaningless and routinary act.[18] It converts a private

document into a public instrument, making it admissible in evidence without the necessity of
preliminary proof of its authenticity and due execution.[19]

In not giving credence to the SPA, the Court agrees with the CA, which held thus:

[T]he same [special power of attorney] was not reported by Atty. Macario
Cruz as having been notarized by him. Thus, in a letter dated April 1,
1993addressed to Luz Reed, Grace S. Belvis, Clerk of Court, Regional Trial
Court, Pasig stated that it was not the special power of attorney dated July 8,
1986 and recorded as Doc. 326, Page No. 66, Book No. XV, Series of 1986 in the
notarial report of Atty. Macario Cruz which was submitted by the latter to the
court. x x x.[20]

54
 Guillermo Reed has consistently denied having signed the document. Moreover, together
with his witness,[21] he has denied other documents allegedly showing that he admitted having
signed it. Thus, we do not find any cogent reason to disturb the CAs findings, as follows:

The alleged admission of Guillermo Reed before the Barangay Chairman

that he signed the special power of attorney, as shown in the minutes of the
meeting prepared by Barangay Secretary, does not appear to be credible.
Guillermo Reed has consistently denied having signed the special power of
attorney. In fact, he was not confronted during his cross-examination, of said
minutes of the meeting in the barangay, where he met Eduardo Quiteves and
Alberta Domingo for the first time, despite his insistence that the subject property
still belongs to him. Moreover, on rebuttal, Dominador Reed, whose signature
appears in the minutes of the meeting, testified that he affixed his signature on a
small piece of paper to show that he attended the meeting and there were no
entries therein regarding the alleged admission of Guillermo Reed that he signed
the special power of attorney; and that Guillermo Reed stated in said meeting that
his property is not for sale. x x x.[22]

Petitioners insist that an expert witness, such as one from the National Bureau of
Investigation (NBI), should have been presented to show that respondents signature was forged.
But even without expert testimony, the questionable circumstances surrounding the execution of
the SPA already casts serious doubt on its genuineness. As shown earlier, there is a plethora of
factual details that point to its falsity.

Additionally, the CA noted the date July 8, 1986, on the SPA authorizing Lolita to sell
the property covered by TCT No. 58195, issued by the Registry of Deeds of Rizal, District II,
Metro Manila. As of that date, however, TCT No. 58195 was not yet in existence, because it was
issued only on the following day, July 9, 1986.[23]

All the foregoing circumstances successfully challenge the integrity, genuineness, and
veracity of the questioned document. Petitioners, therefore, cannot take refuge in the
presumption of regularity of public documents, a presumption that has been clearly rebutted in
this case.

Second Main Issue:

Justification for the Sale
of the Conjugal Property

Lolita Reed argues that, even on the assumption that the SPA was indeed a forgery, she
was still justified in effecting a sale without her husbands consent. We are not persuaded. In
addition to the fact that her rights over the property were merely inchoate prior to the liquidation

55
of the conjugal partnership,[24] there was absolutely no proof to her allegations that she used the
proceeds of the sale to purchase necessities for the maintenance and support of the
family.[25]Having failed to establish any of these circumstances, she may not unilaterally bind the
conjugal assets.

Additionally, the Civil Code provisions she cited pertain to what the conjugal partnership
is liable for. They do not specifically refer to whether the actual transactions entered into by
either spouse can validly bind the conjugal partnership. The issues addressed by this Court in this
case involve the essential formalities determining the validity of contracts entered into by either
the husband or the wife for and on behalf of the partnership.

As to the assertions of Lolita regarding an alleged donation by respondent in favor of

their children, this matter is irrelevant to the disputed sales. We need not belabor the point.
Besides, it would mean that she should have sold the subject property not only in her name, but
for and on behalf of her children as co-owners of the property. To accept her contention is to
open a whole gamut of issues that are not the subject of this appeal.
Third Main Issue:
Buyers in Good Faith

The final question to be resolved is whether petitioners were buyers in good faith. An
innocent purchaser for value is one who buys the property of another without notice that some
other person has a right to or interest in that same property, and who pays a full and fair price at
the time of the purchase or before receiving any notice of another persons claim.[26]

The honesty of intention that constitutes good faith implies freedom from knowledge of
circumstances that ought to put a prudent person on inquiry. Good faith consists in the belief of
the possessors that the persons from whom they received the thing are its rightful owners who
could convey their title.[27]Good faith, while always presumed in the absence of proof to the
contrary, requires this well-founded belief.

When dealing with land that is registered and titled, as in this case, buyers are not
required by the law to inquire further than what the Torrens certificate of title indicates on its
face.[28] It is also settled, however, that purchasers cannot close their eyes to known facts that
should put a reasonable person on guard. They cannot subsequently claim to have acted in good
faith in the belief that there was no defect in the vendors certificate of title. [29] Their mere refusal
to face up to that possibility will not make them innocent purchasers for value, if it later becomes
clear that the title was indeed defective, and that they would have discovered the fact, had they
acted with the measure of precaution required of a prudent person in a like situation.[30]

Thus, the presence of anything that excites or arouses suspicion should then prompt the
vendee to look beyond the vendors certificate and investigate the title appearing on the face of
that certificate.[31] A vendee who does not do so cannot be denominated either as an innocent
purchaser for value or as a purchaser in good faith and, hence, does not merit the protection of
the law.

56
 The circumstances surrounding this case debunk the presumption of good faith on the
part of petitioners. To begin with, it was clear to them that, at the time of the sales, Lolita was
married to Respondent Guillermo Reed; and that the property in question was part of their
conjugal partnership. As to Spouses Domingo, the CA found thus:

Alberta Domingo admitted that the subject property belongs to the

conjugal partnership of spouses Guillermo and Lolita Reed; that the Reed spouses
were no longer living together as husband and wife when the property was sold to
her and her husband by Lolita Reed; and that Guillermo Reed was in Saudi
Arabia. x x x.[32]

The Deed of Sale[33] executed between the Domingo spouses and Lolita Reed clearly
stated that what was being sold was her share in the conjugal property. Despite their knowledge
of this fact, the couple did not inquire about her authority to sell any portion of the property.
According to Alberta Domingo, Lolita told her that the latter had been authorized by Guillermo
to sell the property. When they executed the Deed of Sale, however, Lolita allegedly showed no
special power of attorney. Alberta merely relied on the formers
verbal claim of having been authorized to sell the property, and that the sale would bind the
conjugal partnership.

Neither was there any mention in the Deed of Sale that Lolita had the authority to sell the
property, and that respondent had consented to the sale. In short, there was no mention of the
SPA that she allegedly possessed. Interestingly, the statement in the Deed that the subject of the
sale corresponded to her share in the conjugal assets is not equivalent to her claim that she was
authorized by her husband to sell them.

Lolitas authority to sell the subject property and to bind respondent was not questioned
by Petitioner Quiteves, although he claimed to be close to respondent, who was a classmates
father. The findings of the CA clearly demonstrate that factual circumstances present in this case
should have made Quiteves inquire about Lolitas authority to sell the property. The CA negated
the claim of good faith, as follows:

x x x. [H]e [Quiteves] should have noticed in the acknowledgement

portion of the special power of attorney the statement that only Lolita Reed
appeared before Atty. Cruz, who notarized the special power of attorney.
Considering that the special power of attorney is dated July 8, 1986 and it was
only two years later that the subject property was offered to him by Lolita Reed,
Eduardo should have taken steps to verify the whereabouts of Guillermo Reed and
inquire as to whether the special power of attorney was still valid. Had Eduardo
made the necessary verification from the daughter of Guillermo Reed, he could
have been informed that Guillermo Reed was estranged from Lolita Reed, that
Guillermo Reed returned home in 1986 and where the latter was staying. Eduardo
could [have then] contacted Guillermo Reed and inquired from the latter about the
authenticity of the special power of attorney. Likewise, the admission of Atty.
Cruz in the acknowledgement portion of the special power of attorney that only

57
 Lolita Reed appeared before him should have put Eduardo on guard and he should
have consulted a lawyer other than the one who notarized the special power of
attorney as to the validity thereof. x x x.[34]

Indeed, Quiteves should not have closed his eyes to these facts that should have made
him even more vigilant, as any other reasonable person would have been.

Petitioners complain that the CA imposed on them a task too tedious, such as to pry on
whether respondent was estranged from Lolita Reed.[35] They miss the whole point. What was
required of them by the appellate court, which we affirm, was merely to investigate -- as any
prudent vendee should -- the authority of Lolita to sell the property and to bind the partnership.
They had knowledge of facts that should have led them to inquire and to investigate, in order to
acquaint themselves with possible defects in her title. The law requires them to act with the
diligence of a prudent person; in this case, their only prudent course of action was to investigate
whether respondent had indeed given his consent to the sale and authorized his wife to sell the
property.

Petitioners finally argue that, on the assumption that the Special Power of Attorney was
forged, there was still no proof that the forgery had resulted from a conspiracy between them and
Lolita. Thus, they conclude that the titles issued in their favor cannot be revoked. We disagree.
Petitioners argument would stand if only they have been found to be innocent purchasers for
value.

WHEREFORE, the Petition and the Petition-in-Intervention are hereby DENIED. Costs
against petitioners.

SO ORDERED.

ARTEMIO V. PANGANIBAN
Associate Justice
Chairman, Third Division

W E C O N C U R:

ANGELINA SANDOVAL-GUTIERREZ RENATO C. CORONA

Associate Justice Associate Justice

(No part)

58
 CONCHITA CARPIO MORALES CANCIO C. GARCIA
Associate Justice Associate Justice

ATTESTATION

I attest that the conclusions in the above Decision were reached in consultation before the case
was assigned to the writer of the opinion of the Courts Division.

ARTEMIO V. PANGANIBAN
Associate Justice
Chairman, Third Division

CERTIFICATION

Pursuant to Section 13, Article VIII of the Constitution, and the Division Chairmans Attestation,
I certify that the conclusions in the above Decision were reached in consultation before the case
was assigned to the writer of the opinion of the Courts Division.

HILARIO G. DAVIDE, JR.

Chief Justice

[1]
Rollo, pp. 9-41.
[2]
Id., pp. 43-57. Penned by Justice Marina L. Buzon, with the concurrence of Justices Cancio C.
Garcia (Division chair and now a member of this Court) and Eliezer R. de
los Santos (member).
[3]
Id., pp. 64-66.
[4]
CA Decision, p. 14; rollo, p. 56.
[5]
Id., pp. 2-5 & 44-47. Citations omitted. Penned by Judge Santiago G. Estrella.
[6]
Exhibit 2; records, p. 256.
[7]
Exhibit E; id., p. 164.
[8]
The case was deemed submitted for decision on June 10, 2004, upon this Courts receipt of
petitioner-intervenors Memorandum, signed by Intervenor Lolita Reed herself.
Petitioners Memorandum, signed by Atty. Preston F. Villasis, was received by this Court
on December 11, 2003. Earlier, respondents Memorandum, signed by Atty. Alexander L.
Bansil, was received on October 24, 2003.

59
[9]
Petition, pp. 11-12; rollo, pp. 19-20. Original in uppercase.
[10]
Petition-in-Intervention, pp. 5-6; id, pp. 235-236. Original in uppercase.
[11]
Rollo, pp. 231-243.
[12]
Rule 14, 20, Rules of Court.
[13]
Petitioner-Intervenors Memorandum, p. 8; rollo, p. 307.
[14]
Ibid.
[15]
Gonzales v. Ramos, A.C. No. 6649, June 21, 2005.
[16]
Ibid.
[17]
Traya Jr. v. Villamor, 422 SCRA 293, February 6, 2004.
[18]
De la Cruz v. Zabala, 442 SCRA 407, November 17, 2004.
[19]
Sicat v. Ariola, A.C. No. 5864, April 15, 2005; Bon v. Ziga, 429 SCRA 177, May 27,
2004; Tabas v. Mangibin, 421 SCRA 511, February 3, 2004.
[20]
CA Decision, p. 11; rollo, p. 53.
[21]
TSN dated September 4, 1997, pp. 13 & 22.
[22]
CA Decision, pp. 10-11; rollo, pp. 52-53.
[23]
Exhibit A; records, p. 156.
[24]
Abalos v. Macatangay Jr., 439 SCRA 649, September 30, 2004.
[25]
Wong v. Intermediate Appellate Court, 200 SCRA 792, August 19, 1991.
[26]
Vera Cruz v. Calderon, 434 SCRA 534, July 14, 2004; De la Cruz v. De la Cruz, 419 SCRA
648, January 15, 2004; Tanongon v. Samson, 431 Phil. 729, May 9, 2002.
[27]
Duran v. Intermediate Appellate Court, 138 SCRA 489, September 10, 1985.
[28]
Voluntad v. Spouses Dizon, 372 Phil. 82, August 26, 1999; State Investment House, Inc. v.
CA, 324 Phil. 642, March 5, 1996.
[29]
Occea v. Esponilla, 431 SCRA 116, June 4, 2004; Aguirre v. CA, 421 SCRA 310, January 29,
2004; Spouses Uy v. CA, 411 Phil. 788, June 21, 2001.
[30]
Spouses Uy v. CA, supra.
[31]
Sandoval v. CA, 329 Phil. 48, August 1, 1996.
[32]
CA Decision, p. 7; rollo, p. 49.
[33]
Exhibit 6; records, p. 261.
[34]
CA Decision, pp. 9-10; rollo, pp. 51-52.
[35]
Petitioners Memorandum, p. 29; rollo, p. 211.

60
 THIRD DIVISION

BANK OF COMMERCE, G.R. No. 167848

Petitioner,
Present:

YNARES-SANTIAGO, J.,
Chairperson,
AUSTRIA-MARTINEZ,
CALLEJO, SR.,
CHICO-NAZARIO, and
- versus -
NACHURA, JJ.

Promulgated:

SPS. PRUDENCIO SAN PABLO, JR.,

and NATIVIDAD O. SAN PABLO, April 27, 2007
Respondents.
x- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -x

DECISION

CHICO-NAZARIO, J.:

61
Before this Court is a Petition for Review on Certiorari under Rule 45 of the Revised Rules of
Court, filed by petitioner Bank of Commerce seeking to reverse and set aside the Decision [1] of
the Court of Appeals dated 10 September 2004, and its Resolution[2] dated 10 March 2005. The
Court of Appeals, in its assailed Decision and Resolution reversed the Decision[3] of the Regional
Trial Court (RTC) of Mandaue City, Branch 56 dated 25 June 2002, which affirmed the
Decision,[4] of the Municipal Trial Court (MTC) of Mandaue City, Branch 2, dismissing for lack
of merit the complaint against Melencio Santos (Santos) and the Bank of Commerce filed by the
respondent Spouses Prudencio(Prudencio) and Natividad (Natividad) San Pablo for the
declaration of nullity of the Special Power of Attorney (SPA) and cancellation of Real Estate
Mortgage. The dispositiveportion of the Court of Appeals Decision reads:

WHEREFORE, the Petition for review is GRANTED and the assailed Decision and
Order of the Regional Trial Court, Branch 56, Mandaue City, Cebu, in Civil Case
4135-A must be as they are hereby, SET ASIDE. We therefore declare the so-
called Special Power of Attorney, the Deed of Real Estate Mortgage and the
Foreclosure proceedings to be NULL and VOID ab initio. And, in the meantime,
if the subject Lot No. 1882-C-1-A covered by Transfer Certificate of Title No.
(26469)-7561 has been sold and a new transfer certificate of title had been issued,
let the Registry of deeds of Mandaue City cancel the new title and issue a new one
in favor of Natividad O. San Pablo, unless the new title holder is a purchaser in
good faith and for value. In the latter case, respondent Bank of Commerce and
respondent Melencio G. Santos are hereby held jointly and severally liable to
petitioners for the fair market value of the property as of the date of finality of this
decision. Moreover, private respondents are likewise held jointly and severally
liable to petitioners P50,000.00 as moral damages, P25,000.00 as exemplary
damages, P25,000.00 plus P1,000.00 per count appearance as attorneys fees
and P10,000.00 as litigation expenses. No costs.
The antecedent factual and procedural facts of this case are as follows:

On 20 December 1994, Santos obtained a loan from Direct Funders Management and
Consultancy Inc., (Direct Funders) in the amount of P1,064,000.40.[5]

As a security for the loan obligation, Natividad executed a SPA[6] in favor of Santos,
authorizing the latter to mortgage to Direct Funders a paraphernal real property registered under
her name and covered by Transfer Certificate of Title (TCT) No. (26469)-7561[7] (subject
property).
In the Deed of Real Estate Mortgage[8] executed in favor of Direct Funders, Natividad and her
husband, Prudencio, signed as the co-mortgagors of Santos. It was, however, clear between the
parties that the loan obligation was for the sole benefit of Santos and the spouses San
Pablo merely signed the deed in order to accommodate the former.

62
 The aforesaid accommodation transaction was made possible
because Prudencio and Santos were close friends and business associates. Indeed, Prudencio was
an incorporator and a member of the Board of Directors of Intergems Fashion Jewelries
Corporation (Intergems), a domestic corporation in which Santos acted as the President.

Sometime in June 1995, the spouses San Pablo received a letter from Direct Funders informing
them that Santos failed to pay his loan obligation with the latter. When confronted with the
matter, Santos promised to promptly settle his obligation with Direct Funders, which he actually
did the following month.

Upon learning that Santos debt with Direct Funders had been fully settled, the spouses
San Pablo then demanded from Santos to turn over to them the TCT of the subject property but
the latter failed to do so despite repeated demands. Such refusal prompted the spouses San
Pablo to inquire as to the status of the TCT of the subject property with the Register of Deeds
of Mandaue City and to their surprise, they discovered that the property was again used
by Santos as collateral for another loan obligation he secured from the Bank of Commerce.

As shown in the annotation stamped at the back of the title, the spouses San
Pablo purportedly authorized Santos to mortgage the subject property to the Bank of Commerce,
as evidenced by the SPA allegedly signed by Natividad on 29 March 1995. It was further shown
from the annotation at the back of the title that the spouses San Pablosigned a Deed of Real
Estate Mortgage over the subject property in favor of Bank of Commerce, which they never
did.[9]
In order to free the subject property from unauthorized encumbrances, the spouses San Pablo,
on 22 December 1995, filed a Complaint seeking for the Quieting of Title and Nullification of
the SPA and the deed of real estate mortgage with the prayer for damages against Santos and the
Bank of Commerce before the MTC of Mandaue City, Branch 2.
In their complaint, the spouses San Pablo claimed that their signatures on the SPA and
the Deed of Real Estate Mortgage allegedly executed to secure a loan with the Bank of
Commerce were forged. They claimed that while the loan with the Direct Funders was obtained
with their consent and direct participation, they never authorized the subsequent loan obligation
with the Bank of Commerce.

During the pendency of the case, the Bank of Commerce, for non-payment of the loan, initiated
the foreclosure proceedings on the strength of the contested Deed of Real Estate
Mortgage. During the auction sale, the Bank of Commerce emerged as the highest bidder and

63
thus a Certificate of Sale was issued under its name. Accordingly, the spouses San
Pablo amended their complaint to include the prayer for annulment of the foreclosure sale.[10]

In his Answer,[11] Santos countered that the loan with the Bank of Commerce was deliberately
resorted to with the consent, knowledge and direct participation of the spousesSan Pablo in order
to pay off the obligation with Direct Funders. In fact, it was Prudencio who caused the
preparation of the SPA and together with Santos, they went to the Bank of Commerce, Cebu City
Branch to apply for the loan. In addition, Santos averred that the spouses San Pablo were
receiving consideration from Intergems for extending accommodation transactions in favor of
the latter.

For its part, Bank of Commerce filed an Answer with Compulsory Counterclaim, [12] alleging that
the spouses San Pablo, represented by their attorney-in-fact, Santos, together with Intergems,
obtained a loan in the amount of P1,218,000.00. It denied the allegation advanced by the
spouses San Pablo that the SPA and the Deed of Real Estate Mortgage were spurious. Since the
loan already became due and demandable, the Bank of Commerce sought the foreclosure of the
subject property.

After the Pre-Trial Conference, trial on the merits ensued.

During the trial, Anastacio Barbarona, Jr., the Manager of the Bank of
Commerce, Cebu City Branch, testified that the spouses San Pablo personally signed the Deed of
Real Estate Mortgage in his presence.[13] The testimony of a document examiner and a
handwriting expert, however, belied this claim. The expert witness, after carefully examining the
loan documents with the Bank of Commerce, attested that the signatures of the spouses San
Pablo on the SPA and the Deed of Real Estate Mortgage were forged.[14]
On 10 July 2001, the MTC rendered a Decision,[15] dismissing the complaint for lack of
merit. The MTC declared that while it was proven that the signatures of the spouses San
Pablo on the loan documents were forged, the Bank of Commerce was nevertheless in good
faith. The dispositive portion of the decision reads:
WHEREFORE, foregoing considered, the instant complaint is hereby
ordered DISMISSED for lack of merit. The dismissal of this case is without
prejudice to the filing of the appropriate criminal action against those responsible
for the falsification of the questioned special power of attorney and deed of real
estate mortgage.

Aggrieved, the spouses San Pablo appealed the adverse decision to the RTC
of Mandaue City, Branch 56, which, in turn, affirmed the unfavorable ruling of the MTC in its
Decision[16] promulgated on 25 June 2002. The decretal part of the said decision reads:

64
 WHEREFORE, in view of the foregoing, the Court hereby resolves to
affirm the assailed Decision.

Similarly ill-fated was the Motion for Reconsideration filed by the spouses San
Pablo which was denied by the RTC for lack of merit.[17]

Unyielding, the spouses San Pablo elevated the matter before the Court of Appeals
through a Petition for Review under Rule 42 of the Revised Rules of Court,[18]assailing the
adverse decisions of the MTC and RTC.

In a Decision[19] dated 10 September 2004, the appellate court granted the petition filed
by the spouses San Pablo and reversed the decisions of the MTC and RTC. In setting aside the
rulings of the lower courts, the Court of Appeals ruled that since it was duly proven that the
signatures of the spouses San Pablo on the loan documents were forged, then such spurious
documents could never become a valid source of title. The mortgage contract executed
by Santos over the subject property in favor of Bank of Commerce, without the authority of the
spouses San Pablo, was therefore unenforceable, unless ratified.

The Bank of Commerce is now before this Court assailing the adverse decision rendered
by the Court of Appeals.[20] For the resolution of this Court are the following issues:

I.
WHETHER OR NOT THE MTC HAS JURISDICTION TO
HEAR THE CASE FILED BY THE SPOUSES SAN PABLO.

II.

WHETHER OR NOT THE FORGED SPA AND SPECIAL

POWER OF ATTORNEY COULD BECOME A VALID
SOURCE OF A RIGHT TO FORECLOSE A PROPERTY.

III.

65
 WHETHER OR NOT THE AWARDS OF DAMAGES,
ATTRONEYS FEES AND LITIGATION EXPENSES ARE
PROPER IN THE INSTANT CASE.

In questioning the adverse ruling of the appellate court, the Bank of Commerce, for
the first time in more than 10 years of pendency of the instant case, raises the issue of
jurisdiction. It asseverates that since the subject matter of the case is incapable of pecuniary
estimation, the complaint for quieting of title and annulment of the SPA, the Deed of Real
Estate Mortgage, and foreclosure proceedings should have been originally filed with the RTC
and not with the MTC. The decision rendered by the MTC, which did not acquire jurisdiction
over the subject matter of the case, is therefore void from the very beginning. Necessarily, the
Court of Appeals erred in giving due course to the petition when the tribunal originally trying
the case had no authority to try the issue.

We do not agree.

Upon cursory reading of the records, we gathered that the case filed by the spouses
San Pablo before the MTC was an action for quieting of title, and nullification of the SPA,
Deed of Real Estate Mortgage, and foreclosure proceedings. While the body of the complaint
consists mainly of allegations of forgery, however, the primary object of the spouses San
Pablo in filing the same was to effectively free the title from any unauthorized lien imposed
upon it.

Clearly, the crux of the controversy before the MTC chiefly hinges on the question of
who has the better title over the subject property. Is it the spouses San Pablo who claim that
their signatures on the loan document were forged? Or is it the Bank of Commerce which
maintains that the SPA and the Deed of Real Estate Mortgage were duly executed and,
therefore, a valid source of its right to foreclose the subject property for non-payment of loan?

An action for quieting of title is a common law remedy for the removal of any cloud
upon or doubt or uncertainty with respect to title to real property. As clarified by this Court
in Baricuatro, Jr. v. Court of Appeals[21]:

x x x Originating in equity jurisprudence, its purpose is to secure an adjudication

that a claim of title to or an interest in property, adverse to that of the
complainant, is invalid, so that the complainant and those claiming under him
may be forever afterward free from any danger or hostile claim. In an action for
quieting of title, the competent court is tasked to determine the respective
rights of the complainant and other claimants, not only to place things in their
proper place, to make the one who has no rights to said immovable respect and

66
 not disturb the other, but also for the benefit of both, so that he who has the right
would see every cloud of doubt over the property dissipated, and he could
afterwards without fear introduce the improvements he may desire, to use, and
even to abuse the property as he deems best (citation omitted). Such remedy may
be availed of under the circumstances enumerated in the Civil Code:

ART. 476. Whenever there is a cloud on title to real

property or any interest therein, by reason of any instrument,
record, claim, encumbrance or proceedingwhich is apparently
valid or effective but is in truth and in fact invalid,
ineffective, voidable, or unenforceable, and may be prejudicial to
said title, an action may be brought to remove such cloud or to
quiet the title,

An action may also be brought to prevent a cloud from

being cast upon title to real property or any interest therein.

The mortgage of the subject property to the Bank of Commerce, annotated on the
Spouses San Pablos TCT, constitutes a cloud on their title to the subject property, which may,
at first, appear valid and effective, but is allegedly invalid or voidable for having been made
without their knowledge and authority as registered owners. We thus have established that the
case filed by the spouses San Pablo before the MTC is actually an action for quieting of title,
a real action, the jurisdiction over which is determined by the assessed value of the
property.[22] The assessed value of the subject property located in Mandaue City, as alleged in
the complaint, is P4,900.00, which aptly falls within the jurisdiction of the MTC.

According to Section 33 of Batas Pambansa Blg. 129, as amended, otherwise known as The
Judiciary Reorganization Act of 1980:

Sec. 33. Jurisdiction of Metropolitan Trial Courts, Municipal Trial Courts

and Municipal Circuit Trial Courts in Civil Cases. Metropolitan Trial Courts,
Municipal Trial Courts, and Municipal Circuit Trial Courts shall exercise:

xxxx

(3) Exclusive original jurisdiction in all civil actions which involve title
to, or possession of, real property, or any interest therein where the assessed
value of the property or interest therein does not exceed twenty thousand
pesos (P20,000.00) or, in civil actions in Metro Manila, where such assessed
value does not exceed Fifty thousand pesos (P50,000.0) exclusive of interest,
damages of whatever kind, attorneys fees litigation expenses and costs: Provided,

67
 That in cases of land not declared for taxation purposes, the value of such
property shall be determined by the assessed value of the adjacent lots. (As
amended, R.A. No. 7691.)

Even granting for the sake of argument that the MTC did not have jurisdiction over the case, the
Bank of Commerce is nevertheless estopped from repudiating the authority of the court to try
and decide the case after having actively participated in the proceedings before it and invoking
its jurisdiction by seeking an affirmative relief therefrom.

As we have explained quite frequently, a party may be barred from raising questions of
jurisdiction when estoppel by laches has set in. Estoppel by laches is failure or neglect for
unreasonable and unexplained length of time to do what, by exercising due diligence, ought to
have been done earlier, warranting the presumption that the party entitled to assert it has either
abandoned it or has acquiesced to the correctness or fairness of its resolution. This doctrine is
based on grounds of public policy which, for the peace of the society, requires the
discouragement of stale claims, and, unlike the statute of limitations, is not a mere question of
time but is principally an issue of inequity or unfairness in permitting a right or claim to be
enforced or espoused.[23]

In Soliven v. Fastforms Philippines, Inc., we thus ruled:

While it is true that jurisdiction may be raised at any time, this rule
presupposes that estoppel has not supervened. In the instant case, respondent
actively participated in all stages of the proceedings before the trial court and
invoked its authority by asking for an affirmative relief. Clearly, respondent
is estopped from challenging the trial courts jurisdiction, especially when the
adverse judgment is rendered.[24]

Participation in all stages before the trial court, that included invoking its authority in asking for
affirmative relief, effectively bars the party by estoppel from challenging the courts
jurisdiction.[25] The Court frowns upon the undesirable practice of a party participating in the
proceedings and submitting his case for decision and then accepting the judgment, only if
favorable, and attacking it for lack of jurisdiction when adverse.[26]

We now proceed to resolve the issue of whether a forged SPA or Deed of Real Estate Mortgage
could be a source of a valid title. Settled is the fact, as found by the MTC and as affirmed by
both the RTC and the Court of Appeals, that the SPA and the Deed of Real Estate Mortgage had
been forged. Such fact is no longer disputed by the parties. Thus, the only issue remaining to be

68
threshed out in the instant petition is whether the Bank of Commerce is a mortgagee in good
faith. The MTC and the RTC held that the Bank of Commerce acted in good faith in entering
into the loan transaction with Santos, while the Court of Appeals, on the other
hand, ruled otherwise.

The Bank of Commerce posits that it is a mortgagee in good faith and therefore entitled
to protection under the law. It strenuously asserts that it is an innocent party who had no
knowledge that the right of Santos to mortgage the subject property was merely simulated.

In Cavite Development Bank v. Spouses Lim, [27] the Court explained the doctrine of mortgagee
in good faith, thus:

There is, however, a situation where, despite the fact that the mortgagor is
not the owner of the mortgaged property, his title being fraudulent, the mortgage
contract and any foreclosure sale arising there from are given effect by reason of
public policy. This is the doctrine of the mortgagee in good faith based on the rule
that all persons dealing with property covered by the Torrens Certificates of Title,
as buyers or mortgagees, are not required to go beyond what appears on the face
of the title. The public interest in upholding the indefeasibility of a certificate of
title, as evidence of lawful ownership of the land or of any encumbrance thereon,
protects a buyer or mortgagee who, in good faith, relied upon what appears on the
face of the certificate of title.

Indeed, a mortgagee has a right to rely in good faith on the certificate of title of the
mortgagor of the property given as security, and in the absence of any sign that might
arouse suspicion, the mortgagee has no obligation to undertake further investigation. This
doctrine pre-supposes, however, that the mortgagor, who is not the rightful owner of the
property, has already succeeded in obtaining Torrens title over the property in his name and that,
after obtaining the said title, he succeeds in mortgaging the property to another who relies on
what appears on the title. This is not the situation in the case at bar since Santos was not the
registered owner for he merely represented himself to be the attorney-in-fact of the spouses San
Pablo.

In cases where the mortgagee does not directly deal with the registered owner of real
property, the law requires that a higher degree of prudence be exercised by the mortgagee. As we
have enunciated in the case of Abad v. Guimba:[28]

x x x While one who buys from the registered owner does not need to look behind
the certificate of title, one who buys from one who is not a registered owner is
expected to examine not only the certificate of title but all the factual
circumstances necessary for [one] to determine if there are any flaws in the title of
the transferor, or in [the] capacity to transfer the land. Although the instant case
does not involve a sale but only a mortgage, the same rule applies inasmuch as the
law itself includes a mortgagee in the term purchaser.
69
 This principle is applied more strenuously when the mortgagee is a bank or a banking
institution. In the case of Cruz v. Bancom Finance Corporation, We ruled:

Respondent, however, is not an ordinary mortgagee; it is a mortgagee-

bank. As such, unlike private individuals, it is expected to exercise greater care
and prudence in its dealings, including those involving registered lands. A
banking institution is expected to exercise due diligence before entering into a
mortgage contract. The ascertainment of the status or condition of a property
offered to it as security for a loan must be a standard and indispensable part of its
operations.[29]

We never fail to stress the remarkable significance of a banking institution to commercial

transactions, in particular, and to the countrys economy in general. The banking system is an
indispensable institution in the modern world and plays a vital role in the economic life of every
civilized nation. Whether as mere passive entities for the safekeeping and saving of money or as
active instruments of business and commerce, banks have become an ubiquitous presence among
the people, who have come to regard them with respect and even gratitude and, most of all,
confidence.[30] Consequently, the highest degree of diligence is expected, and high standards of
integrity and performance are even required, of it. [31]

The Bank of Commerce clearly failed to observe the required degree of caution in
ascertaining the genuineness and extent of the authority of Santos to mortgage the subject
property. It should not have simply relied on the face of the documents submitted by Santos, as
its undertaking to lend a considerable amount of money required of it a greater degree of
diligence. That the person applying for the loan is other than the registered owner of the real
property being mortgaged should have already raised a red flag and which should have induced
the Bank of Commerce to make inquiries into and confirm Santos authority to mortgage the
Spouses San Pablos property. A person who deliberately ignores a significant fact that could
create suspicion in an otherwise reasonable person is not an innocent purchaser for value.[32]

Having laid that the bank of Commerce is not in good faith necessitates us to award
moral damages, exemplary damages, attorneys fees and costs of litigation in favor of the
spouses San Pablo. Moral damages are not awarded to penalize the defendant but to compensate
the plaintiff for the injuries he may have suffered.[33] Willful injury to property may be a legal
ground for awarding moral damages if the court should find that, under the circumstances, such
damages are justly due.[34] In the instant case, we find that the award of moral damages is
proper. The Bank of Commerce, in allowing Santos to secure a loan out of the property
belonging to the spouses San Pablo, without taking the necessary precaution demanded by the
circumstances owing to the public policy imbued in the banking business, caused injury to the
latter which calls for the imposition of moral damages. As for the award of exemplary damages,
we deem that the same is proper for the Bank of Commerce was remiss in its obligation to

70
inquire into the veracity of Santos authority to mortgage the subject property, causing damage to
the spouses San Pablo.[35] Finally, we rule that the award of attorneys fees and litigation expenses
is valid since the spouses San Pablo were compelled to litigate and thus incur expenses in order
to protect its rights over the subject property.[36]

Prescinding from the above, we thus rule that the forged SPA and Deed of Real Estate
Mortgage is void ab initio. Consequently, the foreclosure proceedings conducted on the strength
of the said SPA and Deed of Real Estate Mortgage, is likewise void ab initio. Since the Bank of
Commerce is not a mortgagee in good faith or an innocent purchaser for value on the auction
sale, it is not entitled to the protection of its rights to the subject property. Considering further
that it was not shown that the Bank of Commerce has already transferred the subject property to
a third person who is an innocent purchaser for value (since no intervention or third-party claim
was interposed during the pendency of this case), it is but proper that the subject property should
be retained by the Spouses San Pablo.
WHEREFORE, in view of the foregoing, the instant petition is DENIED. The Decision
dated 10 September 2004 rendered by the Court of Appeals in CA-G.R. SP No. 76562, is
hereby AFFIRMED. The SPA, the Deed of Real Estate Mortgage, and the Foreclosure
Proceedings conducted in pursuant to said deed, are hereby declared VOID AB INITIO. The
Register of Deeds of Mandaue City is hereby DIRECTED to cancel Entry Nos. 9089-V.9-D.B
and 9084-V.9-D.B annotated on TCT No.-(26469)-7561 in the name
of Natividad Opolontesima San Pablo. The Bank of Commerce is hereby ORDERED to pay the
spouses San Pablo P50,000.00 as moral damages, P25,000.00 as exemplary
damages, P20,000.00 as attorneys fees and P20,000.00 as litigation expenses. Cost against the
petitioner.

SO ORDERED.

MINITA V. CHICO-NAZARIO
Associate Justice

WE CONCUR:

71
 CONSUELO YNARES-SANTIAGO
Associate Justice
Chairperson

MA. ALICIA AUSTRIA-MARTINEZ ROMEO J. CALLEJO, SR.

Associate Justice Associate Justice

ANTONIO EDUARDO B. NACHURA

Associate Justice

ATTESTATION

I attest that the conclusions in the above Decision were reached in consultation before the case
was assigned to the writer of the opinion of the Courts Division.

CONSUELO YNARES-SANTIAGO
Associate Justice
Chairperson, Third Division

72
 CERTIFICATION

Pursuant to Section 13, Article VIII of the Constitution, and the Division Chairpersons
Attestation, it is hereby certified that the conclusions in the above Decision were reached in
consultation before the case was assigned to the writer of the opinion of the Courts Division.

REYNATO S. PUNO
Chief Justice

[1]
Penned by Associate Justice Vicente L. Yap with Associate Justices Arsenio Magpale and
Ramon Bato, Jr., concurring.
[2]
Rollo, pp. 64-66.
[3]
Id. at 101-110.
[4]
Id. at 88-100.
[5]
Records, Vol. I, pp. 15-21.
[6]
Id. at 14.
[7]
Id. at 10-12.
[8]
Id. at 15-21.
[9]
Id. at 11.
[10]
Id. at 96-103.
[11]
Id. at 50-51.
[12]
Id. at 118-120.
[13]
TSN, 19 October 2000; records, Vol. II.
[14]
TSN, 28 February 1999.
[15]
Records, Vol. I, pp. 448-460.
[16]
Id., Vol. II, pp. 508-518.
[17]
Id. at 543-545.
[18]
Id. at 547-558.
[19]
Rollo, pp. 69-90.
[20]
Id. at 12-50.
[21]
G.R. No. 105902, 9 February 2000, 325 SCRA 137, 146-147.
[22]
Section 33 of Batas Pambansa Blg. 129.

73
[23]
Laxina, Sr. v. Office of the Ombudsman, G.R. No. 153155, 30 September 2005, 471 SCRA
542, 554.
[24]
G.R. No. 139031, 18 October 2004, 440 SCRA 389, 395.
[25]
Pantranco North Express, Inc. v. Court of Appeals, G.R. No. 105180, 5 July 1993, 224
SCRA 477, 491.
[26]
Producers Bank of the Philippines v. National Labor Relations Commission, 359 Phil. 45,
52 (1998).
[27]
381 Phil. 355, 368 (2000) as cited in Erea v. Querrer-Kauffman, G.R. No. 165853, 22 June
2006, 492 SCRA 298, 319.
[28]
G.R. No. 157002, 29 July 2005, 465 SCRA 356, 369.
[29]
429 Phil. 225, 239 (2002).
[30]
Metropolitan Bank and Trust Company v. Cabilzo, G.R. No. 154469, 6 December 2006.
[31]
Bank of the Philippine Islands v. Casa Montessori Internationale, G.R. No. 149454, 28 May
2004, 430 SCRA 261, 283.
[32]
Id.
[33]
Bautista v. Mangaldan Rural Bank, Inc., G.R. No. 100755, 10 February 1994, 230 SCRA 16,
21.
[34]
Philippine Airlines, Inc. v. Court of Appeals, 193 Phil. 560, 579 (1981).
[35]
Simex International (Manila), Inc. v. Court of Appeals, G.R. No. 88013, 19 March 1990, 183
SCRA 360, 367-368.
[36]
Rizal Surety Insurance Company v. Court of Appeals, 329 Phil. 786, 810-811 (1996).

74
 FIRST DIVISION

ROSANA EREA, G.R. No. 165853

Petitioner,
Present:

- versus - PANGANIBAN, C.J., Chairperson,

YNARES-SANTIAGO,
AUSTRIA-MARTINEZ,
CALLEJO, SR. and
VIDA DANA CHICO-NAZARIO, JJ.

QUERRER-KAUFFMAN,
Respondent. Promulgated:

June 22, 2006

--------------------------------------------------------------------------------------------

DECISION

CALLEJO, SR., J.:

Before us is a petition for review on certiorari of the Decision[1] of the Court of Appeals
(CA) in CA-G.R. CV No. 67899. The assailed decision reversed the decision of the Regional
Trial Court (RTC) of Las Pias City in Civil Case No. LP-98-0056.[2]

75
 Vida Dana Querrer-Kauffman is the owner of a residential lot with a house constructed
thereon located at Block 3, Lot 13, Marcillo corner Planza Streets, BF Resort Village, Talon, Las
Pias City. The property is covered by Transfer Certificate of Title (TCT) No. T-48521. The
owners duplicate copy of the title as well as the tax declaration[3]covering the property, were kept
in a safety deposit box in the house.
Sometime in February 1997, as she was going to the United States, Kauffman entrusted
her minor daughter, Vida Rose, to her live-in partner, Eduardo Victor. She also entrusted the key
to her house to Victor. She went back to the Philippines to get her daughter on May 13, 1997,
and again left for the U.S. on the same day. Later on, Victor also left for the U.S. and entrusted
the house and the key thereto to his sister, Mira Bernal.[4]

On October 25, 1997, Kauffman asked her sister, Evelyn Pares, to get the house
from Bernal so that the property could be sold. Pares did as she was told. [5] Kauffman then
sent the key to the safety deposit box to Pares, but Pares did not receive it. Kauffman then
asked Pares to hire a professional locksmith who could open the safe.[6] When the safe was
broken open, however, Pares discovered that the owners duplicate title and the tax
declarations, including pieces of jewelry were missing.[7]

Kauffman learned about this on October 29, 1997 and returned to

the Philippines on November 9, 1997. She and Pares went to the Register of Deeds of Las Pias
City and found out that the lot had been mortgaged to Rosana Erea on August 1, 1997.[8] It
appeared that a Vida Dana F. Querrer had signed the Real Estate Mortgage as owner-
mortgagor,[9] together with Jennifer V. Ramirez, Victors daughter, as attorney-in-fact.[10]

Kauffman and Pares were able to locate Bernal who, when asked, confirmed that
Ramirez had taken the contents of the safety deposit box. When Kauffman told Bernal that she
would file a case against them, Bernal cried and asked for forgiveness. Bernal admitted that
Jennifer Ramirez had been in a tight financial fix and pleaded for time to return the title and the
jewelry.[11]

On March 12, 1998, Kauffman filed a complaint against Erea, Bernal and Jennifer
Ramirez for Nullification of Deed of Real Estate Mortgage and Damages with prayer for a
Temporary Restraining Order and Preliminary Mandatory Injunction[12] in the RTC of
Las Pias City. The complaint contained the following allegations:

2. The plaintiff is the owner of a property consisting of a lot with an area of One
Hundred Ten (110) square meters located at Blk. 3, Lot 13, Marcillo cor. Pianza
Sts., BF Resort Village, Talon, Las Pias City, covered by Transfer Certificate of
Title No. T-48521 of the Register of Deeds of Las Pias City, together with a
residential house thereon, with a combined assessed value of P40,500.00, and
copies of said TCT, and tax declarations of the lot and house x x x;

76
3. Sometime in February 1997, when the plaintiff left for the United States, she
entrusted the key of her said house to one Eduardo Victor who, in turn, when he
himself went to the United States, entrusted said key to his sister, the defendant
Mira V. Bernal;

4. Sometime between May and July 1997, said defendant Mira V. Bernal, in
conspiracy with her niece, the defendant Jennifer V. Ramirez, who is the daughter
of Eduardo Victor, using the key in their possession, opened the locked and the
unoccupied house of the plaintiff, forced open the vault of the plaintiff and stole
the owners copy of TCT No. T-48521 and other articles contained therein valued
at more than P60,000.00, all belonging to the plaintiff;

5. Having in their possession the stolen TCT No. T-48521, defendants Mira V.
Bernal and Jennifer V. Ramirez, with the latter falsely representing herself to be
the attorney-in-fact of the plaintiff, mortgaged the property in question to the
defendant Rosana L. Erea for the amount of P250,000.00, in Pasay City, for
forging the signature of the plaintiff on the corresponding Real Estate Mortgage,
which appears to have been notarized by Notary Public Alfredo M. Mendoza and
registered as Doc. No. 43, Page No. 1, Book No. VII, Series of 1997, x x x;
6. After the execution of the falsified Real Estate Mortgage, the
defendants registered the same with the Registry of Deeds of Las Pias City and
had it annotated on the TCT No. T-48521 as Entry No. 7185-15;

7. When the defendant Rosana L. Erea as mortgagee accepted the property in

mortgage, she knew fully well that the plaintiff-owner was in the United States at
that time and the defendants Mira V. Bernal and Jennifer V. Ramirez were not
authorized to mortgage the property as they claimed themselves to be, and this
notwithstanding, the defendants who were in bad faith conspired and confederated
between and among themselves and fraudulently executed the said document of
mortgage for purposes of personal gain;

8. The plaintiff has been a victim of fraud as above narrated and the defendant
Rosana L. Erea now being in unlawful possession of her torrens title, the plaintiff
is not only in constant apprehension as to what other fraudulent transactions the
defendant might enter into involving her title, but is also prevented from pursuing
her intention to sell her property, and by reason of which the plaintiff is entitled to
recover possession of said title and the cancellation of Entry No. 7185-15 thereon;

77
9. In view thereof, plaintiff is entitled to actual damages in the amount
of P200,000.00;

10. Likewise, plaintiff suffered moral damages in the form of mental anguish,
wounded feelings, serious anxiety and similar injuries in the amount
of P200,000.00;

11. The plaintiff is also entitled to exemplary damages in the amount

of P100,000.00 which plaintiff seeks to impose upon the defendants as a
correction or example for the public good, as a deterrent to people from
committing fraudulent acts against their fellowmen;

12. On account of defendants unwarranted acts aforecited, the plaintiff is

furthermore entitled to attorneys fees in the amount of P50,000.00 as acceptance
fee, plus P1,500.00 appearance fee every hearing, for which the defendants should
be liable;[13]

The complaint also contained the following prayer:

(a) That upon the filing of this complaint and compliance with the pertinent rule, a
temporary mandatory order be issued requiring the defendant Rosana L. Erea to
turn over to the plaintiff the possession of TCT No. T-48521;

(b) That after due hearing, a writ of preliminary mandatory injunction be issued
making permanent the temporary mandatory order;

(c) In case a temporary mandatory order or preliminary injunction be not issued,

that the defendant Rosana L. Erea or whoever be in possession of TCT No. T-
48521, be ordered, after due hearing, to turn the same over to the plaintiff, that the
Real Estate Mortgage (Annex D) of this complaint be declared null and void, and
Entry No. 7185-15 on said title be cancelled;

(d) That after hearing, the defendants be ordered to pay the plaintiff, jointly and
severally, the following amounts:
78
 1. P200,000.00 as moral damages;
2. P200,000.00 as actual damages;
3. P100,000.00 as exemplary damages;
4. P50,000.00 as acceptance fee, plus P1,500.00 appearance fee every hearing, as
attorneys fees, aside from costs.

Plaintiff further prays for such other relief that this Honorable Court may deem
just and equitable in the premises.[14]

Erea interposed the defense of being a mortgagee in good faith. She likewise
interposed a cross-claim against Bernal and Jennifer Ramirez for the refund of
the P250,000.00 she loaned to Vida Dana Querrer.[15]

Jennifer Ramirez and Bernal interposed the common defense that, on November 13, 1998, the
City Prosecutor approved a Resolution absolving them of the robbery and estafa cases through
falsification of a public document.[16]

During pre-trial, defendants Ramirez and Bernal failed to appear. On motion of the
plaintiff, they were thus declared in default.[17]

During trial, Socorro Ramos, Ereas aunt, testified that, Richmond Ramirez, Jennifers
husband, and Angel Jose, her grandson and Ereas nephew, had been classmates and
were compadres.[18] The Ramirez spouses used to go to her house. In one occasion, the Ramirez
spouses arrived in her house with one Vida Dana Querrer whom Richmondintroduced as his
half-sister.[19] He also told Ramos that Querrer wanted to mortgage her house and lot as she was
going to the U.S.[20] Richmond showed her a copy of TCT No. T-48521, Querrers identification
(I.D.) card, and pictures of the house and lot.[21] Ramos then informed her niece, Rosana Erea,
and asked if she would agree to mortgage the property. Ramos later brought the spouses

79
Ramirez and Vida Dana Querrer to Erea who showed a copy of the title, tax declaration, a tax
clearance, all in the name of Vida Dana Querrer. The spouses also showed an I.D. card of Vida
Dana Querrer as a worker in Japan, a police clearance, and the location plan of the
property.[22] Jennifer Ramirez informed Erea that Vida Dana was applying for a passport as she
was going to Japan and the U.S.[23] Vida Dana Querrer likewise introduced herself as Richmonds
sister.[24]

Erea was able to verify from the Office of the Register of Deeds that the property was in
the name of Vida Dana Querrer and that it was free of any lien or encumbrance. Erea and her
husband, Ramos, Richmond Ramirez, Angel Jose, and Vida Dana Querrer later inspected the
house and lot two times.[25] Erea finally agreed to a P250,000.00 mortgage loan, with the house
and lot as security therefor.

On August 1, 1997, Jennifer Ramirez, Rosana Erea and a woman who identified herself
as Vida Dana Querrer arrived in the office Notary Public Alfredo M. Mendoza and asked him to
prepare a Special Power of Attorney to be executed by Vida Dana Querrer, as principal, in favor
of Jennifer Ramirez, as attorney-in-fact; and a Real Estate Mortgage contract over the lot
covered by TCT No. 48521 to be executed by Vida Dana Querrer and Jennifer Ramirez as
mortgagors. Erea and Vida Dana Querrer showed to him their respective residence
certificates. Mendoza prepared the documents after which the parties affixed their respective
signatures above their respective names[26] and their submarkings on the deeds. The Real Estate
Mortgage was filed with the Office of the Register of Deeds and annotated at the dorsal portion
of TCT No. 48521 on November 7, 1997.[27]

On April 4, 2000, the RTC rendered judgment in favor of the defendants and ordered the
dismissal of the complaint. The court ruled that, although the plaintiff adduced proof that she
owned the property and that her signatures on the Special Power of Attorney and in the Real
Estate Mortgage were forged, nevertheless, defendant Erea adduced evidence that she was a
mortgagee in good faith. The court declared that the woman who pretended to be the plaintiff
and lawful owner of the property had in her possession the original copy of the owners duplicate
of title. The defendant thus relied in good faith on the title after ascertaining with the Register of
Deeds the identity of Vida Dana Querrer as the registered owner of the property, who turned out
to be an impostor. In fact, the defendant still had possession of the owners duplicate of the title
when she received the complaint and summons.

The court cited the ruling of this Court in Cebu International Finance Corporation v.
Court of Appeals[28] and Duran v. Intermediate Appellate Court.[29] The fallo of the decision
reads:

80
 WHEREFORE, premises considered, the complaint filed by plaintiff
VIDA DANA QUERRER-KAUFFMAN is hereby DISMISSED for lack of merit
and the questioned Deed of Real Estate Mortgage dated 1 August 1997 is hereby
declared VALID.

No pronouncement as to costs.

SO ORDERED.[30]

Kauffman filed a motion for reconsideration of the decision, alleging that the Cebu
International Finance Corporation case is not applicable as the facts therein are different. She
insisted that Solivel v. Francisco[31] is the case in point.

The RTC denied the motion, prompting Kauffman to file an appeal with the CA where
she made the following allegations:

I
CONSIDERING THAT THE MORTGAGE CONTRACT IN QUESTION WAS
EXECUTED AND MADE POSSIBLE THROUGH THE FRAUDULENT
MANIPULATION OF AN IMPOSTOR, THE LOWER COURT ERRED IN
FINDING THAT DEFENDANT-APPELLANT ROSANA EREA WHO
ACCEPTED THE MORTGAGE OFFERED BY SAID IMPOSTOR IS A
MORTGAGEE IN GOOD FAITH;

II

THE COURT A QUO ERRED IN CONCLUDING THAT THE DEED OF

MORTGAGE IN QUESTION IS VALID DESPITE ITS OWN
FINDING THAT THE SUBJECT PROPERTY IS OWNED BY THE
PLAINTIFF-APPELLANT WHOSE SIGNATURE ON THE DEED WAS
FORGED;

III

81
THE LOWER COURT ERRED IN APPRECIATING THE JURISPRUDENCE CITED
IN ITS APPEALED DECISION AND IN APPLYING THE SAME TO THE
CASE AT BAR;

IV

THE LOWER COURT ERRED IN UPHOLDING THE RIGHT OF DEFENDANT-

APPELLANT ROSANA EREA DERIVED FROM A FORGED MORTGAGE
CONTRACT AS AGAINST THE RIGHT OF THE PLAINTIFF, THE PROVEN
TRUE OWNER OF THE SUBJECT PROPERTY, WHO DID NOT IN ANY
WAY CONTRIBUTE TO THE COMMISSION OF THE FRAUD.[32]

On June 10, 2004, the CA rendered judgment in favor of Kauffman. It held that in
ruling as it did, the RTC disregarded the clear provisions of the Civil Code, particularly
Articles 2085 (2)[33] and 1409 (2)[34] The appellate court relied on the Courts ruling
in Insurance Services & Commercial Traders, Inc. v. Court of Appeals[35] and ratiocinated,
thus:

Thus, it has been uniformly held that (I)n a real estate mortgage contract, it is
essential that the mortgagor be the absolute owner of the property to be
mortgaged; otherwise, the mortgage is void. (Robles vs. Court of Appeals, G.R.
No. 12309, Mar. 14, 2000). This was simply in line with the basic requirement in
our laws that the mortgagor be the absolute owner of the property sought to be
mortgaged (Lorbes vs. Court of Appeals, G.R No. 139884, Feb. 15, 2001). This is
in anticipation of a possible foreclosure sale should the mortgagor default in the
payment of the loan, and a foreclosure sale, though essentially a forced sale, is
still a sale in accordance with Art. 1458 of the Civil Code. Being a sale, the rule
that the seller must be the owner of the thing sold also applies in a foreclosure
sale (Cavite Development Bank vs. Cyrus Lim, G.R. No. 131679, Feb. 1,
2000).[36]

Erea thus filed the instant petition contending that the following legal issues should be
resolved:

82
 I

THE COURT OF APPEALS HAS SERIOUSLY ERRED IN HOLDING THAT

RESPONDENT QUERRER-KAUFFMAN IS THE OWNER OF THE
PROPERTY MORTGAGED TO PETITIONER DESPITE THE ABSENCE OF
SUBSTANTIAL EVIDENCE TO SUPPORT SUCH A CONCLUSION OF
FACT.

II
THE COURT OF APPEALS HAS SERIOUSLY ERRED IN HOLDING
THAT THE CONTRACT OF REAL ESTATE MORTGAGE EXECUTED
ON 01 AUGUST 1997 BETWEEN ROSANA EREA AND VIDA DANA
QUERRER IS A FORGED DEED OF MORTGAGE WITHOUT
SUBSTANTIAL EVIDENCE TO ESTABLISH SUCH FACT.

III

THE COURT OF APPEALS HAS SERIOUSLY ERRED IN HOLDING THAT THE

DOCTRINE OF A MORTGAGE IN GOOD FAITH DOES NOT APPLY TO
PETITIONER DESPITE SUBSTANTIAL AND UNDISPUTED EVIDENCE
PROVING HER A MORTGAGEE IN GOOD FAITH.[37]

Petitioner avers that respondent failed to prove that she is the owner of the property, and points
out that the documentary evidence shows that the negotiator over the property is Vida Dana
Querrer and not Vida Dana Querrer-Kaufffman. There is thus no factual basis for the CAs
finding that the Real Estate Mortgage was a forged deed. Considering that respondent, as the
plaintiff below, failed to adduce clear and convincing evidence that the signature on the Real
Estate Mortgage is a forgery, the signature over the printed name in the said document must be
the genuine signature of Vida Dana Querrer, the registered owner of the property. Even assuming
that respondent was the lawful owner of the property and the signature in the Real Estate
Mortgage is a forgery, petitioner insists that she is a mortgagee in good faith as shown by the
following facts and circumstances:

1. Before the offer of mortgage was accepted by petitioner Rosana Erea, she
required the production of the owners copy of TCT No. T-48521. The mortgagee
took such step to enable her to know the rights of the mortgagor over the property
to be mortgaged. The presentation of the desired certificate was complied with.

83
2. The identity of the mortgagor was ascertained from the personal interview of
the relatives of the mortgagor who were the spouses Jennifer and Richmond
Ramirez, a known compadre of Angel Jose, the grandson of Socorro Ramos, the
aunt of the petitioner. Richmond Ramirez with his wife introduced the mortgagor
Vida Dana Querrer as his half-sister who wanted to mortgage the property
described in the certificate of title which was registered in her name. The spouses
of the mortgagor were accompanied to the house of Rosana Erena by Socorro
Ramos, her aunt who acknowledged to know Richmond and Jennifer Ramirez for
a period of five years, more or less. Aside from the confirmation of her filial
relation to the Ramirez couple by Richmond Ramirez, her personal Identification
Card showed the mortgagors name and proved her identity to be Vida Dana
Querrer. The Tax Declarations, tax clearance, the owners copy of TCT No. T-
48521, police clearance, survey plan attested to the fact that the owner of the
property subject of the mortgage was the mortgagor.

3. Further examination of the certificate of title in the Office of the Register of

Deeds of Las Pias City proved the authenticity of the owners copy of the
certificate.

4. The actual physical inspection of the house and lot covered by the certificate in
the given address for two (2) times, at least by the mortgagor and mortgagee
together with Soccoro Ramos, and the Ramirez couple strengthened
her reasonable belief in good faith that the mortgagor is the owner of the property
covered by the certificate of title.

5. The aforesaid interviews/examination of records, and inspection of the

premises showed that earnest and diligent efforts were exerted by the petitioner to
ascertain the identity of the mortgagor and her ownership of the subject property.
The aforestated steps taken by her are visible proofs of the due diligence
exercised by Rosana Erena to ascertain the identity of the mortgagor and
respondents capacity to convey the property to her in a contract of mortgage with
her.

6. Without admitting on the allegation of a forged signature, the established facts

showing the exercise of due diligence and reasonable caution observed by
petitioner preparatory to the acceptance and execution of the mortgage contract
BELIE the accusation of bad faith to her. In truth, petitioner had been reasonably
diligent to meet the justification of a mortgagee in good faith.[38]

84
For her part, respondent avers that, contrary to petitioners claim, the issues raised in the instant
petition are factual in nature. Moreover, based on the evidence on record, both the trial and
appellate courts are one in declaring that she is the lawful registered owner of the property, and
that such findings are conclusive on this Court. Besides, the petitioner is proscribed from
assailing the findings of the trial and appellate courts since under Rule 45 of the Rules of Court,
only questions of law may be raised in this Court. She insists that petitioner failed to establish
special and important reasons for the Court to exercise its discretion to review the appellate
courts decision.

The petition has no merit.

Indeed, the trial and appellate courts found that respondent, as plaintiff below, adduced
clear and convincing evidence that she is the owner of the property and that the signature on the
Special Power of Attorney and Real Estate Mortgage are not her genuine signatures. She
purchased the property from Edgardo C. Espiritu on June 21, 1997 via a Deed of Absolute
Sale,[39] on the basis of which TCT No. 48521 under her name was issued by the Register of
Deeds on June 25, 1997.[40] Indeed, when respondent and her sister, Evelyn Pares, confronted
Mira Bernal (Jennifer Ramirezs aunt), Bernal pleaded for mercy, on bended knees, after
admitting that she and Jennifer Ramirez stole the owners duplicate copy of the title and the tax
declarations covering the property, the air-conditioning unit, television, and the pieces of jewelry
owned by respondent, and, thus, impliedly admitted that they forged the respondents signature on
the Real Estate Mortgage:

Q Were you able to see Mira in Pasay, in her house?

A Yes, Sir. We saw her in Pasay, but in Bian, she suddenly disappeared when we
arrived.

Q What time did you see Mira in her house in Pasay?

A Between 11:00 to 12:00 P.M., Sir.

Q But you said you arrived there at 6:00 p.m.?

A Yes, Sir.

85
Q You mean you waited?
A We waited for her. Dana said, Mabuti pang ilabas ninyo and mother niyo.

ATTY. CABARON:

The witness is narrating, Your Honor.

ATTY. MASANGKAY:

Q So, finally, you were able to talk to Mira in that house?

A Yes, Sir.

Q How about Jennifer?

A No, Sir.

Q Alright, what did you ask Mira?

A My sister asked Mira who destroyed my vault?

Q What was the answer of Mira?

A Mira answered, Why did you not inform that you will be coming?

ATTY. MASANGKAY:
Q And then?
A Dana said, what I am asking, you better answer.

Q What was the answer?

A According to her, it was Jennifer.

86
Q It was Jennifer who, what?
A She just said Jennifer.

Q What about the title?

A My sister was asking who destroyed the vault, then Mira answered, it was
Jennifer. We did not ask anymore because she continued on talking and
she said Jennifer was short of funds.

She said, Nagipit kasi ang bata, naawa ako kaya binigay ko ang titulo.

Q And, who is Jennifer? Is this Jennifer the same Jennifer Ramirez who is one of
the defendants here?
A Yes, Sir.

Q Who is she?
A According to my sister, she is the daughter of Eduardo Victor.
Q What else did she say?

WITNESS:
A When she said that Jennifer took it, Dana looked for jewelries. Then the
daughter of Beth said, Tita Dana, sabi ni Tita Ellen, papalitan niya ang
mga alahas na iyon.

ATTY. MASANGKAY:
Q And finally, what was the statement of Mira with respect to the transaction?
A When Dana learned about that, she said, we will file a case against them.

Q And so?

87
 A Mira knelt down and began to cry and was begging.

Q What did she say?

A She said, Parang awa mo na sa akin, Dana. Luluhod ako sa harapan niyo,
patawarin mo lang kami. She was crying and saying, Gipit na gipit lang
talaga kami. Bigyan mo kami ng konting panahon at ibabalik naming
iyon. [41]

The trial courts findings of fact as affirmed by the CA are conclusive on this Court absent
evidence that the trial court ignored, misapplied or misconstrued facts and circumstances of
substance which, if considered, would alter the outcome of the case.

