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CASE 41

SECOND DIVISION

[G.R. No. L-9558. May 24, 1957.]

LEONCIO MONGE, SEVERA POLVOROSA and MARIA MONGE, Plaintiffs-Appellants, v. LINO ANGELES and SOCORRO
MOLINA, Defendants-Appellees.

Ezekiel S. Grageda for Appellants.
Reyes and Dy-Liacco for Appellees.

SYLLABUS

1. PUBLIC LANDS; SALE OF; RIGHT OF REDEMPTION TO START FROM DATE OF CONVEYANCE. The period of five years which section
119 of Commonwealth Act No. 141 allows a homesteader to repurchase a homestead sold by him should be counted from the date of conveyance,
regardless of its nature. The word conveyance is of American origin. It may refer not only to an absolute sale but also to mortgage or any other
transaction. It has been defined as signifying "every instrument by which an estate or interest in real estate is created, alienated, mortgaged, or
assigned" (13 C. J., 900; 18 C. J. S., 92).


D E C I S I O N

BAUTISTA ANGELO, J.:


On July 30, 1948, plaintiffs executed in favor of defendants a deed of sale of a parcel of land acquired by plaintiffs under a homestead patent with
right to repurchase it within one year from the date of sale. Because of the failure of plaintiffs to repurchase the land as stipulated, the sale became
absolute on July 30, 1949, although defendants actually consolidated their ownership over the land on January 17, 1953 in accordance with an order
of consolidation issued in Special Proceeding No. 548 (Court of First Instance of Camarines Sur). However, plaintiffs claim that they can still exercise
the right to repurchase the land within the period of five years from July 30, 1949 under Section 119 of Commonwealth Act No. 141 (Public Land
Law) and to that effect they tendered to defendants the repurchase price of P1,200, and when the latter refused, they consigned the money with the
clerk of court and instituted the present action.

Defendants moved to dismiss the complaint on the grounds (1) that it does not state a cause of action and (2) that, in any event, the action was not
commenced with in the period prescribed by law. The court sustained the motion and dismissed the case without costs. Hence this appeal.

The question to be determined is whether the period of five years which Section 119 of Commonwealth Act No. 141 allows a homesteader to
repurchase a homestead sold by him should be counted from the date of the sale even if the same is with an option to repurchase or from the date
the ownership of the land has become consolidated in favor of the purchaser because of the homesteaders failure to repurchase it.

Section 119 of Commonwealth Act No. 141 provides: "Every conveyance of land acquired under thefree patent or homestead provisions, when
proper, shall be subject to repurchase by the applicant, his widow, or legal heirs, within the period of five years from the date of the conveyance."
The language of the law is clear. It provides that the period of five years shall be counted from the date of conveyance, regardless of its nature. The
word conveyance is of American origin. It may refer not only to an absolute sale but also to mortgage or any other transaction. It has been defined as
signifying "every instrument by which any estate or interest in real estate is created, alienated, mortgaged, or assigned" (13 C. J., 900; 18 C. J. S.,
92). When the law is clear, it admits of no interpretation. It follows therefore that the pretense of appellants to the effect that the 5-year period should
be counted from the date the ownership of appellees over the land had become consolidated is untenable.

The above interpretation finds support in recent decisions of this Court. In Blanco v. Bailon, G. R. No. L-7342, April 28, 1956, the question raised was
whether the 5-year period of redemption began from the date of the execution of the contract or from the date of its registration in the office of the
register of deeds, considering that the homestead was registered under the Torrens system. This court held that it is the former because in so far as
the owner of the homestead is concerned, the conveyance mentioned in Section 119 of the Public Land Law is the actual date thereof, and not the
date of registration of the deed of sale. (Citing Galasinao v. Austria, 97 Phil., 82, 51 Off.Gaz., 2874).

In Galanza v. Nuesa, 95 Phil., 713, 50 Off. Gaz., 4213, the question that arose was "whether the period to repurchase the land in question shall be
counted from the execution of the deed of sale with right to repurchase or from the issuance of transfer certificate of title to the herein defendant"
and the Court held that appellants title had already become absolute because of appellees failure to redeem the land within five years from the date
of sale. The Court added: "Both under Section 50 of the Land Registration Law and under Section 119 of Commonwealth Act 141, the owner of a
piece of land is neither prohibited nor precluded from binding himself to an agreement whereby his right of repurchase is for a certain period starting
from the date of the deed of sale." In other words, the date of the sale is of paramount consideration.

The order appealed from is affirmed, with costs against appellants.





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CASE 42
CHATTEL MORTGAGE

G.R. No. L-40018


SECOND DIVISION
[ G.R. No. L-40018, March 21, 1975 ]
NORTHERN MOTORS, INC., PETITIONER, VS. THE HONORABLE JORGE R. COQUIA, EXECUTIVE JUDGE OF THE COURT OF FIRST
INSTANCE OF MANILA, HONESTO ONG, THE SHERIFF OF MANILA, DOMINADOR Q. CACPAL, THE ACTING EXECUTIVE SHERIFF OF
MANILA, AND/OR HIS DULY AUTHORIZED DEPUTY SHERIFF OR REPRESENTATIVE, RESPONDENTS. FILINVEST CREDIT CORPORATION,
INTERVENOR.

D E C I S I O N
FERNANDEZ, J.:
This is a petition for certiorari to nullify the resolution and order of the respondent Judge dated January 17 and 23, 1975, respectively, and for
injunction against the respondent sheriffs from proceeding with the execution sale of the taxicabs subject matter of the instant case.

Sometime in mid-1974, petitioner Northern Motors, Inc. sold 200 units of Holden Torana cars to Manila Yellow Taxicab Co., Inc. on installment basis
with corresponding chattel mortgages thereon, Of the 200 units, the mortgage on 172 units was assigned to Filinvest Credit Corporation.

In December, 1974, the respondent sheriff and/or Acting Executive Sheriff of Manila, thru a deputy sheriff , levied on 20 of the aforesaid 200 units to
satisfy the judgment in Civil Case No. 71584, entitled "Tropical Commercial Co., Inc. vs. Manila Yellow Taxicab Co., Inc., et al.," Court of First
Instance of Manila, Branch XIII, which judgment for P110,000.00 was assigned on December 9, 1974 for P15,000.00 to one Loida Cortez who, a day
after, reassigned the same to respondent Honesto Ong for valuable consideration. Of the 20 units levied on, 8 were mortgaged to petitioner
Northern Motors, Inc., and the 12 units to Filinvest Credit Corporation. The sale of the aforesaid 20 units was scheduled for auction sale by the
respondent sheriff on December 18, 1974 at 10:00 o'clock in the morning. Both petitioner Northern Motors, Inc. and Filinvest Credit Corporation filed
their corresponding third-party claims. Because of these third-party claims, the scheduled sale of the 20 units was postponed to 4:00 o'clock p.m. of
the same day, December 18, 1974, to enable the Tropical Commercial Co., Inc. and/or its assignee to file the indemnity bonds, which bond/bonds
was issued by Filriters Guaranty Assurance Corporation. Shortly before 3:30 p.m. of the same day, December 18, 1974, the representatives of
petitioner and Filinvest Credit Corporation proceeded to the place of the auction sale but was met by Deputy Sheriff Cesar S. Capili and told that the
auction sale of the 20 units had already been consummated.

On January 3, 1975, respondent Judge, upon petition of Tropical Commercial Corporation, issued a resolution cancelling the indemnity bonds filed
by Filriters Guaranty Assurance Corporation for the December 18, 1974 auction sale on the ground of lack of opposition and that no third-party claim
was filed. This resolution was later amended in a resolution dated January 6, 1975, but maintaining the cancellation of the bonds on the grounds of
absence of opposition and on a new ground that the court had ruled in a similar case that "the third party claimant is, if at all, merely a mortgage and
not a claimant of ownership." Petitioner moved to reconsider which motion was denied in a resolution dated January 17, 1975.

Meanwhile, the respondent sheriffs and/or Acting Executive Sheriff, thru Cesar S. Capili, again levied on 35 moreTorana Taxicab unit of the Manila
Yellow Taxicab Co., 7 of which are mortgaged to petitioner and 28 to the Filinvest Credit Corporation to satisfy the balance of the judgment in the
principal case, and set the same for auction sale at 10:00 o'clock in the morning of January 23, 1975. In due course, petitioner and Filinvest Credit
Corporation filed their corresponding third-party claims.

Petitioner also filed an Urgent Motion to Stop the Execution Sale of the 7 out of the 35 units additionally levied upon and to hold the disposition of the
proceeds of the December 18, 1974 auction sale or of any subsequent sale. This motion, however, was also denied by the respondent Judge in the
disputed resolution of January 17, 1975.

Filinvest Credit Corporation then filed a Motion for Intervention with Application for Issuance Ex Parte of Writ of Preliminary Injunction/Restraining
Order. On the day of the hearing of the motion, petitioner joined in and orally manifested that a suit for replevin has been filed by petitioner for the
recovery of the 7 out of 35 units scheduled for auction sale and moved that pending resolution of the question of possession of the units, the
execution sale thereof be stopped. In an order dated January 23, 1975, respondent Judge postponed the scheduled auction sale and ordered that
the same shall proceed at 10:00 o'clock in the morning of the following day, January 24, 1975, "unless there is a restraining order issued by a higher
court."

Hence, the instant petition for certiorari and injunction by petitioner Northern Motors, Inc. On January 24, 1975, Filinvest Credit Corporation filed with
this Court a Manifestation and Urgent Motion praying that, in the event a writ of preliminary injunction or restraining order is issued, the same should
cover as well the execution sale of the 28 units claimed by them. On the same day, this Court granted and issued the restraining order prayed for in
the petition. On January 29, 1975, Filinvest Credit Corporation filed a petition to intervene in the instant case, which was allowed by Us on February
5, 1975.

The issue to be resolved is whether or not the respondent Judge acted with grave abuse of discretion in denying petitioner's and intervenor's third-
party claims.

Section 17, Rule 39 of the Revised Rules of Court provides for the proceedings where a property levied upon is claimed by a third person, the
pertinent portion of which, reads:
"If property levied on be claimed by any other person than the judgment debtor or his agent, and such person make an affidavi t of his title thereto or
right to the possession thereof, stating the grounds of such right or title, and serve the same upon the officer making the levy, and a copy thereof
upon the judgment creditor, the officer shall not be bound to keep the property, unless such judgment creditor or his agent, on demand of the officer,
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indemnify the officer against such claim by a bond in a sum not greater than the value of the property levied on. In case of disagreement as to such
value, the same shall be determined by the Court issuing the writ of execution.

The officer is not liable for damages, for the taking or keeping of the property, to any third party claimant unless a claim is made by the latter and
unless an action for damages is brought by him against the officer within one hundred twenty (120) days from the date of the filing of the bond. But
nothing herein contained shall prevent such claimant or any third person from vindicating his claim to the property by any proper action. x x x."
Pursuant to the above provision, a third-party claimant has two remedies, such as, an action for damages against the sheriff to be brought within 120
days from the filing of the bond, and a separate and independent action to vindicate his claim to the property. In the case at bar, petitioner's and
intervenor's remedy against the bond proved to be unavailing because of the disputed order of the respondent Judge cancelling the indemnity bond.
Such an order as well as the order denying a motion to reconsider the same in effect discarded or quashed the third-party claims. What then would
the remedy be of the third-party claimants?

In the recent case of Serra vs. Rodriguez, G.R. No. L-25546, April 22, 1974 (56 SCRA 538), this Court (First Division), thru Mr. Justice Makasiar,
ruled:
"From the denial of a third-party claim to defeat the attachment caused to be levied by a creditor, neither an appeal nor a petition for certiorari is the
proper remedy (see Santos vs. Mojica, L-19618, Feb. 18, 1964, 10 SCRA 318, 320-321; Potenciano vs. Dineros, 97 Phil. 196, 200). The remedy of
petitioner would be to file a separate and independent action to determine the ownership of the attached property or to file a complaint for damages
chargeable against the bond filed by the judgment creditor in favor of the provincial sheriff." (Underlining Supplied).
In Lara vs. Bayona, L-7920, May 10, 1955, this Court, thru Mr. Justice Concepcion, later Chief Justice, in denying the petition for certiorari to set
aside the order of the lower court quashing the third-party claim of a chattel mortgagee, held:
"Pursuant to this provision, nothing contained therein shall prevent petitioner 'from vindicating his claim to the property by any proper action.' Neither
does the order complained of deprive petitioner herein of the opportunity to enforce his alleged rights by appropriate proceedings. In short, he has
another 'plain, speedy and adequate remedy in the ordinary course of law,' and, hence is not entitled either to a writ of certiorari or to a writ of
prohibition. (Rule 67, Sections 1 and 2, Rules of Court)."
At any rate, even if petitioner and intervenor failed in their respective third-party claims, their right to the motor vehicles subject of the execution sale
is not completely lost, for the rule reserves to them the right to vindicate their claim in a proper action. To be sure, petitioner and intervenor had
already secured writs of replevin to recover possession of the property in dispute. Besides, the chattel mortgage lien attaches to the property
wherever it may be. In other words, the buyer acquires the property subject to such liens and encumbrances as existed thereon at the time of the
execution (Lara vs. Bayona, supra).

We believe the issues discussed by the petitioner and intervenor herein should be threshed out not in this proceedings but in an ordinary action as
adverted to above. We further deem not to delve upon the merits of the case as it might prejudge the case for replevin filed by petitioner and
intervenor in the Court of First Instance.

WHEREFORE, the petition is hereby denied, and the temporary restraining order heretofore issued dissolved, without pronouncement as to costs.

Makalintal, C.J., (Chairman), Fernando, Barredo, and Antonio, JJ., concur.
CASE 43

SECOND DIVISION

[G.R. No. 42091. November 2, 1935.]

GONZALO CHUA GUAN, Plaintiff-Appellant, v. SAMAHANG MAGSASAKA, INC. and SIMPLICIO OCAMPO, ADRIANO G. SOTTO, and
EMILIO VERGARA, as president, secretary and treasurer respectively of the same, Defendants-Appellees.

Buenaventura C. Lopez for Appellant.

Domingo L. Vergara for Appellees.

SYLLABUS
1. CORPORATIONS; MORTGAGE OF SHARES OF STOCK. The registration of the chattel mortgage in the office of the corporation was not
necessary and had no legal effect. (Monserrat v. Ceron, 58 Phil., 469) The long mooted question as to whether or not shares of a corporation could
be hypothecated by placing a chattel mortgage on the certificate representing such shares we now regard as settled by the case above cited of
Monserrat v. Ceron.

2. ID.; ID.; SITUS OF SHARES. It is a common but not accurate generalization that the situs of shares of stock is at the domicile of the owner.
The term situs is not one of fixed or invariable meaning of usage. The situs of shares of stock for some purposes may be at the domicile of the owner
and for others at the domicile of the corporation; and even elsewhere. (Cf. Vidal v. South American Securities Co., 276 Fed., 855; Black Eagle Min.
Co. v. Conroy, 94 Okla., 221 Pac., 425; Norrie v. Kansas City Southern Ry. Co., 7 Fed [2d], 158.)

3. ID.; ID.; ID.; DOMICILE. It is a general rule that for purposes of execution, attachment and garnishment, it is not the domicile of the owner of a
certificate but the domicile of the corporation which is decisive. (Fletcher, Cyclopedia of the Law of Private Corporations, vol. 11, paragraph 5106; Cf.
sections 430 and 450, Code of Civil Procedure.)

4. ID.; ID.; ID.; ACT NO. 1508, SECTION 4, CONSTRUED. By analogy with the foregoing and considering the ownership of shares in a
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corporation as property distinct from the certificate which are merely the evidence of such ownership, it is a reasonable construction of section 4 of
Act No. 1508 to hold that the property in the shares may be deemed to be situated in the province in which the corporation has its principal office or
place of business. If this province is also the province of the owners domicile, a single registration is sufficient. If not the chattel mortgage should be
registered both at the owners domicile and in the province where the corporation has its principal office or place of business. In this sense the
property mortgaged is not the certificate but the participation and share of the owner in the assets of the corporation.

5. ID.; ID.; ASSIGNMENT AND DELIVERY OF CERTIFICATE. The only safe way to accomplish the hypothecation of shares of stock of a
Philippine corporation is for the creditor to insist on the assignment and delivery of the certificate and to obtain the transfer of the legal title to him on
the books of the corporation by the cancellation of the certificate and the issuance of a new one to him.

6. ID.; ID.; ACT NO. 1459, SECTION 35, CONSTRUED. Section 35 of the Corporation Law (Act No. 1459) enacts that shares of stock "may be
transferred by delivery of the certificate endorsed by the owner or his attorney in fact or other person legally authorized to make the transfer." The
use of the verb "may" does not exclude the possibility that a transfer may be made in a different manner, thus leaving the creditor in an insecure
position even though he has the certificate in his possession. The shares still standing in the name of the debtor on the books of the corporation will
be liable to seizure by attachment or levy on execution at the instance of other creditors. (Cf. Uy Piaoco v. McMicking, 10 Phil., 286, and Uson v.
Diosomito, 61 Phil., 535) This unsatisfactory state of our law is well known to the bench and bar. (Cf. Fisher, The Philippine Law of Stock
Corporations, pages 163-168.)


D E C I S I O N


BUTTE, J.:

This is an appeal from a judgment of the Court of First Instance of Nueva Ecija in an action for a writ of mandamus. The case is remarkable for the
following reason: that the parties entered into a stipulation in which the defendants admitted all of the allegations of the complaint and the plaintiff
admitted all of the special defenses in the answer of the defendants, and on this stipulation they submitted the case for decision.

The complaint alleges that the defendant Samahang Magsasaka, Inc. is a corporation duly organized under the laws of the Philippine Islands with
principal office in Cabanatuan, Nueva Ecija, and that the individual defendants are the president, secretary and treasurer respectively of the same;
that on June 18, 1931, Gonzalo H. Co Toco was the owner of 5,894 shares of the capital stock of the said corporation represented by nine
certificates having a par value of P5 per share; that on said date Gonzalo H. Co Toco, a resident of Manila, mortgaged said 5,894 shares to Chua
Chiu to guarantee the payment of a debt of P20,000 due on or before June 19, 1932. The said certificates of stock were delivered with the mortgage
to the mortgagee, Chua Chiu. The said mortgage was duly registered in the office of the registered of deeds of Manila on June 23, 1931, and in the
office of the said corporation on September 30, 1931.

On November 28, 1931, Chua Chiu assigned all his right and interest in said mortgage to the plaintiff and the assignment in the office of the register
of deeds in the City of Manila on December 28, 1931, and in the office of the said corporation on January 4, 1932.

The debtor, Gonzalo H. Co Toco, having defaulted in the payment of said debt at maturity, the plaintiff foreclosed said mortgage and delivered the
certificates of stock and copies of the mortgage and assignment to the sheriff of the City of Manila in order to sell the said shares at public auction.
The sheriff auctioned said 5,894 shares of stock on December 22, 1932, and the plaintiff having been the highest bidder for the sum of P14,390, the
sheriff executed in his favor a certificate of sale of said shares.

The plaintiff tendered the certificates of stock standing in the name of Gonzalo H. Co to the proper officers of the corporation for cancellation and
demanded that they issue new certificates in the name of the plaintiff. The said officers (the individual defendants) refused and still refuse to issue
said new shares in the name of the plaintiff.

The prayer is that a writ of mandamus be issued requiring the defendants to transfer the said 5,894 shares of stock to the plaintiff by cancelling the
old certificates and issuing new ones in their stead.

The special defenses set up in the answer are as follows, that the defendants refuse to cancel said certificates standing in the name of Gonzalo H.
Co Toco on the books of the corporation and to issue new ones in the name of the plaintiff because prior to the date when the plaintiff made his
demand, to wit, February 4, 1933, nine attachments had been issued and served and noted on the books of the corporation against the shares of
Gonzalo H. Co Toco and the plaintiff objected to having these attachments noted on the new certificates which he demanded. These attachments
noted on the books of the corporation against the shares of Gonzalo H. Co Toco are as follows:jgc:chanrobles.com.ph

"(1) Con fecha agosto 26, 1931, se recibio por el Secretario de la entidad demandada la notificacion de embargo expedida por el Juzgado de
Primera Instancia de Nueva Ecija en la causa civil No. 6043, siendo partes Lucia Matias contra Gonzalo H. Co Toco y otros, siendo la cantidad
reclamada P23,582.55.

"(2) Con fecha agosto 27, 1931, se recibio por el Secretario de la entidad demandada la notificacion de embargo expedida por el Juzgado de Paz de
Cabanatuan, Nueva Ecija. en la causa civil No. 2322, siendo partes Samahang Magsasaka, Inc. contra Gonzalo H. Co Toco, abarcando las
acciones o titulos Nos. 280 al 2,279 o 2,000 acciones por valor de P10,000.

"(3) Con fecha 27 de agosto, 1931, se recibio por el Secretario de la entidad demandada la notificacion de embargo expedida por el Juzgado de Paz
de Cabanatuan, Nueva Ecija, en la causa civil No. 2323 siendo partes Samahang Magsasaka, Inc. contra Gonzalo H. Co toco, abarcando las
acciones o titulos Nos. 280 al 2,279 o 2,000 acciones por valor de P10,000.

"(4) Con fecha 28 de agosto, 1931, se ricibio por el Secretario de la entidad damandada la notificacion de embargo expedida por el Juzgado de
Primera Instancia de Nueva Ecija en la causa civil No. 6049, siendo partes Hermenegilda Garcia contra Gonzalo H. Co Toco, siendo la cantidad
reclamada P3,064.72.

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"(5) Con fecha 29 de agosto, 1931, se recibio por el Secretario de la demandada la notificacion de embargo expedida por el Juzgado de Promera
Instancia de Nueva Ecija en la causa civil No. 6042, siendo partes Licerio Soto contra Gonzalo H. Co Toco, y abarcando todas las acciones o titulo a
nombre del Sr. Gonzalo H. Co Toco.

"(6) Con fecha septiembre 1, 1931, se recibio por el Secretario de la entidad demandada la notificacion de embargo expedida por el Juzgado de
Primera Instancia de Manila en la causa civil No. 40211, siendo partes Asiatic Petroleum Co. (P.I.) , Ltd. contra Gonzalo H. Co Toco y abarcando
todas las acciones o titulos a nombre del Sr. Gonzalo H. Co Toco.

"(7) Co fecha septiembre 1, 1931, se recibio por el Secretario de la entidad damandada la notificacion de embargo expedida por el Juzgado de
Primera Instancia de Nueva Ecija en la causa civil No. 6053, siendo partes Rufina Pacheco contra Gonzalo H. Co Toco, y abarcando todas las
acciones o titulos a nombre del Sr. Gonzalo H. Co Toco.

