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[G.R. No. 129471. April 28, 2000] DEVELOPMENT BANK O T!E P!"L"PP"NE#, petitioner, vs. $O%RT O APPEAL# &'( $ARLO# $A)E#, respondents. DE$"#"ON MENDO*A, J.

+ Misact This is a petition for certiorari seeking to reverse the decision1[1] and resolution2[2] of the Court of Appeals dated August 30, 199 and April 23, 199!, respectivel", declaring private respondent Carlos Ca#es the o$ner of 19%& hectares of land e'(raced in TCT )o% 10101 and ordering the segregation and reconve"ance of said portion to hi'% The antecedent facts are as follo$s* The land in dispute, consisting of 19%& hectares located in +an Miguel, ,rovince of -ohol, $as originall" o$ned (" .lpiano Mu'ar, $hose o$nership since 191! $as evidenced (" Ta/ 0eclaration )o% 31&0%3[3] 2n 1930,&[&] Mu'ar sold the land to private respondent $ho $as issued Ta/ 0eclaration )o% 451&!3 that sa'e "ear% 3[3] The ta/ declaration $as later superseded (" Ta/ 0eclaration )os% 45!99 issued in 19 1 [ ] and 0522&! issued in 19!&%![!] ,rivate respondent occupied and cultivated the said land,1[1] planting cassava and ca'ote in certain portions of the land% 9[9] 2n 19 9, unkno$n to private respondent, 6ose Alvare7 succeeded in o(taining the registration of a parcel of land $ith an area of 1,312,& 1%00 s8uare 'eters, 10[10] in his na'e for $hich he $as issued 9CT )o% 3& on 6une 1 , 19 9% 11[11] The parcel of land

1 2 3 4 5 6 7 8 9 10 11

dated March 11.000%00 and.s loan application $as later approved (" petitioner% 19[19] <o$ever after releasing the a'ount of the loan to private respondent. cancelled the loan and de'anded i''ediate pa"'ent of the a'ount% 20[20] . petitioner consolidated its o$nership% 11[11] 2t appears that private respondent had also applied for a loan fro' petitioner in 19!1. . as a result of $hich. 1911. 'ortgaged the land covered (" TCT )o% 10101 to the (ank% 1&[1&] 2n 19!1.rivate respondent. and the +AA0 Agro52ndustries. the +AA0 2nvest'ent Corp%.1.32 . Alvare7 sold the land to the spouses :audencio and 4osario -edu"a to $ho' TCT )o% 10101 $as issued%13[13] That sa'e "ear. represented (" :audencio -edu"a.atton 4% 9lano.&30. a representative of petitioner. 2nc%. petitioner $as the highest (idder% 1![1!] As the spouses -edu"a failed to redee' the propert". offering his 19%& hectare propert" under Ta/ 0eclaration )o% 0522&! as securit" for the loan% As part of the processing of the application.hilippines for .rivate respondent paid the loan to petitioner for $hich the for'er $as issued a Cancellation of Mortgage. and the spouses -edu"a personall" e/ecuted another 'ortgage over the land in favor of petitioner to secure a loan of . petitioner found that the land 'ortgaged (" private respondent $as included in the land covered (" TCT )o% 10101 in the na'e of the spouses -edu"a% .000%00% 13[13] +d#ad The spouses -edu"a later failed to pa" their loans. inspected the land and appraised its value% . the spouses -edu"a o(tained a loan fro' petitioner 0evelop'ent -ank of the . 1913. releasing the propert" in 8uestion fro' encu'(rance% 21[21] 12 13 14 15 16 17 18 19 20 21 . as securit".included the 19%& hectares occupied (" private respondent% Alvare7 never occupied nor introduced i'prove'ents on said land% 12[12] 2n 19!2.etitioner. therefore. the 'ortgage on the propert" $as foreclosed%1 [1 ] 2n the resulting foreclosure sale held on 6anuar" 31.

