UDK No.

7671 June 23, 1988

DEVELOPMENT BANK OF THE PHILIPPINES, registrant-appellant, vs.THE ACTING
REGISTER DEEDS OF NUEVA ECIJA, respondent-appellee.
This case, rather cut-and-dried as far as factual background is concerned, turns upon a
determination of the true meaning and intendment of Section 56 of Presidential Decree No.
1529, 1 which in part reads:
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.
xxx xxx xxx
The facts are few and undisputed. On June 13, 1980, the Development Bank of the
Philippines (hereafter, DBP) presented for registration to the Register of Deeds of Nueva
Ecija, Cabanatuan City, a sheriff's certificate of sale in its favor of two parcels of land
covered by Transfer Certificates of Title Nos. NT-149033 and NT-149034, both in the names
of the spouses Andres Bautista and Marcelina Calison, which said institution had acquired as
the highest bidder at an extrajudicial foreclosure sale. The transaction was entered as Entry
No. 8191 in the Registry's Primary Entry Book and DBP paid the requisite registration fees on
the same day. Annotation of the sale on the covering certificates of title could not, however
be effected because the originals of those certificates were found to be missing from the
files of the Registry, where they were supposed to be kept, and could not be located. 2 On
the advice of the Register of Deeds, DBP instituted proceedings in the Court of First Instance
of Nueva Ecija to reconstitute said certificates, and reconstitution was ordered by that court
in a decision rendered on June 15, 1982. 3 For reasons not apparent on the record, the
certificates of title were reconstituted only on June 19,1984. 4
On June 25, 1984, DBP sought annotation on the reconstituted titles of the certificate of sale
subject of Entry No. 8191 on the basis of that same four-year-old entry. The Acting Register
of Deeds, being in doubt of the proper action to take on the solicitation, took the matter to
the Commissioner of Land Registration by consulta raising two questions: (a) whether the
certificate of sale could be registered using the old Entry No. 8191 made in 1980
notwithstanding the fact that the original copies of the reconstituted certificates of title were
issued only on June 19, 1984; and (b) if the first query was answered affirmatively, whether
he could sign the proposed annotation, having assumed his duties only in July 1982. 5

The resolution on the consulta held that Entry No. 8191 had been rendered "... ineffective
due to the impossibility of accomplishing registration at the time the document was entered
because of the non-availability of the certificate (sic) of title involved. For said certificate of
sale to be admitted for registration, there is a need for it to be re-entered now that the titles
have been reconstituted upon payment of new entry fees," and by-passed the second query
as having been rendered moot and academic by the answer to the first. 6
Unwilling to accept that result, the DBP appealed the resolution to the Court of Appeals
(then the Intermediate Appellate Court) 7 which, after reviewing the record, certified the
appeal to this Court as involving a question purely of law. 8
The appealed resolution appears to be based upon a reading of the cited Section 56 of PD
No. 1529, and particularly of the provision therein referring to the Register's act of making a
primary entry as " ... a preliminary process in registration ...," as depriving of any effect a
primary entry without a corresponding annotation thereof on the certificate of title to which
the instrument subject of said entry refers.
That view fails to find support from a consideration of entire context of said Section 56 which
in another part also provides that the instrument subject of a primary entry "... shall be
regarded as registered from the time so noted ...," and, at the very least, gives such entry
from the moment of its making the effect of putting the whole world on notice of the
existence the instrument on entered. Such effect (of registration) clearly attaches to the
mere making of the entry without regard to the subsequent step of annotating a
memorandum of the instrument subject of the entry on the certificate of title to which it
refers. Indeed, said Section, in also providing that the annotation, "... when made ... shall
bear the same date ..." as the entry, may be said to contemplate unspecified intervals of
time occurring between the making of a primary entry and that of the corresponding
annotation on the certificate of title without robbing the entry of the effect of being
equivalent to registration. Neither, therefore, is the implication in the appealed resolution
that annotation must annotation entry immediately or in short order justified by the
language of Section 56.
Furthermore, it is amply clear that the four-year hiatus between primary entry and proposed
annotation in this case has not been of DBP's making. Though it was under no necessity to
present the owner's duplicates of the certificates of title affected for purposes of primary
entry, since the transaction sought to be recorded was an involuntary transaction, 9 and the
record is silent as to whether it presented them or not, there is nonetheless every probability
that it did so. It was the mortgagee of the lands covered by those titles and it is usual in
mortgage transactions that the owner's duplicates of the encumbered titles are yielded into
the custody of the mortgage until the mortgage is discharged. Moreover, the certificates of
title were reconstituted from the owner's duplicates, 10 and again it is to be presumed that
said duplicates were presented by DBP, the petitioner in the reconstitution proceedings.
It is, furthermore, admitted that the requisite registration fees were fully paid and that the
certificate of sale was registrable on its face. 11 DBP, therefore, complied with all that was
required of it for purposes of both primary entry and annotation of the certificate of sale. It
cannot be blamed that annotation could not be made contemporaneously with the entry
because the originals of the subject certificates of title were missing and could not be found,

since it had nothing to do with their safekeeping. If anyone was responsible for failure of
annotation, it was the Register of Deeds who was chargeable with the keeping and custody
of those documents.
It does not, therefore, make sense to require DBP to repeat the process of primary entry,
paying anew the entry fees as the appealed resolution disposes, in order to procure
annotation which through no fault on its part, had to be deferred until the originals of the
certificates of title were found or reconstituted. That it is hardly just or equitable to do so
also seems to have occurred to the Solicitor General, who dilutes his argument in support of
the appealed resolution with the suggestion that "... the making of a new entry ... would be
the more orderly procedure," and that DBP should not be made to pay filing fees anew. 12
Jurisprudence on the subject, while it has not been entirely consistent, is not wanting.
In Government vs. Aballe, 13this Court ruled that " ... (a)lthough a notice of attachment has
not been noted on the certificate of title, its notation in the book of entry of the register of
deeds produces all the effects which the law gives to its registration or inscription."
Seemingly, that ruling was abandoned in the wartime case of Basa vs. De la Rama, 14 where
it was held that the entry of an instrument in the primary entry book produces no legal
effect unless a memorandum thereof is noted on the certificate of title. Villasor vs.
Camon, 15 however, clarified that Aballe was never really abandoned or reversed insofar as it
applied to involuntary transactions. Said the Court in that case, which involved a voluntary
transactions a deed of assignment of rights in a parcel of land and its improvements:
The appellant cannot invoke in support of her contention, the ruling laid down
in the case of Government of the Philippine Islands vs. Aballe, 60 Phil., 986,
which was followed in Director of Lands vs. Abad, 61 Phil. 479, to the effect
that an attachment entered upon the entry book is duly registered although
the duplicate certificate is not presented at the time of registration to the
register of deeds. Appellant cannot invoked said ruling, not because it has
been abandoned by the Supreme Court during the Japanese occupation in the
case of Bass VS. De la Rama, et al., ... in which it was said that "we are
constrained to abandon the ruling in said two cases,"- it was not abandoned
for the decision was concurred by only two justices or less than a majority,
and said statement was not necessary or an obiter dictum and against the
law, as correctly stated by the two associate justices who dissented and only
concurred in the result, but because said ruling, subsisting and in force, does
not support appellant's contention, for it is only applicable to registration of
involuntary instruments, such as attachment, or other liens and adverse
claims of any description. This ruling is correct or in conformity with the
provisions of section 72 of Act No. 496, which do not require the production by
the registrant of the duplicate certificate of the land to be affected, ...
(emphasis supplied)
The decision in Villasor also quoted with approval the following excerpt from an earlier
case, Philippine National Bank vs. Fernandez. 16
Coming now to the second ground on which the appellant bases his claims, we
find that when Simona Fausa executed the document, Exhibit 3, on October

17, 1928, conveying her interest in the land to the appellant, her interest
therein had already been attached by the provincial sheriff and also by him at
public auction to the Philippine National Bank, and the certificate of sale filed
in the office of the register of deeds in accordance with the law (sections 429
and 450 of the Code of Civil Procedure). It was not necessary for the sheriff to
present the owner's duplicate of the certificate of title when he filed notice of
attachment with the register of deeds, nor was it necessary for the Philippine
National Bank to present the owner's duplicate when the bank filed its
certificate of sale for registration (sections 71 and 72 of Act No. 496).
Later cases appear to have applied the Aballe ruling that entry in the day book, even
without the corresponding annotation on the certificate of title, is equivalent to, or produces
the effect of, registration to voluntary transactions, provided the requisite fees are paid and
the owner's duplicates of the certificates of title affected are presented. Thus, in Levin vs.
Bass, et al., 17 it was held:
... Under the Torrens system the act of registration is the operative act to
convey and affect the land. Do the entry in the day book of a deed of sale
which was presented and filed together with owner's duplicate certificate of
title which the office of the Registrar of Deeds and full payment of registration
fees constitute a complete act of registration which operates to convey and
affect the land? In voluntary registration, such as a sale, mortgage, lease and
the like, if the owner's duplicate certificate be not surrendered and presented
or if no payment of registration fees be made within 15 days, entry in the day
book of the deed of sale does not operate to convey and affect the land sold.
In involuntary registration, such as an attachment, levy upon execution, lis
pendens and the like entry thereof in the day book is a sufficient notice to all
persons of such adverse claim. ... The pronouncement of the court below is to
the effect that an innocent purchaser for value has no right to the property
because he is not a holder of a certificate of title to such property acquired by
him for value and in good faith. It amounts to holding that for failure of the
Registrar of Deeds to comply and perform his duty, an innocent purchaser for
value loses that character-he is not an "innocent holder for value of a
certificate of title." ... Neither violence to, nor stretching of the meaning of,
the law would be done, if we should hold that an innocent purchaser for value
of registered land becomes the registered owner and in contemplation of law
the holder of a certificate thereof the moment he presents the owner's
duplicate certificate of title to the property sold and pays the full amount of
registration fees, because what remains to be done lies not within his power
to perform. The Registrar of Deeds is in duty bound to perform it. We believe
that is a reasonable and practical interpretation of the law under
considerations-a construction which would lead to no inconsistency and
injustice. (emphasis supplied)
A similar ruling was made in Potenciano vs. Dineros, et al., 18 concerning land a deed of sale
of which was entered in the day book upon payment of the corresponding fees and
presentation of the owner's duplicate of the covering certificate of title, on November 4,
1944. However, due to the confusion arising from the bombing of Manila (this having

happened during the final months of the Japanese Occupation), the papers presented by the
registrant were either lost or destroyed, no certificate of title was issued to him and as far as
the records of the Register of Deeds showed, the property remained in the name of the
vendor. Another party later sued the vendor, obtained judgment against him and purchased
the property on execution sale. In affirming judgment annulling the execution sale in an
action brought by the original purchaser, this Court held:
The judgment creditor contends that entry of the deed in the day book is not
sufficient registration. Both upon law and authority this contention must be
rejected. Section 56 of the Land Registration Act says that deeds relating to
registered land shall, upon payment of the filing fees, be entered in the entry
book also called day book in the same section with notation of the year,
month, day, hour, and minute of their reception and that "they shall be
regarded as registered from the moment so noted." And applying this
provision in the cases of Levin vs. Bass, etc., G.R. Nos. L-4340 to 4346,
decided on May 28, 1952, this Court held that "an innocent purchaser for
value of registered land becomes the registered owner and in contemplation
of law the holder of a certificate thereof the moment he presents and files a
duly notarized and lawful deed of sale and the same is entered on the day
book and at the same time he surrenders or presents the owner's duplicate
certificate of title to the property sold and pays the full amount of registration
fees, because what remains to be done lies not within his power to perform."
Current doctrine thus seems to be that entry alone produces the effect of registration,
whether the transaction entered is a voluntary or an involuntary one, so long as the
registrant has complied with all that is required of him for purposes of entry and annotation,
and nothing more remains to be done but a duty incumbent solely on the register of deeds.
Therefore, without necessarily holding that annotation of a primary entry on the original of
the certificate of title may be deferred indefinitely without prejudice to the legal effect of
said entry, the Court rules that in the particular situation here obtaining, annotation of the
disputed entry on the reconstituted originals of the certificates of title to which it refers is
entirely proper and justified. To hold said entry "ineffective," as does the appealed
resolution, amounts to declaring that it did not, and does not, protect the registrant (DBP)
from claims arising, or transactions made, thereafter which are adverse to or in derogation
of the rights created or conveyed by the transaction thus entered. That, surely, is a result
that is neither just nor can, by any reasonable interpretation of Section 56 of PD 1529, be
asserted as warranted by its terms.
The qualms implicit in the query of the respondent (and present appellee) register of deeds
about making annotation of an entry effected before he assumed that office are more
imagined than real. He would only be making a memorandum of an instrument and of its
entry based on or reciting details which are already of indubitable record and, pursuant to
the express command of the law, giving said memorandum the same date as the entry. No
part of that function is exclusive to the incumbent of the office at the time entry was made
or is forbidden to any of his successors.

WHEREFORE, the appealed resolution of the Acting Commissioner of Land Registration is SET
ASIDE. The respondent-appellee Register of Deeds of Nueva Ecija, or his successor, is
ordered to annotate on the originals of the reconstituted Transfer Certificates of Title Nos.
NT-149033 and NT-149034 of his Registry a memorandum of the certificate of sale in favor of
appellant Development Bank of the Philippines as entered under Entry No. 8191 dated June
13, 1980 of the Primary Entry (Day) Book of said Registry. No pronouncement as to costs.
SO ORDERED.
January 13, 2004 SHOPPERS PARADISE REALTY & DEVELOPMENT
CORPORATION, petitioner, vs. EFREN P. ROQUE, respondent.

On 23 December 1993, petitioner Shoppers Paradise Realty & Development

Corporation, represented by its president, Veredigno Atienza, entered into a twentyfive year lease with Dr. Felipe C. Roque, now deceased, over a parcel of land, with
an area of two thousand and thirty six (2,036) square meters, situated at Plaza
Novaliches, Quezon City, covered by Transfer of Certificate of Title (TCT) No. 30591
of the Register of Deeds of Quezon City in the name of Dr. Roque. Petitioner issued
to Dr. Roque a check for P250,000.00 by way of reservation payment.
Simultaneously, petitioner and Dr. Roque likewise entered into a memorandum of
agreement for the construction, development and operation of a commercial
building complex on the property. Conformably with the agreement, petitioner
issued a check for another P250,000.00 downpayment to Dr. Roque.
The contract of lease and the memorandum of agreement, both notarized, were to be
annotated on TCT No. 30591 within sixty (60) days from 23 December 1993 or until 23
February 1994. The annotations, however, were never made because of the untimely
demise of Dr. Felipe C. Roque. The death of Dr. Roque on 10 February 1994 constrained
petitioner to deal with respondent Efren P. Roque, one of the surviving children of the late Dr.
Roque, but the negotiations broke down due to some disagreements. In a letter, dated 3
November 1994, respondent advised petitioner to desist from any attempt to enforce the
aforementioned contract of lease and memorandum of agreement. On 15 February 1995,
respondent filed a case for annulment of the contract of lease and the memorandum of
agreement, with a prayer for the issuance of a preliminary injunction, before Branch 222 of
the Regional Trial Court of Quezon City. Efren P. Roque alleged that he had long been the
absolute owner of the subject property by virtue of a deed of donation inter vivos executed
in his favor by his parents, Dr. Felipe Roque and Elisa Roque, on 26 December 1978, and that
the late Dr. Felipe Roque had no authority to enter into the assailed agreements with
petitioner. The donation was made in a public instrument duly acknowledged by the donorspouses before a notary public and duly accepted on the same day by respondent before the
notary public in the same instrument of donation. The title to the property, however,
remained in the name of Dr. Felipe C. Roque, and it was only transferred to and in the name
of respondent sixteen years later, or on 11 May 1994, under TCT No. 109754 of the Register
of Deeds of Quezon City. Respondent, while he resided in the United States of America,
delegated to his father the mere administration of the property. Respondent came to know
of the assailed contracts with petitioner only after retiring to the Philippines upon the death
of his father.

On 9 August 1996, the trial court dismissed the complaint of respondent; it explained:
Ordinarily, a deed of donation need not be registered in order to be valid between the
parties. Registration, however, is important in binding third persons. Thus, when Felipe
Roque entered into a leased contract with defendant corporation, plaintiff Efren Roque
(could) no longer assert the unregistered deed of donation and say that his father, Felipe,
was no longer the owner of the subject property at the time the lease on the subject
property was agreed upon.
The registration of the Deed of Donation after the execution of the lease contract did not
affect the latter unless he had knowledge thereof at the time of the registration which
plaintiff had not been able to establish. Plaintiff knew very well of the existence of the
lease. He, in fact, met with the officers of the defendant corporation at least once before he
caused the registration of the deed of donation in his favor and although the lease itself was
not registered, it remains valid considering that no third person is involved. Plaintiff cannot
be the third person because he is the successor-in-interest of his father, Felipe Roque, the
lessor, and it is a rule that contracts take effect not only between the parties themselves but
also between their assigns and heirs (Article 1311, Civil Code) and therefore, the lease
contract together with the memorandum of agreement would be conclusive on plaintiff Efren
Roque. He is bound by the contract even if he did not participate therein. Moreover, the
agreements have been perfected and partially executed by the receipt of his father of the
downpayment and deposit totaling to P500,000.00.[1]
The Trial court ordered respondent to surrender TCT No. 109754 to the Register of Deeds of
Quezon City for the annotation of the questioned Contract of Lease and Memorandum of
Agreement.
On appeal, the Court of Appeals reversed the decision of the trial court and held to be
invalid the Contract of Lease and Memorandum of Agreement. While it shared the view
expressed by the trial court that a deed of donation would have to be registered in order to
bind third persons, the appellate court, however, concluded that petitioner was not a lessee
in good faith having had prior knowledge of the donation in favor of respondent, and that
such actual knowledge had the effect of registration insofar as petitioner was
concerned. The appellate court based its findings largely on the testimony of Veredigno
Atienza during cross-examination, viz;
Q. Aside from these two lots, the first in the name of Ruben Roque and the second,
the subject of the construction involved in this case, you said there is another
lot which was part of development project?
A. Yes, this was the main concept of Dr. Roque so that the adjoining properties of
his two sons, Ruben and Cesar, will comprise one whole. The other whole
property belongs to Cesar.
Q. You were informed by Dr. Roque that this property was given to his three (3)
sons; one to Ruben Roque, the other to Efren, and the other to Cesar Roque?
A. Yes.

Q. You did the inquiry from him, how was this property given to them?
A. By inheritance.
Q. Inheritance in the form of donation?
A. I mean inheritance.
Q. What I am only asking you is, were you told by Dr. Felipe C. Roque at the time
of your transaction with him that all these three properties were given to his
children by way of donation?
A. What Architect Biglang-awa told us in his exact word: Yang mga yan pupunta
sa mga anak. Yong kay Ruben pupunta kay Ruben. Yong kay Efren palibhasa
nasa America sya, nasa pangalan pa ni Dr. Felipe C. Roque.
x x x

xxx

xxx

Q. When was the information supplied to you by Biglang-awa? Before the

execution of the Contract of Lease and Memorandum of Agreement?
A. Yes.
Q. That being the case, at the time of the execution of the agreement or soon
before, did you have such information confirmed by Dr. Felipe C. Roque himself?
A. Biglang-awa did it for us.
Q. But you yourself did not?
A. No, because I was doing certain things. We were a team and so Biglang-awa
did it for us.
Q. So in effect, any information gathered by Biglang-awa was of the same effect
as if received by you because you were members of the same team?
A. Yes.[2]
In the instant petition for review, petitioner seeks a reversal of the decision of the Court
of Appeals and the reinstatement of the ruling of the Regional Trial Court; it argues that the
presumption of good faith it so enjoys as a party dealing in registered land has not been
overturned by the aforequoted testimonial evidence, and that, in any event, respondent is
barred by laches and estoppel from denying the contracts.
The existence, albeit unregistered, of the donation in favor of respondent is
undisputed. The trial court and the appellate court have not erred in holding that the nonregistration of a deed of donation does not affect its validity. As being itself a mode of

acquiring ownership, donation results in an effective transfer of title over the property from
the donor to the donee.[3] In donations of immovable property, the law requires for its
validity that it should be contained in a public document, specifying therein the property
donated and the value of the charges which the donee must satisfy. [4] The Civil Code
provides, however, that titles of ownership, or other rights over immovable property, which
are not duly inscribed or annotated in the Registry of Property (now Registry of Land Titles
and Deeds) shall not prejudice third persons.[5] It is enough, between the parties to a
donation of an immovable property, that the donation be made in a public document but, in
order to bind third persons, the donation must be registered in the registry of Property
(Registry of Land Titles and Deeds).[6] Consistently, Section 50 of Act No. 496 (Land
Registration Act), as so amended by Section 51 of P.D. No. 1529 (Property Registration
Decree), states:
SECTION 51.
Conveyance and other dealings by registered owner.- An owner of
registered land may convey, mortgage, lease, charge or otherwise deal with the same in
accordance with existing laws. He may use such forms of deeds, mortgages, leases or other
voluntary instruments as are sufficient in law. But no deed, mortgage, lease, or other
voluntary instrument, except a will purporting to convey or affect registered land shall take
effect as a conveyance or bind the land, but shall operate only as a contract between the
parties and as evidence of authority to the Register of Deeds to make registration.
The act of registration shall be the operative act to convey or affect the land insofar as
third persons are concerned, and in all cases under this Decree, the registration shall be
made in the office of the Register of Deeds for the province or city where the land lies.
(emphasis supplied)
A person dealing with registered land may thus safely rely on the correctness of the
certificate of title issued therefore, and he is not required to go beyond the certificate to
determine the condition of the property[7] but, where such party has knowledge of a prior
existing interest which is unregistered at the time he acquired a right thereto, his knowledge
of that prior unregistered interest would have the effect of registration as regards to him. [8]
The appellate court was not without substantial basis when it found petitioner to have
had knowledge of the donation at the time it entered into the two agreements with Dr.
Roque. During their negotiation, petitioner, through its representatives, was apprised of the
fact that the subject property actually belonged to respondent.
It was not shown that Dr. Felipe C. Roque had been an authorized agent of respondent.
In a contract of agency, the agent acts in representation or in behalf of another with the
consent of the latter.[9] Article 1878 of the Civil Code expresses that a special power of
attorney is necessary to lease any real property to another person for more than one
year. The lease of real property for more than one year is considered not merely an act of
administration but an act of strict dominion or of ownership. A special power of attorney is
thus necessary for its execution through an agent.
The Court cannot accept petitioners argument that respondent is guilty of
laches. Laches, in its real sense, is the failure or neglect, for an unreasonable and

unexplained length of time, to do that which, by exercising due diligence, could or should
have been done earlier; it is negligence or omission to assert a right within a reasonable
time, warranting a presumption that the party entitled to assert it either has abandoned or
declined to assert it.[10]
Respondent learned of the contracts only in February 1994 after the death of his father,
and in the same year, during November, he assailed the validity of the agreements. Hardly,
could respondent then be said to have neglected to assert his case for unreasonable length
of time.
Neither is respondent estopped from repudiating the contracts. The essential elements
of estoppel in pais, in relation to the party sought to be estopped, are: 1) a clear conduct
amounting to false representation or concealment of material facts or, at least, calculated to
convey the impression that the facts are otherwise than, and inconsistent with, those which
the party subsequently attempts to assert; 2) an intent or, at least, an expectation, that this
conduct shall influence, or be acted upon by, the other party; and 3) the knowledge, actual
or constructive, by him of the real facts. [11] With respect to the party claiming the estoppel,
the conditions he must satisfy are: 1) lack of knowledge or of the means of knowledge of the
truth as to the facts in question; 2) reliance, in good faith, upon the conduct or statements of
the party to be estopped; and 3) action or inaction based thereon of such character as to
change his position or status calculated to cause him injury or prejudice. [12] It has not been
shown that respondent intended to conceal the actual facts concerning the property; more
importantly, petitioner has been shown not to be totally unaware of the real ownership of
the subject property.
Altogether, there is no cogent reason to reverse the Court of Appeals in its assailed
decision.
WHEREFORE, the petition is DENIED, and the decision of the Court of Appeals declaring
the contract of lease and memorandum of agreement entered into between Dr. Felipe C.
Roque and Shoppers Paradise Realty & Development Corporation not to be binding on
respondent is AFFIRMED. No costs.

ARLYN* PINEDA VS JULIE C. ARCALAS,

NOV 2007

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

Affidavit of Adverse Claim annotated at the back of Transfer Certificate of Title (TCT) No. T52319 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

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 ThirdParty 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 3 rd Party Claim should be
given due course and the corresponding annotation at the back of TCT No. T52319 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

prohibition, mandamus, quo warranto and habeas

of

Appeals,

corpuscases,

such
a

as certiorari,

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
theappellee, 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
andexecutory.[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

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 Tolentinothrough

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.
Fudot vs. Cattleya Land Inc. (533 SCRA 351)
Knowledge gained by first buyer of second sale cannot defeat first buyers rights, except
where the second buyer registers in good faith the second sale ahead of the first. It is
essential to merit the protection of Art. 1544 of the New Civil Code, that the second realty
buyer must act in good faith in registering his deed of sale.

CARMELITA FUDOT VS CATTLEYA LAND, INC.,

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

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

the Regional Trial Court of Tagbilaran City.

Title
[7]

With

Damages

before

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

rebutAsuncions

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 RIGHTIS IT THE FIRST BUYER WHO WAS GIVEN THE OWNERS DUPLICATE TCT
TOGETHER WITH A DEED OF SALE IN 1986, OR THE SECOND BUYER IN
1992 WITH ONLY A DEED OF SALE.
II.
IS A BUYER OF REGISTERED LAND WHO DID NOT DEMAND OR REQUIRE
THE DELIVERY OF THE OWNERS DUPLICATE TCT A BUYER IN GOOD FAITH.
III.
II.
IN SUBSEQUENT REGISTRATION OF REGISTERED LANDS, AS BY SALE,
WHICH LAW SHALL GOVERN, ARTICLE 1455 OF CIVIL CODE OR P.D. 1529
OR TORRENS SYSTEM.[17]

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

Petitioner claims that respondent did not demand nor require delivery of the owners
duplicate title from the spouses Tecson, neither did it investigate the circumstances
surrounding the absence of the title. These indicate respondents knowledge of a defect in
the title of the spouses and, thus, petitioner concludes that respondent was not a buyer in
good faith.[19]
Finally, petitioner insists that the applicable law in this case is P.D. No. 1529, a special
law dealing precisely with the registration of registered lands or any subsequent sale
thereof, and not Article 1544 of the Civil Code which deals with immovable property not
covered by the Torrens System.[20]
Respondent points out, on one hand, that petitioners first two issues which present
an inquiry on who has a better right or which one is a buyer in good 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.