Indeed, under Rule 45 of the Rules of Court, only questions of law may be raised. This is
so because this Court is not a trier of facts and is not to re-examine and re-evaluate the
testimonial and documentary evidence on record. While the findings and conclusion of the trial
court and the appellate court may be reversed in exceptional circumstances, the Court cannot do
so in the absence of any such justification or exceptional circumstance, such as in this case.

The ruling of the CA, that the Real Estate Mortgage executed in petitioners favor is null
and void, is correct. The registration thereof with the Register of Deeds and its annotation at the
dorsal portion of TCT No. 48521 is also null and void, as provided in the last paragraph of
Section 53, P.D. 1529 which reads:
Sec. 53. Presentation of owners duplicate upon entry of new certificate.

xxxx

In all cases of registration procured by fraud, the owner may pursue all his
legal and equitable remedies against the parties to such fraud without prejudice,
however, to the rights of any innocent holder of the decree of registration on the
original petition or application; any subsequent registration procured by the
presentation of a forged duplicate certificate of title, or a forged deed or
other instrument, shall be null and void (emphasis supplied).

One of the essential requisites of a mortgage contract is that the mortgagor must be the absolute
owner of the thing mortgaged.[42] A mortgage is, thus, invalid if the mortgagor is not the

88
property owner.[43] In this case, the trial court and the CA are one in finding that based on the
evidence on record the owner of the property is respondent who was not the one who mortgaged
the same to the petitioner.

The evidence shows that Mira Bernal and Jennifer Ramirez were able to open
respondents vault and steal the owners duplicate of TCT No. T-48521 and the tax declarations
covering the property; with the connivance of a woman who pretended to be the respondent,
they were able consummate the execution of the Real Estate Mortgage by forging the
respondents signature on said deed. We, thus, quote with approval the CA when it held:

As to the claim of Querrer-Kauffman that her purported signatures on the

mortgage are forgeries, the trial court believed her and held that there
is convincing proof to the contention of the plaintiff that the signature of Vida
Dana Querrer as appearing on the question[ed] contract was a forgery because
the real Vida Dana Querrer who is the plaintiff in this case was actually in the
United States at the time of the questioned contract on 1 August 1997 (Decision,
p. 226, record). And rightly so because of the immigration entries on her passport,
her juxtaposed sample signatures which are clearly different from those in the
deed, and the comic incongruity of Querrer-Kauffman as principal and Ramirez as
her attorney-in-fact both signing the mortgage deed, all prove and declare beyond
reasonable doubt that the subject real estate mortgage is a forgery.[44]

The evidence on record further shows that Jennifer Ramirez and her husband, Richmond
Ramirez, used a woman who introduced herself as Vida Dana Querrer to the petitioner and claim
as owner of the property. That woman, an impostor, signed the Real Estate Mortgage as
mortgagor and the Special Power of Attorney, as principal, and showed to petitioner the owners
duplicate copy of the title that was taken from the respondents vault, and succeeded in having
the Real Estate Mortgage annotated at the dorsal portion of the title. As correctly ruled by the
appellate court:

TCT No. T-48521 (Exh. A) over the litigated lot was issued on June 26,
1995 in the name of the owner of the covered lot: Vida Dana Querrer,
single. That the appellant now goes by the name and status of Vida Dana
Querrer-Kauffman, married, has been well explained, and quibble on this raised
by Erea about the identity and interest of the appellant in the suit has been
dismissed by the trial court as of no moment as this discrepancy is negligible if
no[t] bearing at all to the issue of nullity of the questioned contract and has no
legal anchorage to cling on. The decision went on to state in no uncertain terms
that the appellant Querrer-Kauffman was able to prove preponderantly that she is
the real owner of the subject property.[45]

89
 Indeed, case law is that a Torrens title is generally conclusive evidence of ownership of
the land referred to therein.[46] While it serves as evidence of an indefeasible title to the property
in favor of the person whose name appears therein[47] (and TCT No. T-48521 shows, on its face,
that the owner is the respondent), when the instrument presented for registration is forged, even
if accompanied by the owners duplicate certificate of title, the registered owner does not thereby
lose his title, and neither does the assignee or the mortgagee, for that matter, acquire any right or
title to the property.[48] In such a case, the transferee or the mortgagee, based on a forged
instrument, is not even a purchaser or a mortgagee for value protected by law. Thus, in Joaquin
v. Madrid,[49] the Court had the occasion to state:

In the first assignment of error, it is argued that since par. 2 of Sec. 55 of

the Land Registration Act expressly provides that in all cases of registration of
fraud, the owner may pursue all his legal and equitable remedies against the
parties to the fraud, without prejudice to the rights of any innocent holder for
value of a certificate of title, the second proviso in the same section that a
registration procured by the presentation of a forged deed shall be null and void
should be overlooked. There is no merit in this argument, which would have the
effect of deleting the last proviso. This last proviso is a limitation of the first part
of par. 2 in the sense that in order that the holder of a certificate for value issued
by virtue of the registration of a voluntary instrument may be considered a holder
in good faith for value, the instrument registered should not be forged. When the
instrument presented is forged, even if accompanied by the owners duplicate
certificate of title, the registered owner does not thereby lose his title, and neither
does the assignee in the forged deed acquire any right or title to the property.

In the second assignment of error, it is further argued that as the petitioner

is an innocent purchaser for value, he should be protected as against the
registered owner because the latter can secure reparation from the assurance fund.
The fact is, however, that petitioner herein is not the innocent purchaser for value
protected by law. The innocent purchaser for value protected by law is one who
purchases a titled land by virtue of a deed executed by the registered owner
himself, not by a forged deed, as the law expressly states. Such is not the situation
of the petitioner, who has been the victim of impostors pretending to be the
registered owners but who are not said owners.[50]

The Court cited this ruling in the Joaquin case in Solivel v. Francisco,[51] to wit:

Even more in point and decisive of the issue here raised, however, is the
much later case of Joaquin v. Madrid, where the spouses Abundio Madrid and

90
 Rosalinda Yu, owners of a residential lot in Makati, seeking a building
construction loan from the then Rehabilitation Finance Corporation, entrusted
their certificate of title for surrender to the RFC to Rosalindas godmother, a
certain Carmencita de Jesus, who had offered to expedite the approval of the loan.
Later having obtained a loan from another source, the spouses decided to
withdraw the application they had filed with the RFC and asked Carmencita to
retrieve their title and return it to them Carmencita failed to do so, giving the
excuse that the employee, in- charge of keeping the title was on leave. It turned
out, however, that through the machinations of Carmencita, the property had been
mortgaged to Constancio Joaquin in a deed signed by two persons posing as the
owners and that after said deed had been registered, the amount for which the
mortgage was constituted had been given to the person who had passed herself off
as Rosalinda Yu. Constancio Joaquin admitted that the spouses Madrid and Yu
were, in fact, not the persons who had signed the deed of mortgage.[52]
This ruling was later reiterated in Insurance Services & Commercial Traders, Inc. v.
Court of Appeals,[53] where the Court stressed that in order that the holder of a certificate of
value issued by virtue of the registration of a voluntary instrument may be considered a holder in
good faith and for value, the instrument registered should not be forged.

In Cavite Development Bank v. Lim,[54] the Court explained the doctrine of mortgagee in
good faith, thus:
There is, however, a situation where, despite the fact that the mortgagor is
not the owner of the mortgaged property, his title being fraudulent, the mortgage
contract and any foreclosure sale arising therefrom are given effect by reason of
public policy. This is the doctrine of mortgagee in good faith based on the rule that
all persons dealing with the property covered by a Torrens Certificate of Title, as
buyers or mortgagees, are not required to go beyond what appears on the face of
the title. The public interest in upholding the indefeasibility of a certificate of title,
as evidence of lawful ownership of the land or of any encumbrance thereon,
protects a buyer or mortgagee who, in good faith, relied upon what appears on the
face of the certificate of title.[55]

Indeed, a mortgagee has a right to rely in good faith on the certificate of title of the mortgagor of
the property given as security and in the absence of any sign that might arouse suspicion, has no
obligation to undertake further investigation. Hence, even if the mortgagor is not the rightful
owner of, or does not have a valid title to, the mortgaged property, the mortgagee in good faith is
nonetheless entitled to protection.[56] This doctrine presupposes, however, that the mortgagor,
who is not the rightful owner of the property, has already succeeded in obtaining a Torrens title
over the property in his name and that, after obtaining the said title, he succeeds in mortgaging
the property to another who relies on what appears on the said title. The innocent purchaser

91
(mortgagee in this case) for value protected by law is one who purchases a titled land by virtue
of a deed executed by the registered owner himself, not by a forged deed, as the law expressly
states. Such is not the situation of petitioner, who has been the victim of impostors pretending to
be the registered owners but who are not said owners.[57] The doctrine of mortgagee in good faith
does not apply to a situation where the title is still in the name of the rightful owner and the
mortgagor is a different person pretending to be the owner. In such a case, the mortgagee is not
an innocent mortgagee for value and the registered owner will generally not lose his title. We
thus agree with the following discussion of the CA:

The trial court wrongly applied in this case the doctrine of mortgagee in good
faith which has been allowed in many instances but in a milieu dissimilar from
this case. This doctrine is based on the rule that persons dealing with properties
covered by a Torrens certificate of title are not required to go beyond what
appears on the face of the title. But this is only in a situation where the mortgagor
has a fraudulent or otherwise defective title, but not when the mortgagor is an
impostor and a forger.

In a forged mortgage, as in this case, the doctrine of mortgagee in good

faith cannot be applied and will not benefit a mortgagee no matter how large is his
or her reservoir of good faith and diligence. Such mortgage is void and cannot
prejudice the registered owner whose signature to the deed is falsified. When the
instrument presented is forged, even if accompanied by the owners duplicate
certificate of title, the registered owner does not lose his title, and neither does the
assignee in the forged deed acquire any right or title to the property. An innocent
purchaser for value is one who purchases a titled land by virtue of a deed
executed by the registered owner himself not a forged deed.[58]

As aforesaid, respondents signature on the Real Estate Mortgage was forged by an impostor.
IN LIGHT OF ALL THE FOREGOING, the petition is DENIED. The Decision of
the Court of Appeals dated June 10, 2004 and Resolution dated October 28,
2004 are AFFIRMED. Costs against the petitioner.
SO ORDERED.

ROMEO J. CALLEJO, SR.

Associate Justice

92
WE CONCUR:

ARTEMIO V. PANGANIBAN
Chief Justice
Chairperson

CONSUELO YNARES-SANTIAGO MA. ALICIA AUSTRIA-MARTINEZ Associate

Justice Associate Justice

MINITA V. CHICO-NAZARIO
Associate Justice

CERTIFICATION

93
 Pursuant to Section 13, Article VIII of the Constitution, it is hereby certified that the
conclusions in the above decision were reached in consultation before the case was assigned to
the writer of the opinion of the Courts Division.

ARTEMIO V. PANGANIBAN
Chief Justice

[1]
Penned by Associate Justice Roberto A. Barrios, with Associate Justices Mariano C. del
Castillo and Magdangal M. de Leon, concurring; rollo, pp. 29-36.
[2]
Penned by Judge Manuel B. Fernandez, Jr.; id. at 63-66.
[3]
Exhibits B and C.
[4]
TSN, September 7, 1998, pp. 16-19.
[5]
TSN, September 30, 1998, pp. 36-37.
[6]
TSN, September 7, 1998, p. 20.
[7]
TSN, September 30, 1998, p. 38.
[8]
TSN, September 7, 1998, pp. 22-23.
[9]
Exhibit E-3.
[10]
Exhibit E-2.
[11]
TSN, September 30, 1998, pp. 47-48.
[12]
Records, pp. 1-6.
[13]
Records, pp. 2-4.
[14]
Id. at 5-6.
[15]
Id. at 36.
[16]
I.S. No. LP-97-2715.
[17]
Records, pp. 118-121.
[18]
TSN, September 27, 1999, pp. 19-20.
[19]
TSN, September 27, 1999, pp. 5-7.
[20]
TSN, September 27, 1999, pp. 5-6.
[21]
Exhibits 10 and 10-A.
[22]
TSN, November 12, 1998, pp. 35-38.
[23]
TSN, November 12, 1998, p. 41.
[24]
Id. at 45.
[25]
Id. at 37.
[26]
Exhibits E and L.
[27]
Exhibit CC.
[28]
335 Phil. 643 (1997).

94
[29]
G.R. No. 64159, September 10, 1985, 138 SCRA 489.
[30]
Records, p. 227.
[31]
G.R. No. 51450, February 10, 1989, 170 SCRA 218.
[32]
CA rollo, pp. 87-88.
[33]
Art. 2085. The following requisites are essential to the contracts of pledge and mortgage:
xxxx
(2) That the pledgor or mortgagor be the absolute owner of the thing pledged or mortgaged;
[34]
Art. 1409. The following contracts are inexistent and void from the beginning:
xxxx
(2) Those which are absolutely simulated or fictitious;
xxxx
[35]
395 Phil. 791 (2000).
[36]
Rollo, pp. 33-34.
[37]
Id. at 13.
[38]
Id. at 22-23.
[39]
Exhibit U.
[40]
Exhibit A.
[41]
TSN, September 30, 1998, pp. 45-48. (Underscoring supplied)
[42]
Article 2085 (2) of the Civil Code of the Philippines.
[43]
Adriano v. Pangilinan, 424 Phil. 578, 587 (2002).
[44]
Rollo, p. 32.
[45]
Id. at 31-32.
[46]
Republic v. Orfinada, Sr., G.R. No. 141145, November 12, 2004, 442 SCRA 342, 359.
[47]
Adriano v. Pangilinan, supra note 43, at 588.
[48]
Joaquin v. Madrid, 106 Phil. 1060 (1960).
[49]
Supra.
[50]
Id. at 1063-1064.
[51]
Supra note 31.
[52]
Id. at 225.
[53]
Supra note 35, at 801.
[54]
381 Phil. 355 (2000).
[55]
Id. at 368.
[56]
Cabuhat v. Court of Appeals, 418 Phil. 451, 460 (2001).
[57]
Joaquin v. Madrid, supra note 48, at 1063-1064, reiterated in Solivel v. Francisco, supra note
31.
[58]
Rollo, pp. 33-34.

95
 Republic of the Philippines
Supreme Court
Manila
THIRD DIVISION

SPOUSES REX AND CONCEPCION G.R. No. 165803

AGGABAO,
Petitioners, Present:

CARPIO MORALES, Chairperson

BERSAMIN,
-versus- DEL CASTILLO,*
VILLARAMA, JR., and
SERENO, JJ.

DIONISIO Z. PARULAN, JR. Promulgated:

and MA. ELENA PARULAN,
Respondents. September 1, 2010
x-----------------------------------------------------------------------------------------x
DECISION
BERSAMIN, J:
On July 26, 2000, the Regional Trial Court (RTC), Branch 136, in Makati City annulled
the deed of absolute sale executed in favor of the petitioners covering two parcels of registered
land the respondents owned for want of the written consent of respondent husband Dionisio
Parulan, Jr. On July 2, 2004, in C.A.-G.R. CV No. 69044,[1] the Court of Appeals (CA) affirmed
the RTC decision.

Hence, the petitioners appeal by petition for review on certiorari, seeking to reverse the
decision of the CA. They present as the main issue whether the sale of conjugal property made
by respondent wife by presenting a special power of attorney to sell (SPA) purportedly executed
by respondent husband in her favor was validly made to the vendees, who allegedly acted in
good faith and paid the full purchase price, despite the showing by the husband that his signature
on the SPA had been forged and that the SPA had been executed during his absence from the
country.

We resolve the main issue against the vendees and sustain the CAs finding that the
vendees were not buyers in good faith, because they did not exercise the necessary prudence to
inquire into the wifes authority to sell. We hold that the sale of conjugal property without the
consent of the husband was not merely voidable but void; hence, it could not be ratified.

Antecedents

Involved in this action are two parcels of land and their improvements (property) located at No.
49 Miguel Cuaderno Street, Executive Village, BF Homes, Paraaque City and registered under

96
Transfer Certificate of Title (TCT) No. 63376[2] and TCT No. 63377[3] in the name of
respondents Spouses Maria Elena A. Parulan (Ma. Elena) and Dionisio Z. Parulan, Jr. (Dionisio),
who have been estranged from one another.

In January 1991, real estate broker Marta K. Atanacio (Atanacio) offered the property to the
petitioners, who initially did not show interest due to the rundown condition of the
improvements. But Atanacios persistence prevailed upon them, so that on February 2, 1991, they
and Atanacio met with Ma. Elena at the site of the property. During their meeting, Ma. Elena
showed to them the following documents, namely: (a) the owners original copy of TCT No.
63376; (b) a certified true copy of TCT No. 63377; (c) three tax declarations; and (d) a copy of
the special power of attorney (SPA) dated January 7, 1991 executed by Dionisio authorizing Ma.
Elena to sell the property.[4] Before the meeting ended, they paid P20,000.00 as earnest money,
for which Ma. Elena executed a handwritten Receipt of Earnest Money, whereby the parties
stipulated that: (a) they would pay an additional payment of P130,000.00 on February 4, 1991;
(b) they would pay the balance of the bank loan of the respondents amounting to P650,000.00 on
or before February 15, 1991; and (c) they would make the final payment of P700,000.00 once
Ma. Elena turned over the property on March 31, 1991.[5]

On February 4, 1991, the petitioners went to the Office of the Register of Deeds and the
Assessors Office of Paraaque City to verify the TCTs shown by Ma. Elena in the company of
Atanacio and her husband (also a licensed broker).[6] There, they discovered that the lot under
TCT No. 63376 had been encumbered to Banco Filipino in 1983 or 1984, but that the
encumbrance had already been cancelled due to the full payment of the obligation. [7] They
noticed that the Banco Filipino loan had been effected through an SPA executed by Dionisio in
favor of Ma. Elena.[8] They found on TCT No. 63377 the annotation of an existing mortgage in
favor of the Los Baos Rural Bank, also effected through an SPA executed by Dionisio in favor of
Ma. Elena, coupled with a copy of a court order authorizing Ma. Elena to mortgage the lot to
secure a loan of P500,000.00.[9]

The petitioners and Atanacio next inquired about the mortgage and the court order annotated on
TCT No. 63377 at the Los Baos Rural Bank. There, they met with Atty. Noel Zarate, the banks
legal counsel, who related that the bank had asked for the court order because the lot involved
was conjugal property.[10]

Following their verification, the petitioners delivered P130,000.00 as additional down payment
on February 4, 1991; and P650,000.00 to the Los Baos Rural Bank on February 12, 1991, which
then released the owners duplicate copy of TCT No. 63377 to them.[11]

On March 18, 1991, the petitioners delivered the final amount of P700,000.00 to Ma. Elena, who
executed a deed of absolute sale in their favor. However, Ma. Elena did not turn over the owners
duplicate copy of TCT No. 63376, claiming that said copy was in the possession of a relative
who was then in Hongkong.[12] She assured them that the owners duplicate copy of TCT No.
63376 would be turned over after a week.

On March 19, 1991, TCT No. 63377 was cancelled and a new one was issued in the name
of the petitioners.

97
 Ma. Elena did not turn over the duplicate owners copy of TCT No. 63376 as promised. In
due time, the petitioners learned that the duplicate owners copy of TCT No. 63376 had been all
along in the custody of Atty. Jeremy Z. Parulan, who appeared to hold an SPA executed by his
brother Dionisio authorizing him to sell both lots.[13]

At Atanacios instance, the petitioners met on March 25, 1991 with Atty. Parulan at
the Manila Peninsula.[14] For that meeting, they were accompanied by one Atty.
Olandesca.[15] They recalled that Atty. Parulan smugly demanded P800,000.00 in exchange for
the duplicate owners copy of TCT No. 63376, because Atty. Parulan represented the current
value of the property to be P1.5 million. As a counter-offer, however, they
tendered P250,000.00, which Atty. Parulan declined,[16] giving them only until April 5, 1991 to
decide.

Hearing nothing more from the petitioners, Atty. Parulan decided to call them on April 5,
1991, but they informed him that they had already fully paid to Ma. Elena.[17]

Thus, on April 15, 1991, Dionisio, through Atty. Parulan, commenced an action (Civil
Case No. 91-1005 entitled Dionisio Z. Parulan, Jr., represented by Jeremy Z. Parulan, as
attorney in fact, v. Ma. Elena Parulan, Sps. Rex and Coney Aggabao), praying for the
declaration of the nullity of the deed of absolute sale executed by Ma. Elena, and the cancellation
of the title issued to the petitioners by virtue thereof.

In turn, the petitioners filed on July 12, 1991 their own action for specific performance
with damages against the respondents.

Both cases were consolidated for trial and judgment in the RTC.[18]

Ruling of the RTC

After trial, the RTC rendered judgment, as follows:

WHEREFORE, and in consideration of the foregoing, judgment is hereby

rendered in favor of plaintiff Dionisio A. Parulan, Jr. and against defendants Ma.
Elena Parulan and the Sps. Rex and Concepcion Aggabao, without prejudice to
any action that may be filed by the Sps. Aggabao against co-defendant Ma. Elena
Parulan for the amounts they paid her for the purchase of the subject lots, as
follows:

1. The Deed of Absolute Sale dated March 18, 1991 covering the sale of
the lot located at No. 49 M. Cuaderno St., Executive Village, BF Homes,
Paraaque, Metro Manila, and covered by TCT Nos. 63376 and 63377 is declared
null and void.

2. Defendant Mrs. Elena Parulan is directed to pay litigation expenses

amounting to P50,000.00 and the costs of the suit.

98
 SO ORDERED.[19]

The RTC declared that the SPA in the hands of Ma. Elena was a forgery, based on its
finding that Dionisio had been out of the country at the time of the execution of the SPA;[20] that
NBI Sr. Document Examiner Rhoda B. Flores had certified that the signature appearing on the
SPA purporting to be that of Dionisio and the set of standard sample signatures of Dionisio had
not been written by one and the same person;[21] and that Record Officer III Eliseo O. Terenco
and Clerk of Court Jesus P. Maningas of the Manila RTC had issued a certification to the effect
that Atty. Alfred Datingaling, the Notary Public who had notarized the SPA, had not been
included in the list of Notaries Public in Manila for the year 1990-1991.[22]

The RTC rejected the petitioners defense of being buyers in good faith because of their failure to
exercise ordinary prudence, including demanding from Ma. Elena a court order authorizing her
to sell the properties similar to the order that the Los Baos Rural Bank had required before
accepting the mortgage of the property.[23] It observed that they had appeared to be in a hurry to
consummate the transaction despite Atanacios advice that they first consult a lawyer before
buying the property; that with ordinary prudence, they should first have obtained the owners
duplicate copies of the TCTs before paying the full amount of the consideration; and that the sale
was void pursuant to Article 124 of theFamily Code.[24]

Ruling of the CA

As stated, the CA affirmed the RTC, opining that Article 124 of the Family Code applied
because Dionisio had not consented to the sale of the conjugal property by Ma. Elena; and that
the RTC correctly found the SPA to be a forgery.
The CA denied the petitioners motion for reconsideration.[25]

Issues

The petitioners now make two arguments: (1) they were buyers in good faith; and (2) the
CA erred in affirming the RTCs finding that the sale between Mrs. Elena and the petitioners had
been a nullity under Article 124 of the Family Code.

The petitioners impute error to the CA for not applying the ordinary prudent mans
standard in determining their status as buyers in good faith. They contend that the more
appropriate law to apply was Article 173 of the Civil Code, not Article 124 of the Family Code;
and that even if the SPA held by Ma. Elena was a forgery, the ruling in Veloso v. Court of
Appeals[26] warranted a judgment in their favor.

Restated, the issues for consideration and resolution are as follows:

1) Which between Article 173 of the Civil Code and Article 124 of the Family
Code should apply to the sale of the conjugal property executed without the
consent of Dionisio?

99
 2) Might the petitioners be considered in good faith at the time of their purchase
of the property?

3) Might the ruling in Veloso v. Court of Appeals be applied in favor of the

petitioners despite the finding of forgery of the SPA?
Ruling

The petition has no merit. We sustain the CA.

1.
Article 124, Family Code, applies to sale of conjugal
properties made after the effectivity of the Family Code

The petitioners submit that Article 173 of the Civil Code, not Article 124 of the Family
Code, governed the property relations of the respondents because they had been married prior to
the effectivity of the Family Code; and that the second paragraph of Article 124 of the Family
Code should not apply because the other spouse held the administration over the conjugal
property. They argue that notwithstanding his absence from the country Dionisio still held the
administration of the conjugal property by virtue of his execution of the SPA in favor of his
brother; and that even assuming that Article 124 of the Family Code properly applied, Dionisio
ratified the sale through Atty. Parulans counter-offer during the March 25, 1991 meeting.

We do not subscribe to the petitioners submissions.

To start with, Article 254[27] the Family Code has expressly repealed several titles under
the Civil Code, among them the entire Title VI in which the provisions on the property relations
between husband and wife, Article 173 included, are found.

Secondly, the sale was made on March 18, 1991, or after August 3, 1988, the effectivity
of the Family Code. The proper law to apply is, therefore, Article 124 of the Family Code, for it
is settled that any alienation or encumbrance of conjugal property made during the effectivity of
the Family Code is governed by Article 124 of the Family Code.[28]

Article 124 of the Family Code provides:

Article 124. The administration and enjoyment of the conjugal partnership

property shall belong to both spouses jointly. In case of disagreement, the
husbands decision shall prevail, subject to recourse to the court by the wife for
proper remedy, which must be availed of within five years from the date of the
contract implementing such decision.

In the event that one spouse is incapacitated or otherwise unable to

participate in the administration of the conjugal properties, the other spouse
may assume sole powers of administration. These powers do not include
disposition or encumbrance without authority of the court or the written
100
 consent of the other spouse. In the absence of such authority or consent, the
disposition or encumbrance shall be void. However, the transaction shall be
construed as a continuing offer on the part of the consenting spouse and the third
person, and may be perfected as a binding contract upon the acceptance by the
other spouse or authorization by the court before the offer is withdrawn by either
or both offerors.

Thirdly, according to Article 256[29] of the Family Code, the provisions of the Family
Code may apply retroactively provided no vested rights are impaired. In Tumlos v.
Fernandez,[30] the Court rejected the petitioners argument that the Family Code did not apply
because the acquisition of the contested property had occurred prior to the effectivity of
the Family Code, and pointed out that Article 256 provided that the Family Code could apply
retroactively if the application would not prejudice vested or acquired rights existing before the
effectivity of the Family Code. Herein, however, the petitioners did not show any vested right in
the property acquired prior to August 3, 1988 that exempted their situation from the retroactive
application of the Family Code.

Fourthly, the petitioners failed to substantiate their contention that Dionisio, while
holding the administration over the property, had delegated to his brother, Atty. Parulan, the
administration of the property, considering that they did not present in court the SPA granting to
Atty. Parulan the authority for the administration.
Nonetheless, we stress that the power of administration does not include acts of
disposition or encumbrance, which are acts of strict ownership. As such, an authority to dispose
cannot proceed from an authority to administer, and vice versa, for the two powers may only be
exercised by an agent by following the provisions on agency of the Civil Code (from Article
1876 to Article 1878). Specifically, the apparent authority of Atty. Parulan, being a special
agency, was limited to the sale of the property in question, and did not include or extend to the
power to administer the property.[31]

Lastly, the petitioners insistence that Atty. Parulans making of a counter-offer during
the March 25, 1991 meeting ratified the sale merits no consideration. Under Article 124 of
the Family Code, the transaction executed sans the written consent of Dionisio or the proper
court order was void; hence, ratification did not occur, for a void contract could not be
ratified.[32]

On the other hand, we agree with Dionisio that the void sale was a continuing offer from
the petitioners and Ma. Elena that Dionisio had the option of accepting or rejecting before the
offer was withdrawn by either or both Ma. Elena and the petitioners. The last sentence of the
second paragraph of Article 124 of the Family Code makes this clear, stating that in the absence
of the other spouses consent, the transaction should be construed as a continuing offer on the part
of the consenting spouse and the third person, and may be perfected as a binding contract upon
the acceptance by the other spouse or upon authorization by the court before the offer is
withdrawn by either or both offerors.

101
 2.
Due diligence required in verifying not only vendors title,
but also agents authority to sell the property

A purchaser in good faith is one who buys the property of another, without notice that
some other person has a right to, or interest in, such property, and pays the full and fair price for
it at the time of such purchase or before he has notice of the claim or interest of some other
persons in the property. He buys the property with the belief that the person from whom he
receives the thing was the owner and could convey title to the property. He cannot close his eyes
to facts that should put a reasonable man on his guard and still claim he acted in good
faith.[33] The status of a buyer in good faith is never presumed but must be proven by the person
invoking it.[34]

Here, the petitioners disagree with the CA for not applying the ordinary prudent mans
standard in determining their status as buyers in good faith. They insist that they exercised due
diligence by verifying the status of the TCTs, as well as by inquiring about the details
surrounding the mortgage extended by the Los Baos Rural Bank. They lament the holding of the
CA that they should have been put on their guard when they learned that the Los Baos Rural
Bank had first required a court order before granting the loan to the respondents secured by their
mortgage of the property.

The petitioners miss the whole point.

Article 124 of the Family Code categorically requires the consent of both spouses before
the conjugal property may be disposed of by sale, mortgage, or other modes of disposition.
In Bautista v. Silva,[35] the Court erected a standard to determine the good faith of the buyers
dealing with
a seller who had title to and possession of the land but whose capacity to sell was restricted, in
that the consent of the other spouse was required before the conveyance, declaring that in order
to prove good faith in such a situation, the buyers must show that they inquired not only into the
title of the seller but also into the sellers capacity to sell.[36] Thus, the buyers of conjugal
property must observe two kinds of requisite diligence, namely: (a) the diligence in verifying the
validity of the title covering the property; and (b) the diligence in inquiring into the authority of
the transacting spouse to sell conjugal property in behalf of the other spouse.

It is true that a buyer of registered land needs only to show that he has relied on the face
of the certificate of title to the property, for he is not required to explore beyond what the
certificate indicates on its face.[37] In this respect, the petitioners sufficiently proved that they had
checked on the authenticity of TCT No. 63376 and TCT No. 63377 with the Office of the
Register of Deeds in Pasay City as the custodian of the land records; and that they had also gone
to the Los Baos Rural Bank to inquire about the mortgage annotated on TCT No. 63377.
Thereby, the petitioners observed the requisite diligence in examining the validity of the TCTs
concerned.

Yet, it ought to be plain enough to the petitioners that the issue was whether or not they
had diligently inquired into the authority of Ma. Elena to convey the property, not whether or not
102
the TCT had been valid and authentic, as to which there was no doubt. Thus, we cannot side with
them.

Firstly, the petitioners knew fully well that the law demanded the written consent of
Dionisio to the sale, but yet they did not present evidence to show that they had made inquiries
into the circumstances behind the execution of the SPA purportedly executed by Dionisio in
favor of Ma. Elena. Had they made the appropriate inquiries, and not simply accepted the SPA
for what it represented on its face, they would have uncovered soon enough that the respondents
had been estranged from each other and were under de factoseparation, and that they probably
held conflicting interests that would negate the existence of an agency between them. To lift this
doubt, they must, of necessity, further inquire into the SPA of Ma. Elena. The omission to
inquire indicated their not being buyers in good faith, for, as fittingly observed in Domingo v.
Reed:[38]

What was required of them by the appellate court, which we affirm, was
merely to investigate as any prudent vendee should the authority of Lolita to sell
the property and to bind the partnership. They had knowledge of facts that should
have led them to inquire and to investigate, in order to acquaint themselves with
possible defects in her title. The law requires them to act with the diligence of a
prudent person; in this case, their only prudent course of action was to investigate
whether respondent had indeed given his consent to the sale and authorized his
wife to sell the property.[39]

Indeed, an unquestioning reliance by the petitioners on Ma. Elenas SPA without first
taking precautions to verify its authenticity was not a prudent buyers move.[40] They should have
done everything within their means and power to ascertain whether the SPA had been genuine
and authentic. If they did not investigate on the relations of the respondents vis--vis each other,
they could have done other things towards the same end, like attempting to locate the notary
public who had notarized the SPA, or checked with the RTC in Manila to confirm the authority
of Notary Public Atty. Datingaling. It turned out that Atty. Datingaling was not authorized to act
as a Notary Public for Manila during the period 1990-1991, which was a fact that they could
easily discover with a modicum of zeal.

Secondly, the final payment of P700,000.00 even without the owners duplicate copy of
the TCT No. 63376 being handed to them by Ma. Elena indicated a revealing lack of precaution
on the part of the petitioners. It is true that she promised to produce and deliver the owners copy
within a week because her relative having custody of it had gone to Hongkong, but their
passivity in such an essential matter was puzzling light of their earlier alacrity in immediately
and diligently validating the TCTs to the extent of inquiring at the Los Baos Rural Bank about
the annotated mortgage. Yet, they could have rightly withheld the final payment of the balance.
That they did not do so reflected their lack of due care in dealing with Ma. Elena.

Lastly, another reason rendered the petitioners good faith incredible. They did not take
immediate action against Ma. Elena upon discovering that the owners original copy of TCT No.
63376 was in the possession of Atty. Parulan, contrary to Elenas representation. Human
experience would have impelled them to exert every effort to proceed against Ma. Elena,

103
including demanding the return of the substantial amounts paid to her. But they seemed not to
mind her inability to produce the TCT, and, instead, they contented themselves with meeting
with Atty. Parulan to negotiate for the possible turnover of the TCT to them.

3.
Veloso v. Court of Appeals cannot help petitioners

The petitioners contend that the forgery of the SPA notwithstanding, the CA could still
have decided in their favor conformably with Veloso v. Court of Appeals,[41] a casewhere the
petitioner husband claimed that his signature and that of the notary public who had notarized the
SPA the petitioner supposedly executed to authorize his wife to sell the property had been
forged. In denying relief, the Court upheld the right of the vendee as an innocent purchaser for
value.

Veloso is inapplicable, however, because the contested property therein was exclusively
owned by the petitioner and did not belong to the conjugal regime. Veloso being upon conjugal
property, Article 124 of the Family Code did not apply.

In contrast, the property involved herein pertained to the conjugal regime, and,
consequently, the lack of the written consent of the husband rendered the sale void pursuant to
Article 124 of the Family Code. Moreover, even assuming that the property involved
in Veloso was conjugal, its sale was made on November 2, 1987, or prior to the effectivity of
the Family Code; hence, the sale was still properly covered by Article 173 of the Civil
Code, which provides that a sale effected without the consent of one of the spouses is only
voidable, not void. However, the sale herein was made already during the effectivity of
the Family Code, rendering the application of Article 124 of the Family Code clear and
indubitable.
The fault of the petitioner in Veloso was that he did not adduce sufficient evidence to
prove that his signature and that of the notary public on the SPA had been forged. The Court
pointed out that his mere allegation that the signatures had been forged could not be sustained
without clear and convincing proof to substantiate the allegation. Herein, however, both the RTC
and the CA found from the testimonies and evidence presented by Dionisio that his signature had
been definitely forged, as borne out by the entries in his passport showing that he was out of the
country at the time of the execution of the questioned SPA; and that the alleged notary public,
Atty. Datingaling, had no authority to act as a Notary Public for Manila during the period of
1990-1991.

WHEREFORE, we deny the petition for review on certiorari, and affirm the decision
dated July 2, 2004 rendered by the Court of Appeals in C.A.-G.R. CV No.
69044 entitled Dionisio Z. Parulan, Jr. vs. Ma. Elena Parulan and Sps. Rex and Concepcion
Aggabao and Sps. Rex and Concepcion Aggabao vs. Dionisio Z. Parulan, Jr. and Ma. Elena
Parulan.

Costs of suit to be paid by the petitioners.

SO ORDERED.
104
LUCAS P. BERSAMIN
Associate Justice

WE CONCUR:

CONCHITA CARPIO MORALES

Associate Justice
Chairperson

MARIANO C. DEL CASTILLO MARTIN S. VILLARAMA, JR.

Associate Justice Associate Justice

MARIA LOURDES P. A. SERENO

Associate Justice

ATTESTATION

I attest that the conclusions in the above Decision had been reached in consultation before the
case was assigned to the writer of the opinion of the Courts Division.

CONCHITA CARPIO MORALES

Associate Justice
Chairperson

CERTIFICATION

Pursuant to Section 13, Article VIII of the Constitution, and the Division Chairpersons
Attestation, I certify that the conclusions in the above Decision had been reached in consultation
before the case was assigned to the writer of the opinion of the Courts Division.

RENATO C. CORONA
Chief Justice

105
*
Additional member per Special Order No. 879 dated August 13, 2010
[1]
Rollo, pp. 55-66; penned by Associate Justice Jose C. Mendoza (now a Member of this Court),
with Associate Justice Eugenio S. Labitoria (retired) and Associate Justice Edgardo P. Cruz
(retired) concurring.
[2]
Id., pp. 174-175.
[3]
Id., pp. 176-178.
[4]
Id., p. 23.
[5]
Id., p. 123.
[6]
Id., p. 23.
[7]
Id, pp. 23-24.
[8]
Id., p. 23.
[9]
Id., p. 23-24.
[10]
Id.
[11]
Id., pp. 24-25.
[12]
Id., p. 57.
[13]
Id., p. 110.
[14]
Id., p. 26.
[15]
Id., p. 110.
[16]
Id., p. 26.
[17]
Id., p. 105.
[18]
Id., pp. 14-15.
[19]
Id., p. 56.
[20]
Id., p. 58.
[21]
Id., p. 59.
[22]
Id., pp. 58-59.
[23]
Id., pp. 59-60.
[24]
Id., p. 60.
[25]
Supra, at note 3.
[26]
G.R. No. 102737, August 21, 1996, 260 SCRA 593.
[27]
Article 254. Titles III, IV, V, VI, VII, VIII, IX, XI and XV of Book I of Republic Act No.
386, otherwise known as the Civil Code of the Philippines, as amended, and Articles 17, 18, 19,
27, 28, 29, 30, 31, 39, 40, 41 and 42 of Presidential Decree No. 603, otherwise known as the
Child and Youth Welfare Code, as amended, and all laws, decrees, executive orders,
proclamations, rules and regulations, or parts thereof, inconsistent herewith are hereby repealed.
[28]
Alfredo v. Borras, G.R. No. 144225, June 17, 2003, 404 SCRA 145; Heirs of Ignacia
Aguilar-Reyes v. Mijares, G.R. No. 143826, August 28, 2003, 410 SCRA 97; Sps. Guiang v.
Court of Appeals, G.R. No. 125172, June 26, 1998, 291 SCRA 372.
[29]
Article 256. This Code shall have retroactive effect insofar as it does not prejudice or impair
vested or acquired rights in accordance with the Civil Code or other laws.
[30]
G.R. No. 137650, April 12, 2000, 330 SCRA 718.
[31]
Under Article 1876, Civil Code, a general agency comprises all the business of the principal,
but a special agency comprises one or more specific transactions.
[32]
Article 1409, Civil Code.

106
[33]
Heirs of Ignacia Aguilar-Reyes v. Mijares, G.R. No. 143826, August 28, 2003, 410 SCRA
97, 107
[34]
Bautista v. Silva, G.R. No. 157434, September 19, 2006, 502 SCRA 334, 346; Aguirre v.
Court of Appeals, G.R. No. 122249, January 29, 2004, 421 SCRA 310, 321.
[35]
Id, p. 348.
[36]
Id, p. 348.
[37]
Abad v. Guimba, G.R. No. 157002, July 29, 2005, 465 SCRA 356, 366-367.
[38]
G.R. No. 157701, December 9, 2005, 477 SCRA 227.
[39]
Id., p. 244.
[40]
Bautista v. Silva, note 34.
[41]
Supra, note 26.

107
 Republic of the Philippines

Supreme Court
Baguio City

SECOND DIVISION

TRINIDAD GO, joined by her G.R. No. 182341

husband, GONZALO GO, SR.,
Petitioners,

- versus - Present:

VICENTE VELEZ CHAVES,* CARPIO, J., Chairperson,

Respondent, BRION,
DEL CASTILLO,

ALICE CHAVES, ABAD, and

Respondent-Intervenor, PEREZ, JJ.

MEGA-INTEGRATED AGRO Promulgated:

LIVESTOCK FARMS, INC.,

Respondent-Intervenor, April 23, 2010
x-------------------------------------------------------------------x

108
 DECISION

DEL CASTILLO, J.:

Equity regards substance rather than form, it abhors forfeiture.

On purely technical grounds, the Court of Appeals (CA) dismissed petitioners appeal and denied
their plea for reconsideration. Hence, petitioners come to this Court via this Petition for Review
on Certiorari to assail the Resolutions dated October 10, 2007[1] and March 11, 2008[2] of the appellate
court in CA-G.R. CV No. 00257.

Factual Antecedents

On January 29, 1997, Vicente Chaves (Vicente) filed a Complaint[3] against spouses Trinidad Go
and Gonzalo Go (Go spouses, herein petitioners) before the Regional Trial Court (RTC) of Cagayan de
Oro City for the removal of clouds on his transfer certificates of title. The case was docketed as Civil Case
No. 97-065 and was raffled to Branch 38 (later re-raffled to Branch 24) of said court. Vicente alleged that
in April 1996 Paquito Francisco Yap and Evelyn Nellie Chaves-Yap (the Yap spouses), his son-in-law
and daughter respectively, obtained a loan in the amount of P23.2 million from Trinidad Go (Trinidad),
using his and his wifes real properties as collaterals. The Yap spouses were able to do this by presenting a
forged Special Power of Attorney (SPA)[4] purporting to authorize the Yap spouses to obtain a loan using
Transfer Certificates of Title (TCT) Nos. T-60898 and T-60899 registered in the names of Vicente and
his wife Alice Chaves (Alice) as collaterals.[5]

Because some portions of said lots were disposed of, Vicente consolidated and subdivided the
remaining lots (which included the mortgaged properties to Trinidad), bringing about three derivative
titles still under the names of the Chaves spouses: TCT Nos. T-114415,[6] T-114416,[7] and T-
114417.[8] The Go spouses considered this move a machination in order to prevent them from annotating
their right on the collaterals. Hence, to protect their right, they got hold of the derivative titles and caused
the annotation of the SPA and their mortgage rights on each certificates of title.[9]

Vicente prayed that the SPA and mortgage to petitioners be invalidated, and that the Go spouses
be directed to surrender the owners duplicate certificates of title over the subject properties.

Subsequently, the trial court allowed two parties to intervene in the case: a) Alice, who alleged
that her rights to the share of the conjugal partnership are being trampled upon and who, like her husband,

109
averred that she had never authorized the Yap spouses to mortgage the conjugal properties[10] and; b)
Mega Integrated Agro-Livestock Farms, Inc. (Mega), which claimed that it had purchased from Vicente
in December 1996 a portion of the property covered by TCT No. T-114415, and that it could not effect
the transfer of said title in its name because the Go spouses are in possession of the owners copy of TCT
No. T-114415.[11]

Ruling of the Regional Trial Court

After due hearing, the RTC rendered a Decision[12] dated March 19, 2004, the dispositive portion
of which stated:

WHEREFORE, premises considered, judgment is hereby rendered:

1. DECLARING, as between plaintiff, intervenor Alice C. Chaves and

defendants, the Special Power of Attorney (Exh. 1-Go and Exh. A) allegedly executed by
plaintiff and intervenor Alice C. Chaves as well as the second mortgage (Exh. 2-Go) as
INEFFECTIVE, INVALID, AND UNENFORCEABLE as against plaintiff and
intervenor ALICE CHAVES as they did not sign said special power of attorney and
second mortgage. Consequently, the adverse claim, notice of lis pendens and the
annotation of the second mortgage on TCT No. T-114415, TCT No. T-114416 and TCT
No. T-114417 must be cancelled and or removed they being clouds to said titles. For said
purpose, the Register of Deeds of the City of Cagayan de Oro is hereby ordered to cancel
them;

2. DECLARING plaintiff and intervenor Alice C. Chaves as not bound by the

effects of the second mortgage they having not signed the Special Power of Attorney and
said second mortgage. What defendants should do is to demand the amount mentioned in
the second mortgage from Paquito S. Yap and Evelyn Nellie Chaves Yap;

3. ORDERING defendant TRINIDAD GO to surrender to MEGA

INTERGRATED AGRO-LIVESTOCK INDUSTRIAL FARMS, INC. the owners copy
of TCT No. T-114415 and to intervenor ALICE C. CHAVES the owners copy of TCT
No. T-114416 and T-114417;

4. Ordering MEGA INTEGRATED AGRO-LIVESTOCK INDUSTRIAL

FARMS, INC. thru [sic] See Hong to pay intervenor Alice C. Chaves the balance

110
 of P15,074,000.00 as her share in the conjugal partnership but only after the land sold
consisting of Lot Nos. 1 and 2 covered by TCT No. 114414 and TCT No. 114415 shall
have been cleared of squatters by intervenor Alice Chaves.

5. DENYING the prayer for attorneys fees and moral damages there being no
proof shown that in annotating the second mortgage on TCT No. T-114415, TCT No. T-
114416, and TCT No. T-114417, all of the Registry of Deeds of Cagayan de Oro City,
defendants were motivated by evident bad faith;

6. DENYING defendants counterclaim for lack of merit it not being shown that
in filing the case, plaintiff was motivated by malice and evident bad faith.[13]

The Procedural Blunders that Prodded the CA to

Dismiss Petitioners Appeal

The Go spouses appealed to the CA Cagayan de Oro. They filed their brief and furnished Vicente
with a copy thereof before the June 12, 2007 deadline. However, all the other adverse parties moved
before the CA to have the appeal dismissed:

a) Mega argued in its Motion to Dismiss[14] that Go spouses failed to file their brief on time. It
appears that Go spouses failed to furnish Mega with a copy of their brief. Their counsel, Atty.
Kathryn Dela Serna, claimed inadvertence for the mistake.[15] Nonetheless, when Go spouses
received Megas Motion to Dismiss on June 14, 2007, they personally served Mega a copy of the brief
that same day;[16]
b) Vicente (now substituted by his children in view of his death) on the other hand, complained
about the form of the appellants brief he received, pointing to want of the following requirements
under Rule 44 of the Rules of Court: 1) subject index, page references, and legal citations as required
under Section 13; and 2) certified true copy of the assailed RTC Decision as required in Section 13(f)
[should be (h)]. Petitioners counsel again professed inadvertence and good faith, reasoning that the
errors cannot be considered fatal, for the body/contents of the appellants brief have substantially
complied with the provisions of Rule 44. Nevertheless, she submitted the subject index/table of
contents of the brief;[17]

111
c) More than two months after the filing of the appellants brief, Alice still had not received a copy
of said brief. She thus joined Mega in asking the appellate court for the dismissal of Go spouses
appeal.[18] Upon learning that Alice was likewise not provided with the appellants brief, petitioners
then furnished her with a copy thereof on August 30, 2007.[19] In their Comment,[20] petitioners
counsel, Atty. Emmy Lou Lomboy (working for Atty. Dela Sernas law firm), justified the oversight
by explaining that she only inherited the case from the former counsel of record, and that she merely
relied on the list of parties indicated on the CA Resolutions/Notices[21] who must be furnished with
copies of the appellants brief. It appears, however, that Atty. Erlington Pimentel, is not included
therein.

Ruling of the Court of Appeals

Acceding to all the appellees objections and opining that an utter and flagrant disregard of the
rules of procedure is inexcusable, the CA dismissed the appeal of the Go spouses on the following
grounds: First, that Go spouses failed to serve a copy of their appellants brief upon the intervenors on
time,[22] and, second, that their appellants brief does not contain a subject index and that no copy of the
assailed Decision was appended thereto, in violation of Section 44, Section 13 (a) and (h) in relation to
Rule 50, Section 1(f).[23]

It reasoned:

In the case at bench, appellants [Go spouses] even admitted that they failed to
serve a copy of their brief to Mega Farms as well as to Alice Chaves on the same day
they filed the brief with this Court.Belated compliance with this requirement does not
suffice. Proper procedure dictates that a copy of the pleading be first furnished the
opposing party so that proof of such service may be duly indicated on the original of the
pleading to be filed shortly afterward in court, such indication being either a handwritten
acknowledgment by the adverse party or the registry receipt of the copy mailed to the
adverse party.Service precedes filing; both within the time allowed by the Rules.

Second. It is a matter of fact that the appellants brief does not contain a subject
index nor does it have as an appendix the copy of the assailed decision. x x x

The first requirement of an appellants brief is a subject index. The index is

intended to facilitate the review of appeals by providing ready reference, functioning
much like a table of contents. This jurisdiction prescribes no limit on the length of appeal
briefs or appeal memoranda filed before appellate courts. The downside of this liberal
rule is, of course, the very real possibility that the reviewing tribunal will be swamped

112
 with voluminous documents. This occurs even though the rules consistently urge the
parties to be brief or concise in the drafting of pleadings, briefs, and other papers to be
filed in court. Herein lies the reason and the need for a subject index. The subject index
makes readily available at ones fingertips the subject of the contents of the brief so that
the need to thumb through the brief page after page to locate a partys arguments, or a
particular citation, or whatever else needs to be found and considered, is obviated.

xxxx

Although appellants may have subsequently rectified those deficiencies, the

belated compliance, however, is not by itself sufficient to warrant suspension of the strict
requirements of the rules, absent any showing that the initial non-compliance was not in
any way attributable to negligence, or that there are highly justifying equitable reasons for
this Court to make an extraordinary disposition in the interest of justice.

It has long been recognized that strict compliance with the rules is indispensable
for the prevention of needless delays and for the orderly and expeditious dispatch of
judicial business. Utter disregard of the rules cannot just be rationalized by harking on the
policy of liberal construction. While courts should, in all cases, endeavor to do substantial
justice without undue subservience to technicalities, the mere invocation by the parties of
liberality and substantial justice does not automatically do away with the rules laid down
for the orderly administration of justice.[24]

Issue

Stated simply, the lone issue for our consideration is whether the appellate court erred in
dismissing the appeal.

Our Ruling

Facing up to all these objections and admitting the mistakes committed, the Gos beseech liberality in the
application of the rules. Even if clearly their counsel committed a number of palpable mistakes which, as
a general rule should bind the client, we shall grant the petition in the interest of justice.[25]

113
 Our rules of procedure are designed to facilitate the orderly disposition of cases and permit the
prompt disposition of unmeritorious cases which clog the court dockets and do little more than waste the
courts time.[26] These technical and procedural rules, however, are intended to ensure, rather than
suppress, substantial justice.[27] A deviation from their rigid enforcement may thus be allowed, as
petitioners should be given the fullest opportunity to establish the merits of their case, rather than lose
their property on mere technicalities.[28] We held in Ong Lim Sing, Jr. v. FEB Leasing and Finance
Corporation[29] that:

Courts have the prerogative to relax procedural rules of even the most mandatory
character, mindful of the duty to reconcile both the need to speedily put an end to
litigation and the parties' right to due process. In numerous cases, this Court has allowed
liberal construction of the rules when to do so would serve the demands of substantial
justice and equity.

We agree that the CA had the discretion to dismiss petitioners appeal. The discretion, however,
must be a sound one, to be exercised in accordance with the tenets of justice and fair play, having in mind
the circumstances obtaining in each case.[30]

Here, we find that the failure to serve a copy of the appellants brief to two of the adverse parties
was a mere oversight, constituting excusable neglect.[31] A litigant's failure to furnish his opponent with a
copy of his appeal brief does not suffice to warrant dismissal of that appeal. In such an instance, all that is
needed is for the court to order the litigant to furnish his opponent with a copy of his brief.[32] Anent the
failure to append a copy of the assailed judgment, instead of dismissing the appeal on that basis, it is more
in keeping with equity to simply require the appellants to immediately submit a copy of the Decision of
the lower court rather than punish litigants for the reckless inattention of their lawyers.

The purpose of a subject index in an appellants/appellees brief obviates the court to thumb
through a possibly lengthy brief page after page to locate whatever else needs to be found and considered,
such as arguments and citations.[33] In the case at bar, notably, the appeal brief submitted to the CA
consists only of 17 pages which the appellate court may easily peruse to apprise it of what the case is all
about and of the relief sought. Thus, the belated submission of the subject index may be considered
excusable. Our discussion in Philippine Coconut Authority v. Corona International, Inc.[34] is apropos:

x x x the purpose of the brief is to present the court in coherent and concise form the point
and questions in controversy, and by fair argument on the facts and law of the case, to
assist the court in arriving at a just and proper conclusion. A haphazard and pellmell
presentation will not do for the brief should be so prepared as to minimize the labor of the

114
 court in examination of the record upon which the appeal is heard and determined. It is
certainly, 'the vehicle of counsel to convey to the court the essential facts of his client's
case, a statement of the questions of law involved, the law he should have applied, and
the application he desires of it by the court'. There should be an honest compliance with
the requirements regarding contents of appellant's brief, and among which is that it
should contain "a subject index of the matter in the brief with a digest of the argument
and page references."

We do not disagree with the appellate court's above exposition. The requirements laid
down in Section 13, Rule 43 are intended to aid the appellate court in arriving at a just
and proper conclusion of the case. However, we are of the opinion that despite its
deficiencies petitioner's appellant's brief is sufficient in form and substance as to apprise
the appellate court of the essential facts and nature of the case as well as the issues raised
and the laws necessary for the disposition of the same.

This case involves voluminous records meriting a review on the merits by the CA. Otherwise, the
efforts of the petitioners to protect their collateral in their judicial battle will lead to naught once they lose
their remedy of an appeal just because of procedural niceties. Adherence to legal technicalities allows
individual error to be suffered in order that justice in the maximum may be preserved. Nonetheless, "we
should indeed welcome," as Judge Learned Hand once wrote, "any efforts that help disentangle us from
the archaisms that still impede our pursuit of truth".[35] Our ruling in Aguam v. Court of Appeals[36] also
bears recalling:

Every party litigant must be afforded the amplest opportunity for the proper and just
determination of his cause, free from the unacceptable plea of technicalities. Thus,
dismissal of appeals purely on technical grounds is frowned upon where the policy of the
court is to encourage hearings of appeals on their merits and the rules of procedure ought
not to be applied in a very rigid, technical sense; rules of procedure are used only to help
secure, not override substantial justice. It is a far better and more prudent course of action
for the court to excuse a technical lapse and afford the parties a review of the case on
appeal to attain the ends of justice rather than dispose of the case on technicality and
cause a grave injustice to the parties, giving a false impression of speedy disposal of cases
while actually resulting in more delay, if not a miscarriage of justice.

WHEREFORE, the petition is GRANTED. The Resolutions dated October 10,

2007 and March 11, 2008 of the Court of Appeals in CA-G.R. CV No. 00257 are SET ASIDE;

115
petitioners appeal is REINSTATED; and the instant case is REMANDED to the Court of Appeals for
further proceedings.

SO ORDERED.

MARIANO DEL CASTILLO

Associate Justice

WE CONCUR:

ANTONIO T. CARPIO
Associate Justice
Chairperson

ARTURO D. BRION ROBERTO A. ABAD

Associate Justice
Associate Justice

JOSE P. PEREZ
Associate Justice

ATTESTATION

116
I attest that the conclusions in the above Decision had been reached in consultation before the case was
assigned to the writer of the opinion of the Courts Division.

ANTONIO T. CARPIO
Associate Justice
Chairperson, Second Division

CERTIFICATION

Pursuant to Section 13, Article VIII of the Constitution, and the Division Chairpersons attestation, it is
hereby certified that the conclusions in the above Decision had been reached in consultation before the
case was assigned to the writer of the opinion of the Courts Division.

REYNATO S. PUNO
Chief Justice

*
Substituted by Ronaldo Chaves, Lino Chaves, Carlos Chaves and Tessie C. Aldana, per Order
dated January 18, 2000 of the Regional Trial Court of Cagayan de Oro City, Branch 24,
records, p. 563.
[1]
Rollo, pp. 204-209, penned by Associate Justice Edgardo A. Camello and concurred in by
Associate Justices Jane Aurora C. Lantion and Elihu A. Ybaez.
[2]
Id. at 226-228.
[3]
Id. at 62-75.
[4]
Id. at 112.
[5]
Id. at 113-114. The mortgage to Trinidad Go is a 2nd mortgage by the Yaps over the subject
properties, the first one being with Metrobank, which was subsequently released. Vicente is
only assailing this mortgage with Trinidad Go.
[6]
Id. at 115-116.

117
[7]
Id. at 117-118.
[8]
Id. at 119-120.
[9]
Id. at 116, 118 and 120.
[10]
Id. at 296-298.
[11]
Id. at 100-105.
[12]
Id. at 129-143; penned by Presiding Judge Leonardo N. Demecillo.
[13]
Id. at 142-143.
[14]
Id. at 164-167.
[15]
Id. at 168-171.
[16]
Id. at 172.
[17]
Id. at 178-188.
[18]
CA rollo, pp. 112-113.
[19]
Id. at 118.
[20]
Id. at 114-117.
[21]
Id. at 119-122; dated February 28, 2006, June 20, 2006, March 7, 2007, and March 16, 2007.
[22]
Rule 44, Sec. 7. Appellants brief. It shall be the duty of the appellant to file with the court,
within forty-five (45) days from receipt of the notice of the clerk that all the evidence, oral
and documentary, are attached to the record, seven (7) copies of his legibly typewritten,
mimeographed or printed brief, with proof of service of two (2) copies thereof upon the
appellee.
[23]
Rule 44, Sec. 13. Contents of appellants brief. The appellants brief shall contain, in the order
herein indicated, the following:
(a) A subject index of the matter in the brief with a digest of the arguments and page
references, and a table of cases alphabetically arranged, textbooks and statutes cited with
references to the pages where they are cited;
xxxx
(h) In cases not brought up by record on appeal, the appellants brief shall contain, as an
appendix, a copy of the judgment or final order appealed from.
Rule 50, Sec. 1. Grounds for dismissal of appeal. An appeal may be dismissed by the Court
of Appeals, on its own motion or on that of the appellee, on the following grounds:
xxxx
(f) Absence of specific assignment of errors in the appellants brief, or of page references to
the record as required in section 13, paragraphs (a), (c), (d) and (f) of Rule 44;
[24]
CA rollo, pp. 206-208.
[25]
Friend v. Unionbank, G.R. No. 165767, November 29, 2005, 476 SCRA 453, 457-458.
[26]
Sps. Del Rosario v. Court of Appeals, 311 Phil. 630, 636 (1995).
[27]
Bigornia v. Court of Appeals, G.R. No. 173017, March 17, 2009.
[28]
Sangalang v. Barangay Maguihan, G.R. No. 159792, December 23, 2009; Acme Shoe,
Rubber & Plastic Corp. v. Court of Appeals, 329 Phi. 531, 538 (1996).
[29]
G.R. No. 168115, June 8, 2007, 524 SCRA 333, 343.
[30]
Aguam v. Court of Appeals, 388 Phil. 587, 593 (2000).

118
[31]
Sunrise Manning Agency, Inc. v. National Labor Relations Commission, 485 Phil. 426, 430-
431 (2004); Carnation Philippines Employees Labor Union-FFW v. National Labor
Relations Commission, 210 Phil. 30, 31 (1983).
[32]
Perez v. Court of Appeals, 374 Phil. 388, 408 (1999), citing Precision Electronics
Corporation v. National Labor Relations Commission, G.R. No. 86657, October 23, 1989,
178 SCRA 667, 670.
[33]
De Liano v. Court of Appeals, 421 Phil. 1033, 1042 (2001).
[34]
395 Phil. 742, 750 (2000). Citations omitted.
[35]
United States v. Allied Stevedoring Corp., 241 F.2d 925, 934 (2 Cir.), cert. denied, 353 U.S.
984, 77 S.Ct. 1282, 1 L.Ed.2d 1143 (1957).
[36]
388 Phil. 587, 594 (2000). See also American Express International, Inc. v. Intermediate
Appellate Court, G.R. No. L-70766, November 9, 1988, 167 SCRA 209, 221; Tan Boon Bee
& Co., Inc. v. Judge Jarencio, G.R. No. L-413337, June 30, 1988, 163 SCRA 205, 213; De
las Alas v. Court of Appeals, 172 Phil. 559, 575 (1978); Nerves v. Civil Service Commission,
342 Phil. 578, 585 (1997).

119
 FIRST DIVISION

[G.R. No. 149250. December 8, 2003]

SPOUSES LEON AND LOLITA ESTACIO, petitioners, vs. DR. ERNESTO

JARANILLA, respondent.

DECISION
AZCUNA, J.:

The instant petition for review on certiorari seeks the reversal of the Decision[1] and
Resolution[2] of the Court of Appeals dated June 10, 1999 and May 31, 2001, which affirmed
with modification the Decision[3] of the Regional Trial Court of Pagadian City, Branch 18, in
Civil Case No. 3779.
This case stemmed from an action for the annulment of deeds of conveyance and certificates
of title over a parcel of land located in Barrio Bulatoc, Pagadian City, known as Lot No. 202,
Pls-119 (HV-81514). The factual antecedents, as summarized by the Court of Appeals, are as
follows:

There is no dispute regarding the fact that, sometime in 1987, Josefina Jaranilla went to live with
her son, Ernesto Jaranilla, a doctor based in the United States of America. On June 9, 1992,
however, the above-described parcel of land was sold for a price of P16,000 in favor of Luis A.
Bersales, Jr. The deed of sale was executed in the name of Josefina Jaranilla by one Lolita F.
Estacio who claimed to have been so authorized by a Special Power of Attorney dated July 26,
199[1]. The day following the conveyance, Josefina Jaranillas title was cancelled and, in lieu
thereof, Transfer Certificate Title of Title No. T-9,455 of the Pagadian City registry was issued
in favor of Luis A. Bersales, Jr.

