G.R. No.

159595 January 23, 2007

REPUBLIC OF THE PHILIPPINES, Petitioner,

vs.
LOURDES ABIERA NILLAS, Respondent.

DECISION

TINGA, J.:

The central question raised in this Petition for Review is whether prescription or laches may bar a petition
to revive a judgment in a land registration case. It is a hardly novel issue, yet petitioner Republic of the
Philippines (Republic) pleads that the Court rule in a manner that would unsettle precedent. We deny
certiorari and instead affirm the assailed rulings of the courts below.

The facts bear little elaboration. On 10 April 1997, respondent Lourdes Abiera Nillas (Nillas) filed a
Petition for Revival of Judgment with the Regional Trial Court (RTC) of Dumaguete City. It was alleged
therein that on 17 July 1941, the then Court of First Instance (CFI) of Negros Oriental rendered
a Decision Adicional in Expediente Cadastral No. 14, captioned as El Director De Terrenos contra
Esteban Abingayan y Otros.1 In the decision, the CFI, acting as a cadastral court, adjudicated several
lots, together with the improvements thereon, in favor of named oppositors who had established their title
to their respective lots and their continuous possession thereof since time immemorial and ordered the
Chief of the General Land Registration Office, upon the finality of the decision, to issue the corresponding
decree of registration.2 Among these lots was Lot No. 771 of the Sibulan Cadastre, which was
adjudicated to Eugenia Calingacion (married to Fausto Estoras) and Engracia Calingacion, both residents
of Sibulan, Negros Oriental.3

Nillas further alleged that her parents, Serapion and Josefina A. Abierra, eventually acquired Lot No. 771
in its entirety. By way of a Deed of Absolute Sale dated 7 November 1977, Engracia Calingacion sold her
undivided one-half (1/2) share over Lot No. 771 to the Spouses Abierra, the parents of Nillas. On the
other hand, the one-half (1/2) share adjudicated to Eugenia Calingacion was also acquired by the
Spouses Abierra through various purchases they effected from the heirs of Eugenia between the years
1975 to 1982. These purchases were evidenced by three separate Deeds of Absolute Sale all in favor of
the Spouses Abierra.4

In turn, Nillas acquired Lot No. 771 from her parents through a Deed of Quitclaim dated 30 June 1994.
Despite these multiple transfers, and the fact that the Abierra spouses have been in open and continuous
possession of the subject property since the 1977 sale, no decree of registration has ever been issued
over Lot No. 771 despite the rendition of the 1941 CFI Decision. Thus, Nillas sought the revival of the
1941 Decision and the issuance of the corresponding decree of registration for Lot No. 771. The records
do not precisely reveal why the decree was not issued by the Director of Lands, though it does not
escape attention that the 1941 Decision was rendered a few months before the commencement of the
Japanese invasion of the Philippines in December of 1941.

No responsive pleading was filed by the Office of the Solicitor General (OSG), although it entered its
appearance on 13 May 1997 and simultaneously deputized the City Prosecutor of Dumaguete City to
appear whenever the case was set for hearing and in all subsequent proceedings. 5

Trial on the merits ensued. The RTC heard the testimony of Nillas and received her documentary
evidence. No evidence was apparently presented by the OSG. On 26 April 2000, the RTC rendered a
Decision6 finding merit in the petition for revival of judgment, and ordering the revival of the 1941
Decision, as well as directing the Commissioner of the Land Registration Authority (LRA) to issue the
corresponding decree of confirmation and registration based on the 1941 Decision.1avvphi1.net
The OSG appealed the RTC Decision to the Court of Appeals, arguing in main that the right of action to
revive judgment had already prescribed. The OSG further argued that at the very least, Nillas should
have established that a request for issuance of a decree of registration before the Administrator of the
LRA had been duly made. The appeal was denied by the appellate court in its Decision 7 dated 24 July
2003. In its Decision, the Court of Appeals reiterated that the provisions of Section 6, Rule 39 of the Rules
of Court, which impose a prescriptive period for enforcement of judgments by motion, refer to ordinary
civil actions and not to "special" proceedings such as land registration cases. The Court of Appeals also
noted that it would have been especially onerous to require Nillas to first request the LRA to comply with
the 1941 decision considering that it had been established that the original records in the 1941 case had
already been destroyed and could no longer be reconstructed.

In the present petition, the OSG strongly argues that contrary to the opinion of the Court of Appeals, the
principles of prescription and laches do apply to land registration cases. The OSG notes that Article 1144
of the Civil Code establishes that an action upon judgment must be brought within ten years from the time
the right of action accrues.8 Further, Section 6 of Rule 39 of the 1997 Rules of Civil Procedure establishes
that a final and executory judgment or order may be executed on motion within five (5) years from the
date of its entry, after which time it may be enforced by action before it is barred by statute of
limitations.9 It bears noting that the Republic does not challenge the authenticity of the 1941 Decision, or
Nillas's acquisition of the rights of the original awardees. Neither does it seek to establish that the
property is inalienable or otherwise still belonged to the State.

The OSG also extensively relies on two cases, Shipside Inc. v. Court of Appeals10 and Heirs of Lopez v.
De Castro.11 Shipside was cited since in that case, the Court dismissed the action instituted by the
Government seeking the revival of judgment that declared a title null and void because the judgment
sought to be revived had become final more than 25 years before the action for revival was filed.
In Shipside, the Court relied on Article 1144 of the Civil Code and Section 6, Rule 39 of the 1997 Rules of
Civil Procedure in declaring that extinctive prescription did lie. On the other hand, Heirs of Lopez involved
the double registration of the same parcel of land, and the subsequent action by one set of applicants for
the issuance of the decree of registration in their favor seven (7) years after the judgment had become
final. The Court dismissed the subsequent action, holding that laches had set in, it in view of the
petitioners' omission to assert a right for nearly seven (7) years.

Despite the invocation by the OSG of these two cases, there exists a more general but definite
jurisprudential rule that favors Nillas and bolsters the rulings of the lower courts. The rule is that "neither
laches nor the statute of limitations applies to a decision in a land registration case." 12

The most extensive explanation of this rule may be found in Sta. Ana v. Menla,13 decided in 1961,
wherein the Court refuted an argument that a decision rendered in a land registration case wherein the
decree of registration remained unissued after 26 years was already "final and enforceable." The Court,
through Justice Labrador, explained:

We fail to understand the arguments of the appellant in support of the assignment [of error], except
insofar as it supports his theory that after a decision in a land registration case has become final, it may
not be enforced after the lapse of a period of 10 years, except by another proceeding to enforce the
judgment or decision. Authority for this theory is the provision in the Rules of Court to the effect that
judgment may be enforced within 5 years by motion, and after five years but within 10 years, by an action
(Sec. 6, Rule 39). This provision of the Rules refers to civil actions and is not applicable to special
proceedings, such as a land registration case. This is so because a party in a civil action must
immediately enforce a judgment that is secured as against the adverse party, and his failure to act
to enforce the same within a reasonable time as provided in the Rules makes the decision
unenforceable against the losing party. In special proceedings[,] the purpose is to establish a
status, condition or fact; in land registration proceedings, the ownership by a person of a parcel
of land is sought to be established. After the ownership has been proved and confirmed by
judicial declaration, no further proceeding to enforce said ownership is necessary, except when
the adverse or losing party had been in possession of the land and the winning party desires to
oust him therefrom.

Furthermore, there is no provision in the Land Registration Act similar to Sec. 6, Rule 39, regarding the
execution of a judgment in a civil action, except the proceedings to place the winner in possession by
virtue of a writ of possession. The decision in a land registration case, unless the adverse or losing party
is in possession, becomes final without any further action, upon the expiration of the period for perfecting
an appeal. x x x

x x x x There is nothing in the law that limits the period within which the court may order or issue a
decree. The reason is xxx that the judgment is merely declaratory in character and does not need
to be asserted or enforced against the adverse party. Furthermore, the issuance of a decree is a
ministerial duty both of the judge and of the Land Registration Commission; failure of the court or
of the clerk to issue the decree for the reason that no motion therefor has been filed can not
prejudice the owner, or the person in whom the land is ordered to be registered.14

The doctrine that neither prescription nor laches may render inefficacious a decision in a land registration
case was reiterated five (5) years after Sta. Ana, in Heirs of Cristobal Marcos, etc., et al. v. De Banuvar,
et al.15 In that case, it was similarly argued that a prayer for the issuance of a decree of registration filed in
1962 pursuant to a 1938 decision was, among others, barred by prescription and laches. In rejecting the
argument, the Court was content in restating with approval the above-cited excerpts from Sta. Ana. A
similar tack was again adopted by the Court some years later in Rodil v. Benedicto.16 These cases further
emphasized, citing Demoran v. Ibanez, etc., and Poras 17and Manlapas and Tolentino v.
Llorente,18 respectively, that the right of the applicant or a subsequent purchaser to ask for the issuance
of a writ of possession of the land never prescribes.19

Within the last 20 years, the Sta. Ana doctrine on the inapplicability of the rules on prescription and laches
to land registration cases has been repeatedly affirmed. Apart from the three (3) cases mentioned earlier,
the Sta. Anadoctrine was reiterated in another three (3) more cases later, namely: Vda. de Barroga v.
Albano,20 Cacho v. Court of Appeals,21 and Paderes v. Court of Appeals.22 The doctrine of stare
decisis compels respect for settled jurisprudence, especially absent any compelling argument to do
otherwise. Indeed, the apparent strategy employed by the Republic in its present petition is to feign that
the doctrine and the cases that spawned and educed it never existed at all. Instead, it is insisted that the
Rules of Court, which provides for the five (5)-year prescriptive period for execution of judgments, is
applicable to land registration cases either by analogy or in a suppletory character and whenever
practicable and convenient.23 The Republic further observes that Presidential Decree (PD) No. 1529 has
no provision on execution of final judgments; hence, the provisions of Rule 39 of the 1997 Rules of Civil
Procedure should apply to land registration proceedings.

We affirm Sta. Ana not out of simple reflex, but because we recognize that the principle enunciated
therein offers a convincing refutation of the current arguments of the Republic.

Rule 39, as invoked by the Republic, applies only to ordinary civil actions, not to other or extraordinary
proceedings not expressly governed by the Rules of Civil Procedure but by some other specific law or
legal modality such as land registration cases. Unlike in ordinary civil actions governed by the Rules of
Civil Procedure, the intent of land registration proceedings is to establish ownership by a person of a
parcel of land, consistent with the purpose of such extraordinary proceedings to declare by judicial fiat a
status, condition or fact. Hence, upon the finality of a decision adjudicating such ownership, no further
step is required to effectuate the decision and a ministerial duty exists alike on the part of the land
registration court to order the issuance of, and the LRA to issue, the decree of registration.

The Republic observes that the Property Registration Decree (PD No. 1529) does not contain any
provision on execution of final judgments; hence, the application of Rule 39 of the 1997 Rules of Civil
Procedure in suppletory fashion. Quite the contrary, it is precisely because PD No. 1529 does not
specifically provide for execution of judgments in the sense ordinarily understood and applied in civil
cases, the reason being there is no need for the prevailing party to apply for a writ of execution in order to
obtain the title, that Rule 39 of the 1997 Rules of Civil Procedure is not applicable to land registration
cases in the first place. Section 39 of PD No. 1529 reads:

SEC. 39. Preparation of Decree and Certificate of Title. - After the judgment directing the registration of
title to land has become final, the court shall, within fifteen days from entry of judgment, issue an order
directing the Commissioner to issue the corresponding decree of registration and certificate of title. The
clerk of court shall send, within fifteen days from entry of judgment, certified copies of the judgment and of
the order of the court directing the Commissioner to issue the corresponding decree of registration and
certificate of title, and a certificate stating that the decision has not been amended, reconsidered, nor
appealed, and has become final. Thereupon, the Commissioner shall cause to be prepared the decree of
registration as well as the original and duplicate of the corresponding original certificate of title. The
original certificate of title shall be a true copy of the decree of registration. The decree of registration shall
be signed by the Commissioner, entered and filed in the Land Registration Commission. The original of
the original certificate of title shall also be signed by the Commissioner and shall be sent, together with
the owner’s duplicate certificate, to the Register of Deeds of the city or province where the property is
situated for entry in his registration book.

The provision lays down the procedure that interposes between the rendition of the judgment and the
issuance of the certificate of title. No obligation whatsoever is imposed by Section 39 on the prevailing
applicant or oppositor even as a precondition to the issuance of the title. The obligations provided in the
Section are levied on the land court (that is to issue an order directing the Land Registration
Commissioner to issue in turn the corresponding decree of registration), its clerk of court (that is to
transmit copies of the judgment and the order to the Commissioner), and the Land Registration
Commissioner (that is to cause the preparation of the decree of registration and the transmittal thereof to
the Register of Deeds). All these obligations are ministerial on the officers charged with their performance
and thus generally beyond discretion of amendment or review.

The failure on the part of the administrative authorities to do their part in the issuance of the decree of
registration cannot oust the prevailing party from ownership of the land. Neither the failure of such
applicant to follow up with said authorities can. The ultimate goal of our land registration system is geared
towards the final and definitive determination of real property ownership in the country, and the imposition
of an additional burden on the owner after the judgment in the land registration case had attained finality
would simply frustrate such goal.

Clearly, the peculiar procedure provided in the Property Registration Law from the time decisions in
land registration cases become final is complete in itself and does not need to be filled in. From
another perspective, the judgment does not have to be executed by motion or enforced by action within
the purview of Rule 39 of the 1997 Rules of Civil Procedure.

Following these premises, it can even be posited that in theory, there would have been no need for Nillas,
or others under similar circumstances, to file a petition for revival of judgment, since revival of judgments
is a procedure derived from civil procedure and proceeds from the assumption that the judgment is
susceptible to prescription. The primary recourse need not be with the courts, but with the LRA, with
whom the duty to issue the decree of registration remains. If it is sufficiently established before that body
that there is an authentic standing judgment or order from a land registration court that remains
unimplemented, then there should be no impediment to the issuance of the decree of registration.
However, the Court sees the practical value of necessitating judicial recourse if a significant number of
years has passed since the promulgation of the land court's unimplemented decision or order, as in this
case. Even though prescription should not be a cause to bar the issuance of the decree of registration, a
judicial evaluation would allow for a thorough examination of the veracity of the judgment or order sought
to be effected, or a determination of causes other than prescription or laches that might preclude the
issuance of the decree of registration.
What about the two cases cited by the Republic, Shipside and Heirs of Lopez? Even though the Court
applied the doctrines of prescription and laches in those cases, it should be observed that neither case
was intended to overturn the Sta. Ana doctrine, nor did they make any express declaration to such effect.
Moreover, both cases were governed by their unique set of facts, quite distinct from the general situation
that marked both Sta. Ana and the present case.

The judgment sought belatedly for enforcement in Shipside did not arise from an original action for land
registration, but from a successful motion by the Republic seeking the cancellation of title previously
adjudicated to a private landowner. While one might argue that such motion still arose in a land
registration case, we note that the pronouncement therein that prescription barred the revival of the order
of cancellation was made in the course of dispensing with an argument which was ultimately peripheral to
that case. Indeed, the portion of Shipside dealing with the issue of prescription merely restated the
provisions in the Civil Code and the Rules of Civil Procedure relating to prescription, followed by an
observation that the judgment sought to be revived attained finality 25 years earlier. However, the Sta.
Ana doctrine was not addressed, and perhaps with good reason, as the significantly more extensive
rationale provided by the Court in barring the revival of judgment was the fact that the State no longer
held interest in the subject property, having divested the same to the Bases Conversion Development
Authority prior to the filing of the action for revival. Shipside expounds on this point, and not on the
applicability of the rules of prescription.

Notably, Shipside has attained some measure of prominence as precedent on still another point, relating
to its pronouncements relating to the proper execution of the certification of non-forum shopping by a
corporation. In contrast, Shipside has not since been utilized by the Court to employ the rules on
prescription and laches on final decisions in land registration cases. It is worth mentioning that
since Shipside was promulgated in 2001, the Court has not hesitated in reaffirming the rule in Sta. Ana as
recently as in the middle of 2005 in the Paderes case.

We now turn to Heirs of Lopez, wherein the controlling factual milieu proved even more unconventional
than that in Shipside. The property involved therein was the subject of two separate applications for
registration, one filed by petitioners therein in 1959, the other by a different party in 1967. It was the latter
who was first able to obtain a decree of registration, this accomplished as early as 1968. 24 On the other
hand, the petitioners were able to obtain a final judgment in their favor only in 1979, by which time the
property had already been registered in the name of the other claimant, thus obstructing the issuance of
certificate of title to the petitioners. The issues of prescription and laches arose because the petitioners
filed their action to enforce the 1979 final judgment and the cancellation of the competing title only in
1987, two (2) years beyond the five (5)-year prescriptive period provided in the Rules of Civil Procedure.
The Court did characterize the petitioners as guilty of laches for the delay in filing the action for the
execution of the judgment in their favor, and thus denied the petition on that score.

Heirs of Lopez noted the settled rule that "when two certificates of title are issued to different persons
covering the same land in whole or in part, the earlier in date must prevail x x x," and indeed even if the
petitioners therein were somehow able to obtain a certificate of title pursuant to the 1979 judgment in their
favor, such title could not have stood in the face of the earlier title. The Court then correlated the laches of
the petitioners with their pattern of behavior in failing to exercise due diligence to protect their interests
over the property, marked by their inability to oppose the other application for registration or to seek
enforcement of their own judgment within the five (5) -year reglementary period.

Still, a close examination of Heirs of Lopez reveals an unusual dilemma that negates its application as
precedent to the case at bar, or to detract from Sta. Ana as a general rule for that matter. The execution
of the judgment sought for belated enforcement in Heirs of Lopez would have entailed the disturbance of
a different final judgment which had already been executed and which was shielded by the legal
protection afforded by a Torrens title. In light of those circumstances, there could not have been a
"ministerial duty" on the part of the registration authorities to effectuate the judgment in favor of the
petitioners in Heirs of Lopez. Neither could it be said that their right of ownership as confirmed by the
judgment in their favor was indubitable, considering the earlier decree of registration over the same
property accorded to a different party. The Sta. Ana doctrine rests upon the general presumption that the
final judgment, with which the corresponding decree of registration is homologous by legal design, has
not been disturbed by another ruling by a co-extensive or superior court. That presumption obtains in this
case as well. Unless that presumption is overcome, there is no impediment to the continued application
of Sta. Ana as precedent.25

We are not inclined to make any pronouncements on the doctrinal viability of Shipside or Heirs of
Lopez concerning the applicability of the rules of prescription or laches in land registration cases. Suffice
it to say, those cases do not operate to detract from the continued good standing of Sta. Ana as a general
precedent that neither prescription nor laches bars the enforcement of a final judgment in a land
registration case, especially when the said judgment has not been reversed or modified, whether
deliberately or inadvertently, by another final court ruling. This qualifier stands not so much as a newly-
carved exception to the general rule as it does as an exercise in stating the obvious.

Finally, the Republic faults the Court of Appeals for pronouncing that the 1941 Decision constituted res
judicata that barred subsequent attacks to the adjudicates’ title over the subject property. The Republic
submits that said decision would operate as res judicata only after the decree of registration was issued,
which did not happen in this case. We doubt that a final decision’s status as res judicata is the impelling
ground for its very own execution; and indeed res judicata is more often invoked as a defense or as a
factor in relation to a different case altogether. Still, this faulty terminology aside, the Republic’s
arguments on this point do not dissuade from our central holding that the 1941 Decision is still susceptible
to effectuation by the standard decree of registration notwithstanding the delay incurred by Nillas or her
predecessors-in-interest in seeking its effectuation and the reasons for such delay, following the
prostracted failure of the then Land Registration Commissioner to issue the decree of registration. In this
case, all that Nillas needed to prove was that she had duly acquired the rights of the original adjudicates –
her predecessors-in-interest-in order to entitle her to the decree of registration albeit still in the names of
the original prevailing parties who are her predecessors-in interest. Both the trial court and the

Court of Appeals were satisfied that such fact was proven, and the Republic does not offer any
compelling argument to dispute such proof.

WHEREFORE, the Petition is DENIED. No pronouncement as to costs.

SO ORDERED.
 [G.R. No. 146807. May 9, 2002]

PADCOM CONDOMINIUM CORPORATION, petitioner, vs. ORTIGAS CENTER ASSOCIATION,

INC., respondent.

DECISION
DAVIDE, JR., C.J.:

Challenged in this case is the 30 June 2000 decision [1] of the Court of Appeals in CA-G.R. CV No.
60099, reversing and setting aside the 1 September 1997 decision[2] of the Regional Trial Court of Pasig
City, Branch 264, in Civil Case No. 63801.[3]
Petitioner Padcom Condominium Corporation (hereafter PADCOM) owns and manages the Padilla
Office Condominium Building (PADCOM Building) located at Emerald Avenue, Ortigas Center, Pasig
City. The land on which the building stands was originally acquired from the Ortigas & Company, Limited
Partnership (OCLP), by Tierra Development Corporation (TDC) under a Deed of Sale dated 4 September
1974. Among the terms and conditions in the deed of sale was the requirement that the transferee and its
successor-in-interest must become members of an association for realty owners and long-term lessees in
the area later known as the Ortigas Center. Subsequently, the said lot, together with improvements
thereon, was conveyed by TDC in favor of PADCOM in a Deed of Transfer dated 25 February 1975.[4]
In 1982, respondent Ortigas Center Association, Inc. (hereafter the Association) was organized to
advance the interests and promote the general welfare of the real estate owners and long-term lessees of
lots in the Ortigas Center. It sought the collection of membership dues in the amount of two thousand
seven hundred twenty-four pesos and forty centavos (P2,724.40) per month from PADCOM. The
corporate books showed that PADCOM owed the Association P639,961.47, representing membership
dues, interests and penalty charges from April 1983 to June 1993. [5] The letters exchanged between the
parties through the years showed repeated demands for payment, requests for extensions of payment,
and even a settlement scheme proposed by PADCOM in September 1990.
In view of PADCOMs failure and refusal to pay its arrears in monthly dues, including interests and
penalties thereon, the Association filed a complaint for collection of sum of money before the trial court
below, which was docketed as Civil Case No. 63801. The Association averred that purchasers of lands
within the Ortigas Center complex from OCLP are obligated under their contracts of sale to become
members of the Association. This obligation was allegedly passed on to PADCOM when it bought the lot
from TDC, its predecessor-in-interest.[6]
In its answer, PADCOM contended that it is a non-stock, non-profit association, and for it to become
a special member of the Association, it should first apply for and be accepted for membership by the
latters Board of Directors. No automatic membership was apparently contemplated in the Associations
By-laws. PADCOM added that it could not be compelled to become a member without violating its right to
freedom of association. And since it was not a member of the Association, it was not liable for
membership dues, interests and penalties.[7]
During the trial, the Association presented its accountant as lone witness to prove that PADCOM
was, indeed, one of its members and, as such, did not pay its membership dues.
PADCOM, on the other hand, did not present its evidence; instead it filed a motion to dismiss by way
of demurrer to evidence. It alleged that the facts established by the Association showed no right to the
relief prayed for. It claimed that the provisions of the Associations By-laws and the Deed of Transfer did
not contemplate automatic membership. Rather, the owner or long-term lessee becomes a member of the
Association only after applying with and being accepted by its Board of Directors. Assuming further that
PADCOM was a member of the Association, the latter failed to show that the collection of monthly dues
was a valid corporate act duly authorized by a proper resolution of the Associations Board of Directors. [8]
 After due consideration of the issues raised in the motion to dismiss, the trial court rendered a
decision dismissing the complaint.[9]
The Association appealed the case to the Court of Appeals, which docketed the appeal as CA-G.R.
CV No. 60099. In its decision[10] of 30 June 2000, the Court of Appeals reversed and set aside the trial
courts dismissal of Civil Case No. 63801, and decreed as follows:

WHEREFORE, the appealed decision dated September 1, 1997 is REVERSED and SET ASIDE and, in
lieu thereof, a new one is entered ordering the appellee (PADCOM) to pay the appellant (the Association)
the following:

1) P639,961.47 as and for membership dues in arrears inclusive of earned interests and penalties; and

2) P25,000.00 as and for attorneys fees.

Costs against the appellees.

SO ORDERED.

The Court of Appeals justified its ruling by declaring that PADCOM automatically became a member
of the Association when the land was sold to TDC. The intent to pass the obligation to prospective
transferees was evident from the annotation of the same clause at the back of the Transfer Certificate of
Title covering the lot. Despite disavowal of membership, PADCOMs membership in the Association was
evident from these facts: (1) PADCOM was included in the Associations list of bona fide members as of
30 March 1995; (2) Narciso Padilla, PADCOMs President, was one of the Associations incorporators; and
(3) having received the demands for payment, PADCOM not only acknowledged them, but asked for and
was granted repeated extensions, and even proposed a scheme for the settlement of its obligation. The
Court of Appeals also ruled that PADCOM cannot evade payment of its obligation to the Association
without violating equitable principles underlying quasi-contracts. Being covered by the Associations
avowed purpose to promote the interests and welfare of its members, PADCOM cannot be allowed to
expediently deny and avoid the obligation arising from such membership.
Dissatisfied with the adverse judgment of the Court of Appeals, PADCOM filed the petition for review
in this case. It raises the sole issue of whether it can be compelled to join the association pursuant to the
provision on automatic membership appearing as a condition in the Deed of Sale of 04 September 1974
and the annotation thereof on Transfer Certificate of Title No. 457308.
PADCOM contends that it cannot be compelled to be a member of the Association solely by virtue of
the automatic membership clause that appears on the title of the property and the Deed of Transfer. In
1975, when it bought the land, the Association was still inexistent. Therefore, the provision on automatic
membership was anticipatory in nature, subject to the actual formation of the Association and the
subsequent formulation of its implementing rules.
PADCOM likewise maintains that the Associations By-laws requires an application for
membership. Since it never sought membership, the Court of Appeals erred in concluding that it was a
member of the Association by implication. Aside from the lack of evidence proving such membership, the
Association has no basis to collect monthly dues since there is no board resolution defining and
prescribing how much should be paid.
For its part, the Association claims that the Deed of Sale between OCLP and TDC clearly stipulates
automatic membership for the owners of lots in the Ortigas Center, including their successors-in-
interest. The filing of applications and acceptance thereof by the Board of Directors of the Association
are, therefore, mere formalities that can be dispensed with or waived. The provisions of the Associations
By-laws cannot in any manner alter or modify the automatic membership clause imposed on a property
owner by virtue of an annotation of encumbrance on his title.
 The Association likewise asserts that membership therein requires the payment of certain amounts
for its operations and activities, as may be authorized by its Board of Directors. The membership dues are
for the common expenses of the homeowners for necessary services.
After a careful examination of the records of this case, the Court sees no reason to disturb the
assailed decision. The petition should be denied.
Section 44 of Presidential Decree No. 1529[11] mandates that:

SEC. 44. Statutory liens affecting title. Every registered owner receiving a certificate of title in pursuance
of a decree of registration, and every subsequent purchaser of registered land taking a certificate of title
for value and in good faith, shall hold the same free from all encumbrances except those noted on said
certificate and any of the following encumbrances which may be subsisting, namely: xxx

Under the Torrens system of registration, claims and liens of whatever character, except those
mentioned by law, existing against the land binds the holder of the title and the whole world.[12]
It is undisputed that when the land in question was bought by PADCOMs predecessor-in-interest,
TDC, from OCLP, the sale bound TDC to comply with paragraph (G) of the covenants, conditions and
restrictions of the Deed of Sale, which reads as follows:[13]

G. AUTOMATIC MEMBERSHIP WITH THE ASSOCIATION:

The owner of this lot, its successor-in-interest hereby binds himself to become a member of the
ASSOCIATION which will be formed by and among purchasers, fully paid up Lot BUYERS, Building
Owners and the COMPANY in respect to COMPANY OWNED LOTS.

The OWNER of this lot shall abide by such rules and regulations that shall be laid down by the
ASSOCIATION in the interest of security, maintenance, beautification and general welfare of the OFFICE
BUILDING zone. The ASSOCIATION when organized shall also, among others, provide for and collect
assessments which shall constitute a lien on the property, junior only to liens of the Government for taxes.

Evidently, it was agreed by the parties that dues shall be collected from an automatic member and
such fees or assessments shall be a lien on the property.
This stipulation was likewise annotated at the back of Transfer Certificate of Title No. 457308 issued
to TDC.[14] And when the latter sold the lot to PADCOM on 25 February 1975, the Deed of Transfer
expressly stated:[15]

NOW, THEREFORE, for and in consideration of the foregoing premises, the DEVELOPER, by these
presents, cedes, transfers and conveys unto the CORPORATION the above-described parcel of land
evidenced by Transfer Certificate of Title No. 457308, as well as the Common and Limited Common
Areas of the Condominium project mentioned and described in the Master Deed with Declaration of
Restrictions (Annex A hereof), free from all liens and encumbrances, except those already annotated at
the back of said Transfer Certificate of Title No. 457308, xxx

This is so because any lien annotated on previous certificates of title should be incorporated in or carried
over to the new transfer certificates of title. Such lien is inseparable from the property as it is a right in
rem, a burden on the property whoever its owner may be. It subsists notwithstanding a change in
ownership; in short, the personality of the owner is disregarded. [16] As emphasized earlier, the provision
on automatic membership was annotated in the Certificate of Title and made a condition in the Deed of
Transfer in favor of PADCOM. Consequently, it is bound by and must comply with the covenant.
Moreover, Article 1311 of the Civil Code provides that contracts take effect between the parties, their
assigns and heirs. Since PADCOM is the successor-in-interest of TDC, it follows that the stipulation on
automatic membership with the Association is also binding on the former.
 We are not persuaded by PADCOMs contention that the By-laws of the Association requires
application for membership and acceptance thereof by the Board of Directors. Section 2 of the By-
laws[17]reads:

Section 2. Regular Members. Upon acceptance by the Board of Directors of Ortigas Center Association,
Inc., all real estate owners, or long-term lessees of lots within the boundaries of the Association as
defined in the Articles of Incorporation become regular members, provided, however that the long-term
lessees of a lot or lots in said area shall be considered as the regular members in lieu of the owners of
the same. Likewise, regular membership in the Association automatically ceases upon the cessation of a
member to be an owner or long-term lessee of real estate in the area.

A lessee shall be considered a long-term lessee if his lease is in writing and for a period of two (2) years
or more. Membership of a long-term lessee in the Association shall be co-terminus with his legal
possession (or his lease) of the lot/s in the area. Upon the lessees cessation of membership in the
Association, the owner shall automatically succeed the lessee as member thereat.

As lot owner, PADCOM is a regular member of the Association. No application for membership is
necessary. If at all, acceptance by the Board of Directors is a ministerial function considering that
PADCOM is deemed to be a regular member upon the acquisition of the lot pursuant to the automatic
membership clause annotated in the Certificate of Title of the property and the Deed of Transfer.
Neither are we convinced by PADCOMs contention that the automatic membership clause is a
violation of its freedom of association. PADCOM was never forced to join the association. It could have
avoided such membership by not buying the land from TDC. Nobody forced it to buy the land when it
bought the building with the annotation of the condition or lien on the Certificate of Title thereof and
accepted the Deed. PADCOM voluntarily agreed to be bound by and respect the condition, and thus to
join the Association.
In addition, under the principle of estoppel, PADCOM is barred from disclaiming membership in the
Association. In estoppel, a person, who by his act or conduct has induced another to act in a particular
manner, is barred from adopting an inconsistent position, attitude or course of conduct that thereby
causes loss or injury to another.[18]
We agree with the Court of Appeals conclusion from the facts or circumstances it enumerated in its
decision and enumerated above that PADCOM is, indeed, a regular member of the Association. These
facts and circumstances are sufficient grounds to apply the doctrine of estoppel against PADCOM.
Having ruled that PADCOM is a member of the Association, it is obligated to pay its dues incidental
thereto. Article 1159 of the Civil Code mandates:

Art. 1159. Obligations arising from contracts have the force of law between the contracting parties and
should be complied with in good faith.

Assuming in gratis argumenti that PADCOM is not a member of the Association, it cannot evade
payment without violating the equitable principles underlying quasi-contracts. Article 2142 of the Civil
Code provides:

Art. 2142. Certain lawful, voluntary and unilateral acts give rise to the juridical relation of quasi-contract to
the end that no one shall be unjustly enriched or benefited at the expense of another.

Generally, it may be said that a quasi-contract is based on the presumed will or intent of the obligor
dictated by equity and by the principles of absolute justice. Examples of these principles are: (1) it is
presumed that a person agrees to that which will benefit him; (2) nobody wants to enrich himself unjustly
at the expense of another; or (3) one must do unto others what he would want others to do unto him
under the same circumstances.[19]
 As resident and lot owner in the Ortigas area, PADCOM was definitely benefited by the Associations
acts and activities to promote the interests and welfare of those who acquire property therein or benefit
from the acts or activities of the Association.
Finally, PADCOMs argument that the collection of monthly dues has no basis since there was no
board resolution defining how much fees are to be imposed deserves scant consideration. Suffice it is to
say that PADCOM never protested upon receipt of the earlier demands for payment of membership
dues. In fact, by proposing a scheme to pay its obligation, PADCOM cannot belatedly question the
Associations authority to assess and collect the fees in accordance with the total land area owned or
occupied by the members, which finds support in a resolution dated 6 November 1982 of the Associations
incorporating directors[20] and Section 2 of its By-laws.[21]
WHEREFORE, the petition is hereby DENIED for lack of merit.
Costs against petitioner.
SO ORDERED.
Puno, Kapunan, Ynares-Santiago, and Austria-Martinez, JJ., concur.
 [G.R. No. 146823. August 9, 2005]

SPOUSES RAMON and ESTRELLA RAGUDO, petitioners, vs. FABELLA ESTATE TENANTS
ASSOCIATION, INC., respondent.

DECISION
GARCIA, J.:

Under consideration is this petition for review on certiorari under Rule 45 of the Rules of Court to
nullify and set aside the following issuances of the Court of Appeals in CA-G.R. CV No. 51230, to wit:

1. Decision dated 19 July 2000,[1] affirming with modification an earlier decision of the Regional
Trial Court at Pasig City, Branch 155, in an action for recovery of possession thereat commenced
by the herein respondent against the petitioners; and

2. Resolution dated 29 January 2001,[2] denying petitioners motion for reconsideration.

The facts may be briefly stated, as follows:

Earlier, the tenants of a parcel of land at Mandaluyong City with an area of 6,825 square meters
(hereinafter referred to as the Fabella Estate), which formed part of the estate of the late Don Dionisio M.
Fabella, organized themselves and formed the Fabella Estate Tenants Association, Inc. (FETA), for the
purpose of acquiring said property and distributing it to its members.
Unable to raise the amount sufficient to buy the property from the heirs of Don Dionisio M. Fabella,
FETA applied for a loan from the National Home Mortgage Finance Corporation (NHMFC) under the
latters Community Mortgage Program.
However, as a pre-condition for the loan, and in order that specific portions of the property could be
allotted to each tenant who will have to pay the corresponding price therefor, NHMFC required all tenants
to become members of FETA.
Accordingly, all the tenants occupying portions of the Fabella Estate were asked to join FETA. While
the rest did, the spouses Ramon Ragudo and Estrella Ragudo who were occupying the lot subject matter
of this controversy, consisting of about 105 square meters of the Fabella Estate, refused to join the
Association. Consequently, the portion occupied by them was awarded to Mrs. Miriam De Guzman, a
qualified FETA member.
Later, and with the help of the city government of Mandaluyong, FETA became the registered owner
of the entire Fabella Estate, as evidenced by Transfer Certificate of Title No. 2902 issued in its name by
the Register of Deeds of Mandaluyong in 1989.
To effect the ejectment of the spouses Ragudo from the portion in question which they continued to
occupy despite the earlier award thereof to Mrs. Miriam de Guzman, FETA filed against them a complaint
for unlawful detainer before the Metropolitan Trial Court (MeTC) of Mandaluyong City.
In a decision dated 6 August 1990, the MeTC dismissed the unlawful detainer case on the ground
that it was an improper remedy because the Ragudos had been occupying the subject portion for more
than one (1) year prior to the filing of the complaint, hence the proper action should have been one for
recovery of possession before the proper regional trial court. FETA appealed the dismissal to the
Regional Trial Court at Pasig City, which affirmed the same.
FETA then filed with the RTC-Pasig a complaint for recovery of possession against the Ragudos. In
their Answer, the spouses interposed the defense that they have already acquired ownership of the
disputed portion since they have been in occupation thereof in the concept of an owner for more than
forty (40) years. They further argued that FETAs title over the entire Fabella Estate is fake because as
appearing on TCT No. 2902, it was originally registered as OCT No. 13, a title which has been previously
adjudged null and void by RTC-Pasig in a much earlier case involving different parties. Finally, they insist
that FETAs right to recover has been barred by laches in view of their more than 40-year occupancy of
the portion in question.
Eventually, in a decision dated 29 July 1994,[3] the trial court rendered judgment in FETAs favor,
thus:

WHEREFORE, premises considered, judgment is hereby rendered:

1) ordering [spouses Ragudo] to vacate the premises in question and to turn over possession thereof to
[FETA];

2) to pay [FETA] rent in the amount of P500.00 for the month of November 1981 and every month
thereafter until they vacate the premises;

3) to pay [FETA] attorneys fees in the amount of P20,000.00;

4) to pay [FETA] the amount of P50,000.00 as exemplary damages; and

5) to pay the costs of suit.

SO ORDERED.

Therefrom, the spouses Ragudo went on appeal to the Court of Appeals, whereat their appellate
recourse was docketed as CA-G.R. CV No. 51230.
Meanwhile, pending resolution by the appellate court of the Ragudos appeal, FETA filed with the trial
court a motion for the issuance of a writ of execution pending appeal, to which the Ragudos interposed an
Opposition, followed by FETAs Reply to Opposition. Then, on 11 October 1994, the Ragudos filed with
the trial court a Rejoinder to Reply With Counter-Motion to Admit Attached Documentary Evidence
Relevant to the Pending Incident.[4] Attached thereto and sought to be admitted therein were the following
documents and photographs, to wit:

1. Letter dated 21 November 1989[5] of the spouses Ragudos son, Engr. Aurelio Ragudo, addressed
to FETA, stating therein that the Ragudos were willing to become FETA members;

2. Joint Affidavit, dated 07 October 1994, of three (3) residents of the Fabella Estate; [6]

3. Photos of three (3) alleged houses of Miriam de Guzman located at the Fabella Estate; [7]

4. Photos of two (2) alleged houses of the sons of Miriam de Guzman located at the Fabella
Estate;[8]

5. Photo of a lot allegedly awarded by FETA to its president, Amparo Nobleza, located at the Fabella
Estate;[9] and

6. Photo of a three (3)-storey house of Noblezas relative named Architect Fernandez located at the
Fabella Estate.[10]
 In an order dated 25 November 1994, the trial court admitted in evidence the attachments to the
Ragudos' aforementioned Rejoinder With Counter-Motion, etc., and ultimately denied FETAs motion for
execution pending appeal.
Later, in CA-G.R. CV No. 51230, the Ragudos filed with the appellate court a Motion To Admit
Certain Documentary Evidence by Way of Partial New Trial, In the Interest of Justice,[11]thereunder
seeking the admission in evidence of the very documents earlier admitted by the trial court in connection
with the then pending incident of execution pending appeal, and praying that said documents be made
part of the records and considered in the resolution of their appeal in CA-G.R. CV No. 51230.
This time, however, the Ragudos were not as lucky. For, in a Resolution dated 19 May 1997,[12] the
appellate court denied their aforesaid motion and ordered expunged from the records of the appealed
case the documents they sought admission of, on the ground that they could not be considered as newly
discovered evidence under Rule 37 of the Rules of Court. Dispositively, the Resolution reads:

WHEREFORE, the instant motion to admit certain documentary evidence by way of partial new trial is
DENIED for lack of merit.

ACCORDINGLY, the Joint Affidavit dated October 7, 1994 of Honesto Garcia III and Miguela L. Balbino
and the latter of Aurelio Raguo to Atty. Cesar G. Untalan dated November 21, 1989 are ordered
EXPUNGED from the records of this case.

SO ORDERED.

The Ragudos moved for a reconsideration, invoking liberality in the exercise of judicial discretion and
the interest of equity and substantial justice. Unmoved, the appellate court denied their motion in its
subsequent Resolution of 24 September 1997.[13]
Eventually, in the herein assailed decision dated 19 July 2000, the Court of Appeals dismissed the
Ragudos appeal in CA-G.R. CV No. 51230 and affirmed with modification the RTC decision in the main
case, thus:

WHEREFORE, premises considered, the appealed decision is hereby AFFIRMED, except for the second
clause of the dispositive portion which should be MODIFIED, as follows:

2) to pay [FETA] rent in the amount of P500.00 for the month of November, 1989 and every month
thereafter until they vacate the premises.

SO ORDERED.

With their motion for reconsideration having been denied by the appellate court in its equally
challenged Resolution of 29 January 2001, the Ragudos are now with us via the instant recourse,
commending for our resolution the following issues:

1. WHETHER OR NOT THE COURT OF APPEALS ERRED IN NOT ADMITTING IN EVIDENCE

THE DOCUMENTS SOUGHT TO BE INTRODUCED BY RAGUDO AT THE APPELLATE
LEVEL ON THE GROUND OF LIBERALITY OF PROCEDURAL RULES, EQUITY AND
SUBSTANTIAL JUSTICE, THE MISTAKE AND EXCUSABLE NEGLIGENCE ON THE PART OF
THEIR FORMER COUNSEL, AND THE SOCIAL JUSTICE AND PARENS PATRIAE CLAUSE
OF THE 1987 CONSTITUTION.

2. WHETHER OR NOT ACQUISITIVE PRESCRIPTION AND EQUITABLE LACHES HAD SET IN

TO WARRANT THE CONTINUED POSSESSION OF THE SUBJECT LOT BY RAGUDO AND
WHETHER THE SAME PRINCIPLES HAD CREATED A VESTED RIGHT IN FAVOR OF
RAGUDO TO CONTINUE TO POSSESS AND OWN THE SUBJECT LOT.[14]
 Informed of Mr. Ramon Ragudos death on 26 March 2001, the Court, in a resolution dated 14
January 2002,[15] allowed his substitution by his other heirs.
The recourse must fall.
Relative to the first issue, it is petitioners submission that the appellate court committed an error
when it refused admission as evidence in the main case the documents earlier admitted by the trial court
in connection with FETAs motion for execution pending appeal. Appealing to this Courts sense of judicial
discretion in the interest of equity and substantial justice, petitioners explain that the documents in
question were not presented and offered in evidence during the trial of the main case before the RTC due
to the honest mistake and excusable negligence of their former counsel, Atty. Celso A. Tabobo, Jr.
We are not persuaded.
In this jurisdiction, well-entrenched is the rule that the mistake and negligence of counsel to
introduce, during the trial of a case, certain pieces of evidence bind his client. [16] For sure, in Aguila vs.
Court of First Instance of Batangas,[17] we even ruled that the omitted evidence by reason of counsels
mistake or negligence, cannot be invoked as a ground for new trial:

On the effects of counsels acts upon his client, this Court has categorically declared:

It has been repeatedly enunciated that a client is bound by the action of his counsel in the conduct of a
case and cannot be heard to complain that the result might have been different had he proceeded
differently. A client is bound by the mistakes of his lawyer. If such grounds were to be admitted and
reasons for reopening cases, there would never be an end to a suit so long as new counsel could be
employed who could allege and show that prior counsel had not been sufficiently diligent or experienced
or learned. x x x Mistakes of attorneys as to the competency of a witness, the sufficiency, relevancy or
irrelevancy of certain evidence, the proper defense, or the burden of proof, x x x failure to introduce
certain evidence, to summon witnesses and to argue the case are not proper grounds for a new trial,
unless the incompetency of counsel is so great that his client is prejudiced and prevented from properly
presenting his case. (Vol. 2, Moran, Comments on the Rules of Court, pp. 218, 219-220, citing Rivero v.
Santos, et al., 98 Phil. 500, 503-504; Isaac v. Mendoza, 89 Phil. 279; Montes v. Court, 48 Phil. 64; People
v. Manzanilla, 43 Phil. 167; U.S. v. Umali, 15 Phil. 33; see also People v. Ner, 28 SCRA 1151, 1164). In
the 1988 case of Palanca v. American Food, etc. (24 SCRA 819, 828), this principle was reiterated.
(Tesoro v. Court of Appeals, 54 SCRA 296, 304). [Citations in the original; Emphasis supplied].

This is, as it should be, because a counsel has the implied authority to do all acts which are
necessary or, at least, incidental to the prosecution and management of the suit in behalf of his
client.[18] And, any act performed by counsel within the scope of his general and implied authority is, in the
eyes of the law, regarded as the act of the client himself and consequently, the mistake or negligence of
the clients counsel may result in the rendition of an unfavorable judgment against him. [19]
A contrary rule would be inimical to the greater interest of dispensing justice. For, all that a losing
party will do is to invoke the mistake or negligence of his counsel as a ground for reversing or setting
aside a judgment adverse to him, thereby putting no end to litigation. Again, to quote from our decision
in Aguila:

Now petitioner wants us to nullify all of the antecedent proceedings and recognize his earlier claims to the
disputed property on the justification that his counsel was grossly inept. Such a reason is hardly plausible
as the petitioners new counsel should know. Otherwise, all a defeated party would have to do to
salvage his case is claim neglect or mistake on the part of his counsel as a ground for reversing
the adverse judgment. There would be no end to litigation if this were allowed as every
shortcoming of counsel could be the subject of challenge by his client through another counsel
who, if he is also found wanting, would likewise be disowned by the same client through another
counsel, and so on ad infinitum. This would render court proceedings indefinite, tentative and subject
to reopening at any time by the mere subterfuge of replacing counsel. (Emphasis supplied).
 Admittedly, the rule thus stated admits of exceptions. Thus, in cases where the counsels mistake is
so great and serious that the client is prejudiced and denied his day in court [20] or when he is guilty of
gross negligence resulting in the clients deprivation of his property without due process of law,[21] the
client is not bound by his counsels mistakes and the case may even be reopened in order to give the
client another chance to present his case.
Unfortunately, however, petitioners case does not fall under any of the exceptions but rather
squarely within the ambit of the rule.
As it is, petitioners were given full opportunity during the trial of the main case to adduce any and all
relevant evidence to advance their cause. In no sense, therefore, may it be argued that they were denied
due process of law. As we said in Antonio vs. Court of Appeals,[22] a client cannot be said to have been
deprived of his day in court and there is no denial of due process as long as he has been given an
opportunity to be heard, which, we emphasize, was done in the instant case.
Petitioners further argue that the documents which their former counsel failed to adduce in evidence
during trial of the main case must be allowed to stay in the records thereof and duly considered in the
resolution of their appeal because they were duly admitted in the trial court during the hearing on the
incidental motion for execution pending appeal.
Again, we are not persuaded.
With the reality that those documents were never presented and formally offered during the trial of
the main case, their belated admission for purposes of having them duly considered in the resolution of
CA-G.R. CV No. 51230 would certainly collide with Section 34, Rule 132, of the Rules of Court, which
reads:

SECTION 34. Offer of Evidence. The court shall consider no evidence which has not been formally
offered. The purpose for which the evidence is offered must be specified. (Emphasis supplied).

To stress, it was only during the hearing of the motion for execution pending appeal that said
documents were presented and offered in evidence. Sure, the trial court admitted them, but the admission
was only for the purpose for which they were offered, that is, by way of opposition to FETAs motion for
execution pending appeal. It is basic in the law of evidence that the court shall consider evidence solely
for the purpose for which it was offered.[23]
While the said documents may have the right to stay in the records of the case for purposes of the
incidental issue of execution pending appeal, they do not have that same right insofar as far as the main
case is concerned, and ought not be considered in the resolution thereof.
Petitioners next contend that acquisitive prescription and equitable laches had set in, thereby vesting
them with a right to a continued possession of the subject lot.
The contention holds no water.
It is not disputed that at the core of this controversy is a parcel of land registered under the Torrens
system. In a long line of cases,[24] we have consistently ruled that lands covered by a title cannot be
acquired by prescription or adverse possession. So it is that in Natalia Realty Corporation vs. Vallez, et
al.,[25] we held that a claim of acquisitive prescription is baseless when the land involved is a registered
land because of Article 1126 of the Civil Code[26] in relation to Act 496 (now, Section 47 of Presidential
Decree No. 1529[27]):

Appellants claim of acquisitive prescription is likewise baseless. Under Article 1126 of the Civil Code,
prescription of ownership of lands registered under the Land Registration Act shall be governed
by special laws. Correlatively, Act No. 496 provides that no title to registered land in derogation of
that of the registered owner shall be acquired by adverse possession. Consequently, proof of
possession by the defendants is both immaterial and inconsequential. (Emphasis supplied).
 Petitioners would take exception from the above settled rule by arguing that FETA as well as its
predecessor in interest, Don Dionisio M. Fabella, are guilty of laches and should, therefore, be already
precluded from asserting their right as against them, invoking, in this regard, the rulings of this Court [28] to
the effect that while a registered land may not be acquired by prescription, yet, by virtue of the registered
owners inaction and neglect, his right to recover the possession thereof may have been converted into a
stale demand.
While, at a blush, there is apparent merit in petitioners posture, a closer look at our jurisprudence
negates their submission.
To start with, the lower court found that petitioners possession of the subject lot was merely at the
tolerance of its former lawful owner. In this connection, Bishop vs. Court of Appeals[29]teaches that if the
claimants possession of the land is merely tolerated by its lawful owner, the latters right to recover
possession is never barred by laches:

As registered owners of the lots in question, the private respondents have a right to eject any person
illegally occupying their property. This right is imprescriptible. Even if it be supposed that they were
aware of the petitioners occupation of the property, and regardless of the length of that
possession, the lawful owners have a right to demand the return of their property at any time as
long as the possession was unauthorized or merely tolerated, if at all. This right is never barred by
laches. (Emphasis supplied).

To the same effect is our pronouncement in Urquiaga vs. Court of Appeals,[30] to wit:

We find no reversible error committed by respondent Court of Appeals. We sustain private respondents
ownership of Lot No. 6532-B. As between the verbal claim of ownership by petitioners through
possession for a long period of time, which was found by the court a quo to be inherently weak,
and the validly documented claim of ownership of respondents, the latter must naturally prevail.
(Emphasis supplied).

WHEREFORE, the instant petition is DENIED and the assailed decision and resolution of the Court
of Appeals AFFIRMED.
Costs against petitioners.
SO ORDERED.
Panganiban, (Chairman), Sandoval-Gutierrez, and Carpio-Morales, JJ., concur.
Corona, J., on official leave.
G.R. No. 142938 August 28, 2007

MIGUEL INGUSAN, Petitioner,

vs.
HEIRS OF AURELIANO I. REYES, represented by CORAZON REYES-REGUYAL and ARTEMIO S.
REYES,*Respondents.

DECISION

CORONA, J.:

This is a petition for review on certiorari1 of a decision2 and resolution3 of the Court of Appeals (CA) dated
January 21, 2000 and April 10, 2000, respectively, in CA-G.R. CV No. 56105 which modified the
decision4 dated April 17, 19975 of the Regional Trial Court (RTC) of Cabanatuan City, Nueva Ecija,
Branch 25 in Civil Case No. 2145-A1.

This case involves a 1,254 sq. m. residential land located in Poblacion, San Leonardo, Nueva
Ecija6 originally owned by Leocadio Ingusan who was unmarried and childless when he died in 1932. His
heirs were his two brothers and a sister, namely, Antonio, Macaria and Juan.7 Antonio died and was
succeeded by his son Ignacio who also later died and was succeeded by his son, petitioner Miguel
Ingusan.8 Macaria also died and was succeeded by her child, Aureliano I. Reyes, Sr. (father of
respondents Artemio Reyes, Corazon Reyes-Reguyal, Elsa Reyes, Estrella Reyes-Razon, Aureliano
Reyes, Jr., Ester Reyes, Reynaldo Reyes and Leonardo Reyes). 9 Thus, petitioner is the grandnephew of
Leocadio and Aureliano, Sr. was the latter's nephew.10

After the death of Leocadio, Aureliano, Sr. was designated by the heirs as administrator of the land. 11 In
1972, while in possession of the land and in breach of trust, he applied for and was granted a free patent
over it.12 As a result, he was issued OCT No. P-6176 in 1973.13

In 1976, petitioner filed an accion reivindicatoria against Aureliano, Sr. and his wife Jacoba Solomon
seeking the recovery of Lot 120-A with an area of 502 sq. m. which was part of the land at issue
here.14 But the case was dismissed because petitioner did not pursue it.

Also in 1976, Aureliano, Sr. executed a special power of attorney (SPA) in favor of his son Artemio
authorizing him to mortgage the land in question to any bank. Using that SPA, Artemio mortgaged the
land to secure a loan of ₱10,000 from the Philippine National Bank (PNB).15

In 1983, Aureliano, Sr. died intestate. He was survived by his children, the respondents. 16

In 1986, petitioner paid the PNB loan. The mortgage over the land was released and the owner’s
duplicate copy of OCT No. P-6176 was given to him.17

On June 19, 1988, respondents and petitioner entered into a Kasulatan ng Paghahati-hati Na May
Bilihan wherein they adjudicated unto themselves the land in question and then sold it to their co-heirs, as
follows: (a) to petitioner, 1,171 sq. m. and (b) to respondent Estrella, 83 sq. m. This deed was notarized
but not registered.18

On January 8, 1990, respondent Corazon, despite signing the Kasulatan, executed an affidavit of loss,
stating that she could not find the owner’s duplicate copy of OCT No. P-6176. This was registered and
annotated on the original copy of said title.19

Subsequently, the following documents appeared purportedly with the following dates:
 a) April 23, 199420 - notarized deed of donation of titled property supposedly executed by the
spouses Aureliano, Sr. and Jacoba,21 whereby said spouses donated 297 sq. m. of the subject
land to respondent Artemio and the remaining 957 sq. m. to petitioner;

b) September 5, 1994 - cancellation of affidavit of loss supposedly executed by respondent

Corazon stating that the annotation of the affidavit of loss on the title should be canceled and the
petition for a new title was no longer necessary because she had already found the missing
owner’s duplicate copy of OCT No. P-6176;

c) September 27, 1994 – agreement of subdivision with sale purportedly executed by respondent
Artemio and petitioner, with the consent of their wives. Pursuant to this document, the land was
subdivided into Lot 120-A with an area of 297 sq. m. corresponding to the share of Artemio and
Lot 120-B with an area of 957 sq. m. which was the share of petitioner. The document also
indicated that Artemio sold Lot 120-A to one Florentina Fernandez.22

When respondent Corazon learned about the cancellation of the annotation of her affidavit of loss, she
executed an affidavit of adverse claim on January 17, 1995 stating that the cancellation of affidavit of loss
and the agreement of subdivision with sale were both spurious and the signatures appearing thereon
were forgeries. This affidavit of adverse claim was not registered.23

On April 17, 1995, petitioner brought the owner’s duplicate copy of OCT No. P-6176, the cancellation of
affidavit of loss, deed of donation of titled property and agreement of subdivision with sale to the Registry
of Deeds for registration. Consequently, the following took place on that same day:

1. Corazon’s annotated affidavit of loss was canceled;

2. by virtue of Aureliano, Sr. and Jacoba’s deed of donation of titled property to Artemio and
petitioner, OCT No. P-6176 was canceled and in lieu thereof, TCT No. NT-241155 in the name of
petitioner and TCT No. NT-241156 in the name of respondent Artemio were issued and

3. by virtue of the agreement of subdivision with sale, TCT Nos. NT-241155 and NT-241156 were
canceled and TCT Nos. NT-239747 and NT-239748 were issued in the names of petitioner and
Florentina Fernandez, respectively.24

On June 27, 1995, petitioner took possession of his portion and built his house thereon. 25

On July 4, 1995, respondents filed an action for cancellation, annulment and surrender of titles with
damages against petitioner and Florentina Fernandez in the RTC of Cabanatuan City, Nueva Ecija,
Branch 25. In their complaint, they alleged the following, among others: they inherited the land in question
from their father, Aureliano, Sr.; petitioner caused the preparation of the spurious deed of donation of
titled property, cancellation of affidavit of loss, agreement of subdivision with sale and forged the
signatures appearing thereon except his (petitioner's) own and, in conspiracy with Fernandez,
fraudulently registered said documents which resulted in the cancellation of OCT No. P-6176 and the
eventual issuance to them of TCT Nos. NT-239747 and NT-239748. They prayed that these titles be
declared null and void and that petitioner and Fernandez be ordered to surrender the land and pay
damages to them.26

In his defense, petitioner alleged that respondents' father, Aureliano, Sr., fraudulently secured a free
patent in his name over the land using a fictitious affidavit dated April 10, 1970 purportedly executed by
Leocadio selling to him the land in question and, as a result, OCT No. P-6176 was issued to him; that it
was respondent Artemio who proposed to petitioner the scheme of partition that would assure the latter of
his share with the condition, however, that he (Artemio) would get a portion of 297 sq. m. (which included
the share of respondent Estrella of 83 sq. m.) because he had already earlier sold it to Fernandez and in
fact had already been partially paid ₱60,000 for it; that to implement this scheme, respondent Artemio
caused the execution of several documents namely: (1) deed of donation of titled property; (2) agreement
of subdivision with sale and (3) cancellation of affidavit of loss and that, thereafter, he instructed petitioner
to present the said documents to the Registry of Deeds of Nueva Ecija for registration.27

On October 26, 1995, respondents moved that Fernandez be dropped as defendant because she was no
longer contesting their claim and in fact had surrendered to them her owner’s duplicate copy of TCT
No.NT-239748. Thus, she was excluded from the suit. 28

In a decision dated April 17, 1997, the RTC dismissed the case and declared OCT No. P-6176 as well as
the subsequent certificates of title (TCT Nos. NT-239747 and NT-239748), the deed of donation of titled
property, agreement of subdivision with sale and cancellation of affidavit of loss as null and void. It held
that the aforementioned documents were spurious since the signatures were falsified by respondent
Artemio.

Furthermore, having found that OCT No. P-6176 was issued on the basis of a document falsified by
Aureliano, Sr., the RTC ordered the reversion of the land to its status before the OCT was issued.

Finally, it held that petitioner, being an innocent victim, was entitled to damages. 29

On appeal, the CA modified the RTC decision. It ruled that only TCT Nos. NT-241155, NT-241156, NT-
239747 and NT-239748 were null and void. Their source, OCT No. P-6176, remained valid because it
had already become indefeasible and could no longer be attacked collaterally. It also found that petitioner
schemed with Artemio in defrauding their co-heirs and was therefore in pari delicto. Consequently, neither
party was entitled to claim damages from the other.30 Petitioner's motion for reconsideration was denied.

Hence this petition raising the following issues:

1) whether OCT No. P-6176 was valid or invalid, and

2) whether or not petitioner is entitled to damages.

There is no doubt that the deed of donation of titled property, cancellation of affidavit of loss and
agreement of subdivision with sale, being falsified documents, were null and void. It follows that TCT Nos.
NT-241155, NT-241156, NT-239747 and NT-239748 which were issued by virtue of these spurious
documents were likewise null and void. Neither side disputes these findings and conclusions.

The question is whether the source of these titles, OCT No. P-6176, was valid. Petitioner argues that it
should be invalidated because it was issued based on a fictitious affidavit purportedly executed in 1970
by Leocadio (who died in 1932) wherein the latter supposedly sold the land to Aureliano, Sr. According to
petitioner, Aureliano, Sr. used this to fraudulently and in breach of trust secure a free patent over the land
in his name.

We agree with the CA that OCT No. P-6176 remains valid. The issue of the validity of title (e.g. whether or
not it was issued fraudulently or in breach of trust) can only be assailed in an action expressly instituted
for that purpose.31 A certificate of title cannot be attacked collaterally. Section 48 of PD 1529 32 states:

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

The rationale behind the Torrens System is that the public should be able to rely on a registered title. The
Torrens System was adopted in this country because it was believed to be the most effective measure to
guarantee the integrity of land titles and to protect their indefeasibility once the claim of ownership is
established and recognized. In Fil-estate Management, Inc. v. Trono,33 we explained:
It has been invariably stated that the real purpose of the Torrens System is to quiet title to land and to
stop forever any question as to its legality. Once a title is registered, the owner may rest secure, without
the necessity of waiting in the portals of the court, or sitting on the "mirador su casa" to avoid the
possibility of losing his land.34

Petitioner merely invoked the invalidity of OCT No. P-6176 as an affirmative defense in his answer and
prayed for the declaration of its nullity. Such a defense partook of the nature of a collateral attack against
a certificate of title.35

Moreover, OCT No. P-6176 which was registered under the Torrens System on the basis of a free patent
became indefeasible and incontrovertible after the lapse of one year as provided in Section 32 of PD
1529:

Sec. 32. Review of decree of registration; Innocent purchaser for value. ― The decree of registration
shall not be reopened or revised by reason of absence, minority, or other disability of any person
adversely affected thereby, nor by any proceeding in any court for reversing judgment, subject, however,
to the right of any person, including the government and the branches thereof, deprived of land or of any
estate or interest therein by such adjudication or confirmation of title obtained by actual fraud, to file in the
proper Court of First Instance a petition for reopening and review of the decree of registration not later
than one year from and after the date of the entry of such decree of registration, but in no case shall such
petition be entertained by the court where an innocent purchaser for value has acquired the land or an
interest therein whose rights may be prejudiced. Whenever the phrase "innocent purchaser for value" or
an equivalent phrase occurs in this Decree, it shall be deemed to include an innocent lessee, mortgagee,
or other encumbrancer for value.

Upon the expiration of said period of one year, the decree of registration and the certificate of title
issued shall become incontrovertible. Any person aggrieved by such decree of registration in any case
may pursue his remedy by action for damages against the applicant or any other person responsible for
the fraud. (Emphasis supplied)

Indeed, both the RTC and CA found that Aureliano, Sr. fraudulently and in breach of trust secured OCT
No. P-6176 in his name. Unfortunately, petitioner chose not to pursue a direct proceeding to have this
certificate of title annulled. In 1976, he filed an accion reivindicatoria36 against the spouses Aureliano, Sr.
and Jacoba questioning the validity of OCT No. P-6176 and seeking to recover a portion of the land
(specifically, Lot 120-A with an area of 502 sq. m.) but he voluntarily withdrew the case. 37 Now, the title
has undeniably become incontrovertible since it was issued in 1973 or more than 30 years ago. 38

We now proceed to the issue of whether petitioner is entitled to damages. The RTC held that he is
entitled to moral damages (₱50,000), exemplary damages (₱30,000) and attorney's fees (₱20,000)
because he was not aware that the documents were falsified and he was merely instructed by respondent
Artemio to have them registered. The CA shared the finding of the RTC that it was respondent Artemio
who masterminded the preparation and use of the spurious documents. 39 Nevertheless, it did not find
petitioner an innocent victim who was merely dragged into litigation:

...[Petitioner] was far from innocent. [Respondent Artemio] and [petitioner] signed the bogus "Deed of
Donation of Titled Property" and the fraudulently baseless "Agreement of Subdivision with Sale." It was
[petitioner] who personally submitted all the bogus documents with the Registry of Deeds of Nueva Ecija.
He stood to benefit from the registration of said fake documents. It was he who received the titles issued
in consequence of said fraudulent registration. In the natural course of things and in the ordinary
experience of man, the conclusion is inevitable that [he] knew [about] the spurious nature of said
documents but he made use of them because of the benefit which he would derive therefrom. In short,
[petitioner] confabulated with [respondent Artemio] in defrauding all their co-heirs of their shares in said
property.40
We agree. Petitioner was not in good faith when he registered the fake documents.

Good faith is ordinarily used to describe that state of mind denoting "honesty of intention, and freedom
from knowledge of circumstances which ought to put the holder upon inquiry; an honest intention to
abstain from taking any unconscientious advantage of another, even through technicalities of law,
together with absence of all information, notice, or benefit or belief of facts which render the transaction
unconscientious."41

Petitioner claims that he was not aware of the contents of the falsified documents and their legal
consequences because of his low level of intelligence and educational attainment. But from his own
narration, it is clear that he was aware of the fraudulent scheme conceived by respondent Artemio:

[Respondent Artemio] approached [petitioner] and propose[d] a [scheme] of partition that [would] assure
[petitioner] of getting his share including that which he and his predecessor-in-interest have purchased
from the other heirs of the late LEOCADIO INGUSAN, but with the condition that in implementing the
document known as PAGHAHATI-HATI NA MAY BILIHAN, the corresponding shares of ESTRELLA
RAZON will go to him [respondent Artemio who] has agreed to have it sold in favor of one FLORENTINA
FERNANDEZ for ₱120,000.00, partial payment of which has already been received by [respondent
Artemio], which negotiation of SALE and the payment made by FLORENTINA FERNANDEZ was
acknowledged to be true. Without much ado, a survey of Lot No. 120 was conducted by one Restituto
Hechenova upon instruction of [respondent Artemio], partitioning the land into two (2), one share goes to
[petitioner] with an area of 957 square meters and the other with an area of 297 square meters in the
name of [respondent Artemio], the latter share was to be sold in favor of Florentina Fernandez. To have
this IMPLEMENTED, incidental documentation must be made thus; A DEED OF DONATION OF REAL
PROPERTY allegedly executed by Sps. Aureliano Reyes and JACOBA SOLOMON; SUBDIVISION
AGREEMENT WITH SALE by and between [petitioner] and [respondent Artemio] as alleged DONEES
and SALE in the same document in favor of Florentina Fernandez, making in the process [petitioner]
presentor of all these questioned documents, adding among others an AFFIDAVIT OF LOSS of Original
Certificate of Title No. P-6176 allegedly falsified by [petitioner] of the signature of [respondent] CORAZON
REYES REGUYAL.42

Petitioner does not deny that he signed the fictitious deed of donation of titled property and the agreement
of subdivision with sale. Even if he reached only grade 3, he could not have feigned ignorance of the net
effect of these documents, which was to exclude the other heirs of the spouses and the original owner
Leocadio from inheriting the property and, in the process, acquiring a big chunk of the property at their
expense. The cancellation of respondent Corazon's affidavit of loss of the owner's duplicate copy of OCT
No. P-6176 also removed all obstacles to the registration of the title covering his portion of the lot. In
short, by registering the spurious documents, he had everything to gain.

Although it was respondent Artemio, an educated individual, who engineered the whole scheme and
prepared the fraudulent documents, still petitioner cannot deny that he was a willing co-conspirator in a
plan that he knew was going to benefit him handsomely.

As a result, there is no basis for the award of damages to petitioner. Coming to the court with unclean
hands, he cannot obtain relief. Neither does he fall under any of the provisions for the entitlement to
damages.

Respondents presented an additional issue involving the recovery of possession of the subject land. They
contend that petitioner, his heirs and relatives illegally occupied it and constructed houses
thereon.43 However, it is well-settled that a party who has not appealed cannot obtain from the appellate
court any affirmative relief other than those obtained from the lower court whose decision is brought up on
appeal.44 While there are exceptions to this rule, such as if they involve (1) errors affecting the lower
court's jurisdiction over the subject matter; (2) plain errors not specified and (3) clerical errors, none
applies here.45
Lastly, we note that petitioner entered into certain agreements with respondents to ensure that he would
obtain a portion of the subject land. He not only paid the loan of respondent Artemio to PNB in order to
release the mortgage over the land but also bought from respondents 1,171 sq. m. (almost 94% of the
1,254 sq. m. lot) under the Kasulatan ng Paghahati-hati Na May Bilihan. These are undisputed facts.
Ultimately, however, he failed to get his portion of the property. Although petitioner did not demand the
return of the amounts he paid, we deem it just and equitable to direct respondents to reimburse him for
these.

Article 1236 of the Civil Code provides:

Art. 1236. The creditor is not bound to accept payment or performance by a third person who has no
interest in the fulfillment of the obligation, unless there is a stipulation to the contrary.

Whoever pays for another may demand from the debtor what he has paid, except that if he paid
without the knowledge or against the will of the debtor, he can recover only insofar as the
payment has been beneficial to the debtor. (emphasis ours)

Respondent Artemio was the debtor in this case, PNB the creditor and petitioner the third person who
paid the obligation of the debtor. The amount petitioner may recover will depend on whether Artemio
knew or approved of such payment.1avvphi1

Petitioner should also be able recover the amount (if any) he paid to respondents under
the Kasulatan since this agreement was never implemented. Otherwise, it will result in the unjust
enrichment of respondents at the expense of petitioner, a situation covered by Art. 22 of the Civil Code:

Every person who through an act of performance by another, or any other means, acquires or comes into
possession of something at the expense of the latter without just or legal ground, shall return the same to
him.

Petitioner is not entitled to legal interest since he never made a demand for it.

WHEREFORE, the petition is hereby DENIED. However, respondents are ordered to return to petitioner
the amounts he paid to the Philippine National Bank and under the Kasulatan ng Paghahati-hati Na May
Bilihan. The court a quo is directed to determine the exact amount due to petitioner. The January 21,
2000 decision and April 10, 2000 resolution of the Court of Appeals in CA-G.R. CV No. 56105
are AFFIRMED.

Costs against petitioner.

SO ORDERED.
SECOND DIVISION

FIL-ESTATE MANAGEMENT INC., MEGATOP G. R. No. 130871

REALTY DEVELOPMENT, INC., PEAKSUN
ENTERPRISES AND EXPORT CORP., Present:
ARTURO DY, AND ELENA DY JAO,
Petitioners, PUNO, J., Chairperson,
SANDOVAL-GUTIERREZ,
- versus - *CORONA,

AZCUNA, and
GEORGE H. TRONO, MA. TERESA TRONO, GARCIA, JJ.
MA. VIRGINIA TRONO, JESSE TRONO, MA.
CRISTINA TRONO, PATRICIA TRONO, MA.
DIVINA TRONO, INOCENCIO TRONO, JR.,
CARMEN TRONO, AND ZENAIDA TRONO,
Respondents.

Promulgated:

February 17, 2006

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

DECISION

SANDOVAL-GUTIERREZ, J.:

Before us is a petition for review on certiorari[1] assailing the Decision[2] dated May 20, 1997 and
Resolution[3] dated September 5, 1997 of the Court of Appeals in CA-G.R. SP No. 40263, Ayala Land,
Inc., Fil-estate Management Inc., Megatop Realty Development, Inc., Peaksun Enterprises and Export
Corp., Arturo E. Dy, and Elena Dy Jao,petitioners, versus Hon. Florentino Alumbres, George H. Trono,
Ma. Teresa Trono, Edgardo Trono, Ma. Virginia Trono, Jesse Trono, Ma. Cristina Trono, Inocencio Trono,
Jr., Carmen Trono, and Zenaida Trono, respondents.

The petition alleges that on November 9, 1994, George, Ma. Teresa, Edgardo, Ma. Virginia,
Jesse, Ma. Cristina, Inocencio, Jr., Carmen, and Zenaida, all surnamed Trono, herein respondents, filed
with the Regional Trial Court, Branch 255, Las Pias City, an application for registration [4] of a parcel of
land, docketed as LRC Case No. M-228. The land is located at Bo. Almanza, Las Pias City, Metro Manila
consisting of 245,536 square meters.

Mr. Salvador L. Oriel, Chief of the Docket Division, Land Registration Authority (LRA), issued a
Notice of Initial Hearing,[5] stating, among others, that:
 NOTE: This lot is covered portion of Lot 2271 that which is overlapped by Lot 10,
Psu-80886 Lot 2276, that which is overlapped by Lot 2, Psu-56007 which is also Lot 6,
Psu-80886; Lot 2270, portion of that which is overlapped by Lot 7, Psu-56007 and the
whole Lot 8, Psu-56007.

On August 11, 1995, the above-named petitioners filed their opposition to LRC Case No. M-228
alleging that as per Survey Plan Psu-31086, respondents property partly overlaps their lot. As early
as April 28, 1989, this lot was registered in their names under Transfer Certificate of Title (TCT) No. T-
9182 of the Registry of Deeds of Las Pias City.

Earlier, or on July 25, 1995, Ayala Land, Inc. (Ayala Land) also filed an opposition to respondents
application for registration anchored on the ground that the land applied for overlaps the parcels of land
covered by TCT Nos. T-5331, T-41326, T-15644, T-41325, T-36979, T-36891, and T-36982 registered in
its name in the Registry of Deeds, same city.

During the hearing, respondents presented the July 24, 1995 Report of the LRA and the Survey
Report of the Land Management Services, Department of Environment and Natural Resources, showing
that the land they sought to register under Plan Psu-31086 overlaps the property already registered in the
names of petitioners.

Thereafter, petitioners and Ayala Land filed their respective motions to dismiss respondents
application for registration on the ground of lack of jurisdiction. They claimed that since the property was
previously Torrens registered in their names, the trial court has no jurisdiction over the subject matter of
the proceedings.

On March 4, 1996, the trial court issued a Resolution denying the motions to dismiss, holding that
the Regional Trial Court has exclusive original jurisdiction over all applications for original registration of
title to lands.

Petitioners then filed with the Court of Appeals a petition for certiorari.

On May 20, 1997, the Appellate Court rendered its Decision granting the petition for certiorari, holding

that:
The incontrovertibility of a title prevents a land registration court from acquiring
jurisdiction over a land that is applied for registration if that land is already decreed and
registered under the Torrens System.
The dispositive portion of the Decision reads:

WHEREFORE, the petition is GRANTED and the assailed Order dated March 4,
1996 (Annex A, Petition) is ANNULLED and SET ASIDE. Instead, the respondent Judge
is directed to DISMISS without prejudice LRC M-228.

