Republic of the Philippines them had also been included in the certificate granted to the defendant .

They
SUPREME COURT immediately presented a petition in the Court of Land Registration for an
Manila adjustment and correction of the error committed by including said wall in the
registered title of each of said parties. The lower court however, without notice to
EN BANC the defendant, denied said petition upon the theory that, during the pendency of
the petition for the registration of the defendant's land, they failed to make any
G.R. No. L-8936 October 2, 1915 objection to the registration of said lot, including the wall, in the name of the
CONSUELO LEGARDA, with her husband MAURO PRIETO, plaintiffs- defendant.
appellants,
vs. Sixth. That the land occupied by the wall is registered in the name of each of the
owners of the adjoining lots. The wall is not a joint wall.
N.M. SALEEBY, defendant-appellee.

Singson, Ledesma and Lim for appellants.
D.R. Williams for appellee.
JOHNSON, J.:
From the record the following facts appear:
First. That the plaintiffs and the defendant occupy, as owners, adjoining lots in
the district of Ermita in the city of Manila.
Second. That there exists and has existed a number of years a stone wall between
the said lots. Said wall is located on the lot of the plaintiffs.
Third. That the plaintiffs, on the 2d day of March, 1906, presented a petition in
the Court of Land Registration for the registration of their lot. After a
consideration of said petition the court, on the 25th day of October, 1906,
decreed that the title of the plaintiffs should be registered and issued to them the
original certificate provided for under the torrens system. Said registration and
certificate included the wall.
Fourth. Later the predecessor of the defendant presented a petition in the Court
of Land Registration for the registration of the lot now occupied by him. On the
25th day of March, 1912, the court decreed the registration of said title and
issued the original certificate provided for under the torrens system. The
description of the lot given in the petition of the defendant also included said
wall.
Fifth. Several months later (the 13th day of December, 1912) the plaintiffs
discovered that the wall which had been included in the certificate granted to
1
Under these facts, who is the owner of the wall and the land occupied by it?
The decision of the lower court is based upon the theory that the action for the
registration of the lot of the defendant was a judicial proceeding and that the
judgment or decree was binding upon all parties who did not appear and oppose
it. In other words, by reason of the fact that the plaintiffs had not opposed the
registration of that part of the lot on which the wall was situate they had lost it,
even though it had been theretofore registered in their name. Granting that
theory to be correct one, and granting even that the wall and the land occupied
by it, in fact, belonged to the defendant and his predecessors, then the same
theory should be applied to the defendant himself. Applying that theory to him,
he had already lost whatever right he had therein, by permitting the plaintiffs to
have the same registered in their name, more than six years before. Having thus
lost hid right, may he be permitted to regain it by simply including it in a petition
for registration? The plaintiffs having secured the registration of their lot,
including the wall, were they obliged to constantly be on the alert and to watch
all the proceedings in the land court to see that some one else was not having
all, or a portion of the same, registered? If that question is to be answered in the
affirmative, then the whole scheme and purpose of the torrens system of land
registration must fail. The real purpose of that system is to quiet title to land; to
put a stop forever to any question of the legality of the title, except claims which
were noted at the time of registration, in the certificate, or which may arise
subsequent thereto. That being the purpose of the law, it would seem that once
a title is registered the owner may rest secure, without the necessity of waiting
in the portals of the court, or sitting in the "mirador de su casa," to avoid the
possibility of losing his land. Of course, it can not be denied that the proceeding
for the registration of land under the torrens system is judicial (Escueta vs.
.Director of Lands, 16 Phil. Rep., 482). It is clothed with all the forms of an action
and the result is final and binding upon all the world. It is an action in rem.
(Escueta vs. Director of Lands (supra); Grey Alba vs. De la Cruz, 17 Phil. rep., 49
Roxas vs. Enriquez, 29 Phil. Rep., 31; Tyler vs. Judges, 175 Mass., 51 American
Land Co. vs. Zeiss, 219 U.S., 47.)
While the proceeding is judicial, it involves more in its consequences than does
an ordinary action. All the world are parties, including the government. After the
registration is complete and final and there exists no fraud, there are no innocent
third parties who may claim an interest. The rights of all the world are foreclosed
by the decree of registration. The government itself assumes the burden of giving
notice to all parties. To permit persons who are parties in the registration
proceeding (and they are all the world) to again litigate the same questions, and
to again cast doubt upon the validity of the registered title, would destroy the
very purpose and intent of the law. The registration, under the torrens system,
does not give the owner any better title than he had. If he does not already have
a perfect title, he can not have it registered. Fee simple titles only may be
registered. The certificate of registration accumulates in open document a precise
and correct statement of the exact status of the fee held by its owner. The
certificate, in the absence of fraud, is the evidence of title and shows exactly the
real interest of its owner. The title once registered, with very few exceptions,
should not thereafter be impugned, altered, changed, modified, enlarged, or
diminished, except in some direct proceeding permitted by law. Otherwise all
security in registered titles would be lost. A registered title can not be altered,
modified, enlarged, or diminished in a collateral proceeding and not even by a
direct proceeding, after the lapse of the period prescribed by law.
For the difficulty involved in the present case the Act (No. 496) providing for the
registration of titles under the torrens system affords us no remedy. There is no
provision in said Act giving the parties relief under conditions like the present.
There is nothing in the Act which indicates who should be the owner of land
which has been registered in the name of two different persons.
The rule, we think, is well settled that the decree ordering the registration of a
particular parcel of land is a bar to future litigation over the same between the
same parties .In view of the fact that all the world are parties, it must follow that
future litigation over the title is forever barred; there can be no persons who are
not parties to the action. This, we think, is the rule, except as to rights which are
noted in the certificate or which arise subsequently, and with certain other
exceptions which need not be dismissed at present. A title once registered can
not be defeated, even by an adverse, open, and notorious possession. Registered
title under the torrens system can not be defeated by prescription (section 46,
Act No. 496). The title, once registered, is notice to the world. All persons must
take notice. No one can plead ignorance of the registration.
The question, who is the owner of land registered in the name of two different
persons, has been presented to the courts in other jurisdictions. In some
jurisdictions, where the "torrens" system has been adopted, the difficulty has
been settled by express statutory provision. In others it has been settled by the
courts. Hogg, in his excellent discussion of the "Australian Torrens System," at
2
page 823, says: "The general rule is that in the case of two certificates of title,
purporting to include the same land, the earlier in date prevails, whether the
land comprised in the latter certificate be wholly, or only in part, comprised in
the earlier certificate. (Oelkers vs. Merry, 2 Q.S.C.R., 193; Miller vs. Davy, 7
N.Z.R., 155; Lloyd vs. Myfield, 7 A.L.T. (V.) 48; Stevens vs. Williams, 12 V.L. R.,
152; Register of Titles, vs. Esperance Land Co., 1 W.A.R., 118.)" Hogg adds
however that, "if it can be very clearly ascertained by the ordinary rules of
construction relating to written documents, that the inclusion of the land in the
certificate of title of prior date is a mistake, the mistake may be rectified by
holding the latter of the two certificates of title to be conclusive." (See Hogg on
the "Australian torrens System," supra, and cases cited. See also the excellent
work of Niblack in his "Analysis of the Torrens System," page 99.) Niblack, in
discussing the general question, said: "Where two certificates purport to include
the same land the earlier in date prevails. ... In successive registrations, where
more than one certificate is issued in respect of a particular estate or interest in
land, the person claiming under the prior certificates is entitled to the estate or
interest; and that person is deemed to hold under the prior certificate who is the
holder of, or whose claim is derived directly or indirectly from the person who
was the holder of the earliest certificate issued in respect thereof. While the acts
in this country do not expressly cover the case of the issue of two certificates for
the same land, they provide that a registered owner shall hold the title, and the
effect of this undoubtedly is that where two certificates purport to include the
same registered land, the holder of the earlier one continues to hold the title" (p.
237).
Section 38 of Act No. 496, provides that; "It (the decree of registration) shall be
conclusive upon and against all persons, including the Insular Government and
all the branches thereof, whether mentioned by name in the application, notice,
or citation, or included in the general description "To all whom it may concern."
Such decree shall not be opened by reason of the absence, infancy, or other
disability of any person affected thereby, nor by any proceeding in any court for
reversing judgments or decrees; subject, however, to the right of any person
deprived of land or of any estate or interest therein by decree of registration
obtained by fraud to file in the Court of Land Registration a petition for review
within one year after entry of the decree (of registration), provided no innocent
purchaser for value has acquired an interest.
It will be noted, from said section, that the "decree of registration" shall not be
opened, for any reason, in any court, except for fraud, and not even for fraud,
after the lapse of one year. If then the decree of registration can not be opened
for any reason, except for fraud, in a direct proceeding for that purpose, may
such decree be opened or set aside in a collateral proceeding by including a
portion of the land in a subsequent certificate or decree of registration? We do
not believe the law contemplated that a person could be deprived of his registered
title in that way.
We have in this jurisdiction a general statutory provision which governs the right
of the ownership of land when the same is registered in the ordinary registry in
the name of two persons. Article 1473 of the Civil Code provides, among other
things, that when one piece of real property had been sold to two different
persons it shall belong to the person acquiring it, who first inscribes it in the
registry. This rule, of course, presupposes that each of the vendees or purchasers
has acquired title to the land. The real ownership in such a case depends upon
priority of registration. While we do not now decide that the general provisions of
the Civil Code are applicable to the Land Registration Act, even though we see
no objection thereto, yet we think, in the absence of other express provisions,
they should have a persuasive influence in adopting a rule for governing the effect
of a double registration under said Act. Adopting the rule which we believe to be
more in consonance with the purposes and the real intent of the torrens system,
we are of the opinion and so decree that in case land has been registered under
the Land Registration Act in the name of two different persons, the earlier in date
shall prevail.
In reaching the above conclusion, we have not overlooked the forceful argument
of the appellee. He says, among other things; "When Prieto et al. were served with
notice of the application of Teus (the predecessor of the defendant) they became
defendants in a proceeding wherein he, Teus, was seeking to foreclose their right,
and that of orders, to the parcel of land described in his application. Through
their failure to appear and contest his right thereto, and the subsequent entry of
a default judgment against them, they became irrevocably bound by the decree
adjudicating such land to Teus. They had their day in court and can not set up
their own omission as ground for impugning the validity of a judgment duly
entered by a court of competent jurisdiction. To decide otherwise would be to
hold that lands with torrens titles are above the law and beyond the jurisdiction
of the courts".
As was said above, the primary and fundamental purpose of the torrens system
is to quiet title. If the holder of a certificate cannot rest secure in this registered
title then the purpose of the law is defeated. If those dealing with registered land
cannot rely upon the certificate, then nothing has been gained by the registration
and the expense incurred thereby has been in vain. If the holder may lose a strip
of his registered land by the method adopted in the present case, he may lose it
all. Suppose within the six years which elapsed after the plaintiff had secured
their title, they had mortgaged or sold their right, what would be the position or
right of the mortgagee or vendee? That mistakes are bound to occur cannot be
denied, and sometimes the damage done thereby is irreparable. It is the duty of
the courts to adjust the rights of the parties under such circumstances so as to
3
minimize such damages, taking into consideration al of the conditions and the
diligence of the respective parties to avoid them. In the present case, the appellee
was the first negligent (granting that he was the real owner, and if he was not
the real owner he can not complain) in not opposing the registration in the name
of the appellants. He was a party-defendant in an action for the registration of
the lot in question, in the name of the appellants, in 1906. "Through his failure
to appear and to oppose such registration, and the subsequent entry of a default
judgment against him, he became irrevocably bound by the decree adjudicating
such land to the appellants. He had his day in court and should not be permitted
to set up his own omissions as the ground for impugning the validity of a
judgment duly entered by a court of competent jurisdiction." Granting that he
was the owner of the land upon which the wall is located, his failure to oppose
the registration of the same in the name of the appellants, in the absence of
fraud, forever closes his mouth against impugning the validity of that judgment.
There is no more reason why the doctrine invoked by the appellee should be
applied to the appellants than to him.
We have decided, in case of double registration under the Land Registration Act,
that the owner of the earliest certificate is the owner of the land. That is the rule
between original parties. May this rule be applied to successive vendees of the
owners of such certificates? Suppose that one or the other of the parties, before
the error is discovered, transfers his original certificate to an "innocent
purchaser." The general rule is that the vendee of land has no greater right, title,
or interest than his vendor; that he acquires the right which his vendor had,
only. Under that rule the vendee of the earlier certificate would be the owner as
against the vendee of the owner of the later certificate.
We find statutory provisions which, upon first reading, seem to cast some doubt
upon the rule that the vendee acquires the interest of the vendor only. Sections
38, 55, and 112 of Act No. 496 indicate that the vendee may acquire rights and
be protected against defenses which the vendor would not. Said sections speak
of available rights in favor of third parties which are cut off by virtue of the sale
of the land to an "innocent purchaser." That is to say, persons who had had a
right or interest in land wrongfully included in an original certificate would be
unable to enforce such rights against an "innocent purchaser," by virtue of the
provisions of said sections. In the present case Teus had his land, including the
wall, registered in his name. He subsequently sold the same to the appellee. Is
the appellee an "innocent purchaser," as that phrase is used in said sections?
May those who have been deprived of their land by reason of a mistake in the
original certificate in favor of Teus be deprived of their right to the same, by virtue
of the sale by him to the appellee? Suppose the appellants had sold their lot,
including the wall, to an "innocent purchaser," would such purchaser be
included in the phrase "innocent purchaser," as the same is used in said
sections? Under these examples there would be two innocent purchasers of the
same land, is said sections are to be applied .Which of the two innocent
purchasers, if they are both to be regarded as innocent purchasers, should be
protected under the provisions of said sections? These questions indicate the
difficulty with which we are met in giving meaning and effect to the phrase
"innocent purchaser," in said sections.
May the purchaser of land which has been included in a "second original
certificate" ever be regarded as an "innocent purchaser," as against the rights or
interest of the owner of the first original certificate, his heirs, assigns, or vendee?
The first original certificate is recorded in the public registry. It is never issued
until it is recorded. The record notice to all the world. All persons are charged
with the knowledge of what it contains. All persons dealing with the land so
recorded, or any portion of it, must be charged with notice of whatever it
contains. The purchaser is charged with notice of every fact shown by the record
and is presumed to know every fact which the record discloses .This rule is so
well established that it is scarcely necessary to cite authorities in its support
(Northwestern National Bank vs. Freeman, 171 U.S., 620, 629; Delvin on Real
Estate, sections 710, 710 [a]).
When a conveyance has been properly recorded such record is constructive
notice of its contents and all interests, legal and equitable, included therein.
(Grandin vs. Anderson, 15 Ohio State, 286, 289; Orvis vs. Newell, 17 Conn., 97;
Buchanan vs. Intentional Bank, 78 Ill., 500; Youngs vs. Wilson, 27 N.Y., 351;
McCabe vs. Grey, 20 Cal., 509; Montefiore vs. Browne, 7 House of Lords Cases,
341.)
Under the rule of notice, it is presumed that the purchaser has examined every
instrument of record affecting the title. Such presumption is irrebutable. He is
charged with notice of every fact shown by the record and is presumed to know
every fact which an examination of the record would have disclosed. This
presumption cannot be overcome by proof of innocence or good faith. Otherwise
the very purpose and object of the law requiring a record would be destroyed.
Such presumption cannot be defeated by proof of want of knowledge of what the
record contains any more than one may be permitted to show that he was
ignorant of the provisions of the law. The rule that all persons must take notice
of the facts which the public record contains is a rule of law. The rule must be
absolute. Any variation would lead to endless confusion and useless litigation.
While there is no statutory provision in force here requiring that original deeds
of conveyance of real property be recorded, yet there is a rule requiring mortgages
to be recorded. (Arts. 1875 and 606 of the Civil Code.) The record of a mortgage
is indispensable to its validity. (Art .1875.) In the face of that statute would the
courts allow a mortgage to be valid which had not been recorded, upon the plea
4
of ignorance of the statutory provision, when third parties were interested? May
a purchaser of land, subsequent to the recorded mortgage, plead ignorance of its
existence, and by reason of such ignorance have the land released from such
lien? Could a purchaser of land, after the recorded mortgage, be relieved from
the mortgage lien by the plea that he was a bona fide purchaser? May there be a
bona fide purchaser of said land, bona fide in the sense that he had no knowledge
of the existence of the mortgage? We believe the rule that all persons must take
notice of what the public record contains in just as obligatory upon all persons
as the rule that all men must know the law; that no one can plead ignorance of
the law. The fact that all men know the law is contrary to the presumption. The
conduct of men, at times, shows clearly that they do not know the law. The rule,
however, is mandatory and obligatory, notwithstanding. It would be just as
logical to allow the defense of ignorance of the existence and contents of a public
record.
In view, therefore, of the foregoing rules of law, may the purchaser of land from
the owner of the second original certificate be an "innocent purchaser," when a
part or all of such land had theretofore been registered in the name of another,
not the vendor? We are of the opinion that said sections 38, 55, and 112 should
not be applied to such purchasers. We do not believe that the phrase "innocent
purchaser should be applied to such a purchaser. He cannot be regarded as an
"innocent purchaser" because of the facts contained in the record of the first
original certificate. The rule should not be applied to the purchaser of a parcel of
land the vendor of which is not the owner of the original certificate, or his
successors. He, in nonsense, can be an "innocent purchaser" of the portion of
the land included in another earlier original certificate. The rule of notice of what
the record contains precludes the idea of innocence. By reason of the prior
registry there cannot be an innocent purchaser of land included in a prior
original certificate and in a name other than that of the vendor, or his successors.
In order to minimize the difficulties we think this is the safe rule to establish. We
believe the phrase "innocent purchaser," used in said sections, should be limited
only to cases where unregistered land has been wrongfully included in a
certificate under the torrens system. When land is once brought under the
torrens system, the record of the original certificate and all subsequent transfers
thereof is notice to all the world. That being the rule, could Teus even regarded
as the holder in good fifth of that part of the land included in his certificate of
the appellants? We think not. Suppose, for example, that Teus had never had
his lot registered under the torrens system. Suppose he had sold his lot to the
appellee and had included in his deed of transfer the very strip of land now in
question. Could his vendee be regarded as an "innocent purchaser" of said strip?
Would his vendee be an "innocent purchaser" of said strip? Certainly not. The
record of the original certificate of the appellants precludes the possibility. Has
the appellee gained any right by reason of the registration of the strip of land in
the name of his vendor? Applying the rule of notice resulting from the record of
the title of the appellants, the question must be answered in the negative. We are Separate Opinions
of the opinion that these rules are more in harmony with the purpose of Act No.
496 than the rule contended for by the appellee. We believe that the purchaser
from the owner of the later certificate, and his successors, should be required to
resort to his vendor for damages, in case of a mistake like the present, rather TRENT, J., dissenting:
than to molest the holder of the first certificate who has been guilty of no
negligence. The holder of the first original certificate and his successors should I dissent.
be permitted to rest secure in their title, against one who had acquired rights in
conflict therewith and who had full and complete knowledge of their rights. The
In cases of double or overlapping registration, I am inclined to agree with the
purchaser of land included in the second original certificate, by reason of the
reasoning and authority on which it is held in the majority opinion (first) that the
facts contained in the public record and the knowledge with which he is charged
original holder of the prior certificate is entitled to the land as against the original
and by reason of his negligence, should suffer the loss, if any, resulting from
holder of the later certificate, where there has been no transfer of title by either
such purchase, rather than he who has obtained the first certificate and who
party to an innocent purchaser; both, as is shown in the majority opinion, being
was innocent of any act of negligence.
at fault in permitting the double registration to take place; (second) that an
innocent purchaser claiming under the prior certificate is entitled to the land as
The foregoing decision does not solve, nor pretend to solve, all the difficulties against the original holder of the later certificate, and also as against innocent
resulting from double registration under the torrens system and the subsequent purchasers from the holder of the later certificate; the innocent purchaser being
transfer of the land. Neither do we now attempt to decide the effect of the former in no wise at fault in connection with the issuance of the later certificate.
registration in the ordinary registry upon the registration under the torrens
system. We are inclined to the view, without deciding it, that the record under
But I am of opinion that neither the authorities cited, nor the reasoning of the
the torrens system, supersede all other registries. If that view is correct then it
majority opinion sustains the proposition that the original holder of the prior
will be sufficient, in dealing with land registered and recorded alone. Once land
certificate is entitled to the land as against an innocent purchaser from the
is registered and recorded under the torrens system, that record alone can be
holder of the later certificate.
examined for the purpose of ascertaining the real status of the title to the land.
As to the text-book authorities cited in the majority opinion, it is sufficient to say
It would be seen to a just and equitable rule, when two persons have acquired
that the rules laid down by both Hogg and Niblack are mere general rules,
equal rights in the same thing, to hold that the one who acquired it first and who
admittedly subject to exception, and of course of no binding force or authority
has complied with all the requirements of the law should be protected.
where the reasoning upon which these rules are based is applicable to the facts
developed in a particular case.
In view of our conclusions, above stated, the judgment of the lower court should
be and is hereby revoked. The record is hereby returned to the court now having
In its last analysis the general rule laid down in the majority opinion rests upon
and exercising the jurisdiction heretofore exercised by the land court, with
the proposition set forth in the last page of the opinion wherein it is said that "it
direction to make such orders and decrees in the premises as may correct the
would seem to be a just and equitable rule, when two persons have acquired
error heretofore made in including the land in the second original certificate
equal rights in the same thing, to hold that the one who acquired it first and who
issued in favor of the predecessor of the appellee, as well as in all other duplicate
has complied with all the requirements of the law should be protected." The rule,
certificates issued.
as applied to the matter in hand, may be stated as follows: It would seem to be
a just and equitable rule when two persons have acquired separate and
Without any findings as to costs, it is so ordered. independent registered titles to the same land, under the Land Registration Act,
to hold that the one who first acquired registered title and who has complied with
Arellano, C.J., Torrens, and Araullo, JJ., concur. all the requirements of the law in that regard should be protected, in the absence
of any express statutory provision to the contrary.

