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SECOND DIVISION

SPOUSES EDESITO and CONSORCIA RAGASA, Petitioners,

G.R. No. 141964

Present:

PUNO, J., Chairperson,* SANDOVAL-GUTIERREZ,** - versus CORONA, AZCUNA and GARCIA, JJ. SPOUSES GERARDO and RODRIGA ROA and the EX-OFFICIO SHERIFF OF QUEZON CITY, Respondents. Promulgated:

June 30, 2006 x- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - x

DECISION CORONA, J.:

Edesito and Consorcia Ragasa filed a complaint1[1] against private respondents Gerardo and Rodriga Roa and the public respondent ex-officio sheriff of Quezon City founded on the following allegations:

On May 10, 1989, plaintiffs [petitioners here] entered into a contract with Oakland Development Resources Corporation for the purchase in installments of a piece of property, with improvements, located at No. 06, Garnet St., Prater Village II, Diliman, Q.C. covered by TCT No. 27946 of the Registry of Deeds for Quezon City and more particularly described in a photocopy of TCT No. 27946 []; Immediately thereafter, plaintiffs took possession of the property covered by TCT No. 27946 of the Registry of Deeds for Quezon City and resided thereat together with their relatives who continued to occupy the same whenever the plaintiffs would leave for Italy where they both worked. Hence, from May of 1989 up to the present date, plaintiffs were in continuous and notorious possession of the property covered by TCT No. 27946 of the Registry of Deeds for Quezon City to the exclusion of others and in the concept of an owner;

In March of 1992, plaintiffs were able to fully pay for the agreed purchase price of the property covered by TCT No. 27946 of the Registry of Deeds for Quezon City and accordingly, a Deed of Absolute Sale dated March 12, 1992 was executed by and between Oakland Development Resources Corporation [] and the original owners copy of TCT No. 27946 of the Registry of Deeds for Quezon City accordingly turned over to them; However, despite the execution of the Deed of Absolute Sale, Oakland Development Resources Corporation failed to cause the transfer of title to plaintiffs. On the part of plaintiffs, all the while they thought that the Deed of Absolute Sale and possession of the original of the owners copy of TCT No. 27946 of Registry of Deeds for Quezon City was more than sufficient to protect their rights and interests over the property; Sometime March of 1999, during one of the trips of plaintiff Consorcia Ragasa to the Philippines from Italy, upon learning that Oakland Development Resources Corporation was no longer functional as a corporate entity, she decided to cause the transfer of registration of TCT No. 27946 of Registry of Deeds for Quezon City herself since the vendor thereof was apparently in no position to undertake the same; She was thus surprised to learn from the Registry of Deeds for Quezon City that on April 14, 1995, the property in question was sold by defendant ExOfficio Sheriff of Quezon City [a respondent here] to defendants Sps. Roa [respondents here] as the highest bidder for the price and consideration of P511,000.00 as shown in the Sheriffs Final Deed of Sale []. xxx xxx xxx

The levy on attachment and the execution sale undertaken by the ExOfficio Sheriffs Office of Quezon City is clearly illegal there being no notice given by said individual to the occupants of the property in question. Furthermore, a casual perusal of the Sheriffs Deed of Sale will reveal that the execution price of P511,000.00 is grossly inadequate to pay for real properties listed therein with fair market values conservatively estimated at P3,000,000.00

The case was raffled to Branch 2202[2] of the Quezon City Regional Trial Court (RTC) and was docketed as Civil Case No. Q99-37908.

Instead of filing an answer, private respondents moved for the dismissal of the complaint on the grounds of prescription and laches. In an order3[3] dated February 3, 2000, the RTC granted the motion. Characterizing the suit as an action upon an injury to the rights of the plaintiff which, according to Article 1146 of the Civil Code,4[4] must be filed within four years, the RTC held that petitioners action was barred by prescription for having been filed more than four years after the registration of the execution sale.

Seeking a reversal of the trial courts order dismissing their complaint, petitioners proceeded forthwith to this Court with the present petition for review on certiorari5[5] raising only a pure question of law.6[6]

We grant the petition.

The trial courts order of dismissal was predicated on the theory that the suit petitioners commenced was an action upon an injury to their rights contemplated in Article 1146 of the Civil Code. That premise was erroneous. A reading of the allegations in petitioners complaint reveals that the action was essentially one for quieting of title to real property under Article 476 of the Civil Code which states:

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

To make out an action to quiet title under the foregoing provision, the initiatory pleading has only to set forth allegations showing that (1) the plaintiff has title to real property or any interest therein7[7] and (2) the defendant claims an interest therein adverse to the plaintiffs arising from an instrument, record, claim, encumbrance, or proceeding which is apparently valid or effective but is in truth and in fact invalid, ineffective, voidable, or unenforceable.8[8] Thus, the averments in petitioners complaint that (1) they acquired ownership of a piece of land by tradition or delivery as a consequence of sale and (2) private respondents subsequently purchased the same piece of land at an allegedly void

execution sale were sufficient to make out an action to quiet title under Article 476.

This being the case, Article 1146 (which refers to actions upon an injury to the rights of the plaintiff and upon a quasi delict)9[9] did not apply. Rather, considering petitioners allegation in their complaint that from May of 1989 up to the present date, plaintiffs [had been] in continuous and notorious possession of the propertyto the exclusion of others and in the concept of owner[s]10[10] an assertion private respondents never bothered to dispute our ruling in Sapto v. Fabiana11[11] should apply:

[I]t is an established rule of American jurisprudence (made applicable in this jurisdiction by Art. 480 of the New Civil Code)12[12] that actions to quiet title to property in the possession of the plaintiff are imprescriptible.

The prevailing rule is that the right of a plaintiff to have his title to land quieted, as against one who is asserting some adverse claim or lien thereon, is not barred while the plaintiff or his grantors remain in actual possession of the land, claiming to be owners thereof, the reason for this rule being that while the owner in fee continues liable to an action, proceeding, or suit upon the adverse claim, he has a continuing right to the aid of a court of equity to ascertain and determine the nature of such claim and its effect on his title, or to assert any superior equity in his favor. He may wait until his possession is disturbed or his title is attacked before taking steps to vindicate his right. But the rule that the statute of limitations is not available as a defense to an action to remove a cloud from title can only be invoked by a complain[ant] when he is in possession. One who claims property which is in the possession of another must, it seems, invoke his remedy within the statutory period. (citations omitted)13[13]

Accordingly, petitioners action was not subject to prescription.

WHEREFORE, the petition is GRANTED.

The February 3,

2000 order of the Regional Trial Court, Branch 220, Quezon City dismissing petitioners complaint is hereby REVERSED and SET ASIDE. Let this case be REMANDED to the court a quo for further

proceedings.

SO ORDERED. FIRST DIVISION

TEOFISTO OO, PRECY O. G.R. No. 154270 NAMBATAC, VICTORIA O. MANUGAS and POLOR O. CONSOLACION, Present: Petitioners, PUNO, C.J., Chairperson, CARPIO MORALES, LEONARDO-DE CASTRO, - versus BERSAMIN, and VILLARAMA, JR., JJ.

VICENTE N. LIM, Respondent.

Promulgated:

March 9, 2

x-----------------------------------------------------------------------------------------x DECISION

BERSAMIN, J.:

The subject of controversy is Lot No. 943 of the Balamban Cadastre in Cebu City, covered by Original Certificate of Title (OCT) No. RO-9969-(O-20449), over which the contending parties in this action for quieting of title, initiated by respondent Vicente N. Lim (Lim) in the Regional Trial Court (RTC) in Cebu City, assert exclusive ownership, to the exclusion of the other. In its decision dated July 30, 1996,14[1] the RTC favored Lim, and ordered the cancellation of OCT No. RO-9969-(O-20449) and the issuance of a new certificate of title in the name of Luisa Narvios-Lim (Luisa), Lims deceased mother and predecessor-in-interest. On appeal (CA-GR CV No. 57823), the Court of Appeals (CA) affirmed the RTC on January 28, 2002.15[2] It later denied the petitioners motion for reconsideration through the resolution dated June 17, 2002.16[3]

Hence, this appeal via petition for review on certiorari.

Antecedents

On October 23, 1992, Lim filed in the RTC in Cebu City a petition for the reconstitution of the owners duplicate copy of OCT No. RO-9969-(O-20449), alleging that said OCT had been lost during World War II by his mother, Luisa;17[4] that Lot No. 943 of the Balamban Cadastre in Cebu City covered by said OCT had been sold in 1937 to Luisa by Spouses Diego Oo and Estefania Apas (Spouses Oo), the lots registered owners; and that although the deed evidencing the sale had been lost without being registered, Antonio Oo (Antonio), the only legitimate heir of Spouses Oo, had executed on April 23, 1961 in favor of Luisa a notarized document denominated as confirmation of sale,18[5] which was duly filed in the Provincial Assessors Office of Cebu.

Zosimo Oo and petitioner Teofisto Oo (Oos) opposed Lims petition, contending that they had the certificate of title in their possession as the successors-in-interest of Spouses Oo.

On account of the Oos opposition, and upon order of the RTC, Lim converted the petition for reconstitution into a complaint for quieting of title,19[6] averring additionally that he and his predecessor-in-interest had been in actual possession of the property since 1937, cultivating and developing it, enjoying its fruits, and paying the taxes corresponding to it. He prayed, inter alia, that the Oos be ordered to surrender the reconstituted owners duplicate copy of OCT No. RO-9969-(O-20449), and that said OCT be cancelled and a new certificate of title be issued in the name of Luisa in lieu of said OCT.

In their answer,20[7] the Oos claimed that their predecessors-in-interest, Spouses Oo, never sold Lot No. 943 to Luisa; and that the confirmation of sale purportedly executed by Antonio was fabricated, his signature thereon not being authentic.

RTC Ruling

On July 30, 1996, after trial, the RTC rendered its decision,21[8] viz:

WHEREFORE, premises considered, judgment is hereby rendered quieting plaintiff's title to Lot No. 943 of the Balamban (Cebu) Cadastre, and directing the Register of Deeds of Cebu (1) To register the aforestated April 23, 1961 Confirmation of Sale of Lot No. 943 of the Balamban, Cebu Cadastre by Antonio Oo in favor of Luisa Narvios-Lim; (2) To cancel the original certificate of title covering the said Lot No. 943 of the Balamban, Cebu Cadastre; and, (3) To issue in the name of Luisa Narvios-Lim, a new duplicate certificate of title No. RO-9969 (O-20449) of the Register of Deeds of Cebu, which shall contain a memorandum of the fact that it is issued in place of the lost duplicate certificate of title, and shall in all respects be entitled to like faith and credit as the original certificate, and shall be regarded as such for all purposes of this decree, pursuant to the last paragraph of Section 109, Presidential Decree No. 1529. Without special pronouncement as to costs. SO ORDERED.22[9]

The RTC found that the Lims had been in peaceful possession of the land since 1937; that their possession had never been disturbed by the Oos, except on two occasions in 1993 when the Oos seized the harvested copra from the Lims caretaker; that the Lims had since declared the lot in their name for taxation purposes, and had paid the taxes corresponding to the lot; that the signature of Antonio on the confirmation of sale was genuine, thereby giving more weight to the testimony of the notary public who had notarized the document and affirmatively testified that Antonio and Luisa had both appeared before him to

acknowledge the instrument as true than to the testimony of the expert witness who attested that Antonios signature was a forgery.

