The rationale for the foregoing disposition of the trial court is that

[G.R. No. 107930. October 7, 1994.]

. . . the claim of the plaintiff-intervenors and defendants over this land mainly anchored on
the supposed Deed of Exchange of March 8, 1944, executed between Manuel Bofill and
Cornelio Barriatos, was a mere exchange of collateral(s) from Lot 526 to Lot 2954-A for a
loan of P450.00 obtained by Manuel Bofill. The said loan having been paid one year
thereafter, said deed of exchange as collateral for said loan was rendered without legal force
and effect, hence no entry in the title covering the lot was made regarding said loan, nor was
the title in the name of Manuel Bofill transferred to anybody else up to the present time.

HEIRS OF GEORGE BOFILL, IGNACIO BOFILL, VICTORIA B. ANASTACIO, REGINA FRANCISCA

B. CHUACHINGCO, EVELYN B. SERRA, MANUELITA B. VIZCONDE, LAGRIMAS B. DULLANO,
LOURDES B. DASAL, MANUEL BOFILL, JR., HEIRS OF PLARIDEL BOFILL, EDUARDO BOFILL,
MARIA LUISA BOFILL, Petitioners, v. HONORABLE COURT OF APPEALS, SPS. ENRIQUE
BEGALAN and FLORDELIZA BEGALAN, SPS. JOSE CATALAN and BERNARDITA CATALAN, and
HIERS OF MANUEL BARREDO, namely, NORMA B. ALEJAGA, LEONY BARREDO, MAGILYN
BARREDO, MARIA BARREDO, RAMY BARREDO, RELLY BARREDO, ENRIQUETA B. SARTORIO,
represented by VILMA BARREDO BALATAYO, Respondents.

The case filed by Juana Brillo against Sotera Bofill . . . on November 17, 1975 for the
registration of the Deed of Exchange of 1944 and for the surrender of the original title was
done thirty-one (31) years after its execution, considering laches and prescription, is also
without force and effect . . . Moreover, the order in said case has become moot and
academic upon the death of Sotera Bofill and the surrender of RO-1456 by her heirs and the
cancellation of the same upon the execution of an Extra-Judicial Partition by the heirs of
Manuel Bofill and Sotera Bofill and the issuance of the present Certificate of Title No. 19894
in the name of the plaintiffs.

FIRST DIVISION

Respondents appealed to the Court of Appeals which on 31 August 1992 reversed and set
aside the decision of the lower court. It directed the Register of Deeds of Capiz." . . to divide
TCT No. 19894 into two titles: one in the name of the plaintiffs without including the portion
covered by Lot No. 2954-A; the other title covering Lot No. 2954-A in the name of the heirs
of Manuel Barredo (herein intervenor-appellants), after payment of the required taxes and
fees."cralaw virtua1aw library

DECISION

BELLOSILLO, J.:

In this petition for review of the decision of the Court of Appeals, we reverse the appellate
court and reinstate the judgment of the court a quo.

This case arose from an action for declaration of ownership over Lot No. 2954-A of the Panay
Cadastre, situated in Bo. Linatiran, Panay, Capiz, covered by Transfer Certificate of Title No.
T-19894, filed by petitioners against the Sps. Enrique and Flordeliza Begalan and Sps. Jose
and Bernardita Catalan, two (2) of private respondents herein. Joining their cause, the heirs
of Manuel Barredo, claiming also to be owners of the lot in litigation, filed a complaint in
intervention against the petitioners herein, heirs of Manuel Bofill.

First. The Court of Appeals erred in rejecting the findings of the trial court which we find to
be supported by the evidence on record. Specifically, it discarded the testimonial evidence
proving that the Casugot 2 involves an exchange of collaterals securing the P450-loan of
Bofill to a certain Cornelio Barriatos without citing any contrary proof nor explaining why
such factual finding should be thrown out or ignored. In the same fashion, it casually
brushed aside the factual finding of the trial court that the loan of Bofill was paid one year
after the execution of the Casugot thereby rendering it without further effect. 3

On 12 August 1988, the trial court rendered a decision declaring petitioners the owners of
the lot in question and entitled to the possession thereof, ordering respondents as
defendants therein to vacate the premises, and to pay petitioners P5,000.00 as attorneys
fees. The counterclaim as well as the complaint in intervention was dismissed. 1

We note that this Casugot written in Hiligaynon is ambiguous as the exchange can refer to

ownership, possession, collateral, etc. It does not necessarily apply to ownership alone as
understood by the Court of Appeals. Apparently, the error of the appellate court lies in the
interpretation of the Casugot when it stated in its decision that the document "speaks
eloquently of Manuel Bofills intention to transfer" Lot 2954-A to Barriatos and concluded
that it was an exchange of ownership of two (2) lots. This error is not surprising as the
appellate court not only adopted the English translation of the Casugot offered by private
respondents, which was obviously tailored to suit their purpose, but also because it omitted
a material phrase stipulating that Barriatos was returning Lot 526 to Bofill. Without that
phrase on the return of Lot 526 it would appear, as it does, that Bofill donated Lot 2954-A to
Barriatos which, in effect, would render the deed of exchange an absurdity. Had the Court of
Appeals been more accurate and precise in quoting data from the records, perhaps it would
have arrived at the right conclusion.

ownership, of possession, of collaterals, or of any other attribute of ownership.

Definitely, exchange of lands does not necessarily refer to exchange of ownership. Besides,
possession is not a definitive proof of ownership, nor is non-possession inconsistent
therewith. Hence, the claim that Barriatos was the possessor of Lot 2954-A is not
incompatible with Bofills claim of ownership.
Private respondents next point us to the crux of the Casugot whereby Barriatos returns his
interest in Lot 526 to Bofill in exchange for Lot 2954-A. However, it is not clear from the
provision what interest was being traded by the parties. Consequently, we are constrained
to lean on the premise they themselves established in the first part of the Casugot, i.e., that
Bofill is the real and absolute owner of Lot 526 and Lot 2954. Barriatos not being the owner
of either lot, there could not have been a transfer of ownership between them.

Second. Admittedly, the Casugot clearly reflects the agreement of Bofill and Barriatos with
regard to the ownership of Lot 2954, now comprising Lot 2954-A, which is the lot in
controversy, and Lot 2954-B. Therein is their clear and categorical covenant: "MANUEL F.
BOFILL is the real and absolute owner of two (2) parcels of land, Lot 2954 and Lot 526." This
declaration is decisive in the disposition of this case as it contains an express stipulation by
the signatories thereto on the ownership of Bofill of the lot in question binding upon them
and their successors in interest.

As regards the clause creating a right of way on Lot 2954-A in favor of Lot 2954-B
undisputably belonging to Bofill, private respondents argue that Bofill would not have
required such easement if he were the owner of Lot 2954-A, the latter being considered a
servient estate. This argument is fallacious; it is non sequitur. Bofill did not lose ownership of
his lot by imposing on it a right of way in favor of another lot belonging to him. Besides, we
cannot ignore the practice in the provinces that in giving a realty for a collateral, possession
usually goes with it. At the time the Casugot was entered into between the parties, this was
a common practice. This further explains the real transaction between them and why Bofill
had to demand a right of way over his own land, so that when possession thereof should be
transferred to a third person he could still pass through it, otherwise, he may have no ingress
to or egress from his estate.

Private respondents attempt to crush this overwhelming evidence by giving certain portions
of the Casugot a connotation contrary to the agreement and intention of the parties. Private
respondents allege that the 1939 plan subdividing Lot 2954 into Lot 2954-A in the name of
Barriatos and Lot 2954-B in the name of Bofill reveals the extent of ownership of the parties
over Lot 2954. But the plan reflecting this subdivision is not conclusive as to ownership as it
may refer only to the delineation of their possession. The best proof of the ownership of
Manuel Bofill is the certificate of title in his name. Moreover, the parties to the agreement
apparently did not consider the placing of Lot 2954-A in the name of Barriatos as a transfer
of ownership because when they executed the Casugot in 1944 they still acknowledged Bofill
as the real and absolute owner of the entire Lot 2954.

Private respondents focus on the stipulation that if a certificate of title over Lot 2954-A
would be issued to Barriatos the above-mentioned right of way would be annotated
thereon. While the signatories expressed the possibility of transferring Lot 2954-A to
Barriatos in the future, it is quite clear that the provision cited does not forthwith effect such
transfer. The records do not reveal that the transfer was eventually carried out by the
parties or their successors in interest.

Private respondents call our attention to the statement in the Casugot to the effect that
Barriatos was already in possession of Lot 2954-A before the subdivision of the lot. This
argument is based on an erroneous premise since nowhere in the Casugot is the word
"possession" or its equivalent in Hiligaynon mentioned. It is only in the English translation
proposed by intervenors, which the Court of Appeals injudiciously adopted, where that word
appears. In any case, the exchange of lots as used in the Casugot can refer to exchange of

Third. As regards the case filed by Juana Brillo against Sotera Bofill for the surrender of the
duplicate certificate of title, the appellate court stated that
. . . the CFI is also convinced of the strength of Juana Brillos claim of ownership (which
herein appellant-intervenors subsequently acquired) based orginally on the aforequoted

Deed of Exchange. The above decision does not appear to have been appealed. Thus it is
already the law of the case between therein parties and their successors in interest. The
CFIs Decision being against plaintiffs mother is binding against the plaintiffs (see Sec. 49,
Rule 39 of the Rules of Court).

that was supposed to be in her possession was only personal to her and could not bind
anybody else, particularly petitioners herein who were not parties thereto nor notified
thereof.
Fourth. In reversing the trial court, the Court of Appeals also reasoned out that

We cannot agree with this conclusion. For, it was error for the Court of Appeals to assume
that the issue of ownership over Lot 2954-A was already determined in Special Case No.
1828 as to bar the present action for declaration of ownership. In that case, the CFI simply
directed the mother of petitioners, Sotera Vda. de Bofill, to surrender the duplicate
certificate of title over Lot 2954 so that the Casugot and the subsequent instruments of sale
covering Lot 2954-A could be annotated thereon. Definitely, that court did not declare Juana
Brillo owner of the lot in question. The sole issue resolved by the CFI was whether Juana
Brillo was entitled to have the Casugot as well as the documents of sale conveying the rights
of Barriatos to her thereunder recorded in the Certificate of Title No. RO-1456 in the name
of Manuel Bofill. The ownership of Lot 2954-A and Lot 526 was never raised, hence, was not
determined therein in Special Case No. 1828.

. . . there is no evidence that plaintiffs religiously paid the taxes due thereon from 1947 up to
the filing of their complaint. What appears to have been paid by the plaintiffs were only for
the period from 1972 to 1987. However, the same were paid by the plaintiffs belatedly in
1986 and 1987, evidently in anticipation of this controversy. Besides, the receipts of this
period do not show whether the taxes paid were also for Lot No. 2954-A considering that
they (plaintiffs) own Lot 2954-B. Moreover, payments of realty taxes, more so if not regularly
made, are not conclusive evidence of ownership (see Ferrer-Lopez v. CA, 150 SCRA 393).
This again is error. The issue as to who of the parties paid the property taxes in good faith is
not really paramount in the determination of ownership considering that generally
municipal treasurers simply accept payments regardless of conflicting claims of ownership.
After all, statements in the tax receipts showing such payment are far inferior to the recitals
in the certificate of title. With the Casugot and the certificate of title against them, private
respondents miserably failed to carry their burden to a successful conclusion.

Although Juana Brillo prayed for the cancellation of RO-1456 and the issuance of a separate
certificate of title in her name which would effectively divest Bofill of his title over Lot 2954A, this was not granted by the CFI. The CFI merely directed the annotation of the deeds on
RO-1456 apparently because there was not enough evidence to negate the title of Bofill over
Lot 2954-A. Besides, this was not the appropriate proceeding to adjudicate the ownership of
the property. The evidence adduced by Brillo was only sufficient to compel Sotera Vda. de
Bofill to surrender certificate of title No. RO-1456. It was not adequate to settle the issue of
ownership.

WHEREFORE, the appealed decision is REVERSED and SET ASIDE and the decision of the
Regional Trial Court of Roxas City, Branch 16, in favor of petitioners in Civil Case No. V-5374
is REITERATED and AFFIRMED.
SO ORDERED.

The factual finding of the CFI in Special Case No. 1828 that Lot 526 was owned by Barriatos
was, to say the least, erroneous considering that the Casugot, apparently the same
document from which the CFI drew its conclusion, expressly stipulates that Bofill was the
owner thereof. In asserting that Barriatos was the real owner of Lot 2954-A and therefore
implying that Bofill was the owner of Lot 526, respondents are assailing albeit unwittingly
the very decision in Special Case No. 1828 which they now set up as res judicata in this case.
Thus, in adopting a theory contrary to that maintained in a former decision, a party is now
precluded from raising that case as a bar to a subsequent one. Incidentally, the error was
adopted by the Court of Appeals.

Cruz, Chairman, Davide, Jr., Quiason and Kapunan, JJ., concur.

We emphasize that the decision in Special Case No. 1828 could not bind petitioners herein
as they were not parties thereto. The order directing their mother to surrender RO-1456

2. The reconstitution proceeding started when Fructuosa Laborada, a widow residing at 1665
Interior 12 Dart Street, Paco, Manila, filed in the Court of First Instance of Rizal at Caloocan City
a petition dated November, 1967 for the reconstitution of the title covering the abovementioned Lot No. 915. She alleged that she was the owner of the lot and that the title covering
it, the number of which she could not specify, was "N. A." or not available (Civil Case No. C-677).
The petition was sworn to on November 16, 1967 before Manila notary Domingo P. Aquino (4852, Consolidated Record on Appeal).

SECOND DIVISION
[G.R. Nos. L-46626-27. December 27, 1979.]

3. On April 2, 1968, the lower court issued an order setting the petition for hearing on June 14,
1968. The notice of hearing was published in the Official Gazette. Copies thereof were posted in
three conspicuous places in Caloocan City and were furnished the supposed adjoining owners
(53-54, Consolidated Record on Appeal). The registers of deeds of Caloocan City and Rizal were
not served with copies of the petition and notice of hearing.

REPUBLIC OF THE PHILIPPINES, Petitioner-Appellant, v. COURT OF APPEALS, A & A TORRIJOS

ENGINEERING CORPORATION, FRANCISCA S. BOMBASI, HERCULINO M. DEO, FRUCTUOSA
LABORADA and REGISTER OF DEEDS OF CALOOCAN CITY, Respondents-Appellees.
Office of the Solicitor General for Petitioner.

4. State Prosecutor Enrique A. Cube, as supposed counsel for the Government, did not oppose
the petition. Laborada presented her evidence before the deputy clerk of court. Judge Serafin
Salvador in his "decision" dated July 6, 1968 granted the petition.

Gonzalo D. David for Respondents.

He found that Lot No. 915 was covered by a transfer certificate of title which was not available
and which was issued to Maria Bueza who sold the lot to Laborada. The plan and technical
description for the lot were approved by the Commissioner of Land Registration who
recommended favorable action on the petition (pp. 53-56, Consolidated Record on Appeal).

DECISION

AQUINO, J.:
5. The lower court directed the register of deeds of Caloocan City to reconstitute the title for lot
No. 915 in the name of Laborada. The order of reconstitution was not appealed. It became final
and executory.

These two cases are about the cancellation and annulment of reconstituted Torrens titles whose
originals are existing and whose reconstitution was, therefore, uncalled for.

6. Acting on the courts directive, the register of deeds issued to Laborada on August 14, 1968
Transfer Certificate of Title No. (N.A.) 3-(R). Lot No. 915 was later subdivided into seven lots,
Lots Nos. 915-A to 915-G. The Acting Commissioner of Land Registration approved the
subdivision plan. The register of deeds cancelled TCT No. (N.A.) 3-(R) and issued on October 15,
1968 seven titles to Laborada, namely, TCT Nos. 30257 to 30263 (pp. 56-59, 61-83, Consolidated
Record on Appeal).

1. Lots Nos. 915 and 918 of the Tala Estate, with areas of more than twenty-five and twenty-four
hectares, respectively, located at Novaliches, Caloocan, now Quezon City, are registered in the
name of the Commonwealth of the Philippines, as shown in Transfer Certificates of Title Nos.
34594 and 34596 of the Registry of Deeds of Rizal both dated April 30, 1938.
The originals of those titles are on file in the registry of deeds in Pasig, Rizal. They were not
destroyed during the war. Even the originals of the preceding cancelled titles for those two lots,
namely, Transfer Certificates of Title Nos. 15832 and 15834 in the name of the Philippine Trust
Company, are intact in the registry of deeds.

7. In another and later case, Civil Case No. C-763 of the lower court, one Francisca S. Bombasi,
single, residing at 2021 San Marcelino Street, Malate, Manila filed in the lower court a petition
dated November 16, 1967 for the reconstitution of the title of another lot, the aforementioned

Lot No. 918.

On October 28, 1969, Deo sold the lot to A & A Torrijos Engineering Corporation allegedly for
P250,000. Transfer Certificate of Title No. 34147-R was issued to the corporation (pp. 10-11, 2934, Consolidated Record on Appeal).

She could not specify the number of the title. She alleged that the title was "N. A." or not
available. She claimed to be the owner of the lot and that the title covering it was destroyed
during the war. Like the first petition, the second petition was sworn to on the same date,
November 16, 1967, before Manila notary Domingo P. Aquino. Why it was not filed
simultaneously with Laboradas petition was not explained. (17-21, Consolidated Record on
Appeal.)

12. On May 25 and 26, 1970, the State filed two petitions for the cancellation and annulment of
the reconstituted titles and the titles issued subsequent thereto (Civil Cases Nos. 1784 and
1785). Judge Salvador, who had ordered the reconstitution of the titles and to whom the two
cases for cancellation were assigned, issued on June 5, 1970 restraining orders enjoining the
register of deeds, city engineer and Commissioner of Land Registration from accepting or
recording any transaction regarding Lots Nos. 915 and 918.

8. The lower court set the second petition for hearing on January 31, 1969. As in Laboradas
petition, the notice of hearing for Bombasis petition was published in the Official Gazette. It
was posted in three conspicuous places in Caloocan City and copies thereof were sent to the
supposed adjoining owners (22, Consolidated Record on Appeal). But no copies of the petition
and notice of hearing were served upon the registers of deeds of Caloocan City and Rizal, the
officials who would be interested in the reconstitution of the supposed lost title and who could
certify whether the original of the title was really missing.

13. The respondents in the two cases, through a common lawyer, filed separate answers
containing mere denials. The Commissioner of Land Registration filed pro forma answers
wherein he interposed no objection to the issuance of the preliminary injunction sought by the
State.

9. Bombasis petition was assigned also to Judge Salvador. It was not opposed by the
government lawyers, Enrique A. Cube and Conrado de Leon. Judge Salvador in his order of April
3, 1969 granted the petition.

After a joint trial of the two cases, respondents corporation and Laborada filed amended
answers wherein they pleaded the defense that they were purchasers in good faith and for
value.

