CHAPTER II
CLASSIFICATION, DELIMITATION, AND SURVEY OF LANDS OF THE PUBLIC
DOMAIN, FOR THE CONCESSION THEREOF
Section6. The President, upon the recommendation of the Secretary of
Agriculture and Commerce, shall from time to time classify the lands of the
public domain into —
(a) Alienable or disposable;
(b) Timber, and
(c) Mineral lands,
and may at any time and in a like manner transfer such lands from one class
to another, for the purposes of their administration and disposition.
Section8. Only those lands shall be declared open to disposition or
concession which have been officially delimited and classified and, when
practicable, surveyed, and which have not been reserved for public or quasi-
public uses, nor appropriated by the Government, nor in any manner
become private property, nor those on which a private right authorized and
recognized by this Act or any other valid law may be claimed, or which,
having been reserved or appropriated, have ceased to be so However, the
President may, for reasons of public interest, declare lands of the public
domain open to disposition before the same have had their boundaries
established or been surveyed, or may, for the same reason, suspend their
concession or disposition until they are again declared open to concession
or disposition by proclamation duly published or by Act of the National
Assembly.
TITLE II
AGRICULTURAL PUBLIC LANDS
CHAPTER III
FORMS OF CONCESSION OF AGRICULTURAL LANDS
Section11. Public lands suitable for agricultural purposes can be disposed of
only as follows, and not otherwise:
(1) For homestead settlement
(2) By sale
(3) By lease
(4) By confirmation of imperfect or incomplete titles:
(a) By judicial legalization
(b) By administrative legalization (free patent).
Section12. Any citizen of the Philippines over the age of eighteen years, or
the head of a family, who does not own more than twenty-four hectares of
land in the Philippines or has not had the benefit of any gratuitous
allotment of more than twenty-four hectares of land since the occupation of
the Philippines by the United States, may enter a homestead of not
exceeding twenty-four hectares of agricultural land of the public domain.
Section14. No certificate shall be given or patent issued for the land applied
for until at least one-fifth of the land has been improved and cultivated. The
period within which the land shall be cultivated shall not be less than one or
more than five years, from and after the date of the approval of the
application. The applicant shall, within the said period, notify the Director of
Lands as soon as he is ready to acquire the title. If at the date of such notice,
the applicant shall prove to the satisfaction of the Director of Lands, that he
has resided continuously for at least one year in the municipality in which
the land is located, or in a municipality adjacent to the same, and has
cultivated at least one-fifth of the land continuously since the approval of
the application, and shall make affidavit that no part of said land has been
alienated or encumbered, and that he has complied with all the
requirements of this Act, then, upon the payment of five pesos, as final fee,
he shall be entitled to a patent.
CHAPTER VI
FREE PATENTS
Section44. Any natural-born citizen of the Philippines who is not the owner
of more than twenty-four hectares and who since July fourth, nineteen
hundred and twenty-six or prior thereto, has continuously occupied and
cultivated, either by himself or through his predecessors-in-interest, a tract
or tracts of agricultural public lands subject to disposition, or who shall have
paid the real estate tax thereon while same has not been occupied by any
person shall be entitled, under the provisions of this chapter, to have a free
patent issued to him for such tract or tracts of such land not to exceed
twenty-four hectares.
A member of the national cultural minorities who has continuously occupied
and cultivated, either by himself or through his predecessors-in-interest, a
tract or tracts of land, whether disposable or not since July 4, 1955, shall be
entitled to the right granted in the preceding paragraph of this section:
Provided, That at the time he files his free patent application he is not the
owner of any real property secured or disposable under this provision of the
Public Land Law
period fixed for any district, chartered city, province, or municipality shall
begin to run thirty days after the publication of the proclamation in the
Official Gazette and if available in one newspaper of general circulation in
the city, province or municipality concerned. A certified copy of said
proclamation shall be furnished by the Secretary of Natural Resources
within 30 days counted from the date of the presidential proclamation to
the Director of Lands and to the provincial board, the municipal board or
city council and barangay council affected, and copies thereof shall be
posted on the bulletin board of the Bureau of Lands at Manila and at
conspicuous places in the provincial building and at the municipal building
and barangay hall or meeting place. It shall moreover, be announced by
government radio whenever available, in each of the barrios of the
municipality.

Section45. The President of the Philippines (Prime Minister), upon

recommendation of the Secretary of Natural Resources, shall from time to
time fix by proclamation the period which applications for Proclamation free
patents may be filed in the district, chartered city, of period province,
municipality or region specified in such proclamation, and upon the
expiration of the period so designated, unless the same be extended by the
President (Prime Minister) all the land comprised within such district,
chartered city, province, municipality or region subject thereto under the
provisions of this chapter may be disposed of as agricultural public land
without prejudice to the prior right of the occupant and cultivator to acquire
such land under this Act by means other than free patent. The time to be
fixed in the entire Archipelago for the filing of applications under this
Chapter shall not extend beyond December 31, 1987, except in the
provinces of Agusan del Norte, Agusan del Sur, Cotabato, South Cotabato,
Bukidnon, Lanao del Norte, Lanao del Sur, Davao del Norte, Davao del Sur,
Davao Oriental, Sulu, Mt. Province, Benguet, Kalinga-Apayao, and Ifugao
where the President of the Philippines, upon recommendation of the
Secretary of Natural Resources, shall determine or fix the time beyond
which the filing of applications under this Chapter shall not extend. The
EUGENIO ENCINARES, G.R. No. 161419
Petitioner, Petitioner asseverated that he is the owner and actual possessor of the subject property

Present: which is covered by Tax Declaration No. 07132. He claimed that, for more than thirty (30)
years, he had been in actual, continuous, adverse, and open possession in the concept of an
CARPIO MORALES, J.,*
CHICO-NAZARIO,** owner of the subject property, tacking the possession of his predecessors-in-interest.
Acting Chairperson,
- versus - However, sometime in June 1987, the respondent, by means of misrepresentation, fraud,
VELASCO, JR.,
NACHURA, and deceit, and machination, caused one-half portion of the subject property to be titled in her
PERALTA, JJ.
name under the Free Patent System. Petitioner alleged that, despite the fact that respondents
Promulgated:
application has no legal basis as she is not the owner and actual possessor of the subject
DOMINGA ACHERO,
August 25, 2009 property, a free patent was issued in her favor and Original Certificate of Title (OCT) No.
Respondent.
x------------------------------------------------------------------------------------x P-23505, covering an area of 23,271 square meters, was issued in her name. Thus,
petitioner postulated that, with the inclusion of one-half portion of his property, the
DECISION issuance of said title casts doubt on his ownership over the same. Moreover, petitioner

NACHURA, J.:
Before this Court is a Petition for Review on Certiorari[1] under Rule 45 of the Rules of
[2]
Civil Procedure, seeking the reversal of the Court of Appeals (CA) Decision dated April
28, 2003 which reversed and set aside the Decision[3] dated January 20, 2000 of the
Regional Trial Court (RTC) of Sorsogon, Sorsogon, Branch 52.
demanded that respondent execute in his favor a deed of reconveyance involving the
portion of his land, which is now covered by respondents title, but the latter refused,
compelling him to file this case. Petitioner, therefore, prayed that he be declared the owner
and actual possessor of the subject property and that respondent be ordered to execute a
deed of reconveyance in his favor.

In her Answer[7] dated September 7, 1989, respondent denied petitioner's material

The Facts
On July 13, 1989, petitioner Eugenio Encinares (petitioner) filed a Complaint [4] for
Quieting of Title and Reconveyance against respondent Dominga Achero [5] (respondent).
Petitioner alleged that he bought several parcels of land from Roger U. Lim as evidenced
by a Deed of Absolute Sale of Real Properties[6] dated April 9, 1980. Among these was the
subject property, a parcel of land dedicated to abaca production, containing 16,826 square
meters, known as Lot No. 1623, and situated in Sitio Maricot, Barangay Buraburan, Juban,
Sorsogon (subject property). He, however, discovered that, sometime in June 1987,
respondent was able to register the said property and cause it to be titled under the Free
Patent System.
allegations and, by way of affirmative defense, averred that the complaint constituted an
indirect and collateral attack on her title, which is not allowed, and rendered the complaint
defective, thereby requiring its dismissal. Respondent alleged that OCT No. P-23505 was
issued under her name and the property covered by the OCT is exclusively hers and does
not include petitioner's property.
Upon joint motion of the parties, the RTC issued an Order[8] dated March 9, 1990, directing
a duly authorized representative/surveyor of the Bureau of Lands to conduct a relocation
survey on the two (2) parcels of land involved in the case, namely: Lot No. 1623 and the
lot covered by OCT No. P-23505.

Subsequently, Engineer Eduardo P. Sabater submitted his Commissioners
Report[9] (Report) on August 3, 1993. The Report stated that the limits of the common
boundaries of the parties were defined by large trees and stones marked by X. The Report
also stated that the actual area as claimed by petitioner contained 19,290 square meters,
while that of respondent contained 3,981 square meters.
On September 21, 1994, petitioner filed a Motion for Leave to Amend
Complaint,[10] alleging that there were some mistaken and inadequate allegations in the
original complaint, and that the amendments to be made would not substantially change
the cause of action in the complaint. Because no objection was interposed by respondents
counsel, the Motion was granted by the RTC in an Order[11] dated October 18, 1994.
On October 20, 1994, petitioner filed the Amended Complaint, [12] inserting the word
ENTIRE in paragraph four (4) thereof. Thus, petitioner averred that respondent, through
fraud, caused the ENTIRE area of the above-described land to be titled under the Free
Patent System. For her part, respondent manifested that she would no longer file an answer
to the Amended Complaint. Thereafter, trial on the merits ensued. In January 1996,
respondent passed away.[13] Respondent was duly substituted by her son, Vicente Achero
(Vicente).[14]
The RTC's Ruling
On January 20, 2000, the RTC rendered a Decision in favor of petitioner, declaring him as
the absolute owner of Lot 1623-B, containing an area of 19,290 square meters. The RTC
[15]
declared that while Section 32 of Presidential Decree (P.D.) No. 1529 (The Property
Registration Decree) provides that a decree of registration and certificate of title become
incontrovertible after the lapse of one year, the aggrieved party whose land has been
registered through fraud in the name of another person may file an ordinary civil action for
reconveyance of his property, provided that the same had not been transferred to innocent
purchasers for value. Thus, the RTC disposed of the case in this wise:
WHEREFORE, premises considered, judgment is hereby rendered in
favor of the plaintiff and against the defendant, to wit:
1. Declaring plaintiff Eugenio Encinares the absolute owner
of Lot 1623-B containing an area of 19,290 sq. m. which is a
portion included in OCT No. P-23505 in the name of Dominga
Achero of the Registry of Deeds of Sorsogon;
2. Declaring OCT No. P-23505 covering Lot 1623 with an area of
19,290 sq. m. in the name of the defendant Dominga Achero
as null and void[;]
3. Ordering the defendant Dominga Achero and/or Vicente Achero to
reconvey that portion found in the Relocation Survey Report
marked as Exh. R and denominated as Lot 1623-B as surveyed
for Eugenio Encinares and Dominga Achero[;]
4. Ordering the Register of Deeds of Sorsogon to make an annotation
on the Certificate of Title No. P-23505 covering the land in
question as the same was fraudulently procured[;]
5. Dismissing the counterclaim of the defendants[;]
[6.] Ordering the defendant to pay the costs.
SO ORDERED.[16]
Aggrieved, respondent appealed to the CA.[17]
The CA's Ruling
On April 28, 2003, the CA reversed and set aside the RTC's ruling, upheld the validity of
OCT No. P-23505, and dismissed the complaint for quieting of title and reconveyance filed
by petitioner. The CA held that the RTC erred in declaring OCT No. P-23505 as null and
void because in an action for reconveyance, the decree of registration is respected as
incontrovertible. Moreover, the CA held that petitioner failed to prove by clear and
convincing evidence his title to the subject property and the fact of fraud. Petitioner's
evidence, consisting of tax declarations and deeds of sale, acknowledged that the subject
property had not been registered. Likewise, the CA noted that petitioner's evidence showed
that the possession of his predecessors-in-interest started only sometime in 1951; thus,
petitioner could be presumed to have acquired a title pursuant to Section 48(b) [18] of
Commonwealth Act 141 (The Public Land Act) as amended by P.D. No. 1073. The CA
opined that it was erroneous for the RTC to award 19,290 square meters to petitioner when
the Deed of Absolute Sale of Real Properties, from which he allegedly derived his rights,
stated that the lot sold to him consisted only of 16,826 square meters. Lastly, the CA found
no irregularity in the issuance of the Free Patent and OCT No. P-23505.
Undaunted, petitioner filed a Motion for Reconsideration,[19] which the CA, however,
denied in its Resolution[20] dated December 19, 2003. Hence this Petition, raising the
following issues:
I.
WHETHER THE HONORABLE COURT OF APPEALS GRAVELY
ERRED IN REVERSING AND SETTING ASIDE THE DECISION
OF THE REGIONAL TRIAL COURT.
II.
WHETHER THE PETITIONER HAS THE RIGHT TO SEEK THE
RECONVEYANCE OF THE SUBJECT LAND WHICH WAS
WRONGFULLY REGISTERED IN THE NAME OF THE
RESPONDENT.[21]
[22]
Petitioner claims that the subject property was sold by Simeon Achero (Simeon),
[23]
son of Eustaqio Achero (Eustaqio), to Cecilia Grajo who, in turn, sold the same to
[24]
Cipriano Bardilo. Subsequently, Cipriano Bardilo sold the subject property to Pedro
[25]
Guevarra, who then sold the same to Roger Lim,[26] from whom petitioner bought the
subject property in 1980. Petitioner asserts that he has been in actual, continuous, adverse,
and open possession in the concept of an owner thereof for more than thirty (30) years
when tacked with the length of possession of his predecessors-in-interest; and that he has
introduced some improvements on the subject property and has been enjoying its produce.
Petitioner argues that contrary to the CA's findings, he was able to prove by preponderance
of evidence that he is the true and actual owner of the subject property; that he has equitable
title thereto; and that there was fraud in the acquisition of the Free Patent. Petitioner also
argues that, as pointed out by the RTC, the tax declarations [27] of petitioner and his
predecessors-in-interest show that, in fact, petitioner, as well as his predecessors-in-
interest, has been in actual possession of the subject property since 1951 or even prior
thereto; that the factual findings of the RTC in this case should not have been disturbed by
the CA, as the former's findings were clearly based on evidence; and that the law protects
only holders of title in good faith and does not permit its provisions to be used as a shield
for the commission of fraud or for ones enrichment at the expense of another. [28]
On the other hand, respondent avers that the subject property had been originally claimed,
occupied and cultivated since 1928 by Eustaqio, father of Simeon and father-in-law of
respondent. Before Eustaqio died in 1942, he gave the subject property to respondent, as
evidenced by the Joint Affidavit[29] of Dalmacio Venus and Elias Aurelio. Respondent
continued the possession, occupation and cultivation of the subject property in the concept
of an owner up to the present. On October 1, 1986, respondent executed a Deed of
Ratification and Confirmation of Ownership.[30] Documents were submitted to the Bureau
of Lands, which conducted an ocular inspection and relocation survey and issued a Final
Investigation Report.[31] Finding respondent's application for a Free Patent to be proper in
form and substance, and in accordance with law, the same was granted per Order: Approval
of Applications and Issuance of Patent.[32] Subsequently, OCT No. P-23505, covering the
eldest
subject property with a total area of 23,271 square meters, was issued in favor of
respondent. Respondent manifested that she was unlettered, and that her only
preoccupation was working on the land like other ordinary tillers. As such, in the absence
of evidence, petitioner could not validly claim that respondent employed fraud in the
application and issuance of a Free Patent, in the same way that no fraud attended the
issuance of OCT No. P-23505. Respondent relied on the presumption of regularity in the
performance of official functions of the personnel of the Bureau of Lands.[33]
Simply put, the main issue is who, between petitioner and respondent, has a better right
over the subject property.
 Our Ruling
On this point, our ruling in Republic v. Guerrero,[37] is instructive:
The instant Petition is bereft of merit.
While factual issues are not within the province of this Court, as it is not a trier of facts and
is not required to examine or contrast the oral and documentary evidence de novo, this
Court has the authority to review and, in proper cases, reverse the factual findings of lower
courts when the findings of fact of the trial court are in conflict with those of the appellate
court. [34]
In this light, our review of the records of this case is justified.
In essence, petitioner seeks relief before this Court, on the contention that the registered
Free Patent from which respondent derived her title had been issued through fraud.
We reject petitioner's contention.
A Free Patent may be issued where the applicant is a natural-born citizen of the Philippines;
is not the owner of more than twelve (12) hectares of land; has continuously occupied and
cultivated, either by himself or through his predecessors-in-interest, a tract or tracts of
agricultural public land subject to disposition, for at least 30 years prior to the effectivity
of Republic Act No. 6940; and has paid the real taxes thereon while the same has not been
occupied by any other person.[35]
Once a patent is registered and the corresponding certificate of title is issued, the land
covered thereby ceases to be part of public domain, becomes private property, and the
Torrens Title issued pursuant to the patent becomes indefeasible upon the expiration of
one year from the date of such issuance. However, a title emanating from a free patent
No actual and extrinsic fraud existed in this case; at least, no convincing proof of such
which was secured through fraud does not become indefeasible, precisely because the
fraud was adduced. Other than his bare allegations, petitioner failed to prove that there was
[36]
patent from whence the title sprung is itself void and of no effect whatsoever.
fraud in the application, processing and grant of the Free Patent, as well as in the issuance
Fraud is of two kinds: actual or constructive. Actual or positive fraud
proceeds from an intentional deception practiced by means of the
misrepresentation or concealment of a material fact. Constructive
fraud is construed as a fraud because of its detrimental effect upon
public interests and public or private confidence, even though the act
is not done with an actual design to commit positive fraud or injury
upon other persons.
Fraud may also be either extrinsic or intrinsic. Fraud is regarded as
intrinsic where the fraudulent acts pertain to an issue involved in the
original action, or where the acts constituting the fraud were or could
have been litigated therein. The fraud is extrinsic if it is employed to
deprive parties of their day in court and thus prevent them from
asserting their right to the property registered in the name of the
applicant.
The distinctions assume significance because only actual and
extrinsic fraud had been accepted and is contemplated by the law
as a ground to review or reopen a decree of registration. Thus, relief
is granted to a party deprived of his interest in land where the fraud
consists in a deliberate misrepresentation that the lots are not contested
when in fact they are; or in willfully misrepresenting that there are no
other claims; or in deliberately failing to notify the party entitled to
notice; or in inducing him not to oppose an application; or in
misrepresenting about the identity of the lot to the true owner by the
applicant causing the former to withdraw his application. In all these
examples, the overriding consideration is that the fraudulent scheme of
the prevailing litigant prevented a party from having his day in court
or from presenting his case. The fraud, therefore, is one that affects and
goes into the jurisdiction of the court.
We have repeatedly held that relief on the ground of fraud will not be
granted where the alleged fraud goes into the merits of the case, is
intrinsic and not collateral, and has been controverted and decided.
Thus, we have underscored the denial of relief where it appears that the
fraud consisted in the presentation at the trial of a supposed forged
document, or a false and perjured testimony, or in basing the judgment
on a fraudulent compromise agreement, or in the alleged fraudulent
acts or omissions of the counsel which prevented the petitioner from
properly presenting the case.[38]
of OCT No. P-23505. Neither was it proven that respondent actually took part in the alleged
fraud. We agree with the judicious findings of the CA, to wit:
It must be mentioned though that the records of the case do not show
that there has been any irregularity in the issuance of the Free Patent
or the OCT for that matter, as, despite the posting of the notice of
appellants application for Free Patent, the appellee filed his
opposition/protest (Exhibit O, Record[s], p. 31) thereto only after the
same had already been issued in favor the appellant. The fact that
appellee is in possession of several tax declarations and deeds of sale
over the property, the earliest of which was in the year 1951, does not
in any way refute appellants allegation in her application that she
inherited the property and that her predecessor-in-interest possessed
the property even before the Japanese occupation. Moreover, the
evidence also show that the Bureau of Lands conducted an
investigation (Investigation Report, Exhibit 9, Record[s], p. 195) of the
application and found that the appellant was entitled to the parcel of
land she was applying for.[39]
Petitioner's heavy reliance on the tax declarations in his name and in the names of his
predecessors-in-interest is unavailing. We hold that while it is true that tax declarations
and tax receipts are good indicia of possession in the concept of an owner, the same must
be accompanied by possession for a period sufficient for acquisitive prescription to set in.
By themselves, tax declarations and tax receipts do not conclusively prove ownership.[40]
It was established that respondent was clearly in possession of the subject
property.[41] Thus, notwithstanding the existence of the tax declarations issued in favor of
petitioner, it was not refuted that respondent and her successors were and are still in actual
possession and cultivation of the subject property, and, in fact, the respondent also declared
in her name the subject property for taxation purposes. These circumstances further boost
respondent's claim that, from the start, she believed that the subject property was
exclusively hers.
We reiterate our recent ruling in Rabaja Ranch Development Corporation v. AFP
Retirement and Separation Benefits System,[42] to wit:
The Torrens system is not a mode of acquiring titles to lands; it is
merely a system of registration of titles to lands, x x x justice and equity
demand that the titleholder should not be made to bear the unfavorable
effect of the mistake or negligence of the State's agents, in the absence
of proof of his complicity in a fraud or of manifest damage to third
persons. The real purpose of the Torrens system is to quiet title to land
and put a stop forever to any question as to the legality of the title,
except claims that were noted in the certificate at the time of the
registration or that may arise subsequent thereto. Otherwise, the
integrity of the Torrens system shall forever be sullied by the
ineptitude and inefficiency of land registration officials, who are
ordinarily presumed to have regularly performed their duties.
The general rule that the direct result of a previous void contract cannot
be valid[, is inapplicable] in this case as it will directly contravene
the Torrens system of registration. Where innocent third persons,
relying on the correctness of the certificate of title thus issued, acquire
rights over the property, this Court cannot disregard such rights and
order the cancellation of the certificate. The effect of such outright
cancellation will be to impair public confidence in the certificate of
title. The sanctity of the Torrens system must be preserved; otherwise,
everyone dealing with the property registered under the system will
have to inquire in every instance as to whether the title had been
regularly or irregularly issued, contrary to the evident purpose of the
law. Every person dealing with the registered land may safely rely on
the correctness of the certificate of title issued therefor, and the law
will, in no way, oblige him to go behind the certificate to determine the
condition of the property.
All told, we find no reversible error which will justify our having to disturb, much less,
reverse the assailed CA Decision.
WHEREFORE, the instant Petition is DENIED and the assailed Court of Appeals
Decision is AFFIRMED. Costs against petitioner.
SO ORDERED.
REPUBLIC ACT No. 10023
AN ACT AUTHORIZING THE ISSUANCE OF FREE PATENTS TO
RESIDENTAL LANDS
Be it enacted by the Senate and House of Representatives of the Philippines
in Congress assembled:
Section 1. Qualifications. - Any Filipino citizen who is an actual occupant of a
residential land may apply for a Free Patent Title under this Act: Provided;
That in highly urbanized cities, the land should not exceed two hundred (200)
square meters; in other cities, it should not exceed five hundred (500) square
meters; in first class and second class municipalities, it should not exceed
seven hundred fifty (750) square meters; and in all other municipalities, it
should not exceed one thousand (1,000) square meters; Provided,
further, That the land applied for is not needed for public service and/or
public use.
Section 2. Coverage. - This Act shall cover all lands that are zoned as
residential areas, including townsites as defined under the Public Land
Act; Provided, That none of the provisions of Presidential Decree No. 705
shall be violated.
Zoned residential areas located inside a delisted military reservation or
abandoned military camp, and those of local government units (LGUs) or
townsites which preceded Republic Act No. 7586 or the National Integrated
Protected Areas System (NIPAS) law, shall also be covered by this Act.
Section 3. Application. - The application on the land applied for shall be
supported by a map based on an actual survey conducted by a licensed
geodetic engineer and approved by the Department of Environment and
Natural Resources (DENR) and a technical description of the land applied for
together with supporting affidavit of two (2) disinterested persons who are
residing in the barangay of the city or municipality where the land is located,
attesting to the truth of the facts contained in the application to the effect that
the applicant thereof has, either by himself or through his predecessor-in-
interest, actually resided on and continuously possessed and occupied,
under a bona fide claim of acquisition of ownership, the land applied for at
least ten (10) years and has complied with the requirements prescribed in
Section 1 hereof.
Section 4. Special Patents. - Notwithstanding any provision of law to the
contrary and subject to private rights, if any, public land actually occupied
and used for public schools, municipal halls, public plazas or parks and other
government institutions for public use or purpose may be issued special
patents under the name of the national agency or LGU
concerned: Provided, That all lands titled under this section shall not be
disposed of unless sanctioned by Congress if owned by the national agency
or sanctioned by the sanggunian concerned through an approved ordinance
if owned by the LGU.
Section 5. Removal of Restrictions. - The restrictions regarding
encumbrances, conveyances, transfers or dispositions imposed in Sections
118, 119,121, 122 and 123 of Chapter XII, Title VI of Commonwealth Act No.
141 as amended, shall not apply to patents issued under this Act.
Section 6. Period for Application. - All applications shall be filed immediately
after the effectivity of this Act before the Community Environment and
Natural Resources Office (CENRO) of the DENR. The CENRO is mandated
to process the application within one hundred and twenty (120) days to
include compliance with the required notices and other legal requirements,
and forward this recommendation to the Provincial Environment and Natural
Resources Office (PENRO), who shall have five (5) days to approve or
disapprove the patent. In case of approval, patent shall be issued; in case of
conflicting claims among different claimants, the parties may seek the proper
judicial remedies.1avvphi1
Section 7. Implementing Rules and Regulations. - The Director of the Land
Management Bureau of the Department of Environment and Natural
Resources (DENR) shall promulgate rules and regulations to carry out the
provisions of this Act, and shall see to it that such are gender responsive.
Section 8. Repealing Clause. - All laws, decrees, executive order, executive
issuance's or letters of instruction, rules and regulations or any part thereof
inconsistent with or contrary to the provisions of this Act are hereby deemed
repealed, amended or modified accordingly.
Section 9. Separability Clause. - If, for any reason or reasons, any part or
parts of this Act shall be declared unconstitutional or invalid by any
competent court, other parts of this Act shall be thereby shall continue to be
in full force and effect.
Section 10. Effectivity Clause. - This Act shall take effect fifteen days (15)
after its publication in two (2) national newspapers of general education.
TITLE IV
LANDS FOR EDUCATIONAL, CHARITABLE, AND OTHER SIMILAR PURPOSES