CA Ruling

On appeal, the Oos maintained that the confirmation of sale was spurious; that the property, being a titled one, could not be acquired by the Lims through prescription; that their (the Oos) action to claim the property could not be barred by laches; and that the action instituted by the Lims constituted a collateral attack against their registered title.

The CA affirmed the RTC, however, and found that Spouses Oo had sold Lot No. 943 to Luisa; and that such sale had been confirmed by their son Antonio. The CA ruled that the action for quieting of title was not a collateral, but a direct attack on the title; and that the Lims undisturbed possession had given them a continuing right to seek the aid of the courts to determine the nature of the adverse claim of a third party and its effect on their own title.

Nonetheless, the CA corrected the RTC, by ordering that the Office of the Register of Deeds of Cebu City issue a new duplicate certificate of title in the name

of Luisa, considering that the owners duplicate was still intact in the possession of the Oos.

The decree of the CA decision was as follows:

WHEREFORE, the appeal is DISMISSED for lack of merit. However, the dispositive portion of the decision appealed from is CORRECTED as follows: (1) Within five (5) days from finality of the decision, defendants-appellants are directed to present the owner's duplicate copy of OCT No. RO-9969 (O-20449) to the Register of Deeds who shall thereupon register the Confirmation of Sale of Lot No. 943, Balamban Cadastre, Cebu, executed on April 23, 1961 by Antonio Oo in favor of Luisa NarviosLim, and issue a new transfer certificate of title to and in the name of the latter upon cancellation of the outstanding original and owner's duplicate certificate of title. (2) In the event defendants-appellants neglect or refuse to present the owner's copy of the title to the Register of Deeds as herein directed, the said title, by force of this decision, shall be deemed annulled, and the Register of Deeds shall make a memorandum of such fact in the record and in the new transfer certificate of title to be issued to Luisa NarviosLim. (3) Defendants-appellants shall pay the costs. SO ORDERED.23[10]

The CA denied the Oos motion for reconsideration24[11] on June 17, 2002.25[12]

Hence, this appeal.

Issues

The petitioners raise the following issues:

1. Whether or not the validity of the OCT could be collaterally attacked through an ordinary civil action to quiet title;

2. Whether or not the ownership over registered land could be lost by prescription, laches, or adverse possession; 3. Whether or not there was a deed of sale executed by Spouses Oo in favor of Luisa and whether or not said deed was lost during World War II; 4. Whether or not the confirmation of sale executed by Antonio in favor of Luisa existed; and

5. Whether or not the signature purportedly of Antonio in that confirmation of sale was genuine.

Ruling of the Court

The petition has no merit.

A. Action for cancellation of title is not an attack on the title

The petitioners contend that this action for quieting of title should be disallowed because it constituted a collateral attack on OCT No. RO-9969-(O20449), citing Section 48 of Presidential Decree No. 1529, viz:

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

The petitioners contention is not well taken. An action or proceeding is deemed an attack on a title when its objective is to nullify the title, thereby challenging the judgment pursuant to which the title was decreed.26[13] The attack is direct when the objective is to annul or set aside such judgment, or enjoin its enforcement. On the other hand, the attack is indirect or collateral when, in an action to obtain a different relief, an attack on the judgment is nevertheless made as an incident thereof.27[14]

Quieting of title is a common law remedy for the removal of any cloud, doubt, or uncertainty affecting title to real property.28[15] Whenever there is a cloud on title to real property or any interest in real property by reason of any instrument, record, claim, encumbrance, or proceeding that is apparently valid or effective, but is, in truth and in fact, invalid, ineffective, voidable, or unenforceable, and may be prejudicial to said title, an action may be brought to

remove such cloud or to quiet the title.29[16] In such action, the competent court is tasked to determine the respective rights of the complainant and the other claimants, not only to place things in their proper places, and to make the claimant, who has no rights to said immovable, respect and not disturb the one so entitled, but also for the benefit of both, so that whoever has the right will see every cloud of doubt over the property dissipated, and he can thereafter fearlessly introduce the improvements he may desire, as well as use, and even abuse the property as he deems fit.30[17]

Lims complaint pertinently alleged:


18. If indeed, the genuine original of the Owner's Duplicate of the Reconstituted Original Certificate of Title No. RO-9699 (O-20449) for Lot 943, Balamban Cadastre xxx is in Defendant's (Oos) possession, then VNL submits the following PROPOSITIONS: xxx 18.2. Therefore, the Original of Owners Duplicate Certificate (which Respondents [Defendants Oos] claim in their Opposition is in their possession) must be surrendered to VNL upon order of this Court, after the Court shall have determined VNL's mother's acquisition of the attributes of ownership over said Lot 943, in this action, in accordance with Section 107, P.D. 1529, Property Registration Decree xxx xxx [t]hat OCT 20449 be cancelled and new title for Lot 943 be issued directly in favor of LUISA NARVIOS, to complete her title to said Lot;31[18]

The averments readily show that the action was neither a direct nor a collateral attack on OCT No. RO-9969-(O-20449), for Lim was asserting only that the existing title registered in the name of the petitioners predecessors had become inoperative due to the conveyance in favor of Lims mother, and resultantly should be cancelled. Lim did not thereby assail the validity of OCT No. RO-9969-(O-20449), or challenge the judgment by which the title of the lot involved had been decreed. In other words, the action sought the removal of a cloud from Lims title, and the confirmation of Lims ownership over the disputed property as the successor-in-interest of Luisa.

B. Prescription was not relevant

The petitioners assert that the lot, being titled in the name of their predecessors-in-interest, could not be acquired by prescription or adverse possession.

The assertion is unwarranted.

Prescription, in general, is a mode of acquiring or losing ownership and other real rights through the lapse of time in the manner and under the conditions laid down by law.32[19] However, prescription was not relevant to the determination of the dispute herein, considering that Lim did not base his right of

ownership on an adverse possession over a certain period. He insisted herein, instead, that title to the land had been voluntarily transferred by the registered owners themselves to Luisa, his predecessor-in-interest. Lim showed that his mother had derived a just title to the property by virtue of sale; that from the time Luisa had acquired the property in 1937, she had taken over its possession in the concept of an owner, and had performed her obligation by paying real property taxes on the property, as evidenced by tax declarations issued in her name;33[20] and that in view of the delivery of the property, coupled with Luisas actual occupation of it, all that remained to be done was the issuance of a new transfer certificate of title in her name. C. Forgery, being a question of fact, could not be dealt with now The petitioners submit that Lims evidence did not preponderantly show that the ownership of the lot had been transferred to Luisa; and that both the trial and the appellate courts disregarded their showing that Antonios signature on the confirmation of sale was a forgery.

Clearly, the petitioners hereby seek a review of the evaluation and appreciation of the evidence presented by the parties.

The Court cannot anymore review the evaluation and appreciation of the evidence, because the Court is not a trier of facts.34[21] Although this rule admits of certain exceptions, viz: (1) when the conclusion is a finding grounded entirely on speculation, surmises, or conjecture; (2) when the inference made is manifestly mistaken; (3) where there is a 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 the Court of Appeals, in making its findings, went beyond the issues of the case, and the findings are contrary to the admissions of both appellant and appellee; (7) when the findings of the Court of Appeals are contrary to those of the trial court; (8) when the findings of fact are conclusions without specific evidence on which they are based; (9) when the facts set forth in the petition as well in the petitioners main and reply briefs are not disputed by the respondents; and, (10) when the findings of fact of the Court of Appeals are premised on the supposed absence of evidence and are contradicted by the evidence on record,35[22] it does not appear now that any of the exceptions is present herein. We thus apply the rule without hesitation, and reject the appeal for that reason.

It is emphasized, too, that the CA upheld the conclusion arrived at by the RTC that the signature of Antonio had not been simulated or forged. The CA ruled that the testimony of the notary public who had notarized the confirmation of sale to the effect that Antonio and Luisa had appeared before him prevailed over that of

the petitioners expert witness. The concurrence of their conclusion on the genuineness of Antonios signature now binds the Court.36[23]

In civil cases, the party having the burden of proof must establish his case by a preponderance of evidence. Preponderance of evidence is the weight, credit, and value of the aggregate evidence on either side, and is usually considered to be synonymous with the term greater weight of the evidence or greater weight of the credible evidence. Preponderance of evidence is a phrase that means, in the last analysis, probability of the truth.37[24] It is evidence that is more convincing to the court as worthy of belief than that which is offered in opposition thereto.

Lim successfully discharged his burden of proof as the plaintiff. He established by preponderant evidence that he had a superior right and title to the property. In contrast, the petitioners did not present any proof of their better title other than their copy of the reconstituted certificate of title. Such proof was not enough, because the registration of a piece of land under the Torrens system did not create or vest title, such registration not being a mode of acquiring ownership. The petitioners need to be reminded that a certificate of title is merely an evidence of ownership or title over the particular property described therein. Its issuance in favor of a particular person does not foreclose the possibility that the real property

may be co-owned with persons not named in the certificate, or that it may be held in trust for another person by the registered owner.38[25]

WHEREFORE, the petition for review on certiorari is denied, and the decision dated January 28, 2002 is affirmed.

The petitioners are ordered to pay the costs of suit.

SO ORDERED.
Republic SUPREME Manila THIRD DIVISION G.R. No. 70191 October 29, 1987 RODOLFO L. CORONEL, petitioner, vs. HONORABLE INTERMEDIATE APPELLATE COURT and ELIAS MERLAN, BRIGIDO MERLAN, JOSE MERLAN, TEODORICO NOSTRATIS, SEVERO JECIEL SANTIAGO FERNAN and FORTUNATO OCAMPO, respondents. of the Philippines COURT

GUTIERREZ, JR., J.:

This is a petition to review the decision of the then Intermediate Appellate Court, now the Court of Appeals, which affirmed the decision and order of the then Court of First Instance of Cavite in Civil Case No. 651. The dispositive portion of the trial court's decision reads:
WHEREFORE, in the interest of moral justice, judgment is hereby rendered in favor of all the defendants and intervenor; hereby DISMISSING the complaint; however, the Court hereby orders instead the immediate partition of the land, subject-matter on this case, without prejudice to the plaintiff, and in accordance with the express but undivided apportionments corresponding to the original co-ownership, and pursuant to Transfer Certificate of Title No. T-1444 (EXHIBIT 4-b) of the Registry of Deeds for the Province of Cavite, as entered on May 19, 1960; Hereby declaring null and void, Transfer Certificate of Title No, T-75543 of the same registry. Without pronouncements as to costs. (At p. 71, Record on Appeal)

The dispositive portion of the questioned order of the trial court reads.
WHEREFORE, under our present alternatives, as prayed for by defendants and Intervenor, through Lawyer Eleuterio A. Beltran, in their present incident recorded on January 10, 1980; the Decision subject matter hereof is amended in the following significance: Plaintiff Rodolfo Coronel is further ordered to submit a complete Inventory and Accounting of all the harvests of palay produced from the parcel of land (Lot 1950-A) subject matter of the present litigation, and to deliver the corresponding shares to the defendants and intervenors correlated with all the harvests of palay done by the plaintiffs; considering the unrebutted finality of the testimony of defendant Brigido Merian in congruence with his supplication for the Inventory and Accounting of all the palay gathered by plaintiff Radolfo Coronel who is likewise ordered, finally, to pay Iawyer Eleuterio Beltran as counsel for defendants and intervenors, Four Thousand (P400000) Pesos for his professional services. Naic, Cavite, February 13, 1980. (pp. 88-89, Record on Appeal).