On June 16, 1992, Luis A. Bersales, Jr. sold the subject parcel of land for P16,000 in favor of
Jorge T. Almonte, in whose name Transfer Certificate of Title No. T-9,767 was, consequently,
issued by the Register of Deeds of Pagadian City. Upon the death of his wife, Jorge T. Almonte
caused the issuance of a new title over the land Transfer Certificate of Title No. T-11,732 in his
name and those of his children

Discovering the unauthorized conveyance of her parcel of land upon her return to
the Philippines in 1992, Josefina Jaranilla sent a letter to the Registrar of Deeds of Zamboanga
on March 24, 1993, the contents of which are reproduced, to wit:

March 24, 1993

Cebu City

120
ATTY. RICARDO DIOSO JR.
Registrar of Deeds of Zamboanga del Sur
Capitol Building
Pagadian City
Zamboanga del Sur

SIR:

My client, MS. JOSEFINA JARANILLA, who is the registered owner of Lot No. 202,
Pls-119 situated in the barrio Bulatoc Pagadian City, and covered by Transfer
Certificate of Title No. T-3,706 duly issued by your office dated March 20, 1968,
hereby intend[s] to inform your office that she [has] not authorized anybody to
negotiate or transact the above-stated parcel of land and that the owners duplicate
original of the said land is in her possession. If ever there will be any negotiation or
transaction [over] the said land, my said client, Ms. Josefina Jaranilla, will enter into
the same personally.

This letter is made in order to avoid trouble and confusion that may arise in the future
as my client was informed that somebody is trying to negotiate and transact
the aforestated land without my clients knowledge, authority and consent.

Thank you very much for your kind attention on this matter.

Yours truly,
(SGD.)
Atty. Manuel F. Ong
Counsel for Ms. Josefina Jaranilla

Done at my instance:
(SGD.)
Ms. Josefina Jaranilla

Meanwhile, employing another Special Power of Attorney dated January 4, 1993,

Lolita F. Estacio ratified the sale of the land in favor of Luis A. Bersales, Jr. with the
execution of another Deed of Sale dated April 19, 1993.

Josefina Jaranilla died on December 19, 1994, and her only son and heir, Ernesto
Jaranilla, represented by his duly appointed Attorney-in-Fact, Rosalia Frias Muoz, filed
a complaint for declaration of nullity and/or annulment of transfer certificates of titles,
deeds and conveyances, recovery of possession, and damages. Contending that the
Special Power of Attorney utilized by Lolita F. Estacio was a falsified document,
plaintiff alleged, among other matters, that the subsequent transfers of the land in
litigation were, for said reason alone, already null and void; and that the inadequate
consideration, as well as the inordinate haste at which the land was transferred,
indicates that the defendants conspired with one another in fraudulently depriving him
and his predecessors-in-interest of the ownership thereof.

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 In the answers they separately filed after service of summons upon them, defendants
Luis A. Bersales, Jr. and Jorge T. Almonte, claimed to be innocent purchasers for value
and in good faith.Contending that plaintiff had no cause of action against them, they
both prayed for the dismissal of the complaint and the grant of their counterclaims for
moral and exemplary damages, attorneys fees, litigation expenses and the costs of the
suit.

Joined by her husband, Leon Estacio, Jr., who was impleaded in the suit as a nominal
defendant, Lolita F. Estacio, on the other hand, specifically denied the material
allegations of the complaint in an Answer dated June 28, 1996. As affirmative defenses,
she claimed that, having merely received the assailed powers of attorney from the
decedents sister, Remedios Jaranilla, she had no hand in the preparation of the
documents, much less in the alleged forgery of the signatures therein; that she relied on
the assurance of Remedios Jaranilla regarding the authenticity of the said documents,
and transferred the subject land in favor of defendant Luis A. Bersales, Jr. in good
faith Defendants thereupon prayed for the dismissal of the complainant and sought
indemnity for moral and exemplary damages, attorneys fees, as well as litigation and
other expenses.

At the pre-trial conference, the parties admitted the pieces of documentary evidence
attached to their pleadings and agreed to dispense with the further presentation of
evidence and to submit the case on the merits.[4]

The trial court, finding the special powers of attorney used by petitioner Lolita as highly
questionable, spurious and self-evidently fabricated, nullified the original sale to Atty.
Bersales. It however found that good faith had intervened in the subsequent transaction; hence, it
upheld Atty. Almontes title to the property.
Although noting at the outset that the parties agreement to forego a full-blown trial of the
case on the merits has left unfortunate gaps which would [otherwise] have proved useful to the
resolution of the factual issues, the Court of Appeals nevertheless found sufficient evidence of
forgery. It ruled that the manifest disparity between the genuine signature of Josefina Jaranilla
and those represented to be hers in the Special Powers of Attorney dated July 26,
1991 and January 4, 1993 clearly indicates that the latter signatures were, indeed, forged. It
modified the trial courts decision in that it also nullified Atty. Almontes title, finding him to have
purchased the property in bad faith. Further, it reduced the damages awarded by the trial court in
favor of respondent from P800,000 to P100,000. The dispositive portion of the Court of Appeals
decision states, as follows:

WHEREFORE, the Decision appealed from is MODIFIED, as follows:

1. The Special Power of Attorney dated July 26, 1991, allegedly executed by Josefina
Jaranilla appointing defendant Lolita Frias Estacio as her Attorney-in-Fact is
declared NULL and VOID;

2. The sale of the subject property between Josefina Jaranilla represented by defendant
Lolita F. Estacio as the supposed Attorney-in-Fact of the former, and Atty. Luis

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 Bersales, Jr., and the sale of the same property in litigation between Atty. Luis
Bersales, Jr., as vendor and Atty. Jorge T. Almonte as vendee, are declared NULL
and VOID, together with all the documents and transfer certificates of title issued
subsequent thereto;

3. TCT No. T-9,455 covering the subject property in the name of Atty. Luis Bersales,
Jr.; TCT No. T-767 issued in the name of Atty. Jorge T. Almonte, as well as TCT
No. T-11,732 issued in the name of Atty. Jorge T. Almonte, Jason P. Almonte,
Oliver George P. Almonte, Jeffrey P. Almonte and Lilibeth P. Almonte, over the
same lot in litigation, are hereby ANNULLED;

4. TCT No. T-3,706 of the Zamboanga del Sur Register of Deeds in the name of
Josefina Jaranilla is ordered REINSTATED.

5. Defendant-appellant Lolita Frias Estacio is ordered to indemnify plaintiff Dr. Ernesto

Jaranilla the amount of One Hundred Thousand Pesos (P100,000) as moral,
nominal and temperate damages; and

6. Defendant-appellant Lolita F. Estacio, defendants-appellees Luis Bersales, Jr. and

Jorge T. Almonte, are directed to pay the costs of the suit.[5]

Dissatisfied with the Court of Appeals ruling, petitioner-spouses Leon and

Lolita Estacio now come before this Court raising two issues for our review. First, they question
the assailed Decision and Resolution for having been decided contrary to law on the main
contention that respondent miserably failed to present clear and convincing evidence to support
the finding of forgery. Second, they assert that respondents failure to prove the claim of forgery
renders the order for them to pay damages devoid of legal basis.[6]
The petition is without merit.
In an attempt to cast doubt on the findings of the trial court and the Court of Appeals,
petitioners make much of the fact that respondent did not personally testify nor introduce any
witness to prove the alleged forgery. They aver that as a consequence of such lapse, respondent
has failed to discharge the required burden of proof.[7]
Petitioners argument is not tenable. As shown from the records, the finding of forgery was
based on a comparison of the deceaseds purported signatures on the assailed Special Powers of
Attorney and the latters signature appearing on a private document. Indeed, the factual
conclusion of forgery could have drawn more support from other corroborating evidence such as
testimonies of handwriting experts or witnesses familiar with the deceaseds handwriting. It must
be emphasized, however, that the lack of such evidence is the result of the agreement of
petitioners and respondent to submit the case for decision on the basis of their pleadings and
documents. Petitioners would now have this Court tilt the scale in their favor on the ground that
respondent had failed to offer testimonial evidence to prove his case. There is, therefore, a clear
attempt by petitioners to capitalize on what was a mutual agreement to dispense with a trial on
the merits. The same, however, is unavailing, because the lack of testimonial evidence by no
means disturbs the finding of forgery.

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 It bears stressing that the trial court may validly determine forgery from its own independent
examination of the documentary evidence at hand. This the trial court judge can do without
necessarily resorting to experts, especially when the question involved is mere handwriting
similarity or dissimilarity, which can be determined by a visual comparison of specimen of the
questioned signatures with those of the currently existing ones.[8] Section 22 of Rule 132 of the
Rules of Court explicitly authorizes the court, by itself, to make a comparison of the disputed
handwriting with writings admitted or treated as genuine by the party against whom the evidence
is offered, or proved to be genuine to the satisfaction of the judge.[9]
This Court notes that the Special Powers of Attorney being questioned constitute public
documents, having been acknowledged before a notary public. As such, their executions are
entitled to a presumption of regularity.[10] But, just like any other presumption, this is not
conclusive, but is rebuttable by clear and convincing evidence to the contrary.[11]
After a perusal of the records of the case, this Court finds basis for the finding of manifest
discrepancy between the signatures of the deceased on the questioned Special Powers of
Attorney, and the signature on the submitted specimen. The records support the finding that the
signatures on the assailed Special Powers of Attorney do not appear to have been executed by the
late Josefina Jaranilla. As correctly found by the Court of Appeals:

xxx xxx xxx

The manifest disparity between the genuine signature of Josefina Jaranilla and those represented
to be hers in the Special Powers of Attorney dated July 26, 1991 and Janury 4, 1993 clearly
indicates that the latter signatures were, indeed, forged. Mere variance of the signatures cannot,
admittedly, be considered as exclusive proof that the same were forged in much the same way
that forgery cannot be presumed. As correctly observed by the trial court, however, defendant-
appellant Lolita Estacios bare claim of good faith is belied by her use of a second special Power
of Attorney in the execution of a second deed of sale in favor of defendant-
appellee Luis Bersales after Josefina Jaranilla warned the Registrar of Deeds of Zamboanga
del Sur of unauthorized transactions involving her property.

[A]ppellant Estacio spouses call the attention of the [c]ourt to the supposed fact, among others,
that the plaintiff-appellee had failed to prove Josefina Jaranillas continuous stay in the U.S.A.
after her departure from the Philippines in 1992; and, that as public documents, the Special
Powers of Attorney executed in her (Lolita Estacios) favor, as well as the Deeds of Sale she
executed in favor of defendant-appelleeLuis Bersales, Jr., deserve full faith and credence. The
records, however, shows that defendant-appellants have admitted the following allegations set
forth in paragraph 4 of the complaint, viz:

xxx xxx xxx

4. That sometime in the year 1987, deceased Josefina Jaranilla while still living, went to the
United States to join her son, who has been a permanent resident thereat incidental to the latters
exercise of his medical profession and stayed thereat until her return to the Philippines in the
latter part of the year 1992.

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 xxx xxx xxx

Far more important than their admission of Josefina Jaranillas whereabouts during the aforesaid
period of time, defendant-appellants have thereby effectively put in dubious light the authenticity
of the July 26, 1991 Special Power of Attorney which, on its face, designate Cebu City as its
place of execution and acknowledgement. Having likewise admitted that the consideration stated
in the deed of sale dated June 9, 1992 was false, appellant spouses are, likewise, hardly in a
position to invoke the presumption of authenticity and regularity accorded to public documents.
Moreover, if it were true that defendant-appellant Lolita Estacio believed the deed of sale
dated June 9, 1992 to be authentic and regular, she would not have attempted to ratify the same
with the subsequent execution of the deed of sale dated April 19, 1993. [12]

It can be gleaned from the aforecited decision of the Court of Appeals that in arriving at its
conclusion of forgery, the trial court did not solely rely on the obvious discrepancy of the
signatures as borne by the documentary evidence. It also considered the surrounding
circumstances prevailing at the time of the execution of the assailed documents which reinforced
the finding that the Special Powers of Attorney were indeed fraudulently executed.
First, the trial court found that the deceased was not in the country from 1987 to 1992,
thereby foreclosing the possibility that the deceased executed the Special Power of Attorney in
1991, which was purportedly notarized in Cebu City in the same year. Said fact was duly
established by petitioners own unconditional admission in their verified Answer, stated in this
wise:

4. That defendants ADMIT the allegation of paragraph 4 of the complaint.[13]

In the absence of evidence that no such statement was made or that the same was made through
palpable mistake, the foregoing admission is conclusive and does not require proof.[14]
Second, petitioners use of the second Special Power of Attorney, which was obviously
intended for curative purposes, only served to underscore the patent defect of the first
transaction. It is further worth noting that the lame attempt to ratify the original sale eventually
proved to be futile. As aptly found by the Court of Appeals:

xxx xxx xxx

Apart from the dubious authenticity of her signature thereon, the efficacy of the said Special
Power of Attorney and the Deed of Sale dated April 19, 1993 as acts ratificatory of the initial
June 9, 1992 sale of the subject realty was effectively refuted by the letter dated March 24, 1993
which Josefina Jaranilla caused to be sent to the Registrar of Deeds of Zamboanga.[15]

Unquestionably, the second authorization which sought to confirm and ratify all acts of petitioner
Lolita, is irreconcileable with the deceaseds letter to the Register of Deeds, advising the latter of
unauthorized transactions being entered into by her own relatives. Apart from the inexplicable
need for a second authorization, the timing of its issuance shortly after the deceased sent a
warning to the registrar, draws more suspicion and lends credence to respondents claim that the
transactions under the aforesaid authorizations were indeed anomalous.

125
 All the foregoing circumstances consequently cast doubt on the integrity, genuineness, and
veracity of the questioned public instruments. Petitioners, therefore, cannot take refuge under the
presumption of regularity of the public documents, as this has been clearly rebutted in this case.
This Court likewise sustains the imposition of civil damages against petitioners. Petitioner
Lolitas claim that she only received the Special Powers of Attorney from the deceaseds sister
through mail is self-serving, to say the least. The utter lack of supporting proof prevents the
Court from accepting such claim as satisfactory explanation of her possession of the forged
documents. Moreover, even assuming the veracity thereof, the records are bereft of any showing
that would indicate that she directly communicated with the late Josefina Jaranilla to confirm the
authorization the latter allegedly issued in her favor. Given that the documents were allegedly
mailed from Cebu not by the principal herself, but by the latters sister, prudence should have
cautioned petitioner Lolita into verifying the due execution of the documents. This she ought to
have done, especially considering that the late Josefina Jaranilla could have mailed the
documents herself, if it were true that the latter was in Cebu then, as petitioners would have this
Court believe. Clearly, it was petitioner Lolitas use of the spurious documents without diligently
verifying their source and authenticity, which gave rise to the subsequent fraudulent conveyances
of the subject property to the damage and prejudice of the deceased and her heirs.
As correctly pointed out by respondent,[16] findings of fact of the Court of Appeals are
conclusive on the parties and carry even more weight when these coincide with the factual
findings of the trial court.[17] This rule admits of exceptions as when there is a showing that the
findings of the lower court are totally devoid of support, or are clearly erroneous as to constitute
palpable error or grave abuse of discretion.[18] This Court finds no such grave abuse and no
palpable error in the appreciation of facts and application of law by the trial court and the Court
of Appeals.
WHEREFORE, the petition is DENIED and the decision and resolution of the Court of
Appeals are AFFIRMED.
No costs.
SO ORDERED.
Davide, Jr., C.J., (Chairman), Panganiban, Ynares-Santiago, and Carpio, JJ., concur.

[1]
Rollo, pp. 22-40.
[2]
Id., at 24-26.
[3]
Records, pp. 249-256.
[4]
Rollo, pp. 24-27, citations omitted.
[5]
Id., at 38-39.
[6]
Id., at 15-17.
[7]
Id., at 16-17.

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[8]
Jimenez v. Commission on Ecumenical Mission and Relations of the United Presbyterian
Church in the USA, 383 SCRA 326 (2002); Heirs of Gregorio v. CA, 300 SCRA 565
(1998); Gamido v. CA, 251 SCRA 101 (1995).
[9]
Jimenez v. Commission on Ecumenical Mission and Relations of the United Presbyterian
Church in the USA, supra, note 8, citing Punzalan v. COMELEC, 289 SCRA 702 (1998).
[10]
Ladignon v. CA, 336 SCRA 42 (2000), citing Bernardo v. CA, 332 SCRA 1 (2000); Cacho v.
CA, 269 SCRA 159 (1997).
[11]
Rongavilla v. CA, 294 SCRA 289 (1998).
[12]
Rollo, pp. 33-34. Citations omitted. Underscoring original.
[13]
Records, p. 44.
[14]
Bell Carpets International Trading Corp. v. CA, 185 SCRA 35 (1990).
[15]
Rollo, p. 45, citations omitted.
[16]
Id., at 140.
[17]
Nazareno v. CA, 343 SCRA 637 (2000).
[18]
Ibid.; Potenciano v. Reynoso, G.R. No. 140707, April 22, 2003.

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 FIRST DIVISION

PROCOPIO TAPUROC, HEIRS OF ANTONIA G.R. No. 152007

EBE (Deceased) represented by her children
namely: HEIRS OF CELEDONIA PUTONG,
namely: FORTUNATO ESCUDERO, Present:
TERESITA TABALDINA, CONCORDIO E.
NEBRIA, PEDRO ESCUDERO and LUISA
PEDRERA; HEIRS OF EUFEMIO PUTONG, PUNO, C.J., Chairperson,
namely: RICARDO PUTONG and PORFERIA
PUTONG; HEIRS OF GREGORIO PUTONG, SANDOVAL-GUTIERREZ,
namely: ROSALIO PUTONG,
PERSEVERANDA LOPEZ, BERNARDO CORONA,
PUTONG and ROSALINDA AZCUNA, and
OMAGAC; HEIRS OF MARIANO PUTONG,
namely: SERAPIA DALHOG, TEODORA GARCIA, JJ.
AYENG, MARCIANO PUTONG, RESTITUTA
LIQUIT, SERAPIA LUAY, FAUSTINO
PUTONG and SOFRONIA PATROLLA, ALL
REPRESENTED BY THEIR ATTORNEY-IN-
FACT, AUREA P. MERCIDOR, Promulgated:
Petitioners,

January 22, 2007

- versus -

CARMELITA LOQUELLANO VDA. DE

MENDE and the HEIRS OF EVANS MENDE,
namely: ERIC MITCHEL, ERIC LYNDON,
ERIC FERDINAND, JOSE ERIC ERVIN and
JENNIFER MILDRED, ALL SURNAMED
MENDE and the REGISTER OF DEEDS OF
THE CITY OF TAGBILARAN,
Respondents.
x------------------------------------------------------------------------------------------x

128
 DECISION

GARCIA, J.:

Under consideration is this petition for review under Rule 45 of the Rules of Court to nullify and
set aside the following issuances of the Court of Appeals (CA) in CA-G.R. CV No. 64548, to wit:

1. Decision[1] dated September 21, 2001, affirming an earlier decision

of the Regional Trial Court (RTC) of Tagbilaran City, Branch 47, in an
action for Declaration of Nullity of Deed of Sale, Cancellation of Transfer
Certificate of Title (TCT) No. (8585) T-4767 and all Subsequent
Documents and Damages, thereat commenced by the herein petitioners
against the respondents; and

2. Resolution[2] dated January 23, 2002, denying the petitioners motion

for reconsideration.

The petition embodies an alternative prayer for this Court to remand the case to the trial court for
the presentation of an expert witness.

The facts:

On September 19, 1996, in the RTC of Tagbilaran City, a Complaint for Declaration of Nullity
of Deed of Sale, Cancellation of TCT No. (8585) T-4767 and all Subsequent Documents and
Damages[3] was filed by the petitioners against respondents Carmelita Loquellano Vda. de
Mende, the Heirs of Evans B. Mende, and the Register of Deeds of the City
of Tagbilaran. Thereat docketed as Civil Case No. 5970 and raffled to Branch 47 of the court, the
Complaint alleges that petitioners Procopio Tapuroc and all the successors-in-interest of
deceased co-owner Antonia Ebe are the co-owners, co-heirs and/or descendants of the original
owners of a parcel of land with an area of 5,795 square meters, more or less, situated in the
Barrio (now District) of Booy, Tagbilaran, Bohol and previously covered by TCT No. 3444; that
sometime in 1992, when the petitioners decided to partition the subject property, they discovered
from the Office of the City Assessor that the title covering the land was already in the name of a

129
certain Evans Mende by virtue of a Deed of Sale purportedly executed in favor of the latter by
their predecessors-in-interest on December 30, 1967; that said Deed of Sale is a forged document
because the alleged vendors therein, who were Procopio Tapuroc and the predecessors-in-interest
of the other petitioners, did not sign the conveying deed nor receive any consideration therefor;
and that one of the alleged vendors, Antonia Ebe, had already passed away in 1960, or long
before the purported Deed of Sale was said to have been executed in 1967. Petitioners, as
plaintiffs, thus pray for the nullification of the same Deed of Sale, the cancellation of the title
issued pursuant thereto in the name of Evans Mende and the restoration of the previous title in
their names, plus damages.
In their Answer,[4] the respondent Mendes, as defendants, denied the material allegations of the
Complaint and averred that the late Evans Mende, husband of respondent Carmelita Loquellano
Vda. de Mende and father of the herein co-respondents, bought the subject parcel of land from its
previous owners on December 12, 1967 as evidenced by a Deed of Sale duly notarized by Atty.
Rodolfo Yap. They further assert that they had been in open, continuous, and peaceful
possession of the land in question from the time of said sale, and had been religiously paying the
realty taxes due thereon. By way of affirmative defense, the respondents assert that petitioners
cause of action, if any, had already prescribed in view of the unreasonable delay in filing the suit
in court, let alone the fact that their (respondents) title has become indefeasible.

On June 7, 1999, after due proceedings, the trial court came out with its decision[5] finding that
the evidence adduced by the plaintiffs (now petitioners) was insufficient to establish their claim
that the questioned Deed of Sale was a forgery. The court explained that despite the opportunity
given them, the plaintiffs failed to present a handwriting expert to determine whether the said
Deed of Sale was indeed a forged instrument, adding that laches had already set in because of
plaintiffs inaction and neglect in questioning the supposed forged character of the document after
the lapse of more than twenty-nine (29) years from the time of its execution. Accordingly, the
trial court rendered judgment dismissing the Complaint, thus:

WHEREFORE, PREMISES CONSIDERED, judgment is hereby rendered

DISMISSING the complaint for lack of merit. No compensation for damages,
moral, exemplary and litigation expenses is awarded for failure of plaintiffs (sic)
to prove by preponderance of evidence the existence of malice or bad faith in
filing the instant case.

SO ORDERED.

130
From the adverse decision of the trial court, the petitioners went on appeal to the CA in CA-G.R.
CV No. 64548, faulting the court of origin in ruling that they failed to present convincing
evidence to prove the fact of forgery in the execution of the assailed Deed of Sale. They likewise
faulted the lower court in denying their motion to have the original copy of the Deed of Sale in
dispute and their own Special Power of Attorney containing the genuine signatures of their
predecessors-in-interest, be examined by a handwriting expert.

As stated at the outset hereof, the appellate court, in its Decision[6] of September 21, 2001,
dismissed the petitioners appeal and affirmed that of the trial court. Their motion for
reconsideration having been denied by the CA in its Resolution[7] of January 23, 2002, the
petitioners are now with this Court via the instant recourse on their main submission that -

THE HONORABLE COURT OF APPEALS COMMITTED REVERSIBLE

ERROR WHEN IT DISMISSED THE APPEAL OF THE PETITIONERS
DESPITE SUFFICIENCY OF SUPPORTING EVIDENCE TO WARRANT A
FAVORABLE JUDGMENT ON THE PART OF THE PETITIONERS,

and presenting for our resolution the following issues:

WHETHER OR NOT THE DEED OF SALE ALLEGEDLY

EXECUTED ON DECEMBER 30, 1967 BETWEEN THE
PETITIONERS PREDECESSORS-IN-INTEREST AND THE
RESPONDENTS IS VALID.

II

WHETHER OR NOT THE COURT OF APPEALS HAS

CONTRADICTED ITSELF AND ARRIVED AT A
CONCLUSION CONTRARY TO THE RECORDS, LAW AND
THE APPLICABLE JURISPRUDENCE.

131
The recourse must fail.

As it is, the petitioners call for a review of the facts of the case. This is evident from the
pleadings they filed with this Court. In their main petition[8] and Memorandum,[9] the petitioners
emphatically state:

The issue in the case at bar boils down to whether or not the signatures of
the petitioners predecessors-in-interest and Procopio Tapuroc (the only surviving
vendor to the alleged deed of sale) were forged; and if they were, is the
declaration of nullity of the said deed of sale dated December 13, 1967 is proper
(sic).

Clearly, the foregoing statement calls for a determination of the truth or falsehood of an alleged
fact, a matter not for this Court to resolve. Well-settled is the rule that factual questions may not
be raised in a petition for review on certiorari. Section 1 of Rule 45 of the Revised Rules of
Court is explicit. It reads:

SECTION 1. Filing of petition with Supreme Court. A party desiring to appeal by

certiorari from a judgment or final order or resolution of the Court of Appeals, the
Sandiganbayan, the Regional Trial Court or other courts whenever authorized by
law, may file with the Supreme Court a verified petition for review on
certiorari. The petition shall raise only questions of law which must be distinctly
set forth. (Emphasis supplied)

Evident it is from the above that the function of the Court in petitions for review on
certiorari is limited to reviewing errors of law that may have been committed by the lower
courts. And, as a matter of sound practice and procedure, the Court defers and accords finality to
the factual findings of trial courts, more so when, as here, such findings are undisturbed by the
appellate court. This factual determination, as a matter of long and sound appellate practice,
deserves great weight and shall not be disturbed on appeal, save only for the most compelling
reasons,[10] such as when that determination is clearly without evidentiary support or when grave
abuse of discretion has been committed.[11]This is as it should be since the Court, in petitions for
review of CA decisions under Rule 45 of the Rules of Court, usually limits its inquiry only to
questions of law. Stated otherwise, it is not the function of the Court to analyze and weigh all

132
over again the evidence or premises supportive of the factual holdings of lower courts. [12] The
Court refrains from further scrutiny of factual findings of trial courts, more so when those
findings are affirmed by the CA, as here. To do otherwise would defeat the very essence of Rule
45 and would convert the Court into a trier of facts, which it is not meant to be.[13]
What is more, it appears undisputed that the assailed Deed of Sale is a public document, having
been duly notarized by a certain Atty. Rodolfo Yap who, unfortunately, had already passed
away. Being a notarial instrument, the deed in question is a public document and as such enjoys
the presumption of regularity in its execution. To overthrow that presumption, sufficient, clear
and convincing evidence is required, otherwise the document should be upheld.[14]

Petitioners maintain, however, that by merely examining the signatures in the questioned Deed
of Sale and the genuine signatures of their predecessors-in-interest in their Special Power of
Attorney, the glaring dissimilarities between the two sets of signatures are immediately evident
to support their claim of forgery.

We are not convinced.

As a rule, forgery cannot be presumed. It must be proved by clear, positive and convincing
evidence. Mere allegation of forgery is not evidence and the burden of proof lies on the party
alleging it.[15] Here, the petitioners failed to discharge their burden.

As it were, the petitioners merely alleged that they filed two motions before the trial court
to have the original copy of the documents in the Office of the Register of Deeds of Tagbilaran
City be examined by handwriting experts but their motions were ignored by the trial court. They
then harp on the excuse that they could not be expected to prove forgery if the trial court denied
them the opportunity to do so.

We are not persuaded.

The trial court correctly ruled that the parties themselves dictate the course and flow of the
presentation of evidence, as well as the witnesses for each side. Considering that the case before
it is civil, not criminal, the lower court certainly cannot, on its own, issue an order requiring a
handwriting expert to appear before it and compare the documents presented by the parties. It
behooves upon the parties themselves to call forth their own set of witnesses and present their
own evidence to bolster their respective claims. If the petitioners failed to present an expert
witness, only themselves ought to be blamed. For, as the trial court itself pointed out in its
decision:

133
 x x x. Plaintiffs, despite the opportunity given them by this Court, failed to
present a handwriting expert to determine whether there was indeed forgery in the
execution of the subject Deed of Sale. In the absence of the testimony of the
handwriting expert, the allegations of forgery by the plaintiffs is merely self-
serving. Unfortunately, this Court is not in the position to assess or evaluate the
differences and similarities in the questioned signatures, much less, categorically
state whether or not forgery exists. Neither could this court rely on the
observation of the plaintiffs as to the alleged glaring differences and
dissimilarities of the questioned signatures. (Underscoring ours)

Moreover, the technical procedure utilized by handwriting experts, while usually helpful in the
examination of forged documents, is not mandatory or indispensable to the examination or
comparison of handwritings.[16]

In Jimenez v. Commission on Ecumenical Mission and Relations of the United Presbyterian

Church in the USA,[17] the Court identified and explained the factors involved in the examination
and comparison of handwritings:

xxx [T]he authenticity of a questioned signature cannot be determined

solely upon its general characteristics, similarities or dissimilarities with the
genuine signature. Dissimilarities as regards spontaneity, rhythm, pressure of the
pen, loops in the strokes, signs of stops, shades, etc., that may be found between
the questioned signatures and the genuine one are not decisive on the question of
the formers authenticity. The result of examinations of questioned handwriting,
even with the benefit of aid of experts and scientific instruments, is, at best,
inconclusive. There are other factors that must be taken into consideration. The
position of the writer, the condition of the surface on which the paper where the
questioned signature is written is placed, his state of mind, feelings and nerves,
and the kind of pen and/or paper used, play an important role on the general
appearance of the signature. Unless, therefore, there is, in a given case, absolute
absence, or manifest dearth, of direct or circumstantial competent evidence on the
character of the questioned handwriting, much weight should not be given to
characteristic similarities, or dissimilarities, between that questioned handwriting
and an authentic one.

And to determine forgery, the Court in Cesar v. Sandiganbayan[18] (quoting Osborn, The
Problem of Proof) wrote:

134
 The process of identification, therefore, must include the determination of
the extent, kind, and significance of this resemblance as well as of the variation. It
then becomes necessary to determine whether the variation is due to the operation
of a different personality, or is only the expected and inevitable variation found in
the genuine writing of the same writer. It is also necessary to decide whether the
resemblance is the result of a more or less skillful imitation, or is the habitual and
characteristic resemblance which naturally appears in a genuine
handwriting.When these two questions are correctly answered the whole problem
of identification is solved.

In the present case, all that the petitioners had to offer by way of evidence on the issue of forgery
was their bare denial that their predecessors-in-interest signed the subject Deed of Sale. Such
denial will not suffice to overcome the presumption of regularity of notarized documents, to
overthrow which, the countervailing evidence must be clear, convincing and more than merely
preponderant.[19]

Moreover, and as aptly pointed out by the lower court in its decision of June 7, 1999:

However, even if it were true that the signature of Antonia Ebe is forged,
it cannot brush aside the fact that all the heirs of Antonia Ebe, namely: Celedonia
Putong, Eufemio Putong, Gregorio Putong and Mariano Putong all signed in the
Deed of Absolute Sale. As earlier discussed their signatures cannot be said to
have been forged as evidence presented to prove the same is found to be
insufficient. Henceforth, all the rightful heirs who could question the subject sale
are themselves signatories of the supposed questionable transaction.

Meanwhile, granting that Procopio Tapurocs signature found on Exh. C is

indeed a forgery, he testified in open court that he discovered the sale and the fact
of Mendes possession of the subject land in 1967 yet and did not do anything
about it.

At the other end of the spectrum, the respondents presented sufficient proof of their claim of
ownership over the property in dispute. The respondent Mendes maintain that they had been in
continuous, peaceful and open possession of the property since 1967, the year of the alleged sale,
or for more than thirty (30) years now. No less than the petitioners themselves acknowledged this
in their pleadings[20] before this Court. And beginning the year 1968, the respondents have been

135
religiously paying the realty taxes due on the same property. Likewise, when TCT No. 3444 was
lost, respondent Carmelita Loquellano Vda. de Mende filed a petition for judicial reconstitution
to secure a second owners copy of the lost title. Said petition went through the proper procedure
and thereafter Carmelita was issued a second owners copy of TCT No. 3444 which was later
changed to TCT No. (8585) T-4767.

All told, we find that the petitioners, who initiated in the court of origin the basic complaint in
this case, have not sufficiently met the burden of proof to sustain their cause. Additionally, we
agree with the CA in ruling that laches had barred the petitioners:

xxx The records show that they [petitioners] did not institute any action against
the order of the then Court of First Instance, 14th Judiciary District. Their inaction
and failure to assert any right, if any, over the disputed lot, bars them from
recovering the same as said failure clearly asserts to laches.

Not to be overlooked is the fact that the petitioners filed their complaint of declaration of nullity
only after twenty-nine (29) years from the execution of the alleged forged deed of sale. In the
meanwhile, title to the property had already been in the name of respondent Mendes since 1967.
The Mendes had been in open, continuous and peaceful possession of the subject land, and had
been religiously paying the realty taxes due thereon. These are hard facts that ought not to be
disregarded. The Court, in a long line of cases,[21] has uniformly held in favor of the registered
owner who had been in possession of a disputed property for a considerable period of time. With
the Mendes possession in this case having been in the concept of an owner and the land itself
registered in their names for more than thirty (30) years now, their title thereto had become
indefeasible and their possession could no longer be disturbed. The petitioners failure to take the
necessary steps to assert their alleged right for at least twenty-nine (29) years from date of
registration of title is fatal to their cause of action on the ground of laches.

As a final note, we emphasize that a Torrens title cannot be collaterally attacked. The question on
the validity of a Torrens title, whether fraudulently issued or not, can be raised only in an action
expressly instituted for that purpose. The title represented by the certificate cannot be changed,
altered, modified, enlarged, diminished, or cancelled in a collateral proceeding. The action for
the declaration of nullity of deed of sale commenced by the petitioners in the RTC of Tagbilaran
City is not the direct proceeding required by law to attack a Torrens certificate of title.

WHEREFORE, the instant petition is DENIED and the challenged decision of the CA
is AFFIRMED.

136
No pronouncement as to costs.

SO ORDERED.

CANCIO C. GARCIA
Associate Justice

WE CONCUR:

REYNATO S. PUNO
Chief Justice

ANGELINA SANDOVAL-GUTIERREZ RENATO C. CORONA

Associate Justice Associate Justice

137
 Working Chairperson

ADOLFO S. AZCUNA
Associate Justice

CERTIFICATION

Pursuant to Article VIII, Section 13 of the Constitution, it is hereby certified that the conclusions
in the above decision were reached in consultation before the case was assigned to the writer of
the opinion of the Court.

REYNATO S. PUNO
Chief Justice

138
[1]
Penned by then Associate Justice (now ret.) Eugenio S. Labitoria with then Associate Justices
(now ret.) Eloy R. Bello, Jr. and Perlita J. Tria Tirona, concurring; Rollo, pp. 117-123.
[2]
Id. at 129-130.
[3]
Id. at 30-34.
[4]
Id. at 35-37.
[5]
Id. at 68-80.
[6]
Supra note 1.
[7]
Supra note 2.
[8]
Page 9 of Petitioners Petition for Review on Certiorari dated March 07, 2002, Id. at 18.
[9]
Page 7 of the Memorandum for the Petitioners dated December 19, 2002, Id. at 185.
[10]
Republic v. CA, G.R. No. 116372, January 18, 2001, 349 SCRA 45.
[11]
Floro v. Llenado, G.R. No. 75723, June 2, 1995, 244 SCRA 713, citing Remalante v. Tibe,
158 SCRA 145 (1988); Benguet Exploration, Inc. v. CA, G.R. No. 117434, February 9,
2001, 351 SCRA 445.
[12]
PT & T v. Court of Appeals, G.R. No. 152057, September 29, 2003, 412 SCRA 263.
[13]
American President Lines, Ltd. v. Court of Appeals, G.R. No. 110853, July 31, 2000, 336
SCRA 582, citing Catapusan v. Court of Appeals, 264 SCRA 534, 539 (1996); First
Philippine International Bank v. Court of Appeals, 252 SCRA 259, 309 (1996),
citing South Sea Surety and Insurance Company, Inc. v. Hon. Court of Appeals, 244
SCRA 744 (1995).
[14]
Romualdez-Licaros v. Licaros, 449 Phil. 824 (2003); Bernardo v. Court of Appeals, G.R. No.
107791, May 12, 2000, 332 SCRA 1, citing Spouses Caoili v. Court of Appeals, G.R. No.
128325, September 14, 1999, 314 SCRA 345.
[15]
Victor Lingan v. Attys. Romeo Calubaquib and Jimmy Baliga, A.C. No. 5377, June 15, 2006,
citing Tenio-Obsequio v. Court of Appeals, G.R. No. 107967, March 1, 1994, 230 SCRA
550; People v. Reyes, G.R. No. 153119, April 13, 2004, 427 SCRA 28; and Fernandez v.
Fernandez, 416 Phil. 322 (2001).
[16]
Heirs of Severa P. Gregorio v. Court of Appeals, G.R. No. 117609, December 29, 1998, 300
SCRA 565.
[17]
G.R. No. 140472, June 10, 2002, 383 SCRA 326; citing Lorenzo v. Diaz, 53 OG, 4107, 4110-
4111, July 15, 1957, cited in Punzalan v. Comelec, 289 SCRA 702, April 27, 1998, and
in Francisco, Evidence, Vol. VII, Part I, 1997 ed., p. 674.
[18]
G.R. Nos. L- 54719-50, January 17, 1985, 134 SCRA 105.
[19]
Jimenez v. Commission on Ecumenical Mission and Relations of the United Presbyterian
Church in the USA, supra.
[20]
Page 9 of the Memorandum for the Petitioners dated December 19, 2002, Rollo, p. 187.
[21]
Ladignon v. Court of Appeals, G.R. No. 122973, July 18, 2000, 336 SCRA 42, citing Pasay
City & Republic Real Estate Corporation v. Court of Appeals, 299 SCRA 199
(1998), Carreon v. Court of Appeals, G.R. No. 112041, June 22, 1998, 291 SCRA 78,
citing Trinidad v. Intermediate Appellate Court, 204 SCRA 524 (1991); Heirs of Batiog
Lacamen v. Heirs of Laman, G.R. No. L-27088, July 31, 1975, 65 SCRA 605; Sinaon, et
al. v. Sorongon, et al., G.R. No. L-59879, May 13, 1985, 136 SCRA 407; and Caragay-
Layno v. Court of Appeals, et al., G.R. No. L-52064, December 26, 1984, 133 SCRA
718.

139
 THIRD DIVISION

SPOUSES ARTURO CONDES G.R. No. 161304

and NORA CONDES,

Present:
Petitioners,

YNARES-SANTIAGO, J.,
Chairperson,
AUSTRIA-MARTINEZ,
- versus -
CHICO-NAZARIO, and
NACHURA, JJ.

THE HONORABLE COURT OF APPEALS and

DR. PACIFICO A. DISTURA, Promulgated:
Respondents.
July 27, 2007

x-----------------------------------------------------------------------------------------x

DECISION

NACHURA, J.:

140
This is a petition for review of the Decision[1] of the Court of Appeals (CA) in CA-G.R. SP No.
76927, dated August 28, 2003, which granted the petition for certiorari filed by respondent from
the trial courts order denying the respondents demurrer to evidence. Likewise assailed in this
petition is the CA Resolution dated November 21, 2003, denying the motion for reconsideration
of the assailed decision.

The antecedents of the case are as follows:

On September 21, 1995, the petitioners, spouses Arturo and Nora Condes, filed a
Complaint for annulment of deed of sale or declaration thereof as an equitable mortgage,
cancellation of Transfer Certificate of Title (TCT) No. T-110767, and the restoration of TCT
No. T-78260 with damages. According to the petitioners, they are the registered owners of a
parcel of land with an area of 684 sq. m., covered by TCT No. T-78260. To release the property
from a mortgage with a certain Bernan Certeza, they allegedly re-mortgaged the property to
respondent, Dr. Pacifico Distura, through their attorney-in-fact, Josephine Condes-Jover, on
April 26, 1995 for the sum of P665,504.81 (P572,296.58 at 5% interest per month for three
months, plus P3,000.00, attorneys fees). They averred that, contrary to what was agreed upon,
Josephine was made to sign a deed of sale instead of a mortgage contract.

The petitioners further narrated that on June 7, 1995, the respondent and their attorney-in-
fact executed an Agreement of Option to Repurchase[2] the property giving the petitioners
until August 26, 1995 within which to pay the loan. They, however, failed to pay on the said date
and pleaded with the respondent for additional time. The latter agreed and told them to raise the
amount of P665,504.81, plus 5% interest for one month or P33,275.24, for a total
of P698,780.05. They were allegedly able to raise the amount of P665,504.81 on September 4,
1995, and they expressed willingness to pay the additional interest due but the respondent told
them that he will only sell back the property for P1 million. The petitioners averred that they
found out later that the respondent had the Deed of Sale notarized on June 7, 1995 by Notary
Public Joenel Alipao, without the presence of Josephine. They posited that to evade payment of
the right amount of taxes, the respondent executed another falsified Deed of Sale dated August
29, 1995, wherein he misrepresented that the consideration was only P68,000.00. As a result, the
respondent succeeded in obtaining a new title, TCT No. T-110767, in his name. The petitioners
averred that the last time they contacted the respondent, the latter was willing to sell back the
property for P1,070,678.78.

141
 The petitioners prayed that the Deed of Sale dated April 26, 1995 be declared as an
equitable mortgage; the Deed of Sale dated August 29, 1995 be declared a forgery; and moral
and exemplary damages be paid to them, plus attorneys fees and litigation expenses.

In his Answer with Counterclaim,[3] the respondent contended that the petitioners sold the
property to him on the condition that they will be given a right to repurchase the property for a
period of one month; thus, he executed the Agreement of Option to Repurchase. He asserted that
when the petitioners failed to repurchase the property, he insisted that the certificate of title be
transferred to his name. The petitioners allegedly agreed provided that the consideration
appearing in the deed of sale be reduced to P250,000.00 so that they can save on the payment of
taxes. He said that he found out later on that there was another deed of sale
for P68,400.00 registered in the Registry of Deeds.

After pre-trial, the petitioners, as plaintiffs, presented their witnesses. Josephine Condes-
Jover testified that she offered to transfer the mortgage on the petitioners property to the
respondent for P665,504.81; that the respondent agreed and made her sign a deed of sale; that
she wondered why she was made to sign a deed of sale when their understanding was that the
property will only be mortgaged; that she trusted him because they were close, and the latter
assured him that the property will be redeemed in the future;[4] and that she did not appear before
a notary public for the acknowledgment of the said deed of sale.[5]
Petitioner Nora Condes likewise testified that she only agreed to transfer the mortgage on
the property, not to sell the same to the respondent; the latter agreed and gave her three months
within which to pay the mortgage and an additional one month as grace period.[6] She narrated
that when the loan was about to become due, she arranged to sell the property to a certain
Dr. Lataafrancia for P1.2 million[7] but the respondent and his wife asked her to let them buy the
property for P1 million.[8] After consulting with her husband, she agreed to sell the property to
the respondent only to be told that he needed more time because his buyer was still in Manila.
They were surprised because they thought the respondent himself would buy the property. They
waited for more than two weeks, but the respondent told them later that his prospective buyer
was not interested anymore. He then offered to buy the property for P300,000.00 but she refused.
The respondent told her then that the property was already his and that they have no right over it
anymore. His statement made her anxious, and so she went to the Registry of Deeds to verify the
condition of their title and was relieved to learn that it was still intact.[9]

Petitioner Arturo Condes corroborated his wifes testimony that the agreement was only to
mortgage the property. He added that he obtained from the Registry of Deeds a copy of the Deed
of Sale which resulted in the transfer of their title. He identified the same as the Deed of Sale
dated August 29, 1995 showing that the consideration was P68,400.00. He confronted Josephine
with the said document, and the latter denied executing the deed.[10]

142
 The petitioners also employed the services of Col. Pedro Elvas, Jr., a practicing
Questioned Documents Examiner, who testified that based on his examination, the signature of
Josephine Condes-Jover appearing in the Deed of Definite Sale dated August 29, 1995 is a
forgery.
The trial court admitted the documentary evidence offered by the petitioners,[11] which
consisted of the following:

Exh. B Certified machine copy of the Deed of Sale dated August 29, 1995 for the
amount of P68,400.00 allegedly executed by Josephine Condes-Jover in favor of
Dr. Pacifico Distura, notarized by Florecita Gelvezon;

Exh. C Certified machine copy of TCT No. T-110767 registered in the name of
Dr. Pacifico Distura;

Exh. F Machine copy of the Special Power of Attorney dated May 3, 1995;

Exh. G Bio-data of Col. Pedro S. Elvas, Jr., alleged handwriting expert;

Exh. H Certificate of Achievement of Col. Pedro S. Elvas, Jr. by the Department

of State, Agency of International Development of the Government of the United
States of America dated November 19, 1964;

Exh. I Questioned Document Report No. 17-0997 dated October 3, 1997;

Exh. J Certified machine copy of Deed of Sale dated August 29, 1995 containing
the marking of the questioned signatures of Josephine Condes-Jover;

Exh. K Machine copy of the letter of plaintiff Arturo Condes addressed to the
Register of Deeds of Iloilo City;

Exh. L Comparison Chart of the enlarged photographs of the questioned

signatures of Josephine Condes-Jover and the standard specimen signatures;

143
Exh. M St. Joseph Grade School Progress Report Card of Von Jovi Jover for
school year 1994-95 with signatures of Josephine Condes- Jover;

Exh. N Official Receipt of drivers license dated August 16, 1995 with signature of
Josephine Condes-Jover;

Exh. O Sworn Statement of Josephine Condes-Jover dated September 25,

1995 with her signatures;

Exhs. P and P-1 Two (2) Sworn Statements of Josephine Condes-Jover

dated January 23, 1996 with her signatures;

Exh. Q Community Tax Certificate of Josephine Condes-Jover dated February 13,

1997 with her signature;

Exh. R COMELEC VRR No. 03395358 dated June 22, 1997 with the signature of
Josephine Condes-Jover;

Exh. S Plain sheet of bond paper with the specimen signatures Josephine Condes-
Jover;

Exh. T Certified machine copy of TCT No. T-78260 registered in the name of the
plaintiffs;

Exh. V and V-1 Medical Certificate of plaintiff Nora Condes with the signature of
attending physician dated September 25, 1995;

144
 Exh. W and W1 Medical Certificate of plaintiff Nora Condes with the signature of
attending physician dated September 27, 1995;

Exh. X Certified machine copy of Official Receipt No. 059880 issued by the City
Treasurer of Iloilo City;

Exh. Y Authority to accept payment under Nos. 2580033, 2361465 and 2361466
for the sale of P68,400.00 dated August 30, 1995;

Exh. Z Capital Gains Tax Return on the sale for P68,400.00;

Exh. AA BIR Certificate No. 774924;

Exh. EE Primary Entry Book;

Exh. FF Releasing Book of Title;

Thereafter, the petitioners rested their case.

On November 29, 2002, the respondent filed a Demurrer to Evidence[12] on the ground
that the petitioners had not proven their claims by a preponderance of evidence. He contended
that the petitioners evidence contradict their claims considering that the Deed of Definite Sale
dated August 29, 1995 notarized by Florecita Gelvezon, which they claimed as a forgery, was
not the one used in the transfer of the certificate of title in his name. He pointed out that Exhibit
T, TCT No. 78260, shows that it was cancelled by virtue of a Deed of Sale dated August 28,
1995, for the sum of P68,000.00 executed by Josephine Jover and acknowledged before Notary
Public Joenel T. Alipao,[13] not Notary Public Florecita Gelvezon. Hence, even if the said Deed
of Definite Sale dated August 29, 1995 is declared as void, it would not affect the transfer of title
to his name.

On January 9, 2003, the Regional Trial Court (RTC) of Iloilo City, Branch 36, issued the
Order[14] denying the demurrer to evidence on the ground that some of the petitioners claims
could be supported by their evidence and will prevail in the absence

145
of controverting evidence. On January 28, 2003, the trial court reiterated its previous ruling and
denied the respondents motion for reconsideration.

Unconvinced, the respondent filed a petition for certiorari with the CA. He succeeded in
obtaining a favorable decision when the CA rendered its decision on August 28, 2003,
the dispositive portion of which states:

WHEREFORE, the instant petition is hereby GRANTED and GIVEN

DUE COURSE. The Orders, dated January 9, 2003 and January 29, 2003, are
hereby REVERSED and SET ASIDE. The instant complaint in Civil Case No.
22566 pending before the Regional Trial Court of Iloilo City, Branch 36, is
hereby DISMISSED.

SO ORDERED.[15]
The petitioners moved for the reconsideration of the CAs decision, but the CA denied the
same on November 21, 2003.[16] Consequently, they filed a petition for review, wherein the
petitioners raise the following issues:

I. THE RESPONDENT HONORABLE COURT OF APPEALS FAILED TO

RESOLVE ALL THE ISSUES IN CIVIL CASE NO. 22566 BASED ON THE
EVIDENCE, TESTIMONIAL AND DOCUMENTARY, PRESENTED BY THE
PETITIONERS IN THE TRIAL COURT, FOREMOST OF WHICH IS THE
ISSUE ON EQUITABLE MORTGAGE;

II. THE PETITION FOR CERTIORARI UNDER RULE 65 OF RESPONDENT

DR. DISTURA IS INSUFFICIENT IN FORM AND IN SUBSTANCE
BECAUSE IT FAILED AND OMITTED TO PRESENT TO THE
RESPONDENT HONORABLE COURT OF APPEALS ALL THE EVIDENCE
TESTIMONIAL AND DOCUMENTARY, PRESENTED BY THE
PETITIONERS IN THE TRIAL COURT, WHICH WOULD HAVE BEEN
MADE AS BASIS BY THE RESPONDENT HONORABLE COURT OF
APPEALS IN DETERMINING WHETHER OR NOT THE TRIAL JUDGE
ACTED WITH GRAVE ABUSE OF DISCRETION IN DENYING
RESPONDENTS DR. DISTURAS DEMURRER TO EVIDENCE;

146
 III. THE PETITIONERS HAVE PROVEN BY PREPONDERANCE OF
EVIDENCE ALL THEIR CAUSES OF ACTION AS WELL AS ALL THE
ISSUES AGREED BY THE PARTIES IN CIVIL CASE NO. 22566 BY THEIR
EVIDENCE, TESTIMONIAL AND DOCUMENTARY;

IV. THE PETITIONERS CAUSES OF ACTION ARE NOT

ANCHORED ONLY ON THE FORGED DEED OF SALE, OR ON ITS USE IN
THE TRANSFER OF THE TITLE TO THE PROPERTY FROM THE
PETITIONERS TO RESPONDENT DR. DISTURA, BUT ON OTHER
EVIDENCE, TESTIMONIAL AND DOCUMENTARY, AS WELL AS ON THE
JUDICIAL ADMISSION OF THE LATTER.[17]

Briefly, the issues posed by the petitioners are as follows: (a) whether the CA erred when
it failed to resolve all the issues in its decision granting the demurrer to evidence considering that
such a decision is in effect an adjudication on the merits; (b) whether the petition
for certiorari before the CA should have been dismissed for being defective in form; and (c)
whether the CA erred in granting the demurrer to evidence.

The petition is meritorious.

Before proceeding to the merits of the case, we first delve into the procedural issue raised
by the petitionersthat the CA erred in not dismissing the petition for certiorari for failure to
attach important testimonial and documentary evidence. We do not agree. The CA committed no
reversible error in giving due course to the petition for certiorari even without the said
documents being attached thereto.

Section 1 of Rule 65 of the Rules of Court enumerates the essential documents required
to be attached to a petition for certiorari:

Section 1. Petition for certiorari. x x x x

The petition shall be accompanied by a certified true copy of the

judgment, order or resolution subject thereof, copies of all pleadings and

147
 documents relevant and pertinent thereto, and a sworn certification of non-forum
shopping as provided in the third paragraph of Section 3, Rule 46.

The rule does not specify the precise documents, pleadings, or parts of the records that
should be appended to the petition other than the judgment, final order, or resolution being
assailed. These documents and pleadings are generally the ones needed by the reviewing courts
to decide whether to give due course to the petition.[18] The initial determination of what
pleadings, documents or orders are relevant and pertinent to the petition rests on the
petitioner.[19] Thereafter, the CA will review the petition and determine whether additional
pleadings, documents or orders should have been attached thereto.

The appellate court found the present petition sufficient in form when it proceeded to
decide the case on the merits, without raising any question as to the sufficiency of the petition.
Acceptance of a petition for certiorari, as well as granting due course thereto is addressed to the
sound discretion of the court.[20] Where it does not appear, as in this case, that in giving due
course to the petition for certiorari, the CA committed any error that prejudiced the substantial
rights of the parties, there is no reason to disturb its determination that the copies of the pleadings
and documents attached to the petition were sufficient to make out a prima facie case.[21]

Generally, interlocutory orders are neither appealable nor subject

to certiorari proceedings.[22] Though interlocutory in character, an order denying a demurrer to
evidencemay be the subject of a certiorari proceeding, provided the petitioner can show that it
was issued with grave abuse of discretion; and that appeal in due course is not plain, adequate or
speedy under the circumstances.[23] It must be stressed that a writ of certiorari may be issued
only for the correction of errors of jurisdiction or grave abuse of discretion amounting to lack or
excess of jurisdiction, not errors of judgment. Where the issue or question involves or affects the
wisdom or legal soundness of the decisionnot the jurisdiction of the court--the same is beyond
the province of a petition for certiorari.[24]

However, even as the CA did not err in not dismissing the respondents petition on the
strength of the documents attached thereto, we find that neither did the RTC commit grave abuse
of discretion when it denied the demurrer to evidence. This is evident from the said Order, which
ratiocinated, thus:

While it may be true that the evidence presented by the plaintiff would run
counter to some allegations in this complaint, there are evidence[s] which could
satisfactorily support other allegations unless rebutted by the defendant. It will

148
 also be noted that the existence of a number of deeds of sale could support the
claim of irregularity as to the transfer of the lot subject matter thereof if
not controverted by other evidence. In short, in the absence
of controverting evidence, there are claims which could be supported by the
evidence presented by the plaintiff.[25]

The petitioners insist that the demurrer to evidence should not have been granted since
they have been able to establish some, if not all, of their claims through a preponderance of
evidence. They point out that the decision which granted the demurrer to evidence was, in effect,
adjudication on the merits of the case. Thus, they claim that the CA should have ruled on all the
issues submitted by them, particularly the issue on whether the deed of sale should be declared as
an equitable mortgage.

It is clear from these arguments that the petitioners misunderstood the essence of a
demurrer to evidence and the meaning of preponderance of evidence. A demurrer to evidence is
a motion to dismiss on the ground of insufficiency of evidence and is filed after the plaintiff rests
his case. It is an objection by one of the parties in an action, to the effect that the evidence which
his adversary produced, is insufficient in point of law, whether true or not, to make out a case or
sustain the issue.[26] The question in a demurrer to evidence is whether the plaintiff, by his
evidence in chief, has been able to establish a prima facie case.

In civil cases, the burden of proof is on the plaintiff to establish his case
by preponderance of evidence.[27] Preponderance of evidence means evidence which is of
greater weight, or more convincing than that which is offered in opposition to it.[28] It is,
therefore, premature to speak of preponderance of evidence in a demurrer to evidence because it
is filed before the defendant presents his evidence. The purpose of a demurrer to evidence is
precisely to expeditiously terminate the case without the need of the defendants evidence. It
authorizes a judgment on the merits of the case without the defendant having to submit evidence
on his part as he would ordinarily have to do, if it is shown by plaintiffs evidence that the latter is
not entitled to the relief sought.[29]

It would have been unnecessary, if not antithetical, for the CA to resolve all the issues
submitted by the petitioners when it found that the evidence of the plaintiffs was not sufficient.
The essential question to be resolved in a demurrer to evidence is whether the plaintiffs have
been able to show that they are entitled to their claim and it was incumbent upon the CA to make
such a determination. A perusal of the CA Decision however shows that it is barren of any
discussion on this matter.

149
 After a careful review of the petitioners evidence, we find that the CA erred in dismissing
the petitioners complaint. The Court has recently established some guidelines on when a
demurrer to evidence should be granted, thus:
A demurrer to evidence may be issued when, upon the facts and the law,
the plaintiff has shown no right to relief. Where the plaintiffs evidence together
with such inferences and conclusions as may reasonably be drawn therefrom does
not warrant recovery against the defendant, a demurrer to evidence should be
sustained. A demurrer to evidence is likewise sustainable when, admitting every
proven fact favorable to the plaintiff and indulging in his favor all conclusions
fairly and reasonably inferable therefrom, the plaintiff has failed to make out one
or more of the material elements of his case, or when there is no evidence to
support an allegation necessary to his claim. It should be sustained where the
plaintiffs evidence is prima facie insufficient for a recovery.[30]

Collectively, the petitioners evidence, testimonial and documentary, sufficiently proved

the essential averments of the complaint, that is, that their attorney-in-fact was made to sign the
Deed of Sale dated April 26, 1995 when what was actually agreed upon was only the mortgage
of their property; and that their attorney-in-fact only signed the said Deed of Sale dated April 26,
1995, and that the other deeds of sale, particularly the Deed of Definite Sale dated August 29,
1995 for P68,400.00, were forged.

The respondent, however, contends that the petitioners failed to prove that the Deed of
Definite Sale dated August 29, 1995 for the sum of P68,400.00, notarized by Florecita Gelvezon,
was the deed of sale used in transferring the title to respondents name. The respondent anchors
his contention on the fact that the description of the deed of sale that resulted in the cancellation
of petitioners title differed from that of the Deed of Definite Sale. In the petitioners certificate of
title, it was annotated therein that it was cancelled by virtue of a Deed of Sale dated August 28,
1995 for the sum of P68,000.00, notarized by Joenel Alipao. The respondent, therefore, posits
that, even if the Deed of Definite Sale is declared as void, his title would not be cancelled.

We do not agree. Petitioner Arturo Condes testified that the deed of sale which he
obtained from the Registry of Deeds was the Deed of Definite Sale dated August 29, 1995,
notarized by Florecita Gelvezon. This testimony, taken with the testimony of Josephine Condes-
Jover, the petitioners attorney-in-fact, that she did not execute any other deeds of sale except the
one that was dated April 26, 1995, was more than enough to prove that the transfer of the
certificate of title in the name of the respondent was questionable.
All told, without prejudice to the trial courts findings, we hold that the petitioners
evidence, in the absence of any controverting evidence, will stand and would be sufficient to
prove some, if not all, of their claims. In order to arrive at a just decision on the contending
claims of the parties, trial on the merits is, therefore, necessary.

150
 WHEREFORE, premises considered, the petition is GRANTED. The Decision and
Resolution of the Court of Appeals in CA-G.R. SP No, 76927, dated August 28, 2003 and
November 21, 2003, respectively, are REVERSED and SET ASIDE. The trial court is directed
to REINSTATE Civil Case No. 22566. Costs against the respondent.

SO ORDERED.

ANTONIO EDUARDO B. NACHURA

Associate Justice

WE CONCUR:

CONSUELO YNARES-SANTIAGO
Associate Justice
Chairperson

MA. ALICIA AUSTRIA-MARTINEZ MINITA V. CHICO-NAZARIO

Associate Justice Associate Justice

ATTESTATION

I attest that the conclusions in the above Decision had been reached in consultation before the
case was assigned to the writer of the opinion of the Courts Division.

151
 CONSUELO YNARES-SANTIAGO
Associate Justice
Chairperson, Third Division

CERTIFICATION

Pursuant to Section 13, Article VIII of the Constitution and the Division Chairperson's
Attestation, I certify that the conclusions in the above decision had been reached in consultation
before the case was assigned to the writer of the opinion of the Courts Division.

REYNATO S. PUNO
Chief Justice

[1]
Penned by Associate Justice Bernardo P. Abesamis, with Associate Justices Mariano C. Del
Castillo and Arturo D. Brion, concurring; rollo, pp. 9-13.
[2]
CA rollo, pp. 31-32.
[3]
Rollo, pp. 61-64.
[4]
TSN, August 2, 1996, pp. 8-10; id. at 80-82.
[5]
Id at 7; id. at 79.
[6]
TSN, June 8, 1998, pp. 15-16; rollo, pp. 97-98.
[7]
Id. at 22; id. at 104.
[8]
Id. at 29; id. at 111.
[9]
Id. at 32-39; id. at 114-121.
[10]
TSN, September 28, 1998, pp. 36-37; id at 184-185.
[11]
Rollo, p. 256.