'olesting and interfering plaintiff. the Court of Appeals reversed and gave #udg'ent for private respondent.22[22] petitioner filed a co'plaint for recover" of possession $ith da'ages against hi'% The case $as assigned to -ranch 1 of the 4egional Trial Court. foregoing considered. 1919.+o'eti'e in April of 191 . cease and desist fro' distur(ing. dated August 22. the appealed decision is here(" 4>A>4+>0 A)0 +>T A+20>% A ne$ decision is here(" rendered* 1% 0is'issing the co'plaint% 22 23 24 . rendered a decision.hilippines the true and legal o$ner of the land in 8uestion covered (" TCT )o% 10101 far' of :audencio -edu"a@ 2%%%%%%%0is'issing defendant. and fro' co''itting an" such act as $ould tend to 'itigate. a re5appraisal of the propert" covered (" TCT )o% 10101 $as conducted (" petitioner. den" or deprive plaintiff of its o$nership and possession over said land% +9 940>4>0% 9n appeal.s counterclai'@ +ppedsc 3%%%%%%%9rdering defendant to vacate fro' the land in 8uestion@ the portion of $hich he clai's to (elong to hi' for $ithout (asis in fact and la$@ &%%%%%%%9rdering defendant. his agents or an" person representing hi' or those $ho 'a" clai' su(stantial rights on the land to vacate therefro'. Tag(ilaran Cit".s representatives% 2t $as then discovered that private respondent $as occup"ing a portion of said land% . declaring petitioner the la$ful o$ner of the entire land covered (" TCT )o% 10101 on the ground that the decree of registration $as (inding upon the land%2&[2&] The dispositive portion of the decision reads* =<>4>?94>.s possession of the land in 8uestion.s decision reads* =<>4>?94>. declaring hi' the o$ner of the 19%& hectares of land erroneousl" included in TCT )o% 10101% The dispositive portion of the appellate court. and he $as asked to vacate the propert"% As private respondent refused to do so.rivate respondent $as infor'ed that petitioner had (eco'e the o$ner of the land he $as occup"ing. 'ore than a "ear after the foreclosure sale. the court renders #udg'ent* 1%%%%%%%0eclaring plaintiff (ank 0evelop'ent -ank of the . 23[23] $hich after trial.

or .>+ A-9.> 9? T<> BA)0 2) G.42): A . (eca'e the o$ner of the land (" virtue of the decree of registration issued in his na'e% 2n Benin. ordering its segregation fro' plaintiff5appellee.9)0>)T C9.A4T2C.etitioner 'oved for a reconsideration (ut its 'otion $as denied in a resolution dated April 23.4T. ->2): A) 2))9C>)T M94T:A:>> ?94 AAB..etitioner contends that* 2%%%%%%%T<> 0>C2+29) 9? T<> 4>+.A+9).2& %00 s8uare 'eters% The" asked that the" (e declared the o$ners and la$ful possessors of said lands% Benin is distinguished fro' this case% 2n the first place.9)0>)T C9.B2CA-B> .>+T29) A)0 9? <AA2): .!91.>B 2+ 2BB9:2CAB%2![2!] ir. 3! +C4A 331% 22%%%%%%%T<> 4>+. 2) >+T9. . pra"ing for the cancellation of 9CT )o% !33 covering t$o parcels of land called the +ta% Mesa >state.49A2+29)+ 9? BA= C+ections 31 and & of ACT &9 D A)0 T<> A. . 1!%00 s8uare 'eters.2% 0eclaring the disputed 19%&000 hectares of land e'(raced in TCT 10101 as e/clusivel" (elonging to defendant5appellant.-. 199!%2 [2 ] <ence this petition% .4T 9A>4B99F>0 T<> 2++.arcel 2. $ith an area of 13.4C<A+>0 BAT>4 T<> +AM> 0. $ith an area of 1.9 1..4T 2+ )9T 2) ACC940 =2T< T<> A. or . three sets of plaintiffs filed separate co'plaints against Mariano +evero Tuason and 6%M% Tuason H Co%.. 6ose Alvare7.4>M> C9. and the 0ili'an >state. ancestors occupied the lands in 8uestion and declared the' for ta/ 25 26 27 28 .+ 4... $hen the clai'ants.etitioner invokes the ruling of this Court in Benin v.9)0>)T C9..B2CA-B> 0>C2+29)+ 9? T<> +.BA4BE 2) T<> CA+> 9? ->)2) A+% T.CT29) +AB>% Calrsc 222%T<> 4>+.-B2C A.4T. 2nc%. Benin involved vast tracts of lands $hich had alread" (een su(divided and (ought (" innocent purchasers for value and in good faith at the ti'e the clai'ants o(tained registration% +econdl". Tuason28[28] in support of its clai' that its predecessor5in5interest.B2): 0>CBA42): 0-.arcel 1.T T<> 0-.s title and its reconve"ance to appellant% )o pronounce'ent as to costs% +9 940>4>0%23[23] .

