VII.

SUBSEQUENT REGISTRATION

Chapter V. Sections 51-77

I. Voluntary Dealings with Registered Lands

a. Primary Entry Book

1. DEVELOPMENT BANK OF THE PHILIPPINES vs Acting Register of Deeds of Nueva Ecija,

UDK No. 7671, June 23, 1998

Provisional Registration; Effect. In view of the provisional nature of the registration process, the
vendors certificate of title is not stamped cancelled until the title is reconstituted and a new one issued
to the vendee. The effect of the provisional registration, however, is to effectively convey the property
to the vendee since the entry of an instrument in the primary entry book is not rendered ineffective
because the title involved has not yet been reconstituted when such entry was made and therefore
registration of the instrument may resume once the title has been reconstituted using the old entry
(DBP vs. Actg. Register of Deeds of Nueva Ecija, UDK No. 7671, June 23, 1988). Consulta No. 1815

Two Ways of Dealing with Lands: Voluntary

Transactions and Involuntary Transactions.
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. ...

NARVASA, J.:

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

1
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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
2

refers. Indeed, said Section, in also providing that the annotation, "... when made ... shall bear the same
Page

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, 13 this 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.
3

Appellant cannot invoked said ruling, not because it has been abandoned by the Supreme Court during
Page

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
4

would lead to no inconsistency and injustice. (emphasis supplied)

Page
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
5

respondent-appellee Register of Deeds of Nueva Ecija, or his successor, is ordered to annotate on the
Page

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.

2. National Housing Authority vs Augusto Basa, GR 149121, April 20, 2010

FACTS:
Spouses Basa loaned from NHA secured by a real estate mortgage over their properties. Spouses Basa
did not pay the loan despite repeated demands. To collect its credit, the NHA filed a verified petition for
extrajudicial foreclosure of mortgage before the Sheriffs Office in Quezon City.

After notice and publication, the properties were sold at public auction where NHA emerged as the
highest bidder. On April 16, 1991, the sheriffs certificate of sale was registered and annotated only on
the owners duplicate copies of the titles in the hands of the respondents, since the titles in the custody
of the Register of Deeds were among those burned down when a fire gutted the City Hall of Quezon City
on June 11, 1988.

On April 16, 1992, the redemption period expired, without respondents having redeemed the
properties. Shortly thereafter, on April 24, 1992, NHA executed an Affidavit of Consolidation of
Ownership over the foreclosed properties, and the same was inscribed by the Register of Deeds on the
certificates of title in the hand of NHA.

NHA moved for the issuance of an alias writ of possession. Before the RTC could resolve the motion for
the issuance of an alias writ of possession, respondents, filed a Motion for Leave to Intervene and
Petition in Intervention.
Respondents theorized that the instrument is deemed registered only upon actual inscription on the
certificate of title in the custody of the civil registrar. Since the sheriffs certificate was only inscribed on
the owners duplicate certificate of title, and not on the certificate of title in the possession of the
Register of Deeds, then there was no effective registration and the one-year redemption period had not
even begun to run. Thus, respondents asked the RTC, among others, to declare the foreclosure sale null
and void, to allow the respondents to redeem the mortgaged properties.
NHA maintained that respondents right of redemption had long expired on April 15, 1992 since the
certificate of sale was inscribed on their TCT Nos. 285413 and 287008 a year earlier, or on April 16,
1991.

RTC issued an Order admitting the Petition in Intervention and treating the same as the petition to set
aside sale.

NHA filed a special civil action for certiorari and prohibition before the Court of Appeals.
The Court of Appeals rendered a Decision in favor of the NHA. Respondents filed a motion for
reconsideration.

The Court of Appeals, in its Amended Decision, reconsidered its earlier stance.
It declared that the period of redemption had not expired as the certificate of sale had not been
6
Page

registered or annotated in the original copies of the titles supposedly kept with the Register of Deeds
since said titles were earlier razed by fire.
ISSUE:
Whether or not the annotation of the sheriffs certificate of sale in the primary entry book of the
register of deeds and on the owners duplicate title is sufficient compliance with the requirement of law
on registration.

HELD:
The prevailing rule is that there is effective registration once the registrant has fulfilled all that is needed
of him for purposes of entry and annotation, so that what is left to be accomplished lies solely on the
register of deeds.

NHA followed the procedure in order to have its sheriffs certificate of sale annotated in the transfer
certificates of title. It was not NHAs fault that the certificate of sale was not annotated on the transfer
certificates of title which were supposed to be in the custody of the Registrar, since the same were
burned. Neither could NHA be blamed for the fact that there were no reconstituted titles available
during the time of inscription as it had taken the necessary steps in having the same reconstituted as
early as July 15, 1988. NHA did everything within its power to assert its right.
Since entry of the certificate of sale was validly registered, the redemption period accruing to
respondents commenced therefrom, since the one-year period of redemption is reckoned from the date
of registration of the certificate of sale.

3. Durawood vs Candice Bona, GR 179884, January 25, 2010

This is a Petition for Review on Certiorari assailing the Decision[1] of the Court of Appeals in CA-
G.R. SP No. 94479 dated April 18, 2007 and its Resolution[2] dated September 18, 2007.

On June 3, 2004, petitioner Durawood Construction and Lumber Supply, Inc. (Durawood) filed
an action for sum of money plus damages with a prayer for the issuance of a writ of preliminary
attachment against LBB Construction and Development Corporation (LBB Construction) and its
president Leticia Barber (Barber) before the Regional Trial Court (RTC) of Antipolo. In said suit,
which was docketed as Civil Case No. 04-7240, Durawood prayed for the sum of P665,385.50 as
payment for construction materials delivered to LBB Construction.

On June 14, 2004, the RTC issued an Order granting Durawoods prayer for the issuance of a writ
of attachment. On June 16, 2004, the corresponding writ was issued.

On June 17, 2004, Sheriff Rolando C. Leyva (Sheriff Leyva) levied on a 344-square meter parcel
of land in Richdale Subdivision, Antipolo City covered by Transfer Certificate of Title (TCT) No. R-
17571 in the name of LBB Construction. A Notice of Levy on Attachment was annotated in TCT
No. R-17571s Memorandum of Encumbrances on the same day, June 17, 2004.

On July 13, 2004, respondent Candice S. Bona (Candice) filed a Motion seeking leave to
intervene in Civil Case No. 04-7240. Attached to said Motion was Candices Answer in
Intervention, her Third Party Claim addressed to Sheriff Leyva, and a copy of TCT No. R-17571.
Candice claimed therein that she is a co-owner of the property covered by TCT No. R-17571. She
7
Page

alleged that LBB Construction had sold the property to her and her siblings, Michael Angelo S.
Bona, Diane Sheila S. Bona, Glenda May S. Bona and Johann Louie Sebastian S. Bona, through a
Deed of Absolute Sale dated June 2, 2004. Candice asserted that the sale is the subject of Entry
No. 30549 dated June 16, 2004 in the books of the Registry of Deeds of Antipolo City, while the
levy on attachment is only Entry No. 30590 dated June 17, 2004. What was attached to the
Motion was a copy of TCT No. R-17571, and not a title in Candice and her co-owners names.

On August 11, 2004, the RTC issued an Order granting Candices Motion to Intervene.

LBB Construction and Barber filed their Answer in Civil Case No. 04-7240, but failed to attend
the scheduled hearings, including the pre-trial. Consequently, Durawood was allowed to present
its evidence ex parte.

On July 21, 2005, the RTC rendered its Decision[3] in Civil Case No. 04-7240 in favor of
Durawood. The dispositive portion of the Decision reads:

WHEREFORE, in view of the foregoing consideration, judgment is rendered in favor of the

plaintiff and against the defendants, viz:

1. Ordering the defendants to pay plaintiff the sum of Six Hundred Sixty[-]Five Thousand
Three Hundred Eighty[-]Five Pesos and Fifty Centavos (P665,385.50) plus two percent (2%)
interest per month from May 11, 2004 up to the present;

2. Ordering the defendants to pay plaintiff twenty-five percent (25%) of the amount due to
the plaintiff by way of attorneys fees; and

3. To pay the costs of suit.[4]

The Decision became final and executory. On September 12, 2005, Durawood filed a Motion for
the Issuance of a Writ of Execution. On November 15, 2005, the RTC issued a Writ of Execution.
It was when this Writ was about to be enforced that Durawood discovered the cancellation of
TCT No. R-17571 and the issuance of TCT No. R-22522 in the name of Candice and her siblings.

It would appear from the records that on June 16, 2004, the supposed Register of Deeds of
Antipolo City, Atty. Randy A. Rutaquio (Atty. Rutaquio), cancelled TCT No. R-17571 and issued
TCT No. R-22522 in the name of Candice and her co-owners. The parties, however, do not
dispute that said cancellation of the old TCT and issuance of the new one was antedated, since
Atty. Rutaquio was still the Register of Deeds of Malabon on said date.[5] According to a
certification of the Land Registration Authority,[6] it was a certain Atty. Edgar D. Santos (Atty.
Santos) who was the Acting Register of Deeds of Antipolo City on June 16, 2004.

Durawood filed a Motion to Reinstate Notice of Levy on Attachment in TCT No. R-22522 and Cite
Atty. Randy A. Rutaquio for Contempt[7] on the following grounds:

5. The cancellation of TCT No. R-17571 and the issuance of TCT No. R-22522 was made by Atty.
Randy A. Rutaquio who, on June 2004, was not the Register of Deeds of Antipolo City. As
8

evidence of such fact, plaintiff corporation was issued a certification by LRA Human Resource
Page
Management Officer IV Loreto I. Orense that Atty. Edgar D. Santos was the Acting Register of
Deeds of Antipolo City from June 1-30, 2004.

6. While the Deed of Sale annotated in TCT No. R-17571 appears to have been made on June 16,
2004, the fact of its inscription was made after that of the levy on attachment as it obviously
appears below and next to it.

7. The records of this case reveal that in the Third Party Claim filed by Candice Bona sometime in
July 2004, there was never any mention of any recording about a Deed of Absolute Sale in the
Memorandum of Encumbrances in TCT No. R-17571. It is difficult to comprehend that Atty.
Hernando U. Salvador, Bonas lawyer, would miss mentioning that a Deed of Absolute Sale was
inscribed ahead of the notice of levy on attachment if ever such sale was made on June 16,
2004.

8. Thus, under the circumstances, plaintiff corporation cannot help speculate that [the] Deed of
Sale between LBB Construction and the Bonas was made to appear to have been recorded a day
before the attachment.

9. While the Notice of Levy on Attachment was inscribed in TCT No. R-17571 ahead and before
of the Deed of Sale between LBB Construction Co., Inc. and the Bonas, the said notice was not
carried over in TCT No. R-22522 despite the fact that there was no order coming from this
Honorable Court dissolving the Writ of Preliminary Attachment dated June 16, 2004.