5
Thus stated I have no quarrel with the doctrine as a statement of the general rule
to be applied in cases of double or overlapping registration under the Land
Registration Act; for it is true as stated in the majority opinion that in the
adjudication and registration of titles by the Courts of Land Registration
"mistakes are bound to occur, and sometimes the damage done thereby is
irreparable;" and that in the absence of statutory provisions covering such cases,
"it is the duty of the courts to adjust the rights of the parties, under such
circumstances, so as to minimize such damages, taking into consideration all of
the conditions, and the diligence of the respective parties to avoid them."
But like most such general rules, it has its exceptions and should not be applied
in a case wherein the reasons on which it is based do not exist, or in cases
wherein still more forceful reasons demand the application of a contrary rule.
The general rule relied upon in the majority opinion is a mere application of a
well settled equity rule that: "Where conflicting equities are otherwise equal in
merit, that which first occurred will be given the preference." But it is universally
laid down by all the courts which have had occasion to apply this equity rule
that "it should be the last test resorted to," and that "it never prevails when any
other equitable ground for preference exists." (See 19 Cent. Dig., tit. Equity, par.
181; and may cases cited in 16 Cyc., 139, note 57.) It follows that the general
rules, that in cases of double or overlapping registration the earlier certificate
should be protected, ought not to prevail so as to deprive an innocent purchaser
under the later certificate of his title of the earlier certificate contributed to the
issuance of the later certificate. Hence the holder of the earlier certificate of title
should not be heard to invoke the "just and equitable rule" as laid down in the
majority opinion, in order to have his own title protected and the title of an
innocent purchaser of a later certificate cancelled or annulled, in any case
wherein it appears that the holder of the later certificate was wholly without fault,
while the holder of the issuance of the later certificate, in that he might have
prevented its issuance by merely entering his appearance in court in response to
lawful summons personally served upon him in the course of the proceedings for
the issuance of the second certificate, and pleading his superior rights under the
earlier certificate, instead of keeping silent and by his silence permitting a default
judgment to be entered against him adjudicating title in favor of the second
applicant.
The majority opinion clearly recognizes the soundness of the principles I am
contending for by reasoning (with which I am inclined to agree) whereby it
undertakes to demonstrate that as between the original holders of the double or
overlapping registration the general rule should prevail, because both such
original parties must held to have been fault and, their equities being equal,
preference should be given to the earlier title.
6
The majority opinion further recognizes the soundness of my contention by the
reasoning whereby it undertakes to sustain the application of the general rule in
favor of the original holder of the earlier certificate against purchasers from the
original holder of the later certificate, by an attempt to demonstrate that such
purchasers can in no event be held to be innocent purchasers; because, as it is
said, negligence may and should always be imputed to such a purchaser, so that
in no event can he claim to be without fault when it appears that the lands
purchased by him from the holder of a duly registered certificate of title are
included within the bounds of the lands described in a certificate of title of an
earlier date.
At considerable length the majority opinion (in reliance upon the general rule
laid down under the various systems of land registration, other than those based
on the torrens system) insists that a purchaser of land land duly registered in
the Land Registration Court, is charged with notice of the contents of each and
every one of the thousands and tens of thousands of certificates of registry on
file in the land registry office, so that negligence may be imputed to him if he does
not ascertain that all or any part of the land purchased by him is included within
the boundary lines of any one of the thousands or tens of thousands of tracts of
land whose original registry bears an earlier date than the date of the original
registry of the land purchased by him. It is contended that he cannot claim to be
without fault should he buy such land because, as it is said, it was possible for
him to discover that the land purchased by him had been made the subject of
double or overlapping registration by a comparison of the description and
boundary lines of the thousands of tracts and parcels of land to be found in the
land registry office.
But such ruling goes far to defeat one of the principal objects sought to be
attained by the introduction and adoption of the so-called torrens system for the
registration of land. The avowed intent of that system of land registration is to
relieve the purchase of registered lands from the necessity of looking farther than
the certificate of title of the vendor in order that he may rest secure as to the
validity of the title to the lands conveyed to him. And yet it is said in the majority
opinion that he is charged with notice of the contents of every other certificate of
title in the office of the registrar so that his failure to acquaint himself with its
contents may be imputed to him as negligence.
If the rule announced in the majority opinion is to prevail, the new system of
land registration, instead of making transfers of real estate simple, expenditious
and secure, and instead of avoiding the necessity for expensive and oftimes
uncertain searches of the land record and registries, in order to ascertain the
true condition of the title before purchase, will, in many instances, add to the
labor, expense and uncertainty of any attempt by a purchaser to satisfy himself
as to the validity of the title to lands purchased by him.
As I have said before, one of the principal objects, if not the principal object, of
the torrens system of land registration upon which our Land Registration Act is
avowedly modelled is to facilitate the transfer of real estate. To that end the
Legislature undertakes to relieve prospective purchasers and all others dealing
in registered lands from the necessity of looking farther than the certificate of
title to such lands furnished by the Court of Land Registration, and I cannot,
therefore, give my consent to a ruling which charges a purchaser or mortgage of
registered lands with notice of the contents of every other certificate of title in the
land registry, so that negligence and fault may be imputed to him should he be
exposed to loss or damages as a result of the lack of such knowledge.
Suppose a prospective purchaser of lands registered under the Land Registration
Act desires to avoid the imputation of negligence in the event that, unknown to
him, such lands have been made the subject of double or overlapping
registration, what course should he pursue? What measures should he adopt in
order to search out the information with notice of which he is charged? There are
no indexes to guide him nor is there anything in the record or the certificate of
title of the land he proposes to buy which necessarily or even with reasonable
probability will furnish him a clue as to the fact of the existence of such double
or overlapping registration. Indeed the only course open to him, if he desires to
assure himself against the possibility of double or overlapping registration, would
even seem to be a careful, laborious and extensive comparison of the registered
boundary lines contained in the certificate of title of the tract of land he proposes
to buy with those contained in all the earlier certificates of title to be found in
the land registry. Assuredly it was never the intention of the author of the new
Land Registration Act to impose such a burden on a purchaser of duly registered
real estate, under penalty that a lack of the knowledge which might thus be
acquired may be imputed to him by this court as negligence in ruling upon the
respective equities of the holders of lands which have been the subject of double
or overlapping registration.
On the other hand, I think that negligence and fault may fairly be imputed to a
holder of a registered certificate of title who stood supinely by and let a default
judgment be entered against him, adjudicating all or any part of his registered
lands to another applicant, if it appears that he was served with notice or had
actual notice of the pendency of the proceedings in the Court of Land Registration
wherein such default judgment was entered.
The owner of land who enjoys the benefits secured to him by its registry in the
Court of Land Registration may reasonably be required to appear and defend his
title when he has actual notice that proceedings are pending in that court
wherein another applicant, claiming the land as his own, is seeking to secure its
registry in his name. All that is necessary for him to do is to enter his appearance
in those proceedings, invite the court's attention to the certificate of title
7
registered in his name, and thus, at the cost of the applicant, avoid all the
damage and inconvenience flowing from the double or overlapping registration of
the land in question. There is nothing in the new system of land registration
which seems to render it either expedient or necessary to relieve a holder of a
registered title of the duty of appearing and defending that title, when he has
actual notice that it is being attacked in a court of competent jurisdiction, and
if, as a result of his neglect or failure so to do, his lands become subject to double
or overlapping registration, he should not be permitted to subject an innocent
purchaser, holding under the later certificate, to all the loss and damage
resulting from the double or overlapping registration, while he goes scot free and
holds the land under a manifest misapplication of the equitable rule that "where
conflicting equities are otherwise equal in merit, that which first accrued will be
given the preference." It is only where both or neither of the parties are at fault
that the rule is properly applicable as between opposing claimants under an
earlier and a later certificate of registry to the same land.
Of course all that is said in the briefs of counsel and the majority opinion as to
the right of the holder of a certificate to rest secure in his registered title so that
those dealing with registered lands can confidently rely upon registry certificates
thereto is equally forceful by way of argument in favor of the holder of one or the
other certificate in case of double or overlapping registration. The problem is to
determine which of the certificate holders is entitled to the land. The decision of
that question in favor of either one must necessarily have the effect of destroying
the value of the registered title of the other and to that extent shaking the public
confidence in the value of the whole system for the registration of lands. But, in
the language of the majority opinion, "that mistakes are bound to occur cannot
be denied and sometimes the damage done thereby is irreparable. It is the duty
of the courts to adjust the rights of the parties under such circumstances so as
to minimize the damages, taking into consideration all the conditions and the
diligence of the respective parties to avoid them."lawphil.net
It will be observed that I limit the exception to the general equitable rule, as laid
down in the majority opinion, to case wherein the holder of the earlier certificate
of title has actual notice of the pendency of the proceedings in the course of
which the latter certificate of title was issued, or to cases in which he has received
personal notice of the pendency of those proceedings. Unless he has actual notice
of the pendency of such proceedings I readily agree with the reasoning of the
majority opinion so far as it holds that negligence, culpable negligence, should
not be imputed to him for failure to appear and defend his title so as to defeat
his right to the benefit of the equitable rule. It is true that the order of publication
in such cases having been duly complied with, all the world is charged with
notice thereof, but it does not necessarily follow that, in the absence of actual
notice, culpable negligence in permitting a default judgment to be entered against
him may be imputed to the holder of the earlier certificate so as to defeat his
right to the land under the equitable rule favoring the earlier certificate. Such a
holding would have the effect (to quote the language of the majority opinion) of
requiring the holder of a certificate of title to wait indefinitely "in the portals of
the court" and to sit in the "mirador de su casa" in order to avoid the possibility
of losing his lands; and I agree with the writer of the majority opinion that to do
so would place an unreasonable burden on the holders of such certificate, which
was not contemplated by the authors of the Land Registration Act. But no
unreasonable burden is placed upon the holder of a registered title by a rule
which imputes culpable negligence to him when he sits supinely by and lets a
judgment in default be entered against him adjudicating title to his lands in favor
of another applicant, despite the fact that he has actual knowledge of the
pendency of the proceedings in which such judgment is entered and despite the
fact that he has been personally served with summons to appear and default his
title.
"Taking into consideration all of the conditions and the diligence of the respective
parties," it seems to me that there is no "equality in merit" between the conflicting
equities set up by an innocent purchaser who acquires title to the land under a
registered certificate, and the holder of an earlier certificate who permitted a
default judgment to be entered against him, despite actual notice of the pendency
of the proceedings in the course of which the later certificate was issued.
I am convinced, furthermore, that aside from the superior equities of the
innocent purchaser in cases such as that now under discussion, there are strong
reasons of convenience and public policy which militate in favor of the
recognition of his title rather than that of the holder of the earlier title.
One ruling exposes all persons purchasing or dealing in registered lands to
unknown, unspecified and uncertain dangers, to guard against which all such
persons will be put to additional cost, annoyance and labor on every occasion
when any transaction is had with regard to such lands; while the other ruling
tends to eliminate consequences so directly adverse to the purpose and object
for which the land registration law was enacted, and imposes no burden upon
any holder of a certificate of registered lands other than that of defending his title
on those rare, definite and specific occasions wherein he has actual notice that
his title is being challenged in a Court of Land Registration, a proceeding in which
the cost and expense is reduced to the minimum by the conclusive character of
his certificate of title in support of his claim of ownership. Furthermore,
judgment against the innocent purchaser and in favor of the holder of the earlier
certificate in a case such as that under consideration must inevitably tend to
increase the danger of double or overlapping registrations by encouraging
holders of registered titles, negligently or fraudulently and conclusively, to permit
default judgments to be entered against them adjudicating title to all or a part of
their registered lands in favor of other applicants, despite actual notice of the
8
pendency of judicial proceedings had for that purpose, and this, without adding
in any appreciable degree to the security of thir titles, and merely to save them
the very slight trouble or inconvenience incident to an entry of appearance in the
court in which their own titles were secured, and inviting attention to the fact
that their right, title and ownership in the lands in questions has already been
conclusively adjudicated.
The cases wherein there is a practical possibility of double or overlapping
registration without actual notice to the holder of the earlier certificate must in
the very nature of things to be so rare as to be practically negligible. Double or
overlapping registration almost invariably occurs in relation to lands held by
adjoining occupants or claimants. It is difficult to conceive of a case wherein
double registration can take place, in the absence of fraud, without personal
service of notice of the pendency of the proceedings upon the holder of the earlier
certificate, the statute requiring such notice to be served upon the owner or
occupant of all lands adjoining those for which application for registration is
made; and the cases wherein an adjoining land owner can, even by the use of
fraud, conduct proceedings for the registration of his land to a successful
conclusion without actual notice to the adjoining property owners must be rare
indeed.
In the case at bar the defendant purchased the land in question from the original
holder of a certificate of title issued by the Court of Land Registration, relying
upon the records of the Court of Land Registration with reference thereto and
with no knowledge that any part of the land thus purchased was included in an
earlier certificate of title issued to the plaintiff. The plaintiff, the holder of the
earlier certificate of title, negligently permitted a default judgment to be entered
against him in the Court of Land Registration, adjudicating part of the lands
included in his own certificate of title in favor of another applicant, from whom
the defendant in this action acquired title, and this despite the fact that he was
an adjoining land owner, had actual notice of the pendency of the proceedings
and was personally served with summons to appear and defends his rights in
the premises. It seems to me that there can be no reason for doubt as to the
respective merits of the equities of the parties, and further that the judgment of
the majority in favor of the plaintiff will inevitably tend to increase the number
of cases wherein registered land owners in the future will fail to appear and
defend their titles when challenged in other proceedings in the Courts of Land
Registration, thereby enormously increasing the possibility and probability of
loss and damage to innocent third parties and dealers in registered lands
generally, arising out of erroneous, double or overlapping registration of lands by
the Courts of Land Registration.
Carson, J., concurs.
Republic of the Philippines
SUPREME COURT
Manila
FIRST DIVISION
G.R. No. 80687 April 10, 1989
REPUBLIC OF THE PHILIPPINES, represented by the DIRECTOR OF
LANDS, petitioner,
vs.
HONORABLE MARIANO M. UMALI, in his capacity as Presiding Judge,
Regional Trial Court, Fourth Judicial Region, Branch 23, Trece Martires
City, REMEDIOS MICLAT, JUAN C. PULIDO, ROSALINA NAVAL, and the
REGISTER OF DEEDS OF CAVITE, respondents.
CRUZ, J.:
The petitioner seeks reversion of a parcel of land on the ground that the original
sale thereof from the government was tainted with fraud because based on a
forgery and therefore void ab initio. The present holders of the property claiming
to be innocent purchasers for value and not privy to the alleged forgery, contend
that the action cannot lie against them.
The land in question is situated in Tanza, Cavite, and consists of 78,865 square
meters. 1 It was originally purchased on installment from the government on July
1, 1910 by Florentina Bobadilla, who allegedly transferred her rights thereto in
favor of Martina, Tomasa, Gregorio and Julio, all surnamed Cenizal, in
1922.2 Tomasa and Julio assigned their shares to Martina, Maria and
Gregorio. 3 In 1971 these three assignees purportedly signed a joint affidavit
which was filed with the Bureau of Lands to support their claim that they were
entitled to the issuance of a certificate of title over the said land on which they
said they had already made full payment. 4 On the basis of this affidavit, the
Secretary of Agriculture and Natural Resources executed Deed No. V-10910 (Sale
Certificate No. 1280) on September 10, 1971, in favor of the said
affiants. 5 Subsequently, on October 13, 1971, TCT No. 55044 (replacing
Bobadilla's OCT No. 180) was issued by the register of deeds of Cavite in favor of
Maria Cenizal, Gregorio Cenizal, and (in lieu of Martina Cenizal) Rosalina Naval,
Luz Naval, and Enrique Naval. 6
9
When the complaint for reversion was filed on October 10, 1985, the registered
owners of the land, following several transfers, were Remedios Miclat under TCT
No. 80392, Juan C. Pulido under TCT No. 80393, and Rosalina, Luz and Enrique
Naval under TCT No. 80394. 7 They were named as defendants and asked to
return the property to the State on the aforestated grounds of forgery and fraud.
The plaintiff claimed that Gregorio Cenizal having died on February 25, 1943,
and Maria Cenizal on January 8, 1959, they could not have signed the joint
affidavit dated August 9, 1971, on which Deed No. V-10910 (Sale Certificate No.
1280) was based. 8
In their answer, Pulido and the Navals denied any participation in the joint
affidavit and said they had all acquired the property in good faith and for value.
By way of affirmative defenses, they invoked estoppel, laches, prescription
and res judicata. 9 For her part, Miclat moved to dismiss the complaint,
contending that the government had no cause of action against her because there
was no allegation that she had violated the plaintiff's right, that the government
was not the real party-in-interest because the subject land was already covered
by the Torrens system, and that in any event the action was barred by
prescription or laches. 10
The respondent court, in its order dated October 2, 1987, granted the
motion. 11 The petitioner, contesting this order, now insists that it has a valid
cause of action and that it is not barred by either prescription or res judicata.
The Court will observe at the outset that the joint affidavit is indeed a forgery.
Apart from the fact that two of the supposed affiants were already dead at the
time they were supposed to have signed the sworn statement, even the most
cursory examination of the document will show that the three signatures affixed
thereto were written by one and the same hand. 12 There is no doubt about it. It
is indeed difficult to understand how such an obvious forgery could have
deceived the people in the Bureau of Lands who processed the papers of this case
and made possible the fraudulent transfer of the land.
But given such deception, would the sale itself be considered null and void from
the start, as the petitioner insists, so as to make all titles derived therefrom also
ineffectual ab initio?
We agree with the contention that there is no allegation in the complaint 13 filed
by the petitioner that any one of the defendants was privy to the forged joint
affidavit or that they had acquired the subject land in bad faith. Their status as
innocent transferees for value was never questioned in that pleading. Not having
been disproved, that status now accords to them the protection of the Torrens
System and renders the titles obtained by them thereunder indefeasible and
conclusive. The rule will not change despite the flaw in TCT No. 55044.
Section 39 of the Land Registration Act clearly provided:
Sec. 39. Every person receiving a certificate of title in pursuance of a decree of
registration, and every subsequent purchaser of registered land who takes a
certificate of title for value in good faith shall hold the same free of all
encumbrance except those noted on said certificate.
The rulings on this provision are indeed as numerous as they are consistent:
Thus, under Section 44 of P.D. 1529 (then Sec. 39 of the Land Reg. Act), every
registered owner receiving a certificate of title in pursuance of a decree of
registration, and every subsequent purchaser of registered land taking a
certificate of title for value and in good faith, shall hold the same free from all
encumbrances except those noted on the certificate and any of the
encumbrances which may be subsisting, and enumerated in the law. Under said
provision, claims and liens of whatever character, except those mentioned by law
as existing against the land prior to the issuance of certificate of title, are cut off
by such certificate if not noted thereon, and the certificate so issued binds the
whole world, including the government. 14
xxx xxx xxx
A holder in bad faith is not entitled to the protection of Sec. 39 of the Land
Registration Act. 15
xxx xxx xxx
The real purpose of the Torrens System of land registration is to quiet title to
land; to put a stop forever to any question of the legality of the title, except claims
which were noted at the time of registration in the certificate, or which may arise
subsequent thereto. That being the purpose of the law, it would seem that once
the title was registered, the owner might rest secure, without the necessity of
waiting in the portals of the court, or sitting in the "mirador de su casa," to avoid
the possibility of losing his land. 16
The decision in Piero v. Director of Lands 17 is not applicable to the present
proceeding because the lands involved in that case had not yet passed to the
hands of an innocent purchaser for value. They were still held by the Pineros.
The action for reversion was filed by the government against them as the original
transferees of the properties in question. They were the direct grantees of the free
10
patents issued by the government pursuant to which the corresponding
certificates of title were issued under the Torrens system. The fraud alleged by
the government as a ground for the reversion sought was imputable directly to
the Pineros, who could not plead the status of innocent purchasers for value.
The difference between them and the private respondents is that the latter
acquired the land in question not by direct grant but in fact after several transfers
following the original sale thereof to Bobadilla in 1910. The presumption is that
they are innocent transferees for value in the absence of evidence to the contrary.
The petitioner contends that it was Pedro Miclat who caused the falsification of
the joint affidavit, but that is a bare and hardly persuasive allegation, and indeed,
even if true, would still not prove any collusion between him and the private
respondents. The mere fact that Remedios Miclat was the daughter and heiress
of Miclat, without more, would not necessarily visit upon her the alleged sins of
her father.
The Solicitor General also argues that Remedios is an extension of the juridical
personality of her father and so cannot claim to be an innocent purchaser for
value because she is charged with knowledge of her father's deceit. Such
conclusion has no basis in fact or law. Moreover, there is evidence that Remedios
did not merely inherit the land but actually purchased it for valuable
consideration and without knowledge of its original defect. The agreement to
subdivide, 18 which she presented to show that she had acquired the land for
valuable confederation, is more acceptable than the conjectures of the petitioner.
It is also consonant with the presumption of good faith.
The land being now registered under the Torrens system in the names of the
private respondents, the government has no more control or jurisdiction over it.
It is no longer part of the public domain or, as the Solicitor General contends
as if it made any difference of the Friar Lands. The subject property ceased to
be public land when OCT No. 180 was issued to Florentina Bobadilla in 1910 or
at the latest from the date it was sold to the Cenizals in 1971 upon full payment
of the purchase price. As private registered land, it is governed by the provisions
of the Land Registration Act, now denominated the Property Registration Decree,
which applies even to the government.
The pertinent provision of the Land Registration Act was Section 122, which read
as follows:
Sec. 122. Whenever public lands in the Philippine Islands belonging to the
Government of the United States or to the Government of the Philippine Islands
are alienated, granted, or conveyed to persons or to public or private
corporations, the same shall be brought forthwith under the operation of this Act
and shall become registered lands. 19
This should be related to Section 12 of the Friar Lands Act, providing thus:
Sec. 12. . . . upon the payment of the final installment together with all accrued
interest, the Government will convey to such settler and occupant the said land
so held by him by proper instrument of conveyance, which shall be issued and
become effective in the manner provided in section one hundred and twenty-two
(Sec. 122) of the Land Registration Act.
The petitioner claims that it is not barred by the statute of limitations because
the original transfer of the land was null and void ab initio and did not give rise
to any legal right. The land therefore continued to be part of the public domain
and the action for this reversion could be filed at any time. The answer to that is
the statement made by the Court in Heirs of Tanak Pangawaran Patiwayan
v. Martinez 20 that "even if respondent Tagwalan eventually is proven to have
procured the patent and the original certificate of title by means of fraud, the
land would not revert back to the State," precisely because it has become private
land. Moreover, the petitioner errs in arguing that the original transfer was null
and void ab initio, for the fact is that it is not so. It was only voidable. The land
remained private as long as the title thereto had not been voided, but it is too
late to do that now. As the Court has held in Ramirez vs. Court of Appeals. 21
A certificate of title fraudulently secured is not null and void ab initio, unless the
fraud consisted in misrepresenting that the land is part of the public domain,
although it is not. In such case the nullity arises, not from the fraud or deceit,
but from the fact that the land is not under the jurisdiction of the Bureau of
Lands. Inasmuch as the land involved in the present case does not belong to
such category, OCT No. 282-A would be merely voidable or reviewable (Vda. de
Cuaycong vs. Vda. de Sengbengco, 110 Phil. 113): (1) upon proof of actual fraud;
(2) although valid and effective, until annulled or reviewed in a direct proceeding
therefor (Legarda vs. Saleeby, 31 Phil. 590), not collaterally (Sorongon vs.
Makalintal, 80 Phil. 259, 262; Director of Lands vs. Gan Tan, 89 Phil. 184;
Henderson vs. Garrido, 90 Phil. 624,630; Samonte vs. Sambilon, 107 Phil.
198,200); (3) within the statutory period therefor (Sec. 38, Act 496; Velasco vs.
Gochuico 33 Phil. 363; Delos Reyes vs. Paterno, 34 Phil. 420; Snyder vs.
Provincial Fiscal, 42 Phil. 761, 764; Reyes vs. Borbon, 50 Phil. 791; Clemente vs.
Lukban, 53 Phil. 931; Sugayan vs. Solis, 56 Phil. 276, 279; Heirs of Lichauco vs.
Director of Lands, 70 Phil. 69); (4) after which, the title would be conclusive
against the whole world, including the Government (Legarda vs. Saleeby, 31 Phil.
590, 596; Central Capiz vs. Ramirez, 40 Phil. 883; J. M. Tuason vs. Santiago, 99
Phil. 615).
11
And as we declared in Municipality of Hagonoy vs. Secretary of Agriculture and
Natural Resources: 22
. . . Once a patent is registered and the corresponding certificate of title is issued,
the land ceases to be part of public domain and becomes private property over
which the director of Lands has neither control nor jurisdiction. A public land
patent, when registered in the corresponding Register of Deeds, is a veritable
Torrens Title, and becomes as indefeasible as Torrens Title upon the expiration
of one (1) year from the date of issuance thereof. Said title is, like one issued
pursuant to a judicial decree, subject to review within one (1) year from the date
of the issuance of the patent. Beyond said period, the action for the annulment
of the certificate of title issued upon the land grant can no longer be entertained.
(Emphasis supplied).
It is worth observing here that in two earlier cases, the private respondents were
challenged by the heirs of Matilde Cenizal Arguson but both were dismissed and
the titles of the registered owners were confirmed by the trial court. 23This
decision was later sustained by this Court. 24 While this is not to say that the
present petition is barred by res judicata, as the government was not a party in
these cases, it does suggest that the issue it wants to rake up now has long been
settled. It should not be the subject of further judicial inquiry, especially at this
late hour. Litigation must stop at some point instead of dragging on interminably.
The Torrens system was adopted in this country because it was believed to be
the most effective measure to guarantee the integrity of land titles and to protect
their indefeasibility once the claim of ownership is established and recognized. If
a person purchases a piece of land on the assurance that the seller's title thereto
is valid, he should not run the risk of being told later that his acquisition was
ineffectual after all. This would not only be unfair to him. What is worse is that
if this were permitted, public confidence in the system would be eroded and land
transactions would have to be attended by complicated and not necessarily
conclusive investigations and proof of ownership. The further consequence would
be that land conflicts could be even more numerous and complex than they are
now and possibly also more abrasive if not even violent. The government,
recognizing the worthy purposes of the Torrens system, should be the first to
accept the validity of titles issued thereunder once the conditions laid down by
the law are satisfied. As in this case.
We find that the private respondents are transferees in good faith and for value of the subject
property and that the original acquisition thereof, although fraudulent, did not affect their
own titles. These are valid against the whole world, including the government.
ACCORDINGLY, the petition is DENIED, without any pronouncement as to costs. It is so
ordered
Republic of the Philippines
SUPREME COURT
Manila
FIRST DIVISION
G.R. No. 114299 September 24, 1999
TRADERS ROYAL BANK, petitioner,
vs.
HON. COURT OF APPEALS, PATRIA, RUBY ANN, MARGARITA, ROSARIO,
CYNTHIA, LINDA JOY, all surnamed CAPAY and RAMON A.
GONZALES, respondents.
G.R. No. 118862 September 24, 1999
PATRIA, RUBY ANN, MARGARITA, ROSARIO, CYNTHIA, LINDA JOY, all
surnamed CAPAY, and RAMON A. GONZALES, petitioners,
vs.
SPS. HONORATO D. SANTOS and MARIA CRISTINA S. SANTOS, SPS.
CECILIO L. PE and JOSEFINA L. PE, FLORA LARON WESCOMBE, SPS.
TELESFORO P. ALFELOR II and LIZA R. ALFELOR, SPS. DEAN RODERICK
FERNANDO and LAARNI MAGDAMO FERNANDO, REMEDIOS OCA,
DEVELOPMENT BANK OF THE PHILIPPINES and TRADERS ROYAL
BANK, respondents.
KAPUNAN, J.:
The present controversy has its roots in a mortgage executed by the spouses
Maximo and Patria Capay in favor of Traders Royal Bank (TRB) pursuant to a
loan extended by the latter to the former. The mortgage covered several
properties, including a parcel of land, the subject of the present
dispute. 1 The loan became due on January 8, 1964 and the same having
remained unpaid, TRB instituted extra-judicial foreclosure proceedings upon the
mortgaged property.
To prevent the property's sale by public auction, the Capays, on September 22,
1966, filed a petition for prohibition with preliminary injunction (Civil Case No.
Q-10453) before the Court of First Instance (CFI) of Rizal, alleging that the
12
mortgage was void since they did not receive the proceeds of the loan. The trial
court initially granted the Capays' prayer for preliminary injunction.
On March 17, 1967, the Capays caused to be filed in the Register of Deeds of
Baguio City a notice of lis pendens over the disputed property. Said notice was
entered in the Day Book, as well as in the Capays' certificate of title.
Subsequently, the injunction issued by the trial court was lifted thus allowing
the foreclosure sale to proceed. Foreclosure proceedings were initiated and on
October 17, 1968, the property was sold to TRB which was the highest bidder at
the auction sale. A sheriff certificate of sale was issued in its name on the same
day. On February 25, 1970, the property was consolidated in the name of TRB,
the sole bidder in the sale. TCT No. T-6595 in the name of the Capay spouses
was then cancelled and a new one, TCT No. T-16272, 2 was entered in the bank's
name. The notice of lis pendens, however, was not carried over in the certificate
of title issued in the name TRB.
Thereafter, the Capays filed with the CFI a supplemental complaint praying for
the recovery of the property with damages and attorney's fees. Trial in Civil Case
No. Q-10453 proceeded and, on October 3, 1977, the CFI rendered its decision
declaring the mortgage void for want of consideration. The CFI ordered, among
other things, the cancellation of TCT No. T-16272 in the name of TRB and the
issuance of new certificates of title in the name of the Capay spouses.
TRB appealed to the Court of Appeals. While the case was pending in the Court
of Appeals, TRB on March 17, 1982 sold the land to Emelita Santiago in whose
name a new certificate of title, TCT No. 33774, 3 was issued, also, without any
notice of lis pendens annotated thereon. Santiago in turn divided the land into
six (6) lots and sold these to Marcial Alcantara, Armando Cruz and Artemio
Sanchez, who became co-owners thereof. 4 Alcantara and his co-owners
developed the property and thereafter sold the six (6) lots to seperate buyers who
issued seperate titles, again, bearing no notice of lis pendens. 5
On July 30, 1982, the Court of Appeals rendered its decision modifying the
decision of the trial court as to the award of damages but affirming the same in
all other respects.
For having been filed out of time and for lack of merit, the petition
for certiorari filed by TRB before this Court 6 was denied in a Resolution dated
September 12, 1983. TRB's motion for reconsideration was similarly denied in a
Resolution dated October 12, 1983. The Court's September 12, 1983 Resolution
having become final and executory on November 9, 1983, the trial court issued
a writ of execution directing the Register of Deeds of Baguio City to cancel TCT
No. 16272 in the name of TRB, and to issue a new one in the name of the Capay
spouses.
Said writ, however, could not be implemented because of the successive
subsequent transfers of the subdivided property to buyers who obtained separate
titles thereto. Thus, a complaint for recovery of possession ownership dated 8
June 1985 was filed before the Quezon City Regional Trial Court against TRB
and the subsequent transferees of the property, the respondents in G.R. No.
118862 (hereinafter, "the non-bank respondents"). Plaintiffs in said case were
Patria Capay, her children by Maximo 7who succeeded him upon his death on
August 25, 1976, and Ramon Gonzales, counsel of the spouses in Civil Case No.
Q-10453 who become co-owner of the property to the extent of 35% thereof as
his attorney's fees (collectively, "the Capays"). On March 27, 1991, the trial court
rendered its decision, the dispositive portion of which states:
WHEREFORE, judgment is hereby rendered in favor of the plaintiffs against the
defendants and ordering the Register of Deeds for Baguio to cancel TCT No. T-
36177, Books 198, Page 177 in the names of defendants Spouses Honorato D.
Santos and Maria Cristina Santos; to cancel TCT No. 36707, Book 201, Page 107
in the names of defendant Spouses Cecilio Pe and Josefina L. Pe; to cancel TCT
No. T-36051, Book 198, Page 51 in the name of Flora Laron Wescombe, married
to Kevin Lind Wescombe (now deceased); to cancel TCT No. 36147, Book 198,
page 147 in the names of Spouses Telesforo P. Alfelor II and Liza R. Alfelor; to
cancel TCT No. T-36730, Book 201, Page 130 in the names of Spouses Dean
Roderick Fernando and Laarni Magdamo Fernando; to cancel TCT No. 37437,
Book 205, Page 37 in the name of Remedios Oca, and issue new ones free from
all liens and encumbrances, together with all the improvements therein in the
names of plaintiffs sharing pro indiviso as follows: 35% to Ramon A. Gonzales,
married to Lilia Y. Gonzales, of legal age, with postal address at 23 Sunrise Hill,
New Manila, Quezon City 37.92% to Patria B. Capay, of legal age, widow, Filipino;
5.41% each to Ruby Ann Capay, of legal age, Filipino married to Pokka Vainio,
Finnish citizen; Chona Margarita Capay, of legal age, Filipino, married to Waldo
Flores; Rosario Capay of legal age, Filipino, married to Jose Cuaycong, Jr.;
Cynthia Capay, of legal age, Filipino, married to Raul Flores; Linda Joy Capay,
of legal age, Filipino, married to Pedro Duran, all with postal address at 37
Sampaguita St., Capitolville Subd., Bacolod City, ordering said defendants to
vacate the premises in question and restoring plaintiffs thereto and for defendant
Traders Royal Bank to pay each of the plaintiffs moral damages in the amount
of P100,000.00, P40,000.00 in exemplary damages and P40,000.00 as attorney's
fees, all with legal interest from the filing of the complaint, with costs against
defendants.
SO ORDERED. 8 b) The public respondent erred in not finding that it was not the fault of petitioner
13
TRB and the non-bank respondents appealed to the Court of Appeals. In a
Decision promulgated on February 24, 1994 in CA-G.R. CV No. 33920, the
appellate court affirmed the decision of the trial court in toto. 9 It ruled that the
non-bank respondents cannot be considered as purchasers for value and in good
faith, having purchased the property subsequent to the action in Civil Case No.
Q-10453 and that while the notice of lis pendens was not carried over to TRB's
certificate of title, as well as to the subsequent transferees' titles, it was entered
in the Day Book which is sufficient to constitute registration and notice to all
persons of such adverse claim, citing the cases of Villasor vs. Camon, 10 Levin vs.
Bass 11 and Director of Lands vs. Reyes. 12
As regard TRB, the Court of Appeals said that the bank was in bad faith when it
sold the property knowing that it was under the litigation and without informing
the buyer of that fact.
On April 26, 1994, TRB filed with this Court a petition for review to set aside the
CA decision, docketed herein as G.R. No. 114299, invoking the following
grounds:
I.
THE RESPONDENT HONORABLE COURT OF APPEALS COMMITTED GRAVE
AND SERIOUS ERROR OF LAW IN PROMULGATING THE DISPUTED DECISION
AND THEREBY DECIDED A QUESTION OF SUBSTANCE WHOLLY CONTRARY
TO SETTLED JURISPRUDENCE AND TOTALLY NOT IN ACCORD WITH
APPLICABLE DECISION OF THIS HONORABLE SUPREME COURT.
II.
THE RESPONDENT HONORABLE COURT OF APPEALS HAS COMMITTED SO
GRAVE AND SERIOUS ERRORS OF LAW IN SANCTIONING A DEPARTURE
FROM THE USUAL AND ACCEPTED COURSE OF JUDICIAL PROCEEDING AS
TO CALL FOR THE EXERCISE OF THE POWER OF BY THIS HONORABLE
SUPREME COURT.
a) The public respondent has plainly and manifestly acted whimsically,
arbitrarily, capriciously, with grave abuse of discretion, in excess of jurisdiction
tantamount to lack of jurisdiction.
xxx xxx xxx
when the notice of lis pendens was not carried over to its new title.
xxx xxx xxx
c) The public respondent erred in not finding that PD No. 1271 had legally caused
the invalidation of the Capay's property and the subsequent validation of TRB's
title over the same property was effective even as against the Capays. 13
Meanwhile, the non-bank respondents moved for a reconsideration of the Court
of Appeals' decision. Convinced of the movants' arguments, the Court of Appeals
in a Resolution promulgated on August 10, 1994 granted the motion for
reconsideration and dismissed the complaint as against them. The dispositive
portion of the resolution states:
ACCORDINGLY, in view of the foregoing disquisitions and finding merit in the
motion for reconsideration, the same is hereby GRANTED. Consequently, the
decision of this Court, promulgated on February 24, 1994, is hereby
RECONSIDERED. The complaint filed against defendants-appellants with the
court a quo is hereby ordered DISMISSED, and the certificate of titles originally
issued to them in their individual names are hereby ordered restored and duly
respected. We make no pronouncement as to costs.
SO ORDERED. 14
The Capays thus filed with this Court a petition for review, docketed as G.R. No.
118862 to set aside the resolution of the Court of Appeals raising the following
errors:
I THE COURT OF APPEALS PALPABLY ERRED IN REVERSING ITSELF WITH
THE COURT OF APPEALS PALPABLY ERRED IN REVERSING ITSELF BY NOW
HOLDING THAT TUAZON VS. REYES, 48 PHIL. 814 AND RIVERA VS. MORAN, 48
PHIL. 836 ARE NOT APPLICABLE HEREOF, WHILE PINO VS. COURT OF
APPEALS, 198 SCRA 436, IS APPLICABLE.
II
THE COURT OF APPEALS PALPABLY ERRED IN REVERSING ITSELF BY NOW
HOLDING THAT ATUN VS. MUNOZ, 97 PHIL. 762 AND LAROZA VS. GUIA, 134
SCRA 34, ARE NOT APPLICABLE.
III
14
THE COURT OF APPEALS PALPABLY ERRED IN REVERSING ITSELF BY NOW
HOLDING THAT LEVIN VS. BASS, 91 PHIL. 419 VILLASOR VS. CAMON, 89 PHIL.
404 AND DIRECTOR OF LANDS VS. REYES, 68 SCRA 73, ARE NOT APPLICABLE
HEREOF.
IV
THE COURT OF APPEALS PALPABLY ERRED IN REVERSING ITSELF BY NOW
HOLDING THAT PETITIONERS ARE GUILTY OF LACHES.
V
THE COURT OF APPEALS PALPABLY ERRED IN REVERSING ITSELF BY NOW
HOLDING THAT THERE IS NO DISTINCTION IN THE REGISTRATION OF
VOLUNTARY INSTRUMENTS VIS-A-VIS INVOLUNTARY INSTRUMENTS.
VI
THE COURT OF APPEALS PALPABLY ERRED IN REVERSING ITSELF BY NOW
HOLDING THAT RESPONDENTS WHO ARE LAWYERS, RESPONSIBLE
CITIZENS AND WELL-RESPECTED RESIDENTS IN THE COMMUNITY, ARE
EXEMPTED FROM THE EFFECTS OF THE CONSTRUCTIVE NOTICE ARISING
FROM REGISTRATION.
VII
REGARDS TO TRADERS ROYAL BANK, AFTER THE LATTER HAS PERFECTED
ITS APPEAL TO THE SUPREME COURT.
VIII
THE COURT OF APPEALS PALPABLY ERRED IN NOT RULING ON THE
COUNTER-ASSIGNMENT OF ERROR THAT:
B) THE LOWER COURT ERRED IN NOT HOLDING THAT DEFENDANTS ARE
BOUND BY THE DECISION IN CIVIL CASE NO. Q-10453.
Subsequently, G.R. No. 118862 was consolidated with G.R No. 114299, pursuant
to this Court's Resolution dated July 3, 1996. 15
The consolidated cases primarily involve two issues: (1) who, as between the
Capays and the non-bank respondents, has a better right to the disputed
property, and (2) whether or not TRB is liable to the Capays for damages.
On the first issue, we rule for the non-bank respondents.
I conclusive investigations and proof of ownership. The further consequence would
First, when TRB purchased the property at the foreclosure sale, the notice of lis
pendens that the Capays caused to be annotated on their certificate of title was
not carried to the new one issued to TRB. Neither did the certificate of title of
Emelita Santiago, who purchased the property from TRB, contain any such
notice. When Santiago caused the property to be divided, six (6) new certificates
of title were issued, none of which contained any notice of lis pendens. Santiago
then sold the lots to Marcial Alcantara and his co-owners who next sold each of
these to the non-bank respondents. The non-bank respondents, therefore, could
not have been aware that the property in question was the subject of litigation
when they acquired their respective portions of said property. There was nothing
in the certificates of title or respective predecessors-in-interest that could have
aroused their suspicion. The non-bank respondents had a right to rely on what
appeared on the face of the title of their respective predecessors-in-interest, and
were not bound to go beyond the same. To hold otherwise would defeat one of
the principal objects of the Torrens system of land registration, that is, to
facilitate transactions involving lands.
The main purpose of the Torrens system is to avoid possible conflicts of title to
real estate and to facilitate transactions relative thereto by giving the public the
right to rely upon the face of a Torrens certificate of title and to dispense with the
need of inquiring further, except when the party concerned has actual knowledge
of facts and circumstances that should impel a reasonably cautious man to make
such further inquiry. Where innocent third persons, relying on the correctness
of the certificate of title thus issued, acquire rights over the property, the court
cannot disregard such rights and order the total cancellation of the certificate.
The effect of such an outright cancellation would be to impair public confidence
in the certificate of title, for everyone dealing with property registered under the
Torrens system would have to inquire in every instance as to whether the title
has been regularly or irregularly issued by the court. Every person dealing with
registered land may safely rely on the correctness of the certificate of title issued
therefor and the law will in no way oblige him to go beyond the certificate to
determine the condition of the property.
The Torrens system was adopted in this country because it was believed to be
the most effective measure to guarantee the integrity of land titles and to protect
15
their indefeasibility once the claim of ownership is established and recognized. If
a person purchases a piece of land on the assurance that the seller's title thereto
is valid, he should not run the risk of being told later that his acquisition was
ineffectual after all. This would not only be unfair to him. What is worse is that
if this were permitted, public confidence in the system would be eroded and land
transactions would have to be attended by complicated and not necessarily
be that land conflicts could be even more numerous and complex than they are
now and possibly also more abrasive, if not even violent. The Government,
recognizing the worthy purposes of the Torrens system, should be the first to
accept the validity of titles issued thereunder once the conditions laid down by
the law are satisfied. 16
Second, the foregoing rule notwithstanding, the non-bank respondents
nevertheless physically inspected the properties and inquired from the register
of Deeds to ascertain the absence of any defect in the title of the property they
were purchasing an exercise of diligence above that required by law.
Thus, respondent Aida Fernando Meeks, who bought Lot 5 for her son Dean,
testified:
Q How did you come to live in Baguio City, particulary in Kim. 2.5 San Luis,
Baguio City?
A In one of my visits to my sister who has been residing here for twelve (12) years
now, I got interested in buying a property here.
Q How did you come to know of this property at Asin Road where you now reside?
A My sister, Ruth Ann Valdez, sir.
Q When this particular property was bought by you, when was that?
A I do not remember the exact date, but it was in 1984, sir.
Q At the time when you went to see the place where you now reside, how did it
look?
A This particular property that I bought was then a small one (1) room structure,
it is a two (2)-storey one (1) bedroom structure.
Q What kind of structure with regards to material?
A It is a semi-concrete structure, sir.
Q And aside from this two (2)-storey one (1)-room structure, how did the
surrounding area look like at the time you visited?
A There were stone walls from the road and there were stone walls in front of the
property and beside the property.
Q At the time you went to see the property with your agent, rather your sister
Ruth Ann Valdez did you come to know the owner?
A We did because at the time we went there, Mr. Alcantara was there supervising
the workers.
Q And who?
A Amado Cruz sir.
Q After you saw this property, what else did you do?
A My first concern then was am I buying a property with a clean title.
Q In regards to this concern of yours, did you find an answer to this concern of
yours?
A At first; I asked Mr. Alcantara and I was answered by him.
Q What was his answer?
A That it was a property with a clean title, that he has shown me the mother title
and it is a clean title.
Q Aside from being informed that it is a property with a clean title, did you do
anything to answer your question?
A Yes, sit.
Q What did you do?
A Well, the first step I did was to go to the Land Registration Office.
Q Are you referring to the City Hall of Baguio?
16
A Yes, the City Hall of Baguio.
Q And what did you do in the Registry of Deeds?
A We looked for the title, the original title, sir.
Q When you say we, who was your companion?
A Mr. Alcantara and my present husband, sir.
Q The three (3) of you?
A Yes, sir.
Q What title did you see there?
A We saw the title that was made up in favor of Amado Cruz, sir.
Q And what was the result of your looking up for this title in the name of Amado
Cruz?
A We had to be reassured that it was a genuine one, so we asked Atty. Diomampo
who heads the office. We showed him a copy of that title and we were also
reassured by him that anything that was signed by him was as good as it is.
Q Did this Atty. Diomampo reassure you that the title was good?
A He did.
Q After your conversation with the Register of Deeds, what did you do?
A The second step we did was to confer with our lawyer, a friend from RCBC
Binondo, Manila this is Atty. Nelson Waje.
Q What is your purpose in going to this lawyer?
A We wanted an assurance that we were getting a valid title just in case we think
of buying the property.
Q What was the result of your conference with this lawyer?
A He was absolutely certain that was a valid title.
Q Mrs. Meeks, after looking at the place, going to the Register of Deeds, looking
at the title and seeing your lawyer friend, what decision did you finally make
regarding the property?
A We wanted more reassurances, so we proceeded to Banaue, as advised by that
same lawyer, there is another office of the Bureau of Lands. I cannot recall the
office but it has something to do with registration of the old.
Q What is your purpose in going to this Office in Banaue?
A I wanted more reassuances that I was getting a valid title.
Q What was the result of your visit to the Banaue Office?
A We found the title of this property and there was reassurance that it was a
clean title and we saw the mother title under the Hilario family.
Q Mrs. Meeks, when you say Banaue, what particular place is this Banaue?
A It is in Banaue Street in Quezon City, sir.
Q And when you saw the title to this property and the mother title, what was the
result of your investigation, the investigation that you made?
A We were reassured that we were purchasing a valid title, we had a genuine
title.
Q When you were able to determine that you had a valid, authentic or genuine
title, what did you do?
A That is when I finally thought of purchasing the property. 17
Telesforo Alfelor II, the purchaser of Lot 4, narrated going through a similar
routine:
Q How did you come to know of this place as Asin Road where you are presently
residing?
A It was actually through Mrs. Flory Recto who is presently the Branch Manager
of CocoBank. She informed my wife that there is a property for sale at Asin Road,
and she was the one who introduced to us Mr. Alcantara, sir.
17
Q When you were informed by Mrs. Recto and when you met with Mr. Alcantara,
did you see the property that was being offered for sale?
A Yes, sir.
Q When did you specifically see the property, if you can recall?
A I would say it is around the third quarter of 1983, sir.
Q When you went to see the place, could you please describe what you saw at
that time?
A When we went there the area is still being developed by Mr. Alcantara. As a
matter of fact the road leading to the property is still not passable considering
that during that time it was rainy season and it was muddy, we fell on our way
going to the property and walked to have an ocular inspection and physical check
on the area, sir.
xxx xxx xxx
Q What was the improvement, if any, that was in that parcel which you are going
to purchase?
A During that time, the riprap of the property is already there, the one-half of the
riprap sir.
Q Do you know who was making this improvement at the time that you went
there?
A I would understand that it was Marcial Alcantara, sir.
Q After you saw the place riprap and you were in the course of deciding to
purchase this property, what else did you do?
A First, I have to consider that the property is clean.
Q How did you go about determining whether the title of the property is clean?
A Considering that Marcial Alcantara is a real estate broker, I went to his office
and checked the documents he has regarding the property.
Q And what was the result of your checking as to whether the title of the property A Dominican Hill, Leonila Hill, Cristal Cave and Asin Road, sir.
is clean?
Q You mentioned Asin Road, what particular place in Asin Road are you
A He showed me the copy of the title and it was clean, sir. referring?