SO ORDERED.

Petitioners then filed their motion for partial reconsideration praying that LRC Case No. M-228 be
dismissed with prejudice and to declare that the right of respondents to file any action for reconveyance
of the property has prescribed.

Meanwhile, on July 9, 1997, Ayala Land and respondents executed a Compromise

Agreement.[6] On July 10, 1997, they filed with the Court of Appeals a Motion for Judgment Based on
Compromise Agreement.

On July 25, 1997, the Court of Appeals rendered an Amendatory Decision, holding that in view of
the Compromise Agreement, the case as between Ayala Land and respondents has become moot and
academic.

In a Resolution dated September 5, 1997, the Appellate Court denied petitioners motion for
partial reconsideration.

Petitioners then filed the instant petition for review on certiorari ascribing to the Court of Appeals
the following errors:

IN REFUSING TO DECLARE THE DISMISSAL OF LRC M-228 TO BE WITH

PREJUDICE AND THAT ANY ACTION FOR RECONVEYANCE TO HAVE LONG AGO
PRESCRIBED, THE COURT OF APPEALS DECIDED THE ISSUE NOT IN ACCORD
WITH LAW AND PERTINENT JURISPRUDENCE, IN THAT

I.

HAVING ALREADY FOUND THAT THE LAND WAS TITLED, THE COURT OF
APPEALS REFUSAL TO DISMISS THE LAND REGISTRATION CASE WITH
PREJUDICE CONTRAVENES THE DOCTRINES THAT A) DECREES OF
REGISTRATION ARE IN REM, B) TITLED LANDS CANNOT BE DECREED AGAIN AND
C) THERE CAN BE NO COLLATERAL ATTACK ON TITLES.

II.
 HAVING FOUND THAT THE DECREES FROM WHICH PETITIONERS TITLE IS
DERIVED, WERE ISSUED IN 1966, THE COURT OF APPEALS REFUSAL TO
DECLARE AS ALREADY PRESCRIBED, ANY DIRECT ATTACK OR ACTION FOR
RECONVEYANCE CONTRAVENES SECTION 32 OF PD 1529 AND THE DOCTRINES
IN CARO VS. COURT OF APPEALS AND SALVATIERRA VS. COURT OF APPEALS.

Petitioners contend that the dismissal of a subsequent application for original registration of title
already covered by a Torrens title should be with prejudice; that an action for annulment of title or
reconveyance of the property involved has prescribed; and that respondents application for registration
(LRC Case No. M-228) is a collateral attack against petitioners land titles.

In their comment, respondents claim that they were misled by their lawyers and that what they
should have filed was a complaint for nullification of titles instead of an application for registration of land.

The petition is impressed with merit.

The fundamental issue for our resolution is whether the trial court has jurisdiction over
respondents application for registration of a parcel of land.

Section 2 of Presidential Decree (PD) 1529 [7] partly provides:

Sec. 2. Nature of registration proceedings; jurisdiction of courts. Judicial

proceedings for the registration of lands throughout the Philippines shall be in rem, and
shall be based on the generally accepted principles underlying the Torrens System.

Courts of First Instance shall have exclusive jurisdiction over all applications for
original registration of title to lands, including improvements and interests therein, and
over all petitions filed after original registration of title, with power to hear and determine
all questions arising upon such applications or petitions. x x x

Pursuant to the above provisions, the Regional Trial Court (formerly Court of First Instance) has
the authority to act, not only on applications for original registration of title to land, but also on all petitions
filed after the original registration of title. Thus, it has the authority and power to hear and determine all
questions arising from such applications or petitions.[8]

The Court of Appeals, therefore, erred in ruling that the Regional Trial Court, Branch 255, Las
Pias City has no jurisdiction over LRC Case No. M-228 on the ground that the land subject of
respondents application for registration was already registered in the Registry of Deeds of Las Pias City.
 Significantly, even respondents themselves admit in their comment on the instant petition that
what they should have filed was a complaint for nullity of petitioners titles.

Likewise, Section 48 of PD 1529 provides:

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

Respondents application for registration of a parcel of land already covered by a Torrens title is
actually a collateral attack against petitioners title not permitted under the principle of indefeasibility of
a Torrens title. It is well settled that a Torrens title cannot be collaterally attacked; the issue on the validity
of title, i.e., whether or not it was fraudulently issued, can only be raised in an action expressly instituted
for the purpose.[9] Hence, whether or not respondents have the right to claim title over the property in
question is beyond the province of the instant proceeding. That should be threshed out in a proper
action. It has been invariably stated that the real purpose of the Torrens System is to quiet title to land
and to stop forever any question as to its legality. Once a title is registered, the owner may rest secure,
without the necessity of waiting in the portals of the court, or sitting on the mirador su casa to avoid the
possibility of losing his land.[10]

In Ramos v. Rodriguez,[11] we held:

It must be noted that petitioners failed to rebut the LRA report and only alleged
that the title of the Payatas Estate was spurious, without offering any proof to
substantiate this claim.TCT No. 8816, however, having been issued under the Torrens
System, enjoys the conclusive presumption of validity. As we declared in an earlier case
(Reyes and Nadres vs. Borbon and Director of Lands, 50 Phil. 791), (t)he very purpose of
the Torrens system would be destroyed if the same land may be subsequently brought
under a second action for registration. The application for registration of the
petitioners in this case would, under the circumstances, appear to be a collateral
attack of TCT No. 8816 which is not allowed under Section 48 of P.D.
1529. (underscoring ours)

Corollarily, Section 32 of the same law states:

Sec. 32. Review of decree of registration; Innocent purchaser for value. The
decree of registration shall not be reopened or revised by reason of absence, minority, or
other disability of any person adversely affected thereby, nor by any proceeding in any
court for reversing judgment, subject, however, to the right of any person, including the
government and the branches thereof, deprived of land or of any estate or interest therein
by such adjudication or confirmation of title obtained by actual fraud, to file in the proper
Court of First Instance a petition for reopening and review of the decree of
registration not later than one year from and after the date of the entry of such
 decree of registration, but in no case shall such petition be entertained by the court
where an innocent purchaser for value has acquired the land or an interest therein whose
rights may be prejudiced. Whenever the phrase innocent purchaser for value or an
equivalent phrase occurs in this Decree, it shall be deemed to include an innocent
lessee, mortgagee, or other encumbrancer for value.

Upon the expiration of said period of one year, the decree of registration
and the certificate of title issued shall become incontrovertible. Any person
aggrieved by such decree of registration in any case may pursue his remedy by action for
damages against the applicant or any other person responsible for the
fraud. (underscoring ours)

A decree of registration that has become final shall be deemed conclusive not only on the
questions actually contested and determined, but also upon all matters that might be litigated or decided
in the land registration proceedings.[12]

As per records of the Registry of Deeds of Las Pias City, TCT No. T-9182[13] was registered in
petitioners name as early as April 28, 1989, or five (5) years before the filing of respondents
application for registration. Thus, it is too late for them (respondents) to question petitioners titles
considering that the Certificates of Title issued to the latter have become incontrovertible after the lapse
of one year from the decree of registration.

WHEREFORE, the petition is GRANTED. The assailed Decision and Resolution of the Court of
Appeals in CA-G.R. SP No. 40263 are REVERSED and SET ASIDE.Respondents application for
registration of land in LRC Case No. M-228 pending before the Regional Trial Court, Branch 255, Las
Pias City is ordered DISMISSED with prejudice.

SO ORDERED.
SECOND DIVISION

FIL-ESTATE MANAGEMENT INC., MEGATOP G. R. No. 130871

REALTY DEVELOPMENT, INC., PEAKSUN
ENTERPRISES AND EXPORT CORP., Present:
ARTURO DY, AND ELENA DY JAO,
Petitioners, PUNO, J., Chairperson,
SANDOVAL-GUTIERREZ,
- versus - *CORONA,

AZCUNA, and
GEORGE H. TRONO, MA. TERESA TRONO, GARCIA, JJ.
MA. VIRGINIA TRONO, JESSE TRONO, MA.
CRISTINA TRONO, PATRICIA TRONO, MA.
DIVINA TRONO, INOCENCIO TRONO, JR.,
CARMEN TRONO, AND ZENAIDA TRONO,
Respondents.

Promulgated:

February 17, 2006

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

DECISION

SANDOVAL-GUTIERREZ, J.:

Before us is a petition for review on certiorari[1] assailing the Decision[2] dated May 20, 1997 and
Resolution[3] dated September 5, 1997 of the Court of Appeals in CA-G.R. SP No. 40263, Ayala Land,
Inc., Fil-estate Management Inc., Megatop Realty Development, Inc., Peaksun Enterprises and Export
Corp., Arturo E. Dy, and Elena Dy Jao,petitioners, versus Hon. Florentino Alumbres, George H. Trono,
Ma. Teresa Trono, Edgardo Trono, Ma. Virginia Trono, Jesse Trono, Ma. Cristina Trono, Inocencio Trono,
Jr., Carmen Trono, and Zenaida Trono, respondents.

The petition alleges that on November 9, 1994, George, Ma. Teresa, Edgardo, Ma. Virginia,
Jesse, Ma. Cristina, Inocencio, Jr., Carmen, and Zenaida, all surnamed Trono, herein respondents, filed
with the Regional Trial Court, Branch 255, Las Pias City, an application for registration [4] of a parcel of
land, docketed as LRC Case No. M-228. The land is located at Bo. Almanza, Las Pias City, Metro Manila
consisting of 245,536 square meters.

Mr. Salvador L. Oriel, Chief of the Docket Division, Land Registration Authority (LRA), issued a
Notice of Initial Hearing,[5] stating, among others, that:
 NOTE: This lot is covered portion of Lot 2271 that which is overlapped by Lot 10,
Psu-80886 Lot 2276, that which is overlapped by Lot 2, Psu-56007 which is also Lot 6,
Psu-80886; Lot 2270, portion of that which is overlapped by Lot 7, Psu-56007 and the
whole Lot 8, Psu-56007.

On August 11, 1995, the above-named petitioners filed their opposition to LRC Case No. M-228
alleging that as per Survey Plan Psu-31086, respondents property partly overlaps their lot. As early
as April 28, 1989, this lot was registered in their names under Transfer Certificate of Title (TCT) No. T-
9182 of the Registry of Deeds of Las Pias City.

Earlier, or on July 25, 1995, Ayala Land, Inc. (Ayala Land) also filed an opposition to respondents
application for registration anchored on the ground that the land applied for overlaps the parcels of land
covered by TCT Nos. T-5331, T-41326, T-15644, T-41325, T-36979, T-36891, and T-36982 registered in
its name in the Registry of Deeds, same city.

During the hearing, respondents presented the July 24, 1995 Report of the LRA and the Survey
Report of the Land Management Services, Department of Environment and Natural Resources, showing
that the land they sought to register under Plan Psu-31086 overlaps the property already registered in the
names of petitioners.

Thereafter, petitioners and Ayala Land filed their respective motions to dismiss respondents
application for registration on the ground of lack of jurisdiction. They claimed that since the property was
previously Torrens registered in their names, the trial court has no jurisdiction over the subject matter of
the proceedings.

On March 4, 1996, the trial court issued a Resolution denying the motions to dismiss, holding that
the Regional Trial Court has exclusive original jurisdiction over all applications for original registration of
title to lands.

Petitioners then filed with the Court of Appeals a petition for certiorari.

On May 20, 1997, the Appellate Court rendered its Decision granting the petition for certiorari, holding

that:
The incontrovertibility of a title prevents a land registration court from acquiring
jurisdiction over a land that is applied for registration if that land is already decreed and
registered under the Torrens System.
The dispositive portion of the Decision reads:

WHEREFORE, the petition is GRANTED and the assailed Order dated March 4,
1996 (Annex A, Petition) is ANNULLED and SET ASIDE. Instead, the respondent Judge
is directed to DISMISS without prejudice LRC M-228.

SO ORDERED.

Petitioners then filed their motion for partial reconsideration praying that LRC Case No. M-228 be
dismissed with prejudice and to declare that the right of respondents to file any action for reconveyance
of the property has prescribed.

Meanwhile, on July 9, 1997, Ayala Land and respondents executed a Compromise

Agreement.[6] On July 10, 1997, they filed with the Court of Appeals a Motion for Judgment Based on
Compromise Agreement.

On July 25, 1997, the Court of Appeals rendered an Amendatory Decision, holding that in view of
the Compromise Agreement, the case as between Ayala Land and respondents has become moot and
academic.

In a Resolution dated September 5, 1997, the Appellate Court denied petitioners motion for
partial reconsideration.

Petitioners then filed the instant petition for review on certiorari ascribing to the Court of Appeals
the following errors:

IN REFUSING TO DECLARE THE DISMISSAL OF LRC M-228 TO BE WITH

PREJUDICE AND THAT ANY ACTION FOR RECONVEYANCE TO HAVE LONG AGO
PRESCRIBED, THE COURT OF APPEALS DECIDED THE ISSUE NOT IN ACCORD
WITH LAW AND PERTINENT JURISPRUDENCE, IN THAT

I.

HAVING ALREADY FOUND THAT THE LAND WAS TITLED, THE COURT OF
APPEALS REFUSAL TO DISMISS THE LAND REGISTRATION CASE WITH
PREJUDICE CONTRAVENES THE DOCTRINES THAT A) DECREES OF
REGISTRATION ARE IN REM, B) TITLED LANDS CANNOT BE DECREED AGAIN AND
C) THERE CAN BE NO COLLATERAL ATTACK ON TITLES.

II.
 HAVING FOUND THAT THE DECREES FROM WHICH PETITIONERS TITLE IS
DERIVED, WERE ISSUED IN 1966, THE COURT OF APPEALS REFUSAL TO
DECLARE AS ALREADY PRESCRIBED, ANY DIRECT ATTACK OR ACTION FOR
RECONVEYANCE CONTRAVENES SECTION 32 OF PD 1529 AND THE DOCTRINES
IN CARO VS. COURT OF APPEALS AND SALVATIERRA VS. COURT OF APPEALS.

Petitioners contend that the dismissal of a subsequent application for original registration of title
already covered by a Torrens title should be with prejudice; that an action for annulment of title or
reconveyance of the property involved has prescribed; and that respondents application for registration
(LRC Case No. M-228) is a collateral attack against petitioners land titles.

In their comment, respondents claim that they were misled by their lawyers and that what they
should have filed was a complaint for nullification of titles instead of an application for registration of land.

The petition is impressed with merit.

The fundamental issue for our resolution is whether the trial court has jurisdiction over
respondents application for registration of a parcel of land.

Section 2 of Presidential Decree (PD) 1529 [7] partly provides:

Sec. 2. Nature of registration proceedings; jurisdiction of courts. Judicial

proceedings for the registration of lands throughout the Philippines shall be in rem, and
shall be based on the generally accepted principles underlying the Torrens System.

Courts of First Instance shall have exclusive jurisdiction over all applications for
original registration of title to lands, including improvements and interests therein, and
over all petitions filed after original registration of title, with power to hear and determine
all questions arising upon such applications or petitions. x x x

Pursuant to the above provisions, the Regional Trial Court (formerly Court of First Instance) has
the authority to act, not only on applications for original registration of title to land, but also on all petitions
filed after the original registration of title. Thus, it has the authority and power to hear and determine all
questions arising from such applications or petitions.[8]

The Court of Appeals, therefore, erred in ruling that the Regional Trial Court, Branch 255, Las
Pias City has no jurisdiction over LRC Case No. M-228 on the ground that the land subject of
respondents application for registration was already registered in the Registry of Deeds of Las Pias City.
 Significantly, even respondents themselves admit in their comment on the instant petition that
what they should have filed was a complaint for nullity of petitioners titles.

Likewise, Section 48 of PD 1529 provides:

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

Respondents application for registration of a parcel of land already covered by a Torrens title is
actually a collateral attack against petitioners title not permitted under the principle of indefeasibility of
a Torrens title. It is well settled that a Torrens title cannot be collaterally attacked; the issue on the validity
of title, i.e., whether or not it was fraudulently issued, can only be raised in an action expressly instituted
for the purpose.[9] Hence, whether or not respondents have the right to claim title over the property in
question is beyond the province of the instant proceeding. That should be threshed out in a proper
action. It has been invariably stated that the real purpose of the Torrens System is to quiet title to land
and to stop forever any question as to its legality. Once a title is registered, the owner may rest secure,
without the necessity of waiting in the portals of the court, or sitting on the mirador su casa to avoid the
possibility of losing his land.[10]

In Ramos v. Rodriguez,[11] we held:

It must be noted that petitioners failed to rebut the LRA report and only alleged
that the title of the Payatas Estate was spurious, without offering any proof to
substantiate this claim.TCT No. 8816, however, having been issued under the Torrens
System, enjoys the conclusive presumption of validity. As we declared in an earlier case
(Reyes and Nadres vs. Borbon and Director of Lands, 50 Phil. 791), (t)he very purpose of
the Torrens system would be destroyed if the same land may be subsequently brought
under a second action for registration. The application for registration of the
petitioners in this case would, under the circumstances, appear to be a collateral
attack of TCT No. 8816 which is not allowed under Section 48 of P.D.
1529. (underscoring ours)

Corollarily, Section 32 of the same law states:

Sec. 32. Review of decree of registration; Innocent purchaser for value. The
decree of registration shall not be reopened or revised by reason of absence, minority, or
other disability of any person adversely affected thereby, nor by any proceeding in any
court for reversing judgment, subject, however, to the right of any person, including the
government and the branches thereof, deprived of land or of any estate or interest therein
by such adjudication or confirmation of title obtained by actual fraud, to file in the proper
Court of First Instance a petition for reopening and review of the decree of
registration not later than one year from and after the date of the entry of such
 decree of registration, but in no case shall such petition be entertained by the court
where an innocent purchaser for value has acquired the land or an interest therein whose
rights may be prejudiced. Whenever the phrase innocent purchaser for value or an
equivalent phrase occurs in this Decree, it shall be deemed to include an innocent
lessee, mortgagee, or other encumbrancer for value.

Upon the expiration of said period of one year, the decree of registration
and the certificate of title issued shall become incontrovertible. Any person
aggrieved by such decree of registration in any case may pursue his remedy by action for
damages against the applicant or any other person responsible for the
fraud. (underscoring ours)

A decree of registration that has become final shall be deemed conclusive not only on the
questions actually contested and determined, but also upon all matters that might be litigated or decided
in the land registration proceedings.[12]

As per records of the Registry of Deeds of Las Pias City, TCT No. T-9182[13] was registered in
petitioners name as early as April 28, 1989, or five (5) years before the filing of respondents
application for registration. Thus, it is too late for them (respondents) to question petitioners titles
considering that the Certificates of Title issued to the latter have become incontrovertible after the lapse
of one year from the decree of registration.

WHEREFORE, the petition is GRANTED. The assailed Decision and Resolution of the Court of
Appeals in CA-G.R. SP No. 40263 are REVERSED and SET ASIDE.Respondents application for
registration of land in LRC Case No. M-228 pending before the Regional Trial Court, Branch 255, Las
Pias City is ordered DISMISSED with prejudice.

SO ORDERED.
HEIRS OF ENRIQUE DIAZ, G.R. No. 162037

Represented by AURORA T. DIAZ,

Petitioner,

Present:

PANGANIBAN, C.J.,
Chairperson,
YNARES-SANTIAGO,
AUSTRIA-MARTINEZ,

CALLEJO, SR., and

- versus - CHICO-NAZARIO, JJ.

Promulgated:

ELINOR A. VIRATA, August 7, 2006

In her capacity as the Administratrix of the

Estate of ANTENOR VIRATA,

Respondent.
x- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -x

DECISION

CHICO-NAZARIO, J.:

The instant case involves a protracted controversy which has seen the demise of the patriarchs of two
conflicting families, and is now being pursued by their respective heirs.

In this Petition for Review on Certiorari, petitioners Heirs of Enrique Diaz, represented by Aurora T.
Diaz, seek the reversal of the Decision[1] and Resolution[2] of the Court of Appeals in CA-G.R. CV No.
72907, dated 27 August 2003 and 4 February 2004, respectively, which affirmed with modification the
Decision[3] of the Regional Trial Court (RTC), Branch 22, Imus, Cavite, in Civil Case No. 1399-96, dated
25 May 2001.

The Antecedents

On 13 September 1996, respondent Elinor Virata, in her capacity as Administratrix of the Estate
of Antenor Virata (Antenor), filed with the RTC a Complaint[4] with Application for Temporary Restraining
Order and/or Preliminary Injunction against Enrique Diaz (Enrique), John Doe, Richard Doe, and all
others taking rights or title under him, praying for the declaration of the validity of Transfer Certificates of
Title (TCTs) No. 4983,[5] 4984,[6] 4985,[7] 4986,[8] 5027,[9] 5028,[10] 5029,[11] 5030,[12] 5031,[13]5032,[14] and
5033,[15] all issued in the name of Antenor S. Virata (Antenor) and registered with the Registry of Deeds of
the Province of Cavite. The case was docketed as Civil Case No. 1399-96.

In her Complaint, respondent averred, inter alia, that: sometime in 1959, the deceased Antenor
purchased from Miguela Crisologo, in good faith and for consideration, two parcels of land located in
Palico, Imus, Cavite, covered by TCTs No. (T-3855) RT-2633 and NO. (T-11171) RT-1228, and
registered with the Registry of Deeds of Cavite;[16] by virtue of the sale, the specified titles were cancelled,
and in its place were issued TCTs No. 517 and No. 518, likewise, in the name of Antenor; [17] the two lots
covered by the aforementioned titles were thereafter subdivided by Antenor into several lots, and titles
were issued thereon in Antenors favor, viz: TCTs No. 4983, 4984, 4985, 4986, 5027, 5028, 5029, 5030,
5031, 5032, and 5033;[18] and that sometime in March 1992, Enrique filed a claim with the Department of
Environment and Natural Resources (DENR), alleging that he and his predecessors-in-interest had been
in continuous possession of the same lots owned by Antenor. Respondent further proffered that the claim
of Enrique over the subject properties created a cloud which may be prejudicial to the titles issued in the
name of Antenor, and now managed by his Estate.

In support of her application for restraining order and/or a writ of preliminary injunction,
respondent alleged, inter alia, that: Enrique had fenced the subject properties and had constructed a
driveway thereon; despite respondents demand to desist from fencing the properties and using the same
as driveway, Enrique persisted in his occupation of the subject properties; and respondent will suffer
irreparable injury by the continued occupation, use, and construction of the driveway traversing the
subject properties.

In sum, respondent prayed that Enrique be ordered to pay jointly and severally with the other
defendants (herein petitioners), reasonable rental for the use of the subject properties from the time the
suit before the DENR was filed in April 1992, moral damages, exemplary damages, attorneys fees, and
cost of suit.[19]

On 23 October 1996, Enrique filed his Answer with Counter-Claim,[20] and asserted, among
others, that he filed with the DENR a protest action to enforce his valid and legitimate rights over the
subject properties.[21] He denied respondents allegation that the subject properties were purchased by
Antenor.[22] Moreover, he interposed that his ancestors and predecessors-in-interest had been in actual
and continuous possession of the subject properties since time immemorial.[23] In opposition to
respondents application for preliminary injunction, Enrique argued that the driveway and the fence are
within the boundaries of the lots exclusively owned by him and his heirs, and covered by TCTs No. T-
304191 and No. T-66120, respectively.

By way of special and affirmative defense, Enrique averred that the subject properties, since time
immemorial, was publicly recognized as their familys ancestral land;[24]that their actual and peaceful
occupation over the subject property was uninterrupted until sometime in 1962, when Antenor claimed a
portion of the same, on the ground that he purchased said portion from one Miguela Crisologo, who
acquired the same from a certain Simeon Marcial;[25] and that both Miguela Crisologo and Simeon Marcial
recognized and respected his ownership over the subject properties. [26]

Enrique contended further that the legal battle between the parties commenced when respondent
filed an action for recovery of possession of the subject property with the then Court of First Instance
(CFI) of Cavite, docketed as Civil Case No. N-501 entitled, Antenor Virata v. Fortunata Diaz. However, in
1969, during the pendency of the said civil case, Antenor died. Following the development, the CFI
ordered for the substitution of party-plaintiff, but the heirs of Antenor, including herein respondent, failed
to comply therewith. By reason of their non-compliance, the CFI rendered an Order,[27] dated 6 October
1969, dismissing the case.[28]
 Further, Enrique raised the argument of laches and res judicata in his favor. Anent the claim of
laches, Enrique posited that for a period of almost 27 years after the dismissal of Civil Case No. N-501,
the heirs of Antenor were silent, while he was in actual and continuous possession of the subject
properties in the character and concept of an owner, until again, his peaceful possession is being
disturbed by the present suit. It is the contention of Enrique that respondents failure or neglect for an
unreasonable and unexplained length of time to assert her right, created a presumption that she had
abandoned or declined to assert said right. In raising the ground of res judicata, Enrique posited that the
instant suit, while clothed to appear as an action for quieting of title, partakes the nature of an action for a
recovery of possession. According to Enrique, there is res judicata as the present action and Civil Case
No. N-501 involve similar parties, subject matter, and cause of action.[29]

Consequently, Enrique sought for the dismissal of the Complaint, and prayed that respondent be
ordered to pay attorneys fees, including moral, exemplary and actual damages. [30]

On 15 November 1996, the RTC issued an Order[31] allowing respondent to survey the property
subject matter of the case. In answer thereto, Enrique filed a Motion[32]dated 15 November 1996, praying
that the survey be conducted in the presence of his representative, which was accordingly granted by the
court a quo.[33]

A relocation survey was conducted on 3, 6, 7, 10, and 13 of January 1997 [34] by Geodetic
Engineer Severino Raymundo, who testified in open court that the driveway was outside Antenors
property line.[35] Thus, respondent sought a withdrawal of their application for preliminary injunction, which
was granted by the court a quo in the Order[36]dated 13 February 1997. Respondents motion to file an
appropriate pleading was similarly granted by the court without objection from Enrique. [37]

Subsequent thereto, respondent filed an Amended Complaint [38] dated 19 February 1997,
deleting from the original Complaint, the allegations in support of the application for restraining order
and/or writ of preliminary injunction. Further, respondent alleged anew that: she discovered that Enrique
had fenced the subject properties; and constructed therein one concrete house of about 30 square
meters, more or less; the unauthorized construction was done despite Enriques full knowledge of the
invalidity of his claim; and despite demand to desist from fencing the subject properties, Diaz refused to
take heed of the same and continued to usurp the subject properties under a feigned claim of right. [39]

Thus, respondent sought the following additional reliefs, to wit: (1) an order directing Enrique, his
representatives, or any other person claiming right, title, or interest from him, to vacate the subject
properties and/or to voluntarily surrender possession thereof to respondent; and (2) the removal and
demolition of the barbed wire fence, concrete fence, concrete house, and other improvements Enrique
had erected thereon.[40]

Holding that the merits of the case would be served by the Amended Complaint, and finding that
Enrique and his co-defendants would not be prejudiced by the allowance thereof, the court a
quo admitted the same, in the Order of 22 May 1997.[41] The same Order gave Enrique, ten (10) days
from receipt thereof within which to file a new Answer.However, no new Answer was filed by Enrique
within the time provided for.

On 5 August 1997, respondent filed a Manifestation and Motion, [42] stating therein that for the
failure of Enrique to file an Answer to the Amended Complaint within the period provided for under the
1997 Rules of Civil Procedure,[43] the previous Answer shall stand as the Amended Answer; hence, the
issues having been joined, the case is ripe for pre-trial. Acting on the respondents Motion and
Manifestation, the court a quo set the case for pre-trial.[44] Following thus, respondent filed her Pre-trial
Brief,[45] dated 8 September 1997. On 11 September 1997, Enrique filed a Motion for Leave to File
Amended Answer with Counter-Claim,[46] alleging, inter alia, that: he had deemed convenient to adopt the
Answer previously filed, as the same had already substantially confronted the issues in the Amended
Complaint; however, he discovered a certification issued by the Register of Deeds of Cavite, signifying
that TCT No (T-11171) RT-1228, in the name of Miguela Crisologo, appeared to have been reconstituted
but there existed no record in the Primary Entry Book of said Registry, relative to such administrative
reconstitution, which is a vital defect, affecting not only the validity of the reconstitution of Miguela
Crisologos title but also Antenors title, which was derived therefrom; and said certification is being sought
to be adopted as part of his defense. An Opposition[47] to the foregoing Motion was filed by respondent,
contending in the main, that the allegation therein as to the absence in the records of the administrative
reconstitution of TCT No. (T-11171) RT-1228, constituted a collateral attack on the validity of the title, as
well as other titles emanating therefrom, which cannot be allowed in the instant proceedings.
 After an exchange of pleadings between the parties, the court a quo rendered an Order,[48] dated
14 January 1998, denying Enriques Motion for Leave to File Amended Answer, ratiocinating that Enriques
allegation of the absence of any record in the Primary Entry Book of the Register of Deeds of Cavite,
relative to the reconstitution of TCT No. (T-11171) RT-1228, is a collateral attack to the decree of
registration and the certificate of title which had long been issued in favor of Antenor. The validity of a
certificate of title can be attacked only in an action expressly filed for the purpose. [49]

On 27 February 1998, Enrique filed his Pre-Trial Brief but failed to appear before the court a
quo for the pre-trial proceedings set on 4 June 1998.[50] On 16 April 1998, the court a quo rendered an
Order,[51] declaring Enrique and his co-defendants in default for their failure to appear in the pre-trial
despite notice. On further motion of respondents counsel, the case was referred to the Branch Clerk of
Court for the ex-parte reception of evidence. Enrique filed a Motion for Reconsideration[52] praying for the
lifting of the order declaring him in default. Finding the same to be satisfactory, the court a quo granted
reconsideration in its Order[53] dated 20 April 1998.

In the Pre-Trial Order, dated 4 June 1998, the definition of issues were determined, viz.:

I.

WHETHER OR NOT PLAINTIFFS TITLE[S] ARE VALID AND WERE THE ONLY ONES
ISSUED OVER THE SUBJECT PROPERTIES;

II.

WHETHER OR NOT PLAINTIFF IS ENTITLED TO RECOVER POSSESSION OF SAID

PROPERTIES;

III.

WHETHER OR NOT PLAINTIFF IS ENTITLED TO CLAIM DAMAGES;

 IV.

WHETHER OR NOT THE PRESENT ACTION IS BARRED BY RES JUDICATA;

V.

WHETHER OR NOT THE PRESENT ACTION IS BARRED BY LACHES; AND

VI.

WHETHER OR NOT DEFENDANT IS ENTITLED TO CLAIM DAMAGES. [54]

Trial thereafter ensued. Following respondents offer of exhibits, and at the time when Enrique
was scheduled to present evidence, he filed a Motion to Dismiss [55] dated 13 October 1998, assailing the
jurisdiction of the court a quo to entertain the action. Enrique submitted that as the suit is in the nature of
recovery of possession and quieting of title, the issues of ownership and possession cannot be resolved
without determining the correctness of the technical description of the plans, and the bona fide occupants
of the subject properties. It was further contended that as the subject properties originated from friar
estate, the sole body which can determine the rights and interest of the parties is the DENR.An
Opposition[56] thereto was filed by respondent, maintaining that the court a quo has the competence to
hear and resolve the case. Respondent, likewise, asserted that the subject properties having been titled
in the name of Antenor on 22 October 1959, the same are deemed no longer part of the public domain.

On 12 February 1999, the trial court promulgated an Order [57] denying Enriques Motion to
Dismiss, and setting the hearing dates for the presentation of his evidence.According to the court a
quo, Enrique and his co-defendants were no longer in a position to challenge the jurisdiction and authority
of the court, after having actively participated in the proceedings therein, and repeatedly asking reliefs
therefrom. It further opined that Batas Pambansa Blg. 129 mandates that questions in the nature of
ownership and possession belong exclusively to the RTC.

Aggrieved, Enrique and his co-defendants sought relief from the Order of 12 February 1999 via a
Petition for Certiorari and Prohibition with the Court of Appeals, and docketed as CA-G.R. SP No.
51602.[58] They interposed therein that the court a quo lacked jurisdiction to entertain the issues raised in
Civil Case No. 1399-96; hence, the denial by the trial court of their Motion to Dismiss constituted a grave
abuse of discretion amounting to lack or excess of jurisdiction. A writ of preliminary injunction was
similarly sought to enjoin and restrain the court a quo from further conducting any proceeding thereon.

On 28 February 2000, the Court of Appeals rendered a Decision[59] dismissing the Petition
for Certiorari, and affirming the RTCs Order of 12 February 1999. The appellate court ratiocinated that
Enriques Motion to Dismiss cannot be granted for to do so would countenance dilatory motions, such
motion having been filed only after Enrique filed his Answer to the Complaint. The Court of Appeals
equally took cognizance of the fact that Enrique and his co-defendants had actively participated in the
proceedings a quo, and had repeatedly sought reliefs therefrom.

In the interim, or specifically, on 14 October 1999, Enrique died. On 9 March 2000, respondent
filed an Omnibus Motion[60] with the RTC, praying that she be allowed to procure the appointment of an
executor or administrator for the Estate of the deceased Enrique, and thereafter, that the case be set for
hearing.

Thus, on 24 March 2000, the court a quo ordered petitioners (Enriques heirs and co-defendants)
to file the necessary pleading for substitution of party; otherwise, it will grant respondents request for the
appointment of an executor/administrator for Enriques Estate.[61] Following respondents Manifestation and
Motion to submit the case for resolution, the court a quo rendered a subsequent Order[62] dated 25
September 2000, granting petitioners ten days from receipt therefrom, to file their Comment to
respondents Motion.
 On 14 November 2000, for petitioners failure to comply with the Orders of the court a quo,
dated 24 March 2000 and 25 September 2000, and in consideration of the fact that the case had been
pending for an unreasonable length of time, the RTC ordered the case submitted for decision based on
the evidence adduced by the respondent.

The Ruling of the RTC

On 25 May 2001, the RTC promulgated a Decision in favor of respondent. Hereunder is the
pertinent disquisition of the court a quo, in support of its conclusion, thus:

Evidence for the plaintiff shows that Antenor Virata purchased from one Miguela
Crisologo in 1959 two (2) parcels of land located at Palico, Imus, Cavite and covered by
Transfer Certificates of Title (TCT) Nos. T-3855 (Exhibit P) and T-11171 (Exhibit
Q). Antenor bought these properties after Epifanio Victa, then employed by Virata as a
liason officer, reported to him that the titles to the said properties were clean and that no
encumbrance nor liens had been annotated on its face. Antenor made installment
payments for the subject properties beginning on 5 August 1959(Exhibit R); then on 20
August 1959 (Exhibit S); 3 September 1959 (Exhibit T); 3 September 1959 (Exhibit U)
and 22 September 1959 (Exhibit V). After having fully paid for the properties, TCT Nos.
T-3855 and T-11171 in the name of Crisologo were cancelled and TCT Nos. T-517
(Exhibit W) and T-518 (Exhibit X) were issued to Antenor.

Antenor continued to plant rice on the properties before the same were
subdivided in 1963. As a result of said subdivision, TCT Nos. T-4983, T-4984, T-4985, T-
4986, T-5027, T-5028, T-5029, T-5030, T-5031, T-5032 and T-5033 (Exhibits A to J), all
in the name of Antenor were issued. After Antenor died in 1969, his niece Elinor Virata
was appointed on 4 May 1982 by the then Court of First Instance of Cavite City as
administratrix of his estate (Exhibit Y).

On 13 February 1997, Severino Raymundo testified in Court that he was the

surveyor commissioned to conduct a joint relocation survey to determine the exact metes
and bounds of the titles in dispute. Present during the survey were defendant Diaz (sic)
representative, his surveyor, some police officers and the lawyer of Antenor
(tsn, February 13, 1997, p. 15). Making use of the certified true copies of the titles and
the survey plan dated 27 September to 30 September 1960 in the name of Antenor
(Exhibit L), as well as the title of Diaz, Raymundo attested that the relocation survey
shows that a portion of an existing wall and a concrete structure are encroaching upon
the property of Antenor (tsn, February 13, 1997, p. 10).

xxxx

During the hearing of this case on 4 March 1999, defendants, thru counsel,
manifested that they shall be presenting a surveyor who will testify that upon verification,
lot 4705 occupied by them is within the property they own and that they are not
occupying the lot belonging to the plaintiff. Despite said manifestation, however,
defendants failed to present the said surveyor.[63]

The decretal portion thereof pronounces thus:

WHEREFORE, premises considered, judgment is hereby rendered finding

appropriate Antenor Viratas titles over the properties located at Palico,
Imus, Cavite embraced in and covered by TCT Nos. T-4983, T-4984, T-4985, T-4986, T-
5027, T-5028, T-5029, T-5030, T-5031, T-5032 and T-5033 issued in 1962 and declaring
said titles as the only official titles covering the lots described therein and declaring
further defendant Diaz (sic) claim as void and his possession of portions of said
properties illegal.

Accordingly, defendants representative or any other claiming right, title or interest

from defendant Enrique Diaz are hereby ordered to vacate the properties and/or to
voluntarily surrender possession thereof to plaintiff.

Furthermore, defendants are ordered to pay plaintiff the following:

1. P5,000.00 per month as reasonable rental for the use of the subject properties
computed from the date this case was filed on 13 September 1996 until they actually
vacate the same;

2. P30,000.00 as attorneys fees; and

Cost of suit.
 Defendants representative and any other claiming right, title or interest from
defendant Enrique Diaz are also directed to remove or demolish the barbed wire fence,
concrete fence, the concrete house and other improvements that have been erected on
the properties registered in the name of Antenor Virata. [64]

The Ruling of the Court of Appeals

Before the appellate court, petitioners asseverated that they were denied their defense in
assailing the validity of the subject titles when the court a quo denied the allowance of their Amended
Answer. Secondly, they challenged the judgment of the RTC on the ground that res judicata and laches
had set in to bar the instant action. They similarly assailed the award of attorneys fees in favor of
respondent.

The Court of Appeals ruled that petitioners reliance on a certification issued by the Register of
Deeds of Cavite attesting that there existed no records relative to the administrative reconstitution of the
title of Miguela Crisologo, from whom Antenor bought the subject properties, constitutes an indirect attack
on these titles. It underscored that if petitioners believed that respondents titles were spurious, they
should have filed appropriate proceedings therefor. Moreover, the Court of Appeals held that res
judicata cannot be appreciated notwithstanding the previous action (Civil Case No. N-501) instituted by
Antenor for recovery of possession of the subject properties. It emphasized that the case was dismissed
on 16 October 1969 for failure of the heirs of Antenor to substitute him in said litigation. However, the
judgment which dismissed the action was not an adjudication on the merits. Thus, the dismissal of Civil
Case No. N-501 was a dismissal without prejudice, which did not determine the rights or liabilities of the
parties thereto.Moreover, the appellate court held that res judicata cannot be interposed to bar the
determination of a subsequent case if the first and second cases involve different causes of action or
subject matter and seek different reliefs, which is true of Civil Case No. N-501 and the instant case.[65]

Anent the issue of laches, the appellate court ruled that laches could not apply to registered land
covered by the Torrens system. According to the Court of Appeals, the properties in controversy are titled
in the name of Antenor and, as the registered owner, he had the right to demand the return of the
properties at any time as the possession of petitioners was unauthorized.[66]

Finally, ruling on the propriety of the award of attorneys fees in respondents favor, the appellate
court pronounced that the same must be disallowed on appeal. It rationalized that the trial courts decision
was bereft of any findings of fact and law to justify the award of attorneys fees. No circumstance was
shown to warrant the grant thereof.[67]

Meanwhile, on 9 July 2002, the Court of Appeals issued a Resolution [68] denying respondents
Motion for Execution pending appeal and petitioners Motion to Suspend Proceedings for lack of merit.

The Court of Appeals, in the assailed Decision of 27 August 2003, affirmed with modification the
judgment of the RTC deleting the award of attorneys fees in favor of respondent. The dispositive portion
thereof reads:

WHEREFORE, premises considered, the instant appeal is DISMISSED for utter

lack of merit and the assailed Decision dated May 25, 2001 of the Regional Trial Court of
Imus[,] Cavite in Civil Case No. 1399-96 is hereby AFFIRMED with MODIFICATION. The
award of attorneys fees in favor of appellee is deleted. No pronouncement as to costs.[69]

Undeterred, petitioners filed a Motion for Reconsideration [70] of the 27 August 2003 Decision of
the Court of Appeals, which was denied by the same court in the Resolution of 4 February 2004.

The Issues

Forthwith, petitioners filed the instant Petition for Review on Certiorari raising the following
grounds, to wit:
 I.

THAT THE HONORABLE COURT OF APPEALS ERRED IN AFFIRMING THE

DECISION OF THE TRIAL COURT DECLARING THE SUBJECT LAND TITLES IN THE
NAME OF ANTENOR VIRATA AS VALID; [AND]

II.

THAT THE HONORABLE COURT OF APPEALS ERRED IN AFFIRMING THE

DECISION OF THE TRIAL COURT IN NOT CONSIDERING THAT THE INSTITUTION
OF THE PRESENT ACTION CONSTITUTE (sic) RES JUDICATA.[71]

In addition, petitioners raised the ground that it took respondent 27 years to institute the instant
action from the time Civil Case No. N-501 was dismissed.

The Ruling of the Court

For a full adjudication of the case before us, we shall first resolve the validity of respondents title; and, if in
the affirmative, determine whether respondents right to recover the property is barred by res judicata and
laches.

A. Respondent was able to satisfy the requisites of the law for the filing of an action to quiet
title.

An action for quieting of title is a remedy which may be availed of only when by reason of any
instrument, record, claim, encumbrance or proceeding, which appears valid but is, in fact, invalid,
ineffective, voidable or unenforceable, a cloud is thereby cast on the complainants title to real property or
any interest therein.
 Article 476 of the Civil Code provides:

Article 476. Whenever there is a cloud on title to real property or any interest
therein, by reason of any instrument, record, claim, encumbrance or proceeding which is
apparently valid or effective but is in truth and in fact invalid, ineffective, voidable, or
unenforceable, and may be prejudicial to said title, an action may be brought to remove
such cloud or to quiet the title.
An action may also be brought to prevent a cloud from being cast upon title to
real property or any interest therein.

Further, Article 477[72] of the same Code mandates that in an action to quiet title, the party
bringing the action must have a legal or, at least, an equitable title [73] to the real property subject of the
action and that the alleged cloud[74] on his title must be shown to be in fact invalid. Verily, for an action to
quiet title to prosper, two indispensable requisites must concur, namely: (1) the plaintiff or complainant
has a legal or an equitable title to or interest in the real property subject of the action; and (2) the deed,
claim, encumbrance or proceeding claimed to be casting cloud on his title must be shown to be in fact
invalid or inoperative despite its prima facie appearance of validity or legal efficacy.[75]

First. The determination of the circumstances leading to Antenors acquisition of the subject
properties is a factual matter.

The court a quo found that in 1959, Antenor purchased from Miguela Crisologo two parcels of
land located at Palico, Imus, Cavite, and covered by TCTs No. T-3855 and No. T-11171. Antenor paid for
the aforesaid properties in installment, and after having fully paid for the same, TCTs No. T-3855 and No.
T-11171 in the name of Miguela Crisologo were cancelled, and TCTs No. T-517 and No. T-518 were
issued to Antenor. In 1963, the properties were subdivided and, therefrom, TCTs No. T-4983, T-4984, T-
4985, T-4986, T-5027, T-5028, T-5029, T-5030, T-5031, T-5032 and T-5033, all in the name of Antenor
were issued. On 4 May 1982, respondent was appointed administratrix of the Estate of Antenor.

On appeal, such findings of facts were not disturbed by the appellate court. Nothing is more
settled than the rule that where, as in the case herein, the findings of fact of the trial court are affirmed by
the Court of Appeals, the same are final and conclusive upon this Court. [76] Indeed, the Supreme Court is
not a trier of facts. None of the exceptions[77] to this rule appears to be present in the case at bar, and so
should we apply the rule with force.
 Second. Anteros certificates of title, as found by the trial court and sustained by the appellate
court, were issued as early as 22 October 1959. Time and again, we have upheld the fundamental
principle in land registration that a certificate of title serves as evidence of an indefeasible and
incontrovertible title to the property in favor of the person whose name appears therein. It becomes the
best proof of ownership of a parcel of land.[78] The validity of Anteros titles were upheld by the court a
quo and the Court of Appeals and were not found to be tainted with any defect. Even as Enrique
possessed certificates of title over certain portions of the subject properties, these were issued only on 7
March 1973 and 6 March 1991. On this matter, we do not find basis to digress from the ruling articulated
by the Court of Appeals, to wit:

Well-established is the principle that the person holding a prior certificate is entitled to the
land as against a person who relies on a subsequent certificate. This rule refers to the
date of the certificate of title. Absent any muniment of title issued prior to 1959 in favor of
appellants [Enrique, et al.] which could prove their ownership over the contested lots, this
Court is left with no other alternative but to declare appellants claim over the properties
as void.[79]

B. A collateral attack on respondents title over the disputed properties cannot be allowed.

By express provision of Section 48 of Presidential Decree No. 1529, a certificate of title cannot be
subject to a collateral attack, thus:

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

When is an action a direct attack and when is it collateral? This Court made a distinction,
to wit:

An action is deemed an attack on a title when the object of the action or

proceeding is to nullify the title, and thus challenge the judgment pursuant to which the
title was decreed. The attack is direct when the object of the action is to annul or set
aside such judgment, or enjoin its enforcement. On the other hand, the attack is indirect
or collateral when, in an action to obtain a different relief, an attack on the judgment is
nevertheless made as an incident thereof.[80]
 In the case at bar, petitioners sought to file an Amended Answer, attacking the validity of
Antenors title. Therein, it was alleged that Enrique discovered a certification issued by the Register of
Deeds of Cavite which purports to signify that there was no valid reconstitution of Antenors
title. Otherwise stated, they sought to assert that the aforesaid certification shows that TCT No (T-11171)
RT-1228, in the name of Miguela Crisologo, appeared to have been reconstituted; however, no record in
the Primary Entry Book of said Registry, relative to such administrative reconstitution can be found. As
submitted, petitioners maintained that the lack of record is a vital defect, not only to the validity of the
reconstitution of Miguela Crisologos title but also to Antenors title, which was derived therefrom.

However, the propriety of the court a quos disallowance of petitioners Amended Answer is no
longer the subject of the instant Petition, the same having reached finality.Indeed, after the denial by the
court a quo of Enriques Motion to File Amended Answer, he filed his Pre-Trial Brief on 27 February
1998. There was no attempt on the part of petitioners to assail the interlocutory Order of 14 January
1998, denying Enriques Motion for Leave to File Amended Answer. At this stage, petitioners can no
longer impugn the said Order.

C. The Decision of the CFI of Cavite in Civil Case No. N-501 does not constitute res judicata.

Res judicata exists when the following elements are present:

(a) the former judgment must be final;

(b) the court which rendered judgment had jurisdiction over the parties and the subject
matter;
(c) it must be a judgment on the merits;
(d) and there must be between the first and second actions identity of parties, subject
matter, and cause of action.[81] (Emphasis supplied.)

Civil Case No. N-501 was dismissed without prejudice by the CFI of Cavite on 16 October
1969. The same cannot be deemed a judgment on the merits. A judgment on the merits is one rendered
after a determination of which party is right, as distinguished from a judgment rendered upon some
preliminary or formal or merely technical point.[82]The dismissal of the case without prejudice indicates the
absence of a decision on the merits and leaves the parties free to litigate the matter in a subsequent
action as though the dismissed action had not been commenced. In other words, the discontinuance of a
case not on the merits does not bar another action on the same subject matter.[83]
 D. Laches has not set in to bar respondent from recovering possession of the subject properties.

At first instance, petitioners asserted that it took respondent a period of 27 years to institute the
instant action since the dismissal of Civil Case No. N-501. Otherwise stated, petitioners seek reliance on
the equitable doctrine of laches.

Laches is defined as the failure to assert a right for an unreasonable and unexplained length of
time, warranting a presumption that the party entitled to assert it has either abandoned or declined to
assert it. This equitable defense is based upon grounds of public policy, which requires the
discouragement of stale claims for the peace of society.[84]Indeed, while it is true that a Torrens Title is
indefeasible and imprescriptible, the registered landowner may lose his right to recover the possession of
his registered property by reason of laches.[85] However, In the case at bar, laches cannot be appreciated
in petitioners favor.

The Court of Appeals said that respondent could not be faulted for having instituted the action
several years after the dismissal of a case commenced by Antenor himself because it was only in 1982
that the administratrix for his Estate was appointed, and respondent allowed petitioners to peacefully
vacate the premises. Moreover, the appellate court said that laches cannot lie against respondent on the
ground that petitioners cannot feign ignorance of the possibility of respondents action for quieting of title
because from the time of the dismissal of the case for recovery of possession in 1969, they knew that
another action would be instituted by respondent since the dismissal of the prior case was without
prejudice to the filing of a subsequent action.

We agree.

For laches to apply, it must be shown that there was lack of knowledge or notice on the part of
the defendant that complainant would assert the right in which he bases his suit. [86] Petitioners cannot be
said to be without knowledge of respondents claims over the subject properties as even prior to 1969,
Antenor filed Civil Case N-501, an action for recovery of possession against Enrique. On 16 October
1969, the CFI of Cavite dismissed the case without prejudice to the filing of a subsequent action. The
dismissal without prejudice was adequate to apprise petitioners that an action to assert respondents
rights was forthcoming.
 The Fallo

WHEREFORE, the Petition is DENIED. The assailed Decision and Resolution of the Court of
Appeals in CA-G.R. CV No. 72907, dated 27 August 2003 and 4 February 2004 are AFFIRMED. Costs
against petitioners.

SO ORDERED.
G.R. No. 83141 September 21, 1990

SPOUSES FLORENTINO L. FERNANDEZ AND VIVENCIA B. FERNANDEZ, petitioners,

vs.
HON. COURT OF APPEALS AND ZENAIDA ANGELES FERNANDEZ, respondents.

Wilfredo Espiritu Taganas for petitioners.

L.B. Camins for private respondent.

MEDIALDEA, J.:

This is a petition for review of the decision of the Court of Appeals in CA-G.R. CV No. 05191 which
modified the decision of the Regional Trial Court, Branch 95, Quezon City in Civil Case No. Q-32843
ordering private respondent Zenaida Angeles-Fernandez to execute a deed of conveyance over 1/3
portion or 110 square meters of the lot subject of the action.

The facts of the case are as follows:

On November 28, 1966, petitioners-spouses Florentino and Vivencia Fernandez and private respondent
Zenaida Angeles-Fernandez and the latter's husband Justiniano Fernandez purchased in common a
parcel of land with an area of 310 square meters Identified as Lot 13, Block 19, Pagasa Subdivision,
Quezon City. The parcel of land was purchased for P15,500.00. Spouses Florentino and Vivencia
Fernandez advanced the downpayment of P5,500.00 to the vendors-spouses Santos and Matilde de
Torres. A Deed of Conditional Sale (Exhibit "B") was executed by the spouses de Torres in favor of the
two Fernandez couples.

On February 24, 1967, the vendors Torres executed a Deed of Absolute Sale in favor of spouses Zenaida
and Justiniano Fernandez only. When petitioners learned that the Absolute Deed of Sale did not include
their names as vendees they confronted Zenaida and Justiniano Fernandez. Thus, on April 24, 1967,
Zenaida and Justiniano Fernandez executed an affidavit (Exhibit "D") in which they acknowledged the
sale to petitioners Florentino and Vivencia Fernandez of a portion of the subject parcel of land consisting
of 110 square meters and the receipt of the consideration therefor in the amount of P5,500.00.

When private respondent Zenaida Angeles-Fernandez planned to build a house on the lot, she was
informed by the City Engineer of Quezon City that the area in Pag-asa is classified under the zoning
ordinance as R-2 or residential 2, wherein the minimum requirement for a family house is 240 square
meters and therefore, no two (2) separate and independent family houses can be built on the 310 square
meter lot. She also found out that the Register of Deeds will not issue a separate title for only 110 square
meters (p. 4, C.A. Decision; p. 36, Rollo).

Thus, a duplex building was constructed on the subject land, one unit known as No. 216-A Road I, Pag-
asa, Quezon City which was occupied by petitioners Florentino and Vivencia and the other unit known as
No. 216, Pag-asa, Quezon City which was occupied by the spouses Zenaida and Justiniano.

On January 26, 1970, Zenaida and Justiniano caused the issuance of a certificate of title (TCT No.
149347) only in their names (p. 47, Rollo).

On February 26, 1976, private respondent Zenaida Fernandez and her husband Justiniano Fernandez
filed a petition for voluntary dissolution of their conjugal partnership before the Juvenile and Domestic
Relations Court, Quezon City. In the petition, the couple prayed for judicial approval of their compromise
agreement wherein Justiniano waived all his rights to the conjugal properties including the subject parcel
of land. Pursuant to the compromise agreement, the Juvenile and Domestic Relations Court awarded the
parcel of land subject of the instant case to private respondent Zenaida Angeles-Fernandez on December
13, 1976. In a letter dated October 22, 1977, private respondent demanded that petitioners vacate the
premises of the lot awarded to her. On June 9, 1981, petitioners' spouses Florentino and Vivencia filed an
action to quiet title and damages against Zenaida Fernandez only, who was then already estranged from
her husband Justiniano. In another letter dated June 21, 1981, Zenaida reiterated her demand that
petitioners vacate the premises of the lot awarded to her, which lot was also the subject matter of the
complaint for quieting of title filed by petitioners.

After trial, a decision (pp. 43-45, Rollo) was rendered on July 23, 1984 wherein the trial court made the
following findings and conclusions:

1. The genuineness and/or due execution of the Deed of Conditional Sale dated
November 28, 1966 (Exhibit 'B' & Exhibit '2') and Affidavit dated April 24, 1967 (Exhibit 'D'
& Exhibit '4'), were admitted by defendant Zenaida Angeles-Fernandez. Likewise, the
voluntariness of the execution thereof, including their contents, were not seriously
controverted by defendant Zenaida Angeles- Fernandez. Said documents, therefore,
should be taken against her for as ruled by the higher court; a man's acts, conduct, and
declarations wherever made, if voluntary, are admissible against him, for the reason that
it is fair to presume that they correspond with the truth, and it is his fault if they do not.
(US vs. Ching Po, 23 Phil. 578, 583);

2. The claim of defendant Zenaida Angeles-Fernandez to the effect that the P5,500.00
used as down payment for the purchase price in the total amount of P15,500.00
mentioned in the Deed of Conditional Sale dated November 28, 1966 (Exhibit 'B' &
Exhibit '2'), was merely a loan, and that she and her husband Justiniano E. Fernandez
have already paid the same almost three-fold to plaintiffs, cannot be considered there
being no concrete proof on record to substantiate the same. The Court noted, however,
that no further amount, aside from the P5,500.00 were paid by the plaintiffs for the
purchase of Lot 13, Block N-19 of Pag-asa Subdivision. By mathematical computations,
said amount was short for the amount they should pay for the 1/2 portion of the
purchased lot, and they should be required to reimburse defendant Zenaida Angeles-
Fernandez;

3. Likewise, the verbal claim of the defendant Zenaida Angeles- Fernandez that she and
her husband Justiniano B. Fernandez executed the Affidavit dated April 24, 1967 (Exhibit
'D' & Exhibit '4') as security or assurance to plaintiffs' non-eviction from the premises they
are co-occupying and/or payment of the alleged loan, appears gratuitous and illogical,
and cannot be given weight more than their admission (Exhibit 'B' & Exhibit '4'), while
admission is against interest.

4. The fact that the names of plaintiffs no longer appear as co-vendees in the Deed of
Absolute Sale dated February 24,1967 (Exhibit 'C', & Exhibit '3'), and to the title to Lot 13,
Block N-1 9 of the Pagasa Subdivision, Quezon City Exhibit 'A' & Exhibit '1'), as of not
moment (sic) and inconsequential to their right or ownership over the 1/2 portion of the
lot, the same having been sufficiently established by the Deed of Conditional Sale dated
November 28, 1966 (Exhibit 'B' and Exhibit '2'); the Affidavit dated April 24,1967 (Exhibit
'D' & Exhibit '4'); and the proof on record showing that defendant Zenaida Angeles-
Fernandez collected taxes due on the subject lot for the year 1974, 1975,1976 and 1977
(Exhibit 'H'). (pp. 50-51, Rollo)

Anent the ownership of the duplex house, the trial court concluded that although the petitioners advanced
the sum of P l,258.00 (Exhibit "K" and "K-1") for the unit occupied by them, said amount is not sufficient to
construct one unit of the duplex building.
The trial court disposed of the case as follows:

All told, this Court finds plaintiffs spouses Florentino L. Fernandez and Vivencia B.
Fernandez, owner of 1/2 portion or the area of 113 square meters of the Lot 13, Block N-
19 of Pag-asa Subdivision, Quezon City, subject to reimbursement of the sum of P
2,250.00, representing the difference of the total amount they ought to pay for the
purchase price thereof, to defendant Zenaida Angeles-Fernandez, plus legal interest
thereon from February 24, 1967 until fully paid; and defendant Zenaida Angeles-
Fernandez owner of the other one-half or 113 square meters of the aforesaid lot, together
with both units of the duplex house existing thereon, subject to the provision of Article
448 of the Civil Code.

WHEREFORE, decision is hereby rendered:

l. ORDERING defendant Zenaida Angeles-Fernandez to execute a deed of conveyance

over 1/2 portion of 13 square meters of Lot 13, Block N-19 of Pag-asa Subdivision,
covered by Transfer Certificate of Title No. 149347 of the Register of Deeds of Quezon
City, in favor of plaintiffs, spouses Florentino L. Fernandez and Vivencia B. Fernandez,
upon the latter's payment of P 2,225.00 plus legal interest thereon counted from February
24, 1967, until fully paid.

2. The portion of the duplex building resting on the portion of the lot to be reconveyed to
the plaintiffs, spouses Florentino L. Fernandez and Vivencia B. Fernandez, shall remain
under the ownership of defendant Zenaida Angeles-Fernandez, subject to the provision
of Article 448 of the Civil Code.

xxx

(pp. 53-54, Rollo).

Petitioners filed a motion to reconsider the decision insofar as the area awarded them was concerned and
the amount spent by them for the construction of the duplex house. On November 15, 1984, an order (pp.
55-56, Rollo) was issued by the trial court amending the July 23, 1984 decision, thus:

WHEREFORE, 1) The dispositive portion of the decision dated July 23, 1984, is hereby
amended as follows: 'l. ORDERING defendant Zenaida Angeles-Fernandez to execute a
deed of conveyance over 1/3 portion or 110 square meters of Lot 13, Block N-19 of the
Pag-asa Subdivision, covered by Transfer Certificate of Title No. 149347 of the Register
of Deeds of Quezon City, in favor of plaintiffs, spouses Florentino L. Fernandez and
Vivencia B. Fernandez, upon the latter's payment of P 2,225 plus legal interest thereon
counted from February 24, 1967, until fully paid.' 2) Denying all other matters raised in
the motion for reconsideration and opposition thereto.

SO ORDERED. (pp. 55-56, Rollo)

While the order amended the area of the land to be awarded to the petitioners from 1/2 to 1/3, it failed to
delete the portion ordering petitioners to pay private respondent the amount of P 2,225, as originally
ordered in the July 23, 1984 decision.

Not satisfied with the trial court's decision and the order amending said decision, both the petitioners and
the private respondent appealed to respondent Court of Appeals. In a decision (pp. 33-40, Rollo)
promulgated on January 26, 1988, respondent appellate court made a different conclusion and modified
the decision of the trial court:
 The main basis of the trial court in concluding that the plaintiffs are entitled to 1/2 and
later to 1/3 portion of the lot and house in Pag-asa are the deed of conditional sale (Exh.
B and 2) and the affidavit executed by Justiniano Fernandez (Exh. D).

It appears, however, that the effect of said documents have been modified by later
events. The first is the absolute deed of sale of the house and lot in question and the
subsequent issuance of the title thereof only in the name of Justiniano Fernandez and his
wife (Exh. C and 3 and Exh. A and 1). Thereafter, Transfer Certificate of Title No. 149347
in the name of the spouses Justiniano E. Fernandez and Zenaida A. Fernandez was
issued by the Register of Deeds of Quezon City on January 26, 1970 (Exh. A). If, indeed,
the herein plaintiffs were entitled to 1/2 of the said property, they should have taken steps
to include their names in the said title or at least had it annotated on said title. A
Certificate of Title issued a party accumulates all the ultimate facts with respect to a
particular piece of registered land in one single document, making out a precise and
correct statement to the exact status of the fee simple title which the owner has in fact.
Once issued, the certificate is the evidence of the title which the owner has (Legarda vs.
Saleeby, 31 Phil. 590). A torrens title concludes all controversy over ownership of land
covered by final decree of registration, and title by adverse possession cannot be
acquired against the registered owner (Sec. 46, Act 496; J.M. Tuason and Co. vs. Vibat,
L-28884, May 29,1963,8 SCRA 54; Espiritu vs. Sison, CA 51612-R, Feb. 14,1979).

What militates more against the claim of ownership of a portion of the property in
question by the plaintiffs is the fact that as a result of marriage settlement between
Justiniano Fernandez and his wife Zenaida, the whole property was adjudicated to
Zenaida. The settlement was approved by the Juvenile and Domestic Relations Court.
The herein plaintiffs were supposed to know about said marriage settlement of property.
Here is a situation where Zenaida was in fact abandoned by her husband Justiniano, who
is a nephew of plaintiff Florentino Fernandez. The plaintiffs should have intervened in
said case by filing their claims on the property that was to be granted to Zenaida alone in
the marriage settlement. Indeed, it would be less than fair for the herein plaintiffs to
demand their alleged share against Zenaida alone after their nephew agreed to grant
said property to his wife whom he abandoned.

Lastly, the cause of action of the plaintiffs had already prescribed. As already stated, the
Transfer Certificate of Title was issued in the name of the spouses Justiniano and
Zenaida Fernandez in 1970. From said date, Justiniano and his wife exercised acts of
absolute ownership by mortgaging the property. The instant action to claim ownership of
the portion of the land was filed on July 9, 1981.

With these findings, We find no merit in the contention of plaintiffs-appellants that they
are entitled to damages and attorney's fees.

WHEREFORE, the decision appealed from is hereby MODIFIED by declaring the

defendant Zenaida Fernandez as the sole owner of the property in question covered by
Transfer Certificate of Title No. 14934, Registry of Deeds of Quezon City. In fairness to
the plaintiffs, however, defendant Zenaida Fernandez is ordered to return to the plaintiffs
the amount of P5,500.00 plus interest at the legal rate from November 28, 1966 until full
payment thereof. SO ORDERED. (pp. 39-40, Rollo)

Petitioners' motion for reconsideration of the decision of the Court of Appeals was denied on April 22,
1988 (p. 42,Rollo).

On June 15, 1988, petitioners filed the instant petition for review. They contend that respondent appellate
court erred in not declaring them part owners of the lot in question despite the fact that it is not disputed
that petitioners and defendant Zenaida Fernandez with her husband Justiniano Fernandez entered into
an agreement with the vendors-spouses Santos and Matilde de Torres that the subject land would be
purchased by them in common.

While, as a rule, this Court is bound by the findings of the Court of Appeals in matters of fact, that rule is
subject to well-settled exceptions, amongst them: (1) when the same are grounded entirely on
speculation, surmise, and conjecture; (2) the inference made is manifestly mistaken; (3)...; (4) its
judgment is based on a misapprehension of facts; (5) it went beyond the issues of the case and its
findings contravene admissions of the parties; (6) its findings of fact are contrary to those of the trial court;
(7) the same are conclusions without citation of specific evidence; (8) ...; and (9) when the findings of fact
of the Court of Appeals are not supported by the evidence or contradicted in fact by the evidence on
record (Teodoro v. Court of Appeals, L-31471, November 12, 1987).

In the instant case, there is a disparity in the factual findings and conclusions of the respondent appellate
court and the trial court. On the basis of the evidence presented and in view of the accepted rule that "the
judge who tries a case in the court below, has vastly superior advantage for the ascertainment of truth
and the detection of falsehood over an appellate court of review (Roque v. Buan, L-22459, October 31,
1967, 21 SCRA 642), the findings of the trial court must be upheld.

We agree with petitioners' contention that respondent court erred in not declaring them as part owners of
the subject property. There is sufficient evidence on record to prove that petitioners and spouses
Justiniano and Zenaida Fernandez purchased in common the lot subject of this case and that it was the
parties' intention to become owners of specific portions thereof.

The purchase of the property by the two Fernandez couples was evidenced by a Deed of Conditional
Sale (Exhibit "B" and Exhibit "2") executed by the previous owners Spouses Santos and Matilde de
Torres in favor of the petitioners and the Spouses Zenaida and Justiniano Fernandez. Respondent
appellate court concluded that the effect of the Deed of Conditional Sale was modified by later events
specifically, the execution of a deed of Absolute Sale in favor of Justiniano Fernandez and private
respondent Zenaida Fernandez only. However, respondent appellate court lost sight of the fact that upon
petitioners' knowledge that the Deed of Absolute Sale was executed in favor of Justiniano and Zenaida
Fernandez only, the petitioners confronted the latter spouses which led to the execution by the latter on
April 24,1967 of an affidavit (Exhibit 'D') acknowledging petitioners' purchase of 110 square meters of the
subject lot and the receipt of the consideration therefor for P5,500.00. The due execution and authenticity
of both the Deed of Conditional Sale and Affidavit were never denied by private respondent. Having
recognized the sale and the receipt of the consideration in the affidavit, private respondent is now
estopped from going against such declaration.

It is noted that subsequent to the execution of the affidavit, a duplex house was constructed on the lot
where one unit was occupied by private respondent Zenaida and her husband Justiniano and the other
unit by the petitioners. The expenses for the construction of the duplex were advanced by the spouses
Zenaida and Justiniano, but they demanded reimbursement of the expenses they advanced for the
portion belonging to petitioners. Exhibit "I" and Exhibit "J" reveal that on November 10, 1969, Justiniano
demanded from the petitioners payment of their share of the materials used in the construction of their
portion of the duplex house amounting to P 2,607.70 (p. 44, Rollo) and the taxes due from them for the
house and lot. On March 8, 1977, petitioners paid for their share of the realty taxes for the year
1974,1975,1976 and 1977 in the total amount of P 894.36 to private respondent Zenaida (Exhibit "H").
For the expenses in the construction of the portion of the duplex possessed by petitioners, they gave
P1,258.10 to Justiniano who issued a receipt therefor (Exhibit "K" and "K-1") Petitioners promised to
liquidate the balance in installment at the rate of P 300.00 a month. The trial court concluded that the
amount of P l,258.10 advanced by petitioners was not sufficient to construct their portion of the duplex
house and that no evidence was presented to prove that petitioners paid for the balance. From this
findings, it erroneously concluded that the entire duplex house belongs to private respondent Zenaida
Angeles-Fernandez.
It should be noted that Justiniano Fernandez admitted in Exhibits "I" and "J" petitioner's ownership of the
portion of the duplex house now occupied by them. It may be that the amount of P1,258.10 paid by
petitioner Florentino Fernandez to Justiniano Fernandez was not sufficient to construct their portion of the
duplex house but such insufficiency cannot be made the basis for divesting them of their ownership.

Respondent court's conclusion that petitioners were not part owners of subject land relied much on the
existence of Transfer Certificate of Title No. 149347 issued in the name of Spouses Justiniano and
Zenaida Fernandez only. It further concluded that if, indeed, petitioners were entitled to 1/2 of the
property, they should have taken steps to include their names in the title.

Section 50 of Act No. 496 (now Sec. 51 of P.D. 1529), provides that the registration of the deed is the
operative act to bind or affect the land insofar as third persons are concerned. But where the party has
knowledge of a prior existing interest which is unregistered at the time he acquired a right to the same
land, his knowledge of that prior unregistered interest has the effect of registration as to him. The torrens
system cannot be used as a shield for the commission of fraud (Gustillo v. Maravilla, 48 Phil. 442). As far
as private respondent Zenaida Angeles and her husband Justiniano are concerned, the non-registration
of the affidavit admitting their sale of a portion of 110 square meters of the subject land to petitioners
cannot be invoked as a defense because (K)nowledge of an unregistered sale is equivalent to registration
(Winkleman v. Veluz, 43 Phil. 604).

The respondent appellate court also erred in ruling that the cause of action of petitioners had already
prescribed in view of the issuance in 1970 of a certificate of title in the name of the Spouses Justiniano
and Zenaida Fernandez. As already stated, the issuance of a certificate of title in the name appearing
therein does not preclude petitioners from asserting their right of ownership over the land in question.
Time and again it has been ruled that the torrens system should not be used as a shield to protect fraud.
Moreover, prescription cannot be considered against petitioners who had been in possession of subject
premises from the time it was purchased from the de Torres spouses in 1967 and continue to possess the
same under claim of ownership. There is no sufficient basis for the respondent court to conclude that
spouses Zenaida and Justiniano were possessing the entire property adversely against petitioners. At
most, the first time that respondent Zenaida Fernandez claimed adverse possession of the entire
premises was when she demanded from petitioners the possession of the unit possessed by them in a
letter dated October 22, 1977 (Exhibit "F") emboldened by a decision of the Juvenile and Domestic
Relations Court awarding the premises to her. The decision of private respondent to claim total ownership
of the premises was in fact, pursued only half-heartedly by her because the second time that she
demanded possession of the premises was four (4) years after or on June 21, 1981, after an action to
quiet title was filed by petitioners on June 9,1981. In Almanza v. Arguelles, L-49250, December 21, 1987,
We held that, "prescription cannot be invoked in an action for reconveyance, which is, in effect an action
to quiet title against the plaintiff therein who is in possession of the land in question. As lawful possessor
and owner of the disputed portion, her cause of action for reconveyance which, in effect, seeks to quiet
title to property in one's possession is imprescriptible (also cited in Caragay-Layno v. Court of Appeals,
133 SCRA 718, citing Sapto et al. v. Fabiana, 103 Phil. 683 and Faja v. C.A., 75 SCRA 441). The reason,
we explained in Bucton v. Gabar, L-36359, January 31, 1974, 55 SCRA 499, is:

... that while the owner in fee continues liable to an action, proceeding, or suit upon the
adverse claim, he has a continuing right to the aid of a court of equity to ascertain and
determine the nature of such claim and its effect on his title, or to assert any superior
equity in his favor. He may wait until his possession is disturbed or his title is attacked
before taking steps to vindicate his right. But the rule that the statute of limitations is not
available as a defense of an action to remove a cloud from title can only be invoked by a
complainant when he is in possession. .... (44 Am. Jur., p. 47)

The judgment in the petition for dissolution of the conjugal partnership filed with the Juvenile and
Domestic Relations Court of private respondent Zenaida Angeles-Fernandez and her husband Justiniano
where the property in question was awarded to Zenaida cannot bind the petitioners who were not parties
thereto. The failure of petitioners to intervene in the said proceedings for dissolution of conjugal
partnership is not fatal. Petitioners may file their claim of ownership over the one-third portion of the
property in question separately which they did when they brought the complaint for quieting of title before
the trial court.

As already stated, the affidavit executed by Justiniano Fernandez and private respondent Zenaida
Angeles Fernandez acknowledged the sale of one-third (1/3) portion of the subject land to petitioners-
spouses Florentino and Vivencia Fernandez and the receipt by the former of the amount of P5,500.00 as
consideration thereof. However, the trial court in awarding the said one-third portion to petitioners also
ordered the payment by them of P 2,225.00 to private respondent Zenaida Angeles-Fernandez, oblivious
of the fact that only 1/3 and not one half (1/2) pertain to petitioners and that the P5,500.00 advanced by
petitioners at the time the subject property was purchased from the de Torres spouses was sufficient
payment for the 1/3 portion awarded to them.

ACCORDINGLY, the petition is GRANTED. The decision of respondent appellate court is REVERSED.
Judgment is hereby rendered declaring petitioners owners of 1) one-third (1/3) or 110 square meters of
Lot 13, Block N-19 of Pag-asa Subdivision, presently occupied by them, covered by TCT No. 149347 of
the Register of Deeds of Quezon City; and 2) the portion of the duplex house occupied by them after
payment of the balance of P l,349.70 advanced by the husband of private respondent Zenaida Fernandez
for the construction thereof, with interest at the legal rate from November 1969 until fully paid.

SO ORDERED.

Narvasa (Chairman), Cruz, Gancayco and Griño-Aquino, JJ., concur.

G.R. No. 83141 September 21, 1990

SPOUSES FLORENTINO L. FERNANDEZ AND VIVENCIA B. FERNANDEZ, petitioners,

vs.
HON. COURT OF APPEALS AND ZENAIDA ANGELES FERNANDEZ, respondents.

Wilfredo Espiritu Taganas for petitioners.

L.B. Camins for private respondent.

MEDIALDEA, J.:

This is a petition for review of the decision of the Court of Appeals in CA-G.R. CV No. 05191 which
modified the decision of the Regional Trial Court, Branch 95, Quezon City in Civil Case No. Q-32843
ordering private respondent Zenaida Angeles-Fernandez to execute a deed of conveyance over 1/3
portion or 110 square meters of the lot subject of the action.