10. Randy Rutaquios unauthorized acts of cancelling TCT No. R-17571 and issuing TCT No. R-
22522 without inscribing the Notice of Levy on Attachment despite the absence of a court order
dissolving the writ of Preliminary Attachment constitute improper conduct tending to directly or
indirectly to impede, obstruct or degrade the administration of justice.[8]

Atty. Rutaquio filed a Manifestation alleging that the sale was entered in the Primary Entry Book
prior to the Levy on Attachment. The two transactions were assigned to different examiners and
it just so happened that the examiner to whom the levy on attachment was assigned was able to
inscribe the memorandum ahead of the sale, although the inscription of the sale was entered
ahead of the levy. The levy on attachment was not inscribed on TCT No. R-22522 because
allegedly the sale should have priority and preference. The cancellation of TCT No. R-17571 and
the issuance of TCT No. R-22522 was already completed when he took over the position of Atty.
Santos as Acting Register of Deeds and was therefore already clothed with the authority to issue
and sign TCT No. R-22522.

Atty. Rutaquio also submitted a letter dated June 25, 2004 from Atty. Santos to Land
Registration Authority (LRA) Administrator Benedicto B. Ulep (Administrator Ulep) consulting
the latter as regards the registration of the Deed of Absolute Sale and the Notice of Levy on
Attachment.[9] In said letter received by the LRA on July 1, 2004, Atty. Santos stated that he had
not acted on the Deed of Absolute Sale since the required registration fees were not paid
therefor.[10] Administrator Ulep was able to reply to said letter on October 6, 2004, when Atty.
Rutaquio was already the Acting Register of Deeds. Administrator Ulep stated that since the
9

Deed of Sale was considered registered on June 16, 2004, the same shall take precedence over
Page

the Notice of Levy on Attachment registered on June 17, 2004.[11]

Acting on the Motion to Reinstate Notice of Levy on Attachment in TCT No. R-22522 and Cite
Atty. Randy A. Rutaquio for Contempt, the RTC issued an Order[12] dated March 2, 2006, ruling
in favor of Durawood. The RTC gave great weight to the certification by LRA Human Resource
Management Officer IV Loreto I. Orense that Atty. Santos was the Acting Register of Deeds from
June 1-30, 2004, and held that this proves the fact that Atty. Santos was the only person
authorized to sign and approve all the transactions with the Registry of Deeds of Antipolo City at
the time. Moreover, according to the RTC, the alienation of LBB Construction in favor of the
Bonas without leaving sufficient property to pay its obligation is considered by law in fraud of
creditor under Articles 1381[13] and 1387[14] of the Civil Code.

The RTC did not rule on Durawoods prayer to cite Atty. Rutaquio for contempt. The dispositive
portion of the March 2, 2006 Order reads:

WHEREFORE, premises considered, the instant motion to reinstate notice of levy on attachment
in TCT No. R-22522 now in the name of the intervenors is hereby GRANTED its non-inscription
therein having been made without order of this Court.

The Register of Deeds of Antipolo City is directed to reinstate the notice of levy on attachment
in TCT No. R-22522 in the names of intervenors immediately upon receipt of this Order.[15]

Candice filed a Motion for Reconsideration of the above Order. In the meantime, on March 13,
2006, Sheriff Leyva issued a Notice of Sheriffs Sale setting the sale of the property covered by
TCT No. R-22522 at public auction on April 11, 2006 at 10:00 a.m., pursuant to the November
15, 2005 Writ of Execution. Candice filed an Urgent Ex-Parte Motion to Order the Branch Sheriff
to Desist from the Sale of Intervenors Property for Being Premature, which was granted by the
RTC in an Order dated March 29, 2006.

On March 8, 2006, the new Acting Register of Deeds Jose S. Loriega, Jr. complied with the March
6, 2006 Order of the RTC by reinstating in TCT No. R-22522 the Notice of Levy on Attachment in
favor of Durawood.

On April 7, 2006, the RTC issued an Order denying Candices Motion for Reconsideration. In said
Order, the RTC highlighted its observation that in TCT No. R-17571, the inscription of the levy on
attachment by Atty. Santos dated June 17, 2004 was in page A (the dorsal portion) of the title,
while the supposedly earlier inscription of the Deed of Sale by Atty. Rutaquio dated June 16,
2004 was found in page B (a separate page) of the title. The RTC found this fact, as well as the
above-mentioned certification that Atty. Santos was the Acting Register of Deeds of Antipolo
City from June 1 to 30, 2004, sufficient proof of the irregularity of the June 16, 2004 inscription
of the Deed of Sale.

On April 11, 2006, Sheriff Leyva sold the subject property at public auction for P1,259,727.90
with Durawood being the lone bidder, and issued the corresponding Certificate of Sale. The sale
was inscribed in TCT No. R-22522 on the same date.[16]
10

Candice filed with the Court of Appeals a Petition for Certiorari and Prohibition assailing the
Page

March 2, 2006 and April 7, 2006 Orders of the RTC.

On April 18, 2007, the Court of Appeals rendered the assailed Decision in favor of Candice.
According to the Court of Appeals, the sequence of presentation of the entries in the TCT cannot
control the determination of the rights of the claimants over a disputed property. It is the
registration in the Primary Entry Book (also referred to in other cases as the day book) that
establishes the order of reception of instruments affecting registered land. As explained by Atty.
Rutaquio, the entry in the day book is only the preliminary step in the registration. The
inscription of the levy on attachment on TCT No. R-17571 (which was made before the
inscription of the Deed of Sale on said title) retroacts to the date of entry in the Primary Entry
Book, which is June 17, 2004. However, the inscription of the Deed of Sale on TCT No. R-17571,
although made after the inscription of the levy on attachment, retroacts to the earlier date of
entry in the Primary Entry Book, which is June 16, 2004.

As regards the issuance by Atty. Rutaquio of TCT No. R-22522 on June 16, 2004 despite the fact
that he was not yet the Register of Deeds of Antipolo City at that time, the Court of Appeals held
that there was substantial compliance with the National Land Titles and Deeds Registration
Administration (NALTDRA; now the Land Registration Authority [LRA]) Circular No. 94 on
Certificates of title and documents left unsigned by former Register of Deeds, which provides:

It has been brought to the attention of this Registration that, in some Registries, there are
certificates of title with the full transcriptions and inscriptions, including the volume and page
numbers, the title number, the date and the name of the former Register of Deeds, already
typewritten thereon but which, for some reasons, cannot anymore be signed by the former
official. In such cases and to resolve this problem, the present Register of Deeds may, without
changing or altering the transcriptions and inscriptions, affix his signature below the name of
the former Register of Deeds but placing the actual date and time of signing enclosed in
parenthesis below his signature.[17]

The Court of Appeals accepted Atty. Rutaquios manifestation that he signed TCT No. R-22522
subsequent to June 16, 2004, on a date when he was already the Acting Register of Deeds of
Antipolo City. Since the entry in the Primary Entry Book was made at the time of the
incumbency of Atty. Santos, the name of the latter still appears on the document. According to
the Court of Appeals, Candice cannot be made to suffer for the failure of Atty. Rutaquio to affix
the date when he signed the document. Furthermore, a certificate of title, once registered,
cannot be impugned, altered, changed, modified, enlarged or diminished except in a direct
proceeding permitted by law. Finally, an action for rescission of contracts entered into in fraud
of creditors cannot be instituted except when the party suffering damage has no other legal
means to obtain reparation for the same.[18]

The dispositive portion of the Decision reads:

WHEREFORE, in view of the foregoing, the assailed Orders of public respondent judge ordering
the reinstatement of the subject notice of levy on attachment in TCT No. R-22522 are hereby
ANNULLED and SET ASIDE. As a result thereof, the public auction sale carried out pursuant to
11

said levy is also declared null and void.[19]

Page
Durawood filed a Motion for Reconsideration, but the same was denied by the Court of Appeals
in its Resolution dated September 18, 2007.

Durawood filed the instant Petition for Review, with the following Assignment of Errors:

I.

THE COURT OF APPEALS IGNORED THE FACT THAT NON-PAYMENT OF THE REQUIRED
REGISTRATION FEES BY CANDICE S. BONA AND HER SIBLINGS DID NOT COMPLETE THE
REGISTRATION OF THE DEED OF ABSOLUTE SALE ON JUNE 16, 2004.

II.

THE COURT OF APPEALS GRAVELY ERRED WHEN IT DISREGARDED THE FACT THAT NALTDRA
CIRCULAR NO. 94 WAS NOT COMPLIED WITH BY ATTY. RANDY RUTAQUIO.

III.

THE COURT OF APPEALS GRAVELY ERRED WHEN IT FAILED TO CONSIDER THAT THE ENTRIES IN
TCT NO. R-17571 (THE PREDECESSOR OF TCT NO. R-22522) ARE EVIDENCES OF THE FACTS
STATED THEREIN.

IV.

THE COURT OF APPEALS OVERLOOKED THE FACT THAT THE REAL PROPERTY COVERED BY TCT
NO. R-17571 AND SUBSEQUENTLY BY TCT NO. R-22522 HAS ALREADY BEEN ATTACHED BUT WAS
UNILATERALLY RELEASED FROM THE COURTS JURISDICTION BY A USURPER.[20]

All these allegations are specific matters to be resolved by this Court in determining the
overriding issue of the case at bar: whether the Court of Appeals correctly granted Candices
Petition for Certiorari and Prohibition on its finding that the RTC committed grave abuse of
discretion in issuing its March 2, 2006 and April 7, 2006 Orders. In other words, the main issue
to be determined by this Court is whether or not there was grave abuse of discretion in the RTCs
order to reinstate the notice of levy on attachment in TCT No. R-22522. Grave abuse of
discretion signifies such capricious and whimsical exercise of judgment that is equivalent to lack
of jurisdiction. The abuse of discretion must be grave as where the power is exercised in an
arbitrary or despotic manner by reason of passion or personal hostility, and must be so patent
and gross as to amount to an evasion of positive duty or to a virtual refusal to perform the duty
enjoined by or to act all in contemplation of law.[21]

The Court of Appeals, in considering the date of entry in the day book of the Registry of Deeds
as controlling over the presentation of the entries in TCT No. R-17571, relied on Section 56 of
Presidential Decree No. 1529 which provides that:
12

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
Page

reception, all instruments including copies of writs and processes filed with him relating to
registered land. He shall, as a preliminary process in registration, note in such book the date,
hour and minute of reception of all instruments, in the order in which they were received. They
shall be regarded as registered from the time so noted, and the memorandum of each
instrument, when made on the certificate of title to which it refers, shall bear the same date:
Provided, that the national government as well as the provincial and city governments shall be
exempt from the payment of such fees in advance in order to be entitled to entry and
registration. (Emphasis supplied.)

The consequence of the highlighted portion of the above section is two-fold: (1) in determining
the date in which an instrument is considered registered, the reckoning point is the time of the
reception of such instrument as noted in the Primary Entry Book; and (2) when the
memorandum of the instrument is later made on the certificate of title to which it refers, such
memorandum shall bear the same date as that of the reception of the instrument as noted in
the Primary Entry Book. Pursuant to the second consequence stated above, the Court of Appeals
held that Atty. Rutaquio correctly placed the date of entry in the Primary Entry Book as the date
of the memorandum of the registration of the deed of sale in TCT No. R-17571.