"(8) Con fecha septiembre 2, 1931, se recibio por el Secretario de la entidad demandada la notificacion de embargo expedida por el Juzgado de
Primera Instacia de Manila el a causa civil No. 40294, siendo partes Manuel Borja contra Gozalo H. Co Toco y abarcando todas las accioes o titulos
a ombre del Sr. Gonzalo H. Co Toco.

"(9) Que el enero 15, 1932, se recibio por el Secretariode la etidad demandada la notificacion de embargo expedida por el Juzgado de Primera
Instancia de Manila en la causa civil No. 40244, siendo partes The Philippine Guaranty Co., Inc. contra Gonzalo H. Co Toco y otros y abarcando
todas las acciones o titulos a omre del Sr. Gonzalo H. Co Toco."cralaw virtua1aw library

It will be noted that the first eight of the said writs of attachments were served on the corporation and noted on its records before the corporation
received from the mortgagee Chua Chiu of the mortgage of said shares dated June 18, 1931. No question is raised as to the val idity of said
mortgagee or of said writs of attachment ad the sole question presented for decision is whether the said mortgage takes priority over the said writs of
attachments.

It is not alleged that the said attaching creditors had actual notice of the said mortgage and the question therefore narrows itself down to this: Did the
registration of said chattel mortgage in the registry of chattel mortgages in the office of the register of deeds of Manila, under date of July 23, 1931,
give constructive notice to the said attaching creditors?.

I passing, let it be noted that the registration of the said chattel mortgage in the office of the corporation was not necessary and had no legal effect.
(Monserrat v. Ceron 58 Phil., 469.) The log mooted question as to whether or not shares of a corporation could be hypothecated by placing a chattel
mortgage on the certificate representing such shares we now regard as settled by the case of Monserrat v. Ceron, supra. But that case did not deal
with any question relating to the registration of such a mortgage or the effect of such registration. Nothing appears in the record of that case even
tending to show that the chattel mortgage there involved was ever registered anywhere except in the office of the corporation, and there was no
question involved there as to the right of priority among conflicting claims of creditors of the owner of the shares. The Chattel Mortgage Law, Act No.
1508, as amended by Act No. 2496, contains the following provisions:jgc:chanrobles.com.ph

"Sec. 4. A chattel mortgage shall not be valid against any person except the mortgagor, his executors or administrators, unless the possession of the
property is delivered to and retained by the mortgagee or unless the mortgage is recorded in the office of the register of deeds of the province in
which the mortgagor resides at the time of making the same, or, if he resides without the Philippine Islands in the province in which the property is
situated: Provided, however, That if the property is situated in a different province from that in which the mortgagor resides, the mortgage shall be
recorded in the office of the register of deeds of both the province in which the mortgagor resides and that in which the property is situated, and for
the purposes of this Act the City of Manila shall be deemed to be a province."cralaw virtua1aw library

The practical application of the Chattel Mortgage Law to shares of stock of a corporation presents considerable difficulty and we have obtained little
aid from the decisions of other jurisdictions because that form of mortgage is ill suited to the hypothecation of shares of stock and has been rarely
used elsewhere. In fact, it has been doubted whether shares of stock in a corporation are chattels in the sense in which that word is used in chattel
mortgage statutes. This doubt is reflected in our own decision in the case of Fua Cun v. Summers and China Banking Corporation (44 Phil., 705), in
which we said:jgc:chanrobles.com.ph

". . . an equity in shares of stock is of such an intangible character that it is somewhat difficult to see how it can be treated as a chattel and
mortgaged in such a manner that the recording of the mortgagee will furnish constructive notice to third parties. . . ." And we held that the chattel
mortgage there involved: "at least operated as a conditional equitable assignment." In that case we quoted the following from Spalding v. Paines
Admr. (81 Ky., 416), with regard to a chattel mortgage of shares of stock:jgc:chanrobles.com.ph

"These certificates of stock are in the pockets of the owner, and go with him where he may happen to locate, as choses in action, or evidence of his
right, without any means on the part of those with whom he proposes to deal on the faith of such a security of ascertaining whether or not this stock
is in pledge or mortgaged to others. He finds the name of the owner on the books of the company as a subscriber of paid-up stock, amounting to 180
shares, with the certificates in his possession, pays for these certificates their full value, and has the transfer to him made on the books of the
company, thereby obtaining a perfect title. What other inquiry is he to make, so as to make his investment certain and secure? Where is he to look,
in order to ascertain whether or not this stock has been mortgaged? The chief office of the company may be at one place today and at another
tomorrow. The owner may have no fixed or permanent abode, and with his notes in one pocket and his certificates of stock in the other the one
evidencing the extent of his interest in the stock of the corporation, the other his right to money owing him by his debtor, we are asked to say that the
mortgage is effectual as to the one and inoperative as to the other."

But the case of Fua Cun v. Summers and China Banking Corporation, supra, did not decide the question here presented and gave no light as to the
registration of a chattel mortgage of shares of stock of a corporation under the provisions of section 4 of the Chattel Mortgage Law, supra.

Section 4 of Act No. 1508 provides two ways for executing a valid chattel mortgage which shall be effective against third persons. First, the
possession of the property mortgaged must be delivered to and retained by the mortgagee; and, second, without such delivery the mortgage must be
recorded in the proper office or offices of the register or registers of deeds. If a chattel mortgage of shares of stock of a corporation may validly be
made without the delivery of possession of the property to the mortgagee and the mere registration of the mortgage is sufficient to give constructive
notice to third parties, we are confronted with the question as to the proper place of registration of such a mortgage. Section 4 provides that in such a
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case the mortgage shall be registered in the province in which the mortgagor resides at the time of making the same or, if he is a non-resident, in the
province in which the property is situated; and it also provides that if the property is situated in a different province from that in which the mortgagor
resides the mortgage shall be recorded both in the province of the mortgagors residence and in the province where the property is situated.

If with respect to a chattel mortgage of shares of stock of a corporation, registration in the province of the owners domicile should be sufficient, those
who lend on such security would be confronted with the practical difficulty of being compelled not only to search the records of every province in
which the mortgagor might have been domiciled but also every province in which a chattel mortgage by any former owner of such shares might be
registered. We cannot think that it was the intention of the legislature to put this almost prohibitive impediment upon the hypothecation of shares of
stock in view of the great volume of business that is done on the faith of the pledge of shares of stock as collateral.

It is a common but not accurate generalization that the situs of shares of stock is at the domicile of the owner. The term situs is not one of fixed or
invariable meaning or usage. Nor should we lose sight of the difference between the situs of the shares and the situs of the certificate of shares. The
situs of shares of stock for some purposes may be at the domicile of the owner and for others at the domicile of the corporation; and even elsewhere.
(Cf. Vidal v. South American Securities Co., 276 Fed., 855; Black Eagle Min. Co. v. Conroy, 94 Okla., 199; 221 Pac., 425; Norrie v. Kansas City
Southern Ry. Co., 7 Fed. [2d].158.) It is a general rule that for purposes of execution, attachment and garnishment, it is not the domicile of the owner
of a certificate but the domicile of the corporation which is decisive. (Fletcher, Cyclopedia of the Law of Private Corporations, vol. 11, paragraph
5106. Cf. sections 430 and 450, Code of Civil Procedure.)

By analogy with the foregoing and considering the ownership of shares in a corporation as property distinct from the certificates which are merely the
evidence of such ownership, it seems to us a reasonable construction of section 4 of Act No. 1508 to hold that the property in the shares may be
deemed to be situated in the province in which the corporation has its principal office or place of business. If this province is also the province of the
owners domicile, a single registration is sufficient. If not, the chattel mortgage should be registered both at the owners domicile and in the province
where the corporation has its principal office or place of business. In this sense the property mortgaged is not the certificate but the participation and
share of the owner in the assets of the corporation.

Apart from the cumbersome and unusual method of hypothecating shares of stock by chattel mortgage, it appears that in the present state of our
law, the only safe way to accomplish the hypothecation of share of stock of a Philippine corporation is for the creditor to insist on the assignment and
delivery of the certificate and to obtain the transfer of the legal title to him on the books of the corporation by the cancellation of the certificate and the
issuance of a new one to him. From the standpoint of the debtor this may be unsatisfactory because it leaves the creditor as the ostensible owner of
the shares and the debtor is forced to rely upon the honesty and solvency of the creditor. Of course, the mere possession and retention of the
debtors certificate by the creditor gives some security to the creditor against an attempted voluntary transfer by the debtor, provided by- laws of the
corporation expressly enact that transfers may be made only upon the surrender of the certificate. It is to be noted, however, that section 35 of the
Corporation Law (Act No. 1459) enacts that shares of stock "may be transferred by delivery of the certificate endorsed by the owner or his attorney in
fact or other person legally authorized to make the transfer." The use of the verb "may" does not exclude the possibility that a transfer may be made
in a different manner, thus leaving the creditor in an insecure position even though he has the certificate in his possession. Moreover, the shares still
standing in the name of the debtor on the books of the corporation will be liable to seizure by attachment or levy on execution at the instance of other
creditors. (Cf. Uy Piaoco v. McMicking, 10 Phil., 286, and Uson v. Diosomito, 61 Phil., 535.) This unsatisfactory state of our law is well known to the
bench and bar. (Cf. Fisher, The Philippine Law of Stock Corporations, pages 163-168.) Loans upon stock securities should be facilitated in order to
foster economic development. The transfer by endorsement and delivery of a certificate with intention to pledge the shares covered thereby should
be sufficient to give legal effect to that intention and to consummate the juristic act without necessity for registration.

We are fully conscious of the fact that our decisions in the case of Monserrat v. Ceron, supra, and in the present case have done little perhaps to
ameliorate the present uncertain and unsatisfactory state of our law applicable to pledges and chattel mortgages of shares of stock of Philippine
corporations. The remedy lies with the legislature.

In view of the premises, the attaching creditors are entitled to priority over the defectively registered mortgage of the appellant and the judgment
appealed from must be affirmed special pronouncement as to costs in this instance. 1 .

Malcolm, Villa-Real, Imperial, and Goddard, JJ., concur.

CASE 44
G.R. No. L-14043, Uy Tayag v. Yuseco et al. and Caizares et al., 105 Phil. 484
Republic of the Philippines
SUPREME COURT
Manila
EN BANC
April 16, 1959
G.R. No. L-14043
BELEN UY TAYAG, ET AL., petitioners,
vs.
ROSARIO YUSECO, ET AL., and HON. ANTONIO CAIZARES, ETC., respondents.
Uy, Artiaga and Zaragosa for petitioners.
Yuseco, Abdon and Yuseco for respondents.
MONTEMAYOR, J.:
This is a long drawn out litigation that has lasted many years; in its first phase, it has involved a long decision by the Court of Appeals and a
resolution of this Tribunal dismissing a petition for certiorari to review said last decision of the Court of Appeals. The third phase of the litigation is the
present petition for mandamus to compel the lower court to approve the record on appeal filed by petitioners, wherein they tried to appeal the order
of execution of the trial court to implement the last decision of the Court of Appeals.
For a clear and comprehensive of the first part of the history of this case, as well as the issues involved therein and the determination thereof, we
can do no better than reproduce a pertinent portion of the well written second decision of the Court of Appeals, penned by Justice Felipe Natividad,
based in part on our aforementioned decision in the first phase of the litigation:
7
This case is once more before this Court on the appeal taken by the plaintiff from an order of the Court of First Instance of Manila fixing the value of
the two buildings involved therein at P50,000 and providing that the plaintiffs, should pay that amount to the defendants if they desire to appropriate
said buildings.
The records disclose that prior to the year 1930 defendant Joaquin C. Yuseco, an attorney-at-law, had been rendering without compensation
professional services to Maria Lim. To show her appreciation of such services, Maria Lim offered to Joaquin C. Yuseco, for them to build a house
thereon, Lots 11-A and 11-B, Block 2215, of the Hacienda de San Lazaro, registered in her name under Transfer Certificate of Nos. 3640 and 36401,
Office of the Register of Deeds of the City of Manila. The Yuseco accepted the offer, and in the middle part of that year they built a dwelling house
and an annex for garage and servant quarters on said lots. To legalize the possession of said lots by the Yuseco, Maria Lim and the Yuseco
executed a contract of lease them, which was to run for a period of five years, with a yearly rental of P120.
On November 29, 1945, a few days before her death, Maria Lim sold the two lots above referred to her daughter, plaintiff Belen Uy Tayag, married to
Jesus B. Tayag, for the sum of P4,000. In the year 1946, the Tayags asked the Yusecos to remove their house from the lots, or else pay to them a
monthly rent of P120 thereof. The latter refused. Because of this attitude of the Yusecos, the Tayags brought against the latter in the Municipal Court
of the City of Manila an action of ejection for the restitution of the lots to them and the recovery of a monthly rental of P500 from November 30, 1945,
up to the date of the restitution. Judgment was rendered in that court in favor of the plaintiffs. The defendants appealed.
The case was duly tried in the Court of First Instance of Manila. After such trial, that court rendered judgment adjudicating to the plaintiff Belen Uy
Tayag the possession of the two lots involved in the action, with right to appropriate the two buildings existing thereon upon payment to the
defendants of their value which it assessed fail to pay this amount within 90 days after the right decision shall have become final, the defendants
shall have the right to purchase said lots for the sum of P10,000 to be paid within 90 days from the date the plaintiffs shall have failed to buy the
buildings. From this judgment, the plaintiffs appealed.
The Court of Appeals, finding that the defendants were possessors of the lots in good faith, affirmed the judgment of the Court of first Instance of
Manila. Not satisfied with this judgment, the plaintiffs appealed therefrom by certiorari to the Supreme Court. The latter, after due hearing, rendered
judgment, the dispositive part of which reads as follows:
Affirming the decisions of the Court of Appeals in so far as it finds and declares respondents to be possessor in good faith, let this case be remanded
to the trial court for further proceedings, particularly to give an opportunity to plaintiffs-petitioners to exercise their choice and option; and for purpose
of said choice and option the trial court will admit evidence and make a finding as to the amount of the useful expenditures or "the increase in value
which the things has acquired by reason thereof", under Art. 453 of the old Civil Code, to be refunded or paid by the petitioners should they choose
to appropriate the buildings; "the value of the land" under Art. 361 of the same Code, to be paid by the defendants-respondents in the case plaintiffs-
petitioners elect to compel them to buy the land.
Upon the case being remanded to the Court of First Instance, of Manila, the latter, in consonance with the Directive of the Supreme Court, issued on
July 11, 1956, an order requiring the plaintiffs to make their choice in writing within 10 days whether they would purchase the buildings erected on
the lots, or allow the defendants to buy said lots, and set the case for hearing on August 3, 1956, for the reception of the evidence of the parties
regarding the value of said lots and buildings. Complying with this order, on July 20, 1956, the plaintiffs, through counsel, filed a manifestation stating
that
they are willing to sell the lot involved in this case, but that they are willing to appropriate the building erected thereon if its value is as it
should be and is properly and fairly determined pursuant to, and in accordance with the evidence and the law.
On August 3, 1956, when the case was called for hearing, the trial court, in open court, issued the following order:
"Considering that choice made by the plaintiffs, the Court is of the opinion that the next step now is to adduce evidence in connection with
the value of the buildings erected on the land pursuant to the dispositive part of the decision of the Supreme Court. And the Court believes
that under the circumstances since the defendants will be the sellers, they have the burden of proving the value of the buildings which
belong to them, giving the plaintiffs opportunity to offer their own evidence as rebuttal. That is the ruling of the Court."
The plaintiffs asked for a reconsideration of this order, and for the issuance of another allowing them to adduce evidence on the value of
the buildings as well as the lots. This motion was denied.
The case was finally heard in the Court of First Instance of Manila on August 23 and 24, 1956. Evidence of the plaintiffs tends to show that
the value of the two buildings erected on the lots in question cannot be more than P40,000. That of the defendants, on the other hand,
establishes that the value of the chalet erected on the lots was from P45,000 to P50,000, and of the garage and dwelling house, from
P5,000 to P6,000. Upon the evidence thus submitted, the trial court, in its order of August 28, 1956, fixed the reasonable value of the two
buildings on the lots at P50,000, and ordered that the amount should be paid by the plaintiffs to the defendants if they desire to appropriate
said buildings. This is the order appealed from.
Appellants concede that the fact that the appellees were possessors in good faith of the lots in question is res judicata between the parties.
They contend, however, first, that the trial court erred in limiting the reception of the evidence to the value of the buildings erected on the
lots in question, instead of admitting evidence to the value of the buildings; and, second, that the trial court erred in assessing at P50,000
the value of the two buildings on said lots.
1. Appellants contend under the first proposition that the decision of the Supreme Court of October 24, 1955, affirming the finding of the
Court of Appeals that the appellees were possessors of the lots in question in good faith and ordering the remand of the case to the court
of origin, contemplates the reception of evidence as to the values of both said lots and the buildings existing thereon irrespective of the
choice and option the appellants may exercise in the premises, and, consequently, the trial court, in limiting the reception of evidence on
the value of the buildings, failed to fully implement the instructions of the Supreme Court.
"We do not share appellants' view. The pertinent part of the decision of the Supreme court of October 24, 1955, reads as follows:
8
". . . and for purposes for said choice and option the trial court will admit evidence and make a finding as to the amount of the useful
expenditures or "the increase in value which the thing has acquired by reason thereof", under Art . 453 of the old Civil Code, to be refunded
or paid by the petitioners should they choose to appropriate the buildings; "the value of the land" under Art. 361 of the same Code, to be
paid by the defendants-respondents in case plaintiffs-petitioners elect to compel them to buy the land.
It will be noted that the directive made in the above decision is in alternative. The clause having reference to the admission of evidence
regarding the value of the buildings is separated by a semi-colon from the clause referring to the value of the lots on which said buildings
are ]erected; and the first clause ends with the phrase to be refunded or paid to the petitioners should they choose to appropriate the
buildings', while the second clause terminates with the phrase "to be paid by the defendants respondents in case plaintiffs-petitioners elect
to compel them to buy the land." It would seem clear, therefore, from the language of the decision that evidence as to the value of said
buildings should be admitted only if the appellants choose to appropriate the buildings, and that, in case the appellants should elect to
compel the appellees to buy the lots, then the evidence concerning the value of said lots must be admitted. This, in our opinion, is the most
sensible construction that could be given to the decision above referred to. Any other construction would bring about unnecessary
confusion in the evidence, to say nothing of the valuable time of Court that will necessarily be wasted. For, it stands to reason, that if the
appellants chose not to sell the lots to the appellees and to appropriate the buildings, which cannot be ordered removed by the builders,
the thing in order would be the reception of evidence having reference to the value of said buildings only. Evidence as to the value of the
lots would be superflous, impertinent and immaterial. This was what the trial court did. We, therefore, find the action of the trial court
complained of in accordance with law. . .
Under the second decision of the court of Appeals, the value of the two buildings in question fixed by the trial court at P50,000 was reduced to
P47,500. With that modification, the decision of the trial court was affirmed. As already stated, petitioners herein filed with us a petition for
certiorari to review said decision of the Court of Appeals, but we missed said petition for lack of merit. In other words, we found said decision to be
correct.
When said decision finally reached the trial court, the latter issued the corresponding writ of execution to collect from petitioners the sum of P47,500
for the buildings in litigation. Petitioners protested the writ of execution, claiming that it varied the termsof the final decision, and upon the denial of
their petition for reconsideration, tried to appeal therefrom by preparing the corresponding record on appeal. The trial court refused to approve the
record on appeal, saying that the order for the writ of execution issued by it was fully in accordance with the terms of the decision. Hence, the
present petition for mandamus to compel the trial court to elevate the case to us on appeal.
We are satisfied that the trial court acted correctly in ordering the writ of execution to issue. The main contention of herein petitioners is that they still
retain the right of option, that is to say, to make a choice of either buying the house or compelling the owners thereof to buy the land; and that
furthermore, even if they already had made that choice nevertheless, they cannot be compelled to pay the price fixed by the courts for the purchase
of the said house, because of their inability to pay the said price. We find both arguments untenable. The question of whether petitioners had finally
made their choice, namely, to buy houses because they were unwilling to sell the land, was directly in issue before the Court of Appeals which
definitely decided that petitioners had made their choice not to sell their land but to buy the houses built thereon. As we have already said, by our
refusal to review said decision of the Court of Appeals, we agreed with the said Court on its stand on this point; consequently, the trial court was fully
warranted in limiting the presentation of the evidence to the value of said houses, not of the land.
As regards the alleged inability fixed by the courts at P47,500, claimed by them to be a good reason for not compelling them to buy the buildings, we
cannot sanction said theory. Otherwise, were that claim or contention to be sustained, and if petitioners were allowed to change their mind, repudiate
their choice made in court not to sell the land but to buy the buildings, and then compel the owners of the houses, respondents herein, instead to buy
land, then what if respondents also claimed inability to pay the price of the land, claiming that it is also a good and valid reason for not compelling
them, to make the purchase? How would this litigation end, if it ever would end?
We hold that once a party, in conformity with a court decision, has made his choice, and is accordingly ordered to comply with the same by buying
the building erected on his land and pay the value thereof fixed by the courts, that the duty is converted into a money obligation which can be
enforced by execution, regardless of the unwillingness and alleged inability of the party concerned to pay and alleged inability of the party concerned
to pay the amount. Here there is a final decision of the petitioners to buy the houses and pay the value thereof. If petitioners were ready, willing and
able to pay the amount, there would be no need for execution. It is precisely because they are unwilling and allegedly unready and unable to pay the
sum, that execution issues. That is part of the judicial machinery of due process in action, and we find nothing wrong in it.
As to the alleged absence in the order of execution for the homeowners to make the transfer of the houses to the petitioners, that is to be
understood, that upon payment of the price of the houses, the respondents herein will make and execute the corresponding deed of transfer.
In view of the foregoing, the petition for mandamus is hereby denied, with costs. The writ of preliminary injunction heretofore issued is hereby
ordered dissolved.
Paras, C.J., Bengzon, Padilla, Reyes, A., Bautista Angelo, Labrador, Concepcion and Endencia, JJ., concur.

CASE 45
EN BANC

[G.R. No. L-12439. May 22, 1959.]

FELICIANO MARTIN, Petitioner, v. PRUDENCIO MARTIN, LUISA DE LA CRUZ, and IGNACIO DE LA CRUZ, Respondents.

E. L. Peralta for Petitioner.

Santiago Ranada for Respondents.


9
SYLLABUS


1. COMPROMISE AGREEMENT; REPUDIATION CANNOT LEGALLY BE MADE WITHOUT REASON. A person cannot repudiate the effects of
his voluntary acts simply because it does not fit him, or simply because the judge before whom he executed the act did not have jurisdiction of the
case. In a regime of law and order, repudiation of an agreement validly entered into cannot be made without any ground or reason in law or in fact
for such repudiation.