e. 2nc% Thus. (" virtue of the decree of registration. Act )o% &9 provides* +ec% 39% >ver" person receiving a certificate of title in pursuance of a decree of registration. having filed the co'plaint onl" in 1933. fro' that ti'e on. on the contrar". the transfer certificates of title ac8uired (" the innocent purchasers for value $ere also declared valid% 2t $as held that neither could the clai'ants file an action to annul these titles for not onl" had these actions prescri(ed. the lands $ere alread" covered (" the ta/ declarations in the na'e of 6% M% Tuason H Co%. as a result thereof. 2nc% 2n 191&. 2nc% and that of the other innocent purchasers for value and in good faith co'pared to the failure of the clai'ants to sho$ their right to o$n or possess the 8uestioned properties% +ccalr . it conferred no title (ecause. despite the fact that the" neither possessed nor occupied these lands% This vie$ is 'istaken% A consideration of the cases sho$s that a decree of registration cut off or e/tinguished a right ac8uired (" a person $hen such right refers to a lien or encu'(rance on the land I not to the right of o$nership thereof I $hich $as not annotated on the certificate of title issued thereon% Thus.. the validit" of 9CT )o% !33 had alread" (een recogni7ed (" this Court in several cases29[29] and. the resulting prescriptive title $as cut off and e/tinguished (" the decree of registration% 2f. it $as not solel" the decree of registration $hich $as considered in resolving the Benin case% =hat $as considered decisive $as the valid title or right of o$nership of 6% M% Tuason H Co%. no possession could defeat the title of the registered o$ners of the land% Thirdl".etitioner 8uotes the follo$ing state'ent in the Benin case* 2t follo$s also that the allegation of prescriptive title in favor of plaintiffs does not suffice to esta(lish a cause of action% 2f such prescription $as co'pleted before the registration of the land in favor of the Tuasons. the spouses -edu"aD ac8uired o$nership of the 19%& hectares of land. or &1 "ears after the issuance of 9CT )o% !33 to 6%M% Tuason H Co%. and ever" su(se8uent purchaser of registered land $ho takes a certificate of title for value in good faith shall hold the sa'e 29 30 .purposes in 19&&.etitioner $ould thus insist that.etitioner 'aintains that the possession (" private respondent and his predecessor5in5 interest of the 19%& hectares of land for 'ore than 30 "ears cannot overco'e the decree of registration issued in favor of its predecessor5in5interest 6ose Alvare7% . (" e/press provision of la$. prescription can not operate against the registered o$ner CAct &9 D%30[30] . (ut the fact $as that the clai'ants $ere also (arred fro' doing so (" laches. 6ose Alvare7 and those clai'ing title fro' hi' Ci. 9CT )o% !33 $as issued in the na'e of Tuason so that. the prescription $as either (egun or co'pleted after the decree of registration.

33[33] the Court alread" ruled on the purpose of registration of lands.31[31] it $as helds* % % % Conse8uentl". Ta/es $ithin t$o "ears after the sa'e (eca'e due and pa"a(le% Third. in Cid v. registration has never (een a 'ode of ac8uiring o$nership over i''ova(le propert"% As earl" as 1911.nited +tates or of the . or irrigation canal or lateral thereof. in the case of Cit of !ani"a v. Biens. clai's. Javier. An" pu(lic high$a". private $a" esta(lished (" la$.free of all encu'(rances e/cept those noted on said certificate. $here the certificate of title does not state that the (oundaries of such high$a". or rights arising or e/isting under the la$s of Constitution of the . and an" of the follo$ing encu'(rances $hich 'a" (e su(sisting. na'el"* Calrspped First.hilippine 2slands $hich the statutes of the . #ac$. $a". or an" :overn'ent irrigation canal or lateral thereof. have (een deter'ined% -ut if there are ease'ents or other rights appurtenant to a parcel of registered land $hich for an" reason have failed to (e registered. Paredes32[32] $hich also involved an ease'ent of light and vie$ that $as not annotated on the certificate of title of the servient estate% +cedp -ut to 'ake this principle applica(le to a situation $herein title ac8uired (" a person through ac8uisitive prescription $ould (e considered cut off and e/tinguished (" a decree of registration $ould run counter to esta(lished #urisprudence (efore and after the ruling in Benin.hilippine 2slands cannot re8uire to appear of record in the 4egistr"% Second. $a". it had (een cut off and e/tinguished (" the registration of the servient estate under the Torrens s"ste' $ithout the ease'ent (eing annotated on the corresponding certificate of title. and shall (e held to pass $ith the land until cut off or e/tinguished (" the registration of the servient estate. or in an" other 'anner% <ence. vi%%* 31 32 33 . pursuant to +ection 39 of the Band 4egistration Act% This principle $as reiterated in Purugganan v. such ease'ents or rights shall re'ain so appurtenant not$ithstanding such failure. 2ndeed. even conceding arguendo that such an ease'ent has (een ac8uired.