As regards the first consequence, this Court has applied the same in several cases. Thus, in the
old cases of Levin v. Bass,[22] Potenciano v. Dineros,[23] and Development Bank of the
Philippines v. Acting Register of Deeds of Nueva Ecija,[24] as well as in the fairly recent cases of
Autocorp Group v. Court of Appeals,[25] Armed Forces and Police Mutual Benefit Association,
Inc. v. Santiago,[26] and National Housing Authority v. Basa, Jr.,[27] we upheld the entry of
instruments in the Primary Entry Book to be equivalent to registration despite even the failure
to annotate said instruments in the corresponding certificates of title.

Based on this alone, it appears that the RTC was in error when it considered the registration of
the Absolute Deed of Sale on June 16, 2004 inferior to the registration of the Notice of Levy on
Attachment on June 17, 2004 on the ground that the Attachment was annotated on TCT No. R-
17571 earlier than the Deed of Sale. As discussed in the above-mentioned cases, the annotation
in the certificate of title is not determinative of the effectivity of the registration of the subject
instrument.

However, a close reading of the above-mentioned cases reveals that for the entry of
instruments in the Primary Entry Book to be equivalent to registration, certain requirements
have to be met. Thus, we held in Levin that:

Do the entry in the day book of a deed of sale which was presented and filed together with the
owner's duplicate certificate of title with 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. x x x.[28]
13

Levin, which was decided in 1952, applied Section 56 of the Land Registration Act[29] which
Page

provides:
Sec. 56. Each register of deeds shall keep an entry book in which, upon payment of the filing fee,
he shall enter in the order of their reception all deeds and other voluntary instruments, and all
copies of writs or other process filed with him relating to registered land. He shall note in such
book the year, month, day, 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, however, That no registration, annotation, or memorandum on a
certificate of title shall be made unless the fees prescribed therefor by this Act are paid within
fifteen days' time after the date of the registration of the deed, instrument, order or document
in the entry book or day book, and in case said fee is not paid within the time above mentioned,
such entry shall be null and void: Provided further, That the Insular Government and the
provincial and municipal governments need not pay such fees in advance in order to be entitled
to entry or registration. (Emphasis supplied.)

This provision is the precursor of the aforequoted Section 56 of Presidential Decree No. 1529,
which seems to have dispensed with the provision nullifying the registration if the required fees
are not paid:

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.

In Development Bank of the Philippines v. Acting Register of Deeds of Nueva Ecija,[30] this Court
applied the provisions of Presidential Decree No. 1529 and modified the doctrine as follows:

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.[31]

This pronouncement, which was reiterated in National Housing Authority v. Basa, Jr.,[32] shows
that for the entry to be considered to have the effect of registration, there is still a need to
comply with all that is required for entry and registration, including the payment of the
prescribed fees. Thus, in Autocorp Group v. Court of Appeals,[33] this Court compared the date
14

when the required fees were paid with the therein assailed writ of preliminary injunction:
Page
Petitioners contend that payment of the entry fee is a condition sine qua non before any valid
entry can be made in the primary entry book. Allegedly, the Court of Appeals resorted to judicial
legislation when it held that the subsequent payment of the entry fee was curative and a
substantial compliance with the law. Petitioners claim that the ruling in DBP vs. Acting Register
of Deeds of Nueva Ecija does not apply to this case. As there was no valid registration,
petitioners conclude that the order of the trial court issuing a writ of preliminary injunction was
proper, considering the irregularities present in the conduct of the extrajudicial foreclosure x x x.

We find the petition bereft of merit.

First. The objection as to the payment of the requisite fees is unavailing. There is no question
that the fees were paid, albeit belatedly. Respondent bank presented the certificate of sale to
the Office of the Register of Deeds of Cebu City for registration on January 21, 1999 at 4:30 p.m.
As the cashier had already left, the Office could not receive the payment for entry and
registration fees, but still, the certificate of sale was entered in the primary entry book. The
following day, respondent bank paid the requisite entry and registration fees. Given the peculiar
facts of the case, we agree with the Court of Appeals that the payment of respondent bank must
be deemed to be substantial compliance with the law; and, the entry of the instrument the day
before, should not be invalidated. In any case, even if we consider the entry to have been made
on January 22, the important fact is that the entry in the primary entry book was done prior to
the issuance of the writ of injunction [on February 15, 1999; TRO issued on January 25, 1999] by
the trial court.[34] (Emphases supplied.)

Records in the case at bar reveal that as of June 25, 2004, the date of the letter of Atty. Santos
seeking the opinion of the LRA as regards the registration of the Deed of Sale and the Notice of
Levy on Attachment, the required registration fees for the Deed of Sale has not yet been paid:

25 June 2004
[received by the LRA: July 01, 2004]

HON. BENEDICTO B. ULEP

Administrator
This Authority

Sir:

This has reference to the TCT No. R-17571/T-87 registered under the name of LBB Construction
and Development Corporation relative to the Deed of Absolute Sale with Entry No. 30549, which
was sought to be registered on 16 June 2004 at 11:20 a.m. (a photocopy of which is hereto
attached as Annex A).

However, on 17 June 2004 at 11:45 a.m. a Notice of Levy on Attachment (a photocopy of which
is hereto attached as Annex B) with Entry No. 30590 was filed and annotated against TCT No. R-
17571/T-87.
15
Page
 In view of the foregoing, we are now in a quandary as to what proper steps should be taken. It
should be noted further that the required registration fees of the abovementioned sale was not
paid the reason for which the same was not immediately acted upon by the undersigned.[35]

Since there was still no compliance of all that is required x x x for purposes of entry and
annotation[36] of the Deed of Sale as of June 25, 2004, we are constrained to rule that the
registration of the Notice of Levy on Attachment on June 17, 2004 should take precedence over
the former. Considering that the Notice of Levy on Attachment was deemed registered earlier
than the Deed of Sale, the TCT issued pursuant to the latter should contain the annotation of
the Attachment.

In view of the foregoing, we find that the RTC was, in fact, acting properly when it ordered the
reinstatement of the Notice of Levy on Attachment in TCT No. R-22522. Since the RTC cannot be
considered as to have acted in grave abuse of its discretion in issuing such Order, the Petition for
Certiorari assailing the same should have been dismissed.

b. Double Sales

1. Rodriguez vs. Sioson, GR 199180, July 27, 2016

THELMA RODRIGUEZ, joined by her husband vs. SPS. JAIME and ARMI SIOSON
G.R. No. 199180, July 27, 2016
Ponente: J. Reyes, 3rd Division

Nature of Action: Petition for review under rule 45.

Facts:
In 1997, Municipality of Bataan purchased from Neri delos Reyes an area of about 1.7 ha. of Lot 398 to
be used for the extension of the Municipalitys public market. It was agreed that Neri will surrender the
mother title to the municipality upon full payment of purchase price.

Lot 398 was subsequently divided into 5 lots: A, B, C, D, and E. Lots C and D pertain to the portions that
were sold to the municipality while E is a road lot. Consequently, A and B were left as remaining portions
over which Neri retained absolute title. TCTs T-209894 and T-209895 were then issued over lots A and B
respectively and registered in Neris name married to Violeta Lacuata. The owners duplicate copies
were however retained by the municipality pending Neris payment in the share in expenses incurred for
the subdivision of the lot 398.

Neri, however, sold lot A to Thelma for P1,243,000 and on Mar. 20, 1997, Thelma issued a check for said
amount payable to Neri. When it fell due, no sufficient funds were available to cover the check. Thelma
promised to pay the purchase price in installments until Sept. 4, 1997 but Thelma was only able to pay
P442,293.50. On Nov. 12, 2001, Thelma caused the annotation of an adverse claim on lot As title. She
saw an announcement that a new Orani Common Terminal will be built on lot A. Thelma then filed a
16

complaint for injunction against incumbent Mayor Pascual and municipality under claim of ownership.
Page
In 2002, Neri executed an affidavit claiming that the owners copies of TCTs covering lots A and B were
lost and caused for the reconstitution of new owners copies. After new copies were issued, Neri sold lot
A to respondent Sps. Sioson, Sps. Camacho, and Agnes Samonte. Consequently, the TCT covering lot A
was cancelled and a new TCT was thus issued in the respondents names. Respondents filled the said lot
with about 40 truckloads of soil/fillings but Thelma sent two armed blue guards who entered the
premises and set up a tent therein. Respondents brought the matter to the attention of the barangay
who referred them to the mayor but mayor did not take any action. Respondents filed a forcible entry
case against Thelma.

Pending the ejectment case, Thelma sought for the annulment of the second sale of lot A. RTC in its joint
decision ruled in favor of Thelma. Respondents moved for reconsideration but was denied by RTC. On
appeal, CA granted the appeal and ruled that there was no double sale since the contract between Neri
and Thelma was a mere contract to sell and not contract of sale. Thelma moved for reconsideration but
was denied. Hence, this petition.

Issues:
1) Whether the contract entered into by Neri and Thelma is a contract to sell or a contract of sale.

2) Whether double sale exists in the instant case.

Ruling:
1) The contract entered by Neri and Thelma is a contract to sell.

In determining the nature of the agreement between Thelma and Neri, the CA took note of these two
documents and coupled with Thelmas own admissions, correctly found that it was a mere contract to
sell. According to CA:

During trial, Thelma explained the apparent disparity between the 2 deeds of absolute sale by testifying
that the undated and unnotarized deed of sale served only as a receipt which was signed by Neri when
the latter received the downpayment for the lot. The dated and notarized deed of sale, on the other
hand, was signed by both Thelma and Neri upon Thelmas alleged full payment of purchase price.

xxx

Second, the execution of the deed of absolute sale and the transfer and delivery of the title to Thelmas
name were conditional upon full payment of purchase price.

xxx

Despite the denomination of their agreement as one of sale, the circumstances tend to show that Neri
agreed to sell the subject property to Thelma on the condition that title and ownership would pass or be
transferred upon full payment of the purchase price. This is the very nature of a contract to sell which is
a bilateral contract whereby the prospective seller, while expressly reserving the ownership of the
property despite delivery thereof to the buyer, binds himself to sell the property exclusively to the buyer
upon fulfillment of the condition agreed upon, i.e. full payment of purchase price.
17

2) Double sale doesnt exist in this case.

Page
It was established that Thelma was not able to pay the full purchase price. To bolster her claim, Thelma
insists that she holds title over the property after Neri allegedly delivered the subject lot to her right
after the execution of sale. There is however nothing on record to support this claim aside from her bare
allegations.

Moreover, the alleged delivery of property, even if true, is irrelevant considering that in a contract to
sell, ownership is retained by the registered owner in spite of the partial payment of the purchase price
and delivery of possession of the property.

2. Melencio vs CA, GR 148846, Sept 25, 2007

3. Antonio vs Santos, GR 149238, 538 SCRA 1, Nov, 22, 2007

c. Buyer in Good Faith

1. LBP vs Poblete, GR 196577, February 25, 2013

FACTS:
On October 1997, respondent Poblete obtained a loan worth P 300,000.00 from Kapantay Multi-
Purpose. She mortgaged her Lot No. 29 located in Buenavista, Sablayan, Occidental Mindoro, under
OCT No. P-12026. Kapantay, in turn, used OCT No. P-12026 as collateral under its Loan Account No. 97-
OC-013 with Land Bank Sablayan Branch.