The facts of the case are as follows:

On November 28, 1966, petitioners-spouses Florentino and Vivencia Fernandez and private respondent
Zenaida Angeles-Fernandez and the latter's husband Justiniano Fernandez purchased in common a
parcel of land with an area of 310 square meters Identified as Lot 13, Block 19, Pagasa Subdivision,
Quezon City. The parcel of land was purchased for P15,500.00. Spouses Florentino and Vivencia
Fernandez advanced the downpayment of P5,500.00 to the vendors-spouses Santos and Matilde de
Torres. A Deed of Conditional Sale (Exhibit "B") was executed by the spouses de Torres in favor of the
two Fernandez couples.

On February 24, 1967, the vendors Torres executed a Deed of Absolute Sale in favor of spouses Zenaida
and Justiniano Fernandez only. When petitioners learned that the Absolute Deed of Sale did not include
their names as vendees they confronted Zenaida and Justiniano Fernandez. Thus, on April 24, 1967,
Zenaida and Justiniano Fernandez executed an affidavit (Exhibit "D") in which they acknowledged the
sale to petitioners Florentino and Vivencia Fernandez of a portion of the subject parcel of land consisting
of 110 square meters and the receipt of the consideration therefor in the amount of P5,500.00.

When private respondent Zenaida Angeles-Fernandez planned to build a house on the lot, she was
informed by the City Engineer of Quezon City that the area in Pag-asa is classified under the zoning
ordinance as R-2 or residential 2, wherein the minimum requirement for a family house is 240 square
meters and therefore, no two (2) separate and independent family houses can be built on the 310 square
meter lot. She also found out that the Register of Deeds will not issue a separate title for only 110 square
meters (p. 4, C.A. Decision; p. 36, Rollo).

Thus, a duplex building was constructed on the subject land, one unit known as No. 216-A Road I, Pag-
asa, Quezon City which was occupied by petitioners Florentino and Vivencia and the other unit known as
No. 216, Pag-asa, Quezon City which was occupied by the spouses Zenaida and Justiniano.

On January 26, 1970, Zenaida and Justiniano caused the issuance of a certificate of title (TCT No.
149347) only in their names (p. 47, Rollo).

On February 26, 1976, private respondent Zenaida Fernandez and her husband Justiniano Fernandez
filed a petition for voluntary dissolution of their conjugal partnership before the Juvenile and Domestic
Relations Court, Quezon City. In the petition, the couple prayed for judicial approval of their compromise
agreement wherein Justiniano waived all his rights to the conjugal properties including the subject parcel
of land. Pursuant to the compromise agreement, the Juvenile and Domestic Relations Court awarded the
parcel of land subject of the instant case to private respondent Zenaida Angeles-Fernandez on December
13, 1976. In a letter dated October 22, 1977, private respondent demanded that petitioners vacate the
premises of the lot awarded to her. On June 9, 1981, petitioners' spouses Florentino and Vivencia filed an
action to quiet title and damages against Zenaida Fernandez only, who was then already estranged from
her husband Justiniano. In another letter dated June 21, 1981, Zenaida reiterated her demand that
petitioners vacate the premises of the lot awarded to her, which lot was also the subject matter of the
complaint for quieting of title filed by petitioners.

After trial, a decision (pp. 43-45, Rollo) was rendered on July 23, 1984 wherein the trial court made the
following findings and conclusions:

1. The genuineness and/or due execution of the Deed of Conditional Sale dated
November 28, 1966 (Exhibit 'B' & Exhibit '2') and Affidavit dated April 24, 1967 (Exhibit 'D'
& Exhibit '4'), were admitted by defendant Zenaida Angeles-Fernandez. Likewise, the
voluntariness of the execution thereof, including their contents, were not seriously
controverted by defendant Zenaida Angeles- Fernandez. Said documents, therefore,
should be taken against her for as ruled by the higher court; a man's acts, conduct, and
declarations wherever made, if voluntary, are admissible against him, for the reason that
it is fair to presume that they correspond with the truth, and it is his fault if they do not.
(US vs. Ching Po, 23 Phil. 578, 583);

2. The claim of defendant Zenaida Angeles-Fernandez to the effect that the P5,500.00
used as down payment for the purchase price in the total amount of P15,500.00
mentioned in the Deed of Conditional Sale dated November 28, 1966 (Exhibit 'B' &
Exhibit '2'), was merely a loan, and that she and her husband Justiniano E. Fernandez
have already paid the same almost three-fold to plaintiffs, cannot be considered there
being no concrete proof on record to substantiate the same. The Court noted, however,
that no further amount, aside from the P5,500.00 were paid by the plaintiffs for the
purchase of Lot 13, Block N-19 of Pag-asa Subdivision. By mathematical computations,
said amount was short for the amount they should pay for the 1/2 portion of the
purchased lot, and they should be required to reimburse defendant Zenaida Angeles-
Fernandez;

3. Likewise, the verbal claim of the defendant Zenaida Angeles- Fernandez that she and
her husband Justiniano B. Fernandez executed the Affidavit dated April 24, 1967 (Exhibit
'D' & Exhibit '4') as security or assurance to plaintiffs' non-eviction from the premises they
are co-occupying and/or payment of the alleged loan, appears gratuitous and illogical,
and cannot be given weight more than their admission (Exhibit 'B' & Exhibit '4'), while
admission is against interest.

4. The fact that the names of plaintiffs no longer appear as co-vendees in the Deed of
Absolute Sale dated February 24,1967 (Exhibit 'C', & Exhibit '3'), and to the title to Lot 13,
Block N-1 9 of the Pagasa Subdivision, Quezon City Exhibit 'A' & Exhibit '1'), as of not
moment (sic) and inconsequential to their right or ownership over the 1/2 portion of the
lot, the same having been sufficiently established by the Deed of Conditional Sale dated
November 28, 1966 (Exhibit 'B' and Exhibit '2'); the Affidavit dated April 24,1967 (Exhibit
'D' & Exhibit '4'); and the proof on record showing that defendant Zenaida Angeles-
Fernandez collected taxes due on the subject lot for the year 1974, 1975,1976 and 1977
(Exhibit 'H'). (pp. 50-51, Rollo)

Anent the ownership of the duplex house, the trial court concluded that although the petitioners advanced
the sum of P l,258.00 (Exhibit "K" and "K-1") for the unit occupied by them, said amount is not sufficient to
construct one unit of the duplex building.
The trial court disposed of the case as follows:

All told, this Court finds plaintiffs spouses Florentino L. Fernandez and Vivencia B.
Fernandez, owner of 1/2 portion or the area of 113 square meters of the Lot 13, Block N-
19 of Pag-asa Subdivision, Quezon City, subject to reimbursement of the sum of P
2,250.00, representing the difference of the total amount they ought to pay for the
purchase price thereof, to defendant Zenaida Angeles-Fernandez, plus legal interest
thereon from February 24, 1967 until fully paid; and defendant Zenaida Angeles-
Fernandez owner of the other one-half or 113 square meters of the aforesaid lot, together
with both units of the duplex house existing thereon, subject to the provision of Article
448 of the Civil Code.

WHEREFORE, decision is hereby rendered:

l. ORDERING defendant Zenaida Angeles-Fernandez to execute a deed of conveyance

over 1/2 portion of 13 square meters of Lot 13, Block N-19 of Pag-asa Subdivision,
covered by Transfer Certificate of Title No. 149347 of the Register of Deeds of Quezon
City, in favor of plaintiffs, spouses Florentino L. Fernandez and Vivencia B. Fernandez,
upon the latter's payment of P 2,225.00 plus legal interest thereon counted from February
24, 1967, until fully paid.

2. The portion of the duplex building resting on the portion of the lot to be reconveyed to
the plaintiffs, spouses Florentino L. Fernandez and Vivencia B. Fernandez, shall remain
under the ownership of defendant Zenaida Angeles-Fernandez, subject to the provision
of Article 448 of the Civil Code.

xxx

(pp. 53-54, Rollo).

Petitioners filed a motion to reconsider the decision insofar as the area awarded them was concerned and
the amount spent by them for the construction of the duplex house. On November 15, 1984, an order (pp.
55-56, Rollo) was issued by the trial court amending the July 23, 1984 decision, thus:

WHEREFORE, 1) The dispositive portion of the decision dated July 23, 1984, is hereby
amended as follows: 'l. ORDERING defendant Zenaida Angeles-Fernandez to execute a
deed of conveyance over 1/3 portion or 110 square meters of Lot 13, Block N-19 of the
Pag-asa Subdivision, covered by Transfer Certificate of Title No. 149347 of the Register
of Deeds of Quezon City, in favor of plaintiffs, spouses Florentino L. Fernandez and
Vivencia B. Fernandez, upon the latter's payment of P 2,225 plus legal interest thereon
counted from February 24, 1967, until fully paid.' 2) Denying all other matters raised in
the motion for reconsideration and opposition thereto.

SO ORDERED. (pp. 55-56, Rollo)

While the order amended the area of the land to be awarded to the petitioners from 1/2 to 1/3, it failed to
delete the portion ordering petitioners to pay private respondent the amount of P 2,225, as originally
ordered in the July 23, 1984 decision.

Not satisfied with the trial court's decision and the order amending said decision, both the petitioners and
the private respondent appealed to respondent Court of Appeals. In a decision (pp. 33-40, Rollo)
promulgated on January 26, 1988, respondent appellate court made a different conclusion and modified
the decision of the trial court:
 The main basis of the trial court in concluding that the plaintiffs are entitled to 1/2 and
later to 1/3 portion of the lot and house in Pag-asa are the deed of conditional sale (Exh.
B and 2) and the affidavit executed by Justiniano Fernandez (Exh. D).

It appears, however, that the effect of said documents have been modified by later
events. The first is the absolute deed of sale of the house and lot in question and the
subsequent issuance of the title thereof only in the name of Justiniano Fernandez and his
wife (Exh. C and 3 and Exh. A and 1). Thereafter, Transfer Certificate of Title No. 149347
in the name of the spouses Justiniano E. Fernandez and Zenaida A. Fernandez was
issued by the Register of Deeds of Quezon City on January 26, 1970 (Exh. A). If, indeed,
the herein plaintiffs were entitled to 1/2 of the said property, they should have taken steps
to include their names in the said title or at least had it annotated on said title. A
Certificate of Title issued a party accumulates all the ultimate facts with respect to a
particular piece of registered land in one single document, making out a precise and
correct statement to the exact status of the fee simple title which the owner has in fact.
Once issued, the certificate is the evidence of the title which the owner has (Legarda vs.
Saleeby, 31 Phil. 590). A torrens title concludes all controversy over ownership of land
covered by final decree of registration, and title by adverse possession cannot be
acquired against the registered owner (Sec. 46, Act 496; J.M. Tuason and Co. vs. Vibat,
L-28884, May 29,1963,8 SCRA 54; Espiritu vs. Sison, CA 51612-R, Feb. 14,1979).

What militates more against the claim of ownership of a portion of the property in
question by the plaintiffs is the fact that as a result of marriage settlement between
Justiniano Fernandez and his wife Zenaida, the whole property was adjudicated to
Zenaida. The settlement was approved by the Juvenile and Domestic Relations Court.
The herein plaintiffs were supposed to know about said marriage settlement of property.
Here is a situation where Zenaida was in fact abandoned by her husband Justiniano, who
is a nephew of plaintiff Florentino Fernandez. The plaintiffs should have intervened in
said case by filing their claims on the property that was to be granted to Zenaida alone in
the marriage settlement. Indeed, it would be less than fair for the herein plaintiffs to
demand their alleged share against Zenaida alone after their nephew agreed to grant
said property to his wife whom he abandoned.

Lastly, the cause of action of the plaintiffs had already prescribed. As already stated, the
Transfer Certificate of Title was issued in the name of the spouses Justiniano and
Zenaida Fernandez in 1970. From said date, Justiniano and his wife exercised acts of
absolute ownership by mortgaging the property. The instant action to claim ownership of
the portion of the land was filed on July 9, 1981.

With these findings, We find no merit in the contention of plaintiffs-appellants that they
are entitled to damages and attorney's fees.

WHEREFORE, the decision appealed from is hereby MODIFIED by declaring the

defendant Zenaida Fernandez as the sole owner of the property in question covered by
Transfer Certificate of Title No. 14934, Registry of Deeds of Quezon City. In fairness to
the plaintiffs, however, defendant Zenaida Fernandez is ordered to return to the plaintiffs
the amount of P5,500.00 plus interest at the legal rate from November 28, 1966 until full
payment thereof. SO ORDERED. (pp. 39-40, Rollo)

Petitioners' motion for reconsideration of the decision of the Court of Appeals was denied on April 22,
1988 (p. 42,Rollo).

On June 15, 1988, petitioners filed the instant petition for review. They contend that respondent appellate
court erred in not declaring them part owners of the lot in question despite the fact that it is not disputed
that petitioners and defendant Zenaida Fernandez with her husband Justiniano Fernandez entered into
an agreement with the vendors-spouses Santos and Matilde de Torres that the subject land would be
purchased by them in common.

While, as a rule, this Court is bound by the findings of the Court of Appeals in matters of fact, that rule is
subject to well-settled exceptions, amongst them: (1) when the same are grounded entirely on
speculation, surmise, and conjecture; (2) the inference made is manifestly mistaken; (3)...; (4) its
judgment is based on a misapprehension of facts; (5) it went beyond the issues of the case and its
findings contravene admissions of the parties; (6) its findings of fact are contrary to those of the trial court;
(7) the same are conclusions without citation of specific evidence; (8) ...; and (9) when the findings of fact
of the Court of Appeals are not supported by the evidence or contradicted in fact by the evidence on
record (Teodoro v. Court of Appeals, L-31471, November 12, 1987).

In the instant case, there is a disparity in the factual findings and conclusions of the respondent appellate
court and the trial court. On the basis of the evidence presented and in view of the accepted rule that "the
judge who tries a case in the court below, has vastly superior advantage for the ascertainment of truth
and the detection of falsehood over an appellate court of review (Roque v. Buan, L-22459, October 31,
1967, 21 SCRA 642), the findings of the trial court must be upheld.

We agree with petitioners' contention that respondent court erred in not declaring them as part owners of
the subject property. There is sufficient evidence on record to prove that petitioners and spouses
Justiniano and Zenaida Fernandez purchased in common the lot subject of this case and that it was the
parties' intention to become owners of specific portions thereof.

The purchase of the property by the two Fernandez couples was evidenced by a Deed of Conditional
Sale (Exhibit "B" and Exhibit "2") executed by the previous owners Spouses Santos and Matilde de
Torres in favor of the petitioners and the Spouses Zenaida and Justiniano Fernandez. Respondent
appellate court concluded that the effect of the Deed of Conditional Sale was modified by later events
specifically, the execution of a deed of Absolute Sale in favor of Justiniano Fernandez and private
respondent Zenaida Fernandez only. However, respondent appellate court lost sight of the fact that upon
petitioners' knowledge that the Deed of Absolute Sale was executed in favor of Justiniano and Zenaida
Fernandez only, the petitioners confronted the latter spouses which led to the execution by the latter on
April 24,1967 of an affidavit (Exhibit 'D') acknowledging petitioners' purchase of 110 square meters of the
subject lot and the receipt of the consideration therefor for P5,500.00. The due execution and authenticity
of both the Deed of Conditional Sale and Affidavit were never denied by private respondent. Having
recognized the sale and the receipt of the consideration in the affidavit, private respondent is now
estopped from going against such declaration.

It is noted that subsequent to the execution of the affidavit, a duplex house was constructed on the lot
where one unit was occupied by private respondent Zenaida and her husband Justiniano and the other
unit by the petitioners. The expenses for the construction of the duplex were advanced by the spouses
Zenaida and Justiniano, but they demanded reimbursement of the expenses they advanced for the
portion belonging to petitioners. Exhibit "I" and Exhibit "J" reveal that on November 10, 1969, Justiniano
demanded from the petitioners payment of their share of the materials used in the construction of their
portion of the duplex house amounting to P 2,607.70 (p. 44, Rollo) and the taxes due from them for the
house and lot. On March 8, 1977, petitioners paid for their share of the realty taxes for the year
1974,1975,1976 and 1977 in the total amount of P 894.36 to private respondent Zenaida (Exhibit "H").
For the expenses in the construction of the portion of the duplex possessed by petitioners, they gave
P1,258.10 to Justiniano who issued a receipt therefor (Exhibit "K" and "K-1") Petitioners promised to
liquidate the balance in installment at the rate of P 300.00 a month. The trial court concluded that the
amount of P l,258.10 advanced by petitioners was not sufficient to construct their portion of the duplex
house and that no evidence was presented to prove that petitioners paid for the balance. From this
findings, it erroneously concluded that the entire duplex house belongs to private respondent Zenaida
Angeles-Fernandez.
It should be noted that Justiniano Fernandez admitted in Exhibits "I" and "J" petitioner's ownership of the
portion of the duplex house now occupied by them. It may be that the amount of P1,258.10 paid by
petitioner Florentino Fernandez to Justiniano Fernandez was not sufficient to construct their portion of the
duplex house but such insufficiency cannot be made the basis for divesting them of their ownership.

Respondent court's conclusion that petitioners were not part owners of subject land relied much on the
existence of Transfer Certificate of Title No. 149347 issued in the name of Spouses Justiniano and
Zenaida Fernandez only. It further concluded that if, indeed, petitioners were entitled to 1/2 of the
property, they should have taken steps to include their names in the title.

Section 50 of Act No. 496 (now Sec. 51 of P.D. 1529), provides that the registration of the deed is the
operative act to bind or affect the land insofar as third persons are concerned. But where the party has
knowledge of a prior existing interest which is unregistered at the time he acquired a right to the same
land, his knowledge of that prior unregistered interest has the effect of registration as to him. The torrens
system cannot be used as a shield for the commission of fraud (Gustillo v. Maravilla, 48 Phil. 442). As far
as private respondent Zenaida Angeles and her husband Justiniano are concerned, the non-registration
of the affidavit admitting their sale of a portion of 110 square meters of the subject land to petitioners
cannot be invoked as a defense because (K)nowledge of an unregistered sale is equivalent to registration
(Winkleman v. Veluz, 43 Phil. 604).

The respondent appellate court also erred in ruling that the cause of action of petitioners had already
prescribed in view of the issuance in 1970 of a certificate of title in the name of the Spouses Justiniano
and Zenaida Fernandez. As already stated, the issuance of a certificate of title in the name appearing
therein does not preclude petitioners from asserting their right of ownership over the land in question.
Time and again it has been ruled that the torrens system should not be used as a shield to protect fraud.
Moreover, prescription cannot be considered against petitioners who had been in possession of subject
premises from the time it was purchased from the de Torres spouses in 1967 and continue to possess the
same under claim of ownership. There is no sufficient basis for the respondent court to conclude that
spouses Zenaida and Justiniano were possessing the entire property adversely against petitioners. At
most, the first time that respondent Zenaida Fernandez claimed adverse possession of the entire
premises was when she demanded from petitioners the possession of the unit possessed by them in a
letter dated October 22, 1977 (Exhibit "F") emboldened by a decision of the Juvenile and Domestic
Relations Court awarding the premises to her. The decision of private respondent to claim total ownership
of the premises was in fact, pursued only half-heartedly by her because the second time that she
demanded possession of the premises was four (4) years after or on June 21, 1981, after an action to
quiet title was filed by petitioners on June 9,1981. In Almanza v. Arguelles, L-49250, December 21, 1987,
We held that, "prescription cannot be invoked in an action for reconveyance, which is, in effect an action
to quiet title against the plaintiff therein who is in possession of the land in question. As lawful possessor
and owner of the disputed portion, her cause of action for reconveyance which, in effect, seeks to quiet
title to property in one's possession is imprescriptible (also cited in Caragay-Layno v. Court of Appeals,
133 SCRA 718, citing Sapto et al. v. Fabiana, 103 Phil. 683 and Faja v. C.A., 75 SCRA 441). The reason,
we explained in Bucton v. Gabar, L-36359, January 31, 1974, 55 SCRA 499, is:

... that while the owner in fee continues liable to an action, proceeding, or suit upon the
adverse claim, he has a continuing right to the aid of a court of equity to ascertain and
determine the nature of such claim and its effect on his title, or to assert any superior
equity in his favor. He may wait until his possession is disturbed or his title is attacked
before taking steps to vindicate his right. But the rule that the statute of limitations is not
available as a defense of an action to remove a cloud from title can only be invoked by a
complainant when he is in possession. .... (44 Am. Jur., p. 47)

The judgment in the petition for dissolution of the conjugal partnership filed with the Juvenile and
Domestic Relations Court of private respondent Zenaida Angeles-Fernandez and her husband Justiniano
where the property in question was awarded to Zenaida cannot bind the petitioners who were not parties
thereto. The failure of petitioners to intervene in the said proceedings for dissolution of conjugal
partnership is not fatal. Petitioners may file their claim of ownership over the one-third portion of the
property in question separately which they did when they brought the complaint for quieting of title before
the trial court.

As already stated, the affidavit executed by Justiniano Fernandez and private respondent Zenaida
Angeles Fernandez acknowledged the sale of one-third (1/3) portion of the subject land to petitioners-
spouses Florentino and Vivencia Fernandez and the receipt by the former of the amount of P5,500.00 as
consideration thereof. However, the trial court in awarding the said one-third portion to petitioners also
ordered the payment by them of P 2,225.00 to private respondent Zenaida Angeles-Fernandez, oblivious
of the fact that only 1/3 and not one half (1/2) pertain to petitioners and that the P5,500.00 advanced by
petitioners at the time the subject property was purchased from the de Torres spouses was sufficient
payment for the 1/3 portion awarded to them.

ACCORDINGLY, the petition is GRANTED. The decision of respondent appellate court is REVERSED.
Judgment is hereby rendered declaring petitioners owners of 1) one-third (1/3) or 110 square meters of
Lot 13, Block N-19 of Pag-asa Subdivision, presently occupied by them, covered by TCT No. 149347 of
the Register of Deeds of Quezon City; and 2) the portion of the duplex house occupied by them after
payment of the balance of P l,349.70 advanced by the husband of private respondent Zenaida Fernandez
for the construction thereof, with interest at the legal rate from November 1969 until fully paid.

SO ORDERED.

Narvasa (Chairman), Cruz, Gancayco and Griño-Aquino, JJ., concur.

The Lawphil Project - Arellano Law Foundation

 [G.R. No. L-3970. October 29, 1952.]

GURBAX SINGH PABLA & CO., GURBAX SINGH PABLA, BELA SINGH PABLA, OJAGAR SINGH,
DHARAM SINGH, TALOK SINGH and CIPRIANO TAN ENG KIAT, Petitioners-Appellees, v.
HERMOGENES REYES and TEODORA TANTOCO, Respondents-Appellants.

Jose N. Buendia for Appellants.

Eliseo Caunca for Appellees.

SYLLABUS

1. LAND REGISTRATION; REGISTRATION OF DEEDS; ITS PURPOSE. — The purpose of registering

an instrument is to give notice thereof to all persons (section 51, Act No. 496); it is not intended by the
proceedings for registration to seek to destroy or otherwise affect already registered rights over the land,
subsisting or existing at the time of the registration. The rights of these parties, who have registered their
rights, are not put in issue when an instrument is subsequently presented for registration; nor are its
effects on other instruments previously registered put in issue by the procedure of registration.

2. ID.; ID.; REGISTER OF DEEDS NEED NOT INQUIRE ABOUT VALIDITY OF DOCUMENT SOUGHT
TO BE REGISTERED. — The law on registration does not require that only valid instruments shall be
registered. How can parties affected thereby be supposed to know their invalidity before they become
aware, actually or constructively, of their existence or of their provision? If the purpose of registration is
merely to give notice, then questions regarding the effect or invalidity of instruments are expected to be
decided after, not before, registration. It must follow as a necessary consequence that registration must
first be allowed, and validity or effect litigated afterwards.

3. ID.; ID.; IF QUESTION OF REGISTERABILITY IS BEFORE THE COURT, IT MAY INQUIRE INTO
VALIDITY OF DOCUMENTS IF ALL PARTIES ARE GIVEN OPPORTUNITY TO PRESENT THEIR
EVIDENCE. — The foregoing, however, must not be understood as an absolute and invariable rule of
procedure, for parties may, by mutual consent, submit issues for determination at the time of the
proceeding to register a document. But the court should only proceed therewith (determination of the
issues) upon giving all the parties concerned sufficient opportunity to present their respective side and the
evidence in support thereof, and that if this can not be done, the determination of the issues should be
reserved in a subsequent proceeding, and, in the meantime, the registration of the document ordered.

DECISION

LABRADOR, J.:

This is an appeal prosecuted by the respondents-appellants against an order of the Court of First
Instance of Manila dated November 29, 1949, compelling them to surrender owner’s duplicates of
Transfer Certificates of Title Nos. 8071 and 8072, so that the contract of lease entered into between
petitioners-appellees and the owner of the land covered by said certificates of title be annotated thereon.
John Tan Chin Eng is the owner of the land covered by the above-mentioned certificates of title, and on
July 23, 1948, he entered into a contract (Exhibit A) with the petitioners-appellees, under the terms of
which petitioners-appellees were to construct thereon a three-story building of concrete and of strong
materials valued at from P80,000 to P90,000. The contract also provided that the building shall become
the exclusive property of the owner of the land, but that the petitioners-appellees were to occupy, hold, or
possess it as lessees for a period of three years and six months from its completion, without paying any
rentals therefor, the sum spent in the construction being considered as the rentals; that after the above
period of three years and six months petitioners-appellees were to continue occupying the said building
for another two years at a monthly rental of P2,000. This contract of lease was filed and registered in the
office of the Register of Deeds of Manila on August 10, 1948, under Primary Entry No. 3352, Volume 15.
At the time that the contract was entered into there was an existing mortgage over the land in favor of
Jose Calvo and Carlos Calvo for the sum of P110,000. This mortgage in favor of the Calvos was
cancelled, and a new mortgage was executed by the owner in favor of respondents-appellants herein,
Honorable Hermogenes Reyes and his spouse Teodora Tantoco, dated March 8, 1949, which was
registered on the same date in the office of the Register of Deeds of Manila under Primary Entry No.
5014. On May 14, 1949, the original contract of lease, Exhibit A, was amended by Exh. C, by virtue of
which the period under which the lessees were to hold and occupy the property without rentals was
extended to seven years and four months, and the rental for the additional two years thereafter reduced
to P1,148. This amended contract of lease, Exhibit C, was also registered in the office of the Register of
Deeds of Manila under Primary Entry No. 5014, Volume 16, on May 20, 1949.

On May 25, 1949, counsel for petitioners-appellees wrote respondents-appellants requesting them to
allow him to take the certificates of title to the office of the Register of Deeds of Manila for the annotation
of the contracts of lease entered into by the owner with them (Exhibit D), and on May 27, 1949, the son of
respondents- appellants acknowledged receipt of the said letter but informed counsel for the petitioners-
appellees that the request could not be granted without the written consent of the owner of the certificates
of title (Exhibit E). On June 16, 1949, respondents-appellants’ son wrote the owner of the land (Exhibit M)
demanding the payment of the overdue interest on the mortgage with the following
statement:jgc:chanrobles.com.ph

". . . For this reason, I wish to request that you come over to my office before 12:00 noon to pay the said
interest before we can deliver your Transfer Certificate of Title to Atty. Manuel P. Calanog who will take
charge of registering the lease contract between Mr. Singh Pabla and your goodself."cralaw virtua1aw
library

On June 3, 1949, the petitioners-appellees filed a motion in the Court of First Instance of Manila praying
that an order issue to the owner for the delivery of the owner’s duplicates of transfer certificates of title
Nos. 8071 and 8072 to the petitioners in order that the Register of Deeds of Manila may be able to make
the annotation thereon of the contract of lease, Exhibit A, and its amendment, Exhibit C. Against this
petition Hermogenes Reyes and Teodora Tantoco filed an opposition, alleging that they had no
knowledge whatsoever of the contract of lease, Exhibit A, or of its amendment, Exhibit C, and that the
execution of the amendment, Exhibit C, violated the express provision of the mortgage, to the effect that
the owner could not sell, assign, or encumber the mortgaged premises without the written consent of the
mortgagees. It is to be noted that with respect to the original contract of lease, Exhibit A, no allegation is
made in the opposition of the respondents- appellants that they were not aware of the existence of the
contract, Exhibit A, their only allegation being that the only annotation on the certificates of title at the time
they entered into the contract of mortgage was the mortgage in favor of Jose Calvo and Carlos Calvo. It is
also to be noted that respondents-appellants do not deny an express allegation of paragraph 13 of the
amended petition to the effect that notice was given to the public by a big sign board placed on the
premises while the building was under construction that petitioners- appellees are the owners of the
building. The amended petition further states, without denial on the part of the respondents-appellants,
that as early as October 9, 1948, the Register of Deeds of Manila had demanded in writing from the
owner of the land the submission of his duplicate certificates of title Nos. 8071 and 8072 in order that the
lease executed by him in favor of the petitioners-appellees may be given due course. At the hearing of
the motion no oral evidence was submitted; only documentary evidence was presented.

Thereafter the Court of First Instance of Manila issued the order already mentioned above, directing
respondents to surrender the certificates of title to the Register of Deeds of Manila in order that
petitioners-appellees’ contract of lease may be noted thereon. It expressly found that respondents-
appellants had knowledge of the lease contract, Exhibit A, but that respondents’ deed of mortgage of
March 8, 1949, has priority over petitioner’s amended contract of lease, Exhibit C. As regards the
(supposed) prohibition contained in the contract of mortgage, the court held that the prohibition gives a
right of foreclosure; in other words, that in spite of the prohibition the amended contract of lease, Exhibit
C, may not be considered as null and void.
In this court on appeal claim is made on behalf of the respondents-appellants that the court a quo erred in
holding that respondents-appellants had knowledge of the contract of lease, Exhibit A; that it erred in
holding that Tirso T. Reyes is the attorney-in-fact of the respondents-appellants; that it erred in ordering
the registration of the contract of lease, Exhibit A; and that it erred in not holding that the registration of
the contracts, Exhibits A and C, will prejudice the rights and interest of Respondents-Appellants.

It should be noted that all that the petitioners demand or pray for is the surrender of the titles to the
Register of Deeds so that their contracts of lease, Exhibits A and C, may be noted thereon. The only
issue, therefore, is whether petitioners have a right to have said deeds registered. It is not denied that the
contracts have been executed by the registered owner of the land, or that they have been lawfully
executed, or that they have all the qualities of registerable documents. Indeed, the owner is agreeable to
the registration. The objections interposed by respondents, who are mortgagees merely, that they had no
knowledge of the contract of lease, or that their mortgage has priority, or that they will be prejudiced, are
beside the issue.

The purpose of registering an instrument is to give notice thereof to all persons (section 51, Act No. 496);
it is not intended by the proceedings for registration to seek to destroy or otherwise affect already
registered rights over the land, subsisting or existing at the time of the registration. The rights of these
parties, who have registered their rights, are not put in issue when an instrument is subsequently
presented for registration; nor are its effects on other instruments previously registered put in issue by the
procedure of registration. Thus, the objections raised by respondents-appellants that they had no
knowledge of the contract of lease, Exhibit A, before the property was mortgaged to them, or that the
same violates their contract of mortgage with the owner of the land — these are not passed upon by the
order for the registration of petitioners-appellees’ contract of lease. The objections, as well as the relative
rights of all parties who have registered their deeds, shall be decided in the proper suit or proceeding
when the opportune occasion arises; but they are not now in issue, nor may they be adjudicated upon,
simply because petitioners-appellees have applied for the registration of their contract of lease.

The impropriety and inconvenience of proceeding to determine completely and in advance all the possible
consequences of a document, upon all parties affected thereby, in the proceeding for its registration
becomes apparent when, as in this case, important and complicated questions of fact and of law were
presented by the respondents-appellants about their alleged lack of knowledge of the contracts of lease
and the invalidity thereof. The court a quo passed upon vital issues of fact upon the motion and the
opposition thereto, and upon the documents, letters, and receipts presented, without any other evidence
than the above. Yet the question of knowledge is mainly a question of fact and requires inquiry into many
and complicated circumstances, which can not be satisfactorily shown except by testimony.

On the other hand, the supposed invalidity of the contracts of lease is no valid objection to their
registration, because invalidity is no proof of their non-existence or a valid excuse for denying their
registration. The law on registration does not require that only valid instruments shall be registered. How
can parties affected thereby be supposed to know their invalidity before they become aware, actually or
constructively, of their existence or of their provisions? If the purpose of registration is merely to give
notice, then questions regarding the effect or invalidity of instruments are expected to be decided after,
not before, registration. It must follow as a necessary consequence that registration must first be allowed,
and validity or effect litigated afterwards.

The foregoing, however, must not be understood as an absolute and invariable rule of procedure, for
parties may, by mutual consent, submit issues for determination at the time of the proceeding to register a
document. But the court should only proceed therewith (determination of the issues) upon giving all the
parties concerned sufficient opportunity to present their respective sides and the evidence in support
thereof, and that if this can not be done, the determination of the issues should be reserved in a
subsequent proceeding and the registration of the document ordered.

In accordance with the above opinion, we find that the issues raised by respondents-appellants, namely,
that the contracts of lease, Exhibits A and C, are invalid because they violate the contracts of mortgage
executed in favor of the owner of the land, that Tirso T. Reyes is not the attorney-in-fact of the
respondents-appellants, and that the respondents-appellants had no knowledge of the execution of the
contract of lease, Exhibits A and C - these issues were not properly investigated because respondents-
appellants did not have the opportunity to present evidence thereon and did not even present copy of
their mortgage at the hearing, and the trial court decided the questions without full and complete
investigation. The ruling of the trial court on the above issues should, therefore, be set aside and their
determination reserved in a proper proceeding.

Wherefore, the opposition to the motion for the surrender of the certificates of title to the Register of
Deeds of Manila is overruled, and the order appealed from, in so far as it orders the surrender of the
certificates of title for the registration of the contracts of lease, is hereby affirmed, but the other rulings are
reversed, and the other issues raised by respondents-appellants reserved for determination in a proper
proceeding. With costs against the Respondents-Appellants.

Paras, C.J., Bengzon, Padilla, Montemayor and Jugo, JJ., concur.

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 know every fact which the
record discloses.

"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).

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 debt, she filed against the Gaffud spouses and the PNB an action to quiet title.

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.

Barredo (Chairman), Antonio, Concepcion, Jr. and Santos, JJ., concur.

Abad Santos, J., took no part.
 [G.R. No. 154409. June 21, 2004]

Spouses NOEL and JULIE ABRIGO, petitioners, vs. ROMANA DE VERA, respondent.

DECISION
PANGANIBAN, J.:

Between two buyers of the same immovable property registered under the Torrens system, the law
gives ownership priority to (1) the first registrant in good faith; (2) then, the first possessor in good faith;
and (3) finally, the buyer who in good faith presents the oldest title. This provision, however, does not
apply if the property is not registered under the Torrenssystem.

The Case

Before us is a Petition for Review[1] under Rule 45 of the Rules of Court, seeking to set aside the
March 21, 2002 Amended Decision[2] and the July 22, 2002 Resolution[3] of the Court of Appeals (CA) in
CA-GR CV No. 62391. The Amended Decision disposed as follows:

WHEREFORE, the dispositive part of the original DECISION of this case, promulgated on November 19,
2001, is SET ASIDE and another one is entered AFFIRMING in part and REVERSING in part the
judgment appealed from, as follows:

1. Declaring [Respondent] Romana de Vera the rightful owner and with better right to possess
the property in question, being an innocent purchaser for value therefor;

2. Declaring Gloria Villafania [liable] to pay the following to [Respondent] Romana de Vera and
to [Petitioner-]Spouses [Noel and Julie] Abrigo, to wit:

As to [Respondent] Romana de Vera:

1. P300,000.00 plus 6% per annum as actual damages;

2. P50,000.00 as moral damages;
3. P50,000.00 as exemplary damages;
4. P30,000.00 as attorneys fees; and
5. Cost of suit.

As to [Petitioner-]Spouses [Noel and Julie] Abrigo:

1. P50,000.00 as moral damages;

2. P50,000.00 as exemplary damages;
3. P30,000.00 as attorneys fees;
4. Cost of suit.[4]

The assailed Resolution denied reconsideration.

The Facts
 Quoting the trial court, the CA narrated the facts as follows:

As culled from the records, the following are the pertinent antecedents amply summarized by the trial
court:

On May 27, 1993, Gloria Villafania sold a house and lot located at Banaoang, Mangaldan, Pangasinan
and covered by Tax Declaration No. 1406 to Rosenda Tigno-Salazar and Rosita Cave-Go. The said sale
became a subject of a suit for annulment of documents between the vendor and the vendees.

On December 7, 1993, the Regional Trial Court, Branch 40 of Dagupan City rendered judgment
approving the Compromise Agreement submitted by the parties. In the said Decision, Gloria Villafania
was given one year from the date of the Compromise Agreement to buy back the house and lot, and
failure to do so would mean that the previous sale in favor of Rosenda Tigno-Salazar and Rosita Cave-
Go shall remain valid and binding and the plaintiff shall voluntarily vacate the premises without need of
any demand. Gloria Villafania failed to buy back the house and lot, so the [vendees] declared the lot in
their name.

Unknown, however to Rosenda Tigno-Salazar and Rosita Cave-Go, Gloria Villafania obtained a free
patent over the parcel of land involved [on March 15, 1988 as evidenced by OCT No. P-30522]. The said
free patent was later on cancelled by TCT No. 212598 on April 11, 1996.

On October 16, 1997, Rosenda Tigno-Salazar and Rosita Cave-Go, sold the house and lot to the herein
[Petitioner-Spouses Noel and Julie Abrigo].

On October 23, 1997, Gloria Villafania sold the same house and lot to Romana de Vera x x x. Romana de
Vera registered the sale and as a consequence, TCT No. 22515 was issued in her name.

On November 12, 1997, Romana de Vera filed an action for Forcible Entry and Damages against
[Spouses Noel and Julie Abrigo] before the Municipal Trial Court of Mangaldan, Pangasinan docketed as
Civil Case No. 1452. On February 25, 1998, the parties therein submitted a Motion for Dismissal in view
of their agreement in the instant case that neither of them can physically take possession of the property
in question until the instant case is terminated. Hence the ejectment case was dismissed.[5]

Thus, on November 21, 1997, [petitioners] filed the instant case [with
the Regional Trial Court of Dagupan City] for the annulment of documents, injunction, preliminary
injunction, restraining order and damages [against respondent and Gloria Villafania].

After the trial on the merits, the lower court rendered the assailed Decision dated January 4, 1999,
awarding the properties to [petitioners] as well as damages. Moreover, x x x Gloria Villafania was ordered
to pay [petitioners and private respondent] damages and attorneys fees.

Not contented with the assailed Decision, both parties [appealed to the CA]. [6]

Ruling of the Court of Appeals

In its original Decision promulgated on November 19, 2001, the CA held that a void title could not
give rise to a valid one and hence dismissed the appeal of Private Respondent Romana de Vera. [7] Since
Gloria Villafania had already transferred ownership to Rosenda Tigno-Salazar and Rosita Cave-Go, the
subsequent sale to De Vera was deemed void.
The CA also dismissed the appeal of Petitioner-Spouses Abrigo and found no sufficient basis to
award them moral and exemplary damages and attorneys fees.
 On reconsideration, the CA issued its March 21, 2002 Amended Decision, finding Respondent De
Vera to be a purchaser in good faith and for value. The appellate court ruled that she had relied in good
faith on the Torrens title of her vendor and must thus be protected.[8]
Hence, this Petition.[9]

Issues

Petitioners raise for our consideration the issues below:

1. Whether or not the deed of sale executed by Gloria Villafania in favor of [R]espondent Romana
de Vera is valid.

2. Whether or not the [R]espondent Romana de Vera is a purchaser for value in good faith.

3. Who between the petitioners and respondent has a better title over the property in question. [10]

In the main, the issues boil down to who between petitioner-spouses and respondent has a better
right to the property.

The Courts Ruling

The Petition is bereft of merit.

Main Issue:
Better Right over the Property

Petitioners contend that Gloria Villafania could not have transferred the property to Respondent De
Vera because it no longer belonged to her.[11] They further claim that the sale could not be validated,
since respondent was not a purchaser in good faith and for value.[12]

Law on Double Sale

The present case involves what in legal contemplation was a double sale. On May 27, 1993, Gloria
Villafania first sold the disputed property to Rosenda Tigno-Salazar and Rosita Cave-Go, from whom
petitioners, in turn, derived their right. Subsequently, on October 23, 1997, a second sale was executed
by Villafania with Respondent Romana de Vera.
Article 1544 of the Civil Code states the law on double sale thus:

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 the person who presents the oldest title, provided there is
good faith.

Otherwise stated, the law provides that a double sale of immovables transfers ownership to (1) the
first registrant in good faith; (2) then, the first possessor in good faith; and (3) finally, the buyer who in
good faith presents the oldest title.[13] There is no ambiguity in the application of this law with respect to
lands registered under the Torrens system.
This principle is in full accord with Section 51 of PD 1529 [14] which provides that 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 until its registration.[15] Thus, if the sale is not registered, it is
binding only between the seller and the buyer but it does not affect innocent third persons. [16]
In the instant case, both Petitioners Abrigo and respondent registered the sale of the property. Since
neither petitioners nor their predecessors (Tigno-Salazar and Cave-Go) knew that the property was
covered by the Torrens system, they registered their respective sales under Act 3344. [17] For her part,
respondent registered the transaction under the Torrens system[18]because, during the sale, Villafania had
presented the transfer certificate of title (TCT) covering the property.[19]
Respondent De Vera contends that her registration under the Torrens system should prevail over
that of petitioners who recorded theirs under Act 3344. De Vera relies on the following insight of Justice
Edgardo L. Paras:

x x x If the land is registered under the Land Registration Act (and has therefore a Torrens Title), and it is
sold but the subsequent sale is registered not under the Land Registration Act but under Act 3344, as
amended, such sale is not considered REGISTERED, as the term is used under Art. 1544 x x x. [20]

We agree with respondent. It is undisputed that Villafania had been issued a free patent registered
as Original Certificate of Title (OCT) No. P-30522.[21] The OCT was later cancelled by Transfer Certificate
of Title (TCT) No. 212598, also in Villafanias name.[22] As a consequence of the sale, TCT No. 212598
was subsequently cancelled and TCT No. 22515 thereafter issued to respondent.
Soriano v. Heirs of Magali[23] held that registration must be done in the proper registry in order to bind
the land. Since the property in dispute in the present case was already registered under
the Torrens system, petitioners registration of the sale under Act 3344 was not effective for purposes of
Article 1544 of the Civil Code.
More recently, in Naawan Community Rural Bank v. Court of Appeals,[24] the Court upheld the right
of a party who had registered the sale of land under the Property Registration Decree, as opposed to
another who had registered a deed of final conveyance under Act 3344. In that case, the priority in time
principle was not applied, because the land was already covered by the Torrens system at the time the
conveyance was registered under Act 3344. For the same reason, inasmuch as the registration of the
sale to Respondent De Vera under the Torrens system was done in good faith, this sale must be upheld
over the sale registered under Act 3344 to Petitioner-Spouses Abrigo.
Radiowealth Finance Co. v. Palileo[25] explained the difference in the rules of registration under Act
3344 and those under the Torrens system in this wise:

Under Act No. 3344, registration of instruments affecting unregistered lands is without prejudice to a third
party with a better right. The aforequoted phrase has been held by this Court to mean that the mere
registration of a sale in ones favor does not give him any right over the land if the vendor was not
anymore the owner of the land having previously sold the same to somebody else even if the earlier sale
was unrecorded.

The case of Carumba vs. Court of Appeals[26] is a case in point. It was held therein that Article 1544 of the
Civil Code has no application to land not registered under Act No. 496. Like in the case at bar, Carumba
dealt with a double sale of the same unregistered land. The first sale was made by the original owners
and was unrecorded while the second was an execution sale that resulted from a complaint for a sum of
money filed against the said original owners. Applying [Section 33], Rule 39 of the Revised Rules of
Court,[27] this Court held that Article 1544 of the Civil Code cannot be invoked to benefit the purchaser at
the execution sale though the latter was a buyer in good faith and even if this second sale was
registered. It was explained that this is because the purchaser of unregistered land at a sheriffs execution
sale only steps into the shoes of the judgment debtor, and merely acquires the latters interest in the
property sold as of the time the property was levied upon.

Applying this principle, x x x the execution sale of unregistered land in favor of petitioner is of no effect
because the land no longer belonged to the judgment debtor as of the time of the said execution sale. [28]

Petitioners cannot validly argue that they were fraudulently misled into believing that the property
was unregistered. A Torrens title, once registered, serves as a notice to the whole world.[29] All persons
must take notice, and no one can plead ignorance of the registration.[30]

Good-Faith Requirement

We have consistently held that Article 1544 requires the second buyer to acquire the immovable in
good faith and to register it in good faith.[31] Mere registration of title is not enough; good faith must concur
with the registration.[32] We explained the rationale in Uraca v. Court of Appeals,[33] which we quote:

Under the foregoing, the prior registration of the disputed property by the second buyer does not by itself
confer ownership or a better right over the property. Article 1544 requires that such registration must be
coupled with good faith. Jurisprudence teaches us that (t)he governing principle is primus tempore, potior
jure (first in time, stronger in right). Knowledge gained by the first buyer of the second sale cannot defeat
the first buyers rights except where the second buyer registers in good faith the second sale ahead of the
first, as provided by the Civil Code. Such knowledge of the first buyer does not bar her from availing of
her rights under the law, among them, to register first her purchase as against the second buyer. But
in converso, knowledge gained by the second buyer of the first sale defeats his rights even if he is first to
register the second sale, since such knowledge taints his prior registration with bad faith. This is the price
exacted by Article 1544 of the Civil Code for the second buyer being able to displace the first buyer; that
before the second buyer can obtain priority over the first, he must show that he acted in good faith
throughout (i.e. in ignorance of the first sale and of the first buyers rights) ---- from the time of acquisition
until the title is transferred to him by registration, or failing registration, by delivery of
possession.[34] (Italics supplied)

Equally important, under Section 44 of PD 1529, every registered owner receiving a certificate of title
pursuant to a decree of registration, and every subsequent purchaser of registered land taking such
certificate for value and in good faith shall hold the same free from all encumbrances, except those noted
and enumerated in the certificate.[35] Thus, a person dealing with registered land is not required to go
behind the registry to determine the condition of the property, since such condition is noted on the face of
the register or certificate of title.[36] Following this principle, this Court has consistently held as regards
registered land that a purchaser in good faith acquires a good title as against all the transferees thereof
whose rights are not recorded in the Registry of Deeds at the time of the sale.[37]
Citing Santiago v. Court of Appeals,[38] petitioners contend that their prior registration under Act 3344
is constructive notice to respondent and negates her good faith at the time she registered the
sale. Santiago affirmed the following commentary of Justice Jose C. Vitug:

The governing principle is prius tempore, potior jure (first in time, stronger in right). Knowledge by the first
buyer of the second sale cannot defeat the first buyer's rights except when the second buyer first
registers in good faith the second sale (Olivares vs. Gonzales, 159 SCRA 33). Conversely, knowledge
gained by the second buyer of the first sale defeats his rights even if he is first to register, since such
knowledge taints his registration with bad faith (see also Astorga vs. Court of Appeals, G.R. No 58530, 26
December 1984) In Cruz vs. Cabana (G.R. No. 56232, 22 June 1984; 129 SCRA 656), it was held that it
is essential, to merit the protection of Art. 1544, second paragraph, that the second realty buyer must act
in good faith in registering his deed of sale (citing Carbonell vs. Court of Appeals, 69 SCRA
99, Crisostomo vs. CA, G.R. 95843, 02 September 1992).

xxxxxxxxx

Registration of the second buyer under Act 3344, providing for the registration of all instruments on land
neither covered by the Spanish Mortgage Law nor the Torrens System (Act 496), cannot improve his
standing since Act 3344 itself expresses that registration thereunder would not prejudice prior rights in
good faith (see Carumba vs. Court of Appeals, 31 SCRA 558). Registration, however, by the first
buyer under Act 3344 can have the effect of constructive notice to the second buyer that can
defeat his right as such buyer in good faith (see Arts. 708-709, Civil Code; see also Revilla vs.
Galindez,107 Phil. 480; Taguba vs. Peralta, 132 SCRA 700). Art. 1544 has been held to be inapplicable
to execution sales of unregistered land, since the purchaser merely steps into the shoes of the debtor and
acquires the latter's interest as of the time the property is sold (Carumba vs. Court of Appeals, 31 SCRA
558; see also Fabian vs. Smith, Bell & Co., 8 Phil. 496) or when there is only one sale (Remalante vs.
Tibe, 158 SCRA 138).[39] (Emphasis supplied)

Santiago was subsequently applied in Bayoca v. Nogales,[40] which held:

Verily, there is absence of prior registration in good faith by petitioners of the second sale in their
favor. As stated in the Santiago case, registration by the first buyer under Act No. 3344 can have the
effect of constructive notice to the second buyer that can defeat his right as such buyer. On account of
the undisputed fact of registration under Act No. 3344 by [the first buyers], necessarily, there is absent
good faith in the registration of the sale by the [second buyers] for which they had been issued certificates
of title in their names. x x x.[41]

Santiago and Bayoca are not in point. In Santiago, the first buyers registered the sale under
the Torrens system, as can be inferred from the issuance of the TCT in their names. [42]There was no
registration under Act 3344. In Bayoca, when the first buyer registered the sale under Act 3344, the
property was still unregistered land.[43] Such registration was therefore considered effectual.
Furthermore, Revilla and Taguba, which are cited in Santiago, are not on all fours with the present
case. In Revilla, the first buyer did not register the sale.[44] In Taguba, registration was not an issue.[45]
As can be gathered from the foregoing, constructive notice to the second buyer through registration
under Act 3344 does not apply if the property is registered under the Torrenssystem, as in this case.
We quote below the additional commentary of Justice Vitug, which was omitted in Santiago. This
omission was evidently the reason why petitioner misunderstood the context of the citation therein:

"The registration contemplated under Art. 1544 has been held to refer to registration under Act 496 Land
Registration Act (now PD 1529) which considers the act of registration as the operative act that binds the
land (see Mediante vs. Rosabal, 1 O.G. [12] 900, Garcia vs. Rosabal, 73 Phil 694). On lands covered by
the Torrens System, the purchaser acquires such rights and interest as they appear in the certificate of
title, unaffected by any prior lien or encumbrance not noted therein. The purchaser is not required to
explore farther than what the Torrens title, upon its face, indicates. The only exception is where the
purchaser has actual knowledge of a flaw or defect in the title of the seller or of such liens or
encumbrances which, as to him, is equivalent to registration (see Sec. 39, Act 496; Bernales vs. IAC,
G.R. 75336, 18 October 1988; Hernandez vs. Sales, 69 Phil 744; Tajonera vs. Court of Appeals, L-26677,
27 March 1981),"[46]
Respondent
in Good Faith

The Court of Appeals examined the facts to determine whether respondent was an innocent
purchaser for value.[47] After its factual findings revealed that Respondent De Vera was in good faith, it
explained thus:

x x x. Gloria Villafania, [Respondent] De Veras vendor, appears to be the registered owner. The subject
land was, and still is, registered in the name of Gloria Villafania. There is nothing in her certificate of title
and in the circumstances of the transaction or sale which warrant [Respondent] De Vera in supposing that
she need[ed] to look beyond the title. She had no notice of the earlier sale of the land to [petitioners]. She
ascertained and verified that her vendor was the sole owner and in possession of the subject property by
examining her vendors title in the Registry of Deeds and actually going to the premises. There is no
evidence in the record showing that when she bought the land on October 23, 1997, she knew or had the
slightest notice that the same was under litigation in Civil Case No. D-10638 of
the Regional Trial Court of Dagupan City, Branch 40, between Gloria Villafania and [Petitioners]
Abrigo. She was not even a party to said case. In sum, she testified clearly and positively, without any
contrary evidence presented by the [petitioners], that she did not know anything about the earlier sale and
claim of the spouses Abrigo, until after she had bought the same, and only then when she bought the
same, and only then when she brought an ejectment case with the x x x Municipal Court of Mangaldan,
known as Civil Case No. 1452. To the [Respondent] De Vera, the only legal truth upon which she had to
rely was that the land is registered in the name of Gloria Villafania, her vendor, and that her title under
the law, is absolute and indefeasible. x x x.[48]

We find no reason to disturb these findings, which petitioners have not rebutted. Spouses Abrigo
base their position only on the general averment that respondent should have been more vigilant prior to
consummating the sale. They argue that had she inspected the property, she would have found
petitioners to be in possession.[49]
This argument is contradicted, however, by the spouses own admission that the parents and the
sister of Villafania were still the actual occupants in October 1997, when Respondent De Vera purchased
the property.[50] The family members may reasonably be assumed to be Villafanias agents, who had not
been shown to have notified respondent of the first sale when she conducted an ocular inspection. Thus,
good faith on respondents part stands.
WHEREFORE, the Petition is DENIED and the assailed Decision AFFIRMED. Costs against
petitioners.
SO ORDERED.
Davide, Jr., C.J., (Chairman), Carpio, and Azcuna, JJ., concur.
Ynares-Santiago, J., on leave.
CARMELITA FUDOT, G.R. No. 171008
Petitioner,
Present:

QUISUMBING, J.,
- versus - Chairperson,
CARPIO,
CARPIO MORALES,
TINGA, and
CATTLEYA LAND, INC., VELASCO, JR., JJ.
Respondent.
Promulgated:
September 13, 2007

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

DECISION

TINGA, J.:

For resolution is a petition that seeks to nullify the Decision [1] and Resolution[2] of the Court of Appeals
dated 28 April 2005 and 11 January 2006, respectively, in C.A.G.R. CV No. 73025 which declared
respondent as having a better right over a parcel of land located in Doljo, Panglao, Bohol.

The facts, as culled from the records, follow.

Sometime in July 1992, Cattleya Land, Inc. (hereinafter referred to as respondent) asked someone to
check, on its behalf, the titles of nine (9) lots, the subject land included, which it intended to buy from the
spouses Troadio and Asuncion Tecson. Finding no defect on the titles, respondent purchased the nine
lots through a Deed of Conditional Sale on 6 November 1992. Subsequently, on 30 August 1993,
respondent and the Tecsons executed a Deed of Absolute Sale over the same properties. The Deed of
Conditional Sale and the Deed of Absolute Sale were registered with the Register of Deeds on 06
November 1992 and 04 October 1993, respectively.[3] The Register of Deeds, Atty. Narciso dela Serna,
refused to actually annotate the deed of sale on the titles because of the existing notice of attachment in
connection with Civil Case No. 3399 pending before the Regional Trial Court of Bohol.[4] The attachment
was eventually cancelled by virtue of a compromise agreement between the Tecsons and their attaching
creditor which was brokered by respondent. Titles to six (6) of the nine (9) lots were issued, but the
Register of Deeds refused to issue titles to the remaining three (3) lots , because the titles covering the
same were still unaccounted for.
On 23 January 1995, petitioner presented for registration before the Register of Deeds the owners copy
of the title of the subject property, together with the deed of sale purportedly executed by the Tecsons in
favor of petitioner on 19 December 1986. On the following day, respondent sent a letter of
protest/opposition to petitioners application.Much to its surprise, respondent learned that the Register of
Deeds had already registered the deed of sale in favor of petitioner and issued a new title in her name.[5]

On 5 May 1995, respondent filed its Complaint[6] for Quieting Of Title &/Or Recovery Of Ownership,
Cancellation Of Title With Damages before the Regional Trial Court ofTagbilaran City.[7] On 26 June
1995, Asuncion filed a complaint-in-intervention, claiming that she never signed any deed of sale covering
any part of their conjugal property in favor of petitioner. She averred that her signature in petitioners deed
of sale was forged thus, said deed should be declared null and void.[8] She also claimed that she has
discovered only recently that there was an amorous relationship between her husband and petitioner. [9]

Petitioner, for her part, alleged in her answer[10] that the spouses Tecson had sold to her the
subject property for P20,000.00 and delivered to her the owners copy of the title on 26 December 1986.
She claims that she subsequently presented the said title to the Register of Deeds but the latter refused
to register the same because the property was still under attachment.

On 31 October 2001, the trial court rendered its decision: [11] (i) quieting the title or ownership of the
subject land in favor of respondent; (ii) declaring the deed of sale between petitioner and spouses Tecson
invalid; (iii) ordering the registration of the subject land in favor of respondent; (iv) dismissing respondents
claim for damages against the Register of Deeds for insufficiency of evidence; (v) dismissing Asuncions
claim for damages against petitioner for lack of factual basis; and (vi) dismissing petitioners
counterclaim for lack of the required preponderance of evidence.[12]
According to the trial court, respondent had recorded in good faith the deed of sale in its favor ahead of
petitioner. Moreover, based on Asuncions convincing and unrebutted testimony, the trial court concluded
that the purported signature of Asuncion in the deed of sale in favor of petitioner was forged,
thereby rendering the sale void.[13]

Petitioner sought recourse to the Court of Appeals, arguing in the main that the rule on double sale was
applicable to the case. The appellate court, however, dismissed her appeal, holding that there was no
double sale because the alleged sale to petitioner was null and void in view of the forgery of Asuncions
purported signature in the deed. The appellate court noted that petitioner failed to rebut Asuncions
testimony despite opportunities to do so.[14] Moreover, even if there was double sale, according to the
appellate court, respondents claim would still prevail since it was able to register the second sale in its
favor in good faith, had made inquiries before it purchased the lots, and was informed that the titles were
free from encumbrance except the attachment on the property due to Civil Case No. 3399. [15]
Petitioner sought reconsideration of the decision but the Court of Appeals denied her motion for
reconsideration for lack of merit.[16]

Petitioner thus presents before this Court the following issues for resolution:

I.

BETWEEN 2 BUYERS OF REGISTERED LAND, WHO HAS THE BETTER RIGHT-

IS IT THE FIRST BUYER WHO WAS GIVEN THE OWNERS DUPLICATE TCT
TOGETHER WITH A DEED OF SALE IN 1986, OR THE SECOND BUYER IN 1992
WITH ONLY A DEED OF SALE.

II.
IS A BUYER OF REGISTERED LAND WHO DID NOT DEMAND OR REQUIRE THE
DELIVERY OF THE OWNERS DUPLICATE TCT A BUYER IN GOOD FAITH.

III.

II. IN SUBSEQUENT REGISTRATION OF REGISTERED LANDS, AS BY SALE,

WHICH LAW SHALL GOVERN, ARTICLE 1455 OF CIVIL CODE OR P.D. 1529
OR TORRENSSYSTEM.[17]

Petitioner avers that she was the first buyer in good faith and even had in her possession the
owners copy of the title so much so that she was able to register the deed of sale in her favor and caused
the issuance of a new title in her name. She argues that the presentation and surrender of the deed of
sale and the owners copy carried with it the conclusive authority of Asuncion Tecson which cannot be
overturned by the latters oral deposition.[18]

Petitioner claims that respondent did not demand nor require delivery of the owners duplicate title
from the spouses Tecson, neither did it investigate the circumstances surrounding the absence of the
title. These indicate respondents knowledge of a defect in the title of the spouses and, thus, petitioner
concludes that respondent was not a buyer in good faith.[19]

Finally, petitioner insists that the applicable law in this case is P.D. No. 1529, a special law
dealing precisely with the registration of registered lands or any subsequent sale thereof, and not Article
1544 of the Civil Code which deals with immovable property not covered by the Torrens System. [20]

Respondent points out, on one hand, that petitioners first two issues which present an inquiry on
who has a better right or which one is a buyer in good faith, are questions of fact not proper in a petition
for review. The third issue, on the other hand, is ostensibly a question of law which had been
unsuccessfully raised below.[21]
 Respondent maintains that there is no room to speak of petitioner as a buyer in good faith since
she was never a buyer in the first place, as her claim is based on a null and void deed of sale, so the
court a quo found. Respondent also asserts that its status as a buyer in good faith was established and
confirmed in the proceedings before the two courts below.[22]

Lastly, respondent argues that P.D. No. 1529 finds no application in the instant case. The
production of the owners duplicate certificate x x x being conclusive authority from the registered owner is
only true as between the registration applicant and the register of deeds concerned, but never to third
parties. Such conclusive authority, respondent adds, is only for the Register of Deeds to enter a new
certificate or to make a memorandum of registration in accordance with such instrument. It cannot cure
the fatal defect that the instrument from which such registration was effected is null and void ab initio,
respondent concludes.[23]

The petition is bereft of merit.

Petitioners arguments, which rest on the assumption that there was a double sale, must fail.

In the first place, there is no double sale to speak of. Art. 1544 of the Civil Code,[24] which provides the
rule on double sale, applies only to a situation where the same property is validly sold to different
vendees. In this case, there is only one sale to advert to, that between the spouses Tecson and
respondent.

In Remalante v. Tibe,[25] this Court ruled that the Civil Law provision on double sale is not applicable
where there is only one valid sale, the previous sale having been found to be fraudulent. Likewise,
in Espiritu and Apostol v. Valerio,[26] where the same parcel of land was purportedly sold to two different
parties, the Court held that despite the fact that one deed of sale was registered ahead of the other, Art.
1544 of the Civil Code will not apply where said deed is found to be a forgery, the result of this being that
the right of the other vendee should prevail.

The trial court declared that the sale between the spouses Tecson and petitioner is invalid, as it bears the
forged signature of Asuncion. Said finding is based on the unrebutted testimony of Asuncion and the trial
courts visual analysis and comparison of the signatures in her Complaint-in-Intervention and the
purported deed of sale. This finding was upheld by the Court of Appeals, as it ruled that the purported
sale in petitioners favor is null and void, taking into account Asuncions unrefuted deposition. In particular,
the Court of Appeals noted petitioners failure to attend the taking of the oral deposition and to give written
interrogatories. In short, she did not take the necessary steps to rebut Asuncions definitive assertion.
The congruence of the wills of the spouses is essential for the valid disposition of conjugal
property.[27] Thus, under Article 166 of the Civil Code[28] which was still in effect on 19 December
1986 when the deed of sale was purportedly executed, the husband cannot generally alienate or
encumber any real property of the conjugal partnership without the wifes consent.

In this case, following Article 173[29] of the Civil Code, on 26 June 1995, or eight and a half years (8 ) after
the purported sale to petitioner, Asuncion filed her Complaint-in-Intervention seeking the nullification
thereof, and while her marriage with Troadio was still subsisting. Both the Court of Appeals and the trial
court found Asuncions signature in the deed of sale to have been forged, and consequently, the deed of
sale void for lack of marital consent. We find no reason to disturb the findings of the trial court and the
Court of Appeals. Findings of fact of lower courts are deemed conclusive and binding upon the Supreme
Court subject to certain exceptions,[30] none of which are present in this case. Besides, it has long been
recognized in our jurisprudence that a forged deed is a nullity and conveys no title. [31]

Petitioner argues she has a better right over the property in question, as the holder of and the first one to
present, the owners copy of the title for the issuance of a new TCT. The Court is not persuaded.

The act of registration does not validate petitioners otherwise void contract. Registration is a mere
ministerial act by which a deed, contract, or instrument is sought to be inscribed in the records of the
Office of the Register of Deeds and annotated at the back of the certificate of title covering the land
subject of the deed, contract, or instrument.While it operates as a notice of the deed, contract, or
instrument to others, it does not add to its validity nor converts an invalid instrument into a valid one as
between the parties,[32] nor amounts to a declaration by the state that the instrument is a valid and
subsisting interest in the land.[33] The registration of petitioners void deed is not an impediment to a
declaration by the courts of its invalidity.

Even assuming that there was double sale in this case, petitioner would still not prevail. The pertinent
portion of Art. 1544 provides:

Art. 1544. x x x.

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

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

x x x x.
In interpreting this provision, the Court declared that the governing principle is primus tempore, potior
jure (first in time, stronger in right). Knowledge gained by the first buyer of the second sale cannot defeat
the first buyers rights, except where the second buyer registers in good faith the second sale ahead of the
first as provided by the aforequoted provision of the Civil Code. Such knowledge of the first buyer does
not bar him from availing of his rights under the law, among them to register first his purchase as against
the second buyer. However, knowledge gained by the second buyer of the first sale defeats his rights
even if he is first to register the second sale, since such knowledge taints his prior registration with bad
faith.[34] It is thus essential, to merit the protection of Art. 1544, second paragraph, that the second realty
buyer must act in good faith in registering his deed of sale.[35]
We agree with the trial court and the Court of Appeals that respondent was a buyer in good faith, having
purchased the nine (9) lots, including the subject lot, without any notice of a previous sale, but only a
notice of attachment relative to a pending civil case. In fact, in its desire to finally have the title to the
properties transferred in its name, it persuaded the parties in the said case to settle the same so that the
notice of attachment could be cancelled.

Relevant to the discussion are the following provisions of P.D. No. 1529:

Sec. 51. Conveyance and other dealings by registered owner. An owner of registered
land may convey, mortgage, lease, charge or otherwise deal with the same in
accordance with existing laws. He may use such forms of deeds, mortgages, lease or
other voluntary instruments as are sufficient in law. But no deed, mortgage, lease or
other voluntary instrument, except a will purporting to convey or affect registered land
shall take effect as a conveyance or bind the land, but shall operate only as a contract
between the parties and as evidence of authority to the Register of Deeds to make
Registration.
The act of registration shall be the operative act to convey or affect the
land insofar as third persons are concerned, and in all cases under this Decree, the
registration shall be made in the office of the Register of Deeds for the province or city
where the land lies. (Emphasis supplied)

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

It has been held that between two transactions concerning the same parcel of land, the registered
transaction prevails over the earlier unregistered right. The act of registration operates to convey and
affect the registered land so that a bona fide purchaser of such land acquires good title as against a prior
transferee, if such prior transfer was unrecorded.[36] As found by the courts a quo, respondent was able to
register its purchase ahead of petitioner. It will be recalled that respondent was able to register its Deed of
Conditional Sale with the Register of Deeds as early as 6 November 1992, and its Deed of Absolute Sale
on 14 October 1993. On the other hand, petitioner was able to present for registration her deed of sale
and owners copy of the title only on 23 January 1995, or almost nine years after the purported sale. Why
it took petitioner nine (9) years to present the deed and the owners copy, she had no credible
explanation; but it is clear that when she finally did, she already had constructive notice of the deed of
sale in respondents favor. Without a doubt, respondent had acquired a better title to the property.
Finally, anent petitioners claim that P.D. No. 1529 applies to registered lands or any subsequent sale
thereof, while Art. 1544 of the Civil Code applies only to immovable property not covered by the Torrens
System, suffice it to say that this quandary has already been answered by an eminent former member of
this Court, Justice Jose Vitug, who explained that the registration contemplated under Art. 1544 has been
held to refer to registration under P.D. No. 1529, thus:
The registration contemplated under Art. 1544 has been held to refer to
registration under Act 496 Land Registration Act (now PD 1529) which considers the
act of registration as the operative act that binds the land (see Mediante v. Rosabal, 1
O.G. [12] 900, Garcia v. Rosabal, 73 Phil 694). On lands covered by the Torrens System,
the purchaser acquires such rights and interest as they appear in the certificate of title,
unaffected by any prior lien or encumbrance not noted therein. The purchaser is not
required to explore farther than what the Torrens title, upon its face, indicates. The only
exception is where the purchaser has actual knowledge of a flaw or defect in the title of
the seller or of such liens or encumbrances which, as to him, is equivalent to registration
(see Sec. 39, Act 496; Bernales v. IAC, G.R. 75336, 18 October 1988; Hernandez vs.
Sales, 69 Phil 744; Tajonera s. Court of Appeals, L-26677, 27 March 1981) (Emphasis
supplied)[37]

WHEREFORE, the petition is DENIED. The assailed decision and resolution of the Court of
Appeals are affirmed. Costs against petitioner.

SO ORDERED.
ARLYN* PINEDA, G .R . No. 17 0 17 2
Petitioner,
Present:

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

JULIE C. ARCALAS,
Res p on d en t. Promulgated:

November 23, 2007

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

DECISION

CHICO-NAZARIO, J.:

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

The subject property consists of three parcels of land, which are described as Lot No. 3762-D
with an area of 42,958 square meters, Lot No. 3762-E with an area of 4,436 square meters, and Lot No.
3762-F with an area of 2,606 square meters, the total area of which consists of 50,000 square
meters. These three lots are portions of Lot No. 3762, registered in the name of Spouses
Mauro Lateo and Encarnacion Evangelista (spouses Lateo) under TCT No. T-52319, with a total area of
74,708 square meters, located at Barrios Duhat and Labuin, Santa Cruz, Laguna. A certain
Victoria Tolentino bought the said property from the Spouses Lateo. Sometime later, Civil Case No. Q-96-
27884, for Sum of Money, was instituted by Arcalas against Victoria Tolentino. This case stemmed from
an indebtedness evidenced by a promissory note and four post-dated checks later dishonored, which
Victoria Tolentino owed Arcalas.[3]
On 9 September 1997, Branch 93 of the Quezon City RTC, rendered judgment in favor
of Arcalas and against Victoria Tolentino.[4]
 On 15 December 1997, Pineda bought the subject property from Victoria L. Tolentino.[5] Pineda
alleged that upon payment of the purchase price, she took possession of the subject property by allowing
a tenant, Rodrigo Bautista to cultivate the same. However, Pineda failed to register the subject property
under her name.[6]

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

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

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

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

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

On 3 February 2000, Arcalas and Leonardo Byron P. Perez, Jr. purchased Lot No. 3762 at an
auction sale conducted by the Deputy Sheriff of Quezon City. The sale was evidenced by a Sheriffs
Certificate of Sale issued on the same day and registered as Entry No. 324225 at the back of TCT No. T-
52319.[11]

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

The court order emanating from Branch 91 of the Regional Trial Court of Quezon City
having become final and executory and no relief therefrom having been filed by [Pineda],
 the said order granting the [Arcalass] Motion to Set Aside Affidavit of Title and 3rd Party
Claim should be given due course and the corresponding annotation at the back of TCT
No. T-52319 as Entry No. 324094 dated February 2, 2000 should be expunged
accordingly.[12]
Pineda appealed the Order of the Laguna RTC before the Court of Appeals under Rule 44 of the
Rules of Court. In a Resolution dated 25 January 2005,[13] the appellate court dismissed the appeal and
considered it abandoned when Pineda failed to file her appellants brief.

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

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

I.

WHETHER THE LEVY ON ALIAS WRIT OF EXECUTION ISSUED BY THE REGIONAL

TRIAL COURT OF QUEZON CITY IN CIVIL CASE NO. Q-96-27884 MAY EXEMPT THE
PORTION BOUGHT BY [PINEDA] FROM VICTORIA TOLENTINO; [and]

II.

WHETHER THE POSSESSION OF [PINEDA] OF THE 5 HECTARES PORTION

OF LOT 3762 IS ALREADY EQUIVALENT TO A TITLE DESPITE THE ABSENCE OF
REGISTRATION.

This petition must be dismissed.

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

Section 7. Appellants brief.It shall be the duty of the appellant to file with the court, within
forty-five (45) days from receipt of the notice of the clerk that all the evidence, oral and
documentary, are attached to the record, seven (7) copies of his legibly typewritten,
mimeographed or printed brief, with proof of service of two (2) copies thereof upon
the appellee.

In special cases appealed to the Court of Appeals, such as certiorari,

prohibition, mandamus, quo warranto and habeas corpus cases, a memorandum of appeal must be
filed in place of an appellants brief as provided in Section 10 of Rule 44 of the Rules of Court
 Section 10. Time of filing memoranda in special cases.In certiorari, prohibition,
mandamus, quo warranto and habeas corpus cases, the parties shall file, in lieu of briefs,
their respective memoranda within a non-extendible period of thirty (30) days from receipt
of the notice issued by the clerk that all the evidence, oral and documentary, is already
attached to the record.

The failure of the appellant to file his memorandum within the period therefor may be a
ground for dismissal of the appeal.

Non-filing of an appellants brief or a memorandum of appeal is one of the explicitly recognized grounds of
dismissal of the appeal in Section 1 of Rule 50 of the Rules of Court:

Section 1. Grounds for dismissal of appeal. - An appeal may be dismissed by the Court of
Appeals, on its own motion or on that of the appellee, on the following grounds:

xxxx

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

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

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

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

In this case, Pineda did not even provide a proper justification for her failure to file her appellants
brief. It was merely alleged in her Motion for Reconsideration that her counsel overlooked the period
within which to file the appellants brief. Although Pineda filed no less than two motions for
reconsideration, Pineda had not, at any time, made any attempt to file her appellants brief. Nor did she
supply any convincing argument to establish her right to the subject property for which she seeks
vindication.
 Thus, this Court cannot reverse or fault the appellate court for duly acting in faithful compliance
with the rules of procedure and established jurisprudence that it has been mandated to observe, nor turn
a blind eye and tolerate the transgressions of these rules and doctrines. [20] An appealing party must
strictly comply with the requisites laid down in the Rules of Court since the right to appeal is a purely
statutory right.[21]

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

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

As a rule, the negligence or mistake of counsel binds the client.[24] The only exception to this rule
is when the counsels negligence is so gross that a party is deprived of due process and, thus, loses life,
honor or property on mere technicalities.[25] The exception cannot apply to the present case, where
Pineda is merely repeating arguments that were already heard and decided upon by courts of proper
jurisdiction, and the absolute lack of merit of the petition is at once obvious.
 Pineda avers that she is not a party to Civil Case No. Q-96-27884, heard before the Quezon City
RTC, and that the levy on the alias writ of execution issued in Civil Case No. Q-96-27884 cannot affect
her purchase of subject property. Such position runs contrary to law and jurisprudence.

