KEY CONCEPTS OF THE TORRENS SYSTEM 1. DECREE BINDS THE LAND MANOTOK REALTY vs. CLT REALTY: SEC.

42. The certificate first registered in pursuance of the decree of registration in regard to any parcel of land shall be entitled in the registration book Original certificate of title, entered pursuant to decree of the Court of Land Registration, dated at (stating time and place of entry of decree and the number of case). This certificate shall take effect upon the date of the transcription of the decree. Subsequent certificates relating to the same land shall be in like form, but shall be entitled Transfer from number (the number of the next previous certificate relating to the same land), and also the words Originally registered (date, volume, and page of registration) xxxxxx Otherwise stated, what is actually issued by the register of deeds is the certificate of title itself, not the decree of registration, as he is precisely the recipient from the land registration office of the decree for transcription to the certificate as well as the transcriber no less. Since what is now acknowledged as the authentic OCT No. 994 indicates that it was received for transcription by the Register of Deeds of Rizal on 3 May 1917, it is that date that is the date of registration since that was when he was able to transcribe the decree in the registration book, such entry made in the book being the original certificate of title. Moreover, it is only after the transcription of the decree by the register of deeds that the certificate of title is to take effect.

MANOTOK VS HEIRS OF HOMER BARQUE YNARES-SANTIAGO, J.:

These consolidated petitions for review assail, in G.R. No. 162335, the February 24, 2004 Amended Decision[1] of the Third Division of the Court of Appeals in CA-G.R. SP No. 66642, ordering the Register of Deeds of Quezon City to cancel petitioners TCT No. RT-22481 and directing the Land Registration Authority (LRA) to reconstitute respondents TCT No. 210177; and in G.R. No. 162605, the November 7, 2003 Amended Decision[2] of the Special Division of Five of the Former Second Division in CA-G.R. SP No. 66700 directing the Register of Deeds of Quezon City to cancel petitioners TCT No. RT-22481, and the LRA to reconstitute respondents TCT No. T-210177 and the March 12, 2004 Resolution[3] denying the motion for reconsideration. The facts as found by the Court of Appeals[4] are as follows: Petitioners, (respondents herein) as the surviving heirs of the late Homer Barque, filed a petition with the LRA for administrative reconstitution of the original copy of TCT No. 210177 issued in the name of Homer L. Barque, which was destroyed in the fire that gutted the Quezon City Hall, including the Office of the Register of Deeds of Quezon City, sometime in 1988. In support of the petition, petitioners submitted the owners duplicate copy of TCT No. 210177, real estate tax receipts, tax declarations and the Plan FLS 3168 D covering the property. Upon being notified of the petition for administrative reconstitution, private respondents (petitioners herein) filed their opposition thereto claiming that the lot covered by the title under reconstitution forms part of the land covered by their reconstituted title TCT No. RT-22481, and alleging that TCT No. 210177 in the name of petitioners predecessors-ininterest is spurious.

On June 30, 1997, Atty. Benjamin M. Bustos, as reconstituting officer, denied the reconstitution of TCT No. 210177[5] on grounds that: 1. Lots 823-A and 823-B, Fls-3168-D, containing areas of 171,473 Sq. Mtrs. and 171,472 Sq. Mtrs., respectively, covered by TCT No. 210177, appear to duplicate Lot 823 Piedad Estate, containing an area of 342,945 Sq. Mtrs., covered by TCT No. 372302 registered in the name of Severino M. Manotok, et. al., reconstituted under Adm. Reconstitution No. Q-213 dated February 01, 1991; 2. The submitted plan Fls-3168-D is a spurious document as categorically stated by Engr. Privadi J.G. Dalire, Chief, Geodetic Surveys Division, Land Management Bureau, in his letter dated February 19, 1997.[6]

Respondents motion for reconsideration was denied in an order[7] dated February 10, 1998 hence they appealed to the LRA. The LRA ruled that the reconstituting officer should not have required the submission of documents other than the owners duplicate certificate of title as bases in denying the petition and should have confined himself with the owners duplicate certificate of title.[8] The LRA further declared: Based on the documents presented, petitioners have established by clear and convincing evidence that TCT NO. 210177 was, at the time of the destruction thereof, valid, genuine, authentic and effective. Petitioners duly presented the original of the owners duplicate copy of TCT No. 210177 .... The logbook of the Register of Deeds of Quezon City lists TCT No. 210177 as among the titles lost .... The Register of Deeds of Quezon City himself acknowledged the existence and authenticity of TCT No. 210177 when he issued a certification to the effect that TCT No. 210177 was one of the titles destroyed and not salvaged from the fire that gutted the Quezon City Hall on 11 June 1988 .... It is likewise noteworthy that the technical description and boundaries of the lot reflected in TCT No. 210177 absolutely conform to the technical description and boundaries of Lot 823 Piedad Estate ... as indicated in the B. L. Form No. 28-37-R dated 11-8-94 and B. L. Form No. 31-10 duly issued by the Bureau of Lands .... It therefore becomes evident that the existence, validity, authenticity and effectivity of TCT No. 210177 was established indubitably and irrefutably by the petitioners. Under such circumstances, the reconstitution thereof should be given due course and the same is mandatory.[9] . It would be necessary to underscore that the certified copy of Plan FLS 3168 D was duly issued by the office of Engr. Ernesto Erive, Chief, Surveys Division LMS-DENR-NCR whose office is the lawful repository of survey plans for lots situated within the National Capital Region including the property in question. Said plan was duly signed by the custodian thereof, Carmelito Soriano, Chief Technical Records and Statistics Section, DENR-NCR. Said plan is likewise duly supported by Republic of the Philippines Official Receipt No. 2513818 Q dated 9-23-96 .... Engr. Erive in his letter dated 28 November 1996 addressed to Atty. Bustos confirmed that a microfilm copy of Plan FLS 3168D is on file in the Technical Records and Statistics Section of his office. Engr. Dalire, in his letter dated 2 January 1997 addressed to Atty. Bustos even confirmed the existence and authenticity of said plan. . The claim of Engr. Dalire in his letter dated 19 February 1997 that his office has no records or information about Plan FLS 3168-D is belied by the certified copy of the computer print-out duly issued by the Bureau of Lands indicating therein that FLS 3168D is duly entered into the microfilm records of the Bureau of Lands and has been assigned Accession Number 410436 appearing on Page 79, Preliminary Report No. 1, List of Locator Cards and Box Number 0400 and said computer print-out is duly supported by an Offical Receipt . The said Plan FLS 3168D is indeed authentic and valid coming as it does from the legal repository and duly signed by the custodian thereof. The documentary evidence presented is much too overwhelming to be simply brushed aside and be defeated by the fabricated statements and concoctions made by Engr. Dalire in his 19 February 1997 letter. [10]

Nevertheless, notwithstanding its conclusion that petitioners title was fraudulently reconstituted, the LRA noted that it is only the Regional Trial Court (RTC) which can declare that the same was indeed fraudulently reconstituted. It thus opined that respondents title may only be reconstituted after a judicial declaration that petitioners title was void and should therefore be cancelled.[11] The dispositive portion of the LRAs decision reads: WHEREFORE, in view of the foregoing, it is hereby ordered that reconstitution of TCT No. 210177 in the name of Homer L. Barque, Sr. shall be given due course after cancellation of TCT No. RT-22481 (372302) in the name of Manotoks upon order of a court of competent jurisdiction. SO ORDERED.[12] Petitioners filed a motion for reconsideration which was opposed by respondents with a prayer that reconstitution be ordered immediately.

On June 14, 2001, petitioners motion for reconsideration and respondents prayer for immediate reconstitution were denied.[13] From the foregoing, respondents filed a petition for review[14] with the Court of Appeals docketed as CA-G.R. SP No. 66700 and praying that the LRA be directed to immediately reconstitute TCT No. 210177 without being subjected to the condition that petitioners TCT No. RT-22481 [372302] should first be cancelled by a court of competent jurisdiction.[15] Petitioners likewise filed a petition for review with the Court of Appeals docketed as CA-G.R. SP No. 66642. In CA-G.R. SP No. 66700, the Second Division of the Court of Appeals rendered a Decision[16] on September 13, 2002, the dispositive portion of which reads: WHEREFORE, the foregoing premises considered the assailed Resolution of the LRA dated June 24, 1998 is AFFIRMED in toto and the petition for review is ordered DISMISSED. No pronouncement as to costs. SO ORDERED.[17]

Respondents moved for reconsideration.[18] On November 7, 2003, the Special Division of Five of the Former Second Division rendered an Amended Decision in CA-G.R. SP No. 66700, the dispositive portion of which reads: WHEREFORE, our decision dated 13 September 2002 is hereby reconsidered. Accordingly, the Register of Deeds of Quezon City is hereby directed to cancel TCT No. RT-22481 of private respondents and the LRA is hereby directed to reconstitute forthwith petitioners valid, genuine and existing Certificate of Title No. T-210177. No pronouncement as to costs. SO ORDERED.[19] Petitioners motion for reconsideration of the amended decision in CA-G.R. SP No. 66700 was denied,[20] hence, this petition docketed as G.R. No. 162605. Meanwhile, in CA-G.R. SP No. 66642, the Third Division of the Court of Appeals rendered a Decision[21] on October 29, 2003, the dispositive portion of which reads: WHEREFORE, the petition is hereby DENIED. The Resolution of the LRA dated 24 June 1998 is hereby AFFIRMED. SO ORDERED.[22]

In so ruling, the Third Division of the Court of Appeals declared that the LRA correctly deferred in giving due course to the petition for reconstitution since there is yet no final judgment upholding or annulling respondents title.[23] Respondents motion for reconsideration was granted by the Third Division of the Court of Appeals on February 24, 2004, thus: WHEREFORE, the Motion for Reconsideration is hereby GRANTED. The Decision of this Court dated 29 October 2003 is RECONSIDERED and a new one is entered ordering the Register of Deeds of Quezon City to cancel petitioners TCT No. RT-22481 and directing the LRA to reconstitute forthwith respondents TCT No. T-210177. SO ORDERED.[24] From the foregoing decisions of the Court of Appeals in CA-G.R. SP No. 66700 and CA-G.R. SP No. 66642, petitioners filed separate petitions for review before this Court docketed as G.R. No. 162605 and G.R. No. 162335, respectively. In G.R. No. 162605, petitioners argue that: I THE MAJORITY JUSTICES ACTED WITHOUT JURISDICTION IN ORDERING THE CANCELLATION OF PETITIONERS EXISTING TITLE, CONSIDERING THAT: a. b. c. THEY ORDERED THE CANCELLATION OF TITLE DESPITE THE FACT THAT THE SAME IS NOT PART OF THE RELIEF SOUGHT IN A RECONSTITUTION PROCEEDINGS. THEY ALLOWED A COLLATERAL ATTACK ON A TORRENS CERTIFICATE OF TITLE; and THE COURT OF APPEALS, IN RESOLVING AN APPEAL OF THE DECISION OF THE LAND REGISTRATION AUTHORITY, DOES NOT HAVE JURISDICTION TO ORDER THE CANCELLATION OF TITLE, SINCE ONLY A PROPER REGIONAL TRIAL COURT CAN ORDER THE ANNULMENT/CANCELLATION OF A TORRENS TITLE. BY ALLOWING A SHORT CUT, THE MAJORITY JUSTICES DEPRIVED THE PETITIONERS OF THEIR PROPERTY AND THEIR CONSTITUTIONALLY PROTECTED RIGHT TO DUE PROCESS OF LAW. II

THE MAJORITY JUSTICES GRAVELY MISAPPLIED THE RULING OF THIS HONORABLE COURT IN ORTIGAS V. VELASCO, CONSIDERING THAT: a. IN THE ORTIGAS CASE, THERE WERE TWO TITLES EXISTING OVER THE SAME PARCEL OF LAND, AS A RESULT OF THE RECONSTITUTED TITLE ISSUED IN THE NAME OF MOLINA. IN THE INSTANT CASE, ONLY PETITIONERS HOLD TITLE TO THE PROPERTY IN QUESTION, AS RESPONDENTS ARE MERELY TRYING TO HAVE TITLE RECONSTITUTED IN THEIR NAMES. IN ORTIGAS, THERE WERE SEVERAL DECISIONS OF THE SUPREME COURT WHICH PREVIOUSLY RESOLVED THE ISSUE OF OWNERSHIP OF ORTIGAS PROPERTY. HENCE, THERE WAS SUFFICIENT GROUND TO ANNUL MOLINAS TITLE OUTRIGHT. IN THE INSTANT CASE, THERE ARE NO SUCH DECISIONS IN FAVOR OF RESPONDENTS WHICH WOULD JUSTIFY THE CANCELLATION OF THE TITLE OF PETITIONERS WITHOUT ANY HEARING.[25]

b.

In G.R. No. 162335, petitioners raise the following issues: I. THE HONORABLE COURT OF APPEALS (THIRD DIVISION) COMMITTED GRAVE ABUSE OF DISCRETION AND GROSS IGNORANCE OF THE LAW IN ORDERING THE LAND REGISTRATION AUTHORITY TO CANCEL TCT NO. RT-22481 OF PETITIONERS MANOTOK NOTWITHSTANDING THE FACT THAT SAID COURT WAS FULLY COGNIZANT THAT IT HAS NO JURISDICTION TO EXERCISE SUCH AUTHORITY AND POWER AND THE LAND REGISTRATION AUTHORITY IS EQUALLY DEVOID OF JURISDICTION ON THE MATTER BECAUSE UNDER THE JUDICIARY REORGANIZATION ACT OF 1980 SPECIFICALLY SECTION 19 (2) THEREOF, ONLY THE REGIONAL TRIAL COURTS HAVE EXCLUSIVE ORIGINAL JURISDICTION OVER CIVIL ACTIONS WHICH INVOLVES TITLE TO, OR POSSESSION OF, REAL PROPERTY, OR ANY INTEREST THEREIN. II. THE HONORABLE COURT OF APPEALS (THIRD DIVISION) COMMITTED GRAVE ABUSE OF DISCRETION AND GROSS IGNORANCE OF THE LAW IN INVOKING EQUITABLE CONSIDERATION TO JUSTIFY ITS CHALLENGED AMENDED DECISION DATED FEBRUARY 24, 2004 DIRECTING LRA TO CANCEL PETITIONERS MANOTOKS TITLE NOTWITHSTANDING THE FACT, AS STATED, THE LAW EXPLICITLY VESTS EXCLUSIVE ORIGINAL JURISDICTION TO THE REGIONAL TRIAL COURTS OVER CIVIL ACTIONS WHICH INVOLVES TITLE TO, OR POSSESSION OF, REAL PROPERTY, OR ANY INTEREST THEREIN. III. THE HONORABLE COURT OF APPEALS COMMITTED GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OR IN EXCESS OF JURISDICTION IN FAILING TO ORDER THE SETTING ASIDE OF THE CHALLENGED RESOLUTION DATED JUNE 24, 1998 OF RESPONDENT LAND REGISTRATION AUTHORITY IN LRC ADMIN. CASE NO. Q-547 [97] VIEWED FROM THE FACT THAT SAID RESOLUTION OF LRA IS PATENTLY AT WAR WITH LAW AND CONTROLLING JURISPRUDENCE THAT PROHIBITS RECONSTITUTION OF TITLE BY THIRD PARTY ALLEGED TO HAVE BEEN LOST OR DESTROYED IF ANOTHER VALID TITLE IS EXISTING COVERING THE LAND SUBJECT THEREOF. IV. THE LRA COMMITTED GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OR IN EXCESS OF JURISDICTION IN ORDERING THE RECONSTITUTION OF THE TITLE OF HOMER BARQUE, SR. SUBJECT ONLY TO THE CONDITION THAT THE TITLE OF PETITIONERS MANOTOK SHOULD FIRST BE ORDERED CANCELLED BY COURT OF COMPETENT JURISDICTION IN THE FACE OF THE GLARING FACTS THAT SAID TITLE IS HIGHLY SUSPECT AND BEARS BADGES OF FABRICATION AND FALSIFICATION AND THEREFORE NO OTHER LOGICAL AND CREDIBLE CONCLUSION CAN BE DRAWN EXCEPT THAT IT IS A FAKE AND SPURIOUS TITLE. V. THE HONORABLE COURT OF APPEALS COMMITTED GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OF IN EXCESS OF JURISDICTION IN ALLOWING RESPONDENTS MOTION FOR RECONSIDERATION WHICH WAS CLEARLY FILED OUT OF TIME.[26] On August 2, 2004, the petition in G.R. No. 162605 was consolidated with the petition in G.R. No. 162335.[27] In sum, petitioners contend that (a) the LRA has no authority to annul their title; (b) the reconstitution of respondents Torrens title would be a collateral attack on petitioners existing title; (c) they were not given the opportunity to be heard, specifically the chance to defend the validity of their Torrens title; (d) the Court of Appeals, in resolving the appeal from the LRA, has no jurisdiction to order the cancellation of petitioners title; and (e) the ruling in Ortigas was misapplied.

The petitions must be denied.

The LRA properly ruled that the reconstituting officer should have confined himself to the owners duplicate certificate of title prior to the reconstitution. Section 3 of Republic Act (RA) No. 26[28] clearly provides: Section 3. Transfer certificates of title shall be reconstituted from such of the sources hereunder enumerated as may be available, in the following order: (a) .... The owners duplicate of the certificate of title;

When respondents filed the petition for reconstitution, they submitted in support thereof the owners duplicate certificate of title, real estate tax receipts and tax declaration. Plainly, the same should have more than sufficed as sources for the reconstitution pursuant to Section 3 of RA No. 26 which explicitly mandates that the reconstitution shall be made following the hierarchy of sources as enumerated by law. In addition, Section 12 of the same law requires that the petition shall be accompanied with a plan and technical description of the property only if the source of the reconstitution is Section 3(f) of RA No. 26. Thus: Section 12. Provided, That in case the reconstitution is to be made exclusively from sources enumerated in section 2(f) or 3(f) of this Act, the petition shall further be accompanied with a plan and technical description of the property duly approved by the Chief of the General Land Registration Office, or with a certified copy of the description taken from a prior certificate of title covering the same property.[29]

Since respondents source of reconstitution is the owners duplicate certificate of title, there is no need for the reconstituting officer to require the submission of the plan, much less deny the petition on the ground that the submitted plan appears to be spurious. By enumerating the hierarchy of sources to be used for the reconstitution, it is the intent of the law to give more weight and preference to the owners duplicate certificate of title over the other enumerated sources. The factual finding of the LRA that respondents title is authentic, genuine, valid, and existing, while petitioners title is sham and spurious, as affirmed by the two divisions of the Court of Appeals, is conclusive before this Court. It should remain undisturbed since only questions of law may be raised in a petition for review under Rule 45 of the Rules of Court. Findings of fact of administrative bodies are accorded respect, even finality by this Court and, when affirmed by the Court of Appeals, are no longer reviewable except only for very compelling reasons. Basic is the rule that factual findings of agencies exercising quasi-judicial functions are accorded not only respect but even finality, aside from the consideration that this Court is essentially not a trier of facts.[30] Such questions as whether certain items of evidence should be accorded probative value or weight, or rejected as feeble or spurious, or whether or not the proofs on one side or the other are clear and convincing and adequate to establish a proposition in issue, are without doubt questions of fact. Whether or not the body of proofs presented by a party, weighed and analyzed in relation to contrary evidence submitted by adverse party, may be said to be strong, clear and convincing; whether or not certain documents presented by one side should be accorded full faith and credit in the face of protests as to their spurious character by the other side; whether or not inconsistencies in the body of proofs of a party are of such gravity as to justify refusing to give said proofs weight all these are issues of fact. Questions like these are not reviewable by this court which, as a rule, confines its review of cases decided by the Court of Appeals only to questions of law raised in the petition and therein distinctly set forth.[31] A petition for review should only cover questions of law. Questions of fact are not reviewable.[32] In Dolfo v. Register of Deeds for the Province of Cavite,[33] this Court categorically declared: Second. Both the trial court and the Court of Appeals made a factual finding that petitioners title to the land is of doubtful authenticity. Having jurisdiction only to resolve questions of law, this Court is bound by the factual findings of the trial court and the Court of Appeals....

In view of the foregoing, it is no longer necessary to remand the case to the RTC for the determination of which title, petitioners' or respondents', is valid or spurious. This has been ruled upon by the LRA and duly affirmed by the two divisions of the Court of Appeals. The LRA has the jurisdiction to act on petitions for administrative reconstitution. It has the authority to review, revise, reverse, modify or affirm on appeal the decision of the reconstituting officer. The function is adjudicatory in nature it can properly deliberate on the validity of the titles submitted for reconstitution. Logically, it can declare a title as sham or spurious, or valid on its face. Otherwise, if it cannot make such declaration, then there would be no basis for its decision to grant or deny the reconstitution. The findings of fact of the LRA, when supported by substantial evidence, as in this case, shall be binding on the Court of Appeals.[34] In the reconstitution proceedings, the LRA is bound to determine from the evidence submitted which between or among the titles is genuine and existing to enable it to decide whether to deny or approve the petition. Without such authority, the LRA would be a mere robotic agency clothed only with mechanical powers. The Court of Appeals also properly exercised its appellate jurisdiction over the judgment of the LRA. Under Sections 1 and 3, Rule 43 of the Rules of Court, the appellate court has jurisdiction on appeals from judgments or final orders of the LRA, whether the appeal involves questions of fact, of law, or mixed questions of fact and law. Indeed, it would be needlessly circuitous to remand the case to the RTC to determine anew which of the two titles is sham or spurious and thereafter appeal the trial courts ruling to the Court of Appeals. After all, the LRA and the two divisions of the appellate court have already declared that petitioners title is forged. InMendoza v. Court of Appeals,[35] we ruled that: Now, technically, the revocation and cancellation of the deed of sale and the title issued in virtue thereof in de los Santos favor should be had in appropriate proceedings to be initiated at the instance of the Government. However, since all the facts are now before this Court, and it is not within de los Santos power in any case to alter those facts at any other proceeding, or the verdict made inevitable by said facts, for this Court to direct at this time that cancellation proceedings be yet filed to nullify the sale to de los Santos and his title, would be needlessly circuitous and would unnecessarily delay the termination of the controversy at bar, .... This Court will therefore make the adjudication entailed by the facts here and now, without further proceedings, as it has done in other cases in similar premises.

No useful purpose will be served if a case or the determination of an issue in a case is remanded to the trial court only to have its decision raised again to the Court of Appeals and then to the Supreme Court. The remand of the case or of an issue to the lower court for further reception of evidence is not necessary where the Court is in position to resolve the dispute based on the records before it and particularly where the ends of justice would not be subserved by the remand thereof.[36] The Register of Deeds, the LRA and the Court of Appeals have jurisdiction to act on the petition for administrative reconstitution. The doctrine laid down inAlabang Dev. Corp., et al. v. Hon. Valenzuela, etc., et al.[37] does not apply in the instant case. In Alabang, the Court stressed that: [L]ands already covered by duly issued existing Torrens Titles cannot be the subject of petitions for reconstitution of allegedly lost or destroyed titles filed by third parties without first securing by final judgment the cancellation of such existing titles. The courts simply have no jurisdiction over petitions by such third parties for reconstitution of allegedly lost or destroyed titles over lands that are already covered by duly issued subsisting titles in the names of their duly registered owners. The very concept of stability and indefeasibility of titles covered under the Torrens System of registration rules out as anathema the issuance of two certificates of title over the same land to two different holders thereof. [38]

The Alabang ruling was premised on the fact that the existing Torrens title was duly issued and that there is only one title subsisting at the time the petition for reconstitution was filed. In the instant case, it cannot be said that petitioners title was duly issued much less could it be presumed valid considering the findings of the LRA and the Court of Appeals that the same is sham and spurious.

The Court of Appeals properly applied the doctrine laid down in Ortigas in refusing to remand the case to the trial court. As expressly declared in Ortigas & Company Limited Partnership v. Velasco:[39] Ordinarily, the relief indicated by the material facts would be the remand of the reconstitution case (LRC No. Q5405) to the Court of origin with instructions that Ortigas and the Solicitor Generals appeals from the judgment rendered therein, which were wrongly disallowed, be given due course and the records forthwith transmitted to the appellate tribunal. This, in fact, is a relief alternatively prayed for by petitioner Ortigas. Considering however the fatal infirmities afflicting Molinas theory or cause of action, evident from the records before this Court, such a remand and subsequent appeal proceedings would be pointless and unduly circuitous. Upon the facts, it is not possible for Molinas cause to prosper. To defer adjudication thereon would be unwarranted and unjust.

The same rationale should apply in the instant case. As already discussed, the validity of respondents and petitioners title have been squarely passed upon by the LRA and reviewed and affirmed by the Court of Appeals, which factual findings are no longer reviewable by this Court. A careful examination of the case of Spouses Cayetano, et al. v. CA, et al.,[40] where this Court, as claimed by petitioners, have affirmed their title over the disputed property, would reveal that the sole issue resolved therein is whether or not a tenancy relationship exists between the parties.[41] There was no adjudication on ownership. In fact, it cannot even be discerned if the property subject of the Spouses Cayetano case refers to the property subject of the instant controversy. There is no basis in the allegation that petitioners were deprived of their property without due process of law when the Court of Appeals ordered the cancellation of their Torrens title, even without a direct proceeding in the RTC. As already discussed, there is no need to remand the case to the RTC for a re-determination on the validity of the titles of respondents and petitioners as the same has been squarely passed upon by the LRA and affirmed by the appellate court. By opposing the petition for reconstitution and submitting their administratively reconstituted title, petitioners acquiesced to the authority and jurisdiction of the reconstituting officer, the LRA and the Court of Appeals, and recognized their authority to pass judgment on their title. All the evidence presented was duly considered by these tribunals. There is thus no basis to petitioners claim that they were deprived of their right to be heard and present evidence, which is the essence of due process. As held in Yusingco v. Ong Hing Lian:[42] Therefore, it appearing from the records that in the previous petition for reconstitution of certificates of title, the parties acquiesced in submitting the issue of ownership for determination in the said petition, and they were given the full opportunity to present their respective sides of the issues and evidence in support thereof, and that the evidence presented was sufficient and adequate for rendering a proper decision upon the issue, the adjudication of the issue of ownership was valid and binding.

The reconstitution would not constitute a collateral attack on petitioners title which was irregularly and illegally issued in the first place.
[43]

As pertinently held in Dolfo v. Register of Deeds for the Province of Cavite:[44] The rule that a title issued under the Torrens System is presumed valid and, hence, is the best proof of ownership of a piece of land does not apply where the certificate itself is faulty as to its purported origin. In this case, petitioner anchors her arguments on the premise that her title to the subject property is indefeasible because of the presumption that her certificate of title is authentic. However, this presumption is overcome by the evidence presented, consisting of the LRA report that TCT No. T-320601 was issued without legal basis . Thus, petitioner cannot invoke the indefeasibility of her certificate of title. It bears emphasis that the Torrens system does not create or vest title but only confirms and records one already existing and vested. Thus, while it may be true, as petitioner argues, that a land registration court has no jurisdiction over parcels of land already covered by a certificate of title, it is equally true that this rule applies only where there exists no serious controversy as to the authenticity of the certificate.

Under similar circumstances, this Court has ruled that wrongly reconstituted certificates of title secured through fraud and misrepresentation cannot be the source of legitimate rights and benefits.[45] WHEREFORE, the petitions are DENIED. In G.R. No. 162335, the February 24, 2004 Amended Decision of the Third Division of the Court of Appeals in CA-G.R. SP No. 66642, ordering the Register of Deeds of Quezon City to cancel petitioners TCT No. RT-22481 and directing the Land Registration Authority to reconstitute respondents TCT No. 210177; and in G.R. No. 162605, the November 7, 2003 Amended Decision of the Special Division of Five of the Former Second Division in CA-G.R. SP No. 66700 directing the Register of Deeds of Quezon City to cancel petitioners TCT No. RT-22481, and the Land Registration Authority to reconstitute respondents TCT No. T-210177 and the March 12, 2004 Resolution denying the motion for reconsideration, are AFFIRMED.

SO ORDERED.

REPUBLIC VS NILLAS TINGA, J.: The central question raised in this Petition for Review is whether prescription or laches may bar a petition to revive a judgment in a land registration case. It is a hardly novel issue, yet petitioner Republic of the Philippines (Republic) pleads that the Court rule in a manner that would unsettle precedent. We deny certiorari and instead affirm the assailed rulings of the courts below. The facts bear little elaboration. On 10 April 1997, respondent Lourdes Abiera Nillas (Nillas) filed a Petition for Revival of Judgment with the Regional Trial Court (RTC) of Dumaguete City. It was alleged therein that on 17 July 1941, the then Court of First Instance (CFI) of Negros Oriental rendered a Decision Adicional in Expediente Cadastral No. 14, captioned as El Director De Terrenos contra Esteban Abingayan y Otros.1 In the decision, the CFI, acting as a cadastral court, adjudicated several lots, together with the improvements thereon, in favor of named oppositors who had established their title to their respective lots and their continuous possession thereof since time immemorial and ordered the Chief of the General Land Registration Office, upon the finality of the decision, to issue the corresponding decree of registration.2 Among these lots was Lot No. 771 of the Sibulan Cadastre, which was adjudicated to Eugenia Calingacion (married to Fausto Estoras) and Engracia Calingacion, both residents of Sibulan, Negros Oriental.3 Nillas further alleged that her parents, Serapion and Josefina A. Abierra, eventually acquired Lot No. 771 in its entirety. By way of a Deed of Absolute Sale dated 7 November 1977, Engracia Calingacion sold her undivided one-half (1/2) share over Lot No. 771 to the Spouses Abierra, the parents of Nillas. On the other hand, the one-half (1/2) share adjudicated to Eugenia Calingacion was also acquired by the Spouses Abierra through various purchases they effected from the heirs of Eugenia between the years 1975 to 1982. These purchases were evidenced by three separate Deeds of Absolute Sale all in favor of the Spouses Abierra.4 In turn, Nillas acquired Lot No. 771 from her parents through a Deed of Quitclaim dated 30 June 1994. Despite these multiple transfers, and the fact that the Abierra spouses have been in open and continuous possession of the subject property since the 1977 sale, no decree of registration has ever been issued over Lot No. 771 despite the rendition of the 1941 CFI Decision. Thus, Nillas sought the revival of the 1941 Decision and the issuance of the corresponding decree of registration for Lot No. 771. The records do not precisely reveal why the decree was not issued by the Director of Lands, though it does not escape attention that the 1941 Decision was rendered a few months before the commencement of the Japanese invasion of the Philippines in December of 1941. No responsive pleading was filed by the Office of the Solicitor General (OSG), although it entered its appearance on 13 May 1997 and simultaneously deputized the City Prosecutor of Dumaguete City to appear whenever the case was set for hearing and in all subsequent proceedings.5 Trial on the merits ensued. The RTC heard the testimony of Nillas and received her documentary evidence. No evidence was apparently presented by the OSG. On 26 April 2000, the RTC rendered a Decision6 finding merit in the petition for revival of judgment, and ordering the revival of the 1941 Decision, as well as directing the Commissioner of the Land Registration Authority (LRA) to issue the corresponding decree of confirmation and registration based on the 1941 Decision.1avvphi1.net The OSG appealed the RTC Decision to the Court of Appeals, arguing in main that the right of action to revive judgment had already prescribed. The OSG further argued that at the very least, Nillas should have established that a request for issuance of a decree of registration before the Administrator of the LRA had been duly made. The appeal was denied by the appellate court in its Decision7 dated 24 July 2003. In its Decision, the Court of Appeals reiterated that the provisions of Section 6, Rule 39 of the Rules of Court, which impose a prescriptive period for enforcement of judgments by motion, refer to ordinary civil actions and not to "special" proceedings such as land registration cases. The Court of Appeals also noted that it would have been especially onerous to require Nillas to first request the LRA to comply with the 1941 decision considering that it had been established that the original records in the 1941 case had already been destroyed and could no longer be reconstructed.

In the present petition, the OSG strongly argues that contrary to the opinion of the Court of Appeals, the principles of prescription and laches do apply to land registration cases. The OSG notes that Article 1144 of the Civil Code establishes that an action upon judgment must be brought within ten years from the time the right of action accrues.8 Further, Section 6 of Rule 39 of the 1997 Rules of Civil Procedure establishes that a final and executory judgment or order may be executed on motion within five (5) years from the date of its entry, after which time it may be enforced by action before it is barred by statute of limitations.9 It bears noting that the Republic does not challenge the authenticity of the 1941 Decision, or Nillas's acquisition of the rights of the original awardees. Neither does it seek to establish that the property is inalienable or otherwise still belonged to the State. The OSG also extensively relies on two cases, Shipside Inc. v. Court of Appeals10 and Heirs of Lopez v. De Castro.11 Shipside was cited since in that case, the Court dismissed the action instituted by the Government seeking the revival of judgment that declared a title null and void because the judgment sought to be revived had become final more than 25 years before the action for revival was filed. In Shipside, the Court relied on Article 1144 of the Civil Code and Section 6, Rule 39 of the 1997 Rules of Civil Procedure in declaring that extinctive prescription did lie. On the other hand, Heirs of Lopez involved the double registration of the same parcel of land, and the subsequent action by one set of applicants for the issuance of the decree of registration in their favor seven (7) years after the judgment had become final. The Court dismissed the subsequent action, holding that laches had set in, it in view of the petitioners' omission to assert a right for nearly seven (7) years. Despite the invocation by the OSG of these two cases, there exists a more general but definite jurisprudential rule that favors Nillas and bolsters the rulings of the lower courts. The rule is that "neither laches nor the statute of limitations applies to a decision in a land registration case."12 The most extensive explanation of this rule may be found in Sta. Ana v. Menla,13 decided in 1961, wherein the Court refuted an argument that a decision rendered in a land registration case wherein the decree of registration remained unissued after 26 years was already "final and enforceable." The Court, through Justice Labrador, explained: We fail to understand the arguments of the appellant in support of the assignment [of error], except insofar as it supports his theory that after a decision in a land registration case has become final, it may not be enforced after the lapse of a period of 10 years, except by another proceeding to enforce the judgment or decision. Authority for this theory is the provision in the Rules of Court to the effect that judgment may be enforced within 5 years by motion, and after five years but within 10 years, by an action (Sec. 6, Rule 39). This provision of the Rules refers to civil actions and is not applicable to special proceedings, such as a land registration case. This is so because a party in a civil action must immediately enforce a judgment that is secured as against the adverse party, and his failure to act to enforce the same within a reasonable time as provided in the Rules makes the decision unenforceable against the losing party. In special proceedings[,] the purpose is to establish a status, condition or fact; in land registration proceedings, the ownership by a person of a parcel of land is sought to be established. After the ownership has been proved and confirmed by judicial declaration, no further proceeding to enforce said ownership is necessary, except when the adverse or losing party had been in possession of the land and the winning party desires to oust him therefrom. Furthermore, there is no provision in the Land Registration Act similar to Sec. 6, Rule 39, regarding the execution of a judgment in a civil action, except the proceedings to place the winner in possession by virtue of a writ of possession. The decision in a land registration case, unless the adverse or losing party is in possession, becomes final without any further action, upon the expiration of the period for perfecting an appeal. x x x x x x x There is nothing in the law that limits the period within which the court may order or issue a decree. The reason is xxx that the judgment is merely declaratory in character and does not need to be asserted or enforced against the adverse party. Furthermore, the issuance of a decree is a ministerial duty both of the judge and of the Land Registration Commission; failure of the court or of the clerk to issue the decree for the reason that no motion therefor has been filed can not prejudice the owner, or the person in whom the land is ordered to be registered.14 The doctrine that neither prescription nor laches may render inefficacious a decision in a land registration case was reiterated five (5) years after Sta. Ana, in Heirs of Cristobal Marcos, etc., et al. v. De Banuvar, et al.15 In that case, it was similarly argued that a prayer for the issuance of a decree of registration filed in 1962 pursuant to a 1938 decision was, among others, barred by prescription and laches. In rejecting the argument, the Court was content in restating with approval the above-cited excerpts from Sta. Ana. A similar tack was again adopted by the Court some years later in Rodil v. Benedicto.16 These cases further emphasized, citing Demoran v. Ibanez, etc., and Poras17 and Manlapas and Tolentino v. Llorente,18 respectively, that the right of the applicant or a subsequent purchaser to ask for the issuance of a writ of possession of the land never prescribes.19 Within the last 20 years, the Sta. Ana doctrine on the inapplicability of the rules on prescription and laches to land registration cases has been repeatedly affirmed. Apart from the three (3) cases mentioned earlier, the Sta. Anadoctrine was reiterated in another three (3) more cases later, namely: Vda. de Barroga v. Albano,20 Cacho v. Court of Appeals,21 and Paderes v. Court of Appeals.22 The doctrine of stare decisis compels respect for settled jurisprudence, especially absent any compelling argument to do otherwise. Indeed, the apparent strategy employed by the Republic in its present petition is to feign that the doctrine and the cases that spawned and educed it never existed at all. Instead, it is insisted that the Rules of Court, which provides for the five (5)-year prescriptive period for execution of judgments, is applicable to land registration cases either by analogy or in a suppletory character and whenever practicable and convenient.23 The Republic further observes that Presidential Decree (PD) No. 1529 has no provision on execution of final judgments; hence, the provisions of Rule 39 of the 1997 Rules of Civil Procedure should apply to land registration proceedings. We affirm Sta. Ana not out of simple reflex, but because we recognize that the principle enunciated therein offers a convincing refutation of the current arguments of the Republic.

Rule 39, as invoked by the Republic, applies only to ordinary civil actions, not to other or extraordinary proceedings not expressly governed by the Rules of Civil Procedure but by some other specific law or legal modality such as land registration cases. Unlike in ordinary civil actions governed by the Rules of Civil Procedure, the intent of land registration proceedings is to establish ownership by a person of a parcel of land, consistent with the purpose of such extraordinary proceedings to declare by judicial fiat a status, condition or fact. Hence, upon the finality of a decision adjudicating such ownership, no further step is required to effectuate the decision and a ministerial duty exists alike on the part of the land registration court to order the issuance of, and the LRA to issue, the decree of registration. The Republic observes that the Property Registration Decree (PD No. 1529) does not contain any provision on execution of final judgments; hence, the application of Rule 39 of the 1997 Rules of Civil Procedure in suppletory fashion. Quite the contrary, it is precisely because PD No. 1529 does not specifically provide for execution of judgments in the sense ordinarily understood and applied in civil cases, the reason being there is no need for the prevailing party to apply for a writ of execution in order to obtain the title, that Rule 39 of the 1997 Rules of Civil Procedure is not applicable to land registration cases in the first place. Section 39 of PD No. 1529 reads: SEC. 39. Preparation of Decree and Certificate of Title. - After the judgment directing the registration of title to land has become final, the court shall, within fifteen days from entry of judgment, issue an order directing the Commissioner to issue the corresponding decree of registration and certificate of title. The clerk of court shall send, within fifteen days from entry of judgment, certified copies of the judgment and of the order of the court directing the Commissioner to issue the corresponding decree of registration and certificate of title, and a certificate stating that the decision has not been amended, reconsidered, nor appealed, and has become final. Thereupon, the Commissioner shall cause to be prepared the decree of registration as well as the original and duplicate of the corresponding original certificate of title. The original certificate of title shall be a true copy of the decree of registration. The decree of registration shall be signed by the Commissioner, entered and filed in the Land Registration Commission. The original of the original certificate of title shall also be signed by the Commissioner and shall be sent, together with the owners duplicate certificate, to the Register of Deeds of the city or province where the property is situated for entry in his registration book. The provision lays down the procedure that interposes between the rendition of the judgment and the issuance of the certificate of title. No obligation whatsoever is imposed by Section 39 on the prevailing applicant or oppositor even as a precondition to the issuance of the title. The obligations provided in the Section are levied on the land court (that is to issue an order directing the Land Registration Commissioner to issue in turn the corresponding decree of registration), its clerk of court (that is to transmit copies of the judgment and the order to the Commissioner), and the Land Registration Commissioner (that is to cause the preparation of the decree of registration and the transmittal thereof to the Register of Deeds). All these obligations are ministerial on the officers charged with their performance and thus generally beyond discretion of amendment or review. The failure on the part of the administrative authorities to do their part in the issuance of the decree of registration cannot oust the prevailing party from ownership of the land. Neither the failure of such applicant to follow up with said authorities can. The ultimate goal of our land registration system is geared towards the final and definitive determination of real property ownership in the country, and the imposition of an additional burden on the owner after the judgment in the land registration case had attained finality would simply frustrate such goal. Clearly, the peculiar procedure provided in the Property Registration Law from the time decisions in land registration cases become final is complete in itself and does not need to be filled in. From another perspective, the judgment does not have to be executed by motion or enforced by action within the purview of Rule 39 of the 1997 Rules of Civil Procedure. Following these premises, it can even be posited that in theory, there would have been no need for Nillas, or others under similar circumstances, to file a petition for revival of judgment, since revival of judgments is a procedure derived from civil procedure and proceeds from the assumption that the judgment is susceptible to prescription. The primary recourse need not be with the courts, but with the LRA, with whom the duty to issue the decree of registration remains. If it is sufficiently established before that body that there is an authentic standing judgment or order from a land registration court that remains unimplemented, then there should be no impediment to the issuance of the decree of registration. However, the Court sees the practical value of necessitating judicial recourse if a significant number of years has passed since the promulgation of the land court's unimplemented decision or order, as in this case. Even though prescription should not be a cause to bar the issuance of the decree of registration, a judicial evaluation would allow for a thorough examination of the veracity of the judgment or order sought to be effected, or a determination of causes other than prescription or laches that might preclude the issuance of the decree of registration. What about the two cases cited by the Republic, Shipside and Heirs of Lopez? Even though the Court applied the doctrines of prescription and laches in those cases, it should be observed that neither case was intended to overturn the Sta. Ana doctrine, nor did they make any express declaration to such effect. Moreover, both cases were governed by their unique set of facts, quite distinct from the general situation that marked both Sta. Ana and the present case. The judgment sought belatedly for enforcement in Shipside did not arise from an original action for land registration, but from a successful motion by the Republic seeking the cancellation of title previously adjudicated to a private landowner. While one might argue that such motion still arose in a land registration case, we note that the pronouncement therein that prescription barred the revival of the order of cancellation was made in the course of dispensing with an argument which was ultimately peripheral to that case. Indeed, the portion of Shipsidedealing with the issue of prescription merely restated the provisions in the Civil Code and the Rules of Civil Procedure relating to prescription, followed by an observation that the judgment sought to be revived attained finality 25 years earlier. However, the Sta. Ana doctrine was not addressed, and perhaps with good reason, as the significantly more extensive rationale provided by the Court in barring the revival of judgment was the fact that the State no longer held interest in the subject property, having divested the same to the Bases Conversion Development Authority prior to the filing of the action for revival. Shipside expounds on this point, and not on the applicability of the rules of prescription.

Notably, Shipside has attained some measure of prominence as precedent on still another point, relating to its pronouncements relating to the proper execution of the certification of non-forum shopping by a corporation. In contrast, Shipside has not since been utilized by the Court to employ the rules on prescription and laches on final decisions in land registration cases. It is worth mentioning that since Shipside was promulgated in 2001, the Court has not hesitated in reaffirming the rule in Sta. Ana as recently as in the middle of 2005 in the Paderes case. We now turn to Heirs of Lopez, wherein the controlling factual milieu proved even more unconventional than that in Shipside. The property involved therein was the subject of two separate applications for registration, one filed by petitioners therein in 1959, the other by a different party in 1967. It was the latter who was first able to obtain a decree of registration, this accomplished as early as 1968.24 On the other hand, the petitioners were able to obtain a final judgment in their favor only in 1979, by which time the property had already been registered in the name of the other claimant, thus obstructing the issuance of certificate of title to the petitioners. The issues of prescription and laches arose because the petitioners filed their action to enforce the 1979 final judgment and the cancellation of the competing title only in 1987, two (2) years beyond the five (5)-year prescriptive period provided in the Rules of Civil Procedure. The Court did characterize the petitioners as guilty of laches for the delay in filing the action for the execution of the judgment in their favor, and thus denied the petition on that score. Heirs of Lopez noted the settled rule that "when two certificates of title are issued to different persons covering the same land in whole or in part, the earlier in date must prevail x x x," and indeed even if the petitioners therein were somehow able to obtain a certificate of title pursuant to the 1979 judgment in their favor, such title could not have stood in the face of the earlier title. The Court then correlated the laches of the petitioners with their pattern of behavior in failing to exercise due diligence to protect their interests over the property, marked by their inability to oppose the other application for registration or to seek enforcement of their own judgment within the five (5) -year reglementary period. Still, a close examination of Heirs of Lopez reveals an unusual dilemma that negates its application as precedent to the case at bar, or to detract from Sta. Ana as a general rule for that matter. The execution of the judgment sought for belated enforcement in Heirs of Lopez would have entailed the disturbance of a different final judgment which had already been executed and which was shielded by the legal protection afforded by a Torrens title. In light of those circumstances, there could not have been a "ministerial duty" on the part of the registration authorities to effectuate the judgment in favor of the petitioners in Heirs of Lopez. Neither could it be said that their right of ownership as confirmed by the judgment in their favor was indubitable, considering the earlier decree of registration over the same property accorded to a different party. The Sta. Ana doctrine rests upon the general presumption that the final judgment, with which the corresponding decree of registration is homologous by legal design, has not been disturbed by another ruling by a co-extensive or superior court. That presumption obtains in this case as well. Unless that presumption is overcome, there is no impediment to the continued application of Sta. Ana as precedent.25 We are not inclined to make any pronouncements on the doctrinal viability of Shipside or Heirs of Lopezconcerning the applicability of the rules of prescription or laches in land registration cases. Suffice it to say, those cases do not operate to detract from the continued good standing of Sta. Ana as a general precedent that neither prescription nor laches bars the enforcement of a final judgment in a land registration case, especially when the said judgment has not been reversed or modified, whether deliberately or inadvertently, by another final court ruling. This qualifier stands not so much as a newly-carved exception to the general rule as it does as an exercise in stating the obvious. Finally, the Republic faults the Court of Appeals for pronouncing that the 1941 Decision constituted res judicatathat barred subsequent attacks to the adjudicates title over the subject property. The Republic submits that said decision would operate as res judicata only after the decree of registration was issued, which did not happen in this case. We doubt that a final decisions status as res judicata is the impelling ground for its very own execution; and indeed res judicata is more often invoked as a defense or as a factor in relation to a different case altogether. Still, this faulty terminology aside, the Republics arguments on this point do not dissuade from our central holding that the 1941 Decision is still susceptible to effectuation by the standard decree of registration notwithstanding the delay incurred by Nillas or her predecessors-in-interest in seeking its effectuation and the reasons for such delay, following the prostracted failure of the then Land Registration Commissioner to issue the decree of registration. In this case, all that Nillas needed to prove was that she had duly acquired the rights of the original adjudicates her predecessors-in-interest-in order to entitle her to the decree of registration albeit still in the names of the original prevailing parties who are her predecessors-in interest. Both the trial court and the Court of Appeals were satisfied that such fact was proven, and the Republic does not offer any compelling argument to dispute such proof. WHEREFORE, the Petition is DENIED. No pronouncement as to costs. SO ORDERED. MANOTOK REALTY VS CLT REALTY ANDOVAL-GUTIERREZ, J.:

Before us for resolution are three petitions for review on certiorari:[1]

1.

G.R. No. 123346

The petition in this case was filed by Manotok Realty, Inc. and Manotok Estate Corporation against CLT Realty Development Corporation assailing the Decision[2] dated September 28, 1995 and Resolution dated January 8, 1996 of the Court of Appeals in CA-G.R. CV No. 45255;

2.

G.R. No. 134385

The petition was filed by Araneta Institute of Agriculture, Inc. against Jose B. Dimson (now deceased), represented by his surviving spouse and children, and the Registry of Deeds of Malabon, challenging the Joint Decision[3] dated May 30, 1997 and Resolution dated July 16, 1998 of the Court of Appeals in CA-G.R. CV No. 41883 and CA-G.R. SP No. 34819; and

3.

G.R. No. 148767

The petition here was filed by Sto. Nio Kapitbahayan Association, Inc. against CLT Realty Development Corporation questioning the Decision[4] of the Court of Appeals dated March 23, 2001 in CA-G.R. CV No. 52549.

On March 6, 2002, these petitions were consolidated[5] as the issue involved is the validity of the parties titles over portions of land known as theMaysilo Estate located at Caloocan City and Malabon, Metro Manila, covered by Original Certificate of Title (OCT) No. 994 of the Registry of Deeds of Caloocan City. It is this same OCT No. 994 from which the titles of the parties were purportedly derived.

We shall state the antecedents of these cases separately considering their peculiar circumstances.

1. G.R. No. 123346

(Manotok Realty, Inc. and Manotok Estate Corporation, petitioners, vs. CLT Realty Development Corporation, respondents)

On August 10, 1992, CLT Realty Development Corporation (CLT Realty) filed with the Regional Trial Court, Branch 129, Caloocan City a complaint for annulment of Transfer Certificates of Title (TCT), recovery of possession, and damages against Manotok Realty, Inc. and Manotok Estate Corporation (Manotok Corporations) and the Registry of Deeds of Caloocan City, docketed as Civil Case No. C15539.

The complaint alleges inter alia that CLT Realty (plaintiff) is the registered owner of Lot 26 of the Maysilo Estate located in Caloocan City, covered by TCT No. T-177013 of the Registry of Deeds of said city; that this TCT was originally derived from OCT No. 994; that on December 10, 1988, CLT Realty acquired Lot 26 from its former registered owner, Estelita I. Hipolito, by virtue of a Deed of Sale with Real Estate Mortgage; that she, in turn, purchased the same lot from Jose B. Dimson; that Manotok Corporations (defendants) illegally took possession of 20 parcels of land (covered by 20 separate titles[6]) within said Lot 26 owned by CLT Realty; that based on the technical descriptions of Manotok Corporations titles, their property overlapor embrace Lot 26 of CLT Realty; and that the titles of Manotok Corporations constitute a cloud of doubt over the title of CLT Realty. The latter thus prays that the 20 titles of Manotok Corporations be cancelled for being void; and that Manotok Corporations be ordered to vacate the disputed portions of Lot 26 and turn over possession thereof to CLT Realty, and to pay damages.

In their answer with counterclaim, Manotok Corporations denied the material allegations of the complaint, alleging that Jose B. Dimsons title (TCT No. R-15166) was irregularly issued, hence void; and that consequently, the titles of Estelita Hipolito (TCT No. R-17994) and CLT Realty (TCT No. 177013) derived therefrom are likewise void. By way of affirmative defense, Manotok Corporations assert ownership of the parcel of land being claimed by CLT Realty, alleging that they acquired the same from the awardees or vendees of the National Housing Authority.

During the pre-trial conference, the trial court, upon agreement of the parties, approved the creation of a commission composed of three commissioners tasked to resolve the conflict in their respective titles. On July 2, 1993, the trial court issued an Order[7] defining the issues to be resolved by the commissioners, thus:

1. Whether or not the property covered by the Transfer Certificates of Title of defendants (Manotok Realty, Inc. and Manotok Estate Corporation) pertain to or involved Lot No. 26 of the Maysilo Estate presently titled in the name of the plaintiff (CLT Realty Development Corporation); and 2. Whether or not the property covered by the title of the plaintiff and the property covered by the titles of the defendants overlap.[8]

The commissioners chosen were Engr. Avelino L. San Buenaventura (nominated by CLT Realty), Engr. Teodoro I. Victorino (nominated by Manotok Corporations), and Engr. Ernesto S. Erive (chosen by the two commissioners and the parties). Significantly, Engr. Ernesto Erive is the Chief of the Surveys Division, Land Management Bureau, Department of Environment and Natural Resources (DENR), Quezon City.[9] On July 2, 1993, the three took their oaths of office in open court.

On October 8, 1993, Ernesto Erive and Avelino San Buenaventura submitted an exhaustive Joint Final Report[10] (Majority Report) with the following conclusion:

h. Based on the foregoing, it is the conclusion of the undersigned Commissioners that defendants (Manotok Realty, Inc. and Manotok Estate Corporation) titles overlap portions of plaintiffs (CLT Realty Development Corporation) title, which overlapping is due to the irregular and questionable issuance of TCT Nos. 4211 (also of TCT No. 4210), 5261, 35486, 1368 to 1374. The inherent technical defects on TCT No. 4211 (from where defendants derive their titles) and TCT No. 4210 which were exhaustively elucidated above, point to the fact that there was no approved subdivision of Lot 26 which served as legal basis for the regular issuance of TCT Nos. 4210 and 4211. Thus, as between plaintiffs title, which was derived from regularly issued titles, and defendants titles, which were derived from irregularly issued titles, plaintiffs title which pertains to the entire Lot 26 of the Maysilo Estate should prevail over defendants titles.

On the other hand, Teodoro Victoriano submitted his Individual Final Report[11] (Minority Report) dated October 23, 1993 with the following findings:

f. That viewed in the light of the foregoing considerations, there is no question that the different parcels of land which are covered by defendants transfer certificates of title in question are parts of Lot 26 of then Maysilo Estate; g. That on the basis of the technical descriptions appearing on the certificates of titles of the defendants, it is ascertained that the parcels of land covered therein overlap portions of the parcel of land which is covered by the plaintiffs certificate of title.

The trial court then scheduled the hearing of the two Reports. CLT Realty filed its objections to the Minority Report. For its part, Manotok Corporations submitted their comment/objections to the Majority Report.

On February 8, 1994, the trial court issued an Order directing the parties to file their respective memoranda to enable this court to adopt wholly or partially the memorandum for either as the judgment herein, x x x.[12]

On April 6, 1994, Manotok Corporations submitted their Memorandum praying that the trial court approve the Minority Report and render judgment in their favor.

CLT Realty likewise filed its Memorandum on April 15, 1994 praying that the Majority Report be approved in toto, and that judgment be rendered pursuant thereto.

In its Order of April 22, 1994, the trial court considered the case submitted for decision.[13]

On May 10, 1994, the trial court rendered its Decision, the dispositive portion of which reads: WHEREFORE, premises considered, judgment is hereby rendered in favor of plaintiff (CLT Realty) and against defendants (Manotok Corporations) as follows: 1. Ordering the annulment and cancellation of defendants Transfer Certificates of Title Nos. 4210 and 4211 of the Registry of Deeds of Caloocan City which encroach on plaintiffs 201,288 square meters of Lot No. 26 of the Maysilo Estate, Caloocan City; 2. Ordering defendants to vacate said 201,288 square meters of Lot No. 26 registered in the name of plaintiff; 3. Ordering defendants jointly and severally to pay plaintiff the sum of P201,288.00 annually from March 15, 1989, as reasonable compensation for defendants occupancy and use of the 201,288 square meters involved in this case until the area is vacated; 4. Ordering defendants jointly and severally to pay plaintiffs counsel (Villaraza & Cruz Law Office) the sum of P50,000.00 as attorneys fees; and 5. Ordering defendants jointly and severally to pay the costs of suit. Defendants Counterclaim is dismissed for lack of merit.

SO ORDERED.

The findings of fact and conclusions contained in the Majority Report, which the trial court adopted in its Decision, are quoted as follows:

7. That the following facts were established by the undersigned Commissioners: a. Records show that Maysilo Estate was surveyed under Plan No. Psu-2345 on September 8 to 27, October 4 to 21 and November 17 to 18, 1991; b. That on the basis of the Decision rendered on December 3, 1912 by Hon. Norberto Romualdez in Land Registration Case No. 4429 pursuant to which the Decree No. 36455 was issued and the approved plan Psu2345, the Maysilo Estate was registered under Republic Act No. 496 and Original Certificate of Title No. 994, OCT994, was issued by the Registry of Deeds of Rizal, covering 34 parcels of land, Lots 1 to 6, 7-A, 8 to 15, 17 to 22, 23-A, 24, 25-A, 25-D and 26 to 33, all of Psu-2345. c. The original copy of OCT-994 in its original form although dilapidated is on file at the Registry of Deeds of Caloocan City; d. That according to the documents submitted by the plaintiff, TCT-177013 in the name of plaintiff CLT Realty Development Corporation specifically describes the parcel of land covered by its title as Lot 26, Maysilo Estate. TCT-177013 was a transfer from TCT-R-17994 registered in the name of Estelita Hipolito which in turn is a transfer from TCT-R-15166 registered in the name of Jose B. Dimson which also is a transfer from OCT-994. TCT-R17994 and TCT-R-15166 also specifically describe the parcel of land covered by the titles as Lot 26, Maysilo Estate; e. That defendant Manotok Realty Inc.s properties are covered by TCT Nos. 7528, 7762, 8012, 9866, C17272, 21107, 21485, 26405, 26406, 26407, 33904, 34255, C-35267, 41956, 53268, 55896, T-1214528, 163902 and 165119, while defendant Manotok Estate Corporations property is covered by TCT No. T-232568, all of the Registry of Deeds of Caloocan City. f. That on the basis of the technical descriptions on the titles of defendants, the parcels of land covered therein overlap portions of the parcel of land covered by plaintiffs title; g. That according to the documents of defendants, Lot 26 was apparently subdivided which led to the issuance of Transfer Certificates of Title Nos. 4210 and 4211 which were registered on September 9, 1918 in the names of Messrs. Alejandro Ruiz and Mariano Leuterio. All of defendants titles are derived from TCT No. 4211.

h. The original copy of OCT-994 does not contain the pages where Lot 26 and some other lots are supposedly inscribed; i. TCT No. 4211 was later cancelled by TCT No. 5261 in the name of Francisco J. Gonzales which was later cancelled by TCT No. 35486 in the names of Jose Leon Gonzales, Consuelo Susana Gonzales, Juana Francisca Gonzales, Maria Clara Gonzales, Francisco Felipe Gonzales and Concepcion Maria Gonzales; j. Upon examination of the original copy of OCT-994, it can be seen that the technical descriptions of the lots and the certificate itself are entirely written in the English language. On the other hand, it was noticed that the technical descriptions on TCT Nos. 4211 (as well as TCT No. 4210) 5261 and 35486 are inscribed in the Spanish language in these certificates; k. The dates of the original survey of the mother title OCT-994 (September 8-27, October 4-21 and November 17-18, 1911) are not indicated on TCT Nos. 4211 (also on TCT No. 4210), 5261 and 35486. Rather, an entirely different date, December 22, 1917, is indicated at the end of the Spanish technical descriptions on TCT No. 4211 (also on TCT No. 4210), 5261 and 35486; l. The parcel of land covered by the successive titles TCT Nos. 4211, 5261 and 35486 is not identified by a lot number. There is no reference or mention of Lot 26 of the Maysilo Estate in the technical description of said titles. m. That there is no subdivision survey plan number indicated on TCT No. 4211 (also on TCT No. 4210), 5261 and 35486 covering the purported subdivision of Lot 26. Upon verification with the Bureau of Lands or in the Land Registration Authority, which are the official depositories of all approved survey plans, no survey plan covering said subdivision could be found; n. The three (3) separate lots covered by TCT Nos. 4210 and 4211 which allegedly were the result of the subdivision of Lot 26 were not designated or identified as Lot 26-A, Lot 26-B and Lot 26-C to conform with existing practice; o. That it appears that the parcel of land covered by the successive titles TCT No. 4211, then 5261 and lastly 35486 was again subdivided under Plan Psu-21154. The alleged subdivision plan Psd-21154 had seven (7) resultant lots which are issued individuals certificates, TCT Nos. 1368 thru 1374, six of which are in the names of each of the six children of Francisco J. Gonzales; p. Plan Psd-21154 appears to have been prepared on September 15, 21, 29 and October 5-6, 1946 according to the technical descriptions appearing on TCT Nos. 1368 thru 1374; q. TCT Nos. 1368 thru 1374 are written in the English language and the technical descriptions of the lots covered therein indicate the original survey of the mother title as September 8-27, October 4-21 and November 17-18, 1911 which dates are not found in the mother title TCT No. 35486 or the antecedent titles TCT No. 5261 and 4211; r. It appears that these seven (7) properties covered by TCT Nos. 1368 thru 1374 were later expropriated by the Republic of the Philippines through the Peoples Homesite and Housing Corporation (now the National Housing Authority) after which they were consolidated and subdivided into 77 lots under (LRC) Pcs-1828 for resale to tenants. Manotok Realty, Inc. appears to be one of the original vendees of said lots having acquired Lot 11-B covered by TCT No. 34255. It appears that some of the tenants later sold their lots to various vendees some of whom are the defendants, Manotok Realty, Inc. and Manotok Estate Corporation; s. That Psd-21154, the plan which allegedly subdivided the lot covered by TCT No. 35486 (formerly covered by TCT No. 4211, then TCT No. 5261), could not be traced at the official depository of plans which is the Bureau of Lands. According to the EDPS Listings of the Records Management Division of the Lands Management Bureau (formerly the Bureau of Lands), there is no record of the alleged plan Psd-21154. Accordingly, said EDPS listings indicate those survey plans which were salvaged after the fire that gutted the Philippines from the Japanese forces. It appears, however, from TCT Nos. 1368 thru 1374 that psd-21154 was done after the war on September 15, 21, 29 and October 5-6, 1946; t. Upon examination of the technical descriptions inscribed on TCT Nos. 1368 thru 1374, it was noticed that the tie lines deviated from the mother lots tie point which is Bureau of Lands Location Monument No. 1, Caloocan City. Instead different location monuments of adjoining Piedad Estate were used. The tie point used in TCT No. 1368 is B.M. 10, Piedad Estate while TCT Nos. 1369 and 1370 used B.M. No. 9, Piedad Estate; and TCT Nos. 1371, 1372, 1373 and 1374 used B.M. No. 7, Piedad Estate. The changing of the tie points resulted in the shifting of the position of the seven (7) lots do not fall exactly inside the boundary of the mother lot. The same is true when the lots described on the titles of the defendants are plotted on the basis of their technical descriptions inscribed on said titles.