Petitioner Rodolfo Coronel filed a complaint for recovery of possession of a parcel of land registered under his name (Transfer Certificate of Title No. T-75543 in the Registry of Deeds for the Province of Cavite) and more particularly described as follows:
A parcel of land (lot 1950-A of the subdivision plan (LRC) Psd-104544 being a portion of Lot 1950, Naic, Estate, LRC Rec. No. 8340), situated in the Municipality of Naic, Province of Cavite, Island of Luzon. Bounded on the NE., pts. 12 to 14 by Irrigation Ditch; on the SE and SW pts. 14 to 15 and 15 to 1 by Lot 1950-D of the subdivision plan; on the SW pts. 1 to 2 by lot 2304, and pts. 2 to 11 by Lot 1951, both of Naic, Estate; and on the NW pts. 11 to 12 by Road. ... ; containing an area of TWELVE THOUSAND ONE HUNDRED EIGHTY NINE (12,189) SQUARE METERS, more or less. ... (p. 10, Record on Appeal)

The complaint docketed as Civil Case No. 651 was filed against the private respondents Elias Merlan, Brigido Merlan, Jose Merlan, Teodorico Nostrates, Severo Jeciel Santiago Fernan and Fortunato Ocampo before the then Court of First Instance of Cavite. Coronel alleged in his complaint that at the time he purchased the subject parcel of land, the defendants (private respondents herein) were already occupying a portion thereof as "tenants at will" and that despite demands to vacate the premises, the defendants failed and refused to move out from the land. In their Answer with Counterclaim and With Third-Party Complaint, the defendants denied that Coronel was the owner of the whole parcel of land and alleged that the lots occupied by them form part of a 1/3 undivided share of brothers Brigido Merlan and Jose Merlan which they inherited from their deceased father Gabriel Merlan, one of the three heirs of Bernabela Lontoc, the original owner of Lot No. 1950-A of the Naic Estate; that the Merlan brothers together with their two brothers and a sister never sold their undivided 1/3 share of the lot to anybody; that it was actually their other co-heirs who sold their undivided portions and that the plaintiff's claim of ownership of the whole parcel of land, if ever it has basis, is fraudulent, void, and without effect; that the Merlans have always been in open and peaceful possession of their undivided share of the lot throughout the years from the first sale by their co-heirs of Lot No. 1950-A in 1950; and that the other defendants were legitimate tenants. They prayed that the plaintiff respect their rights over 1/3 (4,063 square meters) of Lot No. 1950-A of the Naic Estate, In their Third-Party Complaint, the defendants charged that the third-party defendants, owners of the remaining portion of Lot No. 1950-A, defrauded them when they sold the entire parcel. Third-Party Defendants Marcelo Novelo, Paz Anuat Daniel Anuat and Rosario Cailao the defendants' co-owners of Lot No. 1950-A denied that they had something to do with the fraudulent acts or illegal machinations which deprived the defendants of their share in the subject parcel of land, and that what they sold was only their 2/3 undivided shares in said parcel. They also filed a cross-claim against their co-defendant Mariano Manalo whom they charged might have connived with others Including the plaintiff to deprive the defendants and their co-heirs of their share in the subject parcel of land. As stated earlier, the lower court ruled in favor of the defendants and on appeal, the lower court's decision was affirmed with the following modification by the then Intermediate Appellate Court, to wit:
WHEREFORE, PREMISES CONSIDERED, there being no reversible error in the main decision appealed from dated December 7, 1979, and the Order of the Court dated February 13, 1980, the same are hereby AFFIRMED with the modification that after the word "intervenor" in the main decision, the following shall be inserted: l) Declaring them as the absolute owners of the remaining 1 1/3 of the 2/8 portion pertaining to the late Bernabela Lontoc, nameIy, Lot 1950-A of the Naic Estate pursuant to Art. 845 of the New Civil Code. (At p. 29.)

The petitioner states that the appellate court erred as follows:


I THAT THE HONORABLE INTERMEDIATE APPELLATE COURT HAS ERRED IN NOT CONSIDERING THAT THE CLAIM OF PRIVATE RESPONDENTS TO THE LAND IN QUESTION HAS BEEN BARRED BY THE STATUTE OF LIMITATION OR BY ESTOPPEL BY LACHES. II THAT THE HONORABLE INTERMEDIATE APPELLATE COURT HAS ERRED IN NOT CONSIDERING PETITIONER AS A PURCHASER IN GOOD FAITH AND FOR VALUABLE CONSIDERATION OF THE LAND IN QUESTION. III THAT THE HONORABLE INTERMEDIATE APPELLATE COURT HAS ERRED IN DECLARING AS NULL AND VOID TRANSFER CERTIFICATE OF TITLE NO. T-75543 OF THE REGISTRY OF DEEDS OF CAVITE WHICH IS ALREADY PACEL IN THE NAME OF PETITIONER. (at pp.1-2 Brief for the Petitioners)

The records show that the 12,189 square meter lot was part of a 48,755 square meter lot covered by Transfer Certificate of Title No. 3116 (RT-5010) of the Naic Estate located at Muzon, Naic, Cavite in the names of the spouses Valentin Gutierrez and Eligia Mangahas with a calculated portion of 2/8; spouses Jose Perea and Celestia Naces with a calculated portion of 3/8; Josefa Nazareno with a calculated portion of 1/8 and Bernabela Lontoc with a calculated portion of 2/8. In dispute in the instant case is the 2/8 share of Bernabela Lontoc which is equivalent to 12,189 square meters. When Lontoc died in 1945, she was survived by three sets of heirs: 1) Bernardino Merlan, a grandson by her son Enrique Merlan who died in 1918; 2) Jose Merlan and Brigido Merlan, defendants in the case below and private respondents herein, Graciano Merlan, Agapito Merlan and Corazon Merlan, children of her son Gabriel who died in 1937; and 3) Daniel Anuat and Paz Anuat children of her daughter Francisca Merlan. In 1950, Bernardino Merlan, Daniel Anuat and Paz Anuat sold their 2/3 undivided portion of the lot to spouses Ignacio Manalo and Marcela Nobelo. In 1960, Transfer Certificate of Title No. (T-3116) RT-5010 was cancelled by Transfer Certificate of Title No. T-1444 but carried the same afore-specified registered co-owners with an annotation carried from the former Transfer Certificate of Title, to wit:
"Entry No. 4953-SALE in favor of IGNACIO MANALO, married to Marcela Nobelo covering the rights, interest and participation of Bernardino Merlan, married to Rosario Cailao DANIEL ANUAT married to Dionisia Loyola, and PAZ ANUAT widow, on the share of BERNABELA LONTOC, consisting of twenty 20 gantas of seedling, on the land described in this Certificate of for the sum of THREE THOUSAND PESOS (P3,000.00) by virtue of the deed of sale, executed before the Notary Public for the City of Cavite Mr.

Primo D. Anuat (Doc. No. 652; page No. 77; Book No. VII Series of 1950) on file in this Registry. Date of Instrument March 11, 1950. Date of Inscription March 13, 1950 at 2:35 p.m. (At pp. 23, Court of Appeals Decision; pp. 18-19, Rollo)

In 1968, Lot No. 1950 of the Naic Estate was subdivided according to a Sketch Plan (Exh. A). The sketch plan was approved by the Commission on Land Registration on August 15, 1969. Bernabela Lontoc's 2/8 portion of Lot No. 1950 became Lot No. 1950A with an area of 12,189 square meters. Sometime in 1970, Ignacio Manalo sold his interest in Lot 1950-A to Mariano Manalo. The pertinent portions of the deed of sale executed by spouses Ignacio Manalo and Marcela Nobelo in favor of spouses Mariano Manalo and Jorga Manalo states:
Ang pagkamayari namin ng bahaging binabanggit sa itaas nito ay natatalikod ng titulo big. T-3116 na gaya ng sumusunod: (Entry No. 4953-SALE In favor of IGNACIO MANALO married to MARCELA NOVELO covering the rights, interests and participations of BERNADINO MERLAN married to ROSARIO CAILAO DANIEL ANUAT 'married to DIONISIA LOYOLA, and PAZ ANUAT widow, on the share of BERNABELA LONTOC, consisting of twenty (20) gantas of seedling, on the land described in this certificate of title of the sum of THREE THOUSAND PESOS (P3,000.00), by virtue of the deed of sale executed before the Notary Public for the City and Prov. of Cavite Mr. Primo D. Anuat (Doc. No. 652; Page No. 77; Book No. VII, Series of 1950) on file in this Registry. Date of instrument-March 13, 1950-at 2:35 p.m. (sgd) ESCOLASTICO CUEVAS, Register of Deeds. Na alang-alang sa halagang ISANG LIBONG P1.000.00 PISO salaping (blurred), na sa amin ay ibinayad ni G. MARIANO MANALO kasal kay JORGA MANALO may sapat na gulang, Filipino at ang tirahan at pahatirang sulat ay (blurred) Cavite, ay aming ipinagbili ng tuluyan (Venta Real y Absoluta) ang nabanggit na DALAWANG PUNG (20) salop na binhi, bahagi ng Lote blg. 1950 (blurred) tiyak sa lote na unahan nito sa naturang G. Mariano Manalo, sa kanyang tagamana o kahaliti sa matuwid magpakailan man. Dito'y sinasaysay rin namin ang nasabing lupang tubigan ay walang sinasagutang pagkakautang kanino mang tao. (pp. 25-26, Rollo)

The deed of sale was registered in the Registry of Deeds in Cavite. Thereafter, Transfer Certificate of Title No. T-1444 was cancelled and Transfer Certificate of Title No. T41175 was issued for Lot No. 1950-A of the Naic Estate in the name of Mariano Manalo married to Jorga Lagos of Naic, Cavite. The certificate of title issued in the name of spouses Mariano Manalo and Jorga Lagos covered the whole Lot No. 1950-A without any mention of the 1/3 share of the private respondents in the parcel of land which was not sold to them. Relying on the transfer certificate of title of the spouses Mariano Manalo and Jorga Lagos and the Sketch Plan (Exhibit "A"), petitioner Rodolfo Coronel then bought Lot No. 1950-A of the Naic Estate from the former for the consideration of P27,000.00 as per

