d. REAL ESTATE MORTGAGE (Sec.

60)

HOME BANKERS SAVINGS VS CA ET AL, G.R. 128354, April 26, 2005

In case of banking institutions..

While the cases cited by petitioner held that the mortgagee is not under obligation to look beyond the certificate of
title when on its face, it was free from lien or encumbrances, the mortgagees therein were considered in good faith as
they were totally innocent and free from negligence or wrongdoing in the transaction. In this case, petitioner knew
that the loan it was extending to Garcia/TransAmerican was for the purpose of the development of the eight-unit
townhouses. Petitioners insistence that prior to the approval of the loan, it undertook a thorough check on the
property and found the titles free from liens and encumbrances would not suffice. It was incumbent upon petitioner to
inquire into the status of the lots which includes verification on whether Garcia had secured the authority from the
HLURB to mortgage the subject lots. Petitioner failed to do so. We likewise find petitioner negligent in failing to even
ascertain from Garcia if there are buyers of the lots who turned out to be private respondents. Petitioners want of
knowledge due to its negligence takes the place of registration, thus it is presumed to know the rights of respondents
over the lot. The conversion of the status of petitioner from mortgagee to buyer-owner will not lessen the importance
of such knowledge. Neither will the conversion set aside the consequence of its negligence as a mortgagee.

Judicial notice can be taken of the uniform practice of banks to investigate, examine and assess the real estate
offered as security for the application of a loan. We cannot overemphasize the fact that the Bank cannot barefacedly
argue that simply because the title or titles offered as security were clean of any encumbrances or lien, that it was
thereby relieved of taking any other step to verify the over-reaching implications should the subdivision be auctioned
on foreclosure. (Homebankers Saving & Trust Co. vs. CA, G.R. No. 128354, 2005)

HOME BANKERS SAVINGS & TRUST CO., petitioner, vs. THE HONORABLE COURT OF APPEALS, PABLO N. AREVALO,
FRANCISCO A. UY, SPOUSES LEANDRO A. SORIANO, JR. and LILIAN SORIANO, ALFREDO LIM and FELISA CHI
LIM/ALFREDO LIM, respondents.

FACTS:

Each of private respondents entered into separate contracts to sell with TransAmerican Sales and Exposition
(TransAmerican) through the latters Owner/General Manager, Engr. Jesus Garcia, involving certain portions of land
covered by Transfer Certificate of Title (TCT) No. 19155, located at No. 45 Gen. Lim Street, Heroes Hill, Quezon City,
together with one unit three-storey townhouse to be built on each portion.

On May 30, 1989, Engr. Garcia and his wife Lorelie Garcia obtained from petitioner Home Bankers Savings and Trust
Company (formerly Home Savings Bank and Trust Company) a loan in the amount of P4,000,000.00 and without the
prior approval of the Housing and Land Use Regulatory Board (HLURB), the spouses mortgaged eight lots covered by
TCT Nos. 3349 to 3356 as collateral. Petitioner registered its mortgage on these titles without any other
encumbrance or lien annotated therein. The proceeds of the loan were intended for the development of the lots into
an eight-unit townhouse project. However, five out of these eight titles turned out to be private respondents
townhouses subject of the contracts to sell with Garcia/TransAmerican.

Petitioner filed its Answer contending that private respondents have no cause of action against it; that at the time of
the loan application and execution of the promissory note and real estate mortgage by Garcia, there were no known
individual buyers of the subject land nor annotation of any contracts, liens or encumbrances of third persons on the
titles of the subject lots; that the loan was granted and released without notifying HLURB as it was not necessary.

Petitioner filed its Answer contending that private respondents have no cause of action against it; that at the time of
the loan application and execution of the promissory note and real estate mortgage by Garcia, there were no known
individual buyers of the subject land nor annotation of any contracts, liens or encumbrances of third persons on the
titles of the subject lots; that the loan was granted and released without notifying HLURB as it was not necessary.

Private respondents filed their Reply and a motion for the judgment on the pleadings. Petitioner did not file a
rejoinder. The case against Garcia/TransAmerican was archived for failure to serve summons on him/it despite
efforts to locate his whereabouts or its office. The case was then considered submitted for decision.

On August 16, 1991, OAALA rendered its Decision in favour of the petitioner . Petitioner filed an appeal with the
Board of Commissioners of the HLURB which dismissed the same in a decision dated June 15, 1992. Petitioner then
elevated the case to the Office of the President which rendered a decision dated June 30, 1995 dismissing the appeal
and affirming the June 15, 1992 decision of the HLURB. Petitioners motion for reconsideration was also denied in a
Resolution dated May 7, 1996.

Petitioner filed a petition for review with the CA which, in the herein assailed decision dated November 28, 1996,
denied the petition and affirmed the decision of the Office of the President.
1

ISSUE:
Page

Whether or not the Office of the President erred in ruling that HLURB has jurisdiction to nullify or declare
unenforceable the real estate mortgage validly constituted by the owner.
HELD:
Petitioner cannot claim to be an innocent purchaser for value and in good faith. Indeed it was negligent, as found by
the Office of the President and by the CA. Petitioner should not have relied only on the representation of the
mortgagor that the latter had secured all requisite permits and licenses from the government agencies concerned.
The former should have required the submission of certified true copies of those documents and verified their
authenticity through its own independent effort.

Petitioners admission that it granted and released the loan without notifying the HLURB because of its belief that it
was not necessary to do so, is fatal to petitioners defense. As a consequence thereof, the mortgage constituted in
favor of petitioner can be declared invalid as against private respondents even without the presence of
Garcia/TransAmerican. This petition was DISMISSED.

DE LA MERCED VS GSIS, ET AL., G.R. 167140, NOV 23, 2011

FACTS:
This case involves five registered parcels of land located within the Antonio Subdivision, Pasig City Lots 6, 7, 8, and 10
of Block 2 and Lot 8 of Block 8 (subject properties). These lots were originally owned by, and titled in the name of,
Jose C. Zulueta (Zulueta), as evidenced by Transfer Certificate of Title (TCT) No. 26105 which contains several lots
other than the subject properties within the Antonio Subdivision.

Later, the Zulueta spouses mortgaged several lots contained in TCT No. 26105 to the GSIS, which eventually
foreclosed on the mortgaged properties, including the subject properties. Upon consolidation of GSISs ownership, TCT
No. 26105 in Zuluetas name was cancelled, and TCT No. 23554 was issued in GSISs name.

Upon learning of the foreclosure, petitioners predecessor, Francisco Dela Merced (Dela Merced), later on substituted
by his heirs, filed a complaint praying for the nullity of the GSIS foreclosure on the subject properties (Lots 6, 7, 8, and
10 of Block 2 and Lot 8 of Block 8) on the ground that he, not the Zuluetas, was the owner of these lots at the time of
the foreclosure. Dela Merced also impleaded Victor and Milagros Manlongat, who were claiming Lot 6, Block 2 by
virtue of a sale executed by the GSIS in their daughters (Elizabeth Manlongat) favor. Dela Merced argued that, due to
the nullity of GSISs foreclosure over the subject properties, it had no ownership right that could be transferred to
Elizabeth Manlongat.

After a protracted litigation, the SC rendered a Decision in the petitioners favor and nullified GSISs foreclosure of the
subject properties because these lots were never part of its mortgage agreement with the Zulueta spouses. Pursuant
to the finality of the Decision, petitioners filed a Motion for Execution which GSIS opposed on the basis of Section 39
of the GSIS Act of 1997 (RA 8291 which allegedly exempts GSIS funds and properties from attachment, garnishment,
execution, levy and other court processes. A writ of execution was finally issued, however, first by the RTC and then
by the CA. The GSIS filed a petition for review before the SC which was denied by the latter.

After the resolution of the issue of GSISs exemption, petitioners encountered more problems with the execution of
the Decision. According to the RD of Pasig City, Policarpio Espenesin, he could not cancel the titles of GSIS over Lots 7
and 8 because it no longer had title over these two lots and had already conveyed the same to two other persons.
Hence, the RD claimed that the writ of execution must first be modified to include the cancellation of derivative titles
of the GSIS title.

ISSUES:

[1] Can the GSIS still raise the issue of exemption?

[2] Can a final and executory judgment against GSIS and Manlongat be enforced against their successors-in-interest or
holders of derivative titles?
[3] Does an order to cancel title to a particular property include an order to provide technical descriptions and
segregate it from its mother title?

HELD: [1] The issue of GSIS's alleged exemption under RA 8291 had been finally decided against when this Court
denied GSIS's petition for review. GSIS's attempt to resurrect the same issue by interjecting the same in this
proceeding is barred by the principle of "law of the case," which states that "determinations of questions of law will
generally be held to govern a case throughout all its subsequent stages where such determination has already been
made on a prior appeal to a court of last resort."

[2] A notice of lis pendens is an announcement to the whole world that a particular real property is in litigation,
serving as a warning that one who acquires an interest over said property does so at his own risk, or that he gambles
on the result of the litigation over the said property. It is not disputed that petitioners caused the annotation of lis
pendens on TCT No. 23554 of the lots in question. The current holders of the derivative titles to these lots were aware
2

of such annotation when the individual titles were issued to them. Ineluctably, both were bound by the outcome of
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the litigation.
[3] The order contained in the Decision in G.R. No. 140398 is for the RD to cancel GSIS's titles over Lot 10, Block 2 and
Lot 8, Block 8, inter alia. Whether these titles are individual or contained in a mother title is of no consequence. The
RD has to cause their cancellation. If the cancellation can only be carried out by requiring GSIS or the Bureau of Lands
to provide the necessary information, then they can be compelled to do so. Otherwise, the Courts decision would be
rendered inefficacious, and GSIS would retain ostensible ownership over the lots by the simple expedience that they
are included in a mother title, instead of individual titles. That result is manifestly contrary to the Courts ruling and
would subvert the very purpose of bringing this case for a complete resolution.

RUIZ VS DIMAILIG, G.R. 204280, NOV 9, 2016

EVELYN V. RUIZ, PETITIONER, V. BERNARDO F. DIMAILIG, RESPONDENT.

DECISION

DEL CASTILLO, J.:

This Petition for Review on Certiorari assails the October 22, 2012 Decision[1] of the Court of Appeals (CA) in CA-GR.
CV No. 95046 which reversed and set aside the November 26,2009 Decision[2] and the March 19, 2010 Order[3] of
the Regional Trial Court (RTC) of Cavite City, Branch 16 in Civil Case No. N-7573. The CA declared void the Real Estate
Mortgage (REM) constituted on the property covered by Transfer Certificate of title (TCT) No. T-361747.
Factual Antecedents

Respondent Bernardo F. Dimailig (Bernardo) was the registered owner of a parcel of land covered by TCT No. T-
361747 located in Alapan, Imus, Cavite.[4] In October 1997, he entrusted the owner's copy of the said TCT to his
brother, Jovannie,[5] who in turn gave the title to Editha Sanggalang (Editha), a broker, for its intended sale. However,
in January 1998, the property was mortgaged to Evelyn V. Ruiz (Evelyn) as evidenced by a Deed of REM[6] without
Bernardo's knowledge and consent. Hence, Bernardo instituted this suit for annulment of the Deed of REM.[7]

In her Answer,[8] Evelyn contended that she met Jovannie when she inspected the subject property and assured her
that Bernardo owned the property and his title thereto was genuine. She further claimed that Jovannie mortgaged
the property to her. She also insisted that as a mortgagee in good faith and for value, the REM cannot be annulled
and that she had the right to keep the owner's copy of TCT No. T-361747 until the loan was fully paid to her.

During pre-trial the parties arrived at the following stipulations:[9]

1. That x x x it was not [Bernardo] who signed as mortgagor in the subject Deed of Real Estate Mortgage.

2. That there was a demand letter sent to [Evelyn] x x x to cause a release of mortgage on the subject property.

3. The x x x controversy [was referred] to the Barangay for conciliation and mediation.

[4.] That Jovannie x x x is the brother of [Bernardo].

Thereafter, trial on the merits ensued.

Bernardo testified that when he went abroad on October 19, 1997, he left the owner's copy of the TCT of the subject
property to Jovannie as they intended to sell the subject property.[10] However, on January 26, 1998, a REM was
executed on the subject property. Bernardo argued that his alleged signature appearing therein was merely
forged[11] as he was still abroad at that time. When he learned in September or November 1998 that Editha
mortgaged the subject property, he personally told Evelyn that the REM was fake and demanded the return of his
title. Not heeding his request, he filed a complaint for estafa through falsification of public document against Editha
and Evelyn. The criminal case against Evelyn was dismissed[12] while Editha was found guilty as charged.[13]

Jovannie also took the witness stand. He testified that sometime in December 1997, Editha convinced him to
surrender the owner's copy of TCT No. T-361747 which she would show her buyer.[14] Subsequently, however, Editha
informed him that she misplaced the title. Hence, he executed in August 1998[15] an affidavit of loss and registered it
with the Register of Deeds (RD).[16] In September 1998, Editha finally admitted that the title was not lost but was in
Evelyn's possession because of the REM.[17] Upon learning this, Jovannie inquired from Evelyn if Editha mortgaged
Bernardo's property to her. Purportedly, Evelyn confirmed said mortgage and told him that she would not return the
owner's copy of TCT No. T-361747 unless Editha pay the loan,[18] Jovannie also alleged that he told Evelyn that
Bernardo's alleged signature in the REM was not genuine since he was abroad at the time of its execution.[19]

On the other hand, Evelyn maintained that she was a mortgagee in good faith. She testified that sales agents - Editha,
Corazon Encarnacion, and a certain Parani, - and a person introducing himself as ''Bernardo" mortgaged the subject
property to her for P300,000.00 payable within a period of three months.[20] She asserted that even after the
expiration of said period, "Bernardo" failed to pay the loan.[21]

Evelyn narrated that before accepting the mortgage of the subject property, she, the sales agents, her aunt, and
Bernardo," visited the property. She pointed out that her companions inspected it while she stayed in the vehicle as
3

she was still recuperating from an operation.[22] She admitted that she neither verified from the neighborhood the
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owner of the property nor approached the occupant thereof.[23]

Moreover, Evelyn asserted that when the Deed of REM was executed, the person who introduced himself as
Bernardo presented a community tax certificate and his picture as proof of identity.[24] She admitted that she did not
ask for any identification card from "Bernardo."[25]

Contrary to the allegation in her Answer that Jovannie mortgaged the property, Evelyn clarified that she met Jovannie
for the first time when he went to her house and told her that Bernardo could not have mortgaged the property to
her as he was abroad.[26]

Corazon Abella Ruiz (Corazon), the sister-in-law of Evelyn, was presented to corroborate her testimony. Corazon
averred that in January 1998, she accompanied Evelyn and several others in inspecting the subject property.[27] The
day after the inspection, Evelyn and "Bernardo'' executed the Deed of REM in the office of a certain Atty. Ignacio;
Evelyn handed P300,000.00 to Editha, not to "Bernardo;"[28] in turn, Editha handed to Evelyn the owner's copy of
TCT No. T-361747.[29]

Ruling of the Regional Trial Court

On November 26, 2009, the RTC dismissed the Complaint. It held that while Bernardo was the registered owner of the
subject property, Evelyn was a mortgagee in good faith because she was unaware that the person who represented
himself as Bernardo was an impostor. It noted that Evelyn caused the verification of the title of the property with the
RD and found the same to be free from any lien or encumbrance. Evelyn also inspected the property and met
Jovannie during such inspection. Finally, the RTC declared that there was no showing of any circumstance that would
cause Evelyn to doubt the validity of the title or the property covered by it. In fine, Evelyn did all that was necessary
before parting with her money and entering Into the REM.

On March 19, 2010, the RTC denied Bernardo's Motion for Reconsideration. Thus, he appealed to the CA.

Ruling of the Court of Appeals

On October 22, 2012, the CA rendered the assailed Decision reversing and setting aside the RTC Decision. The
decretal portion of the CA Decision reads:

WHEREFORE, the appeal is GRANTED. The assailed dispositions of the RTC are REVERSED and SET ASIDE. Tile
complaint of Bernardo F. Dimailig is GRANTED. The Deed of Real Estate Mortgage constituted on the real property
covered by TCT No. T-361747 of the Registry of Deeds for the Province of Cavite, registered in his name, is DECLARED
null and void. Evelyn V. Ruiz is ORDERED to reconvey or return to him the owner's duplicate copy of the said title. His
claims for the payment of attorney's fees and costs of suits are DENIED. Costs against Evelyn V. Ruiz.

SO ORDERED.[30]
The CA held that the "innocent purchaser (mortgagor 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."[31] Since the Deed of
REM was forged, and the title to the subject property is still in the name of the rightful owner, and the mortgagor is a
different person who only pretended to be the owner, then Evelyn cannot seek protection from the cloak of the
principle of mortgagee in good faith. The CA held that in this case, ''the registered owner will not personally lose his
title."[32]

The CA further decreed that Evelyn's claim of good faith cannot stand as she failed to verify the real identity of the
person introduced by Editha as Bernardo. It noted that the impostor did not even exhibit any identification card to
prove his identity; and, by Evelyn's admission, she merely relied on the representation of Editha relative to the
identity of "Bernardo." It also held that Evelyn transacted only with Editha despite the fact that the purported owner
was present during the inspection of the property, and during the execution of the REM.

In sum, the CA ruled that for being a forged instrument, the Deed of REM was a nullity, and the owner's copy of TCT
No. T-361747 must be returned to its rightful owner, Bernardo.

Issue

Hence, Evelyn filed this Petition raising the sole assignment of error as follows:

[T]he Court of Appeals erred in holding that petitioner is not a mortgagee in good faith despite the presence of
substantial evidence to support such conclusion of fact.[33]
Petitioners Arguments

Petitioner insists that she is a mortgagee in good faith. She claims that she was totally unaware of the fraudulent acts
employed by Editha, Jovannie, and the impostor to obtain a loan from her. She stresses that a person dealing with a
property covered by a certificate of title is not required to look beyond what appears on the face of the title.

Respondent's Arguments

Bernardo, on his end, contends that since the person who mortgaged the property was a mere impostor, then Evelyn
4

cannot claim that she was a mortgagee in good faith. This is because a mortgage is void where the mortgagor has no
Page

title at all to the property subject of such mortgage.

Bernardo asserts that there were circumstances that should have aroused suspicion on the part of Evelyn relative to
the mortgagor's title over the property. He specifies that throughout the negotiation of the mortgage, Evelyn
transacted only with Editha, not with "Bernardo," despite the fact that Editha and the other real estate agents who
assisted Evelyn in the mortgage transaction were not armed with a power of attorney.

Bernardo likewise stresses that although Evelyn caused the inspection of the subject property, she herself admitted
that she did not alight from the vehicle during the inspection, and she failed to verify the actual occupant of the
property.

Our Ruling

The Petition is without merit.

As a rule, the issue of whether a person is a mortgagee in good faith is not within the ambit of a Rule 45 Petition. The
determination of presence or absence of good faith, and of negligence factual matters, which are outside the scope of
a petition for review on certiorari.[34] Nevertheless, this rule allows certain exceptions including cases where the RTC
and the CA arrived at different or conflicting factual findings,[35] as in the case at bench. As such, the Court deems it
necessary to re-examine and re-evaluate the factual findings of the CA as they differ with those of the RTC.

No valid mortgage will arise unless the mortgagor has a valid title or ownership over the mortgaged property. By way
of exception, a mortgagee can invoke that he or she derived title even if the mortgagor's title on the property is
defective, if he or she acted in good faith. In such instance, the mortgagee must prove that no circumstance that
should have aroused her suspicion on the veracity of the mortgagor's title on the property was disregarded.[36]

Such doctrine of mortgagee in good faith presupposes "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."[37] In
short, the doctrine of mortgagee in good faith assumes that the title to the subject property had already been
transferred or registered in the name of the impostor who thereafter transacts with a mortgagee who acted in good
faith. In the case at bench, it must be emphasized that the title remained to be registered in the name of Bernardo,
the rightful and real owner, and not in the name of the impostor.

The burden of proof that one is a mortgagee in good faith and for value lies with the person who claims such status. A
mortgagee cannot simply ignore facts that should have put a reasonable person on guard, and thereafter claim that
he or she acted in good truth under the belief that the mortgagor's title is not defective.[38] And, such good faith
entails an honest intention to refrain from taking unconscientious advantage of another.[39]

In other words, in order for a mortgagee to invoke the doctrine of mortgagee in good faith, the impostor must have
succeeded in obtaining a Torrens title in his name and thereafter in mortgaging the property. Where the mortgagor is
an impostor who only pretended to be the registered owner, and acting on such pretense, mortgaged the property to
another, the mortgagor evidently did not succeed in having the property titled in his or her name, and the mortgagee
cannot rely on such pretense as what appears on the title is not the impostor's name but that of the registered
owner.[40]

In this case, Evelyn insists that she is a mortgagee in good faith and for value. Thus, she has the burden to prove such
claim and must provide necessary evidence to support the same. Unfortunately, Evelyn failed to discharge her
burden.

First, the Deed of REM was established to be a forged instrument. As aptly discussed by the CA, Bernardo did not and
could not have executed it as he was abroad at the time of its execution, to wit:

Verily, Bernardo could not have affixed his signature on the said deed on January 26, 1998 for he left the Philippines
on October 19, 1997, x x x and only returned to the Philippines on March 21, 1998. Not only that, his signature on his
Seafarer's Identification and Record Book is remarkably different from the signature on the assailed mortgage
contract. The variance is obvious even to the untrained eye. This is further bolstered by Evelyn's admission that
Bernardo was not the one who represented himself as the registered owner of the subject property and was not the
one who signed the questioned contract. Thus, there can be no denying the fact that the signature on the Deed of
Real Estate Mortgage was not affixed or signed by the same person.[41]
In fact, during pre-trial, both parties agreed that it was not Bernardo who signed as the mortgagor in the Deed of
REM. It was only an impostor - representing himself as Bernardo - who mortgaged the property. This impostor is not
only without rightful ownership on the mortgaged property, he also has no Torrens title in his own name involving
said property.

Simply put, for being a forged instrument, the Deed of REM is a nullity and conveys no title.[42]

Second, Evelyn cannot invoke the protection given to a mortgagee in good faith. As discussed, the title to the subject
property remained registered in the name of Bernardo. It was not transferred to the impostor's name when Evelyn
transacted with the latter. Hence, the principle of mortgagee in good faith finds no application; correspondingly,
Evelyn cannot not seek refuge therefrom.
5
Page

Third, even assuming that the impostor has caused the property to be titled in his name as if he had rightful
ownership thereof, Evelyn would still not be deemed a mortgagee in good faith. This is because Evelyn did not take
the necessary steps to determine any defect in the title of the alleged owner of the mortgaged property. She
deliberately ignored pertinent facts that should have aroused suspicion on the veracity of the title of the mortgagor
"Bernardo."[43]

One, while ''Bernardo" introduced himself to Evelyn as the owner of the property, he did not present any proof of
identification. To recall, he only exhibited his community tax certificate and a picture when he introduced himself to
Evelyn. Bernardo's" failure to sufficiently establish his identity should have aroused suspicion on the part of Evelyn
whether the person she was transacting with is the real Bernardo or a mere impostor. She should have investigated
further and verified the identity of "Bernardo" but she failed to do so. She even admitted that she did not at all ask for
any identification card from "Bernardo."

Two, Evelyn also ignored the fact that "Bernardo" did not participate in the negotiations/transactions leading to the
execution of the Deed of REM. Notably, no power of attorney was given to Editha who supposedly transacted in
behalf of Bernardo. Despite "Bernardo's" presence during the ocular inspection of the property and execution of the
mortgage contract, it was Editha who transacted with Evelyn. As gathered from the testimony of Corazon, after the
execution of the deed, Evelyn handed the loan amount of P300,000.00 to Editha, not to "Bernardo," and it was Editha
who handed to Evelyn the owner's copy of TCT No. T-361747.

Three, Evelyn likewise failed to ascertain the supposed title of "Bernardo" over the property. Evelyn admitted that
during the ocular inspection, she remained in the vehicle. She did not inquire from the subject property's occupant or
from the occupants of the surrounding properties if they knew "Bernardo" and whether or not he owned the subject
property.

Notably, the RTC misapprehended certain facts when it held that Evelyn inspected the property and met Jovannie
during the inspection. By her own account, Evelyn clarified that she met Jovannie for the first time only when the
latter visited her house to inform her that an impostor mortgaged Bernardo's property to her.

Four, the Court observes that Evelyn hastily granted the loan and entered into the mortgage contract. As also testified
by Corazon, a day after the supposed ocular inspection on the property, Evelyn and "Bernardo" executed the Deed of
REM even without Evelyn verifying the identity of the property's occupant as well as the right of the mortgagor, if
any, over the same. Indeed, where the mortgagee acted with haste in granting the loan, without first determining the
ownership of the property being mortgaged, the mortgagee cannot be considered as an innocent mortgagee in good
faith.[44]

Thus, considering that the mortgage contract was forged as it was entered into by Evelyn with an impostor, the
registered owner of the property, Bernardo, correspondingly did not lose his title thereon, and Evelyn did not acquire
any right or title on the property and cannot invoke that she is a mortgagee in good faith and for value.[45]

WHEREFORE, the Petition is DENIED. Accordingly, the October 22, 2012 Decision of the Court of Appeals in CA-G.R. CV
No. 95046 is AFFIRMED.

e. SALE INVOLVING REAL ESTATE

ESGUERRA VS TRINIDAD, G.R. 169890, MARCH 12, 2007

FELICIANO ESGUERRA, CANUTO ESGUERRA, JUSTA ESGUERRA, ANGEL ESGUERRA, FIDELA ESGUERRA, CLARA
ESGUERRA, and PEDRO ESGUERRA, Petitioners,
vs.
VIRGINIA TRINIDAD, PRIMITIVA TRINIDAD, and THE REGISTER OF DEEDS OF MEYCAUAYAN, BULACAN, Respondents.

DECISION

CARPIO MORALES, J.:

Involved in the present controversy are two parcels of land located in Camalig, Meycauayan, Bulacan.

Felipe Esguerra and Praxedes de Vera (Esguerra spouses) were the owners of several parcels of land in Camalig,
Meycauayan, Bulacan among them a 35,284-square meter parcel of land covered by Tax Declaration No. 10374, half
of which (17,642 square meters) they sold to their grandchildren, herein petitioners Feliciano, Canuto, Justa, Angel,
Fidela, Clara and Pedro, all surnamed Esguerra; and a 23,989-square meter

parcel of land covered by Tax Declaration No. 12080, 23,489 square meters of which they also sold to petitioners, and
the remaining 500 square meters they sold to their other grandchildren, the brothers Eulalio and Julian Trinidad
(Trinidad brothers).

Also sold to the Trinidad brothers were a 7,048-square meter parcel of land covered by Tax Declaration No. 9059, a
4,618-square meter parcel of land covered by Tax Declaration No. 12081, and a 768-square meter parcel of land
covered by Tax Declaration No. 13989.
6
Page
The Esguerra spouses executed the necessary Deed of Sale in favor of petitioners on August 11, 1937,1 and that in
favor of the Trinidad brothers on August 17, 1937.2 Both documents were executed before notary public Maximo
Abao.

Eulalio Trinidad later sold his share of the land to his daughters-respondents herein, via a notarized Kasulatan ng
Bilihang Tuluyan ng Lupa3 dated October 13, 1965. A portion of the land consisting of 1,693 square meters was later
assigned Lot No. 3593 during a cadastral survey conducted in the late 1960s.

On respondents application for registration of title, the then Court of First Instance (CFI) of Bulacan, by Decision4 of
February 20, 1967, awarded Lot No. 3593 in their favor in Land Registration Case No. N-323-V. Pursuant to the
Decision, the Land Registration Commission (LRC, now the Land Registration Authority [LRA]) issued Decree No. N-
114039 by virtue of which the Register of Deeds of Bulacan issued OCT No. 0-36315 in the name of respondents.

Meanwhile, under a notarized Bilihan ng Lupa6 dated November 10, 1958, petitioners sold to respondents parents
Eulalio Trinidad and Damiana Rodeadilla (Trinidad spouses) a portion of about 5,000 square meters of the 23,489-
square meter of land which they previously acquired from the Esguerra spouses.7

During the same cadastral survey conducted in the late 1960s, it was discovered that the about 5,000-square meter
portion of petitioners parcel of land sold to the Trinidad spouses which was assigned Lot No. 3591 actually measured
6,268 square meters.

In a subsequent application for registration of title over Lot No. 3591, docketed as Land Registration Case No. N-335-
V, the CFI, by Decision8 of August 21, 1972, awarded Lot No. 3591 in favor of Eulalio Trinidad. Pursuant to the
Decision, the LRC issued Decree No. N-149491 by virtue of which the Register of Deeds of Bulacan issued OCT No. 0-
64989 in the name of Trinidad.

Upon the death of the Trinidad spouses, Lot No. 3591 covered by OCT No. 0-6498 was transmitted to respondents by
succession.

Petitioners, alleging that upon verification with the LRA they discovered the issuance of the above-stated two OCTs,
filed on August 29, 1994 before the Regional Trial Court (RTC) of Malolos, Bulacan two separate complaints for their
nullification on the ground that they were procured through fraud or misrepresentation.

In the first complaint, docketed as Civil Case No. 737-M-94, petitioners sought the cancellation of OCT No. 0-3631.

In the other complaint, docketed as Civil Case No. 738-M-94, petitioners sought the cancellation of OCT No. 0-6498.

Both cases were consolidated and tried before Branch 79 of the RTC which, after trial, dismissed the cases by Joint
Decision10 of May 15, 1997.

Their appeal with the Court of Appeals having been dismissed by Decision of February 28, 2005, a reconsideration of
which was, by Resolution of October 3, 2005,11 denied, petitioners filed the instant petition.

Petitioners fault the appellate court

1. . . . in misappreciating the fact that the act of the respondent Eulalio Trinidad in acquiring the property from Felipe
Esguerra constituted fraud.

2. . . . in the [i]nterpretation and application of the provisions of Article 1542 of the New Civil Code.

3. . . . in ruling that there is prescription, res judicata, and violation of the non-[forum] shopping.12

In their Comment, respondents assailed the petition as lacking verification and certification against forum shopping
and failing to attach to it an affidavit of service and material portions of the record in support thereof. Petitioners
counter that the procedural deficiencies have been mooted by the filing of a Compliance.

A check of the rollo shows that attached to the petition are an Affidavit of Service dated November 21, 2005 and the
appellate courts Decision of February 28, 2005 and Resolution of October 3, 2005; and that on January 16, 2006 or
almost three months following the last day to file the petition, petitioners submitted, not at their own instance,13 a
Verification and Sworn Certification on Non-Forum Shopping signed by petitioner Pedro Esguerra who cited honest
and excusable mistake behind the omission to submit the same.

This Court has strictly enforced the requirement of verification and certification, obedience to which and to other
procedural rules is needed if fair results are to be expected therefrom.14 While exceptional cases have been
considered to correct patent injustice concomitant to a liberal application of the rules of procedure, there should be
an effort on the part of the party invoking liberality to advance a reasonable or meritorious explanation for his failure
to comply with the rules.15 In petitioners case, no such explanation has been advanced.

With regard to petitioners failure to attach material portions of the record in support of the petition, this
7

requirement is not a mere technicality but an essential requisite for the determination of prima facie basis for giving
Page

due course to the petition.16 As a rule, a petition which lacks copies of essential pleadings and portions of the case
record may be dismissed. Much discretion is left to the reviewing court, however, to determine the necessity for such
copies as the exact nature of the pleadings and portions of the case record which must accompany a petition is not
specified.17

At all events, technicality aside, the petition must be denied.

It is settled that fraud is a question of fact and the circumstances constituting the same must be alleged and proved in
the court below.18

In the present cases, as did the trial court, the appellate court found no fraud in respondents acquisition and
registration of the land, viz:

. . . Appellant Pedro Esguerra even testified that he does not know how appellees were able to secure a title over the
lot in question and that they never sold Lot No. 3593 to Virginia Trinidad since it is part of the whole lot of 23,489
square meters. The said testimony is a mere conclusion on the part of appellants. On the other hand, the evidence
shows that appellees acquired title over the subject property by virtue of a deed of sale executed by their father
Eulalio Trinidad in their favor.

xxxx

[T]hey failed to establish that appellees acquisition of the certificate of title is fraudulent. In fact, in their two
complaints, appellants acknowledged that appellees observed and took the initial procedural steps in the registration
of the land, thus ruling out fraud in the acquisition of the certificate of title. . . .19

Factual findings of the trial court, when affirmed by the Court of Appeals, are final, conclusive and binding on this
Court,20 which is not a trier of facts,21 hence, bereft of function under Rule 45 to examine and weigh the probative
value of the evidence presented,22 its jurisdiction being limited only to the review and revision of errors of law.23
Albeit there are exceptions24 to this rule, the cases at bar do not fall thereunder, there being no showing that the
trial and appellate courts overlooked matters which, if considered, would alter their outcome.