8. In the light of the foregoing facts, the undersigned Commissioners have come to the following conclusions: a. There are inherent technical infirmities or defects on the face of TCT Nos. 4211 (also on TCT No. 4210), 5261 and 35486. The fact that the technical descriptions in TCT Nos. 4211, 5261 and 35486 are written in Spanish while those on the alleged mother title, OCT-994, were already in English is abnormal and contrary to the usual practice in the issuance of titles. If OCT-994 is the mother title of TCT Nos. 4211, 5261 and 35486, then said titles should also be written in English because OCT-994 is already in English. It is possible that an ascendant title be written in Spanish and the descendant title in English, the language now officially used, but the reverse is highly improbable and irregular. b. Also, the fact that the original survey dates of OCT-994 (September 8-27, October 4-21 and November 17-18, 1911) are not indicated on the technical descriptions on TCT Nos. 4211, 5261 and 35486 but an entirely different date, December 22, 1917, is instead indicated likewise leads to the conclusion that TCT Nos. 4211, 5261 and 35486 could not have been derived from OCT-994. It is the established procedure to always indicate in the certificate of title, whether original or transfer certificates, the date of the original survey of the mother title together with the succeeding date of subdivision or consolidation. Thus, the absence of the original survey dates of OCT-994 on TCT Nos. 4211, 5261 and 35486 is the original survey date of the mother title, then OCT-994 is not the mother title of TCT Nos. 4211, 5261 and 35486 not only because the original survey dates are different but because the date of original survey is always earlier than the date of the issuance of the original title. OCT-994 was issued on May 3, 1917 and this is much ahead of the date of survey indicated on TCT Nos. 4210 and 4211 which is December 22, 1917; c. Granting that the date December 22, 1917 is the date of a subdivision survey leading to the issuance of TCT Nos. 4210 and 4211, there are, however, no indications on the face of the titles themselves which show that a verified and approved subdivision of Lot 26 took place. In subdividing a lot, the resulting parcels are always designated by the lot number of the subdivided lot followed by letters of the alphabet starting from the letter A to designate the first resultant lot, etc., for example, if Lot 26 is subdivided into three (3) lots, these lots will be referred to as Lot 26-A, Lot 26-N and Lot 26-C followed by a survey number such as Psd-_____ or (LRC) Psd-_____. However, the lots on TCT Nos. 4210 and 4211 do not contain such descriptions. In fact, the parcels of land covered by TCT Nos. 4210 and 4211 are not even described by lot number and this is again technically irregular and defective because the designation of lots by Lot Number was already a practice at that time as exemplified by the technical descriptions of some sub-lots covered by OCT-994, i.e., 23-A, 25-A, 25-D, etc.; d. That TCT Nos. 4210 and 4211 which allegedly was the result of a subdivision of Lot 26 should not have been issued without a subdivision plan approved by the Director of Lands or the Chief of the General Land Registration Office. Republic Act No. 496 which took effect on November 6, 1902, particularly Section 58 thereof, provided that the Registry of Deeds shall not enter the transfer certificate to the grantee until a plan of such land showing all the portions or lots into which it has been subdivided, and the technical description of each portion or lot, have been verified and approved by the Director of Lands and as corroborated by Section 44, Paragraph 2, and that the plan has been approved by the Chief of the General Land Registration Office, or by the Director of Lands as provided in Section fifty-eight of this Act, the Registry of Deeds may issue new certificates of title for any lot in accordance with said subdivision plan; e. The absence of a lot number and survey plan number in the technical description inscribed on TCT Nos. 4210 and 4211 and the absence of a subdivision survey plan for Lot 26 at the records of the Bureau of Lands or the Land Registration Authority leads to the conclusion that there was no verified and approved subdivision survey plan of Lot 26 which is a compulsory requirement needed in the issuance of said titles; f. Similarly, the absence of plan Psd-21154 from the files of the Bureau of Lands, the official depository of survey plans, is another indication that the titles covered by TCT Nos. 1368 thru 1374 which were derived from TCT No. 4211 are again doubtful and questionable; g. Moreover, the changing of the tie points in the technical descriptions on TCT Nos. 1368 thru 1374 from that of the mother lots tie point which is BLLM No. 1, Caloocan City to different location monuments of adjoining Piedad Estate which resulted in the shifting of the position of the seven (7) lots in relation to the mother lot defeats the very purpose of tie points and tie lines since the accepted practice is to adopt the mother lots tie point in order to fix the location of the parcels of land being surveyed on the earths surface.[14]

Manotok Corporations then interposed an appeal to the Court of Appeals. For its part, CLT Realty filed a motion to amend/correct the dispositive portion of the above Decision alleging that TCT Nos. 4210 and 4211 mentioned therein are mistakenly referred to as the titles of

Manotok Corporations; and that to conform to the body of the Decision, the correct numbers of the titles ordered to be cancelled should be indicated. In its Order dated May 30, 1994, the trial court granted the motion, thus:

WHEREFORE, premises considered, the Motion to Amend/Correct Judgment dated May 23, 1994 filed by counsel for plaintiff is granted. Accordingly, the first paragraph of the dispositive portion of the Decision of this Court dated May 10, 1994 is amended as follows: xxx 1. Ordering the annulment and cancellation of Transfer Certificates of Title Nos. 7528, 7762, 8012, 9866, C-17272, 21107, 21485, 26405, 26406, 26407, 33904, 34255, C-35267, 41956, 53268, 55897, T-121428, 163902 and 165119 in the name of defendant Manotok Realty, Inc. and Transfer Certificate of Title No. T-232568 in the name of defendant Manotok Estate Corporation of the Registry of Deeds of Caloocan City which encroach on plaintiffs 201,288 square meters of Lot No. 26 of the Maysilo Estate, Caloocan City. x x x. SO ORDERED.

The Court of Appeals, in its Decision dated September 28, 1995 in CA-G.R. CV No. 45255, affirmed the Decision of the trial court, except as to the award of damages which was ordered deleted, thus:

WHEREFORE, in view of the foregoing, judgment is hereby rendered AFFIRMING the Decision dated May 10, 1994, as corrected by the Order dated May 30, 1994, rendered by the trial court, with the modification that the award of damages in favor of plaintiff-appellee is hereby DELETED. No costs. SO ORDERED.

Manotok Corporations motion for reconsideration was denied by the Appellate Court in its Resolution dated January 8, 1996. Hence, the present petition of Manotok Corporations. They allege in essence that the Court of Appeals erred: 1. In upholding the trial courts Decision which decided the case on the basis of the Commissioners Report; and 2. In giving imprimatur to the trial courts Decision even though the latter overlooked relevant facts recited in the Minority Report of Commissioner Victorino and in the comment of petitioners on the Majority Report of Commissioners San Buenaventura and Erive, detailing the legal and factual basis which positively support the validity of petitioners title and ownership of the disputed parcels of land. 2.

G.R. No. 134385

(Araneta Institute of Agriculture, Inc., petitioner, vs. Heirs of Jose B. Dimson, represented by his compulsory heirs: his surviving spouse, Roqueta R. Dimson and their children, Norma and Celso Tirado, Alson and Virginia Dimson, Linda and Carlos Lagman, Lerma and Rene Policar, and Esperanza R. Dimson; and Registry of Deeds of Malabon, respondents)

Records show that on December 18, 1979, Jose B. Dimson filed with the then Court of First Instance of Rizal, Branch 33, Caloocan City a complaint for recovery of possession and damages against Araneta Institute of Agriculture, Inc. (Araneta Institute), docketed as Civil Case No. C-8050. Dimson alleged in his amended complaint that he is the absolute owner of a parcel of land located at Barrio Potrero, Malabon, Metro Manila with an area of 50 hectares of the Maysilo Estate, covered by TCT No. R-15169 of the Registry of Deeds of Caloocan City; that he discovered that his land has been illegally occupied by Araneta Institute; that the latter has no legal and valid title to the land; and that Araneta Institute refused to vacate the land and remove its improvements thereon despite his repeated demands.

In its answer, Araneta Institute admitted occupying the disputed land by constructing some buildings thereon and subdividing portions thereof, claiming that it is the absolute owner

of the land by virtue of TCT No. 737[15] and TCT No. 13574.[16] It further alleged that Dimsons title of the subject land is void, hence, his complaint has no cause of action.

On May 28, 1993, the trial court rendered a Decision[17] in favor of Dimson, thus:

WHEREFORE, PREMISES CONSIDERED, judgment is hereby rendered in favor of the plaintiff Jose B. Dimson and against defendant Araneta Institute of Agriculture, ordering 1) defendant Araneta Institute of Agriculture and all those claiming rights and authority under the said defendant Araneta, to vacate the parcel of land covered by plaintiff Dimsons title TCT No. R-15169 of the Registry of Deeds of Metro Manila, District III, Caloocan City, with a land area of 500,000 square meters, more or less; to remove all the improvements thereon; and to return full possession thereof to the said plaintiff Dimson. 2) defendant Araneta Institute of Agriculture to pay plaintiff Dimson the amount of P20,000.00 as and for attorneys fees; and 3) defendant Araneta Institute of Agriculture to pay costs. Defendant Aranetas counterclaim is hereby dismissed for lack of merit. All other counterclaim against plaintiff Dimson are, likewise, hereby dismissed for lack of merit. All claims of all the intervenors claiming rights against the title of plaintiff Dimson TCT R-15169 are hereby dismissed for lack of merit. This is without prejudice on the part of the intervenors Heirs of Pascual David, Florentina David and Crisanta Santos to file the proper case against the proper party/parties in the proper forum, if they so desire. The claim of Virgilio L. Enriquez as co-plaintiff in the instant case is dismissed for lack of merit. SO ORDERED.[18]

Araneta Institute interposed an appeal to the Court of Appeals, docketed as CA-G.R. CV No. 41883.

On May 30, 1997, the Court of Appeals rendered the assailed Decision affirming the Decision of the trial court in favor of Dimson.

WHEREFORE, premises considered, in CA-G.R. CV No. 41883 (Civil Case No. C-8050 of the Regional Trial Court, Branch 122, Caloocan City), with MODIFICATION deleting the award for attorneys fees, the decision appealed from is AFFIRMED, with costs against defendant-appellant. CA-G.R. SP No. 34819 is DENIED DUE COURSE and DISMISSED for lack of merit. SO ORDERED.

In its Decision, the Appellate Court ruled that the title of Araneta Institute to the disputed land is a nullity, holding that: We now proceed to CA-G.R. CV No. 41883. In its first assignment of error, defendant-appellant (Araneta Institute of Agriculture, Inc.) contends that the trial court erred in giving more weight to plaintiffs transfer certificate of title over the land in question notwithstanding the highly dubious circumstances in which it was procured. This validity of plaintiff-appellees (Jose B. Dimson) title is actually the meat of the controversy. It was in the pursuit of this objective to nullify plaintiff-appellees title that CA-G.R. SP No. 34819 was belatedly filed on August 10, 1994, long after plaintiff-appellees TCT No. R-15169 was issued on June 8, 1978. Unfortunately for defendant-appellant, in the light of applicable law and jurisprudence, plaintiff-appellees title must be sustained. Plaintiff-appellees TCT No. R-15169 covers Lot 25- A-2 with an area of 500,000 square meters. This was derived from OCT No. 994 registered on April 19, 1917. TCT No. R-15169 was obtained by plaintiff-appellee Jose B. Dimson simultaneously with other titles, viz: TCT Nos. 15166, 15167, and 15168 by virtue of the Decision dated October 13, 1977 and Order dated October 18, 1977, in Special Proceedings No. C-732. The Order dated October 18, 1977 directed the Registry of Deeds of Caloocan City to issue in the name of Jose B. Dimson separate transfer certificate of titles for the lot covered by plan (LRC) SWO-5268 and for the lots covered by the plans, Exhibits H, I and J. Upon the other hand, defendant-appellant Araneta Institute of Agricultures TCT No. 13574 was derived from TCT No. 26539, while TCT No. 7784 (now TCT No. 21343) was derived from TCT No. 26538. TCT No. 26538 and TCT No. 26539 were both issued in the name of Jose Rato. TCT No. 26538 and TCT No. 26539 both show Decree No. 4429 and Record No. 4429. Decree No. 4429 was issued by the Court of First Instance of Isabela. On the other hand, Record No. 4429 was issued for ordinary Land Registration Case on March 31, 1911 in CLR No. 5898, Laguna (Exhs. 8, 8-A Rivera). The trial court ruled defendant-appellant Araneta Institute of Agricultures TCT No. 13574spurious because this title refers to a property in the Province of Isabela (RTC Decision, p. 19). Another point, Aranetas TCT No. 13574 (Exh. 6) and 21343 are both derived from OCT No. 994 registered on May 3, 1917, which was declared null and void by the Supreme Court in Metropolitan Waterworks and Sewerage System vs. Court of Appeals, 215 SCRA 783 (1992). The Supreme Court ruled: Where two certificates of title purport to include the same land, the earlier in date prevails x x x. Since the land in question has already been registered under OCT No. 994 dated April 19, 1917, the subsequent registration of the same land on May 3, 1919 is null and void. In sum, the foregoing discussions unmistakably show two independent reasons why the title of defendantappellant Araneta Institute of Agriculture is a nullity, to wit: the factual finding that the property in Isabela, and the decision of the Supreme Court in the MWSS case.[19]

Araneta Institute then filed the present petition, ascribing to the Court of Appeals a long list of factual errors which may be stated substantially as follows:

In CA-G.R. CV No. 41883

The Honorable Court of Appeals erred in not holding that the evidence presented by petitioner Araneta Institute clearly establish the fact that it has the better right of possession over the subject property than respondent Jose B. Dimson. A.) There is only one Original Certificate of Title No. 994 covering the Maysilo Estate issued on May 3, 1917 pursuant to the Decree No. 36455 issued by the Court of Land Registration on April 17, 1917. Certifications of responsible government officials tasked to preserve the integrity of the Torrens System categorically confirm and certify that there is only one OCT 994 issued on May 3, 1917. The Government in the exercise of its governmental function of preserving the integrity of the torrens system initiated a fact-finding inquiry to determine the circumstances surrounding the issuance of OCT No. 994 and its derivative titles. The Government fact-finding committee correctly found and concluded that there is only one OCT No. 994 issued on May 3, 1917. The Senate Committee on Justice and Human Rights and the Senate Committee on Urban Planning, Housing and Resettlement conducted an Investigation and concluded that there is only one OCT 994 that was issued on May 3, 1917. The certifications issued by the government officials, notably from the Land Registration Authority, the Department of Justice Committee Report and the Senate Committees Joint Report are all newly-discovered evidence that would warrant the holding of a new trial.[20]

B.)

C.)

D.)

E.)

F.)

3. G.R. No. 148767 (Sto. Nino Kapitbahayan Association, Inc., petitioner, vs. CLT Realty Development Corporation, respondent)

CLT Realty is the registered owner of a parcel of land known as Lot 26 of the Maysilo Estate in Caloocan City, covered by TCT No. T-177013.[21] It acquired the property on December 10, 1998 from the former registered owner Estelita I. Hipolito under TCT No. R-17994, who in turn, acquired it from Jose B. Dimson.

On the other hand, Sto. Nio Kapitbahayan Association, Inc. (Sto. Nio Association), petitioner, is the registered owner of two parcels of land likewise located in Caloocan City, covered by TCT Nos. T-158373 and T-158374. By virtue of these titles, Sto. Nio Association occupied and claimed ownership over a portion of Lot 26.

Thus, on July 9, 1992, CLT Realty filed with the Regional Trial Court, Branch 121, Caloocan City a complaint for annulment of titles[22] and recovery of possession with damages against Sto. Nio Association, docketed as Civil Case No. C-15491. In its complaint,

CLT Realty alleged that based on the technical descriptions on the titles of Sto. Nio Association, an overlapping exists between their respective titles; and that the titles of Sto. Nio Association are void as they are derived from TCT No. 4211,[23] a forged and fictitious title.

In its answer, Sto. Nio Association denied the material allegations of the complaint and asserted that its members have been in possession of the disputed lots prior to 1987. The area had been identified by the government as slum and blighted.

At the pre-trial conference, the parties entered into a stipulation of facts, thus: (1) (2) Both parties admit that the defendant (Sto. Nio Association) is presently occupying the property covered by TCT Nos. 158373 and 158374 located at Barrio Baesa, Caloocan City; and Both parties admit that the plaintiff (CLT) is also the registered owner of the same properties being occupied by the defendant and covered by TCT No. 177013 of the Registry of Deeds of Caloocan City.

Resolving the issue of whose title to the disputed land is valid, the trial court, on September 28, 1995, rendered a Decision in favor of Sto. Nio Association and ordered the cancellation of TCT No. T-177013 in the name of CLT Realty.

However, upon motion for reconsideration by CLT Realty, the trial court, in its Amended Decision dated February 12, 1996, granted the motion, rendered judgment in favor of CLT Realty, and ordered the cancellation of TCT Nos. T-158373 and of Sto. Nio Association, thus: T-158374, both in the name

WHEREFORE, premises considered, the Motion for Reconsideration is hereby GRANTED and judgment is accordingly rendered in favor of the plaintiff CLT REALTY DEVELOPMENT CORPORATION and against the defendant STO. NIO KAPITBAHAYAN ASSOCIATION, INC., ordering the cancellation of TCT Nos. T-158373 and T-158374, both in the name of the defendant. The defendants counterclaim is hereby dismissed for utter lack of merit. SO ORDERED.[24]

The Amended Decision is anchored on the trial courts finding that, based on the evidence, there was fraud in the issuance of TCT No. 4211 from which Sto. Nio Associations titles were derived. The irregularities which attended such issuance were discussed lengthily by the court a quo as follows:

The court finds the motion meritorious. The conflict stems from the fact that the plaintiffs and defendants titles overlap each other, hence, a determination of the respective origins of such titles is of utmost importance. TCT No. T-177013 in the name of the plaintiff was derived from R-17994 T-89 in the name of Estelita Hipolito which title can trace its origin from OCT 994. The boundaries of OCT 994 known as Lot No. 26 of the Maysilo Estate are the same as that of the plaintiffs titles. On the other hand, TCT Nos. T-158373 and T-158374, both in the name of the defendants, are the latest in a series of titles which descend from TCT No. 4211. A trace of the history of TCT No. 4211 reveals that it was succeeded by TCT No. 5261 which was in turn succeeded by TCT No. 35486. TCT No. 35486 was allegedly subdivided into seven lots covered by TCT Nos. 1368 to 1374. One or two of these subdivided lots were the predecessors of the defendants titles. It behooves this court to address the issue of whether or not TCT No. 4211 from which the defendants titles were originally derived can validly trace its origin from OCT 994. There is pervasive evidence that TCT No. 4211 could not have been a true derivative of OCT No. 994. Firstly, the survey dates indicated in OCT No. 994 are September 8-27, October 8-21 and November 1718, all in the year 1911. On the other hand, these dates of original survey are conspicuously missing in TCT No. 4211 contrary to established procedure that the original survey dates of the mother title should be indicated in succeeding titles. Instead, an examination of TCT No. 4211 reveals a different date on its face. This date,

December 22, 1971, could not be an original survey date because it differs from those indicated in the mother title. Of equal importance is the fact that the date of original survey always comes earlier than the date of the issuance of the mother title. Since OCT No. 994 was issued on April 19, 1917, it is highly irregular that the original survey was made only several months later or only on December 22, 1917. Neither is the Court inclined to consider this date as the date a subdivision survey was made. The regular procedure is to identify the subdivided lots by their respective survey or lot numbers, on the contrary, no such lot number is found in TCT No. 4211, pointing to the inevitable conclusion that OCT No. 994 was never validly subdivided into smaller lots, of which one of them is covered by TCT No. 4211. Secondly, the assertion that TCT Nos. 1368 to 1374 which preceded the defendants titles were issued pursuant to subdivision plan PSD 21154 is not supported by the evidence. The Land Management Bureau which handles survey plans has no records of the said PSD 21154. The Registry of Deeds of Rizal has a copy of the plan but the court finds such possession questionable since the Land Registration Authority which supervises the Registry of Deeds does not have a copy of the same. The court therefore believes that the issuance of TCT Nos. 1368 to 1374 is attended by a serious irregularity which cannot be ignored as it affects the very validity of the alleged subdivisions of the land covered by TCT No. 35486. Thirdly, the language of the technical descriptions of the land covered by OCT No. 994 is already in English, while its alleged derivative titles TCT Nos. 4211, 5261 and 35486 are still in Spanish. This is in direct violation of the practice that the language used in the mother title is adopted by all its derivative titles. The reversion to Spanish in the derivative titles is highly intriguing and casts a cloud of doubt to the genuineness of such titles. Fourthly, the tie points used in the mother lot were not adopted by the alleged derivative titles particularly TCT Nos. 1368 to 1374, the immediate predecessors of the defendants titles. The pivotal role of tie points cannot be brushed aside as a change thereof could result to the shifting of positions of the derivative lots in relation to the mother lot. Consequently, overlapping could take place as in fact it did when the defendants titles overlapped that of CLT at the northwestern portion of the latters property. Fifthly, the results of laboratory analysis conducted by a Forensic Chemist of the NBI revealed that TCT Nos. 4210 and 4211 were estimated to be fifty (50) years old as of March 1993 when the examination was conducted. Hence, the documents could have been prepared only in 1940 and not in 1918 as appearing on the face of TCT No. 4211. Based on the foregoing patent irregularities, the court finds the attendance of fraud in the issuance of TCT No. 4211 and all its derivative titles which preceded the defendants titles. Evidently, TCT No. 4211 cannot be validly traced from OCT No. 994. Being void ab initio, it did not give rise to any transmissible rights with respect to the land purportedly invalid, and resultantly, the defendants, being the holders of the latest derivatives, cannot assert any right of ownership over the lands in question. The void ab initio land titles issued cannot ripen into private ownership. (Republic vs. Intermediate Appellate Court, 209 SCRA 90) xxx The courts findings are consistent with a ruling of the Court of Appeals in CA-GR No. 45255 entitled CLT Realty Development Corp. vs. Manotok Realty, Inc., et al. promulgated on September 28, 1995, affirming the decision of the mother branch of this court ordering the cancellation of TCT Nos. 4210 and 4211 which encroached on a specific area of Lot No. 26 of the Maysilo Estate, Caloocan City. This court is also aware that on January 8, 1996, the Court of Appeals denied the Motion for Reconsideration of the defendants in the aforementioned case for lack of merit.[25] (underscoring supplied)

The above Amended Decision was affirmed by the Court of Appeals in its Decision dated May 23, 2001 in CA-G.R. CV No. 52549, thus: WHEREFORE, finding no reversible error in the appealed Decision, We AFFIRM the same. Without pronouncement as to costs. SO ORDERED.[26]

Hence, the present petition based on the following

assigned errors:

1. THE HONORABLE COURT OF APPEALS ERRED IN AFFIRMING IN TOTO THE AMENDED DECISION OF THE COURT A QUO. 2. THE JUDGMENT OF THE HONORABLE COURT OF APPEALS IS PREMISED ON THE MISAPPREHENSION OF FACTS OF THE COURT A QUO. 3. ASSUMING ARGUENDO, WITHOUT NECESSARILY ADMITTING THAT THE ARGUMENTS OF APPELLANT ARE UNAVAILING, THERE ARE SUPERVENING FACTS AND EVENTS, SHOULD THIS HONORABLE COURT CONSIDER THE SAME, THAT WOULD WARRANT THE REVERSAL OF THE CHALLENGED DECISION AND WILL IMPEL A DIFFERENT CONCLUSION.[27]

In sum, the three instant petitions assail the validity of: (1) TCT No. R-15169 of the Registry of Deeds of Caloocan City in the name of Jose B. Dimson, covering Lot 25-A-2 of the Maysilo Estate;[28] and (2) TCT No. T-177013 of the same Registry of Deeds in the name of CLT Development Corporation, covering Lot 26, also of the Maysilo Estate.[29]

In the meantime, petitioners Manotok filed with this Court two separate Manifestations stating that a (1) Report of the Fact-Finding Committee dated August 28, 1997 composed of the Department of Justice (DOJ), Land Registration Authority and the Office of the Solicitor General, and (2) Senate Committee Report No. 1031 dated May 25, 1998 were issued by the DOJ and the Senate. Both reports conclude that there is only one OCT No. 994issued, transcribed and registered on May 3, 1917.

The respondents in these cases vehemently opposed the said Manifestations alleging, among others, that the same are nothing but a crude attempt to circumvent and ignore time-honored judicial procedures and sabotage the orderly administration of justice by using alleged findings in the alleged reports prepared by the DOJ and the Senate Committee that were never presented before the trial courts to obtain a reversal of the questioned Decisions. At the very least, said procedure is highly irregular, improper and contrary to the dictates of due process.[30]

Summary of the Contentions of the Parties

I.

G.R. No. 123346

Petitioners Manotok Corporations mainly contend that the Court of Appeals erred in affirming the lower courts Decision which was rendered without conducting trial for the reception of evidence. It merely relied on the technical report of the commissioners appointed by the court based on the parties nomination. They (petitioners) were thus denied due process as they were not able to present evidence in a full-blown trial.

Respondent CLT Realty, on the other hand, maintains that the factual findings of the commissioners are supported by evidence. The contending parties were accorded due process because they submitted their respective evidence to the commissioners in the course of the

proceedings. The same evidence became the basis of their Majority and Minority Reports. The two Reports were later heard and passed upon by the trial court.

Respondent CLT Realty adds that the Decision of the trial court, upheld by the Court of Appeals, complies with the requirement of Section 14, Article VIII of the Constitution since it clearly and distinctly expresses the facts and the law upon which it is based.

II.

G.R. 134385

Petitioner Araneta Institute basically submits that the case of MWSS vs. CA[31] cited in the Decision dated May 30, 1997 of the Court of Appeals is inapplicable to the present case. In that case, it upheld TCT No. 15167 of Dimson derived from OCT 994 issued and registered earlier, or on April 19, 1917. Whereas, the MWSS title was derived from OCT 994 issued and registered later, or on May 3, 1917. Appellate Court erred when it relied onMWSS vs. CA.[32] The

On the other hand, respondents heirs of Dimson counter that the validity of Dimsons title, TCT No. 15167, has been upheld by this Court in MWSS case.

III.

G.R. No. 148767

Like petitioner Araneta Institute in G.R. No. 134385 and petitioners Manotok Corporations in G.R. No. 123346, petitioner Sto. Nio Association contends that there are supervening facts and events that transpired after the trial court rendered its Amended Decision that if considered will result in a different conclusion. These are the two Reports of the DOJ and Senate Fact-Finding Committees that there is only one OCT No. 994 issued on May 3, 1917. Thus, with a new trial, and with the presentation of these Reports as evidence, it could be shown that the titles of Jose Dimson and CLT Realty are void.

Ruling of the Court

The present petitions must fail.

At the outset, it bears stressing that under Rule 45 of the 1997 Rules of Civil Procedure, as amended, our jurisdiction over cases brought to us from the Court of Appeals is limited to reviewing and correcting errors of law committed by said court. The Supreme Court is not a trier of facts. Thus, it is not our function to review factual issues and examine, evaluate or weigh the probative value of the evidence presented by the parties.[33] We are not bound to analyze and weigh all over again the evidence already considered in the proceedings below.[34]

Here, the paramount question being raised in the three petitions is whether TCT No. 15169 issued in the name of Jose B. Dimson and TCT No. 177013 issued in the name of CLT are valid. Undoubtedly, such issue is a pure question of fact a matter beyond our power to determine. Where, as here, the findings of fact of the trial courts are affirmed by the Court of Appeals, the same are accorded the highest degree of respect and, generally, will not be disturbed on appeal. Such findings are binding and conclusive on this Court.[35]

Be that as it may, to reinforce our conclusion, we shall still proceed to discuss why the present petitions have no merit.

As regards G.R. No. 123346 (Manotok Corporations vs. CLT Realty, involving Lot 26), the trial court acted properly when it adopted the Majority Report of the commissioners as part and parcel of its Decision. That is allowed in Section 11, Rule 32 of the Revised Rules of Court (now the 1997 Rules of Civil Procedure, as amended), quoted below: SEC. 11. Hearing upon report. Upon the expiration of the period of ten (10) days referred to in the preceding section, the report shall be set for hearing, after which the court shall render judgment by adopting, modifying, or rejecting the report in whole or in part or it may receive further evidence or may recommit it with instructions. (underscoring supplied)

The case of overlapping of titles necessitates the assistance of experts in the field of geodetic engineering. The very reason why commissioners were appointed by the trial court, upon agreement of the parties, was precisely to make an evaluation and analysis of the titles in conflict with each other. Given their background, expertise and experience, these commissioners are in a better position to determine which of the titles is valid. Thus, the trial court may rely on their findings and conclusions.

It bears stressing that the parties opted to submit the case objections/comments on the commissioners reports.

for decision on the bases, among others, of their respective

Thus, petitioners Manotok Corporations, under the doctrine of estoppel, cannot now be permitted to assail the Decision of the trial court which turned out to be adverse to them and insist that it should have conducted further reception of evidence before rendering its judgment on the case.

We note further that while petitioners assail the trial courts Decision as being premature, however, they also assert that the said court should have adopted the Minority Report which is favorable to them. Certainly, we cannot countenance their act of adopting inconsistent postures as this is a mockery of justice.

We noted in the beginning of this Decision that the issue in all these three (3) cases involves the validity of the parties overlapping titles. The titles of the respondents in these cases were derived from OCT No. 994 of the Registry of Deeds of Caloocan City registered on April 19, 1917. The validity of such mother title has already been upheld by this Court in G.R. No. 103558, MWSS vs. Court of Appeals, et al. dated November 17, 1992[36] earlier cited in the assailed Decisions. Significantly, the ruling in MWSS was reiterated in G.R. No. 96259, Heirs of Luis J. Gonzaga vs. Court of Appeals dated September 3, 1996.[37]

We cannot delve anymore into the correctness of the Decision of this Court in MWSS. The said Decision, confirming the validity of OCT No. 994 issued on April 19, 1917 from which the titles of the respondents in the cases at bar were derived, has long become final and executory. Nothing is more settled in law than that once a judgment attains finality it becomes immutable and unalterable. It may no longer be modified in any respect, even if the modification is meant to correct what is perceived to be an erroneous conclusion of fact or law, and regardless of whether the modification is attempted to be made by the court rendering it or by the highest court of the land.[38]

The doctrine of finality of judgment is grounded on fundamental considerations of public policy and sound practice, and that, at the risk of occasional errors, the judgments or orders of courts must become final at some definite time fixed by law; otherwise, there would be no end to litigations, thus setting to naught the main role of courts of justice which is to assist in the enforcement of the rule of law and the maintenance of peace and order by settling justiciable controversies with finality.[39]

Just as the losing party has the right to file an appeal within the prescribed period, the winning party likewise has the correlative right to enjoy the finality of the resolution of his case. We held that "a final judgment vests in the prevailing party a right recognized and protected by law under the due process clause of the Constitution. . . . A final judgment is a vested interest which it is right and equitable that the government should recognize and protect, and of which the individual could not be deprived arbitrarily without injustice."[40] In the present cases, the winning parties, respondents herein, must not be deprived of the fruits of a final verdict.

Finally, we cannot consider the alleged newly-discovered evidence consisting of the DOJ and Senate Fact-Finding Committee Reports invoked by petitioners herein. Certainly, such committee reports cannot override the Decisions of the trial courts and the Court of Appeals upholding the validity of respondents titles in these cases. The said Decisions were rendered after the opposing parties have been accorded due process. It bears stressing that the courts have the constitutional duty to adjudicate legal disputes properly brought before them. The DOJ and Senate, or any other agencies of the Government for that matter, have clearly distinguishable roles from that of the Judiciary. Just as overlapping

of titles of lands is abhorred, so is the overlapping of findings of facts among the different branches and agencies of the Government. This we unmistakably stressed in Agan, Jr., et al. vs. Philippine International Air Terminals Co., Inc., et al,[41] thus:

Finally, the respondent Congressmen assert that at least two (2) committee reports by the House of Representatives found the PIATCO contracts valid and contend that this Court, by taking cognizance of the cases at bar, reviewed an action of a co-equal body. They insist that the Court must respect the findings of the said committees of the House of Representatives. With due respect, we cannot subscribe to their submission. There is a fundamental difference between a case in court and an investigation of a congressional committee. The purpose of a judicial proceeding is to settle the dispute in controversy by adjudicating the legal rights and obligations of the parties to the case. On the other hand, a congressional investigation is conducted in aid of legislation (Arnault vs. Nazareno, G.R. No. L-3820, July 18, 1950). Its aim is to assist and recommend to the legislature a possible action that the body may take with regard to a particular issue, specifically as to whether or not to enact a new law or amend an existing one. Consequently, this Court cannot treat the findings in a congressional committee report as binding because the facts elicited in congressional hearings are not subject to the rigors of the Rules of Court on admissibility of evidence. The Court in assuming jurisdiction over the petitions at bar simply performed its constitutional duty as the arbiter of legal disputes properly brought before it, especially in this instance when public interest requires nothing less. (Underscoring supplied)

WHEREFORE, the instant petitions are DENIED and the assailed Decisions and Resolutions of the Court of Appeals are hereby AFFIRMED intoto. Costs against petitioners.

SO ORDERED.

OWNERS DUPLICATE CERTIFACTEE SEC 41 REYES VS RAVAI REYES REYES, J.B.L., J.: Direct appeal on pure question of law from an order of the Court of First Instance of Ilocos Norte, in its Cadastral Cases Nos. 31, L. R. C. Rec. No. 1188, and 42, L. R. C. Rec. No. 1994, denying petitioners' motion to compel respondent to surrender their owners' duplicates of Original Certificates of Title Nos. 22161 and 8066, as well as from a subsequent order of the same court, refusing, upon petitioners' motion, to reconsider the first order of denial. The undisputed facts are: three brothers, Mateo H., Juan H., and Francisco H., all surnamed Reyes, are the registered owners of several parcels of land, to wit; Lots Nos. 15891, 15896, 15902 and 15912, of the Laoag (Ilocos Norte) Cadastre, embraced in and covered by Original Certificate of Title No. 22161, and also Lots Nos. 20481 and 20484, of the same cadastral survey, embraced in and covered by Original Certificate of Title No. 8066, both of the Registry of Deeds of Ilocos Norte. These titles were issued pursuant to a decree of registration, dated 31 May 1940. On 17 July 1962, petitioners Mateo H. Reyes and Juan H. Reyes filed, in the above stated cadastral cases, a motion for issuance of writs of possession over all the lots covered by both Certificates of Title above referred to. Respondent Mateo Raval Reyes opposed the motion, admitting that he is only in possession of the lots covered by Original Certificate of Title No. 22161, but denying that he possesses the lots covered by Original Certificate of Title No. 8066; however, he claimed that he has been in, and is entitled to, the possession thereof (i.e., Lots Nos. 20481 and 20484), having acquired by way of absolute sale (not recorded) from petitioners' brother, Francisco H. Reyes, the latter's undivided one-third (1/3) share, interest and participation to these disputed lots. After due hearing of this appellant, the court a quo issued, on 20 December 1962, the writ of possession with respect to Lot Nos. 15891 and 15896, which writ was, upon petitioners' motion for reconsideration, amended, on 7 January 1963, to include all the other lots covered by both titles. Respondent did not appeal from this order amending the writ of possession.

Subsequently, petitioners in the above cadastral cases, as plaintiffs, commenced, on 15 January 1963, before the same court of first instance, an ordinary civil action seeking to recover the products of the disputed lots, or their value, and moral damages against respondent Mateo Raval Reyes, as defendant. This case was docketed as its Civil Case No. 3659. Defendant therein (now respondent M. Raval Reyes) answered the complaint and pleaded a counterclaim for partition of all the disputed lots, alleging the same ground he had heretofore raised in his answer and/or opposition to the motion for issuance of writ of possession, i.e., he is their (plaintiffs') co-owner, he having bought from plaintiffs' brother, Francisco H. Reyes, the latter's undivided one-third (1/3) share, interest and participation to these disputed lots. Pending trial on this ordinary civil case (No. 3659), petitioners presented, on 25 February 1963, in the cadastral cases aforementioned, a motion to compel respondent Mateo Raval Reyes to surrender and deliver to them the owners' duplicates of Original Certificates of Title Nos. 22161 and 8066. Respondent opposed this motion. The court a quo denied petitioners' motion, on the ground that the parcels of land covered by both titles are subjects of litigation in Civil Case No. 3659 and the same has not yet been decided on the merits by it. Petitioners subjected the foregoing order to a motion for reconsideration, but without success; hence, the present appeal. Petitioners-appellants dispute the above ruling of the trial court contending that, since the subject matter of Civil Case No. 3659 are not the lots covered by the titles in question but their products or value, and moral damages, these lots are not in litigation in this ordinary civil case; and that since respondent had already raised the issue of ownership and possession of these lots in his opposition to the (petitioners') motion for issuance of writ of possession and, despite this opposition, the court a quo granted the writ, without any appeal being taken, respondent is barred and estopped from raising the same issue in the ordinary civil case, under the principle ofres judicata.1wph1.t On the other hand, respondent-appellee maintains that, having pleaded a counterclaim for partition of the lots in question in said Civil Case No. 3659, the trial court correctly held that these lots are subjects of litigation in this ordinary civil case. He also maintains that petitioners not having impleaded their brother, Francisco H. Reyes, or his heirs, as parties in their motion for issuance of writ of execution, and because these heirs have not intervened in this particular incident, the writ of possession issued by the trial court is, at most, valid only with respect to their (petitioners) undivided two-thirds (2/3) share and participation in these disputed lots; hence, he concludes that he is not barred and estopped from raising the issue of ownership and possession of the undivided one-third (1/3) share and participation of petitioners' brother, Francisco H. Reyes, which share respondent allegedly bought from the latter. In their reply brief, petitioners-appellants refute the latter argument of respondent-appellee by showing that they had previously obtained special authority from the heirs of their deceased brother to represent them in the proceedings had in the court below. The sole issue to be resolved in the instant appeal is: who between petitioners-appellants or respondent-appellee has a better right to the possession or custody of the disputed owners' duplicates of certificates of title. While we agree with the court a quo that the disputed lots are subjects of litigation in Civil Case No. 3659, it appearing that respondent, as defendant therein, had presented a counterclaim for partition of the lots covered by the titles, we see no valid and plausible reason to justify, on this ground, the withholding from the registered owners, such as the petitioners-appellants herein, the custody and possession of the owners' duplicates of certificates of title. In a decided case, this Court has already held that the owner of the land in whose favor and in whose name said land is registered and inscribed in the certificate of title has a more preferential right to the possession of the owners' duplicate than one whose name does not appear in the certificate and has yet to establish his right to the possession thereto. Thus, this Court said: Como acertadamente dijo el Juzgado, lo unico que se suscita es si Ana Umbao de Carpio tiene derecho a la possession del duplicado para el dueno del Certificado de Titulo Original No. 698, con preferencia a la opositora-apelante. A nuestro juicio, la solucion es clara e ineludible. Hallandose admitido que el decreto final que se dicto en el expediente catastral en 28 de mayo de 1936, en relacion con el lote No. 778, fue a favor de Ana Umbao y que el duplicado para el dueo del Certificado de Titulo Original No. 698 se expidio por el Registrador de Titulos a favor de la misma es obvious que quien tiene derecho a poseer el certificado de titulo es ella y no la apelante (art. 41 de la Ley No. 496, tal como ha sido reformado). Alega la apelante que ella tiene tanto derecho como la apelada a poseer el titulo porque el terreno a que se refiere es de la propiedad de las tres hermanas. La pretension no es meritoria Segun el articulo 41 de la Ley No. 496, conforme ha sido enmendado, el duplicado para el dueno debe expedirse por el Registrador a nombre de la persona a cuyo favor se ha decretado el terreno y dispone, ademas, que dicho duplicado debe entregarsele al dueo inscrito. Si la apelante cree que tiene derecho a participar en el lote No. 778, como coheredera, debe ejercitar una accion independiente, encaminada a obtener su participacion. (El Director de Terrenos contra Abacahin 72 Phil. 326). It being undisputed that respondent had already availed of an independent civil action to recover his alleged co-owner's share in the disputed lots by filing a counterclaim for partition in said Civil Case No. 3659, his rights appear to be amply protected; and considering that he may also avail of, to better protect his rights thereto, the provision on notice of lis pendens under Section 24, Rule 14, of the Revised Rules of Court, for the purpose of recording the fact that the lots covered by the titles in question are litigated in said Civil Case No. 3659, we again see no justifiable reason for respondent to retain the custody of the owners' duplicates of certificates of titles.

In view of the above considerations, we deem it unnecessary to pass on the merits of the second contention of petitioners-appellants. Wherefore, the orders appealed from should be, as they are hereby, reversed; and, in accordance with this opinion, respondent Mateo Raval Reyes is hereby ordered to deliver to petitioners the owners' duplicates of Original Certificates of Title No. 22161 and 8066. With costs against respondent-appellee, Mateo Raval Reyes. Concepcion, C.J., Barrera, Dizon, Makalintal, Bengzon, J.P., Zaldivar, Sanchez and Castro, JJ., concur. Regala, J., took no part.

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

The Case

Before us is a Petition for Review[1] under Rule 45 of the Rules of Court, seeking to set aside the March 21, 2002 Amended Decision[2] and the July 22, 2002 Resolution[3] of the Court of Appeals (CA) in CA-GR CV No. 62391. The Amended Decision disposed as follows: WHEREFORE, the dispositive part of the original DECISION of this case, promulgated on November 19, 2001, is SET ASIDE and another one is entered AFFIRMING in part and REVERSING in part the judgment appealed from, as follows: 1. Declaring [Respondent] Romana de Vera the rightful owner and with better right to possess the property in question, being an innocent purchaser for value therefor; Declaring Gloria Villafania [liable] to pay the following to [Respondent] Romana de Vera and to [Petitioner-]Spouses [Noel and Julie] Abrigo, to wit:

2.

As to [Respondent] Romana de Vera: 1. P300,000.00 plus 6% per annum as actual damages; 2. P50,000.00 as moral damages; 3. P50,000.00 as exemplary damages; 4. P30,000.00 as attorneys fees; and Cost of suit.

5.

As to [Petitioner-]Spouses [Noel and Julie] Abrigo: 1. 4. P50,000.00 as moral damages; 2. P50,000.00 as exemplary damages; 3. P30,000.00 as attorneys fees; Cost of suit.[4] The assailed Resolution denied reconsideration.

The Facts

Quoting the trial court, the CA narrated the facts as follows: As culled from the records, the following are the pertinent antecedents amply summarized by the trial court:

On May 27, 1993, Gloria Villafania sold a house and lot located at Banaoang, Mangaldan, Pangasinan and covered by Tax Declaration No. 1406 to Rosenda Tigno-Salazar and Rosita Cave-Go. The said sale became a subject of a suit for annulment of documents between the vendor and the vendees. On December 7, 1993, the Regional Trial Court, Branch 40 of Dagupan City rendered judgment approving the Compromise Agreement submitted by the parties. In the said Decision, Gloria Villafania was given one year from the date of the Compromise Agreement to buy back the house and lot, and failure to do so would mean that the previous sale in favor of Rosenda Tigno-Salazar and Rosita Cave-Go shall remain valid and binding and the plaintiff shall voluntarily vacate the premises without need of any demand. Gloria Villafania failed to buy back the house and lot, so the [vendees] declared the lot in their name. Unknown, however to Rosenda Tigno-Salazar and Rosita Cave-Go, Gloria Villafania obtained a free patent over the parcel of land involved [on March 15, 1988 as evidenced by OCT No. P-30522]. The said free patent was later on cancelled by TCT No. 212598 on April 11, 1996. On October 16, 1997, Rosenda Tigno-Salazar and Rosita Cave-Go, sold the house and lot to the herein [Petitioner-Spouses Noel and Julie Abrigo]. On October 23, 1997, Gloria Villafania sold the same house and lot to Romana de Vera x x x. Romana de Vera registered the sale and as a consequence, TCT No. 22515 was issued in her name. On November 12, 1997, Romana de Vera filed an action for Forcible Entry and Damages against [Spouses Noel and Julie Abrigo] before the Municipal Trial Court of Mangaldan, Pangasinan docketed as Civil Case No. 1452. On February 25, 1998, the parties therein submitted a Motion for Dismissal in view of their agreement in the instant case that neither of them can physically take possession of the property in question until the instant case is terminated. Hence the ejectment case was dismissed.[5] Thus, on November 21, 1997, [petitioners] filed the instant case [with the Regional Trial Court of Dagupan City] for the annulment of documents, injunction, preliminary injunction, restraining order and damages [against respondent and Gloria Villafania]. After the trial on the merits, the lower court rendered the assailed Decision dated January 4, 1999, awarding the properties to [petitioners] as well as damages. Moreover, x x x Gloria Villafania was ordered to pay [petitioners and private respondent] damages and attorneys fees. Not contented with the assailed Decision, both parties [appealed to the CA].[6]

Ruling of the Court of Appeals

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

Issues

Petitioners raise for our consideration the issues below: 1. 2. 3. Whether or not the deed of sale executed by Gloria Villafania in favor of [R]espondent Romana de Vera is valid. Whether or not the [R]espondent Romana de Vera is a purchaser for value in good faith. Who between the petitioners and respondent has a better title over the property in question.[10]

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

The Courts Ruling

The Petition is bereft of merit.

Main Issue: Better Right over the Property

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

Law on Double Sale

The present case involves what in legal contemplation was a double sale. On May 27, 1993, Gloria Villafania first sold the disputed property to Rosenda Tigno-Salazar and Rosita Cave-Go, from whom petitioners, in turn, derived their right. Subsequently, on October 23, 1997, a second sale was executed by Villafania with Respondent Romana de Vera. Article 1544 of the Civil Code states the law on double sale thus: Art. 1544. If the same thing should have been sold to different vendees, the ownership shall be transferred to the person who may have first taken possession thereof in good faith, if it should be movable property. Should it be immovable property, the ownership shall belong to the person acquiring it who in good faith first recorded it in the Registry of Property. Should there be no inscription, the ownership shall pertain to the person who in good faith was first in the possession; and, in the absence thereof, to the person who presents the oldest title, provided there is good faith. Otherwise stated, the law provides that a double sale of immovables transfers ownership to (1) the first registrant in good faith; (2) then, the first possessor in good faith; and (3) finally, the buyer who in good faith presents the oldest title.[13] There is no ambiguity in the application of this law with respect to lands registered under the Torrens system. This principle is in full accord with Section 51 of PD 1529[14] which provides that no deed, mortgage, lease or other voluntary instrument -except a will -- purporting to convey or affect registered land shall take effect as a conveyance or bind the land until its registration.[15] Thus, if the sale is not registered, it is binding only between the seller and the buyer but it does not affect innocent third persons.[16] In the instant case, both Petitioners Abrigo and respondent registered the sale of the property. Since neither petitioners nor their predecessors (Tigno-Salazar and Cave-Go) knew that the property was covered by the Torrens system, they registered their respective sales under Act 3344.[17] For her part, respondent registered the transaction under theTorrens system[18] because, during the sale, Villafania had presented the transfer certificate of title (TCT) covering the property.[19] Respondent De Vera contends that her registration under the Torrens system should prevail over that of petitioners who recorded theirs under Act 3344. De Vera relies on the following insight of Justice Edgardo L. Paras: x x x If the land is registered under the Land Registration Act (and has therefore a Torrens Title), and it is sold but the subsequent sale is registered not under the Land Registration Act but under Act 3344, as amended, such sale is not considered REGISTERED, as the term is used under Art. 1544 x x x.[20] We agree with respondent. It is undisputed that Villafania had been issued a free patent registered as Original Certificate of Title (OCT) No. P-30522.[21] The OCT was later cancelled by Transfer Certificate of Title (TCT) No. 212598, also in Villafanias name.[22] As a consequence of the sale, TCT No. 212598 was subsequently cancelled and TCT No. 22515 thereafter issued to respondent. Soriano v. Heirs of Magali[23] held that registration must be done in the proper registry in order to bind the land. Since the property in dispute in the present case was already registered under the Torrens system, petitioners registration of the sale under Act 3344 was not effective for purposes of Article 1544 of the Civil Code. More recently, in Naawan Community Rural Bank v. Court of Appeals,[24] the Court upheld the right of a party who had registered the sale of land under the Property Registration Decree, as opposed to another who had registered a deed of final conveyance under Act 3344. In that case, the priority in time principle was not applied, because the land was already covered by the Torrens system at the time the conveyance was registered under Act 3344. For the same reason, inasmuch as the registration of the sale to Respondent De Vera under the Torrens system was done in good faith, this sale must be upheld over the sale registered under Act 3344 to Petitioner-Spouses Abrigo.

Radiowealth Finance Co. v. Palileo[25] explained the difference in the rules of registration under Act 3344 and those under the Torrens system in this wise: Under Act No. 3344, registration of instruments affecting unregistered lands is without prejudice to a third party with a better right. The aforequoted phrase has been held by this Court to mean that the mere registration of a sale in ones favor does not give him any right over the land if the vendor was not anymore the owner of the land having previously sold the same to somebody else even if the earlier sale was unrecorded. The case of Carumba vs. Court of Appeals[26] is a case in point. It was held therein that Article 1544 of the Civil Code has no application to land not registered under Act No. 496. Like in the case at bar, Carumba dealt with a double sale of the same unregistered land. The first sale was made by the original owners and was unrecorded while the second was an execution sale that resulted from a complaint for a sum of money filed against the said original owners. Applying [Section 33], Rule 39 of the Revised Rules of Court,[27] this Court held that Article 1544 of the Civil Code cannot be invoked to benefit the purchaser at the execution sale though the latter was a buyer in good faith and even if this second sale was registered. It was explained that this is because the purchaser of unregistered land at a sheriffs execution sale only steps into the shoes of the judgment debtor, and merely acquires the latters interest in the property sold as of the time the property was levied upon. Applying this principle, x x x the execution sale of unregistered land in favor of petitioner is of no effect because the land no longer belonged to the judgment debtor as of the time of the said execution sale.[28] Petitioners cannot validly argue that they were fraudulently misled into believing that the property was unregistered. A Torrens title, once registered, serves as a notice to the whole world.[29] All persons must take notice, and no one can plead ignorance of the registration.[30]

Good-Faith Requirement

We have consistently held that Article 1544 requires the second buyer to acquire the immovable in good faith and to register it in good faith.[31] Mere registration of title is not enough; good faith must concur with the registration.[32] We explained the rationale in Uraca v. Court of Appeals,[33] which we quote: Under the foregoing, the prior registration of the disputed property by the second buyer does not by itself confer ownership or a better right over the property. Article 1544 requires that such registration must be coupled with good faith. Jurisprudence teaches us that (t)he governing principle is primus tempore, potior jure (first in time, stronger in right). Knowledge gained by the first buyer of the second sale cannot defeat the first buyers rights except where the second buyer registers in good faith the second sale ahead of the first, as provided by the Civil Code. Such knowledge of the first buyer does not bar her from availing of her rights under the law, among them, to register first her purchase as against the second buyer. But in converso, knowledge gained by the second buyer of the first sale defeats his rights even if he is first to register the second sale, since such knowledge taints his prior registration with bad faith. This is the price exacted by Article 1544 of the Civil Code for the second buyer being able to displace the first buyer; that before the second buyer can obtain priority over the first, he must show that he acted in good faith throughout (i.e. in ignorance of the first sale and of the first buyers rights) ---- from the time of acquisition until the title is transferred to him by registration, or failing registration, by delivery of possession.[34] (Italics supplied) Equally important, under Section 44 of PD 1529, every registered owner receiving a certificate of title pursuant to a decree of registration, and every subsequent purchaser of registered land taking such certificate for value and in good faith shall hold the same free from all encumbrances, except those noted and enumerated in the certificate.[35] Thus, a person dealing with registered land is not required to go behind the registry to determine the condition of the property, since such condition is noted on the face of the register or certificate of title.[36] Following this principle, this Court has consistently held as regards registered land that a purchaser in good faith acquires a good title as against all the transferees thereof whose rights are not recorded in the Registry of Deeds at the time of the sale.[37] Citing Santiago v. Court of Appeals,[38] petitioners contend that their prior registration under Act 3344 is constructive notice to respondent and negates her good faith at the time she registered the sale. Santiago affirmed the following commentary of Justice Jose C. Vitug: The governing principle is prius tempore, potior jure (first in time, stronger in right). Knowledge by the first buyer of the second sale cannot defeat the first buyer's rights except when the second buyer first registers in good faith the second sale (Olivares vs. Gonzales, 159 SCRA 33). Conversely, knowledge gained by the second buyer of the first sale defeats his rights even if he is first to register, since such knowledge taints his registration with bad faith (see also Astorga vs. Court of Appeals, G.R. No 58530, 26 December 1984) In Cruz vs. Cabana (G.R. No. 56232, 22 June 1984; 129 SCRA 656), it was held that it is essential, to merit the protection of Art. 1544, second paragraph, that the second realty buyer must act in good faith in registering his deed of sale (citing Carbonell vs. Court of Appeals, 69 SCRA 99, Crisostomo vs. CA, G.R. 95843, 02 September 1992). xxx xxx xxx

Registration of the second buyer under Act 3344, providing for the registration of all instruments on land neither covered by the Spanish Mortgage Law nor the Torrens System (Act 496), cannot improve his standing since Act 3344 itself expresses that registration thereunder would not prejudice prior rights in good faith (see Carumba vs. Court of Appeals, 31 SCRA 558). Registration, however, by the first buyer under

Act 3344 can have the effect of constructive notice to the second buyer that can defeat his right as such buyer in good faith (see Arts. 708709, Civil Code; see also Revilla vs. Galindez, 107 Phil. 480; Taguba vs. Peralta, 132 SCRA 700). Art. 1544 has been held to be inapplicable to execution sales of unregistered land, since the purchaser merely steps into the shoes of the debtor and acquires the latter's interest as of the time the property is sold (Carumba vs. Court of Appeals, 31 SCRA 558; see also Fabian vs. Smith, Bell & Co., 8 Phil. 496) or when there is only one sale (Remalante vs. Tibe, 158 SCRA 138).[39] (Emphasis supplied) Santiago was subsequently applied in Bayoca v. Nogales,[40] which held: Verily, there is absence of prior registration in good faith by petitioners of the second sale in their favor. As stated in the Santiago case, registration by the first buyer under Act No. 3344 can have the effect of constructive notice to the second buyer that can defeat his right as such buyer. On account of the undisputed fact of registration under Act No. 3344 by [the first buyers], necessarily, there is absent good faith in the registration of the sale by the [second buyers] for which they had been issued certificates of title in their names. x x x.[41] Santiago and Bayoca are not in point. In Santiago, the first buyers registered the sale under the Torrens system, as can be inferred from the issuance of the TCT in their names.[42] There was no registration under Act 3344. In Bayoca, when the first buyer registered the sale under Act 3344, the property was still unregistered land.[43] Such registration was therefore considered effectual. Furthermore, Revilla and Taguba, which are cited in Santiago, are not on all fours with the present case. In Revilla, the first buyer did not register the sale.[44] In Taguba, registration was not an issue.[45] As can be gathered from the foregoing, constructive notice to the second buyer through registration under Act 3344 does not apply if the property is registered under the Torrenssystem, as in this case. We quote below the additional commentary of Justice Vitug, which was omitted in Santiago. This omission was evidently the reason why petitioner misunderstood the context of the citation therein: "The registration contemplated under Art. 1544 has been held to refer to registration under Act 496 Land Registration Act (now PD 1529) which considers the act of registration as the operative act that binds the land (see Mediante vs. Rosabal, 1 O.G. [12] 900, Garcia vs. Rosabal, 73 Phil 694). On lands covered by the Torrens System, the purchaser acquires such rights and interest as they appear in the certificate of title, unaffected by any prior lien or encumbrance not noted therein. The purchaser is not required to explore farther than what the Torrens title, upon its face, indicates. The only exception is where the purchaser has actual knowledge of a flaw or defect in the title of the seller or of such liens or encumbrances which, as to him, is equivalent to registration (see Sec. 39, Act 496; Bernales vs. IAC, G.R. 75336, 18 October 1988; Hernandez vs. Sales, 69 Phil 744; Tajonera vs. Court of Appeals, L-26677, 27 March 1981),"[46]

Respondent in Good Faith

The Court of Appeals examined the facts to determine whether respondent was an innocent purchaser for value.[47] After its factual findings revealed that Respondent De Vera was in good faith, it explained thus: x x x. Gloria Villafania, [Respondent] De Veras vendor, appears to be the registered owner. The subject land was, and still is, registered in the name of Gloria Villafania. There is nothing in her certificate of title and in the circumstances of the transaction or sale which warrant [Respondent] De Vera in supposing that she need[ed] to look beyond the title. She had no notice of the earlier sale of the land to [petitioners]. She ascertained and verified that her vendor was the sole owner and in possession of the subject property by examining her vendors title in the Registry of Deeds and actually going to the premises. There is no evidence in the record showing that when she bought the land on October 23, 1997, she knew or had the slightest notice that the same was under litigation in Civil Case No. D-10638 of the Regional Trial Court of Dagupan City, Branch 40, between Gloria Villafania and [Petitioners] Abrigo. She was not even a party to said case. In sum, she testified clearly and positively, without any contrary evidence presented by the [petitioners], that she did not know anything about the earlier sale and claim of the spouses Abrigo, until after she had bought the same, and only then when she bought the same, and only then when she brought an ejectment case with the x x x Municipal Court of Mangaldan, known as Civil Case No. 1452. To the [Respondent] De Vera, the only legal truth upon which she had to rely was that the land is registered in the name of Gloria Villafania, her vendor, and that her title under the law, is absolute and indefeasible. x x x.[48] We find no reason to disturb these findings, which petitioners have not rebutted. Spouses Abrigo base their position only on the general averment that respondent should have been more vigilant prior to consummating the sale. They argue that had she inspected the property, she would have found petitioners to be in possession.[49] This argument is contradicted, however, by the spouses own admission that the parents and the sister of Villafania were still the actual occupants in October 1997, when Respondent De Vera purchased the property.[50] The family members may reasonably be assumed to be Villafanias agents, who had not been shown to have notified respondent of the first sale when she conducted an ocular inspection. Thus, good faith on respondents part stands. WHEREFORE, the Petition is DENIED and the assailed Decision AFFIRMED. Costs against petitioners. SO ORDERED.