CHAPTER IX
CONCESSION OF LANDS FOR EDUCATIONAL, CHARITABLE, AND OTHER
SIMILAR PURPOSES

Section69. Whenever any province, municipality, or other branch or

subdivision of the Government shall need any portion of the land of the
public domain open to concession for educational, charitable or other
similar purposes, the President, upon recommendation by the Secretary of
Agriculture and Commerce, may execute contracts in favor of the same. in
the form of donation, sale, lease, exchange, or any other form, under terms
and conditions to be inserted in the contract; but land so granted shall in no
case be encumbered or alienated, except when the public service requires
their being leased or exchanged, with the approval of the President, for
other lands belonging to private parties, or if the National Assembly
disposes otherwise.

Section118. Except in favor of the Government or any of its branches, units,

or institutions, lands acquired under free patent or homestead provisions
shall not be subject to encumbrance or alienation from the date of the
approval of the application and for a term of five years from and after the
date of issuance of the patent or grant, nor shall they become liable to the
satisfaction of any debt contracted prior to the expiration of said period, but
the improvements or crops on the land may be mortgaged or pledged to
qualified persons, associations, or corporations.

No alienation, transfer, or conveyance of any homestead after five years

and before twenty-five years after issuance of title shall be valid without the
approval of the Secretary of Agriculture and Commerce, which approval
shall not be denied except on constitutional and legal grounds.
 METROPOLITAN BANK AND G.R. No. 162218
capacity and as solidary obligors (the three parties collectively known as the debtors),
TRUST COMPANY,
Petitioner, obtained two separate loans from petitioner Metropolitan Bank and Trust Company

Present: (MBTC) in the total amount of P250,000.The debtors executed a promissory note
promising to pay in four semi-annual installments of P62,500 starting on 23 January
CARPIO, J., Chairperson,
- versus - BRION, 1980, with 15% interest and 2% credit evaluation and supervision fee per annum. The
DEL CASTILLO, two loans were subsequently renewed and secured by one promissory note. Under the
ABAD, and
PEREZ, JJ. note, the debtors made a total payment of P134,054 leaving a balance of P115,946
which remained unpaid despite demands by MBTC.
EDGARDO D. VIRAY, Promulgated:
On 5 June 1981, the debtors executed another promissory note and obtained a loan
Respondent. February 25, 2010
from MBTC in the amount of P50,000, payable on 2 November 1981, with 16%
x- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - x
interest and 2% credit evaluation and supervision fee per annum. On the due date,
the debtors again failed to pay the loan despite demands to pay by MBTC.
DECISION
On 3 September 1981, the debtors obtained a third loan from MBTC in the amount
of P50,000 payable on 14 November 1981, with 16% interest and 2% credit
evaluation and supervision fee per annum. Again, the debtors failed and refused to
CARPIO, J.:
pay on due date.

The Case
Before the Court is a petition for review on certiorari [1] assailing the Decision[2] dated
21 August 2003 and Resolution[3] dated 13 February 2004 of the Court of Appeals
(CA) in CA-G.R. CV No. 43926, which reversed the Decision[4] dated 21 September
2003 of the Regional Trial Court (RTC) of Cagayan de Oro City, Misamis Oriental,
Branch 23, in Civil Case No. 91-309.
MBTC filed a complaint for sum of money against the debtors with the RTC of
Manila, Branch 4.[5] On 28 April 1983, the RTC of Manila rendered a judgment in
favor of MBTC.[6] The dispositive portion of the decision states:
WHEREFORE, judgment is hereby rendered ordering defendants
to pay jointly and severally plaintiff the following:
I On the first cause of action:
(a) The sum of P50,000 with interest thereon at the rate of 16%
per annum from date of filing of the complaint until fully
paid;
(b) The sum equivalent to 1% per month of the principal
obligation as penalty charge, computed likewise from the
filing of the complaint;

II On the second cause of action:

(a) The sum of P50,000 with interest thereon at the rate of 16%
The Facts per annum from date of filing of the complaint until fully
paid;
(b) The sum equivalent to 1% per month of the principal sum as penalty charge,
computed from date of filing of the complaint;
On 7 July 1979, Rico Shipping, Inc., represented by its President, Erlinda Viray-
Jarque, together with respondent Edgardo D. Viray (Viray), in their own personal III On the third cause of action:
 (a) The sum of P115,946.00 with interest thereon at the rate of
1% per annum from date of filing of the complaint until
fully paid;
(b) The sum equivalent to 1% per month of the sum of P115,946.00 as penalty
charge, computed from date of filing of the complaint;
IV
(1) The sum of P15,000.00 as attorneys fees;
and
(2) To pay the costs of suit.
SO ORDERED.
Meanwhile, on 29 December 1982, the government issued Free Patents in favor of
Viray over three parcels of land (lots) designated as (1) Lot No. 26275, Cad-237 with
an area of 500 square meters; (2) Lot No. 26276, Cad-237, with an area of 888 square
meters; and (3) Lot No. 26277, Cad-237 with an area of 886 square meters, all
situated in Barangay Bulua, Cagayan de Oro City, Misamis Oriental. Original
Certificate of Title (OCT) Nos. P-2324, P-2325 and P-2326 were issued covering Free
Patent Nos. [X-1] 10525, [X-1] 10526 and [X-1] 10527, respectively.
The OCTs containing the free patents were registered with the Registry of Deeds of
Cagayan de Oro City on 18 January 1983. Written across the face of the OCTs were
the following:
x x x To have and to hold said tract of land, with the appurtenances
thereunto of right belonging unto the said EDGARDO D. VIRAY
and to his heirs and assigns forever, subject to the provisions of
Sections 118, 119, 121 as amended by P.D. No. 763, 122 and 124 of
Commonwealth Act No. 141, as amended, which provide that except
in favor of the Government or any of its branches, units or
institutions, the land thereby acquired shall be inalienable and shall
not be subject to encumbrance for a period of five (5) years from the
date of this patent, and shall not be liable for the satisfaction of any
debt contracted prior to the expiration of said period x x x.[7]
On 6 March 1984, the RTC of Manila issued a writ of execution over the lots owned
by Viray. On 12 October 1984, pursuant to the writ of execution, the City Sheriff of
Cagayan de Oro sold the lots at public auction in favor of MBTC as the winning
bidder. The next day, the sheriff issued a Certificate of Sale to MBTC.[8]
On 23 August 1990, the sheriff executed a Deed of Final Conveyance to MBTC. The
Register of Deeds of Cagayan de Oro City cancelled OCT Nos. P-2324, P-2325 and
P-2326 and issued in MBTCs name Transfer Certificate of Title (TCT) Nos. T-
59171, T-59172 and T-59173,[9] respectively.
On 30 July 1991, Viray filed an action for annulment of sale against the sheriff and
MBTC with the RTC of Cagayan de Oro City, Misamis Oriental, Branch
23.[10] Viray sought the declaration of nullity of the execution sale, the sheriffs
certificate of sale, the sheriffs deed of final conveyance and the TCT's issued by the
Register of Deeds.
On 21 September 1993, the RTC of Cagayan de Oro City rendered its decision in
favor of MBTC.[11] The dispositive portion states:
Wherefore, based on facts and jurisprudence, the Auction Sale by
the Sheriff of the then lots of plaintiff covered by [free] patents to
satisfy the judgment in favor of Defendant Bank is considered
valid. While plaintiff had until April 2, 1991 to redeem the property,
the former never attempted to show interest in redeeming the
properties, and therefore such right has prescribed. Defendant Bank
therefore is declared as the lawful transferee of the three (3) lots now
covered by Titles in the name of Defendant Bank.
SO ORDERED.[12]
Viray filed an appeal with the CA alleging that the RTC of Cagayan de Oro City
committed reversible error in ruling solely on the issue of redemption instead of the
issue of validity of the auction sale, being the lis mota[13] of the action.
The Ruling of the Court of Appeals
On 21 August 2003, the appellate court reversed the decision of the RTC of
Cagayan de Oro City. The CA ruled that the auction sale conducted by the sheriff
was null and void ab initio since the sale was made during the five-year
prohibition period in violation of Section 118 of Commonwealth Act No. 141 (CA
141) or the Public Land Act. The dispositive portion states:
 WHEREFORE, in view of the foregoing considerations, the decision
appealed from is hereby REVERSED, and plaintiff-appellant
Edgardo Viray is declared entitled to the return and possession of
the three (3) parcels of land covered by O.C.T. Nos. P-2324, P-2325
and P-2326, without prejudice to his continuing obligation to pay the
judgment debt, and expenses connected therewith.
Accordingly, the Register of Deeds of Cagayan de Oro City is ordered to cancel TCT
Nos. T-59171, T-59172 and T-59173 in the name of defendant-appellee Metrobank,
and to restore O.C.T. Nos. P-2324, P-2325 and P-2326 in the name of plaintiff-
appellant Edgardo Viray.
No pronouncement as to costs.
SO ORDERED.[14]
MBTC filed a Motion for Reconsideration which was denied in a Resolution dated 13
February 2004.
Hence, the instant petition.
The Issue
The main issue is whether the auction sale falls within the five-year prohibition period
laid down in Section 118 of CA 141.
The Courts Ruling
The petition lacks merit.
Petitioner MBTC insists that the five-year prohibition period against the alienation or
sale of the property provided in Section 118 of CA 141 does not apply to an obligation
contracted before the grant or issuance of the free patent or homestead. The alienation
or sale stated in the law pertains to voluntary sales and not to forced or execution sales.
Respondent Viray, on the other hand, maintains that the express prohibition in
Section 118 of CA 141 does not qualify or distinguish whether the debt was
contracted prior to the date of the issuance of the free patent or within five years
following the date of such issuance. Further, respondent asserts that Section 118 of
CA 141 absolutely prohibits any and all sales, whether voluntary or not, of lands
acquired under free patent or homestead, made within the five-year prohibition
period.
Section 118 of CA 141 states:
SECTION 118. Except in favor of the Government or any of its
branches, units, or instruction, lands acquired under free patent or
homestead provisions shall not be subject to encumbrance or
alienation from the date of the approval of the application and for a
term of five years from and after the date of issuance of the patent
and grant, nor shall they become liable to the satisfaction of any debt
contracted prior to the expiration of said period, but the
improvements or crops on the land may be mortgaged or pledged to
qualified persons, associations, or corporations.
No alienation, transfer, or conveyance of any homestead after five years and before
twenty-five years after issuance of title shall be valid without the approval of the
Secretary of Agriculture and Natural Resources, which approval shall not be denied
except on constitutional and legal grounds.
The law clearly provides that lands which have been acquired under free patent or
homestead shall not be encumbered or alienated within five years from the date of
issuance of the patent or be liable for the satisfaction of any debt contracted prior to
the expiration of the period.
In the present case, the three loans were obtained on separate dates 7 July 1979, 5
June 1981 and 3 September 1981, or several years before the free patents on the lots
were issued by the government to respondent on 29 December 1982. The RTC of
Manila, in a Decision dated 28 April 1983, ruled in favor of petitioner ordering the
debtors, including respondent, to pay jointly and severally certain amounts of
money. The public auction conducted by the sheriff on the lots owned by respondent
occurred on 12 October 1984.
For a period of five years or from 29 December 1982 up to 28 December 1987,
Section 118 of CA 141 provides that the lots comprising the free patents shall not be
made liable for the payment of any debt until the period of five years expires. In this
case, the execution sale of the lots occurred less than two years after the date of the
issuance of the patents. This clearly falls within the five-year prohibition period
provided in the law, regardless of the dates when the loans were incurred.
In Artates v. Urbi,[15] we held that a civil obligation cannot be enforced against, or
satisfied out of, the sale of the homestead lot acquired by the patentee less than five
years before the obligation accrued even if the sale is involuntary. For purposes of
complying with the law, it is immaterial that the satisfaction of the debt by the
encumbrance or alienation of the land grant was made voluntarily, as in the case of an
ordinary sale, or involuntarily, such as that effected through levy on the property and
consequent sale at public auction. In both instances, the law would have been violated.
for as held in Artates vs. Urbi, supra, such indebtedness has to be
reckoned from the date said obligation was adjudicated and decreed
by the court. x x x[17]
It must be emphasized that the main purpose in the grant of a free patent or homestead
is to preserve and keep in the family of the homesteader that portion of public land
which the State has given to him so he may have a place to live with his family and
become a happy citizen and a useful member of the society. [18] In Jocson v.
Soriano,[19] we held that the conservation of a family home is the purpose of homestead
laws. The policy of the state is to foster families as the foundation of society, and thus
promote general welfare. The sentiment of patriotism and independence, the spirit of
free citizenship, the feeling of interest in public affairs, are cultivated and fostered
more readily when the citizen lives permanently in his own home, with a sense of its
protection and durability.