Doc. No. 341; Page No. 70; Book No. V Series of 1974 in the Notarial Register of Notary Public Nonilo A. Quitangon of the City of Manila. The deed of sale was registered on December 19, 1974 causing the cancellation of Transfer Certificate of Title No. T-41175 and the issuance of Transfer Certificate of Title No. T-75543 in the name of petitioner Rodolfo Coronel. Considering these facts, it is evident that the private respondents never sold their 1/3 share over Lot No. 1950-A of the Naic Estate; that what their co-owners sold to Ignacio Manalo was their 2/3 share of the same lot; and that Ignacio Manalo sold only the 2/3 share to third-party defendant Mariano Manalo, the predecessor-in-interest of petitioner Rodolfo Coronel. Consequently, there was a mistake when Transfer Certificate of Title No. 41175 was issued to Mariano Manalo covering the whole area of Lot No. 1950-A. Unfortunately, Mariano Manalo who was included as third-party defendant as well as the subject of a cross- claim filed by the other third-party defendants, and who could have shed light on this controversy was at the time residing abroad and was not served with the third-party complaint. Moreover, private respondents Brigido Merlan and Jose Merlan were in open, peaceful and adverse possession of their 1/3 share over the lot even after 1950 when the first sale of the lot took place. The first time they knew about Coronel's claim over the whole lot was when they were served a copy of his complaint in 1975. Under these circumstances, the first assignment of error is not well taken. The petitioner contends that the claim of the private respondents over their 1/3 undivided portion of Lot No. 1950-A 25 years after the registration of the deed of sale in favor of Ignacio Manalo in 1950 and more than five (5) years after the registration of the deed of sale in favor of Mariano Manalo is barred by prescription or laches. According to him, there was undue delay on the part of the private respondents to claim their 1/3 portion of Lot No. 1950-A of the Naic Estate and that the action for annulment should have been brought within four (4) years (Art. 1391, New Civil Code) counted from the date of the registration of the instrument. The counterclaim of the private respondents which was in effect a reconveyance to them of their 1/3 undivided share over lot No. 1950-A has not prescribed. As lawful possessors and owners of the lot in question their cause of action falls within the settled jurisprudence that an action to quiet title to property-in one's possession is imprescriptible, Their undisturbed possession over a period of more than 25 years gave them a continuing right to seek the aid of a court of equity to determine the nature of the adverse claim of a third party and the effect of his own title. If at all, the private respondents' right, to quiet title, to seek reconveyance and to annul Transfer Certificate of Title No. T-75543 accrued only in 1975 when they were made aware of a claim adverse to their own. It was only at that time that, the statutory period of prescription may be said to have commenced to run against them. (Sapto, et al. v. Fabiana, 103 Phil. 683, Faja v. Court of Appeals, 75 SCRA 441; Caragay-Layno v. Court of Appeals, 133 SCRA 718).

In the same manner, there is no bar based on laches to assert their right over 1/3 of the disputed property. "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." (Tejido v. Zamacoma, 138 SCRA 78 citing Tijam et al. v. Sibong-hanoy et al., 23 SCRA 29, Sotto v Teves, S6 SCRA 154) The facts of the case show that the private respondents have always been in peaceful possession of the 1/3 portion of the subject lot, exercising ownership thereto for more than 25 years disrupted only in 1975 when the petitioner tried to remove them by virtue of his torrens title covering the entire Lot 1950-A of the Naic Estate. It was only at this point that private respondents knew about the supposed sale of their 1/3 portion of Lot 1950-A of the Naic Estate and they immediately resisted. The petitioner, however, insists that he is a purchaser in good faith. Thus, he argues that Transfer Certificate of Title No. T-41175 in the name of his successor-in-interest Mariano Manalo was very clear to the effect that there is no lien or encumbrance stated therein which could have been seen by his parents who represented him in the sale as he was then in the United States and by the lawyer contracted by him to execute or prepare the corresponding deed of sale. This notwithstanding, we cannot close our eyes to the fact that neither the private respondents nor their co-owners of the subject parcel of land sold the former's share of the lot. Furthermore, even Ignacio Manalo to whom the third-party defendants sold their share resold only the 2/3 shares to Mariano Manalo, the successor-in-interest of the petitioner. Whether or not there was fraud or just a mistake or oversight of an employee of the Register of Deeds of Cavite is not clear from the records. The point is that the 1/3 undivided portion of the private respondents over Lot No. 1950-A was mistakenly included in the transfer certificate of title of Mariano Manalo. We apply equitable considerations:
Nor does the mere fact that respondent-appellee Marcelo Coral could show a certificate of Torrens Title in his favor conclude the matter, the question of fraud having been seasonably raised and the remedy of reconveyance sought. Only recently, in Philippine Commercial and Industrial Bank v. Villalva (L-28194, November 24, 1972, 48 SCRA 31) this Court had occasion to state: There is, however, a countervailing doctrine, certainly not of lesser weight, that mitigates the harshness of the iron-clad application of the principle attaching full faith and credit to a Torrens certificate. It is inspired by the highest concept of what is fair and what is equitable. It would be a sad day for the law if it were to be oblivious to the demands justice The acceptance accorded the Torrens system of registration would certainly be impaired if it could be utilized to perpetrate fraud and chicanery. If it were thus, then no stigma would attach to a claim based solely on a narrow and literal reading of a statutory prescription, devoid of any shadow of moral right. That is not the juridical norm as recognized by this Court. Deceit is not to be countenanced; duplicity is not to be rewarded. Witness the favor with which jurisprudence has looked on the action for reconveyance as well as the recognition of the constructive trust. There is thus the stress of rectitude. (Ibid, p. 39). (Monticenes v. Court of Appeals, 53 SC RA 14, 21; Emphasis supplied).

Moreover, we ruled in an earlier case that:


xxx xxx xxx ... The simple possession of a certificate of title, under the Torrens System, does not necessarily make the possessor a true owner of all the property described therein. If a person obtains a title, under the Torrens system, which includes by mistake or oversight land which cannot be registered under the Torrens systems, he does not, by virtue of said certificate alone, become the owner of the lands illegally included. (Ledesma v. Municipality of Iloilo, 49 Phil. 769, 773, citing Legarda and Prieto v. Saleeby, 31 Phil., 590; see also Caragay-Layno v. Court of Appeals, supra).

We find no reversible error on the part of the lower courts in recognizing the ownership of the private respondents over 1/3 of Lot No. 1950-A of the Naic Estate. The petitioner is bound to recognize the lien in favor of the private respondents which was mistakenly excluded and therefore not inscribed in the torrens title of the land of his predecessorsin-interest. WHEREFORE, the instant petition is hereby DISMISSED. The questioned decision is AFFIRMED but with a modification to the effect that the statement "Hereby declaring null and void, Transfer Certificate of Title No. T-75543 of the same registry" is deleted. Instead, the Registrar of Deeds of Cavite is ordered to segregate the 1/3 portion of Lot No. 1950-A of the Naic Estate (4,063 square meters) from the entire portion embraced in Transfer Certificate of Title No. T-75543 and issue a new certificate of title in favor of the heirs of Gabriel Merlan over the disputed one-third portion and another new certificate of title over the remaining two-thirds portion of the land in favor of petitioner Rodolfo Coronel after cancelling Transfer Certificate of Title No. T-75543. The questioned order is also AFFIRMED. No costs. Republic SUPREME Manila THIRD DIVISION G.R. No. 128573 January 13, 2003 of the Philippines COURT

NAAWAN COMMUNITY RURAL BANK INC., petitioner, vs. THE COURT OF APPEALS and SPOUSES ALFREDO AND ANNABELLE LUMO, respondents. CORONA, J.: Under the established principles of land registration, a person dealing with registered land may generally rely on the correctness of a certificate of title and the law will in no way oblige him to go beyond it to determine the legal status of the property.

Before us is a Petition for Review on Certiorari challenging the February 7, 1997 Decision1 of the Court of Appeals in CA-G.R. CV No. 55149, which in turn affirmed the decision2 of the Regional Trial Court of Misamis Oriental, Branch 18 as follows: "WHEREFORE, the plaintiffs-spouses are adjudged the absolute owners and possessors of the properties in question (Lot 18583, under TCT No. T-50134, and all improvements thereon) and quieting title thereto as against any and all adverse claims of the defendant. Further, the sheriff's certificate of sale, Exhibit 4; 4-A; Sheriff's deed of final conveyance, Exhibit 5, 5-A; Tax Declarations No. 71211, Exhibit 7, and any and all instrument, record, claim, encumbrance or proceeding in favor of the defendant, as against the plaintiffs, and their predecessor-in-interest, which may be extant in the office of the Register of Deeds of Province of Misamis Oriental, and of Cagayan de Oro City, and in the City Assessor's Office of Cagayan de Oro City, are declared as invalid and ineffective as against the plaintiffs' title. "The counterclaim is dismissed for lack of merit. "SO ORDERED."3 The facts of the case, as culled from the records, are as follows: On April 30, 1988, a certain Guillermo Comayas offered to sell to private respondent-spouses Alfredo and Annabelle Lumo, a house and lot measuring 340 square meters located at Pinikitan, Camaman-an, Cagayan de Oro City. Wanting to buy said house and lot, private respondents made inquiries at the Office of the Register of Deeds of Cagayan de Oro City where the property is located and the Bureau of Lands on the legal status of the vendor's title. They found out that the property was mortgaged for P8,000 to a certain Mrs. Galupo and that the owner's copy of the Certificate of Title to said property was in her possession. Private respondents directed Guillermo Comayas to redeem the property from Galupo at their expense, giving the amount of P10,000 to Comayas for that purpose. On May 30, 1988, a release of the adverse claim of Galupo was annotated on TCT No. T-41499 which covered the subject property. In the meantime, on May 17, 1988, even before the release of Galupo's adverse claim, private respondents and Guillermo Comayas, executed a deed of absolute sale. The subject property was allegedly sold for P125,000 but the deed of sale reflected the amount of only P30,000 which was the amount private respondents were ready to pay at the time of the execution of said deed, the balance payable by installment. On June 9, 1988, the deed of absolute sale was registered and inscribed on TCT No. T-41499 and, on even date, TCT No. T-50134 was issued in favor of private respondents.