&1 .hil%. in the case of 'nge"es v. not onl" in or prior to March. $hich gave rise to said ano'al". $hich 'a" have (een issued to hi' under the circu'stances. and of course. or that one should enrich hi'self at the e/pense of another C:ustilo vs% Maravilla.hilippine 2slands under one co'prehensive and har'onious s"ste'.hil%. &9 . 32&D% The defendant and her coo$ners kne$ or.hil%. naturall" to the pre#udice of another. that is. $ith or $ithout (ad faith on his part. $ho resorts to the provisions thereof. said original certificate of title )o% 1993 could not have vested in the defendant 'ore title than $hat $as rightfull" due her and her coo$ners% 2t appearing that said certificate granted her 'uch 'ore than she e/pected. 19 .The Court of Band 4egistration $as created for a single purpose% The Act is entitled JAn Act to provide for the ad#udication and registration of titles to lands in the . the certificate of title. &&2@ Angelo vs% 0irector of Bands. $ith the resultant increase in the use of land as a (usiness asset (" reason of the greater certaint" and securit" of title% 2t does not create a title nor vest one% 2t si'pl" confir&s a title a"read created and a"read vested. 131D% The a(ove5stated Acts do not give an"(od". ever since. as this court has had occasion to so state 'ore than once. 1933.hil%. it is (ut #ust that the error.hilippine 2slands%J The sole purpose of the Begislature in its creation $as to (ring the land titles of the . to the pre#udice of his neigh(or. 390D% This is per'itted (" section 112 of Act )o% &9 . 1921% This is evidenced (" the fact that. 31 . the" re'ained passive $ithout even atte'pting to 'ake the least sho$ing of o$nership over the land in 8uestion until after the lapse of 'ore than eleven "ears% The Band 4egistration Act as $ell as the Cadastral Act protects onl" the holders of a title in good faith and does not per'it its provisions to (e used as a shield for the co''ission of fraud. (ut fro' the ti'e said certificate $as issued in their favor. Sa&ia3([3(] $here land $as erroneousl" registered in favor of persons $ho neither possessed nor occupied the sa'e. is not to create or vest title. fro' 0ece'(er 13. 'a" and should (e cancelled or corrected CBegarda and . 'ore land than he reall" o$ns. $hich is applica(le to the Cadastral Act (ecause it is so provided e/pressl" (" the 34 . (e corrected CCit" of Manila vs% Back. rendering it forever indefeasi(le% % % Again. a (etter title than he reall" and la$full" has% 2f he happened to o(tain it (" 'istake or to secure. (ut to confir' and register title alread" created and alread" vested. the cardinal features of $hich are indefeasi(ilit" of title and the intervention of the +tate as a prere8uisite to the creation and transfer of titles and interest. to the pre#udice of the actual occupant. the Court held* % % % The purpose of the Band 4egistration Act.rieto vs% +alee(". ca'e to kno$ that it $as through error that the original certificate of title in 8uestion $as issued (" the court $hich heard cadastral case )o% 11 of -acolor. at least.

open.hil%. Court of '**ea"s+(. peaceful and continuous possession of the propert" since 1930% This fact $as corro(orated (" the testi'on" of >leuterio Ca'(anga" $ho personall" kne$ that . private respondent has (een in actual.s clai' (ased on actual occupation of the land is (olstered (" Ta/ 0eclaration )os% 451&!3.] Although ta/ declarations or realt" ta/ pa"'ents of propert" are not conclusive evidence of o$nership. 9ngsiako.rivate respondent. if the plan of an applicant for registration or clai'ant in a cadastral case alleges that the land referred to in said plan is 100 or 1. 45!99 and 0522&! 39[39] $hich $ere issued in his na'e in 1930. and the land $hich he reall" o$ns and desires to register in the registr" is onl" 10 ares. as stated in the case of 0o'ingo vs% +antos.000 hectares.provisions of section 11 of the latter Act% 2t cannot (e other$ise (ecause. 19 1 and 19!&. nevertheless. he cannot clai' to (e the o$ner of the e/isting difference if after$ards he is issued a certificate of title granting hi' said area of 100 or 1.lpiano Mu'ar transferred the land covered (" Ta/ 0eclaration )o% 31&0 3![3!] in favor of private respondent in 1930%31[31] . 3 1D.s sincere and honest desire to 35 36 37 38 39 40 . respectivel"% Together $ith his actual possession of the land.000 hectares% 33[33] >dpsc The principle laid do$n in this 1931 case re'ains the prevailing doctrine. Bi' " Cia% C33 . its latest application (eing in the case of 4e"es v% Court of Appeals 3 [3 ] $herein $e ruled that the fact that a part" $as a(le to secure a title in his favor did not operate to vest o$nership upon her of the propert"% 2n the present case. errors in the plans of lands sought to (e registered in the registr" and reproduced in the certificate of title issued later. do not annul the decree of registration on the ground that it is not the plan (ut the land itself $hich is registered in the registr"% 2n other $ords. [(. these ta/ declarations constitute strong evidence of o$nership of the land occupied (" hi'% As $e said in the case of )e*ub"ic vs. the" are good indicia of possession in the concept of o$ner for no one in his right 'ind $ould (e pa"ing ta/es for a propert" that is not in his actual or at least constructive possession% The" constitute at least proof that the holder has a clai' of title over the propert"% The voluntar" declaration of a piece of propert" for ta/ation purposes 'anifests not onl" one.

