Republic of the Philippines

Supreme Court
Manila

SECOND DIVISION

SPOUSES ANSELMO[1] and

PRISCILLA BULAONG,
Petitioners,

G.R. No. 156318

Present:
CARPIO, J., Chairperson,
BRION,
PEREZ,
MENDOZA,* and
SERENO, JJ.

- versus -

Promulgated:
VERONICA GONZALES,
Respondent.

September 5, 2011

x--------------------------------------------------------------------------------------------------------x

DECISION
BRION, J.:
Petitioners Anselmo Bulaong and Priscilla Bulaong collectively referred to as
the Bulaongs seek, through their petition for review on certiorari, the reversal of
the decision[2] of the Court of Appeals (CA) dated July 31, 2002 in CA-G.R. SP No.
55423 and the subsequent resolution of November 27, 2002 [3] reiterating this
decision. These CA rulings reversed and set aside the decision [4] of the Regional
Trial Court (RTC) of Malolos, Bulacan, Branch 12, that ordered the cancellation of
Transfer Certificate of Title (TCT) No. T-62002 and TCT No. T-62003.
FACTUAL ANTECEDENTS

This case traces its roots to the conflicting claims of two sets of parties over
two parcels of land. The first parcel of land, with an area of 237 square meters and
covered by TCT No. T-249639,[5] was originally registered in the name of Fortunato
E. Limpo, married to Bertha Limpo.[6] The other parcel of land, with an area of 86
square meters and covered by TCT No. T-249641, [7] was originally registered in the
names of Pacifica E. Limpo, married to Nicanor C. Sincionco, and Fortunato E.
Limpo, married to Bertha Limpo.[8]
These parcels of land were mortgaged by the daughter of Fortunato and
Bertha Limpo, Regina Christi Limpo, upon the authority of her father,[9] to the
Bulaongs, to secure a loan in the amount of P4,300,000.00. The mortgage was
evidenced by a Deed of Mortgage dated January 13, 1993.[10]
The Bulaongs alleged that before they executed the mortgage, Regina gave
them the owners duplicates of title of the two properties. In early January
1993 (the exact date is unknown but prior to the execution of the mortgage),
Anselmo Bulaong, together with his counsel, Atty. Roberto Dionisio, allegedly went
to the Office of the Register of Deeds of Bulacan to check the titles of the properties
to be mortgaged. According to the Bulaongs, the Register of Deeds, Atty.
Elenita Corpus, assured them that TCT Nos. T-249639 and T-249641 were
completely clear of any liens or encumbrances from any party. Relying on
this assurance, Anselmo Bulaong agreed to the execution of the mortgage over the
two properties.[11]

After the execution of the mortgage, the Bulaongs once again went to the
Office of the Register of Deeds of Bulacan to register and annotate the mortgage on
the titles. They learned then that the Register of Deeds copies of the two titles
were among the records that were burned in the fire that destroyed the entire office
of the Register of Deeds of Bulacan on March 7, 1987. Atty. Elenita Corpus
convinced them to cause the reconstitution of the originals of the titles, and further
assured them that the mortgage over the properties would be protected since a
copy of the Deed of Mortgage had already been given to her office for annotation.
[12]

On February 4, 1993, the newly reconstituted titles were issued TCT No.
RT-29488 replaced TCT No. T-249639, and TCT No. RT-22489 replaced TCT No. T249641, still in the names of Fortunato Limpo, and of Pacifica Limpo and Fortunato
Limpo, respectively.
Thereafter, on February 24, 1993, new titles were again issued upon
the extrajudicial settlement of the estate of Reginas parents. Thus, TCT No. RT29488

was

cancelled

and

TCT

No.

T-30395

was

issued

in

its

place,

with Regina replacing her parents as the registered owner; similarly, TCT No. RT22489 was cancelled and TCT No. T-30396 was issued in the names of Pacifica
Limpo and Regina Limpo, as her parents heir.[13]
To the Bulaongs astonishment, the new titles in Reginas name now
contained the following entries:
TCT No. T-30395
Entry No. 5306; Kind: Condition: The property herein
described is subject to the prov. of sec. 4, rule 74 of the rules of court.
date of instrument: 1-13-93; date of inscription: 2-24-93 at 10:42
a.m.
(SGD.) ELENITA E. CORPUS
Register of Deeds

Entry No. 5484; Kind: Mortgage: Exec. In favor of: Sps.

Anselmo Bulaong & Priscilla Bulaong; Condition: Covering the parcel of
land herein described, for the sum of P4,300,000.00 subject to all the
conditions stipulated in the deed of mortgage on file in this office. Doc.
No. 428, Page 86, Book XXX, S. of 1993, N.P. Roberto Dionisio of
Mal. Bul. Date of Instrument: 1-13-93; date of inscription 3-193 at 9:20 a.m.
(SGD.) ELENITA E. CORPUS
Register of Deeds
/5306
(NOTE: Proceed to Entry no. 5484)
Entry No. 7808: Kind: NOTICE OF LEVY ON EXECUTION:
Conditions: Notice is hereby given that by virtue of the Writ of
Execution, issued in Crim. Cases Nos. 9638 to 9646-M, entitled People
of the Philippines v. Reggie Christi Schaetchen Limpo and Maria
Lourdes (Bong) Diaz y Gamir, et al., Accused by the Regional Trial
Court, Third Jud. Region, Branch 12, Malolos, Bulacan, under date of
Dec. 29, 1992, and at the instance of the private complainant Veronica
R. Gonzales, thru counsel, levy on execution is hereby made upon all
the rights, shares, interests and participations of accused Reggie
Christi Schaetchen[14] over the real properties described in T-249641
and T-249639, by virtue of Deeds of Absolute Sale executed by
former registered owners in favor of Reggie Christi Schaetchen
dated November 5, 1991, together with all the improvements
existing thereon, was levied on execution preparatory to the sale of
the same without prejudice to third persons having better right thereof
and to any valid lien and encumbrances. Date of instrument Jan. 4,
1993; Date of inscription Jan. 4, 1993 at 11:50 a.m.
(SGD.) ELENITA E. CORPUS
Register of
Deeds/negm[15] (emphasis ours)
TCT No. T-30396
Entry No. 5306; Kind: Condition: One-half (1/2) of the
property herein described is subject to the prov. of sec. 4, rule 74 of
the rules of court. date of instrument: 1-13-93; date of inscription: 224-93 at 10:42 a.m.
(SGD.) ELENITA E. CORPUS
Register of Deeds
Entry No. 5484; Kind: Mortgage: Exec. In favor of: Sps.
Anselmo Bulaong & Priscilla Bulaong; Condition: Covering the parcel of

land herein described, for the sum of P4,300,000.00 subject to all the
conditions stipulated in the deed of mortgage on file in this office. Doc.
No. 428, Page 86, Book XXX, S. of 1993, N.P. Roberto Dionisio of
Mal. Bul. Date of Instrument: 1-13-93; date of inscription 3-193 at 9:20 a.m.
(SGD.) ELENITA E. CORPUS
Register of Deeds
/5306
(NOTE: Proceed to Entry No. 5484)
Entry No. 7808: Kind: NOTICE OF LEVY ON EXECUTION:
Conditions: Notice is hereby given that by virtue of the Writ of
Execution, issued in Crim. Cases Nos. 9638 to 9646-M, entitled People
of the Philippines v. Reggie Christi Schaetchen Limpo and Maria
Lourdes (Bong) Diaz y Gamir, et al., Accused by the Regional Trial
Court, Third Jud. Region, Branch 12, Malolos, Bulacan, under date of
Dec. 29, 1992, and at the instance of the private complainant Veronica
R. Gonzales, thru counsel, levy on execution is hereby made upon all
the rights, shares, interests and participations of accused Reggie
Christi Schaetchen over the real properties described in T-249641 and
T-249639, by virtue of Deeds of Absolute Sale executed by
former registered owners in favor of Reggie Christi Schaetchen
dated Nov. 5, 1991, together with all the improvements existing
thereon, was levied on execution preparatory to the sale of the same
without prejudice to third persons having better right thereof and to
any valid lien and encumbrances. Date of instrument Jan. 4, 1993;
Date of inscription Jan. 4, 1993 at 11:50 a.m.
(SGD.) ELENITA E. CORPUS
Register of
Deeds/negm[16] (emphasis ours)

It appears that a certain Veronica Gonzales had filed a criminal case for
estafa against Regina with the RTC of Bulacan, Branch 12.[17] On October 28, 1991,
the RTC rendered a decision acquitting Regina, but at the same time ordering her to
pay Veronica actual damages in the total amount of P275,000.00.[18] By virtue of a
writ of execution issued on December 29, 1992, the above-quoted notice of levy
was recorded in the Primary Entry Book of the Registry of Bulacan on January 4,
1993. However, this was not annotated on the titles themselves because at the
time of the levy, the properties had not yet been transferred to Regina, but were
still registered in the name of her parents.[19]

Based on the annotation referring to the notice of levy, the subject of the
levy was Reginas interest in the properties which, in turn, was anchored on a Deed
of Absolute Sale allegedly executed by her parents on November 5, 1991 to transfer
their interest in both properties to her. Notably, Regina never registered this
sale with the Register of Deeds.
To satisfy Reginas judgment debt, the two lots were sold at public auction
on June 8, 1993 to Veronica, the only bidder, forP640,354.14.[20] The Certificate of
Sale was annotated on the titles on June 8, 1993 as Entry No. 2075. Upon the lapse
of the one year redemption period on June 20, 1994, Veronicas titles over the
properties were consolidated. A final deed of sale was issued in Veronicas name
and annotated as Entry No. 40425 on TCT Nos. T-30395 and T-30396 on June 24,
1994.[21]
On the other hand, the Bulaongs also had the mortgage extrajudicially
foreclosed, with the sheriff conducting the auction sale on August 22, 1994. The
Bulaongs

were

of P4,300,000.00.

the

highest

They

also

bidders,
paid

buying
the

the

properties

corresponding

for

capital

the

sum

gains

tax

of P215,000.00, plus P64,500.00 for the documentary stamp tax, which were
required before the titles to the lots could be transferred in their names. The
Certificate of Sale in their favor was inscribed on August 23, 1994 on TCT No. T30395 and TCT No. T-30396 as Entry No. 46739. [22]
Veronica thereafter filed a petition for the surrender to the Register of Deeds
of the owners copies of TCT Nos. T-30395 and T-30396 with the RTC of Malolos,
docketed as LRC Case No. P-292. On December 16, 1994, the RTC granted the
petition and ordered Regina to surrender her owners copies of the titles; should
Regina fail to comply, the RTC ordered the Register of Deeds to cancel these titles
and issue new ones in Veronicas name. Complying with this order, the Register of
Deeds cancelled TCT Nos. T-30395 and T-30396, and issued TCT No. T-62002 in
Veronicas name, and TCT No. T-62003 in the name of Veronica and Pacifica
Limpo. These new titles were clean and did not contain any annotations,
liens or encumbrances.

The Bulaongs thus filed a petition for mandamus with the RTC of Bulacan
against Ramon Sampana, the incumbent Register of Deeds of Bulacan, and
Veronica, praying that the court order Sampana to cancel TCT Nos. T-62002 and T62003, and issue new titles in their names; and order the respondents therein to
pay them moral and exemplary damages, and attorneys fees.
On July 30, 1999, the RTC ruled in favor of the Bulaongs. According to the
RTC, allowing Veronica to levy on the properties worth at least P5,000,000.00 for a
judgment of P275,000.00 would result in gross unjust enrichment. The RTC thus
ordered the Register of Deeds of Bulacan to issue new titles in the name of the
Bulaongs, but only after the Bulaongs had reimbursed the amount of P275,000.00
to

Veronica,

with

interest.

The

RTC

also

ordered

Veronica

to

pay

the

Bulaongs P50,000.00 as attorneys fees. The dispositive portion of the RTC decision
reads:
WHEREFORE, conformably with all the foregoing, judgment is
hereby rendered:
1.

Annulling and cancelling Transfer Certificates of Title Nos. T62002 in the name of defendant Veronica Gonzales, and T-62003 in
the name of defendant Veronica Gonzales and Pacifica E. Limpo
married to Nicanor C. Sincioco;

2.

Ordering the Ex-Officio Sheriff of Bulacan to execute a final

deed of sale in favor of petitioner spouses Anselmo Bulaong and
Pr[i]scilla Bulaong on the basis of the registered Certificate of Sale
executed by said court officer on August 23, 1994, in favor of said
spouses-mortgagee, without the owner-mortgagors exercising the
right of redemption since then;

3.

Ordering the Register of Deeds of Bulacan to issue new titles,

in place of Transfer Certificate of Title Nos. T-62002 and T-62003,
this time in the name of petitioner spouses Anselmo Bulaong and
Pr[is]cilla Bulaong, as soon as the aforesaid final deed of sale in
their favor is executed by the Ex-Officio Sheriff of Bulacan and only
after said spouses shall have paid and/or reimbursed Veronica
Gonzales lien as judgment creditor in the amount of P275,000.00,
plus interests at the legal rate computed from November 19, 1995,
until fully paid and satisfied;
4.
Order[ing] herein defendants Veronica R. Gonzales and the
Register of Deeds of Bulacan upon notice of this judgment, not to
effect any transfer, encumbrance or any disposition whatsoever of
the parcels of land covered by Transfer Certificates of Title Nos.

62002 and T-62003, or any part thereof, right or interest therein,

either by sale or any form of conveyance, lien or encumbrance; and
5.

Ordering only defendant Veronica R. Gonzales to pay herein

petitioners P50,000.00 as just and equitable attorneys fees, and
the costs of suit, defendant Ramon C. Sampana as the Register of
Deeds of Bulacan having merely performed his ministerial duty of
following the court order of issuing titles to defendant Gonzales.

No pronouncement as to moral and exemplary damages alleged

in the petition but not even testified to by petitioners at the trial. [23]

Both parties appealed to the CA, with the case docketed as CA-G.R. SP No.
55423.
THE COURT OF APPEALS DECISION
In its July 31, 2002 decision, the CA upheld the validity of the Notice of Levy
on Execution, noting that it created a lien in favor of the judgment creditor over the
property. According to the CA, when the Bulaongs received the owners copies of
TCT Nos. T-30395 and T-30396, the Notice of Levy was already annotated on the
titles and, thus, should have put them on guard. As mortgagees of the lots, the
Bulaongs had the option to redeem the properties within the redemption period
provided by law. Since they failed to avail of this remedy, the consolidation of titles
in Veronicas name was proper.
THE PETITION
The Bulaongs filed the present petition, raising the following issues:
a)

Whether Entry No. 7808 is valid;

b)

Whether Veronica has a superior right over the properties; and

c)

Assuming the notice of levy earlier annotated in favor of Veronica to

be valid, whether there was a valid foreclosure sale.
THE COURTS RULING

We GRANT the petition.

Procedural issues
Time and again, we have stated that petitions for review on certiorari shall
only raise questions of law, as questions of fact are not reviewable by this
Court. The main issue of who has a better right over the disputed properties is not
only a question of law but one that requires a thorough review of the presented
evidence, in view particularly of the Bulaongs allegation that fraud attended the
annotation of Entry No. 7808 in the titles. Thus, in the usual course, we would have
denied the present petition for violation of Section 1, Rule 45 of the Rules of Court,
which provides:

Section 1. Filing of petition with Supreme Court. A party

desiring to appeal by certiorari from a judgment or final order or
resolution of the Court of Appeals, the Sandiganbayan, the Regional
Trial Court or other courts whenever authorized by law, may file with
the Supreme Court a verified petition for review on certiorari. The
petition shall raise only questions of law which must be
distinctly set forth. (emphasis ours)

This rule, however, admits of several exceptions. Questions of fact may be

reviewed, among others, when the lower court makes inferences that are
manifestly mistaken, and when the judgment of the CA is based on a
misapprehension of facts.[24] As will be apparent in the discussions below, these
exceptional circumstances are present in the present case. A review of the
evidence, therefore, is not only allowed, but is necessary for the proper resolution
of the presented issues.

It has not escaped our attention that the Bulaongs appear to have
erroneously filed a petition for mandamus for what is essentially an action to assail
the validity of Veronicas certificates of title over the subject properties. This lapse,
however, is not legally significant under the well-settled rule that the cause of
action in a complaint is not the title or designation of the complaint, but the
allegations in the body of the complaint. The designation or caption is not
controlling as it is not even an indispensable part of the complaint; the allegations
of the complaint control.[25] We thus proceed to resolve the case, bearing in mind
that the relief the Bulaongs sought before the lower court was to nullify Veronicas
certificates of title and to order the Register of Deeds to issue new titles in their
name.

Redemption not the proper remedy

The CA faulted the Bulaongs for not redeeming the properties from Veronica
when they had the option of doing so. For failing to exercise this right, the CA
concluded that the consolidation of the titles to the lots in Veronicas name thus
became a matter of course.

We disagree.

At the outset, we observe that this is not a simple case of determining which
lien came first. A perusal of the Bulaongs submissions to the Court shows that they
have consistently maintained that the levy and the corresponding execution sale in
Veronicas favor are null and void. Had the Bulaongs merely exercised the right of
redemption, they would have been barred from raising these issues in court,
pursuant to our ruling in Cometa v. Intermediate Appellate Court: [26]

The respondent appellate court's emphasis on the failure of the

petitioner to redeem the properties within the period required by law is
misplaced because redemption, in this case, is inconsistent with the
petitioner's claim of invalidity of levy and sale. Redemption is an
implied admission of the regularity of the sale and would estop
the petitioner from later impugning its validity on that ground.
[27]
(emphasis ours)

The Bulaongs were thus justified in their refusal to redeem the properties.

Annotation is valid

The Bulaongs assail the validity of Entry No. 7808 (relating to the Notice of
Levy on Execution in Veronicas favor) on the two titles, asserting that it is null and
void for being a fraudulent entry. In support of this contention, they note the
following suspicious circumstances: (a) although Entry No. 7808 has a higher
number and appears after Entry No. 5484 (corresponding to the Bulaongs
mortgage) on the titles, Entry No. 7808 appeared in an earlier volume of the Book
of Entries; and (b) although the Notice of Levy on Execution was purportedly
presented to the Registry of Bulacan on January 4, 1993, or prior to the date when
the Bulaongs deed of mortgage was presented on January 13, 1993, the Notice of
Levy on Execution, Entry No. 7808, was numbered and placed after the mortgage,
Entry No. 5484, on the titles.