Under the Torrens System, an OCT enjoys a presumption of validity, which correlatively carries a strong presumption
that the provisions of the law governing the registration of land which led to its issuance have been duly followed.25
Fraud being a serious charge, it must be supported by clear and convincing proof.26 Petitioners failed to discharge
the burden of proof, however.

On the questioned interpretation and application by the appellate court of Article 1542 of the Civil Code reading:

In the sale of real estate, made for a lump sum and not at the rate of a certain sum for a unit of measure or number,
there shall be no increase or decrease of the price, although there be a greater or less areas or number than that
stated in the contract.

The same rule shall be applied when two or more immovables are sold for a single price; but if, besides mentioning
the boundaries, which is indispensable in every conveyance of real estate, its area or number should be designated in
the contract, the vendor shall be bound to deliver all that is included within said boundaries, even when it exceeds
the area or number specified in the contract; and, should he not be able to do so, he shall suffer a reduction in the
price, in proportion to what is lacking in the area or number, unless the contract is rescinded because the vendee
does not accede to the failure to deliver what has been stipulated. (Emphasis and underscoring supplied),

while petitioners admittedly sold Lot No. 3591 to the Trinidad spouses, they contend that what they sold were only
5,000 square meters and not 6,268 square meters, and thus claim the excess of 1,268 square meters.

In sales involving real estate, the parties may choose between two types of pricing agreement: a unit price contract
wherein the purchase price is determined by way of reference to a stated rate per unit area (e.g., 1,000 per square
meter), or a lump sum contract which states a full purchase price for an immovable the area of which may be
declared based on an estimate or where both the area and boundaries are stated (e.g., 1 million for 1,000 square
meters, etc.). In Rudolf Lietz, Inc. v. Court of Appeals,27 the Court discussed the distinction:

. . . In a unit price contract, the statement of area of immovable is not conclusive and the price may be reduced or
increased depending on the area actually delivered. If the vendor delivers less than the area agreed upon, the vendee
may oblige the vendor to deliver all that may be stated in the contract or demand for the proportionate reduction of
the purchase price if delivery is not possible. If the vendor delivers more than the area stated in the contract, the
vendee has the option to accept only the amount agreed upon or to accept the whole area, provided he pays for the
additional area at the contract rate.

xxxx

In the case where the area of the immovable is stated in the contract based on an estimate, the actual area delivered
may not measure up exactly with the area stated in the contract. According to Article 1542 of the Civil Code, in the
sale of real estate, made for a lump sum and not at the rate of a certain sum for a unit of measure or number, there
shall be no increase or decrease of the price, although there be a greater or less areas or number than that stated in
8

the contract. . . .
Page

xxxx
Where both the area and the boundaries of the immovable are declared, the area covered within the boundaries of
the immovable prevails over the stated area. In cases of conflict between areas and boundaries, it is the latter which
should prevail. What really defines a piece of ground is not the area, calculated with more or less certainty,
mentioned in its description, but the boundaries therein laid down, as enclosing the land and indicating its limits. In a
contract of sale of land in a mass, it is well established that the specific boundaries stated in the contract must control
over any statement with respect to the area contained within its boundaries. It is not of vital consequence that a deed
or contract of sale of land should disclose the area with mathematical accuracy. It is sufficient if its extent is
objectively indicated with sufficient precision to enable one to identify it. An error as to the superficial area is
immaterial. Thus, the obligation of the vendor is to deliver everything within the boundaries, inasmuch as it is the
entirety thereof that distinguishes the determinate object.28 (Emphasis and underscoring supplied)

The courts below correctly characterized the sale of Lot No. 3591 as one involving a lump sum contract. The Bilihan ng
Lupa shows that the parties agreed on the purchase price of 1,000.00 on a predetermined, albeit unsurveyed, area
of 5,000 square meters and not on a particular rate per unit area. As noted by the Court of Appeals, the identity of the
realty was sufficiently described as riceland:

It is clear from the afore-quoted Bilihan ng Lupa that what appellants sold to Eulalio was the "bahaging palayan."
Though measured as 5,000 square meters, more or less, such measurement is only an approximation, and not an
exact measurement. Moreover, we take note of the fact that the said deed of sale mentioned the boundaries
covering the whole area of 33,489 square meters, including the "bahaging palayan." Had appellants intended to sell
only a portion of the "bahaging palayan," they could have stated the specific area in the deed of sale and not the
entire "bahaging palayan" . . . .29

In fine, under Article 1542, what is controlling is the entire land included within the boundaries, regardless of whether
the real area should be greater or smaller than that recited in the deed. This is particularly true since the area of the
land in OCT No. 0-6498 was described in the deed as "humigit kumulang," that is, more or less.30

A caveat is in order, however. The use of "more or less" or similar words in designating quantity covers only a
reasonable excess or deficiency. A vendee of land sold in gross or with the description "more or less" with reference
to its area does not thereby ipso facto take all risk of quantity in the land.31

Numerical data are not of course the sole gauge of unreasonableness of the excess or deficiency in area. Courts must
consider a host of other factors. In one case,32 the Court found substantial discrepancy in area due to
contemporaneous circumstances. Citing change in the physical nature of the property, it was therein established that
the excess area at the southern portion was a product of reclamation, which explained why the lands technical
description in the deed of sale indicated the seashore as its southern boundary, hence, the inclusion of the reclaimed
area was declared unreasonable.

In OCT No. 0-6498, the increase by a fourth of a fraction of the area indicated in the deed of sale cannot be
considered as an unreasonable excess. Most importantly, the circumstances attendant to the inclusion of the excess
area bare nothing atypical or significant to hint at unreasonableness. It must be noted that the land was not yet
technically surveyed at the time of the sale. As vendors who themselves executed the Bilihan ng Lupa, petitioners
may rightly be presumed to have acquired a good estimate of the value and area of the bahaging palayan.

As for the last assigned error, the appellate court, in finding that the complaints were time-barred, noted that when
the complaints were filed in 1994, more than 27 years had elapsed from the issuance of OCT No. 0-3631 and more
than 20 years from the issuance of OCT No. 0-6498. The prescriptive period of one (1) year had thus set
in.1awphi1.nt

Petitioners reliance on Agne v. Director of Lands33 is misplaced since the cancellation of title was predicated not on
the ground of fraud but on want of jurisdiction. Even assuming that petitioners actions are in the nature of a suit for
quieting of title, which is imprescriptible, the actions still necessarily fail since petitioners failed to establish the
existence of fraud.

A word on Republic Act No. 716034 which was raised by petitioners in their petition. It expressly requires the parties
to undergo a conciliation process under the Katarungang Pambarangay, as a precondition to filing a complaint in
court,35 non-compliance with this condition precedent does not prevent a court of competent jurisdiction from
exercising its power of adjudication over a case unless the defendants object thereto. The objection should be
seasonably made before the court first taking cognizance of the complaint, and must be raised in the Answer or in
such other pleading allowed under the Rules of Court.36

While petitioners admittedly failed to comply with the requirement of barangay conciliation, they assert that
respondents waived such objection when they failed to raise it in their Answer. Contrary to petitioners claim,
however, the records reveal that respondents raised their objection in their Amended Answers37 filed in both cases.

IN FINE, it is a fundamental principle in land registration that a certificate of title serves as evidence of an indefeasible
and incontrovertible title to the property in favor of the person whose name appears therein. Such indefeasibility
commences after the lapse or expiration of one year from the date of entry of the decree of registration when all
9

persons are considered to have a constructive notice of the title to the property. After the lapse of one year,
Page

therefore, title to the property can no longer be contested. This system was so effected in order to quiet title to
land.38
WHEREFORE, the petition is DENIED. The assailed Decision and Resolution of the Court of Appeals are AFFIRMED.

DEL PRADO VS CABALLERO, G.R. 148225, MARCH 3, 2010

CARMEN DEL PRADO, Petitioner,

vs.
SPOUSES ANTONIO L. CABALLERO and LEONARDA CABALLERO, Respondents.

DECISION

NACHURA, J.:

This is a petition for review on certiorari of the decision1 of the Court of Appeals (CA) dated September 26, 2000 and
its resolution denying the motion for reconsideration thereof.

The facts are as follows:

In a judgment rendered on February 1, 1985 in Cadastral Case No. N-6 (LRC Rec. No. N-611), Judge Juan Y. Reyes of
the Regional Trial Court (RTC) of Cebu City, Branch 14, adjudicated in favor of Spouses Antonio L. Caballero and
Leonarda B. Caballero several parcels of land situated in Guba, Cebu City, one of which was Cadastral Lot No. 11909,
the subject of this controversy.2 On May 21, 1987, Antonio Caballero moved for the issuance of the final decree of
registration for their lots.3 Consequently, on May 25, 1987, the same court, through then Presiding Judge Renato C.
Dacudao, ordered the National Land Titles and Deeds Registration Administration to issue the decree of registration
and the corresponding titles of the lots in favor of the Caballeros.4

On June 11, 1990, respondents sold to petitioner, Carmen del Prado, Lot No. 11909 on the basis of the tax declaration
covering the property. The pertinent portion of the deed of sale reads as follows:

That we, Spouses ANTONIO L. CABALLERO and LEONARDA B. CABALLERO, Filipinos, both of legal age and residents of
Talamban, Cebu City, Philippines, for and in consideration of the sum of FORTY THOUSAND PESOS (40,000.00),
Philippine Currency, paid by CARMEN DEL PRADO, Filipino, of legal age, single and a resident of Sikatuna St., Cebu
City, Philippines, the receipt of which is full is hereby acknowledged, do by these presents SELL, CEDE, TRANSFER,
ASSIGN & CONVEY unto the said CARMEN DEL PRADO, her heirs, assigns and/or successors-in-interest, one (1)
unregistered parcel of land, situated at Guba, Cebu City, Philippines, and more particularly described and bounded, as
follows:

"A parcel of land known as Cad. Lot No. 11909, bounded as follows:

North : Lot 11903

East : Lot 11908

West : Lot 11910

South : Lot 11858 & 11912

containing an area of 4,000 square meters, more or less, covered by Tax Dec. No. 00787 of the Cebu City Assessors
Office, Cebu City." of which parcel of land we are the absolute and lawful owners.

Original Certificate of Title (OCT) No. 1305, covering Lot No. 11909, was issued only on November 15, 1990, and
entered in the "Registration Book" of the City of Cebu on December 19, 1990.5 Therein, the technical description of
Lot No. 11909 states that said lot measures about 14,457 square meters, more or less.6

On March 20, 1991, petitioner filed in the same cadastral proceedings a "Petition for Registration of Document Under
Presidential Decree (P.D.) 1529"7 in order that a certificate of title be issued in her name, covering the whole Lot No.
11909. In the petition, petitioner alleged that the tenor of the instrument of sale indicated that the sale was for a
lump sum or cuerpo cierto, in which case, the vendor was bound to deliver all that was included within said
boundaries even when it exceeded the area specified in the contract. Respondents opposed, on the main ground that
only 4,000 sq m of Lot No. 11909 was sold to petitioner. They claimed that the sale was not for a cuerpo cierto. They
moved for the outright dismissal of the petition on grounds of prescription and lack of jurisdiction.

After trial on the merits, the court found that petitioner had established a clear and positive right to Lot No. 11909.
The intended sale between the parties was for a lump sum, since there was no evidence presented that the property
was sold for a price per unit. It was apparent that the subject matter of the sale was the parcel of land, known as
Cadastral Lot No. 11909, and not only a portion thereof.8

Thus, on August 2, 1993, the court a quo rendered its decision with the following dispositive portion:
10

WHEREFORE, premises considered, the petition is hereby granted and judgment is hereby rendered in favor of herein
Page

petitioner. The Register of Deeds of the City of Cebu is hereby ordered and directed to effect the registration in his
office of the Deed of Absolute Sale between Spouses Antonio Caballero and Leonarda Caballero and Petitioner,
Carmen del Prado dated June 11, 1990 covering Lot No. 11909 after payment of all fees prescribed by law.
Additionally, the Register of Deeds of the City of Cebu is hereby ordered to cancel Original Certificate No. 1305 in the
name of Antonio Caballero and Leonarda Caballero and the Transfer Certificate of Title be issued in the name of
Petitioner Carmen del Prado covering the entire parcel of land known as Cadastral Lot No. 11909.9

An appeal was duly filed. On September 26, 2000, the CA promulgated the assailed decision, reversing and setting
aside the decision of the RTC.

The CA no longer touched on the character of the sale, because it found that petitioner availed herself of an improper
remedy. The "petition for registration of document" is not one of the remedies provided under P.D. No. 1529, after
the original registration has been effected. Thus, the CA ruled that the lower court committed an error when it
assumed jurisdiction over the petition, which prayed for a remedy not sanctioned under the Property Registration
Decree. Accordingly, the CA disposed, as follows:

IN VIEW OF ALL THE FOREGOING, the appealed decision is REVERSED and SET ASIDE and a new one entered
dismissing the petition for lack of jurisdiction. No pronouncement as to costs.10

Aggrieved, petitioner filed the instant petition, raising the following issues:

I. WHETHER OR NOT THE COURT OF APPEALS COMMITTED GRAVE ERROR IN MAKING FINDINGS OF FACT CONTRARY
TO THAT OF THE TRIAL COURT[;]

II. WHETHER OR NOT THE COURT OF APPEALS COMMITTED GRAVE ERROR IN FAILING TO RULE THAT THE SALE OF THE
LOT IS FOR A LUMP SUM OR CUERPO CIERTO[;]

III. WHETHER OR NOT THE COURT A QUO HAS JURISDICTION OVER THE PETITION FOR REGISTRATION OF THE DEED OF
ABSOLUTE SALE DATED 11 JUNE 1990 EXECUTED BETWEEN HEREIN PETITIONER AND RESPONDENTS[.]11

The core issue in this case is whether or not the sale of the land was for a lump sum or not.

Petitioner asserts that the plain language of the Deed of Sale shows that it is a sale of a real estate for a lump sum,
governed under Article 1542 of the Civil Code.12 In the contract, it was stated that the land contains an area of 4,000
sq m more or less, bounded on the North by Lot No. 11903, on the East by Lot No. 11908, on the South by Lot Nos.
11858 & 11912, and on the West by Lot No. 11910. When the OCT was issued, the area of Lot No. 11909 was declared
to be 14,475 sq m, with an excess of 10,475 sq m. In accordance with Article 1542, respondents are, therefore, duty-
bound to deliver the whole area within the boundaries stated, without any corresponding increase in the price. Thus,
petitioner concludes that she is entitled to have the certificate of title, covering the whole Lot No. 11909, which was
originally issued in the names of respondents, transferred to her name.

We do not agree.

In Esguerra v. Trinidad,13 the Court had occasion to discuss the matter of sales involving real estates. The Courts
pronouncement is quite instructive:

In sales involving real estate, the parties may choose between two types of pricing agreement: a unit price contract
wherein the purchase price is determined by way of reference to a stated rate per unit area (e.g., 1,000 per square
meter), or a lump sum contract which states a full purchase price for an immovable the area of which may be
declared based on the estimate or where both the area and boundaries are stated (e.g., 1 million for 1,000 square
meters, etc.). In Rudolf Lietz, Inc. v. Court of Appeals (478 SCRA 451), the Court discussed the distinction:

"In a unit price contract, the statement of area of immovable is not conclusive and the price may be reduced or
increased depending on the area actually delivered. If the vendor delivers less than the area agreed upon, the vendee
may oblige the vendor to deliver all that may be stated in the contract or demand for the proportionate reduction of
the purchase price if delivery is not possible. If the vendor delivers more than the area stated in the contract, the
vendee has the option to accept only the amount agreed upon or to accept the whole area, provided he pays for the
additional area at the contract rate.

xxxx

In the case where the area of an immovable is stated in the contract based on an estimate, the actual area delivered
may not measure up exactly with the area stated in the contract. According to Article 1542 of the Civil Code, in the
sale of real estate, made for a lump sum and not at the rate of a certain sum for a unit of measure or number, there
shall be no increase or decrease of the price, although there be a greater or less areas or number than that stated in
the contract. . . .

xxxx

Where both the area and the boundaries of the immovable are declared, the area covered within the boundaries of
11

the immovable prevails over the stated area. In cases of conflict between areas and boundaries, it is the latter which
should prevail. What really defines a piece of ground is not the area, calculated with more or less certainty,
Page

mentioned in its description, but the boundaries therein laid down, as enclosing the land and indicating its limits. In a
contract of sale of land in a mass, it is well established that the specific boundaries stated in the contract must control
over any statement with respect to the area contained within its boundaries. It is not of vital consequence that a deed
or contract of sale of land should disclose the area with mathematical accuracy. It is sufficient if its extent is
objectively indicated with sufficient precision to enable one to identify it. An error as to the superficial area is
immaterial. Thus, the obligation of the vendor is to deliver everything within the boundaries, inasmuch as it is the
entirety thereof that distinguishes the determinate object.14

The Court, however, clarified that the rule laid down in Article 1542 is not hard and fast and admits of an exception. It
held:

A caveat is in order, however. The use of "more or less" or similar words in designating quantity covers only a
reasonable excess or deficiency. A vendee of land sold in gross or with the description "more or less" with reference
to its area does not thereby ipso facto take all risk of quantity in the land..

Numerical data are not of course the sole gauge of unreasonableness of the excess or deficiency in area. Courts must
consider a host of other factors. In one case (see Roble v. Arbasa, 414 Phil. 343 [2001]), the Court found substantial
discrepancy in area due to contemporaneous circumstances. Citing change in the physical nature of the property, it
was therein established that the excess area at the southern portion was a product of reclamation, which explained
why the lands technical description in the deed of sale indicated the seashore as its southern boundary, hence, the
inclusion of the reclaimed area was declared unreasonable.15

In the instant case, the deed of sale is not one of a unit price contract. The parties agreed on the purchase price of
40,000.00 for a predetermined area of 4,000 sq m, more or less, bounded on the North by Lot No. 11903, on the
East by Lot No. 11908, on the South by Lot Nos. 11858 & 11912, and on the West by Lot No. 11910. In a contract of
sale of land in a mass, the specific boundaries stated in the contract must control over any other statement, with
respect to the area contained within its boundaries.161avvphi1

Blacks Law Dictionary17 defines the phrase "more or less" to mean:

About; substantially; or approximately; implying that both parties assume the risk of any ordinary discrepancy. The
words are intended to cover slight or unimportant inaccuracies in quantity, Carter v. Finch, 186 Ark. 954, 57 S.W.2d
408; and are ordinarily to be interpreted as taking care of unsubstantial differences or differences of small importance
compared to the whole number of items transferred.

Clearly, the discrepancy of 10,475 sq m cannot be considered a slight difference in quantity. The difference in the area
is obviously sizeable and too substantial to be overlooked. It is not a reasonable excess or deficiency that should be
deemed included in the deed of sale.

We take exception to the avowed rule that this Court is not a trier of facts. After an assiduous scrutiny of the records,
we lend credence to respondents claim that they intended to sell only 4,000 sq m of the whole Lot No. 11909,
contrary to the findings of the lower court. The records reveal that when the parties made an ocular inspection,
petitioner specifically pointed to that portion of the lot, which she preferred to purchase, since there were mango
trees planted and a deep well thereon. After the sale, respondents delivered and segregated the area of 4,000 sq m in
favor of petitioner by fencing off the area of 10,475 sq m belonging to them.18

Contracts are the law between the contracting parties. Sale, by its very nature, is a consensual contract, because it is
perfected by mere consent. The essential elements of a contract of sale are the following: (a) consent or meeting of
the minds, that is, consent to transfer ownership in exchange for the price; (b) determinate subject matter; and (c)
price certain in money or its equivalent. All these elements are present in the instant case.19

More importantly, we find no reversible error in the decision of the CA. Petitioners recourse, by filing the petition for
registration in the same cadastral case, was improper. It is a fundamental principle in land registration that a
certificate of title serves as evidence of an indefeasible and incontrovertible title to the property in favor of the
person whose name appears therein. Such indefeasibility commences after one year from the date of entry of the
decree of registration.20 Inasmuch as the petition for registration of document did not interrupt the running of the
period to file the appropriate petition for review and considering that the prescribed one-year period had long since
expired, the decree of registration, as well as the certificate of title issued in favor of respondents, had become
incontrovertible.21

WHEREFORE, the petition is DENIED.

AGATEP VS RODRIGUEZ, G.R. 170540, OCT 28, 2009

Respondent Natalia Vda Lim owned a parcel of land in Zinundungan, Lasam, Cagayan. Lim mortgaged said lot to the
PNB to secure a loan worth 30,000 and the mortgage was duly annotated on the TCT of the land. While the mortgage
was in effect, Lim sold the property to the husband (Isaac Agatep) of the petitioner Eufemia Balatico Vda De Agatep
for 18,000.

The sale was not registered on the TCT and Lim also did not deliver the title to Balatico or her husband Agatep. In
12

spite of this, Agatep still took possession of the same and fenced said lot. When Agatep died, his heirs including
petitioner continued possession of said property.
Page
PNB foreclosed the said property when Lim could not pay her loan. Lim also failed to redeem her property during the
one year period of redemption. PNB thus consolidated ownership over the land and a new TCT was issued in PNBs
name. PNB subsequently put up some of its acquired assets for sale which included the subject lot. Roberta Rodriguez
(the daughter of respondent Lim) bought the same during the sale.This prompts Balatico to file a complaint for
reconveyance and/or damages with the RTC.

RTC- dismissed complaint but awarded damages to Balatico

CA- affirmed decision of RTC

ISSUE/S:
1. Whether PNB is a mortgagee, buyer and later seller in good faith
2. Whether PNB acquired ownership over the property

Ruling:

1. PNB was a mortgagee, buyer, and later on, seller in good faith.

Petitioner insists that PNB is not a mortgagee in good faith asserting that, if it only exercised due diligence, it would
have found out that petitioner and her husband were already in adverse possession of the subject property as early
as two years before the same was sold to them. This claim, however, is contradicted by no less than petitioner's
averments in her Brief filed with the CA wherein she stated that "[i]mmediately after the sale, the land was delivered
to Isaac Agatep . . . Since that timeup to the present, Isaac Agatep and after his death, the Appellant have been in
continuous, uninterrupted, adverse and public possession of the said parcel of land". The foregoing assertion only
shows that petitioner's husband took possession of the subject lot only after the same was sold to him.

In any case, the Court finds no error in the findings of both the RTC and the CA that PNB is indeed an innocent
mortgagee for value. When the lots were mortgaged to PNB by Lim, the titles thereto were in the latter's name, and
they showed neither vice nor infirmity. In accepting the mortgage, PNB was not required to make any further
investigation of the titles to the properties being given as security, and could rely entirely on what was stated in the
aforesaid title. The public interest in upholding the indefeasibility of a certificate of title, as evidence of the lawful
ownership of the land or of any encumbrance thereon, protects a buyer or mortgagee who, in good faith, relies upon
what appears on the face of the certificate of title.

2. PNB acquired ownership over the land.

Petitioner contends that PNB did not acquire ownership over the disputed lot because the said property was not
delivered to it. Petitioner asserts that the execution of a public document does not constitute sufficient delivery to
PNB, considering that the subject property is in the adverse possession, under claim of ownership, of petitioner and
her predecessor-in-interest.

The court finds the argument untenable.

When the sale is made through a public instrument, the execution thereof shall be equivalent to the delivery of the
thing which is the object of the contract, if from the deed the contrary does not appear or cannot clearly be
inferred.(Art 1498, CC) Therefore, prior physical delivery or possession is not legally required since the execution of
the Deed of Sale is deemed equivalent to delivery. Thus, the execution of the Deed of Sale in favor of PNB, after the
expiration of the redemption period, is deemed equivalent to delivery.

Petitioner avers that she and her husband were not aware of the mortgage contract which was executed between
PNB and Lim prior to the sale of the subject property by the latter to her husband. The fact remains, however, that
the mortgage was registered and annotated on the certificate of title covering the subject property.

It is settled that registration in the public registry is notice to the whole world. Under the rule of notice, it is presumed
that the purchaser has examined every instrument of record affecting the title. Such presumption may not be
rebutted. He is charged with notice of every fact shown by the record and is presumed to know every fact shown by
the record and to know every fact which an examination of the record would have disclosed.

n the present case, since the mortgage contract was registered, petitioner may not claim lack of knowledge thereof as
a valid defense. The subsequent sale of the property to petitioner's husband cannot defeat the rights of PNB as the
mortgagee and, subsequently, the purchaser at the auction sale whose rights were derived from a prior mortgage
validly registered.

DEL PRADO vs COURT OF APPEALSGR 148225Facts:A lot No. 1109 was adjudicated in favor of spouses Caballero thru a
Deed of Sale. They sold to petitioner said lot on the basis of Tax Declaration covering the said property. In the Deed of
Sale, it is stated that the parcel of land sold to Carmen Del Prado only covers 4,000 square meters while the total area
of the said lot is 14,000 square meters.Issue:Whether or Not the sale of the land was for lump sum or not .Held:The
court reiterated the rulings in Esguerra v. Trinidad; In sales involving real estate, the parties may choose between two
13

types of pricing agreement:Unit price contract, where in the purchase price is determined by way of reference to
stated rate per area.Lump sum, contract whichstates a full purchase price for an immovable, the area of which may
Page

be declared based on the estimate or where both the area and boundaries are stated.In the instant case the sale of
the land was for lump sum because the parties agreed to purchase the land at P 40,000 for pre-determined area of
4,000 square meters, more or less, with boundaries stated therein. In a contract of sale of land in a mass, the specific
boundaries stated in the contract prevails over any other statement with respect to the area contained within its
boundaries.

f. CAVEAT EMPTOR PRINCIPLE

SY VS CAPISTRANO, G.R. 154450, JULY 28, 2008

Sy v. Capistrano
G.R. No. 154450, July 28, 2008

Facts:

Sometime in 1980, Nenita Scott (Scott) approached respondent Nicolas Capistrano, Jr. (Capistrano) and offered her
services to help him sell his 13,785 square meters of land covered by Transfer Certificate of Title (TCT) No. 76496 of
the Register of Deeds of Caloocan City. Capistrano gave her a temporary authority to sell which expired without any
sale transaction being made. To his shock, he discovered later that TCT No. 76496, which was in his name, had already
been cancelled on June 24, 1992 and a new one, TCT No. 249959, issued over the same property on the same date to
Josefina A. Jamilar. TCT No. 249959 likewise had already been cancelled and replaced by three (3) TCTs (Nos. 251524,
251525, and 251526), all in the names of the Jamilar spouses. TCT Nos. 251524 and 251526 had also been cancelled
and replaced by TCT Nos. 262286 and 262287 issued to Nelson Golpeo and John B. Tan, respectively. DTCSHA

Thus, the action for reconveyance filed by Capistrano, alleging that his and his wife's signatures on the purported
deed of absolute sale in favor of Scott were forgeries; that the owner's duplicate copy of TCT No. 76496 in his name
had always been in his possession; and that Scott, the Jamilar spouses, Golpeo, and Tan were not innocent purchasers
for value because they all participated in defrauding him of his property.

RTC:
Decided in favor of Capistrano.
1. Declaring plaintiff herein as the absolute owner of the parcel of land located at the Tala Estate, Bagumbong,
Caloocan City and covered by TCT No. 76496;
CA: Affirmed the Decision of the trial court with the modification that the Jamilar spouses were ordered to return to
Sy, Golpeo, and Tan the amount of P1,679,260.00 representing their full payment for the property, with legal interest
thereon from the date of the filing of the complaint until full payment.

Issue(s):
(1) Whether the purported sale from Capistrano to Scott was a forgery
(2) Whether the petitioners were innocent purchasers for value

Ruling:

(1) Yes. The CA was correct in upholding the finding of the trial court that the purported sale of the property from
Capistrano to Scott was a forgery, and resort to a handwriting expert was not even necessary as the specimen
signature submitted by Capistrano during trial showed marked variance from that found in the deed of absolute sale.

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.
By the same token, we agree with the CA when it held that the deed of sale between Scott and the Jamilars was also
forged, as it noted the stark differences between the signatures of Scott in the deed of sale and those in her
handwritten letters to Capistrano. DTESIA

(2) No, they were not innocent purchasers for value.

The Jamilar spouses were not innocent purchasers for value of the subject property. The CA properly held that they
should have known that the signatures of Scott and Capistrano were forgeries due to the patent variance of the
signatures in the two deeds of sale shown to them by Scott, when Scott presented to them the deeds of sale, one
allegedly executed by Capistrano in her favor covering his property; and the other allegedly executed by Scott in favor
of Capistrano over her property, the P40,000.00 consideration for which ostensibly constituted her initial and partial
14

payment for the sale of Capistrano's property to her.

Page

The CA also correctly found the Gilturas not innocent purchasers for value, because they failed to check the veracity
of the allegation of Jamilar that he acquired the property from Capistrano.
In ruling that Sy was not an innocent purchaser for value, we share the observation of the appellate court that Sy
knew that the title to the property was still in the name of Capistrano, but failed to verify the claim of the Jamilar
spouses regarding the transfer of ownership of the property by asking for the copies of the deeds of absolute sale
between Capistrano and Scott, and between Scott and Jamilar. Sy should have likewise inquired why the Gilturas had
to affix their conformity to the contract to sell by asking for a copy of the deed of sale between the Jamilars and the
Gilturas. Had Sy done so, he would have learned that the Jamilars claimed that they purchased the property from
Capistrano and not from Scott.

We also note, as found by both the trial court and the CA, Tan's testimony that he, Golpeo and Sy are brothers, he
and Golpeo having been adopted by Sy's father. Tan also testified that he and Golpeo were privy to the transaction
between Sy and the Jamilars and the Gilturas, as shown by their collective act of filing a complaint for specific
performance to enforce the contract to sell.

Also noteworthy and something that would have ordinarily aroused suspicion is the fact that even before the
supposed execution of the deed of sale by Scott in favor of the Jamilars, the latter had already caused the subdivision
of the property into nine (9) lots, with the title to the property still in the name of Capistrano.

Notable likewise is that the owner's duplicate copy of TCT No. 76496 in the name of Capistrano had always been in his
possession since he gave Scott only a photocopy thereof pursuant to the latter's authority to look for a buyer of the
property. On the other hand, the Jamilars were able to acquire a new owner's duplicate copy thereof by filing an
affidavit of loss and a petition for the issuance of another owner's duplicate copy of TCT No. 76496. The minimum
requirement of a good faith buyer is that the vendee of the real property should at least see the owner's duplicate
copy of the title. A person who deals with registered land through someone who is not the registered owner is
expected to look beyond the certificate of title and examine all the factual circumstances thereof in order to
determine if the vendor has the capacity to transfer any interest in the land. He has the duty to ascertain the identity
of the person with whom he is dealing and the latter's legal authority to convey.

Finally, there is the questionable cancellation of the certificate of title of Capistrano which resulted in the immediate
issuance of a certificate of title in favor of the Jamilar spouses despite the claim that Capistrano sold his property to
Scott and it was Scott who sold the same to the Jamilars.

In light of the foregoing disquisitions, based on the evidence on record, we find no error in the findings of the CA as to
warrant a discretionary judicial review by this Court.

WHEREFORE, the petition is DENIED DUE COURSE for failure to establish reversible error on the part of the Court of
Appeals. Costs against petitioners.
SO ORDERED.

DOMINGO REALTY VS CA, G.R. 126236, JAN. 26, 2007

COMPROMISE AGREEMENT CANNOT BE SET ASIDE ON THE GROUND OF VAGUENESS AND MISTAKE IF THE OBJECT OF
THE CONTRACT IS DETERMINABLE WITHOUT THE NEED OF A NEW CONTRACT

Domingo Realty, Inc. vs. Court of Appeals

G.R. No. 126236; January 26, 2007
Velasco, Jr., J.