The court found from the evidence that the allegedly missing or "not available" title was issued
to Regino Gollez who sold the land to petitioner Bombasi. The owners duplicate of Gollezs title
was supposedly destroyed during the war. Taxes were paid for that land by Gollez and Bombasi.
The technical description of the land the plan were approved by the Commissioner of Land
Registration who submitted a report recommending the reconstitution of the title (pp. 22-25,
Consolidated Record on Appeal).

14. On June 22, 1972, Judge Salvador (who did not bother to inhibit himself) rendered a decision
in the two cases holding that the States evidence was insufficient to establish its ownership and
possession of Lots Nos. 915 and 918 and that Laborada and A & A Torrijos Engineering
Corporation were purchasers in good faith and for value and, consequently, their titles are not
cancellable and annullable.
Judge Salvador further held that the titles, whose reconstitution he had ordered allegedly in
conformity with law, could not be attacked collaterally and, therefore, "the reconstituted titles
and their derivatives have the same validity, force and effect as the originals before the
reconstitution" (pp. 160-161, Consolidated Record on Appeal). The State appealed.

10. The lower court ordered the register of deeds to reconstitute the missing title of Lot No. 918
in the name of Bombasi. Acting on that directive, the register of deeds issued to Bombasi
Transfer Certificate of Title No. N.A. 4(R) dated August 27, 1969 (pp. 24-27, Consolidated Record
on Appeal).

15. The Court of Appeals, in affirming the lower courts judgment, held that the orders of
reconstitution dated July 6, 1968 and April 3, 1969 could no longer be set aside on May 26,
1970, when the petitions for annulment and cancellation of the reconstituted titles were filed,
and that if there were irregularities in the reconstitution, then, as between two innocent
parties, the State, as the party that made possible the reconstitution, should suffer the loss. The
Court of Appeals cited section 101 of Act 496 to support its view that a registered owner may

11. On March 25, 1969 or five months before the issuance of the reconstituted title, Francisca
Bombasi, now identified as single (not widow) and a resident of 1665 Interior 12 Dart Street,
Paco, Manila, which was the same address used by Fructuosa Laborada (Bombasi used first the
address 2021 San Marcelino Street) sold Lot No. 918 to Herculano M. Deo allegedly for
P249,880. Transfer Certificate of Title No. 34146-R was issued to Deo.

lose his land "by the registration of any other person as owner of such land."
To sustain the validity of the reconstituted titles in these cases would be to allow Republic Act
No. 26 to be utilized as an instrument for landgrabbing (See Republic v. Court of Appeals,
Ocampo and Anglo, L-31303-04, May 31, 1978, 83 SCRA 453, 480, per J. G.S. Santos) or to
sanction fraudulent machinations for depriving a registered owner of his land, to undermine the
stability and security of Torrens titles and to impair the Torrens system of registration.

The State appealed to this Court. We hold that the appeal is justified. The Appellate Court and
the trial court grievously erred in sustaining the validity of the reconstituted titles which,
although issued with judicial sanction, are no better than spurious and forged titles.
In all candor, it should be stated that the reconstitution proceedings, Civil Cases Nos. C-677 and
C-763, were simply devices employed by petitioners Laborada and Bombasi for landgrabbing or
for the usurpation and illegal appropriation of fifty hectares of State-owned urban land with
considerable value.

The theory of A & A Torrijos Engineering Corporation that it was a purchaser in good faith and
for value is indefensible because the title of the lot which it purchased unmistakably shows that
such title was reconstituted. That circumstance should have alerted its officers to make the
necessary investigation in the registry of deeds of Caloocan City and Rizal where they could have
found that Lot 918 is owned by the State.

The crucial and decisive fact, to which no importance was attached by the lower court and the
Fifth Division of the Court of Appeals (Reyes, L.B., Domondon and Ericta, JJ.,), is that two valid
and existing Torrens titles in the name of the Commonwealth of the Philippines were needlessly
reconstituted in the names of Laborada and Bombasi on the false or perjurious assumption that
the two titles were destroyed during the war.

WHEREFORE, the decisions of the Court of Appeals and the trial court are reversed and set
aside. The reconstitution proceedings in Civil Cases Nos. C-677 and C-763 are declared void and
are set aside. The reconstituted titles, Transfer Certificates of Title Nos. N.A. 3-(R) and N.A. 4-(R),
and Transfer Certificates of Title Nos. 34146-R, 34147-R and 30257 to 30263 and the survey
plans and subdivision plan connected therewith are likewise declared void. The register of deeds
is directed to cancel the said titles.

That kind of reconstitution was a brazen and monstrous fraud foisted on the courts of justice. It
was a stultification of the judicial process. One and the same judge (1) allowed the
reconstitution and then (2) decided the two subsequent cases for the cancellation and
annulment of the wrongfully reconstituted titles.

The Republic of the Philippines, as the successor of the Commonwealth of the Philippines, is
hereby declared the registered owner of Lots 915 and 918 of the Tala Estate, as shown in
Transfer Certificates of Title Nos. 34594 and 34596 of the registry of deeds of Rizal. Costs against
the privateRespondents-Appellees.

The existence of the two titles of the Government for Lots Nos. 915 and 918 ipso facto nullified
the reconstitution proceedings and signified that the evidence in the said proceedings as to the
alleged ownership of Laborada and Bombasi cannot be given any credence. The two
proceedings were sham and deceitful and were filed in bad faith. Such humbuggery or
imposture cannot be countenanced and cannot be the source of legitimate rights and benefits.

SO ORDERED.
Concepcion Jr. and Santos, JJ., concur.

Republic Act No. 26 provides for a special procedure for the reconstitution of Torrens
certificates of title that are missing and not fictitious titles or titles which are existing. It is a
patent absurdity to reconstitute existing certificates of title that are on file and available in the
registry of deeds.

Abad Santos, J., concur. My vocabulary is inadequate to express my disgust and indignation at
this brozen landgrabbing.
Antonio, J., took no part.

The reconstitution proceedings in Civil Cases Nos. C-677 and C-763 are void because they are
contrary to Republic Act No. 26 and beyond the purview of that law since the titles
reconstituted are actually subsisting in the registry of deeds and do not require reconstitution at
all. As a rule, acts executed against the provisions of mandatory laws are void (Art. 5, Civil
Code).chanrobles law library

Separate Opinions

BARREDO, (Chairman), J., concurring:chanrob1es virtual 1aw library

Republic of the Philippines

SUPREME COURT
Manila

I concur fully in the well-reasoned main opinion of Mr. Justice Aquino, if only because it is to me
inconceivable how any court can order the reconstitution of a supposed lost torrens title when
the record shows beyond doubt that the land in question, per its technical description and
location, is covered already by another title actually subsisting in the office of the corresponding
register of deeds.

EN BANC
G.R. No. L-8539 December 24, 1914

I am writing this separate opinion only to underscore my considered view that considering the
records that the various offices of the government having to do with the matter should keep
regularly, like the Land Registration Commission, the Bureau of Lands and the corresponding
Register of Deeds, only bad faith and bad faith alone can give occasion to occurrences like what
happened in this case. The Torrens system of land registration was conceived to give every duly
registered owner complete peace of mind as long as he has not voluntarily disposed of any right
over the same in the manner allowed by law that he would be safe in his ownership and its
consequent rights. The provision about recourse to the Assurance Fund was not included in the
Act for the benefit of scoundrels who might ingeniously "steal" lands nor to open opportunities
for chicanery of any shade or mode.chanrobles law library

MARIA DEL CONSUELO FELISA ROXAS Y CHUIDIAN, petitioner-appellee,

vs.
RAFAEL ENRIQUEZ, ET AL., objectors-appellants.
Southworth and Faison for appellants.
D. R. Williams for appellee.

Nor is the judiciary without any responsibility in the premises. Judges must bear in mind that the
reconstitution of torrens titles after a war or other national catastrophe is a function that
deserves the most careful and scrupulous attention, certainly not a perfunctory, much less
ministerial chore to be performed on the basis simply of easily obtainable pro forma certificates
of other officials concerned. I would go as far as to require oral testimony of the said official,
unless this be very inconvenient, subject to closest scrutiny as to the veracity of his records.
There is absolutely no excuse for a judge to ignore the actual existence of a title in the office of
the Register of Deeds covering the same land claimed by another who alleges his title thereto
has been lost, absent any showing of voluntary transfers or other lawful transmission by the
registered owner in favor of a person from whom the petitioner could have obtained his right.

JOHNSON, J.:
It appears from the record that on the 12th day of January, 1906, the said petitioner, Maria
del Consuelo Felisa Roxas y Chuidian, presented a petition in the Court of Land Registration
for the purpose of having registered, under the Torrens system, four parcels of land, known
as Parcel A, Parcel B, Parcel C, and Parcel D, all of which were located in the city of Manila.
The only one of said parcels to which attention need be given in the present appeal is Parcel
A.
From an examination of said petition we find that parcel A was described generally and
technically.

There are too many fake titles being peddled around and it behooves every official of the
government whose functions concern the issuance of legal titles to see to it that this plague that
has made a mockery of the Torrens system is eradicated right now through their loyalty,
devotion, honesty and integrity, in the interest of our country and people at large.

I. General description. It is a parcel of land with the buildings erected thereon,

located in the district of Binondo of this city between Nos. 84, 90, 92, 94, and 96
Calle Escolta and the northern bank of the Pasig River; bounded on the north by
Calle Escolta for 31.08 meters, on the south by the Pasig River for 25.19 meters, on
the east by the estate of Pedro P. Roxas for 66.48 meters, and on the west by the

estate of the heirs of Antonio Enriquez for 62.10 meters; with an area of 1,817.03
square meters as set forth in the attached plan.

the north, Calle Escolta; on the south, the Pasig River; on the east, the estate of
Pedro P. Roxas; and on the west, the estate of the heirs of Antonio Enriquez.

II. Technical description. The undersigned on the 26th of the present month
proceeded to survey and fix the boundaries for preparing the topographical plan of
a lot occupied by buildings of strong materials one and two stories high belonging
to Maria del Consuelo Roxas y Chuidian, located in the district of Binondo of this
city between Nos. 84, 90, 92, 94, and 96 Calle Escolta and the northern bank of the
Pasig River. The point marked on the plan with the letter "X," located at the vertex
of the angle formed by the northeastern side of Calle Escolta and the corner of the
Pasaje de Perez was selected as the basic point, whence S. 49 40' W., 27.75 meters
is located Point A, chosen as the point of beginning for the topographical
operations, the result whereof is as follows:1awphil.net

The plan to which reference is made in the above technical description and which
accompanied the petition is as follows and is marked "Exhibit A."
{bmc 029035a.bmp}
By comparing the above technical description with the plan presented (Exhibit A), it will be
noted that the line A-B in the technical description runs S. 44, 30' W., and that the distance
between A and B was 31.08 meters, while in the plan line A-B runs S. 46, 30' W., a distance
of 31.08 meters. Attention is called to this difference between the technical description and
the plan at this time, but its importance to the questions presented will be discussed below.

| Points or | Directions in | Distances | Boundaries |

| stations. | degrees. | in meters. | |

| A to B | S. 44 30' W | 31.08 | Calle Escolta. |

| B to C | S. 46 15' E | 16.15 | Heirs of Antonio |
| C to D | S. 42 00' E | 32.75 | } Enriquez. |
| D to E | S. 40 50' E | 13.20 | |
| E to F | N. 49 45' E | 14.25 | } Pasig River. |
| F to G | N. 52 00' E | 10.94 | |
| G to H | N. 37 10' W | 24.90 | |
| H to I | N. 35 45' W | 6.56 | |
| I to J | N. 50 30' E | 1.92 | } Pedro P. Roxas. |
| J to K | N. 35 00' W | 7.60 | |
| K to A | N. 42 05' W | 25.50 | |

Attached to said petition was a number of documents presented as exhibits, showing the
chain of title of the petitioner.
We find that said petition contains a statement of the names of the adjoining owners of the
land in question. The petition gives the names of said persons, as follows:
The names, surnames, and post-office addresses of the owners of the parcels of
land conterminous with this estate are, according to my information:
The heirs of Antonio Enriquez, whose representatives are the attorneys Hartigan,
Marple, Solignac & Gutierrez, 7 Anda, Intramuros, Manila, Pedro P. Roxas, 154
Malacaang, San Miguel.
Upon the presentation of said petition, the plan, and the documents showing the chain of
title of the petitioner, the matter was referred to the examiner of titles of the Court of Land
Registration, who made a very careful examination of the title of the petitioner to the land in
question, and on the 5th day of March, 1906, presented a very carefully prepared report, in
which he sets out in detail the title of the petitioner to said Parcel A, as well as the other
parcels, the recommends the registration of said Parcel A, as well as the others, in the name
of the petitioner.

The lot described has an area of 1,817.03 square meters; all the points specified are
marked on the attached plan, the bearings are magnetic, and its boundaries are: on

Upon the issue thus presented we find that the Honorable Simplicio del Rosario, judge, on
the 23d day of March, 1906, in accordance with the provisions of section 31 of Act No. 496,
issued the following notice:

intersection of the Escolta and Pasaje de Perez; thence S. 46 30' W., 31.08 m. along
the SE. line of the Escolta, to pt. "B"; S. 46 15' E., 16.15 m. to pt. "C"; S. 42 E.,
32.75 m. to pt. "D"; S. 40 50' E., 13.20 m. to pt. "E"; N. 49 45' E., 14.25 m. to pt.
"F"; N. 52 E., 10.94 m. to pt. "G"; N. 36 20' W., 14.20 m. to pt. "H"; N. 38 40' W.,
17.16 m. to pt. "I"; N. 52 35' E., 2.27 m. to pt. "J"; N. 38 50' W., 4.12 m. to pt. "K";
N. 53 30' E., 0.30 m. to pt. "L"; N. 40 05' W., 14 m. to pt. "M"; N. 44 W., 15.35 m.
to pt. "E" to "G" follow the NW. bank of the Pasig River.

UNITED STATES OF AMERICA,

PHILIPPINE ISLANDS.
[Registration of title. Court of Land Registration.
Case No. 1895.]

Bounded on the NE. by property of Carmen Ayala de Roxas; SE. by the Pasig River;
SW. by property of the heirs of Antonio Enriquez and NW. by the Escolta.

To the Attorney-General of the Philippine Islands; the Municipal Board of

the city of Manila; A. Sing, Nos. 84-88; A. Burke, No. 90; Messrs. Macke and
Chandler and F. M. Sousa, these two No. 90 interior; Ramon Genato, No.
142; Tomas Serreno, No. 92; Rosendo Comas, No. 94; Cheng Tao Sang, No.
96; Luciano Cordoba, No. 28; Messrs. Salgado, Gordillo and Martinez, No.
32; Messrs. Greilsammer Bros., No. 36; and Messrs. Williams & Chandler,
No. 34, upstairs; these on Calle Escolta; Antonio Vy Chuico, No. 226, and
Lim Tinco, No. 200, these two on Calle Rosario; Ang Seng Queng, Calle
Nueva No. 149; and Candido Lim, Calle Jaboneros No. 113; all these of the
district of Binondo; Messrs. Hartigan, Rohde & Gutierrez, attorneys of the
heirs of Antonio Enriquez, Calle Santo Tomas, corner of Calle Cabildo,
district of Intramuros; Carmen Ayala de Roxas, No. 154; and Maximo
Cortes and Dolores Ochoa, these two No. 330, the three on Calle
Malacaang, district of San Miguel; Francisco Saez, Plaza de Goiti No. 14,
Alfonso Tiaoqui, Calle Lacoste No. 122, and Gervasio Rosario Ventura, Calle
Dulumbayan No. 111, these three of the district of Santa Cruz; and Enrique
Somes, Calle Alix No. 140, district of Sampaloc; all of the city of Manila, P.
I., and to all whom it may concern:

Date of survey, December 26, 1905.

You are hereby cited to appear at the Court of Land Registration to be held at the
City Hall, Calzada de las Aguadas, city of Manila, P. I., on the 25th day of April, A. D.
nineteen hundred and six, at 8 o'clock in the forenoon, to show cause, if any you
have, why the prayer of said application shall not be granted; and unless you
appear at such court at the time and place aforesaid your default will be recorded
and the said application will be taken as confessed, and you will be forever barred
from contesting said application or any decree entered thereon.
Witness the Hon. S. del Rosario, judge of said court, this 23d day of March in the
year nineteen hundred and six.
Attest: A. K. JONES,
Clerk of said Court.
In accordance with said order of publication, the clerk of the Court of Land Registration, on
the 28th day of March, 1906, sent a copy of said order to each of the persons mentioned
therein, by registered mail. The record shows that each of said persons received a copy of
said notice, including the representative of the heirs of Antonio Enriquez (Hartigan, Rohde &
Gutierrez). The record further shows, by the certificate of James J. Peterson, sheriff of the
city of Manila, that said notice was posted upon the land in question. The record further
shows that said notice had been published in two daily newspapers of the city of Manila. The
Manila Times and La Democracia.

Whereas an application has been presented to said court by Maria del Consuelo
Felisa Roxas y Chuidian, through her attorney in fact Antonio Bonifas, Calle Padre
Herrera No. 59, district of Tondo, city of Manila, P. I., to register and confirm her
title in the following described land: Four parcels of land with the improvements of
strong materials thereon, situated in the district of Binondo, Manila, P. I., more
particularly bounded and described as follows:
Parcel A. Situated on the Escolta Nos. 84-96, beginning at a pt. marked "A" on
plan, being S. 49 40' W., 27.75 m. from the W. end of the chaflan at the S.

On the 17th day of April, 1906, A. K. Jones, clerk of the Court of Land Registration, made the
following certificate relating to the notice and to the publication of the notices required by
section 31 of Act No. 496.

to any order made by the lower court, relating to said request of the attorney of the city of
Manila.
In accordance with said notice to all of the interested parties, the hearing on the said
petition was brought on for trial on the 25th day of April, 1906, at 9 o'clock a. m., at the
place mentioned in said notice. At the hearing the petitioner was represented. No one
appeared to represent the "heirs of Antonio Enriquez."

UNITED STATES OF AMERICA,

PHILIPPINE ISLANDS.
COURT OF LAND REGISTRATION.
Case No. 1895.

On said date (April 25, 1906, at 9 o'clock a. m.) the cause relating to said Parcel A was
brought on for trial. Mr. Antonio Bonifas appeared for the petitioner and My. Modesto
Reyes, attorney for the city of Manila, appeared for the city of Manila. Mr. Reyes called the
attention of the court again to the fact that there existed certain errors in the measurement
of some of the sides of the plan presented by the petitioner. In view of said fact (the
existence of errors) the court ordered that said errors be corrected. So far as the record
shows no correction whatever was made in the plan of said Parcel A.

Maria del Consuelo Felisa Roxas y Chuidian, Applicant.