REPUBLIC VS MENDOZA CHICO-NAZARIO, J.:

Before Us are consolidated Petitions for Review on Certiorari under Rule 45 of the Rules of Civil Procedure, assailing the Decision[1] of the Court of Appeals in CA-G.R. CV No. 57069, dated 30 March 2001, which reversed and set aside the Decision[2] of the Regional Trial Court (RTC) of Cebu, Branch 14, and dismissed for lack of merit Civil Case No. CEB-9563. The present controversy involves a considerable spread of Silot Bay situated in Liloan, Cebu, and originally classified as part of Block B-Timberland, Project No. 29 of LC Map 1391-Liloan of the Land Classification Project of the Province of Cebu, with an area of 87.134 hectares, more or less. On 13 January 1954, Democrito T. Mendoza, Sr. was accorded Ordinary Fishpond Permit No. F-2166-J for an area of 6.25 hectares within Silot Bay, which was previously leased by his father who waived the leasehold rights in his favor. On 26 July of the same year, Democrito Mendoza, Sr. was also issued Ordinary Nipa-Bacauan Permit No. NB 642 for an area of 2.635 hectares, also in Silot Bay. Several years later, on 7 May 1969, Democrito Mendoza, Sr. was issued Ordinary Fishpond Permit No. F-6029-Y encompassing an estimated area of 70.07 hectares within Silot Bay. This new permit covers the combined areas under Ordinary Nipa-Bacauan Permit No. NB 642 and Ordinary Fishpond Permit No. F-2166-J, as well as other areas previously managed by other fishpond permit grantees whichDemocrito Mendoza, Sr. acquired for valuable consideration. Meanwhile, on 16 January 1967, then President Ferdinand E. Marcos issued a Memorandum addressed to the Secretary of Agriculture and Natural Resources, the Chairman of the Board of Governors of the Development Bank of the Philippines, the Undersecretary of Natural Resources, and the Directors of the Bureaus of Fishery, Forestry, and Lands, respectively, thereby constituting a continuing committee to accomplish the following: 1. 2. Identify the exact locations and area of these 700,000 hectares of fishpond areas on or before February 28, 1967. x x x. Within the month of March 1967, all these fishpond areas shall be released by the Bureau of Forestry to the Bureau of Lands as alienable and disposable, but subject to the disposal of the Bureau of Fisheries for fishpond purposes.[3]

Thereafter, on 24 September 1969, Democrito Mendoza, Sr. filed an application for sales patent[4] to purchase the area covered by Ordinary Fishpond Permit No. F-6029-Y.[5] The fishpond permit indicated that the area covered by said permit was only 70.07 hectares; however, upon resurvey by the Bureau of Lands, the area was reported to be measuring 92.3881 hectares. Later, still another survey by the same bureau disclosed that the area applied for was only a little over 89 hectares. On 17 August 1970, then Acting Director of Forestry Jose Viado issued a Letter Certification addressed to the Director of Lands regarding the classification of the property covered by Ordinary Fishpond Permit No. F-6029-Y subject of the sales patent application applied for by Democrito Mendoza, Sr., to wit: Please be informed that the tract of land situated in Silot-Poblacion, Liloan, Cebu, containing an area of 70.07 hectares xxx, is within the Timberland Block-B of LC Project No. 29 ofLiloan, Cebu, per BF Map LC1391. However, since the said area has already been certified as available for fishpond development and is thus no longer needed for forest purposes, the same (the 70.07 hectares shown on Cebu PMD No. 1379) is, therefore, hereby certified as such and released as Alienable or Disposable for fishpond purposes only pursuant to the directive of the President dated January 16, 1967 and for disposition under the Public Land Act, as amended, subject nevertheless, to the following conditions: xxxx 2. That the area herein certified as Alienable or Disposable be solely developed and used for fishpond purposes in consonance with the approved scientific practices and assistance of the personnel of the Philippine Fisheries Commission (Presidential Directive of January 16, 1967).[6] [Emphasis ours]

In compliance with the process for sales patent application, Democrito Mendoza, Sr. secured and submitted separate certifications from concerned government agencies such as the Provincial Engineer of Cebu, the District Engineer of Cebu, the Municipal Council of Liloan, Cebu, the Commissioner of Customs, the Secretary of Public Works and Highways, among other offices, to determine if there were

objections to his application. Based on these certifications issued upon DemocritoMendoza, Sr.s request, it was ascertained that there was no objection to said application and that the same did not interfere with any function or proposed project of the government. Subsequently, notices of sale were published in the Nueva Era and the Mindanao Mail, in addition to the publication in the Official Gazette. The same were posted in conspicuous places within the vicinity of the property subject of the sale and on the bulletin boards of the Municipal Hall of Liloan, Cebu, and of the Bureau of Lands, District VII-I, both in Cebu City. In the interim, Presidential Decree No. 43, Providing for the Accelerated Development of the Fishery Industry of the Philippines,[7] was issued on 9 November 1972. Whereupon all public lands, such as tidal swamps, mangrove and other swamps, marshes, ponds and streams within public lands, including public lands left dry during the lowest low tide and covered by water during the highest tide; and which are not needed for forestry purposes were declared available for fishpond purposes and automatically transferred to the Bureau of Fisheries for its administration and disposition.[8] On 18 January 1973, a day before the scheduled auction sale of the disputed property, then Liloan Mayor Cesar Bugtai filed a letterprotest with the Director of Lands objecting to the proposed sale of the property. According to Mayor Bugtai, the area was intended for development by the local government as a tourist attraction. Despite said opposition by the municipal mayor, the District Land Office of Cebu City proceeded with the scheduled auction sale on 19 January 1973, wherein Democrito Mendoza, Sr. was declared winner, being the sole bidder thereat. The opposition of Mayor Bugtai was subsequently recommended for dismissal by the Bureau of Lands for lack of merit. Thereafter, then Acting Director of the Bureau of Lands Ramon N. Casanova recommended the approval of Democrito Mendoza, Sr.s request for the issuance of a patent to the land covered by Sales (Fishpond) Application No. (VI-I) 41-A on grounds of justice and equity. In the First Indorsement of then Secretary of Agriculture and Natural Resources Arturo Tanco, Jr., dated 5 March 1974 to the Office of the President, the recommendation of Acting Director of the Bureau of Lands Ramon N. Casanova was favorably endorsed. On 21 May 1974, then Presidential Executive Assistant Jacobo C. Clave issued a Memorandum informing the Secretary of the Department of Natural Resources that President Marcos had approved the recommendation advising approval of the request of Democrito Mendoza, Sr. for the issuance of a patent over the disputed property. Prior to the formal award of the subject property, Democrito Mendoza, Sr., however, had caused the property to be subdivided into Lots 1 and 2. Lot 1 was further subdivided into four, namely Lots 1-A, 1-B, 1-C, and 1-D. Thereafter, Democrito Mendoza, Sr. made an assignment of his rights and interests over Lots 1-B, 1-C, and 1-D in favor of his three children Gwendolyn,[9] Vilma,[10] and Democrito, Jr.,[11] all surnamed Mendoza. For himself, Democrito Mendoza, Sr. retainedLot 1-A[12] with an area of 215,838 square meters and Lot 2 with an area of 241.61 square meters. Subsequently, Gwendolyn, Vilma, and Democrito, Jr. filed their respective sales patent applications for the property assigned to them by their father. On 26 June 1974, Acting Director of the Bureau of Lands Ramon N. Casanova issued an Order awarding the sales patents over the disputed property toDemocrito Mendoza, Sr. and his three children Gwendolyn, Vilma, and Democrito, Jr., respectively, to wit: It appearing that the proceedings had in connection with the above-noted applications were in accordance with law and existing regulations, the portions of the land applied for which correspond to Lot No. 1-A & Lot No. 2, Si(F) (VII) 42-D are hereby awarded to Democrito T. Mendoza at P200.00 per hectare or P4,800.00 for the whole tract of 24.0000 hectares; Lot No. 1-B, Si(F) (VI-I) 42-D, to Gwendolyn C. Mendoza at P200.00 per hectare or P4,600.00 for the whole tract of 23.0000 hectares; Lot No. 1-C Si(F) (VI-I) 42-D, to Vilma C. Mendoza at P200.00 per hectare or P4,600.00 for the whole tract of 23.0000 hectares and Lot No. 1-D Si(F) (VI-I) 42-D, to Democrito C. Mendoza, Jr. at P200.00 per hectare or P4,477.62 for the whole tract of 23.3881 hectares.[13] Following the registration of the sales patents with the Register of Deeds of Cebu, Original Certificates of Title were each issued to Democrito, Sr.,[14]Gwendolyn,[15] Vilma,[16] and Democrito, Jr.[17] On 8 January 1982, in consideration of shares of stock in MENCA Development Corporation (MENCA) worth P77,283.00, Democrito Mendoza, Sr. executed a Contract of Exchange of Real Properties for Shares of Stock on 8 January 1982, whereby he ceded to MENCA Lot No. 2 and a portion of Lot No. 1-A. The portion tendered to MENCA was later on known as Lot No. 1-A-1, while the lot retained by Democrito Mendoza, Sr. was denominated as Lot No. 1-A-2. On 9 July 1982, Democrito Mendoza, Sr., for himself and on behalf of his daughters Gwendolyn and Vilma, executed a Deed of Exchange wherein Lot No. 1-A-2 and a portion of each lot belonging to Gwendolyn and Vilma, respectively, were relinquished to Jacinto Velez, Jr. and Carmen Velez-Ting in exchange for properties enumerated in said instrument. The portion of the lots originally belonging to Gwendolyn and Vilma that were given to Jacinto Velez, Jr. and Carmen Velez-Ting were thereafter denominated as Lots No. 1-B-1 and 1-C-1, while the lots retained were labeled Lots No. 1-B-2 and 1-C-2.

Finally, on 9 May 1988, Democrito Mendoza, Sr., on behalf of his three children Gwendolyn, Vilma, and Democrito, Jr., executed another Contract of Exchange of Real Properties for Shares of Stock with MENCA, trading Lots No. 1-B-2, 1-C-2, and 1-D in exchange for 8,468 shares of stock in said corporation. Sometime in 1988, a protest was filed by the fisherman-residents of Liloan against the issuance of the sales patents to the Mendozas. Acting thereon, the Department of Environment and Natural Resources (DENR) Regional Office No. 7, Cebu City, conducted an investigation. On 23 October 1990, based on the information gathered by the DENR, showing that there were alleged irregularities in the issuance of the sales patents awarded to the Mendozas, the Republic of the Philippines, represented by the Director of the Land Management Bureau, filed with the RTC of Cebu, a complaint for Cancellation of Sales Patents and Titles againstDemocrito Mendoza, Sr. and his three children Gwendolyn, Vilma, and Democrito, Jr., together with the Register of Deeds of Cebu City. According to the complaint, there was irregularity in the issuance of the sales patents covering the subject properties since the area in question forms part of SilotBay and used as communal fishing grounds by the residents of Liloan, Cebu, and hence, is not alienable and disposable. It is further maintained that the sales patents were issued in violation of Section 23 of Presidential Decree No. 704, Fisheries Decree of 1975,[18] which prohibits the disposal by sale of public land suitable for fishpond purposes.[19] Complainant also contends that the issuance of the sales patents was attended by fraud and misrepresentation in that it was made to appear in the applications for sales patents that the areas sought to be patented were alienable and disposable tracts of land, when in fact the same form part of Silot Bay being used as communal fishing grounds by the residents of Liloan, Cebu. On 8 July 1991, herein petitioner Republic of the Philippines filed an Amended Complaint impleading as additional party-defendants MENCA Development Corporation, Jacinto Velez, Jr., and Carmen Velez-Ting. Subsequently, the Silot Bay Fishermans Association, Inc. filed a Complaint in Intervention on 24 October 1991, claiming that its members have a legal interest in the cancellation of the sales patents as they are residing around Silot Bay and deriving their income from fishing in the said disputed area. After trial on the merits, the trial court, on 3 June 1996, rendered a Decision declaring the sales patents, as well as the original certificates of title issued to theMendozas as null and void ab initio. Thus: WHEREFORE, premises considered, judgment is hereby rendered: (1) Declaring Sales Patents Nos. 187, 188, 189 and 190 together with its corresponding Original Certificates of Titles Nos. 0-9983, 0-9980, 0-9981 and 0-9982 issued to defendants Democrito T. Mendoza, Sr., Democrito Mendoza, Jr., Gwendolyn Mendoza and Vilma Mendoza, absolutely null and void ab initio; (2) Ordering the said defendants to surrender to the defendant Register of Deeds for the Province of Cebu their respective owners duplicate copies of Original Certificates of Titles Nos. 09983, 0-9980, 0-9981 and 0-9982, and directing the said defendant Register of Deeds for the Province of Cebu to cancel the same and all the patent titles emanating or springing therefrom; and, (3) Declaring Lot 1-A, Lot 1-B, Lot 1-C and Lot 1-D Psd. 07-01-00026 as inalienable and non-disposable being parts of Silot Bay.[20]

Aggrieved by the aforequoted Decision, the Mendozas and MENCA Corporation lodged an appeal with the Court of Appeals. On 30 March 2001, the appellate court rendered the herein assailed Decision, the pertinent portions of which state: The separate appeals interposed by the defendants are impressed with merit. As We see it, the primordial issue is whether or not appellants are qualified to own the property subject matter of this controversy. Implied in this issue is a more basic one, that is whether or not said property is alienable and disposable and, therefore, subject to private appropriation through modes recognized under the Public Land Act. The lower court resolved the issue in the negative on the main reasoning that Silot Bay is a communal fishing ground, and that the area in question is actually part of the seabed, hence, non-alienable. It added that, assuming the availability for disposition of the area applied for, appellant Democrito, Sr. is barred from asserting ownership thereof in view of Section 11, Article XIV of the 1973 Constitution, xxx. The Court cannot bring itself to agree to the rationale for the trial courts posture. Our reasons are, as follows: One, the property involved in this case is not a communal fishing ground, as erroneously concluded by the court a quo. While Silot Bay is a potential fishpond area, there must be, for it to come within the term communal fishing ground, a declaration to that effect by the appropriate agency.

We have carefully perused the records before Us and found nothing therein evidencing such a declaration by the DANR respecting Silot Bay. What the records yield is the fact thatSilot Bay, as shown by a Land Classification (LC) map, was once categorized as timberland. It cannot be overemphasized that the prerogative of classifying public lands pertains to administrative agencies which have been specially tasked by statutes to do so, namely: the DANR, now the DENR, and two (2) of its bureaus, the Bureau of Lands and the Bureau of Forestry. Hence, consistent with the oft-repeated pronouncements that courts will not interfere on matters which are addressed to the sound discretion of government and/or quasi-judicial agencies entrusted with the regulation of activities coming under the special technical knowledge and training (International Container Terminal Service, Inc. vs. NLRC, 256 SCRA 124; Alba vs. Nitorreda, 254 SCRA 753, citing other cases), and that issues involving basically technical matters deserve to be disentangled from undue interference by the courts (Sta. Ines MelaleForest Products Corp. vs. Macaraig, Jr., 299 SCRA 491, citing Ynson vs. CA, 257 SCRA 411; Casa Filipinas Realty Corporation vs. Office of the President, 241 SCRA 165; Rubenecia vs, CSC, 244 SCRA 770), it behooves this Court to refrain from looking into the underlying reasons or grounds which impelled the classification and declaration of Silot Bay as timberland or from questioning the wisdom such classification or declaration. xxxx This Court, for argument, may allow that Silot Bay had once upon a time been duly reserved or declared as a communal fishing ground. It has to be pointed out, however, that an interplay of events had supervened to alter this reserved nature of the bay. We refer to the issuance on January 16, 1967 of the Presidential Memorandum, supra, and subsequently Presidential Decree (PD) No. 43, whereunder then President Marcos, with the end view of attaining selfsufficiency in fish production, directed the identification of potential fishpond areas, the same to be declared alienable and disposable to be titled in the name of the actual occupants thereof. There can hardly be any quibbling regarding the power of the then President to promulgate the twin issuances, or to undo, by way of reclassification, what a subordinate has done. Second, the Mendozas, or Democrito, Sr. in his behalf and in behalf of his children appear to have complied with all the documentary, developmental, publication, bidding and other legal requirements necessary for securing sales patents. Otherwise, the Director of Lands, during the evaluation process, would have simply denied due course to his application. The actuality of the Director of Lands recommending and the Secretary of Agriculture and Natural Resources favorably endorsing the request of Democrito, Sr. for the issuance of what turned out to be the underlying sales (fishpond) patent is indicative of Democritos compliance. Last but not least, the Presidents act of approving the issuance of the requested sales (fishpond) patent cannot but be viewed as final confirmation that Democrito, Sr. has indeed met all the requirements to justify a public land award through sales. It may be worth mentioning that the Director of Lands had dismissed the protests filed by then Liloan Municipal Mayor Bugtai, et al., against the Sales (Fishpond) Patent application ofDemocrito, Sr. on the consistent ground that the applicant had complied with all the requirements of the law for a sales patent grant. In this regard, jurisprudence reminds that decisions of the Director of Lands on disputes involving patents to public lands, if supported by substantial evidence and approved by the DENR Secretary of Agriculture, are generally conclusive. xxx. Third, as a necessary consequence of Democrito, Sr.s compliance with the legal requirements referred to above, the sales patents and the original certificates of titles issued in favor of the Mendozas are presumptively legal and valid. Much was made by the trial court of the splitting up of the sales patent issued to Democrito, Sr., into four (4) parts, with each part containing an area not exceeding twenty-four (24) hectares in the names of Democrito, Sr., Democrito, Jr., Gwendolyn Mendoza and Vilma Mendoza. It may well be noted, however, that the split obviously effected in view of Section 11, Article XIV of the 1973 Constitution, supra, limiting the acquisition of alienable land by individuals to twenty-four (24) hectares came with the approval of the Director of Lands and the Secretary of Agriculture and Natural Resources. In a very real sense, therefore, the flaw, if any there be, in the manner the Mendoza children acquired their sales patents was remedied by the positive actions of the very officials charged by law with the administration and disposition of alienable public lands. The unyielding posture of the appellee, as adopted by the trial court, that the area in question cannot be legally titled because it is underwater may be accorded some cogency but for the hard fact that it is being titled for fishpond purposes only, as what precisely appears in the sales patents. Fish do not thrive on dry land. Fish are born and grow in water. xxxx Fourth, the sales patents and certificates of titles issued in the name of the Mendozas cannot, after the lapse of one (1) year from their issuance, be successfully challenged on the ground of fraud or misrepresentation. The reason is simple. After the due registration of a patent and the issuance of the corresponding title, the covered area is deemed to have been brought under the aegis of the Torrens system entitled to all guarantees implied in such system of registration. xxx As may be noted, the one-year prescriptive period in the underscored portion of Section 32, P.D. No. 1529 applies even to the government. Accordingly, the government if deprived of property through fraud, as the trial court seems to imply, and as intervenor-appellee have at every turn postulated, must institute the proper petition in court for the reopening and review of the decree of registration including of course the patent issued within one (1) year from and after the date of entry of such decree of registration. Failing in this, the decree becomes inconvertible even as against the

government itself. Hence, since the sales patents in question were registered a little less than a month after they were issued on September 25, 1974, the filing of the instant action for cancellation on October 23, 1990, which in net legal effect partakes of a petition for a reopening or review of the validity of the issuance of the sales patents, has, with the view We take of the case, definitely prescribed. Fifth, the government is estopped to ask for the cancellation of the sales patents and titles issued in the names of the Mendozas. To say the least, there is something disconcerting, if not absurd, in the instant case. For, the very same agency the Bureau of Land Management, formerly called Bureau of Lands, which presumptively evaluated with thoroughness and recommended the grant of Sales (Fishpond) Application No. (VI-I) 41-A of Democrito Sr., he having complied with all the requirements of the law for the grant, would now trifle with its own processes, execute a 180 degree turn to argue and say that the same is not valid and illegal. Suffice it to state that to go back on ones word and to change a stand volte face, as what the Bureau of Land Management has done in this case, goes against well-settled principles of justice and fair play. While concededly, there is the legal stricture that the government is not estoppedby the mistakes committed by its agents, the Supreme Court in Commissioner of Internal Revenue v. Court of Appeals, 303 SCRA 508, 516, pointedly stated that: This Court is mindful of the well entrenched principle that the government is never estopped from the collecting of taxes because of the mistakes or errors on the part of its agents, but this rule admits of exceptions in the interest of justice and fair play x x x. xxxx Then, too, it has been the long standing policy and practice of this Court to respect the conclusions arrived at by quasi-judicial agencies x x x which by the nature of its functions, is dedicated exclusively to the study and consideration of x x x problems, and which has thus developed an expertise on the subject, unless an abuse or improvident exercise of its authority is shown. x x x The Bureau of Land Management and the intervenor-appellee, at this late hour, can no longer assail the issuance of the patents and titles to the Mendozas on the ground of fraud or irregularity. This is as it should be, because the sales patents in question, and the certificates of title issued by virtue thereof, have become incontrovertible and are binding against all persons, including the government and its branches, given that those who may be minded to question their validity have not done so within the period of one (1) year from the date of their registration. Moreover, by reason of the lapse of more that sixteen (16) years from the issuance of the patents and the titles in question up to the filing on October 23, 1990 of the complaint contesting their validity on the ground of fraud, the government agency concerned and the intervenor are guilty of laches and are now precluded from questioning the validity of such grants. x xx. It is indeed illogical and a cruel breach of the sporting idea of fair play, if the very same government agency which vigorously recommended, through indubitable public documents and authentic writings, the issuance of Sales Patents to Democrito Sr., would now be permitted to deny and successfully impugn in this action its official acts. What compounds matters is that the same agency led Democrito Sr. to believe that he has truly complied with the law and who, acting on such belief, participated in the bidding held on January 19, 1973 and paid the price for the area sold. xxxx Finally, We note that the primary basis of the lower court in declaring the nullity of the sales patent and titles of the appellants is its finding that the area covered thereby is beyond the commerce of man, and, therefore, could not have been declared as alienable and disposable. x x x. It bears stressing herein that LC map 1391-Liloan of the Land Classification Project of the Province of Cebu classified Silot Bay as timberland. Evidently, the lower court makes light of LC Map 1391 prepared in 1940. To Our mind, the evidentiary value of antique map like Map 1391 ought to be accorded weighty consideration. Precisely, under the Revised Rules on Evidence, the antiquity of documents impart then with greater probative value. x x x. The trial court deduced that the 1940 map wherein Silot Bay is classified as timberland is incorrect due to misleading information wittingly or unwittingly supplied by the government agencies concerned. The conclusion reached by the lower court is assumed, not demonstrated; it is absolutely wanting in factual support, what with the reality that no evidence whatsoever was adduced by the Republic to sustain such a finding. It cannot be taken to overturn the legal presumption that official duties have been regularly performed. xxxx As between the aforesaid official findings of experts and the bare unsupported conclusions of the lower court, the choice is not hard to make. As it were, only the executive and possibly the legislative departments have the power to transfer, any time, lands of the public domain from one class to another, and, in like manner, to classify, for purposes of administration and disposition, such land as disposable and alienable by sale or other modes of ownership transfer. x x x.

Unquestionably, then, the lower court committed a serious error in ruling that Silot Bay cannot be declared as alienable and disposable. Foregoing premises considered, We rule and so hold that (1) Sales Patents Nos. 187, 188, 189 and 190 issued in favor of the Mendozas; (2) the corresponding Original Certificates of Titles Nos. 0-9980, 0-9981, 0-9982 and 0-9983 issued in favor of the Mendozas; and (3) all the derivative titles emanating therefrom in the names of MENCA Development Corporation and Carmen Velez-Teng and Jacinto Velez, Jr., are all valid, legal and binding as against the whole world.[21]

The trial courts Decision having been reversed and the Sales Patents, as well as the Original Certificates of Title issued to the Mendozas having been declared valid, petitioners Republic of the Philippines and Silot Bay Fishermans Association, Inc. filed their separate appeals before this Court. Petitioners maintain that the Court of Appeals erred in declaring that the area covered by the sales patents are not communal fishing grounds due to the absence of any declaration to that effect by the appropriate government agency. According to petitioners, the appellate court failed to consider that Silot Bay is a navigable body of water and by its very nature and inherent character is of public dominion, thus there is no need for a declaration by any appropriate government agency that it is a communal fishing ground before Silot Bay may be recognized as such. Furthermore, petitioners assert that the Court of Appeals failed to give weight to the testimony of Edgardo Lipang, a former Geodetic Engineer of the Community and Environment Resources Office in Cebu City, who was authorized by the trial court to conduct a resurvey of the disputed area. His testimony established that the disputed area were found to be at the center of Silot Bay, the waters of which flow fromCamotes Sea where marine organisms like sea urchins thrive, and not on marshy lands, rivers or lakes. Additionally, Edgardo Lipang explained in his testimony that the subject property is deep even during low tide and navigable by boats which further indicate that the area is part of the seabed rather than the foreshore. Petitioner Republic of the Philippines added that it was erroneous for the appellate court to conclude that the Mendozas complied with all the requirements for the issuance of sales patents. According to petitioner, the Court of Appeals did not consider the findings of the investigation team from the DENR which discovered irregularities in the issuance of the sales patents, to wit: (a) The areas covered by the sales patents are part of Silot Bay and used as communal fishing grounds by Liloan residents and, therefore, is not alienable and disposable; (b) The sales patents were issued in violation of Section 23 0f Presidential Decree No. 704, which provides that no public land suitable for fishpond purposes shall be disposed by sale except sales patent already processed and approved on or before November 9, 1972 subject to the condition that such application covers a fully developed fishpond not exceeding twenty-four (24) hectares. (The questioned sales patents do not fall within the exception as they were issued on September 25, 1974); (c) The issuance of the sales patents was attended by fraud and misrepresentation committed by the applicants in that it was made to appear that the areas applied for are alienable and disposable tracts of land, when in truth and in fact, they form part of Silot Bay being used as communal fishing grounds by the residents of Liloan, Cebu. Moreover, the government stresses the fact that the sales patent application of Democrito Mendoza, Sr. was for an area of 92.3881 hectares, clearly in violation of the constitutional limitation of 24 hectares; and that his act of circumventing the constitutional prohibition by distributing the area applied for to his three children cannot be legally authorized since his children were not qualified to apply for sales patents because not one of them had an existing lease over the property, which is a condition that must first be complied with before the grant of a sales patent. On the Court of Appeals ruling that the government is now precluded from bringing an action for annulment of title after the lapse of one year from the issuance of the certificate of title, petitioners contend that said ruling is diametrically opposed to the pronouncement of this Court that the Republic of the Philippines is not precluded from bringing an action for annulment of title and reversion of land to the public domain even after the lapse of the one-year period. Lastly, petitioners call attention to the previous rulings of this Court that estoppel does not operate against the government. In the case at bar, petitioner explains that the court a quo found that the sales patents were issued on the basis of false and misleading information supplied by the Mendozas to the government agencies which processed and granted their application; hence, it is erroneous for the appellate court to say that the government is already estopped from seeking the cancellation of these sales patents since the Republic of the Philippines is never estopped by the mistakes or error committed by its officials or agent. In resolving the instant controversy, we shall foremost settle the issue of whether or not the government is now precluded from bringing an action for the annulment of title and reversion of the disputed property to the public domain after the lapse of the one-year period from registration thereof. We answer in the negative. It is true that, as the Court of Appeals upheld, the sales patents and certificates of title

issued in the name of the Mendozas cannot, after the lapse of one year from their issuance, be successfully challenged on the ground of fraud or misrepresentation for the reason that after the due registration of a patent and the issuance of the corresponding title, the covered area is deemed to have been brought under the aegis of the Torrens system entitled to all guarantees implied in such system of registration. It is equally true however, that this Court, on the other hand, has declared too in numerous cases that the lapse of the one-year period within which a decree of title may be reopened for fraud would not prevent the cancellation thereof by the government, for to hold that a title may become indefeasible by registration, even if such title had been secured through fraud or in violation of the law would be the height of absurdity.[22] As held in the case of Republic v. Court of Appeals[23]: [T]he indefeasibility of a title over land previously public is not bar to an investigation by the Director of Lands as to how such title has been acquired, if the purpose of such investigation is to determine whether or not fraud has been committed in securing such title in order that the appropriate action for reversion may be filed by the Government.[24]

Nevertheless, whilst we agree with petitioners that the government is not precluded from conducting an investigation as to how titles to property formerly belonging to the public domain has been acquired notwithstanding the lapse of the one-year period for bringing an action for the annulment of title and reversion of property to the public domain, in the absence of any showing that there was fraud or a violation of any law, we are constrained to uphold the ruling of the Court of Appeals regarding the authority of administrative agencies to classify Silot Bay as timberland and its subsequent release as alienable and disposable, and the findings of the appellate court that the Mendozas have complied with all the necessary requirements under the law for the issuance of the sales patents. Despite petitioners assertion that Silot Bay is a navigable body of water and by its very nature and inherent character is of public dominion, thus, there is no need for a declaration by any appropriate government agency that it is a communal fishing ground before Silot Bay may be recognized as such, it cannot be gainsaid that the prerogative of classifying public lands pertains to administrative agencies which have been specially tasked by statutes to do so and that the courts will not interfere on matters which are addressed to the sound discretion of government and/or quasi-judicial agencies entrusted with the regulation of activities coming under their special technical knowledge and training.[25] It should be stressed that the function of administering and disposing of lands of the public domain in the manner prescribed by law is not entrusted to the courts but to executive officials.[26] And as such, courts should refrain from looking into the underlying reasons or grounds which impelled the classification and declaration of Silot Bay as timberland and its subsequent release as alienable and disposable land. From the facts of the case, it is evident that the Bureau of Forestry released Silot Bay as alienable and disposable by virtue of the Memorandum issued by then President Marcos on 16 January 1967which clearly empowered said bureau to identify and locate the 700,000 hectares of fishpond areas and to release said areas as alienable and disposable. Hence, the courts, in view of the clear legal directive by which said area was released as alienable and disposable, will refrain from questioning the wisdom of such classification or declaration. After a careful perusal of the records of the case, We rule that the sales patents handed out to Democrito T. Mendoza, Sr., Gwendolyn Mendoza, VilmaMendoza and Democrito Mendoza, Jr., were properly issued. Although it may seem that upon the advent of the 1973 Constitution, a conflict had arisen with respect to the then pending sales patent application of DemocritoMendoza, Sr., yet from the letter of then Acting Director of the Bureau of Lands Ramon N. Casanova, the approval of the sales patent application of Democrito T. Mendoza, Sr. was still favorably recommended on grounds of equity and justice, to wit: Under Opinion No. 64, series of 1973 which was promulgated in the meantime by the Secretary of Justice and given clearance for implementation by the President per Memorandum dated February 6, 1974 of Presidential Executive Assistant Jacobo C. Clave, it has been held that even sales application already awarded are not to be exempted from constitutional injunction regarding the acquisition of public lands for the reason that other requirements have still to be satisfied before a patent may be issued. In the case of the abovementioned application, while the land covered thereby was sold at public auction in which the applicant is the successful bidder and has been considerably improved and developed, no formal award has up to now been issued by this Office. In other words, the applicant may be considered not having acquired vested rights over the land applied for prior to the advent of the New Constitution which will entitle him to exemption from the constitutional limitation, following the above-noted ruling of the Secretary of Justice. It may also be mentioned that this case does not fall under any of the categories of sales applications which may be given due course and issued patent pursuant to the policy guidelines prescribed by the Honorable Secretary in his memorandum dated February 18, 1974. As the applicant, however, has in good faith made considerable investment in the development and improvement of the fishpond area and could have already obtained a title thereto were it not for circumstances beyond his control, it is believed that he is entitled, on considerations of equity and justice, to exemption from constitutional injunction.[27] (Emphasis ours.) From the abovequoted letter, it can be deduced that had it not been for circumstance beyond the applicants control, i.e., the adoption of the 1973 Constitution during the pendency of the sales patent application of Democrito T. Mendoza, Sr., there would not have been any obstacle for its approval by the Office of the President. Hence, taking into account the fact that Democrito T. Mendoza, Sr. had complied with all the necessary

requirements for the issuance of sales patent covering the disputed area, then Acting Director of the Bureau of Lands Ramon N. Casanova recommended the approval of said application in the spirit of justice and equity. As stated by the Court of Appeals, Democrito Mendoza, Sr., appears to have complied with all the legal requirements for securing the sales patents; otherwise, the Acting Director of Lands would not have recommended the approval of said application despite the seeming constitutional impediment. Moreover, it is worth noting that in order to conform to the prohibitions imposed by the 1973 Constitution which limits the purchase of lands of the public dominion to 24 hectares per individual, Democrito Mendoza, Sr., subdivided the property in question into four, each comprising an area not more than 24 hectares, and assigned his rights over three parts to his three children. Accordingly, Democrito Mendoza, Sr. amended his sales patent application while his three children filed their own applications for their respective parts. The area applied for in each of the Mendozas sales patent applications were, by then, well-within the constitutional limitation. Such subdivision of the area originally applied for by Democrito Mendoza, Sr. was made with the full knowledge and the subsequent approval of all the appropriate government authorities. There is nothing to suggest that it was done illicitly or fraudulently. That the subdivision was executed overtly actually establish the good faith of the Mendozas to comply with the Constitutional and statutory provisions on sales patent applications. Petitioner Republic has failed to prove fraud on the part of the Mendozas with respect to the issuance of the sales patents. The burden of proving that actual fraud exists rests on the party alleging it. In this jurisdiction, fraud is never presumed FRAUS EST IDIOSA ET NON PRAESUMENDA.[28] It must be stressed that mere allegations of fraud are not enough. Intentional acts to deceive and deprive another of his right, or in some manner injure him, must be specifically alleged and proved.[29] There is very little evidence in this case to convince Us that the Mendozas were able to secure their sales patent by fraud or misrepresentation. The assertion of petitioner Republic that the issuance of the sales patents was attended by fraud and misrepresentation is based solely on the claim made by the Mendozasin their sales patent applications that the areas sought to be patented were alienable and disposable tracts of land, when, in fact, the same form part of Silot Bay which were being used as communal fishing grounds by the residents of Liloan, Cebu. Such an assertion, however, has been squarely debunked in light of the unmistakable legal basis by which the appropriate administrative agency classified the areas applied for as alienable and disposable. In the absence of any evidence of fraud or violation of law, the title of the Mendozas over the disputed property has now become indefeasible, even as against the petitioner Republic. While the general rule is that the State cannot be put in estoppel by the mistakes or errors of its officials or agents, like all general rules, this is also subject to exceptions. We recognized such exceptions in Republic v. Court of Appeals,[30] to wit

The general rule is that the State cannot be put in estoppel by the mistakes or errors of its officials or agents. However, like all general rules, this is also subject to exceptions, viz: "Estoppels against the public are little favored. They should not be invoked except in rare and unusual circumstances, and may not be invoked where they would operate to defeat the effective operation of a policy adopted to protect the public. They must be applied with circumspection and should be applied only in those special cases where the interests of justice clearly require it. Nevertheless, the government must not be allowed to deal dishonorably or capriciously with its citizens, and must not play an ignoble part or do a shabby thing; and subject to limitations x x x the doctrine of equitable estoppelmay be invoked against public authorities as well as against private individuals." In Republic v. Sandiganbayan, the government, in its effort to recover ill-goten wealth, tried to skirt the application of estoppel against it by invoking a specific constitutional provision. The Court countered: "We agree with the statement that the State is immune from estoppel, but this concept is understood to refer to acts and mistakes of its officials especially those which are irregular (Sharp International Marketing vs. Court of Appeals, 201 SCRA 299; 306 [1991]; Republic v. Aquino, 120 SCRA 186 [1983]), which peculiar circumstances are absent in the case at bar. Although the State's right of action to recover ill-gotten wealth is not vulnerable toestoppel[;] it is non sequitur to suggest that a contract, freely and in good faith executed between the parties thereto is susceptible to disturbance ad infinitum. A different interpretation will lead to the absurd scenario of permitting a party to unilaterally jettison a compromise agreement which is supposed to have the authority of res judicata (Article 2037, New Civil Code), and like any other contract, has the force of law between parties thereto (Article 1159, New Civil Code; Hernaez vs. Kao, 17 SCRA 296 [1966]; 6 Padilla, Civil Code Annotated, 7th ed., 198, p. 711; 3 Aquino, Civil Code, 1990 ed., p. 46.

Based on the foregoing, the State can only be immune from estoppel as regards mistakes, errors or irregularities committed by its officials or agents. In the absence of mistake, error or irregularity in the performance by the concerned government officials of their duties, then the State cannot invoke its immunity from estoppel.

In the Petition at bar, the Mendozas were given clearances and certifications on the lack of objections to their sales patent applications by the Director of Forestry, Provincial Engineer of Cebu, the District Engineer of Cebu, the Municipal Council of Liloan, Cebu, and the Commissioner of Customs, and the Secretary of Public Works and Highways. Subsequently, their sales patent applications were approved by the Director of the Bureau of Lands, the Secretary of the Department of Natural Resources, and the President of the Republic. Based on their patents, the Mendozas were able to acquire original certificates of tile from the Registry of Deeds. Without any allegation and evidence that

these government officials committed any mistake, error or irregularity in the approval of the sales patent applications and issuance of the certificates of title in the name of the Mendozas, then their acts in relation thereto estop the Republic from questioning the validity of the said sales patents and the certificates of title.

Finally, it should be borne in mind that that the contested areas and titles thereto had already passed on to third parties who acquired the same from theMendozas in good faith and for value. When the Mendozas sales patents were registered, they were brought under the operation of Presidential Decree No. 11529, otherwise know as the Land Registration Decree. According to Section 103 of the Land Registration Decree, whenever public lands is by the Government alienated, granted, or conveyed to any person, the same shall be brought under the operation of the said Decree and shall be deemed to registered lands to all intents and purposes under the Decree. And a well-settled doctrine in Our jurisdiction provides that one who deals with property registered under the Torrens system need not go beyond the same, but only has to rely on the title. He is charged with notice only of such burdens and claims as are annotated on the title.[31] The Mendozas certificates of title were clean and, thus, MENCA Corporation, Jacinto Velez, Jr. and Carmen Velez-Ting were induced to acquire the same from the Mendozas. That they did so in good faith and for value was not even questioned herein. Their titles, rights, and interests to the fishpond area must be respected and protected.

In Republic v. Agunoy, Sr., et al.,[32] We refused to revert the land in question to the public domain despite the fact that the free patent thereto was secured by fraud since the same land already passed on to purchasers in good faith and for value There can be no debate at all on petitioners submission that no amount of legal technicality may serve as a solid foundation for the enjoyment of the fruits of fraud. It is thus understandable why petitioner chants the dogma of fraus et jus nunquam cohabitant. Significantly, however, in the cases cited by petitioner Republic, as well as in those other cases where the doctrine of fraus et jus nunquam cohabitant was applied against a patent and title procured thru fraud or misrepresentation, we note that the land covered thereby is either a part of the forest zone which is definitely non-disposable, as in Animas, or that said patent and title are still in the name of the person who committed the fraud or misrepresentation, as in Acot, Animas, Republic vs. CA and Del Mundo and Director of Lands vs. Abanilla, et al. and, in either instance, there were yet no innocent third parties standing in the way. If the titles of innocent buyers were recognized and protected in the afore-mentioned circumstances, even when the original title to the property was obtained through fraud, then the titles of the purchasers in good faith and for value of the fishpond areas in the present case better deserve our recognition and protection considering that the sales patents and original certificates of title of their predecessors-in-interest were found to be legally and validly issued. WHEREFORE, premises considered, the instant petition is hereby DENIED. The Decision of the Court of Appeals in CA-G.R. CV No. 57069 is herebyAFFIRMED. SO ORDERED.

STATEMENT OF PERSONAL CIRCUMSTANCES LITAM VS ESPIRITU LACKING REGISTERED LAND NOT TO SUBJECT TO PRESCRIPTION SEC. 47 CABRERA VS CA TORRES, JR., J.: Assailed in this Petition for Review on Certiorari is the Decision[1] of the respondent Court of Appeals dated January 7, 1993 in CA-G.R. No. 22407-CV, the dispositive portion of which reads: WHEREFORE, the decision of the lower court is hereby REVERSED and judgment is hereby entered ordering defendants Felicidad Vda. de Cabrera and Marykane Cabrera to vacate the portion of Lot 2238 occupied by them and surrender possession thereof to plaintiff. SO ORDERED. Reversed by the foregoing pronouncements was the decision[2] of the Regional Trial Court, Branch 7, Baganga, Davao Oriental in Civil Case No. 379, an action for Quieting of Title to Real Property, Damages with Preliminary Injunction. The trial courts disposition reads: WHEREFORE, the plaintiff is hereby ordered: (a) to execute a reconveyance within thirty (30) days after this decision shall have become final and executory in favor of defendant Felicidad Vda. De Cabrera corresponding only to that portion of Lot No. 2239 actually and physically possessed and occupied by the defendant as seen from the sketch plan of Engr. Enecio Magno (Exh. 2) and pinpointed and identified during the ocular investigation as to its extent and boundaries of the said portion bought by defendants Felicidad Vda. De Cabrera from Felicidad Teokemian; (b) To reimburse defendants for litigation expenses and attorneys fees in the amount of P7,000.00; and (c) To pay the cost. SO ORDERED. We are restating the facts as determined by the appellate court, viz: On January 16, 1950, a Deed of Sale (Exh. B) was executed by Daniel Teokemian and Albertana Teokemian in favor of Andres Orais over a parcel of unregistered land situated at Abejod, Cateel, Davao Oriental with an area described as 7.3720 hectares. The property was owned in common by Daniel and Albertana and their sister Felicidad Teokemian, having inherited the same from their late father, Domingo Teokemian. However, the Deed of Sale was not signed by Felicidad, although her name was printed therein as one of the vendors. On January 26, 1950, the parcel of land was surveyed in the name of Virgilia Orais, daughter of the vendee Andres Orais, and denominated as Lot No. 2239, PLS-287, Cateel Cadastre. As surveyed, the property had an area of 11.1000 hectares. On June 24, 1957, Virgilia Orais was issued Free Patent No. V-79089. Original Certificate of Title No. P-10908 was issued in her name (Exh. A). On July 27, 1972, Alberto (sic. Albertana) Teokemian executed a Deed of Absolute Sale conveying to Elano Cabrera, husband of Felicidad Cabrera, ONE HALF PORTION OF LOT NO. 2239, Cad-287, eastern portion, containing an area of FIFTY FIVE THOUSAND FIVE HUNDRED TEN (55,510) SQUARE METERS, more or less (Exh. 3), which portion supposedly corresponded to the one-third share in Lot 2239 of Felicidad Teokemian who was not a party to the Deed of Sale earlier executed by her brother and sister in favor of Andres Orais, Virgilia Orais predecessor-in-interest. It was explained by Felicidad Cabrera that the Deed of Sale was signed by Albertana Teokemian, not by Felicidad Teokemian, because the whole of Lot 2239 was adjudicated to Albertana in a decision of a cadastral court dated June 8, 1965 as evidenced by a Certification of an officer-in-charge of the Office of the Clerk of Court, RTC, Br. 7, Baganga, Davao Oriental (Exh. 4). Felicidad Cabrera and her husband immediately took possession of the western portion of Lot 2239. In 1974 and 1978, Virgilia Orais brothers, Rodolfo and Jimmy Orais went to Cateel, Davao Oriental and confronted the Cabreras of the latters alleged encroachment and illegal occupation of their sisters land, but no concrete action on the matter was pursued by Virgilia Orais until February 11, 1988 when she filed Civil Case No. 379 against Felicidad Cabrera, now a widow, and her daughter Marykane Cabrera for Quieting of Title to Real Property, Damages with Preliminary Mandatory Injunction.

The complaint, which was amended on June 22, 1988 by including Felicidad Teokemian as party defendant (pp. 42-47, Records), alleged that sometime in 1972 and 1973 the late Elano Cabrera and defendant Felicidad Cabrera, knowing that Lot 2239 was already registered in the name of the plaintiff, prepared a document of sale and had Felicidad Teokemian sign it conveying a portion of said lot to them as described in the Sketch Map (Annex D of the Complaint), after which they entered and possessed said portion and enjoyed the fruits thereon. Plaintiff further averred that by reason of the document of sale and the declaration of the property involved in the name of defendant Felicidad Vda. De Cabrera, there created a cloud of doubt on the formers title on said property. Plaintiff prayed as follows: WHEREFORE, premises considered, plaintiff through the undersigned counsel respectfully prays this Honorable Court that: a) After due notice and hearing, a Writ of Preliminary Mandatory Injunction be issued restraining the defendants from further dispossessing the plaintiff of the land in question; b) Ordering the defendants to pay jointly the plaintiff the amount of not less than Sixteen Thousand Two Hundred (P16,200) as total value of the rice produced from the riceland in question, and the amount of Twenty One Thousand Six Hundred (P21,600.00) Pesos as the total proceeds of the nuts of the coconut land in question; c) The Defendants be ordered to pay the plaintiff the amount of Twenty Thousand (P20,000.00) Pesos and Ten Thousand (P10,000.00) Pesos as litigation expenses; d) The defendants be ordered to pay Six Thousand (P6,000.00) Pesos for attorneys fees; Four Hundred (P400.00) Pesos as expenses for every appearance in Court; e) The document of sale executed by Felicidad Teokemian and the Tax Declarations issued to the late Elano Cabrera and Felicidad Vda. De Cabrera and the subsequent Tax Declaration creating a cloud of doubt on the title, possession, rights and interest be declared null and void for being fraudulent and without any legal basis and inexistent; and f) Such other reliefs and remedies which this Honorable Court may deem just, proper, and equitable in the premises. In their answer with counterclaim (pp.10-18, Records), defendants alleged that they acquired a portion of Lot 2239 in good faith and for value; that said portion was owned by Felicidad Teokemian who was not a party to the Deed of Sale executed by Daniel and Albertana Teokemian on January 16, 1950 in favor of Andres Orais over Lot 2239; that not having signed the Deed of Sale, Felicidad Teokemians one-third share in Lot 2239 could not have been legally conveyed to Andres Orais; that Virgilia Orais (successor-in-interest of Andres Orais) committed fraud in including the portion owned by Felicidad Teokemian in her applying for free patent over Lot 2239 is concerned pursuant to Art. 1456 of the Civil Code; and that plaintiff is guilty of laches for not initiating an action against defendants to recover the western portion of Lot 2239 despite plaintiffs knowledge of defendants acquisition thereof in 1972, as in fact it was only in 1988 when the complaint for quieting of title was filed in court. Defendants prayed, thus: WHEREFORE, this Honorable Court, after due notice and hearing on the merits of this case; to issue order or orders; 1. Finding the defendants as the rightful, lawful, and legal owner of that portion which was sold to them by Felicidad Teokemian and which was included in the title of plaintiff; 2. To find that the plaintiff did not own the said portion and that they have personal knowledge of the same when the plaintiff filed and secured the title under the Administrative Proceeding; 3. Finding that the plaintiff is only holding the title to that portion only in an implied trust in favor of the real owner; 4. Finding the plaintiff legally obligated to cause the segregation of the portion at their expense and deliver formally the said portion to the real owners, the defendants. 5. To order the plaintiff to execute, prepare and or make any instrument or document to finally vest in the Defendants absolute, clear and flawless title or ownership over the portion which the plaintiff holds title in trust in defendants favor. 6. To Order the Plaintiff to pay actual damages in the sum of P2,000.00 as litigation expense and Attorneys fees in the sum of P5,000.00 in favor of defendants;

7. To direct the plaintiff to account for the share of the real owner of the portion of land illegally cultivated and planted by plaintiff to rice in favor of FELICIDAD TEOKEMIAN to be paid thru the Defendants who are the owners, which consisted in ONE THIRD OF THE RICE HARVEST every year since the year 1950 to 1972 when the portion was sold and cultivated by defendant based on the computation of income by the plaintiff in Paragraph 16, a paragraph in the Second Cause of Action of the complaint; and to grant the defendants such other reliefs and remedies proper and equitable in the premises.[3] On April 27, 1989, the lower court rendered judgment in favor of defendants and against the plaintiff, ruling that the latter can no longer recover the western portion of Lot 2239 conveyed in 1972 by Felicidad Teokemian in favor of the late Elano Cabrera and Felicidad Cabrera due to laches. In support of its findings, the trial court referred to the Courts pronouncements in Lola vs. Court of Appeals,[4] where it was held that although the defense of prescription is unavailing to the petitioners, because, admittedly, the title to the subject lot was still registered in the name of the respondent, still the petitioners have acquired title to it by virtue of the equitable principle of laches due to the respondents failure to assert her claim and ownership for thirty-two years; and in Republic vs. Court of Appeals[5] that, while it is true that by themselves tax receipts and declaration of ownership for taxation purposes are not incontrovertible evidence of ownership, they become strong evidence of ownership acquired by prescription when accompanied by proof of actual possession of the property; and in Miguel vs. Catalino,[6] that even granting appellants proposition that no prescription lies against their fathers recorded title, their passivity and inaction for more than thirty four years justifies the defendant appellee in setting up the equitable defense of laches in his own behalf. The respondent Court of Appeals reversed such findings upon appeal. Even as the appellate court observed that the registration made by the plaintiffs was fraudulent insofar as it involved the one-third interest of Felicidad Teokemian, which was not included in the sale executed by them and Albertana and Daniel Teokemian, it nevertheless upheld its effects, on the justification that the defendants action for reconveyance based on an implied trust had already been barred by prescription. Furthermore, the action of the plaintiffs is not barred by laches, as was held by the lower court. Said the appellate court: We disagree with the lower courts ruling that plaintiff is barred from bringing an action for recovery of ownership. Parenthetically, while the complaint filed by plaintiff is designated as one for quieting of title, the allegations therein show that it is actually for recovery of ownership/possession. First. The Deed of Absolute Sale dated May 27, 1972 (Exh. 3) executed by Albertana Teokemian in favor of Elcano Cabrera over the portion of 55,510 square meters of Lot 2238 which allegedly pertained to the one-third interest of Felicidad Teokemian did not convey any title to Elcano Cabrera, assuming that Felicidad Teokemian still owned a one-third portion of Lot 2238 which was already registered in plaintiffs name, considering that Albertana did not have any authority from Felicidad Teokemian to effect such conveyance. Consequently, defendants Felicidad vda. De Cabrera and Marykane Cabrera had acquired no title upon which to anchor their claim of ownership over the one-third portion. Such being the case, plaintiffs cannot be barred by laches from instituting the action to quiet title against defendants xxx Second. There was no allegation, much less proof, that Lot 2239 had been partitioned among the co-owners Daniel, Albertana, and Felicidad, all surnamed Teokemian, before the land was sold to Andres Orais in 1950 when the same was still unregistered. This being the case, and assuming that Felicidad Teokemian had retained ownership over an undivided one-third portion of Lot 2239 despite its being titled in plaintiffs name in 1958, Felicidad Teokemian could only dispose her undivided interest, not a definite portion described in the Deed of Sale executed on July 27, 1972 (Exh. 3) as eastern part. Worse, the supposed vendee, Elcano Cabrera, and her successors-in-interest, defendants Felicidad vda. de Cabrera and Marykane Cabrera, occupied the western portion of Lot 2239, not the eastern portion which was the subject of the sale. Their occupation of a definite portion of an undivided property, without any color of title, could not have ripened into ownership on the principle of laches. Third. As testified to by Jimmy Orais, plaintiffs brother, it was only in 1974 when plaintiff came to know that her property was occupied by Elcano Cabrera. According to Jimmy, he and his elder brother Dr. Rodolfo Orais went to the house of Elcano Cabrera three times in 1974 and in 1979 complaining of the latters occupancy of their sisters property. Jimmy further declared that after Elcano Cabrera was shown plaintiffs title to the property, Elcano Cabrera proposed a relocation survey of the area to determine whether the premises occupied by him were included in the plaintiffs title (T.S.N. pp. 39-44, January 3, 1989). It appears, however, that nothing came out of the proposal to conduct a relocation survey. From the time plaintiff became aware of Cabreras possession of the western portion of Lot 2239, which was in 1974, up to the time she instituted the action for quieting of title in 1988, only fourteen (14) years had elapsed. This case, therefore, has no congruency with those cases where the Supreme Court ruled that the registered owner is barred by laches from recovering his property. Thus, in Lola vs. Court of Appeals (145 SCRA 439), the petitioners acquired title to the land owned by respondent by virtue of the equitable principles of laches due, according to the Supreme Court, to respondents failure to assert her claims and ownership for thirty-two (32) years. In Miguel vs. Catalino (26 SCRA 234), the Supreme Court said that appellants passivity and inaction for more than 34 years (1928-1962) justifies the defendant-appellee in setting up the equitable defense of laches in his behalf. In Mejia vs. Gampomana (100 Phil 277), it was held that the original owners right to recover back the possession of the property and title thereto from the defendant has by the long period of 37 years and by the patentees inaction and neglect been converted into a stale demand. Laches, in a general sense, is failure or neglect, for an unreasonable and unexplained length of time, to do that which, by the exercise of due diligence, could or should have been done earlier; it is negligence or omission to assert a right within a reasonable time, warranting a presumption that the party entitled to assert it (Tijam vs. Sibonghanoy, 32 SCRA 29). Since imprescriptibility is one of the basic features of a Torrens title, it is not an ordinary delay in asserting ones right that will give rise to the application of the principle of laches, otherwise, registered title can easily

be defeated by prescription. This is precisely the reason why, in the cases cited, the delay or inaction by the registered owners in asserting their rights was considered unreasonable and unexplained because it took them from 32 to 37 years to do so. In contrast, the delay in the case at bar was only fourteen years. While possession of defendants Felicidad vda. De Cabrera and Marykane Cabrera could not have ripened into ownership as already discussed, they are possessors in good faith of the portion occupied by them and, therefore, entitled to the benefits accorded by the Civil Code as such.[7] Sisters Felicidad vda. de Cabrera and Marykane Cabrera, together with Felicidad Teokemian are now before the Court as Petitioners in this Petition for Review on Certiorari, seeking relief from the respondent courts decision, assigning as errors the following: A RESPONDENT COURT OF APPEALS ERRED IN RULING THAT PRIVATE RESPONDENTS COMPLAINT FILED IN 1988 FOR QUIETING OF TITLE WHICH ACTUALLY IS ONE FOR RECOVERY OF OWNERSHIP AND POSSESSION AS FOUND BY RESPONDENT COURT IS NOT BARRED BY LACHES BECAUSE: 1. A PERIOD OF 30 YEARS HAD ELAPSED FROM 1958 WHEN TORRENS TITLE WAS ISSUED TO PRIVATE RESPONDENT TO 1988 WHEN HER COMPLAINT BELOW WAS FILED DURING WHICH PERIOD OF TIME THE PROPERTY HAS BEEN IN OPEN, CONTINUOUS AND ADVERSE POSSESSION OF THE ORIGINAL OWNER, FELICIDAD TEOKEMIAN, FROM 1958, OR EVEN EARLIER IN 1941 WHEN SHE INHERITED THE PROPERTY, TO 1972 WHEN SHE SOLD IT TO THE CABRERAS WHO CONTINUED THE PRIOR POSSESSION UNTIL 1988 WHEN PRIVATE RESPONDENTS COMPLAINT WAS FILED. 2. ASSUMING ARGUENDO RESPONDENT COURTS HOLDING THAT ONLY 14 YEARS HAD ELAPSED COUNTED FROM 1974 WHEN CABRERAS POSSESSION WAS QUESTIONED BY PRIVATE RESPONDENTS BROTHERS, STILL THAT PERIOD CONSTITUTES LACHES. B RESPONDENT COURT OF APPEALS ERRED IN HOLDING THAT LACHES DOES NOT APPLY BECAUSE WHAT WAS SOLD TO THE CABRERAS WAS A DEFINITE PORTION OF THE COMMUNITY PROPERTY BEFORE PARTITION, HENCE, VOID AND THAT ALBERTANA TEOKEMIAN WHO SIGNED THE DOCUMENT OF SALE IN FAVOR OF THE CABRERAS HAD NO AUTHORITY FROM HER SISTER-CO-OWNER FELICIDAD TEOKEMIAN TO EXECUTE THE DEED OF CONVEYANCE.[8] The bone of the petitioners contention rests on the alleged waiver of the plaintiff to recover any interest she had in the one-third portion of the property inherited by Daniel, Albertana and Felicidad Teokemian from their late father, Domingo, due to the long period of time which lapsed from the time the plaintiffs title was registered until the action for quieting of title was instituted. We find merit in the petition. At the outset, it must be observed that the Certificate of Title of the plaintiff, which was derived from Free Patent No. V-79089, issued in the name of Virgilia Orais, leaves much to be desired in propriety, considering that the Deed of Sale executed by Daniel and Albertana Teokemian, on one hand and Andres Orais on the other, did not bear the signature of Felicidad Teokemian, and therefore, did not cover the latters share. It was the respondent appellate court which observed that the registration of the plaintiffs title over the subject property was fraudulent insofar as it involved the one-third interest of Felicidad Teokemian who did not sign the Deed of Sale in favor of plaintiffs predecessor-ininterest and, therefore, the latter held that portion as a trustee of an implied trust for the benefit of Felicidad, pursuant to Art. 1456 of the Civil Code.[9] Needless to state, these conclusions, being matters of fact, are entitled to our full affirmation, since they are congruent with the findings of the trial court, thus: It would seem from the facts of the case that the basis of the right of plaintiff over the land in litigation specifically Lot No. 2239 now titled in the name of the plaintiff, located at Buayahon, Abejod, Cateel, Davao Oriental, proceeded from the Deed of Sale executed by Daniel Teokemian and Albertana Teokemian on January 16, 1950 acknowledged before Judge Proserador Danao as Notary Ex Oficio. Taking a hard look over the aforesaid deed of sale (Exh. B) the said document apparently included the third heir of Domingo Teokemian Felicidad Teokemian because her name was typewritten together with her sister Albertana and brother Daniel all surnamed Teokemian in the said document. Again this fact will come to mind that the vendee Andres Orais was anticipating at the time Felicidad Teokemian will also sell her share in this portion of land (Lot No. 2239) which at the time of the sale it was still unregistered land. The non-signing of Felicidad Teokemian over her typewritten name in this deed of sale (Exh. B) will attest to the fact that she did not sell her share in the lot in question. After this sale the vendee Andres Orais through his encargado Melecio Capilitan and later Servillano Abarca immediately took possession of the two third portion of said parcel of land respecting the third portion owned by Felicidad Teokemian.[10] However, the appellate court stated further that nonetheless, the plaintiffs attempt to recover the property is justified because defendant Felicidad Teokemians own action for reconveyance has already been barred by prescription,[11] which is the same as stating that the very tardiness of the plaintiffs in pursuing the present action for reconveyance of the subject property has rendered the defendants defense nugatory, and has made the fortress of the plaintiffs case impregnable.