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

Section 51. Conveyance and other dealings by registered owner.An owner of registered
land may convey, mortgage, lease, charge or otherwise deal with the same in
accordance with existing laws. He may use such forms of deeds, mortgages, leases or
other voluntary instruments as are sufficient in law. But no deed, mortgage, lease, or
other voluntary instrument, except a will purporting to convey or affect registered
land shall take effect as a conveyance or bind the land, but shall operate only as a
contract between the parties and as evidence of authority to the Register of Deeds
to make registration.

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

Section 52. Constructive notice upon registration.Every conveyance, mortgage, lease,

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

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

The doctrine is well settled that a levy on execution duly registered takes preference over a prior
unregistered sale.[26] A registered lien is entitled to preferential
consideration.[27] In Valdevieso v. Damalerio,[28] the Court held that a registered writ of attachment was a
superior lien over that on an unregistered deed of sale and explained the reason therefor:
 This is so because an attachment is a proceeding in rem. It is against the particular
property, enforceable against the whole world. The attaching creditor acquires a specific
lien on the attached property which nothing can subsequently destroy except the very
dissolution of the attachment or levy itself. Such a proceeding, in effect, means that the
property attached is an indebted thing and a virtual condemnation of it to pay the owners
debt. The lien continues until the debt is paid, or sale is had under execution issued on
the judgment, or until the judgment is satisfied, or the attachment discharged or vacated
in some manner provided by law.

Thus, in the registry, the attachment in favor of respondent appeared in the

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

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

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

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

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

SO ORDERED.
 [G.R. No. 158682. January 31, 2005]

SPOUSES BIENVENIDO R. MACADANGDANG and VIRGINIA C. MACADANGDANG, petitioners vs.

SPOUSES RAMON MARTINEZ and GLORIA F. MARTINEZ, respondents.

DECISION
CORONA, J.:

Petitioners, spouses Bienvenido and Virginia Macadangdang (Macadangdang spouses), assail the
October 25, 2001 decision[1] of the Court of Appeals in CA-G.R. CV No. 32018, modifying the November
13, 1990 decision[2] of Branch 149 of the Makati Regional Trial Court in Civil Case No. 88-796.
The present controversy involves a house and lot in Lot 6, Block 22-A, Phase 5-A, Parkhomes
Subdivision, Tunasan, Muntinlupa, Metro Manila, covered by TCT No. 146553 in the name of Emma A.
Omalin.
On December 20, 1986, the Macadangdang spouses offered to buy the subject property from
Omalin for P380,000 on installment basis.
On the same date, the Macadangdang spouses made a downpayment of P5,000 through the broker,
Sto. Nino Realty Services, Inc. On January 3, 1987, they paid another P175,000. Thereafter, Omalin
executed a deed of sale with mortgage dated January 5, 1987. The deed provided for the payment of the
balance of P200,000 in three installments.
The Macadangdang spouses took possession of the house and lot on January 18, 1987. On April
22, 1987, they paid P60,000 and on October 1, 1987, another P30,000. After the Macadangdangs had
paid a total of P270,000, the parties agreed that the balance of P110,000 was to be paid upon delivery of
the TCT.
On January 29, 1988, Omalin executed a deed of absolute sale in favor of the Macadangdang
spouses. However, the latter did not pay the P110,000 balance because Omalin failed to deliver the TCT.
It turned out that the property was mortgaged to private respondent spouses Ramon and Gloria Martinez
(Martinez spouses).
It appears that on March 5, 1987, a certain Atty. Paterno Santos, a broker, offered to mortgage the
subject property to the Martinez spouses for P200,000. Atty. Santos was in possession of a clean TCT
No. 146553 and a fire insurance policy covering said property. The spouses Martinez accepted the
mortgage with interest at 36% p.a. and duly recorded it at the Registry of Deeds of Makati. The proper
annotation was made at the back of the title.
From September 1987 to March 9, 1988, Omalin paid the monthly interest of P6,000 but failed to pay
the subsequent interest from April 1988 to October 1989 amounting to P114,000.
The Macadangdang spouses filed a criminal case for estafa against Omalin and a combined action
for specific performance, annulment of contract and damages against the spouses Martinez and Omalin.
After trial, the Makati RTC rendered a decision in favor of the Macadangdang spouses:

WHEREFORE, in view of the foregoing, judgment is rendered as follows:

1. The defendants Emma A. Omalin, Ramon Martinez and Gloria Martinez are hereby
ordered to deliver to the plaintiffs the owners duplicate copy of TCT No. 146553, free
from the encumbrance under Entry No. 30110 of the Register of Deeds of Makati, upon
plaintiffs payment of the balance of P100.000.
 2. The defendant Emma A. Omalin is hereby ordered to pay plaintiffs the amount
of P30,000 as moral damages and P20,000 as attorneys fees and costs of suit.[3]
On appeal, however, the appellate court modified the decision of the Makati RTC:

Considering that defendant Omalin remains to be the owner of the property despite the existence of a
valid mortgage, she has the right to sell it. Hence, we rule that the sale in favor of plaintiffs-appellee is
likewise valid, subject to the right of defendants-appellants to foreclose the property for failure of
defendant Omalin to pay her indebtedness.

xxx xxx xxx

WHEREFORE, the appealed decision is MODIFIED. A new one is hereby entered:

1. Declaring defendants-appellants Ramon and Gloria Martinez as mortgagees in good faith.

2. Declaring the deed of sale with mortgage in favor of plaintiffs-appellees Bienvenido and Virginia
Macadangdang as valid and ordering them to pay defendant Omalin the balance of the price in the sum
of P110,000.

3. Ordering defendants-appellants to deliver the owners duplicate copy of TCT No. 146553 to plaintiffs-
appellees, subject to the existing encumbrance and the right of defendants-appellants to foreclose the
property should defendant Omalin fail to pay her obligation.

4. Ordering defendant Emma A. Omalin to pay plaintiffs-appellees the amount of P30,000 as moral
damages and P20,000 as attorneys fees and costs of suit.

The Macadangdang spouses are now before the Court with the following assignments of error:

FIRST ASSIGNED ERROR

THE COURT OF APPEALS DECISION OPENLY DISREGARDED AND OVERTURNED EXISTING

JURISPRUDENCE INVOLVING SIMILAR FACTS.

SECOND ASSIGNED ERROR

UNLESS REVERSED AND/OR MODIFIED, THE COURT OF APPEALS DECISION, IF EVENTUALLY

IMPLEMENTED, MIGHT GIVE RISE TO ABSURD RESULTS.

THIRD ASSIGNED ERROR

THE COURT OF APPEALS GRAVELY ERRED IN REVERSING THE TRIAL COURTS DECISION
DATED NOVEMBER 13, 1990.[4]

The petition lacks merit.

The subject matter of the instant petition involves registered land. Unlike the case of unregistered
land, in which an earlier instrument, be it sale or mortgage, prevails over a latter one, and the registration
of any one of them is immaterial,[5] with respect to registered land, the rule is different. Between two
transactions concerning the same parcel of land, the registered transaction prevails over the earlier
unregistered right.[6] The act of registration operates to convey and affect the registered land so that a
bonafide purchaser of such land acquires good title as against a prior transferee, if such prior transfer
was unrecorded.[7]
 Sections 51 and 52 of PD 1529, otherwise known as the Property Registration Decree, are pertinent:

Sec. 51. Conveyance and other dealings by registered owner. An owner of registered land may convey,
mortgage, lease, charge or otherwise deal with the same in accordance with existing laws. He may use
such forms of deeds, mortgages, lease or other voluntary instruments as are sufficient in law. But no
deed, mortgage, lease or other voluntary instrument, except a will purporting to convey or affect
registered land shall take effect as a conveyance or bind the land, but shall operate only as a contract
between the parties and as evidence of authority to the Register of Deeds to make Registration.

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

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

It is clear from the foregoing that the registration of the deed is the effectual act which binds the land
insofar as third persons are concerned. Prior registration of a lien creates a preference as the act of
registration is the operative act that conveys and affects the land.[8] Considering that the prior sale of the
subject property to the Macadangdang spouses was not registered, it was the registered mortgage to the
spouses Martinez that was valid and effective. For sure, it was binding on Omalin and, for that matter,
even on the Macadangdang spouses, the parties to the prior sale.
The rule on prior registration is subject only to one exception, that is, when a party has knowledge of
a prior existing interest which is unregistered at the time he acquires a right to the same land, his
knowledge of that prior unregistered interest has the effect of registration as to him. [9]
The Martinez spouses claimed they had never met the Macadangdang spouses and were unaware
that Omalin had already sold the property to them. Hence, the appellate court declared the Martinez
spouses as mortgagees in good faith and innocent mortgagees for value.
An innocent mortgagee for value is akin to an innocent purchaser for value. The phrase innocent
purchaser for value is deemed to include an innocent lessee, mortgagee or other (beneficiary of an)
encumbrance for value.[10] An innocent purchaser for value is one who buys the property of another
without notice that some other person has a right to or interest in such property and pays a full and fair
price for the same at the time of such purchase or before he has notice of the claim of another
person.[11] As a general rule, where the certificate of title is in the name of the vendor when the land is
sold, the vendee for value has the right to rely on what appears on the face of the title and is not obligated
to look beyond what appears on the face of the certificate of title of the vendor. As an exception, the
vendee is required to make the necessary inquiries if there is anything in the certificate of title which
raises any cloud or vice in the ownership of the property.[12] Otherwise, his mere refusal to believe that
such defect exists, or his willful disregard of the possibility of the existence of a defect in his vendors title
will not make him an innocent purchaser for value if it afterwards develops that the title is in fact defective,
and it appears that he had such notice of the defect as would have led to its discovery had he acted with
that measure of precaution which may reasonably be required of a prudent man in a like situation.[13]
Nothing on record shows that the title of Omalin, the mortgagor, was flawed when it was presented
to the spouses Martinez. Their reliance on the title was therefore reasonable and correct. They were in no
way obliged to go beyond the TCT to determine the legal condition of the property since there was
nothing that should have aroused their suspicion about any defect or problem about the title.
Where innocent third persons rely on the lack of defect of a certificate of title and acquire rights over
the property, the Court cannot disregard such rights. Otherwise, public confidence in the certificate of title
and ultimately, in the entire Torrens system will be impaired, for every one dealing with registered
property will have to inquire at every instance whether the title has been regularly or irregularly issued. [14]
 On this note, being innocent registered mortgagees for value, the Martinez spouses acquired a
superior right over the property.
Accordingly, we find no reversible error by the appellate court in upholding the existing encumbrance
over the subject property acquired by the Macadangdang spouses, in declaring the spouses Martinez as
mortgagees in good faith and in recognizing their right to foreclose on the mortgage should Omalin fail to
pay her obligation.
The assailed decision of the appellate court is neither absurd nor unjust. The registered mortgage
contract of the Martinez spouses has given them the superior right, not as owners but only as
mortgagees. Consequently, they are entitled to be paid the amounts due them under the real estate
mortgage registered in their favor. In the event Omalin, as mortgagor, fails to pay the mortgage obligation
or, should any party, for that matter, who may have an interest in the mortgaged property like the
petitioners herein fail to redeem it from the mortgagees, the latter, as declared by the Court of Appeals,
may enforce their rights against the property by foreclosing on the mortgage, regardless of who its owner
may be, considering that the registered mortgage attaches to the property.
WHEREFORE, the instant petition is hereby DENIED and the October 25, 2001 decision of the Court
of Appeals in CA-G.R. CV No. 32018 is AFFIRMED.
Costs against petitioners.
SO ORDERED.
Panganiban, (Chairman), Sandoval-Gutierrez, Carpio-Morales and Garcia, JJ., concur.
G.R. No. 165853 June 22, 2006

ROSANA EREÑA, Petitioner,

vs.
VIDA DANA QUERRER-KAUFFMAN, Respondent.

DECISION

CALLEJO, SR., J.:

Before us is a petition for review on certiorari of the Decision1 of the Court of Appeals (CA) in CA-G.R. CV
No. 67899. The assailed decision reversed the decision of the Regional Trial Court (RTC) of Las Piñas
City in Civil Case No. LP-98-0056.2

Vida Dana Querrer-Kauffman is the owner of a residential lot with a house constructed thereon located at
Block 3, Lot 13, Marcillo corner Planza Streets, BF Resort Village, Talon, Las Piñas City. The property is
covered by Transfer Certificate of Title (TCT) No. T-48521. The owner’s duplicate copy of the title as well
as the tax declaration3 covering the property, were kept in a safety deposit box in the house.

Sometime in February 1997, as she was going to the United States, Kauffman entrusted her minor
daughter, Vida Rose, to her live-in partner, Eduardo Victor. She also entrusted the key to her house to
Victor. She went back to the Philippines to get her daughter on May 13, 1997, and again left for the U.S.
on the same day. Later on, Victor also left for the U.S. and entrusted the house and the key thereto to his
sister, Mira Bernal.4

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

Kauffman learned about this on October 29, 1997 and returned to the Philippines on November 9, 1997.
She and Pares went to the Register of Deeds of Las Piñas City and found out that the lot had been
mortgaged to Rosana Ereña on August 1, 1997.8 It appeared that a "Vida Dana F. Querrer" had signed
the Real Estate Mortgage as owner-mortgagor,9 together with Jennifer V. Ramirez, Victor’s daughter, as
attorney-in-fact.10

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

On March 12, 1998, Kauffman filed a complaint against Ereña, Bernal and Jennifer Ramirez for
Nullification of Deed of Real Estate Mortgage and Damages with prayer for a Temporary Restraining
Order and Preliminary Mandatory Injunction12 in the RTC of Las Piñas City. The complaint contained the
following allegations:

2. The plaintiff is the owner of a property consisting of a lot with an area of One Hundred Ten
(110) square meters located at Blk. 3, Lot 13, Marcillo cor. Pianza Sts., BF Resort Village, Talon,
Las Piñas City, covered by Transfer Certificate of Title No. T-48521 of the Register of Deeds of
Las Piñas City, together with a residential house thereon, with a combined assessed value
of P40,500.00, and copies of said TCT, and tax declarations of the lot and house x x x;
 3. Sometime in February 1997, when the plaintiff left for the United States, she entrusted the key
of her said house to one Eduardo Victor who, in turn, when he himself went to the United States,
entrusted said key to his sister, the defendant Mira V. Bernal;

4. Sometime between May and July 1997, said defendant Mira V. Bernal, in conspiracy with her
niece, the defendant Jennifer V. Ramirez, who is the daughter of Eduardo Victor, using the key in
their possession, opened the locked and the unoccupied house of the plaintiff, forced open the
vault of the plaintiff and stole the owner’s copy of TCT No. T-48521 and other articles contained
therein valued at more than P60,000.00, all belonging to the plaintiff;

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

6. After the execution of the falsified Real Estate Mortgage, the defendants registered the same
with the Registry of Deeds of Las Piñas City and had it annotated on the TCT No. T-48521 as
Entry No. 7185-15;

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

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

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

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

11. The plaintiff is also entitled to exemplary damages in the amount of P100,000.00 which
plaintiff seeks to impose upon the defendants as a correction or example for the public good, as a
deterrent to people from committing fraudulent acts against their fellowmen;

12. On account of defendants’ unwarranted acts aforecited, the plaintiff is furthermore entitled to
attorney’s fees in the amount of P50,000.00 as acceptance fee, plus P1,500.00 appearance fee
every hearing, for which the defendants should be liable;13

The complaint also contained the following prayer:

(a) That upon the filing of this complaint and compliance with the pertinent rule, a temporary
mandatory order be issued requiring the defendant Rosana L. Ereña to turn over to the plaintiff
the possession of TCT No. T-48521;
 (b) That after due hearing, a writ of preliminary mandatory injunction be issued making permanent
the temporary mandatory order;

(c) In case a temporary mandatory order or preliminary injunction be not issued, that the
defendant Rosana L. Ereña or whoever be in possession of TCT No. T-48521, be ordered, after
due hearing, to turn the same over to the plaintiff, that the Real Estate Mortgage (Annex "D") of
this complaint be declared null and void, and Entry No. 7185-15 on said title be cancelled;

(d) That after hearing, the defendants be ordered to pay the plaintiff, jointly and severally, the
following amounts:

1. P200,000.00 as moral damages;

2. P200,000.00 as actual damages;

3. P100,000.00 as exemplary damages;

4. P50,000.00 as acceptance fee, plus P1,500.00 appearance fee every hearing, as

attorney’s fees, aside from costs.

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

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

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

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

During trial, Socorro Ramos, Ereñas’ aunt, testified that, Richmond Ramirez, Jennifer’s husband, and
Angel Jose, her grandson and Ereñas’ nephew, had been classmates and were compadres. 18 The
Ramirez spouses used to go to her house. In one occasion, the Ramirez spouses arrived in her house
with one "Vida Dana Querrer" whom Richmond introduced as his half-sister.19 He also told Ramos that
Querrer wanted to mortgage her house and lot as she was going to the U.S.20 Richmond showed her a
copy of TCT No. T-48521, Querrer’s identification (I.D.) card, and pictures of the house and lot. 21 Ramos
then informed her niece, Rosana Ereña, and asked if she would agree to mortgage the property. Ramos
later brought the spouses

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

Ereña was able to verify from the Office of the Register of Deeds that the property was in the name of
Vida Dana Querrer and that it was free of any lien or encumbrance. Ereña and her husband, Ramos,
Richmond Ramirez, Angel Jose, and "Vida Dana Querrer" later inspected the house and lot two
times.25 Ereña finally agreed to a P250,000.00 mortgage loan, with the house and lot as security therefor.
On August 1, 1997, Jennifer Ramirez, Rosana Ereña and a woman who identified herself as "Vida Dana
Querrer" arrived in the office Notary Public Alfredo M. Mendoza and asked him to prepare a Special
Power of Attorney to be executed by "Vida Dana Querrer," as principal, in favor of Jennifer Ramirez, as
attorney-in-fact; and a Real Estate Mortgage contract over the lot covered by TCT No. 48521 to be
executed by "Vida Dana Querrer" and Jennifer Ramirez as mortgagors. Ereña and "Vida Dana Querrer"
showed to him their respective residence certificates. Mendoza prepared the documents after which the
parties affixed their respective signatures above their respective names26 and their submarkings on the
deeds. The Real Estate Mortgage was filed with the Office of the Register of Deeds and annotated at the
dorsal portion of TCT No. 48521 on November 7, 1997.27

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

The court cited the ruling of this Court in Cebu International Finance Corporation v. Court of
Appeals28 and Duran v. Intermediate Appellate Court.29 The fallo of the decision reads:

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

No pronouncement as to costs.

SO ORDERED.30

Kauffman filed a motion for reconsideration of the decision, alleging that the Cebu International Finance
Corporation case is not applicable as the facts therein are different. She insisted that Solivel v.
Francisco31 is the case in point.

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

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

II

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

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

IV

THE LOWER COURT ERRED IN UPHOLDING THE RIGHT OF DEFENDANT-APPELLANT ROSANA

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

On June 10, 2004, the CA rendered judgment in favor of Kauffman. It held that in ruling as it did, the RTC
disregarded the clear provisions of the Civil Code, particularly Articles 2085 (2) 33 and 1409 (2)34 The
appellate court relied on the Court’s ruling in Insurance Services & Commercial Traders, Inc. v. Court of
Appeals35 and ratiocinated, thus:

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

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

THE COURT OF APPEALS HAS SERIOUSLY ERRED IN HOLDING THAT RESPONDENT QUERRER-
KAUFFMAN IS THE OWNER OF THE PROPERTY MORTGAGED TO PETITIONER DESPITE THE
ABSENCE OF SUBSTANTIAL EVIDENCE TO SUPPORT SUCH A CONCLUSION OF FACT.

II

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

III

THE COURT OF APPEALS HAS SERIOUSLY ERRED IN HOLDING THAT THE DOCTRINE OF A
"MORTGAGE IN GOOD FAITH" DOES NOT APPLY TO PETITIONER DESPITE SUBSTANTIAL AND
UNDISPUTED EVIDENCE PROVING HER A MORTGAGEE IN GOOD FAITH.37

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

1. Before the offer of mortgage was accepted by petitioner Rosana Ereña, she required the
production of the owner’s copy of TCT No. T-48521. The mortgagee took such step to enable her
to know the rights of the mortgagor over the property to be mortgaged. The presentation of the
desired certificate was complied with.

2. The identity of the mortgagor was ascertained from the personal interview of the relatives of
the mortgagor who were the spouses Jennifer and Richmond Ramirez, a known compadre of
Angel Jose, the grandson of Socorro Ramos, the aunt of the petitioner. Richmond Ramirez with
his wife introduced the mortgagor Vida Dana Querrer as his half-sister who wanted to mortgage
the property described in the certificate of title which was registered in her name. The spouses of
the mortgagor were accompanied to the house of Rosana Erena by Socorro Ramos, her aunt
who acknowledged to know Richmond and Jennifer Ramirez for a period of five years, more or
less. Aside from the confirmation of her filial relation to the Ramirez couple by Richmond
Ramirez, her personal Identification Card showed the mortgagor’s name and proved her identity
to be Vida Dana Querrer. The Tax Declarations, tax clearance, the owner’s copy of TCT No. T-
48521, police clearance, survey plan attested to the fact that the owner of the property subject of
the mortgage was the mortgagor.

3. Further examination of the certificate of title in the Office of the Register of Deeds of Las Piñas
City proved the authenticity of the owner’s copy of the certificate.

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

5. The aforesaid interviews/examination of records, and inspection of the premises showed that
earnest and diligent efforts were exerted by the petitioner to ascertain the identity of the
mortgagor and her ownership of the subject property. The aforestated steps taken by her are
visible proofs of the due diligence exercised by Rosana Erena to ascertain the identity of the
mortgagor and respondent’s capacity to convey the property to her in a contract of mortgage with
her.

6. Without admitting on the allegation of a forged signature, the established facts showing the
exercise of due diligence and reasonable caution observed by petitioner preparatory to the
acceptance and execution of the mortgage contract BELIE the accusation of bad faith to her. In
truth, petitioner had been reasonably diligent to meet the justification of a mortgagee in good
faith.38

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

The petition has no merit.

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

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

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

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

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

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

A Yes, Sir.

Q You mean you waited?

A We waited for her. Dana said, "Mabuti pang ilabas ninyo and mother ni’yo."

ATTY. CABARON:

The witness is narrating, Your Honor.

ATTY. MASANGKAY:

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

A Yes, Sir.

Q How about Jennifer?

A No, Sir.

Q Alright, what did you ask Mira?

A My sister asked Mira who destroyed my vault?

Q What was the answer of Mira?

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

ATTY. MASANGKAY:

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

Q What was the answer?

A According to her, it was Jennifer.

Q It was Jennifer who, what?

A She just said Jennifer.

Q What about the title?

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

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

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

A Yes, Sir.

Q Who is she?

A According to my sister, she is the daughter of Eduardo Victor.

Q What else did she say?

WITNESS:

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

ATTY. MASANGKAY:

Q And finally, what was the statement of Mira with respect to the transaction?

A When Dana learned about that, she said, we will file a case against them.

Q And so?

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

Q What did she say?

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

The trial court’s findings of fact as affirmed by the CA are conclusive on this Court absent evidence that
the trial court ignored, misapplied or misconstrued facts and circumstances of substance which, if
considered, would alter the outcome of the case.
Indeed, under Rule 45 of the Rules of Court, only questions of law may be raised. This is so because this
Court is not a trier of facts and is not to re-examine and re-evaluate the testimonial and documentary
evidence on record. While the findings and conclusion of the trial court and the appellate court may be
reversed in exceptional circumstances, the Court cannot do so in the absence of any such justification or
exceptional circumstance, such as in this case.

The ruling of the CA, that the Real Estate Mortgage executed in petitioner’s favor is null and void, is
correct. The registration thereof with the Register of Deeds and its annotation at the dorsal portion of TCT
No. 48521 is also null and void, as provided in the last paragraph of Section 53, P.D. 1529 which reads:

Sec. 53. Presentation of owner’s duplicate upon entry of new certificate.–

xxxx

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

One of the essential requisites of a mortgage contract is that the mortgagor must be the absolute owner
of the thing mortgaged.42 A mortgage is, thus, invalid if the mortgagor is not the property owner.43 In this
case, the trial court and the CA are one in finding that based on the evidence on record the owner of the
property is respondent who was not the one who mortgaged the same to the petitioner.

The evidence shows that Mira Bernal and Jennifer Ramirez were able to open respondent’s vault and
steal the owner’s duplicate of TCT No. T-48521 and the tax declarations covering the property; with the
connivance of a woman who pretended to be the respondent, they were able consummate the execution
of the Real Estate Mortgage by forging the respondent’s signature on said deed. We, thus, quote with
approval the CA when it held:

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

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

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

Indeed, case law is that a Torrens title is generally conclusive evidence of ownership of the land referred
to therein.46 While it serves as evidence of an indefeasible title to the property in favor of the person
whose name appears therein47 (and TCT No. T-48521 shows, on its face, that the owner is the
respondent), when the instrument presented for registration is forged, even if accompanied by the
owner’s duplicate certificate of title, the registered owner does not thereby lose his title, and neither does
the assignee or the mortgagee, for that matter, acquire any right or title to the property. 48 In such a case,
the transferee or the mortgagee, based on a forged instrument, is not even a purchaser or a mortgagee
for value protected by law. Thus, in Joaquin v. Madrid, 49 the Court had the occasion to state:

In the first assignment of error, it is argued that since par. 2 of Sec. 55 of the Land Registration Act
expressly provides that "in all cases of registration of fraud, the owner may pursue all his legal and
equitable remedies against the parties to the fraud, without prejudice to the rights of any innocent holder
for value of a certificate of title," the second proviso in the same section "that a registration procured by
the presentation of a forged deed shall be null and void" should be overlooked. There is no merit in this
argument, which would have the effect of deleting the last proviso. This last proviso is a limitation of the
first part of par. 2 in the sense that in order that the holder of a certificate for value issued by virtue of the
registration of a voluntary instrument may be considered a holder in good faith for value, the instrument
registered should not be forged. When the instrument presented is forged, even if accompanied by the
owner’s duplicate certificate of title, the registered owner does not thereby lose his title, and neither does
the assignee in the forged deed acquire any right or title to the property.

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

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

Even more in point and decisive of the issue here raised, however, is the much later case of Joaquin v.
Madrid, where the spouses Abundio Madrid and Rosalinda Yu, owners of a residential lot in Makati,
seeking a building construction loan from the then Rehabilitation Finance Corporation, entrusted their
certificate of title for surrender to the RFC to Rosalinda’s godmother, a certain Carmencita de Jesus, who
had offered to expedite the approval of the loan. Later having obtained a loan from another source, the
spouses decided to withdraw the application they had filed with the RFC and asked Carmencita to
retrieve their title and return it to them Carmencita failed to do so, giving the excuse that the employee, in-
charge of keeping the title was on leave. It turned out, however, that through the machinations of
Carmencita, the property had been mortgaged to Constancio Joaquin in a deed signed by two persons
posing as the owners and that after said deed had been registered, the amount for which the mortgage
was constituted had been given to the person who had passed herself off as Rosalinda Yu. Constancio
Joaquin admitted that the spouses Madrid and Yu were, in fact, not the persons who had signed the deed
of mortgage.52

This ruling was later reiterated in Insurance Services & Commercial Traders, Inc. v. Court of
Appeals,53 where the Court stressed that in order that the holder of a certificate of value issued by virtue
of the registration of a voluntary instrument may be considered a holder in good faith and for value, the
instrument registered should not be forged.

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

Indeed, a mortgagee has a right to rely in good faith on the certificate of title of the mortgagor of the
property given as security and in the absence of any sign that might arouse suspicion, has no obligation
to undertake further investigation. Hence, even if the mortgagor is not the rightful owner of, or does not
have a valid title to, the mortgaged property, the mortgagee in good faith is nonetheless entitled to
protection.56 This doctrine presupposes, however, that the mortgagor, who is not the rightful owner of the
property, has already succeeded in obtaining a Torrens title over the property in his name and that, after
obtaining the said title, he succeeds in mortgaging the property to another who relies on what appears on
the said title. The innocent purchaser (mortgagee in this case) for value protected by law is one who
purchases a titled land by virtue of a deed executed by the registered owner himself, not by a forged
deed, as the law expressly states. Such is not the situation of petitioner, who has been the victim of
impostors pretending to be the registered owners but who are not said owners.57 The doctrine of
mortgagee in good faith does not apply to a situation where the title is still in the name of the rightful
owner and the mortgagor is a different person pretending to be the owner. In such a case, the mortgagee
is not an innocent mortgagee for value and the registered owner will generally not lose his title. We thus
agree with the following discussion of the CA:

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

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

As aforesaid, respondent’s signature on the Real Estate Mortgage was forged by an impostor.

IN LIGHT OF ALL THE FOREGOING, the petition is DENIED. The Decision of the Court of Appeals dated
June 10, 2004 and Resolution dated October 28, 2004 are AFFIRMED. Costs against the petitioner.

SO ORDERED.
HEIRS OF EDUARDO MANLAPAT, G.R. No. 125585
represented by GLORIA MANLAPAT-
BANAAG and LEON M. BANAAG, JR., Petitioners, Present:

PUNO, J.,*
Chairman,
- versus - AUSTRIA-MARTINEZ,
Acting Chairman,
CALLEJO, SR.,
TINGA, and
CHICO-NAZARIO, JJ.
HON. COURT OF APPEALS,
RURAL BANK OF SAN PASCUAL,
INC., and JOSE B. SALAZAR,
CONSUELO CRUZ and Promulgated:
ROSALINA CRUZ-BAUTISTA,
and the REGISTER OF DEEDS of
Meycauayan, Bulacan, June 8, 2005
Respondents.

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

DECISION

TINGA, J.:

Before this Court is a Rule 45 petition assailing the Decision[1] dated 29 September 1994 of the
Court of Appeals that reversed the Decision[2] dated 30 April 1991 of the Regional Trial Court (RTC) of
Bulacan, Branch 6, Malolos. The trial court declared Transfer Certificates of Title (TCTs) No. T-9326-P(M)
and No. T-9327-P(M) as void ab initio and ordered the restoration of Original Certificate of Title (OCT) No.
P-153(M) in the name of Eduardo Manlapat (Eduardo), petitioners predecessor-in-interest.

The controversy involves Lot No. 2204, a parcel of land with an area of 1,058 square meters,
located at Panghulo, Obando, Bulacan. The property had been originally in the possession of Jose
Alvarez, Eduardos grandfather, until his demise in 1916. It remained unregistered until 8 October 1976
when OCT No. P-153(M) was issued in the name of Eduardo pursuant to a free patent issued in
Eduardos name[3] that was entered in the Registry of Deeds of Meycauayan, Bulacan. [4] The subject lot is
adjacent to a fishpond owned by one

Ricardo Cruz (Ricardo), predecessor-in-interest of respondents Consuelo Cruz and Rosalina Cruz-
Bautista (Cruzes).[5]
 On 19 December 1954, before the subject lot was titled, Eduardo sold a portion thereof with an
area of 553 square meters to Ricardo. The sale is evidenced by a deed of sale entitled Kasulatan ng
Bilihang Tuluyan ng Lupang Walang Titulo (Kasulatan) [6] which was signed by Eduardo himself as vendor
and his wife Engracia Aniceto with a certain Santiago Enriquez signing as witness. The deed was
notarized by Notary Public Manolo Cruz.[7] On 4 April 1963, the Kasulatan was registered with the
Register of Deeds of Bulacan.[8]

On 18 March 1981, another Deed of Sale[9] conveying another portion of the subject lot consisting
of 50 square meters as right of way was executed by Eduardo in favor of Ricardo in order to reach the
portion covered by the first sale executed in 1954 and to have access to his fishpond from the provincial
road.[10] The deed was signed by Eduardo himself and his wife Engracia Aniceto, together with Eduardo
Manlapat, Jr. and Patricio Manlapat. The same was also duly notarized on 18 July 1981 by Notary Public
Arsenio Guevarra.[11]

In December 1981, Leon Banaag, Jr. (Banaag), as attorney-in-fact of his father-in-law Eduardo,
executed a mortgage with the Rural Bank of San Pascual, Obando Branch (RBSP), for P100,000.00 with
the subject lot as collateral. Banaag deposited the owners duplicate certificate of OCT No. P-153(M) with
the bank.

On 31 August 1986, Ricardo died without learning of the prior issuance of OCT No. P-153(M) in
the name of Eduardo.[12] His heirs, the Cruzes, were not immediately aware of the consummated sale
between Eduardo and Ricardo.

Eduardo himself died on 4 April 1987. He was survived by his heirs, Engracia Aniceto, his
spouse; and children, Patricio, Bonifacio, Eduardo, Corazon, Anselmo, Teresita and Gloria, all surnamed
Manlapat.[13] Neither did the heirs of Eduardo (petitioners) inform the Cruzes of the prior sale in favor of
their predecessor-in-interest, Ricardo. Yet subsequently, the Cruzes came to learn about the sale and the
issuance of the OCT in the name of Eduardo.

Upon learning of their right to the subject lot, the Cruzes immediately tried to confront petitioners
on the mortgage and obtain the surrender of the OCT. The Cruzes, however, were thwarted in their bid to
see the heirs. On the advice of the Bureau of Lands, NCR Office, they brought the matter to
the barangay captain of Barangay Panghulo, Obando, Bulacan. During the hearing, petitioners were
informed that the Cruzes had a legal right to the property covered by OCT and needed the OCT for the
purpose of securing a separate title to cover the interest of Ricardo. Petitioners, however, were unwilling
to surrender the OCT.[14]
 Having failed to physically obtain the title from petitioners, in July 1989, the Cruzes instead went
to RBSP which had custody of the owners duplicate certificate of the OCT, earlier surrendered as a
consequence of the mortgage. Transacting with RBSPs manager, Jose Salazar (Salazar), the Cruzes
sought to borrow the owners duplicate certificate for the purpose of photocopying the same and thereafter
showing a copy thereof to the Register of Deeds. Salazar allowed the Cruzes to bring the owners
duplicate certificate outside the bank premises when the latter showed the Kasulatan.[15] The Cruzes
returned the owners duplicate certificate on the same day after having copied the same. They then
brought the copy of the OCT to Register of Deeds Jose Flores (Flores) of Meycauayan and showed the
same to him to secure his legal opinion as to how the Cruzes could legally protect their interest in the
property and register the same.[16] Flores suggested the preparation of a subdivision plan to be able to
segregate the area purchased by Ricardo from Eduardo and have the same covered by a separate
title.[17]

Thereafter, the Cruzes solicited the opinion of Ricardo Arandilla (Arandilla), Land Registration
Officer, Director III, Legal Affairs Department, Land Registration Authority at Quezon City, who agreed
with the advice given by Flores.[18] Relying on the suggestions of Flores and Arandilla, the Cruzes hired
two geodetic engineers to prepare the corresponding subdivision plan. The subdivision plan was
presented to the Land Management Bureau, Region III, and there it was approved by a certain Mr.
Pambid of said office on 21 July 1989.

After securing the approval of the subdivision plan, the Cruzes went back to RBSP and again
asked for the owners duplicate certificate from Salazar. The Cruzes informed him that the presentation of
the owners duplicate certificate was necessary, per advise of the Register of Deeds, for the cancellation
of the OCT and the issuance in lieu thereof of two separate titles in the names of Ricardo and Eduardo in
accordance with the approved subdivision plan.[19] Before giving the owners duplicate certificate, Salazar
required the Cruzes to see Atty. Renato Santiago (Atty. Santiago), legal counsel of RBSP, to secure from
the latter a clearance to borrow the title. Atty. Santiago would give the clearance on the condition that only
Cruzes put up a substitute collateral, which they did.[20] As a result, the Cruzes got hold again of the
owners duplicate certificate.

After the Cruzes presented the owners duplicate certificate, along with the deeds of sale and the
subdivision plan, the Register of Deeds cancelled the OCT and issued in lieu thereof TCT No. T-9326-
P(M) covering 603 square meters of Lot No. 2204 in the name of Ricardo and TCT No. T-9327-P(M)
covering the remaining 455 square meters in the name of Eduardo.[21]

On 9 August 1989, the Cruzes went back to the bank and surrendered to Salazar TCT No. 9327-
P(M) in the name of Eduardo and retrieved the title they had earlier given as substitute collateral. After
securing the new separate titles, the Cruzes furnished petitioners with a copy of TCT No. 9327-P(M)
through the barangay captain and paid the real property tax for 1989.[22]

The Cruzes also sent a formal letter to Guillermo Reyes, Jr., Director, Supervision Sector,
Department III of the Central Bank of the Philippines, inquiring whether they committed any violation of
existing bank laws under the circumstances. A certain Zosimo Topacio, Jr. of the Supervision Sector sent
a reply letter advising the Cruzes, since the matter is between them and the bank, to get in touch with the
bank for the final settlement of the case.[23]

In October of 1989, Banaag went to RBSP, intending to tender full payment of the mortgage
obligation. It was only then that he learned of the dealings of the Cruzes with the bank which eventually
led to the subdivision of the subject lot and the issuance of two separate titles thereon. In exchange for
the full payment of the loan, RBSP tried to persuade petitioners to accept TCT No. T-9327-P(M) in the
name of Eduardo.[24]

As a result, three (3) cases were lodged, later consolidated, with the trial court, all involving the
issuance of the TCTs, to wit:

(1) Civil Case No. 650-M-89, for reconveyance with damages filed by the heirs of
Eduardo Manlapat against Consuelo Cruz, Rosalina Cruz-Bautista, Rural Bank of San
Pascual, Jose Salazar and Jose Flores, in his capacity as Deputy Registrar, Meycauayan
Branch of the Registry of Deeds of Bulacan;

(2) Civil Case No. 141-M-90 for damages filed by Jose Salazar against Consuelo
Cruz, et. [sic] al.; and

(3) Civil Case No. 644-M-89, for declaration of nullity of title with damages filed
by Rural Bank of San Pascual, Inc. against the spouses Ricardo Cruz and Consuelo
Cruz, et al.[25]

After trial of the consolidated cases, the RTC of Malolos rendered a decision in favor of the heirs
of Eduardo, the dispositive portion of which reads:

WHEREFORE, premised from the foregoing, judgment is hereby rendered:

1.Declaring Transfer Certificates of Title Nos. T-9326-P(M) and T-9327-

P(M) as void ab initio and ordering the Register of Deeds, Meycauayan Branch
to cancel said titles and to restore Original Certificate of Title No. P-153(M) in
the name of plaintiffs predecessor-in-interest Eduardo Manlapat;

2.-Ordering the defendants Rural Bank of San Pascual, Jose Salazar,

Consuelo Cruz and Rosalina Cruz-Bautista, to pay the plaintiffs Heirs of
Eduardo Manlapat, jointly and severally, the following:

a)P200,000.00 as moral damages;

b)P50,000.00 as exemplary damages;
 c)P20,000.00 as attorneys fees; and
d)the costs of the suit.

3.Dismissing the counterclaims.

SO ORDERED.[26]

The trial court found that petitioners were entitled to the reliefs of reconveyance and damages. On this
matter, it ruled that petitioners were bona fide mortgagors of an unclouded title bearing no annotation of
any lien and/or encumbrance. This fact, according to the trial court, was confirmed by the bank when it
accepted the mortgage unconditionally on 25 November 1981. It found that petitioners were complacent
and unperturbed, believing that the title to their property, while serving as security for a loan, was safely
vaulted in the impermeable confines of RBSP. To their surprise and prejudice, said title was subdivided
into two portions, leaving them a portion of 455 square meters from the original total area of 1,058 square
meters, all because of the fraudulent and negligent acts of respondents and RBSP. The trial court
ratiocinated that even assuming that a portion of the subject lot was sold by Eduardo to Ricardo,
petitioners were still not privy to the transaction between the bank and the Cruzes which eventually led to
the subdivision of the OCT into TCTs No. T-9326-P(M) and No. T-9327-P(M), clearly to the damage and
prejudice of petitioners.[27]

Concerning the claims for damages, the trial court found the same to be bereft of merit. It ruled
that although the act of the Cruzes could be deemed fraudulent, still it would not constitute intrinsic fraud.
Salazar, nonetheless, was clearly guilty of negligence in letting the Cruzes borrow the owners duplicate
certificate of the OCT. Neither the bank nor its manager had business entrusting to strangers titles
mortgaged to it by other persons for whatever reason. It was a clear violation of the mortgage and
banking laws, the trial court concluded.

The trial court also ruled that although Salazar was personally responsible for allowing the title to
be borrowed, the bank could not escape liability for it was guilty of contributory negligence. The evidence
showed that RBSPs legal counsel was sought for advice regarding respondents request. This could only
mean that RBSP through its lawyer if not through its manager had known in advance of the Cruzes
intention and still it did nothing to prevent the eventuality. Salazar was not even summarily dismissed by
the bank if he was indeed the sole person to blame. Hence, the banks claim for damages must
necessarily fail.[28]

The trial court granted the prayer for the annulment of the TCTs as a necessary consequence of its
declaration that reconveyance was in order. As to Flores, his work being ministerial as Deputy Register of
the Bulacan Registry of Deeds, the trial court absolved him of any liability with a stern warning that he
should deal with his future transactions more carefully and in the strictest sense as a responsible
government official.[29]

Aggrieved by the decision of the trial court, RBSP, Salazar and the Cruzes appealed to the Court
of Appeals. The appellate court, however, reversed the decision of the RTC. The decretal text of the
decision reads:

THE FOREGOING CONSIDERED, the appealed decision is hereby reversed

and set aside, with costs against the appellees.

SO ORDERED.[30]

The appellate court ruled that petitioners were not bona fide mortgagors since as early as 1954 or
before the 1981 mortgage, Eduardo already sold to Ricardo a portion of the subject lot with an area of
553 square meters. This fact, the Court of Appeals noted, is even supported by a document of sale
signed by Eduardo Jr. and Engracia Aniceto, the surviving spouse of Eduardo, and registered with the
Register of Deeds of Bulacan. The appellate court also found that on 18 March 1981, for the second time,
Eduardo sold to Ricardo a separate area containing 50 square meters, as a road right-of-way.[31] Clearly,
the OCT was issued only after the first sale. It also noted that the title was given to the Cruzes by RBSP
voluntarily, with knowledge even of the banks counsel.[32] Hence, the imposition of damages cannot be
justified, the Cruzes themselves being the owners of the property. Certainly, Eduardo misled the bank into
accepting the entire area as a collateral since the 603-square meter portion did not anymore belong to
him. The appellate court, however, concluded that there was no conspiracy between the bank and
Salazar.[33]

Hence, this petition for review on certiorari.

Petitioners ascribe errors to the appellate court by asking the following questions, to wit: (a) can a
mortgagor be compelled to receive from the mortgagee a smaller portion of the originally encumbered title
partitioned during the subsistence of the mortgage, without the knowledge of, or authority derived from,
the registered owner; (b) can the mortgagee question the veracity of the registered title of the mortgagor,
as noted in the owners duplicate certificate, and thus, deliver the certificate to such third persons,
invoking an adverse, prior, and unregistered claim against the registered title of the mortgagor; (c) can an
adverse prior claim against a registered title be noted, registered and entered without a competent court
order; and (d) can belief of ownership justify the taking of property without due process of law?[34]

The kernel of the controversy boils down to the issue of whether the cancellation of the OCT in
the name of the petitioners predecessor-in-interest and its splitting into two separate titles, one for the
petitioners and the other for the Cruzes, may be accorded legal recognition given the peculiar factual
backdrop of the case. We rule in the affirmative.

Private respondents (Cruzes) own

the portion titled in their names

Consonant with law and justice, the ultimate denouement of the property dispute lies in the
determination of the respective bases of the warring claims. Here, as in other legal disputes, what is
written generally deserves credence.

A careful perusal of the evidence on record reveals that the Cruzes have sufficiently proven their
claim of ownership over the portion of Lot No. 2204 with an area of 553 square meters. The duly
notarized instrument of conveyance was executed in 1954 to which no less than Eduardo was a
signatory. The execution of the deed of sale was rendered beyond doubt by Eduardos admission in
his Sinumpaang Salaysay dated 24 April 1963.[35] These documents make the affirmance of the right of
the Cruzes ineluctable. The apparent irregularity, however, in the obtention of the owners duplicate
certificate from the bank, later to be presented to the Register of Deeds to secure the issuance of two
new TCTs in place of the OCT, is another matter.

Petitioners argue that the 1954 deed of sale was not annotated on the OCT which was issued in
1976 in favor of Eduardo; thus, the Cruzes claim of ownership based on the sale would not hold water.
The Court is not persuaded.

Registration is not a requirement for validity of the contract as between the parties, for the effect
of registration serves chiefly to bind third persons.[36] The principal purpose of registration is merely to
notify other persons not parties to a contract that a transaction involving the property had been entered
into. Where the party has knowledge of a prior existing interest which is unregistered at the time he
acquired a right to the same land, his knowledge of that prior unregistered interest has the effect of
registration as to him.[37]

Further, the heirs of Eduardo cannot be considered third persons for purposes of applying the
rule. The conveyance shall not be valid against any person unless registered, except (1) the grantor, (2)
his heirs and devisees, and (3) third persons having actual notice or knowledge thereof. [38] Not only are
petitioners the heirs of Eduardo, some of them were actually parties to the Kasulatan executed in favor of
Ricardo. Thus, the annotation of the adverse claim of the Cruzes on the OCT is no longer required to bind
the heirs of Eduardo, petitioners herein.

Petitioners had no right to constitute

mortgage over disputed portion

The requirements of a valid mortgage are clearly laid down in Article 2085 of the New Civil
Code, viz:

ART. 2085. The following requisites are essential to the contracts of pledge
and mortgage:

(1) That they be constituted to secure the fulfillment of a principal

obligation;
(2) That the pledgor or mortgagor be the absolute owner of the thing
pledged or mortgaged;
(3) That the persons constituting the pledge or mortgage have the free
disposal of their property, and in the absence thereof, that they be
legally authorized for the purpose.

Third persons who are not parties to the principal obligation may secure the
latter by pledging or mortgaging their own property. (emphasis supplied)

For a person to validly constitute a valid mortgage on real estate, he must be the absolute owner thereof
as required by Article 2085 of the New Civil Code.[39] The mortgagor must be the owner, otherwise the
mortgage is void.[40] In a contract of mortgage, the mortgagor remains to be the owner of the property
although the property is subjected to a lien.[41] A mortgage is regarded as nothing more than a mere lien,
encumbrance, or security for a debt, and passes no title or estate to the mortgagee and gives him no right
or claim to the possession of the property.[42] In this kind of contract, the property mortgaged is merely
delivered to the mortgagee to secure the fulfillment of the principal obligation. [43] Such delivery does not
empower the mortgagee to convey any portion thereof in favor of another person as the right to dispose is
an attribute of ownership.[44] The right to dispose includes the right to donate, to sell, to pledge or
mortgage. Thus, the mortgagee, not being the owner of the property, cannot dispose of the whole or part
thereof nor cause the impairment of the security in any manner without violating the foregoing rule. [45] The
mortgagee only owns the mortgage credit, not the property itself.[46]

Petitioners submit as an issue whether a mortgagor may be compelled to receive from the
mortgagee a smaller portion of the lot covered by the originally encumbered title, which lot was partitioned
during the subsistence of the mortgage without the knowledge or authority of the mortgagor as registered
owner. This formulation is disingenuous, baselessly assuming, as it does, as an admitted fact that the
mortgagor is the owner of the mortgaged property in its entirety. Indeed, it has not become a salient issue
in this case since the mortgagor was not the owner of the entire mortgaged property in the first place.

Issuance of OCT No. P-153(M), improper

It is a glaring fact that OCT No. P-153(M) covering the property mortgaged was in the name of
Eduardo, without any annotation of any prior disposition or encumbrance. However, the property was
sufficiently shown to be not entirely owned by Eduardo as evidenced by the Kasulatan. Readily apparent
upon perusal of the records is that the OCT was issued in 1976, long after the Kasulatan was executed
way back in 1954. Thus, a portion of the property registered in Eduardos name arising from the grant of
free patent did not actually belong to him. The utilization of the Torrens system to perpetrate fraud cannot
be accorded judicial sanction.

Time and again, this Court has ruled that the principle of indefeasibility of a Torrens title does not
apply where fraud attended the issuance of the title, as was conclusively established in this case. The
Torrens title does not furnish a shied for fraud.[47] Registration does not vest title. It is not a mode of
acquiring ownership but is merely evidence of such title over a particular property. It does not give the
holder any better right than what he actually has, especially if the registration was done in bad faith. The
effect is that it is as if no registration was made at all. [48] In fact, this Court has ruled that a decree of
registration cut off or extinguished a right acquired by a person when such right refers to a lien or
encumbrance on the landnot to the right of ownership thereofwhich was not annotated on the certificate of
title issued thereon.[49]

Issuance of TCT Nos. T-9326-P(M)

and T-9327-P(M), Valid

The validity of the issuance of two TCTs, one for the portion sold to the predecessor-in-interest of
the Cruzes and the other for the portion retained by petitioners, is readily apparent from Section 53 of the
Presidential Decree (P.D.) No. 1529 or the Property Registration Decree. It provides:

SEC 53. Presentation of owners duplicate upon entry of new certificate. No

voluntary instrument shall be registered by the Register of Deeds, unless the owners
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 owners 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 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 instrument, shall be null and void.
(emphasis supplied)

Petitioners argue that the issuance of the TCTs violated the third paragraph of Section 53 of P.D.
No. 1529. The argument is baseless. It must be noted that the provision speaks of forged duplicate
certificate of title and forged deed or instrument. Neither instance obtains in this case. What the Cruzes
presented before the Register of Deeds was the very genuine owners duplicate certificate earlier
deposited by Banaag, Eduardos attorney-in-fact, with RBSP. Likewise, the instruments of conveyance are
authentic, not forged. Section 53 has never been clearer on the point that as long as the owners duplicate
certificate is presented to the Register of Deeds together with the instrument of conveyance, such
presentation serves as conclusive authority to the Register of Deeds to issue a transfer certificate or
make a memorandum of registration in accordance with the instrument.

The records of the case show that despite the efforts made by the Cruzes in persuading the heirs
of Eduardo to allow them to secure a separate TCT on the claimed portion, their ownership being amply
evidenced by the Kasulatan and Sinumpaang Salaysay where Eduardo himself acknowledged the sales
in favor of Ricardo, the heirs adamantly rejected the notion of separate titling. This prompted the Cruzes
to approach the bank manager of RBSP for the purpose of protecting their property right. They
succeeded in persuading the latter to lend the owners duplicate certificate. Despite the apparent
irregularity in allowing the Cruzes to get hold of the owners duplicate certificate, the bank officers
consented to the Cruzes plan to register the deeds of sale and secure two new separate titles, without
notifying the heirs of Eduardo about it.

Further, the law on the matter, specifically P.D. No. 1529, has no explicit requirement as to the
manner of acquiring the owners duplicate for purposes of issuing a TCT. This led the Register of Deeds
of Meycauayan as well as the Central Bank officer, in rendering an opinion on the legal feasibility of the
process resorted to by the Cruzes. Section 53 of P.D. No. 1529 simply requires the production of the
owners duplicate certificate, whenever any voluntary instrument is presented for registration, and the
same 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.
 Quite interesting, however, is the contention of the heirs of Eduardo that the surreptitious lending
of the owners duplicate certificate constitutes fraud within the ambit of the third paragraph of Section 53
which could nullify the eventual issuance of the TCTs. Yet we cannot subscribe to their position.
Impelled by the inaction of the heirs of Eduardo as to their claim, the Cruzes went to the bank
where the property was mortgaged. Through its manager and legal officer, they were assured of recovery
of the claimed parcel of land since they are the successors-in-interest of the real owner thereof. Relying
on the bank officers opinion as to the legality of the means sought to be employed by them and the
suggestion of the Central Bank officer that the matter could be best settled between them and the bank,
the Cruzes pursued the titling of the claimed portion in the name of Ricardo. The Register of Deeds
eventually issued the disputed TCTs.

The Cruzes resorted to such means to protect their interest in the property that rightfully belongs
to them only because of the bank officers acquiescence thereto. The Cruzes could not have secured a
separate TCT in the name of Ricardo without the banks approval. Banks, their business being impressed
with public interest, are expected to exercise more care and prudence than private individuals in their
dealings, even those involving registered lands.[50] The highest degree of diligence is expected, and high
standards of integrity and performance are even required of it.[51]

Indeed, petitioners contend that the mortgagee cannot question the veracity of the registered title
of the mortgagor as noted in the owners duplicate certificate, and, thus, he cannot deliver the certificate to
such third persons invoking an adverse, prior, and unregistered claim against the registered title of the
mortgagor. The strength of this argument is diluted by the peculiar factual milieu of the case.

A mortgagee can rely on what appears on the certificate of title presented by the mortgagor and
an innocent mortgagee is not expected to conduct an exhaustive investigation on the history of the
mortgagors title. This rule is strictly applied to banking institutions. A mortgagee-bank must exercise due
diligence before entering into said contract. Judicial notice is taken of the standard practice for banks,
before approving a loan, to send representatives to the premises of the land offered as collateral and to
investigate who the real owners thereof are.[52]

Banks, indeed, should exercise more care and prudence in dealing even with registered lands,
than private individuals, as their business is one affected with public interest. Banks keep in trust money
belonging to their depositors, which they should guard against loss by not committing any act of
negligence that amounts to lack of good faith. Absent good faith, banks would be denied the protective
mantle of the land registration statute, Act 496, which extends only to purchasers for value and good faith,
as well as to mortgagees of the same character and description. [53] Thus, this Court clarified that the rule
that persons dealing with registered lands can rely solely on the certificate of title does notapply to
banks.[54]

Bank Liable for Nominal Damages

Of deep concern to this Court, however, is the fact that the bank lent the owners duplicate of the
OCT to the Cruzes when the latter presented the instruments of conveyance as basis of their claim of
ownership over a portion of land covered by the title. Simple rationalization would dictate that a
mortgagee-bank has no right to deliver to any stranger any property entrusted to it other than to those
contractually and legally entitled to its possession. Although we cannot dismiss the banks
acknowledgment of the Cruzes claim as legitimized by instruments of conveyance in their possession, we
nonetheless cannot sanction how the bank was inveigled to do the bidding of virtual strangers.
Undoubtedly, the banks cooperative stance facilitated the issuance of the TCTs. To make matters worse,
the bank did not even notify the heirs of Eduardo. The conduct of the bank is as dangerous as it is
unthinkably negligent. However, the aspect does not impair the right of the Cruzes to be recognized as
legitimate owners of their portion of the property.

Undoubtedly, in the absence of the banks participation, the Register of Deeds could not have
issued the disputed TCTs. We cannot find fault on the part of the Register of Deeds in issuing the TCTs
as his authority to issue the same is clearly sanctioned by law. It is thus ministerial on the part of the
Register of Deeds to issue TCT if the deed of conveyance and the original owners duplicate are
presented to him as there appears on theface of the instruments no badge of irregularity or

nullity.[55] If there is someone to blame for the shortcut resorted to by the Cruzes, it would be the bank
itself whose manager and legal officer helped the Cruzes to facilitate the issuance of the TCTs.

The bank should not have allowed complete strangers to take possession of the owners duplicate
certificate even if the purpose is merely for photocopying for a danger of losing the same is more than
imminent. They should be aware of the conclusive presumption in
Section 53. Such act constitutes manifest negligence on the part of the bank which would necessarily
hold it liable for damages under Article 1170 and other relevant provisions of the Civil Code. [56]

In the absence of evidence, the damages that may be awarded may be in the form of nominal
damages. Nominal damages are adjudicated in order that a right of the plaintiff, which has been violated
or invaded by the defendant, may be vindicated or recognized, and not for the purpose of indemnifying
the plaintiff for any loss suffered by him.[57] This award rests on the mortgagors right to rely on the banks
observance of the highest diligence in the conduct of its business. The act of RBSP of entrusting to
respondents the owners duplicate certificate entrusted to it by the mortgagor without even notifying the
mortgagor and absent any prior investigation on the veracity of respondents claim and

character is a patent failure to foresee the risk created by the act in view of the provisions of Section 53 of
P.D. No. 1529. This act runs afoul of every banks mandate to observe the highest degree of diligence in
dealing with its clients. Moreover, a mortgagor has also the right to be afforded due process before
deprivation or diminution of his property is effected as the OCT was still in the name of Eduardo. Notice
and hearing are indispensable elements of this right which the bank miserably ignored.

Under the circumstances, the Court believes the award of P50,000.00 as nominal damages is
appropriate.

Five-Year Prohibition against alienation

or encumbrance under the Public Land Act

One vital point. Apparently glossed over by the courts below and the parties is an aspect which is
essential, spread as it is all over the record and intertwined with the crux of the controversy, relating as it
does to the validity of the dispositions of the subject property and the mortgage thereon. Eduardo was
issued a title in 1976 on the basis of his free patent application. Such application implies the recognition
of the public dominion character of the land and, hence, the five (5)-year prohibition imposed by the
Public Land Act against alienation or encumbrance of the land covered by a free patent or
homestead[58] should have been considered.

The deed of sale covering the fifty (50)-square meter right of way executed by Eduardo on 18
March 1981 is obviously covered by the proscription, the free patent having been issued on 8 October
1976. However, petitioners may recover the portion sold since the prohibition was imposed in favor of the
free patent holder. In Philippine National Bank v. De los Reyes,[59] this Court ruled squarely on the point,
thus:

While the law bars recovery in a case where the object of the contract is contrary to law
and one or both parties acted in bad faith, we cannot here apply the doctrine of in pari
delicto which admits of an exception, namely, that when the contract is merely prohibited
by law, not illegal per se, and the prohibition is designed for the protection of the party
seeking to recover, he is entitled to the relief prayed for whenever public policy is
enhanced thereby. Under the Public Land Act, the prohibition to alienate is predicated on
the fundamental policy of the State to preserve and keep in the family of the homesteader
that portion of public land which the State has gratuitously given to him, and recovery is
allowed even where the land acquired under the Public Land Act was sold and not merely
encumbered, within the prohibited period.[60]
 The sale of the 553 square meter portion is a different story. It was executed in 1954, twenty-two
(22) years before the issuance of the patent in 1976. Apparently, Eduardo disposed of the portion even
before he thought of applying for a free patent. Where the sale or transfer took place before the filing of
the free patent application, whether by the vendor or the vendee, the prohibition should not be applied. In
such situation, neither the prohibition nor the rationale therefor which is
to keep in the family of the patentee that portion of the public land which the government has gratuitously
given him, by shielding him from the temptation to dispose of his landholding, could be relevant.
Precisely, he had disposed of his rights to the lot even before the government could give the title to him.

The mortgage executed in favor of RBSP is also beyond the pale of the prohibition, as it was
forged in December 1981 a few months past the period of prohibition.

WHEREFORE, the Decision of the Court of Appeals is AFFIRMED, subject to the modifications herein.
Respondent Rural Bank of San Pascual is hereby ORDERED to PAY petitioners Fifty Thousand Pesos
(P50,000.00) by way of nominal damages. Respondents Consuelo Cruz and Rosalina Cruz-Bautista are
hereby DIVESTED of title to, and respondent Register of Deeds of Meycauayan, Bulacan is accordingly
ORDERED to segregate, the portion of fifty (50) square meters of the subject Lot No. 2204, as depicted in
the approved plan covering the lot, marked as Exhibit A, and to issue a new title covering the said portion
in the name of the petitioners at the expense of the petitioners. No costs.

SO ORDERED.
 [G.R. No. 157553. September 8, 2004]

AUTOCORP GROUP and AUTOGRAPHICS, INC., petitioners, vs. Hon. COURT OF APPEALS and
KEPPEL MONTE BANK (formerly Promulgated: Monte de Piedad and Savings
Bank), respondents.

DECISION
PUNO, J.:

Petitioners are before us on a Petition for Review on Certiorari assailing the decision[1] and
resolution[2] of the Court of Appeals in CA-G.R. SP No. 59004, which set aside the order[3]and
resolution[4] of the Regional Trial Court (RTC) of Cebu City, Branch 5, granting a writ of preliminary
injunction against the respondent Keppel Monte Bank and the Register of Deeds of Cebu City.
The records show that respondent bank extended a loan of eighty-five million pesos
(P85,000,000.00) in favor of petitioner Autocorp Group (Autocorp). The loan is embodied in an
Agreement[5] dated December 16, 1994 which was secured by pledge and real estate mortgage on
several properties, among which, were lots in Cebu City, co-owned by petitioner Autographics, Inc., and
covered by Transfer Certificates of Title (TCT) Nos. 72002, 72132, 85737, and 102042, and lots in Lapu-
lapu City, registered under the name of Eurasia Heavy Industries, Inc., and covered by TCT Nos. 19135
and 19136. The Agreement provided that the CREDITOR may, at its sole discretion, treat the whole
obligation, its principal and accrued interest and other charges, as immediately due, payable and
defaulted, without necessity of any demand, presentment or notice by the CREDITOR to the DEBTOR in
any event of default, such as, when [t]he DEBTOR fails to pay the principal loan, interests, and other fees
and charges, or any part thereof as they fall due.
Petitioner Autocorp failed to pay the loan. Despite its failure, it asked for an additional loan
of P48,800,000.00 payable in one year at 20% interest per annum. Of this additional
loan, P17,000,000.00 was applied partially against the original loan. Autocorp was again unable to pay
both accounts totaling P116,800,000.00, despite repeated demands and various requests for extension.[6]
Hence, in a notarized letter[7] dated September 8, 1997, addressed to the Office of the Provincial
Sheriff of Cebu City, respondent bank requested for the sale of the six (6) mortgaged lots at a public
auction, for the satisfaction of petitioner Autocorps obligations, which, as of July 15, 1997, allegedly
amounted to P143,871,904.00, and a sum equivalent to 10% as attorneys fees. The letter was filed with
the Office of the Clerk of Court Ex Oficio Provincial Sheriff of Cebu City on September 12, 1997, and
raffled to Deputy Sheriff Jessie Belarmino on September 15, 1997, for implementation.[8]
Before Deputy Sheriff Belarmino could prepare the requisite publication and notice, the petitioners
filed a complaint for Annulment of Loan Agreement and Real Estate Mortgage/ Declaration of
Unenforceability of Loan Agreement and Real Estate Mortgage with ex parte Restraining Order,
Preliminary Injunction and Damages[9] against respondent bank, the Clerk of Court Ex Oficio Provincial
Sheriff of Cebu, and Deputy Sheriff Belarmino. Summons and notice of raffle were served on respondent
bank and its co-defendants on September 24, 1997. The case was raffled to Branch 23 of the RTC of
Cebu City. On October 1, 1997, the trial court issued a Temporary Restraining Order (TRO) effective for
seventy-two (72) hours. After a summary hearing on October 3, 1997, the TRO was extended for twenty
(20) days.[10]
On October 16, 1997, the trial court issued a writ of preliminary injunction, [11] conditioned on
petitioners filing of a bond of two million pesos (P2,000,000.00). It also set the pre-trial hearing of the
case. The respondent bank sought a reconsideration of the order but in vain.
Respondent bank filed a petition for certiorari under Rule 65 of the Rules of Court with the Court of
Appeals, to annul the order and resolution of the trial court. It contended that the preliminary injunction
was issued without the requisite prior notice and hearing, provided under Section 5, Rule 58 of the 1997
Rules of Court. The Court of Appeals granted the petition on November 12, 1998, after finding that the
summary hearing conducted by the trial court was insufficient. The decision was held to be without
prejudice to his (the trial court judges) conducting the required hearing to determine whether preliminary
injunction should be issued.[12]
The counsel for respondent bank immediately informed Deputy Sheriff Belarmino of the Court of
Appeals favorable decision. In a letter[13] dated November 25, 1998, said counsel furnished Deputy Sheriff
Belarmino with a copy of the November 12, 1998 Decision of the Court of Appeals and requested him to
proceed with the foreclosure.
In response, Deputy Sheriff Belarmino prepared and served the Notice of Extrajudicial Sale. [14] He
scheduled the extrajudicial sale on January 7, 1999 at 10:00 a.m. Before the notice could be published,
petitioners filed an Urgent Motion to Hold in Abeyance the Extrajudicial Sale in Case No. EJF-2397-
CEB[15] dated December 7, 1997 with Branch 5[16] of the RTC of Cebu City. In addition, it filed a Very
Urgent Motion for Issuance of an Order of Status Quo [17] with the Court of Appeals on December 17,
1998.
In its Resolution[18] dated December 22, 1998, the Court of Appeals denied the motion of the
petitioners. It ruled that its November 12, 1998 Decision had become final and executory, hence, the
motion of petitioners should be resolved by the trial court. On January 6, 1999, the RTC of Cebu City,
Branch 5, also denied petitioners motion to hold the extrajudicial sale in abeyance on the ground that
petitioners violated the rule against forum-shopping.[19] Petitioners filed a motion for the reconsideration of
the trial courts decision but without any success.
The extrajudicial sale proceeded on January 7, 1999 at 10:00 a.m. and closed at 10:45 a.m. The six
(6) properties were awarded to respondent bank as the lone bidder. Deputy Sheriff Belarmino issued a
Certificate of Sale dated January 7, 1999 with the approval of Executive Judge Priscila Agana. [20]
On January 13, 1999, petitioners filed a motion to admit their Amended/Supplemental Complaint with
a prayer for the issuance of an ex parte Temporary Restraining Order and an Order for Preliminary
Injunction[21] with the RTC of Cebu City, Branch 5. It aimed to stop the Register of Deeds of Cebu from
registering the Certificate of Sale in the name of respondent bank and the latter from taking possession of
the properties subject of the foreclosure. In addition, the amended complaint sought the annulment of the
extrajudicial foreclosure due to several alleged irregularities in the conduct of the sale.
On January 21, 1999 at 4:30 p.m., respondent bank presented the sheriffs certificate of sale to the
Register of Deeds of Cebu City, involving the four (4) properties located in Cebu Citycovered by TCT Nos.
72002, 72132, 85737, and 102042. On the same date, the certificate was entered in the primary entry
book of the Register of Deeds of Cebu. However, the entry fee of P30.00 and the registration fee
of P154,923.00 were paid only the following day or on January 22, 1999 as the cashier in charge of
receiving payment had already left. Respondent bank also presented the sheriffs certificate of sale to the
Register of Deeds of Lapu-lapu City with respect to the two (2) subject lots, covered by TCT Nos. 19135
and 19136, located therein.[22]The certificate of sale was duly annotated at the back of the transfer
certificates of title of the subject lots with a note that this include[s] four (4) other lots situated
in Cebu City.[23]
On January 25, 1999, the RTC of Cebu City, Branch 5, admitted the amended/supplemental
complaint of petitioners and granted their prayer for the issuance of a TRO, directing the Office of the
Register of Deeds to refrain from registering the assailed sheriffs certificate of sale and also respondent
bank from taking possession of the properties subject of the certificate of sale. It required the respondent
bank to file its answer to the amended/supplemental complaint, within ten (10) days from receipt of the
order, and set a hearing on the propriety of issuing a writ of preliminary injunction on February 15,
1999.[24]
Respondent banks counsel failed to appear on the scheduled February 15, 1999 hearing despite
due notice. Petitioners presented their evidence ex parte. As the TRO it issued was to expire on the same
day, the trial court issued the preliminary injunction on the basis of the evidence adduced by
petitioners. The dispositive portion of the order states:
WHEREFORE, in view of the foregoing, the court hereby grants the preliminary injunction and let a writ
issue after the plaintiffs shall have put up a bond of ONE HUNDRED THOUSAND (P100,000.00) Pesos
conditioned that the applicant will pay the adverse party of all damages which it may sustain by reason of
the injunction if the court will finally decide that the applicant is not entitled thereto.Consequently, the
Office of the Register of Deeds, Cebu City is enjoined not to register the Certificate of Sale, dated
January 7, 1999, and likewise defendant Monte de Piedad is directed not to take possession or do any
act related thereto on the properties subject of said Certificate of [S]ale until further orders from this
court.[25]

Respondent banks motion for reconsideration was denied in an Order dated March 9, 1999.[26]
On May 29, 2000, respondent bank filed a petition for certiorari[27] under Rule 65 of the Rules of
Court with the Court of Appeals, seeking to annul the orders of the trial court dated February 15, 1999
and March 9, 1999. Respondent bank contended that the entry of the certificate of sale in the primary
entry book on January 21, 1999 was equivalent to registration.Hence, the TRO dated January 25, 1999
and the preliminary injunction dated February 15, 1999, were issued with grave abuse of discretion, the
registration of the certificate of sale having already become fait accompli at the time. Respondent bank
also faulted the part of the order prohibiting petitioner from taking possession of the properties as it has
not even filed a petition for a writ of possession at the time as required by Section 7 of Act No. 3135.
On August 16, 2002, the Court of Appeals rendered its first assailed decision, [28] annulling and
setting aside the trial courts February 15, 1999 Order and April 28, 2000 Resolution. It held that the entry
of the certificate of sale in the primary entry book was equivalent to registration, citing Section 56 of
Presidential Decree (P.D.) No. 1529, also known as the Property Registration Decree, and the case
of DBP vs. Acting Register of Deeds of Nueva Ecija.[29] The Court of Appeals held that the failure of
respondent bank to pay the entry and registration fees, on the same day that the sheriffs certificate of
sale was presented and entered in the primary entry book, was not respondents fault but due to the
absence of the cashier. In any case, it ruled that the payment by respondent bank the following day cured
the defect. The Court of Appeals also found as premature the injunction to stop respondent bank from
taking possession of the properties.
Petitioners motion for reconsideration was denied by the Court of Appeals in a Resolution dated
March 17, 2003.[30]
Hence, this petition where petitioners raise the following issues:
I

ARE THE QUESTIONED DECISION OF THE COURT OF APPEALS AND ITS RESOLUTION DATED
AUGUST 16, 2002 AND MARCH 17, 2003 IN CA-G.R. SP. NO. 59004 IN ACCORD WITH THE LAW
AND JURISPRUDENCE THEREON?

II

CAN THE COURT OF APPEALS IN A PETITION FOR CERTIORARI PASS UPON AND REVERSE THE
FINDINGS OF FACT AND LAW OF THE TRIAL COURT MADE IN THE EXERCISE OF ITS
JURISDICTION?[31]

Petitioners contend that payment of the entry fee is a condition sine qua non before any valid entry
can be made in the primary entry book. Allegedly, the Court of Appeals resorted to judicial legislation
when it held that the subsequent payment of the entry fee was curative and a substantial compliance with
the law. Petitioners claim that the ruling in DBP vs. Acting Register of Deeds of Nueva Ecija does not
apply to this case. As there was no valid registration, petitioners conclude that the order of the trial court
issuing a writ of preliminary injunction was proper, considering the irregularities present in the conduct of
the extrajudicial foreclosure such as: (a) the petition for extrajudicial foreclosure was not filed with the
executive judge of the RTC of Cebu City but only with the Clerk of Court Ex Oficio Sheriff, Atty. Jeffrey
Joaquino; (b) the notice of extrajudicial foreclosure was made three (3) days ahead of the finality of the
November 12, 1998 Decision of the Court of Appeals in CA-G.R. SP No. 48305, which dissolved the first
writ of preliminary injunction issued by the court a quo; and (c) the extrajudicial foreclosure sale on
January 7, 1999 was not supervised by the Clerk of Court Ex Oficio Sheriff, as required under
Administrative Order No. 3-98 of this Court.[32]
We find the petition bereft of merit.
First. The objection as to the payment of the requisite fees is unavailing. There is no question that
the fees were paid, albeit belatedly. Respondent bank presented the certificate of sale to the Office of the
Register of Deeds of Cebu City for registration on January 21, 1999 at 4:30 p.m. As the cashier had
already left, the Office could not receive the payment for entry and registration fees, but still, the
certificate of sale was entered in the primary entry book. The following day, respondent bank paid the
requisite entry and registration fees. Given the peculiar facts of the case, we agree with the Court of
Appeals that the payment of respondent bank must be deemed to be substantial compliance with the law;
and, the entry of the instrument the day before, should not be invalidated. In any case, even if we
consider the entry to have been made on January 22, the important fact is that the entry in the primary
entry book was done prior to the issuance of the writ of injunction by the trial court.
Section 56 of P.D. No. 1529 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. (emphasis ours)

Second. Petitioners contend that the aforecited case of DBP is not apropos to the case at
bar. Allegedly, in DBP, the bank not only paid the registration fees but also presented the owners
duplicate certificate of title. We find no merit in petitioners posture. They fail to consider the voluntary or
involuntary nature of the instrument subject of registration. A voluntary instrument is a willful act of the
registered owner of the land to be affected by registration, [33] while an involuntary instrument is one
pertaining to a transaction affecting lands in which the registered owners cooperation is not needed and
which transaction may even be done against his will. [34] For the registration of a voluntary instrument, it is
necessary not only to register the deed, instrument or assignment, mortgage, or lease in the entry book of
the register of deeds, but a memorandum thereof must also be made on the owners duplicate and on its
original.The mere entry by the register of deeds in the entry or diary book, without the presentation of the
owners duplicate certificate of title for corresponding annotation of the conveyance, does not have the
effect of a conveyance of the property.[35] On the other hand, for the registration of an involuntary
instrument, the law does not require the presentation of the owners duplicate certificate of title and
considers the annotation of such instrument upon the entry book, as sufficient to affect the real estate to
which it relates.[36] The reason for the difference is obvious. In a voluntary instrument, the registered
owner of the land to be affected by registration is presumed to be interested in registering the instrument
and would willingly surrender, present or produce his duplicate certificate of title to the register of deeds in
order to accomplish such registration. On the other hand, as the registration of an involuntary instrument
is contrary to the interest of the registered owner or will affect him adversely, it is but natural that he will
not willingly present or produce his duplicate certificate or at least delay the production as long as
possible.[37]
Like in DBP vs. Acting Register of Deeds of Nueva Ecija, [38] the instrument involved in the case at
bar, is a sheriffs certificate of sale. We hold now, as we held therein, that the registrant is under no
necessity to present the owners duplicates of the certificates of title affected, for purposes of primary
entry, as the transaction sought to be recorded is an involuntary transaction.
 Registration is merely a specie of notice.[39] It is a ministerial act by which an instrument is sought to
be inscribed in the records of the Office of the Register of Deeds and annotated at the back of the
certificate of title covering the land subject of the instrument. It is not a declaration by the State that such
an instrument is a valid and subsisting interest in the land. [40] The law on registration does not require that
only valid instruments shall be registered. The purpose of registration is merely to give notice.[41]
It is a ministerial duty on the part of the Register of Deeds to annotate the instrument on the
certificate of sale after a valid entry in the primary entry book. P.D. No. 1524 provides:

SEC. 63. Foreclosure of Mortgage. x x x

(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. (emphases ours)

In fine, petitioners prayer for the issuance of a writ of injunction, to prevent the register of deeds from
registering the subject certificate of sale, had been rendered moot and academic by the valid entry of the
instrument in the primary entry book. Such entry is equivalent to registration. Injunction would not lie
anymore, as the act sought to be enjoined had already become a fait accompli or an accomplished act.
Third. As to the writ of injunction preventing respondent bank from possessing the subject lands, Act
No. 3135 provides:

SECTION 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.