I, A. K. Jones, clerk of the Court of Land Registration of the Philippine Islands, certify
that, in compliance with the order issued by said court, a notice referring to the
application for registry No. 1895, presented by Antonio Bonifas, as representative
of Maria del Consuelo Felisa Roxas y Chuidian, was published once only in the daily
newspapers of this city, The Manila Times on March 28, 1906, and La
Democracia on the 31st of the same month and year, in English and Spanish
respectively, and notice was served upon the Attorney-General of the Philippine
Islands; the Municipal Board of the city of Manila; A. Sing; A. Burke; Macke &
Chandler; F. M. Sousa; Ramon Genato; Tomas Serrano; Rosendo Comas; Cheng Tao
Sang; Luciano Cordoba; Salgado, Gordillo & Martinez; Greilsammer Hermanos;
Williams & Chandler; Antonio Vy Chuico; Lim Tinco; Ang Seng Queng; Candido Lim;
Hartigan, Rohde & Gutierrez; Carmen Ayala de Roxas; Maximo Cortes and Dolores
Ochoa, Francisco Saez; Alfonso Tiaoqui; Gervasia Rosario Ventura; and Enrique
Somes, a copy of said notice in Spanish having been sent to each one on March 28,
1906, by registered mail. And for the purposes of the necessary procedure, I issue
the present in Manila on the 17th day of April, 1906.

On the 21st day of July, 1906, the cause having been brought on for hearing, the honorable
Simplicio del Rosario, judge, distated the following order or judgment in default against all
persons:
UNITED STATES OF AMERICA,
PHILIPPINE ISLANDS.
COURT OF LAND REGISTRATION.
No. 1895.
Application of Maria del Consuelo Felisa Roxas y Chuidian for registration
of the real estate described herein,

A. K. JONES,
Clerk of the Court.

vs.
The Attorney-General of the Philippine Islands; the Municipal Board of the
city of Manila; A. Sing; A. Burke: Macke & Chandler; F. M. Sousa; Ramon
Geneto; Tomas Serrano; Rosendo Comas; Cheng Tao Sang; Luciano
Cordoba; Salgado, Gordillo & Martinez; Greilsammer Hermanos; Williams
& Chandler; Antonio Vy Chuico; Lim Tinco; And Seng Queng; Candido Lim;
Hartigan, Rohde & Gutierrez; Carmen Ayala de Roxas; Maximo Cortes and

On the 19th day of April, 1906, the record shows that Modesto Reyes, attorney for the city
of Manila (p. 131, record) presented a written statement to the court calling its attention to
the fact that there existed an "error of closure" in the plan of said Parcel A, and asked the
court to correct the error. The said attorney also called the attention of the other plans of
the other parcels of land, included in the original petition. Our attention has not been called

10

Dolores Ochoa; Francisco Saez; Alfonso Tiaoqui; Gervasia Rosario Ventura;

and Enrique Somes; and whomsoever it may concern, defendants.

Having tried case No. 1895, this court decrees that Maria del Consuelo Felisa Roxas
y Chuidian, of Manila, Philippine Islands, applicant, spinster, is the absolute owner
of the real property, which is adjudicated to her, located in the city of Manila, the
description whereof is hereinafter set forth:

The present case having been duly tried, and

A parcel of land, situated at Nos. 84 to 96 Calle Escolta, district of Binondo;

bounded on the NE. by the property of Carmen Ayala de Roxas; on the SE. by the
Pasig River; on the SW. by the property of the heirs of Antonio Enriquez; and on the
NW. by Calle Escolta.

Whereas, the clerk of this court caused to be published once only a notice in due
from referring to the application mentioned, in two newspapers of general
circulation, one printed in the English language and another in the Spanish
language, to wit, The Manila Times of this city, and La Democracia of the same city;
and 119 days have elapsed since publication of said notice was effected;

Whereas, the sheriff of Manila posted in a conspicuous place on each of the parcels
of land included in the application a certified copy of the notice in Spanish, and also
in a conspicuous place in the principal municipal building of the city of Manila,
before the fourteen days preceding that set for the termination of the period fixed;

Beginning at a point marked A on the plan, which point is 27.75 m. S., 49 40' W.
from the extreme W. of the angle situated at the intersection S. of Calle Escolta and
Passage de Perez; and from said point A., S., 46 30' W., 31.08 m. to point B; thence
S., 46 15' E., 16.15 m. to point C; thence S., 42 E., 32.75 m. to point D; thence S.,
40 50' E., 13.20 m. to point E.; thence N., 49 45' E., 14.25 m. to point F; thence N.,
52 E., 10.94 m. to point G; thence N., 36 20' W., 14.20 m. to point H; thence N.,
38 40' W., 17.16 m. to point I; thence N., 52 35' E., 2.27 m. to point J; thence N.,
38 50' W., 4.12 m. to point K; thence N., 53 30' E., 0.30 m. to point L; thence N.,
40 05' W., 14 m. to point M; thence N., 44 W., 15.35 m. to point of beginning;
having an area of 1,817.03 square meters.

Whereas, all of the persons cited as defendants have failed to appear to impugn the
application, within the period fixed by the law;

All the points named are marked on the plan; the bearings are magnetic; date of
survey, December 26, 1905.

This court orders a declaration of default against all the defendants and other
persons who may be concerned in opposing the application, which is granted.

Wherefore this court orders that the said real property be registered in accordance
with the provisions of the Land Registration Act in the name of the aforesaid Maria
del Consuelo Felisa Roxas y Chuidian, subject however to any of the encumbrances
set forth in section 39 of said Act that may be in force and effect.

Whereas, said clerk caused to be sent by registered mail, within seven days after
the publication of the said notice, a copy thereof in the Spanish language to each
one of the persons named in the application or who appeared to be concerned
therein;

Given by the Honorable S. del Rosario, judge of the said Court of Land Registration,
in Manila, this 21st day of July, 1906.

Given by the Honorable S. del Rosario, judge of the said Court of Land Registration,
in Manila, this twenty-first day of July, nineteen hundred and six, at eight o'clock
and ten minutes ante meridian.

Attest: A. K. JONES,
Clerk of the Court.

Attest:
[SEAL.] (Sgd.) A. K. Jones,
Clerk of the Court.

Later the Honorable Simplicio del Rosario dictated the following order, decreeing that said
parcel of land, A, be registered as the absolute property of Maria del Consuelo Felisa Roxas Y
Chuidian. Said decree was as follows:

11

A copy of this decree was sent to the register of deeds of Manila, September 25,
1906.

It is not clear whether said petition refers to the incorrections in the plan of Parcel A or to
the incorrections in the plans of the other parcels of land (B, C, and D), which were included
in the petition of the petitioner.

On the 21st day of July, 1906, the court issued the certificate of title known as No. 742, and
delivered to the petitioner the owner's duplicate, and the property became registered under
the Torrens system, in the name of the petitioner.

On the 23d date of December, 1911, the honorable Charles H. Smith, judge of the Court of
Land Registration, referred the petition of the city of Manila to the chief surveyor of the
court. On the 27th day of December, 1911, the said surveyor reported to the court that
there existed "errors of closure in said plans."

After the registration of said Parcel A in the name of the petitioner, on the 21st day of July,
1906, nothing further seems to have been done in the Court of Land Registration until on or
about the 19th day of December, 1911, nearly five years and a half after said land had been
registered, when we find that the assistant attorney of the city of Manila filed the following
petition:

On the 5th day of January, 1912, the judge of the Court of Land Registration ordered the
chief surveyor to prepare new plans, in accordance with section 4 of Act No. 1875, and
directed that notice be given to the adjoining owners.

UNITED STATES OF AMERICA,

PHILIPPINE ISLANDS.
COURT OF LAND REGISTRATION.

On the 28th day of February, 1912, the original petitioner, Maria del Consuelo Felisa Roxas y
Chuidian, presented a petition for the correction of the certificate issued to her on the 21st
day of July, 1906, so as to include the buildings upon the lands included in her petition. Said
petition was as follows:

Case No. 1895.

UNITED STATES OF AMERICA,
PHILIPPINE ISLANDS.
COURT OF LAND REGISTRATION:

Roxas y Cuyugan, applicant.

MOTION.

Case No. 1895.

The city of Manila, through its undersigned attorney, comes now into the court and
respectfully represents;

Maria del Consuelo Felisa Roxas y Chuidian, applicant.

I. That the plan of the property with which the present case deals is affected by an
error of closure greater than 1/1500;

Comes now the applicant into the Honorable Court of Land Registration and
represents:

II. That the city of Manila is interested in the correction of said error as it has to
expropriate a portion of said land for use as a public street;

1. That on January 10, 1906, Don Antonio Bonifas, in the name and representation
of the applicant, sought the legalization of property title to four estates, among
them the following:

Therefore, the petitioner prays the court to order a new survey of said property
described in the plan filed in this case.

(a) A parcel of land with the buildings erected thereon, located at Nos. 84 to 96
Calle Escolta, district of Binondo.

Manila, P. I., December 18, 1911.

12

(b) Another parcel of land with the buildings erected thereon located at Nos. 28 to
36 Calle Escolta, district of Binondo.

7. That by decree of June 21, 1906, adjudication and registration of the estates
were ordered in applicant's favor in the terms set forth in the application; but in the
certificate of the decree or resolution under consideration, issued by the clerk of
the court, the description of the parcel of land corresponding to each estate was
given, but the respective building on each was omitted, and in this form were
issued the certificates of title, Nos. 472, 764, and 743, which accompany this
application.

(c) Another parcel of land with the buildings erected thereon, located at No. 149
Calle Nueva, corner of Callejon Carvajal, district of Binondo.
2. That the other estate mentioned in the said application refers to a parcel of land,
with the buildings erected thereon, located at Nos. 222 to 230 Calle Rosario, district
of Binondo, which buildings were totally destroyed by the fire that occurred on the
2d of November of the year just past, and it cannot therefore be included in the
purpose of the present application.

8. That on January 12, September 21, October 9 and 22, 1906, the legal
representative of the applicant guaranteed by deposit, as assurance fund, the rights
of issuance of title and one-tenth of 1 per cent of the assessed valuation, the sum of
P943.70 Philippine currency, the receipts and vouchers wherefore do not
accompany this application because the applicant destroyed them in the belief that
there was no need to exhibit them, but averring that the amounts paid for those
purposes are credited in the accounting division of the Court of Land Registration
and the office of the register of deeds, as has been ascertained by a person
delegated therefor by the applicant.

3. That in the said application it is stated that the land of the estate designated by
the letter (a) was assessed at 65,072 dollars and 50 cents United States currency,
and the buildings at 18,500 dollars United States currency; that the land of the
estate designated by the letter (b) was assessed at 55,020 dollars and 50 cents,
United States currency, and the buildings at 15,000 dollars, United States currency;
and the land of the estate designated by the letter (c) was assessed at 5,658 dollars
Unites States currency, and the buildings at 5,000 dollars United States currency.

9. That when applicant attempted to alienate one of the estates mentioned she
observed the omission in the corresponding certificate of title of the building
existing thereon, the same as in the certificates of title corresponding to the other
two estates; and as it is to be supposed that said omission is due solely to a simple
clerical error, which nevertheless greatly affects the applicant's right, she appeals to
your honorable court with the request that you order the correction of said
omission, especially as there at present exist on the said parcels of land, without
modification or alteration, the same buildings that existed when legalization of title
thereto was applied for and which appear in the titles of acquisition annexed to the
above-entitled case, reference whereto has been made in the third paragraph.

4. That both in the property titles to the said estates and in the plans and technical
descriptions thereof which accompany said application and are annexed to the
above-entitled case, it appears that on the parcels of land which form part of the
estates under consideration there are erected buildings, consisting of two houses of
strong materials, one behind the other, in the estate designated by the letter (a); a
house of stone and masonry in that designated by the letter (b); and another house
of stone and masonry in that designated by the letter (c).
5. That in the record of the register of deeds, in the registration entries referring to
the said estates, it appears that they consist of the parcels of land and the buildings
stated.

10. That for greater assurance and for the purpose of proving that the said estates
consist not only in the parcel of land or lot but also in the building erected on each,
the applicant attaches hereto the assessment or property-tax receipts for each of
the said estates, wherein are stated the two points mentioned.

6. That in the notice to the Attorney-General, the Municipal Board, the tenants, and
owners conterminous with the estates referred to therein, the buildings erected on
them are likewise mentioned.

11. That in view of what has been set forth and explained, the applicant prays the
honorable court to decree, after the necessary legal proceedings, correction of the
omission referred to by ordering the free issuance of a new certificate of title to

13

each of the said estates, wherein record be made of the building erected on each,
consisting of those enumerated in the third paragraph of this application.
Felisa Roxas y Chuidian after notice had been given to all the interested parties, were set
down for hearing. For one reason or another, the hearings on said motion were transferred
from one date to another from the 22d of April, 1912, until the 24th of August, 1912. During
said various hearings, in addition to the appointment of a commission to view the premises,
certain proof was taken upon the question of the correctness of the original plan presented
by the petitioner, in January, 1906. During said hearings the heirs of Don Antonio Enriquez
appeared and apparently made some objection to the granting of said motions. They
presented no written statement in which their specific objections appear. The nearest
approach to a definite and specific statement of their objections appears in the argument of
their counsel at the close of said several hearings, in which it appears that their objections to
the correction of the original plan and certificate and the issuance of a new certificate to the
Masonic Temple Association of Manila was based upon the ground that they claimed
easements or servitudes in the land in the question.

Manila, February 28, 1912.

MARIA DEL CONSUELO FELISA ROXAS Y CHUIDIAN.
On the 9th of April, 1912, the Masonic Temple Association of Manila sent a communication
to Honorable Charles H. Smith, judge of the Court of Land Registration, accompanied by a
contract, showing that on the 20th day of March, 1912, Maria del Consuelo Felisa Roxas y
Chuidian had sold all her rights, title, and interest in said Parcel A, including the buildings
thereon, to the said Masonic Temple Association of Manila. Said Masonic Temple Association
of Manila requested the judge of the Land Court to attach said contract to the record in the
case and issue a new certificate to it.
On the 19th day of April, 1912, a new plan of said Parcel A, prepared by Mr. B. W. Hay,
surveyor of the Bureau of Lands, was presented, in accordance with the order of the court of
the 23d of December, 1911. Said new plan was made for the purpose of correcting the
errors in closure in the original plan presented by the petitioner on the 10th day of January,
1906. Said new plan is as follows (see page 48):

After hearing all of the parties, the Honorable Charles H. Smith, judge of the Court of Land
Registration, and his associates, the Honorable James A. Ostrand and the Honorable
Norberto Romualdez, auxiliary judges of said court, sitting in banc, on the 24th day of
August, 1912, by a unanimous decision, granted the motions of the city of Manila, of Maria
del Consuelo Felisa Roxas y Chuidian, and of the Masonic Temple Association of Manila.

After the presentation of said new or corrected plan, the motions:

On the 10th day of September, 1912, the attorneys for the objectors presented a motion for
new trial, basing it upon the ground that the conclusions of the lower court were manifestly
contrary to the proof. After a due consideration of said motion for a new trial and after
hearing the respective parties, the Court of Land Registration, sitting in banc, composed of
Charles H. Smith, James A. Ostrand, and Norberto Romualdez, denied said motion, and the
case was appealed to this court. In this court the respondents presented the following
assignments of error:

(a) That of the city of Manila to have corrected the error of closure in the original plan;
(b) That of Maria del Consuelo Felisa Roxas y Chuidian, to have included in her certificate of
title the buildings located upon the lands registered in accordance with her original petition;
and
(c) That of the Masonic Temple Association of Manila, to have a certificate issued to it in
accordance with its contract of purchase of said lands from Maria del Consuelo

1. That the court below erred in holding that the proceedings of the Court of Land
Registration were valid in entering judgment in favor of the plaintiff and appellee,
confirming the title to lot 4, which is in controversy in this suit.
2. That the judgment of the lower court is contrary to law.

{bmc 029048.bmp}

14

3. That the judgment of the court below is against the manifest weight of the
evidence.

directed by the court, by publishing or mailing, shall be filed in the case before the return day,
and shall be conclusive proof of such service."

After a careful examination of the argument of the appellants in support of each of said
assignments of error, we are of the opinion that they may be discussed together.

On the day set for the hearing of said original petition, no one appeared to oppose the
granting of the prayer which it contained. Section 35 of Act No. 496 provides: "If no person
appears and answer within the time allowed, the court may at once, upon motion of the
applicant, no reason to the contrary appearing, order a general default to be recorded
and the application ( petition) be taken for confessed. By the description in the notice. "To all
whom it may concern," all the world are made parties defendant and shall be concluded by
the default and order. The court shall not be bound by the report of the examiner of titles,
but may require other and further proof."

In the argument of the appellants in support of their assignments of error, there is but little
argument against the decision of the court rendered on the 24th of August, 1912. Practically
the whole argument of the appellants is based upon the ground that the original certificate
(No. 742, issued July 21, 1906) is absolutely void, for the reason that "the appellants had no
notice of the pendency of the original action to confirm the title of said property."
Appellants now admit that a notice of the pendency of the original action was sent to
attorneys Hartigan, Rohde & (Marple?) Gutierrez. Appellants now allege that it affirmatively
appears that neither this firm nor any of its members represented the defendants and
appellants in that action. The record shows, as we have pointed out above, that the original
petition showed that Hartigan, Rohde & Gutierrez were the representatives of the heirs of
Don Antonio Enriquez, and that notice was duly sent to them. We have searched the record
now in vain to find the slightest denial of the fact that they were the representatives of said
heirs, even though one of said attorneys represented them, or at least some of them, in the
present proceedings. So far as the record shows there is not even a suggestion found in the
various hearings and proceedings taken and had under the above motions, that said
attorneys were not the representation of the heirs of Don Antonio Enriquez at the time of
the original proceedings. Neither does the record show any attempt on their part to deny
the fact that they received the notices given in the original action. The appellants assert in
their argument that "personal notice was absolutely necessary in order to justify the court
below in rendering a decree in favor of the plaintiff and appellee, in the first instance" (the
original proceeding). The appellants, by that argument, attempt to show, not that the
judgment of the 24th of August, 1912, was invalid, but that the original certificate (No. 742)
was void, because they had not been served with personal notice. This brings us to the
question whether or not personal notice to all of the persons interested in an action for the
registration of real property under the Torrens system, is an absolute prerequisite to the
validity of said registration. It will be remembered that we noted above that personal notice
of the pendency of the original petition had been given and that a publication of the same
had been made in accordance with the provisions of sections 31 and 32 of Act No. 496. After
the expiration of the period during which notice must be given, the original cause was set
down for hearing. The record also shows that the clerk of the Land Court made a certificate
showing that that notice had been issued and published in accordance with the law. Section
32 provides, in part, that said "certificate of the clerk that he had served the notice as

The provisions of section 35 seem to be directly contrary to the contention of the appellants.
It seems to directly contradict the requirements of personal notice as an absolute
prerequisite to the granting of a valid title under the Torrens system.
The same idea is further confirmed by the provisions of section 38 of said Act No. 496. Said
section 38 provides that: "Every decree of registration shall bind the land and quite the title
thereto, subject only to the exceptions stated in the following section. It shall be conclusive
upon and against all persons, including the Insular Government, and all the branches
thereof, whether mentioned by name in the application, notice or citations, or included in
the general description 'To all whom it may concern.'"
There is a further and very strong intimation in the law that personal notice is not absolutely
a prerequisite to the validity of title under the Torrens system. Section 32 (Act No. 496)
provides that: "The court shall, so far as it deems it possible, require proof of actual notice to
all the adjoining owners and to all persons who appear to have an interest in or claim to the
land included in the application." It will be noted also that the petitioner in registration cases
is not by law required to give any notice to any person. The law requires the clerk of the
court to give the notices. (Sections 31 and 32 of Act No. 496.) It is true that "the court may
also cause other or further notice of the application to be given in such a manner and to
such persons as it may deem proper." Thus it is seen that the applicant is by express
provision of law relieved from any obligation whatsoever to give motive to any person of the
pendency of his application to have his land registered under the Torrens system. That being
true, upon what theory may the applicant be subjected to harassment or delay or additional
expense, because some person claims that he did not receive actual personal notice? Section
101 and 102 (Act No. 496) seem to contain a remedy for persons who have suffered

15

damages for the failure on the part of court officials to comply with the law. (Noble State
Bank vs. Haskell, 219 U. S., 104.) His remedy is not to have the registration and certificate
annulled, unless he comes within the provisions of section 38, and even then he is without a
remedy against the applicant unless he can show, within a period of one year after the
decree of registration and the granting of the certificate, at he has been "deprived of land or
any estate or interest therein," by fraud, and not even then, if an "innocent purchaser for
the value has acquired and interest." In the present case five years and a half had transpired
and negotiations for the sale of the land to an innocent purchaser had been terminated.
There is not intimation that the petitioner is guilty of fraud, in the slightes degree.

the persons who might have an interest in the registration of her land, in her petition. The
applicant is not charged even with negligence. The record shows that she did all the law
required her to do.
In discussing the Torrens Land Law we must keep in mind that its primary purpose is the
registration of the title which the applicant or petitioner has and to relieve his land of
unknown liens or claims, just or unjust, against it. The Torrens system of land registration is a
system for the registration of title to land only, and not a system established for the
acquisition of land. It is not intended that lands may be acquired by said system of
registration. It is intended only that the title, which the petitioner has, shall be registered
and thereby cleared of all liens and burdens of whatsoever character, except those which
shall be noted in the order of registration and in the certificate issued.

