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[G.R. No. 128354.

April 26, 2005]

HOME BANKERS SAVINGS & TRUST CO., petitioner,


vs.
THE HONORABLE COURT OF APPEALS, PABLO N. AREVALO, FRANCISCO A. UY, SPOUSES LEANDRO A. SORIANO, JR. and LILIAN SORIANO, ALFREDO LIM and FELISA CHI LIM/ALFREDO LIM, respondents.
DECISION

AUSTRIA-MARTINEZ, J.:
Before us is a petition for review on certiorari under Rule 45 of the Rules of Court seeking to annul the Decision[1] of the Court of Appeals (CA) dated November 28, 1996 in CA-G.R. SP No. 40892 and its Resolution dated February 19,
1997 denying petitioners motion for reconsideration. Each of private respondents entered into separate contracts to sell with TransAmerican Sales and Exposition (TransAmerican) through the latters Owner/General Manager, Engr.
Jesus Garcia, involving certain portions of land covered by Transfer Certificate of Title (TCT) No. 19155, located at No. 45 Gen. Lim Street, Heroes Hill, Quezon City, together with one unit three-storey townhouse to be built on each
portion, as follows: Respondent Pablo N. Arevalo purchased the portion of land denominated as Unit No. 5[2] for the amount of P750,000.00 on August 21, 1988 and had already fully paid the purchase price on September 3, 1988;
Respondent Alfredo Lim purchased the portion of land denominated as Unit No. 1[3] for the amount of P800,000.00 on December 22, 1988 and fully paid the same upon execution of the agreement on the same day; Respondent
Francisco A. Uy purchased the portion of land denominated as Unit No. 6[4] on October 29, 1988 in the amount of P800,000.00 payable in installments and had allegedly made a total payment of P581,507.41. He ordered to stop the
payment of all [postdated] checks from September 1990 to November 1995 on the ground of non-completion of his unit and had later learned of the foreclosure of the property; Respondent spouses Leandro A. Soriano, Jr. and Lilian
Soriano purchased the portion of land denominated as Unit No. 3[5] on February 15, 1990 in the amount of P1,600,000.00 and had allegedly made a payment of P669,960.00. They had stopped paying because of non-completion of
the project and had later learned of the foreclosure of the property; Respondents Alfredo Lim and Santos Lim purchased the portion of land denominated as Unit No. 7[6] for P700,000.00 on October 1988 and had been fully paid as
of March 18, 1989; Santos Lim subsequently sold and assigned his share of the property to private respondent Felisa Chi Lim on May 12, 1989. It is stipulated in their respective contracts that their individual townhouses will be fully
completed and constructed as per plans and specifications and the respective titles thereto shall be delivered and transferred to private respondents free from all liens and encumbrances upon their full payment of the purchase price.
However, despite repeated demands, Garcia/TransAmerican failed to comply with their undertakings. On May 30, 1989, Engr. Garcia and his wife Lorelie Garcia obtained from petitioner Home Bankers Savings and Trust Company
(formerly Home Savings Bank and Trust Company) a loan in the amount of P4,000,000.00 and without the prior approval of the Housing and Land Use Regulatory Board (HLURB), the spouses mortgaged[7] eight lots covered by TCT
Nos. 3349 to 3356 as collateral. Petitioner registered its mortgage on these titles without any other encumbrance or lien annotated therein. The proceeds of the loan were intended for the development of the lots into an eight-unit
townhouse project. However, five out of these eight titles turned out to be private respondents townhouses subject of the contracts to sell with Garcia/TransAmerican. When the loan became due, Garcia failed to pay his obligation to
petitioner. Consequently, petitioner instituted an extrajudicial foreclosure[8] on the subject lots and being the highest bidder in the public auction, a certificate of sale[9] in its favor was issued by the sheriff on February 26, 1990.
Subsequently, the sheriffs certificate of sale was registered and annotated on the titles of the subject lots in the Register of Deeds of Quezon City. On November 8, 1990, private respondents filed a complaint with the Office of Appeals,
Adjudication and Legal Affairs (OAALA), HLURB, against Garcia/TransAmerican as seller/developer of the property and petitioner, as indispensable party, for non-delivery of titles and non-completion of the subdivision project.[10]
They prayed for the completion of the units, annulment of the mortgage in favor of petitioner, release of the mortgage on the lots with fully paid owners and delivery of their titles, and for petitioner to compute individual loan values
of amortizing respondents and to accept payments from them and damages. Petitioner filed its Answer contending that private respondents have no cause of action against it; that at the time of the loan application and execution of
the promissory note and real estate mortgage by Garcia, there were no known individual buyers of the subject land nor annotation of any contracts, liens or encumbrances of third persons on the titles of the subject lots; that the loan
was granted and released without notifying HLURB as it was not necessary. Private respondents filed their Reply and a motion for the judgment on the pleadings. Petitioner did not file a rejoinder. Private respondents filed a
manifestation reiterating for a judgment on their pleadings and asked that the reliefs prayed for be rendered as far as petitioner was concerned. Upon motion of private respondents, the case against Garcia/TransAmerican was
archived for failure to serve summons on him/it despite efforts to locate his whereabouts or its office. The case was then considered submitted for decision. On August 16, 1991, OAALA rendered its Decision,[11] the dispositive portion
of which reads:

WHEREFORE, Judgment is hereby rendered as follows:


1. Declaring the mortgage executed by and between respondents Engr. Jesus Garcia/TransAmerican Sales and Exposition and Home Bankers Savings and Trust Company (formerly Home Savings Bank and Trust Company) to be
unenforceable as against all the complainants;
2. Ordering the Register of Deeds of Quezon City to cancel the annotations of the mortgage indebtedness between respondents Engr. Jesus Garcia and Home Bankers Savings and Trust Company (formerly Home Savings Bank and Trust
Company);
3. Ordering, likewise the Register of Deeds of Quezon City to cancel the annotation of the Certificate of Sale in favor of the respondent Home Bankers Savings and Trust Company on the following Transfer Certificates of Title to wit:
1) TCT No. 3350
2) TCT No. 3351
3) TCT No. 3352
4) TCT No. 3354
5) TCT No. 3356
4. Ordering respondent Home Bankers Savings and Trust Company (formerly Home Savings Bank and Trust Company) to:
4.1. AS TO THE FIRST CAUSE OF ACTION
Deliver to Complainant Pablo N. Arevalo TCT No. 3352 free from all liens and encumbrances.
4.2. AS TO THE SECOND CAUSE OF ACTION
Deliver to Complainant Alfredo Lim TCT No. 3356 free from all liens and encumbrances.
4.3. AS TO THE THIRD CAUSE OF ACTION
To compute and/or determine the loan value of complainant Francisco A. Uy who was not able to complete or make full payment and to accept payment and/or receive amortization from said complainant Francisco A. Uy and upon
full payment to deliver TCT No. 3351 free from all liens and encumbrances.
4.4. AS TO THE FOURTH CAUSE OF ACTION
To compute and/or determine the loan value of Complainant Spouses Leandro A. Soriano, Jr. and Lilian Soriano who were not able to complete or make full payment and to accept and/or receive amortization from said Complainants
Soriano and upon full payment to deliver TCT No. 3354 free from all liens and encumbrances.
4.5. AS TO THE FIFTH CAUSE OF ACTION
Deliver to complainant Alfredo Lim and Felisa Chi Lim TCT No. 3350 free from all liens and encumbrances.
without prejudice to its right to require respondent Engr. Jesus Garcia/TransAmerican to constitute new collaterals in lieu of the said titles sufficient in value to cover the mortgage obligation.[12]
Petitioner filed an appeal with the Board of Commissioners of the HLURB which dismissed the same in a decision dated June 15, 1992.[13] Petitioner then elevated the case to the Office of the President which rendered a decision
dated June 30, 1995[14] dismissing the appeal and affirming the June 15, 1992 decision of the HLURB. Petitioners motion for reconsideration was also denied in a Resolution dated May 7, 1996.[15]
Petitioner filed a petition for review with the CA which, in the herein assailed decision dated November 28, 1996, denied the petition and affirmed the decision of the Office of the President. The CA applied the case of Union Bank of
the Philippines vs. HLURB, et al.,[16] where it was held that the act of a subdivision developer of mortgaging the subdivision without the knowledge and consent of a unit buyer and without the approval of the National Housing
Authority (NHA, now HLURB) is violative of Section 18 of P.D. No. 957 thus, falling under the exclusive jurisdiction of HLURB.

The CA upheld the findings of the OAALA, HLURB that private respondents had already entered into separate contracts to sell with TransAmerican as early as 1988 while it was only in 1989 that spouses Garcia applied for a loan with
petitioner and executed a mortgage contract over the subject lots; that the proceeds of the loan were purposely intended for the development of a property which was the same property subject of the contracts to sell; that despite
the contracts to sell, Garcia/TransAmerican did not apprise petitioner of the existence of these contracts nor did petitioner exhaust any effort to inquire into their existence since petitioner merely relied on the purported clean
reconstituted titles in the name of Garcia; that the mortgage of the subject lots without the consent of the buyers and the authorization of the HLURB is a clear violation of P.D. No. 957; that the mortgage contract is void and
unenforceable against private respondents.
Petitioners motion for reconsideration was denied by the CA in its Resolution dated February 19, 1997.[17]
Petitioner is now before us raising the following grounds in support of its petition:
A. THE OFFICE OF THE PRESIDENT ERRED IN RULING THAT THE HLURB HAS JURISDICTION TO NULLIFY OR DECLARE UNENFORCEABLE THE REAL ESTATE MORTGAGE VALIDLY CONSTITUTED BY THE OWNER.
B. ASSUMING ARGUENDO THAT THE HLURB HAS JURISDICTION, RESPONDENT COURT MANIFESTLY ERRED IN FINDING THE REAL ESTATE MORTGAGE IN FAVOR OF HOME AS INVALID AND UNENFORCEABLE AGAINST RESPONDENTS.
C. IN THE EVENT THAT THE DECISION OF THE RESPONDENT COURT FINDING THE REAL ESTATE MORTGAGE IN FAVOR OF HOME AS INVALID AND UNENFORCEABLE AGAINST RESPONDENTS IS UPHELD, THE UNREGISTERED CONTRACTS
TO SELL IN FAVOR OF RESPONDENTS SHOULD ALSO BE HELD VALID ONLY AS TO THE PARTIES THERETO BUT UNENFORCEABLE AGAINST PETITIONER.
Private respondents filed their Comment and petitioner filed its Reply thereto.
In a Resolution dated February 23, 2004, we gave due course to the petition and required the parties to submit their respective memoranda which they complied with.
The petition is devoid of merit.
Notably, the issues raised are mere rehash of the issues already passed upon by the HLURB, the Office of the President and the CA which we uphold as we find no reversible errors committed.
Petitioner claims that HLURB has no power to declare the mortgage contract over real property executed between a real estate developer and petitioner, a banking institution, void or unenforceable, as it is properly within the
jurisdiction of the Regional Trial Court. Petitioner asserts that being a mortgagee of the subject lots and a purchaser in good faith, it is not a project owner, developer, or dealer contemplated under P.D. No. 1344, the law which
expanded the jurisdiction of the NHA; and that since there is no seller-buyer relationship existing between it and private respondents, HLURB has no jurisdiction to rule on the validity of the mortgage and to annul foreclosure
proceedings.

The argument is untenable.


The CA did not err in affirming the decision of the Office of the President that HLURB has jurisdiction to declare invalid the mortgage contract executed between Garcia/TransAmerican and petitioner over the subject lots insofar as
private respondents are concerned. It correctly relied on Union Bank of the Philippines vs. HLURB, et al.[18] where we squarely ruled on the question of HLURBs jurisdiction to hear and decide a condominium buyers complaint for: (a)
annulment of a real estate mortgage constituted by the project owner without the consent of the buyer and without the prior written approval of the NHA; (b) annulment of the foreclosure sale; and (c) annulment of the condominium
certificate of title that was issued to the highest bidder at the foreclosure sale, thus:
The issue in HLURB Case No. REM-062689-4077 is the validity of the real estate mortgage of Davids condominium unit that FRDC executed in favor of the Union Bank and Far East Bank without prior approval of the National Housing
Authority and the legality of the title which the mortgage banks acquired as highest bidder therefore in the extrajudicial foreclosure sale. The applicable provisions of P.D. No. 957, otherwise known as The Subdivision and Condominium
Buyers Protective Decree are quoted hereunder as follows:
Sec. 3. NATIONAL HOUSING AUTHORITY. The National Housing Authority shall have exclusive jurisdiction to regulate the real estate trade and business in accordance with the provisions of this Decree.
Section 18. Mortgages No mortgage on any unit or lot shall be made by the owner or developer without prior written approval of the authority. Such approval shall not be granted unless it is shown that the proceeds of the mortgage
loan shall be used for the development of the condominium or subdivision project and effective measures have been provided to ensure such utilization. The loan value of each lot or unit covered by the mortgage shall be determined
and the buyer thereof if any shall be notified before the release of the loan. The buyer may, at his option, pay his installment for the lot or unit directly to the mortgagee who shall apply the payments to the corresponding mortgage
indebtedness secured by the particular lot or unit being paid for, with a view to enabling said buyer to obtain title over the lot or unit promptly after full payment thereof.
P.D. No. 1344 of April 2, 1978 expanded the jurisdiction of the National Housing Authority to include the following:
Sec. 1. In the exercise of its function to regulate the real estate trade and business and in addition to its powers provided for in Presidential Decree No. 957, the National Housing Authority shall have exclusive jurisdiction to hear and
decide cases of the following nature:
A. Unsound real estate business practices;
B. Claims involving refund and any other claims filed by subdivision lot or condominium unit buyer against the project owner, developer, dealer, broker or salesman; and
C. Cases involving specific performance of contractual and statutory obligations filed by buyers of subdivision lot or condominium unit against the owner, developer, broker or salesman.