After obtaining their TCT, private respondents requested the issuance of a new tax declaration certificate in their names. However, they were surprised to learn from the City Assessor's Office that the property was also declared for tax purposes in the name of petitioner Naawan Community Rural Bank Inc. Records in the City Assessor's Office revealed that, for the lot covered by TCT No. T-50134, Alfredo Lumo's T/D # 83324 bore the note: "This lot is also declared in the name of Naawan Community Rural Bank Inc. under T/D # 71210". Apparently, on February 7, 1983, Guillermo Comayas obtained a P15,000 loan from petitioner Bank using the subject property as security. At the time said contract of mortgage was entered into, the subject property was then an unregistered parcel of residential land, tax-declared in the name of a certain Sergio A. Balibay while the residential one-storey house was tax-declared in the name of Comayas. Balibay executed a special power of attorney authorizing Comayas to borrow money and use the subject lot as security. But the Deed of Real Estate Mortgage and the Special Power of Attorney were recorded in the registration book of the Province of Misamis Oriental, not in the registration book of Cagayan de Oro City. It appears that, when the registration was made, there was only one Register of Deeds for the entire province of Misamis Oriental, including Cagayan de Oro City. It was only in 1985 when the Office of the Register of Deeds for Cagayan de Oro City was established separately from the Office of the Register of Deeds for the Province of Misamis Oriental. For failure of Comayas to pay, the real estate mortgage was foreclosed and the subject property sold at a public auction to the mortgagee Naawan Community Rural Bank as the highest bidder in the amount of P16,031.35. Thereafter, the sheriff's certificate of sale was issued and registered under Act 3344 in the Register of Deeds of the Province of Misamis Oriental. On April 17, 1984, the subject property was registered in original proceedings under the Land Registration Act. Title was entered in the registration book of the Register of Deeds of Cagayan de Oro City as Original Certificate of Title No. 0-820, pursuant to Decree No. N-189413. On July 23, 1984, Transfer Certificate of Title No. T-41499 in the name of Guillermo P. Comayas was entered in the Register of Deeds of Cagayan de Oro City. Meanwhile, on September 5, 1986, the period for redemption of the foreclosed subject property lapsed and the MTCC Deputy Sheriff of Cagayan de Oro City issued and delivered to petitioner bank the sheriff's deed of final conveyance. This time, the deed was registered under Act 3344 and recorded in the registration book of the Register of Deeds of Cagayan de Oro City. By virtue of said deed, petitioner Bank obtained a tax declaration for the subject house and lot. Thereafter, petitioner Bank instituted an action for ejectment against Comayas before the MTCC which decided in its favor. On appeal, the Regional Trial Court affirmed the decision of the MTCC in a decision dated April 13, 1988.

On January 27, 1989, the Regional Trial Court issued an order for the issuance of a writ of execution of its judgment. The MTCC, being the court of origin, promptly issued said writ. However, when the writ was served, the property was no longer occupied by Comayas but herein private respondents, the spouses Lumo who had, as earlier mentioned, bought it from Comayas on May 17, 1988. Alarmed by the prospect of being ejected from their home, private respondents filed an action for quieting of title which was docketed as Civil Case No. 89-138. After trial, the Regional Trial Court rendered a decision declaring private respondents as purchasers for value and in good faith, and consequently declaring them as the absolute owners and possessors of the subject house and lot. Petitioner appealed to the Court of Appeals which in turn affirmed the trial court's decision. Hence, this petition. Petitioner raises the following issues: I. WHETHER OR NOT THE SHERIFF'S DEED OF FINAL CONVEYANCE WAS DULY EXECUTED AND REGISTERED IN THE REGISTER OF DEEDS OF CAGAYAN DE ORO CITY ON DECEMBER 2, 1986; II. WHETHER OR NOT REGISTRATION OF SHERIFF'S DEED OF FINAL CONVEYANCE IN THE PROPER REGISTRY OF DEEDS COULD BE EFFECTIVE AS AGAINST SPOUSES LUMO. Both parties cite Article 1544 of the Civil Code which governs the double sale of immovable property. Article 1544 provides: ". . . . 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." Petitioner bank contends that the earlier registration of the sheriff's deed of final conveyance in the day book under Act 3344 should prevail over the later registration of private respondents' deed of absolute sale under Act 496,4 as amended by the Property Registration Decree, PD 1529. This contention has no leg to stand on. It has been held that, where a person claims to have superior proprietary rights over another on the ground that he derived his title from a sheriff's sale registered in the Registry of Property, Article 1473 (now Article 1544) of the Civil Code will apply only if said execution sale of real estate is registered under Act 496.5 Unfortunately, the subject property was still untitled when it was already acquired by petitioner bank by virtue of a final deed of conveyance. On the other hand, when private respondents purchased the same property, it was covered by the Torrens System.

Petitioner also relies on the case of Bautista vs. Fule6 where the Court ruled that the registration of an instrument involving unregistered land in the Registry of Deeds creates constructive notice and binds third person who may subsequently deal with the same property. However, a close scrutiny of the records reveals that, at the time of the execution and delivery of the sheriff's deed of final conveyance on September 5, 1986, the disputed property was already covered by the Land Registration Act and Original Certificate of Title No. 0-820 pursuant to Decree No. N189413 was likewise already entered in the registration book of the Register of Deeds of Cagayan De Oro City as of April 17, 1984. Thus, from April 17, 1984, the subject property was already under the operation of the Torrens System. Under the said system, registration is the operative act that gives validity to the transfer or creates a lien upon the land. Moreover, the issuance of a certificate of title had the effect of relieving the land of all claims except those noted thereon. Accordingly, private respondents, in dealing with the subject registered land, were not required by law to go beyond the register to determine the legal condition of the property. They were only charged with notice of such burdens on the property as were noted on the register or the certificate of title. To have required them to do more would have been to defeat the primary object of the Torrens System which is to make the Torrens Title indefeasible and valid against the whole world. Private respondents posit that, even assuming that the sheriff's deed of final conveyance in favor of petitioner bank was duly recorded in the day book of the Register of Deeds under Act 3344, ownership of the subject real property would still be theirs as purchasers in good faith because they registered the sale first under the Property Registration Decree. The rights created by the above-stated statute of course do not and cannot accrue under an inscription in bad faith. Mere registration of title in case of double sale is not enough; good faith must concur with the registration.7 Petitioner contends that the due and proper registration of the sheriff's deed of final conveyance on December 2, 1986 amounted to constructive notice to private respondents. Thus, when private respondents bought the subject property on May 17, 1988, they were deemed to have purchased the said property with the knowledge that it was already registered in the name of petitioner bank. Thus, the only issue left to be resolved is whether or not private respondents could be considered as buyers in good faith. The "priority in time" principle being invoked by petitioner bank is misplaced because its registration referred to land not within the Torrens System but under Act 3344. On the other hand, when private respondents bought the subject property, the same was already registered under the Torrens System. It is a well-known rule in this jurisdiction that persons dealing with registered land have the legal right to rely on the face of the Torrens Certificate of Title and to

dispense with the need to inquire further, except when the party concerned has actual knowledge of facts and circumstances that would impel a reasonably cautious man to make such inquiry.8 Did private respondents exercise the required diligence in ascertaining the legal condition of the title to the subject property so as to be considered as innocent purchasers for value and in good faith? We answer in the affirmative. Before private respondents bought the subject property from Guillermo Comayas, inquiries were made with the Registry of Deeds and the Bureau of Lands regarding the status of the vendor's title. No liens or encumbrances were found to have been annotated on the certificate of title. Neither were private respondents aware of any adverse claim or lien on the property other than the adverse claim of a certain Geneva Galupo to whom Guillermo Comayas had mortgaged the subject property. But, as already mentioned, the claim of Galupo was eventually settled and the adverse claim previously annotated on the title cancelled. Thus, having made the necessary inquiries, private respondents did not have to go beyond the certificate of title. Otherwise, the efficacy and conclusiveness of the Torrens Certificate of Title would be rendered futile and nugatory. Considering therefore that private respondents exercised the diligence required by law in ascertaining the legal status of the Torrens title of Guillermo Comayas over the subject property and found no flaws therein, they should be considered as innocent purchasers for value and in good faith. Accordingly, the appealed judgment of the appellate court upholding private respondents Alfredo and Annabelle Lumo as the true and rightful owners of the disputed property is affirmed. WHEREFORE, petition is hereby DENIED. SO ORDERED. Republic of the Philippines SUPREME COURT Manila SECOND DIVISION G.R. No. 141993 March 17, 2006

NARCISA AVILA, assisted by her husband Bernardo Avila, Spouses JANUARIO N. ADLAWAN and NANETTE A. ADLAWAN, NATIVIDAD MACAPAZ, assisted by her husband EMILIO MACAPAZ, FRANCISCA N. ADLAWAN and LEON NEMEO, Petitioners, vs. Spouses BENJAMIN BARABAT and JOVITA BARABAT, Respondents.

DECISION CORONA, J.: This petition for review on certiorari under Rule 45 of the Rules of Court assails the July 30, 1999 decision1 and January 19, 2000 resolution of the Court of Appeals in CA-G.R. CV No. 50899. The subject of this controversy is a portion of a 433-square meter parcel of land located in Poblacion, Toledo City, Cebu. The entire property is designated as cadastral lot no. 348 registered in the name of Anunciacion Bahena vda. de Nemeo. Upon her death, ownership of the lot was transferred by operation of law to her five children, petitioners Narcisa Avila, Natividad Macapaz, Francisca Adlawan, Leon Nemeo and Jose Bahena. These heirs built their respective houses on the lot. In 1964, respondent Benjamin Barabat leased a portion of the house owned by Avila. His corespondent, Jovita Barabat, moved in with him in 1969 when they got married. Avila subsequently relocated to Cagayan de Oro City. She came back to Toledo City in July 1979 to sell her house and share in the lot to her siblings but no one showed interest in it. She then offered it to respondents who agreed to buy it. Their agreement was evidenced by a private document dated July 17, 1979 which read: ALANG SA KASAYURAN SA TANAN: Nga ako, NARCISA AVILA, nagpuyo sa siyudad sa Cagayan de Oro, 52 aos ang panu-igon, minyo ug may mga anak magatimaan ning maong kasulatan nga akong guibaligya sa kantidad nga walo ka libo ka pesos (P8,000.00) ang bahin nga balay ug yuta nga sinunod ko sa akong mga ginikanan ngadto sa magtiayon nga Benjamin ug Jovita Barabat, mga lumulupyo sa siyudad sa Toledo. Nga ang maong lote ug balay ana-a mahimutang sa Poblacion, Toledo City kansang mga utlanan mao kining musunod: Atubangan ---------- N. Rafols Street Dapit sa Tuo ---------- yuta ug mga panimalay sa Magsuong Natividad Macapaz, Francisca Adlawan, Jose Bahena ug Leoning Nemeno Dapit sa wala ---------- kanal sa tubig Dapit sa luyo ---------- lote nga kumon sa magsuong Nemeno Tiniman-an: (Sgd.) Narcisa Avila2