FACTS:
Petitioner Domingo Realty filed a complaint for recovery of possession of three (3) parcels of land against private
respondent Acero, who had constructed a factory building on a portion of said lots. During the pendency of the case,
both petitioner and Acero executed a Compromise Agreement in which the latter admitted that the property he is
occupying by way of lease is encroaching on a portion of the property of petitioner and undertakes to clear all
structures within the period of 60 days.

The Regional Trial Court (RTC) rendered a decision based on the Compromise Agreement. Acero then filed a Motion
to Nullify the Compromise Agreement on the ground of vagueness and mistake. The motion was denied. The Court of
Appeals (CA) set aside the decision of the RTC. Thus, petitioner filed this petition for review on certiorari under Rule
45.

Acero alleges that the Compromise Agreement is vague as there is still a need to determine the exact metes and
bounds of the encroachment on the petitioners lot. Moreover, the agreement is mistaken as it is anchored on his
belief that the encroachment on the property of petitioners is only a portion and not the entire lot he is occupying.

ISSUE:
Should the Compromise Agreement entered into between petitioner and private respondent be set aside on the
ground of vagueness and mistake?
15

RULING:
Page

No, the compromise agreement is valid. Article 1349 of the Civil Code provides that in order for the object of the
contract to be considered as certain, it is enough that the object is determinable. Here, the title over the subject
property contains a technical description that provides the metes and bounds of the property of petitioner. Acero was
also aware of the boundaries of the lot he leased. Thus, the area of the encroachment is determinable without the
need of a new contract between the parties. Before consenting to the agreement, Acero could have simply hired a
geodetic engineer to conduct a verification survey and determine the actual encroachment of the area he was leasing
on the titled lot of petitioner. Moreover, Acero admitted that "the property he is presently occupying by way of lease
is encroaching on a portion of the property of the plaintiff." Thus, whether it is only a portion or the entire lot Acero is
leasing that will be affected by the agreement is of no importance. What controls is the encroachment on the lot of
petitioner regardless of whether the entire lot or only a portion occupied by Acero will be covered by the
encroachment. Therefore, the compromise agreement cannot be set aside on the ground of vagueness and mistake.

LOCSIN VS HIZON, G.R. 204369, SEPT 17, 2014

ENRIQUETA M. LOCSIN, Petitioner, v. BERNARDO HIZON, CARLOS HIZON, SPS. JOSE MANUEL & LOURDES GUEVARA,
Respondents.
DECISION
VELASCO JR., J.:
Nature of the Case

Before Us is a Petition for Review on Certiorari under Rule 45 assailing the Decision1 and Resolution of the Court of
Appeals (CA), dated June 6, 2012 and October 30, 2012, respectively, in CA-G.R. CV No. 96659 entitled Enriqueta M.
Locsin v. Marylou Bolos, et al. In reversing the ruling of the trial court, the CA held that respondents are innocent
purchasers for value and good faith of the subject property.
The Facts

Petitioner Enriqueta M. Locsin (Locsin) was the registered owner of a 760-sq.m. lot covered by Transfer Certificate of
Title (TCT) No. 235094, located at 49 Don Vicente St., Don Antonio Heights Subdivision, Brgy. Holy Spirit, Capitol,
Quezon City. In 1992, she filed an ejectment case, Civil Case No. 38-6633,2 against one Billy Aceron (Aceron) before
the Metropolitan Trial Court, Branch 38 in Quezon City (MTC) to recover possession over the land in issue. Eventually,
the two entered into a compromise agreement, which the MTC approved on August 6, 1993.3 Locsin later went to the
United States without knowing whether Aceron has complied with his part of the bargain under the compromise
agreement. In spite of her absence, however, she continued to pay the real property taxes on the subject lot.

In 1994, after discovering that her copy of TCT No. 235094 was missing, Locsin filed a petition for administrative
reconstruction in order to secure a new one, TCT No. RT-97467.Sometime in early 2002, she then requested her
counsel to check the status of the subject lot. It was then that they discovered the
following:chanRoblesvirtualLawlibrary
1. One Marylou Bolos (Bolos) had TCT No. RT-97467 cancelled on February 11, 1999, and then secured a new
one, TCT No. N-200074, in her favor by registering a Deed of Absolute Sale dated November 3, 1979 allegedly
executed by Locsin with the Registry of Deeds;
2. Bolos later sold the subject lot to Bernardo Hizon (Bernardo) for PhP1.5 million, but it was titled under
Carlos Hizons (Carlos) name on August 12, 1999. Carlos is Bernardos son;
3. On October 1, 1999, Bernardo, claiming to be the owner of the property, filed a Motion for Issuance of Writ
of Execution for the enforcement of the court-approved compromise agreement in Civil Case No. 38-6633;
4. The property was already occupied and was, in fact, up for sale.

On May 9, 2002, Locsin, through counsel, sent Carlos a letter requesting the return of the property since her signature
in the purported deed of sale in favor of Bolos was a forgery. In a letter-reply dated May 20, 2002, Carlos denied
Locsins request, claiming that he was unaware of any defect or flaw in Bolos title and he is, thus, an innocent
purchaser for value and good faith.

On June 13, 2002,4 Bernardo met with Locsins counsel and discussed the possibility of a compromise. He ended the
meeting with a promise to come up with a win-win situation for his son and Locsin, a promise which turned out to be
deceitful, for, on July 15, 2002, Locsin learned that Carlos had already sold the property for PhP 1.5 million to his
sister and her husband,herein respondents Lourdes and Jose Manuel Guevara (spouses Guevara), respectively, who,
as early as May 24, 2002, had a new certificate of title, TCT No. N-237083, issued in their names. The spouses Guevara
then immediately mortgaged the said property to secure a PhP2.5 million loan/credit facility with Damar Credit
Corporation (DCC).

It was against the foregoing backdrop of events that Locsin filed an action for reconveyance, annulment of TCT No. N-
237083, the cancellation of the mortgage lien annotated thereon, and damages, against Bolos, Bernardo, Carlos, the
Sps. Guevara, DCC, and the Register of Deeds, Quezon City,docketed as Civil Case No. Q-02-47925, which was tried by
the Regional Trial Court, Branch 77 in Quezon City (RTC). The charges against DCC, however, were dropped on joint
motion of the parties. This is in view of the cancellation of the mortgage for failure of the spouses Guevara to avail of
the loan/credit facility DCC extended in their favor.5cralawlawlibrary
Ruling of the Trial Court

On November 19, 2010, the RTC rendered a Decision6 dismissing the complaint and finding for respondents, as
16

defendants thereat, holding that: (a) there is insufficient evidence to show that Locsins signature in the Deed of
Absolute Sale between her and Bolos is a forgery; (b) the questioned deed is a public document, having been
Page

notarized; thus, it has, in its favor, the presumption of regularity; (c) Locsin cannot simply rely on the apparent
difference of the signatures in the deed and in the documents presented by her to prove her allegation of forgery; (d)
the transfers of title from Bolos to Carlos and from Carlos to the spouses Guevara are valid and regular; (e) Bernardo,
Carlos, and the spouses Guevara are all buyers in good faith.

Aggrieved, petitioner appealed the case to the CA.

Ruling of the Court of Appeals

The CA, in its assailed Decision, ruled that it was erroneous for the RTC to hold that Locsin failed to prove that her
signature was forged. In its appreciation of the evidence, the CA found that, indeed, Locsins signature in the Deed of
Absolute Sale in favor of Bolos differs from her signatures in the other documents offered as evidence.

The CA, however, affirmed the RTCs finding that herein respondents are innocent purchasers for value. Citing
Casimiro Development Corp. v. Renato L. Mateo,7 the appellate court held that respondents, having dealt with
property registered under the Torrens System, need not go beyond the certificate of title, but only has to rely on the
said certificate. Moreover, as the CA added, any notice of defect or flaw in the title of the vendor should encompass
facts and circumstances that would impel a reasonably prudent man to inquire into the status of the title of the
property in order to amount to bad faith.

Accordingly, the CA ruled that Locsin can no longer recover the subject lot.8 Hence, the insant petition.
Arguments

Petitioner Locsin insists that Bernardo was well aware, at the time he purchased the subject property, of a possible
defect in Bolos title since he knew that another person, Aceron, was then occupying the lot in issue.9 As a matter of
fact, Bernardo even moved for the execution of the compromise agreement between Locsin and Aceronin Civil Case
No. 38-6633 in order to enforce to oust Aceron of his possession over the property.10cralawlawlibrary

Thus, petitioner maintains that Bernardo, knowing as he did the incidents involving the subject property, should have
acted as a reasonably diligent buyer in verifying the authenticity of Bolos title instead of closing his eyes to the
possibility of a defect therein. Essentially, petitioner argues that Bernardos stubborn refusal to make an inquiry
beyond the face of Bolos title is indicative of his lack of prudence in protecting himself from possible defects or flaws
therein, and consequently bars him from interposing the protection accorded to an innocent purchaser for value.

As regards Carlos and the Sps. Guevaras admissions and testimonies, petitioner points out that when these are
placed side-by-side with the concurrent circumstances in the case, it is readily revealed that the transfer from the
former to the latter was only simulated and intended to keep the property out of petitioners reach.

For their part, respondents maintain that they had the right to rely solely upon the face of Bolos clean title,
considering that it was free from any lien or encumbrance.They are not even required, so they claim, to check on the
validity of the sale from which they derived their title.11 Too, respondents claim that their knowledge of Acerons
possession cannot be the basis for an allegation of bad faith, for the property was purchased on an as-is where-is
basis.
The Issue

Considering that the finding of the CA that Locsins signature in the Deed of Absolute Sale in favor of Bolos was indeed
bogus commands itself for concurrence, the resolution of the present petition lies on this singular issuewhether or
not respondents are innocent purchasers for value.12cralawlawlibrary
The Courts Ruling

The petition is meritorious.

Procedural issue

As a general rule, only questions of law may be raised in a petition for review on certiorari .13 This Court is not a trier
of facts; and in the exercise of the power of review, we do not normally undertake the re-examination of the evidence
presented by the contending parties during the trial of the case.14This rule, however, admits of exceptions. For one,
the findings of fact of the CA will not bind the parties in cases where the inference made on the evidence is mistaken,
as here.15cralawlawlibrary

That being said, we now proceed to the core of the controversy.

Precautionary measures for

buyers of real property

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 it, and who pays a full and fair price at the time of the purchase or before receiving any notice
of another persons claim.16 As such, a defective titleor one the procurement of which is tainted with fraud and
misrepresentationmay be the source of a completely legal and valid title, provided that the buyer is an innocent
third person who, in good faith, relied on the correctness of the certificate of title, or an innocent purchaser for
value.17cralawlawlibrary
17

Complementing this is the mirror doctrine which echoes the doctrinal rule that every person dealing with registered
Page

land may safely rely on the correctness of the certificate of title issued therefor and is in no way obliged to go beyond
the certificate to determine the condition of the property.18 The recognized exceptions to this rule are stated as
follows:chanRoblesvirtualLawlibrary
[A] person dealing with registered land has a right to rely on the Torrens certificate of title and to dispense with the
need of inquiring further except when the party has actual knowledge of facts and circumstances that would impel a
reasonably cautious man to make such inquiry or when the purchaser has knowledge of a defect or the lack of title in
his vendor or of sufficient facts to induce a reasonably prudent man to inquire into the status of the title of the
property in litigation. The presence of anything which excites or arouses suspicion should then prompt the vendee to
look beyond the certificate and investigate the title of the vendor appearing on the face of said certificate. One who
falls within the exception can neither be denominated an innocent purchaser for value nor a purchaser in good faith
and, hence, does not merit the protection of the law.19 (emphasis added)

Thus, in Domingo Realty, Inc. v. CA,20 we emphasized the need for prospective parties to a contract involving titled
lands to exercise the diligence of a reasonably prudent person in ensuring the legality of the title, and the accuracy of
the metes and bounds of the lot embraced therein,by undertaking precautionary measures, such
as:chanRoblesvirtualLawlibrary
1. Verifying the origin, history, authenticity, and validity of the title with the Office of the Register of Deeds
and the Land Registration Authority;
2. Engaging the services of a competent and reliable geodetic engineer to verify the boundary, metes, and
bounds of the lot subject of said title based on the technical description in the said title and the approved survey plan
in the Land Management Bureau;
3. Conducting an actual ocular inspection of the lot;
4. Inquiring from the owners and possessors of adjoining lots with respect to the true and legal ownership of
the lot in question;
5. Putting up of signs that said lot is being purchased, leased, or encumbered; and
6. Undertaking such other measures to make the general public aware that said lot will be subject to
alienation, lease, or encumbrance by the parties.

In the case at bar, Bolos certificate of title was concededly free from liens and encumbrances on its face.
However,the failure of Carlos and the spouses Guevara to exercise the necessary level of caution in light of the factual
milieu surrounding the sequence of transfers from Bolos to respondents bars the application of the mirror doctrine
and inspires the Courts concurrence with petitioners proposition.

Carlos is not an innocent purchaser for value

Foremost, the Court is of the view that Bernardo negotiated with Bolos for the property as Carlos agent. This is
bolstered by the fact that he was the one who arranged for the sale and eventual registration of the property in
Carlos favor. Carlos testified during the May 27, 2009 hearing:21cralawlawlibrary
Q: Are you privy with the negotiations between your father, Mr. Bernardo Hizon, and your co-defendant,
Marylou Bolos, the alleged seller?
A: No, Maam.
Q: Do you remember having signed a Deed of Absolute Sale, dated August 12, 1999?
A: Yes, Maam.
Q: And, at that time that you have signed the Deed, was Marylou Bolos present?
A: No, Maam.
Q: Who negotiated and arranged for the sale of the property between Marylou Bolos and you?
A: It was my father.(emphasis ours)

Consistent with the rule that the principal is chargeable and bound by the knowledge of, or notice to, his agent
received in that capacity,22 any information available and known to Bernardo is deemed similarly available and
known to Carlos, including the following:chanRoblesvirtualLawlibrary
1. Bernardo knew that Bolos, from whom he purchased the subject property, never acquired possession over
the lot. As a matter of fact, in his March 11, 2009 direct testimony,23Bernardo admitted having knowledge of
Acerons lot possession as well as the compromise agreement between petitioner and Aceron.
2. Bolos purported Deed of Sale was executed on November 3, 1979 but the ejectment case commenced by
Locsin against Aceron was in 1992, or thirteen (13) years after the property was supposedly transferred to Bolos.
3. The August 6, 1993 Judgment,24 issued by the MTC on the compromise agreement between Locsin and
Aceron, clearly stated therein that [o]n August 2, 1993, the parties [Aceron and Locsin] submitted to [the MTC] for
approval a Compromise Agreement dated July 28, 1993. It further indicated that [Aceron] acknowledges [Locsins]
right of possession to [the subject property], being the registered owner thereof.

Having knowledge of the foregoing facts, Bernardo and Carlos, to our mind, should have been impelled to investigate
the reason behind the arrangement. They should have been pressed to inquire into the status of the title of the
property in litigation in order to protect Carlos interest. It should have struck them as odd that it was Locsin, not
Bolos, who sought the recovery of possession by commencingan ejectment case against Aceron, and even entered
into a compromise agreement with the latter years after the purported sale in Bolos favor. Instead, Bernardo and
Carlos took inconsistent positions when they argued for the validity of the transfer of the property in favor of Bolos,
but in the same breath prayed for the enforcement of the compromise agreement entered into by Locsin.
18

At this point it is well to emphasize that entering into a compromise agreement is an act of strict dominion.25 If Bolos
already acquired ownership of the property as early as 1979, it should have been her who entered into a compromise
Page

agreement with Aceron in 1993, not her predecessor-in-interest, Locsin, who, theoretically, had already divested
herself of ownership thereof.
The spouses Guevara are not innocent purchasers for value

As regards the transfer of the property from Carlos to the spouses Guevara, We find the existence of the sale highly
suspicious. For one, there is a dearth of evidence to support the respondent spouses position that the sale was a
bona fide transaction. Even if we repeatedly sift through the evidence on record, still we cannot find any document,
contract, or deed evidencing the sale in favor of the spouses Guevara. The same goes for the purported payment of
the purchase price of the property in the amount of PhP 1.5 million in favor of Carlos.As a matter of fact, the only
documentary evidence that they presented were as follows:chanRoblesvirtualLawlibrary
1. Deed of Sale between Locsin and Bolos;
2. TCT No. 200074 issued in Bolos name;
3. TCT No. N-205332 in Carlos name;
4. TCT No. N-237083 in the name of the Sps. Guevara.

To bridge the gap in their documentary evidence, respondents proffer their own testimonies explaining the
circumstances surrounding the alleged sale.26 However, basic is the rule that bare and self-serving allegations,
unsubstantiated by evidence, are not equivalent to proof under the Rules.27As such, we cannot give credence to their
representations that the sale between them actually transpired.

Furthermore, and noticeably enough, the transfer from Carlos to the spouses Guevara was effected only fifteen (15)
days after Locsin demanded the surrender of the property from Carlos. Reviewing the
timeline:chanRoblesvirtualLawlibrary
May 9, 2002: Locsins counsel sent a letter to Carlos, requesting that he return the property to Locsin since the latters
signature in the purported deed of sale between her and Bolos was a forgery.

May 20, 2002: Carlos counsel replied to Locsins May 9, 2002 letter, claiming that Carlos was unaware of any defect
or flaw in Bolos title, making him an innocent purchaser of the subject property.

May 24, 2002: The Sps. Guevara allegedly purchased the property from Carlos.

When Bernardo met with Locsins counsel on June 13, 2002, and personally made a commitment to come up with a
win-win situation for his son and Locsin, he knew fully well,too, that the property had already been purportedly
transferred to his daughter and son-in-law, the spouses Guevara, for he, no less, facilitated the same. This, to us, is
glaring evidence of bad faith and an apparent intention to mislead Locsin into believing that she could no longer
recover the subject property.

Also, the fact that Lourdes Guevara and Carlos are siblings, and that Carlos agent in his dealings concerning the
property is his own father, renders incredible the argument that Lourdes had no knowledge whatsoever of Locsins
claim of ownership at the time of the purported sale.

Indeed, the fact that the spouses Guevara never intended to be the owner in good faith and for value of the lot is
further made manifest by their lack of interest in protecting themselves in the case. It does not even appear in their
testimonies that they, at the very least, intended to vigilantly protect their claim over the property and prevent Locsin
take it away from them. What they did was to simply appoint Bernardo as their attorney-in-fact to handle the
situation and never bothered acquainting themselves with the developments in the case.28 To be sure, respondent
Jose Manuel Guevara was not even presented as a witness in the case.

There is also strong reason to believe that even the mortgage in favor of DCC was a mere ploy to make it appear that
the Sps. Guevara exercised acts of dominion over the subject property. This is so considering the proximity between
the propertys registration in their names and its being subjected to the mortgage. Most telling is that the credit line
secured by the mortgage was never used by the spouses, resulting in the mortgages cancellation and the exclusion of
DCC as a party in Civil Case No. Q-02-47925.

These circumstances, taken altogether, strongly indicate that Carlos and the spouses Guevara failed to exercise the
necessary level of caution expected of a bona fide buyer and even performed acts that are highly suspect.
Consequently, this Court could not give respondents the protection accorded to innocent purchasers in good faith
and for value.

Locsin is entitled to nominal damages

We now delve into petitioners prayer for exemplary damages, attorneys fees, and costs of suit.

Here, the Court notes that petitioner failed to specifically pray that moral damages be awarded. Additionally, she
never invoked any of the grounds that would have warranted the award of moral damages. As can be gleaned from
the records, lacking from her testimony is any claim that she suffered any form of physical suffering, mental anguish,
fright, serious anxiety, besmirched reputation, wounded feelings, moral shock, social humiliation, or any other similar
circumstance.29Thus, we are constrained to refrain from awarding moral damages in favor of petitioner.
19

In the same vein, exemplary damages cannot be awarded in favor of petitioner. Well-settled that this species of
damages is allowed only in addition to moral damages such that no exemplary damages can be awarded unless the
Page

claimant first establishes his clear right to moral damages.30Consequently, despite our finding that respondents
acted in a fraudulent manner, petitioners claim for exemplary damages is unavailing at this point.
Nevertheless, we find an award for nominal damages to be in order. Under prevailing jurisprudence, nominal
damages are recoverable where a legal right is technically violated and must be vindicated against an invasion that
has produced no actual present loss of any kind or where there has been a breach of contract and no substantial
injury or actual damages whatsoever have been or can be shown.31 As expounded in Almeda v. Cario,32 a violation
of the plaintiffs right, even if only technical, is sufficient to support an award of nominal damages. So long as there is
a showing of a violation of the right of the plaintiff, as herein petitioner, an award of nominal damages is
proper.33cralawlawlibrary

In the case at bar, this Court recognizes that petitioner was unduly deprived of her ownership rights over the
property, and was compelled to litigate for its recovery, for almost ten (10) years. Clearly, this could have entitled her
to actual or compensatory damages had she quantified and proved, during trial, the amounts which could have
accrued in her favor, including commercial fruits such as reasonable rent covering the pendency of the case.
Nonetheless, petitioners failure to prove actual or compensatory damages does not erase the fact that her property
rights were unlawfully invaded by respondents, entitling her to nominal damages.

As to the amount to be awarded, it bears stressing that the same is addressed to the sound discretion of the court,
taking into account the relevant circumstances.34 Considering the length of time petitioner was deprived of her
property and the bad faith attending respondents actuations in the extant case, we find the amount of seventy-five
thousand pesos (PhP75,000)as sufficient nominal damages. Moreover, respondents should be held jointly and
severally liable for the said amount, attorneys fees in the amount of an additional seventy-five thousand pesos (PhP
75,000), and the costs of the suit.

WHEREFORE, in light of the foregoing, the Petition is hereby GRANTED. The assailed Decision of the Court of Appeals
dated June 6, 2012 in CA-G.R. CV No. 96659 affirming the Decision of the Regional Trial Court, Branch 77, Quezon City,
in Civil Case No. Q-02-47925; as well as its Resolution dated October 30, 2012, denying reconsideration thereof, are
hereby REVERSED and SET ASIDE. TCT No. N-200074 in the name of Marylou Bolos, and the titles descending
therefrom, namely, TCT Nos. N-205332 and N-237083 in the name of Carlos Hizon, and the Spouses Jose Manuel &
Lourdes Guevara, respectively, are hereby declared NULL and VOID. Respondents and all other persons acting under
their authority are hereby DIRECTED to surrender possession of the subject property in favor of petitioner.
Respondents Bernardo Hizon, Carlos Hizon, and the spouses Jose Manuel and Lourdes Guevara shall jointly and
severally pay petitionerPhP75,000 as nominal damages, PhP75,000 as attorneys fees, and costs of suit.

The Register of Deeds of Quezon City is hereby ORDERED to (1) cancel TCT No. N-237083;(2) reinstate TCT No. RT-
97467; and (3) re-issue TCT No. RT-97467 in favor of petitioner, without requiring from petitioner payment for any
and all expenses in performing the three acts.

2. INVOLUNTARY DEALINGS

a. Attachments (Sec. 69)

b. Adverse Claims (Sec. 70)

SAJONAS VS CA, G.R. 102377, JULY 5, 1996

Theme: Notice of Adverse Claims vs. Notice of Levy on Execution

Facts:
The inscription of a Notice of Levy on Execution was caused to be made by the private respondent (Pilares) on
Transfer Certificate of Title No. N-79073 of the Register of Deeds of Marikina, issued in the name of the spouses
Ernesto B. Uychocde and Lucita Jarin, and was later carried over to and annotated on Transfer Certificate of Title
No. N-109417 of the same registry, issued in the name of the spouses Alfredo Sajonas and Conchita R. Sajonas,
who purchased the parcel of land from the Uychocdes, and are now the petitioners in this case.

On September 22, 1983, the spouses Ernesto Uychocde and Lucita Jarin agreed to sell a parcel of residential land
located in Antipolo, Rizal to the spouses Alfredo Sajonas and Conchita R. Sajonas on installment basis as
evidenced by a Contract to Sell. The property was registered in the names of the Uychocde spouses under TCT
No. N-79073 of the Register of Deeds of Marikina, Rizal. On August 27, 1984, the Sajonas couple caused the
annotation of an adverse claim based on the said Contract to Sell on the title of the subject property, which was
inscribed as Entry No. 116017. Upon full payment of the purchase price, the Uychocdes executed a Deed of Sale
involving the property in question in favor of the Sajonas couple on September 4, 1984. The deed of absolute
sale was registered almost a year after, or on August 28, 1985.

Meanwhile, it appears that Domingo Pilares (defendant-appellant) filed Civil Case No. Q-28850 for collection of
sum of money against Ernesto Uychocde. On June 25, 1980, a Compromise Agreement was entered into by the
parties in the said case under which Ernesto Uychocde acknowledged his monetary obligation to Domingo
Pilares amounting to P27,800 and agreed to pay the same in two years from June 25, 1980. When Uychocde
failed to comply with his undertaking in the compromise agreement, defendant-appellant Pilares moved for the
issuance of a writ of execution to enforce the decision based on the compromise agreement, which the court
20

granted in its order dated August 3, 1982. Accordingly, a writ of execution was issued on August 12, 1982 by the
CFI of Quezon City where the civil case was pending. Pursuant to the order of execution dated August 3, 1982, a
Page

notice of levy on execution was issued on February 12, 1985. On February 12, 1985, defendant sheriff Roberto
Garcia of Quezon City presented said notice of levy on execution before the Register of Deeds of Marikina and
the same was annotated at the back of TCT No. 79073 as Entry No. 123283.

On January 10, 1986, the Sajonas spouses demanded the cancellation of the notice of levy on execution upon
defendant-appellant Pilares, through a letter to their lawyer, Atty. Melchor Flores. Despite said demand,
defendant-appellant Pilares refused to cause the cancellation of said annotation.
Thereafter, the Sajonases filed their complaint in the Regional Trial Court of Rizal, Branch 71, against Domingo
Pilares, the judgment creditor of the Uychocdes.

RTC Ruling:
That at the time the notice of levy was annotated by the defendant, the Uychocde spouses, debtors of the
defendant, have already transferred, conveyed and assigned all their title, rights and interests to the plaintiffs
and there was no more title, rights or interests therein which the defendant could levy upon;
That the annotation of the levy on execution which was carried over to the title of said plaintiffs is illegal and
invalid and was made in utter bad faith, in view of the existence of the Adverse Claim annotated by the plaintiffs
on the corresponding title of the Uychocde spouses.

Dissatisfied, Pilares appealed to the Court of Appeals, assigning errors on the part of the lower court. The
appellate court reversed the lower courts decision, and upheld the annotation of the levy on execution on the
certificate of title.

Hence, the present petition.

Issues:

1. Was the adverse claim inscribed in the Transfer Certificate of Title No. N-109417 still in force when private
respondent (Pilares) caused the notice of levy on execution to be registered and annotated in the said title,
considering that more than thirty days had already lapsed since it was annotated? (Addressing this issue is
essential in determining who has a better right over the property: Sajonas or Pilares)
2.
2. Whether or not the petitioners (Sajonas spouses) are buyers in good faith of the subject property?

Held:
1. Yes, the adverse claim was still in force when private respondent (Pilares) caused the notice of levy on
execution to be registered and annotated in the said title, irrespective of the lapse of thirty days as mandated
under Section 70 of P.D. No. 1529.

Sec. 70 (P.D. 1529) Adverse Claim- Whoever claims any part or interest in registered land adverse to the
registered owner, arising subsequent to the date of the original registration, may, if no other provision is made in
this decree for registering the same, make a statement in writing setting forth fully his alleged right or interest,
and how or under whom acquired, a reference to the number of certificate of title of the registered owner, the
name of the registered owner, and a description of the land in which the right or interest is claimed.

The statement shall be signed and sworn to, and shall state the adverse claimants residence, and a place at
which all notices may be served upon him. This statement shall be entitled to registration as an adverse claim on
the certificate of title. The adverse claim shall be effective for a period of thirty days from the date of
registration. After the lapse of said period, the annotation of adverse claim may be cancelled upon filing of a
verified petition therefor by the party in interest: Provided, however, that after cancellation, no second adverse
claim based on the same ground shall be registered by the same claimant.

Before the lapse of thirty days aforesaid, any party in interest may file a petition in the Court of First Instance
where the land is situated for the cancellation of the adverse claim, and the court shall grant a speedy hearing
upon the question of the validity of such adverse claim, and shall render judgment as may be just and equitable.
If the adverse claim is adjudged to be invalid, the registration thereof shall be ordered cancelled. If, in any case,
the court, after notice and hearing shall find that the adverse claim thus registered was frivolous, it may fine the
claimant in an amount not less than one thousand pesos, nor more than five thousand pesos, in its discretion.
Before the lapse of thirty days, the claimant may withdraw his adverse claim by filing with the Register of Deeds
a sworn petition to that effect. (Italics ours)

In construing the law aforesaid, care should be taken that every part thereof be given effect and a construction
that could render a provision inoperative should be avoided, and inconsistent provisions should be reconciled
whenever possible as parts of a harmonious whole.

In ascertaining the period of effectivity of an inscription of adverse claim, we must read the law in its entirety.
Sentence three, paragraph two of Section 70 of P.D. 1529 provides:

The adverse claim shall be effective for a period of thirty days from the date of registration.
At first blush, the provision in question would seem to restrict the effectivity of the adverse claim to thirty days.
But the above provision cannot and should not be treated separately, but should be read in relation to the
21

sentence following, which reads:

Page

After the lapse of said period, the annotation of adverse claim may be cancelled upon filing of a verified petition
therefor by the party in interest.
If the rationale of the law was for the adverse claim to ipso facto lose force and effect after the lapse of thirty
days, then it would not have been necessary to include the foregoing caveat to clarify and complete the rule. For
then, no adverse claim need be cancelled. If it has been automatically terminated by mere lapse of time, the law
would not have required the party in interest to do a useless act.

Construing the provision as a whole would reconcile the apparent inconsistency between the portions of the law
such that the provision on cancellation of adverse claim by verified petition would serve to qualify the provision
on the effectivity period. The law, taken together, simply means that the cancellation of the adverse claim is still
necessary to render it ineffective, otherwise, the inscription will remain annotated and shall continue as a lien
upon the property. For if the adverse claim has already ceased to be effective upon the lapse of said period, its
cancellation is no longer necessary and the process of cancellation would be a useless ceremony.

It should be noted that the law employs the phrase may be cancelled, which obviously indicates, as inherent in
its decision making power, that the court may or may not order the cancellation of an adverse claim,
notwithstanding such provision limiting the effectivity of an adverse claim for thirty days from the date of
registration. The court cannot be bound by such period as it would be inconsistent with the very authority vested
in it. A fortiori, the limitation on the period of effectivity is immaterial in determining the validity or invalidity of
an adverse claim which is the principal issue to be decided in the court hearing. It will therefore depend upon the
evidence at a proper hearing for the court to determine whether it will order the cancellation of the adverse
claim or not.

To interpret the effectivity period of the adverse claim as absolute and without qualification limited to thirty
days defeats the very purpose for which the statute provides for the remedy of an inscription of adverse claim,
as the annotation of an adverse claim is a measure designed to protect the interest of a person over a piece of
real property where the registration of such interest or right is not otherwise provided for by the Land
Registration Act or Act 496 (now P.D. 1529 or the Property Registration Decree), and serves as a warning to third
parties dealing with said property that someone is claiming an interest or the same or a better right than the
registered owner thereof.

The reason why the law provides for a hearing where the validity of the adverse claim is to be threshed out is to
afford the adverse claimant an opportunity to be heard, providing a venue where the propriety of his claimed
interest can be established or revoked, all for the purpose of determining at last the existence of any
encumbrance on the title arising from such adverse claim. This is in line with the provision immediately
following:

Provided, however, that after cancellation, no second adverse claim shall be registered by the same claimant.
Should the adverse claimant fail to sustain his interest in the property, the adverse claimant will be precluded
from registering a second adverse claim based on the same ground.

In sum, the disputed inscription of adverse claim on the Transfer Certificate of Title No. N-79073 was still in
effect on February 12, 1985 when Quezon City Sheriff Roberto Garcia annotated the notice of levy on execution
thereto. Consequently, he is charged with knowledge that the property sought to be levied upon on execution
was encumbered by an interest the same as or better than that of the registered owner thereof. Such notice of
levy cannot prevail over the existing adverse claim inscribed on the certificate of title in favor of the petitioners.
This can be deduced from the pertinent provision of the Rules of Court, to wit:

Section 16. Effect of levy on execution as to third persons- The levy on execution shall create a lien in favor of the
judgment creditor over the right, title and interest of the judgment debtor in such property at the time of the
levy, subject to liens or encumbrances then existing. (Italics supplied)
To hold otherwise would be to deprive petitioners of their property, who waited a long time to complete
payments on their property, convinced that their interest was amply protected by the inscribed adverse claim.