This conclusion is incorrect. As can be discerned from the established facts, the Certificates of Title of the vendees Orais are, to say the least, irregular, and were issued in a calculated move to deprive Felicidad Teokemian of her dominical rights over the property reserved to her by descent. Plaintiff could not have registered the part reserved to Felicidad Teokemian, as this was not among those ceded in the Deed of Sale between Daniel/Albertana Teokemian and Andres Orais. It must be remembered that registration does not vest title, it is merely evidence of such title over a particular property. (Embrado vs. Court of Appeals)[12] The defense of indefeasibility of the Torrens Title does not extend to a transferee who takes the certificate of title with notice of a flaw in his title. (Anonuevo vs. Court of Appeals)[13] The principle of indefeasibility of title is unavailing where there was fraud that attended the issuance of the free patents and titles. (Meneses vs. Court of Appeals)[14] Be that as it may, that the right of the defendants for reconveyance of the subject property arising from an implied trust under Article 1456 of the Civil Code is material to the instant case, such remedy has not yet lapsed, as erroneously submitted by the plaintiffs, and, is thus, a bar to the plaintiffs action. In the case of Heirs of Jose Olviga vs. Court of Appeals,[15] we observed that an action for reconveyance of a parcel of land based on implied or constructive trust prescribes in ten years, the point of reference being the date of registration of the deed or the date of the issuance of the certificate of title over the property, but this rule applies only when the plaintiff or the person enforcing the trust is not in possession of the property, since if a person claiming to be the owner thereof is in actual possession of the property, as the defendant is in the instant case, the right to seek reconveyance, which in effect seeks to quiet title to the property, does not prescribe. The reason for this is that one who is in actual possession of a piece of land claiming to be the owner thereof may wait until his possession is disturbed or his title is attacked before taking steps to vindicate his right, the reason for the rule being, that his undisturbed possession gives him a continuing right to seek the aid of a court of equity to ascertain and determine the nature of the adverse claim of a third party and its effect on his own title, which right can be claimed only by one who is in possession. As it is, before the period of prescription may start, it must be shown that (a) the trustee has performed unequivocal acts of repudiation amounting to an ouster of the cestui que trust; (b) such positive acts of repudiation have been made known to the cestui que trust; and, (c) the evidence thereon is clear and positive.[16] In the case at bar, the defendant Felicidad Teokemian, and thereafter, the Cabreras, were in actual possession of the property since it was left to Felicidad Teokemian by her father in 1941, which possession had not been interrupted, despite the sale of the two-third portion thereof to the plaintiff in 1950, and the latters procurement of a Certificate of Title over the subject property in 1957. Until the institution of the present action in 1988, plaintiffs, likewise, have not displayed any unequivocal act of repudiation, which could be considered as an assertion of adverse interest from the defendants, which satisfies the above-quoted requisites. Thus, it cannot be argued that the right of reconveyance on the part of the defendants, and its use as defense in the present suit, has been lost by prescription. On the other hand, the action for reconveyance (quieting of title) of the plaintiff was instituted only in 1988, that is, thirty years from the time the plaintiffs husband was able to acquire Certificate of Title covering the properties inherited by the Teokemians, and apparently including that portion belonging to Felicidad Teokemian. In the meantime, defendant Felicidad vda. De Cabrera and her late husband have been actively in possession of the same, tilling it, and constructing an irrigation system thereon. This must surely constitute such tardiness on the part of the plaintiff constituting the basis for laches. Laches has been defined as the failure or neglect, for an unreasonable and unexplained length of time, to do that which by exercising due diligence could or should have been done earlier; it is negligence or omission to assert a right within a reasonable time, warranting a presumption that the party entitled to assert it either has abandoned it or declined to assert it.[17] The defense of laches is an equitable one and does not concern itself with the character of the defendants title, but only with whether or not by reason of plaintiffs long inaction or inexcusable neglect, he should be barred from asserting his claim at all, because to allow him to do so would be inequitable and unjust to defendant. Laches is not concerned merely with lapse of time, unlike prescription. While the latter deals with the fact of delay, laches deals with the effect of unreasonable delay.[18] This Court emphasized in Mejia de Lucas vs. Gampona,[19] the reason upon which the rule is based is not alone the lapse of time during which the neglect to enforce the right has existed, but the changes of condition which may have arisen during the period in which there has been neglect. In other words, where a court finds that the position of the parties has to change, that equitable relief cannot be afforded without doing injustice, or that the intervening rights of third persons may be destroyed or seriously impaired, it will not exert its equitable powers in order to save one from the consequences of his own neglect. In our jurisdiction, it is an enshrined rule that even a registered owner of property may be barred from recovering possession of property by virtue of laches. Under the Land Registration Act (now the Property Registration Decree), no title to registered land in derogation to that of the registered owner shall be acquired by prescription or adverse possession. The same is not true with regard to Laches.[20] As we have stated earlier in Mejia de Lucas vs. Gamponia, while the defendant may not be considered as having acquired title by virtue of his and his predecessors long continued possession (37 years) the original owners right to recover back the possession of the property and the title thereto from the defendant has, by the latters long period of possession and by patentees inaction and neglect, been converted into a stale demand. The argument that laches does not apply because what was sold to the Cabreras was a definite portion of the community property, and, therefore, void, is likewise untenable. Under Article 493 of the Civil Code: Each co-owner shall have the full ownership of his part and of the fruits and benefits pertaining thereto, and even he may therefore alienate, assign or mortgage it, and even substitute another person in its enjoyment, except when personal rights are involved. But the effect of the alienation or the mortgage, with respect to the co-owners, shall be limited to the portion which may be allotted to him in the division upon the termination of the co-ownership.

In Go Ong vs. Court of Appeals,[21] this Court ruled that the heirs, as co-owners, shall each have the full ownership of his part and the fruits and benefits pertaining to it. An heir may, therefore, alienate, assign or mortgage it, and even substitute another person in its enjoyment, except when the personal rights are involved. But the effect of the alienation or mortgage, with respect to the co-owners, shall be limited to the portion which may be allotted to him in the division upon the termination of the co-ownership. Undisputed is the fact that since the sale of the two-third portion of the subject property to the plaintiff, the latter had allowed Felicidad Teokemian to occupy that one-third portion allotted to her. There has, therefore, been a partial partition, where the transferees of an undivided portion of the land allowed a co-owner of the property to occupy a definite portion thereof and has not disturbed the same, for a period too long to be ignored--the possessor is in a better condition or right (Potior est conditio possidentis). Clearly, the plaintiff in this instance is barred from asserting her alleged right over the portion subject matter in the instant case on the ground that their right has been lost by laches. In Bailon-Casilao vs. Court of Appeals, we ruled that: As early as 1923, this Court has ruled that even if a co-owner sells the whole property as his, the sale will affect only his own share but not those of the other co-owners who did not consent to the sale (Punzalan vs. Boon Liat, 44 Phil 320 [1923]). This is because under the aforementioned codal provision, the sale or other dispostion affects only his undivided share and the transferee gets only what would correspond to his grantor in the partition of the things owned in common (Ramirez vs. Bautista, 14 Phil 528 [1909]). xxx For Article 494 of the Civil Code explicitly declares: No prescription shall lie in favor of a co-owner or co-heir so long as he expressly or impliedly recognizes the co-ownership.[22] IN VIEW WHEREOF, the petition is hereby GRANTED. The decision of the Court of Appeals dated January 7, 1993 is hereby SET ASIDE. The decision of the trial court dated April 27, 1989 is hereby REINSTATED in toto. SO ORDERED.

CERTIFICATE OF TITLE NOT TO SUBJECT TO COLLATERAL ATTACKS SEC. 48 TAPARUC VS VDA DE MENDE 512 SCRA 97

No collateral attack on title A Torrens title cannot be collaterally attacked. The question on the validity of a Torrens title, whether fraudulently issued or not, can be raised only in an action expressly instituted for that purpose. The title represented by the certificate cannot be changed, altered, modified, enlarged, diminished, or cancelled in a collateral proceeding. The action for the declaration of nullity of deed of sale commenced by the petitioners in the RTC is not the direct proceeding required by law to attack a Torrens certificate of title.

RODRIGUEZ VS RODRIGUEZ

This petition for review on certiorari assails the Decision[1] of the Court of Appeals in CA-G.R. SP No. 91442 dated June 27, 2006, which set aside the Decision of the Regional Trial Court (RTC) of Makati City, Branch 134, in Civil Case No. 03-517, and reinstated the Decision of the Metropolitan Trial Court (MTC) of Makati City, Branch 63, in Civil Case No. 75717, dismissing the complaint for ejectment; as well as the Resolution denying the motion for reconsideration. Juanito Rodriguez owned a five-door apartment located at San Jose Street, Guadalupe Nuevo, Makati City, and covered by TCT No. 144865.[2] On October 27, 1983, Juanito executed a Huling Habilin at Testamento giving petitioner Cresenciana Tubo Rodriguez, his live-in partner, apartments D and E, and his children Benjamin Rodriguez (the deceased husband of respondent Evangeline Rodriguez), apartment A, respondent Buenaventura Rodriguez, apartment B, and respondent Belen Rodriguez, apartment C.[3] However, on June 14, 1984, Juanito executed a Deed of Absolute Sale over the property in favor of petitioner.[4] Thus, TCT No. 144865 was cancelled and a new TCT No. 150431 was issued in the name of the petitioner.[5]

The case arose when petitioner filed on September 20, 2001 a complaint for unlawful detainer against the respondents, alleging that she is the lawful and registered owner of the property; and that in 1984, she allowed respondents Evangeline, Buenaventura and Belen, out of kindness and tolerance, to personally occupy units A, B and D, respectively. However, without her knowledge and consent, respondents separately leased the units to Montano Magpantay, Mel Navarro and Socorro Escota, who despite repeated demands, failed and refused to vacate the premises and to pay the rentals thereof.[6] In their Answer, respondents claimed ownership over the subject property by succession. They alleged that while petitioner is the registered owner of the property, however, she is not the lawful owner thereof because the June 14, 1984 Deed of Absolute Sale was simulated and void. As in Civil Case No. 01-1641 now pending before the RTC of Makati City, Branch 141, which they filed to assail the validity of the said sale, respondents maintain that petitioner exerted undue influence over their father, who at that time was seriously ill, to agree to the sale of the property for only P20,000.00 after knowing that only two apartments were given to her in the Huling Habilin at Testamento. Further, she had no cause of action against them for being a party to the August 23, 1990 Partition Agreement wherein they recognized each other as co-owners and partitioned the property in accordance with the provision of the last will and testament.[7] On February 26, 2002, the MTC rendered a judgment in favor of the respondents and held that the deed of sale was simulated otherwise petitioner would not have entered into the Partition Agreement, which legally conferred upon each heir exclusive ownership over their respective shares, thus: WHEREFORE, the Complaint is DISMISSED. Plaintiff is ordered to pay attorneys fees of P10,000.00 and the costs of suit in favor of defendants. SO ORDERED.[8]

On appeal, the RTC reversed the decision of the MTC. It held that petitioners certificate of title is a conclusive evidence of ownership of the land described therein; and that unless and until said title has been annulled by a court of competent jurisdiction, such title is existing and valid. This is true also with respect to the deed of sale. The present action, which involves only the issue of physical or material possession, is not the proper action to challenge it. Further, the MTC erred when it relied heavily on the Huling Habilin at Testamento, which was not probated hence has no effect and no right can be claimed therein. The Partition Agreement which was allegedly entered into pursuant to the Huling Habilin at Testamento should not also be considered. Thus: WHEREFORE, premises considered, the decision rendered by the Metropolitan Trial Court, Branch 63, Makati City, is hereby ordered REVERSED AND SET ASIDE. Consequently, judgment is hereby rendered ordering the defendants and all persons claiming rights under them to vacate the premises and surrender the possession thereof to the plaintiff. Defendants are likewise ordered to pay jointly and severally the plaintiff an amount of P5,000.00 a month per unit beginning 13 August 2001 until they finally vacate the premises and the costs of this suit. SO ORDERED.[9]

Aggrieved, respondents filed a petition for review before the Court of Appeals which reversed and set aside the decision of the RTC and reinstated the decision of the MTC. It held that the MTC correctly received evidence on ownership since the question of possession could not be resolved without deciding the issue of ownership. Further, the Huling Habilin at Testamento transmitted ownership of the specific apartments not only to the respondents but also to the petitioner; and pursuant thereto, the parties executed the Partition Agreement in accordance with the wishes of the testator, thus: WHEREFORE, this Court resolves to REVERSE and SET ASIDE the Decision of the Regional Trial Court. The decision dated February 26, 2002 of the Metropolitan Trial Court, Branch 63, Makati City in Civil Case No. 75717 dismissing the complaint for ejectment is hereby REINSTATED. SO ORDERED.[10]

The motion for reconsideration was denied hence, petitioner filed the present petition for review raising the following errors: I. THE COURT OF APPEALS COMMITTED A REVERSIBLE ERROR OF LAW AND GRAVE ABUSE OF DISCRETION IN REVERSING AND SETTING ASIDE THE DECISION OF THE REGIONAL TRIAL COURT AND REINSTATING THE DECISION OF THE METROPOLITAN TRIAL COURT DISMISSING PETITIONERS COMPLAINT FOR UNLAWFUL DETAINER. II. THE COURT OF APPEALS COMMITTED A REVERSIBLE ERROR OF LAW AND GRAVE ABUSE OF DISCRETION IN DECLARING THAT THE PROPERTY, A PARCEL OF LAND UPON WHICH A FIVE-UNIT APARTMENT STANDS, BECAME THE SUBJECT OF JUANITO RODRIGUEZS HULING HABILIN AT TESTAMENTO WHEREIN THE PROPERTY WAS DISTRIBUTED TO HIS HEIRS (HEREIN RESPONDENTS) INCLUDING THE RESPONDENT (PETITIONER HEREIN).[11]

Petitioner alleges that as the registered owner of the subject property, she enjoys the right of possession thereof and that question of ownership cannot be raised in an ejectment case unless it is intertwined with the issue of possession. While the court may look into the evidence of title or ownership and possession de jure to determine the nature of possession, it cannot resolve the issue of ownership because the resolution of said issue would effect an adjudication on ownership which is not proper in the summary action for unlawful detainer. Petitioner insists that the Court of Appeals erred in ruling that the Huling Habilin at Testamento transmitted ownership of the specific apartments disregarding the fact that the same is not probated yet and that the testator changed or revoked his will by selling the property to petitioner prior to his death. Contrarily, respondents pray that the instant petition for review be dismissed since the resolution of the question of ownership by the MTC and the Court of Appeals was provisional only to resolve the issue of possession. Petitioner can always avail of legal remedies to have the issue of ownership passed upon by the proper court. Aware of the provisional nature of the resolution on ownership in ejectment cases, respondents filed Civil Case No. 01-1641 to assail the validity of the deed of sale of the property and the registration thereof in petitioners name. The petition has merit. An action for unlawful detainer exists when a person unlawfully withholds possession of any land or building against or from a lessor, vendor, vendee or other persons, after the expiration or termination of the right to hold possession, by virtue of any contract, express or implied.[12] The sole issue to be resolved is the question as to who is entitled to the physical or material possession of the premises or possession de facto.[13] Being a summary proceeding intended to provide an expeditious means of protecting actual possession or right to possession of property, the question of title is not involved[14] and should be raised by the affected party in an appropriate action in the proper court.[15] However, when the issue of ownership is raised the court is not ousted of its jurisdiction. Section 16 of Rule 70 of the Rules of Court provides: SEC 16. Resolving defense of ownership. When the defendant 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.

Thus, all that the trial court can do is to make an initial determination of who is the owner of the property so that it can resolve who is entitled to its possession absent other evidence to resolve ownership.[16] But this adjudication is only provisional and does not bar or prejudice an action between the same parties involving title to the property.[17] In the case at bar, petitioners cause of action for unlawful detainer was based on her alleged ownership of land covered by TCT No. 150431 and that she merely tolerated respondents stay thereat. However, when respondents leased the apartments to other persons without her

consent, their possession as well as those persons claiming right under them became unlawful upon their refusal to vacate the premises and to pay the rent. On the other hand, respondents assailed petitioners title by claiming that the deed of sale upon which it was based was simulated and void. They insisted that they were co-owners thus, they have the right to possess the said property. To prove their claim, they presented the Huling Habilin at Testamento of Juanito Rodriguez and the Partition Agreement. The lower courts considered the following documentary evidence in arriving at their respective decisions, albeit the RTC decision contradicts that of the MTC and Court of Appeals: 1) Huling Habilin at Testamento executed by Juanito Rodriguez on October 27, 1983; 2) Deed of Sale of the property executed by Juanito Rodriguez and the petitioner on June 14, 1984; 3) TCT No. 150431 in the name of the petitioner; and 4) the August 23, 1990 Partition Agreement executed by both the respondents and the petitioner. Based on the foregoing documentary evidence, we find that there is preponderance of evidence in favor of the petitioners claim. Respondents failed to prove their right of possession, as the Huling Habilin at Testamento and the Partition Agreement have no legal effect since the will has not been probated. Before any will can have force or validity it must be probated. This cannot be dispensed with and is a matter of public policy.[18] Article 838 of the Civil Code mandates that [n]o will shall pass either real or personal property unless it is proved and allowed in accordance with the Rules of Court. As the will was not probated, the Partition Agreement which was executed pursuant thereto can not be given effect. Thus, the fact that petitioner was a party to said agreement becomes immaterial in the determination of the issue of possession. Moreover, at the time the deed of sale was executed in favor of the petitioner, Juanito Rodriguez remained the owner thereof since ownership would only pass to his heirs at the time of his death. Thus, as owner of the property, he had the absolute right to dispose of it during his lifetime. Now, whether or not the disposition was valid is an issue that can be resolved only in Civil Case No. 01-1641, an action instituted by the respondents for that purpose. We are, thus, left with the deed of sale and the certificate of title over the property to consider. We agree with the RTC that a certificate of title is a conclusive evidence of ownership of the land described therein; the validity of which shall not be subject to a collateral attack, especially in an ejectment case which is summary in nature. In Ross Rica Sales Center, Inc. v. Ong,[19] the Court held that: The long settled rule is that the issue of ownership cannot be subject of a collateral attack. In Apostol v. Court of Appeals, this Court had the occasion to clarify this: . . . Under Section 48 of Presidential Decree No. 1529, a certificate of title shall not be subject to collateral attack. It cannot be altered, modified or cancelled, except in a direct proceeding for that purpose in accordance with law. The issue of the validity of the title of the respondents can only be assailed in an action expressly instituted for that purpose. Whether or not the petitioners have the right to claim ownership over the property is beyond the power of the court a quo to determine in an action for unlawful detainer. Further, in Co v. Militar,[20] it was held that: [T]he Torrens System was adopted in this country because it was believed to be the most effective measure to guarantee the integrity of land titles and to protect their indefeasibility once the claim of ownership is established and recognized. It is settled that a Torrens Certificate of title is indefeasible and binding upon the whole world unless and until it has been nullified by a court of competent jurisdiction. Under existing statutory and decisional law, the power to pass upon the validity of such certificate of title at the first instance properly belongs to the Regional Trial Courts in a direct proceeding for cancellation of title. As the registered owner, petitioner had a right to the possession of the property, which is one of the attributes of ownership. x x x

We emphasize, however, that our ruling on the issue of ownership is only provisional to determine who between the parties has the better right of possession. It is, therefore, not conclusive as to the issue of ownership, which is the subject matter of Civil Case No. 01-1641. Our ruling that petitioner has a better right of possession was arrived at on the basis of evidence without prejudice to the eventual outcome of the annulment case, where the issue as to who has title to the property in question is fully threshed out. As the law now stands, in an ejectment suit, the question of ownership may be provisionally ruled upon for the sole purpose of determining who is entitled to possession de facto. WHEREFORE, in view of the foregoing, the Decision of the Court of Appeals in CA-G.R. SP No. 91442 dated June 27, 2006 is REVERSED and SET ASIDE. The Decision of the Regional Trial Court of Makati City, Branch 134, in Civil Case No. 03-517, reversing the Decision of the Metropolitan Trial Court (MTC) of Makati City, Branch 63, in Civil Case No. 75717, is REINSTATED.

SO ORDERED.

V. VOLUNTARY DEALINGS Entry in the primary entry book Auto Corp Group v. CA and Keppel Monte Bank (2004) CASE DIGEST FACTS: Certiorari. Keppel Monte Bank extended a loan of Php 85 M in favor of Autocorp Grp. Which was secured by pledge and real estate mortgage on several properties. This is embodied in an AGREEMENT which provides that the creditor may, at its sole discretion, treat the whole obligation, its principal and accrued interest and other charges, as immediately due, payable and defaulted, without necessity of any demand, presentment or notice by the creditor to the debtor. Autocorp FAILED to pay the loan. Despite its failure, it asked for an additional loan of Php 48.8 M payable in 1 year at 20% interest. Php 17 M of which was applied to the 1st loan. Autocorp failed to pay despite repeated demands and extensions. Total= Php 116.8 M (143,871,904.00). In a notarized letter addressed to the Provincial Sheriff of Cebu, the bank requested for the SALE of the mortgaged lots in a public auction, for the satisfaction of Autocorps obligations. Before the Sheriff could prepare the requisite publication and notice, a complaint for Annulment of Loan Agreement and Real Estate Mortgage/ Declaration of Unenforceability of Loan Agreement and Real Estate Mortgage was filed against the Bank and the Sheriff. RTC issued a TRO effective for 72 hours which was extended to 20 days. Subsequently it issued a Writ of Preliminary Injunction conditioned on Autocorps filing of a bond of Php 20 M. CA annulled the order and resolution of the RTC. Counsel for the Bank immediately informed the Sheriff of the CAs favorable decision and requested him to proceed with the foreclosure. Thereafter, the Sheriff prepared and served the NOTICE OF EXTRAJUDICIAL SALE. Before it could be published Autocorp filed an URGENT MOTION TO HOLD IN ABEYANCE THE EXTRAJUDICIAL SALE before the RTC and VERY URGENT MOTION FOR ISSUANCE OF AN ORDER OF STATUS QUO before the CA. Both motions were denied by the respective courts. The extrajudicial sale proceeded and the land was awarded to the bank as the lone bidder. A few days after, Autocorp filed a MOTION TO ADMIT THEIR AMENDED/SUPPLEMENTAL COMPLAINT WITH A PRAYER FOR THE ISSUANCE OF AN EX PARTE TRO AND AN ORDER FOR PRELIMINARY INJUNCTION before the RTC to stop the Register of Deeds of Cebu from Registering the CERTIFICATE OF SALE in the name of the Bank and the latter from taking into possession of the properties subject of the foreclosure.

January 21, 1999. Bank presented the SHERIFFs CERTIFICATE OF SALE to the Register of Deeds. On the same date, the certificate was entered in the primary entry book of the Register of Deeds. However, the entry fee and the registration fee were paid only the following day because the cashier had already left. The certificate of sale was duly annotated at the back of the transfer certificates of title of the subject lots. January 25, 1999. RTC granted the motion to admit their amended complaint and issued the TRO, directing the Register of Deeds to refrain from registering the assailed sheriffs certificate of sale and the bank from taking possession of the properties. CA. annulled and set aside the RTC decision holding that the entry in the primary entry book was equivalent to registration. ISSUE: WON there was registration? RULING: The objection as to the payment of the requisite fees is unavailing. There is no question that the fees were paid, albeit belatedly. Xxx Given the peculiar facts of the case, we agree with the CA that the payment of respondent bank must be deemed to be substantial compliance with the law, and, the entry of the instrument the day before, should not be invalidated. In any case, even if we consider the entry to have been made on January 22, the important fact is that the entry in the primary entry book was done prior to the issuance of the writ of injunction by the trial court. (see Section 56, PD 1529) xxx A voluntary instrument is a willful act of the registered owner of the land to be affected by registration, while an involuntary instrument is one pertaining to a transaction affecting lands in which the registered owners cooperation is not needed and which transaction may even be done against his will. For the registration of a voluntary instrument, it is necessary not only to register the deed, instrument or assignment, mortgage, or lease in the entry book of the register of deeds, but a memorandum thereof must also be made on the owners duplicate and on its original. The mere entry by the register of deeds in the entry or diary book, without the presentation of the owners duplicate certificate of title for corresponding annotation of the conveyance, does not have the effect of a conveyance of the property. On the other hand, for the registration of an involuntary instrument, the law does not require the presentation of the owners duplicate certificate of title and considers the annotation of such instrument upon the entry book, as sufficient to affect the real estate to which it relates. The reason for the difference is obvious. In a voluntary instrument, the registered owner of the land to be affected by registration is presumed to be interested in registering the instrument and would willingly surrender, present or produce his duplicate certificate of title to the register of deeds in order to accomplish such registration. On the other hand, as the registration of an involuntary instrument is contrary to the interest of the registered owner or will affect him adversely, it is but natural that he will not willingly present or produce his duplicate certificate or at least delay the production as long as possible. Like in DBP vs. Acting Register of Deeds of Nueva Ecija, the instrument involved in the case at bar, is a sheriffs certificate of sale. We hold now, as we held therein, that the registrant is under no necessity to present the owners duplicates of the certificates of title affected, for purposes of primary entry, as the transaction sought to be recorded is an involuntary transaction. Registration is merely a species of notice. It is a ministerial act by which an instrument is sought to be inscribed in the records of the Office of the Register of Deeds and annotated at the back of the certificate of title covering the land subject of the instrument. It is not a declaration by the State that such an instrument is a valid and subsisting interest in the land. The law on registration does not require that only valid instruments shall be registered. The purpose of registration is merely to give notice. HELD: petition dismissed /adsum

Auto Corp Group vs CA PUNO, J.: Petitioners are before us on a Petition for Review on Certiorari assailing the decision1 and resolution2 of the Court of Appeals in CA-G.R. SP No. 59004, which set aside the order3 and resolution4 of the Regional Trial Court (RTC) of Cebu City, Branch 5, granting a writ of preliminary injunction against the respondent Keppel Monte Bank and the Register of Deeds of Cebu City. The records show that respondent bank extended a loan of eighty-five million pesos (P85,000,000.00) in favor of petitioner Autocorp Group (Autocorp). The loan is embodied in an Agreement5 dated December 16, 1994 which was secured by pledge and real estate mortgage on several properties, among which, were lots in Cebu City, co-owned by petitioner Autographics, Inc., and covered by Transfer Certificates of Title (TCT) Nos. 72002, 72132, 85737, and 102042, and lots in Lapu-lapu City, registered under the name of Eurasia Heavy Industries, Inc., and covered by TCT Nos. 19135 and 19136. The Agreement provided that the "CREDITOR may, at its sole discretion, treat the whole obligation, its principal and accrued interest and other charges, as immediately due, payable and defaulted, without necessity of any demand, presentment or notice by the CREDITOR to the DEBTOR" in any event of default, such as, when "[t]he DEBTOR fails to pay the principal loan, interests, and other fees and charges, or any part thereof as they fall due." Petitioner Autocorp failed to pay the loan. Despite its failure, it asked for an additional loan of P48,800,000.00 payable in one year at 20% interest per annum. Of this additional loan, P17,000,000.00 was applied partially against the original loan. Autocorp was again unable to pay both accounts totaling P116,800,000.00, despite repeated demands and various requests for extension.6 Hence, in a notarized letter7 dated September 8, 1997, addressed to the Office of the Provincial Sheriff of Cebu City, respondent bank requested for the sale of the six (6) mortgaged lots at a public auction, for the satisfaction of petitioner Autocorps obligations, which, as of July 15, 1997, allegedly amounted to P143,871,904.00, and a sum equivalent to 10% as attorneys fees. The letter was filed with the Office of the Clerk of Court Ex OficioProvincial Sheriff of Cebu City on September 12, 1997, and raffled to Deputy Sheriff Jessie Belarmino on September 15, 1997, for implementation.8 Before Deputy Sheriff Belarmino could prepare the requisite publication and notice, the petitioners filed a complaint for "Annulment of Loan Agreement and Real Estate Mortgage/ Declaration of Unenforceability of Loan Agreement and Real Estate Mortgage with ex parte Restraining Order, Preliminary Injunction and Damages"9against respondent bank, the Clerk of Court Ex Oficio Provincial Sheriff of Cebu, and Deputy Sheriff Belarmino. Summons and notice of raffle were served on respondent bank and its co-defendants on September 24, 1997. The case was raffled to Branch 23 of the RTC of Cebu City. On October 1, 1997, the trial court issued a Temporary Restraining Order (TRO) effective for seventy-two (72) hours. After a summary hearing on October 3, 1997, the TRO was extended for twenty (20) days.10 On October 16, 1997, the trial court issued a writ of preliminary injunction,11 conditioned on petitioners filing of a bond of two million pesos (P2,000,000.00). It also set the pre-trial hearing of the case. The respondent bank sought a reconsideration of the order but in vain. Respondent bank filed a petition for certiorari under Rule 65 of the Rules of Court with the Court of Appeals, to annul the order and resolution of the trial court. It contended that the preliminary injunction was issued without the requisite prior notice and hearing, provided under Section 5, Rule 58 of the 1997 Rules of Court. The Court of Appeals granted the petition on November 12, 1998, after finding that the summary hearing conducted by the trial court was insufficient. The decision was held to be "without prejudice to his (the trial court judges) conducting the required hearing to determine whether preliminary injunction should be issued."12 The counsel for respondent bank immediately informed Deputy Sheriff Belarmino of the Court of Appeals favorable decision. In a letter13 dated November 25, 1998, said counsel furnished Deputy Sheriff Belarmino with a copy of the November 12, 1998 Decision of the Court of Appeals and requested him to proceed with the foreclosure. In response, Deputy Sheriff Belarmino prepared and served the Notice of Extrajudicial Sale.14 He scheduled the extrajudicial sale on January 7, 1999 at 10:00 a.m. Before the notice could be published, petitioners filed an "Urgent Motion to Hold in Abeyance the Extrajudicial Sale in Case No. EJF-2397-CEB"15 dated December 7, 1997 with Branch 516 of the RTC of Cebu City. In addition, it filed a "Very Urgent Motion for Issuance of an Order of Status Quo"17 with the Court of Appeals on December 17, 1998. In its Resolution18 dated December 22, 1998, the Court of Appeals denied the motion of the petitioners. It ruled that its November 12, 1998 Decision had become final and executory, hence, the motion of petitioners should be resolved by the trial court. On January 6, 1999, the RTC of Cebu City, Branch 5, also denied petitioners motion to hold the extrajudicial sale in abeyance on the ground that petitioners violated the rule against forum-shopping.19Petitioners filed a motion for the reconsideration of the trial courts decision but without any success. The extrajudicial sale proceeded on January 7, 1999 at 10:00 a.m. and closed at 10:45 a.m. The six (6) properties were awarded to respondent bank as the lone bidder. Deputy Sheriff Belarmino issued a Certificate of Sale dated January 7, 1999 with the approval of Executive Judge Priscila Agana.20 On January 13, 1999, petitioners filed a motion to admit their Amended/Supplemental Complaint with a prayer for the issuance of an ex parte Temporary Restraining Order and an Order for Preliminary Injunction21 with the RTC of Cebu City, Branch 5. It aimed to stop the Register

of Deeds of Cebu from registering the Certificate of Sale in the name of respondent bank and the latter from taking possession of the properties subject of the foreclosure. In addition, the amended complaint sought the annulment of the extrajudicial foreclosure due to several alleged irregularities in the conduct of the sale. On January 21, 1999 at 4:30 p.m., respondent bank presented the sheriffs certificate of sale to the Register of Deeds of Cebu City, involving the four (4) properties located in Cebu City covered by TCT Nos. 72002, 72132, 85737, and 102042. On the same date, the certificate was entered in the primary entry book of the Register of Deeds of Cebu. However, the entry fee of P30.00 and the registration fee of P154,923.00 were paid only the following day or on January 22, 1999 as the cashier in charge of receiving payment had already left. Respondent bank also presented the sheriffs certificate of sale to the Register of Deeds of Lapu-lapu City with respect to the two (2) subject lots, covered by TCT Nos. 19135 and 19136, located therein.22 The certificate of sale was duly annotated at the back of the transfer certificates of title of the subject lots with a note that "this include[s] four (4) other lots situated in Cebu City."23 On January 25, 1999, the RTC of Cebu City, Branch 5, admitted the amended/supplemental complaint of petitioners and granted their prayer for the issuance of a TRO, directing the Office of the Register of Deeds to refrain from registering the assailed sheriffs certificate of sale and also respondent bank from taking possession of the properties subject of the certificate of sale. It required the respondent bank to file its answer to the amended/supplemental complaint, within ten (10) days from receipt of the order, and set a hearing on the propriety of issuing a writ of preliminary injunction on February 15, 1999.24 Respondent banks counsel failed to appear on the scheduled February 15, 1999 hearing despite due notice. Petitioners presented their evidence ex parte. As the TRO it issued was to expire on the same day, the trial court issued the preliminary injunction on the basis of the evidence adduced by petitioners. The dispositive portion of the order states: WHEREFORE, in view of the foregoing, the court hereby grants the preliminary injunction and let a writ issue after the plaintiffs shall have put up a bond of ONE HUNDRED THOUSAND (P100,000.00) Pesos conditioned that the applicant will pay the adverse party of all damages which it may sustain by reason of the injunction if the court will finally decide that the applicant is not entitled thereto. Consequently, the Office of the Register of Deeds, Cebu City is enjoined not to register the Certificate of Sale, dated January 7, 1999, and likewise defendant Monte de Piedad is directed not to take possession or do any act related thereto on the properties subject of said Certificate of [S]ale until further orders from this court.25 Respondent banks motion for reconsideration was denied in an Order dated March 9, 1999.26 On May 29, 2000, respondent bank filed a petition for certiorari27 under Rule 65 of the Rules of Court with the Court of Appeals, seeking to annul the orders of the trial court dated February 15, 1999 and March 9, 1999. Respondent bank contended that the entry of the certificate of sale in the primary entry book on January 21, 1999 was equivalent to registration. Hence, the TRO dated January 25, 1999 and the preliminary injunction dated February 15, 1999, were issued with grave abuse of discretion, the registration of the certificate of sale having already become fait accompli at the time. Respondent bank also faulted the part of the order prohibiting petitioner from taking possession of the properties as it has not even filed a petition for a writ of possession at the time as required by Section 7 of Act No. 3135. On August 16, 2002, the Court of Appeals rendered its first assailed decision,28 annulling and setting aside the trial courts February 15, 1999 Order and April 28, 2000 Resolution. It held that the entry of the certificate of sale in the primary entry book was equivalent to registration, citing Section 56 of Presidential Decree (P.D.) No. 1529, also known as the "Property Registration Decree," and the case of DBP vs. Acting Register of Deeds of Nueva Ecija.29 The Court of Appeals held that the failure of respondent bank to pay the entry and registration fees, on the same day that the sheriffs certificate of sale was presented and entered in the primary entry book, was not respondents fault but due to the absence of the cashier. In any case, it ruled that the payment by respondent bank the following day cured the defect. The Court of Appeals also found as premature the injunction to stop respondent bank from taking possession of the properties. Petitioners motion for reconsideration was denied by the Court of Appeals in a Resolution dated March 17, 2003.30 Hence, this petition where petitioners raise the following issues: I ARE THE QUESTIONED DECISION OF THE COURT OF APPEALS AND ITS RESOLUTION DATED AUGUST 16, 2002 AND MARCH 17, 2003 IN CA-G.R. SP. NO. 59004 IN ACCORD WITH THE LAW AND JURISPRUDENCE THEREON? II CAN THE COURT OF APPEALS IN A PETITION FOR CERTIORARI PASS UPON AND REVERSE THE FINDINGS OF FACT AND LAW OF THE TRIAL COURT MADE IN THE EXERCISE OF ITS JURISDICTION?31 Petitioners contend that payment of the entry fee is a condition sine qua non before any valid entry can be made in the primary entry book. Allegedly, the Court of Appeals resorted to judicial legislation when it held that the subsequent payment of the entry fee was curative and a substantial compliance with the law. Petitioners claim that the ruling in DBP vs. Acting Register of Deeds of Nueva Ecija does not apply to this

case. As there was no valid registration, petitioners conclude that the order of the trial court issuing a writ of preliminary injunction was proper, considering the irregularities present in the conduct of the extrajudicial foreclosure such as: (a) the petition for extrajudicial foreclosure was not filed with the executive judge of the RTC of Cebu City but only with the Clerk of Court Ex Oficio Sheriff, Atty. Jeffrey Joaquino; (b) the notice of extrajudicial foreclosure was made three (3) days ahead of the finality of the November 12, 1998 Decision of the Court of Appeals in CA-G.R. SP No. 48305, which dissolved the first writ of preliminary injunction issued by the court a quo; and (c) the extrajudicial foreclosure sale on January 7, 1999 was not supervised by the Clerk of Court Ex Oficio Sheriff, as required under Administrative Order No. 3-98 of this Court.32 We find the petition bereft of merit. First. The objection as to the payment of the requisite fees is unavailing. There is no question that the fees were paid, albeit belatedly. Respondent bank presented the certificate of sale to the Office of the Register of Deeds of Cebu City for registration on January 21, 1999 at 4:30 p.m. As the cashier had already left, the Office could not receive the payment for entry and registration fees, but still, the certificate of sale was entered in the primary entry book. The following day, respondent bank paid the requisite entry and registration fees. Given the peculiar facts of the case, we agree with the Court of Appeals that the payment of respondent bank must be deemed to be substantial compliance with the law; and, the entry of the instrument the day before, should not be invalidated. In any case, even if we consider the entry to have been made on January 22, the important fact is that the entry in the primary entry book was done prior to the issuance of the writ of injunction by the trial court. Section 56 of P.D. No. 1529 provides: SEC. 56. Primary Entry Book; fees; certified copies. Each Register of Deeds shall keep a primary entry book in which, upon payment of the entry fee, he shall enter, in the order of their reception, all instruments including copies of writs and processes filed with him relating to registered land. He shall, as a preliminary process in registration, note in such book the date, hour and minute of reception of all instruments, in the order in which they were received. They shall be regarded as registered from the time so noted, and the memorandum of each instrument, when made on the certificate of title to which it refers, shall bear the same date: Provided, that the national government as well as the provincial and city governments shall be exempt from the payment of such fees in advance in order to be entitled to entry and registration. (emphasis ours) Second. Petitioners contend that the aforecited case of DBP is not apropos to the case at bar. Allegedly, in DBP, the bank not only paid the registration fees but also presented the owners duplicate certificate of title. We find no merit in petitioners posture. They fail to consider the voluntary or involuntary nature of the instrument subject of registration. A voluntary instrument is a willful act of the registered owner of the land to be affected by registration,33 while an involuntary instrument is one pertaining to a transaction affecting lands in which the registered owners cooperation is not needed and which transaction may even be done against his will.34 For the registration of a voluntary instrument, it is necessary not only to register the deed, instrument or assignment, mortgage, or lease in the entry book of the register of deeds, but a memorandum thereof must also be made on the owners duplicate and on its original. The mere entry by the register of deeds in the entry or diary book, without the presentation of the owners duplicate certificate of title for corresponding annotation of the conveyance, does not have the effect of a conveyance of the property.35 On the other hand, for the registration of an involuntary instrument, the law does not require the presentation of the owners duplicate certificate of title and considers the annotation of such instrument upon the entry book, as sufficient to affect the real estate to which it relates.36 The reason for the difference is obvious. In a voluntary instrument, the registered owner of the land to be affected by registration is presumed to be interested in registering the instrument and would willingly surrender, present or produce his duplicate certificate of title to the register of deeds in order to accomplish such registration. On the other hand, as the registration of an involuntary instrument is contrary to the interest of the registered owner or will affect him adversely, it is but natural that he will not willingly present or produce his duplicate certificate or at least delay the production as long as possible.37 Like in DBP vs. Acting Register of Deeds of Nueva Ecija,38 the instrument involved in the case at bar, is a sheriffs certificate of sale. We hold now, as we held therein, that the registrant is under no necessity to present the owners duplicates of the certificates of title affected, for purposes of primary entry, as the transaction sought to be recorded is an involuntary transaction. Registration is merely a specie of notice.39 It is a ministerial act by which an instrument is sought to be inscribed in the records of the Office of the Register of Deeds and annotated at the back of the certificate of title covering the land subject of the instrument. It is not a declaration by the State that such an instrument is a valid and subsisting interest in the land.40 The law on registration does not require that only valid instruments shall be registered. The purpose of registration is merely to give notice.41 It is a ministerial duty on the part of the Register of Deeds to annotate the instrument on the certificate of sale after a valid entry in the primary entry book. P.D. No. 1524 provides: SEC. 63. Foreclosure of Mortgage. x x x (b) If the mortgage was foreclosed extrajudicially, a certificate of sale executed by the officer who conducted the sale shall be filed with the Register of Deeds who shall make a brief memorandum thereof on the certificate of title. (emphases ours) In fine, petitioners prayer for the issuance of a writ of injunction, to prevent the register of deeds from registering the subject certificate of sale, had been rendered moot and academic by the valid entry of the instrument in the primary entry book. Such entry is equivalent to registration. Injunction would not lie anymore, as the act sought to be enjoined had already become a fait accompli or an accomplished act.

Third. As to the writ of injunction preventing respondent bank from possessing the subject lands, Act No. 3135 provides: SECTION 7. In any sale made under the provisions of this Act, the purchaser may petition the Court of First Instance of the province or place where the property or any part thereof is situated, to give him possession thereof during the redemption period, furnishing bond in an amount equivalent to the use of the property for a period of twelve months, to indemnify the debtor in case it be shown that the sale was made without violating the mortgage or without complying with the requirements of this Act. Such petition shall be made under oath and filed in form of an ex parte motion in the registration or cadastral proceedings if the property is registered, or in special proceedings in the case of property registered under the Mortgage Law or under section one hundred and ninety-four of the Administrative Code, or of any other real property encumbered with a mortgage duly registered in the office of any register of deeds in accordance with any existing law, and in each case the clerk of the court shall, upon the filing of such petition, collect the fees specified in paragraph eleven of section one hundred and fourteen of Act Numbered Four hundred and ninety-six, as amended by Act Numbered Twenty-eight hundred and sixty-six, and the court shall, upon approval of the bond, order that a writ of possession issue, addressed to the sheriff of the province in which the property is situated, who shall execute said order immediately. A writ of possession is generally understood to be an order whereby a sheriff is commanded to place a person in possession of a real or personal property, such as, when a property is extrajudicially foreclosed. It has been consistently held that during the period of redemption after the registration of the sale, a writ of possession issues as a matter of course upon the filing of the proper motion and the approval of a bond. A writ of possession may also be issued after consolidation of ownership of the property in the name of the purchaser. It is settled that the buyer in a foreclosure sale, who becomes the absolute owner of the property if the same is not redeemed during the one-year redemption period after the registration of the sale, is entitled to the possession of the property and can demand it at any time, following the consolidation of ownership in his name and the issuance to him of a new transfer certificate of title. To underscore the writs ministerial character, we have disallowed injunction to prohibit its issuance, just as we have held that issuance of the same may not be stayed by a pending action for annulment of the mortgage or the foreclosure itself.42 The preliminary injunction issued by the trial court to prevent respondent bank from taking possession of the subject lots, was properly set aside by the Court of Appeals, as the trial court judge acted with grave abuse of discretion when it issued the same. It was not alleged that respondent bank committed acts of possession over the properties before it could file a petition for a writ of possession during the redemption period. If the trial court cannot refuse to issue a writ of possession in the event that respondent bank complies with the requisites for its issuance, with more reason that the trial court cannot issue an injunction, preempting respondent bank from filing a petition or application for a writ of possession, over the properties subject of the certificate of sale. IN VIEW WHEREOF, the petition is dismissed. The assailed decision and resolution of the Court of Appeals are affirmed. Cost against petitioners. SO ORDERED. Paulo Ballesteros v. Rolando Abion (2006) CASE DIGEST FACTS: Certiorari. Ruperto Esano is the owner of a 2-door, 3-storey commercial building. Ownership was then transferred to DBP which in turn sold the property to Dr. Rodolfo Vargas. March 14, 1991. Ballesteros entered into a contract of lease for 1 door of the building with Ronald Vargas, son of Dr. Vargas, who represented himself as the absolute owner of the property. The agreement was not registered in the Register of Deeds. The lease was to run until April 1, 1996. September 27, 1995. Dr. Vargas sold the property to Rolando Abion, evidenced by a deed of absolute sale. TCT was transferred to Abion on April 10, 1996. October 30, 1995. New lease contract was entered between Ballesteros and Ronald Vargas, who again misrepresented himself as absolute owner of the property. This new agreement extended the term of the original contract of lease between the parties and included the remaining door of the building in its coverage. It was to be effective for a period of five years from November 1, 1995, or until November 1, 2000. Ballesteros immediately occupied the additional door upon the execution of the new contract of lease. He made advance payments for the rent of the two doors until June 1997. He also sought to register the new contract of lease with the Register of Deeds of Iriga City. However, the contract was entered only in the primary book because it could not be registered for several reasons: (a) the requisite tax had not been paid (b) the contract lacked a documentary stamp and (c) the tax declaration of the property was not in the name of the lessor.

April 30, 1996. Ballesteros received a letter from Abion demanding that he vacate the property and surrender its possession. He also subsequently received another letter from Abions counsel reiterating the demand for him to vacate the property. All this notwithstanding, petitioner refused to vacate the premises. A complaint for UNLAWFUL DETAINER was filed in the MTCC. MTCC. dismissed for failure to state a cause of action. RTC. Reversed the decision of the MTCC. Ordered Ballesteros to vacate the property and surrender its possession to Abion. RTC issued a writ of execution which was received by Ballesteros wife on Dec. 3, 1997. As authorized by the court, the sheriff opened the main entrance of the building and delivered possession of the property to Abion. CA. affirmed the RTC decision. ISSUE: WON the second lease contract was registered in the Register of Deeds of Iriga City so as to amount to notice to Abion of the existence of such lease contract? RULING: Petitioners third argument is likewise without merit. Whether the second lease contract was registered or not was immaterial since it was void. Registration does not legitimize a void contract. Moreover, assuming for the sake of argument that the second contract could be registered, the primary entry thereof did not produce the effect of registration. Petitioner presented the second lease contract to the Register of Deeds of Iriga City for registration on October 31, 1995, or a day after its execution. The contract was, however, merely entered in the primary book. It was not registered because it lacked certain requisites. It is well settled that for the registration of voluntary instruments (e.g., deed of sale or contract of lease), it is necessary not only to register the deed, instrument of assignment, mortgage or lease in the entry book of the register of deeds but also for the Register of Deeds to annotate a memorandum thereof on the owners duplicate certificate and its original. In voluntary registration, if the owners duplicate certificate is not surrendered and presented or if no payment of registration fees is made within fifteen days, entry in the day book will not convey or affect the land sold, mortgaged or leased. Entry alone produces the effect of registration, whether the transaction entered is voluntary or involuntary, 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. Here, petitioner admits that the second lease contract was refused registration by the Register of Deeds for his failure to comply with certain conditions for registration. And since petitioner failed to comply with all the requisites for entry and annotation, the entry in the primary book did not ripen into registration. HELD: petition is denied. /adsum

Ballesteros vs Abion CORONA, J.: Before us is a petition for review on certiorari under Rule 45 of the Rules of Court assailing the July 15, 1999 decision1 of the Court of Appeals (CA) in CA-G.R. SP No. 46065 which affirmed the decision of the Regional Trial Court (RTC) of Iriga City, Branch 37, in Civil Case No. 2917. The property subject of this petition is a two-door, three-story commercial building and the 229 sq.m. parcel of land on which it stands. The property was originally owned by Ruperto Ensano, as evidenced by TCT No. 6178. Ownership was subsequently transferred to the Development Bank of the Philippines (DBP) which, in turn, sold the property to Dr. Rodolfo Vargas in a deed of absolute sale dated March 30, 1988. Despite these transfers of ownership, however, the property was registered in the names of DBP and Dr. Vargas (TCT Nos. 941 and 942, respectively) only on February 21, 1996.

Meanwhile, on March 14, 1991, petitioner entered into a contract of lease for one door of the building with Ronald Vargas, son of Dr. Vargas, who represented himself as the absolute owner of the property. Under the agreement (which was not registered in the Register of Deeds), the lease was to run until April 1, 1996. On September 27, 1995, Dr. Vargas sold the property to respondent. This was evidenced by a deed of absolute sale of even date. TCT No. 949 in the name of the respondent was subsequently issued on April 10, 1996. In the meantime, on October 30, 1995, petitioner entered into a new contract of lease with Ronald Vargas who again misrepresented himself as the absolute owner of the property. This new agreement extended the term of the original contract of lease between the parties and included the remaining door of the building in its coverage. It was to be effective for a period of five years from November 1, 1995, or until November 1, 2000. Since respondent had not yet taken possession of the building, petitioner immediately occupied the additional door upon the execution of the new contract of lease. He made advance payments for the rent of the two doors until June 1997. He also sought to register the new contract of lease with the Register of Deeds of Iriga City. However, the contract was entered only in the primary book because it could not be registered for several reasons: (a) the requisite tax had not been paid (b) the contract lacked a documentary stamp and (c) the tax declaration of the property was not in the name of the lessor.2 On April 30, 1996, petitioner received respondents April 25, 1996 letter demanding that he vacate the property and surrender its possession. On June 20, 1996, petitioner received another letter from respondents counsel reiterating the demand for him to vacate the property. All this notwithstanding, petitioner refused to vacate the premises. On September 4, 1996, respondent filed a complaint for unlawful detainer with damages against petitioner in the Municipal Trial Court in Cities (MTCC) of Iriga City, Branch 2. It was, however, dismissed for failure to state a cause of action. On appeal, the RTC of Iriga City, Branch 37, reversed the decision of the MTCC and ordered petitioner to vacate the property and surrender its possession to respondent. Petitioner was also ordered to pay respondent P50,000 as attorneys fees and P7,000 per month as rental for the property from September 1995 until petitioner vacated the premises. Petitioner moved for a reconsideration of the RTC decision but the motion was denied. On respondents motion, the RTC issued a writ of execution dated December 1, 1997.3 It was received on December 3, 1997 by petitioners wife. Petitioner filed an urgent motion for time to vacate the premises4 and a supplemental motion for time to vacate the property,5 praying for thirty days from December 5, 1997 (the deadline given by the sheriff for petitioner to leave the premises) within which to vacate the property. On December 9, 1997, the RTC denied petitioners motion and directed the sheriff to immediately effect the restitution and delivery of the property to respondent. The sheriff filed a manifestation with motion dated December 9, 19976 praying that the use of force to implement the writ of execution be allowed in order to open the premises and deliver its possession to respondent. On the other hand, petitioner moved for a reconsideration of the December 9, 1997 order of the RTC as well as for the suspension of the implementation of the writ of execution. Acting on the sheriffs manifestation with motion and the petitioners motion for reconsideration and/or suspension of the implementation of the writ of execution, the RTC, in an order dated December 11, 1997, denied petitioners motion and allowed the sheriff to execute the writ pursuant to paragraph (c) of Rule 39, Section 10 of the Rules of Court. As authorized by the trial court, the sheriff forced open the main entrance of the building and delivered possession of the property to respondent on December 15, 1997.7 Petitioner filed a petition for review with the CA. It was docketed as CA-G.R. SP No. 46065. On July 15, 1999, the CA affirmed the RTC decision with modification. The CA ruled that petitioners right of possession to the property was only by virtue of the second lease contract dated October 30, 1995 between petitioner and Ronald Vargas. It was clear, however, that Ronald Vargas was not the owner of the property and therefore had no right to lease it out. Petitioner himself admitted respondents ownership of the property. Neither was there any evidence that Ronald Vargas had been authorized by respondent or even by Dr. Vargas himself to transact the second lease on their behalf. The CA held that petitioners possession of the property from the date of purchase by respondent was merely by tolerance. Such possession became unlawful from the time respondent made a demand on petitioner to vacate it. The CA further ruled that petitioner could not pretend ignorance of the ownership of the property when he entered into the second lease agreement. The property was registered with the Register of Deeds and such registration constituted notice to the whole world. However, the CA reduced the award of attorneys fees from P50,000 to P20,000 for lack of factual basis. The CA also took the stipulation in petitioners lease agreement into consideration and reduced the rent from P7,000 toP5,000 per month, and only for the period covering July 1 to December 15, 1997.