Respondents stopped paying rentals to Avila and took possession of the property as owners. They also assumed the payment of realty taxes on it. Sometime in early 1982, respondents were confronted by petitioner Januario Adlawan who informed them that they had until March 1982 only to stay in Avilas place because he was buying the property. Respondents replied that the property had already been sold to them by Avila. They showed Adlawan the July 17, 1979 document executed by Avila. On January 6, 1983, respondents received a letter from Atty. Joselito Alo informing them that Avila had sold her house and share in lot no. 348 to his clients, the spouses Januario and Nanette Adlawan. Considering the sale to the spouses Adlawan as prejudicial to their title and peaceful possession of the property, they demanded that Avila execute a public document evidencing the sale of the property to them but Avila refused. Respondents filed a complaint for quieting of title with the Regional Trial Court (RTC) of Toledo City, Branch 29.3 Docketed as Civil Case No. T-53, the complaint was subsequently amended to include annulment of the deed of sale to the spouses Adlawan, specific performance, partition and damages as additional causes of action. Respondents anchored their claim over the property to the July 17, 1979 private document which they presented as Exhibit "A." Avila denied having offered to sell her property to respondents. She claimed that respondents gave her an P8,000 loan conditioned on her signing a document constituting her house and share in lot no. 348 as security for its payment. She alleged that she innocently affixed her signature on Exhibit "A" which was prepared by respondents and which they now claim as a private deed of sale transferring ownership to them. The trial court rendered its May 9, 1995 decision in favor of respondents. It declared Exhibit "A" as a valid and lawful deed of sale. It nullified the subsequent deed of sale between Avila and the spouses Adlawan. Avila was ordered to execute a formal and notarized deed of sale in favor of respondents. It also held petitioners liable for moral damages and attorneys fees. Aggrieved, petitioners filed an appeal with the Court of Appeals. In its July 30, 1999 decision, the appellate court affirmed the decision of the RTC in toto. Petitioners sought a reconsideration but it was denied. Hence, this petition. Petitioners claim that the appellate court erred in ruling that the transaction between respondents and Avila was an absolute sale, not an equitable mortgage. They assert that the facts of the case fell within the ambit of Article 1602 in relation to Article 1604 of the Civil Code on equitable mortgage because they religiously paid the realty tax on the property and there was gross inadequacy of consideration. In this connection, Articles 1602 and 1604 provide: Art. 1602. The contract shall be presumed to be an equitable mortgage, in any of the following cases: (1) When the price of a sale with right to repurchase is unusually inadequate;

(2) When the vendor remains in possession as lessee or otherwise; (3) When upon or after the expiration of the right to repurchase another instrument extending the period of redemption or granting a new period is executed; (4) When the purchaser retains for himself a part of the purchase price; (5) When the vendor binds himself to pay the taxes of the thing sold; (6) In any other case where it may be fairly inferred that the real intention of the parties is that the transaction shall secure the payment of a debt or the performance of any other obligation. In any of the foregoing cases, any money, fruits, or other benefit to be received by the vendee as rent or otherwise shall be considered as interest which shall be subject to the usury laws. xxxxxxxxx Art. 1604. The provisions of Article 1602 shall also apply to a contract purporting to be an absolute sale. They also claim that the court erred in denying them the right to redeem the property and in ruling that there was implied partition by the acts of the parties. We rule in favor of respondents. For Articles 1602 and 1604 to apply, two requisites must concur: (1) the parties entered into a contract denominated as a contract of sale and (2) their intention was to secure an existing debt by way of mortgage.4 Here, both the trial and appellate courts found that Exhibit "A" evidenced a contract of sale. They also agreed that the circumstances of the case show that Avila intended her agreement with respondents to be a sale. Both courts were unanimous in finding that the subsequent acts of Avila revealed her intention to absolutely convey the disputed property. It was only after the perfection of the contract, when her siblings began protesting the sale, that she wanted to change the agreement. Furthermore, contrary to petitioners claim, the trial court found that it was respondents who took over the payment of real property taxes after the execution of Exhibit "A." There is no reason to depart from these factual findings because, as a rule, factual findings of the trial court, when adopted and confirmed by the Court of Appeals, are binding and conclusive on the Court and generally will not be reviewed on appeal to us.5 There is no reason for us to deviate from this rule. Petitioners claim of gross inadequacy of selling price has no basis. They failed to introduce evidence of the correct price at the time the land was sold to respondents in 1979. How can we therefore conclude that the price was grossly inadequate? In the absence of evidence as to the fair

market value of a parcel of land at the time of its sale, we cannot reasonably conclude that the price at which it was sold was inadequate.6 Petitioners rely on Article 1623 in relation to Article 1620 of the Civil Code to justify th eir right of redemption. This is incorrect. These provisions state: Art. 1620. A co-owner of a thing may exercise the right of redemption in case the shares of all the other co-owners or any of them, are sold to a third person. If the price of the alienation is grossly excessive, the redemptioner shall pay only a reasonable one. Should two or more co-owners desire to exercise the right of redemption, they may only do so in proportion to the share they may respectively have in the thing owned in common. xxxxxxxxx Art. 1623. The right of legal pre-emption or redemption shall not be exercised except within thirty days from the notice in writing by the prospective vendor, or by the vendor, as the case may be. The deed of sale shall not be recorded in the Registry of Property, unless accompanied by an affidavit of the vendor that he has given written notice thereof to all possible redemptioners. The right of redemption of co-owners excludes that of adjoining owners. Petitioners right to redeem would have existed only had there been co-ownership among petitioners-siblings. But there was none. For this right to be exercised, co-ownership must exist at the time the conveyance is made by a co-owner and the redemption is demanded by the other co-owner or co-owner(s).7 However, by their own admission, petitioners were no longer coowners when the property was sold to respondents in 1979. The co-ownership had already been extinguished by partition. The regime of co-ownership exists when the ownership of an undivided thing or right belongs to different persons.8 By the nature of co-ownership, a co-owner cannot point to any specific portion of the property owned in common as his own because his share in it remains intangible and ideal.9 Every act intended to put an end to indivision among co-heirs is deemed to be a partition.10 Here, the particular portions pertaining to petitioners had been ascertained and they in fact already took possession of their respective parts. The following statement of petitioners in their amended answer11 as one of their special and affirmative defenses was revealing: F-8. That all defendants [i.e., petitioners] in this case who are co-owners of lot 348 have their own respective buildings constructed on the said lot in which case it can be safely assumed that that their respective shares in the lot have been physically segregated although there is no formal partition of the land among themselves.12 (emphasis supplied)

Being an express judicial admission, it was conclusive on petitioners unless it was made through palpable mistake or that no such admission was in fact made.13 Petitioners proved neither and were therefore bound by it. The purpose of partition is to separate, divide and assign a thing held in common among those to whom it belongs.14 By their own admission, petitioners already segregated and took possession of their respective shares in the lot. Their respective shares were therefore physically determined, clearly identifiable and no longer ideal. Thus, the co-ownership had been legally dissolved. With that, petitioners right to redeem any part of the property from any of their former co -owners was already extinguished. As legal redemption is intended to minimize co-ownership,15 once a property is subdivided and distributed among the co-owners, the community ceases to exist and there is no more reason to sustain any right of legal redemption.16 Under the law, subject to certain conditions, owners of adjoining urban land have the preemptive right to a lot before it is sold to third parties, or the redemptive right if it has already been sold. In particular, Article 1622 of the Civil Code provides: Art. 1622. Whenever a piece of urban land is so small and so situated in that a major portion thereof cannot be used for any practical purpose within a reasonable time, having been bought merely for speculation, is about to be re-sold, the owner of any adjoining land has a right of preemption at a reasonable price. If the re-sale has been perfected, the owner of the adjoining land shall have a right of redemption, also at a reasonable price. When two or more owners of adjoining lands wish to exercise the rights of pre-emption or redemption, the owner whose intended use of the land in question appears best justified shall be preferred. However, this provision does not apply here. Aside from the fact that petitioners never raised it as an issue, the conditions provided for its application were not met. While the property may be considered as urban land, it was not shown or even alleged that its area and location would render a major portion of no practical use within a reasonable time. Neither was there any allegation to the effect that the disputed property was bought merely for speculation. WHEREFORE, the petition is hereby DENIED. The July 30, 1999 decision and January 19, 2000 resolution of the Court of Appeals in CA-G.R. CV No. 50899 are AFFIRMED. Costs against petitioners. SO ORDERED.

TAN V. CA

172 SCRA 660


FACTS:
Tan owned a parcel of land. During his lifetime, he obtained a loan secured by a REM over the land. Upon his death, he was survived by his wife and children. The loan was unpaid and thus, the REM was foreclosed. Wife and kids sought the annulment of the REM. An amicable settlement was then entered into between the bank and the family. The redemption would be extended into 1 year more. Anne redeemed from bank but the latter issued the title back to the co-heirs.

HELD:
Co-ownership expired when the heirs allowed the one-year redemption period to expire without redeeming their parents property and permitted the issuance of the new title and consolidation of ownership. There was no co-ownership anymore when Annie redeemed the property. It was in all accounts, to be considered as a sale.

Republic of the Philippines SUPREME COURT Manila FIRST DIVISION G.R. No. L-46345 January 30, 1990 RESTITUTO CENIZA and JESUS CENIZA, petitioners, vs. THE HON. COURT OF APPEALS, MAGNO DABON, VICENTA DABON, TERESITA DABON, EUGENIA DABON, and TOMAS DABON, respondents. Vicente P. Valera and Pedro Rosito & Jesus F. Balicanta for petitioners. Victorino U. Montecillo for respondents.