After a year, Poblete instructed her son-in-law Domingo Balen to look for a buyer for the Lot No. 29 in
order to pay her loan and he referred Angelito Joseph Maniego. Both parties agreed that the lot shall
amount to P 900,000.00 but in order to reduce taxes they will execute a P 300,000.00 agreed price
appearing in the Deed of Absolute Sale dated November 9, 1998. In the Deed, Poblete specifically
described herself as a widow. Baledn, then, delivered the Deed to Maniego. Instead of paying the
price, Maniego promised in an affidavit dated November 19, 1998 stating that the said amount will be
deposited to her Land Bank Savings Account but he failed to do so.

On August 1999, Maniego paid Kapantays Loan Account for P 448,202.08 and on subsequent year he
applied for a loan worth P 1,000,000.00 from Land Bank using OCT No. P-12026 as a collateral in a
condition that the title must be first transferred on his name. On August 14, 2000, the Registry of Deeds
issued TCT No. T-20151 in Maniegos name pursuant to a Deed of Absolute Sale with the signatures of
Mrs. Poblete and her husband date August 11, 2000 and Maniego successfully availed the Credit Line
Agreement for P 1,000,000.00 and a Real Estate Mortgage over TCT No. T-20151 on August 15, 2000.
On November 2002, Land Bank filed an Application for an Extra-judicial Foreclosure against the said
Mortgage stating that Maniego failed to pay his loan.
18
Page
Poblete filed a complaint for nullification of the Deed of Sale dated August 11, 2000 and TCT No. T-
20151, Reconveyance of the Title and Damages with a Prayer for Temporary Restraining Order and/or
Issuance of Writ of Preliminary Injunction against Maniego, Landbank and the Register of Deeds.

The judgment of RTC, affirmed by the CA upon appeal, favors the plaintiff Poblete.
Hence, this petition.

ISSUE:
Whether or not:
1. the CA erred in upholding the finding of the trial court declaring the TCT No. T-20151 as null and
void. The CA misconstrued and misappreciated the evidence and the law in not finding the title
registered in the name of Maniego.

2. the CA promulgated a decision and misconstrued the evidence and the law in not finding the
Land Bank a mortgagee in good faith.

3. the CA misconstrued the evidence and the law in not finding the respondent and Maniego in
pari delicto.

4. the CA erred in not applying the principle of estoppels or laches on respondent in that the
proximate cause of her loss was negligence to safeguard her rights over the subject property, thereby
enabling Maniego to mortgage the same with Land Bank.

RULING:
The petition is meritorious.
It is well-entrenched rule, as applied, by the CA, that a forged or fraudulent deed is a nullity and conveys
no title. Moreover, where the deed of sale is states that the purchase price has been paid but in fact has
never been, the deed is void ab initio for lack of consideration. Since the deed, is void, the title is also
void.

Since the land title has been declared void by final judgment, the Real Estate Mortgage over it is also
void. It is essential that the mortgagor be the absolute owner of the mortgage; otherwise, the mortgage
is void. The doctrine the mortgagee in good faith as a rule does not apply to banks which are required
to observe a higher standard of diligence. A bank cannot assume that, simply because the title offered
as security is on its face, free of any encumbrances or lien, it is relieved of the responsibility of taking
further steps to verify the title and inspect the properties to be mortgage. The records do not even
show that Land Bank investigated and inspected the actual occupants. Lad Bank merely mentioned
Maniegos loan application upon his presentation of OCT No. P-12026, which was still under the name of
Poblete. Land Bank even ignored the fact that Kapantay previously used Pobletes title as collateral in its
loan account with Land Bank.

Furthermore, only one day after Maniego obtained TCT No. P-20151 under his name, Land Bank and
Maniego executed a Credit Line Agreement and Real Mortgage. It appears that Maniegos loan was
already completely processed while the collateral was still in the name of Poblete. Where said
mortgagee acted with haste in granting the mortgage loan and did not ascertain the ownership of the
19

land being mortgaged, it cannot be considered innocent mortgagee.

Page
The pari delicto rule provides when two parties are equally at fault, the law leaves them as they are and
denies recovery by either one of them. This court adopt the decisions of RTC and CA that only Maniego
is at fault.

Finally, on the issue of estoppels and laches, such question were not raised before the trial court. It is
settled that an issue which are neither alleged in the complaint nor raised during the trial cannot be
raised for the time on appeal.

2. Legarda vs CA, et al, GR 94457, Oct 16, 1997

The parties hereto entered into a lease agreement over a certain property owned by petitioner Victoria
Legarda. Legarda, however, refused to sign a contract although respondent New Cathay House already
made a deposit and a down payment of rentals. Cathay, therefore, filed a complaint against Legarda for
specific performance with preliminary injunction and damages. The court a quo issued an injunction.

Legarda's counsel (Atty. Coronel) failed to file an answer, thereby prompting the court to declare her in
default. Cathay was allowed to present evidence ex-parte and a judgment by default was reached by the
trial court ordering Legarda to execute the lease contract in favor of Cathay.

When the judgment became final and executory, the trial court issued a writ of execution and a public
auction was held where Cathay's Manager, Roberto V. Cabrera, Jr. was the highest bidder. The sheriff
issued a Certificate of Sale. Upon failure of Legarda to redeem her property within the one-year
redemption period, a final Deed of Sale was issued by the sheriff which was registered by Cabrera with
the Register of Deeds.

Legarda's Transfer Certificate of Title was cancelled with the issuance of a new TCT in favor of Cabrera.
Atty. Coronel did not inform Legarda of all these developments. He then filed a petition for annulment
of judgment before the Court of Appeals. The appellate court affirmed the decision of the trial court by
dismissing the petition for annulment of judgment and holding Legarda bound by the negligence of her
counsel. Legarda then hired a new lawyer for the purpose of elevating her case to the Supreme Court.

The Supreme Court's decision reversed the decision of the Court of Appeals and declared that Atty.
Coronel committed reckless, inexcusable and gross negligence which deprived his client of her property
without due process of law.

Aggrieved, Cathay filed the instant motion for reconsideration alleging that the reconveyance would not
be possible because its owner Cabrera, even prior to the promulgation of the decision, had already sold
the subject property. The motion for reconsideration of respondent New Cathay House, Inc. was
granted.

A new judgment was entered dismissing petition for review and affirming the decision of the Court of
Appeals. What was clear from the records of the case was that the auction sale was conducted regularly.
The certificate of sale and the final deed of sale were properly issued to Cabrera that allowed him to
20

consolidate his ownership over the subject property, register it and obtain a title in his own name
Page

and sell it to an innocent purchaser for value. Therefore, since the property was already sold to an
innocent purchaser for value, Cabrera, much less by Cathay can no longer return it to its original owner.
Petitioner Victoria Legarda was the defendant in a complaint for specific performance with damages
filed by private respondent New Cathay House, Inc. before the Regional Trial Court of Quezon City. The
complaint was aimed at compelling Victoria Legarda to sign a lease contract involving her house and lot
at 123 West Avenue, Quezon City which New Cathay House, Inc. intended to use in operating a
restaurant.[1]

As prayed for in the complaint, the lower court issued a temporary restraining order enjoining Victoria
Legarda and her agents from stopping the renovation of the property which was being done by New
Cathay House, Inc. After hearing, the lower court issued a writ of preliminary injunction.

Thereafter, Antonio P. Coronel of the Coronel Law Office at 146 Katipunan Road, White Plains, Quezon
City, entered his appearance as counsel for Victoria Legarda. He also filed an urgent motion for an
extension of ten (10) days from February 6, 1985 within which to file an answer to the complaint. The
motion was granted by the court which gave Victoria Legarda until February 20, 1985 to answer the
complaint.

However, Victoria Legarda failed to file her answer within the extended period granted by the court.
Hence, upon motion of New Cathay House, Inc., she was declared in default, thereby paving the way for
the presentation of evidence ex parte.

On March 25, 1985, the lower court rendered a decision by default. It ordered Victoria Legarda to
execute and sign the lease contract and to pay the following: (a) exemplary damages of P100,000.00, (b)
actual and compensatory damages in the total amount of P278,764.37, and (c) attorney's fees of
P10,000.00.

Atty. Coronel received a copy of the lower court's decision on April 9, 1985 but he did not interpose an
appeal therefrom within the reglementary period. Consequently, the decision became final and, upon
motion of New Cathay House, Inc., the lower court issued a writ of execution. In compliance with the
writ, on June 27, 1985, the sheriff levied upon, and sold at public auction, the property subject of the
litigation to New Cathay House, Inc., the highest bidder. The sheriff's certificate of sale was registered in
the Office of the Register of Deeds of Quezon City.

The one-year redemption period having expired on July 8, 1986, the sheriff issued a final deed of sale
which, on July 11, 1986, was duly registered with the Office of the Register of Deeds. On November 6,
1986, Victoria Legarda, represented by her attorney-in-fact Ligaya C. Gomez, filed in the Court of
Appeals a petition for annulment of the judgment against her in Civil Case No. Q-43811. She alleged
therein that the decision was obtained through fraud and that it is not supported by the allegations in
the pleadings nor by the evidence submitted.

Forthwith, the Court of Appeals issued a temporary restraining order enjoining the respondents from
dispossessing petitioner of the premises in question. Private respondent New Cathay House, Inc. then
filed its consolidated comment on the petition with a motion for the lifting of the temporary restrain-ing
order. Victoria Legarda, through Atty. Coronel, filed a reply to the consolidated comment. The petition
21

was thereafter orally argued. Required by the Court of Appeals to manifest if the parties desired to file
their respective memoranda, Dean Coronel informed the appellate court that he was adopting Victoria
Page

Legarda's reply to the consolidated comment as her memorandum.