Q Aside from going to Mr. Alcantara to check up the title of the property, what A That property I bought from Emelita Santiago, sir.
else did you do?
Q When you say you bought it from Emelita Santiago, how did you come to know
A Well, the next thing is I requested his wife to accompany me to the Bureau of that Emelita Santiago is disposing of the property?
Lands or rather the Registry of Deeds, sir.
A Because of the father, he is the one who offered me the property, sir, Armando
Q What registry of Deeds are you referring to? Gabriel.

A The Registry of Deeds of Baguio City, sir. Q Is he also a resident of Baguio?

Q And were you able to see the Register of Deeds regarding what you would like A He is from Buyagan, La Trinidad sir,
to know?
Q How did you come to know of this Armando Gabriel wanting to sell a property
A Yes, and we were given a certification regarding this particular area that it was in Asin?
clean, sir.
A He approached me in the house, sir. He has acquired a title from the Traders
Q What Certification are you referring to? Royal Bank.

A It is a Certification duly signed by the employee of the Registry of Deeds Adelina Q Can you inform the Honorable Court when you had this conversation with
Tabangin, sir. Armando Gabriel on the sale of the property at Asin Road?

Q Do you have a copy of that Certification? A Later part of March, 1983, sir.

A Yes, I have, sir. 18 Q Now, when this Armando Gabriel informed you that he wants his property to
be sold, what did you do?
The testimonies of Honorato Santos 19 and Josefina Pe 20 were to the same effect.
A I went to the place with the agent, sir.
The non-bank respondent predecessor-in-interest, Marcial Alcantara, was less
thorough: Q When you say you went to the place with the agent, what place?

Q And will you give a brief description of what you do? A Kilometer 2, Asin Road sir.

A I normally acquire land, quite big tract of land and subdivide it into smaller Q And when you went there to see the place, did you actually go there to see the
lots and sold it to some interested parties. place?

Q Specifically, Mr. Alcantara will you please inform the Court in what place in A By walking, I parked my car a kilometer away, sir.
Baguio have you acquired and subdivided and sold lots?
18
Q Is it my understanding that when you went to see the property there were no Q And what was the result of your talk with Atty. Diomampo?
roads?
A The papers are clean except to the annotation at the back with the road right
A None, sir. of way, sir.

xxx xxx xxx Q After making this investigation with the Register of Deeds and talking with
Atty. Diomampo, what else transpired?
Q Mr. Alcantara, when you went to see this place at Asin Road last week of
March, 1983, will you please briefly describe how this place looked like at that A We bought the property, sir.
time?
Q After purchasing the property from Emelita Santiago, could you please tell the
A The place was mountainous, grassy, there were cogon trees, some of the roads Honorable Court what you did with that deed of sale?
were eroding already, so we cannot possibly enter the property, sir.
A We registered it with the Register of Deeds for the Certificate of Title because
Q At the time you entered the place, was there any visible sign of claim by at that time when we bought the property, Emelita Santiago had it subdivided
anyone? into six (6) lots, sir.

A None, sir. Q Is it our understanding that prior to your purchase the property was
subdivided into six (6) parcels?
Q In terms of fence in the area?
A Yes, sir.
A There is no such, sir.
Q Could you please inform the Honorable Court if you have any buyers in the
xxx xxx xxx subdivision of this property prior to your purchase?

Q Aside from looking or going to the property, what else did you do to this
property prior to your purchase?
A I investigated it with the Register of Deeds, sir.
Q What is your purpose in investigating it with the Register of Deeds?
A To see if the paper in clean and there are no encumbrances, sir.
Q To whom did you talk?
A To Atty. Ernesto Diomampo, sir.
Q And when you went to the Registry of Deeds to investigate and check, did you
have occasion to talk with Atty. Diomampo?
A Yes, I have.
Q This subdivision of this property, to what office was it brought for action?
A Bureau of Lands, San Fernando, La Union, sir.
Q Now, Mr. Alcantara, at the time that you had this property subdivided by the
owner, could you please inform the Court if there was any claim by any other
party opposing the subdivision or claiming the property?
A None, sir.
Q When the Deed of Sale was executed and you said that you presented it to the
Register of Deeds and after the subdivision already, what action did the Register
of Deeds have regarding the matter?