2. As to whether or not the petitioners are buyers in good faith of the subject property, the same should be
made to rest on the findings of the trial court. As pointedly observed by the appellate court, there is no question
that plaintiffs-appellees were not aware of the pending case filed by Pilares against Uychocde at the time of the
sale of the property by the latter in their favor. This was clearly elicited from the testimony of Conchita Sajonas,
wife of plaintiff, during cross-examination on April 21, 1988.

A purchaser in good faith and for value is one who buys 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 claims or interest of some other person in the property. Good faith
consists in an honest intention to abstain from taking any unconscientious advantage of another. Thus, the claim
of the private respondent that the sale executed by the spouses was made in fraud of creditors has no basis in
fact, there being no evidence that the petitioners had any knowledge or notice of the debt of the Uychocdes in
favor of the private respondents, nor of any claim by the latter over the Uychocdes properties or that the same
was involved in any litigation between said spouses and the private respondent. While it may be stated that
good faith is presumed, conversely, bad faith must be established by competent proof by the party alleging the
same. Sans such proof, the petitioners are deemed to be purchasers in good faith, and their interest in the
22

subject property must not be disturbed.

Page

ACCORDINGLY, the assailed decision of the respondent Court of Appeals dated October 17, 1991 is hereby
REVERSED and SET ASIDE. The decision of the Regional Trial Court dated February 15, 1989 finding for the
cancellation of the notice of levy on execution from Transfer Certificate of Title No. N-109417 is hereby
REINSTATED.

RODRIGUEZ vs CA, G.R. 142687, JULY 20, 2006

This is a petition for review of the decision of the Court of Appeals dated September 7, 1999 in CA-G.R. CV No.
48772 and its resolution dated March 31, 2000. The Court of Appeals reversed the decision of the Regional Trial
Court of Makati in Civil Case No. 92-3524.

The facts show that herein respondent Spouses Antonio and Maridel Calingo (respondents Calingo) were the
registered owners of a house and lot located at No. 7903 Redwood Street, Marcelo Green Village, Paraaque,
Metro Manila. The property was mortgaged to the Development Bank of the Philippines, which mortgage was
later absorbed by the Home Mutual Development Fund (HMDF) or Pag-ibig.
On April 27, 1992, respondents Calingo and respondent Spouses Christopher and Ma. Angelica Barrameda
(respondents Barrameda) entered into a contract of sale with assumption of mortgage where the former sold to
the latter the property in question and the latter assumed to pay the outstanding loan balance to the
Development Bank of the Philippines.[1] Respondents Barrameda issued two checks in the amounts of
P150,000.00 and P528,539.76, for which respondents Calingo issued a receipt dated April 24, 1992.[2]

In a letter dated April 23, 1992, respondent Antonio S. Calingo informed HMDF/Pag-ibig about the sale of the
property with assumption of mortgage. Said letter, however, together with an affidavit by respondents Calingo,
was served upon HMDF/Pag-ibig on October 2, 1992.[3]

On May 29, 1992, respondents Barrameda filed with the Register of Deeds of Paraaque an affidavit of adverse
claim on the property. The adverse claim was inscribed at the back of the certificate of title as Entry No. 3439.[4]

On June 1, 1992, respondent Ma. Angelica Paez-Barrameda wrote HMDF, Mortgage and Loans Division informing
the office that they have purchased the subject property from the Calingo spouses and that they filed a notice of
adverse claim with the Register of Deeds of Paraaque. They also sought assistance from said office as regards the
procedure for the full settlement of the loan arrearages and the transfer of the property in their names.[5]

Respondents Barrameda moved into the property on June 2, 1992.

On July 13, 1992, a notice of levy with attachment on real property by virtue of a writ of execution was
annotated at the back of the certificate of title of the property in question. The writ of execution was issued by
Judge Salvador Abad Santos, Regional Trial Court of Makati, Branch 65 in connection with Civil Case No. 88-2159
involving a claim by herein petitioners, Spouses Francisco and Bernardina Rodriguez, against respondents
Calingo. Judge Abad Santos issued the writ in favor of petitioners Rodriguez.[6]

On July 21, 1992, petitioners counsel, Atty. Nelson A. Loyola, sent a letter to respondents Barrameda inquiring
about the basis of their occupation of the property in question.
On August 21, 1992, respondents Barrameda remitted to respondents Calingo the amount of P364,992.07 to
complete the payment of the agreed purchase price. Respondents Calingo acknowledged receipt of said amount
and waived all their rights to the property in favor of the Barrameda spouses. They also guaranteed that the
property was clear and free from any liens and encumbrances, except the real estate mortgage assumed by
respondents Barrameda.[7]

On October 7, 1992, respondents Barrameda executed a joint affidavit stating that they are the owners of the
property in question by virtue of a deed of sale with assumption of mortgage; that they registered an affidavit of
adverse claim with the Register of Deeds of Paraaque; that the Sheriff of the Regional Trial Court, Branch 65,
Makati, Sheriff Manuel C. Dolor, levied said property despite their adverse claim; and that they have acquired
the property long before the levy was made, and therefore, said levy was illegal. They served a copy of the
affidavit on petitioners counsel, Atty. Loyola, who made a reply thereto on October 15, 1992.

In his letter to Christopher Barrameda dated October 15, 1992, Atty. Loyola pointed out that the alleged deed of
sale with assumption of mortgage was not registered with the Register of Deeds and that the records of the
HMDF show that the property is owned by the Calingo spouses. He urged the Barrameda spouses to confer with
the petitioners to amicably settle the controversy.[8]

On November 9, 1992, respondents Barrameda found a Notice of Sheriffs Sale posted on their front gate,
announcing the auction sale of their house and lot on December 3, 1992 at 10:00 in the morning.[9]

On November 20, 1992, pursuant to Rule 39, Section 17 of the Revised Rules of Court, respondents Barrameda
served a Notice of Third Party Claim upon Sheriff Manuel C. Dolor, accompanied by their affidavit of title.

On December 2, 1992, respondents Barrameda filed with the Regional Trial Court of Makati a petition for
quieting of title with prayer for preliminary injunction. The petition prayed, among others, that the execution
sale of the property be enjoined, the notice of levy and attachment
23

inscribed on the certificate of title be cancelled, and that respondents Barrameda be declared the lawful and sole
owners of the property in question.[10]
Page
The trial court ruled in favor of herein petitioners and dismissed respondents Barramedas petition for quieting of
title. It ruled that the annotation of respondents Barramedas adverse claim at the back of the certificate of title
was insufficient to establish their claim over the property. It said that respondents Barrameda, as buyers of the
property, should have registered the title in their names. Furthermore, respondents Barramedas adverse claim
had lost its efficacy after the lapse of thirty days in accordance with the provisions of the Land Registration Act.
The trial court also found that there was collusion between respondents Barrameda and respondents Calingo to
transfer the property to defraud third parties who may have a claim against the Calingos.[11]

The Court of Appeals, however, reversed the decision of the trial court. Citing the ruling in Sajonas v. Court of
Appeals,[12] the appellate court held that respondents Barramedas adverse claim inscribed on the certificate of
title was still effective at the time the property was levied on execution. It said:
Therefore, the disputed inscription of adverse claim on TCT No. 83612/57286 was still in effect on July 13, 1992
when the Rodriguezes caused the annotation of the notice of levy on execution thereto. Consequently, they are
charged with knowledge that the property sought to be levied upon on execution was encumbered by an
interest the same as or better than that of the registered owner thereof. Such notice of levy cannot prevail over
the existing adverse claim inscribed on the certificate of title in favor of the Barramedas. xxx

The court held, therefore, that the notice of levy could not prevail over respondents Barramedas adverse claim.

Petitioners moved for a reconsideration of the appellate courts ruling, but the motion was denied.

Hence, this petition. Petitioners essentially argue that the remedy of a petition for quieting of title was not
available to respondents Barrameda as they did not have a valid title to the property in question; that the
affidavit of adverse claim inscribed by respondents Barrameda at the back of the certificate of title was not
sufficient to establish their claim to the property; and there was collusion between respondents Barrameda and
respondents Calingo.

The principal issue that needs to be resolved in this case is whether respondents Barramedas adverse claim on
the property should prevail over the levy on execution issued by another court in satisfaction of a judgment
against respondents Calingo.

We hold that it cannot.

Respondents Barrameda anchor their claim on the property on the deed of sale with assumption of mortgage
executed by them and respondents Calingo on April 27, 1992. The Property Registration Decree[13] requires that
such document be registered with the Register of Deeds in order to be binding on third persons. The law
provides:
Sec. 51. Conveyance and other dealings by registered owner. An owner of registered land may convey,
mortgage, lease, charge or otherwise deal with the same in accordance with existing laws. He may use such
forms of deeds, mortgages, leases or other voluntary instruments as are sufficient in law. But 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, but shall operate only as a contract between the parties and as evidence of
authority to the Register of Deeds to make registration.

The act of registration shall be the operative act to convey or affect the land insofar as third persons are
concerned, and in all cases under this Decree, the registration shall be made in the office of the Register of
Deeds for the province or city where the land lies. (emphasis supplied)

It is admitted in this case that the deed of sale with assumption of mortgage was not registered, but instead,
respondents Barrameda filed an affidavit of adverse claim with the Register of Deeds. The question now is
whether the adverse claim is sufficient to bind third parties such as herein petitioners.

In L.P. Leviste and Company, Inc. v. Noblejas,[14] we explained when an inscription of an adverse claim is
sufficient to affect third parties, thus:
The basis of respondent Villanuevas adverse claim was an agreement to sell executed in her favor by Garcia
Realty. An agreement to sell is a voluntary instrument as it is a wilful act of the registered owner. As such
voluntary instrument, Section 50 of Act No. 496 [now Presidential Decree No. 1529] expressly provides that the
act of registration shall be the operative act to convey and affect the land. And Section 55 of the same Act
requires the presentation of the owners duplicate certificate of title for the registration of any deed or voluntary
instrument. As the agreement to sell involves an interest less than an estate in fee simple, the same should have
been registered by filing it with the Register of Deeds who, in turn, makes a brief memorandum thereof upon the
original and owners duplicate certificate of title. The reason for requiring the production of the owners duplicate
certificate in the registration of a voluntary instrument is that, being a wilful act of the registered owner, it is to
be presumed that he is interested in registering the instrument and would willingly surrender, present or
produce his duplicate certificate of title to the Register of Deeds in order to accomplish such registration.
However, where the owner refuses to surrender the duplicate certificate for the annotation of the voluntary
instrument, the grantee may file with the Register of Deeds a statement setting forth his adverse claim, as
provided for in Section 110 of Act No. 496. In such a case, the annotation of the instrument upon the entry book
24

is sufficient to affect the real estate to which it relates, although Section 72 of Act No. 496 imposes upon the
Register of Deeds the duty to require the production by the [r]egistered owner of his duplicate certificate for the
Page

inscription of the adverse claim. The annotation of an adverse claim is a measure designed to protect the
interest of a person over a piece of real property where the registration of such interest or right is not otherwise
provided for by the Land Registration Act, and serves as a notice and warning to third parties dealing with said
property that someone is claiming an interest on the same or a better right than the registered owner thereof.
(emphases supplied)

In the case at bar, the reason given for the non-registration of the deed of sale with assumption of mortgage was
that the owners duplicate copy of the certificate of title was in the possession of HMDF. It was not shown,
however, that either respondents Barrameda or respondents Calingo exerted any effort to retrieve the owners
duplicate copy from the HMDF for the purpose of registering the deed of sale with assumption of mortgage. In
fact, the parties did not even seek to obtain the consent of, much less inform, the HMDF of the sale of the
property. This, despite the provision in the contract of mortgage prohibiting the mortgagor (respondents
Calingo) from selling or disposing the property without the written consent of the mortgagee.[15] Respondents
Calingo, as party to the contract of mortgage, are charged with the knowledge of such provision and are bound
to comply therewith. Apparently, there was haste in disposing the property that respondents Calingo informed
HMDF of the sale only on October 2, 1992 when they served a copy of their letter to said office regarding the
transfer of the property to respondents Barrameda. There was no reason for the parties failure to seek the
approval of the HMDF to the sale as it appears from the letter of respondent Angelica Paez-Barrameda to HMDF
that they were ready to pay in full the balance of the loan plus interest. What is more suspect is that the
judgment against respondents Calingo ordering them to pay the petitioners the sum of P1,159,355.90 was
rendered on January 28, 1992, before the sale of the property on April 27, 1992. We also find it unsettling that
respondents Barrameda, without any reservation or inquiry, readily remitted to respondents Calingo the full
payment for the property on August 21, 1992 despite knowledge of the levy on execution over the property in
July of the same year. Any prudent buyer of real property, before parting with his money, is expected to first
ensure that the title to the property he is about to purchase is clear and free from any liabilities and that the
sellers have the proper authority to deal on the property.

Again, we stress that the annotation of an adverse claim is a measure designed to protect the interest of a
person over a piece of property where the registration of such interest or right is not otherwise provided for by
the law on registration of real property. Section 70 of Presidential Decree No. 1529 is clear:
Sec. 70. Adverse claim. Whoever claims any part or interest in registered land adverse to the registered owner,
arising subsequent to the date of the original registration, may, if no other provision is made in this Decree for
registering the same, make a statement in writing setting forth his alleged right or interest, and how or under
whom acquired, a reference to the number of the certificate of title of the registered owner, the name of the
registered owner, and a description of the land in which the right or interest is claimed. xxx

The deed of sale with assumption of mortgage executed by respondents Calingo and Barrameda is a registrable
instrument. In order to bind third parties, it must be registered with the Office of the Register of Deeds. It was
not shown in this case that there was justifiable reason why the deed could not be registered. Hence, the
remedy of adverse claim cannot substitute for registration.

IN VIEW WHEREOF, the petition is GRANTED. The assailed decision and resolution of the Court of Appeals are
SET ASIDE and the decision of the Regional Trial Court, Makati in Civil Case No. 92-3524 is REINSTATED. No cost.

GOLDEN HAVEN MEMORIAL PARK vs FILINVEST, G.R. 188265, Nov. 17, 2010

GOLDEN HAVEN MEMORIAL PARK, INC., Petitioner v. FILINVEST DEVELOPMENT CORPORATION, Respondent

Abad, J.:

FACTS:

Yap, Vivar, Cruz, Aquino, Corpuz and Sobremesana and other relatives inherited a parcel of land in Las Pinas.
They had it judicially divided into 13 parcels Lots 1 and 12 went to Aquino, 2 went to Corpuz and Sobremesana, 6
went to Yap, Cruz and the Vivars. Others went to other relatives.

Yap, acting for herself and for Cruz and the Vivars, executed an agreement to sell Lot 6 in favor of Golden Haven
Memorial Park, Inc. (GHM), payable in three installments. Another heir, Aquino, acting for himself and for Corpuz
and Sobremesana, also executed an agreement to sell Lots 1, 2, and 12 in favor of GHM, payable in the same
manner.In both instances, GHM paid the firstinstallment upon execution of the contract. GHM stated that it was
waiting for the title to be consolidated in their names for it to pay the 2nd instalment.

Filinvest Development Corporation (Filinvest) applied for the transfer in its name of the titles over Lots 2, 4, and
5 but the Las Pic Register of Deeds declined its application.Upon inquiry, Filinvest learned that Lot 8, a lot
belonging to some other heir or heirs and covered by the same mother title, had been sold to Household
Development Corporation (HDC), a sister company of GHM, and HDC held the owners duplicate copy of that title.
Filinvest alleged that it bought Lots 1, 2, 6, and 12 of the property from their respective owners as evidenced by
three deeds of absolute sale in its favor dated September 10, November 18, and December 29, 1989 and that
Filinvest was entitled to the registrations of such sales.
25

GHM filed against the sellers and Filinvest a complaint for the annulment of the deeds of sale issued in the
Page

latters favor before the Regional Trial Court (RTC) of Las Pis City in Civil Case 91-098.On March 16, 2006 the RTC
rendered a decision after trial, declaring the contracts to sell executed by some of the heirs in GHMs favor valid
and enforceable and the sale in favor of Filinvest null and void.Only Filinvest appealed among the defendants.

On November 25, 2008 the Court of Appeals (CA) affirmed the RTC decision with respect to the validity of the
contract to sell Lot 6 in GHMs favor.But the CA declared the contracts to sell Lots 1, 2, and 12 in GHMs favor void
and the sale of the same lots in favorof Filinvest valid.

ISSUES:

1. Whether or not the contracts to sell that the sellers executed in GHMs favor covering the same lots sold to
Filinvest are valid and enforceable.

HELD:

Yes, they are valid contracts.

Civil Law: Buyer in good faith

To prove good faith, the rule is that the buyer of registered land needs only show that he relied on the title that
covers the property.But this is true only when, at the time of the sale, the buyer was unaware of any adverse
claim to the property.Otherwise, the law requires the buyer to exercise a higher degree of diligence before
proceeding with his purchase.He must examine not only the certificate of title, but also the sellers right and
capacity to transfer any interest in the property.In such a situation, the buyer must show that he exercised
reasonable precaution by inquiring beyond the four corners of the title.Failing in these, he may be deemed a
buyer in bad faith.

Here, Filinvest was aware of the notation of adverse claim in the mother title. The notice is a warning to third
parties dealing with the property that someone claims an interest in it or asserts a better right than the
registered owner.Such notice constitutes, by operation of law, notice to the whole world.Here, although the
notice of adverse claim pertained to only one lot and Filinvest wanted to acquire interest in some other lots
under the same title, the notice served as warning to it that one of the owners was engaged in double selling.

One who has knowledge of facts which should have put him upon such inquiry and investigation cannot claim
that he has acquired title to the property in good faith as against the true owner of the land or of an interest in
it.

These cases are about which of two real estate developers, both buyers of the same lands, acted in good faith
and has a better title to the same.

The Facts and the Case

Petronila Yap (Yap), Victoriano and Policarpio Vivar (the Vivars), Benjamin Cruz (Cruz), Juan Aquino (Aquino),
Gideon Corpuz (Corpuz), and Francisco Sobremesana (Sobremesana), and some other relatives inherited a parcel
of land in Las Pias City covered by Transfer Certificate of Title (TCT) 67462 RT-1. Subsequently, the heirs had the
land divided into 13 lots and, in a judicial partition, the court distributed four of the lots as follows: a) Lots 1 and
12 to Aquino; b) Lot 2 to Corpuz and Sobremesana; and (c) Lot 6 to Yap, Cruz, and the Vivars. The other lots were
distributed to the other heirs.

On March 6, 1989 Yap, acting for herself and for Cruz and the Vivars, executed an agreement to sell Lot 6 in favor
of Golden Haven Memorial Park, Inc. (GHM), payable in three installments. On July 31, 1989 another heir,
Aquino, acting for himself and for Corpuz and Sobremesana, also executed an agreement to sell Lots 1, 2, and 12
in favor of GHM, payable in the same manner. In both instances, GHM paid the first installment upon execution
of the contract.

On August 4, 1989 GHM caused to be annotated a Notice of Adverse Claim on TCT 67462 RT-1. On September
20, 1989 the sellers of the four lots wrote GHM that they were still working on the titling of the lots in their
names and wanted to know if GHM was still interested in proceeding with their agreements. GHM replied in the
affirmative on September 21, 1989 and said that it was just waiting for the sellers titles so it can pay the second
installments.

Sometime in August of 1989, Filinvest Development Corporation (Filinvest) applied for the transfer in its name of
the titles over Lots 2, 4, and 5 but the Las Pias Register of Deeds declined its application. Upon inquiry, Filinvest
learned that Lot 8, a lot belonging to some other heir or heirs and covered by the same mother title, had been
sold to Household Development Corporation (HDC), a sister company of GHM, and HDC held the owners
duplicate copy of that title. Filinvest immediately filed against HDC a petition for the surrender and cancellation
of the co-owners duplicate copy of TCT 67462 RT-1. Filinvest alleged that it bought Lots 1, 2, 6, and 12 of the
property from their respective owners as evidenced by three deeds of absolute sale in its favor dated September
26

10, November 18, and December 29, 1989 and that Filinvest was entitled to the registrations of such sales.
Page
On January 14, 1991 GHM filed against the sellers and Filinvest a complaint for the annulment of the deeds of
sale issued in the latters favor before the Regional Trial Court (RTC) of Las Pias City in Civil Case 91-098. On
March 16, 2006 the RTC rendered a decision after trial, declaring the contracts to sell executed by some of the
heirs in GHMs favor valid and enforceable and the sale in favor of Filinvest null and void. Only Filinvest appealed
among the defendants.

On November 25, 2008 the Court of Appeals (CA) affirmed the RTC decision with respect to the validity of the
contract to sell Lot 6 in GHMs favor. But the CA declared the contracts to sell Lots 1, 2, and 12 in GHMs favor
void and the sale of the same lots in favor of Filinvest valid.

Both parties filed their petitions for review before this Court, Filinvest in G.R. 187824, and GHM in G.R. 188265.

The Issue Presented

The issue presented in these cases is whether or not the contracts to sell that the sellers executed in GHMs
favor covering the same lots sold to Filinvest are valid and enforceable.

The Courts Ruling

To prove good faith, the rule is that the buyer of registered land needs only show that he relied on the title that
covers the property. But this is true only when, at the time of the sale, the buyer was unaware of any adverse
claim to the property.1 Otherwise, the law requires the buyer to exercise a higher degree of diligence before
proceeding with his purchase. He must examine not only the certificate of title, but also the sellers right and
capacity to transfer any interest in the property.2 In such a situation, the buyer must show that he exercised
reasonable precaution by inquiring beyond the four corners of the title.3 Failing in these, he may be deemed a
buyer in bad faith.4

Here, Filinvest was on notice that GHM had caused to be annotated on TCT 67462 RT-1, the mother title, as early
as August 4, 1989 a notice of adverse claim covering Lot 6. This notwithstanding, Filinvest still proceeded to buy
Lots 1, 2, 6, and 12 on September 10, November 18, and December 29, 1989.

Filinvest of course contends that, although the title carried a notice of adverse claim, that notice was only with
respect to seller Yaps interest in Lot 6 and it did not affect Lots 1, 2, 12, and the remaining interests in Lot 6. The
Court disagrees.

The annotation of an adverse claim is intended to protect the claimants interest in the property.1avvphi1 The
notice is a warning to third parties dealing with the property that someone claims an interest in it or asserts a
better right than the registered owner.5 Such notice constitutes, by operation of law, notice to the whole
world.6 Here, although the notice of adverse claim pertained to only one lot and Filinvest wanted to acquire
interest in some other lots under the same title, the notice served as warning to it that one of the owners was
engaged in double selling.

What is more, upon inquiry with the Register of Deeds of Las Pias, Filinvest also learned that the heirs of Andres
Aldana sold Lot 8 to HDC and turned over the co-owners duplicate copy of TCT 67462 RT-1 to that company
which had since then kept the title. Filinvest (referred to below as FDC) admits this fact in its petition,7 thus:

Sometime in August 1989, FDC applied with the Register of Deeds of Las Pias for the transfer and registration of
Lots 2, 4, and 5 in its name and surrendered the co-owners duplicate copy of TCT No. (67462) RT-1 given to it by
the Vivar family, but the Register of Deeds of Las Pias City refused to do the transfer of title in the name of FDC
and instead demanded from FDC to surrender as well the other co-owner's duplicate copy of TCT No. (67462) RT-
1 which was issued to the heirs of Andres Aldana. Upon further inquiry, FDC came to know that the heirs of
Andres Aldana sold Lot 8 and delivered their co-owner's duplicate copy of TCT No. (67462) RT-1 to Household
Development Corporation, a sister company of respondent GHMPI. FDC made representations to Household
Development Corporation for the surrender of said co-owner's duplicate copy of TCT No. (67462) RT-1 to the
Register of Deeds of Las Pias City, but Household Development Corporation refused to do so.

Filinvests knowledge that GHM, a competitor, had bought Lot 6 in which Filinvest was interested, that GHM had
annotated an adverse claim to that Lot 6, and that GHM had physical possession of the title, should have put
Filinvest on its toes regarding the prospects it faced if it bought the other lots covered by the title in question.
Filinvest should have investigated the true status of Lots 1, 2, 6, and 12 by asking GHM the size and shape of its
interest in the lands covered by the same title, especially since both companies were engaged in the business of
developing lands. One who has knowledge of facts which should have put him upon such inquiry and
investigation cannot claim that he has acquired title to the property in good faith as against the true owner of
the land or of an interest in it.8

The Court upholds the validity of the contracts between GHM and its sellers. As the trial court aptly observed,
GHM entered into valid contracts with its sellers but the latter simply and knowingly refused without just cause
to honor their obligations. The sellers apparently had a sudden change of heart when they found out that
27

Filinvest was willing to pay more.

Page

As to the award of exemplary damages, the Court sustains the CA ruling. This species of damages is allowed only
in addition to moral damages such that exemplary damages cannot be awarded unless the claimant first
establishes a clear right to moral damages.9 Here, since GHM failed to prove that it is entitled to moral damages,
the RTCs award of exemplary damages had no basis. But the grant of attorneys fees is proper. As the RTC
noted, this case has been pending since 1991, or for 19 years now. GHM was forced to litigate and incur
expenses in order to protect its rights and interests.

WHEREFORE, the Court GRANTS the petition in G.R. 188265 and DISMISSES the petition in G.R. 187824. The
Court likewise REVERSES and SETS ASIDE the decision of the Court of Appeals dated November 25, 2008 in CA-
G.R. CV 89448, and REINSTATES the decision of the Regional Trial Court in Civil Case 91-098 dated March 16,
2006 with the MODIFICATION that the award of exemplary damages is DELETED.

SO ORDERED.

MARTINEZ VS GARCIA, G.R. 166356, FEB 4, 2010

Before us is a special civil action for certiorari under Rule 65 of the Rules of Court to annul and set aside the
Decision[1] dated August 12, 2004 and the Resolution[2] dated November 18, 2004 of the Court of Appeals (CA)
in CA-G.R. CV No. 61591, which reversed and set aside the Decision[3] dated April 15, 1998 and Order[4] dated
August 11, 1998 of the Regional Trial Court (RTC) of Pasig, Branch 267, in Special Civil Action No. 574.
The factual antecedents are as follows:

Respondent Edilberto Brua was the registered owner of a parcel of land located in Mandaluyong, Rizal, covered
by Transfer Certificate of Title (TCT) No. 346026 of the Registry of Deeds of Rizal, which is the subject matter of
this case. The property was first mortgaged to the Government Service Insurance System (GSIS), and such
mortgage was annotated at the back of TCT No. 346026 as Entry No. 91370, inscribed on June 5, 1974.[5] On
February 5, 1980, respondent Brua obtained a loan from his brother-in-law, respondent Ernesto Garcia, in the
amount of One Hundred Fifty Thousand Pesos (P150,000.00) and, to secure the payment of said loan,
respondent Brua mortgaged the subject property to respondent Garcia, as evidenced by a Deed of Real Estate
Mortgage[6] executed in respondent Garcia's favor. Since the title to the subject property was in the possession
of the GSIS and respondent Garcia could not register the Deed of Real Estate Mortgage, he then executed an
Affidavit of Adverse Claim[7] and registered it with the Registry of Deeds of Rizal on June 23, 1980 as Entry No.
49853/T-346026,[8] which remained uncanceled up to this time.

Sometime in October 1991, respondent Brua requested respondent Garcia to pay the former's loan with the
GSIS, so that the title to the subject property would be released to the latter. Respondent Garcia then paid GSIS
the amount of P400,000.00 and, thus, the title to the subject property was released to him.

On October 22, 1991, a Deed of Absolute Sale[9] was executed between respondents Garcia and Brua over the
subject property, where respondent Brua sold the property in the amount of P705,000.00. In the same deed, it
was stated that the subject property was only a partial payment of respondent Brua's mortgage indebtedness to
respondent Garcia, which he could no longer redeem from the latter. Respondent Garcia then registered the
Deed of Sale with the Registry of Deeds of Rizal on October 24 1991, and a new TCT No. 5204[10] was issued in
the names of respondent Garcia and his wife. However, the annotations at the back of the previous title were
carried over to the new title, to wit: Entry No. 56837, a Notice of Levy on Attachment and/or Levy inscribed on
January 8, 1981;[11] Entry No. 2881 showing a Notice of Levy on Execution in favor of petitioner Flor Martinez,
which was inscribed on July 11, 1988;[12] Entry No. 3706, which was a Certificate of Sale in favor of petitioner
inscribed on September 2, 1988;[13] Entry No. 72854, which was a Notice of Levy on Execution in favor of
Pilipinas Bank inscribed on December 8, 1981;[14] and Entry No. 16611 inscribed on October 24, 1991, which
was the cancellation of respondent Brua's mortgage with GSIS.[15]

It appeared that the annotations found at the back of the title of the subject property in favor of petitioner, i.e.,
Notice of Levy on Attachment and/or Levy, Notice of Levy on Execution, and Certificate of Sale, were all made in
connection with petitioner's action for Collection of Sum of Money, which she filed against respondent Brua at
the RTC of Makati City, Branch 60, docketed as Civil Case No. 39633. In that case, a decision was rendered in
favor of petitioner, where the RTC ordered respondent Brua to pay the former the amount of P244,594.10,
representing the value of the dishonored checks plus 12% interest per annum as damages and the premium paid
by petitioner for the attachment bond. The decision became final and executory as respondent Brua failed to
appeal the same, and a notice of levy on execution was issued. A public auction was subsequently conducted,
where the subject property was awarded to petitioner as the sole bidder in the amount of P10,000.00, and a
Certificate of Sale was issued in her favor.

The annotation of Pilipinas Bank's Notice of Levy on Execution annotated as Entry No. 72854 on the title of the
subject property was by virtue of a civil case filed by Filipinas Manufacturers Bank, now known as Pilipinas Bank,
against respondent Brua.

On February 9, 1994, respondents Garcia and Brua filed with the RTC of Pasig, Branch 267, an Action to Quiet
Title, initially against petitioner due to the encumbrances/liens annotated on respondent Garcia's new title. They
contended that these encumbrances/liens were registered subsequent to the annotation of respondent Garcia's
adverse claim made in 1980, and prayed that these be canceled. Subsequently, the complaint was amended to
28

include Pilipinas Bank as an additional defendant. Petitioner and Pilipinas Bank filed their respective Answers
thereto.
Page

Trial thereafter ensued.

On April 15, 1998, the RTC rendered its decision dismissing respondent Garcia's action for quieting of title, the
dispositive portion of which reads:
WHEREFORE, PREMISES CONSIDERED, the instant complaint is hereby dismissed for lack of merit and judgment
is hereby rendered in favor of defendants Flor Martinez and Pilipinas Bank as against plaintiffs Ernesto Garcia
and Edilberto Brua who are further directed to pay both defendants attorney's fees in the amount of P50,000.00
each.

Accordingly, the judicial inscriptions particularly, Entry No. 3706/T-346026, annotation of certificate of sale and
Entry No. 72854/T-346026 are held to be valid, subsisting liens which do not constitute a cloud on Transfer
Certificate of Title No. 5204.[16]
In so ruling, the RTC found that the adverse claim which respondent Garcia caused to be annotated on the
previous title of the subject property, i.e, TCT No. 346026, on June 23, 1980 was predicated on his interest as a
mortgagee of a loan of P150,000.00, which he extended to respondent Brua; that respondent Garcia's adverse
interest was merely that of a second mortgagee, as he was not yet the purchaser of the subject property as of
said date; that when the judicial liens, i.e., Notice of Levy on Attachment and/or Levy and Notice of Levy on
Execution, were caused to be registered by petitioner on respondent Brua's title on January 8, 1981 and July 8,
1998, respectively, by virtue of petitioner being adjudged judgment creditor by Branch 60 of RTC Makati,
respondent Garcia's claim became inferior to that of petitioner. The RTC said that respondent Garcia's inaction to
preserve his adverse claim as a second mortgagee, which was inscribed on June 23, 1980, and his sudden
decision to redeem and purchase the subject property from the GSIS in October 1991 -- when petitioner's Notice
of Levy on Attachment and/or Levy, Notice of Levy on Execution and Certificate of Sale were already inscribed at
the back of respondent Brua's title -- showed bad faith on the part of respondent Garcia; that respondent Brua
did not even testify or participate in the case, except when he was impleaded as a plaintiff in the case. The RTC
did not give credit to respondent Garcia's claim that he and respondent Brua had no prior knowledge of the
occurrence of a public auction and the consequent annotation of the certificate of sale, and found respondent
Garcia to be a buyer in bad faith of the subject property.