he does not. . it has (een sho$n that neither 6ose Alvare7 nor the spouses -edu"a $ere at an" ti'e in possession of the propert" in 8uestion% 2n fact.o(tain title to the propert" and announces his adverse clai' against the +tate and all other interested parties.rescription re8uires pu(lic. therefore. 'ore than 30 "ears had elapsed (efore a decree of registration $as issued in favor of 6ose Alvare7% This uninterrupted adverse possession of the land for 'ore than 30 "ears could onl" ripen into o$nership of the land through ac8uisitive prescription $hich is a 'ode of ac8uiring o$nership and other real rights over i''ova(le propert"% . the land in 8uestion 'ust (e reconve"ed in favor of private respondent. (ut also the intention to contri(ute needed revenues to the :overn'ent% +uch an act strengthens one. su(se8uentl". $hich dates (ack to 191!% &1[&1] Clearl". in case the possession is in good faith and $ith a #ust title% +uch prescription is called ordinar" prescription. (" virtue of the said certificate alone. it can (e concluded that neither 6ose Alvare7 nor the spouses -edu"a ever e/ercised an" right of o$nership over the land% The fact of registration in their favor never vested in the' the o$nership of the land in dispute% J2f a person o(tains a title under the Torrens s"ste'. as distinguished fro' e/traordinar" prescription $hich re8uires possession for 30 "ears in case possession is $ithout #ust title or is not in good faith%&2[&2] >dp 2n contrast to private respondent. $hich includes (" 'istake or oversight land $hich can no longer (e registered under the s"ste'. it $as esta(lished that private respondent. peaceful. despite kno$ledge (" :audencio -edu"a that private respondent occupied this 19%& hectares included in the area covered (" TCT )o% 10101. &3[&3] he never instituted an" action to e#ect or recover possession fro' the latter% <ence. his possession tacked to that of his predecessor5 in5interest. uninterrupted and adverse possession of the propert" in the concept of an o$ner for ten C10D "ears. having (een in possession of the land since 1930. $e hold that o$nership of the 19%& hectares of land presentl" occupied (" private respondent $as alread" vested in hi' and that its inclusion in 9CT )o% 3& and. $as erroneous% Accordingl". reconve"ance (eing clearl" the proper re'ed" in this case% 41 42 43 44 . in TCT )o% 10101. the true and actual o$ner thereof.s bona fide clai' of ac8uisition of o$nership% More i'portantl". $as the o$ner of the propert" $hen it $as registered (" 6ose Alvare7 in 19 9.lpiano Mu'ar. (eco'e the o$ner of the lands illegall" included%J&&[&&] Considering the circu'stances pertaining in this case.