[24]

Art. 1544 of the Civil Code,

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 ofAsuncion. 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-inIntervention 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.
G.R. No. 165853

June 22, 2006

ROSANA EREA, Petitioner, vs. VIDA DANA QUERRER-KAUFFMAN, Respondent.

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 Pias 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 Pias City. The property is covered by Transfer Certificate of Title (TCT) No. T-48521. The
owners duplicate copy of the title as well as the tax 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.6When the safe was broken open,
however, Pares discovered that the owners duplicate title and the tax declarations,
including pieces of jewelry were missing.7
Kauffman learned about this on October 29, 1997 and returned to the Philippines on
November 9, 1997. She and Pares went to the Register of Deeds of Las Pias City and found
out that the lot had been mortgaged to Rosana Erea on August 1, 1997. 8 It appeared that a
"Vida Dana F. Querrer" had signed the Real Estate Mortgage as owner-mortgagor, 9 together
with Jennifer V. Ramirez, Victors daughter, as attorney-in-fact.10
Kauffman and Pares were able to locate Bernal who, when asked, confirmed that Ramirez
had taken the contents of the safety deposit box. When Kauffman told Bernal that she would
file a case against them, Bernal cried and asked for forgiveness. Bernal admitted that
Jennifer Ramirez had been in a tight financial fix and pleaded for time to return the title and
the jewelry.11
On March 12, 1998, Kauffman filed a complaint against Erea, Bernal and Jennifer Ramirez
for Nullification of Deed of Real Estate Mortgage and Damages with prayer for a Temporary
Restraining Order and Preliminary Mandatory Injunction12 in the RTC of Las Pias City. The
complaint contained the following allegations:
2. The plaintiff is the owner of a property consisting of a lot with an area of One
Hundred Ten (110) square meters located at Blk. 3, Lot 13, Marcillo cor. Pianza Sts.,
BF Resort Village, Talon, Las Pias City, covered by Transfer Certificate of Title No. T48521 of the Register of Deeds of Las Pias City, together with a residential house
thereon, with a combined assessed value of P40,500.00, and copies of said TCT, and
tax declarations of the lot and house x x x;
3. Sometime in February 1997, when the plaintiff left for the United States, she
entrusted the key of her said house to one Eduardo Victor who, in turn, when he
himself went to the United States, entrusted said key to his sister, the defendant Mira
V. Bernal;

4. Sometime between May and July 1997, said defendant Mira V. Bernal, in conspiracy
with her niece, the defendant Jennifer V. Ramirez, who is the daughter of Eduardo
Victor, using the key in their possession, opened the locked and the unoccupied
house of the plaintiff, forced open the vault of the plaintiff and stole the owners copy
of TCT No. T-48521 and other articles contained therein valued at more
than P60,000.00, all belonging to the plaintiff;
5. Having in their possession the stolen TCT No. T-48521, defendants Mira V. Bernal
and Jennifer V. Ramirez, with the latter falsely representing herself to be the attorneyin-fact of the plaintiff, mortgaged the property in question to the defendant Rosana L.
Erea for the amount of P250,000.00, in Pasay City, for forging the signature of the
plaintiff on the corresponding Real Estate Mortgage, which appears to have been
notarized by Notary Public Alfredo M. Mendoza and registered as Doc. No. 43, Page
No. 1, Book No. VII, Series of 1997, x x x;
6. After the execution of the falsified Real Estate Mortgage, the defendants registered
the same with the Registry of Deeds of Las Pias City and had it annotated on the
TCT No. T-48521 as Entry No. 7185-15;
7. When the defendant Rosana L. Erea as mortgagee accepted the property in
mortgage, she knew fully well that the plaintiff-owner was in the United States at that
time and the defendants Mira V. Bernal and Jennifer V. Ramirez were not authorized
to mortgage the property as they claimed themselves to be, and this
notwithstanding, the defendants who were in bad faith conspired and confederated
between and among themselves and fraudulently executed the said document of
mortgage for purposes of personal gain;
8. The plaintiff has been a victim of fraud as above narrated and the defendant
Rosana L. Erea now being in unlawful possession of her torrens title, the plaintiff is
not only in constant apprehension as to what other fraudulent transactions the
defendant might enter into involving her title, but is also prevented from pursuing her
intention to sell her property, and by reason of which the plaintiff is entitled to
recover possession of said title and the cancellation of Entry No. 7185-15 thereon;
9. In view thereof, plaintiff is entitled to actual damages in the amount
of P200,000.00;
10. Likewise, plaintiff suffered moral damages in the form of mental anguish,
wounded feelings, serious anxiety and similar injuries in the amount of P200,000.00;
11. The plaintiff is also entitled to exemplary damages in the amount of P100,000.00
which plaintiff seeks to impose upon the defendants as a correction or example for
the public good, as a deterrent to people from committing fraudulent acts against
their fellowmen;
12. On account of defendants unwarranted acts aforecited, the plaintiff is
furthermore entitled to attorneys fees in the amount of P50,000.00 as acceptance

fee, plus P1,500.00 appearance fee every hearing, for which the defendants should
be liable;13
The complaint also contained the following prayer:
(a) That upon the filing of this complaint and compliance with the pertinent rule, a
temporary mandatory order be issued requiring the defendant Rosana L. Erea to
turn over to the plaintiff the possession of TCT No. T-48521;
(b) That after due hearing, a writ of preliminary mandatory injunction be issued
making permanent the temporary mandatory order;
(c) In case a temporary mandatory order or preliminary injunction be not issued, that
the defendant Rosana L. Erea or whoever be in possession of TCT No. T-48521, be
ordered, after due hearing, to turn the same over to the plaintiff, that the Real Estate
Mortgage (Annex "D") of this complaint be declared null and void, and Entry No.
7185-15 on said title be cancelled;
(d) That after hearing, the defendants be ordered to pay the plaintiff, jointly and
severally, the following amounts:
1. P200,000.00 as moral damages;
2. P200,000.00 as actual damages;
3. P100,000.00 as exemplary damages;
4. P50,000.00 as acceptance fee, plus P1,500.00 appearance fee every
hearing, as attorneys fees, aside from costs.
Plaintiff further prays for such other relief that this Honorable Court may deem just and
equitable in the premises.14
Erea interposed the defense of being a mortgagee in good faith. She likewise interposed a
cross-claim against Bernal and Jennifer Ramirez for the refund of the P250,000.00 she
loaned to "Vida Dana Querrer."15
Jennifer Ramirez and Bernal interposed the common defense that, on November 13, 1998,
the City Prosecutor approved a Resolution absolving them of the robbery and estafa cases
through falsification of a public document.16
During pre-trial, defendants Ramirez and Bernal failed to appear. On motion of the plaintiff,
they were thus declared in default.17
During trial, Socorro Ramos, Ereas aunt, testified that, Richmond Ramirez, Jennifers
husband, and Angel Jose, her grandson and Ereas nephew, had been classmates and were
compadres.18 The Ramirez spouses used to go to her house. In one occasion, the Ramirez

spouses arrived in her house with one "Vida Dana Querrer" whom 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, Querrers
identification (I.D.) card, and pictures of the house and lot. 21 Ramos then informed her niece,
Rosana Erea, and asked if she would agree to mortgage the property. Ramos later brought
the spouses
Ramirez and "Vida Dana Querrer" to Erea who showed a copy of the title, tax declaration, a
tax clearance, all in the name of "Vida Dana Querrer." The spouses also showed an I.D. card
of "Vida Dana Querrer" as a worker in Japan, a police clearance, and the location plan of the
property.22 Jennifer Ramirez informed Erea that Vida Dana was applying for a passport as
she was going to Japan and the U.S.23 "Vida Dana Querrer" likewise introduced herself as
Richmonds sister.24
Erea was able to verify from the Office of the Register of Deeds that the property was in the
name of Vida Dana Querrer and that it was free of any lien or encumbrance. Erea and her
husband, Ramos, Richmond Ramirez, Angel Jose, and "Vida Dana Querrer" later inspected
the house and lot two times.25 Erea finally agreed to aP250,000.00 mortgage loan, with the
house and lot as security therefor.
On August 1, 1997, Jennifer Ramirez, Rosana Erea and a woman who identified herself as
"Vida Dana Querrer" arrived in the office Notary Public Alfredo M. Mendoza and asked him to
prepare a Special Power of Attorney to be executed by "Vida Dana Querrer," as principal, in
favor of Jennifer Ramirez, as attorney-in-fact; and a Real Estate Mortgage contract over the
lot covered by TCT No. 48521 to be executed by "Vida Dana Querrer" and Jennifer Ramirez
as mortgagors. Erea and "Vida Dana Querrer" showed to him their respective residence
certificates. Mendoza prepared the documents after which the parties affixed their
respective signatures above their respective names 26 and their submarkings on the deeds.
The Real Estate Mortgage was filed with the Office of the Register of Deeds and annotated at
the dorsal portion of TCT No. 48521 on November 7, 1997.27
On April 4, 2000, the RTC rendered judgment in favor of the defendants and ordered the
dismissal of the complaint. The court ruled that, although the plaintiff adduced proof that
she owned the property and that her signatures on the Special Power of Attorney and in the
Real Estate Mortgage were forged, nevertheless, defendant Erea adduced evidence that
she was a mortgagee in good faith. The court declared that the woman who pretended to be
the plaintiff and lawful owner of the property had in her possession the original copy of the
owners duplicate of title. The defendant thus relied in good faith on the title after
ascertaining with the Register of Deeds the identity of Vida Dana Querrer as the registered
owner of the property, who turned out to be an impostor. In fact, the defendant still had
possession of the owners duplicate of the title when she received the complaint and
summons.
The court cited the ruling of this Court in Cebu International Finance Corporation v. Court of
Appeals28 and Duran v. Intermediate Appellate Court.29 The fallo of the decision reads:

WHEREFORE, premises considered, the complaint filed by plaintiff VIDA DANA QUERRERKAUFFMAN 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:
I
CONSIDERING THAT THE MORTGAGE CONTRACT IN QUESTION WAS EXECUTED AND MADE
POSSIBLE THROUGH THE FRAUDULENT MANIPULATION OF AN IMPOSTOR, THE LOWER
COURT ERRED IN FINDING THAT DEFENDANT-APPELLANT ROSANA EREA WHO ACCEPTED
THE MORTGAGE OFFERED BY SAID IMPOSTOR IS A MORTGAGEE IN GOOD FAITH;
II
THE COURT A QUO ERRED IN CONCLUDING THAT THE DEED OF MORTGAGE IN QUESTION IS
VALID DESPITE ITS OWN FINDING THAT THE SUBJECT PROPERTY IS OWNED BY THE
PLAINTIFF-APPELLANT WHOSE SIGNATURE ON THE DEED WAS FORGED;
III
THE LOWER COURT ERRED IN APPRECIATING THE JURISPRUDENCE CITED IN ITS APPEALED
DECISION AND IN APPLYING THE SAME TO THE CASE AT BAR;
IV
THE LOWER COURT ERRED IN UPHOLDING THE RIGHT OF DEFENDANT-APPELLANT ROSANA
EREA DERIVED FROM A FORGED MORTGAGE CONTRACT AS AGAINST THE RIGHT OF THE
PLAINTIFF, THE PROVEN TRUE OWNER OF THE SUBJECT PROPERTY, WHO DID NOT IN ANY
WAY CONTRIBUTE TO THE COMMISSION OF THE FRAUD.32
On June 10, 2004, the CA rendered judgment in favor of Kauffman. It held that in ruling as it
did, the RTC disregarded the clear provisions of the Civil Code, particularly Articles 2085
(2)33 and 1409 (2)34 The appellate court relied on the Courts ruling in Insurance Services &
Commercial Traders, Inc. v. Court of 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
Erea thus filed the instant petition contending that the following legal issues should be
resolved:
I
THE COURT OF APPEALS HAS SERIOUSLY ERRED IN HOLDING THAT RESPONDENT QUERRERKAUFFMAN IS THE OWNER OF THE PROPERTY MORTGAGED TO PETITIONER DESPITE THE
ABSENCE OF SUBSTANTIAL EVIDENCE TO SUPPORT SUCH A CONCLUSION OF FACT.
II
THE COURT OF APPEALS HAS SERIOUSLY ERRED IN HOLDING THAT THE CONTRACT OF REAL
ESTATE MORTGAGE EXECUTED ON 01 AUGUST 1997 BETWEEN ROSANA EREA AND VIDA
DANA QUERRER IS A FORGED DEED OF MORTGAGE WITHOUT SUBSTANTIAL EVIDENCE TO
ESTABLISH SUCH FACT.
III
THE COURT OF APPEALS HAS SERIOUSLY ERRED IN HOLDING THAT THE DOCTRINE OF A
"MORTGAGE IN GOOD FAITH" DOES NOT APPLY TO PETITIONER DESPITE SUBSTANTIAL AND
UNDISPUTED EVIDENCE PROVING HER A MORTGAGEE IN GOOD FAITH.37
Petitioner avers that respondent failed to prove that she is the owner of the property, and
points out that the documentary evidence shows that the negotiator over the property is
Vida Dana Querrer and not Vida Dana Querrer-Kaufffman. There is thus no factual basis for
the CAs finding that the Real Estate Mortgage was a forged deed. Considering that
respondent, as the plaintiff below, failed to adduce clear and convincing evidence that the
signature on the Real Estate Mortgage is a forgery, the signature over the printed name in
the said document must be the genuine signature of Vida Dana Querrer, the registered
owner of the property. Even assuming that respondent was the lawful owner of the property
and the signature in the Real Estate Mortgage is a forgery, petitioner insists that she is a
mortgagee in good faith as shown by the following facts and circumstances:
1. Before the offer of mortgage was accepted by petitioner Rosana Erea, she
required the production of the owners copy of TCT No. T-48521. The mortgagee took
such step to enable her to know the rights of the mortgagor over the property to be
mortgaged. The presentation of the desired certificate was complied with.

2. The identity of the mortgagor was ascertained from the personal interview of the
relatives of the mortgagor who were the spouses Jennifer and Richmond Ramirez, a
known compadre of Angel Jose, the grandson of Socorro Ramos, the aunt of the
petitioner. Richmond Ramirez with his wife introduced the mortgagor Vida Dana
Querrer as his half-sister who wanted to mortgage the property described in the
certificate of title which was registered in her name. The spouses of the mortgagor
were accompanied to the house of Rosana Erena by Socorro Ramos, her aunt who
acknowledged to know Richmond and Jennifer Ramirez for a period of five years,
more or less. Aside from the confirmation of her filial relation to the Ramirez couple
by Richmond Ramirez, her personal Identification Card showed the mortgagors name
and proved her identity to be Vida Dana Querrer. The Tax Declarations, tax clearance,
the owners copy of TCT No. T-48521, police clearance, survey plan attested to the
fact that the owner of the property subject of the mortgage was the mortgagor.
3. Further examination of the certificate of title in the Office of the Register of Deeds
of Las Pias City proved the authenticity of the owners copy of the certificate.
4. The actual physical inspection of the house and lot covered by the certificate in the
given address for two (2) times, at least by the mortgagor and mortgagee together
with Soccoro Ramos, and the Ramirez couple strengthened her reasonable belief in
good faith that the mortgagor is the owner of the property covered by the certificate
of title.
5. The aforesaid interviews/examination of records, and inspection of the premises
showed that earnest and diligent efforts were exerted by the petitioner to ascertain
the identity of the mortgagor and her ownership of the subject property. The
aforestated steps taken by her are visible proofs of the due diligence exercised by
Rosana Erena to ascertain the identity of the mortgagor and respondents capacity to
convey the property to her in a contract of mortgage with her.
6. Without admitting on the allegation of a forged signature, the established facts
showing the exercise of due diligence and reasonable caution observed by petitioner
preparatory to the acceptance and execution of the mortgage contract BELIE the
accusation of bad faith to her. In truth, petitioner had been reasonably diligent to
meet the justification of a mortgagee in good faith.38
For her part, respondent avers that, contrary to petitioners claim, the issues raised in the
instant petition are factual in nature. Moreover, based on the evidence on record, both the
trial and appellate courts are one in declaring that she is the lawful registered owner of the
property, and that such findings are conclusive on this Court. Besides, the petitioner is
proscribed from assailing the findings of the trial and appellate courts since under Rule 45 of
the Rules of Court, only questions of law may be raised in this Court. She insists that
petitioner failed to establish special and important reasons for the Court to exercise its
discretion to review the appellate courts decision.
The petition has no merit.

Indeed, the trial and appellate courts found that respondent, as plaintiff below, adduced
clear and convincing evidence that she is the owner of the property and that the signature
on the Special Power of Attorney and Real Estate Mortgage are not her genuine signatures.
She purchased the property from Edgardo C. Espiritu on June 21, 1997 via a Deed of
Absolute Sale,39 on the basis of which TCT No. 48521 under her name was issued by the
Register of Deeds on June 25, 1997.40 Indeed, when respondent and her sister, Evelyn Pares,
confronted Mira Bernal (Jennifer Ramirezs aunt), Bernal pleaded for mercy, on bended
knees, after admitting that she and Jennifer Ramirez stole the owners duplicate copy of the
title and the tax declarations covering the property, the air-conditioning unit, television, and
the pieces of jewelry owned by respondent, and, thus, impliedly admitted that they forged
the respondents signature on the Real Estate Mortgage:
Q Were you able to see Mira in Pasay, in her house?
A Yes, Sir. We saw her in Pasay, but in Bian, she suddenly disappeared when we arrived.
Q What time did you see Mira in her house in Pasay?
A Between 11:00 to 12:00 P.M., Sir.
Q But you said you arrived there at 6:00 p.m.?
A Yes, Sir.
Q You mean you waited?
A We waited for her. Dana said, "Mabuti pang ilabas ninyo and mother niyo."
ATTY. CABARON:
The witness is narrating, Your Honor.
ATTY. MASANGKAY:
Q So, finally, you were able to talk to Mira in that house?
A Yes, Sir.
Q How about Jennifer?
A No, Sir.
Q Alright, what did you ask Mira?
A My sister asked Mira who destroyed my vault?
Q What was the answer of Mira?

A Mira answered, "Why did you not inform that you will be coming?"
ATTY. MASANGKAY:
Q And then?
A Dana said, what I am asking, you better answer.
Q What was the answer?
A According to her, it was Jennifer.
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 niyo, patawarin mo
lang kami." She was crying and saying, "Gipit na gipit lang talaga kami. Bigyan mo kami ng
konting panahon at ibabalik naming iyon."41
The trial courts findings of fact as affirmed by the CA are conclusive on this Court absent
evidence that the trial court ignored, misapplied or misconstrued facts and circumstances of
substance which, if considered, would alter the outcome of the case.
Indeed, under Rule 45 of the Rules of Court, only questions of law may be raised. This is so
because this Court is not a trier of facts and is not to re-examine and re-evaluate the
testimonial and documentary evidence on record. While the findings and conclusion of the
trial court and the appellate court may be reversed in exceptional circumstances, the Court
cannot do so in the absence of any such justification or exceptional circumstance, such as in
this case.
The ruling of the CA, that the Real Estate Mortgage executed in petitioners favor is null and
void, is correct. The registration thereof with the Register of Deeds and its annotation at the
dorsal portion of TCT No. 48521 is also null and void, as provided in the last paragraph of
Section 53, P.D. 1529 which reads:
Sec. 53. Presentation of owners duplicate upon entry of new certificate.
xxxx
In all cases of registration procured by fraud, the owner may pursue all his legal and
equitable remedies against the parties to such fraud without prejudice, however, to the
rights of any innocent holder of the decree of registration on the original petition or
application; any subsequent registration procured by the presentation of a forged duplicate
certificate of title, or a forged deed or other instrument, shall be null and void (emphasis
supplied).
One of the essential requisites of a mortgage contract is that the mortgagor must be the
absolute owner of the thing mortgaged.42 A mortgage is, thus, invalid if the mortgagor is not
the property owner.43 In this case, the trial court and the CA are one in finding that based on
the evidence on record the owner of the property is respondent who was not the one who
mortgaged the same to the petitioner.
The evidence shows that Mira Bernal and Jennifer Ramirez were able to open respondents
vault and steal the owners duplicate of TCT No. T-48521 and the tax declarations covering
the property; with the connivance of a woman who pretended to be the respondent, they
were able consummate the execution of the Real Estate Mortgage by forging the
respondents signature on said deed. We, thus, quote with approval the CA when it held:

As to the claim of Querrer-Kauffman that her purported signatures on the mortgage are
forgeries, the trial court believed her and held that there is "convincing proof to the
contention of the plaintiff that the signature of Vida Dana Querrer as appearing on the
question[ed] contract was a forgery because the real Vida Dana Querrer who is the plaintiff
in this case was actually in the United States at the time of the questioned contract on 1
August 1997" (Decision, p. 226, record). And rightly so because of the immigration entries
on her passport, her juxtaposed sample signatures which are clearly different from those in
the deed, and the comic incongruity of Querrer-Kauffman as principal and Ramirez as her
attorney-in-fact both signing the mortgage deed, all prove and declare beyond reasonable
doubt that the subject real estate mortgage is a forgery.44
The evidence on record further shows that Jennifer Ramirez and her husband, Richmond
Ramirez, used a woman who introduced herself as Vida Dana Querrer to the petitioner and
claim as owner of the property. That woman, an impostor, signed the Real Estate Mortgage
as mortgagor and the Special Power of Attorney, as principal, and showed to petitioner the
owners duplicate copy of the title that was taken from the respondents vault, and
succeeded in having the Real Estate Mortgage annotated at the dorsal portion of the title. As
correctly ruled by the appellate court:
TCT No. T-48521 (Exh. "A") over the litigated lot was issued on June 26, 1995 in the name of
the owner of the covered lot: Vida Dana Querrer, single. That the appellant now goes by the
name and status of Vida Dana Querrer-Kauffman, married, has been well explained, and
quibble on this raised by Erea about the identity and interest of the appellant in the suit
has been dismissed by the trial court as "of no moment as this discrepancy is negligible if
no[t] bearing at all to the issue of nullity of the questioned contract" and "has no legal
anchorage to cling on." The decision went on to state in no uncertain terms that the
appellant Querrer-Kauffman "was able to prove preponderantly that she is the real owner of
the subject property."45
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 owners duplicate certificate of title, the registered
owner does not thereby lose his title, and neither does the assignee or the mortgagee, for
that matter, acquire any right or title to the property. 48 In such a case, the transferee or the
mortgagee, based on a forged instrument, is not even a purchaser or a mortgagee for value
protected by law. Thus, in Joaquin v. Madrid,49 the Court had the occasion to state:
In the first assignment of error, it is argued that since par. 2 of Sec. 55 of the Land
Registration Act expressly provides that "in all cases of registration of fraud, the owner may
pursue all his legal and equitable remedies against the parties to the fraud, without
prejudice to the rights of any innocent holder for value of a certificate of title," the second
proviso in the same section "that a registration procured by the presentation of a forged
deed shall be null and void" should be overlooked. There is no merit in this argument, which
would have the effect of deleting the last proviso. This last proviso is a limitation of the first
part of par. 2 in the sense that in order that the holder of a certificate for value issued by
virtue of the registration of a voluntary instrument may be considered a holder in good faith

for value, the instrument registered should not be forged. When the instrument presented is
forged, even if accompanied by the owners duplicate certificate of title, the registered
owner does not thereby lose his title, and neither does the assignee in the forged deed
acquire any right or title to the property.
In the second assignment of error, it is further argued that as the petitioner is an innocent
purchaser for value, he should be protected as against the registered owner because the
latter can secure reparation from the assurance fund. The fact is, however, that petitioner
herein is not the innocent purchaser for value protected by law. The innocent purchaser for
value protected by law is one who purchases a titled land by virtue of a deed executed by
the registered owner himself, not by a forged deed, as the law expressly states. Such is not
the situation of the petitioner, who has been the victim of impostors pretending to be the
registered owners but who are not said owners.50
The Court cited this ruling in the Joaquin case in Solivel v. Francisco, 51 to wit:
Even more in point and decisive of the issue here raised, however, is the much later case of
Joaquin v. Madrid, where the spouses Abundio Madrid and Rosalinda Yu, owners of a
residential lot in Makati, seeking a building construction loan from the then Rehabilitation
Finance Corporation, entrusted their certificate of title for surrender to the RFC to
Rosalindas godmother, a certain Carmencita de Jesus, who had offered to expedite the
approval of the loan. Later having obtained a loan from another source, the spouses decided
to withdraw the application they had filed with the RFC and asked Carmencita to retrieve
their title and return it to them Carmencita failed to do so, giving the excuse that the
employee, in- charge of keeping the title was on leave. It turned out, however, that through
the machinations of Carmencita, the property had been mortgaged to Constancio Joaquin in
a deed signed by two persons posing as the owners and that after said deed had been
registered, the amount for which the mortgage was constituted had been given to the
person who had passed herself off as Rosalinda Yu. Constancio Joaquin admitted that the
spouses Madrid and Yu were, in fact, not the persons who had signed the deed of
mortgage.52
This ruling was later reiterated in Insurance Services & Commercial Traders, Inc. v. Court of
Appeals,53 where the Court stressed that in order that the holder of a certificate of value
issued by virtue of the registration of a voluntary instrument may be considered a holder in
good faith and for value, the instrument registered should not be forged.
In Cavite Development Bank v. Lim,54 the Court explained the doctrine of mortgagee in good
faith, thus:
There is, however, a situation where, despite the fact that the mortgagor is not the owner of
the mortgaged property, his title being fraudulent, the mortgage contract and any
foreclosure sale arising therefrom are given effect by reason of public policy. This is the
doctrine of "mortgagee in good faith" based on the rule that all persons dealing with the
property covered by a Torrens Certificate of Title, as buyers or mortgagees, are not required
to go beyond what appears on the face of the title. The public interest in upholding the
indefeasibility of a certificate of title, as evidence of lawful ownership of the land or of any

encumbrance thereon, protects a buyer or mortgagee who, in good faith, relied upon what
appears on the face of the certificate of title.55
Indeed, a mortgagee has a right to rely in good faith on the certificate of title of the
mortgagor of the property given as security and in the absence of any sign that might
arouse suspicion, has no obligation to undertake further investigation. Hence, even if the
mortgagor is not the rightful owner of, or does not have a valid title to, the mortgaged
property, the mortgagee in good faith is nonetheless entitled to protection. 56 This doctrine
presupposes, however, that the mortgagor, who is not the rightful owner of the property,
has already succeeded in obtaining a Torrens title over the property in his name and that,
after obtaining the said title, he succeeds in mortgaging the property to another who relies
on what appears on the said title. The innocent purchaser (mortgagee in this case) for value
protected by law is one who purchases a titled land by virtue of a deed executed by the
registered owner himself, not by a forged deed, as the law expressly states. Such is not the
situation of petitioner, who has been the victim of impostors pretending to be the registered
owners but who are not said owners.57 The doctrine of mortgagee in good faith does not
apply to a situation where the title is still in the name of the rightful owner and the
mortgagor is a different person pretending to be the owner. In such a case, the mortgagee is
not an innocent mortgagee for value and the registered owner will generally not lose his
title. We thus agree with the following discussion of the CA:
The trial court wrongly applied in this case the doctrine of "mortgagee in good faith" which
has been allowed in many instances but in a milieu dissimilar from this case. This doctrine is
based on the rule that persons dealing with properties covered by a Torrens certificate of
title are not required to go beyond what appears on the face of the title. But this is only in a
situation where the mortgagor has a fraudulent or otherwise defective title, but not when
the mortgagor is an impostor and a forger.
In a forged mortgage, as in this case, the doctrine of "mortgagee in good faith" cannot be
applied and will not benefit a mortgagee no matter how large is his or her reservoir of good
faith and diligence. Such mortgage is void and cannot prejudice the registered owner whose
signature to the deed is falsified. When the instrument presented is forged, even if
accompanied by the owners duplicate certificate of title, the registered owner does not lose
his title, and neither does the assignee in the forged deed acquire any right or title to the
property. An innocent purchaser for value is one who purchases a titled land by virtue of a
deed executed by the registered owner himself not a forged deed. 58
As aforesaid, respondents signature on the Real Estate Mortgage was forged by an
impostor.
IN LIGHT OF ALL THE FOREGOING, the petition is DENIED. The Decision of the Court of
Appeals dated June 10, 2004 and Resolution dated October 28, 2004 are AFFIRMED. Costs
against the petitioner.
SO ORDERED.