On February 7, 1981, Executive Order No. 648 transferred the regulatory and quasi-judicial functions of the NHA to the Human Settlements Regulatory Commission.
Sec. 8. TRANSFER OF FUNCTIONS. The regulatory functions of the National Housing Authority pursuant to Presidential Decree Nos. 957, 1216, 1344 and other related laws are hereby transferred to the Commission, together with such
applicable personnel, appropriation, records, equipment and property necessary for the enforcement and implementation of such functions. Among these regulatory functions are:
1. Regulation of the real estate trade and business:
7. Approval of mortgage on any subdivision lot or condominium unit made by the owner or developer;
11. Hear and decide cases on unsound real estate business practices; claims involving refund filed against project owners, developers, dealers, brokers, or salesmen; and cases of specific performance.
Executive Order No. 90 dated December 17, 1986 changed the name of the Human Settlements Regulatory Commission to Housing and Land Use Regulatory Board (HLURB).
Clearly, FRDCs act of mortgaging the condominium project to Bancom and FEBTC, without the knowledge and consent of David as buyer of a unit therein, and without the approval of the NHA (now HLURB) as required by P.D. No. 957,
was not only an unsound real estate business practice but also highly prejudicial to the buyer. David, who has a cause of action for annulment of the mortgage, the mortgage foreclosure sale, and the condominium certificate of title
that was issued to the UBP and FEBTC as the highest bidders at the sale. The case falls within the exclusive jurisdiction of the NHA (now HLURB) as provided in P.D. No. 957 of 1976 and P.D. No. 1344 of 1978.
We hold that the jurisdiction of the HLURB to regulate the real estate trade is broad enough to include jurisdiction over complaints for specific performance of the sale, or annulment of the mortgage, of a condominium unit, with
damages.[19]
Petitioner avers that the Union Bank ruling is not applicable in its case, since it had no knowledge of any buyer of the subject lots at the time the mortgage was constituted; that there was no construction in the subject lots at the time
petitioner accepted the same as collateral; that the title to the subject property was still in the process of being reconstituted and the loan was in fact meant for the development of the subject lots into an eight-unit townhouse project.

We are not persuaded.


Contrary to petitioners claim that there were no buyers of the subject lots at the time of the constitution of the mortgage, records show that private respondents Arevalo, Uy, Alfredo Lim and Santos Lim had entered into contracts to
sell with Garcia/TransAmerican as early as 1988 for their respective lots. In fact, they, except for Uy, had already fully paid their townhouse units in 1988 without the certificates of title being delivered to them. Garcia mortgaged the
subject lots without their knowledge and consent.
While private respondents spouses Soriano bought the subject lots after the constitution of the mortgage in favor of petitioner, the subject lots are, as early as 1988, subdivision lots which as defined under Section 2(e) of P.D. No. 957
to mean any of the lots, whether residential, commercial, industrial, or recreational in a subdivision project[20] are entitled to the protection of P.D. No. 957.
Under Section 18 of P.D. No. 957, it is provided that no mortgage on any unit or lot shall be made by the owner or developer without prior written approval of the authority. Such approval shall not be granted unless it is shown that
the proceeds of the mortgage loan shall be used for the development of the condominium or subdivision project and effective measures have been provided to ensure such utilization. As in the Union Bank, the mortgage was constituted
on the subject lots in favor of petitioner without the prior written approval from the HLURB, thus HLURB has jurisdiction to rule on the validity of the mortgage.
Notwithstanding that petitioner became the owner of the subject lots by being the highest bidder in the extrajudicial foreclosure sale, it must be remembered that it was first a mortgagee of the same. Since the lot was mortgaged in
violation of Section 18 of P.D. No. 957, HLURB has jurisdiction to declare the mortgage void insofar as private respondents are concerned and to annul the foreclosure sale. In Far East Bank and Trust Co. vs. Marquez,[21] we held that
Section 18 of P.D. No. 957 is a prohibitory law, and acts committed contrary to it are void. We said:
In determining whether a law is mandatory, it is necessary to ascertain the legislative intent, as stated by Sen. Arturo M. Tolentino, an authority on civil law:
There is no well-defined rule by which a mandatory or prohibitory law may, in all circumstances, be distinguished from one which is directory, suppletory, or permissive. In the determination of this question, the prime object is to
ascertain the legislative intention. Generally speaking, those provisions which are mere matter of form, or which are not material, do not affect any substantial right, and do not relate to the essence of the thing to be done, so that
compliance is a matter of convenience rather than substance, are considered to be directory. On the other hand, statutory provisions which relate to matters of substance, affect substantial rights and are the very essence of the thing
required to be done, are regarded as mandatory.
In Philippine National Bank vs. Office of the President, we had occasion to mull over the intent of P.D. No. 957 thus:
[T]he unmistakable intent of the law [is] to protect innocent lot buyers from scheming subdivision developers. As between these small lot buyers and the gigantic financial institutions which the developers deal with, it is obvious that
the law as an instrument of social justice must favor the weak. Indeed, the petitioner Bank had at its disposal vast resources with which it could adequately protect its loan activities, and therefore is presumed to have conducted the
usual due diligence checking and ascertaining (whether thru ocular inspection or other modes of investigation) the actual status, condition, utilization and occupancy of the property offered as collateral, . . . On the other hand, private
respondents obviously were powerless to discover attempt of the land developer to hypothecate the property being sold to them. It was precisely in order to deal with this kind of situation that P.D. No. 957 was enacted, its very
essence and intendment being to provide a protective mantle over helpless citizens who may fall prey to the razzmatazz of what P.D. No. 957 termed unscrupulous subdivision and condominium sellers.
Concededly, P.D. No. 957 aims to protect innocent lot buyers. Section 18 of the decree directly addresses the problem of fraud committed against buyers when the lot they have contracted to purchase, and which they have religiously
paid for, is mortgaged without their knowledge. The avowed purpose of P.D. No. 957 compels the reading of Section 18 as prohibitory acts committed contrary to it are void. Such construal ensures the attainment of the purpose of
the law: to protect lot buyers, so that they do not end up still homeless despite having fully paid for their home lots with their hard-earned cash.[22]
Since the mortgage is void, HLURBs orders of the cancellation of the sheriffs certificate of sale, release of the mortgaged lots and delivery of the corresponding titles to respondents who had fully paid the purchase price of the units
are but the necessary consequences of the invalidity of the mortgage for the protection of private respondents.
Anent the second issue, petitioner contends that since the titles on their face were free from any claims, liens and encumbrances at the time of the mortgage, it is not obliged under the law to go beyond the certificates of title registered
under the Torrens system and had every reason to rely on the correctness and validity of those titles.
We are not convinced.

While the cases[23] cited by petitioner held that the mortgagee is not under obligation to look beyond the certificate of title when on its face, it was free from lien or encumbrances, the mortgagees therein were considered in good
faith as they were totally innocent and free from negligence or wrongdoing in the transaction. In this case, petitioner knew that the loan it was extending to Garcia/TransAmerican was for the purpose of the development of the eight-
unit townhouses. Petitioners insistence that prior to the approval of the loan, it undertook a thorough check on the property and found the titles free from liens and encumbrances would not suffice. It was incumbent upon petitioner
to inquire into the status of the lots which includes verification on whether Garcia had secured the authority from the HLURB to mortgage the subject lots. Petitioner failed to do so. We likewise find petitioner negligent in failing to
even ascertain from Garcia if there are buyers of the lots who turned out to be private respondents. Petitioners want of knowledge due to its negligence takes the place of registration, thus it is presumed to know the rights of
respondents over the lot. The conversion of the status of petitioner from mortgagee to buyer-owner will not lessen the importance of such knowledge.[24] Neither will the conversion set aside the consequence of its negligence as a
mortgagee.[25]
Judicial notice can be taken of the uniform practice of banks to investigate, examine and assess the real estate offered as security for the application of a loan. We cannot overemphasize the fact that the Bank cannot barefacedly argue
that simply because the title or titles offered as security were clean of any encumbrances or lien, that it was thereby relieved of taking any other step to verify the over-reaching implications should the subdivision be auctioned on
foreclosure.[26] We find apropos to cite our ruling in Far East Bank and Trust Co. vs. Marquez, thus:[27]
Petitioner argues that it is an innocent mortgagee whose lien must be respected and protected, since the title offered as security was clean of any encumbrances or lien. We do not agree.
As a general rule, where there is nothing on the certificate of title to indicate any cloud or vice in the ownership of the property, or any encumbrance thereon, the purchaser is not required to explore further than what the Torrens
Title upon its face indicates in quest for any hidden defect or inchoate right that may subsequently defeat his right thereto. This rule, however, admits of an exception as where the purchaser or mortgagee has knowledge of a defect
or lack of title in the vendor, or that he was aware of sufficient facts to induce a reasonably prudent man to inquire into the status of the property in litigation.
Petitioner bank should have considered that it was dealing with a [townhouse] project that was already in progress. A reasonable person should have been aware that, to finance the project, sources of funds could have been used
other than the loan, which was intended to serve the purpose only partially. Hence, there was need to verify whether any part of the property was already the subject of any other contract involving buyers or potential buyers. In
granting the loan, petitioner bank should not have been content merely with a clean title, considering the presence of circumstances indicating the need for a thorough investigation of the existence of buyers like respondent. Having
been wanting in care and prudence, the latter cannot be deemed to be an innocent mortgagee.
Petitioner cannot claim to be a mortgagee in good faith. Indeed it was negligent, as found by the Office of the President and by the CA. Petitioner should not have relied only on the representation of the mortgagor that the latter had
secured all requisite permits and licenses from the government agencies concerned. The former should have required the submission of certified true copies of those documents and verified their authenticity through its own
independent effort.
Having been negligent in finding out what respondents rights were over the lot, petitioner must be deemed to possess constructive knowledge of those rights.
As to the third issue, petitioner contends that private respondents were negligent in failing to register their contracts to sell in accordance with Section 17 of P.D. No. 957; that private respondents unregistered contracts to sell are
binding only on them and Garcia/TransAmerican but not on petitioner which had no actual or constructive notice of the sale at the time the mortgage was constituted.
We disagree.

Section 17 of P.D. No. 957[28] provides that the seller shall register the contracts to sell with the Register of Deeds of Quezon City. Thus, it is Garcias responsibility as seller to register the contracts and petitioner should not blame
private respondents for not doing so. As we have said earlier, considering petitioners negligence in ascertaining the existence or absence of authority from HLURB for Garcia/TransAmerican to mortgage the subject lots, petitioner
cannot claim to be an innocent purchaser for value and in good faith. Petitioner is bound by private respondents contracts to sell executed with Garcia/TransAmerican.|
The last paragraph of Section 18 of P.D. No. 957 provides that respondents who have not yet paid in full have the option to pay their installment for the lot directly to the mortgagee (petitioner) who is required to apply such payments
to the corresponding mortgage indebtedness secured by the particular lot or unit being paid for, with a view to enabling said buyer to obtain title over the lot or unit promptly after full payment thereof. Thus, petitioner is obliged to
accept the payment of remaining unpaid amortizations, without prejudice to petitioner banks seeking relief against the subdivision developer.[29]
Notably, although no issue was taken on the fact that the case against Garcia/TransAmerican, the developer/seller and mortgagor of the subject lots, was archived for failure to serve summons on him/it as his whereabouts or the
office could not be located, it must be stated that Garcia/TransAmerican is not an indispensable party since a final determination on the validity of the mortgage over the subject lots can be rendered against petitioner. Thus, the
absence of Garcia/TransAmerican did not hamper the OAALA from resolving the dispute between private respondents and petitioner.
In China Bank vs. Oliver,[30] we held that the mortgagor, who allegedly misrepresented herself to be Mercedes M. Oliver, the registered owner of TCT No. S-50195, is not an indispensable party in a case filed by a person claiming to
be the true registered owner, for annulment of mortgage and cancellation of title against the mortgagee, China Bank. We found therein that even without the mortgagor, the true Mercedes Oliver can prove in her complaint that she
is the real person referred in the title and she is not the same person using the name who entered into a deed of mortgage with the mortgagee, China Bank.
In the present case, private respondents, in their complaint, alleged that the mortgage was constituted without the prior written approval of the HLURB which is in violation of Section 18 of P.D. No. 957. Petitioners admission that it
granted and released the loan without notifying the HLURB because of its belief that it was not necessary to do so, is fatal to petitioners defense. As a consequence thereof, the mortgage constituted in favor of petitioner can be
declared invalid as against private respondents even without the presence of Garcia/TransAmerican. It is worthy to mention that the assailed decision was rendered merely against petitioner and had not made any pronouncement as
to Garcia/TransAmericans liability to private respondents for the non-completion of the projects; or to herein petitioner, as mortgagee.
The present case merely involves the liability of petitioner bank to private respondents as buyers of the lots and townhouse units.
WHEREFORE, the petition is DISMISSED for lack of merit.
SO ORDERED.
Puno, (Chairman), Callejo, Sr., Tinga, and Chico-Nazario, JJ., concur.
G.R. No. 167140 November 23, 2011
COL. FRANCISCO DELA MERCED, substituted by his heirs namely, LUIS CESAR DELA MERCED, BLANQUITA DELA MERCED nee MACATANGAY, and MARIA OLIVIA M. PAREDES, Petitioners.
vs.
GOVERMENT SERVICE INSURANCE SYSTEM(GSIS) and Spouses VICTOR and MILAGROS MANLONGAT, Respondents.
DECISION