Petitioner moved for a reconsideration of the CA decision but it was denied in a resolution dated May 25, 2000. Hence, this petition, which raises the following issues: 1. whether or not respondent could legally eject petitioner or terminate the lease; 2. whether or not respondent was able to establish a cause of action; 3. whether or not the trial court (MTCC of Iriga City, Br. 2) had jurisdiction to try the case; 4. whether or not, as ruled by the [CA], there was pretended ignorance by petitioner of the ownership of the property; 5. whether or not the [CAs] award of attorneys fees was justified; 6. whether or not the implementation of the writ of execution dated December 1, 1997 on December 15, 1997 was valid; 7. whether or not respondent and the sheriffs who implemented on December 15, 1997 the writ of execution dated December 1, 1997 (as reiterated by the RTCs order of December 11, 1997) should be held in contempt of court [and] 8. whether or not the [RTC had] the jurisdiction to issue a writ for the implementation of the [CAs] decision when the case was originally filed with the [MTCC].8 Propriety of the Ejectment Petitioner contends that respondent could not have legally ejected him from the premises or terminated the lease. He claims that the two lease contracts he entered into with Ronald Vargas were valid and that contracts validly entered into by a predecessor-in-interest should be respected by, and be binding upon, his successor-in-interest. According to petitioner, he was not unlawfully detaining the property because the action was commenced by respondent while the second lease contract was still in force. He insists that his good faith and honest belief that he was transacting with the true owner should be considered in favor of the validity of the lease contracts entered into by him. Petitioner also invokes our ruling in Garcia v. Court of Appeals9 that the owners successor-in-interest must respect an existing contract of lease. Any attempt to eject the lessee within the period of lease constitutes a breach of contract. Petitioner further asserts that the second lease contract was "registered" with the Register of Deeds of Iriga City, hence respondent had notice thereof and was bound to respect it. We disagree. The first premise of petitioners argument, that both lease agreements were valid, is erroneous. As correctly observed by the RTC and the CA, Ronald Vargas was not the owner of the property and had no authority to let it. Although the lessor need not be the owner of the property being leased,10 he should have a right (e.g., either as a usufructuary or a lessee) or at least an authority (e.g., as an agent of the owner, usufructuary, or lessee) to lease it out. Here, Ronald Vargas had neither the right nor the authority to grant petitioner the lease of the property. Dr. Vargas is deemed to have ratified the first lease because he never objected to it and in fact allowed petitioner to occupy the property for five years despite his knowledge of his son Ronalds misdeed. Thus, we consider the first lease valid. But the same cannot be said of the second lease. Under the principle of relativity of contracts, the sale of the property by Dr. Vargas to respondent bound Ronald Vargas as an heir of the seller. Neither did respondent authorize him to enter into a new lease contract with petitioner. Thus, Ronald Vargas could not have validly executed the second lease agreement upon which petitioner now bases his right to the continued possession of the property. The river cannot rise higher than its source. Where the purported lessor is bereft of any right or authority to lease out the property, then his supposed lessee does not acquire any right to the possession or enjoyment of the property. Suffice it to say that the second lease contract was legally inexistent for lack of an object certain. Under Arts. 1318 and 1409 (3) of the Civil Code, contracts the cause or object of which did not exist at the time of the transaction are inexistent and void ab initio. Petitioners claim of good faith is of no moment. The good faith of a party in entering into a contract is immaterial in determining whether it is valid or not. Good faith, not being an essential element of a contract, has no bearing on its validity. No amount of good faith can validate an agreement which is otherwise void. A contract which the law denounces as void is necessarily no contract at all and no effort or act of the parties to create one can bring about a change in its legal status.11

Any presumption of good faith on the part of petitioner disappeared after he learned from the Register of Deeds that the property was already registered in the name of another person. Possession in good faith ceases from the moment defects in the title are made known to the possessor by extraneous evidence or by a suit for recovery of the property by the true owner.12 Every possessor in good faith becomes a possessor in bad faith from the moment he becomes aware that what he believed to be true is not so.13 When petitioner presented the second lease contract to the Register of Deeds a day after its execution, his attention was called to the fact that the "lessor" (Ronald Vargas) whom he believed to be the owner of the property had no authority to lease it out. From that moment, his possession ceased to be in good faith.1avvphil.net Petitioners reliance on our ruling in the Garcia case is misplaced. Garcia involved the lease of a residential unit and was governed by a special law, "An Act Regulating Rentals of Dwelling Units or of Land on which Anothers Dwelling is Located and for Other Purposes" (BP 25). In this case, the property involved is a commercial building, not a residential unit. The Garcia case is therefore inapplicable. Assuming arguendo that Garcia is applicable, petitioners argument would still be untenable. We held in Garciathat, while a successor-ininterest would be in breach of contract if he were to eject a lessee of his predecessor-in-interest during the existence of the lease, "where the lease has expired, there is no more contract to breach." Since the lease between petitioner and Ronald Vargas had expired on April 1, 1996, there was no existing lease contract that could have been breached when respondent made a demand on petitioner to vacate the property on April 30, 1996. Registration of the Lease Contract Petitioners third argument is likewise without merit. Whether the second lease contract was registered or not was immaterial since it was void. Registration does not legitimize a void contract. Moreover, assuming for the sake of argument that the second contract could be registered, the primary entrythereof did not produce the effect of registration. Petitioner presented the second lease contract to the Register of Deeds of Iriga City for registration on October 31, 1995, or a day after its execution. The contract was, however, merely entered in the primary book. It was not registered because it lacked certain requisites. It is well settled that for the registration of voluntary instruments (e.g., deed of sale or contract of lease), it is necessary not only to register the deed, instrument of assignment, mortgage or lease in the entry book of the register of deeds but also for the Register of Deeds to annotate a memorandum thereof on the owners duplicate certificate and its original.14 In voluntary registration, if the owners duplicate certificate is not surrendered and presented or if no payment of registration fees is made within fifteen days, entry in the day book will not convey or affect the land sold, mortgaged or leased.15 Entry alone produces the effect of registration, whether the transaction entered is voluntary or involuntary, 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.16 Here, petitioner admits that the second lease contract was refused registration by the Register of Deeds for his failure to comply with certain conditions for registration. And since petitioner failed to comply with all the requisites for entry and annotation, the entry in the primary book did not ripen into registration. Curiously, petitioner uses "registered" (that is, the word registered in quotation marks) to describe his act of presenting the lease contract to the register of deeds. This shows that petitioner himself doubted whether he had actually fulfilled the requirements for the registration of the lease. Petitioner also anchors his arguments against the ejectment on the second contract of lease which was inexistent and void ab initio. But even assuming that it was valid, it already lapsed on November 1, 2000, in which case the question of the propriety of petitioners ejectment would now be moot.1avvphil.net Sufficiency of the Allegations in the Complaint to Confer Jurisdiction on the MTCC and to Establish a Cause of Action Petitioner asserts that the MTCC had no jurisdiction to try the case because the complaint did not allege that he was withholding possession of the property beyond the expiration of the lease period and that, in violation of Rule 70, Section 2 of the Rules of Court, respondent failed to establish a cause of action by omitting to allege that demand to vacate was made for failure to pay the rent or comply with the conditions of the contract. We disagree. What determine the nature of the action as well as the court which has jurisdiction over the case are the allegations in the complaint.17 In Hilario v. Court of Appeals,18 we ruled: The settled rule is that a complaint for unlawful detainer is sufficient if it contains the allegation that the withholding of possession or the refusal to vacate is unlawful, without necessarily employing the terminology of the law. The complaint must aver facts showing that the inferior court has jurisdiction to try the case, such as how defendants possession started or continued. Thus, the allegation in a complaint that the "plaintiff verbally asked the defendants to remove their houses on the lot of the former but the latter refused and still refuse to do so without just and lawful grounds" was held to be more than sufficient compliance with the jurisdictional requirements. (citations omitted)

The complaint filed with the MTCC alleged that petitioner had been holding the property by virtue of an expired lease contract with the son of respondents predecessor-in-interest and that, despite demands made by respondent for him to vacate the property, petitioner had "unjustifiably refused to heed [respondents] demand and continuously and unlawfully occup[ied] and possess[ed] [respondents] property."19 Nothing could be clearer to confer jurisdiction on the MTCC and to establish a cause of action. While possession by tolerance is lawful, such possession becomes illegal from the moment a demand to vacate is made by the owner and the possessor refuses to comply with such demand. 20 A person who occupies the land of another with the latters tolerance or permission, without any contract between them, is necessarily bound by an implied promise that he will vacate upon demand, failing which a summary action for ejectment is the proper remedy against him.21 The CA correctly ruled that petitioners possession from the time the property was sold to respondent was merely by tolerance. His lawful possession was interrupted when respondent demanded that he vacate the property. His refusal to comply with the demand made his continued possession unlawful, giving respondent the right to institute an action for unlawful detainer.1avvphil.net Furthermore, it is also worthy to note that, in his motion for reconsideration of the RTC decision, petitioner explicitly prayed that the "MTCC decision be affirmed." Since he actively participated in the proceedings before the MTCC and in fact later sought the affirmation of its decision, he in effect recognized its jurisdiction and he should now be estopped from questioning the jurisdiction of that court. In other words, petitioner cannot now assail the jurisdiction of the MTCC after voluntarily submitting himself to its proceedings.22 We have held that "while lack of jurisdiction may be assailed at any stage, a partys active participation in the proceedings before a court without jurisdiction will estop such party from assailing such lack of jurisdiction."23 Correctness of the Award of Attorneys Fees Petitioner argues that the award of attorneys fees was improper because it was touched upon only in the dispositive portion of the RTC decision, hence, the CA should not have merely reduced the award of attorneys fees but should have deleted it entirely. We agree. The award of attorneys fees is the exception, not the general rule. It is not sound public policy to place a penalty on the right to litigate; nor should attorneys fees be awarded every time a party wins a lawsuit.24 It is necessary for the court to make express findings of facts and law that would bring the case within the exception and justify the grant of such award.25 The CA correctly noted that the decisions of both the MTCC and the RTC do not state any factual basis for an award of attorneys fees. In particular, the award of attorneys fees was mentioned only in the dispositive portion of the RTC decision. Nonetheless, instead of deleting the award of attorneys fees, the CA merely reduced the amount thereof from P50,000 to P20,000 on the ground that attorneys fees may be awarded "if the court deems it just and equitable." Article 2208 (11) of the Civil Code allows the recovery of counsels fees: where the court deems it just and equitable that attorneys fees and expenses of litigation should be recovered. However, the conclusion must be borne out by findings of facts and law.26 The exercise of judicial discretion in the award of attorneys fees under Article 2208 (11) of the Civil Code demands a factual, legal or equitable justification. Without such justification, the award is a conclusion without a premise, its basis being improperly left to speculation and conjecture.27 The matter of attorneys fees cannot be dealt with only in the dispositive portion of the decision. The text of the decision must state the reason behind the award of attorneys fees.28 Otherwise, its award is totally unjustified. Propriety of the Issuance and Service of the Writ of Execution Petitioner alleges that the writ of execution was implemented in violation of the Rules of Court because it was implemented after only one working day from his receipt of a copy of the order dated December 11, 1997 (denying his motion for reconsideration and/or suspension of the implementation of the writ of execution) instead of threeworking days as provided in Rule 39, Section 10 (c) of the Rules of Court. According to him, since the implementation of the writ was not in accordance with the Rules of Court, the sheriffs should have been cited in contempt by the CA. Petitioners error was that he counted the three days from receipt of denial of his motion for reconsideration and/or suspension of the implementation of the writ on December 12, 1997. He should have counted it from receipt by his wife of the copy of the writ of execution on December 3, 1997. Under Rule 39, Section 10 (c) of the Rules of Court,29 the

writ of execution is carried out by giving the defendant notice of such writ and making a demand that the latter vacate the property within three working days from such notice. Hence, the three-day period of implementation of the writ of execution should be reckoned from the date petitioner was notified of the writ, that is, from December 3, 1997, the date his wife received the notice or writ. The December 9, 1997 manifestation and motion filed by the sheriff and the December 16, 1997 sheriffs report state that the sheriff served a copy of the writ on the wife of the petitioner on December 3, 1997. Receipt of a copy of the writ by petitioners wife in their office constituted constructive personal service on petitioner.30 Thus, the sheriff could have lawfully ejected petitioner from the property as early as December 8, 1997, the third workingday from notice of the writ of execution to petitioner. Besides, in his December 4, 1997 urgent motion for time to vacate the premises, petitioner admitted that a writ had been issued by the RTC and a copy thereof received by his wife. And in his December 8, 1997 supplemental motion for time to vacate the property, petitioner alleged that the writ of execution issued by the trial court on December 1, 1997 "[gave] the sheriff 30 days from [petitioners] receipt of the writ within which to implement the same." These incidents indubitably show that petitioner had notice of the issuance of the writ of execution within a sufficient period before the writ was actually implemented on December 15, 1997. There was substantial compliance with the requirement of service or notice when petitioner acquired knowledge of the writ of execution.31 Since the writ of execution was properly issued, served and implemented, there was no basis to hold the sheriffs in contempt. Correctness of the RTCs July 4, 2000 Order Petitioner also questions the July 4, 2000 order of the RTC directing the issuance of a writ to enforce the petitioners civil liability as determined by the CA. Petitioner insists that it is either the MTCC where the case was originally filed or the CA itself which should have issued the writ. This particular issue was never brought to the attention of the CA. Moreover, a diligent search of the entire records of this case failed to yield a copy of the alleged July 4, 2000 order. Except for the bare allegations of petitioner, there is therefore no way to determine the nature and import of the challenged order. WHEREFORE, the petition is hereby DENIED. The July 15, 1999 decision of the Court of Appeals in CA-G.R. SP No. 46065 is AFFIRMED with the MODIFICATION that the award of attorneys fees is deleted. Costs against petitioner. SO ORDERED. NHA vs BASA LEONARDO-DE CASTRO, J.: This Petition for Review on Certiorari under Rule 45 of the Rules of Court seeks to set aside the Amended Decision1 of the Court of Appeals dated November 27, 2000 and its Resolution dated July 19, 2001 denying the motion for reconsideration of the National Housing Authority (NHA). On April 19, 1983, spouses Augusto and Luz Basa loaned from NHA the amount of P556,827.10 secured by a real estate mortgage over their properties covered by Transfer Certificates of Title (TCTs) Nos. 287008 and 285413, located at No. 30 San Antonio St., San Francisco del Monte, Quezon City.2 Spouses Basa did not pay the loan despite repeated demands. To collect its credit, the NHA, on August 9, 1990, filed a verified petition for extrajudicial foreclosure of mortgage before the Sheriffs Office in Quezon City, pursuant to Act No. 3135, as amended.3 After notice and publication, the properties were sold at public auction where NHA emerged as the highest bidder.4On 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, 1988.5 On April 16, 1992, the redemption period expired,6 without respondents having redeemed the properties. Shortly thereafter, on April 24, 1992, NHA executed an Affidavit of Consolidation of Ownership7 over the foreclosed properties, and the same was inscribed by the Register of Deeds on the certificates of title in the hand of NHA under Entry No. 6572/T-287008-PR-29207.8 On June 18, 1992, NHA filed a petition for the issuance of a Writ of Possession. The said petition was granted by the Regional Trial Court (RTC) in an Order9 dated August 4, 1992. A Writ of Possession10 was issued on March 9, 1993 by the RTC, ordering spouses Augusto and Luz Basa to vacate the subject lots. The writ, however, remained unserved. This compelled NHA to move for the issuance of an alias writ of possession on April 28, 1993.

Before the RTC could resolve the motion for the issuance of an alias writ of possession, respondents spouses Basa and Eduardo Basa, on June 2, 1993, filed a Motion for Leave to Intervene and Petition in Intervention (with Prayer for Temporary Restraining Order and/or Writ of Preliminary Injunction).11 Respondents anchored said petition for intervention on Section 812 of Act No. 3135, as amended, which gives the debtor/mortgagor the remedy to petition that the sale be set aside and the writ of possession be cancelled. In the said petition for intervention, respondents averred that the extrajudicial foreclosure of the subject properties was a nullity since notices were not posted and published, written notices of foreclosure were not given to them, and notices of sale were not tendered to the occupants of the sold properties, thereby denying them the opportunity to ventilate their rights.13 Respondents likewise insisted that even assuming arguendo that the foreclosure sale were valid, they were still entitled to redeem the same since the one-year redemption period from the registration of the sheriffs certificate of foreclosure sale had not yet prescribed.14 Citing Bernardez v. Reyes15 and Bass v. De la Rama,16respondents theorized that the instrument is deemed registered only upon actual inscription on the certificate of title in the custody of the civil registrar.17 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 in the amount of P21,160.00, and to cancel the Writ of Possession dated March 9, 1993. NHA opposed respondents petition for intervention.18 It countered that the extrajudicial foreclosure sale was conducted validly and made in accordance with Act No. 3135 as evidenced by the publication of the Notice of Sheriffs Sale in the Manila Times in its issues dated July 14, 21 and 28, 1990.19 NHA also said that respondents had been furnished with a copy of the Notice of Sheriffs Sale as shown at the bottom portion of said notice.20 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. It pointed out that the RTC, via its Order dated August 4, 1992, had already ruled that respondents right of redemption was already gone without them exercising said right. Since said order had already attained finality, the ruling therein could no longer be disturbed. On January 2, 1995, the RTC issued the first assailed Order21 with the following directives: 1) granting the issuance of the alias writ of possession which allowed NHA to take possession of the subject properties; 2) admitting the Petition in Intervention and "treating the same as the petition to set aside sale mentioned in [Sec. 8] of Act No. 3155"; and 3) granting the issuance of a Writ of Preliminary Injunction in favor of respondents that ordered NHA to refrain from selling or disposing of the contested properties. The pertinent portion of the order reads: After examining the record and following precedents x x x this Court hereby orders: 1. The issuance of an alias writ of possession; 2. Admission of the "Petition in Intervention," treating the same as the "petition" to set aside sale, etc., mentioned in [Sec. 8] of Act No. 3155; 3. The issuance of a writ of preliminary injunction, after a BOND in the amount of P20,000.00 had been duly filed by intervenors, ordering movant National Housing Authority, its agents and/or any other person acting under its command, to desist and refrain from selling or in any manner from disposing of the subject properties covered by TCT Nos. 287008 and 285413 and located at No. 30, San Antonio Street, San Francisco del Monte, Quezon City, pending the termination of this proceeding and/or unless a contrary order is issued by this Court; 4. Setting the hearing of the petition in intervention (to set aside) on March 17, 1995, at 8:30 a.m.22 NHA filed a motion for reconsideration23 assailing the RTCs Order insofar as it admitted respondents motion for intervention and issued a writ of preliminary injunction. NHA argued that respondents should have assailed the foreclosure sale during the hearing in the petition for the issuance of a Writ of Possession, and not during the hearing in the petition for the issuance of an alias writ of possession since the "petition" referred to in Section 8 of Act No. 3135 pertains to the original petition for the issuance of the Writ of Possession and not the Motion for the Issuance of an Alias Writ of Possession. NHA stressed that another reason why the petition for intervention should be denied was the finality of the Order dated August 4, 1992 declaring respondents right of redemption barred by prescription. Lastly, NHA asserted that the writ of possession was issued as a matter of course upon filing of the proper motion and thereby, the court was bereft of discretion. In the second assailed Order24 dated September 4, 1995, the RTC denied NHAs motion for reconsideration reasoning that the admission of the intervention was sanctioned by Section 8 of Act No. 3135. As to the grant of preliminary injunction, the RTC made the justification that if the NHA was not restrained, the judgment which may be favorable to respondents would be ineffectual. The order partly provides: The motion is without merit. The admission of the intervention is sanctioned by Sec. 8 of Act No. 3135. And, because, otherwise or if no preliminary injunction is issued, the movant NHA may, before final judgment, do or continue the doing of the act with the intervenor asks the court to restrain, and thus make ineffectual the final judgment rendered afterwards which may grant the relief sought by the intervenor. ACCORDINGLY, the motion for reconsideration is DENIED. 25 Undaunted, NHA filed on November 24, 1995, a special civil action for certiorari and prohibition before the Court of Appeals.

The Court of Appeals rendered a Decision26 dated February 24, 2000, in favor of the NHA. It declared null and void the assailed orders of the RTC dated January 2, 1995 and September 4, 1995, to the extent that the said orders admitted the petition in intervention and granted the issuance of the preliminary injunction; but it upheld the grant of the alias writ of possession, thus: WHEREFORE, the petition is GRANTED, and the assailed order of January 2, 1995 is declared NULL AND VOID except for the portion directing the issuance of an alias writ of possession. Likewise declared NULL AND VOID is the second assailed order of September 4, 1995 denying the petitioners motion for reconsideration. Let an alias writ of possession be issued and executed/implemented by the public respondent without further delay.27 The Court of Appeals defended its affirmation of the RTCs grant of the alias writ of possession in NHAs favor by saying that it was a necessary consequence after the earlier writ was left unserved to the party. It further explained that NHA was entitled to the writ of possession as a matter of course after the lapse of the redemption period. As to the RTCs admission of respondents petition for intervention, the appellate court opined that it was improperly and erroneously made. The Court of Appeals believed that the only recourse available to a mortgagor, in this case the respondents, in a foreclosure sale is to question the validity of the sale through a petition to set aside the sale and to cancel the writ of possession, a summary procedure provided for under Section 112 of the Land Registration Act. It also observed that the grant of the preliminary injunction by the RTC was uncalled for as it would effectively defeat the right of NHA to possession, the latter having been entitled by virtue of the grant of the alias writ of possession. Respondents filed a motion for reconsideration.28 They alleged that since they raised the issue that their right of redemption had not prescribed, said fact should have changed the whole scenario such that the issuance of a writ of possession ceased to be summary in nature and was no longer ministerial. Respondents then concluded that their right to redeem the properties against NHAs right to the writ of possession must be threshed out in a hearing of the case on its merits. With regard to the RTC Order dated August 4, 1992 granting the writ of possession which, according to the NHA, became final and executory, respondents argued that said order did not constitute res judicata so as to bar the filing of the petition for intervention since the said order was not a judgment on the merits that could attain finality. Also, respondents would like the Court of Appeals to treat the petition for intervention not only as an opposition to the issuance of the alias writ of possession, but also as a proper remedy under Section 8 of Act No. 3135, as amended, in view of the various issues raised. On November 27, 2000, 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 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. Taking its cue from Bass v. De la Rama where the Court purportedly made a ruling that entry of a document, such as sale of real property, in the entry book is insufficient to treat such document as registered, unless the same had been annotated on the certificate of title; the Court of Appeals went on to say that the entry of the certificate of sale in the owners duplicate of the titles could not have been sufficient to register the same since anyone who would wish to check with the Register of Deeds would not see any annotation. Thus, entry made on the owners duplicate of the titles cannot be considered notice that would bind the whole world. Having been deprived of their right of redemption, the Court of Appeals deemed it proper to allow respondents to intervene.1avvphi1 The dispositive part of the amended decision decrees: WHEREFORE, the motion for reconsideration is GRANTED. Our decision dated February 24, 2000, is RECONSIDERED and SET ASIDE and the petition DISMISSED.29 Unfazed, NHA filed a motion for reconsideration, which the Court of Appeals denied in its July 19, 2001 Resolution, to wit: ACCORDINGLY, the Motion for Reconsideration dated February 24, 2000 is DENIED for lack of merit.30 Hence, the instant petition. In its memorandum, NHA tendered the following issues: 1. 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. 2. WHETHER OR NOT THE CASE OF BASS VS. DE LA RAMA HAS BEEN SUPERSEDED.31 Respondents, on the other hand, offered the following as issues: I

WHETHER OR NOT THE COURT OF APPEALS ERRED IN FINDING THAT THE LOWER COURT DID NOT ACT WITH GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OF JURISDICTION IN ADMITTING THE RESPONDENTS INTERVENTION AND GRANTING THE EQUITABLE WRIT OF INJUNCTION THEREBY DISMISSING THE PETITION FOR CERTIORARI AND PROHIBITION. II WHETHER OR NOT THE INSTANT PETITION COMPLIES WITH THE REQUIREMENTS OF RULE 45 OF THE RULES OF COURT.32 On the procedural aspect, respondents question NHAs alleged failure to include in its petition copies of material portions of the record such as pleadings filed in the RTC and the Court of Appeals as required under Section 4, Rule 45 of the Rules of Court. Respondents also pointed out the purported defective verification of NHA in view of the fact that it merely stated that the one verifying had read the allegations of the petition and that the same were true and correct to the best of his knowledge. According to respondents, such declarations were not in accordance with the rules which require that a verified pleading must state that the affiant had read the pleading and that the allegations therein were true and correct based on his personal knowledge and not only to the "best" of his knowledge. As to the merits, NHA stresses that the annotation and entry in the owners duplicate certificate of titles of the sheriffs certificate of sale are sufficient compliance with the requirement of law on registration. To support this, NHA refers to Land Registration Administration Circular No. 3 dated December 6, 1988, entitled "Entry and Provisional Registration of Instruments Pending Reconstitution of Title" which allegedly authorized all Registers of Deeds to accept for entry and provisional registration instruments affecting lost or destroyed certificates of title pending reconstitution of the original. The legality and validity of the disputed registration on its duplicate copies of the sheriffs certificate of sale, NHA insists, are backed by this Courts ruling in Development Bank of the Philippines v. Acting Register of Deeds of Nueva Ecija,33 where purportedly, this Court made a favorable interpretation of Section 56 of Presidential Decree No. 1529. NHA says that the inscription of the sheriffs certificate of sale only to the owners duplicate copies, but not to those in the custody of the register of deeds is justified as the latter were burned down. Thus, it could not be blamed for the non-registration of the sale in the original copies. NHA faults the Court of Appeals reliance on Bass v. De la Rama since the ruling therein stating that entry and annotation of a sale instrument on the owners duplicate copy only as insufficient registration, was already abandoned in Development Bank of the Philippines v. Acting Register of Deeds of Nueva Ecija, where it was allegedly ruled that the primary entry alone of the transaction produces the effect of registration so long as the registrant has complied with all that is required of him for purposes of entry and annotation. In contrast, respondents submit that annotation of the sheriffs certificate of sale on the owners copy is inadequate to propel the running of the redemption period. They firmly believe that for the sale instrument to be considered as registered, the inscription must be made on the reconstituted titles. Respondents disagree with NHAs opinion that Bass v. De la Rama was superceded by Development Bank of the Philippines v. Acting Register of Deeds of Nueva Ecija. They are of the persuasion that the ruling in DBP pertains exclusively to the unique factual milieu and the issues attendant therein, but not to the instant case where Basspurportedly applies. Respondents also assail NHAs citation of Sta. Ignacia Rural Bank, Inc. v. Court of Appeals.34According to them, said case finds no application to the instant controversy because the issue involved in the former was whether the redemption period should be reckoned from the date of the auction sale or the registration of the certificate of sale, which ostensibly is not the bone of contention in this case. Ascribing NHAs inaction to have the burned titles reconstituted, respondents assert that such neglect should not be used as a justification for the non-inscription in the original titles of the certificate of sale. Additionally, respondents insist that the question of whether the redemption period should be reckoned from the inscription on the owners duplicate copies is a factual and legal issue that is appropriately adjudicated in a hearing on the merits of their petition in intervention, and not in the instant special civil action for certiorari and prohibition which is limited in scope, namely, whether the RTC committed grave abuse of discretion amounting to lack of jurisdiction in admitting their petition in intervention. Respondents reiterate that the issuance of the writ of possession prayed for by NHA before the RTC is no longer ministerial since it raised the issue of whether their period of redemption has already expired. They cite Barican v. Intermediate Appellate Court35 as the authority to this argument. We dwell first with the procedural issues before the main controversy. Respondents contend that the instant petition is dismissible on the ground that NHA failed to attach pleadings filed in the RTC and the Court of Appeals as required under Section 4, Rule 45 of the Rules of Court which partly provides: SEC. 4. Contents of petition. The petition shall be filed in eighteen (18) copies, with the original copy intended for the court being indicated as such by the petitioner, and shall x x x (d) be accompanied by a clearly legible duplicate original, or a certified true copy of the judgment or final order or resolution certified by the clerk of court of the court a quo and the requisite number of plain copies thereof, and such material portions of the record as would support the petition; x x x. In its petition, NHA attached the February 24, 2000 Decision, the November 27, 2000 Amended Decision, and the July 19, 2001 Resolution all of the Court of Appeals; copies of the transfer certificates of title of the disputed properties; and the June 13, 1994 Order of the Quezon City RTC

ordering the reconstitution of the said titles. This Court finds that NHA substantially complied with the requirements under Section 4 of Rule 45. The same conclusion was arrived at by this Court in Development Bank of the Philippines v. Family Foods Manufacturing Co., Ltd.36 when it was faced with the same procedural objection, thus: As held by this Court in Air Philippines Corporation v. Zamora: [E]ven if a document is relevant and pertinent to the petition, it need not be appended if it is shown that the contents thereof can also [be] found in another document already attached to the petition. Thus, if the material allegations in a position paper are summarized in a questioned judgment, it will suffice that only a certified true copy of the judgment is attached. Third, a petition lacking an essential pleading or part of the case record may still be given due course or reinstated (if earlier dismissed) upon showing that petitioner later submitted the documents required, or that it will serve the higher interest of justice that the case be decided on the merits. Nevertheless, even if the pleadings and other supporting documents were not attached to the petition, the dismissal is unwarranted because the CA records containing the promissory notes and the real estate and chattel mortgages were elevated to this Court. Without a doubt, we have sufficient basis to actually and completely dispose of the case. We must stress that cases should be determined on the merits, after all parties have been given full opportunity to ventilate their causes and defenses, rather than on technicalities or procedural imperfections. In that way, the ends of justice would be served better. Rules of procedure are mere tools designed to expedite the decision or resolution of cases and other matters pending in court. A strict and rigid application of rules, resulting in technicalities that tend to frustrate rather than promote substantial justice, must be avoided. In fact, Section 6 of Rule 1 states that the Rules shall be liberally construed in order to promote their objective of ensuring the just, speedy and inexpensive disposition of every action and proceeding. Contrary to respondents assertion, NHAs verification conforms to the rule. Section 4, Rule 7 of the Rules of Court states: SEC. 4. Verification. Except when otherwise specifically required by law or rule, pleadings need not be under oath, verified or accompanied by affidavit. A pleading is verified by an affidavit that the affiant has read the pleading and that the allegations therein are true and correct of his personal knowledge or based on authentic records. A pleading required to be verified which contains a verification based on "information and belief," or upon "knowledge, information and belief," or lacks a proper verification, shall be treated as an unsigned pleading. The reason for requiring verification in the petition is to secure an assurance that the allegations of a pleading are true and correct; are not speculative or merely imagined; and have been made in good faith.37 To achieve this purpose, the verification of a pleading is made through an affidavit or sworn statement confirming that the affiant has read the pleading whose allegations are true and correct of the affiant's personal knowledge or based on authentic records.38 The General Manager of NHA verified the petition as follows: 3. I have read the allegations contained therein and that the same are true and correct to the best of my own personal knowledge.39 A reading of the above verification reveals nothing objectionable about it. The affiant confirmed that he had read the allegations in the petition which were true and correct based on his personal knowledge. The addition of the words "to the best" before the phrase "of my personal knowledge" did not violate the requirement under Section 4 of Rule 7, it being sufficient that the affiant declared that the allegations in the petition are true and correct based on his personal knowledge. Now, as to the merits of the case. The main issue before us is whether the annotation of the sheriffs certificate of sale on the owners duplicate certificate of titles is sufficient registration considering that the inscription on the original certificates could not be made as the same got burned. Jurisprudence is replete with analogous cases. Of foremost importance is Development Bank of the Philippines v. Acting Register of Deeds of Nueva Ecija40 where the Court listed cases where the transaction or instrument was annotated not on the original certificate but somewhere else. In that case, DBP, following the extrajudicial foreclosure sale where it emerged as the highest bidder, registered with the Register of Deeds the sheriffs certificate of sale in its favor. After it had paid the required fees, said transaction was entered in the primary entry book. However, the annotation of the said transaction to the originals of the certificates of title could not be done because the same titles were missing from the files of the Registry. This prompted DBP to commence reconstitution proceedings of the lost titles. Four years had passed before the missing certificates of title were reconstituted. When DBP sought the inscription of the four-year old sale transaction on the reconstituted titles, the Acting Register of Deeds, being in doubt of the proper action to take, referred the matter to the Commissioner of the Land Registration Authority by consulta, the latter resolved against the annotation of the sale transaction and opined that said entry was "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."41 In other words, annotation on the primary book was deemed insufficient registration. The Court disagreed with this posture. Considering that DBP had paid all the fees and complied with all the requirements for purposes of both primary entry and annotation of the certificate of sale, the Court declared that mere entry in the primary book was considered sufficient registration since "[DBP] 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."42 To buttress its conclusion, the Court reviewed the relevant jurisprudence starting from 1934.1avvph!1 The Court noted that before the Second World War, particularly in Government of the Philippine Islands v. Aballe,43 the prevailing doctrine was an inscription in the book of entry even without the notation on the certificate of title was considered as satisfactory and produced all the effects which the law gave to its registration. During the war, however, the Court observed that there was apparent departure from said ruling since in Bass v. De la Rama, the holding was that entry of an instrument in the primary entry book does not confer any legal effect without a memorandum thereof inscribed on the certificate of title.44 DBP noted that Bass v. De la Rama, however, survived only for a little while since "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 owners duplicates of the certificates of title affected are presented."45 These later cases are Levin v. Bass46 and Potenciano v. Dineros,47 both of which involve the issue of whether entry in the day book of a deed of sale, payment of the fees, and presentation of the owners duplicate certificate of title constitute a complete act of registration.48 Simply, respondents resort to Bass v. De la Rama is futile as the same was abandoned by the later cases, i.e.,Bass, Potenciano and DBP. In the recent case of Autocorp Group v. Court of Appeals,49 the respondent was awarded the foreclosed parcels of land. A sheriffs certificate of sale was thereafter issued in its favor. Thereafter, petitioners in that case filed a complaint before the RTC with a prayer for the issuance of an ex parte TRO aimed at preventing the Register of Deeds from registering the said certificate of sale in the name of the respondent and from taking possession of the subject properties.50 Before the RTC could issue a TRO, respondent presented the sheriffs certificate of sale to the Register of Deeds who entered the same certificate in the primary book, even if the registration fee was paid only the following day. Four days after, the RTC issued a TRO directing the Register of Deeds to refrain from registering the said sheriffs certificate of sale. A preliminary injunction was thereafter issued as the TRO was about to expire. The preliminary injunction was questioned by therein respondent. One of the main issues raised there was whether the entry of the certificate of sale in the primary book was equivalent to registration such that the TRO and the preliminary injunction issues would not lie anymore as the act sought to be restrained had become an accomplished act. The Court held that the TRO and the preliminary injunction had already become moot and academic by the earlier entry of the certificate of sale in the primary entry book which was tantamount to registration, thus: In fine, petitioners prayer for the issuance of a writ of injunction, to prevent the register of deeds from registering the subject certificate of sale, had been rendered moot and academic by the valid entry of the instrument in the primary entry book. Such entry is equivalent to registration. Injunction would not lie anymore, as the act sought to be enjoined had already become a fait accompli or an accomplished act.51 Indeed, 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. The Court thus once held: 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.52 In the case under consideration, NHA presented the sheriffs certificate of sale to the Register of Deeds and the same was entered as Entry No. 2873 and said entry was further annotated in the owners transfer certificate of title.53 A year later and after the mortgagors did not redeem the said properties, respondents filed with the Register of Deeds an Affidavit of Consolidation of Ownership54after which the same instrument was presumably entered into in the day book as the same was annotated in the owners duplicate copy.55 Just like in DBP, Levin, Potenciano and Autocorp, NHA followed the procedure in order to have its sheriffs certificate of sale annotated in the transfer certificates of title. There would be, therefore, no reason not to apply the ruling in said cases to this one. 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, 1988.56 NHA did everything within its power to assert its right. While it may be true that, in DBP, the Court ruled 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," this does not mean, as respondents insist, that the ruling therein applies exclusively to the factual milieu and the issue obtaining in said case, and not to similar cases. There is nothing in the subject declaration that categorically states its pro hac vice character. For in truth, what the said statement really conveys is that the current doctrine that entry in the primary book produces the effect of registration can be applied in the situation obtaining in that case since the registrant therein complied with all that was required of it, hence, it was fairly reasonable that its acts be given the effect of registration, just as the Court did in the past cases. In fact the Court there continued with this pronouncement: 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 Presidential Decree No. 1529 be asserted as warranted by its terms.57 What is more, in Autocorp Group v. Court of Appeals,58 the pertinent DBP ruling was applied, thereby demonstrating that the said ruling in DBP may be applied to other cases with similar factual and legal issues, viz: Petitioners contend that the aforecited case of DBP is not apropos to the case at bar. Allegedly, in DBP, the bank not only paid the registration fees but also presented the owners duplicate certificate of title. We find no merit in petitioners posture x x x. xxxx Like in DBP v. Acting Register of Deeds of Nueva Ecija, the instrument involved in the case at bar, is a sheriffs certificate of sale, We hold now, as we held therein, that the registrant is under no necessity to present the owners duplicates of the certificates of title affected, for purposes of primary entry, as the transaction sought to be recorded is an involuntary transaction. xxxx x x x Such entry is equivalent to registration. Injunction would not lie anymore, as the act sought to be enjoined had already become a fait accompli or an accomplished act.59 Moreover, respondents stand on the non-applicability of the DBP case to other cases, absent any statement thereof to such effect, contravenes the principle of stare decisis which urges that courts are to apply principles declared in prior decisions that are substantially similar to a pending case.60 Since entry of the certificate of sale was validly registered, the redemption period accruing to respondents commenced therefrom, since the oneyear period of redemption is reckoned from the date of registration of the certificate of sale.61 It must be noted that on April 16, 1991, the sheriffs certificate of sale was registered and annotated only on the owners duplicate copies of the titles and on April 16, 1992, the redemption period expired, without respondents having redeemed the properties. In fact, on April 24, 1992, NHA executed an Affidavit of Consolidation of Ownership. Clearly, respondents have lost their opportunity to redeem the properties in question. As regards respondents allegation on the defect in the publication and notice requirements of the extrajudicial foreclosure sale, the same is unavailing. The rule is that it is the mortgagor who alleges absence of a requisite who has the burden of establishing such fact.62 This is so because foreclosure proceedings have in their favor the presumption of regularity and the burden of evidence to rebut the same is on the party who questions it.63 Here, except for their bare allegations, respondents failed to present any evidence to support them. In addition, NHA stated in its Comment to Motion for Leave of Court to Intervene that it had complied with the publication of the Notice of Sheriffs Sale in the Manila Times in the latters issues dated July 14, 21 and 28, 1990.64 It also claimed that an Affidavit of Publication of said newspaper was attached as Annex "B" in the said comment.65 NHA also said that respondents had been furnished with a copy of the Notice of Sheriffs Sale as shown at the bottom portion of said notice.66 From all these, it would tend to show that respondents aspersion of non-compliance with the requirements of foreclosure sale is a futile attempt to salvage its statutory right to redeem their foreclosed properties, which right had long been lost by inaction. Considering that the foreclosure sale and its subsequent registration with the Register of Deeds were done validly, there is no reason for the nonissuance of the writ of possession. A writ of possession is an order directing the sheriff to place a person in possession of a real or personal property, such as when a property is extrajudicially foreclosed.67 Section 7 of Act No. 3135 provides for the rule in the issuance of the writ of possession involving extrajudicial foreclosure sales of real estate mortgage, to wit: Sec. 7. In any sale made under the provisions of this Act, the purchaser may petition the [Regional Trial Court] of the province or place where the property or any part thereof is situated, to give him possession thereof during the redemption period, furnishing bond in an amount equivalent to the use of the property for a period of twelve months, to indemnify the debtor in case it be shown that the sale was made without violating the mortgage or without complying with the requirements of this Act. Such petition shall be made under oath and filed in the form of an ex parte motion in the registration or cadastral proceedings if the property is registered, or in special proceedings in the case of property registered under the Mortgage Law or under section one hundred and ninety-four of the Administrative Code, or of any other real property encumbered with a mortgage duly registered in the office of any register of deeds in accordance with any existing law, and in each case the clerk of the court shall, upon the filing of such petition, collect the fees specified in paragraph eleven of section one hundred and fourteen of Act Numbered Four Hundred and ninety-six, as amended by Act Numbered Twenty-eight hundred and sixty-six, and the court shall, upon approval of the bond, order that a writ of possession issue, addressed to the sheriff of the province in which the property is situated, who shall execute said order immediately. This provision of law authorizes the purchaser in a foreclosure sale to apply for a writ of possession during the redemption period by filing an ex parte motion under oath for that purpose in the corresponding registration or cadastral proceeding in the case of property with Torrens title.68 Upon the filing of such motion and the approval of the corresponding bond, the law also in express terms directs the court to issue the order for a writ of possession.69

The time-honored precept is that after the consolidation of titles in the buyers name, for failure of the mortgagor to redeem, the writ of possession becomes a matter of right.70 Its issuance to a purchaser in an extrajudicial foreclosure is merely a ministerial function.71 The writ of possession issues as a matter of course upon the filing of the proper motion and the approval of the corresponding bond. The judge issuing the writ following these express provisions of law neither exercises his official discretion nor judgment.72 As such, the court granting the writ cannot be charged with having acted without jurisdiction or with grave abuse of discretion.73 To accentuate the writs ministerial character, the Court disallowed injunction to prohibit its issuance despite a pending action for annulment of mortgage or the foreclosure itself.74 Believing that the instant case does not come within the penumbra of the foregoing rule, respondents resort to the ruling in Barican v. Intermediate Appellate Court.75 Unfortunately for them, the instant case does not even come close to the cited case. There, the Court deemed it inequitable to issue a writ of possession in favor of the purchaser in the auction sale considering that the property involved was already in the possession of a third person by virtue of a deed of sale with assumption of mortgage even before the purchaser could register the sheriffs certificate of sale. Also, the auction buyer therein unreasonably deferred to exercise its right to acquire possession over the property. These circumstances are not present in the instant case. Moreover, in Fernandez v. Espinoza,76 the Court refused to apply the ruling in Barican v. Intermediate Appellate Court77 and Cometa v. Intermediate Appellate Court,78 two cases which are exemptions to the stated rule, reasoning that: In Cometa, which actually involved execution of judgment for the prevailing party in a damages suit, the subject properties were sold at the public auction at an unusually lower price, while in Barican, the mortgagee bank took five years from the time of foreclosure before filing the petition for the issuance of writ of possession. We have considered these equitable and peculiar circumstances in Cometa and Barican to justify the relaxation of the otherwise absolute rule. None of these exceptional circumstances, however, attended herein so as to place the instant case in the same stature as that of Cometa and Barican. Instead, the ruling in Vaca v. Court of Appeals is on all fours with the present petition. In Vaca, there is no dispute that the property was not redeemed within one year from the registration of the extrajudicial foreclosure sale; thus, the mortgagee bank acquired an absolute right, as purchaser, to the issuance of the writ of possession. Similarly, UOB, as the purchaser at the auction sale in the instant case, is entitled as a matter of right, to the issuance of the writ of possession. Just as in Fernandez, this Court does not see any compelling reason to veer away from the established rule. In fine, this Court finds that the Court of Appeals committed reversible error in ruling that the annotation of NHAs sheriffs certificate of sale on the duplicate certificates of title was not effective registration and in holding that respondents redemption period had not expired. WHEREFORE, premises considered, the instant petition is hereby GRANTED. The Amended Decision of the Court of Appeals dated November 27, 2000 is SET ASIDE. SO ORDERED. DOUBLE SALE San Lorenzo Devt. Corp. v. CA CASE DIGEST FACTS: Certiorari. Sps. Lu are owners of 2 parcels of land situated in Laguna. They sold these to Babasanta for the price of P15 per sq. m. A downpayment worth P50 K was evidenced by a memorandum receipt. Other payments were also made totaling P200 K. Babasanta wrote Pacita Lu demanding the execution of a final deed of sale in his favor so that he could effect full payment of the purchase price. He also informed the spouses that he received information that the property was sold to another and demanded that the second sale be cancelled. Pacita responded acknowledging the agreement to sell the property but reminded Babasanta that when the payment for the purchase price became due, he asked for its reduction which was refused causing him to back out of the sale. She added that she returned the P50 k through Eugenio Oya. Babasanta filed a COMPLAINT FOR SPECIFIC PERFORMANCE AND DAMAGES before the RTC. He filed an amended complaint praying for the issuance of a WRIT OF PRELIMINARY INJUNCTION with TRO which included the Register of Deeds as defendant to restrain the transfer or conveyance of the properties. San Lorenzo filed a MOTION FOR INTERVENTION alleging its interest because the properties were sold to it evidenced by a DEED OF ABSOLUTE SALE WITH MORTGAGE.

RTC. Granted the preliminary injunction conditioned upon Babasantas filing of a bond in the amount of P50 K. Upheld the sale to SLDC. RTC applied Article 1544 CC. CA. reversed the RTC decision. It declared that the sale between Sps. Lu and Babasante was vailid and subsisting and ordered the Sps. To execute the necessary deed of conveyance. It declared that SLDC is a buyer in bad faith. PETITIONERS CONTENTION(S): 1. 2. 3. 4. Having advance P200 K to Pacita did not amount to a prior notice that the property was prior sold to Babasanta Pacita had not informed them that the land was already sold to another After execution of the sale in its favor it immediately took possession thereof. It acquired the property in good faith. Since there was no annotations in the in the title it relied on the correctness of the title.

RESPONDENTS CONTENTION(S): 1. 2. 3. Sldc did not acquire ownership of the property because it failed to comply with the requirements of registration in good faith. When SLDC registered the sale in June 30, 1990 there was already a notice of lis pendens annotated on the title as early as June 2, 1989. Bad faith is evident from the fact that it did not inquire the purpose for the advance sought by Pacita.

ISSUE: Who has a better right SLDC or Babasanta? RULING: xxxx The perfection of a contract of sale should not, however, be confused with its consummation. In relation to the acquisition and transfer of ownership, it should be noted that sale is not a mode, but merely a title. A mode is the legal means by which dominion or ownership is created, transferred or destroyed, but title is only the legal basis by which to affect dominion or ownership. Under Article 712 of the Civil Code, ownership and other real rights over property are acquired and transmitted by law, by donation, by testate and intestate succession, and in consequence of certain contracts, by tradition. Contracts only constitute titles or rights to the transfer or acquisition of ownership, while delivery or tradition is the mode of accomplishing the same. Therefore, sale by itself does not transfer or affect ownership; the most that sale does is to create the obligation to transfer ownership. It is tradition or delivery, as a consequence of sale, that actually transfers ownership. Explicitly, the law provides that the ownership of the thing sold is acquired by the vendee from the moment it is delivered to him in any of the ways specified in Article 1497 to 1501. The word delivered should not be taken restrictively to mean transfer of actual physical possession of the property. The law recognizes two principal modes of delivery, to wit: (1) actual delivery; and (2) legal or constructive delivery. xxxxx Following the above disquisition, respondent Babasanta did not acquire ownership by the mere execution of the receipt by Pacita Lu acknowledging receipt of partial payment for the property. For one, the agreement between Babasanta and the Spouses Lu, though valid, was not embodied in a public instrument. Hence, no constructive delivery of the lands could have been effected. For another, Babasanta had not taken possession of the property at any time after the perfection of the sale in his favor or exercised acts of dominion over it despite his assertions that he was the rightful owner of the lands. Simply stated, there was no delivery to Babasanta, whether actual or constructive, which is essential to transfer ownership of the property. Thus, even on the assumption that the perfected contract between the parties was a sale, ownership could not have passed to Babasanta in the absence of delivery, since in a contract of sale ownership is transferred to the vendee only upon the delivery of the thing sold. However, it must be stressed that the juridical relationship between the parties in a double sale is primarily governed by Article 1544 which lays down the rules of preference between the two purchasers of the same property. It provides: Art. 1544. If the same thing should have been sold to different vendees, the ownership shall be transferred to the person who may have first taken possession thereof in good faith, if it should be movable property. Should it be immovable property, the ownership shall belong to the person acquiring it who in good faith first recorded it in the Registry of Property. Should there be no inscription, the ownership shall pertain to the person who in good faith was first in the possession; and, in the absence thereof, to the person who presents the oldest title, provided there is good faith. The principle of primus tempore, potior jure (first in time, stronger in right) gains greater significance in case of double sale of immovable property. When the thing sold twice is an immovable, the one who acquires it and first records it in the Registry of Property, both

made in good faith, shall be deemed the owner. Verily, the act of registration must be coupled with good faith that is, the registrant must have no knowledge of the defect or lack of title of his vendor or must not have been aware of facts which should have put him upon such inquiry and investigation as might be necessary to acquaint him with the defects in the title of his vendor. Admittedly, SLDC registered the sale with the Registry of Deeds after it had acquired knowledge of Babasantas claim. Babasanta, however, strongly argues that the registration of the sale by SLDC was not sufficient to confer upon the latter any title to the property since the registration was attended by bad faith. Specifically, he points out that at the time SLDC registered the sale on 30 June 1990, there was already a notice of lis pendens on the file with the Register of Deeds, the same having been filed one year before on 2 June 1989. Did the registration of the sale after the annotation of the notice of lis pendens obliterate the effects of delivery and possession in good faith which admittedly had occurred prior to SLDCs knowledge of the transaction in favor of Babasanta? We do not hold so. It must be stressed that as early as 11 February 1989, the Spouses Lu executed the Option to Buy in favor of SLDC upon receiving P316,160.00 as option money from SLDC. After SLDC had paid more than one half of the agreed purchase price of P1,264,640.00, the Spouses Lu subsequently executed on 3 May 1989 a Deed of Absolute Sale in favor or SLDC. At the time both deeds were executed, SLDC had no knowledge of the prior transaction of the Spouses Lu with Babasanta. Simply stated, from the time of execution of the first deed up to the moment of transfer and delivery of possession of the lands to SLDC, it had acted in good faith and the subsequent annotation of lis pendens has no effect at all on the consummated sale between SLDC and the Spouses Lu. A purchaser 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 a 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 person in the property. Following the foregoing definition, we rule that SLDC qualifies as a buyer in good faith since there is no evidence extant in the records that it had knowledge of the prior transaction in favor of Babasanta. At the time of the sale of the property to SLDC, the vendors were still the registered owners of the property and were in fact in possession of the lands. Time and again, this Court has ruled that a person dealing with the owner of registered land is not bound to go beyond the certificate of title as he is charged with notice of burdens on the property which are noted on the face of the register or on the certificate of title. In assailing knowledge of the transaction between him and the Spouses Lu, Babasanta apparently relies on the principle of constructive notice incorporated in Section 52 of the Property Registration Decree (P.D. No. 1529) which reads, thus: Sec. 52. Constructive notice upon registration. Every conveyance, mortgage, lease, lien, attachment, order, judgment, instrument or entry affecting registered land shall, if registered, filed, or entered in the office of the Register of Deeds for the province or city where the land to which it relates lies, be constructive notice to all persons from the time of such registering, filing, or entering. However, the constructive notice operates as such by the express wording of Section 52 from the time of the registration of the notice of lis pendens which in this case was effected only on 2 June 1989, at which time the sale in favor of SLDC had long been consummated insofar as the obligation of the Spouses Lu to transfer ownership over the property to SLDC is concerned. More fundamentally, given the superiority of the right of SLDC to the claim of Babasanta the annotation of the notice of lis pendens cannot help Babasantas position a bit and it is irrelevant to the good or bad faith characterization of SLDC as a purchaser. A notice of lis pendens, as the Court held in Natao v. Esteban, serves as a warning to a prospective purchaser or incumbrancer that the particular property is in litigation; and that he should keep his hands off the same, unless he intends to gamble on the results of the litigation. xxxxx Assuming ex gratia argumenti that SLDCs registration of the sale had been tainted by the prior notice of lis pendens and assuming further for the same nonce that this is a case of double sale, still Babasantas claim could not prevail over that of SLDCs. In Abarquez v. Court of Appeals, this Court had the occasion to rule that if a vendee in a double sale registers the sale after he has acquired knowledge of a previous sale, the registration constitutes a registration in bad faith and does not confer upon him any right. If the registration is done in bad faith, it is as if there is no registration at all, and the buyer who has taken possession first of the property in good faith shall be preferred. The law speaks not only of one criterion. The first criterion is priority of entry in the registry of property; there being no priority of such entry, the second is priority of possession; and, in the absence of the two priorities, the third priority is of the date of title, with good faith as the common critical element. Since SLDC acquired possession of the property in good faith in contrast to Babasanta, who neither registered nor possessed the property at any time, SLDCs right is definitely superior to that of Babasantas. HELD: petition granted. /adsum

SAN LORENZO VS DEVT CORP VS CA TINGA, J.: From a coaptation of the records of this case, it appears that respondents Miguel Lu and Pacita Zavalla, (hereinafter, the Spouses Lu) owned two (2) parcels of land situated in Sta. Rosa, Laguna covered by TCT No. T-39022 and TCT No. T-39023 both measuring 15,808 square meters or a total of 3.1616 hectares. On 20 August 1986, the Spouses Lu purportedly sold the two parcels of land to respondent Pablo Babasanta, (hereinafter, Babasanta) for the price of fifteen pesos (P15.00) per square meter. Babasanta made a downpayment of fifty thousand pesos (P50,000.00) as evidenced by a memorandum receipt issued by Pacita Lu of the same date. Several other payments totaling two hundred thousand pesos (P200,000.00) were made by Babasanta. Sometime in May 1989, Babasanta wrote a letter to Pacita Lu to demand the execution of a final deed of sale in his favor so that he could effect full payment of the purchase price. In the same letter, Babasanta notified the spouses about having received information that the spouses sold the same property to another without his knowledge and consent. He demanded that the second sale be cancelled and that a final deed of sale be issued in his favor. In response, Pacita Lu wrote a letter to Babasanta wherein she acknowledged having agreed to sell the property to him at fifteen pesos (P15.00) per square meter. She, however, reminded Babasanta that when the balance of the purchase price became due, he requested for a reduction of the price and when she refused, Babasanta backed out of the sale. Pacita added that she returned the sum of fifty thousand pesos (P50,000.00) to Babasanta through Eugenio Oya. On 2 June 1989, respondent Babasanta, as plaintiff, filed before the Regional Trial Court (RTC), Branch 31, of San Pedro, Laguna, a Complaint for Specific Performance and Damages[1] against his co-respondents herein, the Spouses Lu. Babasanta alleged that the lands covered by TCT No. T- 39022 and T-39023 had been sold to him by the spouses at fifteen pesos (P15.00) per square meter. Despite his repeated demands for the execution of a final deed of sale in his favor, respondents allegedly refused. In their Answer,[2] the Spouses Lu alleged that Pacita Lu obtained loans from Babasanta and when the total advances of Pacita reached fifty thousand pesos (P50,000.00), the latter and Babasanta, without the knowledge and consent of Miguel Lu, had verbally agreed to transform the transaction into a contract to sell the two parcels of land to Babasanta with the fifty thousand pesos (P50,000.00) to be considered as the downpayment for the property and the balance to be paid on or before 31 December 1987. Respondents Lu added that as of November 1987, total payments made by Babasanta amounted to only two hundred thousand pesos (P200,000.00) and the latter allegedly failed to pay the balance of two hundred sixty thousand pesos (P260,000.00) despite repeated demands. Babasanta had purportedly asked Pacita for a reduction of the price from fifteen pesos (P15.00) to twelve pesos (P12.00) per square meter and when the Spouses Lu refused to grant Babasantas request, the latter rescinded the contract to sell and declared that the original loan transaction just be carried out in that the spouses would be indebted to him in the amount of two hundred thousand pesos (P200,000.00). Accordingly, on 6 July 1989, they purchased Interbank Managers Check No. 05020269 in the amount of two hundred thousand pesos (P200,000.00) in the name of Babasanta to show that she was able and willing to pay the balance of her loan obligation. Babasanta later filed an Amended Complaint dated 17 January 1990[3] wherein he prayed for the issuance of a writ of preliminary injunction with temporary restraining order and the inclusion of the Register of Deeds of Calamba, Laguna as party defendant. He contended that the issuance of a preliminary injunction was necessary to restrain the transfer or conveyance by the Spouses Lu of the subject property to other persons. The Spouses Lu filed their Opposition[4] to the amended complaint contending that it raised new matters which seriously affect their substantive rights under the original complaint. However, the trial court in its Order dated 17 January 1990[5] admitted the amended complaint.

On 19 January 1990, herein petitioner San Lorenzo Development Corporation (SLDC) filed a Motion for Intervention[6] before the trial court. SLDC alleged that it had legal interest in the subject matter under litigation because on 3 May 1989, the two parcels of land involved, namely Lot 1764-A and 1764-B, had been sold to it in a Deed of Absolute Sale with Mortgage.[7] It alleged that it was a buyer in good faith and for value and therefore it had a better right over the property in litigation. In his Opposition to SLDCs motion for intervention,[8] respondent Babasanta demurred and argued that the latter had no legal interest in the case because the two parcels of land involved herein had already been conveyed to him by the Spouses Lu and hence, the vendors were without legal capacity to transfer or dispose of the two parcels of land to the intervenor. Meanwhile, the trial court in its Order dated 21 March 1990 allowed SLDC to intervene. SLDC filed its Complaint-in-Intervention on 19 April 1990.[9] Respondent Babasantas motion for the issuance of a preliminary injunction was likewise granted by the trial court in its Order dated 11 January 1991[10] conditioned upon his filing of a bond in the amount of fifty thousand pesos (P50,000.00). SLDC in its Complaint-in-Intervention alleged that on 11 February 1989, the Spouses Lu executed in its favor an Option to Buy the lots subject of the complaint. Accordingly, it paid an option money in the amount of three hundred sixteen thousand one hundred sixty pesos (P316,160.00) out of the total consideration for the purchase of the two lots of one million two hundred sixty-four thousand six hundred forty pesos (P1,264,640.00). After the Spouses Lu received a total amount of six hundred thirty-two thousand three hundred twenty pesos (P632,320.00) they executed on 3 May 1989 a Deed of Absolute Sale with Mortgage in its favor. SLDC added that the certificates of title over the property were delivered to it by the spouses clean and free from any adverse claims and/or notice of lis pendens. SLDC further alleged that it only learned of the filing of the complaint sometime in the early part of January 1990 which prompted it to file the motion to intervene without delay. Claiming that it was a buyer in good faith, SLDC argued that it had no obligation to look beyond the titles submitted to it by the Spouses Lu particularly because Babasantas claims were not annotated on the certificates of title at the time the lands were sold to it. After a protracted trial, the RTC rendered its Decision on 30 July 1993 upholding the sale of the property to SLDC. It ordered the Spouses Lu to pay Babasanta the sum of two hundred thousand pesos (P200,000.00) with legal interest plus the further sum of fifty thousand pesos (P50,000.00) as and for attorneys fees. On the complaint-in-intervention, the trial court ordered the Register of Deeds of Laguna, Calamba Branch to cancel the notice of lis pendens annotated on the original of the TCT No. T-39022 (T-7218) and No. T-39023 (T-7219). Applying Article 1544 of the Civil Code, the trial court ruled that since both Babasanta and SLDC did not register the respective sales in their favor, ownership of the property should pertain to the buyer who first acquired possession of the property. The trial court equated the execution of a public instrument in favor of SLDC as sufficient delivery of the property to the latter. It concluded that symbolic possession could be considered to have been first transferred to SLDC and consequently ownership of the property pertained to SLDC who purchased the property in good faith. Respondent Babasanta appealed the trial courts decision to the Court of Appeals alleging in the main that the trial court erred in concluding that SLDC is a purchaser in good faith and in upholding the validity of the sale made by the Spouses Lu in favor of SLDC. Respondent spouses likewise filed an appeal to the Court of Appeals. They contended that the trial court erred in failing to consider that the contract to sell between them and Babasanta had been novated when the latter abandoned the verbal contract of sale and declared that the original loan transaction just be carried out. The Spouses Lu argued that since the properties involved were conjugal, the trial court should have declared the verbal contract to sell between Pacita Lu and Pablo Babasanta null and void ab initio for lack of knowledge and consent of Miguel Lu. They further averred that the trial court erred in not dismissing the complaint filed by Babasanta; in awarding damages in his favor and in refusing to grant the reliefs prayed for in their answer. On 4 October 1995, the Court of Appeals rendered its Decision[11] which set aside the judgment of the trial court. It declared that the sale between Babasanta and the Spouses Lu was valid and subsisting and ordered the spouses to execute the necessary deed of conveyance in favor of Babasanta, and the latter to pay the balance of the purchase price in the amount of two hundred sixty thousand pesos (P260,000.00). The appellate court ruled that the Absolute Deed of Sale with Mortgage in favor of SLDC was null and void on the ground that SLDC was a purchaser in bad faith. The Spouses Lu were further ordered to return all payments made by SLDC with legal interest and to pay attorneys fees to Babasanta. SLDC and the Spouses Lu filed separate motions for reconsideration with the appellate court.[12] However, in a Manifestation dated 20 December 1995,[13] the Spouses Lu informed the appellate court that they are no longer contesting the decision dated 4 October 1995. In its Resolution dated 11 March 1996,[14] the appellate court considered as withdrawn the motion for reconsideration filed by the Spouses Lu in view of their manifestation of 20 December 1995. The appellate court denied SLDCs motion for reconsideration on the ground that no new or substantial arguments were raised therein which would warrant modification or reversal of the courts decision dated 4 October 1995. Hence, this petition. SLDC assigns the following errors allegedly committed by the appellate court: THE COURT OF APPEALS ERRED IN HOLDING THAT SAN LORENZO WAS NOT A BUYER IN GOOD FAITH BECAUSE WHEN THE SELLER PACITA ZAVALLA LU OBTAINED FROM IT THE CASH ADVANCE OF P200,000.00, SAN LORENZO WAS PUT ON INQUIRY OF A PRIOR TRANSACTION ON THE PROPERTY. THE COURT OF APPEALS ERRED IN FAILING TO APPRECIATE THE ESTABLISHED FACT THAT THE ALLEGED FIRST BUYER, RESPONDENT BABASANTA, WAS NOT IN POSSESSION OF THE DISPUTED PROPERTY WHEN SAN LORENZO BOUGHT AND TOOK POSSESSION OF THE PROPERTY AND NO ADVERSE CLAIM, LIEN, ENCUMBRANCE OR LIS PENDENS WAS ANNOTATED ON THE TITLES.