HEIRS OF EDUARDO MANLAPAT represented by GLORIA MANLAPATAPPEALS,

VS HON. COURT OF

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. P153(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 ofBarangay 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 barangaycaptain 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 predecessorin-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-9326P(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 thereof which 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 predecessorin-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-infact, 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-ininterest 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 not apply 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.

[G.R. No. 143868. November 14, 2002]

OSCAR C. FERNANDEZ, GIL C. FERNANDEZ and ARMANDO C. FERNANDEZ, vs.
Spouses CARLOS and NARCISA TARUN,
The right of redemption may be exercised by a co-owner, only when part of the
community property is sold to a stranger. When the portion is sold to a co-owner, the right
does not arise because a new participant is not added to the co-ownership.
The Case
The Petition for Review on Certiorari before us challenges the July 7, 2000 Decision of
the Court of Appeals (CA)[1] in CA-GR CV No. 55264, which reversed the Regional Trial Court
(RTC) of Dagupan City (Branch 44) in Civil Case No. D-3815. [2] The assailed Decision disposed
as follows:
WHEREFORE, the appealed decision is REVERSED and a NEW ONE is entered:
1. Ordering the partition of Lot 2991 in the proportion stated in Transfer
Certificate of Title No. 24440, that is: Angel Fernandez, married to Corazon Cabal
7,114.46 sqm; spouses Carlos Tarun and Narcisa Zareno 1094.54 sqm.
The costs of the subdivision shall be equitably shared by plaintiffs-appellants and
defendants-appellees.
2. Ordering the Register of Deeds of Dagupan City to issue a separate transfer
certificate of title each to plaintiffs-appellants and defendants-appellees
corresponding to their respective shares upon completion of the partition. [3]
The Facts
The antecedent facts of the case are narrated in the assailed CA Decision as follows:
An 8,209-square meter fishpond situated at Arellano-Bani, Dagupan City is disputed by
[Respondents] Carlos Tarun and Narcisa Zareno, and [Petitioners] Corazon Cabal vda. de
Fernandez and her children Oscar, Gil and Armando, all surnamed Fernandez.
The property is known as Lot No. 2991 of the Cadastral Survey of Dagupan. It was
originally covered by OCT No. 43099, subsequently cancelled by TCT No. 24440. The

brothers Antonio, Santiago, Demetria and Angel Fernandez, together with their uncle
Armando, co-owned this property to the extent of 1/6 thereof.[4] It was subsequently
increased to 1/5 on account of the 1/6 share of Armando, who died single and without issue,
which accrued in favor of the five remaining co-owners.
On June 4, 1967, Antonio Fernandez sold his share of about 547.27 square meters to [the
Spouses] Tarun (Exh. I).[5] On June 18, 1967, Demetria Fernandez, also sold her share on the
same fishpond consisting of 547.27 square meters to [respondents].[6] Thus, the total area
sold to [respondents] is 1094.54 square meters, more or less. The two sales were registered
and annotated on OCT No. 43099.
On November 14, 1969, the co-owners of the subject fishpond and another fishpond
covered by TCT No. 10944 executed a Deed of Extrajudicial Partition of two parcels of
registered land with exchange of shares. Among the parties to the deed are Antonio,
Santiago, Demetria and Angel, all surnamed Fernandez.
It was stipulated in the deed that the parties recognize and respect the sale of a portion of
Lot 2991 consisting of 1094.54 square meters previously sold by Antonio and Demetria
Fernandez in favor of [respondents]. This portion was excluded in the partition.
Likewise, by virtue of the Deed of Extrajudicial Partition, Angel B. Fernandez exchanged his
share on the other fishpond covered by TCT No. 10944 to the shares of his co-owners on the
remaining portion of [L]ot No. 2991 covered by TCT No. 10945, making Angel B. Fernandez
and [respondents] as co-owners of Lot No. 2991.
By virtue of the terms and conditions set forth in the Deed, TCT No. 24440 of the Registry of
Deed[s] of Dagupan City, (Exh. A) was issued in favor of Angel B. Fernandez and
[respondents]. From the time the latter bought the 1094.54-square meter portion of the
fishpond, they had been paying the realty taxes thereon. However, it was Angel B.
Fernandez and later on his heirs, [petitioners], who remained in possession of the entire
fishpond.
When Angel B. Fernandez was still alive, [respondents] sought the partition of the property
and their share of its income. Angel Fernandez refused to heed their demand. After the
death of Angel Fernandez, [respondents] wrote [petitioners] of their desire for partition but
this was rejected by [petitioners]. Hence, this suit for partition and damages.[7]

Ruling of the RTC

On August 1, 1996, the RTC rendered judgment in favor of petitioners, ruling that, under
Articles 1620 and 1621 of the Civil Code, they were entitled to redeem the property that
they had sold to respondents. It further held that the sale was highly iniquitous and void for
respondents failure to comply with Article 1623 of the same code.
Ruling of the Court of Appeals

Reversing the RTC, the CA held that petitioners were not entitled to redeem the
controversial property for several reasons. First, it was Angel Fernandez who was its coowner at the time of the sale; hence, he was the one entitled to receive notice and to
redeem the property, but he did not choose to exercise that right. Second, the execution of
the Deed of Extrajudicial Partition was a substantial compliance with the notice requirement
under that law. Finally, it was too late in the day to declare the exchange highly iniquitous,
when Angel Fernandez had not complained about it. As his successors-in-interest,
petitioners were bound by the terms of the agreement.
Hence, this Petition.[8]
Issues
In their Memorandum,[9] petitioners raise the following issues:
1. Whether or not petitioners are entitled to exercise their right of legal
redemption.
2. Whether or not the transaction is one of equitable mortgage.
3. Whether or not the deed of extra-judicial partition is void and inefficacious.
4. Whether or not petitioners are entitled to damages, attorneys fees and costs.
5. Whether or not the lower court committed grave abuse of discretion amounting
to lack of jurisdiction when it substituted it surmises, conjectures and guesswork
in place of the trial courts findings of fact borne by the evidence on record. [10]
This Courts Ruling
The Petition is not meritorious.
First Issue:
Entitlement to Legal Redemption
Petitioners aver that the sale to respondents is void, because it did not comply with the
requirements of the Civil Code. According to them, they were not notified of the sale, but
learned about it only when they received the summons for the partition case. They claim
their right to redeem the property under the following provisions of the Civil Code:
Article 1620. A co-owner of a thing may exercise the right of redemption in case the shares
of all the other co-owners or of any of them, are sold to a third person. If the price of the
alienation is grossly excessive, the redemptioner shall pay only a reasonable one.
Should two or more co-owners desire to exercise the right of redemption, they may only do
so in proportion to the share they may respectively have in the thing owned in common.

Article 1621. The owners of adjoining lands shall also have the right of redemption when a
piece of rural land, the area of which does not exceed one hectare, is alienated, unless the
grantee does not own any rural land.
The right is not applicable to adjacent lands which are separated by brooks, drains, ravines,
roads and other apparent servitudes for the benefit of other estates.
If two or more adjoining owners desire to exercise the right of redemption at the same time,
the owner of the adjoining land of smaller area shall be preferred; and should both lands
have the same area, the one who first requested the redemption.
xxx

xxx

xxx

Article 1623. The right of legal pre-emption or redemption shall not be exercised except
within thirty days from the notice in writing by the prospective vendor, or by the vendor, as
the case may be. The deed of sale shall not be recorded in the Registry of Property, unless
accompanied by an affidavit of the vendor that he has given written notice thereof to all
possible redemptioners.
The right of redemption of co-owners excludes that of adjoining owners.
We disagree with petitioners. True, the right to redeem is granted not only to the
original co-owners, but also to all those who subsequently acquire their respective shares
while the community subsists.[11] However, it must be stressed that this right of redemption
is available only when part of the co-owned property is sold to a third person. Otherwise
put, the right to redeem referred to in Article 1620 applies only when a portion is sold to a
non-co-owner.
In this case, it is quite clear that respondents are petitioners co-owners. The sale of the
contested property to Spouses Tarun had long been consummated before petitioners
succeeded their predecessor, Angel Fernandez. By the time petitioners entered into the coownership, respondents were no longer third persons, but had already become co-owners
of the whole property. A third person, within the meaning of Article 1620, is anyone who is
not a co-owner.[12]
In Basa v. Aguilar,[13] this Court has unequivocally ruled that the right of redemption may
be availed of by a co-owner, only when the shares of the other owners are sold to a third
person. Legal redemption is in the nature of a privilege created by law partly for reasons
of public policy and partly for the benefit and convenience of the redemptioner, to afford him
a way out of what might be a disagreeable or [an] inconvenient association into which he
has been thrust. (10 Manresa, 4th. Ed., 317.) It is intended to minimize co-ownership. The
law grants a co-owner the exercise of the said right of redemption when the shares of the
other owners are sold to a third person. [14] There is no legal redemption, either in case of a
mere lease[15] and if the purchaser is also a tenant.[16]
Equally unavailing is petitioners contention that the sale was void, because the vendor
had not sent any notice in writing to the other co-owners as required under Article 1625 of
the Code. Indeed, the Code merely provides that a deed of sale shall not be recorded in the

Registry of Property, unless accompanied by an affidavit that a written notice has been
given to all possible redemptioners. However, it does not state that, by reason of such lack
of notice, the sale shall become void.
Jurisprudence affirms the need for notice, but its form has been the subject of varying
interpretations. Conejero v. Court of Appeals [17] held that a written notice was still required,
even if the redemptioner had actual prior knowledge of the sale. However, in Distrito v.
Court of Appeals,[18] the Court ruled that written notice was not necessary, if the co-owner
was actually aware of the sale. While the law requires that the notice must be in writing, it
does not prescribe any particular form, so long as the reasons for a written notice are
satisfied otherwise.[19] Thus, in a civil case for collection of a share in the rentals by an
alleged buyer of a co-owned property, the receipt of a summons by a co-owner has been
held to constitute actual knowledge of the sale. On that basis, the co-owner may exercise
the right of redemption within 30 days from the finality of the decision. [20]
Applying the presently prevailing principles discussed above, petitioners predecessor -Angel Fernandez -- is deemed to have been given notice of the sale to respondents by the
execution and signing of the Deed of Extrajudicial Partition and Exchange of Shares. As
correctly held by the CA, the law does not require any specific form of written notice to the
redemptioner.[21] From such time, he had 30 days within which to redeem the property sold
under Article 1623. The Deed was executed November 4, 1969; hence, the period to
redeem expired on December 4, 1969. Consequently, the right to redeem was deemed
waived, and petitioners are bound by such inaction of their predecessor. The former cannot
now be allowed to exercise the right and adopt a stance contrary to that taken by the
latter. Otherwise stated, the right to redeem had long expired during the lifetime of the
predecessor and may no longer be exercised by petitioners who are his successors-ininterest.
Second Issue:
Sale or Equitable Mortgage?
Petitioners contend that the sale was only an equitable mortgage because (1) the price
was grossly inadequate, and (2) the vendors remained in possession of the land and enjoyed
its fruits. Since the property is situated primely within the city proper, the price of P7,662
for 1,094.54 square meters is supposedly unconscionable. Moreover, since June 4, 1967 up
to the present, the vendees (or herein respondents) have allegedly never been in actual
possession of the land.
The contention is untenable. On its face, a document is considered a contract of
equitable mortgage when the circumstances enumerated in Article 1602 of the Civil Code
are manifest, as follows: (a) when the price of the sale with the right to repurchase is
unusually inadequate,[22] and (b) when the vendor remains in possession as lessee or
otherwise.[23]Although it is undisputed that Angel Fernandez was in actual possession of the
property, it is important to note that he did not sell it to respondents. The sellers were his
co-owners -- Antonio and Demetria Fernandez -- who, however, are not claiming that the
sale between them was an equitable mortgage. For the presumption of an equitable
mortgage to arise, one must first satisfy the requirement that the parties entered into a

contract denominated as a contract of sale, and that their intention was to secure an
existing debt by way of mortgage.[24]
Furthermore, mere alleged inadequacy of the price does not necessarily void a contract
of sale, although the inadequacy may indicate that there was a defect in the consent, or that
the parties really intended a donation, mortgage, or some other act or contract. [25] Finally,
unless the price is grossly inadequate or shocking to the conscience, [26] a sale is not set
aside. In this case, petitioners failed to establish the fair market value of the property when
it was sold in 1967. Hence, there is no basis to conclude that the price was grossly
inadequate or shocking to the conscience.
Third Issue:
Validity of the Extrajudicial Partition
Petitioners also assail the partition as lopsided and iniquitous. They argue that their
predecessor stood to lose 5,498.14 square meters under the extrajudicial partition.
We are not convinced. It is a long-established doctrine that the law will not relieve
parties from the effects of an unwise, foolish or disastrous agreement they entered into with
all the required formalities and with full awareness of what they were doing. Courts have no
power to relieve them from obligations they voluntarily assumed, simply because their
contracts turn out to be disastrous deals or unwise investments. [27] Neither the law nor the
courts will extricate them from an unwise or undesirable contract which they entered into
with all the required formalities and with full knowledge of its consequences. [28] On the other
hand, petitioners herein are bound by the extrajudicial partition, because contracts not only
take effect between the parties, but also extend to their assigns and heirs. [29]
Moreover, if petitioners intended to annul the extrajudicial partition for being lopsided
and iniquitous, then they should have argued this in a proper action and forum. They
should have filed an action to annul the extrajudicial partition and claimed their rightful
share in the estate, impleading therein the other signatories to the Deed and not just herein
respondents.
In any event, a perusal of the Deed of Extrajudicial Partition with Exchange of Shares
reveals that the partition of Lot nos. 2991 and 2924 was done equally and fairly. Indeed,
1,641.80 square meters of Lot No. 2991 [30] and 10,971.80 square meters of Lot No. 2924B[31] were originally given to all the co-owners -- except Antonio, Demetria and Santiago
Fernandez, who had already sold parts of their share to third persons. However, Angel
Fernandez agreed and stipulated in the same Deed that he had traded his share in Lot No.
2924-B for the entire Lot No. 2991, except the portion already sold to respondents. [32]
Taking these stipulations into consideration, we are inclined to believe that the swapping
of shares by the heirs was more favorable to the late Angel Fernandez, because his
ownership became contiguous and compact in only one fishpond, instead of being merely
shared with the other co-heirs in two different fishponds. [33]
Fourth Issue:

Damages and Attorneys Fees

Petitioners claim that they are entitled to P50,000 as attorneys fees and damages
deserves scant consideration. It has been clearly established that respondents are coowners of the subject property. Under Article 494 of the Civil Code, each co-owner may
demand at any time the partition of the thing owned in common. Hence, respondents
action for partition was not an unfounded suit. Verily, it was founded on a right given by law.
Fifth Issue:
Factual Findings of the CA
Petitioners insist that the CA made some factual findings that were neither in conformity
with those of the RTC nor borne by the evidence on record. They assert that the appellate
court erred in ruling that the extrajudicial partition had been freely and willfully entered into
when, in fact, Angel B. Fernandez had been shortchanged by 5,498.14 square meters. They
also contend that the registration of the two Deeds of Sale in favor of respondents was not
valid, because it was not accompanied by an affidavit that written notice had been served to
all possible redemptioners.
We are not persuaded. We do not find any factual or legal basis to conclude that the
extrajudicial partition was iniquitous, and that the sale of Antonio and Demetrias share in
Lot no. 2991 is void. Factual findings of the CA supported by substantial evidence are
conclusive and binding,[34] unless they fall under the exceptions in Fuentes v. Court of
Appeals[35] and similar cases.
WHEREFORE, the Petition is DENIED and the assailed Decision AFFIRMED. Costs
against petitioners.
G.R. No. 80739 August 20, 1992
GRACIA R. JOVEN vs.
COURT OF APPEALS, HON. MANUEL A. PATRON, in his capacity as Presiding Judge
of the RTC, Branch 59, Lucena
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 sixtysix, 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.6 We 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 andaccion 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.
April 28, 2000
DEVELOPMENT BANK OF THE PHILIPPINES, petitioner, vs. COURT OF APPEALS and
CARLOS CAJES,respondents.
This is a petition for certiorari seeking to reverse the decision[1] and resolution[2] of the Court
of Appeals dated August 30, 1996 and April 23, 1997, respectively, declaring private
respondent Carlos Cajes the owner of 19.4 hectares of land embraced in TCT No. 10101 and
ordering the segregation and reconveyance of said portion to him.
The antecedent facts are as follows:
The land in dispute, consisting of 19.4 hectares located in San Miguel, Province of Bohol, was
originally owned by Ulpiano Mumar, whose ownership since 1917 was evidenced by Tax
Declaration No. 3840.[3] In 1950,[4] Mumar sold the land to private respondent who was
issued Tax Declaration No. R-1475 that same year.[5] The tax declaration was later
superseded by Tax Declaration Nos. R-799 issued in 1961 [6] and D-2247 issued in 1974.
[7]
Private respondent occupied and cultivated the said land,[8] planting cassava and camote
in certain portions of the land.[9]
In 1969, unknown to private respondent, Jose Alvarez succeeded in obtaining the
registration of a parcel of land with an area of 1,512,468.00 square meters, [10] in his name
for which he was issued OCT No. 546 on June 16, 1969. [11] The parcel of land included the
19.4 hectares occupied by private respondent. Alvarez never occupied nor introduced
improvements on said land.[12]
In 1972, Alvarez sold the land to the spouses Gaudencio and Rosario Beduya to whom TCT
No. 10101 was issued.[13] That same year, the spouses Beduya obtained a loan from
petitioner Development Bank of the Philippines for P526,000.00 and, as security, mortgaged
the land covered by TCT No. 10101 to the bank.[14] In 1978, the SAAD Investment Corp., and
the SAAD Agro-Industries, Inc., represented by Gaudencio Beduya, and the spouses Beduya
personally executed another mortgage over the land in favor of petitioner to secure a loan of
P1,430,000.00.[15] Sdjad

The spouses Beduya later failed to pay their loans, as a result of which, the mortgage on the
property was foreclosed.[16] In the resulting foreclosure sale held on January 31, 1985,
petitioner was the highest bidder.[17] As the spouses Beduya failed to redeem the property,
petitioner consolidated its ownership.[18]
It appears that private respondent had also applied for a loan from petitioner in 1978,
offering his 19.4 hectare property under Tax Declaration No. D-2247 as security for the loan.
As part of the processing of the application, a representative of petitioner, Patton R. Olano,
inspected the land and appraised its value.
Private respondents loan application was later approved by petitioner. [19] However after
releasing the amount of the loan to private respondent, petitioner found that the land
mortgaged by private respondent was included in the land covered by TCT No. 10101 in the
name of the spouses Beduya. Petitioner, therefore, cancelled the loan and demanded
immediate payment of the amount.[20] Private respondent paid the loan to petitioner for
which the former was issued a Cancellation of Mortgage, dated March 18, 1981, releasing
the property in question from encumbrance.[21]
Sometime in April of 1986, more than a year after the foreclosure sale, a re-appraisal of the
property covered by TCT No. 10101 was conducted by petitioners representatives. It was
then discovered that private respondent was occupying a portion of said land. Private
respondent was informed that petitioner had become the owner of the land he was
occupying, and he was asked to vacate the property. As private respondent refused to do so,
[22]
petitioner filed a complaint for recovery of possession with damages against him. The
case was assigned to Branch 1 of the Regional Trial Court, Tagbilaran City, [23] which after
trial, rendered a decision, dated August 22, 1989, declaring petitioner the lawful owner of
the entire land covered by TCT No. 10101 on the ground that the decree of registration was
binding upon the land.[24] The dispositive portion of the decision reads:
WHEREFORE, foregoing considered, the court renders judgment:
1.......Declaring plaintiff bank Development Bank of the Philippines the true
and legal owner of the land in question covered by TCT No. 10101 farm of
Gaudencio Beduya;
2.......Dismissing defendants counterclaim; Sppedsc
3.......Ordering defendant to vacate from the land in question; the portion of
which he claims to belong to him for without basis in fact and law;
4.......Ordering defendant, his agents or any person representing him or those
who may claim substantial rights on the land to vacate therefrom, cease and
desist from disturbing, molesting and interfering plaintiffs possession of the
land in question, and from committing any such act as would tend to mitigate,
deny or deprive plaintiff of its ownership and possession over said land.
SO ORDERED.

On appeal, the Court of Appeals reversed and gave judgment for private respondent,
declaring him the owner of the 19.4 hectares of land erroneously included in TCT No. 10101.
The dispositive portion of the appellate courts decision reads:
WHEREFORE, the appealed decision is hereby REVERSED AND SET ASIDE. A
new decision is hereby rendered:
1. Dismissing the complaint.
2. Declaring the disputed 19.4000 hectares of land embraced in TCT 10101 as
exclusively belonging to defendant-appellant, ordering its segregation from
plaintiff-appellees title and its reconveyance to appellant.
No pronouncement as to costs.
SO ORDERED.[25]
Petitioner moved for a reconsideration but its motion was denied in a resolution dated April
23, 1997.[26] Hence this petition.
Petitioner contends that:
I.......THE DECISION OF THE RESPONDENT COURT IS NOT IN ACCORD WITH
THE APPLICABLE PROVISIONS OF LAW (Sections 38 and 46 of ACT 496) AND
THE APPLICABLE DECISIONS OF THE SUPREME COURT, PARTICULARLY IN THE
CASE OF BENIN VS. TUASON, 57 SCRA 531.
II.......THE RESPONDENT COURT OVERLOOKED THE ISSUES ABOUT THE DBP
BEING AN INNOCENT MORTGAGEE FOR VALUE OF THE LAND IN QUESTION AND
OF HAVING PURCHASED LATER THE SAME DURING A PUBLIC AUCTION
SALE. Calrsc
III.THE RESPONDENT COURTS RULING DECLARING DBP IN ESTOPPEL IS
ILLOGICAL.[27]
First. Petitioner invokes the ruling of this Court in Benin v. Tuason[28] in support of its claim
that its predecessor-in-interest, Jose Alvarez, became the owner of the land by virtue of the
decree of registration issued in his name. In Benin, three sets of plaintiffs filed separate
complaints against Mariano Severo Tuason and J.M. Tuason & Co., Inc., praying for the
cancellation of OCT No. 735 covering two parcels of land called the Sta. Mesa Estate, or
Parcel 1, with an area of 8,798,617.00 square meters, and the Diliman Estate, or Parcel 2,
with an area of 15,961,246.00 square meters. They asked that they be declared the owners
and lawful possessors of said lands.
Benin is distinguished from this case. In the first place, Benin involved vast tracts of lands
which had already been subdivided and bought by innocent purchasers for value and in
good faith at the time the claimants obtained registration. Secondly, when the claimants
ancestors occupied the lands in question and declared them for tax purposes in 1944, the

lands were already covered by the tax declarations in the name of J. M. Tuason & Co., Inc. In
1914, OCT No. 735 was issued in the name of Tuason so that, from that time on, no
possession could defeat the title of the registered owners of the land. Thirdly, the validity of
OCT No. 735 had already been recognized by this Court in several cases [29] and, as a result
thereof, the transfer certificates of title acquired by the innocent purchasers for value were
also declared valid. It was held that neither could the claimants file an action to annul these
titles for not only had these actions prescribed, but the fact was that the claimants were also
barred from doing so by laches, having filed the complaint only in 1955, or 41 years after the
issuance of OCT No. 735 to J.M. Tuason & Co., Inc. Thus, it was not solely the decree of
registration which was considered in resolving the Benin case. What was considered decisive
was the valid title or right of ownership of J. M. Tuason & Co., Inc. and that of the other
innocent purchasers for value and in good faith compared to the failure of the claimants to
show their right to own or possess the questioned properties. Sccalr
Petitioner maintains that the possession by private respondent and his predecessor-ininterest of the 19.4 hectares of land for more than 30 years cannot overcome the decree of
registration issued in favor of its predecessor-in-interest Jose Alvarez. Petitioner quotes the
following statement in the Benin case:
It follows also that the allegation of prescriptive title in favor of plaintiffs does
not suffice to establish a cause of action. If such prescription was
completed before the registration of the land in favor of the Tuasons, the
resulting prescriptive title was cut off and extinguished by the decree of
registration. If, on the contrary, the prescription was either begun or
completed after the decree of registration, it conferred no title because, by
express provision of law, prescription can not operate against the registered
owner (Act 496).[30]
Petitioner would thus insist that, by virtue of the decree of registration, Jose Alvarez and
those claiming title from him (i.e., the spouses Beduya) acquired ownership of the 19.4
hectares of land, despite the fact that they neither possessed nor occupied these lands.
This view is mistaken. A consideration of the cases shows 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 land not to the right of ownership thereof which was not annotated on the
certificate of title issued thereon. Thus, Act No. 496 provides:
Sec. 39. Every person receiving a certificate of title in pursuance of a decree
of registration, and every subsequent purchaser of registered land who takes
a certificate of title for value in good faith shall hold the same free of all
encumbrances except those noted on said certificate, and any of the following
encumbrances which may be subsisting, namely: Calrspped
First. Liens, claims, or rights arising or existing under the laws of Constitution
of the United States or of the Philippine Islands which the statutes of the
Philippine Islands cannot require to appear of record in the Registry.
Second. Taxes within two years after the same became due and payable.