DEL CASTILLO, J.:


A transferee pendente lite of registered land, whose title bears a notice of a pending litigation involving his transferors title to the said land, is bound by the outcome of the litigation, whether it be for or against his transferor. Given
this principle, the modification of the final decision against the transferor in order to include the transferee pendente lite does not violate the doctrine of immutability of final judgments. His inclusion does not add to or change the
judgment; it is only a legal consequence of the established doctrine that a final judgment binds the privy of a litigating party.
Before the Court is a Petition for Review[1] assailing the validity of the February 9, 2005 Order[2] of Branch 160 of the Regional Trial Court (RTC) of Pasig City. The said Order denied petitioners motion for supplemental writ of
execution:[3]
Conformably with Section 8, Rule 39, 1997 Rules of Civil Procedure, execution in this case can only be implemented as far as what has been decreed in the decision dated September 11, 2001, qualified by the Order of this Court
dated January 20, 2003 with respect [to] the payment of attorneys fees.
In view thereof, plaintiffs motion for supplemental writ of execution is DENIED.

SO ORDERED.[4]
The September 11, 2001 Decision referred to in the assailed Order was rendered by this Court in G.R. No. 140398, entitled Col. Francisco Dela Merced, substituted by his heirs, namely, BLANQUITA E. DELA MERCED, LUIS CESAR DELA
MERCED, BLANQUITA E. DELA MERCED (nee MACATANGAY), and MARIA OLIVIA M. PAREDES, v. GOVERNMENT SERVICE INSURANCE SYSTEM (GSIS) and SPOUSES VICTOR and MILAGROS MANLONGAT.[5] The fallo of the said Decision
reads:|
WHEREFORE, in view of the foregoing, the petition is GRANTED. The decision of the Court of Appeals is REVERSED AND SET ASIDE. The decision of the Regional Trial Court of Pasig City, Branch 160, in Civil Case Nos. 51410 and 51470,
is REINSTATED. The foreclosure sale of Lot Nos. 6, 7, 8 and 10 of Block 2 and Lot 8 of Block 8 of the property originally covered by TCT 26105, and the subsequent certificates of titles issued to GSIS as well as TCT No. PT-94007 in the
name of Elizabeth Manlongat, are declared NULL AND VOID. The Register of Deeds of Pasig City is ordered to CANCEL all present certificates of title in the name of GSIS and Elizabeth Manlongat covering the above-mentioned
properties, and to ISSUE new certificates of title over the same in the name of petitioners as co-owners thereof. Respondents GSIS and spouses Victor and Milagros Manlongat are ORDERED to pay, jointly and severally, attorneys
fees in the increased amount of P50,000.00, and to pay the costs.
SO ORDERED.[6]
G.R. No. 140398 has long attained finality[7] but could not be executed because of the objections raised by the Register of Deeds (RD) and respondent Government Service Insurance System (GSIS). These objections, which the trial
court found insurmountable in its assailed February 9, 2005 Order, are now presented to us for resolution.

Factual antecedents

This case involves five registered parcels of land located within the Antonio Subdivision, Pasig City Lots 6, 7, 8, and 10 of Block 2 and Lot 8 of Block 8 (subject properties). These lots were originally owned by, and titled in the name of,
Jose C. Zulueta (Zulueta), as evidenced by Transfer Certificate of Title (TCT) No. 26105.[8] TCT No. 26105 contains several lots, other than the subject properties, within the Antonio Subdivision.
Later, the Zulueta spouses mortgaged[9] several lots contained in TCT No. 26105 to the GSIS, which eventually foreclosed on the mortgaged properties, including the subject properties. Upon consolidation of GSISs ownership, TCT No.
26105 in Zuluetas name was cancelled, and TCT No. 23554[10] was issued in GSISs name.[11]
Upon learning of the foreclosure, petitioners predecessor, Francisco Dela Merced (Dela Merced) filed a complaint[12] praying for the nullity of the GSIS foreclosure on the subject properties (Lots 6, 7, 8, and 10 of Block 2 and Lot 8 of
Block 8) on the ground that he, not the Zuluetas, was the owner of these lots at the time of the foreclosure. Dela Merced also impleaded Victor and Milagros Manlongat,[13] who were claiming Lot 6, Block 2 by virtue of a sale executed
by the GSIS in their daughters (Elizabeth Manlongat) favor.[14] Dela Merced argued that, due to the nullity of GSISs foreclosure over the subject properties, it had no ownership right that could be transferred to Elizabeth Manlongat.
Dela Merced caused the annotation of lis pendens[15] on GSISs TCT No. 23554 on September 21, 1984 in order to protect his interests in the subject properties. Dela Merced died in 1988 and was substituted by his heirs, the petitioners
in the instant case.
After a protracted litigation, the case reached this Court as G.R. No. 140398. On September 11, 2001, a Decision[16] was rendered in petitioners favor. The Court nullified GSISs foreclosure of the subject properties because these lots
were never part of its mortgage agreement with the Zulueta spouses. The dispositive portion of said Decision reads:

WHEREFORE, in view of the foregoing, the petition is GRANTED. The decision of the Court of Appeals is REVERSED AND SET ASIDE. The decision of the Regional Trial Court of Pasig City, Branch 160, in Civil Case Nos. 51410 and 51470,
is REINSTATED. The foreclosure sale of Lot Nos. 6, 7, 8 and 10 of Block 2 and Lot 8 of Block 8 of the property originally covered by TCT 26105, and the subsequent certificates of titles issued to GSIS as well as TCT No. PT-94007 in the
name of Elizabeth Manlongat, are declared NULL AND VOID. The Register of Deeds of Pasig City is ordered to CANCEL all present certificates of title in the name of GSIS and Elizabeth Manlongat covering the above-mentioned properties,
and to ISSUE new certificates of tile over the same in the name of petitioners as co-owners thereof. Respondents GSIS and spouses Victor and Milagros Manlongat are ORDERED to pay, jointly and severally, attorneys fees in the
increased amount of P50,000.00, and to pay the costs.[17]

Judgment was entered on April 23, 2002.[18]

Pursuant to the finality of the above Decision, petitioners filed a Motion for Execution[19] with Branch 160 of the RTC of Pasig City.

First obstacle:
GSISs alleged exemption from execution
GSIS opposed the motion for execution, citing as basis Section 39 of Republic Act No. 8291 (RA 8291), also known as the GSIS Act of 1997. The said provision allegedly exempts GSIS funds and properties from attachment, garnishment,
execution, levy and other court processes.[20]
On January 20, 2003, the trial court granted petitioners motion for execution; but held in abeyance the execution of the award of attorneys fees, pending clarification before the higher courts of the issue of GSISs exemption under
Section 39 of RA 8291. The said Order is reproduced below:
Acting on the Motion for Execution filed by the plaintiff herein together with the opposition of defendant GSIS, and considering that the judgment has already become final and executory, the same is hereby Granted.
As prayed for, let a writ of execution issue to enforce the judgment of this court.
However, with respect to the payment of attorneys fees in the increased amount of P50,000.00 which has to be paid jointly and severally by the GSIS and Sps. Manlongat, the same is held in abeyance as far as GSIS is concerned pending
clarification by the GSIS before the Supreme Court on the issue of whether its funds and assets are exempt from execution pursuant to Section 39, R.A. 8291, otherwise known as the GSIS Act of 1997.

SO ORDERED.[21]
A writ of execution was issued on July 24, 2003.[22]
Eventually, GSIS filed with the Court of Appeals (CA) a petition for certiorari and prohibition against the trial courts implementation of the writ of execution against it.[23] The petition, docketed as CA-G.R. SP No. 87821, presented the
issue whether the trial judge gravely abused her discretion in ordering execution against GSIS funds and properties despite their alleged express and absolute exemption from execution, garnishment, and other court processes under
Section 39 of RA 8291.[24]
In its October 28, 2005 Decision, the CA dismissed GSISs petition and held that execution may be enforced against it.[25] The ratio of the appellate court is reproduced in part:
Public respondent court presided by Hon. Amelia A. Fabros did not commit grave abuse of discretion when it issued the Writ of Execution dated 24 July 2003. It must be considered that the properties which (Lots 6, 7, 8, and 10 of
Block 2 and Lot 8 of Block 8 of Antonio Subdivision) were the subject of the writ of execution in the instant case are not the properties of petitioner GSIS. In the court a quos Decision dated October 23, 1987 and reiterated in the
Honorable Supreme Courts Decision dated September 11, 2001, it declared inter alia that the certificates of title issued to petitioner GSIS pertaining to Lot Nos. 6, 7, 8, and 10 of Block 2 and Lot 8 of Block 8 are null and void and further
directed inter alia the Register of Deeds of Pasig City to cancel all the present certificates of title in the name of petitioner GSIS. x x x[26]

[P]etitioner GSIS has no interest over the subject properties and x x x had never validly acquired ownership thereof. x x x[27] Therefore, any and all [rights] that petitioner GSIS may have on the subject properties were non-existent
from the very beginning. Verily, the court a quo was right then in issuing the writ of execution dated 24 July 2003 and that petitioner GSIS claim that it should be exempted from execution has no basis in fact and in law.[28]
We lay stress that the pronouncement made in the abovementioned SC circular and in the case of Commissioner of Public Highways vs. San Diego, cited in the Armovit case find no application in the case at bar. It must be noted that
the properties referred to therein are those owned by government which could not be seized under writ of execution to satisfy such judgment because to do so, there is a necessity for the corresponding appropriation of public funds
by Congress before the same could be disbursed. In this instant case, it has already been settled that the herein properties involved are not owned by petitioner GSIS; hence, there is no prohibition that the same could be executed
and that there is no public funds involved which require the corresponding appropriation thereof. x x x[29]
In fine, the execution of the subject properties is proper for to assert otherwise, would be depriving private respondents dela Merced and Paredes of their properties without due process of law as it had been clearly established on
record that they really owned the subject properties. To sustain petitioner GSIS view that it should be exempt from execution would be putting the subject properties beyond the reach of the rightful owners thereof x x x. Likewise, to
uphold petitioner GSIS theory would inevitably lead to a disastrous consequence and lend imprimatur to deprivation of property without due process of law. Additionally, to grant petitioner GSIS prayer that the subject properties be
exempt from execution without any factual and legal basis thereof would resultantly remain the same in the custody or control of petitioner GSIS which unjustly enriches itself at the expense of private respondents dela Merced and
Paredes and who the latter could be deprived of the beneficial use/ownership thereof when in the very first place they were able to establish the ownership thereof. Every person who through an act or performance by another, or
any other means, acquires or comes into possession of something at the expense of the latter without just or legal ground, shall return the same to him.[30]
WHEREFORE, premises considered, the instant PETITION FOR CERTIORARI and PROHIBITION is hereby DISMISSED. Accordingly, the Writ of Execution dated 24 July 2003 and the Order dated 16 September 2004 both rendered by the
Regional Trial Court of Pasig City, Branch 160 stand.