the point of reference (eing the date of registration of the deed or the date of the issuance of the certificate of title over the propert". since if a person clai'ing to (e the o$ner thereof is in actual possession of the propert". $ithout ordering the cancellation of the Torrens title issued upon the patent. an action for reconve"ance (ased on an i'plied or constructive trust. the right to seek reconve"ance. private respondent 'a" seek reconve"ance of his propert" despite the lapse of 'ore than 10 "ears% )or is there an" o(stacle to the deter'ination of the validit" of TCT )o% 10101% 2t is true that the indefeasi(ilit" of torrens titles cannot (e collaterall" attacked% 2n the instant case. it has (een held* Misedp % % % [A]n action for reconve"ance of a parcel of land (ased on i'plied or constructive trust prescri(es in ten "ears. (ut this rule applies onl" -hen the *"aintiff or the *erson enforcing the trust is not in *ossession of the *ro*ert . this rule does not appl" $hen the plaintiff is in actual possession of the land% Thus. the registered o$ner to reconve" the parcel of land to the plaintiff $ho has (een found to (e the true o$ner thereof%J CAital vs% A'ore. the original co'plaint is for recover" of possession filed (" petitioner against private respondent. not an original action filed (" the latter to 8uestion the validit" of TCT )o% 10101 on $hich petitioner (ases its right% To rule on the issue of validit" in a 45 46 47 . such as the instant case. 90 . 129 +C4A 123D&3[&3] #.hil% 933D JThe reconve"ance is #ust and proper in order to ter'inate the intolera(le ano'al" that the patentees should have a torrens title for the land $hich the" and their predecessors never possessed $hich has (een possessed (" )ovo in the concept of o$ner%J C-ustarga v% )ovo. $hich right can (e clai'ed onl" (" one $ho is in possession% &! [&!] <aving (een the sole occupant of the land in 8uestion. prescri(es in 10 "ears fro' the date of issuance of decree of registration%& [& ] <o$ever.JThe true o$ner 'a" (ring an action to have the o$nership or title to the land #udiciall" settled and the Court in the e/ercise of its e8uit" #urisdiction. does not prescri(e% The reason for this is that one $ho is in actual possession of a piece of land clai'ing to (e the o$ner thereof 'a" $ait until his possession is distur(ed or his title is attacked (efore taking steps to vindicate his right. :enerall"./o'(. that his undistur(ed possession gives hi' a continuing right to seek the aid of a court of e8uit" to ascertain and deter'ine the nature of the adverse clai' of a third part" and its effect on his o$n title. $hich in effect seeks to 8uiet title to the propert". the reason for the rule (eing. as the defendants are in the instant case. 'a" direct the defendants.

or other disa(ilit" of an" person affected there(". clai'ing o$nership over the land and seeking da'ages% <ence. to direct the part" to institute cancellation proceedings $ould (e needlessl" circuitous and $ould unnecessaril" dela" the ter'ination of the controvers" $hich has alread" dragged on for 20 "ears% T0ir(. provides* Misoedp 2f the court after hearing finds that the applicant or adverse clai'ant has title as stated in his application or adverse clai' and proper for registration. it is the original defendant $ho (eco'es the plaintiff% % % % 2t stands on the sa'e footing and is to (e tested (" the sa'e rules as if it $ere an independent action%J &1[&1] 2n an analogous case. or citation. ever" decree or certificate of title issued in accordance $ith this section shall (e incontroverti(le% 2f there is an" such purchaser. ho$ever. $e could rule on the 8uestion of the validit" of TCT )o% 10101 for the counterclai' can (e considered a direct attack on the sa'e% JA counterclai' is considered a co'plaint. That no decree or certificate of title issued to persons not parties to the appeal shall (e cancelled or 48 49 .case for recover" of possession is tanta'ount to a collateral attack% <o$ever. su(#ect onl" to the e/ceptions stated in the follo$ing section% 2t shall (e conclusive upon and against all persons. provided no innocent purchaser for value has ac8uired an interest% . notice. and 8uiet title thereto. nor (" an" proceeding in an" court for reversing #udg'ents or decrees@ su(#ect. infanc". . onl" this ti'e. the Band 4egistration Act. including the 2nsular :overn'ent and all the (ranches thereof. (ut shall re'ain in full force and effect forever. su(#ect onl" to the right of appeal herein(efore provided* Provided.etitioner nonetheless contends that an action for reconve"ance does not lie against it. or included in the general description JTo all $ho' it 'a" concern%J +uch decree shall not (e opened (" reason of the a(sence.pon the e/piration of said ter' of one "ear. (ecause it is an innocent purchaser for value in the foreclosure sale held in 1913% This contention has no 'erit% +ec% 31 of Act )o% &9 . $hether 'entioned (" na'e in the application. ho-ever. a decree of confir'ation and registration shall (e entered% >ver" decree of registration shall (ind the land. it should not (e overlooked that private respondent filed a counterclai' against petitioner.&9[&9] $e ruled on the validit" of a certificate of title despite the fact that the original action instituted (efore the lo$er court $as a case for recover" of possession% The Court reasoned that since all the facts of the case are (efore it. the decree of registration shall not (e opened. to the right of an" person deprived of land or of an" estate or interest therein (" decree of registration o(tained (" fraud to file in the co'petent Court of ?irst 2nstance a petition for revie$ $ithin one "ear after entr" of the decree.