The RTC also ruled that the Notice of Levy on Execution, which was annotated on December 8, 1981 as Entry No.
72854 on respondent Brua's title arising from Civil Case No. 7262 entitled Pilipinas Bank v. Edilberto Brua, was a
valid levy on the subject property in favor of Pilipinas Bank. The levy could not be canceled, as this would impair
the interest of the bank which had been decided upon by a co-equal court. The RTC found that the sale between
respondents appeared to be tainted with bad faith, which constrained petitioner and Pilipinas Bank from
engaging the services of lawyers; thus, the award of attorney's fees in the latter's favor.

Respondents' motion for reconsideration was denied by the RTC on August 11, 1998.

Respondents filed their appeal with the CA. However, respondent Brua failed to file his appellant's brief; thus, his
appeal was considered abandoned and dismissed. Petitioner and Pilipinas Bank filed their respective appellees'
briefs.

On August 12, 2004, the CA reversed and set aside the RTC decision, the dispositive portion of which reads:
WHEREFORE, the appealed Decision dated April 15, 1998 is REVERSED and SET ASIDE. Granting the instant
appeal, Entry No. 72854 (Notice of Levy on Execution in favor of Pilipinas Bank), Entry No. 2881 (Notice of Levy
on Execution in favor of Flor Martinez) and Entry No. 3706 (Certificate of Sale in favor of Flor Martinez) inscribed
in TCT No. 346026 and carried over to TCT No. 5204, are hereby CANCELLED.[17]
The CA said that a subsequent sale of property covered by a certificate of title cannot prevail over an adverse
claim, duly sworn to and annotated on the certificate of title previous to the sale; that while one who buys a
property from the registered owner need not have to look behind the title, he is nevertheless bound by the liens
and encumbrances annotated thereon; and, thus, one who buys without checking the vendor's title takes all the
risks and losses consequent to such failure. The CA found that in order to protect his interest, respondent Garcia
executed an Affidavit of Adverse Claim on June 23, 1980, annotated it on the title of the subject property under
Entry No. 49853 and it has remained uncanceled up to this time; that such adverse claim was registered prior to
the inscription of the Certificate of Sale in favor of petitioner under Entry No. 3706 and Pilipinas Bank's Notice of
Levy on Execution under Entry No. 72854; that the prior registration of respondent Garcia's adverse claim
effectively gave petitioner and Pilipinas Bank notice of the former's right to the subject property and, thus,
petitioner was deemed to have knowledge of respondent Garcia's claim and could not be considered as a buyer
in good faith at the time she purchased the subject property in the public auction; that petitioner could not claim
that she was a purchaser in good faith, since respondent Garcia's adverse claim was entered on June 23, 1980,
eight years ahead of petitioner's Certificate of Sale on September 2, 1988; that when the Notice of Levy on
Execution in favor of Pilipinas Bank was annotated on respondent Brua's title, the sheriff who caused the
annotation was charged with knowledge that the property sought to be levied upon on execution was
encumbered by an interest, which was the same if not better than that of the registered owner thereof; and that
such notice of levy could not prevail over the existing adverse claim of respondent Garcia inscribed on the title as
can be deduced from Section 12, Rule 39 of the Rules of Court.
29

The CA found that the RTC erred in concluding that respondent Garcia was a purchaser in bad faith, since his
adverse claim was entered in respondent Brua's title in 1980, and respondent Garcia could not have foretold at
Page

the time he caused such annotation of adverse claim that petitioner would purchase the same property eight
years thereafter; and that while good faith is presumed, bad faith must be established by competent proof by
the party alleging the same; and, thus, in the absence of respondent Garcia's bad faith, he is deemed to be a
purchaser in good faith, and his interest in the property must not be disturbed.

The CA also found that a Notice of Adverse Claim remains valid even after the lapse of 30 days, as provided for in
Sec. 70 of Presidential Decree No. (PD) 1529 pursuant to our ruling in Sajonas v. CA; that since no petition was
filed by petitioner for the cancellation of respondent Garcia's Notice of Adverse Claim, the adverse claim
subsisted and his rights over the subject property must consequently be upheld.

Petitioners motion for reconsideration was denied by the CA in a Resolution dated November 18, 2004.

Petitioner is now before us via a petition for certiorari under Rule 65, alleging grave abuse of discretion
amounting to lack or excess of jurisdiction committed by the CA in issuing its assailed decision and resolution.

Petitioner contends that respondent Garcia's adverse claim is nothing but a notice that he has an interest
adverse to that of respondent Brua to the extent of P150,000.00, which was the amount of the loan secured by a
Deed of Real Estate Mortgage executed by respondent Brua in favor of respondent Garcia; that the adverse
claim cannot be said to be superior to a final sale conducted by the sheriff by authority of the court pursuant to a
judgment that has attained finality; that Sajonas v. CA, on which the CA anchored its decision, differs from this
case, since the adverse claim made in the title by therein petitioner Sajonas was by virtue of a contract to sell;
that unlike in this case, respondent Garcia caused the annotation of his adverse claim as a mortgagee of
respondent Brua in the amount of P150,000.00 in 1980; and respondent Garcia's payment of the GSIS loan in
1991, upon the request of respondent Brua, was presumably for the reason that respondent Brua could no
longer discharge the GSIS obligation; and to avoid the foreclosure of the property by the GSIS, respondent Brua
asked Garcia to redeem it; that respondent Garcia's adverse claim in 1980 was not as a vendee of the property
like in Sajonas, but merely as a mortgagee.

Petitioner admits that respondent Garcia, as a mortgagee on the basis of which an adverse claim was inscribed
on the title of the subject property, is protected by Sec. 12, Rule 39 of the Rules of Court; and, thus, petitioner
knows that she is obliged as a vendee in the public sale to pay liens and encumbrances then existing at the time
of the sale on September 2, 1988, which necessarily included the adverse claim of respondent Garcia in the
amount of P150,000.00.

In his Comment, respondent Garcia claims that the petition faces outright dismissal, since the appropriate
remedy of the petitioner should have been a petition for review under Rule 45 which had already lapsed; that
when the CA reversed the RTC decision, such action did not constitute grave abuse of discretion since it had legal
basis; that any lien or adverse claim earlier inscribed prevails over those liens or adverse claims inscribed
subsequent thereto.

Respondent Brua did not file his comment. Thus, we dispensed with the filing of the same in a Resolution dated
June 19, 2006.

Petitioner filed her Reply, arguing that a petition for certiorari may be availed of where appeal is inadequate and
ineffectual.

The parties submitted their respective memoranda as required in Our Resolution dated August 30, 2006.

We dismiss the petition.

Petitioner should have filed a petition for review under Rule 45 of the Rules of Court instead of a petition for
certiorari under Rule 65, since she is assailing the CA decision and resolution which are final judgments. Rule 45
clearly provides that decisions, final orders or resolutions of the CA in any case, i.e., regardless of the nature of
the action or proceedings involved, may be appealed to us by filing a petition for review, which is just a
continuation of the appellate process over the original case.[18] And the petition for review must be filed within
fifteen (15) days from notice of the judgment or final order or resolution appealed from, or of the denial of
petitioner's motion for a new trial or reconsideration filed in due time after notice of the judgment.[19]

In this case, petitioner received a copy of the CA Resolution denying her motion for reconsideration on
November 24, 2004; and, thus, under Rule 45, she has 15 days from receipt of such resolution, or until December
9, 2004, to file a petition for review. However, petitioner did not file a petition for review; instead, she filed a
petition for certiorari under Rule 65 on January 24, 2005.[20] Hence, the CA decision and resolution have already
attained finality, and petitioner has lost her right to appeal.

A petition for certiorari under Rule 65 is proper if a tribunal, a board or an officer exercising judicial or quasi-
judicial functions has acted without or in excess of jurisdiction or with grave abuse of discretion amounting to
lack or excess of jurisdiction and there is no appeal, or any plain, speedy and adequate remedy in the ordinary
course of law.[21] In this case, petitioner had the remedy of appeal, and it was the speedy and adequate remedy
in the ordinary course of law. Thus, a special civil action for certiorari cannot be used as a substitute for an
appeal that the petitioner has already lost. Certiorari cannot be allowed when a party to a case fails to appeal a
30

judgment to the proper forum despite the availability of that remedy, certiorari not being a substitute for a lost
appeal.[22] Certiorari will not be a cure for failure to timely file a petition for review on certiorari under Rule
Page

45.[23]
While there are instances where the extraordinary remedy of certiorari may be resorted to despite the
availability of an appeal, the long line of decisions denying the special civil action for certiorari, either before
appeal was availed of or in instances where the appeal period had lapsed, far outnumber the instances where
certiorari was given due course.[24] The few significant exceptions are: (1) when public welfare and the
advancement of public policy dictate; (2) when the broader interests of justice so require; (3) when the writs
issued are null; (4) when the questioned order amounts to an oppressive exercise of judicial authority,[25] which
we find to be not present in this case. Notably, petitioner did not even fail to advance an explanation why appeal
was not availed of, nor was there any showing that the issue raised in the petition for certiorari could not be
raised on appeal. Concomitant to a liberal application of the rules of procedure should be an effort on the part of
the party invoking liberality to adequately explain his failure to abide by the rules.[26]

In fact, the argument raised by petitioner, i.e., that the Court of Appeals had no legal authority to vary the
findings of the trial court and substitute its own conclusion, which were patently contrary to the trial court's
findings, and conclusion, relates to the wisdom and soundness of the assailed CA decision and resolution. Where
the issue or question involved affects the wisdom or legal soundness of the decision not the jurisdiction of the
court to render said decision the same is beyond the province of a special civil action for certiorari.[27]
Erroneous findings and conclusions do not render the appellate court vulnerable to the corrective writ of
certiorari, for where the court has jurisdiction over the case, even if its findings are not correct, these would, at
the most, constitute errors of law and not abuse of discretion correctible by certiorari.[28] For if every error
committed by the trial court or quasi-judicial agency were to be the proper subject of review by certiorari, then
trial would never end, and the dockets of appellate courts would be clogged beyond measure.[29]

Even if we consider this petition for certiorari under Rule 65, it must be shown that the CA committed grave
abuse of discretion equivalent to lack or excess of jurisdiction, and not mere errors of judgment, for the petition
to be granted.[30] As we said, certiorari is not a remedy for errors of judgment, which are correctible by appeal.
By grave abuse of discretion is meant such capricious and whimsical exercise of judgment as is equivalent to lack
of jurisdiction, and mere abuse of discretion is not enough -- it must be grave.[31]

Petitioner contends that the adverse claim of respondent Garcia inscribed on the title of the subject property is
but a notice that the latter has an interest adverse to respondent Brua's title, to the extent of P150,000.00
secured by a real estate mortgage, and such adverse claim cannot be considered superior to that of a final sale
conducted by the sheriff by virtue of a court judgment that has attained finality.

Sec. 12, Rule 39 of the Rules of Court provides:

SEC. 12. Effect of levy on execution as to third persons. The levy on execution shall create a lien in favor of the
judgment obligee over the right, title and interest of the judgment obligor in such property at the time of the
levy, subject to liens and encumbrances then existing.

Clearly, the levy does not make the judgment creditor the owner of the property levied upon. He merely obtains
a lien.[32] Such levy on execution is subject and subordinate to all valid claims and liens existing against the
property at the time the execution lien attached, such as real estate mortgages.[33]
Respondent Garcia's adverse claim, which refers to the deed of mortgage executed by respondent Brua in his
favor, was annotated on respondent Brua's title registered with the Registry of Deeds of Rizal on June 23, 1980
as Entry No. 49853. The adverse claim was already existing when the Notice of Levy on Execution, as well as the
Certificate of Sale in favor of petitioner, was inscribed on July 11, 1988 and September 2, 1988, respectively; and,
hence, the adverse claim is sufficient to constitute constructive notice to petitioner regarding the subject
property. When petitioner registered her Notice of Levy on Execution on the title of the subject property, she
was charged with the knowledge that the subject property sought to be levied upon on execution was
encumbered by an interest the same as or better than that of the registered owner thereof.[34] Thus, no grave
abuse of discretion was committed by the CA when it held that the notice of levy and subsequent sale of the
subject property could not prevail over respondent Garcia's existing adverse claim inscribed on respondent
Brua's certificate of title.

The annotation of an adverse claim is a measure designed to protect the interest of a person over a piece of real
property, where the registration of such interest or right is not otherwise provided for by the Land Registration
Act or Act No. 496 (now P.D. No.1529 or the Property Registration Decree), and serves a warning to third parties
dealing with said property that someone is claiming an interest on the same or a better right than that of the
registered owner thereof.[35]

Petitioner cannot be considered as a buyer in good faith. A purchaser in good faith and for value 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 claims or
interest of some other person in the property.[36] Here, petitioner admitted on cross-examination that when
she registered her notice of attachment in 1981 and the levy on execution on July 11, 1988, she already saw
respondent Garcia's adverse claim inscribed on respondent Brua's title on June 23, 1980.[37]

Petitioner claims that Sajonas v. CA[38] is not applicable, since the adverse claim registered on the title of the
31

subject property made by the Sajonases in 1984 was by virtue of a contract to sell, so that when the full purchase
price was eventually paid on September 4, 1984, a deed of sale of the property was subsequently executed and
Page

registered in the Registry of Deeds of Marikina on August 28, 1985; that when the respondent therein registered
his notice levy on execution on February 12, 1985, such notice of levy could not have precedence over the
 adverse claim, because there was no more property to levy upon. In this case, however, respondent Garcia
caused the annotation of his adverse claim only as a mortgagee of respondent Brua in the amount of
P150,000.00 in 1980. The subsequent deed of sale was executed in 1991 between respondents Garcia and Brua
after the former paid the latter's loan from with the GSIS. When a new title was issued in respondent Garcia's
name, the notice of levy on execution and the certificate of sale were already annotated on the title of the
subject property; and, thus, the sale in favor of respondent Garcia could not prevail over the previous auction
sale in petitioner's favor.

We are not impressed.

The issue posed in Sajonas was whether the adverse claim inscribed on TCT No. N-190417 was still in force when
private respondent therein caused the annotation of the notice of levy on execution on the title; if the adverse
claim was still in effect, then respondent therein was charged with the knowledge of pre-existing interest over
the subject property and, thus, the Sajonases were entitled to the cancellation of the notice of levy inscribed on
the title.

We ruled in Sajonas that the inscription of the adverse claim on the title of the subject property was still in effect
on February 12, 1985, when the sheriff annotated the notice of levy on execution in favor of respondent therein;
that respondent therein was charged with knowledge that the subject property sought to be levied upon on
execution was encumbered by an interest the same as or better than that of the registered owner thereof. We
then said that such notice of levy could not prevail over the existing adverse claim inscribed on the certificate of
title in favor of the Sajonases.

As in that case, the adverse claim of respondent Garcia based on the Deed of Mortgage executed by respondent
Brua over the subject land in the formers favor was existing when the Notice of Levy on Execution was inscribed
in favor of petitioner. Although the deed of sale between respondents Brua and Garcia was done after the notice
of levy on execution and certificate of sale were inscribed on the title, it was clearly stated in the deed that the
subject property was only a partial payment for respondent Brua's mortgage indebtedness to respondent Garcia,
which the former could no longer redeem from the latter. Thus, the sale of the subject property by respondent
Brua to respondent Garcia was by reason of respondent Brua's prior loan from respondent Garcia, which was
secured by a mortgage on the subject property; and this mortgage was registered and already existing on the
title of the subject property when the Notice of Levy on Execution and Certificate of Sale in favor of petitioner
were inscribed thereon. Thus, petitioner's claim over the subject property must yield to the earlier encumbrance
registered by respondent Garcia.

WHEREFORE, the petition is DISMISSED. The Decision dated August 12, 2004 and Resolution dated November 18,
2004 of the Court of Appeals in CA-G.R. CV No. 61591 are AFFIRMED.

c. Enforcement of Liens on Registered Land

PADILLA JR. VS PHIL. PRODUCERS COOPERATIVE, G.R. 141256, July 15, 2005

In implementing the involuntary transfer of title of real property levied and sold on execution, is it enough for the executing party to file a
motion with the court which rendered judgment, or does he need to file a separate action with the Regional Trial Court?

This is a petition for review on certiorari[1] from a decision

of the Court of Appeals in CA-G.R. CV No. 53085,[2] and its resolution denying reconsideration,[3] both of which affirmed the orders of
the Regional Trial Court of Bacolod City, Branch 51.[4]

The undisputed facts of the case follow.[5]

Petitioner and his wife are the registered owners of the following real properties: Lot Nos. 2904-A (covered by TCT No. T-36090), 2312-C-
5 (covered by TCT No. T-3849), and 2654 (covered by TCT No. T-8053), all situated in Bago City.

Respondent is a marketing cooperative which had a money claim against petitioner.

On April 24, 1987, respondent filed a civil case against petitioner for collection of a sum of money in the Regional Trial Court of Bacolod
City.[6] Despite receipt of summons on May 18, 1987, petitioner (then defendant) opted not to file an answer.[7] On March 3, 1988,
respondent (then plaintiff) moved to have petitioner-defendant declared in default, which the trial court granted on April 15, 1988.[8]
Respondent presented its evidence on October 9, 1989.[9] On November 28, 1989, the trial court rendered a decision in respondents
favor.[10] Petitioner was furnished a copy of this decision by mail on November 29, 1989 but, because of his failure to claim it, the copy
was returned.[11]
32
Page
On May 31, 1990, the Court issued a writ of execution. On June 4, 1990, the three lots (Lot 2904-A, Lot 2312-C-5 and Lot 2654), all of the
Bago Cadastre and registered in petitioners name, were levied by virtue of that writ. On July 4, 1990, sheriff Renato T. Arimas auctioned
off the lots to satisfy the judgment, with respondent as the only bidder. On July 10, 1990, ex-officio provincial sheriff and clerk of court
Antonio Arbis executed a certificate of sale in favor of respondent. On August 13, 1990, the certificate of sale was recorded in the
Register of Deeds.[12]

When petitioner failed to exercise his right of redemption within the 12-month period allowed by law, the court, on motion of
respondent, ordered on February 5, 1992 the issuance of a writ of possession for the sheriff to cause the delivery of the physical
possession of the properties in favor of respondent.[13]

On May 17, 1995, respondent filed a motion to direct the Register of Deeds to issue new titles over the properties in its name, alleging
that the Register of Deeds (RD) of Bago City would not issue new titles (in respondents name) unless the owners copies were first
surrendered to him. Respondent countered that such surrender was impossible because this was an involuntary sale and the owners
copies were with petitioner.[14]

On July 3, 1995, the trial court issued an order granting the motion. In a subsequent order dated August 8, 1995, it denied petitioners
motion for reconsideration. Petitioner appealed. Four years later, the Court of Appeals rendered the assailed decision affirming the order
of the trial court.

Petitioner contends that respondents motion for the RD to cancel the existing certificates of title and issue new ones in its name was in
fact a real action and that the motion was procedurally infirm because respondent did not furnish him a copy.[15] He also claims that
under Section 6 of Rule 39 of the 1997 Rules of Civil Procedure, the execution of the judgment was barred by prescription, given that the
motion was filed more than 5 years after the writ of execution was issued on March 23, 1990.[16] He also argues that respondent failed
to follow the correct procedure for the cancellation of a certificate of title and the issuance of a new one, which is contained in Section
107 of PD 1529.[17]

In its comment,[18] respondent claims that the motion dated May 15, 1995 to direct the RD to issue new certificates of title was but a
continuation of the series of events that began with the decision in its favor on November 28, 1989, and from there, the auction of the
properties and the issuance of a certificate of sale in 1990.

The two principal issues for consideration are:

(1) whether or not respondents right to have new titles issued in its name is now barred by prescription and

(2) whether or not the motion in question is the proper remedy for cancelling petitioners certificates of title and new ones issued in its
name.

On the first issue, we rule that the respondents right to petition the court for the issuance of new certificates of title has not yet
prescribed.

In Heirs of Blancaflor vs. Court of Appeals,[19] Sarmiento Trading Corporation, predecessor-in-interest of the private respondent Greater
Manila Equipment Marketing Corporation, secured a writ of execution in 1968 by virtue of which it levied real property belonging to
petitioners predecessor-in-interest, Blancaflor. When the property was auctioned, Sarmiento Trading bid successfully and, in 1970, after
the lapse of the one-year redemption period, consolidated its ownership over the lot.

Sarmiento Trading then filed a petition with the Court of First Instance to order the cancellation of Blancaflors title and the issuance of a
new one in its name. In 1972, Sarmiento Trading sold the lot to private respondent which, at the time, went by the name Sarmiento
Distributors Corporation.

In 1988, the Deputy Register of Deeds of Iloilo wrote to Blancaflor requesting him to surrender his owners duplicate copy of the TCT.
Blancaflor did not comply and the RD refused to issue a new title. On May 25, 1989, private respondent filed a petition in the Regional
Trial Court praying that the petitioners be ordered to surrender the owners duplicate copy of the title. The petitioners refused, claiming
that respondents cause of action had already prescribed. Ruling otherwise, we stated:

It is settled that execution is enforced by the fact of levy and sale. The result of such execution salewith Sarmiento Trading Corporation as
the highest bidderwas that title to Lot No. 22 of TCT No. 14749 vested immediately in the purchaser subject only to the judgment debtors
right to repurchase. Therefore, upon Sarmiento Trading Corporations purchase of Lot No. 22 covered by TCT No. 14749 at the auction
sale, private respondents successor-in-interest had acquired a right over said title.

The right acquired by the purchaser at an execution sale is inchoate and does not become absolute until after the expiration of the
redemption period without the right of redemption having been exercised. But inchoate though it be, it is like any other right, entitled to
protection and must be respected until extinguished by redemption. Gaudencio Blancaflor was not able to redeem his property after the
expiration of the redemption period, which was 12 months after the entry or annotation of the certificate of sale made on the back of
TCT No. 14749. Consequently, he had been divested of all his rights to the property. (underscoring ours)

In this case, the rule being invoked by petitioner[20] states:

33

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

by action before it is barred by the statute of limitations.

As should be evident from Blancaflor, petitioner Padillas reliance on Section 6 of Rule 39 of the 1997 Revised Rules of Civil Procedure is
misplaced. The fact of levy and sale constitutes execution, and not the action for the issuance of a new title. Here, because the levy and
sale of the properties took place in June and July of 1990, respectively, or less than a year after the decision became final and executory,
the respondent clearly exercised its rights in timely fashion.

In addition, petitioner himself admits his failure to redeem the properties within the one-year period by adopting the facts stated in the
Court of Appeals decision.[21] There is thus no doubt he had been divested of his ownership of the contested lots.

Respondents position hinges on petitioners failure to redeem the properties 12 months after the certificate of sale was recorded in the
Register of Deeds on August 13, 1990. There is no uncertainty about respondents having become the new lawful owner of the lots in
question by virtue of the levy and the execution sale.

On the other hand, the issue of whether to acquire new titles by mere motion or through a separate petition is an entirely different
matter.

Petitioner is correct in assailing as improper respondents filing of a mere motion for the cancellation of the old TCTs and the issuance of
new ones as a result of petitioners refusal to surrender his owners duplicate TCTs.

Indeed, this called for a separate cadastral action initiated via petition.

Section 107 of PD 1529,[22] formerly Section 111 of Act 496,[23] provides:

Sec. 107. Surrender of withheld duplicate certificates.Where it is necessary to issue a new certificate of title pursuant to any involuntary
instrument which divests the title of the registered owner against his consent or where a voluntary instrument cannot be registered by
reason of the refusal or failure of the holder to surrender the owners duplicate certificate of title, the party in interest may file a petition
in court to compel the surrender of the same to the Register of Deeds. The court, after hearing, may order the registered owner or any
person withholding the duplicate certificate to surrender the same, and direct the entry of a new certificate or memorandum upon such
surrender. If the person withholding the duplicate certificate is not amenable to the process of the court, or if for any reason the
outstanding owners duplicate certificate cannot be delivered, the court may order the annulment of the same as well as the issuance of a
new certificate of title in lieu thereof. Such new certificate and all duplicates thereof shall contain a memorandum of the annulment of
the outstanding duplicate.

Respondent alleges that it resorted to filing the contested motion because it could not obtain new certificates of title, considering that
petitioner refused to surrender his owners duplicate TCTs. This contention is incorrect. The proper course of action was to file a petition
in court, rather than merely move, for the issuance of new titles. This was the procedure followed in Blancaflor by Sarmiento Trading
which was in more or less the same situation as the respondent in this case:[24]

Petitioners reliance on prescription and laches is unavailing in this instance. It was proper for Sarmiento Trading Corporation to file a
petition with the Court of First Instance of Iloilo, acting as a cadastral court, for the cancellation of TCT No. 14749 in the name of
Gaudencio Blancaflor and the issuance of another in its name. This is a procedure provided for under Section 78 of Act No. 496 and
Section 75 of PD No. 1529

Section 78 of Act 496 reads:

Sec. 78. Upon the expiration of the time, if any allowed by law for redemption after registered land has been sold on any execution, or
taken or sold for the enforcement of any lien of any description, the person claiming under the execution or under any deed or other
instrument made in the course of the proceedings to levy such execution or enforce any lien, may petition the court for the entry of a
new certificate to him, and the application may be granted: Provided, however, That every new certificate entered under this section
shall contain a memorandum of the nature of the proceeding on which it is based: Provided, further, That at any time prior to the entry
of a new certificate the registered owner may pursue all his lawful remedies to impeach or annul proceedings under execution or to
enforce liens of any description

Section 75 of PD 1529 provides:

Sec. 75. Application for new certificate upon expiration of redemption period.Upon the expiration of the time, if any, allowed by law for
redemption after the registered land has been sold on execution, or taken or sold for the enforcement of a lien of any description, except
a mortgage lien, the purchaser at such sale or anyone claiming under him may petition the court for the entry of a new certificate to him.

Before the entry of a new certificate of title, the registered owner may pursue all legal and equitable remedies to impeach or annul such
proceedings.

It is clear that PD 1529 provides the solution to respondents quandary. The reasons behind the law make a lot of sense; it provides due
process to a registered landowner (in this case the petitioner) and prevents the fraudulent or mistaken conveyance of land, the value of
34

which may exceed the judgment obligation. Petitioner contends that only his interest in the subject lots, and not that of his wife who was
not a party to the suit, should have been subjected to execution, and he should have had the opportunity to prove as much.
Page
While we certainly will not condone any attempt by petitioner to frustrate the ends of justice the only way to describe his refusal to
surrender his owners duplicates of the certificates of title despite the final and executory judgment against him respondent, on the
other hand, cannot simply disregard proper procedure for the issuance to it of new certificates of title. There was a law on the matter and
respondent should have followed it.

In any event, respondent can still file the proper petition with the cadastral court for the issuance of new titles in its name.

WHEREFORE, the instant petition is hereby GRANTED. The decision of the Court of Appeals in CA-G.R. CV No. 53085 is hereby REVERSED.
The order of the Regional Trial Court of Bacolod City ordering the Register of Deeds of Bago City to issue new certificates of title in favor
of respondent is ANULLED.

REYES vs TANG SOAT ING, G.R. 185620, Dec. 14, 2011

Challenged in this petition for review on certiorari under Rule 45 of the Rules of Court is the Decision[1] of the Court of Appeals in CA-G.R.
SP No. 96913 annulling and setting aside the Orders[2] of the Regional Trial Court (RTC), Branch 7, Malolos, Bulacan which denied
respondents Tang Soat Ings (Joanna Tangs) and Ando Sys Opposition (To MFR Farm, Inc.s Motion dated 25 April 2006) and Motion (To
declare void the sale of the property covered by TCT No. 198753) dated May 23, 2006.

The controversy arose from a complaint for Enforcement of Easement and Damages with Prayer for Preliminary Injunction and
Restraining Order filed by MFR Farms, Inc. (MFR) against respondents docketed as Civil Case No. 1245-M. MFR complained of
respondents commercial and industrial use of their property covered by Transfer Certificate of Title (TCT) No. T-198753, and sought the
enforcement of the encumbrance contained in their title. MFR likewise asked for the payment of damages suffered by its pig farm
resulting from respondents illegal use of their property.

After trial, the RTC granted MFRs complaint and specifically held that:

x x x [Respondents] have defied the clear undertaking stated in the title to the subject property to limit the use thereof to purposes not
commercial or industrial in character. x x x [U]sing the land as a chemical processing site and as a storage facility for chemicals is devoting
it to industrial purposes, which is not allowed under the subsisting encumbrance on the property.

x x x [R]elief is owing to [MFR], but the grant thereof is rendered all the more imperative in light of the manifestly injurious effects which
the business of [respondents] is causing to the neighboring estate, if not to the entire locality. x x x By more than mere preponderance of
evidence has it been established that the gaseous by-products of the chemical manufacturing process are outright pollutants which cause
direct and manifest harm to humans and animals alike, not to mention other living things.

xxxx

WHEREFORE, judgment is hereby rendered: (a) ordering [respondents] to desist from the further conduct of industrial or commercial
activities on the parcel of land covered by TCT No. T-198753 of the Registry of Deeds of Bulacan, particularly the manufacture and storage
of chemicals thereat, including the construction of buildings intended for purposes prohibited by the title to the property; (b) making
permanent the injunctions issued by this Courts orders of May 3, 1982 and December 7, 1983; (c) ordering [respondents] to pay [MFR]
actual damages in the amount of Six hundred Thirty-Nine Thousand Six hundred Fifty (P639,650.00) Pesos, with legal rate of Twelve (12%)
percent interest from the filing of the complaint on January 15, 1982, until the same is fully paid; (d) ordering [respondents] to pay [MFR]
exemplary damages in the amount One Hundred Thousand (P100,000.00) Pesos by way of example of correction for the public good; (e)
ordering [respondents] to pay MFR attorneys fees in the amount of One Hundred Thousand (P100,000.00) Pesos and to pay the costs of
suit.[3]

On appeal by respondents docketed as CA G.R. CV No. 37808, the Court of Appeals affirmed with modification the ruling of the RTC: the
Court of Appeals reduced the rate of interest to six percent (6%) and deleted the award of exemplary damages and attorneys fees.[4]

MFR and respondents filed separate appeals by certiorari[5] to this Court questioning the appellate courts ruling. Unfortunately for the
parties, we dismissed both appeals for late payment of legal fees and late filing of the petition.[6] By December 1, 1997, the decision of
35

the Court of Appeals in CA G.R. CV No. 37808 became final and executory, and was recorded in the Book of Entries of Judgment.[7]
Page
On September 28, 1998, upon motion of MFR, the RTC issued a Writ of Execution.[8] Pursuant thereto, the Branch Clerk of Court
commanded the Sheriff of RTC, Branch 7, Malolos, Bulacan, Mr. Leovino Legaspi (Sheriff Legaspi), to execute the Decision dated
September 12, 1991 as modified by the Court of Appeals.[9] Sheriff Legaspi was likewise ordered to accomplish a return of the
proceedings taken thereon in accordance with Section 14, Rule 39 of the Rules of Court.

On January 4, 1999, Sheriff Legaspi submitted a Sheriffs Report manifesting:

That on October 2, 1998[,] the undersigned was in receipt of the Writ of Execution issued by Hon. Danilo A. Manalastas for service
thereof;

That on October 9, 1998[,] the undersigned served copy of the Writ of Execution and copy of the Notice dated October 9, 1998 to
[respondent] Tang Soat Ing giving him five (5) days to comply [with] his obligations under the Writ of Execution, thru Rodolfo Mendez,
caretaker of the [respondents], at Tungkong Mangga, San Jose del Monte, Bulacan. The undersigned inquired from the said caretaker
about the personal properties of Tang Soat Ing but he was told that Tang Soat Ing has no more properties and the factory located in the
compound is being leased to other people;

That on December 10, 1998[,] the undersigned went back to Tang Soat Ing at Tungkong Mangga, Sa Jose del Monte, Bulacan but said
person was not there and also Rodolfo Mendez was not around because he was in Manila;

That on December 28, 1998[,] the undersigned went back to Tungkong Mangga, San Jose del Monte, Bulacan and talked to the
caretaker[,] Rodolfo Mendez[,] and asked him what happened to the papers he gave to [respondent] Tang Soat Ing. The caretaker said
that [respondent Tang Soat Ing] called his lawyer and informed [the latter] about the papers he received. The caretaker also told the
undersigned that he [did] not know what the lawyer said.[10]

A few days thereafter, on January 7, 1999, Sheriff Legaspi presented the Writ of Execution and the Notice of Levy on Execution of Real
Property[11] covering TCT No. T-198753 to the Register of Deeds of Bulacan Province.