Third. Any public highway, way, private way established by law, or any
Government irrigation canal or lateral thereof, where the certificate of title
does not state that the boundaries of such highway, way, or irrigation canal or
lateral thereof, have been determined.
But if there are easements or other rights appurtenant to a parcel of
registered land which for any reason have failed to be registered, such
easements or rights shall remain so appurtenant notwithstanding such failure,
and shall be held to pass with the land until cut off or extinguished by the
registration of the servient estate, or in any other manner.
Hence, in Cid v. Javier,[31] it was helds:
. . . Consequently, even conceding arguendo that such an easement has been
acquired, it had been cut off and extinguished by the registration of the
servient estate under the Torrens system without the easement being
annotated on the corresponding certificate of title, pursuant to Section 39 of
the Land Registration Act.
This principle was reiterated in Purugganan v. Paredes[32] which also involved an easement of
light and view that was not annotated on the certificate of title of the servient estate. Scedp
But to make this principle applicable to a situation wherein title acquired by a person
through acquisitive prescription would be considered cut off and extinguished by a decree of
registration would run counter to established jurisprudence before and after the ruling
in Benin. Indeed, registration has never been a mode of acquiring ownership over
immovable property. As early as 1911, in the case of City of Manila v. Lack,[33]the Court
already ruled on the purpose of registration of lands, viz.:
The Court of Land Registration was created for a single purpose. The Act is
entitled "An Act to provide for the adjudication and registration of titles to
lands in the Philippine Islands." The sole purpose of the Legislature in its
creation was to bring the land titles of the Philippine Islands under one
comprehensive and harmonious system, the cardinal features of which are
indefeasibility of title and the intervention of the State as a prerequisite to the
creation and transfer of titles and interest, with the resultant increase in the
use of land as a business asset by reason of the greater certainty and security
of title. It does not create a title nor vest one. It simply confirms a title already
created and already vested, rendering it forever indefeasible. . .
Again, in the case of Angeles v. Samia[34] where land was erroneously registered in favor of
persons who neither possessed nor occupied the same, to the prejudice of the actual
occupant, the Court held:
. . . The purpose of the Land Registration Act, as this court has had occasion to
so state more than once, is not to create or vest title, but to confirm and
register title already created and already vested, and of course, said original
certificate of title No. 8995 could not have vested in the defendant more title

than what was rightfully due her and her coowners. It appearing that said
certificate granted her much more than she expected, naturally to the
prejudice of another, it is but just that the error, which gave rise to said
anomaly, be corrected (City of Manila vs. Lack, 19 Phil., 324). The defendant
and her coowners knew or, at least, came to know that it was through error
that the original certificate of title in question was issued by the court which
heard cadastral case No. 11 of Bacolor, not only in or prior to March, 1933, but
from the time said certificate was issued in their favor, that is, from December
15, 1921. This is evidenced by the fact that, ever since, they remained
passive without even attempting to make the least showing of ownership over
the land in question until after the lapse of more than eleven years. The Land
Registration Act as well as the Cadastral Act protects only the holders of a title
in good faith and does not permit its provisions to be used as a shield for the
commission of fraud, or that one should enrich himself at the expense of
another (Gustilo vs. Maravilla, 48 Phil., 442; Angelo vs. Director of Lands, 49
Phil., 838). The above-stated Acts do not give anybody, who resorts to the
provisions thereof, a better title than he really and lawfully has. If he
happened to obtain it by mistake or to secure, to the prejudice of his neighbor,
more land than he really owns, with or without bad faith on his part, the
certificate of title, which may have been issued to him under the
circumstances, may and should be cancelled or corrected (Legarda and Prieto
vs. Saleeby, 31 Phil., 590). This is permitted by section 112 of Act No. 496,
which is applicable to the Cadastral Act because it is so provided expressly by
the provisions of section 11 of the latter Act. It cannot be otherwise because,
as stated in the case of Domingo vs. Santos, Ongsiako, Lim y Cia. (55 Phil.,
361), errors in the plans of lands sought to be registered in the registry and
reproduced in the certificate of title issued later, do not annul the decree of
registration on the ground that it is not the plan but the land itself which is
registered in the registry. In other words, if the plan of an applicant for
registration or claimant in a cadastral case alleges that the land referred to in
said plan is 100 or 1,000 hectares, and the land which he really owns and
desires to register in the registry is only 80 ares, he cannot claim to be the
owner of the existing difference if afterwards he is issued a certificate of title
granting him said area of 100 or 1,000 hectares.[35] Edpsc
The principle laid down in this 1938 case remains the prevailing doctrine, its latest
application being in the case of Reyes v. Court of Appeals[36]wherein we ruled that the fact
that a party was able to secure a title in his favor did not operate to vest ownership upon her
of the property.
In the present case, private respondent has been in actual, open, peaceful and continuous
possession of the property since 1950. This fact was corroborated by the testimony of
Eleuterio Cambangay who personally knew that Ulpiano Mumar transferred the land covered
by Tax Declaration No. 3840[37] in favor of private respondent in 1950.[38] Private
respondents claim based on actual occupation of the land is bolstered by Tax Declaration
Nos. R-1475, R-799 and D-2247[39] which were issued in his name in 1950, 1961 and 1974,
respectively. Together with his actual possession of the land, these tax declarations

constitute strong evidence of ownership of the land occupied by him. As we said in the case
ofRepublic vs. Court of Appeals:[40]
Although tax declarations or realty tax payments of property are not
conclusive evidence of ownership, nevertheless, they are good indicia of
possession in the concept of owner for no one in his right mind would be
paying taxes for a property that is not in his actual or at least constructive
possession. They constitute at least proof that the holder has a claim of title
over the property. The voluntary declaration of a piece of property for taxation
purposes manifests not only ones sincere and honest desire to obtain title to
the property and announces his adverse claim against the State and all other
interested parties, but also the intention to contribute needed revenues to the
Government. Such an act strengthens ones bona fide claim of acquisition of
ownership.
More importantly, it was established that private respondent, having been in possession of
the land since 1950, was the owner of the property when it was registered by Jose Alvarez in
1969, his possession tacked to that of his predecessor-in-interest, Ulpiano Mumar, which
dates back to 1917.[41] Clearly, more than 30 years had elapsed before a decree of
registration was issued in favor of Jose Alvarez. This uninterrupted adverse possession of the
land for more than 30 years could only ripen into ownership of the land through acquisitive
prescription which is a mode of acquiring ownership and other real rights over immovable
property. Prescription requires public, peaceful, uninterrupted and adverse possession of the
property in the concept of an owner for ten (10) years, in case the possession is in good faith
and with a just title. Such prescription is called ordinary prescription, as distinguished from
extraordinary prescription which requires possession for 30 years in case possession is
without just title or is not in good faith.[42] Edp
In contrast to private respondent, it has been shown that neither Jose Alvarez nor the
spouses Beduya were at any time in possession of the property in question. In fact, despite
knowledge by Gaudencio Beduya that private respondent occupied this 19.4 hectares
included in the area covered by TCT No. 10101,[43] he never instituted any action to eject or
recover possession from the latter. Hence, it can be concluded that neither Jose Alvarez nor
the spouses Beduya ever exercised any right of ownership over the land. The fact of
registration in their favor never vested in them the ownership of the land in dispute. "If a
person obtains a title under the Torrens system, which includes by mistake or oversight land
which can no longer be registered under the system, he does not, by virtue of the said
certificate alone, become the owner of the lands illegally included." [44]
Considering the circumstances pertaining in this case, therefore, we hold that ownership of
the 19.4 hectares of land presently occupied by private respondent was already vested in
him and that its inclusion in OCT No. 546 and, subsequently, in TCT No. 10101, was
erroneous. Accordingly, the land in question must be reconveyed in favor of private
respondent, the true and actual owner thereof, reconveyance being clearly the proper
remedy in this case.
"The true owner may bring an action to have the ownership or title to the land
judicially settled and the Court in the exercise of its equity jurisdiction, without

ordering the cancellation of the Torrens title issued upon the patent, may
direct the defendants, the registered owner to reconvey the parcel of land to
the plaintiff who has been found to be the true owner thereof." (Vital vs.
Amore, 90 Phil. 955) "The reconveyance is just and proper in order to
terminate the intolerable anomaly that the patentees should have a torrens
title for the land which they and their predecessors never possessed which
has been possessed by Novo in the concept of owner." (Bustarga v. Novo, 129
SCRA 125)[45]
Second. Generally, an action for reconveyance based on an implied or constructive trust,
such as the instant case, prescribes in 10 years from the date of issuance of decree of
registration.[46] However, this rule does not apply when the plaintiff is in actual possession of
the land. Thus, it has been held: Misedp
. . . [A]n action for reconveyance of a parcel of land based on implied or
constructive trust prescribes in ten years, the point of reference being the
date of registration of the deed or the date of the issuance of the certificate of
title over the property, but this rule applies only when the plaintiff or the
person enforcing the trust is not in possession of the property, since if a
person claiming to be the owner thereof is in actual possession of the
property, as the defendants are in the instant case, the right to seek
reconveyance, which in effect seeks to quiet title to the property, does not
prescribe. The reason for this is that one who is in actual possession of a piece
of land claiming to be the owner thereof may wait until his possession is
disturbed or his title is attacked before taking steps to vindicate his right, the
reason for the rule being, that his undisturbed possession gives him a
continuing right to seek the aid of a court of equity to ascertain and determine
the nature of the adverse claim of a third party and its effect on his own title,
which right can be claimed only by one who is in possession. [47]
Having been the sole occupant of the land in question, private respondent may seek
reconveyance of his property despite the lapse of more than 10 years.
Nor is there any obstacle to the determination of the validity of TCT No. 10101. It is true that
the indefeasibility of torrens titles cannot be collaterally attacked. In the instant case, the
original complaint is for recovery of possession filed by petitioner against private
respondent, not an original action filed by the latter to question the validity of TCT No. 10101
on which petitioner bases its right. To rule on the issue of validity in a case for recovery of
possession is tantamount to a collateral attack. However, it should not be overlooked that
private respondent filed a counterclaim against petitioner, claiming ownership over the land
and seeking damages. Hence, we could rule on the question of the validity of TCT No. 10101
for the counterclaim can be considered a direct attack on the same. "A counterclaim is
considered a complaint, only this time, it is the original defendant who becomes the plaintiff.
. . . It stands on the same footing and is to be tested by the same rules as if it were an
independent action."[48] In an analogous case,[49] we ruled on the validity of a certificate of
title despite the fact that the original action instituted before the lower court was a case for
recovery of possession. The Court reasoned that since all the facts of the case are before it,
to direct the party to institute cancellation proceedings would be needlessly circuitous and

would unnecessarily delay the termination of the controversy which has already dragged on
for 20 years.
Third. Petitioner nonetheless contends that an action for reconveyance does not lie against
it, because it is an innocent purchaser for value in the foreclosure sale held in 1985.
This contention has no merit. Sec. 38 of Act No. 496, the Land Registration Act,
provides: Misoedp
If the court after hearing finds that the applicant or adverse claimant has title
as stated in his application or adverse claim and proper for registration, a
decree of confirmation and registration shall be entered. Every decree of
registration shall bind the land, and quiet title thereto, subject only to the
exceptions stated in the following section. It shall be conclusive upon and
against all persons, including the Insular Government and all the branches
thereof, whether mentioned by name in the application, notice, or citation, or
included in the general description "To all whom it may concern." Such decree
shall not be opened by reason of the absence, infancy, or other disability of
any person affected thereby, nor by any proceeding in any court for reversing
judgments or decrees; subject, however, to the right of any person deprived of
land or of any estate or interest therein by decree of registration obtained by
fraud to file in the competent Court of First Instance a petition for review
within one year after entry of the decree, provided no innocent purchaser for
value has acquired an interest. Upon the expiration of said term of one year,
every decree or certificate of title issued in accordance with this section shall
be incontrovertible. If there is any such purchaser, the decree of registration
shall not be opened, but shall remain in full force and effect forever, subject
only to the right of appeal hereinbefore provided: Provided, however, That no
decree or certificate of title issued to persons not parties to the appeal shall
be cancelled or annulled. But any person aggrieved by such decree in any
case may pursue his remedy by action for damages against the applicant or
any other person for fraud in procuring the decree. Whenever the phrase
"innocent purchaser for value" or an equivalent phrase occurs in this Act, it
shall be deemed to include an innocent lessee, mortgagee, or other
encumbrancer for value. (As amended by Sec. 3, Act 3621; and Sec. 1, Act No.
3630.) Edpmis
Succinctly put, 38 provides that a certificate of title is conclusive and binding upon the
whole world. Consequently, a buyer need not look behind the certificate of title in order to
determine who is the actual owner of the land. However, this is subject to the right of a
person deprived of land through fraud to bring an action for reconveyance, provided that it
does not prejudice the rights of an innocent purchaser for value and in good faith. "It is a
condition sine qua non for an action for reconveyance to prosper that the property should
not have passed to the hands of an innocent purchaser for value."[50] The same rule applies
to mortgagees, like petitioner. Thus, we held:
Where the certificate of title is in the name of the mortgagor when the land is
mortgaged, the innocent mortgagee for value has the right to rely on what

appears on the certificate of title. In the absence of anything to excite

suspicion, said mortgagee is under no obligation to look beyond the certificate
and investigate the title of the mortgagor appearing on the face of said
certificate. Although Article 2085 of the Civil Code provides that absolute
ownership of the mortgaged property by the mortgagor is essential, the
subsequent declaration of a title as null and void is not a ground for nullifying
the mortgage right of a mortgagee in good faith.[51]
The evidence before us, however, indicates that petitioner is not a mortgagee in good faith.
To be sure, an innocent mortgagee is not expected to conduct an exhaustive investigation
on the history of the mortgagors title. Nonetheless, especially in the case of a banking
institution, a mortgagee 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 are
the real owners thereof. 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.[52] Jjsc
In this case, petitioners representative, Patton R. Olano, admitted that he came to know of
the property for the first time in 1979 when he inspected it to determine whether the portion
occupied by private respondent and mortgaged by the latter to petitioner was included in
TCT No. 10101. This means that when the land was mortgaged by the spouses Beduya in
1972, no investigation had been made by petitioner. It is clear, therefore, that petitioner
failed to exercise due care and diligence in establishing the condition of the land as regards
its actual owners and possessors before it entered into the mortgage contract in 1972 with
the Beduyas. Had it done so, it would not have failed to discover that private respondent
was occupying the disputed portion of 19.4 hectares. For this reason, petitioner cannot be
considered an innocent purchaser for value when it bought the land covered by TCT No.
10101 in 1985 at the foreclosure sale.
Indeed, two circumstances negate petitioners claim that it was an innocent purchaser for
value when it bought the land in question, including the portion occupied by private
respondent: (1) petitioner was already informed by Gaudencio Beduya that private
respondent occupied a portion of the property covered by TCT No. 10101; and (2)
petitioners representative conducted an investigation of the property in 1979 to ascertain
whether the land mortgaged by private respondent was included in TCT No. 10101. In other
words, petitioner was already aware that a person other than the registered owner was in
actual possession of the land when it bought the same at the foreclosure sale. A person who
deliberately ignores a significant fact which would create suspicion in an otherwise
reasonable man is not an innocent purchaser for value. "It is a well-settled rule that a
purchaser cannot close his eyes to facts which should put a reasonable man upon his guard,
and then claim that he acted in good faith under the belief that there was no defect in the
title of the vendor."[53]
Petitioner deliberately disregarded both the fact that private respondent already occupied
the property and that he was claiming ownership over the same. It cannot feign ignorance of
private respondents claim to the land since the latter mortgaged the same land to
petitioner as security for the loan he contracted in 1978 on the strength of the tax

declarations issued under his name. Instead of inquiring into private respondents
occupation over the land, petitioner simply proceeded with the foreclosure sale, pretending
that no doubts surround the ownership of the land covered by TCT No. 10101. Considering
these circumstances, petitioner cannot be deemed an innocent mortgagee/purchaser for
value. As we ruled: Scjj
"The failure of appellees to take the ordinary precautions which a prudent
man would have taken under the circumstances, specially in buying a piece of
land in the actual, visible and public possession of another person, other than
the vendor, constitutes gross negligence amounting to bad faith.
In this connection, it has been held that where, as in this case, the land sold is
in the possession of a person other than the vendor, the purchaser is required
to go beyond the certificates of title and ma[k]e inquiries concerning the
rights of the actual possessor. (Citations omitted.)
....
One who purchases real property which is in the actual possession of another
should, at least, make some inquiry concerning the right of those in
possession. The actual possession by other than the vendor should, at least
put the purchaser upon inquiry. He can scarcely, in the absence of such
inquiry, be regarded as a bona fide purchaser as against such possessors." [54]
Fourth. From the foregoing, we find that the resolution of the issue of estoppel will not
affect the outcome of this case. Petitioner claims that the fact that it approved a loan in
favor of private respondent and executed a mortgage contract covering the 19.4 hectares
covered by tax declarations issued under private respondents name does not mean that it
is estopped from questioning the latters title. Petitioner accuses private respondent of
having made misrepresentations which led it to believe in his valid title and ownership.
The claim has no basis. Private respondent made no misrepresentation with regard to the
land occupied by him as he is actually the real owner thereof. Moreover, when private
respondent entered into a mortgage contract with petitioner, his claim of ownership was
supported not only by the tax declarations but also by a certification of the Clerk of Court of
the Court of First Instance of Bohol that no civil, land registration or cadastral case has been
filed or instituted before the court affecting the validity of Tax Declaration No. D-2247
covering the land located in Bugang, San Miguel, Bohol and declared in the name of Carlos
Cajes.[55] These documents were relied upon by private respondent in support of his claim of
ownership. We cannot consider the submission of these documents as misrepresentations by
private respondent as to the actual ownership of the land. Rather, private respondent
believed in good faith and with good reason that he was the owner of the 19.4 hectares
occupied by him. Sjcj
As to the question of estoppel, we do not find petitioner to be estopped from questioning
private respondents title. "Estoppel in pais arises when one, by his acts, representations or
admission, or by his own silence when he ought to speak out, intentionally or through
culpable negligence, induces another to believe certain facts to exist and such other

rightfully relies and acts on such belief, so that he will be prejudiced if the former is
permitted to deny the existence of such facts." [56] In the case at bar, upon learning that the
land occupied by private respondent was also covered by TCT No. 10101, petitioner
immediately demanded full payment of the loan and thereafter cancelled the mortgage
contract, a fact that is admitted by private respondent himself. [57] Indeed, nothing in record
indicates that petitioner impliedly acquiesced to the validity of private respondents title
when it found out that the latter was occupying a portion of the land covered by TCT No.
10101.
However, for reasons aforestated, we uphold private respondents ownership of 19.4
hectares occupied by him. As a necessary consequence thereof, such portion of land
included in TCT No. 10101 must be segregated and reconveyed in his favor.
WHEREFORE, the decision of the Court of Appeals is AFFIRMED in toto.
[G.R. No. 155810. August 13, 2004]
LYDIA SUMIPAT, LAURITO SUMIPAT, ALEJANDRO SUMIPAT, ALICIA SUMIPAT, and
LIRAFE
SUMIPAT, petitioners,
vs. BRIGIDO
BANGA,
HERMINIGILDO
TABOTABO, VIVIANO TABOTABO, BERNARDITA ANION, and LEONIDA
TABOTABO, respondents.
This is a Petition for Review on Certiorari [1] of the Decision[2] of the Court of Appeals
which reversed and set aside the decision [3] of the Regional Trial Court (RTC) and partially
annulled the Deed of Absolute Transfer and/or Quitclaim (the deed) subject of this case.
We quote the appellate courts findings of fact:
The spouses Placida Tabo-tabo and Lauro Sumipat, who contracted marriage on July 20,
1939, acquired three parcels of land two of which were covered by Original Certificate of
Title No. P-17842 and Transfer Certificate of Title No. T-15826.
The couple was childless.
Lauro Sumipat, however, sired five illegitimate children out of an extra-marital affair with
Pedra Dacola, namely: herein defendants-appellees Lydia, Laurito, Alicia, Alejandro and
Lirafe, all surnamed Sumipat.
On January 5, 1983, Lauro Sumipat executed a document denominated DEED OF ABSOLUTE
TRANSFER AND/OR QUIT-CLAIM OVER REAL PROPERTIES (the assailed document) in favor of
defendants-appellees covering the three parcels of land (the properties). On the document
appears the signature of his wife Placida which indicates that she gave her marital consent
thereto.
It appears that on January 5, 1983 when the assailed document was executed, Lauro
Sumipat was already very sick and bedridden; that upon defendant-appellee Lydias request,
their neighbor Benjamin Rivera lifted the body of Lauro Sumipat whereupon Lydia guided his
(Lauro Sumipats) hand in affixing his signature on the assailed document which she had

brought; that Lydia thereafter left but later returned on the same day and requested Lauros
unlettered wife Placida to sign on the assailed document, as she did in haste, even without
the latter getting a responsive answer to her query on what it was all about.
After Lauro Sumipats death on January 30, 1984, his wife Placida, hereinafter referred to as
plaintiff-appellant, and defendants-appellees jointly administered the properties 50% of the
produce of which went to plaintiff-appellant.
As plaintiff-appellants share in the produce of the properties dwindled until she no longer
received any and learning that the titles to the properties in question were already
transferred/made in favor of the defendants-appellees, she filed a complaint for declaration
of nullity of titles, contracts, partition, recovery of ownership now the subject of the present
appeal.
Defendant-appellee Lydia disclaims participation in the execution of the assailed document,
she claiming to have acquired knowledge of its existence only on January 10, 1983 or five
days after its execution when Lauro Sumipat gave the same to her.
Branch 6 of the Regional Trial Court of Dipolog City decided the case in favor of defendantsappellees, it holding that by virtue of the assailed document the due execution of which was
not contested by plaintiff-appellant, the properties were absolutely transferred to
defendants-appellees.[4]
The trial court found that the subject properties are conjugal having been acquired
during the marriage of Lauro Sumipat and Placida Tabotabo (Placida). However, because
Placida failed to question the genuineness and due execution of the deed and even admitted
having affixed her signature thereon, the trial court declared that the entirety of the subject
properties, and not just Lauro Sumipats conjugal share, were validly transferred to the
defendants, the petitioners herein.[5]
On appeal,[6] the appellate court held that since Placida was unlettered, [7] the appellees,
the petitioners herein, as the parties interested in enforcing the deed, have the burden of
proving that the terms thereof were fully explained to her.[8] This they failed to do.
Under the Civil Code, a contract where consent is given through mistake, violence,
intimidation, undue influence or fraud is voidable. [9] In order that mistake may invalidate
consent, it should refer to the substance of the thing which is the object of the contract, or
to those conditions which have principally moved one or both parties to enter into the
contract.[10]
The appellate court found that Placida did not understand the full import of the deed
because the terms thereof were not explained to her either by the petitioners or by the
notary public before whom the deed was acknowledged. According to the appellate court,
Judge Pacifico Garcia (Judge Garcia), before whom the deed was acknowledged, did not
identify Placida as having appeared before him on January 5, 1983 to acknowledge the
deed. The jurat indicates that it was only Lauro Sumipat who appeared before Judge Garcia
and to whom he explained the contents of the deed. Further, the appellate court noted that
Judge Garcia himself was under the impression that the deed conveyed the exclusive

properties of Lauro Sumipat. Hence, he could not have explained to Placida that the deed
actually transferred the conjugal properties of Lauro Sumipat and Placida. [11]
The Court of Appeals, therefore, annulled the deed insofar as it covers Placidas conjugal
share in the subject properties because the latters consent thereto was vitiated by mistake
when she affixed her signature on the document.
The petitioners filed a Motion for Reconsideration on the grounds of estoppel, absence
of fraud and prescription. The appellate court denied the Motion for Reconsideration in
its Resolution[12] dated October 16, 2002 ruling that the grounds relied upon have been
addressed in its Decision dated April 11, 2002. Anent the ground of prescription, the
appellate court held that since the properties were acquired through fraud or mistake, the
petitioners are considered trustees of an implied trust for the benefit of Placida. Citing
jurisprudence,[13] the Court of Appeals ruled that actions based on implied or constructive
trust prescribe 10 years from the issuance of a Torrens Title over the property. Since two (2)
of the subject properties were issued Transfer Certificates of Title (TCT) Numbered T40037[14] and T-40038[15] under the petitioners names on August 18, 1987, the Complaint for
declaration of nullity of titles, partition, recovery of ownership and possession,
reconveyance, accounting and damages, which was filed on March 3, 1993, was filed well
within the prescriptive period.
The petitioners are now before this Court principally claiming that Placida freely
consented to the execution of the deed and that they did not commit fraudulent acts in
connection with its execution. They also reiterate their argument that the Court of Appeals
should have dismissed the case on the ground of prescription. It is their contention that the
present action being one to annul a contract on the ground of fraud, it should have been
filed within four (4) years from the discovery of fraud or registration of the instrument with
the Registry of Deeds.
The respondents filed their Comment[16] dated February 7, 2003, essentially echoing the
findings of the Court of Appeals on the matter of Placidas consent. According to them,
Placida was deceived and misled into affixing her signature on the deed. They further claim
that Placida did not actually appear before the notary public to acknowledge the instrument.
In their Reply[17] dated April 29, 2003, the petitioners insist that Placida was not illiterate
and that Lauro Sumipat validly transferred the titles over the properties in question to them.
They also argue that if Placida did not understand the import of the deed, she could have
questioned Lauro Sumipat about it since the deed was executed a year before the latter
died.
The trial court and the Court of Appeals are in agreement that the subject properties are
conjugal, having been acquired during the marriage of Lauro Sumipat and Placida. They
came out, however, with disparate denouements. While the trial court upheld the validity of
the deed as an instrument of transfer of all the litigated parcels of land in their entirety on
the ground that Placida failed to question its authenticity and due execution, the appellate
court struck the deed down insofar as the conjugal share of Placida is concerned based on
its finding that her consent was vitiated by mistake.