A Yes, sir. A They approved it and registered it already in six (6) titles, sir.
19
Q In whose names?
A One (1) title under my name, Amado Cruz and Dr. Sanchez, sir.
Q Initially, Mr. Alcantara, you said that you are the sole purchaser of this entire
area of One Thousand Five Hundred Ninety One (1,591) Square Meters. Now, you
are informing this Honorable Court that one Amado Cruz and one Dr. Sanchez
were also issued two (2) titles. Could you explain how these titles came into their
possession?
A Actually, two (2) are our co-owners, sir.
Q So, is it our understanding that the Deed of Sale from Emelita Santiago is in
favor of these two (2) Atty. Cruz and Dr. Sanchez?
A Yes, sir. 21
Third, between two innocent persons, the one who made it possible for the wrong
to be done should be the one to bear the resulting loss. 22 The Capays filed the
notice of lis pendens way back on March 17, 1967 but the same was not TRB's
title. The Capays and their counsel Atty. Ramon A. Gonzales knew in 1968 of the
extra-judicial foreclosure sale of the property to TRB and the consolidation of
title in the bank's name following the lapse of the one-year period of redemption.
But in the next fifteen (15) years or so, they did not bother to find out the status
of their title or whether the liens noted on the original certificate of title were still
existing considering that the property had already been foreclosed. In the
meantime, the subject property had undergone a series of transfers to buyers in
good and for value. It was not until after the land was subdivided and developed
with the buyers building their houses on the other lots when the Capays
suddenly appeared and questioned the occupants' titles. At the very least, the
Capays are guilty of laches. Laches has been defined as the failure or neglect, for
an unreasonable and unexplained length of time, to do that which by exercising
due diligence could nor should have been done earlier; it is negligence or
omission to assert a right within a reasonable time, warranting presumption that
the party entitled to it either has abandoned it or declined to assert it. 23
Verily, the principle on prescription of actions is designed to cover situations
such as the case at bar, where there have been a series of transfers to innocent
purchasers for value. To set aside these transactions only to accommodate a
party who has slept on his rights is anathema to good order.
Independently of the principle of prescription of actions working against
petitioners, the doctrine of laches may further be counted against them, which
20
latter tenet finds application even to imprescriptible
actions. . . . 24
In De La Calzada-Cierras vs. Court of Appeals, 25 we held:
While it is true that under the law it is the act of registration of the deed of
conveyance that serves as the operative act to convey the land registered under
the Torrens System (Davao Grains, Inc. vs. Intermediate Appellate Court, 171
SCRA 612), the petitioners cannot invoke said dictum because their action to
recover Lot 4362 is barred by the equitable doctrine of laches.
The act of registering the conveyance to Rosendo was constructive notice to the
whole world of the fact of such conveyance (Heirs of Maria Marasigan vs.
Intermediate Appellate Court, 152 SCRA 253).
But the petitioners' complaint to recover the title and possession of Lot 4362 was
filed only on July 21, 1981, twelve (12) years after the registration of the sale to
Rosendo. The petitioners failed and neglected for an unreasonably long time to
assert their right, if any, to the property in Rosendo's possession.
Being guilty of laches, the Capays cannot invoke the ruling in Villasor vs. Camon
Levin Bass and Director of Lands vs. Reyes 26 to the effect that entry of the notice
of lis pendens in the day book (primary entry book) is sufficient to constitute
registration and such entry is notice to all persons of such adverse claim.
Certainly, it is most iniquitous for the Capays who, after sleeping on their rights
for fifteen years to assert ownership over the property that has undergone several
transfers made in good faith and for value and already subdivided into several
lots with improvements introduced thereon by their owners.
In the same vein, the cases cited by the Capays in their first two (2) assignment
of errors, do not help them any, as the transferees in said cases were not innocent
purchasers for value and in good faith. In Tuazon vs. Reyes and
Siochi, 27 where the land involved therein was sold by Petronilo David to Vicente
Tuazon, it was with a deed containing the recital that the land was in dispute
between the vendor and Roberto Siochi. Tuazon, who was merely subrogated to
the rights of the vendor was aware of the dispute and, furthermore, David did
not warrant the title to the same. In Rivera vs. Moran, 28 Rivera acquired interest
in the land before the final decree was entered in the cadastral proceedings.
Rivera, the transferee, was aware of the pending litigation and, consequently,
could not have been considered a purchaser in good faith. Similarly, in Atun, et
al. vs. Nuez, et al. 29 and Laroza vs. Guia, 30 the buyers of the property at the
time of their acquisition knew of the existence of the notice of lis pendens. In
contrast to the cited cases, the non-bank respondents in the case at bar acquired
their respective portions of the land with clean title from their predecessors-in-
interest.
II
We come now to TRB's liability towards the Capays.
The Bank unconvincingly tries to wash its hands off the present controversy, and
attempts to shift the blame on the Capays, thus:
xxx xxx xxx
23. The petitioner Bank, during all the time that it was holding the title for over
fourteen (14) years that there was no legal impediment for it to sell said property,
Central Bank regulations require that real properties of banks should not he held
for more than five (5) years:
24. The fault of the Register of Deeds in not carrying over the Notice of Lis
Pendens to the new title of the petitioner Bank should not be absorbed by the
latter considering that in all good faith, it was not aware of the existence of said
annotation during all the time that said title was in its possession for almost
fourteen (14) years before the property was sold to Emelita G. Santiago. . . . 31
TRB concludes that "(t)he inaction and negligence of private respondents
allowing ownership to pass for almost 15 years constitute prescription of action
and/or laches." 32
Sec. 25 of the General Banking Act, 33 provides that no bank "shall hold the
possession of any real estate under mortgage or trust, deed, or the title and
possession of any real estate purchased to secure any debt due to it, for a longer
period than five years." TRB, however, admits hoding on to the foreclosed
property for twelve (12) years after consolidating title in its name. The bank is,
therefore, estopped from involving banking laws and regulations to justify its
belated disposition of the property. It cannot be allowed to hide behind the law
which it itself violated.
TRB cannot feign ignorance of the existence of the lis pendens because when the
property was foreclosed by it, the notice of lis pendens was annotated on the title.
But when TCT No. T-6595 in the name of the Capay spouses was cancelled after
the foreclosure, TCT No. T-16272 which was issued in place thereof in the name
of TRB did not carry over the notice of lis pendens.
21
We do not find the Capays guilty of "inaction and negligence" as against TRB. It
may be recalled that upon the commencement of foreclosure proceedings by TRB,
the Capays filed an action for prohibition on September 22, 1966 against the
TRB before the CFI to stop the foreclosure sale. Failing in that attempt, the
Capays filed a supplemental complaint for the recovery of the property. The case
reached this Court. Prescription or laches could not have worked against the
Capays because they had persistently pursued their suit against TRB to recover
their property.
On the other hand, it is difficult to believe TRB's assertion that after holding on
to the property for more than ten (10) years, it suddenly realized that it was
acting in violation of the General Bank Act. What is apparent is that TRB took
advantage of the absence of the notice of lis pendens at the back of their
certificate of title and sold the property to an unwary purchaser. This
notwithstanding the adverse decision of the trial court and the pendency of its
appeal. TRB, whose timing indeed smacks of bad faith, thus transferred caused
the property without the lis pendens annotated on its title to put it beyond the
Capays' reach. Clearly, the bank acted in a manner contrary to morals, good
customs and public policy and should be held liable for damages. 34
Considering however, that the mortgage in favor of TRB had been declared null
and void for want of consideration and, consequently, the foreclosure
proceedings did not have a valid effect, the Capays would ordinarily be entitled
to the recovery of their property. Nevertheless, this remedy is not now available
to the Capays inasmuch as title to said property has passed into the hands of
third parties who acquired the same in good faith and for value. Such being the
case, TRB is duty bound to pay the Capays the fair market value of the property
at the time it was sold to Emelita Santiago, the transferee of TRB.
WHEREFORE, the Decision of the Court of Appeals dated Frebruary 24, 1994 in
CA-G.R. CV No. 33920, as modified by its Resolution dated August 10, 1994 is
hereby AFFIRMED. In addition, Traders Royal Bank is ordered to pay the Capays
the fair market value of the property at the time it was sold to Emelita Santiago.
This Decision is without prejudice to whatever criminal, civil or administrative
action against the Register of Deeds and or his assistants that may be taken by
the party or parties prejudiced by the failure of the former to carry over the notice
of lis pendens to the certificate of title in the name of TRB.
SO ORDERED.
Republic of the Philippines
SUPREME COURT
Manila
FIRST DIVISION
G.R. No. 183448 June 30, 2014
SPOUSES DOMINADOR PERALTA AND OFELIA PERALTA, Petitioners,
vs.
HEIRS OF BERNARDINA ABALON, represented by MANSUETO ABALON,
Respondents.
x-----------------------x
G.R. No. 183464
HEIRS OF BERNARDINA ABALON, represented by MANSUETO ABALON,
Petitioners,
vs.
MARISSA ANDAL, LEONIL AND AL, ARNEL AND AL, SPOUSES DOMINDOR
PERALTA AND OFELIA PERALTA, and HEIRS of RESTITUTO RELLAMA,
represented by his children ALEX, IMMANUEL, JULIUS and SYLVIA, all
surnamed RELLAMA.
DECISION
SERENO, CJ:
Before us are the consolidated Petitions for Review on Certiorari under Rule 45
of the Rules of Court assailing the 30 May 2007 Decision1 of the Court of Appeals
(CA) Seventeenth Division in CA-G.R. CV No. 85542. The CA had reversed the 14
April 2005 Decision2 of the Regional Trial Court (RTC), Fifth Judicial Region of
Legaspi City, Branch 5, in Civil Case No. 9243.
The civil case before the RTC of Legaspi City involved a parcel of land registered
under the name of Bernardina Abalon and fraudulently transferred to Restituto
Rellama and who, in turn, subdivided the subject property and sold it separately
to the other parties to this case Spouses Dominador and Ofelia Peralta; and
Marissa, Leonil and Arnel, all surnamed Andal. Thereafter, Spouses Peralta and
the Andals individually registered the respective portions of the land they had
bought under their names. The heirs of Bernardina were claiming back the land,
alleging that since it was sold under fraudulent circumstances, no valid title
passed to the buyers. On the other hand, the buyers, who were now title holders
22
of the subject parcel of land, averred that they were buyers in good faith and
sought the protection accorded to them under the law.
THE FACTS
The RTC and the CA have the same findings of fact, but differ in their legal
conclusions. There being no factual issues raised in the Petitions, we adopt the
findings of fact of the CA in CA-G.R. No. 85542, as follows:
The subject parcel of land, described as Lot 1679 of the Cadastral Survey of
Legaspi, consisting of 8,571 square meters, was originally covered by Original
Certificate of Title (OCT) No. (O) 16 and registered in the name of Bernardina
Abalon (Abalon). It appears that a Deed of Absolute Sale was executed over the
subject property in favor of Restituto M. Rellama (Rellama) on June 10, 1975. By
virtue of such conveyance OCT No. (O) 16 was cancelled and in lieu thereof
Transfer Certificate of Title (TCT) No. 42108 was issued in the name of Rellama.
The subject property was then subdivided into three (3) portions: Lot 1679-A, Lot
1679-B, Lot 1679-C. Lot 1679-A was sold to Spouses Dominador P. Peralta, Jr.
and Ofelia M. Peralta (Spouses Peralta) for which reason TCT No. 42254 was
issued in their names. Lot 1679-B, on the other hand, was first sold to Eduardo
Lotivio (Lotivio) who thereafter transferred his ownership thereto to Marissa
Andal, Arnel Andal, and Leonil Andal (the Andals) through a Deed of Absolute
Sale dated October 9, 1995. On even date, TCT No. 42482 was issued in the
name of the Andals. The Andals likewise acquired Lot 1679-C as evidenced by
the issuance of TCT No. 42821 in their favor on December 27, 1995.
Claiming that the Deed of Absolute Sale executed by Abalon in favor of Rellama
was a forged document, and claiming further that they acquired the subject
property by succession, they being the nephew and niece of Abalon who died
without issue, plaintiff-appellees Mansueta Abalon and Amelia Abalon filed the
case below against Rellama, Spouses Peralta, and the Andals, the herein
defendants-appellants and the Bank of the Philippines [sic] Islands which was
later dropped as a party defendant.
It was alleged in their Complaint and subsequent Amended Complaint, under
five separate causes of action, that Rellama was able to cause the cancellation of
OCT No. (O) 16, and in lieu thereof the issuance of TCT No. 42108 in his own
name from which the defendants-appellants derived their own titles, upon
presentation of a xerox copy of the alleged forged deed of absolute sale and the
order granting the issuance of a second owners duplicate copy of OCT No. (O)
16 in his favor in Miscellaneous Cadastral Case No. 10648, which he had filed
on the pretext that Lot 1679 covered by OCT No. (O) 16 was sold to him and that
the owners duplicate copy of the said title got lost in 1976 after the same was
delivered to him. They averred that the owners duplicate copy of Oct NO. (O) 16
had always been with Abalon and that upon her death, it was delivered to them.
Likewise, they alleged that Abalon had always been in possession of the subject
property through her tenant Pedro Bellen who was thereafter succeeded by his
wife, Ruperta Bellen, and then his son, Godofredo Bellen. On the other hand,
they said that Rellama had never set foot on the land he was claiming. They
further alleged that after the ownership over the subject property was transferred
to them upon the death of Abalon, they took possession thereof and retained
Godofredo as their own tenant. However, they averred that in 1995 the
defendants-appellants were able to wrest possession of the subject property from
Godofredo Bellen. They alleged that the defendants-appellants are not buyers in
good faith as they were aware that the subject land was in the possession of the
plaintiffs-appellees at the time they made the purchase. They thus claim that the
titles issued to the defendants-appellants are null and void.
In his answer, Rellama alleged that the deed of absolute sale executed by Abalon
is genuine and that the duplicate copy of OCT No. (O) 16 had been delivered to
him upon the execution of the said deed of transfer.
As for Spouses Peralta and the Andals, who filed their separate answers to the
complaint, they mainly alleged that they are buyers in good faith and for value.
During the trial, Rellama passed away. He was substituted by his heirs.
After the plaintiffs-appellees rested their case, instead of presenting their own
evidence, the defendants-appellants and the Heirs of Restituto Rellama, on
different occasions, filed a demurrer to evidence.
On April 14, 2005, the court a quo rendered judgment in favor of the plaintiffs-
appellees and ordered the restoration of OCT No. (O) 16 in the name of Abalon
and the cancellation of the titles issued to the defendants-appellants. The fact
that only a xerox copy of the purported deed of sale between Rellama and Abalon
was presented before the Register of Deeds for registration and the absence of
such xerox copy on the official files of the said Office made the court a quo
conclude that the said document was a mere forgery. On the other hand, the
court a quo noted that the duplicate copy of OCT No. (O) 16 in the hands of the
plaintiffs-appellees bears [sic] the perforated serial number B 221377, which it
held is a convincing proof of its authenticity and genuineness. It thus stated that
"Miscellaneous Cadastral Case No. 10648 is a (mere) strategem [sic] fraudulently
concocted ... for the issuance of a fabricated (second) owners duplicate certificate
of Oct No. (O) 16" since the owners duplicate copy of OCT No. (O) 16 has not
been lost at all. It said that any subsequent registration procured by the
presentation of such forged instrument is null and void. The dispositive portion
23
of the court a quos decision reads: WHEREFORE, [p]remises [c]onsidered,
judgment is rendered as follows, to wit:
1. Ordering the restoration of Original Certificate of Title No. (O) 16 embracing
Lot 1679 in the name of Bernardina Abalon into the official files of the Registry
of Deeds of Legaspi City a copy of the owners duplicate certificate embodying
the technical description of Lot 1679 forming official part of the record as Exhibit
"D" as well as ordering the cancellation of any and all transfer certificates of
title succeeding Original Certificate of title No. (O) 16 including Transfer
Certificates (sic) of Title Nos. 42108, 42254, 42255, 42256, 42821 [,] and 42482;
2. Ordering the defendants Marissa Andal, Leonil Andal, Arnel Andal[,] and the
spouses Dominador and Ofelia Peralta to vacate Lot 1679 and to peacefully
surrender such lot to the plaintiffs;
3. Ordering the defendants to pay the plaintiffs the amount of 50,000.00 as
litigation expenses; and
4. Ordering the defendants to pay the costs of suit.
The counterclaims by [sic] the defendants are all dismissed.
SO ORDERED.
Spouses Peralta and the Andals filed their separate Notices of Appeal and
thereafter, upon approval, filed their respective Defendants-Appellants Briefs.
The Heirs of Rellama, on the other hand, opted not to challenge the ruling of the
lower court.3
The Andals and Spouses Peralta appellants in CA-G.R. CV No. 85542 raised
several issues, which the CA summarized as follows:
1. Whether the Deed of Absolute Sale executed by Abalon in favor of Rellama was
spurious
2. Whether the Andals and Spouses Peralta were buyers in good faith and for
value
3. Who among the parties were entitled to their claims for damages.4
THE RULING OF THE COURT OF APPEALS
On 30 May 2007, the Seventeenth Division of the Court of Appeals promulgated
its assailed judgment setting aside the RTC Decision. The CA ruled that the
circumstances surrounding the sale of the subject property showed badges of
fraud or forgery against Rellama. It found that Abalon had not parted with her
ownership over the subject property despite the claim of Rellama that they both
executed a Deed of Absolute Sale. As proof, the CA pointed out the existence of
a notarized contract of leasehold executed by Abalon with Ruperta Bellen on 11
June 1976. The genuineness and due execution of the said leasehold agreement
was uncontroverted by the parties. On this basis, the appellate court concluded
that Abalon could not have leased the subject parcel of land to Bellen if the
former had parted with her ownership thereof.5
The CA also found no evidence to show that Rellama exercised dominion over the
subject property, because he had not introduced improvements on the property,
despite claiming to have acquired it in 1975.6 Further, the CA noted that he did
not cause the annotation of the Deed of Sale, which he had executed with Abalon,
on OCT No. (O) 16. It observed that when the original copy of OCT No. (O) 16 was
allegedly lost in 1976, while Rellama was on his way to Legaspi City to register
the title to his name, it took him almost 20 years to take steps to judicially
reconstitute a copy thereof. To the appellate court, these circumstances cast
doubt on the veracity of Rellamas claim of ownership over such a significant
property, which was almost a hectare.7
The CA also ruled that the heirs of Bernardina Abalon had the legal standing to
question the sale transaction between Rellama and their predecessor-in-interest.
It concluded that the heirs of Abalon had acquired the subject property by
ordinary acquisitive prescription and thus had every right to attack every
document that intended to divest them of ownership thereof,8 which in this case
was the Deed of Sale that Bernardina executed in favor of Rellama. Lastly, the
appellate court considered the Spouses Peralta as buyers in bad faith for relying
on a mere photocopy of TCT No. 42108 when they bought the property from
Rellama.9 On the other hand, it accorded the Andals the presumption of good
faith, finding no evidence that would rebut this presumption.10
The dispositive portion of the assailed CA Decision in CA-G.R. CV No. 85542 is
as follows:
WHEREFORE, the assailed decision is SET ASIDE and a new judgment is
rendered as follows:
1. Transfer Certificate of Title No. 42482 and Transfer Certificate of Title No.
42821, both in the names of Andals, are held legal and valid.
2. Transfer Certificate of Title No. 42254 registered in the names of Spouses
Peralta is cancelled for being null and void. Hence, they are ordered to vacate the
land covered thereby and to surrender possession thereof in favor of the
plaintiffs-appellees.
24
SO ORDERED.11
The heirs of Abalon filed a Motion for Reconsideration of the 30 May 2007
Decision, insofar as the CA declared the Andals to be buyers in good faith of the
subject property and, thus, that the land title issued in their favor was valid.
Spouses Peralta, for their part, filed a Motion for Partial Reconsideration of the
said CA Decision pertaining to the portion that declared them as buyers in bad
faith which accordingly nullified the title issued to them.
On 10 June 2008, the CA denied the Motions for Partial Reconsideration of the
movants for lack of merit.12
On 11 August 2008, Spouses Peralta filed with this Court a Petition for Review
under Rule 45 of the Rules of Court assailing the 30 May 2007 Decision in CA-
G.R. CV No. 85542.13 On the same day, the heirs of Bernardina Abalon,
represented by Mansueto Abalon, filed a similar Petition questioning the portion
of the mentioned CA Decision declaring the validity of the title issued to the
Andals, who were adjudged by the appellate court as buyers in good faith.14 THE
ISSUES
The Petition filed by Spouses Peralta, docketed as G.R. No. 183448, lists the
following issues:
a) The case for annulment should have been dismissed because the purported
Deed of Sale executed by Abalon and Rellama was not introduced in evidence
and thus, forgery was not proven.
b) The heirs of Abalon are notforced heirs of Bernardina Abalon; hence, they do
not have the legal personality to file the action to annul the subject Deed of Sale.
c) The heirs of Abalon failed to prove that they had inherited the subject property.
d) Spouses Peralta are buyers in good faith and, thus title to their portion of the
subject property must be upheld15
As for the heirs of Abalon, their Petition, docketed as G.R. No. 183464, raises the
following issues:
a) The Andals cannot be considered as buyers in good faith by simply applying
the ordinary presumption in the absence of evidence showing the contrary.
b) The CA erred in applying in favor of the Andals, the doctrine that a forged
instrument may become the root of a valid title in the hands of an innocent
purchaser for value, because Abalon never parted with her possession of the
valid and uncancelled title over the subject property
c) The CA erred in declaring the validity of the title issued in the names of the
Andals, because Rellama was bereft of any transmissible right over the portion
of the property he had sold to them.16
THE COURTS RULING
We deny the Petitions and affirm the ruling of the CA.
The main issue to be resolved in this case is whether a forged instrument may
become the root of a valid title in the hands of an innocent purchaser for value,
even if the true owner thereof has been in possession of the genuine title, which
is valid and has not been cancelled.
It is well-settled 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. The real purpose of the Torrens system of land registration is to
quiet title to land and put a stop forever to any question as to the legality of the
title."17
In Tenio-Obsequio v. Court of Appeals,18 we explained the purpose of the
Torrens system and its legal implications to third persons dealing with registered
land, as follows:
The main purpose of the Torrens system is to avoid possible conflicts of title to
real estate and to facilitate transactions relative thereto by giving the public the
right to rely upon the face of a Torrens certificate of title and to dispense with the
need of inquiring further, except when the party concerned has actual knowledge
of facts and circumstances that should impel a reasonably cautious man to make
such further inquiry. Where innocent third persons, relying on the correctness
of the certificate of title thus issued, acquire rights over the property, the court
cannot disregard such rights and order the total cancellation of the certificate.
The effect of such an outright cancellation would be to impair public confidence
in the certificate of title, for everyone dealing with property registered under the
Torrens system would have to inquire in every instance as to whether the title
has been regularly or irregularly issued by the court. Every person dealing with
registered land may safely rely on the correctness of the certificate of title issued
therefor and the law will in no way oblige him to go beyond the certificate to
determine the condition of the property.
The Torrens system was adopted in this country because it was believed to be
the most effective measure to guarantee the integrity of land titles and to protect
their indefeasibility once the claim of ownership is established and recognized. If
a person purchases a piece of land on the assurance that the seller's title thereto
is valid, he should not run the risk of being told later that his acquisition was
25
ineffectual after all. This would not only be unfair to him. What is worse is that
if this were permitted, public confidence in the system would be eroded and land
transactions would have to be attended by complicated and not necessarily
conclusive investigations and proof of ownership. The further consequence would
be that land conflicts could be even more numerous and complex than they are
now and possibly also more abrasive, if not even violent. The Government,
recognizing the worthy purposes of the Torrens system, should be the first to
accept the validity of titles issued thereunder once the conditions laid down by
the law are satisfied.
The Torrens system was intended to guarantee the integrity and conclusiveness
of the certificate of registration, but the system cannot be used for the
perpetration of fraud against the real owner of the registered land. The system
merely confirms ownership and does not create it. It cannot be used to divest
lawful owners of their title for the purpose of transferring it to another one who
has not acquired it by any of the modes allowed or recognized by law. Thus, the
Torrens system cannot be used to protect a usurper from the true owner or to
shield the commission of fraud or to enrich oneself at the expense of another.19
It is well-established in our laws and jurisprudence that a person who is dealing
with a registered parcel of land need not go beyond the face of the title. A person
is only charged with notice of the burdens and claims that are annotated on the
title.20 This rule, however, admits of exceptions, which we explained in Clemente
v. Razo:21
Any buyer or mortgagee of realty covered by a Torrens certificate of title, in the
absence of any suspicion, is not obligated to look beyond the certificate to
investigate the titles of the seller appearing on the face of the certificate. And, he
is charged with notice only of such burdens and claims as are annotated on the
title.
We do acknowledge that the rule thus enunciated is not cast in stone. For,
indeed, there are exceptions thereto. Thus, in Sandoval vs. CA, we made clear
the following:
The aforesaid principle admits of an unchallenged exception: that 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 ofa
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.22
Thus, the determination whether one is a buyer in good faith or can be
considered an innocent purchaser for value becomes imperative. Section 55 of
the Land Registration Act provides protection to an innocent purchaser for
value23 by allowing him to retain the parcel of land bought and his title is
considered valid. Otherwise, the title would be cancelled and the original owner
of the parcel of land is allowed to repossess it.
Jurisprudence has defined an innocent purchaser for value as one who buys the
property of another without notice that some other person has a right to or
interest therein and who then pays a full and fair price for it at the time of the
purchase or before receiving a notice of the claim or interest of some other
persons in the property. Buyers in good faith buy a property with the belief that
the person from whom they receive the thing is the owner who can convey title
to the property. Such buyers do not close their eyes to facts that should put a
reasonable person on guard and still claim that they are acting in good faith.24
The assailed Decision of the CA held that the Andals were buyers in good faith,
while Spouses Peralta were not. Despite its determination that fraud marred the
sale between Bernardina Abalon and Rellama, a fraudulent or forged document
of sale may still give rise to a valid title. The appellate court reasoned that if the
certificate of title had already been transferred from the name of the true owner
to that which was indicated by the forger and remained as such, the land is
considered to have been subsequently sold to an innocent purchaser, whose title
is thus considered valid.25 The CA concluded that this was the case for the
Andals.
The appellate court cited Fule v. Legare26 as basis for its ruling. In the said case,
the Court made an exception to the general rule that a forged or fraudulent deed
is a nullity and conveys no title. A fraudulent document may then become the
root of a valid title, as it held in Fule:
Although the deed of sale in favor of John W. Legare was fraudulent, the fact
remains that he was able to secure a registered title to the house and lot. It was
this title which he subsequently conveyed to the herein petitioners. We have
indeed ruled that a forged or fraudulent deed is a nullity and conveys no title
(Director of Lands vs. Addison, 49 Phil., 19). However, we have also laid down
the doctrine that there are instances when such a fraudulent document may
become the root of a valid title. One such instance is where the certificate of title
26
was already transferred from the name of the true owner to the forger, and while
it remained that way, the land was subsequently sold to an innocent purchaser.
For then, the vendee had the right to rely upon what appeared in the certificate
(Inquimboy vs. Cruz, G.R. No. L-13953, July 28, 1960).
We have been constrained to adopt the conclusion here set forth because under
the Torrens system, "registration is the operative act that gives validity to the
transfer or creates a lien upon the land (Secs. 50 and 51, Land Registration Act).
Consequently, where there was nothing in the certificate of title to indicate any
cloud or vice in the ownership of the property, or any encumbrance thereon, the
purchaser is not required to explore farther than what the Torrens title upon its
face indicates in quest for any hidden defect or inchoate right that may
subsequently defeat his right thereto. If the rule were otherwise, the efficacy and
conclusiveness of the certificate of title which the Torrens system seeks to insure
would entirely be futile and nugatory. (Reynes vs. Barrera, 68 Phil., 656; De Lara
and De Guzman vs. Ayroso, 50 O.G. No 10, 4838). The public shall then be
denied of its foremost motivation for respecting and observing the Land
Registration Act. In the end, the business community stands to be
inconvenienced and prejudiced immeasurably.
Furthermore, when the Register of Deeds issued a certificate of title in the name
of John W. Legare, and thereafter registered the same, John W. Legare, insofar
as third parties were concerned, acquired valid title to the house and lot here
disputed. When, therefore, he transferred this title to the herein petitioners, third
persons, the entire transaction fell within the purview of Article 1434 of the Civil
Code. The registration in John W. Legare's name effectively operated to convey
the properties to him.
After executing the Deed of Sale with Bernardina Abalon under fraudulent
circumstances, Rellama succeeded in obtaining a title in his name and selling a
portion of the property to the Andals, who had no knowledge of the fraudulent
circumstances involving the transfer from Abalon to Rellama. In fact, the
Decisions of the RTC and the CA show no factual findings or proof that would
rebut the presumption in favor of the Andals as buyers in good faith. Thus, the
CA correctly considered them as buyers in good faith and upheld their title.
The Abalons counter this ruling and allege that the CA erred in relying on Fuleto
justify its assailed Decision. They argue that Torres v. Court of Appeals27 is the
applicable ruling, because the facts therein are on all fours with the instant
case.28
In Torres, the subject property was covered by TCT No. 53628 registered in the
name of Mariano Torres. His brother-in-law Francisco Fernandez,
misrepresenting that the copy of the title had been lost, succeeded in obtaining
a court Order for the issuance of another copy of TCT No. 53628. He then forged
a simulated deed of sale purportedly showing that Torres had sold the property
to him and caused the cancellation of TCT No. 53628, as well as the issuance of
TCT No. 86018 in his name. Soon, Fernandez mortgaged the property to Mota.
Upon learning of the fraud committed by Fernandez, Torres caused the
annotation of an adverse claim on the formers copy and succeeded in having
Fernandezs title declared null and void. Meanwhile, Mota was able to foreclose
on Fernandezs real estate mortgage, as well as to cause the cancellation of TCT
No. 86018 and the issuance of a new one TCT No. 105953 in her name. The
issue to be resolved in Torres was whether Mota can be considered an innocent
mortgagee for value, and whether her title can be deemed valid. Ruling in the
negative, the Court explained:
There is nothing on the records which shows that Torres performed any act or
omission which could have jeopardized his peaceful dominion over his realties.
The decision under review, however, in considering Mota an innocent mortgagee
protected under Section 65 of the Land Registration Law, held that Torres was
bound by the mortgage. Inevitably, it pronounced that the foreclosure sale, where
Mota was the highest bidder, also bound Torres and concluded that the
certificate of title issued in the name of Mota prevails over that of Torres'. As
correctly pointed out by Torres, however, his properties were sold on execution,
and not on foreclosure sale, and hence, the purchaser thereof was bound by his
notice of adverse claim and lis pendens annotated at the back of Fernandez' TCT.
Moreover, even if We grant Mota the status of an innocent mortgagee, the
doctrine relied upon by the appellate court that a forged instrument may become
the root of a valid title, cannot be applied where the owner still holds a valid and
existing certificate of title covering the same interest in a realty. The doctrine
would apply rather when, as in the cases for example of De la Cruz v. Fabie, 35
Phil. 144 [1916], Fule v. De Legare, No. L-17951, February 28, 1963, 7 SCRA
351, and Republic v. Umali, G.R. No. 80687, April 10, 1989, the forger thru
insidious means obtains the owners duplicate certificate of title, converts it in
his name, and subsequently sells or otherwise encumbers it to an innocent
holder for value, for in such a case the new certificate is binding upon the owner
(Sec.55, Act 496; Sec. 53, P.D. No. 1529). But if the owner holds a valid and
existing certificate of title, his would be indefeasible as against the whole world,
and not that of the innocent holder's. "Prior tempore potior jure" as We have said
in Register of Deeds v. Philippine National Bank, No. L-17641, January 30, 1965,
13 SCRA 46, citing Legarda v. Saleeby, 31 Phil.590, Roman Catholic Bishop v.
Philippine Railway, 49 Phil. 546, Reyes v. Borbon, 50 Phil. 791.29 (Emphasis
and underscoring supplied)
27
We do not agree with the contention of the Abalons that the ruling in Torresis
controlling in this case. They quoted a portion in the said case that is clearly an
obiter. In Torres, it was shown that Mariano had annotated an adverse claim on
the title procured by Fernandez prior to the execution sale, in which Mota was
the highest bidder. This Court declared her as a mortgagee in bad faith because,
at the back of Fernandezs title, Torres made an annotation of the adverse claim
and the notice of lis pendens. The annotation of the adverse claim was made
while the forged document was still in the name of the forger, who in this case is
Fernandez. That situation does not obtain in the instant case.
The records of the RTC and the CA have a finding that when Rellama sold the
properties to the Andals, it was still in his name; and there was no annotation
that would blight his clean title. To the Andals, there was no doubt that Rellama