We agree that these circumstances render the Notice of Levy on Execution,

annotated on the titles, highly suspicious. These circumstances, however, can be
sufficiently explained when the records are examined.

The records show that on January 4, 1993, Veronica went to the Registry of
Bulacan with the Notice of Levy on Execution, requesting that the notice be
registered. While the Register of Deeds placed the Notice of Levy on Execution in
the Primary Entry Book, she did not immediately make a registration when a
question arose regarding the registrability of the notice; the question necessitated
the submission of a consulta to the Land Registration Authority (LRA) on January
25, 1993.[28]

The LRA Administrator responded to the consulta only on February 10, 1993.
[29]

Thus, the Notice of Levy on Execution was not immediately annotated on the

newly reconstituted titles, which were issued on February 4, 1993. It was only
when new titles were again issued to reflect the extrajudicial settlement of the
estate of Reginas parents on February 24, 1993 that the Notice of Levy on
Execution appeared on the titles as Entry No. 7808.

The apparent discrepancy in the numbering of the Notice of Levy on

Execution and the date of inscription on the certificates of title is suitably explained
by Section 56 of Presidential Decree No. 1529 whose pertinent portion states:

Section 56. Primary Entry Book; fees; certified copies. Each

Register of Deeds shall keep a primary entry book in which, upon
payment of the entry fee, he shall enter, in the order of their
reception, all instruments including copies of writs and
processes filed with him relating to registered land. He shall, as a
preliminary process in registration, note in such book the date,
hour and minute of reception of all instruments, in the order in
which they were received. They shall be regarded as registered
from the time so noted, andthe memorandum of each instrument,
when made on the certificate of title to which it refers,
shall bear the same date: Provided, that the national government as
well as the provincial and city governments shall be exempt from the
payment of such fees in advance in order to be entitled to entry and
registration. [emphases ours]

In other words, the order of entries in the Primary Entry Book determines the
priority in registration. Thus, the Register of Deeds merely complied with the law
when she fixed Entry No. 7808s date of inscription as January 4, 1993, to coincide
with the date when the Notice of Levy on Execution was presented and inscribed in
the Primary Entry Book.

The late annotation of the levy on execution on the titles did not at all lessen
its effectivity. Jurisprudence has already established the rule that the entry of the
notice of levy on execution in the Primary Entry Book, even without the
corresponding annotation on the certificate of titles, is sufficient notice to all
persons that the land is already subject to the levy.[30] As we explained in Armed
Forces and Police Mutual Benefit Association, Inc. v. Santiago:[31]

The notice of levy on attachment in favor of petitioner may be

annotated on TCT No. PT-94912. Levin v. Bass (91 Phil. 420 [1952];
see also Dr. Caviles, Jr. v. Bautista, 377 Phil. 25; 319 SCRA 24
[1999]; Garcia v. Court of Appeals, 184 Phil. 358; 95 SCRA 380
[19890]) provided the distinction between voluntary registration and
involuntary registration. In voluntary registration, such as a sale,
mortgage, lease and the like, if the owner's duplicate certificate be not
surrendered and presented or if no payment of registration fees be
made within fifteen (15) days, entry in the day book of the deed of
sale does not operate to convey and affect the land sold.
In involuntary registration, such as an attachment, levy upon
execution, lis pendens and the like, entry thereof in the day book is
a sufficient notice to all persons of such adverse claim.

The entry of the notice of levy on attachment in the primary

entry book or day book of the Registry of Deeds on September 14,
1994 is sufficient notice to all persons, including the respondent, that
the land is already subject to an attachment. The earlier
registration of the notice of levy on attachment already binds
the land insofar as third persons are concerned.[32] (emphases
ours)

Consequently, when the Register of Deeds placed the Notice of Levy on

Execution in the Primary Entry Book on January 4, 1993, this entry already bound
third persons to the notice entered.

Validity of the Levy

i.

Reginas interest in the properties is not established

The levy on execution for judgment is the act x x x by which an officer sets
apart or appropriate[s,] for the purpose of satisfying the command of the writ, a
part or the whole of the judgment debtors property.[33] Every interest which the
judgment debtor may have in the property may be subjected to levy on execution.
[34]

As established by the Court in Reyes v. Grey:[35]

The term "property" as here applied to lands comprehends

every species of title, inchoate or complete; legal or equitable.
This statute authorizes the sale under execution of every kind of
property, and every interest in property which is, or may be, the
subject of private ownership and transfer. It deals with equitable rights
and interests as it deals with legal, without anywhere expressly
recognizing or making any distinction between them. [emphases ours]

In Reyes, the Court set the standard to be applied in determining the kind of
property that can be subject to attachment:

We think the real test, as to whether or not property can be attached

and sold upon execution is does the judgment debtor hold such
abeneficial
interest in
such
property
that he
can
sell or otherwise dispose of it for value? If he does, then the
property is subject to execution and payment of his debts.
[36]
(emphasis and underscoring ours)

Applying the test in Reyes, the Court, in Gotauco & Co. v. Register of Deeds
of Tayabas,[37] recognized as valid the inscription of a notice of levy on execution on
the certificates of title, even though the titles were not in the name of the judgment
debtor (Rafael Vilar). According to the Court, while the certificates of title were still
registered in the name of Florentino Vilar, since Rafael Vilar presented a copy of a
petition filed with the lower court, from which it could be inferred that Florentino
Vilar was dead and Rafael Vilar was one of his heirs, Rafael had an interest in
Florentinos property that could properly be the subject of attachment, even if his
participation in Florentinos property was indeterminable before the final
liquidation of the estate.

Similarly, in Pacific Commercial Co. v. Geaga,[38] the Court held that

although the Register of Deeds may properly reject an attachment where it appears
that the titles involved are not registered in the name of the defendants (debtors),
that rule yields to a case where there is evidence submitted to indicate that the
defendants have present or future interests in the property covered by said titles,
regardless of whether they still stand in the names of other persons. The fact that
the present interests of the defendants are still indeterminate, and even though
there was no judicial declaration of heirship yet, is of no consequence for the
purpose of registering the attachment in question. This is the case since what is
being attached and what may be later sold at public auction in pursuance
of the attachment cannot be anything more than whatever rights, titles,
interests and participations which the defendants may or might have in the
property so attached. In other words, if they had actually nothing in the property,
then

nothing is affected

and

the

property will remain

intact. [39] This rule

is expressed in Section 35, Rule 39 of the old Rules of Civil Procedure, which
provides:

Upon the execution and delivery of said deed [of conveyance

and possession], the purchaser, or redemptioner, or his assignee, shall
be substituted to and acquire all the right, title, interest and claim
of the judgment debtor to the property as of the time of the
levy[.][emphases ours]

Although we recognize the validity of the annotation of the levy on the

execution in the present case, the question of whether the levy itself is valid
remains to be determined. To do this, Reginas interest in the subject properties at
the time of the levy has to be ascertained. To recall, Veronicas notice of levy on
execution is based on Reginas interest in the two properties, which

she

acquired via the Deed of Absolute Sale purportedly executed by her parents in her
favor on November 5, 1991. But is this Deed of Absolute Sale a sufficient evidence
of Reginas interest in the subject properties?

After carefully reviewing the evidence on record, we rule in the negative.

To begin with, not only were the properties subject of the attachment not
registered in Reginas name, the Deed of Absolute Sale on which Regina based her
interest was not even annotated on these titles. While Regina purportedly
purchased her parents rights to the subject properties in 1991, she never asserted
her rights over these properties by presenting the Deed of Absolute Sale to the
Register of Deeds for registration and annotation on the titles. As a matter of fact, it
was Veronica, and not Regina, who presented the Deed of Absolute Sale to the
Register of Deeds.

More importantly, from the records, it is clear that the subject properties
were finally registered in Reginas name, not by virtue of the 1991 Deed of
Absolute Sale, but by virtue of succession, specifically by the Adjudication
that Regina filed with the Register of Deeds on February 24, 1993,[40] pursuant to
Section 1, Rule 74 of the Rules of Court. [41] The procedure by which the properties
were registered in Reginas name suggests that when Reginas parents died, the
subject lots still formed part ofReginas parents estate, and were not, as Veronica
claims, sold to Regina in 1991, thereby casting doubt to the validity of the Deed of
Absolute Sale. As the Bulaongs reason in their memorandum, if the subject

properties had already been sold to Regina as early as 1991, why would they still
be considered a part of her parents estate in 1993? [42]

Another point to consider is that Regina dealt with the Bulaongs as her
fathers representative when they were negotiating the mortgage over the
properties.[43] If she had already acquired her parents interest in these properties in
1991, she would not have needed any authority from her father to execute the
mortgage with the Bulaongs; she would have done so in her own capacity.

These facts, taken together, lead us to doubt that Regina had any interest in
the properties at the time of the levy. Thus, unlike in the previously cited cases
where the debtors, although possessing merely an inchoate interest in the
properties at the time of the levy, had interests that were established with
reasonable certainty and could be the subject of attachment; in the present
case, the

evidence

on

record

fails

to

prove

that

Regina

actually

had any interest in the properties which could be the subject of levy.

The spring cannot rise higher than its source. [44] Since Regina had no
established interest in the subject properties at the time of the levy, Veronicas levy
had nothing to attach to in the subject properties.

ii.

Unregistered sale of land cannot bind third parties

Even assuming that the Deed of Absolute Sale in Reginas favor was valid, we
still cannot uphold the validity of the levy and execution sale in Veronicas favor.

The general rule in dealing with registered land is set forth in Section 51 of
P.D. No. 1529:

Section 51. Conveyance and other dealings by registered owner.

An owner of registered land may convey, mortgage, lease, charge or
otherwise deal with the same in accordance with existing laws. He may
use such forms of deeds, mortgages, leases or other voluntary
instruments as are sufficient in law. But no deed, mortgage, lease, or
other voluntary instrument, except a will purporting to convey or affect
registered land shall take effect as a conveyance or bind the
land, but shall operate only as a contract between the parties and as
evidence of authority to the Register of Deeds to make registration.

The act of registration shall be the operative act to

convey or affect the land insofar as third persons are
concerned, and in all cases under this Decree, the registration shall
be made in the office of the Register of Deeds for the province or city
where the land lies. [emphases ours]

From

the

standpoint

of

third

parties,

property

registered

under

the Torrens system remains, for all legal purposes, the property of the person in
whose name it is registered, notwithstanding the execution of any deed of
conveyance, unless the corresponding deed is registered. [45] Simply put, if a sale is
not registered, it is binding only between the seller and the buyer, but it does not
affect innocent third persons.

Undoubtedly, Veronicas claim on the properties is rooted in the unregistered

Deed of Absolute Sale between Regina and her parents. The Bulaongs do not
appear

to

have

had

any

knowledge

that

this

sale

ever

took

place.

To

recall, Regina gave the Bulaongs the owners duplicate certificates of the properties,
which showed that the properties were registered in the names of her parents,
Fortunato and Bertha Limpo. It thus appears that the Bulaongs first learned about
the sale between Regina and her parents when they received the newly issued titles
in Reginas name which contained the annotation of the levy in Veronicas favor.

One of the principal features of the Torrens system of registration is that all
encumbrances on the land shall be shown, or at least intimated upon the certificate
of title and a person dealing with the owner of the registered land is not bound to
go behind the certificate and inquire into transactions, the existence of which is not
there intimated.[46] Since the Bulaongs had no knowledge of the unregistered
sale between Regina and her parents, the Bulaongs can neither be bound
by it, nor can they be prejudiced by its consequences. This is but the logical
corollary to the rule set forth in Section 51 of P.D. No. 1529, in keeping with the
basic legal maxim that what cannot be done directly cannot be done indirectly.

Execution sale in Veronicas favor was highly irregular

We also find that the execution sale in favor of Veronica is invalid

because Reginas interest in both lots was sold together, in violation of Sections 15
and 21, Rule 39 of the old Rules of Court. The pertinent portions of these provisions
provide:

Section 15. Execution of money judgments. The officer

must enforce an execution of a money judgment by levying on all the
property, real and personal of every name and nature whatsoever, and
which may be disposed of for value, of the judgment debtor not
exempt from execution, or on a sufficient amount of such property, if
there be sufficient, and selling the same, and paying to the judgment
creditor, or his attorney, so much of the proceeds as will satisfy the
judgment. Any excess in the proceeds over the judgment and
accruing costs must be delivered to the judgment debtor, unless
otherwise directed by the judgment or order of the court. When there
is more property of the judgment debtor than is sufficient to satisfy
the judgment and accruing costs, within the view of the officer, he
must levy only on such part of the property as is amply
sufficient to satisfy the judgment and costs.

Section 21. How property sold on execution. Who may direct

manner and order of sale. All sales of property under execution must
be made at public auction, to the highest bidder, between the hours of
nine in the morning and five in the afternoon. After sufficient
property has been sold to satisfy the execution, no more shall
be sold. When the sale is of real property, consisting of several
known lots,they must be sold separately; or, when a portion of such
real property is claimed by a third person, he may require it to be sold
separately. [emphases ours]

Where the property to be sold consists of distinct lots, tracts or parcels, or is

susceptible of division without injury, it should be offered for sale in parcels and
not en masse, for the reason that a sale in that manner will generally realize the
best price, and will not result in taking from the debtor any more property than is
necessary to satisfy the judgment. It will also enable the defendant to redeem any
one or more of the parcels without being compelled to redeem all the land sold. [47] A
sale of additional land or personal property after enough has been sold to satisfy
the judgment is unauthorized.[48]

While the general policy of the law is to sustain execution sales, the sale may
be set aside where there is a resulting injury based on fraud, mistake and
irregularity.[49] Where the properties were sold together when the sale of less than
the whole would have been sufficient to satisfy the judgment debt, the sale may be
set aside.[50]

In Caja v. Nanquil, [51] we took judicial notice of the fact that the value of a
property was usually bigger than the amount for which it could be mortgaged. Since
the two properties, taken together, were mortgaged to the petitioners to secure a
loan worthP4,300,000.00, we can easily assume that these properties are worth at
least this amount. Even Veronica does not contest this assumption.

From this premise, we can logically assume that the sale of just one of the
lots would have been sufficient to satisfy the judgment debt. Yet no explanation was
provided as to why the sheriff sold both parcels of land at the execution sale for the
paltry sum of P640,354.14. This act undoubtedly resulted in great prejudice to the
Bulaongs. To our minds, this renders the execution sale defective, and provides
sufficient ground for us to set the sale aside.

For the foregoing reasons, we rule and so hold that the levy and the
corresponding execution sale in Veronicas favor are invalid, and must be set
aside. Veronica, however, is not without recourse, as she may still seek to enforce
the judgment debt againstRegina.

WHEREFORE,

premises

considered,

we GRANT the

petition

and REVERSE the decision of the Court of Appeals datedJuly 31, 2002 in CA-G.R.
SP No. 55423. We REINSTATE the decision of the Regional Trial Court, Branch 12,
Malolos,

Bulacan,

dated July

30,

1999 in

Civil

Case

No.

170-M-95,

with

the MODIFICATION that petitioners Anselmo Bulaong and Priscilla Bulaong are no
longer required to reimburse Veronica Gonzales for her lien in the amount
of P275,000.00, plus interest.

SO ORDERED.

ARTURO D. BRION
Associate Justice

WE CONCUR:

ANTONIO T. CARPIO
Associate Justice
Chairperson

Republic of the Philippines

SUPREME COURT
Manila

FIRST DIVISION

HEIRS OF DR. JOSE DELESTE,

namely: JOSEFA DELESTE, JOSE RAY
DELESTE, RAUL HECTOR DELESTE,
and RUBEN ALEX DELESTE,

G.R. No. 169913

Petitioners,

- versus -

LAND BANK OF THE PHILIPPINES

(LBP), as represented by its
Manager, LAND VALUATION OFFICE
OF LBP COTABATO CITY; THE
REGIONAL DIRECTOR REGION 12
OF COTABATO CITY, THE SECRETARY
OF THE DEPARTMENT OF AGRARIAN
REFORM; THE REGIONAL DIRECTOR
OF REGION X CAGAYAN DE ORO
CITY, represented by MCMILLAN
LUCMAN, in his capacity as Provincial
Agrarian Reform Officer (PARO) of
DAR Lanao del Norte; LIZA
BALBERONA, in her capacity as DAR
Municipal Agrarian Reform Officer
(MARO); REYNALDO BAGUIO, in his
capacity as the Register of Deeds of
Iligan City as nominal party; the
emancipation patent holders: FELIPE
D. MANREAL, CUSTUDIO M. RICO,
HEIRS OF DOMINGO V. RICO, HEIRS
OF ABDON T. MANREAL, MACARIO M.
VELORIA, ALICIA B. MANREAL,
PABLO RICO, SALVACION MANREAL,
HEIRS OF TRANQUILIANA MANREAL,
HEIRS OF ANGELA VELORIA, HEIRS
OF NECIFURO CABALUNA, HEIRS OF
CLEMENTE RICO, HEIRS OF

Present:

CORONA, C.J., Chairperson,

VELASCO, JR.,
LEONARDO-DE CASTRO,
DEL CASTILLO, and
PEREZ, JJ.

MANTILLANO OBISO, HEIRS OF

HERCULANO BALORIO, and TITO
BALER,
Respondents.

Promulgated:

June 8, 2011
x-----------------------------------------------------------------------------------------x

DECISION

VELASCO, JR., J.:

The Case

Before Us is a Petition for Review on Certiorari under Rule 45 seeking to

reverse and set aside the October 28, 2004 Resolution [1] of the Court of Appeals
(CA) and its September 13, 2005 Resolution [2] denying petitioners motion for
reconsideration.