THE COURT OF APPEALS ERRED IN FAILING TO APPRECIATE THE FACT THAT RESPONDENT BABASANTA HAS SUBMITTED NO EVIDENCE SHOWING THAT SAN LORENZO WAS AWARE OF HIS RIGHTS OR INTERESTS IN THE DISPUTED PROPERTY. THE COURT OF APPEALS ERRED IN HOLDING THAT NOTWITHSTANDING ITS FULL CONCURRENCE ON THE FINDINGS OF FACT OF THE TRIAL COURT, IT REVERSED AND SET ASIDE THE DECISION OF THE TRIAL COURT UPHOLDING THE TITLE OF SAN LORENZO AS A BUYER AND FIRST POSSESSOR IN GOOD FAITH. [15] SLDC contended that the appellate court erred in concluding that it had prior notice of Babasantas claim over the property merely on the basis of its having advanced the amount of two hundred thousand pesos (P200,000.00) to Pacita Lu upon the latters representation that she needed the money to pay her obligation to Babasanta. It argued that it had no reason to suspect that Pacita was not telling the truth that the money would be used to pay her indebtedness to Babasanta. At any rate, SLDC averred that the amount of two hundred thousand pesos (P200,000.00) which it advanced to Pacita Lu would be deducted from the balance of the purchase price still due from it and should not be construed as notice of the prior sale of the land to Babasanta. It added that at no instance did Pacita Lu inform it that the lands had been previously sold to Babasanta. Moreover, SLDC stressed that after the execution of the sale in its favor it immediately took possession of the property and asserted its rights as new owner as opposed to Babasanta who has never exercised acts of ownership. Since the titles bore no adverse claim, encumbrance, or lien at the time it was sold to it, SLDC argued that it had every reason to rely on the correctness of the certificate of title and it was not obliged to go beyond the certificate to determine the condition of the property. Invoking the presumption of good faith, it added that the burden rests on Babasanta to prove that it was aware of the prior sale to him but the latter failed to do so. SLDC pointed out that the notice of lis pendens was annotated only on 2 June 1989 long after the sale of the property to it was consummated on 3 May 1989. Meanwhile, in an Urgent Ex-Parte Manifestation dated 27 August 1999, the Spouses Lu informed the Court that due to financial constraints they have no more interest to pursue their rights in the instant case and submit themselves to the decision of the Court of Appeals.[16] On the other hand, respondent Babasanta argued that SLDC could not have acquired ownership of the property because it failed to comply with the requirement of registration of the sale in good faith. He emphasized that at the time SLDC registered the sale in its favor on 30 June 1990, there was already a notice of lis pendens annotated on the titles of the property made as early as 2 June 1989. Hence, petitioners registration of the sale did not confer upon it any right. Babasanta further asserted that petitioners bad faith in the acquisition of the property is evident from the fact that it failed to make necessary inquiry regarding the purpose of the issuance of the two hundred thousand pesos (P200,000.00) managers check in his favor. The core issue presented for resolution in the instant petition is who between SLDC and Babasanta has a better right over the two parcels of land subject of the instant case in view of the successive transactions executed by the Spouses Lu. To prove the perfection of the contract of sale in his favor, Babasanta presented a document signed by Pacita Lu acknowledging receipt of the sum of fifty thousand pesos (P50,000.00) as partial payment for 3.6 hectares of farm lot situated at Barangay Pulong, Sta. Cruz, Sta. Rosa, Laguna.[17] While the receipt signed by Pacita did not mention the price for which the property was being sold, this deficiency was supplied by Pacita Lus letter dated 29 May 1989[18] wherein she admitted that she agreed to sell the 3.6 hectares of land to Babasanta for fifteen pesos (P15.00) per square meter. An analysis of the facts obtaining in this case, as well as the evidence presented by the parties, irresistibly leads to the conclusion that the agreement between Babasanta and the Spouses Lu is a contract to sell and not a contract of sale. Contracts, in general, are perfected by mere consent,[19] which is manifested by the meeting of the offer and the acceptance upon the thing which are to constitute the contract. The offer must be certain and the acceptance absolute.[20] Moreover, contracts shall be obligatory in whatever form they may have been entered into, provided all the essential requisites for their validity are present.[21] The receipt signed by Pacita Lu merely states that she accepted the sum of fifty thousand pesos (P50,000.00) from Babasanta as partial payment of 3.6 hectares of farm lot situated in Sta. Rosa, Laguna. While there is no stipulation that the seller reserves the ownership of the property until full payment of the price which is a distinguishing feature of a contract to sell, the subsequent acts of the parties convince us that the Spouses Lu never intended to transfer ownership to Babasanta except upon full payment of the purchase price. Babasantas letter dated 22 May 1989 was quite telling. He stated therein that despite his repeated requests for the execution of the final deed of sale in his favor so that he could effect full payment of the price, Pacita Lu allegedly refused to do so. In effect, Babasanta himself recognized that ownership of the property would not be transferred to him until such time as he shall have effected full payment of the price. Moreover, had the sellers intended to transfer title, they could have easily executed the document of sale in its required form simultaneously with their acceptance of the partial payment, but they did not. Doubtlessly, the receipt signed by Pacita Lu should legally be considered as a perfected contract to sell. The distinction between a contract to sell and a contract of sale is quite germane. In a contract of sale, title passes to the vendee upon the delivery of the thing sold; whereas in a contract to sell, by agreement the ownership is reserved in the vendor and is not to pass until the full payment of the price.[22] In a contract of sale, the vendor has lost and cannot recover ownership until and unless the contract is resolved or rescinded; whereas in a contract to sell, title is retained by the vendor until the full payment of the price, such payment being a positive suspensive condition and failure of which is not a breach but an event that prevents the obligation of the vendor to convey title from becoming effective.[23] The perfected contract to sell imposed upon Babasanta the obligation to pay the balance of the purchase price. There being an obligation to pay the price, Babasanta should have made the proper tender of payment and consignation of the price in court as required by law. Mere sending of a letter by the vendee expressing the intention to pay without the accompanying payment is not considered a valid tender of payment.[24] Consignation of the amounts due in court is essential in order to extinguish Babasantas obligation to pay the balance of the purchase

price. Glaringly absent from the records is any indication that Babasanta even attempted to make the proper consignation of the amounts due, thus, the obligation on the part of the sellers to convey title never acquired obligatory force. On the assumption that the transaction between the parties is a contract of sale and not a contract to sell, Babasantas claim of ownership should nevertheless fail. Sale, being a consensual contract, is perfected by mere consent[25] and from that moment, the parties may reciprocally demand performance.[26] The essential elements of a contract of sale, to wit: (1) consent or meeting of the minds, that is, to transfer ownership in exchange for the price; (2) object certain which is the subject matter of the contract; (3) cause of the obligation which is established.[27] The perfection of a contract of sale should not, however, be confused with its consummation. In relation to the acquisition and transfer of ownership, it should be noted that sale is not a mode, but merely a title. A mode is the legal means by which dominion or ownership is created, transferred or destroyed, but title is only the legal basis by which to affect dominion or ownership.[28] Under Article 712 of the Civil Code, ownership and other real rights over property are acquired and transmitted by law, by donation, by testate and intestate succession, and in consequence of certain contracts, by tradition. Contracts only constitute titles or rights to the transfer or acquisition of ownership, while delivery or tradition is the mode of accomplishing the same.[29] Therefore, sale by itself does not transfer or affect ownership; the most that sale does is to create the obligation to transfer ownership. It is tradition or delivery, as a consequence of sale, that actually transfers ownership. Explicitly, the law provides that the ownership of the thing sold is acquired by the vendee from the moment it is delivered to him in any of the ways specified in Article 1497 to 1501.[30] The word delivered should not be taken restrictively to mean transfer of actual physical possession of the property. The law recognizes two principal modes of delivery, to wit: (1) actual delivery; and (2) legal or constructive delivery. Actual delivery consists in placing the thing sold in the control and possession of the vendee.[31] Legal or constructive delivery, on the other hand, may be had through any of the following ways: the execution of a public instrument evidencing the sale;[32] symbolical tradition such as the delivery of the keys of the place where the movable sold is being kept;[33] traditio longa manu or by mere consent or agreement if the movable sold cannot yet be transferred to the possession of the buyer at the time of the sale;[34] traditio brevi manu if the buyer already had possession of the object even before the sale;[35] and traditio constitutum possessorium, where the seller remains in possession of the property in a different capacity.[36] Following the above disquisition, respondent Babasanta did not acquire ownership by the mere execution of the receipt by Pacita Lu acknowledging receipt of partial payment for the property. For one, the agreement between Babasanta and the Spouses Lu, though valid, was not embodied in a public instrument. Hence, no constructive delivery of the lands could have been effected. For another, Babasanta had not taken possession of the property at any time after the perfection of the sale in his favor or exercised acts of dominion over it despite his assertions that he was the rightful owner of the lands. Simply stated, there was no delivery to Babasanta, whether actual or constructive, which is essential to transfer ownership of the property. Thus, even on the assumption that the perfected contract between the parties was a sale, ownership could not have passed to Babasanta in the absence of delivery, since in a contract of sale ownership is transferred to the vendee only upon the delivery of the thing sold.[37] However, it must be stressed that the juridical relationship between the parties in a double sale is primarily governed by Article 1544 which lays down the rules of preference between the two purchasers of the same property. It provides: Art. 1544. If the same thing should have been sold to different vendees, the ownership shall be transferred to the person who may have first taken possession thereof in good faith, if it should be movable property. Should it be immovable property, the ownership shall belong to the person acquiring it who in good faith first recorded it in the Registry of Property. Should there be no inscription, the ownership shall pertain to the person who in good faith was first in the possession; and, in the absence thereof, to the person who presents the oldest title, provided there is good faith. The principle of primus tempore, potior jure (first in time, stronger in right) gains greater significance in case of double sale of immovable property. When the thing sold twice is an immovable, the one who acquires it and first records it in the Registry of Property, both made in good faith, shall be deemed the owner.[38] Verily, the act of registration must be coupled with good faith that is, the registrant must have no knowledge of the defect or lack of title of his vendor or must not have been aware of facts which should have put him upon such inquiry and investigation as might be necessary to acquaint him with the defects in the title of his vendor.[39] Admittedly, SLDC registered the sale with the Registry of Deeds after it had acquired knowledge of Babasantas claim. Babasanta, however, strongly argues that the registration of the sale by SLDC was not sufficient to confer upon the latter any title to the property since the registration was attended by bad faith. Specifically, he points out that at the time SLDC registered the sale on 30 June 1990, there was already a notice of lis pendens on the file with the Register of Deeds, the same having been filed one year before on 2 June 1989. Did the registration of the sale after the annotation of the notice of lis pendens obliterate the effects of delivery and possession in good faith which admittedly had occurred prior to SLDCs knowledge of the transaction in favor of Babasanta? We do not hold so. It must be stressed that as early as 11 February 1989, the Spouses Lu executed the Option to Buy in favor of SLDC upon receiving P316,160.00 as option money from SLDC. After SLDC had paid more than one half of the agreed purchase price of P1,264,640.00, the Spouses Lu subsequently executed on 3 May 1989 a Deed of Absolute Sale in favor or SLDC. At the time both deeds were executed, SLDC had no knowledge of the prior transaction of the Spouses Lu with Babasanta. Simply stated, from the time of execution of the first deed up to the

moment of transfer and delivery of possession of the lands to SLDC, it had acted in good faith and the subsequent annotation of lis pendens has no effect at all on the consummated sale between SLDC and the Spouses Lu. A purchaser 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 a 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 person in the property.[40] Following the foregoing definition, we rule that SLDC qualifies as a buyer in good faith since there is no evidence extant in the records that it had knowledge of the prior transaction in favor of Babasanta. At the time of the sale of the property to SLDC, the vendors were still the registered owners of the property and were in fact in possession of the lands. Time and again, this Court has ruled that a person dealing with the owner of registered land is not bound to go beyond the certificate of title as he is charged with notice of burdens on the property which are noted on the face of the register or on the certificate of title.[41] In assailing knowledge of the transaction between him and the Spouses Lu, Babasanta apparently relies on the principle of constructive notice incorporated in Section 52 of the Property Registration Decree (P.D. No. 1529) which reads, thus: Sec. 52. Constructive notice upon registration. Every conveyance, mortgage, lease, lien, attachment, order, judgment, instrument or entry affecting registered land shall, if registered, filed, or entered in the office of the Register of Deeds for the province or city where the land to which it relates lies, be constructive notice to all persons from the time of such registering, filing, or entering. However, the constructive notice operates as suchby the express wording of Section 52from the time of the registration of the notice of lis pendens which in this case was effected only on 2 June 1989, at which time the sale in favor of SLDC had long been consummated insofar as the obligation of the Spouses Lu to transfer ownership over the property to SLDC is concerned. More fundamentally, given the superiority of the right of SLDC to the claim of Babasanta the annotation of the notice of lis pendens cannot help Babasantas position a bit and it is irrelevant to the good or bad faith characterization of SLDC as a purchaser. A notice of lis pendens, as the Court held in Natao v. Esteban,[42] serves as a warning to a prospective purchaser or incumbrancer that the particular property is in litigation; and that he should keep his hands off the same, unless he intends to gamble on the results of the litigation. Precisely, in this case SLDC has intervened in the pending litigation to protect its rights. Obviously, SLDCs faith in the merit of its cause has been vindicated with the Courts present decision which is the ultimate denouement on the controversy. The Court of Appeals has made capital[43] of SLDCs averment in its Complaint-in-Intervention[44] that at the instance of Pacita Lu it issued a check for P200,000.00 payable to Babasanta and the confirmatory testimony of Pacita Lu herself on cross-examination.[45] However, there is nothing in the said pleading and the testimony which explicitly relates the amount to the transaction between the Spouses Lu and Babasanta for what they attest to is that the amount was supposed to pay off the advances made by Babasanta to Pacita Lu. In any event, the incident took place after the Spouses Lu had already executed the Deed of Absolute Sale with Mortgage in favor of SLDC and therefore, as previously explained, it has no effect on the legal position of SLDC. Assuming ex gratia argumenti that SLDCs registration of the sale had been tainted by the prior notice of lis pendens and assuming further for the same nonce that this is a case of double sale, still Babasantas claim could not prevail over that of SLDCs. In Abarquez v. Court of Appeals,[46] this Court had the occasion to rule that if a vendee in a double sale registers the sale after he has acquired knowledge of a previous sale, the registration constitutes a registration in bad faith and does not confer upon him any right. If the registration is done in bad faith, it is as if there is no registration at all, and the buyer who has taken possession first of the property in good faith shall be preferred. In Abarquez, the first sale to the spouses Israel was notarized and registered only after the second vendee, Abarquez, registered their deed of sale with the Registry of Deeds, but the Israels were first in possession. This Court awarded the property to the Israels because registration of the property by Abarquez lacked the element of good faith. While the facts in the instant case substantially differ from that in Abarquez, we would not hesitate to rule in favor of SLDC on the basis of its prior possession of the property in good faith. Be it noted that delivery of the property to SLDC was immediately effected after the execution of the deed in its favor, at which time SLDC had no knowledge at all of the prior transaction by the Spouses Lu in favor of Babasanta. The law speaks not only of one criterion. The first criterion is priority of entry in the registry of property; there being no priority of such entry, the second is priority of possession; and, in the absence of the two priorities, the third priority is of the date of title, with good faith as the common critical element. Since SLDC acquired possession of the property in good faith in contrast to Babasanta, who neither registered nor possessed the property at any time, SLDCs right is definitely superior to that of Babasantas. At any rate, the above discussion on the rules on double sale would be purely academic for as earlier stated in this decision, the contract between Babasanta and the Spouses Lu is not a contract of sale but merely a contract to sell. In Dichoso v. Roxas,[47] we had the occasion to rule that Article 1544 does not apply to a case where there was a sale to one party of the land itself while the other contract was a mere promise to sell the land or at most an actual assignment of the right to repurchase the same land. Accordingly, there was no double sale of the same land in that case. WHEREFORE, the instant petition is hereby GRANTED. The decision of the Court of Appeals appealed from is REVERSED and SET ASIDE and the decision of the Regional Trial Court, Branch 31, of San Pedro, Laguna is REINSTATED. No costs. SO ORDERED. Melencion v. CA and Aznar Bro. Realty (2007) CASE DIGEST FACTS: Certiorari.

Esteban Bonghanoy was the owner of s 30,351 sq. m. parcel of land located at MArigondon, Cebu. Juana Bonghanoy-Amodia is his only daughter. Juana on the other hand is the mother of the petitioners. The property was brought under the Torrrens system but the title thereto was lost during the 2nd world war. Thereafter in 1964, the Amodias executed an EXTRAJUDICIAL PARTITION OF REAL ESTATE with DEED OF ABSOLUTE SALE which settled Estebans estate and conveyed the property to the Aznar Bro. Realty in consideration of P10,200.00. It was registered under Act No. 3344 as there was no title on file at the Register of Deeds of Lapu-lapu City. Improvements have beeb introduced by the buyer. 1989. the Ampdias executed a DEED OF EXTRAJUDICIAL SETTLEMENT WITH DEED OF ABSOLUTE SALE conveying the property to Go Kim Chuan in consideration of P70,000.00. Pursuant to Act No. 26, a reconstituted title was issued to Bonghanoy and a subsequent derivative title to Go Kim Chuan. Go exercised control and dominion over the subject property in an adverse and continuous manner and in a concept of an owner. Aznar wrote a letter to the Amodias asking them to nullify or withdraw the sale they entered with Go. Aznar also annotated a NOTICE OF ADVERSE CLAIM in the derivative title possessed by Go. Unheeded, Aznar filed a case for ANNULMENT OF SALE AND CANCELLATION OF TCT NO. 20626. RTC. Dismissed Aznars complaint and declared Go as the real owner of the property. CA. reversed and set aside the RTC decision. It held that the Deed executed between the Amodias and Aznar was registered first than the deed executed with Go. The former deed prevails over the latter (according to Art. 1544, CC) PETITIONERS CONTENTION(S): 1. 2. 3. 4. Registration under Act 3344 is without legal effect and could not operate as a constructive notice to petitioners and 3rd persons. Art 1544 CC does not apply Aznar should have availed of the remedy of RECONSTITUTION. The Notice of Adverse Claim was annotated ony in 1990 after the execution of the deed between the Amodias and Go in 1989.

RESPONDENTS CONTENTION(S): 1. 2. 3. 4. Petition id dismissible because the verification and certification of non-forum shopping were not signed by all petitioners Go was a buyer in bad faith because he had prior constructive notice that the property was sold to Aznar because it was registered under Act 3344. 2nd sale did not transfer the subject property to Go since it was no longer within the vendors power to convey With respect to forgery, the findings of the document examiner is iconcusive

ISSUE: Who has a better right to the property Aznar or Go? RULING: Go Kim Chuan! ELEMENTS: 1. Priority in registration

Without doubt, we have here a case of DOUBLE SALE of registered land. (see Article 1544 CC) We have already ruled that the REGISTRATION contemplated in this provision refers to registration under the Torrens System, which considers the act of registration as the operative act that gives validity to the transfer or create a lien upon the land. This rule precisely applies to cases involving conflicting rights over registered property and those of innocent transferees who relied on the clean title of the properties. Thus, we held that registration must be done in the property registry in order to bind the same. In the case at bench, it is uncontroverted that the subject property was under the operation of the Torrens system even before the respective conveyances to Aznar and Go were made. Aznar knew of this, and admits this fact. Yet, despite this knowledge, Aznar registered the sale in its favor under Act 3344 on the contention that at the time of sale, there was no title on file. We are not persuaded by such a lame excuse. Act 3344 provides for the system of recording of transactions or claims over unregistered real estate without prejudice to a 3 rd party with a better right. But if the land is registered under the Land Registered Act, and it is sold and the sale is registered not under the Land Registration Act but under Act 3344, such sale is not considered registered, as the term is used under Art. 1544 CC.

In this case, since the deed in favor of Aznar was registered under Act No. 3344 and not under Act No. 496, the said document is deemed not registered. Rather, it was the sale in favor of Go which was registered under Act No. 496.xxxx The fact that the certificate of title over the registered land is lost does not convert it unto unregistered land. After all, a certificate of title is merely an evidence of ownership or title over the particular property described therein. This Court agrees with the petitioners that Aznar should have availed itself of the legal remedy of reconstitution of the lost certificate of title, instead of registering under Act No. 3344. 2. Good faith

To be able to enjoy priority status, the second purchaser must be in good faith, i.e. he must have no knowledge of the previous alienation of the property by the vendor to another. Notably, what is important for this purpose is not whether the buyer is in good faith, but whether he registers the second sale in good faith, meaning he does so without knowledge of any defect in the title over the property sold. Xxx Concededly, inscription of an adverse claim serves as a warning to 3rd parties dealing with a piece of real property that someone claims an interest therein or that there is a right superior to that of the titled owner. However, as pointed out by petitioners and as admitted by Aznar, the Notice of Adverse clai was annotated only in Feb. 4, 1990, after the lost certificate of title was reconstituted and after the issuance of said TCT in the name of Go on Dec. 1, 1989. It is therefore absurd to say that Go should be bound by an adverse claim which was not previously annotated on the lost title or on the new one, or be shackled by a claim which he did not have any knowledge of. Xxx Moreover, before buying the subject property, Go made verifications with the Office of the City Assessor of Lapu-lapu City and the Register of Deeds. He likewise visited the premises of the property and found that nobody interposed any adverse claim against the Amodias. After he decided to buy the subject property, he paid all taxes in arrears, caused the publication of the deed in a newspaper of general circulation, caused the reconstitution of the lost certificate of title and caused the issuance of the assailed TCT in his name. Given these antecedents, good faith on the part of Go cannot be doubted. HELD: petition granted. /adsum

MELENCION VS COURT OF APPEALS NACHURA, J.:

Before this Court is a Petition for Review on Certiorari[1] under Rule 45 of the Rules of Civil Procedure seeking the reversal of the Court of Appeals (CA) Decision[2] dated March 30, 2001 and praying that the Decision[3] of the Regional Trial Court (RTC) of Lapu-Lapu City, dated February 18, 1993, be upheld.

The Facts

The subject property is a 30,351 square meter parcel of land (subject property) particularly denominated as Lot No. 3368, located at Subabasbas, Marigondon, Lapu-Lapu City, Cebu, and part of a total area of 30,777 square meters covered by Transfer Certificate of Title (TCT) No. 20626[4] (entire property) in the name of the late petitioner Go Kim Chuan (Go Kim Chuan).[5] The entire property was originally owned by Esteban Bonghanoy[6] who had only one child, Juana Bonghanoy-Amodia,[7] mother of the late Leoncia Amodia and petitioners Cecilia Amodia Vda. de Melencion, Veneranda Amodia, Felipe Amodia, and Eutiquio Amodia[8] (the Amodias). The entire property was brought under the operation of the Torrens System.[9] However, the title thereto was lost during the Second World War. On July 10, 1964, the Amodias allegedly executed an Extra-Judicial Partition of Real Estate with Deed of Absolute Sale[10] whereby they extra-judicially settled the estate of Esteban Bonghanoy and conveyed the subject property to respondent Aznar Brothers Realty Company (AZNAR) for a consideration of P10,200.00. OnAugust 10, 1964, the said Extra-Judicial Partition of Real Estate with Deed of Absolute Sale was registered under Act 3344[11] as there was no title on file at the Register of Deeds of Lapu-Lapu

City (Register of Deeds). Thereafter, AZNAR made some improvements and constructed a beach house thereon. On February 18, 1989, petitioners Cecilia Amodia Vda. de Melencion, Veneranda Amodia, Felipe Amodia and Eutiquio Amodia[12] (petitioners Amodias) executed a Deed of Extra-Judicial Settlement with Absolute Sale,[13] conveying the subject property in favor of Go Kim Chuan for and in consideration ofP70,000.00. The lost title covering the subject property was reconstituted pursuant to Republic Act (RA) No. 26.[14] A reconstituted title particularly designated as Original Certificate of Title (OCT) No. RO-2899 was issued in the name of Esteban Bonghanoy[15] and, subsequently, a derivative title (TCT No. 20626) was issued in the name of Go Kim Chuan on December 1, 1989. Thereafter, Go Kim Chuan exercised control and dominion over the subject property in an adverse and continuous manner and in the concept of an owner. On February 14, 1990, AZNAR wrote a letter[16] to petitioners Amodias asking the latter to withdraw and/or nullify the sale entered into between them and Go Kim Chuan. On the same date, a Notice of Adverse Claim[17] was annotated by AZNAR on TCT No. 20626. Because petitioners did not heed AZNAR's demand, onApril 25, 1990, AZNAR filed a case against petitioners Amodias and Go Kim Chuan for Annulment of Sale and Cancellation of TCT No. 20626[18] alleging that the sale to Go Kim Chuan was an invalid second sale of the subject property which had earlier been sold to it. Petitioners Amodias denied that they executed the Extra-Judicial Partition of Real Estate with Deed of Absolute Sale in favor of AZNAR, claiming that their purported signatures thereon were forged.[19] Trial on the merits ensued. The RTC's Decision

On February 18, 1993, the RTC dismissed AZNAR's complaint and declared Go Kim Chuan as the real owner of the subject property. The RTC ratiocinated that the signatures of the Amodias in the Extra-Judicial Partition of Real Estate with Deed of Absolute Sale executed in favor of AZNAR were found by the document examiner of the Philippine Constabulary (PC) Crime Laboratory to be forged, thus, the said deed did not convey anything in favor of AZNAR. Moreover, the subject property had been brought under the Land Registration Act; hence, all transactions involving the same should have complied with the said law. Finally, the RTC held that AZNAR failed to show that Go Kim Chuan acquired the subject property in bad faith. Aggrieved, AZNAR appealed the RTC Decision to the CA.[20]

The CA's Decision On March 30, 2001, the CA rendered a Decision holding that the Extra-Judicial Partition of Real Estate with Deed of Absolute Sale executed by the Amodias in favor of AZNAR was registered ahead of the Deed of Extra-Judicial Settlement with Absolute Sale in favor of Go Kim Chuan, thus, pursuant to Article 1544 of the New Civil Code, the former deed should be given preference over the latter; that AZNAR's adverse claim was annotated earlier than the execution of the Deed of Extra-Judicial Settlement with Absolute Sale in favor of Go Kim Chuan; hence, the latter should have respected said adverse claim and should have made inquiries as to possible defects that may exist in the title over the subject property; and that in the absence of a final determination by a court of proper jurisdiction on the alleged forged signatures of the Amodias in the Extra-Judicial Partition of Real Estate with Deed of Absolute Sale, the finding of the document examiner was insufficient for the RTC to rule in favor of the petitioners. The CA disposed of the case in this wise: WHEREFORE, premises considered, the assailed decision dated February 18, 1993 of the Regional Trial Court of Lapu-Lapu City, Branch 27, in Civil Case No. 2254-L is herebyREVERSED and SET ASIDE and a new one is hereby entered as follows: (1) Declaring plaintiff-appellant Aznar Brothers Realty Company as the real owner of the land in question; (2) Declaring both the Deed of Extra-judicial Settlement with Absolute Sale dated February 1, 1989 executed by Felipe Amodia, Cecilia Amodia, Veneranda A. Ibag

and Eustaquio Amodia in favor of Go Kim Chuan and the Transfer Certificate of Title No. 20626 in the name of Go Kim Chuan as NULL AND VOID; (3) Ordering Go Kim Chuan to deliver to the aforesaid plaintiff-appellant the possession of the land in question and to execute a registrable deed of conveyance of the subject property to the said plaintiff-appellant.

No costs. SO ORDERED.[21] Petitioners filed a Motion for Reconsideration[22] which the CA denied in its Resolution[23] dated June 5, 2001. Hence, this Petition based on the following grounds: I Lot 3368 was already a registered land under Act 496, thus, the registration by respondent of the Deed of Sale in 1964 under Act 3344 produces no legal effect whatsoever; II Even assuming arguendo that the lot in question was duly registered under Act 3344 as an unregistered land, it is without prejudice to better rights and the provision of Article 1544 of the New Civil Code would be inapplicable; III The Honorable Court of Appeals erred in holding that an adverse claim was already existing at the time the subject land was sold to petitioner Go Kim Chuan; on the contrary, the latter had purchased the said land in good faith and for value, without notice of any fact that would reasonably impel a closer inquiry as to the possibility of a defect in the vendor's title; and IV The Court of Appeals has misapplied the case of Heirs of Severa Gregorio v. CA, 300 SCRA 565, cited in support of its ruling that the court a quo committed error in appreciating the testimony of an expert witness as to the forgery of the first Deed of Sale.[24]

In its Comment[25] dated September 18, 2001, AZNAR argued, among others, that the Petition is dismissible because the Verification and Certification of Non-forum Shopping were not signed by all the petitioners, invoking this Court's Decision in the case of Loquias v. Office of the Ombudsman,[26] and that the same were signed only by one April Socorro Go, daughter of the late Go Kim Chuan, who did not even appear to be authorized to file the instant case in behalf of the other petitioners. In their Reply[27] dated October 22, 2001, petitioners contended that April Socorro Go is one of the legitimate children and an heir of the late Go Kim Chuan and, as such, she has personal knowledge of the truth of the facts alleged in the Petition. Petitioners submitted that they substantially complied with the Rules of Court by attaching the required Verification and Certification of Non-Forum Shopping and since the same are required simply to facilitate and promote the orderly administration of justice, compliance therewith should not be imposed with absolute literalness. On December 19, 2001, petitioners, through counsel, filed a Motion[28] for Leave to Admit Amended Petition[29] for Review on Certiorari (Amended Petition). Petitioners manifested that they were seeking to correct a defect in the designation of parties and prayed that the Heirs of Go Kim Chuan, namely, Estrella S. Go, Sonia Beth Go-Reynes, Daryl Go, and April Socorro Go be impleaded as petitioners instead of the earlier designated petitioners, Cecilia Amodia Vda. de Melencion, Veneranda Amodia, Felipe Amodia, Eutiquio Amodia, and Go Kim Chuan. Counsel for petitioners admitted that he inadvertently included the petitioners Amodias in the initial Petition for Review on Certiorari (Original Petition), as they were parties before the RTC and CA. The counsel also manifested that he was only representing the Heirs of Go Kim Chuan in this case. Lastly, he claimed that other than the substitution of the original petitioners, both the Original Petition and

Amended Petition uniformly raised the same issues and should be given due course in the greater interest of justice and that the instant Motion was not interposed for delay. Per directive of the Court,[30] AZNAR filed its Comment[31] on the said motion wherein AZNAR manifested that it had no serious objection to the admission of the Amended Petition if the same was intended merely to implead the Heirs of Go Kim Chuan as petitioners. However, AZNAR interposed strong opposition to the Amended Petition's admission since the names of the petitioners Amodias were deleted without their written consent. In their Reply,[32] the Heirs of Go Kim Chuan, through counsel, claimed that petitioners Amodias were excluded from the Amended Petition because they can no longer be located despite diligent efforts exerted by counsel. The counsel claims that after the rendition of the assailed CA Decision, he sent several letters to petitioners Amodias but they did not reply; hence, the Heirs of Go Kim Chuan, left with no choice, filed the instant case before this Court on their own. The Court issued a Resolution[33] dated September 16, 2002 giving due course to the Petition and requiring the parties to submit their respective Memoranda. In their Memorandum,[34] petitioners Heirs of Go Kim Chuan reiterate the same issues raised in the Original Petition and the Amended Petition. They argue that Act 3344 only refers to transactions affecting lands or interests therein not previously registered under the Spanish Mortgage Law or under the Torrens system; that if AZNAR could not have registered the sale in 1964 under Act 496 because the title over the subject property was lost, AZNAR should have availed itself of the remedy of reconstitution; that registration under Act 3344 is without legal effect and could not operate as constructive notice to petitioners and third persons, hence, may not be used as basis for the application of Art. 1544 of the New Civil Code; that the Notice of Adverse Claim of AZNAR was annotated on TCT No. 20626 only on February 14, 1990 after the execution of the Deed of Extra-Judicial Settlement with Absolute Sale in favor of Go Kim Chuan on February 18, 1989, hence, the CA erred when it held that Go Kim Chuan was not a buyer in good faith for supposedly having knowledge of such adverse claim; and that the doctrine laid down in Heirs of Severa Gregorio v. CA[35] is inapplicable since it referred to a case wherein the original copy of the document under review was not produced in evidence while in the instant case, the original copy of the Extra-Judicial Partition of Real Estate with Deed of Absolute Sale executed by the Amodias in favor of AZNAR was presented before the trial court judge. On the other hand, in its Memorandum,[36] AZNAR maintains that the Original Petition is dismissible because the Verification and Certification of Non-Forum Shopping thereof were not signed by all the petitioners. AZNAR further claims that the Amended Petition was filed in order to cure a fatal defect which should not be countenanced by this Court. AZNAR also contends that Go Kim Chuan was a buyer in bad faith as he had prior constructive notice that the subject property was sold to AZNAR because the sale was registered with the Register of Deeds under Act 3344; that the 1964 sale was registered under Act 3344 because the subject property was not actually covered by a Torrens title at the time; that there was no other mode of registration except under Act 3344; that Go Kim Chuan had to wait for the reconstitution of the lost title, hence, it could not be said that he examined any certificate of title and could feign ignorance of the sale in favor of AZNAR; that the second sale did not transfer the subject property to Go Kim Chuan since it was no longer within the vendors' power to convey; that with respect to the issue of forgery, the finding of the document examiner is not conclusive; and that such issue was belied by petitioner Veneranda Amodia herself when she declared that the negotiated sale in 1964 between AZNAR and the Amodias was not consummated because the latter did not receive the full consideration for the subject property. Before resolving the main issues raised, the Court shall first deal with an apparent procedural lapse in this case. Counsel for petitioners filed a Motion for Leave to Admit Amended Petition for Review on Certiorari in order to implead the Heirs of the late Go Kim Chuan as the new petitioners and to delete the names of petitioners Amodias because they could no longer be located. Said petitioners sought the relaxation of the rules so that in the interest of justice, the case can be decided on the merits. AZNAR opposes the Amended Petition because it was allegedly filed to cure a fatal defect in the original petition Certification of Non-Forum Shopping. In this regard, the case of Iglesia ni Cristo v. Ponferrada[37] is instructive, viz.: non-compliance with the rules on Verification and

The purpose of verification is simply to secure an assurance that the allegations of the petition (or complaint) have been made in good faith; or are true and correct, not merely speculative. This requirement is simply a condition affecting the form of pleadings, and noncompliance therewith does not necessarily render it fatally defective. Indeed, verification is only a formal, not a jurisdictional requirement. The issue in the present case is not the lack of verification but the sufficiency of one executed by only one of plaintiffs. This Court held in Ateneo de Naga University v. Manalo, that the verification requirement is deemed substantially complied with when, as in the present case, only one of the heirs-plaintiffs, who has sufficient knowledge and belief to swear to the truth of the allegations in the petition (complaint), signed the verification attached to it. Such verification is deemed sufficient assurance that the matters alleged in the petition have been made in good faith or are true and correct, not merely speculative. The same liberality should likewise be applied to the certification against forum shopping. The general rule is that the certification must be signed by all plaintiffs in a case and the signature of only one of them is insufficient. However, the Court has also stressed in a number of cases that the rules on forum shopping were designed to promote and facilitate the orderly administration of justice and thus should not be interpreted with such absolute literalness as to subvert its own ultimate and legitimate objective. The rule of substantial compliance may be availed of with respect to the contents of the certification. This is because the requirement of strict compliance with the provisions merely underscores its mandatory nature in that the certification cannot be altogether dispensed with or its requirements completely disregarded.

Thus, we held in Iglesia ni Cristo that the commonality of interest is material and crucial to relaxation of the Rules. In the case at bench, the petitioners in the Amended Petition are Heirs of the late Go Kim Chuan. They represent their predecessor-ininterest in whose favor a title was issued covering the subject property and said title is sought to be canceled by AZNAR. Clearly, there is presence of the commonality of interest referred to inIglesia ni Cristo. Under the circumstances, the rules may be reasonably and liberally construed to avoid a patent denial of substantial justice, because it cannot be denied that the ends of justice are better served when cases are determined on the merits after all parties are given full opportunity to ventilate their causes and defenses rather than on technicality or some procedural imperfections.[38] The Issues We now proceed to the merits of the case. From the issues raised, there are ultimately two questions that require resolution: First, did the CA misapply the doctrine in Heirs of Severa Gregorio v. CA in ruling that the RTC committed an error in appreciating the testimony of an expert witness as to the forgery of the Extra-Judicial Partition of Real Estate with Deed of Absolute Sale? Second, who between Go Kim Chuan and AZNAR has the better right over the subject property? We resolve the first question in the negative. Forgery cannot be presumed. It must be proved by clear, positive and convincing evidence and the burden of proof rests on the party alleging forgery. Handwriting experts are usually helpful in the examination of forged documents because of the technical procedure involved in analyzing them. But 1resort to these experts is not mandatory or indispensable. A finding of forgery does not depend entirely on the testimonies of handwriting experts, because the judge must conduct an independent examination of the questioned signature in order to arrive at a reasonable conclusion as to its authenticity.[39] The RTC's finding with respect to the issue of forgery reads: After a thorough study of the pleadings and evidence of the parties, the court finds that preponderance of evidence heavily tilts in favor of the defendants. The document relied upon by the plaintiff in its claim of ownership over the land in question, the extrajudicial partition and sale, has been found by the document examiner of the PC Crime Laboratory to be a forgery. Being a forgery, said document conveyed nothing in favor of the plaintiff. Hence, plaintiff's claim of ownership over the same has no more leg to stand on. x x x[40]

While it is true that the original document was produced before the RTC, the finding of forgery relies wholly on the testimony of the document examiner. It falls short of the required independent examination to be conducted by the trial court judge. Other than the statement of the document examiner, the RTC decision contains no other basis to support its conclusion

of the existence of forgery. Accordingly, the CA was correct in rejecting the RTCs finding and in applying the doctrine laid down in the case of Heirs of Severa Gregorio v. CA. However, we resolve the second question in favor of Go Kim Chuan. Without doubt, we have here a case of double sale of registered land. Apropos is Article 1544 of the New Civil Code which provides: ART. 1544. If the same thing should have been sold to different vendees, the ownership shall be transferred to the person who may have first taken possession thereof in good faith, if it should be movable property. Should it be immovable property, the ownership shall belong to the person acquiring it who in good faith first recorded it in the Registry of Property. Should there be no inscription, the ownership shall pertain to the person who in good faith was first in the possession; and, in the absence thereof, to the person who presents the oldest title, provided there is good faith. We have already ruled that the registration contemplated in this provision refers to registration under the Torrens System, which considers the act of registration as the operative act[41] that gives validity to the transfer or creates a lien upon the land.[42] This rule precisely applies to cases involving conflicting rights over registered property and those of innocent transferees who relied on the clean title of the properties.[43] Thus, we held that registration must be done in the proper registry in order to bind the same.[44]

In the case at bench, it is uncontroverted that the subject property was under the operation of the Torrens System even before the respective conveyances to AZNAR and Go Kim Chuan were made. AZNAR knew of this, and admits this as fact. Yet, despite this knowledge, AZNAR registered the sale in its favor under Act 3344 on the contention that at the time of sale, there was no title on file. We are not persuaded by such a lame excuse. Act 3344 provides for the system of recording of transactions or claims over unregistered real estate[45] without prejudice to a third party with a better right.[46] But if the land is registered under the Land Registration Act (and therefore has a Torrens Title), and it is sold and the sale is registered not under the Land Registration Act but under Act 3344, as amended, such sale is not considered registered, as the term is used under Art. 1544 of the New Civil Code.[47] In this case, since the Extra-Judicial Partition of Real Estate with Deed of Absolute Sale in favor of AZNAR was registered under Act No. 3344 and not under Act No. 496, the said document is deemed not registered.[48] Rather, it was the sale in favor of Go Kim Chuan which was registered under Act No. 496. AZNAR insists that since there was no Torrens title on file in 1964, insofar as the vendors, AZNAR, and the Register of Deeds are concerned, the subject property was unregistered at the time. The contention is untenable. The fact that the certificate of title over the registered land is lost does not convert it into unregistered land. After all, a certificate of title is merely an evidence of ownership or title over the particular property described therein.[49] This Court agrees with the petitioners that AZNAR should have availed itself of the legal remedy of reconstitution of the lost certificate of title, instead of registration under Act 3344. We note that in Aznar Brothers Realty Company v. Aying,[50] AZNAR, beset with the similar problem of a lost certificate of title over a registered land, sought the reconstitution thereof. It is unfortunate that, in the instant case, despite the sale of the subject property way back in 1964 and the existence of the remedy of reconstitution at that time, AZNAR opted to register the same under the improper registry (Act 3344) and allowed such status to lie undisturbed. From 1964 to 1989, AZNAR did not bother to have the lost title reconstituted or even have the subject property declared under its name for taxation purposes. Vigilantibus, non dormientibus, jura subveniunt. Laws must come to the assistance of the vigilant, not of the sleepy.[51] Although it is obvious that Go Kim Chuan registered the sale in his favor under Act 496 while AZNAR did not, we still cannot make an outright award of the subject property to the petitioners solely on that basis. For the law is clear: mere registration of title is not enough. Good faith must accompany the registration.

Thus, to be able to enjoy priority status, the second purchaser must be in good faith, i.e., he must have no knowledge of the previous alienation of the property by the vendor to another. Notably, what is important for this purpose is not whether the second buyer is a buyer in good faith, but whether he registers the second sale in good faith, meaning, he does so without knowledge of any defect in the title over the property sold. [52] To fully resolve the second question, therefore, it is imperative that we determine whether Go Kim Chuan was a registrant in good faith. The CA found that AZNAR registered its Notice of Adverse Claim ahead of the Deed of Extra-Judicial Settlement with Absolute Sale in favor of Go Kim Chuan. Because of this, the CA declared that Go Kim Chuan was not a buyer in good faith, because he should have respected such adverse claim or, at least, inquired into the validity thereof. We do not agree. While factual issues are not within the province of this Court, as it is not a trier of facts and is not required to examine the oral and documentary evidence de novo, this Court has the authority to review and, in proper cases, reverse the factual findings of lower courts in the following instances: (a) when the findings of fact of the trial court are in conflict with those of the appellate court; (b) when the judgment of the appellate court is based on a misapprehension of facts; and, (c) when the appellate court manifestly overlooked certain relevant facts which, if properly considered, would justify a different conclusion.[53] The instant case falls squarely within the foregoing exceptions. Concededly, inscription of an adverse claim serves as a warning to third parties dealing with a piece of real property that someone claims an interest therein or that there is a right superior to that of the titled owner.[54] However, as pointed out by petitioners and as admitted by AZNAR, the Notice of Adverse Claim was annotated on TCT No. 20626 only on February 4, 1990, after the lost certificate of title was reconstituted and after the issuance of said TCT in the name of Go Kim Chuan on December 1, 1989. It is, therefore, absurd to say that Go Kim Chuan should be bound by an adverse claim which was not previously annotated on the lost title or on the new one, or be shackled by a claim which he did not have any knowledge of. Citing Santiago v. Court of Appeals,[55] AZNAR contends that even if the adverse claim was annotated on TCT No. 20626 only on February 4, 1990, the prior registration of the sale in its favor under Act 3344 served as constructive notice to Go Kim Chuan and thus negates the latter's claim of good faith, since the Court held in that case, Registration, however, by the first buyer under Act 3344 can have the effect of constructive notice to the second buyer that can defeat his right as such buyer in good faith. AZNAR's reliance on Santiago is misplaced. In Santiago, the first buyers registered the sale under the Torrens System, as can be inferred from the issuance of the TCT in their names. There was no registration under Act 3344. Conversely, in the instant case, AZNAR registered the sale in its favor under Act 3344 despite its full knowledge that the subject property is under the operation of the Torrens System. To repeat, there can be no constructive notice to the second buyer through registration under Act 3344 if the property is registered under the Torrens system.[56] Moreover, before buying the subject property, Go Kim Chuan made verifications with the Office of the City Assessor of Lapu-Lapu City and the Register of Deeds. He likewise visited the premises of the subject property and found that nobody interposed any adverse claim against the Amodias. After he decided to buy the subject property, he paid all taxes in arrears, caused the publication of the Deed of Extra-Judicial Settlement with Absolute Sale in a newspaper of general circulation, caused the reconstitution of the lost certificate of title and caused the issuance of the assailed TCT in his name.[57] Given these antecedents, good faith on the part of Go Kim Chuan cannot be doubted. We also note that AZNAR's complaint for cancellation of title contains no allegation that the (second) purchaser was aware of defects in his title. In the absence of such an allegation and proof of bad faith, it would be grossly inappropriate for this Court to render judgment against the

purchaser who had already acquired title not only because of lack of evidence, but also because of the indefeasibility and conclusiveness of such title.[58] Finally, it is worth stressing that the Torrens system was adopted in this country because it was believed to be the most effective measure to guarantee the integrity of land titles and to insure their indefeasibility once the claim of ownership is established and recognized. If a person purchases a piece of land on the assurance that the seller's title thereto is valid, he should not run the risk of losing his acquisition. If this were permitted, public confidence in the system would be eroded and land transactions would have to be attended by complicated and not necessarily conclusive investigations and proof of ownership.[59] WHEREFORE, the instant petition for review is GRANTED. The Decision of the Court of Appeals in CA-G.R. CV No. 51814 is REVERSED and SET ASIDE. The Decision of the Regional Trial Court of Lapu-Lapu City, Branch 27, in Civil Case No. 2254-L, is REINSTATED. No costs.

SO ORDERED.

ANTONIO VS SANTOS LACKING INNOCENT PURCHASER FOR VALUE ISLAMIC DIRECTORATE OF THE PHILIPPINES VS CA HERMOSISIMA, JR., J.: The subject of this petition for review is the Decision of the public respondent Court of Appeals,[1] dated October 28, 1994, setting aside the portion of the Decision of the Securities and Exchange Commission (SEC, for short) in SEC Case No. 4012 which declared null and void the sale of two (2) parcels of land in Quezon City covered by the Deed of Absolute Sale entered into by and between private respondent Iglesia Ni Cristo (INC, for short) and the Islamic Directorate of the Philippines, Inc., Carpizo Group, (IDP, for short). The following facts appear of record. Petitioner IDP-Tamano Group alleges that sometime in 1971, Islamic leaders of all Muslim major tribal groups in the Philippines headed by Dean Cesar Adib Majul organized and incorporated the ISLAMIC DIRECTORATE OF THE PHILIPPINES (IDP), the primary purpose of which is to establish an Islamic Center in Quezon City for the construction of a Mosque (prayer place), Madrasah (Arabic School), and other religious infrastructures so as to facilitate the effective practice of Islamic faith in the area.[2] Towards this end, that is, in the same year, the Libyan government donated money to the IDP to purchase land at Culiat, Tandang Sora, Quezon City, to be used as a Center for the Islamic populace. The land, with an area of 49,652 square meters, was covered by two titles: Transfer Certificate of Title Nos. RT-26520 (176616)[3] and RT-26521 (170567),[4]both registered in the name of IDP. It appears that in 1971, the Board of Trustees of the IDP was composed of the following per Article 6 of its Articles of Incorporation: Senator Mamintal Tamano[5] Congressman Ali Dimaporo Congressman Salipada Pendatun Dean Cesar Adib Majul Sultan Harun Al-Rashid Lucman Delegate Ahmad Alonto Commissioner Datu Mama Sinsuat Mayor Aminkadra Abubakar[6] According to the petitioner, in 1972, after the purchase of the land by the Libyan government in the name of IDP, Martial Law was declared by the late President Ferdinand Marcos. Most of the members of the 1971 Board of Trustees like Senators Mamintal Tamano, Salipada Pendatun, Ahmad Alonto, and Congressman Al-Rashid Lucman flew to the Middle East to escape political persecution. Thereafter, two Muslim groups sprung, the Carpizo Group, headed by Engineer Farouk Carpizo, and the Abbas Group, led by Mrs. Zorayda Tamano and Atty. Firdaussi Abbas. Both groups claimed to be the legitimate IDP. Significantly, on October 3, 1986, the SEC, in a suit between these two contending groups, came out with a Decision in SEC Case No. 2687 declaring the election of both the Carpizo Group and the Abbas Group as IDP board members to be null and void. The dispositive portion of the SEC Decision reads: WHEREFORE, judgment is hereby rendered declaring the elections of both the petitioners[7] and respondents[8] as null and void for being violative of the Articles of Incorporation of petitioner corporation. With the nullification of the election of the respondents, the approved by-laws which they certified to this Commission as members of the Board of Trustees must necessarily be likewise declared null and void. However, before any election of the members of the Board of Trustees could be conducted, there must be an approved by-laws to govern the internal government of the association including the conduct of election. And since the election of both petitioners and respondents have been declared null and void, a vacuum is created as to who should adopt the by-laws and certify its adoption. To remedy this unfortunate situation that the association has found itself in, the members of the petitioning corporation are hereby authorized to prepare and adopt their by-laws for submission to the Commission. Once approved, an election of the members of the Board of Trustees shall immediately be called pursuant to the approved by-laws.

SO ORDERED.[9] Neither group, however, took the necessary steps prescribed by the SEC in its October 3, 1986 Decision, and, thus, no valid election of the members of the Board of Trustees of IDP was ever called. Although the Carpizo Group[10] attempted to submit a set of by-laws, the SEC found that, aside from Engineer Farouk Carpizo and Atty. Musib Buat, those who prepared and adopted the by-laws were not bona fide members of the IDP, thus rendering the adoption of the by-laws likewise null and void. On April 20, 1989, without having been properly elected as new members of the Board of Trustees of IDP, the Carpizo Group caused to be signed an alleged Board Resolution[11]of the IDP, authorizing the sale of the subject two parcels of land to the private respondent INC for a consideration of P22,343,400.00, which sale was evidenced by a Deed of Absolute Sale[12] dated April 20, 1989. On May 30, 1991, the petitioner 1971 IDP Board of Trustees headed by former Senator Mamintal Tamano, or the Tamano Group, filed a petition before the SEC, docketed as SEC Case No. 4012, seeking to declare null and void the Deed of Absolute Sale signed by the Carpizo Group and the INC since the group of Engineer Carpizo was not the legitimate Board of Trustees of the IDP. Meanwhile, private respondent INC, pursuant to the Deed of Absolute Sale executed in its favor, filed an action for Specific Performance with Damages against the vendor, Carpizo Group, before Branch 81 of the Regional Trial Court of Quezon City, docketed as Civil Case No. Q90-6937, to compel said group to clear the property of squatters and deliver complete and full physical possession thereof to INC. Likewise, INC filed a motion in the same case to compel one Mrs. Leticia P. Ligon to produce and surrender to the Register of Deeds of Quezon City the owners duplicate copy of TCT Nos. RT-26521 and RT-26520 covering the aforementioned two parcels of land, so that the sale in INCs favor may be registered and new titles issued in the name of INC. Mrs. Ligon was alleged to be the mortgagee of the two parcels of land executed in her favor by certain Abdulrahman R.T. Linzag and Rowaida Busran-Sampaco claimed to be in behalf of the Carpizo Group. The IDP-Tamano Group, on June 11, 1991, sought to intervene in Civil Case No. Q-90-6937 averring, inter alia: xxx xxx xxx

2. That the Intervenor has filed a case before the Securities and Exchange Commission (SEC) against Mr. Farouk Carpizo, et, al., who, through false schemes and machinations, succeeded in executing the Deed of Sale between the IDP and the Iglesia Ni Kristo (plaintiff in the instant case) and which Deed of Sale is the subject of the case at bar; 3. That the said case before the SEC is docketed as Case No. 04012, the main issue of which is whether or not the aforesaid Deed of Sale between IDP and the Iglesia ni Kristo is null and void, hence, Intervenors legal interest in the instant case. A copy of the said case is hereto attached as Annex A; 4. That, furthermore, Intervenor herein is the duly constituted body which can lawfully and legally represent the Islamic Directorate of the Philippines; xxx xxx xxx.[13]

Private respondent INC opposed the motion arguing, inter alia, that the issue sought to be litigated by way of intervention is an intracorporate dispute which falls under the jurisdiction of the SEC.[14] Judge Celia Lipana-Reyes of Branch 81, Regional Trial Court of Quezon City, denied petitioners motion to intervene on the ground of lack of juridical personality of the IDP-Tamano Group and that the issues being raised by way of intervention are intra-corporate in nature, jurisdiction thereto properly pertaining to the SEC.[15] Apprised of the pendency of SEC Case No. 4012 involving the controverted status of the IDP-Carpizo Group but without waiting for the outcome of said case, Judge Reyes, on September 12, 1991, rendered Partial Judgment in Civil Case No. Q-90-6937 ordering the IDP-Carpizo Group to comply with its obligation under the Deed of Sale of clearing the subject lots of squatters and of delivering the actual possession thereof to INC.[16] Thereupon, Judge Reyes in another Order, dated March 2, 1992, pertaining also to Civil Case No. Q-90-6937, treated INC as the rightful owner of the real properties and disposed as follows: WHEREFORE, Leticia P. Ligon is hereby ordered to produce and/or surrender to plaintiff[17] the owners copy of RT-26521 (170567) and RT26520 (176616) in open court for the registration of the Deed of Absolute Sale in the latters name and the annotation of the mortgage executed in her favor by herein defendant Islamic Directorate of the Philippines on the new transfer certificate of title to be issued to plaintiff. SO ORDERED.[18] On April 6, 1992, the above Order was amended by Judge Reyes directing Ligon to deliver the owners duplicate copies of TCT Nos. RT-26521 (170567) and RT-26520 (176616) to the Register of Deeds of Quezon City for the purposes stated in the Order of March 2, 1992.[19]

Mortgagee Ligon went to the Court of Appeals, thru a petition for certiorari, docketed as CA-G.R. No. SP-27973, assailing the foregoing Orders of Judge Reyes. The appellate court dismissed her petition on October 28, 1992.[20] Undaunted, Ligon filed a petition for review before the Supreme Court which was docketed as G.R. No. 107751. In the meantime, the SEC, on July 5, 1993, finally came out with a Decision in SEC Case No. 4012 in this wise: 1. Declaring the by-laws submitted by the respondents[21] as unauthorized, and hence, null and void. 2. Declaring the sale of the two (2) parcels of land in Quezon City covered by the Deed of Absolute Sale entered into by Iglesia ni Kristo and the Islamic Directorate of the Philippines, Inc.[22] null and void. 3. Declaring the election of the Board of Directors[23] of the corporation from 1986 to 1991 as null and void; 4. Declaring the acceptance of the respondents, except Farouk Carpizo and Musnib Buat, as members of the IDP null and void. No pronouncement as to cost. SO ORDERED.[24] Private respondent INC filed a Motion for Intervention, dated September 7, 1993, in SEC Case No. 4012, but the same was denied on account of the fact that the decision of the case had become final and executory, no appeal having been taken therefrom.[25] INC elevated SEC Case No. 4012 to the public respondent Court of Appeals by way of a special civil action for certiorari, docketed as CA-G.R. SP No. 33295. On October 28, 1994, the court a quo promulgated a Decision in CA-G.R. SP No. 33295 granting INCs petition. The portion of the SEC Decision in SEC Case No. 4012 which declared the sale of the two (2) lots in question to INC as void was ordered set aside by the Court of Appeals. Thus, the IDP-Tamano Group brought the instant petition for review, dated December 21, 1994, submitting that the Court of Appeals gravely erred in: 1) Not upholding the jurisdiction of the SEC to declare the nullity of the sale; 2) Encouraging multiplicity of suits; and 3) Not applying the principles of estoppel and laches.[26] While the above petition was pending, however, the Supreme Court rendered judgment in G.R. No. 107751 on the petition filed by Mrs. Leticia P. Ligon. The Decision, dated June 1, 1995, denied the Ligon petition and affirmed the October 28, 1992 Decision of the Court of Appeals in CA-G.R. No. SP-27973 which sustained the Order of Judge Reyes compelling mortgagee Ligon to surrender the owners duplicate copies of TCT Nos. RT-26521 (170567) and RT-26520 (176616) to the Register of Deeds of Quezon City so that the Deed of Absolute Sale in INCs favor may be properly registered. Before we rule upon the main issue posited in this petition, we would like to point out that our disposition in G.R. No. 107751 entitled, Ligon v. Court of Appeals, promulgated on June 1, 1995, in no wise constitutes res judicata such that the petition under consideration would be barred if it were the case. Quite the contrary, the requisites of res judicata do not obtain in the case at bench. Section 49, Rule 39 of the Revised Rules of Court lays down the dual aspects of res judicata in actions in personam, to wit: Effect of judgment. - The effect of a judgment or final order rendered by a court or judge of the Philippines, having jurisdiction to pronounce the judgment or order, may be as follows: xxx xxx xxx

(b) In other cases the judgment or order is, with respect to the matter directly adjudged or as to any other matter that could have been raised in relation thereto, conclusive between the parties and their successors in interest by title subsequent to the commencement of the action or special proceeding, litigating for the same thing and under the same title and in the same capacity; (c) In any other litigation between the same parties or their successors in interest, that only is deemed to have been adjudged in a former judgment which appears upon its face to have been so adjudged, or which was actually and necessarily included therein or necessary thereto.

Section 49(b) enunciates the first concept of res judicata known as bar by prior judgment, whereas, Section 49(c) is referred to as conclusiveness of judgment. There is bar by former judgment when, between the first case where the judgment was rendered, and the second case where such judgment is invoked, there is identity of parties, subject matter and cause of action. When the three identities are present, the judgment on the merits rendered in the first constitutes an absolute bar to the subsequent action. But where between the first case wherein judgment is rendered and the second case wherein such judgment is invoked, there is only identity of parties but there is no identity of cause of action, the judgment is conclusive in the second case, only as to those matters actually and directly controverted and determined, and not as to matters merely involved therein. This is what is termed conclusiveness of judgment.[27] Neither of these concepts of res judicata find relevant application in the case at bench. While there may be identity of subject matter (IDP property) in both cases, there is no identity of parties. The principal parties in G.R. No. 107751 were mortgagee Leticia P. Ligon, as petitioner, and the Iglesia Ni Cristo, as private respondent. The IDP, as represented by the 1971 Board of Trustees or the Tamano Group, was only made an ancillary party in G.R. No. 107751 as intervenor.[28] It was never originally a principal party thereto. It must be noted that intervention is not an independent action, but is merely collateral, accessory, or ancillary to the principal action. It is just an interlocutory proceeding dependent on or subsidiary to the case between the original parties.[29] Indeed, the IDP-Tamano Group cannot be considered a principal party in G.R. No. 107751 for purposes of applying the principle of res judicata since the contrary goes against the true import of the action of intervention as a mere subsidiary proceeding without an independent life apart from the principal action as well as the intrinsic character of the intervenor as a mere subordinate party in the main case whose right may be said to be only in aid of the right of the original party.[30] It is only in the present case, actually, where the IDP-Tamano Group became a principal party, as petitioner, with the Iglesia Ni Cristo, as private respondent. Clearly, there is no identity of parties in both cases. In this connection, although it is true that Civil Case No. Q-90-6937, which gave rise to G.R. No. 107751, was entitled, Iglesia Ni Kristo, Plaintiff v. Islamic Directorate of the Philippines, Defendant,[31] the IDP can not be considered essentially a formal party thereto for the simple reason that it was not duly represented by a legitimate Board of Trustees in that case. As a necessary consequence, Civil Case No. Q-90-6937, a case for Specific Performance with Damages, a mere action in personam, did not become final and executory insofar as the true IDP is concerned since petitioner corporation, for want of legitimate representation, was effectively deprived of its day in court in said case. Res inter alios judicatae nullum aliis praejudicium faciunt. Matters adjudged in a cause do not prejudice those who were not parties to it.[32] Elsewise put, no person (natural or juridical) shall be affected by a proceeding to which he is a stranger.[33] Granting arguendo, that IDP may be considered a principal party in Ligon, res judicata as a bar by former judgment will still not set in on the ground that the cause of action in the two cases are different. The cause of action in G.R. No. 107751 is the surrender of the owners duplicate copy of the transfer certificates of title to the rightful possessor thereof, whereas the cause of action in the present case is the validity of the Carpizo Group-INC Deed of Absolute Sale. Res Judicata in the form of conclusiveness of judgment cannot likewise apply for the reason that any mention at all in Ligon as to the validity of the disputed Carpizo Board-INC sale may only be deemed incidental to the resolution of the primary issue posed in said case which is: Who between Ligon and INC has the better right of possession over the owners duplicate copy of the TCTs covering the IDP property? G.R. No. 107751 cannot be considered determinative and conclusive on the matter of the validity of the sale for this particular issue was not the principal thrust of Ligon. To rule otherwise would be to cause grave and irreparable injustice to IDP which never gave its consent to the sale, thru a legitimate Board of Trustees. In any case, while it is true that the principle of res judicata is a fundamental component of our judicial system, it should be disregarded if its rigid application would involve the sacrifice of justice to technicality.[34] The main question though in this petition is: Did the Court of Appeals commit reversible error in setting aside that portion of the SECs Decision in SEC Case No. 4012 which declared the sale of two (2) parcels of land in Quezon City between the IDP-Carpizo Group and private respondent INC null and void? We rule in the affirmative. There can be no question as to the authority of the SEC to pass upon the issue as to who among the different contending groups is the legitimate Board of Trustees of the IDP since this is a matter properly falling within the original and exclusive jurisdiction of the SEC by virtue of Sections 3 and 5(c) of Presidential Decree No. 902-A: Section 3. The Commission shall have absolute jurisdiction, supervision and control over all corporations, partnerships or associations, who are the grantees of primary franchises and/or a license or permit issued by the government to operate in the Philippines xxx xxx. xxx xxx xxx

Section 5. In addition to the regulatory and adjudicative functions of the Securities and Exchange Commission over corporations, partnerships and other forms of associations registered with it as expressly granted under existing laws and decrees, it shall have original and exclusive jurisdiction to hear and decide cases involving: xxx xxx xxx

c) Controversies in the selection or appointment of directors, trustees, officers, or managers of such corporations, partnerships or associations. x x x.

If the SEC can declare who is the legitimate IDP Board, then by parity of reasoning, it can also declare who is not the legitimate IDP Board. This is precisely what the SEC did in SEC Case No. 4012 when it adjudged the election of the Carpizo Group to the IDP Board of Trustees to be null and void.[35] By this ruling, the SEC in effect made the unequivocal finding that the IDP-Carpizo Group is a bogus Board of Trustees. Consequently, the Carpizo Group is bereft of any authority whatsoever to bind IDP in any kind of transaction including the sale or disposition of IDP property. It must be noted that SEC Case No. 4012 is not the first case wherein the SEC had the opportunity to pass upon the status of the Carpizo Group. As far back as October 3, 1986, the SEC, in Case No. 2687,[36] in a suit between the Carpizo Group and the Abbas Group, already declared the election of the Carpizo Group (as well as the Abbas Group) to the IDP Board as null and void for being violative of the Articles of Incorporation.[37] Nothing thus becomes more settled than that the IDP-Carpizo Group with whom private respondent INC contracted is a fake Board. Premises considered, all acts carried out by the Carpizo Board, particularly the sale of the Tandang Sora property, allegedly in the name of the IDP, have to be struck down for having been done without the consent of the IDP thru a legitimate Board of Trustees. Article 1318 of the New Civil Code lays down the essential requisites of contracts: There is no contract unless the following requisites concur: (1) Consent of the contracting parties; (2) Object certain which is the subject matter of the contract; (3) Cause of the obligation which is established. All these elements must be present to constitute a valid contract. For, where even one is absent, the contract is void. As succinctly put by Tolentino, consent is essential for the existence of a contract, and where it is wanting, the contract is non-existent.[38] In this case, the IDP, owner of the subject parcels of land, never gave its consent, thru a legitimate Board of Trustees, to the disputed Deed of Absolute Sale executed in favor of INC. This is, therefore, a case not only of vitiated consent, but one where consent on the part of one of the supposed contracting parties is totally wanting. Ineluctably, the subject sale is void and produces no effect whatsoever. The Carpizo Group-INC sale is further deemed null and void ab initio because of the Carpizo Groups failure to comply with Section 40 of the Corporation Code pertaining to the disposition of all or substantially all assets of the corporation: Sec. 40. Sale or other disposition of assets. - Subject to the provisions of existing laws on illegal combinations and monopolies, a corporation may, by a majority vote of its board of directors or trustees, sell, lease, exchange, mortgage, pledge or otherwise dispose of all or substantially all of its property and assets, including its goodwill, upon terms and conditions and for such consideration, which may be money, stocks, bonds or other instruments for the payment of money or other property or consideration, as its board of directors or trustees may deem expedient, when authorized by the vote of the stockholders representing at least two-thirds (2/3) of the outstanding capital stock; or in case of non-stock corporation, by the vote of at least two-thirds (2/3) of the members, in a stockholders or members meeting duly called for the purpose. Written notice of the proposed action and of the time and place of the meeting shall be addressed to each stockholder or member at his place of residence as shown on the books of the corporation and deposited to the addressee in the post office with postage prepaid, or served personally: Provided, That any dissenting stockholder may exercise his appraisal right under the conditions provided in this Code. A sale or other disposition shall be deemed to cover substantially all the corporate property and assets if thereby the corporation would be rendered incapable of continuing the business or accomplishing the purpose for which it was incorporated. xxx xxx x x x.