On February 4, 1999, the Notice of Levy was inscribed on TCT No. T-198753.[12]

On May 7, 1999, Sheriff Legaspi issued a Notice of Sale on Execution of Real Property[13] which he likewise posted on the following
places:

(a) The Bulletin Board of Municipal Hall of San Jose del Monte, Bulacan;

(b) The Bulletin Board of the Church of San Jose del Monte, Bulacan;

(c) The Bulletin Board of the Chapel of Gaya-gaya, San Jose del Monte, Bulacan;

(d) The Bulletin Board of the main entrance of the Provincial Capitol Building of Malolos, Bulacan; and

(e) The Posting Board of the Office of the Ex-Officio Sheriff located at the back of the Bulwagan ng Katarungan Building, Malolos,
Bulacan.[14]

On June 12, 19 & 26, 1999, the Notice of Sale on Execution of Real Property was published in The Times Newsweekly.[15]

On July 19, 1999, at the public auction of the subject property covered by TCT No. T-198753, MFR was declared as the highest bidder. On
even date, Sheriff Legaspi issued a Certificate of Sale[16] which was registered with the Register of Deeds of Bulacan Province.

After more than five (5) years, on September 17, 2004, with respondents failing to exercise their right of redemption, MFR filed a
Motion[17] asking the RTC to issue an order directing the Register of Deeds of Bulacan Province to cancel TCT No. T-198753 in the name
36

of respondents, and issue a new certificate of title in the name of MFR.

Page
On September 28, 2004, the RTC denied the Motion holding that a mere motion is not sufficient for the cancellation of a certificate of
title. The RTC ruled that under Section 107[18] of Presidential Decree No. 1529, the Property Registration Decree, a petition and a
hearing are required for the issuance of a new certificate of title.

On December 1, 2004, MFR filed a Petition[19] in the same case, under the same docket number, Civil Case No. 1245-M, before the same
execution court. In this new petition, MFR impleaded the Register of Deeds as additional defendant and prayed for the same reliefs as
those prayed for in their previous motion with an additional prayer for the issuance of an order directing respondents to immediately
surrender the Owners Duplicate Copy of TCT No. T-198753.

On three separate occasions, December 9, 2004 and February 8 and 17, 2005, respondents, through their counsel of record, Atty. T. J.
Sumawang (Atty. Sumawang), received a copy of the Petition.[20]

Respondents failed to file an Answer or any responsive pleading to MFRs Petition. Consequently, MFR moved to declare respondents in
default. The Motion to Declare Respondents in Default was served on Atty. Sumawang on June 11, 2005.

The RTC granted MFRs Motion to Declare Respondents in Default: thereafter, MFR presented evidence ex-parte.

During presentation of evidence ex-parte, MFR filed a Motion for Substitution of Party Petitioner attaching thereto a Deed of Transfer of
Interest declaring petitioner Ruben C. Reyes (Reyes) acquisition of MFRs rights over the subject property. On January 2, 2006, the RTC
issued an Order granting this latest motion: MFR was substituted by Reyes as party-petitioner.

In an Order dated January 10, 2006, the RTC granted the Petition, thus:

WHEREFORE, finding merit in the instant petition, the same is hereby granted. Accordingly, defendant/private respondent Tang Soat Ing
(Joanna Tang) is hereby directed to surrender to the Court her duplicate owners copy of TCT No. T-198753 within thirty (30) days from
receipt of this Order. In [the event said] defendant/private respondent fails to surrender such owners duplicate copy as directed
hereinabove, the Register of Deeds of Bulacan is hereby directed to cancel TCT No. T-198753 and issue in lieu thereof a new owners
duplicate certificate of title in the name of Ruben C. Reyes, who has substituted [MFR] by virtue of a Deed of Transfer of Interest and
pursuant to the order of this court dated January 02, 2006.[21]

Copies of the Order were separately served on Atty. Sumawang, Atty. Anacleto Diaz (Reyes counsel) and the Register of Deeds of Bulacan
Province on January 20 and February 2, 2006, respectively.[22] However, service thereof to respondents counsel was returned and
rendered impossible. Apparently, Atty. Sumawang had already died in December 2005.[23]

On April 27, 2006, Reyes filed another Motion praying that the Register of Deeds of Bulacan Province be directed to cancel TCT No. T-
198753 in the name of respondents and to issue a new one in his (Reyes) name.

On May 19, 2006, new counsel for respondents entered its appearance. Forthwith, on May 23, 2006, respondents, through their new
counsel, filed the previously adverted to Opposition and Motion,[24] opposing Reyes April 27, 2006 Motion and moving to declare void
the sale of the subject property.

After an exchange of pleadings from the parties, the RTC issued the Order denying respondents Opposition and Motion for lack of merit.
The RTC ruled that, Section 107 of PD 1529 does not categorically state that the petition x x x should be in the form of a separate, distinct
and original action to be filed in another court, as otherwise it will create a situation in which the final judgment of a court, and its
enforcement, may be subject to a review of, or even reversal by another court of co-equal jurisdiction.[25] As regards the motion to
declare void the execution sale of the subject property covered by TCT No. T-198753, the RTC noted that there was substantial
compliance with the requirements of [Section 15, Rule 39 of the Rules of Court evidenced] in the Sheriffs Report dated January 4, 1999,
as well as the publication and posting requirements, extant in the records of this case.[26] In conclusion, the RTC ruled that respondents
are estopped from questioning the proceedings, after keeping silent thereon for a long time, despite notice thereof.
37
Page

Respondents filed a Motion for Reconsideration which the RTC denied in its Order dated October 20, 2006.
Gaining no reprieve from the RTC, respondents filed a petition for certiorari before the Court of Appeals seeking to: (1) nullify the trial
courts twin Orders dated July 17, 2006 and October 20, 2006, respectively; and (2) declare void the execution proceedings relating to the
sale of the subject property and the cancellation of TCT No. T-198753.

In yet another turn of events, the appellate court annulled and set aside the July 17, 2006 and October 20, 2006 Orders of the RTC:

WHEREFORE, the Petition is GRANTED and the Orders issued on July 17 and October 20, 2006 are ANNULLED and SET ASIDE. The public
auction sale of the property held on July 19, 1999 is declared invald and the Certificate of Sale issued by Sheriff Leovino G. Legaspi on July
19, 1999 in favor of [petitioner Reyes, substituting MFR] covering the parcel of land embraced in Transfer Certificate of Title No. T-198753
is likewise declared null and void.[27]

Aggrieved, Reyes filed a Motion for Reconsideration which resulted in another exchange of pleadings between the parties. On December
9, 2008, the Court of Appeals denied the motion.

Hence, this impasse with the following issues for our resolution:

1. Whether the execution sale of the subject property covered by TCT No. T-198753 is void;

2. Proceeding from the validity of the execution sale and the consolidation of Reyes ownership over the subject property, whether
Section 107 of Presidential Decree No. 1529 contemplates the filing of a separate cadastral case before the RTC acting as a land
registration court.

The petition is partially impressed with merit.

In declaring void the execution sale, the appellate court noted that petitioner did not strictly comply with the requirements of Section 15,
Rule 39 of the Rules of Court. The Court of Appeals relied on our holding in Villaceran v. Beltejar,[28] an administrative case finding
therein respondent Sheriff guilty of simple neglect of duty for failure to strictly comply with the rules on execution sale. The Court of
Appeals ruled that the deficiencies in the notice of execution sale were substantial and of such nature as to prevent the court from
applying the presumption of regularity in the performance of official functions by Sheriff Legaspi at the time of the execution sale. On this
score, the Court of Appeals pointed out that it was incumbent upon Reyes part to prove that the requirements of the law on execution
sale have been fully complied with.

We disagree.

Contrary to the Court of Appeals holding, the burden of evidence to prove lack of compliance with Section 15, Rule 39 of the Rules of
Court rests on the party claiming lack thereof i.e., respondents.

In Venzon v. Spouses Juan,[29] we declared that the judgment debtor, as herein respondents, alleging lack of compliance with the posting
and publication requirements of the auction sale in accordance with the rules, is behooved to prove such allegation. We held, thus:

x x x. Whoever asserts a right dependent for its existence upon a negative, must establish the truth of the negative by a preponderance of
the evidence. This must be the rule, or it must follow that rights, of which a negative forms an essential element, may be enforced
without proof. Thus, whenever the [partys] right depends upon the truth of a negative, upon him is cast the onus probandi, except in
cases where the matter is peculiarly within the knowledge of the adverse party.
38

It was error, therefore, for the trial court to hold that:

Page
Defendants did not present evidence to rebut the no notice allegation of the plaintiff. Although in the defendant spouses pre-trial brief,
there is that general allegation that the auction sale was made in accordance with law, however, there is no showing in the record that
the requirements with respect to publication/posting of notices were complied with by the defendants.

Deliberating on the absence of notice, the fact that the plaintiff did not come to know that Lot 12 was being subjected to an auction sale
proves two things: one, that no notice was posted in the place where the property is located [and, two, that] there was no auction sale
that took place on March 30, 1992. . . .

Further, the defendants, particularly defendant sheriff, who is the most competent person to testify that a written notice of sale was
made and posted in accordance with law, was not presented to the witness stand. Neither was a document presented like Sheriffs
Certificate of Posting to attest to the fact that a written notice of sale was posted before the property was allegedly sold at public
auction. In fact, the record is silent as (to) where the auction sale was conducted.

By ruling in the foregoing manner, the trial court incorrectly shifted the plaintiffs burden of proof to the defendants. It is true that the fact
of posting and publication of the notices is a matter peculiarly within the knowledge of the Deputy Sheriff. However, the trial court did
not acquire jurisdiction over him, as he was not served with summons. At the time of the filing of the complaint, he was no longer
connected with the Caloocan RTC, Branch 126, which issued the writ of execution. Hence, he could not testify in his own behalf.

x x x [T]he duty imposed by Section [18] (c) is reposed upon the sheriff, who is charged with the enforcement of the writ. Respondent
spouses had a right to presume that he had regularly performed his duty. It was not incumbent upon them to present him as a witness
for, in the absence of the sheriff, the burden to prove lack of posting and publication remained with petitioner.[30] (Emphasis supplied)

Respondents made no attempt to meet this burden of evidence, simply maintaining lack of notice of the entire proceedings (execution
and issuance of a new title over the subject property) before the trial court.

We cannot subscribe to respondents belated posturing. The disputable presumption that official duty has been regularly performed was
not overcome by respondents.[31] The documents on record lead us to the inevitable conclusion that respondents had constructive, if
not actual, notice of the execution proceedings from the issuance of the Writ of Execution, the levy on the subject property,[32] its
subjection to execution sale, up to and until the proceedings in the RTC relating to the issuance of a new certificate of title over the
subject property. Certainly, respondents are precluded from feigning ignorance of MFR (substituted by Reyes) staking a claim thereon.

There was substantial compliance with Section 15, Rule 39 of the Rules of Court: the documents in support thereof, i.e., the Certificate of
Posting issued by Sheriff Legaspi and the Affidavit of Publication executed by the publisher of The Times Newsweekly, appear to be in
order.[33] In this case, the purpose of giving notice through posting and publication under Section 15(c) of the same ruleto let the public
know of the sale to the end that the best price or a better bid may be made possible to minimize prejudice to the judgment debtorwas
realized.

Another thing militates against respondents claim of lack of knowledge of the encumbrance on their propertythe separate registrations
of: (1) the Notice of Levy on TCT No. T-198753; (2) the Certificate of Sale.

In this jurisdiction, we adhere to the doctrine that registration in a public registry works as constructive notice to the whole world.[34]
Section 51 of Act No. 496, as amended by Section 52 of Presidential Decree No. 1529, provides:

SECTION 52. Constructive notice upon registration.Every conveyance, mortgage, lease, lien, attachment, order, judgment, instrument or
entry affecting registered land shall, if registered, filed or entered in the Office of the Register of Deeds for the province or city where the
land to which it relates lies, be constructive notice to all persons from the time of such registering, filing, or entering.

And, quite undeniably, respondents had constructive notice that their property is subject of execution proceedings arising from their
39

judgment debt and in danger of forfeiture to their judgment creditor.

Page
Respondents consistently flouted the judgment in Civil Case No. 1245-M, as amended by the Decision of the Court of Appeals in CA G.R.
CV No. 37808, which became final and executory on December 1, 1997, by their utter failure to respond to the processes of the RTC in
the execution proceedings despite their receipt of notice at each stage thereof. At the very least, respondents attack on the validity of the
execution proceedings, culminating in the execution sale of the subject property, is barred by laches.

Laches is 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 a presumption that the
party entitled to assert it either has abandoned it or declined to assert it.[35] Laches thus operates as a bar in equity.[36]

We hearken to the time-honored rule anchored on public policy:

[R]elief will be denied to a litigant whose claim or demand has become "stale," or who has acquiesced for an unreasonable length of
time, or who has not been vigilant or who has slept on his rights either by negligence, folly or inattention. In other words, public policy
requires, for peace of society, the discouragement of claims grown stale for non-assertion; thus laches is an impediment to the assertion
or enforcement of a right which has become, under the circumstances, inequitable or unfair to permit.[37] (Emphasis supplied)

The records bear out that as of October 9, 1998, and on two occasions thereafter, December 10 & 28, 1998, Sheriff Legaspi served a copy
of the Writ of Execution on respondents, and followed up thereon. With no action forthcoming from respondents, who are ostensibly
evading payment of their judgment debt, the Sheriff correctly levied on the subject property. For more than five (5) years from the
execution sale thereof, with respondents not exercising their right of redemption, up to the filing of a Motion, and subsequently, a
Petition for the issuance of a new certificate of title over the property in Reyes name, respondents made no effort to settle their
judgment debt, much less, to ascertain the status of the execution proceedings against them and the levy on, and consequent sale of,
their property. Truly significant is the fact that eight (8) years had lapsed, from the time respondents received a copy of the Writ of
Execution in October 1998 until they, through their new counsel, filed the Opposition and Motion in May 2006, before respondents were
prodded into action.

We find obvious respondents brazen ploy to forestall and thwart the execution of a final and executory judgment against them. The
death of their counsel, Atty. Sumawang, and their engagement of a new one, does not minimize the hard fact that respondents had
notice of, not only the execution proceedings, but also, the proceedings on the issuance of a new title over the subject property. Yet,
respondents did not act on any of these notices which were duly received by Atty. Sumawang. Respondents Motion to nullify the
execution proceedings, from the levy on the subject property and sale thereof, is an afterthought, a last-ditch effort to evade payment of
their judgment debt. Their claim of ignorance of the execution proceedings flies in the face of the documents on record. This bare-faced
claim cannot trump the disputable presumption that a person takes ordinary care of his concerns.[38] Consequently, respondents are
estopped and barred from assailing the execution proceedings before the RTC.

Time and again, we have held that once a judgment becomes final and executory, the prevailing party should not be denied the fruits of
his victory by some subterfuge devised by the losing party.[39] We completely agree with the RTCs disquisition, thus:

Finally, after [MFR] had filed the petition in question pursuant to and in compliance with the order of this court dated September 28,
2004, to which no answer or any responsive pleading was filed by respondents or thru their lawyer, as the latter was certainly notified of
the proceedings in said petition, respondents cannot now assail said proceedings after keeping silent thereon for a long time, and if
indeed there was neglect on the part of their lawyer in informing them of or in taking part in said proceedings, such negligence of their
counsel binds them as client. There is likewise an evident lack of prudence and due diligence on the part of the respondents by their
failure to inform this court of the withdrawal of their former counsel for a long period of time, and they cannot now, by feigning
ignorance of the proceedings had in the petition in question, assail the same thru a new counsel. In other words, respondents cannot be
allowed to keep silent on or refuse to participate in proceedings that they know were taking place in connection with a final judgment
rendered against them and then suddenly, after said proceedings were long terminated, come to court to question the same through a
new counsel. The respondents are clearly in estoppel. Also, the court finds no practical purpose and benefit in sustaining the theory
posited by respondents which, aside from the reasons advanced earlier, will have no other effect than to further unduly delay the
execution of a judgment that had long acquired finality.[40]
40
Page

xxxx
Respondents are clearly estopped from assailing the proceedings in question by their failure or refusal to participate therein despite their
or their counsels knowledge thereof, and it would be unjust for the plaintiff to allow respondents to put in issue the validity of said
proceedings at this late stage, thru another counsel, as they are bound by the action or inaction of their former counsel.[41]

The Court of Appeals reliance on Villaceran v. Beltejar[42] is misplaced. Villaceran is an administrative case finding the Sheriff guilty of
simple neglect of duty for failure to strictly comply with the rules on execution sale. We held therein that there was no substantial
compliance by the Sheriff with Section 15(c), Rule 39 of the Rules of Court. Our declaration that [n]o reason exists not to apply the
principle in the extrajudicial foreclosure sales of real property (statutory requirements of posting and publication must be strictly
complied with since non-compliance could constitute a jurisdictional defect that would invalidate the sale) to execution sales of real
property under Rule 39 of the Rules of Court[43] is an obiter which should not be definitive of the facts obtaining herein.

The facts of this case demonstrate respondents stubborn refusal to comply with the judgment against them by claiming lack of notice of
the execution proceedings. We reiterate that this claim is belied by the evidence on record and cannot invalidate the enforcement and
execution of a final and executory judgment of this Court. On the whole, respondents silence and inaction for eight (8) years from the
time the subject property was validly levied upon by the RTC, bars them from claiming invalidity of the execution proceedings.

Notwithstanding the validity of the execution sale and Reyes consolidation of ownership over the subject property upon the lapse of the
redemption period, we hold that Section 107 of Presidential Decree No. 1529 contemplates the filing of a separate and original action
before the RTC, acting as a land registration court.

Reyes argues that to require him to file his petition in another court would unduly divest the RTC of its jurisdiction to enforce its final and
executory decision. Reyes invokes our ruling in Natalia Realty, Inc. v. Court of Appeals[44] where we declared that jurisdiction of the court
to execute its judgment continues even after the judgment has become final for the purpose of enforcement of judgment.[45]

Reyes reasoning is off tangent. Natalia is inapplicable because the execution proceedings in this case have been completed and was
terminated upon the execution sale of the subject property. Reyes already consolidated ownership over the subject property; as owner,
he has a right to have the same registered in his name. This transfer of title to the subject property in Reyes name is no longer part of the
execution proceedings: the fact of levy and sale constitutes execution, not so is the action for the issuance of a new title.[46]

Indeed, the subsequent filing of a separate and original action for the titling of the subject property in Reyes name, no longer involves the
execution of the judgment in Civil Case No. 1245-M.

Section 107 of the Property Registration Decree falls under PETITIONS AND ACTIONS AFTER ORIGINAL REGISTRATION, Chapter X thereof.
The provision reads:

SECTION 107. Surrender of withhold duplicate certificates. Where it is necessary to issue a new certificate of title pursuant to any
involuntary instrument which divests the title of the registered owner against his consent or where a voluntary instrument cannot be
registered by reason of the refusal or failure of the holder to surrender the owner's duplicate certificate of title, the party in interest may
file a petition in court to compel surrender of the same to the Register of Deeds. The court, after hearing, may order the registered owner
or any person withholding the duplicate certificate to surrender the same, and direct the entry of a new certificate or memorandum upon
such surrender. If the person withholding the duplicate certificate is not amenable to the process of the court, or if not any reason the
outstanding owner's duplicate certificate cannot be delivered, the court may order the annulment of the same as well as the issuance of
a new certificate of title in lieu thereof. Such new certificate and all duplicates thereof shall contain a memorandum of the annulment of
the outstanding duplicate.

That a succeeding registration of property in anothers name, after its original registration, contemplates a separate original action is
41

reinforced by our ruling in Padilla v. Philippine Producers Cooperative Marketing Association, Inc.[47] Answering the question: In
implementing the involuntary transfer of title of real property levied and sold on execution, is it enough for the executing party to file a
Page
motion with the court which rendered judgment, or does he need to file a separate action with the Regional Trial Court, we unequivocally
declared, thus:

Petitioner is correct in assailing as improper respondents filing of a mere motion for the cancellation of the old TCTs and the issuance of
new ones as a result of petitioners refusal to surrender his owners duplicate TCTs.

Indeed, this called for a separate cadastral action initiated via petition.

Section 107 of PD 1529, formerly Section 111 of Act 496, provides:

xxxx

Respondent alleges that it resorted to filing the contested motion because it could not obtain new certificates of title, considering that
petitioner refused to surrender his owners duplicate TCTs. This contention is incorrect. The proper course of action was to file a petition
in court, rather than merely move, for the issuance of new titles. This was the procedure followed in Blancaflor by Sarmiento Trading
which was in more or less the same situation as the respondent in this case:

Petitioners reliance on prescription and laches is unavailing in this instance. It was proper for Sarmiento Trading Corporation to file a
petition with the Court of First Instance of Iloilo, acting as a cadastral court, for the cancellation of TCT No. 14749 in the name of
Gaudencio Blancaflor and the issuance of another in its name. This is a procedure provided for under Section 78 of Act No. 496 and
Section 75 of PD No. 1529. . . .

Section 78 of Act 496 reads:

Sec. 78. Upon the expiration of the time, if any allowed by law for redemption after registered land has been sold on any execution, or
taken or sold for the enforcement of any lien of any description, the person claiming under the execution or under any deed or other
instrument made in the course of the proceedings to levy such execution or enforce any lien, may petition the court for the entry of a
new certificate to him, and the application may be granted: Provided, however, That every new certificate entered under this section
shall contain a memorandum of the nature of the proceeding on which it is based: Provided, further, That at any time prior to the entry
of a new certificate the registered owner may pursue all his lawful remedies to impeach or annul proceedings under execution or to
enforce liens of any description.

Section 75 of PD 1529 provides:

Sec. 75. Application for new certificate upon expiration of redemption period. Upon the expiration of the time, if any, allowed by law
for redemption after the registered land has been sold on execution, or taken or sold for the enforcement of a lien of any description,
except a mortgage lien, the purchaser at such sale or anyone claiming under him may petition the court for the entry of a new certificate
to him.

Before the entry of a new certificate of title, the registered owner may pursue all legal and equitable remedies to impeach or annul such
proceedings.

It is clear that PD 1529 provides the solution to respondents quandary. The reasons behind the law make a lot of sense; it provides due
process to a registered landowner (in this case the petitioner) and prevents the fraudulent or mistaken conveyance of land, the value of
which may exceed the judgment obligation. x x x.
42
Page

While we certainly will not condone any attempt by petitioner to frustrate the ends of justice the only way to describe his refusal to
surrender his owners duplicates of the certificates of title despite the final and executory judgment against him respondent, on the
other hand, cannot simply disregard proper procedure for the issuance to it of new certificates of title. There was a law on the matter and
respondent should have followed it.

In any event, respondent can still file the proper petition with the cadastral court for the issuance of new titles in its name.[48] (Emphasis
supplied).

Plainly, Reyes must institute a separate cadastral action initiated via petition.

WHEREFORE, the petition is PARTLY GRANTED. The Decision of the Court of Appeals in CA G.R. SP No. 96913 annulling and setting aside
the Orders dated July 17, 2006 and October 20, 2006 issued by the Regional Trial Court, Branch 7, Malolos, Bulacan in Civil Case No. 1245-
M is MODIFIED:

1. The public auction sale of the subject property covered by TCT No. T-198753 on July 19, 1999 is declared VALID;

2. The Certificate of Sale issued by Sheriff Leovino Legaspi on July 19, 1999 in favor of MFR Farms, Inc. (substituted by petitioner Ruben C.
Reyes) covering the parcel of land embraced in Transfer Certificate of Title No. T-198753 is likewise declared VALID; and

3. The Petition[49] dated October 29, 2004 filed by MFR Farms, Inc. (substituted by Ruben C. Reyes) is DISMISSED without prejudice to re-
filing as a separate original action pursuant to Section 107 of Presidential Decree No. 1529.

d. LIS PENDENS

VIEWMASTER CONSTRUCTION VS MAULIT, G.R. 136283, FEB 29, 2000

A notice of lis pendens may be registered when an action or a proceeding directly affects the title to the land or the
buildings thereon; or the possession, the use or the occupation thereof. Hence, the registration of such notice should
be allowed if the litigation involves the enforcement of an agreement for the co-development of a parcel of land. h Y

Statement of the Case

Before us is a Petition for Review on Certiorari[1] assailing the February 27, 1998 Decision[2] of the Court of Appeals
(CA)[3] in CA- GR SP No. 39649 and its November 12, 1998 Resolution[4] denying reconsideration. The assailed
Decision affirmed the Resolution[5] of the Land Registration Authority (LRA) in Consulta No. 2381, which ruled as
follows:

"PREMISES CONSIDERED, this Authority is of the considered view and so holds that the Notice of Lis Pendens subject
of this consulta is not registrable."[6]

The Facts

The undisputed facts were summarized by the Court of Appeals as follows:

"The subject property is known as the Las Pias property registered in the name of Peltan Development Inc. (now State
Properties Corporation) covered by Transfer Certificate of Title No. (S-17992) 12473-A situated in Barrio Tindig na
Manga, Las Pias, Rizal.

"The Chiong/Roxas family collectively owns and controls State Investment Trust, Inc. (formerly State Investment
House, Inc.) and is the major shareholder of the following corporations, namely: State Land Investment Corporation,
Philippine Development and Industrial Corporation and Stronghold Realty Development.

"Sometime in 1995, the said family decided to give control and ownership over the said corporations to only one
member of the family, through the process of bidding among the family members/stockholders of the said
companies. It was agreed that the bidder who acquires 51% or more of the said companies shall be deemed the
43

winner.
Page
"Defendant Allen Roxas, one of the stockholders of State Investment Trust, Inc. applied for a loan with First Metro
Investment, Inc. (First Metro for brevity) in the amount of P36,500,000.00 in order to participate in the bidding. Es
msc

"First Metro granted Allen Roxas' loan application without collateral provided, however, that he procure a
guarantor/surety/solidary co-debtor to secure the payment of the said loan.

"Petitioner Viewmaster agreed to act as guarantor for the aforementioned loan in consideration for its participation
in a Joint Venture Project to co-develop the real estate assets of State Investment Trust, Inc.

"After a series of negotiations, petitioner Viewmaster and defendant Allen Roxas agreed that should the latter prevail
and win in the bidding, he shall sell to petitioner fifty percent (50%) of the total eventual acquisitions of shares of
stock in the State Investment Trust, Inc., at a purchase price equivalent to the successful bid price per share plus an
additiona1 ten percent (10%) per share.

"As a result of the loans granted by First Metro in consideration of and upon the guaranty of petitioner Viewmaster,
defendant Allen Roxas, eventually gained control and ownership of State Investment Trust, Inc.

"However, notwithstanding the lapse of two (2) years since defendant Allen Roxas became the controlling stockholder
of State Investment Trust, Inc., he failed to take the necessary action to implement the Joint Venture Project with
petitioner Viewmaster to co-develop the subject properties.

"Thus, petitioner's counsel wrote defendant Allen Roxas, reiterating petitioner's demand to comply with the
agreement to co-develop the Las Pias Property and to set in operation all the necessary steps towards the realization
of the said project.

"On September 8, 1995, petitioner Viewmaster filed a Complaint for Specific Performance, Enforcement of Implied
Trust and Damages against State Investment Trust, Inc. Northeast Land Development, Inc., State Properties
Corporation (formerly Peltan Development, Inc.) and defendant Allen Roxas, in his capacity as Vice-Chairman of State
Investment Trust, Inc., and Chairman of Northeast Land Development, Inc., State Properties Corporation, which was
docketed as Civil Case No.65277. Esmm is

"On September 11,1995, petitioner Viewmaster filed a Notice of Lis Pendens with the Register of Deeds of Quezon
City and Las Pias for the annotation of a Notice of Lis Pendens on Transfer Certificate of Title No. (S-17992) 12473- A,
registered in the name of Peltan Development, Inc. (now State Properties Corporation).

"In a letter dated September 15, 1995, the respondent Register of Deeds of Las Pias denied the request for
annotation of the Notice of Lis Pendens on the following grounds:

1. the request for annotation and the complaint [do] not contain an adequate description of the subject property;

2. petitioner's action only has an incidental effect on the property in question. Esmso

"On September 20, 1995, petitioner filed an appeal to the respondent Land Registration Authority, which was
docketed as Consulta No. 2381.

"On December 14, 1995, the Respondent Land Registration Authority issued the assailed Resolution holding that
petitioner's 'Notice of Lis Pendens' was not registrable."[7]

Ruling of the Court of Appeals

In affirming the ruling of the LRA, the Court of Appeals held that petitioner failed to adequately describe the subject
property in the Complaint and in the application for the registration of a notice of lis pendens. The CA noted that
while Transfer Certificate of Title No. (S-17992) 12473-A indicated six parcels of land, petitioner's application
mentioned only one parcel.

Moreover, the CA also ruled that a notice of lis pendens may be registered only when an action directly affects the
title to or possession of the real property. In the present case, the proceedings instituted by petitioner affected the
title or possession incidentally only, not directly.

Hence, this Petition.[8]

Issues

Petitioner submits for the consideration of the Court the following issues:

"I
44

Whether or not the petitioner failed to adequately describe the subject property in its complaint and in the notice of
lis pendens Mse sm
Page

II
Whether or not the Las Pias property is directly involved in Civil Case No. 65277."[9]

The Court's Ruling

The Petition is meritorious.

First Issue: Description of Property

Petitioner contends that the absence of the property's technical description in either the notice of lis pendens or the
Complaint is not a sufficient ground for rejecting its application, because a copy of TCT No. (S-17992) 12473-A
specifically describing the property was attached to and made an integral part of both documents.

On the other hand, respondents argue that petitioner failed to provide an accurate description of the Las Pias
property, which was merely referred to as a "parcel of land."

The notice of lis pendens described the property as follows:

"A parcel of land situated in the Barrio of Tindig na Manga, Municipality of Las Pias, Province of Rizal x x x containing
an area of Seven Hundred Eighty Six Thousand One Hundred Sixty Seven (786,167) square meters, more or less."

By itself, the above does not adequately describe the subject property, pursuant to Section 14 of Rule 13 of the Rules
of Court and Section 76 of Presidential Decree (PD) No.1529. It does not distinguish the said property from other
properties similarly located in the Barrio of Tindig na Manga, Municipality of Las Pias, Province of Rizal. Indeed, by the
above description alone, it would be impossible to identify the property.

In the paragraph directly preceding the description quoted above, however, petitioner specifically stated that the
property referred to in the notice of lis pendens was the same parcel of land covered by TCT No. (S-17992) 12473-A:

"Please be notified that on 08 September 1995, the [p]laintiff in the above-entitled case filed an action against the
above-named [d]efendants for specific performance, enforcement of an implied trust and damages, now pending in
the Regional Trial Court of Pasig, Branch 166, which action involves a parcel of land covered by Transfer Certificate
Title (TCT) No. (S-17992) 12473-A, registered in the name of Peltan Development Incorporated which changed its
corporate name to State Properties Corporation, one of the [d]efendants in the aforesaid case. The said parcel of land
is more particu1arly described as follows: Ex sm

'A parcel of land situated in the Barrio of Tindig na Manga, Municipality of Las Pias, Province of Rizal x x x containing
an area of Seven Hundred Eighty Six Thousand One Hundred Sixty Seven (786,167) square meters, more or less.'

"Request is therefore made [for] your good office to record this notice of pendency of the aforementioned action in
TCT No. (S-17992) 12473-A for all legal purposes."[10]

As earlier noted, a copy of the TCT was attached to and made an integral part of both documents. Consequently, the
notice of lis pendens submitted for registration, taken as a whole, leaves no doubt as to the identity of the property,
the technical description of which appears on the attached TCT. We stress that the main purpose of the requirement
that the notice should contain a technical description of the property is to ensure that the same can be distinguished
and readily identified. In this case, we agree with petitioner that there was substantial compliance with this
requirement.