The Facts

The spouses Gregorio Nanaman (Gregorio) and Hilaria Tabuclin (Hilaria) were
the owners of a parcel of agricultural land located in Tambo, Iligan City, consisting
of 34.7 hectares (subject property). Said spouses were childless, but Gregorio had
a son named Virgilio Nanaman (Virgilio) by another woman. Virgilio had been raised
by the couple since he was two years old. Gregorio also had two daughters,
Esperanza and Caridad, by still another woman.[3]

When Gregorio died in 1945, Hilaria and Virgilio administered the subject
property.[4] On February 16, 1954, Hilaria and Virgilio sold the subject property to
Dr. Jose Deleste (Deleste) for PhP 16,000. [5] The deed of sale was notarized on
February 17, 1954 and registered on March 2, 1954. Also, the tax declaration in the
name of Virgilio was canceled and a new tax declaration was issued in the name of
Deleste. The arrears in the payment of taxes from 1952 had been updated by
Deleste and from then on, he paid the taxes on the property.[6]

On May 15, 1954, Hilaria died.[7] Gregorios brother, Juan Nanaman, was
appointed as special administrator of the estate of the deceased spouses.
Subsequently, Edilberto Noel (Noel) was appointed as the regular administrator of
the joint estate.[8]

On April 30, 1963, Noel, as the administrator of the intestate estate of the
deceased spouses, filed before the Court of First Instance, Branch II, Lanao del
Norte an action against Deleste for the reversion of title over the subject property,
docketed as Civil Case No. 698. [9] Said case went up to this Court in Noel v. CA,
where We rendered a Decision [10] on January 11, 1995, affirming the ruling of the
CA that the subject property was the conjugal property of the late spouses Gregorio
and Hilaria and that the latter could only sell her one-half (1/2) share of the subject
property to Deleste. As a result, Deleste, who died in 1992, and the intestate estate
of Gregorio were held to be the co-owners of the subject property, each with a onehalf (1/2) interest in it.[11]

Notably, while Civil Case No. 698 was still pending before the CFI, particularly
on October 21, 1972, Presidential Decree No. (PD) 27 was issued. This law
mandates that tenanted rice and corn lands be brought under the Operation Land
Transfer (OLT) Program and awarded to farmer-beneficiaries. Thus, the subject
property was placed under the said program. [12] However, only the heirs of Gregorio
were

identified

by

the

Department

of

Agrarian

Reform

(DAR)

as

the

landowners. Concomitantly, the notices and processes relative to the coverage

were sent to these heirs.[13]

In 1975, the City of Iligan passed City Ordinance No. 1313, known as the
Zoning

Regulation

of

commercial/residential.

Iligan

City,

reclassifying

the

subject

property

as

[14]

Eventually, on February 12, 1984, DAR issued Certificates of Land Transfer

(CLTs) in favor of private respondents who were tenants and actual cultivators of
the subject property.[15] The CLTs were registered on July 15, 1986. [16]

In 1991, the subject property was surveyed. [17] The survey of a portion of the
land consisting of 20.2611 hectares, designated as Lot No. 1407, was approved on

January 8, 1999.[18] The claim folder for Lot No. 1407 was submitted to the LBP
which issued a Memorandum of Valuation and a Certificate of Cash Deposit on May
21, 2001 and September 12, 2001, respectively. Thereafter, Emancipation Patents
(EPs) and Original Certificates of Title (OCTs) were issued on August 1, 2001 and
October 1, 2001, respectively, in favor of private respondents over their respective
portions of Lot No. 1407.[19]

Meanwhile, on November 22, 1999, the City of Iligan filed a complaint with
the Regional Trial Court (RTC), Branch 4 inIligan City for the expropriation of a
5.4686-hectare portion of Lot No. 1407, docketed as Special Civil Action No. 4979.
On December 11, 2000, the RTC issued a Decision granting the expropriation.
Considering that the real owner of the expropriated portion could not be
determined, as the subject property had not yet been partitioned and distributed to
any of the heirs of Gregorio and Deleste, the just compensation for the
expropriated portion of the subject property in the amount of PhP 27,343,000 was
deposited with the Development Bank of the Philippines in Iligan City, in trust for
the RTC in Iligan City.[20]

On February 28, 2002, the heirs of Deleste, petitioners herein, filed with the
Department of Agrarian Reform Adjudication Board (DARAB) a petition seeking to
nullify private respondents EPs.[21] This was docketed as Reg. Case No. X-471-LN2002.

On July 21, 2003, the Provincial Agrarian Reform Adjudicator (PARAD)

rendered a Decision[22] declaring that the EPs were null and void in view of the
pending issues of ownership, the subsequent reclassification of the subject property
into a residential/commercial land, and the violation of petitioners constitutional
right to due process of law.

Dissatisfied, private respondents immediately filed their Notice of Appeal on

July 22, 2003. Notwithstanding it, on July 24, 2003, petitioners filed a Motion for a

Writ of Execution pursuant to Section 2, Rule XII of the Revised Rules of Procedure,
which was granted in an Order dated August 4, 2003 despite strong opposition from
private respondents.[23] On January 28, 2004, the DARAB nullified the Order dated
August 4, 2003 granting the writ of execution.[24]

Subsequently, the DARAB, in DARAB Case No. 12486, reversed the ruling of
the PARAD in its Decision[25] dated March 15, 2004. It held, among others, that the
EPs were valid as it was the heirs of Deleste who should have informed the DAR of
the pendency of Civil Case No. 698 at the time the subject property was placed
under the coverage of the OLT Program considering that DAR was not a party to the
said case. Further, it stated that the record is bereft of any evidence that the city
ordinance has been approved by the Housing and Land Use Regulatory Board
(HLURB), as mandated by DAR Administrative Order No. 01, Series of 1990, and
held that whether the subject property is indeed exempt from the OLT Program is
an administrative determination, the jurisdiction of which lies exclusively with the
DAR Secretary or the latters authorized representative. Petitioners motion for
reconsideration was likewise denied by the DARAB in its Resolution [26] dated July 8,
2004.

Undaunted, petitioners filed a petition for review with the CA, docketed as
CA-G.R. SP No. 85471, challenging the Decision and Resolution in DARAB Case No.
12486. This was denied by the CA in a Resolution dated October 28, 2004 for
petitioners failure to attach the writ of execution, the order nullifying the writ of
execution, and such material portions of the record referred to in the petition and
other supporting papers, as required under Sec. 6 of Rule 43 of the Rules of Court.
Petitioners motion for reconsideration was also denied by the appellate court in a
Resolution dated September 13, 2005 for being pro forma.

On November 18, 2005, petitioners filed a petition for review with this Court.
In Our Resolution[27] dated February 4, 2008, We resolved to deny the said petition
for failure to show sufficiently any reversible error in the assailed judgment to

warrant the exercise by the Court of its discretionary appellate jurisdiction in this
case.

On March 19, 2008, petitioners filed a Motion for Reconsideration. [28] On April
11, 2008, they also filed a Supplement to the Motion for Reconsideration. [29]

In Our Resolution[30] dated August 20, 2008, this Court resolved to grant
petitioners motion for reconsideration and give due course to the petition, requiring
the parties to submit their respective memoranda.

The Issues

I.

[WHETHER THE CA WAS CORRECT IN DISMISSING]

OUTRIGHT THE PETITION FOR REVIEW OF PETITIONERS X X X.

II.

[WHETHER] THE OUTRIGHT DENIAL OF PETITIONERS

MOTION
FOR
RECONSIDERATION
BASED
ON
A
MISAPPRECIATION OF FACTS IS JUSTIFIED; AND [WHETHER
THE] OUTRIGHT DISMISSAL OF THE PETITION IS JUST
CONSIDERING THE IMPORTANCE OF THE ISSUES RAISED
THEREIN.

XXXX

III.

[WHETHER PETITIONERS LAND IS] COVERED BY

AGRARIAN REFORM GIVEN THAT THE CITY OF ILIGANPASSED
[CITY] ORDINANCE NO. 1313 RECLASSIFYING THE AREA INTO
A STRICTLY RESIDENTIAL AREA IN 1975.

IV.

[WHETHER THE LAND] THAT HAS BEEN PREVIOUSLY AND

PARTIALLY EXPROPRIATED BY A CITY GOVERNMENT [MAY]
STILL BE SUBJECT[ED] TO AGRARIAN REFORM.

V.

[WHETHER DAR VIOLATED] THE RIGHTS OF PETITIONERS

TO PROCEDURAL DUE PROCESS.

VI.

[WHETHER] THE COMPENSATION DETERMINED BY DAR

AND LBP IS CORRECT GIVEN THAT THE FORMULA USED HAD
BEEN REPEALED.

VII.

[WHETHER] THE ISSUANCE OF EMANCIPATION PATENTS

[IS] LEGAL GIVEN THAT THEY WERE FRUITS OF AN ILLEGAL
PROCEEDING.

VIII.

[WHETHER] THE CERTIFICATES OF TITLE [ARE] VALID GIVEN

THAT THEY WERE DIRECTLY ISSUED TO THE FARMERBENEFICIARIES IN GROSS VIOLATION OF SECTION 16(E) OF
R.A. 6657 X X X.[31]

Our Ruling

The petition is meritorious.

Effect of non-compliance with the requirements

under Sec. 6, Rule 43 of the Rules of Court

In filing a petition for review as an appeal from awards, judgments, final

orders, or resolutions of any quasi-judicial agency in the exercise of its quasi-

judicial functions, it is required under Sec. 6(c), Rule 43 of the Rules of Court that it
be accompanied by a clearly legible duplicate original or a certified true copy of the
award, judgment, final order, or resolution appealed from, with certified true copies
of such material portions of the record referred to in the petition and other
supporting papers. As stated:

Sec. 6. Contents of the petition. The petition for review shall

(a) state the full names of the parties to the case, without impleading
the court or agencies either as petitioners or respondents; (b) contain
a concise statement of the facts and issues involved and the grounds
relied upon for the review; (c) be accompanied by a clearly legible
duplicate original or a certified true copy of the award,
judgment, final order or resolution appealed from, together
with certified true copies of such material portions of the
record referred to therein and other supporting papers; and (d)
contain a sworn certification against forum shopping as provided in the
last paragraph of section 2, Rule 42. The petition shall state the
specific material dates showing that it was filed within the period fixed
herein. (Emphasis supplied.)

Non-compliance with any of the above-mentioned requirements concerning

the contents of the petition, as well as the documents that should accompany the
petition, shall be sufficient ground for its dismissal as stated in Sec. 7, Rule 43 of
the Rules:

Sec. 7. Effect of failure to comply with requirements. The

failure of the petitioner to comply with any of the foregoing
requirements regarding the payment of the docket and other lawful
fees, the deposit for costs, proof of service of the petition, and the
contents of and the documents which should accompany the
petition shall be sufficient ground for the dismissal thereof.
(Emphasis supplied.)

In the instant case, the CA dismissed the petition in CA-G.R. SP No. 85471
for petitioners failure to attach the writ of execution, the order nullifying the writ of
execution, and such material portions of the record referred to in the petition and
other supporting papers.[32]

A perusal of the issues raised before the CA would, however, show that the
foregoing documents required by the appellate court are not necessary for the
proper disposition of the case. Specifically:

Is [Lot No. 1407] within the ambit of the [Comprehensive Agrarian

Reform Program]?

Can the OLT by DAR over the subject land validly proceed without
notice to the landowner?

Can the OLT be validly completed without a certification of deposit by

Land Bank?

[I]s the landowner barred from exercising his right of retention x x x

[considering that EPs were already issued on the basis of CLTs]?

Are the EPs over the subject land x x x valid x x x?[33]

Petitioners complied with the requirement under Sec. 6(c), Rule 43 of the
Rules of Court when they appended to the petition filed before the CA certified true
copies of the following documents: (1) the challenged resolution dated July 8, 2004
issued by the DARAB denying petitioners motion for reconsideration; (2) the

duplicate original copy of petitioners Motion for Reconsideration dated April 6,

2005; (3) the assailed decision dated March 15, 2004 issued by the DARAB
reversing on appeal the decision of the PARAD and nullifying with finality the order
of execution pending appeal; (4) the Order dated December 8, 2003 issued by the
PARAD reinstating the writ of execution earlier issued; and (5) the Decision dated
July 21, 2003 issued by the PARAD in the original proceedings for the cancellation
of the EPs.[34] The CA, therefore, erred when it dismissed the petition based on such
technical ground.

Even assuming that the omitted documents were material to the appeal, the
appellate court, instead of dismissing outright the petition, could have just required
petitioners to submit the necessary documents. In Spouses Espejo v. Ito,[35] the
Court held that under Section 3 (d), Rule 3 of the Revised Internal Rules of the
Court of Appeals,[36] the Court of Appeals is with authority to require the parties to
submit additional documents as may be necessary to promote the interests of
substantial justice.

Moreover, petitioners subsequent submission of the documents required by

the CA with the motion for reconsideration constitutes substantial compliance with
Section 6(c), Rule 43 of the Rules of Court. [37] In Jaro v. CA, this Court held that
subsequent and substantial compliance may call for the relaxation of the rules of
procedure. Particularly:

The amended petition no longer contained the fatal defects that

the original petition had but the Court of Appeals still saw it fit to
dismiss the amended petition. The Court of Appeals reasoned that
non-compliance in the original petition is admittedly attributable to
the petitioner and that no highly justifiable and compelling reason has
been advanced to the court for it to depart from the mandatory
requirements of Administrative Circular No. 3-96. The hard stance
taken by the Court of Appeals in this case is unjustified under the
circumstances.

There is ample jurisprudence holding that the subsequent

and substantial compliance of an appellant may call for the
relaxation of the rules of procedure. In Cusi-Hernandez vs.
Diaz and Piglas-Kamao vs. National Labor Relations Commission, we
ruled that the subsequent submission of the missing documents
with the motion for reconsideration amounts to substantial
compliance.The reasons behind the failure of the petitioners in these
two cases to comply with the required attachments were no longer
scrutinized. What we found noteworthy in each case was the fact that
the petitioners therein substantially complied with the formal
requirements. We ordered the remand of the petitions in these cases
to the Court of Appeals, stressing the ruling that by precipitately
dismissing the petitions the appellate court clearly put a premium on
technicalities at the expense of a just resolution of the
case.[38] (Citations omitted; emphasis supplied.)

Time and again, this Court has held that a strict and rigid application of
technicalities must be avoided if it tends to frustrate rather than promote
substantial justice.[39] As held in Sta. Ana v. Spouses Carpo:[40]

Rules of procedure are merely tools designed to facilitate the

attainment of justice. If the application of the Rules would tend
to frustrate rather than to promote justice, it is always within
our power to suspend the rules or except a particular case from
their operation. Law and jurisprudence grant to courts the
prerogative to relax compliance with the procedural rules, even
the most mandatory in character, mindful of the duty to
reconcile the need to put an end to litigation speedily and the
parties right to an opportunity to be heard.

Our recent ruling in Tanenglian v. Lorenzo is instructive:

We have not been oblivious to or unmindful of the

extraordinary situations that merit liberal application of the

Rules, allowing us, depending on the circumstances, to set aside

technical infirmities and give due course to the appeal. In cases
where we dispense with the technicalities, we do not mean to
undermine the force and effectivity of the periods set by law. In
those rare cases where we did not stringently apply the
procedural rules, there always existed a clear need to prevent
the commission of a grave injustice. Our judicial system and the
courts have always tried to maintain a healthy balance between
the strict enforcement of procedural laws and the guarantee that
every litigant be given the full opportunity for the just and
proper disposition of his cause. (Citations omitted; emphasis
supplied.)

Clearly, the dismissal of the petition by the CA on mere technicality is

unwarranted in the instant case.

On the coverage of the subject property

by the agrarian reform program

Petitioners contend that the subject property, particularly Lot No. 1407, is
outside the coverage of the agrarian reform program in view of the enactment of
City Ordinance No. 1313 by the City of Iligan reclassifying the area into a
residential/commercial land.[41]

Unconvinced, the DARAB, in its Decision, noted that the record is bereft of
any evidence that the city ordinance has been approved by the HLURB, thereby
allegedly casting doubt on the validity of the reclassification over the subject
property.[42] It further noted that whether the subject property is exempt from the
OLT Program is an administrative determination, the jurisdiction of which lies
exclusively with the DAR Secretary, not with the DARAB.

Indeed, it is the Office of the DAR Secretary which is vested with the primary
and exclusive jurisdiction over all matters involving the implementation of the
agrarian reform program.[43] However, this will not prevent the Court from assuming
jurisdiction over the petition considering that the issues raised in it may already be
resolved on the basis of the records before Us. Besides, to allow the matter to
remain with the Office of the DAR Secretary would only cause unnecessary delay
and undue hardship on the parties. Applicable, by analogy, is Our ruling in the
recent Bagong Pagkakaisa ng Manggagawa ng Triumph International v. Department
of Labor and Employment Secretary,[44] where We held:

But as the CA did, we similarly recognize that undue hardship,

to the point of injustice, would result if a remand would be
ordered under a situation where we are in the position to
resolve the case based on the records before us. As we said
in Roman Catholic Archbishop of Manila v. Court of Appeals:

[w]e have laid down the rule that the remand of the case
to the lower court for further reception of evidence is not
necessary where the Court is in a position to resolve the dispute
based on the records before it. On many occasions, the
Court, in the public interest and for the expeditious
administration of justice, has resolved actions on the
merits instead of remanding them to the trial court for
further proceedings, such as where the ends of justice,
would not be subserved by the remand of the case.
Thus, we shall directly rule on the dismissal issue. And while we
rule that the CA could not validly rule on the merits of this issue, we
shall not hesitate to refer back to its dismissal ruling, where
appropriate. (Citations omitted; emphasis supplied.)

Pertinently, after an assiduous study of the records of the case, We agree

with petitioners that the subject property, particularly Lot No. 1407, is outside the

coverage of the agrarian reform program in view of the enactment by the City
of Iligan of its local zoning ordinance, City Ordinance No. 1313.

It is undeniable that the local government has the power to reclassify

agricultural into non-agricultural lands. In Pasong Bayabas Farmers Association,
Inc. v. CA,[45] this Court held that pursuant to Sec. 3 of Republic Act No. (RA) 2264,
amending the Local Government Code, municipal and/or city councils are
empowered to adopt zoning and subdivision ordinances or regulations in
consultation with the National Planning Commission. It was also emphasized
therein that [t]he power of the local government to convert or reclassify lands
[from agricultural to non-agricultural lands prior to the passage of RA 6657] is not
subject to the approval of the [DAR].[46]

Likewise, it is not controverted that City Ordinance No. 1313, which was
enacted by the City of Iligan in 1975, reclassified the subject property into a
commercial/residential area. DARAB, however, believes that the approval of HLURB
is necessary in order for the reclassification to be valid.