Likewise, in Beach v. Pacific Commercial Company and Sheriff of Nueva Ecija,[16] we Section 118 of CA 141, therefore, is predicated on public policy. Its violation gives
held that to subject the land to the satisfaction of debts would violate Section 116 of rise to the cancellation of the grant and the reversion of the land and its improvements
Act No. 2874 (now Section 118 of CA 141). to the government at the instance of the latter.[20] The provision that nor shall they
become liable to the satisfaction of any debt contracted prior to the expiration of the

As correctly observed by the CA in the present case: five-year period is mandatory[21] and any sale made in violation of such provision is
void[22] and produces no effect whatsoever, just like what transpired in this
It is argued by defendant-appellee, however, that the debt referred to in the case. Clearly, it is not within the competence of any citizen to barter away what public
law must have been contracted within the five-year prohibitory
period; any debt contracted before or after the five-year prohibitory policy by law seeks to preserve.[23]
period is definitely not covered by the law. This argument is WHEREFORE, we DENY the petition. We AFFIRM the Decision dated 21 August
weakest on two points. Firstly, because the provision of law does
not say that the debt referred to therein should be contracted before 2003 and Resolution dated 13 February 2004 of the Court of Appeals in CA-G.R. CV
the five-year prohibitory period but before the expiration of the five-
No. 43926.
year prohibitory period. (Defendant-appellee deliberately omitted
the word expiration to suit its defense.) This simply means that it is
not material whether the debt is contracted before the five-year
prohibitory period; what is material is that the debt must be SO ORDERED.
contracted before or prior to the expiration of the five-year
prohibitory period from the date of the issuance and approval of the
patent or grant. x x x

And secondly, while it is true that the debt in this case was contracted prior
to the five-year prohibitory period, the same is of no consequence,
CHAPTER V the person who presents the oldest title, provided there is good faith.
SUBSEQUENT REGISTRATION (1473)

I
VOLUNTARY DEALINGS WITH REGISTERED LANDS

GENERAL PROVISIONS

Section 51. Conveyance and other dealings by registered owner. An owner

of registered land may convey, mortgage, lease, charge or otherwise deal
with the same in accordance with existing laws. He may use such forms of
deeds, mortgages, leases or other voluntary instruments as are sufficient in
law. But no deed, mortgage, lease, or other voluntary instrument, except a
will purporting to convey or affect registered land shall take effect as a
conveyance or bind the land, but shall operate only as a contract between
the parties and as evidence of authority to the Register of Deeds to make
registration.

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

Section 52. Constructive notice upon registration. Every conveyance,

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

Art. 1544. If the same thing should have been sold to different vendees, the
ownership shall be transferred to the person who may have first taken
possession thereof in good faith, if it should be movable property.

Should it be immovable property, the ownership shall belong to the person

acquiring it who in good faith first recorded it in the Registry of Property.