A writ of possession is generally understood to be an order whereby a sheriff is commanded to place

a person in possession of a real or personal property, such as, when a property is extrajudicially
foreclosed. It has been consistently held that during the period of redemption after the registration of the
sale, a writ of possession issues as a matter of course upon the filing of the proper motion and the
approval of a bond. A writ of possession may also be issued after consolidation of ownership of the
property in the name of the purchaser. It is settled that the buyer in a foreclosure sale, who becomes the
absolute owner of the property if the same is not redeemed during the one-year redemption period after
the registration of the sale, is entitled to the possession of the property and can demand it at any time,
following the consolidation of ownership in his name and the issuance to him of a new transfer certificate
of title. To underscore the writs ministerial character, we have disallowed injunction to prohibit its
issuance, just as we have held that issuance of the same may not be stayed by a pending action for
annulment of the mortgage or the foreclosure itself.[42]
The preliminary injunction issued by the trial court to prevent respondent bank from taking
possession of the subject lots, was properly set aside by the Court of Appeals, as the trial court judge
acted with grave abuse of discretion when it issued the same. It was not alleged that respondent bank
committed acts of possession over the properties before it could file a petition for a writ of possession
during the redemption period. If the trial court cannot refuse to issue a writ of possession in the event that
respondent bank complies with the requisites for its issuance, with more reason that the trial court cannot
issue an injunction, preempting respondent bank from filing a petition or application for a writ of
possession, over the properties subject of the certificate of sale.
IN VIEW WHEREOF, the petition is dismissed. The assailed decision and resolution of the Court of
Appeals are affirmed.
Cost against petitioners.
SO ORDERED.
G.R. No. 80739 August 20, 1992

GRACIA R. JOVEN, petitioner,

vs.
COURT OF APPEALS, HON. MANUEL A. PATRON, in his capacity as Presiding Judge of the RTC,
Branch 59, Lucena City, Roberto Paguia & Fernando Lasala, respondents.

De Castro & Cagampang Law Offices for petitioner.

Castillo, Laman, Tan & Pantaleon for private respondents.

CRUZ, J.:

The petitioner was the registered owner of three parcels of land which she mortgaged in favor of the
Development Bank of the Philippines. Upon the extrajudicial foreclosure of the mortgage due to her
failure to pay her loan, the properties were sold at public auction to DBP as the biggest bidder. A
certificate of sale was issued and annotated on the certificate of title on November 17, 1982.

After the expiration of the redemption period, no redemption having been made by the petitioner, DBP
sold the subject properties to Roberto Paguia, one of the herein private respondents, through a deed of
sale executed on December 17, 1985. On January 30, 1986, Paguia took possession of the properties
through his representative, Fernando Lasala, the other private respondent.

Earlier, the petitioner had filed on December 3, 1985, an action before the Regional Trial Court of Lucena
City (raffled later to Branch 55) for the annulment of the mortgage and its foreclosure. Named as
defendants were DBP and the private respondents. Later, when her application for preliminary injunction
and restraining order was denied, she lodged with the Municipal Circuit Trial Court of Lucban-Sampaloc
complaint against the private respondents for forcible entry with a prayer for writ of mandatory injunction.
This was docketed as Civil Case No. 155.

In a decision dated May 14, 1986, the case was dismissed for lack of jurisdiction. But on May 29, 1986,
the petitioner filed a motion for reconsideration, which was granted. In a resolution dated July 11,
1986, 1 the private respondents were ordered to: 1) immediately restore and deliver possession of the
subject properties to the petitioner; 2) render to the petitioner an accounting of all the fruits and products
gathered from said property from the time they took possession thereof until they vacate the same; and 3)
reimburse the petitioner the total cost of such accounting.

This resolution was reversed on appeal by the Regional Trial Court of Lucena City, Branch 59, 2 which
held that the court a quo had no jurisdiction over the ejectment case because of the issue of ownership
raised therein and that, assuming such jurisdiction, the decision had already become final and executory
when the resolution dated July 11, 1986, was rendered. The petitioner elevated the case to the
respondent Court of Appeals, which sustained the assailed decision in toto. 3

She is now before us in this petition for review on certiorari, contending that the Municipal Circuit Trial
Court had jurisdiction over the ejectment case and that the private respondents were guilty of forcible
entry on the subject premises for occupying the same without judicial authorization.

The petition has merit:

The respondents argue that the Municipal Circuit Trial Court had no jurisdiction over the action for forcible
entry on the principal ground that a question of ownership was involved therein. This view does not jibe
with the following observations from Chief Justice Moran based on a consistent line of decisions from this
Court: 4

It would be a mistake to suppose that an action involves a question of title merely

because the plaintiff may allege in his complaint that he is the owner of the land. Just as
the plaintiff may introduce proof of his title in order to show the character of his (sic) prior
possession, so be may allege ownership in himself as a material and relevant fact in the
case, and the insertion of such an allegation in the complaint cannot by any possibility
place the cause beyond the jurisdiction of the magistrate's court, provided it otherwise
sufficiently appears that what the plaintiff really seeks is the restoration of possession as
against an intruder who has seized the property within the period of one year. Much less
can the defendant in such an action defeat the jurisdiction of the magistrate's court by
setting up title in himself. In this connection it should be borne in mind that the factor
which defeats the jurisdiction of the court of the justice of the peace is the necessity to
adjudicate the question of title. The circumstance that proof of title is introduced at the
hearing or that a claim of ownership is made by either or both of the parties is not
material

This ruling is embodied in Sec. 33, (2), Batas Pambansa Blg. 129, which vests municipal courts with:

Exclusive original jurisdiction over cases of forcible entry and unlawful detainer; Provided,
that when, in such cases, the defendant raises the question of ownership in his pleadings
and the question of possession cannot be resolved without deciding the issue of
ownership, the issue of ownership should be resolved only to determine the issue of
possession.

It is true that before the petitioner instituted the action for forcible entry in the Municipal Circuit Trial Court
of Lucban-Sampaloc, the case for annulment of the mortgage and foreclosure sale, which necessarily
involves recovery of ownership, was already being litigated in the Regional Trial Court of Lucena City.
Even so, the municipal court could, pending final adjudication of that case, exercise its jurisdiction to
determine the right of possession (only) over the subject properties in the ejectment case.

The private respondents also contend that the Municipal Circuit Trial Court had no jurisdiction over the
complaint for forcible entry because; a) under Section 19 par. (2) of BP 129, as amended, the Regional
Trial Court has exclusive original jurisdiction over all civil actions which involve the title to, or possession
of, real property or any interest therein; and b) under Section 1, par. A (1) of the Rule on Summary
Procedure, cases of forcible entry and detainer involving the question of ownership are
expressly excluded from the summary jurisdiction of the municipal court.

Curiously, however, they also insist that an action for forcible entry and unlawful detainer shall be
governed by the Rule on Summary Procedure pursuant to Section 36 of BP 129 and that the petitioner is
now estopped from assailing the applicability of that Rule.

There is no question that under Section 1, par. A (1), of the said Rule, the Metropolitan Trial Courts,
Municipal Trial Courts and Municipal Circuit Trial Courts have jurisdiction over cases of forcible entry and
unlawful detainer except where the question of ownership is involved or where the damages or unpaid
rentals sought to be recovered by the plaintiff exceed P20,000.00 at the time of the filing of the
complaint. *

However, it is incorrect to say that the question of ownership was involved in the ejectment case filed by
the petitioner simply because she alleged in her complaint that she was the original owner of the subject
properties. That the petitioner instituted a separate action for the annulment of the mortgage is not a valid
reason either for defeating the summary remedy of ejectment. On the contrary, it only bolsters the
conclusion that the ejectment case did not involve the question of title as this was the subject of the
annulment case before the Regional Trial Court of Lucena City. The Rule on Summary Procedure was
clearly applicable because the ejectment case involved only the restoration of possession of the subject
land and not its ownership.

The respondent court also sustained the ruling of the Regional Trial Court that the motion for
reconsideration filed by the petitioner with the Municipal Circuit Trial Court did not stop the running of the
reglementary period to appeal because such motion was a prohibited pleading under Section 15 (c) ** of
the Rule on Summary Procedure. Its conclusion was that the Municipal Circuit Trial Court had already lost
jurisdiction to issue the resolution dated July 11, 1986, because the decision sought to be reconsidered
had then become already final and executory.

We do not agree. The Municipal Circuit Trial Court did not err in holding that the motion for
reconsideration was not covered by the prohibition under Section 15 (c). The motion prohibited by this
section is that which seeks reconsideration of the judgment rendered by the court after trial on the merits
of the case. 5 The decision dismissing the petitioner's ejectment case for lack of jurisdiction was not an
adjudication on the merits. Review thereof could therefore be sought by the petitioner through her motion
for reconsideration and this motion, which was not pro forma, had the effect of suspending the running of
the period to appeal.

Now, on the issue of possession:

Section 7 of Act No. 3135, as amended by Act No. 4118, provides that in case of extrajudicial foreclosure
of mortgage, the court *** may issue as a matter of course a writ of possession in favor of the purchaser
even during the redemption period, provided that a proper motion has been filed, a bond is approved, and
no third person is involved.

Section 6 of the Act provides that where an extrajudicial sale is made, "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."

Sections 464-466 of the Code of Civil Procedure were superseded by Sections 25-27 and Section 31 of
Rule 39 of the Rules of Court, which in turn were replaced by Sections 29 to 31 and Section 35 of Rule 39
of the Revised Rules of Court.

Section 35 provides that "if no redemption be made within twelve (12) months after the sale, the
purchaser, or his assignee, is entitled to a conveyance and the possession of property, . . . The
possession of the property shall be given to the purchaser or last redemptioner by the same officer unless
a third party is actually holding the property adversely to the judgment debtor."

To give effect to his right of possession, the purchaser must invoke the aid of the courts and ask for a writ
of possession. He cannot simply take the law into his own hands and enter the property without judicial
authorization. 6We have consistently held that he need not bring a separate and independent suit for this
purpose. 7 Nevertheless, it is essential that he ask for and be granted a writ of possession in order that he
may be legally installed in the property he has bought.

Section 63 (b) of P.D. 1529, otherwise known as the Property Registration Decree, requires that in case
of non-redemption, the purchaser at a 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. The Register of Deeds shall
thereupon issue a new certificate in favor of the purchaser after the owner's duplicate certificate shall
have been previously delivered and canceled.

In F. David Enterprises vs. Insular Bank of Asia and America, 8 this Court held:
 It is settled that the buyer in a foreclosure sale becomes the absolute owner of the
property purchased if it is not redeemed during the period of one year after the
registration of the sale. As such, he is entitled to the possession of the said property
and can demand it at any time following the consolidation ownership in his name and the
issuance to him of a new transfer certificate of title. The buyer can in fact demand
possession of the land even during the redemption period except that he has to post a
bond in accordance with Section 7 of Act No. 3135 as amended. No such bond is
required after the redemption period if the property is not redeemed. Possession of the
land then becomes an absolute right of the purchaser as confirmed owner. Upon proper
application and proof of title, the issuance of the writ of possession becomes a ministerial
duty of the court. (Emphasis supplied).

In the case at bar, there is no showing that after the lapse of the redemption period without the petitioner
having redeemed the lands, DBP executed an affidavit of consolidation of ownership of the subject
properties. Neither has it filed with the Register of deeds a final deed of sale or a sworn statement
attesting to the fact of non-redemption. The circumstance that the properties are still in the name of the
petitioner shows that DBP has also not yet obtained a new certificate of title in its name. And neither does
it appear that DBP, on the basis of its purchase of the lands at the foreclosure sale, ever secured a writ of
possession to authorize its entry into the said lands.

Not having done any of these, DBP had as yet not acquired any perfected right of possession that it could
transfer to the private respondents. And as the petitioner continued in actual possession of the subject
premises, she could undoubtedly maintain an action for forcible entry against the private respondents
when, not being armed with a court order or a writ of possession, they simply entered and took
possession of the subject lands.

The only issue in an action for forcible entry is the physical or material possession of real property, that is,
possession de facto and not possession de jure. The philosophy underlying this remedy is that
irrespective of the actual condition of the title to the property, the party in peaceable quiet possession
shall not be turned out by strong hand, violence or terror. In affording this remedy of restitution, the
statute seeks to prevent breaches of the peace and criminal disorder which might ensue from the
withdrawal of the remedy. Another purpose is to discourage those persons who, believing themselves
entitled to the possession of the property, resort to force rather than to some appropriate action in the
courts to assert their claims. 9

Under Section 1, Rule 70, of the Rules of Court, there is forcible entry when one in physical possession of
a land or building is deprived of that possession by another through force, intimidation, threat, strategy or
stealth. The words "by force, intimidation, threat, strategy or stealth" include every situation or condition
under which one person can wrongfully enter upon real property and exclude another, who has had prior
possession thereof. To constitute the use of "force" as contemplated in the above-mentioned provision,
the trespasser does not have to institute a state of war. Nor is it even necessary that he use violence
against the person of the party in possession. The act of going on the property and excluding the lawful
possessor therefrom necessarily implies the exertion of force over the property, and this is all that is
necessary. 10

It is noted that the petitioner instituted the action for annulment of mortgage on December 3, 1985, while
the deed of sale in favor of the private respondent was executed on December 17, 1985. Paguia cannot
say that when he took possession of the subject land on January 30, 1986, he was acting in good faith.
Neither can be claim that he had no knowledge of the pendency of that litigation because he was in fact
one of the defendants in that case. In any event, the fact that the titles were still in the name of the
petitioner should have warned him of the need to ascertain the status of the properties before he took
possession of them.
The private respondents also assert that the institution of the ejectment case resulted in the splitting of a
single cause of action into two, one for the recovery of ownership and possession and the other for
recovery of possession de facto.

In Drilon vs. Gaurana, 11 this Court held:

It is true that a party may not institute more than one suit for a single cause of action
(Rule 2, Sec. 3, Revised Rules of Court) and if two or more complaints are brought for
different parts of a single cause of action, the filing of the first may be pleaded in
abatement of the other (Rule 2, Sec. 4 Revised Rules of Court). However, a forcible entry
or unlawful detainer action has an entirely different subject from that of an action for
reconveyance of title. What is involved in a forcible entry case is merely the issue of
material possession or possession de facto; whereas in an action for reconveyance,
ownership is the issue. So much so that the pendency of an action for reconveyance of
title over the same property does not divest the city or municipal court of its jurisdiction to
try the forcible entry or unlawful detainer case, nor will it preclude or bar execution of
judgment in the ejectment case where the only issue involved is material possession or
possession de facto (De la Cruz v. Court of Appeals, 133 SCRA 520 [1984]).

While there may be identity of parties and subject matter in the two actions, the issues involved and the
reliefs prayed for are not the same. In the annulment suit, the issue is the validity of the mortgage and the
subsequent foreclosure sale whereas the issue in the ejectment case is whether, assuming the mortgage
and foreclosure sale to be valid, the private respondents have the right to take possession of the property.
In the former case, the relief prayed for is recovery of ownership of the subject land while in the latter it is
restoration of possession thereof to the petitioner. Hence, the municipal court had jurisdiction to try the
ejectment case while the annulment suit was being litigated in the regional trial court.

The contention that the petitioner was forum-shopping must also be rejected. As an injunction cannot be
a substitute for the other suits for recovery of possession, 12 such as an action for forcible entry or
unlawful detainer and accion publiciana, denial of the injunction did not bar the petitioner from availing
herself of the more appropriate remedy, to wit, the action for forcible entry. 13

In sum, the respondent court erred when it affirmed the decision of the Regional Trial Court declaring that
the Municipal Circuit Trial Court had no jurisdiction over the ejectment case filed by the petitioner. We find
that it had.

ACCORDINGLY, the petition is GRANTED and the resolution of the Municipal Circuit Trial Court of
Lucban, Sampaloc dated July 11, 1986, in Civil Case No. 155 is REINSTATED. Costs against the private
respondents.

SO ORDERED.

Griño-Aquino, Medialdea and Bellosillo, JJ., concur.

 [G.R. No. 130380. March 17, 1999]

HEIRS OF GAUDENCIO BLANCAFLOR, petitioner, vs. COURT OF APPEALS and GREATER

MANILA EQUIPMENT MARKETING CORPORATION, respondents.

DECISION
DAVIDE, JR., C.J.:

This is a petition for review on certiorari under Rule 45 of the Revised Rules of Court of the 4 April
1997 decision[1] of the Court of Appeals, affirming in toto the 4 March 1992 decision[2] of the Regional Trial
Court (RTC) of Iloilo City, Branch 36, in LRC Cadastral Record Nos. 5913 & 9739.
The factual antecedents were summarized by public respondent Court of Appeals as follows: [3]

On May 16, 1968, in Civil Case No. 10270 the then Court of First Instance [CFI] of Rizal, 7 th Judicial
District, Branch 8, Pasig, Rizal rendered judgment in favor of Sarmiento Trading Corporation and against
defendant Gaudencio Blancaflor ordering the latter to pay to the former the amount of P9,994.05 with
interest thereon at the rate of 12% per annum from June 21, 1967, until fully paid, P500 as attorneys fees
and the costs.

On August 26, 1968, [a] writ was issued to execute the foregoing judgment, by reason of which at the
auction sale conducted by the sheriff Lot No. 22 of the consolidation and subdivision plan Pcs-4577 in
Iloilo City belonging to defendant Blancaflor, covered by TCT No. 14749, was sold to Sarmiento Trading
Corporation. The certificate of sale was inscribed as a memorandum of encumbrance on TCT No. 14749
under Entry No. 39774 on December 19, 1968.

On January 13, 1970, after the one-year period from date of sale, the final deed was issued in favor of
Sarmiento Trading Corporation.

On March 20, 1970, upon petition filed the then Court of First Instance of Iloilo in Cadastral Case No. 4,
Record No. 9739, ordered [the] cancellation of TCT No. 14749 in the name of defendant Blancaflor and
issuance of [a] new certificate of title in lieu thereof in the name of Sarmiento Trading Corporation, which
was annotated on TCT No. 14749 as Entry No. 139381.

On June 2, 1972, Sarmiento Trading Corporation sold, transferred and conveyed unto Sarmiento
Distributors Corporation Lot No. 22.

On September 26, 1988, the Deputy Registrar of Deeds of Iloilo City and Assistant Regional Registrar,
Region VI, wrote to Gaudencio Blancaflor requesting him to surrender the owners duplicate copy of TCT
No. T-14749 in his possession.

On February 10, 1989, no new transfer certificate of title having been issued by the Registrar of Deeds,
appellee Greater Manila Equipment Marketing Corporation (formerly Sarmiento Distributors Corporation),
filed a petition and on May 25, 1989, an amended petition in the Regional Trial Court praying that the
heirs of Gaudencio Blancaflor be ordered to surrender the owners duplicate copy of TCT No. T-14749;
that should they refuse to do so such owners duplicate copy of the title be deemed cancelled; and that the
notice of levy on execution in Civil Case No. 11562, Philippine Commercial and Industrial Bank vs.
Gaudencio Blancaflor and Agapito Labado, be cancelled.[4]

After due hearing, the RTC rendered a decision, with the dispositive portion reading as follows:
WHEREFORE, in the light of the foregoing, the instant petition is hereby GRANTED.

As prayed for, the respondent Heirs of Gaudencio Blancaflor are hereby ordered to surrender to this
Court within Fifteen (15) days from receipt of copy of this Decision their owners copy of Transfer
Certificate of Title No. T-14749. Failure to do so within the said time will result in the nullification of the
same without further orders from this Court in which case, it is already proper for the Register of Deeds
for the City of Iloilo to issue a new Certificate of Title over Lot No. 22 in favor of the petitioner.

Moreover, Entry No. 81965 in favor of Philippine Commercial and Industrial Bank at the dorsal portion of
TCT No. T-14749 is hereby ordered cancelled.[5]

Petitioners seasonably appealed to the Court of Appeals, which docketed the appeal as CA-G.R. CV
No. 38838. Petitioners argued that the process of execution of the decision of the CFI of Rizal had not
been completely carried out and that it was only 19 years after the issuance of the final certificate of sale
that it was sought to be enforced through the filing of appellees petition for the surrender of the owners
duplicate copy of TCT No. 14749. Hence, appellees cause of action had already prescribed.
The Court of Appeals affirmed the challenged decision of the trial court, holding as follows: [6]

The judgment of the then Court of First Instance of Rizal against Gaudencio Blancaflor and in favor of
Sarmiento Trading Corporation ordering the former to pay the latter the amount of P9,994.05 with interest
thereon at the rate of 12% per annum from June 21, 1967 until fully paid, P500 as attorneys fees and the
costs having become final, the writ to execute it was issued. At the auction sale conducted by the sheriff,
the parcel of land, Lot No. 22, covered by TCT No. 14749, belonging to the judgment debtor was sold to
the judgment creditor at an execution sale. The certificate of sale was inscribed as a memorandum of
encumbrance on TCT No. 14747. After the lapse of one year from date of sale the final deed was issued
in favor of the judgment creditor. Upon petition filed, the then Court of First Instance of Iloilo acting as a
cadastral court ordered cancellation of TCT No. 14749 in the name of the judgment debtor and issuance
of another in lieu thereof in the name of the judgment creditor, which was annotated on TCT No.
14749. The judgment creditor subsequently transferred and conveyed the parcel of land unto Sarmiento
Distributors Corporation. To enable the Registrar of Deeds to issue the corresponding title in appellees
name, the judgment creditors successor-in-interest, there is a need for the judgment debtor to surrender
the owners duplicate copy of TCT No. T-14749, now in the possession of his heirs, the herein
appellants. Under Section 107 of the Property Registration Decree, Presidential Decree No. 1529, which
provides:

Where it is necessary to issue a new certificate of title pursuant to any involuntary instrument which
divests the title of the registered owner against his consent or where a voluntary instrument cannot be
registered by reason of the refusal or failure of the holder to surrender the owners duplicate certificate of
title, the party in interest may file a petition in court to compel surrender of the same to the Register of
Deeds. The court, after hearing, may order the registered owner or any person withholding the duplicate
certificate to surrender the same, and direct the entry of a new certificate or memorandum upon such
surrender. If the person withholding the duplicate certificate is not amenable to the process of the court,
or if for any reason the outstanding owners duplicate certificate cannot be delivered, the court may order
the annulment of the same as well as the issuance of a new certificate of title in lieu thereof. Such new
certificate and all duplicates thereof shall contain a memorandum of the annulment of the outstanding
duplicate the Regional Trial Court, after hearing, is authorized and empowered to order the registered
owner of the parcel of land in question or any person withholding the owners duplicate copy of the
certificate of title to surrender it and direct entry of a new certificate or memorandum upon surrender
thereof, otherwise if the person withholding said duplicate copy of the certificate is not amenable to the
process, the trial Court may order annulment of the same and issuance of a new certificate of title in lieu
thereof. That is what the Regional Trial Court did in this case. And that it did correctly and properly. [7]

In its Resolution[8] of 25 August 1997, the Court of Appeals denied, for lack of merit, petitioners
motion for reconsideration.[9]
 In this appeal, petitioners aver that the causes of action of private respondent below were actually to
enforce the following:
a) the default decision dated 16 May 1968 in Civil Case No. 10270 of the then CFI of Rizal; the
writ of execution dated 13 August 1968 enforcing said decision; and the 13 January 1970
Final Deed of Sale executed by the Sheriff covering TCT No. 14749 and TCT No. 19002;
and
b) the 20 March 1970 decision of the then CFI of Iloilo directing the Register of Deeds of Iloilo
City to issue new Transfer Certificate of Title on favor of the petitioner Sarmiento Trading
Corporation, cancelling Transfer Certificate of Title No. 14749.
Petitioners then argue that these causes of action had already prescribed under Art. 1144 of the New
Civil Code, which provides that any action based upon an obligation created by law or upon a judgment
must be brought within ten (10) years from the time of the right of action accrues. Petitioners point out
that since private respondent belatedly sued to compel surrender of the owners certificate of title, then
either prescription or laches had already set in. Petitioners likewise speculate that private respondent
merely waited for the demise of Gaudencio Blancaflor before filing the petition in court on 26 February
1989, when the latter could no longer refute the contentions of the former.
Private respondent Greater Manila Equipment Marketing Corporation, and its successor-in-interest,
Sarmiento Trading Corporation, dispute petitioners contentions, maintaining that prescription does not
apply in this case because the judgment is not being executed but is merely being completed; moreover,
they pursued their claim over the subject property through administrative proceedings under Section 78 of
Act No. 496.
The petition is devoid of merit.
A closer examination of the facts discloses that enforcement of the decision in Civil Case No. 10270
of the CFI of Rizal was not the cause of action in private respondents petition for the Surrender and/ or
Cancellation of the Owners Duplicate Copy of Transfer Certificate Title No. 14749. Plainly, the petition
was merely a consequence of the execution of the judgment as the judgment in said Civil Case No.
10270 had already been fully enforced. A writ of execution was in fact issued on 26 August 1968, by
virtue of which a Notice of Attachment or Levy was made by the Sheriff on the property of Blancaflor,
including the lot covered by TCT No. 14749. This notice was duly inscribe at the back of TCT No. 14749,
then an auction sale of the lot covered by TCT No. 14749 was conducted with Sarmiento Trading
Corporation emerging as the highest bidder. The latter was awarded the bid and a certificate of sale in its
favor was executed by the Sheriff and thereafter inscribed as a memorandum of encumbrance on TCT
No. 14749. Subsequently, the Sheriff executed a final deed of sale in favor of Sarmiento Trading
Corporation.
It is settled that execution is enforced by the fact of levy and sale. [10] The result of such execution
sale -- with Sarmiento Trading Corporation as the highest bidder -- was that title to Lot No. 22 of TCT No.
14749 vested immediately in the purchaser subject only to the judgment debtors right to
repurchase.[11] Therefore, upon Sarmiento Trading Corporations purchase of Lot No. 22 covered by TCT
No. 14749 at the auction sale, private respondents successor-in-interest had acquired a right over said
title.
The right acquired by the purchaser at an execution sale is inchoate and does not become absolute
until after the expiration of the redemption period without the right of redemption having been
exercised.But inchoate though it be, it is like any other right, entitled to protection and must be respected
until extinguished by redemption.[12] Gaudencio Blancaflor was not able to redeem his property after the
expiration of the redemption period, which was 12 months after the entry or annotation of the certificate of
sale made on the back of TCT No. 14749. Consequently, he had been divested of all his rights to the
property.
Petitioners reliance on prescription and laches is unavailing in this instance. It was proper for
Sarmiento Trading Corporation to file a petition with the Court of First Instance of Iloilo, acting as a
cadastral court, for the cancellation of TCT No. 14749 in the name of Gaudencio Blancaflor and the
issuance of another in its name. This is a procedure provided for under Section 78 of Act No. 496[13] and
Section 75 of P.D. 1529,[14] which read:

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

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

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

Contrary to the impression of petitioners, it is the certificate of sale issued by the sheriff after the
auction sale which has to be registered for such involuntary conveyance to affect the land. On this note,
Section 74 of P.D. 1529 clearly provides:

Section 74. Enforcement of liens on registered land -- Whenever registered land is sold on execution, or
taken or sold for taxes or for any assessment or to enforce a lien of any character, or for any costs and
charges incident to such liens, any execution or copy of execution, any officers return, or any deed,
demand, certificate, or affidavit, or other instrument made in the course of the proceedings to enforce
such liens and required by law to be recorded, shall be filed with the Register of Deeds of the province or
city where the land lies and registered in the registration book, and a memorandum made upon the
proper certificate of title in each case as lien or encumbrance.

As held in Agbulos v. Alberto:[15]

It is the law in this jurisdiction that when property brought under the operation of the Land Registration Act
is sold, the operative act is the registration of the deed of conveyance. The deed of sale does not take
effect as a conveyance, or bind the land until it is registered (Section 50, Act No. 496; Tuason v.
Raymundo, 28 Phil. 635; Sikatuna v. Guevara, 43 Phil. 371; Worcester v. Ocampo, 34 Phil.
646).Undoubtedly, to be in consonance with this well settled rule, Section 24, Rule 39 of the Rules of
Court, provides that a duplicate of the certificate of sale given by the sheriff who made the auction sale to
the purchaser must be filed (registered) in the office of the register of deeds of the province where the
property is situated.

Neither are we persuaded by petitioners argument that the Register of Deeds did not: (a) inform
Gaudencio Blancaflor of the levy of TCT No. 14749 and the inscription of the Certificate of Sale on 19
December 1968; (b) notify him of the levy and subsequent sale at public auction; or (c) require Gaudencio
Blancaflor to produce his owners duplicate copy of the title for inscription. Section 52 of P.D. No. 1529
expressly provides:

SEC. 52. Constructive notice upon registration. -- Every conveyance, mortgage, lease, lien, attachment,
order, judgment, instrument or entry affecting registered land, shall, if registered, filed or entered in the
office of the Register of Deeds for the province or city where the land to which it relates lies, be
constructive notice to all persons from the time of such registering, filing, or entering.
 There was constructive notice of the levy on TCT No. 14749 and the subsequent auction sale, as
evidenced by the inscription of both the Notice of Attachment or Levy and the Certificate of Sale at the
back of TCT No. 14749. Petitioners are thus barred from claiming that their predecessor-in-interest was
not notified of such levy and auction sale. As regards inscription in the owners duplicate copy of the
certificate of title, petitioners have overlooked the fact that what is involved herein is the involuntary
conveyance of Lot 22 covered by TCT No. 14749 by way of levy upon execution. In such a case, title is
transferred by involuntary alienation and by its very nature such transfer is carried out against the will of
the owner. Section 71 of Presidential Decree No. 1529 thus provides:

Sec. 71. Surrender of certificate in involuntary dealings. -- If an attachment or other lien in the nature of
involuntary dealing in registered land is registered, and the duplicate certificate is not presented at the
time of registration, the Register of Deeds, shall, within thirty-six hours thereafter, send notice by mail to
the registered owner, stating that such paper has been registered, and requesting him to send or produce
his duplicate certificate so that a memorandum of the attachment or other lien may be made thereon. If
the owner neglects or refuses to comply within a reasonable time, the Register of Deeds shall report the
matter to the court, and it shall, after notice, enter an order to the owner to produce his certificate at a
time and place named therein, and may enforce the order by suitable process.

WHEREFORE, the petition is DENIED and the challenged decision of the Court of Appeals is
AFFIRMED in toto.
Costs against petitioners.
SO ORDERED.
Melo, Kapunan, and Pardo, JJ., concur.
 [G.R. No. 106812. June 10, 1997]

TAGAYTAY-TAAL TOURIST DEVELOPMENT CORPORATION, petitioner, vs. COURT OF APPEALS

(SPECIAL NINTH DIVISION) and THE CITY OF TAGAYTAY, respondents.

DECISION
KAPUNAN, J.:

The instant petition for review on certiorari seeks to reverse the decision[1] of respondent Court of
Appeals in CA-G.R. CV No. 24933 entitled "City of Tagaytay vs. Tagaytay-Taal Tourist Development
Corporation" promulgated on November 11, 1991 and the Resolution of the Court of Appeals dated
August 24, 1992 denying petitioner's motion for reconsideration.
The Court of Appeals' decision sought to be reviewed affirmed the decision of the Regional Trial
Court of Cavite, Branch XVIII, dated December 5, 1989[2] granting respondent City's unnumbered
"Petition for Entry of New Certificate of Title," and ordering the issuance in its name of new certificates of
title over certain properties it acquired through public auction to satisfy petitioner's alleged real estate tax
delinquency.
It appears that petitioner was the registered owner of four (4) parcels of land with an aggregate area
of 220 hectares and covered by TCT Nos. T-9816, T-9817, T-9818 and T-9819 supposed to be of the
Register of Deeds of Tagaytay City. The properties were mortgaged on June 7, 1976 to Filipinas
Manufacturers Bank and Trust Company by Benjamin Osias, representing himself as President and
Chairman of the Board of petitioner. Two of the parcels of land, Lot 10-A and Lot 10-B of Subd. Plan
(LRC) Psd-229279 and covered by TCT No. T-9816 and TCT No. 9817, respectively, are more
particularly described as follows:

TECHNICAL DESCRIPTION
TCT No. 9816
CITY OF TAGAYTAY

A parcel of land (Lot 10-A of the subdivision plan (LRC) Psd-229279, being portion of Lot 10, Psu-82838,
Amd. 4 L.R.C. Record No. 43057, situated in the Barrio of Birinayan, Municipality of Talisay, Province of
Batangas, island of Luzon. Bounded on the NW., and NE., points 7 to 1 and 1 to 2 Lot 10-B on the SE.,
points 3 to 4, Lot 1-C both of the subdivision plan; and on the SW., points 4 to 7 by property of Agapito
Rodriguez x x x x containing an area of SEVENTY FOUR THOUSAND THREE HUNDRED FORTY
(74,340) SQUARE METERS, more or less xxx.

TECHNICAL DESCRIPTION
TCT No. 9817
CITY OF TAGAYTAY

A parcel of land (Lot 10-B, of the subdivision plan (LRC) Psd-229279, being a portion of Lot 10, Psu-
82838, Amd. 4., L.R.C. Record No. 49057), situated in the Barrio of Birinayan, Municipality of Talisay,
Province of Batangas, Island of Luzon. Bounded on the NE., points 14 to 1 and 1 to 4 by property of
Angel T. Limjoco; on the SE., points 4 to 5 by Lot 10-B, on the SW., and SE., points 5 to 7 by Lot 10-A,
both of the subdivision plan; on the SW., points 7 to 9 by property of Agapito Rodriguez; and on the NW.,
points 9 to 12 by Lot 11, points 12 to 13 by Lot 9, and points 13 to 14 containing an area of NINE
HUNDRED THIRTY SEVEN THOUSAND AND EIGHT HUNDRED FOURTEEN (937,814) SQUARE
METERS, more or less xxx.
 Owing to a dispute regarding the composition of its set of corporate officers and board of directors,
petitioner in June of 1976, filed a complaint to nullify the aforesaid mortgage with the Regional Trial Court
of Cavite, docketed as Civil Case No. TG-346, with prayer for the issuance of a writ of preliminary
injunction. The trial court forthwith issued a temporary restraining order enjoining the Register of Deeds
from registering the mortgage and directing it to hold for safekeeping the four (4) titles covering the
properties until further orders.
On August 13, 1979, the trial court rendered a decision [3] dismissing the complaint for lack of
jurisdiction stating that the subject matter thereof involved the determination of who were the legitimate
officers of petitioner, a question falling within the jurisdiction of the Securities and Exchange
Commission. Said decision was subsequently upheld by this Court in G.R. No. 55521 in Tagaytay-Taal
Tourist Development Corporation vs. Judge Alfredo B. Concepcion, et al.
In the meantime, the parcels of land covered by TCT Nos. T-9816 and T-9817 allegedly became
delinquent in the payment of real estate taxes corresponding to the years 1976-1983 in the amounts
of P131,465.20 and P950,616.11, respectively, resulting in the sale of the said properties in a public
auction on November 28, 1983 to satisfy the taxes. Respondent City itself was the successful bidder in
the public auction sale and was issued a Certificate of Sale on the same date.
On June 30, 1989, respondent City registered the final bills of sale over the lots covered by TCT
Nos. T-9816 and T-9817.
On July 14, 1989, respondent City filed before the Regional Trial Court of Cavite City, sitting as land
registration court, an unnumbered petition for the entry of new certificates of title over the lots in its
name. Said petition was opposed by herein petitioner, alleging that the tax delinquency sale was null and
void for lack of valid and proper notice to petitioner.[4]
On December 5, 1989, the trial court rendered its decision holding that whatever rights and interests
petitioners may have had in the subject properties had long been lost through prescription or laches, the
dispositive portion of the decision reads:

WHEREFORE, finding the petition to be meritorious and sufficiently sustained with preponderant, legal
and factual basis, this Court hereby gives its imprimatur to it and grants the same, dismissing in the
process, the Opposition filed by Tagaytay-Taal Tourist Development Corporation. Accordingly, the
Register of Deeds of Tagaytay City is hereby ordered to allow the City to consolidate the titles covering
the properties in question (TCT Nos. T-9816 and T-9817), by issuing in its favor, and under its name, new
Transfer Certificates of Titles and cancelling as basis thereof, the said TCT Nos. 9816 and 9817 in the
name of Tagaytay-Taal Tourist Development Corporation, all of which, being hereby declared null and
void, henceforth.

Not satisfied with the above decision, petitioner appealed to the Court of Appeals, docketed as CA-
G.R. CV No. 24933, citing the following errors:

I. THE TRIAL COURT ERRED IN GIVING DUE COURSE TO THE PETITION FROM WHICH THE
PRESENT APPEAL AROSE DESPITE ITS BEING PREDICATED ON A MISPLACED LEGAL BASIS.

II. THE TRIAL COURT ERRED IN FINDING THAT THE ENFORCEMENT OF WHATEVER RIGHTS THE
APPELLANT HAS OVER THE SUBJECT PROPERTIES HAD ALREADY PRESCRIBED.

On July 19, 1991, during the pendency of CA-G.R. CV No. 24933, petitioner filed with the Regional
Trial Court of Cavite, sitting as a regular court, a petition entitled "Tagaytay-Taal Tourist Development
Corporation vs. City of Tagaytay, Municipality of Laurel (formerly Talisay), Province of Batangas, Register
of Deeds of Batangas, and Register of Deeds of the City of Tagaytay," docketed as Civil Case No. TG-
1196,[5] assailing the authority of respondent City to levy real estate tax on the properties covered by TCT
Nos. T-9816 and T-9817 on the ground that said properties are located in the Province of Batangas, and
not in Tagaytay City. The case was assigned to Branch XVIII of the RTC.
 On October 21, 1991, petitioner filed a Motion to Suspend Proceedings in CA-G.R. CV No.
24933,[6] until the termination of TG-1196 arguing that should the RTC in Civil Case No. TG-1196 rule that
respondent City is without authority to levy realty taxes on the properties in question, then the decision of
the RTC of December 5, 1989, subject of appeal in the Court of Appeals, directing the issuance of new
certificates of titles in the name of respondent City over the properties would have no legal basis. The
Court of Appeals did not resolve the motion.
On September 24, 1991, the Regional Trial Court of Cavite in Civil Case No. TG-1196 granted
petitioner's application for writ of preliminary injunction, enjoining respondents therein from taking physical
possession of the properties and/or offering the same for sale.[7]
On November 11, 1991, the Court of Appeals promulgated a decision [8] affirming the judgment of the
Regional Trial Court in the petition for the entry of new certificates of title.Petitioner's motion for
reconsideration was denied in a Resolution of the Court of Appeals dated August 24, 1992.[9]
Thus, on October 16, 1992, petitioner filed the instant petition on the following grounds:

xxx. The Regional Trial Court of Cavite (Tagaytay City) sitting as a land registration/cadastral court did not
have any jurisdiction to hear and decide respondent City's petition for entry of new certificate of title. The
respondent appellate Court, therefore, erred in affirming the decision of the lower court dated December
5, 1989. Assuming that the lower court has jurisdiction, the petition of respondent City should have been
denied considering that the public auction sale of herein petitioner's properties was conducted without
due and valid notice; and

xxx. In any event, the decision of the respondent Court is premature. The issue of authority of respondent
City to levy real estate taxes on petitioner's properties, to declare herein petitioner a tax delinquent and to
sell the properties in question is still pending determination by the Regional Trial Court of Tagaytay City in
Civil Case No. TG-1196. The determination of such authority constitutes a prejudicial issue which must be
resolved ahead of respondent City's petition for entry of a new title.

In the meantime, on October 21, 1994, the Regional Trial Court of Cavite rendered a decision in Civil
Case No. TG-1196,[10] the dispositive portion of which reads:

WHEREFORE, judgment is hereby rendered granting the instant petition and as a consequence, the
public auction sale of the properties of the petitioner, both covered by TCT Nos. T-9816 and T-9817 of the
Register of Deeds of Tagaytay City, as well as the Certificate of Sale and the Final Bills of Sale of said
properties in favor of the respondent City of Tagaytay City, and all proceedings held in connection
therewith are hereby annulled and set aside, and the respondent Register of Deeds of the City of
Tagaytay is hereby directed to cancel Entries Nos. 21951/T-9816 and 21984/T-9816 annotated and
appearing on TCT No. T-9816 and Entries Nos. 21950/T-9817 and 30087/T-9817 annotated and
appearing on TCT No. T-9817 regarding the sale of the lots described therein in favor of the City of
Tagaytay.

Moreover, the writ of preliminary injunction issued by this Court on September 24 is hereby made
permanent.

SO ORDERED.

No appeal having been taken from the above cited decision by any of the parties, the same had
become final and executory.
Asserting that the decision of the Regional Trial Court in Civil Case No. TG-1196 is material to the
resolution of the petition at bar, petitioner on May 31, 1995 filed a Supplemental Petition dated May 24,
1995 principally anchored on the following grounds:
xxx. In addition or as supplement to the grounds relied upon in the petition, petitioner seeks the reversal
of the decision (Annex 'A', Petition) and resolution (Annex 'B', Petition) promulgated in CA-G.R. CV No.
24933 on November 11, 1991 and August 24, 1992, respectively, on the basis of the following: By a
decision (now final and conclusive on respondent City of Tagaytay and the petitioner) rendered by the
Regional Trial Court of Cavite on October 21, 1994 in Civil Case No. TG-1196 entitled 'Tagaytay Taal
Tourist Development Corporation vs. City of Tagaytay, et al.' the respondent City of Tagaytay had been
found without authority to levy real estate taxes on the properties. The public auction sale at which
respondent City of Tagaytay allegedly purchased the properties subject of the petition was annulled and
set aside. Similarly, the certificates of sale and the final bills of sale covering said properties were
annulled and set aside. Hence, there is clearly no basis for the decision (Annex 'A', Petition) and
Resolution (Annex 'B', Petition) of respondent Court of Appeals promulgated on November 11, 1991 and
August 24, 1992 in CA-G.R. CV No. 24933.[11]

After respondent City filed its comment on the supplemental petition, followed by petitioner's reply
thereto, this Court gave due course to the petition and required the parties to file their respective
memoranda.
We grant the petition.
The issues in the instant petition are: (a) whether or not the Regional Trial Court of Cavite, sitting as
a land registration or cadastral court, had jurisdiction to hear and decide respondent City's petition for the
cancellation of TCT No. T-9816 and TCT No. T-9817 in the name of petitioner and the issuance of new
ones in the name of respondent City despite serious opposition by petitioner; (b) whether or not
respondent City had the right to levy real estate tax over the properties covered by TCT Nos. T-9816 and
T-9817.
We answer both issues in the negative.
I
Respondent City's unnumbered petition filed on July 14, 1989 with the Regional Trial Court of Cavite
sitting as land registration or cadastral court for the entry of new certificates of title over the properties in
its name, is pursuant to Section 75, Presidential Decree No. 1529, [12] which provides as follows:

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

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

It is crystal from the above-quoted provision that upon the expiration of time allowed by law for
redemption of a registered land sold on execution, the purchaser at such sale may petition for the
issuance of a new certificate of title to him, subject to the condition that "before entry of a new certificate
of title the registered owner may pursue all legal and equitable remedies to impeach or annul such
proceedings." (underscoring ours).
Here, petitioner had the right to avail of its legal and equitable remedies to nullify the delinquency
sale because, firstly, there was lack of notice to it, and therefore, it was deprived of due
process; secondly, the properties in question became subject of serious controversy brought about by the
filing of a complaint in June of 1976 with the RTC of Cavite in Civil Case No. TG-346 to nullify the contract
of mortgage over the properties for lack of authority to execute the contract, as well as the pendency
before the SEC of the dispute as to who were the duly elected directors and officers of petitioner, which
directly affected the validity of their dealing and disposition of the subject properties, all of which matters
were ventilated in petitioner's opposition to respondent City's petition for issuance of new certificates of
title in its name; and thirdly, respondent City had no authority to impose realty tax on petitioner as the
properties alleged to have been delinquent are actually located in Talisay, Batangas.
Thus, in the opposition of petitioner to the issuance of new certificates of title to respondent City, it
was vigorously argued that:

That herein oppositor, as owner, should be named as a necessary party or given notice in such a petition
is implicit in the said provision of the law. Were this not so, the provision giving the registered owner the
opportunity to pursue all legal and equitable remedies to impeach or annul proceedings wherein the entry
of a new certificate of title is sought would be rendered negatory.

The present petition is very clearly a case in point for the simple reason that herein oppositor was not
even named as a party and notice thereof came to it purely by chance. Had it not come to know of the
petition, herein oppositor would have been deprived of the change to have recourse to the remedies
allows it by law.

Herein oppositor to the present petition is essentially anchored upon the fact that the suppose sale at
public auction of the properties in question on November 28, 1983 to the City Government of Tagaytay
was null and void considering that it was effected without any previous legally valid and effective notice to
the owner thereof, herein oppositor.

While it may appear in the records of the Office of the Treasurer of Tagaytay City that a notice or notices
were sent, the same could not have been considered properly addressed to and received by herein
oppositor to warrant the conduct of said sale.

It must be pointed out that this Honorable Court, in its decision dated August 13, 1979, in Civil Case No.
TG-346 disclaimed jurisdiction in that case and thereby tossed the question of the determination of the
lawful directors and officers of oppositor corporation to the Securities and Exchange Commission. At the
time the Tagaytay City Treasurer moved to seek the satisfaction of the delinquent taxes of oppositor
corporation on its aforementioned properties, there was yet nobody who could validly act for and in its
behalf. Any notice covering the scheduled sale of its properties therefore could not have been deemed
effective notice as it must necessarily have been sent to someone who had no legal personality or
capacity to act for it and if said notice was, in fact, received by anybody, such notice and receipt thereof
could not have validly bound oppositor corporation for failure to act accordingly.

Being aware of the then situation of oppositor corporation which was frozen to immobility by the decision
of this Honorable Court in the aforementioned Civil Case No. TG-346, the Treasurer of Tagaytay City
should have deferred action on oppositor corporation's property tax delinquency until such time that it
could already perform acts as a juridical person through its officers and directors certified and recognized
as such by the SEC. That is proceeded with the auction sale after a notice which is invalid rendered the
same null and void.

And consequently, the present petition has no valid and legal basis.[13]

The issues raised before the RTC sitting as a land registration or cadastral court, without question,
involved substantial or controversial matters and, consequently, beyond said court's jurisdiction. The
issues may be resolved only by a court of general jurisdiction.
In Re: Balanga vs. Court of Appeals,[14] we emphatically held:

xxx. While it is true that Section 78 of Act. 496 on which the petition is based provides that upon the
failure of the judgment-debtor to redeem the property sold at public auction the purchaser of the land may
be granted a new certificate of title, the exercise of such function is qualified by the provision that 'at any
time prior to the entry of a new certificate the registered owner may pursue all his lawful remedies to
impeach or annul proceedings under executions or to enforce liens of any description.' The right,
therefore, to petition for a new certificate under said section is not absolute but subject to the
determination of any objection that may be interposed relative to the validity of the proceedings leading to
the transfer of the land subject thereof which should be threshed out in a separate appropriate
action. This is the situation that obtains herein. Teopista Balanga, the judgment-debtor, is trying to
impeach or annul the execution and sale of the properties in question by alleging that they are conjugal in
nature and the house erected on the land has been constituted as a family home which under the law is
exempt from execution. These questions should first be determined by the court in an ordinary action
before entry of a new certificate may be decreed.

This pronouncement is also in line with the interpretation we have placed on Section 112 of the same Act
to the effect that although cadastral courts are empowered to order the cancellation of a certificate of title
and the issuance of a new one in favor of the purchaser of the land covered by it, such relief can only be
granted if there is unanimity among the parties, or no serious objection is interposed by a party in interest.
As this Court has aptly said: 'While this section, (112) among other things, authorizes a person in interest
to ask the court for any erasure, alteration, or amendment of a certificate of title x x x and apparently the
petition comes under its scope, such relief can only be granted if there is unanimity among the parties, or
there is no adverse claim or serious objection on the part of any party in interest; otherwise the case
becomes controversial and should be threshed out in an ordinary case or in the case where the incident
properly belongs' (Angeles v. Razon, G.R. No. L-13679, October 26, 1959, and cases cited therein). x x x.

From the foregoing ruling, it is clear that petitions under Section 75 and Section 108 of P.D. 1529
(formerly Sec. 78 and Sec. 112 of Act 496) can be taken cognizance of by the RTC sitting as a land
registration or cadastral court. Relief under said sections can only be granted if there is unanimity among
the parties, or that there is no adverse claim or serious objection on the part of any party in interest;
otherwise, the case becomes controversial and should be threshed out in an ordinary case or in the case
where the incident properly belongs.[15]
Petitioner also questioned the validity of the delinquency sale for lack of notice, the effect of which
was to vitiate the sale. Indeed, there is nothing on record to show to whom the notice of the delinquency
sale was sent and who received the same, which is a critical issue considering that at that time there was
a question as to who were the lawful directors and officers of petitioner, the determination of which was
disclaimed by the Regional Trial Court in Civil Case No. TG-346 and was thereby thrown into the lap of
the Securities and Exchange Commission.In other words, at the time of the delinquency sale, there was
no definite person yet who was clothed with authority to act for and in behalf of petitioner. There being no
evidence that petitioner was notified of the delinquency sale, the omission rendered the sale null and
void.

The assailed decision of the appellate court declares that the prescribed procedure in auction sales of
property for tax delinquency being in derogation of property rights should be followed punctiliously. Strict
adherence to the statues governing tax sales is imperative not only for the protection of the taxpayers, but
also to allay any possible suspicion of collusion between the buyer and the public officials called upon to
enforce such laws. Notice of sale to the delinquent land owners and to the public in general is an
essential and indispensable requirement of law, the non-fulfillment of which vitiates the sale.

We give our stamp of approval on the aforementioned ruling of the respondent court. x x x. [16]

The Court of Appeals, in affirming the decision of the Regional Trial Court, reasoned out that
petitioner was barred by prescription and laches in questioning the lack of notice of the delinquency sale
because it knew of such sale "at least on 27 November 1984 when it secured from the Honorable
Supreme Court, through its President Eduardo L. Santos, telegraphic restraining order enjoining
petitioner-appellee from consolidating title over the subject properties."[17]
Precisely, the capacity of Eduardo L. Santos as director and corporate officer of petitioner
corporation has been questioned by the other stockholders of petitioner who asserted that Santos and
others made it appear that they are stockholders by virtue of shares traceable from the unissued shares,
which were nullified by the SEC.[18] On June 15, 1990, petitioner, et al., filed with the SEC an action for
"Injunction and Damages, with Preliminary Injunction and Enforcement of SEC Decision" against Eduardo
L. Santos and others,[19] praying principally that Eduardo L. Santos and his co-respondents be declared
"not stockholders of the corporation and are unlawful usurpers of the positions of directors and corporate
officers of the Corporation."[20]
Consequently, knowledge of Eduardo L. Santos of the delinquency sale could not have been
considered as notice to petitioners.
Considering, therefore, that the Regional Trial Court of Cavite acted without jurisdiction over the case
so that its decision is null and void, it necessarily follows that the decision of the Court of Appeals
affirming the RTC's decision has no leg to stand on.
II
The Regional Trial Court of Cavite, sitting as a land registration or cadastral court, could not have
ordered the issuance of new certificates of title over the properties in the name of respondent City if the
delinquency sale was invalid because said properties are actually located in the municipality of Talisay,
Batangas, not in Tagaytay City. Stated differently, respondent City could not have validly collected real
taxes over properties that are outside its territorial jurisdiction. This is clear from P.D. 464, otherwise
known as the Real Property Tax Code, the pertinent provisions of which state:

SEC. 5. Appraisal of Real Property. All real property, whether taxable or exempt, shall be appraised at
the current and fair market value prevailing in the locality where the property is situated.

x x x.

SEC. 39. Rates of Levy. The provincial, city or municipal board or council shall fix a uniform rate of real
property tax applicable to their respective localities as follows:

x x x.

SEC. 47. Special Levy by Local Governments. The provincial, city, municipal boards or councils may,
by ordinance, provide for the imposition and collection of a special levy on the lands comprised within the
province, city or municipality or parts thereof. x x x.

x x x.

SEC. 57. Collection of Tax to be the Responsibility of Treasurers. The collection of the real property
tax and all penalties accruing thereto, and the enforcement of the remedies provided for in this Code or
any applicable laws, shall be the responsibility of the treasurer of the province, city or municipality where
the property is situated.

The Regional Trial Court of Cavite in Civil Case No. TG-1196 rendered a decision on October 21,
1994 ruling that the properties in question are actually situated in Talisay, Batangas, [21]hence, the
assessment of real estate taxes thereon by respondent City and the auction sale of the properties on
November 28, 1983, as well as the Certificate of Sale and Final Bill of Sale in favor of respondent City are
null and void. We quote with favor portions of said decision:

As earlier stated herein, the portion of Barrio of Birinayan, Municipality of Talisay, Province of Batangas,
by virtue of the provisions of Commonwealth Act No. 338 corresponds to Exhibit '1-B' of the Plan of
Mendez-Nuez marked as Exhibit '1', and it is noted that Exhibit '1-B' or that portion of the Municipality of
Talisay, Province of Batangas given to the respondent City under Commonwealth Act No. 338 is located
below the Tagaytay Ridge which was the boundary between the Provinces of Cavite and Batangas before
the enactment of Commonwealth Act No. 338. Thus, taking into account the above-quoted portion of the
explanatory note of Republic Act No. 1418, there can be no doubt that what had been ordered returned
by the law to the Municipality of Talisay, Province of Batangas does not extend only to the portion
annexed to the respondent City by virtue of Executive Order No. 336 but also the portion mentioned
under Commonwealth Act No. 338. Besides, the same explanatory note mentions specifically the return
of the two (2) barrios of Talisay, Batangas, and not merely portions thereof, hence the conclusion is
inescapable that Republic Act No. 1418 intended the return of the entire barrios of Caloocan and
Birinayan to the same municipality.

It is beyond my doubt, therefore, that Lots 10-A and 10-B of TCT Nos. T-9816 and T-9817 of petitioner,
which are located in Barrio Binirayan, Municipality of Talisay, Province of Batangas, at the time Republic
Act No. 1418 took effect, are no longer within the territorial jurisdiction of the respondent City of Tagaytay
and since there is no dispute that under the law, the City of Tagaytay may only subject to the payment of
real estate tax properties that are situated within its territorial boundaries (See Sections 27 & 30,
Commonwealth Act No. 338; Presidential Decree No. 464; and 1991 Local Government Code), the
assessment of real estate taxes imposed by the respondent City on the same properties in the years
1976 up to 1983 appears to be legally unwarranted. In the same manner, the public auction sale, which
was conducted by the same respondent on November 28, 1989, for deficiencies on the part of the
petitioner to pay real estate taxes on the same years, as well as the certificates of sale and the final bills
issued and executed in connection with such auction sale, and all proceedings taken by the respondent
City in connection therewith are all considered by this Court as illegal, and null and void.

In fine, this Court finds from the evidence adduced on record that petitioner has preponderantly
established its entitlement to the reliefs mentioned in its petition.

WHEREFORE, judgment is hereby rendered granting the instant petition and as a consequence, the
public auction sale of the properties of the petitioner, both covered by TCT Nos. T-9816 and T-9817 of the
Registry of Deeds of Tagaytay City, as well as the Certificates of Sale and the Final Bills of Sale of said
properties in favor of the respondent Tagaytay City, and all proceedings held in connection therewith are
hereby annulled and set aside, and the respondent Register of Deeds of the City of Tagaytay is hereby
directed to cancel Entries Nos. 21951/T-9816, 21984/T-9816 annotated and appearing on TCT No. T-
9816 and Entries Nos. 21950/T-98917 and 30087/T-9817 annotated and appearing on TCT No. T-9817
regarding the sale of the lots described therein in favor of the City of Tagaytay.

The above-cited decision has not been appealed and is now final and executory. [22]
WHEREFORE, the decision of respondent Court of Appeals promulgated on November 11, 1991
and its resolution of August 24, 1992, and the decision of the Regional Trial Court of Cavite dated
December 5, 1989 are hereby REVERSED and SET ASIDE. The "Petition for Entry of New Certificates of
Title" of respondent City of Tagaytay is DENIED.
SO ORDERED.
Bellosillo, and Hermosisima, Jr., JJ., concur.
Padilla, (Chairman), J., on leave.
Vitug, J., In the result.
ESTANISLAO PADILLA, JR. G.R. No. 141256
Petitioner,
Present:
PANGANIBAN, J., Chairman
SANDOVAL-GUTIERREZ,
- v e r s u s - CORONA,
CARPIO MORALES and GARCIA, JJ.

PHILIPPINE PRODUCERS
COOPERATIVE MARKETING
ASSOCIATION, INC.,
Respondent. Promulgated:

July 15, 2005

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

DECISION

CORONA, J.:

In implementing the involuntary transfer of title of real property levied and sold on execution, is it

enough for the executing party to file a motion with the court which rendered judgment, or does he need

to file a separate action with the Regional Trial Court?

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

of the Court of Appeals in CA-G.R. CV No. 53085,[2] and its resolution denying reconsideration,[3] both of

which affirmed the orders of the Regional Trial Court of Bacolod City, Branch 51. [4]

The undisputed facts of the case follow.[5]

Petitioner and his wife are the registered owners of the following real properties: Lot Nos. 2904-A

(covered by TCT No. T-36090), 2312-C-5 (covered by TCT No. T-3849), and 2654 (covered by TCT No.

T-8053), all situated in Bago City.

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

On April 24, 1987, respondent filed a civil case against petitioner for collection of a sum of money

in the Regional Trial Court of Bacolod City.[6] Despite receipt of summons on May 18, 1987, petitioner

(then defendant) opted not to file an answer.[7] On March 3, 1988, respondent (then plaintiff) moved to
have petitioner-defendant declared in default, which the trial court granted on April 15,

1988.[8] Respondent presented its evidence on October 9, 1989.[9] On November 28, 1989, the trial court

rendered a decision in respondents favor.[10] Petitioner was furnished a copy of this decision by mail on

November 29, 1989 but, because of his failure to claim it, the copy was returned. [11]

On May 31, 1990, the Court issued a writ of execution. On June 4, 1990, the three lots (Lot 2904-

A, Lot 2312-C-5 and Lot 2654), all of the Bago Cadastre and registered in petitioners name, were levied

by virtue of that writ. On July 4, 1990, sheriff Renato T. Arimas auctioned off the lots to satisfy the

judgment, with respondent as the only bidder. On July 10, 1990, ex-officio provincial sheriff and clerk of

court Antonio Arbis executed a certificate of sale in favor of respondent. On August 13, 1990, the

certificate of sale was recorded in the Register of Deeds.[12]

When petitioner failed to exercise his right of redemption within the 12-month period allowed by

law, the court, on motion of respondent, ordered on February 5, 1992 the issuance of a writ of possession

for the sheriff to cause the delivery of the physical possession of the properties in favor of respondent. [13]

On May 17, 1995, respondent filed a motion to direct the Register of Deeds to issue new titles

over the properties in its name, alleging that the Register of Deeds (RD) of Bago City would not issue new

titles (in respondents name) unless the owners copies were first surrendered to him. Respondent

countered that such surrender was impossible because this was an involuntary sale and the owners

copies were with petitioner.[14]

On July 3, 1995, the trial court issued an order granting the motion. In a subsequent order dated

August 8, 1995, it denied petitioners motion for reconsideration. Petitioner appealed. Four years later, the

Court of Appeals rendered the assailed decision affirming the order of the trial court.

Petitioner contends that respondents motion for the RD to cancel the existing certificates of title

and issue new ones in its name was in fact a real action and that the motion was procedurally infirm

because respondent did not furnish him a copy.[15] He also claims that under Section 6 of Rule 39 of the

1997 Rules of Civil Procedure, the execution of the judgment was barred by prescription, given that the
motion was filed more than 5 years after the writ of execution was issued on March 23, 1990. [16] He also

argues that respondent failed to follow the correct procedure for the cancellation of a certificate of title and

the issuance of a new one, which is contained in Section 107 of PD 1529. [17]

In its comment,[18] respondent claims that the motion dated May 15, 1995 to direct the RD to issue

new certificates of title was but a continuation of the series of events that began with the decision in its

favor on November 28, 1989, and from there, the auction of the properties and the issuance of a

certificate of sale in 1990.

The two principal issues for consideration are:

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

prescription and

(2) whether or not the motion in question is the proper remedy for cancelling petitioners

certificates of title and new ones issued in its name.

On the first issue, we rule that the respondents right to petition the court for the issuance of new

certificates of title has not yet prescribed.

In Heirs of Blancaflor vs. Court of Appeals,[19] Sarmiento Trading Corporation, predecessor-in-

interest of the private respondent Greater Manila Equipment Marketing Corporation, secured a writ of

execution in 1968 by virtue of which it levied real property belonging to petitioners predecessor-in-

interest, Blancaflor. When the property was auctioned, Sarmiento Trading bid successfully and, in 1970,

after the lapse of the one-year redemption period, consolidated its ownership over the lot.

Sarmiento Trading then filed a petition with the Court of First Instance to order the cancellation of

Blancaflors title and the issuance of a new one in its name. In 1972, Sarmiento Trading sold the lot to

private respondent which, at the time, went by the name Sarmiento Distributors Corporation.
 In 1988, the Deputy Register of Deeds of Iloilo wrote to Blancaflor requesting him to surrender his

owners duplicate copy of the TCT. Blancaflor did not comply and the RD refused to issue a new title. On

May 25, 1989, private respondent filed a petition in the Regional Trial Court praying that the petitioners be

ordered to surrender the owners duplicate copy of the title. The petitioners refused, claiming that

respondents cause of action had already prescribed. Ruling otherwise, we stated:

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

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

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

SEC. 6. Execution by motion or by independent action.A final and executory

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

As should be evident from Blancaflor, petitioner Padillas reliance on Section 6 of Rule 39 of the

1997 Revised Rules of Civil Procedure is misplaced. The fact of levy and sale constitutes execution, and

not the action for the issuance of a new title. Here, because the levy and sale of the properties took place

in June and July of 1990, respectively, or less than a year after the decision became final and executory,

the respondent clearly exercised its rights in timely fashion.

In addition, petitioner himself admits his failure to redeem the properties within the one-year

period by adopting the facts stated in the Court of Appeals decision. [21] There is thus no doubt he had

been divested of his ownership of the contested lots.

 Respondents position hinges on petitioners failure to redeem the properties 12 months after the

certificate of sale was recorded in the Register of Deeds on August 13, 1990. There is no uncertainty

about respondents having become the new lawful owner of the lots in question by virtue of the levy and

the execution sale.

On the other hand, the issue of whether to acquire new titles by mere motion or through a

separate petition is an entirely different matter.

Petitioner is correct in assailing as improper respondents filing of a mere motion for the cancellation of the

old TCTs and the issuance of new ones as a result of petitioners refusal to surrender his owners duplicate

TCTs.

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

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

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

Respondent alleges that it resorted to filing the contested motion because it could not obtain new

certificates of title, considering that petitioner refused to surrender his owners duplicate TCTs. This

contention is incorrect. The proper course of action was to file a petition in court, rather than merely

move, for the issuance of new titles. This was the procedure followed in Blancaflor by Sarmiento Trading

which was in more or less the same situation as the respondent in this case: [24]
 Petitioners reliance on prescription and laches is unavailing in this instance. It
was proper for Sarmiento Trading Corporation to file a petition with the Court of
First Instance of Iloilo, acting as a cadastral court, for the cancellation of TCT No.
14749 in the name of Gaudencio Blancaflor and the issuance of another in its name.
This is a procedure provided for under Section 78 of Act No. 496 and Section 75 of PD
No. 1529

Section 78 of Act 496 reads:

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

Section 75 of PD 1529 provides:

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

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

It is clear that PD 1529 provides the solution to respondents quandary. The reasons behind the

law make a lot of sense; it provides due process to a registered landowner (in this case the petitioner)

and prevents the fraudulent or mistaken conveyance of land, the value of which may exceed the

judgment obligation. Petitioner contends that only his interest in the subject lots, and not that of his wife

who was not a party to the suit, should have been subjected to execution, and he should have had the

opportunity to prove as much.

While we certainly will not condone any attempt by petitioner to frustrate the ends of justice ― the

only way to describe his refusal to surrender his owners duplicates of the certificates of title despite the

final and executory judgment against him ― respondent, on the other hand, cannot simply disregard
proper procedure for the issuance to it of new certificates of title. There was a law on the matter and

respondent should have followed it.

In any event, respondent can still file the proper petition with the cadastral court for the issuance

of new titles in its name.

WHEREFORE, the instant petition is hereby GRANTED. The decision of the Court of Appeals in

CA-G.R. CV No. 53085 is hereby REVERSED. The order of the Regional Trial Court of Bacolod City

ordering the Register of Deeds of Bago City to issue new certificates of title in favor of respondent

is ANULLED.

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
agreement to sell involves an interest less than an estate in fee simple, the same should have
been registered by filing it with the Register of Deeds who, in turn, makes a brief memorandum
thereof upon the original and owner’s duplicate certificate of title. The reason for requiring 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 is to be presumed that he is interested in registering
the instrument and would willingly surrender, present or produce his duplicate certificate of title to
the Register of Deeds in order to accomplish such registration. However, where the owner
refuses to surrender the duplicate certificate for the annotation of the voluntary
instrument, the grantee may file with the Register of Deeds a statement setting forth his
adverse claim, as provided for in Section 110 of Act No. 496. In such a case, the annotation
 of the instrument upon the entry book is sufficient to affect the real estate to which it relates,
although Section 72 of Act No. 496 imposes upon the Register of Deeds the duty to require the
production by the [r]egistered owner of his duplicate certificate for the inscription of the adverse
claim. The annotation of an adverse claim is a measure designed to protect the interest of
a person over a piece of real property where the registration of such interest or right is not
otherwise provided for by the Land Registration Act, and serves as a notice and warning
to third parties dealing with said property that someone is claiming an interest on the
same or a better right than the registered owner thereof. (emphases supplied)

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

Again, we stress that the annotation of an adverse claim is a measure designed to protect the interest of
a person over a piece of property where the registration of such interest or right is not otherwise
provided for by the law on registration of real property. Section 70 of Presidential Decree No. 1529 is
clear:

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

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

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

SO ORDERED.
Sandoval-Gutierrez, Corona, Azcuna, Garcia, J.J., concur.
G.R. No. 102377 July 5, 1996

ALFREDO SAJONAS and CONCHITA SAJONAS, petitioners,

vs.
THE COURT OF APPEALS, DOMINGO A. PILARES, SHERIFF ROBERTO GARCIA OF QUEZON
CITY and REGISTER OF DEEDS OF MARIKINA, respondents.

TORRES, JR., J.:p

A word or group of words conveys intentions. When used truncatedly, its meaning disappears and breeds
conflict. Thus, it is written -- "By thy words shalt thou be justified, and by thy words shalt thou be
condemned." (Matthew, 12:37)

Construing the new words of a statute separately is the raison d'etre of this appeal.

Essentially, the case before us is for cancellation of the inscription of a Notice of Levy on Execution from
a certificate of Title covering a parcel of real property. The inscription was caused to be made by the
private respondent on Transfer Certificate of Title No. N-79073 of the Register of Deeds of Marikina,
issued in the name of the spouses Ernesto B. Uychocde and Lucita Jarin, and was later carried over to
and annotated on Transfer Certificate of Title No. N-109417 of the same registry, issued in the name of
the spouses Alfredo Sajonas and Conchita H. Sajonas, who purchased the parcel of land from the
Uychocdes, and are now the petitioners in this case.

The facts are not disputed, and are hereby reproduced as follows:

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

Meanwhile, it appears that Domingo Pilares (defendant-appellant) filed Civil Case No. Q-
28850 for collection of sum of money against Ernesto Uychocde. On June 25, 1980, a
Compromise Agreement was entered into by the parties in the said case under which
Ernesto Uychocde acknowledged his monetary obligation to Domingo Pilares amounting
to P27,800 and agreed to pay the same in. two years from June 25, 1980. When
Uychocde failed to comply with his undertaking in the compromise agreement,
defendant-appellant Pilares move d for the issuance of a writ of execution to enforce the
decision based on the compromise agreement, which the court granted in its order dated
August 3, 1982. Accordingly, a writ of execution was issued on August 12, 1982 by the
CFI of Quezon City where the civil case was pending. Pursuant to the order of execution
dated August 3, 1982, a notice of levy on execution was issued on February 12, 1985,
On February 12, 1985, defendant sheriff Roberto Garcia of Quezon City presented said
notice of levy on execution before the Register of Deeds of Marikina and the same was
annotated at the back of TCT No. 79073 as Entry No. 123283.
 When the deed of absolute sale dated September 4, 1984 was registered on August 28,
1985, TCT No. N-79073 was cancelled and in lieu thereof, TCT No. N-109417 was
issued in the name of the Sajonas couple. The notice of levy on execution annotated by
defendant sheriff was carried over to the new title. On October 21, 1985, the Sajonas
couple filed a Third Party Claim with the sheriff of Quezon city, hence the auction sale of
the subject property did not push through as scheduled.

On January 10, 1986, the Sajonas spouses demanded the cancellation of the notice of
levy on execution upon defendant-appellant Pilares, through a letter to their lawyer, Atty.
Melchor Flores. Despite said demand, defendant-appellant Pilares refused to cause the
cancellation of said annotation. In view thereof, plaintiffs-appellees filed this complaint
dated January 11, 1986 on February 5, 1986.1

The Sajonases filed their complaint2 in the Regional Trial Court of Rizal, Branch 71, against Domingo
Pilares, the judgment creditor of the Uychocdes. The relevant portion of the complaint alleges:

7. That at the time the notice of levy was annotated by the defendant, the Uychocde
spouses, debtors of the defendant, have already transferred, conveyed and assigned all
their title, rights and interests to the plaintiffs and there was no more title, rights or
interests therein which the defendant could levy upon;

8. That the annotation of the levy on execution which was carried over to the title of said
plaintiffs is illegal and invalid and was made in utter bad faith, in view of the existence of
the Adverse Claim annotated by the plaintiffs on the corresponding title of the Uychocde
spouses;

9. That a demand was made by the plaintiffs upon the defendant Domingo A. Pilares, to
cause the cancellation of the said notice of levy but the latter, without justifiable reason
and with the sole purpose of harassing and embarrassing the plaintiffs ignored and
refused plaintiffs' demand;

10. That in view of the neglect, failure and refusal of the defendant to cause the
cancellation of the notice of levy on execution, the plaintiffs were compelled to litigate and
engage the services of the undersigned counsel, to protect their rights and interests, for
which they agreed to pay attorney's fees in the amount of P10,000 and appearance fees
of P500 per day in court.3

Pilares filed his answer with compulsory counterclaim 4 on March 8, 1986, raising special and affirmative
defenses, the relevant portions of which are as follows:

10. Plaintiff has no cause of action against herein defendants;

11. Assuming without however admitting that they filed an adverse claim against the
property covered by TCT No. 79073 registered under the name of spouses Ernesto
Uychocde on August 27, 1984, the same ceases to have any legal force and effect (30)
days thereafter pursuant to Section 70 of P.D. 1529;

12 The Notice of Levy annotated at the back of TCT No. 79073 being effected pursuant
to the Writ of Execution dated August 31, 1982, duly issued by the CFI (now RTC) of
Quezon proceeding from a decision rendered in Civil Case No. 28859 in favor of herein
defendant against Ernesto Uychocde, is undoubtedly proper and appropriate because the
property is registered in the name of the judgment debtor and is not among those
exempted from execution;
 13. Assuming without admitting that the property subject matter of this case was in fact
sold by the registered owner in favor of the herein plaintiffs, the sale is the null and void
(sic) and without any legal force and effect because it was done in fraud of a judgment
creditor, the defendant Pilares.5

Pilares likewise sought moral and exemplary damages in a counterclaim against the Sajonas spouses.
The parties appeared at pre-trial proceedings on January 21, 1987,6 after which, trial on the merits
ensued.