While the Torrens Land Law is a law of modern times, is has been adopted in many States
and its provisions have been attacked at almost every point. The requirements relating to
notices has been a fruitful source of litigation. The constitutionality of the law has been
attacked many times, because of the provision of said law relating to notices. This is not the
first time that the question has been presented to this court. The same question was
presented to this court in the case of Grey Alba vs. De la Cruz (17 Phil. Rep., 49). In that case
the registered title was attacked upon the ground that fraud existed, simply because
personal notice had not been given. The existence of fraud was predicated upon the failure
of actual personal notice. In passing upon that question, this court, speaking through Mr.
Justice Trent, said (quoting from the syllabus):

If there exists known and just claims against the title of the applicant, he gains nothing in
effect by his registration, except in the simplicity of subsequent transfer of his title. The
registration either relieves the land of all known as well as unknown claims, absolutely, or it
compels the claimants to come into court and to make there a record, so that thereafter
there may be no uncertainly concerning either the character or the extent of such claims.
The requirement that personal notice shall be a prerequisite to the validity of registration
would absolutely prohibit the foreclosure of unknown claims, for the reason that personal
notice could never be given to "unknown claimants." The great difficulty in land titles arises
from the existence of possible unknown claimants. Known claimants can be dealt with. They
furnish no valid impediment, in fact, to the transfer of titles.

In original proceedings for the registration of land under Act No. 496, the appellee
herein was made a party- defendant by publication, but was not personally served
with notice: Held, That the decree of the Court of Land Registration is conclusive
against his as well as all the world.

Courts have held that in actions in rem personal notice to owners of a res is not necessary to
give the courts jurisdiction to deal with and to dispose of the res. (Grey Alba vs. De la Cruz,
17 Phil. Rep., 49; Tyler vs. Judges, 175 Mass., 71; American Land Company vs. Zeis, 219 U.S.,
47.) This rule was first established in admiralty proceedings. It was established out of the
very necessities of the case. The owner of a ship, for instance, lived in London. His ship was
found in the most distant ports of the earth. Its operation necessarily required supplies, such
as men, coal, and food. The very nature of its business necessitated the making of contracts.
The continuance of its voyage depended upon its capacity to make contracts and to get
credit. It might also, perchance, cause damage to other craft, in like conditions. To be able to
secure all such necessities, to satisfy all possible obligations, to continue its voyage and its
business on the high seas, merchants and courts came to regard the "ship" as a person, with
whom or with which they were dealing, and not its real owner. Consequently there came

The proceedings for the registration of land, under Act No. 496, are in rem and
not in personam. A proceeding in rem, dealing with a tangible res, may be instituted
and carried to judgment without personal service upon the claimants within the
state or notice by name to those outside of it. Jurisdiction is secured by the power
of the court over the res. Such a proceeding would be impossible were this not so,
for it would hardly do to make a distinction between the constitutional rights of
claimants who were known and those who were not known to the plaintiff, when
the proceeding is to bar all. (Tyler vs. Judges, 175 Mass., 71.)
In the present case there is not the slightest intimation that the original applicant (Maria del
Consuelo Felisa Roxas y Chuidan) was guilty of fraud. The record shows that she named all

16

into existence this action in rem. For the purpose of carrying into effect the broader
purposes of the Torrens land law, it has been universally considered that the action should
be considered as one in rem. Mr. Justice Holmes, then of the Supreme Court of the State of
Massachusetts, and now a member of the Supreme Court of the United State, in the case of
Tyler vs. Judges (175 Mass., 71), in discussing this question, said:

obligations, private or public, and the models of establishing title thereto; and for the
purpose of determining these question, it (the state) may provide any reasonable rules or
procedure. (Clark vs. Smith, 13 Peters, 195; Barker vs. Harvey, 181 U.S., 481;
Mitchell vs. Furman, 180 U.S., 402; Botiller vs. Domingues, 130 U.S., 238;
Moore vs. Steinbach, 127 U.S., 70; Arndt vs. Griggs, 134 U.S., 316; American Land
Company vs. Zeiss, 219 U.S., 47.)

Looked at either from the point of view of history or of the necessary requirements
of justice, a proceedingin rem, dealing with a tangible res, may be instituted and
carried to judgment without personal service upon claimants within the State or
notice by name to those outside of it, and not encounter any provision of either
constitution (of the State of Massachusetts or the United States). Jurisdiction is
secured by the power of the court over the res. As we have said, such a proceeding
would be impossible were this not so, for it hardly would dot to make a distinction
between the constitutional rights of claimants who were known and those who
were not known to the plaintiff, when the proceeding is to bar all.
(Pennoyer vs. Neff, 95 U.S., 714, 727; The Mary, 9 Cranch 126, 144.)

The state possesses not only the power to determine how title to real estate may be
acquired and proved, but it is also within its legislative competency to establish the method
of procedure. (American Land Co. vs. Zeiss, 219 U.S., 47; Bertrand vs. Taylor, 87 Ill., 235;
Title, Document, etc., Company vs. Kerrigan, 150 Cal., 208, 305; Perkins vs. Wakeham, 86
Cal., 580.)
The estate, as sovereign over the lands situated within it, may provide for the adjudication of
title in a proceedingin rem, or in the nature of a proceeding in rem, which shall be binding
upon all persons known and unknown. (State vs. McGlynn, 20 Cal., 233; 81 Am. Dec., 118;
Perkins vs. Wakeham, 86 Cal., 580; 21 Am.t. Rep., 67; McLaughlin vs. McCrory, 55 Ark., 442;
29 Am. St. Rep., 56; People's National Bank vs. Cleveland, 117 Ga., 908; People vs. Simon,
176 Ill., 165; 68 Am. St. Rep., 175; Quarl vs. Abbett, 102 Ind., 233; 52 Am. Rep., 662;
Ruppinvs. McLaughlin, 122 Iowa, 343; Young vs. Upshur, 42 La. An., 362; 21 Am. St. Rep.,
381; Tyler vs. Judges, 175 Mass., 71; 51 L.R.A., 571; 57 L.R.A., 297; Rohrer vs. Ader, 124 Mo.,
24; Sandiford vs. Town of Hempstead, 90 N.Y. Supp., 76, 79, 97; Arndt vs. Griggs, 134 U.S.,
316.)

There are many classes of cases where men may be deprived of their property and of their
rights, without personal notice of the proceedings in which that may occur. For instance, in
attachment cases, notice or service upon the defendant may be had by publication.
(Pennoyer vs. Neff, 95 U.S., 714, 727.) So also in divorce proceedings, as well as the rights of
claimants against estates of deceased persons, personal notice is not a prerequisite. Notice
by publication may be had. Also unknown claimants or owners may be brought into court
without personal notice in an action for the condemnation of private property for public use.
There exists a multitude of cases in which personal service is not necessary and service by
publication is sufficient.

If the state can provide for substituted service for the purpose of quieting title to real estate
against an unknown resident, it may provide a reasonable method for securing substituted
services against residents. The power of the state to provide methods of quieting title should
not be limited to known persons. In order to make such a law valuable and effective to its
fullest extent, it is necessary that it be made to operate on all interest and persons known or
unknown.

The law, even before the Torrens Law, provided means by which title to land might be
quited "by notice by publication to all persons." (Hamilton vs. Brown, 101 U.S., 256, 274;
Huling vs. Kaw Valley, etc., Co., 130 U.S., 559, 564; Parker vs. Overman, 18 Howard (N.Y.)
137; American Land Company vs. Zeiss, 219 U.S., 47; Arndt vs.Griggs, 134 U.S., 316;
Perkins vs. Wakeman, 86 Cal., 580.)

Mr. Justice Holmes, in the case of Tyler vs. Judges (175 Mass., 71) in discussing this question,
said: "If it (the procedure) does not satisfy the Constitution, a judicial proceeding to clear
titles against all the world hardly is possible, for the very meaning of such a proceeding is to
get rid of unknown as well as known claims indeed certainly against the unknown may be
said to be its chief end and unknown claims cannot be dealt with by personal service upon
the claimant."

Even before the Torrens Law was adopted, the states had the power and right to provide a
procedure for the adjudication of title to real estate. The state had control over real property
within its limits. The conditions of ownership of real estate in a state, whether the owner be
a stranger or a citizen, are subject to its rules, concerning the holding, transfer, liability to

17

Mr. Chief Justice White of the Supreme Court of the United States, in the case of the
American Land Company vs.Zeiss (219 U. S., 47) said: "To argue that the provisions of the
statute are repugnant to the due process clause (of the Constitution) because a case may be
conceived where rights in and to property would be adversely affected without notice being
actually conveyed by the proceedings is in effect to deny the power of the state to deal with
the subject. The criterion is not the possibility of conceivable injury, but the just and
reasonable character of the requirements, having reference to the subject with which the
statute deals."

to the possession of said parcels of land, and each of them, was that of owner in fee simple,
absolute, free from all encumbrance, liens, defects, claims or demands of any kind or nature
whatsoever. Under these facts the plaintiff, Zeiss, prated that he be adjudged to be the
owner of and entitled to the possession of said described parcels of land in fee simple, and
that no one else had any estate, rights, title, interest or claim in or to the same, or any part
thereof, either legal or equitable, present or future, vested or contingent.
Upon the presentation of the petition by Zeisss, a summons was issued and notice of the
pendency of the action was published in certain newspaper, as was required by law. Notice
was also posted upon the property, as required by the statute. No one having appeared and
opposed the granting of the petition of the complaint, or claimed any interest in or lien upon
the property described in the complaint, a default was ordered against all persons, and on
the 19th days of December, 1906, a decree was entered in favor of Zeiss, adjudging that he
was the owner in fee simple, absolute, and entitled to the possession of the land described
in the complaint and that no other person had any right title, interest, or estate in and to the
same, or any part thereof, either legal or equitable, present or future, vested or contingent.

The court of appeals of the State of New York, in the case of In re Empire City Bank (18 N.Y.,
199, 215) in speaking of the right of the state to prescribe in suitable cases for substituted
service, said: "Various prudential regulations are made with respect to these remedies by it
may possibly happen, notwithstanding all these precautions, that a citizen who owes
nothing, and has done none of the acts mentioned in the statutes, may be deprived of his
estate without any actual knowledge of the process by which it has been taken from him. If
we hold, as we must, in order to sustain this legislation, that the Constitution does not
positively require personal notice in order to constitute a legal proceedings due process of
law, it then belongs to the legislature to determine in the particular instance whether the
case calls for this kind of exceptional legislation, and what manner of constructive notice
shall be sufficient to reasonably apprise the party proceeded against of the Legal steps which
are taken against him. (American Land Company vs. Zeiss, 219 U.S., 47; Title, Document, etc.,
Company vs.Kerrigan, 150 Cal., 289.)"

Nothing else seems to have transpired after said decree was issued in favor of Zeiss, until the
26th day of May, 1908, or one year and five months after the entry of the decree of the
superior court, in the city and county of San Francisco. On that date (the 26th of May, 1908)
an action was brought in the United States Circuit Court for the Northern District of
California, in which the plaintiffs claimed title to the parcels of land, as owners in fee simple,
absolute, which had theretofore been decreed to Zeiss. The plaintiff alleged that the decree
issued by the superior court of the city and county of San Francisco was void and of no force
and effect and was made and maintained without due process of law, and that said superior
court, in said action and proceedings never had any jurisdiction over the persons holding the
title during such proceedings, and that said court did not have or obtain jurisdiction to divest
the right, title, interest or estate of plaintiff . The complaint alleged that "Zeiss had no right
whatever in said parcels of land, other than his rights of possession and occupation." The bill
further alleged that the plaintiffs had been at all times citizens and residents of California,
not seeking to evade, but ready to accept service of summons and easily reached for that
purpose; that, notwithstanding that fact, no service was made upon them nor did they in any
way receive notice of the pendency of the action (Zeiss vs. All persons claiming any interest in
or lien upon the real property herein described); nor did they gain any knowledge of
existence of the decree until more than a year after its entry. To the complaint the
defendant, Zeiss, demurred.

The only case cited by the appellants in support of their argument, is the case of the
American Land Company vs.Zeiss (219 U.S., 47). In view of the facts and the decisions of the
different courts which are cited in that case, it is difficult to understand how it is authority in
support of the contention of the appellants here. The facts in that case are as follows:
Zeiss, on the 22d of August, 1906, commenced an action in the superior court of the country
San Francisco, alleging in substance that on the 18th and 19th days of April, 1906, a material
part of the public records contained in the office of the county recorder of the city and
county of San Francisco was destroyed by fire; that on the 18th day of April, 1906, and at the
time of the filing of the complaint, he was the owner and in the actual and peaceable
possession of the parcels of land in controversy: that his estate, title, interest in and to said
parcels of land, and each of them, was that of owner in fee simple, absolute, free from all
encumbrances, liens, defect, claims or demands of any kind or nature whatsoever. Under
these facts the plaintiff, Zeiss, prayed that the be adjudged to be the owner of and entitled

18

Upon the issue thus presented, the Circuit Court of Appeals for the Ninth District certified
the question involved to the Supreme Court of the United States. The Supreme Court of the
United States, after a careful analysis of the facts and of the law, in a very lengthy and
instructive opinion (219 U. S., 47), decided each of the question submitted by the Circuit
Court of Appeals against the contention of the plaintiff and returned the cause to the court
below.

The law further provided that said summons or notice should be published in a newspaper
of general circulation in the county where the action was brought, at least once a week for a
period of two months.

The original action by Zeiss was brought to quiet the title to two parcels of land for the
purpose of registrating his title to the same under an act of the legislature of the State of
California, entitled "An act to provide for the establishment and quieting of title to real
property in case of loss or destruction of public records." Said law is known as the
McEnerney Law. It was intended by said act to provide a method whereby owners in
possession of real estate, where records had been destroyed to such an extent as to make it
impossible to trace a record title, might secure a degree in the court which would furnish
public, authenticated evidence of title. The special occasion for the law was the fact that
practically all of the public records of title in several counties in the State of California had
recently theretofore been destroyed as the result of an earthquake and fire. Said law
provided that whenever the public records in the office of the county recorded had been, or
shall hereafter be lost or destroyed, in whole or in any material part, by flood, fire, or
earthquake, any person who claims an estate of inheritance or have title in, and who had by
himself or his tenants, or other persons holding under him, in actual and peaceable
possession any real property in said county, may bring and maintain an action in rem,
against all the world, in the superior court for the county in which said real property is
situate, to establish his title, and to determine all adverse claims thereto.

The said law further provided that upon the publication and posting of the summons and its
service upon and mailing to the person, if any, upon whom it is herein directed to be
specially served, the court shall have full and complete jurisdiction over the plaintiff and said
property and of the person and every one claiming any estate, right, title, or interest in or to
or lien upon said property, or any part thereof, and shall be deemed to have obtained the
possession and control of said property, for the purpose of the action, and shall have full and
complete jurisdiction to render judgment therein, which is provided for in the law.

The law further provided that personal notice should be given to any person claiming an
interest in the property or a lien thereon adverse to the plaintiff.

In the case of the American Land Company vs. Zeiss, cited and relied upon by the appellants,
the validity of said law was attacked and the legality of the title granted to Zeiss was
impugned for the reason that the law was unconstitutional and void, and because the
plaintiff had not received actual notice of the application to Zeiss to have his title quieted,
under said law. The Supreme Court of the United States (219 U.S., 47) held, as has been
above indicated, that the law was constitutional and that a compliance with the
requirements of the notice provided for in said law was sufficient to give the court
jurisdiction over the res and to enter a valid decree. There seems to be but little in the
decision in the case of the American Land Company vs. Zeiss to support the contention of
the appellants.

The law further provides that an action shall be commenced by the filing of a verified
complaint, in which he shall name the defendants as "all persons claiming any interest in or
lien upon the real property herein described, or any part thereof." He was required to give in
his complaint a particular description of the property. The law provided that upon the filing
of the complaint, a summons or notice was required to be issued, containing the names of
the court and the country in which the action was brought, the name of the plaintiff, and a
particular description of the property involved, which notice was directed to "all persons
claiming any interest in or lien upon the real property herein described, or any part thereof,"
as defendants.

Considering that the Legislature of the Philippine Islands had full power to adopt the
procedure provided for in Act No. 496, for the registration of the title of lands; and
Considering that the court in the original action followed strictly the procedure adopted by
said law; and
Considering that there is no claim of fraud, actual or constructive, upon the part of any of
the parties connected with said action, we are forced to the conclusion that the appellants
here are not now entitled to have that judgment or decree of registration and certificate
amended or set aside.