Should there be no inscription, the ownership shall pertain to the person

who in good faith was first in the possession; and, in the absence thereof, to
G.R. No. L-56483 May 29, 1984
SOSTENES CAMPILLO, petitioner,
vs.
HON. COURT OF APPEALS and ZENAIDA DIAZ VDA. DE SANTOS, in her
capacity as Administratrix of the Intestate Estate of the late SIMPLICIO S.
SANTOS, respondents.
Rosendo J. Tansinsin for petitioner.
Buenaventura Evangelista for private respondent.
DE CASTRO, J.:
In this petition for review on certiorari of the decision of the defunct Court of Appeals
in CA-G.R. No. 62842-R issued on March 9, 1981, the only issue is whether who has
a better right or title to the herein disputed two (2) parcels of land — Simplicio Santos
who earlier purchased them in a private sale but failed to register his sale, or
petitioner Sostenes Campillo who subsequently purchased them at an execution sale
and obtained a certificate of title.
The pertinent undisputed facts, may be summarized as follows: On February 27,
1961, Tomas de Vera and his wife Felisa Serafico sold two (2) parcels of land located
in Tondo, Manila, designated as Lots 1 and 2 of the consolidation and subdivision
plan (LRC) Pcs. 888 and segregated from Transfer Certificate of Title No. 37277
under Transfer Certificate of Title No. 63559, to Simplicio Santos, now deceased and
is represented by his administratrix, Zenaida Diaz Vda. de Santos, the herein private
respondent. Said sale was however never presented for registration in the office of
the Registry of Deeds of Manila nor noted in the title covering the property.
On January 27, 1962, petitioner Sostenes Campillo obtained a judgment for a sum of
money against Tomas de Vera in Civil Case No. 49060 of the Court of First Instance
of Manila. That judgment became final and executory, and petitioner obtained an
order for the issuance of a writ of execution. The writ was issued on April 4, 1962 and
pursuant thereto, the City Sheriff levied on three (3) parcels of land covered by TCT
No. 63559 in the name of Tomas de Vera, including the two (2) parcels of land which
the latter previously sold to Simplicio Santos.
On June 26, 1962, notice of the sale of said lots was issued by the Sheriff and
published in the "Daily Record" and La Nueva Era."
On July 25, 1962, the three parcels of land were sold at public auction for P17,550.81
in favor of petitioner who was issued the corresponding certificate of sale. After the
lapse of one year, the City Sheriff executed the final deed of sale in favor of petitioner
over the three (3) parcels of land levied and sold on execution. On February 4, 1964,
TCT No. 63559 was cancelled and in lieu thereof, TCT No. 73969 was issued by the
Registry of Deeds of Manila in the name of petitioner Sostenes Campillo. Upon
petition by the latter, the Registry of Deeds cancelled TCT No. 73969 and issued in
hell thereof TCT Nos. 74019 and 74020 over the disputed Lots 1 and 2, respectively.
Claiming to be the owner of the two parcels of land by reason of the previous sale to
him by Tomas de Vera, Simplicio Santos filed an action to annul the levy, notice of
sale, sale at public auction and final deed of sale of Lots 1 and 2 in favor of petitioner
Campillo, with damages. In resisting the complaint, the herein petitioner as one of the
defendants below, alleged that he is an innocent purchaser for value and that the
supposed previous sale could not be preferred over the levy and sale at public action
because it was not registered.
After due trial, the lower court rendered judgment sustaining the validity of the levy
and sale at public auction primarily because at the time of the levy and sale, the
disputed properties were still registered in the name of the judgment debtor, Tomas
de Vera. Besides, the trial court ruled, the sale to Simplicio Santos which was not
registered nor noted in the title of the subject lots, cannot bind third persons.
On appeal at the instance of the herein private respondent, the respondent appellate
court modified the decision of the lower court, as follows:
WHEREFORE, the judgment of the trial court is hereby modified as
follows:
(1) The dismissal of the amended complaint as against defendant
Sostenes Campillo only and ordering the plaintiff to pay the costs of
suit are set aside;
(2) Declaring the levy, sheriff's sale and sheriff's certificate in favor
of defendant Sostenes Campillo null and void and of no effect;
(3) Declaring plaintiff Simplicio Santos, now his estate, to be the
owner of the two parcels of land under litigation and embraced in
Transfer Certificate of Title No. 63559; and
(4) Ordering the Register of Deeds of Manila to cancel Transfer
Certificate of Title Nos. 74019 and 74020 in the name of defendant
Sostenes Campillo and to issue the proper certificate of title in the
name of the estate of Simplicio Santos.
The rest of the judgment appealed from is hereby affirmed. (p. 45,
Rollo)
Rationalizing its stand, the appellate court said that the subject lots could not be
legally levied upon to satisfy the judgment debt of the de Veras in favor of petitioner
because at the time of the execution sale, the judgment debtor, having previously
sold said properties, was no longer the owner thereof; that since the judgment debtor
had no more right to or interest on the said properties, then the purchaser at the
auction sale acquires nothing considering that a judgment creditor only acquires the
Identical interest possessed by the judgment debtor in the property which is the
subject of the auction sale, and he takes the property subject to all existing equities to
which the property would have been subject in the hands of the debtor; and, while it
may be true that Simplicio Santos did not record or register the sale of the disputed
lots, the levy on execution does not take precedence over the unrecorded deed of
sale to the same property made by the judgment debtor anterior to the said levy since
the judgment creditor is not a third party within the meaning of the law and could not
therefore be considered as purchaser for value in good faith.
After a conscientious review and scrutiny of the records of this case as well as
existing legislations and jurisprudence on the matter, We are constrained to reverse
the judgment of the respondent appellate court and rule in favor of the herein
petitioner.
It is settled in this jurisdiction that a sale of real estate, whether made as a result of a
private transaction or of a foreclosure or execution sale, becomes legally effective
against third persons only from the date of its registration. 1Consequently, and
considering that the properties subject matter hereof were actually attached and
levied upon at a time when said properties stood in the official records of the Registry
of Deeds as still owned by and registered in the name of the judgment debtor, Tomas
de Vera, the attachment, levy and subsequent sale of said properties are proper and
legal. The net result is that the execution sale made in favor of the herein petitioner
transferred to him all the rights, interest and participation of the judgment debtor in the
aforestated properties as actually appearing in the certificate of title, unaffected by
any transfer or encumbrance not so recorded therein.
Section 51, PD No. 1529, otherwise known as the Property Registration Decree,
provides as follows:
Section 51. Conveyance and other dealings by registered owner. —
An owner of registered land may convey, mortgage, lease, charge
or otherwise deal with the same in accordance with existing laws.
He may use such forms of deeds, mortgages, leases or other
voluntary instruments as are sufficient in law. But no deed,
mortgage, lease or other voluntary instrument, except a will
purporting to convey or affect registered land shall take effect as a
conveyance or bind the land, but shall operate only as a contract
between the parties and as evidence of authority to the Register of
Deeds to make registration.
The act of registration shall be the operative act to convey or affect
the land insofar as third persons are concerned, and in all cases
under this Decree, the registration shall be made in the office of the
Register of Deeds for the province or city where the land lies.
(Italics for emphasis)
As succinctly stated in the case of Philippine National Bank vs. Court of Appeals, 98
SCRA 207:
Whatever might have been generally or unqualifiedly stated in the
cases heretofore decided by this Court, We hold that under the
Torrens System registration is the operative act that gives validity to
the transfer or creates a hen upon the land. A person dealing with
registered land is not required to go behind the register to
determine the condition of the property. He is only charged with
notice of the burdens on the property which are noted on the face
of the register or the certificate of title. To require him to do more is
to defeat one of the primary objects of the Torrens system. A bona
fide purchaser for value of such property at an auction sale
acquires good title as against a prior transferee of same property if
such transfer was unrecorded at the time of the auction sale. (Italics
for emphasis)
The case of Leyson vs. Tanada, 2 invoked by the private respondent is not in point. In
that case, a notice of lis pendens was inscribed at the back of the certificate of title of
the land subject therein before it was sold at public auction. Necessarily, the
purchaser at public auction is bound by the outcome of the pending case referred to
therein. Since it turned out that the judgment debtor is merely a co-owner of the
property sold at public auction, then the puchaser thereat is not entitled to the entirety
of the land. As the Court held: "The interest acquired by a purchaser in an execution
sale is limited to that which is possessed by the debtor. If there is more than one
person owning property in common and an execution against one only is levied
thereon, the sale effected by the Sheriff under such execution operates exclusively
upon the interest of the execution debtor, without being in any wise prejudicial to the
interest of the other owners. The result in such case merely is that one new owner in
common is substituted for the owner whose interest is alienated by process of law."
While it may be true as stated in the aforesaid case of Leyson vs. Tanada, that
purchasers at execution sales should bear in mind that the rule of caveat
emptor applies to such sales, that the sheriff does not warrant the title to real property
sold by him as sheriff, and that it is not incumbent on him to place the purchaser in
possession of such property, still the rule applies that a person dealing with registered
land is not required to go behind the register to determine the condition of the
property and he is merely charged with notice of the burdens on the property which
are noted on the face of the register or the certificate of title. Hence, the petitioner
herein, as the purchaser in the execution sale of the registered land in suit, acquires
such right and interest as appears in the certificate of title unaffected by prior lien or
encumbrances not noted therein. This must be so in order to preserve the efficacy
and conclusiveness of the certificate of title which is sanctified under our Torrens
system of land registration.
WHEREFORE, the questioned decision of the respondent appellate court is hereby
reversed and set aside, and the judgment of the lower court is reinstated. Without
pronouncement as to costs.
SO ORDERED.
G.R. No. L-69303 July 23, 1987
HEIRS OF MARIA MARASIGAN, namely, Teofilo, Isabel, Maximina, Anicia, and
Francisco, all surnamed Marasigan, petitioners,
vs.
THE INTERMEDIATE APPELLATE COURT and MARIA MARRON, respondents.
GUTIERREZ, JR., J.:
Who has a better right to the property in question, the party who bought it with a
notice of lis pendens annotated at the back of her title or the party in whose favor the
notice of lis pendens was made? The appellate court answered this question in favor
of the party who had the notice annotated and who won the litigation over the
property. We affirm.
The disputed property in this case is a residential lot (Lot No. 2-A) covered by
Transfer Certificate of Title No. 100612 issued by the Register of Deeds of the City of
Manila in the name of one Fe Springael-Bazar, married to Felicisimo Bazar.
The pertinent facts as disclosed by the record are as follows:
On April 24, 1975, Civil Case No. 97479 entitled "Maria Marron v. Felicisimo Bazar
and Fe S. Bazaar" was filed before the then Court of First Instance of Manila, Branch
XIII. The action sought to compel defendants Bazar to execute a registrable Deed of
Absolute Sale of their lot covered by T.C.T. No. 100612 in favor of Maria Marron.
On January 27, 1976, while Civil Case No. 97479 was still pending, the private
respondent caused the annotation of a notice of lis pendens at the back of T.C.T. No.
100612.
On February 24, 1976, judgment was rendered in Civil Case No. 97479. The
dispositive portion reads:
WHEREFORE, the Court hereby renders judgment in favor of the plaintiff and against
the defendants as follows:
a) Ordering the defendants Fe Springael Bazar and Felicisimo Bazar as
vendors (1) to execute in favor of the plaintiff Maria Marron as vendee a
Deed of Absolute Sale in a public instrument over the residential lot covered
by Transfer Certificate of Title No. 100612 issued by the Registry of Deeds
of the City of Manila to and in the name of Fe S. Bazar, married to Felicisimo
Bazaar; and (2) to deliver to plaintiff sufficient copies of such deed of sale,
together with the Owner's copy of said Transfer Certificate of Title No.
100612, in order that the plaintiff can register the Deed of Absolute Sale with
the Registry of Deeds of the City of Manila and secure a transfer certificate
of title for the land in her name.
b) Ordering the defendants to pay to the plaintiff the sum of P500.00
Philippine Currency, as and for attorney's fees; and
c) Ordering the defendants to pay the costs of the suit. (Rollo, p. 15).
The above judgment became final and executory so Maria Marron filed a motion for
execution which was granted. A writ of execution was issued by the court on July 12,
1976. The spouses Bazar, however, refused to surrender their title to the property in
question and to execute the required deed of sale in Marron's favor. On November
29, 1978, the lower court finally ordered the Clerk of Court to execute the deed of sale
in behalf of the erring spouses. When the said deed was presented to the Register of
Deeds of Manila for registration, the Deputy Clerk of Court was advised to secure a
court order in order that the new title issued in the name of herein petitioner Maria
Marasigan could be cancelled.
It appears that on December 18, 1974, a deed of absolute sale of Lot 2-A covered by
T.C.T. No. 100612 was executed by Fe S. Bazar in favor of Maria Marasigan for and
in consideration of the sum of Fifteen Thousand Pesos (P15,000.00). However, it was
only on July 5, 1977 that said deed was registered with the Registry of Deeds of
Manila. Consequently, T.C.T. No. 100612 was cancelled and a new title was issued in
Maria Marasigan's name. When the Register of Deeds of Manila issued Transfer
Certificate of Title No. 126056 naming Maria Marasigan as the new owner of Lot 2-A,
the notice of lis pendens caused to be annotated by Marron on the Bazar's title was
carried over on the said new title.
Meanwhile, on May 26, 1977, the Bazaars filed a petition for relief from the judgment
dated February 24, 1976 in Civil Case No. 97479. While their petition was still
pending, they moved to set aside the said judgment on June 22, 1979 on the ground
of lack of jurisdiction over their persons.
On the other hand, on February 24, 1979, Marron instituted L.R.C. Case No. 7680
captioned "Maria Marron v. Maria Marasigan" which prayed for a court order requiring
the Register of Deeds of Manila to register the deed of sale executed by the Deputy
Clerk of Court in behalf of the Bazaars pursuant to the order dated November 29,
1978 of the Court of First Instance, Manila, Branch XIII. L.R.C. Case No. 7680 was
tried by the Court of First Instance of Manila, Branch IV acting as a land registration
court. Said case was dismissed for the following reason:
... This court acting as a Land Registration Court, with limited and special
jurisdiction cannot act on this petition under summary proceedings but (sic)
should be ventilated before a court of general jurisdiction Branch XIII, which
issued the aforesaid Order dated November 29, 1978, the said petition is
hereby dismissed for lack of jurisdiction without prejudice on the part of the
petitioner to institute the appropriate civil action before the proper court. ...
(Annex "A," p. 4, Rollo, p. 138)
On September 6, 1979, Marron filed another case docketed as Civil Case No. 126378
to have Marasigan's TCT 126056 cancelled conformably to the procedure outlined in
the decision of the above land registration court. On July 30, 1980, the parties
submitted said case for decision.
On February 18, 1982, the Court of First Instance of Manila, Branch IV to which Civil
Case No. 126378 was assigned dismissed Marron's complaint for being premature
since the decision rendered by the CFI, Branch XIII in Civil Case No. 97479 had not
yet become final and executory considering that it was still the subject of a petition for
relief from judgment.
On appeal, the Intermediate Appellate Court, on August 7, 1984, ruled that Marron is
entitled to the property under litigation by virtue of the notice of lis pendens annotated
at the back of Maria Marasigan's title. The appellate court further ruled that the
decision in Civil Case No. 97479 had become final and executory because the
petition for relief from judgment of the spouses Bazar was filed out of time. The
dispositive portion of the appellate court's decision reads:
WHEREFORE, the appealed decision is hereby REVERSED and another one
entered —
(a) Ordering the Register of Deeds of Manila to cancel T.C.T. No. 126056 in
the name of Maria Marasigan and issue another in the name of Maria
Marron by virtue of the Deed of Sale executed by the Branch Clerk of Court
of Branch XIII;
(b) Ordering the said Register of Deeds, during the pendency of this case, to
refrain from registering any deed of sale pertaining to T.C.T. No. 126056 in
the name of Maria Marasigan other than that of the herein plaintiff; and
(c) Ordering the defendant Maria Marasigan to pay attorney's fees in the
amount of P10,000.00. (IAC, Decision. Rollo, pp. 17-18).
Maria Marasigan who died in the course of the proceedings is now represented by
her heirs in the instant petition which assigns the following errors:
I Section 52 of the Property Registration Decree (P.D. 1529) provides:
THAT THE INTERMEDIATE APPELLATE COURT FAILED TO APPREHEND THAT
THE RIGHT OF ACTION OF RESPONDENT MARIA MARRON (AS PLAINTIFF) IN
CIVIL CASE NO. 97479 HAD PRESCRIBED AND SHE INCURRED IN LACHES.
II
THAT THE INTERMEDIATE APPELLATE COURT FAILED TO APPREHEND THAT
RESPONDENT ABANDONED OR WAIVED HER PROPERTY RIGHTS AND
EFFECTS TO/OF THE DECISION IN CIVIL CASE NO. 97479, WHEN SHE FILED
CIVIL CASES NO. 7680 AND 126378, DURING ITS EFFECTIVITY.
III
THAT THE INTERMEDIATE APPELLATE COURT ERRED IN CONCLUDING THAT
THE DECISION IN CIVIL CASE NO. 97479 HAS BECOME FINAL AND
EXECUTORY.
IV
THAT THE INTERMEDIATE APPELLATE COURT FAILED TO APPREHEND THE
LACK OF JURISDICTION OF THE TRIAL COURT IN CIVIL CASES NO. 7680 AND
126378 OVER THE PERSONS OF PETITIONERS.
V
THAT THE INTERMEDIATE APPELLATE COURT ERRED IN CONSIDERING THAT
THE TRIAL COURT IN CIVIL CASE NO. 97479 HAS JURISDICTION OVER THE
PERSONS OF DEFENDANTS SPOUSES FELICISIMO BAZAAR AND FE S.
BAZAAR.
VI
THAT THE INTERMEDIATE APPELLATE COURT FAILED TO APPREHEND THAT
THE DEED OF ABSOLUTE SALE EXECUTED BY THE DEPUTY CLERK OF
COURT, WAS NOT LEGAL AND VALID AND WITHOUT PROOF AND EFFECT.
(Brief for the appellant, pp. 1 and 2)
We find no merit in the present petition.
There is a clear showing that although the late Maria Marasigan acquired the property
in question from the Bazaars pursuant to a deed of absolute sale on December 18,
1974 or a little over four months before the filing of Civil Case No. 97479, the
transaction became effective as against third persons only on July 5, 1977 when it
was registered with the Registry of Deeds of Manila. It is the act of registration which
creates constructive notice to the whole world. Section 51 of Act 496, as amended by
Sec. 52. Constructive notice upon registration. — Every conveyance ...
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.
Moreover, there is no question that when the late Maria Marasigan was issued her
transfer certificate of title to the subject property (T.C.T. No. 126056), the Registrar of
Deeds of Manila then carried over to the new title the notice of lis pendens which the
private respondent had caused to be annotated at the back of the Bazar's title. In
case of subsequent sales or transfers, the Registrar of Deeds is duty bound to carry
over the notice of lis pendens on all titles to be issued. Otherwise, if he cancels any
notice of lis pendens in violation of his duty, he may be held civilly and even criminally
liable for any prejudice caused to innocent third persons (The Director of Lands, et al.
v. Reyes, 68 SCRA 177).
A notice of lis pendens means that a certain property is involved in a litigation and
serves as notice to the whole world that one who buys the same does it at his own
risk (Rehabilitation Finance Corporation v. Morales, 101 Phil. 171). It was also a clear
notice to Maria Marasigan that there was a court case affecting her rights to the
property she had purchased.1avvphi1
As earlier stated it was only on July 5, 1977 that the sale between Maria Marasigan
and the Bazaars became effective as against third persons. The registration of the
deed of sale over the subject property was definitely subsequent to the annotation
made on January 27, 1976. Consequently, Marasigan was bound by the outcome of
the litigation against her vendors or transferors. (See Rivera v. Tirona, et al., 109 Phil.
505).
We reiterate the established rule that:
... the filing of a notice of lis pendens charges all strangers with a notice of
the particular litigation referred to therein and, therefore, any right they may
thereafter acquire on the property is subject to the eventuality of the suit.
The doctrine of lis pendens is founded upon reason of public policy and
necessity, the purpose of which is to keep the subject matter of the litigation
within the power of the Court until the judgment or decree shall have been
entered; otherwise, by successive alienations pending the litigation, its
judgment or decree shall be rendered abortive and impossible of execution.
... (Laroza v. Guia, 134 SCRA 34 1)
The late Marasigan's transferors did not interpose any appeal from the adverse
judgment dated February 24, 1976 in Civil Case No. 97479. The 30-day period under
the old rule (Rule 41, section 3 of the Revised Rules of court now amended by Batas
Pambansa Bilang 129, section 39) within which the Bazaars may have taken an
appeal started to run from May 12, 1976 when they were served with a copy of the
said decision. On June 11, 1976, the February 24, 1976 decision in Civil Case No.
97479 became final and executory. At this point after the finality of the said decision,
the Bazaars no longer had the right to alienate the property subject of the litigation.
Any transaction effective during the period of litigation is subject to the risks implicit in
the notice of lis pendens and to the eventual outcome of the litigation.
Moreover, we agree with the finding of the appellate court that the petition for relief
from judgment by the Bazaars dated May 26, 1977 was filed beyond the two periods
provided in Section 3 Rule 38 of the Revised Rules of Court. There may have been
some errors in the computations but the petition itself was out of time.
Rule 38, Section 3 of said Rules provides, in part, that:
Sec. 3. Time for filing petition. ... — A petition provided for in either of the
preceding sections of this rule must be verified, filed within sixty (60) days
after the petitioner learns of the judgment, order or other proceeding to be
set aside, and not more than six (6) months after such judgment or order
was entered or such proceeding was taken. ...
The 60-day period must be reckoned from May 12, 1976 when the Bazaars were
served with a copy of the assailed decision. Therefore, the 60-day period expired on
July 11, 1976. It was only after 379 days or more than 12 months after they learned of
the judgment that the Bazaars filed their petition for relief from said judgment. (See
Domingo v. Dela Cruz, 23 SCRA 1121) The appellate court computed the 6-month
period from the date of the judgment was rendered. Rule 38 states that the counting
should commence from the entry of the judgment or order. (See Dirige v. Biranya, 17
SCRA 840). A judgment is entered only after its finality and Civil Case No. 97479
became final on June 11, 1976. Since the records do not bear the exact date the
questioned judgment was entered, the 6-month period can be counted for purposes
of our decision from July 12, 1976 when the writ of execution of the final judgment
was issued. The phrase "or other proceeding" in Section 3 of Rule 38 includes a writ
of execution (Aquino v. Blanco, 79 Phil. 647). The 6-month period from July 12, 1976
lapsed on January 8, 1977. A period of ten (10) months had already lapsed when the
Bazaars filed their petition for relief from judgment on May 26, 1977. Obviously, the
petitioners cannot now question the effects of the final and executory judgment in
Civil Case No. 97479. In the words of Laroza v. Guia (supra) they cannot render the
final judgment abortive and impossible of execution. The deed of sale executed by
the Deputy Clerk of Court on behalf of the Bazar spouses pursuant to the court's
judgment was valid and binding.
The petitioners cannot also raise before us the issues of prescription or laches and
lack of jurisdiction over the persons of the Bazar spouses in Civil Case No. 97479.
This cannot be done in this petition which stems from Civil Case No. 126378 in the
trial court and AC-G.R. No. 00183 in the appellate court. The Bazaars were the
proper parties who ought to have raised them as defenses either in a motion to
dismiss or in their answer. Since they did not do so, the same were deemed waived.
(See Rule 9, section 2 of the Revised Rules of Court; MD Transit & Taxi Co., Inc. v.
Estrella, 113 SCRA 378; Torreda v. Boncaros, 69 SCRA 247; Visayan Electric Co.,
Inc. v. Commissioner of Internal Revenue, 39 SCRA 43; Republic v. Mambulao
Lumber Company, 6 SCRA 858).
WHEREFORE, in view of all the foregoing, the petition is hereby DISMISSED for lack
of merit. The appellate court's decision is AFFIRMED.
SO ORDERED.
G.R. Nos. L-48971 & 49011 January 22, 1980
PACIFICO GARCIA, petitioner-appellant,
vs.
BENJAMIN M. GOZON, TECLA GUTIERREZ, ROSARIO FELIX, PAULINO
D. BUENAVENTURA, RAYMUNDO DIONISIO, VIRGILIO AUSTRIA and
MARCEON VICENCIO, respondents-appellees;
PHILIPPINE NATIONAL BANK, petitioner-appellant,
vs.
COURT OF APPEALS (Third Division), CAROLINA LAPUZ- GOZON,
assisted by her husband BENJAMIN M. GOZON, TECLA GUTIERREZ,
ROSARIO FELIX, PAULINO D. BUENAVENTURA, RAYMUNDO
DIONISIO, VIRGILIO AUSTRIA and MARCEON VICENCIO, respondents-
appellees.
Agapito Mendoza & Antonio G. Ibarra for appellant Pacifico Garcia
Laurel Law Office and Flores Ocampo, Dizon & Domingo for private
appellees.
AQUINO, J.:
This case is about the issuance of two or more transfer certificates of title to
different persons for the same lots, or subdivisions thereof, due to the fact
that the original title was allegedly not cancelled when the first transfer
certificates of title were issued to replace the original title. The factual
background is as follows:
1. On August 9, 1918, a deed of sale for two parcels of land, E and G (with a
total area of more than seven hectares) of the Hacienda Maysilo, located in
Malabon, Rizal and covered by Original Certificate of Title No. 983, was
executed in favor of Ismael Lapus a bona fide occupant thereof. The deed
was executed pursuant to an order of the Court of First Instance of Rizal in
Civil Case No. 391, Negao vs. Vidal, a partition proceeding involving the said
hacienda (See Bustamante vs. Tuason, 47 Phil. 433, 434).
2. The deed of sale was presented for registration at two-twenty five in the
afternoon of January 15, 1920 and was recorded as Primary Entry No. 7710.
That deed of sale itself contains the following entries showing that it was
annotated on the back of OCT NO. 983:
Presentado en este Registro a las 2:25 de la tarde del dia de
hoy segun el Asiento No. 7710 de tomo 10 del Libro Diario,
Pasig, Rizal, Enero 15, 1920.
Register of Deeds (Exh. B-12)
Inscrito el documento que precede al dorso del certificado
de Titulo Original No. 983 del Tomo A-9, de inscritor en las
paginas 113 y 114 ambos del libro T-25 de registro como
certificados de titulo Nos. 4910 y 4911, archivado en el
legajo T-#4910. Pasig, Rizal, Enero 15, 1920.:
Register of Deeds (Exh. B-1).
However, it seemed that, contrary to the foregoing entry and the official
routine or standard operating procedure, the deed of sale was not annotated
on OCT No. 983 and that, consequently, that title was apparently not
cancelled. Why that annotation did not appear in OCT No. 983 and why there
was no notation of the cancellation of that title, as it appeared in 1962, is a
mystifying circumstance in this case.
3. As a result of the registration of that deed of sale, Transfer Certificate of
'Title No. 4910 was issued to Lapus for the two parcels of land, E and G, and
I Transfer Certificate of Title No. 4911 was issued for the remaining five lots
covered by OCT No. 983 (which embrace an area of more than two hundred
fifty-eight hectares registered in the names of more than twenty-six-co-
owners). TCT Nos. 4910 and 4911 contain the following entries: "Transfer
from No. 983. Originally registered on the 29th day of January, in the year
1917 in Book No. A-9, page 215, of the said Province of Rizal, pursuant to a
decree entered in Case No. 3850."
4. Lapus on different occasions mortgaged the two parcels of land to secure
his obligations to the Philippine National Bank, the Government and the
Philippine Trust Company. He died in 1951. The two parcels of land were
inherited by his daughter, Carolina Lapuz-Gozon. She became the registered
owner of the two lots. She subdivided them into fifty-five lots. She sold some
of the subdivision lots to her co-respondents-appellees herein. Lapus and his
successors-in-interest have been in possession of the two parcels even
before 1910 or for more than seventy years.
5. Meanwhile, in 1962, certain. alleged heirs (collectively known as the
Riveras) of the late Maria de la Concepcion Vidal filed a motion in Land
Registration Cases Nos. 4429 and 4496 of the Court of First Instance of
Rizal, alleging that they were deprived of their participation in the Hacienda
Maysilo covered by OCT No. 983 and for other titles and that, since only
OCT No. 983 was supposedly unencumbered, all the land covered by that
title should be adjudicated to them. The court granted the motion. It should
be stressed that OCT No. 983 appears to have remained uncancelled
notwithstanding the sale to Lapus of two parcels covered by it and the fact
that it had been replaced by TCT Nos. 4910 and 4911.
6. On June 7, 1963, OCT No. 983 was definitely cancelled and in lieu thereof
Transfer Certificate of Title No. 112236 was issued to the Riveras. Later, Lots
5 and 7 of the said title (corresponding to parcels E and G which were sold to
Ismael Lapus in 1918 as stated earlier) were assigned by Bartolome Rivera
to Sergio Cruz and Pacifico Garcia and TCT Nos. 112743 and 112742 were
issued to Cruz and Garcia, respectively. Thus, two sets of transfer
certificates of title for Lots E and G or 5 and 7, originally covered by OCT No.
983, were issued, one to the heir of Ismael Lapus and another set to the
successors-in-interest of the Riveras.
7. On October 22, 1964, Garcia subdivided Lot 7 (G) into Lots A and B.
Garcia retained Lot A and obtained TCT No. 134958 for it. He assigned Lot B
to Antonio Muñoz on November 5, 1964. As a consequence of the
assignment, TCT No. 112742 was cancelled and TCT No. 134957 was
issued to Muñoz. In 1965, he mortgaged Lot B to the Associated Banking
Corporation to secure a loan of P200,000.
8. On the other hand, on July 17, 1964 Cruz sold to Santiago Go Lot 5 (E)
covered by TCT No. 112743. TCT No. 131329 was issued to Go on August
25,1964. On December 23, 1964, Go mortgaged Lot 6 to the Philippine
National Bank (PNB) to secure a loan of P50,000 which was later increased
to P60,000.
9. Muñoz and Go did not pay their mortgage debts. The two banks
foreclosed the mortgages. The PNB bought the mortgaged lot at the auction
sale held on May 4. 1967. The sheriff issued to it a certificate of sale dated
May 19, 1967 but at that time there was already a notice of lis
pendens annotated on the title of the mortgaged lot. TCT Nos. 212163 and
236881 for the mortgaged lots were issued to the Associated Banking
Corporation and the Philippine National Bank, respectively.
10. The Riveras and their successors-in-interest have never set foot on the
disputed lots.
11. Mrs. Gozon later learned that the Riveras and their successors-in-interest
had acquired the land (more than two hundred fifty-eight hectares) covered
by OCT No. 983. Her lawyer and a surveyor informed her that parcels E and
G, which she inherited from her father, were identical to Lots 5 and 7 which
were conveyed to Cruz and Garcia. She registered adverse claims on the
titles covering Lots 5 and 7. On December 27, 1965 she and the persons to
whom she had transferred portions of parcels E and G filed with the Court of
First Instance of Rizal at Caloocan City against the Riveras, Cruz, Muñoz,
Garcia, Associated Banking Corporation, PNB and others an action to quiet
title and for damages.
12. A notice of lis pendens was annotated on January 25, 1966 on the titles
of Garcia, Muñoz and Go. The notice of lis pendens was annotated on the
title of the PNB when the sale in its favor was registered on December 13,
1969.
13. The trial court in its decision of July 30, 1975 declared valid TCT Nos.
141802 to 141855 and 143512 issued to Mrs. Gozon and her co-plaintiffs. It
voided TCT No. 112235 issued to the Riveras and all titles and transactions
emanating therefrom insofar as those titles covered the lots embraced in
plaintiffs' titles. The Riveras were ordered to pay the plaintiffs twenty
thousand pesos as attorney's fees.
14. The trial court also ordered Muñoz to pay the Associated Banking
Corporation, in the event that the bank would be evicted from the lot covered
by TCT No. 212153, two hundred sixty-five thousand seventy-two pesos and
fifteen centavos with twelve percent interest per annum from the date of the
eviction plus ten thousand pesos as attorney's fees.
15. Santiago Go was ordered to pay the PNB, should it be evicted from the
lot covered by TCT No. 236881, the sum of sixty thousand pesos plus nine
percent interest per annum from the date of the eviction and six thousand
pesos as attorney's fees.
16. That judgment of the trial court was affirmed by the Court of Appeals in
its decision of May 25, 1978. Garcia and the PNB appealed from that
decision. The Associated Banking Corporation, now the Associated Citizens
Bank, tried to appeal but it was not able to file its petition for review (L-
49010).
Garcia contends that the Court of Appeals erred in not holding that his title is
valid and that the titles of Ismael Lapus and his successors-in-interest lost
their right to the disputed lots due to their negligence or inaction.
The issue is whether the 1920 title issued to Lapus and the titles derived
therefrom should prevail over the 1963 title issued to the Riveras and the
subsequent titles derived from it. Should Lapus' title prevail even if it was not
annotated by the register of deeds on the anterior or parent title which was
not cancelled before 1963? It was that noncancellation which led to the
issuance of the duplicative title to the Riveras and eventually to the execution
of the controversial mortgages and foreclosure sales to the two banks.
We hold that the two appeals have no merit. The title of Lapus and the titles
derived therefrom should be given effect. The title of the Riveras and the
titles springing from it are void.
There can be no doubt that Lapus was an innocent purchaser for value. He
validly transmitted to his successors-in-interest his indefeasible title or
ownership over the disputed lots or parcels of land. That title could not be
nullified or defeated by the issuance forty-three Years later to other persons
of another title over the same lots due to the failure of the register of deeds to
cancel the title preceding the title issued to Lapuz. This must be so
considering that Lapus and his interest remained in possession of the
disputed successors in lots and the rival claimants never possessed the
same.
"The general rule is that in the case of two certificates of title, purporting to
include the same land, the earlier in date prevail, whether the land comprised
in the latter certificate be wholly, or only in part, comprised in the earlier
certificate" (Hogg, Australian Torrens System 823, citing cases and cited in
Legarda and Prieto vs. Saleeby, 31 Phil. 590, 595).
"Where two certificates (of title) purport to include the same land, the earlier
in date prevails. ... In successive registrations, where more than once
certificate is issued in respect of a party estate or interest in land, the Person
claiming under the prior certificate 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 " (Niblack, Analysis
of the Torrens System page 237, cited in Legarda and Prieto vs.
Saleeby, supra, pages 595-6).
And the rule that in case of double registration the owner of the earlier
certificate is the owner of the land applies to the successive vendees of the
owners of such certificates. "The vendee of the earlier certificate would be
the owner as against the vendee of the owner of the later certificate"
(Legarda and Prieto vs. Saleeby, supra, pages 597-9).
It is settled that is this jurisdiction the maxim prior est in tempore, potior est in
jure (he who is first in time is preferred in right) is followed in land registration
matters (La Urbana vs. Bernardo, 62 Phil. 790, 806).
Appellant Garcia invokes the ruling that the mere entry of a document in the
day or entry book without noting it on the certificate of title is not a sufficient
registration (Bass vs. De la Rama, 73 Phil. 682, 685).
That ruling was superseded by the holding in the later six cases of Levin vs.
Bass, 91 Phil. 420, where a distinction was made
between voluntary and involuntary registration, such as the registration of an
attachment, levy upon execution, notice of his pendens, and the like. In
cases of involuntary registration, an entry thereof in the day book is a
sufficient notice to all persons even if the owner's duplicate certificate of title
is not presented to the register of deeds.
On the other hand, according to the said cases of Levin vs. Bass, in case
of voluntary registration of documents an innocent purchaser for value of
registered land becomes the registered owner, and, in contemplation of law
the holder of a certificate of title, the moment he presents and files a duly
notarized and valid deed of sale and the same is entered in the day book
and at the same time he surrenders or presents the owner's duplicate
certificate of title covering the land sold and pays the registration fees,
because what remains to be done lies not within his power to perform. The
register of deeds is duty bound to perform it. (See Potenciano vs. Dineros, 97
Phil. 196.)
The instant case is not Identical to the Bass cases. Here the deed of sale in
favor of Lapus, which was judicially authorized, was entered in the entry book
and a new title was issued to him. As already stated, and this point should be
underscored, the deed of sale in favor of Lapus contains the notation that it
was annotated on the back of OCT No. 983 (presumably, the original and
owner's duplicate thereof).
But why in 1962 it appeared that no such annotation was found on the back
of OCT No. 983, contrary to what was stated in the 1918 deed of sale, is a
mystery that the trill court and the plaintiffs failed to unravel during the trial.
Moreover, the title issued to Lapus contains the usual notation that it was a
transfer from a previous title which in this case was OCT No. 983.
It should be further observed that the deed of sale in favor of Lapus and the
titles issued to him and his successors interest together with his mortgage in
1929 of the disputed lots to the PNB itself, are all a matter of public record in
the registry of deeds.
As stressed in Legarda and Prieto vs. Saleeby, 31 Phil. 590, 600, "the record
is 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 debt, she filed against the Gaffud spouses and the PNB an action to quiet
know every fact which the record discloses. title.