At bottom, the crux of the controversy is whether the questioned deed by its terms or
under the surrounding circumstances has validly transferred title to the disputed properties
to the petitioners.
A perusal of the deed reveals that it is actually a gratuitous disposition of property a
donation although Lauro Sumipat imposed upon the petitioners the condition that he and
his wife, Placida, shall be entitled to one-half (1/2) of all the fruits or produce of the parcels
of land for their subsistence and support. The preliminary clauses of the deed read:
That conscious of my advanced age and failing health, I feel that I am not capable anymore
of attending to and maintaining and keeping in continuous cultivation my above described
properties;
That my children are all desirous of taking over the task of maintaining my properties and
have demonstrated since childhood the needed industry and hard work as they have in fact
established possession over my real properties and introduced more improvements over my
lands, the fruit of which through their concerted efforts and labors, I myself and my family
have enjoyed;
That it would be to the best interest of my above mentioned children that the ownership
over my above described properties be transferred in their names, thereby encouraging
them more in developing the lands to its fullest productivity. [18]
The deed covers three (3) parcels of land. [19] Being a donation of immovable property,
the requirements for validity set forth in Article 749 of the Civil Code should have been
followed, viz:
Art. 749. In order that the donation of the immovable may be valid, it must be made in a
public document, specifying therein the property donated and the value of the charges
which the donee must satisfy.
The acceptance may be made in the same deed of donation or in a separate public
document, but it shall not take effect unless it is done during the lifetime of the donor.
If the acceptance is made in a separate instrument, the donor shall be notified thereof in an
authentic form, and this step shall be noted in both instruments.
Title to immovable property does not pass from the donor to the donee by virtue of a
deed of donation until and unless it has been accepted in a public instrument and the donor
duly notified thereof. The acceptance may be made in the very same instrument of donation.
If the acceptance does not appear in the same document, it must be made in another.
Where the deed of donation fails to show the acceptance, or where the formal notice of the
acceptance, made in a separate instrument, is either not given to the donor or else not
noted in the deed of donation and in the separate acceptance, the donation is null and void.
[20]

In this case, the donees acceptance of the donation is not manifested either in the deed
itself or in a separate document. Hence, the deed as an instrument of donation is patently
void.
We also note the absence of any proof of filing of the necessary return, payment of
donors taxes on the transfer, or exemption from payment thereof. Under the National
Internal Revenue Code of 1977, the tax code in force at the time of the execution of the
deed, an individual who makes any transfer by gift shall make a return and file the same
within 30 days after the date the gift is made with the Revenue District Officer, Collection
Agent or duly authorized Treasurer of the municipality in which the donor was domiciled at
the time of the transfer.[21] The filing of the return and payment of donors taxes are
mandatory. In fact, the registrar of deeds is mandated not to register in the registry of
property any document transferring real property by way of gifts inter vivos unless a
certification that the taxes fixed and actually due on the transfer had been paid or that the
transaction is tax exempt from the Commissioner of Internal Revenue, in either case, is
presented.[22]
Neither can we give effect to the deed as a sale, barter or any other onerous
conveyance, in the absence of valid cause or consideration and consent competently and
validly given.[23] While it is true that the appellate court found Placidas consent to have been
vitiated by mistake, her testimony on the matter actually makes out a case of total absence
of consent, not merely vitiation thereof. She testified in this regard, thus:
Q- What have you been doing on that day on January 5, 1983?
A-

I was at home boiling water.

Q-

While you were boiling water in the house, at that time who arrived, if there
was any?

A-

Lydia Sumipat arrived.

Court:-(To the witness)

Q- Who is this Lydia Sumipat?
A-

The daughter of my husband with his paramour.

Q- How old was she?

A-

I did not know if she was already 30 years old at that time because he was born
in 1950.

Atty. Legorio:-(To the witness)

Q-

When you said Lydia Sumipat, you are referring to one of the defendants in this
case?

A-

Yes, sir. She is the one.

Q-

This Lydia Sumipat you are referring to as one of the principal defendant and
daughter of your husband with his paramour, in January, 1983 what was her
educational attainment, if you know?

A-

She has already finished schooling.

Q- Do you know what she obtained?

A-

Teacher.

Q- You said she arrived in the afternoon of January 5, 1983 in your house while you
were boiling water. What did she do when she arrived there?
A-

She brought with her a paper.

Q- What did she say to you?

A-

She told me to sign that paper immediately because there is the witness
waiting and so I asked from her what was that paper I am going to sign. I asked
her because I am unlettered but she said never mind just sign this immediately.

Q- By the way, what is your highest educational attainment?

A-

I have never gone to school.

Q- Do you know how to read or to write?

A-

I know how to write only my name.

Q- You know how to write your name only?

A-

Yes, sir.

Q-

You said she told you to sign that piece of paper and you asked her what was
that and she told you you just sign that, what did you do then?

A-

She was in a hurry to let me sign that document so I signed it without knowing
what was that.

Q-

Did she tell you that piece of paper was a document wherein the land including
your land in Siayan were to be given to them?

A-

I did not give my land.[24]

During cross-examination, Placida again denied any knowledge of the nature of the
deed:
q

You are aware that the titles over these lots had already been transferred in the
name of the defendants?

They surreptitiously transferred the title in their names, I do not know about it.

You mean to say you signed a document transferring them in their names?

There was a piece of paper brought to me to be signed by Lydia; I asked whats

all about but she did not tell me; I was forced to sign considering that according
to her somebody was waiting for it.

What do you mean that you are force to sign?

She told me to sign that paper immediately because there is a witness waiting
that paper but she was alone when she came to me.

So you signed that paper?

I signed it because she was in a hurry.

That was done during the lifetime of your husband?

Yes, sir.

And your husband also signed that paper?

I do not know because I have not seen my husband signed, Lydia only came to
me to let me sign that paper.

Is it not a fact that you and your husband were brought before the office of
Judge Pacifico Garcia of Manukan, and in the office you signed that document?

I have not gone to the Municipal building of Manukan and I do not know Judge
Garcia.

But what you know now that the titles are transferred in the name of the
defendants?

It was Lydia who caused the transfer of the titles in their names.

And you know that fact when you signed that paper?

At the time I signed the paper, I do not know yet that the title would be
transferred, it was only at the time when I requested my niece to follow it up
because according to them I am no longer entitled to the land. [25]

In Baranda v. Baranda,[26] this Court declared that the deeds of sale questioned therein
are not merely voidable (as intimated by the plaintiffs themselves in their complaint for
annulment of the deeds and reconveyance of the lots) but null and void ab initio as the
supposed seller declared under oath that she signed the deeds without knowing what they
were. The significant circumstance meant, the Court added, that her consent was not
merely marred by vices of consent so as to make the contracts voidable, but that she had
not given her consent at all.
Parenthetically, as Placidas Complaint is entitled Declaration of Nullity of Titles;
Contracts; Partition, Recovery of Ownership and Possession; Reconveyance; Accounting and
Damages with Prayer for Preliminary Injunction and Receivership, the validity of the deed
was directly assailed, but its absolute nullity was not specifically raised as an issue.
Nevertheless, both the RTC and the appellate court took the cue from Placidas theory that
the deed is merely voidable as regards her conjugal share of the properties. However, since
the real issue is whether the questioned deed has validly transferred ownership of the
litigated properties, it is appropriate for the Court to inquire into the form of the deed and
the existence of valid consent thereto to ascertain the validity or nullity of the deed.
From the substantive and procedural standpoints, the objectives to write finis to a
protracted litigation and avoid multiplicity of suits are worth pursuing at all times.
Conformably, we have ruled in a number of cases that an appellate court is accorded broad
discretionary power to consider even errors not assigned. We have applied this tenet,
albeit as a matter of exception, in the following instances: (1) grounds not assigned as errors
but affecting jurisdiction over the subject matter; (2) matters not assigned as errors on
appeal but are evidently plain or clerical errors within contemplation of law; (3) matters not
assigned as errors on appeal but consideration of which is necessary in arriving at a just
decision and complete resolution of the case or to serve the interests of justice or to avoid
dispensing piecemeal justice; (4) matters not specifically assigned as errors on appeal but
raised in the trial court and are matters of record having some bearing on the issue
submitted which the parties failed to raise or which the lower court ignored; (5) matters not
assigned as errors on appeal but closely related to an error assigned; and (6) matters not
assigned as errors on appeal but upon which the determination of a question properly
assigned is dependent.[27]
In the instant case, the validity of the deed was directly assailed although both parties
are of the view that it is not an absolute nullity. The correct characterization of the deed is,
therefore, determinative of the present controversy. Elsewise framed, the issue of validity or
nullity is interwoven with the positions adopted by the parties and the rulings made by the
courts below. Hence, we shall be resolute in striking down the deed especially as it appears
on its face to be a patent nullity.
Having said this, we shall now proceed to the issue of prescription. Being an absolute
nullity, both as a donation and as a sale, the deed is subject to attack at any time, in

accordance with the rule in Article 1410 of the Civil Code that an action to declare the
inexistence of a void contract does not prescribe.
We are thus unimpressed by the petitioners contention that the appellate court should
have dismissed Placidas appeal on the ground of prescription. Passage of time cannot cure
the fatal flaw in an inexistent and void contract. [28] The defect of inexistence of a contract is
permanent and incurable; hence, it cannot be cured either by ratification or by
prescription. [29]
Turning now to the effects of the absolute nullity of the deed, it is well-settled that when
there is a showing of illegality, the property registered is deemed to be simply held in trust
for the real owner by the person in whose name it is registered, and the former then has the
right to sue for the reconveyance of the property. The action for the purpose is also
imprescriptible. As long as the land wrongfully registered under the Torrens system is still in
the name of the person who caused such registration, an action in personam will lie to
compel him to reconvey the property to the real owner. [30]
One final note. After this Decision shall have become final and executory, the parties
may either extrajudicially divide the estates of Lauro Sumipat and Placida Tabotabo pursuant
to Rule 74 of the Rules of Court or judicially settle the estates pursuant to Rules 78, et
seq., in accordance with this Decision and the law.
WHEREFORE, the instant Petition for Review on Certiorari is DENIED. The Decision of
the Regional Trial Court dated September 29, 1997 and the Decision of the Court of Appeals
dated April 11, 2002, as well as its Resolution dated October 16, 2002, are VACATED. In lieu
thereof, judgment is hereby rendered in favor of the respondents, to wit: (i) DECLARING
the Deed of Absolute Transfer and/or Quitclaim dated January 5, 1983 NULL AND VOID; and
(ii) ORDERING the CANCELLATION of Transfer Certificates of Title Numbered T-40037 and T40038 (Zamboanga del Norte) and the tax declaration covering the unregistered parcel of
land, all issued in the names of the petitioners Lydia, Laurito, Alicia, Alejandro and Lirafe, all
surnamed Sumipat, and the REINSTATEMENT of Original Certificate of Title No. P-17842
(Zamboanga del Norte) Transfer Certificate Title No. T-15826 (Zamboanga del Norte) and the
tax declaration covering the unregistered parcel of land, all in the name of Lauro Sumipat . .
. married to Placida Tabotabo.
Costs against the petitioners.

FE P. VELASCO, represented by ALFREDO GONZALES vs. HON. VICENTE N. CUSI, JR.

and THE CITY OF DAVAO
Petitioner filed in the Court of First Instance of Davao an action against Davao City to quiet
title to her lot known as Lot 77-B-2, a portion of which she claims to having been occupied
illegally as part of Bolton Street, Davao City. On a motion to dismiss filed by the defendant,
on the ground that the complaint states no cause of action, the Court, presided over by
respondent Judge Hon. Vicente Cusi Jr., dismissed the case. Hence, this petition for certiorari
seeking a review of the Order of dismissal dated July 11, 1970 (Annex D to tile Petition). 1

The dismissal being on the ground that the complaint does not state a cause of action, the
allegations of the complaint have to be closely examined, as the court a quo did in its Order
aforecited which quoted the material allegations of the complaint as follows:
The action is to quiet title and damages. But the complaint does not allege
any cloud or doubt on the title, 'Transfer Certificate of Title No. T-7000 of the
Register of Deeds of the City of Davao, of the plaintiff to Lot No. 77-B-2,
subdivision plan Psd-22295. According to the complaint, ' . . . when plaintiff
bought the said lot 77-B-2 from the original owner in 1956, the Bolton Street
was already existing; that without ascertaining the monuments along Bolton
Street, she had her house constructed on her said lot and built fence along
said Bolton Street which she believed to be the boundary between her lot and
said street and in line with other offences already existing when she bought
said lot; 6. That plaintiff has just discovered, after a relocation of the
monuments of her lot, Lot No. 77-B-2, that the Bolton Street of the defendant
has encroached at least TWENTY-FIVE (25) SQUARE METERS with dimension of
2.5 meters by 10 meters, making her actual occupation of her lot 10 meters
by 47.5 meters, as indicated in the plan Annex "A" hereon enclosed thereon
by red pencil lines; 7. That plaintiff has just discovered also that the width of
the Bolton Street is only NINE (9) METERS and since the defendant is now
asphalting the said Bolton Street, plaintiff has filed this complaint in order to
quiet her title to the said portion of 2.5 meters by 10 meters as shown in the
plan enclosed in red pencil oil Annex "A" hereon because the continued
occupation of said portion by the defendant has cast a cloud of doubt on the
title of the plaintiff over the portion of plaintiff's Lot No. 77-B-2 now being
occupied by Bolton Street, valued at four hundred pesos per square meters.
After quoting the material allegations of the complaint as above set forth, the court a
quo analyzed them carefully and scrutinizingly, and came up with the conclusion that the
allegations of the complaint state no cause of action. Thus
The allegations in the complaint that the Bolton Street encroached on the lot
of the plaintiff and that the defendant had continuously occupied the portion
so encroached upon do not, contrary to the conclusion of the plaintiff found in
the complaint, cast ' . . a cloud of doubt on the title of the plaintiff over said
portion which would justify this action.
In her present petition, petitioner assigned as error of the court a quo the following:
1. THE LOWER COURT ERRED IN DECLARING THAT THE BOLTON STREET AS AN
EASEMENT MUST REMAIN A BURDEN ON LOT 77-B-2 (LOT IN QUESTION)
PURSUANT TO SECTION 39 OF ACT 496 ON THE GROUND THAT IT IS SUBJECT
TO EASEMENT OF PUBLIC HIGHWAY.
2. THE LOWER COURT ERRED IN DECLARING THAT THE PORTION OF THE LAND
OF PETITIONER ENCROACHED UPON BY THE RESPONDENT CITY OF DAVAO'S
BOLTON STREET DOES NOT CAST A CLOUD OF DOUBT IN THE TITLE OF
PETITIONER.

3. THE LOWER COURT ERRED IN DECLARING THAT ASSUMING THE FACTS

ALLEGED IN THE COMPLAINT TO BE TRUE, A JUDGMENT UPON THE SAME IN
ACCORDANCE WITH THE PRAYER COULD NOT BE RENDERED.
4. THE LOWER COURT ERRED IN DISMISSING THE COMPLAINT FOR LACK OF
CAUSE OF ACTION.
As alleged by petitioner, the lot in question, Lot No. 77-B-2, which she bought in 1956, was
part of Lot No. 77-B, which was in turn originally a portion of Lot No. 77, covered by O.C.T.
No. 683, issued on July 21, 1911. For the lot she bought, she received Transfer Certificate of
Title No. T-7000.
In 1970, petitioner discovered that the Bolton Street of the City of Davao had encroached
upon her a lot of portion of 2.5 meters wide and 10 meters long, along said Street, or an
area of 25 Square meters. She also discovered that Bolton Street was delimited to nine (9)
meters wide, but the proposed width was 15 meters, and in that same year 1970, the Bolton
Street had already encroached on her lot, on the northwestern part thereof, to the extent as
above stated (par. 7, Complaint, Annex A. to Petition).
From The allegations of the complaint as set forth above, as well as inhe questioned Order
quoted earlier, We agree with respondent judge that the complaint states no cause of action
upon which to render judgment in favor of petitioner, even assuming S the said allegations
to be true, indeed, in a motion to dismiss for lack of cause of action, the allegations of the
complaint must be hypothetically admitted. 2
It appears on the face of the complaint that Bolton Street has been where it is from time
immemorial. When the mother title of petitioner's Transfer Certificate of Title No. T- 7000,
which is O.C.T. No. 638, was issued in 1911, it was issued subject to the provisions of Section
39 of Act 496 which reads:
Section 39. Every person receiving a certificate of title in pursuance of a
decree or registration, and every subsequent purchasers of registered land
who takes a certificate of title for value in good faith shall hold the same free
of all encumbrances, except those noted on said certificate, and any of the
following encumbrances which may be subsisting namely:
xxx xxx xxx
Third. Any public highway, way, private way, ... or any government irrigation,
canal, or lateral thereof ...
From the foregoing provision, Bolton Street which is a public highway, already subsisting
when O.C.T. No. 638 was issued, as this fact is apparent too from the face of the complaint
itself, is deemed to have attached as a legal encumbrance to the lot originally registered lot
No. 77, notwithstanding the lack of an annotation thereof on O.C.T. No. 638. petitioner,
therefore, cannot rely, as she almost entirely does for the relief she seeks, on the
aforequoted provision, which she had repeatedly cited but without making mention, perhaps

conveniently, of the exception as expressly provided in the later part of the legal provision
invoked (Sec. 39, Act 496).
If from the undisputed fact Chat when Lot -77 was registered, Bolton Street had already
been a legal encumbrance on said lot, pursuant to Section 39 of Act 496, contrary to
petitioner's theory based on the same legal provision but o committing the portion pertinent
to the instant case, there can be no gainsaying the fact that petitioner's lot, Lot No. 77-B-2,
which admittedly was originally a part of Lot No. 77, must have to remain subject to the
same legal encumbrance of a public highway.
From her own allegations in her complaint, Bolton Street cannot be a discontinuous
easement as she claims it to be, which may not be acquired by prescription. Nonetheless,
whether the mode of acquisition of the easement that Bolton Street is, would be only by
virtue of title, as petitioner contends, this is not material or of any consequence, in the
present proceedings, once it indubitably appears as it does, from the allegations of the
complaint itself, that Bolton Street constituted an easement of public highway on Lot No. 77,
from which petitioner's lot was taken, when the said bigger lot was original registered. It
remained as such legal encumbrance, as effectively as if it had been duly noted on the
certificate of title, by virtue of the clear and express provision of Section 39 of Act 496, it
being admitted that at the time of the registration of Lot 77, the public highway was already
in existence or subsisting. This fact erases whatever cause of action petitioner may have to
bring the complaint she filed in the court a quofor quieting of title on a portion of the street
which she claims to be part of her lot, free from encumbrance of any kind. The Order
complained of has only this legal postulate as its basis. Nothing has been mentioned therein
on the acquisition by the City of Davao of the lot in question by prescription, and a
discussion of this matter as is found in petitioner's brief 3 would be entirely irrelevant.
WHEREFORE, no reversible error having been found in the Order complained of, the same is
hereby affirmed, and the instant petition, dismissed. Costs against petitioner.

ESTANISLAO PADILLA, JR.

VS PHILIPPINE PRODUCERS COOPERATIVE
MARKETING ASSOCIATION, INC.,
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.

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

GREATER MANILA EQUIPMENT MARKETING CORPORATION, MARCH 1999
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 totothe 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,
7th 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 successorin-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.

TAGAYTAY-TAAL TOURIST DEVELOPMENT CORPORATION, petitioner, vs. COURT OF

APPEALS JUNE 1997
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 19761983 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 T9817 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. TG1196 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. T9816 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.

G.R. No. L-29264

August 29, 1969

BARBARA RODRIGUEZ vs.HON. COURT OF APPEALS

For a clear understanding of the issues posed by the present petition
for mandamus and certiorari with preliminary injunction, we hereunder quote the statement
of the case and the findings of fact made by the Court of Appeals in its decision dated
October 4, 1967 in CA-G.R. 35084-R, as well as the dispositive portion of the said decision:
On December 31, 1958, in Paraaque, Rizal, by virtue of a document denominated
"Kasunduan" written in the vernacular and ratified before Notary Public Lazaro C. Ison
of that locality, Nieves Cruz, now deceased, authorized the spouses Atanacio
Valenzuela, and Maximina Victorio and Liberate Santos to sell a certain parcel of land
of about 44,634 square meters belonging to her and situated in Sitio Matatdo, Barrio
San Dionisio, Paraaque, Rizal, the identity of which is not now in dispute. Among,
the anent conditions of this authority were that the price payable to Nieves Cruz for
the land would be P1.60 per square meter and any overprice would pertain to the
agents; that Nieves Cruz would receive from said agents, by way of advance payment
on account of the purchase price to be paid by whomsoever may buy the land, the
sum of P10,000.00 upon the execution of the agreement aforesaid, and another
P10,000.00 on January 5, 1959; that the balance on the total purchase price would be
payable to Nieves Cruz upon the issuance of the Torrens title over the property, the
obtention of which was undertaken by the agents who also were bound to advance

the expense therefor in the sum of P4,000.00 which would be deductible from the last
amount due on the purchase price; and that should the agent find no buyer by the
time that Torrens title is issued, Nieves Cruz reserved the right to look for a buyer
herself although all sums already received from the agents would be returned to
them without interest.
As confirmed by Nieves Cruz in a "recibo", Exhibit 2, bearing the date "... ng Enero ng
1959," the stipulated "advance payment (paunang bayad)" of P20,000.00 was duly
made to her. Contrary to the agreement that the balance on the purchase price
would be paid upon the issuance of the Torrens title over the land (September 9,
1960), Nieves Cruz and her children, however, collected from the agents, either thru
Maximina Victorio or thru Salud G. de Leon, daughter of Liberate Santos, various
sums of money during the period from July 3, 1959 up to September 3, 1961, all of
which were duly receipted for by Nieves Cruz and/or her children and in which
receipts it is expressly stated that said amounts were "bilang karagdagan sa
ipinagbili naming lupa sa kanila (additional payments for the land we sold to them)",
Exhibits 12, 12-a to 12-z-1. These totalled P27,198.60 which with the P20,000.00
previously paid amounted to P47,198.60.
Meanwhile, proceedings to place the land under the operation of the Torrens system
were initiated. In due season, the registration court finding a registrable title in the
name of the applicants, Emilio Cruz and Nieves Cruz, but that
"... the applicant Nieves Cruz has likewise sold her one-half (1/2) undivided
share to the spouses Atanacio Valenzuela and Maxima (Maximina) Victorio and
to Liberata Santos from whom she had received partial payments thereof in
the sum of P22,000.00;" (Exhibit 4-a).
decreed, on July 15, 1960, the registration of the land in the names of the applicants
aforesaid
"Subject ... to the rights of the spouses Atanacio Valenzuela and Maximina
Victorio and to Liberata Santos over the one-half share of Nieves Cruz of the
parcel of land for which the latter was paid P22,000.00 as partial payment
thereof." (Exhibit 4).
The judgment aforesaid having become final, the corresponding Original Certificate of
Title No. 2488 of the Registry of Deeds of Rizal was, on September 9, 1960, duly
entered and issued to the applicants aforesaid, subject, amongst others, to the
limitation heretofore stated.
Eventually, pursuant to a partition between Nieves Cruz and her brother, Emilio Cruz,
by virtue of which the entire land was subdivided into two lots of 48,260 square
meters each, Original Transfer of Title No. 2488 was cancelled and superseded by two
new transfer certificates respectively covering the two sub-divided lots, that which
pertained to Nieves Cruz, Lot A (LRC) Psd-13106, being covered by Transfer
Certificate of Title No. 80110 issued on October 3, 1960. Said title carried over the
annotation heretofore mentioned respecting the rights of Atanacio Valenzuela and

Maximina Victorio and Liberata Santos over the portion covered thereby. (Exhibits 6
and 6-a).
Then, on September 15, 1961, Nieves Cruz sold the property in question to Barbara
Lombos Rodriguez, her "balae" because the latter's son was married to her daughter,
for the sum of P77,216.00 (Exhibit J). In consequence, Transfer Certificate of Title No.
80110 in the name of Nieves Cruz was cancelled and, in lieu thereof, Transfer
Certificate of Title No. 91135 was issued in the name of Barbara Lombos Rodriguez
(Exhibit I) which likewise carried over the annotation respecting the rights of Atanacio
Valenzuela, Maximina Victorio and Liberata Santos over the property covered thereby.
Forthwith, on September 16, 1961, Nieves Cruz, through counsel, gave notice to
Atanacio Valenzuela, Maximina Victorio and Liberata Santos of her decision to rescind
the original agreement heretofore adverted to, enclosing with said notice Bank of
America check for P48,338.60, representing sums advanced by the latter which were
tendered to be returned. Atanacio Valenzuela, Maximina Victorio and Liberata Santos,
through counsel, balked at the attempt at rescission, denying non-compliance with
their undertaking inasmuch as, per agreement, the balance on the purchase price for
the land was not due until after the 1962 harvest. They, accordingly, returned Nieves
Cruz' check.
Thus rebuffed, plaintiff Nieves Cruz hailed defendants Atanacio Valenzuela, Maximina
Victorio and Liberate Santos before the Rizal Court in the instant action for rescission
of the "Kasunduan" heretofore adverted to, the cancellation of the annotation on the
title to the land respecting defendant's right thereto, and for damages and attorney's
fees. In their return to the complaint, defendants traversed the material averments
thereof, contending principally that the agreement sought to be rescinded had since
been novated by a subsequent agreement whereunder they were to buy the property
directly. They also impleaded Barbara Lomboa Rodriguez on account of the sale by
the plaintiff to her of the subject property and interposed a counterclaim against both
plaintiff and Rodriguez for the annulment of the sale of the land to the latter, as well
as the transfer certificate of title issued in her favor consequent thereto and the
reconveyance of the land in their favor, and also for damages and attorney's fees.
Pending the proceedings below, plaintiff Nieves Cruz died and was, accordingly,
substituted as such by her surviving children, to wit: Arsenio, Nelo, Jaime, Andres and
Amanda, all surnamed Nery, and Carmen and Armenia both surnamed Mendoza.
In due season, the trial court finding for plaintiff Nieves Cruz and her buyer,
Barbara Lombos Rodriguez, and against defendants rendered judgment thus
"IN VIEW OF ALL THE FOREGOING, judgment is hereby rendered (1) Ordering
the cancellation at the back of Transfer Certificate of Title No. 91135 of the
Register of Deeds of Rizal, stating that the land covered thereby was sold to
the defendants; (2) Ordering the defendants to pay to the plaintiff, jointly and
severally the sum of P67,564.00 as actual damages and P5,000.00 by way of
attorney's fees; (3) Dismissing the defendants counterclaim; and (4) Ordering
the defendants to pay the costs of this suit jointly and severally."

xxx

xxx

xxx

We find no obstacle to appellants' purchase of the land in the prohibition against an

agent buying the property of his principal entrusted to him for sale. With the
agreement of Nieves Cruz to sell the land directly to said appellants, her agents
originally, it cannot seriously be contended that the purchase of the land by
appellants was, without the express consent of the principal Nieves Cruz.
Accordingly, that purchase is beyond the coverage of the prohibition.
By and large, we are satisfied from a meticulous assay of the evidence at bar that the
contract of sale over the land subsequently made by Nieves Cruz in favor of
appellants was duly and satisfactorily proved. No showing having been made by
appellees to warrant the rescission of that contract, the attempt of such rescission is
legally untenable and necessarily futile. The specific performance of that contract is
under the circumstances, legally compellable.
Considering that the rights of appellants, as such purchasers of the portion
corresponding to Nieves Cruz, is a matter of official record in the latter's certificate of
title over the land the annotation of which was authorized by the decision of the
registration court and which annotation was duly carried over in the subsequent titles
issued therefor, including that issued in the name of appellee Rodriguez said
appellee must be conclusively presumed to have been aware, as indeed she was, of
the prior rights acquired by appellants over the said portion. Said appellee's
acquisition of the land from Nieves Cruz remains subject, and must yield, to the
superior rights of appellants. Appellee Rodriguez cannot seek refuge behind the
protection afforded by the Land Registration Act to purchasers in good faith and for
value. Aware as she was of the existence of the annotated prior rights of appellants,
she cannot now be heard to claim a right better than that of her grantor, Nieves Cruz.
Her obligation to reconvey the land to the appellants is thus indubitable.
xxx

xxx

xxx

WHEREFORE, the judgment appealed from is hereby REVERSED in toto, and, in lieu
thereof, another is hereby rendered:
(1) Setting aside and annulling the deed of sale, Exhibit J, executed by plaintiff in
favor of Barbara Lombos Rodriguez;
(2) Declaring defendant-appellee Barbara Lombos Rodriguez divested of title over the
property covered by TCT No. 91135 of the Register of Deeds of Rizal and title thereto
vested in defendants-appellants upon payment of the latter to appellee Rodriguez of
the sum of P28,877.40, representing the balance of the agreed purchase price due on
the property minus P13,000.00 awarded under paragraph (4) within 90 days after this
decision shall have become final, and ordering the Register of Deeds of Rizal to
cancel TCT No. 91135 and issue in lieu thereof a new certificate of title in favor of
appellants, upon payment of corresponding fees;