was the owner of the property being sold to them, and that he had transmissible
rights of ownership over the said property. Thus, they had every right to rely on
the face of his title alone.
The established rule is that a forged deed is generally null and cannot convey
title, the exception thereto, pursuant to Section 55 of the Land Registration Act,
denotes the registration of titles from the forger to the innocent purchaser for
value. Thus, the qualifying point here is that there must be a complete chain of
registered titles.30 This means that all the transfers starting from the original
rightful owner to the innocent holder for value and that includes the transfer
to the forger must be duly registered, and the title must be properly issued to
the transferee. Contrary to what the Abalons would like to impress on us,
Fuleand Torresdo not present clashing views. In Fule, the original owner
relinquished physical possession of her title and thus enabled the perpetrator to
commit the fraud, which resulted in the cancellation of her title and the issuance
of a new one. The forged instrument eventually became the root of a valid title in
the hands of an innocent purchaser for value. The new title under the name of
the forger was registered and relied upon by the innocent purchaser for value.
Hence, it was clear that there was a complete chain of registered titles.
On the other hand in Torres, the original owner retained possession of the title,
but through fraud, his brother-in-law secured a court order for the issuance of
a copy thereof. While the title was in the name of the forger, the original owner
annotated the adverse claim on the forged instrument. Thus, before the new title
in the name of the forger could be transferred to a third person, a lien had already
been annotated on its back. The chain of registered titles was broken and sullied
by the original owners annotation of the adverse claim. By this act, the
mortgagee was shown to be in bad faith.
In the instant case, there is no evidence that the chain of registered titles was
broken in the case of the Andals. Neither were they proven to have knowledge of
anything that would make them suspicious of the nature of Rellamas ownership
over the subject parcel of land. Hence, we sustain the CAs ruling that the Andals
were buyers in good faith. Consequently, the validity of their title to the parcel of
the land bought from Rellama must be upheld.
As for Spouses Peralta, we sustain the ruling of the CA that they are indeed
buyers in bad faith. The appellate court made a factual finding that in purchasing
the subject property, they merely relied on the photocopy of the title provided by
Rellama. The CA concluded that a mere photocopy of the title should have made
Spouses Peralta suspicious that there was some flaw in the title of Rellama,
because he was not in possession of the original copy. This factual finding was
supported by evidence.
The CA pointed out Spouses Peraltas Answer to the Complaint of the Abalons in
Case No. 9243 in the RTC of Legaspi City, Branch 5. In their Answer, they
specifically alleged as follows:
2- These defendants [Spouses Peralta] acquired lot No. 1679-A by purchase in
good faith and for value from Restituto Rellama under Doc. No. 11212, page No.
26, Book No. 60, Series of 1996 of Notary Public Atty. Otilio Bongon, Legaspi City
on March 2, 1995 copy of which is attached as and made part of this answer as
Exhibit "1;"
3- That these defendants were handed over by Rellama xerox [sic] copy of the
Transfer Certificate of Title No. 42103 issued by the Register of Deed of Legaspi
City on the 2nd day of August 1995 copy attached and made integral part as
Exhibit "1-A" and also Original Certificate of Title No. (O) 16 as Exhibit "1-B"31
We have no reason to disturb this factual finding of the CA because it is
supported by the evidence on record. Spouses Peralta filed a Petition for Review
on Certiorari under Rule 45, which allows only questions of law to be raised. It
is a settled rule that questions of fact are not reviewable in this kind of appeal.
Under Rule 45, Section 1, "petitions for review on certiorari shall raise only
questions of law which must be distinctly set forth."32 A question of fact arises
when there is "as to the truth or falsehood of facts or when there is a need to
calibrate the whole evidence considering mainly the credibility of the witnesses,
the existence and relevancy of specific surrounding circumstances, as well as
their relation to each other and to the whole, and the probability of the
situation."33 It is further pointed out that "the determination of whether one is
a buyer in good faith is a factual issue, which generally is outside the province
of this Court to determine in a petition for review."34
28
Whether or not Spouses Peralta are buyers in good faith, is without a doubt, a
factual issue. Although this rule admits of exceptions,35 none of these applies
to their case. There is no conflict between the factual findings and legal
conclusions of the RTC and those of the CA, both of which found them to be
buyers in bad faith. The fact that they did not participate in the proceedings
before the lower court does not help their case either.
On the issue of the legal standing of the Abalons to file this case, we find that
the CA correctly upheld their standing as heirs of the deceased Bernardina
Abalon. The appellate court ruled that during her lifetime, Bernardina Abalon
had promised her heirs - siblings Mansueto and Amelia - that she would give
them the subject property. A duplicate copy of OCT No. (0) 16 was delivered to
them upon her death. Thus, the CA concluded that the two siblings acquired the
subject property by ordinary prescription. Further, it deduced that the mode of
transmission of the property from Bernardina to her nephew and niece was a
form of donation mortis causa, though without the benefit of a will.36 Despite
this omission, it still held that Mansueto and Amelia acquired the subject
property through ordinary acquisitive prescription because, since the death of
their aunt Bernardina, they had been in possession of the property for more than
10 years that ripened into full ownership.37
Under Article 97538 of the Civil Code, siblings Mansueto and Amelia Abalon are
the legal heirs of Bernardina, the latter having had no issue during her marriage.
As such, they succeeded to her estate when she passed away. While we agree
with the CA that the donation mortis causa was invalid in the absence of a will,
it erred in concluding that the heirs acquired the subject property through
ordinary acquisitive prescription. The subject parcel of land is a titled property;
thus, acquisitive prescription is not applicable.39 Upon the death of Bernardina,
Mansueto and Amelia, being her legal heirs, acquired the subject property by
virtue of succession, and not by ordinary acquisitive prescription.
WHEREFORE, the petitions in G.R. Nos. 183448 and 183464 are DENIED for
lack of merit. The Decision in CA-G.R. CV No. 85542 is hereby AFFIRMED.
SO ORDERED.
Republic of the Philippines
SUPREME COURT
Manila
THIRD DIVISION
G.R. No. 202414 June 4, 2014
JOSEPHINE WEE, Petitioner,
vs.
FELICIDAD MARDO, Respondent.
DECISION
MENDOZA, J.:
This is a petition for review on certiorari under Rule 45 assailing the June 26,
2012 Decision of the Court of Appeals (CA), which reversed and set aside the
September 4, 2009 Decision of the Regional Trial Court, Branch XVIII, Tagaytay
City, Cavite (RTC), granting petitioner's "Application for Registration of Title."
Factual and Procedural Antecedents:
Respondent Felicidad Gonzales, married to Leopoldo Mardo, was granted a
registered Free Patent No. (IV-2) 15284, dated April 26, 1979, covering Lot No.
8348, situated in Puting Kahoy, Silang, Cavite.
On February 1, 1993, respondent allegedly conveyed to petitioner, Josephine
Wee, through a Deed of Absolute Sale,1 a portion of Lot No. 8348 known as Lot
No. 8348-B, for a consideration of 250,000.00 which was fully paid.
Respondent, however, refused to vacate and turn over the subject property
claiming that the alleged sale was falsified.
On December 22, 1994, petitioner filed an Application for Original Registration
of a parcel of land located at Barangay Putting Kahoy, Silang, Cavite, known as
Lot No. 8349. Said application was amended on September 19, 1996, this time
covering a parcel of land known as Lot 8348-B situated in Barangay Puting
Kahoy, Silang, Cavite. Petitioner claimed that she is the owner of the said
unregistered land by virtue of a deed of absolute sale.
On September 19, 1997, respondent filed her Opposition to the Amended
Application alleging 1] that she is the true and lawful owner of the parcel of land
which is the subject of the amended application; and 2] that petitioners deed of
absolute sale is surreptitious.
29
On October 28, 2000, respondent filed a Motion to Dismiss the Application
alleging that the land described in the application was different from the land
being claimed for titling. The motion was, however, denied. A motion for
reconsideration and second urgent motion for reconsideration were subsequently
filed by respondent, but both were denied by the RTC.
Thereafter, petitioner completed her presentation of evidence and filed a formal
offer which was admitted by the RTC.
On June 10, 2003, during the pendency of the case, respondent managed to
register the land in her name under Original Certificate of Title (OCT) No. OP-
1840. Petitioner filed a Notice of Lis Pendens with the Registry of Deeds of Cavite
on May 10, 2005 which was annotated on the title. A "Motion for Leave to File
Supplemental Pleading and to Admit Attached Supplemental Complaint for
Reconveyance" was filed by petitioner which was denied by the RTC on the
ground that a motion for reconveyance was different from an application for
registration of title.
Consequently, respondent presented her own evidence, through the testimony of
her counsel, who testified that the parcel of land subject of the application for
registration was the property she bought ten (10) years ago. Respondent,
however, did not state from whom she bought it. As proof of her alleged
ownership, she presented copies of tax declarations in the absence of any deed
of sale in her favor.
On September 4, 2009, the RTC rendered a Decision2 granting the application
of petitioner. The dispositive portion of said decision reads:
WHEREFORE, judgment is hereby rendered granting the applicant, Josephine
Wee, as qualified to register the subject land in her name, and the Administrator
of LRA is hereby directed to issue the corresponding decree in her name based
on the plan and technical description of said land as submitted by the applicant
and the Register of Deeds of the Province of Cavite to issue title in her name.
SO ORDERED.
A motion for reconsideration was filed by respondent which was denied by the
RTC. Hence, respondent appealed the decision before the CA, which case was
docketed as CA-G.R. CV No. 96934.
On June 26, 2012, the CA handed down a Judgment3 reversing and setting aside
the RTC decision. The decretal portion of the CA decision reads:
WHEREFORE, the appeal is GRANTED. The Decision, dated September 4, 2009,
of the Regional Trial Court (Branch XVIII) of Tagaytay City, Cavite, in LRC No.
TG-647 is SET ASIDE.
Accordingly, applicant-appellees Application for Original Registration of a parcel
of land located at Barangay Putting Kahoy, Silang Cavite, known as Lot No. 8349,
Cad. Lot 042118-011719-D of Silang Cadastre, is hereby DENIED.
SO ORDERED.
The CA held, among others, that petitioner was not able to comply with the
requirement of possession and occupation under Sec. 14 (1) of P.D. No. 1529.
Her admission that the subject lot was not physically turned over to her due to
some objections and oppositions to her title suggested that she was not
exercising any acts of dominion over the subject property, an essential element
in the requirement of possession and occupation contemplated under Sec. 14 (1)
of P.D. No. 1529.
A copy of the decision was received by petitioner on July 2, 2012. On August 15,
2012, petitioner filed this subject petition for review challenging the CA decision.
Hence, this petition.
In advocacy of her petition, petitioner assigns the following
ERRORS:
I.
The Court of Appeals gravely erred and ruled contrary to law in not finding that
petitioner is entitled to register the subject land under her name. Under the
peculiar circumstances of this case, wherein petitioners predecessor-in-interest
unexpectedly and unjustifiably continued to be in physical possession of the
subject property after the sale thereof to petitioner, the latter must be deemed to
be in possession and occupation thereof through her predecessor-in-interest.
Under the Public Land Act and Presidential Decree No. 1529, the period of
possession of an applicants predecessor-in-interest benefits and is credited in
favor of the applicant.
II.
Moreover, petitioner was denied actual possession of the subject land by
circumstances amounting to a fortuitous event. By express provision of Sec.
48(b) of the Public Land Act, such fortuitous event does not affect her vested
right to register the property under her name.
30
III.
The Court of Appeals likewise seriously erred and ruled contrary to the law and
to the evidence in not finding that petitioners predecessor-in-interest,
respondent Felicidad Mardo, had possession and occupation of the subject
parcel of land under a bona fide claim of ownership since June 12, 1945, or
earlier.
IV.
In view of the fact that the validity of the sale of the subject parcel of land to
petitioner in 1993 was duly established before the trial court and affirmed by the
Court of Appeals and considering further that the registration of the said land
under respondents name was fraudulently secured, in order to avoid multiplicity
of suits and to put an end to the long pending dispute between the parties, the
Court of Appeals should have ordered the reconveyance of the subject parcel of
land to the petitioner as its rightful owner.
Petitioner presents the theory that she must be deemed to have been in
possession and occupation of the subject property through respondent, her
predecessor-in-interest, who after the sale in 1993 and despite demands from
her, unexpectedly and unjustifiably continued to occupy the property and
refused to turn over physical possession to her. Petitioner argues that it is not
necessary that the person in possession should himself be the occupant as the
occupancy can be held by another in his name.
Moreover, petitioner also seeks reconveyance of the subject property arguing that
by virtue of its fraudulent registration, respondent became a trustee of an implied
trust for her benefit, as its real owner, having validly acquired the same from
respondent through an absolute deed of sale.
The Courts Ruling
The petition deserves no merit.
P.D. 1529, otherwise known as Property Registration Decree, governs the original
registration proceedings of unregistered land. The subject application for original
registration was filed pursuant to Sec. 14(1) of PD 1529, which provides the
condition necessary for registration. Thus:
SEC 14. Who may apply.The following persons may file in the proper Court of
First Instance an application for registration of title to land, whether personally
or through their duly authorized representatives:
(1) Those who by themselves or through their predecessors-in-interest have been
in open, continuous, exclusive and notorious possession and occupation of
alienable and disposable lands of the public domain under a bona fide claim of
ownership since June 12, 1945, or earlier.(Emphasis supplied)
Based on these legal parameters, applicants for registration of title under Section
14(1) must sufficiently establish: (1) that the subject land forms part of the
disposable and alienable lands of the public domain; (2) that the applicant and
his predecessors-in-interest have been in open, continuous, exclusive and
notorious possession and occupation of the same; and (3) that it is under a bona
fide claim of ownership since June 12, 1945 or earlier.4
The CA denied the application on the issue of open, continuous, exclusive, and
notorious possession and occupation of the subject land. It was of the view that
she could not have complied with the requirement of possession and occupation
under Sec. 14 (1) of P.D. No. 1529 considering that she had admitted that it was
not physically turned over to her. As she was not in actual and physical
possession, she could not have exercised any acts of dominion over the subject
property which was essential to the requirement of possession and occupation
contemplated under Sec. 14 (1) of P.D. No. 1529.
A more important consideration, however, is that the subject land is already
registered under OCT No. OP-1840 (Patent No. 042118-03-6111) of the Registry
of Deeds of Cavite, under the name of respondent Felicidad Gonzales.
In the case of Republic vs. Umali,5 this Court ruled that once a patent is
registered and the corresponding certificate of title is issued, the land ceases to
be part of public domain and becomes private property over which the Director
of Lands has neither control nor jurisdiction. A public land patent, when
registered in the corresponding Register of Deeds, is a veritable Torrens title, and
becomes as indefeasible upon the expiration of one (1) year from the date of
issuance thereof. Said title, like one issued pursuant to a judicial decree, is
subject to review within one (1) year from the date of the issuance of the patent.
This rule is embodied in Section 103 of PD 1529, which provides that:
Section 103. Certificates of title pursuant to patents. Whenever public land is
by the Government alienated, granted or conveyed to any person, the same shall
be brought forthwith under the operation of this Decree. x x x After due
registration and issuance of the certificate of title, such land shall be deemed to
be registered land to all intents and purposes under this Decree. (Emphasis
supplied)
31
Accordingly, respondents registered patent in the corresponding Registry of
Deeds is a veritable Torrens title and becomes as indefeasible as a Torrens title
upon the expiration of one (1) year from the date of its issuance.6
For said reason, the order of the RTC directing the Administrator of LRA to issue
a corresponding decree in petitioners name is null and void. A land registration
court has no jurisdiction to order the registration of land already decreed in the
name of another in an earlier land registration case. A second decree for the same
land would be null and void, since the principle behind the original registration
is to register a parcel of land only once.7
Verily, once a title is registered, as a consequence either of judicial or
administrative proceedings, the owner may rest secure, without the necessity of
waiting in the portals of the court sitting in the mirador de su casa to avoid the
possibility of losing his land.8 The certificate of title cannot be defeated by
adverse, open and notorious possession. Neither can it be defeated by
prescription. As provided under Sec. 47 of PD 1529, no title to registered land in
derogation of the title of the registered owner shall be acquired by prescription
or adverse possession.
A Certificate of Title Not
Subject to Collateral Attack
Petitioner argued that the rule on indefeasibility of title does not attach to titles
secured by fraud and misrepresentation. In this case, she alleged that the
respondent fraudulently registered the subject property under her name after
she (respondent) had already sold a portion thereof to her (petitioner). By virtue
of the deed of sale, petitioner insists that she is considered to be the real owner
of the subject parcel of land.
The Court finds no merit in petitioners argument. It is settled in this jurisdiction
that the issue of the validity of title can only be assailed in an action expressly
instituted for such purpose.9 A certificate of title cannot be attacked collaterally.
This rule is provided under Section 48 of PD 1529 which states that:
SEC. 48. Certificate not subject to collateral attack. A certificate of title shall
not be subject to collateral attack. It cannot be altered, modified, or canceled
except in a direct proceeding in accordance with law. (Emphasis supplied)
In Lagrosa v. Court of Appeals,10 it was stated that it is a well-known doctrine
that the issue as to whether title was procured by falsification or fraud as
advanced by petitioner can only be raised in an action expressly instituted for
the purpose. A Torrens title can be attacked only for fraud, within one year after
the date of the issuance of the decree of registration. Such attack must be direct,
and not by a collateral proceeding. The title represented by the certificate cannot
be changed, altered, modified, enlarged, or diminished in a collateral proceeding.
In this case, the petitioner is contesting the indefeasibility of title on the ground
of fraud and misrepresentation. Applying the abovementioned doctrine, even
assuming that the petitioners allegations are true, the same are considered as
collateral attacks, and such must be raised in an action expressly instituted for
such purpose and in a proper proceeding.
Thus, in Carvajal v. Court of Appeals,11 it was ruled that an application for
registration of an already titled land constitutes a collateral attack on the existing
title. The title may be challenged only in a proceeding for that purpose, not in an
application for registration of a land already registered in the name of another
person. After one year from its registration, the title is incontrovertible and is no
longer open to review.
Remedy of the petitioner is to file a separate proceeding such as an action for
specific performance or for reconveyance
Petitioner further argues that considering the registration of the said land under
respondents name was fraudulently secured, in order to avoid multiplicity of
suits and to put an end to the long pending dispute between the parties, the
courts below should have ordered the reconveyance of the subject land to her as
its rightful owner.
Petitioner advances the theory that by virtue of the fraudulent registration of a
subject property, respondent is a trustee of an implied trust for her benefit, being
the real owner of the subject property, as she had validly acquired the same from
respondent through an absolute deed of sale.
Petitioners argument fails to persuade. The issue of fraudulent alienation raised
in the second application for registration of the subject property is collateral
attack which should be directly raised in a separate proceeding filed for such
purpose. It cannot be entertained in this proceeding. In several cases, the Court
has ruled that an attack is indirect or collateral when, in an action to obtain a
different relief, an attack on the judgment or proceeding is nevertheless made as
an incident thereof.12
The RTC was, thus, correct in denying petitioners "Motion for Leave to File
Supplemental Pleading and to Admit Attached Supplemental Complaint For
Reconveyance." Allowing it would not have been permissible because the
application for original registration of title over a parcel of land already registered
is a collateral attack itself. It is settled that an application for registration of a
32
parcel of land already covered by a Torrens title is actually a collateral attack,
not permitted under the principle of indefeasibility of a Torrens title.13
Registration, however, does not deprive an aggrieved party of a remedy in law.
What cannot be collaterally attacked is the certificate of title and not the title or
ownership which is represented by such certificate. Ownership is different from
a certificate of title. The fact that a person was able to secure a title in his name
did not operate to vest ownership upon him of the subject land. Registration of
a piece of land under the Torrens System does not create or vest title, because it
is not a mode of acquiring ownership.
A certificate of title is merely an evidence of ownership or title over the particular
property described therein.1wphi1 It cannot be used to protect a usurper from
the true owner; nor can it be used as a shield for the commission of fraud: neither
does it permit one to enrich himself at the expense of others. Its issuance in favor
of a particular person does not foreclose the possibility that the real prope1iy
may be co-owned with persons not named in the certificate, or that it may be
held in trust for another person by the registered owner.14
The remedy of the petitioner is to file a separate proceeding or action to protect
her alleged interest. As she claimed that she bought the subject property for
value from the respondent as evidenced by a deed of sale, she can file an action
for specific performance to compel the respondent to comply with her obligation
in the alleged deed of sale and/or an action for reconveyance of the property. She
can also file an action for rescission. Needless to state, petitioner must prove her
entitlement because the respondent claims that the sale was falsified.
Reconveyance is based on Section 55 of Act No. 496, as amended by Act No.
3322, which states that in all cases of registration procured by fraud the owner
may pursue all his legal and equitable remedies against the parties to such fraud,
without prejudice, however, to the rights of any innocent holder for value of a
certificate of title.15 It is an action in personam available to a person whose
property has been wrongfully registered under the Torrens system in another's
name.16 It does not seek to set aside the decree but, respecting it as
incontrovertible and no longer open to review, seeks to transfer or reconvey the
land from the registered owner to the rightful owner.17 Reconveyance is always
available as long as the property has not passed to an innocent third person for
value.18
WHEREFORE, the petition is hereby DENIED, without prejudice to any remedial
action by the petitioner to protect her claimed interest.
SO ORDERED.
Republic of the Philippines
SUPREME COURT
Manila
THIRD DIVISION
G.R. No. 164687 February 12, 2009
SM PRIME HOLDINGS, INC., Petitioner,
vs.
ANGELA V. MADAYAG, Respondent.
DECISION
NACHURA, J.:
This is a petition for review on certiorari of the Decision1 of the Court of Appeals
(CA) dated March 19, 2004 and Resolution dated July 15, 2004, which set aside
the lower courts order to suspend the proceedings on respondents application
for land registration.
On July 12, 2001, respondent Angela V. Madayag filed with the Regional Trial
Court (RTC) of Urdaneta, Pangasinan an application for registration of a parcel
of land with an area of 1,492 square meters located in Barangay Anonas,
Urdaneta City, Pangasinan.2 Attached to the application was a tracing cloth of
Survey Plan Psu-01-008438, approved by the Land Management Services (LMS)
of the Department of Environment and Natural Resources (DENR), Region 1, San
Fernando City.
On August 20, 2001, petitioner SM Prime Holdings, Inc., through counsel, wrote
the Chief, Regional Survey Division, DENR, Region I, demanding the cancellation
of the respondents survey plan because the lot encroached on the properties it
recently purchased from several lot owners and that, despite being the new owner
of the adjoining lots, it was not notified of the survey conducted on June 8, 2001.3
Petitioner then manifested its opposition to the respondents application for
registration. The Republic of the Philippines, through the Office of the Solicitor
General, and the heirs of Romulo Visperas also filed their respective oppositions.
On February 6, 2002, petitioner filed its formal opposition. Petitioner alleged that
it had recently bought seven parcels of land in Barangay Anonas, Urdaneta,
delineated as Lots B, C, D, E, G, H and I in Consolidation-Subdivision Plan No.
(LRC) Pcs-21329, approved by the Land Registration Commission on August 26,
1976, and previously covered by Survey Plan No. Psu-236090 approved by the
Bureau of Lands on December 29, 1970. These parcels of land are covered by
33
separate certificates of title, some of which are already in the name of the
petitioner while the others are still in the name of the previous owners.
On February 20, 2002, the RTC declared a general default, except as to the
petitioner, the Republic, and the heirs of Romulo Visperas. Thereafter,
respondent commenced the presentation of evidence.
Meanwhile, acting on petitioners request for the cancellation of the respondents
survey plan, DENR Assistant Regional Executive Director for Legal Services and
Public Affairs, Allan V. Barcena, advised the petitioner to file a petition for
cancellation in due form so that the DENR could properly act on the same.4
Accordingly, petitioner formally filed with the DENR a petition5 for cancellation
of the survey plan sometime in March 2002, alleging the following grounds:
I.
THERE IS NO SUCH THING AS ALIENABLE OR DISPOSABLE PROPERTY
WHICH IS THE SUBJECT LOT IN THIS CASE
II.
NO NOTICE WAS MADE UPON PETITIONER (AS ADJOINING LANDOWNER AND
WHO BEARS INTEREST OVER THE SUBJECT LOT) MUCH LESS THE OWNERS
OF ADJOINING LANDS.
III.
THE CIRCUMSTANCES EVIDENTLY SHOW THAT BAD FAITH AND/OR MALICE
ATTENDED THE APPROVAL OF (PLAN WITH PSU NO. 01-008438).6
On July 17, 2002, petitioner filed an Urgent Motion to Suspend Proceedings7 in
the land registration case, alleging that the court should await the DENR
resolution of the petition for the cancellation of the survey plan "as the
administrative case is prejudicial to the determination" of the land registration
case.
On October 8, 2002, the RTC issued an Order granting the motion, thus:
WHEREFORE, PREMISES CONSIDERED, the Court hereby GRANTS the instant
motion and suspends the proceedings herein. In the meantime, and until receipt
by this Court of a copy of the resolution of the petition for cancellation by the
DENR, the instant case is hereby ARCHIVED.
SO ORDERED.8
Emphasizing that a survey plan is one of the mandatory requirements in land
registration proceedings, the RTC agreed with the petitioner that the cancellation
of the survey plan would be prejudicial to the petition for land registration.9
On February 13, 2003, the RTC denied the respondents motion for
reconsideration of its order.10 Respondent thereafter filed a petition for certiorari
with the CA assailing the order suspending the proceedings.
On March 19, 2004, finding that the RTC committed grave abuse of discretion in
suspending the proceedings, the CA granted the petition for certiorari, thus:
WHEREFORE, premises considered, the instant petition is hereby GRANTED.
The challenged Orders dated October 8, 2002 and February 13, 2003 of the
respondent Court are declared NULL and VOID.
The Court a quo is directed to continue the proceedings until its final
determination. No pronouncement as to costs.
SO ORDERED.11
The CA ratiocinated that the survey plan which was duly approved by the DENR
should be accorded the presumption of regularity, and that the RTC has the
power to hear and determine all questions arising from an application for
registration.12
On July 15, 2004, the CA issued a Resolution13 denying the petitioners motion
for reconsideration. Petitioner was, thus, compelled to file this petition for review,
ascribing the following errors to the CA:
I. THE COURT OF APPEALS COMMITTED MANIFEST ERROR IN NOT FINDING
THAT THE SUSPENSION OF THE PROCEEDINGS IN THE LAND REGISTRATION
CASE IS LEGAL AND PROPER PENDING THE DETERMINATION AND
RESOLUTION OF THE ADMINISTRATIVE CASE BEFORE THE DEPARTMENT OF
ENVIRONMENT AND NATURAL RESOURCES-REGION 1.
II. THE COURT OF APPEALS COMMITTED MANIFEST ERROR IN FAILING TO
FIND THAT THE ASSAILED ORDERS OF THE LOWER COURT HAVE PROPER
AND SUFFICIENT BASES IN FACT AND IN LAW.
III. THE COURT OF APPEALS COMMITTED MANIFEST ERROR IN HOLDING
THAT THE LOWER COURT HAS ACTED WITH GRAVE ABUSE OF DISCRETION
IN SUSPENDING THE PROCEEDINGS AND ARCHIVING THE CASE.
IV. THE COURT OF APPEALS COMMITTED MANIFEST ERROR IN FAILING TO
FIND THAT THE FILING OF THE PETITION FOR CERTIORARI, UNDER RULE 65
34
OF THE REVISED RULES OF CIVIL PROCEDURE, IS NOT THE ONLY PLAIN,
SPEEDY AND ADEQUATE REMEDY IN THE ORDINARY COURSE OF LAW ON
THE PART OF HEREIN RESPONDENT.14
The petition has no merit.
Petitioner contends that, since the respondents cause of action in the land
registration case depends heavily on the survey plan, it was only prudent for the
RTC to suspend the proceedings therein pending the resolution of the petition
for cancellation of the survey plan by the DENR.15 It, therefore, insists that
recourse to a petition for certiorari was not proper considering that respondent
was not arbitrarily deprived of her right to prosecute her application for
registration.16
Undeniably, the power to stay proceedings is an incident to the power inherent
in every court to control the disposition of the cases in its dockets, with economy
of time and effort for the court, counsel and litigants. But courts should be
mindful of the right of every party to a speedy disposition of his case and, thus,
should not be too eager to suspend proceedings of the cases before them. Hence,
every order suspending proceedings must be guided by the following precepts: it
shall be done in order to avoid multiplicity of suits and prevent vexatious
litigations, conflicting judgments, confusion between litigants and courts,17 or
when the rights of parties to the second action cannot be properly determined
until the questions raised in the first action are settled.18 Otherwise, the
suspension will be regarded as an arbitrary exercise of the courts discretion and
can be corrected only by a petition for certiorari.
None of the circumstances that would justify the stay of proceedings is present.
In fact, to await the resolution of the petition for cancellation would only delay
the resolution of the land registration case and undermine the purpose of land
registration.
The fundamental purpose of the Land Registration Law (Presidential Decree No.
1529) is to finally settle title to real property in order to preempt any question on
the legality of the title except claims that were noted on the certificate itself at
the time of registration or those that arose subsequent thereto.1avvphi1
Consequently, once the title is registered under the said law, owners can rest
secure on their ownership and possession.19
Glaringly, the petition for cancellation raises practically the very same issues
that the herein petitioner raised in its opposition to the respondents application
for registration. Principally, it alleges that the survey plan should be cancelled
because it includes portions of the seven properties that it purchased from
several landowners, which properties are already covered by existing certificates this allegation based on the respondents survey plan vis--vis the certificates of
of title. title of the petitioner and its predecessors-in-interest. After all, a survey plan
precisely serves to establish the true identity of the land to ensure that it does
Petitioner posits that it is the DENR that has the sole authority to decide the not overlap a parcel of land or a portion thereof already covered by a previous
validity of the survey plan that was approved by the LMS.20 It cites Section 4(15),
land registration, and to forestall the possibility that it will be overlapped by a
Chapter 1, Title XIV, Administrative Code of 1987 which provides that the DENR
subsequent registration of any adjoining land.27
shall
Should the court find it difficult to do so, the court may require the filing of
(15) Exercise (of) exclusive jurisdiction on the management and disposition of all
additional papers to aid in its determination of the propriety of the application,
lands of the public domain and serve as the sole agency responsible for
based on Section 21 of P.D. No. 1529:
classification, sub-classification, surveying and titling of lands in consultation
with appropriate agencies. SEC. 21. Requirement of additional facts and papers; ocular inspection. The
court may require facts to be stated in the application in addition to those
However, respondent argues that the land registration court is clothed with prescribed by this Decree not inconsistent therewith and may require the filing
adequate authority to resolve the conflicting claims of the parties, and that even
of any additional papers.
if the DENR cancels her survey plan, the land registration court is not by duty
bound to dismiss the application for registration based solely on the cancellation The court may also directly require the DENR and the Land Registration
of the survey plan.21lawphil.net Authority to submit a report on whether the subject property has already been
registered and covered by certificates of title, like what the court did in Carvajal
Without delving into the jurisdiction of the DENR to resolve the petition for
v. Court of Appeals.28 In that case, we commended such move by
cancellation, we hold that, as an incident to its authority to settle all questions
over the title of the subject property, the land registration court may resolve the the land registration court for being "in accordance with the purposes of the Land
underlying issue of whether the subject property overlaps the petitioners Registration Law."29
properties without necessarily having to declare the survey plan as void.
WHEREFORE, premises considered, the petition is DENIED. The Court of
It is well to note at this point that, in its bid to avoid multiplicity of suits and to Appeals Decision dated March 19, 2004 and Resolution dated July 15, 2004 are
promote the expeditious resolution of cases, Presidential Decree (P.D.) No. 1529 AFFIRMED. The Regional Trial Court of Urdaneta, Pangasinan is DIRECTED to
eliminated the distinction between the general jurisdiction vested in the RTC and continue with the proceedings in L.R.C. Case No. U-1134 and to resolve the same
the latters limited jurisdiction when acting merely as a land registration court. with dispatch.
Land registration courts, as such, can now hear and decide even controversial
SO ORDERED.
and contentious cases, as well as those involving substantial issues.22 When the
law confers jurisdiction upon a court, the latter is deemed to have all the
necessary powers to exercise such jurisdiction to make it effective.23 It may,
therefore, hear and determine all questions that arise from a petition for
registration.