152
[12]
Id. at 257-270.
[13]
Id. at 245.
[14]
Id. at 271.
[15]
Id. at 12.
[16]
Id. at 15.
[17]
Id. at 34.
[18]
Barcenas v. Tomas, G.R. No. 150321. March 31, 2005, 454 SCRA 593, 605.
[19]
Garcia v. Philippine Airlines, Inc., G.R. No. 160798, June 8, 2005, 459 SCRA 768, 780.
[20]
Floren Hotel v. National Labor Relations Commission, G.R. No. 155264, May 6, 2005, 458
SCRA128, 141.
[21]
Id. at 142.
[22]
Choa v. Choa, 441 Phil. 175, 181 (2002).
[23]
Id. at 178.
[24]
Deutsche Bank Manila v. Chua Yok See, G.R. No. 165606, February 6, 2006, 481 SCRA 672,
692.
[25]
Rollo, p. 271.
[26]
Celino v. Heirs of Alejo and Teresa Santiago, G.R. No. 161817, July 30, 2004, 435 SCRA
690, 693.
[27]
Ong v. Yap, G.R. No. 146797, February 18, 2005, 452 SCRA 41, 50.
[28]
Rivera v. Court of Appeals, 348 Phil. 734, 742 (1998).
[29]
Heirs of Emilio Santioque v. Heirs of Emilio Calma, G.R. No. 160832, October 27, 2006, 505
SCRA 665, 679.
[30]
Id. at 679-680.

153
 EN BANC

[A.C. No. 5081. March 24, 2003]

EMILIANA M. EUSTAQUIO, PIORILLO GUTIERREZ RUBIS and ALICIA MONTERO

RUBIS, complainants, vs. ATTY. REX C. RIMORIN, respondent.

RESOLUTION
QUISUMBING, J.:

In a verified complaint[1] filed before this Court on June 17, 1999, complainants Emiliana M.
Eustaquio, Piorillo G. Rubis, and Alicia M. Rubis charged Atty. Rex C. Rimorin with grave
misconduct for allegedly falsifying certain documents which enabled him to sell complainants
land without their knowledge and consent.
It appears from the records that on July 30, 1979, the spouses Piorillo Gutierrez Rubis and
Alicia Montero Rubis were given title to a parcel of land located at Dizon Subdivision, Baguio
City and covered by TCT No. T-30444 of the Baguio City Registry of Deeds.
On June 22, 1991, while complainants Piorillo and Alicia Rubis were both in the United
States, respondent Atty. Rex C. Rimorin executed a Special Power of Attorney[2] purportedly
notarized, with the Rubis spouses present and appearing on June 22, 1991, before Notary Public
E.M. Fallarme of Baguio City.[3] Using this spurious special power of attorney, respondent
Rimorin subsequently executed on July 3, 1991, a Deed of Absolute Sale[4] over the same
property in favor of Mr. and Mrs. So Hu, of Baguio City. The execution of this deed of sale
resulted in the issuance on July 5, 1991, of TCT No. 40835[5] over the land in favor of the So Hu
spouses.
In November 1997, complainant Alicia Rubis came to the Philippines for a brief visit. While
she was still unaware of the forgeries already perpetrated by respondent Atty. Rimorin, she was
inveigled into signing a memorandum of agreement[6] between complainants Rubis and So Hu
spouses dated November 29, 1997, containing the following provisions:

That the FIRST PARTY (Plaintiff Alicia Montero Rubis) is the registered owner of a parcel of
land situated at Dizon Subdivision, Baguio City, more particularly covered and described under
TCT No. 30444 containing an area of FIVE HUNDRED SEVEN (SIC) ONE (571) SQUARE
METERS more or less.

That the FIRST PARTY who is now a resident of Virginia, USA, intends to sell the above
described property to any interested buyer and by these presents has offered the said property for
sale to the SECOND PARTY who agrees to purchase the same subject to the following terms
and conditions.

154
 On February 26, 1998 the title of the So Hu spouses was cancelled and in its place TCT No.
69071[7] was issued in the name of spouses Danilo T. de Vera and Estrellita S. Mercado, both of
Baguio City.
On July 21, 1999, this Court issued a resolution[8] directing respondent Atty. Rimorin to file
his comment on the instant complaint within ten (10) days from notice of the resolution. On
December 28, 1999, complainants filed a manifestation with motion[9] alleging that copies of
pleadings sent to respondents known address have been returned with a notation that respondent
was abroad.[10] They also made reference to other processes and pleadings, in a civil and a
criminal case, likewise filed by complainants against respondent, which were unsuccessfully
served because respondent was in the United States as shown by attached return cards. Hence,
complainants prayed respondent be deemed to have waived his right to comment and that,
accordingly, investigation of the case be conducted even without respondents comment.[11]
In a resolution[12] dated February 2, 2000, this Court referred the case to the Integrated Bar
of the Philippines (IBP) for investigation, report and recommendation. Subsequently,
Commissioner Milagros V. San Juan of the Commission on Bar Discipline of the IBP issued an
order[13] requiring respondent Atty. Rimorin to submit his duly verified answer within 15 days
from receipt of the order. In another order[14] dated October 24, 2000, Commissioner San Juan
reiterated her previous order.
Because of respondents failure to file his answer, the Commission resolved to declare
respondent to have waived his right to file an answer and the case was deemed submitted for
resolution. Hearings were conducted and on November 13, 2001, the Investigating
Commissioner found respondent Atty. Rimorin guilty of grave misconduct and recommended his
disbarment. Thus:

The execution of the memorandum of agreement dated November 29, 1997 was made apparently
to remedy the fraud committed in the execution of the Special Power of Attorney to give it
semblance of legality. However, the dates of the documents is a clear give away that fraud has
been committed. The Memorandum of Agreement is dated November 29, 1999 yet the Deed of
Sale in favor of Spouses So Hu was executed July 3, 1991; the Special Power of Attorney was
executed on June 22, 1991; the executed fraudulent Special Power of Attorney resulted to the
subsequent sales, all manipulated by the respondent. These facts remain uncontroverted by the
respondent.

In view of all the foregoing, it is respectfully recommended that the respondent Atty. Rex C.
Rimorin be DISBARRED from practice of law.[15]

On June 29, 2002, the Board of Governors of the Integrated Bar of the Philippines passed a
resolution[16] in Administrative Case No. 5081 resolving and adopting the report and
recommendation[17] of the Investigating Commissioner with modification that respondent be
suspended instead of disbarred. Said resolution reads as follows:

RESOLUTION NO. XV-2002-227

Adm. Case No. 5081

Emiliana M. Eustaquio, et al. vs. Atty. Rex C. Rimorin

155
RESOLVED to ADOPT and APPROVE, as it hereby ADOPTED and APPROVED, the Report
and Recommendation of the Investigating Commissioner of the above-entitled case, herein made
part of this Resolution/Decision as Annex A; and, finding the recommendation fully supported
by the evidence on record and the applicable laws and rules, with modification, and in view of
respondents execution of the Memorandum of Agreement was made apparently to remedy the
fraud committed in the execution of the Special Power of Attorney to give it semblance of
legality, Respondent is hereby SUSPENDEDfrom the practice of law for five (5) years and
Revocation of his Notarial Commission and Perpetual Disqualification from being appointed as
Notary Public.[18]

Said resolution is now before us for confirmation.

Time and again, we have stressed the settled principle that the practice of law is not a right
but a privilege bestowed by the State on those who show that they possess, and continue to
possess, the qualifications required by law for the conferment of such privilege.[19] Membership
in the bar is a privilege burdened with conditions. A high sense of morality, honesty, and fair
dealing is expected and required of a member of the bar. Rule 1.01 of the Code of Professional
Responsibility provides that, A lawyer shall not engage in unlawful, dishonest, immoral or
deceitful conduct.[20] The nature of the office of a lawyer requires that he shall be of good moral
character. This qualification is not only a condition precedent to the admission to the legal
profession, but its continued possession is essential to maintain ones good standing in the
profession.[21] A lawyer can be deprived of his license for misconduct ascertained and declared
by judgment of the Court after giving him the opportunity to be heard.[22]
The power of the Court to discipline lawyers should not, however, be exercised in an
arbitrary and despotic manner. Neither should it be exercised at the pleasure of the Court or from
passion, prejudice or personal hostility. The Courts power to discipline members of the bar
should be tempered by a sound and just judicial discretion, whereby the rights and independence
of the bar may be scrupulously guarded and maintained by the Court as the rights and dignity of
the Court itself.[23]
In Montano v. Integrated Bar of the Philippines,[24] we said that the power to disbar must be
exercised with great caution. Only in a clear case of misconduct that seriously affects the
standing and character of the lawyer as an officer of the Court and member of the bar will
disbarment be imposed as a penalty. It should never be decreed where a lesser penalty, such as
temporary suspension, would accomplish the end desired.
In this case, despite having been furnished copies of orders requiring him to file comment or
a verified answer, respondent Atty. Rimorin failed to file any comment or an answer. The dates
of the documents attached in the complaint and presented during the investigation before the IBP
clearly show, as reported, that fraud has been committed by him. The Memorandum of
Agreement, where respondent purportedly bought the subject property from complainant Alicia
Rubis, was dated November 29, 1997; yet the Deed of Sale in favor of the Spouses So Hu,
signed and executed by respondent purportedly as agent of complainants, was executed earlier on
July 3, 1991. In fact, at the time the Memorandum of Agreement was executed, a new TCT had
already been issued to the Spouses So Hu on July 5, 1991. The Special Power of Attorney in
respondents favor was allegedly executed on June 22, 1991, when complainant spouses were still

156
in the United States and could not have possibly signed it in Baguio City, much less appear
before the notary to acknowledge it. These facts remain uncontroverted by respondent.
It is clear that respondents execution of the Memorandum of Agreement was made, as
alleged by complainants, to remedy the fraud committed in the execution of the Special Power of
Attorney and to give it semblance of legality. In the absence of satisfactory explanation, one
found in possession of and who used a forged document, taking advantage thereof and profiting
thereby, is presumed the forger or the material author of the falsification.[25] This presumption
has not been rebutted by respondent.
Respondents deceitful conduct makes him less than worthy of his continued practice of
law. A lawyer is expected at all times to uphold the integrity of the legal
profession.[26]Commission of grossly immoral conduct and deceit are grounds for suspension or
disbarment of lawyers.[27] Whenever it is made to appear to the Supreme Court that an attorney is
no longer worthy of the trust and confidence of the public, it becomes not only the right but the
duty of the Court which made him one of its officers and gave him the privilege of ministering
within its bar to withdraw the privilege.[28]
On the basis of the records before us, we have no hesitance in confirming the resolution
passed by the IBP Board of Governors suspending respondent from the practice of law and
revoking his notarial commission as well as disqualifying him perpetually from being appointed
as notary public.
WHEREFORE, Atty. Rex C. Rimorin is hereby SUSPENDED from the practice of law for
five (5) years. His commission as Notary Public is revoked, and he is perpetually disqualified
from appointment as Notary Public. Let a copy of this Resolution be FURNISHED to the IBP,
the OCA, and the Bar Confidant to be spread on the personal records of respondent and for
circulation to all courts in the Philippines.
SO ORDERED.
Davide, Jr., C.J., Bellosillo, Puno, Vitug, Mendoza, Panganiban, Sandoval-Gutierrez,
Carpio, Austria-Martinez, Corona, Carpio-Morales, Callejo, Sr. and Azcuna, JJ., concur.
Ynares-Santiago, J., on leave.

157
 EN BANC

MANUEL O. FUENTES and G.R. No. 178902

LETICIA L. FUENTES,

Petitioners, Present:

Puno, C.J.,

Carpio,

Corona,

Carpio Morales,

Velasco, Jr.,

Nachura,

- versus - Leonardo-De Castro,

Brion,

Peralta,

158
 Bersamin,

Del Castillo,

Abad,

Villarama, Jr.,

Perez, and

Mendoza, JJ.

CONRADO G. ROCA, ANNABELLE R.

JOSON, ROSE MARIE R. CRISTOBAL

and PILAR MALCAMPO, Promulgated:

Respondents.

April 21, 2010

x ---------------------------------------------------------------------------------------- x

DECISION

ABAD, J.:

This case is about a husbands sale of conjugal real property, employing a

challenged affidavit of consent from an estranged wife. The buyers claim valid
consent, loss of right to declare nullity of sale, and prescription.

159
 The Facts and the Case

Sabina Tarroza owned a titled 358-square meter lot in Canelar, Zamboanga

City. On October 11, 1982 she sold it to her son, Tarciano T. Roca (Tarciano) under
a deed of absolute sale.1 But Tarciano did not for the meantime have the
registered title transferred to his name.

Six years later in 1988, Tarciano offered to sell the lot to petitioners Manuel
and Leticia Fuentes (the Fuentes spouses). They arranged to meet at the office of
Atty. Romulo D. Plagata whom they asked to prepare the documents of sale. They
later signed an agreement to sell that Atty. Plagata prepared2 dated April 29,
1988, which agreement expressly stated that it was to take effect in six months.

The agreement required the Fuentes spouses to pay Tarciano a down

payment of P60,000.00 for the transfer of the lots title to him. And, within six
months, Tarciano was to clear the lot of structures and occupants and secure the
consent of his estranged wife, Rosario Gabriel Roca (Rosario), to the sale. Upon
Tarcianos compliance with these conditions, the Fuentes spouses were to take
possession of the lot and pay him an additional P140,000.00 or P160,000.00,
depending on whether or not he succeeded in demolishing the house standing on

1 Records, p. 8.

2 Id. at 149.

160
it. If Tarciano was unable to comply with these conditions, the Fuentes spouses
would become owners of the lot without any further formality and payment.

The parties left their signed agreement with Atty. Plagata who then worked
on the other requirements of the sale. According to the lawyer, he went to see
Rosario in one of his trips to Manila and had her sign an affidavit of consent.3 As
soon as Tarciano met the other conditions, Atty. Plagata notarized Rosarios
affidavit in Zamboanga City. On January 11, 1989 Tarciano executed a deed of
absolute sale4 in favor of the Fuentes spouses. They then paid him the additional
P140,000.00 mentioned in their agreement. A new title was issued in the name of
the spouses5 who immediately constructed a building on the lot. On January 28,
1990 Tarciano passed away, followed by his wife Rosario who died nine months
afterwards.

Eight years later in 1997, the children of Tarciano and Rosario, namely,
respondents Conrado G. Roca, Annabelle R. Joson, and Rose Marie R. Cristobal,
together with Tarcianos sister, Pilar R. Malcampo, represented by her son, John
Paul M. Trinidad (collectively, the Rocas), filed an action for annulment of sale and
reconveyance of the land against the Fuentes spouses before the Regional Trial
Court (RTC) of Zamboanga City in Civil Case 4707. The Rocas claimed that the sale

3 Id. at 10.

4 Id. at 9.

5 Id. at 171.

161
to the spouses was void since Tarcianos wife, Rosario, did not give her consent to
it. Her signature on the affidavit of consent had been forged. They thus prayed
that the property be reconveyed to them upon reimbursement of the price that
the Fuentes spouses paid Tarciano.6

The spouses denied the Rocas allegations. They presented Atty. Plagata
who testified that he personally saw Rosario sign the affidavit at her residence in
Paco, Manila, on September 15, 1988. He admitted, however, that he notarized
the document in Zamboanga City four months later on January 11, 1989.7 All the
same, the Fuentes spouses pointed out that the claim of forgery was personal to
Rosario and she alone could invoke it. Besides, the four-year prescriptive period
for nullifying the sale on ground of fraud had already lapsed.

Both the Rocas and the Fuentes spouses presented handwriting experts at
the trial. Comparing Rosarios standard signature on the affidavit with those on
various documents she signed, the Rocas expert testified that the signatures were
not written by the same person. Making the same comparison, the spouses
expert concluded that they were.8

6 Id. at 1-5.

7 TSN, April 12, 2000, pp. 16-18.

8 Rollo, p. 42.

162
 On February 1, 2005 the RTC rendered judgment, dismissing the case. It
ruled that the action had already prescribed since the ground cited by the Rocas
for annulling the sale, forgery or fraud, already prescribed under Article 1391 of
the Civil Code four years after its discovery. In this case, the Rocas may be
deemed to have notice of the fraud from the date the deed of sale was registered
with the Registry of Deeds and the new title was issued. Here, the Rocas filed
their action in 1997, almost nine years after the title was issued to the Fuentes
spouses on January 18, 1989.9

Moreover, the Rocas failed to present clear and convincing evidence of the
fraud. Mere variance in the signatures of Rosario was not conclusive proof of
forgery.10 The RTC ruled that, although the Rocas presented a handwriting
expert, the trial court could not be bound by his opinion since the opposing
expert witness contradicted the same. Atty. Plagatas testimony remained
technically unrebutted.11

Finally, the RTC noted that Atty. Plagatas defective notarization of the
affidavit of consent did not invalidate the sale. The law does not require spousal
consent to be on the deed of sale to be valid. Neither does the irregularity vitiate

9 Id. at 72.

10 Id. at 73.

11 Id. at 92.

163
Rosarios consent. She personally signed the affidavit in the presence of Atty.
Plagata.12

On appeal, the Court of Appeals (CA) reversed the RTC decision. The CA
found sufficient evidence of forgery and did not give credence to Atty. Plagatas
testimony that he saw Rosario sign the document in Quezon City. Its jurat said
differently. Also, upon comparing the questioned signature with the specimen
signatures, the CA noted significant variance between them. That Tarciano and
Rosario had been living separately for 30 years since 1958 also reinforced the
conclusion that her signature had been forged.

Since Tarciano and Rosario were married in 1950, the CA concluded that
their property relations were governed by the Civil Code under which an action
for annulment of sale on the ground of lack of spousal consent may be brought by
the wife during the marriage within 10 years from the transaction. Consequently,
the action that the Rocas, her heirs, brought in 1997 fell within 10 years of the
January 11, 1989 sale.

Considering, however, that the sale between the Fuentes spouses and
Tarciano was merely voidable, the CA held that its annulment entitled the
spouses to reimbursement of what they paid him plus legal interest computed

12 Id. at 95-96.

164
from the filing of the complaint until actual payment. Since the Fuentes spouses
were also builders in good faith, they were entitled under Article 448 of the Civil
Code to payment of the value of the improvements they introduced on the lot.
The CA did not award damages in favor of the Rocas and deleted the award of
attorneys fees to the Fuentes spouses.13

Unsatisfied with the CA decision, the Fuentes spouses came to this court by
petition for review.14

The Issues Presented

The case presents the following issues:

1. Whether or not Rosarios signature on the document of consent to

her husband Tarcianos sale of their conjugal land to the Fuentes spouses was
forged;

2. Whether or not the Rocas action for the declaration of nullity of that
sale to the spouses already prescribed; and

13 Id. at 45-50.

14 A Division of the Court already denied the petition for having been filed late and on other
technical grounds. (Rollo, pp. 7 and 110-111). But it was reinstated on second motion for
reconsideration and referred to the En Banc on a consulta. (Rollo, pp. 199-200).

165
 3. Whether or not only Rosario, the wife whose consent was not had,
could bring the action to annul that sale.

The Courts Rulings

First. The key issue in this case is whether or not Rosarios signature on the
document of consent had been forged. For, if the signature were genuine, the fact
that she gave her consent to her husbands sale of the conjugal land would render
the other issues merely academic.

The CA found that Rosarios signature had been forged. The CA observed a
marked difference between her signature on the affidavit of consent15 and her
specimen signatures.16 The CA gave no weight to Atty. Plagatas testimony that he
saw Rosario sign the document in Manila on September 15, 1988 since this
clashed with his declaration in the jurat that Rosario signed the affidavit in
Zamboanga City on January 11, 1989.

15 Records, p. 10.

16 Exhibits E to E-21 consisting of personal letters and legal documents signed by Rosario
relative to a special proceedings case tried by another court.

166
 The Court agrees with the CAs observation that Rosarios signature strokes
on the affidavit appears heavy, deliberate, and forced. Her specimen signatures,
on the other hand, are consistently of a lighter stroke and more fluid. The way the
letters R and s were written is also remarkably different. The variance is obvious
even to the untrained eye.

Significantly, Rosarios specimen signatures were made at about the time

that she signed the supposed affidavit of consent. They were, therefore, reliable
standards for comparison. The Fuentes spouses presented no evidence that
Rosario suffered from any illness or disease that accounted for the variance in her
signature when she signed the affidavit of consent. Notably, Rosario had been
living separately from Tarciano for 30 years since 1958. And she resided so far
away in Manila. It would have been quite tempting for Tarciano to just forge her
signature and avoid the risk that she would not give her consent to the sale or
demand a stiff price for it.

What is more, Atty. Plagata admittedly falsified the jurat of the affidavit of
consent. That jurat declared that Rosario swore to the document and signed it in
Zamboanga City on January 11, 1989 when, as Atty. Plagata testified, she
supposedly signed it about four months earlier at her residence in Paco, Manila
on September 15, 1988. While a defective notarization will merely strip the
document of its public character and reduce it to a private instrument, that
falsified jurat, taken together with the marks of forgery in the signature, dooms
such document as proof of Rosarios consent to the sale of the land. That the
167
Fuentes spouses honestly relied on the notarized affidavit as proof of Rosarios
consent does not matter. The sale is still void without an authentic consent.

Second. Contrary to the ruling of the Court of Appeals, the law that applies
to this case is the Family Code, not the Civil Code. Although Tarciano and Rosario
got married in 1950, Tarciano sold the conjugal property to the Fuentes spouses
on January 11, 1989, a few months after the Family Code took effect on August 3,
1988.

When Tarciano married Rosario, the Civil Code put in place the system of
conjugal partnership of gains on their property relations. While its Article 165
made Tarciano the sole administrator of the conjugal partnership, Article 16617
prohibited him from selling commonly owned real property without his wifes
consent. Still, if he sold the same without his wifes consent, the sale is not void
but merely voidable. Article 173 gave Rosario the right to have the sale annulled
during the marriage within ten years from the date of the sale. Failing in that, she
or her heirs may demand, after dissolution of the marriage, only the value of the
property that Tarciano fraudulently sold. Thus:

17 Art. 166. Unless the wife has been declared a non compos mentis or a spendthrift, or is under
civil interdiction or is confined in a leprosarium, the husband cannot alienate or encumber any
real property of the conjugal partnership without the wifes consent. If she refuses unreasonably
to give her consent, the court may compel her to grant the same.

168
 Art. 173. The wife may, during the marriage, and within ten years
from the transaction questioned, ask the courts for the annulment of any
contract of the husband entered into without her consent, when such consent
is required, or any act or contract of the husband which tends to defraud her
or impair her interest in the conjugal partnership property. Should the wife
fail to exercise this right, she or her heirs, after the dissolution of the
marriage, may demand the value of property fraudulently alienated by the
husband.

But, as already stated, the Family Code took effect on August 3, 1988. Its
Chapter 4 on Conjugal Partnership of Gains expressly superseded Title VI, Book I
of the Civil Code on Property Relations Between Husband and Wife.18 Further,
the Family Code provisions were also made to apply to already existing conjugal
partnerships without prejudice to vested rights.19 Thus:

Art. 105. x x x The provisions of this Chapter shall also apply to conjugal
partnerships of gains already established between spouses before the effectivity of
this Code, without prejudice to vested rights already acquired in accordance with the
Civil Code or other laws, as provided in Article 256. (n)

Consequently, when Tarciano sold the conjugal lot to the Fuentes spouses on
January 11, 1989, the law that governed the disposal of that lot was already the
Family Code.

18 Family Code of the Philippines, Art. 254.

19 Id., Art. 105; see also Homeowners Savings and Loan Bank v. Miguela C. Dailo, G.R. No.
153802, March 11, 2005, 453 SCRA 283, 290.

169
 In contrast to Article 173 of the Civil Code, Article 124 of the Family Code
does not provide a period within which the wife who gave no consent may assail
her husbands sale of the real property. It simply provides that without the other
spouses written consent or a court order allowing the sale, the same would be
void. Article 124 thus provides:

Art. 124. x x x In the event that one spouse is incapacitated or otherwise

unable to participate in the administration of the conjugal properties, the other
spouse may assume sole powers of administration. These powers do not include the
powers of disposition or encumbrance which must have the authority of the court or
the written consent of the other spouse. In the absence of such authority or consent,
the disposition or encumbrance shall be void. x x x

Under the provisions of the Civil Code governing contracts, a void or

inexistent contract has no force and effect from the very beginning. And this rule
applies to contracts that are declared void by positive provision of law,20 as in the
case of a sale of conjugal property without the other spouses written consent. A
void contract is equivalent to nothing and is absolutely wanting in civil effects. It
cannot be validated either by ratification or prescription.21

But, although a void contract has no legal effects even if no action is taken
to set it aside, when any of its terms have been performed, an action to declare

20 Civil Code of the Philippines, Art. 1409.

21 Id., Vol. IV (1990-1991 Edition) Arturo M. Tolentino, pp. 629 & 631.

170
its inexistence is necessary to allow restitution of what has been given under it.22
This action, according to Article 1410 of the Civil Code does not prescribe. Thus:

Art. 1410. The action or defense for the declaration of the inexistence of a
contract does not prescribe.

Here, the Rocas filed an action against the Fuentes spouses in 1997 for
annulment of sale and reconveyance of the real property that Tarciano sold
without their mothers (his wifes) written consent. The passage of time did not
erode the right to bring such an action.

Besides, even assuming that it is the Civil Code that applies to the
transaction as the CA held, Article 173 provides that the wife may bring an action
for annulment of sale on the ground of lack of spousal consent during the
marriage within 10 years from the transaction. Consequently, the action that the
Rocas, her heirs, brought in 1997 fell within 10 years of the January 11, 1989 sale.
It did not yet prescribe.

The Fuentes spouses of course argue that the RTC nullified the sale to them
based on fraud and that, therefore, the applicable prescriptive period should be
that which applies to fraudulent transactions, namely, four years from its

22 Id. at 632.

171
discovery. Since notice of the sale may be deemed given to the Rocas when it was
registered with the Registry of Deeds in 1989, their right of action already
prescribed in 1993.

But, if there had been a victim of fraud in this case, it would be the Fuentes
spouses in that they appeared to have agreed to buy the property upon an honest
belief that Rosarios written consent to the sale was genuine. They had four years
then from the time they learned that her signature had been forged within which
to file an action to annul the sale and get back their money plus damages. They
never exercised the right.

If, on the other hand, Rosario had agreed to sign the document of consent
upon a false representation that the property would go to their children, not to
strangers, and it turned out that this was not the case, then she would have four
years from the time she discovered the fraud within which to file an action to
declare the sale void. But that is not the case here. Rosario was not a victim of
fraud or misrepresentation. Her consent was simply not obtained at all. She lost
nothing since the sale without her written consent was void. Ultimately, the Rocas
ground for annulment is not forgery but the lack of written consent of their
mother to the sale. The forgery is merely evidence of lack of consent.

Third. The Fuentes spouses point out that it was to Rosario, whose consent
was not obtained, that the law gave the right to bring an action to declare void

172
her husbands sale of conjugal land. But here, Rosario died in 1990, the year after
the sale. Does this mean that the right to have the sale declared void is forever
lost?

The answer is no. As stated above, that sale was void from the beginning.
Consequently, the land remained the property of Tarciano and Rosario despite
that sale. When the two died, they passed on the ownership of the property to
their heirs, namely, the Rocas.23 As lawful owners, the Rocas had the right, under
Article 429 of the Civil Code, to exclude any person from its enjoyment and
disposal.

In fairness to the Fuentes spouses, however, they should be entitled,

among other things, to recover from Tarcianos heirs, the Rocas, the P200,000.00
that they paid him, with legal interest until fully paid, chargeable against his
estate.

Further, the Fuentes spouses appear to have acted in good faith in entering
the land and building improvements on it. Atty. Plagata, whom the parties
mutually entrusted with closing and documenting the transaction, represented
that he got Rosarios signature on the affidavit of consent. The Fuentes spouses
had no reason to believe that the lawyer had violated his commission and his

23 Id., Art. 979. Legitimate children and their descendants succeed the parents and other ascendants, without
distinction as to sex or age, and even if they should come from different marriages. x x x

173
oath. They had no way of knowing that Rosario did not come to Zamboanga to
give her consent. There is no evidence that they had a premonition that the
requirement of consent presented some difficulty. Indeed, they willingly made a
30 percent down payment on the selling price months earlier on the assurance
that it was forthcoming.

Further, the notarized document appears to have comforted the Fuentes

spouses that everything was already in order when Tarciano executed a deed of
absolute sale in their favor on January 11, 1989. In fact, they paid the balance due
him. And, acting on the documents submitted to it, the Register of Deeds of
Zamboanga City issued a new title in the names of the Fuentes spouses. It was
only after all these had passed that the spouses entered the property and built on
it. He is deemed a possessor in good faith, said Article 526 of the Civil Code, who
is not aware that there exists in his title or mode of acquisition any flaw which
invalidates it.

As possessor in good faith, the Fuentes spouses were under no obligation

to pay for their stay on the property prior to its legal interruption by a final
judgment against them.24 What is more, they are entitled under Article 448 to
indemnity for the improvements they introduced into the property with a right of
retention until the reimbursement is made. Thus:

24 Id., Art. 544.

174
 Art. 448. The owner of the land on which anything has been built, sown or
planted in good faith, shall have the right to appropriate as his own the works, sowing
or planting, after payment of the indemnity provided for in Articles 546 and 548, or to
oblige the one who built or planted to pay the price of the land, and the one who
sowed, the proper rent. However, the builder or planter cannot be obliged to buy the
land if its value is considerably more than that of the building or trees. In such case, he
shall pay reasonable rent, if the owner of the land does not choose to appropriate the
building or trees after proper indemnity. The parties shall agree upon the terms of the
lease and in case of disagreement, the court shall fix the terms thereof. (361a)

The Rocas shall of course have the option, pursuant to Article 546 of the
Civil Code,25 of indemnifying the Fuentes spouses for the costs of the
improvements or paying the increase in value which the property may have
acquired by reason of such improvements.

WHEREFORE, the Court DENIES the petition and AFFIRMS WITH

MODIFICATION the decision of the Court of Appeals in CA-G.R. CV 00531 dated
February 27, 2007 as follows:

1. The deed of sale dated January 11, 1989 that Tarciano T. Roca
executed in favor of Manuel O. Fuentes, married to Leticia L. Fuentes, as well as

25 Art. 546. Necessary expenses shall be refunded to every possessor; but only the possessor in good faith may
retain the thing until he has been reimbursed therefor. Useful expenses shall be refunded only to the possessor in
good faith with the same right of retention, the person who has defeated him in the possession having the option
of refunding the amount of the expenses or of paying the increase in value which the thing may have acquired by
reason thereof. (453a)

175
the Transfer Certificate of Title T-90,981 that the Register of Deeds of Zamboanga
City issued in the names of the latter spouses pursuant to that deed of sale are
DECLARED void;

2. The Register of Deeds of Zamboanga City is DIRECTED to reinstate

Transfer Certificate of Title 3533 in the name of Tarciano T. Roca, married to
Rosario Gabriel;

3. Respondents Gonzalo G. Roca, Annabelle R. Joson, Rose Marie R.

Cristobal, and Pilar Malcampo are ORDERED to pay petitioner spouses Manuel
and Leticia Fuentes the P200,000.00 that the latter paid Tarciano T. Roca, with
legal interest from January 11, 1989 until fully paid, chargeable against his estate;

4. Respondents Gonzalo G. Roca, Annabelle R. Joson, Rose Marie R.

Cristobal, and Pilar Malcampo are further ORDERED, at their option, to indemnify
petitioner spouses Manuel and Leticia Fuentes with their expenses for introducing
useful improvements on the subject land or pay the increase in value which it may
have acquired by reason of those improvements, with the spouses entitled to the
right of retention of the land until the indemnity is made; and

176
 5. The RTC of Zamboanga City from which this case originated is
DIRECTED to receive evidence and determine the amount of indemnity to which
petitioner spouses Manuel and Leticia Fuentes are entitled.

SO ORDERED.

ROBERTO A. ABAD

Associate Justice

WE CONCUR:

REYNATO S. PUNO

Chief Justice

177
ANTONIO T. CARPIO RENATO C. CORONA
Associate Justice Associate Justice

(On Leave)
CONCHITA CARPIO MORALES PRESBITERO J. VELASCO, JR.
Associate Justice Associate Justice

ANTONIO EDUARDO B. NACHURA TERESITA J. LEONARDO-DE CASTRO

Associate Justice Associate Justice

ARTURO D. BRION DIOSDADO M. PERALTA

Associate Justice Associate Justice

178
LUCAS P. BERSAMIN MARIANO C. DEL CASTILLO

Associate Justice Associate Justice

MARTIN S. VILLARAMA, JR. JOSE PORTUGAL PEREZ

Associate Justice Associate Justice

JOSE CATRAL MENDOZA

Associate Justice

CERTIFICATION

179
 Pursuant to Section 13, Article VIII of the Constitution, it is hereby certified
that the conclusions in the above Decision had been reached in consultation
before the case was assigned to the writer of the opinion of the Court.

REYNATO S. PUNO

Chief Justice

[1]
Rollo, pp. 1-5.
[2]
Id. at 7.
[3]
Id. at 8.
[4]
Id. at 9-10.
[5]
Id. at 11.
[6]
Id. at 3.
[7]
Id. at 12.
[8]
Id. at 13.
[9]
Id. at 22-24.
[10]
Id. at 28.
[11]
Id. at 23.
[12]
Id. at 48-49.
[13]
Records, Vol. III, p. 1.
[14]
Id. at 2.
[15]
Rollo, p. 55.
[16]
Id. at 51.

180
[17]
Id. at 52-55.
[18]
Supra note 16.
[19]
Sebastian v. Calis, A.C. No. 5118, 9 September 1999, 314 SCRA 1, 8; Arrieta v. Llosa, 346
Phil. 932, 939 (1997).
[20]
See also Co v. Bernardino, 349 Phil. 16, 23 (1998).
[21]
Calub v. Suller, A.C. No. 1474, 28 January 2000, 323 SCRA 556, 560; Tapucar v. Tapucar,
355 Phil. 66, 74 (1998); Rayos-Ombac v. Rayos, 349 Phil. 7, 15 (1998).
[22]
Marcelo v. Javier, Sr., A.C. No. 3248, 18 September 1992, 214 SCRA 1, 13.
[23]
In re Almacen, No. L-27654, 18 February 1970, 31 SCRA 562, 602.
[24]
A.C. No. 4215, 21 May 2001, 358 SCRA 1, 9.
[25]
See Maliwat v. Court of Appeals, 326 Phil. 732, 750 (1996).
[26]
Tapucar v. Tapucar, 355 Phil. 66, 74 (1998).
[27]
Vda. de Mijares v. Villaluz, 340 Phil. 164, 171 (1997).
[28]
In re Almacen, No. L-27654, 18 February 1970, 31 SCRA 562, 601-602, In re Paraiso, 41
Phil. 24 (1920), In re Sotto, 38 Phil. 532, 549 (1918).

181
 EN BANC

MANUEL O. FUENTES and G.R. No. 178902

LETICIA L. FUENTES,

Petitioners, Present:

Puno, C.J.,

Carpio,

Corona,

Carpio Morales,

Velasco, Jr.,

Nachura,

- versus - Leonardo-De Castro,

Brion,

Peralta,

182
 Bersamin,

Del Castillo,

Abad,

Villarama, Jr.,

Perez, and

Mendoza, JJ.

CONRADO G. ROCA, ANNABELLE R.

JOSON, ROSE MARIE R. CRISTOBAL

and PILAR MALCAMPO, Promulgated:

Respondents.

April 21, 2010

x ---------------------------------------------------------------------------------------- x

DECISION

ABAD, J.:

This case is about a husbands sale of conjugal real property, employing a

challenged affidavit of consent from an estranged wife. The buyers claim valid
consent, loss of right to declare nullity of sale, and prescription.

183
 The Facts and the Case

Sabina Tarroza owned a titled 358-square meter lot in Canelar, Zamboanga

City. On October 11, 1982 she sold it to her son, Tarciano T. Roca (Tarciano) under
a deed of absolute sale.26 But Tarciano did not for the meantime have the
registered title transferred to his name.

Six years later in 1988, Tarciano offered to sell the lot to petitioners Manuel
and Leticia Fuentes (the Fuentes spouses). They arranged to meet at the office of
Atty. Romulo D. Plagata whom they asked to prepare the documents of sale. They
later signed an agreement to sell that Atty. Plagata prepared27 dated April 29,
1988, which agreement expressly stated that it was to take effect in six months.

The agreement required the Fuentes spouses to pay Tarciano a down

payment of P60,000.00 for the transfer of the lots title to him. And, within six
months, Tarciano was to clear the lot of structures and occupants and secure the
consent of his estranged wife, Rosario Gabriel Roca (Rosario), to the sale. Upon
Tarcianos compliance with these conditions, the Fuentes spouses were to take
possession of the lot and pay him an additional P140,000.00 or P160,000.00,
depending on whether or not he succeeded in demolishing the house standing on

26 Records, p. 8.

27 Id. at 149.

184
it. If Tarciano was unable to comply with these conditions, the Fuentes spouses
would become owners of the lot without any further formality and payment.

The parties left their signed agreement with Atty. Plagata who then worked
on the other requirements of the sale. According to the lawyer, he went to see
Rosario in one of his trips to Manila and had her sign an affidavit of consent.28 As
soon as Tarciano met the other conditions, Atty. Plagata notarized Rosarios
affidavit in Zamboanga City. On January 11, 1989 Tarciano executed a deed of
absolute sale29 in favor of the Fuentes spouses. They then paid him the
additional P140,000.00 mentioned in their agreement. A new title was issued in
the name of the spouses30 who immediately constructed a building on the lot.
On January 28, 1990 Tarciano passed away, followed by his wife Rosario who died
nine months afterwards.

Eight years later in 1997, the children of Tarciano and Rosario, namely,
respondents Conrado G. Roca, Annabelle R. Joson, and Rose Marie R. Cristobal,
together with Tarcianos sister, Pilar R. Malcampo, represented by her son, John
Paul M. Trinidad (collectively, the Rocas), filed an action for annulment of sale and
reconveyance of the land against the Fuentes spouses before the Regional Trial
Court (RTC) of Zamboanga City in Civil Case 4707. The Rocas claimed that the sale

28 Id. at 10.

29 Id. at 9.

30 Id. at 171.

185
to the spouses was void since Tarcianos wife, Rosario, did not give her consent to
it. Her signature on the affidavit of consent had been forged. They thus prayed
that the property be reconveyed to them upon reimbursement of the price that
the Fuentes spouses paid Tarciano.31

The spouses denied the Rocas allegations. They presented Atty. Plagata
who testified that he personally saw Rosario sign the affidavit at her residence in
Paco, Manila, on September 15, 1988. He admitted, however, that he notarized
the document in Zamboanga City four months later on January 11, 1989.32 All the
same, the Fuentes spouses pointed out that the claim of forgery was personal to
Rosario and she alone could invoke it. Besides, the four-year prescriptive period
for nullifying the sale on ground of fraud had already lapsed.

Both the Rocas and the Fuentes spouses presented handwriting experts at
the trial. Comparing Rosarios standard signature on the affidavit with those on
various documents she signed, the Rocas expert testified that the signatures were
not written by the same person. Making the same comparison, the spouses
expert concluded that they were.33

31 Id. at 1-5.

32 TSN, April 12, 2000, pp. 16-18.

33 Rollo, p. 42.

186
 On February 1, 2005 the RTC rendered judgment, dismissing the case. It
ruled that the action had already prescribed since the ground cited by the Rocas
for annulling the sale, forgery or fraud, already prescribed under Article 1391 of
the Civil Code four years after its discovery. In this case, the Rocas may be
deemed to have notice of the fraud from the date the deed of sale was registered
with the Registry of Deeds and the new title was issued. Here, the Rocas filed
their action in 1997, almost nine years after the title was issued to the Fuentes
spouses on January 18, 1989.34

Moreover, the Rocas failed to present clear and convincing evidence of the
fraud. Mere variance in the signatures of Rosario was not conclusive proof of
forgery.35 The RTC ruled that, although the Rocas presented a handwriting
expert, the trial court could not be bound by his opinion since the opposing
expert witness contradicted the same. Atty. Plagatas testimony remained
technically unrebutted.36

Finally, the RTC noted that Atty. Plagatas defective notarization of the
affidavit of consent did not invalidate the sale. The law does not require spousal
consent to be on the deed of sale to be valid. Neither does the irregularity vitiate

34 Id. at 72.

35 Id. at 73.

36 Id. at 92.

187
Rosarios consent. She personally signed the affidavit in the presence of Atty.
Plagata.37

On appeal, the Court of Appeals (CA) reversed the RTC decision. The CA
found sufficient evidence of forgery and did not give credence to Atty. Plagatas
testimony that he saw Rosario sign the document in Quezon City. Its jurat said
differently. Also, upon comparing the questioned signature with the specimen
signatures, the CA noted significant variance between them. That Tarciano and
Rosario had been living separately for 30 years since 1958 also reinforced the
conclusion that her signature had been forged.

Since Tarciano and Rosario were married in 1950, the CA concluded that
their property relations were governed by the Civil Code under which an action
for annulment of sale on the ground of lack of spousal consent may be brought by
the wife during the marriage within 10 years from the transaction. Consequently,
the action that the Rocas, her heirs, brought in 1997 fell within 10 years of the
January 11, 1989 sale.

Considering, however, that the sale between the Fuentes spouses and
Tarciano was merely voidable, the CA held that its annulment entitled the
spouses to reimbursement of what they paid him plus legal interest computed

37 Id. at 95-96.

188
from the filing of the complaint until actual payment. Since the Fuentes spouses
were also builders in good faith, they were entitled under Article 448 of the Civil
Code to payment of the value of the improvements they introduced on the lot.
The CA did not award damages in favor of the Rocas and deleted the award of
attorneys fees to the Fuentes spouses.38

Unsatisfied with the CA decision, the Fuentes spouses came to this court by
petition for review.39

The Issues Presented

The case presents the following issues:

1. Whether or not Rosarios signature on the document of consent to

her husband Tarcianos sale of their conjugal land to the Fuentes spouses was
forged;

2. Whether or not the Rocas action for the declaration of nullity of that
sale to the spouses already prescribed; and

38 Id. at 45-50.

39 A Division of the Court already denied the petition for having been filed late and on other
technical grounds. (Rollo, pp. 7 and 110-111). But it was reinstated on second motion for
reconsideration and referred to the En Banc on a consulta. (Rollo, pp. 199-200).

189
 3. Whether or not only Rosario, the wife whose consent was not had,
could bring the action to annul that sale.

The Courts Rulings

First. The key issue in this case is whether or not Rosarios signature on the
document of consent had been forged. For, if the signature were genuine, the fact
that she gave her consent to her husbands sale of the conjugal land would render
the other issues merely academic.

The CA found that Rosarios signature had been forged. The CA observed a
marked difference between her signature on the affidavit of consent40 and her
specimen signatures.41 The CA gave no weight to Atty. Plagatas testimony that he
saw Rosario sign the document in Manila on September 15, 1988 since this
clashed with his declaration in the jurat that Rosario signed the affidavit in
Zamboanga City on January 11, 1989.

40 Records, p. 10.

41 Exhibits E to E-21 consisting of personal letters and legal documents signed by Rosario
relative to a special proceedings case tried by another court.

190
 The Court agrees with the CAs observation that Rosarios signature strokes
on the affidavit appears heavy, deliberate, and forced. Her specimen signatures,
on the other hand, are consistently of a lighter stroke and more fluid. The way the
letters R and s were written is also remarkably different. The variance is obvious
even to the untrained eye.

Significantly, Rosarios specimen signatures were made at about the time

that she signed the supposed affidavit of consent. They were, therefore, reliable
standards for comparison. The Fuentes spouses presented no evidence that
Rosario suffered from any illness or disease that accounted for the variance in her
signature when she signed the affidavit of consent. Notably, Rosario had been
living separately from Tarciano for 30 years since 1958. And she resided so far
away in Manila. It would have been quite tempting for Tarciano to just forge her
signature and avoid the risk that she would not give her consent to the sale or
demand a stiff price for it.

What is more, Atty. Plagata admittedly falsified the jurat of the affidavit of
consent. That jurat declared that Rosario swore to the document and signed it in
Zamboanga City on January 11, 1989 when, as Atty. Plagata testified, she
supposedly signed it about four months earlier at her residence in Paco, Manila
on September 15, 1988. While a defective notarization will merely strip the
document of its public character and reduce it to a private instrument, that
falsified jurat, taken together with the marks of forgery in the signature, dooms
such document as proof of Rosarios consent to the sale of the land. That the
191
Fuentes spouses honestly relied on the notarized affidavit as proof of Rosarios
consent does not matter. The sale is still void without an authentic consent.

Second. Contrary to the ruling of the Court of Appeals, the law that applies
to this case is the Family Code, not the Civil Code. Although Tarciano and Rosario
got married in 1950, Tarciano sold the conjugal property to the Fuentes spouses
on January 11, 1989, a few months after the Family Code took effect on August 3,
1988.

When Tarciano married Rosario, the Civil Code put in place the system of
conjugal partnership of gains on their property relations. While its Article 165
made Tarciano the sole administrator of the conjugal partnership, Article 16642
prohibited him from selling commonly owned real property without his wifes
consent. Still, if he sold the same without his wifes consent, the sale is not void
but merely voidable. Article 173 gave Rosario the right to have the sale annulled
during the marriage within ten years from the date of the sale. Failing in that, she
or her heirs may demand, after dissolution of the marriage, only the value of the
property that Tarciano fraudulently sold. Thus:

42 Art. 166. Unless the wife has been declared a non compos mentis or a spendthrift, or is under
civil interdiction or is confined in a leprosarium, the husband cannot alienate or encumber any
real property of the conjugal partnership without the wifes consent. If she refuses unreasonably
to give her consent, the court may compel her to grant the same.

192
 Art. 173. The wife may, during the marriage, and within ten years
from the transaction questioned, ask the courts for the annulment of any
contract of the husband entered into without her consent, when such consent
is required, or any act or contract of the husband which tends to defraud her
or impair her interest in the conjugal partnership property. Should the wife
fail to exercise this right, she or her heirs, after the dissolution of the
marriage, may demand the value of property fraudulently alienated by the
husband.

But, as already stated, the Family Code took effect on August 3, 1988. Its
Chapter 4 on Conjugal Partnership of Gains expressly superseded Title VI, Book I
of the Civil Code on Property Relations Between Husband and Wife.43 Further,
the Family Code provisions were also made to apply to already existing conjugal
partnerships without prejudice to vested rights.44 Thus:

Art. 105. x x x The provisions of this Chapter shall also apply to conjugal
partnerships of gains already established between spouses before the effectivity of
this Code, without prejudice to vested rights already acquired in accordance with the
Civil Code or other laws, as provided in Article 256. (n)

Consequently, when Tarciano sold the conjugal lot to the Fuentes spouses on
January 11, 1989, the law that governed the disposal of that lot was already the
Family Code.

43 Family Code of the Philippines, Art. 254.

44 Id., Art. 105; see also Homeowners Savings and Loan Bank v. Miguela C. Dailo, G.R. No.
153802, March 11, 2005, 453 SCRA 283, 290.

193
 In contrast to Article 173 of the Civil Code, Article 124 of the Family Code
does not provide a period within which the wife who gave no consent may assail
her husbands sale of the real property. It simply provides that without the other
spouses written consent or a court order allowing the sale, the same would be
void. Article 124 thus provides:

Art. 124. x x x In the event that one spouse is incapacitated or otherwise

unable to participate in the administration of the conjugal properties, the other
spouse may assume sole powers of administration. These powers do not include the
powers of disposition or encumbrance which must have the authority of the court or
the written consent of the other spouse. In the absence of such authority or consent,
the disposition or encumbrance shall be void. x x x

Under the provisions of the Civil Code governing contracts, a void or

inexistent contract has no force and effect from the very beginning. And this rule
applies to contracts that are declared void by positive provision of law,45 as in the
case of a sale of conjugal property without the other spouses written consent. A
void contract is equivalent to nothing and is absolutely wanting in civil effects. It
cannot be validated either by ratification or prescription.46

But, although a void contract has no legal effects even if no action is taken
to set it aside, when any of its terms have been performed, an action to declare

45 Civil Code of the Philippines, Art. 1409.

46 Id., Vol. IV (1990-1991 Edition) Arturo M. Tolentino, pp. 629 & 631.

194
its inexistence is necessary to allow restitution of what has been given under it.47
This action, according to Article 1410 of the Civil Code does not prescribe. Thus:

Art. 1410. The action or defense for the declaration of the inexistence of a
contract does not prescribe.

Here, the Rocas filed an action against the Fuentes spouses in 1997 for
annulment of sale and reconveyance of the real property that Tarciano sold
without their mothers (his wifes) written consent. The passage of time did not
erode the right to bring such an action.

Besides, even assuming that it is the Civil Code that applies to the
transaction as the CA held, Article 173 provides that the wife may bring an action
for annulment of sale on the ground of lack of spousal consent during the
marriage within 10 years from the transaction. Consequently, the action that the
Rocas, her heirs, brought in 1997 fell within 10 years of the January 11, 1989 sale.
It did not yet prescribe.

The Fuentes spouses of course argue that the RTC nullified the sale to them
based on fraud and that, therefore, the applicable prescriptive period should be
that which applies to fraudulent transactions, namely, four years from its

47 Id. at 632.

195
discovery. Since notice of the sale may be deemed given to the Rocas when it was
registered with the Registry of Deeds in 1989, their right of action already
prescribed in 1993.

But, if there had been a victim of fraud in this case, it would be the Fuentes
spouses in that they appeared to have agreed to buy the property upon an honest
belief that Rosarios written consent to the sale was genuine. They had four years
then from the time they learned that her signature had been forged within which
to file an action to annul the sale and get back their money plus damages. They
never exercised the right.

If, on the other hand, Rosario had agreed to sign the document of consent
upon a false representation that the property would go to their children, not to
strangers, and it turned out that this was not the case, then she would have four
years from the time she discovered the fraud within which to file an action to
declare the sale void. But that is not the case here. Rosario was not a victim of
fraud or misrepresentation. Her consent was simply not obtained at all. She lost
nothing since the sale without her written consent was void. Ultimately, the Rocas
ground for annulment is not forgery but the lack of written consent of their
mother to the sale. The forgery is merely evidence of lack of consent.

Third. The Fuentes spouses point out that it was to Rosario, whose consent
was not obtained, that the law gave the right to bring an action to declare void

196
her husbands sale of conjugal land. But here, Rosario died in 1990, the year after
the sale. Does this mean that the right to have the sale declared void is forever
lost?

The answer is no. As stated above, that sale was void from the beginning.
Consequently, the land remained the property of Tarciano and Rosario despite
that sale. When the two died, they passed on the ownership of the property to
their heirs, namely, the Rocas.48 As lawful owners, the Rocas had the right, under
Article 429 of the Civil Code, to exclude any person from its enjoyment and
disposal.

In fairness to the Fuentes spouses, however, they should be entitled,

among other things, to recover from Tarcianos heirs, the Rocas, the P200,000.00
that they paid him, with legal interest until fully paid, chargeable against his
estate.

Further, the Fuentes spouses appear to have acted in good faith in entering
the land and building improvements on it. Atty. Plagata, whom the parties
mutually entrusted with closing and documenting the transaction, represented
that he got Rosarios signature on the affidavit of consent. The Fuentes spouses
had no reason to believe that the lawyer had violated his commission and his

48 Id., Art. 979. Legitimate children and their descendants succeed the parents and other ascendants, without
distinction as to sex or age, and even if they should come from different marriages. x x x

197
oath. They had no way of knowing that Rosario did not come to Zamboanga to
give her consent. There is no evidence that they had a premonition that the
requirement of consent presented some difficulty. Indeed, they willingly made a
30 percent down payment on the selling price months earlier on the assurance
that it was forthcoming.

Further, the notarized document appears to have comforted the Fuentes

spouses that everything was already in order when Tarciano executed a deed of
absolute sale in their favor on January 11, 1989. In fact, they paid the balance due
him. And, acting on the documents submitted to it, the Register of Deeds of
Zamboanga City issued a new title in the names of the Fuentes spouses. It was
only after all these had passed that the spouses entered the property and built on
it. He is deemed a possessor in good faith, said Article 526 of the Civil Code, who
is not aware that there exists in his title or mode of acquisition any flaw which
invalidates it.

As possessor in good faith, the Fuentes spouses were under no obligation

to pay for their stay on the property prior to its legal interruption by a final
judgment against them.49 What is more, they are entitled under Article 448 to
indemnity for the improvements they introduced into the property with a right of
retention until the reimbursement is made. Thus:

49 Id., Art. 544.

198
 Art. 448. The owner of the land on which anything has been built, sown or
planted in good faith, shall have the right to appropriate as his own the works, sowing
or planting, after payment of the indemnity provided for in Articles 546 and 548, or to
oblige the one who built or planted to pay the price of the land, and the one who
sowed, the proper rent. However, the builder or planter cannot be obliged to buy the
land if its value is considerably more than that of the building or trees. In such case, he
shall pay reasonable rent, if the owner of the land does not choose to appropriate the
building or trees after proper indemnity. The parties shall agree upon the terms of the
lease and in case of disagreement, the court shall fix the terms thereof. (361a)

The Rocas shall of course have the option, pursuant to Article 546 of the
Civil Code,50 of indemnifying the Fuentes spouses for the costs of the
improvements or paying the increase in value which the property may have
acquired by reason of such improvements.

WHEREFORE, the Court DENIES the petition and AFFIRMS WITH

MODIFICATION the decision of the Court of Appeals in CA-G.R. CV 00531 dated
February 27, 2007 as follows:

1. The deed of sale dated January 11, 1989 that Tarciano T. Roca
executed in favor of Manuel O. Fuentes, married to Leticia L. Fuentes, as well as

50 Art. 546. Necessary expenses shall be refunded to every possessor; but only the possessor in good faith may
retain the thing until he has been reimbursed therefor. Useful expenses shall be refunded only to the possessor in
good faith with the same right of retention, the person who has defeated him in the possession having the option
of refunding the amount of the expenses or of paying the increase in value which the thing may have acquired by
reason thereof. (453a)

199
the Transfer Certificate of Title T-90,981 that the Register of Deeds of Zamboanga
City issued in the names of the latter spouses pursuant to that deed of sale are
DECLARED void;

2. The Register of Deeds of Zamboanga City is DIRECTED to reinstate

Transfer Certificate of Title 3533 in the name of Tarciano T. Roca, married to
Rosario Gabriel;

3. Respondents Gonzalo G. Roca, Annabelle R. Joson, Rose Marie R.

Cristobal, and Pilar Malcampo are ORDERED to pay petitioner spouses Manuel
and Leticia Fuentes the P200,000.00 that the latter paid Tarciano T. Roca, with
legal interest from January 11, 1989 until fully paid, chargeable against his estate;

4. Respondents Gonzalo G. Roca, Annabelle R. Joson, Rose Marie R.

Cristobal, and Pilar Malcampo are further ORDERED, at their option, to indemnify
petitioner spouses Manuel and Leticia Fuentes with their expenses for introducing
useful improvements on the subject land or pay the increase in value which it may
have acquired by reason of those improvements, with the spouses entitled to the
right of retention of the land until the indemnity is made; and

200
 5. The RTC of Zamboanga City from which this case originated is
DIRECTED to receive evidence and determine the amount of indemnity to which
petitioner spouses Manuel and Leticia Fuentes are entitled.

SO ORDERED.

ROBERTO A. ABAD

Associate Justice

WE CONCUR:

REYNATO S. PUNO

Chief Justice

201
ANTONIO T. CARPIO RENATO C. CORONA
Associate Justice Associate Justice

(On Leave)
CONCHITA CARPIO MORALES PRESBITERO J. VELASCO, JR.
Associate Justice Associate Justice

ANTONIO EDUARDO B. NACHURA TERESITA J. LEONARDO-DE CASTRO

Associate Justice Associate Justice

ARTURO D. BRION DIOSDADO M. PERALTA

Associate Justice Associate Justice

202
LUCAS P. BERSAMIN MARIANO C. DEL CASTILLO

Associate Justice Associate Justice

MARTIN S. VILLARAMA, JR. JOSE PORTUGAL PEREZ

Associate Justice Associate Justice

JOSE CATRAL MENDOZA

Associate Justice

CERTIFICATION

203
 Pursuant to Section 13, Article VIII of the Constitution, it is hereby certified
that the conclusions in the above Decision had been reached in consultation
before the case was assigned to the writer of the opinion of the Court.

REYNATO S. PUNO

Chief Justice

204
Republic of the Philippines

Supreme Court
Manila

SECOND DIVISION

THE HEIRS OF NICOLAS S. CABIGAS,

NAMELY: LOLITA ZABATE CABIGAS, G.R. No. 175291
ANECITA C. CANQUE, DIOSCORO
CABIGAS, FIDEL CABIGAS, and RUFINO
CABIGAS,

Petitioners,

- versus -

Present:
MELBA L. LIMBACO, LINDA L. LOGARTA,
RAMON C. LOGARTA, HENRY D. SEE,
FREDDIE S. GO, BENEDICT Y. QUE, AWG CARPIO, J.,
DEVELOPMENT CORPORATION, PETROSA
Chairperson,
DEVELOPMENT CORPORATION, and
UNIVERSITY OF CEBU BANILAD, INC., LEONARDO-DE CASTRO,*

* Designated as Acting Member of the Second Division per Special Order No. 1006 dated June
10, 2011.

205
 Respondents. BRION,

PERALTA,** and

PEREZ, JJ.

Promulgated:

July 27, 2011

x------------------------------------------------------------------------------------x

DECISION

BRION, J.:

We resolve the petition for review on certiorari51 filed by Lolita Cabigas,

Anecita Canque, Dioscoro Cabigas, Fidel Cabigas, and Rufino Cabigas (petitioners),
heirs of Nicolas S. Cabigas, to reverse and set aside the resolutions of the Court of

** Additional member in lieu of Associate Justice Maria Lourdes P. A. Sereno per Special Order
No. 1040 dated July 6, 2011.

51 Under Rule 45 of the Rules of Court. Rollo, pp. 12-35.

206
Appeals (CA) in CA-G.R. CV No. 01144 dated May 31, 200652 and October 4,
2006,53 dismissing their ordinary appeal for being the wrong recourse.

THE FACTS

On February 4, 2003, the petitioners filed a complaint for the annulment of

titles of various parcels of land registered in the names of Melba Limbaco, Linda
Logarta, Ramon Logarta, Eugenio Amores, New Ventures Realty Corporation,
Henry See, Freddie Go, Benedict Que, AWG Development Corporation (AWG),
Petrosa Development Corporation (Petrosa), and University of Cebu Banilad, Inc.
(UCB) with the Regional Trial Court (RTC) of Cebu City, docketed as Civil Case No.
28585.

The complaint alleged that petitioner Lolita Cabigas and her late husband,
Nicolas Cabigas, purchased two lots (Lot No. 74254 and Lot No. 95355) from

52 Penned by Associate Justice Apolinario Bruselas, Jr., with the concurrence of Associate
Justices Arsenio J. Magpale and Vicente L. Yap. Id. at 37-49.

53 Penned by Associate Justice Arsenio J. Magpale, with the concurrence of Associate Justices
Marlene Gonzales-Sison and Antonio Villamor. Id. at 51-55.

54 With an area of twelve thousand nine hundred eighty-two square meters (12,982 sq. m.).

55 With an area of five thousand six hundred twenty-six sq. m. (5,626 sq. m.).

207
Salvador Cobarde on January 15, 1980. Cobarde in turn had purchased these lots
from Ines Ouano56 on February 5, 1948.

Notwithstanding the sale between Ouano and Cobarde, and because the
two lots remained registered in her name,57 Ouano was able to sell these same
lots to the National Airports Corporation on November 25, 1952 for its airport
expansion project. The National Airports Corporation promptly had the titles of
these properties registered in its name.

When the airport expansion project fell through, respondents Melba

Limbaco, Ramon Logarta, and Linda Logarta, the legal heirs of Ouano, succeeded
in reclaiming title to the two lots through an action for reconveyance filed with
the lower court;58 the titles over these lots were thereafter registered in their
names.59 They then subdivided the two lots60 and sold them to New Ventures

56 Misspelled as Quano in the complaint.

57 Lot No. 953 was registered in Ouanos name under Transfer Certificate of Title (TCT) No. T-
2696, while Lot No. 742 was registered under TCT No. T-225.

58 In G.R. No. 121506, this Court affirmed the existence of the right of respondents Melba
Limbaco, Linda C. Logarta and Ramon Logarta, the heirs of Ines Ouano, to repurchase Lot No.
742 and Lot No. 953 from the Mactan Cebu International Airport Authority (previously the
National Airports Corporation).

59 The titles in the name of National Airports Corporation were cancelled and TCT No. 143605
and TCT No. 143604 were issued in the names of respondents Melba Limbaco, Ramon Logarta,
and Linda Logarta. Rollo, p. 128.

60 Lot No. 953 was divided into Lot No. 953-A (2,719 sq. m.); Lot No. 953-B (1,406.44 sq. m.);
Lot No. 953-C (1,406.24 sq. m.); and Lot No. 953-D (94 sq. m.). On the other hand, Lot No. 742
208
Realty Corporation, Eugenio Amores, Henry See, Freddie Go, Benedict Que,
Petrosa, and AWG. AWG, in turn, sold one of the parcels of land to UCB. All the
buyers registered the titles over their respective lots in their names.

After the respondents had filed their individual Answers, respondents

Henry See, Freddie Go and Benedict Que filed a motion to set the case for hearing
on special affirmative defenses on July 8, 2004. On the other hand, respondents
AWG, Petrosa, and UCB filed a motion for summary judgment on April 13, 2005,
admitting as true the facts stated in the petitioners complaint, but claiming that
the petitioners had no legal right to the properties in question.