GRINO-AQUINO, J.: This is a petition for review of the order dated October 29, 1976, of the Court of Appeals in CA-G.R. No. 48546 entitled, "Restituto Ceniza, et al. vs. Magno Dabon, et al.,"

dismissing the petitioners' complaint for reconveyance of their shares in co-ownership property and reversing the decision of the trial court in their favor. On June 14, 1967, the petitioners filed against private respondents, an action in the Court of First Instance of Cebu for recovery of their title to Lots Nos. 627-B and 627-C (being portions of Lot No. 627 with an area of approximately 5,306 square meters) situated in Casuntingan, Mandaue, Cebu (now Mandaue City), which originally formed part of "Hacienda de Mandaue" of the Seminario de San Carlos de Cebu. The Property is covered by reconstituted Original Certificate of Title No. RO-10996 issued on February 8, 1939 (formerly Decree No. 694438 issued on February 27, 1934) in the name of "Vicente Dabon married to Marcela [or Marcelina] Ceniza." (pp. 7 and 19, Record on Appeal). Petitioners are the descendants of Manuel Ceniza while the private respondents are the descendants of his sister, Sofia Ceniza. Sofia Ceniza was childless but she had an adopted daughter named Flaviana Ceniza, who begot a daughter named Marced Ceniza and who in turn had a daughter named Marcelina (or Marcela) Ceniza who married Vicente Dabon. Private respondents are the children of this marriage and they are the great-great-grandchildren of Sofia Ceniza. On the other hand, Manuel Ceniza had an only son, Pablo, who had two sons, Santiago and Jose Ceniza. Petitioners Restituto and Jesus Ceniza and a certain Nemesia Ceniza-Albina are their children and the great-grandchildren of Manuel Ceniza. The records disclose that when Hacienda de Mandaue was subdivided for resale to the occupants in 1929, Jose Ceniza and Vicente Dabon, who were residing in the hacienda, jointly purchased Lot 627 on installment basis and they agreed, for convenience, to have the land registered in the name of Dabon. Since then, Jose Ceniza, Vicente Dabon, and their heirs have possessed their respective portions of the land, declared the same for taxation, paid real estate taxes on their respective shares, and made their respective installment payments to the Seminario de San Carlos de Cebu. After Dabon died in 1954, his seven (7) children, named Magno, Jacinta, Tomas, Flaviana, Soledad, Teresita and Eugenia, succeeded to his possession of a portion of the land. On November 4, 1961, a private land surveyor, Espiritu Bunagan, on the request of Jacinta Dabon and Restituto Ceniza who jointly defrayed the cost, divided Lot 627 into three parts, namely: (1) Lot No. 627-A with 3,538 square meters for Marcela Ceniza; (2) Lot No. 627-B with 884 square meters for Restituto Ceniza; and

(3) Lot No. 627-C with 834 square meters for Nemesia Ceniza-Albina, who later bequeathed her share to her brother, Jesus Ceniza. (p. 19, Record on Appeal). The present controversy arose because the private respondents refused to convey Lots Nos. 627-B and 627-C to the petitioners. They claimed that their predecessor-ininterest, Vicente Dabon, was the sole and exclusive owner of Lot 627, by purchase from the Seminario de San Carlos de Cebu. In their answer to the petitioners' complaint for reconveyance in June 1967, they alleged that the petitioners' right of action had already prescribed. Petitioners replied that Vicente Dabon held the land in trust for them, as co-owners, hence, their action for reconveyance was imprescriptible. On August 31, 1970, the trial court rendered judgment for the petitioners. Finding that there existed a co-ownership among the parties, it ordered the private respondents to execute deeds of conveyance of Lots Nos. 627-B and 627-C in favor of the plaintiffs, Restituto and Jesus Ceniza, respectively (p. 35, Record on Appeal). On appeal by the defendants (now private respondents) the Court of Appeals on October 29, 1976, reversed that decision of the trial court. It ruled that the petitioners' right of action had prescribed after the lapse of 20 years from the date of registration of the land on February 8, 1939 in Vicente Dabon's name (p. 32, Rollo). The petitioners have appealed to this Court by a petition for review under Rule 45 of the Rules of Court. The legal issue presented by the petition is whether the registration of the title of the land in the name of one of the co-owner, constituted a repudiation of the co-ownership for purposes of acquisitive prescription. We find merit in the petition for review. The trial court correctly ruled that since a trust relation and co-ownership were proven to exist between the predecessors- in-interest of both petitioners and private respondents, prescription did not run in favor of Dabon's heirs except from the time that they repudiated the co-ownership and made the repudiation known to the other co-owners, Restituto and Jesus Ceniza (Cortes vs. Oliva, 33 Phil. 480). Paragraph 5 of Article 494 of the Civil Code providesNo prescription shall run in favor of a co-owner or co-heir against his co-owners or coheirs so long as he expressly or impliedly recognizes the co-ownership.

The registration of Lot No. 627 in the name of Vicente Dabon created a trust in favor of his co-owner Jose Ceniza, and the latter's heirs. Article 1452 of the Civil Code states:

If two or more persons agree to purchase property and common consent the legal title is taken in the name of one of them for the benefit of all, a trust is created by force of law in favor of the others in proportion to the interest of each.

This Court has ruled in numerous cases involving fiduciary relations that, as a general rule, the trustee's possession is not adverse and therefore cannot ripen into a title by prescription. Adverse possession requires the concurrence of the following circumstances: a) that the trustee has performed unequivocal acts of repudiation amounting to the ouster of the cestui que trust; b) that such positive acts of repudiation have been made known to the cestui que trust; and c) that the evidence thereon should be clear and conclusive. The above elements are not present here for the petitioners/ co-owners have not been ousted from the land. They continue to possess their respective shares of Lot 627 and they have been paying the realty taxes thereon. Restituto's house stands on his portion of the Land. Assuming that the private respondents' rejection of the subdivision plan for the partition of the land was an act of repudiation of the co-ownership, prescription had not yet set in when the petitioners instituted the present action for reconveyance. These circumstances were overlooked by the Court of Appeals. In Custodio v. Casiano 9 SCRA 841, we ruled that:
Where title to land was issued in the name of a co-heir merely with the understanding that he would act as a trustee of his sisters, and there is no evidence that this trust relation had ever been repudiated by said trustee, it is held that a reaction of coownership existed between such trustee and his sisters and the right of the successorsin-interest of said sisters to bring the present action for recovery of their shares therein against the successors-in-interest of said trustee cannot barred by prescription, despite the, lapse of 25 years from the date of registration of the land in the trustee's name. (Emphasis supplied.)

In Escobar v. Locsin, 74 Phil. 86, we affirmed the duty of the courts to shield fiduciary relations "against every manner of chicanery or detestable design cloaked by legal technicalities" and to guard against misuse of the Torrens system "to foment betrayal in the performance of a trust." In this case, since the statutory period of limitation within which to file an action for reconveyance, after the defendants had repudiated the co-ownership in 1961, had not yet run its course when the petitioners filed said action in 1967, the action was not barred by prescription. WHEREFORE. the decision of the Court of appeals is hereby REVERSED AND SET ASIDE and the decision dated August 31, 1970 of the then Court of First Instance of

Cebu, Branch VI, in Civil Case No. R-10030 is reinstated. Costs against the private respondents. SO ORDERED. Republic of the Philippines SUPREME COURT Manila FIRST DIVISION G.R. No. 128576 August 13, 2002

MARIANO A. VELEZ, SR. (deceased), ATTY. PURO M. VELEZ, ATTY. ALEJANDRO M. VELEZ, ENGR. PLUTARCO M. VELEZ and SARAH VDA. DE VELEZ (for herself and her children by the late HOMER M. VELEZ, namely PATRICIA, HAYDEE, HOMER, JR., RUBY, FE VAL and HANAH, all surnamed VELEZ), petitioners, vs. REV. FRANCISCO DEMETRIO (deceased), CELERINA DEMETRIO FIANZA, TARCILO DEMETRIO, LEVITA FERNANDEZ DEMETRIO JUAN (for herself and her children), ANGELA, VALDEHUEZA RADAZA, FELECITO RADAZA and JOSE RADAZA, JR., respondents. YNARES-SANTIAGO, J.: This is a petition for review of decision of the Court of Appeals dated March 22, 1996 in CAG.R. CV No. 30381, reversing and setting aside the decision of the then Court of First instance of Cagayan de Oro City, Branch 17. The spouses Felix Radaza and Estefania Abrogar were the owners of a ten-hectare agricultural land situated in Puntod, Macasandig, Cagayan de Oro City. Upon their death, ownership of the land passed by intestate succession to their surviving children namely - Ramona, Severo, Filomeno and Jacoba, - and grandchildren by their son, Jose, Sr. namely - Vicente, Felicito, Rosario and Jose, Jr. On March 12, 1938, the land was registered under Original Certificate of Title No. 76781 in the names of: Severo Radaza, 1/5 share; Filomeno Radaza, 1/5 share; Jacoba Radaza, 1/5 share; Ramona Radaza, 1/5 share; Vicente Radaza, 1/20 share; Felicito Radaza, 1/20 share; Rosario Radaza, 1/20 share; and Jose Radaza, Jr., 1/20 share. On April 14, 1975, respondents, the surviving children of Ramona Radaza-Demetrio and Jose Radaza, Sr., instituted a complaint for Partition of Real Estate with Damages against petitioners, the heirs of the late Mariano Velez, Sr., docketed as Civil Case No. 4686 of the Court of First Instance of Cagayan de Oro City, Branch 17. They alleged that sometime in 1947, they discovered that the property had been claimed and fenced in by Mariano Velez, Sr., and that they were denied entry thereto. Due to financial reasons, it took them several years before instituting the complaint. In the meantime, they tried earnestly to recover ownership and possession of the land through extra-legal means.2

On the other hand, petitioners averred that the property had been partitioned among the heirs of Felix Radaza and Estefania Abrogar; that Mariano Velez, Sr. purchased the shares of Severo Radaza and Jacoba Radaza in 1936; that on May 30, 1947, Filomeno sold his share as well as Ramonas share to Mariano Velez, Sr.; that the share of Jose was likewise sold to Mariano Velez, Sr. by his wife Ciriaca Bacarro Radaza; and that since his acquisition of the property, Mariano Velez, Sr., by himself and through his heirs, has been in open, notorious, public and uninterrupted possession of the same in the concept of owners, and have exercised fully the attributes of its ownership.3 After trial, the court a quo rendered judgment as follows: WHEREFORE, for all the foregoing considerations, judgment is hereby rendered in favor of the defendants and against the plaintiffs and the Court hereby: 1. Orders the dismissal of the complaint filed by the plaintiffs; 2. Declares the defendants as the absolute owners of the property in litigation; 3. Declares the plaintiffs never again to molest nor disturb the defendants in their lawful, peaceful and rightful ownership, possession and enjoyment of the property in litigation; 4. On the counterclaim, orders the plaintiffs, jointly and severally, to pay the defendants the amount of P20,000.00 as moral damages and P5,000.00 as attorneys fee; and 5. Orders the plaintiffs to pay the costs. SO ORDERED.4 Respondents appealed to the Court of Appeals, which reversed and set aside the lower courts decision, to wit: WHEREFORE, the judgment appealed from is hereby REVERSED and SET ASIDE, and a new one entered directing the partition of the property covered by OCT No. 7678 in the portion of 2/5 to the plaintiffs-appellants and 3/5 to the defendants-appellees. Costs against the appellees.5 The motion for reconsideration filed by petitioner was denied by the appellate court.6 Hence, the instant petition for review. The issues raised by petitioners are: whether the shares of Ramona Radaza and Jose Radaza were sold to Mariano Velez. Sr. and whether respondents are guilty of laches. As regards the first issue, the findings of facts by the trial court conflict with those of the Court of Appeals. The trial court was morally convinced that the shares of Ramona Radaza and Jose Radaza, Sr. were sold to Mariano Velez, Sr. on two different transactions and occasions. On the