19

There remains another question, however, which the appellants have not discussed and
which we deem of importance. It is the question of the right of the Land Court to correct an
error of closure in a plan or of a statement contained in a certificate. A plan is prepared and
is presented with the petition for the registration of a parcel of land. No opponents appear.
No opposition is presented to the registration. All the steps in the procedure required by law
have been taken. The land is registered. It is then discovered for the first time that by reason
of a wrong direction given to one of the lines in the plan, said plan will not close that if a
wall were built upon the lines of the plan, one of the four corners of the wall would not
meter. We believe that an error of the character may be corrected by the court, provided
that such correction does not include land not included in the original petition. Upon the
question whether the amended plan (p.252, record) included more or different lands than
were included in the original petition, we find the following statements made by one of the
judges who ordered said plan amended. The statements is:

del Consuelo Felisa Roxas y Chuidian have not been enlarged; the boundary lines
thereof have not been changed; the real descriptions of the properties have been
left undisturbed; the adjoining land owned by the petitioners is undiminished,
except possibly as to alleged easements claimed to have been created by the
projection of some of the roots of the petitioners' building over the aforesaid
registered property of the said Roxas. That matter is settled clearly by the
provisions of the last paragraph of section 39 of Act No. 496."
We called attention above to the fact that the petitioner alleged that the line A-B of her
property ran S., 44 30' W., a distance of 31.08 meters, while the plan accompanying said
petition (see Exhibit A, page 35, ante) made said line to run S., 46 30' W., a distance of
31.08 meters An examination of the certificate issued to the petitioner (see page 39, ante)
also states that the line A-B runs S., 46 30' W., for a distance of 31.08 meters. The record
contains no application why the original plan (see Exhibit A, page 35, ante) did not conform
to the description of the land given in the petition. That error, in our judgment, seems to
have constituted the real difficulty with the closure of the plan. Under said conditions we are
of the opinion that the Land Court is entirely justified in ordering the plan corrected for the
purposes above indicated.

At this stage of the proceedings and on his particular point nothing further is
incumbent upon the court than to determine the property as it was adjudicated in
this case.
Therein no new portion was either added or subtracted, and this court finds that
such should be the holding on this particular point.

There is still another question involved in the case, which the appellants have not discussed,
and that is the right of Maria del Consuelo Felisa Roxas y Chuidian to have her original
certificate of registration corrected, for the purpose of showing that she was the owner of
the buildings located upon the parcel of land in question. It will be remembered that in her
petition presented January 12, 1906, she alleged that she was the owner of the parcel of
land in question, together with the buildings thereon. No opposition was presented. No
objection was made to the registration of the land as described in her petition. The record
shows no reason why the buildings should have been omitted in the certificate of
registration. The omission must have been an errors. on the part of the clerk. We find that
Act No. 496 contains an express provision for the correction of such errors. Section 112
provides that the registered owner may, at any time, apply by petition to have corrected any
"error, omission, or mistake made in entering a certificate, or any memorandum thereon, or
on any duplicate certificate." We think the petition presented by Miss Roxas for the
correction of such original certificate was entirely within her right under the law. It might be
claimed, and we believe that the proposition is sustained by law, that the registration of a
parcel of land, unless the record contains something to the contrary, necessarily includes the
buildings and edifices located thereon, even though they are not mentioned. Without relying
upon that proposition of law, however, and in view of the petition of the plaintiff, it is

We have a further statement made by one of the judges, the Honorable Charles H. Smith,
relating to the same question, in an answer presented by him to a petition for a writ of
prohibition, presented by some the appellants herein, to the Supreme Court. That petition
for a writ of prohibition involved practically the same question presented by the appellants
here now. Upon the question whether or not additional lands had been included in the new
plan (p.252, record), Judge Smith, in answering for himself and his associates (Ostrand and
Romualdez) said:
Respondents deny that a new dividing line between the premises in question
(premises of the plaintiff and appellant) was determined and established by an
order of the court issued at the conclusion of said proceedings, but, on the
contrary, respondents charge the truth to be that the dividing line between said
properties was not changed but simply approved and so indicated upon the record
title. For instance, the line between said properties beginning on the south side of
the Escolta is exactly at the same point indicated in the original description and
approved by the court; in other words, the premises in question of the said Maria

20

hereby ordered that the original certificate be amended so as to include not only the land
described in the original petition, but the buildings located thereon as well.

The undisputed facts of this case as found by the Trial Court and the Intermediate Appellate
Court are as follows:chanrob1es virtual 1aw library

With reference to the petition of the Masonic Temple Association of Manila, the record
contains no sufficient reasons for not granting the same.

On December 2, 1971, the spouses Paulino Vivas and Engracia Lizardo, as owners of a parcel
of land situated in Bo. San Francisco, Victoria, Laguna, comprising more or less 105,710
square meters, sold for P30,000.00 said property in favor of spouses Melencio Magcamit and
Nena Cosico, and Amelita Magcamit (herein private respondents) as evidenced by
"Kasulatan Ng Bilihang Mabiling Muli." This sale with right to repurchase was recorded in the
Office of the Register of Deeds of Laguna on December 6, 1971 under Act No. 3344. On
January 31, 1972 the sale was made absolute by the spouses Vivas and Lizardo in favor of
the private respondents for the sum of P90,000.00; P50,000.00 of which was paid upon the
execution of the instrument, entitled "Kasulatan Ng Bilihan Tuluyan," after being credited
with the P30,000.00 consideration of the "Kasulatan Ng Mabibiling Muli," and the balance of
P40,000.00 was to be paid the moment that the certificate of title, is issued. From the
execution of said Kasulatan, private respondent have remained in peaceful, adverse and
open possession of subject property.

Therefore, and in view of all of the foregoing, we are of the opinion that the judgment of the
court below should be and it is hereby affirmed, with costs.
Arellano, C.J., Torres, Carson, Trent, and Araullo, JJ., concur.

On February 26, 1975, an Original Certificate of Title No. T-1728 covering the property in
question was issued to and in the name of the spouses Vivas and Lizardo without the
knowledge of the private respondents and on April 30, 1975, said Spouses executed a Special
Power of Attorney in favor of Irenea Ramirez authorizing the latter to mortgage the property
with the petitioner, National Grains Authority.

FIRST DIVISION
[G.R. No. L-68741. January 28, 1988.]
NATIONAL GRAINS AUTHORITY, Plaintiff-Appellee, v. INTERMEDIATE APPELLATE COURT,
MELECIO MAGCAMIT, NENA COSICO and EMELITA MAGCAMIT, Defendants-Appellants.

On May 2, 1974, the counsel for the petitioner wrote the Provincial Sheriff in Sta. Cruz,
Laguna, requesting for the extra-judicial foreclosure of the mortgage executed by Irenea
Ramirez on May 18, 1975, covering, among others, the property involved in this case
covered by OCT No. T-1728, for unpaid indebtedness in the amount of P63,948.80 in favor of
the petitioner.

DECISION

On May 31, 1974, the Provincial Sheriff caused the issuance of the notice of sale of the
property in question, scheduling the public auction sale on June 28, 1974. The petitioner was
the highest and successful bidder so that a Certificate of Sale was issued in its favor on the
same date by the Provincial Sheriff.

PARAS, J.:

This is a petition for review of the decision of the then Intermediate Appellate Court * (now
Court of Appeals) dated January 31, 1984, reversing the decision of the Court of First
Instance of Laguna and San Pablo City, 8th Judicial District, Branch III, and of the resolution
dated August 28, 1984 denying the motion for reconsideration filed thereof.

On July 10, 1974, the petitioner in its capacity as attorney-in-fact of the mortgagor sold the
subject real property in favor of itself. By virtue of the deed of absolute sale, TCT No. T75171 of the Register of Deeds for the Province of Laguna was issued in the name of the

21

petitioner on July 16, 1974. It was only in July 1974, that private respondents learned that a
title in the name of the Vivas spouses had been issued covering the property in question and
that the same property had been mortgaged in favor of the petitioner. Private respondent
Nena Magcamit offered to pay the petitioner NGA the amount of P40,000.00 which is the
balance of the amount due the Vivas spouses under the terms of the absolute deed of sale
but the petitioner refused to accept the payment. On July 31, 1974, counsel for private
respondents made a formal demand on the spouses Vivas and Lizardo to comply with their
obligation under the terms of the absolute deed of sale; and soon after reiterated to the
NGA, the offer to pay the balance of P40,000.00 due under the absolute deed of sale. On
August 13, 1974 petitioner in its reply informed counsel of private respondents that
petitioner is now the owner of the property in question and has no intention of disposing of
the same.

"(1) declaring defendant National Grains Authority the lawfull owner of the property in
question by virtue of its indefeasible title to the same;

The private respondents, who as previously stated, are in possession of subject property
were asked by petitioner to vacate it but the former refused. Petitioner filed a suit for
ejectment against private respondents in the Municipal Court of Victoria, Laguna, but the
case was dismissed.

The private respondents interposed an appeal from the decision of the trial court to the
Intermediate Appellate Court.

"(2) ordering plaintiffs to turn over possession of the land to defendant National Grains
Authority;
"(3) ordering defendants-spouses Paulino Vivas and Engracia Lizardo to pay plaintiffs the
sum of P56,000.00 representing the amount paid pursuant to the Kasulatan Ng Bilihang
Tuluyan marked Exhibit 3, with legal interest thereon from January 31, 1972 until the
amount is paid, to pay an additional amount of P5,000.00 for and as attorneys fees, an
additional amount of P10,000.00 as moral damages, another amount of P5,000.00 by way of
exemplary damages and to pay the costs of this suit. (Rollo, p. 35)

After proper proceedings, the appellate court rendered its decision on January 31, 1984,
reversing and setting aside the decision of the trial court as follows:chanrobles.com.ph :
virtual law library

On June 4, 1975, private respondents filed a complaint before the then Court of First
Instance of Laguna and San Pablo City, Branch III, San Pablo City, against the petitioner and
the spouses Vivas and Lizardo, praying, among others, that they be declared the owners of
the property in question and entitled to continue in possession of the same, and if the
petitioner is declared the owner of the said property, then, to order it to reconvey or
transfer the ownership to them under such terms and conditions as the court may find just,
fair and equitable under the premises. (Record on Appeal, pp. 2-11).

"WHEREFORE, the decision of the lower court is hereby reversed and set aside and another
one is rendered ordering the National Grains Authority to execute a deed of reconveyance
sufficient in law for purposes of registration and cancellation of Transfer Certificate of Title
No. T-75171 and the issuance of another title in the names of plaintiff-appellants, and
ordering defendants-appellees Paulino Vivas and Engracia Lizardo to pay the National Grains
Authority the sum of P78,375.00 (Exh. 3) within thirty (30) days from the receipts of the writ
of execution. No damages and costs." (Rollo, p. 19)

In its answer to the complaint, the petitioner (defendant therein) maintained that it was
never a privy to any transaction between the private respondents (plaintiffs therein) and the
spouses Paulino Vivas and Engracia Lizardo; that it is a purchaser in good faith and for value
of the property formerly covered by OCT No. 1728; and that the title is now indefeasible,
hence, private respondents cause of action has already prescribed. (Record on Appeal, pp.
16-22).

The petitioner filed a motion for reconsideration of the said decision but the same was
denied. (Rollo, p. 26)
Hence, this petition.

After due hearing, the trial court ** rendered its decision on March 17, 1981, in favor of the
petitioner, the dispositive portion of said judgment reading as follows:jgc:chanrobles.com.ph

In the resolution of May 20, 1985, the petition was given due course and the parties were
required to submit simultaneous memoranda (Rollo, p. 128). The memorandum for the
petitioner was filed on July 3, 1985 (Rollo, p. 129) while the memorandum for the private
respondents was filed on August 26, 1985 (Rollo, p. 192).

"WHEREFORE, judgment is hereby rendered as follows:jgc:chanrobles.com.ph

22

The main issue in this case is whether or not violation of the terms of the agreement
between the spouses Vivas and Lizardo, the sellers, and private respondents, the buyers, to
deliver the certificate of title to the latter, upon, its issuance, constitutes a breach of trust
sufficient to defeat the title and right acquired by petitioner NGA, an innocent purchaser for
value.

Time and time again, this Court has ruled that the proceedings for the registration of title to
land under the Torrens System is an action in rem, not in personam, hence, personal notice
to all claimants of the res is not necessary in order that the court may have jurisdiction to
deal with and dispose of the res. Neither may lack of such personal notice vitiate or
invalidate the decree or title issued in a registration proceeding, for the State, as sovereign
over the land situated within it, may provide for the adjudication of title in a proceeding in
rem or one in the nature of or akin a proceeding in rem which shall be binding upon all
persons, known or unknown (Moscoso v. Court of Appeals, 128 SCRA 719 [1984], citing: City
of Manila v. Lack, Et Al., 19 Phil. 324, 337; Roxas v. Enriquez, 29 Phil. 31; Director of Lands v.
Roman Catholic Archbishop of Manila, 41 Phil. 120; Aguilar v. Caogdan, 105 Phil. 661). It is
thus evident that respondents right over the property was barred by res judicata when the
decree of registration was issued to spouses Vivas and Lizardo. It does not matter that they
may have had some right even the right of ownership, BEFORE the grant of the Torrens Title.

It is undisputed that: (1) there are two deeds of sale of the same land in favor of private
respondents, namely: (a) the conditional sale with right to repurchase or the "Kasulatan Ng
Bilihang Mabibiling Muli" which was registered under Act 3344 and (b) the deed of absolute
sale or "Kasulatan ng Bilihang Tuluyan" which was not registered; (2) the condition that the
Certificate of Title will be delivered to the buyers upon its issuance and upon payment of the
balance of P40,000.00 is contained in the deed of absolute sale; and (3) the land in question
at the time of the execution of both sales was not yet covered by the Torrens System of
registration.

Thus, under Section 44 of P.D. 1529, every registered owner receiving a certificate of title in
pursuance of a decree of registration, and every subsequent purchaser of registered land
taking a certificate of title for value and in good faith, shall hold the same free from all
encumbrances except those noted on the certificate and any of the encumbrances which
may be subsisting, and enumerated in the law. Under said provision, claims and liens of
whatever character, except those mentioned by law as existing, against the land prior to the
issuance of certificate of title, are cut off by such certificate if not noted thereon, and the
certificate so issued binds the whole world, including the government (Aldecoa and Co. v.
Warner Barns & Co., 30 Phil. 209 [1915]; Snyder v. Fiscal of Cebu and Avila, 42 Phil. 766
[1922]). Under said ruling, if the purchaser is the only party who appears in the deeds and
the registration of titles in the property registry, no one except such purchaser may be
deemed by law to be the owner of the properties in question (Ibid). Moreover, no title to
registered land in derogation to that of the registered owner shall be acquired by
prescription or adverse possession (Umbay v. Alecha, 135 SCRA 427 [1985]).

It is axiomatic, that while the registration of the conditional sale with right of repurchase
may be binding on third persons, it is by provision of law "understood to be without
prejudice to third party who has better right" (Section 194 of the Administrative Code, as
amended by Act No. 3344). In this case, it will be noted that the third party NGA, is a
registered owner under the Torrens System and has obviously a better right than private
respondents and that the deed of absolute sale with the suspensive condition is not
registered and is necessarily binding only on the spouses Vivas and Lizarda and private
respondents.chanrobles virtual lawlibrary
In their complaint at the Regional Trial Court, private respondents prayed among others, for
two alternative reliefs, such as: (a) to be declared the owners of the property in question or
(b) to order the declared owner to reconvey or transfer the ownership of the property in
their favor.
Private respondents claim a better right to the property in question by virtue of the
Conditional Sale, later changed to a deed of Absolute Sale which although unregistered
under the Torrens System allegedly transferred to them the ownership and the possession of
the property in question. In fact, they argue that they have been and are still in possession of
the same openly, continuously, publicly under a claim of ownership adverse to all other
claims since the purchase on December 2, 1971 (Rollo, p. 165). It is stressed that not until
the month of July, 1974 did the plaintiff learn that a time had been issued covering the
property in question (Rollo, p. 15).

It does not appear that private respondents claim falls under any of the exceptions provided
for under Section 44 of P.D. 1529 which can be enforced against petitioner herein.
Thus, it has been invariably restated by this Court, that "The real purpose of the Torrens
System is to quiet title to land and to stop forever any question as to its legality.Once a title
is registered, the owner may rest secure, without the necessity of waiting in the portals of
the court, or sitting on the mirador su casa, to avoid the possibility of losing his land." An
indirect or collateral attack on a Torrens Title is not allowed (Dominga v. Santos, 55 Phil. 361;
Singian v. Manila Railroad, 62 Phil. 467).

23

mortgage to make an investigation of the title of the property being given as security (Phil.
National Cooperative Bank v. Carandang-Villalon, 139 SCRA 570 [1985]), and where innocent
third persons like mortgages relying on the certificate of title acquire rights over the
property, their rights cannot be disregarded (Duran v. IAC, 138 SCRA 489
[1985]).chanrobles.com : virtual law library

The only exception to this rule is where a person obtains a certificate of title to a land
belonging to another and he has full knowledge of the rights of the true owner. He is then
considered as guilty of fraud and he may be compelled to transfer the land to the defrauded
owner so long as the property has not passed to the hands of an innocent purchaser for
value (Angeles v. Sania, 66 Phil. 444 [1938],Emphasis supplied).chanrobles virtualawlibrary
chanrobles.com:chanrobles.com.ph

Under the circumstances, the Regional Trial Court could not have erred in ruling that
plaintiffs (private respondents herein) complaint insofar as it prays that they be declared
owners of the land in question can not prosper in view of the doctrine of indefeasibility of
title under the Torrens System, because it is an established principle that a petition for
review of the decree of registration will not prosper even if filed within one year from the
entry of the decree if the title has passed into the hands of an innocent purchaser for value
(Pres. Decree No. 1529, Sec. 32). The setting aside of the decree of registration issued in land
registration proceedings is operative only between the parties to the fraud and the parties
defrauded and their privies, but not against acquirers in good faith and for value and the
successors in interest of the latter; as to them the decree shall remain in full force and effect
forever (Domingo v. The Mayon Realty Corp. Et. Al., 102 Phil. 32 [1957]). Assuming,
therefore, that there was fraud committed by the sellers against the buyers in the instant
case, petitioner NGA who was not privy therein cannot be made to suffer the consequences
thereof. As correctly declared by the trial court, the National Grains Authority is the lawful
owner of the property in question by virtue of its indefeasible title.

It will be noted that the spouses Vivas and Lizardo never committed any fraud in procuring
the registration of the property in question. On the contrary, their application for
registration which resulted in the issuance of OCT No. 1728 was with complete knowledge
and implied authority of private respondents who retained a portion of the consideration
until the issuance to said spouses of a certificate of title applied for under the Torrens Act
and the corresponding delivery of said title to them. The question therefore, is not about the
validity of OCT No. 1728 but in the breach of contract between private respondents and the
Vivas spouses. Petitioner NGA was never a privy to this transaction. Neither was it shown
that it had any knowledge at the time of the execution of the mortgage, of the existence of
the suspensive condition in the deed of absolute sale, much less of its violation. Nothing
appeared to excite suspicion. The Special Power of Attorney was regular on its face; the OCT
was in the name of the mortgagor and the NGA was the highest bidder in the public auction.
Unquestionably, therefore, the NGA is an innocent purchaser for value, first as an innocent
mortgages under Section 32 of P.D. 1529 and later as innocent purchaser for value in the
public auction sale.

As to private respondents alternative prayer that the declared owner be ordered to

reconvey or transfer the ownership of the property in their favor, it is clear that there is
absolutely no reason why petitioner, an innocent purchaser for value, should reconvey the
land to the private respondents.