The trial court rendered its decision on February 15, 1989.7 It found in favor of the Sajonas couple, and
ordered the cancellation of the Notice of Levy from Transfer Certificate of Title No. N-109417.

The court a quo stated, thus:

After going over the evidence presented by the parties, the court finds that although the
title of the subject matter of the Notice of Levy on Execution was still in the name of the
Spouses Uychocde when the same was annotated on the said title, an earlier Affidavit of
Adverse of claim was annotated on the same title by the plaintiffs who earlier bought said
property from the Uychocdes.

It is a well settled rule in this jurisdiction (Guidote vs. Maravilla, 48 Phil. 442) that actual
notice of an adverse claim is equivalent to registration and the subsequent registration of
the Notice of Levy could not have any legal effect in any respect on account of prior
inscription of the adverse claim annotated on the title of the Uychocdes.

xxx xxx xxx

On the issue of whether or not plaintiffs are buyers in good faith of the property of the
spouses Uychocde even notwithstanding the claim of the defendant that said sale
executed by the spouses was made in fraud of creditors, the Court finds that the
evidence in this instance is bare of any indication that said plaintiffs as purchasers had
notice beforehand of the claim of the defendant over said property or that the same is
involved in a litigation between said spouses and the defendant. Good faith is the
opposite of fraud and bad faith, and the existence of any bad faith must be established by
competent proof.8 (Cai vs. Henson, 51 Phil 606)

xxx xxx xxx

In view of the foregoing, the Court renders judgment in favor of the plaintiffs and against
the defendant Pilares, as follows:

1. Ordering the cancellation of the Notice of Levy on Execution annotated on Transfer

Certificate of Title No. N-109417.

2. Ordering said defendant to pay the amount of P5,000 as attorney's fees.

3. Dismissing the Counterclaim interposed by said defendant.

Said defendant is likewise ordered to pay the costs.

Dissatisfied, Pilares appealed to the Court of Appeals", assigning errors on the part of the lower court.
The appellate court reversed the lower court's decision, and upheld the annotation of the levy on
execution on the certificate of title, thus:
 WHEREFORE, the decision of the lower court dated February 15, 1989 is reversed and
set aside and this complaint is dismissed.

Costs against the plaintiffs-appellees. 10

The Sajonas couple are now before us, on a Petition for Review on Certiorari, 11 praying inter alia to set
aside the Court of Appeals' decision, and to reinstate that of the Regional Trial Court

Private respondent filed his Comment 12 on March 5, 1992, after which, the parties were ordered to file
their respective Memoranda. Private respondent complied thereto on April 27, 1994 13, while petitioners
were able to submit their Memorandum on September 29, 1992. 14

Petitioner assigns the following as errors of the appellate court, to wit:

THE LOWER COURT ERRED IN HOLDING THAT THE RULE ON THE 30-DAY
PERIOD FOR ADVERSE CLAIM UNDER SECTION 70 OF P.D. NO. 1529 IS
ABSOLUTE INASMUCH AS IT FAILED TO READ OR CONSTRUE THE PROVISION IN
ITS ENTIRETY AND TO RECONCILE THE APPARENT INCONSISTENCY WITHIN THE
PROVISION IN ORDER TO GIVE EFFECT TO IT AS A WHOLE.

II

THE LOWER COURT ERRED IN INTERPRETING SECTION 70 OF P.D. NO. 1529 IN

SUCH WISE ON THE GROUND THAT IT VIOLATES PETITIONERS' SUBSTANTIAL
RIGHT TO DUE PROCESS.

Primarily, we are being asked to ascertain who among the parties in suit has a better right over the
property in question. The petitioners derive their claim from the right of ownership arising from a perfected
contract of absolute sale between them and the registered owners of the property, such right being
attested to by the notice of adverse claim 15 annotated on TCT No. N-79073 as early as August 27, 1984.
Private respondent on the other hand, claims the right to levy on the property, and have it sold on
execution to satisfy his judgment credit, arising from Civil Case No. Q-28850 16 against the Uychocdes,
from whose title, petitioners derived their own.

Concededly, annotation of an adverse claim is a measure designed to protect the interest of a person
over a piece of real property where the registration of such interest or right not otherwise provided for by
the Land Registration Act or Act 496 (now P.D. 1529 or the Property Registration Decree), and serves a
warning to third parties dealing with said property that someone is claiming an interest on the same or a
better right than that of the registered owner thereof. Such notice is registered by filing a sworn statement
with the Register of Deeds of the province where the property is located, setting forth the basis of the
claimed right together with other dates pertinent thereto. 17

The registration of an adverse claim is expressly recognized under Section 70 of P.D. No. 1529. *

Noting the changes made in the terminology of the provisions of the law, private respondent interpreted
this to mean that a Notice of Adverse Claim remains effective only for a period of 30 days from its
annotation, and does not automatically lose its force afterwards. Private respondent further maintains that
the notice of adverse claim was annotated on August 27, 1984, hence, it will be effective only up to
September 26, 1984, after which it will no longer have any binding force and effect pursuant to Section 70
of P.D. No. 1529. Thus, the sale in favor of the petitioners by the Uychocdes was made in order to
defraud their creditor (Pilares), as the same was executed subsequent to their having defaulted in the
payment of their obligation based on a compromise
agreement. 18

The respondent appellate court upheld private respondents' theory when it ruled:

The above staled conclusion of the lower court is based on the premise that the adverse
claim filed by plaintiffs-appellees is still effective despite the lapse of 30 days from the
date of registration. However, under the provisions of Section 70 of P.D. 1529, an
adverse claim shall be effective only for a period of 30 days from the date of its
registration. The provision of this Decree is clear and specific.

xxx xxx xxx

It should be noted that the adverse claim provision in Section 110 of the Land
Registration Act (Act 496) does not provide for a period of effectivity of the annotation of
an adverse claim. P.D. No. 1529, however, now specifically provides for only 30 days. If
the intention of the law was for the adverse claim to remain effective until cancelled by
petition of the interested party, then the aforecited provision in P.D. No. 1529 stating the
period of effectivity would not have been inserted in the law.

Since the adverse claim was annotated On August 27, 1984, it was effective only until
September 26, 1984. Hence, when the defendant sheriff annotated the notice of levy on
execution on February 12, 1985, said adverse claim was already ineffective. It cannot be
said that actual or prior knowledge of the existence of the adverse claim on the
Uychocdes' title is equivalent to registration inasmuch as the adverse claim was already
ineffective when the notice of levy on execution was annotated. Thus, the act of
defendant sheriff in annotating the notice of levy on execution was proper and justified.

The appellate court relied on the rule of statutory construction that Section 70 is specific and
unambiguous and hence, needs no interpretation nor construction. 19 Perforce, the appellate court stated,
the provision was clear enough to warrant immediate enforcement, and no interpretation was needed to
give it force and effect. A fortiori, an adverse claim shall be effective only for a period of thirty (30) days
from the date of its registration, after which it shall be without force and effect. Continuing, the court
further stated;

. . . clearly, the issue now has been reduced to one of preference -- which should be
preferred between the notice of levy on execution and the deed of absolute sate. The
Deed of Absolute Sale was executed on September 4, 1984, but was registered only on
August 28, 1985, while the notice of levy on execution was annotated six (6) months prior
to the registration of the sale on February 12, 1985.

In the case of Landig vs. U.S. Commercial Co., 89 Phil. 638 Commere it was held that
where a sale is recorded later than an attachment, although the former is of an earlier
date, the sale must give way to the attachment on the ground that the act of registration
is the operative act to affect the land. A similar ruling was restated in Campillo vs. Court
of Appeals (129 SCRA 513).

xxx xxx xxx

The reason for these rulings may be found in Section 51 of P.D. 1529, otherwise known
as the Property Registration Decree, which provides as follows:
 Sec. 1. Conveyance and other dealings by the registered owner. -- An
owner of registered land may convey, mortgage, lease, charge,
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 Deeds to make of registration.

The act of registration shall be the operative act to convey or affect the land in so far as
third persons are concerned and in all cases under the 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 by the lower court.)

Under the Torrens system, registration is the operative act which gives validity to the transfer or creates a
lien 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 certificate of title. 20

Although we have relied on the foregoing rule, in many cases coming before us, the same, however, does
not fit in the case at bar. While it is the act of registration which is the operative act which conveys or
affects the land insofar as third persons are concerned, it is likewise true, that the subsequent sale of
property covered by a Certificate of Title cannot prevail over an adverse claim, duly sworn to and
annotated on the certificate of title previous to the sale. 21 While it is true that under the provisions of the
Property Registration Decree, deeds of conveyance of property registered under the system, or any
interest therein only take effect as a conveyance to bind the land upon its registration, and that a
purchaser is not required to explore further than what the Torrens title, upon its face, indicates in quest for
any hidden defect or inchoate right that may subsequently defeat his right thereto, nonetheless, this rule
is not absolute. Thus, one who buys from the registered owner need not have to look behind the
certificate of title, he is, nevertheless, bound by the liens and encumbrances annotated thereon. One who
buys without checking the vendor's title takes all the risks and losses consequent to such failure. 22

In PNB vs. Court of Appeals, we held that "the subsequent sale of the property to the De Castro spouses
cannot prevail over the adverse claim of Perez, which was inscribed on the bank' s certificate of title on
October 6, 1958. That should have put said spouses on notice, and they can claim no better legal right
over and above that of Perez. The TCT issued in the spouses' names on July, 1959 also carried the said
annotation of adverse claim. Consequently, they are not entitled to any interest on the price they paid for
the property. 23

Then again, in Gardner vs. Court of Appeals, we said that "the statement of respondent court in its
resolution of reversal that 'until the validity of an adverse claim is determined judicially, it cannot be
considered a flaw in the vendor's title' contradicts the very object of adverse claims. As stated earlier, the
annotation of an adverse claim is a measure designed to protect the interest of a person over a piece of
real property, and serves as a notice and warning to third parties dealing with said property that someone
is claiming an interest on the same or has a better right than the registered owner thereof. A subsequent
sale cannot prevail over the adverse claim which was previously annotated in the certificate of title over
the property. 24

The question may be posed, was the adverse claim inscribed in the Transfer Certificate of Title No. N-
109417 still in force when private respondent caused the notice of levy on execution to be registered and
annotated in the said title, considering that more than thirty days had already lapsed since it was
annotated?
 This is a decisive factor in the resolution of this instant case.

If the adverse claim was still in effect, then respondents are charged with knowledge of pre-existing
interest over the subject property, and thus, petitioners are entitled to the cancellation of the notice of levy
attached to the certificate of title.

For a definitive answer to this query, we refer to the law itself. Section 110 of Act 496 or the Land
Registration Act reads:

Sec. 110. Whoever claims any part or interest in registered lands 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. The
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 cancelled. 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 the costs in its
discretion."

The validity of the above-mentioned rules on adverse claims has to be reexamined in the light of the
changes introduced by P.D. 1529, which provides:

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

The statement shall be signed and sworn to, and shall state the adverse 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 cancelled upon filing of a verified
petition therefor by the party in-interest: Provided, however, that after cancellation, no
second adverse claim based on the same ground shall be registered by the same
claimant.

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

In construing the law aforesaid, care should be taken that every part thereof be given effect and a
construction that could render a provision inoperative should be avoided, and inconsistent provisions
should be reconciled whenever possible as parts of a harmonious whole. 25 For taken in solitude, a word
or phrase might easily convey a meaning quite different from the one actually intended and evident when
a word or phrase is considered with those with which it is associated." 26 In ascertaining the period of
effectivity of an inscription of adverse claim, we must read the law in its entirety. Sentence three,
paragraph two of Section 70 of P.D. 1529 provides:

The adverse claim shall be effective for a period of thirty days from the date of
registration."

At first blush, the provision in question would seem to restrict the effectivity of the adverse claim to thirty
days. But the above provision cannot and should not be treated separately, but should be read in relation
to the sentence following, which reads:

After the lapse of said period, the annotation of adverse claim may be cancelled upon
filing of a verified petition therefor by the party in interest.

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

A statute's clauses and phrases must not be taken separately, but in its relation to the statute's totality.
Each statute must, in fact, be construed as to harmonize it with the pre-existing body of laws. Unless
clearly repugnant, provisions of statutes must be reconciled. The printed pages of the published Act, its
history, origin, and its purposes may be examined by the courts in their construction. 27 An eminent
authority on the subject matter states the rule candidly:

A statute is passed as a whole and not in parts sections, and is animated by one general
purpose and intent. Consequently, each part or section should be construed in
connection with every other part section so as to produce a harmonious whole. It is not
proper to confine its intention to the one section construed. It is always an unsafe way of
construing a statute or contract to divide it by a process of etymological dissection, into
separate words, and then apply to each, thus separated from the context, some particular
meaning to be attached to any word or phrase usually to be ascertained from the as
context. 28

Construing the provision as a whole would reconcile the apparent inconsistency between the portions of
the law such that the provision on cancellation of adverse claim by verified petition would serve to qualify
the provision on the effectivity period. The law, taken together, simply means that the cancellation of the
adverse claim is still necessary to render it ineffective, otherwise, the inscription will remain annotated and
shall continue as a lien upon the property. For if the adverse claim has already ceased to be effective
upon the lapse of said period, its cancellation is no longer necessary and the process of cancellation
would be a useless ceremony. 29

It should be noted that the law employs the phrase "may be cancelled", which obviously indicates, as
inherent in its decision making power, that the court may or not order the cancellation of an adverse
claim, nothwitstanding such provision limiting the effectivity of an adverse claim for thirty days from the
date of registration. The court cannot be bound by such period as it would be inconsistent with the very
authority vested in it. A fortiori, the limitation on the period of effectivity is immaterial in determining the
validity or invalidity of an adverse claim which is the principal issue to be decided in the court hearing. It
will therefore depend upon the evidence at a proper hearing for the court to determine whether it will
order the cancellation of the adverse claim or not. 30

To interpret the effectivity period of the adverse claim as absolute and without qualification limited to thirty
days defeats the very purpose for which the statute provides for the remedy of an inscription of adverse
claim, as the annotation of an adverse claim is a measure designed to protect the interest of a person
over a piece of real property where the registration of such interest or right is not otherwise provided for
by the Land Registration Act or Act 496 (now P.D. 1529 or the Property Registration Decree), and serves
as a warning to third parties dealing with said property that someone is claiming an interest or the same
or a better right than the registered owner thereof. 31

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

Provided, however, that after cancellation, no second adverse claim shall be registered
by the same claimant.

Should the adverse claimant fail to sustain his interest in the property, the adverse claimant will be
precluded from registering a second adverse claim based on the same ground.

It was held that "validity or efficaciousness of the claim may only be determined by the Court upon petition
by an interested party, in which event, the Court shall. order the immediate hearing thereof and make the
proper adjudication a justice and equity may warrant. And it is only when such claim is found
unmeritorious that the registration of the adverse claim may be cancelled, thereby protecting the interest
of the adverse claimant and giving notice and warning to third parties". 32

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

Sec. 16. Effect of levy on execution as to third persons -- The levy on execution shall
create a lien in favor of the judgment creditor over the right, title and interest of the
judgment debtor in such property at the time of the levy, subject to liens or encumbrances
then existing. (Emphasis supplied)

To hold otherwise would be to deprive petitioners of their property, who waited a long time to complete
payments on their property, convinced that their interest was amply protected by the inscribed adverse
claim.

As lucidly observed by the trial court in the challenged decision:

True, the foregoing section provides that an adverse claim shall be effective for a period
of thirty days from the date of registration. Does this mean however, that the plaintiffs
thereby lost their right over the property in question? Stated in another, did the lapse of
the thirty day period automatically nullify the contract to sell between the plaintiffs and the
Uychocdes thereby depriving the former of their vested right over the property?
 It is respectfully submitted that it did not. 33

As to whether or not the petitioners are buyers in good faith of the subject property, the same should be
made to rest on the findings of the trial court. As pointedly observed by the appellate court, "there is no
question that plaintiffs-appellees were not aware of the pending case filed by Pilares against Uychocde at
the time of the sale of the property by the latter in their favor. This was clearly elicited from the testimony
of Conchita Sajonas, wife of plaintiff, during cross-examination on April 21, 1988". 34

ATTY. REYES.

Q Madam Witness, when Engr. Uychocde and his wife offered to you
and your husband the property subject matter of this case, they showed
you the owner's transfer certificate, is it not?

A Yes, sir.

Q That was shown to you the very first time that this lot was offered to
you for sale?

A Yes.

Q After you were shown a copy of the title and after you were informed
that they are desirous in selling the same, did you and your husband
decide to buy the same?

A No, we did not decide right after seeing the title. Of course, we visited.
..

Q No, you just answer my question. You did not immediately decide?

A Yes.

Q When did you finally decide to buy the same?

A After seeing the site and after verifying from the Register of Deeds in
Marikina that it is free from encumbrances, that was the time we decided.

Q How soon after you were offered this lot did you verify the exact
location and the genuineness of the title, as soon after this was offered to
you?

A I think it' s one week after they were offered. 35

A purchaser in good faith and for value is one who buys property of another without notice that some
other person has a right to or interest in such property and pays a full and fair price for the same, at the
time of such purchase, or before he has notice of the claims or interest of some other person in the
property.36 Good faith consists in an honest intention to abstain from taking an unconscientious
advantage of another, 3 7 Thus, the claim of the private respondent that the sale executed by the spouses
was made in fraud of creditors has no basis in fact, there being no evidence that the petitioners had any
knowledge or notice of the debt of the Uychocdes in favor of the private respondent, nor of any claim by
the latter over the Uychocdes' properties or that the same was involved in any litigation between said
spouses and the private respondent. While it may be stated that good faith is presumed, conversely, bad
faith must be established by competent proof by the party alleging the same. Sans such proof, the
petitioners are deemed to be purchasers in good faith, and their interest in the subject property must not
be disturbed.

At any rate, the Land Registration Act (Property Registration Decree) guarantees to every purchaser of
registered land in good faith that they can take and hold the same free from any and all prior claims, liens
an encumbrances except those set forth on the Certificate of Title and those expressly mentioned in the
ACT as having been reserved against it. Otherwise, the efficacy of the conclusiveness of the Certificate of
Title which the Torrens system seeks to insure would be futile and nugatory. 38

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

The inscription of the notice of levy On execution on TCT No. N-109417 is hereby CANCELLED.

Costs against private respondent.

SO ORDERED.
G.R. No. 89775 November 26, 1992

JACINTO UY DIÑO and NORBERTO UY, petitioners,

vs.
HON. COURT OF APPEALS and METROPOLITAN BANK AND TRUST COMPANY, respondents.

DAVIDE, JR., J.:

Continuing Suretyship Agreements signed by the petitioners set off this present controversy.

Petitioners assail the 22 June 1989 Decision of the Court in CA-G.R. CV No. 17724 1 which reversed the
2 December 1987 Decision of Branch 45 of the Regional Trial Court (RTC) of Manila in a collection suit
entitled "Metropolitan Bank and Trust Company vs. Uy Tiam, doing business under the name of "UY
TIAM ENTERPRISES & FREIGHT SERVICES," Jacinto Uy Diño and Norberto Uy" and docketed as Civil
Case No. 82-9303. They likewise challenge public respondent's Resolution of 21 August 1989 2 denying
their motion for the reconsideration of the former.

The impugned Decision of the Court summarizes the antecedent facts as follows:

It appears that in 1977, Uy Tiam Enterprises and Freight Services (hereinafter referred to
as UTEFS), thru its representative Uy Tiam, applied for and obtained credit
accommodations (letter of credit and trust receipt accommodations) from the Metropolitan
Bank and Trust Company (hereinafter referred to as METROBANK) in the sum of
P700,000.00 (Original Records, p. 333). To secure the aforementioned credit
accommodations Norberto Uy and Jacinto Uy Diño executed separate Continuing
Suretyships (Exhibits "E" and "F" respectively), dated 25 February 1977, in favor of the
latter. Under the aforesaid agreements, Norberto Uy agreed to pay METROBANK any
indebtedness of UTEFS up to the aggregate sum of P300,000.00 while Jacinto Uy Diño
agreed to be bound up to the aggregate sum of P800,000.00.

Having paid the obligation under the above letter of credit in 1977, UTEFS, through Uy
Tiam, obtained another credit accommodation from METROBANK in 1978, which credit
accommodation was fully settled before an irrevocable letter of credit was applied for and
obtained by the abovementioned business entity in 1979 (September 8, 1987, tsn, pp.
14-15).

The Irrevocable Letter of Credit No. SN-Loc-309, dated March 30, 1979, in the sum of
P815, 600.00, covered UTEFS' purchase of "8,000 Bags Planters Urea and 4,000 Bags
Planters 21-0-0." It was applied for and obtain by UTEFS without the participation of
Norberto Uy and Jacinto Uy Diño as they did not sign the document denominated as
"Commercial Letter of Credit and Application." Also, they were not asked to execute any
suretyship to guarantee its payment. Neither did METROBANK nor UTEFS inform them
that the 1979 Letter of Credit has been opened and the Continuing Suretyships
separately executed in February, 1977 shall guarantee its payment (Appellees brief, pp.
2-3; rollo, p. 28).

The 1979 letter of credit (Exhibit "B") was negotiated. METROBANK paid Planters
Products the amount of P815,600.00 which payment was covered by a Bill of Exchange
(Exhibit "C"), dated 4 June 1979, in favor of (Original Records, p. 331).
Pursuant to the above commercial transaction, UTEFS executed and delivered to
METROBANK and Trust Receipt (Exh. "D"), dated 4 June 1979, whereby the former
acknowledged receipt in trust from the latter of the aforementioned goods from Planters
Products which amounted to P815, 600.00. Being the entrusted, the former agreed to
deliver to METROBANK the entrusted goods in the event of non-sale or, if sold, the
proceeds of the sale thereof, on or before September 2, 1979.

However, UTEFS did not acquiesce to the obligatory stipulations in the trust receipt. As a
consequence, METROBANK sent letters to the said principal obligor and its sureties,
Norberto Uy and Jacinto Uy Diño, demanding payment of the amount due. Informed of
the amount due, UTEFS made partial payments to the Bank which were accepted by the
latter.

Answering one of the demand letters, Diño, thru counsel, denied his liability for the
amount demanded and requested METROBANK to send him copies of documents
showing the source of his liability. In its reply, the bank informed him that the source of
his liability is the Continuing Suretyship which he executed on February 25, 1977.

As a rejoinder, Diño maintained that he cannot be held liable for the 1979 credit
accommodation because it is a new obligation contracted without his participation.
Besides, the 1977 credit accommodation which he guaranteed has been fully paid.

Having sent the last demand letter to UTEFS, Diño and Uy and finding resort to
extrajudicial remedies to be futile, METROBANK filed a complaint for collection of a sum
of money (P613,339.32, as of January 31, 1982, inclusive of interest, commission penalty
and bank charges) with a prayer for the issuance of a writ of preliminary attachment,
against Uy Tiam, representative of UTEFS and impleaded Diño and Uy as parties-
defendants.

The court issued an order, dated 29 July 1983, granting the attachment writ, which writ
was returned unserved and unsatisfied as defendant Uy Tiam was nowhere to be found
at his given address and his commercial enterprise was already non-operational (Original
Records, p. 37).

On April 11, 1984, Norberto Uy and Jacinto Uy Diño (sureties-defendant herein) filed a
motion to dismiss the complaint on the ground of lack of cause of action. They
maintained that the obligation which they guaranteed in 1977 has been extinguished
since it has already been paid in the same year. Accordingly, the Continuing Suretyships
executed in 1977 cannot be availed of to secure Uy Tiam's Letter of Credit obtained in
1979 because a guaranty cannot exist without a valid obligation. It was further argued
that they can not be held liable for the obligation contracted in 1979 because they are not
privies thereto as it was contracted without their participation (Records, pp. 42-46).

On April 24, 1984, METROBANK filed its opposition to the motion to dismiss. Invoking
the terms and conditions embodied in the comprehensive suretyships separately
executed by sureties-defendants, the bank argued that sureties-movants bound
themselves as solidary obligors of defendant Uy Tiam to both existing obligations and
future ones. It relied on Article 2053 of the new Civil Code which provides: "A guaranty
may also be given as security for future debts, the amount of which is not yet known; . . .
." It was further asserted that the agreement was in full force and effect at the time the
letter of credit was obtained in 1979 as sureties-defendants did not exercise their right to
revoke it by giving notice to the bank. (Ibid., pp. 51-54).
 Meanwhile, the resolution of the aforecited motion to dismiss was held in abeyance
pending the introduction of evidence by the parties as per order dated February 21, 1986
(Ibid., p. 71).

Having been granted a period of fifteen (15) days from receipt of the order dated March
7, 1986 within which to file the answer, sureties-defendants filed their responsive
pleading which merely rehashed the arguments in their motion to dismiss and maintained
that they are entitled to the benefit of excussion (Original Records, pp. 88-93).

On February 23, 1987, plaintiff filed a motion to dismiss the complaint against defendant
Uy Tiam on the ground that it has no information as to the heirs or legal representatives
of the latter who died sometime in December, 1986, which motion was granted on the
following day (Ibid., pp. 180-182).

After trial, . . . the court a quo, on December 2, 198, rendered its judgment, a portion of which reads:

The evidence and the pleadings, thus, pose the querry (sic):

Are the defendants Jacinto Uy Diñoand Norberto Uy liable for the

obligation contracted by Uy Tiam under the Letter of Credit (Exh. B)
issued on March 30, 1987 by virtue of the Continuing Suretyships they
executed on February 25, 1977?

Under the admitted proven facts, the Court finds that they are not.

a) When Uy and Diño executed the continuing suretyships, exhibits E

and F, on February 25, 1977, Uy Tiam was obligated to the plaintiff in the
amount of P700,000.00 — and this was the obligation which both
obligation which both defendants guaranteed to pay. Uy Tiam paid this
1977 obligation –– and such payment extinguished the obligation they
assumed as guarantors/sureties.

b) The 1979 Letter of Credit (Exh. B) is different from the 1977 Letter of
Credit which covered the 1977 account of Uy Tiam. Thus, the obligation
under either is apart and distinct from the obligation created in the other
— as evidenced by the fact that Uy Tiam had to apply anew for the 1979
transaction (Exh. A). And Diño and Uy, being strangers thereto, cannot
be answerable thereunder.

c) The plaintiff did not serve notice to the defendants Diño and Uy when
it extended to Credit — at least to inform them that the continuing
suretyships they executed on February 25, 1977 will be considered by
the plaintiff to secure the 1979 transaction of Uy Tiam.

d) There is no sufficient and credible showing that Diño and Uy were fully
informed of the import of the Continuing Suretyships when they affixed
their signatures thereon –– that they are thereby securing all future
obligations which Uy Tiam may contract the plaintiff. On the contrary,
Diño and Uy categorically testified that they signed the blank forms in the
office of Uy Tiam at 623 Asuncion Street, Binondo, Manila, in obedience
to the instruction of Uy Tiam, their former employer. They denied having
gone to the office of the plaintiff to subscribe to the documents (October
1, 1987, tsn, pp. 5-7, 14; October 15, 1987, tsn, pp. 3-8, 13-16).
(Records, pp. 333-334). 3
 xxx xxx xxx

In its Decision, the trial court decreed as follows:

PREMISES CONSIDERED, judgment is hereby rendered:

a) dismissing the COMPLAINT against JACINTO UY DIÑO and NORBERTO UY;

b) ordering the plaintiff to pay to Diño and Uy the amount of P6,000.00 as attorney's fees
and expenses of litigation; and

c) denying all other claims of the parties for want of legal and/or factual basis.

SO ORDERED. (Records, p. 336) 4

From the said Decision, the private respondent appealed to the Court of Appeals. The case was docketed
as CA-G.R. CV No. 17724. In support thereof, it made the following assignment of errors in its Brief:

I. THE LOWER COURT SERIOUSLY ERRED IN NOT FINDING AND HOLDING THAT
DEFENDANTS-APPELLEES JACINTO UY DIÑO AND NORBERTO UY ARE
SOLIDARILY LIABLE TO PLAINTIFF-APPELLANT FOR THE OBLIGATION OF
DEFENDANT UY TIAM UNDER THE LETTER OF CREDIT ISSUED ON MARCH 30,
1979 BY VIRTUE OF THE CONTINUING SURETYSHIPS THEY EXECUTED ON
FEBRUARY 25, 1977.

II. THE LOWER COURT ERRED IN HOLDING THAT PLAINTIFF-APPELLANT IS

ANSWERABLE TO DEFENDANTS-APPELLEES JACINTO UY DIÑO AND NORBERTO
UY FOR ATTORNEY'S FEES AND EXPENSES OF LITIGATION. 5

On 22 June 1989, public respondent promulgated the assailed Decision the dispositive portion of which
reads:

WHEREFORE, premises considered, the judgment appealed from is hereby REVERSED

AND SET, ASIDE. In lieu thereof, another one is rendered:

1) Ordering sureties-appellees Jacinto Uy Diño and Norberto Uy to pay,

jointly and severally, to appellant METROBANK the amount of
P2,397,883.68 which represents the amount due as of July 17, 1987
inclusive of principal, interest and charges;

2) Ordering sureties-appellees Jacinto Uy Diño and Norberto Uy to pay,

jointly and severally, appellant METROBANK the accruing interest, fees
and charges thereon from July 18, 1987 until the whole monetary
obligation is paid; and

3) Ordering sureties-appellees Jacinto Uy Diño and Norberto Uy to pay,

jointly and severally, to plaintiff P20,000.00 as attorney's fees.

With costs against appellees.

SO ORDERED. 6
In ruling for the herein private respondent (hereinafter METROBANK), public respondent held that the
Continuing Suretyship Agreements separately executed by the petitioners in 1977 were intended to
guarantee payment of Uy Tiam's outstanding as well as future obligations; each suretyship arrangement
was intended to remain in full force and effect until METROBANK would have been notified of its
revocation. Since no such notice was given by the petitioners, the suretyships are deemed outstanding
and hence, cover even the 1979 letter of credit issued by METROBANK in favor of Uy Tiam.

Petitioners filed a motion to reconsider the foregoing Decision. They questioned the public respondent's
construction of the suretyship agreements and its ruling with respect to the extent of their liability
thereunder. They argued the even if the agreements were in full force and effect when METROBANK
granted Uy Tiam's application for a letter of credit in 1979, the public respondent nonetheless seriously
erred in holding them liable for an amount over and above their respective face values.

In its Resolution of 21 August 1989, public respondent denied the motion:

. . . considering that the issues raised were substantially the same grounds utilized by the
lower court in rendering judgment for defendants-appellees which We upon appeal found
and resolved to be untenable, thereby reversing and setting aside said judgment and
rendering another in favor of plaintiff, and no new or fresh issues have been posited to
justify reversal of Our decision herein, . . . . 7

Hence, the instant petition which hinges on the issue of whether or not the petitioners may be held liable
as sureties for the obligation contracted by Uy Tiam with METROBANK on 30 May 1979 under and by
virtue of the Continuing Suretyship Agreements signed on 25 February 1977.

Petitioners vehemently deny such liability on the ground that the Continuing Suretyship Agreements were
automatically extinguished upon payment of the principal obligation secured thereby, i.e., the letter of
credit obtained by Uy Tiam in 1977. They further claim that they were not advised by either METROBANK
or Uy Tiam that the Continuing Suretyship Agreements would stand as security for the 1979 obligation.
Moreover, it is posited that to extend the application of such agreements to the 1979 obligation would
amount to a violation of Article 2052 of the Civil Code which expressly provides that a guaranty cannot
exist without a valid obligation. Petitioners further argue that even granting, for the sake of argument, that
the Continuing Suretyship Agreements still subsisted and thereby also secured the 1979 obligations
incurred by Uy Tiam, they cannot be held liable for more than what they guaranteed to pay because it s
axiomatic that the obligations of a surety cannot extend beyond what is stipulated in the agreement.

On 12 February 1990, this Court resolved to give due course to the petition after considering the
allegations, issues and arguments adduced therein, the Comment thereon by the private respondent and
the Reply thereto by the petitioners; the parties were required to submit their respective Memoranda.

The issues presented for determination are quite simple:

1. Whether petitioners are liable as sureties for the 1979 obligations of Uy Tiam to
METROBANK by virtue of the Continuing Suretyship Agreements they separately signed
in 1977; and

2. On the assumption that they are, what is the extent of their liabilities for said 1979
obligations.

Under the Civil Code, a guaranty may be given to secure even future debts, the amount of which may not
known at the time the guaranty is
executed. 8 This is the basis for contracts denominated as continuing guaranty or suretyship. A
continuing guaranty is one which is not limited to a single transaction, but which contemplates a future
course of dealing, covering a series of transactions, generally for an indefinite time or until revoked. It is
prospective in its operation and is generally intended to provide security with respect to future
transactions within certain limits, and contemplates a succession of liabilities, for which, as they accrue,
the guarantor becomes liable.9 Otherwise stated, a continuing guaranty is one which covers all
transactions, including those arising in the future, which are within the description or contemplation of the
contract, of guaranty, until the expiration or termination thereof. 10 A guaranty shall be construed as
continuing when by the terms thereof it is evident that the object is to give a standing credit to the
principal debtor to be used from time to time either indefinitely or until a certain period, especially if the
right to recall the guaranty is expressly reserved. Hence, where the contract of guaranty states that the
same is to secure advances to be made "from time to time" the guaranty will be construed to be a
continuing one. 11

In other jurisdictions, it has been held that the use of particular words and expressions such as payment
of "any debt," "any indebtedness," "any deficiency," or "any sum," or the guaranty of "any transaction" or
money to be furnished the principal debtor "at any time," or "on such time" that the principal debtor may
require, have been construed to indicate a continuing guaranty. 12

In the case at bar, the pertinent portion of paragraph I of the suretyship agreement executed by petitioner
Uy provides thus:

I. For and in consideration of any existing indebtedness to the BANK of UY TIAM

(hereinafter called the "Borrower"), for the payment of which the SURETY is now
obligated to the BANK, either as guarantor or otherwise, and/or in order to induce the
BANK, in its discretion, at any time or from time to time hereafter, to make loans or
advances or to extend credit in any other manner to, or at the request, or for the account
of the Borrower, either with or without security, and/or to purchase or discount, or to
make any loans or advances evidence or secured by any notes, bills, receivables, drafts,
acceptances, checks, or other instruments or evidences of indebtedness (all hereinafter
called "instruments") upon which the Borrower is or may become liable as maker,
endorser, acceptor, or otherwise, the SURETY agrees to guarantee, and does hereby
guarantee, the punctual payment at maturity to the loans, advances credits and/or other
obligations hereinbefore referred to, and also any and all other indebtedness of every
kind which is now or may hereafter become due or owing to the BANK by the Borrower,
together with any and all expenses which may be incurred by the BANK in collecting all
or any such instruments or other indebtedness or obligations herein before referred to,
and/or in enforcing any rights hereunder, and the SURETY also agrees that the BANK
may make or cause any and all such payments to be made strictly in accordance with the
terms and provisions of any agreement(s) express or implied, which has (have) been or
may hereafter be made or entered into by the Borrow in reference thereto, regardless of
any law, regulation or decree, unless the same is mandatory and non-waivable in
character, nor or hereafter in effect, which might in any manner affect any of the terms or
provisions of any such agreement(s) or the Bank's rights with respect thereto as against
the Borrower, or cause or permit to be invoked any alteration in the time, amount or
manner of payment by the Borrower of any such instruments, obligations or
indebtedness; provided, however, that the liability of the SURETY hereunder shall not
exceed at any one time the aggregate principal sum of PESOS: THREE HUNDRED
THOUSAND ONLY (P300,000.00) (irrespective of the currenc(ies) in which the
obligations hereby guaranteed are payable), and such interest as may accrue thereon
either before or after any maturity(ies) thereof and such expenses as may be incurred by
the BANK as referred to above. 13

Paragraph I of the Continuing Suretyship Agreement executed by petitioner Diño contains identical
provisions except with respect to the guaranteed aggregate principal amount which is EIGHT
THOUSAND PESOS (P800,000.00). 14

Paragraph IV of both agreements stipulate that:

 VI. This is a continuing guaranty and shall remain in full force and effect until written
notice shall have been received by the BANK that it has been revoked by the
SURETY, but any such notice shall not release the SURETY, from any liability as to any
instruments, loans, advances or other obligations hereby guaranteed, which may be held
by the BANK, or in which the BANK may have any interest at the time of the receipt (sic)
of such notice. No act or omission of any kind on the BANK'S part in the premises shall in
any event affect or impair this guaranty, nor shall same (sic) be affected by any change
which may arise by reason of the death of the SURETY, or of any partner(s) of the
SURETY, or of the Borrower, or of the accession to any such partnership of any one or
more new partners. 15

The foregoing stipulations unequivocally reveal that the suretyship agreement in the case at bar are
continuing in nature. Petitioners do not deny this; in fact, they candidly admitted it. Neither have they
denied the fact that they had not revoked the suretyship agreements. Accordingly, as correctly held by the
public respondent:

Undoubtedly, the purpose of the execution of the Continuing Suretyships was to induce
appellant to grant any application for credit accommodation (letter of credit/trust receipt)
UTEFS may desire to obtain from appellant bank. By its terms, each suretyship is a
continuing one which shall remain in full force and effect until the bank is notified of its
revocation.

xxx xxx xxx

When the Irrevocable Letter of Credit No. SN-Loc-309 was obtained from appellant bank,
for the purpose of obtaining goods (covered by a trust receipt) from Planters Products,
the continuing suretyships were in full force and effect. Hence, even if sureties-appellees
did not sign the "Commercial Letter of Credit and Application, they are still liable as the
credit accommodation (letter of credit/trust receipt) was covered by the said suretyships.
What makes them liable thereunder is the condition which provides that the Borrower "is
or may become liable as maker, endorser, acceptor or otherwise." And since UTEFS
which (sic) was liable as principal obligor for having failed to fulfill the obligatory
stipulations in the trust receipt, they as insurers of its obligation, are liable thereunder. 16

Petitioners maintain, however, that their Continuing Suretyship Agreements cannot be made applicable to
the 1979 obligation because the latter was not yet in existence when the agreements were executed in
1977; under Article 2052 of the Civil Code, a guaranty "cannot exist without a valid obligation." We cannot
agree. First of all, the succeeding article provides that "[a] guaranty may also be given as security for
future debts, the amount of which is not yet known." Secondly, Article 2052 speaks about a valid
obligation, as distinguished from a void obligation, and not an existing or current obligation. This
distinction is made clearer in the second paragraph of Article 2052 which reads:

Nevertheless, a guaranty may be constituted to guarantee the performance of a voidable

or an unenforceable contract. It may also guarantee a natural obligation.

As to the amount of their liability under the Continuing Suretyship Agreements, petitioners contend that
the public respondent gravely erred in finding them liable for more than the amount specified in their
respective agreements, to wit: (a) P800,000.00 for petitioner Diño and (b) P300,000.00 for petitioner Uy.

The limit of the petitioners respective liabilities must be determined from the suretyship agreement each
had signed. It is undoubtedly true that the law looks upon the contract of suretyship with a jealous eye,
and the rule is settled that the obligation of the surety cannot be extended by implication beyond its
specified limits. To the extent, and in the manner, and under the circumstances pointed out in his
obligation, he is bound, and no farther. 17
Indeed, the Continuing Suretyship Agreements signed by petitioner Diño and petitioner Uy fix the
aggregate amount of their liability, at any given time, at P800,000.00 and P300,000.00, respectively. The
law is clear that a guarantor may bond himself for less, but not for more than the principal debtor, both as
regards the amount and the onerous nature of the conditions. 18 In the case at bar, both agreements
provide for liability for interest and expenses, to wit:

. . . and such interest as may accrue thereon either before or after any maturity(ies)
thereof and such expenses as may be incurred by the BANK referred to above. 19

They further provide that:

In the event of judicial proceedings being instituted by the BANK against the SURETY to
enforce any of the terms and conditions of this undertaking, the SURETY further agrees
to pay the BANK a reasonable compensation for and as attorney's fees and costs of
collection, which shall not in any event be less than ten per cent (10%) of the amount due
(the same to be due and payable irrespective of whether the case is settled judicially or
extrajudicially). 20

Thus, by express mandate of the Continuing Suretyship Agreements which they had signed,
petitioners separately bound themselves to pay interest, expenses, attorney's fees and costs. The
last two items are pegged at not less than ten percent (10%) of the amount due.

Even without such stipulations, the petitioners would, nevertheless, be liable for the interest and judicial
costs. Article 2055 of the Civil Code provides: 21

Art. 2055. A guaranty is not presumed; it must be express and cannot extend to more
than what is stipulated therein.

If it be simple or indefinite, it shall comprise not only the principal obligation, but also all
its accessories, including the judicial costs, provided with respect to the latter, that the
guarantor shall only be liable for those costs incurred after he has been judicially required
to pay.

Interest and damages are included in the term accessories. However, such interest should run
only from the date when the complaint was filed in court. Even attorney's fees may be imposed
whenever appropriate, pursuant to Article 2208 of the Civil Code. Thus, in Plaridel Surety &
Insurance Co., Inc. vs. P.L. Galang Machinery Co., Inc., 22 this Court held:

Petitioner objects to the payment of interest and attorney's fees because: (1) they were
not mentioned in the bond; and (2) the surety would become liable for more than the
amount stated in the contract of suretyship.

xxx xxx xxx

The objection has to be overruled, because as far back as the year 1922 this Court held
in Tagawa vs. Aldanese, 43 Phil. 852, that creditors suing on a suretyship bond may
recover from the surety as part of their damages, interest at the legal rate even if the
surety would thereby become liable to pay more than the total amount stipulated in the
bond. The theory is that interest is allowed only by way of damages for delay upon the
part of the sureties in making payment after they should have done so. In some states,
the interest has been charged from the date of the interest has been charged from the
date of the judgment of the appellate court. In this jurisdiction, we rather prefer to follow
 the general practice, which is to order that interest begin to run from the date when the
complaint was filed in court, . . .

Such theory aligned with sec. 510 of the Code of Civil Procedure which was
subsequently recognized in the Rules of Court (Rule 53, section 6) and with Article 1108
of the Civil Code (now Art. 2209 of the New Civil Code).

In other words the surety is made to pay interest, not by reason of the contract, but by
reason of its failure to pay when demanded and for having compelled the plaintiff to
resort to the courts to obtain payment. It should be observed that interest does not run
from the time the obligation became due, but from the filing of the complaint.

As to attorney's fees. Before the enactment of the New Civil Code, successful litigants
could not recover attorney's fees as part of the damages they suffered by reason of the
litigation. Even if the party paid thousands of pesos to his lawyers, he could not charge
the amount to his opponent (Tan Ti vs. Alvear, 26 Phil. 566).

However the New Civil Code permits recovery of attorney's fees in eleven cases
enumerated in Article 2208, among them, "where the court deems it just and equitable
that attorney's (sic) fees and expenses of litigation should be recovered" or "when the
defendant acted in gross and evident bad faith in refusing to satisfy the plaintiff's plainly
valid, just and demandable claim." This gives the courts discretion in apportioning
attorney's fees.

The records do not reveal the exact amount of the unpaid portion of the principal obligation of Uy Tiam to
MERTOBANK under Irrevocable Letter of Credit No. SN-Loc-309 dated 30 March 1979. In referring to the
last demand letter to Mr. Uy Tiam and the complaint filed in Civil Case No. 82-9303, the public
respondent mentions the amount of "P613,339.32, as of January 31, 1982, inclusive of interest
commission penalty and bank charges." 23This is the same amount stated by METROBANK in its
Memorandum. 24 However, in summarizing Uy Tiam's outstanding obligation as of 17 July 1987, public
respondent states:

Hence, they are jointly and severally liable to appellant METROBANK of UTEFS'
outstanding obligation in the sum of P2,397,883.68 (as of July 17, 1987) — P651,092.82
representing the principal amount, P825,133.54, for past due interest (5-31-82 to 7-17-
87) and P921,657.32, for penalty charges at 12%per annum (5-31-82 to 7-17-87) as
shown in the Statement of Account (Exhibit I). 25

Since the complaint was filed on 18 May 1982, it is obvious that on that date, the outstanding
principal obligation of Uy Tiam, secured by the petitioners' Continuing Suretyship Agreements,
was less than P613,339.32. Such amount may be fully covered by the Continuing Suretyship
Agreement executed by petitioner Diño which stipulates an aggregate principal sum of not
exceeding P800,000.00, and partly covered by that of petitioner Uy which pegs his maximum
liability at P300,000.00.

Consequently, the judgment of the public respondent shall have to be modified to conform to the
foregoing exposition, to which extent the instant petition is impressed with partial merit.

WHEREFORE, the petition is partly GRANTED, but only insofar as the challenged decision has to be
modified with respect to the extend of petitioners' liability. As modified, petitioners JACINTO UY DIÑO
and NORBERTO UY are hereby declared liable for and are ordered to pay, up to the maximum limit only
of their respective Continuing Suretyship Agreement, the remaining unpaid balance of the principal
obligation of UY TIAM or UY TIAM ENTERPRISES & FREIGHT SERVICES under Irrevocable Letter of
Credit No. SN-Loc-309, dated 30 March 1979, together with the interest due thereon at the legal rate
commencing from the date of the filing of the complaint in Civil Case No. 82-9303 with Branch 45 of the
Regional Trial Court of Manila, as well as the adjudged attorney's fees and costs.

All other dispositions in the dispositive portion of the challenged decision not inconsistent with the above
are affirmed.

SO ORDERED.

Gutierrez, Jr., Bidin, Romero and Melo, JJ., concur.

 [G.R. No. 146262. January 21, 2005]

HEIRS OF EUGENIO LOPEZ, SR., petitioners, vs. HON. ALFREDO R. ENRIQUEZ, in his capacity as
Administrator of the Land Registration Authority and the REGISTER OF DEEDS OF
MARIKINA CITY, respondents.

DECISION
CARPIO, J.:

The Case

This is a petition for review[1] to reverse the Decision[2] dated 29 November 2000 of the Court of
Appeals (appellate court) in CA-G.R. SP No. 55993. The appellate court affirmed the Resolution [3] dated
21 May 1999 issued by the Land Registration Authority (LRA) in Consulta No. 2879. The LRA ruled that a
notice of lis pendens based on a motion is not registrable.

The Facts

Alfonso Sandoval (Sandoval) and Roman Ozaeta, Jr. (Ozaeta) filed an application for registration of
title before the Regional Trial Court of Pasig City, Branch 152 (land registration court), docketed as Case
No. 2858, Land Registration Case No. N-18887 (LRC No. N-18887). The land registration court issued an
order of general default and hearings on the application followed. On 31 May 1966, the land registration
court granted the application. The decision became final and executory, and the land registration court
issued a certificate of finality dated 8 March 1991.[4]
The National Land Titles and Deeds Administration (now LRA) issued on 20 October 1977 Decree
Nos. N-217643 and N-217644 in the names of Sandoval and his wife Rosa Ruiz, and Ozaeta and his wife
Ma. Salome Lao.[5]
On 16 July 1997, petitioners Eugenio Lopez, Jr., Manolo Lopez, Oscar Lopez, and Presentacion L.
Psinakis (petitioners), heirs of Eugenio Lopez, Sr., filed a motion [6] in LRC No. N-18887. The motion
alleged that Sandoval and Ozaeta sold the lots subject of the application to the late Eugenio Lopez, Sr.
on 23 September 1970. Petitioners prayed that the court consider in the land registration case the Deed
of Absolute Sale[7] over the lots executed by Sandoval and Ozaeta and their respective spouses in favor
of Eugenio Lopez, Sr. Invoking Section 22 of Presidential Decree No. 1529 (PD 1529), [8] petitioners also
prayed that the court issue the decree of registration in their names as the successors-in-interest of
Eugenio Lopez, Sr.
The land registration court gave due course to the motion and conducted hearings. [9]
The Register of Deeds of Marikina City issued the corresponding OCT Nos. O-1603 and O-1604 in
favor of Sandoval and Ozaeta and their spouses only on 18 August 1998. [10] The pertinent entries[11] in
the Decrees read:

This Decree is issued pursuant to the Decision dated 31st day of May, 1966 of the Hon. Pedro C.
Navarro, Judge of [Court of First Instance of Rizal, Branch II, Pasig, Rizal], and the Honorable Briccio C.
Ygaa, this 3rd day of July, 1998.
Issued at the National Land Titles and Deeds Registration Administration, Quezon City, this 20th day of
October, in the year of Our Lord nineteen hundred and ninety-seven at 8:01 a.m.

(signed)
ALFREDO R. ENRIQUEZ
ADMINISTRATOR
National Land Titles and Deeds
Registration Administration

Entered in the Registration Book for Marikina, pursuant to the provisions

of section 39 of PD No. 1529, on the 18th day of August nineteen hundred
and ninety-eight, at 1:16 p.m.

(signed)
EDGAR D. SANTOS
Register of Deeds (Emphasis added)
Petitioners filed another motion on 25 November 1998 to declare void Decree Nos. N-217643 and N-
217644 and Original Certificate of Title (OCT) Nos. O-1603 and O-1604. Petitioners pointed out that the
OCTs show that incumbent Administrator Alfredo R. Enriquez signed the Decrees on 20 October 1997,
before he assumed office on 8 July 1998 and even before Hon. Briccio C. Ygaa issued the Order of 3 July
1998.[12]
Petitioners questioned the inconsistencies in the dates and requested the LRA to recall the decrees.
The LRA Administrator denied the request and explained the inconsistencies in the dates in a
letter[13] dated 1 December 1998. The entire letter states:
Republic of the Philippines
Department of Justice
LAND REGISTRATION AUTHORITY
Quezon City

1 December 1998

Atty. Crisostomo A. Quizon

Quiason Makalintal Barot Torres & Ibarra Law Offices
2nd Floor Benpres Building
Exchange Road corner Meralco Ave.
Ortigas Center, Pasig City

Sir:

This concerns your letter requesting the recall of Decree Nos. N-217643 and N-217644 issued in Land
Registration Case No. N-2858, LRC Record No. N-18887, both in the names of Alfonso Sandoval and his
wife, Rosa Ruiz, and Roman Ozaeta, Jr., and his wife, Ma. Salome Lao.

Records of this Authority show that aforesaid decrees of registration were prepared on October 20, 1977
pursuant to the decision of the court dated May 31, 1966 and the order for issuance of decree dated
August 24, 1993. Said decrees were forwarded to the Office of the Administrator on August 8, 1998 and
was [sic] released therefrom on August 13, 1998. Consequently, said decrees were signed sometime
between August 8 and 13 1998 and definitely not on October 20, 1997 as what is reflected thereon
because the undersigned Administrator assumed office only on July 8, 1998. Apparently, at the time the
decrees were signed it was not noticed, through oversight, that they were dated October 20, 1977. It is
therefore hereby clarified that Decree Nos. N-217643 and N-217644 were actually issued sometime
between August 8 and 13 1998 and not on October 20, 1997.
Regarding the claim that these decrees were prematurely issued as the motion for the issuance of the
decrees in favor of the Heirs of Eugenio Lopez, the properties involved having been sold to him by the
applicants, is still pending with the court, it is informed that no copy of said motion nor of the order
directing this Office to comment thereon appears on file in the records of the case. Hence, these matters
could not have been taken into consideration in the issuance of the decrees. Had the Administration been
apprised of these incidents, perhaps the issuance of the decrees could have been held in abeyance until
the court has resolved the same.

As to the recall of the decrees of registration, we regret to inform you that since the certificates of title
transcribed pursuant to said decrees have already been issued and released by the Registrar of Deeds
concerned, it is now beyond our authority to recall them unless duly authorized by the court.

We hope that we have satisfactorily disposed of the concerns raised in your letter.

Very truly yours,

(signed)
ALFREDO R. ENRIQUEZ
Administrator
On 25 November 1998, petitioners filed with the Register of Deeds of Marikina City an application to
annotate the notice of lis pendens at the back of OCT Nos. O-1603 and O-1604 on the ground that
petitioners have filed with the land registration court a motion to declare OCT Nos. O-1603 and O-1604
void.[14] Petitioners attached to the application a copy of the 25 November 1998 motion and the pertinent
OCTs.
In a letter[15] dated 15 December 1998, the Register of Deeds of Marikina City denied the application
to annotate the notice of lis pendens. The entire letter states:
Republic of the Philippines
Department of Justice
LAND REGISTRATION AUTHORITY
Registry of Deeds, Marikina City

15 December 1998

Atty. Crisostomo A. Quizon

2nd Floor, Benpres Bldg.
Exchange Road cor. Meralco Avenue
Pasig City

Sir:

This is in connection to [sic] your application to have a Notice of Lis Pendens [annotated] at the back of
OCT Nos. O-1603 and O-1604 issued in the name of ALFONSO SANDOVAL AND SPOUSE.

Pursuant to Sec. 76, PD No. 1529[,] the contents of the notice are the name[s] of the parties, the court
where the action is pending, the date the action was instituted and a copy of the compalint [sic] in order to
determine if the person named in the title is impleaded.

We regret to inform you that the application, bereft of the original petition or compaint [sic] upon which this
office will base its action, is DENIED.

If you do not agree with our findings, you can, without withdrawing the documents you submitted, elevate
the matter en consulta five (5) days from receipt hereof to the Office of the Administrator, Land
Registration Authority, East Avenue cor. NIA Road, Quezon City.
 Very truly yours,

(signed)
EDGAR D. SANTOS
Register of Deeds
On 14 January 1999, three days after receipt of the letter, petitioners elevated the denial
in consulta to the LRA. The case was docketed as Consulta No. 2879.

The Ruling of the Land Registration Authority

In its resolution[16] dated 21 May 1999, the LRA stated that the sole question for resolution is whether
a notice of lis pendens is registrable based on a motion to declare void the decrees and titles. The LRA
agreed with the Register of Deeds that a notice of lis pendens based on a motion is not registrable.
Relying on Section 24, Rule 14 of the Rules of Court, the LRA ruled that only a party to a case has the
legal personality to file a notice of lis pendens relative to the pending case.
The LRA focused on petitioners standing in LRC No. N-18887. The LRA declared that petitioners are
not parties in LRC No. N-18887. Since a land registration case is a proceeding in rem, an order of general
default binds the whole world as a party in the case. Petitioners are mere movants whose personality the
court has not admitted. Based on Section 26 of PD 1529, the LRA ruled that petitioners should have filed
a motion to lift the order of general default. Pertinent portions of the LRA decision read:

Until and after the Order of General Default in LRC Case No. 18887 is lifted, petitioners cannot be clothed
with personality as oppositors in said land registration case by merely filing a motion after a judgement
has been rendered. Such being the case, a notice of lis pendens on the basis of the motion filed by
petitioners cannot be admitted for registration. To rule otherwise would preempt the judgment of the Court
in so far as the personalities of the movants as oppositors in the land registration case is concerned.

WHEREFORE, premises considered, this Authority is of the opinion and so holds that the notice of lis
pendens is not registrable.

SO ORDERED.[17]

The Ruling of the Court of Appeals

Undaunted, petitioners filed before the appellate court a petition for review of the LRAs decision.
Petitioners filed the petition on the ground of manifest error and grave abuse of discretion on the part of
the LRA Administrator when he ruled in Consulta No. 2879 that the notice of lis pendens is not
registrable.
The appellate court dismissed the petition for lack of merit. The appellate court reiterated the LRAs
ruling that only a party to a case has the legal personality to file a notice of lis pendens. Petitioners have
no legal personality because they failed to file a motion to lift the order of general default in the land
registration case.

Issues

Petitioners present the following issues for resolution of this Court:

 1. WHETHER PETITIONERS MOTION TO DECLARE VOID THE DECREES ISSUED BY THE
LAND REGISTRATION AUTHORITY IS A PROPER BASIS FOR FILING THE NOTICE
OF LIS PENDENS, and
2. WHETHER PETITIONERS CAN FILE THE MOTION TO DECLARE VOID THE DECREES
ISSUED BY THE LAND REGISTRATION COURT IN LRC CASE NO. N-18887 DESPITE
THE FACT THAT THE COURT HAS NOT LIFTED THE GENERAL ORDER OF
DEFAULT.[18]

The Ruling of the Court

The petition has no merit.

We agree with the observation of the appellate court that the pleadings filed by petitioners, public
respondents and the Office of the Solicitor General cite more or less the same provisions of the laws as
applicable in support of their respective contentions but differ x x x only with respect to their interpretation
thereof.[19] With this observation in mind, we quote the pertinent provisions of the 1997 Rules of Civil
Procedure and of PD 1529.
Section 14, Rule 13 of the 1997 Rules of Civil Procedure provides:

SECTION 14. Notice of lis pendens. In an action affecting the title or the right of possession of real
property, the plaintiff and the defendant, when affirmative relief is claimed in his answer, may record in
the office of the registry of deeds of the province in which the property is situated a notice of the
pendency of the action. Said notice shall contain the names of the parties and the object of the action or
defense, and a description of the property in that province affected thereby. Only from the time of filing
such notice for record shall a purchaser, or encumbrancer of the property affected thereby, be deemed to
have constructive notice of the pendency of the action, and only of its pendency against the parties
designated by their real names.

The notice of lis pendens hereinabove mentioned may be cancelled only upon order of the court, after
proper showing that the notice is for the purpose of molesting the adverse party, or that it is not necessary
to protect the rights of the party who caused it to be recorded.

Section 76 of PD 1529 states:

SECTION 76. Notice of lis pendens. No action to recover possession of real estate, or to quiet title
thereto, or to remove clouds upon the title thereof, or for partition or other proceedings of any kind in court
directly affecting the title to land or the use or occupation thereof or the buildings thereon, and no
judgment, and no proceeding to vacate or reverse any judgment, shall have any effect upon registered
land as against persons other than the parties thereto, unless a memorandum or notice stating the
institution of such action or proceeding and the court wherein the same is pending, as well as the date of
the institution thereof, together with a reference to the number of the certificate of title, and an adequate
description of the land affected and the registered owner thereof, shall have been filed and registered.

Notice of Lis Pendens

Lis pendens literally means a pending suit. The doctrine of lis pendens refers to the jurisdiction,
power or control which a court acquires over property involved in a suit, pending the continuance of the
action, and until final judgment.[20]
 The purposes of lis pendens are (1) to protect the rights of the party causing the registration of the lis
pendens, and (2) to advise third persons who purchase or contract on the subject property that they do so
at their peril and subject to the result of the pending litigation.[21]
The filing of a notice of lis pendens has a two-fold effect. First, it keeps the subject matter of the
litigation within the power of the court until the entry of the final judgment to prevent the defeat of the final
judgment by successive alienations. Second, it binds a purchaser, bona fide or not, of the land subject of
the litigation to the judgment or decree that the court will promulgate subsequently. However, the filing of
a notice of lis pendens does not create a right or lien that previously did not exist. [22]
Without a notice of lis pendens, a third party who acquires the property after relying only on the
certificate of title is a purchaser in good faith. Against such third party, the supposed rights of a litigant
cannot prevail, because the former is not bound by the property owners undertakings not annotated in the
transfer certificate of title.[23] Thus, we have consistently held that

The notice of lis pendens x x x is ordinarily recorded without the intervention of the court where the action
is pending. The notice is but an incident in an action, an extrajudicial one, to be sure. It does not affect the
merits thereof. It is intended merely to constructively advise, or warn, all people who deal with the
property that they so deal with it at their own risk, and whatever rights they may acquire in the property in
any voluntary transaction are subject to the results of the action, and may well be inferior and subordinate
to those which may be finally determined and laid down therein. The cancellation of such a precautionary
notice is therefore also a mere incident in the action, and may be ordered by the Court having jurisdiction
of it at any given time. And its continuance or removal x x x is not contingent on the existence of a final
judgment in the action, and ordinarily has no effect on the merits thereof.[24]

A notice of lis pendens may involve actions that deal not only with title or possession of a property,
but also with the use or occupation of a property. [25] The litigation must directly involve a specific property
which is necessarily affected by the judgment. Magdalena Homeowners Association, Inc. v. Court of
Appeals[26] enumerated the cases where a notice of lis pendens is appropriate:

[A] notice of lis pendens is proper in the following cases, viz:

a) An action to recover possession of real estate;

b) An action to quiet title thereto;

c) An action to remove clouds thereon;

d) An action for partition; and

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

On the other hand, the doctrine of lis pendens has no application in the following cases:

a) Preliminary attachments;

b) Proceedings for the probate of wills;

c) Levies on execution;

d) Proceedings for administration of estate of deceased persons; and

e) Proceedings in which the only object is the recovery of a money judgment. [27]
 As decreed by Section 76 of PD 1529, a notice of lis pendens should contain a statement of the
institution of an action or proceeding, the court where the same is pending, and the date of its institution.
A notice of lis pendens should also contain a reference to the number of the certificate of title of the land,
an adequate description of the land affected and its registered owner.
The Register of Deeds denied registration of the notice of lis pendens because the application was
bereft of the original petition or complaint upon which this office will base its action. [28] In consulta to the
LRA, petitioners pointed out that they have complied with the requirements for the registration of the
notice of lis pendens, as follows:

7.2.1 The Notice of Lis Pendens contains a statement of the filing by the Heirs of Eugenio Lopez of a
motion to declare Original Certificates of Title Nos. O-1603 and O-1604 null and void;

7.2.2 It contains the name of the court wherein the motion is pending which is the registration court,
Regional Trial Court, Branch 152, Pasig City. The date of the filing of the motion is shown on the motion
itself wherein the receipt of said motion by the land registration court on November 25, 1998 is duly
stamped;

7.2.3 The numbers of the Original Certificates of Title Nos. O-1603 and O-1604 are clearly indicated in
the notice;

7.2.4 There is adequate description of the land affected in the Notice of Lis Pendens;

7.2.5 The names of the registered owners are indicated in Paragraph 4 of the Motion attached to the
Notice;

7.2.6 A copy of the motion to declare OCT Nos. O-1603 and O-1604 null and void, dated November 25,
1998 upon which the Register of Deeds of the Province of Rizal will base its action is attached as Annex
A of the Notice of Lis Pendens. (Emphasis in the original)[29]

Petitioners enumeration readily reveals that they have not complied with the requisites. Both the LRA
and the appellate court denied the application for a notice of lis pendens because petitioners are mere
movants, and not original parties, in LRC No. N-18887. As petitioners are not parties to an action as
contemplated in Section 76 of PD 1529, they failed to present the requisite pleading to the Register of
Deeds of Marikina City. We hold that the Register of Deeds correctly denied the application for a notice
of lis pendens.

Reconveyance

Petitioners committed a fatal procedural error when they filed a motion in LRC No. N-18887 on 16
July 1997. The remedy of petitioners is an action for reconveyance against Sandoval, Ozaeta and their
spouses. Reconveyance is based on Section 55 of Act No. 496, as amended by Act No. 3322, which
states that xxx 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 xxx.
An action for reconveyance is an action in personam available to a person whose property has been
wrongfully registered under the Torrens system in anothers name. Although the decree is recognized as
incontrovertible and no longer open to review, the registered owner is not necessarily held free from liens.
As a remedy, an action for reconveyance is filed as an ordinary action in the ordinary courts of justice and
not with the land registration court.[30] Reconveyance is always available as long as the property has not
passed to an innocent third person for value. A notice of lis pendens may thus be annotated on the
certificate of title immediately upon the institution of the action in court. The notice of lis pendens will
avoid transfer to an innocent third person for value and preserve the claim of the real owner. [31]

Necessity of a Motion to Lift the Order of General Default

In its comment,[32] the LRA states that under Section 26 of PD 1529 the order of default includes
petitioners. Therefore, petitioners failure to move to lift the default order did not give them standing in the
case. As long as the court does not lift the order of general default, petitioners have no legal standing to
file the motion to declare void the decrees of registration issued to the applicant. Section 26 of PD 1529
provides thus:

Sec. 26. Order of default; effect. If no person appears and answers within the time allowed, the court
shall, upon motion of the applicant, no reason to the contrary appearing, order a default to be recorded
and require the applicant to present evidence. By the description in the notice To All Whom It May
Concern, all the world are made parties defendant and shall be concluded by the default order.

Where an appearance has been entered and an answer filed, a default order shall be entered against
persons who did not appear and answer.

Petitioners justification for filing a motion to annul the decrees and titles, as opposed to filing a
motion to lift the order of general default, rests on two related assumptions. First, with the filing of the 16
July 1997 motion and giving of due course to the motion by the land registration court, petitioners assert
that they acquired legal standing in the registration proceedings. Second, buyer Eugenio Lopez, Sr.
stepped into the shoes of the sellers-applicants Sandoval and Ozaeta when applicants sold the property
to him. As successors-in-interest of the buyer, petitioners contend that they are not strangers to the
proceedings.
To justify their two assumptions, petitioners traced the antecedent of Section 22 of PD 1529 to
Section 29 of Act 496[33] and its judicial interpretation in Mendoza v. Court of Appeals.[34]

Section 22 of PD 1529 provides:

SECTION 22. Dealings with land pending original registration.After the filing of the application and before
the issuance of the decree of registration, the land therein described may still be the subject of dealings in
whole or in part, in which case the interested party shall present to the court the pertinent instruments
together with the subdivision plan approved by the Director of Lands in case of transfer of portions
thereof, and the court, after notice to the parties, shall order such land registered subject to the
conveyance or encumbrance created by said instruments, or order that the decree of registration be
issued in the name of the person to whom the property has been conveyed by said instruments.

The pertinent portion of Section 29 of Act 496 provides:

SECTION 29. After the filing of the application and before the issuance of the decree of title by the Chief
of the General Land Registration Office, the land therein described may be dealt with and instruments
relating thereto shall be recorded in the office of the register of deeds at any time before issuance of the
decree of title, in the same manner as if no application had been made. The interested party may,
however, present such instruments to the Court of First Instance instead of presenting them to the office
of the Register of Deeds, together with a motion that the same be considered in relation with the
application, and the court, after notice to the parties shall order such land registered subject to the
encumbrance created by said instruments, or order the decree of registration issued in the name of the
buyer or of the person to whom the property has been conveyed by said instruments. x x x
 Mendoza v. Court of Appeals[35] explains the procedure in cases of conveyance of the land subject
of a registration proceeding by an instrument executed between the time of filing of the application for
registration and the issuance of the decree of title.

The law does not require that the application for registration be amended by substituting the buyer or the
person to whom the property has been conveyed for the applicant. Neither does it require that the buyer
or the person to whom the property has been conveyed be a party to the case. He may thus be a total
stranger to the land registration proceedings. The only requirements of the law are: (1) that the instrument
be presented to the court by the interested party together with a motion that the same be considered in
relation with the application; and (2) that prior notice be given to the parties to the case xxx. [36]

Petitioners also assert that they do not dispute the judgment of the land registration court. However,
this position is in conflict with their 25 November 1998 motion to have the decree and the titles declared
void. Petitioners now assume the roles of both successors-in-interest and oppositors. This confusion of
roles brought about petitioners grave error in procedure.
The land registration court granted the application in LRC No. N-18887 on 31 May 1966 and issued
a certificate of finality dated 8 March 1991. Petitioners filed their motion to consider the deed of sale in the
registration on 16 July 1997. Petitioners filed their motion to have the decrees and the corresponding
certificates of title declared void on 25 November 1998. Petitioners filed both motions long after the
decision in LRC No. N-18887 became final and executory. Neither petitioners nor even the applicants
from whom they base their claim presented the Deed of Sale before the land registration court while the
action was pending.
Considering the facts and arguments as presented above, we hold that the motion filed by petitioners
is insufficient to give them standing in the land registration proceedings for purposes of filing an
application of a notice of lis pendens. However, we disagree with the LRA and the appellate courts
observation that petitioners need to file a motion to lift the order of general default. A motion to lift the
order of general default should be filed before entry of final judgment. The land registration court granted
the application for registration of title on 31 May 1966 and issued a certificate of finality on 8 March 1991.
Petitioners filed their motion on 16 July 1997. Thus, even if petitioners filed a motion to lift the order of
general default, the order of default could not be set aside because the motion was filed out of time.
In Lim Toco v. Go Fay,[37] this Court explained the effect of an order of default to the party
defaulted. A party declared in default loses his standing in court. As a result of his loss of standing, a
party in default cannot appear in court, adduce evidence, be heard, or be entitled to notice. A party in
default cannot even appeal from the judgment rendered by the court, unless he files a motion to set aside
the order of default under the grounds provided in what is now Section 3, Rule 9 of the 1997 Rules of Civil
Procedure.
Indeed, in its comment before this Court, the LRA stated thus:

Under Section 26, PD 1429, petitioners are deemed to have been included by the default order. Those
who did not file an answer should be considered as having lost their standing in court from that stage
(Republic v. Dela Rosa, 173 SCRA 12) except when they file a motion to set aside the order [of] default
on the grounds mentioned in Section 3, Rule 18 of the Rules of Court (Toco v. Fay, 80 Phil. 166).

In land registration cases (as in the said LRC No. N-18887), an order of general default was deemed to
have been issued based on the presumption of regularity in judicial proceedings (Pascual, et al. v.
Ortega, et al., 58 O.G. 12 March 1962 C.A.). Petitioners failed to adduce any evidence showing that the
order of general default was lifted. Records disclosed that without first filing a motion to lift the order of
general default, petitioners filed a motion to declare as null and void the decrees and titles. Until the order
of general default is lifted by the court, petitioner could not be considered as a party to the action. They
are deemed movants whose personality as far as the case is concerned is not yet admitted by the court
considering that the order of default has not been lifted.[38]
 One should be careful, however, to distinguish between movants as mere interested parties
prescribed under Section 22 of PD 1529 and movants as intervenors-oppositors to the land registration
proceedings. It is only in the latter case that a motion to lift the order of general default is required. It is
only in the latter case that the doctrine pronounced in Serrano v. Palacio,[39] as repeatedly invoked by
the LRA and OSG, is applicable:

x x x [P]etitioners committed an error of procedure when they filed a motion to intervene in the x x x land
registration case for the proper procedure would have been for them to ask first for the lifting of the order
of general default, and then, if lifted, to file an opposition to the application of the applicants. This is so
because proceedings in land registration are in rem, and not in personam, the sole object being the
registration applied for, and not the determination of any right not connected with the registration (Estila
vs. Alvero, 37 Phil. 498).

Petitioners are not mere interested parties in this case. By filing their motion to have the decrees and the
corresponding certificates of title declared void, they took the role of oppositors to the application for land
registration.
The appellate court stated that in as much as it would want to oblige to the plea of petitioners to
hasten or expedite the proceedings and to avoid further expenses on the part of the petitioners,
however[,] (it) could not.[40] Indeed, it requires a delicate balancing act between the objective of the Rules
of Court to secure a just, speedy and inexpensive disposition of every action and proceeding[41] and the
strict requirements for a notice of lis pendens. The facts in this case show that petitioners have not
complied with the requirements.
WHEREFORE, we DENY the petition. We AFFIRM the Decision of the Court of Appeals in CA-G.R.
SP No. 55993 dated 29 November 2000.
SO ORDERED.
G.R. No. L-13465 March 29, 1960

In the Matter of the Petition to Cancel Notice of Lis Pendens on Transfer Certificate of Title No.
13960. EWALD E. SELPH, ETC., petitioner.
EWALD E. SELPH, ETC., plaintiff-appellant,
vs.
GLICERIA M. VDA. DE AGUILAR, defendant-appellee.

Ross, Selph, Carrascoso and Janda for appellant.

Bonus and Bonus for appellee.

BENGZON, J.:

Appeal from a decision of the Quezon court of first instance, concerning a ten-hectare land in Atimonan,
same province, originally registered in 1917, under Torrens Certificate of Title No. 228.

Appellant does not dispute the facts. This property was after 1917 acquired by Lois Capule, wife of
Simeon C. Capule, to whom Transfer Certificate of Title No. 43 was issued. This certificate of title was
later cancelled and substituted on October 2, 1930, by Transfer Certificate Title No. 4610 in the name of
Lois D. Capule. Thereafter, on October 21, 1930, Valentin Devilles obtained judgment against the Capule
couple, and the latter's right and interest to the property were levied upon by virtue of two writs of
execution which culminated in the sale to Devilles of the land, at public auction. Such sale was noted in
February 1931 on Transfer Certificate of Title No. 4610.

Subsequently, Capule presented a complaint against Devilles which was docketed as Civil Case No.
2614. Capule won and, on March 14, 1931, reacquired the land at the Sheriff's sale, also on execution.
Transfer Certificate of Title No. 5568 was consequently issued to Capule, mortgaged the property to
Manila Trading & Supply Company on October 17, 1931, to secure the payment of sixteen (16)
promissory notes, as shown in the records of the Office of the Register of Deeds.

A month later or on November 14, 1931, Devilles named the spouses Capule and the Provincial Sheriff of
Tayabas in a complaint (Civil Case No. 3145) to annul the execution of the judgment in Civil Case No.
2614 and to cancel the Sheriff's sale to the Capules. On the same date, Devilles caused a Notice of Lis
Pendens to be inscribed in Capule's certificate of title and in the land records.