SO ORDERED. [31]
GSISs motion for reconsideration of the above Decision was denied in the June 30, 2006 Resolution of the appellate court.[32] GSIS appealed the CA Decision to this Court[33] but the petition was denied in a Resolution dated February
12, 2007,[34] which denial was entered in the Book of Judgments on October 2, 2007.[35]

Second obstacle:
Alleged inadequacy of the fallo
After the resolution of the issue of GSISs exemption, petitioners encountered more problems with the execution of the September 11, 2001 Decision in G.R. No. 140398. According to the RD of Pasig City, Policarpio Espenesin, he could
not enforce the Decision in G.R. No. 140398 as worded.
The order to cancel the titles of GSIS over Lots 7 and 8 of Block 2 allegedly could not be enforced because GSIS no longer had title over these two lots. GSIS had already conveyed these lots in 1985 and 1988 to Diogenes Bartolome (Lot
8) and Antonio Dimaguila [Dimaguila] (Lot 7), respectively. At present, Lot 7 of Block 2 is titled in Dimaguilas name (TCT No. PT-67466)[36] while Lot 8 of Block 2 is titled in the name of Bartolomes assignee, Zenaida Victorino [Victorino]
(TCT No. 53031).[37] While both titles contain notices of lis pendens carried over from GSISs title,[38] the RD claimed that the writ of execution must first be modified to include the cancellation of derivative titles of the GSIS title.
The RD also found difficulty in implementing the order to cancel GSISs titles over Lot 10 of Block 2 and Lot 8 of Block 8 and to issue new ones in petitioners name because no such individual titles exist in his records. The RD posited that
these two lots must still be included in GSISs mother title, TCT No. 23554. The RD opined that he cannot cancel GSISs mother title, even if it contains Lot 10 of Block 2 and Lot 8 of Block 8 because it would affect other lots that might
still be included therein.
The RD further lamented that assuming he could cancel GSISs mother title with respect to Lot 10 of Block 2 and Lot 8 of Block 8, there is still no way that he could issue new titles over these lots in petitioners name. This is because his
office has no information regarding the technical descriptions for these two lots. The RD thus suggested that the parties provide him with these relevant information before he can proceed.
In order to address these difficulties, petitioners filed before the trial court a Motion for Supplemental Writ of Execution.[39] They prayed for a supplemental writ ordering the RD to cancel the titles over Lots 7 and 8 of Block 2 in GSISs
name or in the name of other subsequent transferees; and directing the GSIS and the Bureau of Lands to supply the RD with the technical descriptions of Lot 10, Block 2, and Lot 8, Block 8.[40]
GSIS opposed the issuance of a supplemental writ of execution.[41]
On February 9, 2005, Judge Amelia A. Fabros issued the assailed order denying petitioners motion for supplemental writ of execution.

Respondents arguments
The Manlongats could not be served with copies of the Courts resolutions; hence the Court dispensed with their comment.[42]
GSIS argues that petitioners motion was properly denied because it seeks
to modify a final and executory Decision. The September 11, 2001 Decision in G.R. No. 140398 only ordered the cancellation of GSISs titles over the subject properties. It did not order the cancellation of all derivative titles of GSISs
transferees; nor did it order the GSIS to perform acts such as providing the RD with the technical descriptions for Lot 10, Block 2 and Lot 8, Block 8. GSIS maintains that a supplemental writ that includes such additional orders is null
and void for non-conformity with the judgment.
Further, GSIS argues that the inclusion of derivative titles in the September 11, 2001 Decision in G.R. No. 140398 would deprive the holders of these derivative titles their day in court. GSIS opines that the holders of the derivative titles
are not bound by the judgment against GSIS because these holders are strangers to the action between GSIS and petitioners.
Lastly, GSIS again raises its earlier argument that the September 11, 2001 Decision in G.R. No. 140398 cannot be enforced because of GSISs exemption from court processes under RA 8291.

Petitioners arguments
Petitioners counter that the September 11, 2001 Decision in G.R. No. 140398 can be enforced against GSISs transferees pendente lite because these transferees were given notice of the pendency of the case by virtue of the notice of
lis pendens that had been inscribed on GSISs TCT No. 23554 as early as September 21, 1984. In fact, when TCT No. 23554 was cancelled with respect to Lots 7 and 8 of Block 2 in order to issue new titles in Dimaguilas and Victorinos
names, this notice was carried over to their respective titles. Moreover, the conveyance of these lots to Victorino and Dimaguila transpired in 1985 and 1988, respectively; clearly during the pendency of the case and with notice of the
questions surrounding GSISs ownership over these properties.
As transferees pendente lite, Dimaguilas and Victorinos titles are proper subjects of writs of execution even if they were not actual parties to the case. Petitioners cite Voluntad v. Spouses Dizon[43] as their authority.[44]
With regard to the issuance of new titles for Lot 10, Block 2 and Lot 8, Block 8, petitioners argue that GSIS can be compelled to provide the RD with their respective technical descriptions. This power is granted to the courts under
Section 10, Rule 39 of the Rules of Court.[45]
Petitioners maintain that execution of the Decision in G.R. No. 140398 should not be confined to the literal terms contained only in the fallo or the dispositive portion.[46]
As regards GSISs alleged exemption, petitioners posit that the GSIS can no longer raise the issue of exemption from execution given that the CA had already rendered its Decision on that question in CA-G.R. SP No. 87821. The said
Decision was affirmed by this Court in G.R. No. 173391 through our February 12, 2007 Resolution[47] and entry of judgment in that case was made on October 2, 2007.[48]

Issues
Can GSIS still raise the issue of exemption?
Whether a final and executory judgment against GSIS and Manlongat can be enforced against their successors-in-interest or holders of derivative titles
Whether an order to cancel title to a particular property includes an order to provide technical descriptions and segregate it from its mother title

Our Ruling
On the issue of GSISs exemption
The issue of GSISs alleged exemption under RA 8291 had been finally decided against GSIS in G.R. No. 173391, when this Court denied GSISs petition for review. The denial rendered the CA Decision in CA-G.R. SP No. 87821 final and
executory. GSISs attempt to resurrect the same issue by interjecting the same in this proceeding is barred by the principle of law of the case, which states that determinations of questions of law will generally be held to govern a
case throughout all its subsequent stages where such determination has already been made on a prior appeal to a court of last resort.[49] The Decision in G.R. No. 173391 allowing the execution of the judgment against GSIS is the
law of the case and controls the proceedings below which are already in the execution stage.

Enforcement of judgment against transferees pendente lite


A notice of lis pendens is an announcement to the whole world that a particular real property is in litigation, serving as a warning that one who acquires an interest over said property does so at his own risk, or that he gambles on
the result of the litigation over the said property.[50] The effect of the annotation of lis pendens on future transactions over the subject property is discussed by an authority on land titles and registration:
Once a notice of lis pendens has been duly registered, any cancellation or issuance of the title of the land involved as well as any subsequent transaction affecting the same, would have to be subject to the outcome of the litigation.
In other words, upon the termination of the litigation there can be no risk of losing the property or any part thereof as a result of any conveyance of the land or any encumbrance that may be made thereon posterior to the filing of
the notice of lis pendens.[51]
It is not disputed that petitioners caused the annotation of lis pendens on TCT No. 23554, which covers Lots 7 and 8 of Block 2, as early as September 21, 1984.[52] On July 29, 1985 and August 24, 1998, TCT No. 23554 was cancelled
with respect to Lots 7 and 8 of Block 2 and new individual titles were issued to Victorino and Dimaguila. Both titles had the notice of lis pendens which was carried over from TCT No. 23554. Ineluctably, both Victorino and Dimaguila
had notice of the litigation involving GSISs ownership over the subject properties, and were bound by the outcome of the litigation. When a transferee pendente lite takes property with notice of lis pendens, such transferee
undertakes to respect the outcome of the litigation. As held in Selph v. Vda. de Aguilar,[53] an order to cancel the transferors title may be enforced against his transferee, whose title is expressly subject to the outcome of the
litigation by the fact of the annotation of lis pendens.
The existence of these entries on Dimaguilas and Victorinos titles bars any defense of good faith[54] against petitioners and effectively makes Dimaguila and Victorino mere privies of GSIS and subject to whatever rights GSIS might
have in the subject properties, which (as it turns out) is none at all. What Dimaguila and Victorino possess are derivative titles of the GSISs title over Lots 7 and 8 of Block 2, which this Court has finally adjudicated to be null and void.
Given the legal maxim that a spring cannot rise higher than its source, it follows that Dimaguilas and Victorinos titles, or any other title over the subject properties that are derived from TCT No. 23554 of the GSIS, are likewise null
and void. As explained by this Court in another case, the title obtained by the transferee pendente lite affords him no special protection; he cannot invoke the rights of a purchaser in good faith and cannot acquire better rights than
those of his predecessor-in-interest.[55]
In Voluntad v. Spouses Dizon,[56] the Court allowed the issuance of an alias
writ of execution against the transferees pendente lite, who had knowledge of the pending litigation on the basis of the annotation of the notice of lis pendens on their titles. The Court clarified therein that there was no need for the
victorious [parties] to file a separate action to enforce their right to recover the property as against the new registered owners.[57]
In Associated Bank v. Pronstroller,[58] the Court affirmed the judgments of the trial and appellate courts cancelling the titles of the spouses Vaca, who were transferees pendente lite of Associated Bank, despite the fact that the
spouses Vaca were not parties to the case between Associated Bank and the Pronstrollers. The Court explained therein:
Admittedly, during the pendency of the case, respondents timely registered a notice of lis pendens to warn the whole world that the property was the subject of a pending litigation.
Lis pendens, which literally means pending suit, refers to the jurisdiction, power or control which a court acquires over property involved in a suit, pending the continuance of the action, and until final judgment. Founded upon public
policy and necessity, lis pendens is intended to keep the properties in litigation within the power of the court until the litigation is terminated, and to prevent the defeat of the judgment or decree by subsequent alienation. x x x
The filing of a notice of lis pendens has a twofold effect: (1) to keep the subject matter of the litigation within the power of the court until the entry of the final judgment to prevent the defeat of the final judgment by successive
alienations; and (2) to bind a purchaser, bona fide or not, of the land subject of the litigation to the judgment or decree that the court will promulgate subsequently.
This registration, therefore, gives the court clear authority to cancel the title of the spouses Vaca, since the sale of the subject property was made after the notice of lis pendens. x x x[59]
Upon Associated Banks MR, the spouses Vaca filed a motion to intervene arguing that they had a real interest in assailing the July 14, 2008 Decision, which ordered the cancellation of their title. The Court denied the intervention. It
was held that the interests of the spouses Vaca in the subject property were properly represented in the action by their transferor/vendor Associated Bank, which was already a party thereto. As transferees pendente lite, the
spouses Vaca stand exactly in the shoes of their predecessor-in-interest, Associated Bank.[60]
The Court cannot accept GSISs theory that the dispositive portion of the Decision in G.R. No. 140398 is enforceable only against GSISs title because it does not contain the phrase and all its derivative titles. GSISs narrow
interpretation would render nugatory the principle that a final judgment against a party is binding on his privies and successors-in-interest. We cannot sustain this interpretation. In Cabresos v. Judge Tiro,[61] the Court upheld the
respondent judges issuance of an alias writ of execution against the successors-in-interest of the losing litigant despite the fact that these successors-in-interest were not mentioned in the judgment and were never parties to the
case. The Court explained that an action is binding on the privies of the litigants even if such privies are not literally parties to the action. Their inclusion in the writ of execution does not vary or exceed the terms of the judgment. In
the same way, the inclusion of the derivative titles in the writ of execution will not alter the Decision in G.R. No. 140398 ordering the cancellation of GSISs title.