Private respondents claim that NGA did not even field any representative to the land which
was not even in the possession of the supposed mortgagors, nor present any witness to
prove its allegations in the ANSWER nor submit its DEED OF MORTGAGE to show its being a
mortgages in good faith and for value (Rollo, p. 110).

PREMISES CONSIDERED, the decision of the Court of Appeals is REVERSED and SET ASIDE,
and the decision of the Court of First Instance of Laguna and San Pablo City, now Regional
Trial Court, is REINSTATED.

Such contention is, however, untenable. Well settled is the rule that all persons dealing with
property covered by a torrens certificate of title are not required to go beyond what appears
on the face of the title. When there is nothing on the certificate of title to indicate any cloud
or vice in the ownership of the property, or any encumbrance thereon, the purchaser is not
required to explore further than what the torrens title upon its face indicates in quest for
any hidden defect or inchoate right that may subsequently defeat his right thereto (Centeno
v. Court of Appeals, 139 SCRA 545 [1985]).

SO ORDERED.
Teehankee, C.J., Narvasa, Cruz and Gancayco, JJ., concur.

More specifically, the Court has ruled that a bank is not required before accepting a

24

DECISION

CONCEPCION, J.:
EN BANC
Plaintiff, Capitol Subdivision, Inc., seeks to recover from defendant, the Province of Negros
Occidental, the possession of Lot 378 of the cadastral survey of Bacolod, Negros Occidental, and
a reasonable compensation for the use and occupation of said lot by the defendant from
November 8, 1935, in addition to attorneys fees and costs. On June 28, 1951, the Court of First
Instance of Negros Occidental rendered judgment for the plaintiff. On appeal taken by the
defendant, this judgment was, however, set aside by the Supreme Court (see G.R. No. L-6204,
decided on July 31, 1956), which, likewise, ordered the case remanded to the lower court "for
further trial", after which another decision was rendered by said court of first instance
dismissing plaintiffs complaint and ordering plaintiff to execute a deed conveying Lot 378 to
the defendant. The case is, once again, before us, this time on appeal by the plaintiff, the
subject matter of litigation being worth more than P200,000, exclusive of interest and costs.

[G.R. No. L-16257. January 31, 1963.]

CAPITOL SUBDIVISION, INC., Plaintiff-Appellant, v. PROVINCE OF NEGROS
OCCIDENTAL,Defendant-Appellee.
San Juan, Africa & Benedicto, for Plaintiff-Appellant.
Eduardo P. Arboleda and Jose S. Rodriguez, for Defendant-Appellee.

SYLLABUS

1. TORRENS REGISTRATION; NATURE AND PURPOSE. The main purpose of the Torrens
System is to avoid conflicts of title in and to real estate, and to facilitate transactions relative
thereto by giving the public the right to rely upon the face of a Torrens certificate of title and to
dispense with the need of inquiring further, except when the party concerned has actual
knowledge of facts and circumstances that should impel a reasonably cautious man to make
such further inquiry (Tiburcio v. PHHC, L-13479, October 31, 1959; Revilla v. Galindez, G.R. No.
L- 19940, March 30, 1960; Maacop, Jr. v. Cansino, G.R. No. L-13971, February 27, 1961).
2. EMINENT DOMAIN: EXPROPRIATION OF LANDED ESTATES; HOW COMPENSATION
DETERMINED. Since the right of the Province of Negros Occidental to expropriate the lot in
question in the present case is not contested, the owner of said lot is entitled to recover from
said province the fair and full value of the lot, as of the time when possession thereof was
actually taken by the province, plus consequential damages including attorneys fees from
which the consequential benefits, if, any should be deducted, with interest at the legal rate, on
the aggregate sum due to the owner from and after the date of actual taking.

25

The main facts are not in dispute. Said Lot 378 is part of Hacienda Mandalagan, consisting of
Lots 378, 405, 407, 410, 1205, 1452 and 1641 of the aforementioned cadastral survey, with an
aggregate area of over 502 hectares, originally registered in the name of Agustin Amenabar and
Pilar Amenabar. Lot 378 has an area of 22,783 sq. meters, more or less, and was covered by
Original Certificate of Title No. 1776 (Exhibit 4), issued on August 25, 1916, in the name of the
Amenabars. On November 30, 1920, the latter sold the aforementioned Hacienda to Jose
Benares (also referred to in some documents as Jose Benares Montelibano) for the sum of
P300,000, payable in installments, as set forth in the deed of sale, Exhibit 21. On February 8,
1924, said Original Certificate of Title No. 1776 was cancelled and Jose Benares obtained, in lieu
thereof, Transfer Certificate of Title No. 6295 in his name. Meanwhile, or on March 12, 1921,
the Hacienda, including Lot 378, had been mortgaged by Jose Benares to the Bacolod- Murcia
Milling Co. for the sum of P27,991.74 (Exhibit Y-2). On December 6, 1926, Jose Benares again
mortgaged the Hacienda, including said Lot 378, to the Philippine National Bank, subject to the
first mortgage held by the Bacolod-Murcia Milling Co. (Exhibit Y-1). These transactions were
duly recorded in the office of the Register of Deeds of Negros Occidental and annotated on the
corresponding certificates of title, including said Transfer Certificate of Title No. 6295, covering
Lot 378.

The mortgage in favor of the Bank was subsequently foreclosed, in pursuance of a decision of
the Court of First Instance of Negros Occidental dated September 29, 1931 (Exhibit U-1), and
the Bank acquired the Hacienda, including Lot 378, as purchaser at the foreclosure sale.
Accordingly, said Transfer Certificate of Title No. 6295 was cancelled and, in its stead, Transfer
Certificate of Title No. 17166 which, owing to its subsequent loss, had to be reconstituted as
Transfer Certificate of Title No. RT-1371 in the name of the Bank, was issued on March 14, 1934
(Exhibit P). Soon, later, or on November 8, 1935, the Bank agreed to sell the Hacienda to Carlos
P. Benares, son of Jose Benares, for the sum of P400,000, payable in annual installments,
subject to the condition that, until full payment thereof, title would remain in the Bank (Exhibit
R). Thereafter, Carlos P. Benares transferred his rights, under this contract with the Bank, to
plaintiff herein, which completed the payment of the installments due to the Bank in 1949.
Hence, on September 29, 1949, the Bank executed the corresponding deed of absolute sale to
the plaintiff (Exhibit Q) and Transfer Certificate of Title No. 1798, covering Lot 378 was issued, in
lieu of Transfer Certificate of Title No. 17166 (or reconstituted Transfer Certificate of Title RT1371), in plaintiffs name (Exhibit O).
At this juncture, it should be noted that, despite the acquisition of the Hacienda in 1934 by the
Bank, the latter did not take possession of the property for Jose Benares claimed to be entitled
to retain it under an alleged right of lease. For this reason, the deed of promise to sell, executed
by the Bank in favor of Carlos P. Benares, contained a caveat emptor stipulation. When, upon
the execution of the deed of absolute sale (Exhibit Q) by the Bank, on September 29, 1949,
plaintiff took steps to take possession of the Hacienda, it was discovered that Lot 378 was the
land occupied by the Provincial Hospital of Negros Occidental. Immediately, thereafter, or on
October 4, 1949, plaintiff made representations with the proper officials to clarify the status of
said occupation and, not being satisfied with the explanations given by said officials, it brought
the present action on June 10, 1950.
In its answer dated June 24, 1950, defendant maintained that it had acquired Lot 378 in the
year 1924-1925, through expropriation proceedings; that immediately after the
commencement of said proceedings in 1924, it took possession of said lot and began the
construction thereon of the provincial hospital, which was completed in 1926; that since then it
had occupied said lot publicly, adversely, notoriously and continuously as owner thereof; that,
"for some reason or other and for cause beyond comprehension of the defendant title thereto
was never transferred in the name of said defendant" ; that said lot had been placed in
defendants name for assessment purposes under Tax Declaration No. 16269 (dated December
31, 1937); and that plaintiff had acted in bad faith in purchasing said lot from the Bank in 1935,
for plaintiff knew then that the provincial hospital was where it is up to the present, and did not
declare said lot in its name for assessment purposes until 1950, aside from the fact that Alfredo

26

Montelibano, the controlling stockholder, president and general manager of plaintiff

corporation, was the first City Mayor of Bacolod, which contributed to the support, operation
and maintenance of said hospital. In an amended answer, dated November 8, 1950, defendant
alleged, also, that the aforementioned expropriation case was "amicably settled as between the
parties herein, in the sense that the . . . Province of Negros Occidental would pay . . . and did in
fact pay to Jose Benares the assessed value of Lot 378 . . . and whatever consideration
pertaining to said lot in excess of its assessed value which was paid by the Province would be
donated and was in fact donated by said . . . Jose Benares in favor of the Province purposely for
Hospital site."
The main question for determination in this case is whether or not defendant herein had
acquired Lot 378 in the aforementioned expropriation proceedings. The decision appealed from
in effect decided this question in the affirmative and declared that plaintiff merely holds it in
trust for the defendant, in view of which it ordered the former to convey said lot to the latter.
This conclusion is predicated, substantially, upon the following premises, namely; that case No.
3041 of the Court of First Instance of Negros Occidental, for the expropriation of the hospital
site of said province, was actually commenced on January 26, 1924; that, among the lands
sought to be expropriated in said case was Lot 377 of the aforementioned cadastral survey,
belonging to one Anacleta Agsam, who sold it, on July 10, 1926, to the defendant (Exhibit BB), in
whose favor the corresponding transfer certificate of title (Exhibit BB-2) was issued on July 12,
1926; that, according to the testimony of Jose Benares, the expropriation of Lot 378 was settled
amicably upon payment to him of the sum of P12,000; and that defendants failure to secure
the corresponding transfer certificate of title to Lot 378 was due to "the mistaken notion or
belief that said lot forms part of Lot No. 405-B" in the plan (Exhibit X).
The testimony of Jose Benares does not deserve, however, full faith and credence,
because:chanrob1es virtual 1aw library
1. Jose Benares appears to be strongly biased and prejudiced against the plaintiff and its
president, for the former believes that the latter had "manipulated" to exclude him from
plaintiff corporation, and there have been four (4) litigations between Jose Benares and
plaintiff, all of which have been finally decided against the former;
2. The testimony of Jose Benares is extremely contradictory. Thus: (a) he testified to having
been paid P12,000 by the Government, although, at the rate of P1,000 a hectare at which, he
would have us believe, he agreed to sell Lot 378, he should have received less than P3,000 for
its 22,783 sq. meters; (b) he claimed to have received said sum of P12,000.00 "in the year 1924
or 1925", about "2 or 3 days" after the Government had taken possession of the land, and to

have sent the money the next day to Pilar Amenabar, but the latter acknowledged to have
received said sum of P12,000 on November 7, 1928;
3. Said testimony was contradicted by that of defendants witness Jose Marco, former deputy
clerk of court of Negros Occidental, for: (a) Jose Benares asserted that there was a written
compromise agreement between him and the Government, whereas Marco averred that
agreement was merely oral; and (b) Marco stated that Benares had agreed to accept, as
compensation for Lot 378, the assessed value thereof, which was P430, and to donate to the
Government the difference between this sum and the true value of the property, but Benares
affirmed that he was first offered P300 per hectare which he rejected, and that he later
demanded P1,000 a hectare, which the Government agreed to pay, although, subsequently, he
said that Rafael Alunan and Mariano Yulo had prevailed upon him to accept P1,000 per hectare;
4. Jose Benares was, also, contradicted by defendants witness Ildefonso Coscolluela, the
provincial treasurer of Negros Occidental at the time of the expropriation, who positively
assured the Court that the expropriation case "was not yet terminated" and that "negotiations
were still pending" for the acquisition of Lot 378 by the Government when he retired from the
service in 1934.
Upon the other hand, several circumstances strongly indicate that no agreement for the
acquisition of the land by the Government had been reached and that the expropriation had
not been consummate For instance:chanrob1es virtual 1aw library
1. The only entries in the docket relative to the expropriation case refer to its filing and the
publication in the newspaper of the corresponding notices (Exhibit 1);
2. The registration of the deed of sale of Lot 377 by Anacleta Agsam to the Government,
followed by the cancellation of the certificate of title in her name and the issuance, in lieu
thereof, of another title in the name of the Province, when contrasted with the absence of a
similar deed of assignment and of a transfer certificate of title in favor of the Province as
regards Lot 378, strongly suggest that no such assignment or agreement with respect to Lot 378
had been made or reached;
3. The property was mortgaged to the Bacolod-Murcia Milling Co. since March 12, 1921, and
this mortgage, duly registered and annotated, inter alia, on Transfer Certificate of Title No.
1776, in the name of Jose Benares, was not cancelled until September 28, 1935. Moreover, Lot
378 could not have been expropriated without the intervention of the Milling Co. Yet, the latter
was not made a party in the expropriation proceedings;

27

4. On December 26, 1926, Jose Benares constituted a second mortgage in favor of the Bank,
which would not have accepted the mortgage had Lot 378 not belonged then to the mortgagor.
Neither could said lot have been expropriated subsequently thereto without the Banks
knowledge and participation. What is more, in the deed executed by the Bank, on November 8,
1935 (Exhibit R), promising to sell the Hacienda Mandalagan to Carlos P. Benares, it was
explicitly stated that portions of Lots 405, 407 and 410, forming part of said Hacienda and
designated as Lots 405-A, 407-A, 407-B and 410-A, had been expropriated by the Provincial
Government of Negros Occidental, thus indicating, by necessary implication, that Lot 378 had
not been expropriated.
The decision appealed from says:jgc:chanrobles.com.ph
". . . It is evident that there were no further proceedings in connection with the expropriation
case and the chances are that the case was dismissed. The Court had to examine carefully and
minutely every single piece of evidence adduced by both parties in order to arrive at the correct
solution of the mystery. The Court believes that the failure of the government to secure the
corresponding transfer of title to Lot 378 lies in the mistaken notion or belief that said lot forms
a part of Lot 405-B. This conclusion was arrived at after examining closely the plan, Exhibit X.
The plan shows that while all the subdivided lots were properly identified by lot numbers, that
particular portion at the lower corner of the plan encircled with red pencil, marked Exhibit X-1,
is not labelled with the corresponding lot number and that portion is precisely lot No. 378, now
in question, where the hospital building was constructed. This plan was prepared for the
government on May 12, 1927 by public land surveyor, Mr. Formento, embracing lots covering
over 22 hectares for the Capitol and hospital sites. The fact that this particular portion was not
labelled with the corresponding lot number might have misled the authorities to believe that it
formed a part of lot 405B, which adjoins it, altho separated by the creek. This lack of reasonable
explanation why the government failed to secure the corresponding certificate of title to lot
378, when there is sufficient proof that Jose Benares was paid and he executed the deed of sale
in favor of the government."cralaw virtua1aw library
Although said decision appears to have been prepared with the conscientiousness and moral
courage that account for the well earned reputation and prestige of the Philippine judiciary, we
find ourselves unable to concur in the foregoing view. To begin with, there is no evidence, and
defendant has not even tried to prove, that the expropriation case had ever been dismissed
insofar as Lot 378 is concerned. Hence, the lower court merely speculated about the "chances
that the (expropriation) case was dismissed." By the way, the contrary was intimated by
defendants witness, Ildefonso Coscolluela, for he testified that the expropriation case was still

pending in 1934, when he ceased to be the provincial treasurer, and the record before us
suggests that since the Province took possession of the land in 1924 or 1925 and completed the
construction of the hospital in 1926, there were no further proceedings in said case.
With respect to the plan Exhibit X, there is, likewise, no evidence whatsoever that the
authorities had been misled . . . to believe" that the portion at the lower corner of said plan
which was enclosed, during the trial, within a circle in red pencil, and marked as Exhibit X-1
formed part of Lot 405-B, which had been expropriated by the Province of Negros Occidental. In
fact, said portion Exhibit X-1 is not part of the land covered by the plan Exhibit X. A close
examination of the latter shows that the boundaries of said portion are not delimited on the
plan. More important still, on the right hand side of Exhibit X, the following appears in bold
letters: "Subdivision & Consolidation PLAN of Lots Nos. 400, 401, 403, 405, 406, 407 and 410
Bacolod Cadastre as surveyed for the Provincial Government of Bacolod, Negros Occidental
(Capitol site)." The absence of Lot 378 from said enumeration and the explicit statement in
Exhibit X to the effect that it refers to the "Capitol Site", negates the possibility of its being
mistaken by any body, much less by government engineers, as including the hospital site, and,
hence, said Lot 378. Lastly, the very evidence for the defendant herein, specially the assessors
field sheets and declarations of real property for tax purposes (Exhibits 9, 10, 11, 12 and 13)
show that the Government had always regarded Lot 378, not Lot 405, as part of the Provincial
Hospital Site. In any event, said possibility of mistake, if any which would be remote, cannot
suffice to warrant in the race of documentary evidence to the contrary the conclusion that
Lot 378 has already been acquired by the Government.
How about the P12,000 received by Jose Benares from the Government and applied by him to
the payment of his debt to Pilar Amenabar? Said amount could not possibly be the price of Lot
378, for, at the rate of P1,000 a hectare allegedly agreed therefor, its price could not have
exceeded P3,000.00 in this connection, it should be noted that, aside from the expropriation
proceedings for the hospital site, another expropriation case for the Capitol site, affecting
another property of Jose Benares, appears to have been instituted in the Court of First Instance
of Negros Occidental. Jose Benares may have mistaken the payment for his land included in the
Capitol Site, as one intended for Lot 378, which was affected by the hospital site. And this
possibility may amount to a probability when we consider that he erroneously believed that
there had been only one expropriation case, instead of two cases, against him, and that Lot 378
was not included in the mortgage constituted by him in favor of the Philippine National Bank.
Evidently, he did not have, at least, an accurate recollection of the events or transactions
affecting his properties, and, hence, his testimony may not be relied upon.

defendant of Lot 378, which must be held, therefore, to be the exclusive property of plaintiff
herein.
The lower court entertained no doubts about the veracity of the testimony of plaintiffs
president to the effect that he did not know until 1949 that the land on which the Provincial
Hospital Building stands is Lot 378. Yet, it held that plaintiff was "not a purchaser in good faith
for having constructive knowledge of defendants possession of the property at the time it was
bought by the plaintiff", because Carlos P. Benares whose right to buy the Hacienda
Mandalagan from the Bank was acquired by plaintiff "is a part owner of the Capitol
Subdivision and holds a responsible position therein", because "the hospital was already
constructed in Lot 378 since 1926 and the lot was declared in the name of the Government"
and "when plaintiff bought the lot in 1935, the purchaser should have inquired as to its location
and improvements" ; because "it took the plaintiff 14 years to sleep over their supposed rights
to take possession of Lot No. 378" ; and because "of the overwhelming fact that Lot No. 378
was erroneously or inadvertently included by the deeds of sale (Exhibits Q & R) executed by the
Philippine National Bank in favor of the plaintiff subdivision and that same lot was occupied by
the defendant government for the provincial hospital for the last 34 years, as owner
thereof."cralaw virtua1aw library
As above stated, however, and the lower court conceded, plaintiffs president did not know
until 1949 that Lot 378 was the very land occupied by the provincial hospital. Moreover, there is
a total absence of evidence that this fact was known to Carlos P. Benares before 1949. Neither
may such knowledge be deduced from the circumstances that he is a son of its former owner,
Jose Benares, for even the latter appears not to be well-posted on the status of his properties.
Indeed, Jose Benares did not apparently know that there were two (2) expropriation
proceedings affecting said properties; that the P12,000 received by him from the Government
was not meant for Lot 378; and that this lot was one of the properties mortgaged by him to the
Bank.
Upon the other hand, the main purpose of the Torrens System is to avoid possible conflicts of
title in and to real estate, and to facilitate transactions relative thereto by giving the public the
right to rely upon the face of a Torrens certificate of title and to dispense with the need of
inquiring further, except when the party concerned has actual knowledge of facts and
circumstances that should impel a reasonably cautious man to make such further inquiry
(Tiburcio v. PHHC, L-13479, October 31, 1959; Revilla v. Galindez, G.R. No. L-19940, March 30,
1960; Maacop, Jr. v. Cansino, G.R. No. L-13971, February 27, 1961). In the case at bar plaintiff
had no such actual knowledge, it being an established fact that he was not aware until 1949
that the land on which the provincial hospital stood was Lot 378. Furthermore, since the year

Thus, the evidence on record is far from sufficient to establish the alleged acquisition by the

28

1921, or before the expropriation case for the hospital site had begun, said lot was mortgaged
to the Bacolod-Murcia Milling Co., and the mortgage, duly registered, as well as annotated on
the corresponding certificate of title, was not cancelled until September 28, 1935. Prior to this
date, or on December 26, 1926, Lot 378 was subjected to a second mortgage in favor of the
Bank, which acquired title thereto, thru foreclosure proceedings, in 1934. When the Bank
agreed on November 8, 1935, to sell the property to Carlos P. Benares and the latter,
subsequently, conveyed his rights to plaintiff herein, as well as when the Bank executed the
deed of absolute sale in plaintiffs favor on September 20, 1949, the title to the property was in
the name of the Bank. Considering that sugar centrals as well as banks are known to have an
array of experienced and competent lawyers, it cannot be said that plaintiff was not justified in
assuming that said institutions had scrutinized the background of Lot 378 and were satisfied
that the same belonged to the mortgagor when said mortgages were constituted, and to the
Bank when said deed of sale was executed. In short, we find that plaintiff herein is a purchaser
in good faith and for value.