We differ. As previously mentioned, City Ordinance No. 1313 was enacted by

the City of Iligan in 1975. Significantly, there was still no HLURB to speak of during
that time. It was the Task Force on Human Settlements, the earliest predecessor of
HLURB, which was already in existence at that time, having been created on
September 19, 1973 pursuant to Executive Order No. 419. It should be noted,
however, that the Task Force was not empowered to review and approve zoning
ordinances and regulations. As a matter of fact, it was only on August 9, 1978, with
the issuance of Letter of Instructions No. 729, that local governments were required
to submit their existing land use plans, zoning ordinances, enforcement systems
and procedures to the Ministry of Human Settlements for review and ratification.
The Human Settlements Regulatory Commission (HSRC) was the regulatory arm of
the Ministry of Human Settlements.[47]

Significantly, accompanying the Certification[48] dated October 8, 1999 issued

by Gil R. Balondo, Deputy Zoning Administrator of the City Planning and
Development Office, Iligan City, and the letter [49] dated October 8, 1999 issued by
Ayunan B. Rajah, Regional Officer of the HLURB, is the Certificate of Approval
issued by Imelda Romualdez Marcos, then Minister of Human Settlements and
Chairperson of the HSRC, showing that the local zoning ordinance was, indeed,
approved on September 21, 1978. This leads to no other conclusion than that City
Ordinance No. 1313 enacted by the City of Iligan was approved by the HSRC, the
predecessor of HLURB. The validity of said local zoning ordinance is, therefore,
beyond question.

Since the subject property had been reclassified as residential/commercial

land with the enactment of City Ordinance No. 1313 in 1975, it can no longer be
considered as an agricultural land within the ambit of RA 6657. As this Court held
in Buklod nang Magbubukid sa Lupaing Ramos, Inc. v. E.M. Ramos and Sons, Inc.,
[50]

To be exempt from CARP, all that is needed is one valid reclassification of the

land from agricultural to non-agricultural by a duly authorized government agency

before June 15, 1988, when the CARL took effect.

Despite the foregoing ruling, respondents allege that the subsequent

reclassification by the local zoning ordinance cannot free the land from the legal
effects of PD 27 which deems the land to be already taken as of October 21, 1972,
when said law took effect. Concomitantly, they assert that the rights which accrued
from said date must be respected. They also maintain that the reclassification of
the subject property did not alter its agricultural nature, much less its actual use. [51]

Verily, vested rights which have already accrued cannot just be taken away
by the expedience of issuing a local zoning ordinance reclassifying an agricultural
land into a residential/commercial area. As this Court extensively discussed
in Remman Enterprises, Inc. v. CA:[52]

In the main, REMMAN hinges its application for exemption on

the ground that the subject lands had ceased to be agricultural lands
by virtue of the zoning classification by the Sangguniang Bayan of
Dasmarias, Cavite, and approved by the HSRC, specifying them as
residential.

In Natalia Realty, Inc. v. Department of Agriculture, this Court

resolved the issue of whether lands already classified for residential,
commercial or industrial use, as approved by the Housing and Land
Use Regulatory Board (HLURB) and its precursor agencies, i.e.,
National Housing Authority and Human Settlements Regulatory
Commission, prior to 15 June 1988, are covered by Republic Act No.
6657, otherwise known as the Comprehensive Agrarian Reform Law of
1988. We answered in the negative, thus:

We now determine whether such lands are covered by the

CARL. Section 4 of R.A. 6657 provides that the CARL shall
cover, regardless of tenurial arrangement and commodity
produced, all public and private agricultural lands. As to what
constitutes agricultural land, it is referred to as land devoted
to agricultural activity as defined in this Act and not classified as
mineral, forest, residential, commercial or industrial land. The
deliberations of the Constitutional Commission confirm this
limitation. Agricultural lands are only those lands which are
arable and suitable agricultural lands and do not include
commercial, industrial and residential land.

xxx

xxx

xxx

Indeed, lands not devoted to agricultural activity are outside

the coverage of CARL. These include lands previously converted
to non-agricultural uses prior to the effectivity of CARL by
government agencies other than respondent DAR. In its Revised
Rules and Regulations Governing Conversion of Private
Agricultural Lands to Non-Agricultural Uses, DAR itself defined
agricultural land thus

. . . Agricultural lands refers to those devoted to agricultural

activity as defined in R.A. 6657 and not classified as mineral or
forest by the Department of Environment and Natural Resources
(DENR) and its predecessor agencies, and not classified in town
plans and zoning ordinances as approved by the Housing and
Land Use Regulatory Board (HLURB) and its preceding
competent authorities prior to 15 June 1988 for residential,
commercial or industrial use.

Since the NATALIA lands were converted prior to 15 June

1988, respondent DAR is bound by such conversion. . . . .

However, Natalia should be cautiously applied in light of

Administrative Order 04, Series of 2003, which outlines the rules on
the Exemption on Lands from CARP Coverage under Section (3) of
Republic Act No. 6657, and Department of Justice (DOJ) Opinion No.
44, Series of 1990. It reads:

I.

Prefatory Statement

Republic Act (RA) 6657 or the Comprehensive Agrarian

Reform Law (CARL), Section 3, Paragraph (c) defines
agricultural land as referring to land devoted to agricultural
activity as defined in this Act and not classified as mineral,
forest, residential, commercial or industrial land.

Department of Justice Opinion No. 44, Series of 1990, (or

DOJ Opinion 44-1990 for brevity) and the case of Natalia
Realty versus Department of Agrarian Reform (12 August 2993,
225 SCRA 278) opines that with respect to the conversion of
agricultural land covered by RA 6657 to non-agricultural uses,
the authority of the Department of Agrarian Reform (DAR) to
approve such conversion may be exercised from the date of its
effectivity, on 15 June 1988. Thus, all lands that are already

classified as commercial, industrial or residential before 15 June

1988 no longer need any conversion clearance.

However, the reclassification of lands to nonagricultural

uses
shall
not
operate
to
divest
tenant[-]farmers of their rights over lands covered by
Presidential Decree (PD) No. 27, which have been vested
prior to 15 June 1988.

As emphasized, the reclassification of lands to nonagricultural cannot be applied to defeat vested rights of tenantfarmers under Presidential Decree No. 27.

Indeed, in the recent case of Sta. Rosa Realty Development

Corporation v. Amante, where the Court was confronted with the issue
of whether the contentious property therein is agricultural in nature on
the ground that the same had been classified as park since 1979
under the Zoning Ordinance of Cabuyao, as approved by the HLURB,
the Court said:
The Court recognizes the power of a local government to
reclassify and convert lands through local ordinance, especially
if said ordinance is approved by the HLURB. Municipal Ordinance
No. 110-54 dated November 3, 1979, enacted by
the Municipality ofCabuyao, divided the municipality into
residential, commercial, industrial, agricultural and institutional
districts, and districts and parks for open spaces. It did not
convert, however, existing agricultural lands into residential,
commercial, industrial, or institutional. While it classified
Barangay Casile into a municipal park, as shown in its permitted
uses of land map, the ordinance did not provide for the
retroactivity of its classification. In Co vs. Intermediate
Appellate Court, it was held that an ordinance converting
agricultural lands into residential or light industrial
should be given prospective application only, and should
not change the nature of existing agricultural lands in the
area or the legal relationships existing over such
land. . . . .

A reading of Metro Manila Zoning Ordinance No. 81-01,

series of 1981, does not disclose any provision converting
existing agricultural lands in the covered area into residential or
light industrial. While it declared that after the passage of the
measure, the subject area shall be used only for residential or
light industrial purposes, it is not provided therein that it shall
have retroactive effect so as to discontinue all rights previously
acquired over lands located within the zone which are neither
residential nor light industrial in nature. This simply means
that, if we apply the general rule, as we must, the
ordinance should be given prospective operation only.
The further implication is that it should not change the
nature of existing agricultural lands in the area or the
legal relationships existing over such lands. (Citations
omitted; emphasis supplied.)

This, however, raises the issue of whether vested rights have actually
accrued in the instant case. In this respect, We reckon that under PD 27, tenantfarmers of rice and corn lands were deemed owners of the land they till as of
October 21, 1972. This policy, intended to emancipate the tenant-farmers from the
bondage of the soil, is given effect by the following provision of the law:

The tenant farmer, whether in land classified as landed estate or

not, shall be deemed owner of a portion constituting a family size
farm of five (5) hectares if not irrigated and three (3) hectares if
irrigated. (Emphasis supplied.)

It should be clarified that even if under PD 27, tenant-farmers are deemed

owners as of October 21, 1972, this is not to be construed as automatically vesting
upon these tenant-farmers absolute ownership over the land they were tilling.
Certain requirements must also be complied with, such as payment of just
compensation, before full ownership is vested upon the tenant-farmers. This was

elucidated by the Court in Association of Small Landowners in the Philippines, Inc.

v. Sec. of Agrarian Reform:[53]

It is true that P.D. No. 27 expressly ordered the emancipation of

tenant-farmer as October 21, 1972 and declared that he shall be
deemed the owner of a portion of land consisting of a family-sized
farm except that no title to the land owned by him was to be actually
issued to him unless and until he had become a full-fledged member of
a duly recognized farmers cooperative. It was understood,
however, that full payment of the just compensation also had
to be made first, conformably to the constitutional
requirement.

When E.O. No. 228, categorically stated in its Section 1 that:

All qualified farmer-beneficiaries are now deemed full

owners as of October 21, 1972 of the land they acquired by
virtue of Presidential Decree No. 27.

it was obviously referring to lands already validly

acquired under the said decree, after proof of full-fledged
membership in the farmers cooperatives and full payment of
just compensation. Hence, it was also perfectly proper for the Order
to also provide in its Section 2 that the lease rentals paid to the
landowner by the farmer-beneficiary after October 21, 1972 (pending
transfer of ownership after full payment of just compensation), shall
be considered as advance payment for the land.

The CARP Law, for its part, conditions the transfer of possession
and ownership of the land to the government on receipt by the
landowner of the corresponding payment or the deposit by the DAR of
the compensation in cash or LBP bonds with an accessible bank.Until
then, title also remains with the landowner. No outright change
of ownership is contemplated either. (Citations omitted; emphasis
supplied.)

Prior to compliance with the prescribed requirements, tenant-farmers have,

at most, an inchoate right over the land they were tilling. In recognition of this, a
CLT is issued to a tenant-farmer to serve as a provisional title of ownership over
the landholding while the lot owner is awaiting full payment of [just compensation]
or for as long as the [tenant-farmer] is an amortizing owner.[54] This certificate
proves inchoate ownership of an agricultural land primarily devoted to rice and
corn production. It is issued in order for the tenant-farmer to acquire the
land[55] he was tilling.

Concomitantly, with respect to the LBP and the government, tenant-farmers

cannot be considered as full owners of the land they are tilling unless they have
fully paid the amortizations due them. This is because it is only upon such full
payment of the amortizations that EPs may be issued in their favor.

In Del Castillo v. Orciga, We explained that land transfer under PD 27 is

effected in two (2) stages. The first stage is the issuance of a CLT to a farmerbeneficiary as soon as the DAR transfers the landholding to the farmer-beneficiary
in recognition that said person is its deemed owner. And the second stage is the
issuance of an EP as proof of full ownership of the landholding upon full payment of
the annual amortizations or lease rentals by the farmer-beneficiary.[56]

In the case at bar, the CLTs were issued in 1984. Therefore, for all
intents and purposes, it was only in 1984 that private respondents, as
farmer-beneficiaries, were recognized to have an inchoate right over the
subject property prior to compliance with the prescribed requirements.
Considering that the local zoning ordinance was enacted in 1975, and
subsequently approved by the HSRC in 1978, private respondents still had
no vested rights to speak of during this period, as it was only in 1984 that
private respondents were issued the CLTs and were deemed owners.

The same holds true even if EPs and OCTs were issued in 2001, since
reclassification had taken place twenty-six (26) years prior to their
issuance. Undeniably, no vested rights accrued prior to reclassification and
its approval. Consequently, the subject property, particularly Lot No. 1407,
is outside the coverage of the agrarian reform program.

On the violation of petitioners right to due process of law

Petitioners contend that DAR failed to notify them that it is subjecting the
subject property under the coverage of the agrarian reform program; hence, their
right to due process of law was violated.[57] Citing De Chavez v. Zobel,[58] both the
DAR and the private respondents claim that the enactment of PD 27 is a statutory
notice to all owners of agricultural lands devoted to rice and/or corn production,
[59]

implying that there was no need for an actual notice.

We agree with petitioners. The importance of an actual notice in subjecting a

property under the agrarian reform program cannot be underrated, as noncompliance

with

it

trods

roughshod

administrative due process of law.

[60]

with

the

essential

requirements

of

Our ruling in Heirs of Jugalbot v. CA

is

particularly instructive:

Firstly, the taking of subject property was done in violation of

constitutional due process. The Court of Appeals was correct in
pointing out that Virginia A. Roa was denied due process
because the DAR failed to send notice of the impending land
reform coverage to the proper party. The records show that
notices were erroneously addressed and sent in the name of Pedro N.
Roa who was not the owner, hence, not the proper party in the instant
case. The ownership of the property, as can be gleaned from the
records, pertains to Virginia A. Roa. Notice should have been therefore
served on her, and not Pedro N. Roa.

[61]

xxxx

In addition, the defective notice sent to Pedro N. Roa was

followed by a DAR certification signed by team leader Eduardo Maandig
on January 8, 1988 stating that the subject property was tenanted as
of October 21, 1972 and primarily devoted to rice and corn despite the
fact that there was no ocular inspection or any on-site fact-finding
investigation and report to verify the truth of the allegations of Nicolas
Jugalbot that he was a tenant of the property. The absence of such
ocular inspection or on-site fact-finding investigation and report
likewise deprives Virginia A. Roa of her right to property through the
denial of due process.

By analogy, Roxas & Co., Inc. v. Court of Appeals applies to the

case at bar since there was likewise a violation of due process in the
implementation of the Comprehensive Agrarian Reform Law when the
petitioner was not notified of any ocular inspection and investigation to
be conducted by the DAR before acquisition of the property was to be
undertaken. Neither was there proof that petitioner was given the
opportunity to at least choose and identify its retention area in those
portions to be acquired. Both in the Comprehensive Agrarian Reform
Law and Presidential Decree No. 27, the right of retention and how this
right is exercised, is guaranteed by law.

Since land acquisition under either Presidential Decree

No. 27 and the Comprehensive Agrarian Reform Law govern the
extraordinary method of expropriating private property, the
law must be strictly construed. Faithful compliance with legal
provisions, especially those which relate to the procedure
for acquisition of expropriated lands should therefore be
observed. In the instant case, no proper notice was given to Virginia
A. Roa by the DAR. Neither did the DAR conduct an ocular inspection
and investigation. Hence, any act committed by the DAR or any of its
agencies that results from its failure to comply with the proper
procedure for expropriation of land is a violation of constitutional due
process and should be deemed arbitrary, capricious, whimsical and

tainted with grave abuse of discretion. (Citations omitted; emphasis

supplied.)

Markedly, a reading of De Chavez invoked by both the DAR and private

respondents does not show that this Court ever made mention that actual notice
may be dispensed with under PD 27, its enactment being a purported statutory
notice to all owners of agricultural lands devoted to rice and/or corn production
that their lands are subjected to the OLT program.

Quite contrarily, in Sta. Monica Industrial & Devt. Corp. v. DAR,[62] this Court
underscored the significance of notice in implementing the agrarian reform program
when it stated that notice is part of the constitutional right to due process of law.
It informs the landowner of the States intention to acquire a private land upon
payment of just compensation and gives him the opportunity to present evidence
that his landholding is not covered or is otherwise excused from the agrarian law.
The Court, therefore, finds interest in the holding of the DARAB that
petitioners were not denied the right to due process despite the fact that only the
Nanamans were identified as the owners. Particularly:

Fourthly, the PARAD also ruled that the petitioners were denied
the right to be given the notice since only the Nanamans were
identified as the owners. The fault lies with petitioners who did not
present the tax declaration in the name of Dr. Deleste as of October
21, 1972. It was only in 1995 that Civil Case No. 698 was finally
decided by the Supreme Court dividing the 34.7 hectares between the
Delestes and the Nanamans. Note that Dr. Deleste died in 1992 after
PD 27 was promulgated, hence, the subject land or his share was
considered in his name only (see Art. 777, New Civil Code). Even then,
it must be borne in mind that on September 26, 1972, PD No. 2 was
issued by President Marcos proclaiming the whole country as a land
reform area, this was followed by PD 27. This should have alarmed
them more so when private respondents are in actual possession and
cultivation of the subject property.

But it was incumbent upon the DAR to notify Deleste, being the landowner of
the subject property. It should be noted that the deed of sale executed by Hilaria in
favor of Deleste was registered on March 2, 1954, and such registration serves as a
constructive notice to the whole world that the subject property was already owned
by Deleste by virtue of the said deed of sale. In Naval v. CA, this Court held:

Applying the law, we held in Bautista v. Fule that the

registration of an instrument involving unregistered land in the
Registry of Deeds creates constructive notice and binds third
person who may subsequently deal with the same property. [63] x x x
(Emphasis supplied.)

It bears stressing that the principal purpose of registration is to notify other

persons not parties to a contract that a transaction involving the property has been
entered into.[64] There was, therefore, no reason for DAR to feign ignorance of the
transfer of ownership over the subject property.

Moreover, that DAR should have sent the notice to Deleste, and not to the
Nanamans, is bolstered by the fact that the tax declaration in the name of Virgilio
was already canceled and a new one issued in the name of Deleste. [65] Although tax
declarations or realty tax payments of property are not conclusive evidence of
ownership, they are nonetheless good indicia of possession in the concept of an
owner, for no one in his right mind would be paying taxes for a property that is not
in his actual or, at least, constructive possession.[66]

Petitioners right to due process of law was, indeed, violated when the DAR
failed to notify them that it is subjecting the subject property under the coverage of
the agrarian reform program.