2. PROPERTY; RIGHT OF BUILDER IN GOOD FAITH; OPTION OF LAND OWNER. The owner of a land by purchase where a house was
constructed by a builder in good faith is given the choice, either to pay for the value of the house, or require the builder to pay for the value of the
land.


D E C I S I O N


LABRADOR, J.:


This is an appeal by certiorari from a decision of the Court of Appeals, declaring intervenor-appellee therein Ignacio de la Cruz, owner of the two
parcels of land subject of the action, with the obligation of paying petitioner Feliciano Martin a redemption price of P600, and ordering Feliciano
Martin to deliver the lands to said intervenor-appellee upon payment by the latter of the said sum of P600.

The facts found by the Court of Appeals are as follows: On September 12, 1919 Jose Balagui and Dorotea Balagui, brother and sister , sold the two
parcels of land subject of the action, to Feliciano Martin and Florentino Martin for P1,200. On April 17. 1923, Jose Balagui brought an action in the
Justice of the Peace Court of Solsona, Ilocos Norte, against said Feliciano and Florentino Martin for damages arising from failure of the Martins to
comply with some conditions agreed upon in the sale. The said action was terminated by a compromise agreement between Feliciano Martin,
Florentino Martin and Isidro Martin, on the one hand, and the above-named spouses, on the other, who were plaintiffs, submitted to and approved by
the court. The agreement is as follows:jgc:chanrobles.com.ph

"Presentes en la Corte las partes despues de Ilamada la Causa Civil arriba titulada, pidieron que se terminase al asunto para evitar mayores gastos
y las molestias consiguientes entre una y otra parte, mediante transaction de dicho asunto en los siguientes terminos:jgc:chanrobles.com.ph

"Primero: Las partes se convienen en dejar sin efecto ni valor en juicio o fuera de el la escritura publica otorgada en 12 de Septiembre de 1919 por
Jose Balagui demandante y la difunta Dorotea Balagui, madre de la dicha demandante Sixta Lantada a favor de los demandados Florentino Martin y
Feliciano Martin, sobre venta de dos parcelas de terrenos ubicados en Buguiata del termino Municipal de Piddig en la cantidad de P1,200.00.

"Segundo: que en la escritura que se otorgara de conformidad con la extencion del terreno que resulte de su medicon con levantamiento de croquis
para mayor intelegencia de vendedores y compradores, ha de constarse como uno de los compradores, Isidro Martin en lugar de Florentino Martin,
por no ser este el dueno de los 600.00 mitad del precio.

"Tercero: En el entre tanto, el terreno de Buguiata que se compone de sementera huerta y cogonal y de un solo lote y no de dos erroneamente
consignados en ella estara a disposicion de los demandados Feliciano Martin y de Isidro Martin, para que see aprovechen de sus frutos por la
cantidad de P1,200.00 sin transmitir definitivamente los demandados el dominio, corriendo a cuenta de Jose Balagui los derechos del otogamiento
de la nueva escritura.

"El juzgado no encontrando motivos para no aprobar las estipulaciones arriba mencionadas las apruebas y queda terminada la Causa sin
pronunciamiento en cuento al pago de costas."cralaw virtua1aw library

The Court of Appeals, notwithstanding the claim of Feliciano Martin that he had not known of such agreement and did not sign it, found that Feliciano
Martin did in fact sign the agreement. The court also found that the intention of the parties in the execution of the compromise set forth above, was to
transform the original sale made in favor of Feliciano and Florentino Martin on September 12, 1919, into an equitable mortgage, as contended by the
spouses and their transferees, the defendant Prudencio Martin and intervenor Ignacio de la Cruz. The court also found that on January 8, 1946, Jose
Balagui sold the parcels of land in question to Ignacio de la Cruz for the sum P2,500, with the understanding that the purchaser would redeem the
lands from Feliciano Martin and Florentino Martin by paying to them the sum of P1,200.

On the basis of the above findings the Court of Appeals reversed the decision of the Court of First Instance of Ilocos Norte which had declared the
compromise null and void for having been made before a court which had no competent jurisdiction over the action.

The decision of the Court of Appeals is now the subject of this appeal by certiorari before this Court, petitioner contending that the Court of Appeals
erred in declaring that the compromise had the effect of coverting the previous contract of sale into one of loan secured by a mortgage; and on
failing to make a finding on the rights and obligations of the petitioner, with respect to the houses builts on the lands in good faith by the petitioner
Feliciano Martin and his son-in-law and his daughter. According to the evidence, the house of Feliciano Martin was valued at P3,000, and that of his
son-in-law and daughter, P2,000. The court of Appeals is also alleged to have made an error in declaring that the compromise was valid even if the
court before which it was made had no jurisdiction over the case brought and in which it was entered into.

We cannot reverse or modify the conclusion made by the Court of Appeals that petitioner Feliciano Martin had actually signed the compromise
agreement, this being a finding of fact, which is final and binding upon us. It is apparent also that the conclusion to the effect that the validity of the
compromise does not depend upon the question of whether or not the justice of the peace court before whom it was made had jurisdiction over
the main case, is correct, it being a fact that the parties to the compromise agreement signed and executed the same willingly and voluntarily, and
should, therefore, be bound by its terms. A person cannot repudiate the effects of his voluntary acts simply because it does not fit him, or simply
because the judge before whom he executed the act did not have jurisdiction of the case. In a regime of law and order, repudiation of an agreement
10
validly entered into can not be made without any ground or reason in law or in fact for such repudiation. The conclusion of the trial court in respect to
the validity of the compromise agreement and its binding effect upon Feliciano Martin cannot be questioned.

The last question raised by the petitioner refers to the failure of the Court of Appeals to pass upon the respective rights of the intervenor-appellant,
respondent herein, and the plaintiff, petitioner herein, and his son-in-law and daughter, with respect to the houses that the latter had built on the
lands in question. There is no claim nor even a suggestion that the building of the houses had been made by Feliciano Martin and his son-in-law and
daughter in bad faith. That said two buildings actually exist and that one of them is valued at P3,000 and the other, at P2,000, is not denied. The
decision of the Court of Appeals is silent on the rights and obligations of the parties with respect to the said houses. We find merit in the contention
that the Court of Appeals erred in failing to make a specific pronouncement on the rights and obligations of the parties with respect to the said
houses.

The Court of Appeals found that the houses were built after October 31,1930, after Feliciano Martin had returned the amount of P600 that Florentino
Martin had contributed to the purchase money. At the time of the construction, therefore, the petitioner had already become the rightful possessor of
the land, having, besides, declared them for tax purposes. No claim is made by any of the parties respondents that the construction of the houses
had been made in bad faith. The compromise agreement did not specify within what period of time Feliciano Martin was to enjoy the possession and
use of the lands in question. Neither has there been any evidence submitted to show that the building of the houses was prohibited by the original
owners of the land or by the subsequent purchaser. A portion of the land was residential, so its use could only be enjoyed by the building of a house
thereon. So we must find as a fact that the building of the houses was made in good faith and in the exercise of the rights granted to Feliciano Martin
by the compromise agreement. The law applicable to petitioner is Article 361 of the Spanish Civil Code, which provides as
follows:jgc:chanrobles.com.ph

"Art. 361. The owner of land on which anything has been built, sown, or planted, in good faith, shall be entitled to appropriate the thing so built, sown,
or planted, upon paying the indemnification mentioned in Articles 453 and 454, or to compel the person who has built or planted to pay him the value
of the land, and the person who sowed thereon to pay the proper rent therefor."cralaw virtua1aw library

We, therefore, agree with the petitioner that the Court of Appeals erred in not having made an express provision as to the houses in question and in
accordance with the above-quoted provision of the Civil Code the intervenor Ignacio de la Cruz, who had become the owner by purchase of the
lands in question, should be given, as he is hereby given, the choice either to pay for the value of the houses, or require the petitioner herein to pay
for the value of the land.

The Court of Appeals found that the value of the houses constructed about 29 years ago, were P3,000 and P2,000. We take judicial notice of the fact
that the said houses must have depreciated. On the other hand, we can also take judicial notice of the fact that the value of real estate has greatly
increased since 29 years ago. As no evidence was submitted as to the actual value of the said houses, it seems that it is only just that said values be
previously determined before the choice for the purchase thereof by the owner of the land, the intervenor-appellee, can be exercised by the latter.

Wherefore, the decision of the Court of Appeals is hereby affirmed in the sense that the intervenor-appellee Ignacio de la Cruz is declared to be the
owner of the lands subjects of the action and entitled to the possession thereof upon payment by him of the sum of P600 to petitioner Feliciano
Martin, but the decision is modified by further ordering that the case be remanded to the court below for determination of the price or the value of the
two houses built on the lands in question, and thereafter for the intervenor-appellee to exercise the option specified in Article 361 of the Spanish Civil
Code.

Paras. C.J., Bengzon, Padilla, Montemayor, Reyes, A., Bautista Angelo and Endencia, JJ., concur.

CASE 46
TRUSTS AND POWERS OF ATTORNEY

G.R. No. L-1717, Manlincon and Guzman v. De Vera and Urmaza, 86 Phil. 115
Republic of the Philippines
SUPREME COURT
Manila
EN BANC
April 17, 1950
G.R. No. L-1717
JUANA MANLINCON and JACINTO (alias Marcelo) DE GUZMAN, plaintiffs-appellees,
vs.
MAGNO DE VERA and CONSTANCIA URMAZA, defendants-appellants.
Jose F. Bautista for appellant.
Manuel L. Fernandez for appellees.
PARAS, J.:
This is an appeal by the defendants from a judgment of the Court of First Instance of Pangasinan "ordering the defendants Magno de Vera and
Constancia Urmaza to execute a deed of conveyance in favor of Juana Manlincon, married to Jacinto de Guzman, Filipinos, and resident of
Binmaley, Pangasinan, and to pay to her one-sixth of the products of the land or fishpond from 1932 up to the time of the return of the one-sixth
portion of the land belonging to the plaintiff, Juana Manlincon, at the rate of one-sixth of P30, which was the annual rent of the fishpond, and one-
sixth of P12, the proceeds of the nipa shingles gathered therefrom annually, with interest at the rate of 6 per centum and to pay the costs."
The land in question is situated in the barrio of Balogo, municipality of Binmaley, province of Pangasinan, and has an area of about 15,122 square
meters. Said land, which is a fishpond, formerly belonged to the conjugal partnership of Domingo Manlincon and Maxima Arenas. Domingo
Manlincon died on September 11, 1930. On September 29, 1932, Maxima Arenas, the surviving wife of Domingo Manlincon, sold the land to Magno
de Vera and his wife, the herein defendants. The deed of sale was also signed by Moises Manlincon and Fransisca Manlincon, children of Domingo
Manlincon in his first marriage, as witness. This sale was duly registered by the defendants and a Torrens certificate of title was issued in their name.
The herein plaintiff, Juana Manlincon, is the only surviving child of the deceased Domingo Manlincon in his second marriage with Maxima Arenas,
11
and she was still a minor at the time the deed of sale was executed by Maxima Arenas. This action was filed by Juana Manlincon and her husband
for the purpose of assuring a reconveyance of the property.
The trial court rejected the theory of the plaintiffs that the sale executed by Maxima Arenas in favor of defendant Magno de Vera was tainted with
fraud, in that it was secured by Magno de Vera while having amorous relations with Maxima Arenas, and after obtaining from the latter the
documents covering the land on the pretext of looking for a lawyer to defend Maxima Arenas in the action brought against her by Francisca
Manlincon. The court therefore held that the sale is valid as far as the share of Maxima Arenas is concerned. But the trial court awarded the
judgment, hereinabove quoted, in favor of the plaintiffs on the ground that, as the defendant Magno de Vera was the owner of an adjoining fishpond
prior to the sale in question, and therefore knew that the fishpond was owned by the deceased Domingo Manlincon and Maxima Arenas who had
Juana Manlincon as their only child, he also knew that upon the death of Domingo Manlincon, Juana Manlincon succeeded to the right of her father
in the ownership of the fishpond. The trial court ruled that the resulting situation was a sort of a special trust in which Juana Manlincon, in conjunction
with the children of the first marriage, Moises and Francisca Manlincon, was the beneficiary and the defendant Magno de Vera, the trustee.
We are of the opinion that the judgment of the trial court is correct. The defendant Magno de Vera, with his admitted knowledge of the facts about the
ownership of the property, could not be in a better situation than that of Maxima Arenas if the latter had registered it in her own name. As stated
in Gayondato vs. Treasurer of the Philippine Islands, Magno de Vera may be considered as a trustee, not in its technical sense, but for a want of a
better term.
The appealed judgment is therefore affirmed, and it is so ordered with costs against the appellants.
Moran, C.J., Ozaeta, Pablo, Bengzon, Padilla, Tuason, Montemayor, Reyes, and Torres, JJ., concur.
CASE 47
G.R. Nos. L-36811, 36827, 36840, 36872 March 31, 1934
ANTONIO MA. BARRETTO Y ROCHA, ET AL., plaintiffs-appellees,
vs.
AUGUSTO H. TUASON Y DE LA PAZ, ET AL., defendants-appellants;
BENITO LEGARDA Y ROCES, administrator of the estate of the deceased Benito Legarda y de la Paz, ET AL.,
ESTANISLAOA ARENAS, ET AL., and ANA BARCINAS TORRES, (alias ANA BARCINAS PEREZ) ET AL.,intervenors-appellants;
ERIBERTO TUASON, ET AL., intervenors-appellees.
Araneta, De Joya, Zaragoza and Araneta and Jose Yulo for defendants-appellants.
Eusebio Orense and Nicolas Belmonte for intervenors- appellants Legarda de la Paz et al.
Feria and La O for intervenors-appellees Arenas et al.
J.A. Wolfson for intervenors-appellants Barcinas Torres et al.
Antonio Sanz and Courtney Whitney for plaintiffs-appellees.
Duran, Lim and Tuason for intervenors-appellees G. Maga et al.
No appearance for the other intervenors-appellees.
IMPERIAL, J.:
For the third time, there is presented for our consideration the mayorazgo founded by the deceased Don Antonio Tuason. The first occasion was
when both plaintiffs and defendants appealed from a decision of the Court of First Instance of Manila, dismissing the complaint and the counterclaim
filed, without costs. The appeals thus interposed were docketed under No. 23923, and the decision promulgated on March 23, 1926, is published in
full in volume 50 Philippine Reports, page 888 et seq. the second occasion was when some of the defendants instituted a certiorari proceeding
against the Court of First Instance of Manila, some of the plaintiffs, and other intervenors, because of the appointment, at the latter's instance, of
the Bank of the Philippine Islands as receiver of all the properties constituting the mayorazgo. Said proceeding was docketed under No. 32423, and
the decision promulgated on February 7, 1930, is published in full in volume 54 Philippine Reports, page 408 et seq.
1
And the third is brought about
by four appeals taken by the defendants and some intervenors from certain portions of the decision and order rendered by the court during the new
trial held pursuant to our resolution of which we shall hereafter have occasion to speak.
The four appeals now before us were docketed separately, but for a better understanding of the questions which we propose to resolve, we have
thought it convenient to render a single decision wherein each appeal will be discussed individually.
PRELIMINARY CONSIDERATIONS
Before entering upon a consideration of the appeals, it is convenient to set out some fundamental facts which have been submitted, discussed, and
resolved in the decision rendered in the original and principal case, and which are of the utmost importance to bear in mind in resolving the questions
raised anew in the appeals. These facts are:
The mayorazgo was founded by Don Antonio Tuason on February 25, 1794.
On June 4 of the same year the founder died in the City of Manila.
The mayorazgo was approved by Royal Cedula of August 20, 1795.
On October 11, 1820, the Statute of Civil Disentailments was promulgated in Spain, was extended to the Philippine Islands, and took effect therein
on March 1, 1864, by virtue of a Royal Decree of October 31, 1863.
The properties of the mayorazgo consist of the Haciendas de Santa Mesa y Diliman, Hacienda de Mariquina, and two urban properties situated on
Rosario Street, Manila. By agreement of the parties, the assessed value of the said properties is:
12
Haciendas de Santa Mesa y Diliman P3,550,646.00
Hacienda de Mariquina 1,507,140.00
Properties on Rosario Street 542,382.00
Total . . . . . . . . . . . . . . . . . .