atton 4% 9lano. indicates that petitioner is not a 'ortgagee in good faith% To (e sure. 'ortgagee. this is su(#ect to the right of a person deprived of land through fraud to (ring an action for reconve"ance. K31 provides that a certificate of title is conclusive and (inding upon the $hole $orld% Conse8uentl". ad'itted that he ca'e to kno$ of the propert" for the first ti'e in 19!9 $hen he inspected it to deter'ine $hether the portion occupied (" private respondent and 'ortgaged (" the latter to 50 51 52 .ua non for an action for reconve"ance to prosper that the propert" should not have passed to the hands of an innocent purchaser for value%J30[30] The sa'e rule applies to 'ortgagees. .annulled% -ut an" person aggrieved (" such decree in an" case 'a" pursue his re'ed" (" action for da'ages against the applicant or an" other person for fraud in procuring the decree% =henever the phrase Jinnocent purchaser for valueJ or an e8uivalent phrase occurs in this Act. or other encu'(rancer for value% CAs a'ended (" +ec% 3. even those involving registered lands% 32[32] 6#sc 2n this case. their (usiness (eing i'pressed $ith pu(lic interest. it shall (e dee'ed to include an innocent lessee. an innocent 'ortgagee is not e/pected to conduct an e/haustive investigation on the histor" of the 'ortgagor. petitioner. a (u"er need not look (ehind the certificate of title in order to deter'ine $ho is the actual o$ner of the land% <o$ever. $e held* =here the certificate of title is in the na'e of the 'ortgagor $hen the land is 'ortgaged. like petitioner% Thus. Act )o% 3 30%D >dp'is +uccinctl" put. to send representatives to the pre'ises of the land offered as collateral and to investigate $ho are the real o$ners thereof% -anks. ho$ever.s title% )onetheless. are e/pected to e/ercise 'ore care and prudence than private individuals in their dealings. (efore approving a loan. provided that it does not pre#udice the rights of an innocent purchaser for value and in good faith% J2t is a condition sine .s representative. the su(se8uent declaration of a title as null and void is not a ground for nullif"ing the 'ortgage right of a 'ortgagee in good faith% 31[31] The evidence (efore us. said 'ortgagee is under no o(ligation to look (e"ond the certificate and investigate the title of the 'ortgagor appearing on the face of said certificate% Although Article 2013 of the Civil Code provides that a(solute o$nership of the 'ortgaged propert" (" the 'ortgagor is essential. the innocent 'ortgagee for value has the right to rel" on $hat appears on the certificate of title% 2n the a(sence of an"thing to e/cite suspicion. Act 3 21@ and +ec% 1. a 'ortgagee 'ust e/ercise due diligence (efore entering into said contract% 6udicial notice is taken of the standard practice for (anks. especiall" in the case of a (anking institution.

it $ould not have failed to discover that private respondent $as occup"ing the disputed portion of 19%& hectares% ?or this reason. the land sold is in the possession of a person other than the vendor. petitioner $as alread" a$are that a person other than the registered o$ner $as in actual possession of the land $hen it (ought the sa'e at the foreclosure sale% A person $ho deli(eratel" ignores a significant fact $hich $ould create suspicion in an other$ise reasona(le 'an is not an innocent purchaser for value% J2t is a $ell5settled rule that a purchaser cannot close his e"es to facts $hich should put a reasona(le 'an upon his guard. therefore. no investigation had (een 'ade (" petitioner% 2t is clear.s representative conducted an investigation of the propert" in 19!9 to ascertain $hether the land 'ortgaged (" private respondent $as included in TCT )o% 10101% 2n other $ords. t$o circu'stances negate petitioner. petitioner cannot (e dee'ed an innocent 'ortgageeLpurchaser for value% As $e ruled* +c## JThe failure of appellees to take the ordinar" precautions $hich a prudent 'an $ould have taken under the circu'stances.s occupation over the land. and then clai' that he acted in good faith under the (elief that there $as no defect in the title of the vendor%J 33[33] .petitioner $as included in TCT )o% 10101% This 'eans that $hen the land $as 'ortgaged (" the spouses -edu"a in 19!2. pretending that no dou(ts surround the o$nership of the land covered (" TCT )o% 10101% Considering these circu'stances.s clai' to the land since the latter 'ortgaged the sa'e land to petitioner as securit" for the loan he contracted in 19!1 on the strength of the ta/ declarations issued under his na'e% 2nstead of in8uiring into private respondent. other than the vendor. it has (een held that $here. petitioner si'pl" proceeded $ith the foreclosure sale. constitutes gross negligence a'ounting to (ad faith% 2n this connection.etitioner deli(eratel" disregarded (oth the fact that private respondent alread" occupied the propert" and that he $as clai'ing o$nership over the sa'e% 2t cannot feign ignorance of private respondent. visi(le and pu(lic possession of another person.s clai' that it $as an innocent purchaser for value $hen it (ought the land in 8uestion. speciall" in (u"ing a piece of land in the actual. including the portion occupied (" private respondent* C1D petitioner $as alread" infor'ed (" :audencio -edu"a that private respondent occupied a portion of the propert" covered (" TCT )o% 10101@ and C2D petitioner. the purchaser is re8uired to go (e"ond the certificates of title and 'a[k]e in8uiries concerning the rights of the actual possessor% CCitations o'itted%D 53 . petitioner cannot (e considered an innocent purchaser for value $hen it (ought the land covered (" TCT )o% 10101 in 1913 at the foreclosure sale% 2ndeed. as in this case. that petitioner failed to e/ercise due care and diligence in esta(lishing the condition of the land as regards its actual o$ners and possessors (efore it entered into the 'ortgage contract in 19!2 $ith the -edu"as% <ad it done so.