(3) Ordering plaintiffs and defendant Barbara Lombos Rodriguez to deliver to the
defendants-appellants possession of the property aforementioned; and
(4) Ordering appellees jointly and severally to pay to defendants-appellants the sum
of P5,000.00 as temperate damages, P3,000.00 as moral damages and P5,000.00 as
attorney's fees plus costs. These amounts shall be deducted from the P28,877.40
appellants are required to pay to Rodriguez under paragraph (2) hereof.
This case is before us for the second time. In L-28462, the heirs of Nieves Cruz and the
present petitioner (Barbara Lombos Rodriguez) filed a joint petition for certiorari as an
original action under Rule 65 and, simultaneously, as an appeal under Rule 45. As the
former, it sought redress against the refuse of the respondent Court of Appeals to consider a
motion for reconsideration filed beyond the reglementary period. As the latter, it sought a
review of the respondent Court's findings of fact and conclusions of law. On January 3, 1968
we denied the joint petition; the joint petition was thereafter amended, and this amended
petition we likewise denied on January 26, 1968; on February 20, 1968 we denied the motion
for reconsideration filed solely by Rodriguez.
On July 20, 1968, Rodriguez alone filed the present petition for mandamus and certiorari.
She prays for the issuance of a writ of preliminary injunction to restrain the respondents
from enforcing the decision of the Court of Appeals in CA-G.R. 35084-R and from entering
into any negotiation or transaction or otherwise exercising acts of ownership over the parcel
of land covered by transfer certificate of title 91135 issued by the Register of Deeds of Rizal.
She also prays that preliminary injunction issue to restrain the Register of Deeds of Rizal
from registering any documents affecting the subject parcel of land. No injunction, however,
was issued by us.
The petition in the present case, L-29264, while again assailing the findings of fact and
conclusions of law made by the respondent Court, adds two new grounds. The first is the
allegation that the land involved in CA-G.R. 35084-R has a value in excess of P200,000. The
petitioner complains that the Court of Appeals should have certified the appeal to us,
pursuant to section 3 of Rule 50 in relation to section 17(5) of the Judiciary Act of 1948, 1 as
she had asked the said Court to do in her supplemental motion of June 14, 1968. The second
ground is the claim that the Court of Appeals gravely abused its discretion in denying her
May 14, 1968 motion for new trial, based on alleged newly discovered evidence.
In their answer, Atanacio Valenzuela, Maximina Victorio and Liberata Santos allege that the
findings of fact made by the Court of Appeals in its decision of October 4, 1967 are
substantiated by the record and the conclusions of law are supported by applicable laws and
jurisprudence, and, moreover, that these findings are no longer open to review inasmuch as
the said decision has become final and executory, the period of appeal provided in Rule 45
having expired. Atanacio Valenzuela, et al. also maintain that the land in litigation had a
value of less than P200,000, according to the records of the case, when their appeal from
the decision of the Court of First Instance of Rizal in civil case 6901 was perfected; that the
petitioner's motion for new trial in the Court of Appeals was filed out of time; and that the
petitioner is estopped from questioning the jurisdiction of the Court of Appeals in the matter
of the value of the land in controversy. Two grounds for the defense of estoppel are offered
by Atanacio Valenzuela, et al. One is that the petitioner speculated in obtaining a favorable

judgment in the Court of Appeals by submitting herself to the jurisdiction of the said Court
and she cannot now therefore be allowed to attack its jurisdiction when the judgment turned
out to be unfavorable. The other is that the petitioner's laches made possible the sale in
good faith by Atanacio Valenzuela, et al., of the land in litigation to Emilio and Isidro Ramos,
in whose names the land is at present registered under transfer certificate of title 229135
issued on September 25, 1968 by the Register of Deeds of Rizal.
The heirs of Nieves Cruz filed an answer unqualifiedly admitting the basic allegations of the
petition, except as to the value of the land, as to which they are non-committal.
It is our considered view that the petitioner's claim of grave abuse by the respondent Court
in denying her motion for new trial is devoid of merit. It is not disputed that, on the
assumption that the respondent Court had jurisdiction over the appeal, the petitioner had
already lost her right to appeal from the decision of October 4, 1967 when the petition in L28462 was filed in January 1968. It logically follows that the case had passed the stage for
new trial on newly discovered evidence when the petitioner filed her motion for new trial on
May 14, 1968.
Two issues remain, to wit, (1) the value of the land in controversy; and (2) estoppel.
At the time appeal was taken to the Court of Appeals. section 17(5) of the Judiciary Act of
1948, as amended, provided:
The Supreme Court shall have exclusive jurisdiction to review, revise, reverse modify or
affirm on appeal, certiorari or writ of error, as the law or rules of court may provide, final
judgments and decrees of inferior courts as herein provided, in
xxx

xxx

xxx

(5) All civil cases in which the value in controversy exceeds two hundred thousand
pesos, exclusive of interests and costs or in which the title or possession of real
estate exceeding in value the sum of two hundred thousand pesos to be ascertained
by the oath of a party to the cause or by other competent evidence, is involved or
brought in question. The Supreme Court shall likewise have exclusive jurisdiction over
all appeals in civil cases, even though the value in controversy, exclusive of interests
and costs, is two hundred thousand pesos or less, when the evidence involved in said
cases is the same as the evidence submitted in an appealed civil case within the
exclusive jurisdiction of the Supreme Court as provided herein.
The petitioner would have us believe that, other than a realtor's sworn statement dated June
14, 1968, which was filed with the respondent Court together with her supplemental motion,
there is nothing in the records that would indicate the value of the litigated parcel. We
disagree. The "Kasunduan" (annex A to the petition) dated December 31, 1958 executed by
and between Nieves Cruz and Atanacio Valenzuela, et al. fixed the value of the land (of an
area of 44,634 square meters) at P1.60 per square meter. The decision (annex B) of the
Court of First Instance of Rizal dated August 12, 1964 assessed the value of the land at
P3.00 per square meter. The decision (annex D) dated October 4, 1967 of the respondent
Court of Appeals pointed out that the consideration stated in the deed of sale of the land

executed by Nieves Cruz in favor of Rodriguez, the petitioner herein, is P77,216. Moreover,
until June 14, 1968, no party to the cause questioned the valuation of P3.00 per square
meter made by the trial court. The records, therefore, overwhelmingly refute the petitioner's
allegation. They also prove that the value of the entire parcel of land had been impliedly
admitted by the parties as being below P200,000.
Granting arguendo, however, that the value of the land in controversy is in excess of
P200,000, to set aside at this stage all proceedings had before the Court of Appeals in CAG.R. 35084-R, and before this Court in L-28462, would violate all norms of justice and equity
and contravene public policy. The appeal from the decision of the Court of First Instance of
Rizal was pending before the respondent Court during the period from 1964 until October 4,
1967, when on the latter date it was decided in favor of the appellants and against the
petitioner herein and the heirs of Nieves Cruz. Yet, the appellees therein did not raise the
issue of jurisdiction. The joint petition in L-28462 afforded the petitioner herein the
opportunity to question the jurisdiction of the respondent Court. Again, the value of the land
in controversy, was not questioned by the petitioners, not even in their amended joint
petition. It was not until June 14, 1968 that the petitioner herein filed with the respondent
Court a supplemental motion wherein she raised for the first time the issue of value and
questioned the validity of the final decision of the respondent Court on the jurisdictional
ground that the real estate involved has a value in excess of P200,000. That the petitioner's
present counsel became her counsel only in May, 1968 provides no excuse for the
petitioner's failure to exercise due diligence for over three years to discover that the land
has a value that would oust the respondent Court of jurisdiction. The fact remains that the
petitioner had allowed an unreasonable period of time to lapse before she raised the
question of value and jurisdiction, and only after and because the respondent Court had
decided the case against her. The doctrine of estoppel by laches bars her from now
questioning the jurisdiction of the Court of Appeals.
The learned disquisition of Mr. Justice Arsenio P. Dizon, speaking for this Court in Serafin
Tijam, et al. vs. Magdaleno Sibonghanoy, et al. (L-21450, April 15, 1968), explained, in
unequivocal terms, the reasons why, in a case like the present, a losing party cannot be
permitted to belatedly raise the issue of jurisdiction.
A party may be estopped or barred from raising a question in different ways and for
different reasons. Thus we speak of estoppel in pais, of estoppel by deed or by
record, and of estoppel by laches.
Laches, in a general sense, is failure or neglect, for an unreasonable and unexplained
length of time, to do that which, by exercising due diligence, could or should have
been done earlier; it is negligence or omission to assert a right within a reasonable
time, warranting a presumption that the party entitled to assert it either has
abandoned it or declined to assert it.
The doctrine of laches or of "stale demands" is based upon grounds of public policy
which requires, for the peace of society, the discouragement of stale claims and,
unlike the statute of limitation is not a mere question of time but is principally a
question of the inequity or unfairness of permitting a right or claim to be enforced or
asserted.

It has been held that a party cannot invoke the jurisdiction of a court to secure
affirmative relief against his opponent and, after obtaining or failing to obtain such
relief, repudiate or question that same jurisdiction (Dean vs. Dean, 136 Or. 694, 86 A.
L. R. 79). In the case just cited, by way of explaining the rule, it was further said that
the question whether the court had jurisdiction either of the subject matter of the
action or of the parties was not important in such cases because the party is barred
from such conduct not because the judgment or order of the court is valid and
conclusive as an adjudication, but for the reason that such a practice cannot be
tolerated obviously for reasons of public policy.
Furthermore, it has also been held that after voluntarily submitting a cause and
encountering an adverse decision on the merits, it is too late for the loser to question
the jurisdiction or power of the court (Pease vs. Rathbun-Jones, etc., 243 U.S. 273, 61
L. Ed. 715, 37 S. Ct. 283; St. Louis, etc. vs. McBride, 141 U.S. 127, 35 L. Ed. 659). And
in Littleton vs. Burgess, 16 Wyo 58, the Court said that it is not right for a party who
has affirmed and invoked the jurisdiction of a court in a particular matter to secure an
affirmative relief, to afterwards deny that same jurisdiction to escape a penalty.
Upon this same principle is what We said in the three cases mentioned in the
resolution of the Court of Appeals of May 20, 1963 (supra) to the effect that we
frown upon the "undesirable practice" of a party submitting his case for decision and
then accepting the judgment, only if favorable, and attacking it for lack of
jurisdiction, when adverse as well as in Pindagan etc. vs. Dans, et al., G.R. L14591, September 26, 1962; Montelibano, et al. vs. Bacolod-Murcia Milling Co.,
Inc., G.R. L-15092; Young Men Labor Union, etc. vs. The Court of Industrial Relations,
et al., G.R. No.
L-20307, Feb. 26, 1965; and Mejia vs. Lucas, 100 Phil. p. 277.
We do not here rule that where the pleadings or other documents in the records of a case
state a value of a real estate in controversy, a party to the cause may not show that the true
value thereof is more or is less than that stated in the records. Section 17(5) of the Judiciary
Act of 1948 precisely allows a party to submit a sworn statement of such higher or lower
value. This is not to say, of course, that the court is bound by a party's sworn statement, for
where more than one party submit materially differing statements of value, or where a
party's sworn statement conflicts with other competent evidence, the true value is to be
determined by the trial court as an issue of fact before it.
The time when the issue of the value of a real estate in controversy is to be resolved is prior
to, or simultaneously with, the approval of the record on appeal and appeal bond, for it is
upon the perfection of the appeal that the appellate court acquires jurisdiction over the case
(Rule 41, section 9). It is at this time that a party to the cause, be he the intended appellant
or the intended appellee, must raise the issue of value before the trial court, for said court to
allow appeal involving a question of fact either to this Court or to the Court of Appeals,
depending on its finding on the value of the realty. Failure to raise this issue before the trial
court amounts to a submission of the issue solely on the basis of the pleadings and
evidence a quo and is equivalent to a waiver of the right to present the statement under
oath or to adduce the other competent evidence referred to in section 17(b) of the Judiciary
Act of 1948.

A contrary rule would be disastrous. For one thing, to allow a party to present proof of value
before an appellate court would be to convert the said court to a trial court. For another
thing, the value of real estate may change between the perfection of an appeal and the
receipt of the record or the payment of the appellate court docket fee; hence, it is best, for
stability, to have the value determined at the precise instant when the trial court must
decide to which appellate court the appeal should be made and not at some uncertain time
thereafter. Worse yet, to permit a party to prove before the Court of Appeals or before us,
after a decision on the merits has been rendered, that a real estate in controversy exceeds,
or does not exceed P200,000 in value, would be to encourage speculation by litigants; for, a
losing party can be expected to raise the issue of value of the realty to show that it is in
excess of P200,000 if the unfavorable judgment is rendered by the Court of Appeals, or to
show that it does not exceed P200,000 if the unfavorable judgment is rendered by this
Court, in an attempt to litigate the merits of the case all over again. 2
In the case at bar, the records as of the perfection of the appeal on August 12, 1964
show that the litigated real estate had a value not in excess of P200,000. Conformably with
the Judiciary Act of 1948, therefore, the appeal from the decision of the Court of First
Instance of Rizal in civil case 6901 was within the jurisdiction of the Court of Appeals.
Other issues, both of fact and of law, are raised in the pleadings. Considering our conclusion
that the respondent Court had jurisdiction over the appeal, it is not necessary to discuss,
much less resolve, any of those other issues. However, because the petitioner and the heirs
of Nieves Cruz have hammered on the twin issues of the existence of an oral contract of sale
and of the efficacy of an oral novatory contract of sale, a brief discussion of these issues
would not be amiss.
The agency agreement of December 31, 1958 is not impugned by any of the parties. Nieves
Cruz, however, asserted that the agency remained in force until she rescinded it on
September 16, 1961 by notice to that effect to Atanacio Valenzuela, et al., tendering with
the said notice the return, in check, of the sum of P48,338.60 which she had received from
Atanacio Valenzuela, et al. The defendants, upon the other hand, contend that the agency
agreement was novated by a contract of sale in their favor and that the balance of the
purchase price was not due until after the 1962 harvest. Rodriguez, when impleaded by
Atanacio Valenzuela, et al., denied that she was a buyer in bad faith from Nieves Cruz.
The parties and the lower courts are agreed that Nieves Cruz had received P20,000 from
Atanacio Valenzuela, et al., by January 5, 1959 and that the payment of this total sum was in
accordance with the agency agreement. The parties and the lower courts, however, are at
variance on the basis or reason for the subsequent payments. The petitioner herein, the
heirs of Nieves Cruz and the Court of First Instance of Rizal take the position that the
payments after January 5, 1959 were received by Nieves Cruz as partial or installment
payments of the purchase price on the representations of Atanacio Valenzuela, et al., that
they had a buyer for the property from whom these payments came, all pursuant to the
agency agreement. The respondents Atanacio Valenzuela, et al., on the other hand, assert
that those amounts were paid by them, as disclosed buyers, to Nieves Cruz and her children,
pursuant to a novatory verbal contract of sale entered into with Nieves Cruz, subsequent to
the agency agreement and prior to the issuance of the decree of registration of July 15,
1960.

It is thus clear that the decisive issues are (a) whether or not Nieves Cruz did agree to sell to
Atanacio Valenzuela, et al., the litigated parcel of land sometime after January 5, 1959, and
(b) whether or not the said agreement is enforceable or can be proved under the law. The
fact that Atanacio Valenzuela, et al. were agents of Nieves Cruz under the agency
agreement of December 31, 1958 is not material, for if it is true that Nieves Cruz did agree
to sell to her agents the real estate subject of the agency, her consent took the transaction
out of the prohibition contained in article 1491(2) of the Civil Code. Neither are articles 1874
and 1878(5) and (12) of the Civil Code relevant, for they refer to sales made by an agent for
a principal and not to sales made by the owner personally to another, whether that other be
acting personally or through a representative.
Was there a novatory oral contract to sell entered into by Nieves in favor of Atanacio
Valenzuela, et al.? In resolving this question, the respondent Court pointed to significant
facts and circumstances sustaining an affirmative answer.
Cited by the Court of Appeals is the testimony of Andres Nery, a successor-in-interest of
Nieves Cruz and a substitute plaintiff upon Nieves Cruz' death, to the effect that after they
had gone to the defendants several times, they were told that the buyer was Salud de Leon.
This witness also said, according to the transcript cited by the respondent Court, that they
were paid little by little and had been paid a grand total of P48,000. The respondent Court
likewise adverted to the receipts (exhibits L-12 to L-22, exhibit L-24, exhibit L-26, and
exhibits 12, 12-a to 12-z-1) signed by Nieves Cruz and/or her children and concluded that on
the faces of these receipts it is clear that the amounts therein stated were in payment by
Atanacio Valenzuela, et al. of the land which the recipients had sold to them ("ipinagbile
naming lupa sa kanila"). Of incalculable significance is the notation in the original certificate
of title and in the transfer certificate of title in the name of Nieves Cruz which, in
unambiguous language, recorded Nieves Cruz' sale of her interest in the land to Atanacio
Valenzuela, et al. If that notation were inaccurate or false, Nieves Cruz would not have
remained unprotesting for over a year after the entry of the decree of registration in July,
1960, nor would she and her children have received 13 installment payments totalling
P19,963 during the period from September 9, 1960 to September 3, 1961.
Salud de Leon, it should be borne in mind, is the husband of Rogaciano F. de Leon and the
daughter of the defendant Liberata Santos. It should likewise be remembered that, as
remarked by the trial court, Salud de Leon testified that it was she who had the oral
agreement with Nieves Cruz for the purchase by Atanacio Valenzuela, et al. of the litigated
property and, as found by the respondent Court, Salud de Leon was the representative of
Atanacio Valenzuela, et al., not of Nieves Cruz.
We conclude, therefore, that there is substantial evidence in the record sustaining the
finding of the respondent Court that the parties to the agency agreement subsequently
entered into a new and different contract by which the landowner, Nieves Cruz, verbally
agreed to sell her interest in the litigated real estate to Atanacio Valenzuela, et al.
A legion of receipts there are of payments of the purchase price signed by Nieves Cruz. True,
these receipts do not state all the basic elements of a contract of sale, for they do not
expressly identify the object nor fix a price or the manner of fixing the price. The parties,
however, are agreed at least the plaintiff has not questioned the defendants' claim to this

effect that the object of the sale referred to in the receipts is Nieves Cruz' share in the
land she co-owned with her brother Emilio and that the price therefor is P1.60 per square
meter. At all events, by failing to object to the presentation of oral evidence to prove the
sale and by accepting from the defendants a total of P27,198.60 after January 5, 1959, the
plaintiff thereby ratified the oral contract, conformably with article 1405 of the Civil Code,
and removed the partly executed agreement from the operation of the Statute of Frauds.
And, finally, the sale was established and recognized in the land registration proceedings
wherein the land court, in its decision, categorically stated:
[T]he applicant Nieves Cruz has likewise sold her one-half () undivided share to the
spouses Atanacio Valenzuela and Maximina Victorio and Liberata Santos from whom
she had received partial payment thereof in the sum of P22,000.00.
The pertinent certificates of title bear the annotation of the aforesaid right of Atanacio
Valenzuela, et al. The final decision of the land court to the effect that Nieves Cruz had
sold her undivided share to Atanacio Valenzuela, et al., and had received a partial payment
of P22,000 is now beyond judicial review, and, because a land registration case is a
proceeding in rem, binds even Rodriguez.
Rodriguez nevertheless insist that despite the rescission by the Court of Appeals of her
purchase from Nieves Cruz, the said respondent Court did not order Nieves Cruz to return
the P77,216 which she had received from her. While mutual constitution follows rescission of
a contract (article 1385, Civil Code), the respondent Court should not be blamed for omitting
to order Nieves Cruz to restore what she had received from the petitioner on account of the
rescinded contract of sale. In the first place, in the pleadings filed before the trial court,
Rodriguez made no claim for restitution against Nieves Cruz or her heirs. In the second
place, Nieves Cruz died in the course of the proceedings below and was substituted by her
heirs who, necessarily, can be held individually liable for restitution only to the extent that
they inherited from her.
Nevertheless, inasmuch as rescission of the contract between Nieves Cruz and the petitioner
herein was decreed by the respondent Court, the latter should be entitled to restitution as a
matter of law. It is of no moment that herein petitioner did not file any cross-claim for
restitution against the plaintiff, for her answer was directed to the defendants' claim which
was in the nature of a third-party complaint. She was neither a co-defendant nor a co-thirdparty defendant with Nieves Cruz; nor were Nieves Cruz and the herein petitioner opposing
parties a quo, for they joined in maintaining the validity of their contract. Section 4 of Rule 9,
therefore, has no application to the petitioner's right to restitution.
We declare, consequently, that the estate of Nieves Cruz is liable to Barbara Lombos
Rodriguez for the return to the latter of the sum of P77,216, less the amount which Atanacio
Valenzuela, et al. had deposited with the trial court in accordance with the decision of
respondent Court. We cannot order the heirs of Nieves Cruz to make the refund. As we
observed above, these heirs are liable for restitution only to the extent of their individual
inheritance from Nieves Cruz. Other actions or proceedings have to be commenced to
determine the liability accruing to each of the heirs of Nieves Cruz.

ACCORDINGLY, the present petition for mandamus and certiorari is denied, at petitioner's
cost.

ALFREDO SAJONAS and CONCHITA SAJONAS, petitioners, vs. THE COURT OF

APPEALS JULY 1996
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 detre 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 R. 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. Q28850 for collection of sum of money against Ernesto Uychocde. On June 25, 1980, a
Compromise Agreement was entered into by the parties in the said case under which
Ernesto Uychocde acknowledged his monetary obligation to Domingo Pilares amounting to
P27,800 and agreed to pay the same in two years from June 25, 1980. When Uychocde failed
to comply with his undertaking in the compromise agreement, defendant-appellant Pilares
moved for the issuance of a writ of execution to enforce the decision based on the
compromise agreement, which the court 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 ssued 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 complaint[2] 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 attorneys 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
City 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 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 attorneys 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 [9], assigning errors on the part of
the lower court. The appellate court reversed the lower courts decision, and upheld the
annotation of the levy on execution on the certificate of title, 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:
I
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 is 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 stated 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 sale. 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 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 inCampillo 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:
Section 51. Conveyance and other dealings by the 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 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. (Italics 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 vendors
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
banks 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 vendors 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 claimants
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 claimants
residence, and a place at which all notices may be served upon him. This statement shall be
entitled to registration as an adverse claim on the certificate of title. The adverse claim
shall be effective for a period of thirty days from the date of registration. After the lapse of
said period, the annotation of adverse claim may be cancelled upon filing of a
verified petition therefor by the party in interest: Provided, however, that after cancellation,
no second adverse claim based on the same ground shall be registered by the same
claimant.
Before the lapse of thirty days aforesaid, any party in interest may file a petition in the Court
of First Instance where the land is situated for the cancellation of the adverse claim, and the
court shall grant a speedy hearing upon the question of the validity of such adverse claim,
and shall render judgment as may be just and equitable. If the adverse claim is adjudged to
be invalid, the registration thereof shall be ordered cancelled. If, in any case, the court, after
notice and hearing shall find that the adverse claim thus registered was frivolous, it may fine
the claimant in an amount not less than one thousand pesos, nor more than five thousand
pesos, in its discretion. Before the lapse of thirty days, the claimant may withdraw his
adverse claim by filing with the Register of Deeds a sworn petition to that effect. (Italics
ours)
In construing the law aforesaid, care should be taken that every part thereof be given
effect and a construction that could render a provision inoperative should be avoided, and
inconsistent provisions should be reconciled whenever possible as parts of a harmonious
whole.[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 statutes clauses and phrases must not be taken separately, but in its relation to the
statutes totality. Each statute must, in fact, be construed as to harmonize it with the preexisting 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 or sections, and is animated by one general
purpose and intent. Consequently, each part or section should be construed in connection
with every other part or 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 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 may not order the
cancellation of an adverse claim, notwithstanding such provision limiting the effectivity of an

adverse claim for thirty days from the date of registration. The court cannot be bound by
such period as it would be inconsistent with the very authority vested in it. A fortiori, the
limitation on the period of effectivity is immaterial in determining the validity or invalidity of
an adverse claim which is the principal issue to be decided in the court hearing. It will
therefore depend upon the evidence at a proper hearing for the court to determine whether
it will order the cancellation of the adverse claim or not. [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 as 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 adverse claim on the Transfer Certificate of Title No.
N-79073 was still in effect on February 12, 1985 when Quezon City Sheriff Roberto Garcia
annotated the notice of levy on execution thereto. Consequently, he is charged with
knowledge that the property sought to be levied upon on execution was encumbered by an
interest the same as or better than that of the registered owner thereof. Such notice of levy
cannot prevail over the existing adverse claim inscribed on the certificate of title in favor of
the petitioners. This can be deduced from the pertinent provision of the Rules of Court, to
wit:
Section 16. Effect of levy on execution as to third persons- The levy on execution shall
create a lien in favor of the judgment creditor over the right, title and interest of the

judgment debtor in such property at the time of the levy, subject to liens or encumbrances
then existing. (Italics supplied)
To hold otherwise would be to deprive petitioners of their property, who waited a long
time to complete payments on their property, convinced that their interest was amply
protected by the inscribed adverse claim.
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 owners
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 its 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 any unconscientious advantage of another. [37]Thus, the claim of the
private respondent that the sale executed by the spouses was made in fraud of creditors has
no basis in fact, there being no evidence that the petitioners had any knowledge or notice of
the debt of the Uychocdes in favor of the private respondents, nor of any claim by the latter
over the Uychocdes properties or that the same was involved in any litigation between said
spouses and the private respondent. While it may be stated that good faith is presumed,
conversely, bad faith must be established by competent proof by the party alleging the
same. Sanssuch 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 and encumbrances except those set forth on the
Certificate of Title and those expressly mentioned in the ACT as having been preserved
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.
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, JAN 2005

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 31 st 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 ninetyseven 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. N217643 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. N18887. 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. N18887 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 sellersapplicants Sandoval and Ozaeta when applicants sold the property to him. As successors-ininterest 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-ininterest 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.