5,600,168.00
After the promulgation of the decision in the principal case, the defendants filed a motion of reconsideration and various persons filed motions of
intervention asking at the same time that they be admitted as intervenors for the purpose of participating in one-fifth of the properties. The resolution
published in volume 50 Philippine Reports, page 959 et seq., was adopted, wherein (page 963) the following fundamental conclusions, established in
the decision, were reiterated:
Resolving, therefore, said motion for reconsideration, we reiterate the following conclusions, declaringfinally:
(1) That the first-born possessor of this mayorazgo was a mere usufructuary of the entailed properties.
(2) That this mayorazgo was a fideicomiso.
(3) That the charge to distribute the fifth of the revenues from said properties was a family trust .
(4) That article 4 of the Disentailing Law of October 11, 1820 is applicable to the present case.
(5) That the fifth of the properties into which, by virtue of said law, the fifth of the revenue was converted on March 1, 1864, when the
Disentailing Law became effective in the Philippines, has remained and subsists as a fideicomiso up to the present date.
(6) That the plaintiffs' right of action has not prescribed.
(7) That the registration of the entailed properties under Act No. 496 must, with respect to the fifth of the said properties conserved up to
the present time as a fideicomiso, be held to have been made in favor of the beneficiaries of said fifth part.
(8) That the plaintiffs, as well as any other descendants of the founder, are entitled to participate in the fifth of the properties of
this mayorazgo in accordance with the sixth clause of the deed of foundation and article 4 of the Disentailing Law.
The motion of reconsideration was denied in so far as it was incompatible with the final and fundamental conclusions arrived at in the decision and in
the resolution, but the motion for a new trial of the intervenors who appeared in order that they or any other person entitled to participate in one-
fifth of the properties may intervene, either by filing other complaints of intervention or by amending the complaint filed was granted. The
dispositive part of said resolution reads literally as follows:
ORDER
In view of the foregoing, it is ordered:
(a) That the motion for reconsideration filed by counsel for the defendants is denied in so far as it is incompatible with the fundamental
conclusions we have arrived at in the present cause and enumerated in the preceding resolution.
(b) That the dispositive part of our decision in this cause be set aside.
(c) That the record in the present case, together with the petitions of intervention mentioned, be returned to the Court of First Instance of
Manila in order that the new parties may intervene in this cause and prove their alleged rights, and that the original plaintiffs may, if they so
desire, amend their complaint.
(d) That the plaintiffs take the necessary steps to include as parties to this cause all such known and unknown persons who may have the
right to participate in the said fifth part of the properties of this foundation, requiring them to appear and prove their rights.
(e) That said Court of First Instance proceed to try this cause and render judgment as to the amount to which the original parties and those
who may intervene may be entitled as their participation in the fifth of the properties of this mayorazgo.
(f) That the stipulation of facts subscribed on August 30, 1924 by Attorneys Sanz and Blanco on behalf of the plaintiffs and Araneta &
Zaragoza on behalf of the defendants, for all intents and purposes and with respect to the parties affected, is held as subsisting, as well as
the oral and documentary evidence presented by the parties during the original trial of the cause, the original parties as well as o hereafter
may intervene, being entitled to introduce such additional evidence as they may desire upon the subject matter of the trial herein ordered.
(Barretto vs.Tuason, 50 Phil., 888, 966, 967.)
The case was remanded to the court of origin for the purpose above-mentioned, and after the filing of many complaints of intervention by a number
of persons claiming to be relatives of the founder and of his younger children and, therefore, entitled to participate in one-fifth of the properties, on
suggestion of counsel for the parties the court appointed Modesto Reyes as referee, and upon his death, Attorney Crispin Oben. Both referees filed
their written reports, although that of the former does not resolve the major portion of the questions raised due to his premature death, and at the trial
13
various objections were interposed which were resolved by the court. In its decision the court approved most of the findings and recommendations of
the last referee, but modified others which in its opinion were not supported either by the proven facts or the applicable law. The defendants and
some of the intervenors, not being likewise agreeable to certain portions of the decision and order thus promulgated, have taken the four appeals
now before us.
G.R. No. L-36811
APPEAL OF THE INTERVENORS SURNAMED LEGARDA Y DE LA PAZ
The appellants in this case are the brother and sisters Benito, Consuelo. Rita, surnamed Legarda y de la Paz. These intervenors claim participations
in one-fifth of the properties in two capacities: First. is descendants of the younger son Pablo Tuason, and, second, for having inherited from their
parents the participations in one-fifth of the properties which were sold to the latter by certain relatives of the founder. They likewise claim the share
to which they would be entitled in the participations of certain relatives of the younger daughter, Eustaquia Ma. Tuason, who sold said participations
to the defendants. We will hereafter have occasion to pass on this contention in discussing the four assigned error.
The following is an enumeration of the names of the vendors of their participations in favor of the parents of the appellants, giving the dates of the
respective deeds:
1. DOROTEA TUASON, by a deed of absolute sale executed by her in favor of Benito Legarda and Teresa de la Paz.dated September 13,
1881. (Exhibit A-Legarda.)
2. ISABEL ARENAS, by a deed of absolute sale executed by her and her husband Francisco Esteban, in favor of the spouses Benito
Legarda and de la Paz, dated October 2, 1884 Exhibit B-Legarda.)
3. The brothers ENRIQUE. SEVERINO, and DOMINGO, surnamed FRANCO, by a deed of absolute sale executed by them in favor of the
spouses Benito Legarda and Teresa de la Paz, dated November 7, 1884. (Exhibit C-Legarda.)
4. The sisters BALBINA SANTOS TUASON and MAGDALENA SANTOS TUASON, by a deed of absolute sale executed by them in favor
of the spouses Benito Legarda and Teresa de la Paz, dated January 23, 1885. (Exhibit D-Legarda.)
5. APOLINARIA TUASON, by a deed of absolute sale, executed by her in favor of the spouses Benito Legarda and Teresa de la Paz,
dates February 17, 1885. (Exhibit F-Legarda.)
6. ESTEBAN DUARTE, ISIDRA MARIA DUARTE, and ALEJANDRO DUARTE, by a deed of absolute sale executed by them in favor of
the spouses Benito Legarda and Teresa de la Paz, dated February 17, 1885. (Exhibit F-Legarda.)
7. TOMASA TUASON DE TOBIAS, who was then a widow, by a deed of absolute sale executed by her in favor of the spouses Benito
Legarda and Teresa de la Paz, dated October 3, 1888. (Exhibit G-Legarda.)
8. LUIS TUASON and PEDRO TUASON, by a deed of absolute sale executed by them in favor of the spouses Benito Legarda and Teresa
de la Paz, dated April 7, 1886. (Exhibit H-Legarda.)
9. ALEJANDRO, ANACLETO, TEODORICO, MARIA, AND DIONISIA, surnamed CAMACHO y TUASON, and TOMAS, ENCARNACION,
MARIA, and MERCEDES, surnamed MACARANAS y TUASON, by a deed of absolute sale executed by them in favor of the spouses
Benito Legarda and Teresa de la Paz, dated August 11, 1886. (Exhibit I-Legarda.)
10. FELIPE G. ALCALDE, by a deed of absolute sale executed by him in favor of the said spouses, dated October 27, 1886. (Exhibit J-
Legarda.)
11. QUINTINA CASTILLO VIUDA DE JUAN N. C. REYES, by a deed of absolute sale executed by her in favor of the spouses Benito
Legarda and Teresa de la Paz, dated April 25, 1888. (Exhibit K-Legarda.)
The vendor, Quintina Castillo Viuda de Juan N. C. Reyes, who had a participation in the entailed properties as descendant in the direct line
of the founder, acquired the participation of the latter, the said vendor Quintina Castillo having been declared the sole and universal heir by
will of the said Juan N. C. Reyes, as evidenced by Exhibit K-1-Legarda.
12. TEODORA EIZMENDI, by a deed of absolute sale executed by her in favor of the spouses Benito Legarda and Teresa de la Pam,
dated October 3, 1888. (Exhibit L-Legarda.)
13. PETRONA MARIA DUARTE, by a deed of absolute sale executed by her in favor of the said spouses Benito Legarda and Teresa de la
Paz, dated October 8, 1888. (Exhibit L-1-Legarda.)
14. AVELINO TUASON alias ANDRES AVELINO TUASON, by a deed of absolute sale executed by him in favor of the father of the herein
intervenors, Benito Legarda, dated March 5, 1883. (Exhibit M-Legarda.)
Of the said sales, only those executed by the following were impugned: (1) Isabel Arenas; (2) Tomasa Tuason de Tobias; (3) Luis Tuason and Pedro
Tuason; (4) Alejandro, Anacleto, Teodorico, Maria, and Dionisia, surnamed Camacho y Tuason, and Tomas, Encarnacion, Maria, and Mercedes,
surnamed Macaranas y Tuason; (5) Felipe G. Alcalde, and (6) Teodora Eizmendi. The impugners of the sales are relatives of the vendors who would
be entitled to succeed there in their respective participations.
14
The appellants impute the following errors to the appealed decision:
I. In finding that Tomasa Tuason de Tobias, Luis Tuason, and Pedro Tuason, who sold their participations in the properties in litigation to
the father and mother of the intervenors Legarda y de la Paz, were already receiving the revenue on the date the Disentailing Statute took
effect.
II. In declaring null and void as to one-half of the participations sold, instead of valid in their entirety, the sale made by Tomasa de Tobias
(Exhibit G-Legarda) and that executed by Luis and Pedro Tuason (Exhibit H- Legarda), and in not adjudicating to the intervenors Legarda y
de la Paz the entire participations corresponding to said vendors.
III. In excluding from the sales the participations corresponding to the vendors in the portions belonging to the younger children without
succession of the founder, and in not adjudicating said participations to the intervenors Legarda y de la Paz.
IV. In not adjudicating to the intervenors Legarda y de la Paz the participations sold by some descendants of the founder's daughter,
Eustaquia Maria Tuason, and in the event of the distribution of said participations among the descendants, in general, of the founder, in not
adjudicating to said intervenors the participations which would, therefore, correspond to the vendors of the Legardas.
V. In not adjudicating to the intervenors Legarda y de la Paz the participation corresponding to the vendor Dorotea Tuason as descendant
of Santos Luciano Tuason.
VI. In not ordering the defendants to pay legal interest.
VII. In denying the motion for a new trial.
The first two assigned errors are intimately related, as they refer to the sales of their participations executed by Tomasa Tuason de Tobias, Luis
Tuason, and Pedro Tuason. Referee Oben held in his report that the sales made by said vendors did not transfer more than one-half of their
participations, because on the dates of the sales they were the ones who received the revenue and they could not dispose of more than one-half of
their participations, reserving the other half in favor of their immediate successors, in accordance with the provisions of article 4, in connection with
articles 2 and 3, of the Disentailing Statute. The court entertained the same opinion.
In support of their contention, the appellants advance the following reasons: (1) That the said vendors were not the ones who received the revenue
on March 1, 1864, when the Disentailing Statute took effect; consequently, the reservation of one-half is not applicable to the sales in question; (2)
that the present action of the impugners to invalidate the sales as to one-half thereof has already prescribed; (3) that the appellants have acquired by
prescription of owner ship the entire participations sold; and (4) that the inaction of the impugners of the sales for a period of years without exercising
their alleged right estops them from claiming the participations sold, under the doctrine known as estoppel by laches.
Although we have examined the oral and documentary evidence adduced, to ascertain whether Tomasa Tuason de Tobias, Luis Tuason, and Pedro
Tuason were in fact the ones who received the revenue when the Disentailing Statute took effect and we are in a position to state that the first of
said vendors was not in fact the one who received the revenue on said date but the Tuason brothers nevertheless, we do not make any
pronouncement on this question in view of the fact that the first two assigned errors under consideration should be resolved in connection with the
other arguments relative to prescription of action and ownership and estoppel by laches.
It will be recalled that the deed of sale of the participation of Tomasa Tuason de Tobias was executed on October 3, 1888, and the sale of those of
the brothers Luis and Pedro Tuason on April 7, 1886; the complaints of intervention which assailed the validity of the sales of said participations for
the first time were filed in 1927, hence, approximately forty-one years have elapsed from the first sale to the date its validity was impugned for the
first time, and about thirty years from the execution of the second sale to the said date.
The right now exercised by the impugners of the sales is a personal action whose prescription should be governed by the laws in force at the time of
the execution of the deeds of sale, that is, April 7, 1886, and October 3, 1888, namely, Law 5, Title 8, Book 11, of the Novisima Recopilacion, and
Law 21, Title 29, Partida 3, which provide for the period of ten years (Crusado vs. Bustos and Escaler, 34 Phil., 17).
Article 1939 of the present Civil Code provides:
ART. 1939. Prescription which began to run before the publication of this Code shall be governed by the prior law; but if, after this Code
took effect, all the time required by the same for prescription bas elapsed, it shall be sufficient even if according to such prior law a longer
period of time would have been required.
And article 1301 of the same Code provides:
ART. 1301. The action of annulment shall last four years.
The term shall commence to run
In cases of intimidation or violence from the day on which it has ceased;
In those of error or deceit or falsity of consideration., from the date of the consummation of the contract;
When the purpose of the action is to invalidate the un authorized contracts of a married woman, from the date of the dissolution of the
marriage;
15
With respect to contracts made by minors or incapacitated persons, from the date they were released from guardianship.
According to these provisions, the action of annulment, admitting that it had not yet prescribed when the Civil Code took effect in these Islands on
December 7, 1889 (Mijares vs. Nery, 3 Phil., 195), should have commenced by the impugners of the sales within the four (4) years following the
taking effect of the Civil Code, which was not done.
The rules of prescription found in the Code of Civil Procedure, Act No. 190, are not applicable to the action of annulment under consideration,
because according to section 38 thereof, the prescriptive period provided in former statutes should be applied to rights of action which have already
accrued before it went into effect.
From the foregoing it clearly follows that the action of annulment instituted and relied upon by the impugners of the said sales has already
prescribed, both under the Laws of the Partidas and the Novisima Recopilacion and under the provisions of the Civil Code, and in the latter case,
even the supposition that the prescriptive period for an action of annulment of contracts had been extended to ten years, instead of four, in
accordance with the provisions of section 43, No. 1, of the Code of Civil Procedure. (Willard, Notes on Civil Code; Brillantes vs. Margarejo and
Belmonte, 36 Phil. 202.)
But the impugners of the sales argue that they do not in fact institute an action of annulment, but merely use the same as a defense, hence, they are
not affected by the laws of prescription. In the able report of referee Oben, this phase of the question was discussed at length, and he came to
conclusion, as did the court, that the impugners of the sales have in fact brought an action of annulment. Without going into another extended
discussion, we believe it will suffice to state, to demonstrate the same conclusion, that in the instant case those in the enjoyment of the participations
sold as well as the ownership thereof are the appellants and not the impugners of the sales, and that to recover the rights lost under the deeds of
sale they executed, the latter have to avail themselves of an action of annulment. In this sense, at least, they should be under stood as bringing the
action instead of simply defending themselves, aside from the indisputable fact that, to recover the participations which they sold, they found it
necessary to file complaints of intervention, which are really complaints under the letter and spirit of section 121 of the Code of Civil Procedure.
As to the question of acquisitive prescription, likewise invoked by the appellants, we hold that due to the long lapse of time they have acquired by
prescription whatever rights the impugners of the sales had in the participations which they sold.
Addressing ourselves to appellants' last argument, it should again be stated that they and their predecessors have enjoyed the revenue
corresponding to the participations which they have acquired and that during the period that has elapsed, the vendors and impugners of the sales
have done nothing to recover their alleged rights. Such conduct insurmountably bars the instant action of annulment under the doctrine of estoppel
by laches. In the case of Buenaventura vs. David (37 Phil., 435), speaking of the said doctrine, we said:
. . . The assertion of doubtful claims, after long delay, cannot be favored by the courts. Time inevitably tends to obliterate occurrences from
the memory of witnesses, and even where the recollection appears to be entirely clear, the true clue to the resolution of a case may be
hopelessly lost. These considerations constitute one of the pillars of the doctrine long familiar in equity jurisprudence to the effect that
laches or unreasonable delay on the part of a plaintiff in seeking to enforce a right is not only persuasive of a want of merit but may,
according to the circumstances, be destructive of the right itself. Vigilantibus non dormientibus equitas subvenit.
And in the case of Tuason vs. Marquez (45 Phil., 381), the same principle was again applied as follows:
The equitable doctrine termed with questionable propriety "estoppel by laches," has particular applicability to the fact before us.
Inexcusable delay in asserting a right and acquiescence in existing conditions are a bar to legal action. . . .
We see no good reason why the said equitable doctrine should not be applied to the case at bar. The impugners of said sales have let pass a
number of years from the accrual of their right of action to annul the sales without exercising such right, and have voluntarily permitted appellants'
predecessors in interest to enjoy the participations sold; in which circumstances it is the duty of the courts to restrict, instead of encourage, the
granting of a right already lost.
The third assigned error refer to the sales executed by some descendants of the founder who sold the participations that would come to them as
descendants likewise of the younger children of the founder. The court at first approved the report of referee Oben declaring valid the sales of the
participations coming from the younger children with succession as well as from those without succession. But the court, in its order of April 8, 1931,
modified its decision declaring invalid the sales of the participations coming from the younger children without succession. From this latter resolution
the appeal was taken. The reason alleged by the court in support of its last order was, that the said sales were illegal because they conveyed rights
not known and determined at the time of the execution of the deeds of sale. We do not see the force of this argument. If the sales were valid as to
the participations coming from the younger children with succession, with more reason should the sales of the participations coming from the
younger children who died without succession be declared equally valid, as in both cases the sale of existing rights, known and determinable, was
involved, as said participations, so far as the vendors were concerned, arose and were acquired by the latter from the death of their predecessors in
interest, the younger children. (Article 657 of the Civil Code.) For this reason we find the third error tenable and sustain the validity of the sales of
said participations.
The plaintiffs and the defendants had stipulated when the original case was heard that the younger daughter, Eustaquia Ma. Tuason, died without
succession, but it developed that the said deceased in fact left descendants some of whom sold their participations to the defendants. The referee
stated in his report that such participations have neither been sold nor legally acquired by the defendants because they were estopped by their
stipulation with the plaintiffs to the effect that said younger daughter died without descendants. The court differed from this and held in its decision
that there was no such estoppel, and that the defendants validly acquired the participations sold to them. The herein appellants, Legarda brothers
and sisters, by their fourth assigned error, now attempt to reverse the finding of the court that the defendants are not thus estopped. And appellants'
purpose is obvious: if the sales are invalidated, the participations, subject matter thereof, would be distributed among all the relatives of the said
younger daughter, and appellants will naturally receive a certain aliquot part thereof.
16
We agree with the court that the defendants are not estopped just because they stipulated that Eustaquia Ma. Tuason left no succession. And this
proposition is clear by simply taking into account that the defendants never agreed that they had not purchased the participations of the descendants
of the said younger daughter. The stipulation referred only and exclusively to the succession or descendants of the said younger daughter and
cannot be logically extended to the sales made by several of her descendants. Moreover, as properly observed by the court, to sustain appellants'
theory would result in the absurd case of the other descendants of said younger daughter who did not sell their participations being deprived thereof
just because the original parties stipulated that their predecessor in interest left no succession. We, therefore, rule that the fourth assigned error is
untenable.
The fifth error relates to the participations of Dorotea Tuason which she sold to the appellants. This vendor was entitled to a double participation
coming from two sources, to wit, from the younger children Santos Luciano Tuason and Felix Bolois Tuason. In amendatory report of referee Oben
the participation of this vendor as descendants of Santos Luciano Tuason was overlooked. The appellants filed a motion of reconsideration asking,
among other things, that the participation of said vendor as descendant of Santos Luciano Tuason be likewise adjudicated to them. The court
granted the motion, but in its order it was stated that the participation of Dorotea Tuason coming from Felix Bolois Tuason will be adjudicated to the
appellants, instead of that coming from Santos Luciano Tuason. In other words there was a transposition of names, hence, appellants state in their
brief that this involves a mere correction of a clerical error.
In view of the foregoing we find the fifth assigned error well-founded.
In their sixth assigned error the appellants contend that the defendants are bound to pay them legal interest on the amounts of money to be
adjudicated to them as their participations in the one-fifth, alleging as a reason therefor that the defendants were guilty of delay from the taking effect
of the Disentailing Statute ordering the distribution and delivery of the fifth to the persons entitled to it, among whom were said appellants.
The contention is without merit in view of the fact that in the decision rendered in the original case, it was held that the plaintiffs, whose position was
like that of the herein appellants, were entitled to an accounting of the expenses and revenues of said properties and to receive that corresponding
revenues, from January 1, 1923, until the defend ants deliver to them their participations in the properties of the foundation. The revenues thus
adjudicated were in lieu of legal interest claimed by the plaintiffs. For these reasons, the sixth assigned error is untenable.
The seventh and last assigned error need not be discussed being a corollary of the preceding ones.
Recapitulating all that has been said so far, it results:
1. That the sales of their participations made by Tomasa Tuason de Tobias, Luis Tuason and Pedro Tuason in favor of the appellants, are
valid in their entirety and should, therefore, be adjudicated to the latter; thus resolving favorably the first two errors assigned;
2. That the sales made by some descendants of the founder, of their participations coming from the younger children without succession,
are likewise valid, and said participations should be adjudicated to the appellants. This also resolves favorably the third assigned error;
3. That the participation of Dorotea Tuason as descendant of Santos Luciano Tuason should be adjudicated to the appellants; thereby
resolving favorably the fifth assigned error; and
4. That the fourth and sixth assigned errors are overruled as untenable.
G. R. No. 36827
APPEAL OF THE INTERVENOR ANA BARCINAS TORRES (alias ANA BARCINAS PEREZ) AND OTHERS
It will be recalled, from what has been said in connection with the first appeal, that Eustaquia Ma. Tuason died leaving succession, notwithstanding
the stipulation to the contrary by the plaintiffs and the defendants at the trial of the principal case. The herein appellants are descendants of the
younger daughter Eustaquia Ma. Tuason. All of them, with the exemption of Tomas Barcinas y Reyes, are descendants of Tomas Barcinas, who,
with the said Tomas Barcinas y Reyes, sold all their rights, interest, and participation in one-fifth of the revenue of themayorazgo through their
attorney-in-fact Manuel de los Reyes, in favor of the estate of Teresa de la Paz.
Said appellants attribute to the appealed decision the following errors:
I. We hereby adopt as our own all of the pertinent assignments of errors of the other intervenors in G.R. Nos. 36811 and 36840, which are
applicable to the intervenors here and, by reference, hereby incorporate their arguments in support of said errors.
II. The lower court erred in holding the sale executed by Manuel de los Reyes, pretending to act under and by virtue of aforesaid void
power of attorney, valid, and in failing to hold same null and void.
III. The lower court erred in holding the sale executed by Manuel de los Reyes, pretending to act under and by virtue of aforesaid void
power of attorney, valid, and in failing to hold same null and void.
IV. The lower court erred in interpreting aforesaid sale executed by Manuel de los Reyes, pretending to act under aforesaid void power of
attorney, and in so interpreting said sale as to deprive these intervenors of their true rights under the mayorazgo founded by Don Antonio
Tuason.
Exhibit Tuason-1 shows that on June 8, 1894, the said Tomas Barcinas y Cruz, Tomas Barcinas y Reyes, Benita Barcinas y Cruz, and Maria
Manibusan y Barcinas, through their attorney-in-fact Manuel de los Reyes, sold all their participations in one-fifth of the revenue of
17
the mayorazgo which they had in possession as descendants of the younger daughter Eustaquia Ma Tuason, including all their rights and interest in
the said one-fifth of the revenue, for the sum of P5,000. In the said deed of sale there was reproduced in full the power of attorney which said
vendors had conferred on their attorney-in-fact Manuel de los Reyes, executed on July 4, 1893, in the City of Agaa, capital of Marianas Islands,
before the judge of first instance acting as notary in the absence of the notary of said district.
The appellants contend that the sale is null and void because the power of attorney which the vendors conferred on their agent was not ratified
before a notary but before a judge of first instance. The referee, in passing upon the legal point involved, said:
In order that the sale made by Manuel de los Reyes behalf of the Barcinas may be valid, a written power of attorney was sufficient, without
the necessity of converting said power of attorney into a public document. (Section 335, No. 5, Code of Civil Procedure; article 1278, Civil
Code. Without dis therefore, whether or not under the laws in force in the Marianas Islands in 1893, the judge of first instance could act as
notary public, the indisputable fact remains that those named as grantors in the instrument in question executed said power of attorney;
and this execution of the written power of attorney was sufficient to authorize the attorney-in-fact Manuel de los Reyes to execute a valid
sale of the property of his principals.
The undersigned is of the opinion, therefore, that the deed Exhibit Tuason-1 legally transferred to the estate of Doa Teresa de la Paz
what appears in said deed, belonging to the grantors therein named:
The court affirmed the conclusion of the referee in the following language:
The court agrees with the referee that, notwithstanding the execution of the power of attorney in the City of Agaa before the judge of first
instance of the Marianas Islands the sale was valid, because according to the said Exhibit Tuason-1, the judge of first instance of said
Islands, "Acted with the witnesses then present, Don Manuel Aflague and Don Juan del Rosario, in the capacity of notary public" in the
absence of this official in that district (emphasis ours). The intervenors Barcinas, represented by Attorney Wolfson, have not shown that on
the date of the execution of the power of attorney, June 8, 1894, there was a notary in the City of Agaa; on the contrary, said Exhibit
Tuason-1 shows that there was no such notary in the district, hence, the judge of first instance acted in that capacity. There being no
notary, we cannot insist that the power of attorney be executed before a notary. It was sufficient that it be executed before the judge of first
instance acting in the capacity of notary public. Wherefore, the court is of the same opinion as the referee, that the sale executed by the
intervenors Barcinas, Exhibit Tuason-1, in favor of the estate of Doa Teresa de la Paz is valid.
The appellants have not cited any law especially applicable to the Marianas Islands at the time the power of attorney in question was executed,
whereby the intervention of a notary in the execution of said kind of document was made absolutely necessary. In 1893 the present Civil Code was
already in force in the country, and the provisions thereof applicable to the subject are as follows:
ART. 1710. An agency may be express or implied.
An express agency may be created by a public or private instrument or even orally.
The acceptance may also be express or implied, the latter being inferred from the acts of the agent.
ART. 1713. An agency created in general terms only includes acts of administration.
In order to compromise, alienate, mortgage, or to execute any other act of strict ownership, an express power is required.
The power to compromise does not give authority to submit the matter to arbitrators or friendly adjusters.
The pertinent portion of section 335 of the Code of Civil Procedure, provides:
SEC. 335. Agreements invalid unless made in writing. In the following cases an agreement hereafter made shall be unenforceable by
action unless the same, or some note or memorandum thereof, be in writing, and subscribed by the party charged, or by his agent;
evidence, therefore, of the agreement cannot be received without the writing, or secondary evidence of its contents:
x x x x x x x x x
5. An agreement for the leasing for a longer period than one year, or for the sale of real property, or of an interest therein, and such
agreement, if made by the agent of the party sought to be charged, is invalid unless the authority of the agent be in writing and subscribed
by the party sought to be charged.
It, therefore, follows that under the legal provisions above quoted, the power conferred upon Manuel de los Reyes is valid although no notary public
intervened in its execution. And the sale executed by said attorney-in-fact is likewise valid because in the execution of the corresponding deed the
essential requisites provided by law were complied with.
The above refuses appellants second, third, fourth assigned errors relating to the validity of the power of attorney and the deed of sale of the
participations already referred to.
The first assignment does not specify any error committed by the court and the appellants only make and re produce therein, as their own, the
assignments of error of the intervenors-appellants in G.R. Nos. 36811 and 36840. It is not incumbent upon us to consider seriously an assignment of
error of this nature, although the assignments of error made by the other appellants will be considered and resolved in due time.
18
In resume, we find the four assigned errors of these appellants untenable.
G.R. No. 36840
APPEAL OF ESTANISLAOA ARENAS AND OTHERS
The herein appellants are likewise descendants of the founder of the mayorazgo, Some of them directly sold to the defendants their participations in
one-fifth of the revenue and all their rights and interest in the mayorazgo; the others are descendants of other relatives of the founder who likewise
sold their participations in one-fifth of the revenue and all their rights and interest in the mayorazgo in favor of the same defendants. The deeds
evidencing the sales have been marked as Exhibits 2, 3, 4, 5, 6, 7, 10, 11 12, 13, 14, 16, and 17.
The appellants impugn all the sales as null and void and in their brief assign the following errors:
I. The court erred in holding that, by the deeds of sale executed by the intervenors-appellants, or their predecessors in interest, in favor of
the defendants and the predecessors in interest of the intervenors Legarda and sisters, the participations of the former in the ownership
and dominion of one-fifth of the properties of the mayorazgo were sold and in not declaring said sales null and void.
II. The court erred in finding that on the date of the execution of the sale made by Israel Arenas the latter had no immediate successor and
in disapproving the report of the referee on this question.
III. The court erred in finding that Camila Tuason died after the year 1864, when the Disentailing Statute took effect in the Philippines, and
not in 1863 as found by the referee."
In support of the first assigned error, the following propositions are advanced: (1) That the vendors intended to sell only their participations in one-
fifth of the revenue and, not the ownership or other rights which they had in themayorazgo, consequently, the sales were null and void for lack of said
vendors' consent; (2) that the purchasers were administrators or trustees of the properties of the mayorazgo, and, therefore, fall under the prohibition
found in article 1459 of the Civil Code; (3) that the purchasers the spouses Legarda, at the time they purchased the participations of some of the
intervenors, were legal administrators of the properties of the mayorazgo, and, therefore, lacked the capacity to buy in accordance with the
provisions of the Novisima Recopilacion then applicable; (4) that the purchasers obtained the vendors' consent through fraud, and (5) that the said
are moreover null and void under the express provisions of article 4, in connection with article 3, of the Disentailing Matute, for lack of prior formal
appraisal and partition of the properties constituting the fifth of the mayorazgo.
Considering the view we have taken in respect of the first assigned error, a view which we will hereafter set forth, it would seem unnecessary to
answer the arguments advanced by the appellants. However, we will briefly state the following:
After a careful examination of all the deeds of sale, we hold. as did the referee and the court, that the vendors sold not only their participations in the
revenue but also all their rights and interest in the properties of the mayorazgo. In other words, said vendors in fact sold their participations and rights
in the ownership of the mayorazgo, to which the one-fifth of the revenue was converted in view of the enforcement of the Disentailing Statute in the
Islands.
The purchasers, strictly speaking, were not legal administrators or fiduciaries of the rights sold to them by the vendors, at least in the sense in which
the prohibition then existing was expressed and established. As the court correctly stated, the purchasers, in connection with the transactions, acted
as mere coproprietors or tenants in common, and the right to buy which they then exercised was expressly recognized by law.
The fraud imputed to the purchasers has not been proved; the evidence shows that the vendors had full knowledge of the rights which they sold and
that thereby they conveyed to the vendees all the interest which they could have in the mayorazgo.
And with respect to the lack of formal appraisal and partition of one-fifth of the properties of the mayorazgo, prior to the sales, requisites found in
article 4, in connection with article 3, of the Disentailing Statute, it is sufficient to state our opinion that non-compliance therewith should not produce
either the effect or the meaning attributed to them by the appellants. It seems to us that the court was right in interpreting that the appraisal, partition,
and intervention of the immediate successor are required only in cases in which the actual possessor of properties or the one who receives the
revenue desires to dispose of his participations in a specific and particular form, but not when, as in the case under consideration, undivided and
indeterminate rights or participations were sold. In case of an hereditary estate, for instance, a coheir may sell his successory right, although
undetermined, without the necessity either of a prior appraisal or partition of said estate or notice to or intervention by the other coheirs.
We will now briefly state the view we have taken of the first assigned error. The most recent sales impugned were made between the year 1905 and
1910; the oldest deeds were executed between the years 1891 and 1898. On the other hand, the appellants challenged the validity of said sales for
the first time in January and February, 1929. Theretofore, at least, nineteen years had elapsed as to the sale effected in 1910. We hold that the lapse
of the period of nineteen years is more than that required for the prescription of the action of annulment began by the appellants through their
complaints of intervention, and in support of this holding we recur here to all that we said on the subject in resolving the appeal interposed by the
intervenors Legarda. We are likewise of the opinion that the appellants are now barred from claiming any right in connection with said sales under
the doctrine of estoppel by laches. We repeat what we said on this point in the appeal of the Legardas, to the effect that the validity of sales may not
be questioned anew after the purchasers have enjoyed the participations sold and the fruits thereof for many years.
The second and third assigned errors refer to the sales made by Isabel Arenas and Alejandro Camacho and brothers, respectively. The intervenor-
appellant Rafael Arenas contends that the sale executed by his mother Isabel Arenas is null and void as to one-half because said vendor had an
immediate successor at the time of the sale. The Camachos, in turn, allege that the sale they executed is likewise null and void as to one-half
because, contrary to the finding of the court, they were the ones who received the revenue at the time the Disentailing Statute took effect, and they
contend in this connection that their mother Camila Tuason died in 1863 and not after 1873, as found by the court. We do not find it necessary to
19
discuss the question of fact thus raised, because in both cases prescription and the rule of estoppel by laches are applicable against the appellants.
On both grounds we rule that the appellants may not now question the validity of the aforesaid sales.
It follows from what has been said that the three errors assigned by the appellants are overruled as not well-founded.
G.R. No. 36872
APPEAL OF THE DEFENDANTS AUGUSTO H. TUASON Y DELA PAZ AND OTHERS
This appeal is interposed by the defendants who were the possessors of all the properties of the mayorazgo at the time the principal case was
instituted and before the Bank of the Philippine Islands was appointed receiver. Said appellants impute to the appealed decision and order the
following error:
FIRST ERROR
The lower court erred in not passing upon certain vital issues on the ground that they had been definitely concluded.
SECOND ERROR
The trial court erred in not finding that the fifth part of the mayorazgo belongs in fee simple to the defendants.
THIRD ERROR
The trial court erred in distributing the fifth part as follows: three-eighths thereof among all the descendants of the founder (including those
of the first possessor of the mayorazgo) per stirps of great grandchildren, including those who have already died; and the remaining five
eighths among the descendants of the five younger children of the founder who died leaving succession, distributing the same per stirps of
said children.
FOURTH ERROR
The trial court erred in not finding that the plan of distribution more in conformity with the provisions of article 4 of the Disentailing Law,
would be to assign to each recipient (whether plaintiff or intervenor) a portion of the one-fifth of the entail in the proportion that the pension
which he used to receive bears to the net income of the fifth on the entail.
FIFTH ERROR
The trial court erred in not distributing the three-eights exclusively among the defendants.
SIXTH ERROR
In case the preceding assignment of error be over ruled, we respectfully submit that the trial court erred in distributing the three-eights in
equal portions per stirps of the great great grandchildren (tataranietos), including those who have already died, instead of distributing the
same only among those that are living, or, more properly, instead of distributing the same per stirps of the children of the founder.
SEVENTH ERROR
The trial court erred in not finding what is the value in pesos of the different participations assigned to the different parties in this case.
EIGHT ERROR
The trial court erred in not finding that the plaintiffs having filed a personal action against the defendants asking judgment in the sum of five
hundred thousand pesos (P500,000), for damages which the said parties agreed were the value of the one-half of the so-called family trust
are now barred to claim participation in the properties them- selves thereby converting the action into one in rem.
NINTH ERROR
The trial court erred in finding that the sales executed by Mariano Arenas, Estanislaoa Arenas, Julio Tuason, Severino, Tuason,
Encarnacion Rojo and Candelaria Rojo were null and void as to one-half thereof.
TENTH ERROR
Assuming that the said sales as to one-half thereof should be declared null and void, the trial court erred in not condemning the sellers or
their successors in interest to return one-half of the price received by them from the purchasers, plus the legal interest thereof the time of
the sale.
ELEVENTH ERROR
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The trial court erred in finding that the sales executed by the intervenors or their predecessors in interest of any rights that they might have
had in the fifth of the mayorazgo in question, did not cover the right that they had to participate in the three eighths which originally
correspond to the three younger children of the founder who died without leaving succession.
TWELVE ERROR
The trial court erred in not requiring the referee to file an amended report in conformity with the order of the trial court dated April 9, 1931.
By way of preliminary observation we will state that it is not our intention to hold that the questions raised by the appellants in their first, second, third,
fourth, fifth, sixth, and eighth assigned errors are res judicata because they have been submitted, discussed at length, and resolved in the decision
rendered in the principal case, because we believe this to be unnecessary; but we understand, and so decide, that unless it is shown that said
questions have been erroneously resolved and that there exist sufficient reasons justifying that we renounce the conclusions already reached, it is
our duty to adhere to them and to apply the principles laid down in the aforesaid decision in so far as they are applicable to the same points raised
anew in the instant appeal.
The first assignment does not specify any error committed by the court, hence, we are not bound to resolve any specific question; but in the
development of the idea which the appellants have apparently attempted to bring out, they argue in synthesis that in the resolution granting a new
trial this court again left open for discussion the same points already considered and resolved as well as the new ones which the parties may desire
to raise in the aforesaid new trial. An examination of said resolution, however, shows just the contrary. In the said resolution the following language
was employed.
Counsel for defendants insist upon their contentions maintained from the beginning and disposed of in our decision. They raise some
points in their briefs, however which require a few brief-remarks. (Baretto vs. Tuason, 50 Phil., 888, 959.)
x x x x x x x x x
Resolving, therefore, said motion for reconsideration, we reiterate the following conclusions, declaring finally:
(1) That the first-born possessor of this mayorazgo was a mere usufructuary of the entailed properties.
(2) That this mayorazgo was a fideicamiso.
(3) That the charge to distribute the fifth of the revenues from said properties was a family trust.
(4) That article 4 of the Disentailing Law of October 11, 1820 is applicable to the present case.
(5) That the fifth of the properties into which, by virtue of said law, the fifth of the revenue was converted on March 1, 1864, when the
Disentailing Law became effective in the Philippines, has remained and subsists as a fideicomiso up to the present date.
(6) That the plaintiffs' right of action has not prescribed.
(7) That the registration of the entailed properties under Act No. 496 must, with respect to the fifth of the said properties conserved up to
the present time as a fideicomiso, be held to have been made in favor of the beneficiaries of said fifth part.
(8) That the plaintiffs, as well as any other descendants of the founder, are entitled to participate in the fifth of the properties of
this mayorazgo in accordance with the sixth clause of the deed of foundation and article 4 of the Disentailing Law.
(9) The pronouncements made in our decision with respect as to the amount of the participation of each claimant shall be set aside in view
of the motions of the intervenors which we about to examine. (Ibid., pp. 963, 964.)
No clearer and more categorical language could have been employed to express the intention of the court to adhere to and reiterate the conclusions
and principles already established in the decision originally rendered, notwithstanding the motion of reconsideration and new trial. Neither can there
be any doubt as to the questions which the court considered definitely resolved and which should not be the subject of further discussion.
That this court did not intend to allow the parties to raise anew the fundamental questions already resolved, and that the new trial should be limited
exclusively to a determination of the amount to which the intervenors could be entitled in the fifth of the properties, is clearly shown by the following
quoted paragraphs which form a part of the order found in the aforesaid resolution:
(a) That the motion for reconsideration filed by counsel for the defendants is denied in so far as it is incompatible with the fundamental
conclusions we have arrived at in the present cause and enumerated in the preceding resolution.
x x x x x x x x x
(e) That said Court of First Instance proceed to try this cause and render judgment as to the amount to which the original parties and those
who may intervene may be en titled as their participation in the fifth of the properties of this mayorazgo. (Ibid p. 966.)
Defendants-appellants intimate that the said resolution is without legal force because it was not concurred in by a sufficient majority of the members
then composing this court. A sufficient answer to this is, that the aforesaid resolution was authorized and concurred in by eight of the nine members
then composing this court.
21
In the second assigned error, the appellants again insist that the naked ownership of the fifth of the properties of the mayorazgo belongs to them.
This question was already definitely resolved in the decision as well as in the resolution on the motions of reconsideration and new trial wherein was
stated:
Counsel for defendants allege that the properties of this foundation passed into the hands of the heir, Jose Victoriano Tuason, completely
free, one-half by testamentary inheritance and the other half by virtue of article 2 of the Disentailing Law. This, however, was not the will of
the testator, Don Jose Severino Tuason, nor the will of his successors, all of whom respected the mayorazgo and held it as subsisting de
facto. In no event could the properties pass into the hands of the heir Jose Victoriano Tuason completely free. It was necessary to
preserve them intact until they were appraised and the fifth part thereof had been segregated for distribution among the recipients of the
revenues and their immediate successors, in accordance with the provisions of article 4 of the statute.
It is a fact that the trust subsisted and still subsists. The successive possessors of the entail have preserved and preserve the properties of
the mayorazgo respecting and distributing the fifth of the revenue among the descendants of the younger children of the founder.
But the entail could not and cannot continue perpetually. Its abolition was decreed by the statute as of the 1st day of March, 1864. Its
perpetual survival would be contrary, not only to the Disentailing Law of October 11, 1820, but also the Civil Code in force which, under
articles 781 and 785, paragraph 2, positively prohibits perpetual entails.
If up to the present time the entail in question subsists, this has been because the interested parties have been maintaining it without
proceeding to the appraisal and distribution of the entailed properties, as required by articles 2 and 4 of the Disentailing Law; and in
accordance with the doctrine announced by the Supreme Court of Spain on October 29, 1857, above cited, the properties of
this mayorazgo, pre served de facto by the interested parties as entailed, legally retain this character for the purposes of their partition
which must be effected in accordance with the statute of October 11, 1820.
From what has been said it follows that since March 1, 1864, the date upon which the said Disentailing Law came into force in the
Philippine Islands, the successive possessors of the properties of this mayorazgoconstituted themselves trustees, charged with the
administration and preservation of the said properties and the distribution of the fifth of the revenue among the descendants of the younger
children of the founder. Consequently, after the entail was abolished, one-half of the four-fifths of the proof Asgo continued subject to the
trust in favor of its beneficiaries, the heirs of Jose Victoriano Tuason, who was the one called to succeed immediately to the mayorazgo on
the date of its disentailment (article 2, Statute), and the fifth of the said properties in favor of the beneficiaries, the recipients of the fifth of
the revenue in accordance with the foundation.
Summing up the effects produced with respect to this mayorazgo by the Disentailing Law on the one hand, and the conduct of the
interested parties on the other, we may say first, that the trust of the naked ownership instituted in favor of the descendants of the founder
indefinitely was abolished, in consequence of the disentailment; and second, that the trust of the usufruct of the properties became
converted into a trust of the properties themselves, the beneficiaries being the same, but as owners; that is to say, the first-born successor
as to one-half of four-fifths of the said properties, and the descendants of the younger children of the founder with respect to the remaining
fifth. (Ibid., pp. 936-938.)
Resolving, therefore, said motion for reconsideration, we reiterate the following conclusions, declaring finally:
x x x x x x x x x
(5) That the fifth of the properties into which, by virtue of said law, the fifth of the revenue was converted on March 1, 1864, when the
Disentailing Law became effective in the Philippines, has remained and subsists as a fideicomiso up to the present date.
x x x x x x x x x
(7) That the registration of the entailed properties under Art No. 496 must, with respect to the fifth of the said properties conserved up to
the present time as a fideicomiso, be held to have been made in favor of the beneficiaries of said fifth part.
(8) That the plaintiffs, as well as any other descendants of the founder, are entitled to participate in the fifth of the properties of
this mayorazgo in accordance with the sixth clause of the deed of foundation and article 4 of the Disentailing Law. (Ibid., pp. 963, 964.)
The arguments now advanced by the appellants in sup port of their second assigned error are not entirely new because they were already brought
out when the question was submitted and discussed in the principal case and we do not find therein any weighty reasons justifying our repudiation of
the conclusions and principles established in the decision rendered in the original case.
The third, fourth, fifth, and sixth assigned errors may be jointly considered because they all refer to the distribution of the one-fifth of the properties. In
the paragraphs here after quoted of the original decision, it will be seen that the distribution of the fifth and those entitled to it under the instrument of
foundation were already dealt with and resolved:
PERSONS ENTITLED TO THE REMEDY
The recipients of the fifth of the revenues are indicated in the sixth clause of the instrument of foundation, the text of which we again transcribe:
"It shall be his duty to set apart one-fifth of the net revenue derived from the entail each year, and that one-fifth part shall be divided into
eight parts, giving one to each of my eight children, and in their absence, to my grandchildren, but upon the understanding that if one or
more of my children should die without succession, the part belonging to them shall be distributed among my children and other
descendants of mine according to their needs and as prudence may dictate to him, so that, when the time arrives that none of my children
22
are alive, it shall then be always understood that said fifth part shall be applied to all those of my descendants who are poor, the
apportionment to be made by him prudently according to their needs and therefore the possessor of the entail is hereby charged to
discharge this duty with conscientious scruple." (Ibid., pp. 941, 942.)
x x x x x x x x x
If the descendants of the younger children, subsequent to the grandchildren of the founder, are granted under certain circumstances the
right to possess the mayorazgo itself, with all its properties, we do not see how it can be said that these descendants, subsequent to
grandchildren, the sons of sons, were prohibited from receiving a fifth of the revenues of said properties.
It is our understanding that the intention of the founder was not to restrict the grant of the usufruct of the fifth of the revenue by limiting it to
a certain number of generations of the younger children, but that he intended to extend it to all of the descendants of the latter. If this is so
we should apply to the case the rule of law of the Partidas (Rule 28, Title 34, 7th Partido), which says: "Privilegia recipiunt largum
interpretationem voluntati consonan concedentis." (Privileges are to be interpreted with liberality in accordance with the will of him who
grants them.)
Furthermore, that the present plaintiffs are entitled to receive the fifth of the revenues has been repeatedly recognized by the defendants
when they purchased, in 1905, from Don Jose Rocha y Ruiz, and in 1916 from Doa Remedios Aragon y Rocha their respective
participations in the fifth of the revenue, according to paragraph 16 of the stipulation of facts, and while in the years 1917 to 1921 the said
defendants delivered to Don Antonio Maria Barretto y Rocha, and to Don Santiago, Don Julio and Don Andres Rocha y Ruiz Delgado, and
their sister, Doa Rosario; and in the years 1917 to 1922, to Doa Isabel, Doa Enriqueta, Doa Carmen, Don Antonio, Don Alfredo and
Don Clodoaldo Rocha y Pereyra, Don Francisco Beech y Rojo, Don Ciriaco, Don Cayetano, Don Pablo Leon and Don Tomas Tuason, and
to the minors Doa Consuelo, Don Juan, Doa Rosario and Doa Carmen Tuason, and Doa Victoria Rufina, Doa Ana Consolacion
Tuason, and Doa Asuncion Romana Tuason widow of Caballero, their respective participations in the fifth of the revenue, as appears
from the cross-complaint of the defendants, admitted in para graph 8 of the stipulation of facts.
And it appears that the said Don Jose Rocha y Ruiz was the son of Don Lorenzo Rocha, a grandson, in turn, of Doa Gregoria N. Tuason
(Exhibit 6 and paragraphs 2 and 16 of the stipulation of facts): that Doa Remedios Aragon y Rocha is a relative of the founder (Exhibit 7,
admitted in paragraph 16 of the stipulation of facts) ; and that the said recipients of the fifth of the revenue from the year 1917 to 1921 and
from the year 1917 to 1922, are all descendants of grandchildren of the younger children of the founder. (Paragraphs 2 to 30, admitted in
paragraph 1 of the stipulation of facts.) (Ibid., pp. 944, 945.)
x x x x x x x x x
Passing to the amount of the Participation which is due them respectively, for the purpose of determining this point we must have regard to
the intention of the founder, as it is expressed in the instrument creating the mayorazgo. It was his will that the fifth of the revenue should
he divided into eight parts, and that to each of his children, other than his first born, one part should be given. Upon the death of each of
these children, by virtue of the provisions of the instrument of foundation, and by operation of law, their right to an eighth part of the
revenue which they received during their lifetime was transmitted to their heirs. That is, each of these eight portions of the fifth of the
revenue was transmitted from succession to succession, within the stirps of each of the eight younger children who died leaving
succession. The heirs of a younger son or daughter could legally participate in the eight part corresponding to another stirps, as long "
heirs in the direct line of this stirps survived; that is to say, each of the eight portions of the fifth, except those corresponding to young
children born without succession. The heirs of a younger child could not legally participate in the eight corresponding to another stirps,
while heirs of this stirps in, the direct line survive. That is to say, each one of the said eight parts of the fifth, except those corresponding to
the younger children dying without succession, was preserved and transmitted from generation to generation within each respective stirps.
This plan of division of participation, based upon the will of the founder and the precepts of the law, is that which in our judgment must
continue to prevail, and is that which we shall follow in determining the proportion which corresponds to the plaintiffs in the half of the fifth
of the properties of this foundation.
Of the eight younger children four died without sucession and the other four are the descendants of the plaintiffs in this cause. Hence, four
of the eight portions, that is, one-half of the fifth of the properties of this foundation, belong to the plaintiffs herein under the plan of division
which has just been indicated. The other four portions, that is, the one-half of the said fifth, which would have corresponded to the stirps of
the other four younger children, if they had died leaving succession, accrue, so to speak, both to the defendants of the younger children
leaving succession and to the other descendants of the founder.
The distribution of this accretion is made in obedience to a plan distinct from that above indicated, because the founder, foreseeing the
contingency, did not prescribe a quota for each stirps of his younger children, but ordered that it he delivered to descendants of both
classes without distinction of line or stirps. Consequently, this one-half in accretion should be distributed among the descendants of the
founder in general, who are the plaintiffs and some of the defendants, but bearing in mind the different rights with which each heir
participates, by reason of the greater or lesser proximity of his relationship to the founder, for the purpose of determining if he is to
inherit per capita or per stirpes. We say some of the defendants, because with the exception of the ten mentioned in paragraph 5 of the
complaint, the other defendants are either persons whose relationship has not been determined (paragraph 6 of the complaint) or have
refused to become parties to this action (paragraph 30 of the complaint).
From what has been said it follows that one-half of the fifth of the properties corresponding to the younger sons leaving succession, four-
fortieth parts (4/40) of the whole of the properties of this foundation must be divided into four equal portions, because one portion, or one-
fortieth part (1/40) corresponds to each stirps of the said four younger children. The other one-half of the said fifth, that is to say, the other
four-fortieth parts (4/40) of the whole of the properties of this foundation must be distributed in general among the plaintiffs and some of the
defendants, taking into consideration the circumstances of their respective heirships. (Ibid., pp. 946-948.)
23
The foregoing paragraphs contain conclusions of fact and of law established after a careful study of the provisions found in the foundation and of the
laws applicable to the case, and are squarely applicable to the facts recently proved at the new trial, except that five-eighths of the fifth should be
divided among the descendants of the five (5) younger children with succession and the remaining three-eighths of the fifth among the relatives in
general of the founder, because it developed that the younger daughter Eustaquia Ma. Tuason had left heirs, contrary to the stipulation of the
plaintiffs and the defendants.
The arguments advanced by the appellants in support of said assignments of error do not justify, in our opinion, a different result from that already
reached; in truth they are merely repetitions of the same arguments already brought out by counsel for the same appellants.
In the seventh assigned error, it is contended that the court erred in not reducing the respective participations of the parties to figures or pesos. It is
true that the court did not undertake the arithmetical operations involved there in. but we cannot conceive of this as an error subject to modification or
reversal, in view of the fact that there was then no necessity therefor, and that such work could be easily entrusted to the referee after this decision
has become final and the records remanded to the court.
By their eighth assigned error the defendants-appellants again reproduce their original special defense to the effect that the plaintiffs could not
convert the personal action for damages which they had originally commenced into an action in rem, and that said plaintiffs are barred from claiming
any participation in the properties of themayorazgo.
This point was likewise considered and resolved in the decision in the principal case, wherein it was said:
In addition to the arguments mentioned heretofore, counsel for defendants interpose as obstacles to the action of plaintiffs the registration
of the title to the properties of the mayorazgo in favor of the defendants, mentioned in paragraph 11 of the first special defense, under Act
No. 496, and the prescription of this action. The defendants Doa Paz Tuason de Gonzales, Doa Consuelo Tuason de Quimson, Don
Juan Tuason and Doa Albina Tuason inter pose as a defense to this action the contention that the plaintiffs filed no claim whatever in the
proceedings had upon the testamentary estate of Don Juan Jose Tuason de la Paz, the father of the said defendants. which testamentary
proceedings were finally disposed of and filed June 25, 1920.
If, as we have found and decided, the successive possessors of the properties of this mayorazgo were and have been mere trustees of the
said properties, holding them in trust for the benefit of the beneficiaries, part of whom are the recipients of the fifth of the revenues, and
their descendants, the registration of the title to said properties under Act No. 496 in favor of the said defendant must be deemed to have
been effected for the benefit of the beneficiaries of said properties, part of whom are the present plaintiffs. The doctrine established by this
court in the case of Severino vs. Severino (44 Phil., 343), is applicable to this feature of the case.
Although the plaintiffs endeavored to demonstrate that the said defendants registered the title by fraud, it is our opinion that the alleged
fraud has not been proven in this action. Nevertheless, the existence of fraud is unnecessary to arrant the declaration that registration of
the Title under Act No. 496 is not a legal obstacle to this action brought by plaintiffs, and the adjudication in favor of those among them
who are entitled thereto of the portion pertaining to them of the properties so registered. It was said in the case of Gilbert vs. Hewetson (79
Minn., 326), cited with approval in the case of Severino vs. Severino, supra:
"A receiver, trustee attorney, agent, or any other person occupying fiduciary relations respecting property or per sons, is utterly disabled
from acquiring for his own benefit the property committed to his custody for management. This rule is entirely independent of the fact
whether any fraud has intervened. No fraud in fact need be shown, and no excuse will be heard from the trustee." (Emphasis ours.)
With respect to the plea of prescription, counsel for defendants contend that inasmuch as plaintiffs, prior to the filing of the present
complaint, had made no effort to enforce their rights since the 1st day of March, 1864, their action is barred. But from the records it that up
to the year 1922 the defendant have been recognizing in the entries in their books, and in deeds, such as Exhibits 6 and 7, signed by Don
Augusto Tuason de la Paz, as grantee, the right of the descendants of the younger children of the founder to the fifth of the revenue, and
therefore the trust which this charge implies; furthermore, said defendants made payments on account of the fifth of the revenue. These
acts of recognition and payments, made during the said period of time, prevent the operation of prescription. Section 50, Code of Civil
Procedure.)
Furthermore, this being a case which deals with a trust which subsisted from the time of its foundation and by virtue thereof up to March 1,
1864, and thereafter down to the present time by the express will of the present parties, the defense of prescription cannot be entertained.
By virtue of the said trust the possession of the said defendants could not be regarded as a basis for an acquisitive prescription in their
favor against the plaintiffs because such possession has not been nor is it under claim of ownership, but a title held in the name and on
behalf of the beneficiaries, some of whom are the plaintiffs in general. For this reason the defense of prescription cannot be enforced
between the trustee and the beneficiaries while the trust relations continue, as was impliedly held in the case of the Government of the
Philippine Islands vs. Abadilla(46 Phil., 642.) (Ibid., pp. 938-940.)
Strictly speaking there was no alteration in the nature of the action then commenced by the plaintiffs. They claimed indemnity for damages in the
amount of half a million pesos believing that the registration of the real properties of the mayorazgo in favor of the defendants and the issuance of
the corresponding certificates of title, made the latter the exclusive owners thereof; but this court held that a trust being involved, the titles should be
under stood as issued in favor of all the co-proprietors, among them the plaintiffs, and in view of this ruling the plaintiffs were declared entitled, not to
an indemnity, but to a participation in one-fifth of the aforesaid properties. From this it follows that, although the plaintiffs were granted a relief
different from that they had asked for, the rights which they invoked from the very beginning and upon which they based the action which they
began, were, nevertheless, the same to wit, their rights as relatives or descendants of the founder of the mayorazgo. They erred in the choice of the
remedy to which they were entitled, but they did not change the essential ground of the action. In either case the right which they wanted to enforce
was the same, but it developed that the adequate remedy was not the, one they asked for but that granted to them by the court.
24
In their ninth assigned error the appellants contend that the court erred in declaring null and void as to one-half the sales of their participations
executed by the intervenors Mariano Arenas, Estanislaoa Arenas, Julio Tuason, Severino Tuason, Encarnacion Rojo, and Candelaria Rojo in favor
of the said defendants-appellants.
The referee in fact declared said sales null and void as to one-half, either because the vendors were the ones who received the revenue or because
they had immediate successors at the time the Disentailing Statute took effect in the Islands. The court sustained the referee.
Without going into an extended discussion, we rule that the said intervenors-vendors cannot now question the validity of the aforesaid sales because
their action has pre scribed and they are now in estoppel by laches. All that we said in this connection in the appeal of the Legardas may be taken as
reproduced herein. The most recent sale was made in 1916 and the first complaint of intervention questioning the validity of the sales was filed in
1926, that is, after the lapse of more than ten years. During all this time the defendants were in the enjoyment of the said participations without any
protest or claim of any kind from any of the vendors. The time that has elapsed is more than that required for the prescription of the action to annul
the sales, and estops the intervenors-vendors from questioning their validity.
We find the error assigned tenable.
The tenth assigned error requires no discussion because it was made conditionally, that is, in the event that the preceding one is not well-founded
and is not sustained.
Various intervenors or their predecessors sold their participations in the fifth of the mayorazgo which came from the younger children with
succession as well as from those without succession, favor of the defendants. The referee last appointed was of the opinion that the sales of the
participations which came from the younger children with succession, were valid, but not those which came from the younger children who died
without succession. In its decision the court disapproved this conclusion and held that all the sales were valid. But in its order of April 8, 1931, in
passing upon different motions of reconsideration, it concurred in the opinion of the referee and ruled that the sales of the participations coming from
the younger children without succession were null and void because undetermined rights were transmitted thereby.
We rule that the eleventh assigned error is well founded and that the sales in question are as valid as those made of the participations coming. from
the younger children with succession. And on this point we repeat what we already said in the appeal of the Legardas, in resolving a similar case,
that pursuant to the provisions of article 657 of the Civil Code, successory rights are transmitted from the death of the person leaving the hereditary
estate, where fore. it cannot be said that in the aforementioned sales undetermined rights were conveyed. It is true that on the dates of the sales, the
amount of the participations sold were not yet determined, but doubtless it could be fixed and reduced to figures through the appraisal and liquidation
provided for by the Disentailing Statute.
The twelve and last assigned error states that the court should have required the referee to file an amended report pursuant to the order of April 8,
1931. The error, if any is no ground for either modification or reversal. There is no doubt that the referee should file his amended and final report, but
this may be prepared and submitted for approval after the appeals have been disposed of and the present decision has become final. We find no
merit in this assigned error.
Summarizing what has been said in connection with this appeal we have:
1. That the first, second, third, fourth, fifth, sixth, seventh, eight, tenth and twelfth assigned error are without merit and must be as they are
hereby overruled;
2. That the sales executed by Mariano Arenas, Estanislao Arenas, Julio Tuason, Severino Tuason, Encarnacion Rojo and Candelaria Rojo
in favor of the defendants are valid in their entirety; thereby sustaining the ninth assigned error; and
3. That the sales executed by certain intervenors or their predecessors of their participations coming from the younger children without
succession, in favor of the defendants, are valid; thereby sustaining likewise the eleventh assigned error.
JUDGMENT
In view of all the foregoing considerations, and disposing finally of all the appeals interposed, it is ordered:
In case G.R. No. 36811
1. That the appealed decision and order be amended, in the sense that the sales executed by Tomasa Tuason de Tobias, Luis Tuason,
and Pedro Tuason, in favor of the intervenors Legarda, are valid, and that the participations sold thereby should be adjudicated in favor of
said purchasers;
2. That the appealed decision and order be modified, in the sense that the sales executed in favor of the intervenors Legarda of the
participations coming from the younger children without succession, are valid, and, consequently, said participations should be adjudicated
in favor of the said intervenors;
3. That the appealed decision and order be modified, in the ant of Santos Luciano Tuason, should be adjudicated in favor of the
intervenors-appellants, and
4. That the appealed decision and order, in so far as they have been affected by the appeal interposed but have not been modified, are
hereby affirmed;
25
In case G.R. No. 36827
1. That the aforesaid appealed decision, in so far as it has been affected by the appeal interposed by the intervenors-appellants in this case, is
hereby affirmed;
In case G.R. No. 36840
1. That the decision of the court is hereby affirmed in so far as it has been affected by the appeal interposed in this case by the intervenors-
appellants Estanislaoa Arenas and others;
In case G.R. No. 36872
1. That the appealed decision and order are hereby amended, in the sense that the sales executed by Mariano Arenas, Estanislaoa
Arenas, Julio Tuason, Severino Tuason, Encarnacion Rojo, and Candelaria Rojo, in favor of the defendants-appellants, are valid in their
entirety, and consequently. the participations transferred thereby should be adjudicated to the said purchasers.
2. That the said appealed decision and order be amended in the sense that the sales executed in favor of the defend ants-appellants of the
participations coming from the younger children without succession, are valid in their entirety, and therefore, said participations should be
adjudicated in favor of said defendants-appellants; and
3. That the said decision and order in so far as they have been affected by the appeal interposed in this case but have not been modified.
are hereby affirmed.
It is likewise ordered that the court of origin take the necessary steps looking to the adjudication and distribution among the parties entitled thereto of
their respective participations, to the end that this mayorazgo case may be definitely closed.
Without costs in this instance.So ordered.
Avancea, C.J., Malcolm, and Villa-Real, JJ., concur.
CASE 48
G.R. No. L-19001 November 11, 1922
HARRY E. KEELER ELECTRIC CO., INC., plaintiff-appellant,
vs.
DOMINGO RODRIGUEZ, defendant-appellee.
Hartford Beaumont for appellant.
Ross and Lawrence and Antonio T. Carrascoso, Jr., for appellee.
STATEMENT
The plaintiff is a domestic corporation with its principal office in the city of Manila and engaged in the electrical business, and among other things in
the sale of what is known as the "Matthews" electric plant, and the defendant is a resident of Talisay, Occidental Negros, and A. C. Montelibano was
a resident of Iloilo.
Having this information, Montelibano approached plaintiff at its Manila office, claiming that he was from Iloilo and lived with Governor Yulo; that he
could find purchaser for the "Matthews" plant, and was told by the plaintiff that for any plant that he could sell or any customer that he could find he
would be paid a commission of 10 per cent for his services, if the sale was consummated. Among other persons. Montelibano interviews the
defendant, and, through his efforts, one of the "Matthews" plants was sold by the plaintiff to the defendant, and was shipped from Manila to Iloilo, and
later installed on defendant's premises after which, without the knowledge of the plaintiff, the defendant paid the purchase price to Montelibano. As a
result, plaintiff commenced this action against the defendant, alleging that about August 18, 1920, it sold and delivered to the defendant the electric
plant at the agreed price of P2,513.55 no part of which has been paid, the demands judgment for the amount with interest from October 20, 1920.
For answer, the defendant admits the corporation of the plaintiff, and denies all other material allegations of the complaint, and, as an affirmative
defense, alleges "that on or about the 18th of August, 1920, the plaintiff sold and delivered to the defendant a certain electric plant and that the
defendant paid the plaintiff the value of said electric plant, to wit: P2,513.55."
Upon such issues the testimony was taken, and the lower court rendered judgment for the defendant, from which the plaintiff appeals, claiming that
the court erred in holding that the payment to A. C. Montelibano would discharge the debt of defendant, and in holding that the bill was given to
Montelibano for collection purposes, and that the plaintiff had held out Montelibano to the defendant as an agent authorized to collect, and in
rendering judgment for the defendant, and in not rendering judgment for the plaintiff.