THE RTC RESOLUTION

On August 23, 2005, the RTC issued a resolution,61 granting the motion for
summary judgment filed by AWG, Petrosa and UCB, and dismissing the petitioners
complaint. According to the RTC, while the petitioners alleged bad faith and
malice on the part of Ouano when she sold the same properties to the National
Airports Corporation, they never alleged bad faith on the part of the buyer, the

was subdivided into Lot No. 742-A (1,500 sq. m.); Lot No. 742-B (2,322 sq. m.); Lot No. 742-C
(4,303 sq. m.); Lot No. 742-D (4,316 sq. m.); and Lot No. 742-E (541 sq. m.). Id. at 66.

61 Id. at 128-132.

209
National Airports Corporation. Since good faith is always presumed, the RTC
concluded that the National Airports Corporation was a buyer in good faith and
its registration of the properties in its name effectively transferred ownership
over the two lots, free from all the unrecorded prior transactions involving these
properties, including the prior sale of the lots to Cobarde.

As the RTC explained, the unregistered sale of the lots by Ouano to Cobarde
was merely an in personam transaction, which bound only the parties. On the
other hand, the registered sale between Ouano and the National Airports
Corporation, a buyer in good faith, was an in rem transaction that bound the
whole world. Since Cobardes rights to the properties had already been cut off
with their registration in the name of the National Airports Corporation, he
could not sell any legal interest in these properties to the Cabigas spouses.
Hence, under the Torrens system, the petitioners are strangers to the lots and
they had no legally recognized interest binding it in rem that the courts could
protect and enforce against the world.62

The petitioners filed a notice of appeal to question the RTC resolution. In

response, respondents AWG, Petrosa, and UCB filed a motion to dismiss the
appeal, claiming that the petitioners raised only questions of law in their appeal;
thus, they should have filed an appeal by certiorari with the Supreme Court, and
not an ordinary appeal with the appellate court.

62 Id. at 132.

210
 THE COURT OF APPEALS RESOLUTIONS

In its May 31, 2006 resolution, the CA ruled that the petitioners should
have filed a petition for review on certiorari under Rule 45 of the Rules of Court
with the Supreme Court instead of an ordinary appeal since they only raised a
question of law, i.e., the propriety of the summary judgment. Accordingly, insofar
as the respondents who filed the motion for summary judgment are concerned,
namely, AWG, Petrosa, and UCB, the CA dismissed the petitioners appeal.

However, the CA remanded the case to the RTC for further proceedings on
the Motion to Set Case for Hearing on Special and Affirmative Defenses filed by
respondents Henry See, Freddie Go, and Benedict Que.

In its October 4, 2006 resolution, the CA resolved the petitioners motion for
reconsideration, as well as the Partial Motion for Reconsideration filed by
respondents Henry See, Freddie Go, and Benedict Que. The CA observed that it
did not have jurisdiction to entertain the appeal since it raised a pure question of
law. Since it dismissed the appeal based on a technicality, it did not have the
jurisdiction to order that the case be remanded to the RTC.

211
 Furthermore, the trial court had already dismissed the case in its entirety
when it held that the petitioners had no enforceable right as against the
respondents, since they had no registered legal interest in the properties. There
was thus no need to remand the case to the RTC.

Hence, the petitioners seek recourse with this Court via the present
petition, raising the following grounds:

(1) The Court of Appeals committed grave and serious error in dismissing the
appeal and in holding that a summary judgment is appealable only through
a petition for review on certiorari under Rule 45 to the Supreme Court.

(2) The paramount and overriding considerations of substantial justice and

equity justify the reversal and setting aside of the questioned resolutions.

THE RULING

We AFFIRM the assailed CA resolutions.

Petitioners availed of the wrong mode of appeal

212
 Section 2, Rule 41 of the Rules of Court provides the three modes of appeal,
which are as follows:

Section 2. Modes of appeal.

(a) Ordinary appeal. The appeal to the Court of Appeals in cases decided by the
Regional Trial Court in the exercise of its original jurisdiction shall be taken by filing a
notice of appeal with the court which rendered the judgment or final order appealed
from and serving a copy thereof upon the adverse party. No record on appeal shall be
required except in special proceedings and other cases of multiple or separate appeals
where the law or these Rules so require. In such cases, the record on appeal shall be
filed and served in like manner.

(b) Petition for review. The appeal to the Court of Appeals in cases decided by the
Regional Trial Court in the exercise of its appellate jurisdiction shall be by petition for
review in accordance with Rule 42.

(c) Appeal by certiorari. In all cases where only questions of law are raised or involved,
the appeal shall be to the Supreme Court by petition for review on certiorari in
accordance with Rule 45.

The first mode of appeal, the ordinary appeal under Rule 41 of the Rules of
Court, is brought to the CA from the RTC, in the exercise of its original jurisdiction,
and resolves questions of fact or mixed questions of fact and law. The second
mode of appeal, the petition for review under Rule 42 of the Rules of Court, is
brought to the CA from the RTC, acting in the exercise of its appellate jurisdiction,
and resolves questions of fact or mixed questions of fact and law. The third mode

213
of appeal, the appeal by certiorari under Rule 45 of the Rules of Court, is brought
to the Supreme Court and resolves only questions of law.

Where a litigant files an appeal that raises only questions of law with the
CA, Section 2, Rule 50 of the Rules of Court expressly mandates that the CA
should dismiss the appeal outright as the appeal is not reviewable by that court.

There is a question of law when the issue does not call for an examination of
the probative value of the evidence presented, the truth or falsehood of facts being
admitted, and the doubt concerns the correct application of law and jurisprudence
on the matter.63 On the other hand, there is a question of fact when the doubt or
controversy arises as to the truth or falsity of the alleged facts.

While the petitioners never filed their appellants brief, we discern from the
petitioners submissions to the CA,64 as well as from their petition with this Court,
their perceived issues with respect to the RTCs summary judgment, and they are
as follows:

63 Roman Catholic Archbishop of Manila v. CA, 327 Phil. 810, 826 (1996), citing Vda. De
Arroyo v. El Beaterio del Santissimo Rosario de Molo, G.R. No. L-22005, May 3, 1968, 23
SCRA 525.

64 The petitioners submitted their motion for reconsideration of the CAs May 31, 2006
resolution and their Supplemental Arguments in Support of the Motion for Reconsideration dated
June 19, 2006.

214
 a) Whether or not the National Airports Corporation acted with good faith
when it purchased the properties from Ouano;
b) Whether the heirs of Ouano acted with good faith in recovering the
properties from the National Airports Corporation; and
c) Whether the subsequent buyers of the properties acted with good faith in
purchasing the properties from the heirs of Ouano.

Given that the question of whether a person acted with good faith or bad
faith in purchasing and registering real property is a question of fact,65 it appears,
at first glance, that the petitioners raised factual issues in their appeal and, thus,
correctly filed an ordinary appeal with the CA. After reviewing the RTC resolution
being assailed, however, we find that the petitioners actually raised only questions
of law in their appeal.

We quote the pertinent portions of the RTC decision:

The main issue to be resolved is who between [the] plaintiffs and the
defendants have a better right to the subject lots.

In selling the land in favor of the National Airports Corporation[,]

plaintiffs alleged bad faith and malice on the part of the seller Ine[s] Ouano but
have not pleaded bad faith on the part of the buyer. Since good faith is always
presumed under Article 427 of the Civil Code, the National Airports Corporation
was therefore a buyer in good faith. Being [a] purchaser in good faith and for

65 See Bautista v. Silva, G.R. No. 157434, September 19, 2006, 502 SCRA 334.

215
value, it is axiomatic that the right of [the] National Airports Corporation must be
upheld and its titles protected over the claim of the plaintiffs. In the case of
Flordeliza Cabuhat vs. The Honorable Court of Appeals, G.R. No. 122425,
September 28, 2001, the Supreme Court upheld the validity of the title of an
innocent purchaser in good faith and for value and at the same time invoked the
principle of stability of our Torrens system and indefeasibility of title
guaranteeing the integrity of land titles once the claim of ownership is established
and recognized.

However, it is well-settled that even if the procurement of a

certificate of title was tainted with fraud and misrepresentation,
such defective title may be the source of a completely legal and
valid title in the hands of an innocent purchaser for value. Thus:
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 whether the title
has been regularly or irregularly issued. This is contrary to the
evident purpose of the law. Every person dealing with the
registered land may safely rely on the correctness of the certificate
of title issued therefore and the law will in no way oblige him to go
behind the certificate to determine the condition of the property.

The subject lots being registered land under the Torrens [s]ystem the
recordation of the sale by the National Airports Corporation, a buyer in good faith
gave National Airports Corporation a title free of all unrecorded prior
transactions, deeds, liens and encumbrances, and conversely forever erased or cut
off the unrecorded interest of Salvador Cobarde. Section 50 of Article 496 of the
Land Registration Act (now sec. 51 of PD 1529) reads: No deed, mortgage, lease
or other voluntary instrument, except a will, purporting to convey or affect
registered land shall take effect as a conveyance or bind the land xxx. The act of
registration shall be the operative act to convey and affect [the] land. In the case
of National Grains Authority v. IAC, 157 SCRA 380, the Supreme Court ruled,
thus, the possession by plaintiffs and their predecessors-in-interest is irrelevant to
this case because possession of registered land can never ripen into ownership. No
title to registered land in derogation of the title of the registered owner shall be
acquired by prescription or adverse possession. (Sec. 46 of Act 496, now Sec. 47
of PD 1529).

216
 In the eyes of the Torrens system, the unregistered sale of the property by
Ine[s] Ouano to Salvador Cobarde did not bind the land or the whole world in
rem; it bound, in personam, only the parties. On the other hand, the registered sale
by Ine[s] Ouano to National Airports Corporation, a buyer in good faith, bound
the land in rem, meaning that the whole world was put on constructive notice that
thenceforth the land belonged to National Airports Corporation free of all prior
transactions, deeds and encumbrances, such as the claim of Salvador Cobarde,
which were at the very moment National Airports Corporation registered its title
free of prior claims forever erased or cut off by operation of law.

xxxx

Salvador Cobarde, whose rights to the property had been erased or cut off
by operation of law, had nothing or had no legally recognized interest in the
property that he could sell when he sold the property to Nicolas and Lolita
Cabigas. Nicolas and Lolita Cabigas having bought nothing could transmit
nothing to their successors-in-interest, the plaintiffs herein. Under the Torrens
system, herein plaintiffs are strangers to the property; they possess no legally
recognized interest binding the property in rem that courts could protect and
enforce against the world.66

As astutely observed by the CA, the RTC resolution merely collated from the
pleadings the facts that were undisputed, admitted, and stipulated upon by the
parties, and thereafter ruled on the legal issues raised by applying the pertinent
laws and jurisprudence on the matter. In other words, the RTC did not resolve any
factual issues, only legal ones.

66 Rollo, pp. 130-132.

217
 When there is no dispute as to the facts, the question of whether or not the
conclusion drawn from these facts is correct is a question of law.67 When the
petitioners assailed the summary judgment, they were in fact questioning the
conclusions drawn by the RTC from the undisputed facts, and raising a question of
law.

In light of the foregoing, jurisdiction over the petitioners appeal properly

lay with this Court via an appeal by certiorari, and the CA was correct in
dismissing the appeal for lack of jurisdiction.

Rendition of summary judgment was proper

Even if we overlook the procedural lapse and resolve the case on the merits,
we still affirm the assailed CA resolutions.

Under the Rules of Court, a summary judgment may be rendered where, on

motion of a party and after hearing, the pleadings, supporting affidavits,
depositions and admissions on file show that, except as to the amount of
damages, there is no genuine issue as to any material fact and that the moving

67 See Far East Marble (Philippines), Inc. v. Court of Appeals, G.R. No. 94093, August 10,
1993, 225 SCRA 249.

218
party is entitled to a judgment as a matter of law.68 The Court explained the
concept of summary judgment in Asian Construction and Development
Corporation v. Philippine Commercial International Bank:69

Summary or accelerated judgment is a procedural technique aimed at weeding out

sham claims or defenses at an early stage of litigation thereby avoiding the expense and
loss of time involved in a trial.

Under the Rules, summary judgment is appropriate when there are no genuine
issues of fact which call for the presentation of evidence in a full-blown trial. Even if on
their face the pleadings appear to raise issues, when the affidavits, depositions and
admissions show that such issues are not genuine, then summary judgment as
prescribed by the Rules must ensue as a matter of law. The determinative factor,
therefore, in a motion for summary judgment, is the presence or absence of a genuine
issue as to any material fact. [Emphasis supplied.]

The petitioners assert that the RTC erred in rendering a summary judgment
since there were factual issues that required the presentation of evidence at a
trial.

We disagree with the petitioners.

At the outset, we note from the respondents pleadings that several

respondents70 denied that the sale between Ouano and Cobarde ever occurred. It

68 RULES OF COURT, Section 3, Rule 35.

69 G.R. No. 153827, April 25, 2006, 488 SCRA 192, 203.

219
would, therefore, appear that a factual issue existed that required resolution
through a formal trial, and the RTC erred in rendering summary judgment.

A closer examination of the parties submissions, however, makes it

apparent that this is not a genuine issue of fact because, as will be discussed
below, the petitioners do not have any legally enforceable right to the properties
in question, as their predecessors-in-interest are not buyers in good faith.

A closer examination of the parties submissions, however, makes it apparent

that this is not a genuine issue of fact because, as will be discussed below, the
petitioners do not have any legally enforceable right to the properties in question,
as their predecessors-in-interest are not buyers in good faith.

i. Cabigas spouses are not buyers in good faith

A purchaser in good faith is one who buys the property of another without
notice that some other person has a right to or interest in such property, and pays
a full and fair price for the same at the time of such purchase or before he has
notice of the claim of another person.71 It is a well-settled rule that a purchaser
cannot close his eyes to facts which should put a reasonable man upon his
guard, and then claim that he acted in good faith under the belief that there

71 Cruz v. Court of Appeals, 346 Phil. 506 (1997).

220
was no defect in the title of the vendor. His mere refusal to believe that such
defect exists, or his willful closing of his eyes to the possibility of the existence of
a defect in his vendors title, will not make him an innocent purchaser for value, if
it afterwards develops that the title was in fact defective, and it appears that he
had such notice of the defect as would have led to its discovery had he acted with
that measure of precaution which may reasonably be required of a prudent man
in a like situation.72

We are dealing with registered land, a fact known to the Cabigas spouses
since they received the duplicate owners certificate of title from Cobarde when
they purchased the land. At the time of the sale to the Cabigas spouses,
however, the land was registered not in Cobardes name, but in Ouanos name.
By itself, this fact should have put the Cabigas spouses on guard and prompted
them to check with the Registry of Deeds as to the most recent certificates of title
to discover if there were any liens, encumbrances, or other attachments covering
the lots in question. As the Court pronounced in Abad v. Sps. Guimba:73

[The law protects to a greater degree a purchaser who buys from the registered
owner himself. Corollarily, it] requires a higher degree of prudence from one who buys
from a person who is not the registered owner, although the land object of the
transaction is registered. While one who buys from the registered owner does not need
to look behind the certificate of title, one who buys from one who is not the registered

72 Pea, Registration of Land Titles and Deeds, 1994 ed., p. 149, citing Leung Yee v. Strong
Machinery Co., 37 Phil. 644; RFC v. Javillonar, 107 Phil. 664; Maacop v. Cansino, 111 Phil.
166.

73 503 Phil. 321, 331-332 (2005), citing Revilla v. Galindez, 107 Phil. 480 (1960).

221
 owner is expected to examine not only the certificate of title but all factual
circumstances necessary for [one] to determine if there are any flaws in the title of the
transferor, or in [the] capacity to transfer the land. (emphasis supplied)

Instead, the Cabigas spouses relied completely on Cobardes representation

that he owned the properties in question, and did not even bother to perform the
most perfunctory of investigations by checking the properties titles with the
Registry of Deeds. Had the Cabigas spouses only done so, they would easily have
learned that Cobarde had no legal right to the properties they were acquiring
since the lots had already been registered in the name of the National Airports
Corporation in 1952. Their failure to exercise the plain common sense expected of
real estate buyers bound them to the consequences of their own inaction.

ii. No allegation that the National Airports Corporation registered the lots
in bad faith

All the parties to this case trace their ownership to either of the two
persons that Ouano sold the properties to either to Cobarde, who allegedly
purchased the land in 1948, or to the National Airports Corporation, which bought
the land in 1952. Undoubtedly, the National Airports Corporation was the only
party that registered the sale with the Registry of Deeds. For this registration to
be binding, we now have to determine whether the National Airports Corporation

222
acted with good faith when it registered the properties, in accordance with Article
1544 of the Civil Code, which provides:

Article 1544. If the same thing should have been sold to different vendees, the
ownership shall be transferred to the person who may have first taken possession
thereof in good faith, if it should be movable property.

Should it be immovable property, the ownership shall belong to the person

acquiring it who in good faith first recorded it in the Registry of Property.

Should there be no inscription, the ownership shall pertain to the person who in
good faith was first in the possession; and, in the absence thereof, to the person
who presents the oldest title, provided there is good faith.

Based on this provision, the overriding consideration to determine

ownership of an immovable property is the good or bad faith not of the seller, but
of the buyer; specifically, we are tasked to determine who first registered the sale
with the Registry of Property (Registry of Deeds) in good faith.

As accurately observed by the RTC, the petitioners, in their submissions to

the lower court, never imputed bad faith on the part of the National Airports
Corporation in registering the lots in its name. This oversight proves fatal to their
cause, as we explained in Spouses Chu, Sr. v. Benelda Estate Development
Corporation:

In a case for annulment of title, therefore, the complaint must allege that the
purchaser was aware of the defect in the title so that the cause of action against him
will be sufficient. Failure to do so, as in the case at bar, is fatal for the reason that the

223
 court cannot render a valid judgment against the purchaser who is presumed to be in
good faith in acquiring the said property. Failure to prove, much less impute, bad faith
on said purchaser who has acquired a title in his favor would make it impossible for
the court to render a valid judgment thereon due to the indefeasibility and
conclusiveness of his title.74

Since the petitioners never alleged that the National Airports Corporation
acted with bad faith when it registered the lots in its name, the presumption of
good faith prevails. Consequently, the National Airports Corporation, being a
registrant in good faith, is recognized as the rightful owner of the lots in question,
and the registration of the properties in its name cut off any and all prior liens,
interests and encumbrances, including the alleged prior sale to Cobarde, that
were not recorded on the titles. Cobarde, thus, had no legal rights over the
property that he could have transferred to the Cabigas spouses.

Since the Cabigas spouses have no legally recognizable interest in the lots in
question, it follows that the petitioners, who are subrogated to the rights of the
former by virtue of succession, also have no legally recognizable rights to the
properties that could be enforced by law. The petitioners clearly have no cause of
action against the respondents, and the RTC correctly dismissed their complaint
for annulment of title.

74 405 Phil. 936, 947 (2001).

224
 WHEREFORE, premises considered, we DENY the petition for lack of merit,
and AFFIRM the Resolutions, dated May 31, 2006 and October 4, 2006, of the
Court of Appeals in CA-G.R. CV No. 01144. No costs.

SO ORDERED.

ARTURO D. BRION
Associate Justice

225
WE CONCUR:

ANTONIO T. CARPIO
Associate Justice
Chairperson

TERESITA J. LEONARDO-DE CASTRO DIOSDADO M. PERALTA

Associate Justice Associate Justice

JOSE PORTUGAL PEREZ

Associate Justice

ATTESTATION

226
 I attest that the conclusions in the above Decision had been reached in
consultation before the case was assigned to the writer of the opinion of the
Courts Division.

ANTONIO T. CARPIO
Associate Justice
Chairperson, Second Division

CERTIFICATION

Pursuant to Section 13, Article VIII of the Constitution and the Division
Chairperson's Attestation, I certify that the conclusions in the above Decision had
been reached in consultation before the case was assigned to the writer of the
opinion of the Courts Division.

RENATO C. CORONA
Chief Justice

227
THIRD DIVISION

SPOUSES FELIPE and VICTORIA LAYOS,

G.R. No. 150470
Petitioners,

Present:

- versus-
YNARES-SANTIAGO, J.

Chairperson,

MARTINEZ,
FIL-ESTATE GOLF AND DEVELOPMENT, INC.,

LA PAZ HOUSING AND DEVELOPMENT

CHICO-NAZARIO,

CORPORATION, REPUBLIC OF THE NACHURA, and

PHILIPPINES, AND THE SPOUSES MARINA REYES, JJ.

AND GENEROSO OTIC,

Respondents.

Promulgated:

228
 August 6, 2008

x- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -x

DECISION

CHICO-NAZARIO, J.:

Before this Court is a Petition for Review on Certiorari75 under Rule 45 of

the Rules of Court filed by petitioner-spouses Felipe and Victoria Layos (Spouses
Layos) seeking the reversal and setting aside of the Decision76 dated 26 April
2001 of the Court of Appeals in CA-G.R. CV No. 61759, which affirmed the
Order77 dated 19 January 1998 of the Regional Trial Court (RTC), Branch 93 of San
Pedro, Laguna, summarily dismissing the spouses Layos Petition for
Reconstitution of Original Certificate of Title (OCT) No. 239 in LRC Case No. B-
1784. Likewise being assailed in the Petition at bar is the Resolution78 dated 18

75 Rollo, pp. 11-31.

76 Penned by Associate Justice Rodrigo V. Cosico with Associate Justices Ramon A.

Barcelona and Alicia L. Santos, concurring; rollo, pp. 32-38.

77 Penned by Judge Francisco Dizon Paro, rollo, pp. 41-43.

78 Penned by Associate Justice Martin S. Villarama, Jr. with Associate Justices Conrado M.
Vasquez, Jr. and Eliezer R. de los Santos, concurring; rollo, pp. 39-40.

229
October 2001 of the appellate court denying the Spouses Layos Motion for
Reconsideration of its earlier Decision.

The factual and procedural antecedents of the case presently before this
Court, by themselves, appear deceptively simple. However, they are so intimately
linked with other cases the factual backgrounds and judicial resolutions of which
the Court must also necessarily present herein.

FACTUAL BACKGROUND

G.R. No. 120958:

The Injunction Cases

The Court begins with Fil-Estate Golf and Development, Inc. v. Court of
Appeals,79 a case which it decided more than a decade ago. The said case arose
from the following facts:

Petitioner Fil-Estate Golf & Development, Inc. (FEGDI) is the developer of the
Manila Southwoods golf course and residential subdivision project which partly covers
lands located in Bian, Laguna. Its partner in the joint venture, La Paz Housing and

79 333 Phil. 465 (1996).

230
Development Corporation (La Paz), provided the aforementioned properties which are
registered in its name. The project involves the "construction and development of,
among others, a highway interchange linking nearby communities to the South
Expressway and world class tourism-generating cultural theme and water parks."

On 29 December 1992, a certain Felipe Layos filed a complaint for Injunction

and Damages with Application for Preliminary Injunction against Fil-Estate Realty
Corporation, (FERC) et al. with the Regional Trial Court of Bian, Laguna and docketed as
Civil Case No. B-3973.

It was alleged in the said complaint that Felipe Layos is the legal owner and
possessor of two (2) parcels of land having a total area of 837,695 square meters
located at Barrio Tubigan, Bian, Laguna, known as Lots 1 & 2 of Plan Psu-201 of the
Bureau of Lands having acquired the same from his father, Mauricio Layos, who in turn
inherited said properties from his own father, Natalio Layos, allegedly the original owner
thereof. Layos claimed that the Southwoods project encroached upon the aforecited
lands and thus contended that his rights of ownership and possession were violated
when FERC brought in men and equipment to begin development of the said properties.

On 2 February 1993, FERC filed an Opposition to Application for Writ of

Preliminary Injunction and explicitly stated therein that the developer of the
Southwoods project is its sister company, FEGDI.

On 5 March 1993, FEGDI filed an Answer to the abovementioned complaint and

reiterated that it is the developer of the Southwoods project and not FERC and that the
land covered by the project is covered by Transfer Certificates of Title in the name of La
Paz, copies of which were attached to said answer as annexes.

On 29 March 1993, Presiding Judge Justo M. Sultan of the Regional Trial Court of
Bian, Laguna issued an order denying the prayer for preliminary injunction in Civil Case
No. B-3973 in view of the inability of Layos to substantiate his right. Neither he nor his
counsel appeared on the scheduled hearings. x x x

xxxx

231
 On 25 June 1993, Felipe Layos along with his wife and other individuals filed
another case for Injunction and Damages with Prayer for Preliminary Injunction with the
Regional Trial Court of San Pedro, Laguna docketed as Civil Case No. B-4133, this time
against the correct party, FEGDI.

The complaint in the San Pedro case (Civil Case No. B-4133) is basically identical
to that filed in the Bian case (Civil Case No. B3973), except for changes in the number of
party-plaintiffs and party-defendants and in the area size of the claimed landholdings.
Further, in the San Pedro case there is reference to a title (OCT No. 239), a specific date
of intrusion and an increase in the damages prayed for.

On 1 July 1993, FEGDI moved to dismiss the San Pedro case on grounds of litis
pendentia, forum-shopping, lack of cause of action and lack of jurisdiction. FEGDI argued
that a similar complaint was previously filed with the Regional Trial Court of Bian,
Laguna and is currently pending therein. It, likewise, accused the private respondents of
forum-shopping, stating that the latter instituted the San Pedro case after their
application for preliminary injunction was denied by the Bian court. Anent the third and
fourth grounds, FEGDl averred that the documents relied upon by the private
respondents are of doubtful veracity and that they failed to pay the correct filing fees
considering that the San Pedro case is a real action as allegedly revealed in the body of
the complaint. The Layoses filed their opposition on 5 July 1993 arguing in the main that
there is no litis pendentia because there is no identity of parties. Felipe Layos claimed
that he never authorized the filing of the Bian case and that the defendant therein is the
Fil-Estate Realty Corporation not the Fil-Estate Golf & Development, Inc. Consequently,
the two cases being dissimilar, there can be no forum-shopping. Private respondents
contended, likewise, that they have satisfied all the requirements of a valid cause of
action and insisted that the suit is not for recovery of possession but is a personal action
for injunction and damages. On 12 July 1993, Judge Stella Cabuco-Andres of the San
Pedro Regional Trial Court issued an order denying FEGDI's motion to dismiss. The
Motion for Reconsideration filed by FEGDI on 13 July 1993 was similarly denied by the
aforesaid court in an order dated 14 July 1993.

On 15 July 1993, FEGDI filed a Petition for Certiorari and Prohibition with
Application for Preliminary Injunction with the Court of Appeals (docketed as CA-G.R. SP
No. 31507) assailing the denial of its motion to dismiss the San Pedro case. The
arguments and issues raised by petitioner to support its motion to dismiss were the
same issues raised in the aforestated petition.

232
 On 20 July 1993, the Court of Appeals issued a temporary restraining order
enjoining Judge Andres from proceeding with the San Pedro case.

Meanwhile, the Regional Trial Court of Bian, Laguna, in an order dated 25

January 1994, dismissed the Bian case without prejudice on grounds of forum-shopping.
FEGDI moved for a partial reconsideration of the said order praying that the dismissal be
with prejudice. Hence, on 25 April 1994, the aforestated court dismissed the Bian case
with prejudice to forestall the plaintiffs therein from forum-shopping. x x x.

xxxx

On 10 March 1995, the Court of Appeals, dismissed FEGDI's petition for lack of
merit. x x x.

FEGDI's motion for reconsideration was subsequently denied in the Court of

Appeals' resolution dated 13 July 1995. Hence, this petition for review.80

FEGDI came to this Court via a Petition for Review on Certiorari under Rule
45 of the Rules of Court, docketed as G.R. No. 120958. The Court granted the
Petition and ruled in favor of FEGDI.

The Court found that therein private respondents, which included the
Spouses Layos, did commit forum shopping by instituting similar proceedings for
injunction before the RTCs of Bian and San Pedro, Laguna:

80 Id. at 468-474.

233
 Private respondents have indeed resorted to forum-shopping in order to obtain
a favorable decision. The familiar pattern (of one party's practice of deliberately seeking
out a " sympathetic" court) is undisputedly revealed by the fact that after Felipe Layos
instituted in 1992 a case for injunction and damages with application for preliminary
injunction in the Regional Trial Court of Bian, Laguna and after his prayer for a
preliminary injunction was denied in March 1993, he and his wife, together with four (4)
alleged buyers of portions of the land claimed by him, filed an identical complaint for
injunction and damages with preliminary injunction a few months later, or in June 1993,
this time with the Regional Trial Court of San Pedro, Laguna.

Having been denied their temporary restraining order in one court, private
respondents immediately instituted the same action in another tribunal - a deliberate
tactic to seek out a different court which may grant their application for preliminary
injunction, or at least give them another chance to obtain one.

Private respondents parry petitioner's allegation of forum shopping by

adamantly contending that Felipe Layos did not, in any manner, authorize the filing of
the Bian case. Moreover, they insist that Felipe Layos' signature in the Bian complaint is
a forgery and that he neither appeared nor participated in the proceedings before the
Bian court.

We find no merit in private respondents' assertions. The almost word-for-word

similarity of the complaints in both the Bian and San Pedro cases totally refutes such a
theory, as can readily be observed from a comparative view of the two aforementioned
complaints x x x.

xxxx

Even the affidavits attached to the two complaints are virtually identical x x x

xxxx

234
 Examining the two complaints one can easily discern that the San Pedro
complaint is simply an "improved" version of the Bian complaint and the similarity does
not end there. The residence certificates (of Felipe Layos) used in the verification of
both complaints are practically identical - same number, date of issue and place of issue.

If indeed there is a "ghost Mr. Layos," as claimed by the private respondents,

the genuine Felipe Layos and the rest of the private respondents should have, on their
own volition, denounced the allegedly bogus case filed with the Bian court or at the very
least, informed the San Pedro court about it. It cannot be denied that private
respondents were aware of the Bian case considering that Annex C (Affidavit of Self-
Adjudication with Sale) of the San Pedro complaint was a mere photocopy of Annex B of
the Bian complaint.

Private respondents likewise aver that there is no identity of party-defendants

in view of the fact that the defendant in the Bian case is the Fil-Estate Realty
Corporation (FERC) and in the San Pedro case the Fil-Estate Golf and Development, Inc.
(FEGDI), two completely separate and distinct entities.

Private respondents' contention is unmeritorious. In the Bian case, FEGDI

voluntarily submitted to the court's jurisdiction by filing its answer and expressly stating
therein that it is the developer of Southwoods, and not its sister company, FERC.
Moreover, the Bian court in its orders dated 25 January 1994 and 20 October 1994
expressly recognized FEGDI as the defendant in the said case. There can be no question
then that in both cases FEGDI is the true party-defendant.

As clearly demonstrated above, the willful attempt by private respondents to

obtain a preliminary injunction in another court after it failed to acquire the same from
the original court constitutes grave abuse of the judicial process. Such disrespect is
penalized by the summary dismissal of both actions as mandated by paragraph 17 of the
Interim Rules and Guidelines issued by this Court on 11 January 1983 and Supreme
Court Circular No. 28-91. x x x

xxxx

235
 The rule against forum-shopping is further strengthened by the issuance of
Supreme Court Administrative Circular No. 04-94. Said circular formally established the
rule that the deliberate filing of multiple complaints to obtain favorable action
constitutes forum-shopping and shall be a ground for summary dismissal thereof x x
x.81

The Court further pronounced that the Complaint in the San Pedro case did
not state a cause of action. Taking into consideration the Complaint itself and its
attached annexes, as well as the other pleadings submitted by the parties, the
Court found that:

In the San Pedro complaint, private respondents anchored their claim of

ownership on an OCT No. 239 and on a survey plan Psu-201 in the name of Natalio
Layos, copies of which were attached to the complaint. His son and sole heir Mauricio
Layos inherited the properties covered by the said plan. In turn, Felipe Layos became
the owner thereof through an Affidavit of Self-Adjudication with Sale executed by
Mauricio Layos, his father. This is where the inconsistency materializes. In the said
Affidavit of Self-Adjudication with Sale which was also attached to the San Pedro
complaint as Annex "C", Mauricio Layos categorically stated that the subject properties
(Lots No. 1 and 2 of Plan PSU-201) were not registered under the Spanish Mortgage Law
or under the Property Registration Decree. If the properties in question were not
registered, where did the OCT No. 239 come from? Mauricio Layos' express admission
not only contradicts but indubitably strikes down the purported OCT No. 239 and
exposes private respondents' claim as a sham. This inconsistency is patent in the
documents attached to the complaint which form part and parcel of the complaint. The
Affidavit of Self-Adjudication with Sale attached to the complaint is the crucial and
indispensable basis for private respondents' claim of ownership and interest in the
subject properties, without which they have no right of action or personality in the case.
Necessarily, the Affidavit of Self-Adjudication is a vital part of the complaint that should
be considered in the determination of whether or not a cause of action exists.

81 Id. at 475-487.

236
 Private respondents' inconsistency is further manifested by the 1992 application
for original registration filed by Mauricio Layos with the Regional Trial Court of Bian,
Laguna (docketed as Civil Case No. B-542) for the lots under Plan Psu-201. Why would
Mauricio Layos file an application for the registration of the land claimed by him if it is
already covered by OCT No. 239? The conclusion is inescapable that the document is
fake or a forgery.

Finally, private respondents' cause of action against petitioner is defeated by

the findings of Mr. Privadi Dalire, Chief of the Geodetic Surveys Division of the Bureau of
Lands, contained in his letters to the Regional Technical Director of the Department of
Environment and Natural Resources (DENR), Region IV dated 12 November 1992 and 15
December 1992, respectively:

12 November 1992

The Regional Technical Director of Lands

DENR, Region IV, 1515 L & S Building

Roxas Boulevard. Manila

ATTN.: Engr. ROBERT C. PANGYARIHAN

OIC, Surveys Division

Sir:

In connection with your request to validate the white print copy of an alleged
plan Psu-201 which you had issued and certified that it is a copy of the tracing cloth of
Psu-201 which is on file in that Office, please forward to us the tracing cloth plan to be
examined instead of the white print copy that you have issued in accordance with the
procedure stated in DENR Administrative Order regarding validation of plans other than
the original copies being sent to the region office.

237
It may be worthwhile to state for your information that the plan Psu-201 is not among
those officially enrolled into the file of this Bureau. What is more confusing is that the
inventory book of all plans that were recovered after the war shows that Psu-201 is a
survey for J. Reed covering a piece of land in Malate, Manila but the plan that was
salvaged was heavily damaged and therefore it was not also microfilmed. This would
require therefore a more exhaustive research regarding the authenticity of the tracing
cloth that is in your file. (Italics ours.)

Very truly yours,

For the Director of Lands:

(SGD.) PRIVADI J.G. DALIRE

Chief, Geodetic Surveys Division

xxx

MEMORANDUM:

15 December 1992

FOR: The Regional Technical Director of Lands

The Chief, Regional Surveys Division

DENR, Region IV

L & S Building, Roxas Boulevard

Manila

FROM: L M B

SUBJECT: Psu-201

238
Records show that the region furnished us a white print copy certified by Engr. Robert
Pangyarihan to have been "prepared from a tracing cloth plan on file in the NCR" for
validation. We returned the white print plan prepared by Engr. Pangyarihan because we
should examine the "tracing cloth plan" and it is the tracing cloth plan, white prints and
photographic copies sent by the Central Records Division to be returned to LMB for
validation by this Division.

In the letter dated 27 November 1992, Engr. Pangyarihan explained that he prepared
the copy which he certified from a white print plan on file in the region as the applicant
claims to have lost the tracing cloth. While the explanation may be considered, yet the
preparation of the plan is not yet in accordance with Section 1.3 and 4.3 of DENR
Administrative Order No. 49, s-1991 which requires that the white prints or
photographic print of the plan other than the original plan which have been
decentralized must first be authenticated by this Bureau before a certified true copy is
issued by the region. It is evident therefore that the issuance of a certified true copy of
Psu-201 from a white print is premature, and considered void ab initio.

Consider also that if the record of the Bureau is different from the print copy is
subjected to field ocular inspection of the land and on the basis of the findings, the
region may reconstruct the plan to be approved as usual. Certified copies may now be
issued based on the reconstructed and approved plan. The white print of Psu-201
should therefore be subjected to ocular inspection.

Our records of inventory of approved plans show Psu-201 as a survey of J. Reed covering
a piece of land in Malate, Manila. That plan was heavily damaged and its reconstruction
was not finalized. This should be included in the investigation. (Italics ours.)

For the Director of Lands:

(SGD.) PRIVADI J.G. DALIRE

Chief, Geodetic Surveys Division.

239
 Consequently, Mr. Sidicious F. Panoy, the Regional Technical Director of DENR,
Region IV, issued an order dated 5 May 1994 cancelling all copies of plans pertaining to
Psu-201. The order states that:

IN RE: CANCELLATION ORDER:

Plan Si-14769

True copy of Plan Claimant-Sofronio Olano

Si- 14779 and Psu-201 Brgy Bukal ng Tala & Hasaan

Municipality of Ternate, Cavite

Area: 13,321,977 sq. m.

Plan Psu-201

Claimant - Natalio Layos

Brgy. Tubigan, Bian, Laguna

Area: 837,695 sq. m.

ORDER

By way of reaction to a number of inquiries as to the status of plans Si-14769

and Psu-201, verification was made at the Technical Reference Section of the Land
Management Bureau, Escolta, Manila as to the authenticity thereof on the basis of still
recoverable records and the following facts were established, to wit:

1. That Psu-201 is an original survey for J Reed located in Malate, Manila; and

2. That Si-14769 is a survey number for the plan of a land parcel situated in Bo.
Bessang, Municipality of Allacapang, Province of Cagayan in the name of Gregorio
Blanco.

240
 The purported blue print plan of Psu-201 indicating the land covered thereby to
be situated in Bo. Tubigan, Bian, Laguna and claimed by Natalio Layos and comprising
837,695 sq. meters is, therefore, a spurious plan and, probably the result of a
manipulative act by scheming individuals who surreptitiously got it inserted in the
records. The same can be said as to the blue print of Si-14769 which is a plan
purportedly covering a parcel of land situated in Bo. Bukal ng Tala and Hasaan, Ternate,
Cavite comprising 13,321,977 sq. meters. (Italics ours.)

WHEREFORE, in view of the foregoing, all plans pertaining to the above and
indicated as true copies and bearing the signature of Engr. Robert C. Pangyarihan are as
hereby IT IS CANCELLED including any document attached thereto and, as such, declared
null and void and of no force and effect.

SO ORDERED.

5 May 1994.

(SGD.) SIDICIOUS F. PANOY

Regional Technical Director

It is quite evident from the foregoing findings on record that private

respondents' claim of ownership is totally baseless. Plan Psu-201 pertains to land
located in Malate, Manila and said survey plan was made for a certain J. Reed.

In the case at bar, the technical rules of procedure regarding motions to dismiss
must be applied liberally lest these very same rules be used not to achieve but to thwart
justice.82

82 Id. at 494-499.

241
 Consequently, on the grounds of forum shopping and lack of cause of
action, the Court decreed in G.R. No. 120958 as follows:

WHEREFORE, premises considered, the petition for review on certiorari is

hereby GRANTED. Private respondents' complaint docketed as Civil Case No. B-4133 is
hereby DISMISSED.83

In a Resolution dated 19 February 1997, the Court refused to reconsider its

afore-quoted Decision and dismissed with finality G.R. No. 120958.

CA-G.R. CV No. 50962:

The Quieting of Title Case

On 12 August 1993, only months after instituting the injunction cases

before the RTCs of Bian and San Pedro, Laguna, and during the pendency of said
cases, the Spouses Layos filed with the Bian RTC a Complaint84 for Quieting of
Title and/or Declaration of Nullity/Annulment of Title with Damages, against La
Paz and the Register of Deeds of the Province of Laguna, docketed as Civil Case
No. B-4194.

83 Id. at 499.

84 Rollo, pp. 452-460.

242
 According to the Complaint, Felipe Layos grandfather, Natalio Layos, was
the original owner and lawful possessor of two parcels of land (subject property)
with a total land area of 1,068,725 square meters, more or less, situated in Barrio
Tubigan, Bian, Laguna, known as Lots 1 and 2 of Plan Psu-201 of the Bureau of
Lands. The subject property is covered by OCT No. 239 in the name of Natalio
Layos. Upon the death of Natalio Layos, his son, Mauricio Layos, inherited the
subject property. On 15 April 1992, Mauricio Layos executed an Affidavit of Self-
Adjudication with Sale by which he sold the subject property to his son, Felipe
Layos, and the latters wife, Victoria Layos. The Spouses Layos and their
predecessors-in-interest had exercised their right of ownership by being in open,
continuous, adverse, and peaceful possession of the subject property for more
than 80 years, even before Plan Psu-201 was approved by the Bureau of Lands.
The subject property had also been declared for taxation purposes with an
assessed value of P555,737.00.

The Complaint further alleged that in 1992 and 1993, La Paz, in conspiracy
with other persons, entered the subject property and started developing the
same without the consent of the Spouses Layos. The Spouses Layos then
discovered that La Paz had in its name 19 Transfer Certificates of Title (TCTs)
which encroached upon portions of the subject property. The TCTs of La Paz were
derived from OCT No. 242, which was issued on 9 August 1913, or 14 days after
OCT No. 239 was issued on 30 July 1913 in the name of Natalio Layos. Since OCT
No. 239 was older or issued earlier than OCT No. 242, the Spouses Layos asserted

243
that their title under OCT No. 239 was indefeasible against any other title issued
subsequent to it, such as OCT No. 242 and the TCTs of La Paz derived and issued
from the latter.

Contending that the TCTs of La Paz, although void ab initio, put a cloud over
their title to and ownership and possession of the subject property, the Spouses
Layos primarily prayed that the said TCTs be declared null and void and be
accordingly cancelled in order to quiet their title.

In their Answer, La Paz and the Register of Deeds denied the allegations in
the Spouses Layos Complaint, and countered:

21. That [Spouses Layos] have never owned nor possessed the land in
question.

22. That the Original Certificates of Title No. 239 purportedly issued by the
Register of Deeds on November 18, 1913, in the name of Natalio Layos, does not exist in
the files of the Registry of Deeds of Laguna.

23. That Decree No. 7663 dated July 12, 1912, GLRO Record No. 7733 from
whence OCT No. 239 appears to have emanated from likewise does not exist in the
records of the Land Registration Authority.

24. That records of Plan PSU-201 are still extant in the Bureau of Lands but
it is not in the name of Natalio Layos, but in the name of another person nor, is the land
covered thereby situated in Laguna.

244
 25. That the certified technical data of Lot Nos. 1 and 2, PSU-201, marked as
Annex D attached to the Complaint was issued on the basis of records that do not exist
in the files of the Lands Office.

26. That in the Affidavit of Self-Adjudication with Sale dated April 15, 1992,
marked as Annex C attached to the Complaint, there is an admission in the third
paragraph by Mauricio Layos to the following effect:

Which parcels of land are not registered under the Spanish Mortgage Law nor
the Property Registration Decree.[]

27. That the [Spouses Layos] alleged predecessor, Mauricio Layos, filed an
application for registration of the same land on October 5, 1992, with this Honorable
Court docketed as LRC No. RTC-B-542, which act amounts to an admission that the
[Spouses Layos] and their predecessors-in-interest have no title to the land.

28. That OCT No. 239 surfaced only when the [Spouses Layos] themselves
filed a petition for reconstitution of their alleged OCT No. 239 with this Honorable Court
on August 11, 1993 (sic), which has been docketed as LRC Case No. B-1784.

29. That it is [La Pazs] Certificates of Titles [sic] that are real, genuine and
subsisting, and the originals thereof are extant in the files of the Registry of Deeds of
Laguna.

30. That [La Paz] acquired ownership of these lands from various registered
owners from 1982 to 1988 for valuable consideration.

31. That the lands form part of what used to be called the Bian Friar Land
estate which the government purchased from Spanish Religious Orders, and later
subdivided and resold at cost to qualified applicants pursuant to Act No. 1120,

245
 otherwise known as the Friar Land Act, and which have fallen finally into the hands of
[La Paz] after a succession of transfers.

32. That under Act No. 496, otherwise known as the Land Registration Act,
[La Pazs] titles to the land in question are indefeasible, binding, conclusive and
enforceable against the whole world.85

Following other developments in the case,86 La Paz filed on 22 February

1995 an Omnibus Amended Motion (for Summary Judgment and Cancellation of
Lis Pendens). Acting on the said Motion, the Bian RTC issued on 14 July 1995 an
Omnibus Order in Civil Case No. B-4194, the decretal portion of which reads:

WHEREFORE, in view of the foregoing, the instant Omnibus Amended Motion

for Summary Judgment filed by counsel for [La Paz] is hereby GRANTED in accordance
with Rule 34 of the Revised Rules of Court. The Original Certificate of Title No. 242
issued to the Government of the Philippine Islands and the [La Pazs] nineteen (19)
Transfer Certificates of Title which were respectively derives [sic] therefrom are hereby
declared indefeasible for all legal intents and purposes against any other title thereby
making it binding to the whole world.

Necessarily, the Motion for Leave to Intervene and the Motion for Issuance of a
Writ of Preliminary Injunction, both pending before this Court, are hereby declared
MOOTED.

85 Id. at 465-466.

86 Related to the filing by the Spouses Layos of a Petition for Notice of Lis Pendens and the
filing by unnamed parties of a Motion for Leave of Court to Intervene.

246
 On the other hand, the Motion for Cancellation of Lis Pendens included in the
[La Pazs] Omnibus Motion for Summary Judgment is likewise GRANTED for the reasons
above-stated.

Consequently, the Office of the Register of Deeds of Calamba, Laguna is hereby

directed to immediately cancel the Notice of Lis Pendens annotated at the back of each
of the [La Pazs] nineteen (19) Transfer Certificates of Title which were all disputed by
the [Spouses Layos].

Meanwhile, let the hearing of the instant case for the reception of evidence as
to the counterclaim of [La Paz] for damages be set for hearing on August 31, 1995 at
8:30 oclock in the morning.87

When their motion for reconsideration was denied by the Bian RTC, the
Spouses Layos appealed their case to the Court of Appeals, where it was docketed
as CA-G.R. CV No. 50962. In a Decision88 dated 20 February 2001, the appellate
court ruled:

Under par. 13 of the [Spouses Layos] complaint, it was alleged that La Paz[s] title
was issued only on August 9, 1913, which was 14 days after the issuance of the Layos
title. From the findings of the lower court, August 13, 1913 was the date when La Paz[s]
title was transcribed at the Register of Deeds while that of the Layos as can be seen in
their attached xerox copy of title, the transcription was made later which was on
November, 1913.

87 Rollo, pp. 461-462.

88 Penned by Associate Justice Eloy R. Bello, Jr. with Associate Justices Eugenio S.
Labitoria and Perlita J. Tria Tirona, concurring; rollo, pp. 461-474.

247
 The date issued referred to by [Spouses Layos] is the date of the decree of
judgment issued by the Court. But this is not the reckoning period within which title
should become indefeasible in the ambit of the law. The operative act is the decree of
registration which is the transcription at the Register of Deeds. One year after its
transcription in the Register of Deeds, the title becomes indefeasible. It means
therefore, that it is the transcription in the Register of Deeds and not the date decreed
by the Court is the operative act. And this should be the reckoning date when a title
becomes indefeasible.

In the case at bar, we have the scenario that OCT 239 was earlier decreed by the
Land Management Court than OCT 242, but for unknown reasons, OCT 242 was
transcribed earlier at the Register of [D]eeds on August 19, 1913 while OCT 239 was
transcribed at the Register of Deeds only on November 18, 1913. While the PSU-201 is
of minor importance as even claimed by [Spouses Layos], this court deem to pass over
the same.

[Spouses Layos] contended that the representatives of the Land Management

Bureau, identified and confirmed that the Original PSU-201 in the name of Natalio Layos
and the technical descriptions as appearing in LMB Form No. 28-37R issued to [Spouses
Layos], are true and genuine. But this was denied by the Chief, Records of [sic] Division
of the Bureau of Lands, Mr. Armando Bangayan, the superior of the Land Management
Bureau, alleging in his affidavit that was [sic] not his signature appearing in the
Certification. And to corroborate the denial of Mr. Bangayan, a certain Engineer Private
(sic) J.J. Dalire, Chief of Surveys Division, Land Management Bureau, PSU-201 which is
purportedly covered by OCT No. 239 is a survey plan in the name of J. Reed and it covers
a piece of land situated in Malate, Manila. Further, the Regional Technical Director for
Lands, Region IV, Roxas Boulevard, Manila has issued an Order declaring PSU-201 of
Natalio Layos as null and void, because it is a spurious document.

Considering the aforementioned, this Court believes that [Spouses Layos] has
[sic] no proof to establish their claim in the present case.

With the foregoing, this court is more inclined to believe the three affidavits
executed by three (3) different individuals coming from different offices that PSU-201
claimed by Layos is obviously doubtful, contrary to the affidavits of persons who are

248
 subordinates of Bangayan. If this is so, OCT 239 is therefore, patently a spurious title.89
(Underscoring supplied.)

Based on the foregoing ratiocination, the fallo of the Court of Appeals

Decision dated 20 February 2001 in CA-G.R. CV No. 50962 reads, thus:

WHEREFORE, finding no reversible error committed on the part of the lower

court, the appealed Omnibus Order dated July 14, 1995 is hereby AFFIRMED.90

Records do not show whether the Spouses Layos filed a motion for reconsideration of the afore-
mentioned Decision of the appellate court; what they do establish is that the Spouses Layos filed a
Petition for Review on Certiorari with this Court, docketed as G.R. No. 155612, but said Petition was
denied by this Court in a Resolution dated 13 January 2003 because of the Spouses Layos failure to:

a) take the appeal within the reglementary period of fifteen (15) days in
accordance with Section 2, Rule 45 in relation to Section 5(a), Rule 56, in view of
the denial of the motion for extension of time to file said petition in the
resolution of 20 November 2002;

b) properly verify the petition in accordance with Section 4, Rule 7 in

relation to Section 1, Rule 45, and submit a valid certification on non-forum
shopping duly executed by all petitioners in accordance with Section 5, Rule 7,
Section 4(e), Rule 45 in relation to Section 2, Rule 42 and Sections 4 and 5(d),
Rule 56, there being no proof that petitioner Felipe Layos was duly authorized to

89 Id. at 472-473.

90 Id.

249
 sign said verification and certification on non-forum shopping in behalf of his co-
petitioner; and

c) serve a copy of the petition on the Court of Appeals in accordance with

Section 4, Rule 13, in relation to Section 3, Rule 45 of the 1997 Rules of Civil
Procedure, as amended, and par. 2 of Revised Circular No. 1-88 of this Court.91

The Resolution dated 13 January 2003 of this Court denying the Petition in G.R. No. 155612 became
final and executory, and entry of judgment was made therein on 14 March 2003.92

G.R. No. 150470:

The Reconstitution Case

The Court now comes to the Petition at bar.

The instant Petition originated from a Petition for Reconstitution93 of OCT No. 239 filed by the
Spouses Layos on 12 August 1993 with the San Pedro RTC, docketed as LRC Case No. B-1784. It is
noted that the Spouses Layos instituted this reconstitution case on the same day as their quieting of
title case before the Bian RTC.

The Petition in LRC Case No. B-1784 essentially contained the same allegations made by the
Spouses Layos in their Complaints in the injunction cases and quieting of title case. However, in
support of their prayer for the reconstitution of the original copy of OCT No. 239 from their Owners
Duplicate Certificate, the Spouses Layos additionally alleged that:

91 Id. at 475-476.

92 Id.

93 Id. at 477-482.

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 6. The Owners Duplicate Certificate of the said Original Certificate of Title is
in due form without any alteration or erasure, and is not subject to litigation or
investigation, administrative or judicial, regarding its genuineness or due
execution or issuance.

xxxx

9. The Original Copy of the said title which used to be in the Office of
the Register of Deeds for the Province of Laguna appears to have been lost
and/or destroyed. In fact, the said Office does not anymore have any record
regarding the subject title.

10. The above parcels of land are free from any lien or encumbrance,
and no deed or instrument affecting the same has been presented for
registration or is any such deed or instrument pending registration with the
Office of the Register of Deeds for the Province of Laguna.

11. The above parcels of land are in lawful possession of [Spouses

Layos].

12. The transfer of the subject properties from Natalio Layos to

Mauricio Layos (by inheritance) and the subsequent transfer of the same
properties from Mauricio Layos to petitioner Felipe Layos (through the Affidavit
of Self-Adjudication with Sale executed by Mauricio Layos in favor of Felipe
Layos) cannot be registered and new title/s cannot be issued in the name of
[Spouses Layos] because the original copy of said Original Certificate of Title No.
239 was lost and/or destroyed.94

94 Id. at 479-480.

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 Several parties filed their intervention and/or opposition to the Petition for Reconstitution of
the Spouses Layos in LRC Case No. B-1784, particularly:

PARTY PLEADING INTEREST/BASIS

Shappel Homes, Inc. Complaint-in- In a Joint Venture with

Intervention95 the Spouses Layos to
develop the subject
property

La Paz Opposition96 Existing TCTs over the

subject property

FEGDI Opposition97 In a Joint Venture with

La Paz to develop the
subject property as part
of the Manila
Southwoods Project

Mauricio Layos Opposition98 Sole child and heir of

Natalio Layos denies
alienating or disposing

95 Records, Vol. 1, pp. 84-86.

96 Id. at 173-184

97 Id. at 195-204.

98 Id. at 264-270.

252
 the subject property in
favor of the Spouses
Layos

Spouses Antonio and Complaint-in- Purchased portions of

Norma Saavedra Intervention99 the subject property
from Mauricio Layos and
Felipe Layos

Veneracion L. Arboleda, Complaint-in- Purchased portions of

Antonio L. Arboleda, Jr., Intervention100 the subject property
Lydia Arboleda-David, from Mauricio Layos
and Antonio M. and/or Felipe Layos
Arboleda

Spouses Ponciano and Petition-in- Purchased a portion of

Annie Miranda Intervention101 the subject property
from the Spouses Layos

Bonifacio Javier, Opposition102 The true heirs of Natalio

representing the Heirs of Layos deny that the
Natalio Layos Spouses Layos are in any
way related to them

Spouses Marina and Motion for Purchased an undivided

Generoso Otic Intervention103 portion of the subject

99 Id., Vol. II, pp. 407-409.

100 Id. at 428-431.

101 Id. at 529-532.

102 Id., Vol. III, pp. 797-798.

103 Id. at 827-829.

253
 property from Mauricio
Layos and are, thus, co-
owners of the subject
property with Mauricio
Layos

FEGDI and La Paz filed separate Motions to Dismiss, which the Office of the Solicitor General
supported in its Comment on the Petition. On 19 January 1998, the San Pedro RTC issued an
Order,104 the dispositive portion of which states:

Acting therefore on the motion (sic) to dismiss filed by La Paz Housing and
FEGDI, and it appearing that indeed the title sought to be reconstituted,
specifically OCT No. 239 is a forgery as held no [sic] less than the Supreme Court
in G.R. No. 120958, Fil-Estate Golf and Development, Inc., (FEGDI) vs. Court of
Appeals, December 16, 1996, the Court has no other option but to dismiss the
case.

Resolution on all other pending incidents had been rendered moot and academic
with the dismissal of this case.105

The San Pedro RTC denied the Spouses Layos Motion for Reconsideration in an Order106 issued
on 1 October 1998.

104 Rollo, pp. 41-43.

105 Id. at 43.

106 Id. at 44.

254
 Aggrieved, the Spouses Layos filed an appeal with the Court of Appeals, docketed as CA-G.R. CV No.
61759. The appellate court, however, found no reversible error in the ruling of the lower court
dismissing the Spouses Layos Petition for Reconstitution. According to the Court of Appeals, the
validity of OCT No. 239 of the spouses Layos was already determined by the Supreme Court in its
Decision dated 16 December 1996 in G.R. No. 120958, in which the Supreme Court categorically
declared that the said certificate of title was a forgery. The appellate court contradicted the Spouses
Layos assertion that such declaration of the Supreme Court in G.R. No. 120958 was merely an obiter
dictum, for the same was a resolution of one of the controverted issues and was part of the principal
disquisition of the lower court. Hence, in its assailed Decision107 dated 26 April 2001, the Court of
Appeals decreed:

WHEREFORE, premises considered, the instant appeal is hereby DISMISSED, and

the orders of the lower court dated January 19, 1998 and October 1, 1998 are
hereby AFFIRMED.108

The Spouses Layos moved for the reconsideration of the foregoing Decision, but they failed to
convince the Court of Appeals to detract from its earlier ruling. Resultantly, the appellate court
denied what it called the pro-forma motion for reconsideration of the Spouses Layos in a
Resolution109 dated 18 October 2001.

The Spouses Layos, thus, filed before this Court the instant Petition for Review on Certiorari under
Rule 45 of the Rules of Court, docketed as G.R. No. 150470, stating the following assignment of
errors:

107 Id. at 32-38.

108 Id. at 38.

109 Id. at 39-40.

255
 A. The Court of Appeals erred in applying the principle of res judicata in the
instant case, when it declared that the ruling of this Honorable Supreme
Court in G.R. No. 120958 is conclusive upon the issue of validity of the
[Spouses Layos] O.C.T. No. 239;

B. The Court of Appeals erred in holding that the observation of this Honorable
Supreme Court in G.R. No. 120958 to the effect that OCT No. 239 is a forgery
was not merely an obiter dictum, but a resolution of one of the controverted
issues, and is part of the principal disquisition of the Supreme Court;

C. The Court of Appeals erred in upholding the summary dismissal of the instant
case by the court a quo by holding that since the title sought to be
reconstituted has finally been determined as a forgery and fake, there is no
longer a need for trial and in effect deprived [Spouses Layos] of property
without due process of law; [and]

D. The Court of Appeals erred in upholding the decision of the lower court and
in effect violated the cardinal rule against a collateral attack against the
validity of the land title;110

and seeking the following reliefs from this Court:

WHEREFORE, it is respectfully prayed that judgment be rendered by this

Honorable Court, setting aside the assailed Decision dated April 26, 2001 and
Resolution dated October 18, 2001 respectively of the Court of Appeals which
affirmed the Decision of the Court a quo for being contrary to law and
jurisprudence and directing the Regional Trial Court of San Pedro, Laguna to
forthwith receive evidence of all parties concerned to determine the merits of
their respective claims.

Other reliefs just and equitable are likewise prayed for.

110 Id. at 16.

256
 II

THE COURTS RULING

Res Judicata

Based on the arguments raised by the parties in their pleadings herein, the foremost issue for
resolution of this Court is whether the Decision dated 16 December 1996 of this Court in G.R. No.
120958 bars by res judicata LRC Case No. B-1784, the Petition for Reconstitution of OCT No. 239 filed
by the Spouses Layos before the San Pedro RTC, thus, justifying the dismissal of the latter case.

The Spouses Layos maintain that the Decision dated 16 December 1996 of this Court in G.R. No.
120958 does not bar by res judicata their Petition for Reconstitution of the same certificate of title in
LRC Case No. B-1784, there being no identity of parties, causes of action, and subject matters
between the two cases. They insist that the Court in G.R. No. 120958 had no jurisdiction to
determine the issue of ownership as the same was never raised or contained in the pleadings and,
therefore, any pronouncement of the Court in its Decision of 16 December 1996 on the validity of
OCT No. 239 or on the question of ownership is mere obiter dictum. They highlight the fact that the
fallo of the Courts 16 December 1996 Decision in G.R. No. 120958 simply dismissed the injunction
case before the San Pedro RTC but did not annul or cancel OCT No. 239.

The position of the Spouses Layos is untenable.

Res judicata literally means a matter adjudged; a thing judicially acted upon
or decided; a thing or matter settled by judgment. Res judicata lays the rule that
an existing final judgment or decree rendered on the merits, and without fraud or
collusion, by a court of competent jurisdiction, upon any matter within its

257
jurisdiction, is conclusive of the rights of the parties or their privies, in all other
actions or suits in the same or any other judicial tribunal of concurrent jurisdiction
on the points and matters in issue in the first suit.111

It is espoused in the Rules of Court, under paragraphs (b) and (c) of Section
47, Rule 39, which provide:

SEC. 47. Effect of judgments or final orders. The effect of a judgment or final
order rendered by a court of the Philippines, having jurisdiction to pronounce the
judgment or final order, may be as follows:

xxxx

(b) In other cases, the judgment or final order is, with respect to the matter
directly adjudged or as to any other matter that could have been raised in relation
thereto, conclusive between the parties and their successors in interest by title
subsequent to the commencement of the action or special proceeding, litigating the
same thing and under the same title and in the same capacity; and

(c) In any other litigation between the same parties or their successors in
interest, that only is deemed to have been adjudged in a former judgment or final order
which appears upon its face to have been so adjudged, or which was actually and
necessarily included therein or necessary thereto.

111 Oropeza Marketing Corporation v. Allied Banking Corporation, 441 Phil. 551, 563
(2002).

258
 The doctrine of res judicata lays down two main rules which may be stated
as follows: (1) The judgment or decree of a court of competent jurisdiction on the
merits concludes the litigation between the parties and their privies and
constitutes a bar to a new action or suit involving the same cause of action either
before the same or any other tribunal; and (2) any right, fact, or matter in issue
directly adjudicated or necessarily involved in the determination of an action
before a competent court in which a judgment or decree is rendered on the
merits is conclusively settled by the judgment therein and cannot again be
litigated between the parties and their privies whether or not the claims or
demands, purposes, or subject matters of the two suits are the same. These two
main rules mark the distinction between the principles governing the two typical
cases in which a judgment may operate as evidence.112 In speaking of these
cases, the first general rule above stated, and which corresponds to the afore-
quoted paragraph (b) of Section 47, Rule 39 of the Rules of Court, is referred to as
"bar by former judgment"; while the second general rule, which is embodied in
paragraph (c) of the same section and rule, is known as "conclusiveness of
judgment."