The Court of Appeals promulgated its decision on November 29, 1989. On the issue of fraud, for which
Victoria Legarda claimed that Roberto V. Cabrera, Jr., who represented New Cathay House, Inc., made
her believe through false pretenses that he was agreeable to the conditions of the lease she had
imposed on the lessee and that the latter would withdraw the complaint against her, thereby prompting
her to advise her lawyer not to file an answer to the complaint anymore, the Court of Appeals[2] said:

"On the other hand, petitioner's above allegation of fraud supposedly practiced upon her by Roberto V.
Cabrera, Jr. is so improbable as to inspire belief. For the Coronel Law Office had already entered its
appearance as petitioner's counsel by then, so that if it were true that Cabrera had already agreed to the
conditions imposed by petitioner, said law office would have asked plaintiff to file the proper motion to
dismiss or withdraw complaint with the Court, and if plaintiff had refused to do so, it would have filed
defendant's answer anyway so that she would not be declared in default. Or said law office would have
prepared a compromise agreement embodying the conditions imposed by their client in the lease
contract in question which plaintiffs had allegedly already accepted, so that the same could have been
submitted to the Court and judgment on a compromise could be entered. All these, any conscientious
lawyer of lesser stature than the Coronel Law Office, headed by no less than a former law dean, Dean
Antonio Coronel, or even a new member of the bar, would normally have done under the circumstances
to protect the interests of their client, instead of leaving it to the initiative of plaintiff to withdraw its
complaint against defendant, as it had allegedly promised the latter. Thus, it is our belief that this case is
one of pure and simple negligence on the part of the defendant's counsel, who simply failed to file the
answer in behalf of defendant. But counsel's negligence does not stop here. For after it had been
furnished with copy of the decision by default against defendant, it should then have appealed
therefrom or file (sic) a petition for relief from the order declar-ing their client in default or from the
judgment by default. Hence, defendant is bound by the acts of her counsel in this case and cannot be
heard to complain that the result might have been different if it had proceeded differently (Pulido v.
C.A., 122 SCRA 63; Ayllon v. Sevilla, 156 SCRA 257, among other cases). And the rationale of this rule is
obvious and clear. For if such grounds were to be admitted as reasons for opening cases, there would
never be an end to a suit so long as new counsel could be employed who could allege and show that the
prior counsel had not been sufficiently diligent, or experienced, or learned' (Fernandez v. Tan Tiong Tick,
SCRA 1138)." (Underscoring supplied.)
Finding the second ground for the petition to be likewise unmeritorious, the Court of Appeals dismissed
the petition. Surprisingly, however, inspite of the Court of Appeals' tirade on his professional
competence, Atty. Coronel did not lift a finger to file a motion for reconsideration. Neither did he initiate
moves towards an appeal to this Court of the decision which was adverse and prejudicial to his client.

Thus, the Court of Appeals decision became final. On December 8, 1989, counsel for New Cathay House,
Inc. sent petitioner through the Coronel Law Office, a letter demanding that she vacate the property
within three days from receipt thereof. Atty. Coronel did not inform petitioner of this develop-ment
until sometime in March, 1990. Due to petitioner's persist-ent telephone calls, Atty. Coronel's secretary
informed her of the fact that New Cathay House, Inc. had demanded her eviction from the property.
Consequently, petitioner had no recourse but to oblige and vacate the property.[3]

On August 7, 1990, Victoria Legarda, represented by a new counsel,[4] filed before this Court a petition
for certiorari under Rule 65 contending that the decisions of the courts below "are null and void as
22

petitioner was deprived of her day in court and divested of her property without due process of law
through the gross, pervasive and malicious negligence of previous counsel, Atty. Antonio Coronel."[5]
Page
In its decision of March 18, 1991, this Court declared as null and void the decisions of March 25, 1985
And November 29, 1989 of the Regional Trial Court of Quezon City and the Court of Appeals,
respectively, as well as the sheriff's certificate of sale dated June 27, 1985 of the property involved and
the subse-quent final deed of sale covering the same. The Court further directed private respondent
New Cathay House, Inc. to reconvey the property to the petitioner and the Register of Deeds to cancel
the registration of said property in the name of said private respondent and to issue a new one in the
name of the petitioner.

The same decision required the former counsel of petitioner, Atty. Antonio Coronel, to show cause
within ten (10) days from notice why he should not be held administatively liable for his acts and
omissions which resulted in grave injustice to the petitioner. Said counsel having been inadvertently
omitted in the service of copies of said decision,[6] on February 11, 1992, the Clerk of Court of this
Division to which this case was transferred, sent Atty. Coronel a copy thereof which he received on
February 12, 1992.[7]

On the tenth day from his receipt of said copy, Atty. Coronel filed an urgent ex-parte motion for an
extension of thirty (30) days from February 22, 1992 within which to file his explanation. He alleged as
reason for the motion pressure of work "consisting of daily hearings in several forums and preparations
of pleadings in equally urgent cases, such as the more than 80 civil and criminal cases against the
Marcoses."[8]

The Court, in its resolution of March 9, 1992, granted said motion for extension with warning that no
further extension will be given. Atty. Coronel received a copy of said resolution on March 27, 1992 but it
appears that on March 24, 1992,[9] a day after the expiration of the 30-day extended period prayed for
in his first motion for extension, he had mailed another urgent motion for a second extension of thirty
(30) days within which to submit his explanation on the ground that since March 2, 1992, he had been
"treated and confined at the St. Luke's Hospital." Attached to the motion is a medical certificate stating
that Atty. Coronel had "ischemic cardiomyopathy, diabetes mellitus, congestive heart failure class IV and
brain infarction, thrombotic."[10]

While off-hand, the reasons cited in the second motion for reconsideration seem to warrant another
extension, the fact that it was filed one day late, coupled with the circumstances of this case do not call
for a reconsideration of the resolution of March 9, 1992. Hence, the second motion for extension must
be denied. Lawyers should not presume that their motions for exten-sion of time will always be granted
by the Court. The granting or denial of motions for extension of time is addressed to the sound
discretion of the Court with a view to attaining substantial justice.[11]

It should be emphasized that the show-cause resolution was addressed to Atty. Coronel not in his
capacity as a lawyer of a litigant in this Court. It was addressed to him in his personal capacity as a
lawyer subject to the disciplinary powers of this Court. That he failed to immediately heed the directive
of the decision of March 18, 1991 to show cause, notwithstanding the grant of a 30-day extension for
him to do so, reflects an unbe-coming disrespect towards this Court's orders. We cannot counte-nance
such disrespect. As a lawyer, Atty. Coronel is expected to recognize the authority of this Court and obey
its lawful processes and orders.[12]
23

Hence, the Court considers his failure to show cause, notwithstanding reasonable notice therefor, as a
waiver of his rights to be heard and to due process, thereby warranting an ex parte determination of the
Page

matter for which he had been required to explain.[13]

The facts of the case clearly show that Atty. Coronel vio-lated Canon 18 of the Code of Professional
Responsibility which mandates that "a lawyer shall serve his client with competence and diligence." He
failed to observe particularly Rule 18.03 of the same Code which requires that "a lawyer shall not
neglect a legal matter entrusted to him, and his negligence in connection therewith shall render him
liable."

Indeed, petitioner could not have gone through the travails attending the disposition of the case against
her not to mention the devastating consequence on her property rights had Dean Coronel exercised
even the ordinary diligence of a member of the Bar. By neglecting to file the answer to the complaint
against petitioner, he set off the events which resulted in the depriva-tion of petitioner's rights over her
house and lot. In this regard, worth quoting is the observation of Justice Emilio A. Gancayco in his
ponencia of March 18, 1991:

"Petitioner's counsel is a well-known practicing lawyer and dean of a law school. It is to be expected that
he would extend the highest quality of service as a lawyer to the petitioner. Unfortunately, counsel
appears to have abandoned the cause of petitioner. After agreeing to defend the petitioner in the civil
case filed against her by private respondent, said counsel did nothing more than enter his appearance
and seek for an extension of time to file the answer. Nevertheless, he failed to file the answer. Hence,
petitioner was declared in default on the motion of private respondent's counsel. x x x."
This is not the only case wherein, in dealing with this Court's orders, Atty. Coronel appears to exhibit a
pattern of negligence, inattention to his obligations as counsel, sloppiness and superciliousness. In G.R.
No. 97418, "Imelda R. Marcos, et al. v. PCGG, et al.," the Court en banc, in its Resolution of May 28,
1992, imposed upon Atty. Coronel a fine of Five Hundred Pesos (P500.00) after he was found guilty of
inexcusable negli-gence in his failure to comply with this Court's resolutions. The Court said:

"We find the explanation for his failure to comply with the Resolutions of 4 June 1991 and 27 August
1991 unsatisfactory. Atty. Coronel had obviously taken this Court for granted. Although he received a
copy of the 4 June 1991 Resolution on 4 July 1991, he nonchalantly let the 10-day period pass and even
deliberately chose to remain silent about it even after he received a copy of the Resolution of 27 August
1991. It was only on the last day of the period granted to, him under said Resolu-tion that he showed
initial efforts to comply with the Resolution by filing a motion for a 20-day extension from 30 September
1991 to file the Reply. This was a self-imposed period and, therefore, he was expected to faithfully
comply with it not only because of the re-spect due this Court, but also because he had put his honor
and virtues of candor and good faith on the line. For reasons only known to him, he did not. Worse,
de-spite his receipt on 27 November 1991 of the Resolution of 5 November 1991 which granted his 30
September 1991 motion, Atty. Coronel did not even move for a new period within which to comply with
the Resolutions of 4 June 1991 and 27 August 1991. This Court had to issue the Resolution of 30 January
1992 to compel compliance. When he finally did, he committed, allegedly through inad-vertence, the
blunder of placing his Reply under a wrong caption.
"For deliberately failing, if not stubbornly refusing, to comply with the Resolutions of 4 June 1991 and 27
August 1991 and meet his self-imposed deadline, Atty. Coronel was both unfair and disrespectful to this
Court. Furthermore, he has unduly delayed the disposi-tion of the pending incidents in this case."
(Underscor-ing supplied.)
Undoubtedly, in the case at hand, Atty. Coronel's failure to exercise due diligence in protecting and
24

attending to the interest of his client caused the latter material prejudice.[14] It should be remembered
that the moment a lawyer takes a client's cause, he covenants that he will exert all effort for its
Page

prose-cution until its final conclusion. A lawyer who fails to exercise due diligence or abandons his
client's cause makes him unworthy of the trust reposed on him by the latter.[15] Moreover, a lawyer
owes fealty, not only to his client, but also to the Court of which he is an officer. Atty. Coronel failed to
obey this Court's order even on a matter that personally affects him, such that one cannot avoid the
conclusion that he must be bent on professional self-destruction. Be that as it may, Atty. Coronel cannot
escape this Court's disciplinary action for gross negligence which resulted in depriving petitioner of her
property rights, for, as this Court enunciated in the aforecited Cantiller v. Potenciano case:

"Lawyers are indispensable part of the whole system of administering justice in this jurisdiction. At a
time when strong and disturbing criticisms are being hurled at the legal profession, strict compliance
with one's oath of office and the canons of professional ethics is an imperative.
"Lawyers should be fair, honest, respectable, above suspicion and beyond reproach in dealing with their
clients. The profession is not synonymous with an ordinary business proposition. It is a matter of public
interest."
WHEREFORE, the second motion for an extension of time to file explanation is hereby DENIED. Atty.
Antonio P. Coronel is hereby found GUILTY of gross negligence in the defense of peti-tioner Victoria
Legarda in Civil Case No. Q-43811 and accordingly SUSPENDED from the practice of law for a period of
six (6) months effective from the date of his receipt of this resolution. A repetition of the acts
constituting gross negligence shall be dealt with more severely.

3. Gabutan vs Nacalaban, GR 185857-58, June 29, 2016

Before us are consolidated petitions questioning the Court of Appeals' (CA) Decision1 dated December
11, 2008 and Resolution2 dated August 17, 2010 in CA-G.R. CV No. 68960-MIN and CA-G.R. SP No.
53598-MlN.3 In G.R. Nos. 185857-58, the heirs of Trifonia D. Gabutan and Tirso Dalondonan, Buna D.
Actub, Felisia Trocio and Crisanta D. Ubaub (Gabutan, et al.) filed a partial appeal by way of a petition for
review on certiorari, 4 seeking to reverse the portion of the CA Decision declaring Cagayan Capital
College (the College) as a buyer in good faith. The other petition, G .R. Nos. 194 314-] 5, is one for
certiorari5filed by Dante D. Nacalaban, Helen N. Maandig, and Susan N. Siao as heirs of Baldomera D.
Vda. De Nacalaban (Nacalaban, et al.). It seeks to annul the CA Decision and Resolution which sustained
the action for reconveyance filed by Gabutan, et al.