JOHNS, J.:
26
The testimony is conclusive that the defendant paid the amount of plaintiff's claim to Montelibano, and that no part of the money was ever paid to the
plaintiff. The defendant, having alleged that the plaintiff sold and delivered the plant to him, and that he paid the plaintiff the purchase price, it
devolved upon the defendant to prove the payment to the plaintiff by a preponderance of the evidence.
It appears from the testimony of H. E. Keeler that he was president of the plaintiff and that the plant in question was shipped from Manila to Iloilo and
consigned to the plaintiff itself, and that at the time of the shipment the plaintiff sent Juan Cenar, one of its employees, with the shipment, for the
purpose of installing the plant on defendant's premises. That plaintiff gave Cenar a statement of the account, including some extras and the
expenses of the mechanic, making a total of P2,563,95. That Montelibano had no authority from the plaintiff to receive or receipt for money. That in
truth and in fact his services were limited and confined to the finding of purchasers for the "Matthews" plant to whom the plaintiff would later make
and consummate the sale. That Montelibano was not an electrician, could not install the plant and did not know anything about its mechanism.
Cenar, as a witness for the plaintiff, testified that he went with shipment of the plant from Manila to Iloilo, for the purpose of installing, testing it, and to
see that everything was satisfactory. That he was there about nine days, and that he installed the plant, and that it was tested and approved by the
defendant. He also says that he personally took with him the statement of account of the plaintiff against the defendant, and that after he was there a
few days, the defendant asked to see the statement, and that he gave it to him, and the defendant said, "he was going to keep it." I said that was all
right "if you want." "I made no effort at all to collect the amount from him because Mr. Rodriguez told me he was going to pay for the plant here in
Manila." That after the plant was installed and approved, he delivered it to the defendant and returned to Manila.
The only testimony on the part of the defendant is that of himself in the form of a deposition in which he says that Montelibano sold and delivered the
plant to him, and "was the one who ordered the installation of that electrical plant," and he introduced in evidence as part of his deposition a
statement and receipt which Montelibano signed to whom he paid the money. When asked why he paid the money to Montelibano, the witness says:
Because he was the one who sold, delivered, and installed the electrical plant, and he presented to me the account, Exhibits A and A-I,
and he assured me that he was duly authorized to collect the value of the electrical plant.
The receipt offered in evidence is headed:
STATEMENT Folio No. 2494
Mr. DOMINGO RODRIGUEZ,
Iloilo, Iloilo, P.I.
In account with
HARRY E. KEELER ELECTRIC COMPANY, INC.
221 Calle Echaque, Quiapo, Manila, P.I.
MANILA, P.I., August 18, 1920.
The answer alleges and the receipt shows upon its face that the plaintiff sold the plant to the defendant, and that he bought it from the plaintiff. The
receipt is signed as follows:
Received payment
HARRY E. KEELER ELECTRIC CO. Inc.,
Recibi
(Sgd.) A. C. MONTELIBANO.
There is nothing on the face of this receipt to show that Montelibano was the agent of, or that he was acting for, the plaintiff. It is his own personal
receipt and his own personal signature. Outside of the fact that Montelibano received the money and signed this receipt, there is no evidence that he
had any authority, real or apparent, to receive or receipt for the money. Neither is there any evidence that the plaintiff ever delivered the statement to
Montelibano, or authorized anyone to deliver it to him, and it is very apparent that the statement in question is the one which was delivered by the
plaintiff to Cenar, and is the one which Cenar delivered to the defendant at the request of the defendant.
The evidence of the defendant that Montelibano was the one who sold him the plant is in direct conflict with his own pleadings and the receipt
statement which he offered in evidence. This statement also shows upon its face that P81.60 of the bill is for:
To Passage round trip, 1st Class @
P40.80 a trip ...........................................P81.60.
Plus Labor @ P5.00 per day
Machine's transportation ................. 9.85.
This claim must be for the expenses of Cenar in going to Iloilo from Manila and return, to install the plant, and is strong evidence that it was Cenar
and not Montelibano who installed the plant. If Montelibano installed the plant, as defendant claims, there would not have been any necessity for
Cenar to make this trip at the expense of the defendant. After Cenar's return to Manila, the plaintiff wrote a letter to the defendant requesting the
payment of its account, in answer to which the defendant on September 24 sent the following telegram:
Electric plant accessories and installation are paid to Montelibano about three weeks Keeler Company did not present bill.
27
This is in direct conflict with the receipted statement, which the defendant offered in evidence, signed by Montelibano. That shows upon its face that
it was an itemized statement of the account of plaintiff with the defendant. Again, it will be noted that the receipt which Montelibano signed is not
dated, and it does not show when the money was paid: Speaking of Montelibano, the defendant also testified: "and he assured me that he was duly
authorized to collect the value of the electrical plant." This shows upon its face that the question of Montelibano's authority to receive the money
must have been discussed between them, and that, in making the payment, defendant relied upon Montelibano's own statements and
representation, as to his authority, to receipt for the money.
In the final analysis, the plant was sold by the plaintiff to the defendant, and was consigned by the plaintiff to the plaintiff at Iloilo where it was
installed by Cenar, acting for, and representing, the plaintiff, whose expense for the trip is included in, and made a part of, the bill which was
receipted by Montelibano.
There is no evidence that the plaintiff ever delivered any statements to Montelibano, or that he was authorized to receive or receipt for the money,
and defendant's own telegram shows that the plaintiff "did not present bill" to defendant. He now claims that at the very time this telegram was sent,
he had the receipt of Montelibano for the money upon the identical statement of account which it is admitted the plaintiff did render to the defendant.
Article 1162 of the Civil Code provides:
Payment must be made to the persons in whose favor the obligation is constituted, or to another authorized to receive it in his name.
And article 1727 provides:
The principal shall be liable as to matters with respect to which the agent has exceeded his authority only when he ratifies the same
expressly or by implication.
In the case of Ormachea Tin-Conco vs. Trillana (13 Phil., 194), this court held:
The repayment of a debt must be made to the person in whose favor the obligation is constituted, or to another expressly authorized to
receive the payment in his name.
Mechem on Agency, volume I, section 743, says:
In approaching the consideration of the inquiry whether an assumed authority exist in a given case, there are certain fundamental
principles which must not be overlooked. Among these are, as has been seen, (1) that the law indulges in no bare presumptions that an
agency exists: it must be proved or presumed from facts; (2) that the agent cannot establish his own authority, either by his representations
or by assuming to exercise it; (3) that an authority cannot be established by mere rumor or general reputation; (4)that even a general
authority is not an unlimited one; and (5) that every authority must find its ultimate source in some act or omission of the principal. An
assumption of authority to act as agent for another of itself challenges inquiry. Like a railroad crossing, it should be in itself a sign of danger
and suggest the duty to "stop, look, and listen." It is therefore declared to be a fundamental rule, never to be lost sight of and not easily to
be overestimated, that persons dealing with an assumed agent, whether the assumed agency be a general or special one, are bound at
their peril, if they would hold the principal, to ascertain not only the fact of the agency but the nature and extent of the authority, and in case
either is controverted, the burden of proof is upon them to establish it.
. . . It is, moreover, in any case entirely within the power of the person dealing with the agent to satisfy himself that the agent has the
authority he assumes to exercise, or to decline to enter into relations with him. (Melchem on Agency, vol.I, sec. 746.)
The person dealing with the agent must also act with ordinary prudence and reasonable diligence. Obviously, if he knows or has good
reason to believe that the agent is exceeding his authority, he cannot claim protection. So if the suggestions of probable limitations be of
such a clear and reasonable quality, or if the character assumed by the agent is of such a suspicious or unreasonable nature, or if the
authority which he seeks to exercise is of such an unusual or improbable character, as would suffice to put an ordinarily prudent man upon
his guard, the party dealing with him may not shut his eyes to the real state of the case, but should either refuse to deal with the agent at
all, or should ascertain from the principal the true condition of affairs. (Mechem on Agency, vol.I, sec 752.)
And not only must the person dealing with the agent ascertain the existence of the conditions, but he must also, as in other cases, be able
to trace the source of his reliance to some word or act of the principal himself if the latter is to be held responsible. As has often been
pointed out, the agent alone cannot enlarge or extend his authority by his own acts or statements, nor can he alone remove limitations or
waive conditions imposed by his principal. To charge the principal in such a case, the principal's consent or concurrence must be shown.
(Mechem on Agency, vol.I, section 757.)
This was a single transaction between the plaintiff and the defendant.lawph!l.net
Applying the above rules, the testimony is conclusive that the plaintiff never authorized Montelibano to receive or receipt for money in its behalf, and
that the defendant had no right to assume by any act or deed of the plaintiff that Montelibano was authorized to receive the money, and that the
defendant made the payment at his own risk and on the sole representations of Montelibano that he was authorized to receipt for the money.
The judgment of the lower court is reversed, and one will be entered here in favor of the plaintiff and against the defendant for the sum of P2,513.55
with interest at the legal rate from January 10, 1921, with costs in favor of the appellant. So ordered.
Araullo, C. J., Johnson, Street, Malcolm, Avancea, Villamor, Ostrand, and Romualdez, JJ., concur.
28