In view of the nature of a Torrens title, a land registration court has the duty to
determine whether the issuance of a new certificate of title will alter a valid and
existing certificate of title.24 An application for registration of an already titled
land constitutes a collateral attack on the existing title, 25 which is not allowed
by law.26 But the RTC need not wait for the decision of the DENR in the petition
to cancel the survey plan in order to determine whether the subject property is
already titled or forms part of already titled property. The court may now verify

35
SECOND DIVISION
[G.R. No. 157447. April 29, 2005]
NEMENCIO C. EVANGELISTA, PASCUAL G. QUINTO, LUIS B. BUENA, EUSEBIA
V. TABLADA, CANUTO G. TISBE, DAVID R. CARULLO, SOFONIAS E.
COLEGADO, FELIX B. BUENA, TORIBIO C. EVANGELISTA, LEBRADA A.
NICOLAS, ALECIA J. RAMOS, MILA G. DE LOS REYES, SALVADOR I. DE LA
TORRE, MOISES CRUZ, RUFINO INFANTE, ALICIA ASTROLOGO, TRINIDAD
LUMIQUED, LUZMINIDA QUINIQUINI, & TEODORA C. TEMERAS, petitioners,
vs. CARMELINO M. SANTIAGO, respondent.
DECISION
CHICO-NAZARIO, J.:
In this Petition for Review under Rule 45 of the Rules of Court, petitioners pray
for the reversal of the Decision of the Court of Appeals in CA-G.R. CV No.
64957,[1] affirming the Order of the Regional Trial Court (RTC) of San Mateo,
Rizal, Branch 77, in Civil Case No. 1220,[2] dismissing petitioners Complaint for
declaration of nullity of Original Certificate of Title (OCT) No. 670 and all other
titles emanating therefrom.
In their Complaint, petitioners alleged that they occupied and possessed parcels
of land, located in Sitio Panayawan, Barangay San Rafael, Montalban (now
Rodriquez), Province of Rizal (Subject Property), by virtue of several Deeds of
Assignment, dated 15 April 1994 and 02 June 1994, executed by a certain Ismael
Favila y Rodriguez.[3]
According to the Deeds of Assignment, the Subject Property was part of a vast
tract of land called Hacienda Quibiga, which extended to Paraaque, Las Pias,
Muntinlupa, Cavite, Batangas, Pasay, Taguig, Makati, Pasig, Mandaluyong,
Quezon City, Caloocan, Bulacan, and Rizal; awarded to Don Hermogenes
Rodriguez by the Queen of Spain and evidenced by a Spanish title. Ismael Favila
claimed to be one of the heirs and successors-in-interest of Don Hermogenes
Rodriguez. Acting as Attorney-in-Fact pursuant to a Special Power of Attorney
executed by his mga kapatid on 25 February 1965, Ismael Favila signed the
aforementioned Deeds of Assignment, assigning portions of the Subject Property
to the petitioners, each portion measuring around 500 to 1,000 square meters,
in exchange for the labor and work done on the Subject Property by the
petitioners and their predecessors.[4]
Petitioners came by information that respondent was planning to evict them from
the Subject Property. Two of the petitioners had actually received notices to
36
vacate. Their investigations revealed that the Subject Property was included in
Transfer Certificates of Titles (TCTs) No. 53028, No. 281660, No. N-39258 and
No. 205270, all originating from OCT No. 670, and now in the name of
respondent.[5]
OCT No. 670 was issued in the name of respondents mother, Isabel Manahan y
Francisco, and three other individuals, pursuant to Decree No. 10248, dated 13
February 1913, in Case No. 8502 of the Court of Land Registration of the
Philippine Islands. The whole property covered by OCT No. 670 was subsequently
adjudicated in favor of Isabel Manahan Santiago (formerly Isabel Manahan y
Francisco). Consequently, OCT No. 670 was cancelled and TCT No. T-53028 was
issued exclusively in the name of Isabel Manahan Santiago. On 28 December
1968, Isabel Manahan Santiago executed a Deed of Donation transferring the
property to her son, respondent herein, who subsequently secured TCTs No.
281660, No. N-39258 and No. 205270 in his own name.[6]
Petitioners filed with the trial court, on 29 April 1996, an action for declaration
of nullity of respondents certificates of title on the basis that OCT No. 670 was
fake and spurious. Among the defects of OCT No. 670 pointed out by petitioners
were that: (1) OCT No. 670 was not signed by a duly authorized officer; (2)
Material data therein were merely handwritten and in different penmanships; (3)
OCT No. 670 was not printed on the Official Form used in 1913, the year it was
issued; (4) It failed to indicate the Survey Plan which was the basis of the
Technical Description of the property covered by the title; (5) Decree No. 10248
referred to in OCT No. 670 was issued only on 11 April 1913, while OCT No. 670
was issued earlier, on 13 February 1913; and (6) Decree No. 10248 was issued
over a property other than the one described in OCT No. 670, although also
located in the Province of Rizal.[7]
Respondent filed his Answer with Prayer for Preliminary Hearing on the
Affirmative Defenses on 03 July 1996. According to respondent, [t]he allegations
in the Complaint would readily and patently show that the same are flimsy,
fabricated, malicious, without basis in law and in fact[8]
As an affirmative defense, respondent claimed that the petitioners had no legal
capacity to file the Complaint, and thus, the Complaint stated no cause of action.
Since OCT No. 670 was genuine and authentic on its face, then OCT No. 670 and
all of respondents land titles derived therefrom, are incontrovertible, indefeasible
and conclusive against the petitioners and the whole world.[9]
Citing the consolidated cases of Director of Forestry, et al. v. Hon. Emmanuel M.
Muoz, et al. and Pinagcamaligan Indo-Agro Development Corporation v. Hon.
Macario Peralta, Jr., et al.,[10] respondent argued that the Spanish title, on
which petitioners based their claim, was neither indefeasible nor imprescriptible.
Moreover, Presidential Decree (P.D.) No. 892, which took effect on 16 February
1976, required all holders of Spanish titles or grants to apply for registration of
their lands under Republic Act No. 496, otherwise known as the Land
Registration Act,[11] within six months from effectivity of the decree. After the
given period, Spanish titles could no longer be used as evidence of land
ownership in any registration proceedings under the Torrens System. [12]
Respondent also raised the affirmative defense of prescription. He pointed out
that any action against his certificates of title already prescribed, especially with
regard to OCT No. 670, which was issued in 1913 or more than 83 years prior to
the filing of the Complaint by the petitioners. At the very least, respondent
contended, it must be presumed that the questioned land titles were issued by
the public officials concerned in the performance of their regular duties and
functions pursuant to the law.[13]
Even assuming arguendo that the petitioners entered and occupied the Subject
Property, they did so as mere intruders, squatters and illegal occupants, bereft
of any right or interest, since the Subject Property was already covered by
Torrens certificates of title in the name of respondent and his predecessors-in-
interest.[14]
Lastly, respondent denied knowing the petitioners, much less, threatening to
evict them. In fact, petitioners were not included as defendants in Civil Case No.
783 entitled, Carmelino M. Santiago v. Remigio San Pascual, et al., which
respondent instituted before the same trial court against squatters occupying
the Subject Property. In its decision, dated 01 July 1992, the trial court held that
there is no doubt that the plaintiff (respondent herein) is the owner of the land
involved in this case on which the defendants have built their houses and
shanties Although the decision in Civil Case No. 783 was appealed to the Court
of Appeals, it had become final and executory for failure of the defendants-
appellants therein to file their appellants brief.[15]
In the instant case, the trial court held a preliminary hearing on the affirmative
defenses as prayed for by the respondent. During said hearing, petitioners
presented their lone witness, Engineer Placido Naval, a supposed expert on land
registration laws. In response to questions from Honorable Judge Francisco C.
Rodriguez of the trial court, Engineer Naval answered that a parcel of land titled
illegally would revert to the State if the Torrens title was cancelled, and that it
was the State, through the Office of the Solicitor General, that should file for the
annulment or cancellation of the title. Respondent, on the other hand, did not
37
present any evidence but relied on all the pleadings and documents he had so
far submitted to the trial court.[16]
After the preliminary hearing, the trial court issued the questioned Order, dated
05 February 1999, dismissing petitioners Complaint. Pertinent portions of the
Order of the trial court read:
After considering the testimonial and documentary evidence presented, this
Court is inclined not to grant plaintiffs (sic) prayer. Finding credence and giving
weight to plaintiffs (sic) lone but expert witness, it is crystal clear that, to quote:
1. a parcel of land titled illegally will revert to the State
2. it is the State who must file the corresponding case of annulment of title
through the Office of the Solicitor General, and
3. a land illegally titled in the name of private individual, the State through the
Office of the Solicitor General should file the corresponding case for cancellation
of title. (TSN August 26, 1997).
The above quoted testimony is straight from horse (sic) mouth so to speak as this
was the testimony of the plaintiffs (sic) expert witness. And judging from the said
testimony alone aforecited, plaintiffs (sic) cause [of action] is bound to fail.
Plaintiffs (sic) own testimony wrote finis to their case. From the record, this case
was initiated and filed by private individuals, Nemencio Evangelista, et. al.,
contradicting their witness (sic) testimony. To reiterate, this Court finds credence
to the testimony of the plaintiffs (sic) witness, i.e., is (sic) the State through the
Office of the Solicitor General who must initiate and file a case of this nature
when title to a land is being claimed to be obtained through fraud and allegedly
spurious.
The opinion of this Court anent the testimony of the witness is not without basis.
Explicit is the pronouncement of the Supreme Court in the recent case of Heirs
of Marciano Nagano v. Court of Appeals, to wit:
An action for reversion has to be instituted by the Solicitor General pursuant to
Section 101, Commonwealth Act No. 141. (282 SCRA 43).
As to the documentary evidence, having gone through with the Deed of
Assignment/s purportedly executed by and between a certain Ismael Favila y
Rodriguez and the plaintiffs, which is the principal if not the only basis of
plaintiffs claim ownership and possession of the subject parcel of land, the same
does not hold water in a manner of speaking, for being self-serving. Assignor
Ismael Favila y Rodriguez claimed in said Deed that he is the Attorney-in-Fact
by virtue of an alleged Special Power of Attorney executed in his favor by his mga
kapatid on February 23, 1965, but said Special Power of Attorney was not
presented before this Court, thus there arises a doubt as to its existence and
execution not to mention doubt on the existence of his mga kapatid who as
alleged executed said Special Power Attorney (sic) in his favor.
Even if this Court granting arguendo would admit the authenticity of said Deeds
of Assignment/s, that will not alter the outcome of the pending incident/s before
this Court. Why? Because the said Deed of Assignment/s which were based on
Spanish title have lost their evidentiary value pursuant to the Presidential Decree
No. 892 i.e. DISCONTINUANCE OF THE SPANISH MORTGAGE SYSTEM OF
REGISTRATION AND OF THE USE OF SPANISH TITLES AS EVIDENCE IN LAND
REGISTRATION PROCEEDINGS.
There is no need to elaborate on the above-cited provisions of PD 892 as they are
self-explanatory. Suffice it to say that there is no showing, that plaintiffs
complied with the said law i.e. to apply for registration of their lands under Act
No. 496, otherwise known as the Land Registration Act, within six (6) months
from the effectivity of this decree (February 16, 1976). Thereafter, Spanish titles
cannot be used as evidence of land ownership in any registration proceedings
under the Torrens System.
This being the case and likewise being clear that plaintiffs were not the lawful
owners of the land subject of this case, for they did not comply with PD 892, the
said plaintiffs do not have the legal standing to bring before this Court the instant
complaint
Moreover, the principal issue in this case is for the declaration of nullity of
defendants title, which has nothing to do with plaintiffs (sic) claim of ownership
and possession even if we set aside, albeit momentarily, the truth that plaintiffs
(sic) claim were based on barred Spanish Title/s, and thus plaintiffs were never
the owners of the parcel of land subject of this case.
Further, defendants (sic) title especially so with the mother title OCT 670 was
entered and issued in 1913 or more than Eighty Three (83) years ago, the same
not having been questioned by any party. Only now that it is being questioned,
but sad to say, plaintiffs who are on the offensive and relying on their lone expert
witness, instead of bolstering their case, unwittingly sealed their fate [17]
After the trial court denied petitioners Motion for Reconsideration in its Order,
dated 20 July 1999,[18] petitioners appealed both Orders of the trial court to the
Court of Appeals.
38
The Court of Appeals, in its Decision, dated 29 July 2002,[19] affirmed the Order
of the trial court, dated 05 February 1999, dismissing petitioners Complaint. The
Court of Appeals denied petitioners Motion for Reconsideration in its Resolution,
dated 14 February 2003.[20]
Thus, petitioners filed this Petition for Review [21] under Rule 45 of the Rules of
Court, raising the following issues and praying for the reversal of the
aforementioned Decision of the Court of Appeals affirming the Order of dismissal
of the trial court:
I. Whether the lower courts dismissal of the petitioners complaint should be
proscribed by the rules of evidence it being based inter alia on Engr. Navals
testimony, which was indisputably not based on facts but conclusion of law.
II. Whether the lower courts dismissal of petitioners complaint should be
proscribed by the rules of evidence it being done sans ample evidence except
bare allegations of respondent.
III. Whether the provision of P.D. 892, i.e., Spanish titles cannot be used as
evidence of land ownership in any registration proceedings under the Torrens
system, holds of an exception.
IV. Whether an action for quieting of title, specifically where petitioners are in
possession of subject land, can be subject of prescription.
In his Comment,[22] the respondent, for the most part, reiterated the findings of
the trial court and the Court of Appeals.
The Court believes that the trial court rightfully dismissed petitioners Complaint,
but for reasons different from those relied upon by the trial court and the Court
of Appeals.
According to the respondent, petitioners had no legal capacity to file the
Complaint, and thus, the Complaint filed before the trial court stated no cause
of action.
Before anything else, it should be clarified that the plaintiff has no legal capacity
to sue[23] and the pleading asserting the claim states no cause of action[24] are
two different grounds for a motion to dismiss or are two different affirmative
defenses. Failure to distinguish between the lack of legal capacity to sue from
the lack of personality to sue is a fairly common mistake. The difference between
the two is explained by this Court in Columbia Pictures, Inc. v. Court of
Appeals:[25]
Among the grounds for a motion to dismiss under the Rules of Court are lack of
legal capacity to sue and that the complaint states no cause of action. Lack of
legal capacity to sue means that the plaintiff is not in the exercise of his civil
rights, or does not have the necessary qualification to appear in the case, or does
not have the character or representation he claims. On the other hand, a case is
dismissible for lack of personality to sue upon proof that the plaintiff is not the
real party-in-interest, hence grounded on failure to state a cause of action. The
term "lack of capacity to sue" should not be confused with the term "lack of
personality to sue." While the former refers to a plaintiffs general disability to
sue, such as on account of minority, insanity, incompetence, lack of juridical
personality or any other general disqualifications of a party, the latter refers to
the fact that the plaintiff is not the real party- in-interest. Correspondingly, the
first can be a ground for a motion to dismiss based on the ground of lack of legal
capacity to sue; whereas the second can be used as a ground for a motion to
dismiss based on the fact that the complaint, on the face thereof, evidently states
no cause of action.
In the present case, this Court may assume that the respondent is raising the
affirmative defense that the Complaint filed by the petitioners before the trial
court stated no cause of action because the petitioners lacked the personality to
sue, not being the real party-in-interest. It is the respondents contention that
only the State can file an action for annulment of his certificates of title, since
such an action will result in the reversion of the ownership of the Subject
Property to the State.
The affirmative defense that the Complaint stated no cause of action, similar to
a motion to dismiss based on the same ground, requires a hypothetical
admission of the facts alleged in the Complaint. In the case of Garcon v.
Redemptorist Fathers,[26] this Court laid down the rules as far as this ground for
dismissal of an action or affirmative defense is concerned:
It is already well-settled by now that, in a motion to dismiss a complaint based
on lack of cause of action, the question submitted to the court for determination
is the sufficiency of the allegations of fact made in the complaint to constitute a
cause of action, and not on whether these allegations of fact are true, for said
motion must hypothetically admit the truth of the facts alleged in the complaint;
that the test of the sufficiency of the facts alleged in the complaint is whether or
not, admitting the facts alleged, the court could render a valid judgment upon
the same in accordance with the prayer of said complaint. Stated otherwise, the
insufficiency of the cause of action must appear in the face of the complaint in
order to sustain a dismissal on this ground, for in the determination of whether
or not a complaint states a cause of action, only the facts alleged therein and no
39
other matter may be considered, and the court may not inquire into the truth of
the allegations, and find them to be false before a hearing is had on the merits
of the case; and it is improper to inject in the allegations of the complaint facts
not alleged or proved, and use these as basis for said motion.
In resolving whether or not the Complaint in the present case stated a cause of
action, the trial court should have limited itself to examining the sufficiency of
the allegations in the Complaint. It was proscribed from inquiring into the truth
of the allegations in the Complaint or the authenticity of any of the documents
referred or attached to the Complaint, since these are deemed hypothetically
admitted by the respondent. The trial court evidently erred in making findings
as to the authenticity of the Deeds of Assignment executed by Ismael Favila in
favor of petitioners on 15 April 1994 and 02 June 1994; and questioning the
existence and execution of the Special Power of Attorney in favor of said Ismael
Favila by his siblings on 25 February 1965. These matters may only be resolved
after a proper trial on the merits.
Petitioners alleged in their Complaint, and respondent hypothetically admitted
that: (1) Petitioners predecessors-in-interest, in the concept of owners, had been
in actual, physical, open, continuous and adverse possession of the Subject
Property against the whole world since time immemorial; (2) The Subject Property
was part of the vast tract of land called Hacienda Quibiga awarded to Don
Hermogenes Rodriguez by the Queen of Spain by virtue of a Spanish title; (3)
Ismael Favila, an heir and successor-in-interest of Don Hermogenes Rodriguez,
acting as Attorney-in-Fact pursuant to a Special Power of Attorney executed by
his mga kapatid on 25 February 1965, executed Deeds of Assignment covering
the Subject Property in favor of petitioners; (4) Petitioners still occupied and
possessed the Subject Property, on which their houses were erected, when they
discovered that the Subject Property was already covered by Torrens certificates
of title in the name of respondent; and (5) That petitioners filed the Complaint to
prevent their eviction by the respondent. To determine whether these allegations
are sufficient to constitute a cause of action, it is important for this Court to
establish first the nature of petitioners action.
Indeed, petitioners Complaint filed before the trial court was captioned as an
action for declaration of nullity of respondents certificates of title. However, the
caption of the pleading should not be the governing factor, but rather the
allegations therein should determine the nature of the action, because even
without the prayer for a specific remedy, the courts may nevertheless grant the
proper relief as may be warranted by the facts alleged in the Complaint and the
evidence introduced.[27]
The trial court believed that petitioners action was ultimately one for reversion
of the Subject Property to the public domain. Based on the testimony of Engineer
Naval and the case of Nagao v. Court of Appeals,[28] it declared that the State,
represented by the Office of the Solicitor General, is the party-in-interest in an
action for cancellation of a certificate of title illegally issued in the name of a
private individual, because the eventual effect of such cancellation is the
reversion of the property to the State.
The Court disagrees in this pronouncement of the trial court, and calls for a far
closer review of its decision in Nagao v. Court of Appeals,[29] wherein the Court
held that
It is then clear from the allegations in the complaint that private respondents
claim ownership of the 2,250 square meter portion for having possessed it in the
concept of an owner, openly, peacefully, publicly, continuously and adversely
since 1920. This claim is an assertion that the lot is private land, or that even
assuming it was part of the public domain, private respondents had already
acquired imperfect title thereto under Section 48(b) of C.A. No. 141, otherwise
known as the Public Land Act, as amended by R.A. No. 1942
Under Section 48, a subject lot is, for all legal intents and purposes, segregated
from the public domain, because the beneficiary is conclusively presumed to
have performed all the conditions essential to a Government grant and shall be
entitled to a certificate of title under the provisions of this chapter.
Consequently, merely on the basis of the allegations in the complaint, the lot in
question is apparently beyond the jurisdiction of the Director of the Bureau of
Lands and could not be the subject of a Free Patent. Hence, dismissal of private
respondents complaint was premature and trial on the merits should have been
conducted to thresh out evidentiary matters.
It would have been entirely different if the action were clearly for reversion, in
which case, it would have to be instituted by the Solicitor General pursuant to
Section 101 of C.A. No. 141, which provides:
Sec. 101. All actions for the reversion to the Government of lands of the public
domain or improvements thereon shall be instituted by the Solicitor General or
the officer acting in his stead, in the proper courts, in the name of the [Republic]
of the Philippines.
In the more recent case of Heirs of Ambrocio Kionisala v. Heirs of Honorio
Dacut,[30] the difference between an action for declaration of nullity of land titles
from an action for reversion was more thoroughly discussed as follows:
40
An ordinary civil action for declaration of nullity of free patents and certificates
of title is not the same as an action for reversion. The difference between them
lies in the allegations as to the character of ownership of the realty whose title is
sought to be nullified. In an action for reversion, the pertinent allegations in the
complaint would admit State ownership of the disputed land. Hence, in Gabila
vs. Barriga [41 SCRA 131], where the plaintiff in his complaint admits that he
has no right to demand the cancellation or amendment of the defendants title
because even if the title were canceled or amended the ownership of the land
embraced therein or of the portion affected by the amendment would revert to
the public domain, we ruled that the action was for reversion and that the only
person or entity entitled to relief would be the Director of Lands.
On the other hand, a cause of action for declaration of nullity of free patent and
certificate of title would require allegations of the plaintiffs ownership of the
contested lot prior to the issuance of such free patent and certificate of title as
well as the defendants fraud or mistake, as the case may be, in successfully
obtaining these documents of title over the parcel of land claimed by plaintiff. In
such a case, the nullity arises strictly not from the fraud or deceit but from the
fact that the land is beyond the jurisdiction of the Bureau of Lands to bestow
and whatever patent or certificate of title obtained therefore is consequently void
ab initio. The real party-in-interest is not the State but the plaintiff who alleges a
pre-existing right of ownership over the parcel of land in question even before the
grant of title to the defendant
In their Complaint, petitioners never alleged that the Subject Property was part
of the public domain. On the contrary, petitioners asserted title over the Subject
Property by virtue of their actual, physical, open, continuous and adverse
possession thereof, in the concept of owners, by themselves and through their
predecessors-in-interest, since time immemorial. The Deeds of Assignment
executed in their favor and attached to their Complaint referred to a Spanish title
granted by the Queen of Spain to their predecessor-in-interest, Don Hermogenes
Rodriguez. Clearly, petitioners are asserting private title over the Subject
Property, and consequently, their action could not be one for reversion.
In their instant Petition, petitioners further averred that rather than an action
for nullity of respondents certificates of title, theirs was more appropriately an
action to remove a cloud on or to quiet their title over the Subject Property.
Article 476 of the Civil Code, on removal of a cloud on or quieting of title, provides
that:
Art. 476. Whenever there is a cloud on title to real property or any interest
therein, by reason of any instrument, record, claim, encumbrance or proceeding
which is apparently valid or effective but is in truth and in fact invalid, ineffective,
voidable, or unenforceable, and may be prejudicial to said title, an action may be
brought to remove such cloud or to quiet the title.
An action may also be brought to prevent a cloud from being cast upon title to
real property or any interest therein.
Respondents certificates of title over the Subject Property appeared valid or
effective; but according to the petitioners, they were fake, spurious and/or
fraudulent, and a cloud on their title to the same property that needed to be
removed. A cloud on title has been defined as follows:
Cloud on Title. A cloud on title is an outstanding instrument, record, claim,
encumbrance or proceeding which is actually invalid or inoperative, but which
may nevertheless impair or affect injuriously the title to property. The matter
complained of must have a prima facie appearance of validity or legal efficacy.
The cloud on title is a semblance of title which appears in some legal form but
which is in fact unfounded. The invalidity or inoperativeness of the instrument
is not apparent on the face of such instrument, and it has to be proved by
extrinsic evidence[31]
Even as this Court agrees with the petitioners that their action was one for
removal of a cloud on or quieting of title, it does arrive at the same conclusion as
the trial court and the Court of Appeals that petitioners had no personality to file
the said action, not being the parties-in-interest, and their Complaint should be
dismissed for not stating a cause of action.
According to Article 477 of the Civil Code, the plaintiff, in an action to remove a
cloud on or to quiet title, must have legal or equitable title to, or interest in, the
real property which is the subject matter of the action.[32] Petitioners failed to
establish in their Complaint that they had any legal or equitable title to, or
legitimate interest in, the Subject Property so as to justify their right to file an
action to remove a cloud on or to quiet title.
Title to real property refers to that upon which ownership is based. It is the
evidence of the right of the owner or the extent of his interest, by which means
he can maintain control and, as a rule, assert right to exclusive possession and
enjoyment of the property.[33]
In their Complaint, petitioners claimed title to the Subject Property by virtue of
their actual and continuous possession of the same since time immemorial, by
themselves and through their predecessors-in-interest. Yet, the Deeds of
Assignment executed by Ismael Favila in their favor, attached to and an integral
part of their Complaint, revealed that petitioners predecessors-in-interest based
41
their right to the Subject Property on the Spanish title awarded to Don
Hermogenes Rodriguez.
There existed a contradiction when petitioners based their claim of title to the
Subject Property on their possession thereof since time immemorial, and at the
same time, on the Spanish title granted to Don Hermogenes Rodriguez.
Possession since time immemorial carried the presumption that the land had
never been part of the public domain or that it had been private property
even before the Spanish conquest.[34] If the Subject Property was already
private property before the Spanish conquest, then it would have been beyond
the power of the Queen of Spain to award or grant to anyone.
The title to and possession of the Subject Property by petitioners predecessors-
in-interest could be traced only as far back as the Spanish title of Don
Hermogenes Rodriguez. Petitioners, having acquired portions of the Subject
Property by assignment, could acquire no better title to the said portions than
their predecessors-in-interest, and hence, their title can only be based on the
same Spanish title.
Respondent maintained that P.D. No. 892 prevents petitioners from invoking the
Spanish title as basis of their ownership of the Subject Property. P.D. No. 892
strengthens the Torrens system by discontinuing the system of registration
under the Spanish Mortgage Law, and by categorically declaring all lands
recorded under the latter system, not yet covered by Torrens title, unregistered
lands. It further provides that within six months from its effectivity, all holders
of Spanish titles or grants should apply for registration of their land under what
is now P.D. No. 1529, otherwise known as the Land Registration Decree.
Thereafter, Spanish titles can no longer be used as evidence of land ownership
in any registration proceedings under the Torrens system. [35] Indubitably, P.D.
No. 892 divests the Spanish titles of any legal force and effect in establishing
ownership over real property.
P.D. No. 892 became effective on 16 February 1976. The successors of Don
Hermogenes Rodriguez had only until 14 August 1976 to apply for a Torrens title
in their name covering the Subject Property. In the absence of an allegation in
petitioners Complaint that petitioners predecessors-in-interest complied with
P.D. No. 892, then it could be assumed that they failed to do so. Since they failed
to comply with P.D. No. 892, then the successors of Don Hermogenes Rodriguez
were already enjoined from presenting the Spanish title as proof of their
ownership of the Subject Property in registration proceedings.
Registration proceedings under the Torrens system do not create or vest title, but
only confirm and record title already created and vested.[36] By virtue of P.D. No.
892, the courts, in registration proceedings under the Torrens system, are
precluded from accepting, confirming and recording a Spanish title. Reason
therefore dictates that courts, likewise, are prevented from accepting and
indirectly confirming such Spanish title in some other form of action brought
before them (i.e., removal of cloud on or quieting of title), only short of ordering
its recording or registration. To rule otherwise would open the doors to the
circumvention of P.D. No. 892, and give rise to the existence of land titles,
recognized and affirmed by the courts, but would never be recorded under the
Torrens system of registration. This would definitely undermine the Torrens
system and cause confusion and instability in property ownership that P.D. No.
892 intended to eliminate.
Petitioners argued that the Spanish title may still be presented as proof of
ownership on the basis of the exception provided in the fourth whereas clause of
P.D. No. 892, which reads:
WHEREAS, Spanish titles to lands which have not yet been brought under the
operation of the Torrens system, being subject to prescription, are now ineffective
to prove ownership unless accompanied by proof of actual possession; . . .
Since Petitioners alleged that they were in actual possession of the Subject
Property, then they could still present the Spanish title as evidence of their
ownership of the Subject Property. [37]
This Court cannot sustain petitioners argument. Actual proof of possession only
becomes necessary because, as the same whereas clause points out, Spanish
titles are subject to prescription. A holder of a Spanish title may still lose his
ownership of the real property to the occupant who actually possesses the same
for the required prescriptive period.[38] Because of this inherent weakness of a
Spanish title, the applicant for registration of his Spanish title under the Torrens
system must also submit proof that he is in actual possession of the real
property, so as to discount the possibility that someone else has acquired a better
title to the same property by virtue of prescription.
Moreover, legislative intent must be ascertained from a consideration of the
statute as a whole, and not just a particular provision alone. A word or phrase
taken in the abstract may easily convey a meaning quite different from the one
actually intended and evident when the word or phrase is considered with those
with which it is associated. An apparently general provision may have a limited
application if read together with other provisions of the statute.[39]
The fourth whereas clause of P.D. No. 892 should be interpreted and harmonized
with the other provisions of the whole statute.[40] Note that the tenor of the whole
42
presidential decree is to discontinue the use of Spanish titles and to strip them
of any probative value as evidence of ownership. It had clearly set a deadline for
the filing of applications for registration of all Spanish titles under the Torrens
system (i.e., six months from its effectivity or on 14 August 1976), after which,
the Spanish titles may no longer be presented to prove ownership.
All holders of Spanish titles should have filed applications for registration of their
title on or before 14 August 1976. In a land registration proceeding, the applicant
should present to the court his Spanish title plus proof of actual possession of
the real property. However, if such land registration proceeding was filed and
initiated after 14 August 1976, the applicant could no longer present his Spanish
title to the court to evidence his ownership of the real property, regardless of
whether the real property was in his actual possession.
Therefore, the fact that petitioners were in actual possession of the Subject
Property when they filed the Complaint with the trial court on 29 April 1996 does
not exclude them from the application of P.D. No. 892, and their Spanish title
remain inadmissible as evidence of their ownership of the Subject Property,
whether in a land registration proceeding or in an action to remove a cloud on or
to quiet title.
The preceding discussion does not bar holders of Spanish titles from claiming
ownership of the real property on some other basis, such as those provided in
either the Land Registration Decree[41] or the Public Land Act.[42] Petitioners
though failed to allege any other basis for their titles in their Complaint aside
from possession of the Subject Property from time immemorial, which this Court
has already controverted; and the Spanish title, which is already ineffective to
prove ownership over the Subject Property.
Therefore, without legal or equitable title to the Subject Property, the petitioners
lacked the personality to file an action for removal of a cloud on, or quieting of,
title and their Complaint was properly dismissed for failing to state a cause of
action. In view of the dismissal of the case on this ground, it is already
unnecessary for this Court to address the issue of prescription of the action.
Wherefore, this Court DENIES the instant petition and AFFIRMS the Decision of
the Court of Appeals, dated 29 July 2002, and the Order of the Regional Trial
Court of San Mateo, Rizal, Branch 77, dated 05 February 1999, dismissing
petitioners Complaint for failure to state a cause of action.
SO ORDERED.
Republic of the Philippines
SUPREME COURT
Manila
EN BANC
G.R. No. 103727 December 18, 1996
INTESTATE ESTATE OF THE LATE DON MARIANO SAN PEDRO Y
ESTEBAN, represented by its HEIR-JUDICIAL ADMINISTRATOR,
ENGRACIO F. SAN PEDRO, petitioner-appellant,
vs.
COURT OF APPEALS (Second Division) AURELIO OCAMPO, DOMINADOR D.
BUHAIN, TERESA C. DELA CRUZ, respondents-appellees.
G.R. No. 106496 December 18, 1996
ENGRACIO SAN PEDRO, CANDIDO GENER, ROSA PANTALEON, VICENTE
PANTALEON, ELEUTERIO PANTALEON, TRINIDAD SAN PEDRO, RODRIGO
SAN PEDRO, RICARDO NICOLAS, FELISA NICOLAS, and LEONA SAN
PEDRO, petitioners,
vs.
THE HONORABLE COURT OF APPEALS, (Sixteenth Division) and
REPUBLIC OF THE PHILIPPINES, respondents.
HERMOSISIMA, JR., J.:p
The most fantastic land claim in the history of the Philippines is the subject of
controversy in these two consolidated cases. The heirs of the late Mariano San
Pedro y Esteban laid claim and have been laying claim to the ownership of,
against third persons and the Government itself, a total land area of
approximately 173,000 hectares or "214,047 quiniones," 1 on the basis of a
Spanish title, entitled "Titulo de Propriedad Numero 4136" dated April 25, 1894.
The claim, according to the San Pedro heirs, appears to cover lands in the
provinces of Nueva Ecija, Bulacan, Rizal, Laguna and Quezon; and such Metro
Manila cities as Quezon City, Caloocan City, Pasay City, City of Pasig and City of
Manila, thus affecting in general lands extending from Malolos, Bulacan to the
City Hall of Quezon City and the land area between Dingalan Bay in the north
and Tayabas Bay in the south.2
Considering the vastness of the land claim, innumerable disputes cropped up
and land swindles and rackets proliferated resulting in tedious litigation in
43
various trial courts, in the appellate court and in the Supreme Court, 3 in
connection therewith.
We have had the impression that our decisions in Director of Forestry, et al. v.
Muoz, 23 SCRA 1183 [1968]; Antonio, et al. v. Barroga, et al., 23 SCRA 357
[1968]; Carabot, et al. v. Court of Appeals, et al., 145 SCRA 368 [1986]; Republic
v. Intermediate Appellate Court, et al., 186 SCRA 88 [1990]; Widows and Orphans
Association, Inc. (WIDORA) v. Court of Appeals, et al., 212 SCRA 360 [1992];
NAPOCOR v. Court of Appeals, et al., 144 SCRA 318 [1986]; Republic v. Court of
Appeals, et al., 135 SCRA 156 [1985]; and Director of lands v. Tesalona, 236
SCRA 336 [1994] 4 terminated the controversy as to ownership of lands covered
by Spanish Land Titles, for it is the rule that, once this Court, as the highest
Tribunal of the land, has spoken, there the matter must rest:
It is withal of the essence of the judicial function that at some point, litigation
must end, Hence, after the procedures and processes for lawsuits have been
undergone, and the modes of review set by law have been exhausted, or
terminated, no further ventilation of the same subject matter is allowed. To be
sure, there may be, on the part of the losing parties, continuing disagreement
with the verdict, and the conclusions therein embodied. This is of no moment,
indeed, is to be expected; but, it is not their will, but the Court's, which must
prevail; and, to repeat, public policy demands that at some definite time, the
issues must be laid to rest and the court's dispositions thereon accorded absolute
finality. 5 [Cited cases omitted]
It is, therefore, to the best interest of the people and the Government that we
render judgment herein writing finis to these controversies by laying to rest the
issue of validity of the basis of the estate's claim of ownership over this vast
expanse of real property.
The following facts are pertinent in the resolution of these long drawn-out cases:
G.R. NO. 103727
G.R No. 103727, an appeal by certiorari, arose out of a complaint 6 for recovery
of possession and/or damages with a prayer for a writ of preliminary injunction.
This was dismissed by the Regional Trial Court, National Capital Judicial Region,
Branch 104, Quezon City in its decision 7 dated July 7, 1989, the dispositive
portion 8 of which reads:
WHEREFORE, judgment is hereby rendered, dismissing the complaint against
the defendants Aurelio Ocampo, Dominador Buhain and Teresa dela Cruz and
ordering plaintiff to pay each of the herein defendants, the sum of FIVE
THOUSAND PESOS (P5,000.00) as and for attorney's fees, and to pay the costs
of suit.
The said complaint for recovery of possession of real property and/or
reconveyance with damages and with a prayer for preliminary injunction was
filed on August 15, 1988 by Engracio San Pedro as heir-judicial administrator of
the "Intestate Estate of Don Mariano San Pedro y Esteban" against Jose G. De
Ocampo, Aurelio Ocampo, MARECO, Inc., Rey Antonio Noguera, Teresa C. dela
Cruz, Gaudencio R Soliven, Diomedes Millan, Carmen Rayasco, Dominador D.
Buhain, Mario D. Buhain, Jose D. Buhain, Arestedes S. Cauntay, Manuel Chung
and Victoria Chung Tiu (El Mavic Investment & Development Corporation),
Capitol Hills Realty Corporation and Jose F. Castro. The complaint was docketed
as Civil Case No. Q-88-447 in Branch 104, Regional Trial Court of Quezon City.
In the complaint, it was alleged, among others: (1) that Engracio San Pedro
discovered that the aforenamed defendants were able to secure from the Registry
of Deeds of Quezon City titles to portions of the subject estate, particularly
Transfer Certificates of Title Nos. 1386, 8982, 951975-951977, 313624, 279067,
1412, 353054, 372592, 149120, 86404, 17874-17875, all emanating from
Original Certificate of Title No. 614 9 and Transfer Certificates of Title Nos.
255544 and 264124, both derivatives of Original Certificate of Title No. 333; (2)
that the aforesaid defendants were able to acquire exclusive ownership and
possession of certain portions of the subject estate in their names through deceit,
fraud, bad faith and misrepresentation; (3) that Original Certificates of Title Nos.
614 and 333 had been cancelled by and through a final and executory decision
dated March 21, 1988 in relation to letter recommendations by the Bureau of
Lands, Bureau of Forest Development and the Office of the Solicitor General and
also in relation to Central Bank Circulars dated April 7, 1971, April 23, 1971,
September 12, 1972 and June 10, 1980; and (4) that the issue of the existence,
validity and genuineness of Titulo Propriedad No. 4136 dated April 25, 1894
which covers the subject estate had been resolved in favor of the petitioner estate
in a decision dated April 25, 1978 by the defunct Court of First Instance, Branch
1 of Baliwag, Bulacan pertaining to a case docketed as Special Proceeding No.
312-B. 10
Summons were served on only five of the aforementioned defendants, namely,
Aurelio Ocampo, MARECO, Inc., Teresita G. dela Cruz, Dominador Buhain and
Manuel Chung and Victoria Chung Tiu. 11
On February 7, 1989, the lower court ordered the dismissal of the complaint
against Mareco, Inc. for improper service of summons and against Manuel Chung
and Victoria Chung Tiu for lack of cause of action considering that the registered
44
owner of the parcel of land covered by TCT No. 86404 is El Mavic Investment and
Development Co., Inc., not Manuel Chung and Victoria Chung Tiu. 12
Trial on the merits proceeded against the private respondents Ocampo, Buhain
and Dela Cruz.
On July 7, 1989, the lower court rendered judgment dismissing the complaint
based on the following grounds: (a) Ocampo, Buhain and Dela Cruz are already
the registered owners of the parcels of land covered by Torrens titles which
cannot be defeated by the alleged Spanish title, Titulo Propriedad No. 4136,
covering the subject estate; and (b) the decision of the Court of First Instance of
Bulacan entitled "In the Matter of the Intestate Estate of the late Don Mariano
San Pedro y Esteban" specifically stated in its dispositive portion that all lands
which have already been legally and validly titled under the Torrens System by
private persons shall be excluded from the coverage of Titulo Propriedad No.
4136. 13
The motion for reconsideration thereof was denied, 14 and so, the petitioner
estate interposed an appeal with the Court of Appeals. On January 20, 1992, the
appeal was dismissed 15 for being unmeritorious and the lower court's decision
was affirmed with costs against the petitioner estate. The appellate court
ratiocinated:
(1) neither the Titulo Propriedad No. 4136 nor a genuine copy thereof was
presented in the proceeding below;
(2) the illegible copy of the Titulo presented in court was not registered under the
Torrens system hence, it cannot be used as evidence of land ownership;
(3) the CFI decision invoked by petitioner estate in its favor expressly excluded
from the Titulo titled lands of private individuals;
(4) the Titulo is inferior to that of the registered titles of Ocampo, Buhain and
Dela Cruz as correctly ruled by the lower court;
(5) there is no evidence showing that OCT No. 614 from which titles of Ocampo,
Buhain and Dela Cruz originated was already cancelled, hence, the lower court
did not err in not declaring the same as null and
void. 16
Not having obtained a favorable judgment on appeal, the petitioner estate, on
March 16, 1992, filed the present petition 17 docketed as G.R. No. 103727.
G.R. NO. 106496
G.R. No. 106496, a petition for review on certiorari, began as a Engracio San Pedro and Justino Z. Benito who sought to be appointed as
petition 18 for letters of administration over the intestate estate of the late administrator and co-administrator, respectively.
Mariano San Pedro y Esteban which eventually resulted to an Order 19 dated
November 17, 1978 declaring inter alia, Titulo de Propriedad No. 4136 as null On February 29, 1972, after the jurisdictional facts were established, evidence
for the petitioners was received by the lower court without any opposition. 21
and void and of no legal force and effect.
On March 2, 1972, then Presiding Judge Juan F. Echiverri issued an Order
The dispositive portion 20 of the said Order reads:
appointing Engracio San Pedro as Administrator of the subject estate. 22
WHEREFORE, this Court so orders that:
On March 11, 1972, the Court issued letters of administration in favor of
1) The Decision dated April 25, 1978 is reconsidered and set aside. Engracio San Pedro upon posting of a bond in the sum of Ten Thousand Pesos
(P10,000.00). 23
2) Titulo de Propriedad No. 4136 is declared null and void and of no legal force
and effect and that therefore no rights could be derived therefrom. On February 7, 1974, Administrator Engracio San Pedro was ordered to furnish
copies of the letters of administration and other pertinent orders approving
3) All orders approving the sales, conveyances, donations or any other
certain dispositions of the properties of the estate to the following entities:
transactions involving the lands covered by Titulo de Propriedad No. 4136 are
declared invalidated, void and of no force and effect. (a) The Commanding General
Philippine Constabulary
4) All lands covered by Titulo de Propriedad No. 4136 are excluded from the Camp Crame, Quezon City
inventory of the estate of the late Mariano San Pedro y Esteban.
(b) The Solicitor General
5) The heirs, agents, privies or anyone acting for and in behalf of the estate of
Manila
the late Mariano San Pedro y Esteban are enjoined from representing or
exercising any acts of possession or ownership or from disposing in any manner (c) The Government Corporate Counsel
portions of all the lands covered by Titulo de Propriedad No. 4136 and to A. Mabini St., Manila
immediately vacate the same.
(d) The City Mayors of Quezon City & Caloocan
6) Engracio San Pedro and Justino Benito as co-administrators submit in Court
(e) The Governors of Rizal, Quezon and Bulacan
within twenty days their final accounting and inventory of all real and personal
properties of the estate which had come into their possession or knowledge under (f) The City Treasurers of Quezon City and Caloocan
oath.
(g) The Provincial Treasurers of Quezon, Bulacan and Rizal
7) This case is hereby re-opened, to allow movants-intervenors to continue with
the presentation of their evidence in order to rest their case. (h) The PHHC, Diliman, Quezon City