The Antecedents

On January 25, 1957, Godofredo Nacalaban (Godofredo) purchased an 800-square meter parcel of
prime land (property) in Poblacion, Cagayan de Oro City from Petra, F ortunata, Francisco and Dolores,
all surnamed Daamo.6 Pursuant to the sale, Transfer Certificate of Title (TCT) No. T-2259 7 covering the
property was issued in the name of Godofredo. He thereafter built a house on it.8

Godofredo died on January 7, 1974.9 He was survived by his wife, Baldomera, and their children, Dante,
Helen, and Susan. On March 19, 1979, Baldomera issued a Certification 10 in favor of her mother,
Melecia. It provided, in effect, that Baldomera was allowing her mother to build and occupy a house on
the portion of the property. 11 Accordingly, the house was declared for taxation purposes. The tax
declaration 12 presented in evidence showed that Melecia owned the building on the land owned by
25

Godofredo. 13
Page
Baldomera died on September 11, 1994. 14 On July 3, 1996, her children executed an Extrajudicial
Settlement of Estate of Deceased Person with Sale15 (Extrajudicial Settlement with Sale) where they
adjudicated unto themselves the property and sold it to the College. On August 22, 1996, TCT No. T-
2259 was cancelled and TCT No. T-111846 16 covering the property was issued in the name of the
College. 17

Melecia died on April 20, 199718 and was survived by her children, Trifonia, Buna, Felisia, Crisanta, and
Tirso.

In a letter 19 dated May 5, 1997, the College demanded Trifonia D. Gabutan, Mary Jane Gilig, Allan
Ubaub, and Evelyn Dailo, the heirs of Melecia who were occupying the house on the property, to vacate
the premises. 20

On July 7, 1997, Gabutan, et al. filed a Complaint for Reconveyance of Real Property, Declaration of
Nullity of Contracts, Partition and Damages with Writ of Preliminary Attachment and Injunction21
against Nacalaban, et al. and the College. They alleged that: (1) Melecia bought the property using her
own money but Godofredo had the Deed of Absolute Sale executed in his name instead of his mother-
in-law;22 (2) Godofredo and Baldomera were only trustees of the property in favor of the real owner
and beneficiary, Melecia;23 (3) they only knew about the Extrajudicial Settlement with Sale upon
verification with the Registry of Deeds;24 and (4) the College was a buyer in bad faith, being aware they
were co-owners of the property. 25

In its Answer with Affirmative Defenses,26 the College claimed that it is a buyer in good faith and for
value, having "made exhaustive investigations and verifications from all reliable sources" that Melecia
and her heirs were staying in the property by mere tolerance. 27 It alleged that: (l) in the tax
declaration28 of the residential house, Melecia admitted that the lot owner is Godofredo;29 (2) the
occupancy permit of Melecia was issued only after Godofredo issued a certification30 to the effect that
Melecia was allowed to occupy a portion of the property;31 and (3) the Extrajudicial Settlement with
Sale was published in three consecutive issues of Mindanao Post, a newspaper of general circulation.32

In their Answer with Counterclaim, 33 Nacalaban, et al. denied the allegations of Gabutan, et al. They
claimed to have acquired the property by intestate succession from their parents, who in their lifetime,
exercised unequivocal and absolute ownership over the property.34 Nacalaban, et al. also set up the
defenses of laches and prescription, and asserted that the action for reconveyance was improper
because the property had already been sold to an innocent purchaser for value.35

On September 10, 1997, the College filed a separate Complaint for Unlawful Detainer and Damages36
with the Municipal Trial Court in Cities (MTCC) against Trifonia, Mary Jane, Allan, Evelyn and Nicolas
Dailo (Heirs of Melecia). In their Answer with Affirmative and/or Negative Defenses with Compulsory
Counterclaim, 37 the Heirs of Melecia claimed that they own and possess the property in co-ownership
with Nacalaban, et al. and Gabutan, et al. because it was purchased by Melecia, their common
predecessor. 38 They also claimed that the house in which they reside was constructed at her
expense.39 The College had prior knowledge of this co-ownership, and hence, was a purchaser in bad
faith. 40 The Heirs of Melecia also raised the defense of forum-shopping in view of the pendency of the
action for reconveyance. 41 They then concluded that in view of the issues and the value of the
26

property, as well, the MTCC had no jurisdiction over the case.42

Page

The MTCC found it had jurisdiction to hear the case and ruled in favor of the College:43
WHEREFORE, JUDGMENT is hereby rendered ordering each of the defendants to:

a.) Immediately vacate the property of the plaintiff;

b.) Pay the plaintiff the monthly use compensation for the continued use of the property at the rate of
P500.00 per month from MAY 5, 1997 until the property is actually vacated;

c.) Pay the plaintiff Attorney's fees amounting to P5,000.00 per defendant;

d.) Pay for litigation expenses at the rate of P1,000.00 per defendant.

SO ORDERED.44

On appeal, the Regional Trial Court (RTC) affirmed the MTCC's Decision46 in all respects, except that the
Heirs of Melecia were given 30 days from notice to vacate the property.47 They filed a motion for
reconsideration, but it was denied.49 Thus, the Heirs of Melecia filed a petition for review50 before the
CA, docketed as CA-G.R. SP No. 53598.51

Meanwhile, in the reconveyance case, the RTC rendered a Decision52 in favor of Gabutan, et al. The RTC
found the testimonies of their witnesses credible, in that the money of Melecia was used in buying the
property but the name of Godofredo was used when the title was obtained because Godofredo lived in
Cagayan de Oro City while Melecia lived in Bornay, Gitagum, Misamis Oriental.53 Thus, the RTC held
that a trust was established by operation of law pursuant to Article 1448 of the Civil Code.54 The
dispositive portion of the RTC's Decision reads:

WHEREFORE, judgment is hereby rendered, and this Court hereby:

1. Declares that the Spouses Godofredo and Baldomera Nacalaban held the land covered by Transfer
Certificate of Title No. T-2259 issued in the name of Godofredo Nacalaban married to Baldomera
Dalondonan issued on January 13, 1959 in trust for Melecia V da. de Dalondonan with the Spouses as
the trustees and Melecia V da. de Dalondonan as the cestui que trust;

2. Declares that upon the death of Melecia V da. de Dalondonan on August 20, 1997, the ownership and
beneficial interest of the foregoing Land passed to the plaintiffs and individual defendants by operation
of law as legal heirs of Melecia V da. de Dalondonan;

3. Nullifies the Extrajudicial Settlement of Estate of Deceased Person with Sale executed by the
individual defendants on July 30, 1996 and known as Doc. No. 326; Page No. 67; Book No. XX; Series of
1996 in the Notarial Register of Notary Public Victoriano M. Jacot with respect to the Extrajudicial
settlement by the individual defendants of the land referred to above;

4. Declares that defendant Cagayan Capitol College was a buyer in good faith and for value of the land
referred to above, and, accordingly, declares that said defendant now owns the land;
27

5. Orders defendant Cagayan Capitol College to inform this Court in writing within thirty (30) days from
receipt of this decision the amount of the purchase price of the land referred to above bought by it from
Page
the individual defendants the amount of which should approximate the prevailing market value of the
land at the time of the purchase;

6. Orders the individual defendants namely, Dante D. Nacalaban, Helen N. Maandig, and Susan N. Siao,
jointly and severally, to deliver and turn over to the plaintiffs, within thirty (30) days from receipt of this
decision, plaintiffs' shares of the proceeds of the sale of the land referred to above the amount of which
is equivalent to five-sixth (5/6) of said proceeds with the remaining one-sixth (1/6) to be retained by the
individual defendants as their share by virtue of their being the legal heirs of Baldomera D. Nacalaban;

SO ORDERED.55

Both parties filed separate appeals from this Decision before the CA. 57 In a Resolution58 dated October
7, 2004, the CA consolidated both appeals.

The CA rendered its Decision59 on December 11, 2008 dismissing the consolidated appeals and
affirming in toto the RTC Decisions in the unlawful detainer case and the action for reconveyance. The
CA held that: (1) the defense of co-ownership based on an implied trust by a defendant in an unlawful
detainer case shall not divest the MTCC of jurisdiction over the case;60 (2) the dead man's statute does
not apply because Gabutan, et al.'s counsel did not interpose any objection when the testimony of
Crisanta Ubaub was offered and Gabutan, et al.'s counsel even examined her;61 (3) Nacalaban, et al.'s
claim that Gabutan, et al.'s witnesses are not competent to testify on matters which took place before
the death of Godofredo and Melecia is without merit because Gabutan, et al. have not specified these
witnesses and such hearsay evidence alluded to;62 (4) the parole evidence rule does not apply because
Melecia and Nacalaban, et al. were not parties to the Deed of Conditional Sale;63 (5) the action for
reconveyance has not yet prescribed because Gabutan, et al. are in possession of the property;64 and
(6) the College is a buyer in good faith. 65

Nacalaban, et al. filed their motion for reconsideration of the CA Decision, but it was denied in a
Resolution 66 dated August 1 7, 2010. Hence, they filed the present petition for certiorari67under Rule
65, where they allege that: (1) the action for reconveyance already expired;68 (2) for an action for
reconveyance to prosper, the property should not have passed into the hands of another who bought
the property in good faith and for value;69 and (3) the title of Godofredo under TCT No. T-2259 which
was issued on January 13, 1959 could not be attacked collaterally.70

On the other hand, Gabutan, et al. filed the present petition for review on certiorari71under Rule 45,
seeking a partial appeal of the CA Decision. In their petition, Gabutan, et al. allege that the College is not
a buyer in good faith because it did not buy the property from the registered owner. 72 Since Godofredo
was the registered owner of the property and not Nacalaban, et al., the College should have exercised a
higher degree of prudence in establishing their capacity to sell it. 73 Further, despite knowing that other
persons possessed the property, the College did not inquire with Gabutan, et al. the nature of their stay
on the property.74 Under Section 1, paragraph 2, Rule 7 4 of the Rules of Court, the publication of the
Extrajudicial Settlement with Sale was also without prejudice to claims of other persons who had no
notice or participation thereof. 75 Finally, Gabutan, et al. argue that they cannot be ejected from the
property because there is no evidence to show that their stay was by mere tolerance, and that Melecia
was a builder in good faith. 76
28

Considering that the petitions assail the same CA Decision and involve the same parties, we issued a
Page

Resolution77 dated December 13, 2010 consolidating them.