On this note, We take exception to our ruling in Roxas & Co., Inc. v. CA,
[67]

where, despite a finding that there was a violation of due process in the

implementation of the comprehensive agrarian reform program when the petitioner

was not notified of any ocular inspection and investigation to be conducted by the
DAR before acquiring the property, thereby effectively depriving petitioner the
opportunity to at least choose and identify its retention area in those portions to be
acquired,[68] this Court nonetheless ruled that such violation does not give the Court
the power to nullify the certificates of land ownership award (CLOAs) already issued
to the farmer-beneficiaries, since the DAR must be given the chance to correct its
procedural lapses in the acquisition proceedings.

Manifesting her disagreement that this Court cannot nullify illegally issued
CLOAs and should first ask the DAR to reverse and correct itself, Justice YnaresSantiago, in her Concurring and Dissenting Opinion, [69] stated that [i]f the acts of
DAR are patently illegal and the rights of Roxas & Co. violated, the wrong decisions
of DAR should be reversed and set aside. It follows that the fruits of the wrongful
acts, in this case the illegally issued CLOAs, must be declared null and void. She
also noted that [i]f CLOAs can under the DARs own order be cancelled
administratively, with more reason can the courts, especially the Supreme Court, do
so when the matter is clearly in issue.

In the same vein, if the illegality in the issuance of the CLTs is patent, the
Court must immediately take action and declare the issuance as null and void.
There being no question that the CLTs in the instant case were improperly issued,
for which reason, their cancellation is warranted.[70] The same holds true with
respect to the EPs and certificates of title issued by virtue of the void CLTs, as there
can be no valid transfer of title should the CLTs on which they were grounded are
void.[71] Cancellation of the EPs and OCTs are clearly warranted in the instant case
since, aside from the violation of petitioners right to due process of law, the subject
property is outside the coverage of the agrarian reform program.

Issue of Validity of EPs Not Barred by Res Judicata

The LBP maintains that the issue of the EPs validity has already been settled
by this Court in Heirs of Sofia Nanaman Lonoy v. Secretary of Agrarian Reform,
[72]

where We held that the EPs and OCTs issued in 2001 had already become

indefeasible and incontrovertible by the time the petitioners therein instituted the
case in 2005; hence, their issuance may no longer be reviewed. [73]

In effect, the LBP raises the defense of res judicata in order to preclude a
relitigation of the issue concerning the validity of the EPs issued to private
respondents.

Notably, the doctrine of res judicata has two aspects, namely: (1) bar by
prior judgment,[74] wherein the judgment in a prior case bars the prosecution of a
second action upon the same claim, demand, or cause of action; [75] and (2)
conclusiveness of judgment,[76] which precludes relitigation of a particular fact or
issue in another action between the same parties on a different claim or cause of
action.[77]

Citing Agustin v. Delos Santos,[78] this Court, in Spouses Antonio v. Sayman,

[79]

expounded on the difference between the two aspects of res judicata:

The principle of res judicata is applicable by way of (1) bar by

prior judgment and (2) conclusiveness of judgment. This Court had
occasion to explain the difference between these two aspects of res
judicata as follows:

There is bar by prior judgment when, as between the first

case where the judgment was rendered and the second case
that is sought to be barred, there is identity of parties, subject

matter, and causes of action. In this instance, the judgment in

the first case constitutes an absolute bar to the second action.
Otherwise put, the judgment or decree of the court of
competent jurisdiction on the merits concludes the litigation
between the parties, as well as their privies, and constitutes a
bar to a new action or suit involving the same cause of action
before the same or other tribunal.

But where there is identity of parties in the first and

second cases, but no identity of causes of action, the first
judgment is conclusive only as to those matters actually
and directly controverted and determined and not as to
matters merely involved therein. This is the concept of
res
judicata
known
as
conclusiveness
of
judgment. Stated differently, any right, fact or matter in issue
directly adjudicated or necessarily involved in the determination
of an action before a competent court in which judgment is
rendered on the merits is conclusively settled by the judgment
therein and cannot again be litigated between the parties and
their privies whether or not the claim, demand, purpose, or
subject matter of the two actions is the same. (Citations
omitted; emphasis supplied.)

To be sure, conclusiveness of judgment merits application when a fact or

question has been squarely put in issue, judicially passed upon, and adjudged in a
former suit by a court of competent jurisdiction.[80] Elucidating further on this
second aspect ofres judicata, the Court, in Spouses Antonio, stated:

x x x The fact or question settled by final judgment or order

binds the parties to that action (and persons in privity with them or
their successors-in-interest), and continues to bind them while the
judgment or order remains standing and unreversed by proper
authority on a timely motion or petition; the conclusively-settled fact
or question cannot again be litigated in any future or other action
between the same parties or their privies and successors-in-interest, in

the same or in any other court of concurrent jurisdiction, either for the
same or for a different cause of action. Thus, only the identities of
parties and issues are required for the operation of the
principle of conclusiveness of judgment. [81] (Citations omitted;
emphasis supplied.)

Applying the above statement of the Court to the case at bar, We find that
LBPs contention that this Courts ruling in Heirs of Sofia Nanaman Lonoy that the
EPs and OCTs issued in 2001 had already become indefeasible and incontrovertible
precludes a relitigation of the issue concerning the validity of the EPs issued to
private respondents does not hold water.

In the first place, there is no identity of parties in Heirs of Sofia Nanaman

Lonoy and the instant case. Arguably, the respondents in these two cases are
similar. However, the petitioners are totally different. In Heirs of Sofia Nanaman
Lonoy, the petitioners are the more than 120 individuals who claim to be
descendants of Fulgencio Nanaman, Gregorios brother, and who collectively assert
their right to a share in Gregorios estate, arguing that they were deprived of their
inheritance by virtue of the improper issuance of the EPs to private respondents
without notice to them. On the other hand, in the instant case, petitioners are the
heirs of Deleste who seek nullification of the EPs issued to private respondents on
grounds of violation of due process of law, disregard of landowners right of
retention, improvident issuance of EPs and OCTs, and non-coverage of the agrarian
reform program, among others. Evidently, there is even no privity among the
petitioners in these two cases.

And in the second place, the issues are also dissimilar. In Heirs of Sofia
Nanaman Lonoy, the issue was whether the filing of a petition for prohibition was
the proper remedy for the petitioners therein, considering that the EPs and OCTs
had already been issued in 2001, four (4) years prior to the filing of said petition in
2005. In the instant case, however, the issue is whether the EPs and OCTs issued in
favor of private respondents are void, thus warranting their cancellation.

In addition, the factual circumstances in these two cases are different such
that the necessity of applying the rule on indefeasibility of title in one is wanting in
the other. In Heirs of Sofia Nanaman Lonoy, the petition for prohibition was filed by
the petitioners therein in 2005, notwithstanding the fact that the EPs and OCTs had
already been issued in 2001. For that reason, apart from making a ruling that
[p]rohibition, as a rule, does not lie to restrain an act that is already a fait
accompli, it becomes incumbent upon this Court to hold that:

x x x Considering that such EPs and OCTs were issued in

2001, they had become indefeasible and incontrovertible by the
time petitioners instituted CA-G.R. SP No. 00365 in 2005, and
may no longer be judicially reviewed.[82] (Emphasis supplied.)

On the contrary, in the instant case, the petition for nullification of private
respondents EPs and OCTs was filed on February 28, 2002. Taking into account that
the EPs and OCTs were issued on August 1, 2001 and October 1, 2001, respectively,
the filing of the petition was well within the prescribed one year period, thus,
barring the defense of indefeasibility and incontrovertibility. Even if the petition was
filed before the DARAB, and not the Regional Trial Court as mandated by Sec. 32 of
the Property Registration Decree,[83] this should necessarily have the same effect,
considering that DARABs jurisdiction extends to cases involving the cancellation of
CLOAs, EPs, and even of certificates of title issued by virtue of a void EP. As this
Court held in Gabriel v. Jamias:[84]

It is well-settled that the DAR, through its adjudication arm, i.e.,

the DARAB and its regional and provincial adjudication boards,
exercises quasi-judicial functions and jurisdiction on all matters
pertaining to an agrarian dispute or controversy and the
implementation of agrarian reform laws. Pertinently, it is provided in
the DARAB Revised Rules of Procedure that the DARAB has primary
and exclusive jurisdiction, both original and appellate, to determine

and adjudicate all agrarian disputes involving the implementation of

the Comprehensive Agrarian Reform Program (CARP) and related
agrarian reform laws. Such jurisdiction shall extend to cases
involving the issuance, correction and cancellation of
Certificates
of
Land
Ownership
Award
(CLOAs)
and
Emancipation Patents which are registered with the Land
Registration Authority.

This Court has had the occasion to rule that the mere issuance
of an emancipation patent does not put the ownership of the agrarian
reform beneficiary beyond attack and scrutiny. Emancipation patents
may be cancelled for violations of agrarian laws, rules and regulations.
Section 12 (g) of P.D. No. 946 (issued on June 17, 1976) vested the
then Court of Agrarian Relations with jurisdiction over cases involving
the cancellation of emancipation patents issued under P.D. No. 266.
Exclusive jurisdiction over such cases was later lodged with the DARAB
under Section 1 of Rule II of the DARAB Rules of Procedure.

For sure, the jurisdiction of the DARAB cannot be deemed

to disappear the moment a certificate of title is issued, for,
such certificates are not modes of transfer of property but
merely evidence of such transfer, and there can be no valid
transfer of title should the CLOA, on which it was grounded, be
void. The same holds true in the case of a certificate of title
issued by virtue of a void emancipation patent.

From the foregoing, it is therefore undeniable that it is the

DARAB and not the regular courts which has jurisdiction herein, this
notwithstanding the issuance of Torrens titles in the names of the
petitioners. For, it is a fact that the petitioners Torrens titles emanated
from the emancipation patents previously issued to them by virtue of
being the farmer-beneficiaries identified by the DAR under the OLT of
the government. The DAR ruling that the said emancipation patents
were erroneously issued for failing to consider the valid retention
rights of respondents had already attained finality. Considering that
the action filed by respondents with the DARAB was precisely to annul
the emancipation patents issued to the petitioners, the case squarely,

therefore, falls within the jurisdiction of the DARAB. x x x (Citations

omitted; emphasis supplied.)

Inevitably, this leads to no other conclusion than that Our ruling in Heirs of
Sofia Nanaman Lonoy concerning the indefeasibility and incontrovertibility of the
EPs and OCTs issued in 2001 does not bar Us from making a finding in the instant
case that the EPs and OCTs issued to private respondents are, indeed, void.

With the foregoing disquisition, it becomes unnecessary to dwell on the other

issues raised by the parties.

WHEREFORE, the Court GRANTS the petition and REVERSES and SETS
ASIDE the CAs October 28, 2004 and September 13, 2005 Resolutions in CA-G.R.
SP No. 85471. The Emancipation Patents and Original Certificates of Title covering
the subject property, particularly Lot No. 1407, issued in favor of private
respondents are hereby declared NULL and VOID.

The DAR is ordered to CANCEL the aforementioned Emancipation Patents

and Original Certificates of Title erroneously issued in favor of private respondents.

No pronouncement as to costs.

SO ORDERED.

PRESBITERO J. VELASCO, JR.

Associate Justice

WE CONCUR:

RENATO C. CORONA
Chief Justice
Chairperson

TERESITA J. LEONARDO-DE CASTRO

MARIANO C. DEL CASTILLO

Associate Justice

Associate Justice

JOSE PORTUGAL PEREZ

Associate Justice

CERTIFICATION

Republic of the Philippines

Supreme Court
Manila
THIRD DIVISION
ESTATE
OF
represented
ALI,
titioner,

MARGARITA
by

D.
LUZ

CABACUNGAN,
LAIGOPe

G.R.
175073

No.

Present:
- versus -

MARILOU LAIGO, PEDRO ROY LAIGO, STELLA

BALAGOT and SPOUSES MARIO B. CAMPOS AND
JULIA S. CAMPOS,
Respondents.

CARPIO,* J.,
VELASCO,
JR., J.,Chairpers
on,
BRION,**
PERALTA, and
SERENO,*** JJ.
Promulgated:

August 15,
2011
x--------------------------------------------------x
DECISION

PERALTA, J.:
This Petition for Review under Rule 45 of the Rules of Court assails
the October 13, 2006 Decision[1] of the Court of Appeals in CA-G.R. CV No.
72371. The assailed decision affirmed the July 2, 2001 judgment [2] rendered by the
Regional Trial Court of La Union, Branch 33 in Civil Case No. 1031-BG a complaint
for annulment of sale of real property, recovery of ownership and possession,

cancellation of tax declarations and damages filed by Margarita Cabacungan,

[3]

represented by her daughter, Luz Laigo-Ali against Marilou Laigo and Pedro Roy

Laigo, respondents herein, and against Estella Balagot, [4] and the spouses Mario and
Julia Campos.
The facts follow.
Margarita Cabacungan (Margarita) owned three parcels of unregistered land
in Paringao and in Baccuit, Bauang, La Union, each measuring 4,512 square
meters, 1,986 square meters and 3,454 square meters. The properties were
individually covered by tax declaration all in her name. [5] Sometime in 1968,
Margaritas son, Roberto Laigo, Jr. (Roberto), applied for a non-immigrant visa to
the United States, and to support his application, he allegedly asked Margarita to
transfer the tax declarations of the properties in his name. [6] For said purpose,
Margarita, unknown to her other children, executed an Affidavit of Transfer of Real
Property whereby the subject properties were transferred by donation to Roberto.
[7]

Not long after, Robertos visa was issued and he was able to travel to the U.S. as

a tourist and returned in due time. In 1979, he adopted respondents Pedro Laigo
(Pedro) and Marilou Laigo (Marilou), [8] and then he married respondent Estella
Balagot.
In July 1990, Roberto sold the 4,512 sq m property in Baccuit to the spouses
Mario and Julia Campos for P23,000.00.[9] Then in August 1992, he sold the 1,986
sq m and 3,454 sq m lots in Paringao, respectively, to Marilou for P100,000.00 and
to Pedro for P40,000.00.[10] Allegedly, these sales were not known to Margarita and
her other children.[11]
It was only in August 1995, at Robertos wake, that Margarita came to know
of the sales as told by Pedro himself.[12] In February 1996, Margarita, represented
by her daughter, Luz, instituted the instant complaint for the annulment of said
sales and for the recovery of ownership and possession of the subject properties as
well as for the cancellation of Ricardos tax declarations. Margarita admitted having
accommodated Robertos request for the transfer of the properties to his name, but
pointed out that the arrangement was only for the specific purpose of supporting
his U.S. visa application. She emphasized that she never intended to divest herself
of ownership over the subject lands and, hence, Roberto had no right to sell them
to respondents and the Spouses Campos. She likewise alleged that the sales,

which were fictitious and simulated considering the gross inadequacy of the
stipulated price, were fraudulently entered into by Roberto. She imputed bad faith
to Pedro, Marilou and the Spouses Campos as buyers of the lots, as they
supposedly knew all along that Roberto was not the rightful owner of the
properties.[13] Hence, she principally prayed that the sales be annulled; that
Robertos tax declarations be cancelled; and that the subject properties be
reconveyed to her.[14]
The Spouses Campos advanced that they were innocent purchasers for value
and in good faith, and had merely relied on Robertos representation that he had
the right to sell the property; and that, hence, they were not bound by whatever
agreement entered by Margarita with her son. They posited that the alleged gross
inadequacy of the price would not invalidate the sale absent a vitiation of consent
or proof of any other agreement. Further, they noted that Margaritas claim was
already barred by prescription and laches owing to her long inaction in recovering
the subject properties. Finally, they believed that inasmuch as Roberto had already
passed away, Margarita must have, instead, directed her claim against his estate. [15]
In much the same way, Marilou and Pedro, [16] who likewise professed
themselves to be buyers in good faith and for value, believed that Margaritas cause
of action had already been barred by laches, and that even assuming the contrary,
the cause of action was nevertheless barred by prescription as the same had
accrued way back in 1968 upon the execution of the affidavit of transfer by virtue of
which an implied trust had been created. In this regard, they emphasized that the
law allowed only a period of ten (10) years within which an action to recover
ownership of real property or to enforce an implied trust thereon may be brought,
but Margarita merely let it pass.[17]
On February 3, 1999, prior to pre-trial, Margarita and the Spouses Campos
amicably entered into a settlement whereby they waived their respective claims
against each other.[18] Margarita died two days later and was forthwith substituted
by her estate.[19] On February 8, 1999, the trial court rendered a Partial
Decision[20] approving the compromise agreement and dismissing the complaint
against the Spouses Campos. Forthwith, trial on the merits ensued with respect to
Pedro and Marilou.