Cancellation of title
The RD claimed that it cannot execute the order to cancel the GSISs titles over Lot 10, Block 2 and Lot 8, Block 8 because it has no record of GSISs title over these two lots. The RD theorized that these lots are included in a mother
title in GSISs possession and would still have to be segregated therefrom. To effectuate such segregation, the RD needed the technical descriptions of the two lots and the mother title. Thus, petitioners ask that the GSIS be
compelled to surrender its title over, as well as the technical descriptions of, Lot 10, Block 2 and Lot 8, Block 8.
GSIS refused to turn over the needed documents and information, claiming that these acts go beyond what were ordered in the Decision in G.R. No. 140398. GSISs protestations ring hollow.
The order contained in the Decision in G.R. No. 140398 is for the RD to cancel GSISs titles over Lot 10, Block 2 and Lot 8, Block 8, inter alia. Whether these titles are individual or contained in a mother title is of no consequence. The
RD has to cause their cancellation. If the cancellation can only be carried out by requiring GSIS or the Bureau of Lands to provide the necessary information, then they can be compelled to do so. Otherwise, the Courts decision would
be rendered inefficacious, and GSIS would retain ostensible ownership over the lots by the simple expedience that they are included in a mother title, instead of individual titles. That result is manifestly contrary to the Courts ruling
and would subvert the very purpose of bringing this case for a complete resolution.
A similar predicament was ruled upon by the Court in Republic Surety and Insurance Co., Inc. v. Intermediate Appellate Court.[62] In that case, the Court declared that Republic Mines had no right to the property involved but during
the execution, the RD refused to cancel the TCT in Republic Mines name on the ground that the dispositive portion of the trial courts Decision did not order the RD to cancel the title and to revive the old title in favor of the victorious
party. The Court held that the missing order to cancel and revive should be deemed implied in the trial courts decision. Speaking through Justice Feliciano, the Court explained thus:
What is involved here is not what is ordinarily regarded as a clerical error in the dispositive part of the decision of the Court of First Instance, which type of error is perhaps best typified by an error in arithmetical computation. At the
same time, what is involved here is not a correction of an erroneous judgment or dispositive portion of a judgment. What we believe is involved here is in the nature of an inadvertent omission on the part of the Court of First
Instance x x x, of what might be described as a logical follow-through of something set forth both in the body of the decision and in the dispositive portion thereof: the inevitable follow-through, or translation into, operational or
behavioral terms, of the annulment of the Deed of Sale with Assumption of Mortgage, from which petitioners' title or claim of title embodied in TCT 133153 flows. The dispositive portion of the decision itself declares the nullity ab
initio of the simulated Deed of Sale with Assumption of Mortgage and instructed the petitioners and all persons claiming under them to vacate the subject premises and to turn over possession thereof to the respondent-spouses.
Paragraph B of the same dispositive portion, confirming the real estate mortgage executed by the respondent-spouses also necessarily assumes that Title No. 133153 in the name of petitioner Republic Mines is null and void and
therefore to be cancelled, since it is indispensable that the mortgagors have title to the real property given under mortgage to the creditor (Article 2085 [2], Civil Code).[63]
There are powerful considerations of an equitable nature which impel us to the conclusions we reach here. Substantial justice cannot be served if the petitioner Republic Mines, having absolutely no right, legal or equitable, to the
property involved, its claim thereto being based upon a transaction which was not only simulated but also immoral and unconscionable, should be allowed to retain the Transfer Certificate of Title in its name. The petitioner would
thereby be in a position to inflict infinite mischief upon the respondent-spouses whom they deprived for 15 years of the possession of the property of which they were and are lawful owners, and whom they compelled to litigate for
15 years to recover their own property. The judicial process as we know it and as administered by this Court cannot permit such a situation to subsist. It cannot be an adequate remedy for the respondent-spouses to have to start
once more in the Court of First Instance, to ask that court to clarify its own judgment, a process which could be prolonged by the filing of petitions for review in the Court of Appeals and eventually in this Court once more. Public
policy of the most fundamental and insistent kind requires that litigation must at last come to an end if it is not to become more pernicious and unbearable than the very injustice or wrong sought to be corrected thereby. That public
policy demands that we cut this knot here and now.[64]
When a judgment calls for the issuance of a new title in favor of the winning party (as in the instant case), it logically follows that the judgment also requires the losing party to surrender its title for cancellation. It is the only sensible
way by which the decision may be enforced. To this end, petitioners can obtain a court order requiring the registered owner to surrender the same and directing the entry of a new certificate of title in petitioners favor.[65] The trial
court should have granted petitioners motion for supplemental writ of execution as it had authority to issue the necessary orders to aid the execution of the final judgment.[66]
GSISs objection that these orders cannot be enforced because they do not literally appear in the Decision in G.R. No. 140398 is unreasonable. GSIS would have the Court spell out the wheres, whys, and hows of the execution. GSIS
wants a dispositive portion that is a step-by-step detailed description of what needs to be done for purposes of execution. This expectation is unreasonable and absurd.

WHEREFORE, the petition is GRANTED. The February 9, 2005 Order of Branch 160 of the Regional Trial Court of Pasig City is REVERSED and SET ASIDE. The September 11, 2001 Decision in G.R. No. 140398 is clarified to read as
follows:
WHEREFORE, in view of the foregoing, the petition is GRANTED. The decision of the Court of Appeals is REVERSED AND SET ASIDE.
The decision of the Regional Trial Court of Pasig City, Branch 160, in Civil Case Nos. 51410 and 51470, is REINSTATED. The foreclosure sale of Lot Nos. 6, 7, 8 and 10 of Block 2 and Lot 8 of Block 8 of the property originally covered by
TCT No. 26105, and the subsequent certificates of titles issued to GSIS as well as TCT No. PT-94007 in the name of Elizabeth Manlongat, and their respective derivative titles are declared NULL AND VOID.
The Register of Deeds of Pasig City is ordered to CANCEL all present certificates of title covering the above-mentioned properties, whether contained in individual titles or in a mother title, in the name of GSIS and Elizabeth
Manlongat, or in the name of their privies, successors-in-interest or transferees pendente lite, and to ISSUE new certificates of title over the same in the name of petitioners as co-owners thereof.
GSIS and the Bureau of Lands are ordered to supply the necessary documents and information for the proper enforcement of the above orders.
Respondents GSIS and spouses Victor and Milagros Manlongat are ORDERED to pay, jointly and severally, attorneys fees in the increased amount of P50,000.00, and to pay the costs.

SO ORDERED.
The trial court is ordered to ISSUE the writ of execution in accordance with the above clarified dispositive portion.
GSIS is seriously warned not to further delay the execution of this case.
G.R. No. 204280 November 9, 2016

EVELYN V. RUIZ, Petitioner


vs.
BERNARDO F. DIMAILIG, Respondent
DECISION

DEL CASTILLO, J.:


This Petition for Review on Certiorari assails the October 22, 2012 Decision1 of the Court of Appeals (CA) in CA-GR. CV No. 95046 which reversed and set aside the November 26, 2009 Decision2 and the March 19, 2010 Order3 of the
Regional Trial Court (RTC) of Cavite City, Branch 16 in Civil Case No. N-7573. The CA declared void the Real Estate Mortgage (REM) constituted on the property covered by Transfer Certificate of Tit1e (TCT) No. T-361747.
Factual Antecedents
Respondent Bernardo F. Dimailig (Bernardo) was the registered owner of a parcel ofland covered by TCT No. T-361747 located inAlapan, Imus, Cavite.4 In October 1997, he entrusted the owners copy of the said TCT to his brother,
Jovannie,5 who in turn gave the title to Editha Sanggalang (Editha), a broker, for its intended sale. However, in January 1998, the property was mortgaged to Evelyn V. Ruiz (Evelyn) as evidenced by a Deed of REM6 without Bernardos
knowledge and consent. Hence, Bernardo instituted this suit for annulment of the Deed of REM.7
In her Answer,8 Evelyn contended that she met Jovannie when she inspected the subject property and assured her that Bernardo owned the property and his title thereto was genuine. She further claimed that Jovannie mortgaged
the property to her. She also insisted that as a mortgagee in good faith and for value, the REM cannot be annulled and that she had the right to keep the owner's copy of TCT No. T-3617 4 7 until the loan was fully paid to her.
During pre-trial, the parties arrived at the following stipulations:9
1. That x x x it was not [Bernardo] who signed as mortgagor in the subject Deed of Real Estate Mortgage.
2. That there was a demand letter sent to [Evelyn] x x x to cause a release of mortgage on the subject property.
3. The x x x controversy [was referred] to the Barangay for conciliation and mediation.
[4.] That Jovannie x x x is the brother of [Bernardo].

Thereafter, trial on the merits ensued.


Bernardo testified that when he went abroad on October 19, 1997, he left the owner's copy of the TCT of the subject property to Jovannie as they intended to sell the subject property.10 However, on January 26, 1998, a REM was
executed on the subject property. Bernardo argued that his alleged signature appearing therein was merely forged11 as he was still abroad at that time. When he learned in September or November 1998 that Editha mortgaged the
subject property, be personally told Evelyn that the REM was fake and demanded the return of his title. Not heeding his request, he filed a complaint for estafa through falsification of public document against Editha and Evelyn, The
criminal case against Evelyn was dismissed12 while Editha was found guilty as charged.13
Jovannie also took the witness stand. He testified that sometime in December 1997, Editha convinced him to surrender the owner's copy of TCT No. T-361747 which she would show her buyer.14 Subsequently, however, Editha
informed him that she misplaced the title. Hence, he executed in August 199815 an affidavit of loss and registered it with the Register of Deeds (RD).16 In September 1998, Editha finally admitted that the title was not lost but was in
Evelyn's possession because of the REM.17 Upon learning this, Jovannie inquired from Evelyn if Editha mortgaged Bernardo's property to her. Purportedly, Evelyn confirmed said mortgage and told him that she would not return the
owner's copy of TCT No. T-361747 unless Editha pay the loan,18 Jovannie also alleged that he told Evelyn that Bernardo's alleged signature in the REM was not genuine since he was abroad at the time of its execution.19
On the other hand, Evelyn maintained that she was a mortgagee in good faith. She testified that sales agents - Editha, Corazon Encarnacion, and a certain Parani, - and a person introducing himself as "Bernardo" mortgaged the subject
property to her for 300,000.00 payable within a period of three months.20 She asserted that even after the expiration of said period, "Bernardo" failed to pay the loan.21
Evelyn narrated that before accepting the mortgage of the subject property, she, the sales agents, her aunt, and "Bernardo," visited the property. She pointed out that her companions inspected it while she stayed in the vehicle as she
was still recuperating from an operation.22 She admitted that she neither verified from the neighborhood the owner of the property nor approached the occupant thereof.23
Moreover, Evelyn asserted that when the Deed of REM was executed, the person who introduced himself as Bernardo presented a community tax certificate and his picture as proof of identity.24 She admitted that she did not ask for
any identification card from "Bernardo."25
Contrary to the allegation in her Answer that Jovannie mortgaged the property, Evelyn clarified that she met Jovannie for the first time when he went to her house and told her that Bernardo could not have mortgaged the property
to her as he was abroad.26
Corazon Abella Ruiz (Corazon), the sister-in-law of Evelyn, was presented to corroborate her testimony. Corazon averred that in January 1998, she accompanied Evelyn and several others in inspecting the subject property.27 The day
after the inspection, Evelyn and '"Bernardo'' executed the Deed of REM in the office of a certain Atty. Ignacio; Evelyn handed 300,000.00 to Editha, not to "Bernardo;"28 in turn, Editha handed to Evelyn the owner's copy of TCT No.
T-361747.29
Ruling of the Regional Trial Court
On November 26, 2009, the RTC dismissed the Complaint. It held that while Bernardo was the registered owner of the subject property, Evelyn was a mortgagee in good faith because she was unaware that the person who represented
himself as Bernardo was an impostor. It noted that Evelyn caused the verification of the title of the property with the RD and found the same to be free from any lien or encumbrance. Evelyn also inspected the property and met
Jovannie during such inspection. Finally, the RTC declared that there was no showing of any circumstance that would cause Evelyn to doubt the validity of the title or the property covered by it. In fine, Evelyn did all that was necessary
before parting with her money and entering into the REM.
On March 19, 2010, the RTC denied Bernardo's Motion for Reconsideration. Thus, he appealed to the CA.
Ruling of the Court of Appeals
On October 22, 2012, the CA rendered the assailed Decision reversing and setting aside the RTC Decision. The decretal portion of the CA Decision reads:

WHEREFORE, the appeal is GRANTED. The assailed dispositions of the RTC are REVERSED and SET ASIDE. The complaint of Bernardo F. Dimailig is GRANTED. The Deed of Real Estate Mortgage constituted on the real property covered
by TCT No. T-361747 of the Registry of Deeds for the Province of Cavite, registered in his name, is DECLARED null and void. Evelyn V. Ruiz is ORDERED to reconvey or return to him the owner's duplicate copy of the said title. His claims
for the payment of attorney's fees and costs of suits are DENIED. Costs against Evelyn V. Ruiz.

SO ORDERED.30

The CA held that the "innocent purchaser (mortgagor in this case) for value protected by law is one who purchases a titled land by virtue of a deed executed by the registered owner himself, not by a forged deed."31 Since the Deed of
REM was forged, and the title to the subject property is still in the name of the rightful owner, and the mortgagor is a different person who only pretended to be the owner, then Evelyn cannot seek protection from the cloak of the
principle of mortgagee in good faith. The CA held that in this case, "the registered owner will not personally lose his title."32
The CA further decreed that Evelyn's claim of good faith cannot stand as she failed to verify the real identity of the person introduced by Editha as Bernardo. It noted that the impostor did not even exhibit any identification card to
prove his identity; and, by Evelyn's admission, she merely relied on the representation of Editha relative to the identity of "Bernardo." It also held that Evelyn transacted only with Editha despite the fact that the purported owner was
present during the inspection of the property, and during the execution of the REM.
In sum, the CA ruled that for being a forged instrument, the Deed of REM was a nullity, and the owner's copy of TCT No. T-361747 must be returned to its rightful owner, Bernardo.

Issue
Hence, Evelyn filed this Petition raising the sole assignment of error as follows:
[T]he Court of Appeals erred in holding that petitioner is not a mortgagee in good faith despite the presence of substantial evidence to support such conclusion of fact.33
Petitioners Arguments
Petitioner insists that she is a mortgagee in good faith. She claims that she was totally unaware of the fraudulent acts employed by Editha, Jovannie, and the impostor to obtain a loan from her. She stresses that a person dealing with
a property covered by a certificate of title is not required to look beyond what appears on the face of the title.
Respondents Arguments
Bernardo, on his end, contends that since the person who mortgaged the property was a mere impostor, then Evelyn cannot claim that she was a mortgagee in good faith. This is because a mortgage is void where the mortgagor has
no title at all to the property subject of such mortgage.
Bernardo asserts that there were circumstances that should have aroused suspicion on the part of Evelyn relative to the mortgagor's title over the property. He specifies that throughout the negotiation of the mortgage, Evelyn
transacted only with Editha, not with "Bernardo," despite the fact that Editha and the other real estate agents who assisted Evelyn in the mortgage transaction were not armed with a power of attorney.
Bernardo likewise stresses that although Evelyn caused the inspection of the subject property, she herself admitted that she did not alight from the vehicle during the inspection, and she failed to verify the actual occupant of the
property.

Our Ruling

The Petition is without merit.