CASE 49
G.R. No. 10104, Cortes et al. v. Oliva, 33 Phil. 480
Republic of the Philippines
SUPREME COURT
Manila
EN BANC
February 10, 1916
G.R. No. 10104
ROMANA CORTES, ET AL., plaintiffs-appellants,
vs.
FLORENCIO G. OLIVA, defendant-appellee.
Leodegario Azarraga for appellants.
Jose Agoncillo for appellee.
CARSON, J.:
This is an action for the recovery of personal property and for the damages incident to its alleged unlawful conversion.
The plaintiffs are the heirs of one Pio Oliva, deceased, who during his lifetime was the owner of a large machine used for grinding sugar cane; he
was also the joint owner with his brother, Florencio Oliva, the defendant herein, of another smaller machine used for the same purpose. Throughout
the record the machine owned outright by Pio Oliva is referred to as the large machine or mill (trapiche grande) while the other is referred to as the
small or partnership machine.
In 1896 defendant was the manager of an hacienda in Nasugbu, Batangas, and Pio Oliva was a tenant on the hacienda. The two machines in
question were installed and in use on the hacienda at the time of the breaking out of the revolution against Spain. Owing to the unsettled conditions
incident to the revolution, the hacienda was abandoned together with the two machines in question and various other agricultural implements. Pio
Oliva died in 1898 in the pueblo of Calawang, Laguna, P. I., leaving as his heirs the plaintiffs herein. The defendant, Florencio Oliva, returned to
Nasugbu in 1899. In 1901 he took them in an abandoned condition and badly in need of repairs. On the large machine he expended approximately
P163 and a less amount on the smaller machine, and he kept both machines under shelter until work was received on the hacienda. In 1906 the
large machine was again used for grinding cane and it appears to have been used for that purpose ever since. The smaller machine, the one owned
in partnership, has never been used since 1896, and unsuccessful efforts have been made to sell it. The record is very unsatisfactory and
inconclusive as to the value of the two machines. One of the plaintiffs testified that the large machine was worth P1,200, while the defendant put its
value at P400. There is no direct evidence in the record as to what the value of the smaller machine is, but it is very clear that its market value must
be small indeed.
The plaintiffs contend that the defendant unlawfully took possession of these machines in the year 1906 without their knowledge or consent; that
from that dateuntil the year 1912 he had ground cane in the large machine to the value of P42,000, and that they, as the heirs of the true owner of
the machine, are entitled to P14,000 for the use of this machine, that being one third the estimated value of the output; that the profits which would
have accrued to them from the use of the small machine during that period amounts to P3,500; that they are entitled to a judgment for the recovery
of the machines of their value; and further to a judgment for the sum of P17,500 for the profits which should have accrued to them for the use of
these machines from the year 1906 to the year 1912.
The defendant contends that he took possession of the machines in 1901, and has them in his possession since that date under a claim of
ownership; that he took possession because his brother, Pio Oliva, was indebted to him at the time of his death, and in view of conditions existing at
that time, 1901, he took this mode of indemnity himself against loss of the amount of the indebtedness which exceeded the value of both machines
at the time when he took possession.
This action was instituted on the 6th day of June, 1913, and the trial judge was of opinion that it had prescribed under the provisions of section 43 of
the new Code of Civil Procedure (Act No. 190), the evidence of record disclosing that the defendant had been in possession of both the mills under a
claim of ownership for a period of morethan four years prior to the date of the institution of the action.
As to larger machine, we are of opinion that the ruling of the trial judge was unquestionably correct. We find nothing in the record which would justify
us in disturbing the findings of fact by the trial judge and there can be no doubt that accepting his finding of facts as correct, the plaintiff's action for
possession had prescribed long before the action was instituted (sec. 43 Act No. 190).
The plaintiff contend that the defendant did not take and keep possession of this machine under a claim of ownership; and that in truth and in fact he
originally took possession of this machine in the year 1906, and that since that time he has kept possession merely as security for his claim of
indebtedness against their father. In support of their contentions, they rely on certain statements made by the defendant in a letter written to one of
the plaintiffs. This letter appears to have been written partly with a view to secure some compromise of the threatened litigation over the machines,
and partly by way of justification and defense of the defendant's conduct in taking possession of the machines after his brother's death. In the course
of the letter he insists that the plaintiffs were not wronged by his action in taking possession, because, as he indicates, their claim of ownership in the
machine and of profits from its operation is fully met by his claim of indebtedness and of interest on the debt. Plaintiffs insist that this statement
demonstrates that the defendant was not asserting a right of ownership in the machine at the time when the letter was written, but only the right
to payment of the amount of the alleged indebtedness with interest.
Without stopping to consider the question of the admissibility in evidence of the contents of his letter, which seems to have been written with some
view to a compromise of threatened litigation, we hold that, read in connection with all the evidence of record, it falls far short of sustaining the
contentions of the plaintiffs. We agree with the trial judge, who carefully reviewed the letter together with all the rest of the evidence, and held that
the letter, as a whole, clearly discloses that defendant regarded himself as the lawful owner of the machine at the time when the letter was written;
and that the references to the principal and interest of the debt for which it was taken was made by the defendant merely for the sake of showing
that he had not wronged his brother or his brother's heirs by taking the machines for the debt.
With reference to the smaller machine, which was originally owned jointly by the defendant and his brother, the claim of prescription of the action
brought by the plaintiffs is not satisfactorily established.
29
This machine having been originally the joint property of the defendant and his brother, the fact that he held it in his possession for a long period of
years, and exercised acts of ownership with reference to it does not afford a sufficient ground for the inference he had possession under a claim of
exclusive ownership, and adverse to the claims of his brother's estate. Ordinarily possession by one joint owner will not be presumed to be adverse
to the others, but will, as a rule, be held to be for the benefit of all. Much stronger evidence is required to show an adverse holding by one of several
joint owners than by a stranger; and in such cases, to sustain a plea of prescription, it must always clearly appear that one who was originally a joint
owner has repudiated the claims of his coowners, and that his coowners were apprised or should have been apprised of his claim of adverse and
exclusive ownership before the alleged prescriptive period began to run. We do not think that the evidence or record is sufficient to sustain a finding
to that effect with reference to the small machine.
On their own allegations, however, plaintiffs cannot maintain an action for possession of this machine against the defendant, who was originally a
joint with his brother, their predecessor in interest. Doubtless they have a right to have the machine sold and to a partition of the proceeds of the
sale, and an accounting for profits while in the exclusive possession of the defendant; and liberally construed, the allegations of their complaint would
seem to be sufficient, if supported by competent evidence to entitle them to a judgment for such profits.
But there is no direct evidence in the record as to profits gained by the defendant from the use of this machine, though there are indications in the
record that in fact he made no such profits, and that the machine, which was practically worthless, has lain idle ever since it came into his
possession.
The judgment entered in the court below dismissing the complaint at costs of the plaintiffs should be affirmed with the costs of this instance against
the appellants, without prejudice, nevertheless, to the right of the plaintiffs to bring another action asserting any right they may have in the small
machine, originally owned jointly by the defendant and his brother, their predecessor in interest, or in profits arising from the use of this machine
since the date of the institution of this action. So ordered.
Arellano, C.J., Torres, Johnson, Moreland and Trent, JJ., concur.