The Tandang Sora property, it appears from the records, constitutes the only property of the IDP. Hence, its sale to a third-party is a sale or disposition of all the corporate property and assets of IDP falling squarely within the contemplation of the foregoing section. For the sale to be valid, the majority vote of the legitimate Board of Trustees, concurred in by the vote of at least 2/3 of the bona fide members of the corporation should have been obtained. These twin requirements were not met as the Carpizo Group which voted to sell the Tandang Sora property was a fake Board of Trustees, and those whose names and signatures were affixed by the Carpizo Group together with the sham Board Resolution authorizing the negotiation for the sale were, from all indications, not bona fide members of the IDP as they were made to appear to be. Apparently, there are only fifteen (15) official members of the petitioner corporation including the eight (8) members of the Board of Trustees.[39] All told, the disputed Deed of Absolute Sale executed by the fake Carpizo Board and private respondent INC was intrinsically void ab initio. Private respondent INC nevertheless questions the authority of the SEC to nullify the sale for being made outside of its jurisdiction, the same not being an intra-corporate dispute. The resolution of the question as to whether or not the SEC had jurisdiction to declare the subject sale null and void is rendered moot and academic by the inherent nullity of the highly dubious sale due to lack of consent of the IDP, owner of the subject property. No end of substantial justice will be served if we reverse the SECs conclusion on the matter, and remand the case to the regular courts for further litigation over an issue which is already determinable based on what we have in the records.

It is unfortunate that private respondent INC opposed the motion for intervention filed by the 1971 Board of Trustees in Civil Case No. Q90-6937, a case for Specific Performance with Damages between INC and the Carpizo Group on the subject Deed of Absolute Sale. The legitimate IDP Board could have been granted ample opportunity before the regional trial court to shed light on the true status of the Carpizo Board and settled the matter as to the validity of the sale then and there. But INC, wanting to acquire the property at all costs and threatened by the participation of the legitimate IDP Board in the civil suit, argued for the denial of the motion averring, inter alia, that the issue sought to be litigated by the movant is intra-corporate in nature and outside the jurisdiction of the regional trial court.[40] As a result, the motion for intervention was denied. When the Decision in SEC Case No. 4012, came out nullifying the sale, INC came forward, this time, quibbling over the issue that it is the regional trial court, and not the SEC, which has jurisdiction to rule on the validity of the sale. INC is here trifling with the courts. We cannot put a premium on this clever legal maneuverings of private respondent which, if countenanced, would result in a failure of justice. Furthermore, the Court observed that the INC bought the questioned property from the Carpizo Group without even seeing the owners duplicate copy of the titles covering the property. This is very strange considering that the subject lot is a large piece of real property in Quezon City worth millions, and that under the Torrens System of Registration, the minimum requirement for one to be a good faith buyer for value is that the vendee at least sees the owners duplicate copy of the title and relies upon the same.[41] The private respondent presumably knowledgeable on the aforesaid working of the Torrens System, did not take heed of this and nevertheless went through with the sale with undue haste. The unexplained eagerness of INC to buy this valuable piece of land in Quezon City without even being presented with the owners copy of the titles casts very serious doubt on the rightfulness of its position as vendee in the transaction. WHEREFORE, the petition is GRANTED. The Decision of the public respondent Court of Appeals dated October 28, 1994 in CA-G.R. SP No. 33295 is SET ASIDE. The Decision of the Securities and Exchange Commission dated July 5, 1993 in SEC Case No. 4012 is REINSTATED. The Register of Deeds of Quezon City is hereby ordered to cancel the registration of the Deed of Absolute Sale in the name of respondent Iglesia Ni Cristo, if one has already been made. If new titles have been issued in the name of Iglesia Ni Cristo, the register of Deeds is hereby ordered to cancel the same, and issue new ones in the name of petitioner Islamic Directorate of the Philippines. Petitioner corporation is ordered to return to private respondent whatever amount has been initially paid by INC as consideration for the property with legal interest, if the same was actually received by IDP. Otherwise, INC may run after Engineer Farouk Carpizo and his group for the amount of money paid. SO ORDERED.

LEGARDA VS COURT OF APPEALS ROMERO, J.: For our resolution is the motion for reconsideration of the March 18, 1991, decision of the Courts's First Division, filed by private respondents New Cathay House, Inc. (Cathay). A brief narration of facts is in order. The parties hereto entered into a lease agreement over a certain Quezon City property owned by petitioner Victoria Legarda. For some reason or another, she refused to sign the contract although respondent lessee, Cathay, made a deposit and a down payment of rentals, prompting the latter to file before the Regional Trial Court of Quezon City, Branch 94 a complaint[1] against the former for specific performance with preliminary injunction and damages. The court a quo issued the injunction. In the meantime, Legardas counsel, noted lawyer Dean Antonio Coronel, requested a 10-day extension of time to file an answer which the court granted. Atty. Coronel, however, failed to file an answer within the extended period. His client was eventually declared in default, Cathay was allowed to present evidence ex-parte, and on March 25, 1985, a judgment by default was reached by the trial court ordering Legarda to execute the lease contract in favor of, and to pay damages to, Cathay. On April 9, 1985, a copy of said decision was served on Atty. Coronel but he took no action until the judgment became final and executory. A month later, the trial court issued a writ of execution and a public auction was held where Cathays manager, Roberto V. Cabrera, Jr., as highest bidder, was awarded the property for P376,500.00 in satisfaction of the judgment debt. Consequently, a Certificate of Sale was issued by the sheriff on June 27, 1985. Upon failure of Legarda to redeem her property within the one-year redemption period, a Final Deed of Sale was issued by the sheriff on July 8, 1986, which was registered by Cabrera with the Register of Deeds three days later. Hence, Legardas Transfer Certificate of Title (TCT) No. 270814 was cancelled with the issuance of TCT No. 350892 in the name of Cabrera. Despite the lapse of over a year since the judgment by default became final and executory, Atty. Coronel made no move on behalf of his client. He did not even inform her of all these developments. When Legarda did learn of the adverse decision, she nevertheless did not lose faith in her counsel[2] and prevailed upon him to seek appropriate relief. Thus, on October 23, 1986, he filed a petition for annulment of judgment with prayer for the issuance of a writ of preliminary mandatory injunction before the Court of Appeals.[3] On November 29, 1989, the appellate court rendered a decision affirming the March 25, 1985, decision of the trial court, dismissing the petition for annulment of judgment, and holding Legarda bound by the negligence of her counsel. It considered her allegation of fraud by Cathay to be improbable, and added that there was pure and simple negligence on the part of petitioners counsel who failed to file an answer and, later, a petition for relief from judgment by default. Upon notice of the Court of Appeals decision, Atty. Coronel again neglected to protect his clients interest by failing to file a motion for reconsideration or to appeal therefrom until said decision became final on December 21, 1989. Sometime in March 1990, Legarda learned of the adverse decision of the Court of Appeals dated November 29, 1989, not from Atty. Coronel but from his secretary. She then hired a new counsel for the purpose of elevating her case to this Court. The new lawyer filed a petition for certiorari praying for the annulment of the decision of the trial and appellate courts and of the sheriffs sale, alleging, among other things, that Legarda lost in the courts below because her previous lawyer was grossly negligent and inefficient, whose omissions cannot possibly bind her because this amounted to a violation of her right to due process of law. She, therefore, asked Cathay (not Cabrera) to reconvey the subject property to her.

On March 18, 1991, a decision[4] was rendered in this case by Mr. Justice Gancayco, ruling, inter alia, as follows: (a) granting the petition; (b) nullifying the trial courts decision dated March 25, 1985, the Court of Appeals decision dated November 29, 1989, the Sheriffs Certificate of Sale dated June 27, 1985, of the property in question, and the subsequent final deed of sale covering the same property; and (c) ordering Cathay to reconvey said property to Legarda, and the Register of Deeds to cancel the registration of said property in the name of Cathay (not Cabrera) and to issue a new one in Legardas name. The Court then declared that Atty. Coronel committed, not just ordinary or simple negligence, but reckless, inexcusable and gross negligence, which deprived his client of her property without due process of law. His acts, or the lack of it, should not be allowed to bind Legarda who has been consigned to penury because her lawyer appeared to have abandoned her case not once but repeatedly. Thus, the Court ruled against tolerating such unjust enrichment of Cathay at Legardas expense, and noted that counsels lack of devotion to duty is so gross and palpable that this Court must come to the aid of his distraught client. Aggrieved by this development, Cathay filed the instant motion for reconsideration, alleging, inter alia, that reconveyance is not possible because the subject property had already been sold by its owner, Cabrera, even prior to the promulgation of said decision. By virtue of the Gancayco decision, Cathay was duty bound to return the subject property to Legarda. The impossibility of this directive is immediately apparent, for two reasons: First, Cathay neither possessed nor owned the property so it is in no position to reconvey the same; second, even if it did, ownership over the property had already been validly transferred to innocent third parties at the time of promulgation of said judgment. There is no question that the highest bidder at the public auction was Cathays manager. It has not been shown nor even alleged, however, that Roberto Cabrera had all the time been acting for or in behalf of Cathay. For all intents and purposes, Cabrera was simply a vendee whose payment effectively extinguished Legardas liability to Cathay as the judgment creditor. No proof was ever presented which would reveal that the sale occurred only on paper, with Cabrera acting as a mere conduit for Cathay. What is clear from the records is that the auction sale was conducted regularly, that a certificate of sale and, subsequently, a final deed of sale were issued to Cabrera which allowed him to consolidate his ownership over the subject property, register it and obtain a title in his own name, and sell it to Nancy Saw, an innocent purchaser for value, at a premium price. Nothing on record would demonstrate that Cathay was the beneficiary of the sale between Cabrera and Saw. Cabrera himself maintained that he was acting in his private (as distinct from his corporate) capacity[5] when he participated in the bidding. Since the decision of the Court of Appeals gained finality on December 21, 1989, the subject property has been sold and ownership thereof transferred no less than three times,viz.: (a) from Cabrera to Nancy Saw on March 21, 1990, four months after the decision of the Court of Appeals became final and executory and one year before the promulgation of the March 18, 1991, decision under reconsideration; (b) from Nancy Saw to Lily Tanlo Sy Chua on August 7, 1990, more than one year before the Court issued a temporary restraining order in connection with this case; and (c) from the spouses Victor and Lily Sy Chua to Janet Chong Luminlun on April 3, 1992. With these transfers, Cabreras TCT No. 350892 gave way to Saws TCT No. 31672, then to Chuas TCT No. 31673, and finally to Luminluns TCT No. 99143, all issued by the Register of Deeds of Quezon City on April 3, 1990, August 8, 1990, and November 24, 1993, respectively. We do not have to belabor the fact that all the successors-in-interest of Cabrera to the subject lot were transferees for value and in good faith, having relied as they did on the clean titles of their predecessors. The successive owners were each armed with their own indefeasible titles which automatically brought them under the aegis of the Torrens System. As the Court declared in Sandoval v. Court of Appeals,[6] (i)t is settled doctrine that one who deals with property registered under the Torrens system need not go beyond the same, but only has to rely on the title. He is charged with notice only of such burdens and claims as are annotated on the title.[7] In the case at bar, it is not disputed that no notice of lis pendens was ever annotated on any of the titles of the subsequent owners. And even if there were such a notice, it would not have created a lien over the property because the main office of a lien is to warn prospective buyers that the property they intend to purchase is the subject of a pending litigation. Therefore, since the property is already in the hands of Luminlun, an innocent purchaser for value, it can no longer be returned to its original owner by Cabrera, much less by Cathay itself. Another point to consider, though not raised as an issue in this case, is the fact that Cabrera was impleaded as a party-respondent only on August 12, 1991, after the promulgation of the Gancayco decision.[8] The dispositive portion itself ordered Cathay, instead of Cabrera to reconvey the property to Legarda. Cabrera was never a party to this case, either as plaintiff-appellee below or as respondent in the present action. Neither did he ever act as Cathays representative. As we held in the recent case of National Power Corporation v. NLRC, et al.,[9] (j)urisdiction over a party is acquired by his voluntary appearance or submission to the court or by the coercive process issued by the court to him, generally by service of summons.[10] In other words, until Cabrera was impleaded as party respondent and ordered to file a comment in the August 12, 1991, resolution, the Court never obtained jurisdiction over him, and to command his principal to reconvey a piece of property which used to be HIS would not only be inappropriate but would also constitute a real deprivation of ones property without due process of law. Assuming arguendo that reconveyance is possible, that Cathay and Cabrera are one and the same and that Cabreras payment redounded to the benefit of his principal, reconveyance, under the facts and evidence obtaining in this case, would still not address the issues raised herein The application of the sale price to Legardas judgment debt constituted a payment which extinguished her liability to Cathay as the party in whose favor the obligation to pay damages was established.[11] It was a payment in the sense that Cathay had to resort to a court-supervised auction sale in order to execute the judgment.[12] With the fulfillment of the judgment debtors obligation, nothing else was required to be done. Under the Gancayco ruling, the order of reconveyance was premised on the alleged gross negligence of Legardas counsel which should not be allowed to bind her as she was deprived of her property without due process of law. It is, however, basic that as long as a party was given the opportunity to defend her interests in due course, she cannot be said to have been denied due process of law, for this opportunity to be heard is the very essence of due process. The chronology of events shows that the case took its regular course in the trial and appellate courts but Legardas counsel failed to act as any ordinary counsel should have acted, his negligence every step of the way amounting to abandonment, in the words of the Gancayco decision. Yet, it cannot be denied that the proceedings which led to the filing of this case were not attended by any irregularity. The judgment by default was valid, so was the ensuing sale at public

auction. If Cabrera was adjudged highest bidder in said auction sale, it was not through any machination on his part. All of his actuations that led to the final registration of the title in his name were aboveboard, untainted by any irregularity. The fact that Cabrera is an officer of Cathay does not make him a purchaser in bad faith. His act in representing the company was never questioned nor disputed by Legarda. And while it is true that he won in the bidding, it is likewise true that said bidding was conducted by the book. There is no call to be alarmed that an official of the company emerges as the winning bidder since in some cases, the judgment creditor himself personally participates in the bidding. There is no gainsaying that Legarda is the judgment debtor here. Her property was sold at public auction to satisfy the judgment debt. She cannot claim that she was illegally deprived of her property because such deprivation was done in accordance with the rules on execution of judgments. Whether the money used to pay for said property came from the judgment creditor or its representative is not relevant. What is important is that it was purchased for value. Cabrera parted with real money at the auction. In his Sheriffs Certificate of Sale dated June 27, 1985,[13] Deputy Sheriff Angelito R. Mendoza certified, inter alia, that the highest bidder paid to the Deputy Sheriff the said amount of P376,500.00, the sale price of the levied property. If this does not constitute payment, what then is it? Had there been no real purchase and payment below, the subject property would never have been awarded to Cabrera and registered in his name, and the judgment debt would never have been satisfied. Thus, to require either Cathay or Cabrera to reconvey the property would be an unlawful intrusion into the lawful exercise of his proprietary rights over the land in question, an act which would constitute an actual denial of property without due process of law. It may be true that the subject lot could have fetched a higher price during the public auction, as Legarda claims, but the fail to betray any hint of a bid higher than Cabreras which was bypassed in his favor. Certainly, he could not help it if his bid of only P376,500.00 was the highest. Moreover, in spite of this allegedly low selling price, Legarda still failed to redeem her property within the one-year redemption period. She could not feign ignorance of said sale on account of her counsels failure to so inform her, because such auction sales comply with requirements of notice and publication under the Rules of Court. In the absence of any clear and convincing proof that such requirements were not followed, the presumption of regularity stands. Legarda also claims that she was in the United States during the redemption period, but she admits that she left the Philippines only on July 13, 1985, or sixteen days after the auction sale of June 27, 1985. Finally, she admits that her mother Ligaya represented her during her absence.[14] In short, she was not totally in the dark as to the fate of her property and she could have exercised her right of redemption if she chose to, but she did not. Neither Cathay nor Cabrera should be made to suffer for the gross negligence of Legardas counsel. If she may be said to be innocent because she was ignorant of the acts of negligence of her counsel, with more reason are respondents truly innocent. As between two parties who may lose due to the negligence or incompetence of the counsel of one, the party who was responsible for making it happen should suffer the consequences. This reflects the basic common law maxim, so succinctly stated by Justice J.B.L. Reyes, that . . . (B)etween two innocent parties, the one who made it possible for the wrong to be done should be the one to bear the resulting loss.[15] In this case, it was not respondents, Legarda, who misjudged and hired the services of the lawyer who practically abandoned her case and who continued to retain him even after his proven apathy and negligence. The Gancayco decision makes much of the fact that Legarda is now consigned to penury and, therefore, this Court must come to the aid of the distraught client. It must be remembered that this Court renders decisions, not on the basis of emotions but on its sound judgment, applying the relevant, appropriate law. Much as it may pity Legarda, or any losing litigant for that matter, it cannot play the role of a knight in shining armor coming to the aid of someone, who through her weakness, ignorance or misjudgment may have been bested in a legal joust which complied with all the rules of legal proceedings. In Vales v. Villa,[16] this Court warned against the danger of jumping to the aid of a litigant who commits serious error of judgment resulting in his own loss: x x x Courts operate not because one person has been defeated or overcome by another, but because he has been defeated or overcome illegally. Men may do foolish things, make ridiculous contracts, use miserable judgment, and lose money by them - indeed, all they have in the world; but not for that alone can the law intervene and restore. There must be, in addition, a violation of law, the commission of what the law knows as an actionable wrong, before the courts are authorized to lay hold of the situation and remedy it." Respondents should not be penalized for Legardas mistake. If the subject property was at all sold, it was only after the decisions of the trial and appellate courts had gained finality. These twin judgments, which were nullified by the Gancayco decision, should be respected and allowed to stand by this Court for having become final and executory. A judgment may be broadly defined as the decision or sentence of the law given by a court or other tribunal as the result of proceedings instituted therein.[17] It is a judicial act which settles the issues, fixes the rights and liabilities of the parties, and determines the proceeding, and it is regarded as the sentence of the law pronounced by the court on the action or question before it.[18] In the case at bar, the trial courts judgment was based on Cathays evidence after Legarda was declared in default. Damages were duly awarded to Cathay, not whimsically, but upon proof of its entitlement thereto. The issue of whether the plaintiff (Cathay) deserved to recover damages because of the defendants (Legardas) refusal to honor their lease agreement was resolved. Consequently, the right of Cathay to be vindicated for such breach and the liability incurred by Legarda in the process were determined. This judgment became final when she failed to avail of remedies available to her, such as filing a motion for reconsideration or appealing the case. At the time, the issues raised in the complaint had already been determined and disposed of by the trial court.[19] This is the stage of finality which judgments must at one point or another reach. In our jurisdiction, a judgment becomes ipso facto final when no appeal is perfected or the reglementary period to appeal therefrom expires. The necessity of giving finality to judgments that are not void is self-evident. The interests of society impose it. The opposite view might make litigations more unendurable than the wrongs (they are) intended to redress. It would create doubt, real or imaginary, and controversy would constantly arise as to what the judgment or order was. Public policy and sound practice demand that, at the risk of occasional errors, judgments of courts should become final at some definite date fixed by law. The very object for which courts were instituted was to put an end to controversies. [20] When judgments of lower courts gain finality, they, too, become

inviolable, impervious to modification. They may, then, no longer be reviewed, or in any way modified directly or indirectly, by a higher court, not even by the Supreme Court.[21] In other words, once a judgment becomes final, the only errors that may be corrected are those which are clerical.[22] From the foregoing precedents, it is readily apparent that the real issue that must be resolved in this motion for reconsideration is the alleged illegality of the final judgments of the trial and appellate courts. Void judgments may be classified into two groups: those rendered by a court without jurisdiction to do so and those obtained by fraud or collusion.[23] This case must be tested in light of the guidelines governing the latter class of judgments. In this regard, an action to annul a judgment on the ground of fraud will not lie unless the fraud is extrinsic or collateral and facts upon which it is based (have) not been controverted or resolved in the case where (the) judgment was rendered. [24] Where is the fraud in the case at bar? Was Legarda unlawfully barred from the proceedings below? Did her counsel sell her out to the opponent? It must be noted that, aside from the fact that no extrinsic fraud attended the trial and resolution of this case, the jurisdiction of the court a quo over the parties and the subject matter was never raised as an issue by Legarda. Such being the case, the decision of the trial court cannot be nullified. Errors of judgment, if any, can only be reviewed on appeal, failing which the decision becomes final and executory, valid and binding upon the parties in the case and their successors in interest.[25] At this juncture, it must be pointed out that while Legarda went to the Court of Appeals claiming precisely that the trial courts decision was fraudulently obtained, she grounded her petition before the Supreme Court upon her estranged counsels negligence. This could only imply that at the time she filed her petition for annulment of judgment, she entertained no notion that Atty. Coronel was being remiss in his duties. It was only after the appellate courts decision had become final and executory, a writ of execution issued, the property auctioned off then sold to an innocent purchasers for value, that she began to protest the alleged negligence of her attorney. In most cases, this would have been dismissed outright for being dilatory and appearing as an act of desperation on the part of a vanquished litigant. The Gancayco ruling, unfortunately, ruled otherwise. Fortunately, we now have an opportunity to rectify a grave error of the past. WHEREFORE, the Motion for Reconsideration of respondent New Cathay House, Inc. is hereby GRANTED. Consequently, the decision dated March 18, 1991, of the Courts First Division is VACATED and SET ASIDE. A new judgment is hereby entered DISMISSING the instant petition for review and AFFIRMING the November 29, 1989, decision of the Court of Appeals in CA-G.R. No. SP-10487. Costs against petitioner Victoria Legarda. SO ORDERED.

CHUA VS SORIANO USTRIA-MARTINEZ, J.: Before the Court is a Petition for Review on Certiorari under Rule 45 of the Rules of Court assailing the Decision1dated September 21, 2001 of the Court of Appeals (CA) in CA-G.R. CV No. 56568 which affirmed with modification the Decision2 dated July 10, 1997 of the Regional Trial Court, Branch 81, Quezon City (RTC) in Civil Case No. Q-90-6439. The factual background of the case is as follows: Msgr. Virgilio C. Soriano (Soriano) owned a 1,600 square meter parcel of land located in Barangay Banlat, Quezon City, covered by Transfer Certificate of Title (TCT) No. 363471 of the Registry of Deeds of Quezon City. Sometime in the early months of 1988, Sorianos first cousin and godson, Emmanuel C. Celestino, Sr. (Celestino) asked Soriano to lend him TCT No. 363471 as a security for a loan to be used in the business operation of Celestinos company, Digital Philippines, Inc.3 Acceding to Celestinos request, Soriano executed on March 29, 1988 a Special Power of Attorney (SPA) authorizing Celestino to mortgage said property.4 Then came the June 11, 1988 fire that gutted a portion of the Quezon City Hall and destroyed in the process the original copy of TCT No. 363471 on file with the Registry of Deeds of Quezon City. On August 22, 1988, Soriano executed a SPA authorizing Celestino and one Carlito Castro to initiate administrative reconstitution proceedings of TCT No. 363471.5 On April 17, 1990, the reconstituted title, TCT No. RT-3611 (363471) PR 1686, was issued.6 During the pendency of the administrative reconstitution proceedings, Soriano asked Celestino whether there was any truth to the spreading rumor that he had already sold the subject property.7 Celestino denied the rumor but informed Soriano that the subject property was mortgaged with a foreign bank.8 Dissatisfied with Celestino's explanation, Soriano made inquiries with the Registry of Deeds of Quezon City9 and discovered, to his dismay, that TCT No. 363471 had been canceled by TCT No. 1451410 in the name of spouses Emmanuel and Edna Chua and spouses Manuel and Maria Chua (Chuas). By virtue of a SPA11 dated March 9, 1989 with Soriano's purported signature, Celestino sold to the Chuas the property in an Absolute Deed of Sale12 dated July 4, 1989 forP500,000.00.

Claiming that his signature in the SPA is a forgery, Soriano filed on August 20, 1990 a complaint against Celestino and the Chuas for annulment of deed of sale and special power of attorney, cancellation of title and reconveyance with damages.13 The defense of Celestino is that he was duly authorized to sell the property14 while the Chuas contend that they are purchasers in good faith since they bought the property from Celestino by virtue of a SPA which was duly inscribed and annotated on the owner's duplicate of the TCT and the tax declaration and that they have duly inspected the property before purchasing it.15 Soriano died during the pendency of the trial.16 He was substituted by his sister, Florencia Celestino Soriano, also known as Sister Mary Virgilia Celestino Soriano (Sis. Soriano).17 On July 10, 1997, the RTC rendered its Decision18 in favor of Soriano, the dispositive portion of which reads: WHEREFORE, premises considered, judgment is hereby rendered as follows: 1. Declaring the special power of attorney dated March 19, 1985 and the Deed of Sale dated July 4, 1989 as without legal force and effect; 2. Declaring Transfer Certificate of Title No. 14514 in the name of the defendants Chuas as null and void; 3. Directing defendants Chuas to reconvey the subject property to plaintiff Soriano. 4. Ordering defendant Celestino to pay to the plaintiff the amounts of P100,000.00 as moral damages,P20,000.00 as attorneys fees and P10,000.00 as litigation expenses; 5. Ordering defendant Celestino to pay to the defendants Chuas the amount of P500,000.00 plus interest at the legal rate from July 4, 1989 until fully paid; 6. Ordering defendant Celestino to pay the defendants Chuas the amounts of P20,000.00 as attorneys fees and P10,000.00 as litigation expenses. With costs against defendant Celestino. SO ORDERED.19 The RTC held that Soriano's purported signature in the SPA dated March 9, 1989 is a forgery based on the opinion of expert witness Arcadio A. Ramos, Chief of the Questioned Documents Division of the National Bureau of Investigation (NBI), that a comparison of Soriano's sample signature and the one appearing on the SPA dated March 9, 1989 revealed that they were "not written by one and the same person;"20 that the Chuas are not purchasers in good faith since they did not personally verify the title of the subject property but relied only upon its tax declaration; that the Chuas were placed on guard to ascertain the authenticity of the authority of Celestino since they were not dealing with Soriano, the registered owner. Dissatisfied, Celestino and the Chuas filed separate appeals with the CA, docketed singly as CA-G.R. No. 56568.21 On September 21, 2001, the CA rendered its Decision,22 the dispositive portion of which reads: WHEREFORE, for the lack of merit, this Court DISMISSES the appeal and AFFIRMS the appealed Decision except paragraph number 3 of the dispositive part which is hereby completely DELETED and replaced with the following: 3. The Register of Deeds of Quezon City is ordered to reinstate and reactivate Transfer Certificate of Title No. RT-3611 (363471) PR-1686 in the name of appellee Soriano. SO ORDERED.23 The CA held that that there was no cogent reason to set aside the RTCs reliance on the testimony of the expert witness since there is no contrary evidence to rebut the same. The CA also agreed with the RTCs findings that the Chuas are not purchasers in good faith since they failed to determine the veracity of Celestinos alleged authority to sell the property. No appeal was filed by Celestino. The Chuas filed the present petition anchored on the following grounds: THE HONORABLE COURT OF APPEALS HAS DECIDED A QUESTION IN A WAY NOT PROBABLY IN ACCORD WITH THE LAW AND WITH THE DECISIONS OF THE HONORABLE SUPREME COURT; AND

THE HONORABLE COURT OF APPEALS HAS SO FAR DEPARTED FROM THE ACCEPTED AND USUAL COURSE OF JUDICIAL PROCEEDINGS.24 The Chuas argue that they are purchasers in good faith since they dealt with Celestino who had in his possession the owner's duplicate title and the SPA dated March 9, 1989 with Sorianos purported signature; that the SPA was inscribed and annotated in the owner's duplicate title; that since verification with the original title in the Registry of Deeds of Quezon City was not possible, they checked the tax declaration of the property; that the SPA dated March 9, 1989 was duly annotated in the tax declaration; that they inspected the property and found three squatter occupants; that they paid off the two squatters and appointed the third squatter occupant as caretaker of the property; that Soriano was responsible for his predicament since he entrusted the owners duplicate title to Celestino; that the fact that Sorianos purported signature in the SPA dated March 9, 1989 was later declared by the NBI handwriting expert as a forgery is of no moment since they are not handwriting experts and they had the right to assume that the SPA was perfectly legal for otherwise, it could not have been annotated at the back of the title. Sis. Soriano, on the other hand, avers that the Chuas are not purchasers in good faith since they failed to check the veracity of Celestino's alleged authority to sell the property; that had the Chuas conferred with Soriano about the sale transaction proposed by Celestino, they would have readily discovered the fraud being then hatched by Celestino. Emmanuel Chua died during the pendency of the present petition.25 He was substituted by his surviving spouse and co-petitioner, Edna L. Chua, and his children, Erlyn, Ericson, Emmanuel and Elise, all surnamed Chua.26 The sole issue to be resolved in the present petition is this: whether or not the Chuas are purchasers in good faith. The question of whether or not a person is a purchaser in good faith is a factual matter that will generally be not delved into by this Court, since only questions of law may be raised in petitions for review.27 The established rule is that in the exercise of the Supreme Courts power of review, the Court, not being a trier of facts, does not normally embark on a re-examination of the evidence presented by the contending parties during the trial of the case considering that the findings of facts of the CA are conclusive and binding on the Court.28This rule, however, has several well-recognized exceptions: (1) when the findings are grounded entirely on speculation, surmises or conjectures; (2) when the inference made is manifestly mistaken, absurd or impossible; (3) when there is grave abuse of discretion; (4) when the judgment is based on a misapprehension of facts;(5) when the findings of fact are conflicting; (6) when in making its findings the Court of Appeals went beyond the issues of the case, or its findings are contrary to the admissions of both the appellant and the appellee; (7) when the findings are contrary to the trial court; (8) when the findings are conclusions without citation of specific evidence on which they are based; (9) when the facts set forth in the petition as well as in the petitioners main and reply briefs are not disputed by the respondent; (10) when the findings of fact are premised on the supposed absence of evidence and contradicted by the evidence on record; and (11) when the Court of Appeals manifestly overlooked certain relevant facts not disputed by the parties, which, if properly considered, would justify a different conclusion.29 Exception (4) is present in the instant case. A purchaser in good faith is one who buys property without notice that some other person has a right to or interest in such property and pays its fair price before he has notice of the adverse claims and interest of another person in the same property. The honesty of intention which constitutes good faith implies a freedom from knowledge of circumstances which ought to put a person on inquiry.30 As the Court enunciated in Lim v. Chuatoco:31 x x x good faith consists in the possessors belief that the person from whom he received the thing was the owner of the same and could convey his title. Good faith, while it is always to be presumed in the absence of proof to the contrary, requires a well founded belief that the person from whom title was received was himself the owner of the land, with the right to convey it. There is good faith where there is an honest intention to abstain from taking any unconscientious advantage from another. Otherwise stated, good faith is the opposite of fraud and it refers to the state of mind which is manifested by the acts of the individual concerned.32 Consistently, this Court has ruled that every person dealing with registered land may safely rely on the correctness of the certificate of title issued therefor and the law will in no way oblige him to go beyond the certificate to determine the condition of the property. Where there is nothing in the certificate of title to indicate any cloud or vice in the ownership of the property, or any encumbrance thereon, the purchaser is not required to explore further than what the Torrens Title upon its face indicates in quest for any hidden defects or inchoate right that may subsequently defeat his right thereto.33 However, when a person who deals with registered land through someone who is not the registered owner, he is expected to look behind the certificate of title and examine all the factual circumstances, in order to determine if the vendor has the capacity to transfer any interest in the land.34 He has the duty to ascertain the identity of the person with whom he is dealing and the latters legal authority to convey.35 The law "requires a higher degree of prudence from one who buys from a person who is not the registered owner, although the land object of the transaction is registered. While one who buys from the registered owner does not need to look behind the certificate of title, 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."36 The strength of buyers inquiry on the sellers capacity or legal authority to sell depends on the proof of capacity of the seller. If the proof of capacity consists of a special power of attorney duly notarized, mere inspection of the face of such public document already constitutes sufficient

inquiry. If no such special power of attorney is provided or there is one but there appear flaws in its notarial acknowledgment, mere inspection of the document will not do; the buyer must show that his investigation went beyond the document and into the circumstances of its execution.37 In the present case, the Chuas were dealing with Celestino, Sorianos attorney-in-fact, who presented Sorianos duplicate title, a SPA dated March 9, 1989 with Sorianos purported signature, and tax declaration. An examination of the assailed SPA shows that it is valid and regular on its face. It contains a notarial seal.38 A notarial seal is a mark, image or impression on a document which would indicate that the notary public has officially signed it.39 The long-standing rule is that documents acknowledged before a notary public have the evidentiary weight with respect to their due execution and regularity.40 The assailed SPA is a notarized document and therefore, presumed to be valid and duly executed. Thus, the reliance by the Chuas on the notarial acknowledgment found in the duly notarized SPA presented by Celestino is sufficient evidence of good faith. The Chuas need not prove anything more for it is already the function of the notarial acknowledgment to establish the appearance of the parties to the document, its due execution and authenticity.41 Moreover, the SPA was accepted by the Register of Deeds. It was registered with the Registry of Deeds of Quezon City42 and inscribed and annotated in the owner's duplicate title,43 further bolstering the appearance of due execution and regularity. The fact that Soriano's purported signature in the SPA dated March 9, 1989 was declared to be a forgery does not alter the Chuas status as purchasers in good faith. The Court's recent pronouncements in Bautista v. Silva44 are enlightening to quote: When the document under scrutiny is a special power of attorney that is duly notarized, we know it to be a public document where the notarial acknowledgment is prima facie evidence of the fact of its due execution. A purchaser presented with such a document would have no choice between knowing and finding out whether a forger lurks beneath the signature on it. The notarial acknowledgment has removed the choice from him and replaced it with a presumption sanctioned by law that the affiant appeared before the notary public and acknowledged that he executed the document, understood its import and signed it. In reality, he is deprived of such choice not because he is incapable of knowing and finding out but because, under our notarial system, he has been given the luxury of merely relying on the presumption of regularity of a duly notarized SPA. And he cannot be faulted for that because it is precisely that fiction of regularity which holds together commercial transactions across borders and time.45 Thus, the fact that Sorianos signature in the SPA dated March 9, 1989 was subsequently declared by the trial court to have been falsified would not revoke the title subsequently issued title in favor of the Chuas. With the property in question having already passed to the hands of purchasers in good faith, it is now of no moment that some irregularity attended the issuance of the SPA, consistent with our pronouncement in Heirs of Spouses Benito Gavino and Juana Euste v. Court of Appeals,46 to wit: x x x, the general rule that the direct result of a previous void contract cannot be valid, is inapplicable in this case as it will directly contravene the Torrens system of registration. Where innocent third persons, relying on the correctness of the certificate of title thus issued, acquire rights over the property, the court cannot disregard such rights and order the cancellation of the certificate. The effect of such outright cancellation will be to impair public confidence in the certificate of title. The sanctity of the Torrens system must be preserved; otherwise, everyone dealing with the property registered under the system will have to inquire in every instance as to whether the title had been regularly or irregularly issued, contrary to the evident purpose of the law.47 Being purchasers in good faith, the Chuas already acquired valid title to the property. A purchaser in good faith holds an indefeasible title to the property and he is entitled to the protection of the law. Accordingly, TCT No. 14514 issued in the name of the Chuas is valid. The amount of P500,000.00, representing the purchase price in the Absolute Deed of Sale48 dated July 4, 1989, which the RTC directed Celestino to pay to the Chuas should instead be paid to Soriano as part of the actual damages awarded to him. Such amount shall earn interest rate of 6% from August 20, 1990, the time of the filing of the complaint until its full payment before finality of judgment. After the judgment becomes final and executory until the obligation is satisfied, the amount due shall earn interest at 12% per year, the interim period being deemed equivalent to a forbearance of credit.49 For the Court to uphold the effects of a SPA that is rooted in falsity may be disconcerting. Yet whatever sympathies may be judicially appreciated for the deceived party must be balanced in deference to the protection afforded by law to the purchaser in good faith. If such innocence or good faith is established by the evidence, or insufficiently rebutted by the disputant, then the corresponding duty of the Court is simply to affirm the rights of the purchaser in good faith. It is mischief at worse, and error at least, for a court to misread or inflate the facts to justify a ruling for the defrauded party, no matter how wronged he or she may be.50 WHEREFORE, the petition is GRANTED. Petitioners are hereby declared purchasers in good faith. Accordingly, the Decision of the Court of Appeals dated September 21, 2001 in CA-G.R. CV No. 56568 is PARTLY REVERSEDand SET ASIDE insofar as it affirms the Decision of the Regional Trial Court, Branch 81, Quezon City dated July 10, 1997 in Civil Case No. Q-90-6439 finding the Chuas as purchasers in bad faith. The Decision dated July 10, 1997 of the Regional Trial Court, Branch 81, Quezon City (RTC) in Civil Case No. Q-90-6439 is MODIFIED to read as follows:

1. Declaring the special power of attorney dated March 9, 1985 and the Deed of Sale dated July 4, 1989 and the Transfer Certificate of Title No. 14514 in the name of the defendants Chuas as valid; 2. Ordering Celestino to pay plaintiff the amount of P500,000.00 as actual damages, with interest rate of 6% p.a. computed from the time of the filing of the complaint until its full payment before finality of judgment; thereafter, if the amount adjudged remains unpaid, the interest rate shall be 12% p.a. computed from the time the judgment becomes final and executory until fully satisfied; 3. Ordering defendant Celestino to pay to the plaintiff the amounts of P100,000.00 as moral damages,P20,000.00 as attorneys fees and P10,000.00 as litigation expenses; With costs against defendant Celestino. SO ORDERED.

REAL ESTATE MORTGAGE HOME BANKERS SAVINGS VS CA AUSTRIA-MARTINEZ, J.: Before us is a petition for review on certiorari under Rule 45 of the Rules of Court seeking to annul the Decision[1] of the Court of Appeals (CA) dated November 28, 1996 in CA-G.R. SP No. 40892 and its Resolution dated February 19, 1997 denying petitioners motion for reconsideration. Each of private respondents entered into separate contracts to sell with TransAmerican Sales and Exposition (TransAmerican) through the latters Owner/General Manager, Engr. Jesus Garcia, involving certain portions of land covered by Transfer Certificate of Title (TCT) No. 19155, located at No. 45 Gen. Lim Street, Heroes Hill, Quezon City, together with one unit three-storey townhouse to be built on each portion, as follows: Respondent Pablo N. Arevalo purchased the portion of land denominated as Unit No. 5[2] for the amount of P750,000.00 on August 21, 1988 and had already fully paid the purchase price on September 3, 1988; Respondent Alfredo Lim purchased the portion of land denominated as Unit No. 1[3] for the amount of P800,000.00 on December 22, 1988 and fully paid the same upon execution of the agreement on the same day; Respondent Francisco A. Uy purchased the portion of land denominated as Unit No. 6[4] on October 29, 1988 in the amount of P800,000.00 payable in installments and had allegedly made a total payment of P581,507.41. He ordered to stop the payment of all [postdated] checks from September 1990 to November 1995 on the ground of non-completion of his unit and had later learned of the foreclosure of the property; Respondent spouses Leandro A. Soriano, Jr. and Lilian Soriano purchased the portion of land denominated as Unit No. 3[5] on February 15, 1990 in the amount of P1,600,000.00 and had allegedly made a payment of P669,960.00. They had stopped paying because of non-completion of the project and had later learned of the foreclosure of the property; Respondents Alfredo Lim and Santos Lim purchased the portion of land denominated as Unit No. 7[6] for P700,000.00 on October 1988 and had been fully paid as of March 18, 1989; Santos Lim subsequently sold and assigned his share of the property to private respondent Felisa Chi Lim on May 12, 1989. It is stipulated in their respective contracts that their individual townhouses will be fully completed and constructed as per plans and specifications and the respective titles thereto shall be delivered and transferred to private respondents free from all liens and encumbrances upon their full payment of the purchase price. However, despite repeated demands, Garcia/TransAmerican failed to comply with their undertakings. On May 30, 1989, Engr. Garcia and his wife Lorelie Garcia obtained from petitioner Home Bankers Savings and Trust Company (formerly Home Savings Bank and Trust Company) a loan in the amount of P4,000,000.00 and without the prior approval of the Housing and Land Use Regulatory Board (HLURB), the spouses mortgaged[7] eight lots covered by TCT Nos. 3349 to 3356 as collateral. Petitioner registered its mortgage on these titles without any other encumbrance or lien annotated therein. The proceeds of the loan were intended for the development of the lots into an eight-unit townhouse project. However, five out of these eight titles turned out to be private respondents townhouses subject of the contracts to sell with Garcia/TransAmerican. When the loan became due, Garcia failed to pay his obligation to petitioner. Consequently, petitioner instituted an extrajudicial foreclosure[8] on the subject lots and being the highest bidder in the public auction, a certificate of sale[9] in its favor was issued by the sheriff on February 26, 1990. Subsequently, the sheriffs certificate of sale was registered and annotated on the titles of the subject lots in the Register of Deeds of Quezon City.

On November 8, 1990, private respondents filed a complaint with the Office of Appeals, Adjudication and Legal Affairs (OAALA), HLURB, against Garcia/TransAmerican as seller/developer of the property and petitioner, as indispensable party, for non-delivery of titles and non-completion of the subdivision project.[10] They prayed for the completion of the units, annulment of the mortgage in favor of petitioner, release of the mortgage on the lots with fully paid owners and delivery of their titles, and for petitioner to compute individual loan values of amortizing respondents and to accept payments from them and damages. Petitioner filed its Answer contending that private respondents have no cause of action against it; that at the time of the loan application and execution of the promissory note and real estate mortgage by Garcia, there were no known individual buyers of the subject land nor annotation of any contracts, liens or encumbrances of third persons on the titles of the subject lots; that the loan was granted and released without notifying HLURB as it was not necessary. Private respondents filed their Reply and a motion for the judgment on the pleadings. Petitioner did not file a rejoinder. Private respondents filed a manifestation reiterating for a judgment on their pleadings and asked that the reliefs prayed for be rendered as far as petitioner was concerned. Upon motion of private respondents, the case against Garcia/TransAmerican was archived for failure to serve summons on him/it despite efforts to locate his whereabouts or its office. The case was then considered submitted for decision. On August 16, 1991, OAALA rendered its Decision,[11] the dispositive portion of which reads: WHEREFORE, Judgment is hereby rendered as follows: 1. Declaring the mortgage executed by and between respondents Engr. Jesus Garcia/TransAmerican Sales and Exposition and Home Bankers Savings and Trust Company (formerly Home Savings Bank and Trust Company) to be unenforceable as against all the complainants; 2. Ordering the Register of Deeds of Quezon City to cancel the annotations of the mortgage indebtedness between respondents Engr. Jesus Garcia and Home Bankers Savings and Trust Company (formerly Home Savings Bank and Trust Company); 3. Ordering, likewise the Register of Deeds of Quezon City to cancel the annotation of the Certificate of Sale in favor of the respondent Home Bankers Savings and Trust Company on the following Transfer Certificates of Title to wit: 1) TCT No. 3350 2) TCT No. 3351 3) TCT No. 3352 4) TCT No. 3354 5) TCT No. 3356 4. Ordering respondent Home Bankers Savings and Trust Company (formerly Home Savings Bank and Trust Company) to: 4.1. AS TO THE FIRST CAUSE OF ACTION Deliver to Complainant Pablo N. Arevalo TCT No. 3352 free from all liens and encumbrances. 4.2. AS TO THE SECOND CAUSE OF ACTION Deliver to Complainant Alfredo Lim TCT No. 3356 free from all liens and encumbrances. 4.3. AS TO THE THIRD CAUSE OF ACTION To compute and/or determine the loan value of complainant Francisco A. Uy who was not able to complete or make full payment and to accept payment and/or receive amortization from said complainant Francisco A. Uy and upon full payment to deliver TCT No. 3351 free from all liens and encumbrances. 4.4. AS TO THE FOURTH CAUSE OF ACTION To compute and/or determine the loan value of Complainant Spouses Leandro A. Soriano, Jr. and Lilian Soriano who were not able to complete or make full payment and to accept and/or receive amortization from said Complainants Soriano and upon full payment to deliver TCT No. 3354 free from all liens and encumbrances. 4.5. AS TO THE FIFTH CAUSE OF ACTION Deliver to complainant Alfredo Lim and Felisa Chi Lim TCT No. 3350 free from all liens and encumbrances. without prejudice to its right to require respondent Engr. Jesus Garcia/TransAmerican to constitute new collaterals in lieu of the said titles sufficient in value to cover the mortgage obligation.[12] Petitioner filed an appeal with the Board of Commissioners of the HLURB which dismissed the same in a decision dated June 15, 1992.[13] Petitioner then elevated the case to the Office of the President which rendered a decision dated June 30, 1995[14] dismissing the appeal

and affirming the June 15, 1992 decision of the HLURB. Petitioners motion for reconsideration was also denied in a Resolution dated May 7, 1996.[15] Petitioner filed a petition for review with the CA which, in the herein assailed decision dated November 28, 1996, denied the petition and affirmed the decision of the Office of the President. The CA applied the case of Union Bank of the Philippines vs. HLURB, et al.,[16] where it was held that the act of a subdivision developer of mortgaging the subdivision without the knowledge and consent of a unit buyer and without the approval of the National Housing Authority (NHA, now HLURB) is violative of Section 18 of P.D. No. 957 thus, falling under the exclusive jurisdiction of HLURB. The CA upheld the findings of the OAALA, HLURB that private respondents had already entered into separate contracts to sell with TransAmerican as early as 1988 while it was only in 1989 that spouses Garcia applied for a loan with petitioner and executed a mortgage contract over the subject lots; that the proceeds of the loan were purposely intended for the development of a property which was the same property subject of the contracts to sell; that despite the contracts to sell, Garcia/TransAmerican did not apprise petitioner of the existence of these contracts nor did petitioner exhaust any effort to inquire into their existence since petitioner merely relied on the purported clean reconstituted titles in the name of Garcia; that the mortgage of the subject lots without the consent of the buyers and the authorization of the HLURB is a clear violation of P.D. No. 957; that the mortgage contract is void and unenforceable against private respondents. Petitioners motion for reconsideration was denied by the CA in its Resolution dated February 19, 1997.[17] Petitioner is now before us raising the following grounds in support of its petition: A. THE OFFICE OF THE PRESIDENT ERRED IN RULING THAT THE HLURB HAS JURISDICTION TO NULLIFY OR DECLARE UNENFORCEABLE THE REAL ESTATE MORTGAGE VALIDLY CONSTITUTED BY THE OWNER. B. ASSUMING ARGUENDO THAT THE HLURB HAS JURISDICTION, RESPONDENT COURT MANIFESTLY ERRED IN FINDING THE REAL ESTATE MORTGAGE IN FAVOR OF HOME AS INVALID AND UNENFORCEABLE AGAINST RESPONDENTS. C. IN THE EVENT THAT THE DECISION OF THE RESPONDENT COURT FINDING THE REAL ESTATE MORTGAGE IN FAVOR OF HOME AS INVALID AND UNENFORCEABLE AGAINST RESPONDENTS IS UPHELD, THE UNREGISTERED CONTRACTS TO SELL IN FAVOR OF RESPONDENTS SHOULD ALSO BE HELD VALID ONLY AS TO THE PARTIES THERETO BUT UNENFORCEABLE AGAINST PETITIONER. Private respondents filed their Comment and petitioner filed its Reply thereto. In a Resolution dated February 23, 2004, we gave due course to the petition and required the parties to submit their respective memoranda which they complied with. The petition is devoid of merit. Notably, the issues raised are mere rehash of the issues already passed upon by the HLURB, the Office of the President and the CA which we uphold as we find no reversible errors committed. Petitioner claims that HLURB has no power to declare the mortgage contract over real property executed between a real estate developer and petitioner, a banking institution, void or unenforceable, as it is properly within the jurisdiction of the Regional Trial Court. Petitioner asserts that being a mortgagee of the subject lots and a purchaser in good faith, it is not a project owner, developer, or dealer contemplated under P.D. No. 1344, the law which expanded the jurisdiction of the NHA; and that since there is no seller-buyer relationship existing between it and private respondents, HLURB has no jurisdiction to rule on the validity of the mortgage and to annul foreclosure proceedings. The argument is untenable. The CA did not err in affirming the decision of the Office of the President that HLURB has jurisdiction to declare invalid the mortgage contract executed between Garcia/TransAmerican and petitioner over the subject lots insofar as private respondents are concerned. It correctly relied on Union Bank of the Philippines vs. HLURB, et al.[18]where we squarely ruled on the question of HLURBs jurisdiction to hear and decide a condominium buyers complaint for: (a) annulment of a real estate mortgage constituted by the project owner without the consent of the buyer and without the prior written approval of the NHA; (b) annulment of the foreclosure sale; and (c) annulment of the condominium certificate of title that was issued to the highest bidder at the foreclosure sale, thus: . . . The issue in HLURB Case No. REM-062689-4077 is the validity of the real estate mortgage of Davids condominium unit that FRDC executed in favor of the Union Bank and Far East Bank without prior approval of the National Housing Authority and the legality of the title which the mortgage banks acquired as highest bidder therefore in the extrajudicial foreclosure sale. The applicable provisions of P.D. No. 957, otherwise known as The Subdivision and Condominium Buyers Protective Decree are quoted hereunder as follows: Sec. 3. NATIONAL HOUSING AUTHORITY. The National Housing Authority shall have exclusive jurisdiction to regulate the real estate trade and business in accordance with the provisions of this Decree. Section 18. Mortgages No mortgage on any unit or lot shall be made by the owner or developer without prior written approval of the authority. Such approval shall not be granted unless it is shown that the proceeds of the mortgage loan shall be used for the development of the condominium or subdivision project and effective measures have been provided to ensure such utilization. The loan value of each lot or unit covered by the mortgage shall be determined and the buyer thereof if any shall be notified before the release of the loan. The buyer may, at his option, pay his installment for the lot or unit directly to the mortgagee who shall apply the payments to the corresponding mortgage indebtedness

secured by the particular lot or unit being paid for, with a view to enabling said buyer to obtain title over the lot or unit promptly after full payment thereof. P.D. No. 1344 of April 2, 1978 expanded the jurisdiction of the National Housing Authority to include the following: Sec. 1. In the exercise of its function to regulate the real estate trade and business and in addition to its powers provided for in Presidential Decree No. 957, the National Housing Authority shall have exclusive jurisdiction to hear and decide cases of the following nature: A. B. C. Unsound real estate business practices; Claims involving refund and any other claims filed by subdivision lot or condominium unit buyer against the project owner, developer, dealer, broker or salesman; and Cases involving specific performance of contractual and statutory obligations filed by buyers of subdivision lot or condominium unit against the owner, developer, broker or salesman.

On February 7, 1981, Executive Order No. 648 transferred the regulatory and quasi-judicial functions of the NHA to the Human Settlements Regulatory Commission. Sec. 8. TRANSFER OF FUNCTIONS. The regulatory functions of the National Housing Authority pursuant to Presidential Decree Nos. 957, 1216, 1344 and other related laws are hereby transferred to the Commission, together with such applicable personnel, appropriation, records, equipment and property necessary for the enforcement and implementation of such functions. Among these regulatory functions are: 1. Regulation of the real estate trade and business: ... 7. Approval of mortgage on any subdivision lot or condominium unit made by the owner or developer; ... 11. Hear and decide cases on unsound real estate business practices; claims involving refund filed against project owners, developers, dealers, brokers, or salesmen; and cases of specific performance. Executive Order No. 90 dated December 17, 1986 changed the name of the Human Settlements Regulatory Commission to Housing and Land Use Regulatory Board (HLURB). Clearly, FRDCs act of mortgaging the condominium project to Bancom and FEBTC, without the knowledge and consent of David as buyer of a unit therein, and without the approval of the NHA (now HLURB) as required by P.D. No. 957, was not only an unsound real estate business practice but also highly prejudicial to the buyer. David, who has a cause of action for annulment of the mortgage, the mortgage foreclosure sale, and the condominium certificate of title that was issued to the UBP and FEBTC as the highest bidders at the sale. The case falls within the exclusive jurisdiction of the NHA (now HLURB) as provided in P.D. No. 957 of 1976 and P.D. No. 1344 of 1978. ... We hold that the jurisdiction of the HLURB to regulate the real estate trade is broad enough to include jurisdiction over complaints for specific performance of the sale, or annulment of the mortgage, of a condominium unit, with damages.[19] Petitioner avers that the Union Bank ruling is not applicable in its case, since it had no knowledge of any buyer of the subject lots at the time the mortgage was constituted; that there was no construction in the subject lots at the time petitioner accepted the same as collateral; that the title to the subject property was still in the process of being reconstituted and the loan was in fact meant for the development of the subject lots into an eight-unit townhouse project. We are not persuaded. Contrary to petitioners claim that there were no buyers of the subject lots at the time of the constitution of the mortgage, records show that private respondents Arevalo, Uy, Alfredo Lim and Santos Lim had entered into contracts to sell with Garcia/TransAmerican as early as 1988 for their respective lots. In fact, they, except for Uy, had already fully paid their townhouse units in 1988 without the certificates of title being delivered to them. Garcia mortgaged the subject lots without their knowledge and consent. While private respondents spouses Soriano bought the subject lots after the constitution of the mortgage in favor of petitioner, the subject lots are, as early as 1988, subdivision lots which as defined under Section 2(e) of P.D. No. 957 to mean any of the lots, whether residential, commercial, industrial, or recreational in a subdivision project[20] are entitled to the protection of P.D. No. 957. Under Section 18 of P.D. No. 957, it is provided that no mortgage on any unit or lot shall be made by the owner or developer without prior written approval of the authority. Such approval shall not be granted unless it is shown that the proceeds of the mortgage loan shall be used for

the development of the condominium or subdivision project and effective measures have been provided to ensure such utilization. As in the Union Bank, the mortgage was constituted on the subject lots in favor of petitioner without the prior written approval from the HLURB, thus HLURB has jurisdiction to rule on the validity of the mortgage. Notwithstanding that petitioner became the owner of the subject lots by being the highest bidder in the extrajudicial foreclosure sale, it must be remembered that it was first a mortgagee of the same. Since the lot was mortgaged in violation of Section 18 of P.D. No. 957, HLURB has jurisdiction to declare the mortgage void insofar as private respondents are concerned and to annul the foreclosure sale. In Far East Bank and Trust Co. vs. Marquez,[21] we held that Section 18 of P.D. No. 957 is a prohibitory law, and acts committed contrary to it are void. We said: In determining whether a law is mandatory, it is necessary to ascertain the legislative intent, as stated by Sen. Arturo M. Tolentino, an authority on civil law: There is no well-defined rule by which a mandatory or prohibitory law may, in all circumstances, be distinguished from one which is directory, suppletory, or permissive. In the determination of this question, the prime object is to ascertain the legislative intention. Generally speaking, those provisions which are mere matter of form, or which are not material, do not affect any substantial right, and do not relate to the essence of the thing to be done, so that compliance is a matter of convenience rather than substance, are considered to be directory. On the other hand, statutory provisions which relate to matters of substance, affect substantial rights and are the very essence of the thing required to be done, are regarded as mandatory. In Philippine National Bank vs. Office of the President, we had occasion to mull over the intent of P.D. No. 957 thus: . . . [T]he unmistakable intent of the law [is] to protect innocent lot buyers from scheming subdivision developers. As between these small lot buyers and the gigantic financial institutions which the developers deal with, it is obvious that the law as an instrument of social justice must favor the weak. Indeed, the petitioner Bank had at its disposal vast resources with which it could adequately protect its loan activities, and therefore is presumed to have conducted the usual due diligence checking and ascertaining (whether thru ocular inspection or other modes of investigation) the actual status, condition, utilization and occupancy of the property offered as collateral, . . . On the other hand, private respondents obviously were powerless to discover attempt of the land developer to hypothecate the property being sold to them. It was precisely in order to deal with this kind of situation that P.D. No. 957 was enacted, its very essence and intendment being to provide a protective mantle over helpless citizens who may fall prey to the razzmatazz of what P.D. No. 957 termed unscrupulous subdivision and condominium sellers. Concededly, P.D. No. 957 aims to protect innocent lot buyers. Section 18 of the decree directly addresses the problem of fraud committed against buyers when the lot they have contracted to purchase, and which they have religiously paid for, is mortgaged without their knowledge. The avowed purpose of P.D. No. 957 compels the reading of Section 18 as prohibitory acts committed contrary to it are void. Such construal ensures the attainment of the purpose of the law: to protect lot buyers, so that they do not end up still homeless despite having fully paid for their home lots with their hard-earned cash.[22] Since the mortgage is void, HLURBs orders of the cancellation of the sheriffs certificate of sale, release of the mortgaged lots and delivery of the corresponding titles to respondents who had fully paid the purchase price of the units are but the necessary consequences of the invalidity of the mortgage for the protection of private respondents. Anent the second issue, petitioner contends that since the titles on their face were free from any claims, liens and encumbrances at the time of the mortgage, it is not obliged under the law to go beyond the certificates of title registered under the Torrens system and had every reason to rely on the correctness and validity of those titles. We are not convinced. While the cases[23] cited by petitioner held that the mortgagee is not under obligation to look beyond the certificate of title when on its face, it was free from lien or encumbrances, the mortgagees therein were considered in good faith as they were totally innocent and free from negligence or wrongdoing in the transaction. In this case, petitioner knew that the loan it was extending to Garcia/TransAmerican was for the purpose of the development of the eight-unit townhouses. Petitioners insistence that prior to the approval of the loan, it undertook a thorough check on the property and found the titles free from liens and encumbrances would not suffice. It was incumbent upon petitioner to inquire into the status of the lots which includes verification on whether Garcia had secured the authority from the HLURB to mortgage the subject lots. Petitioner failed to do so. We likewise find petitioner negligent in failing to even ascertain from Garcia if there are buyers of the lots who turned out to be private respondents. Petitioners want of knowledge due to its negligence takes the place of registration, thus it is presumed to know the rights of respondents over the lot. The conversion of the status of petitioner from mortgagee to buyer-owner will not lessen the importance of such knowledge.[24] Neither will the conversion set aside the consequence of its negligence as a mortgagee.[25] Judicial notice can be taken of the uniform practice of banks to investigate, examine and assess the real estate offered as security for the application of a loan. We cannot overemphasize the fact that the Bank cannot barefacedly argue that simply because the title or titles offered as security were clean of any encumbrances or lien, that it was thereby relieved of taking any other step to verify the over-reaching implications should the subdivision be auctioned on foreclosure.[26] We find apropos to cite our ruling in Far East Bank and Trust Co. vs. Marquez, thus:[27] Petitioner argues that it is an innocent mortgagee whose lien must be respected and protected, since the title offered as security was clean of any encumbrances or lien. We do not agree. . . . As a general rule, where there is nothing on the certificate of title to indicate any cloud or vice in the ownership of the property, or any encumbrance thereon, the purchaser is not required to explore further than what the Torrens Title upon its face indicates in quest for any hidden

defect or inchoate right that may subsequently defeat his right thereto. This rule, however, admits of an exception as where the purchaser or mortgagee has knowledge of a defect or lack of title in the vendor, or that he was aware of sufficient facts to induce a reasonably prudent man to inquire into the status of the property in litigation. Petitioner bank should have considered that it was dealing with a [townhouse] project that was already in progress. A reasonable person should have been aware that, to finance the project, sources of funds could have been used other than the loan, which was intended to serve the purpose only partially. Hence, there was need to verify whether any part of the property was already the subject of any other contract involving buyers or potential buyers. In granting the loan, petitioner bank should not have been content merely with a clean title, considering the presence of circumstances indicating the need for a thorough investigation of the existence of buyers like respondent. Having been wanting in care and prudence, the latter cannot be deemed to be an innocent mortgagee. Petitioner cannot claim to be a mortgagee in good faith. Indeed it was negligent, as found by the Office of the President and by the CA. Petitioner should not have relied only on the representation of the mortgagor that the latter had secured all requisite permits and licenses from the government agencies concerned. The former should have required the submission of certified true copies of those documents and verified their authenticity through its own independent effort. Having been negligent in finding out what respondents rights were over the lot, petitioner must be deemed to possess constructive knowledge of those rights. As to the third issue, petitioner contends that private respondents were negligent in failing to register their contracts to sell in accordance with Section 17 of P.D. No. 957; that private respondents unregistered contracts to sell are binding only on them and Garcia/TransAmerican but not on petitioner which had no actual or constructive notice of the sale at the time the mortgage was constituted. We disagree. Section 17 of P.D. No. 957[28] provides that the seller shall register the contracts to sell with the Register of Deeds of Quezon City. Thus, it is Garcias responsibility as seller to register the contracts and petitioner should not blame private respondents for not doing so. As we have said earlier, considering petitioners negligence in ascertaining the existence or absence of authority from HLURB for Garcia/TransAmerican to mortgage the subject lots, petitioner cannot claim to be an innocent purchaser for value and in good faith. Petitioner is bound by private respondents contracts to sell executed with Garcia/TransAmerican. The last paragraph of Section 18 of P.D. No. 957 provides that respondents who have not yet paid in full have the option to pay their installment for the lot directly to the mortgagee (petitioner) who is required to apply such payments to the corresponding mortgage indebtedness secured by the particular lot or unit being paid for, with a view to enabling said buyer to obtain title over the lot or unit promptly after full payment thereof. Thus, petitioner is obliged to accept the payment of remaining unpaid amortizations, without prejudice to petitioner banks seeking relief against the subdivision developer.[29] Notably, although no issue was taken on the fact that the case against Garcia/TransAmerican, the developer/seller and mortgagor of the subject lots, was archived for failure to serve summons on him/it as his whereabouts or the office could not be located, it must be stated that Garcia/TransAmerican is not an indispensable party since a final determination on the validity of the mortgage over the subject lots can be rendered against petitioner. Thus, the absence of Garcia/TransAmerican did not hamper the OAALA from resolving the dispute between private respondents and petitioner. In China Bank vs. Oliver,[30] we held that the mortgagor, who allegedly misrepresented herself to be Mercedes M. Oliver, the registered owner of TCT No. S-50195, is not an indispensable party in a case filed by a person claiming to be the true registered owner, for annulment of mortgage and cancellation of title against the mortgagee, China Bank. We found therein that even without the mortgagor, the true Mercedes Oliver can prove in her complaint that she is the real person referred in the title and she is not the same person using the name who entered into a deed of mortgage with the mortgagee, China Bank. In the present case, private respondents, in their complaint, alleged that the mortgage was constituted without the prior written approval of the HLURB which is in violation of Section 18 of P.D. No. 957. Petitioners admission that it granted and released the loan without notifying the HLURB because of its belief that it was not necessary to do so, is fatal to petitioners defense. As a consequence thereof, the mortgage constituted in favor of petitioner can be declared invalid as against private respondents even without the presence of Garcia/TransAmerican. It is worthy to mention that the assailed decision was rendered merely against petitioner and had not made any pronouncement as to Garcia/TransAmericans liability to private respondents for the non-completion of the projects; or to herein petitioner, as mortgagee. The present case merely involves the liability of petitioner bank to private respondents as buyers of the lots and townhouse units. WHEREFORE, the petition is DISMISSED for lack of merit. SO ORDERED.