On July 2, 2001, the trial court rendered judgment dismissing the complaint
as follows:
WHEREFORE, in view of the foregoing considerations, the
complaint is DISMISSED.[21]
The trial court ruled that the 1968 Affidavit of Transfer operated as a simple
transfer of the subject properties from Margarita to Roberto. It found no express
trust created between Roberto and Margarita by virtue merely of the said document
as there was no evidence of another document showing Robertos undertaking to
return the subject properties. Interestingly, it concluded that, instead, an implied
or constructive trust was created between the parties, as if affirming that there
was indeed an agreement albeit unwritten to have the properties returned to
Margarita in due time. [22]
Moreover, the trial court surmised how Margarita could have failed to recover
the subject properties from Roberto at any time between 1968, following the
execution of the Affidavit of Transfer, and Robertos return from the United
States shortly thereafter. Finding Margarita guilty of laches by such inaction, the
trial court barred recovery from respondents who were found to have acquired the
properties supposedly in good faith and for value. [23] It also pointed out that
recovery could no longer be pursued in this case because Margarita had likewise
exhausted the ten-year prescriptive period for reconveyance based on an implied
trust which had commenced to run in 1968 upon the execution of the Affidavit of
Transfer.[24] Finally, it emphasized that mere inadequacy of the price as alleged
would not be a sufficient ground to annul the sales in favor of Pedro and Marilou
absent any defect in consent.[25]
Aggrieved, petitioner appealed to the Court of Appeals which, on October 13,
2006,

affirmed

the

trial

courts

disposition. The

appellate

court

dismissed

petitioners claim that Roberto was merely a trustee of the subject properties as
there was no evidence on record supportive of the allegation that Roberto merely
borrowed the properties from Margarita upon his promise to return the same on his
arrival from the United States. Further, it hypothesized that granting the existence
of

an

implied

trust,

circumscribed by laches.

still
[26]

Margaritas action

thereunder

had

already

been

Curiously, while the appellate court had found no implied trust relation in the
transaction between Margarita and Roberto, nevertheless, it held that the ten-year
prescriptive period under Article 1144 of the Civil Code, in relation to an implied
trust created under Article 1456, had already been exhausted by Margarita because
her cause of action had accrued way back in 1968; and that while laches and
prescription as defenses could have availed against Roberto, the same would be
unavailing against Pedro and Marilou because the latter were supposedly buyers in
good faith and for value.[27] It disposed of the appeal, thus:
WHEREFORE,
the Appeal is
hereby
DENIED.
The
assailed Decision dated 2 July 2001 of the Regional Trial Court of
Bauang, La Union, Branch 33 is AFFIRMED.
SO ORDERED.[28]
Hence, the instant recourse imputing error to the Court of Appeals in
holding: (a) that the complaint is barred by laches and prescription; (b) that the
rule on innocent purchaser for value applies in this case of sale of unregistered
land; and (c) that there is no evidence to support the finding that there is an
implied trust created between Margarita and her son Roberto. [29]
Petitioner posits that the Court of Appeals should not have haphazardly
applied the doctrine of laches and failed to see that the parties in this case are
bound by familial ties. They assert that laches must not be applied when an
injustice would result from it. Petitioner believes that the existence of such
confidential relationship precludes a finding of unreasonable delay on Margaritas
part in enforcing her claim, especially in the face of Luzs testimony that she and
Margarita had placed trust and confidence in Roberto. Petitioner also refutes the
Court of Appeals finding that there was a donation of the properties to Roberto
when the truth is that the subject properties were all that Margarita possessed and
that she could not have failed to provide for her other children nor for means by
which to support herself. It reiterates that the transfer to Roberto was only an
accommodation so that he could submit proof to support his U.S. visa application.
On the issue of prescription, petitioner advances that it runs from the time
Roberto, as trustee, has repudiated the trust by selling the properties to

respondents in August 15, 1992; that hence, the filing of the instant complaint in
1996 was well within the prescriptive period. Finally, petitioner states that whether
a buyer is in good or bad faith is a matter that attains relevance in sales of
registered land, as corollary to the rule that a purchaser of unregistered land
uninformed of the sellers defective title acquires no better right than such seller.
Respondents stand by the ruling of the Court of Appeals. In their Comment,
they theorize that if indeed Margarita and Roberto had agreed to have the subject
properties returned following the execution of the Affidavit of Transfer, then there
should have been a written agreement evincing such intention of the parties. They
note that petitioners reliance on the Affidavit of Transfer as well as on the alleged
unwritten agreement for the return of the properties must fail, simply because they
are not even parties to it. Be that as it may, the said document had effectively
transferred the properties to Roberto who, in turn, had acquired the full capacity to
sell them, especially since these properties could well be considered as Robertos
inheritance from Margarita who, on the contrary, did have other existing properties
in her name. Moreover, they believe that the liberal application of the rule on
laches between family members does not apply in the instant case because there is
no fiduciary relationship and privity between them and Margarita.
There is merit in the petition.
To begin with, the rule is that the latitude of judicial review under Rule 45
generally excludes factual and evidentiary reevaluation, and the Court ordinarily
abides by the uniform conclusions of the trial court and the appellate court. Yet, in
the case at bar, while the courts below have both arrived at the dismissal of
petitioners complaint, there still remains unsettled the ostensible incongruence in
their respective factual findings. It thus behooves us to be thorough both in
reviewing the records and in appraising the evidence, especially since an opposite
conclusion is warranted and, as will be shown, justified.
A trust is the legal relationship between one person having an equitable
ownership of property and another person owning the legal title to such property,
the equitable ownership of the former entitling him to the performance of certain
duties and the exercise of certain powers by the latter.[30] Trusts are either express
or implied.[31] Express or direct trusts are created by the direct and positive acts of

the parties, by some writing or deed, or will, or by oral declaration in words

evincing an intention to create a trust. [32] Implied trusts also called trusts by
operation of law, indirect trusts and involuntary trusts arise by legal
implication based on the presumed intention of the parties or on equitable
principles independent of the particular intention of the parties. [33] They are those
which, without being expressed, are deducible from the nature of the transaction as
matters of intent or, independently of the particular intention of the parties, as
being inferred from the transaction by operation of law basically by reason of
equity.[34]
Implied trusts are further classified into constructive trusts and resulting
trusts. Constructive trusts, on the one hand, come about in the main by operation
of law and not by agreement or intention. They arise not by any word or phrase,
either expressly or impliedly, evincing a direct intention to create a trust, but one
which arises in order to satisfy the demands of justice. [35] Also known as trusts ex
maleficio, trusts ex delicto and trusts de son tort, they are construed against one
who by actual or constructive fraud, duress, abuse of confidence, commission of a
wrong or any form of unconscionable conduct, artifice, concealment of questionable
means, or who in any way against equity and good conscience has obtained or
holds the legal right to property which he ought not, in equity and good conscience,
hold

and

enjoy.[36] They

are

aptly

characterized

as

fraud-rectifying

trust,[37]imposed by equity to satisfy the demands of justice [38] and to defeat or

prevent the wrongful act of one of the parties. [39] Constructive trusts are illustrated
in Articles 1450, 1454, 1455 and 1456. [40]
On the other hand, resulting trusts arise from the nature or circumstances of
the consideration involved in a transaction whereby one person becomes invested
with legal title but is obligated in equity to hold his title for the benefit of another.
This is based on the equitable doctrine that valuable consideration and not legal
title is determinative of equitable title or interest and is always presumed to have
been contemplated by the parties. [41] Such intent is presumed as it is not
expressed in the instrument or deed of conveyance and is to be found in the nature
of their transaction.[42] Implied trusts of this nature are hence describable as
intention-enforcing trusts.[43] Specific examples of resulting trusts may be found in
the Civil Code, particularly Articles 1448, 1449, 1451, 1452 and 1453. [44]

Articles 1448 to 1456 of the Civil Code enumerate cases of implied trust, but
the list according to Article 1447 is not exclusive of others which may be
established by the general law on trusts so long as the limitations laid down in
Article 1442 are observed,[45] that is, that they be not in conflict with the New Civil
Code, the Code of Commerce, the Rules of Court and special laws. [46]
While resulting trusts generally arise on failure of an express trust or of the
purpose thereof, or on a conveyance to one person upon a consideration from
another (sometimes referred to as a purchase-money resulting trust), they may
also be imposed in other circumstances such that the court, shaping judgment in its
most efficient form and preventing a failure of justice, must decree the existence of
such a trust.[47] A resulting trust, for instance, arises where, there being no fraud or
violation of the trust, the circumstances indicate intent of the parties that legal title
in one be held for the benefit of another.[48] It also arises in some instances where
the underlying transaction is without consideration, such as that contemplated in
Article 1449[49] of the Civil Code. Where property, for example, is gratuitously
conveyed for a particular purpose and that purpose is either fulfilled or frustrated,
the court may affirm the resulting trust in favor of the grantor or transferor,
[50]

where the beneficial interest in property was not intended to vest in the grantee.

[51]

Intention although only presumed, implied or supposed by law from the

nature of the transaction or from the facts and circumstances accompanying the
transaction, particularly the source of the consideration is always an element of a
resulting trust[52] and may be inferred from the acts or conduct of the parties rather
than from direct expression of conduct. [53] Certainly, intent as an indispensable
element, is a matter that necessarily lies in the evidence, that is, by evidence, even
circumstantial, of statements made by the parties at or before the time title passes.
[54]

Because an implied trust is neither dependent upon an express agreement nor

required to be evidenced by writing,[55] Article 1457[56] of our Civil Code authorizes

the admission of parole evidence to prove their existence. Parole evidence that is
required to establish the existence of an implied trust necessarily has to be
trustworthy and it cannot rest on loose, equivocal or indefinite declarations. [57]
Thus, contrary to the Court of Appeals finding that there was no evidence on
record showing that an implied trust relation arose between Margarita and Roberto,

we find that petitioner before the trial court, had actually adduced evidence to
prove the intention of Margarita to transfer to Roberto only the legal title to the
properties in question, with attendant expectation that Roberto would return the
same to her on accomplishment of that specific purpose for which the transaction
was entered into. The evidence of course is not documentary, but rather
testimonial.
We recall that the complaint before the trial court alleged that the 1968
Affidavit of Transfer was executed merely to accommodate Robertos request to
have the properties in his name and thereby produce proof of ownership of certain
real

properties

in

the Philippines to

support

his U.S. visa

application. The

agreement, the complaint further stated, was for Margarita to transfer the tax
declarations of the subject properties to Roberto for the said purpose and without
the intention to divest her of the rights of ownership and dominion. [58] Margarita,
however, died before trial on the merits ensued; [59] yet the allegation was
substantiated by the open-court statements of her daughter, Luz, and of her niece,
Hilaria Costales (Hilaria), a disinterested witness.
In her testimony, Luz, who affirmed under oath her own presence at the
execution of the Affidavit of Transfer, described the circumstances under which
Margarita and Roberto entered into the agreement. She narrated that Roberto had
wanted to travel to the U.S and to show the embassy proof of his financial capacity,
he asked to borrow from Margarita the properties involved but upon the condition
that he would give them back to her upon his arrival from the United States. She
admitted that Robertos commitment to return the properties was not put in writing
because they placed trust and confidence in him, and that while she had spent most
of her time in Mindanao since she married in 1956, she would sometimes come to
La Union to see her mother but she never really knew whether at one point or
another her mother had demanded the return of the properties from Roberto.
[60]

She further asserted that even after Robertos arrival from the United States, it

was Margarita who paid off the taxes on the subject properties and that it was only
when her health started to deteriorate that Roberto had taken up those obligations.
[61]

Hilarias testimony ran along the same line. Like Luz, she was admittedly

present at the execution of the Affidavit of Transfer which took place at the house
she shared with Jacinto Costales, the notarizing officer who was her own
brother. She told that Roberto at the time had wanted to travel to the U.S. but did

not have properties in the Philippines which he could use to back up his visa
application; as accommodation, Margarita lent him the tax declarations covering
the properties but with the understanding that upon his return he would give them
back to Margarita. She professed familiarity with the properties involved because
one of them was actually sitting close to her own property.[62]
While indeed at one point at the stand both of Luzs and Hilarias presence at
the execution of the affidavit had been put to test in subtle interjections by
respondents counsel to the effect that their names and signatures did not appear in
the Affidavit of Transfer as witnesses, this, to our mind, is of no moment inasmuch
as they had not been called to testify on the fact of, or on the contents of, the
Affidavit of Transfer or its due execution. Rather, their testimony was offered to
prove the circumstances surrounding its execution the circumstances from which
could be derived the unwritten understanding between Roberto and Margarita that
by their act, no absolute transfer of ownership would be effected. Besides, it would
be highly unlikely for Margarita to institute the instant complaint if it were indeed
her intention to vest in Roberto, by virtue of the Affidavit of Transfer, absolute
ownership over the covered properties.
It is deducible from the foregoing that the inscription of Robertos name in
the Affidavit of Transfer as Margaritas transferee is not for the purpose of
transferring ownership to him but only to enable him to hold the property in trust
for Margarita. Indeed, in the face of the credible and straightforward testimony of
the two witnesses, Luz and Hilaria, the probative value of the ownership record
forms in the names of respondents, together with the testimony of their witness
from the municipal assessors office who authenticated said forms, are utterly
minimal to show Robertos ownership. It suffices to say that respondents did not
bother to offer evidence that would directly refute the statements made by Luz and
Hilaria in open court on the circumstances underlying the 1968 Affidavit of
Transfer.
As a trustee of a resulting trust, therefore, Roberto, like the trustee of an
express passive trust, is merely a depositary of legal title having no duties as to the
management, control or disposition of the property except to make a conveyance
when called upon by the cestui que trust.[63] Hence, the sales he entered into with
respondents are a wrongful conversion of the trust property and a breach of the

trust. The question is: May respondents now be compelled to reconvey the subject
properties to petitioner? We rule in the affirmative.
Respondents posit that petitioners claim may never be enforced against
them as they had purchased the properties from Roberto for value and in good
faith. They also claim that, at any rate, petitioners cause of action has accrued
way back in 1968 upon the execution of the Affidavit of Transfer and, hence, with
the 28 long years that since passed, petitioners claim had long become stale not
only on account of laches, but also under the rules on extinctive prescription
governing a resulting trust. We do not agree.
First, fundamental is the rule in land registration law that the issue of
whether the buyer of realty is in good or bad faith is relevant only where the
subject of the sale is registered land and the purchase was made from the
registered owner whose title to the land is clean, in which case the purchaser who
relies on the clean title of the registered owner is protected if he is a purchaser in
good faith and for value. [64] Since the properties in question are unregistered lands,
respondents purchased the same at their own peril. Their claim of having bought
the properties in good faith, i.e., without notice that there is some other person
with a right to or interest therein, would not protect them should it turn out, as it in
fact did in this case, that their seller, Roberto, had no right to sell them.
Second, the invocation of the rules on limitation of actions relative to a
resulting trust is not on point because the resulting trust relation between Margarita
and Roberto had been extinguished by the latters death. A trust, it is said,
terminates upon the death of the trustee, particularly where the trust is personal to
him.[65] Besides, prescription and laches, in respect of this resulting trust relation,
hardly can impair petitioners cause of action. On the one hand, in accordance with
Article 1144[66] of the Civil Code, an action for reconveyance to enforce an implied
trust in ones favor prescribes in ten (10) years from the time the right of action
accrues, as it is based upon an obligation created by law. [67] It sets in from the
time the trustee performs unequivocal acts of repudiation amounting to an ouster
of the cestui que trust which are made known to the latter.[68] In this case, it was
the 1992 sale of the properties to respondents that comprised the act of repudiation
which, however, was made known to Margarita only in 1995 but nevertheless
impelled her to institute the action in 1996 still well within the prescriptive

period. Hardly can be considered as act of repudiation Robertos open court

declaration which he made in the 1979 adoption proceedings involving respondents
to the effect that he owned the subject properties, [69] nor even the fact that he in
1977 had entered into a lease contract on one of the disputed properties which
contract had been subject of a 1996 decision of the Court of Appeals. [70] These do
not suffice to constitute unequivocal acts in repudiation of the trust.
On the other hand, laches, being rooted in equity, is not always to be applied
strictly in a way that would obliterate an otherwise valid claim especially between
blood

relatives. The

existence

of

confidential

relationship

based

upon

consanguinity is an important circumstance for consideration; hence, the doctrine is

not to be applied mechanically as between near relatives. [71] Adaza v. Court of
Appeals[72] held that the relationship between the parties therein, who were siblings,
was sufficient to explain and excuse what would otherwise have been a long delay
in enforcing the claim and the delay in such situation should not be as strictly
construed as where the parties are complete strangers vis-a-vis each other; thus,
reliance by one party upon his blood relationship with the other and the trust and
confidence normally connoted in our culture by that relationship should not be
taken against him. Too, Sotto v. Teves[73] ruled that the doctrine of laches is not
strictly applied between near relatives, and the fact that the parties are connected
by ties of blood or marriage tends to excuse an otherwise unreasonable delay.
Third, there is a fundamental principle in agency that where certain property
entrusted to an agent and impressed by law with a trust in favor of the principal is
wrongfully diverted, such trust follows the property in the hands of a third person
and the principal is ordinarily entitled to pursue and recover it so long as the
property

can

be

traced

and

identified,

and

no

superior

equities

have

intervened. This principle is actually one of trusts, since the wrongful conversion
gives rise to a constructive trust which pursues the property, its product or
proceeds, and permits the beneficiary to recover the property or obtain damages
for the wrongful conversion of the property. Aptly called the trust pursuit rule, it
applies when a constructive or resulting trust has once affixed itself to property in a
certain state or form.[74]
Hence, a trust will follow the property through all changes in its state and
form as long as such property, its products or its proceeds, are capable of
identification, even into the hands of a transferee other than a bona fide purchaser

for value, or restitution will be enforced at the election of the beneficiary through
recourse against the trustee or the transferee personally. This is grounded on the
principle in property law that ownership continues and can be asserted by the true
owner against any withholding of the object to which the ownership pertains,
whether such object of the ownership is found in the hands of an original owner or
a transferee, or in a different form, as long as it can be identified. [75] Accordingly,
the person to whom is made a transfer of trust property constituting a wrongful
conversion of the trust property and a breach of the trust, when not protected as
a bona fidepurchaser for value, is himself liable and accountable as a constructive
trustee. The liability attaches at the moment of the transfer of trust property and
continues until there is full restoration to the beneficiary. Thus, the transferee is
charged with, and can be held to the performance of the trust, equally with the
original trustee, and he can be compelled to execute a reconveyance. [76]
This scenario is characteristic of a constructive trust imposed by Article
1456[77] of the Civil Code, which impresses upon a person obtaining property
through mistake or fraud the status of an implied trustee for the benefit of the
person from whom the property comes. Petitioner, in laying claim against
respondents who are concededly transferees who professed having validly derived
their ownership from Roberto, is in effect enforcing against respondents a
constructive trust relation that arose by virtue of the wrongful and fraudulent
transfer to them of the subject properties by Roberto.
Aznar Brother Realty Co. v. Aying, [78] citing Buan Vda. de Esconde v. Court
of Appeals,[79] explained this form of implied trust as follows:
A deeper analysis of Article 1456 reveals that it is not a trust in
the technical sense for in a typical trust, confidence is reposed in one
person who is named a trustee for the benefit of another who is called
the cestui que trust, respecting property which is held by the trustee
for the benefit of the cestui que trust. A constructive trust, unlike an
express trust, does not emanate from, or generate a fiduciary relation.
While in an express trust, a beneficiary and a trustee are linked by
confidential or fiduciary relations, in a constructive trust, there is
neither a promise nor any fiduciary relation to speak of and the socalled trustee neither accepts any trust nor intends holding the
property for the beneficiary.
xxxx

x x x [C]onstructive trusts are created by the construction of equity in

order to satisfy the demands of justice and prevent unjust enrichment.
They arise contrary to intention against one who, by fraud, duress or
abuse of confidence, obtains or holds the legal right to property which
he ought not, in equity and good conscience, to hold. [80]