CASE 50
INVOLUNTARY DEALINGS WITH REGISTERED LAND- ATTACHMENT AND OTHER LINES

G.R. No. 2486, Joaquin v. Avellano, 6 Phil. 551
Republic of the Philippines
SUPREME COURT
Manila
EN BANC
October 30, 1906
G.R. No. 2486
LEOCADIO JOAQUIN, plaintiff-appellant,
vs.
LAMBERTO AVELLANO, defendant-appellee.
Rosado, Sanz and Opisso, for appellant.
Martinez and Azarraga, for appellee.

WILLARD, J.:
On the 8th of December, 1902, the plaintiff commenced an action against Tan Tongco to recover the sum of 2,000 pesos. On the 11th of December
a writ of attachment was duly issued in that action and on that day was duly levied upon the property described in the complaint in this action, which
was a leasehold interest of Tan Tongco in a tract of land situated in Calle Lemery, in Tondo, in the city of Manila, and the building standing upon the
said land. On the 15th day of December, 1902, the said writ of attachment and levy were duly annotated in the Registry of Property. On the 26th of
February, 1903, final judgment was duly entered in said action in favor of the plaintiff and against the defendant, Tan Tongco, for the recovery of
2,000 pesos and interest at 6 per cent from the 2d day of September, 1902. A writ of execution was duly issued upon said judgment on the 23d of
April, 1904, and by virtue of that execution the property attached, to wit, the right, title, and interest which Tan Tongco had in the property attached
on the 12th day of December, 1902, or which he had acquired subsequent to that date, was sold by the sheriff on the 28th of May, 1904, to the
plaintiff. On the 14th day of July, 1904, the plaintiff presented to the registrar of property a certificate of the aforesaid sale, which the registrar on the
20th of July refused to inscribe, basing his refusal so far as the house was concerned upon the fact that it had been sold the defendant and said sale
had been inscribed in the Registry of Property.

The facts relating to the sale of the house to the defendant are as follows: On the 19th of December, 1902, one of the judges of the Court of First
Instance appointed a receiver of all the property of Tan Tongco. This order appointing the receiver was afterwards held void by this court in the case
of Blanco vs. Ambler
[[
1
]]
(2 Off. Gaz., 429). The receiver, acting under orders of the court, sold the house in question to the defendant on the 5th day
of December, 1903. The defendant is, and has been for many years, the owner of the land.
The plaintiff brought this action, asking that the sale made by the receiver to the defendant be declared void and that the registry of the said sale be
canceled and that his certificate of sale be recorded in the Registry of Property, and for other relief. Judgment was entered for the defendant and the
plaintiff has brought the case here by bill of exceptions.
Whether the sale made by the receiver was void or valids, whatever rights the defendant acquired thereunder he acquired subject to the attachment
obtained by the plaintiff prior to the appointment of the receiver. The plaintiff pursued the steps marked out by the law for the purpose of enforcing his
judgment by sale upon an execution issued under the final judgment rendered in his favor in that action, and we think that the sale passed to him
whatever interest Tan Tongco had in the property at the time the attachment was levied and that the interest acquired by the defendant, if he did
acquire any, by virtue of the receiver's sale, were subject to the rights of the plaintiff. The court below found as a fact that the defendant had some
time before leased the land in question to Agustina Brillo. This finding is supported by the evidence, but he also found that she had lost all her
interest in the property acquired by virtue of that contract or lease prior to the levy of the judgment aforesaid and that the defendant had taken
30
possession of the land prior to such attachment. There is no evidence to support this finding. The only evidence in the case upon that point is the
testimony of the defendant, himself, who made the following statements:
P. Como vino V. a ser propietario de ello? R. He comprado ese terreno.
P. Cuando lo compro V.? R. Hace deiz aos y despuel lo cedi en arrendamiento a Agustina Brillo, esto hace tres aos.
P. Ahora la pregunta es: Doa Agustina Brillo pagaba a V. el alquiler? R. No, seor; ella no me ha pagado y esa es la razon porque
tuve emplear a un abogadopara poder conseguir mi dinero.
In view of this evidence the judgment of the court below can not be sustained but we think that the case should be remanded for new trial and no
final judgment should be now entered in favor of the plaintiff because it does not clearly appear what interest Tan Tongco had in this property at the
time the attachment was levied nor what interest he had at the time of the sale. The evidence shows that the lease was made by the defendant to
Agustina Brillo. It is also show that at the time of the trial of this action in the court below she was his wife of Tan Tongco but there is no evidence to
show that she was his wife at the time the lease was made, and there is no positive evidence to show who constructed the house upon the property,
whether it was constructed by her or by Tan Tongco, or whether at the time of such construction they were husband and wife. Neither is there any
evidence, as we have said, as to whether the leasehold interest still continued in force at the time of the attachment or at the time when the judicial
sale was made. The parties should have an opportunity to present evidence upon these two questions, first as to the interest which Tan Tongco had
in the property at the time of the attachment and whether the interest had been lost, if any existed by the forfeiture of the leasehold estate for
violation of the terms of the lease.
The judgment of the court below is reversed and the case remanded for a new trial. Upon the new trial it will not be necessary to retake the evidence
already taken, but the parties will be at liberty to present such new evidence as they desire upon all the questions raised herein. No costs will be
allowed to either party in this court. After the expiration of twenty days judgment will be entered in accordance herewith and ten days thereafter the
cause remanded for proper procedure. So ordered.
Arellano, C.J., Torres, Mapa, Johnson, Carson and Tracey, JJ., concur.

G.R. No. 46840, Hernandez v. Katigbak Vda. de Salas, 69 Phil. 744
Republic of the Philippines
SUPREME COURT
Manila
EN BANC
June 17, 1940
G.R. No. 46840
VICTORIANO HERNANDEZ, plaintiff-appellee,
vs.
MACARIA KATIGBAK VIUDA DE SALAS, defendant-appellant.
Barrera and Reyes for appellant.
Wolfson, Barrison and Baradi for appellee.
MORAN, J.:
Appeal from a judgment rendered by the Court of First Instance of Rizal.
The facts as agreed upon by parties and material to the disposition of the case, are as follows:
Vicente Singson Encarnacion was, at first alone, and later with others, the registered owner of lots Nos. 27, 28 and 29 of the "Hacienda Maysilo",
located at Tuliahan, municipality of Caloocan, Rizal, with an aggregate area of 234 hectares, and covered by Torrens certificates of title Nos. 8540
and 8548 of the register of deeds of Rizal. Nicolas Rivera repurchased, in pursuance of his registered right to that effect, 40 hectares of these three
lots, and later sold to Mariano P. Leuterio an unsegregrated portion of about 18 hectares thereof. The latter, in turn, sold a total area of 16,900
square meters to Rafael Villanueva by deeds which had never been registered. These deeds are dated September 21, 1920, September 24, 1920,
August 31, 1922 and September 1, 1922, respectively. Later Rafael Villanueva sold to the herein plaintiff, Victoriano Hernandez, all rights in the said
total area of 16,900 square meters.
In civil case No. 2861 of the Court of First Instance of Rizal, instituted by Perfecto J. Salas Rodriguez, against Mariano P. Leuterio, a writ of
execution was issued against the defendant, and, in pursuance thereof, the provincial sheriff of Rizal levied upon the properties of said defendant,
among them, a parcel of land containing an area of 177,557.4 square meters. This is the same property that the defendant bought from Nicolas
Rivera. The levy was duly recorded in the office of the Register of Deeds and noted on transfer certificate of title No. 8540 covering lot No. 28. Rafael
Villanueva filed with the sheriff a third party claim, but as the judgment creditor gave an indemnity bond, the sheriff proceeded with the execution
and sold the property at a public auction at which the judgment creditor himself was the highest bidder. On March 30, 1926, said officer executed the
corresponding deed in favor of the purchaser.
Prior to the execution of the officer's deed, or on March 1, 1926, the 40 hectares bought by Nicolas Rivera from Singson Encarnacion were
segregated, and on March 5, 1926, two transfer certificates of title were issued in favor of Nicolas Rivera, one with lot No. 10533, for 79,014 square
meters, designated as lot No. 28-A, and the other with No. 10535, for 62,661 square meters and 174,130 square meters, designated as lots Nos. 27-
A and 29-A, respectively. The execution lien of Perfecto J. Salas Rodriguez as well as the auction sale held on March 30, 1926, which were
annotated on transfer certificate of title No. 8540, were transferred to and annotated on the new certificate of title No. 10533 covering lot No. 28-A.
And there having been no redemption, a final deed of sale was executed on March 30, 1927 by the sheriff in favor of the purchaser, Perfecto J.
Salas Rodriguez, and transfer certificate of title No. 12242 was issued the following day in the latter's name. Perfecto J. Salas died, and by virtue of a
partition approved by theprobate court , lot No. 29-A was adjudicated to his widow, Macaria Katigbak Vda. de Salas, now defendant, in whose favor
transfer certificate of title No. 22157 was issued by the Register of Deeds of Rizal on August 9, 1932.
On the basis of the foregoing facts, the Court of First Instance of Rizal rendered judgment, ordering the defendant to segregate from lot No. 28-A,
covered by her transfer certificate of title No. 22157, a portion equivalent to 16,900 square meters, and to execute, in due form, the corresponding
deed in favor of the herein plaintiff. The judgment is predicated on the decisions rendered by this Court in cases (G.R. Nos. 33950 and 33969 which
in turn are founded on the ruling laid down in Lanci vs. Yangco, 52 Phil., 563).
The question is: who has a better right the purchaser at the execution sale, Perfecto J. Salas Rodriguez, predecessor in interest of the defendant,
or the purchaser in theprivate sale, Rafael Villanueva, predecessor in interest of the plaintiff?
31
The two purchasers derived their title from Mariano P. Leuterio, who in turn acquired his from Nicolas Rivera. The purchase made by Villanueva took
place prior to the execution sale, but was never registered. The property is registered under the Torrens system, there being a certificate of title
issued in favor of Nicolas Rivera bearing No. 10533 on lot No. 28-A. No certificate of title was ever issued in favor of Mariano P. Leuterio, but the
levy and the execution sale of the property were noted on the transfer certificate of title of Nicolas Rivera without the latter's objection, and in the
notation it appeared that the property had been sold by Nicolas Rivera to Mariano P. Leuterio. It was, therefore, Mariano P. Leuterio alone who, in
Rivera's certificate of title, appeared as the sole owner of the property at the time of the levy and execution sale.
It is a well-settled rule that, when the property sold on execution is registered under the Torrens systems, registration is the operative act that gives
validity to the transfer, or creates a lien on the land, and a purchaser, on execution sale, is not required to go behind the registry to determine the
conditions of the property. Such purchaser acquires such right, title and interest as appear on the certificate of title issued on the property, subject to
no aliens encumbrances or burdens that are noted thereon. (Anderson and Co. vs. Garcia, 36 Of. Gaz., 2847; Reynes vs. Barrera, G.R. No. 46724.)
It follows that, on the property in question, defendant has a better right than the plaintiff.
Judgment is reversed, with costs against plaintiff-appellee.
Avancea, C.J., Imperial, Diaz, Laurel and Concepcion, JJ., concur.

FIRST DIVISION

[G.R. No. 48004. June 27, 1941.]

CARLOS DORONILA, Plaintiff-Appellant, v. DOLORES VASQUEZ DE ARROYO and THE PROVINCIAL SHERIFF OF ILOILO, Defendants-
Appellees.

Claro M. Recto for Appellant.

Clemente M. Zulueta for Appellees.

SYLLABUS
JUDICIAL SALES; REDEMPTION; EXTENSION OF REDEMPTION PERIOD ON EQUITABLE GROUNDS; CASE AT BAR. Section 465 of the
Code of Civil Procedure provides that the judgment debtor or redemptioner may redeem the property from the purchaser at any time within twelve
months after the sale, and it is admitted by the appellant that, if the time during which civil case No. 10269 was pending (from September 23, 1935 to
March 31, 1937) is not deducted, the tendered redemption was made beyond the twelve months period fixed in the aforesaid legal provision. The
appellant, however, invokes equitable considerations in favor of the redemption and argue with vehemence that it would be unfair to count the period
during which civil case No. 10269 was pending, because he could not be expected to claim merely the right of redemption when in said action he
sought a judicial declaration of absolute ownership. While redemption must be effected within the time prescribed, there are indeed cases where,
having in view the purpose sought to be achieved by statutory provisions of this kind and principally to promote justice and avoid injustice, courts
may be reasonable construction of the period fixed in the statute. We have, however, inquired into the equities of this case and have come to the
conclusion that the judgment of the lower court should not be disturbed.

D E C I S I O N


LAUREL, J.:

In civil case No. 9031 of the Court of First Instance of Iloilo, entitled "Dolores Vasquez de Arroyo v. Mariano B. Arroyo," the plaintiff there one of
the defendants-appellees here obtained a judgment against her defendant husband, Mariano B. Arroyo, for alimony at the rate of P500 per month
beginning February, 1932. Because of the failure of Mariano B. Arroyo to comply with this judgment, Dolores Vasquez obtained and order of
execution and, on July 27, 1935, the provincial sheriff of Iloilo sold at public auction to Dolores Vasquez a parcel of land covered by transfer
certificate of sale was executed in her favor on August 10, 1936. In connection with the aforesaid levy, Carlos Doronila, plaintiff and appellant herein,
filed a third- party claim with the provincial sheriff, but the latter nevertheless effected the sale upon the filing by Dolores Vasquez of the required
bond of P1,000.

On September 23, 1935, plaintiff-appellant Carlos Doronila filed civil case No. 10269 in the Court of First Instance of Iloilo in which it was asked that
the auction sale above referred to be set aside and that he be declared the sole owner of the property in question, it being claimed by him that the
same was conveyed to him by Mariano B. Arroyo, first, under a sale by installment executed on June 10, 1933 and, later, under a definite sale
executed on June 10, 1933 and, later, under a definite sale executed on February 11, 1935. The Court of First Instance of Iloilo rendered judgment
declaring the transfer relied upon by Carlos Doronila null and void as being in fraud of creditors, and upholding the validity of the levy and sale
sought to be annulled. Upon appeal to the Court of Appeal (CAG. R. No. 414) this judgment was affirmed on March 31, 1937. On April 12, 1937,
Carlos Doronila offered to redeem the controverted property, at the same time depositing with the provincial sheriff of Iloilo the sum of P4,608
covering the full amount of the purchase price at the auction sale plus the corresponding interest. Redemption was refused on the ground that the
period provided by law for that purpose had already expired. In vies of such refusal on the part of the provincial sheriff to allow the tendered
redemption, Carlos Doronila instituted this civil case No. 10874 in the Court of First Instance of Iloilo for the purpose of annulling the deed of absolute
sale executed by the provincial sheriff in favor of Dolores Vasquez and of compelling the latter and the said sheriff to permit Carlos Doronila to
redeem the land in question. The trial court dismissed the complaint principally on the ground that the period for the redemption of the land sold
at public auction by the provincial sheriff to Dolores Vasquez on July 27, 1935 had already expired. It is from this decision that plaintiff- appellant
Carlos Doronila has brought the present appeal.

Six errors are assigned in the brief for the plaintiff-appellant, but the important question raised refer (a) to the right of Carlos Doronila to redeem the
property in question (error No. I) and (b) to the expiration of the time of redemption (error No. II). Following the line of approach of the trial judge, we
do not consider it necessary to determine the first question for the reason that if, as found by thetrial court , the time for redemption had already
expired, it would serve no purpose to consider whether the appellant had that right.

32
Section 465 of the Code of Civil Procedure provides that the judgment debtor or redemptioner may redeem the property from the purchaser at any
time within twelve months after the sale, and it is admitted by the appellant that, if the time during which civil case No. 10269 was pending (from
September 23, 1935 to March 31, 1937) is not deducted, the tendered redemption was made beyond the twelve months period fixed in the aforesaid
legal provision. The appellant, however, invokes equitable considerations in favor of the redemption and argues with vehemence that it would be
unfair to count the period during which civil case No. 10269 was pending, because he could not be expected to claim merely the right of redemption
when in said action he sought a judicial declaration of absolute ownership. While redemption must be effected within the time prescribed, there
areindeed cases where, having in view the purpose sought to be achieved by statutory provisions of this kind and principally to promote justice and
avoid injustice, courts may by reasonable construction allow redemption notwithstanding the actual expiration of the period fixed in the statute. We
have, however, inquired into the equities of this case and have come to the conclusion that the judgment of the lower court should not be disturbed.