Second Issue: Property Directly Involved

In upholding the LRA, the Court of Appeals held that "the doctrine of lis pendens has no application to a proceeding in
which the only object sought is the recovery of [a] money judgment, though the title [to] or right or possession [of] a
property may be incidentally affected. It is thus essential that the property be directly affected where the relief
sought in the action or suit includes the recovery of possession, or the enforcement [thereof], or an adjudication
between the conflicting claims of title, possession or right of possession to specific property, or requiring its transfer
or sale."[11]

On the other hand, petitioner contends that the civil case subject of the notice of lis pendens directly involved the
land in question, because it prayed for the enforcement of a prior agreement between herein petitioner and
Defendant Allen Roxas to co-develop the latter's property.

We agree with the petitioner. A notice of lis pendens, which literally means "pending suit," may involve actions that
deal not only with the title or possession of a property, but even with the use or occupation thereof. Thus, Section 76
of PD 1529 reads: Jjjuris

"Sec. 76. Notice of lis pendens. -- No action to recover possession of real estate, or to quiet title thereto, or to remove
clouds upon the title thereof, or for partition, or other proceedings of any kind in court directly affecting the title to
45

land or the use or occupation thereof or the buildings thereon, and no judgment, and no proceeding to vacate or
reverse any judgment, shall have any effect upon registered land as against persons other than the parties thereto,
Page

unless a memorandum or notice stating the institution of such action or proceeding and the court wherein the same
is pending, as well as the date of the institution thereof, together with a reference to the number of the certificate of
title, and an adequate description of the land affected and the registered owner thereof, shall have been filed and
registered."

In Magdalena Homeowners Association, Inc. v. Court of Appeals,[12] the Court did not confine the availability of lis
pendens to cases involving the title to or possession of real property. Thus, it held:

"According to Section 24, Rule 14[13] of the Rules of Court and Section 76 of Presidential Decree No.1529, a notice of
lis pendens is proper in the following cases, viz.:

a).......An action to recover possession of real estate;

b).......An action to quiet title thereto;

c).......An action to remove clouds thereon;

d).......An action for partition; and

e).......Any other proceedings of any kind in Court directly affecting the title to the land or the use or occupation
hereof or the buildings thereon."

In Villanueva v. Court of Appeals,[14] this Court further declared that the rule of lis pendens applied to suits brought
"to establish an equitable estate, interest, or right in specific real property or to enforce any lien, charge, or
encumbrance against it x x x." Thus, this Court observed that the said notice pertained to the following: Sjcj

"x x x all suits or actions which directly affect real property and not only those which involve the question of title, but
also those which are brought to establish an equitable estate, interest, or right, in specific real property or to enforce
any lien, charge, or encumbrance against it, there being in some cases a lis pendens, although at the commencement
of the suit there is no present vested interest, claim, or lien in or on the property which it seeks to charge. It has also
been held to apply in the case of a proceeding to declare an absolute deed of mortgage, or to redeem from a
foreclosure sale, or to establish a trust, or to suits for the settlement and adjustment of partnership interests."

In the present case, petitioner's Complaint docketed as Civil Case No. 65277 clearly warrants the registration of a
notice of lis pendens. The Complaint prayed for the following reliefs: Scjj

"1. Render judgment ordering the Defendant Allen Roxas to sell fifty percent (50%) of his shareholdings in Defendant
State Investment to Plaintiff at the price equivalent to the successful bid price per share plus an additional ten
percent (10%) per share and directing Defendants to co-develop with the Plaintiff the subject real properties;

2. Render judgment ordering the Defendant Allen Roxas to:

a. Pay the Plaintiff the amount of at least Twenty Million Pesos (P20,000,000.00) and/or such other amounts as may
be proven during the course of the trial, by way of actual damages;

b. Pay the Plaintiff the amount of at least One Million Pesos (P1,000,000.00), by way of moral damages;

c. Pay the Plaintiff the amount of at least One Million Pesos (P1,000,000.00), by way of exemplary damages;

d. Pay the Plaintiff the amount of Two Hundred Fifty Thousand Pesos (P250,000.00) by way of attorney's fees; and

e. Pay expenses of litigation and costs of suit."[15]

Undeniably, the prayer that Defendant Allen Roxas be ordered to sell 50 percent of his shareholdings in State
Investment does not directly involve title to the property and is therefore not a proper subject of a notice of lis
pendens. Neither do the various amounts of damages prayed for justify such annotation.

We disagree, however, with the Court of Appeals and the respondents that the prayer for the co-development of the
land was merely incidental to the sale of shares of defendant company. Jjsc

The Complaint shows that the loan obtained by Allen Roxas (one of the defendants in the civil case) from First Metro
was guaranteed by petitioner for two distinct considerations: (a) to enable it to purchase 50 percent of the stocks that
the said defendant may acquire in State Investment and (b) to co-develop with the defendants the Quezon City and
the Las Pias properties of the corporation. In other words, the co-development of the said properties is a separate
undertaking that did not arise from petitioner's acquisition of the defendant's shares in the corporation. To repeat,
the co-development is not merely auxiliary or incidental to the purchase of the shares; it is a distinct consideration for
Viewmaster's guaranty.[16]

Hence, by virtue of the alleged agreement with Allen Roxas, petitioner has a direct -- not merely incidental -- interest
in the Las Pias property. Contrary to respondents' contention,[17] the action involves not only the collection of a
46

money judgment, but also the enforcement of petitioner's right to co-develop and use the property.
Page

The Court must stress that the purpose of lis pendens is (1) to protect the rights of the party causing the registration
thereof[18] and (2) to advise third persons who purchase or contract on the subject property that they do so at their
peril and subject to the result of the pending litigation.[19] One who deals with property subject of a notice of lis
pendens cannot acquire better rights than those of his predecessors-in-interest.[20] In Tanchoco v. Aquino,[21] the
Court held:

"x x x. _ The doctrine of lis pendens is founded upon reason of public policy and necessity, the purpose of which is to
keep the subject matter of the litigation within the power of the court until the judgment or decree shall have been
entered; otherwise, by successive alienations pending the litigation, its judgment or decree shall be rendered abortive
and impossible of execution. Purchasers pendente lite of the property subject of the litigation after the notice of lis
pendens is inscribed in the Office of the Register of Deeds are bound by the judgment against their predecessors. x x
x."

Without a notice of lis pendens, a third party who acquires the property after relying only on the Certificate of Title
would be deemed a purchaser in good faith. Against such third party, the supposed rights of petitioner cannot be
enforced, because the former is not bound by the property owner's undertakings not annotated in the TCT.[22] Kyle

Likewise, there exists the possibility that the res of the civil case would leave the control of the court and render
ineffectual a judgment therein. Indeed, according to petitioner, it was not even informed when Allen Roxas
exchanged the Quezon City property for shares of stock in Northeast Land Development, Inc.[23] Hence, it maintains
that there is a clear risk that the same thing would be done with the Las Pias property.

In this light, the CA ruling left unprotected petitioner's claim of co-development over the Las Pias property. Hence,
until the conflicting rights and interests are threshed out in the civil case pending before the RTC, it will be in the best
interest of the parties and the public at large that a notice of the suit be given to the whole world.

The Court is not here saying that petitioner is entitled to the reliefs prayed for in its Complaint pending in the RTC.
Verily, there is no requirement that the right to or the interest in the property subject of a lis pendens be proven by
the applicant. The Rule merely requires that an affirmative relief be claimed.[24] A notation of lis pendens neither
affects the merits of a case nor creates a right or a lien.[25] It merely protects the applicant's rights, which will be
determined during the trial.

WHEREFORE, the Petition is hereby GRANTED and the assailed Decision of the Court of Appeals REVERSED and SET
ASIDE. The Las Pias Register of Deeds is directed to cause the annotation of lis pendens in TCT No. (S-17992) 12473-A.
No costs.

ATLANTIC ERECTORS INC VS HERBAL COVE REALTY, G.R. 148568, March 20, 2003

The pendency of a simple collection suit arising from the alleged nonpayment of construction services, materials,
unrealized income and damages does not justify the annotation of a notice of lis pendens on the title to a property
where construction has been done.

Statement of the Case

Before the Court is a Petition for Review on Certiorari[1] under Rule 45 of the Rules of Court, challenging the May 30,
2000 Decision[2] of the Court of Appeals (CA) in CA-GR SP No. 56432. The dispositive portion of the Decision is
reproduced as follows:

WHEREFORE, the petition is granted and the assailed November 4, 1998 and October 22, 1999 orders annulled and
set aside. The July 30, 1998 order of respondent judge is reinstated granting the cancellation of the notices of lis
pendens subject of this petition.[3]

In its July 21, 2001 Resolution,[4] the CA denied petitioners Motion for Reconsideration.

The Facts

The factual antecedents of the case are summarized by the CA in this wise:

On June 20, 1996, [respondent] and [petitioner] entered into a Construction Contract whereby the former agreed to
construct four (4) units of [townhouses] designated as 16-A, 16-B, 17-A and 17-B and one (1) single detached unit for
an original contract price of P15,726,745.19 which was late[r] adjusted to P16,726,745.19 as a result of additional
works. The contract period is 180 days commencing [on] July 7, 1996 and to terminate on January 7, 1997.
[Petitioner] claimed that the said period was not followed due to reasons attributable to [respondent], namely:
suspension orders, additional works, force majeure, and unjustifiable acts of omission or delay on the part of said
[respondent]. [Respondent], however, denied such claim and instead pointed to [petitioner] as having exceeded the
180 day contract period aggravated by defective workmanship and utilization of materials which are not in
compliance with specifications.

xxxxxxxxx
47

On November 21, 1997, [petitioner] filed a complaint for sum of money with damages (Civil Case No. 97-2707) with
Page

the Regional Trial Court of Makati entitled Atlantic Erectors, Incorporated vs. Herbal Cove Realty Corp. and Ernest C.
Escal[e]r. This case was raffled to Branch 137, x x x Judge Santiago J. Ranada presiding. In said initiatory pleading,
[petitioner] AEI asked for the following reliefs:

AFTER DUE NOTICE AND HEARING, to order x x x defendant to:

1. Pay plaintiff the sum of P4,854,229.94 for the unpaid construction services already rendered;

2. To x x x pay plaintiff the sum of P1,595,551.00 for the construction materials, equipment and tools of plaintiff held
by defendant;

3. To x x x pay plaintiff the sum of P2,250,000.00 for the [loss] x x x of expected income from the construction project;

4. [T]o x x x pay plaintiff the sum of P800,000.00 for the cost of income by way of rental from the equipment of
plaintiff held by defendants;

5. To x x x pay plaintiff the sum of P5,000,000.00 for moral damages;

6. To x x x pay plaintiff the sum of P5,000,000.00 for exemplary damages;

7. To x x x pay plaintiff the sum equivalent of 25% of the total money claim plus P200,000.00 acceptance fee and
P2,500.00 per court appearance;

8. To x x x pay the cost of suit.

On the same day of November 21, 1997, [petitioner] filed a notice of lis pendens for annotation of the pendency of
Civil Case No. 97-707 on titles TCTs nos. T-30228, 30229, 30230, 30231 and 30232. When the lots covered by said
titles were subsequently subdivided into 50 lots, the notices of lis pendens were carried over to the titles of the
subdivided lots, i.e., Transfer Certificate of Title Nos. T-36179 to T-36226 and T-36245 to T-36246 of the Register of
Deeds of Tagaytay City.

On January 30, 1998, [respondent] and x x x Ernest L. Escaler, filed a Motion to Dismiss [petitioners] Complaint for
lack of jurisdiction and for failure to state a cause of action. They claimed [that] the Makati RTC has no jurisdiction
over the subject matter of the case because the parties Construction Contract contained a clause requiring them to
submit their dispute to arbitration.

xxxxxxxxx

On March 17, 1998, [RTC Judge Ranada] dismissed the Complaint as against [respondent] for [petitioners] failure to
comply with a condition precedent to the filing of a court action which is the prior resort to arbitration and as against
x x x Escaler for failure of the Complaint to state a cause of action x x x.

[Petitioner] filed a Motion for Reconsideration of the March 17, 1998 dismissal order. [Respondent] filed its
Opposition thereto.

On April 24, 1998, [respondent] filed a Motion to Cancel Notice of Lis Pendens. It argued that the notices of lis
pendens are without basis because [petitioners] action is a purely personal action to collect a sum of money and
recover damages and x x x does not directly affect title to, use or possession of real property.

In his July 30, 1998 Order, [Judge Ranada] granted [respondents] Motion to Cancel Notice of Lis Pendens x x x:

[Petitioner] filed a Motion for Reconsideration of the aforesaid July 30, 1998 Order to which [respondent] filed an
Opposition.

In a November 4, 1998 Order, [Judge Ranada,] while finding no merit in the grounds raised by [petitioner] in its
Motion for Reconsideration, reversed his July 30, 1998 Order and reinstated the notices of lis pendens, as follows:

1. The Court finds no merit in plaintiffs contention that in dismissing the above-entitled case for lack of jurisdiction,
and at the same time granting defendant Herbal Coves motion to cancel notice of lis pendens, the Court [took] an
inconsistent posture. The Rules provide that prior to the transmittal of the original record on appeal, the court may
issue orders for the protection and preservation of the rights of the parties which do not involve any matter litigated
by the appeal (3rd par., Sec. 10, Rule 41). Even as it declared itself without jurisdiction, this Court still has power to act
on incidents in this case, such as acting on motions for reconsideration, for correction, for lifting of lis pendens, or
approving appeals, etc.

As correctly argued by defendant Herbal Cove, a notice of lis pendens serves only as a precautionary measure or
warning to prospective buyers of a property that there is a pending litigation involving the same.

The Court notes that when it issued the Order of 30 July 1998 lifting the notice of lis pendens, there was as yet no
48

appeal filed by plaintiff. Subsequently, on 10 September 1998, after a notice of appeal was filed by plaintiff on 4
September 1998, the Branch Clerk of Court was ordered by the Court to elevate the entire records of the above-
Page

entitled case to the Court of Appeals. It therefore results that the above-entitled case is still pending. After a careful
consideration of all matters relevant to the lis pendens, the Court believes that justice will be better served by setting
aside the Order of 30 July 1998.

On November 27, 1998, [respondent] filed a Motion for Reconsideration of the November 4, 1998 Order arguing that
allowing the notice of lis pendens to remain annotated on the titles would defeat, not serve, the ends of justice and
that equitable considerations cannot be resorted to when there is an applicable provision of law.

xxxxxxxxx

On October 22, 1999, [Judge Ranada] issued an order denying [respondents] Motion for Reconsideration of the
November 4, 1998 Order for lack of sufficient merit.[5]

Thereafter, Respondent Herbal Cove filed with the CA a Petition for Certiorari.

Ruling of the Court of Appeals

Setting aside the Orders of the RTC dated November 4, 1998 and October 22, 1999, the CA reinstated the formers July
30, 1998 Order[6] granting Herbal Coves Motion to Cancel the Notice of Lis Pendens. According to the appellate court,
the re-annotation of those notices was improper for want of any legal basis. It specifically cited Section 76 of
Presidential Decree No. 1529 (the Property Registration Decree). The decree provides that the registration of such
notices is allowed only when court proceedings directly affect the title to, or the use or the occupation of, the land or
any building thereon.

The CA opined that the Complaint filed by petitioner in Civil Case No. 97-2707 was intended purely to collect a sum of
money and to recover damages. The appellate court ruled that the Complaint did not aver any ownership claim to the
subject land or any right of possession over the buildings constructed thereon. It further declared that absent any
claim on the title to the buildings or on the possession thereof, the notices of lis pendens had no leg to stand on.

Likewise, the CA held that Judge Ranada should have maintained the notice cancellations, which he had directed in
his July 30, 1998 Order. Those notices were no longer necessary to protect the rights of petitioner, inasmuch as it
could have procured protective relief from the Construction Industry Arbitral Commission (CIAC), where provisional
remedies were available. The CA also mentioned petitioners admission that there was already a pending case before
the CIAC, which in fact rendered a decision on March 11, 1999.

The appellate court further explained that the re-annotation of the Notice of Lis Pendens was no longer warranted
after the court a quo had ruled that the latter had no jurisdiction over the case. The former held that the rationale
behind the principle of lis pendens -- to keep the subject matter of the litigation within the power of the court until
the entry of final judgment -- was no longer applicable. The reason for such inapplicability was that the Makati RTC
already declared that it had no jurisdiction or power over the subject matter of the case.

Finally, the CA opined that petitioners Complaint had not alleged or claimed, as basis for the continued annotation of
the Notice of Lis Pendens, the lien of contractors and laborers under Article 2242 of the New Civil Code. Moreover,
petitioner had not even referred to any lien of whatever nature. Verily, the CA ruled that the failure to allege and
claim the contractors lien did not warrant the continued annotation on the property titles of Respondent Herbal
Cove.

Hence, this Petition.[7]

The Issues

Petitioner raises the following issues for our consideration:

I. Whether or not money claims representing cost of materials [for] and labor [on] the houses constructed on a
property [are] a proper lien for annotation of lis pendens on the property title[.]

II. Whether or not the trial court[,] after having declared itself without jurisdiction to try the case[,] may still decide on
[the] substantial issue of the case.[8]

This Courts Ruling

The Petition has no merit.

First Issue:
Proper Basis for a
Notice of Lis Pendens

Petitioner avers that its money claim on the cost of labor and materials for the townhouses it constructed on the
respondents land is a proper lien that justifies the annotation of a notice of lis pendens on the land titles. According to
49

petitioner, the money claim constitutes a lien that can be enforced to secure payment for the said obligations. It
argues that, to preserve the alleged improvement it had made on the subject land, such annotation on the property
Page

titles of respondent is necessary.

On the other hand, Respondent Herbal Cove argues that the annotation is bereft of any factual or legal basis, because
petitioners Complaint[9] does not directly affect the title to the property, or the use or the possession thereof. It also
claims that petitioners Complaint did not assert ownership of the property or any right to possess it. Moreover,
respondent attacks as baseless the annotation of the Notice of Lis Pendens through the enforcement of a contractors
lien under Article 2242 of the Civil Code. It points out that the said provision applies only to cases in which there are
several creditors carrying on a legal action against an insolvent debtor.

As a general rule, the only instances in which a notice of lis pendens may be availed of are as follows: (a) an action to
recover possession of real estate; (b) an action for partition; and (c) any other court proceedings that directly affect
the title to the land or the building thereon or the use or the occupation thereof.[10] Additionally, this Court has held
that resorting to lis pendens is not necessarily confined to cases that involve title to or possession of real property.
This annotation also applies to suits seeking to establish a right to, or an equitable estate or interest in, a specific real
property; or to enforce a lien, a charge or an encumbrance against it.[11]

Apparently, petitioner proceeds on the premise that its money claim involves the enforcement of a lien. Since the
money claim is for the nonpayment of materials and labor used in the construction of townhouses, the lien referred
to would have to be that provided under Article 2242 of the Civil Code. This provision describes a contractors lien
over an immovable property as follows:

Art. 2242. With reference to specific immovable property and real rights of the debtor, the following claims,
mortgages and liens shall be preferred, and shall constitute an encumbrance on the immovable or real right:

xxxxxxxxx

(3) Claims of laborers, masons, mechanics and other workmen, as well as of architects, engineers and contractors,
engaged in the construction, reconstruction or repair of buildings, canals or other works, upon said buildings, canals
or other works;

(4) Claims of furnishers of materials used in the construction, reconstruction, or repair of buildings, canals or other
works, upon said buildings, canals or other works[.] (Emphasis supplied)

However, a careful examination of petitioners Complaint, as well as the reliefs it seeks, reveals that no such lien or
interest over the property was ever alleged. The Complaint merely asked for the payment of construction services
and materials plus damages, without mentioning -- much less asserting -- a lien or an encumbrance over the property.
Verily, it was a purely personal action and a simple collection case. It did not contain any material averment of any
enforceable right, interest or lien in connection with the subject property.

As it is, petitioners money claim cannot be characterized as an action that involves the enforcement of a lien or an
encumbrance, one that would thus warrant the annotation of the Notice of Lis Pendens. Indeed, the nature of an
action is determined by the allegations of the complaint.[12]

Even assuming that petitioner had sufficiently alleged such lien or encumbrance in its Complaint, the annotation of
the Notice of Lis Pendens would still be unjustified, because a complaint for collection and damages is not the proper
mode for the enforcement of a contractors lien.

In J.L. Bernardo Construction v. Court of Appeals,[13] the Court explained the concept of a contractors lien under
Article 2242 of the Civil Code and the proper mode for its enforcement as follows:

Articles 2241 and 2242 of the Civil Code enumerates certain credits which enjoy preference with respect to specific
personal or real property of the debtor. Specifically, the contractors lien claimed by the petitioners is granted under
the third paragraph of Article 2242 which provides that the claims of contractors engaged in the construction,
reconstruction or repair of buildings or other works shall be preferred with respect to the specific building or other
immovable property constructed.

However, Article 2242 finds application when there is a concurrence of credits, i.e., when the same specific property
of the debtor is subjected to the claims of several creditors and the value of such property of the debtor is insufficient
to pay in full all the creditors. In such a situation, the question of preference will arise, that is, there will be a need to
determine which of the creditors will be paid ahead of the others. Fundamental tenets of due process will dictate that
this statutory lien should then only be enforced in the context of some kind of a proceeding where the claims of all
the preferred creditors may be bindingly adjudicated, such as insolvency proceedings.[14] (Emphasis supplied)

Clearly then, neither Article 2242 of the Civil Code nor the enforcement of the lien thereunder is applicable here,
because petitioners Complaint failed to satisfy the foregoing requirements. Nowhere does it show that respondents
property was subject to the claims of other creditors or was insufficient to pay for all concurring debts. Moreover, the
Complaint did not pertain to insolvency proceedings or to any other action in which the adjudication of claims of
preferred creditors could be ascertained.

Another factor negates the argument of petitioner that its money claim involves the enforcement of a lien or the
50

assertion of title to or possession of the subject property: the fact that it filed its action with the RTC of Makati, which
is undisputedly bereft of any jurisdiction over respondents property in Tagaytay City. Certainly, actions affecting title
Page

to or possession of real property or the assertion of any interest therein should be commenced and tried in the
proper court that has jurisdiction over the area, where the real property involved or a portion thereof is situated.[15]
If petitioner really intended to assert its claim or enforce its supposed lien, interest or right over respondents subject
properties, it would have instituted the proper proceedings or filed a real action with the RTC of Tagaytay City, which
clearly had jurisdiction over those properties.[16]

Narciso Pea, a leading authority on the subject of land titles and registration, gives an explicit exposition on the
inapplicability of the doctrine of lis pendens to certain actions and proceedings that specifically include money claims.
He explains in this wise:

By express provision of law, the doctrine of lis pendens does not apply to attachments, levies of execution, or to
proceedings for the probate of wills, or for administration of the estate of deceased persons in the Court of First
Instance. Also, it is held generally that the doctrine of lis pendens has no application to a proceeding in which the only
object sought is the recovery of a money judgment, though the title or right of possession to property be incidentally
affected. It is essential that the property be directly affected, as where the relief sought in the action or suit includes
the recovery of possession, or the enforcement of a lien, or an adjudication between conflicting claims of title,
possession, or the right of possession to specific property, or requiring its transfer or sale[17] (Emphasis supplied)

Pea adds that even if a party initially avails itself of a notice of lis pendens upon the filing of a case in court, such
notice is rendered nugatory if the case turns out to be a purely personal action. We quote him as follows:

It may be possible also that the case when commenced may justify a resort to lis pendens, but during the progress
thereof, it develops to be purely a personal action for damages or otherwise. In such event, the notice of lis pendens
has become functus officio.[18] (Emphasis supplied)

Thus, when a complaint or an action is determined by the courts to be in personam, the rationale for or purpose of
the notice of lis pendens ceases to exist. To be sure, this Court has expressly and categorically declared that the
annotation of a notice of lis pendens on titles to properties is not proper in cases wherein the proceedings instituted
are actions in personam.[19]

Second Issue:
Jurisdiction of the Trial Court

Petitioner argues that the RTC had no jurisdiction to issue the Order canceling the Notice of Lis Pendens as well as the
Order reinstating it. Supposedly, since both Orders were issued by the trial court without jurisdiction, the annotation
made by the Register of Deeds of Tagaytay City must remain in force.

Petitioner avers that the trial court finally declared that the latter had no jurisdiction over the case on July 27, 1998, in
an Order denying the formers Motion for Reconsideration of the March 17, 1998 Order dismissing the Complaint.
Petitioner insists that the subsequent July 30, 1998 Order cancelling the subject Notice of Lis Pendens is void, because
it was issued by a court that had no more jurisdiction over the case.

Rule 41 of the 1997 Rules on Civil Procedure, which governs appeals from regional trial courts, expressly provides that
RTCs lose jurisdiction over a case when an appeal is filed. The rule reads thus:

SEC. 9. Perfection of appeal; effect thereof. -- A partys appeal by notice of appeal is deemed perfected as to him upon
the filing of the notice of appeal in due time.

xxxxxxxxx

In appeals by notice of appeal, the court loses jurisdiction over the case upon the perfection of the appeals filed in
due time and the expiration of the time to appeal of the other parties. (Emphasis supplied)

On the basis of the foregoing rule, the trial court lost jurisdiction over the case only on August 31, 1998, when
petitioner filed its Notice of Appeal.[20] Thus, any order issued by the RTC prior to that date should be considered
valid, because the court still had jurisdiction over the case. Accordingly, it still had the authority or jurisdiction to issue
the July 30, 1998 Order canceling the Notice of Lis Pendens. On the other hand, the November 4, 1998 Order that set
aside the July 30, 1998 Order and reinstated that Notice should be considered without force and effect, because it
was issued by the trial court after it had already lost jurisdiction.

In any case, even if we were to adopt petitioners theory that both the July 30, 1998 and the November 4, 1998 Orders
were void for having been issued without jurisdiction, the annotation is still improper for lack of factual and legal
bases.

As discussed previously, erroneously misplaced is the reliance of petitioner on the premise that its money claim is an
action for the enforcement of a contractors lien. Verily, the annotation of the Notice of Lis Pendens on the subject
property titles should not have been made in the first place. The Complaint filed before the Makati RTC -- for the
collection of a sum of money and for damages -- did not provide sufficient legal basis for such annotation.

Finally, petitioner vehemently insists that the trial court had no jurisdiction to cancel the Notice. Yet, the former filed
51

before the CA an appeal, docketed as CA-GR CV No. 65647,[21] questioning the RTCs dismissal of the Complaint for
lack of jurisdiction. Moreover, it must be remembered that it was petitioner which had initially invoked the
Page

jurisdiction of the trial court when the former sought a judgment for the recovery of money and damages against
respondent. Yet again, it was also petitioner which assailed that same jurisdiction for issuing an order unfavorable to
the formers cause. Indeed, parties cannot invoke the jurisdiction of a court to secure affirmative relief, then repudiate
or question that same jurisdiction after obtaining or failing to obtain such relief.[22]

WHEREFORE, the Petition is hereby DENIED and the assailed Decision AFFIRMED. Costs against petitioner.

HOMEOWNERS SAVINGS VS DELGADO, G.R. 189477. Feb 26, 2014

HOMEOWNERS SAVINGS AND LOAN BANK, Petitioner-Appellant,v. ASUNCION P. FELONIA AND LYDIA C. DE GUZMAN,
REPRESENTED BY MARIBEL FRIAS,Respondents-Appellees. V. MARIE MICHELLE P. DELGADO, REGISTER OF DEEDS OF
LAS PIS CITY AND RHANDOLFO B. AMANSEC, IN HIS CAPACITY AS CLERK OF COURT EX-OFFICIO SHERIFF, OFFICE OF
THE CLERK OF COURT, LAS PIS CITY,Respondents-Defendants.

PEREZ,J.:

FACTS:

The case involved a real property owned by Felonia and De Guzman. Sometime in June 1990, they mortgaged the
property to Delgado to secure a loan. However, instead of a real estate mortgage, the parties executed a deed of
absolute sale with an option to repurchase. On December 1991, Felonia and De Guzman filed an action for
reformation of instrument.

Inspite of the pendency of the Reformation case in which she was the defendant, Delgado filed a Petition for
Consolidation of Ownership of Property Sold with an Option to Repurchase and Issuance of a New Certificate of Title.
The RTC declared Delgado the absolute owner and ordered the Registry of Deeds to issue a new certificate of title in
the name of Delgado.

Aggrieved, Felonia and De Guzman elevated the case to the CA through a petition for annulment of judgment. On
June 1995, Delgado mortgage the property to Homeowners Savings and Loan Bank (HSLB) using her newly registered
title. On September 1995, Felonia and De Guzman caused the annotation of a notice of lispendens on Delgados title.
On November 1997, HLRB foreclosed the property and later consolidated ownership in its favor.

Felonia and De Guzman instituted a complaint before RTC of Las Pinas for reconveyance of possession and ownership
of the subject property in their favor. As defendant, HLRC contended that it was a mortgagee in good faith. RTC ruled
in favor of Felonia and De Guzman. CA affirmed the RTC decision

ISSUE: Whether or not HSLB is a mortgagee and a purchaser in good faith

HELD: No. Decision of CA sustained.

Civil Law: Who is a Purchaser in good faith

The rights of the parties to the present case are defined not by the determination of whether or not HSLB is a
mortgagee in good faith, but of whether or not HSLB is a purchaser in good faith. And, HSLB is not such a purchaser. A
purchaser in good faith is defined as one who buys a property without notice that some other person has a right to,
or interest in, the property and pays full and fair price at the time of purchase or before he has notice of the claim or
interest of other persons in the property.

In the case at bar, HSLB utterly failed to take the necessary precautions. At the time the subject property was
mortgaged, there was yet no annotated Notice ofLis Pendens. However, at the time HSLB purchased the subject
property, the Notice ofLis Pendenswas already annotated on the title. When a prospective buyer is faced with facts
and circumstances as to arouse his suspicion, he must take precautionary steps to qualify as a purchaser in good faith.

Lis pendens is a Latin term which literally means, a pending suit or a pending litigation while a notice oflispendensis
an announcement to the whole world that a real property is in litigation, serving as a warning that anyone who
acquires an interest over the property does so at his/her own risk, or that he/she gambles on the result of the
litigation over the property.It is a warning to prospective buyers to take precautions and investigate the pending
litigation. The purpose of a notice of lis pendens is to protect the rights of the registrant while the case is pending
resolution or decision. With the notice of lis pendens duly recorded and remaining uncancelled, the registrant could
rest secure that he/she will not lose the property or any part thereof during litigation.

Indeed, at the time HSLB bought the subject property, HSLB had actual knowledge of the annotated Notice of Lis
Pendens. Instead of heeding the same, HSLB continued with the purchase knowing the legal repercussions a notice of
lis pendens details.

Facts: Felonia and De Guzman were the registered owners of a parcel of land (532 sq.m.) with a 5-bedroom house,
covered by TCT No. T-402 issued by RD of Las Pias City.
52
Page
Sometime in June 1990, Felonia and De Guzman mortgaged the property to Delgado to secure the loan in the amount
of P1,655,000.00. However, instead of a real estate mortgage, the parties executed a Deed of Absolute Sale with an
Option to Repurchase.

THE REFORMATION CASE

On December 20, 1990, Felonia and De Guzman filed an action for Reformation of Contract (Reformation Case) before
the Manila RTC.

RTC DECISION: On March 21, 1995, RTC rendered a judgment in favor of Felonia and De Guzman based on the
findings that it is very apparent that the transaction had between the parties is one of a mortgage and not a deed of
sale with right to repurchase.

CA DECISION: Affirmed RTC Decision; decision became final and executory on October 16, 2000.

THE CONSOLIDATION CASE

On June 20 1994, in spite of the pendency of the REFORMATION CASE in which she was the defendant, Delgado filed
a "Petition for Consolidation of Ownership of Property Sold with an Option to Repurchase and Issuance of a New
Certificate of Title" (Consolidation Case) in the Las Pias RTC.

RTC DECISION: ordered the issuance of a new title under Delgados name, proclaiming her as the absolute owner of
TCT No. T-402 and ordered RD of Las Pias to cancel such title and issue a new one in favor of Delgado.

Meanwhile, on June 2, 1995, Delgado mortgaged the subject property to Homeowners Savings and Loan Bank (HSLB)
using her newly registered title. Three (3) days later, or on June 5, 1995, HSLB caused the annotation of the mortgage.