It is settled that an action for reconveyance based on a constructive

implied trust prescribes in 10 years likewise in accordance with Article 1144 of the
Civil Code. Yet not like in the case of a resulting implied trust and an express
trust, prescription supervenes in a constructive implied trust even if the trustee
does not repudiate the relationship. In other words, repudiation of said trust is not
a condition precedent to the running of the prescriptive period. [81]
As to when the prescriptive period commences to run, Crisostomo v.
Garcia

[82]

elucidated as follows:

When property is registered in another's name, an implied or

constructive trust is created by law in favor of the true owner. The
action for reconveyance of the title to the rightful owner prescribes in
10 years from the issuance of the title. An action for
reconveyancebased on implied or constructive trust prescribes in ten
years from the alleged fraudulent registration or date of issuance of
the certificate of title over the property.
It is now well settled that the prescriptive period to recover
property obtained by fraud or mistake, giving rise to an implied trust
under Art. 1456 of the Civil Code, is 10 years pursuant to Art.
1144. This ten-year prescriptive period begins to run from the
date the adverse party repudiates the implied trust, which
repudiation takes place when the adverse party registers the
land.[83]

From the foregoing, it is clear that an action for reconveyance under a

constructive implied trust in accordance with Article 1456 does not prescribe unless
and until the land is registered or the instrument affecting the same is inscribed in
accordance

with

law,

inasmuch

as

operates constructive notice to the world.

it
[84]

is

what

binds

the

land

and

In the present case, however, the

lands involved are concededly unregistered lands; hence, there is no way by which
Margarita, during her lifetime, could be notified of the furtive and fraudulent sales

made in 1992 by Roberto in favor of respondents, except by actual notice from

Pedro himself in August 1995. Hence, it is from that date that prescription began
to toll. The filing of the complaint in February 1996 is well within the prescriptive
period. Finally, such delay of only six (6) months in instituting the present action
hardly suffices to justify a finding of inexcusable delay or to create an inference that
Margarita has allowed her claim to stale by laches.
WHEREFORE, the Petition is GRANTED. The October 13, 2006 Decision of
the Court of Appeals in CA-G.R. CV No. 72371, affirming the July 2, 2001
judgment of the Regional Trial Court of La Union, Branch 33 in Civil Case No. 1031BG, isREVERSED and SET ASIDE, and a new one is entered (a) directing the
cancellation of the tax declarations covering the subject properties in the name of
Roberto D. Laigo and his transferees; (b) nullifying the deeds of sale executed by
Roberto D. Laigo in favor of respondents Pedro Roy Laigo and Marilou Laigo; and (c)
directing said respondents to execute reconveyance in favor of petitioner.
SO ORDERED.

DIOSDADO M. PERALTA
Associate Justice
WE CONCUR:
ANTONIO T. CARPIO
Associate Justice

PRESBITERO J. VELASCO, JR.

BRION
Associate Justice
Chairperson

ARTURO D.
Associate Justice

MARIA LOURDES P. A. SERENO

Associate Justice
ATTESTATION
I attest that the conclusions in the above Decision had been reached in
consultation before the case was assigned to the writer of the opinion of the Courts
Division.

Republic of the Philippines

Supreme Court
Baguio City
THIRD DIVISION
DOMINGO CARABEO,
Petitioner,

G.R. No. 190823

Present:
CARPIO,* J.,
CARPIO MORALES, J., Chairperson,
BRION,
BERSAMIN, and
SERENO, JJ.

- versus -

SPOUSES NORBERTO and

SUSAN DINGCO,
Respondents
.

Promulgated:
April 4, 2011

x------------------------------------------------- x
DECISION
CARPIO MORALES, J.:
On July 10, 1990, Domingo Carabeo (petitioner) entered into a contract
denominated as Kasunduan sa Bilihan ng Karapatan sa Lupa [1] (kasunduan) with

Spouses Norberto and Susan Dingco (respondents) whereby petitioner agreed to

sell his rights over a 648 square meter parcel of unregistered land situated
in Purok III, Tugatog, Orani, Bataan to respondents for P38,000.
Respondents tendered their initial payment of P10,000 upon signing of the
contract, the remaining balance to be paid on September 1990.
Respondents were later to claim that when they were about to hand in the
balance of the purchase price, petitioner requested them to keep it first as he was
yet to settle an on-going squabble over the land.
Nevertheless, respondents gave petitioner small sums of money from time to
time which totaled P9,100, on petitioners request according to them; due to
respondents inability to pay the amount of the remaining balance in full, according
to petitioner.
By respondents claim, despite the alleged problem over the land, they
insisted

on

petitioners

acceptance

of

the

remaining

balance

of P18,900

but petitioner remained firm in his refusal, proffering as reason therefor that he
would register the land first.
Sometime in 1994, respondents learned that the alleged problem over the
land had been settled and that petitioner had caused its registration in his name on
December 21, 1993 under Transfer Certificate of Title No. 161806. They thereupon
offered to pay the balance but petitioner declined, drawing them to file a complaint
before the Katarungan Pambarangay. No settlement was reached, however, hence,
respondent filed a complaint for specific performance before the Regional Trial Court
(RTC) of Balanga,Bataan.
Petitioner countered in his Answer to the Complaint that the sale was void for
lack of object certain, the kasunduan not having specified the metes and bounds of
the land. In any event, petitioner alleged that if the validity of the kasunduan is
upheld, respondents failure to comply with their reciprocal obligation to pay the
balance of the purchase price would render the action premature. For, contrary to
respondents claim, petitioner maintained that they failed to pay the balance

of P28,000 on September 1990 to thus constrain him to accept installment

payments totaling P9,100.
After the case was submitted for decision or on January 31, 2001,
[2]

petitioner passed away. The records do not show that petitioners counsel

informed Branch 1 of the Bataan RTC, where the complaint was lodged, of his death
and that proper substitution was effected in accordance with Section 16, Rule 3,
Rules of Court.[3]
By Decision of February 25, 2001, [4] the trial court ruled in favor of
respondents, disposing as follows:
WHEREFORE,
rendered ordering:
1.

2.

premises

considered,

judgment

is

hereby

The defendant to sell his right over 648 square meters of land
pursuant to the contract dated July 10, 1990 by executing a Deed
of Sale thereof after the payment of P18,900 by the plaintiffs;
The defendant to pay the costs of the suit.
SO ORDERED.[5]

Petitioners counsel filed a Notice of Appeal on March 20, 2001.

By the herein challenged Decision dated July 20, 2009, [6] the Court of
Appeals affirmed that of the trial court.
Petitioners motion for reconsideration having been denied by Resolution of
January 8, 2010, the present petition for review was filed by Antonio Carabeo,
petitioners son,[7] faulting the appellate court:
(A)
in holding that the element of a contract, i.e., an object
certain is present in this case.
(B)

 in considering it unfair to expect respondents who are not

lawyers to make judicial consignation after herein petitioner allegedly
refused to accept payment of the balance of the purchase price.
(C)
in upholding the validity of the contract, Kasunduan sa
Bilihan ng Karapatan sa Lupa, despite the lack of spousal
consent, (underscoring supplied)

and proffering that

(D)
[t]he death of herein petitioner causes the dismissal of the action filed
by respondents; respondents cause of action being an action in
personam. (underscoring supplied)

The petition fails.

The pertinent portion of the kasunduan reads:[8]
xxxx
Na ako ay may isang partial na lupa na matatagpuan sa Purok
111, Tugatog, Orani Bataan, na may sukat na 27 x 24 metro
kuwadrado, ang nasabing lupa ay may sakop na dalawang punong
santol at isang punong mangga, kayat ako ay nakipagkasundo sa
mag-asawang Norby Dingco at Susan Dingco na ipagbili sa kanila ang
karapatan ng nasabing lupa sa halagang P38,000.00.
x x x x (underscoring supplied)

That the kasunduan did not specify the technical boundaries of the property
did not render the sale a nullity. The requirement that a sale must have for its
object a determinate thing is satisfied as long as, at the time the contract is entered
into, the object of the sale is capable of being made determinate without the
necessity of a new or further agreement between the parties. [9] As the abovequoted portion of the kasunduan shows, there is no doubt that the object of the
sale is determinate.

Clutching at straws, petitioner proffers lack of spousal consent. This was

raised only on appeal, hence, will not be considered, in the present case, in the
interest of fair play, justice and due process. [10]
Respecting the argument that petitioners death rendered respondents
complaint against him dismissible, Bonilla v. Barcena[11] enlightens:
The question as to whether an action survives or not depends
on the nature of the action and the damage sued for. In the causes of
action which survive, the wrong complained [of] affects primarily
and principally property and property rights, the injuries to the person
being merely incidental, while in the causes of action which do not
survive, the injury complained of is to the person, the property and
rights of property affected being incidental. (emphasis and
underscoring supplied)

In the present case, respondents are pursuing a property right arising from
the kasunduan, whereas petitioner is invoking nullity of the kasunduan to protect
his

proprietary

interest. Assuming arguendo,

however, that

the kasunduan is

deemed void, there is a corollary obligation of petitioner to return the money paid
by respondents, and since the action involves property rights, [12] it survives.
It

bears

noting

that

trial

on

the

merits

was

already

concluded before petitioner died. Since the trial court was not informed of
petitioners death, it may not be faulted for proceeding to render judgment without
ordering his substitution. Its judgment is thus valid and binding upon petitioners
legal representatives or successors-in-interest, insofar as his interest in the
property subject of the action is concerned.[13]
In another vein, the death of a client immediately divests the counsel of
authority.[14] Thus, in filing a Notice of Appeal, petitioners counsel of record had no
personality to act on behalf of the already deceased client who, it bears reiteration,
had not been substituted as a party after his death. The trial courts decision had
thereby become final and executory, no appeal having been perfected.
WHEREFORE, the petition is DENIED.

SO ORDERED.
CONCHITA CARPIO MORALES
Associate Justice

WE CONCUR:

ANTONIO T. CARPIO
Associate Justice

ARTURO D. BRION
Associate Justice

LUCAS P. BERSAMIN
Associate Justice

MARIA LOURDES P. A. SERENO

Associate Justice

ATTESTATION
I attest that the conclusions in the above Decision had been reached in
consultation before the case was assigned to the writer of the opinion of the Courts
Division.
CONCHITA CARPIO MORALES
Associate Justice
Chairperson

CERTIFICATION
Pursuant to Section 13, Article VIII of the Constitution, and the Division
Chairpersons Attestation, I certify that the conclusions in the above decision had

been reached in consultation before the case was assigned to the writer of the
opinion of the Courts Division.

RENATO C. CORONA
Chief Justice

*
[1]
[2]

[3]

Designated member per Raffle dated March 10, 2010.

Records, p. 6.
Petitioners Death Certificate is appended as Annex M to the petition for
review, rollo, p. 105
Section 16. Death of party; duty of counsel. Whenever a party to a
pending action dies, and the claim is not thereby extinguished, it shall be the
duty of his counsel to inform the court within thirty (30) days after such death of
the fact thereof, and to give the name and address of his legal representative or
representatives. Failure of counsel to comply with his duty shall be a ground for
disciplinary action.
The heirs of the deceased may be allowed to be substituted for the deceased,
without requiring the appointment of an executor or administrator and the court
may appoint a guardianad litem for the minor heirs.
The court shall forthwith order said legal representative or representatives to
appear and be substituted within a period of thirty (30) days from notice.

[4]
[5]
[6]

[7]

[8]

[9]
[10]

[11]

If no legal representative is named by the counsel for the deceased party, or if

the one so named shall fail to appear within the specified period, the court may
order the opposing party, within a specified time to procure the appointment of
an executor or administrator for the estate of the deceased and the latter shall
immediately appear for and on behalf of the deceased. The court charges in
procuring such appointment, if defrayed by the opposing party, may be
recovered as costs. (16a, 17a)
Rollo, pp. 71-79.
Id. at 78-79.
Penned by Associate Justice Jose C. Reyes, with the concurrence of Associate
Justices Martin S. Villarama, Jr. (now Supreme Court Associate Justice) and
Normandie B. Pizzaro, id. at 28-36.
Rositas Death Certificate appended to the petition for review as Annex M-1,
id. at 106.
Heirs of Romana Ingjug-Tiro, et. al., v. Spouses Casal, et.al., G.R. No.
134718, August 20, 2001.
CIVIL CODE, Article 1460.
Philippine Commercial and International Bank v. Custodio, G.R. No.
173207, February 14, 2008, 545 SCRA 367.
G.R. No. L-41715, June 18, 1976.

THIRD DIVISION
SPOUSES
ISAGANI
and
DIOSDADA CASTRO,
Petitioners,

G.R. No. 190122

Present:
CARPIO MORALES, J., Chairperson,
BRION,
BERSAMIN,
VILLARAMA, JR., and
SERENO, JJ.

- versus -

SPOUSES REGINO SE and

VIOLETA
DELA
CRUZ,
SPOUSES
EDUARDO
and
CHARITO
PEREZ
and
Promulgated:
MARCELINO TOLENTINO,
Respondents.
January 10, 2011
x-------------------------------------------------- x
DECISION
CARPIO MORALES, J.,
For the Courts consideration is the propriety of the issuance of a writ of
preliminary mandatory injunction in favor of respondent Spouses Regino Se and
Violeta dela Cruz (Spouses dela Cruz).
Respondent Spouses Eduardo and Charito Perez (Spouses Perez) obtained
a P250,000 loan from Spouses Isagani and Diosdada Castro (petitioners) on
November 15, 1996, to secure which they executed a real estate mortgage in
petitioners favor covering an unregistered 417 square meter parcel of land, located
in San Isidro, Hagonoy, Bulacan, covered by Tax Declaration (TD) No. 01844 (the
property).

Respondent Spouses Perez having failed to settle their loan, petitioners

extrajudicially foreclosed the mortgage and, as the highest bidder at the public
auction, bought the property on February 4, 1999. It turned out that before the

foreclosure or sometime in 1997 respondent Spouses Perez, contrary to a provision

of the real estate mortgage, sold the property to respondent Spouses dela Cruz
who had in fact caused the cancellation of TD No. 01844 by TD No. 01892 in their
name on August 15, 1997.
Petitioners thus filed on April 8, 1999 a complaint against herein two sets of
respondent Spouses, for annulment of Deed of Sale and TD No. 01892 [1] and
damages before the Malolos Regional Trial Court (RTC). Respondent Marcelino
Tolentino, Municipal Assessor of Hagonoy, Bulacan was impleaded as defendant. The
complaint was raffled to Branch 7 of the RTC.
By respondent Spouses dela Cruzs allegation, before buying the property,
they inspected it and found no improvements thereon that would put them on
guard against the integrity of the TD of the sellers-Spouses Perez which TD,
contrary to petitioners claim, bore no annotation of the mortgage. They had in fact
constructed a house on the property in the course of which they were approached
by petitioners who informed them of an existing mortgage thereover, but as
petitioners did not present any document to prove it, they paid no heed to the
information.
During the pendency of petitioners complaint against respondents spouses,
petitioners filed an ex-parte motion before Branch16 of the RTC for the issuance of
a writ of possession over the property by virtue of the foreclosure of the mortgage
of the sale to them of the property. [2] Petitioners motion was granted and a writ of
possession dated August 2, 2001 was issued and enforced against respondent
Spouses dela Cruz who were evicted from the property.
On December 7, 2002, petitioners amended, with leave of court, their
complaint, alleging that, inter alia, respondent Spouses Perez failed to redeem the
mortgage within the reglementary period.
In their Answer to the Amended Complaint, respondent Spouses dela Cruz
prayed

for

the

issuance

of

writ

of

preliminarymandatory injunction to restore them to physical possession of the

property, which prayer Branch 7 of the RTC granted by Order of October 29, 2004 in
this wise:

. . . It is not disputed that the Sps. Isagani Castro and

Diosdada Castro, herein plaintiffs, were placed in possession of the
subject property by virtue of a writ of possession issued by Branch 16
of the Court. This writ of possession commanded the sheriff to require
the spouses Eduardo Perez and Charito Lopez and all persons claiming
rights under them to vacate subject property and surrender possession
thereof to spouses Castro. At that time, the Spouses Regino Se and
Violeta dela Cruz were in possession of the property as owners thereof,
having already purchased the same from the Sps. Castro. Their
evidence of ownership is Tax Declaration No. 01892 of the Office of the
Municipal Assessor of Hagonoy, Bulacan, the property being still an
unregistered property. They were not claiming rights under the
spouses Perez. They were and still are the owners in their own right.
Hence, the writ of possession issued was improperly implemented and
under Art. 539 of the Civil Code, they must be restored to said
possession by the means established by the laws and the Rules of
Court. The writ of preliminary mandatory injunction prayed for is
undeniably one of the means established by the laws and the Rules of
Court. [3] (underscoring supplied)

Petitioners motion for reconsideration of the trial courts Order of October

29, 2004 was denied by Order of March 5, 2007, hence, they filed a petition for
certiorari before the Court of Appeals. Finding no grave abuse of discretion in the
issuance of the Order, the appellate court denied petitioners petition, by Decision of
September 14, 2009.[4]
Hence, the present petition.
The trial court anchored its assailed Order granting the writ of preliminary
mandatory injunction on Article 539 of the Civil Code. The Article reads:
Art. 539. Every possessor has a right to be respected in his
possession; and should he be disturbed therein, he shall be protected
in or restored to said possession by the means established by the laws
and the Rules of Court.
xxxx

Undoubtedly, respondent Spouses dela Cruz actually took possession of the

property before the real estate mortgage covering it was foreclosed, and had in fact

cancelled the TD in Spouses Perez name and had one issued in their name. It
appears, however, that petitioners did not inform Branch 16, RTC of the previous
sale of the property to third parties, herein respondent Spouses dela Cruz, and the
latters actual possession thereof.
For an injunctive writ to issue, a clear showing of extreme urgency to prevent
irreparable injury and a clear and unmistakable right to it must be proven by the
party seeking it. The primary objective of a preliminary injunction, whether
prohibitory or mandatory, is to preserve the status quo until the merits of the case
can be heard.[5]
[T]he rule is well-entrenched that the issuance of the writ of
preliminary injunction rests upon the sound discretion of the trial
court. It bears reiterating that Section 4 of Rule 58 gives generous
latitude to the trial courts in this regard for the reason that conflicting
claims in an application for a provisional writ more often than not
involve a factual

determination which is not the function of appellate courts. Hence,

the exercise of sound judicial discretion by the trial court in
injunctive matters must not be interfered with except when
there is manifest abuse, which is wanting in the present case.
[6]
(emphasis and underscoring supplied)

Indeed, the rule is well-entrenched that for grave abuse of discretion to exist
as a valid ground for the nullification of an injunctive writ, there must be a
capricious and whimsical exercise of judgment, equivalent to lack or excess of
jurisdiction. Or the power must be exercised in an arbitrary manner by reason of
passion or personal hostility, and it must be patent and gross as to amount to an
evasion of a positive duty or a virtual refusal to perform a duty enjoined by law.