SPOUSES ROBERT DINO and CRISTINA DINO, Petitioners, v. COURT OF APPEALS,

CONSORCIA SOMBRIO and SPOUSES FROILAN PERNITO and PROSERFINA
PERNITO,Respondents. September 2, 1992
1. CIVIL LAW; LAND REGISTRATION; LIS PENDENS; MAY LIE ONLY WHERE THERE IS AN
ACTION IN COURT AFFECTING REAL PROPERTY; TO AFFECT THE RIGHT OF A SUBSEQUENT
PURCHASER, NOTICE OF LIS PENDENS SHOULD BE ANNOTATED ON THE BACK OF THE
CERTIFICATE OF TITLE. Lis pendens may lie only where there is an action or proceeding in
court, which affects title to, or possession of real property. In other words, lis pendens is the
jurisdiction, power, or control which the court acquires over the property involved in the suit
pending the continuance of the action; and until its final judgment therein, it has for its
object the keeping of the subject or res within the power of the court until the judgment or
decree shall be entered, to make it possible for courts of justice to give effect to their
judgments and decrees. This, in effect, is the essence of the rule of lis pendens. When a case
is commenced involving any right to land registered under the Land Registration Law, any
decision therein will bind the parties only, unless a notice of the pendency of such action is

registered on the title of the said land, in order to bind the whole world as well. Therefore, in
order that a notice of lis pendens may affect the right of a subsequent purchaser, such
notice should be annotated on the back of the certificate of title, which is not present in the
case at bar.
2. INNOCENT PURCHASER HAS THE RIGHT TO RELY ON WHAT APPEARS IN THE CERTIFICATE
AND HAS NO OBLIGATION TO LOOK BEYOND IT. Where the certificate of title was already
in the name of the forger when the land was sold to an innocent purchaser, the vendee had
the right to rely on what appeared in the certificate and. in the absence of anything to excite
suspicion, was under no obligation to look beyond the certificate and investigate the title of
the vendor appearing on the face of said certificate.
3. REGISTRATION UNDER THE TORRENS SYSTEM IS THE OPERATIVE ACT THAT GIVES
VALIDITY TO THE TRANSFER OR CREATION OF A LIEN UPON THE LAND; REGISTRATION
EXTINGUISHES ALL CLAIMS, LIENS AND ENCUMBRANCES ASSERTED PRIOR TO IT;
EXCEPTION. Under the Torrens system, registration is the operative act that 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 the certificate of title. To require him to do more is to defeat one of the primary
objects of the Torrens System. Moreover, registration of land under the Torrens system
extinguishes all claims, liens and encumbrances asserted prior to registration except
statutory liens and those noted in the certificate of title.
4. PETITIONERS, WHILE INDISPENSABLE PARTIES IN CIVIL CASE NO. R-18073, ARE NOT
BOUND BY THE DECISION IN SAID CASE; REASON; IMPLEADING THEM AS ADDITIONAL
DEFENDANTS ONLY IN THE EXECUTION STAGE OF SAID CASE VIOLATES THEIR RIGHTS TO
DUE PROCESS. As the registered owner of the subject property, petitioners are not bound
by the decision in Civil Case No. R-18073 for they were never summoned in said case and
the notice of lis pendens annotated on TCT No. 73069 was already cancelled at the time
petitioners purchased the subject property. While it is true that petitioners are indispensable
parties in Civil Case No. R-18073, without whom no complete relief could be accorded to the
private respondents, the fact still remains that petitioners were never actually joined as
defendants in said case. Impleading petitioners as additional defendants only in the
execution stage of said case violated petitioners right to due process as no notice of lis
pendens was annotated on the existing certificate of title of said property nor were
petitioners given notice of the pending case, therefore petitioners remain strangers in said
case and the Order of the trial court involving them is null and void, considering that
petitioners are innocent purchasers of the subject property for value.

This is a petition to review on certiorari the decision 1 dated August 6, 1990 of the Court of
Appeals affirming the decision of the trial court 2 in ordering the Register of Deeds of Cebu
City to cancel TCT No. 87156 which emanated from TCT No. 73069 and to reinstate TCT No.
67441 in the name of the late Consorcia Sombrio or issue another one in lieu of the old one,
as well as the resolution dated October 24, 1990 denying petitioners motion for
reconsideration of the appealed decision.chanrobles virtual lawlibrary
The facts as found by the trial court are as follows:chanrob1es virtual 1aw library
On December 21, 1978, Consorcia Sombrio, an old and illiterate lady who is the registered
owner of a parcel of land and its improvements covered by TCT No. 67441 located at 15 F.
Gochan Street, Mabolo, Cebu City containing an area of 1,008 square meters, more or less,
was made to sign a document by Maria Ching purportedly to be a letter authorizing the

latter to sell said property to Benedicto. However, said document turned out to be a Deed of
Sale of said property in favor of Maria Ching. 3 Consequently, TCT No. 67441 was cancelled
and TCT No. 87156 was issued in the name of Maria Ching. 4
Upon Sombrios discovery of said fraud, she filed, on May 11, 1979, an action against Maria
Ching and notary public Ciriaco Alcazar, who notarized said document without the presence
of Sombrio, with the Regional Trial Court of Cebu City, Branch IV in Civil Case No. R-18073 for
the annulment of the sale and the cancellation of TCT No. 87156 alleging that Maria Ching
through fraudulent representations and without any consideration tricked and deceived
Sombrio into signing said Deed of Sale.
Thereafter, Maria Ching mortgaged said property to petitioners spouses Robert and Cristina
Dino with the notice of lis pendens annotated on the TCT No. 87156 as evidenced by Entry
No. 2814-V-19-D.B. on said TCT. 5
On July 22, 1981, a decision based on a compromise agreement executed between Sombrio
and Maria Ching was rendered, to wit:jgc:chanrobles.com.ph
"A Compromise Agreement, duly signed by the parties, plaintiff, assisted by counsel, and
defendants likewise assisted by their counsel, has been submitted to this Court with a prayer
that the same be approved and that judgment he rendered in accordance with the terms
and conditions thereof. The said agreement reads:chanrob1es virtual 1aw library
COMPROMISE AGREEMENT
With the assistance of counsel, this Compromise Agreement, involving the above-entitled
case, made and entered at Cebu City, Philippines, this 23rd day of June, 1981 by and
between plaintiff and the defendants above-named,
WITNESSETH:chanrob1es virtual 1aw library
1. That plaintiff, Consorcia Vda. de Sombrio, makes known that she has not caused the filing
of the above-entitled case, the truth being that she was influenced, forced, coerced,
manhandled and intimidated to sign the complaint by one Froilan Pernito who is interested in
the land subject-matter of this suit; the occupancy of Froilan Pernito is merely tolerated
whose right, if any, is subordinate to that of defendant Maria Buracan Ching;chanrobles law
library : red
2. That right from the start or commencement of this suit, plaintiff has never engaged the
services of counsel; it was Froilan Pernito who secured, shouldered and paid the services of
counsel in the prosecution of the above-entitled case; just recently, without authority and
consent from the plaintiff, the said Froilan Pernito has engaged the services of new counsel,
Atty. Jose Batiquin, who is not personally known to the plaintiff;
3. That apart from the reason stated, supra, plaintiff hereby declares voluntarily and upon
her own free will, without any mental reservation, that the deed of absolute sale dated
December 2l, 1978, involving the land subject matter of this suit executed by and between
her and Maria B. Ching, notarized by Ciriaco Alcazar per document No. 884, Page No. 44,
Book III, Series of 1978 is regular and valid and was executed for a consideration in the
amount of ONE HUNDRED THOUSAND (P100,000.00) PESOS, receipt of which was
acknowledged at the time of the execution of that presents and that she was not deceived
nor fraudulently induced and unlawfully influenced into signing the aforesaid deed of sale;
for which reason, she freely and voluntarily DESIST from further prosecuting the aboveentitled case;

4. That plaintiff is turning over the physical or actual possession of the land in question,
together with all the improvements found therein, to the defendant Maria B. Ching, entitling
the latter to such writ of possession as may be necessary against parties, like Froilan Pernito,
whose possession is illegal and unauthorized;
5. That defendants, on the other hand, hereby waive their right to proceed with their
counterclaims against plaintiff.
WHEREFORE, it is most respectfully prayed that the foregoing compromise agreement be
approved and that judgment be rendered in accordance therewith.
Cebu City, Philippines, June 23, 1981
(Sgd.) CONSORCIA VDA. DE SOMBRIO
Plaintiff
(Sgd.) MARIA B. CHING
Defendant
Assisted by:chanrob1es virtual 1aw library
(Sgd.) EXEQUIL L. RUBI Atty. Pablo Badong & Associates
Counsel for the plaintiff counsel for defendants,
By: (SGD.) MIGUEL R. ZOSA
SIGNED IN THE PRESENCE OF:chanrob1es virtual 1aw library
(Sgd.) CORAZON PANTINO
(Sgd.) REMEDIOS SOLON
Finding the Compromise Agreement quoted above to be not contrary to law, public order,
public policy, morals or good customs, the same is hereby approved, and judgment is hereby
rendered in accordance therewith, without pronouncement as to costs. Strict compliance
with the said Compromise Agreement is hereby enjoined." 6
From said decision, Maria Ching went to the Register of Deeds of Cebu City to cancel the
notice of lis pendens as evidenced by Entry No. 6008-21-D.B. dated July 27, 1981. 7
On the other hand, Sombrio appealed said decision to the Court of Appeals alleging that the
Compromise Agreement was done under dubious circumstances since she was kidnapped
and released only after said Compromise Agreement had been signed by her. Moreover, Atty.
Jose Batiquin who was Sombrios counsel of record was substituted by another counsel, Atty.
Exequil Rubi who was a partner of Maria Chings lawyer, in said Compromise
Agreement.cralawnad
In the meantime, on May 30, 1983, while said appeal was still pending with the appellate
court, Maria Ching sold to the petitioners the subject property free from any written notice of
liens or encumbrances. Thereafter, TCT No. 73069 was cancelled and a new one. TCT No.
87156, was issued in the name of the petitioners by the Register of Deeds of Cebu City.

Since then, petitioners have been in continuous and peaceful possession of the subject
property which they turned into a clinic and center of autistic and behaviorally handicapped
children.
On February 7, 1989, the Court of Appeals rendered its decision, the dispositve portion of
which reads:
"WHEREFORE, the decision approving the compromise agreement is hereby set aside and
another one is rendered annulling the deed of sale of December 21, 1978 and cancelling
Transfer Certificate of Title No. 73069 of the Registry of Deeds of Cebu in the name of
defendant-appellant and ordering the Register of Deeds of Cebu to reinstate Transfer
Certificate of Title No. 67441 in the name of plaintiff-appellant or to issue another one in the
name of said plaintiff-appellant in lieu of the old one. No pronouncement as to damages and
costs." 8
On March 2, 1989, said decision became final and executory. When the records were
remanded to the trial court, Sombrio filed a Motion for Execution on July 18, 1989.
On July 19, 1989, the trial court ordered the issuance of a writ of execution. However, when
the Deputy Provincial Sheriff went to the Register of Deeds of Cebu City to execute said writ,
the latter informed the former that TCT No. 73069 was already cancelled and transferred to
petitioner Dino who was not a party in Civil Case No. R-18073.
On July 22, 1989, Sombrio filed a motion for the issuance of a writ of possession which was
granted in an Order dated July 24, 1989, the pertinent portion of which reads:
"Finding the motion to be in order, the same is hereby granted and accordingly, the Register
of Deeds for Cebu City is ordered to implement within three (3) days from receipt hereof, the
said judgment of the Honorable Court of Appeals.
Let a writ of Possession issue directing the Provincial Sheriff or his duly authorized
representative to place plaintiff Consorcia Sombrio in actual, physical and peaceful
possession of a parcel of land and the improvements thereon covered by Transfer Certificate
of Title No. 67441, Lot No. 1, Block 7 of the Consolidation and Subdivision Plan Pcs-326,
being a part of the Consolidation Lots Nos. 675 and 1424 of Banilad Friar Estate GLRO
Record 5988 situated in Cebu City, and containing an area of ONE THOUSAND AND EIGHT
(1,008) SQUARE METERS."
On July 26, 1989, the trial court issued a writ of possession directing the provincial sheriff of
Cebu City to place Consorcia Sombrio in actual physical possession of the subject property
and its improvement.
Upon receipt of said writ, the Register of Deeds, on July 27, 1989, filed with the trial court a
motion for the issuance of an Order directing the Register of Deeds of Cebu City to perform
his duty consistent with his ministerial function while petitioners, on July 31, 1989, filed with
said court an Extremely Urgent Motion to Quash Writ of Possession together with an Affidavit
of Third-Party claims.
On August 8, 1989, private respondents spouses Froilan and Proserfina Pernito filed their
comments on petitioners Motion to Quash Writ of Execution. Said private respondents
entered their appearance for the first time in Civil Case No. R-18073 claiming to be the
successors-in-interest of the late Consorcia Sombrio pursuant to a Deed of Sale executed
between private respondents and Sombrio during the pendency of this case, 11 to which
petitioners filed its Rejoinder on August 11, 1989. 12

Acting on said motions, the trial court issued an Order dated August 17, 1989, the
dispositive portion of which reads:
"WHEREFORE, for all the foregoing considerations, the motion of spouses Robert and Cristina
Dino is denied. The Register of Deeds of Cebu City is directed to follow and implement the
final judgment of the Court of Appeals by cancelling Transfer Certificate of Title No. 73069
and Transfer Certificate of Title No. 87156 emanating therefrom and reinstate Transfer
Certificate of Title No. 67441 in the name of plaintiff-appellant Consorcia Sombrio or issue
another one in her name in lieu of the old one by annotating therein issued pursuant to a
final judgment rendered by the Court of Appeals in CA-G.R. CV No. 04725, entitled Consorcia
Sombrio v. Maria Buracan Ching, Et. Al. dated February 7, 1989."
From said Order, Petitioners filed their Motion for Reconsideration which was denied on
September 30, 1989.
On October 18, 1989, the trial court issued the following Order:
"Deputy Sheriffs Rene Natividad and Jessie Belarmino in their manifestation dated October
10, 1989 declared that in compliance with their appointment as special sheriffs dated July
28, 1989, they implemented the writ of execution issued in this case but withheld delivery of
possession until the rightful possessor shall have been determined on account of the fact
that plaintiff Consorcia Sombrio is already deceased. The Deputy Sheriffs found themselves
in a quandary as to whom to deliver the possession of the property because they received a
letter dated October 4, 1989 sent by Atty. Manuelito Inso, counsel for Spouses Roberto Dino
and Cristina Dino, claiming ownership of the subject property. This matter is already settled
in the Order dated September 30, 1989.
Spouses Froilan Pernito and Proserfina Pernito on record appear as the successors-in-interest
of the deceased Consorcia Sombrio pursuant to the memorandum of agreement for the sale
of said land executed on April 23, 1979 marked as Annex B in the Sheriffs report dated
August 1, 1989. The record shows that so far no heir or successor-in-interest of the deceased
Consorcia Sombrio appeared to claim possession over the property except the herein
spouses Froilan Pernito and Proserfina Pernito.
IN VIEW THEREOF, the above-mentioned Deputy Sheriffs are directed to deliver the property
subject of the writ of execution in favor of spouses Froilan Pernito and Proserfina Pernito who
are the present claimants or successor-in-interest of Consorcia Sombrio until they are
lawfully dispossessed by other rightful claimant or successor-in-interest with a better right."
On October 23, 1989, petitioners filed with the Court of Appeals a Petition for Certiorari,
Prohibition and Mandamus which was denied on August 6, 1990. Petitioners Motion for
Reconsideration was, likewise, denied on October 24, 1990.
Hence, this petition.
Petitioners contend that the Court of Appeals acted with grave abuse of discretion when it
ordered the cancellation of petitioners Transfer Certificate of Title of the subject property
considering that they are not privies to Civil Case No. R-18073 and to consider them privies
to the same would outrightly deny petitioners their right to due process. Petitioners also
contend that they had acquired the subject property in good faith and for value because the
notice of lis pendens was already cancelled at the time the Deed of Sale was executed
therefore they are innocent holder for value of a certificate of title.
We find the petition meritorious.
Section 76 of P.D. 1529 provides that:

"SEC. 76. Notice of lis pendens. No action to recover possession of real estate, or to quiet
title thereto, or to remove clouds upon the title thereof, or for partition, or other proceedings
of any kind in court directly affecting the title to 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 affect 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."
Under said law, lis pendens may lie only where there is an action or proceeding in court,
which affects title to, or possession of real property. In other words, lis pendens is the
jurisdiction, power, or control which the court acquires over the property involved in the suit
pending the continuance of the action; and until its final judgment therein, it has for its
object the keeping of the subject or res within the power of the court until the judgment or
decree shall be entered, to make it possible for courts of justice to give effect to their
judgments and decrees. 15 This, in effect, is the essence of the rule of lis pendens. When a
case is commenced involving any right to land registered under the Land Registration Law,
any decision therein will bind the parties only, unless a notice of the pendency of such action
is registered on the title of the said land, in order to bind the whole world as well. Therefore,
in order that a notice of lis pendens may affect the right of a subsequent purchaser, such
notice should be annotated on the back of the certificate of title, which is not present in the
case at bar.
The appellate court acted without jurisdiction when it ordered the cancellation of petitioners
title as the judgment which was rendered in Civil Case No. R-18073 and affirmed by the
Court of Appeals on February 7, 1989 did not bind petitioners because at the time
petitioners purchased the subject property, the vendors (Maria Ching) title to said property
was clean and free from any lien and encumbrance since the notice of lis pendens which was
annotated on said title or certificate had already been cancelled for more than a year.
Where the certificate of title was already in the name of the forger when the land was sold to
an innocent purchaser, the vendee had the right to rely on what appeared in the certificate
and. in the absence of anything to excite suspicion, was under no obligation to look beyond
the certificate and investigate the title of the vendor appearing on the face of said
certificate. 16 Under the Torrens system, registration is the operative act that 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 the certificate of title. To require him to do more is to defeat one of the primary
objects of the Torrens system. 17 Moreover, registration of land under the Torrens system
extinguishes all claims, liens and encumbrances asserted prior to registration except
statutory liens and those noted in the certificate of title.
As the registered owner of the subject property, petitioners are not bound by the decision in
Civil Case No. R-18073 for they were never summoned in said case and the notice of lis
pendens annotated on TCT No. 73069 was already cancelled at the time petitioners
purchased the subject property. While it is true that petitioners are indispensable parties in
Civil Case No. R-18073, without whom no complete relief could be accorded to the private
respondents, the fact still remains that petitioners were never actually joined as defendants
in said case. Impleading petitioners as additional defendants only in the execution stage of
said case violated petitioners right to due process as no notice of lis pendens was annotated
on the existing certificate of title of said property nor were petitioners given notice of the
pending case, therefore petitioners remain strangers in said case and the Order of the trial

court involving them is null and void, considering that petitioners are innocent purchasers of
the subject property for value.
Private respondents remedy is to file a claim for damages against Maria Ching to recover
the consideration for said property.
WHEREFORE, the decision dated August 6, 1990 of the Court of Appeals and the resolution
dated October 24, 1990 are annulled and set aside. TCT No. 87156 in the name of
petitioners are hereby reinstated. Costs de officio.
[G.R. No. 123509. March 14, 2000]
LUCIO ROBLES, EMETERIA ROBLES, ALUDIA ROBLES and EMILIO
ROBLES, petitioners, vs. COURT OF APPEALS,
To be entitled to the remedy of quieting of title, petitioners must show that they have title to
the real property at issue, and that some deed or proceeding beclouds its validity or efficacy.
Buyers of unregistered real property, especially banks, must exert due diligence in
ascertaining the titles of mortgagors and sellers, lest some innocent parties be prejudiced.
Failure to observe such diligence may amount to bad faith and may result in the nullity of
the mortgage, as well as of the subsequent foreclosure and/or auction sale. Unless the coownership is clearly repudiated, a co-owner cannot, by prescription, acquire title to the
shares of the other co-owners.
The Case
Before us is a Petition for Review under Rule 45, assailing the June 15, 1995 Decision and the
January 15, 1996 Resolution of the Court of Appeals[1] (CA) in CA-GR CV No. 34213.[2] In its
Decision, the CA ruled:[3]
"WHEREFORE, the trial courts June 17, 1991 decision is REVERSED and SET
ASIDE, and in lieu thereof a new one is hereby entered ordering the dismissal
of the plaintiffs-appellees['] second amended complaint."
Earlier, the trial court had disposed as follows:
"WHEREFORE, premises considered, judgment is hereby rendered as follows:
1. Declaring free patent Title No. IV-1-010021 issued by the Bureau of
Lands as null and void;
2. Ordering the defendant spouses Vergel Santos and Ruth Santos to
deliver the property subject of this case to the plaintiff; and
3. Declaring the heirs of Silvino Robles as the absolute owner of the
land in controversy."
The January 15, 1996 CA Resolution denied petitioners' Motion for Reconsideration.

The Facts
The present Petition is rooted in a case for quieting of title before the Regional Trial Court of
Morong, Rizal, filed on March 14, 1988,[4] by Petitioners Lucio Robles, Emeteria Robles, Aludia
Robles and Emilio Robles. The facts were narrated by the trial court in this wise:
"There seems to be no dispute that Leon Robles primitively owned the land
situated in Kay Taga, Lagundi, Morong, Rizal with an area of 9,985 square
meters. He occupied the same openly and adversely. He also declared the
same in his name for taxation purposes as early as 1916 covered by Tax
Declaration No. 17865 (Exh. "I") and paid the corresponding taxes thereon
(Exh. "B"). When Leon Robles died, his son Silvino Robles inherited the land,
who took possession of the land, declared it in his name for taxation purposes
and paid the taxes thereon.
"Upon the death of Silvino Robles in 1942, his widow Maria de la Cruz and his
children inherited the property. They took adverse possession of said property
and paid taxes thereon. The task of cultivat[ing] the land was assigned to
plaintiff Lucio Robles who planted trees and other crops. He also built a nipa
hut on the land. The plaintiffs entrusted the payment of the land taxes to their
co-heir and half-brother, Hilario Robles.
"In 1962, for unknown reasons, the tax declaration of the parcel of land in the
name of Silvino Robles was canceled and transferred to one Exequiel Ballena
(Exh. "19"), father of Andrea Robles who is the wife of defendant Hilario
Robles. Thereafter, Exequiel Ballena secured a loan from the Antipolo Rural
Bank, using the tax declaration as security. Somehow, the tax declaration was
transferred [to] the name of Antipolo Rural Bank (Exh. "17") and later on, was
transferred [to] the name of defendant Hilario Robles and his wife (Exh. "16").
"In 1996, Andrea Robles secured a loan from the Cardona Rural Bank, Inc.,
using the tax declaration as security. Andrea Robles testified without
contradiction that somebody else, not her husband Hilario Robles, signed the
loan papers because Hilario Robles was working in Marinduque at that time as
a carpenter.
"For failure to pay the mortgage debt, foreclosure proceedings were had and
defendant Rural Bank emerged as the highest bidder during the auction sale
in October 1968.
"The spouses Hilario Robles failed to redeem the property and so the tax
declaration was transferred in the name of defendant Rural Bank. On
September 25, 1987, defendant Rural Bank sold the same to the Spouses
Vergel Santos and Ruth Santos.
"In September 1987, plaintiff discovered the mortgage and attempted to
redeem the property, but was unsuccessful. On May 10,1988, defendant

spouses Santos took possession of the property in question and was able to
secure Free Patent No. IV-1-010021 in their names."[5]
On the other hand, the Court of Appeals summarized the facts of the case as follows:
"The instant action for quieting of title concerns the parcel of land bounded
and more particularly described as follows:
"A parcel of land located at Kay Taga, Lagundi, Morong, Rizal. Bounded
[i]n the north by the property of Venancio Ablay y Simeon Ablay; [i]n
the east by the property of Veronica Tulak y Dionisio Ablay; [i]n the
south by the property of Simeon Ablay y Dionisio Ablay; and [i]n the
west by the property of Dionisio Ablay y Simeon Ablay, with an area of
9,985 square meters, more or less, assessed in the year 1935
at P60.00 under Tax Declaration No. 23219.
"As the heirs of Silvino Robles who, likewise inherited the above-described
parcel from Leon Robles, the siblings Lucio, Emeteria, Aludia and Emilio, all
surnamed Robles, commenced the instant suit with the filing of their March
14, 1988 complaint against Spouses Virgilio and Ruth Santos, as well as the
Rural Bank of Cardona, Inc. Contending that they had been in possession of
the land since 1942, the plaintiff alleged, among other matters, that it was
only in September of 1987 that they came to know of the foreclosure of the
real estate mortgage constituted thereon by the half-brother, Hilario Robles, in
favor of defendant Rural Bank; and that they likewise learned upon further
inquiry, that the latter had already sold the self-same parcel in favor of the
Santos spouses (pp. 1-3, orig. rec.). Twice amended to implead Hilario Robles
(pp. 76-80, orig. rec) and, upon subsequent discovery of the issuance of Free
Patent No. IV-I-010021 in favor of the defendant spouses, the Director of
Lands and the District Land Officer of the Bureau of Lands as partiesdefendants (pp. 117-121, orig. rec). The plaintiffs complaint sought the
following reliefs on the theory that the encumbrance of their half-brother,
constituted on the land, as well as all proceedings taken subsequent thereto,
were null and void, to wit:
"Wherefore, it is respectfully prayed that (a) a preliminary mandatory
injunction be issued forthwith restoring plaintiffs to their possession of
said parcel of land; (b) an order be issued annulling said Free Patent
No. IV-I-010021 in the name of defendants spouses Vergel Santos and
Ruth C. Santos, the deed of sale aforementioned and any tax
declaration which have been issued in the name of defendants; and (c)
ordering defendants jointly and severally, to pay plaintiffs the sum of
P10,000.00 as attorneys fees.
"Plaintiffs pray for other relief as [may be] just and equitable under the
premises." (pp. 120-121, orig. rec.)
xxxxxxxxx