The Resolution of this Court in Calalang v. Register of Deeds of Quezon

City,113 provides the following enlightening discourse on conclusiveness of
judgment:

112 Vda. de Cruzo v. Carriaga, Jr., G.R. No. 75109-10, 28 June 1989, 174 SCRA 330, 338.

113 G.R. No. 76265, 11 March 1994, 231 SCRA 88, 99-100.

259
 The doctrine res judicata actually embraces two different concepts: (1) bar by
former judgment and (b) conclusiveness of judgment.

The second concept conclusiveness of judgment states that a fact or question

which was in issue in a former suit and was there judicially passed upon and determined
by a court of competent jurisdiction, is conclusively settled by the judgment therein as
far as the parties to that action and persons in privity with them are concerned and
cannot be again litigated in any future action between such parties or their privies, in
the same court or any other court of concurrent jurisdiction on either the same or
different cause of action, while the judgment remains unreversed by proper authority. It
has been held that in order that a judgment in one action can be conclusive as to a
particular matter in another action between the same parties or their privies, it is
essential that the issue be identical. If a particular point or question is in issue in the
second action, and the judgment will depend on the determination of that particular
point or question, a former judgment between the same parties or their privies will be
final and conclusive in the second if that same point or question was in issue and
adjudicated in the first suit (Nabus vs. Court of Appeals, 193 SCRA 732 [1991]). Identity
of cause of action is not required but merely identity of issue.

Justice Feliciano, in Smith Bell & Company (Phils.), Inc. vs. Court of Appeals (197
SCRA 201, 210 [1991]), reiterated Lopez vs. Reyes (76 SCRA 179 [1977]) in regard to the
distinction between bar by former judgment which bars the prosecution of a second
action upon the same claim, demand, or cause of action, and conclusiveness of
judgment which bars the relitigation of particular facts or issues in another litigation
between the same parties on a different claim or cause of action.

The general rule precluding the relitigation of material facts or

questions which were in issue and adjudicated in former action are
commonly applied to all matters essentially connected with the subject
matter of the litigation. Thus, it extends to questions necessarily implied
in the final judgment, although no specific finding may have been made
in reference thereto and although such matters were directly referred
to in the pleadings and were not actually or formally presented. Under
this rule, if the record of the former trial shows that the judgment could
not have been rendered without deciding the particular matter, it will
be considered as having settled that matter as to all future actions

260
 between the parties and if a judgment necessarily presupposes certain
premises, they are as conclusive as the judgment itself.

Another case, Oropeza Marketing Corporation v. Allied Banking

Corporation,114 further differentiated between the two rules of res judicata, as
follows:

There is bar by prior judgment when, as between the first case where the
judgment was rendered and the second case that is sought to be barred, there is
identity of parties, subject matter, and causes of action. In this instance, the judgment
in the first case constitutes an absolute bar to the second action. Otherwise put, the
judgment or decree of the court of competent jurisdiction on the merits concludes the
litigation between the parties, as well as their privies, and constitutes a bar to a new
action or suit involving the same cause of action before the same or other tribunal.

But where there is identity of parties in the first and second cases, but no
identity of causes of action, the first judgment is conclusive only as to those matters
actually and directly controverted and determined and not as to matters merely
involved therein. This is the concept of res judicata known as conclusiveness of
judgment. Stated differently, any right, fact, or matter in issue directly adjudicated or
necessarily involved in the determination of an action before a competent court in
which judgment is rendered on the merits is conclusively settled by the judgment
therein and cannot again be litigated between the parties and their privies whether or
not the claim, demand, purpose, or subject matter of the two actions is the same.
(Emphasis ours.)

114 441 Phil. 551, 564 (2002).

261
 In sum, conclusiveness of judgment bars the re-litigation in a second case of
a fact or question already settled in a previous case. The second case, however,
may still proceed provided that it will no longer touch on the same fact or
question adjudged in the first case. Conclusiveness of judgment requires only the
identity of issues and parties, but not of causes of action.

It is on the ground of res judicata, in its second concept conclusiveness of

judgment that the Petition for Reconstitution of the Spouses Layos must be
dismissed. As explained by the Court of Appeals in its assailed Decision:

In the case at bar, the ruling of the Supreme Court in G.R. No. 120958 is
conclusive upon the issue of validity of the [Spouses Layos] OCT No. 239, inasmuch as
the said issue has already been mutually controverted by the parties and ruled upon
with finality by the Supreme Court no less, in favor of the invalidity of the [Spouses
Layos] title.115

Conclusiveness of Judgment in G.R. No.

120958

Contrary to the position of the Spouses Layos, there is identity of parties and issues between G.R. No.
120958 (the injunction cases) and LRC Case No. B-1784 (the reconstitution case).

The principal parties in both cases are the Spouses Layos, on one hand, and La Paz and FEGDI, on the
other. The Spouses Layos and La Paz both claim title to the subject property, while FEGDI is the

115 Rollo, p. 35.

262
 partner of La Paz in a joint venture to develop the said property. There may be other parties named
in both cases, but these parties only derive their rights from the principal parties. The Court has
previously held that for purposes of res judicata, only substantial identity of parties is required and
not absolute identity. There is substantial identity of parties when there is community of interest
between a party in the first case and a party in the second case even if the latter was not impleaded
in the first case. In other words, privity or a shared identity of interest is sufficient to invoke
application of the principle of res judicata.116 It is fundamental that the application of res judicata
may not be evaded by simply including additional parties in a subsequent litigation.117

For conclusiveness of judgment, identity of causes of action and subject matter is not required; it is
the identity of issues that is material. The issue of the validity of the Spouses Layos title to the subject
property is integral to both G.R. No. 120958 and LRC Case No. B-1784.

In G.R. No. 120958, the Spouses Layos themselves invoked OCT No. 239 to establish their title over
the subject property. It was on the basis of their title to the subject property that they sought to
enjoin FEGDI and La Paz from entering into and developing the same. In seeking the dismissal of the
injunction case before the San Pedro RTC, La Paz presented its own title to the subject property by
virtue of which it claimed the right to possess and develop the said property. It then became
incumbent upon the Court to determine which of the titles to the property is valid. For the Spouses
Layos to be entitled to the issuance of a writ of injunction, it must have valid title to the subject
property. Without a valid title to the said property, the Spouses Layos had no cause of action for
injunction against FEGDI and La Paz. It was in this context that the Court was compelled to look into
the validity of the Spouses Layos title to the subject property.

After consideration of the Complaint for injunction of the Spouses Layos and its annexed documents,
the Court observed that: (a) the annexed Affidavit of Self-Adjudication with Sale, supposedly
executed by Mauricio Layos in favor of his son Felipe Layos stated that the subject property had not

116 Sendon v. Ruiz, 415 Phil. 376, 385 (2001).

117 Javier v. Veridiano, II, G.R. No. 48050, 10 October 1994, 237 SCRA 565, 571.

263
 been registered; (b) Mauricio Layos filed an application for registration of the subject property with
the Bian RTC in 1992; (c) Mr. Privadi Dalire, Chief of the Geodetic Surveys Division of the Bureau of
Lands, stated his findings in his letters dated 12 November 1992 and 15 December 1992, that Plan
PSU-201, on which OCT No. 239 was supposed to be based, was actually a survey for J. Reed covering
a piece of land in Malate, Manila, that was heavily damaged and had not yet been fully reconstructed
and microfilmed; and (d) Mr. Sidicious F. Panoy, the Regional Director of the Department of
Environment and Natural Resources (DENR), Region IV, issued an Order dated 5 May 1994, cancelling
all plans pertaining to PSU-201, since it was a spurious plan and, probably the result of a
manipulative act by scheming individuals who surreptitiously got it inserted in the records,118 which
led the Court to the inescapable conclusion in its Decision dated 16 December 1996 that OCT No. 239
is fake or a forgery.

Consequently, the Court of Appeals correctly ruled that the pronouncement of the Supreme Court in
G.R. No. 120958 on the invalidity of OCT No. 239 was not merely obiter dictum, 119 but was a
resolution of one of the controverted issues in said case. In fact, it was on the basis of the said
pronouncement that this Court ordered the dismissal of the injunction case filed before the San
Pedro RTC for lack of cause of action.

In LRC Case No. B-1784, the Spouses Layos once again invoked ownership of the subject property
pursuant to OCT No. 239. They sought the reconstitution of the original copy of OCT No. 239 which
allegedly used to be in the possession of the Register of Deeds of Laguna, but was now lost and/or
destroyed, and, in support thereof, they presented their owners duplicate of OCT No. 239. However,
both La Paz and FEGDI, as well as the Office of the Solicitor General, opposed the Petition for
Reconstitution of the Spouses Layos on the ground that OCT No. 239 and Plan Psu-201, on which said

118 Supra note 5.

119 Obiter dictum simply means words of a prior opinion entirely unnecessary for the
decision of the case (Blacks Law Dictionary, p. 1222, citing Noel v. Olds, 78 U.S. App.
D.C. 155) or an incidental and collateral opinion uttered by a judge and therefore not
material to his decision or judgment and not binding (Websters Third New International
Dictionary, p. 1555). (Sta. Lucia Realty v. Cabrigas, 411 Phil. 369, 382-383 [2001].)

264
 certificate of title was based, were spurious. The opposition to LRC Case No. B-1784, thus, raised the
question of whether a valid OCT No. 239 existed in the first place, and could be reconstituted.

Reconstitution or reconstruction of a certificate of title literally and within the meaning of Republic
Act No. 26 denotes restoration of the instrument which is supposed to have been lost or destroyed in
its original form and condition.120 For an order of reconstitution to issue, the following elements
must be present: 1) the certificate of title has been lost or destroyed; 2) the petitioner is the
registered owner or has an interest therein; and 3) the certificate of title is in force at the time it was
lost or destroyed.121

While G.R. No. 120958 does not bar the institution of LRC Case No. B-1758, the pronouncement of
invalidity of OCT No. 239 by this Court in G.R. No. 120958 is conclusive upon the San Pedro RTC in
LRC Case No. B-1758, precluding it from re-litigating the same issue and ending up with a contrary
ruling. Since the Court already settled in G.R. No. 120958 that OCT No. 239 is fake and a forgery, it
would have been a senseless and futile endeavor for the San Pedro RTC to continue with the
reconstitution proceedings in LRC Case No. B-1758, for there is actually no valid certificate to
reconstitute. The court cannot, and should not, reconstitute a spurious certificate of title and allow
the continuous illegal proliferation and perpetuation thereof. Republic Act No. 26122 provides for a
special procedure for the reconstitution of Torrens certificates of title that are missing but not
fictitious titles or titles, which are existing.123

120 Vda. de Anciano v. Caballes, 93 Phil. 875, 876 (1953).

121 Antonio H. Noblejas and Edilberto H. Noblejas, Registration of Land Titles and Deeds,
1992 Revised Edition, p. 242.

122 An Act Providing a Special Procedure for the Reconstitution of Torrens Certificate of
Title Lost or Destroyed.

123 Caero v. University of the Philippines, G.R. No. 156380, 8 September 2004, 437 SCRA
630, 641.

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Resultantly, the San Pedro RTC is left with no other option but to order the dismissal of LRC Case No.
B-1758.

Conclusiveness of Judgment in G.R. No.

155612

During the pendency of the Petition at bar, a significant development took place in the quieting of
title case. The Court had already denied in a Resolution dated 13 January 2003 the appeal of the
Spouses Layos in G.R. No. 155612 and, in effect, affirmed the Decision dated 20 February 2001 of the
Court of Appeals in CA-G.R. CV No. 50962. It should be recalled that in said Decision, the appellate
court upheld the validity of OCT No. 242 from which La Paz derived its TCTs and, at the same time,
explicitly found OCT No. 239 of the Spouses Layos spurious.

This ruling of the Court of Appeals on the spuriousness of OCT No. 239, once again, constitutes res
judicata by conclusiveness of judgment on the Petition for Reconstitution of the Spouses Layos.

The Spouses Layos and La Paz, asserting their respective titles to and ownership of the subject
property, are parties to the quieting of title case, as well as the reconstitution case. In their
Complaint before the Bian RTC, the Spouses Layos prayed for the quieting of their title to the subject
property under OCT No. 239 by the annulment or cancellation of the TCTs of La Paz covering the
same property. In answer, La Paz claimed that it was its title to the subject property under the 19
TCTs, derived from OCT No. 242, which was valid, and pointed out that it was actually OCT No. 239
and its supporting documents which were inexistent in the records of the concerned government
agencies. Given the contradicting assertions of the parties, the Bian RTC and the Court of Appeals, in
their original and appellate jurisdiction, respectively, over the quieting of title case, had to delve into
the issue of validity of OCT No. 239 vis--vis OCT No. 242. Necessarily, only one of the said certificates
of title over the same property can be valid, and the 20 February 2001 Decision of the Court of
Appeals in CA-G.R. CV No. 50962 settled with finality that it is OCT No. 242. The categorical finding of
the Court of Appeals in CA-G.R. CV No. 50962 (the quieting of title case) that OCT No. 239 is spurious
is now conclusive and binding upon this Court in its consideration on appeal of the Spouses Layos

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 Petition for Reconstitution of OCT No. 239, in much the same way and for the same reasons
previously discussed herein for the conclusiveness of this Courts judgment in G.R. No. 120958 (the
injunction cases) that OCT No. 239 is fake and a forgery.

Finality of Judgment

A statement in the Spouses Layos Petition for Review before this Court reveals their ultimate intent:

The test of a mans honor is his ability to admit his mistake. In the instant case, it
would [be] in keeping with the rule of law and justice for this Most Venerable
and Honorable Court to allow the parties to fully ventilate their claims in the
court below instead of depriving the [Spouses Layos] of their valued property
based on a sweeping obiter dictum by this Court in the FEDGI [sic] case where
the [Spouses Layos] title was not directly attacked.124

It may be nicely and even deceptively phrased but, simply, what the Spouses Layos pray to this Court
is for the re-litigation of an issue settled conclusively in this Courts Decision dated 16 December 1996
in G.R. No. 120958, and also in the Court of Appeals Decision dated 20 February 2001 in CA-G.R. CV
No. 50962. Both Decisions have already become final, and no part thereof may be disturbed by any
court, even if to correct a purported error therein.

Nothing is more settled in law than that when a final judgment is executory; it thereby becomes immutable and unalterable. The
judgment may no longer be modified in any respect, even if the modification is meant to correct what is perceived to be an erroneous
conclusion of fact or law, and regardless of whether the modification is attempted to be made by the court rendering it or by the highest Court
of the land. The doctrine is founded on considerations of public policy and sound practice that, at the risk of occasional errors, judgments must
become final at some definite point in time.125

124 Rollo, p. 20.

125 Mayon Estate Corporation v. Altura, G.R. No. 134462, 18 October 2004, 440 SCRA 377,
386.

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 What cannot be directly done by motion for reconsideration or appeal, given the finality of the
Decisions in G.R. No. 120985 and CA-G.R. CV No. 50962, likewise, cannot be indirectly done through a
separate proceeding.

Under the doctrine of conclusiveness of judgment which is also known as preclusion of issues or
collateral estoppel, issues actually and directly resolved in a former suit cannot again be raised in any
future case between the same parties involving a different cause of action. Once a judgment attains
finality it becomes immutable and unalterable. It may no longer be modified in any respect, even if
the modification is meant to correct what is perceived to be an erroneous conclusion of fact or law,
and regardless of whether the modification is attempted to be made by the court rendering it or by
the highest court of the land.126

Due Process

The Spouses Layos contend that the Order dated 19 January 1998 of the San Pedro RTC dismissing
their Petition for Reconstitution without a full blown trial deprived them of their property without
due process. The said Order had no evidentiary foundation, being based entirely on the unjust and
sweeping conclusion of this Court in its 16 December 1996 Decision in G.R. No. 120958 that OCT No.
239 is fake or a forgery.

There is no truth in the averments of the Spouses Layos.

Holding a trial in the reconstitution case would be an exercise in futility, because given the
conclusiveness of the judgment of this Court in G.R. No. 120958 and the Court of Appeals in CA-G.R.

126 Lu Do Lu Ym Corporation v. Aznar Brothers Realty, Co., G.R. No. 143307, 26 April
2006, 488 SCRA 315, 323-324.

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 CV No. 50962 that OCT No. 239 is fake, forged, and spurious, then the San Pedro RTC in LRC Case No.
B-1758 is, thus, barred from re-litigating the issue and accepting evidence thereon.

Furthermore, due process does not require that a trial be held in all circumstances. This Court, in a
Resolution dated 18 November 2003 in Republic v. Sandiganbayan, elucidated that:

The words hearing and trial have different meanings and connotations. Trial may
refer to the reception of evidence and other processes. It embraces the period
for the introduction of evidence by both parties. Hearing, as known in law, is not
confined to trial but embraces the several stages of litigation, including the pre-
trial stage. A hearing does not necessarily mean presentation of evidence. It does
not necessarily imply the presentation of oral or documentary evidence in open
court but that the parties are afforded the opportunity to be heard.

A careful analysis of Section 5 of RA 1379 readily discloses that the word hearing
does not always require the formal introduction of evidence in a trial, only that
the parties are given the occasion to participate and explain how they acquired
the property in question. If they are unable to show to the satisfaction of the
court that they lawfully acquired the property in question, then the court shall
declare such property forfeited in favor of the State. There is no provision in the
law that a full blown trial ought to be conducted before the court declares the
forfeiture of the subject property. Thus, even if the forfeiture proceedings do not
reach trial, the court is not precluded from determining the nature of the
acquisition of the property in question even in a summary proceeding.

Due process, a constitutional precept, does not therefore always and in all
situations require a trial-type proceeding. The essence of due process is found in
the reasonable opportunity to be heard and submit ones evidence in support of
his defense. What the law prohibits is not merely the absence of previous notice
but the absence thereof and the lack of opportunity to be heard. This
opportunity was made completely available to respondents who participated in
all stages of the litigation.127

127 461 Phil. 598, 613-614 (2003).

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 The Spouses Layos cannot claim deprivation of property without due process when they were never
denied the opportunity to be heard by the courts. The Spouses Layos repeatedly and persistently
sought recourse from the courts, at the risk of forum shopping (of which it was actually found guilty
at one point in G.R. No. 120958). They instituted no less than four cases before the RTCs of Bian and
San Pedro, Laguna; although based on different causes of action, all invoked their title to the subject
property under OCT No. 239. They were able to file pleadings bearing their allegations and
arguments, reply to their opponents pleadings, and present as attachments their documentary
evidence. When their cases were dismissed by the RTCs, they were able to file their motions for
reconsideration and, upon denial thereof, raised their case on appeal to the appellate court.
Unfortunately for the Spouses Layos, however, the Court of Appeals and this Court agreed in the
dismissal of their cases.

That the cases of the Spouses Layos were dismissed by the RTCs even before they reach trial stage is
not denial of due process. The dismissals were due to the lack of merit of their complaints and/or
petitions, already apparent in the pleadings and evidence on record, and pointed out in their
opponents Motions for Dismissal (in the injunction cases) and Motion for Summary Judgment (in the
quieting of title case).

In a letter dated 8 September 2005 to then Chief Justice Hilario G. Davide,128 made part of the
records of this case, Felipe Layos averred that the conflicting allegations and documents which led
this Court and the Court of Appeals in G.R. No. 120958 and CA-G.R. CV No. 50962, respectively, to
declare OCT No. 239 spurious, were fraudulently prepared and submitted to the courts in a
concerted scheme (which sadly seemed to involve their former counsel, Atty. Vitaliano Aguirre II) to
deprive them of the subject property. Now represented by a new counsel, he requested that he be
given a chance to prove that the subject property is covered by OCT No. 239 and not OCT No. 242.

128 Rollo, pp. 400-414.

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 Even if it is conceded that the allegations of the aforementioned letter are true, no stretch of
interpretation or liberal application of the rules of procedure can grant the San Pedro RTC jurisdiction
in LRC Case No. B-1758, a case for reconstitution, to set aside or reverse the final judgment made in
both G.R. No. 120958 and CA-G.R. CV No. 50962 on the invalidity of OCT No. 239.

The RTC, acting on a petition for reconstitution, is of limited jurisdiction. Lands already covered by
valid titles in the name of registered owners other than the petitioners cannot be a proper subject of
reconstitution proceedings, thus:

The Court stresses once more that lands already covered by duly issued existing
Torrens Titles (which become incontrovertible upon the expiration of one year
from their issuance under Section 38 of the Land Registration Act) cannot be the
subject of petitions for reconstitution of allegedly lost or destroyed titles filed by
third parties without first securing by final judgment the cancellation of such
existing titles. (And as the Court reiterated in the recent case of Silvestre vs.
Court of Appeals, "in cases of annulment and/or reconveyance of title, a party
seeking it should establish not merely by a preponderance of evidence but by
clear and convincing evidence that the land sought to be reconveyed is his.") The
courts simply have no jurisdiction over petitions by such third parties for
reconstitution of allegedly lost or destroyed titles over lands that are already
covered by duly issued subsisting titles in the names of their duly registered
owners. The very concept of stability and indefeasibility of titles covered under
the Torrens System of registration rules out as anathema the issuance of two
certificates of title over the same land to two different holders thereof.129
(Emphasis ours.)

129 Director of Lands v. Court of Appeals, 181 Phil. 432, 439 (1979). Reiterated in Alabang
Development Corporation v. Valenzuela, 201 Phil. 727, 744 (1982); Metropolitan
Waterworks and Sewerage System v. Sison, 209 Phil. 325, 337 (1983); Serra Serra v.
Court of Appeals, G.R. No. 34080, 22 March 1991, 195 SCRA 482, 494; and Ortigas
&Co., Ltd. Partnership v. Judge Velasco, 343 Phil. 115, 136 (1997).

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 It should be pointed out that the validity of the title to the subject property herein had already been
squarely put in issue in Civil Case No. B-4194, the quieting of title case, instituted by the Spouses
Layos before the Bian RTC, and resolved definitively and with finality when appealed to the Court of
Appeals in CA-G.R. CV No. 50962, in favor of La Paz. It is a ruling irrefragably beyond the jurisdiction
of the San Pedro RTC to overturn or contradict in LRC Case No. B-1784, the reconstitution case.

The prayer of the Spouses Layos to have LRC Case No. B-1784 remanded to the San Pedro RTC for
trial, if granted, would only be farcical. Should the San Pedro RTC subsequently grant the
reconstitution of OCT No. 239 after the trial, it would only be an empty victory for the Spouses Layos,
for a reconstituted certificate of title, like the original certificate, by itself does not vest ownership of
the land or estate covered thereby.130 The valid title to the subject property would still be that of La
Paz, as determined by the Court of Appeals in CA-G.R. CV No. 50962, over which the reconstituted
certificate of title of the Spouses Layos cannot prevail. The reconstituted OCT No. 239 would be a
mere piece of paper with actually no title to evidence ownership.

As earlier mentioned, a reconstitution of title is the re-issuance of a new

certificate of title lost or destroyed in its original form and condition. It does not
pass upon the ownership of the land covered by the lost or destroyed title. Any
change in the ownership of the property must be the subject of a separate suit.
Thus, although petitioners are in possession of the land, a separate proceeding is
necessary to thresh out the issue of ownership of the land.131

The reconstitution of a title is simply the reissuance of a new duplicate certificate

of title allegedly lost or destroyed in its original form and condition. It does not
pass upon the ownership of the land covered by the lost or destroyed title.
Possession of a lost certificate is not necessarily equivalent to ownership of the

130 Alonso v. Cebu Country Club, Inc., 462 Phil. 546, 565 (2003).

131 Lee v. Republic, 418 Phil. 793, 803 (2001). See also Alonso v. Cebu Country Club, Inc.,
426 Phil. 61, 86-87 (2002); Heirs of de Guzman Tuazon v. Court of Appeals, 465 Phil.
114, 126 (2004).

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 land covered by it. The certificate of title, by itself, does not vest ownership; it is
merely an evidence of title over a particular property.132

Evidently, the Spouses Layos seek more than just reconstitution of OCT No. 239 in LRC Case No. B-
1758. They want to hold a trial so as to prove before the San Pedro RTC the fraudulent scheme
perpetrated by several people, including their former counsel, to sabotage their cases before the
courts; the errors in the Decisions of the courts that have long attained finality; and, ultimately, the
validity of their title to the subject property. Again, these are matters beyond the jurisdiction of the
San Pedro RTC to determine in a case for reconstitution. If truly the Spouses Layos have been misled
and defrauded in a concerted effort to ruin their chances before the courts, then their recourse is not
to persist with this petition for reconstitution of title, but to institute other actions to hold those
responsible administratively, civilly, and even criminally liable.

Collateral Attack

Finally, the Spouses Layos argue that the Motions to Dismiss of La Paz and FEGDI and the
Comment of the Office of the Solicitor General supporting the dismissal of the Spouses Layos Petition
for Reconstitution constitute a collateral attack upon the validity of OCT No. 239, in violation of the
proscription laid down by law and jurisprudence against any collateral attack of a duly registered
certificate of title.

The Spouses Layos are clearly mistaken. No collateral attack on OCT No. 239 was made in LRC Case
No. B-1784 (the reconstitution case). The San Pedro RTC dismissed it precisely because the invalidity
of said certificate of title was already determined conclusively and with finality by the Supreme Court
in G.R. No. 120958 (the injunction cases). A similar ruling of invalidity of OCT No. 239 was rendered
yet again in the final judgment of the Court of Appeals in CA-G.R. CV No. 50962 (the quieting of title
case). Therefore, no collateral attack has been made on OCT No. 239 in the present Petition; the San

132 Strait Times, Inc. v. Court of Appeals, 356 Phil. 217, 230 (1998).

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 Pedro RTC, Court of Appeals, and this Court only abided by the conclusive and final judgment made
on the invalidity of OCT No. 239 in G.R. No. 120958 and CA-G.R. CV No. 50962.

In sum, the Decision dated 16 December 1996 of this Court in G.R. No. 120958 and the Decision
dated 20 February 2001 of the Court of Appeals in CA-G.R. CV No. 50962 declaring OCT No. 239 fake,
forged, and spurious, already bar the reconstitution of OCT No. 239 under the doctrine of res
judicata, in the concept of conclusiveness of judgment. There is, therefore, no need to remand the
case to the San Pedro RTC for trial.

WHEREFORE, premises considered, the instant Petition for Review is hereby DENIED. The Decision
dated 26 April 2001 and Resolution dated 18 October 2001 of the Court of Appeals in CA-G.R. CV No.
61759, affirming the Order dated 19 January 1998 of the Regional Trial Court, Branch 93 of San
Pedro, Laguna, in LRC Case No. B-1784, which dismissed the Petition for Reconstitution of OCT No.
239 filed by the petitioner- spouses Felipe and Victoria Layos, are hereby AFFIRMED. Costs against
the petitioner-spouses.

SO ORDERED.

MINITA V. CHICO-NAZARIO
Associate Justice

WE CONCUR:

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 CONSUELO YNARES-SANTIAGO

Associate Justice

Chairperson

MA. ALICIA AUSTRIA-MARTINEZ ANTONIO EDUARDO B.

NACHURA
Associate Justice Associate Justice

RUBEN T. REYES

Associate Justice

ATTESTATION

I attest that the conclusions in the above Decision were reached in

consultation before the case was assigned to the writer of the opinion of the
Courts Division.

275
CONSUELO YNARES-SANTIAGO

Associate Justice

Chairperson, Third Division

CERTIFICATION

Pursuant to Section 13, Article VIII of the Constitution, and the Division
Chairpersons Attestation, it is hereby certified that the conclusions in the above
Decision were reached in consultation before the case was assigned to the writer
of the opinion of the Courts Division.

REYNATO S. PUNO

Chief Justice

276
Republic of the Philippines

SUPREME COURT

Manila

EN BANC

G.R. No. L-42636 August 1, 1985

MARIA LUISA DE LEON ESCALER and ERNESTO ESCALER, CECILIA J. ROXAS and PEDRO
ROXAS, petitioners, vs. COURT OF APPEALS, JOSE L. REYNOSO, now deceased, to be
substituted by his heirs or legal representatives and AFRICA V. REYNOSO, respondents.

Avancea Law Office for petitioners.

Bauza, Ampil, Suarez, and Paredes Law Office for respondent Africa V. Reynoso.

CUEVAS, J.:

This is a Petition for Review on certiorari of the Decision of the then Court of Appeals (now the
Intermediate Appellate Court) and of its Resolution denying petitioners' Motion for Reconsideration,
in CA G.R. No. 41953-R, which was an appeal from the judgment of the Court of First Instance of
Rizal in Civil Case No. 9014 entitled "Maria Luisa de Leon Escaler, et al vs. Jose L. Reynoso and
Africa Reynoso."

The following are the pertinent background facts:

On March 7, 1958, the spouses Africa V. Reynoso and Jose L, Reynoso sold to petitioners several
others, a parcel of land, situated in Antipolo, Rizal with an area of 239,479 square meters and
covered by TCT No. 57400 of the Register of Deeds of the Province of Rizal. The Deed of Sale 1
contained the following covenant against eviction, to wit:

That the VENDOR is the absolute owner of a parcel of land ... the ownership
thereof being evidenced by an absolute deed of sale executed in her favor by
registered owner ANGELINA C. REYNOSO, ...;

That the VENDOR warrants valid title to and ownership of said parcel of land
and further, warrant to defend the property herein sold and conveyed, unto
the VENDEES, their heirs, and assignees, from any and all claims of any
persons whatsoever.

On April 21, 1961, the Register of Deeds of Rizal and A. Doronilla Resources Development, Inc. filed
Case No. 4252 before the Court of First Instance of Rizal for the cancellation of OCT No. 1526
issued in the name of Angelina C. Reynoso (predecessor-in-interest of private respondents-vendors)
on February 26, 1958 under Decree No. 62373, LRC Record No. N-13783, on the ground that the
property covered by said title is already previously registered under Transfer Certificate of Title No.
42999 issued in the name of A. Doronilla Development, Inc. Petitioners as vendees filed their
opposition to the said petition.

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On June 10, 1964, an Order 2 was issued in the said case, the dispositive portion of which reads:

IN VIEW OF THE ABOVE CONSIDERATIONS, this Court is constrained to

set aside Decree No. 62373 issued in LRC. Rec. No. N-13783 and the
Register of Deeds of Rizal is directed to cancel OCT No. 1526 of his office
and all Transfer Certificates of Title issued subsequently thereafter to
purchaser of said property or portions thereof, the same being null and void,
the expenses for such cancellation to be charged to spouses Angelina
Reynoso and Floro Reynoso. The owner's duplicates in the possession of the
transferees of the property covered by OCT No. 1526 are declared null and
void and said transferees are directed to surrender to the Register of Deeds
of Rizal, said owner's duplicates for cancellation.

The other reliefs sought for by the party oppositors are denied the same not
falling within the jurisdiction of this Court under this proceeding.

SO ORDERED.

On August 31, 1965, herein petitioners, spouses Maria de Leon Escaler and Ernesto Escaler and
spouses Cecilia J. Roxas and Pedro Roxas, filed Civil Case No. 9014 before the Court of First
Instance of Rizal against their vendors, herein private respondents, spouses Jose L. Reynoso and
Africa Reynoso for the recovery of the value of the property sold to them plus damages on the
ground that the latter have violated the vendors' "warranty against eviction."

The complaint among others, alleged that the Order issued in Case No. 4252 which cancelled the
title of Angelina C. Reynoso and all subsequent Transfer Certificates of Title derived and/or
emanating therefrom and which includes the titles of petitioners, is now final, and by reason thereof
petitioners lost their right over the property sold; and that in said Case No. 4252, the respondents
were summoned and/or given their day in court at the instance of the petitioners. 3

The respondents, as defendants, filed their answer alleging, among others, by way of affirmative
defenses that "the cause of action, if any, of plaintiffs against defendants have been fully adjudicated
in Case No. 4252 when plaintiffs failed to file a third-party complaint against defendants." 4

On August 18, 1967, petitioners, as plaintiffs, filed a Motion for Summary Judgment, alleging the
facts already averred in the complaint, and further alleging that the defendants were summoned and
were given their day in court at the instance of plaintiffs in Case No. 4252. In support of their said
motion, the plaintiffs attached the affidavit of Atty. Alberto R. Avancea who had represented the
plaintiffs in Case No. 4252 and had filed a joint opposition in behalf of all the vendees. The pertinent
portion of that affidavit, states

4. That he has furnished a copy of said joint opposition to Africa Reynoso,

wife of Jose L. Reynoso, at her given address at c/o Antipolo Enterprises,
Antipolo, Rizal and the latter had received the same, as evidenced by the
photostatic copy of the Registry Return Receipt thereto affixed as Annex "C-
l";

xxx xxx xxx

6. That he hereby executed this Affidavit to prove that said defendants Africa
Reynoso and Jose L. Reynoso were given their day in Court and/or were
afforded their opportunity to be heard in Case No. 4252 aforecited.

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On September 27, 1967, judgment was rendered by the trial court, the pertinent portion of which
reads

Considering the foregoing motion for summary judgment and it appearing

that the defendants under a Deed of Absolute Sale (Annex "C") have
expressly warranted their valid title and ownership of the said parcel of land
and further warranted to defend said property from any and all claims of any
persons whomever in favor of plaintiffs; that the said warranties were violated
when on June 10, 1964, an Order was promulgated by the Court of First
Instance of Rizal in Case No. 4252 (Related to LRC Case No. 1559, LRC
Record No. N13293). In Re: Petition for Cancellation of Original Registration,
etc., covering the parcel of land in question; that said order of June 10, 1964
has become final and executory there being no appeal interposed thereto
and defendants were summoned and were given a day in court at the
instance of the plaintiffs in Case No. 4252, the Court hereby grants the
motion for summary judgment, and hereby orders the defendants to jointly
and severally return to the plaintiffs Maria Luisa de Leon Escaler and Ernesto
Escaler, Cecilia J. Roxas and Pedro Roxas, the value of the property sold to
them at the time of eviction which is not to be less than P5,500.00 to
reimburse to each one of the plaintiffs the expenses of contract and litigation
and the amount of P2,250.00 to pay the attorney's fees of P1,000.00 plus the
costs of suit.

SO ORDERED.

Private respondents appealed the aforesaid decision to the then Court of Appeals 5 assigning as sole
errorthat the lower court erred in finding that they were summoned and were given their day in court at
the instance of petitioners-plaintiffs in Case No. 4252.

In reversing the decision of the trial court and dismissing the case, the then Court of Appeals found
and so ruled that petitioners as vendees had not given private respondents-vendors, formal notice of
the eviction case as mandated by Arts. 1558 and 1559 of the New Civil Code.

Hence, the instant recourse, petitioners contending

1) that the Court of Appeals erred in applying strictly to the instant case the
provisions of Articles 1558 and 1559 of the new Civil Code; and

2) that the decision of the Court of First Instance of Rizal should have been
affirmed by the Court of Appeals or at least, the, Court of Appeals should
have remanded the case to the trial court, for hearing on the merits.

The petition is devoid of merit. Consequently, it must be dismissed.

Article 1548, in relation to Articles 1558. and 1559 of the New Civil Code reads as follows:

Art. 1548, Eviction shall take place whenever by a final judgment based on a
right prior to the sale or an act imputable to the vendor, the vendee is
deprived of the whole or of a part of the thing purchased.

The vendor shall answer for the eviction even though nothing has been said
in the contract on the subject.

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 The contracting parties, however, may increase, diminish, or suppress this
legal obligation of the vendor.

Art. 1558. The vendor shall not be obliged to make good the proper warranty,
unless he is summoned in the suit for eviction at the instance of the vendee.
(emphasis supplied)

Art. 1559. The defendant vendee shall ask, within the time fixed in the Rules
of Court for answering the complaint that the vendor be made as co-
defendant.

In order that a vendor's liability for eviction may be enforced, the following requisites must concur
a) there must be a final judgment; b) the purchaser has been deprived of the whole or part of the
thing sold; c) said deprivation was by virtue of a right prior to the sale made by the vendor; and d)
the vendor has been summoned and made co-defendant in the suit for eviction at the instance of the
vendee. 6

In the case at bar, the fourth requisitethat of being summoned in the suit for eviction (Case No.
4252) at the instance of the vendeeis not present. All that the petitioners did, per their very
admission, was to furnish respondents, by registered mail, with a copy of the opposition they
(petitioners filed in the eviction suit. Decidedly, this is not the kind of notice prescribed by the
aforequoted Articles 1558 and 1559 of the New Civil Code. The term "unless he is summoned in the
suit for eviction at the instance of the vendee" means that the respondents as vendor/s should be
made parties to the suit at the instance of petitioners-vendees, either by way of asking that the
former be made a co-defendant or by the filing of a third-party complaint against said vendors.
Nothing of that sort appeared to have been done by the petitioners in the instant case.

IN VIEW OF THE FOREGOING CONSIDERATIONS, the petition is DISMISSED and the appealed
decision of the then Court of Appeals is AFFIRMED.

No pronouncement as to costs.

SO ORDERED.

Concepcion, Jr., Abad Santos, Plana, Escolin, Relova, Gutierrez, Jr. and De la Fuente, JJ., concur.

Separate Opinions

AQUINO, J., dissenting:

In 1958 Cecilia Roxas and Maria Luisa de Leon Escaler and ten other persons bought for P12,000
from Africa V Reynoso, 23.9 hectares of land located at Barrio San Isidro, Antipolo, Rizal covered by
OCT No. 1526 in the name of Angelina C. Reynoso. Africa had purchased the land from Angelina (9-
12, Record on Appeal). Escaler and Roxas obtained TCT Nos. 58389 and 58393, respectively.

On April 21, 1961 the register of deeds of Rizal in Civil Case No. 4252, LRC Case No. 1559, Rec.
No. 13793, filed a petition for the cancellation of Decree No. N-62373 and OCT No. 1526 issued in

280
the name of Angelina C. Reynoso because the 23.9 hectare land covered by said decree and title
had been previously registered in the name of A. Doronilla Resources Development, Inc. since
February 20, 1956. Angelina was furnished a copy of the petition by registered mail, Registry
Receipt No. 6883. The petition was set for hearing on May 20, 1961.

It was alleged in paragraph 5 of the petition that Angelina transferred to Africa V. Reynoso the said
land. Among the 20 persons furnished copies of the petition for cancellation were Escaler and
Roxas. Escaler and Roxas filed a joint opposition to the petition for cancellation. Their lawyer,
Alberto P. Avancea, furnished Africa Reynoso and A Angelina C. Reynoso by registered mail with
copies of said opposition sent at their common Postal address, care of Antipolo Enterprises,
Antipolo, Rizal, as shown in Registry Receipts Nos. 58558 and 58559 dated June 24, 1961 (p. 85,
Record of Civil Case No. 4252).

In said joint opposition, it was alleged that Escaler and Roxas were innocent purchasers for value,
that the court, as a land registration court, had no jurisdiction over the controversy and that should
the titles of Escaler and Roxas be nullified, they are entitled to relief from the Assurance Fund.

After hearing, which lasted for three years, Judge Muoz Palma in her order of June 10, 1964 found
that the land covered by Angelina Reynoso's title, OCT No. 1526, had been previously registered in
1907 under OCT No. 301, which was cancelled by subsequent transfer certificates of title, the latest
of which is TCT No. 42999 in the name of A. Doronilla Resources Development, Inc.

She declared void Decree No. 62373 and Angelina Reynoso's title and those derived therefrom, like
the titles of Escaler and Roxas, in accordance with the rule that the prior registration prevails over
the later registration (Legarda and Prieto vs. Saleeby, 31 Phil. 590).

The titles of Angelina and Africa (maybe relatives by affinity) were void because they were issued for
lands already registered. The titles of Angelina and Africa may be regarded as a form of land-
grabbing. The purchasers were speculators in Antipolo lots.

More than a year later, or on August 31, 1965, Escaler and Roxas in Civil Case No. 9014 sued
Africa Reynoso to enforce the warranty against eviction contained in the deed of sale executed by
Africa in 1958 in their favor. They prayed for the return to each of the plaintiffs of P5,500 as the value
of the land and P4,750 as reimbursement of "expenses of contract", attorney's fees and litigation
expenses.

Africa Reynoso in her answer alleged that Escaler and Roxas failed to file a third- party complaint
against her when the latter were sued in Civil Case No. 4252, that their action had prescribed, that
they should claim from Angelina C. Reynoso reimbursement for the expenses of cancellation of title
and that their claim is against the Assurance Fund.

Africa Reynoso filed a third-party complaint against Angelina C. Reynoso. No summons was issued.
Escaler and Roxas filed a motion for summary judgment.

On September 27, 1967, Judge Navarro ordered the spouses Africa Reynoso and Jose Reynoso to
return solidarity to the Escalers and the Roxases the value of the land amounting to P5,500, to
reimburse to each one of the plaintiffs the "expenses of contract" and litigation in the sum of P2,250
and attorney's fees of P1,000 (61, Record on Appeal).

The Reynoso spouses appealed to the Court of Appeals which reversed the trial court's decision.
The Appellate Court held that because Escaler and Roxas did not make Africa Reynoso a co-

281
defendant in the eviction case, as required in articles 1558 and 1559 of the Civil Code, they could
not later on enforce the warranty against Africa. Escaler and Roxas appealed to this Court.

In my opinion, it was not possible for Escaler and Roxas to comply strictly with articles 1558 and
1559. The eviction took place, not in an ordinary suit wherein the vendor can be made a co-
defendant, but as an incident in the cancellation of title in a land registration proceeding.

In such a case, the furnishing of the vendor with a copy of the opposition was a substantial
compliance with articles 1558 and 1559. It was a notice to the vendor. Africa's vendor, Angelina, was
first notified of the cancellation proceeding.

At least, Escaler and Roxas complied with article 1481 of the old Civil Code which requires notice to
the vendor. It was not the fault of the petitioners that the eviction case assumed the shape of a mere
incident in the land registration proceeding and not that of an ordinary contentious civil action. Africa
Reynoso could not be made a co- defendant in that incident for cancellation of title, a summary
proceeding.

A contrary view would enable Africa Reynoso to enrich herself unjustly at the expense of the
petitioners.

Makasiar, C.J., Teehankee, Melencio-Herrera, Alampay, JJ., concur.

Separate Opinions

AQUINO, J., dissenting:

In 1958 Cecilia Roxas and Maria Luisa de Leon Escaler and ten other persons bought for P12,000
from Africa V Reynoso, 23.9 hectares of land located at Barrio San Isidro, Antipolo, Rizal covered by
OCT No. 1526 in the name of Angelina C. Reynoso. Africa had purchased the land from Angelina (9-
12, Record on Appeal). Escaler and Roxas obtained TCT Nos. 58389 and 58393, respectively.

On April 21, 1961 the register of deeds of Rizal in Civil Case No. 4252, LRC Case No. 1559, Rec.
No. 13793, filed a petition for the cancellation of Decree No. N-62373 and OCT No. 1526 issued in
the name of Angelina C. Reynoso because the 23.9 hectare land covered by said decree and title
had been previously registered in the name of A. Doronilla Resources Development, Inc. since
February 20, 1956. Angelina was furnished a copy of the petition by registered mail, Registry
Receipt No. 6883. The petition was set for hearing on May 20, 1961.

It was alleged in paragraph 5 of the petition that Angelina transferred to Africa V. Reynoso the said
land. Among the 20 persons furnished copies of the petition for cancellation were Escaler and
Roxas. Escaler and Roxas filed a joint opposition to the petition for cancellation. Their lawyer,
Alberto P. Avancea, furnished Africa Reynoso and A Angelina C. Reynoso by registered mail with
copies of said opposition sent at their common Postal address, care of Antipolo Enterprises,
Antipolo, Rizal, as shown in Registry Receipts Nos. 58558 and 58559 dated June 24, 1961 (p. 85,
Record of Civil Case No. 4252).

282
In said joint opposition, it was alleged that Escaler and Roxas were innocent purchasers for value,
that the court, as a land registration court, had no jurisdiction over the controversy and that should
the titles of Escaler and Roxas be nullified, they are entitled to relief from the Assurance Fund.

After hearing, which lasted for three years, Judge Muoz Palma in her order of June 10, 1964 found
that the land covered by Angelina Reynoso's title, OCT No. 1526, had been previously registered in
1907 under OCT No. 301, which was cancelled by subsequent transfer certificates of title, the latest
of which is TCT No. 42999 in the name of A. Doronilla Resources Development, Inc.

She declared void Decree No. 62373 and Angelina Reynoso's title and those derived therefrom, like
the titles of Escaler and Roxas, in accordance with the rule that the prior registration prevails over
the later registration (Legarda and Prieto vs. Saleeby, 31 Phil. 590).

The titles of Angelina and Africa (maybe relatives by affinity) were void because they were issued for
lands already registered. The titles of Angelina and Africa may be regarded as a form of land-
grabbing. The purchasers were speculators in Antipolo lots.

More than a year later, or on August 31, 1965, Escaler and Roxas in Civil Case No. 9014 sued
Africa Reynoso to enforce the warranty against eviction contained in the deed of sale executed by
Africa in 1958 in their favor. They prayed for the return to each of the plaintiffs of P5,500 as the value
of the land and P4,750 as reimbursement of "expenses of contract", attorney's fees and litigation
expenses.

Africa Reynoso in her answer alleged that Escaler and Roxas failed to file a third- party complaint
against her when the latter were sued in Civil Case No. 4252, that their action had prescribed, that
they should claim from Angelina C. Reynoso reimbursement for the expenses of cancellation of title
and that their claim is against the Assurance Fund.

Africa Reynoso filed a third-party complaint against Angelina C. Reynoso. No summons was issued.
Escaler and Roxas filed a motion for summary judgment.

On September 27, 1967, Judge Navarro ordered the spouses Africa Reynoso and Jose Reynoso to
return solidarity to the Escalers and the Roxases the value of the land amounting to P5,500, to
reimburse to each one of the plaintiffs the "expenses of contract" and litigation in the sum of P2,250
and attorney's fees of P1,000 (61, Record on Appeal).

The Reynoso spouses appealed to the Court of Appeals which reversed the trial court's decision.
The Appellate Court held that because Escaler and Rxas did not make Africa Reynoso a co-
defendant in the eviction case, as required in articles 1558 and 1559 of the Civil Code, they could
not later on enforce the warranty against Africa. Escaler and Roxas appealed to this Court.

In my opinion, it was not possible for Escaler and Roxas to comply strictly with articles 1558 and
1559. The eviction took place, not in an ordinary suit wherein the vendor can be made a co-
defendant, but as an incident in the cancellation of title in a land registration proceeding.

In such a case, the furnishing of the vendor with a copy of the opposition was a substantial
compliance with articles 1558 and 1559. It was a notice to the vendor. Africa's vendor, Angelina, was
first notified of the cancellation proceeding.

At least, Escaler and Roxas complied with article 1481 of the old Civil Code which requires notice to
the vendor. It was not the fault of the petitioners that the eviction case assumed the shape of a mere

283
incident in the land registration proceeding and not that of an ordinary contentious civil action. Africa
Reynoso could not be made a co- defendant in that incident for cancellation of title, a summary
proceeding.

A contrary view would enable Africa Reynoso to enrich herself unjustly at the expense of the
petitioners.

Makasiar, C.J., Teehankee, Melencio-Herrera, Alampay, JJ., concur.

Footnotes

1 Annex "A", pp. 7- 12, Record on Appeal, Page 29, Rollo.

2 pp. 13-21 Record on Appeal, p. 29 Rollo.

3 pp. 1-7, Record on Appeal, p. 29, Rollo.

4 pp. 25-26, Record on Appeal, p. 29, Rollo.

5 CA-G.R. No. 41953.

6 Bautista et al vs. Laserna, et al, 72 Phil. 506; Jovellano, et al vs. Lualhati, 47 Phil. 371; Canizares
Tiana vs. Torrejos, 21 Phil. 127.

284
Republic of the Philippines

SUPREME COURT

Manila

EN BANC

G.R. No. 109125 December 2, 1994

ANG YU ASUNCION, ARTHUR GO AND KEH TIONG, petitioners,

vs.
THE HON. COURT OF APPEALS and BUEN REALTY DEVELOPMENT CORPORATION,
respondents.

Antonio M. Albano for petitioners.

Umali, Soriano & Associates for private respondent.

VITUG, J.:

Assailed, in this petition for review, is the decision of the Court of Appeals, dated 04 December
1991, in CA-G.R. SP No. 26345 setting aside and declaring without force and effect the orders of
execution of the trial court, dated 30 August 1991 and 27 September 1991, in Civil Case No. 87-
41058.

The antecedents are recited in good detail by the appellate court thusly:

On July 29, 1987 a Second Amended Complaint for Specific Performance

was filed by Ang Yu Asuncion and Keh Tiong, et al., against Bobby Cu
Unjieng, Rose Cu Unjieng and Jose Tan before the Regional Trial Court,
Branch 31, Manila in Civil Case No. 87-41058, alleging, among others, that
plaintiffs are tenants or lessees of residential and commercial spaces owned
by defendants described as Nos. 630-638 Ongpin Street, Binondo, Manila;
that they have occupied said spaces since 1935 and have been religiously
paying the rental and complying with all the conditions of the lease contract;
that on several occasions before October 9, 1986, defendants informed
plaintiffs that they are offering to sell the premises and are giving them
priority to acquire the same; that during the negotiations, Bobby Cu Unjieng
offered a price of P6-million while plaintiffs made a counter offer of P5-million;
that plaintiffs thereafter asked the defendants to put their offer in writing to
which request defendants acceded; that in reply to defendant's letter,
plaintiffs wrote them on October 24, 1986 asking that they specify the terms
and conditions of the offer to sell; that when plaintiffs did not receive any
reply, they sent another letter dated January 28, 1987 with the same request;
that since defendants failed to specify the terms and conditions of the offer to
sell and because of information received that defendants were about to sell

285
the property, plaintiffs were compelled to file the complaint to compel
defendants to sell the property to them.

Defendants filed their answer denying the material allegations of the

complaint and interposing a special defense of lack of cause of action.

After the issues were joined, defendants filed a motion for summary judgment
which was granted by the lower court. The trial court found that defendants'
offer to sell was never accepted by the plaintiffs for the reason that the
parties did not agree upon the terms and conditions of the proposed sale,
hence, there was no contract of sale at all. Nonetheless, the lower court ruled
that should the defendants subsequently offer their property for sale at a
price of P11-million or below, plaintiffs will have the right of first refusal. Thus
the dispositive portion of the decision states:

WHEREFORE, judgment is hereby rendered in favor of the

defendants and against the plaintiffs summarily dismissing
the complaint subject to the aforementioned condition that if
the defendants subsequently decide to offer their property for
sale for a purchase price of Eleven Million Pesos or lower,
then the plaintiffs has the option to purchase the property or
of first refusal, otherwise, defendants need not offer the
property to the plaintiffs if the purchase price is higher than
Eleven Million Pesos.

SO ORDERED.

Aggrieved by the decision, plaintiffs appealed to this Court in

CA-G.R. CV No. 21123. In a decision promulgated on September 21, 1990
(penned by Justice Segundino G. Chua and concurred in by Justices Vicente
V. Mendoza and Fernando A. Santiago), this Court affirmed with modification
the lower court's judgment, holding:

In resume, there was no meeting of the minds between the

parties concerning the sale of the property. Absent such
requirement, the claim for specific performance will not lie.
Appellants' demand for actual, moral and exemplary damages
will likewise fail as there exists no justifiable ground for its
award. Summary judgment for defendants was properly
granted. Courts may render summary judgment when there is
no genuine issue as to any material fact and the moving party
is entitled to a judgment as a matter of law (Garcia vs. Court
of Appeals, 176 SCRA 815). All requisites obtaining, the
decision of the court a quo is legally justifiable.

WHEREFORE, finding the appeal unmeritorious, the

judgment appealed from is hereby AFFIRMED, but subject to
the following modification: The court a quo in the aforestated
decision gave the plaintiffs-appellants the right of first refusal
only if the property is sold for a purchase price of Eleven
Million pesos or lower; however, considering the mercurial
and uncertain forces in our market economy today. We find

286
 no reason not to grant the same right of first refusal to herein
appellants in the event that the subject property is sold for a
price in excess of Eleven Million pesos. No pronouncement
as to costs.

SO ORDERED.

The decision of this Court was brought to the Supreme Court by petition for
review on certiorari. The Supreme Court denied the appeal on May 6, 1991
"for insufficiency in form and substances" (Annex H, Petition).

On November 15, 1990, while CA-G.R. CV No. 21123 was pending

consideration by this Court, the Cu Unjieng spouses executed a Deed of Sale
(Annex D, Petition) transferring the property in question to herein petitioner
Buen Realty and Development Corporation, subject to the following terms
and conditions:

1. That for and in consideration of the sum of FIFTEEN

MILLION PESOS (P15,000,000.00), receipt of which in full is
hereby acknowledged, the VENDORS hereby sells, transfers
and conveys for and in favor of the VENDEE, his heirs,
executors, administrators or assigns, the above-described
property with all the improvements found therein including all
the rights and interest in the said property free from all liens
and encumbrances of whatever nature, except the pending
ejectment proceeding;

2. That the VENDEE shall pay the Documentary Stamp Tax,

registration fees for the transfer of title in his favor and other
expenses incidental to the sale of above-described property
including capital gains tax and accrued real estate taxes.

As a consequence of the sale, TCT No. 105254/T-881 in the name of the Cu

Unjieng spouses was cancelled and, in lieu thereof, TCT No. 195816 was
issued in the name of petitioner on December 3, 1990.

On July 1, 1991, petitioner as the new owner of the subject property wrote a
letter to the lessees demanding that the latter vacate the premises.

On July 16, 1991, the lessees wrote a reply to petitioner stating that petitioner
brought the property subject to the notice of lis pendens regarding Civil Case
No. 87-41058 annotated on TCT No. 105254/T-881 in the name of the Cu
Unjiengs.

The lessees filed a Motion for Execution dated August 27, 1991 of the
Decision in Civil Case No. 87-41058 as modified by the Court of Appeals in
CA-G.R. CV No. 21123.

On August 30, 1991, respondent Judge issued an order (Annex A, Petition)

quoted as follows:

287
 Presented before the Court is a Motion for Execution filed by
plaintiff represented by Atty. Antonio Albano. Both defendants
Bobby Cu Unjieng and Rose Cu Unjieng represented by Atty.
Vicente Sison and Atty. Anacleto Magno respectively were
duly notified in today's consideration of the motion as
evidenced by the rubber stamp and signatures upon the copy
of the Motion for Execution.

The gist of the motion is that the Decision of the Court dated
September 21, 1990 as modified by the Court of Appeals in
its decision in CA G.R. CV-21123, and elevated to the
Supreme Court upon the petition for review and that the same
was denied by the highest tribunal in its resolution dated May
6, 1991 in G.R. No.
L-97276, had now become final and executory. As a
consequence, there was an Entry of Judgment by the
Supreme Court as of June 6, 1991, stating that the aforesaid
modified decision had already become final and executory.

It is the observation of the Court that this property in dispute

was the subject of the Notice of Lis Pendens and that the
modified decision of this Court promulgated by the Court of
Appeals which had become final to the effect that should the
defendants decide to offer the property for sale for a price of
P11 Million or lower, and considering the mercurial and
uncertain forces in our market economy today, the same right
of first refusal to herein plaintiffs/appellants in the event that
the subject property is sold for a price in excess of Eleven
Million pesos or more.

WHEREFORE, defendants are hereby ordered to execute the

necessary Deed of Sale of the property in litigation in favor of
plaintiffs Ang Yu Asuncion, Keh Tiong and Arthur Go for the
consideration of P15 Million pesos in recognition of plaintiffs'
right of first refusal and that a new Transfer Certificate of Title
be issued in favor of the buyer.

All previous transactions involving the same property

notwithstanding the issuance of another title to Buen Realty
Corporation, is hereby set aside as having been executed in
bad faith.

SO ORDERED.

On September 22, 1991 respondent Judge issued another order, the

dispositive portion of which reads:

WHEREFORE, let there be Writ of Execution issue in the

above-entitled case directing the Deputy Sheriff Ramon
Enriquez of this Court to implement said Writ of Execution
ordering the defendants among others to comply with the
aforesaid Order of this Court within a period of one (1) week

288
 from receipt of this Order and for defendants to execute the
necessary Deed of Sale of the property in litigation in favor of
the plaintiffs Ang Yu Asuncion, Keh Tiong and Arthur Go for
the consideration of P15,000,000.00 and ordering the
Register of Deeds of the City of Manila, to cancel and set
aside the title already issued in favor of Buen Realty
Corporation which was previously executed between the
latter and defendants and to register the new title in favor of
the aforesaid plaintiffs Ang Yu Asuncion, Keh Tiong and
Arthur Go.

SO ORDERED.

On the same day, September 27, 1991 the corresponding writ of execution
(Annex C, Petition) was issued. 1

On 04 December 1991, the appellate court, on appeal to it by private respondent, set aside and
declared without force and effect the above questioned orders of the court a quo.

In this petition for review on certiorari, petitioners contend that Buen Realty can be held bound by the
writ of execution by virtue of the notice of lis pendens, carried over on TCT No. 195816 issued in the
name of Buen Realty, at the time of the latter's purchase of the property on 15 November 1991 from
the Cu Unjiengs.

We affirm the decision of the appellate court.

A not too recent development in real estate transactions is the adoption of such arrangements as the
right of first refusal, a purchase option and a contract to sell. For ready reference, we might point out
some fundamental precepts that may find some relevance to this discussion.

An obligation is a juridical necessity to give, to do or not to do (Art. 1156, Civil Code). The obligation
is constituted upon the concurrence of the essential elements thereof, viz: (a) The vinculum juris or
juridical tie which is the efficient cause established by the various sources of obligations (law,
contracts, quasi-contracts, delicts and quasi-delicts); (b) the object which is the prestation or
conduct; required to be observed (to give, to do or not to do); and (c) the subject-persons who,
viewed from the demandability of the obligation, are the active (obligee) and the passive (obligor)
subjects.

Among the sources of an obligation is a contract (Art. 1157, Civil Code), which is a meeting of minds
between two persons whereby one binds himself, with respect to the other, to give something or to
render some service (Art. 1305, Civil Code). A contract undergoes various stages that include its
negotiation or preparation, its perfection and, finally, its consummation. Negotiation covers the
period from the time the prospective contracting parties indicate interest in the contract to the time
the contract is concluded (perfected). The perfection of the contract takes place upon the
concurrence of the essential elements thereof. A contract which is consensual as to perfection is so
established upon a mere meeting of minds, i.e., the concurrence of offer and acceptance, on the
object and on the cause thereof. A contract which requires, in addition to the above, the delivery of
the object of the agreement, as in a pledge or commodatum, is commonly referred to as a real
contract. In a solemn contract, compliance with certain formalities prescribed by law, such as in a
donation of real property, is essential in order to make the act valid, the prescribed form being
thereby an essential element thereof. The stage of consummation begins when the parties perform
their respective undertakings under the contract culminating in the extinguishment thereof.

289
Until the contract is perfected, it cannot, as an independent source of obligation, serve as a binding
juridical relation. In sales, particularly, to which the topic for discussion about the case at bench
belongs, the contract is perfected when a person, called the seller, obligates himself, for a price
certain, to deliver and to transfer ownership of a thing or right to another, called the buyer, over
which the latter agrees. Article 1458 of the Civil Code provides:

Art. 1458. By the contract of sale one of the contracting parties obligates
himself to transfer the ownership of and to deliver a determinate thing, and
the other to pay therefor a price certain in money or its equivalent.

A contract of sale may be absolute or conditional.

When the sale is not absolute but conditional, such as in a "Contract to Sell" where invariably the
ownership of the thing sold is retained until the fulfillment of a positive suspensive condition
(normally, the full payment of the purchase price), the breach of the condition will prevent the
obligation to convey title from acquiring an obligatory force. 2 In Dignos vs. Court of Appeals (158
SCRA 375), we have said that, although denominated a "Deed of Conditional Sale," a sale is still absolute
where the contract is devoid of any proviso that title is reserved or the right to unilaterally rescind is
stipulated, e.g., until or unless the price is paid. Ownership will then be transferred to the buyer upon
actual or constructive delivery (e.g., by the execution of a public document) of the property sold. Where
the condition is imposed upon the perfection of the contract itself, the failure of the condition would
prevent such perfection. 3 If the condition is imposed on the obligation of a party which is not fulfilled, the
other party may either waive the condition or refuse to proceed with the sale (Art. 1545, Civil Code). 4

An unconditional mutual promise to buy and sell, as long as the object is made determinate and the
price is fixed, can be obligatory on the parties, and compliance therewith may accordingly be
exacted. 5

An accepted unilateral promise which specifies the thing to be sold and the price to be paid, when
coupled with a valuable consideration distinct and separate from the price, is what may properly be
termed a perfected contract of option. This contract is legally binding, and in sales, it conforms with
the second paragraph of Article 1479 of the Civil Code, viz:

Art. 1479. . . .