As hereinbefore mentioned, the conveyance alleged to have been made by Mariano B. Arroyo in favor of the appellant and relied upon by the latter
in claiming ownership in civil case No. 10269 was found to be fraudulent. The appellant cannot be said to have had no conscious collaboration in the
fraud intended by Mariano B. Arroyo to defeat the judgment for alimony rendered against him in civil case No. 9031 in favor of the herein appellee,
Dolores Vasquez. To support this statement we have only to refer to the following passages of the decision of the Court of Appeals in CA-G. R. No.
414 affirming the judgment of the Court of First Instance of Iloilo in civil case No. 10269;

". . . Pero es innecesario resolver esa contradiccion en el presente caso, porque la venta que invoca a su favor el demandante y apelante ha sido
efectuada por Mariano B. Arroyo en fraude de acreedores. Cuando se hizo esa venta el 10 de junio de 1933 por Mariano B. Arroy, ya se habia
dictado contra el la sentencia por alimentos. Esa sentencia fue promulgada el 31 de marzo de 1933, o sea, mas de dos meses antes de verificarse
la venta ya mencionada. Segun el articulo 1297 del Codigo Civil, se presumen fraudulentas las enajenaciones a titulo oneroso, hechas por personas
contra quienes se hubiere pronunciado antes sentencia condenatoria. Y no hay en los autos ninguna prueba que destruya esa presuncion.Por el
contrario, existen circunstancias que la apoyan.En la fecha en que se verifico la venta, Mariano B. Arroyo estaba en estado casi de insolvencia.

"Y hay un detalle muy significativo que no debe pasar inadvertido. Esa venta verificada en junio de 1933, no fue registrada sino en julio de 1935.
Carlos Doronila, antes de efectuarese la venta, que como ya se ha dicho, era a plazos, pago, segun el, una gran parte del precio, adquiriendo, de
ese modo, un interes considerable que proteger mediante el registro de la transaccion. No la registro, empero, sino dos aos despues, y, segun
todas las circunstancias, no tenia motivo alguna para ello, como no fuera el ocultar la transaccion para ayudar a Mariano B. Arroyo a defraudar a
sus acreedores. En efecto, por no haberse registrado esa venta, Dolores Vasquez de Arroyo no se entero, el tiempo del embargo, de que su esposo
Mariano B. Arroyo era acreedor de Carlos Doronila por el remanente del precio que, segun la escritura de venta, quedaba por pagar, y que ascendia
a mas de diez mil pesos (P10,000). Y, por consiguiente, ella perdio la oportunidad de embargar el credito, el cual le hubiera sido mucho mas
provechoso que la propiedad misma, que estaba gravada. Ahora, ella ya no puede embargar ese credito, porque, aun despues del embargo y aun
despues de la subasta, Carlos Doronila estuvo pagandolo, segun el, a Mariano B. Arroyo.

"Carlos Doronila afirma que todos los pagos hechos por el a Mariano B. Arroyo fueron reales. Si eso es cierto o no, solo el y Mariano B. Arroyo lo
saben. Ni Dolores Vasquez de Arroyo ni el Sheriff Provincial de Iloilo tienen medios de comprobarlo. . . ."cralaw virtua1aw library

We may add that after the mortgage held by one Remedios Jalandoni against Mariano B. Arroyo on the land in dispute had been assigned to Carlos
Doronila, the latter, by an amended complaint filed against Mariano B. Arroyo on September 11, 1935 in civil case No. 10199 of the Court of First
Instance of Iloilo, obtained the corresponding foreclosure judgment upon default of Mariano B. Arroyo. In this foreclosure proceeding in herein
appellee Dolores Vasquez was not made a party, although the appellant knew that the litigated land had already been sold at public auction to
Dolores Vasquez, said appellant having filed a third-party claim with the provincial sheriff. There was clearly a violation of section 255 of the Code of
Civil Procedure requiring that in an action for foreclosure of a real estate mortgage, the complaint shall set forth, among others, the names and
residences of all persons having or claiming an interest in the premises, all of whom shall be made defendants in the action. If anything can be
inferred from the course thus followed by the appellant, it is perhaps no other than a stubborn desire on his part to further help Mariano B. Arroyo in
defeating the right of Dolores Vasquez to receive the alimony awarded to her in civil case No. 9031. If, as pretended by the appellant, the land
mortgaged to Remedios Jalandoni had been sold by Carlos Doronila to the appellant prior to the filing of the amended complaint in civil case No.
10199, the result is that he was simply trying to foreclosure a mortgage on the property of which he was already the absolute owner. The land in
question could not have been the subject of execution in said civil case No. 10199, for, as the trial court held in civil case No. 10269

"En el presente asunto Carlos Doronila pidio la nulidad de la venta en subasta publica de dicho terreno en el asunto 9031. El Juzgado en decision
recaida en este asunto de febrero 28, 1936 declaro valido el embargo y subasta publica del referido terreno en dicho asunto civil 9031; el cual
pronunciamiento ipso facto resuelve todas las cuestiones sobre el asunto civil 10199, que es posterior al 9031. Los procedimientos seguidos en el
primitivo asunto 9031 con respecto al terreno en cuestion se efectuaron obteniendo las correspondientes anotaciones o registros de documentos del
citado predico, de modo que este no puede ser afectado por cualquiera orden o decision en el asunto civil 10199, Carlos Doronila versus Mariano
B. Arroyo, a menos que la decision dictada en el presente asunto 10269, Carlos Doronila versus Dolores Vasquez Et. Al. sea revocada por nuestro
Tribunal Supremo, declarando en su consecuencia nulos el embargo y venta en publica subasta en el asunto civil 9031.

"Para evitar, sin embargo, torcidas interpretaciones, el Juzgado declara que el terreno en cuestion, que es el mismo objeto del asunto civil 9031, no
debe ser object de ejecucion en virtud del otro asunto civil 10199, Carlos Doronila versus Mariano B. Arroyo."

A circumstance showing inconsistency in the position of the appellant, and tending to support the suggestion that the appellant knowingly cooperated
in the attempt of Mariano B. Arroyo to defraud the appellee Dolores Vasquez, is found in the sale by Mariano B. Arroyo to the appellant on June 16,
1937 of the formers right to redemption, notwithstanding the fact that the appellant pretends that he had already become the owner of the property in
question by virtue of a prior conveyance executed by Mariano B. Arroyo. It is noteworthy that the consideration for the alleged sale of the right of
redemption was only one peso.

In view of al the circumstances surrounding the instant case, we are convinced that the appellant has not come to the court with clean hands and we
are accordingly constrained to rule that this case is not a fitting example that calls for the extension, on equitable considerations, of the period of
redemption fixed in section 465 of the Code of Civil Procedure in the sense desired by the Appellant.

We therefore affirm the judgment of the lower court in its entirety, with costs against the plaintiff-appellant. So ordered.

Avancea, C.J., Diaz and Horrilleno, JJ., concur.
33

REGISTRATION OF LIS PENDENS, JUDGMENTS, PARTITIONS, ETC.

G.R. No.L-12053, Diaz v. Perez et al., 103 Phil. 1023, 55 Off. Gaz. [No. 52] 10678
Republic of the Philippines
SUPREME COURT
Manila
EN BANC
May 30, 1958
G.R. No. L-12053
ROBERTA DIAZ Y CRUZ, petitioner,
vs.
HON. JESUS Y. PEREZ, presiding Judge, 7th Branch, Court of First Instance, Pasay City, ET AL., respondents.
Carlos, Laurea and Associates for petitioner.
Taada, Teehankee and Carreon for respondents.
BENGZON, J.:
Roberta Diaz y Cruz is an old woman, 83 years of age, residing in Pasay City possessing real and personal properties roughly estimated at half a
million pesos.
On August 18, 1956, three of her nine legitimate children, and two of her grandchildren by another daughter, joined in a Petition addressed to the
Rizal Court of First Instance, to declare her incompetent to take care of herself and manage her properties and to appoint a guardian of her person
and her properties. The allegations, too long to relate, set out a prima facie case of incompetency
[[
1
]]
(Special Proceeding 1483-P).
On November 7, 1956 while the above special proceeding was pending hearing before respondent Judge Jesus Y. Perez, Roberta Di az y Cruz
received from the Register of deeds of Rizal a letter advising her that by reason of said proceedings, a notice of lis pendens had been annotated on
her Transfer Certificate of Title to real property No. 32872 of that Province.
Wherefore, on November 29, 1956, she filed in the above-mentioned proceedings a petition to cancel the lis pendens. In view of the opposition of the
adverse parties, the respondents judge denied the petition. Her motion to reconsider having failed, Roberta Diaz filed a notice of appeal, record on
appeal, and appeal bond.
But on January 22, 1957, the respondent judge disapproved the record on appeal, holding the appealed orders to be interlocutory, and therefore not
appealable.
So on February 26, 1957, this petition for mandamus and certiorari was filed in this Court. The first, to compel approval of the record on appeal; the
second, to annul the order refusing cancellation of the notice of lis pendens.
We think mandamus does not lie. As the respondent judge said, the order was interlocutory, which can not "be the subject of appeal until final
judgment is rendered." (Section 2, Rule 41.) It is comparable with an order refusing to annul a preliminary attachment
[[
2
]]
or an order denying or
granting a preliminary injunction
[[
3
]]
which have been held to be interlocutory
[[
4
]]

As to the certiorari, petitioner may not seriously urge lack of jurisdiction. In asking the Court to annul the lis pendens she admitted its jurisdiction to
annul and also to refuse annulment.
Was there abuse of discretion? The lis pendens had been obviously annotated for the purpose of advising any one who might wish to buy the realty,
that there is in court a petition to declare Roberta Diaz incompetent to dispose of her properties so that such purchaser may make the
necessary inquiries and take steps to protect his interest, bearing in mind that if said Roberta Diaz should be declared incompetent, his purchase will
be or might be affected adversely.
[[
5
]]
It is a proper cautionary measure which the courts should be slow to disturb, unless the petition for
guardianship was prima facieunconvincing, or was not made in good faith, or as alleged by petitioner here, the pendency of guardianship
proceedings may not be considered as lis pendens affecting the realties of the person allegedly incompetent.

"The effect of filing a notice of lis pendens is to charge the stranger with notice of the particular litigations referred to in the notice; and if the notice is
effective, a third party who acquires the property affected by the lis pendens takes subject to the eventually of the litigations."
[[
6
]]

And its purpose is "to hold property within the jurisdiction and control of the court pending determination of the controversy, thereby preventing third
persons from acquiring such interests therein as would preclude giving effect to the judgment."
[[
7
]]

In the light of the object and salutory effects of the notation, we see no reason to declare it improper in this case, specially because the allegations of
the guardianship petition specified instances wherein the incompetent disposed of her properties in favor of persons allegedly taking undue
advantage age and weak mental and physical condition.
The argument is presented that sec. 79 Of Act No. 496 sec. 24 of Rule 7 indicate the cases wherein lis pendens may be annotated, and that
guardianship proceedings is not included therein. In the first place sec. 79 is not an exclusive enumeration. In the second place, these proceedings
affect "the use" or possession of the real estate within the meaning of above sections, even "the title", in the sense that the proceedings will curtail or
take away the right of the owner to dispose of the same.
Anyway, it is to be doubted whether the above sections were intended to be exclusive of other circumstances wherein equity and general
convenience would make lis pendens appropriate. Indeed, cases have held it to be proper in receivership proceedings
[[
8
]]
involving realty, and in
lunacy proceedings 1 situations closely akin to the instant litigation.
In this connection, it is insisted that both sections only apply to "actions" which are different from "Special proceedings", like guardianship. It is
enough to point out that the Rules provided for civil actions are generally applicable to special proceedings. (Rule 73, section 2.)
Lastly, we are advised that after hearing the petition the lower court found in April 1957 that by reason of her advanced age and weak mind, Roberta
Diaz could not manage her properties she does not even remember them and needed a guardian to help administer her interests. This, in a
way, vindicates the annotation and the court's refusal to cancel it.
34
Clearly then no abuse was made of the court's discretion. Petition denied, with costs.
Paras, C.J., Montemayor, Bautista Angelo, Concepcion, Reyes, J.B.L., Endencia and Felix, JJ., concur.

G.R. No. L-23268 June 30, 1972
PASTOR B. CONSTANTINO and PASTOR CONSTANTINO, JR., plaintiffs-movants-appellees,
vs.
HERMINIA ESPIRITU, defendant, NICANOR B. AVES, purchaser-oppositor-appellant.
David Guevara for plaintiffs-movants-appellees.
Silva & Gonzales for purchaser-oppositor-appellant.

FERNANDO, J.:p
The crucial issue in this appeal from an order of the lower court, one on which no pronouncement has as yet come from this Tribunal, is the binding
effect, if any, of a declaration of nullity of the cancellation of a lis pendens on the rights of an innocent purchaser for value, who had relied on the title
of the vendor, with such cancellation duly noted. The answer given by the lower court would consider the reliance as misplaced even as to such
vendee, if thereafter such cancellation could be shown to be improper and illegal, resulting in the challenged order requiring that such lis pendens be
inscribed in his title. Hence this appeal, predicated on the contention that a sale, under such circumstances with the vendor's title clear of such
encumbrance, due to such previous cancellation, could not thereafter be saddled with such burden, the purchaser, appellant Nicanor V. Aves, being
a beneficiary of theTorrens system of registration. The teaching to be culled from authoritative precedents sustains such a stand. Appellant has
made out a case for reversal.
The appealed order of December 19, 1963 started with a statement of the case: "The plaintiff Pastor B. Constantino filed the instant Motion to
Reinstate Lis Pendens dated July 17, 1963 and the Amending Motion dated July 23, 1963 praying [for the] cancellation of lis pendens on the
property described in Transfer Certificate of Title No. 32744 effected by the Register of Deeds of Rizal on September 5, 1960 be declared null and
void, and that the said Register of Deeds be forthwith ordered to reinstate not only on Transfer Certificate of Title No. 32744 but also on Transfer
Certificate of Title No. 82798 the lis pendens originally inscribed on said Transfer Certificate of Title No. 32744."
1

Then came a statement of the antecedent facts: "... On December 3, 1959 the plaintiff filed the complaint in this case against the defendant Herminia
Espiritu, praying among other things: 'a) That pending this suit, a writ of preliminary injunction be issued restraining the defendant, her agents,
attorneys, representatives, or any other persons acting in her behalf, to absolutely abstain from further alienating or otherwise disposing of the
property described in Paragraph IV hereof and that, after trial, the same be made permanent; b) That the defendant be forthwith ordered to execute
a deed of absolute conveyance of the said property in favor of Pastor Constantino, Jr., the beneficiary, free from all liens and encumbrances; ...Upon
a motion to dismiss filed by the defendant, the complaint was ordered dismissed on January 8, 1960. A motion to admit amended complaint was
filed by the plaintiff on January 12, 1960, but the same was denied on February 1. Appeal was taken by the plailitiff from the second order and after
said appeal was found to have been filed out of time, a motion for reconsideration was filed, which was however also denied on March 23. A petition
for mandamus was filed before the Supreme Court to compel this Court to approve the record on appeal filed by the plaintiff in this case (G.R. No. L-
16853). This petition was granted in a decision promulgated on June 29, 1963."
2

The appealed order then noted the circumstances indicative of bad faith in the cancellation of such lis pendens: "It is alleged that while
the mandamus proceeding was still pending before the Supreme Court, the defendant on September 5, 1960 fraudulently and in bad faith caused
the cancellation of lis pendens on Transfer Certificate of Title No. 32477 by filing with the Office of the Register of Deeds of Rizal a true copy of the
Order dated January 8, 1960, which ordered the dismissal of the complaint, 'Knowing fully well that this case is still pending in this Court by virtue of
the mandamus proceeding the plaintiffs filed in the Supreme Court [and] the Register of Deeds of Rizal, without first verifying if the said Order of
January 8, 1960 had really become final by requiring the defendant to secure a certificate to that effect from the Clerk of this Court, illegally cancelled
from the said certificate of title thelis pendens inscribed thereon under Entry No. 88374, L. P. 478, as follows: ...,' and thereafter the defendant
executed a purported deed of sale of the property in favor of one Nicanor B. Aves on December 31, 1960, as a result of which Transfer Certificate of
Title No. 32744 was cancelled and, in lieu thereof, Transfer Certificate of Title No. 82798 was issued in favor of said supposed vendee, ... .
Subsequently, or on January 26, 1961, said Nicanor Aves mortgaged the property in favor of the Philippine Banking Corporation to guarantee
the payment of the sum of P30,000.00. These transactions took place while this case was still (and still is) pending by virtue of the petition
for mandamus, which was granted in a decision promulgated on June 29, 1963."
3

The claim of appellant of clear title was next taken up. Thus: "In answer to the plaintiffs' motion, the vendee, Nicanor B. Aves, admitted being the
purchaser of the property but claimed lack of knowledge of the pendency of the litigation between the plaintiffs and the defendant; that he is an
innocent purchaser in good faith and for value and that the sale was consummated only after the title which appeared to be clean and free from all
liens and encumbrances had been shown to him, and furthermore, after having been assured by the vendor to that effect, that he mortgaged the
property as an exercise of ownership and dominion and, finally, that his title to the property cannot be attacked collaterally in the present motion."
4

After stating that there was bad faith in the cancellation of such lis pendens, the order of the lower court discussed its legal effect: "The cancellation
of the notice of lis pendens is of doubtful validity, considering that its cancellation was based merely on the Order of January 8, 1960 ..., which is the
Order dismissing the original complaint, while there had been subsequent order after said date. Moreover, such cancellation was made not
on express order of the Court but only by reason of the dismissal of the Complaint contrary to [law]. Such was not done in the cancellation of the lis
pendens in question. The cancellation of the lis pendens was, therefore, improper and illegal."
5
The dispositive portion of such a decision was to
35
declare the cancellation null and void and "to inscribe the samelis pendens on Transfer Certificate of Title No. 82798 [in the name of appellant
Nicanor B. Aves]."
Appellant Aves elevated the matter to this Court. He had every reason to. There is, as was pointed out, merit in his appeal. As an innocent purchaser
for value he was well within the mantle of protection that is a distinctive feature of the Torrens system of registration.
1. A notice of lis pendens, it is to be noted, flows from the conclusive character of a decree in land registration cases. That is a basic aspect of the
Torrens system as stressed in our decisions, beginning with Jones v. The Insular Government,
6
promulgated in 1906. As set forth in the leading
case of Legarda v. Saleeby:
7
"The real purpose of the system is to quiet title of land; to put a stop forever to any question of the legality of the title,
except claims which were noted at the time of registration, in the certificate, or which may arise subsequent thereto. That being the purpose of the
law, it would seem that once a title is registered the owner may rest secure, without the necessity of waiting in the portals of the courts, or sitting in
the 'mirador de sucasa,' to avoid the possibility of losing his land."
8
For such title "accumulates in one document a precise and correct statement of
the exact status of the fee held by its owner. The certificate, in the absence of fraud, is the evidence of title and shows exactly the real interest of its
owner. The title once registered, with very few exceptions, should not thereafter be impugned, altered, changed, modified, enlarged, or diminished,
except in some direct proceeding permitted by law. Otherwise all security in registered titles would be lost."
9
Such a principle applies not only to the
holder of the title but to one who buys it from him for value.
The notice of lis pendens thus serves a useful purpose. Nothing could be more appropriate, considering the reliance that any person wishing to deal
with a holder of a certificate of title could place thereon. If there be anything adverse to the fullness of his rights then, including the pendency of a
suit, the title itself would show it. So we have made clear in our decisions from Sikatuna v. Guevara,
10
to Jose v. Blue.
11
An excerpt from the opinion
of Justice Zaldivar, speaking for the Court, in Jose v. Blue summarizes the matter neatly: "The notice of lis pendens is an announcement to the
whole world that a particular real property is in litigation, and serves as a warning that one who acquires an interest over said property does so at his
own risk, or that he gambles on the result of the litigation over said property. Since appellant herein bought the land in question with knowledge of
the existing encumbrances thereon, she cannot invoke the right of a purchaser in good faith, and she could not have acquired better rights than
those of her predecessors in interest."
12

2. Appellant Aves would impugn the order for not respecting his rights as an innocent purchaser for value. There he is on solid ground. Had the lower
court yielded deference to controlling decisions of this Court, it would not have decided as it did. For appellant was an innocent purchaser for value.
At the time of the sale the title exhibited to him by the seller had this entry: "Entry No. 4756/T-No. 32744-[Cancellation of Lis Pendens]: In the order
of the Court of First Instance of Rizal, in Case No. 5924, the opposition of plaintiff and the rejoinder of defendant, finding the ground for dismissal
being meritorious, the complaint in said Case is dismissed, by virtue of which the Lis Pendens inscribed under Entry No.88374, L. P. 478 is hereby
cancelled. Date of the Instrument Jan. 8, 1960, Date of the inscription Sept. 5, 1960 8:49 a.m. (Sgd) Jose D. Santos, Register of Deeds."
13

It was Justice Moreland who as far back as 1914 stressed: "The peculiar force of a Torrens title [is brought] into play [if the sale be] to an innocent
third person for value."
14
Even a previous sale, according to the same jurist would have "no effect upon a [later] purchase ... for value and in good
faith ... ."
15
The same thought finds expression in a still later opinion of his in these words: "To repeat, the purpose was to give to the person
registering, and to his transferee for value, an absolutely clean title, one not subject to hidden defects, to undeveloped or inchoate claims, to any sort
of restriction, limitation, or reduction except those [found therein]."
16
There has been no deviation on the part of this Court from such an
approach.
17
Only recently in 1967, in Gestosani v. Insular Development Co., Inc.,
18
Justice Dizon, after stressing the incontrovertible and
indefeasible character of a title stated: "In the instant case the above doctrine should apply with more reason, considering the fact that the property
has passed from the hands of the original registered owner into those of clearly innocent third parties."
19
A restatement of the doctrine in the latest
opinion in point, Maquiling v. Umadhay,
20
this time from Justice Makalintal, is illuminating. Thus: "However, while the Umadhay spouses cannot rely
on the title, the same not being in the name of their grantor, respondent Crisanta S. Gumban stands on a different footing altogether. At the time she
purchased the land the title thereto was already in the same of her vendors (T.C.T. 15522). She had the right to rely on what appeared on the
face of said title. There is nothing in the record to indicate that she knew of any unregistered claims to or equities in the land pertaining to other
persons, such as that of herein petitioner, or of any other circumstances which should put her on guard and cause her to inquire behind the
certificate. According to the Court of Appeals, 'she took all the necessary precautions to ascertain the true ownership of the property, having
engaged the services of a lawyer for the specific purpose and, it was only after said counsel had assured her that everything was in order did she
make the final arrangements to purchase the property.' The appellate court's conclusion that respondent Crisanta S. Gumban was a purchaser in
good faith and for value is correct, and the title she has thereby acquired is good and indefeasible."
21

In the light of the above, the conclusion is fairly obvious that the appealed order cannot stand.
WHEREFORE, the order of the lower court of December 19, 1963 requiring the inscription of the lis pendens on Transfer Certificate of Title No.
82798 in the name of Nicanor B. Aves is reversed. With costs against appellees.
Concepcion, C.J., Makalintal, Zaldivar, Castro, Makasiar and Antonio, JJ., concur.
Teehankee, J., reserved his vote.