"With the termination of the pre-trial stage upon the parties-litigants

agreement (p. 203, orig. rec.) the trial court proceeded to try the case on the
merits. It thereafter rendered the challenged June 17, 1991 decision upon the
following findings and conclusions:
"The real estate mortgage allegedly executed by Hilario Robles is not
valid because his signature in the mortgage deed was forged. This fact,
which remains unrebutted, was admitted by Andrea Robles.
"Inasmuch as the real estate mortgage executed allegedly by Hilario
Robles in favor of the defendant Cardona Rural Bank, Inc. was not
valid, it stands to reason that the foreclosure proceedings therein were
likewise not valid. Therefore, the defendant bank did not acquire any
right arising out of the foreclosure proceedings. Consequently,
defendant bank could not have transferred any right to the spouses
Santos.
"The fact that the land was covered by a free patent will not help the
defendant Santos any.
"There can be no question that the subject [property was held] in the
concept of owner by Leon Robles since 1916. Likewise, his successorin-interest, Silvino Robles, his wife Maria de la Cruz and the plaintiffs
occupied the property openly, continuously and exclusively until they
were ousted from their possession in 1988 by the spouses Vergel and
Ruth Santos.
"Under the circumstances, therefore, and considering that "open,
exclusive and undisputed possession of alienable public lands for the
period prescribed by law (30 years), creates the legal fiction whereby
the land, upon completion of the requisite period, ipso jure and without
the need of judicial or other action, ceases to be public land and
becomes private property. Possession of public land x x x which is [of]
the character and duration prescribed by the statute is the equivalent
of an express grant from the State, considering the dictum of the
statute itself[:]; "The possessor x x x shall be conclusively presumed to
have performed all the conditions essential to a government grant and
shall be entitled to a certificate of title x x x." No proof is admissible to
overcome a conclusive presumption[,] and confirmation proceedings
would be a little more than a formality, at the most limited to
ascertaining whether the possession claimed is of the required
character and length of time. Registration thereunder would not confer
title, but simply recognize a title already vested. (Cruz v. IAC, G.R. No.
75042, November 29, 1988) The land in question has become private
land.
"Consequently, the issuance of [a] free patent title to the Spouses
Vergel Santos and Ruth C. Santos is not valid because at the time the

property subject of this case was already private land, the Bureau of
Lands having no jurisdiction to dispose of the same." (pp. 257-259,
orig. rec.)"
"Dissatisfied with the foregoing decision, the Santos spouses and the
defendant Rural Bank jointly filed their July 6, 1991 Notice of Appeal (p.260,
orig. rec.) x x x."[6]
Ruling of the Court of Appeals
In reversing the trial court, the Court of Appeals held that petitioners no longer had any title
to the subject property at the time they instituted the Complaint for quieting of title. The CA
ratiocinated as follows:
"As correctly urged by the appellants, the plaintiff-appellees no longer had any
title to the property at the time of the institution of the instant complaint. (pp.
25-27, rec.) The latters claim of continuous possession notwithstanding (pp.
3-5, TSN, July 5, 1990; p. 12, TSN, July 12, 1990), the aforesaid loss of title is
amply evidenced by the subsequent declaration of the subject realty for
taxation purposes not only in the name of Exequiel Ballena (Exhibits "1" and
"2", pp. 23-24, orig. rec.) but also in the name of the Rural Bank of Antipolo
(Exhibit 17, vol. II, orig. rec.). On the theory that tax declarations can be
evincive of the transfer of a parcel of land or a portion thereof (Gacos v. Court
of Appeals, 212 SCRA 214), the court a quo clearly erred in simply brushing
aside the apparent transfers [which] the land in litigation had undergone.
Whether legal or equitable, it cannot, under the circumstances, be gainsaid
that the plaintiff-appellees no longer had any title to speak of when Exequiel
Ballena executed the November 7, 1966 Deed of Absolute Sale transferring
the land in favor of the spouses Hilario and Andrea Robles (Exhibit "3", p. 25,
orig. rec.)
"Even on the theory that the plaintiffs-appellees and their half-brother, Hilario
Robles, are co-owners of the land left behind by their common father, Silvino
Robles, such title would still be effectively discounted by what could well serve
as the latters acts of repudiation of the co-ownership, i.e., his possession (p.
22, TSN, November 15, 1990) and declaration thereof for taxation purposes in
his own name (Exhibit "4", p. 26, orig. rec.). In view of the plaintiffs-appellees
inaction for more than twenty (20) years from the time the subject realty was
transferred in favor of Hilario Robles, the appellants correctly maintain that
prescription had already set in. While it may be readily conceded that an
action to quiet title to property in the possession of the plaintiff is
imprescriptible (Almanza vs. Arguelles, 156 SCRA 718; Coronel vs.
Intermediate Appellate Court, 155 SCRA 270; Caragay-Layno vs. Court of
Appeals, 133 SCRA 718; Charon Enterprises vs. Court of Appeals, 124 SCRA
784; Faja vs. Court of Appeals, 75 SCRA 441; Burton vs. Gabar, 55 SCRA
4999), it equally bears emphasis that a co-owner or, for that matter, the said
co-owner[']s successors-in-interest who occupy the community property other
than as co-owner[s] can claim prescription as against the other co-owners (De

Guzman vs. Austria, 148 SCRA 75; Ramos vs. Ramos, 45 Phil. 362; Africa vs.
Africa, 42 Phil. 902; Bargayo vs. Camumot, 40 Phil. 857; De Castro vs. Echarri,
20 Phil. 23). If only in this latter sense, the appellants correctly argue that the
plaintiffs-appellees have lost their cause of action by prescription.
"Over and above the foregoing considerations, the court a quo gravely erred
in invalidating the real estate mortgage constituted on the land solely on the
basis of Andrea Robles testimony that her husbands signature thereon was
forged (p. 257, orig. rec.),
xxx xxx xxx
"In according to the foregoing testimony x x x credibility which, while
admittedly unrebutted, was altogether uncorroborated, the trial court lost
sight of the fact that the assailed deed of real estate mortgage (Exhibit "5",
Vol. II, orig. rec.) is a public document, the acknowledgment of which is
a prima facie evidence of its due execution (Chua vs. Court of Appeals, 206
SCRA 339). As such, it retains the presumption of validity in the absence of a
full, clear and convincing evidence to overcome such presumption (Agdeppa
vs. Ibe, 220 SCRA 584).
"The foregoing principles take even more greater [sic] when it is, moreover,
borne in mind that Hilario Robles made the following admissions in his March
8, 1989 answer, viz:
"3. The complaint filed against herein answering defendant has no
legal basis considering that as the lawful owner of the subject real
property, defendant Hilario Robles has the right to mortgage the said
real property and could dispose the same in whatever manner he
wishe[s] to do." (p. 96, orig. rec.)
"Appropriately underscored by the appellants, the foregoing admission is
binding against Hilario [Robles]. Judicial admissions, verbal or written, made
by the parties in the pleadings or in the course of the trial or other
proceedings in the same case are conclusive, no evidence being required to
prove the same. They cannot be contradicted unless shown to have been
made through [a] palpable mistake or [unless] no such admission was actually
made (Philippine American General Insurance, Inc. vs. Sweet Lines, Inc., 212
SCRA 194).
"It does not help the plaintiffs-appellees cause any that, aside from complying
with the requirements for the foreclosure of the subject real estate mortgage
(Exhibits "6", "7", "8" and "10", Volume II[)], the appellant Rural Bank had not
only relented to the mortgagors request to postpone the (Exhibit "g", Vol. II,
orig. rec.) but had likewise granted the latters request for an extension of the
redemption period therefor (Exhibits "11" and "12", pp. 35-36, orig. rec.).
Without going into minute detail in discussing the Santos spouses rights as
purchasers for value and in good faith (Exhibit "21", Vol. II, orig. rec.), the

mortgagor and the plaintiffs-appellees cannot now be heard to challenge the

validity of the sale of the land after admittedly failing to redeem the same
within the extension the appellant Rural Bank granted (pp. 10-11, TSN,
November 15, 1990).
"Being dependent on the supposed invalidity of the constitution and
foreclosure of the subject real estate mortgage, the plaintiffs-appellees attack
upon x x x Free Patent No. IV-I must necessarily fail. The trial court, therefore,
misread, and ignored the evidence o[n] record, to come up with erroneous
conclusion."
Contending that such ruling was contrary to law and jurisprudence, Petitioners Lucio,
Emeteria, Aludia and Emilio -- all surnamed Robles -- filed this Petition for Review. [7]
The Assigned Error
Petitioners ascribe the following error to the respondent court:
"Respondent Court of Appeals grievously erred in ruling that with the transfers
of the tax declaration over the parcel of land in question from Silvino Robles to
Exequiel Ballena, then to the Rural Bank of Antipolo, then to Respondent
Hilario Robles, then to Respondent Rural Bank of Cardona Inc., and then finally
to Respondent Spouses Santos, petitioners, who by themselves and their
predecessors in interest have been in open, actual and adverse possession of
said parcel of land since 1916 up to their forced removal therefrom in 1988,
have lost their title to said property by prescription to their half-brother,
Respondent Hilario Robles, and then finally, to Respondent Spouses Santos." [8]
For a better understanding of the case, the above issue will be broken down into three
points: first, the nature of the remedy of quieting of title;second, the validity of the real
estate mortgage; and third, the efficacy of the free patent granted to the Santos spouses.
First Issue: Quieting of Title
Article 476 of the Civil Code provides:
"Whenever there is 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 title.
"An action may also be brought to prevent a cloud from being cast upon title
to real property or any interest therein."
Based on the above definition, an action to quiet title is a common-law remedy for the
removal of any cloud or doubt or uncertainty on the title to real property. [9] It is essential for
the plaintiff or complainant to have a legal or an equitable title to or interest in the real

property which is the subject matter of the action. Also, the deed, claim, encumbrance or
proceeding that is being alleged as a cloud on plaintiffs title must be shown to be in fact
invalid or inoperative despite its prima facie appearance of validity or legal efficacy.
That there is an instrument or a document which, on its face, is valid and efficacious is clear
in the present case. Petitioners allege that their title as owners and possessors of the
disputed property is clouded by the tax declaration and, subsequently, the free patent
thereto granted to Spouses Vergel and Ruth Santos. The more important question to be
resolved, however, is whether the petitioners have the appropriate title that will entitle them
to avail themselves of the remedy of quieting of title.
Petitioners anchor their claim to the disputed property on their continued and open
occupation and possession as owners thereof. They allege that they inherited it from their
father, Silvino, who in turn had inherited it from his father, Leon. They maintain that after
their fathers death, they agreed among themselves that Petitioner Lucio Robles would be
tending and cultivating it for everyone, and that their half-brother Hilario would be paying
the land taxes.
Petitioners insist that they were not aware that from 1962 until 1987, the subject property
had been declared in the names of Exequiel Ballena, the Rural Bank of Antipolo, Hilario
Robles, the Rural Bank of Cardona, Inc., and finally, Spouses Vergel and Ruth Santos.
Maintaining that as co-owners of the subject property, they did not agree to the real estate
mortgage constituted on it, petitioners insist that their shares therein should not have been
prejudiced by Hilarios actions.
On the other hand, Private Respondents Vergel and Ruth Santos trace their claim to the
subject property to Exequiel Ballena, who had purportedly sold it to Hilario and Andrea
Robles. According to private respondents, the Robles spouses then mortgaged it to the Rural
Bank of Cardona, Inc. -- not as co-owners but as absolute owners -- in order to secure an
agricultural loan worth P2,000. Upon their failure to pay their indebtedness, the mortgage
was foreclosed and the property sold to the bank as the highest bidder. Thereafter, private
respondents purchased the property from the bank.
Undisputed is the fact that the land had previously been occupied by Leon and later by
Silvino Robles, petitioners predecessors-in-interest, as evidenced by the different tax
declarations issued in their names. Also undisputed is the fact that the petitioners continued
occupying and possessing the land from the death of Silvino in 1942 until they were
allegedly ousted therefrom in 1988. In 1962, the subject property was declared in the name
of Exequiel for taxation purposes. On September 30, 1965, it was again declared in the same
name; on October 28, 1965, in the name of the Rural Bank of Antipolo; on November 7,
1966, in the name of Hilario and Andrea; and thereafter, in the name of the Rural Bank of
Cardona and, finally, in the name of the Santos spouses.
Ostensibly, the Court of Appeals failed to consider irregularities in the transactions involving
the disputed property. First, while it was declared in the name of Exequiel in 1962, there was
no instrument or deed of conveyance evidencing its transfer from the heirs of Silvino to him.
This fact is important, considering that the petitioners are alleging continued possession of
the property. Second, Exequiel was the father-in-law of Hilario, to whom petitioners had

entrusted the payment of the land taxes. Third, considering that the subject property had
been mortgaged by Exequiel to the Rural Bank of Antipolo, and that it was foreclosed and in
fact declared in the banks name in 1965, why was he able to sell it to Spouses Hilario and
Andrea in 1966? Lastly, inasmuch as it was an unregistered parcel of land, the Rural Bank of
Cardona, Inc., did not observe due diligence in determining Hilarios title thereto.
The failure to show the indubitable title of Exequiel to the property in question is vital to the
resolution of the present Petition. It was from him that Hilario had allegedly derived his title
thereto as owner, an allegation which thereby enabled him to mortgage it to the Rural Bank
of Cardona. The occupation and the possession thereof by the petitioners and their
predecessors-in-interest until 1962 was not disputed, and Exequiels acquisition of the said
property by prescription was not alleged. Thus, the deed of conveyance purportedly
evidencing the transfer of ownership and possession from the heirs of Silvino to Exequiel
should have been presented as the best proof of that transfer. No such document was
presented, however.
Therefore, there is merit to the contention of the petitioners that Hilario mortgaged the
disputed property to the Rural Bank of Cardona in his capacity as a mere co-owner thereof.
Clearly, the said transaction did not divest them of title to the property at the time of the
institution of the Complaint for quieting of title.
Contrary to the disquisition of the Court of Appeals, Hilario effected no clear and evident
repudiation of the co-ownership. It is a fundamental principle that a co-owner cannot acquire
by prescription the share of the other co-owners, absent any clear repudiation of the coownership. In order that the title may prescribe in favor of a co-owner, the following
requisites must concur: (1) the co-owner has performed unequivocal acts of repudiation
amounting to an ouster of the other co-owners; (2) such positive acts of repudiation have
been made known to the other co-owners; and (3) the evidence thereof is clear and
convincing
In the present case, Hilario did not have possession of the subject property; neither did he
exclude the petitioners from the use and the enjoyment thereof, as they had indisputably
shared in its fruits. Likewise, his act of entering into a mortgage contract with the bank
cannot be construed to be a repudiation of the co-ownership. As absolute owner of his
undivided interest in the land, he had the right to alienate his share, as he in fact did.
Neither should his payment of land taxes in his name, as agreed upon by the co-owners, be
construed as a repudiation of the co-ownership. The assertion that the declaration of
ownership was tantamount to repudiation was belied by the continued occupation and
possession of the disputed property by the petitioners as owners.
Second Issue: Validity of the Real Estate Mortgage
In 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.[15] In the present case, it is
apparent that Hilario Robles was not the absolute owner of the entire subject property; and
that the Rural Bank of Cardona, Inc., in not fully ascertaining his title thereto, failed to
observe due diligence and, as such, was a mortgagee in bad faith.

First, the bank was utterly remiss in its duty to establish who the true owners and
possessors of the subject property were. It acted with precipitate haste in approving the
Robles spouses loan application, as well as the real estate mortgage covering the disputed
parcel of land.[16]Had it been more circumspect and assiduous, it would have discovered that
the said property was in fact being occupied by the petitioners, who were tending and
cultivating it.
Second, the bank should not have relied solely on the Deed of Sale purportedly showing that
the ownership of the disputed property had been transferred from Exequiel Ballena to the
Robles spouses, or that it had subsequently been declared in the name of Hilario. Because it
was dealing with unregistered land, and the circumstances surrounding the transaction
between Hilario and his father-in-law Exequiel were suspicious, the bank should have
exerted more effort to fully determine the title of the Robleses. Rural Bank of Compostela v.
Court of Appeals[17]invalidated a real estate mortgage after a finding that the bank had not
been in good faith. The Court explained: "The rule that persons dealing with registered lands
can rely solely on the certificate of title does not apply to banks." In Tomas v. Tomas, the
Court held:
"x x x. Banks, indeed, should exercise more care and prudence in dealing
even with registered lands, than private individuals, for their business is one
affected with public interest, keeping in trust money belonging to their
depositors, which they should guard against loss by not committing any act of
negligence which amounts to lack of good faith by which they would be
denied the protective mantle of land registration statute, Act 496, extended
only to purchasers for value and in good faith, as well as to mortgagees of the
same character and description. x x x."
Lastly, the Court likewise finds it unusual that, notwithstanding the banks insistence that it
had become the owner of the subject property and had paid the land taxes thereon, the
petitioners continued occupying it and harvesting the fruits therefrom.
Considering that Hilario can be deemed to have mortgaged the disputed property not
as absolute owner but only as a co-owner, he can be adjudged to have disposed to the Rural
Bank of Cardona, Inc., only his undivided share therein. The said bank, being the immediate
predecessor of the Santos spouses, was a mortgagee in bad faith. Thus, justice and equity
mandate the entitlement of the Santos spouses, who merely stepped into the shoes of the
bank, only to what legally pertains to the latter -- Hilarios share in the disputed property.
Third Issue: Efficacy of Free Patent Grant
Petitioners repeatedly insist that the disputed property belongs to them by private
ownership and, as such, it could not have been awarded to the Santos spouses by free
patent. They allege that they possessed it in the concept of owners -- openly, peacefully,
publicly and continuously as early as 1916 until they were forcibly ousted therefrom in 1988.
They likewise contend that they cultivated it and harvested its fruits. Lucio Robles testified:
"xxx xxx xxx

Q By the way, why do you know this parcel of land?

A Because before my father died, he showed me all the documents.
Q Before the death of your father, who was the owner of this parcel of land?
A My father, sir. Spped
Q How did your father acquire this parcel of land?
A My father knew that it [was] by inheritance, sir.
Q From whom?
A From his father, Leon Robles, sir.
Q And do you know also [from] whom Leon Robles acquired this land?
A It was inherited from his father, sir.
Q What is the nature of this parcel of land?
A Its an agricultural land, sir,
Q Now, at the time of the death of your father, this land was planted with
what crops?
A Mango trees, santol trees, and I was the one who planted those trees, sir.
Q When did you plant those trees?
A Before the death of my father, sir.
Q Now, after the death of your father, who cultivated this parcel of land?
A I took charge of the land after the death of my father, sir.
Q Up to when?
A Up to the present, sir, after this case was already filed."
The preceding claim is an assertion that the subject property is private land. The petitioners
do not concede, and the records do not show, that it was ever an alienable land of the public
domain. They allege private ownership thereof, as evidenced by their testimonies and the
tax declarations issued in the names of their predecessors-in-interest. It must be noted that
while their claim was not corroborated by other witnesses, it was not controverted by the
other parties, either.

Carlos Dolores insisted that the Rural Bank of Cardona, Inc., of which he was the manager,
had acquired and possessed the subject property. He did not, however, give any reason why
the petitioners had continued occupying it, even as he admitted on the stand that he had
visited it twice.
In the light of their open, continuous, exclusive and notorious possession and occupation of
the land, petitioners are "deemed to have acquired, by operation of law, a right to a grant, a
government grant, without the necessity of a certificate of title being issued." The land was
"segregated from the public domain." Accordingly, the director of lands had no authority to
issue a free patent thereto in favor of another person. Verily, jurisprudence holds that a free
patent covering private land is null and void.
Worth quoting is the disquisition of the Court in Agne v. Director of Lands, [24] in which it held
that a riparian owner presently in possession had a better right over an abandoned river bed
than had a registered owner by virtue of a free patent.
"Under the provisions of Act 2874 pursuant to which the title of private
respondents predecessor-in-interest was issued, the President of the
Philippines, or his alter ego, the Director of Lands, has no authority to grant a
free patent for land that has ceased to be a public land and has passed to
private ownership and a title so issued is null and void. The nullity arises, not
from fraud or deceit, but from the fact that the land is not under the
jurisdiction of the Bureau of Lands. The jurisdiction of the Director of Lands is
limited only to public lands and does not cover lands publicly owned. The
purpose of the Legislature in adopting the former Public Land Act, Act No.
2874, was and is to limit its application to lands of the public domain, and
lands held in private ownership are not included therein and are not affected
in any manner whatsoever thereby. Land held in freehold or fee title, or of
private ownership, constitutes no part of the public domain, and cannot
possibly come within the purview of said act 2874, inasmuch as the subject
of such freehold or private land is not embraced in any manner in the title of
the Act and the same is excluded from the provisions of the text thereof. Kyle
"We reiterate that private ownership of land is not affected by the issuance of
the free patent over the same land because the Public Land Act applies only
to lands of the public domain. Only public land may be disposed of by the
Director of Lands. Since as early as 1920, the land in dispute was already
under the private ownership of herein petitioners and no longer a part of the
lands of the public domain, the same could not have been the subject matter
of a free patent. The patentee and his successors-in-interest acquired no right
or title to said land. Necessarily, Free Patent No. 23263 issued to Herminigildo
Agpoon is null and void and the subsequent titles issued pursuant thereto
cannot become final and indefeasible. Hence we ruled in Director of Lands v.
Sicsican, et al. that if at the time the free patents were issued in 1953 the land
covered therein were already private property of another and, therefore, not
part of the disposable land of the public domain, then applicants patentees
acquired no right or title to the land.

"Now, a certificate of title fraudulently secured is null and void ab initio if the
fraud consisted in misrepresenting that the land is part of the public domain,
although it is not. As earlier stated, the nullity arises, not from the fraud or
deceit, but from the fact that the land is not under the jurisdiction of the
Bureau of Lands. Being null and void, the free patent granted and the
subsequent titles produce no legal effect whatsoever. Quod nullum est,
nullum producit effectum.
"A free patent which purports to convey land to which the government did not
have any title at the time of its issuance does not vest any title in the
patentee as against the true owner. The Court has previously held that the
Land Registration Act and the Cadastral Act do not give anybody who resorts
to the provisions thereof a better title than what he really and lawfully
has. Exsm
xxx xxx xxx
"We have, therefore, to arrive at the unavoidable conclusion that the title of
herein petitioners over the land in dispute is superior to the title of the
registered owner which is a total nullity. The long and continued possession of
petitioners under a valid claim of title cannot be defeated by the claim of a
registered owner whose title is defective from the beginning."
The Santos spouses argue that petitioners do not have the requisite personality to question
the free patent granted them, inasmuch as "it is a well-settled rule that actions to nullify free
patents should be filed by the Office of the Solicitor General at the behest of the Director of
Lands."
Private respondents reliance on this doctrine is misplaced. Indeed, the Court held in Peltan
Development, Inc. v. Court of Appeals[26] that only the solicitor general could file an action for
the cancellation of a free patent. Ruling that the private respondents, who were applicants
for a free patent, were not the proper parties in an action to cancel the transfer certificates
covering the parcel of land that was the subject of their application, the Court ratiocinated
thus:
"The Court also holds that private respondents are not the proper parties to
initiate the present suit. The complaint, praying as it did for the cancellation of
the transfer certificates of title of petitioners on the ground that they were
derived from a "spurious" OCT No. 4216, assailed in effect the validity of said
title. While private respondents did not pray for the reversion of the land to
the government, we agree with the petitioners that the prayer in the
complaint will have the same result of reverting the land to the government
under the Regalian Doctrine. Gabila v. Barinaga[27] ruled that only the
government is entitled to this relief. x x x."
Because the cancellation of the free patent as prayed for by the private respondents
in Peltan would revert the property in question to the public domain, the ultimate beneficiary

would be the government, which can be represented by the solicitor general only. Therefore,
the real party-in-interest is the government, not the private respondents.
This ruling does not, however, apply to the present case. While the private respondents
in Peltan recognized that the disputed property was part of the public domain when they
applied for free patent,[28] herein petitioners asserted and proved private ownership over the
disputed parcel of land by virtue of their open, continued and exclusive possession thereof
since 1916.
Neither does the present case call for the reversion of the disputed property to the State. By
asking for the nullification of the free patent granted to the Santos spouses, the petitioners
are claiming the property which, they contend, rightfully belongs to them.
Indeed, the same issue was resolved by this Court in Heirs of Marciano Nagano v. Court of
Appeals.[29] In that case, the trial court dismissed a Complaint seeking the declaration of
nullity of an Original Certificate of Title issued pursuant to a free patent, reasoning that the
action should have been instituted by the solicitor general. In reversing the trial court, the
Supreme Court held:
"It is settled that a Free Patent issued over private land is null and void, and
produces no legal effect whatsoever. Quod nullum est, nullum producit
effectum. Moreover, private respondents claim of open, peaceful, continuous
and adverse possession of the 2,250 square meter portion since 1920, and its
illegal inclusion in the Free Patent of petitioners and in their original certificate
of title, gave private respondents a cause of action for quieting of title which is
imprescriptible."
In any event, the Office of the Solicitor General was afforded an opportunity to express its
position in these proceedings. But it manifested that it would not file a memorandum,
because "this case involves purely private interests.
The foregoing considered, we sustain the contention of petitioners that the free patent
granted to the Santos spouses is void. It is apparent that they are claiming ownership of the
disputed property on the basis of their possession thereof in the concept of owners -- openly,
peacefully, publicly, continuously and adversely since 1916. Because they and their
predecessors-in-interest have occupied, possessed and cultivated it as owners for more than
thirty years,[31] only one conclusion can be drawn -- it has become private land and is
therefore beyond the authority of the director of lands.
Epilogue
We recognize that both the petitioners and the Santos spouses fell victim to the dubious
transaction between Spouses Hilario and Andrea Robles and the Rural Bank of Cardona, Inc.
However, justice and equity mandate that we declare Petitioners Lucio, Emerita, Aludia and
Emilio Robles to have the requisite title essential to their suit for quieting of title.
Considering the circumstances peculiar to this complicated problem, the Court finds this
conclusion the logical and just solution.

The claim that petitioners were guilty of laches in not asserting their rights as owners of the
property should be viewed in the light of the fact that they thought their brother was paying
the requisite taxes for them, and more important, the fact that they continued cultivating it
and harvesting and gaining from its fruits.
From another viewpoint, it can even be said that it was the Rural Bank of Cardona, Inc.,
which was guilty of laches because, granting that it had acquired the subject property
legally, it failed to enforce its rights as owner. It was oblivious to the petitioners continued
occupation, cultivation and possession thereof. Considering that they had possessed the
property in good faith for more than ten years, it can even be argued that they thus
regained it by acquisitive prescription. In any case, laches is a remedy in equity, and
considering the circumstances in this case, the petitioners cannot be held guilty of it.
In sum, the real estate mortgage contract covering the disputed property a contract
executed between Spouses Hilario and Andrea on the one hand and the Rural Bank of
Cardona, Inc., on the other -- is hereby declared null and void insofar as it prejudiced the
shares of Petitioners Lucio, Emerita, Aludia and Emilio Robles; it is valid as to Hilario Robles
share therein. Consequently, the sale of the subject property to the Santos spouses is valid
insofar as it pertained to his share only. Likewise declared null and void is Free Patent No. IV1-010021 issued by the Bureau of Lands covering the subject property.
WHEREFORE, the Petition is hereby GRANTED. The assailed Decision is REVERSED and SET
ASIDE. Except as modified by the last paragraph of this Decision, the trial courts Decision
is REINSTATED. No costs.