An accepted unilateral promise to buy or to sell a determinate thing for a

price certain is binding upon the promissor if the promise is supported by a
consideration distinct from the price. (1451a) 6

Observe, however, that the option is not the contract of sale itself. 7 The optionee has the right, but not
the obligation, to buy. Once the option is exercised timely, i.e., the offer is accepted before a breach of
the option, a bilateral promise to sell and to buy ensues and both parties are then reciprocally bound to
comply with their respective undertakings. 8

Let us elucidate a little. A negotiation is formally initiated by an offer. An imperfect promise

(policitacion) is merely an offer. Public advertisements or solicitations and the like are ordinarily
construed as mere invitations to make offers or only as proposals. These relations, until a contract is
perfected, are not considered binding commitments. Thus, at any time prior to the perfection of the
contract, either negotiating party may stop the negotiation. The offer, at this stage, may be
withdrawn; the withdrawal is effective immediately after its manifestation, such as by its mailing and
not necessarily when the offeree learns of the withdrawal (Laudico vs. Arias, 43 Phil. 270). Where a
period is given to the offeree within which to accept the offer, the following rules generally govern:

290
(1) If the period is not itself founded upon or supported by a consideration, the offeror is still free and
has the right to withdraw the offer before its acceptance, or, if an acceptance has been made, before
the offeror's coming to know of such fact, by communicating that withdrawal to the offeree (see Art.
1324, Civil Code; see also Atkins, Kroll & Co. vs. Cua, 102 Phil. 948, holding that this rule is
applicable to a unilateral promise to sell under Art. 1479, modifying the previous decision in South
Western Sugar vs. Atlantic Gulf, 97 Phil. 249; see also Art. 1319, Civil Code; Rural Bank of
Paraaque, Inc., vs. Remolado, 135 SCRA 409; Sanchez vs. Rigos, 45 SCRA 368). The right to
withdraw, however, must not be exercised whimsically or arbitrarily; otherwise, it could give rise to a
damage claim under Article 19 of the Civil Code which ordains that "every person must, in the
exercise of his rights and in the performance of his duties, act with justice, give everyone his due,
and observe honesty and good faith."

(2) If the period has a separate consideration, a contract of "option" is deemed perfected, and it
would be a breach of that contract to withdraw the offer during the agreed period. The option,
however, is an independent contract by itself, and it is to be distinguished from the projected main
agreement (subject matter of the option) which is obviously yet to be concluded. If, in fact, the
optioner-offeror withdraws the offer before its acceptance (exercise of the option) by the optionee-
offeree, the latter may not sue for specific performance on the proposed contract ("object" of the
option) since it has failed to reach its own stage of perfection. The optioner-offeror, however, renders
himself liable for damages for breach of the option. In these cases, care should be taken of the real
nature of the consideration given, for if, in fact, it has been intended to be part of the consideration
for the main contract with a right of withdrawal on the part of the optionee, the main contract could
be deemed perfected; a similar instance would be an "earnest money" in a contract of sale that can
evidence its perfection (Art. 1482, Civil Code).

In the law on sales, the so-called "right of first refusal" is an innovative juridical relation. Needless to
point out, it cannot be deemed a perfected contract of sale under Article 1458 of the Civil Code.
Neither can the right of first refusal, understood in its normal concept, per se be brought within the
purview of an option under the second paragraph of Article 1479, aforequoted, or possibly of an offer
under Article 1319 9 of the same Code. An option or an offer would require, among other things, 10 a clear
certainty on both the object and the cause or consideration of the envisioned contract. In a right of first
refusal, while the object might be made determinate, the exercise of the right, however, would be
dependent not only on the grantor's eventual intention to enter into a binding juridical relation with another
but also on terms, including the price, that obviously are yet to be later firmed up. Prior thereto, it can at
best be so described as merely belonging to a class of preparatory juridical relations governed not by
contracts (since the essential elements to establish the vinculum juris would still be indefinite and
inconclusive) but by, among other laws of general application, the pertinent scattered provisions of the
Civil Code on human conduct.

Even on the premise that such right of first refusal has been decreed under a final judgment, like
here, its breach cannot justify correspondingly an issuance of a writ of execution under a judgment
that merely recognizes its existence, nor would it sanction an action for specific performance without
thereby negating the indispensable element of consensuality in the perfection of contracts. 11 It is not
to say, however, that the right of first refusal would be inconsequential for, such as already intimated
above, an unjustified disregard thereof, given, for instance, the circumstances expressed in Article 19 12 of
the Civil Code, can warrant a recovery for damages.

The final judgment in Civil Case No. 87-41058, it must be stressed, has merely accorded a "right of
first refusal" in favor of petitioners. The consequence of such a declaration entails no more than what
has heretofore been said. In fine, if, as it is here so conveyed to us, petitioners are aggrieved by the
failure of private respondents to honor the right of first refusal, the remedy is not a writ of execution
on the judgment, since there is none to execute, but an action for damages in a proper forum for the
purpose.

291
Furthermore, whether private respondent Buen Realty Development Corporation, the alleged
purchaser of the property, has acted in good faith or bad faith and whether or not it should, in any
case, be considered bound to respect the registration of the lis pendens in Civil Case No. 87-41058
are matters that must be independently addressed in appropriate proceedings. Buen Realty, not
having been impleaded in Civil Case No. 87-41058, cannot be held subject to the writ of execution
issued by respondent Judge, let alone ousted from the ownership and possession of the property,
without first being duly afforded its day in court.

We are also unable to agree with petitioners that the Court of Appeals has erred in holding that the
writ of execution varies the terms of the judgment in Civil Case No. 87-41058, later affirmed in CA-
G.R. CV-21123. The Court of Appeals, in this regard, has observed:

Finally, the questioned writ of execution is in variance with the decision of the
trial court as modified by this Court. As already stated, there was nothing in
said decision 13 that decreed the execution of a deed of sale between the Cu
Unjiengs and respondent lessees, or the fixing of the price of the sale, or the
cancellation of title in the name of petitioner (Limpin vs. IAC, 147 SCRA 516;
Pamantasan ng Lungsod ng Maynila vs. IAC, 143 SCRA 311; De Guzman vs.
CA, 137 SCRA 730; Pastor vs. CA, 122 SCRA 885).

It is likewise quite obvious to us that the decision in Civil Case No. 87-41058 could not have decreed
at the time the execution of any deed of sale between the Cu Unjiengs and petitioners.

WHEREFORE, we UPHOLD the Court of Appeals in ultimately setting aside the questioned Orders,
dated 30 August 1991 and 27 September 1991, of the court a quo. Costs against petitioners.

SO ORDERED.

Narvasa, C.J., Padilla, Bidin, Regalado, Davide, Jr., Romero, Bellosillo, Melo, Quiason, Puno and
Mendoza, JJ., concur.

Kapunan, J., took no part.

Feliciano, J., is on leave.

#Footnotes

1 Rollo, pp. 32-38.

2 Roque vs. Lapuz, 96 SCRA 741; Agustin vs. CA, 186 SCRA 375.

3 See People's Homesite and Housing Corp. vs. Court of Appeals, 133
SCRA 777.

4 Delta Motor Corporation vs. Genuino, 170 SCRA 29.

5 See Art. 1459; Atkins, Kroll and Co., Inc. vs. Cua Hian Tek, 102 Phil. 948.

292
 6 It is well to note that when the consideration given, for what otherwise
would have been an option, partakes the nature in reality of a part payment
of the purchase price (termed as "earnest money" and considered as an
initial payment thereof), an actual contract of sale is deemed entered into and
enforceable as such.

7 Enriquez de la Cavada vs. Diaz, 37 Phil. 982.

8 Atkins, Kroll & Co., Inc., vs. Cua Hian Tek, 102 Phil. 948.

9 Article 1319, Civil Code, provides:

Art. 1319. Consent is manifested by the meeting of the offer and the
acceptance upon the thing and the cause which are to constitute the
contract. The offer must be certain and the acceptance absolute. A qualified
acceptance constitutes a counter-offer. (Emphasis supplied.)

10 It is also essential for an option to be binding that valuable consideration

distinct from the price should be given (see Montilla vs. Court of Appeals, 161
SCRA 167; Sps. Natino vs. IAC, 197 SCRA 323; Cronico vs. J.M. Tuason &
Co., Inc., 78 SCRA 331).

11 See Article 1315 and 1318, Civil Code; Madrigal & Co. vs. Stevenson &
Co., 15 Phil. 38; Salonga vs. Ferrales, 105 SCRA 359).

12 Art. 19. Every person must, in the exercise of his rights and in the
performance of his duties, act with justice, give everyone his due, and
observe honesty and good faith.

13 The decision referred to reads:

In resume, there was no meeting of the minds between the parties

concerning the sale of the property. Absent such requirement, the claim for
specific performance will not lie. Appellants' demand for actual, moral and
exemplary damages will likewise fail as there exists no justifiable ground for
its award. Summary judgment for defendants was properly granted. Courts
may render summary judgment when there is no genuine issue as to any
material fact and the moving party is entitled to a judgment as a matter of law
(Garcia vs. Court of Appeals, 176 SCRA 815). All requisites obtaining, the
decision of the court a quo is legally justifiable.

WHEREFORE, finding the appeal unmeritorious, the judgment appealed from is hereby AFFIRMED,
but subject to the following modification: The court a quo in the aforestated decision, gave the
plaintiffs considering the mercurial and uncertain forces in our market economy today. We find no
reason not to grant the same right of first refusal to herein appellants in the event that the subject
property is sold for a price in excess of Eleven Million pesos. No pronouncement as to costs.

293
SECOND DIVISION

[G.R. No. 112140. June 23, 2005]

JESUS D. MORALES and CAROLINA NUQUI, petitioners, vs. COURT OF APPEALS,

ISAAC OLIVA, MILAGROS OLIVA-OBUYES, ANTONIA OLIVA-OLEO, DANILO OLIVA
and ROBERTO OLIVA, respondents.

DECISION

TINGA, J.:

The rules of procedure should not be viewed as a self-contained celebration of ritual, but rather
as a means to vindicate rights and establish justice. The higher goals of the Rules of Courtto
secure a just, speedy and inexpensive disposition of every action and proceedingshould forebear
every resolution of a procedural question. The subject litigation is the sort of case where the
correct, just and obvious legal solution is enmeshed behind a procedural thicket attributable to
several factors. We grant the petition to render effective relief to the prevailing party in
accordance with the applicable law and the established facts.

The facts follow. Spouses Isaac Oliva and Encarnacion dela Cruz were the conjugal owners of a
parcel of land and the improvements thereon[1] located in Polo,[2] Bulacan. The property was
covered by Transfer Certificate of Title (TCT) No. T-37578 issued by the Register of Deeds of
the Province of Bulacan. Encarnacion dela Cruz died in 1976, before the subject controversy
arose. Isaac Oliva is one of the respondents in the present case, along with four of his children
with Encarnacion.[3]

It is alleged that Florentino Oliva, a son of Isaac and Encarnacion, borrowed TCT No. T-37578
on the pretext that he would use the title as collateral for a loan he was to obtain for the
construction of his house, with the assurance that upon the maturity date of the loan, he would
redeem the property and return the title to his father and siblings.[4] Florentino likewise induced
the private respondents into entrusting unto him their respective residence certificates.

Eventually, after Florentino failed to return the borrowed certificate of title despite his familys
repeated demands, the private respondents made inquiries with the Register of Deeds of Bulacan.
There they discovered that a document entitled An Extrajudicial Settlement With Sale dated 17
March 1980 had been filed for registration and inscription. Said document, which purports to
contain the alleged signatures of the private respondents in their twin capacity as co-heirs and
owners-vendors, evidences the sale of the subject property to petitioner Jesus D. Morales
(Morales) for the sum of Twenty One Thousand One Hundred Fifty Pesos (P21,150.00). Private
respondents likewise learned that TCT No. T-37578 had been cancelled and that in lieu thereof
TCT No. 36356 was issued on 16 July 1980 in the name of Morales and his wife, petitioner
Carolina Nuqui.

The private respondents filed an adverse claim with the Register of Deeds, their signatures
affixed thereon. Then, on 3 March 1982, the private respondents filed an action seeking the

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nullification of the Deed Of Extrajudicial Settlement With Sale, reconveyance of the property,
and damages. The case docketed as Civil Case No. 1555-V82 was assigned to Branch III of the
Court of First Instance of Valenzuela (subsequently, it became the Regional Trial Court of
Valenzuela, Branch CLXXI), then presided over by Judge Avelino M. Constantino. In their
answer, the petitioners alleged that the signatures of the private respondents in the deed of sale
were genuine and raised the defense, among others that they were buyers in good faith.

On 20 July 1992, the parties entered into a Stipulation of Facts, the pertinent portions of which
are reproduced below:

1. That the plaintiffs maintain that their signatures appearing in the Extra Judicial Settlement and
Sale of the Estate of the Deceased Encarnacion de la Cruz (Annex A of the Complaint) are
forgeries;

2. That the defendants maintain otherwise because their signatures appearing therein are
authentic;

3. That the signatures appearing in the Adverse Claim (Annex C of the Complaint) dated January
25, 1982 are genuine and authentic signatures of the plaintiffs which could serve as standards for
examination by the National Bureau of Investigation (NBI);

4. That defendants spouses Jesus D. Morales and Carolina Nuqui claim that the signatures
appearing in Annexes A and C are the one and the same signatures of the plaintiffs;

5. That if and when signatures of the plaintiffs appearing in Annex A are authentic and genuine
same as appearing in Annex C, they are going to recognize the right of ownership of the
defendants and that they will immediately vacate the premises in question as well as other
tenants thereof;

6. That if and when the signatures of the plaintiffs are false as claimed by them after the
examination by the NBI, the defendant spouses Jesus D. Morales and Carolina Nuqui will
reconvey the property in question in favor of the plaintiffs and will execute the corresponding
deeds of sale;

7. That the losing party will pay all the damages to be incurred by the winning party including
attorneys fees to be assessed by the Court;

8. That the expenses to be incurred in the examination of Annexes A and C by the National
Bureau of Investigation shall be shouldered by the parties in equal share or pro rata.[5]

Pursuant to these stipulations, the trial court ordered the National Bureau of Investigation (NBI)
to examine the genuineness of the private respondents signatures in the Deed of Extrajudicial
Settlement With Sale, as compared with the signatures appearing in the adverse claim filed with
the Register of Deeds. The NBI submitted its report on 22 November 1982, concluding that the
questioned signatures were indeed those of the private respondents. The submission of the report
caused the petitioners to file a Motion for Summary Judgment,[6] alleging that they were entitled

295
to immediate judgment in their favor owing to the Stipulation of Facts. This motion was duly
opposed by the private respondents.

The trial court issued a Resolution[7] dated 29 December 1983, ruling as follows:

ACCORDINGLY, judgment by the stipulation of facts is hereby rendered declaring the

defendants to be the lawful owners of the subject properties and ordering the plaintiffs to
immediately vacate the same. Judgment on the amount of damages/expenses incurred in the NBI
examination is hereby deferred until after the reception of evidence on the same.

SO ORDERED.[8]

The private respondents filed a motion for reconsideration of the Resolution dated 29 December
1983, but the motion was denied. The private respondents then filed a Notice of Appeal dated 23
February 1984, but the trial court ruled that the notice of appeal could not be given due course,
owing to the fact that it had yet to rule on the petitioners claim for damages.[9] Trial then ensued
on the matter of damages. Morales testified in his behalf on his claim for damages on 5 April and
22 May 1984.

On 14 June 1984, the private respondents, through their new counsel, filed another motion for
reconsideration or for new trial, claiming that they were not made aware of the legal implications
or consequences of the Stipulation of Facts. They likewise alleged therein that at the time they
entered into the Stipulation of Facts, they had not known that there were government offices
other than the NBI which could render persuasive findings over the questioned signatures, and
that based on this misperception, they imprudently agreed to place full reliance on the NBIs
findings.

On 17 May 1985, the trial court issued an Order resolving the latest motion for reconsideration
filed by the private respondents. The trial court found convincing the argument that the private
respondents had placed all their hopes in the NBI when there was another government entity, the
PC Crime Laboratory, that could have similarly examined the questioned document. Thus, the
trial court found it prudent to allow a hearing for the NBI examiner to be cross-examined on his
findings, and thus set aside the Resolution dated 9 December 1983 which deemed the conclusive
these findings of the NBI conclusive. The fallo of the Order dated 17 May 1985 reads, thus:

ACCORDINGLY, the Resolution of December 9, 1983, as well as the Order dated February 17,
1984, are hereby set aside. Let the Questioned Documents Report No. 427-1182 be set for
hearing on June 13, 1985 at 8:30 a.m., and NBI supervising document examiner Arcadio A.
Ramos is hereby directed to appear on said date and hour of the hearing.[10]

As a result of this new Order, there were two issues left to be resolved by the trial court, namely:
the petitioners claim for damages, and the conclusiveness of the NBI report.

When it emerged that NBI document examiner Arcadio A. Ramos was on indefinite leave of
absence, the trial court directed the NBI to dispatch another document examiner who participated
or collaborated in the examination of the subject document. Accordingly, NBI Senior Document

296
Examiner Rhoda B. Flores appeared to testify before the trial court on three occasions, her
testimony terminating on the hearing of 6 April 1986. Her testimony affirmed the earlier finding
that the questioned signatures were valid.

Thereafter, the petitioners submitted their Offer of Documentary Evidence,[11] while the private
respondents filed a Motion for Examination of Documents seeking that the PC Crime Laboratory
be directed to examine the authenticity of the questioned signatures. In an Order dated 1 August
1986, the trial court allowed the private respondents to have the PC Crime Laboratory conduct its
own examination on the document, and set a hearing for 21 August 1986 during which the PC
Crime Laboratory expert was to examine the said document in open court.[12] The hearing was
reset to 11 September 1986 after the original hearing date was declared a special non-working
holiday.[13] However, when the case was called for hearing on 11 September 1986, the private
respondents moved for postponement on the ground that they had no witness from the PC Crime
Laboratory. Upon the strong objections of the petitioners, the motion for postponement was
denied, and the petitioners claim for damages/expenses was deemed submitted.[14] The private
respondents attempts to have this ruling reconsidered proved futile.

On 7 July 1987, petitioners filed a Motion for Resolution of Defendants Claim for
Damages/Expenses Deemed Submitted.[15] Therein, they cited the Resolution dated 29 December
1983, which declared them the lawful owners of the subject property based on the Stipulation of
Facts. But they did not mention therein that the Resolution was subsequently set aside by the
Order dated 17 May 1985. Proceeding from the directive in the earlier Resolution which deferred
pending litigation the judgment on the amount of damages/expenses incurred in the NBI
examination, the petitioners narrated the trial that was subsequently conducted up to that point.
Without any reference to the fact that the trial court had subsequently reopened as an issue the
correctness of the NBI report, and that hearings were conducted precisely on that question, the
petitioners in their motion simply prayed that their claims for damages/expenses incurred in the
NBI examination be resolved.

Fortuitously perhaps, the judge who had presided over the trial of the case, Hon. Avelino
Constantino, died on 13 October 1986 and was replaced by Hon. Adriano R. Osorio. On 13 July
1987, the trial court issued a Resolution,[16] resolving the claim of the petitioners for damages. As
with the petitioners, the new trial judge adverted to the 29 December 1983 Resolution which
declared the petitioners as the owners of the subject properties and ordered the plaintiffs to
immediately vacate the same, but did not mention the fact that the said Resolution was set aside
in the Order dated 17 May 1985. The trial court passed upon the claims for damages, which
included attorneys fees, moral damages, and exemplary damages, and concluded that the
petitioners were entitled to moral damages in the amount of Twenty Thousand Pesos
(P20,000.00) and Five Thousand Pesos (P5,000.00) as attorneys fees. The trial court did not
render a conclusion on, much less even make mention of, the NBI Report and the testimony of
NBI Senior Document Examiner Rhoda B. Flores.

Their motion for reconsideration having been denied by the trial court,[17] private respondents
lodged an appeal before the Court of Appeals. They assigned twelve errors, among them being
that the trial court, in rendering its assailed Resolution dated 13 July 1987, erred in relying upon

297
the Resolution dated 29 December 1983 despite the fact that the latter had already been
previously set aside and never expressly or impliedly revived.[18]

The assailed Decision[19] of the Court of Appeals was rendered on 29 July 1993. The first four
pages of the five page Decision was devoted to a restatement of the antecedent facts, with the
opinion including the dispositive portion, confined to the last five paragraphs. We quote the
opinion and disposition, thus:

In their brief, plaintiff-appellants have assigned (12) errors imputed to the lower court. However,
the decisive issue is whether or not the signatures of the plaintiffs in the Deed of Extrajudicial
Settlement with Sale, dated March 17, 1980, are genuine.

We resolve the issue against appellants. National Bureau of Investigation expert (sic) opined that
the signatures were genuine. Appellants failed to present any evidence showing otherwise. In this
appeal, appellants contend that they were deceived into signing the stipulation of facts in which
they agreed to submit the deed of extrajudicial settlement with sale to the National Bureau of
Investigation for examination to determine the genuineness of the signatures of the appellants.
But appellants were duly assisted by their own counsel in subscribing to the stipulation of facts,
and even if the stipulation were set aside, it will not benefit the appellants because they have not
adduced any evidence showing that their signatures thereon were forged. Allegation is not proof.

With the finding that the extrajudicial settlement with sale is authentic, it is unnecessary for the
Court to rule on the other issues raised by the appellants. However, we find the award of moral
damages in the sum of P20,000.00 to be untenable. There is no basis for the award of moral
damages, nor for attorneys fee.

The Court also sustains appellants (sic) contention that the resolution of December 29, 1983,
declaring that defendants are the lawful owners of the subject property set aside in the order
dated May 17, 1985, was not revived, expressly or impliedly, by the resolution dated July 13,
1987.

IN VIEW WHEREOF, the Court SETS ASIDE the appealed resolution. No costs.

SO ORDERED.[20]

Both parties filed their respective motions for reconsideration of the Court of Appeals Decision.
For its part, the petitioners argued that following the appellate courts conclusion that they were
the owners and rightful possessors of the property in question, there was a need to state such
facts in the dispositive portion of its Decision and cause the private respondents to vacate the
property. They posited that the general prayer in their counterclaim that such other reliefs as are
just and equitable be granted is broad and comprehensive enough to warrant a declaration in the
fallo that the private respondents be ordered to vacate the property. They argued that the trial
court impliedly revived the Resolution dated 29 December 1983 in its subsequent ruling on 13
July 1987.

298
These were jointly disposed of by the Court of Appeals in a Resolution dated 4 October 1993.
The claims of the private respondents were definitively rejected by the Court of Appeals.
Likewise denied was petitioners motion for clarification and/or reconsideration, although the
appellate court again stated that they were the owners of the property. At the same time, the
Court of Appeals declared that it cannot order the ejectment of the private respondents, as there
was no counterclaim for recovery of possession; hence, there was a need to institute a separate
civil action for eviction.[21]

Still unsatisfied, the petitioners filed the present Petition, praying that the dispositive portion of
the appellate courts Decision be clarified or corrected by inserting a declaration that the
petitioners are the owners of the property described in the complaint [and] ordering the private
respondents and their tenants to vacate the property.[22] They argue that the Court of Appeals
erred in declaring that the summary judgment of 29 December 1983 was not revived expressly or
impliedly, pointing out that had this been the case, there would be no basis for the subsequent
award of attorneys fees in their favor.[23] They fault the appellate court in ruling that there was
need to file a separate civil action to pursue the relief of ejectment, noting that paragraph 5 of the
Stipulation of Facts provides that the private respondents would immediately vacate the premises
should the NBI find that their signatures in the deed of sale were valid. They likewise cite
jurisprudence to the effect that if ownership over a parcel of land is decreed in the judgment, the
delivery of possession should be considered included in the decision.[24] Finally, the petitioners
also invoke previous rulings of this Court that corrections may be made in the dispositive portion
of a decision to correct or clarify an ambiguity.[25] Notably, the petitioners do not question the
denial of their claim for damages by the Court of Appeals; hence, we shall not pass upon the
matter.

Apparently, for its cause, the private respondents have chosen not to challenge the rulings of the
Court of Appeals, as in fact in their Comment before this Court, they pray for the affirmance of
its Decision. Nonetheless, they still pray on their Comment that further judgment rendered
declaring the Extrajudicial Settlement with Sale as void ab initio, or alternatively, the Stipulation
of Facts and the NBI Report void and ordering the trial court to conduct full trial on the
merits.[26]

Ostensibly, the heart of the matter lies in whether or not the Deed of Extrajudicial Settlement
with Sale is valid. And on this score, there is little doubt that its legitimacy had been duly
established. The burden was on the private respondents to impugn the genuineness of their
signatures on the document which having been notarized is imbued with the character of a public
document;[27] yet they were unable to present a single shred of countervailing evidence.
Moreover, the validity of the Deed of Extrajudicial Settlement with Sale has been strengthened
by the findings of the NBI that the signatures of the private respondents were genuine, findings
with which the private respondents themselves agreed to abide pursuant to the Stipulation of
Facts.

Yet the Court cannot lightly dismiss the effect of the 17 May 1985 Resolution which set aside the
Resolution of 9 December 1983 and the Order dated 17 February 1984. It was the earlier
resolution which upheld the Deed of Extrajudicial Settlement by affirming the authenticity of the
signatures therein, and accordingly incorporated a partial judgment declaring the petitioners as

299
the owners of the subject properties and ordering the private respondents to vacate the same. The
trial court did not reinstate this partial judgment in any of its succeeding promulgations. In its
Resolution of 13 July 1987, which granted petitioners claim for damages, the RTC adverted to
the 1983 Resolution yet failed to mention that the said earlier resolution had been subsequently
set aside. The RTC again failed to disclose the previous vacation of the 1983 Resolution, in the 5
October 1987 Order denying private respondents motion for reconsideration of the 13 July 1987
Resolution. It is unclear whether such omission was purposeful or unintentional, though it bears
noting that the judge who issued the 1987 rulings, Hon. Adriano R. Osorio, was not yet the
presiding judge when the 1985 Order was issued.

Nor did the Court of Appeals see it fit to reinstate the 1983 Order. In its Decision dated 29 July
1993, it expressly declared that the 1983 Order set aside in 1985 was not revived, expressly or
impliedly, by the resolution dated July 13, 1987.[28] Yet the appellate court declared that the
petitioners were indeed the owners of the subject property. The efficacy of this latter declaration
is put in doubt because there is no subsisting court order or resolution with a disposition towards
that effect.[29] Only the 1983 Resolution embodied a partial judgment declaring that the
petitioners were the owners of the subject property and ordering the private respondents to vacate
it. But of course, said adjudication was set aside in the 1985 Order.

The importance of the fallo or dispository portion of a decision cannot be gainsaid. The
disposition should state whether the complaint or petition is granted or denied, the specific relief
granted, and the costs.[30] As of 13 July 1987 when the Resolution of even date was issued, the
question of ownership of the subject property remained unresolved as a result of the vacation of
the 1983 Resolution embodying the partial judgment. Yet the 13 July 1987 Resolution failed to
rule upon this question of ownership, and its fallo was limited to the adjudication of damages.[31]
The 05 October 1987 Order denying private respondents motion for reconsideration is similarly
deficient.

Thus, viewed from the narrow lens of procedure, the 17 May 1985 Order still stands, it never
having been expressly annulled either by the RTC or by the Court of Appeals. Yet at the same
time, both the RTC and the Court of Appeals made the indubitable pronouncements that the
Extrajudicial Settlement with Sale is valid and that the petitioners are the owners of the subject
property. In fact, it is very clear that the RTC, in ruling on the question of damages, precisely
proceeded from that premise. To quote from the 1987 Resolution:

The Court is of the opinion that since the case was decided upon the stipulation of facts
submitted by the parties and a summary judgment was rendered, the sum of P5,000.00 by
way of attorneys fees is fair and reasonable under the circumstances.[32]

Sadly, the RTC forgot that the earlier partial or summary judgment rendered had been vacated by
the 1985 Order. That in incorporating in the dispositive portion of their respective issuances the
appropriate terminology for now, the pertinent query is this: Given that both the RTC and the
Court of Appeals concluded that the Extrajudicial Settlement with Sale is valid but they
overlooked bestowing executory force to such conclusion, is it legally feasible for this Court to
rectify such lapse and provide for a dispositive portion that will serve as the basis for the
recognition and enforcement of petitioners ownership rights?

300
The higher ends of our rules of procedure are to secure just, speedy and inexpensive disposition
of every action and proceeding.[33] To hold the myopic view that the petitioners are precluded
from exercising their established rights of ownership over the property due to the absence of an
executory fallo to that effect, or that this Court is not empowered to provide the appropriate relief
towards that end, would frustrate the ends of justice. The Court can and should correct the
anomaly here and now.

There are several circumstances in the case at bar that warrant a liberal application of the
procedural rules. All things considered, there should really be no impediment to declaring the
Extrajudicial Settlement with Sale valid.

The 1985 Order setting aside the 1983 Resolution containing the partial judgment is of dubious
legal basis. The cited ground of mistaken impression on the part of the private respondents on the
effect of the pre-trial order and the Stipulation of Facts was not substantiated and hardly
warranted the reversal of a resolution that had attained finality nearly two years earlier.

While the petitioners may be faulted for not timely challenging the 1985 Order,[34] the RTC
could have easily reinstated the 1983 Resolution after 11 September 1986, when it was clear
even to the RTC the abject failure of the private respondents to present evidence to rebut the NBI
Report despite ample opportunity. Unfortunately, the RTC compounded its earlier error in
issuing the 1985 Order by failing to either reinstate the 1983 Resolution, or by issuing a new
ruling expressly declaring the Extrajudicial Settlement with Sale, instead of simply referring to
the Stipulation of Facts and the summary judgment based thereon, when it issued its 1987
Resolution on the question of damages.

The question of validity of the Extrajudicial Settlement with Sale was duly raised before the
Court of Appeals; in fact it was posed by the respondents as the central issue in their appeal.[35]
The propriety and status of the 1983 and 1985 rulings of the RTC were open to the Court of
Appeals for review and correction, if necessary, the trial court having lost jurisdiction over the
case upon its elevation on appeal.[36] The appellate court clearly agreed that the validity of the
Extrajudicial Settlement with Sale had been established, but unfortunately failed to include the
corresponding disposition in the fallo that would have given executory force to the
pronouncement.

The Court of Appeals, in its Resolution on the motions for reconsideration, alluded to a viable
avenue for such relief when it correctly noted that the 1985 Order did not annul the Stipulation
of Facts but only the rulings based thereon. This Court can very well affirm the subsisting
Stipulation of Facts, and on the strength thereof and the corresponding evidence presented by the
parties, uphold the genuineness of the Extrajudicial Settlement with Sale and the ownership of
the petitioners over the subject property. Any and all rulings of the RTC and the Court of
Appeals that are inconsistent with this pronouncement are set aside.

In line with the unequivocal affirmance of the petitioners ownership over the subject property,
we have to sustain petitioners position that an order of eviction against the private respondents is
warranted. It is established case law that where ownership of a parcel of land is decreed in the
judgment the delivery of possession should be deemed ordained in the judgment.[37] Indeed, a

301
decision upholding ownership but denying possession to the prevailing party is starkly
incomplete and particularly in this case, even unpardonably empty in view of the considerable
length of time that the matter has remained unresolved.

Finally, the petitioners failure to explicitly present a counterclaim for recovery of possession, a
point relied upon by the appellate court, is hardly of any consequence. For one thing, the prayer
in the counterclaim seeking other remedies just and equitable under the premises is broad and
comprehensive enough, according to jurisprudence, to justify the extension of a remedy different
from that requested.[38] Indeed, a court may grant relief to a party, even if the party awarded did
not pray for it in his pleadings.[39] For another, since private respondents undertook in the
Stipulation of Facts to recognize the ownership of the petitioners and immediately vacate the
subject property, together with the tenants, should the genuineness of the signatures in the Deed
of Extrajudicial Settlement With Sale be upheld, which has become the case, and since the
Stipulation of Facts has not been set aside, it is perfectly appropriate for the Court to affirm the
petitioners ownership and to order the private respondents eviction from the subject property.
The appellate courts suggestion that the petitioners institute a new, separate action to recover
possession of the subject property is inconsistent with the foregoing considerations and
contravenes the avowed policy to achieve just, speedy and inexpensive resolution of cases.[40]

WHEREFORE, the Petition is GRANTED. Judgment is hereby rendered declaring the

petitioners to be the lawful owners of the subject property and ordering the private respondents
and all persons claiming under them to vacate the same. Costs against private respondents.

SO ORDERED.

Puno, (Chairman), Austria-Martinez, Callejo, Sr., and Chico-Nazario, JJ., concur.

[1] Consisting of a house and apartment. Rollo, p. 36.

[2] Now Valenzuela City.

[3] Namely Milagros Oliva-Obuyes, Antonia Oliva-Oleo, Danilo Oliva and Roberto Oliva.

[4] Rollo, p. 37.

[5] Rollo, pp. 21-22.

[6] RTC Records, pp. 142-147.

[7] Penned by Judge Avelino M. Constantino.

302
[8] RTC Records, pp. 156-157.

In an Order dated 6 March 1984. A motion for reconsideration thereto was denied in an Order
[9]
dated 24 March 1984.

[10] RTC Records, p. 286.

[11] Admitted by the trial court in an Order dated 15 July 1986. Id. at 339.

[12] Id. at 342.

[13] Id. at 345 & 356.

[14] Id. at 359.

[15] Id. at 379-384.

[16] Id. at 386-389.

[17] In an Order dated 5 October 1987. Id. at 406-407.

[18] Brief for the Appellants, CA Records, p. 14.

Penned by Justice (later Justice of this Court) B. Pardo, concurred in by Justices M. Herrera
[19]
and R. Ordoez-Benitez. Rollo, pp. 20-25.

[20] Rollo, p. 24.

[21] Rollo, p. 28.

[22] Rollo, p. 14.

[23] Id. at 10.

[24] Id. at 11.

Id. at 12-13 citing Partosa-Jo v. Court of Appeals, 216 SCRA 692, 696-697 and Republic
[25]
Surety v. IAC, 152 SCRA 309, 316-317.

[26] Id. at 114.

See, e.g., Naguiat v. Court of Appeals, G.R. No. 118375, 03 October 2003, 412 SCRA 591,
[27]
596-597.

[28] Rollo, p. 24.

303
[29] Id. at 28.

[30] Velarde v. Social Justice Society, G.R. No. 159357, 28 April 2004, 428 SCRA 283, 313.

[31]WHEREFORE, judgment is hereby rendered against the plaintiffs jointly and severally in
favor of the defendant-spouses Jesus D. Morales and Carolina Nuqui, condemning the plaintiffs
to pay the defendant-spouses the amount of TWENTY THOUSAND PESOS (P20,000.00) as
moral damages and the further sum of FIVE THOUSAND PESOS (P5,000.00) in the concept of
reasonable attorneys fees and the costs of suit. RTC Records, pp. 388-389.

[32] RTC Records, p. 388, emphasis supplied.

[33] See Section 6, Rule 1, 1997 Rules of Civil Procedure.

[34]The 1985 Order could have been assailed via the special civil action of certiorari. See Section
1, Rule 65, 1964 Rules of Civil Procedure.

[35] CA Records, p. 25.

See Section 9, Rule 41, 1964 Rules of Procedure, then in force. See also Lirio v. Court of
[36]
Appeals, G.R. No. 90462, 29 May 1992, 209 SCRA 424. The same principle is reiterated in
Section 9, Rule 41 of the 1997 Rules of Civil Procedure.

See Perez and Alcantara v. Evite and Manigbas, 111 Phil. 564, 567-568 (1961) citing Marcelo
[37]
v. Mencias, 107 Phil. 1071.

[38] See Schenker v. Gemperle, 116 Phil. 194, 199 (1962).

[39] The Court held in Go Lea Chu v. Gonzales, 130 Phil. 767, 776-777 (1968), as follows:

Besides, as we have declared in Schenker v. Gemperle, L-16449, August 31, 1962: "A
judgment may grant the relief to which a party in whose favor it is entered is entitled, even if the
party has not demanded such relief in his pleadings." Long ago, this Court, in Shioji vs. Harvey,
43 Phil. 333, 344, ruled: "Independent of any statutory provision, we assert that every court has
inherent power to do all things reasonably necessary for the administration of justice within the
scope of its jurisdiction."

Indeed, to deprive a court of power to give substantial justice is to render the

administration thereof impotent and ineffectual.

See also Philipp Brothers Oceanic v. Court of Appeals, G.R. No. 105416-17, 111863,
143715, 25 June 2003, 404 SCRA 605.

[40] See Section 6, Rule 1, 1997 Rules of Civil Procedure.

304
 Republic of the Philippines
Supreme Court
Manila

THIRD DIVISION

MARIANO RIVERA and G.R. No. 156249

JOSE RIVERA,

Petitioners,

Present:

YNARES-SANTIAGO, J.,

- versus - Chairperson,

AUSTRIA-MARTINEZ,

CALLEJO, SR.,

CHICO-NAZARIO, and

On leave.

305
EMERITO AQUINO TURIANO NACHURA, JJ.

and REGISTER OF DEEDS

OF PARAAQUE CITY,

METRO MANILA, Promulgated:

Respondents. March 7, 2007

x----------------------------------------x

DECISION

AUSTRIA-MARTINEZ, J.:

Before the Court is a Petition for Review on Certiorari under Rule 45 of the
Rules of Court questioning the Decision133 dated September 28, 2001
promulgated by the Court of Appeals (CA) in CA-G.R. CV No. 59070, which
reversed the Decision dated February 2, 1997 of the Regional Trial Court (RTC),
Branch 258, Paraaque City, docketed as LRC Case No. 94-0053; and the CA

133 Penned by Associate Justice Ruben T. Reyes (now Presiding Justice), with Associate
Justices Mercedes Gozo-Dadole (now retired) and Juan Q. Enriquez, Jr., concurring; CA
rollo, pp. 52-61.

306
Resolution134 dated November 21, 2002 which denied the petitioners Motion for
Reconsideration.

This case originated from a Complaint for Cancellation of Encumbrance on

Transfer Certificate of Title No. S-5667 with Claim for Damages filed by Mariano
Rivera and Jose Rivera (petitioners) against Emerito Aquino Turiano (private
respondent).

The facts of the case, as found by the RTC and summarized by the CA, are
as follows:

In dispute is a parcel of land situated in San Dionisio, Paraaque City containing

an area of one thousand (1000) square meters and covered by TCT No. S-5667. The
property is registered in the name of Paz Aquino, [private respondents] mother.
[Petitioner] Mariano Rivera is a businessman engaged in gasoline business.

It appears that a certain Manuel Pelaez obtained a loan from [petitioner]

Mariano Rivera in the amount of two hundred forty thousand pesos (P240,000.00) on
February 18, 1987 (Exh. C). The loan is payable within a period of fifteen days, subject to
renewal. As security for the loan, a Deed of Real Estate Mortgage was executed by
Manuel Pelaez over the subject property on the strength of a Special Power of Attorney
allegedly executed by Paz Aquino on January 29, 1987 (Exh. D). The Special Power of
Attorney was not inscribed on the title. The owners duplicate copy was delivered to
[petitioner] Mariano Rivera by Manuel Pelaez.

134 Id. at 93.

307
 It was only in 1991 that [petitioner] Mariano tried to cause the registration of
the Deed of Mortgage before the Register of Deeds of Paraaque [when he] learned that
[private respondent] executed an affidavit of loss dated December 28, 1990 (Exh. 1) and
annotated135 on TCT No. S-5667, attesting to the fact of loss of the owners duplicate
copy of the said title. The Register of Deeds refused to cause the registration of the
Deed of Mortgage in view of the earlier inscription of the affidavit of loss.

Claiming that the affidavit of loss was maliciously and fraudulently executed,
[petitioners] instituted the present action.

Upon the other hand, [private respondent] asserted that his mother, Paz
Aquino, owned a parcel of land covered by TCT No. S-5667. After her death on August
31, 1990, they searched for the title in order to pay the real estate taxes, but they failed
to find it. Hence, he executed an affidavit of loss. It was his mother [who] solely
administered her property during her lifetime. In 1986, his mother mortgaged the
property through Special Power of Attorney dated January 30, 1986 in favor of Solid
Management. It was duly annotated in the title under entry numbers 86-46234 (Exh. 2)
and No. 86-54648 (Exh. 2-B). The second mortgage was executed in favor of Agricultural
Feeds whereby his mother executed a Special Power of Attorney in favor of Commercial
Bank of Manila in an instrument dated May 2, 1986. It was annotated in the title under
entry Numbers 86-46226 (Exh. 2-A) and [no.] 86-54649 (Exh. 2-C).

[Private respondent] claimed that the signature appearing in the Special Power
of Attorney purportedly executed by one Paz Aquino in favor of Manuel Pelaez does not
belong to his mother because he is familiar with her signature.

The trial court in its Order, dated March 18, 1996, granted the motion of
plaintiff-appellee for partial summary judgment. The affidavit of loss which was
annotated on the back of the title was declared null and void.136

135 Under Entry No. 4938.

136 Rollo, pp. 6-9.

308
 On February 2, 1997, the RTC rendered its Decision, the dispositive portion
of which reads:

WHEREFORE, viewed in the light of the foregoing, the Register of Deeds of

Paraaque, Metro Manila is hereby ordered to cancel the annotation appearing under
Entry No. 4938137 on Transfer Certificate of Title No. S-5667 and that the Real Estate
Mortgage with the accompanying Special Power of Attorney entered into by the
plaintiffs and Attorney-In-Fact, Manuel Pelaez be registered and annotated at the back
of the aforesaid title after payment of its lawful fees.

No pronouncement as to costs.

SO ORDERED.138

The RTC held that the petitioners were able to show that the photocopy of
the Special Power of Attorney (Exhibits D and 3) amounted to secondary evidence
and that the said exhibit was positively identified by no less than Atty. Ramon N.
Nalipay, Jr., the one who notarized its duplicate original on January 29, 1987; that
as proof thereof he brought along with him a copy of his notarial register for 1987
showing therein the entry under Doc. No. 425, Page No. 86, Book No. 3; that his
testimony was not tainted by any cloud of suspicion; that the petitioners are
mortgagees in good faith; that the private respondent merely submitted self-
serving and uncorroborated allegations that the Special Power of Attorney
executed by Paz Aquino in favor of Manuel Pelaez is a forgery; that while the

137 Affidavit of Loss.

138 Rollo, p. 54.

309
signatures of Paz Aquino as they appear on the Contract of Lease and Deed of
Absolute Sale documents proffered by private respondent for purposes of
comparison reveal through naked eyes the differences in the signatures, this fact
alone, however, is not sufficient to sustain the defense that the signature
appearing in the Special Power of Attorney is a forgery; that the mere variance of
the signatures cannot be considered as conclusive proof of forgery; that forgery
should be proved by clear and convincing evidence and whoever alleges it has the
burden of proving the same; that it is necessary to determine whether the
variation is due to the operation of a different personality or is only an inevitable
variation in the genuine writing of the same writer; and that it is also necessary to
decide whether the resemblance is the result of skillful imitation or habitual and
characteristic resemblance which naturally appears in genuine writing.

Private respondent appealed to the CA. On September 28, 2001, the CA

rendered the herein assailed Decision, the dispositive portion of which reads:

WHEREFORE, the appealed judgment is REVERSED and a new one is entered:

(a) Dismissing the petition.

(b) Declaring null and void the Special Power of Attorney in favor of Manuel
Pelaez and the Deed of Mortgage executed by Manuel Pelaez in favor of
[petitioners] Mariano and Jose Rivera.

(c) Ordering the Register of Deeds of Paraaque to cancel the annotations

appearing on TCT No. S-5667 under Entry numbers 6984 on the Special
Power of Attorney executed in favor of Manuel Pelaez and 6985 [sic] or

310
 the Deed of Mortgage executed by Manuel Pelaez in favor of [the
petitioners].

(d) Ordering [petitioners] to surrender possession of the original owners

duplicate copy of TCT No. S-5667 to [private respondent].

SO ORDERED.139

The CA held that the differences in the signature of Paz Aquino on the
Special Power of Attorney as compared to her signatures on the Contract of Lease
(Exhibit 4) and Deed of Absolute Sale (Exhibit 5) are clearly discernible through
the naked eye, and, hence, the Special Power of Attorney is a forgery; that it is
not necessary for handwriting experts to testify as to the authenticity of the
signature because the question of forgery is not a highly technical issue; and, in
view of these reasons, the mortgage allegedly executed by Manuel Pelaez in favor
of the petitioners is void.

On November 21, 2002, the CA denied petitioners Motion for

Reconsideration.

The petitioners are now before this Court with the following assignment of
errors:

139 Id. at 14-15.

311
 (A) THE HONORABLE COURT OF APPEALS ERRED IN DECLARING NULL AND VOID
THE SPECIAL POWER OF ATTORNEY EXECUTED BY PAZ AQUINO IN FAVOR OF
MANUEL PELAEZ, AND THE DEED OF MORTGAGE EXECUTED BY MANUEL PELAEZ
IN FAVOR OF PETITIONERS MARIANO RIVERA AND JOSE RIVERA;

(B) THE HONORABLE COURT OF APPEALS ERRED IN ORDERING THE CANCELLATION

OF ANNOTATION ON TCT NO. S-5667 UNDER ENTRY 6984 ON THE SPECIAL
POWER OF ATTORNEY EXECUTED BY PAZ AQUINO IN FAVOR OF MANUEL
PELAEZ, AND UNDER ENTRY NO. 6985 ON THE DEED OF MORTGAGE EXECUTED
BY MANUEL PELAEZ IN FAVOR OF PETITIONERS MARIANO RIVERA AND JOSE
RIVERA;

(C) THE HONORABLE COURT OF APPEALS ERRED IN ORDERING PETITIONERS

MARIANO RIVERA AND JOSE RIVERA TO SURRENDER POSSESSION OF THE
ORIGINAL OWNERS DUPLICATE COPY OF TCT NO. S-5667 TO PRIVATE
RESPONDENT EMERITO AQUINO TURIANO.140

The Court grants the petition.

The principal question is whether the signature of the vendor, Paz Aquino,
is a forgery, the resolution of which lays to rest all the other issues.

While the CA held that the differences in the signatures of Paz Aquino and
that of the questioned document are clearly discernible through a mere ocular
inspection, this observation, by itself, is no good reason to conclude that the
document is forged.

140 Id. at 101-102.

312
 This Court has held that an allegation of forgery and a perfunctory
comparison of the signatures by themselves cannot support the claim of forgery,
as forgery cannot be presumed and must be proved by clear, positive and
convincing evidence, and the burden of proof lies in the party alleging forgery.141
Even in cases where the alleged forged signature was compared to samples of
genuine signatures to show its variance therefrom, this Court still found such
evidence insufficient.142 It must be stressed that the mere variance of the
signatures cannot be considered as conclusive proof that the same were
forged.143

To determine forgery, the Court in Ladignon v. Court of Appeals144 laid

down the following criteria:

The process of identification, therefore, must include the determination of the

extent, kind, and significance of this resemblance as well as of the variation. It then
becomes necessary to determine whether the variation is due to the operation of a
different personality, or is only the expected and inevitable variation found in the
genuine writing of the same writer. It is also necessary to decide whether the
resemblance is the result of a more or less skillful imitation, or is the habitual and

141 JN Development Corporation v. Philippine Export and Foreign Loan Guarantee

Corporation, G.R. No. 151060 and Cruz v. Philippine Export and Foreign Loan
Guarantee Corporation, G.R. No. 151311, August 31, 2005, 468 SCRA 555, 569-570.

142 Id. at 570; citing Ladignon v. Court of Appeals, 390 Phil. 1161, 1170 (2000).

143 Id.; citing Veloso v. Court of Appeals, 329 Phil. 398, 406 (1996).

144 Ladignon v. Court of Appeals, supra note 10.

313
 characteristic resemblance which naturally appears in a genuine writing. When these
two questions are correctly answered the whole problem of identification is solved.145

In the instant case, the foregoing criteria were not met. Private respondent
failed to discharge his burden of proof. He failed to demonstrate that the
signature of Paz Aquino on the Special Power of Attorney is a forgery.

In his attempt to prove the forgery, private respondent made a comparison

of the signatures of Paz Aquino by proffering the Contract of Lease dated August
16, 1982 (Exhibit 4) executed between Paz Aquino and Calixto Morandarte, the
Deed of Absolute Sale dated June 13, 1972 (Exhibit 5) executed between Paz
Aquino and herein private respondent, and the subject Special Power of Attorney
dated January 29, 1987 (Exhibit D; Exhibit 3).

While it is true that the testimonies of handwriting experts are not

necessary, however, pursuant to the criteria enunciated in Ladignon, the private
respondent must not only show material differences between or among the
signatures. In addition, (1) he must demonstrate the extent, kind, and significance
of the variation; (2) he must prove that the variation is due to the operation of a
different personality and not merely an expected and inevitable variation found in
the genuine writing of the same writer; and (3) he must show that the

145 Id. at 1171; citing Cesar v. Sandiganbayan, G.R. Nos. L-54719-50, January 17, 1985,
134 SCRA 105, 127.

314
resemblance is a result of a more or less skillful imitation and not merely a
habitual and characteristic resemblance which naturally appears in a genuine
writing.

The private respondent, at best, was only able to show the variance of the
signatures of Paz Aquino. The Court must point out that the dates of the
foregoing instruments purportedly signed by Paz Aquino, i.e., 1972, 1982, and
1987, are considerably so spaced apart to possibly account for the variance of the
signatures to be expected and inevitable due to the passage of time.

As stated, to prove forgery, a perfunctory comparison of the signatures by

themselves is not enough, as forgery cannot be presumed and must be proved by
clear, positive, and convincing evidence in accordance with the standards in
Ladignon, among other cases. Without such demonstration, the CA committed a
serious error in concluding that fraud had been perpetrated.

WHEREFORE, the petition is GRANTED. The Decision and Resolution of the

Court of Appeals are REVERSED and SET ASIDE. The Decision of the Regional Trial
Court is AFFIRMED.

No pronouncement as to costs.

315
SO ORDERED.

MA. ALICIA AUSTRIA-MARTINEZ

Associate Justice

WE CONCUR:

CONSUELO YNARES-SANTIAGO

Associate Justice

Chairperson

316
(On leave)

ROMEO J. CALLEJO, SR. MINITA V. CHICO-NAZARIO

Associate Justice Associate Justice

ANTONIO EDUARDO B. NACHURA

Associate Justice

ATTESTATION

I attest that the conclusions in the above Decision had been reached in
consultation before the case was assigned to the writer of the opinion of the
Courts Division.

317
 CONSUELO YNARES-SANTIAGO

Associate Justice

Chairperson, Third Division

CERTIFICATION

Pursuant to Section 13, Article VIII of the Constitution, and the Division
Chairpersons Attestation, it is hereby certified that the conclusions in the above
Decision had been reached in consultation before the case was assigned to the
writer of the opinion of the Courts Division.

REYNATO S. PUNO

Chief Justice

318
 FIRST DIVISION

[G.R. No. 122973. July 18, 2000]

DIONISIO C. LADIGNON, petitioner, vs. COURT OF APPEALS and

LUZVIMINDA C. DIMAUN, respondents.

DECISION

YNARES-SANTIAGO, J.:

The instant Petition for Review seeks to set aside the December 11, 1995 Decision of
respondent Court of Appeals in CA-G.R. CV No. 38183 which reversed the May 20,
1992 Decision of the Regional Trial Court of Quezon City, Branch 85 in Civil Case No.
Q-90-5871.

The case originates from a Complaint for Declaration of Nullity of Conveyance and
Recovery of Possession and Damages,146 filed on May 12, 1990 by private respondent
against petitioner, Richard C. Tong, Jose Porciuncula, Jr. and Litogo Company, Inc. In
the Complaint, private respondent alleged that petitioner, a relative by affinity, offered
his services as lawyer to mediate between her and the relatives of her adoptive mother
with respect to inheritance she was expecting to receive from her adoptive parents.

Private respondent claimed that petitioner made her sign a Petition147 for the
reconstitution of Transfer Certificate of Title No. 240724, covering an eight hundred fifty
nine and seven/tenths (859.7) square meter parcel of land located in Talayan, Quezon
City, registered under her name and that of her adoptive mother, Ligaya Flores
Collantes. Said Petition was, however, dismissed on August 28, 1989 for her failure to
appear at the scheduled hearing. Private respondent claims that she did not know of
such dismissal, neither of the fact that Transfer Certificate of Title No. 240724 was
superseded by Transfer Certificate of Title No. 383675 of the Registry of Deeds of
Quezon City, in her name alone.

Attached to private respondents Complaint was a copy of a Deed of Absolute Sale

which appears to have been executed by her as vendor and by Litoco Co., Inc.,
represented by its President, Richard Tong, as vendee. Subject of the said sale was the
Talayan property. Under the terms of the Deed, the purchase price of the sale was
P800,000.00, receipt of which was therein specifically acknowledged by the vendor. The
Deed, dated May 12, 1989, was duly notarized in Manila on the same date as

146 Rollo, pp. 1-25, filed on March 6, 1989.

147 Exhibit "B", Complaint, Civil Case No. Q90-5871; Rollo, pp. 10-16.

319
Document No. 267, Page No. 55, Book No. VI, Series of 1989 of the notarial books of
Notary Public Elsa R. Reblora.

Private respondent denied having received the purchase price therefor, nor having
signed the same, insisting that her alleged signatures thereon are falsified or forged.
Thus, she prayed for the declaration of nullity of the said Deed of Absolute Sale and for
the defendants therein to be ordered to surrender possession of the lot covered thereby
as well as the owners duplicate copy of TCT No. 38365. Private respondent also sought
P50,000.00 in moral damages, P30,000.00 as attorneys fees, exemplary and nominal
damages, litigation expenses and costs of suit.

During pre-trial, the parties agreed to limit the issues to the following

"1.....Whether the signatures of plaintiff on the Deed of Absolute Sale

(Exhibit "F") conveying the inherited property to defendants are
forged/falsified or not;

2.....Whether the failure of plaintiff to reconstitute TCT No. 240724

covering the property subject matter hereof affects the issuance of TCT
No. 383675 or not;

3.....Whether defendants should be held liable for damages to plaintiff for

their wanton acts of depriving plaintiff of her inherited property."148

The trial court found the evidence submitted by private respondent as insufficient to
overturn the public document sought to be annulled. Thus, a Decision was rendered on
May 20, 1992, in favor of petitioner, to wit

"WHEREFORE, in the light of the foregoing, judgment is hereby rendered

DISMISSING the complaint and, on the counterclaim, ordering the plaintiff
to pay defendant Dionisio Ladignon the sum of P50,000.00 by way of
moral and exemplary damages, and P25,000.00 as attorneys fees, plus
costs.

The crossclaim of defendant Litogo Company, Inc. and Richard Tong

against defendant Dionisio Ladignon is likewise DISMISSED.

SO ORDERED."149

Private respondent appealed the decision to the Court of Appeals which reversed the
trial courts decision dated May 20, 1992. In reversing the said judgment, respondent

148 Pre-Trial Order, Civil Case No. Q-90-5871, p. 3; Rollo, p. 154.

149 Decision, Civil Case No. Q-90-5871, p. 13; Rollo, p. 81.

320
Court of Appeals relied on the following findings: First, that the authenticity of TCT No.
383675, which was the subject of the questioned deed, was highly questionable; and
second, that the private respondent was shown to have no participation in the
questioned deed of sale.

The dispositive portion of said Decision states:

"WHEREFORE, premises considered, the appeal is GRANTED being

meritorious. Judgment appealed from is hereby REVERSED and
judgment is hereby rendered as follows:

1).....The deed of sale of the Talayan property is declared NULL and

VOID. Consequently, the entry in what purports to be TCT No. 383675 re
said sale is also ANNULLED and CANCELLED;

2).....Ordering Ladignon to pay appellant Dimaun P50,000.00 by way of

moral damages; P30,000.00 by way of attorneys fees; and P30,000.00 by
way of exemplary damages;

3).....Ordering Litogo to surrender possession of the Talayan property to

appellant Dimaun;

4).....Ordering the Register of Deeds of Quezon City to cancel TCT No.

383675 which is hereby declared annulled and of no force and effect;

5).....Atty. Ladignon is ordered to return to Litogo Company the amount of

P2,063,280.00 with interest at 6% per annum from May 12, 1989 until fully
paid; and

6).....To pay the costs of suit.

SO ORDERED."150

Hence, the instant petition for review based on the following grounds:

"I

THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN GIVING

CREDENCE TO THE THEORY OF THE PRIVATE RESPONDENT
WHEN THERE IS NO EVIDENCE EVER ADDUCED TO SUBSTANTIATE
THE ASSEVERATION.

II

150 Decision, CA-G.R. CV No. 38183, pp. 13-14; Records, pp. 67-68.

321
 THE HONORABLE COURT OF APPEALS COMMITTED A GRAVE
ABUSE OF DISCRETION, TANTAMOUNT TO LACK OF JURISDICTION
WHEN IT DISREGARDED JURISPRUDENTIAL EDICTS ON
PRESUMPTIONS THAT PRIVATE TRANSACTIONS ARE FAIR AND
REGULAR AND THAT DOCUMENTS EXECUTED BY THE PARTIES
ARE VALID AND REGULAR.

III

THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN

REVERSING THE FACTUAL FINDINGS OF THE TRIAL COURT IN THE
ABSENCE OF ANY SHOWING THAT THE LOWER COURT ABUSED
ITS DISCRETION IN APPRECIATING THE EVIDENCE ADDUCED BY
THE PARTIES.

IV

THE HONORABLE COURT OF APPEALS COMMITTED A GRAVE

ABUSE OF DISCRETION TANTAMOUNT TO LACK OF JURISDICTION
WHEN IT ACCUSED PETITIONER OF COMMITTING AN INFRACTION
WHEN THE EVIDENCE ON RECORD DOES NOT SUPPORT THE
CONCLUSION AND NO LESS THAN THE PROSECUTORIAL ARM OF
THE GOVERNMENT DISMISSED THE COMPLAINT FILED BY THE
PRIVATE RESPONDENT FOR WANT OF PROBABLE CAUSE."151

It is evident that the instant Petition calls for a review of the facts of the case. On this
matter, well-settled is the rule that in the exercise of the power to review, the findings of
fact of the Court of Appeals are conclusive and binding on this Court. However, there
are recognized exceptions among which is when the factual findings of the trial court
and the appellate court are conflicting.152 The instant case falls within this exception and
we are thus constrained to examine the arguments presented by petitioner.

We note that the Deed of Absolute Sale being questioned is a public document, having
been notarized by Atty. Elsa R. Reblora who appeared on the witness stand to testify on
the due execution of the same.153

As a public document, the subject Deed of Absolute Sale had in its favor the
presumption of regularity, and to contradict the same, there must be evidence that is

151 Petition for Review, pp. 3-4; Records, pp. 11-12.

152American Express International, Inc. v. Court of Appeals, 308 SCRA 65, 69 (1999), citing
Security Bank & Trust Company v. Triumph Lumber and Construction Corporation, 301 SCRA
537 .

153 T.S.N., October 22, 1991, pp. 2-12.

322
clear, convincing and more than merely preponderant; otherwise the document should
be upheld.154

It is also worth stressing that private respondent claim that her signature on the subject
Deed of Absolute Sale is forged. As a rule, forgery cannot be presumed and must be
proved by clear, positive and convincing evidence and the burden of proof lies on the
party alleging forgery.155

Was the evidence presented by private respondent against the Deed of Absolute Sale
clear, convincing and more than merely preponderant to overcome both the
presumption of regularity attached to public documents and to meet the stringent
requirements to prove forgery?

Far from being clear and convincing, all private respondent had to offer by way of
evidence was her mere denial that she had signed the same. Such mere denial will not
suffice to overcome the positive value of the subject Deed, a notarized document.
Indeed, even in cases where the alleged forged signature was compared to samples of
genuine signatures to show its variance therefrom, this Court still found such evidence
insufficient, to wit --

"Petitioner contends that his signature on the power of attorney was

falsified. He also alleges that the same was not duly notarized for as
testified by Atty. Tubig himself, he did not sign thereon nor was it ever
recorded in his notarial register. To bolster his argument, petitioner had
presented checks, marriage certificate and his residence certificate to
prove his alleged genuine signature which when compared to the
signature in the power of attorney, showed some difference.

We found, however, that the basis presented by the petitioner was

inadequate to sustain his allegation of forgery. Mere variance of the
signatures cannot be considered as conclusive proof that the same were
forged. Forgery cannot be presumed (Tenio-Obsequio vs. Court of
Appeals, G.R. 107967, March 1, 1994). Petitioner, however, failed to
prove his allegation and simply relied on the apparent difference of the
signatures. His denial had not established that the signature on the power
of attorney was not his.

x x x............................x x x............................x x x

See Bernardo v. Court of Appeals, G.R. No. 107791, 12 May 2000, citing Spouses Caoili v.
154
Court of Appeals, G.R. No. 128325, 14 September 1999.