his clai' of o$nership $as supported not onl" (" the ta/ declarations (ut also (" a certification of the Clerk of Court of the Court of ?irst 2nstance of -ohol that no civil. upon learning that the land occupied (" private respondent $as also covered (" TCT )o% 10101. land registration or cadastral case has (een filed or instituted (efore the court affecting the validit" of Ta/ 0eclaration )o% 0522&! covering the land located in -ugang. induces another to (elieve certain facts to e/ist and such other rightfull" relies and acts on such (elief. (e regarded as a (ona fide purchaser as against such possessors%J3&[3&] o1r-0.%%%% 9ne $ho purchases real propert" $hich is in the actual possession of another should. $e do not find petitioner to (e estopped fro' 8uestioning private respondent. $hen private respondent entered into a 'ortgage contract $ith petitioner.s title% J>stoppel in *ais arises $hen one. so that he $ill (e pre#udiced if the for'er is per'itted to den" the e/istence of such facts%J 3 [3 ] 2n the case at (ar. petitioner i''ediatel" de'anded full pa"'ent of the loan and thereafter cancelled the 'ortgage contract. at least put the purchaser upon in8uir"% <e can scarcel". or (" his o$n silence $hen he ought to speak out.rivate respondent 'ade no 'isrepresentation $ith regard to the land occupied (" hi' as he is actuall" the real o$ner thereof% Moreover.s title% .etitioner clai's that the fact that it approved a loan in favor of private respondent and e/ecuted a 'ortgage contract covering the 19%& hectares covered (" ta/ declarations issued under private respondent. +an Miguel. nothing in record indicates that petitioner i'pliedl" 54 55 56 . in the a(sence of such in8uir".etitioner accuses private respondent of having 'ade 'isrepresentations $hich led it to (elieve in his valid title and o$nership% The clai' has no (asis% . a fact that is ad'itted (" private respondent hi'self%3![3!] 2ndeed. (" his acts. ?ro' the foregoing.s na'e does not 'ean that it is estopped fro' 8uestioning the latter. 'ake so'e in8uir" concerning the right of those in possession% The actual possession (" other than the vendor should. intentionall" or through culpa(le negligence. $e find that the resolution of the issue of estoppel $ill not affect the outco'e of this case% . at least. -ohol and declared in the na'e of Carlos Ca#es% 33[33] These docu'ents $ere relied upon (" private respondent in support of his clai' of o$nership% =e cannot consider the su('ission of these docu'ents as 'isrepresentations (" private respondent as to the actual o$nership of the land% 4ather. representations or ad'ission. private respondent (elieved in good faith and $ith good reason that he $as the o$ner of the 19%& hectares occupied (" hi'% +#c# As to the 8uestion of estoppel.

/Chair&an0. $e uphold private respondent. the decision of the Court of Appeals is A??24M>0 in toto% #O ORDERED. and 2e #eon. 57 . JJ.s o$nership of 19%& hectares occupied (" hi'% As a necessar" conse8uence thereof. such portion of land included in TCT )o% 10101 'ust (e segregated and reconve"ed in his favor% 2!ERE ORE. 1uisu&bing..s title $hen it found out that the latter $as occup"ing a portion of the land covered (" TCT )o% 10101% <o$ever. +upre'e Be""osi""o.ac8uiesced to the validit" of private respondent. Buena. for reasons aforestated.. concur. Jr.