other hand, the Court of Appeals held that the alleged sale made by Ramona Radaza to Filomeno of her 1/5 share and the subsequent sale made by Filomeno to Mariano Velez, Sr. of his share and that of Ramonas and the sale made by Ciriaca Radaza to Mariano Velez of the shares of the heirs of Jose Radaza, Sr., were of no force and effect7 for there was no evidence presented in support thereof. The testimonies offered by petitioners to establish the alleged transactions were pure hearsay. To prove the alleged sale of Ramonas share to Filomeno, petitioners capitalized on the affidavit and testimony of Francisco, who stated that in the middle 1930s, Ramona sold her share to his father, Filomeno, who paid Ramona three cows in consideration thereof; and that since then they had been in exclusive possession of the said property up to the time the same was sold to Mariano Velez, Sr. by his father. On the witness stand, Francisco testified that he returned to the disputed land sometime in 1936 and that his father built a house inside the lot.8 However, the Court of Appeals ruled that it is improbable that he witnessed or could have had personal knowledge of the alleged sale because he started residing on the land in question from 1930 up to 1935 and that for three years thereafter, or up to February 28, 1938, he was enlisted in the Philippine Constabulary at Camp Kethly in Lanao. Such facts do not directly and convincingly establish the alleged sale of the portion of Ramona Radaza to Filomeno Radaza, hence, the same cannot be logically inferred. As regards the shares of Jose Radaza, Sr.s children which were allegedly sold by their mother, the Court of Appeals found nothing in the record to indicate that Ciriaca was authorized by Vicente, Felicito, Rosario and Jose, Jr. to make the alleged sale to Mariano Velez, Sr. Petitioners insist that Ciriaca sold her childrens shares but the pertinent documents were lost during the war. To prove this alleged sale, petitioners again invoke Francisco Radazas statement that the wife and heirs of Jose Radaza, Sr. sold their respective shares to the spouses Mariano Velez, Sr. and Patricia Mercado. However, the Court of Appeals observed that even Felicito, the son of Ciriaca, had no knowledge of the sale. With more reason, Francisco Radaza, who is a stranger to such alleged sale, cannot have any basis in making this statement. Another piece of evidence petitioners offered to prove the alleged sale was the testimony of Isabelo Tabian, a former tenant of Ciriaca Radaza, who testified that Ciriaca told him, "Beloy I am going to take the land from you because there is difficulty in coming over this place and I am afraid I might get drown(ed). I might as well sell the land to Etoy (Mariano Velez, Sr.)." Tabian further testified that he delivered the land to Ciriaca. Thereafter, Sario Echem, a tenant of Mariano Velez, Sr., approached him asking for help in plowing the land which he was formerly cultivating.9 While the Court of Appeals did not squarely rule on the weight of Tabians testimony, the same was likewise hearsay and cannot serve as proof of the alleged sale. Anent the second issue, the principle of laches finds no application in this case. Laches is the failure of 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, or to assert a right within reasonable time, warranting a presumption that the party entitled thereto has either abandoned it or declined to assert it.10

Fundamentally, laches is an equitable doctrine, its application is controlled by equitable considerations.11 Concomitantly, it is a better rule that courts, under the principle of equity, will not be guided or bound strictly by the statute of limitations or the doctrine of laches when to do so, manifest wrong or injustice would result.12 Petitioners invoke laches against the respondents for their failure to protest their occupation of the subject land since 1947. They allege that respondents slept on their rights because it took them twenty eight (28) years before they instituted this case. The Court of Appeals held that laches could not have set in because the specific act of repudiation of the co-ownership was made only on March 27, 1974, when petitioners registered the affidavit of adverse claim executed by Mariano Velez and had the same annotated on respondents title with respect to the 3/5 portion of the land. It held that only then did the period of prescription start to run. However, since this case was filed on April 14, 1975 and only for a 3/5 portion thereof, then no prescription can be counted in favor of petitioners for the remaining 2/5.13 We agree with the Court of Appeals. The land involved was registered under the Torrens system in the name of respondents and their predecessor-in-interest in 1938. The evidence shows that only 3/5 of the land was sold to Mariano Velez, Sr. and the 2/5 thereof remains in the name of respondents. The land being undivided, only the rights of the co-owners were transferred, thereby making the buyer another co-owner of the property. It is noteworthy that petitioners did not transfer the title of the land in their name. Instead, they merely annotated their claim over the 3/5 portion of the land. This leads to no other conclusion but a tacit recognition that ownership over the 2/5 share of the land does not belong to them. Article 494 of the Civil Code provides that prescription does not run against a co-owner "so long as he expressly or impliedly recognizes the co-ownership." Moreover, laches may not prevail against specific provision of law, since equity, which has been defined as "justice outside legality" is applied in the absence of and not against statutory law or rules of procedure.14 Under 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.15 It is well-settled that prescription and laches can not apply to registered land covered by the Torrens system.16 Applying the above principles, respondents being the registered owner of the land can rest secure, without the necessity of waiting in the portals of the court, or sitting in the "mirador de su casa," to avoid the possibility of losing his land.17 WHEREFORE, in view of the foregoing, the petition is DENIED. The decision of the Court of Appeals dated March 22, 1996 in CA-G.R. CV No. 30381 is AFFIRMED. SO ORDERED. Republic of the Philippines SUPREME COURT Manila

SECOND DIVISION G.R. No. 156402 February 13, 2006

SPS. ALFREDO MENDOZA and ROSARIO F. MENDOZA, Petitioners, vs. MARIA CORONEL, represented by JUANITO CORONEL, Respondent. DECISION PUNO, J.: On appeal are the Court of Appeals (CAs) May 30, 2002 Decision1 in CA-G.R. SP No. 67157 and November 12, 2002 Resolution,2 reversing the September 17, 2001 Decision3 of the Regional Trial Court (RTC) of Malolos, Bulacan in Civil Case No. 458-M-2001. The RTC of Malolos ruled that the Municipal Trial Court (MTC) of Hagonoy, Bulacan, before which respondent filed the ejectment case against petitioners, had no jurisdiction to decide the case for failure of respondent to implead her co-owners of the disputed property, the latter being indispensable parties to the ejectment suit. The facts are as follows: Respondent Maria Coronel is one of the co-owners of Lots 3250 and 3251 located at Sagrada Familia, Hagonoy, Bulacan. Petitioners, spouses Alfredo and Rosario Mendoza, occupied said lots upon tolerance of respondent and her co-owners without paying any rent. When respondent demanded that petitioners vacate the premises, the latter refused. Thus, on December 27, 2000, respondent filed a case before the MTC of Hagonoy, Bulacan for unlawful detainer against petitioners. The MTC ruled in favor of respondent, ordering petitioners to vacate the disputed lots. The dispositive portion of its May 29, 2001 Decision reads as follows: WHEREFORE, premises considered, judgment is hereby rendered ordering the defendants and all those claiming rights under them: (1) to vacate the subject premises (lots 3250 and 3251) and to surrender possession of the same to plaintiff[;] (2) to pay plaintiff attorneys fees and litigation expenses in the amount of P10,000.00 and to pay a monthly rental of P500 from receipt of this decision until they shall have vacated the subject premises; and (3) to pay the costs of suit. SO ORDERED.4

Petitioners appealed to the RTC of Malolos, Bulacan which ruled in their favor. It annulled and set aside the appealed decision for want of jurisdiction of the MTC. It held that the co-owners of the subject lot should have been impleaded as indispensable parties. On appeal to the CA, respondent was successful as the appellate court reversed and set aside the ruling of the RTC and revived the decision of the MTC dated May 29, 2001. Petitioners Motion for Reconsideration was denied. Hence, this appeal.5 Petitioners assign the following errors: I. The lower court erred in ruling that a co-owner can bring an action in ejectment without impleading his co-owners, relying on an "Errata for pages 38-39 of Volume 280 SCRA," which appears to alter the original tenor of the ruling in Arcelona vs. CA that coowners are indispensable parties. II. The lower court erred in not taking into account that the complaint was filed by an attorney-in-fact authorized by only one of the co-owners to file the ejectment suit. III. The lower court erred in allowing the petition for review despite the fact that the certification against forum-shopping was executed by an attorney-in-fact, in violation of the requirement that parties must personally sign the same. The main issue in the case at bar is whether any of the co-owners may bring an action in ejectment. The CA is correct in overruling the RTC. The latter court held that in Arcelona v. Court of Appeals,6 we held that a co-owner cannot maintain an action in ejectment without joining all the other co-owners, the latter being indispensable parties. In reversing the ruling of the RTC, the CA pointed out that the RTC relied on the uncorrected Arcelona decision. The RTC overlooked the fact that the decision has been corrected by an "ERRATA for pages 38-39" appearing on the second leaf of volume 280 of the SCRA. Thus, the CA held: Formerly, Article 487 of the old Civil Code provided that "any one of the co-owners may bring an action in ejectment." It was subsequently held that a co-owner could not maintain an action in ejectment without joining all the other co-owners. The foregoing statement was deleted and replaced with the following: In the past, a co-owner could not even maintain an action in ejectment without joining all the other co-owners. . .

While Article 487 of the Civil Code now provides that "any one of the co-owners may bring an action in ejectment," former Chief Justice Moran also stressed that all of them are necessary and proper parties . . . We reiterate the Arcelona ruling that the controlling law is Article 487 of the Civil Code which categorically states: Any one of the co-owners may bring an action in ejectment. (n) Article 487 is a departure from the rule laid down in the case of Palarca v. Baguisi7 which held that an action for ejectment must be brought by all the co-owners. As explained by Tolentino, the law now allows a co-owner to bring an action for ejectment, which covers all kinds of actions for the recovery of possession, including forcible entry and unlawful detainer, without the necessity of joining all the other co-owners as co-plaintiffs, because the suit is deemed to be instituted for the benefit of all.8 We also reject petitioners second and third assignment of errors. Petitioners claim that Juanito Coronel, attorney-in-fact of Maria Coronel, one of the co-owners of the lots in dispute is not authorized to file the ejectment suit. They insist that he should have obtained the authority and consent of all the co-owners. But since Article 487 of the Civil Code authorizes any one of the co-owners to bring an action for ejectment and the suit is deemed to be instituted for the benefit of all, without the other co-owners actually giving consent to the suit, it follows that an attorneyin-fact of the plaintiff co-owner does not need authority from all the co-owners. He needs authority only from the co-owner instituting the ejectment suit. We likewise hold that the execution of the certification against forum shopping by the attorneyin-fact in the case at bar is not a violation of the requirement that the parties must personally sign the same. The attorney-in-fact, who has authority to file, and who actually filed the complaint as the representative of the plaintiff co-owner, pursuant to a Special Power of Attorney, is a party to the ejectment suit. In fact, Section 1, Rule 70 of the Rules of Court9 includes the representative of the owner in an ejectment suit as one of the parties authorized to institute the proceedings. IN VIEW WHEREOF, petitioners appeal is DENIED. The Court of Appeals May 30, 2002 Decision in CA-G.R. SP No. 67157 and November 12, 2002 Resolution, reversing the September 17, 2001 Decision of the Regional Trial Court of Malolos, Bulacan in Civil Case No. 458-M2001 and reviving the May 29, 2001 Decision of the Municipal Trial Court of Hagonoy, Bulacan in Civil Case No. 1308, are AFFIRMED. SO ORDERED.