155 Heirs of Gregorio v. Court of Appeals, 300 SCRA 565, 574 (1998)

323
 Documents acknowledged before a notary public have the evidentiary
weight with respect to their due execution. The questioned power of
attorney and deed of sale, were notarized and therefore, presumed to be
valid and duly executed. Atty. Tubig denied having notarized the said
documents and alleged that his signature had also been falsified. He
presented samples of his signature to prove his contention. Forgery
should be proved by clear and convincing evidence and whoever alleges it
has the burden of proving the same. Just like the petitioner, witness Atty.
Tubig merely pointed out that his signature was different from that in the
power of attorney and deed of sale. There had never been an accurate
examination of the signature, even that of the petitioner. To determine
forgery, it was held in Cesar vs. Sandiganbayan (G.R. Nos. 54719-50, 17
January 1985, quoting Osborn, The Problem of Proof) that:

"The process of identification, therefore, must include the

determination of the extent, kind, and significance of this
resemblance as well as of the variation. It then becomes
necessary to determine whether the variation is due to the
operation of a different personality, or is only the expected
and inevitable variation found in the genuine writing of the
same writer. It is also necessary to decide whether the
resemblance is the result of a more or less skillful imitation,
or is the habitual and characteristic resemblance which
naturally appears in a genuine writing. When these two
questions are correctly answered the whole problem of
identification is solved."156

In American Express International, Inc. v. Court of Appeals,157 the means to prove

the genuineness of a handwriting were laid down, as follows --

"Licartes testimony likewise failed to demonstrate the existence of forgery.

He only stated that the cardholders denied having made the transactions
as they were allegedly not in the Philippines. Forgery cannot be deduced
therefrom. As stated in Tenio-Obsequio v. Court of Appeals (G.R. No.
107967, 1 March 1994, 230 SCRA 550), forgery cannot be presumed; it
must be proved by clear, positive and convincing evidence. In imputing
discrepancy in the signatures appearing in the charge forms and those
appearing on the credit cards as well as in its records, AMEXCO should
have conducted an examination of the signatures before the court (Sec.
22. How genuineness of handwriting proved. The handwriting of a person
may be proved by any witness who believes it to be the handwriting of

156 Veloso vs. Court of Appeals, 260 SCRA 593, 601-602 (1996)

157 See Note 7, at pp. 71-72.

324
 such person because he has seen the person write, or has seen writing
purporting to be his upon which the witness has acted or been charged,
and has thus acquired knowledge of the handwriting of such person.
Evidence respecting the handwriting may also be given by a comparison,
made by the witness or the court, with writings admitted or treated as
genuine by the party against whom the evidence is offered, or proved to
be genuine to the satisfaction of the judge [Rule 132, Rules of Court]). A
comparison of both the differences and similarities in the questioned
signatures should have been made to satisfy the demands of evidence.
Failing to introduce ample proof to substantiate its claim of forgery,
petitioners case has no leg to stand on."

In the case at bar, we cannot accept the claim of forgery where no comparison of
private respondents signatures was made, no witness (save for private respondent
herself) was presented to testify on the same, much less an expert witness called, and
all that was presented was private respondents testimony that her signature on the
questioned Deed was forged. Indeed, even when the evidence is conflicting, the public
document must still be upheld.158

Neither was private respondent able to prove that contrary to the recital in the
acknowledgment, she never appeared before the notary public and acknowledged the
deed to be her voluntary act, a burden which was hers to discharge.159 Instead, the
notary public even directly testified that private respondent had acknowledged to her
that she had the signed the questioned Deed, to wit

"Q:....Atty. Reblora, on May 12, 1989, you were the duly commissioned
Notary Public for the City of Manila, is that correct?

A:....Yes sir.

Q:....And do you know one of the defendants in this case Richard Tong?

A:....Yes sir.

Q:....And why do you know him?

A:....I know him because aside from the fact that he is holding office on the
same building that I work, on May 12, 1989, he together with or
accompanied by a woman who introduced herself as Luzviminda
Collantes, then asked me to notarize a deed of sale. (sic)

158 See R&B Insurance Corporation v. Court of Appeals, G.R. No. 108472, 9 October 1999.

159 See Aznar Brothers Realty Company v. Court of Appeals, G.R. No. 128102, 7 March 2000,
citing Daroy v. Abecia, 298 SCRA 239, 251 (1998)

325
Q:....I am showing to you a deed of sale, previously marked as Exh. 4 for
Ladignon and another deed of sale which was marked as Exh. F for the
plaintiff, will you please tell the Honorable Court, what is the relation of this
document to the document that you notarized on May 12, 1989?

A:....These are the same. This is the same deed of sale that I notarized on
that day.

Q:....And appearing at the end of the same are the signature, document
number 267, page no. 55, book no. 6, series of 1989 which is marked as
Exh. 4-Ladignon and Exh. F for the plaintiff is the document no. 267, page
no. 55, book 6, series of 1989, will you please state what are the relation
of these 2 documents as per numbers and identification of the same?

A:....These are the same and one sir.

Q:....Now, after presented (sic) to you this document for notarization, what
did you do when the same was presented to you?

A:....When they came to my office, I asked them if the parties to the

transaction were present.

Q:....Now, you asked the parties, were Luzviminda the plaintiff and
Richard Tong present at that time?

A:....Yes sir.

Q:....After you were satisfied of their presence, what did you do next in
relation to your job as a Notary Public?

A:....After that, I verified whether their signature on the deed of sale are
their signature. After verifying to be their signature (sic) and the same to
have been acknowledged by the same, I notarized the document.

Q:....When you said that you have verified, that these signatures
appearing on Exh. F for Ladignon are their signature, to whom are you
referring to?

A:....These parties namely: Richard Tong and Luzviminda Collantes.

Q:....And when you asked whether they are their signatures, did they
confirm the same?

326
 A:....Yes, they answered yes."160

All told, we find that private respondent, who has filed the Complaint for nullity of
conveyance below has not sufficiently met the burden of proof to sustain her case and
for such reason, we must reinstate the dismissal of her complaint as ordered by the
court a quo.

In upholding private respondents position, respondent Court of Appeals gave much

importance to the claim by private respondent that there was no valid reconstitution of
Transfer Certificate of Title No. 240724 upon which Transfer Certificate of Title No.
383675 (subject of the questioned Deed of Absolute Sale) was derived. Respondent
Court of Appeals posited that Transfer Certificate of Title No. 383675 was "highly
questionable for the simple reason that no basis for its issuance has been shown." And
as such, it went on to conclude that "no Deed of Sale between plaintiff-appellant
Dimaun and Litogo had ever been executed." Aside from being an obvious stretch of
reasoning, this conclusion finds no basis in the case before us, which is simply one for
nullity of conveyance. What is worse, in ordering the cancellation of Transfer Certificate
of Title No. 383675, respondent Court of Appeals acted without jurisdiction. After all, it is
hornbook law that a torrens title cannot be collaterally attacked. The issue of validity of a
torrens title, whether fraudulently issued or not, may be posed only in an action brought
to impugn or annul it. Unmistakable, and cannot be ignored, is the germane provision of
Section 48 of Presidential Decree No. 1529, that a certificate of title can never be the
subject of a collateral attack. It cannot be altered, modified, or cancelled except in a
direct proceeding instituted in accordance with law.161 Clearly, the action below for nullity
of conveyance is hardly the direct proceeding required by law to attack a Torrens
Certificate of Title.

WHEREFORE, the instant Petition for Review is hereby GRANTED. The challenged
Decision of the Court of Appeals is REVERSED and SET ASIDE. The Decision of the
Regional Trial Court of Quezon City, Branch 85, dismissing Civil Case No. Q-90-5871 is
REINSTATED in its totality. No pronouncement as to costs.

SO ORDERED.

Davide, Jr., C.J., (Chairman), Puno, Kapunan, and Pardo, JJ., concur.

160 T.S.N., October 22, 1991, pp. 3-4.

Pasay City & Republic Real Estate Corporation v. Court of Appeals, 299 SCRA 199 (1998);
161
Carreon v. Court of Appeals, G.R. No. 112041, 22 June 1998, citing Trinidad v. Intermediate
Appellate Court, 204 SCRA 524 (1991)

327
SECOND DIVISION

[G.R. No. 144103. August 31, 2005]

AGUEDA DE VERA-CRUZ, MARIO, EVANGELINE, EDRONEL, ANGELITO, TEODORO

JR. and FERNANDO, all surnamed DELA CRUZ, petitioners, vs. SABINA MIGUEL,
respondent.

DECISION

CHICO-NAZARIO, J.:

Assailed in a Petition for Review on Certiorari under Rule 45 of the Rules of Court is the
decision[1] of the Court of Appeals dated 12 July 2000 that reversed and set aside the decision of
the Regional Trial Court (RTC) of Cauayay, Isabela, Branch 20, in Civil Case No. 20-235, for
Recovery of Possession with Damages, ordering respondent Sabina Miguel to vacate the land,
subject matter of this case, to remove her house and/or whatever improvements she introduced
thereon, to pay rent, and to pay costs of suit.

Petitioners Agueda de Vera-Cruz, Mario, Evangeline, Edronel, Angelito, Teodoro, Jr., and
Fernando, all surnamed Dela Cruz, are the registered owners of a parcel of land situated at the
Municipality of San Mateo, Isabela, described as Lot 7035-A-8-B-5 containing an area of 17,796
square meters covered by Transfer Certificate of Title (TCT) No. T-70778 of the Registry of
Deeds of Isabela which was issued on 17 January 1974.[2]

The origin[3] of Lot 7035-A-8-B-5 is as follows:

Lot 7035-A-8-B-5 is a subdivided portion of Lot 7035-A which was formerly part of a
homestead applied for in 1921 by Angel Madrid over lands situated in Santiago, Isabela. The
application was approved in 1935. On 08 August 1947, the Bureau of Lands found him to be in
exclusive occupation of the lands subject of the homestead. On 11 July 1950, an order for the
issuance of the patent was entered, and Patent V-5993 was issued on 27 September 1950.
Pursuant thereto, the Register of Deeds issued Original Certificate of Title (OCT) No. P-1267 on
2 October 1950. Since the homestead consisted of three lots, upon petition of Madrid, the OCT
was substituted with TCTs No. T-2385 for Lot 7035-A, No. T-2386 for Lot 7036-B and No. T-
2387 for Lot 7036-A.

After the death of Angel Madrid on 23 April 1955, his widow, Cipriana Madrid, and his children
extrajudicially partitioned his estate wherein Lot 7035-A and a portion of Lot 7036-B were
adjudicated to the widow, while Lot 7036-A and the remainder of Lot 7036-B were given to the
children. On 30 September 1955, Cipriana Madrid sold the entire Lot 7035-A to spouses
Teodoro Dela Cruz and Agueda de Vera for P18,000.00. On 04 January 1956 and 21 April 1956,
Cipriana Madrid and the other heirs sold two portions of Lot 7036-B with an aggregate area of
10,200 square meters to Teodoro Dela Cruz. New TCTs were issued in the names of the vendees.

328
On 01 June 1956, Teodoro Dela Cruz commenced an accion publiciana docketed as Civil Case
No. BR. II-79 (CA-31309-R) in the Court of First Instance (CFI) of Isabela against Silverio
Corpus and twenty-three (23) others for alleged illegal occupation of Lot 7035-A.

On 18 January 1957, the Republic of the Philippines, through the Office of the Solicitor General,
filed Civil Case No. BR. II-141 (CA-31252) in the CFI of Isabela for reversion of homestead
consisting of Lots 7035-A, 7036-A and 7036-B of the Santiago, Isabela Cadastre, against the
widow and heirs of homesteader Angel Madrid, Agueda de Vera, Teodoro Dela Cruz and others.

Teodoro Dela Cruz likewise filed an accion publiciana (BR. II-79) with the CFI of Isabela and
forcible entry and detainer cases with the Justice of the Peace Court of San Mateo, Isabela (110
and 111) against other occupants of the lots he bought. Some of the defendants in said cases and
the defendants in BR. II-79, totaling 38, filed a complaint-in-intervention in the reversion case
(BR. II-141).

In the reversion case, the CFI dismissed the amended complaint and amended complaint-in-
intervention and, among other things, ordered the thirty-eight intervenors to surrender the
material and peaceful possession of the portions they are occupying, together with their buildings
and improvements within Lot 7035-A, to Teodoro Dela Cruz.

As to BR. II-79, the CFI rendered judgment declaring Teodoro Dela Cruz the absolute owner of
Lot 7035-A. It forfeited in favor of Teodoro Dela Cruz all the buildings and improvements of the
defendants and ordered the latter to vacate and surrender the material and peaceful possession of
the portions they are occupying to the former, and to pay rentals or damages.

Only BR. II-141 and BR. II-79 were appealed to the Court of Appeals which promulgated its
decision on 23 July 1965, affirming in all respects the judgments of the CFI. The decision was
appealed to the Supreme Court in a petition for certiorari which was denied for lack of merit.

Subsequently, the Municipality of San Mateo, Isabela, filed an action for the declaration of
nullity of contracts of sale, annulment of TCT and reconveyance of property described as Lot
7035-A before Branch 3 of the CFI of Isabela which was docketed as Civil Case No. 1913.[4]
Said court dismissed the complaint on 28 September 1967.

On 30 June 1987, petitioners filed a complaint before the RTC of Cauayay, Isabela, for Recovery
of Possession with Damages against respondent for allegedly occupying two hundred (200)
square meters, more or less, of Lot 7035-A-8-B-5 without any legal right to do so, much less
their consent or permission, and has failed and refused to vacate the premises despite repeated
demands. They prayed that respondent be ordered to vacate the land, and to pay them P10,000.00
as attorneys fees, P500.00 a month as rental, and moral and exemplary damages as the court may
find just and reasonable.[5] The case was raffled to Branch 20 and was docketed as Civil Case
No. 20-235.

On 04 August 1987, respondent filed her answer with counterclaim alleging that the land being
claimed by petitioners is different from the land where her house is standing and that the land
was given or awarded to her by the Municipal Government of San Mateo, Isabela. She added that

329
she has been occupying the land since February 1946 and no one molested her in her actual
possession and use thereof except the claims of petitioners which she came to know only on 04
July 1987 when she received the summons.[6]

In their answer to counterclaim dated 14 August 1987, petitioners denied the allegations in the
counterclaim and asserted that respondents claim is an utter and gross falsity because the land is
part of a registered land duly titled in their names and, previously, in their predecessors-in-
interest.[7]

On 29 January 1988, the court terminated the pre-trial and set the case for hearing after counsel,
instead of moving that respondent be declared as in default, moved for its termination due to the
latters absence despite notice.[8]

Before the case can be heard, petitioners filed a Motion for Summary Judgment on the ground
that respondent has not raised any genuine issue except as to the question of damages. They said
that in a decision rendered by the CFI of Isabela in Civil Case No. 1913[9] entitled, The
Municipality of San Mateo v. Teodoro Dela Cruz, et al., it was adjudged that the land occupied
by respondent belonged exclusively to Teodoro Dela Cruz, their predecessor, and that said
decision has long become final and is res judicata as to the ownership of the land in question.
They said that since their predecessor-in-interest was declared as the true and legal owner, the
municipality had no power or authority to dispose or award any portion of the land in favor of
third parties.[10]

On 29 February 1988, respondent filed her opposition to the Motion for Summary Judgment on
the ground that the pre-trial was terminated without the issues being simplified, nor stipulations
or admissions being made on facts and documents.[11] Petitioners filed a rejoinder dated 17
March 1988.[12]

On 27 April 1988, the RTC rendered a summary judgment declaring petitioners the owners of
the land in question and ordered respondent to vacate the same and to remove whatever
improvement she has introduced on the lot. The court set the case for hearing with respect to
petitioners claim for damages.[13]

On 12 May 1988, respondent filed a notice of appeal from the summary judgment.[14]

On 25 May 1988, petitioners filed an Omnibus Motion for Execution Pending Appeal and to Set
for Reception of Evidence on the Damages[15] which respondent opposed.[16]

In an order dated 07 June 1988, the court denied the motion to execute the decision pending
appeal, but granted the motion to set the case for hearing for the reception of the evidence on
damages. To avoid multiplicity of appeal, it held in abeyance the transmittal of the records to the
Court of Appeals until after the rendition of the decision on the issue of damages.[17]

Petitioners filed a Motion for Reconsideration[18] which respondent opposed.[19] On 24 June

1988, the court denied the motion.

330
On 22 July 1988, the court rendered its decision on petitioners claim for damages,[20] ordering
respondent to pay petitioners P146.66 a month beginning July 1987, and every month thereafter
until the former shall have vacated the premises. On 05 August 1988, respondent filed a Notice
of Appeal.[21] Petitioners, on the other hand, filed a Motion for Reconsideration praying that the
decision be reconsidered, amended or modified to include the award of attorneys fees, expenses
of litigation and exemplary damages in their favor.[22] The court denied the motion on 11
August 1988. Thus, petitioners filed a Notice of Appeal.[23]

On 16 February 1990, the Court of Appeals rendered a decision,[24] setting aside the summary
judgment dated 27 April 1988 and the judgment on the rental value dated 22 July 1988. The
dispositive portion reads:

WHEREFORE, the summary judgment of April 27, 1988 and the judgment on rental value dated
July 22, 1988 are SET ASIDE and the trial court is directed to conduct further proceedings in
accordance with the guidelines set forth above, and thereafter to render the proper decision.

On 22 June 1990, pre-trial was conducted and terminated with the parties manifesting that they
cannot settle the case and that they failed to enter into a stipulation of facts. The parties agreed to
litigate the case on only one issue whether or not respondent Sabina Miguel is inside or outside
the land of the petitioners which is covered by TCT No. T-70778.[25]

After trial, on 08 January 1991, the court rendered a decision[26] in this wise:

The court resolves the issue in favor of the plaintiffs. The evidence is overwhelming that
defendant is occupying an area within the titled land of the plaintiffs. This is established by the
testimony of Angelito dela Cruz and the Sketch Plan marked as Exhibit D and D-1 showing that
the land occupied by the defendant is inside the titled land of the plaintiffs. Furthermore,
defendant admitted that the area she is occupying is a part of the land bounded on the North by
Mabini St., East by Magsaysay St., West by Quezon St., and South by Bonifacio St. This is the
description of the entire land, consisting of one block, owned and titled in the name of the
plaintiffs.

...

WHEREFORE, judgment is hereby rendered in favor of the plaintiffs and against the defendant
Sabina Miguel ordering said defendant to vacate the premises of the land in question described in
paragraph 2 of the complaint and covered by Transfer Certificate of Title No. T-70778 and to
remove her house and/or whatever improvements she introduced on the land, and to pay the
plaintiffs P15,000.00 representing the rental value of the land occupied by her at the rate of
P500.00 from the time the complaint was filed on July 30, 1987. Costs against the defendant.

Respondent appealed the decision to the Court of Appeals.[27] On 12 July 2000, the latter
reversed and set aside the decision of the RTC. The decision[28] partly reads as follows:

After a thorough and careful evaluation of the records hereof and the evidence submitted by the
parties, the Court finds that the parcel of land which is registered in the name of plaintiffs-

331
appellees includes the land being occupied by defendant-appellant. However, as the Court go
deeper into the peculiar circumstances hereof, one important question surfaces: Can plaintiffs-
appellees recover the said land from defendant-appellant who has been in peaceful possession
thereof for more than 40 years and has performed all acts consistent with her claim of
ownership?

...

The Court rules that plaintiffs-appellees are guilty of laches for their unexplained and
unreasonable delay in asserting their right to the subject land and instituting action to recover the
same from defendant-appellant who has been in possession thereof for more than forty years
(40). The records show that the complaint for recovery of possession was filed only on June 30,
1987 despite the fact that defendant-appellant has occupied the subject land since February 14,
1946 up to the present.

...

There is no doubt that the plaintiffs-appellees long inaction in asserting their right to the subject
land bar them from recovering the same from defendant-appellant under the equitable principle
of laches. The law serves those who are vigilant and diligent and not those who sleep when the
law requires them to act.

The Court further notes that plaintiffs-appellants did not object to nor complained of the acts of
ownership being exercised by defendant-appellant over the subject land. It is apparent from the
records that in 1946, the latter, together with her husband (who was already deceased at the time
the instant case was initiated), has built a hut on the subject land to serve as their dwelling. In
1954, another one of strong material was constructed, which defendant-appellant still occupies to
date. Defendant-Appellant has never been asked to vacate. Neither was she evicted therefrom
despite the fact that plaintiffs-appellees were also residing in the same municipality where the
subject land is located. Much to this, as early as September 30, 1955, when the parcel of land
now covered by TCT No. T-70778 was purchased by plaintiff-appellee Agueda de Vera-Cruz
and her husband, from Cipriano Gamino, they knew that some other persons, like defendant-
appellant, were in possession of the other parts thereof.

...

Thus, the Court cannot look with favor at plaintiffs-appellees who, by their delay and inaction,
knowingly induce defendant-appellant to spend time and effort over the subject land, and
thereafter, claim title after more than 40 years of silence.

...

WHEREFORE, in view of the foregoing, the decision, dated February 8, 1991, of the court a quo
is hereby REVERSED and SET ASIDE and a new one is entered ordering plaintiffs-appellees to
cause the segregation of the 600 square meters parcel of land, forming part of Lot 7035-A-8-B-5,
LRC-Psd 60052, under TCT No. T-70778, presently occupied by defendant-appellant Sabrina

332
Miguel, and to convey the same to said defendant-appellant. After the segregation shall have
been accomplished, the Register of Deeds of Isabela is hereby ordered to issue a new certificate
of title covering the portion of the land pertaining to plaintiffs-appellees and another certificate
of title in favor of defendant-appellant Sabrina Miguel covering the 600 square meters which she
occupies.

Petitioners now assail the decision before this Court via a Petition for Review on Certiorari
advancing the following arguments:

THE COURT OF APPEALS ERRED IN NOT RECOGNIZING THE ESTABLISHED

PRINCIPLE IN LAW THAT A TORRENS TITLE IS INDEFEASIBLE

II

THE COURT OF APPEALS ERRED IN FINDING THAT THE EQUITABLE DOCTRINE OF

LACHES APPLIES TO THE PRESENT CASE

A) THE DOCTRINE OF LACHES IS A REMEDY WHICH IS GROUNDED IN EQUITY

AND IT IS TO BE APPLIED IF AND ONLY IF THE CIRCUMSTANCES OF A
PARTICULAR CASE WARRANT IT[29]

Petitioners contend that when the Court of Appeals ruled that they were guilty of laches because
they supposedly did not protest respondents long and continuous occupancy of the lot in
question, it was in effect saying that the land subject of the present controversy has been
acquired by acquisitive prescription which is contrary to law and jurisprudence that the owner of
a land registered under the Torrens system cannot lose it by prescription.

A reading of the decision of the Court of Appeals clearly shows that prescription was not the
basis of the decision. Nowhere in said decision did it say that respondent acquired the property
occupied by her through prescription. In fact, the Court of Appeals was fully aware that adverse,
notorious and continuous possession under claim of ownership for the period fixed by law is
ineffective against a Torrens title, and that title to a registered land in derogation of that of the
registered owner may not be acquired by prescription or adverse possession because the efficacy
and integrity of the Torrens system must be protected. What it used in reaching its conclusion
was the exception LACHES.

The law[30] provides that no title to registered land in derogation of that of the registered owner
can be acquired by prescription or adverse possession. Nonetheless, while it is true that a Torrens
Title is indefeasible and imprescriptible, the registered landowner may lose his right to recover
the possession of his registered property by reason of laches.[31]

Laches has been defined as such neglect or omission to assert a right, taken in conjunction with
lapse of time and other circumstances causing prejudice to an adverse party, as will operate as a
bar in equity. It is a delay in the assertion of a right which works disadvantage to another because

333
of the inequity founded on some change in the condition or relations of the property or parties. It
is based on public policy which, for the peace of society, ordains that relief will be denied to a
stale demand which otherwise could be a valid claim. It is different from and applies
independently of prescription. While prescription is concerned with the fact of delay, laches is
concerned with the effect of delay. Prescription is a matter of time; laches is principally a
question of inequity of permitting a claim to be enforced, this inequity being founded on some
change in the condition of the property or the relation of the parties. Prescription is statutory;
laches is not. Laches applies in equity, whereas prescription applies at law. Prescription is based
on a fixed time, laches is not.[32] Laches means the failure or neglect for an unreasonable and
unexplained length of time, to do that which, by exercising due diligence, could or should have
been done earlier; it is negligence or omission to assert a right within a reasonable time,
warranting the presumption that the party entitled to assert it either has abandoned or declined to
assert it.[33]

Petitioners maintain that the Court of Appeals erred in applying the equitable doctrine of laches
in the case at bar. They argue that they and their predecessor-in-interest, Teodoro Dela Cruz,
were never remiss, and have not delayed, in asserting their ownership over the property subject
of the present case because they have been litigating this issue as far back as 1956 and lasting
over ten years, and successfully warding off the respective claims of the illegal occupants, the
Republic of the Philippines and the Municipality of San Mateo, Isabela.[34]

Now, the question is: Should laches be applied in the case before us knowing that petitioners
after purchasing Lot 7035-A on 30 September 1955 engaged in court battles against illegal
occupants thereof, the Republic of the Philippines and the Municipality of San Mateo, Isabela,
for more than ten years resulting in the upholding by the courts of their ownership over the land
in question?

There is no absolute rule as to what constitutes laches or staleness of demand; each case is to be
determined according to its particular circumstances. The question of laches is addressed to the
sound discretion of the court, and since laches is an equitable doctrine, its application is
controlled by equitable considerations. It cannot work to defeat justice or to perpetrate fraud and
injustice.[35]

Having filed accion publiciana and forcible entry and detainer cases in the 1950s against the
illegal occupants of Lot 7035-A, though not against respondent, and having successfully
overcome the reversion case filed by the Republic and the Reconveyance case filed by the
Municipality of San Mateo, Isabela, it cannot be said that petitioners slept on their rights in
asserting their ownership over Lot 7035-A. How then can petitioners be said to have failed or
neglected to assert their right on the land when they have been judicially fighting to be
recognized as the legal owner of Lot 7035-A?

The Court of Appeals ruled that since respondent has been in peaceful and unmolested
possession of the subject land since 1946, petitioners are barred from recovering the same under
the principle of laches. In support thereof, it cited the cases of Ching v. Court of Appeals,[36]
Caragay-Layno v. Court of Appeals,[37] Heirs of Batiog Lacamen v. Heirs of Laruan,[38]

334
Tambot v. Court of Appeals,[39] Wright, Jr. v. Lepanto Consolidated Mining Co.[40] and Vda.
de Delima v. Tio.[41]

From the records, it appears that respondent cannot have entered and possessed the land under
litigation in 1946. The Court of Appeals in its decision in the consolidated cases of Republic of
the Philippines v. Marita Madrid, et al. and Teodoro de la Cruz v. Silverio Corpuz, et al.[42]
made a factual finding that the land was in the exclusive possession of Angel Madrid, the
homestead applicant in 1947. This notwithstanding, and regardless of whether respondent
entered the lot in 1946 or in 1954, the application of laches, as stated above, should be
determined in accordance with the circumstances present in a particular case.

The cases cited by the Court of Appeals are not on all fours with the case on hand. The case of
Ching v. Court of Appeals involves a landowners property which was wrongfully or erroneously
registered in anothers name. In Caragay-Layno v. Court of Appeals, the issue was the fraudulent
or mistaken inclusion of property in a certificate of title. In Heirs of Batiog Lacamen v. Heirs of
Laruan, the subject matter was the sale of land without the required approval of the executive
authority. The case of Tambot v. Court of Appeals likewise involves a conveyance of land via a
deed of sale. In Wright, Jr. v. Lepanto Consolidated Mining Co., what was questioned was the
acquisition and ownership of mining claims which were covered by reconstituted certificates of
title. In Vda. de Delima v. Tio, what was questioned was the selling by a husband of the wifes
paraphernal property without the latters consent.

In all these cases, the parties in possession of the properties under litigation had titles thereto or
had documents showing that the ownership over these properties was transferred to them. In the
case before us, respondent is not the registered owner of the lot she is occupying and she has
failed to adduce evidence showing that the property has been conveyed to her by the petitioners
or by the original owner thereof. Respondent has no evidence of her ownership over the lot
where her house is erected. Her allegation[43] that the lot was awarded or given through a
resolution by the Municipal Government of San Mateo, Isabela, cannot be given credence. She
did not even produce a copy of said resolution. Even if respondent were able to produce a copy
thereof, the same will be of no use since it has been judicially nullified. Furthermore, as admitted
by respondent, she and her husband tried to procure ownership papers over the land, but to no
avail.[44] Petitioners, on the other hand, have shown that the courts have upheld their ownership
over Lot 7035-A, and have ruled in their favor and against the reversion case[45] filed by the
Republic and on the case for reconveyance[46] of Lot 7035-A filed by the Municipality of San
Mateo, Isabela.

We are not unmindful of the Tax Declarations[47] held by respondent but same are not proofs of
ownership. A tax declaration does not prove ownership. It is merely an indicium of a claim of
ownership.[48] Payment of taxes is not proof of ownership, it is, at best, an indicium of
possession in the concept of ownership.[49] Neither tax receipts nor declaration of ownership for
taxation purposes are evidence of ownership or of the right to possess realty when not supported
by other effective proofs.[50]

An examination of the tax declarations reveals that the property covered is not even specified
and described with particularity -- the exact location and borders were not mentioned.

335
Respondent utterly failed to show her ownership of the land in question. In fact, the RTC and the
Court of Appeals have declared that the land being occupied by respondent is within the land
registered in the names of petitioners.[51] With this finding, respondents claim that the land she
is occupying is different from the land being claimed by petitioners completely crumbles. Thus,
it is clear that respondent, without any authority or right, is occupying petitioners land.

Having no title or document to overcome petitioners ownership over the land in question,
respondent is therefore an intruder or squatter whose occupation of the land is merely being
tolerated. A squatter has no possessory rights over the land intruded upon.[52] As such, her
occupancy of the land is only at the owners sufferance, her acts are merely tolerated and cannot
affect the owners possession. She is necessarily bound to an implied promise that she will vacate
upon demand.[53]

Respondent argues that petitioners, despite all the opportunity they had to implead respondent in
the cases they filed in 1956 against those occupying Lot 7035-A, deliberately ignored and failed
to do so. In doing so, petitioners slept on their rights and practically allowed laches to set in.

We find this feeble. Assuming for the sake of argument that respondent already occupied the lot
in question in 1956, we cannot put all the blame on petitioners if respondent and her husband
were not impleaded. It must be remembered that there were many people who occupied the
subject land. If petitioners committed an oversight in not impleading respondent, she, having an
interest on the land, should have intervened in the cases just like what the other occupants did.
This, she did not do. It is simply impossible for her not to know that there were on-going court
cases involving the land she is occupying. She testified that the lot she is occupying is bounded
on the east by the lot of one Wenceslao Urmaneta.[54] As can be gleaned from the decision of
the Court of Appeals in the consolidated cases[55] of Republic of the Philippines v. Marita
Madrid, et al., and Teodoro de la Cruz v. Silverio Corpuz, et al., this Urmaneta was one of the
defendants in the accion publiciana case and was an intervenor in the reversion case filed by the
Republic. Contrary to the posture of an adjacent neighbor, respondent exhibited a lethargic
stance. Her failure to join and to get involved in the proceedings in order to protect her rights, if
there were any, over the land shows her apathy on the matter. This lack of concern and inaction
on her part show that she failed to protect any right she had on the land. The laches of one
nullifies the laches of the other. One who seeks equity must himself be deserving of equity.[56]
While all the people around her were fighting tooth and nail over Lot 7035-A, respondent simply
watched on the sidelines, oblivious of what the courts will pronounce on the matter. Acting the
way she did, she does not deserve equity.

This Court has ruled that unless there are intervening rights of third persons which may be
affected or prejudiced by a decision directing the return of the lot to petitioners, the equitable
defense of laches will not apply as against the registered owners.[57] In the case at bar, there
being no intervening third persons whose rights will be affected or prejudiced if possession of
the subject lot is restored to the petitioners, the return of the same is in order.

Under the circumstances obtaining in this case, the equitable doctrine of laches shall not apply.

336
WHEREFORE, the petition for review is GRANTED. The decision of the Court of Appeals
dated 12 July 2000 is REVERSED and SET ASIDE, and the decision of the Regional Trial Court
dated 08 January 1991 is REINSTATED. Costs against the respondent.

SO ORDERED.

Puno, (Chairman), Austria-Martinez, Callejo, Sr., and Tinga, JJ., concur.

[1] CA Rollo, pp. 43-51; Penned by Associate Justice Eriberto U. Rosario, Jr. with Associate
Justices Eubolo G. Verzola and Roberto A. Barrios, concurring.

[2] Exh. A, Records, pp. 35-36.

[3] See consolidated cases of Republic of the Philippines v. Marita Madrid, et al., CA-G.R. No.
31252-R, 23 July 1965 and Teodoro de la Cruz v. Silverio Corpuz, et al., CA-G.R. No. 31309-R,
23 July 1965; Rollo, pp. 52-85.

[4] Exh. B; Records, pp. 37-49.

[5] Records, pp. 1-3.

[6] Id. at 6-7.

[7] Id. at 10.

[8] Id. at 30.

[9] Exh. B, Records, pp. 37-49.

[10] Records, pp. 32-34.

[11] Id. at 53.

[12] Id. at 54.

[13] Id. at 60-64.

[14] Id. at 65.

[15] Id. at 66-67.

337
[16] Id. at 68-69.

[17] Id. at 72.

[18] Id. at 73.

[19] Id. at 75.

[20] Id. at 82-83.

[21] Id. at 85.

[22] Id. at 87-88.

[23] Id. at 93.

[24] Id. at 98-104; Penned by Associate Justice Serafin E. Camilon with Associate Justices Jaime
M. Lantin and Regina G. Ordoez-Benitez, concurring.

[25] Id. at 115.

[26] Id. at 133-135.

[27] Id. at 136.

[28] CA Rollo, pp. 43-51.

[29] Rollo, p. 12.

[30] Act. No. 496, 46 (The Land Registration Act), now P.D. No. 1529 (Property Registration
Decree).

[31] Isabela Colleges, Inc. v. Heirs of Nieves Tolentino-Rivera, G.R. No. 132677, 20 October
2000, 344 SCRA 95, 106-107.

[32] Heirs of Batiog Lacamen v. Heirs of Laruan, G.R. No. L-27088, 31 July 1975, 65 SCRA
605, 609-610.

[33] Catholic Bishop of Balanga v. Court of Appeals, G.R. No. 112519, 14 November 1996, 264
SCRA 181, 192-193; Eduarte v. Court of Appeals, G.R. No. 121038, 22 July 1999, 311 SCRA
18, 26.

[34] See Exh. B, Records, pp. 37-49, and consolidated cases of Republic of the Philippines v.
Marita Madrid, et al., CA-G.R. No. 31252-R, 23 July 1965 and Teodoro de la Cruz v. Silverio
Corpuz, et al., CA-G.R. No. 31309-R, 23 July 1965, Rollo, pp. 52-85.

338
[35] Romero v. Natividad, G.R. No. 161943, 28 June 2005; Jimenez v. Fernandez, G.R. No.
46364, 06 April 1990, 184 SCRA 190, 197.

[36] G.R. No. 59731, 11 January 1990, 181 SCRA 9.

[37] G.R. No. L-52064, 26 December 1984, 133 SCRA 718.

[38] Supra, Note 32.

[39] G.R. No. 462238, 22 January 1990, 181 SCRA 202.

[40] G.R. No. L-18904, 11 July 1964, 11 SCRA 508.

[41] G.R. No. L-27181, 30 April 1970, 32 SCRA 516.

[42] Supra, Note 34; Rollo, p. 58.

[43] Records, p. 6; TSN, 21 July 1988, pp. 23-24.

[44] TSN, 07 December 1990, p. 7.

[45] Supra, Note 3.

[46] Exh. B, Records, pp. 37-49.

[47] Exhs. 1 and 2; Records, pp. 70-71.

[48] Municipality of Antipolo v. Zapanta, G.R. No. L-65334, 26 December 1984, 133 SCRA
820, 825.

[49] Arambulo v. Court of Appeals, G.R. No. 120166, 03 August 1998, 293 SCRA 567, 576.

[50] Elumbaring v. Elumbaring, G.R. No. 4000, 05 January 1909, 12 Phil. 384, 388-389.

[51] See Exh. D; Records, p. 57.

[52] Pendot v. Court of Appeals, G.R. No. 49022, 12 April 1989, 172 SCRA 20, 29, citing
Astudillo v. Board of Directors of PHHC, G.R. No. L-28066, 22 September 1976, 73 SCRA 15,
19.

[53] Banez v. Court of Appeals, G.R. No. L-30351, 11 September 1974, 59 SCRA 15, 22.

[54] TSN, 07 December 1990, p. 3.

[55] Supra, Note 34.

339
[56] Jandusay v. Court of Appeals, G.R. No. 48714, 18 April 1989, 172 SCRA 376, 387.

[57] Cimafranca v. Intermediate Appellate Court, G.R. No. 68687, 31 January 1987, 147 SCRA
611, 621; Javier v. Concepcion, Jr., G.R. No. L-36566, 7 November 1979, 94 SCRA 213, 223.

340
FIRST DIVISION

MIGUEL INGUSAN, G.R. No. 142938

Petitioner,

Present:

PUNO, C.J., Chairperson,

SANDOVAL-GUTIERREZ,

-versus- CORONA,

AZCUNA and

GARCIA, JJ.

HEIRS OF AURELIANO

I. REYES, represented by

CORAZON REYES-REGUYAL and

ARTEMIO S. REYES,*

Respondents. Promulgated:

August 28, 2007

* The Court of Appeals was originally impleaded as respondent. However, it was excluded
pursuant to Rule 45, Section 4 of the Rules of Court.

341
x- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - x

DECISION

CORONA, J.:

This is a petition for review on certiorari162 of a decision163 and

resolution164 of the Court of Appeals (CA) dated January 21, 2000 and April 10,

2000, respectively, in CA-G.R. CV No. 56105 which modified the decision165

dated April 17, 1997166 of the Regional Trial Court (RTC) of Cabanatuan City,

Nueva Ecija, Branch 25 in Civil Case No. 2145-A1.

162 Under Rule 45 of the Rules of Court.

163 Penned by Associate Justice Hilarion L. Aquino (retired) and concurred in by Associate
Justices Buenaventura J. Guerrero (retired) and Elvi John S. Asuncion (dismissed from
the service) of the Eighth Division of the Court of Appeals; rollo, pp. 29-37.

164 No copy of this resolution was submitted to the Court.

165 Penned by Judge Johnson L. Ballutay; rollo, p. 93.

166 Id., p. 33.

342
 This case involves a 1,254 sq. m. residential land located in Poblacion, San

Leonardo, Nueva Ecija167 originally owned by Leocadio Ingusan who was

unmarried and childless when he died in 1932. His heirs were his two brothers

and a sister, namely, Antonio, Macaria and Juan.168 Antonio died and was

succeeded by his son Ignacio who also later died and was succeeded by his son,

petitioner Miguel Ingusan.169 Macaria also died and was succeeded by her child,

Aureliano I. Reyes, Sr. (father of respondents Artemio Reyes, Corazon Reyes-

Reguyal, Elsa Reyes, Estrella Reyes-Razon, Aureliano Reyes, Jr., Ester Reyes,

Reynaldo Reyes and Leonardo Reyes).170 Thus, petitioner is the grandnephew of

Leocadio and Aureliano, Sr. was the latter's nephew.171

After the death of Leocadio, Aureliano, Sr. was designated by the heirs as

administrator of the land.172 In 1972, while in possession of the land and in

breach of trust, he applied for and was granted a free patent over it.173 As a

result, he was issued OCT No. P-6176 in 1973.174

167 Lot 126, Cad. 342-D; id., p. 29.

168 Id.
169 His two sisters, Eladia and Arcadia died with no heirs; id., p. 62.
170 Id.
171 Id.
172 Id., p. 30.
173 The free patent was issued on May 17, 1972; id., p. 35.
174 The title was issued on February 29, 1973; id.

343
 In 1976, petitioner filed an accion reivindicatoria against Aureliano, Sr. and

his wife Jacoba Solomon seeking the recovery of Lot 120-A with an area of 502 sq.

m. which was part of the land at issue here.175 But the case was dismissed

because petitioner did not pursue it.

Also in 1976, Aureliano, Sr. executed a special power of attorney (SPA) in

favor of his son Artemio authorizing him to mortgage the land in question to any

bank. Using that SPA, Artemio mortgaged the land to secure a loan of P10,000

from the Philippine National Bank (PNB).176

In 1983, Aureliano, Sr. died intestate. He was survived by his children, the

respondents.177

In 1986, petitioner paid the PNB loan. The mortgage over the land was

released and the owners duplicate copy of OCT No. P-6176 was given to him.178

175 Civil Case No. 927 in the Court of First Instance of Nueva Ecija, Branch IV; id., p. 63.
176 Id., p. 30.
177 Id.
178 Id.

344
 On June 19, 1988, respondents and petitioner entered into a Kasulatan ng

Paghahati-hati Na May Bilihan wherein they adjudicated unto themselves the

land in question and then sold it to their co-heirs, as follows: (a) to petitioner,

1,171 sq. m. and (b) to respondent Estrella, 83 sq. m. This deed was notarized but

not registered.179

On January 8, 1990, respondent Corazon, despite signing the Kasulatan,

executed an affidavit of loss, stating that she could not find the owners duplicate

copy of OCT No. P-6176. This was registered and annotated on the original copy

of said title.180

Subsequently, the following documents appeared purportedly with the

following dates:

a) April 23, 1994181 - notarized deed of donation of titled property

179 Id. According to petitioner, this document was not implemented; id., p. 63.
180 Id. Why she did this considering that she had divested herself of her interest in the land under the
Kasulatan ng Paghahati-hati Na May Bilihan was never explained.
181 The year 1982 was superimposed on the typewritten year of 1994; id., p. 34.

345
 supposedly executed by the spouses Aureliano, Sr. and Jacoba,182

whereby said spouses donated 297 sq. m. of the subject land to

respondent Artemio and the remaining 957 sq. m. to petitioner;

b) September 5, 1994 - cancellation of affidavit of loss supposedly

executed by respondent Corazon stating that the annotation of the

affidavit of loss on the title should be canceled and the petition for a

new title was no longer necessary because she had already found the

missing owners duplicate copy of OCT No. P-6176;

c) September 27, 1994 agreement of subdivision with sale purportedly

executed by respondent Artemio and petitioner, with the consent of

their wives. Pursuant to this document, the land was subdivided into

Lot 120-A with an area of 297 sq. m. corresponding to the share of

Artemio and Lot 120-B with an area of 957 sq. m. which was the share

of petitioner. The document also indicated that Artemio sold Lot 120-A

to one Florentina Fernandez.183

182 The signatures of petitioner and respondent Artemio also appeared thereon, presumably
as donees; id., p. 31.

183 Id., pp. 30-31.

346
 When respondent Corazon learned about the cancellation of the

annotation of her affidavit of loss, she executed an affidavit of adverse claim on

January 17, 1995 stating that the cancellation of affidavit of loss and the

agreement of subdivision with sale were both spurious and the signatures

appearing thereon were forgeries. This affidavit of adverse claim was not

registered.184

On April 17, 1995, petitioner brought the owners duplicate copy of OCT No.

P-6176, the cancellation of affidavit of loss, deed of donation of titled property

and agreement of subdivision with sale to the Registry of Deeds for registration.

Consequently, the following took place on that same day:

1. Corazons annotated affidavit of loss was canceled;

2. by virtue of Aureliano, Sr. and Jacobas deed of donation of titled

property to Artemio and petitioner, OCT No. P-6176 was canceled and in

lieu thereof, TCT No. NT-241155 in the name of petitioner and TCT No.

NT-241156 in the name of respondent Artemio were issued and

3. by virtue of the agreement of subdivision with sale, TCT Nos. NT-241155

and NT-241156 were canceled and TCT Nos. NT-239747 and NT-239748

184 Id., p. 31.

347
 were issued in the names of petitioner and Florentina Fernandez,

respectively.185

On June 27, 1995, petitioner took possession of his portion and built his

house thereon.186

On July 4, 1995, respondents filed an action for cancellation, annulment

and surrender of titles with damages against petitioner and Florentina Fernandez

in the RTC of Cabanatuan City, Nueva Ecija, Branch 25. In their complaint, they

alleged the following, among others: they inherited the land in question from

their father, Aureliano, Sr.; petitioner caused the preparation of the spurious

deed of donation of titled property, cancellation of affidavit of loss, agreement of

subdivision with sale and forged the signatures appearing thereon except his

(petitioner's) own and, in conspiracy with Fernandez, fraudulently registered said

documents which resulted in the cancellation of OCT No. P-6176 and the eventual

issuance to them of TCT Nos. NT-239747 and NT-239748. They prayed that these

185 Id.
186 Id.

348
titles be declared null and void and that petitioner and Fernandez be ordered to

surrender the land and pay damages to them.187

In his defense, petitioner alleged that respondents' father, Aureliano, Sr.,

fraudulently secured a free patent in his name over the land using a fictitious

affidavit dated April 10, 1970 purportedly executed by Leocadio selling to him the

land in question and, as a result, OCT No. P-6176 was issued to him; that it was

respondent Artemio who proposed to petitioner the scheme of partition that

would assure the latter of his share with the condition, however, that he

(Artemio) would get a portion of 297 sq. m. (which included the share of

respondent Estrella of 83 sq. m.) because he had already earlier sold it to

Fernandez and in fact had already been partially paid P60,000 for it; that to

implement this scheme, respondent Artemio caused the execution of several

documents namely: (1) deed of donation of titled property; (2) agreement of

subdivision with sale and (3) cancellation of affidavit of loss and that, thereafter,

he instructed petitioner to present the said documents to the Registry of Deeds of

Nueva Ecija for registration.188

187 Id., p. 32.

188 Id., pp. 32-33.

349
 On October 26, 1995, respondents moved that Fernandez be dropped as

defendant because she was no longer contesting their claim and in fact had

surrendered to them her owners duplicate copy of TCT No.NT-239748. Thus, she

was excluded from the suit.189

In a decision dated April 17, 1997, the RTC dismissed the case and declared

OCT No. P-6176 as well as the subsequent certificates of title (TCT Nos. NT-

239747 and NT-239748), the deed of donation of titled property, agreement of

subdivision with sale and cancellation of affidavit of loss as null and void. It held

that the aforementioned documents were spurious since the signatures were

falsified by respondent Artemio.

Furthermore, having found that OCT No. P-6176 was issued on the basis of

a document falsified by Aureliano, Sr., the RTC ordered the reversion of the land

to its status before the OCT was issued.

189 In an order dated November 9, 1995 of the RTC; id., p. 33.

350
 Finally, it held that petitioner, being an innocent victim, was entitled to

damages.190

On appeal, the CA modified the RTC decision. It ruled that only TCT Nos. NT-

241155, NT-241156, NT-239747 and NT-239748 were null and void. Their source,

OCT No. P-6176, remained valid because it had already become indefeasible and

could no longer be attacked collaterally. It also found that petitioner schemed

with Artemio in defrauding their co-heirs and was therefore in pari delicto.

190 Id., pp. 33-34. The dispositive portion stated:

PREMISES CONSIDERED, judgment is hereby rendered as follows:

1. Dismissing the [respondents] complaint;

2. Declaring OCT No. P-6176 as well as the subsequent certificates of Title (TCT Nos.
NT-239747 and NT-239748) all of the Registry of Deeds of the Province of Nueva
Ecija and the Deed of Donation, Subdivision Agreement and Cancellation of
Affidavit of Loss as null and void, and ordering the reversion of Lot 120, Cad-120-C
Case 1 of San Leonardo Cadastre to the status before OCT P-6176 of the Registry of
Deeds of Nueva Ecija.

3. Ordering the [respondents] to pay the costs of the suit.

As regards the counterclaim of [petitioner], there is a preponderance of evidence

that supports the same, hence the Court hereby orders the [respondents] to jointly and
severally pay [petitioner] the [sums] of P50,000.00 as moral damages, P30,000.00 as
exemplary damages and P20,000.00 as attorneys fees.

SO ORDERED.

351
Consequently, neither party was entitled to claim damages from the other.191

Petitioner's motion for reconsideration was denied.

Hence this petition raising the following issues:

1) whether OCT No. P-6176 was valid or invalid, and

2) whether or not petitioner is entitled to damages.

There is no doubt that the deed of donation of titled property, cancellation

of affidavit of loss and agreement of subdivision with sale, being falsified

documents, were null and void. It follows that TCT Nos. NT-241155, NT-241156,

NT-239747 and NT-239748 which were issued by virtue of these spurious

documents were likewise null and void. Neither side disputes these findings and

conclusions.

The question is whether the source of these titles, OCT No. P-6176, was

valid. Petitioner argues that it should be invalidated because it was issued based

on a fictitious affidavit purportedly executed in 1970 by Leocadio (who died in

1932) wherein the latter supposedly sold the land to Aureliano, Sr. According to

petitioner, Aureliano, Sr. used this to fraudulently and in breach of trust secure a

free patent over the land in his name.

191 Id., pp. 34-36.

352
 We agree with the CA that OCT No. P-6176 remains valid. The issue of the

validity of title (e.g. whether or not it was issued fraudulently or in breach of

trust) can only be assailed in an action expressly instituted for that purpose.192 A

certificate of title cannot be attacked collaterally. Section 48 of PD 1529193

states:

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

The rationale behind the Torrens System is that the public should be able to

rely on a registered title. 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. In Fil-estate Management, Inc. v. Trono,194 we

explained:

It has been invariably stated that the real purpose of the Torrens System is to quiet title
to land and to stop forever any question as to its legality. Once a title is registered, the
owner may rest secure, without the necessity of waiting in the portals of the court, or
sitting on the "mirador su casa" to avoid the possibility of losing his land.195

192 Caraan v. Court of Appeals, G.R. No. 140752, 11 November 2005, 474 SCRA 534, 550, citing Apostol v.
Court of Appeals, G.R. No. 125375, 17 June 2004, 432 SCRA 351, 359.
193 Property Registration Decree.
194 G.R. No. 130871, 17 February 2006, 482 SCRA 578.
195 Id., p. 585, citing Domingo v. Santos, et al. v. Santos, et al., 55 Phil. 361 (1930).

353
 Petitioner merely invoked the invalidity of OCT No. P-6176 as an affirmative

defense in his answer and prayed for the declaration of its nullity. Such a defense

partook of the nature of a collateral attack against a certificate of title.196

Moreover, OCT No. P-6176 which was registered under the Torrens System

on the basis of a free patent became indefeasible and incontrovertible after the

lapse of one year as provided in Section 32 of PD 1529:

Sec. 32. Review of decree of registration; Innocent purchaser for value. The
decree of registration shall not be reopened or revised by reason of absence, minority,
or other disability of any person adversely affected thereby, nor by any proceeding in
any court for reversing judgment, subject, however, to the right of any person, including
the government and the branches thereof, deprived of land or of any estate or interest
therein by such adjudication or confirmation of title obtained by actual fraud, to file in
the proper Court of First Instance a petition for reopening and review of the decree of
registration not later than one year from and after the date of the entry of such decree
of registration, but in no case shall such petition be entertained by the court where an
innocent purchaser for value has acquired the land or an interest therein whose rights
may be prejudiced. Whenever the phrase "innocent purchaser for value" or an

196 Ugale v. Gorospe, G.R. No. 149516, 11 September 2006, 501 SCRA 376, 386, citations omitted; in Heirs
of Enrique Diaz v. Virata, we discussed the distinction as to when an action is a direct attack and when is it
collateral:
An action is deemed an attack on a title when the object of the action or proceeding is to nullify
the title, and thus challenge the judgment pursuant to which the title was decreed. The attack is direct
when the object of the action is to annul or set aside such judgment, or enjoin its enforcement. On the
other hand, the attack is indirect or collateral when, in an action to obtain a different relief, an attack on
the judgment is nevertheless made as an incident thereof. (G.R. No. 162037, 7 August 2006, 498 SCRA
141, 164-165, citing Sarmiento v. Court of Appeals, G.R. No. 152627, 16 September 2005, 470 SCRA 99,
107-108.)

354
 equivalent phrase occurs in this Decree, it shall be deemed to include an innocent
lessee, mortgagee, or other encumbrancer for value.

Upon the expiration of said period of one year, the decree of registration and
the certificate of title issued shall become incontrovertible. Any person aggrieved by
such decree of registration in any case may pursue his remedy by action for damages
against the applicant or any other person responsible for the fraud. (Emphasis supplied)

Indeed, both the RTC and CA found that Aureliano, Sr. fraudulently and in

breach of trust secured OCT No. P-6176 in his name. Unfortunately, petitioner

chose not to pursue a direct proceeding to have this certificate of title annulled. In

1976, he filed an accion reivindicatoria197 against the spouses Aureliano, Sr. and

Jacoba questioning the validity of OCT No. P-6176 and seeking to recover a

portion of the land (specifically, Lot 120-A with an area of 502 sq. m.) but he

voluntarily withdrew the case.198 Now, the title has undeniably become

incontrovertible since it was issued in 1973 or more than 30 years ago.199

We now proceed to the issue of whether petitioner is entitled to damages.

The RTC held that he is entitled to moral damages (P50,000), exemplary damages

(P30,000) and attorney's fees (P20,000) because he was not aware that the

197 Docketed as Civil Case No. 927 in the former Court of First Instance of Gapan, Nueva Ecija; id., pp. 30,
105.
198 Id., p. 63. He admitted that this was due to the promise of the spouses Aureliano, Sr. and Jacoba that they
would give back the land to him after five years; id., p. 32.
199 An action for reconveyance based on fraud prescribes in four years while an action for reconveyance based
on implied trust prescribes in ten years; Bejoc v. Cabreros, G.R. No. 145849, 22 July 2005, 464 SCRA 78,
88.

355
documents were falsified and he was merely instructed by respondent Artemio to

have them registered. The CA shared the finding of the RTC that it was

respondent Artemio who masterminded the preparation and use of the spurious

documents.200 Nevertheless, it did not find petitioner an innocent victim who

was merely dragged into litigation:

...[Petitioner] was far from innocent. [Respondent Artemio] and [petitioner] signed the
bogus Deed of Donation of Titled Property and the fraudulently baseless Agreement of
Subdivision with Sale. It was [petitioner] who personally submitted all the bogus
documents with the Registry of Deeds of Nueva Ecija. He stood to benefit from the
registration of said fake documents. It was he who received the titles issued in
consequence of said fraudulent registration. In the natural course of things and in the
ordinary experience of man, the conclusion is inevitable that [he] knew [about] the
spurious nature of said documents but he made use of them because of the benefit
which he would derive therefrom. In short, [petitioner] confabulated with [respondent
Artemio] in defrauding all their co-heirs of their shares in said property.201

We agree. Petitioner was not in good faith when he registered the fake

documents.

Good faith is ordinarily used to describe that state of mind denoting "honesty of
intention, and freedom from knowledge of circumstances which ought to put the holder
upon inquiry; an honest intention to abstain from taking any unconscientious advantage
of another, even through technicalities of law, together with absence of all information,
notice, or benefit or belief of facts which render the transaction unconscientious."202

200 The RTC and CA relied on the following facts: 1) respondent Artemio was a law graduate and a former
chief of police of San Leonardo, Nueva Ecija whereas petitioner merely reached grade 3 of elementary
education; 2) respondent Artemio actually received P60,000 from Florentina Fernandez as partial payment
for the 297-sq. m. portion he allotted for himself which he sold to her and 3) he refused to give specimens
of his signature to the National Bureau of Investigation for its report; id., p. 102.
201 Id., p. 36.
202 Bercero v. Capitol Development Corporation, G.R. No. 154765, 29 March 2007, citation omitted.

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 Petitioner claims that he was not aware of the contents of the falsified

documents and their legal consequences because of his low level of intelligence

and educational attainment. But from his own narration, it is clear that he was

aware of the fraudulent scheme conceived by respondent Artemio:

[Respondent Artemio] approached [petitioner] and propose[d] a [scheme] of partition

that [would] assure [petitioner] of getting his share including that which he and his
predecessor-in-interest have purchased from the other heirs of the late LEOCADIO
INGUSAN, but with the condition that in implementing the document known as
PAGHAHATI-HATI NA MAY BILIHAN, the corresponding shares of ESTRELLA RAZON will
go to him [respondent Artemio who] has agreed to have it sold in favor of one
FLORENTINA FERNANDEZ for P120,000.00, partial payment of which has already been
received by [respondent Artemio], which negotiation of SALE and the payment made by
FLORENTINA FERNANDEZ was acknowledged to be true. Without much ado, a survey of
Lot No. 120 was conducted by one Restituto Hechenova upon instruction of [respondent
Artemio], partitioning the land into two (2), one share goes to [petitioner] with an area
of 957 square meters and the other with an area of 297 square meters in the name of
[respondent Artemio], the latter share was to be sold in favor of Florentina Fernandez.
To have this IMPLEMENTED, incidental documentation must be made thus; A DEED OF
DONATION OF REAL PROPERTY allegedly executed by Sps. Aureliano Reyes and JACOBA
SOLOMON; SUBDIVISION AGREEMENT WITH SALE by and between [petitioner] and
[respondent Artemio] as alleged DONEES and SALE in the same document in favor of
Florentina Fernandez, making in the process [petitioner] presentor of all these
questioned documents, adding among others an AFFIDAVIT OF LOSS of Original
Certificate of Title No. P-6176 allegedly falsified by [petitioner] of the signature of
[respondent] CORAZON REYES REGUYAL.203

203 Rollo, p. 64.

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 Petitioner does not deny that he signed the fictitious deed of donation of

titled property and the agreement of subdivision with sale. Even if he reached

only grade 3, he could not have feigned ignorance of the net effect of these

documents, which was to exclude the other heirs of the spouses and the original

owner Leocadio from inheriting the property and, in the process, acquiring a big

chunk of the property at their expense. The cancellation of respondent Corazon's

affidavit of loss of the owner's duplicate copy of OCT No. P-6176 also removed all

obstacles to the registration of the title covering his portion of the lot. In short, by

registering the spurious documents, he had everything to gain.

Although it was respondent Artemio, an educated individual, who

engineered the whole scheme and prepared the fraudulent documents, still

petitioner cannot deny that he was a willing co-conspirator in a plan that he knew

was going to benefit him handsomely.

As a result, there is no basis for the award of damages to petitioner.

Coming to the court with unclean hands, he cannot obtain relief. Neither does he

fall under any of the provisions for the entitlement to damages.

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 Respondents presented an additional issue involving the recovery of

possession of the subject land. They contend that petitioner, his heirs and

relatives illegally occupied it and constructed houses thereon.204 However, it is

well-settled that a party who has not appealed cannot obtain from the appellate

court any affirmative relief other than those obtained from the lower court whose

decision is brought up on appeal.205 While there are exceptions to this rule, such

as if they involve (1) errors affecting the lower court's jurisdiction over the subject

matter; (2) plain errors not specified and (3) clerical errors, none applies here.206

Lastly, we note that petitioner entered into certain agreements with

respondents to ensure that he would obtain a portion of the subject land. He not

only paid the loan of respondent Artemio to PNB in order to release the mortgage

over the land but also bought from respondents 1,171 sq. m. (almost 94% of the

1,254 sq. m. lot) under the Kasulatan ng Paghahati-hati Na May Bilihan. These

are undisputed facts. Ultimately, however, he failed to get his portion of the

property. Although petitioner did not demand the return of the amounts he paid,

we deem it just and equitable to direct respondents to reimburse him for these.

204 Id., p. 131.

205 Real v. Belo, G.R. No. 146224, 26 January 2007, citing Tangalin v. Court of Appeals, 422 Phil. 358, 364
(2001); Rural Bank of Sta. Maria, Pangasinan v. Court of Appeals, 373 Phil. 27, 45 (1999).
206 Id., citing Santos v. Court of Appeals, G.R. No. 100963, April 6, 1993, 221 SCRA 42, 46.

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 Article 1236 of the Civil Code provides:

Art. 1236. The creditor is not bound to accept payment or performance by a

third person who has no interest in the fulfillment of the obligation, unless there is a
stipulation to the contrary.

Whoever pays for another may demand from the debtor what he has paid,
except that if he paid without the knowledge or against the will of the debtor, he can
recover only insofar as the payment has been beneficial to the debtor. (emphasis ours)

Respondent Artemio was the debtor in this case, PNB the creditor and petitioner

the third person who paid the obligation of the debtor. The amount petitioner

may recover will depend on whether Artemio knew or approved of such payment.

Petitioner should also be able recover the amount (if any) he paid to

respondents under the Kasulatan since this agreement was never implemented.

Otherwise, it will result in the unjust enrichment of respondents at the expense of

petitioner, a situation covered by Art. 22 of the Civil Code:

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 Every person who through an act of performance by another, or any other means,
acquires or comes into possession of something at the expense of the latter without just
or legal ground, shall return the same to him.

Petitioner is not entitled to legal interest since he never made a demand for

it.

WHEREFORE, the petition is hereby DENIED. However, respondents are

ordered to return to petitioner the amounts he paid to the Philippine National

Bank and under the Kasulatan ng Paghahati-hati Na May Bilihan. The court a quo

is directed to determine the exact amount due to petitioner. The January 21, 2000

decision and April 10, 2000 resolution of the Court of Appeals in CA-G.R. CV No.

56105 are AFFIRMED.

Costs against petitioner.

SO ORDERED.

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 RENATO C. CORONA
Associate Justice

WE CONCUR:

REYNATO S. PUNO

Chief Justice

Chairperson

ANGELINA SANDOVAL-GUTIERREZ ADOLFO S. AZCUNA

Associate Justice Associate Justice

CANCIO C. GARCIA

Associate Justice

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 CERTIFICATION

Pursuant to Section 13, Article VIII of the Constitution, I certify that the
conclusions in the above decision had been reached in consultation before the case
was assigned to the writer of the opinion of the Courts Division.

REYNATO S. PUNO

Chief Justice

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