"When a conveyance has been properly recorded, such record is
constructive notice of its contents and all interests, legal and equitable,
included therein." "Under the rule of notice, it is presumed that the purchaser
has examined every instrument of record affecting the title. Such
presumption is irrefutable. 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" (Legarda and Prieto vs. Saleeby, supra, page
600).
As Justice Johnson says, "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" (Legarda
and Prieto vs. Saleeby, supra, pp. 600-601).
As to the PNB's claim that it was a mortgagee and purchaser in good faith
and for value, the Appellate Court held that the bank should have made an
on-the-spot investigation of the lot mortgaged by Go to ascertain whether he
was in possession of it or it was claimed by other persons. Its failure to do so
precludes the bank from being considered as a mortgagee in good faith and
for value (Gatioan vs. Gaffud, L-21953, March 28, 1969, 27 SCRA 706).
It was held that Gatioan's title should prevail over that of the Gaffud spouses
and that the mortgage executed by them in favor of the PNB was void. The
Gaffud spouse were ordered to pay damages to Gatioan.
Since the applicable rule in the instant case is that the earlier certificate of
title should be recognized as superior and controlling there is no justification
for relying on the doctrine laid down by Justice Holmes in Eliason vs.
Wilborn 281 U.S. 457, that "as between two innocent persons, one of whom
must suffer the consequence of a breach of trust, the one who made it
possible by his act of confidence must bear the loss."
There was no breach of trust in this case. What is note. worthy in this case is
that after it was recited in the registered deed of sale that sale was annotated
at the back of the title covering the lots sold, it turned out that the title did not
contain such an annotation and that the title was not cancelled. For that
anomaly, the purchaser, Ismael Lapus, the how" of the earlier title, was not
culpable or blameworthy.
WHEREFORE, the judgment of the Court of Appeals, affirming the decision
of the trial court, should stand. Costs against the appellants.
SO ORDERED.

On the other hand, the trial court held that the PNB was not a buyer in good
faith when it bought Go's lot at the auction sale because there was already a
notice of his pendens annotated on his title.

In the Gatioan case, it appears that in 1935 Rufina Permison secured a

Torrens title for a parcel of land on the basis of a free patent. The land was
sold to Encarnacion Gatioan and Transfer Certificate of Title No. T-1212 was
issued to her. She mortgaged the land three times to the PNB