The Issues

The issues for resolution are:

1. Whether the petition for certiorari of Nacalaban, et al. shall prosper;

2. Whether the action for reconveyance was proper; and

3. Whether the College is a buyer in good faith.

Our Ruling

I. The petition for certiorari of

Nacalaban, et al. is a wrong
remedy

Pursuant to Section 1, Rule 45 of the Rules of Court,78 the proper remedy to obtain a reversal of
judgment on the merits, final order or resolution is an appeal. The Resolution dated August 17, 2010 of
the CA, which affirmed its Decision dated December 11, 2008, was a final resolution that disposed of the
appeal by Nacalaban, et al. and left nothing more to be done by the CA in respect to the said case. Thus,
Nacalaban, et al. should have filed an appeal in the form of a petition for review on certiorari and not a
petition for certiorari under Rule 65, which is a special civil action.

Rule 65 is a limited form of review and is a remedy of last recourse. This extraordinary action lies only
where there is no appeal nor plain, speedy and adequate remedy in the ordinary course of law. 79 In
Malayang Manggagawa ng Stayfast Phils., Inc. v. National Labor Relations Comission, 80 we held that
appeal would still be the proper remedy from a judgment on the merits, final order or resolution even if
the error ascribed to the court rendering the judgment is its lack of jurisdiction over the subject matter,
or the exercise of power in excess thereof, or grave abuse of discretion in the findings of fact or of law
set out in the decision, order or resolution. The existence and availability of the right of appeal prohibits
the resort to certiorari because one of the requirements for the latter remedy is that there should be no
appeal. 81 We have always declared that a petition for certiorari is not a substitute for an appeal where
the latter remedy is available but was lost through fault or negligence. 82

Here, Nacalaban, et al. received the assailed Resolution dated August 17, 2010 on September 7, 2010.83
Under the Rules of Court, they had 15 days or until September 22, 2010 to file an appeal before us.
Nacalaban, et al. allowed this period to lapse without doing so and, instead, filed a petition for certiorari
on November 5, 2010. 84 Being the wrong remedy, the petition of Nacalaban, et al. is, therefore,
dismissible. Although there are exceptions85 to this general rule, none applies in this case.

In spite of the consolidation we have ordered, we cannot treat the petition of Nacalaban, et al. as one
under Rule 45. We have the discretion to treat a Rule 65 petition for certiorari as a Rule 45 petition for
review on certiorari if (1) the petition is filed within the reglementary period for filing a petition for
29

review; (2) when errors of judgment are averred; and (3) when there is sufficient reason to justify the
relaxation of the rules. 86 The first and third requisites are absent in this case. To reiterate, the petition
Page
was filed beyond the 15-day reglementary period of filing a petition for review on certiorari. As will be
discussed, we also find no compelling reason to relax the rules.

II. The action for reconveyance filed by Gabutan, et al. is proper

a. An implied resulting trust was created

between Melecia and Godofredo

We stress at the outset that the question of existence of an implied trust is factual, hence, ordinarily
outside the purview of Rule 45. 87 The resolution of factual issues is the function of the lower courts
whose findings, when aptly supported by evidence, bind us. This is especially true when the CA affirms
the lower court's findings, as in this case. While we, under established exceptional circumstances, had
deviated from this rule, we do not find this case to be under any of the exceptions. 88 Even if we were
to disregard these established doctrinal rules, we would still affirm the assailed CA rulings.

Article 1448 of the Civil Code provides in part that there is an implied trust when property is sold, and
the legal estate is granted to one party but the price is paid by another for the purpose of having the
beneficial interest of the property. The former is the trustee, while the latter is the beneficiary. The trust
created here, which is also referred to as a purchase money resulting trust, 89 occurs when there is (l)
an actual payment of money, property or services, or an equivalent, constituting valuable consideration;
(2) and such consideration must be furnished by the alleged beneficiary of a resulting trust.90 These two
elements are present here.

Gabutan, et al., through the testimonies of Felisia, Crisanta, and Trifonia, established that Melecia's
money was used in buying the property, but its title was placed in Godofredo's name. She purchased the
property because Felisia wanted to build a pharmacy on it.91 On one occasion in Melecia' s house, and
when the entire family was present, Melecia gave Godofredo the money to purchase the property.92
Melecia entrusted the money to Godofredo because he was in Cagayan de Oro, and per Melecia' s
instruction, the deed of sale covering the property was placed in his name. 93 It was allegedly her
practice to buy properties and place them in her children's name, but it was understood that she and
her children co-own the properties. 94

Melecia built a residential building on the property, where her daughter Crisanta and some of her
grandchildren resided. 95 Godofredo also thereafter built a house on the property. Twice, he also
mortgaged the property to secure loans. Melecia allowed him to do so because she trusted him. 96
After Godofredo' s death, and when Baldomera fell ill, there were family discussions to transfer the title
in Melecia's name so Melecia's children can divide it together with the rest of Melecia's properties. The
plans, however, always fell through.97

Both the RTC and CA found credence on these pieces of testimonial evidence that an implied resulting
trust exists. Reliance on these testimonies will not violate the parol evidence rule, as Nacalaban, et al.
once raised. In Tong v. Go Tiat Kun,98we ruled that since an implied trust is neither dependent upon an
express agreement nor required to be evidenced by writing, Article 1457 of our Civil Code authorizes the
admission of parol evidence to prove their existence. What is crucial is the intention to create a trust.99
We cautioned, however, that the parol evidence that is required to establish the existence of an implied
30

trust necessarily has to be trustworthy and it cannot rest on loose, equivocal or indefinite declarations.
100 The testimonies of Felisia, Crisanta, and Trifonia satisfy these requirements. They are consistent and
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agree in all material points in reference to the circumstances behind the arrangement between Melecia
and Godofredo. We agree with the RTC when it said that this arrangement among family members is not
unusual, especially in the 1950s. 101

Nacalaban, et al., on the other hand, denied the arrangement between Melecia and Godofredo, and
maintained that it was really the latter who purchased the property from its original owners, as
evidenced by their possession of the Deed of Conditional Sale and the title being in Godofredo's name.
102 It is telling, however, that Nacalaban, et al. failed to provide the details of the sale, specifically with
regard to how Godofredo could have been able to afford the purchase price himself, which would have
directly refuted the allegation that Melecia's money was used in the purchase. As the RTC aptly
observed, if Godofredo really bought the property with his own money, it was surprising that Baldomera
did not transfer the title of the property to her name when Godofredo died in 1974. Baldomera did not
do so until her death in 1994 despite being pressed by her siblings to partition the property. The RTC
correctly deduced that this only meant that Baldomera acknowledged that the property belongs to
Melecia. 103

Having established the creation of an implied resulting trust, the action for reconveyance filed by
Gabutan, et al., the heirs of Melecia in whose benefit the trust was created, is proper. An action for
reconveyance is a legal and equitable remedy granted to the rightful landowner, whose land was
wrongfully or erroneously registered in the name of another, to compel the registered owner to transfer
or reconvey the land to him. 104 It will not amount to a collateral attack on the title, contrary to the
allegation of Nacalaban, et al. 105We explained in Hortizuela v. Tagufa: 106

x x x As a matter of fact, an action for reconveyance is a recognized remedy, an action in personam,

available to a person whose property has been wrongfully registered under the Torrens system in
another's name. In an action for reconveyance, the decree is not sought to be set aside. It does not seek
to set aside the decree but, respecting it as incontrovertible and no longer open to review, seeks to
transfer or reconvey the land from the registered owner to the rightful owner. Reconveyance is always
available as long as the property has not passed to an innocent third person for value.

There is no quibble that a certificate of title, like in the case at bench, can only be questioned through a
direct proceeding. The MCTC and the CA, however, failed to take into account that in a complaint for
reconveyance, the decree of registration is respected as incontrovertible and is not being questioned.
What is being sought is the transfer of the property wrongfully or erroneously registered in another's
name to its rightful owner or to the one with a better right. If the registration of the land is fraudulent,
the person in whose name the land is registered holds it as a mere trustee, and the real owner is
entitled to file an action for reconveyance of the property. 107

The fact that the property was already titled in Godofredo's name, and later transferred to the College,
is not a hindrance to an action for reconveyance based on an implied trust. The title did not operate to
vest ownership upon the property in favor of the College. As held in Naval v. 108

x x x Registration of a piece of land under the Torrens System does not create or vest title, because it is
not a mode of acquiring ownership. A certificate of title is merely an evidence of ownership or title over
the particular property described therein. It cannot be used to protect a usurper from the true owner;
nor can it be used as a shield for the commission of fraud; neither does it permit one to enrich himself at
31

the expense of others. Its issuance in favor of a particular person does not foreclose the possibility that
the real property may be co-owned with persons not named in the certificate, or that it may be held in
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trust for another.109

Moreover, the body of the Complaint filed by Gabutan, et al. shows that it is not only for the
reconveyance of the property but also for the annulment of TCT No. T-111846 issued in the name of the
College. 110 Gabutan, et al. questioned the validity of the sale to the College and claimed co-ownership
over the property. Thus, we can rule on the validity of TCT No. T-111846 since the Complaint is a direct
attack on the title of the College.

b. The action for reconveyance is

imprescriptible because the
plaintiffs are in possession of
the property

An action for reconveyance based on an implied or a constructive trust prescribes 10 years from the
alleged fraudulent registration or date of issuance of the certificate of title over the property. However,
an action for reconveyance based on implied or constructive trust is imprescriptible if the plaintiff or the
person enforcing the trust is in possession of the property. In effect, the action for reconveyance is an
action to quiet the property title, which does not prescribe. 111 The reason is that the one who is in
actual possession of the land claiming to be its owner may wait until his possession is disturbed or his
title is attacked before taking steps to vindicate his right. 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. 112

The fact of actual possession of Gabutan, et al. of the property, during the lifetime of Melecia and even
after her death, is an undisputed and established fact. The College has even filed an ejectment case
against the Heirs of Melecia for this reason. 113 Thus, their complaint for reconveyance is
imprescriptible. It follows, with more reason, that Gabutan, et al. cannot be held guilty of !aches as the
said doctrine, which is one in equity, cannot be set up to resist the enforcement of an imprescriptible
legal right. 114

III. The property shall be

reconveyed to the estate of
Melecia

a. The Extrajudicial Settlement with Sale

executed between Nacalaban, et al.
and the College is void

Having established the creation of an implied resulting trust between Melecia and Godofredo, the law
thereby creates the obligation of the trustee to reconvey the property and its title in favor of the true
owner. 115 The true owner, Melecia, died in 1997 and was succeeded by her children and
grandchildren. The property, therefore, must be reconveyed to her estate.