On September 14, 1995, Felonia and De Guzman caused the annotation of a Notice of Lis Pendens on Delgados title,
TCT No. 44848.

On November 20, 1997, HSLB foreclosed the subject property and later consolidated ownership in its favor, causing
the issuance of a new title in its name, TCT No. 64668.

CA DECISION: On October 27, 2000, the CA annulled and set aside the decision of the RTC, Las Pias City in the
Consolidation Case. The decision of the CA, declaring Felonia and De Guzman as the absolute owners of the subject
property and ordering the cancellation of Delgados title, became final and executory on December 1, 2000. NOTE:
BOTH CA DECISION ARE IN FAVOR OF FELONIA AND DE GUZMAN AND BOTH BECAME FINAL AND EXECUTORY.

THE INSTANT CASE

On April 29, 2003, Felonia and De Guzman, represented by Maribel Frias (Frias), claiming to be the absolute owners of
the subject property, instituted the instant complaint against Delgado, HSLB, Register of Deeds of Las Pias City and
Rhandolfo B. Amansec before the RTC of Las Pias City for Nullity of Mortgage and Foreclosure Sale, Annulment of
Titles of Delgado and HSLB, and finally, Reconveyance of Possession and Ownership of the subject property in their
favor.

HSLB asserted that Felonia and De Guzman are barred from laches as they had slept on their rights to timely
annotate, by way of Notice of Lis Pendens, the pendency of the REFORMATION CASE. HSLB also claimed that it should
not be bound by the decisions of the CA in the Reformation and Consolidation cases because it was not a party
therein. HSLB asserted that it was a mortgagee in good faith because the mortgage between Delgado and HSLB was
annotated on the title on June 5, 1995, whereas the Notice of Lis Pendens was annotated only on September 14,
1995.

RTC DECISION: Ruled in favor of Felonia and De Guzman as the absolute owners of the subject property (NOTE: RTC
noted the previous decisions of CA cannot be ignored).

CA DECISION: Affirmed RTC Decision but with modifications (on damages).

Issues:
1. Whether or not HSLB is a purchaser in good faith.

Ruling: No, it is not a purchaser in good faith.

Arguably, HSLB was initially a mortgagee in good faith. Citing Bank of Commerce v. San Pablo, Jr., the Court said:
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 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.
53

When the property was mortgaged to HSLB, the registered owner of the subject property was Delgado who had in
Page

her name TCT No. 44848. Thus, HSLB cannot be faulted in relying on the face of Delgados title. The records indicate
that Delgado was at the time of the mortgage in possession of the subject property and Delgados title did not contain
any annotation that would arouse HSLBs suspicion. HSLB, as a mortgagee, had a right to rely in good faith on
Delgados title, and in the absence of any sign that might arouse suspicion, HSLB had no obligation to undertake
further investigation.

However, the rights of the parties to the present case are defined not by the determination of whether or not HSLB is
a mortgagee in good faith, but of whether or not HSLB is a purchaser in good faith. It is not a purchaser in good faith.
A purchaser in good faith is defined as one who buys a property without notice that some other person has a right to,
or interest in, the property and pays full and fair price at the time of purchase or before he has notice of the claim or
interest of other persons in the property. When a prospective buyer is faced with facts and circumstances as to
arouse his suspicion, he must take precautionary steps to qualify as a purchaser in good faith.

In Spouses Mathay v. CA, SC determined the duty of a prospective buyer:

XXX it is also a firmly settled rule that where there are circumstances which would put a party on guard and prompt
him to investigate or inspect the property being sold to him, such as the presence of occupants/tenants thereon, it is
of course, expected from the purchaser of a valued piece of land to inquire first into the status or nature of
possession of the occupants Should he find out that the land he intends to buy is occupied by anybody else other
than the seller who, as in this case, is not in actual possession, it would then be incumbent upon the purchaser to
verify the extent of the occupants possessory rights. The failure of a prospective buyer to take such precautionary
steps would mean negligence on his part and would thereby preclude him from claiming or invoking the rights of a
purchaser in good faith.

In the case at bar, HSLB utterly failed to take the necessary precautions. At the time the subject property was
mortgaged, there was yet no annotated Notice of Lis Pendens. However, at the time HSLB purchased the subject
property, the Notice of Lis Pendens was already annotated on the title.

Lis pendens is a Latin term which literally means, "a pending suit or a pending litigation" while a notice of lis pendens
is an announcement to the whole world that a real property is in litigation, serving as a warning that anyone who
acquires an interest over the property does so at his/her own risk, or that he/she gambles on the result of the
litigation over the property. It is a warning to prospective buyers to take precautions and investigate the pending
litigation. Its purpose is to protect the rights of the registrant while the case is pending resolution or decision so that
he could rest secure that he/she will not lose the property or any part thereof during litigation.

The doctrine of lis pendens is founded upon reason of public policy and necessity, the purpose of which is to keep the
subject matter of the litigation within the Courts jurisdiction until the judgment or the decree have been entered.

Indeed, at the time HSLB bought the subject property, HSLB had actual knowledge of the annotated Notice of Lis
Pendens. Instead of heeding the same, HSLB continued with the purchase knowing the legal repercussions a notice of
lis pendens entails. HSLB took upon itself the risk that the Notice of Lis Pendens leads to.

As correctly found by the CA, "the notice of lis pendens was annotated on 14 September 1995, whereas the
foreclosure sale, where the appellant was declared as the highest bidder, took place sometime in 1997. There is no
doubt that at the time appellant purchased the subject property, it was aware of the pending litigation concerning the
same property and thus, the title issued in its favor was subject to the outcome of said litigation."

This ruling is in accord with Rehabilitation Finance Corp. v. Morales, which underscored the significance of a lis
pendens, then defined in Sec. 24, Rule 7 now Sec. 14 of Rule 13 in relation to a mortgage priorly annotated on the
title covering the property. It was held that: [w]hile the notice of lis pendens cannot affect petitioners right as
mortgagee, because the same was annotated subsequent to the mortgage, yet the said notice affects its right as
purchaser because notice of lis pendens simply means that a certain property is involved in a litigation and serves as a
notice to the whole world that one who buys the same does so at his own risk.

The subject of the lis pendens on the title of HSLBs vendor, Delgado, is the "Reformation Case" filed against Delgado
by the respondents. The case was decided with finality by the CA in favor of respondents. The contract of sale in favor
of Delgado was ordered reformed into a contract of mortgage. By final decision of the CA, HSLBs vendor, Delgado, is
not the property owner but only a mortgagee. As it turned out, Delgado could not have constituted a valid mortgage
on the property. Article 2085 (2) of the Civil Code states:

Art. 2085. The following requisites are essential to the contracts of pledge and mortgage:
(2) That the pledgor or mortagagor be the absolute owner of the thing pledged or mortgaged.

Hence, for a valid mortgage to exist, ownership of the property is an essential requisite.

Philippine National Bank v. Rocha (cited in Reyes v. De Leon), pronounced that "a mortgage of real property executed
by one who is not an owner thereof at the time of the execution of the mortgage is without legal existence." Such
that, there being no valid mortgage, there could also be no valid foreclosure or valid auction sale.

We go back to Bank of Commerce v. San Pablo, Jr. (cited above) where the doctrine of mortgagee in good faith, upon
54

which petitioner relies, was clarified as "based on the rule that all persons dealing with property covered by the
Torrens Certificate of Title, as buyers or mortgagees, are not required to go beyond what appears on the face of the
Page

title. In turn, the rule is based on "x x x public interest in upholding the indefeasibility of a certificate of title, as
evidence of lawful ownership of the land or of any encumbrance thereon."
Insofar as the HSLB is concerned, there is no longer any public interest in upholding the indefeasibility of the
certificate of title of its mortgagor, Delgado. Such title has been nullified in a decision that had become final and
executory. Its own title, derived from the foreclosure of Delgado's mortgage in its favor, has likewise been nullified in
the very same decision that restored the certificate of title in respondents' name. There is absolutely no reason that
can support the prayer of HSLB to have its mortgage lien carried over and into the restored certificate of title of
respondents.

WHEREFORE, the Petition is DENIED.

CASIM VS RD OF LAS PINAS, G.R. 168655, July 2, 2010

DOCTRINE: When the RTC in the exercise of its general jurisdiction cancels a notice of lis pendens pending before
another court, according to the SC, the notice of lis pendens is under the control of the court that has taken a
cognizance of the main case. This is because a notice of lis pendens is only an ancillary remedy. So another regular
court cannot exercise jurisdiction to have the notice of lis pendens cancelled except the court hearing the main case.

FACTS: Petitioner, represented herein by Rogelio C. Casim, is a duly organized domestic corporation in whose name
TCT No. 49936, covering a 10,715-square meter land was registered. Sometime in 1982, petitioner Casim acquired the
covered property by virtue of a Deed of Absolute Sale and as a result the mother title, TCT No. 30459 was cancelled
and TCT No. 49936 was issued.

On March 22, 2004, petitioner filed with the RTC of Las Pias City, Branch 253 an original petition for the cancellation
of the notice of lis pendens, as well as of all the other entries of involuntary encumbrances annotated on the original
copy of TCT No. 49936. Petitioner claimed that its owner's duplicate copy of the TCT was clean at the time of its
delivery and that it was surprised to learn later on that the original copy of its TCT , on file with the Register of Deeds,
contained several entries which all signified that the covered property had been subjected to various claims.

To justify the cancellation, petitioner alleged that:

1. The notice of lis pendens, in particular, was a forgery judging from the inconsistencies in the inscriber's
signature as well as from the fact that the notice was entered non-chronologically, that is, the date thereof is much
earlier than that of the preceding entry. In this regard, it noted the lack of any transaction record on file with the
Register of Deeds that would support the notice of lis pendens annotation.

2. Petitioner also stated that while Section 59 of Presidential Decree (P .D.) No. 1529 requires the carry-over of
subsisting encumbrances in the new issuances of TCTs, petitioner's duplicate copy of the title did not contain any such
carry-over, which means that it was an innocent purchaser for value, especially since it was never a party to the civil
case referred to in the notice of lis pendens.

3. Lastly, it alludes to the indefeasibility of its title despite the fact that the mother title, TCT No. 30459, might
have suffered from certain defects and constraints.

The Intestate Estate of Bruneo F. Casim, representing Bruneo F. Casim, intervened in the instant case and filed a
Comment/Opposition in which it maintained that the RTC of Las Pias did not have jurisdiction over the present
action, because the matter of canceling a notice of lis pendens lies within the jurisdiction of the court before which
the main action referred to in the notice is pending. In this regard, it emphasized that the case referred to in the said
notice had already attained finality as the Supreme Court had issued an entry of judgment therein and that the RTC of
Makati City had ordered execution in that case.

In response to petitioners allegation, and as opposed to petitioner's claim that there was no carryover of
encumbrances made in TCT No. 49936 from the mother title TCT No. 30459, the latter would show that it also had the
same inscriptions as those found in TCT No. 49936 only that they were entered in the original copy on file with the
Register of Deeds.

Also, as per certification issued by the Register of Deeds, petitioner's claim of lack of transaction record could not
stand, because the said certification stated merely that the corresponding transaction record could no longer be
retrieved and might, therefore, be considered as either lost or destroyed.

RTC: On April 14, 2005, the trial court, ruling that it did not have jurisdiction over the action, resolved to dismiss the
petition and declared that the action must have been filed before the same court and in the same action in relation to
which the annotation of the notice of lis pendens had been sought. Anent the allegation that the entries in the TCT
were forged, the trial court pointed out that not only did petitioner resort to the wrong forum to determine the
existence of forgery, but also that forgery could not be presumed merely from the alleged non-chronological entries
in the TCT but instead must be positively proved.
55

ISSUE: Whether the RTC of Las Pias City, Branch 253 has jurisdiction in an original action to cancel the notice of lis
pendens annotated on the subject title of petitioner.
Page
RULING: No. RTC of Las Pinas has NO jurisdiction in an original action to cancel the notice of lis pendens annotated on
the subject title of petitioner.

Lis Pendens which literally means pending suit refers to the jurisdiction, power or control which a court acquires
over the property involved in a suit, pending the continuance of the action, and until final judgment. Founded upon
public policy and necessity, lis pendens is intended to keep the properties in litigation within the power of the court
until the litigation is terminated, and to prevent the defeat of the judgment or decree by subsequent alienation. Its
notice is an announcement to the whole world that a particular property is in litigation and serves as a warning that
one who acquires an interest over said property does so at his own risk, or that he gambles on the result of the
litigation over said property. A notice of lis pendens, once duly registered, may be cancelled by the trial court before
which the action involving the property is pending (decision has not attained finality yet). This power is said to be
inherent in the trial court and is exercised only under express provisions of law.

Accordingly, Section 14, Rule 13 of the 1997 Rules of Civil Procedure authorizes the trial court to cancel a notice of lis
pendens where it is properly shown that the purpose of its annotation is for molesting the adverse party, or that it is
not necessary to protect the rights of the party who caused it to be annotated. Be that as it may, the power to cancel
a notice of lis pendens is exercised only under exceptional circumstances, such as: where such circumstances are
imputable to the party who caused the annotation; where the litigation was unduly prolonged to the prejudice of the
other party because of several continuances procured by petitioner; where the case which is the basis for the lis
pendens notation was dismissed for non prosequitur on the part of the plaintiff; or where judgment was rendered
against the party who caused such annotation. In such instances, said notice is deemed ipso facto cancelled.

Petitioners contention in theorizing that the RTC of Las Pias City, Branch 253 has the inherent power to cancel the
notice of lis pendens that was incidentally registered in relation to Civil Case No. 2137, a case which had been decided
by the RTC of Makati City, Branch 62 and affirmed by the Supreme Court on appeal, petitioner advocates that the
cancellation of such a notice is not always ancillary to a main action. This argument fails. From the available records, it
appears that the subject notice of lis pendens had been recorded at the instance of Bruneo F. Casim (Bruneo) in
relation to Civil Case No. 2137 one for annulment of sale and recovery of real property which he led before the
RTC of Makati City, Branch 62 against the spouses Jesus and Margarita Casim, predecessors-in-interest and
stockholders of petitioner corporation. That case involved the property subject of the present case, then covered by
TCT No. 30459. At the close of the trial on the merits therein, the RTC of Makati rendered a decision adverse to
Bruneo and dismissed the complaint for lack of merit. Aggrieved, Bruneo lodged an appeal with the Court of Appeals,
docketed as CA-G.R. CV No. 54204, which reversed and set aside the trial court's decision. Expectedly, the spouses
Jesus and Margarita Casim elevated the case to the Supreme Court, docketed as G.R. No. 151957, but their appeal
was dismissed for being filed out of time. A necessary incident of registering a notice of lis pendens is that the
property covered thereby is effectively placed, until the litigation attains finality, under the power and control of the
court having jurisdiction over the case to which the notice relates. In this sense, parties dealing with the given
property are charged with the knowledge of the existence of the action and are deemed to take the property subject
to the outcome of the litigation. It is also in this sense that the power possessed by a trial court to cancel the notice of
lis pendens is said to be inherent as the same is merely ancillary to the main action.

Clearly, the action for cancellation of the notice of lis pendens in this case must have been filed not before the court a
quo via an original action but rather, before the RTC of Makati City, Branch 62 as an incident of the annulment case in
relation to which its registration was sought. Thus, it is the latter court that has jurisdiction over the main case
referred to in the notice and it is that same court which exercises power and control over the real property subject of
the notice. But even so, the petition could no longer be expected to pursue before the proper forum inasmuch as the
decision rendered in the annulment case has already attained finality before both the Court of Appeals and the
Supreme Court on the appellate level, unless of course there exists substantial and genuine claims against the parties
relative to the main case subject of the notice of lis pendens. There is none in this case. It is thus well to note that the
precautionary notice that has been registered relative to the annulment case then pending before the RTC of Makati
City, Branch 62 has served its purpose. With the finality of the decision therein on appeal, the notice has already been
rendered functus officio. The rights of the parties, as well as of their successors-ininterest, petitioner included, in
relation to the subject property, are hence to be decided according the said final decision.

But petitioner is not altogether precluded from pursuing a specific remedy, only that the suitable course of action
legally available is not judicial but rather administrative.

Section 77 of P .D. No. 1529 provides the appropriate measure to have a notice of lis pendens cancelled out from the
title, that is by presenting to the Register of Deeds, after finality of the judgment rendered in the main action, a
certificate executed by the clerk of court before which the main action was pending to the effect that the case has
already been finally decided by the court, stating the manner of the disposal.

SEC. 77. Cancellation of Lis Pendens. Before final judgment, a notice of lis pendens may be cancelled upon order of
the court, after proper showing that the notice is for the purpose of molesting the adverse party, or that it is not
necessary to protect the rights of the party who caused it to be registered. It may also be cancelled by the Register of
Deeds upon verified petition of the party who caused the registration thereof.

At any time after final judgement in favour of the defendant or other disposition of the action such as to terminate
56

finally all rights of the plaintiff in an to the land and/or buildings involved, in any case in which a memorandum or
notice of lis pendens has been registered as provided in the preceding section, the notice of lis pendens shall be
Page

deemed cancelled upon the registration of a certificate of the clerk of court in which the action or proceeding was
 pending stating the manner disposal thereof.

All told, the RTC of Las Pias City, Branch 253 has committed no reversible error in issuing the assailed Resolution and
Order dismissing for lack of jurisdiction the petition for cancellation of notice of lis pendens led by petitioner, and in
denying reconsideration,

e. Levies on Execution

PINEDA VS ARCALAS, GR 170172, Nov 23, 2007

This is a Special Civil Action for Certiorari under Rule 65 of the Rules of Court, assailing the Resolution[1] dated 25 January 2005, rendered
by the Court of Appeals in C.A. G.R. CV No. 82872, dismissing the appeal filed by petitioner Arlyn Pineda (Pineda) for failure to file her
appellants brief. Under the assailed Resolution, the Order[2] promulgated by Branch 27 of the Regional Trial Court of Santa Cruz, Laguna
(Laguna RTC), on 2 February 2004, granting the petition of respondent Julie Arcalas (Arcalas) for the cancellation of the Affidavit of
Adverse Claim annotated at the back of Transfer Certificate of Title (TCT) No. T-52319 under Entry No. 324094, became final.

The subject property consists of three parcels of land, which are described as Lot No. 3762-D with an area of 42,958 square meters, Lot
No. 3762-E with an area of 4,436 square meters, and Lot No. 3762-F with an area of 2,606 square meters, the total area of which consists
of 50,000 square meters. These three lots are portions of Lot No. 3762, registered in the name of Spouses Mauro Lateo and Encarnacion
Evangelista (spouses Lateo) under TCT No. T-52319, with a total area of 74,708 square meters, located at Barrios Duhat and Labuin, Santa
Cruz, Laguna. A certain Victoria Tolentino bought the said property from the Spouses Lateo. Sometime later, Civil Case No. Q-96-27884,
for Sum of Money, was instituted by Arcalas against Victoria Tolentino. This case stemmed from an indebtedness evidenced by a
promissory note and four post-dated checks later dishonored, which Victoria Tolentino owed Arcalas.[3]

On 9 September 1997, Branch 93 of the Quezon City RTC, rendered judgment in favor of Arcalas and against Victoria Tolentino.[4]

On 15 December 1997, Pineda bought the subject property from Victoria L. Tolentino.[5] Pineda alleged that upon payment of the
purchase price, she took possession of the subject property by allowing a tenant, Rodrigo Bautista to cultivate the same. However, Pineda
failed to register the subject property under her name.[6]

To execute the judgment, the Quezon City RTC levied upon the subject property and the Notice of Levy on Alias Writ of Execution dated
12 January 1999 was annotated as Entry No. 315074, in relation to Entry No. 319362, at the back of TCT No. T-52319.[7]

Asserting ownership of the subject property, Pineda filed with the Deputy Sheriff of the Quezon City RTC an Affidavit of Title and Third
Party Claim. Arcalas filed a motion to set aside Pinedas Affidavit of Title and Third Party Claim, which on 3 November 1999, the Quezon
City RTC granted, to wit:

[Arcalas] showed that her levies on the properties were duly registered while the alleged Deed of Absolute Sale between the defendant
Victoria L. Tolentino and Analyn G. Pineda was not. The levies being superior to the sale claimed by Ms. Pineda, the court rules to quash
and set aside her Affidavit of Title and Third Party Claim.

ACCORDINGLY, the motion is granted. The Affidavit of Title and Third-Party Claim is set aside to allow completion of execution
proceedings.[8]

On 2 February 2000, after the finality[9] of the Order of the Quezon City RTC quashing Pinedas third-party claim, Pineda filed with the
Office of the Register of Deeds of Laguna another Affidavit of Third Party Claim and caused the inscription of a notice of adverse claim at
the back of TCT No. T-52319 under Entry No. 324094. [10]

On 3 February 2000, Arcalas and Leonardo Byron P. Perez, Jr. purchased Lot No. 3762 at an auction sale conducted by the Deputy Sheriff
of Quezon City. The sale was evidenced by a Sheriffs Certificate of Sale issued on the same day and registered as Entry No. 324225 at the
57

back of TCT No. T-52319.[11]

Page
Arcalas then filed an action for the cancellation of the entry of Pinedas adverse claim before the Laguna RTC. The Laguna RTC ordered the
cancellation of the Notice of Adverse Claim annotated as Entry No. 324094 at the back of TCT No. 52319 on the ground of res judicata:

The court order emanating from Branch 91 of the Regional Trial Court of Quezon City having become final and executory and no relief
therefrom having been filed by [Pineda], the said order granting the [Arcalass] Motion to Set Aside Affidavit of Title and 3rd Party Claim
should be given due course and the corresponding annotation at the back of TCT No. T-52319 as Entry No. 324094 dated February 2,
2000 should be expunged accordingly.[12]

Pineda appealed the Order of the Laguna RTC before the Court of Appeals under Rule 44 of the Rules of Court. In a Resolution dated 25
January 2005,[13] the appellate court dismissed the appeal and considered it abandoned when Pineda failed to file her appellants brief.

Pineda filed a Motion for Reconsideration, wherein it was plainly stated that Pinedas counsel overlooked the period within which he
should file the appellants brief.[14] The said motion was denied in a Resolution dated 26 May 2005. Pineda filed a Second Motion for
Reconsideration, which was denied on 7 October 2005.[15] No appellants brief was attached to either motion for reconsideration.

Hence, the present Petition raising the following issues:[16]

I.

WHETHER THE LEVY ON ALIAS WRIT OF EXECUTION ISSUED BY THE REGIONAL TRIAL COURT OF QUEZON CITY IN CIVIL CASE NO. Q-96-
27884 MAY EXEMPT THE PORTION BOUGHT BY [PINEDA] FROM VICTORIA TOLENTINO; [and]

II.

WHETHER THE POSSESSION OF [PINEDA] OF THE 5 HECTARES PORTION OF LOT 3762 IS ALREADY EQUIVALENT TO A TITLE DESPITE THE
ABSENCE OF REGISTRATION.

This petition must be dismissed.

The Court of Appeals properly dismissed the case for Pinedas failure to file an appellants brief. This is in accordance with Section 7 of Rule
44 of the Rules of Court, which imposes upon the appellant the duty to file an appellants brief in ordinary appealed cases before the
Court of Appeals, thus:

Section 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.

In special cases appealed to the Court of Appeals, such as certiorari, prohibition, mandamus, quo warranto and habeas corpus cases, a
memorandum of appeal must be filed in place of an appellants brief as provided in Section 10 of Rule 44 of the Rules of Court

Section 10. Time of filing memoranda in special cases.In certiorari, prohibition, mandamus, quo warranto and habeas corpus cases, the
parties shall file, in lieu of briefs, their respective memoranda within a non-extendible period of thirty (30) days from receipt of the notice
issued by the clerk that all the evidence, oral and documentary, is already attached to the record.
58

The failure of the appellant to file his memorandum within the period therefor may be a ground for dismissal of the appeal.
Page
Non-filing of an appellants brief or a memorandum of appeal is one of the explicitly recognized grounds of dismissal of the appeal in
Section 1 of Rule 50 of the Rules of Court:

Section 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

(e) Failure of the appellant to serve and file the required number of copies of his brief or memorandum within the time provided by these
Rules;

This Court provided the rationale for requiring an appellants brief in Enriquez v. Court of Appeals[17]:

[T]he appellants brief is mandatory for the assignment of errors is vital to the decision of the appeal on the merits. This is because on
appeal only errors specifically assigned and properly argued in the brief or memorandum will be considered, except those affecting
jurisdiction over the subject matter as well as plain and clerical errors. Otherwise stated, an appellate court has no power to resolve an
unassigned error, which does not affect the courts jurisdiction over the subject matter, save for a plain or clerical error.

Thus, in Casim v. Flordeliza,[18] this Court affirmed the dismissal of an appeal, even when the filing of an appellants brief was merely
attended by delay and fell short of some of the requirements of the Rules of Court. The Court, in Gonzales v. Gonzales,[19] reiterated that
it is obligatory on the part of the appellant to submit or file a memorandum of appeal, and that failing such duty, the Rules of Court
unmistakably command the dismissal of the appeal.

In this case, Pineda did not even provide a proper justification for her failure to file her appellants brief. It was merely alleged in her
Motion for Reconsideration that her counsel overlooked the period within which to file the appellants brief. Although Pineda filed no less
than two motions for reconsideration, Pineda had not, at any time, made any attempt to file her appellants brief. Nor did she supply any
convincing argument to establish her right to the subject property for which she seeks vindication.

Thus, this Court cannot reverse or fault the appellate court for duly acting in faithful compliance with the rules of procedure and
established jurisprudence that it has been mandated to observe, nor turn a blind eye and tolerate the transgressions of these rules and
doctrines.[20] An appealing party must strictly comply with the requisites laid down in the Rules of Court since the right to appeal is a
purely statutory right.[21]

Even when this Court recognized the importance of deciding cases on the merits to better serve the ends of justice, it has stressed that
the liberality in the application of rules of procedure may not be invoked if it will result in the wanton disregard of the rules or cause
needless delay in the administration of justice.[22] The Court eyes with disfavor the unjustified delay in the termination of cases; once a
judgment has become final, the winning party must not be deprived of the fruits of the verdict, through a mere subterfuge. The time
spent by the judiciary, more so of this Court, in taking cognizance and resolving cases is not limitless and cannot be wasted on cases
devoid of any right calling for vindication and are merely reprehensible efforts to evade the operation of a decision that is final and
executory.[23]

In the present case, there is a clear intent on the part of Pineda to delay the termination of the case, thereby depriving Arcalas of the
59

fruits of a just verdict. The Quezon City RTC already quashed Pinedas third party claim over the subject property, yet she filed another
adverse claim before the Office of the Register of Deeds of Laguna based on the same allegations and arguments previously settled by
Page

the Quezon City RTC. Arcalas, thus, had to file another case to cause the cancellation of Pinedas notice of adverse claim on TCT No. T-
52319 before the Laguna RTC. After the Laguna RTC gave due course to Arcalass petition, Pineda filed a dilatory appeal before the Court
of Appeals, where she merely let the period for the filing of the appellants brief lapse without exerting any effort to file one. The two
motions for reconsideration and even the petition before this Court fail to present new issues. They raised the very same issues which
had been consistently resolved by both the Quezon City RTC and the Laguna RTC in favor of Arcalas, upholding the superiority of her lien
over that of Pinedas unregistered sale. Considering all these circumstances, there is no basis for the lenient application of procedural
rules in this case; otherwise, it would result in a manifest injustice and the abuse of court processes.

As a rule, the negligence or mistake of counsel binds the client.[24] The only exception to this rule is when the counsels negligence is so
gross that a party is deprived of due process and, thus, loses life, honor or property on mere technicalities.[25] The exception cannot
apply to the present case, where Pineda is merely repeating arguments that were already heard and decided upon by courts of proper
jurisdiction, and the absolute lack of merit of the petition is at once obvious.

Pineda avers that she is not a party to Civil Case No. Q-96-27884, heard before the Quezon City RTC, and that the levy on the alias writ of
execution issued in Civil Case No. Q-96-27884 cannot affect her purchase of subject property. Such position runs contrary to law and
jurisprudence.

Sections 51 and 52 of Presidential Decree No. 1529, otherwise known as the Property Registration Decree, provide that:

Section 51. Conveyance and other dealings by registered owner.An owner of registered land may convey, mortgage, lease, charge or
otherwise deal with the same in accordance with existing laws. He may use such forms of deeds, mortgages, leases or other voluntary
instruments as are sufficient in law. But 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, but shall operate only as a contract between the parties and as
evidence of authority to the Register of Deeds to make registration.

The act of registration shall be the operative act to convey or affect the land insofar as third persons are concerned, and in all cases under
this Decree, the registration shall be made in the office of the Register of Deeds for the province or the city where the land lies. (Emphasis
provided.)

Section 52. Constructive notice upon registration.Every conveyance, mortgage, lease, lien, attachment, order, judgment, instrument or
entry affecting registered land shall, if registered, filed or entered in the office of the Register of Deeds for the province or city where the
land to which it relates lies, be constructive notice to all persons from the time of such registering, filing or entering. (Emphasis provided.)

It is clear from these provisions that before a purchaser of land causes the registration of the transfer of the subject property in her favor,
third persons, such as Arcalas, cannot be bound thereby. Insofar as third persons are concerned, what validly transfers or conveys a
persons interest in real property is the registration of the deed. As the deed of sale was unrecorded, it operates merely as a contract
between the parties, namely Victoria Tolentino as seller and Pineda as buyer, which may be enforceable against Victoria Tolentino
through a separate and independent action. On the other hand, Arcalass lien was registered and annotated at the back of the title of the
subject property and accordingly amounted to a constructive notice thereof to all persons, whether or not party to the original case filed
before the Quezon City RTC.

The doctrine is well settled that a levy on execution duly registered takes preference over a prior unregistered sale.[26] A registered lien
is entitled to preferential consideration.[27] In Valdevieso v. Damalerio,[28] the Court held that a registered writ of attachment was a
superior lien over that on an unregistered deed of sale and explained the reason therefor:

This is so because an attachment is a proceeding in rem. It is against the particular property, enforceable against the whole world. The
attaching creditor acquires a specific lien on the attached property which nothing can subsequently destroy except the very dissolution of
the attachment or levy itself. Such a proceeding, in effect, means that the property attached is an indebted thing and a virtual
condemnation of it to pay the owners debt. The lien continues until the debt is paid, or sale is had under execution issued on the
judgment, or until the judgment is satisfied, or the attachment discharged or vacated in some manner provided by law.

Thus, in the registry, the attachment in favor of respondent appeared in the nature of a real lien when petitioner had his purchase
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recorded. The effect of the notation of said lien was to subject and subordinate the right of petitioner, as purchaser, to the lien.
Petitioner acquired ownership of the land only from the date of the recording of his title in the register, and the right of ownership which
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he inscribed was not absolute but a limited right, subject to a prior registered lien of respondent, a right which is preferred and superior
to that of petitioner.

Pineda also contends that her possession of the subject property cures the defect caused by her failure to register the subject property in
her name. This contention is inaccurate as well as inapplicable.

True, that notwithstanding the preference given to a registered lien, this Court has made an exception in a case where a party has actual
knowledge of the claimants actual, open, and notorious possession of the disputed property at the time the levy or attachment was
registered. In such situations, the actual notice and knowledge of a prior unregistered interest, not the mere possession of the disputed
property, was held to be equivalent to registration.[29]

Lamentably, in this case, Pineda did not even allege, much less prove, that Arcalas had actual knowledge of her claim of ownership and
possession of the property at the time the levy was registered. The records fail to show that Arcalas knew of Pinedas claim of ownership
and possession prior to Pinedas filing of her third party claim before the Quezon City RTC. Hence, the mere possession of the subject
property by Pineda, absent any proof that Arcalas had knowledge of her possession and adverse claim of ownership of the subject
property, cannot be considered as equivalent to registration.

IN VIEW OF THE FOREGOING, the instant Petition is DISMISSED and the assailed Decision of the Court of Appeals in C.A. G.R. CV No.
82872, promulgated on 25 January 2005, is AFFIRMED. The Order of Branch 27 of the Regional Trial Court of Sta. Cruz, Laguna, directing
the Register of Deeds of Laguna to cancel the Notice of Adverse Claim inscribed at the back of TCT No. T-52319 as Entry No. 324094 is
SUSTAINED. No costs.

VALDEVIESO VS DAMALERIO, G.R 133303, Feb 17, 2005

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