DE LA MERCED VS GSIS

YNARES-SANTIAGO, J.:

This is a petition for review under Rule 45 of the Rules of Court, seeking to set aside the decision of the Court of Appeals dated May 21, 1999 in CA-G.R. CV No. 55034,[1] which reversed the decision of the Regional Trial Court of Pasig, Metro Manila, Branch 160, in Civil Cases Nos. 51410 and 51470.[2] The antecedent facts, as culled from the records, are as follows: Governor Jose C. Zulueta and his wife Soledad Ramos were the owners of parcels of land consisting of 100,986 square meters, known as the Antonio Village Subdivision, Orambo, Pasig City. The parcels of land were registered in their names under Transfer Certificates of Title Nos. 26105,[3] 37177[4] and 50256[5] of the Registry of Deeds of the Province of Rizal. On September 25, 1956, the Zuluetas obtained a loan of P520,000.00 from the Government Service Insurance System, as security for which they mortgaged the lands covered by TCT No. 26105. It was expressly stipulated in the mortgage deed that certain lots within TCT No. 26105 shall be excluded from the mortgage because they have been either previously sold to third parties or donated to the government. The Zulueta spouses obtained an additional loan from the GSIS on March 6, 1957 in the amount of P190,000.00, as security for which they mortgaged the land covered by TCT No. 50256. On April 4, 1957, the Zuluetas obtained another loan from GSIS this time in the amount of P1,000,000.00, which they secured by mortgaging parcels of land included in TCT Nos. 26105 and 37177. On September 3, 1957, the Zulueta spouses executed a contract to sell whereby they undertook to sell to Francisco dela Merced and Evarista Mendoza lots identified as Lots 6, 7, 8 and 10, Block 2 (formerly Block 4), Antonio Subdivision covered by TCT No. 26105.[6] On October 26, 1972, after full payment by Col. dela Merced of the purchase price, a Deed of Absolute Sale was executed by the Zuluetas in his favor. On October 15, 1957, another loan was extended by GSIS to the Zulueta spouses in the amount of P1,398,000.00, secured by a mortgage on the properties included in TCT Nos. 26105 and 50256. The Zuluetas defaulted in the payment of their loans. Thus, GSIS extrajudicially foreclosed the mortgages and, at the foreclosure sale held on August 16, 1974, GSIS was awarded the mortgaged properties as the highest bidder. Since the Zuluetas did not redeem the properties within the reglementary period, title to the properties was consolidated to GSIS. Later, on March 25, 1982, GSIS held a sale at public auction of its acquired assets. Elizabeth D. Manlongat and Ma. Therese D. Manlongat, the children of Victor and Milagros Manlongat, purchased Lot 6, Block 2 of Antonio Village.[7] On August 22, 1984, a complaint for declaratory relief, injunction and damages, docketed as Civil Case No. 51410, was filed with the Regional Trial Court of Pasig, Branch 160, by Victor Lemonsito and several others,[8] against Benjamin Cabusao, in his capacity as In-Charge of the Municipal Task Force on Squatters of the Municipal Engineers Office of Pasig, spouses Domini and Olivia Suarez and spouses Victor and Milagros Manlongat.[9] Plaintiffs therein averred that they were owners of houses in various lots in Antonio Village, having constructed the same with the permission of the late Jose C. Zulueta before the same was foreclosed by GSIS; that defendants Suarez and Manlongat claimed to be vendees of lots in Antonio Village; and that defendant Cabusao was threatening to demolish plaintiffs houses on the alleged ground that they were squatters on the lots. On September 7, 1984, Col. dela Merced also instituted Civil Case No. 51470 with the Regional Trial Court of Pasig, Branch 154, against GSIS and the spouses Zulueta, praying, among others, that the foreclosure sale, insofar as his lots were concerned, be declared null and void.[10] Meanwhile, Col. dela Merced filed a complaint-in-intervention in Civil Case No. 51410,[11] wherein he prayed that plaintiffs complaint be dismissed and defendants titles to lots 6, 7 and 8, Block 2 be declared null and void. The complaint in Civil Case No. 51410 was dismissed for failure of plaintiffs to prosecute, but the complaint-in-intervention of Col. dela Merced was allowed to proceed against defendants Suarez and Manlongat.[12] On September 5, 1986, upon motion of plaintiff Col. dela Merced, the trial court ordered the consolidation of Civil Case No. 51470 with Civil Case No. 51410.[13] On October 23, 1987, the Regional Trial Court of Pasig, Branch 160, rendered its decision, the dispositive portion of which reads: WHEREFORE, judgment is hereby rendered in Civil Case No. 51410: 1. Declaring Lots 6, 7, 8 and 10 of Block 2, and Lot 8 of Block 8 which are the subject of the action, as the exclusive property of the intervenor. Consequently, the certificates of Title of the defendants covering said property lots are declared null and void; and in Civil Case No. 51470: 1. Declaring the foreclosure proceedings conducted by defendant GSIS, insofar as they affected the lots in question, as null and void, including the consolidation of ownership thereof by the GSIS, and the sale of the lots to defendant Manlongat spouses; 2. Declaring the certificates of title issued to GSIS covering the aforesaid lots, as well as those issued to defendant Manlongat spouses by virtue of the sale executed by the former in favor of the latter, as null and void; and directing the Office of the Register of Deeds of Pasig, Metro Manila, to issue a new one in the name of the plaintiff Francisco Mendoza dela Merced;

3. Ordering the defendants, jointly and severally, to pay the plaintiff the sums of P100,000.00 as moral damages; P50,000.00 as exemplary damages; and P50,000.00 by way of attorneys fees; plus costs. SO ORDERED.[14] The GSIS and Manlongat spouses filed separate appeals. The Court of Appeals held that the trial court erred in declaring defendants as having waived their right to present evidence. Thus, on April 19, 1994, the Court of Appeals set aside the decision of the trial court and remanded the case to the lower court for the reception of evidence of defendants Manlongat and GSIS.[15] In the meantime, on March 19, 1988, Col. dela Merced passed away and was substituted by his heirs. On December 27, 1996, the Regional Trial Court of Pasig, Branch 160, rendered a decision, the dispositive portion of which reads: WHEREFORE, judgment is hereby rendered: 1. Declaring the foreclosure sale of Lot Nos. 6, 7, 8 and 10 of Block 2, and Lot 8 of Block 8 and certificate of Titles issued to GSIS covering the aforesaid lots as well as those issued to defendant Manlongat spouses as null and void; 2. Declaring plaintiff-intervenor as the true and lawful owner of the aforesaid lots; 3. Ordering the Register of Deeds of Pasig, Metro Manila to issue new titles in the name of plaintiff-intervenor or his substituted heirs namely Blanquita dela Merced-Macatangay, Blanquita Errea dela Merced, Luis dela Merced and Maria Olivia dela Merced Paredes; 4. Ordering defendants GSIS and spouses Manlongat jointly and severally to pay attorneys fees of P20,000.00 and to pay the costs. SO ORDERED.[16] The trial court made the following findings: The mortgage contract signed by the Zulueta spouses of the property covered by TCT No. 26105 in favor of GSIS (Exh. C-C-1 Merced) contained the following provisions: Note: The following lots which form part of TCT No. 26105 are not covered by this mortgage contract due to sale to third parties and donation to government. 1. 2. 3. 4. 5. 6. Lots No. 1 to 13, Block No. 1 - 6,138 sq.m. Lots Nos. 1 to 11, Block No. 2 - 4,660 sq.m. Lot No. 15, Block No. 3 -----Lot No. 17, Block No. 4 -----Lot No. 1, Block No. 7 -------487 sq.m. 263 sq.m. 402 sq.m.

Road Lots Nos. 1, 2, 3 & 4 -- 22,747 sq.m.

Evidently, lot numbers 1 to 11, Block 2 to include plaintiff-intervenors lots were excluded from the mortgage. In fact, in a letter dated October 1, 1956, defendant GSIS confirmed that portions of the subdivision such as lots Nos. 1 to 11, Block 2 x x x have already been sold x x x. (Exh. B-1 Merced) The intent of the parties was clear to exclude from the mortgage the properties claimed by plaintiff-intervenor, among others, where he introduced improvements since 1955. On October 26, 1972, the spouses Zulueta executed the corresponding deed of sale in favor of plaintiff-intervenor (Exh. C). The contention of defendant GSIS and defendants Victor and Milagros Manlongat that Lot Nos. 6, 7, 8 & 10 are not the lots excluded from the mortgage by the spouses Zulueta to the GSIS cannot be given credence. Evidence reveal that lots 6, 7, 8 and 10, Block 2, with a total area of 1,405 square meters of the Antonio Village Subdivision were excluded from the September 25, 1956 mortgage contract executed by defendants in favor of GSIS. (Exh. C, C-1 Merced, 9-1-95) Defendant GSIS in fact had admitted in its answer, the letter to plaintiff acknowledging that there has been no problem with respect to Lot 8, Block 8 of the said property. Obviously, defendant recognized the ownership of intervenor of

the mentioned lots. It is further to be noted that plan Pcs-5889 was not yet in existence when the mortgage was executed in 1956. Besides defendant GSIS had knowledge of the possession of intervenor. While the deed of sale between the Zuluetas and plaintiff-intervenor was never registered nor annotated in the title and executed only after one (1) year, defendant GSIS had knowledge of the possession of intervenor of the lots; that defendant GSIS was not acting in good faith when it accepted the mortgage of the questioned lots. Plaintiff-intervenor in 1957 built a house and introduced improvement and built a house of strong structure on lots 6 & 7 and with the other lots serving as backyard and for 28 years had paid dues on the lots.[17] Respondents appealed the decision to the Court of Appeals, where the same was docketed as CA-G.R. CV No. 55034. On May 21, 1999, the Court of Appeals reversed the decision of the trial court. Petitioners filed a Motion for Reconsideration which was denied on October 4, 1999. Hence, the instant petition for review, raising the following assignments of error: FIRST ASSIGNMENT OF ERROR THE COURT A QUO ACTED CONTRARY TO LAW AND JURISPRUDENCE IN TOTALLY DISREGARDING THE ADMISSION OF DEFENDANT GSIS THAT THE LOTS IN QUESTION WERE EXCLUDED FROM THE MORTGAGE SECOND ASSIGNMENT OF ERROR THE COURT A QUO ACTED CONTRARY TO LAW AND JURISPRUDENCE IN NOT RULING THAT (A) PLAINTIFF HAS BEEN IN POSSESSION OF THE SUBJECT LOTS SINCE 1955 CONTINUOUSLY UNTIL THE PRESENT AND (B) GSIS HAD KNOWLEDGE OF PLAINTIFFS POSSESSION THIRD ASSIGNMENT OF ERROR THE COURT A QUO ACTED CONTRARY TO LAW AND JURISPRUDENCE IN ITS FAILURE TO APPRECIATE THE SIGNIFICANCE OF PLAINTIFFS CONTINUOUS OPEN AND ADVERSE POSSESSION IN THE CONCEPT OF OWNER FOR 28 YEARS AND THE ACTUAL KNOWLEDGE OF GSIS OF SUCH POSSESSION FOURTH ASSIGNMENT OF ERROR THE COURT A QUO ACTED CONTRARY TO LAW AND JURISPRUDENCE IN RULING THAT NO JUDGMENT CAN BE RENDERED AGAINST THE SPOUSES MANLONGAT WITHOUT VIOLATING THEIR RIGHT TO DUE PROCESS OF LAW[18] In essence, petitioners allege that the foreclosure sale was null and void because the mortgage executed by the parties, insofar as the properties previously sold to petitioners were concerned, was also void from the beginning. Petitioners had been in continuous and open possession thereof before and during the time of the mortgage, more specifically, since 1955 continuously up to the present, and GSIS had knowledge thereof. Furthermore, respondent GSIS admitted that the lots in questions were excluded from the mortgage. Finally, under Presidential Decree No. 957, also known as The Subdivision and Condominium Buyers Protective Decree, petitioners are entitled to the issuance of their corresponding title over the lots after having completed their payments to the subdivision owner.[19] Petitioners aver that when the Zuluetas mortgaged their properties to GSIS on October 15, 1957, they were no longer the owners of the lots subject of this litigation, the same having been sold to Francisco dela Merced by virtue of the contract to sell executed on September 3, 1957. Hence, the mortgage was void from its inception and GSIS, as mortgagee, acquired no better right notwithstanding the registration of the mortgage. Petitioners also argued that GSIS was a mortgagee in bad faith as it had been negligent in ascertaining and investigating the condition of the subject lots mortgaged to it as well as the rights of petitioners who were already in possession thereof at the time of mortgage. Furthermore, petitioners cite the judicial admission of respondent GSIS in its answer before the trial court, wherein it recognized the rights of ownership of Francisco dela Merced over Lot 8, Block 8 and of Eva Mendoza dela Merced over Lot 10, Block 2 of TCT 26105. Respondent GSIS countered that it cannot be legally presumed to have acknowledged petitioners rights over Lot 8, Block 8 of TCT 26105. With regard to the possession of petitioners, respondent GSIS invoked the ruling of the Court of Appeals that the mere possession of petitioner cannot stand against the registered titles of GSIS and its buyers, Elizabeth and Ma. Therese Manlongat. Moreover, Lot 6, Block 2 (formerly Block 4) of the Antonio Village Subdivision was acquired by Elizabeth Manlongat in a public bidding, as a consequence of which TCT No. PT-94007 was issued to her. Respondent GSIS also maintained that the lots being claimed by petitioners were included in the real estate mortgage executed by the Zuluetas in favor of GSIS; and that the inclusion of the subject lots in the mortgage was confirmed by Manuel Ibabao, an employee of the Acquired Assets Department of GSIS. For their part, respondent spouses Manlongat alleged that since Francisco dela Merced never registered the contract to sell and deed of absolute sale with the Register of Deeds, the same cannot affect the rights of third persons such as their daughter, Elizabeth Manlongat, who dealt in good faith with GSIS as the prior registered owner. The petition is impressed with merit. Petitioners rights of ownership over the properties in dispute, albeit unregistered, are superior to the registered mortgage rights of GSIS over the same. The execution and validity of the contract to sell dated September 3, 1957 executed by the Zulueta spouses, as the former

subdivision owner, in favor of Francisco dela Merced, are beyond cavil. There is also no dispute that the contract to sell was entered into by the parties before the third mortgage was constituted on October 15, 1957 by the Zuluetas in favor of GSIS on the property covered by TCT No. 26105, which included the subject lots. Francisco dela Merced was able to fully pay the purchase price to the vendor, who later executed a deed of absolute sale in his favor. However, the Zuluetas defaulted on their loans; hence, the mortgage was foreclosed and the properties were sold at public auction to GSIS as the highest bidder. In the case of State Investment House, Inc. v. Court of Appeals,[20] it was held that: STATEs registered mortgage right over the property is inferior to that of respondents-spouses unregistered right. The unrecorded sale between respondents-spouses and SOLID is preferred for the reason that if the original owner (SOLID, in this case) had parted with his ownership of the thing sold then he no longer had ownership and free disposal of that thing so as to be able to mortgage it again. Registration of the mortgage is of no moment since it is understood to be without prejudice to the better right of third parties. In the same vein, therefore, the registered right of GSIS as mortgagee of the property is inferior to the unregistered right of Francisco dela Merced. The unrecorded sale between Francisco dela Merced as the vendee of the property and the Zuluetas, the original owners, is preferred for the same reason stated above. Respondents cannot even assert that as mortgagee of land registered under the Torrens system, GSIS was not required to do more than rely upon the certificate of title. As a general rule, where there is nothing on the certificate of title to indicate any cloud or vice in the ownership of the property, or any encumbrance thereon, the purchaser is not required to explore further than what the Torrens Title upon its face indicates in quest for any hidden defect or inchoate right that may subsequently defeat his right thereto. This rule, however, admits of an exception as where the purchaser or mortgagee has knowledge of a defect or lack of title in the vendor, or that he was aware of sufficient facts to induce a reasonably prudent man to inquire into the status of the property in litigation.[21] In the case at bar, GSIS is admittedly a financing institution. In its answer to the complaint filed with the trial court, GSIS admitted knowledge that the spouses Jose C. Zulueta and Soledad B. Ramos owned the Antonio Subdivision when they mortgaged the same with GSIS. In Sunshine Finance and Investment Corp. v. Intermediate Appellate Court,[22] we held that when the purchaser or mortgagee is a financing institution, the general rule that a purchaser or mortgagee of land is not required to look further than what appears on the face of the title does not apply. Further: Nevertheless, we have to deviate from the general rule because of the failure of petitioner in this case to take the necessary precautions to ascertain if there was any flaw in the title of the Nolascos and to examine the condition of the property they sought to mortgage. The petitioner is an investment and financing corporation. We presume it is experienced in its business. Ascertainment of the status and condition of properties offered to it as security for the loans it extends must be a standard and indispensable part of its operations. Surely it cannot simply rely on an examination of a Torrens certificate to determine what the subject property looks like as its condition is not apparent in the document. The land might be in a depressed area. There might be squatters on it. It might be easily inundated. It might be an interior lot without convenient access. These and other similar factors determine the value of the property and so should be of practical concern to the petitioner.[23] There is nothing in the records of this case to indicate that an ocular inspection report was conducted by GSIS, or whether it investigated, examined and assessed the subdivision lots when they were offered as security for the loans by the original owners. The only inventory made by GSIS based on its documentary evidence was prepared by its officers employed with the Acquired Assets Department, but that was after the foreclosure sale was already conducted and not before the mortgage was constituted over the property. The constructive knowledge of GSIS of the defect in the title of the subject property, or lack of such knowledge due to its negligence, takes the place of registration of the rights of petitioners. Likewise, in Philippine National Bank v. Office of the President,[24]24 we held that --As between these small lot buyers and the gigantic financial institutions which the developers deal with, it is obvious that the law --- as an instrument of social justice --- must favor the weak. Indeed, the petitioner Bank had at its disposal vast resources with which it could adequately protect its loan activities, and therefore is presumed to have conducted the usual due diligence checking and ascertained (whether thru ocular inspection or other modes of investigation) the actual status, condition, utilization and occupancy of the property offered as collateral. It could not have been unaware that the property had been built on by small lot buyers. On the other hand, private respondents obviously were powerless to discover the attempt of the land developer to hypothecate the property being sold to them. It was precisely in order to deal with this kind of situation that P.D. 957 was enacted, its very essence and intendment being to provide a protective mantle over helpless citizens who may fall prey to the razzmatazz of what P.D. 957 termed unscrupulous subdivision and condominium sellers.[25] In the case at bar, GSIS admitted in its answer that it received a letter from Francisco dela Merced on August 27, 1981, stating that he had acquired the subject lots by virtue of a deed of absolute sale executed in his favor by the Zulueta spouses.[26] GSIS also admitted the fact that on October 17, 1980, its Deputy General Counsel wrote Francisco dela Merced stating that his claim of ownership over Block 8, Lot 8, of TCT No. 26105 had no problem; but his claim to Lots 6, 7, 10 and 11 of Block 2, of the same title, was not very clear.[27] Clearly, therefore, GSIS had full knowledge of the claim of ownership of dela Merced over the aforementioned lots even before their sale at public auction to Elizabeth Manlongat. Coming now to the last issue --- whether Elizabeth Manlongat, as purchaser of Lot 6, Block 2 at an auction sale conducted by GSIS, had a better right than petitioners --- we must rule in the negative. It should be borne in mind that the title of Manlongat was derived through sale or transfer from GSIS, whose acquisition over the property proceeded from a foreclosure sale that was null and void. Nemo potest plus juris ad alium transferre quam ipse habet. No one can transfer a greater right to another than he himself has.[28] In other words, the subsequent certificates of title of GSIS and of Manlongat over the property are both void, because of the legal truism that the spring cannot rise higher than the source.

Further, Manlongat cannot claim that she was a purchaser in good faith. The records categorically reflect that neither Manlongat nor her predecessor-in-interest, GSIS, possessed the property prior to or after the former bought the same at an auction sale. In fact, at the time the lots were sold to Manlongat, petitioners were not only in actual possession thereof, but their father, Francisco dela Merced, had already built a house thereon. Again, a cautious and prudent purchaser would usually make an ocular inspection of the premises, this being standard practice in the real estate industry. Should such prospective buyer find out that the land she intends to buy is being occupied by anybody other than the seller, who, in this case, was not in actual possession, it would then be incumbent upon her to verify the extent of the occupants possessory rights. The failure of a prospective buyer to take such precautionary steps would mean negligence on her part and would thereby preclude her from claiming or invoking the rights of a purchaser in good faith. WHEREFORE, in view of the foregoing, the petition is GRANTED. The decision of the Court of Appeals is REVERSED AND SET ASIDE. The decision of the Regional Trial Court of Pasig City, Branch 160, in Civil Cases Nos. 51410 and 51470, is REINSTATED. The foreclosure sale of Lot Nos. 6, 7, 8 and 10 of Block 2 and Lot 8 of Block 8 of the property originally covered by TCT 26105, and the subsequent certificates of titles issued to GSIS as well as TCT No. PT-94007 in the name of Elizabeth Manlongat, are declared NULL AND VOID. The Register of Deeds of Pasig City is ordered to CANCEL all present certificates of title in the name of GSIS and Elizabeth Manlongat covering the above-mentioned properties, and to ISSUE new certificates of title over the same in the name of petitioners as co-owners thereof. Respondents GSIS and spouses Victor and Milagros Manlongat are ORDERED to pay, jointly and severally, attorneys fees in the increased amount of P50,000.00, and to pay the costs. SO ORDERED.

ERENA VS QUERRER KAUFFMAN CALLEJO, SR., J.: Before us is a petition for review on certiorari of the Decision1 of the Court of Appeals (CA) in CA-G.R. CV No. 67899. The assailed decision reversed the decision of the Regional Trial Court (RTC) of Las Pias City in Civil Case No. LP-98-0056.2 Vida Dana Querrer-Kauffman is the owner of a residential lot with a house constructed thereon located at Block 3, Lot 13, Marcillo corner Planza Streets, BF Resort Village, Talon, Las Pias City. The property is covered by Transfer Certificate of Title (TCT) No. T-48521. The owners duplicate copy of the title as well as the tax declaration3 covering the property, were kept in a safety deposit box in the house. Sometime in February 1997, as she was going to the United States, Kauffman entrusted her minor daughter, Vida Rose, to her live-in partner, Eduardo Victor. She also entrusted the key to her house to Victor. She went back to the Philippines to get her daughter on May 13, 1997, and again left for the U.S. on the same day. Later on, Victor also left for the U.S. and entrusted the house and the key thereto to his sister, Mira Bernal.4 On October 25, 1997, Kauffman asked her sister, Evelyn Pares, to get the house from Bernal so that the property could be sold. Pares did as she was told.5 Kauffman then sent the key to the safety deposit box to Pares, but Pares did not receive it. Kauffman then asked Pares to hire a professional locksmith who could open the safe.6When the safe was broken open, however, Pares discovered that the owners duplicate title and the tax declarations, including pieces of jewelry were missing.7 Kauffman learned about this on October 29, 1997 and returned to the Philippines on November 9, 1997. She and Pares went to the Register of Deeds of Las Pias City and found out that the lot had been mortgaged to Rosana Erea on August 1, 1997.8 It appeared that a "Vida Dana F. Querrer" had signed the Real Estate Mortgage as owner-mortgagor,9 together with Jennifer V. Ramirez, Victors daughter, as attorney-in-fact.10 Kauffman and Pares were able to locate Bernal who, when asked, confirmed that Ramirez had taken the contents of the safety deposit box. When Kauffman told Bernal that she would file a case against them, Bernal cried and asked for forgiveness. Bernal admitted that Jennifer Ramirez had been in a tight financial fix and pleaded for time to return the title and the jewelry.11 On March 12, 1998, Kauffman filed a complaint against Erea, Bernal and Jennifer Ramirez for Nullification of Deed of Real Estate Mortgage and Damages with prayer for a Temporary Restraining Order and Preliminary Mandatory Injunction12 in the RTC of Las Pias City. The complaint contained the following allegations: 2. The plaintiff is the owner of a property consisting of a lot with an area of One Hundred Ten (110) square meters located at Blk. 3, Lot 13, Marcillo cor. Pianza Sts., BF Resort Village, Talon, Las Pias City, covered by Transfer Certificate of Title No. T-48521 of the Register of Deeds of Las Pias City, together with a residential house thereon, with a combined assessed value of P40,500.00, and copies of said TCT, and tax declarations of the lot and house x x x; 3. Sometime in February 1997, when the plaintiff left for the United States, she entrusted the key of her said house to one Eduardo Victor who, in turn, when he himself went to the United States, entrusted said key to his sister, the defendant Mira V. Bernal; 4. Sometime between May and July 1997, said defendant Mira V. Bernal, in conspiracy with her niece, the defendant Jennifer V. Ramirez, who is the daughter of Eduardo Victor, using the key in their possession, opened the locked and the unoccupied house of the

plaintiff, forced open the vault of the plaintiff and stole the owners copy of TCT No. T-48521 and other articles contained therein valued at more than P60,000.00, all belonging to the plaintiff; 5. Having in their possession the stolen TCT No. T-48521, defendants Mira V. Bernal and Jennifer V. Ramirez, with the latter falsely representing herself to be the attorney-in-fact of the plaintiff, mortgaged the property in question to the defendant Rosana L. Erea for the amount of P250,000.00, in Pasay City, for forging the signature of the plaintiff on the corresponding Real Estate Mortgage, which appears to have been notarized by Notary Public Alfredo M. Mendoza and registered as Doc. No. 43, Page No. 1, Book No. VII, Series of 1997, x x x; 6. After the execution of the falsified Real Estate Mortgage, the defendants registered the same with the Registry of Deeds of Las Pias City and had it annotated on the TCT No. T-48521 as Entry No. 7185-15; 7. When the defendant Rosana L. Erea as mortgagee accepted the property in mortgage, she knew fully well that the plaintiff-owner was in the United States at that time and the defendants Mira V. Bernal and Jennifer V. Ramirez were not authorized to mortgage the property as they claimed themselves to be, and this notwithstanding, the defendants who were in bad faith conspired and confederated between and among themselves and fraudulently executed the said document of mortgage for purposes of personal gain; 8. The plaintiff has been a victim of fraud as above narrated and the defendant Rosana L. Erea now being in unlawful possession of her torrens title, the plaintiff is not only in constant apprehension as to what other fraudulent transactions the defendant might enter into involving her title, but is also prevented from pursuing her intention to sell her property, and by reason of which the plaintiff is entitled to recover possession of said title and the cancellation of Entry No. 7185-15 thereon; 9. In view thereof, plaintiff is entitled to actual damages in the amount of P200,000.00; 10. Likewise, plaintiff suffered moral damages in the form of mental anguish, wounded feelings, serious anxiety and similar injuries in the amount of P200,000.00; 11. The plaintiff is also entitled to exemplary damages in the amount of P100,000.00 which plaintiff seeks to impose upon the defendants as a correction or example for the public good, as a deterrent to people from committing fraudulent acts against their fellowmen; 12. On account of defendants unwarranted acts aforecited, the plaintiff is furthermore entitled to attorneys fees in the amount of P50,000.00 as acceptance fee, plus P1,500.00 appearance fee every hearing, for which the defendants should be liable;13 The complaint also contained the following prayer: (a) That upon the filing of this complaint and compliance with the pertinent rule, a temporary mandatory order be issued requiring the defendant Rosana L. Erea to turn over to the plaintiff the possession of TCT No. T-48521; (b) That after due hearing, a writ of preliminary mandatory injunction be issued making permanent the temporary mandatory order; (c) In case a temporary mandatory order or preliminary injunction be not issued, that the defendant Rosana L. Erea or whoever be in possession of TCT No. T-48521, be ordered, after due hearing, to turn the same over to the plaintiff, that the Real Estate Mortgage (Annex "D") of this complaint be declared null and void, and Entry No. 7185-15 on said title be cancelled; (d) That after hearing, the defendants be ordered to pay the plaintiff, jointly and severally, the following amounts: 1. P200,000.00 as moral damages; 2. P200,000.00 as actual damages; 3. P100,000.00 as exemplary damages; 4. P50,000.00 as acceptance fee, plus P1,500.00 appearance fee every hearing, as attorneys fees, aside from costs. Plaintiff further prays for such other relief that this Honorable Court may deem just and equitable in the premises.14 Erea interposed the defense of being a mortgagee in good faith. She likewise interposed a cross-claim against Bernal and Jennifer Ramirez for the refund of the P250,000.00 she loaned to "Vida Dana Querrer."15

Jennifer Ramirez and Bernal interposed the common defense that, on November 13, 1998, the City Prosecutor approved a Resolution absolving them of the robbery and estafa cases through falsification of a public document.16 During pre-trial, defendants Ramirez and Bernal failed to appear. On motion of the plaintiff, they were thus declared in default.17 During trial, Socorro Ramos, Ereas aunt, testified that, Richmond Ramirez, Jennifers husband, and Angel Jose, her grandson and Ereas nephew, had been classmates and were compadres.18 The Ramirez spouses used to go to her house. In one occasion, the Ramirez spouses arrived in her house with one "Vida Dana Querrer" whom Richmond introduced as his half-sister.19 He also told Ramos that Querrer wanted to mortgage her house and lot as she was going to the U.S.20 Richmond showed her a copy of TCT No. T-48521, Querrers identification (I.D.) card, and pictures of the house and lot.21 Ramos then informed her niece, Rosana Erea, and asked if she would agree to mortgage the property. Ramos later brought the spouses Ramirez and "Vida Dana Querrer" to Erea who showed a copy of the title, tax declaration, a tax clearance, all in the name of "Vida Dana Querrer." The spouses also showed an I.D. card of "Vida Dana Querrer" as a worker in Japan, a police clearance, and the location plan of the property.22 Jennifer Ramirez informed Erea that Vida Dana was applying for a passport as she was going to Japan and the U.S.23 "Vida Dana Querrer" likewise introduced herself as Richmonds sister.24 Erea was able to verify from the Office of the Register of Deeds that the property was in the name of Vida Dana Querrer and that it was free of any lien or encumbrance. Erea and her husband, Ramos, Richmond Ramirez, Angel Jose, and "Vida Dana Querrer" later inspected the house and lot two times.25 Erea finally agreed to aP250,000.00 mortgage loan, with the house and lot as security therefor. On August 1, 1997, Jennifer Ramirez, Rosana Erea and a woman who identified herself as "Vida Dana Querrer" arrived in the office Notary Public Alfredo M. Mendoza and asked him to prepare a Special Power of Attorney to be executed by "Vida Dana Querrer," as principal, in favor of Jennifer Ramirez, as attorney-in-fact; and a Real Estate Mortgage contract over the lot covered by TCT No. 48521 to be executed by "Vida Dana Querrer" and Jennifer Ramirez as mortgagors. Erea and "Vida Dana Querrer" showed to him their respective residence certificates. Mendoza prepared the documents after which the parties affixed their respective signatures above their respective names26 and their submarkings on the deeds. The Real Estate Mortgage was filed with the Office of the Register of Deeds and annotated at the dorsal portion of TCT No. 48521 on November 7, 1997.27 On April 4, 2000, the RTC rendered judgment in favor of the defendants and ordered the dismissal of the complaint. The court ruled that, although the plaintiff adduced proof that she owned the property and that her signatures on the Special Power of Attorney and in the Real Estate Mortgage were forged, nevertheless, defendant Erea adduced evidence that she was a mortgagee in good faith. The court declared that the woman who pretended to be the plaintiff and lawful owner of the property had in her possession the original copy of the owners duplicate of title. The defendant thus relied in good faith on the title after ascertaining with the Register of Deeds the identity of Vida Dana Querrer as the registered owner of the property, who turned out to be an impostor. In fact, the defendant still had possession of the owners duplicate of the title when she received the complaint and summons. The court cited the ruling of this Court in Cebu International Finance Corporation v. Court of Appeals28 and Duran v. Intermediate Appellate Court.29 The fallo of the decision reads: WHEREFORE, premises considered, the complaint filed by plaintiff VIDA DANA QUERRER-KAUFFMAN is hereby DISMISSED for lack of merit and the questioned Deed of Real Estate Mortgage dated 1 August 1997 is hereby declared VALID. No pronouncement as to costs. SO ORDERED.30 Kauffman filed a motion for reconsideration of the decision, alleging that the Cebu International Finance Corporation case is not applicable as the facts therein are different. She insisted that Solivel v. Francisco31 is the case in point. The RTC denied the motion, prompting Kauffman to file an appeal with the CA where she made the following allegations: I CONSIDERING THAT THE MORTGAGE CONTRACT IN QUESTION WAS EXECUTED AND MADE POSSIBLE THROUGH THE FRAUDULENT MANIPULATION OF AN IMPOSTOR, THE LOWER COURT ERRED IN FINDING THAT DEFENDANT-APPELLANT ROSANA EREA WHO ACCEPTED THE MORTGAGE OFFERED BY SAID IMPOSTOR IS A MORTGAGEE IN GOOD FAITH; II

THE COURT A QUO ERRED IN CONCLUDING THAT THE DEED OF MORTGAGE IN QUESTION IS VALID DESPITE ITS OWN FINDING THAT THE SUBJECT PROPERTY IS OWNED BY THE PLAINTIFF-APPELLANT WHOSE SIGNATURE ON THE DEED WAS FORGED; III THE LOWER COURT ERRED IN APPRECIATING THE JURISPRUDENCE CITED IN ITS APPEALED DECISION AND IN APPLYING THE SAME TO THE CASE AT BAR; IV THE LOWER COURT ERRED IN UPHOLDING THE RIGHT OF DEFENDANT-APPELLANT ROSANA EREA DERIVED FROM A FORGED MORTGAGE CONTRACT AS AGAINST THE RIGHT OF THE PLAINTIFF, THE PROVEN TRUE OWNER OF THE SUBJECT PROPERTY, WHO DID NOT IN ANY WAY CONTRIBUTE TO THE COMMISSION OF THE FRAUD.32 On June 10, 2004, the CA rendered judgment in favor of Kauffman. It held that in ruling as it did, the RTC disregarded the clear provisions of the Civil Code, particularly Articles 2085 (2)33 and 1409 (2)34 The appellate court relied on the Courts ruling in Insurance Services & Commercial Traders, Inc. v. Court of Appeals35 and ratiocinated, thus: Thus, it has been uniformly held that (I)n a real estate mortgage contract, it is essential that the mortgagor be the absolute owner of the property to be mortgaged; otherwise, the mortgage is void. (Robles vs. Court of Appeals, G.R. No. 12309, Mar. 14, 2000). This was simply in line with the basic requirement in our laws that the mortgagor be the absolute owner of the property sought to be mortgaged (Lorbes vs. Court of Appeals, G.R No. 139884, Feb. 15, 2001). This is in anticipation of a possible foreclosure sale should the mortgagor default in the payment of the loan, and a foreclosure sale, though essentially a "forced sale," is still a sale in accordance with Art. 1458 of the Civil Code. Being a sale, the rule that the seller must be the owner of the thing sold also applies in a foreclosure sale (Cavite Development Bank vs. Cyrus Lim, G.R. No. 131679, Feb. 1, 2000).36 Erea thus filed the instant petition contending that the following legal issues should be resolved: I THE COURT OF APPEALS HAS SERIOUSLY ERRED IN HOLDING THAT RESPONDENT QUERRER-KAUFFMAN IS THE OWNER OF THE PROPERTY MORTGAGED TO PETITIONER DESPITE THE ABSENCE OF SUBSTANTIAL EVIDENCE TO SUPPORT SUCH A CONCLUSION OF FACT. II THE COURT OF APPEALS HAS SERIOUSLY ERRED IN HOLDING THAT THE CONTRACT OF REAL ESTATE MORTGAGE EXECUTED ON 01 AUGUST 1997 BETWEEN ROSANA EREA AND VIDA DANA QUERRER IS A FORGED DEED OF MORTGAGE WITHOUT SUBSTANTIAL EVIDENCE TO ESTABLISH SUCH FACT. III THE COURT OF APPEALS HAS SERIOUSLY ERRED IN HOLDING THAT THE DOCTRINE OF A "MORTGAGE IN GOOD FAITH" DOES NOT APPLY TO PETITIONER DESPITE SUBSTANTIAL AND UNDISPUTED EVIDENCE PROVING HER A MORTGAGEE IN GOOD FAITH.37 Petitioner avers that respondent failed to prove that she is the owner of the property, and points out that the documentary evidence shows that the negotiator over the property is Vida Dana Querrer and not Vida Dana Querrer-Kaufffman. There is thus no factual basis for the CAs finding that the Real Estate Mortgage was a forged deed. Considering that respondent, as the plaintiff below, failed to adduce clear and convincing evidence that the signature on the Real Estate Mortgage is a forgery, the signature over the printed name in the said document must be the genuine signature of Vida Dana Querrer, the registered owner of the property. Even assuming that respondent was the lawful owner of the property and the signature in the Real Estate Mortgage is a forgery, petitioner insists that she is a mortgagee in good faith as shown by the following facts and circumstances: 1. Before the offer of mortgage was accepted by petitioner Rosana Erea, she required the production of the owners copy of TCT No. T-48521. The mortgagee took such step to enable her to know the rights of the mortgagor over the property to be mortgaged. The presentation of the desired certificate was complied with. 2. The identity of the mortgagor was ascertained from the personal interview of the relatives of the mortgagor who were the spouses Jennifer and Richmond Ramirez, a known compadre of Angel Jose, the grandson of Socorro Ramos, the aunt of the petitioner. Richmond Ramirez with his wife introduced the mortgagor Vida Dana Querrer as his half-sister who wanted to mortgage the property

described in the certificate of title which was registered in her name. The spouses of the mortgagor were accompanied to the house of Rosana Erena by Socorro Ramos, her aunt who acknowledged to know Richmond and Jennifer Ramirez for a period of five years, more or less. Aside from the confirmation of her filial relation to the Ramirez couple by Richmond Ramirez, her personal Identification Card showed the mortgagors name and proved her identity to be Vida Dana Querrer. The Tax Declarations, tax clearance, the owners copy of TCT No. T-48521, police clearance, survey plan attested to the fact that the owner of the property subject of the mortgage was the mortgagor. 3. Further examination of the certificate of title in the Office of the Register of Deeds of Las Pias City proved the authenticity of the owners copy of the certificate. 4. The actual physical inspection of the house and lot covered by the certificate in the given address for two (2) times, at least by the mortgagor and mortgagee together with Soccoro Ramos, and the Ramirez couple strengthened her reasonable belief in good faith that the mortgagor is the owner of the property covered by the certificate of title. 5. The aforesaid interviews/examination of records, and inspection of the premises showed that earnest and diligent efforts were exerted by the petitioner to ascertain the identity of the mortgagor and her ownership of the subject property. The aforestated steps taken by her are visible proofs of the due diligence exercised by Rosana Erena to ascertain the identity of the mortgagor and respondents capacity to convey the property to her in a contract of mortgage with her. 6. Without admitting on the allegation of a forged signature, the established facts showing the exercise of due diligence and reasonable caution observed by petitioner preparatory to the acceptance and execution of the mortgage contract BELIE the accusation of bad faith to her. In truth, petitioner had been reasonably diligent to meet the justification of a mortgagee in good faith.38 For her part, respondent avers that, contrary to petitioners claim, the issues raised in the instant petition are factual in nature. Moreover, based on the evidence on record, both the trial and appellate courts are one in declaring that she is the lawful registered owner of the property, and that such findings are conclusive on this Court. Besides, the petitioner is proscribed from assailing the findings of the trial and appellate courts since under Rule 45 of the Rules of Court, only questions of law may be raised in this Court. She insists that petitioner failed to establish special and important reasons for the Court to exercise its discretion to review the appellate courts decision. The petition has no merit. Indeed, the trial and appellate courts found that respondent, as plaintiff below, adduced clear and convincing evidence that she is the owner of the property and that the signature on the Special Power of Attorney and Real Estate Mortgage are not her genuine signatures. She purchased the property from Edgardo C. Espiritu on June 21, 1997 via a Deed of Absolute Sale,39 on the basis of which TCT No. 48521 under her name was issued by the Register of Deeds on June 25, 1997.40 Indeed, when respondent and her sister, Evelyn Pares, confronted Mira Bernal (Jennifer Ramirezs aunt), Bernal pleaded for mercy, on bended knees, after admitting that she and Jennifer Ramirez stole the owners duplicate copy of the title and the tax declarations covering the property, the air-conditioning unit, television, and the pieces of jewelry owned by respondent, and, thus, impliedly admitted that they forged the respondents signature on the Real Estate Mortgage: Q Were you able to see Mira in Pasay, in her house? A Yes, Sir. We saw her in Pasay, but in Bian, she suddenly disappeared when we arrived. Q What time did you see Mira in her house in Pasay? A Between 11:00 to 12:00 P.M., Sir. Q But you said you arrived there at 6:00 p.m.? A Yes, Sir. Q You mean you waited? A We waited for her. Dana said, "Mabuti pang ilabas ninyo and mother niyo." ATTY. CABARON: The witness is narrating, Your Honor. ATTY. MASANGKAY:

Q So, finally, you were able to talk to Mira in that house? A Yes, Sir. Q How about Jennifer? A No, Sir. Q Alright, what did you ask Mira? A My sister asked Mira who destroyed my vault? Q What was the answer of Mira? A Mira answered, "Why did you not inform that you will be coming?" ATTY. MASANGKAY: Q And then? A Dana said, what I am asking, you better answer. Q What was the answer? A According to her, it was Jennifer. Q It was Jennifer who, what? A She just said Jennifer. Q What about the title? A My sister was asking who destroyed the vault, then Mira answered, it was Jennifer. We did not ask anymore because she continued on talking and she said Jennifer was short of funds. She said, "Nagipit kasi ang bata, naawa ako kaya binigay ko ang titulo. Q And, who is Jennifer? Is this Jennifer the same Jennifer Ramirez who is one of the defendants here? A Yes, Sir. Q Who is she? A According to my sister, she is the daughter of Eduardo Victor. Q What else did she say? WITNESS: A When she said that Jennifer took it, Dana looked for jewelries. Then the daughter of Beth said, "Tita Dana, sabi ni Tita Ellen, papalitan niya ang mga alahas na iyon." ATTY. MASANGKAY: Q And finally, what was the statement of Mira with respect to the transaction?

A When Dana learned about that, she said, we will file a case against them. Q And so? A Mira knelt down and began to cry and was begging. Q What did she say? A She said, "Parang awa mo na sa akin, Dana. Luluhod ako sa harapan niyo, patawarin mo lang kami." She was crying and saying, "Gipit na gipit lang talaga kami. Bigyan mo kami ng konting panahon at ibabalik naming iyon."41 The trial courts findings of fact as affirmed by the CA are conclusive on this Court absent evidence that the trial court ignored, misapplied or misconstrued facts and circumstances of substance which, if considered, would alter the outcome of the case. Indeed, under Rule 45 of the Rules of Court, only questions of law may be raised. This is so because this Court is not a trier of facts and is not to re-examine and re-evaluate the testimonial and documentary evidence on record. While the findings and conclusion of the trial court and the appellate court may be reversed in exceptional circumstances, the Court cannot do so in the absence of any such justification or exceptional circumstance, such as in this case. The ruling of the CA, that the Real Estate Mortgage executed in petitioners favor is null and void, is correct. The registration thereof with the Register of Deeds and its annotation at the dorsal portion of TCT No. 48521 is also null and void, as provided in the last paragraph of Section 53, P.D. 1529 which reads: Sec. 53. Presentation of owners duplicate upon entry of new certificate. xxxx In all cases of registration procured by fraud, the owner may pursue all his legal and equitable remedies against the parties to such fraud without prejudice, however, to the rights of any innocent holder of the decree of registration on the original petition or application; any subsequent registration procured by the presentation of a forged duplicate certificate of title, or a forged deed or other instrument, shall be null and void (emphasis supplied). One of the essential requisites of a mortgage contract is that the mortgagor must be the absolute owner of the thing mortgaged.42 A mortgage is, thus, invalid if the mortgagor is not the property owner.43 In this case, the trial court and the CA are one in finding that based on the evidence on record the owner of the property is respondent who was not the one who mortgaged the same to the petitioner. The evidence shows that Mira Bernal and Jennifer Ramirez were able to open respondents vault and steal the owners duplicate of TCT No. T48521 and the tax declarations covering the property; with the connivance of a woman who pretended to be the respondent, they were able consummate the execution of the Real Estate Mortgage by forging the respondents signature on said deed. We, thus, quote with approval the CA when it held: As to the claim of Querrer-Kauffman that her purported signatures on the mortgage are forgeries, the trial court believed her and held that there is "convincing proof to the contention of the plaintiff that the signature of Vida Dana Querrer as appearing on the question[ed] contract was a forgery because the real Vida Dana Querrer who is the plaintiff in this case was actually in the United States at the time of the questioned contract on 1 August 1997" (Decision, p. 226, record). And rightly so because of the immigration entries on her passport, her juxtaposed sample signatures which are clearly different from those in the deed, and the comic incongruity of Querrer-Kauffman as principal and Ramirez as her attorney-in-fact both signing the mortgage deed, all prove and declare beyond reasonable doubt that the subject real estate mortgage is a forgery.44 The evidence on record further shows that Jennifer Ramirez and her husband, Richmond Ramirez, used a woman who introduced herself as Vida Dana Querrer to the petitioner and claim as owner of the property. That woman, an impostor, signed the Real Estate Mortgage as mortgagor and the Special Power of Attorney, as principal, and showed to petitioner the owners duplicate copy of the title that was taken from the respondents vault, and succeeded in having the Real Estate Mortgage annotated at the dorsal portion of the title. As correctly ruled by the appellate court: TCT No. T-48521 (Exh. "A") over the litigated lot was issued on June 26, 1995 in the name of the owner of the covered lot: Vida Dana Querrer, single. That the appellant now goes by the name and status of Vida Dana Querrer-Kauffman, married, has been well explained, and quibble on this raised by Erea about the identity and interest of the appellant in the suit has been dismissed by the trial court as "of no moment as this discrepancy is negligible if no[t] bearing at all to the issue of nullity of the questioned contract" and "has no legal anchorage to cling on." The decision went on to state in no uncertain terms that the appellant Querrer-Kauffman "was able to prove preponderantly that she is the real owner of the subject property."45 Indeed, case law is that a Torrens title is generally conclusive evidence of ownership of the land referred to therein.46 While it serves as evidence of an indefeasible title to the property in favor of the person whose name appears therein47 (and TCT No. T-48521 shows, on its face, that the

owner is the respondent), when the instrument presented for registration is forged, even if accompanied by the owners duplicate certificate of title, the registered owner does not thereby lose his title, and neither does the assignee or the mortgagee, for that matter, acquire any right or title to the property.48 In such a case, the transferee or the mortgagee, based on a forged instrument, is not even a purchaser or a mortgagee for value protected by law. Thus, in Joaquin v. Madrid,49 the Court had the occasion to state: In the first assignment of error, it is argued that since par. 2 of Sec. 55 of the Land Registration Act expressly provides that "in all cases of registration of fraud, the owner may pursue all his legal and equitable remedies against the parties to the fraud, without prejudice to the rights of any innocent holder for value of a certificate of title," the second proviso in the same section "that a registration procured by the presentation of a forged deed shall be null and void" should be overlooked. There is no merit in this argument, which would have the effect of deleting the last proviso. This last proviso is a limitation of the first part of par. 2 in the sense that in order that the holder of a certificate for value issued by virtue of the registration of a voluntary instrument may be considered a holder in good faith for value, the instrument registered should not be forged. When the instrument presented is forged, even if accompanied by the owners duplicate certificate of title, the registered owner does not thereby lose his title, and neither does the assignee in the forged deed acquire any right or title to the property. In the second assignment of error, it is further argued that as the petitioner is an innocent purchaser for value, he should be protected as against the registered owner because the latter can secure reparation from the assurance fund. The fact is, however, that petitioner herein is not the innocent purchaser for value protected by law. The innocent purchaser for value protected by law is one who purchases a titled land by virtue of a deed executed by the registered owner himself, not by a forged deed, as the law expressly states. Such is not the situation of the petitioner, who has been the victim of impostors pretending to be the registered owners but who are not said owners.50 The Court cited this ruling in the Joaquin case in Solivel v. Francisco,51 to wit: Even more in point and decisive of the issue here raised, however, is the much later case of Joaquin v. Madrid, where the spouses Abundio Madrid and Rosalinda Yu, owners of a residential lot in Makati, seeking a building construction loan from the then Rehabilitation Finance Corporation, entrusted their certificate of title for surrender to the RFC to Rosalindas godmother, a certain Carmencita de Jesus, who had offered to expedite the approval of the loan. Later having obtained a loan from another source, the spouses decided to withdraw the application they had filed with the RFC and asked Carmencita to retrieve their title and return it to them Carmencita failed to do so, giving the excuse that the employee, in- charge of keeping the title was on leave. It turned out, however, that through the machinations of Carmencita, the property had been mortgaged to Constancio Joaquin in a deed signed by two persons posing as the owners and that after said deed had been registered, the amount for which the mortgage was constituted had been given to the person who had passed herself off as Rosalinda Yu. Constancio Joaquin admitted that the spouses Madrid and Yu were, in fact, not the persons who had signed the deed of mortgage.52 This ruling was later reiterated in Insurance Services & Commercial Traders, Inc. v. Court of Appeals,53 where the Court stressed that in order that the holder of a certificate of value issued by virtue of the registration of a voluntary instrument may be considered a holder in good faith and for value, the instrument registered should not be forged. In Cavite Development Bank v. Lim,54 the Court explained the doctrine of mortgagee in good faith, thus: There is, however, a situation where, despite the fact that the mortgagor is not the owner of the mortgaged property, his title being fraudulent, the mortgage contract and any foreclosure sale arising therefrom are given effect by reason of public policy. This is the doctrine of "mortgagee in good faith" based on the rule that all persons dealing with the property covered by a Torrens Certificate of Title, as buyers or mortgagees, are not required to go beyond what appears on the face of the title. The public interest in upholding the indefeasibility of a certificate of title, as evidence of lawful ownership of the land or of any encumbrance thereon, protects a buyer or mortgagee who, in good faith, relied upon what appears on the face of the certificate of title.55 Indeed, a mortgagee has a right to rely in good faith on the certificate of title of the mortgagor of the property given as security and in the absence of any sign that might arouse suspicion, has no obligation to undertake further investigation. Hence, even if the mortgagor is not the rightful owner of, or does not have a valid title to, the mortgaged property, the mortgagee in good faith is nonetheless entitled to protection.56 This doctrine presupposes, however, that the mortgagor, who is not the rightful owner of the property, has already succeeded in obtaining a Torrens title over the property in his name and that, after obtaining the said title, he succeeds in mortgaging the property to another who relies on what appears on the said title. The innocent purchaser (mortgagee in this case) for value protected by law is one who purchases a titled land by virtue of a deed executed by the registered owner himself, not by a forged deed, as the law expressly states. Such is not the situation of petitioner, who has been the victim of impostors pretending to be the registered owners but who are not said owners.57 The doctrine of mortgagee in good faith does not apply to a situation where the title is still in the name of the rightful owner and the mortgagor is a different person pretending to be the owner. In such a case, the mortgagee is not an innocent mortgagee for value and the registered owner will generally not lose his title. We thus agree with the following discussion of the CA: The trial court wrongly applied in this case the doctrine of "mortgagee in good faith" which has been allowed in many instances but in a milieu dissimilar from this case. This doctrine is based on the rule that persons dealing with properties covered by a Torrens certificate of title are not required to go beyond what appears on the face of the title. But this is only in a situation where the mortgagor has a fraudulent or otherwise defective title, but not when the mortgagor is an impostor and a forger. In a forged mortgage, as in this case, the doctrine of "mortgagee in good faith" cannot be applied and will not benefit a mortgagee no matter how large is his or her reservoir of good faith and diligence. Such mortgage is void and cannot prejudice the registered owner whose signature to the deed is falsified. When the instrument presented is forged, even if accompanied by the owners duplicate certificate of title, the registered owner

does not lose his title, and neither does the assignee in the forged deed acquire any right or title to the property. An innocent purchaser for value is one who purchases a titled land by virtue of a deed executed by the registered owner himself not a forged deed.58 As aforesaid, respondents signature on the Real Estate Mortgage was forged by an impostor. IN LIGHT OF ALL THE FOREGOING, the petition is DENIED. The Decision of the Court of Appeals dated June 10, 2004 and Resolution dated October 28, 2004 are AFFIRMED. Costs against the petitioner. SO ORDERED.

SALES INVOLVING REAL ESTATE

Esguerra vs. Trinidad (518 SCRA 186) Unit Price Contract vs. Lump Sum In a unit price contract, the statement of area of immovable is not conclusive and the price may be reduced or increased depending on the area actually delivered. If the vendor delivers less than the area agreed upon, the vendee may oblige the vendor to deliver all that may be stated in the contract or demand for the proportionate reduction of the purchase price if delivery is not possible. If the vendor delivers more than the area stated in the contract, the vendee has the option to accept only the amount agreed upon or to accept the whole area, provided he pays for the additional area at the contract rate. In the sale of real estate, made for a lump sum and not at the rate of a certain sum for a unit of measure or number, there shall be no increase or decrease of the price, although there be a greater or less areas or number than that stated in the contract. In a contract of sale of land in a mass, it is well established that the specific boundaries stated in the contract must control over any statement with respect to the area contained within its boundaries. It is not of vital consequence that a deed or contract of sale of land should disclose the area with mathematical accuracy. It is sufficient if its extent is objectively indicated with sufficient precision to enable one to identify it. An error as to the superficial area is immaterial. Thus, the obligation of the vendor is to deliver everything within the boundaries, inasmuch as it is the entirety thereof that distinguishes the determinate object.

CAVEAT EMPTOR PRINCIPLE Domingo Realty Inc vs. Court of Appeals (513 SCRA 40) Caveat Emptor Principle Hopefully this case will serve as a precaution to prospective parties to a contract involving titled lands for them to exercise the diligence of a reasonably prudent person by undertaking measures to ensure the legality of the title and the accurate metes and bounds of the lot embraced in the title. It is advisable that such parties (1) verify the origin, history, authenticity, and validity of the title with the Office of the Register of Deeds and the Land Registration Authority; (2) engage the services of a competent and reliable geodetic engineer to verify the boundary, metes, and bounds of the lot subject of said title based on the technical description in the said title and the approved survey plan in the Land Management Bureau; (3) conduct an actual ocular inspection of the lot; (4) inquire from the owners and possessors of adjoining lots with respect to the true and legal ownership of the lot in question; (5) put up signs that said lot is being purchased, leased, or encumbered; and (6) undertake such other measures to make the general public aware that said lot will be subject to alienation, lease, or encumbrance by the parties. Respondent Acero, for all his woes, may have a legal recourse against lessor David Victorio who inveigled him to lease the lot which turned out to be owned by another.