FIRST DIVISION
[G.R. No. 114299. September 24, 1999.]
TRADERS ROYAL BANK, Petitioner, v. HON. COURT OF APPEALS, PATRIA, RUBY ANN,
MARGARITA, ROSARIO, CYNTHIA, LINDA JOY, all surnamed CAPAY and RAMON A.
GONZALES, Respondents.
[G.R. No. 118862. September 24, 1999.]

As regards the compensation that, as such, it may collect from the defendant, we are of the
opinion, and so hold, that, since the latters right to expropriate Lot 378 is not contested, and is
seemingly conceded, the plaintiff may demand what is due by reason of the expropriation of
said lot. In short, plaintiff is entitled to recover from the defendant the fair and full equivalent
of Lot 378, as of the time when possession thereof was actually taken by the defendant, plus
consequential damages including attorneys fees from which consequential damages the
consequential benefits, if any, should be deducted, with interest, at the legal rate, on the
aggregate sum due to the plaintiff, from and after the date of said actual taking. The case
should be remanded, therefor, to the lower court for the reception of evidence on the date of
said actual taking and the amount of compensation collectible from the defendant, and the
rendition, thereafter, of the corresponding decision thereon.

PATRIA, RUBY ANN, MARGARITA, ROSARIO, CYNTHIA, LINDA JOY, all surnamed CAPAY, and
RAMON A. GONZALES, Petitioners, v. SPS. HONORATO D. SANTOS and MARIA CRISTINA S.
SANTOS, SPS. CECILIO L. PE and JOSEFINA L. PE, FLORA LARON WESCOMBE, SPS. TELESFORO
P. ALFELOR II and LIZA R. ALFELOR, SPS. DEAN RODERICK FERNANDO and LAARNI MAGDAMO
FERNANDO, REMEDIOS OCA, DEVELOPMENT BANK OF THE PHILIPPINES and TRADERS ROYAL
BANK, Respondents.
DECISION

KAPUNAN, J.:

WHEREFORE, the decision appealed from is hereby reversed and the records remanded to the
lower court for further proceedings, as above stated, with costs against the defendant. It is so
ordered.

The present controversy has its roots in a mortgage executed by the spouses Maximo and
Patria Capay in favor of Traders Royal Bank (TRB) pursuant to a loan extended by the latter to
the former. The mortgage covered several properties, including a parcel of land, the subject of
the present dispute. 1 The loan became due on January 8, 1964 and the same having remained
unpaid, TRB instituted extra-judicial foreclosure proceedings upon the mortgaged
property.chanroblesvirtuallawlibrary:red

Bengzon, C.J., Padilla, Bautista Angelo, Labrador, Reyes, J.B.L., Barrera, Paredes, Dizon and
Regala,JJ., concur.
Makalintal, J., took no part.

To prevent the propertys sale by public auction, the Capays, on September 22, 1966, filed a

29

petition for prohibition with preliminary injunction (Civil Case No. Q-10453) before the Court of
First Instance (CFI) of Rizal, alleging that the mortgage was void since they did not receive the
proceeds of the loan. The trial court initially granted the Capays prayer for preliminary
injunction.

September 12, 1983 Resolution having become final and executory on November 9, 1983, the
trial court issued a writ of execution directing the Register of Deeds of Baguio City to cancel TCT
No. T-16272 in the name of TRB, and to issue a new one in the name of the Capay spouses.

On March 17, 1967, he Capays caused to be filed in the Register of Deeds of Baguio City a notice
of lis pendens over the disputed property. Said notice was entered in the Day Book, as well as in
the Capays certificate of title.
Subsequently, the injunction issued by the trial court was lifted thus allowing the foreclosure
sale to proceed. Foreclosure proceedings were initiated and on October 17, 1968, the property
was sold to TRB which was the highest bidder at the auction sale. A sheriff certificate of sale
was issued in its name on the same day. On February 25, 1970, the property was consolidated
in the name of TRB, the sole bidder in the sale. TCT No. T-6595 in the name of the Capay
spouses was then cancelled and a new one, TCT No. T-16272, 2 was entered in the banks
name. The notice of lis pendens, however, was not carried over in the certificate of title issued
in the name of TRB

Said writ, however, could not be implemented because of the successive subsequent transfers
of the subdivided property to buyers who obtained separate titles thereto. Thus, a complaint
for recovery of possession/ownership dated 8 June 1985 was filed before the Quezon City
Regional Trial Court against TRB and the subsequent transferees of the property, the
respondents in G.R. No. 118862 (hereinafter, "the non-bank respondents"). Plaintiffs in said
case were Patria Capay, her children by Maximo 7 who succeeded him upon his death on
August 25, 1976, and Ramon Gonzales, counsel of the spouses in Civil Case No. Q-10453 who
became co-owner of the property to the extent of 35% thereof as his attorneys fees
(collectively, "the Capays"). On March 27, 1991, the trial court rendered its decision, the
dispositive portion of which states:chanrob1es virtual 1aw library
WHEREFORE, judgment is hereby rendered in favor of the plaintiffs against the defendants and
ordering the Register of Deeds for Baguio to cancel TCT No. T-36177, Books 198, Page 177 in
the names of defendants Spouses Honorato D. Santos and Maria Cristina Santos; to cancel TCT
No. 36707, Book 201, Page 107 in the names of defendant Spouses Cecilio Pe and Josefina L. Pe;
to cancel TCT No. T-36051, Book 198, Page 51 in the name of Flora Laron Wescombe, married
to Kevin Lind Wescombe (now deceased); to cancel TCT No. T-36147, Book 198, page 147 in the
name of Spouses Telesforo P. Alfelor II and Liza R. Alfelor; to cancel TCT No. T-36730, Book 201,
Page 130 in the names of Spouses Dean Roderick Fernando and Laarni Magdamo Fernando; to
cancel TCT No. 37437, Book 205, Page 37 in the name of Remedios Oca, and issue new ones
free from all liens and encumbrances, together with all the improvements therein in the names
of plaintiffs sharing pro indiviso as follows: 35% to Ramon A. Gonzales, married to Lilia Y.
Gonzales, of legal age, with postal address at 23 Sunrise Hill, New Manila, Quezon City; 37.92%
to Patria B. Capay, of legal age, widow, Filipino; 5.41% each to Ruby Ann Capay, of legal age,
Filipino, married to Pokka Vainio, Finnish citizen; Chona Margarita Capay, of legal age, Filipino,
married to Waldo Flores; Rosario Capay, of legal age, Filipino, married to Jose Cuaycong, Jr.,
Cynthia Capay, of legal age, Filipino, married to Raul Flores; Linda Joy Capay, of legal age,
Filipino, married to Pedro Duran, all with postal address at 37 Sampaguita St., Capitolville Subd.,
Bacolod City, ordering said defendants to vacate the premises in question and restoring
plaintiffs thereto and for defendant Traders Royal Bank to pay each of the plaintiffs moral
damages in the amount of P100,000.00, P40,000.00 in exemplary damages and P40,000.00 as
attorneys fees, all with legal interest from the filing of the complaint, with costs against
defendants.chanrobles virtual lawlibrary

Thereafter, the Capays filed with the CFI a supplemental complaint praying for the recovery of
the property with damages and attorneys fees. Trial in Civil Case No. Q-10453 proceeded and,
on October 3, 1997, the CFI rendered its decision declaring the mortgage void for want of
consideration. The CFI ordered, among other things, the cancellation of TCT No. T-16272 in the
name of TRB and the issuance of new certificates of title in the name of the Capay spouses.
TRB appealed to the Court of Appeals. While the case was pending in the Court of Appeals, TRB
on March 17, 1982 sold the land to Emelita Santiago in whose name a new certificate of title,
TCT No. 33774, 3 was issued, also, without any notice of lis pendens annotated thereon.
Santiago in turn divided the land into six (6) lots and sold these to Marcial Alcantara, Armando
Cruz and Artemio Sanchez, who became co-owners thereof. 4 Alcantara and his co-owners
developed the property and thereafter sold the six (6) lots to separate buyers who were issued
separate titles, again, bearing no notice of lis pendens. 5
On July 30, 1982, the Court of Appeals rendered its decision modifying the decision of the trial
court as to the award of damages but affirming the same in all other respects.
For having been filed out of time and for lack of merit, the petition for certiorari filed by TRB
before this Court 6 was denied in a Resolution dated September 12,1983. TRBs motion for
reconsideration was similarly denied in a Resolution dated October 12, 1983. The Courts

30

SO ORDERED. 8

TRB and the non-bank respondents appealed to the Court of Appeals. In a Decision
promulgated on February 24, 1994 in CA-G.R. CV No. 33920, the appellate court affirmed the
decision of the trial court in toto. 9 It ruled that the non-bank respondents cannot be
considered as purchasers for value and in good faith, having purchased the property
subsequent to the action in Civil Case No. Q-10453 and that while the notice of lis pendens was
not carried over to TRBs certificate of title, as well as to the subsequent transferees titles, it
was entered in the Day Book which is sufficient to constitute registration and notice to all
persons of such adverse claim, citing the case of Villasor v. Camon, 10 Levin v. Bass 11 and
Director of Lands v. Reyes. 12

b) The public respondent erred in not finding that it was not the fault of petitioner when the
notice of lis pendens was not carried over to its new title.
x

c) The public respondent erred in not finding that PD No. 1271 had legally caused the
invalidation of the Capays property and the subsequent validation of TRBs title over the same
property was effective even as against the Capays. 13

As regard TRB, the Court of Appeals said that the bank was in bad faith when it sold the
property knowing that it was under litigation and without informing the buyer of that fact.

Meanwhile, the non-bank respondents moved for a reconsideration of the Court of Appeals
decision. Convinced of the movants arguments, the Court of Appeals in a Resolution
promulgated on August 10, 1994 granted the motion for reconsideration and dismissed the
complaint as against them. The dispositive portion of the resolution states:chanrob1es virtual
1aw library

On April 26, 1994, TRB filed with this Court a petition for review to set aside the CA decision,
docketed herein as G.R. No. 114299, invoking the following grounds:chanrob1es virtual 1aw
library
I.

ACCORDINGLY, in view of the foregoing disquisitions and finding merit in the motion for
reconsideration, the same is hereby GRANTED. Consequently, the decision of this Court,
promulgated on February 24, 1994, is hereby RECONSIDERED. The complaint filed against
defendants-appellants with the court a quo is hereby ordered DISMISSED, and the certificate of
titles originally issued to them in their individual names are hereby ordered restored and duly
respected. We make no pronouncement as to costs.

THE RESPONDENT HONORABLE COURT OF APPEALS COMMITTED GRAVE AND SERIOUS ERROR
OF LAW IN PROMULGATING THE DISPUTED DECISION AND THEREBY DECIDED A QUESTION OF
SUBSTANCE WHOLLY CONTRARY TO SETTLED JURISPRUDENCE AND TOTALLY NOT IN ACCORD
WITH APPLICABLE DECISION OF THIS HONORABLE SUPREME COURT.

SO ORDERED. 14
II.
The Capays thus filed with this Court a petition for review, docketed a G.R. No. 118862, to set
aside the resolution of the Court of Appeals raising the following errors:chanrob1es virtual 1aw
library

THE RESPONDENT HONORABLE COURT OF APPEALS HAS COMMITTED SO GRAVE AND SERIOUS
ERRORS OF LAW IN SANCTIONING A DEPARTURE FROM THE USUAL AND ACCEPTED COURSE OF
JUDICIAL PROCEEDING AS TO CALL FOR THE EXERCISE OF THE POWER OF REVIEW BY THIS
HONORABLE SUPREME COURT.

a) The public respondent has plainly and manifestly acted whimsically, arbitrarily, capriciously,
with grave abuse of discretion, in excess of jurisdiction tantamount to lack of jurisdiction.

THE COURT OF APPEALS PALPABLY ERRED IN REVERSING ITSELF BY NOW HOLDING THAT
TUAZON VS. REYES, 48 PHIL. 814 AND RIVERA VS. MORAN, 48 PHIL. 836 ARE NOT APPLICABLE

31

HEREOF, WHILE PINO VS. COURT OF APPEALS, 198 SCRA 436, IS APPLICABLE.
THE COURT OF APPEALS PALPABLY ERRED IN REVERSING ITSELF WITH REGARDS TO TRADERS
ROYAL BANK, AFTER THE LATTER HAS PERFECTED ITS APPEAL TO THE SUPREME COURT.

II

VIII
THE COURT OF APPEALS PALPABLY ERRED IN REVERSING ITSELF BY NOW HOLDING THAT ATUN
VS. MUOZ, 97 PHIL. 762 AND LAROZA VS. GUIA, 134 SCRA 34, ARE NOT APPLICABLE.
THE COURT OF APPEALS PALPABLY ERRED IN NOT RULING ON THE COUNTER-ASSIGNMENT OF
ERROR THAT:chanrob1es virtual 1aw library

III

THE COURT OF APPEALS PALPABLY ERRED IN REVERSING ITSELF BY NOW HOLDING THAT LEVIN
VS. BASS, 91 PHIL. 419 VILLASOR VS. CAMON, 89 PHIL. 404 AND DIRECTOR OF LANDS VS. REYES,
68 SCRA 73, ARE NOT APPLICABLE HEREOF.

B) THE LOWER COURT ERRED IN NOT HOLDING THAT DEFENDANTS ARE BOUND BY THE
DECISION IN CIVIL CASE NO. Q-10453.
Subsequently, G.R. No. 118862 was consolidated with G. R. No. 114299, pursuant to this Courts
Resolution dated July 3, 1996. 15

IV
The consolidated cases primarily involve two issues: (1) who, as between the Capays and the
non-bank respondents, has a better right to the disputed property, and (2) whether or not TRB
is liable to the Capays for damages.

THE COURT OF APPEALS PALPABLY ERRED IN REVERSING ITSELF BY NOW HOLDING THAT
PETITIONERS ARE GUILTY OF LACHES.

On the first issue, we rule for the non-bank respondents.

V
I
THE COURT OF APPEALS PALPABLY ERRED IN REVERSING ITSELF BY NOW HOLDING THAT THERE
IS NO DISTINCTION IN THE REGISTRATION OF VOLUNTARY INSTRUMENTS VIS-A-VIS
INVOLUNTARY INSTRUMENTS.

First, when TRB purchased the property at the foreclosure sale, the notice of lis pendens that
the Capays caused to be annotated on their certificate of title was not carried over to the new
one issued to TRB. Neither did the certificate of title of Emelita Santiago, who purchased the
property from TRB, contain any such notice. When Santiago caused the property to be divided,
six (6) new certificates of title were issued, none of which contained any notice of lis pendens.
Santiago then sold the lots to Marcial Alcantara and his co-owners who next sold each of these
to the non-bank respondents. The non-bank respondents, therefore, could not have been
aware that the property in question was the subject of litigation when they acquired their
respective portions of said property. There was nothing in the certificates of title of their
respective predecessors-in-interest that could have aroused their suspicion. The non-bank
respondents had a right to rely on what appeared on the face of the title of their respective
predecessors-in-interest, and were not bound to go beyond the same. To hold otherwise would
defeat one of the principal objects of the Torrens system of the land registration, that is, to

VI

THE COURT OF APPEALS PALPABLY ERRED IN REVERSING ITSELF BY NOW HOLDING THAT
RESPONDENTS WHO ARE LAWYERS, RESPONSIBLE CITIZENS AND WELL-RESPECTED RESIDENTS
IN THE COMMUNITY, ARE EXEMPTED FROM THE EFFECTS OF THE CONSTRUCTIVE NOTICE
ARISING FROM REGISTRATION.
VII

32

facilitate transactions involving lands.chanroblesvirtualawlibrary

The main purpose of the torrens system is to avoid possible conflicts of title to real estate and
to facilitate transactions relative thereto by giving the public the right to rely upon the face of a
Torrens certificate of title and to dispense with the need of inquiring further, except when the
party concerned has actual knowledge of facts and circumstances that should impel a
reasonably cautious man to make such further inquiry. Where innocent third persons, relying
on the correctness of the certificate of title thus issued, acquire rights over the property, the
court cannot disregard such rights and order the total cancellation of the certificate. The effect
of such an outright cancellation would be to impair public confidence in the certificate of title,
for everyone dealing with property registered under the Torrens system would have to inquire
in every instance as to whether the title has been regularly or irregularly issued by the court.
Every person dealing with registered land may safely rely on the correctness of the certificate of
title issued therefor and the law will in no way oblige him to go beyond the certificate to
determine the condition of the property.
The Torrens system was adopted in this country because it was believed to be the most
effective measure to guarantee the integrity of land titles and to protect their indefensibility
once the claim of ownership is established and recognized. If a person purchases a piece of land
on the assurance that the sellers title thereto is valid, he should not run the risk of being told
later that his acquisition was ineffectual after all. This would not only be unfair to him. What is
worse is that if this were permitted, public confidence in the system would be eroded and land
transactions would have to be attended by complicated and not necessarily conclusive
investigations and proof of ownership. The further consequence would be that land conflicts
could be even more numerous and complex than they are now and possibly also more abrasive,
if not even violent. The Government, recognizing the worthy purposes of the Torrens system,
should be the first to accept the validity of titles issued thereunder once the conditions laid
down by the law are satisfied. 16
Second, the foregoing rule notwithstanding, the non-bank respondents nevertheless physically
inspected the properties and inquired from the Register of Deeds to ascertain the absence of
any defect in the title of the property they were purchasing-an exercise of diligence above that
required by law.