In 1956, the spouses Sixto Gaffud and Villamora Logan were able to secure
a Torrens title for the same lot also on the basis of a free patent. They
mortgaged the land also to the PNB. The Secretary of Agriculture and
Natural Resources, on discovering that two Torrens titles were issued for the
same land, recommended the cancellation of the later title issued to the
Gaffud spouses. As the PNB refused to cancel the mortgaged executed by
Gatioan, in spite of the fact that she had made full payment of the mortgage
G.R. No. 97282 August 16, 1991
ATTY. PLARIDEL M. MINGOA, petitioner,
vs.
LAND REGISTRATION ADMINISTRATOR, respondent.
Plaridel M. Mingoa for and in his own behalf.
GANCAYCO, J.:
The facts of this case are simple. A deed of donation of several parcels of
land was executed by petitioner in favor of his children on July 15, 1987. The
deed was forwarded to the Register of Deeds of Romblon for registration by
registered mail on September 9, 1988. It was entered in the primary entry
book of the Register of Deeds on September 20, 1988 under Entry No. 181.
Said Register of Deeds suspended registration of the donation until the
petitioner has secured the proper clearances from the Department of
Agrarian Reform on the ground that under Section 6 of Republic Act 6657,
any disposition of private agricultural lands made prior to June 15, 1988,
when the Act took effect, must be registered within three (3) months from
said date or on before September 13, 1988 to be valid.
The matter was elevated by petitioner en consulta with the Administrator of
the Land Registration Authority LTA. On November 27,1990 the LTA
Administrator issued a resolution sustaining the stand of the Register of
Deeds that unless the proper clearances from the Department of Agrarian
Reform are secured, the deed of donation may not be registered.
Hence this petition for certiorari whereby petitioner contends that Section 1,
Rule 13 of the Rules of Court should apply in a suppletory manner in that the
date of the mailing should be considered the date of filing of the document in
the office of the Register of Deeds.
The petition is impressed with merit.
Section 6 of Republic Act No. 6657 provides, among others:
SEC. 6. Retention Limits.—Except as otherwise provided in its Act,
no person may own or retain, directly or indirectly, any public or
private agricultural land, the size of which shall vary according to
factors governing a viable family-size farm, such as commodity
produced, terrain, infrastructure, and soil fertility as determined by
the Presidential Agrarian Reform Council (PARC) created hereunder,
but in no case shall retention by the landowner exceed five (5)
hectares. Three (3) hectares may be awarded to each child of the
landowner, subject to the following qualifications: (1) that he is at
least fifteen (15) years of age, and (2) that he is actually tilling the
land or directly managing the farm: Provided, That landowners
whose lands have been covered by Presidential Decree No. 27 shall
be allowed to keep the area originally retained by them thereunder:
Provided, further, That original homestead grantees or their direct
compulsory heirs who still own the original homestead at the time of
the approval of its Act shall retain the same areas as long as they
continue to cultivate said homestead.
The right to choose the area to be retained, which shall be compact
or contiguous, shall pertain to the landowner; Provided, however,
That in case the area selected for retention by the landowner is
tenanted, the tenant shall have the option to choose whether to
remain therein or be a beneficiary in the same or another agricultural
land with similar or comparable features. In case the tenant chooses
to remain in the retained area, he shall be considered a leaseholder
and shall lose his right to be a beneficiary under this Act. In case the
tenant chooses to be a beneficiary in another agricultural land, he
loses his right as a leaseholder to the land retained by the
landowner. The tenant must exercise this option with a period of one
(1) year from the time the landowner manifests his choice of the area
for retention.
In all cases the security of tenure of the farmers or farm workers on
the land prior to the approval of this Act shall be respected.
Upon the effectivity of this Act, any sale, disposition, lease,
management contract or transfer of possession of private lands
executed by the original landowner in violation of this Act shall be
null and void; Provided, however, That those executed prior to this
Act shall be valid only when registered with the Register of Deeds
within a period of three (3) months after the effectivity of this Act.
Thereafter, all Registers of Deeds shall inform the Department of
Agrarian Reform (DAR) within thirty (30) days of any transaction
involving agricultural lands in excess of five (5) hectares. (Emphasis
supplied)
The said law was approved by the President of the Philippines on June 10,
1988. Section 78 thereof provides that it "shall take effect immediately after
publication in at least two (2) national newspapers of general circulation." It
appears the law took effect on June 15, 1988.
Section 56 of Presidential Decree No. 1529 also provides:
SEC. 56. Primary Entry Book; fees; certified copies.—Each Register
of Deeds shall keep a primary entry book in which, upon payment of
the entry fee, he shall enter, in the order of their reception, all
instruments including copies of writs and processes filed with him
relating to registered land. He shall, as a preliminary process in
registration, note in such book the date, hour and minute of reception
of all instruments, in the order in which they were received. They
shall be regarded as registered from the time so noted, and the
memorandum of each instrument, when made on the certificate of
title to which it refers, shall bear the same date: Provided, that the
national government as well as the provincial and city governments
shall be exempt from the payment of such fees in advance in order
to be entitled to entry and registration.
Every deed or other instrument, whether voluntary or involuntary, so
filed with the Register of Deeds shall be numbered and indexed and
endorsed with a reference to the proper certificate of title. All records
and papers relative to registered land in the office of the Register of
Deeds shall be open to the public in the same manner as court
records, subject to such reasonable relations as the Register of
Deeds, No. 97282 under the direction of the Commissioner of Land
Registration, may prescribe.s
All deeds and voluntary instruments shall be presented with their
respective copies and shall be attend and sealed by the Register of
Deeds, endorsed with the file number, and copies may be delivered
to the person presenting them.
Certified copies of all instruments filed and registered may also be
obtained from the Register of Deeds upon payment of the prescribed
fees.
The foregoing provision requires the Register of Deeds, upon payment of the
entry fees, to enter in the primary book of entry, in the order of reception, all
instruments including copies of writs and processes filed with him relative to
registered land; the date, hour and minute shall be noted in said book which
shall be regarded as the date of registration of the instrument; and the
memorandum of each instrument on the certificate of title shall bear the
same date.
Section 34 of Presidential Decree No. 1529 likewise provides:
SEC. 34. Rules of procedure.—The Rules of Court shall, insofar as
not inconsistent with the provisions of this Decree, be applicable to
land registration and cadastral cases by analogy or in a suppletory
character and whenever practicable and convenient.
Consequently, Section 1, Rule 13 of the Rules of Court is applicable to this
case in a suppletory character as it provides:
SEC. 1. Filing with the court, defined.—The filing of pleadings,
appearances, motions, notices, orders and other papers with the
court as required by these rules shall be made by filing them
personally with the clerk of the court or by sending them by
registered mail. In the first case, the clerk shall endorse on the
pleading the date and hour of filing. In the second case, the date of
the mailing of motions, pleadings, or any other papers or payments
or deposits as shown by the post office stamp on the envelope or the
registry receipt, shall be considered as the date of their filing,
payment, or deposit in court. The envelope shall be attached to the
record of the case.
The foregoing rule clearly provides that the date of mailing of the motion,
pleading, or any other papers, which may include instruments as the deed of
donation, is considered the date of filing as shown by the post office stamp
on the envelope or registry receipt.
The Court therefore finds and so holds that the date of mailing of an
instrument to the Register of Deeds for purposes of registration should be
considered the date of filing and receipt thereof by the Register of Deeds. It
is this date that should be entered in the primary entry book of the Register of
Deeds which shall be regarded as the date of its registration.
Since in this case, the deed of donation was admittedly sent by registered
mail to the Register of Deeds on September 9, 1988, said date is in effect the
date of filing, receipt and registration of the instrument, although the
instrument was actually received by said office only on September 20, 1988.
WHEREFORE, the petition is given due course and is hereby GRANTED.
The questioned resolution of the public respondent Administrator of the Land
Registration Authority dated November 27,1990 is hereby SET ASIDE and it
is hereby directed that the registration of deed of donation subject of this
petition be effected by the Register of Deeds of Romblon.
SO ORDERED.
G.R. No. 142687 July 20, 2006
SPOUSES FRANCISCO and BERNARDINA RODRIGUEZ, petitioners,
vs.
HON. COURT OF APPEALS, SPOUSES CHRISTOPHER and MA. ANGELICA
BARRAMEDA, and SPOUSES ANTONIO and MARIDEL
CALINGO, respondents.
DECISION
PUNO, J.:
This is a petition for review of the decision of the Court of Appeals dated
September 7, 1999 in CA-G.R. CV No. 48772 and its resolution dated March 31,
2000. The Court of Appeals reversed the decision of the Regional Trial Court of
Makati in Civil Case No. 92-3524.
The facts show that herein respondent Spouses Antonio and Maridel Calingo
(respondents Calingo) were the registered owners of a house and lot located at
No. 7903 Redwood Street, Marcelo Green Village, Parañaque, Metro Manila.
The property was mortgaged to the Development Bank of the Philippines, which
mortgage was later absorbed by the Home Mutual Development Fund (HMDF) or
Pag-ibig.
On April 27, 1992, respondents Calingo and respondent Spouses Christopher
and Ma. Angelica Barrameda (respondents Barrameda) entered into a contract of
sale with assumption of mortgage where the former sold to the latter the property
in question and the latter assumed to pay the outstanding loan balance to the
Development Bank of the Philippines.1 Respondents Barrameda issued two
checks in the amounts of P150,000.00 and P528,539.76, for which respondents
Calingo issued a receipt dated April 24, 1992.2
In a letter dated April 23, 1992, respondent Antonio S. Calingo informed
HMDF/Pag-ibig about the sale of the property with assumption of mortgage. Said
letter, however, together with an affidavit by respondents Calingo, was served
upon HMDF/Pag-ibig on October 2, 1992.3
On May 29, 1992, respondents Barrameda filed with the Register of Deeds of
Parañaque an affidavit of adverse claim on the property. The adverse claim was
inscribed at the back of the certificate of title as Entry No. 3439.4
On June 1, 1992, respondent Ma. Angelica Paez-Barrameda wrote HMDF,
Mortgage and Loans Division informing the office that they have purchased the
subject property from the Calingo spouses and that they filed a notice of adverse
claim with the Register of Deeds of Parañaque. They also sought assistance
from said office as regards the procedure for the full settlement of the loan
arrearages and the transfer of the property in their names.5
Respondents Barrameda moved into the property on June 2, 1992.
On July 13, 1992, a notice of levy with attachment on real property by virtue of a
writ of execution was annotated at the back of the certificate of title of the
property in question. The writ of execution was issued by Judge Salvador Abad
Santos, Regional Trial Court of Makati, Branch 65 in connection with Civil Case
No. 88-2159 involving a claim by herein petitioners, Spouses Francisco and
Bernardina Rodriguez, against respondents Calingo. Judge Abad Santos issued
the writ in favor of petitioners Rodriguez.6
On July 21, 1992, petitioners’ counsel, Atty. Nelson A. Loyola, sent a letter to
respondents Barrameda inquiring about the basis of their occupation of the
property in question.
On August 21, 1992, respondents Barrameda remitted to respondents Calingo
the amount of P364,992.07 to complete the payment of the agreed purchase
price. Respondents Calingo acknowledged receipt of said amount and waived all
their rights to the property in favor of the Barrameda spouses. They also
guaranteed that the property was clear and free from any liens and
encumbrances, except the real estate mortgage assumed by respondents
Barrameda.7
On October 7, 1992, respondents Barrameda executed a joint affidavit stating
that they are the owners of the property in question by virtue of a deed of sale
with assumption of mortgage; that they registered an affidavit of adverse claim
with the Register of Deeds of Parañaque; that the Sheriff of the Regional Trial
Court, Branch 65, Makati, Sheriff Manuel C. Dolor, levied said property despite
their adverse claim; and that they have acquired the property long before the levy
was made, and therefore, said levy was illegal. They served a copy of the
affidavit on petitioners’ counsel, Atty. Loyola, who made a reply thereto on
October 15, 1992.
In his letter to Christopher Barrameda dated October 15, 1992, Atty. Loyola
pointed out that the alleged deed of sale with assumption of mortgage was not
registered with the Register of Deeds and that the records of the HMDF show
that the property is owned by the Calingo spouses. He urged the Barrameda
spouses to confer with the petitioners to amicably settle the controversy.8
On November 9, 1992, respondents Barrameda found a Notice of Sheriff’s Sale
posted on their front gate, announcing the auction sale of their house and lot on
December 3, 1992 at 10:00 in the morning.9
On November 20, 1992, pursuant to Rule 39, Section 17 of the Revised Rules of
Court, respondents Barrameda served a Notice of Third Party Claim upon Sheriff
Manuel C. Dolor, accompanied by their affidavit of title.
On December 2, 1992, respondents Barrameda filed with the Regional Trial
Court of Makati a petition for quieting of title with prayer for preliminary injunction.
The petition prayed, among others, that the execution sale of the property be
enjoined, the notice of levy and attachment inscribed on the certificate of title be
cancelled, and that respondents Barrameda be declared the lawful and sole
owners of the property in question.10
The trial court ruled in favor of herein petitioners and dismissed respondents
Barrameda’s petition for quieting of title. It ruled that the annotation of
respondents Barrameda’s adverse claim at the back of the certificate of title was
insufficient to establish their claim over the property. It said that respondents
Barrameda, as buyers of the property, should have registered the title in their
names. Furthermore, respondents Barrameda’s adverse claim had lost its
efficacy after the lapse of thirty days in accordance with the provisions of the
Land Registration Act. The trial court also found that there was collusion between
respondents Barrameda and respondents Calingo to transfer the property to
defraud third parties who may have a claim against the Calingos.11
The Court of Appeals, however, reversed the decision of the trial court. Citing the
ruling in Sajonas v. Court of Appeals,12 the appellate court held that
respondents Barrameda’s adverse claim inscribed on the certificate of title was
still effective at the time the property was levied on execution. It said:
Therefore, the disputed inscription of adverse claim on TCT No.
83612/57286 was still in effect on July 13, 1992 when the Rodriguezes
caused the annotation of the notice of levy on execution thereto.
Consequently, they are charged with knowledge that the property sought
to be levied upon on execution was encumbered by an interest the same
as or better than that of the registered owner thereof. Such notice of levy
cannot prevail over the existing adverse claim inscribed on the certificate
of title in favor of the Barramedas. xxx
The court held, therefore, that the notice of levy could not prevail over
respondents Barrameda’s adverse claim.
Petitioners moved for a reconsideration of the appellate court’s ruling, but the
motion was denied.
Hence, this petition. Petitioners essentially argue that the remedy of a petition for
quieting of title was not available to respondents Barrameda as they did not have
a valid title to the property in question; that the affidavit of adverse claim
inscribed by respondents Barrameda at the back of the certificate of title was not
sufficient to establish their claim to the property; and there was collusion between
respondents Barrameda and respondents Calingo.
The principal issue that needs to be resolved in this case is whether respondents
Barrameda’s adverse claim on the property should prevail over the levy on
execution issued by another court in satisfaction of a judgment against
respondents Calingo.
We hold that it cannot.
Respondents Barrameda anchor their claim on the property on the deed of sale
with assumption of mortgage executed by them and respondents Calingo on
April 27, 1992. The Property Registration Decree13 requires that such document
be registered with the Register of Deeds in order to be binding on third persons.
The law provides:
Sec. 51. Conveyance and other dealings by registered owner. An
owner of registered land may convey, mortgage, lease, charge or
otherwise deal with the same in accordance with existing laws. He may
use such forms of deeds, mortgages, leases or other voluntary
instruments as are sufficient in law. But no deed, mortgage, lease, or
other voluntary instrument, except a will purporting to convey or
affect registered land shall take effect as a conveyance or bind the
land, but shall operate only as a contract between the parties and
as evidence of authority to the Register of Deeds to make
registration.
The act of registration shall be the operative act to convey or affect the
land insofar as third persons are concerned, and in all cases under this
Decree, the registration shall be made in the office of the Register of
Deeds for the province or city where the land lies. (emphasis supplied)
It is admitted in this case that the deed of sale with assumption of mortgage was
not registered, but instead, respondents Barrameda filed an affidavit of adverse
claim with the Register of Deeds. The question now is whether the adverse claim
is sufficient to bind third parties such as herein petitioners.
In L.P. Leviste and Company, Inc. v. Noblejas,14 we explained when an
inscription of an adverse claim is sufficient to affect third parties, thus:
The basis of respondent Villanueva’s adverse claim was an agreement
to sell executed in her favor by Garcia Realty. An agreement to sell is a
voluntary instrument as it is a wilful act of the registered owner. As such
voluntary instrument, Section 50 of Act No. 496 [now Presidential
Decree No. 1529] expressly provides that the act of registration shall be
the operative act to convey and affect the land. And Section 55 of the
same Act requires the presentation of the owner’s duplicate certificate of
 title for the registration of any deed or voluntary instrument. As the Calingo the full payment for the property on August 21, 1992 despite knowledge
agreement to sell involves an interest less than an estate in fee simple, of the levy on execution over the property in July of the same year. Any prudent
the same should have been registered by filing it with the Register of buyer of real property, before parting with his money, is expected to first ensure
Deeds who, in turn, makes a brief memorandum thereof upon the that the title to the property he is about to purchase is clear and free from any
original and owner’s duplicate certificate of title. The reason for requiring liabilities and that the sellers have the proper authority to deal on the property.
the production of the owner’s duplicate certificate in the registration of a
voluntary instrument is that, being a wilful act of the registered owner, it Again, we stress that the annotation of an adverse claim is a measure designed
is to be presumed that he is interested in registering the instrument and to protect the interest of a person over a piece of property where the
would willingly surrender, present or produce his duplicate certificate of registration of such interest or right is not otherwise provided for by the
title to the Register of Deeds in order to accomplish such law on registration of real property. Section 70 of Presidential Decree No.
registration. However, where the owner refuses to surrender the 1529 is clear:
duplicate certificate for the annotation of the voluntary instrument,
the grantee may file with the Register of Deeds a statement setting
forth his adverse claim, as provided for in Section 110 of Act No. Sec. 70. Adverse claim. Whoever claims any part or interest in
496. In such a case, the annotation of the instrument upon the entry registered land adverse to the registered owner, arising subsequent to
the date of the original registration, may, if no other provision is made
book is sufficient to affect the real estate to which it relates, although
in this Decree for registering the same, make a statement in writing
Section 72 of Act No. 496 imposes upon the Register of Deeds the duty
setting forth his alleged right or interest, and how or under whom
to require the production by the [r]egistered owner of his duplicate
certificate for the inscription of the adverse claim. The annotation of an acquired, a reference to the number of the certificate of title of the
adverse claim is a measure designed to protect the interest of a registered owner, the name of the registered owner, and a description of
the land in which the right or interest is claimed. xxx
person over a piece of real property where the registration of such
interest or right is not otherwise provided for by the Land
Registration Act, and serves as a notice and warning to third The deed of sale with assumption of mortgage executed by respondents Calingo
parties dealing with said property that someone is claiming an and Barrameda is a registrable instrument. In order to bind third parties, it must
interest on the same or a better right than the registered owner be registered with the Office of the Register of Deeds. It was not shown in this
thereof. (emphases supplied) case that there was justifiable reason why the deed could not be registered.
Hence, the remedy of adverse claim cannot substitute for registration.
In the case at bar, the reason given for the non-registration of the deed of sale
with assumption of mortgage was that the owner’s duplicate copy of the IN VIEW WHEREOF, the petition is GRANTED. The assailed decision and
certificate of title was in the possession of HMDF. It was not shown, however, resolution of the Court of Appeals are SET ASIDE and the decision of the
that either respondents Barrameda or respondents Calingo exerted any effort to Regional Trial Court, Makati in Civil Case No. 92-3524 is REINSTATED. No cost.
retrieve the owner’s duplicate copy from the HMDF for the purpose of registering
the deed of sale with assumption of mortgage. In fact, the parties did not even SO ORDERED.
seek to obtain the consent of, much less inform, the HMDF of the sale of the
property. This, despite the provision in the contract of mortgage prohibiting the
mortgagor (respondents Calingo) from selling or disposing the property without
the written consent of the mortgagee.15 Respondents Calingo, as party to the
contract of mortgage, are charged with the knowledge of such provision and are
bound to comply therewith. Apparently, there was haste in disposing the property
that respondents Calingo informed HMDF of the sale only on October 2, 1992
when they served a copy of their letter to said office regarding the transfer of the
property to respondents Barrameda. There was no reason for the parties’ failure
to seek the approval of the HMDF to the sale as it appears from the letter of
respondent Angelica Paez-Barrameda to HMDF that they were ready to pay in
full the balance of the loan plus interest. What is more suspect is that the
judgment against respondents Calingo ordering them to pay the petitioners the
sum of P1,159,355.90 was rendered on January 28, 1992, before the sale of the
property on April 27, 1992. We also find it unsettling that respondents
Barrameda, without any reservation or inquiry, readily remitted to respondents
Section 50. Subdivision and consolidation plans. Any owner subdividing a tract of
registered land into lots which do not constitute a subdivision project has defined and
provided for under P.D. No. 957, shall file with the Commissioner of Land Registration
or with the Bureau of Lands a subdivision plan of such land on which all boundaries,
streets, passageways and waterways, if any, shall be distinctly and accurately
delineated.
If a subdivision plan, be it simple or complex, duly approved by the Commissioner of
Land Registration or the Bureau of Lands together with the approved technical
descriptions and the corresponding owner's duplicate certificate of title is presented
for registration, the Register of Deeds shall, without requiring further court approval of
said plan, register the same in accordance with the provisions of the Land
Registration Act, as amended: Provided, however, that the Register of Deeds shall
annotate on the new certificate of title covering the street, passageway or open
space, a memorandum to the effect that except by way of donation in favor of the
national government, province, city or municipality, no portion of any street,
passageway, waterway or open space so delineated on the plan shall be closed or
otherwise disposed of by the registered owner without the approval of the Court of
First Instance of the province or city in which the land is situated.
A registered owner desiring to consolidate several lots into one or more, requiring
new technical descriptions, shall file with the Land Registration Commission, a
consolidation plan on which shall be shown the lots to be affected, as they were
before, and as they will appear after the consolidation. Upon the surrender of the
owner's duplicate certificates and the receipt of consolidation plan duty approved by
the Commission, the Register of Deeds concerned shall cancel the corresponding
certificates of title and issue a new one for the consolidated lots.
The Commission may not order or cause any change, modification, or amendment in
the contents of any certificate of title, or of any decree or plan, including the technical
description therein, covering any real property registered under the Torrens system,
nor order the cancellation of the said certificate of title and the issuance of a new one
which would result in the enlargement of the area covered by the certificate of title.
Section 53. Presentation of owner's duplicate upon entry of new certificate. No
voluntary instrument shall be registered by the Register of Deeds, unless the owner's
duplicate certificate is presented with such instrument, except in cases expressly
provided for in this Decree or upon order of the court, for cause shown.
The production of the owner's duplicate certificate, whenever any voluntary
instrument is presented for registration, shall be conclusive authority from the
registered owner to the Register of Deeds to enter a new certificate or to make a
memorandum of registration in accordance with such instrument, and the new
certificate or memorandum shall be binding upon the registered owner and upon all
persons claiming under him, in favor of every purchaser for value and in good faith.
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. After the entry of the
decree of registration on the original petition or application, any subsequent
registration procured by the presentation of a forged duplicate certificate of title, or a
forged deed or other instrument, shall be null and void.
Section 54. Dealings less than ownership, how registered. No new certificate shall be
entered or issued pursuant to any instrument which does not divest the ownership or
title from the owner or from the transferee of the registered owners. All interests in
registered land less than ownership shall be registered by filing with the Register of
Deeds the instrument which creates or transfers or claims such interests and by a
brief memorandum thereof made by the Register of Deeds upon the certificate of title,
and signed by him. A similar memorandum shall also be made on the owner's
duplicate. The cancellation or extinguishment of such interests shall be registered in
the same manner.
Section 55. Grantee's name, nationality, etc., to be stated. Every deed or other
voluntary instrument presented for registration shall contain or have endorsed upon it
the full name, nationality, residence and postal address of the grantee or other person
acquiring or claiming an interest under such instrument, and every deed shall also
state whether the grantee is married or unmarried, and if married, the name in full of
the husband or wife. If the grantee is a corporation or association, the instrument
must contain a recital to show that such corporation or association is legally qualified
to acquire private lands. Any change in the residence or postal address of such
person shall be endorsed by the Register of Deeds on the original copy of the
corresponding certificate of title, upon receiving a sworn statement of such change.
All names and addresses shall also be entered on all certificates.
Notices and processed issued in relation to registered land in pursuance of this
Decree may be served upon any person in interest by mailing the same to the
addresses given, and shall be binding, whether such person resides within or without
the Philippines, but the court may, in its discretion, require further or other notice to be
given in any case, if in its opinion the interest of justice so requires.
Section 56. Primary Entry Book; fees; certified copies. Each Register of Deeds shall
keep a primary entry book in which, upon payment of the entry fee, he shall enter, in
the order of their reception, all instruments including copies of writs and processes
filed with him relating to registered land. He shall, as a preliminary process in
registration, note in such book the date, hour and minute of reception of all
instruments, in the order in which they were received. They shall be regarded as
registered from the time so noted, and the memorandum of each instrument, when
made on the certificate of title to which it refers, shall bear the same date: Provided,
that the national government as well as the provincial and city governments shall be
exempt from the payment of such fees in advance in order to be entitled to entry and
registration.
Every deed or other instrument, whether voluntary or involuntary, so filed with the
Register of Deeds shall be numbered and indexed and endorsed with a reference to
the proper certificate of title. All records and papers relative to registered land in the
office of the Register of Deeds shall be open to the public in the same manner as
court records, subject to such reasonable regulations as the Register of Deeds, under
the direction of the Commissioner of Land Registration, may prescribe.
All deeds and voluntary instruments shall be presented with their respective copies
and shall be attested and sealed by the Register of Deeds, endorsed with the file
number, and copies may be delivered to the person presenting them.
Certified copies of all instruments filed and registered may also be obtained from the
Register of Deeds upon payment of the prescribed fees.
(A) CONVEYANCES AND TRANSFERS
Section 57. Procedure in registration of conveyances. An owner desiring to convey
his registered land in fee simple shall execute and register a deed of conveyance in a
form sufficient in law. The Register of Deeds shall thereafter make out in the
registration book a new certificate of title to the grantee and shall prepare and deliver
to him an owner's duplicate certificate. The Register of Deeds shall note upon the
original and duplicate certificate the date of transfer, the volume and page of the
registration book in which the new certificate is registered and a reference by number
to the last preceding certificate. The original and the owner's duplicate of the grantor's
certificate shall be stamped "canceled". The deed of conveyance shall be filled and
indorsed with the number and the place of registration of the certificate of title of the
land conveyed.
Section 58. Procedure where conveyance involves portion of land. If a deed or
conveyance is for a part only of the land described in a certificate of title, the Register
of Deeds shall not enter any transfer certificate to the grantee until a plan of such land
showing all the portions or lots into which it has been subdivided and the
corresponding technical descriptions shall have been verified and approved pursuant
to Section 50 of this Decree. Meanwhile, such deed may only be annotated by way of
memorandum upon the grantor's certificate of title, original and duplicate, said
memorandum to serve as a notice to third persons of the fact that certain
unsegregated portion of the land described therein has been conveyed, and every
certificate with such memorandum shall be effectual for the purpose of showing the
grantee's title to the portion conveyed to him, pending the actual issuance of the
corresponding certificate in his name.
Upon the approval of the plan and technical descriptions, the original of the plan,
together with a certified copy of the technical descriptions shall be filed with the
Register of Deeds for annotation in the corresponding certificate of title and thereupon
said officer shall issue a new certificate of title to the grantee for the portion conveyed,
and at the same time cancel the grantor's certificate partially with respect only to said
portion conveyed, or, if the grantor so desires, his certificate may be canceled totally
and a new one issued to him describing therein the remaining portion: Provided,
however, that pending approval of said plan, no further registration or annotation of
any subsequent deed or other voluntary instrument involving the unsegregated
portion conveyed shall be effected by the Register of Deeds, except where such
unsegregated portion was purchased from the Government or any of its
instrumentalities. If the land has been subdivided into several lots, designated by
numbers or letters, the Register of Deeds may, if desired by the grantor, instead of
canceling the latter's certificate and issuing a new one to the same for the remaining
unconveyed lots, enter on said certificate and on its owner's duplicate a memorandum
of such deed of conveyance and of the issuance of the transfer certificate to the
grantee for the lot or lots thus conveyed, and that the grantor's certificate is canceled
as to such lot or lots.
Section 59. Carry over of encumbrances. If, at the time of any transfer, subsisting
encumbrances or annotations appear in the registration book, they shall be carried
over and stated in the new certificate or certificates; except so far as they may be
simultaneously released or discharged.
Section 54. Dealings less than ownership, how registered. No new certificate shall be
entered or issued pursuant to any instrument which does not divest the ownership or
title from the owner or from the transferee of the registered owners. All interests in
registered land less than ownership shall be registered by filing with the Register of
Deeds the instrument which creates or transfers or claims such interests and by a
brief memorandum thereof made by the Register of Deeds upon the certificate of title,
and signed by him. A similar memorandum shall also be made on the owner's
duplicate. The cancellation or extinguishment of such interests shall be registered in
the same manner.
Section 63. Foreclosure of Mortgage. (a) If the mortgage was foreclosed judicially, a
certified copy of the final order of the court confirming the sale shall be registered with
the Register of Deeds. If no right of redemption exists, the certificate of title of the
mortgagor shall be canceled, and a new certificate issued in the name of the
purchaser.
Where the right of redemption exists, the certificate of title of the mortgagor
shall not be canceled, but the certificate of sale and the order confirming the
sale shall be registered by a brief memorandum thereof made by the
Register of Deeds upon the certificate of title. In the event the property is
redeemed, the certificate or deed of redemption shall be filed with the
Register of Deeds, and a brief memorandum thereof shall be made by the
Register of Deeds on the certificate of title of the mortgagor.
If the property is not redeemed, the final deed of sale executed by the sheriff
in favor of the purchaser at a foreclosure sale shall be registered with the
Register of Deeds; whereupon the title of the mortgagor shall be canceled,
and a new certificate issued in the name of the purchaser.
(b) If the mortgage was foreclosed extrajudicially, a certificate of sale
executed by the officer who conducted the sale shall be filed with the
Register of Deeds who shall make a brief memorandum thereof on the
certificate of title.
 In the event of redemption by the mortgagor, the same rule provided for in
the second paragraph of this section shall apply.
In case of non-redemption, the purchaser at foreclosure sale shall file with
the Register of Deeds, either a final deed of sale executed by the person
authorized by virtue of the power of attorney embodied in the deed of
mortgage, or his sworn statement attesting to the fact of non-redemption;
whereupon, the Register of Deeds shall issue a new certificate in favor of the
purchaser after the owner's duplicate of the certificate has been previously
delivered and canceled.
Section 18. Mortgages. No mortgage on any unit or lot shall be made by the owner or
developer without prior written approval of the Authority. Such approval shall not be
granted unless it is shown that the proceeds of the mortgage loan shall be used for
the development of the condominium or subdivision project and effective measures
have been provided to ensure such utilization. The loan value of each lot or unit
covered by the mortgage shall be determined and the buyer thereof, if any, shall be
notified before the release of the loan. The buyer may, at his option, pay his
installment for the lot or unit directly to the mortgagee who shall apply the payments
to the corresponding mortgage indebtedness secured by the particular lot or unit
being paid for, with a view to enabling said buyer to obtain title over the lot or unit
promptly after full payment thereto;
(C) POWERS OF ATTORNEY; TRUSTS
Section 64. Power of attorney. Any person may, by power of attorney, convey or
otherwise deal with registered land and the same shall be registered with the Register
of Deeds of the province or city where the land lies. Any instrument revoking such
power of attorney shall be registered in like manner.
Section 65. Trusts in registered land. If a deed or other instrument is filed in order to
transfer registered land in trust, or upon any equitable condition or limitation
expressed therein, or to create or declare a trust or other equitable interests in such
land without transfer, the particulars of the trust, condition, limitation or other equitable
interest shall not be entered on the certificate; but only a memorandum thereof shall
be entered by the words "in trust", or "upon condition", or other apt words, and by a
reference by number to the instrument authorizing or creating the same. A similar
memorandum shall be made upon the original instrument creating or declaring the
trust or other equitable interest with a reference by number to the certificate of title to
which it relates and to the volume and page in the registration book in which it is
registered.
Section 66. Trust with power of sale, etc., how expressed. If the instrument creating
or declaring a trust or other equitable interest contains an express power to sell,
mortgage or deal with the land in any manner, such power shall be stated in the
certificate of title by the words "with power to sell", or "power to mortgage", or by apt
words of description in case of other powers. No instrument which transfers,
mortgages or in any way deals with registered land in trust shall be registered, unless
the enabling power thereto is expressly conferred in the trust instrument, or unless a
final judgment or order of a court of competent jurisdiction has construed the
instrument in favor of the power, in which case a certified copy of such judgment or
order may be registered.
Section 67. Judicial appointment of new trustee. If a new trustee of registered land is
appointed by a court of competent jurisdiction, a new certificate may be issued to him
upon presentation to the Register of Deeds of a certified copy of the order or judicial
appointment and the surrender for cancellation of the duplicate certificate.
Section 68. Implied, trusts, how established. Whoever claims an interest in registered
land by reason of any implied or constructive trust shall file for registration with the
Register of Deeds a sworn statement thereof containing a description of the land, the
name of the registered owner and a reference to the number of the certificate of title.
Such claim shall not affect the title of a purchaser for value and in good faith before its
registration.
II
INVOLUNTARY DEALINGS
Section 69. Attachments. An attachment, or a copy of any writ, order or process
issued by a court of record, intended to create or preserve any lien, status, right, or
attachment upon registered land, shall be filed and registered in the Registry of
Deeds for the province or city in which the land lies, and, in addition to the particulars
required in such papers for registration, shall contain a reference to the number of the
certificate of title to be affected and the registered owner or owners thereof, and also
if the attachment, order, process or lien is not claimed on all the land in any certificate
of title a description sufficiently accurate for identification of the land or interest
intended to be affected. A restraining order, injunction or mandamus issued by the
court shall be entered and registered on the certificate of title affected, free of charge.
CHAPTER VI
REGISTRATION OF JUDGMENTS; ORDERS; PARTITIONS
Section 78. Judgment for Plaintiff. Whenever in any action to recover possession or
ownership of real estate or any interest therein affecting registered land judgment is
entered for the plaintiff, such judgment shall be entitled to registration on presentation
of a certificate of the entry thereof from the clerk of court where the action is pending
to the Register of Deeds for the province or city where the land lies, who shall enter a
memorandum upon the certificate of title of the land to which such judgment relates. If
the judgment does not apply to all the land described in the certificate of title, the
certificate of the clerk of the court where the action is pending and the memorandum
entered by the Register of Deeds shall contain a description of the land affected by
the judgment.
Section 10. Execution of judgments for specific act. —
(a) Conveyance, delivery of deeds, or other specific acts; vesting title. — If a
judgment directs a party to execute a conveyance of land or personal property, or to
deliver deeds or other documents, or to perform, any other specific act in connection
therewith, and the party fails to comply within the time specified, the court may direct
the act to be done at the cost of the disobedient party by some other person
appointed by the court and the act when so done shall have like effect as if done by
the party. If real or personal property is situated within the Philippines, the court in lieu
of directing a conveyance thereof may by an order divest the title of any party and
vest it in others, which shall have the force and effect of a conveyance executed in
due form of law. (10a)
(b) Sale of real or personal property. — If the judgment be for the sale of real or
personal property, to sell such property, describing it, and apply the proceeds in
conformity with the judgment. (8[c]a)
(c) Delivery or restitution of real property. — The officer shall demand of the
person against whom the judgment for the delivery or restitution of real property is
rendered and all persons claiming rights under him to peaceably vacate the property
within three (3) working days, and restore possession thereof to the judgment obligee,
otherwise, the officer shall oust all such persons therefrom with the assistance, if
necessary, of appropriate peace officers, and employing such means as may be
reasonably necessary to retake possession, and place the judgment obligee in
possession of such property. Any costs, damages, rents or profits awarded by the
judgment shall be satisfied in the same manner as a judgment for money. (13a)
(d) Removal of improvements on property subject of execution. — When the
property subject of the execution contains improvements constructed or planted by
the judgment obligor or his agent, the officer shall not destroy, demolish or remove
said improvements except upon special order of the court, issued upon motion of the
judgment obligee after the hearing and after the former has failed to remove the same
within a reasonable time fixed by the court. (14a)
(e) Delivery of personal property. — In judgment for the delivery of personal
property, the officer shall take possession of the same and forthwith deliver it to the
party entitled thereto and satisfy any judgment for money as therein provided. (8a)
RULE 68
Foreclosure of Real Estate Mortgage
Section 1. Complaint in action for foreclosure. — In an action for the
foreclosure of a mortgage or other encumbrance upon real estate, the complaint shall
set forth the date and due execution of the mortgage; its assignments, if any; the
names and residences of the mortgagor and the mortgagee; a description of the
mortgaged property; a statement of the date of the note or other documentary
evidence of the obligation secured by the mortgage, the amount claimed to be unpaid
thereon; and the names and residences of all persons having or claiming an interest
in the property subordinate in right to that of the holder of the mortgage, all of whom
shall be made defendants in the action. (1a)
Section 2. Judgment on foreclosure for payment or sale. — If upon the trial in
such action the court shall find the facts set forth in the complaint to be true, it shall
ascertain the amount due to the plaintiff upon the mortgage debt or obligation,
including interest and other charges as approved by the court, and costs, and shall
render judgment for the sum so found due and order that the same be paid to the
court or to the judgment obligee within a period of not less than ninety (90) days nor
more than one hundred twenty (120) days from the entry of judgment, and that in
default of such payment the property shall be sold at public auction to satisfy the
judgment. (2a)
Section 3. Sale of mortgaged property; effect. — When the defendant, after
being directed to do so as provided in the next preceding section, fails to pay the
amount of the judgment within the period specified therein, the court, upon motion,
shall order the property to be sold in the manner and under the provisions of Rule 39
and other regulations governing sales of real estate under execution. Such sale shall
not affect the rights of persons holding prior encumbrances upon the property or a
part thereof, and when confirmed by an order of the court, also upon motion, it shall
operate to divest the rights in the property of all the parties to the action and to vest
their rights in the purchaser, subject to such rights of redemption as may be allowed
by law.
Upon the finality of the order of confirmation or upon the expiration of the period of
redemption when allowed by law, the purchaser at the auction sale or last
redemptioner, if any, shall be entitled to the possession of the property unless a third
party is actually holding the same adversely to the judgment obligor. The said
purchaser or last redemptioner may secure a writ of possession, upon motion, from
the court which ordered the foreclosure. (3a)
Where a right of redemption exists, the certificate of title in the name of the mortgagor
shall not be cancelled, but the certificate of sale and the order confirming the sale
shall be registered and a brief memorandum thereof made by the registrar of deeds
upon the certificate of title. In the event the property is redeemed, the deed of
redemption shall be registered with the registry of deeds, and a brief memorandum
thereof shall be made by the registrar of deeds on said certificate of title.