The Capules failed to pay their monetary obligation Manila Trading & Supply Company; and judgment
having been rendered in favor of Manila Trading & Supply Co., the Sheriff (November 1934) sold the
property at foreclosure sale to Manila Trading & Supply Co. Capule's Transfer Certificate of Title No. 5568
was consequently cancelled and a new one, Transfer Certificate of Title No. 8578, was issued to Manila
Trading & Supply Co. The notice of Lis Pendens was annotated in this new certificate of title of Manila
Trading & Supply Co.

On April 13, 1934, Valentin Devilles at last won his Civil Case No. 3145, the Supreme Court declaring (G.
R. No. 40283),

. . . The sale had by virtue of the execution of the judgment in Case No. 2614 of the Court of First
Instance of Tayabas is declared null and void and it is further ordered that the Transfer Certificate
of Title No. 5568 in favor of Simeon C. Capule and Lois D. Capule, which cancelled Transfer
Certificate of Title No. 4610 in favor of Valentin Devilles, be cancelled and that a new certificate of
title covering the same land be issued in favor of Valentin Devilles. . . .

By documents executed on July 8, 1936, October 3, 1944 and October 14, 1949, Valentin Devilles sold
the property to the spouses Vicente Aguilar and Gliceria Manalo Vda. de Aguilar (herein appellee).
On October 22, 1951, the Quezon Register of Deeds addressed a letter to Manila Trading & Supply Co.,
requiring the surrender of the owner's duplicate of Transfer Certificate of Title No. 8578, for cancellation in
accordance with this Supreme Court's above mentioned decision.

On September 15, 1952, Manila Trading & Supply Co. sold the property, subject to the Lis Pendens to
Julius S. Reese, its president; and Transfer Certificate of Title No. 13960 was issued in the latter's name,
with annotation of the Lis Pendens.

On December 21, 1956, the administrator of the estate of Julius S. Reese (who had died), presented to
the Quezon court a petition under sec. 112 of Act 496 for cancellation of the annotation of lis pendens,
inasmuch as the litigation named therein had been decided in April 1934 but such decision, never having
been executed for 21 years had lost its binding force. Her husband having died, Gliceria Manalo de
Aguilar filed an opposition.

Thereafter, a few days after his petition, Reese's administrator presented a complaint against her to get
possession of the property, plus damages, and attorney's fees.

Defendant Aguilar set up the ownership of Devilles, the transfers made to her and her husband, plus the
decision of this Supreme Court annulling the titles of the Capules. And she asked that the Register of
Deeds be required issue title in her favor.

The petition was heard together with the complaint, and the Hon. Vicente del Rosario, Judge, rendered
one decision, the dispositive portion of which reads as follows:

PREMISED on the foregoing considerations, judgment is hereby rendered in favor of the

defendant and against the plaintiff dismissing the complaint and the petition to cancel the lis
pendens existing against Transfer Certificate of Title No. 13960, declaring the defendant the
absolute owner of the property in litigation and ordering the plaintiff as administrator of the estate
of the deceased Julius S. Reese to deliver to the Register of Deeds the province of Quezon the
owner's duplicate of Transfer Certificate of Title No. 13960 and authorizing the Register of Deeds
to cancel it and issue a new certificate of title in the name of the defendant Gliceria Manalo Vda.
de Aguilar with the alternative order that in the event that the plaintiff refuses to deliver to the
Register of Deeds the owner's duplicate of the certificate of title in question within 15 days from
the date this decision shall have become final, the Register of Deeds shall cancel said owner's
duplicate of Transfer Certificate of Title No. 13960 and shall issue new certificate of title in favor
of Gliceria Manalo Vda. de Aguilar. . . .

It is undisputed that this land has always been in the possession of Devilles first, and of the spouses
Vicente Aguilar later. Now Reese wishes to recover ownership possession thereof on the strength of the
title he obtained from Manila Trading & Supply Co. But Manila Trading & Supply Co. derives ownership
from the Capules1 whose title in turn has been voided by the decision of Supreme Court. On the other
hand, the Aguilars are transferees of Devilles whose title to the land (in a suit against the Capules) was
expressly upheld by this Supreme Court. Both Reese and the Manila Trading were aware if that suit by
virtue of the lis pendens notice, and are bound by the judgment against the Capules, their predecessor in
interest.2

However, Reese claims the lis pendens may not adversely affect him because the Supreme Court
decision was not shown to the Register of Deeds until the year 1951, contrary to sec. 79 of the Land
Registration Law, which provides:

SEC. 79. No . . . judgment or decree, and no proceeding to vacate or reverse any judgment or
decree, shall have any effect on registered land as against persons other than the parties thereto,
unless a memorandum .. shall be filed and registered. . . . Provided, however, That in case notice
 of the pendency of the action has been duly registered it shall be sufficient to register the
judgment or decree in such action within sixty days (60) after the rendition thereof.

We think this section does not say that if the judgment is not registered within 60 days, the notice will not
be binding. And even if it said so, the judgment will not be binding only as against persons other than the
parties to the suit. It is still binding on the parties (the Capules)and we hold also on the successors of
such parties (like Manila Trading Co. and Reese), particularly because the titles of these successors bear
the annotation relating to the lis pendens.

Indeed, even admitting for the sake of argument that the annotation in the Register's Office concerning
the lis pendens had become ineffective by reason of non-presentation (to the Register) of this Court's
1934 decision there is still ample ground to hold that as Reese purchased the property with actual
notice of the controversy over the title thereto, he was particularly subject to its outcome.

But the appellant argues: the appealed order would enforce the judgment of 1934, which has prescribed,
more than ten years having elapsed since that year.

Remember, however, that although action on a judgment prescribes after ten years, the period begins
from the time such judgment becomes final;3 and no proof exists as to date when the judgment of 1934
became final. And then, in so far as Reese's attempt to get possession the decision may be invoked in
defense as res judicata which does not prescribe.4

As to the order for surrender of the title and the issuance of a new certificate, Reese may not object on
the ground of non-enforcement and prescription of the 1934 decision, because if any one could object
thereto, it was the Register of Deeds who was called upon to implement the order of cancellation and
issuance; and yet he has shown willingness to comply. It is true that in complying, the Register is now
requiring Reese in turn to surrender his title. But the latter may not properly refuse, because he received
such title from the Register upon his undertaking to respect the outcome of the litigation, the title being
expressly subject thereto, by the annotation of lis pendens.5

At any rate, according to sec. 81 of the Land Registration Act, the judgment in 1934 was "entitled to
registration" upon presentation of appropriate papers to the Register of Deeds; and the section fixes no
time for such presentation.6 And when such office was requested, in accordance with the 1934 judgment,
to cancel the outstanding title and to issue another in the name of Devilles' successors, he was
authorized to take adequate measures by sec. 111, Act 496 of the law applicable which reads as follows:

SEC. 111. In every case where the clerk or any register of deeds is requested to enter a new
certificate in pursuance of an instrument purporting to be executed by the registered owner, or by
reason of any instrument or proceedings which divest the title of the registered owner against his
consent, if the outstanding owner's duplicate certificate is not presented for cancellation when
such request is made, the clerk or register of deeds shall not enter a new certificate, but the
person claiming to be entitled thereto may apply by petition to the court. The court, after hearing,
may order the registered owner or any person withholding the duplicate to surrender the same,
and direct the entry of a new certificate of title upon such surrender.

Accordingly, the Register of Deeds required Manila Trading to surrender the title, and its refusal or failure
gave Devilles' successors the right to petition the court for appropriate orders, in other words, a right of
action7 which obviously had not yet prescribed when it was asserted in the Tayabas court as a
counterclaim in this case.

The appealed order is affirmed, with costs.

Paras, C. J., Montemayor, Bautista Angelo, Labrador, Concepcion, Reyes, J. B. L., Barrera and Gutierrez
David, JJ.,concur.
G.R. No. 109387 April 25, 1994

LEONARDO LIM DE MESA, petitioner,

vs.
HON. COURT OF APPEALS, HON. RODRIGO V. COSICO, as Presiding Judge of the Regional Trial
Court, Biñan, Laguna; ROGELIO S. MOLINA, Branch Sheriff; and ALFREDO, NUMERIANO,
ZENAIDA, ROGELIO, YOLANDA, OLIVIA, BENJAMIN, TERESITA and WILSON, all surnamed LIM
DE MESA, respondents.

Renato B. Vasquez for petitioner.

Rolando N.E. De Leon for private respondents.

REGALADO, J.:

In a resolution promulgated on March 4, 1993 in CA-G.R. SP No. 29818, entitled ("Leonardo Lim de Mesa
vs. Hon. Rodrigo V. Cosico, etc., et al.,") respondent court denied due course to the petition
for certiorari which sought the nullification of three orders of the Regional Trial Court, Branch 24, Biñan,
Laguna which were issued as incidents of Civil Case No. B-1942 thereof. Petitioner is now before us
impugning the forestalled resolution. 1

The case stemmed from an action for partition filed by herein private respondents against their eldest
brother, herein petitioner Leonardo Lim de Mesa, and his sister Leticia Lim de Mesa, which suit was
docketed in the Regional Trial Court of Laguna, Branch 24, as Civil Case No. B-1942. Private
respondents prayed therein for the partition of the property left by their parents, Manuel de Mesa and
Lucia Lim, consisting of a house and lot in Sta. Rosa Estate Subdivision, Laguna and a funeral parlor;
that petitioner Leonardo de Mesa be compelled to render an accounting of the income of the funeral
parlor business from October 24, 1980, the date when the mother of the parties died; and that private
respondent Rogelio Lim de Mesa be declared the owner of eight-tenths (8 /10) of the entire estate, as the
other heirs had assigned their interests to him.

In his answer, petitioner admitted that their deceased parents left the house and lot described in the
complaint, but claimed that the funeral parlor, known as Lim de Mesa Memorial Chapel, was solely owned
by him. Petitioner also alleged that their deceased parents left other properties and businesses which are
in the possession and under the management of the two other plaintiffs therein.

After trial, the court rendered the following judgment:

WHEREFORE, in view of all the foregoing considerations, judgment is hereby rendered

as follows:

1. Ordering the partition of the estate of the deceased spouses Manuel de Mesa and
Lucia Lim described in paragraph 1 of the complaint as Lot No. 329 of the Sta. Rosa
Estate Subdivision with a residential house of strong material(s) and a funeral business
therein, all located at Sta. Rosa, Laguna, among the following surviving heirs in the
following proportions;

1. Rogelio Lim de Mesa - 9.8787872 /13 shares representing the sum total of his
participations plus all the shares sold to him by co-heirs Alfredo, Numeriano, Zenaida,
Yolanda, Olivia, Benjamin, and Teresita, all surnamed Lim de Mesa
 2. Leonardo Lim de Mesa - 0.6515151 /13 share

3. Leticia Lim de Mesa - 1.818181 /13 share

4. Wilson Lim de Mesa - 0.6515151 /13 share

as regards the property of the estate, namely, Lot No. 329 and the residential house of
strong material(s) erected therein, and —

1. Rogelio Lim de Mesa - 8 /11 shares

2. Leonardo Lim de Mesa - 1 /11 shares

3. Leticia Lim de Mesa - 1 /11 shares

4. Wilson Lim de Mesa - 1 /11 shares

as regards the proceeds from the funeral business from November 1980
up to the present after an accounting thereof to be rendered by Leonardo
Lim de Mesa.

2. Ordering the defendants Leonardo Lim de Mesa and Leticia Lim de Mesa and plaintiff
Wilson Lim de Mesa to execute a deed of confirmation of the Extra-Judicial Partition with
Sale (Exhibit "H") and "Reformation of Instrument" (Exhibit "I") dated January 27, 1983
and November 12, 1984, respectively.

3. Ordering defendant Leonardo Lim de Mesa to render an accounting of the operation

and management of the funeral business from November 1980 up to the present within
thirty (30) days from the date this decision becomes final.

4. Ordering the defendants to pay the plaintiffs the amount of P30,000.00 as moral
damages and the amount of P20,000.00 as reimbursement for attorney's fees.

5. Ordering defendants to pay costs of suits. 2

On appeal, the Court of Appeals affirmed the aforesaid judgment with some modifications, that is, by
deleting those portions thereof directing therein defendants Leonardo and Leticia Lim de Mesa, aside
from plaintiff Wilson Lim de Mesa, to execute a deed confirming the extrajudicial partition with sale and
the reformation of instrument, and to pay the awards for moral damages and attorney's fees. 3 Not
satisfied therewith, petitioners further sought relief from this Court which, however, denied their appeal in
a resolution dated January 27, 1992. On June 4, 1992, entry of said judgment was made, thereby making
the judgment of the lower court, as modified by respondent Court of Appeals, final and executory.

Thereafter, private respondents filed a motion for execution which was granted by the lower court. 4 A writ
of execution was issued, but the same was returned unsatisfied on September 21, 1992 due to
petitioner's refusal to comply with the same. Private respondents then filed a motion to enforce judgment
which was granted by the lower court in its order dated October 14, 1992. 5

Subsequently, petitioner filed a motion to be furnished copies of the basic pleadings and/or orders.
Private respondents filed their opposition thereto, arguing that petitioner was not entitled to the relief
prayed for since private respondents were entitled to execution as a matter of right, and that all incidental
matters flowing therefrom may be resolved motu proprio without prior notice and hearing to petitioner.
The court a quo acted on petitioner's motion by an order, dated November 13, 1992, directing private
respondent Rogelio Lim de Mesa to furnish petitioner a copy of the deed of partition and such documents
as the latter would specify. 6

Private respondents then filed a motion to resolve the incident subject of the order of October 14, 1992
and this, in turn, led to the issuance of the lower court's order dated November 18, 1992. 7 Upon motion
filed by private respondents, the lower court issued another order, dated November 25, 1992, granting the
former's motion for a writ of possession and delineation of property lines. 8 Petitioner thereafter moved for
the reconsideration of the orders dated November 18 and 25, 1992, contending that the same were
issued in violation of Section 4, Rule 15 of the Rules of Court, as these were issued ex parte. 9 In its order
dated December 23, 1992, the court below denied the motion for reconsideration. 10

A petition for certiorari was then filed by petitioner in the Court of Appeals assailing, on the same grounds,
the following orders of the trial court, to wit:

1. ORDER dated October 14, 1992 designating Atty. Luzod, Jr. to sign the deed of
partition for and in behalf of Leonardo Lim de Mesa, petitioner, to enforce the judgment,
and ordering petitioner to explain within 10 days from notice why he should not be cited
(for) contempt of court pursuant to Sec. 3 (a) in relation to Sec. 6 and 7, Rule 71 of the
Revised Rules of Court;

2. ORDER dated November 18, 1992, giving petitioner an extension of 15 days to render
an accounting and in case of failure, to cite him (for) contempt of court (for) violation of
Sec. 3(b) in relation to Sec. 6, (Rule 71), Rules of Court, and if he continues to disobey,
the public respondent may be constrained to order his imprisonment.

3. ORDER dated November 25, 1992, granting a writ of possession directing the
respondent Sheriff to place private respondent Rogelio Lim de Mesa in possession of the
property pertaining to him by virtue of ANNEXES "X", "A", to "A-4". 11

In its resolution of March 4, 1993, as stated at the outset, respondent Court of Appeals ruled against
therein petitioner, 12 hence the instant petition with the following assignment of errors:

1. The Court of Appeals erred in applying Rule 39 of the

Rules of Court and, therefore, in concluding that the
judgment in the action for partition in Civil Case No. B-
1942 became final and executory as of June 4, 1992 and
the prevailing party is entitled to a writ of execution the
issuance of which is a ministerial duty of the court.

2. The Court of Appeals also erred in holding that the

three (3) assailed orders in Civil Case No. B-1942 were
issued consequent to the execution of a judgment that
has already become final and executory.

3. The Court of Appeals finally erred in holding that the

three (3) assailed orders in Civil Case No. B-1942
having been issued ex-parte is of no moment where the
execution is a matter of right and the losing party need
not be given advance notice of hearing of such
motion. 13

It is from the foregoing perceptions that the main thrust of herein petitioner's arguments postulates the
supposed nullity of the writ of execution issued by the trial court since the same was issued without prior
notice and hearing. We disagree.
Jurisprudentially entrenched is the rule that a judgment ordering partition with damages is final and duly
appealable, notwithstanding the fact, which petitioner seeks to capitalize on, that further proceedings will
still have to take place in the trial court. 14

There are two stages involved in the special civil action of judicial partition and accounting under Rule 69
of the Rules of Court.

The first stage of an action for judicial partition and/or accounting is concerned with the determination of
whether or not a co-ownership in fact exists and a partition is proper, that is, it is not otherwise legally
proscribed and may be made by voluntary agreement of all the parties interested in the property. This
phase may end in a declaration that plaintiff is not entitled to the desired partition either because a co-
ownership does not exist or a partition is legally prohibited. It may also end, on the other hand, with an
adjudgment that a co-ownership does in truth exist, that partition is proper in the premises, and that an
accounting of rents and profits received by the defendant from the real estate in question is in order. In
the latter case, "the parties may, if they are able to agree, make partition among themselves by proper
instruments of conveyance, and the court shall confirm the partition so agreed upon by all the
parties." 15 In either case, whether the action is dismissed or partition and/or accounting is decreed, the
order is a final one and may be appealed by any party aggrieved thereby. 16

The second stage commences when the parties are unable to agree upon the partition ordered by the
court. In that event, partition shall be effected for the parties by the court with the assistance of not more
than three (3) commissioners. This second phase may also deal with the rendition of the accounting itself
and its approval by the Court after the parties have been accorded the opportunity to be heard thereon,
and an award for the recovery by the party or parties thereto entitled of their just shares in the rents and
profits of the real estate in question. Such an order is, to be sure, also final and appealable. 17

In the decision ordering partition, the execution of that part of the judgment which will not necessitate any
further proceedings may be enforced. Further proceedings, such as the appointment of commissioners to
carry out the partition and the rendition and approval of the accounting, may be had without prejudice to
the execution of that part of the judgment which needs no further proceedings. Thus, it has been held that
execution was entirely proper to enforce the defendant's obligation to render an accounting and to exact
payment of the money value of the plaintiffs' shares in the personal property and attorney's fees due
defendants, as well as the costs of the suit and damages. 18

In the present case, the decision ordering partition and the rendition of accounting had already become
final and executory. The execution thereof thus became a matter of right on the part of the plaintiffs,
herein private respondents, and is a mandatory and ministerial duty on the part of the court. Once a
judgment becomes final and executory, the prevailing party can have it executed as a matter of right, and
the judgment debtor need not be given advance notice of the application for execution nor be afforded
prior hearings thereon. 19

On the bases of the foregoing considerations, therefore, the Court of Appeals acted correctly in holding
that the failure to serve a copy of the motion for execution on petitioner is not a fatal defect. In fact, there
was no necessity for such service.

However, notwithstanding our aforesaid observations, the orders of the trial court dated October 14, 1992
and November 25, 1992, respectively directing Atty. Luzod, Jr. to sign the deed of partition for and in
behalf of petitioner and granting the writ of possession, must be set aside for having been rendered in
excess of jurisdiction.

The trial court cannot compel herein petitioner to sign the extrajudicial deed of partition prepared solely by
private respondents. Concomitantly, it cannot issue a writ of possession pursuant to the said extrajudicial
partition.
An action for partition, which is typically brought by a person claiming to be the owner of a specified
property against a defendant or defendants whom the plaintiff recognizes to be his co-owners, may
readily be seen to simultaneously present two principal issues. Firstly, there is the issue of whether the
plaintiff is indeed a co-owner of the property sought to be partitioned. Secondly, assuming that the plaintiff
successfully hurdles the first issue, there is the secondary issue of how the property is to be divided
between the plaintiff and the defendants, that is, what portion should go to which co-owner. 20

After a judgment is rendered in an action for partition declaring that the property in question shall be
divided among the parties thereto, the procedure provided by law thereafter is that, if the parties can
agree among themselves, then the partition can be made by them through the proper instruments of
conveyance which shall be submitted for approval of the court, and such partition with the court order
confirming the same shall be recorded in the office of the proper registry of deeds. But, if the parties are
unable to agree upon the partition, the court shall by order appoint not more than three (3) competent and
disinterested persons as commissioners to make the partition, commanding them to set off to the plaintiff
and to each party in interest such part and proportion of the property as the court in such order shall
direct. 21

The decision in Civil Case No. B-1942 merely declares that partition is proper and forthwith specified
therein the respective aliquot shares of the parties to the real estate and to the proceeds of the funeral
business. Withal, it did not specifically state, by metes and bounds and by adequate description, the
particular portion of the real estate to be assigned to each party. Actual partition is, therefore, necessary.
Since the parties, however, cannot agree on the actual division and allocation of the property held in
common, the trial court should order the appointment of commissioners to carry out the partition, as
provided by Section 3 of Rule 69.

WHEREFORE, the assailed resolution of respondent Court of Appeals is hereby MODIFIED and the
questioned orders of the trial court dated October 14, 1992 and November 25, 1992 are hereby SET
ASIDE. The court a quo is directed to immediately appoint and constitute the necessary number of
commissioners who shall expeditiously effect the partition of the subject property in accordance with Rule
69 of the Rules of Court.

SO ORDERED.

Narvasa, C.J., Padilla and Puno, JJ. concur.

G.R. No. L-42805 August 31, 1987

THE TREASURER OF THE PHILIPPINES, petitioner,

vs.
THE COURT OF APPEALS and SPOUSES EDUARDO OCSON and NORA E. OCSON respondents.

CRUZ, J.:

The petitioner asks us to reverse a decision of the respondent court affirming that of the trial court holding
the Assurance Fund subsidiarily liable for damages sustained by the private respondents under the
following established facts.

Sometime in 1965, a person Identifying himself as Lawaan Lopez offered to sell to the private
respondents a parcel of land located in Quezon City and consisting of 1,316.8 square meters, which he
claimed as his property. His asking price was P85.00 per square meter but after a month's haggling the
parties agreed on the reduced price of P76.00 per square meter. The sale was deferred, however,
because the prospective vendor said his certificate of title had been burned in his house in Divisoria, and
he would have to file a petition with the court of first instance of Quezon City for a duplicate certificate of
title. He did so and the petition was granted after hearing without any opposition. Following the issuance
of the new duplicate certificate of title, the said person executed a deed of sale in favor of the private
respondents, who paid him the stipulated purchase price of P98,700.00 in full. The corresponding transfer
certificate of title was subsequently issued to them after cancellation of the duplicate certificate in the
name of Lawaan Lopez. 1

Trouble began two years later when another person, this time a woman, appeared and, claiming to be the
real Lawaan Lopez, filed a petition in the court of first instance of Quezon City to declare as null and void
the transfer of her land in favor of the private respondents, on the ground that it had been made by an
impostor. 2 After trial, the questioned deed of sale was annulled, (together with the duplicate certificate of
title issued to the impostor and the transfer certificate of title in the name of the private respondents) and
the real owner's duplicate certificate of title was revalidated. 3 Neither the Solicitor General nor the private
respondents appealed the decision, but Lawaan Lopez did so, claiming that the defendants should have
been required to pay damages to her and the costs. The appeal was dismissed, with the finding by
Justices Jose Leuterio, Magno Gatmaitan and Luis B. Reyes of the Court of Appeals that there was no
collusion between the private respondents and the impostor. 4

Subsequently the private respondents filed a complaint against the impostor Lawaan Lopez and the
Treasurer of the Philippines as custodian of the Assurance Fund for damages sustained by the plaintiffs
as above narrated. Both the trial court * ruled the respondent court ** ruled in their favor, holding the
Assurance Fund subsidiarily liable for the sum of P138,264.00 with legal interest from the date of filing of
the complaint, in case the judgment could not be enforced against the other defendant who had been
defaulted and could not be located. 5 The petitioner, disclaiming liability, is now before us and prays for
relief against the decision of the respondent court which he says is not in accord with law and
jurisprudence.

The applicable law is Section 101 of Act No. 496 (before its revision by P.D. No. 1529) providing as
follows:

Sec. 101. Any person who without negligence on his part sustains loss or damage
through any omission, mistake or misfeasance of the clerk, or register of deeds, or of any
examiner of titles, or of any deputy or clerk or of the register of deeds in the performance
of their respective duties under the provisions of this Act, and any person who is
wrongfully deprived of any land or any interest therein, without negligence on his part,
 through the bringing of the same under the provisions of this Act or by the registration of
any other person as owner of such land, or by any mistake, omission, or misdescription in
any certificate or owner's duplicate, or in any entry or memorandum in the register or
other official book, or by any cancellation and who by the provisions of this Act is barred
or in any way precluded from bringing an action for the recovery of such land or interest
therein, or claim upon the same, may bring in any court or competent jurisdiction an
action against the Treasurer of the Philippine Archipelago for the recovery of damages to
be paid out of the Assurance Fund.

Commenting on this provision, Commissioner Antonio H. Noblejas, in his book on Land Titles and
Deed 6 notes that recovery from the Assurance Fund could be demanded by:

1) Any person who sustains loss or damage under the following conditions:

a) that there was no negligence on his part; and

b) that the loss or damage was sustained through any

omission, mistake, or misfeasance of the clerk of court,
or the register of deeds, his deputy or clerk, in the
performance of their respective duties under the
provisions of the land Registration Act,' or

2) Any person who has been deprived of any land or any interest therein under the
following conditions:

a) that there was no negligence on his part;

b) that he was deprived as a consequence of the

bringing of his land or interest therein under the
provisions of the Property Registration Decree; or by the
registration by any other persons as owner of such land;
or by mistake, omission or misdescription in any
certificate or owner's duplicate, or in any entry or
memorandum in the register or other official book, or by
any cancellation; and

c) that he is barred or in any way precluded from

bringing an action for the recovery of such land or
interest therein, or claim upon the same.

A careful reading of the above provision will readily show that the private respondents do not come under
either of the two situations above mentioned.

The first situation is clearly inapplicable as we are not dealing here with any omission, mistake or
malfeasance of the clerk of court or of the register of deeds or his personnel in the performance of their
duties.

The second situation is also inapplicable. The strongest obstacle to recovery thereunder is that the
private respondents acquired no land or any interest therein as a result of the invalid sale made to them
by the spurious Lawaan Lopez.

The petition correctly points out that such sale conveyed no title or any interest at all to them for the
simple reason that the supposed vendor had no title or interest to transfer. He was not the owner of the
land. He had no right thereto he could convey. Manifestly, the deception imposed upon them by the
impostor deprived the private respondents of the money they delivered to him as consideration for the
sale. But there is no question that the subsequent cancellation of the sale did not deprive them of
the land subject thereof, or of any interest wherein, for they never acquired ownership over it in the first
place.

The private respondents argue that from the time the new transfer certificate of title was issued in their
name on January 28, 1965, until it was cancelled on October 12, 1967, they were the true and exclusive
owners of the disputed property. Hence, the cancellation of their title on the latter date had the effect of
depriving them of the said land and so entitles them now to proceed against the Assurance Fund.

The flaw in this posture is that the real Lawaan Lopez had her own genuine certificate of title all the
time and it remained valid despite the issuance of the new certificate of title in the name of the private
respondents. That new certificate, as the trial court correctly declared, was null and void ab initio, which
means that it had no legal effect whatsoever and at any time. The private respondents were not for a
single moment the owner of the property in question and so cannot claim to have been unlawfully
deprived thereof when their certificate of title was found and declared to be a total nullity.

Additionally, the Court observes that the private respondents were not exactly diligent in verifying the
credentials of the impostor whom they had never met before he came to them with his bogus offer. The
fact alone that he claimed to have lost his duplicate certificate of title in a fire, not to mention the amount
of the consideration involved, would have put them on their guard and warned them to make a more
thorough investigation of the seller's Identity. They did not. Oddly, they seemed to be satisfied that he had
an Ilongo accent to establish his claim to be the Visayan owner of the property in question. They were
apparently not concerned over the curious fact that for his residence certificate B the supposed owner
had paid only P1.00 although the property he was selling was worth to him no less than
P98,700.00. 7 Moreover, whereas address in that certificate was Mandaluyong, Rizal, whereas the
address indicated in the records of the Register of Deeds of the owner of the land in question was Fara-
on Fabrics, Negros Occidental. 8

As for the proceedings for the issuance of a duplicate certificate of title, the private respondents
themselves state in their complaint that the evidence of the petitioner therein was received by the clerk of
court only, without any opposition, and his report was thereafter accepted by the trial judge who
thereupon granted the relief sought by the impostor. 9 It is not likely, given the summary nature of these
proceedings, that the necessary care was taken by the court to establish the real identity of the person
who claimed to be the owner of the property in question.

While we may agree that there was no collusion between the parties respondents and the vanished
vendor, we are not prepared to rule under the circumstances of this case that they are entitled to even
claim the status of innocent purchasers of the land. On the contrary, we find that for failure to exercise the
necessary diligence in ascertaining the credentials and bona fides of the false Lawaan Lopez, and as a
result of his deception, they never acquired any title to the said land or any interest therein covered by
Section 101 of Act No. 496.

As this Court held in La Urbana v. Bernardo 10 "it is a condition sine qua non that the person who brings
an action for damages against the Assurance Fund be the registered owner and as the holders of transfer
certificates of title, that they be innocent purchasers in good faith and for value." Being neither the
registered owners nor innocent purchasers, the private respondents are not entitled to recover from the
Assurance Fund.

They are, of course, not entirely without recourse, for they may still proceed against the impostor in a civil
action for recovery and damages or prosecute him under the Revised Penal Code, assuming he can be
located and arrested. The problem is that he has completely disappeared. That difficulty alone, however,
should not make the Assurance Fund liable to the private respondents for the serious wrong they have
sustained from the false Lawaan Lopez. The Government — like all governments, and for obvious
reasons — is not an insurer of the unwary citizen's property against the chicanery of scoundrels.

WHEREFORE, the petition is GRANTED. The decision of the respondent court dated January 26, 1976 is
set aside, and Civil Case No. 12426 of the then Court of First Instance of Rizal is dismissed. No costs.

SO ORDERED.

Teehankee, C.J., Narvasa and Paras, JJ., concur.

Gancayco, J., took no part.

G.R. No. 143281 August 3, 2000

SPOUSES FRANCISCO and AMPARO DE GUZMAN, JR., petitioners,

vs.
THE NATIONAL TREASURER OF THE REPUBLIC OF THE PHILIPPINES and THE REGISTER OF
DEEDS OF MARIKINA CITY, respondents.

RESOLUTION

KAPUNAN, J.:

Petitioners De Guzman spouses seek the reversal of the decision of the Court of Appeals holding that the
Assurance Fund established under the Property Registration Decree is not liable for the losses allegedly
sustained by petitioners.

The facts that led to the present proceedings are succinctly set forth by the Court of Appeals as follows:

On 01 July 1985, Urlan Milambiling and Asuncion Velarde purchased a parcel of land situated in Antipolo,
Rizal from Sta. Lucia Realty and Development, Inc. Although they were already civilly married, Asuncion
used her maiden name in the Deed of Sale because, being conservative, she did not want to use her
married name until she was married in church.

After their church wedding on 05 July 1985, Urlan and Asuncion Milambiling left for Europe on their
honeymoon and from there, they proceeded to Saudi Arabia where they were working as accountant and
nurse, respectively.

Before leaving for abroad, the spouses Milambiling entrusted the Deed of Sale of the parcel of land they
bought from Sta. Lucia Realty and the corresponding Certificate of Title still in the name of Sta. Lucia
Realty to a long-time friend and one of their principal wedding sponsors, Marilyn Belgica, who volunteered
to register the sale and transfer the title in their names.

Later, the spouses Milambiling learned from Belgica through an overseas telephone call that a transfer
certificate of title of the said parcel of land had already been issued in their names. Belgica committed to
the Milambiling spouses that she will personally deliver the title to them in Saudi Arabia. Sometime in May
1986, Belgica arrived in Saudi Arabia but the title was not with her. Belgica said that she left it in their
house in the Philippines and forgot to bring it with her.

Urlan Milambiling was angry and immediately called up his relatives in the Philippines and asked them to
find out from the Office of the Register of Deeds of Rizal what happened to their title. He was informed
that the Certificate of Title covering the said parcel of land had indeed been transferred in their names but
was subsequently cancelled and title transferred in the names of x x x the spouses De Guzman.

Milambiling was also told about the circumstances that led to the cancellation of their title. It appears that
while the spouses Milambiling were in Saudi Arabia, a couple identifying themselves as the spouses
Urlan and Asuncion Milambiling went to the house of a certain Natividad Javiniar, a real estate broker,
inquiring if the latter could find a buyer for their lot located in Vermont Subdivision, Antipolo, Rizal.
Javiniar accompanied the said couple to the house of [the] spouses De Guzman. Having somehow
obtained possession of the owner’s duplicate copy of the certificate of title in the name of the spouses
Milambiling, the impostor-couple were able to convince the de Guzmans to buy the property. On 20
November 1985, the impostor-couple, posing as the spouses Milambiling, executed a Deed of Absolute
Sale in favor of [the] spouses de Guzman who paid the stipulated purchase price of P99,200.00. On 30
April 1986, [the De Guzmans] registered the said sale with the Register of Deeds of Marikina who
cancelled the certificate of title in the name of the Milambilings and issued TCT No. N-117249 in the
names of [the] De Guzman[s].

Upon learning of the above, Urlan Milambiling quickly returned to the Philippines. On 24 July 1986, the
spouses Milambiling filed an action against [the spouses De Guzman] before the Regional Trial Court of
Antipolo, Rizal, Branch 73, for declaration of nullity of sale and title with damages.

xxx

[The] spouses De Guzman appealed the decision of the trial court to the Court of Appeals. On 18 July
1991, [the Court of Appeals] rendered its decision affirming the decision of the court a quo.

[The] spouses De Guzman then went to the Supreme Court on a petition for review
on certiorari.1âwphi1 On 01 July 1992, the High Tribunal issued a resolution denying the petition on the
ground that no reversible error was committed by the Court of Appeals.

On 11 February 1993, [the] spouses De Guzman filed [an] action for damages against the Assurance
Fund before the Regional Trial Court of Pasig, Branch 153[,] [impleading the National Treasurer of the
Republic of the Philippines and the Register of Deeds of Marikina City.] 1

On January 20, 1995, the RTC rendered its decision finding in favor of the De Guzman spouses, thus:

IN VIEW OF THE FOREGOING, judgment is hereby rendered in favor of the plaintiffs and against the
defendants adjudging the Assurance Fund liable to the amount actually paid by the plaintiffs which is in
the amount of P99,200.00 and ordering the defendants Treasurer and/or Registrar to pay or cause the
payment of the said amount to herein plaintiffs.

SO ORDERED.2

The National Treasurer and the Marikina Registrar of Deeds appealed from the above decision. The
Court of Appeals found merit in the appeal and reversed the decision of the RTC.

We affirm the decision of the Court of Appeals.

Section 95 of Presidential Decree No. 1529, otherwise known as the Property Registration Decree,
provides:

SEC. 95. Action for compensation from funds. – A person who, without negligence on his part, sustains
loss or damage, or is deprived of land or any estate or interest therein in consequence of the bringing of
the land under the operation of the Torrens system or arising after original registration of land, through
fraud or in consequence of any error, omission, mistake or misdescription in any certificate of title or in
any entry or memorandum in the registration book, and who by the provisions of this Decree is barred or
otherwise precluded under the provision of any law from bringing an action for the recovery of such land
or the estate or interest therein, may bring an action in any court of competent jurisdiction for the recovery
of damage to be paid out of the Assurance Fund.

The precursor of Section 95, Section 101 of the Land Registration Act (Act No. 496), similarly states:

SEC. 101. Any person who without negligence on his part sustains loss or damage through any omission,
mistake or misfeasance of the clerk, or register of deeds, or of any examiner of titles, or of any deputy or
clerk of the register of deeds in the performance of their respective duties under the provisions of this Act,
and any person who is wrongfully deprived of any land or any interest therein, without negligence on his
part, through the bringing of the same under the provisions of this Act or by the registration of any other
persons as owner of such land, or by any mistake, omission, or misdescription in any certificate or
owner’s duplicate, or in any entry or memorandum in the register or other official book, or by any
cancellation, and who by the provisions of this Act is barred or in any way precluded from bringing an
action for the recovery of such land or interest therein, or claim upon the same, may bring in any court of
competent jurisdiction an action against the Treasurer of the Philippine Archipelago for the recovery of
damages to be paid out of the Assurance Fund.1âwphi1

It may be discerned from the foregoing provisions that the persons who may recover from the Assurance
Fund are:

1) Any person who sustains loss or damage under the following conditions:

a) that there was no negligence on his part; and

b) that the loss or damage sustained was through any omission, mistake or malfeasance of the
court personnel, or the Registrar of Deeds, his deputy, or other employees of the Registry in the
performance of their respective duties under the provisions of the Land Registration Act, now, the
Property Registration Decree; or

2) Any person who has been deprived of any land or interest therein under the following conditions:

a) that there was no negligence on his part;

b) that he was deprived as a consequence of the bringing of his land or interest therein under the
provisions of the Property Registration Decree; or by the registration by any other person as
owner of such land; or by mistake, omission or misdescription in any certificate of owner’s
duplicate, or in any entry or memorandum in the register or other official book or by any
cancellation; and

c) that he is barred or in any way precluded from bringing an action for the recovery of such land
or interest therein, or claim upon the same.3

The Court of Appeals correctly held that petitioners’ circumstances do not fall under the first case.
Petitioners have not alleged that the loss or damage they sustained was "through any omission, mistake
or malfeasance of the court personnel, or the Registrar of Deeds, his deputy, or other employees of the
Registry in the performance of their respective duties." Moreover, petitioners were negligent in not
ascertaining whether the impostors who executed a deed of sale in their (petitioner's) favor were really
the owners of the property.4

Nor does petitioners’ situation fall under the second case. They were not deprived of their land "as a
consequence of the bringing of [the] land or interest therein under the provisions of the Property
Registration Decree." Neither was the deprivation due to "the registration by any other person as owner of
such land," or "by mistake, omission or misdescription in any certificate or owner’s duplicate, or in any
entry or memorandum in the register or other official book or by any cancellation."

Petitioners' claim is not supported by the purpose for which the Assurance Fund was established. The
Assurance Fund is intended to relieve innocent persons from the harshness of the doctrine that a
certificate is conclusive evidence of an indefeasible title to land.5 Petitioners did not suffer any prejudice
because of the operation of this doctrine. On the contrary, petitioners sought to avail of the benefits of the
Torrens System by registering the property in their name. Unfortunately for petitioners, the original owners
were able to judicially recover the property from them. That petitioners eventually lost the property to the
original owners, however, does not entitle them to compensation under the Assurance Fund. While we
commiserate with petitioners, who appear to be victims of unscrupulous scoundrels, we cannot sanction
compensation that is not within the law's contemplation. As we said in Treasurer of the Philippines vs.
Court of Appeals,6 the Government is not an insurer of the unwary citizen’s property against the chicanery
of scoundrels. Petitioners’ recourse is not against the Assurance Fund, as the Court of Appeals pointed
out, but against the rogues who duped them.

ACCORDINGLY, the petition is DENIED.

Davide, Jr., C.J., (Chairman), Puno, Pardo, and Ynares-Santiago, JJ., concur.
G.R. No. L-28565 January 30, 1971

IN RE: APPLICATION FOR REGISTRATION OF TITLE. SPOUSES FRANCISCO LAHORA and

TORIBIA MORALIZON, petitioners-appellants,
vs.
EMILIO DAYANGHIRANG, JR., and THE DIRECTOR OF LANDS, oppositors-appellees.

Occena and Ocampo Law Offices for petitioners-appellants.

Jose C. Mañgune for oppositor-appellee Emilio Dayanghirang, Jr.

REYES, J.B.L., J.:

The spouses Francisco Lahora and Toribia Moralizon brought the present appeal to this Court from the
order of the Court of First Instance of Davao (in Land Reg. Case No. N-86), dismissing their petition with
respect to Lot No. 2228 on the ground of previous registration, said appellants claiming that the question
of the validity of a certificate of title based on a patent allegedly obtained by fraud can be raised by them
in a land registration proceeding, contrary to the ruling of the court a quo.

The records show that on 26 November 1965 herein appellants petitioned the Court of First Instance of
Davao for registration of nine (9) parcels of land located in barrio Zaragosa, municipality of Manay,
province of Davao, one-half of which having been acquired by appellant Toribia Moralizon allegedly by
inheritance, and the other half by purchase and by continuous, open, public and adverse possession in
the concept of owner. One of the said parcels of land is identified as lot No. 2228, plan SWO-36856,
Manay Cadastre.

The petition was opposed by Emilio Dayanghirang, Jr., who alleged that lands belonging to him and his
wife were included in the application for registration, mentioning specifically Lot No. 2228 which was said
to be already covered by Original Certificate of Title No. P-6055 in the name of oppositor's wife. The
Director of Lands also filed an opposition to the petition, contending that the applicants or their
predecessors-in-interest never had sufficient title over the parcels of land sought to be registered, nor
have they been in open, continuous, and notorious possession thereof for at least 30 years.

On 14 June 1967, counsel for the private oppositor filed a motion for correction of the number of the
certificate of title covering Lot No. 2228, erroneously referred to as OCT No. P-6055, when it should
properly be OCT No. P-6053. It is likewise prayed in the same motion that the petition be dismissed
insofar as it includes Lot No. 2228, for the reason that said lot was already registered and titled in the
name of oppositor's wife as of 21 June 1956. In its order of 18 June 1967, which was amended on 29
June 1967, the court granted the oppositor's motion and directed the dismissal of the petition as regards
Lot No. 2228, on the ground that it having been previously registered and titled, said parcel of land can no
longer be the subject of adjudication in another proceeding. Hence, this appeal by the petitioners.

It may be recalled that the action filed by petitioners-appellants in the lower court on 26 November 1965
was for original registration of certain parcels of land, including Lot No. 2228 of the Manay Cadastre. It is
not here denied by appellants that said Lot No. 2228 was the subject of a public land grant in favor of the
oppositor's wife, and by virtue of which grant or patent Original Certificate of Title No. P-6053 was issued
in her name on 21 June 1956. Appellants, however, try to make a case against the dismissal-order of the
lower court by contending that the patent issued to oppositor's wife was procured by fraud, because
appellants, the alleged actual occupants of the land, were not notified of the application for patent therefor
and of its adjudication. Thus, according to appellants, since they were the actual occupants of the
property, the government could not have awarded it to oppositor's wife, and the patent issued to the latter,
as well as the original certificate of title subsequently obtained by her, were null and void.
The rule in this jurisdiction, regarding public land patents and the character of the certificate of title that
may be issued by virtue thereof, is that where land is granted by the government to a private individual,
the corresponding patent therefor is recorded, and the certificate of title is issued to the grantee;
thereafter, the land is automatically brought within the operation of the Land Registration Act 1, the title
issued to the grantee becoming entitled to all the safeguards provided in Section 38 of the said Act. 2 In
other words, upon expiration of one year from its issuance, the certificate of title shall become irrevocable
and indefeasible like a certificate issued in a registration proceeding.3

In the present case, Lot No. 2228 was registered and titled in the name of oppositors' wife as of 21 June
1956, nine (9) years earlier. Clearly, appellants' petition for registration of the same parcel of land on 26
November 1965, on the ground that the first certificate of title (OCT No. P-6053) covering the said
property is a nullity, can no longer prosper. Orderly administration of justice precludes that Lot 2228, of
the Manay Cadastre, should be the subject of two registration proceedings. Having become registered
land under Act 496, for all legal purposes, by the issuance of the public land patent and the recording
thereof, further registration of the same would lead to the obviously undesirable result of two certificates
of title being issued for the same piece of land, even if both certificates should be in the name of the same
person. And if they were to be issued to different persons, the indefeasibility of the first title, which is the
most valued characteristic of Torrens titles, would be torn away. For this reason, this Court has ruled
in Pamintuan vs. San Agustin, 43 Phil. 558, that in a cadastral case the court has no jurisdiction to decree
again the registration of land already decreed in an earlier case; and that a second decree for the same
land would be null and void.4 Of course, if the patent had been issued during the pendency of the
registration proceedings, the situation would be different.5

Even assuming arguendo, that there indeed exists a proper case for cancellation of the patent for intrinsic
fraud, the action for review of the decree should have been filed before the one year period had
elapsed.6 Thereafter, the proper party to bring the action would only be the person prejudiced by the
alleged fraudulent act — the owner and grantor,7 and not another applicant or claimant. Furthermore, the
relief provided by the law in such instance may be secured by the aggrieved party, not in another
registration, for land already registered in the name of a person can not be the subject of another
registration8, but in an appropriate action such as one for reconveyance or reversion9, or for damages in
case the property has passed into the hands of an innocent purchaser for value. 10

As regards the complaint against the alleged correction of the number of the certificate of title covering
Lot No. 2228 which was erroneously stated in the oppositor's motion as OCT No. P-6055, when it should
properly be OCT No. P-6053, it appearing that the motion was intended to rectify a clearly typographical
mistake, there is nothing irregular in the lower court's order granting the same.

WHEREFORE, finding no error in the order appealed from, the same is hereby affirmed, with costs
against the appellants.

Concepcion, C.J., Dizon, Makalintal, Zaldivar, Castro, Fernando, Teehankee, Barredo, Villamor and
Makasiar, JJ., concur.
G. R. NO. 158449 October 22, 2004

LUNINGNING P. DEL ROSARIO-IGTIBEN, JOSE REYES IGTIBEN, JOSE DEL ROSARIO IGTIBEN,
JR. and THERESA TOPACIO MEDINA, petitioners,
vs.
REPUBLIC OF THE PHILIPPINES and THE COURT OF APPEALS, respondents.

DECISION

CHICO-NAZARIO, J.:

This petition for review on certiorari under Rule 45 of the Rules of Court assails the decision of the Court
of Appeals in CA-G.R. CV No. 68546,1 which set aside the decision of the Municipal Circuit Trial Court of
Silang-Amadeo Cavite in LRC Case No. 98-133 (LRA Record No. N-69787)2 and dismissed petitioners’
application for registration of a parcel of land.

On 08 January 1998, petitioners filed with the trial court an application for registration of land under
Presidential Decree (PD) No. 1529, otherwise known as the Property Registration Decree. The
application covered a parcel of land with an area of 2,988 square meters, situated in Barangay Malabag,
Silang, Cavite, and more particularly described as Lot 5442, Cad 452-D, Silang Cadastre, Ap-04-007007
(hereinafter referred to as the Subject Property). Petitioners alleged that they acquired the Subject
Property by purchase, and that they, by themselves and through their predecessors-in-interest, had been
in actual, continuous, uninterrupted, open, public, and adverse possession of the Subject Property in the
concept of owner for more that 30 years.3

No opposition was filed against the application and so petitioners proceeded with the presentation of their
evidence. The State was represented in the proceedings by Assistant Provincial Prosecutor Jose M.
Velasco, Jr.4

Based on the testimonial and documentary evidence presented, the trial court traced the history of
possession of the Subject Property back to 1958, when the Subject Property was first declared for tax
purposes by Justina Hintog.5

Teodoro Calanog came into possession of the Subject Property in 1968. In the same year, the Subject
Property was transferred to spouses Alfredo Tonido and Agatona Calanog. Agatona Calanog allegedly
inherited the Subject Property from Teodoro Calanog, her father; on the other hand, Alfredo Tonido
supposedly purchased the same property also from Teodoro Calanog, his father-in-law. Alfredo Tonido
planted the Subject Property with palay, sayote, coffee, guyabano and other fruit bearing trees. After the
demise of Agatona Calanog, the rest of the Tonido family, consisting of Alfredo and his children, Samuel,
Elizabeth, Benjamin, Imelda and Esther, shared possession of the Subject Property. 6

On 21 November 1995, the Tonido family sold the Subject Property to petitioners, as evidenced by a
Deed of Absolute Sale.7

The history of possession of the Subject Property, as related above, was supported by tax declarations in
the name of petitioners and their predecessors-in-interest from 1958 to 1998.8

On 15 August 2000, the trial court rendered a decision approving petitioners’ application for registration of
the Subject Property. The Republic of the Philippines, represented by the Office of the Solicitor General,
appealed the decision of the trial court to the Court of Appeals.

In its appeal, the Republic alleged that the trial court erred in approving the application for registration
despite petitioners’ failure to prove open, continuous, exclusive and notorious possession and occupation
of the Subject Property since 12 June 1945, or earlier, as required by Section 48(b) of Commonwealth
Act No. 141, otherwise known as the Public Land Act, as amended by PD No. 1073. Moreover,
petitioners also failed to produce muniments of title to tack their possession to those of their
predecessors-in-interest in compliance with the prescriptive period required by law. 9

On 20 December 2002, the Court of Appeals rendered a decision finding the appeal meritorious, setting
aside the decision of the trial court, and dismissing the application for registration of petitioners.10 The
Court of Appeals denied petitioners’ Motion for Reconsideration in its resolution dated 22 May 2003. 11

Petitioners filed this petition for review on certiorari under Rule 45 of the Rules of Court praying that the
decision of the Court of Appeals be set aside and that the decision of the trial court, approving petitioners’
application for registration of the Subject Property, be reinstated. 12

In the original application filed by petitioners before the trial court, they claim that they are entitled to
confirmation and registration of their title to the Subject Property in accordance with Section 14 of the
Property Registration Decree, although they had not identified under which specific paragraph of the said
Section.13

Section 14 of the Property Registration Decree reads –

SEC. 14. Who may apply. – The following persons may file in the proper Court of First Instance
an application for registration of title to land, whether personally or through their duly authorized
representatives:

(1) Those who by themselves or through their predecessors-in-interest have been in

open, continuous, exclusive and notorious possession and occupation of alienable and
disposable lands of the public domain under a bona fide claim of ownership since June
12, 1945, or earlier.

(2) Those who have acquired ownership of private lands by prescription under the
provisions of existing laws.

(3) Those who have acquired ownership of private lands or abandoned river beds by right
of accession or accretion under the existing laws.

(4) Those who have acquired ownership of land in any other manner provided for by law.

By the allegation of petitioners in their application of actual, continuous, uninterrupted, open,

public, and adverse possession of the Subject Property in the concept of owner, by themselves
and through their predecessors-in-interest, for a given period of time, it can be logically presumed
that their claim to the right to register the Subject Property was based on Section 14, paragraph
(1) of the Property Registration Decree.

However, subsequent pleadings filed by both petitioners and respondent Republic before the
Court of Appeals and this Court, discuss mainly the Public Land Act, thus, establishing that the
application for registration filed by petitioners before the trial court is essentially an application for
judicial confirmation of their imperfect or incomplete title over the Subject Property, governed by
Sections 47 to 57 of the Public Land Act.

Proceedings under the Property Registration Decree and the Public Land Act are the same in that
both are against the whole world, both take the nature of judicial proceedings, and the decree of
registration issued for both is conclusive and final. They differ mainly in that under the Property
Registration Decree, there already exists a title which the court only needs to confirm. On the
 other hand, under the Public Land Act, there exists a presumption that the land applied for still
pertains to the State, and that the occupants and possessors can only claim an interest in the
land by virtue of their imperfect title or continuous, open, and notorious possession thereof.
Nonetheless, in the end, the two laws arrive at the same goal, namely, a Torrens title, which aims
at complete extinguishment, once and for all, of rights adverse to the record title.14

In general, an applicant for judicial confirmation of an imperfect or incomplete title under the Public Land
Act must be able to prove that: (1) the land is alienable public land; and (2) his open, continuous,
exclusive and notorious possession and occupation of the same must either be since time immemorial or
for the period prescribed in the Public Land Act.15

The finding of fact of the trial court that the Subject Property is alienable public land is undisputed. What
is to be determined herein is whether petitioners have complied with the period of possession and
occupation required by the Public Land Act.

The provision of the Public Land Act that is particularly relevant to petitioners’ application is Section 48(b).
Through the years, Section 48(b) of the Public Land Act has been amended several times. The case of
Republic v. Doldol16provides a summary of these amendments, as follows–

x x x. The original Section 48(b) of C.A. No. 141 provided for possession and occupation of lands
of the public domain since July 26, 1894. This was superseded by R.A. No. 1942, which provided
for a simple thirty-year prescriptive period of occupation by an applicant for judicial confirmation of
imperfect title. The same, however, has already been amended by Presidential Decree No. 1073,
approved on January 25, 1977. As amended, Section 48(b) now reads:

(b) Those who by themselves or through their predecessors-in-interest have been in

open, continuous, exclusive and notorious possession and occupation of agricultural
lands of the public domain, under a bona fide claim of acquisition or ownership, since
June 12, 1945, or earlier, immediately preceding the filing of the application for
confirmation of title, except when prevented by wars or force majeure. Those shall be
conclusively presumed to have performed all the conditions essential to a Government
grant and shall be entitled to a certificate of title under the provisions of this chapter.

Section 48(b) of the Public Land Act, as amended by PD No. 1073, presently requires, for judicial
confirmation of an imperfect or incomplete title, the possession and occupation of the piece of
land by the applicants, by themselves or through their predecessors-in-interest, since 12 June
1945 or earlier. This provision is in total conformity with Section 14(1) of the Property Registration
Decree heretofore cited.

In the case at bar, the Court of Appeals correctly ruled that petitioners have failed to comply with the
period of possession and occupation of the Subject Property, as required by both the Property
Registration Decree and the Public Land Act. In its decision, the Court of Appeals held that –

Indeed, the earliest period that the applicants could claim ownership over the property is in 1958,
which is the earliest date Justina Hintog, the previous owner/occupant, declared the property for
taxation purposes. This is far later than June 12, 1945, the date prescribed by law that the
applicants’ possession under claim of ownership should have begun at the latest.17

Petitioners maintain, however, that RA No. 6940, enacted on 28 March 1990, has repealed by implication
Section 48(b) of the Public Land Act, as amended by PD No. 1073, and has effectively reduced the
required period of possession and occupation of the land to thirty years prior to the filing of the application
for confirmation of an imperfect or incomplete title.
Petitioners’ arguments are without merit. This Court has already laid down the standard for repeals by
implication, as follows –

It has been the constant holding of this Court that repeals by implication are not favored and will
not be so declared unless it be manifest that the legislature so intended. Such a doctrine goes as
far back as United States v. Reyes, a 1908 decision. It is necessary then before such a repeal is
deemed to exist, that it be shown that the statutes or statutory provisions deal with the same
subject matter and that the latter be inconsistent with the former. There must be a showing of
repugnancy clear and convincing in character. The language used in the latter statute must be
such as to render it irreconcilable with what had been formerly enacted. An inconsistency that
falls short of that standard does not suffice. What is needed is a manifest indication of the
legislative purpose to repeal.18

In herein case, Section 48(b) of the Public Land Act and the provisions of RA No. 6940 do not even
address the same subject matter.

In the Public Land Act, the ways by which the State may dispose of agricultural lands is enumerated, to
wit –

SEC. 11. Public lands suitable for agricultural purposes can be disposed of only as follows –

1. For homestead settlement;

2. By sale;

3. By lease; and

4. By confirmation of imperfect or incomplete titles:

(a) By judicial legalization;

(b) By administrative legalization (free patent).

Each mode of disposition is appropriately covered by separate chapters of the Public Land Act since the
specific requirements and application procedure differ for every mode. More particularly, the confirmation
of imperfect or incomplete titles may be done two ways, either by: (a) administrative legalization or free
patents under Chapter VII of the Public Land Act; or (b) judicial legalization or judicial confirmation of
imperfect or incomplete titles under Chapter VIII of the same Act. Having filed their application before the
courts, petitioners have pursued a judicial legalization or judicial confirmation of their title to the Subject
Property.

Petitioners primarily base their arguments on the amendment by RA No. 6940 of Section 44 of the Public
Land Act, to read as follows –

SEC. 44. Any natural-born citizen of the Philippines who is not the owner of more than twelve (12)
hectares and who, for at least thirty (30) years prior to the effectivity of this amendatory Act, 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, who shall have paid the real estate
tax thereon while the 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 twelve (12) hectares.
While the above-quoted provision does provide for a 30-year period of occupation and cultivation of the
land, Section 44 of the Public Land Act applies to free patents, and not to judicial confirmation of an
imperfect or incomplete title to which Section 48(b) applies.

The distinction between Sections 44 and 48(b) of the Public Land Act was recognized by Mr. Justice
Puno, in his separate opinion in the case of Cruz v. Secretary of Environment and Natural Resources, 19 in
which he discussed the development of the Regalian doctrine in the Philippine legal system –

Registration under the Public Land Act and Land Registration Act recognizes the concept of
ownership under the civil law. This ownership is based on adverse possession for a specified
period, and harkens to Section 44 of the Public Land Act on administrative legalization (free
patent) of imperfect or incomplete titles and Section 48(b) and (c) of the same Act on the judicial
confirmation of imperfect or incomplete titles.

The remaining provisions of RA No. 6940 amend Sections 44 and 47 of the Public Land Act by extending
the periods for filing of applications for free patents and for judicial confirmation of imperfect or incomplete
titles, respectively, to 31 December 2000. Except for extending the period for filing of applications for
judicial confirmation of imperfect or incomplete titles, RA No. 6940 does not touch on the other provisions
under Chapter VIII of the Public Land Act, such as Section 48(b) and the prescriptive period provided
therein.

Consequently, applying the standard provided by this Court on repeal by implication, there can be no
conflict or inconsistency between Section 48(b) of the Public Land Act and the provisions of RA No. 6940
that would give rise to a repeal of the former by the latter.

The subsequent effectivity of RA No. 9176 on 01 January 2001 does not affect the position of this Court
on the issues discussed herein. Once again, Section 47 is the only provision under Chapter VIII of the
Public Land Act amended by RA No. 9176 by further extending the period for filing of applications for
judicial confirmation of imperfect or incomplete titles to 31 December 2020. The other provisions of the
Public Land Act amended by RA No. 9176, such as Sections 44 and 45, already refer to free patents
under Chapter VII. Section 48(b) of the Public Land Act, as amended by PD No. 1073, and the
prescriptive period provided therein still remain unchanged.

IN ALL:

(1) Section 44 of the Public Land Act, as amended by RA No. 6940, which provides for a
prescriptive period of thirty (30) years possession, applies only to applications for free patents;

(2) The case at bar is a judicial application for confirmation of an imperfect or incomplete title over
the Subject Property covered by Section 48(b) of the Public Land Act; and

(3) Section 48(b) of the Public Land Act requires for judicial confirmation of an imperfect or
incomplete title the continuous possession of the land since 12 June 1945, or earlier, which
petitioners herein failed to comply with.

WHEREFORE, the petition is hereby DENIED for lack of merit. The Court AFFIRMS the assailed decision
of the Court of Appeals in CA-G.R. CV No. 68546, which reversed the decision of the lower court in LRC
Case No. 98-133 (LRA Record No. N-69787) and dismissed the application for land title of petitioners. No
cost.

SO ORDERED.
G.R. No. 107751 June 1, 1995

LETICIA P. LIGON, petitioner,

vs.
COURT OF APPEALS, JUDGE CELIA LIPANA-REYES, Presiding Judge, Branch 81, Regional Trial
Court of Quezon City, Iglesia ni Kristo and the Register of Deeds of Quezon City, respondent.

BELLOSILLO, J.:

This is a petition for review of the decision of the Court of Appeals which affirmed the order of the
Regional Trial Court of Quezon City, Br. 82, granting the motion of respondent of Iglesia ni Kristo to direct
petitioner to surrender the owner's duplicate of the certificates of title in her possession.

On 19 October 1990 respondent Iglesia ni Kristo (INK) filed with the Regional Trial Court of Quezon City a
complaint 1 for specific performance with damages against the Islamic Directorate of the Philippines (IDP)
docketed as Civil Case No. Q90-6937. Respondent INK alleged in its complaint that by virtue of an
Absolute Deed of Sale dated 20 April 1989 IDP sold to it two (2) parcels of land located at Tandang Sora,
Barrio Culiat, Quezon City, both of which IDP is the registered owner. The parties stipulated in the deed
of sale that the IDP shall undertake to evict all squatters and illegal occupants in the property within forty-
five (45) days from the execution of the contract.

IDP failed to fulfill this obligation. Hence INK prayed that the trial court order IDP to comply with its
obligation of clearing the subject lots of illegal occupants and to pay damages to INK.

IDP alleged in its answer that it was INK which violated the contract by delaying the payment of the
purchase price and prayed that the contract of sale be rescinded and revoked.

On 15 June 1991 INK filed a motion for partial summary judgment on the ground that there was actually
no genuine issue as to any material fact.

On 12 September 1991 the trial court rendered partial judgment, and on 7 October 1991 an amended
partial judgment granting the reliefs prayed for by INK except the prayer for damages which was to be
resolved later.

On 22 January 1992 INK filed a motion in the same case praying that petitioner Leticia Ligon, who was in
possession of the certificates of title over the properties as mortgagee of IDP, be directed to surrender the
certificates to the Register of Deeds of Quezon City for the registration of the Absolute Deed of Sale in its
name. INK alleged that the document could not be registered because of the refusal and/or failure of
petitioner to deliver the certificates of title despite repeated requests.

On 31 January 1992 petitioner Ligon filed an opposition to the motion on the ground that the IDP was not
served copy of the motion, and the ownership of the INK over the property was still in issue since
rescission was sought by the IDP as a counterclaim. She prayed that the motion be denied, but should it
be granted, the Register of Deeds be directed after registration to deliver the owner's duplicate copies of
the new certificates of title to her.

On 15 February 1992 petitioner filed a Supplemental Opposition questioning the jurisdiction of the trial
court because the motion involved the registrability of the document of sale, and she was not made a
party to the main case.
On 2 March 1992 the trial court granted the motion of INK and ordered petitioner to surrender to INK the
owner's copy of RT-26521 (170567) and RT-26520 (176616) in open court for the registration of the
Absolute Deed of Sale in the latter's name and the annotation of the mortgage executed in favor of
petitioner on the new transfer certificates of title to be issued to INK.2

On 6 April 1992, on motion of petitioner Ligon, the trial court reconsidered its order by directing her to
deliver the certificates of title to the Register of Deeds of Quezon City. 3

Petitioner filed a petition for certiorari with the Court of Appeals seeking the annulment of the two (2)
orders. However, on 28 October 1992 the Court of Appeals dismissed the petition and affirmed the orders
of the trial court.

Petitioner now comes to us alleging that the trial court erred: (a) in ruling that it had jurisdiction over
petitioner; (b) in upholding the orders of the trial court even as they violated the rule prohibiting splitting of
a single cause of action and forum-shopping; (c) in holding that INK is the owner of the property and
entitled to registration of its ownership; and, (d) in holding that INK has a superior right to the possession
of the owner's copies of the certificates of title.

Upon prior leave, the IDP intervened alleging that prior to the issuance by the trial court of the order of 2
March 1992, its legal Board of Trustees filed a motion for intervention informing said court that the sale of
the properties was not executed by it but was made possible by a fake Board of Trustees, hence, the sale
is void. The trial court denied the motion since jurisdiction over the incident properly belonged to the
Securities and Exchange Commission (SEC). Conformably therewith, IDP brought the matter before the
SEC which later declared that the sale of the properties was void. Thus, IDP banks on this favorable
decision in similarly seeking the nullification of the questioned orders of the trial court.

Under our land registration law, no voluntary instrument shall be registered by the Register of Deeds
unless the owner's duplicate certificate is presented together with such instrument, except in some cases
or upon order of the court for cause shown. In case the person in possession of the duplicate certificates
refuses or fails to surrender the same to the Register of Deeds so that a voluntary document may be
registered and a new certificate issued, Sec. 107, Chapter 10, of P.D. No. 1529 clearly states:

Sec. 107. Surrender of withheld duplicate certificates. — Where it is necessary to issue a

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

Before the enactment of P.D. No. 1529 otherwise known as the Property Registration Decree, the former
law, Act No. 496 otherwise known as the Land Registration Act, and all jurisprudence interpreting the
former law had established that summary reliefs such as an action to compel the surrender of owner's
duplicate certificate of title to the Register of Deeds could only be filed with and granted by the Regional
Trial Court sitting as a land registration court if there was unanimity among the parties or there was no
adverse claim or serious objection on the part of any party in interest, otherwise, if the case became
contentious and controversial it should be threshed out in an ordinary action or in the case where the
incident properly belonged.4
Under Sec. 2 of P.D. No. 1529, it is now provided that "Courts of First Instance (now Regional Trial
Courts) shall have exclusive jurisdiction over all applications for original registration of titles to lands,
including improvements and interest therein and over all petitions filed after original registration of title,
with power to hear and determine all questions arising upon such applications or petitions." The above
provision has eliminated the distinction between the general jurisdiction vested in the regional trial court
and the limited jurisdiction conferred upon it by the former law when acting merely as a cadastral court.
Aimed at avoiding multiplicity of suits the change has simplified registration proceedings by conferring
upon the regional trial courts the authority to act not only on applications for original registration but also
over all petitions filed after original registration of title, with power to hear and determine all questions
arising upon such applications or petitions.5

The principal action filed by INK in Civil Case No. Q-90-6937 before the trial court was for specific
performance with damages based on a document of sale. Such action was well within the exclusive
jurisdictions of the Regional Trial Court.6 When IDP, the defendant in the trial court, did not question the
genuineness and validity of said deed of sale and its obligations thereunder, the summary judgment
issued by the court granting the reliefs sought by INK was also an exercise of its general jurisdiction.

Hence, when INK filed a motion for the issuance of an order from the same court to compel the holder of
the duplicate certificates of title to surrender the same to the Register of Deeds for the registration of the
deed of sale subject of the principal action, the motion was a necessary incident to the main case. When
the sale of the property was upheld by the court in its judgment and the defendant was directed to comply
with its terms and conditions, the right of INK to have the same registered with the Register of Deeds
could not be disregarded. To assert and enjoy its right, INK should be allowed to seek the aid of the court
to direct the surrender of the certificates of title. Since Regional Trial Courts are courts of general
jurisdiction, they may therefore take cognizance of this case pursuant to such jurisdiction. 7 Even while
Sec. 107 of P.D. 1529 speaks of a petition which can be filed by one who wants to compel another to
surrender the certificates of title to the Register of Deeds, this does not preclude a party to a pending
case to include as incident therein the relief stated under Sec. 107, especially if the subject certificates of
title to be surrendered are intimately connected with the subject matter of the principal action. 8 This
principle is based on expediency and in accordance with the policy against multiplicity of suits.

The records of the case show that the subsisting mortgage lien of petitioner appears in the certificates of
title Nos. 26520 and 26521. Hence, the order of the trial court directing the surrender of the certificates to
the Register of Deeds in order that the deed of sale in favor of INK can be registered, cannot in any way
prejudice her rights and interests as a mortgagee of the lots. Any lien annotated on the previous
certificates of title which subsists should be incorporated in or carried over to the new transfer certificates
of title. This is true even in the case of a real estate mortgage because pursuant to Art. 2126 of the Civil
Code it directly and immediately subjects the property upon which it is imposed, whoever the possessor
may be, to the fulfillment of the obligation for whose security it was constituted. It is inseparable from the
property mortgaged as it is a right in rem — a lien on the property whoever its owner may be. It subsists
notwithstanding a change in ownership; in short, the personality of the owner is disregarded. Thus, all
subsequent purchasers must respect the mortgage whether the transfer to them be with or without the
consent of the mortgagee, for such mortgage until discharged follows the property.9 It is clear therefore
that the surrender by petitioner of the certificates of title to the Register of Deeds as ordered by the trial
court will not create any substantial injustice to her. To grant the petition and compel INK to file a new
action in order to obtain the same reliefs it asked in the motion before the trial court is to encourage
litigations where no substantial rights are prejudiced. This end should be avoided. Courts should not be
so strict about procedural lapses that do not really impair the proper administration of justice. The rules
are intended to insure the orderly conduct of litigations because of the higher objective they seek, which
is, to protect the parties' substantive rights. 10

WHEREFORE, the appealed decision of the Court of Appeals dated 28 October 1992 is AFFIRMED.

SO ORDERED.
Padilla, Davide, Jr. and Kapunan, JJ., concur.

Quiason, J., is on leave.

G.R. No. 120600 September 22, 1998

ERNESTO C. DAWSON, LOUIS P. DAWSON, JR., BENJAMIN C. DAWSON, JOSEPHINE DAWSON

SOLIVEN, RALPH D. CUDILLA, ELIZA C. ISIP and LARRY D. ISIP, petitioners,
vs.
REGISTER OF DEEDS OF QUEZON CITY and JUDGE OF REGIONAL TRIAL COURT OF QUEZON
CITY, BRANCH 85, respondents.

PANGANIBAN, J.:

In a contract to sell, the title over the subject property vests in the vendee only upon full payment of the
consideration. Where the installments agreed on have not been completely paid upon the death of the
original vendee and the certificate of title was erroneously issued in his name, his heirs, who assumed his
obligations and completed the payment, can resort to the summary proceedings under Section 108 of
Presidential Decree (PD) 1529 to correct the manifest mistake.

The Case

Before us is; a petition for review assailing the February 9, 1995 Decision and the May 29, 1995
Resolution of the Court of Appeals 1 in CA-GR SP No. 34515 entitled "Dr. Ernesto Dawson, et. al., v.
Register of Deeds of Quezon City, Judge of RTC, QC, Branch 85." The assailed Decision affirmed the
Resolution 2 of the trial court 3 dated December 29, 1993 in LRC Case No. Q-6403 (93), dismissing the
petition for cancellation of Transfer Certificate of Title (TCT) No. RT-58706 (248057). The May 29, 1995
Resolution denied petitioners' Motion for Reconsideration.

The Facts

4
The undisputed facts, as summarized by Respondent Court of Appeals, are reproduced hereunder:

On October 7, 1993, the petitioners herein filed a petition with the Regional Trial Court in Quezon City
alleging, inter alia, the following:

— On May 2, 1967, during his lifetime. Louis P. Dawson offered to buy on installment
from the SISKA DEVELOPMENT CORPORATION, per contract to sell, a parcel of land
in Quezon City, consisting of 638 square meters for P27,632.00, now covered by
Transfer Certificate of Title No. RT-58706 (248057);

— On June 3, 1971, Louis P. Dawson died intestate;

— Upon his death, the petitioners assumed the rights and obligations of deceased Louis
P. Dawson in the aforementioned contract to sell, paying in full the selling price of the lot
from their own funds, which payment was completed in 1978;

— With said full payment, vendor SISKA DEVELOPMENT CORPORATION executed on

March 16, 1978 a deed of absolute sale in favor of deceased Louis P. Dawson who had
died seven (7) years earlier, instead of in favor of the petitioners who assumed and to
whom [were] transferred the rights and obligations of deceased Louis P. Dawson upon
the latter's death;
 — Because of the obvious error, Transfer Certificate of Title No. RT-58706 (248057) was
issued in the name of deceased Louis P. Dawson instead of those of petitioners —
hence, the petition for the cancellation and correction of TCT No. RT - 58706 (248057) in
the name of Louis P. Dawson and the issuance of a new title in the names of herein
petitioners, to wit: Dr. Ernesto C. Dawson (1/5), Louis P. Dawson, Jr. (1/5), Benjamin C.
Dawson (1/5), Josephine Dawson Soliven (1/5), Ralph D. Cudilla (1/15), Eliza C. Isip
(1/15) and Larry D. Cudilla (1/15);

— this petition is filed pursuant to Section 108 of P.D. 1529 (formerly Section 112 of Act
No. 496);

— the herein petition is not without legal precedent;

— the petition is not controversial, considering the unanimity among all the interested
parties, who are all petitioners herein, being the only surviving heirs of deceased Louis P.
Dawson. (pages 1-6 of the Record).

On December 1, 1993, the respondent court issued an Order allowing the petitioners to
present ex-parte their evidence before the Branch Clerk of Court. (page 16 of the
Record).

On December 20, 1993, the respondent court rendered its first assailed Resolution (pages 36-38 thereof),
the dispositive portion of which was earlier quoted.

On February 2, 1993, the petitioner herein filed a motion for reconsideration (pages 39-48
of the Record) from the afore-quoted Resolution of the respondent court.

Said motion was denied by the respondent court in its second assailed Order (dated
March 21, 1994) which was earlier quoted.

Hence, this petition for review. 5

Ruling of the Court of Appeals

In affirming the dismissal of the petition for cancellation of TCT No. RT-58706 (248057), the Court of
Appeals held that the summary proceedings under Section 108, PD 1529, do not apply to the present
case, viz.:

Petitioners' contention that the respondent court erred in holding that Section 108 of
Presidential Decree No. 1529 "does not apply" was torpedoed by the following:

— Wrong Action. Petitioners' evidence showed that their father, Louis P. Dawson, died
on June 3, 1971 (Exhibit 'D'), while the deed of absolute sale for the subject parcel was
executed on March 16, 1978 by the Siska Development. Corporation in favor of Louis P.
Dawson, (Exhibit 'E'). It was on this basis that a certificate of title (TCT No. RT-58706)
was issued in the name of Louis P. Dawson, which title was entered at the Office of the
Register of Deeds in Quezon City on August 17, 1978. As per the tax declaration and real
property tax bill, the subject parcel is still in the name of Louis P. Dawson (pages 23-24,
tsn of December 8, 1993), although his wife (Soledad Dawson) died in 1988 (Exhibit 'I').
We are intrigued why the petitioners only took action by filing the petition for cancellation
of the certificate of title in their father's name only on October 7, 1993. Was it designed to
evade the payment of the necessary taxes to the government?
 — Legal shortcut. As aptly observed by the respondent court in its assailed resolution,
"the case at bar pertains more to the partition of the estate which will in effect transfer
ownership of title of the property to the petitioners as compulsory heirs of the decedent."
Hence, Section 108 of Presidential Decree No. 1529 (which calls for summary
proceedings) does not apply. Certainly, to allow petitioners' move will open the floodgate
[of] tax evasion[s]. Petitioners' posture can be likened to a petition seeking to
change/alter one's paternity or citizenship by merely seeking the correction/revision of
birth certificate. Such is not allowable — there must be a petition for naturalization. In the
case at bench, [w]e further took note of the fact that the wife of the property owner
(Soledad Dawson) died in 1988, almost ten years after a certificate of title was issued by
the respondent Register of Deeds in the name of Louis P. Dawson.