The execution of the Extrajudicial Settlement with Sale between Godofredo's heirs and the College will
not defeat the legal obligation to reconvey the property because at the time of its execution in 1996,
32

Melecia was still alive. Hence, Nacalaban, et al. did not have the right or authority to sell the property.
Nemo dat quad non habet. One can sell only what one owns or is authorized to sell, and the buyer can
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acquire no more right than what the seller can transfer legally. 116 Nacalaban, et al. cannot find refuge
in their argument that the property was registered in their father's name and that after his death, his
rights passed to them as his legal heirs. To repeat, title to property does not vest ownership but is a
mere proof that such property has been registered. 117

b. The College is a buyer in bad

faith

Despite the finding that the property was owned by Melecia and upon her death, by her heirs, the lower
courts still sustained the ownership of the College of the property on the ground that it is an innocent
purchaser for value. 118 The lower courts' findings are grounded on the following: (i) Gabutan, et al.'s
claim was never annotated on Godofredo's title; (ii) the Extrajudicial Settlement with Sale was duly
published and the College was able to effect the transfer of the title in its name; (iii) Baldomera issued a
certification in favor of Melecia allowing her to occupy a portion of the lot; and (iv) the tax declaration
showed that Melecia owned only the building on the land owned by Godofredo. 119

The RTC reiterated the rule that the buyer of a land registered under the Torrens System may rely upon
the face of the certificate of title and does not have to look beyond it. 120 The CA, on the other hand,
held that when taken together, these facts would reasonably constitute enough reason for the College
or any buyer to conclude that the property is free from any adverse claim, thereby making any further
investigation unnecessary. Absent any showing that the College knew of the actual arrangement
between Godofredo and Melecia, it must be deemed a buyer in good faith. 121

Gabutan, et al. alleged that the lower courts erred in ruling that the College is a buyer in good faith,
raising the following: (1) Nacalaban, et al. are not the registered owners of the property; Godofredo is
the registered owner who died on January 7, 1974; 122 (2) not being the registered owners, the College,
as buyer, is expected to examine not only the certificate of title but all factual circumstances necessary
for him to determine if there are any flaws in the title of the transferor, or in his capacity to transfer the
property; 123 and (3) the College knew that other persons possessed the property so it should have first
established the capacity of the Nacalaban children to sell the property. 124

Whether one is a buyer in good faith and whether due diligence and prudence were exercised are
questions of fact. 125 As we have already mentioned, only questions of law may be raised in a petition
for review on certiorari under Rule 45 of the Rules of Court. We see an exception, however, to this
general rule relative to the finding that the College is a buyer in good faith. We hold that the RTC's
finding that the College is a buyer in good faith, which finding was upheld by the CA, was based on an
obvious misapprehension of facts and was clearly not supported by law and jurisprudence.

In Bautista v. Silva,126 we reiterated the requisites for one to be considered a purchaser in good faith:

A buyer for value in good faith is one who buys property of another, without notice that some other
person has a right to, or interest in, such property and pays full and fair price for the same, at the time
of such purchase, or before he has notice of the claim or interest of some other persons in the property.
He buys the property with the well-founded belief that the person from whom he receives the thing had
title to the property and capacity to convey it.
33

To prove good faith, a buyer of registered and titled land need only show that he relied on the face of
the title to the property. He need not prove that he made further inquiry for he is not obliged to explore
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beyond the four comers of the title. Such degree of proof of good faith, however, is sufficient only when
the following conditions concur: first, the seller is the registered owner of the land; second, the latter is
in possession thereof; and third, at the time of the sale, the buyer was not aware of any claim or interest
of some other person in the property, or of any defect or restriction in the title of the seller or in his
capacity to convey title to the property.

Absent one or two of the foregoing conditions, then the law itself puts the buyer on notice and obliges
the latter to exercise a higher degree of diligence by scrutinizing the certificate of title and examining all
factual circumstances in order to determine the seller's title and capacity to transfer any interest in the
property. Under such circumstance, it is no longer sufficient for said buyer to merely show that he relied
on the face of the title; he must now also show that he exercised reasonable precaution by inquiring
beyond the title. Failure to exercise such degree of precaution makes him a buyer in bad faith. 127
(Emphasis supplied.)

Thus, the College, which has the burden to prove the status of being a purchaser in good faith, is
required to prove the concurrence of the above conditions. This onus probandi cannot be discharged by
mere invocation of the legal presumption of good faith. 128 We find that the College failed to discharge
this burden.

Firstly, as correctly pointed out by Gabutan, et al., Nacalaban, et al. are not the registered owners of the
property, but Godofredo. In Bautista v. 129 Court of Appeals, we held:

However, it is important to note that petitioners did not buy the land from the registered owner,
Dionisio Santiago. They bought it from his heirs, Maria dela Cruz and Jose Santiago.

Where a purchaser buys from one who is not the registered owner himself: the law requires a higher
degree of prudence even if the land object of the transaction is registered. One who buys from one who
is not the registered owner is expected to examine not only the certificate of title but all factual
circumstances necessary for him to determine if there are any flaws in the title of the transferor, or in
his capacity to transfer the land. 130

Secondly, the College was aware that aside from Nacalaban, et al., the Heirs of Melecia, were also in
possession of the property. The College cited the tax declaration which bore an annotation that Melecia
owned a residential building and Godofredo owned the lot. 131 Also, apart from filing an ejectment case
against the Heirs of Melecia, the College retained part of the purchase price for the demolition of
Melecia's building as well. 132

In Occea v. Esponilla, 133 we held that petitioner-spouses were not purchasers in good faith when they
merely relied on the representation of the seller regarding the nature of possession of the occupants of
the land:

In the case at bar, we find that petitioner-spouses failed to prove good faith in their purchase and
registration of the land. x x x At the trial, Tomas Occea admitted that he found houses built on the land
during its ocular inspection prior to his purchase. He relied on the representation of vendor Arnold that
these houses were owned by squatters and that he was merely tolerating their presence on the land.
Tomas should have verified from the occupants of the land the nature and authority of their possession
34

instead of merely relying on the representation of the vendor that they were squatters, having seen for
himself that the land was occupied by persons other than the vendor who was not in possession of the
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land at that time. x x x 134 (Emphasis supplied.)

Although the College in its Answer alleged that it made an exhaustive investigation and verification from
all reliable sources and found that the possession of Melecia and her heirs was merely tolerated, 135 it
failed to specify who or what these sources were. There is no evidence that the College did inquire from
Melecia or her heirs themselves, who were occupying the property, the nature and authority of their
possession. It is not far-fetched to conclude, therefore, that the College merely relied on the
representations of the sellers and the documents they presented. In this regard, the College is not a
buyer in good faith.

The "honesty of intention" which constitutes good faith implies a freedom from knowledge of
circumstances which ought to put a person on inquiry. 136 If the land purchased is in the possession of a
person other than the vendor, the purchaser must be wary and must investigate the rights of the actual
possessor. 137 Without such inquiry, the purchaser cannot be said to be in good faith and cannot have
any right over the property. 138

We are aware that in the ejectment case, the MTCC and RTC ruled in favor of the College.1wphi1 We
emphasize, though, that the ruling on the College's better right of possession was without prejudice to
the eventual outcome of the reconveyance case where the issue of ownership was fully threshed out.
We have held that the sole issue for resolution in an unlawful detainer case is physical or material
possession of the property involved, independent of any claim of ownership by any of the parties. When
the defendant, however, raises the defense of ownership in his pleadings and the question of possession
cannot be resolved without deciding the issue of ownership, the issue of ownership shall be resolved
only to determine the issue of possession. 139 Thus, the ruling on the ejectment case is not conclusive
as to the issue of ownership. 140

WHEREFORE, in view of the foregoing, the petition for certiorari in G.R. Nos. 194314-14 is DENIED and
the petition for review on certiorari in G.R. Nos. 185857-58 is GRANTED. The Decision of the Court of
Appeals dated December 11, 2008 and its Resolution dated August 17, 2010 are AFFIRMED with the
following MODIFICATIONS:

1. Cagayan Capitol College is hereby declared a buyer in bad faith, who has no right to possession and
ownership of the property;

2. Nacalaban, et al. are ordered to return the purchase price paid on the property to the College, plus
interest at the rate of six percent (6%) per annum computed from July 23, 1997 141 until the date of
finality of this judgment. The total amount shall thereafter earn interest at the rate of six percent (6%)
per annum from the finality of judgment until its satisfaction; 142 and

3. The Register of Deeds is ordered to cancel TCT No. T-111846 in the name of the College.

4. The property should be reconveyed to the Estate of the late Melecia Dalondonan with the institution
of the proper proceedings for its partition and titling.

4. Cusi vs Domingo, GR 195825, Feb. 27, 2013

35
Page

Facts:
Respondent Lilia V. Domingo was the owner of the lot in dispute covered under Transfer Certificate of
Title (TCT) No. N-165606.On July 18, 1997, without her consent, RadeliaSy (Sy) petitioned before the RTC
for reissuance of new owners copy and, as proof, presented a deed of sale dated July 14, 1997 executed
by Domingo in her favor, and an affidavit of loss dated July 17, 1997, stating that her bag containing the
owners copy of TCT No. N-165606 had been snatched while she was at the SM City, North EDSA.

After the RTC granted the petition, the Register of Deeds cancelled the TCT No. N-165606 and issued a
new TCT No. 186142 in favor of Syby virtue of the deed of absolute sale date July 14, 1997. Sy
immediately subdivided the property and sold each half to Spouses De Vera and Spouses Cusi, and were
issued TCT Nos. 189568 and 189569 respectively, annotatedon the TCT a consideration of onlyPhp 1M
each but the entire lot had an actual valueof not less than Php 14M.

It was only on July 1999 when the respondent learned the situation.She filed an action against Spouses
Sy, Spouses De Vera, and the Spouses Cusi seeking annulment of titles, injuction, and damages. She also
applied for the issuance of writ of preliminary prohibition and mandatory injunction, and a temporary
restraining order (TRO).

The RTC granted her application, however, the title of Spouses De Vera and Spouses Cusiremain valid as
they were held purchasers in good faith. Dissatisfied with the decision, Domingo filed a motion for
reconsideration. The RTC set aside its first decision and declaring the sale between the respondent and
Sy void; the buyers were not purchasers in good faith; cancellation of TCT Nos. 189568 and 189569; the
TCT No. 165606 shall be revalidated in the name of Domingo.

This decision was brought up to the CA filed by the petitioners but was denied. A motion for
reconsideration was also filed but the same was denied.Hence, this petition.

Issue:

Whether or not the petitioners are purchasers in good faith and for value.

Held:

The petitioners were NOT purchasers in good faith.

Under the Torrens System of land registration, a person dealing in the registered land has the right to
rely on the Torrens certificate title and to dispense with the need of inquiring further, exceptwhen the
party has actual knowledge of facts and circumstances that would impel a reasonably cautious man to
make such inquiry.

Their observance of a certain degree of diligence within the context of the principles underlying the
36

Torrens System was not the only barometer for them to verify the acquisition of title. Under the law and
jurisprudence, it was not enough for them to show that the property was unfenced and vacant nor it
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was safe for them to rely on the face of Sys TCT No. 186142 because they were aware that the TCT was
derived only from a duplicate owners copy reissued by virtue of the loss of the original duplicate
owners copy. That circumstance should have already alerted them to the need to inquire beyond the
face of the Sys TCT. Other circumstances that would impel a reasonably cautious man to make such
inquiry in dealing with the property are the almost simultaneous transactions affecting the acquisition of
the property that the petitioners were also aware of and the material, undervaluation of the property in
the deed of sale, e.i. the price in consideration of the property of Php 1M each half when the market
value is at least Php 14Mostensibly at the request of Sy to minimize her liabilities for Capital Gains Tax.

5. Saberon vs Ventanilla, GR 192669, April 21, 2014

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