As a Rule, the issue of whether a person is a mortgagee in good faith is not within the ambit of a Rule 45 Petition.1wphi1 The determination of presence or absence of good faith, and of negligence are factual matters, which are
outside the scope of a petition for review on certiorari.34 Nevertheless, this rule allows certain exceptions including cases where the RTC and the CA arrived at different or conflicting factual findings,35 as in the case at bench. As such,
the Court deems it necessary to re-examine and re-evaluate the factual findings of the CA as they differ with those of the RTC.
No valid mortgage will arise unless the mortgagor has a valid title or ownership over the mortgaged property. By way of exception, a mortgagee can invoke that he or she derived title even if the mortgagor's title on the property is
defective, if he or she acted in. good faith. In such instance, the mortgagee must prove that no circumstance that should have aroused her suspicion on the veracity of the mortgagor's title on the property was disregarded.36
Such doctrine of mortgagee in good faith presupposes "that the mortgagor, who is not the rightful owner of the property, has already succeeded in obtaining a Torrens title over the property in his name and that, after obtaining the
said title, he succeeds in mortgaging the property to another who relies on what appears on the said title."37 In short, the doctrine of mortgagee in good faith assumes that the title to the subject property had already been transferred
or registered in the name of the impostor who thereafter transacts with a mortgagee who acted in good faith. In the case at bench, it must be emphasized that the title remained to be registered in the name of Bernardo, the rightful
and real owner, and not in the name of the impostor.
The burden of proof that one is a mortgagee in good faith and for value lies with the person who claims such status. A mortgagee cannot simply ignore facts that should have put a reasonable person on guard, and thereafter claim
that he or she acted in good faith under the belief that the mortgagor's title is not defective.38 And, such good faith entails an honest intention to refrain from taking unconscientious advantage of another.39
In other words, in order for a mortgagee to invoke the doctrine of mortgagee in good faith, the impostor must have succeeded in obtaining a Torrens title in his name and thereafter in mortgaging the property. Where the mortgagor
is an impostor who only pretended to be the registered owner, and acting on such pretense, mortgaged the property to another, the mortgagor evidently did not succeed in having the property titled in his or her name, and the
mortgagee cannot rely on such pretense as what appears on the title is not the impostor's name but that of the registered owner.40
In this case, Evelyn insists that she is a mortgagee in good faith and for value. Thus, she has the burden to prove such claim and must provide necessary evidence to support the same. Unfortunately, Evelyn failed to discharge her
burden.
First, the Deed of REM was established to be a forged instrument. As aptly discussed by the CA, Bernardo did not and could not have executed it as he was abroad at the time of its execution, to wit:
Verily, Bernardo could not have affixed his signature on the said deed on January 26, 1998 for he left the Philippines on March 21, 1998. Not only that, his signature on his Seafarers Identification and Record Book is remarkably
different from the signature on the assailed mortgage contract. The variance is obvious even to the untrained eye. This is further bolstered by Evelyns admission that Bernardo was not the one who represented himself as the registered
owner of the subject property and was not the one who signed the questioned contract. Thus, there can be no denying the fact that the signature on the Deed of Real Estate Mortgage was not affixed or signed by the same person.41
In fact, during pre-trial, both parties agreed that it was not Bernardo who signed as the mortgagor in the Deed of REM. It was only an impostor - representing himself as Bernardo - who mortgaged the property. This impostor is not
only without rightful ownership on the mortgaged property, he also has no Torrens title in his own name involving said property.
Simply put, for being a forged instrument, the Deed of REM is a nullity and conveys no title.42
Second, Evelyn cannot invoke the protection given to a mortgagee in good faith. As discussed, the title to the subject property remained registered in the name of Bernardo. It was not transferred to the impostor's name when Evelyn
transacted with the latter. Hence, the principle of mortgagee in good faith finds no application; correspondingly, Evelyn cannot not seek refuge therefrom.
Third, even assuming that the impostor has caused the property to be titled in his name as if he had rightful ownership thereof, Evelyn would still not be deemed a mortgagee in good faith. This is because Evelyn did not take the
necessary steps to dete1mine any defect in the title of the alleged owner of the mortgaged property. She deliberately ignored pertinent facts that should have aroused suspicion on the veracity of the title of the mortgagor "Bernardo."43
One, while '"Bernardo" introduced himself to Evelyn as the owner of the property, he did not present any proof of identification. To recall, he only exhibited his co1rununity tax certificate and a picture when he introduced himself to
Evelyn. ''Bernardo's" failure to sufficiently establish his identity should have aroused suspicion on the part of Evelyn whether the person she was transacting with is the real Bernardo or a mere impostor. She should have investigated
further and verified the identity of ''Bernardo" but she failed to do so. She even admitted that she did not at all ask for any identification card from "'Bernardo."
Two, Evelyn also ignored the fact that "Bernardo'' did not participate in the negotiations/transactions leading to the execution of the Deed of REM. Notably, no power of attorney was given to Editha who supposedly transacted in
behalf of Bernardo. Despite "Bernardo's" presence during the ocular inspection of the property and execution of the mortgage contract, it was Editha who transacted with Evelyn. As gathered from the testimony of Corazon, after the
execution of the deed, Evelyn handed the loan amount of 300,000.00 to Editha, not to "Bernardo," and it was Editha who handed to Evelyn the owner's copy of TCT No. T-361747.
Three, Evelyn likewise failed to ascertain the supposed title of "Bernardo" over the property, Evelyn admitted that during the ocular inspection, she remained in the vehicle. She did not inquire from the subject property's occupant or
from the occupants of the surrounding properties if they knew "Bernardo" and whether or not he owned the subject property.
Notably, the RTC misapprehended certain facts when it held that Evelyn inspected the property and met Jovannie during the inspection. By her own account, Evelyn clarified that she met Jovannie for the first time only when the latter
visited her house to inform her that an impostor mortgaged Bernardo's property to her.
Four, the Court observes that Evelyn hastily granted the loan and entered into the mortgage contract. As also testified by Corazon, a day after the supposed ocular inspection on the property, Evelyn and "Bernardo" executed the Deed
of REM even without Evelyn verifying the identity of the property's occupant as well as the right of the mortgagor, if any, over the same. Indeed, where the mortgagee acted with haste in granting the loan, without first determining
the ownership of the property being mortgaged, the mortgagee cannot be considered as an innocent mortgagee in good faith.44
Thus, considering that the mortgage contract was forged as it was entered into by Evelyn with an impostor, the registered owner of the property, Bernardo, correspondingly did not lose his title thereon, and Evelyn did not acquire any
right or title on the property and cannot invoke that she is a mortgagee in good faith and for value.45
WHEREFORE, the Petition is DENIED. Accordingly, the October 22, 2012 Decision of the Court of Appeals in CAG.R. CV No. 95046 is AFFIRMED.
G.R. No. 169890 March 12, 2007

FELICIANO ESGUERRA, CANUTO ESGUERRA, JUSTA ESGUERRA, ANGEL ESGUERRA, FIDELA ESGUERRA, CLARA ESGUERRA, and PEDRO ESGUERRA, Petitioners,
vs.
VIRGINIA TRINIDAD, PRIMITIVA TRINIDAD, and THE REGISTER OF DEEDS OF MEYCAUAYAN, BULACAN, Respondents.
DECISION

CARPIO MORALES, J.:


nvolved in the present controversy are two parcels of land located in Camalig, Meycauayan, Bulacan.
Felipe Esguerra and Praxedes de Vera (Esguerra spouses) were the owners of several parcels of land in Camalig, Meycauayan, Bulacan among them a 35,284-square meter parcel of land covered by Tax Declaration No. 10374, half of
which (17,642 square meters) they sold to their grandchildren, herein petitioners Feliciano, Canuto, Justa, Angel, Fidela, Clara and Pedro, all surnamed Esguerra; and a 23,989-square meter
parcel of land covered by Tax Declaration No. 12080, 23,489 square meters of which they also sold to petitioners, and the remaining 500 square meters they sold to their other grandchildren, the brothers Eulalio and Julian Trinidad
(Trinidad brothers).
Also sold to the Trinidad brothers were a 7,048-square meter parcel of land covered by Tax Declaration No. 9059, a 4,618-square meter parcel of land covered by Tax Declaration No. 12081, and a 768-square meter parcel of land
covered by Tax Declaration No. 13989.
The Esguerra spouses executed the necessary Deed of Sale in favor of petitioners on August 11, 1937, 1 and that in favor of the Trinidad brothers on August 17, 1937.2 Both documents were executed before notary public Maximo
Abao.
Eulalio Trinidad later sold his share of the land to his daughters-respondents herein, via a notarized Kasulatan ng Bilihang Tuluyan ng Lupa3 dated October 13, 1965. A portion of the land consisting of 1,693 square meters was later
assigned Lot No. 3593 during a cadastral survey conducted in the late 1960s.
On respondents application for registration of title, the then Court of First Instance (CFI) of Bulacan, by Decision 4 of February 20, 1967, awarded Lot No. 3593 in their favor in Land Registration Case No. N-323-V. Pursuant to the
Decision, the Land Registration Commission (LRC, now the Land Registration Authority [LRA]) issued Decree No. N-114039 by virtue of which the Register of Deeds of Bulacan issued OCT No. 0-36315 in the name of respondents.
Meanwhile, under a notarized Bilihan ng Lupa6 dated November 10, 1958, petitioners sold to respondents parents Eulalio Trinidad and Damiana Rodeadilla (Trinidad spouses) a portion of about 5,000 square meters of the 23,489-
square meter of land which they previously acquired from the Esguerra spouses. 7
During the same cadastral survey conducted in the late 1960s, it was discovered that the about 5,000-square meter portion of petitioners parcel of land sold to the Trinidad spouses which was assigned Lot No. 3591 actually measured
6,268 square meters.
In a subsequent application for registration of title over Lot No. 3591, docketed as Land Registration Case No. N-335-V, the CFI, by Decision8 of August 21, 1972, awarded Lot No. 3591 in favor of Eulalio Trinidad. Pursuant to the
Decision, the LRC issued Decree No. N-149491 by virtue of which the Register of Deeds of Bulacan issued OCT No. 0-64989 in the name of Trinidad.
Upon the death of the Trinidad spouses, Lot No. 3591 covered by OCT No. 0-6498 was transmitted to respondents by succession.
Petitioners, alleging that upon verification with the LRA they discovered the issuance of the above-stated two OCTs, filed on August 29, 1994 before the Regional Trial Court (RTC) of Malolos, Bulacan two separate complaints for their
nullification on the ground that they were procured through fraud or misrepresentation.
In the first complaint, docketed as Civil Case No. 737-M-94, petitioners sought the cancellation of OCT No. 0-3631.
In the other complaint, docketed as Civil Case No. 738-M-94, petitioners sought the cancellation of OCT No. 0-6498.
Both cases were consolidated and tried before Branch 79 of the RTC which, after trial, dismissed the cases by Joint Decision10 of May 15, 1997.
Their appeal with the Court of Appeals having been dismissed by Decision of February 28, 2005, a reconsideration of which was, by Resolution of October 3, 2005,11 denied, petitioners filed the instant petition.
Petitioners fault the appellate court

1. in misappreciating the fact that the act of the respondent Eulalio Trinidad in acquiring the property from Felipe Esguerra constituted fraud.
2. in the [i]nterpretation and application of the provisions of Article 1542 of the New Civil Code.
3. in ruling that there is prescription, res judicata, and violation of the non-[forum] shopping.12