With the foregoing, [w]e find no error committed by the respondent court in handing down
its assailed resolution (dated December 20, 1993) and Order (dated March 21, 1994).
The law abhors shortcuts. 6

The Issue

Petitioners submit, for the consideration of the Court, a single issue:

The Court of Appeals erred in affirming that Section 108 of P.D. 1529 does not apply
herein.

The Court's Ruling

The petition is meritorious.

Sole Issue: Applicability of Section 108, PD 1529

Sec. 108 of PD 1529 reads:

Sec. 108. Amendment and alteration of certificates. — No erasure, alteration, or

amendment shall be made upon the registration book after the entry of a certificate of title
or of a memorandum thereon and the attestation of the same by the Register of Deeds,
except by order of the proper Court of First Instance. A registered owner or other person
having an interest in registered property, or, in proper cases, the Register of Deeds with
the approval of the Commissioner of Land Registration, may apply by petition to the court
upon the ground that the registered interests of any description, whether vested,
contingent, expectant or inchoate appearing on the certificate, have terminated and
ceased; or that [a] new interest not appearing upon the certificate have arisen or been
created; or that an omission or error was made in entering a certificate or any
memorandum thereon, or on any duplicate certificate; or that the name of any person on
the certificate has been changed; or that the registered owner has married, or, if
registered as married, that the marriage has been terminated and no right or interest of
heirs or creditors will thereby be affected; or that a corporation which owned registered
land and has been dissolved has not conveyed the same within three years after its
dissolution; or upon any other reasonable ground; and the court may hear and determine
the petition after notice to all parties in interest, and may order the entry or cancellation of
a new certificate, the entry or cancellation of a memorandum upon a certificate, or grant
any other relief upon such terms and conditions, requiring security or bond if necessary,
as it may consider proper; Provided, however, that this section shall not be construed to
give the court authority to reopen the judgment or decree of registration, and that nothing
shall be done or ordered by the court which shall impair the title or other interest of a
purchaser holding a certificate for value in good faith, or his heirs and assigns, without his
 or their written consent. Where the owner's duplicate certificate is not presented, a similar
petition may be filed as provided in the preceding section.

All petitions or motions filed under this section as well as under any other provision of this
Decree after original registration shall be filed and entitled in the original case in which
the decree or registration was
entered. 7

Petitioners contend that, as the sole heirs of Louis P. Dawson, they assumed upon his death in 1971 the
obligations under the contract to sell that he had entered into in 1967. Thus, when the contract price was
fully paid by them in 1978, ownership over the property in question should have been transferred to them,
and not to the deceased, Louis P. Dawson. Since the issuance of the aforesaid TCT in the name of the
deceased was manifestly an error, petitioners posit that they can avail of the remedy provided under the
aforecited statutory provision.

On the other hand, the Court of Appeals and the trial court ruled that petitioners could not avail
themselves of the summary proceedings under the said provision, because the present controversy
involved not the cancellation of a certificate of title but the partition of the estate of the deceased.

In his Comment 8 dated May 8, 1996 and Memorandum 9 dated May 5, 1998, the Office of the Solitor
General sides with petitioners and argues that, under the given factual circumstances, a resort to Section
108 of PD 1529 is proper.

We agree with both the petitioners and the solicitor general.

On May 2, 1967, Louis P. Dawson and Siska Development Corporation executed a contract to sell, the
subject of which was the parcel of land in question. By the nature of a contract to sell, the title over the
subject property is transferred to the vendee only upon the full payment of the stipulated consideration.
Unlike in a contract of sale, the title does not pass to the vendee upon the execution of the agreement or
the delivety of the thing sold. In Salazar v. Court of Appeals, 10 this Court explained the distinction
between a contract to sell and a contract of sale:

In a contract of sale, the title to the property passes to the vendee upon the delivery of
the thing sold; in a contract to sell, ownership is, by agreement, reserved in the vendor
and is not to pass to the vendee until full payment of the purchase price. Otherwise
stated, in a contract of sale, the vendor loses ownership over the property and cannot
recover it until and unless the contract is resolved or rescinded; whereas in a contract to
sell, title is retained by the vendor until full payment of the price. In the latter contract,
payment of the price is a positive suspensive condition, failure of which is not a breach
but an event that prevents the obligation of the vendor to convey title from becoming
effective.

It is undisputed that Louis P. Dawson died in June 1971, without having completed the installments on the
property. His heirs, herein petitioners, then took over the contrac to sell, assumed his obligations by
paying the selling price of the lot from their own funds, and completed the payment in 1978. Accordingly,
the ownership of the lot had not been vested in Louis P. Dawson during his lifetime.

Indeed, on March 16, 1978, Siska Development Corporation could not have transferred the title over the
lot, through a Deed of Absolute Sale, to Louis P. Dawson who had died seven years earlier in 1971. In
1978, the deceased had no more civil personality or juridical capacity. 11 "His juridical capacity, which is
the fitness to be the subject of legal relations, was lost through death." 12

In other words, the said property did not become part of the estate of Louis P Dawson. Necessarily,
partition is not the remedy to determine ownership thereof and to consolidate title in herein petitioners.
Hence, we agree with the following assertion of the solicitor general: "Having stepped into the shoes of
the deceased Louis P. Dawson upon his death in June, 1971 with respect to the said contract, and being
the ones who continued the installment payments of the selling price from their own funds until its full
payment in 1978, petitioners necessarily became the lawful owners of the said lot in whose favor the
deed of absolute sale should have been executed by vendor Siska Development Corporation." 13

In view of the circumstances of this case, Section 108 of PD is clearly available as a remedy to correct the
erroneous issuance of the subject TCT in the name of Louis P. Dawson. The issue is not really novel.
Faced with substantially similar facts in Cruz v. Tan, 14 this Court also allowed the application of Section
112 of the Public Land Act, which is identical to Section 108 of PD 1529. A translation of the said case
from Spanish reads: 15

Simeon de la Cruz purchased a parcel of land on a ten-year installment basis. He died in

1939 and his wife died in 1942, leaving three children. The vendor of the land executed
the corresponding deed of sale over the land in 1950 upon completion of the payment.
The transfer certificate of title was then issued in the name of the deceased buyer,
Simeon de la Cruz. Petitioner filed this petition under the original land registration case
praying that the court order the Register of Deeds to substitute the name of Regino de la
Cruz, petitioner herein, for that of Simeon de la Cruz in the transfer certificate of title.
Petitioner claimed that Simeon during his lifetime transferred all rights over, the land to
him. The petition carried the conformity of the heirs of the deceased Simeon de la Cruz.
Respondent court denied the petition on the ground that the substitution of owners
cannot be ordered by the court acting on its jurisdiction granted by the Land Registration
Law, because Simeon de la Cruz and Regino de la Cruz are two different persons. The
court also said that the petition should be brought before an ordinary court for the
protection of the interested parties.

Held: The danger that respondent judge feared that other interested parties might be
prejudiced of their rights is remote, considering that the heirs of Simeon de la Cruz
signified their conformity to the petition. Intestate proceedings are not necessary when
the heirs have amicably settled the estate among themselves and when the deceased left
no debts. Section 112 of the Land Registration Law (now Section 108 of Presidential
Decree No. 1529) authorizes the court upon proper petition and notification to order the
cancellation of a certificate of title and substitute the name of the person who appears to
be entitled to the property. The order of respondent judge is revoked and the Register of
Deeds is ordered to make the necessary substitution.

Accordingly, petitioners may avail of the remedy provided under Section 108 of PD 1529. This, however,
does not necessarily mean that they are automatically entitled to the relief prayed for — the cancellation
of the title issued in the name of Louis P. Dawson and the issuance of new titles. It is incumbent upon
them to satisfy the requirements and conditions prescribed under the statutory provision.

Respondent Court questioned the filing of the petition for cancellation only in 1993, hinting that the
remedy was "designed to evade the payment of the necessary taxes to the government." Respondent
Court, however, failed to state which taxes petitioners sought to avoid. Although they are required to pay
capital gains tax and, thereafter, real estate tax, there is no showing that said taxes have not been paid.
Thus, we cannot withhold the relief prayed for by petitioners, merely on the basis of some speculation of
improper motivation.

WHEREFORE, the petition is GRANTED and the assailed Decision is REVERSED and SET ASIDE. The
Regional Trial Court of Quezon City is ORDERED to cause the cancellation of TCT No. RT-58706
(248057) issued in the name of Louis P. Dawson and to cause the issuance, in lieu thereof, of a new
certificate of title in the names of the petitioners as co-owners of the subject property, after said
petitioners have fulfilled the requirements stated in Section 108 of PD 1529. No cost.
SO ORDERED.
G.R. No. 120827 February 15, 2007

LIFE HOMES REALTY CORPORATION, Petitioner,

vs.
COURT OF APPEALS AND MARVI DEVELOPMENT, INC., Respondents.

DECISION

AZCUNA, J.:

This is an appeal from the Decision of the Court of Appeals (CA) in CA-G.R. CV No. 38409 dismissing the
appeal of petitioner Life Homes Realty Corporation for lack of merit. The CA ruled that the ordinary civil
action for recovery of possession filed by petitioner against private respondent Marvi Development, Inc.
(Marvi) is not the proper remedy in this case.

The facts are:

Petitioner Life Homes Realty Corporation is the registered owner of two parcels of land located in Barrio
Ampid, San Mateo, Rizal covered by TCT No. N-28603 (Psu-52080) and TCT No. 31730 (Psu-52085) of
the Register of Deeds of Rizal, which have been subdivided into lots for residential/subdivision purposes.
To the south and southwest of the lots is a parcel of land registered in the name of private respondent
Marvi under TCT No. 309740 (Psu-52084) of the Register of Deeds of Rizal. Private respondent’s
property has likewise been subdivided into lots for residential/subdivision purposes.

In 1979, petitioner discovered, upon a relocation and verification of the boundaries of its property, that the
southern and southwestern portions of its property were encroached upon, developed and occupied by
private respondent for subdivision purposes. The encroachment of private respondent’s property (plan
Psu-52084) over petitioner’s properties (plan Psu-52080 and Psu-52085) allegedly covered a total area of
10,365 square meters.

Both parties subsequently agreed to have an independent relocation survey conducted by a Government
Geodetic Engineer to decide whether there was overlapping of the aforementioned properties, and that
the party found to have an erroneous survey shall shoulder the expenses of the relocation survey. Marvi
agreed to such proposal in its letter of April 10, 1981.1

Thus, in a letter2 dated May 11, 1981, the parties requested the Director of the Bureau of Lands, Manila
for a relocation survey of their properties.

After acceding to the request, the Chief of the Technical Services of the Bureau of Lands, Engr. Felipe R.
Venezuela, submitted his report (Venezuela report) of the verification survey of Psu-52080, Psu-52084
and Psu-52085, Barrio Ampid, San Mateo, Rizal in a letter dated April 28, 1983 addressed to the
Regional Land Director through the Chief, Surveys Division of the Bureau of Lands.

The report reads:

xxx

Sir:

In connection with Office Memorandum dated 26 April 1981 regarding the joint request of Life Homes
Realty Corporation and Marvi Hills Development to verify the lots covered by plan Psu-52080, Psu-52084
and Psu-52085 as relocated by their respective surveyors, the undersigned respectfully submit[s] the
following findings based on the verification survey conducted to wit:
 1) Engr. Isabelo Muñoz was hired by Marvi Hills Development to relocate their properties covered
by plan Psu-177242 and plan Psu-52084. His relocation was conducted prior to the cadastral
survey of San Mateo, Rizal. The boundaries and corners were then set on the ground by using
the technical description as appearing on transfer certificate of title No. 4641 and approved plan
Psu-52084;

2) On November 10, 1964 to December 20, 1965, the municipality of San Mateo, Rizal was
cadastrally surveyed by Engr. Regino Rigor under Cad-375-D, San Mateo, Rizal, plan Psu-52084
becomes identical to lot 3680 and 3031, San Mateo Cadastre. Similarly plan Psu-52080 and plan
Psu-52085 were assigned a cadastral lot number of 3037 and 3031, Cad-375-D, San Mateo
Cadastre. These three lots were accepted by the cadastral survey;

3) Engr. Regino Natividad is the Geodetic Engineer of Life Homes Realty Corporation. As such,
his duty is to relocate the boundaries of plan Psu-52080 and plan Psu-52085 for the development
of Life Homes Subdivision. It was during this relocation survey that he found out plan Psu-52084
encroached plan Psu-52080 and plan Psu-52085 thus the request for verification survey was
referred to this office;

4) Considering that the request is for us to decide who is correct between Engr. Isabelo Muñoz
and Engr. Regino Natividad relocation survey, the survey done by Engr. Natividad is correct in
the sense that it adopt[s] the system of Cadastral survey. Furthermore, during the execution of
the cadastral survey, plan Psu-177242 a titled property was found defective. It was not accepted
and as amended, line 9-10 was amended from S.35 deg. 22’E., 108.75 m. to S. 28 deg. 43’E.,
129.62 m. Also line 14-15 was amended from N.64 deg. 17’W., 371.91 m. to N.60 deg. 52’W.,
382.58 m. Due to this amendments its area increases by THREE THOUSAND FIVE HUNDRED
THIRTY NINE (3,539) SQ. METERS.

In view of the foregoing findings it is recommended that the Relocation survey executed by Engr. Regino
Natividad be followed and that plan Psu-52084 as relocated by Engr. Isabelo Muñoz be Re-relocated
using corner 7 and 8 of plan Psu-52080 and corner 4 of plan Psu-52085 as starting point and reference.3

Thereafter, petitioner made a demand on private respondent to vacate the alleged encroached area but
private respondent refused.

On July 11, 1984, petitioner filed a complaint4 against private respondent with the Regional Trial Court of
San Mateo, Rizal, Branch 76 (RTC) for recovery of possession and damages, and prayed that private
respondent be directed to move its boundaries common with that of the two parcels of land owned by it to
those points and lines as determined by the verification and relocation survey included in the Venezuela
report dated April 28, 1983; to vacate the encroached area, and pay the expenses for the relocation
survey, attorney’s fees and litigation expenses.

In its Answer, private respondent alleged that it is petitioner’s parcels of land that wrongfully overlap its
(private respondent’s) property. By way of affirmative and/or special defenses, private respondent alleged
that the agreement to allow Geodetic Engineer Venezuela to decide which of the two conflicting surveys
is correct is null and void, and that the petitioner’s land survey was a later survey which disregarded the
previous survey of private respondent’s property.

In its counterclaim, private respondent alleged that petitioner put up a steep boundary along private
respondent’s property, which posed a grave risk and danger of soil erosion, causing lot buyers to
discontinue paying for the subdivision lots affected, and as a result deprived private respondent of profits.
Hence, private respondent sought payment of unrealized profits, attorney’s fees of ₱50,000, litigation
expenses of ₱10,000 and the refund of ₱3,482 which it paid to the Bureau of Lands.
On May 21, 1992, the RTC dismissed both the Complaint and the Counterclaim for lack of basis. The
RTC ruled:

There is no gainsaying the fact that this case is anchored on the report of Felipe R. Venezuela.
Objections interposed to the said report by the defendant are found to be impressed with merit in view of
the following considerations: The report contained an admission that Plan Psu-177242, a titled property,
was found defective and hence was amended. There is no showing, however, that the amendment of the
said Plan was made by virtue of a Court Order nor that notice thereof was given to the owners of the
adjoining lots, in violation of law and indeed, of due process. Since Plan Psu-177242 was approved by
the Court resulting in the titling of the property, it follows that any amendment or alteration thereof, being
mere incidents, would equally have to have judicial sanction.

Under the circumstances therefore, Venezuela’s report, which sustained as correct the survey done by
Engineer Natividad (for the plaintiff) based on the aforesaid amendment done violative of law, is
necessarily void and of no effect.

Further compounding the observable inefficacy of Venezuela’s report is the fact that said report was
merely recommendatory, which can only mean that without the approval of the Regional Director of the
Bureau of Lands to whom it was submitted, it can have no force and effect, and fittingly, can only be
regarded as a mere scrap of paper. Plaintiff offered no proof that Venezuela’s report was duly approved.

Rejecting therefore the correctness, validity and efficacy of Venezuela’s report, this complaint, which
primordially hinges on the said report, has no more leg to stand on.

WHEREFORE, premises considered, this case is hereby ordered dismissed for lack of basis. No
pronouncement as to costs.

Defendant’s counterclaim is likewise dismissed for lack of credible basis, the evidence submitted in
support thereof being at the most, self-serving.

SO ORDERED.5

Both petitioner and private respondent appealed from the decision of the trial court to the CA.

Petitioner questioned the dismissal of its complaint, while private respondent questioned the dismissal of
its counterclaim.

On June 22, 1995, the CA rendered judgment dismissing both appeals for lack of merit. The CA ruled that
the report of Government Geodetic Engineer Venezuela was not binding upon the parties. Moreover, as
pointed out by petitioner, the defects in the technical description contained in the plans prepared in
connection with areas adjudicated in ordinary or voluntary registration proceedings may be corrected after
a cadastral survey in accordance with Sec. 112 of Act 496,6 which has been superseded by Sec. 108 of
Presidential Decree (P.D.) No. 1529.7

The CA stated that under Sec. 112 of Act 496, now Sec. 108 of P.D. No. 1529, the petition for correction
shall be filed and entitled in the original case in which the decree of registration was entered. Hence, the
CA held that the ordinary civil action for recovery of possession is not the proper remedy of petitioner.

On August 8, 1995, petitioner filed this petition for review on certiorari of the decision of the CA.

Petitioner raised the following issues:

I. The respondent Court erred in holding that the Venezuela report is not binding upon the parties.
 II. The respondent court erred in holding that the re-relocation survey recommended by
Venezuela amounts to an erasure, alteration or amendment of a certificate of title which requires
the filing of a petition for that purpose in the original case in which the decree of registration was
entered.8

Petitioner argues that the CA erred in holding that the Venezuela report is not binding upon the parties,
because:

a. the engagement of the Government Geodetic Engineer to conduct an independent survey to

determine whether there was overlapping of the subject lots was based on an agreement
between the parties that they would be bound by the results thereof and to accordingly make the
proper adjustments to their landholdings;

b. the objection of private respondent to the Venezuela report was natural since it was
unfavorable to it. Before the report was made, private respondent never made an issue of the
supposed amendment of petitioner’s survey plan; hence, raising such issue after the Venezuela
report is an afterthought; and

c. private respondent is estopped from repudiating the Venezuela report because it agreed with
petitioner that an independent survey be conducted to decide once and for all their respective
irreconcilable surveys.

Petitioner’s argument is without merit.

The CA correctly ruled that the Venezuela report is not binding upon the parties, thus:

First, when the parties agreed to request the Director of the Bureau of Lands to settle the disagreement
between their respective surveyors regarding the "common boundary in the actual ground," there was no
express agreement that the verification survey would be deemed final and binding upon the parties, a
stipulation which the parties could have easily entered into had they so intended.

Second, when a copy of the Venezuela report was furnished to private respondent’s counsel, the latter
promptly objected to the report as erroneous on the ground that Geodetic Engineer Venezuela erred in
adopting the relocation survey made by petitioner’s geodetic engineer because it was based on the illegal
amendment of Psu-17742, a titled property, by the cadastral survey since the amendment was made
without court order. Contrary to the contention of petitioner, the objection cannot be considered an
afterthought.

Third, the request9 of the parties for a verification survey to be conducted by a Government Geodetic
Engineer was addressed to the Director of the Bureau of Lands, and the report of Geodetic Engineer
Venezuela was addressed to the Regional Land Director through the Chief, Surveys Division, Bureau of
Lands, National Capital Region. There is no evidence that the Bureau of Lands Regional Director to
whom the report was submitted approved the report. Hence, the report has remained recommendatory
and not valid without the approval of the proper government authority.

Fourth, petitioner does not dispute the conclusion of the RTC that the alleged amendment or alteration of
Plan Psu-177242, a property titled before the cadastral survey of the municipality of San Mateo, Rizal in
1964-1965, was made without notice to the owners of the adjoining lots. Such an amendment/alteration
effected without notice to affected owners would not be in compliance with law nor the requirements of
due process.

Moreover, the Venezuela report contained an admission that Plan Psu-177242, a titled property (owned
by Marvi), was found defective and was amended, thus:1awphi1.net
[D]uring the execution of the cadastral survey, plan Psu-177242 a titled property was found defective. It
was not accepted and as amended, line 9-10 was amended from S.35 deg. 22’E., 108.75 m. to S. 28 deg.
43’E., 129.62 m. Also line 14-15 was amended from N.64 deg. 17’W., 371.91 m. to N.60 deg. 52’W.,
382.58 m. Due to this amendments its area increases by THREE THOUSAND FIVE HUNDRED THIRTY
NINE (3,539) SQ. METERS.

The Court agrees with the CA that such defects in plans prepared in connection with areas adjudicated in
ordinary or voluntary registration proceedings may be corrected after the cadastral survey in accordance
with Sec. 108 of P.D. No. 1529, thus:

SEC. 108. Amendment and alteration of certificates. -- No erasure, alteration, or amendment shall be
made upon the registration book after the entry of a certificate of title or of a memorandum thereon and
the attestation of the same by Register of Deeds, except by order of the proper Court of First Instance. A
registered owner or other person having an interest in registered property, or, in proper cases, the
Register of Deeds with the approval of the Commissioner of Land Registration, may apply by petition to
the court upon the ground that registered interests of any description, whether vested, contingent,
expectant or inchoate appearing on the certificate, have terminated and ceased; or that new interest not
appearing upon the certificate have arisen or been created; or that an omission or error was made in
entering a certificate or any memorandum thereon, or, on any duplicate certificate; x x x or upon any other
reasonable ground; and the court may hear and determine the petition after notice to all parties in
interest, and may order the entry or cancellation of a new certificate, the entry or cancellation of a
memorandum upon a certificate, or grant any other relief upon such terms and conditions, requiring
security or bond if necessary, as it may consider proper; Provided, however, That this section shall not be
construed to give the court authority to reopen the judgment or decree of registration, and that nothing
shall be done or ordered by the court, which shall impair the title or other interest of a purchaser holding a
certificate for value and in good faith, or his heirs and assigns, without his or their written consent. x x x

All petitions or motions filed under this Section as well as under any other provision of this Decree after
original registration shall be filed and entitled in the original case in which the decree or registration was
entered.10

The last paragraph above provides that a petition for correction shall be filed and entitled in the original
case in which the decree of registration was entered. As stated by the CA, the jurisdiction to entertain the
petition lies with the Land Registration Court which heard and decided the voluntary registration
proceedings filed by private respondent. The rule aims to prevent confusion and to avoid difficulty in
tracing the origin of entries in the registry. 11

Next, petitioner argues that Geodetic Engineer Venezuela’s recommendation of a re-relocation survey is
not tantamount to an alteration of the title earlier issued to Marvi by virtue of a private survey. Petitioner
asserts that it is clear from the letter-request of the parties to the Bureau of Lands that the titles and the
survey plans of the parties do not overlap each other. The overlapping occurs only on the actual plotting
on the ground. This indicates that there is nothing wrong with the technical description of the Marvi
property as stated in the court decree and court-approved plan. There is thus no need to deviate
therefrom. What is only required is that Marvi follow the correct starting point and reference which, as
stated in the report of Geodetic Engineer Venezuela, is to use "corner 7 and 8 of plan Psu-52080 and
corner 4 of plan Psu-52085." Petitioner contends that this is not the erasure, alteration or amendment
referred to in Section 112 of Act 496, now Sec. 108 of P.D. No. 1529, which requires court approval.
Instead, it is a simple matter of Marvi properly plotting its landholdings using the proper starting points.
Hence, petitioner contends that the finding of the CA that a court order to correct the defects in Marvi’s
plans and title is necessary must be set aside.

The argument is untenable.

Granting that the Venezuela report is an authorized issuance of the Bureau of Lands, said report stated
that Marvi’s properties were covered by Plan Psu-177242 and Plan Psu-52084. The properties were
relocated prior to the cadastral survey of San Mateo, Rizal. The boundaries and corners of the property
were set on the ground by using the technical description appearing on OCT No. 4641 (Plan Psu-
177242)12 and Plan Psu-52084. However, Plan Psu-177242 was later amended, without court order,
during the cadastral survey as it was found defective. It is only proper that the amendment made during
the cadastral survey be properly reflected in the corresponding TCT of Marvi or the proper party in
accordance with Sec. 108, P.D. No. 1529.

WHEREFORE, the petition is DENIED for lack of merit and the Decision of the Court of Appeals in CA-
G.R. CV No. 38409 is AFFIRMED.

No costs.

SO ORDERED.
G.R. No. 111732 February 20, 1996

NEW DURAWOOD CO., INC. petitioner,

vs.
COURT OF APPEALS, HON. FELIX S. CABALLES, as Judge, RTC of Antipolo, Rizal, Branch 71,
WILSON M. GAW, ORLANDO S. BONGAT , DURAWOOD CONSTRUCTION AND LUMBER SUPPLY
CO., INC., respondents.

DECISION

PANGANIBAN, J.:

The main issue here is: does a court have jurisdiction to issue a new owner's duplicate of a Torrens
certificate of title if it is shown that the existing owner's copy has not, in fact and in truth, been lost or
destroyed? The Court resolved this issue in the negative in this petition for review under Rule 45 of the
Rules of Court, of the Decision1 of the Court of Appeals2 promulgated on May 31, 1993 and the
subsequent Resolution denying the motion for reconsideration. The said Rulings dismissed the petition in
CA-G.R. SP No. 25434 and in effect affirmed the "order"3 of the Regional Trial Court, Branch LXXI,
Antipolo, Rizal4 dated April 16, 1991 in LRC Case No. 91-924, the dispositive portion of which reads:

WHEREFORE, premises considered, judgment is hereby rendered:

(a) Declaring the owner's duplicate copy of Transfer Certificates of Title Nos. 140486, 15645 and
140485 which were lost, null and void and of no further force and effect and in lieu thereof,

(b) Hereby orders and directs that new copy of the said titles be issued to the petitioner giving
them the same faith and credit and carrying over the same terms and conditions appearing on the
originals thereof, upon payment of the required fees.

SO ORDERED.

By Resolution of the First Division dated November 15, 1995, this case along with several others was
transferred to THIRD DIVISION. After due consultation and deliberation, the Court assigned the
undersigned ponente to write this Decision.

The Facts

On February 14, 1990, a "Petition for Judicial Reconstitution of the Lost Owner's Duplicate Certificates of
TCT Nos. 140486; 156454 and 140485"5 was filed in the Regional Trial Court, Branch LXXI, Antipolo,
Rizal by petitioner-corporation, "represented by its Branch Manager, Wilson M. Gaw. . ." Attached to said
petition was an "Affidavit of Loss" dated December 31, 1990 6 of respondent Orlando S. Bongat, one of
the stockholders of petitioner-corporation.

Finding the petition "to be sufficient in form and in substance," respondent Judge set the case for hearing
on March 18, 1991. On April 16, 1991, respondent Judge issued the questioned order.

Sometime in May, 1991, petitioner discovered that the original TCT Nos. N-140485, N-140486 and
156454 on file with the Register of Deeds of Rizal had been cancelled and, in lieu thereof, TCT Nos.
200100, 200101 and 200102 had been issued in the name of respondent Durawood Construction and
Lumber Supply, Inc. Surprised by this cancellation, petitioner - after investigation - found out about the
reconstitution proceeding in the respondent trial court. So, on July 17, 1991, petitioner filed 7 suit in the
Court of Appeals docketed as CA-G.R. 25434 praying for the annulment of the assailed order in LRC
Case No. 91-924 penned by respondent Judge. It also prayed for the cancellation of the new certificates
(TCT Nos. 200100, 200101 and 200102). On May 31, 1993, the respondent Court of Appeals rendered
the assailed Decision and on August 30, 1993, the Resolution denying the motion for reconsideration.
Hence, the present recourse to the Supreme Court.

The Issues

Petitioner brought up the following ground as basis for its petition:

The Court of Appeals gravely abused its authority in not declaring the order of respondent Judge
Caballes in LRC Case No. 91-924 null and void for want of jurisdiction and in not declaring that
the reconstitution of the owner's duplicate transfer certificates of title Nos. N-140486, N-140485
and 156454 was obtained through fraud.

Petitioner argues that a reconstitution proceeding is one in rem and thus jurisdiction can be acquired only
through publication and notice sent pursuant to Section 13, Republic Act No. 26. It also alleges that fraud
is manifest (1) from the insufficient allegations of the petition filed before the trial court, as it (the petition)
does not mention the names of adjoining land owners and interested persons, as well as (2) from the
affidavit of loss attached to the petition.

In their Comment, private respondents aver that in 1990, these three lots were sold by petitioner to
Durawood Construction and Lumber Supply, Inc. but the sale in their favor could not be registered
because "the certificates of title. . . were lost." They also allege that the applicable law is Section 109 of
R.A. No. 496, as amended by P.D. 1529, and not Sec. 13 of R.A. No. 26, and that fraud, in order to serve
as basis for the annulment of a judgment "must be extrinsic or collateral in character", which is not the
case in the action before the court a quo. They also fault "(t)he deliberate failure of Dy Quim Pong
(petitioner's board chairman) and his family, who constitute the majority of the stockholders and directors
of (herein petitioner-corporation), to disclose the whereabouts (of) there (sic) son, the President and
General Manager Francis Dytiongsee . . . " who allegedly executed the deed of sale of the lots and who
allegedly claimed that the owner's copies of the TCTs were lost.

In its Reply, petitioner contends that "the very procedure provided under Sec. 109, PD 1529, which they
(private respondents) insist is the applicable provision of law in the matter, was not strictly followed . . ." It
also argues that the owner's duplicate copies of the TCTs were all along in the custody of Dy Quim Pong,
whom private respondents should have sued to compel him to surrender the same in order that the
alleged deed or sale in favor of private respondent could be registered.

Finally, petitioner claims that respondent Wilson Gaw had no authority to institute the petition for
reconstitution in the trial court because "(t)he Court of Appeals itself, in its questioned resolution stated
that said board resolution (authorizing Gaw) was passed without the required quorum."

From the foregoing, the issues may be summed up as follows:

(1) Which law governs the issuance of new owner's duplicate certificates of title in lieu of lost
ones?

(2) Did the respondent trial court have jurisdiction to order the issuance of the new owner's
duplicate certificates?

(3) Was the reconstitution of the said owner's duplicate certificates of title obtained through fraud?

The First Issue:

Law Governing Issuance of
Lost Owner's Duplicate Titles
To resolve this issue, it is necessary to reexamine the following provisions referred to by the parties:

(1) Section 13, Republic Act No. 26:8

Sec. 13. The court shall cause a notice of the petition, filed under the preceding section, to be
published, at the expense of the petitioner, twice in successive issues of the Official Gazette, and
to be posted on the main entrance of the provincial building and of the municipal building of the
municipality or city in which the land is situated, at least thirty days prior to the date of hearing.
The court shall likewise cause a copy of the notice to be sent, by registered mail or otherwise, at
the expense of the petitioner, to every person named therein whose address is known, at least
thirty days prior to the date of hearing. Said notice shall state, among other things, the number of
the lost or destroyed certificate of title, if known, the name of the registered owner, the names of
the occupants or persons in possession of the property, the owners of the adjoining properties
and all other interested parties, the location, area and boundaries of the property, and the date on
which all persons having any interest therein must appear and file their claim or objections to the
petition. The petitioner shall, at the hearing, submit proof of the publication, posting and service of
the notice as directed by the court,"

(2) Section 109 P.D. 1529 (amending R.A. 496):

Sec. 109. Notice and replacement of lost duplicate certificate. In case of loss or theft of an
owner's duplicate certificate of title, due notice under oath shall be sent by the owner or by
someone in his behalf to the Register of Deeds of the province or city where the land lies as soon
as the loss or theft is discovered. If a duplicate certificate is lost or destroyed, or cannot be
produced by a person applying for the entry of a new certificate to him or for the registration of
any instrument, a sworn statement of the fact of such loss or destruction may be filed by the
registered owner or other person in interest and registered.

Upon the petition of the registered owner or other person in interest, the court may, after notice
and due hearing, direct the issuance of a new duplicate certificate, which shall contain a
memorandum of the fact that it is issued in place of the lost duplicate certificate, but shall in all
respects be entitled to like faith and credit as the original duplicate, and shall thereafter be
regarded as such for all purposes of this decree.

A reading of both provisions clearly shows that Section 109 of P.D. 1529 is the law applicable in petitions
for issuance of new owner's duplicate certificates of title which are lost or stolen or destroyed. On the
other hand, R.A. 26 applies only in cases of reconstitution of last or destroyed original certificates on file
with the Register of Deeds. This is expressly provided for under Section 110 of P.D. 1529 as follows:

Sec. 110. Reconstitution of lost or destroyed original of Torrens title. - Original copies of
certificates of title lost or destroyed in the offices of Registers of Deeds as well as liens and
encumbrances affecting the lands covered by such titles shall be reconstituted judicially in
accordance with the procedure prescribed in Republic Act No. 26 insofar as not inconsistent with
this Decree. The procedure relative to administrative reconstitution of lost or destroyed certificate
prescribed in said Act may be availed of only in case of substantial loss or destruction of land
titles due to fire, flood or other force majure as determined by the Administrator of the Land
Registration Authority: Provided, That the number of certificates of titles lost or damaged should
be at least ten percent (10%) of the total number in the possession of the Office of the Register of
Deeds: Provided, further, That in no case shall the number of certificates of titles lost or damaged
be less that five hundred (500).

Notice of all hearings of the petition for judicial reconstitution shall be furnished the Register of
Deeds of the place where the land is situated and to the Administrator of the Land Registration
Authority. No order or judgment ordering the reconstitution of a certificate of title shall become
 final until the lapse of fifteen (15) days from receipt by the Register of Deeds and by the
Administrator of the Land Registration Authority of a notice of such order or judgment without any
appeal having been filed by any such officials." (As amended by R.A. 6732, emphasis supplied)

The Second Issue: Jurisdiction

In Demetriou vs. Court of Appeals, et al.9 this Court ruled:

In Serra Serra v. Court of Appeals (195 SCRA 482 [1991]), on facts analogous to those involved
in this case, this Court already held that if a certificate of title has not been lost but is in fact in the
possession of another person, the reconstituted title is void and the court rendering the decision
has not acquired jurisdiction. Consequently the decision may be attacked any time.

In the instant case, the owner's duplicate certificates of title were in the possession of Dy Quim Pong, the
petitioner's chairman of the board and whose family controls the petitioner-corporation. Since said
certificates were not in fact "lost or destroyed", there was no necessity for the petition filed in the trial court
for the "issuance of New Owner's Duplicate Certificates of Title: . . ." In fact, the said court never acquired
jurisdiction to order the issuance of new certificates. Hence, the newly issued duplicates are themselves
null and void.

It is obvious that this lapse happened because private respondents and respondent judge failed to follow
the procedure set forth in P.D. No. 1529 which, as already stated, governs the issuance of new owner's
duplicate certificates of title.

Section 109 of said law provides, inter alia, that "due notice under oath" of the loss or theft of the owner's
duplicate "shall be sent by the owner as by someone in his behalf to the Register of Deeds . . ."
(emphasis supplied). In this case, while an affidavit or loss was attached to the petition in the lower court,
no such notice was sent to the Register of Deeds.

Private respondents tried to convince the Court that by their failure to locate Francis Dytiongsee, they had
no other recourse but to file a petition for reconstitution. Sec. 107 of P.D. 1529, however, states that the
remedy, in case of the refusal or failure of the holder - in this case, the petitioner - to surrender the
owner's duplicate certificate of title, is a "petition in court to compel surrender of the same to the Register
of Deeds", and not a petition for reconstitution.

The Third Issue: Fraud

The respondent Court of Appeals, in its own words, "confine(d) its discussion" 10 in the assailed Decision
only to the ground of fraud. It ruled that the Rte's decision could be annulled only
where extrinsic or collateral fraud is shown - that is, when the fraudulent acts prevented a party "from
exhibiting fully his side of the case . . .". Hence, petitioner could not claim extrinsic fraud inasmuch as it
was duly represented by Gaw in the reconstitution proceeding.

The appellate court explained that while there may not have been a quorum during the board meeting of
petitioner-corporation on May 10, 1984 when a resolution authorizing Gaw to sue on its behalf was
allegedly passed, this did "not mean however, that New Durawood Co., Inc. cannot be bound by Gaw's
action'' because "no howl of protest, complaint or denial came from (said corporation)", and that said
corporation in fact had taken advantage of the benefits therefrom. Hence, petitioner is estopped from
questioning Gawls acts. The appellate Court was of the belief that petitioner-corporation ratified Gaw's
"authority" by acquiescence to his acts. The respondent Court thus concluded that petitioner-corporation's
"claim of being a victim of extrinsic fraud is baseless."
We are appalled by this rather novel interpretation of corporate law. It is clear that, there having been no
quorum present during the meeting in question, the board of directors could not have validly given Gaw
any express authority to file the petition. Upon the other hand, the doctrine of "apparent authority" cannot
apply as to Gaw because, being a mere branch manager, he could not be looked upon as a corporate
officer clothed with the implied or "apparent" power to file suit for and in behalf of a corporation 11 . Neither
will estoppel prevent the corporation from questioning Gaw's acts. Precisely, these acts were hidden from
the company and its top officers. How then can estoppel attach? 12

Suffice it to say then, that by his surreptitious filing of the petition for reconstitution without authority -
express or implied - of his employer, Gaw enabled respondent corporation to acquire the certificates of
title in a manner contrary to law.

In petitions for issuance of new owner's duplicate copies of Torrens titles, it is essential - as provided
under Sec. 109 of P.D. 1529 as amended (supra) - that the trial court take steps to assure itself that the
petitioner is the "registered owner or other person in interest". Otherwise, new owner's duplicate
certificates might be issued in favor of impostors who could fraudulently dispose, hypothecate or
otherwise deal in and with real estate in mockery of the Torrens system of titling properties.

Be that as it may, in the case before us, whether Gaw was authorized to file the suit or not is of little
significance in finally resolving this case. Jurisdiction is and remains the main issue. Since we already
concluded earlier that the trial court did not have jurisdiction, necessarily its judgment must fall.

WHEREFORE, the petition is GRANTED; the assailed decision SET ASIDE and REVERSED; the
proceedings in LRC Case No. 91-924 ANNULLED; and the order issued therein dated April 15, 1991 as
well as the reconstituted Transfer Certificates of Title issued pursuant thereto, namely, TCT Nos. 200100,
200101 and 200102 in the name of private respondent declared NULL and VOID. Costs against private
respondents.

SO ORDERED.

Narvasa, C.J., Davide, Jr. Melo and Francisco and Francisco, JJ., concur.
 FIRST DIVISION

REPUBLIC OF THE PHILIPPINES, G.R. No. 166139

Petitioner, Present:

PANGANIBAN, C.J.
Chairperson,
YNARES-SANTIAGO,

AUSTRIA-MARTINEZ,

CALLEJO, SR., and

- versus-
CHICO-NAZARIO, JJ.

Promulgated:

PEDRO T. CASIMIRO,
Respondent. June 20, 2006

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

DECISION

CHICO-NAZARIO, J.:

This is a Petition for Review on Certiorari of the Decision[1] of the Court of Appeals in CA-G.R. CV
No. 78436, dated 18 November 2004, which affirmed the Decision,[2] of the Regional Trial Court
(RTC), Quezon City, Branch 227, in LRC Case No. Q-11101 (99), dated 22 October 2001, granting the
Petition for Reconstitution of the original copy of Transfer Certificate of Title (TCT) No. 305917.

Culled from the records are the following facts:

 A Petition for the Reconstitution of the original copy of TCT No. 305917 of the Quezon City
Registry of Deeds was filed by herein respondent Pedro T. Casimiro on 4 January 1999, which was
docketed as LRC Case No. Q-11101 (99) before the RTC, Quezon City. According to the Petition,
respondent is the registered owner and lawful possessor of Lots No. 2 and 3 of subdivision plan Psd-
57312, situated in Barrio Payatas, Municipality of Montalban, now part of Quezon City, containing the
areas of 31,537 and 13,078 square meters, respectively, more or less. Respondent allegedly purchased
the subject lots from his father, Jose M. Casimiro, as evidenced by a Deed of Absolute Sale, dated 24
March 1979. By virtue of the said sale, TCT No. 35359, in the name of the seller, Jose M. Casimiro, was
cancelled, and TCT No. 305917, in the name of the buyer and herein respondent, Pedro T. Casimiro, was
issued. TCT No. 305917 was among the certificates of title lost and destroyed during the fire that razed
the Quezon City Hall Buildingon 11 June 1988. The Petition in LRC Case No. Q-11101 (99) was
subsequently amended on 20 November 2000 to include the Quezon City Register of Deeds as
respondent.During the hearing for the purpose of establishing the jurisdictional requirements of the
Petition, Solicitor Brigido Luna, from the Office of the Solicitor General (OSG) and on behalf of herein
petitioner, Republic of the Philippines, appeared before the RTC, Quezon City, interposing his objection
to the Petition.

After hearing, the RTC on 24 May 2001, rendered its Decision[3] denying the Petition for failure to
comply with Section 3 of Republic Act (Rep. Act) No. 26,[4] the dispositive portion of which reads:

WHEREFORE, premises considered, the instant petition for reconstitution of TCT

No. 305917 is DENIED for failure to comply with Section 3 of Republic Act No.26. This
dismissal, however, shall not preclude the right of the petitioner to file an application for
confirmation of his or their title under the provisions of Land Registration Act if he is
entitled thereto. As provided by RA No. 26; each dismissal shall not preclude the right of
the party or parties entitled thereto to file an application for confirmation of his or their title
under the provision of the Land Registration Act.

Respondent filed a Motion for Reconsideration of the aforequoted Decision of the RTC, and after
hearing, the same court rendered a Decision,[5] dated 22 October 2001, granting the motion, and ruling
thus:

WHEREFORE, premises considered, petition is hereby GRANTED. The Register

of Deeds of Quezon City is hereby DIRECTED TO ACKNOWLEDGE RECEIPT AND
THEN VERIFY the authenticity of the attached Owners Duplicate Certificate which is the
duplicate original and if found authentic and issued regularly in due course,
to RECONSTITUTE and issue a corresponding new owners duplicate copy of the
reconstituted title of TCT No. 305917 provided however that there exists no other title or
any Owners Duplicate Certificate of the title in the Register of Deeds, encompassing the
 area covered by the above TCT No.305917, otherwise this decision shall ipso facto be
without force and effect.

Subsequently, an Entry of Judgment was issued on 12 November 2001 in LRC Case No. Q-
11101 (99).[6] However, on 20 November 2001, a Notice of Nullity of Entry of Judgment [7] was issued by
the Clerk of Court of the RTC, considering that the herein petitioner, Republic of the Philippines, through
the OSG, filed a Notice of Appeal viaregistered mail on 9 November 2001, which was received by the
said court on 20 November 2001. During the hearing on the Notice of Appeal, Solicitor Brigido Luna
manifested that instead of the Notice of Appeal, the same should be considered as an Ad-
Cautelum Notice of Appeal converted into a Motion for Reconsideration. The RTC, issued an
Order,[8] dated 10 December 2001, granting the said Ad-Cautelum Notice of Appeal converted into a
Motion for Reconsideration and ordered a re-hearing of the case for the purpose of verifying the
authenticity of the Owners Duplicate of TCT No. 305917.

In a Manifestation,[9] dated 19 December 2001, petitioner asserted, among other things, that it
had received only on 11 December 2001 a copy of the Entry of Judgment declaring the Decision of the
RTC, dated 22 October 2001, final and executory, and that said Entry of Judgment was premature given
that it intended to appeal the assailed Decision. Petitioner further explained that it was the suggestion of
the RTC to treat its Notice of Appeal as a Motion for Reconsideration; that in deference to such
suggestion, it agreed to a re-hearing only for the purpose of verifying the owners duplicate of TCT No.
305917 with the Quezon City Register of Deeds; and that it had not abandoned its Notice of Appeal by
merely acquiescing that said Notice be treated as a Motion for Reconsideration, upon the suggestion of
the RTC. In another Manifestation,[10] dated 7 January 2002, petitioner reiterated that with the perfection
of its appeal upon the filing in due time of its Notice of Appeal, and with the expiration of respondents time
to appeal, RTC had already lost its jurisdiction over the case.

In the meantime, on 8 January 2002, the Quezon City Register of Deeds manifested[11] before the
RTC that based on its Decision, dated 22 October 2001, the Quezon City Register of Deeds was directed
to (a) verify the authenticity of the owners duplicate of TCT No. 305917, and (b) ascertain whether or not
there was another title covering the same parcel of land as that of the title sought to be reconstituted. In
compliance with the said Decision, the Quezon City Register of Deeds indorsed the matter to the Land
Registration Authority (LRA), which issued a report/findings, [12] dated 10 December
2001. The Quezon City Register of Deeds essentially adopted the findings of the LRA. The LRA declared
the authenticity of the owners duplicate of TCT No. 305917 as highly questionable, finding thus:
 Anent to Question No. 1, a verification of the records of the Property Section, this
Authority, reveals that Judicial Form with Serial No. 3842367 was issued to the Registry
of Deeds of Quezon City on September 21, 1982 while TCT No. 305917 under Judicial
Form No. 3842367 shows that it was issued/entered by the Register of Deeds
of Quezon City on November 20, 1979, hence, there exists a discrepancy on the dates of
issuance of the Judicial Form and the issuance of TCT No. 305917.[13]

The LRA likewise pronounced that the lots covered by TCT No. 305917 overlapped another title
duly issued to the National Government, categorically stating that:

With respect to Question No. 2, Lots 2 and 3, both of the subdivision plan PSD-57312
covering TCT No. 305917 when plotted in our Municipal Index Sheet, it appears that the
technical descriptions of both lots are open polygon,
inside Government Center and Natl. Govt. Center.[14]

Despite the fact that the Manifestation, dated 8 January 2002, of the Quezon City Register of
Deeds, with the attached LRA report/findings, dated 10 December 2001, were actually favorable to its
cause, petitioner still filed another Manifestation, dated 14 January 2002, insisting that the RTC had
already lost jurisdiction over the present case due to the perfection of its appeal and the expiration of
respondents time to appeal, and that it would no longer participate in any proceeding before the said
court.

On the other hand, in an attempt to address the adverse findings of the Quezon City Register of
Deeds and the LRA, particularly on the discrepancy in the dates of issuance of Judicial Form No.
3842367 and of TCT No. 305917, respondent presented a Certification [15] issued by Edelmira N. Salazar,
LRA Administrative Officer IV, OIC-Judicial Forms, on 20 December 2001, which reads:

This is to certify that after due verification of the records on file in the Property
Section, Land Registration Authority, it appears that Judicial Form No. 109-D (Revised
1977) with Serial No. 3842367 was issued to Registry of Deeds of Quezon City on
November 17, 1979.

Over the objection of the petitioner, RTC rendered an Amended Decision, [16] dated 17 January
2002, the decretal portion of which states that:

WHEREFORE, premises considered:

 (1) the Motion for Reconsideration of the October 22, 2001 Decision of the Solicitor
General is hereby GRANTED;
(2) and therefore, the October 22, 2001 Decision is hereby RECALLED, CANCELLED
AND DECLARED NULL AND VOID AB INITIO AND WITHOUT EFFECT;
(3) the instant petition for reconstitution of the original of TCT No. 305917 is
hereby DENIED for failure to comply with Republic Act No. 26s jurisdictional
requirements;
(4) the Register of Deeds of Quezon City which found the Owners Duplicate Original of
TCT No. 305917 as irregularly issued is hereby DIRECTED to turn over its findings to
the National Bureau of Investigation (NBI);
(5) the National Bureau of Investigation (NBI) is hereby DIRECTED to investigate the
alleged fraudulent issuance of TCT No. 305917 and if warranted, to file the
necessary civil and criminal charges relative to the fraudulent document involving
TCT No. 305917.
(6) the NBI is DIRECTED to render a report to this Court of its findings within six (6)
months from receipt of this Amended Decision.

Once again, despite the fact that the aforequoted Amended Decision of the RTC, dated 17
January 2002, was apparently in its favor, the petitioner filed another Manifestation, dated 29 January
2002, asserting that, by virtue of its perfected appeal, the said court already lost its jurisdiction to render
the Amended Decision, dated 17 January 2002, and that the same could not have any legal
effect. Petitioner insisted that its Notice of Appeal must be given due course and the records of the case
be elevated to the Court of Appeals.

Unyielding, the RTC issued a Resolution,[17] dated 6 February 2002, denying petitioners Notice of
Appeal. In the said Resolution, the RTC maintained that the said Notice of Appeal of its Decision,
dated 22 October 2001, was premature since such Decision was not yet final and executory. The
Decision of 22 October 2001 was conditional, and would become effective only if the conditions stated in
its dispositive portion had been met, to wit:

(1) that the owners duplicate original must be verified by the Register of Deeds to be
authentic and duly issued; thus the October 22, 2001 Amended Decision stated: The
Register of Deeds of Quezon City is hereby DIRECTED TO ACKNOWLEDGE
RECEIPT AND THEN VERIFY the authenticity of the attached Owners Duplicate
Certificate which is the duplicate original and if found authentic and issued regularly
in due course, to RECONSTITUTE and issue a corresponding new owners duplicate
copy of reconstituted title of TCT No. 305917.
(2) that the Register of Deeds must verify that there is no other property with the same
technical description as TCT No. 305917 or that any portion of the property is
encompassed in another TCT technical description; thus the October 22, 2001
Amended Decision stated: provided however that there exists no other title or any
Owners Duplicate Certificate of the title in the Register of Deeds, encompassing the
area covered by the above TCT No. 305917, otherwise this decision shall ipso facto
be without force and effect.
The same Resolution provided that without compliance with the foregoing conditions, the Decision,
dated 22 October 2001, shall ipso facto be without force and effect.Furthermore, the Quezon City
Register of Deeds actually found that the given conditions were not met, and so reported to the court,
thus, the Decision of 22 October 2001 never went into effect and TCT No. 305917 cannot be
reconstituted by the Quezon City Register of Deeds pursuant thereto. Finally, the RTC barred petitioner
from appealing the Resolution, dated 6 February 2002, invoking Section 1(d), Rule 41 of the Rules of
Court which states that no appeal may be taken from an order disallowing or dismissing an appeal.

In its Petition for Certiorari and Mandamus[18] filed before the Court of Appeals, docketed as CA-
G.R. SP No. 70723, petitioner prayed for the following:

WHEREFORE, it is respectfully prayed that:

(1) A writ of preliminary mandatory injunction be issued directing the trial court to
give due course to the appeal in LRC Case No. Q-11109-99 and to elevate the records of
the case to this Honorable Court;
(2) After due proceedings, the writ of preliminary mandatory injunction be made
permanent; and
(3) The entry of judgment dated November 12, 2001 and Resolution
dated February 6, 2002 be nullified and set aside.
Further just and equitable reliefs are also prayed for:

The Court of Appeals eventually rendered its Decision [19] in CA-G.R. SP No. 70723, on 17 March
2003, the salient portions of which read:

Jurisdiction is vested by law and cannot be conferred or waived by the parties

(Pangilinan vs. Court of Appeals, 321 SCRA 51). Thus, when the respondent court
rendered the said original decision despite the presence of two (2) conditions, to be
satisfied, the timely appeal thereof by the petitioner and the lapse of private respondents
period to appear, divested the respondent court the jurisdiction to continue hearing the
case. Suffice it to state, petitioner loses the right to invoke the intervention of the trial
court and so he cannot anymore file a motion for reconsideration or new trial in said
court. Nonetheless, despite the loss of its jurisdiction as a result of the appeal, the court
before the transmission of the original record may issue orders: a) the protection and
preservation of the rights of the parties which do not involve any matter litigated by the
appeal; b) approve compromises; c) permit of appeal of indigent litigants, and d) order
execution pending appeal (Section 9, Rule 41, Rules of Court).
Evidently, the assailed Amended Decision and Resolution which denied due
course to petitioners appeal and barring it from further taking an appeal, were not
included in the exceptions and therefore, considered as null and void. Although, the
respondent court had reversed and set aside the original decision dated 22 October
2001, by issuing an Amended Decision dated 17 January 2002, which in effect was
favorable to the petitioner, the latters fear that it cannot rest on its laurel, was more real
 than imaginary. Because the said Amended Decision may always be assailed on the
ground of lack of jurisdiction.
In the same breath, the issuance of the Entry of Judgment despite the non-finality
of the decision dated 22 October 2001, was issued by the respondent court with grave
abuse of discretion.
The undisputed fact remains that when the respondent court issued the said
Entry of Judgment on 12 November 2001, the petitioner has timely filed its notice of
appeal on 09 November 2001. x x x
xxxx
Considering the timely notice of appeal interposed by the petition, the respondent
courts Decision dated 22 October 2001 has not become final and executory. Hence, the
Entry of Judgment dated 12 November 2001 was prematurely issued and perforce [is]
considered null and void.
xxxx
WHEREFORE, in consideration of the foregoing disquisitions, the petition is
perforce Granted. Accordingly, the Entry of Judgment dated 12 November 2001 and
Resolution dated 02 February 2002 are hereby nullified and set aside. The respondent
court is directed to give due course to the appeal in LRC Case No. Q-11109-99 and to
elevate the records of the case to this Honorable Court.

In obedience to the Decision of the Court of Appeals in CA-G.R. SP No. 70723, dated 17 March
2003, the RTC issued an Order,[20] on 26 March 2003, approving the petitioners appeal of the Decision,
dated 22 October 2001, rendered by the same court, and directing that the records of LRC Case No. Q-
11101 (99) be forwarded to the Court of Appeals.

Petitioners appeal before the Court of Appeals of the Decision of the RTC in LRC Case No. Q-
11101 (99), dated 22 October 2001, was docketed as CA-G.R. CV No. 78436. In its Brief for the
Appellant,[21] petitioner made a lone assignment of error, that THE TRIAL COURT ERRED IN GRANTING
THE PETITION FOR RECONSTITUTION OF TCT NO. 305917 DESPITE THE INSUFFICIENCY OF THE
DOCUMENTS PRESENTED AS BASES THEREFOR. After considering the pleadings filed and
arguments raised by both parties, the Court of Appeals promulgated its Decision [22] in CA-G.R. CV No.
78436, on 18 November 2004, ruling in favor of the respondent and affirming with modification the
Decision, dated 22 October 2001, of the RTC ordering the reconstitution of TCT No. 305917. In the said
Decision, the Court of Appeals found that respondents exhibits substantially complied with the
documentary requirements under Section 3(f) of Rep. Act No. 26 for the reconstitution of burnt or
destroyed TCTs, and ruled thus:

This Court believes that the above-described documents, taken together, readily
fall under Section 3(f) of Republic Act No. 26. They are sufficient and proper bases for
reconstituting the burned or destroyed original certificate of title, and the lower court
 correctly ordered the reconstitution. The duty is mandatory. The law does not give the
court discretion to deny the reconstitution if all the basic requirements have been
complied with. The tendency of the rules on evidence is towards substantial justice rather
than strict adherence to technicalities.
Anent appellants objection on the copy of the owners duplicate, i.e., that said
document (TCT No. 305917 with Serial No. 3842367) appears to have been issued
allegedly by the Register of Deeds of Quezon City at the time when no such form was yet
issued by the LRC.
Assuming the allegation to be true, appellee could not be faulted
thereto. Appellee did not have a hand in the preparation of the certificate of title in
question. All judicial forms are accountable forms and only authorized officials and
personnel of the offices concerned (LRA and Register of Deeds) have access to
them. Any infirmity in the judicial forms and serial numbers appearing therein, if any there
be, is not known to the public because this knowledge is confined only to the authorized
officials and personnel of both the LRA and Registers of Deeds.
WHEREFORE, the petition for reconstitution is GRANTED and the Register of
Deeds of Quezon City is ORDERED to reconstitute TCT No. 305917, and issue new
owners copy thereof. The Decision appealed from is MODIFIED, by deleting that portion
which directed the Register of Deeds to verify the authenticity of the Owners Duplicate
Certificate.

Aggrieved by the Decision of the Court of Appeals in CA-G.R. CV No. 78436, dated 18 November
2004, petitioner filed the instant Petition, arguing that the Court of Appeals erred in affirming the Decision
of the RTC in LRC Case No. Q-11101 (99), dated 22 October 2001, which granted the Petition for
Reconstitution of TCT No. 305917, despite the insufficiency of documents presented as bases therefor.

Section 110 of Presidential Decree No. 1529, otherwise known as the Property Registration
Decree, as amended by Rep. Act No. 6732 allows the reconstitution of lost or destroyed
original Torrens title, by providing that:

SEC. 110. Reconstitution of lost or destroyed original of Torrens title. Original

copies of certificates of title lost or destroyed in the offices of Register of Deeds as well
as liens and encumbrances affecting the lands covered by such titles shall be
reconstituted judicially in accordance with the procedure prescribed in Republic Act No.
26 insofar as not inconsistent with this Decree. The procedure relative to administrative
reconstitution of lost or destroyed certificate prescribed in said Act may be availed of only
in case of substantial loss or destruction of land titles due to fire, flood or
other force majeure as determined by the Administrator of the Land Registration
Authority: Provided, That the number of certificates of titles lost or damaged should be at
least ten percent (10%) of the total number in the possession of the Office of the Register
of Deeds: Provided, further, That in no case shall the number of certificates of titles lost
or damaged be less than five hundred (500).
 Depending on the attendant circumstances, reconstitution of a lost or destroyed certificate of title
may be done judicially, in accordance with the special procedure laid down in Rep. Act No. 26, or
administratively, in accordance with the provisions of Rep. Act No. 6732.

By filing his Petition for Reconstitution with the RTC, docketed as LRC Case No. Q-11101 (99),
respondent sought a judicial reconstitution of TCT No. 305917 as governed by Rep. Act No. 26.

According to Section 3 of Rep. Act No. 26, TCTs may be reconstituted from the following sources,
as may be available, and in the following order:

(a) The owners duplicate of the certificate of title;

(b) The co-owners, mortgagees, or lessees duplicate of the certificate of title;
(c) A certified copy of the certificate of title, previously issued by the register of deeds or
by a legal custodian thereof;
(d) The deed of transfer or other document, on file in the Registry of Deeds, containing
the description of the property, or an authenticated copy thereof, showing that its
original had been registered, and pursuant to which the lost or destroyed certificate of
title was issued;
(e) A document, on file in the Registry of Deeds by which the property, the description
of which is given in said document, is mortgaged, leased or encumbered, or an
authenticated copy of said document showing that its original had been registered;
and
(f) Any other document which, in the judgment of the court, is sufficient and proper
basis for reconstituting the lost or destroyed certificate of title.

In support of his Petition for Reconstitution of TCT No. 305917, respondent presented the
following documentary evidence before the RTC:

1. Owners duplicate of TCT No. 305917, issued in the name of respondent;[23]

2. Letter issued by the Q.C. Register of Deeds Samuel C. Cleofe stating that the
original of TCT No. 305917 was either lost or burned during the fire that gutted the
Q.C. City Hall building on 11 June 1988;[24]
3. Photocopy of TCT No. 35359, the precursor or origin of TCT No. 305917, in the
name of the former owner and father of respondent, Jose M. Casimiro;[25]
4. Deed of Absolute Sale, dated 24 March 1979, whereby Jose M. Casimiro sold the
property to the respondent;[26]
5. Certification by Jennifer H. dela Cruz-Buendia, Assistant Clerk of Court of the
Manila RTC, Notarial Section, that the Deed of Absolute Sale was notarized by duly
commissioned Notary Public Catalino C. Manalaysay on 24 March 1979;[27]
6. Photocopy of the approved Survey Plan of Lots 2 and 3 of Psd-57312 (the property
covered by TCT No. 305917), prepared for the respondent;[28]
 7. Photocopy of the Technical Description of Lots 2 and 3 of Psd-57312, per records
of the Lands Management Bureau, and duly verified and found correct by the Chief of
the Geodetic Surveys Division, Department of Environment and Natural
Resources;[29]
8. Certification issued by the Q.C. Assessor that the respondent is the owner of Lots 2
and 3 of Psd-57312, and that the said property was plotted exactly, and the technical
description thereof duly prepared and recorded by the Q.C. Geodetic Engineer and
Tax Mapper;[30]
9. Certification issued by the Q.C. Assessor that the respondent is the registered
owner of Lots 2 and 3 of Psd-57312 and identifying the boundaries of said
property;[31]
10. Certification issued by the Q.C. Assessor naming the adjoining lot owners of Lots 2
and 3 of Psd-57312;[32]
11. Photocopy of Tax Declaration No. B-008-02423, of Lots 2 and 3 of Psd-57312,
covered by TCT No. 305917, in the name of respondent;[33]
12. Letter addressed to the Q.C. Treasurer requesting certification on the existence of
Real Property Tax Bill Receipt G-No. 844207-A;[34] and
13. Certified photocopy of Real Property Tax Bill Receipt G-No. 844207-A, issued on 30
June 2000, in the name of respondent;[35]

It should be noted that each TCT would have several copies: (1) an original copy, which remains
with the Register of Deeds; (2) the owners duplicate certificate, to be delivered only to the registered
owner of the property as named in the TCT or his duly authorized representative; and (3) separate
owners duplicate certificates in cases where there are two or more registered owners and each co-owner
desires his own duplicate certificate.[36] In resolving petitions for judicial reconstitution of the original copy
of a TCT, great evidentiary weight is rightfully accorded to the owners duplicate of the TCT, since a duly-
issued owners duplicate certificate is, by all accounts, an exact reproduction of the original copy of the
TCT. Thus, among the sources enumerated in Section 3 of Rep. Act No. 26 from which TCTs may be
reconstituted, the owners duplicate of the TCT is primary.

However, if the reconstitution of the original copy of the TCT shall be based on the owners
duplicate of the said TCT, the owners duplicate certificate itself must have been presented before the
court, and not a mere photocopy thereof. Such a requirement is only reasonable so as to preclude any
questions as to the genuineness and authenticity of the owners duplicate certificate, and bar the
possibility of reconstitution based on a fraudulent or forged owners duplicate certificate.

In the course of the hearings held by the RTC of LRC Case No. Q-11101 (99), respondent
presented his owners duplicate of TCT No. 305917 as evidence for the inspection by the court and the
petitioner. Such a fact was acknowledged in an Order,[37] issued by the RTC on 16 February 1999, to wit:
 The Court notes the existence of the owners duplicate copy of TCT No. 305917
as shown by the petitioner who is hereby directed to surrender the same when he files
his formal offer of evidence.

Despite the aforequoted directive of the RTC, respondent merely submitted a photocopy of his owners
duplicate certificate when he made his formal offer of evidence. As a consequence, the RTC initially
denied the respondents Petition for Reconstitution and archived LRC Case No. Q-11101 (99) through a
Resolution,[38] dated 3 March 1999.However, when the respondent, in his second Motion for
Reconsideration of the Resolution, dated 3 March 1999, finally surrendered to the RTC his owners
duplicate of TCT No. 305917, the said court, in its Decision, dated 22 October 2001, granted the petition
for reconstitution of the original copy of TCT No. 305917.

Notwithstanding the surrender by the respondent of his owners duplicate of TCT No. 305917 to
the RTC, petitioner maintains that the said document cannot be the basis for reconstitution of the original
copy of TCT No. 305917 since it is of dubious origin, basically relying on the LRA report/findings, dated
10 December 2001.

It should be recalled that in the said report/findings, the LRA declared respondents owners
duplicate of TCT No. 305917 as highly questionable since it shows that TCT No. 305917 was issued and
recorded by the Quezon City Register of Deeds on 20 November 1979, ahead of Judicial Form No.
3842367, which was issued only on 21 September 1982. Judicial Form No. 3842367 is supposed to be
the administrative form issued by the LRA to the Quezon City Register of Deeds directing the latter to
issue TCT No. 305917; thus, TCT No. 305917 could not have been issued before Judicial Form No.
3842367. Although the LRA report/findings refer only to the owners duplicate of TCT No. 305917, it
actually raises doubt even as to the authenticity of the original copy of TCT No. 305917, because the
owners duplicate certificate merely reflects the date when the original copy of TCT No. 305917 was
issued and recorded by the Quezon City Register of Deeds, which was on 20 November 1979. Delving
into such an issue may constitute a violation of the rule that a Torrens title cannot be collaterally
attacked.[39]

Moreover, there appears to be a mix-up within the LRA itself as to the dates of issuance of TCT
No. 305917 and Judicial Form No. 3842367. On 7 December 2001, Atty. Rodolfo F. Reynoso, counsel for
the respondent, drafted a request for certification addressed to the LRA Administrator as regards the date
of issuance of the judicial form covering TCT No. 305917. This request was hand-carried by respondent
himself to the LRA office and was received by a certain Mr. Jose Manabat of the said office on 18
December 2001. In response to the foregoing request, two (2) Certifications were actually issued
by Edelmira N. Salazar, LRA Administrative Officer IV, OIC-Judicial Forms, both bearing the same date,
20 December 2001, and covered by the same receipt, Official Receipt No. 1042439-6, to wit: (1)
Certification that Judicial Form No. 3842376 was issued to the Q.C. Register of Deeds on 21 September
1982; and (2) Certification that Judicial Form No. 3842367 was issued to the Quezon City Register of
Deeds on 17 November 1979. Respondent first received the Certification on Judicial Form No. 3842376,
but when respondent noticed that the date of issuance of the said judicial form was 21 September 1982,
he complained to Mr. Manabat that he had no property registered with the Quezon City Registry of Deeds
on the said date and requested that the necessary correction be made on the Certification to reflect the
accurate information. After about a week, respondent returned to the LRA Office and
Mr. Manabat handed to him the Certification on Judicial Form No. 3842367 which stated that such judicial
form was issued on 17 November 1979.[40] The latter Certification is consistent with the fact that TCT No.
305917 was issued on 20 November 1979, three days after Judicial Form No. 3842367.

According to the LRA report/findings being invoked by the petitioner, it is Judicial Form No.
3842367 which pertains to TCT No. 305917, ruling out Judicial Form No. 3842376. While the LRA
report/findings, dated 10 December 2001, states that Judicial Form No. 3842367 was issued on 21
September 1982, the LRA Certification issued by the LRA Officer-in-Charge of Judicial Forms, dated 20
December 2001, just 10 days after the LRA report/findings, avers that the same judicial form was issued
on 17 November 1979. Therefore, the report/findings of the LRA relied upon by petitioner as to the date of
issuance of Judicial Form No. 3842367, was rebutted by the second Certification from the same agency
acquired by the respondent. The existence of the first Certification only makes it more probable that the
LRA confused Judicial Form No. 3842367, issued on 17 November 1979, with Judicial Form No.
3842376, issued on 21 September 1982.

Aside from the LRA report/findings, petitioner did not present any other evidence to further
establish the highly-questionable character of the owners duplicate certificate presented by the
respondent. The second LRA Certification on the date of issuance of Judicial Form No. 3842367
effectively raises doubts as to the accuracy of the LRA report/findings.

Another problematic aspect of the same LRA report/findings is its statement that the title sought
to be reconstituted [by the respondent] overlaps another title duly issued to the National
Government.[41] Surprisingly, while the LRA made such a vital declaration, it failed to mention specific
details in support thereof. The LRA report/findings does not even identify the particular certificate title
number in the name of the National Government with which TCT No. 305917 of the respondent
supposedly overlaps. Records also show that pursuant to a request by the LRA itself, DENR issued a
certified copy of the technical descriptions of Lots 2 and 3 of Psd-57312, consistent with the plottings in
TCT No. 305917, supporting even further the validity and authenticity of respondents owners duplicate of
TCT No. 305917 and raising even more doubts as the actual existence of another title covering the same
lots in the name of the National Government. Such doubts could have been easily dispelled by petitioners
presentation of the alleged title of the National Government so that the technical descriptions of the
property covered therein could be compared to those in TCT No. 305917. Again, however, other than
relying on the LRA report/findings, petitioner made no further attempts to prove that Lots 2 and 3 of Psd-
57312 was covered by another title aside from TCT No. 305917.

The existence of respondents owners duplicate of TCT No. 305917 having been satisfactorily
established, then the other documents he presented in support of his Petition for Reconstitution before
the RTC are merely corroborating or parol evidence. It bears to emphasize that the basis for the
reconstitution of TCT No. 305917 is Section 3(a) of Rep. Act No. 26,[42] thus, its jurisdictional
requirements are governed by Section 10 of the same statute.[43]

Section 10 of Rep. Act No. 26 provides that

SEC. 10. Nothing hereinbefore provided shall prevent any registered owner or
person in interest from filing the petition mentioned in Section five of this Act directly with
the proper Court of First Instance, based on sources enumerated in Sections 2(a), 2(b),
3(a), 3(b), and/or 4(a) of this Act: Provided, however, That the Court shall cause a notice
of the petition, before hearing and granting the same, to be published in the manner
stated in Section nine hereof: and Provided, further, That certificates of title reconstituted
pursuant to this Section shall not be subject to the encumbrance referred to in Section
seven of this Act.

Section 9 of the same statute on the notice requirements reads as follows

SEC. 9. A registered owner desiring to have his reconstituted certificate of title

freed from the encumbrance mentioned in Section seven of this Act, may file a petition to
that end with the proper Court of First Instance giving his reason or reasons therefore. A
similar petition may, likewise, be filed by a mortgagee, lessee or other lien holder whose
interest is annotated in the reconstituted certificate of title. Thereupon, the court shall
cause a notice of the petition to be published, at the expense of the petitioner, twice in
successive issues of the Official Gazette, and to be posted on the main entrance of the
provincial building and of the municipal building of the municipality or city in which the
land lies, at least thirty days prior to the date of hearing, and after hearing, shall
determine the petition and render such judgment as justice and equity may require. The
notice shall specify, among other things, the number of the certificate of title, the name of
the registered owner, the names of the interested parties appearing in the reconstituted
certificate of title, the location of the property, and the date on which all persons having
an interest in the property must appear and file such claim as they may have. The
 petitioner shall, at the hearing, submit proof of the publication and posting of the notice:
x x x.

As declared by the RTC, respondent has satisfactorily complied with the jurisdictional requirements for
the reconstitution of TCT No. 305917 based on Section 3(a) of Rep. Act No. 26, to wit

Thus, the following jurisdictional requirements were complied with:

1. a petition filed with the [sic] by the registered owner, a mortgagee, a lessee, or
other lien holder whose interest in [sic] annotated in the reconstituted certificate of title;
2. the publication of a notice of the petition, at the expense of the petitioner, twice
in successive issues of the Official Gazette, at least 30 days prior to the date of hearing;
3. the posting of a notice of the petition at the main entrance of the provincial
building and of the municipal building of the municipality or city in which the land lies, at
least 30 days prior to the date of hearing; [and]
4. PRESENTATION OF THE OWNERS DUPLICATE CERTIFICATE which is the
duplicate original carbon copy of the original, but with original signatures. [44]

The findings of fact of the RTC, affirmed by the Court of Appeals, cannot be disturbed by this Court, since

As a rule, only questions of law may be appealed to the Court by certiorari. The
Court is not a trier of facts, its jurisdiction being limited to errors of law. Moreover, where
as in this case the Court of Appeals affirms the factual findings of the trial court, such
findings generally become conclusive and binding upon the Court. The Court will not
disturb the factual findings of the trial and appellate courts unless there are compelling or
exceptional reasons, and there is none in the instant petition. [45]

Petitioner failed to present before this Court any compelling or exceptional argument or evidence
that would justify a departure from the foregoing general rule. This Court defers to the findings of both the
RTC and the Court of Appeals as to the weight accorded to respondents evidence and the sufficiency
thereof to substantiate his right to a reconstitution of the original copy of TCT No. 305917.

When a court, after hearing of a petition for reconstitution, finds that the evidence presented is
sufficient and proper to grant the same, that the petitioner therein is the registered owner of the property,
and that the certificate sought to be reconstituted was in force at the time it was lost, it becomes the duty
of the court to issue the order of reconstitution. This duty is mandatory. The law does not give the court
discretion to deny the reconstitution if all the basic requirements have been complied with. [46] The RTC,
therefore, acted accordingly, when after finding that the respondent in the Petition at bar [the petitioner in
LRC Case No. Q-11101 (99) before the RTC] complied with the jurisdictional requirements under the law,
authorized reconstitution of TCT No. 305917, albeit with conditions. Such conditions were subsequently
deleted by the Court of Appeals.

WHEREFORE, premises considered, the instant Petition is hereby DENIED. The Decision, dated
18 November 2004, of the Court of Appeals, in CA-G.R. CV No. 78436, ordering the reconstitution of the
original copy of TCT No. 305917 and the issuance of a new owners duplicate thereof, is
hereby AFFIRMED. No costs.

SO ORDERED.