A In one of my visits to my sister who has been residing here for twelve (12) years now, I got
interested in buying a property here.
Q How did you come to know of this property at Asin Road where you now reside?
A My sister, Ruth Ann Valdez, sir.
Q When this particular property was bought by you, when was that?
A I do not remember the exact date, but it was in early 1984, sir.
Q At the time when you went to see the place where you now reside, how did it look?
A This particular property that I bought was then a small one (1)-room structure, it is a two (2)storey one (1) bedroom structure.
Q What kind of structure with regards to material?
A It is a semi-concrete structure, sir.
Q And aside from this two (2)-storey one (1)-room structure, how did the surrounding area look
like at the time you visited?
A There were stone walls from the road and there were stone walls in front of the property and
beside the property.
Q At the time you went to see the property with your agent, rather, your sister Ruth Ann
Valdez, did you come to know the owner?
A We did because at the time we went there, Mr. Alcantara was there supervising the workers.
Q And who?

Thus, respondent Aida Fernando Meeks, who bought Lot 5 for her son Dean,
testified:chanrob1es virtual 1aw library

A Amado Cruz, sir.

Q After you saw this property, what else did you do?

Q How did you come to live in Baguio City, particularly in Km. 2.5 San Luis, Baguio City?

33

A My first concern then was am I buying a property with a clean title.

A We saw the title that was made up in favor of Amado Cruz, sir.

Q In regards to this concern of yours, did you find an answer to this concern of yours?

Q And what was the result of your looking up for this title in the name of Amado Cruz?

A At first, I asked Mr. Alcantara and I was answered by him.

A We had to be reassured that it was a genuine one, so we asked Atty. Diomampo who heads
the office. We showed him a copy of that title and we were also reassured by him that anything
that was signed by him was as good as it is.

Q What was his answer?

A That it was a property with a clean title, that he has shown me the mother title and it is a
clean title.

Q Did this Atty. Diomampo reassure you that the title was good?
A He did.

Q Aside from being informed that it is a property with a clean title, did you do anything to
answer your question?

Q After your conversation with the Register of Deeds, what did you do?

A Yes, sir.

A The second step we did was to confer with our lawyer, a friend from RCBC Binondo, Manila,
this is Atty. Nelson Waje.

Q What did you do?

Q What is your purpose in going to this lawyer?
A Well, the first step I did was to go to the Land Registration Office.
Q Are you referring to the City Hall of Baguio?

A We wanted an assurance that we were getting a valid title just in case we think of buying the
property.

A Yes, the City Hall of Baguio.

Q What was the result of your conference with this lawyer?

Q And what did you do in the Registry of Deeds?

A He was absolutely certain that (that) was a valid title.

A We looked for the title, the original title, sir.

Q Mrs. Meeks, after looking at the place, going to the Register of Deeds, looking at the title and
seeing your lawyer friend, what decision did you finally make regarding the property?

Q When you say we, who was your companion?

A We wanted more reassurances, so we proceeded to Banaue, as advised by that same lawyer,
there is another office of the Bureau of Lands. I cannot recall the office but it has something to
do with registration of the old.

A Mr. Alcantara and my present husband, sir.

Q The three (3) of you?

Q What is your purpose in going to his Office in Banaue?

A Yes, sir.
A I wanted more reassurances that I was getting a valid title.
Q What title did you see there?
Q What was the result of your visit to the Banaue Office?

34

A When we went there the area is still being developed by Mr. Alcantara. As a matter of fact
the road leading to the property is still not passable considering that during that time it was
rainy season and it was muddy, we fell on our way going to the property and walked to have an
ocular inspection and physical check on the area, sir.chanrobles virtualawlibrary
chanrobles.com:chanrobles.com.ph

A We found the title of this property and there was reassurance that it was a clean title and we
saw the mother title under the Hilario family.
Q Mrs. Meeks, when you say Banaue, what particular place is this Banaue?

A It is in Banaue Street in Quezon City, sir.

Q And when you saw the title to this property and the mother title, what was the result of your
investigation, the investigation that you made?

Q What was the improvement, if any, that was in that parcel which you are going to purchase?

A We were reassured that we were purchasing a valid title, we had a genuine title.

A During that time, the riprap of the property is already there, the one-half of the riprap sir.

Q When you were able to determine that you had a valid, authentic or genuine title, what did
you do?

Q Do you know who was making this improvement at the time that you went there?
A I would understand that it was Marcial Alcantara, sir.

A That is when I finally thought of purchasing the property. 17

Q After you saw the place and you saw the riprap and you were in the course of deciding to
purchase this property, what else did you do?

Telesforo Alfelor II, the purchaser of Lot 4, narrated going through a similar routine:chanrob1es
virtual 1aw library

A First, I have to consider that the property is clean.

Q How did you come to know of this place as Asin Road where you are presently residing?
Q How did you go about determining whether the title of the property is clean?
A It was actually through Mrs. Flory Recto who is presently the Branch Manager of CocoBank.
She informed my wife that there is a property for sale at Asin road, and she was the one who
introduced to us Mr. Alcantara, sir.

A Considering that Marcial Alcantara is a real estate broker, I went to his office and checked the
documents he has regarding the property.
Q And what was the result of your checking as to whether the title of the property is clean?

Q When you were informed by Mrs. Recto and when you met with Mr. Alcantara, did you see
the property that was being offered for sale?

A He showed me the copy of the title and it was clean, sir.

A Yes, sir.
Q Aside from going to Mr. Alcantara to check up the title of the property, what else did you do?
Q When did you specifically see the property, if you can recall?
A I would say it is around the third quarter of 1983, sir.

A Well, the next thing is I requested his wife to accompany me to the Bureau of Lands or rather
the Registry of Deeds, sir.

Q When you went to see the place, could you please describe what you saw at that time?

Q What registry of Deeds are you referring to?

35

A The Registry of Deeds of Baguio City, sir.

Q Is he also a resident of Baguio?

Q And were you able to see the Register of Deeds regarding what you would like to know?

A He is from Buyagan, La Trinidad, sir.

A Yes, and we were given a certification regarding this particular area that it was clean, sir.

Q How did you come to know of this Armando Gabriel wanting to sell a property in Asin?

Q What Certification are you referring to?

A He approached me in the house, sir. He has acquired a title from the Traders Royal Bank.

A It is a Certification duly signed by the employee of the Registry of Deeds Adelina Tabangin, sir.

Q Can you inform the Honorable Court when you had this conversation with Armando Gabriel
on the sale of the property at Asin Road?

Q Do you have a copy of that Certification?

A Later part of March, 1983, sir.
A Yes, I have, sir. 18
Q Now, when this Armando Gabriel informed you that he wants his property to be sold, what
did you do?

The testimonies of Honorato Santos 19 and Josefina Pe 20 were to the same effect.
The non-bank respondents predecessor-in-interest, Marcial Alcantara, was no less
through:chanrob1es virtual 1aw library

A I went to the place with the agent, sir.

Q When you say you went to the place with the agent, what place?

Q And will you give a brief description of what you do?

A Kilometer 2, Asin Road, sir.
A I normally acquire land, quite big tract of land and subdivide it into smaller lots and sold it to
some interested parties.

Q And when you went there to see the place, did you actually go there to see the place?

Q Specifically, Mr. Alcantara, will you please inform the Court in what place in Baguio have you
acquired and subdivided and sold lots?

A By walking, I parked my car a kilometer away, sir.

Q Is it my understanding that when you went to see the property there were no roads?

A Dominican Hill, Leonila Hill, Crystal Cave and Asin Road, sir.
A None, sir.
Q You mentioned Asin Road, what particular place in Asin Road are you referring?
x

A That property I bought from Emelita Santiago, sir.

Q When you say you bought it from Emelita Santiago, how did you come to know that Emelita
Santiago is disposing of the property?

Q Mr. Alcantara, when you went to see this place at Asin Road last week of March, 1983, will
you please briefly describe how this place looked like at that time?

A Because of the father, he is the one who offered me the property, sir, Armando Gabriel.

A The place was mountainous, grassy, there were cogon trees, some of the roads were eroding
already, so we cannot possibly enter the property, sir.

36

Q At the time you entered the place, was there any visible sign of claim by anyone?

Q After purchasing the property from Emelita Santiago, could you please tell the Honorable
Court what you did with that deed of sale?

A None, sir.
A We registered it with the Register of Deeds for the Certificate of Title because at that time
when we bought the property, Emelita Santiago had it subdivided into six (6) lots, sir.

Q In terms of fence in the area?

A There is no such, sir.

Q Is it our understanding that prior to your purchase the property was subdivided into six (6)
parcels?
x

x
A Yes, sir.

Q Aside from looking or going to the property, what else did you do to this property prior to
your purchase?

Q Could you please inform the Honorable Court if you have any buyers in the subdivision of this
property prior to your purchase?

A I investigated it with the Register of Deeds, sir.

A Yes, I have.

Q What is your purpose in investigating it with the Register of Deeds?

Q This subdivision of this property, to what office was it brought for action?

A To see if the paper is clean and there are no encumbrances, sir.

A Bureau of Lands, San Fernando, La Union, sir.

Q To whom did you talk?

Q Now, Mr .Alcantara, at the time that you had this property subdivided by the owner, could
you please inform the Court if there was any claim by any other party opposing the subdivision
or claiming the property?

A To Atty. Ernesto Diomampo, sir.

Q And when you went to the Registry of Deeds to investigate and check, did you have occasion
to talk with Atty. Diomampo?

A None, sir.
Q When the Deed of Sale was executed and you said that you presented it to the Register of
Deeds and after the subdivision already, what action did the Register of Deeds have regarding
the matter?

A Yes, sir.
Q And what was the result of your talk with Atty. Diomampo?

A They approved it and registered it already in six (6) titles, sir.

A The papers are clean except to the annotation at the back with the road right of way, sir.
Q In whose names?
Q After making this investigation with the Register of Deeds and talking with Atty. Diomampo,
what else transpired?

A One (1) title under my name, Amado Cruz and Dr. Sanchez, sir.

A We bought the property, sir.

Q Initially, Mr. Alcantara, you said that you are the sole purchaser of this entire area of One

37

Thousand Five Hundred Ninety One (1,591) Square Meters. Now, you are informing this
Honorable Court that one Amado Cruz and one Dr. Sanchez were also issued two (2) titles.
Could you explain how these titles came into their possession?

While it is true that under the law it is the act of registration of the deed of conveyance that
serves as the operative act to convey the land registered under the Torrens System (Davao
Grains, Inc. v. Intermediate Appellate Court, 171 SCRA 612), the petitioners cannot invoke said
dictum because their action to recover Lot 4362 is barred by the equitable doctrine of laches.

A Actually, two (2) are our co-owners, sir.

Q So, is it our understanding that the Deed of Sale from Emelita Santiago is in favor of these two
(2) Atty. Cruz and Dr. Sanchez?

The act of registering the conveyance to Rosendo was constructive notice to the whole world of
the fact of such conveyance (Heirs of Maria Marasigan v. Intermediate Appellate Court, 152
SCRA 253).

A Yes, sir. 21
Third, between two innocent persons, the one who made it possible for the wrong to be done
should be the one to bear the resulting loss. 22 The Capays filed the notice of lis pendens way
back on March 17, 1967 but the same was not annotated in TRBs title. The Capays and their
counsel Atty. Ramon A. Gonzales knew in 1968 of the extra-judicial foreclosure sale of the
property to TRB and the consolidation of title in the banks name following the lapse of the oneyear period of redemption. But in the next fifteen (15) years or so, they did not bother to find
out the status of their title or whether the liens noted on the original certificate of title were
still existing considering that the property had already been foreclosed. In the meantime, the
subject property had undergone a series of transfers to buyers in good faith and for value. It
was not until after the land was subdivided and developed wit the buyers building their houses
on the other lots when the Capays suddenly appeared and questioned the occupants titles. At
the very least, the Capays are guilty of laches. Laches has been defined as the failure or neglect,
for an unreasonable and unexplained length of time, to do which by exercising due diligence
could nor should have been done earlier; it is negligence or omission to assert a right within a
reasonable time, warranting presumption that the party entitled to it either has abandoned it
or declined to assert it. 23
Verily, the principle on prescription of actions is designed to cover situations such as the case at
bar, where there have been a series of transfers to innocent purchasers for value. To set aside
these transactions only to accommodate a party who has slept on his right is anathema to good
order.chanrobles virtual lawlibrary
Independently of the principle of prescription of actions working against petitioners, the
doctrine of laches may further be counted against them, which latter tenet finds application
even to imprescriptible actions. . . 24

But the petitioners complaint to recover the title and possession of Lot 4362 was filed only on
July 21, 1981, twelve (12) years after the registration of the sale to Rosendo. The petitioners
failed and neglected for an unreasonably long time to assert their right, if any, to the property
in Rosendos possession.
Being guilty of laches, the Capays cannot invoke the ruling in Villasor v. Camon, Levin v. Bass
and Director of Lands v. Reyes 26 to the effect that entry of the notice of lis pendens in the day
book (primary entry book) is sufficient to constitute registration and such entry is notice to all
persons of such adverse claim. Certainly, it is most iniquitous for the Capays who, after sleeping
on their rights for fifteen years, to assert ownership over the property that has undergone
several transfers made in good faith and for value and already subdivided into several lots with
improvements introduced thereon by their owners.
In the same vein, the cases cited by the Capays in their first two (2) assignment of errors do not
help them any, as the transferees in said cases were not innocent purchasers for value and in
good faith. In Tuazon v. Reyes and Siochi, 27 where the land involved therein was sold by
Petronilo David to Vicente Tuazon, it was with a deed containing the recital that the land was in
dispute between the vendor and Roberto Siochi. Tuazon, who was merely subrogated to the
rights of the vendor was aware of the dispute and, furthermore, David did not warrant the title
to the same. In Rivera v. Moran, 28 Rivera acquired interest in the land before the final decree
was entered in the cadastral proceedings. Rivera, the transferee, was aware of the pending
litigation and, consequently, could not have been considered a purchaser in good faith.
Similarly, in Atun, Et. Al. v. Nunez, Et. Al. 29 and Laroza v. Guia, 30 the buyers of the property at
the time of their acquisition knew of the existence of the notice of lis pendens. In contrast to
the cited cases, the non-bank respondents in the case at bar acquired their respective portions
of the land with clean title from their predecessors-in-interest.
II

In De La Calzada-Cierras v. Court of Appeals, 25 we held:chanrob1es virtual 1aw library

38

prohibition on September 22, 1966 against the TRB before the CFI to stop the foreclosure sale.
Failing in that attempt, the Capays filed a supplemental complaint for the recovery of the
property. The case reached this Court. Prescription or laches could not have worked against the
Capays because they had persistently pursued their suit against TRB to recover their
property.chanrobles.com.ph : virtual law library

We come now to TRBs liability towards the Capays.

The Bank unconvincingly tries to wash its hands off the present controversy, and attempts to
shift the blame on the Capays, thus:chanrob1es virtual 1aw library
x

On the other hand, it is difficult to believe TRBs assertion that after holding on to the property
for more than ten (10) years, it suddenly realized that it was acting in violation of the General
Bank Act. What is apparent is that TRB took advantage of the absence of the notice of lis
pendens at the back of their certificate of title and sold the property to an unwary purchaser.
This notwithstanding the adverse decision of the trial court and the pendency of its appeal. TRB,
whose timing indeed smacks of bad faith, thus transferred caused the property without the lis
pendens annotated on its title to put it beyond the Capays reach. Clearly, the bank acted in a
manner contrary to morals, good customs and public policy, and should be held liable for
damages. 34

23. The petitioner Bank, during all the time that it was holding the title for over fourteen (14)
years that there was no legal impediment for it to sell said property, Central Bank regulations
require that real properties of banks should not be held for more than five (5) years;
24. The fault of the Register of Deeds in not carrying over the Notice of Lis Pendens to the new
title of the petitioner Bank should not be absorbed by the latter considering that in all good
faith, it was not aware of the existence of said annotation during all the time that said title was
in its possession for almost fourteen (14) years before the property was sold to Emelita G.
Santiago . . . 31

Considering, however, that the mortgage in favor of TRB had been declared null and void for
want of consideration and, consequently, the foreclosure proceedings did not have a valid
effect, the Capays would ordinarily be entitled to the recovery of their property. Nevertheless,
this remedy is not now available to the Capays inasmuch as title to said property has passed
into the hands of third parties who acquired the same in good faith and for value. Such being
the case, TRB is duty bound to pay the Capays the fair market value of the property at the time
it was sold to Emelita Santiago, the transferee of TRB.

TRB concludes that" (t)he inaction and negligence of private respondents, allowing ownership
to pass for almost 15 years constitute prescription of action and/or laches." 32
Section 25 of the General Banking Act, 33 provides that no bank "shall hold the possession of
any real estate under mortgage or trust, deed, or the title and possession of any real estate
purchased to secure any debt due to it, for a longer period than five years." TRB, however,
admits holding on to the foreclosed property for twelve (12) years after consolidating title in its
name. The bank is therefore, estopped from invoking banking laws and regulations to justify its
belated disposition of the property. It cannot be allowed to hide behind the law which it itself
violated.

WHEREFORE, the decision of the Court of Appeals dated February 24, 1994 in CA-G.R. CV No.
33920, as modified by its Resolution dated August 10, 1994 is hereby AFFIRMED. In addition,
Traders Royal Bank is ordered to pay the Capays the fair market value of the property at the
time it was sold to Emelita Santiago.
This Decision is without prejudice to whatever criminal, civil or administrative action against the
Register of Deeds and/or his assistants that may be taken by the party or parties prejudiced by
the failure of the former to carry over the notice of lis pendens to the certificate of title in the
name of TRB.

TRB cannot feign ignorance of the existence of the lis pendens because when the property was
foreclosed by it, the notice of lis pendens was annotated on the title. But when TCT No. T-6595
in the name of the Capay spouses was cancelled after the foreclosure, TCT No. T-16272 which
was issued in place thereof in the name of TRB did not carry over the notice of lis pendens.

SO ORDERED.

We do not find the Capays guilty of "inaction and negligence" as against TRB. It may be recalled
that upon the commencement of foreclosure proceedings by TRB, the Capays filed an action for

39

Davide, Jr., C.J., Puno, Pardo and Santiago, JJ., concur.