Section 4. Disposition of proceeds of sale. — The amount realized from the If the property is not redeemed, the final deed of sale executed by the sheriff in favor
foreclosure sale of the mortgaged property shall, after deducting the costs of the sale, of the purchaser at the foreclosure sale shall be registered with the registry of deeds;
be paid to the person foreclosing the mortgage, and when there shall be any balance whereupon the certificate of title in the name of the mortgagor shall be cancelled and
or residue, after paying off the mortgage debt due, the same shall be paid to junior a new one issued in the name of the purchaser. (n)
encumbrancers in the order of their priority, to be ascertained by the court, or if there
be no such encumbrancers or there be a balance or residue after payment to them,
then to the mortgagor or his duly authorized agent, or to the person entitled to it. (4a)
Section 8. Applicability of other provisions. — The provisions of sections 31,
32 and 34 of Rule 39 shall be applicable to the judicial foreclosure of real estate
mortgages under this Rule insofar as the former are not inconsistent with or may
Section 5. How sale to proceed in case the debt is not all due. — If the debt serve to supplement the provisions of the latter. (8a)
for which the mortgage or encumbrance was held is not all due as provided in the
judgment as soon as a sufficient portion of the property has been sold to pay the total
amount and the costs due, the sale shall terminate; and afterwards as often as more
becomes due for principal or interest and other valid charges, the court may, on
motion, order more to be sold. But if the property cannot be sold in portions without
prejudice to the parties, the whole shall be ordered to be sold in the first instance, and
the entire debt and costs shall be paid, if the proceeds of the sale be sufficient
therefor, there being a rebate of interest where such rebate is proper. (5a)

Section 6. Deficiency judgment. — If upon the sale of any real property as

provided in the next preceding section there be a balance due to the plaintiff after
applying the proceeds of the sale, the court, upon motion, shall render judgment
against the defendant for any such balance for which, by the record of the case, he
may be personally liable to the plaintiff, upon which execution may issue immediately
if the balance is all due at the time of the rendition of the judgment; otherwise; the
plaintiff shall be entitled to execution at such time as the balance remaining becomes
due under the terms of the original contract, which time shall be stated in the
judgment. (6a)

Section 7. Registration. — A certified copy of the final order of the court

confirming the sale shall be registered in the registry of deeds. If no right of
redemption exists, the certificate of title in the name of the mortgagor shall be
cancelled, and a new one issued in the name of the purchaser.
ACT NO. 3135 - AN ACT TO REGULATE THE SALE OF PROPERTY UNDER SPECIAL
POWERS INSERTED IN OR ANNEXED TO REAL-ESTATE MORTGAGES
Section 1. When a sale is made under a special power inserted in or attached to any real-
estate mortgage hereafter made as security for the payment of money or the fulfillment of
any other obligation, the provisions of the following election shall govern as to the manner
in which the sale and redemption shall be effected, whether or not provision for the same
is made in the power.
Sec. 2. Said sale cannot be made legally outside of the province in which the property sold
is situated; and in case the place within said province in which the sale is to be made is
subject to stipulation, such sale shall be made in said place or in the municipal building of
the municipality in which the property or part thereof is situated.
Sec. 3. Notice shall be given by posting notices of the sale for not less than twenty days in
at least three public places of the municipality or city where the property is situated, and if
such property is worth more than four hundred pesos, such notice shall also be published
once a week for at least three consecutive weeks in a newspaper of general circulation in
the municipality or city.
Sec. 4. The sale shall be made at public auction, between the hours or nine in the morning
and four in the afternoon; and shall be under the direction of the sheriff of the province, the
justice or auxiliary justice of the peace of the municipality in which such sale has to be
made, or a notary public of said municipality, who shall be entitled to collect a fee of five
pesos each day of actual work performed, in addition to his expenses.
Sec. 5. At any sale, the creditor, trustee, or other persons authorized to act for the creditor,
may participate in the bidding and purchase under the same conditions as any other
bidder, unless the contrary has been expressly provided in the mortgage or trust deed
under which the sale is made.
Sec. 6. In all cases in which an extrajudicial sale is made under the special power
hereinbefore referred to, the debtor, his successors in interest or any judicial creditor or
judgment creditor of said debtor, or any person having a lien on the property subsequent to
the mortgage or deed of trust under which the property is sold, may redeem the same at
any time within the term of one year from and after the date of the sale; and such
redemption shall be governed by the provisions of sections four hundred and sixty-four to
four hundred and sixty-six, inclusive, of the Code of Civil Procedure, in so far as these are
not inconsistent with the provisions of this Act.
Sec. 7. In any sale made under the provisions of this Act, the purchaser may petition the
Court of First Instance of the province or place where the property or any part thereof is
situated, to give him possession thereof during the redemption period, furnishing bond in
an amount equivalent to the use of the property for a period of twelve months, to indemnify
the debtor in case it be shown that the sale was made without violating the mortgage or
without complying with the requirements of this Act. Such petition shall be made under
oath and filed in form of an ex parte motion in the registration or cadastral proceedings if
the property is registered, or in special proceedings in the case of property registered
under the Mortgage Law or under section one hundred and ninety-four of the
Administrative Code, or of any other real property encumbered with a mortgage duly
registered in the office of any register of deeds in accordance with any existing law, and in
each case the clerk of the court shall, upon the filing of such petition, collect the fees
specified in paragraph eleven of section one hundred and fourteen of Act Numbered Four
hundred and ninety-six, as amended by Act Numbered Twenty-eight hundred and sixty-six,
and the court shall, upon approval of the bond, order that a writ of possession issue,
addressed to the sheriff of the province in which the property is situated, who shall execute
said order immediately.
Sec. 8. The debtor may, in the proceedings in which possession was requested, but not
later than thirty days after the purchaser was given possession, petition that the sale be set
aside and the writ of possession cancelled, specifying the damages suffered by him,
because the mortgage was not violated or the sale was not made in accordance with the
provisions hereof, and the court shall take cognizance of this petition in accordance with
the summary procedure provided for in section one hundred and twelve of Act Numbered
Four hundred and ninety-six; and if it finds the complaint of the debtor justified, it shall
dispose in his favor of all or part of the bond furnished by the person who obtained
possession. Either of the parties may appeal from the order of the judge in accordance
with section fourteen of Act Numbered Four hundred and ninety-six; but the order of
possession shall continue in effect during the pendency of the appeal.
Sec. 9. When the property is redeemed after the purchaser has been given possession,
the redeemer shall be entitled to deduct from the price of redemption any rentals that said
purchaser may have collected in case the property or any part thereof was rented; if the
purchaser occupied the property as his own dwelling, it being town property, or used it
gainfully, it being rural property, the redeemer may deduct from the price the interest of
one per centum per month provided for in section four hundred and sixty-five of the Code
of Civil Procedure.
Sec. 10. This Act shall take effect on its approval.
G.R. No. 147902 March 17, 2006
SPOUSES VICENTE YU AND DEMETRIA LEE-YU, Petitioners,
vs.
PHILIPPINE COMMERCIAL INTERNATIONAL BANK, Respondent.
DECISION
AUSTRIA-MARTINEZ, J.:
Before the Court is a Petition for Review on Certiorari of the Decision1 dated
November 14, 2000 of the Court of Appeals (CA) in CA-G.R. SP No. 58982 and
the CA Resolution dated April 26, 2001, which denied petitioner’s Motion for
Reconsideration.
The factual background of the case is as follows:
Under a Real Estate Mortgage dated August 15, 19942 and Amendments of Real
Estate Mortgage dated April 4, 19953 and December 4, 1995,4 spouses Vicente
Yu and Demetria Lee-Yu (petitioners) and spouses Ramon T. Yu and Virginia A.
Tiu, or Yu Tian Hock aka Victorino/Vicente Yu, mortgaged their title, interest, and
participation over several parcels of land located in Dagupan City and Quezon
City, in favor of the Philippine Commercial International Bank (respondent) as
security for the payment of a loan in the amount of P9,000,000.00.5
As the petitioners failed to pay the loan, the interest, and the penalties due
thereon, respondent filed on July 21, 1998 with the Office of the Clerk of Court
and Ex-Officio Sheriff of the Regional Trial Court of Dagupan City a Petition for
Extra-Judicial Foreclosure of Real Estate Mortgage on the Dagupan City
properties.6 On August 3, 1998, the City Sheriff issued a Notice of Extra-Judicial
Sale scheduling the auction sale on September 10, 1998 at 10:00 o’clock in the
morning or soon thereafter in front of the Justice Hall, Bonuan, Tondaligan,
Dagupan City.7
At the auction sale on September 10, 1998, respondent emerged as the highest
bidder.8 On September 14, 1998, a Certificate of Sale was issued in favor of
respondent.9 On October 1, 1998, the sale was registered with the Registry of
Deeds of Dagupan City.
About two months before the expiration of the redemption period, or on August
20, 1999, respondent filed an Ex-Parte Petition for Writ of Possession before the
Regional Trial Court of Dagupan City, docketed as Special Proceeding No. 99-
00988-D and raffled to Branch 43 (RTC Branch 43).10 Hearing was conducted on
September 14, 1999 and respondent presented its evidence ex-parte.11 The
testimony of Rodante Manuel was admitted ex-parte and thereafter the petition
was deemed submitted for resolution.
On September 30, 1999, petitioners filed a Motion to Dismiss and to Strike Out
Testimony of Rodante Manuel stating that the Certificate of Sale dated
September 14, 1998 is void because respondent violated Article 2089 of the Civil
Code on the indivisibility of the mortgaged by conducting two separate
foreclosure proceedings on the mortgage properties in Dagupan City and
Quezon City and indicating in the two notices of extra-judicial sale that
petitioners’ obligation is P10,437,015.2012 as of March 31, 1998, when petitioners
are not indebted for the total amount of P20,874,031.56.13
In the meantime, petitioners filed a complaint for Annulment of Certificate of Sale
before the Regional Trial Court of Dagupan City, docketed as Civil Case No. 99-
03169-D and raffled to Branch 44 (RTC Branch 44).
On February 14, 2000, RTC Branch 43 denied petitioners’ Motion to Dismiss and
to Strike Out Testimony of Rodante Manuel, ruling that the filing of a motion to
dismiss is not allowed in petitions for issuance of writ of possession under
Section 7 of Act No. 3135.14
On February 24, 2000, petitioners filed a Motion for Reconsideration, further
arguing that the pendency of Civil Case No. 99-03169-D in RTC Branch 44 is a
prejudicial issue to Spec. Proc. No. 99-00988-D in RTC Branch 43, the resolution
of which is determinative on the propriety of the issuance of a writ of
possession.15
On May 8, 2000, RTC Branch 43 denied petitioners’ Motion for Reconsideration,
holding that the principle of prejudicial question is not applicable because the
case pending before RTC Branch 44 is also a civil case and not a criminal
case.16
On June 1, 2000, petitioners filed a Petition for Certiorari with the CA.17 On
November 14, 2000, the CA dismissed petitioners’ Petition for Certiorari on the
grounds that petitioners violated Section 8 of Act No. 3135 and disregarded the
rule against multiplicity of suits in filing Civil Case No. 99-03169-D in RTC Branch
44 despite full knowledge of the pendency of Spec. Proc. No. 99-00988-D in RTC
Branch 43; that since the one-year period of redemption has already lapsed, the
issuance of a writ of possession in favor of respondent becomes a ministerial
duty of the trial court; that the issues in Civil Case No. 99-03169-D are not
prejudicial questions to Spec. Proc. No. 99-00988-D because: (a) the special
proceeding is already fait accompli, (b) Civil Case No. 99-03169-D is deemed not
filed for being contrary to Section 8 of Act No. 3135, (c) the filing of Civil Case
No. 99-03169-D is an afterthought and dilatory in nature, and (d) legally speaking
what seems to exist is litis pendentia and not prejudicial question.18
Petitioners filed a Motion for Reconsideration19 but it was denied by the CA on
April 26, 2001.20
Hence, the present Petition for Review on Certiorari.
Petitioners pose two issues for resolution, to wit:
A. Whether or not a real estate mortgage over several properties located
in different locality [sic] can be separately foreclosed in different places.
B. Whether or not the pendency of a prejudicial issue renders the issues
in Special Proceedings No. 99-00988-D as [sic] moot and academic.21
Anent the first issue, petitioners contend that since a real estate mortgage is
indivisible, the mortgaged properties in Dagupan City and Quezon City cannot be
separately foreclosed. Petitioners further point out that two notices of extra-
judicial sale indicated that petitioners’ obligation is P10,437,015.2022 each as of
March 31, 1998 or a total of P20,874,030.40,23 yet their own computation yields
only P9,957,508.90 as of February 27, 1998.
As to the second issue, petitioners posit that the pendency of Civil Case No. 99-
03169-D is a prejudicial issue, the resolution of which will render the issues in
Spec. Proc. No. 99-00988-D moot and academic. Petitioners further aver that
they did not violate Section 8 of Act No. 3135 in filing a separate case to annul
the certificate of sale since the use of the word "may" in said provision indicates
that they have the option to seek relief of filing a petition to annul the certificate of
sale in the proceeding involving the application for a writ of possession or in a
separate proceeding.
Respondent contends24 that, with respect to the first issue, the filing of two
separate foreclosure proceedings did not violate Article 2089 of the Civil Code on
the indivisibility of a real estate mortgage since Section 2 of Act No. 3135
expressly provides that extra-judicial foreclosure may only be made in the
province or municipality where the property is situated. Respondent further
submits that the filing of separate applications for extra-judicial foreclosure of
mortgage involving several properties in different locations is allowed by A.M. No.
99-10-05-0, the Procedure on Extra-Judicial Foreclosure of Mortgage, as further
amended on August 7, 2001.
As to the second issue, respondent maintains that there is no prejudicial question
between Civil Case No. 99-03169-D and Spec. Proc. No. 99-00988-D since the
pendency of a civil action questioning the validity of the mortgage and the extra-
judicial foreclosure thereof does not bar the issuance of a writ of possession.
Respondent also insists that petitioners should have filed their Petition to Annul
the Certificate of Sale in the same case where possession is being sought, that
is, in Spec. Proc. No. 99-00988-D, and not in a separate proceeding (Civil Case
No. 99-01369-D) because the venue of the action to question the validity of the
foreclosure is not discretionary since the use of the word "may" in Section 8 of
Act No. 3135 refers to the filing of the petition or action itself and not to the
venue. Respondent further argues that even if petitioners filed the Petition to
Annul the Certificate of Sale in Spec. Proc. No. 99-00988-D, the writ of
possession must still be issued because issuance of the writ in favor of the
purchaser is a ministerial act of the trial court and the one-year period of
redemption has already lapsed.
Anent the first issue, the Court finds that petitioners have a mistaken notion that
the indivisibility of a real estate mortgage relates to the venue of extra-judicial
foreclosure proceedings. The rule on indivisibility of a real estate mortgage is
provided for in Article 2089 of the Civil Code, which provides:
Art. 2089. A pledge or mortgage is indivisible, even though the debt may be
divided among the successors in interest of the debtor or of the creditor.
Therefore, the debtor’s heir who has paid a part of the debt cannot ask for the
proportionate extinguishment of the pledge or mortgage as the debt is not
completely satisfied.
Neither can the creditor’s heir who received his share of the debt return the
pledge or cancel the mortgage, to the prejudice of the other heirs who have not
been paid.
From these provisions is excepted the case in which, there being several things
given in mortgage or pledge, each one of them guarantees only a determinate
portion of the credit.
The debtor, in this case, shall have a right to the extinguishment of the pledge or
mortgage as the portion of the debt for which each thing is specially answerable
is satisfied.
This rule presupposes several heirs of the debtor or creditor25 and therefore not
applicable to the present case. Furthermore, what the law proscribes is the
foreclosure of only a portion of the property or a number of the several properties
mortgaged corresponding to the unpaid portion of the debt where, before
foreclosure proceedings, partial payment was made by the debtor on his total
outstanding loan or obligation. This also means that the debtor cannot ask for the
release of any portion of the mortgaged property or of one or some of the several
lots mortgaged unless and until the loan thus secured has been fully paid,
notwithstanding the fact that there has been partial fulfillment of the obligation.
Hence, it is provided that the debtor who has paid a part of the debt cannot ask
for the proportionate extinguishment of the mortgage as long as the debt is not
completely satisfied.26 In essence, indivisibility means that the mortgage
obligation cannot be divided among the different lots,27 that is, each and every
parcel under mortgage answers for the totality of the debt.28
On the other hand, the venue of the extra-judicial foreclosure proceedings is the
place where each of the mortgaged property is located, as prescribed by Section
2 of Act No. 3135,29 to wit:
SECTION 2. Said sale cannot be made legally outside of the province in which
the property sold is situated; and in case the place within said province in which
the sale is to be made is subject to stipulation, such sale shall be made in said
place or in the municipal building of the municipality in which the property or part
thereof is situated.
A.M. No. 99-10-05-0,30 the Procedure on Extra-Judicial Foreclosure of Mortgage,
lays down the guidelines for extra-judicial foreclosure proceedings on mortgaged
properties located in different provinces. It provides that the venue of the extra-
judicial foreclosure proceedings is the place where each of the mortgaged
property is located. Relevant portion thereof provides:
Where the application concerns the extrajudicial foreclosure of mortgages of real
estates and/or chattels in different locations covering one indebtedness, only one
filing fee corresponding to such indebtedness shall be collected. The collecting
Clerk of Court shall, apart from the official receipt of the fees, issue a certificate
of payment indicating the amount of indebtedness, the filing fees collected, the
mortgages sought to be foreclosed, the real estates and/or chattels mortgaged
and their respective locations, which certificate shall serve the purpose of
having the application docketed with the Clerks of Court of the places
where the other properties are located and of allowing the extrajudicial
foreclosures to proceed thereat. (Emphasis supplied)
The indivisibility of the real estate mortgage is not violated by conducting two
separate foreclosure proceedings on mortgaged properties located in different
provinces as long as each parcel of land is answerable for the entire debt.
Petitioners’ assumption that their total obligation is P20,874,030.40 because the
two notices of extra-judicial sale indicated that petitioners’ obligation
is P10,437,015.2031 each, is therefore flawed. Considering the indivisibility of a
real estate mortgage, the mortgaged properties in Dagupan City and Quezon
City are made to answer for the entire debt of P10,437,015.29.32
As to the second issue, that is, whether a civil case for annulment of a certificate
of sale is a prejudicial question to a petition for issuance of a writ of possession,
this issue is far from novel and, in fact, not without precedence. In Pahang v.
Vestil,33 the Court said:
A prejudicial question is one that arises in a case the resolution of which is a
logical antecedent of the issue involved therein, and the cognizance of which
pertains to another tribunal. It generally comes into play in a situation where a
civil action and a criminal action are both pending and there exists in the former
an issue that must be preemptively resolved before the criminal action may
proceed, because howsoever the issue raised in the civil action is resolved would
be determinative juris et de jure of the guilt or innocence of the accused in the
criminal case. The rationale behind the principle of prejudicial question is to avoid
two conflicting decisions. 1avvph!l.net
In the present case, the complaint of the petitioners for Annulment of Extrajudicial
Sale is a civil action and the respondent’s petition for the issuance of a writ of
possession of Lot No. 3-A, Block 1, Psd-07-021410, TCT No. 44668 is but an
incident in the land registration case and, therefore, no prejudicial question can
arise from the existence of the two actions. A similar issue was raised in Manalo
v. Court of Appeals, where we held that:
At any rate, it taxes our imagination why the questions raised in Case No. 98-
0868 must be considered determinative of Case No. 9011. The basic issue in the
former is whether the respondent, as the purchaser in the extrajudicial
foreclosure proceedings, may be compelled to have the property repurchased or
resold to a mortgagor’s successor-in-interest (petitioner); while that in the latter is
merely whether the respondent, as the purchaser in the extrajudicial foreclosure
proceedings, is entitled to a writ of possession after the statutory period for
redemption has expired. The two cases, assuming both are pending, can
proceed separately and take their own direction independent of each other.34
In the present case, Civil Case No. 99-01369-D and Spec. Proc. No. 99-00988-D
are both civil in nature. The issue in Civil Case No. 99-01369-D is whether the
extra-judicial foreclosure of the real estate mortgage executed by the petitioners
in favor of the respondent and the sale of their properties at public auction are
null and void, whereas, the issue in Spec. Proc. No. 99-00988-D is whether the
respondent is entitled to a writ of possession of the foreclosed properties.
Clearly, no prejudicial question can arise from the existence of the two actions.
The two cases can proceed separately and take their own direction
independently of each other.
Nevertheless, there is a need to correct the CA’s view that petitioners violated
Section 8 of Act No. 3135 and disregarded the proscription on multiplicity of suits
by instituting a separate civil suit for annulment of the certificate of sale while
there is a pending petition for issuance of the writ of possession in a special
proceeding.
Section 8 of Act No. 3135 provides:
Sec. 8. Setting aside of sale and writ of possession. – The debtor may, in the
proceedings in which possession was requested, but not later than thirty days
after the purchaser was given possession, petition that the sale be set aside and
the writ of possession cancelled, specifying the damages suffered by him,
because the mortgage was not violated or the sale was not made in accordance
with the provisions hereof, and the court shall take cognizance of this petition in
accordance with the summary procedure provided for in section one hundred and
twelve of Act Numbered Four hundred and ninety-six; and if it finds the complaint
of the debtor justified, it shall dispose in his favor of all or part of the bond
furnished by the person who obtained possession. Either of the parties may
appeal from the order of the judge in accordance with section fourteen of Act
Numbered Four hundred and ninety-six; but the order of possession shall
continue in effect during the pendency of the appeal. (Emphasis supplied)
Under the provision above cited, the mortgagor may file a petition to set aside the
sale and for the cancellation of a writ of possession with the trial court which
issued the writ of possession within 30 days after the purchaser mortgagee was
given possession. It provides the plain, speedy, and adequate remedy in
opposing the issuance of a writ of possession.35 Thus, this provision presupposes
that the trial court already issued a writ of possession. In Sps. Ong v. Court of
Appeals,36 the Court elucidated:
The law is clear that the purchaser must first be placed in possession of the
mortgaged property pending proceedings assailing the issuance of the writ of
possession. If the trial court later finds merit in the petition to set aside the writ of
possession, it shall dispose in favor of the mortgagor the bond furnished by the
purchaser. Thereafter, either party may appeal from the order of the judge in
accordance with Section 14 of Act 496, which provides that "every order,
decision, and decree of the Court of Land Registration may be reviewed…in the
same manner as an order, decision, decree or judgment of a Court of First
Instance (RTC) might be reviewed." The rationale for the mandate is to allow the
purchaser to have possession of the foreclosed property without delay, such
possession being founded on his right of ownership.37
Accordingly, Section 8 of Act No. 3135 is not applicable to the present case since
at the time of the filing of the separate civil suit for annulment of the certificate of
sale in RTC Branch 44, no writ of possession was yet issued by RTC Branch 43.
mortgaged properties located in different provinces since these are two unrelated
concepts. Also, no prejudicial question can arise from the existence of a civil
case for annulment of a certificate of sale and a petition for the issuance of a writ
of possession in a special proceeding since the two cases are both civil in nature
which can proceed separately and take their own direction independently of each
other.
Furthermore, since the one-year period to redeem the foreclosed properties
lapsed on October 1, 1999, title to the foreclosed properties had already been
consolidated under the name of the respondent. As the owner of the properties,
respondent is entitled to its possession as a matter of right.40 The issuance of a
writ of possession over the properties by the trial court is merely a ministerial
function. As such, the trial court neither exercises its official discretion nor
judgment.41 Any question regarding the validity of the mortgage or its foreclosure
cannot be a legal ground for refusing the issuance of a writ of
possession.42 Regardless of the pending suit for annulment of the certificate of
sale, respondent is entitled to a writ of possession, without prejudice of course to
the eventual outcome of said case.43
WHEREFORE, the petition is DENIED.
SO ORDERED.