[7]

Recall that respondent Spouses dela Cruz had long before the foreclosure of
the mortgage or sometime in 1997 bought and took possession of the property, and
had in fact cancelled the seller-respondent Spouses Perez TD and had one issued in
their name. By petitioners seeking ex parte the issuance to them on February
1999 of a writ of possession over the property, which was granted and the writ
enforced against respondent Spouses de la Cruz, they disturbed the status quo
ante litem.

The trial court did not thus commit grave abuse of discretion when it

issued the writ of preliminary mandatory injunction in favor of Spouses de la Cruz.

For the enforcement of the writ of possession against respondent Spouses
dela Cruz, who did not take part in the foreclosure proceedings, would amount to
taking of real property without the benefit of a proper judicial intervention. The
procedural shortcut which petitioners is impermissible. Even Article 433 of the Civil
Code instructs that Actual possession under claim of ownership raises disputable
presumption of ownership. The true owner must resort to judicial process for the
recovery of the property.

The contemplated judicial process is not through an ex-

parte petition as what petitioners availed of, but a process wherein a third party,
Spouses de la Cruz herein, is given an opportunity to be heard. [8]
The jurisdictional foundation for the issuance of a writ of injunction rests not
only in the existence of a cause of action and in the probability of irreparable injury,
among other considerations, but also in the prevention of multiplicity of suits.

Since petitioners failed to show that the appellate court erred in upholding
the

trial

courts

exercise

of

its

discretion

in

issuing

the

writ

of

preliminary mandatory injunction, the challenged Decision stands.

Parenthetically, the issuance of the challenged writ does not render
petitioners case closed. Whether there existed a conspiracy between both sets of
respondent spouses to defraud petitioners can be only be determined after the
principal action is tried on the merits during which the parties are afforded the
opportunity to present evidence in support of their respective claims. [9]
WHEREFORE, the petition is DENIED.
SO ORDERED.

CONCHITA CARPIO MORALES

Associate Justice

WE CONCUR:

ARTURO D. BRION
Associate Justice

LUCAS P. BERSAMIN
Associate Justice

MARTIN S. VILLARAMA, JR.

Associate Justice

MARIA LOURDES P. A. SERENO

Associate Justice

ATTESTATION

I attest that the conclusions in the above Decision had been reached in
consultation before the case was assigned to the writer of the opinion of the Courts
Division.
CONCHITA CARPIO MORALES
Associate Justice
Chairperson

CERTIFICATION

Pursuant to Section 13, Article VIII of the Constitution, and the Division
Chairpersons Attestation, I certify that the conclusions in the above decision had
been reached in consultation before the case was assigned to the writer of the
opinion of the Courts Division.

RENATO C. CORONA
Chief Justice

[1]

[2]

[3]
[4]

[5]

[6]

[7]

Tax Declaration No. 01844 in the name of Spouses Perez was cancelled by
Tax Declaration No. 01892, registered in the names of respondents.
Vide CA rollo, pp. 62-63. Petitioners filed a petition for the issuance of a writ
of possession on December 7, 2000, during the pendency of the instant case.
Id. at 80.
Penned by Associate Justice Jane Aurora C. Lantion, with the concurrence of
Associate Justices Mario L. Guarina, III and Mariflor P. Punzalan Castillo, rollo,
pp. 153-165.
Dolmar Realty Estate Development Corp. v. Court of Appeals, G.R. No.
172990, February 27, 2008, 547 SCRA 114-115.
Land
Bank
of
the Philippines v.
Continental
Watchman
Agency,
Incorporated, G.R. No. 136114, January 22, 2004, 420 SCRA 624, 625.
People v. Romualdez, G.R. No. 166510, July 23, 2008, 559 SCRA 492, 494.

Villanueva v. Cherdan Lending Investors Corporation, G.R. No. 177881,

October 13, 2010.
[9]
Philippine National Bank v. RJ Ventures Realty & Development Corporation
and Rajah Broadcasting Network, Inc., G.R. No. 164548, September 27, 2006,
503 SCRA 639.
[8]

Republic of the Philippines

Supreme Court
Manila

SECOND DIVISION

HEIRS OF PACENCIA RACAZA,

namely, VIRGINIA
RACAZA MIEL,

RACAZA

COSCOS,

ANGELES

RODRIGO RACAZA, QUIRINO RACAZA, ROGELIO

RACAZA,
ERNESTA
RACAZA
and
ROLAND
RACAZA,

G.R.
198402
Present:

CARPIO, J.,

Petitioners,

Chairperso
n,
BRION,
PEREZ,

- versus -

No.

SERENO,
and
REYES, JJ.

SPOUSES FLORENCIO ABAY-ABAY,

and ELEUTERIA ABAY-ABAY,[1]
Respondents.
Promulgated:

June 13, 2012

x----------------------------------------------------------------------------------------x

RESOLUTION

REYES, J.:

This resolves the Petition for Review on Certiorari with Prayer to Admit Newly
Discovered Evidence, filed by the Heirs of Pacencia Racaza, [2] herein petitioners
under Rule 45 of the Rules of Court to assail the Decision [3] dated September 8,
2010 and Resolution[4] dated August 8, 2011 of the Court of Appeals (CA) in CAG.R. CEB-CV No. 01095.

The Facts

As a background, herein respondents Spouses Florencio and Eleuteria Abayabay

[5]

filed in July 1985 with the Regional Trial Court (RTC) of Tagbilaran City,

Bohol a complaint for quieting of title, recovery of possession and damages against
several defendants that included Alexander Miel (Alexander), the husband of herein
petitioner Angeles Racaza Miel (collectively, the Miels). Subject of the complaint,
which was docketed as Civil Case No. 3920, was the property covered by Tax
Declaration No. 4501-663 and situated in Poblacion Ubay, Bohol, more particularly
described as follows:
A residential lot bounded on the North by Emelia Garces
(part); East by Emelia Garces; South by Rosario Garces, Esperanza
Rosello, Matea de Japson; West by Toribio Reyes St., with an area of
600 square meters, more or less.[6]

Spouses Abay-abay alleged that they acquired the property from the estate
of one Emilia Garces by virtue of a Deed of Absolute Sale dated August 12, 1979,
which was registered with the Register of Deeds on October 10, 1984. In mid1984, however, therein defendants began erecting residential houses on the subject
property without the knowledge and consent of Spouses Abay-abay. The refusal of
defendants therein to vacate the subject land despite herein respondents demand
prompted the latter to file the complaint with the RTC. Alexander failed to file his
answer to the complaint, and was then declared in default by the trial court.

On May 30, 1988, the RTC rendered its judgment in favor of Spouses Abayabay, and then ordered the defendants therein to vacate the disputed property. A
writ of execution was later issued by the trial court to effect the removal of the
structures, including the house of the Miels, built on the property. When the Miels
failed to vacate the property despite their repeated promise to do so not later than
January 11, 1991, the RTC issued on January 14, 1991 an Order directing the
sheriff to immediately destroy and demolish the house of the Miels.

On January 23, 1991, the petitioners then filed before the RTC their own
complaint, docketed as Civil Case No. 4856, for quieting of title, recovery of
possession and damages against Spouses Abay-abay. As the surviving heirs of
Pacencia Racaza (Pacencia), petitioners claimed to be the co-owners of the property
covered by Tax Declaration No. 45C1-313 under the name of Pacencia and more
particularly described as:

A parcel of land... bounded [on] the North by Seashore and

Josefina Ruiz; on the South by Burgos St. and M. Garces; on the East
by Public Land and on the West by Marciano Garces now Public
Market... containing an area of ONE HUNDRED FIFTY square
meters...[7]

Petitioners claimed to have had actual, peaceful, continuous and public

possession of the land, disturbed only in 1985 when Spouses Abay-abay instituted
Civil Case No. 3920. They also questioned the unjustified demolition of their
ancestral house, arguing that only Alexander, who had no interest in the property,
was impleaded in the case.

In their answer to the complaint, Spouses Abay-abay invoked the valid

judgment and writ of execution already issued in Civil Case No. 3920. They also
raised the issues of estoppel and laches in view of the petitioners failure to
intervene in Civil Case No. 3920.

The Ruling of the RTC

After due proceedings, the RTC rendered its Decision [8] dated April 4, 2005,
which dismissed the complaint for lack of preponderance of evidence, and affirmed
Spouses Abay-abay's ownership and possession over the subject property. The
rulings of the trial court were based on the following findings:

1 Defendants [herein respondents] evidence to the effect

that defendants and [their] predecessors-in-interest have been in
possession and ownership of the land under litigation since 1917 until
the present has more evidentiary weight than that of plaintiffs [herein
petitioners] whose tax declaration over a portion of the land claimed
by defendants was issued in 1949;

2 The following undisputed facts negate plaintiffs claim over

a portion of the land claimed by defendants as follows:

a) Plaintiff Angeles Racaza Miel, who received the

complaint and summons in Civil Case No. 3920 involving
the land in question before RTC, Branch 2, never informed
her husband Alexander Miel, who was one of the
defendants in that case, about such summons and
complaint.

It is quite intriguing that, if indeed plaintiff

Angeles Racaza Miel is one of the heirs of Paciencia
Racaza[,] the alleged owner of a portion of the land in
question, why did she not inform her co-heirs and
intervene in that Civil Case No. 3920 when it was heard
before RTC, Br. 2?

Such inaction of Angeles Racaza Miel infers the

inanity of plaintiffs claim over a portion of the land in
question.

xxx

c) Angeles or her husband[,] Alexander Miel never

appealed the decision rendered by RTC, Branch 2
awarding the land under litigation in favor of defendantspouses Florencio and Eleuteria Abay-abay.

3 Another undisputed fact that would reveal that in

connection with the decision rendered by RTC, Branch 2 in favor of
defendant[s]-spouses Florencio and Eleuteria, plaintiff Angeles Racaza
Miel and her original counsel in this case, Atty. Roberto Cajes promised
before the said Court to vacate the subject land. Such act of plaintiff
Angeles Racaza Miel is indicative of her agreement to the decision

rendered by RTC, Branch 2 awarding the subject land to Florencio

Abay-abay, Sr. and, thus, demolishes whatever claim she and her coplaintiffs in the case at bench may have over the land in question,
which is the subject matter of the above-entitled case.

Simply stated, the evidence as a whole adduced by the

defendants is superior to that of the plaintiffs[].[9]

The Ruling of the CA

On appeal, the CA affirmed the rulings of the RTC via the assailed
Decision[10] dated

September

8,

2010

and

Resolution [11]dated

August

8,

2011. Hence, this petition for review on certiorari.

The Present Petition

To support their petition, the petitioners argue that: (1) the disputed
property is a foreshore land and thus, owned by the State; (2) the respondents
were buyers in bad faith when they purchased the unregistered land; and (3) the
order to demolish their property was inhuman and thus, unconstitutional.

As part of their petition, the petitioners also ask this Court to admit as
newly discovered evidence a Certification of the Community Environment and
Natural Resources Office (CENRO) of Bohol, and a cadastral map of Poblacion, Ubay,
Bohol, purportedly to support their claim that the subject property is a foreshore
land which cannot be owned by herein respondents.

This Court's Ruling

We deny the petition.

First, the petition raises questions of fact which are beyond the coverage of a
petition for review on certiorari. The settled rule is that only questions of law may
be raised in a petition under Rule 45 of the Rules of Court. It is not this Courts
function to analyze or weigh all over again evidence already considered in the
proceedings below, our jurisdiction being limited to reviewing only errors of law that
may have been committed by the lower court. The resolution of factual issues is
the function of the lower courts, whose findings on these matters are received with
respect. A question of law which we may pass upon must not involve an
examination of the probative value of the evidence presented by the litigants.
[12]

This is in accordance with Section 1, Rule 45 of the Rules of Court, as amended,

which reads:

Section 1. Filing of petition with Supreme Court. A party

desiring to appeal by certiorari from a judgment, final order or
resolution of the Court of Appeals, the Sandiganbayan, the Court of
Tax Appeals, the Regional Trial Court or other courts, whenever
authorized by law, may file with the Supreme Court a verified petition
for review on certiorari. The petition may include an application for a
writ of preliminary injunction or other provisional remedies and shall
raise only questions of law, which must be distinctly set
forth. The petitioner may seek the same provisional remedies by
verified motion filed in the same action or proceeding at any time
during its pendency. (Emphasis supplied)

Significantly, Section 5, Rule 45 provides that the failure of the petitioner to

comply with the requirements on the contents of the petition shall be sufficient

ground for the dismissal thereof. While jurisprudence provides settled exceptions to
these rules, the instant petition does not fall under any of these exceptions.

On the same ground that petitions under Rule 45 must not involve questions
of fact, the petitioners prayer for this Court to admit what they claimed to be newly
discovered evidence is hereby denied. The Supreme Court is not a trier of facts,
and is not the proper forum for the ventilation and substantiation of factual issues.
[13]

While the Rules of Court allows the introduction by parties of newly-discovered

evidence, as in motions for new trial under Rule 37, these are not to be presented
for the first time during an appeal. In addition, the term newly-discovered
evidence has a specific definition under the law. Under the Rules of Court, the
requisites for newly discovered evidence are: (a) the evidence was discovered after
trial; (b) such evidence could not have been discovered and produced at the trial
with reasonable diligence; and (c) it is material, not merely cumulative,
corroborative or impeaching, and is of such weight that, if admitted, will probably
change the judgment.[14]

The two documents which the petitioners seek to now present are not of this
nature. Undeniably, the CENRO Certification and cadastral map annexed to the
petition could have been produced and presented by the petitioners during the
proceedings before the court a quo. Further to this, the petitioners purpose for
submitting the said documents is only to prove that the disputed property is a
foreshore land that should have been declared owned by the State. Thus, even
granting that the documents may be admitted at this stage, the certification and
cadastral map fail to support the petitioners claim of ownership over the disputed
property. On the contrary, these documents only negate their claim of ownership
and better right to possess the land because foreshore land is not subject to private
ownership, but is part of the public domain. In Republic of the Philippines v. CA,
[15]

we thus held:

When the sea moved towards the estate and tide invaded it,
the invaded property became foreshore land and passed to the realm
of the public domain. In fact, the Court in Government vs.

Cabangis annulled the registration of land subject of cadastral

proceedings when the parcel subsequently became foreshore land. In
another case, the Court voided the registration decree of a trial court
and held that said court had no jurisdiction to award foreshore land to
any private person or entity. The subject land in this case, being
foreshore land, should therefore be returned to the public domain.
[16]
(Citations omitted)

We note that not even herein petitioners, but the Republic of the Philippines, is the
real party in interest that is allowed to pursue such claims against lands of the
public domain.[17]

All told, this Court finds no justification to depart from the factual findings
of the trial and appellate courts. The petitioners failed to present any cogent
reason that would warrant a reversal of the decision and resolution assailed in this
petition.

WHEREFORE, premises

considered,

the

instant

petition

is

hereby DENIED. The Decision dated September 8, 2010 and Resolution dated
August 8, 2011 of the Court of Appeals in CA-G.R. CEB-CV No. 01095 are
hereby AFFIRMED.

SO ORDERED.

BIENVENIDO L. REYES

Associate Justice

WE CONCUR:

ANTONIO T. CARPIO
Senior Associate Justice
Chairperson, Second Division

ARTURO D. BRION

JOSE PORTUGAL PEREZ

Associate Justice

Associate Justice

MARIA LOURDES P. A. SERENO

Associate Justice

CERTIFICATION

I certify that the conclusions in the above Resolution had been reached in
consultation before the case was assigned to the writer of the opinion of the Courts
Division.

ANTONIO T. CARPIO
Senior Associate Justice
(Per Section 12, R.A. 296
The Judiciary Act of 1948, as amended)

[1]
The RTC Decision in Civil Case No. 4856 indicates that spouses
Florencio, Sr. and Eleuteria Abay-abay have died on August 22, 2002 and
September 17, 2002, respectively. They were substituted by their heirs in the
proceedings.

[2]

Also referred to as Paciencia Racaza in some documents.

[3]
Penned by Associate Justice Edgardo L. Delos Santos, with Associate
Justices Agnes Reyes-Carpio and Eduardo B. Peralta, Jr., concurring; rollo, pp. 2130.
[4]

Id. at 19-20.

[5]

Also referred to as Abayabay in some documents.

[6]

Rollo, p. 22.

[7]

Id. at 23.

[8]

Id. at 63-72.

[9]

Id. at 70-71.

[10]

Supra note 3.

[11]

Supra note 4.

[12]
Vallacar Transit, Inc. v. Catubig, G.R. No. 175512, May 30, 2011, 649
SCRA 281, 294, citing Land Bank of the Philippines, v. Monets Export and
Manufacturing Corporation, 493 Phil. 327, 338 (2005).
[13]
Titan Construction Corporation v. David, Sr., G.R. No. 169548, March
15, 2010, 615 SCRA 362, 363, citing Soriano III v. Yuzon, 247 Phil. 191 (1988).
[14]
Cabarlo v. People, G.R. No. 172274, November 16, 2006, 507 SCRA
236, 243, citing Amarillo v. Sandiganbayan, 444 Phil. 487, 497 (2003).
[15]

346 Phil. 637 (1997).

[16]

Id. at 655.

[17]
See Manese v. Velasco, G.R. No. 164024, January 29, 2009, 577 SCRA
108, 114.
es