The consideration and approval of the administrator's final accounting and (i) The PAHRRA Quezon Boulevard, Quezon City
inventory of the presentation of movants-intervenors' evidence as well as the
(j) The Municipal Treasurers of the various municipalities in which properties of
consideration of all other incidents are hereby set on December 22, 1978 at 8:30
the estate are located; and
a.m.
(k) Office of Civil Relations, Camp Crame, Quezon City and Camp Aguinaldo,
The aforementioned petition for letters of administration over the intestate estate
Quezon City. 24
of the late Mariano San Pedro y Esteban was filed on December 29, 1971 with
the defunct Court of First Instance of Bulacan, Fifth Judicial District, Branch IV, The above Order was issued so as to protect the general public from any
Baliuag, Bulacan. The petition docketed as Sp. Proc. No. 312-B was initiated by confusion brought about by various persons who had been misrepresenting

45
themselves as having been legally authorized to act for the subject estate and to
sell its properties by virtue thereof.
On August 30, 1976, a Motion for Intervention and an Opposition to the Petition
was filed by the Republic of the Philippines alleging, inter alia:
4. That under Presidential Decree No. 892, dated February 16, 1976, Spanish
titles like the TITULO is absolutely inadmissible and ineffective as proof of
ownership in court proceedings, except where the holder thereof applies for land
registration under Act 496, which is not true in the proceedings at bar;
5. That no less than the Supreme Court had declared TITULO DE PROPIEDAD
NO. 4136 as invalid;
6. That, moreover, the late Don Mariano San Pedro y Esteban and/or his
supposed heirs have lost whatever rights of ownership they might have had to
the so-called Estate on the ground of inaction, laches and/or prescription;
7. That, accordingly, there is no estate or property to be administered for
purposes of inventory, settlement or distribution in accordance with law, and all
the inventories so far submitted, insofar as they embraced lands within the
TITULO, are deemed ineffective and cannot be legally considered; and
8. That the Republic of the Philippines has a legal interest in the land subject
matter of the petition considering that, except such portions thereof had been
(sic) already the subject of valid adjudication or disposition in accordance with
law, the same belong in State ownership.25
On February 15, 1977, the Republic filed a Motion to Suspend
Proceedings. 26
On February 16, 1977, the Republic's Opposition to the Petition for Letters of
Administration was dismissed by means of the following Order issued by Judge
Benigno Puno:
WHEREFORE, for lack of jurisdiction to determine the legal issues raised, the
Court hereby DISMISSES the "Opposition" dated August 30, 1976, filed by the
Office of the Solicitor General; likewise, for lack of merit, the Motion to Suspend
Proceedings dated February 15, 1977, filed by the Office of the Solicitor General
is DENIED.
The administrator Engracio San Pedro and the Co-administrator Justino Z.
Benito are ordered to furnish the office of the Solicitor General all copies of
inventories already filed in Court within ten (10) days from notice hereof. 27
46
On March 9, 1977, a motion for reconsideration was filed by the
Republic. 28
On April 25, 1978, the lower court then presided over by Judge Agustin C.
Bagasao, rendered a 52-page decision, the dispositive portion of which reads:
WHEREFORE, judgment is hereby rendered:
(a) Declaring the existence, genuineness and authenticity of Titulo de Propriedad
No. 4136 of the Registry of Deeds of Bulacan, issued on April 29, 1984, in the
name of the deceased Don Mariano San Pedro y Esteban, covering a total area of
approximately 214,047 quiniones or 173,000 hectares, situated in the Provinces
of Bulacan, Rizal, Quezon, Quezon City and Caloocan City;
(b) Declaring Engracio San Pedro, Candido Gener, Santiago Gener, Rosa
Pantaleon, Vicente Pantaleon, Eleuterio Pantaleon, Trinidad San Pedro, Rodrigo
San Pedro, Ricardo Nicolas, and Teresa Nicolas, as the true and lawful heirs of
the deceased Don Mariano San Pedro y Esteban and entitled to inherit the
intestate estate left by the said deceased, consisting of the above-mentioned tract
of private land covered and described by said above-mentioned Titulo de
Propriedad No. 4136 of the Registry of Deeds of Bulacan, excluding therefrom:
(a) all lands which have already been legally and validly titled under the Torrens
System, by private persons, or the Republic of the Philippines, or any of its
instrumentalities or agencies; (b) all lands declared by the government as
reservations for public use and purposes; (c) all lands belonging to the public
domain; and, (d) all portions thereof which had been sold, quitclaimed and/or
previously excluded by the Administrator and duly approved by a final order of
the Court, except those which may hereafter be set aside, after due consideration
on a case to case basis, of various motions to set aside the said Court order which
approved the said sales, quit-claims, and/or exclusions;
(c) The designation of Atty. Justino Z. Benito as co- administrator, is hereby
revoked to take effect immediately, to obviate any confusion in the administration
of the Estate, and to fix the responsibilities of administration to the co-heir
Administrator, Engracio San Pedro, whose appointment as such is hereby
confirmed. The said co-administrator Justino Z. Benito is hereby ordered to
render his final accounting of his co-administration of the Estate, within thirty
(30) days from receipt of copy hereof;
(d) The Co-Heir-Administrator, Engracio San Pedro is hereby ordered to amass,
collate, consolidate and take possession of all the net estate of the deceased Don
Marino San Pedro y Esteban, as well as all other sets and credits lawfully
belonging to the estate and/or to take appropriate legal action to recover the
same in the proper Courts of Justice, government offices or any appropriate
forum; and to pay all taxes or charges due from the estate to the Government,
and all indebtedness of the estate, and thereafter, to submit a project of partition
of the estate among the lawful heirs as herein recognized and declared.
It is, however, strongly recommended to His Excellency, President Ferdinand E.
Marcos that, to avoid the concentration of too much land to a few persons and
in line with the projected urban land reform program of the government, corollary
to the agricultural land reform program of the New Society, the above intestate
estate of the late Don Mariano San Pedro y Esteban should be expropriated or
purchased by negotiated sale by the government to be used in its human
settlements and low cost housing projects.
No Costs.
SO ORDERED. 29
On May 17, 1978, the Republic moved for a reconsideration of the above decision.
30
On June 5, 1978, administrator Engracio San Pedro filed a Manifestation and
Petition for the Inhibition of the then newly appointed Presiding Judge Oscar
Fernandez. On July 12, 1978, after the Republic filed its Reply to the Petition for
Inhibition, Judge Fernandez denied the said petition. 31
After hearings were conducted on the Republic's Motion for Reconsideration,
Judge Fernandez issued the aforestated Order 32 dated November 17, 1978
which, in essence, set aside Judge Bagasao's decision dated April 25, 1978 by
declaring Titulo de Propriedad No. 4136 as null and void and of no legal force
and effect, thus, excluding all lands covered by Titulo de Propriedad No. 4136
from the inventory of the estate of the late Mariano San Pedro y Esteban.
The petitioners-heirs of the late Mariano San Pedro y Esteban appealed to the
Court of Appeals and alleged that the lower court did not act with impartiality
when it granted the Republic's motion for reconsideration which was merely pro
forma, thereby overturning a prior declaration by the same court of the existence,
genuineness and authenticity of Titulo de Propriedad No. 4136 in the name of
the deceased Mariano San Pedro. 33
On March 11, 1992, the Court of Appeals dismissed the appeal of the petitioners-
heirs.34 In affirming the assailed Order dated November 17, 1978, the appellate
court focused its discussion solely on the issue of whether or not the lower court
erred in declaring Titulo de Priopriedad No. 4136 null and void. The appellate
court ruled that the petitioners-heirs failed to controvert the Republic's claim
47
that Titulo de Propriedad No. 4136 is invalid on the following bases; (a) non-
production of the original of the subject title; (b) inadmissibility of the photostat
copies of the said title; and (c) non-registration of the subject Spanish title under
Act No. 496 (Land Registration Act) as required by Presidential Decree No. 892
(Discontinuance of the Spanish Mortgage System of Registration and of the Use
of Spanish Titles as Evidence in Land Registration Proceedings).
The petitioners-heirs moved for a reconsideration of the Court of Appeals'
decision by invoking certain cases wherein the validity of Titulo de Propriedad
No. 4136 had been allegedly recognized. The Court of Appeals refused to be
swayed and denied the motion for reconsideration for lack of merit. 35
Hence, the herein petition, 36 docketed as G. R. No. 106496, was filed on
September 18, 1992.
After the parties filed their respective pleadings in G.R. Nos. 103727 and 106496,
this Court resolved to consolidate both cases on September 15,
1994. 3 7
While these cases were pending before us, several parties filed separate motions
for intervention which we denied on different occasions for lack of merit.
In G.R No. 103727, the grounds relied upon for the grant of the petition are as
follows:
I. That petitioner-appellant as plaintiff in Civil Case No. Q-88-447, RTC, Branch
104 was denied due process of law due to gross negligence of lawyer, which
respondent court grossly failed to take cognizance of.
II. That the respondent court committed grave abuse of discretion tantamount to
lack of jurisdiction in not remanding the case for trial and in affirming the lower
court's null and void judgment.38
In G.R No. 106496, the petitioners-heirs present the following assignment of
errors, to wit:
First. Respondent Court of Appeals affirmed the appealed order which resolved a
question of title or ownership over which the lower court as an intestate court
has no jurisdiction and over the vigorous and repeated objections of the
petitioners. 39
Second. Respondent Court of Appeals erred in upholding the order of Judge
Fernandez setting aside the order and decision of Judge Puno and Bagasao;
Judge Fernandez thereby acted as an appellate court reviewing, revising,
amending or setting aside the order and decision of Judges of equal rank. 40
Third. Respondent Court of Appeals has no jurisdiction to uphold the order of
Judge Fernandez who without jurisdiction, set aside the order of Judge Puno
and the decision of Judge Bagasao, both of which were already final. 41
Fourth. Respondent Court of Appeals was unmindful of the fact that Judge
Fernandez was appointed by President Marcos to reverse Judge Bagasao,
regardless of the evidence, thereby unmindful that petitioners were denied the
cold neutrality of an impartial tribunal.42
Fifth. Respondent Court of Appeals erred in not considering the evidence
presented before Judges Echiverri, Puno and Bagasao and merely adopted the
order of Judge Fernandez who never received a single piece of evidence,
notwithstanding the 1906 Guide title over Hacienda Angono in Binangonan,
Rizal, the boundary owner stated therein being Don Mariano San Pedro y
Esteban, and the November 1991 en banc decision of the Supreme Court
upholding the Guido title. 43
Of paramount importance over and above the central issue of the probative value
of the petitioners' Spanish title in these cases is the propriety of the lower court's
resolution of the question of ownership of the subject San Pedro estate in the
special proceedings case. Thus, before we address ourselves to the issue of
whether or not petitioners' Titulo de Propriedad No. 4136 is null and void and of
no legal force and effect, it is best that we first determine whether or not the
lower court, acting as a probate court, in the petition for letters of administration,
committed grave abuse of discretion amounting to lack of jurisdiction in settling
the issue of ownership of the San Pedro estate covered by Titulo Propriedad No.
4136.
Petitioners-heirs, in G.R No. 106496, on the one hand, contend that the lower
court, then CFI, Bulacan, Branch IV, had no jurisdiction as an "intestate court"
44 to resolve the question of title or ownership raised by the public respondent
Republic of the Philippines, through the Office of the Solicitor General in the
intestate proceedings of the estate of Mariano San Pedro y Esteban. 45
The public respondent, on the other hand, invoking its sovereign capacity as
parens patriae, argues that petitioners' contention is misplaced considering that
when the Republic questioned the existence of the estate of Mariano San Pedro
y Esteban, the lower court became duty-bound to rule on the genuineness and
validity of Titulo de Propriedad 4136 which purportedly covers the said estate,
otherwise, the lower court in the intestate proceedings would be mistakenly
dealing with properties that are proven to be part of the State's patrimony or
improperly included as belonging to the estate of the deceased. 46
48
A probate court's jurisdiction is not limited to the determination of who the heirs
are and what shares are due them as regards the estate of a deceased person.
Neither is it confined to the issue of the validity of wills. We held in the case of
Manigat v. Castillo, 4 7 that "the main function of a probate court is to settle
and liquidate the estates of deceased persons either summarily or through the
process of administration." Thus, its function necessarily includes the
examination of the properties, rights and credits of the deceased so as to rule on
whether or not the inventory of the estate properly included them for purposes of
distribution of the net assets of the estate of the deceased to the lawful heirs.
In the case of Trinidad v. Court of Appeals, 48 we stated, thus:
. . . questions of title to any property apparently still belonging to estate of the
deceased maybe passed upon in the Probate Court, with the consent of all the
parties, without prejudice to third persons . . .
Parenthetically, questions of title pertaining to the determination prima facie of
whether certain properties ought to be included or excluded from the inventory
and accounting of the estate subject of a petition for letters of administration, as
in the intestate proceedings of the estate of the late Mariano San Pedro y Esteban,
maybe resolved by the probate court. In this light, we echo our pronouncement
in the case of Garcia v. Garcia 49 that:
. . . The court which acquired jurisdiction over the properties of a deceased
person through the filing of the corresponding proceedings, has supervision and
control over the said properties, and under the said power, it is its inherent duty
to see that the inventory submitted by the administrator appointed by it contains
all the properties, rights and credits which the law requires the administrator to
set out in his inventory. In compliance with this duty, the court has also inherent
power to determine what properties, rights and credits of the deceased should be
included in or excluded from the inventory. Should an heir or person interested
in the properties of a deceased person duly call the court's attention to the fact
that certain properties, rights or credits have been left out in the inventory, it is
likewise the court's duty to hear the observations, with power to determine if
such observations should be attended to or not and if the properties referred to
therein belong prima facie to the intestate, but no such determination is final and
ultimate in nature as to the ownership of the said properties. 50 [Emphasis
Supplied]
In view of these disquisitions of this Court, we hold that the lower court did not
commit any reversible error when it issued the Order dated November 17, 1978
which set aside Judge Bagasao's decision dated April 25, 1978 and declared
Titulo de Propriedad No. 4136 as null and void, consequently excluding all lands
covered by the said title from the inventory of the estate of the late Mariano San
Pedro y Esteban.
A corollary issue sought to be ventilated by the petitioners-heirs as regards the
assailed Order of November 17, 1978 is the impropriety of Judge Fernandez' act
of granting the motion for reconsideration filed by the public respondent Republic
since, Judge Fernandez did not personally hear the intestate case. Petitioners
thus dubbed him as a "reviewing judge." By setting aside the Decision dated April
25, 1978 of his predecessors in CFI, Branch IV, Baliuag, Bulacan, namely, Judge
Benigno Puno and Judge Agustin C. Bagasao, respectively, Judge Fernandez,
acting as a "reviewing judge," proceeded without authority and/or jurisdiction.51
There is no question that, barring any serious doubts as to whether the decision
arrived at is fair and just, a newly appointed judge who did not try the case can
decide the same as long as the record and the evidence are all available to him
and that the same were taken into consideration and thoroughly studied. The
"reviewing judge" argument of the petitioners-heirs has no leg to stand on
considering that "the fact that the judge who penned the decision did not hear a
certain case in its entirety is not a compelling reason to jettison his findings and
conclusion inasmuch as the full record was available to him for his perusal." 52
In the case at bar, it is evident that the 41-page Order dated November 17, 1978
of Judge Fernandez bespeaks of a knowledgeable and analytical discussion of
the rationale for reconsidering and setting aside Judge Bagasao's Decision dated
April 25, 1978.
Considering the definiteness of our holding in regard to the correctness of Judge
Fernandez' disposition of the case, i.e., the issuance by the lower court of the
assailed Order of November 17, 1978, we now focus on the core issue of whether
or not the lower court in G.R No. 106496 committed reversible error in excluding
from the inventory of the estate of the deceased Mariano San Pedro y Esteban all
lands covered by Titulo de Propriedad No. 4136 primarily on the ground that the
said title is null and void and of no legal force and effect. Juxtaposed with this is
the issue of whether or not the appellate court, in both cases, G.R. Nos. 103727
and 106496, erred in not recognizing Titulo de Propriedad No. 4136 as evidence
to prove ownership by the Late Mariano San Pedro of the lands covered thereby.
It is settled that by virtue of Presidential Decree No. 892 which took effect on
February 16, 1976, the system of registration under the Spanish Mortgage Law
was abolished and all holders of Spanish titles or grants should cause their lands
covered thereby to be registered under the Land Registration Act 53 within six
(6) months from the date of effectivity of the said Decree or until August 16, 1976.
54 Otherwise, non-compliance therewith will result in a re-classification of their
49
lands. 55 Spanish titles can no longer be countenanced as indubitable evidence
of land ownership. 56
Section 1 of the said Decree provides:
Sec. 1. The system of registration under the Spanish Mortgage Law is
discontinued, and all lands recorded under said system which are not yet covered
by Torrens title shall be considered as unregistered lands.
All holders of Spanish titles or grants should apply for registration of their lands
under Act No. 496, otherwise known as the Land Registration Act, within six (6)
months from the effectivity of this decree. Thereafter, Spanish titles cannot be
used as evidence of land ownership in any registration proceedings under the
Torrens system.
Hereafter, all instruments affecting lands originally registered under the Spanish
Mortgage Law may be recorded under Section 194 of the Revised Administrative
Code, as amended by Act. 3344.
The Whereas clauses of the aforesaid Decree specify the underlying policies for
its passage, to wit:
WHEREAS, fraudulent sales, transfers, and other forms of conveyances of large
tracts of public and private lands to unsuspecting and unwary buyers appear to
have been perpetrated by unscrupulous persons claiming ownership under
Spanish titles or grants of dubious origin;
WHEREAS, these fraudulent transactions have often resulted in conflicting
claims and litigations between legitimate title holders, bona fide occupants or
applicants of public lands, on the one hand, and the holders of, or person
claiming rights under the said Spanish titles or grants, on the other, thus
creating confusion and instability in property ownership and threatening the
peace and order renditions in the areas affected;
WHEREAS, statistics in the Land Registration Commission show that recording
in the system of registration under the Spanish Mortgage Law is practically nil
and that this system has become obsolete;
WHEREAS, Spanish titles to lands which have not yet been brought under the
operation of the Torrens system, being subject to prescription, are now ineffective
to prove ownership unless accompanied by proof of actual possession;
WHEREAS, there is an imperative need to discontinue the System of registration
under the Spanish Mortgage Law and the use of Spanish titles as evidence in
registration proceedings under the Torrens system;
In the case of Director of Lands v. Heirs of Isabel Tesalona, et al., 57 we took
cognizance of this Decree and thus held that caution and care must be exercised
in the acceptance and admission of Spanish titles taking into account the
numerous fake titles that have been discovered after their supposed
reconstitution subsequent to World War II.
In both cases, petitioners-heirs did not adduce evidence to show that Titulo de
Propriedad 4136 was brought under the operation of P.D. 892 despite their
allegation that they did so on August 13, 1976. 58 Time and again we have held
that a mere allegation is not evidence and the party who alleges a fact has the
burden of proving it. 59 Proof of compliance with P.D. 892 should be the
Certificate of Title covering the land registered.
In the petition for letters of administration, it was a glaring error on the part of
Judge Bagasao who rendered the reconsidered Decision dated April 25, 1978 to
have declared the existence, genuineness and authenticity of Titulo de
Propriedad No. 4136 in the name of the deceased Mariano San Pedro y Esteban
despite the effectivity of P.D. No. 892. Judge Fernandez, in setting aside Judge
Bagasao's decision, emphasized that Titulo de Propriedad No. 4136, under P.D.
892, is inadmissible and ineffective as evidence of private ownership in the
special proceedings case. He made the following observations as regards the
Titulo, to wit:
The Solicitor General, articulating on the dire consequences of recognizing the
nebulous titulo as an evidence of ownership underscored the fact that during the
pendency of this case, smart speculators and wise alecks had inveigled innocent
parties into buying portions of the so-called estate with considerations running
into millions of pesos.
Some, under the guise of being benign heroes even feigned donations to
charitable and religious organizations, including veterans' organizations as
smoke screen to the gargantuan fraud they have committed and to hood wink
further other gullible and unsuspecting victims. 60
In the same light, it does not escape this Court's onomatopoeic observation that
the then heir-judicial administrator Engracio San Pedro who filed the complaint
for recovery of possession and/or reconveyance with damages in G.R No. 103727
on August 15, 1988 invoked Judge Bagasao's Decision of April 25, 1978 in
support of the Titulo's validity notwithstanding the fact that, by then, the said
Decision had already been set aside by Judge Fernandez' Order of November 17,
1978. We are in accord with the appellate courts' holding in G.R No. 103727
insofar as it concludes that since the Titulo was not registered under Act No.
50
496, otherwise known as the Land Registration Act, said Titulo is inferior to the
registered titles of the private respondents Ocampo, Buhain and Dela Cruz.
This Court can only surmise that the reason for the non-registration of the Titulo
under the Torrens system is the lack of the necessary documents to be presented
in order to comply with the provisions of P.D. 892. We do not discount the
possibility that the Spanish title in question is not genuine, especially since its
genuineness and due execution have not been proven. In both cases, the
petitioners heirs were not able to present the original of Titulo de Propriedad No.
4136 nor a genuine copy thereof. In the special proceedings case, the petitioners-
heirs failed to produce the Titulo despite a subpoena duces tecum (Exh. "Q-RP")
to produce it as requested by the Republic from the then administrators of the
subject intestate estate, Engracio San Pedro and Justino Benito, and the other
interested parties. As an alternative to prove their claim of the subject intestate
estate, the petitioners referred to a document known as "hypoteca" (the Spanish
term is 'hipoteca') allegedly appended to the Titulo. However, the said hypoteca
was neither properly identified nor presented as evidence. Likewise, in the action
for recovery of possession and/or reconveyance with damages, the petitioners-
heirs did not submit the Titulo as part of their evidence. Instead, only an alleged
illegible copy of the Titulo was presented. (Exhs. "C-9" to "C-19").
The Best Evidence Rule as provided under Rule 130, section 2 of the Rules of
Court is stated in unequivocal terms. Subparagraphs (a) and (b) of the said Rule
read:
Sec. 2. Original writing must be produced; exceptions. There can be no evidence
of a writing the contents of which is the subject of inquiry, other than the original
writing itself, except in the following cases:
(a) When the original has been lost, destroyed, or cannot be produced in court;
(b) When the original is in the possession of the party against whom the evidence
is offered, and the latter fails to produce it after reasonable notice;
xxx xxx xxx
Sections 3 and 4 of the same Rule further read:
Sec 4. Secondary evidence when original is lost or destroyed When the original
writing has been lost or destroyed, or cannot be produced in court, upon proof
of its execution and loss or destruction or unavailability, its contents may be
proved by a copy, or by a recital of its contents in some authentic document, or
by the recollection of witnesses.
Sec. 5. Secondary evidence when original is in adverse party's custody. If the
writing be in the custody of the adverse party, he must have reasonable notice
to produce it. If after such notice and after satisfactory proof of its existence, he
fails to produce the writing, the contents thereof may be proved as in the case of
its loss. But the notice to produce it is not necessary where the writing is itself a
notice, or where it has been wrongfully obtained or withheld by the adverse party.
Thus, the court shall not receive any evidence that is merely substitutionary in
its nature, such as photocopies, as long as the original evidence can be had. In
the absence of a clear showing that the original writing has been lost or destroyed
or cannot be produced in court, the photocopy submitted, in lieu thereof, must
be disregarded, being unworthy of any probative value and being an inadmissible
piece of evidence. 61
Hence, we conclude that petitioners-heirs failed to establish by competent proof
the existence and due execution of the Titulo. Their explanation as to why the
original copy of the Titulo could not be produced was not satisfactory. The alleged
contents thereof which should have resolved the issue as to the exact extent of
the subject intestate estate of the late Mariano San Pedro were not distinctly
proved. In the case of Ong Ching Po v. Court of Appeals, 62 we pointed out that:
Secondary evidence is admissible when the original documents were actually lost
or destroyed. But prior to the introduction of such secondary evidence, the
proponent must establish the former existence of the document. The correct
order of proof is as follows: existence; execution; loss; contents. This order may
be changed if necessary in the discretion of the court. 63
In upholding the genuineness and authenticity of Titulo de Propriedad No. 4136,
Judge Bagasao, in his decision, relied on: (1) the testimony of the NBI expert, Mr.
Segundo Tabayoyong, pertaining to a report dated January 28, 1963
denominated as "Questioned Documents Report No. 230-163"; (2) a photostat
copy of the original of the Titulo duly certified by the then Clerk of Court of the
defunct Court of First Instance of Manila; and (3) the hipoteca Registered in the
Register of Deeds of Bulacan on December 4, 1894.
Judge Fernandez, in his November 1978 Order which set aside Judge Bagasao's
April 1978 decision correctly clarified that the NBI report aforementioned was
limited to the genuineness of the two signatures of Alejandro Garcia and Mariano
Lopez Delgado appearing on the last page of the Titulo, not the Titulo itself. When
asked by the counsel of the petitioners-heirs to admit the existence and due
execution of the Titulo, the handling Solicitor testified:
xxx xxx xxx
51
ATTY. BRINGAS:
With the testimony of this witness, I would like to call the distinguished counsel
for the government whether he admits that there is actually a titulo propiedad
4136.
COURT:
Would you comment on that Solicitor Agcaoili?
ATTY. AGCAOILI:
We are precisely impugning the titulo and I think the question of counsel is
already answered by witness. The parties have not yet established the due
existence of the titulo.
ATTY. BRINGAS:
We are constrained to ask this matter in order to be candid about the question.
The witness is a witness for the government, so with the testimony of this witness
for the government to the effect that there is actually in existence titulo propiedad
4136; we are asking the question candidly to the government counsel whether
he is prepared to state that there is really in existence such titulo propiedad
4136.
ATTY. AGCAOILI:
We are now stating before this court that there was such a document examined
by the NBI insofar as the signatures of Alejandro Garcia and Manuel Lopez
Delgado are concerned and they are found to be authentic. 64
The following significant findings of Judge Fernandez further lend credence to
our pronouncement that the Titulo is of dubious validity:
. . . the NBI in its Questioned Document Report No. 448-977 dated September 2,
1977 (Exhibit "O-RP") concluded that the document contained material
alterations as follows:
a) On line 15 of "p, 1, Title" and on line 5 of "p. 2, Title," the word
"Pinagcamaligan" was written after "Pulo;"
b) On line 16, "p. 1, Title," "un" was converted to "mil;"
c) On Line 18, "p. 1, Title," "mil" was written at the end of "tres" in "tres mil;"
d) On line 19 of "p. 1, Title," a semblance of "mil" was written after "setentay tres;"
e) On line 6, "p. 2, Title," "un" was formed to a semblance of "uni;" and
f) On line 8, "p. 2, Title," "un" was formed to "mil."
The plain and evident purpose was definitely to enlarge the area of the titulo.
According to Mr. Tabayoyong of the NBI, there are still "pieces of black ashes
around the rings of the portions which are indications of burnings". The burnings
were made on the very portions where there were previous erasures, alterations
and intercalations. Understandably, the burnings were done to erase traces of
the criminal act. 65
In the case of National Power Corporation v. Court of Appeals, et a1. 66 Justice
Ameurfina Melencio-Herrera, in reinstating the trial court's judgment therein,
sustained the finding that:
. . . The photostatic copy (in lieu of the lost original) of the Spanish title in the
name of Mariano San Pedro shows obvious alterations and intercalations in an
attempt to vastly increase the area and change the location of the land described
in the original title . . .
Anent the inadmissibility as evidence of the photostat copy of the Titulo, we
sustain the lower court's analysis, as affirmed by the appellate court, viz:
To begin with, the original of Titulo de Propiedad No. 4136 was never presented
in Court. Upon request of the Government, a subpoena duces tecum (Exhibit "Q-
RP") was issued to the two administrators, Engracio San Pedro and Justino
Benito as well as to other interested parties to produce the original of Titulo de
Propriedad No. 4136. But no one produced the titulo. What the parties did was
to pass the buck to one another.
Without any plausible explanation at all on as to why the original could not be
produced, the Court cannot take cognizance of any secondary evidence.
It was explained that the titulo after changing hands, finally fell into the hands
of a certain Moon Park of Korea but who later disappeared and that his present
whereabouts could not be known.
Strangely enough, despite the significance of the titulo, no serious efforts on the
part of the claimants-heirs were exerted to retrieve this document of vital
importance despite the Court order to produce it in order to determine its
authenticity.
It would not be enough to simply say that Moon Park's whereabouts are unknown
or that there are not enough funds to locate him. The only logical conclusion
52
would be that the original would be adverse if
produced. 67
As regards the hipoteca which allegedly defines the metes and bounds of the
subject intestate estate, the petitioners-heirs have not established the conditions
required by law for their admissibility as secondary evidence to prove that there
exists a document designated as Titulo de Propriedad No. 4136. Hence, the same
acquires no probative value. 68
At this juncture, our decision dated June 28, 1968 in Director of Forestry, et al.
v. Hon. Emmanuel M. Muoz, as Judge of the Court of First Instance of Bulacan,
Branch I, et al. 69 is enlightening. In said case, private respondent,
Pinaycamaligan Indo-Agro Development Corporation, Inc., (PIADECO), claimed
to be the owner of some 72,000 hectares of land located in the municipalities of
Angat, Norzagaray and San Jose del Monte, province of Bulacan, and in Antipolo
and Montalban, province of Rizal. To prove its ownership Piadeco relied on Titulo
de Propriedad No. 4136 dated April 28, 1894. Scholarly opining that the Titulo
is of doubtful validity, 70 Justice Conrado V. Sanchez, speaking for the Court,
stated that:
But an important moiety here is the deeply disturbing intertwine of two
undisputed facts. First. The Title embraces land "located in the Provinces of
Bulacan, Rizal, Quezon, and Quezon City." Second. The title was signed only by
the provincial officials of Bulacan, and inscribed only in the Land Registry of
Bulacan. Why? The situation, indeed, cries desperately for a plausible answer.
To be underscored at this point is the well-embedded principle that private
ownership of land must be proved not only through the genuineness of title but
also with a clear identity of the land claimed. (Oligan v. Mejia, 17 Phil. 494, 496;
Villa Abrille v. Banuelos, 20 Phil. 1, 8, citing Sison v. Ramos, 13 Phil. 54 and
Belen v. Belen, 13 Phil. 202; Licad v. Bacani, 51 Phil. 51, 54-56; Lasam v.
Director, 65 Phil. 367, 371. This Court ruled in a case involving a Spanish title
acquired by purchase that the land must be concretely measured per hectare or
per quinon, not in mass (cuerpos ciertos), (Valdez v. Director, 62 Phil. 362, 373,
375). The fact that the Royal Decree of August 31, 1888 used 30 hectares as a
basis for classifying lands strongly suggests that the land applied for must be
measured per hectare.
Here, no definite area seems to have been mentioned in the title. In Piadeco's
"Rejoinder to Opposition" dated April 28, 1964 filed in Civil Case 3035-M, it
specified that area covered by its Titulo de Propiedad as 74,000 hectares (Rollo in
L-24796, p. 36). In its "Opposition" of May 13, 1964 in the same case, it described
the land as containing 72,000 hectares (Id., p. 48). Which is which? This but
accentuates the nebulous identity of Piadeco's land, Piadeco's ownership thereof
then equally suffers from vagueness, fatal at least in these proceedings.
Piadeco asserts that Don Mariano San Pedro y Esteban, the original owner
appearing on the title, acquired his rights over the property by prescription under
Articles 4 and 5 of the Royal Decree of June 25, 1880, (Rollo of L-24796, p. 184)
the basic decree that authorized adjustment of lands. By this decree,
applications for adjustment showing the location, boundaries and area of land
applied for were to be filed with the Direccion General de Administration Civil,
which then ordered the classification and survey of the land with the assistance
of the interested party or his legal representative (Ponce, op. cit., p. 22).
The Royal Decree of June 5, 1880 also fixed the period for filing applications for
adjustment at one year from the date of publication of the decree in the Gaceta
de Manila on September 10, 1880, extended for another year by the Royal Order
of July 15, 1881 (Ibid.). If Don Mariano sought adjustment within the time
prescribed, as he should have, then, seriously to be considered here are the Royal
Orders of November 25, 1880 and of October 26, 1881, which limited adjustment
to 1,000 hectares of arids lands, 500 hectares of land with trees and 100 hectares
of irrigable lands (See: Government v. Avila, 46 Phil. 146, 154; Bayot v. Director
of Lands, 98 Phil. 935, 941. Article 15 of the Royal Decree of January 26, 1889
limited the area that may be acquired by purchase to 2,500 hectares, with
allowable error up to 5%. Ponce, op cit., p. 19). And, at the risk of repetition, it
should be stated again that Piadeco's Titulo is held out to embrace 72,000 or
74,000 hectares of land.
But if more were needed, we have the Maura Law (Royal Decree of February 13,
1894), published in the Gaceta de Manila on April 17, 1894 (Ibid., p. 26; Venture,
op. cit., p. 28). That decree required a second petition for adjustment within six
months from publication, for those who had not yet secured their titles at the
time of the publication of the law (Ibid.). Said law also abolished the provincial
boards for the adjustment of lands established by Royal Decree of December 26,
1884, and confirmed by Royal Decree of August 31, 1888, which boards were
directed to deliver to their successors, the provincial boards established by
Decree on Municipal Organization issued on May 19, 1893, all records and
documents which they may hold in their possession (Ramirez v. Director of Land,
supra, at p. 124).
Doubt on Piadeco's title here supervenes when we come to consider that title was
either dated April 29 or April 25, 1894, twelve or eight days after the publication
of the Maura Law.
53
Let us now take a look, as near as the record allows, at how Piadeco exactly
acquired its rights under the Titulo. The original owner appearing thereon was
Don Mariano San Pedro y Esteban. From Piadeco's explanation not its evidence
(Rollo of L-24796, pp. 179-188) we cull the following: On December 3, 1894, Don
Mariano mortgaged the land under pacto de retro, redeemable within 10 years,
for P8,000.00 to one Don Ignacio Conrado. This transaction was said to have
been registered or inscribed on December 4, 1894. Don Mariano Ignacio died,
his daughter, Maria Socorro Conrado, his only heir, adjudicated the land to
herself. At about the same time, Piadeco was organized. Its certificate of
registration was issued by the Securities and Exchange Commission on June 27,
1932. Later, Maria Socorro, heir of Don Ignacio, became a shareholder of Piadeco
when she conveyed the land to Piadeco's treasurer and an incorporator, Trinidad
B. Estrada, in consideration of a certain amount of Piadeco shares. Thereafter,
Trinidad B. Estrada assigned the land to Piadeco. Then came to the scene a
certain Fabian Castillo, appearing as sole heir of Don Mariano, the original owner
of the land. Castillo also executed an affidavit of adjudication to himself over the
same land, and then sold the same to Piadeco. Consideration therefor was paid
partially by Piadeco, pending the registration of the land under Act 496.
The question may well be asked: Why was full payment of the consideration to
Fabian Castillo made to depend on the registration of the land under the Torrens
system, if Piadeco was sure of the validity of Titulo de Propiedad 4136? This, and
other factors herein pointed out, cast great clouds of doubt that hang most
conspicuously over Piadeco's title.
Moreover, in the case of Widows & Orphans Association, Inc. v. Court of Appeals,
71 we categorically enunciated that the alleged Spanish title, Titulo de
Propriedad No. 4136, had become bereft of any probative value as evidence of
land ownership by virtue of P.D. 892 as contained in our Resolution dated
February 6, 1985 in a related case entitled Benito and WIDORA v. Ortigas
docketed as G.R No. 69343. On March 29, 1985, an entry of final judgment was
made respecting G.R. No. 69343.
Under the doctrine of conclusiveness of judgment, the prior declarations by this
Court relating to the issue of the validity of Titulo de Propriedad No. 4136
preclude us from adjudicating otherwise. In the Muoz case, we had cast doubt
on the Titulo's validity. In the WIDORA case, the Titulo's nullification was
definitive. In both cases, the Republic and the estate of Mariano San Pedro y
Esteban were on opposite ends before this bench. In the case en banc of Calalang
v. Register of Deeds of Quezon City, 72 the Court explained the concept of
conclusiveness of judgment, viz:
. . . conclusiveness of judgment states that a fact or question which was in
issue in a former suit and was there judicially passed upon and determined by a
court of competent jurisdiction, is conclusively settled by the judgment therein
as far as the parties to that action and persons in privity with them are concerned
and cannot be again litigated in any future action between such parties or their
privies, in the same court or any other court of concurrent jurisdiction on either
the same or different cause of action, while the judgment remains unreversed by
proper authority. It has been held that in order that a judgment in one action
can be conclusive as to a particular matter in another action between the same
parties or their privies, it is essential that the issue be identical. If a particular
point or question is in issue in the second action, and the judgment will depend
on the determination of that particular point or question, a former judgment
between the same parties or their privies will be final and conclusive in the
second if that same point or question was in issue and adjudicated in the first
suit (Nabus v. Court of Appeals, 193 SCRA 732 [1991]). Identity of cause of action
is not required by merely identity of issues.
The issue, whether Titulo de Propriedad No. 4136 is valid or not, must now be
laid to rest. The Titulo cannot be relied upon by the petitioners-heirs or their
privies as evidence of ownership. In the petition for letters of administration the
inventory submitted before the probate court consisted solely of lands covered
by the Titulo. Hence, there can be no "net estate" to speak of after the Titulo's
exclusion from the intestate proceedings of the estate of the late Mariano San
Pedro.
In G.R No. 103727, the Titulo cannot be superior to the Torrens Titles of private
respondents Buhain, Ocampo and Dela Cruz, namely TCT No. 372592 (Exh. "2",
Buhain), TCT No. 8982 (Exh. "2" De Ocampo) and TCT No. 269707 (Exh. "2"
Dela Cruz). 73 Under the Torrens system of registration, the titles of private
respondents became indefeasible and incontrovertible one year from its final
decree. 74 More importantly, TCT Nos. 372592, 8982, 269707, having been
issued under the Torrens system, enjoy the conclusive presumption of validity.
75 As a last hurrah to champion their claim to the vast estate covered by the
subject Spanish title, the petitioners-heirs imputed fraud and bad faith which
they failed to prove on the part of the private respondents as regards their
Torrens titles and accused their own counsel of gross negligence for having failed
to call the proper witnesses from the Bureau of Forestry to substantiate the
petitioners-heirs' claim that OCT No. 614 from which private respondents were
derived is null and void. It is an elementary legal principle that the negligence of
counsel binds the client. 76 The records show that the petitioners-heirs were not
at all prejudiced by the non-presentation of evidence to prove that OCT No. 614
54
is a nullity considering that their ownership itself of the lands being claimed was
not duly proved. In the case of Villa Rhecar Bus v. Dela Cruz, et al., 77 we held:
It is unfortunate that the lawyer of the petitioner neglected his responsibilities to
his client. This negligence ultimately resulted in a judgment adverse to the client.
Be that as it may, such mistake binds the client, the herein petitioner. As a
general rule, a client is bound by the mistakes of his counsel. (Que v. Court of
Appeals, 101 SCRA 13 [1980] Only when the application of the general rule would
result in serious injustice should an exception thereto be called for. Under the
circumstances obtaining in this case, no undue prejudice against the petitioner
has been satisfactorily demonstrated. At most, there is only an unsupported
claim that the petitioner bad been prejudiced by the negligence of its counsel,
without an explanation to that effect.
Sans preponderance of evidence in support of the contention that the petitioners-
heirs were denied due process on account of the negligence of their counsel, the
writ of certiorari is unavailing.
It bears repeating that the heirs or successors-in-interest of Mariano San Pedro
y Esteban are not without recourse. Presidential Decree No. 892, quoted
hereinabove, grants all holders of Spanish Titles the right to apply for registration
of their lands under Act No. 496, otherwise known as the Land Registration Act,
within six (6) months from the effectivity of the Decree. Thereafter, however, any
Spanish Title, if utilized as evidence of possession, cannot be used as evidence
of ownership in any land registration proceedings under the Torrens system.
All instruments affecting lands originally registered under the Spanish Mortgage
Law may be recorded under Section 194 of the Revised Administrative Code, as
amended by Act 3344.
In view hereof, this is as good a time as any, to remind the Solicitor General to
be more vigilant in handling land registration cases and intestate proceedings
involving portions of the subject estate. It is not too late in the day for the Office
of the Solicitor General to contest the Torrens titles of those who have acquired
ownership of such portions of land that rightfully belong to the State.
In fine, the release of the matured Land Bank Capital Bonds issued in favor of
Mariano San Pedro y Esteban on August 13, 1968 sought by one Catalino San
Pedro, alleged heir, legal holder and owner of Titulo de Propriedad No. 4136 is a
matter not ripe for adjudication in these cases. Firstly, Catalino San Pedro is not
a party in any of the two cases before us for review, hence, this Court in a
Resolution dated May 10, 1993, 78 denied Catalino's motion for leave to reopen
and/or new trial. And, secondly, the aforementioned bonds were not included in
the inventory of the subject estate submitted by then administrators, Engracio
San Pedro and Justino Benito before the probate court.

WHEREFORE, in view of all the foregoing, the petitions in G.R Nos. 103727 and
106496 are hereby DISMISSED for lack of merit.

Consequently, in G.R No. 103727, the decision of the Court of Appeals dated
January 20, 1992 is hereby AFFIRMED.

In G.R No. 106496, judgment is hereby rendered as follows:

(1) Titulo de Propriedad No. 4136 is declared null and void and, therefore, no
rights could be derived therefrom;

(2) All lands covered by Titulo de Propriedad No. 4136 are excluded from the
inventory of the estate of the late Mariano San Pedro y Esteban;

(3) The petition for letters of administration, docketed as Special Proceedings No.
312-B, should be, as it is, hereby closed and terminated.

(4) The heirs, agents, privies and/or anyone acting for and in behalf of the estate
of the late Mariano San Pedro y Esteban are hereby disallowed to exercise any
act of possession or ownership or to otherwise, dispose of in any manner the
whole or any portion of the estate covered by Titulo de Propriedad No. 4136; and
they are hereby ordered to immediately vacate the same, if they or any of them
are in possession thereof.

This judgment is IMMEDIATELY EXECUTORY.

SO ORDERED.