Similarly, the Court rejects the CA’s application of the principle of litis pendentia
to Civil Case No. 99-03169-D in relation to Spec. Proc. No. 99-00988-D. Litis
pendentia refers to that situation wherein another action is pending between the
same parties for the same cause of actions and that the second action becomes
unnecessary and vexatious. For litis pendentia to be invoked, the concurrence of
the following requisites is necessary: (a) identity of parties or at least such as
represent the same interest in both actions; (b) identity of rights asserted and
reliefs prayed for, the reliefs being founded on the same facts; and, (c) the
identity in the two cases should be such that the judgment that may be rendered
in one would, regardless of which party is successful, amount to res judicata in
the other.38

Applying the foregoing criteria in the instant case, litis pendentia does not obtain
in this case because of the absence of the second and third requisites. The
issuance of the writ of possession being a ministerial function, and summary in
nature, it cannot be said to be a judgment on the merits, but simply an incident in
the transfer of title. Hence, a separate case for annulment of mortgage and
foreclosure sale cannot be barred by litis pendentia or res judicata.39 Thus,
insofar as Spec. Proc. No. 99-00988-D and Civil Case No. 99-03169-D pending
before different branches of RTC Dagupan City are concerned, there is no litis
pendentia.

To sum up, the Court holds that the rule on indivisibility of the real estate
mortgage cannot be equated with the venue of foreclosure proceedings on
Spouses Yu vs PCIB HELD:

TITLE: Spouses Yu vs. PCIB

CITATION: GR No. 147902, March 17, 2006 Supreme Court held that no prejudicial question can arise from the existence of a
civil case for annulment of a certificate of sale and a petition for the issuance of a
writ of possession in a special proceeding since the two cases are both civil in
nature which can proceed separately and take their own direction independently
of each other.
FACTS:

A prejudicial question is “one that arises in a case the resolution of which is a

Petitioners Vicente Yu and Demetria Lee-Yu mortgaged their title, interest, and
logical antecedent of the issue involved therein, and the cognizance of which
participation over several parcels of land located in Dagupan City and Quezon
pertains to another tribunal. It generally comes into play in a situation where a
City, in favor of the Philippine Commercial International Bank, respondent and
civil action and a criminal action are both pending and there exists in the former
highest bidder, as security for the payment of a loan.
an issue that must be preemptively resolved before the criminal action may
proceed because issue raised in civil action would be determinative de jure of the
guilt or innocence of the accused in a criminal case”.

As petitioners failed to pay the loan and the interest and penalties due thereon,
respondent filed petition for extra-judicial foreclosure of real estate mortgage on
the Dagupan City properties on July 21, 1998. City Sheriff issued notice of extra-
judicial sale on August 3, 1998 scheduling the auction sale on September 10,
1998.

Certificate of Sale was issued on September 14, 1998 in favor of respondent, the
highest bidder. The sale was registered with the Registry of Deeds in Dagupan
City on October 1, 1998. After two months before the expiration of the
redemption period, respondent filed an ex-parte petition for writ of possession
before RTC of Dagupan. Petitioners complaint on annulment of certificate of sale
and motion to dismiss and to strike out testimony of Rodante Manuel was denied
by said RTC. Motion for reconsideration was then filed on February 14, 2000
arguing that the complaint on annulment of certificate of sale is a prejudicial issue
to the filed ex-parte petition for writ of possession, the resolution of which is
determinative of propriety of the issuance of a Writ of Possession.

ISSUE: Whether prejudicial question exist in a civil case for annulment of a

certificate of sale and a petition for the issuance of a writ of possession.
Section 70. Adverse claim. Whoever claims any part or interest in registered land
adverse to the registered owner, arising subsequent to the date of the original
registration, may, if no other provision is made in this Decree for registering the
same, make a statement in writing setting forth fully his alleged right or interest,
and how or under whom acquired, a reference to the number of the certificate of
title of the registered owner, the name of the registered owner, and a description
of the land in which the right or interest is claimed.

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

Before the lapse of thirty days aforesaid, any party in interest may file a petition
in the Court of First Instance where the land is situated for the cancellation of the
adverse claim, and the court shall grant a speedy hearing upon the question of
the validity of such adverse claim, and shall render judgment as may be just and
equitable. If the adverse claim is adjudged to be invalid, the registration thereof
shall be ordered canceled. If, in any case, the court, after notice and hearing,
shall find that the adverse claim thus registered was frivolous, it may fine the
claimant in an amount not less than one thousand pesos nor more than five
thousand pesos, in its discretion. Before the lapse of thirty days, the claimant
may withdraw his adverse claim by filing with the Register of Deeds a sworn
petition to that effect.
G.R. No. L-29740 November 10, 1978
TERESITA ROSAL ARRAZOLA, petitioner-appellee,
vs.
PEDRO A. BERNAS and SOLEDAD VERNAS ALIVIO, oppositors-appellants.
Gellada & Gellada for appellants.
Venicio Escolin for appellee.
AQUINO, J.:
This case is about the cancellation of an adverse claim which was annotated on
Transfer Certificates of Title Nos. T-6881 and T-6882 in the name of Teresita Rosal
Bernas (Arrazola), covering Lots Nos. 371 and 373 of the Pilar, Capiz cadastre with a
total area of 12,830 square meters.
Teresita was allegedly an adopted daughter of Elviro Bernas who on May 5, 1967,
when he was 79 years old, executed in Iloilo City a notarized will wherein he
disinherited Teresita and instituted his brother Pedro A. Bernas and his sister Soledad
Bernas Alivio as heirs to all his properties, including Lots Nos. 371 and 373 which he
had allegedly "involuntarily transferred" to Teresita.
A month later, or on June 5, 1967, Elviro Bernas died in Roxas City. His brother
Pedro filed with the Court of First Instance of Capiz a petition dated September 6,
1967 for the probate of his will (Special Proceeding No. V-2965).
On December 12, 1967, Pedro A. Bernas filed with the register of deeds of Capiz a
verified notice of adverse claimwhich was recorded as follows:
Entry No. 27222. Notice of adverse claim in favor of Pedro and
Soledad, all surnamed Bernas. Claiming ownership in the parcels
of land described in T-6881 and T-6882 by virtue of the Last Will
executed before Not. Public Reynaldo Gellada of Iloilo City on May
5, 1967, Doc. No. 4, page 2, Book III, series of 1967: by Elviro
Bernas. — Inscription — Dec. 12, 1967 at 8:20 a.m.
He alleged in that adverse claim that Lots Nos. 371 and 373 were conveyed by his
brother Elviro to Teresita Rosal Bernas "involuntarily, fictitiously and without
consideration" and that in Elviro's will the two lots were devised to him (Pedro) and
his sister Soledad. A copy of the will was attached to the adverse claim.
After the register of deeds had annotated the adverse claim on TCT Nos. T-6881 and
T-6882, Teresita R. Bernas Arrazola filed in the cadastral and probate proceedings a
motion dated August 13, 1968 for the cancellation of the annotation of adverse claim.
The motion was predicated on the grounds that she was not served with prior notice"
of the adverse claim and that there was "no petition for approval or justification"
thereof filed with the court. Pedro A. Bernas and Soledad Bernas Alivio opposed the
motion. The lower court in its order of August 20, 1968 granted it and ordered the
register of deeds to cancel the annotation. The oppositors appealed.
The correctness of the lower court's order is to be passed upon in the light of section
110 of Act No. 496 which reads:
SEC. 110. Whoever claims any right or interest in registered land
adverse to the registered owner, arising subsequent to the date of
the original registration, may, if no other provision is made in this
Act for registering the same, make a statement in writing setting
forth fully his alleged right or interest, and how or under whom
acquired, and a reference to the volume and page of the certificate
of title of the registered owner, and a description of the land in
which the right or interest is claimed. The statement shall be signed
and sworn to, and shall state the adverse claimant's residence and
designate a place at which all notices may be served upon him.
This statement shall be entitled to registration as an adverse claim,
and the court, upon a petition of any party in interest, shall grant a
speedy hearing upon the question of the validity of such adverse
claim and shall enter such decree therein as justice and equity may
require. If the claim is adjudged to be invalid, the registration shall
be canceled. If in any case the court after notice and hearing shall
find that a claim thus registered was frivolous or vexatious, it may
tax the adverse claimant double or treble costs in its discretion.
Under section 110, the adverse claimant must be one who claims any right or interest
in registered land adverse to the registered owner, arising subsequent to the original
registration. That interest is registerable as an adverse claim if no other provision is
made in Act No. 496 for its registration.
Applying section 110, it was held that a claim based on occurrences prior to the
original registration is not registerable as an adverse claim (De los Reyes vs. De los
Reyes, 91 Phil. 528).
A lease over a parcel of land for a ten-year period, which could not be registered
because the owner's duplicate of the title was not surrendered, could be registered as
an adverse claim and the owner could be compelled to surrender the owner's
duplicate of the title so that the adverse claim could be annotated thereon. If the
adverse claim turns out to be invalid, the owner could ask for its cancellation and, if
found to be frivolous or vexatious, then double or treble costs may be adjudged
against the adverse claimant. (Register of Deeds of Manila vs. Tinoco Vda. de Cruz,
95 Phil. 818)
But where the vendee of a parcel of land may register the deed of sale in his favor, as
provided for in section 57 of Act No. 496, he is not entitled to cause that sale to be
annotated as an adverse claim on the vendor's title (Register of Deeds of Quezon
City vs. Nicandro, 111 Phil. 989, 997).
An example of a baseless adverse claim is when the possessor of land already
registered in the name of another person claims the land on the basis of prescription
and adverse possession. That claim is not registerable as an adverse claim (Estella
vs. Register of Deeds of Rizal, 106 Phil. 911).
However, the claim of a person that she has hereditary rights in the land fraudulently
registered in her sister's name, because the land belonged to their mother, whose
estate is pending settlement in a special proceeding, is registerable as an adverse
claim (Gabriel vs. Register of Deeds of Rizal, 118 Phil. 980).
In the instant case, the lower court ordered the cancellation of the adverse claim
because the will of Elviro Bernas had not yet been probated. It reasoned out that
before the probate Pedro A. Bernas and Soledad Bernas Alivio are merely
presumptive heirs with a "contingent, expectant and inchoate" interest in the two lots.
We hold that the lower court erred in ordering the cancellation of the adverse claim. It
is true that the will of Elviro Bernas has not yet been probated but the fact is that there
is a pending proceeding for its probate. And in that will the testator transmitted to his
surviving brother and sister, the herein oppositors-appellants or adverse claimants,
the right to secure a declaration as to the invalidity of his conveyance of lots Nos. 371
and 373 to Teresita Rosal Arrazola.
Because of that will, Teresita's title to the two lots have become controversial. To alert
third persons, or for that matter the whole world, to the fact that Pedro A. Bernas and
Soledad Bernas Alivio have an adverse claim on the two lots, section 110 of Act No.
496 gives them the remedy of causing to be annotated their adverse claim on the
titles of the two lots. If that remedy is not given to them, then the registered owner can
transfer the lots to an innocent purchaser for value and, in that event, the
unregistered adverse claim will be nullified or frustrated. (See Reyes vs. Court of
Appeals, 95 Phil. 952 as to the right of an heir to sue for the annulment of a
conveyance made in fraud of the deceased.)
The purpose of annotating the adverse claim on the title of the disputed land is to
apprise third persons that there is a controversy over the ownership of the land and to
preserve and protect the right of the adverse claimant during the pendency of the
controversy. It is a notice to third persons that any transaction regarding the disputed
land is subject to the outcome of the dispute.
Appellants' adverse claim, which was made in good faith, has some basis and
semblance of plausibility and is not palpably frivolous or vexatious. Hence, it is
premature to order the cancellation of the annotation thereof before it is finally
determined by the courts that the titles of Teresita Rosal Arrazola to the disputed lots
are indefeasible and that appellants' claim is devoid of merit.
The instant case has some similarity to Ty Sin Tei vs. Dy Piao, 103 Phil. 858, where
the testator, Dy Lac, in 1940 purchased houses and a lot located at Zurbaran Street,
Manila, and placed the title thereof, Transfer Certificate of Title No. 58652, in the
name of his maidservant and concubine named Paz Ty Sin Tei. After the testator's
death in 1948, Paz filed a petition for the probate of his will. Lee Dy Piao and Uy Cho,
the respective legitimate son and widow of Dy Lac acting pursuant to section 110 of
Act No. 496, caused their claim, as heirs of Dy Lac, to be annotated on the back of
TCT No. 58652 pending the determination of their hereditary rights in the
testamentary proceeding.
On March 23, 1955, Paz Ty Sin Tei filed a petition in the land registration record of
TCT No. 58652 for the cancellation of the adverse claim. The Court of First Instance
of Manila cancelled it over Lee Dy Piao's opposition. On appeal, this Court set aside
the order of cancellation and further held that the adverse claim could subsist
concurrently with a subsequent annotation of a notice of lis pendens which referred to
a case filed by Lee Dy Piao, involving the same right or interest covered by the
adverse claim.
In further support of our holding that the lower court erred in ordering the cancellation
of the annotation of the adverse claim, it is also relevant to cite the holding that where
a guardianship proceeding was instituted for an octogenarian woman, it was proper to
annotate on the title of her land the pendency of such a proceeding by means of a
notice of lis pendens for the purpose of alerting anyone who might wish to buy the
land that his purchase might be questioned later on (Diaz vs. Hon. Perez, 103 Phil.
102). An adverse claim and a notice of lis pendens have the same purpose.
In this case, the trial court relied on the ruling of the Court of Appeals that the
contingent, expectant and inchoate hereditary rights of the children of a living parent
do not constitute an adverse claim during his lifetime which could be annotated on the
titles covering the parent's land (Diaz vs. Santos Diaz, CA 54 0. G. 8082). That is an
illustration of a frivolous or vexatious adverse claim.
That ruling is not applicable to this case because in the Diaz case the hereditary
rights had not yet accrued, since the parent was still alive. In the instant case, the
testator is dead and there is a proceeding for the probate of his will which is the basis
of appellants' adverse claim. Hence, they are entitled to announce to third persons, by
means of a notice of adverse claim annotated on the titles of the two lots, that they
are contesting the validity of those titles.
It has been said that the annotation of an adverse claim should not be confused with
its validity which should be litigated in a proper proceeding and that the registration of
an invalid adverse claim is not as harmful as the non-registration of a valid one
(Gabriel vs. Register of Deeds of Rizal, 118 Phil. 980).
WHEREFORE, the lower court's order of August 20, 1968, ordering the cancellation
of appellants' adverse claim on TCT Nos. T-6881 and T-6882, is reversed and set
aside. Costs against the petitioner-appellee.
SO ORDERED.