55
Republic of the Philippines
SUPREME COURT
Manila
SECOND DIVISION
G.R. No. 171008 September 13, 2007
CARMELITA FUDOT, Petitioner,
vs.
CATTLEYA LAND, INC., VELASCO, JR., JJ. Respondent.
DECISION
TINGA, J.:
For resolution is a petition that seeks to nullify the Decision1 and Resolution2 of
the Court of Appeals dated 28 April 2005 and 11 January 2006, respectively, in
C.A.G.R. CV No. 73025 which declared respondent as having a better right over
a parcel of land located in Doljo, Panglao, Bohol.
The facts, as culled from the records, follow.
Sometime in July 1992, Cattleya Land, Inc. (hereinafter referred to as
respondent) asked someone to check, on its behalf, the titles of nine (9) lots, the
subject land included, which it intended to buy from the spouses Troadio and
Asuncion Tecson. Finding no defect on the titles, respondent purchased the nine
lots through a Deed of Conditional Sale on 6 November 1992. Subsequently, on
30 August 1993, respondent and the Tecsons executed a Deed of Absolute Sale
over the same properties. The Deed of Conditional Sale and the Deed of Absolute
Sale were registered with the Register of Deeds on 06 November 1992 and 04
October 1993, respectively.3 The Register of Deeds, Atty. Narciso dela Serna,
refused to actually annotate the deed of sale on the titles because of the existing
notice of attachment in connection with Civil Case No. 3399 pending before the
Regional Trial Court of Bohol.4 The attachment was eventually cancelled by
virtue of a compromise agreement between the Tecsons and their attaching
creditor which was brokered by respondent. Titles to six (6) of the nine (9) lots
were issued, but the Register of Deeds refused to issue titles to the remaining
three (3) lots , because the titles covering the same were still unaccounted for.
On 23 January 1995, petitioner presented for registration before the Register of
Deeds the owners copy of the title of the subject property, together with the deed
of sale purportedly executed by the Tecsons in favor of petitioner on 19 December
1986. On the following day, respondent sent a letter of protest/opposition to
56
petitioners application. Much to its surprise, respondent learned that the
Register of Deeds had already registered the deed of sale in favor of petitioner
and issued a new title in her name.5
On 5 May 1995, respondent filed its Complaint6 for Quieting Of Title &/Or
Recovery Of Ownership, Cancellation Of Title With Damages before the Regional
Trial Court of Tagbilaran City.7 On 26 June 1995, Asuncion filed a complaint-in-
intervention, claiming that she never signed any deed of sale covering any part
of their conjugal property in favor of petitioner. She averred that her signature
in petitioners deed of sale was forged thus, said deed should be declared null
and void.8 She also claimed that she has discovered only recently that there was
an amorous relationship between her husband and petitioner.9
Petitioner, for her part, alleged in her answer10 that the spouses Tecson had sold
to her the subject property for 20,000.00 and delivered to her the owners copy
of the title on 26 December 1986. She claims that she subsequently presented
the said title to the Register of Deeds but the latter refused to register the same
because the property was still under attachment.
On 31 October 2001, the trial court rendered its decision:11 (i) quieting the title
or ownership of the subject land in favor of respondent; (ii) declaring the deed of
sale between petitioner and spouses Tecson invalid; (iii) ordering the registration
of the subject land in favor of respondent; (iv) dismissing respondents claim for
damages against the Register of Deeds for insufficiency of evidence; (v) dismissing
Asuncions claim for damages against petitioner for lack of factual basis; and (vi)
dismissing petitioners counterclaim for lack of the required preponderance of
evidence.12
According to the trial court, respondent had recorded in good faith the deed of
sale in its favor ahead of petitioner. Moreover, based on Asuncions convincing
and unrebutted testimony, the trial court concluded that the purported signature
of Asuncion in the deed of sale in favor of petitioner was forged, thereby rendering
the sale void.13
Petitioner sought recourse to the Court of Appeals, arguing in the main that the
rule on double sale was applicable to the case. The appellate court, however,
dismissed her appeal, holding that there was no double sale because the alleged
sale to petitioner was null and void in view of the forgery of Asuncions purported
signature in the deed. The appellate court noted that petitioner failed to rebut
Asuncions testimony despite opportunities to do so.14 Moreover, even if there
was double sale, according to the appellate court, respondents claim would still
prevail since it was able to register the second sale in its favor in good faith, had
made inquiries before it purchased the lots, and was informed that the titles were
free from encumbrance except the attachment on the property due to Civil Case
No. 3399.15
Petitioner sought reconsideration of the decision but the Court of Appeals denied
her motion for reconsideration for lack of merit.16
Petitioner thus presents before this Court the following issues for resolution:
I.
BETWEEN 2 BUYERS OF REGISTERED LAND, WHO HAS THE BETTER RIGHT-
IS IT THE FIRST BUYER WHO WAS GIVEN THE OWNERS DUPLICATE TCT
TOGETHER WITH A DEED OF SALE IN 1986, OR THE SECOND BUYER IN 1992
WITH ONLY A DEED OF SALE.
II.
IS A BUYER OF REGISTERED LAND WHO DID NOT DEMAND OR REQUIRE
THE DELIVERY OF THE OWNERS DUPLICATE TCT A BUYER IN GOOD FAITH.
III.
II. IN SUBSEQUENT REGISTRATION OF REGISTERED LANDS, AS BY SALE,
WHICH LAW SHALL GOVERN, ARTICLE 1455 OF CIVIL CODE OR P.D. 1529 OR
TORRENS SYSTEM.17
Petitioner avers that she was the first buyer in good faith and even had in her
possession the owners copy of the title so much so that she was able to register
the deed of sale in her favor and caused the issuance of a new title in her name.
She argues that the presentation and surrender of the deed of sale and the
owners copy carried with it the "conclusive authority of Asuncion Tecson" which
cannot be overturned by the latters oral deposition.18
Petitioner claims that respondent did not demand nor require delivery of the
owners duplicate title from the spouses Tecson, neither did it investigate the
circumstances surrounding the absence of the title. These indicate respondents
knowledge of a defect in the title of the spouses and, thus, petitioner concludes
that respondent was not a buyer in good faith.19
Finally, petitioner insists that the applicable law in this case is P.D. No. 1529, a
special law dealing precisely with the registration of registered lands or any
subsequent sale thereof, and not Article 1544 of the Civil Code which deals with
immovable property not covered by the Torrens System.20
Respondent points out, on one hand, that petitioners first two issues which
present an inquiry on who has a better right or which one is a buyer in good
57
faith, are questions of fact not proper in a petition for review. The third issue, on
the other hand, is ostensibly a question of law which had been unsuccessfully
raised below.21
Respondent maintains that there is no room to speak of petitioner as a buyer in
good faith since she was never a buyer in the first place, as her claim is based
on a null and void deed of sale, so the court a quo found. Respondent also asserts
that its status as a buyer in good faith was established and confirmed in the
proceedings before the two courts below.22
Lastly, respondent argues that P.D. No. 1529 finds no application in the instant
case. The "production of the owners duplicate certificate x x x being conclusive
authority from the registered owner" is only true as between the registration
applicant and the register of deeds concerned, but never to third parties. Such
conclusive authority, respondent adds, is "only for the Register of Deeds to enter
a new certificate or to make a memorandum of registration in accordance with
such instrument." It cannot cure the fatal defect that the instrument from which
such registration was effected is null and void ab initio, respondent concludes.23
The petition is bereft of merit.
Petitioners arguments, which rest on the assumption that there was a double
sale, must fail.
In the first place, there is no double sale to speak of. Art. 1544 of the Civil Code,24
which provides the rule on double sale, applies only to a situation where the
same property is validly sold to different vendees. In this case, there is only one
sale to advert to, that between the spouses Tecson and respondent.
In Remalante v. Tibe,25 this Court ruled that the Civil Law provision on double
sale is not applicable where there is only one valid sale, the previous sale having
been found to be fraudulent. Likewise, in Espiritu and Apostol v. Valerio,26 where
the same parcel of land was purportedly sold to two different parties, the Court
held that despite the fact that one deed of sale was registered ahead of the other,
Art. 1544 of the Civil Code will not apply where said deed is found to be a forgery,
the result of this being that the right of the other vendee should prevail.
The trial court declared that the sale between the spouses Tecson and petitioner
is invalid, as it bears the forged signature of Asuncion. Said finding is based on
the unrebutted testimony of Asuncion and the trial courts visual analysis and
comparison of the signatures in her Complaint-in-Intervention and the
purported deed of sale. This finding was upheld by the Court of Appeals, as it
ruled that the purported sale in petitioners favor is null and void, taking into
account Asuncions unrefuted deposition. In particular, the Court of Appeals
noted petitioners failure to attend the taking of the oral deposition and to give
written interrogatories. In short, she did not take the necessary steps to rebut
Asuncions definitive assertion.
The congruence of the wills of the spouses is essential for the valid disposition of
conjugal property.27 Thus, under Article 166 of the Civil Code28 which was still
in effect on 19 December 1986 when the deed of sale was purportedly executed,
the husband cannot generally alienate or encumber any real property of the
conjugal partnership without the wifes consent.
In this case, following Article 17329 of the Civil Code, on 26 June 1995, or eight
and a half years (8 ) after the purported sale to petitioner, Asuncion filed her
Complaint-in-Intervention seeking the nullification thereof, and while her
marriage with Troadio was still subsisting. Both the Court of Appeals and the
trial court found Asuncions signature in the deed of sale to have been forged,
and consequently, the deed of sale void for lack of marital consent. We find no
reason to disturb the findings of the trial court and the Court of Appeals.
Findings of fact of lower courts are deemed conclusive and binding upon the
Supreme Court subject to certain exceptions,30 none of which are present in this
case. Besides, it has long been recognized in our jurisprudence that a forged deed
is a nullity and conveys no title.31
Petitioner argues she has a better right over the property in question, as the
holder of and the first one to present, the owners copy of the title for the issuance
of a new TCT. The Court is not persuaded.
The act of registration does not validate petitioners otherwise void contract.
Registration is a mere ministerial act by which a deed, contract, or instrument
is sought to be inscribed in the records of the Office of the Register of Deeds and
annotated at the back of the certificate of title covering the land subject of the
deed, contract, or instrument. While it operates as a notice of the deed, contract,
or instrument to others, it does not add to its validity nor converts an invalid
instrument into a valid one as between the parties,32 nor amounts to a
declaration by the state that the instrument is a valid and subsisting interest in
the land.33 The registration of petitioners void deed is not an impediment to a
declaration by the courts of its invalidity.
Even assuming that there was double sale in this case, petitioner would still not
prevail. The pertinent portion of Art. 1544 provides:
Art. 1544. x x x.
Should it be immovable property, the ownership shall belong to the person
acquiring it who in good faith first recorded it in the Registry of Property.
58
x x x x.
In interpreting this provision, the Court declared that the governing principle is
primus tempore, potior jure (first in time, stronger in right). Knowledge gained
by the first buyer of the second sale cannot defeat the first buyers rights, except
where the second buyer registers in good faith the second sale ahead of the first
as provided by the aforequoted provision of the Civil Code. Such knowledge of
the first buyer does not bar him from availing of his rights under the law, among
them to register first his purchase as against the second buyer. However,
knowledge gained by the second buyer of the first sale defeats his rights even if
he is first to register the second sale, since such knowledge taints his prior
registration with bad faith.34 It is thus essential, to merit the protection of Art.
1544, second paragraph, that the second realty buyer must act in good faith in
registering his deed of sale.35
We agree with the trial court and the Court of Appeals that respondent was a
buyer in good faith, having purchased the nine (9) lots, including the subject lot,
without any notice of a previous sale, but only a notice of attachment relative to
a pending civil case. In fact, in its desire to finally have the title to the properties
transferred in its name, it persuaded the parties in the said case to settle the
same so that the notice of attachment could be cancelled.
Relevant to the discussion are the following provisions of P.D. No. 1529:
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, lease 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)
Sec. 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.
It has been held that between two transactions concerning the same parcel of
land, the registered transaction prevails over the earlier unregistered right. The
act of registration operates to convey and affect the registered land so that a bona
fide purchaser of such land acquires good title as against a prior transferee, if
such prior transfer was unrecorded.36 As found by the courts a quo, respondent
was able to register its purchase ahead of petitioner. It will be recalled that
respondent was able to register its Deed of Conditional Sale with the Register of
Deeds as early as 6 November 1992, and its Deed of Absolute Sale on 14 October
1993. On the other hand, petitioner was able to present for registration her deed
of sale and owners copy of the title only on 23 January 1995, or almost nine
years after the purported sale. Why it took petitioner nine (9) years to present
the deed and the owners copy, she had no credible explanation; but it is clear
that when she finally did, she already had constructive notice of the deed of sale
in respondents favor. Without a doubt, respondent had acquired a better title to
the property.1wphi1

Finally, anent petitioners claim that P.D. No. 1529 applies to registered lands or
any subsequent sale thereof, while Art. 1544 of the Civil Code applies only to
immovable property not covered by the Torrens System, suffice it to say that this
quandary has already been answered by an eminent former member of this
Court, Justice Jose Vitug, who explained that the registration contemplated
under Art. 1544 has been held to refer to registration under P.D. No. 1529, thus:

The registration contemplated under Art. 1544 has been held to refer to
registration under Act 496 Land Registration Act (now PD 1529) which considers
the act of registration as the operative act that binds the land (see Mediante v.
Rosabal, 1 O.G. [12] 900, Garcia v. Rosabal, 73 Phil 694). On lands covered by
the Torrens System, the purchaser acquires such rights and interest as they
appear in the certificate of title, unaffected by any prior lien or encumbrance not
noted therein. The purchaser is not required to explore farther than what the
Torrens title, upon its face, indicates. The only exception is where the purchaser
has actual knowledge of a flaw or defect in the title of the seller or of such liens
or encumbrances which, as to him, is equivalent to registration (see Sec. 39, Act
496; Bernales v. IAC, G.R. 75336, 18 October 1988; Hernandez vs. Sales, 69 Phil
744; Tajonera s. Court of Appeals, L-26677, 27 March 1981) (Emphasis
supplied)37

WHEREFORE, the petition is DENIED. The assailed decision and resolution of

the Court of Appeals are affirmed. Costs against petitioner.

SO ORDERED.

59
Republic of the Philippines
SUPREME COURT
Manila
FIRST DIVISION
G.R. No. 164356 July 27, 2011
HEIRS OF MARGARITO PABAUS, namely, FELICIANA P. MASACOTE,
MERLINDA P. CAILING, MAGUINDA P. ARCLETA, ADELAIDA PABAUS,
RAUL MORGADO AND LEOPOLDO MORGADO, Petitioners,
vs.
HEIRS OF AMANDA YUTIAMCO, namely, JOSEFINA TAN, AND MOISES,
VIRGINIA, ROGELIO, ERLINDA, ANA AND ERNESTO, all surnamed
YUTIAMCO, Respondents.
DECISION
VILLARAMA, JR., J.:
By way of petition1 for review on certiorari, petitioners Heirs of Margarito Pabaus
challenge the June 10, 2004 Decision2 of the Court of Appeals (CA) in CA-G.R.
CV No. 65854. The CA affirmed the October 8, 1999 Judgment3 of the Regional
Trial Court (RTC) of Butuan City, Branch 1 in Civil Case No. 4489 declaring void
petitioners title and ordering them and all those claiming any right under them
to vacate the land covered by said title and deliver possession thereof to the
respondents.
Subject of this controversy are three adjoining parcels of land located in
Barangay Cabayawa, Municipality of Tubay, Agusan Del Norte. Lot 1, Plan Psu-
213148 with an area of 58,292 square meters, and Lot 2, Plan Psu-213148,
consisting of 1,641 square meters, are registered in the name of Amanda L.
Yutiamco under Original Certificate of Title (OCT) No. O-1044 and Transfer
Certificate of Title (TCT) No. T-1428,5 respectively. Lot 2994, Pls-736, with an
area of 35,077 square meters, is owned by Margarito Pabaus and covered by OCT
No. P-8649.6
OCT No. O-104 was issued pursuant to Judicial Decree No. R-130700 dated July
9, 1970 which covered Lots 1 and 2. A separate title, TCT No. T-1428, was
subsequently issued to Amanda Yutiamco for Lot 2, thus partially canceling OCT
No. O-104. Meanwhile, OCT No. P-8649 was issued to Margarito Pabaus on
March 12, 1974 pursuant to Free Patent No. (X-2)102.
60
On December 26, 1996, respondents Josefina Tan, and Moises, Virginia, Rogelio,
Erlinda, Ana and Ernesto, all surnamed Yutiamco, representing themselves as
the heirs of Amanda L. Yutiamco, filed a Complaint7 for Cancellation of OCT No.
P-8649, Recovery of Possession and Damages against the heirs of Margarito
Pabaus, namely, petitioners Feliciana P. Masacote, Merlinda P. Cailing,
Maguinda P. Arcleta, Adelaida Pabaus, Raul Morgado and Leopoldo Morgado.
The case was docketed as Civil Case No. 4489 in the RTC of Butuan City, Branch
1.
Respondents alleged that petitioners illegally entered upon their lands, harvested
coconuts therein and built a house on the premises, thus encroaching a
substantial portion of respondents property. Despite repeated demands and
objection by Moises Yutiamco, petitioners continued to occupy the encroached
portion and harvest the coconuts; petitioners even filed a criminal complaint
against the respondents before the Office of the Provincial Prosecutor.
Respondents averred that OCT No P-8649 issued to Margarito Pabaus is invalid
as it substantially includes a land already covered by Decree No. N-130700 and
OCT No. O-104 issued on July 9, 1970 in the name of Amanda Yutiamco. When
Moises Yutiamco caused a resurvey of the land, the relocation plan confirmed
that the free patent title of Margarito Pabaus overlapped substantially the lot
covered by OCT No. O-104.
In their Answer with Counterclaim,8 petitioners admitted having gathered
coconuts and cut trees on the contested properties, but asserted that they did
so in the exercise of their rights of dominion as holders of OCT No. P-8649. They
also contended that it was respondents who unlawfully entered their property
and harvested coconuts therein. Citing a sketch plan prepared by Engr.
Rosalinda V. De Casa, petitioners claimed it was the respondents who
encroached Lot 1708, Cad-905 which is within and part of OCT No. P-8649. It
was pointed out that with the claim of respondents of an alleged encroachment,
respondents land area would have increased by 5,517.50 square meters (or a
total of 65,447.5) while that of petitioners would be decreased to only 29,546
square meters. Petitioners likewise averred that the complaint states no cause of
action since the case was not referred for barangay conciliation and respondents
cause of action was, in any event, already barred by prescription, if not laches.
In the pre-trial conference held on March 12, 1997, the RTC issued an Order 9
which directed the conduct of a relocation survey to determine if the land covered
by petitioners title overlaps those in defendants titles. The three commissioners
who conducted the said survey were Engr. Romulo Estaca, a private surveyor
and the court-appointed commissioner, Antonio Libarios, Jr., the representative
of respondents, and Engr. Regino Lomarda, Jr., petitioners representative.10 It
was agreed that the relocation survey shall be done by having the commissioners
examine the titles in question and then survey the land to determine if there was
indeed an overlapping of titles and who has better right to the contested lands.11
During the same pre-trial conference, petitioners manifested their intention to
file an amended answer. The RTC gave them five days within which to seek leave
of court to file the amended answer but they failed to comply. Thus, the court
considered petitioners to have waived the filing of said pleading.
At the continuation of the pre-trial conference on June 23, 1997, the trial court
informed the parties of the following findings in the Relocation Survey Report12
dated May 27, 1997:
xxxx
That, Lot 2, Psu-213148 covered by TCT#T-1428 issued in favor of Amanda L.
[Yutiamco] is inside the lot covered by OCT#[P]-8649, issued in favor of Margarito
Pabaus;
That, Portion of Lot 1, Psu-213148 covered by OCT#O-104, issued in favor of
Amanda L. [Yutiamco] containing an area of 15,675 Sq. M. is inside the lot
covered by OCT#P-8649, issued in favor of Margarito Pabaus;
That, there is actually an overlapping in the issuance of title[s] on the above-
mentioned two (2) parcels of land, please refer to accompanying relocation plan
and can be identified through color legend;
That, the Technical Description of Lot 1, Psu-213148 of OCT#O-104 has been
properly verified and checked against approved plan of Psu-213148, approved in
the name of Amanda L. [Yutiamco];
Finally, that during the relocation survey nobody objected and oppose[d] the
findings conducted by the undersigned.
x x x x13
The Report was accompanied by a Relocation Plan14 which was certified by Engr.
Estaca as accurately indicating the boundaries of the subject properties. Engr.
Libarios, Jr. and Engr. Lomarda, Jr. also signed the Relocation Plan, expressing
their conformity thereto.
In the pre-trial conference held on July 17, 1997, petitioners counsel sought
leave of court to file an amended answer. In their Amended Answer with
Counterclaim,15 petitioners reiterated that in Engr. De Casas sketch plan which
was plotted in accordance with the description in the cadastral survey, it was
61
respondents who encroached and claimed Lot 1708, Cad-905 within and part of
OCT P-8649. They further alleged
xxxx
10. That plaintiffs[] title to the property in [question], known as O.C.T. No. 104
and TCT No. 1428 both registered in the name of Amanda Yutiamco were both
secured thru fraud, if not the said properties are situated away, for a distance as
adjoining of defendants property, under the following circumstances:
10.a. The subject property was surveyed by a private surveyor Antonio A.
Libarios, Jr. on November 3 and 5, 1960, nonetheless, his license as Geodetic
Engineer was issued only on November 11, [1965];
10.b. Base[d] on this fact, the survey plan or relocation survey was approved by
the Director of Land[s], Nicanor G. Jorge on June 9, 1965;
10.c. Perspicacious examination of the technical description of plaintiffs[] title
under OCT No. 104 and TCT No. 1428, the BLLM is marked as No. 4, which the
tie line of PSU No. 213148, as compared [to] defendants[] title under OCT No. P-
8649, the BLLM is marked as No. 1, which the tie line of PLS 736;
11. Actually, based on the foregoing observation, the properties of plaintiffs are
away situated with the property of defendants; should plaintiffs insisted (sic)
based on the relocation survey conducted by the commissioner appointed by this
Honorable Court, which defendants believed that there was a maneuver to hoax
and hoodwink themselves, into believing that plaintiffs properties are situated in
the heart of defendants property, then their titles, covering their properties were
secured thru fraud, which annulment of the same is proper and within the
bounds of the law.
x x x x16
At the trial, plaintiffs presented as witnesses Moises Yutiamco (adopted son of
Amanda Yutiamco), Figuracion Regala, Sr. (former barangay captain of Tubay),
Antonio Payapaya (tenant of Moises Yutiamco) and court-appointed
commissioner Engr. Estaca, while the defendants presented Raul P. Morgado
(one of the heirs of Margarito Pabaus), Francisco Baylen (retired Land
Management Officer/Deputy Land Inspector of the Bureau of Lands, Butuan
City), Engr. Rosalinda V. De Casa (Geodetic Engineer I, DENR) and Ambrocio P.
Alba (retired Land Management Officer-Chief of Lands Management Services,
CENRO-Cabadbaran, Agusan del Norte).
On October 8, 1999, the RTC rendered judgment in favor of the respondents and
against the petitioners. Said court gave credence to the finding in the Relocation
Survey Report that petitioners lot overlap respondents lands. It held that since
the land in dispute was already under the private ownership of the respondents
and no longer part of the public domain, the same could not have been the
subject of a free patent. As to the presumption of regularity in the performance
of official duty invoked by the petitioners as far as the issuance of the free patent
and title, the trial court pointed out that this cannot be appreciated in view of
the testimony of Engr. De Casa that in conducting the cadastral survey, she was
not able to secure a copy of the title of the landholdings of Amanda Yutiamco
from the Register of Deeds, which is a vital document in the scheme of
operations. The trial court thus applied the rule that in case of two certificates of
title issued to different persons over the same land, the earlier in date must
prevail. Hence, respondents OCT No. O-104 is superior to petitioners OCT No.
P-8649 which is a total nullity.
The fallo of the RTC decision reads:
WHEREFORE, premises considered, judgment is hereby rendered in favor of the
plaintiffs and against the defendants, as follows:
1. Declaring as null and void ab initio [Original] Certificate of Title No. [P]-8649
and ordering defendants and all those claiming any right under them to vacate
the land covered by said title and deliver possession thereof to the plaintiffs
and/or otherwise refrain and desist perpetually from exercising any act of
dispossession and encroachment over the subject premises;
2. Declaring the plaintiffs as the true and legal owner of the property subject of
this case;
3. Ordering defendants to render an accounting to the plaintiffs with respect to
the income of the coconuts in the area in conflict starting from December 26,
1996 up to the timereconveyance as herein directed is made, and to deliver or
pay to the plaintiffs the income with legal interest thereon from the date of filing
of the complaint in this case[,] which is December 26, 1996, until the same is
paid or delivered; and
4. Ordering defendants to pay the plaintiffs, jointly and severally, the amount of
P13,175.00 by way of actual damages, P50,000.00 by way of moral damages, the
sum of P30,000.00 by way of attorney's fees and the cost of litigation in the
amount of P720.00.
SO ORDERED.17
62
On appeal, the CA affirmed the RTC ruling and emphasized that petitioners are
bound by the findings contained in the Relocation Survey Report and the
Relocation Plan because not only did they agree to the appointment of the three
commissioners but the commissioner representing them also manifested his
conformity to the findings. It noted that neither party posed any objection while
the survey was ongoing and that petitioners disputed the findings only after it
turned out adverse to them. Since the settled rule is that a free patent issued
over a private land is null and void and produces no legal effects whatsoever, and
with the trial courts finding that the properties of respondents and petitioners
overlapped as to certain areas, the CA held that the trial court correctly declared
as void the title of the petitioners. Moreover, the CA cited previous rulings stating
that "a certificate of title over a land issued pursuant to the Public Land Law,
when in conflict with one obtained on the same date through judicial
proceedings, must give way to the latter," and that "a certificate of title issued
pursuant to a decree of registration and a certificate of title issued in conformity
therewith are on a higher level than a certificate of title based upon a patent
issued by the Director of Lands."18
Aggrieved, petitioners filed the instant petition arguing that --
I
THE COURT OF APPEALS COMMITTED REVERSIBLE ERROR IN AFFIRMING
THE LOWER COURT DECISION THAT PETITIONERS LOT NO. 2994, COVERED
BY OCT NO. P-8649[,] REGISTERED IN THE NAME OF MARGARITO PABAUS
OVERLAPPED RESPONDENTS[] LOT 2 AND LOT 1, [RESPECTIVELY] COVERED
[BY] TCT NO. T-1428 AND OCT NO. O-104...BOTH REGISTERED IN THE NAME
OF AMANDA YUTIAMCO.
II
THE COURT OF APPEALS COMMITTED REVERSIBLE ERROR IN RELYING [ON]
THE FINDING OF PRIVATE SURVEYOR OR GEODETIC [ENGR.] ROMULO S.
ESTACA APPOINTED BY THE COURT WHO DISTURBED THE CADASTRAL
SURVEY CONDUCTED BY THE GOVERNMENT THRU THE DEPARTMENT OF
ENVIRONMENT AND NATURAL RESOURCES.19
Petitioners contend that the original technical description of Lot 2994, as per the
1961 public land survey20, clearly showed that respondents property lies south
of the land applied for by Margarito Pabaus. The matter of encroachment was
likewise refuted by Engr. De Casa who conducted the cadastral survey CAD 905
in Tubay and plotted the subject lots on the cadastral map.21 They likewise
assailed the relocation survey undertaken solely by the court-appointed
commissioner, Engr. Estaca while the other two surveyors did not perform their
respective tasks or confirm the ground verification conducted by Engr. Estaca.
With the admission by Engr. Estaca that there were five missing corners, there
was no precise and accurate ground verification made on the alleged overlapping.
Petitioners cite the testimony of Engr. De Casa which was based on the cadastral
map she herself prepared showing the respective locations of the subject lots.
They assert that the three government witnesses testified that the property of
Margarito Pabaus was surveyed based on existing official records, and that the
presumption of regularity in the performance of official duty should be upheld.
Respondents, for their part, assert that petitioners assignment of errors delve on
factual matters which are not proper subjects of an appeal before this Court.
They echo the trial courts conclusion that petitioners title is void since it covers
private land.
As a general rule, in petitions for review, the jurisdiction of this Court in cases
brought before it from the CA is limited to reviewing questions of law which
involves no examination of the probative value of the evidence presented by the
litigants or any of them. The Supreme Court is not a trier of facts; it is not its
function to analyze or weigh evidence all over again.22 Accordingly, findings of
fact of the appellate court affirming those of the trial court are generally
conclusive on this Court.
Nonetheless, jurisprudence has recognized certain exceptions to the general rule
that findings of the fact by the Court of Appeals are not reviewable by the
Supreme Court. One such exception is when such findings are not sustained by
the evidence.23 Another is when the judgment of the CA is based on
misapprehension of facts or overlooked certain relevant facts not disputed by the
parties which, if properly considered, would justify a different conclusion.24
The case of overlapping of titles necessitates the assistance of experts in the field
of geodetic engineering. The very reason why commissioners were appointed by
the trial court, upon agreement of the parties, was precisely to make an
evaluation and analysis of the titles in conflict with each other. Given their
background, expertise and experience, these commissioners are in a better
position to determine which of the titles is valid. Thus, the trial court may rely
on their findings and conclusions.25
However, in overlapping of titles disputes, it has always been the practice for the
court to appoint a surveyor from the government land agencies the Land
Registration Authority or the DENR to act as commissioner.26 In this case, the
trial court appointed a private surveyor in the person of Engr. Estaca who
actually conducted the relocation survey while the two other surveyors chosen
63
by the parties expressed their conformity with the finding of encroachment or
overlapping indicated in the Relocation Plan27 submitted to the court by Engr.
Estaca. Said plan showed that the area in conflict is on the northeastern portion
wherein petitioners OCT No. P-8649 overlapped with respondents title (OCT No.
O-104) by 15,675 square meters.
Were the respondents able to prove their claim of overlapping?
We rule in the negative.
Survey is the process by which a parcel of land is measured and its boundaries
and contents ascertained; also a map, plat or statement of the result of such
survey, with the courses and distances and the quantity of the land.28 A case of
overlapping of boundaries or encroachment depends on a reliable, if not
accurate, verification survey.29 To settle the present dispute, the parties agreed
to the conduct of a relocation survey. The Manual for Land Surveys in the
Philippines (MLSP)30 provides for the following rules in conducting relocation
surveys:
Section 593 - The relocation of corners or re-establishment of boundary lines
shall be made using the bearings, distances and areas approved by the Director
of Lands or written in the lease or Torrens title.
Section 594 - The data used in monumenting or relocating corners of approved
surveys shall be submitted to the Bureau of Lands for verification and approval.
New corner marks set on the ground shall be accurately described in the field
notes and indicated on the original plans on file in the Bureau of Lands. (Italics
supplied.)
In his Report, Engr. Estaca stated that he was able to relocate some missing
corners of the subject lots:
xxxx
By April 26, 1997, the whole survey team together with Mr. E. Concon and
representatives from the Plaintiffs and De[f]endants returned to the area in
question to relocate missing corners of Lot 1, Psu-213148 of OCT#O-104; Lot 2,
Psu-213148 of TCT#T-1428; and OCT#P-8649. We were able to relocate the
following corners of: Cors. 2 & 4 of Lot 1, Psu-213148 of OCT#O-104; cors. 7 &
8 of Lot 1, Psu-213148 of OCT#[O]-104 which are identical to cors. 15 & 16 of
OCT#P-8649, respectively. We laid out missing cors. 3 & 2 of Lot 2, Psu-213148
of TCT#T-1428 and missing cors. 1 & 3 of Lot 1, Psu-213148 of OCT#O-104. All
missing corners which were relocated were not yet planted with cylindrical
concrete monuments pending court decision of the case.
x x x x31
On cross-examination, Engr. Estaca testified as follows:
xxxx
Q In your report, you stated that there missing corners: 3 and 2 of Lot 2; and
missing corners 1 and 3 of Lot 1. Which of these three documents, Exhibit S
which is OCT No. O-104 or Exhibit T which is TCT No. T-1428 or OCT No. P-
8649 in which there are missing corners?
A TCT No. T-1428 has 3 missing corners; and OCT No. O-104 has 2 missing
corners.
Q When you say missing corners, what do you mean by that?
A Well, based on the technical description, we were not able to locate the corners
because it might have been moved or lost.
Q And when you say corners, you are referring to cylindrical concrete
monuments?
A Yes, sir.
Q Do you agree with me Mr. Witness that in order to locate the missing corners
to proceed with the relocation survey, you have to make a point of reference?
A Yes.
Q And that point of reference is found in the title itself?
A Yes, sir.
Q Do you agree with me that the point of reference is BLLM?
A No, that is a point of tie line. But the point of reference can be any of the
corners within the property. If you have say ten corners, you can base from the
existing corners. In other words, localize your location. Unless the whole property
is lost, meaning all missing corners are not reliable then you have to tie from
known BLLM (Bureau of Lands Location Monument) That is established by a
geographic position.
Q Do you agree with me that in order to have an accurate relocation survey, to
determine and to locate the missing corners, you have to base the relocation
survey on the tie line?
64
A It depends. There are tie lines which are located "40 kilometers" from that
point. The big error is there. So we will not adopt all monuments. Anyway, they
interrelated to each other. You can determine it by doing relocation survey. You
can check it out by their positions. So the allowable for that is only 30
centimeters.
xxxx
Q Finally, in your resurvey report which is Exhibit Q, you mentioned that there
were missing corners which were relocated and you said certain basis for the
relocation if there are missing corners and you said that the river is not a reliable
point or basis. What did you base on your relocation survey considering that
there are missing corners?
A Based on other existing monuments, sir.
Q What for example?
A Based on my report, I stated from a known corners identified as cors. 10 and
9 of Lot 1, PSU 213148 of OCT #O-104 which are identical to corners 1 and 17
of OCT #P-8649.
Q Is this already covered in your report?
A Yes, and it is found on par. 2 of my report.
x x x x32
The MLSP laid down specific rules regarding tie lines, point of reference and
overlapping of adjoining titled lands. In this case, records failed to disclose that
the basis for relocating the missing corners was submitted to the Bureau of
Lands (now Land Management Bureau) for verification and approval as required
by Section 594. This is crucial considering that the court-appointed
commissioner is a private surveyor and not a government surveyor from the LRA
or LMB-DENR. It bears stressing that in every land dispute, the aim of the courts
is to protect the integrity of and maintain inviolate the Torrens system of land
registration, as well as to uphold the law; a resolution of the parties dispute is
merely a necessary consequence.33
On the part of petitioners, their only evidence to support their opposition to the
claim of encroachment by the respondents is the cadastral map which indicated
the boundary of respondents property at the south of petitioners lot. But as
admitted by Engr. De Casa, during the cadastral survey they conducted from
1986 to 1996, they did not send a written notice to the landowner Amanda
Yutiamco and that she plotted the boundaries of her property based merely on a
tax declaration because the cadastral survey team failed to obtain copies of OCT determine overlapping of titles over Lots 1 and 2, Psu-213148 and Lot 2994, PLS
No. O-104 and TCT No. T-1428 from the Registry of Deeds.34 The MLSP 736 covered by OCT No. O-104, TCT No. T-1428 and OCT No. P-8649,
specifically required that relocation of boundary lines is to be made using the respectively, all of the Registry of Deeds for the Province of Agusan del Norte.
bearings, distances and areas approved by the Director of Lands or indicated in
SO ORDERED.
the Torrens titles. Hence, said cadastral map is not competent proof of the actual
location and boundaries of respondents Lots 1 and 2, Psu-213148.1awphi1

Indeed, we have ruled that if the land covered by free patent was a private land,
the Director of Lands has no jurisdiction over it. Such free patent and the
subsequent certificate of title issued pursuant thereto are a nullity.35 The
aggrieved party may initiate an action for cancellation of such title. In the recent
case of De Guzman v. Agbagala,36 the Court reiterated:

The settled rule is that a free patent issued over a private land is null and void,
and produces no legal effects whatsoever. Private ownership of land - as when
there is a prima facie proof of ownership like a duly registered possessory
information or a clear showing of open, continuous, exclusive, and notorious
possession, by present or previous occupants - is not affected by the issuance of
a free patent over the same land, because the Public Land [L]aw applies only to
lands of the public domain. The Director of Lands has no authority to grant free
patent to lands that have ceased to be public in character and have passed to
private ownership. Consequently, a certificate of title issued pursuant to a
homestead patent partakes of the nature of a certificate issued in a judicial
proceeding only if the land covered by it is really a part of the disposable land of
the public domain.37

Considering, however, that the claim of overlapping has not been clearly
established, it is premature to declare the free patent issued to Margarito Pabaus
null and void. Instead, the Court deems it more appropriate to remand the case
to the trial court for the conduct of a verification/relocation survey under the
direction and supervision of the LMB-DENR. In the event that respondents claim
of encroachment of 15,675 square meters is found to be correct, the
corresponding adjustment in the metes and bounds of petitioners property
should be reflected in OCT No. P-8649 which title will then have to be partially,
not totally, voided and the corresponding amendment as to the precise area and
technical description of Lot 2994, PLS 736 be entered by the Registry of Deeds.

WHEREFORE, the Decision dated June 10, 2004 of the Court of Appeals in CA-
G.R. CV No. 65854 and Judgment dated October 8, 1999 of the Regional Trial
Court of Butuan City, Branch 1 in Civil Case No. 4489 are SET ASIDE. The case
is REMANDED to the said RTC which is hereby directed to order the Land
Management Bureau of the DENR to conduct verification/relocation survey to

65