In their Comment, respondents assailed the petition as lacking verification and certification against forum shopping and failing to attach to it an affidavit of service and material portions of the record in support thereof. Petitioners
counter that the procedural deficiencies have been mooted by the filing of a Compliance.
A check of the rollo shows that attached to the petition are an Affidavit of Service dated November 21, 2005 and the appellate courts Decision of February 28, 2005 and Resolution of October 3, 2005; and that on January 16, 2006 or
almost three months following the last day to file the petition, petitioners submitted, not at their own instance,13 a Verification and Sworn Certification on Non-Forum Shopping signed by petitioner Pedro Esguerra who cited honest
and excusable mistake behind the omission to submit the same.
This Court has strictly enforced the requirement of verification and certification, obedience to which and to other procedural rules is needed if fair results are to be expected therefrom.14 While exceptional cases have been considered
to correct patent injustice concomitant to a liberal application of the rules of procedure, there should be an effort on the part of the party invoking liberality to advance a reasonable or meritorious explanation for his failure to comply
with the rules.15 In petitioners case, no such explanation has been advanced.
With regard to petitioners failure to attach material portions of the record in support of the petition, this requirement is not a mere technicality but an essential requisite for the determination of prima facie basis for giving due course
to the petition.16 As a rule, a petition which lacks copies of essential pleadings and portions of the case record may be dismissed. Much discretion is left to the reviewing court, however, to determine the necessity for such copies as
the exact nature of the pleadings and portions of the case record which must accompany a petition is not specified. 17
At all events, technicality aside, the petition must be denied.
It is settled that fraud is a question of fact and the circumstances constituting the same must be alleged and proved in the court below.18
In the present cases, as did the trial court, the appellate court found no fraud in respondents acquisition and registration of the land, viz:
Appellant Pedro Esguerra even testified that he does not know how appellees were able to secure a title over the lot in question and that they never sold Lot No. 3593 to Virginia Trinidad since it is part of the whole lot of 23,489 square
meters. The said testimony is a mere conclusion on the part of appellants. On the other hand, the evidence shows that appellees acquired title over the subject property by virtue of a deed of sale executed by their father Eulalio
Trinidad in their favor.
[T]hey failed to establish that appellees acquisition of the certificate of title is fraudulent. In fact, in their two complaints, appellants acknowledged that appellees observed and took the initial procedural steps in the registration of
the land, thus ruling out fraud in the acquisition of the certificate of title.19
Factual findings of the trial court, when affirmed by the Court of Appeals, are final, conclusive and binding on this Court,20 which is not a trier of facts,21 hence, bereft of function under Rule 45 to examine and weigh the probative value
of the evidence presented,22 its jurisdiction being limited only to the review and revision of errors of law.23 Albeit there are exceptions24 to this rule, the cases at bar do not fall thereunder, there being no showing that the trial and
appellate courts overlooked matters which, if considered, would alter their outcome.
Under the Torrens System, an OCT enjoys a presumption of validity, which correlatively carries a strong presumption that the provisions of the law governing the registration of land which led to its issuance have been duly followed.25
Fraud being a serious charge, it must be supported by clear and convincing proof. 26 Petitioners failed to discharge the burden of proof, however.
On the questioned interpretation and application by the appellate court of Article 1542 of the Civil Code reading:
In the sale of real estate, made for a lump sum and not at the rate of a certain sum for a unit of measure or number, there shall be no increase or decrease of the price, although there be a greater or less areas or number than that
stated in the contract.
The same rule shall be applied when two or more immovables are sold for a single price; but if, besides mentioning the boundaries, which is indispensable in every conveyance of real estate, its area or number should be designated in
the contract, the vendor shall be bound to deliver all that is included within said boundaries, even when it exceeds the area or number specified in the contract; and, should he not be able to do so, he shall suffer a reduction in the
price, in proportion to what is lacking in the area or number, unless the contract is rescinded because the vendee does not accede to the failure to deliver what has been stipulated. (Emphasis and underscoring supplied),
while petitioners admittedly sold Lot No. 3591 to the Trinidad spouses, they contend that what they sold were only 5,000 square meters and not 6,268 square meters, and thus claim the excess of 1,268 square meters.
In sales involving real estate, the parties may choose between two types of pricing agreement: a unit price contract wherein the purchase price is determined by way of reference to a stated rate per unit area (e.g., 1,000 per square
meter), or a lump sum contract which states a full purchase price for an immovable the area of which may be declared based on an estimate or where both the area and boundaries are stated (e.g., 1 million for 1,000 square meters,
etc.). In Rudolf Lietz, Inc. v. Court of Appeals,27 the Court discussed the distinction:
In a unit price contract, the statement of area of immovable is not conclusive and the price may be reduced or increased depending on the area actually delivered. If the vendor delivers less than the area agreed upon, the vendee may
oblige the vendor to deliver all that may be stated in the contract or demand for the proportionate reduction of the purchase price if delivery is not possible. If the vendor delivers more than the area stated in the contract, the vendee
has the option to accept only the amount agreed upon or to accept the whole area, provided he pays for the additional area at the contract rate.
In the case where the area of the immovable is stated in the contract based on an estimate, the actual area delivered may not measure up exactly with the area stated in the contract. According to Article 1542 of the Civil Code, in the
sale of real estate, made for a lump sum and not at the rate of a certain sum for a unit of measure or number, there shall be no increase or decrease of the price, although there be a greater or less areas or number than that stated in
the contract.
Where both the area and the boundaries of the immovable are declared, the area covered within the boundaries of the immovable prevails over the stated area. In cases of conflict between areas and boundaries, it is the latter which
should prevail. What really defines a piece of ground is not the area, calculated with more or less certainty, mentioned in its description, but the boundaries therein laid down, as enclosing the land and indicating its limits. In a contract
of sale of land in a mass, it is well established that the specific boundaries stated in the contract must control over any statement with respect to the area contained within its boundaries. It is not of vital consequence that a deed or
contract of sale of land should disclose the area with mathematical accuracy. It is sufficient if its extent is objectively indicated with sufficient precision to enable one to identify it. An error as to the superficial area is immaterial. Thus,
the obligation of the vendor is to deliver everything within the boundaries, inasmuch as it is the entirety thereof that distinguishes the determinate object.28 (Emphasis and underscoring supplied)
The courts below correctly characterized the sale of Lot No. 3591 as one involving a lump sum contract. The Bilihan ng Lupa shows that the parties agreed on the purchase price of 1,000.00 on a predetermined, albeit unsurveyed,
area of 5,000 square meters and not on a particular rate per unit area. As noted by the Court of Appeals, the identity of the realty was sufficiently described as riceland:
It is clear from the afore-quoted Bilihan ng Lupa that what appellants sold to Eulalio was the "bahaging palayan." Though measured as 5,000 square meters, more or less, such measurement is only an approximation, and not an exact
measurement. Moreover, we take note of the fact that the said deed of sale mentioned the boundaries covering the whole area of 33,489 square meters, including the "bahaging palayan." Had appellants intended to sell only a
portion of the "bahaging palayan," they could have stated the specific area in the deed of sale and not the entire "bahaging palayan" . . . .29
In fine, under Article 1542, what is controlling is the entire land included within the boundaries, regardless of whether the real area should be greater or smaller than that recited in the deed. This is particularly true since the area of
the land in OCT No. 0-6498 was described in the deed as "humigit kumulang," that is, more or less. 30
A caveat is in order, however. The use of "more or less" or similar words in designating quantity covers only a reasonable excess or deficiency. A vendee of land sold in gross or with the description "more or less" with reference to its
area does not thereby ipso facto take all risk of quantity in the land.31
Numerical data are not of course the sole gauge of unreasonableness of the excess or deficiency in area. Courts must consider a host of other factors. In one case,32 the Court found substantial discrepancy in area due to
contemporaneous circumstances. Citing change in the physical nature of the property, it was therein established that the excess area at the southern portion was a product of reclamation, which explained why the lands technical
description in the deed of sale indicated the seashore as its southern boundary, hence, the inclusion of the reclaimed area was declared unreasonable.
In OCT No. 0-6498, the increase by a fourth of a fraction of the area indicated in the deed of sale cannot be considered as an unreasonable excess. Most importantly, the circumstances attendant to the inclusion of the excess area bare
nothing atypical or significant to hint at unreasonableness. It must be noted that the land was not yet technically surveyed at the time of the sale. As vendors who themselves executed the Bilihan ng Lupa, petitioners may rightly be
presumed to have acquired a good estimate of the value and area of the bahaging palayan.
As for the last assigned error, the appellate court, in finding that the complaints were time-barred, noted that when the complaints were filed in 1994, more than 27 years had elapsed from the issuance of OCT No. 0-3631 and more
than 20 years from the issuance of OCT No. 0-6498. The prescriptive period of one (1) year had thus set in.1awphi1.nt
Petitioners reliance on Agne v. Director of Lands33 is misplaced since the cancellation of title was predicated not on the ground of fraud but on want of jurisdiction. Even assuming that petitioners actions are in the nature of a suit for
quieting of title, which is imprescriptible, the actions still necessarily fail since petitioners failed to establish the existence of fraud.
A word on Republic Act No. 716034 which was raised by petitioners in their petition. It expressly requires the parties to undergo a conciliation process under the Katarungang Pambarangay, as a precondition to filing a complaint in
court,35 non-compliance with this condition precedent does not prevent a court of competent jurisdiction from exercising its power of adjudication over a case unless the defendants object thereto. The objection should be seasonably
made before the court first taking cognizance of the complaint, and must be raised in the Answer or in such other pleading allowed under the Rules of Court.36
While petitioners admittedly failed to comply with the requirement of barangay conciliation, they assert that respondents waived such objection when they failed to raise it in their Answer. Contrary to petitioners claim, however, the
records reveal that respondents raised their objection in their Amended Answers 37 filed in both cases.
IN FINE, it is a fundamental principle in land registration that a certificate of title serves as evidence of an indefeasible and incontrovertible title to the property in favor of the person whose name appears therein. Such indefeasibility
commences after the lapse or expiration of one year from the date of entry of the decree of registration when all persons are considered to have a constructive notice of the title to the property. After the lapse of one year, therefore,
title to the property can no longer be contested. This system was so effected in order to quiet title to land. 38
WHEREFORE, the petition is DENIED. The assailed Decision and Resolution of the Court of Appeals are AFFIRMED.
Costs against petitioners.
G.R. No. 148225 March 3, 2010

CARMEN DEL PRADO, Petitioner,


vs.
SPOUSES ANTONIO L. CABALLERO and LEONARDA CABALLERO, Respondents.
DECISION

NACHURA, J.:
This is a petition for review on certiorari of the decision1 of the Court of Appeals (CA) dated September 26, 2000 and its resolution denying the motion for reconsideration thereof.
The facts are as follows:
In a judgment rendered on February 1, 1985 in Cadastral Case No. N-6 (LRC Rec. No. N-611), Judge Juan Y. Reyes of the Regional Trial Court (RTC) of Cebu City, Branch 14, adjudicated in favor of Spouses Antonio L. Caballero and
Leonarda B. Caballero several parcels of land situated in Guba, Cebu City, one of which was Cadastral Lot No. 11909, the subject of this controversy. 2 On May 21, 1987, Antonio Caballero moved for the issuance of the final decree of
registration for their lots.3 Consequently, on May 25, 1987, the same court, through then Presiding Judge Renato C. Dacudao, ordered the National Land Titles and Deeds Registration Administration to issue the decree of registration
and the corresponding titles of the lots in favor of the Caballeros.4
On June 11, 1990, respondents sold to petitioner, Carmen del Prado, Lot No. 11909 on the basis of the tax declaration covering the property. The pertinent portion of the deed of sale reads as follows:|
That we, Spouses ANTONIO L. CABALLERO and LEONARDA B. CABALLERO, Filipinos, both of legal age and residents of Talamban, Cebu City, Philippines, for and in consideration of the sum of FORTY THOUSAND PESOS (40,000.00),
Philippine Currency, paid by CARMEN DEL PRADO, Filipino, of legal age, single and a resident of Sikatuna St., Cebu City, Philippines, the receipt of which is full is hereby acknowledged, do by these presents SELL, CEDE, TRANSFER,
ASSIGN & CONVEY unto the said CARMEN DEL PRADO, her heirs, assigns and/or successors-in-interest, one (1) unregistered parcel of land, situated at Guba, Cebu City, Philippines, and more particularly described and bounded, as
follows:
"A parcel of land known as Cad. Lot No. 11909, bounded as follows:
North : Lot 11903
East : Lot 11908
West : Lot 11910
South : Lot 11858 & 11912
containing an area of 4,000 square meters, more or less, covered by Tax Dec. No. 00787 of the Cebu City Assessors Office, Cebu City." of which parcel of land we are the absolute and lawful owners.
Original Certificate of Title (OCT) No. 1305, covering Lot No. 11909, was issued only on November 15, 1990, and entered in the "Registration Book" of the City of Cebu on December 19, 1990.5 Therein, the technical description of Lot
No. 11909 states that said lot measures about 14,457 square meters, more or less. 6
On March 20, 1991, petitioner filed in the same cadastral proceedings a "Petition for Registration of Document Under Presidential Decree (P.D.) 1529"7 in order that a certificate of title be issued in her name, covering the whole Lot
No. 11909. In the petition, petitioner alleged that the tenor of the instrument of sale indicated that the sale was for a lump sum or cuerpo cierto, in which case, the vendor was bound to deliver all that was included within said
boundaries even when it exceeded the area specified in the contract. Respondents opposed, on the main ground that only 4,000 sq m of Lot No. 11909 was sold to petitioner. They claimed that the sale was not for a cuerpo cierto.
They moved for the outright dismissal of the petition on grounds of prescription and lack of jurisdiction.
After trial on the merits, the court found that petitioner had established a clear and positive right to Lot No. 11909. The intended sale between the parties was for a lump sum, since there was no evidence presented that the property
was sold for a price per unit. It was apparent that the subject matter of the sale was the parcel of land, known as Cadastral Lot No. 11909, and not only a portion thereof.8
Thus, on August 2, 1993, the court a quo rendered its decision with the following dispositive portion:

WHEREFORE, premises considered, the petition is hereby granted and judgment is hereby rendered in favor of herein petitioner. The Register of Deeds of the City of Cebu is hereby ordered and directed to effect the registration in his
office of the Deed of Absolute Sale between Spouses Antonio Caballero and Leonarda Caballero and Petitioner, Carmen del Prado dated June 11, 1990 covering Lot No. 11909 after payment of all fees prescribed by law. Additionally,
the Register of Deeds of the City of Cebu is hereby ordered to cancel Original Certificate No. 1305 in the name of Antonio Caballero and Leonarda Caballero and the Transfer Certificate of Title be issued in the name of Petitioner
Carmen del Prado covering the entire parcel of land known as Cadastral Lot No. 11909.9
An appeal was duly filed. On September 26, 2000, the CA promulgated the assailed decision, reversing and setting aside the decision of the RTC.
The CA no longer touched on the character of the sale, because it found that petitioner availed herself of an improper remedy. The "petition for registration of document" is not one of the remedies provided under P.D. No. 1529, after
the original registration has been effected. Thus, the CA ruled that the lower court committed an error when it assumed jurisdiction over the petition, which prayed for a remedy not sanctioned under the Property Registration Decree.
Accordingly, the CA disposed, as follows:

IN VIEW OF ALL THE FOREGOING, the appealed decision is REVERSED and SET ASIDE and a new one entered dismissing the petition for lack of jurisdiction. No pronouncement as to costs.10
Aggrieved, petitioner filed the instant petition, raising the following issues:
I. WHETHER OR NOT THE COURT OF APPEALS COMMITTED GRAVE ERROR IN MAKING FINDINGS OF FACT CONTRARY TO THAT OF THE TRIAL COURT[;]
II. WHETHER OR NOT THE COURT OF APPEALS COMMITTED GRAVE ERROR IN FAILING TO RULE THAT THE SALE OF THE LOT IS FOR A LUMP SUM OR CUERPO CIERTO[;]
III. WHETHER OR NOT THE COURT A QUO HAS JURISDICTION OVER THE PETITION FOR REGISTRATION OF THE DEED OF ABSOLUTE SALE DATED 11 JUNE 1990 EXECUTED BETWEEN HEREIN PETITIONER AND RESPONDENTS[.]11

The core issue in this case is whether or not the sale of the land was for a lump sum or not.
Petitioner asserts that the plain language of the Deed of Sale shows that it is a sale of a real estate for a lump sum, governed under Article 1542 of the Civil Code.12 In the contract, it was stated that the land contains an area of 4,000
sq m more or less, bounded on the North by Lot No. 11903, on the East by Lot No. 11908, on the South by Lot Nos. 11858 & 11912, and on the West by Lot No. 11910. When the OCT was issued, the area of Lot No. 11909 was declared
to be 14,475 sq m, with an excess of 10,475 sq m. In accordance with Article 1542, respondents are, therefore, duty-bound to deliver the whole area within the boundaries stated, without any corresponding increase in the price. Thus,
petitioner concludes that she is entitled to have the certificate of title, covering the whole Lot No. 11909, which was originally issued in the names of respondents, transferred to her name.

We do not agree.

In Esguerra v. Trinidad,13 the Court had occasion to discuss the matter of sales involving real estates. The Courts pronouncement is quite instructive:
In sales involving real estate, the parties may choose between two types of pricing agreement: a unit price contract wherein the purchase price is determined by way of reference to a stated rate per unit area (e.g., 1,000 per square
meter), or a lump sum contract which states a full purchase price for an immovable the area of which may be declared based on the estimate or where both the area and boundaries are stated (e.g., 1 million for 1,000 square meters,
etc.). In Rudolf Lietz, Inc. v. Court of Appeals (478 SCRA 451), the Court discussed the distinction:
"In a unit price contract, the statement of area of immovable is not conclusive and the price may be reduced or increased depending on the area actually delivered. If the vendor delivers less than the area agreed upon, the vendee
may oblige the vendor to deliver all that may be stated in the contract or demand for the proportionate reduction of the purchase price if delivery is not possible. If the vendor delivers more than the area stated in the contract, the
vendee has the option to accept only the amount agreed upon or to accept the whole area, provided he pays for the additional area at the contract rate.
In the case where the area of an immovable is stated in the contract based on an estimate, the actual area delivered may not measure up exactly with the area stated in the contract. According to Article 1542 of the Civil Code, in the
sale of real estate, made for a lump sum and not at the rate of a certain sum for a unit of measure or number, there shall be no increase or decrease of the price, although there be a greater or less areas or number than that stated in
the contract.
Where both the area and the boundaries of the immovable are declared, the area covered within the boundaries of the immovable prevails over the stated area. In cases of conflict between areas and boundaries, it is the latter which
should prevail. What really defines a piece of ground is not the area, calculated with more or less certainty, mentioned in its description, but the boundaries therein laid down, as enclosing the land and indicating its limits. In a contract
of sale of land in a mass, it is well established that the specific boundaries stated in the contract must control over any statement with respect to the area contained within its boundaries. It is not of vital consequence that a deed or
contract of sale of land should disclose the area with mathematical accuracy. It is sufficient if its extent is objectively indicated with sufficient precision to enable one to identify it. An error as to the superficial area is immaterial. Thus,
the obligation of the vendor is to deliver everything within the boundaries, inasmuch as it is the entirety thereof that distinguishes the determinate object.14
The Court, however, clarified that the rule laid down in Article 1542 is not hard and fast and admits of an exception. It held:
A caveat is in order, however. The use of "more or less" or similar words in designating quantity covers only a reasonable excess or deficiency. A vendee of land sold in gross or with the description "more or less" with reference to its
area does not thereby ipso facto take all risk of quantity in the land..
Numerical data are not of course the sole gauge of unreasonableness of the excess or deficiency in area. Courts must consider a host of other factors. In one case (see Roble v. Arbasa, 414 Phil. 343 [2001]), the Court found substantial
discrepancy in area due to contemporaneous circumstances. Citing change in the physical nature of the property, it was therein established that the excess area at the southern portion was a product of reclamation, which explained
why the lands technical description in the deed of sale indicated the seashore as its southern boundary, hence, the inclusion of the reclaimed area was declared unreasonable.15
In the instant case, the deed of sale is not one of a unit price contract. The parties agreed on the purchase price of 40,000.00 for a predetermined area of 4,000 sq m, more or less, bounded on the North by Lot No. 11903, on the East
by Lot No. 11908, on the South by Lot Nos. 11858 & 11912, and on the West by Lot No. 11910. In a contract of sale of land in a mass, the specific boundaries stated in the contract must control over any other statement, with respect
to the area contained within its boundaries.161avvphi1
Blacks Law Dictionary17 defines the phrase "more or less" to mean:
About; substantially; or approximately; implying that both parties assume the risk of any ordinary discrepancy. The words are intended to cover slight or unimportant inaccuracies in quantity, Carter v. Finch, 186 Ark. 954, 57 S.W.2d
408; and are ordinarily to be interpreted as taking care of unsubstantial differences or differences of small importance compared to the whole number of items transferred.
Clearly, the discrepancy of 10,475 sq m cannot be considered a slight difference in quantity. The difference in the area is obviously sizeable and too substantial to be overlooked. It is not a reasonable excess or deficiency that should
be deemed included in the deed of sale.
We take exception to the avowed rule that this Court is not a trier of facts. After an assiduous scrutiny of the records, we lend credence to respondents claim that they intended to sell only 4,000 sq m of the whole Lot No. 11909,
contrary to the findings of the lower court. The records reveal that when the parties made an ocular inspection, petitioner specifically pointed to that portion of the lot, which she preferred to purchase, since there were mango trees
planted and a deep well thereon. After the sale, respondents delivered and segregated the area of 4,000 sq m in favor of petitioner by fencing off the area of 10,475 sq m belonging to them. 18
Contracts are the law between the contracting parties. Sale, by its very nature, is a consensual contract, because it is perfected by mere consent. The essential elements of a contract of sale are the following: (a) consent or meeting of
the minds, that is, consent to transfer ownership in exchange for the price; (b) determinate subject matter; and (c) price certain in money or its equivalent. All these elements are present in the instant case.19
More importantly, we find no reversible error in the decision of the CA. Petitioners recourse, by filing the petition for registration in the same cadastral case, was improper. It is a fundamental principle in land registration that a
certificate of title serves as evidence of an indefeasible and incontrovertible title to the property in favor of the person whose name appears therein. Such indefeasibility commences after one year from the date of entry of the decree
of registration.20 Inasmuch as the petition for registration of document did not interrupt the running of the period to file the appropriate petition for review and considering that the prescribed one-year period had long since expired,
the decree of registration, as well as the certificate of title issued in favor of respondents, had become incontrovertible.21

WHEREFORE, the petition is DENIED.


G.R. No. 170540 October 28, 2009

EUFEMIA BALATICO VDA. DE AGATEP, Petitioner,


vs.
ROBERTA* L. RODRIGUEZ and NATALIA AGUINALDO VDA. DE LIM, Respondents.
DECISION

PERALTA, J.:
Before the Court is a petition for review on certiorari under Rule 45 of the Rules of Court seeking the reversal and setting aside of the Decision1 of the Court of Appeals (CA) dated September 9, 2005 in CA-G.R. CV No. 83163 which
affirmed the May 12, 2004 Decision of the Regional Trial Court (RTC) of Aparri, Cagayan, Branch 8, in Civil Case No. 08-298. Petitioner also assails the CA Resolution2 dated November 16, 2005 denying her motion for reconsideration.
The factual and procedural antecedents of the case are as follows:
The present case arose from a dispute involving a parcel of land located at Zinundungan, Lasam, Cagayan with an area of 1,377 square meters and covered by Transfer Certificate of Title (TCT) No. T-10759 of the Register of Deeds of
the Province of Cagayan.3
The subject property was previously owned by herein respondent Natalia Aguinaldo Vda. de Lim. On July 18, 1975, Lim mortgaged the lot to the Philippine National Bank (PNB), Tuguegarao Branch, to secure a loan of 30,000.00 which
she obtained from the said bank. The mortgage contract was duly annotated on TCT No. T-10759. Lim was not able to pay her loan prompting PNB to foreclose the property. On April 13, 1983, the subject parcel of land was sold at
public auction to PNB as the highest bidder.4 Lim failed to redeem the property. After the expiration of the one-year redemption period allowed by law, PNB consolidated its ownership over the disputed land.5 As a consequence, TCT
No. T-10759 in the name of Lim was canceled and a new certificate of title (TCT No. T-65894) was issued in the name of PNB on November 8, 1985.6
Meanwhile, on August 18, 1976, while the mortgage was still in effect, Lim sold the subject property to herein petitioner's husband, Isaac Agatep (Agatep), for a sum of 18,000.00.7 However, the sale was not registered. Neither did
Lim deliver the title to petitioner or her husband. Nonetheless, Agatep took possession of the same, fenced it with barbed wire and introduced improvements thereon. Subsequently, Agatep died in 1978. Despite his death, his heirs,
including herein petitioner, continued to possess the property.
In July 1992, the subject lot was included among PNB's acquired assets for sale. Later on, an invitation to bid was duly published. On April 20, 1993, the disputed parcel of land was sold to herein respondent Roberta L. Rodriguez
(Rodriguez), who is the daughter of respondent Lim.8 Subsequently, TCT No. T-65894, in the name of PNB, was canceled and a new title (TCT No. T-89400) was issued in the name of Rodriguez.9
On January 27, 1995, herein petitioner filed a Complaint10 for "reconveyance and/or damages" with the RTC of Aparri, Cagayan against herein respondents.
Later, the complaint was amended to implead PNB as a party-defendant.11
On January 20, 2000, the RTC dismissed the amended complaint for failure of herein petitioner (then plaintiff) to file her Pre-Trial Brief.12 Petitioner filed a motion for reconsideration but the RTC denied it. Thereafter, trial ensued.
On May 12, 2004, the RTC rendered judgment in favor of herein respondents. 13 The dispositive portion of the Decision reads as follows:

WHEREFORE, the Court hereby renders judgment to wit:


1. Dismiss the instant complaint for reconveyance for lack of merit;
2. Sustain the legality of TCT No. 1055914 in the name of defendant Roberta Rodriguez; and
3. Award actual damages in favor of plaintiff Eufemia Balatico Vda. de Agatep against defendant Natalia Aguinaldo Vda. de Lim in the amount of Php18,000.00 with legal interest to be computed from the filing of the instant case up to
the full completion of its payment.

SO DECIDED.15
In awarding damages in favor of herein petitioner, the RTC ruled that Lim enriched herself at the expense of petitioner and her husband by benefiting from the proceeds of the sale but failing to deliver the object of such sale. Hence,
on grounds of justice and equity, petitioner should be awarded an adequate compensation for the value of the loss suffered.
Herein petitioner filed an appeal with the CA contending that the RTC erred in not considering the merit of the evidence and arguments proven and submitted by petitioner on the issues defined and agreed upon by the parties.
Petitioner also averred that the RTC erred in deciding the case on issues different from those defined and agreed upon by the parties during the pre-trial conference and that the trial court further erred in dismissing the amended
complaint.
On September 9, 2005, the CA rendered its Decision dismissing herein petitioner's appeal for lack of merit and affirming the assailed Decision of the RTC.
Petitioner filed a motion for reconsideration, but the CA denied it in its Resolution dated November 16, 2005.
Hence, the present petition with the following assignment of errors:
IV.1. IN AFFIRMING THE DECISION OF THE TRIAL COURT IN DISMISSING THE AMENDED COMPLAINT AGAINST THE PNB, THE APPELLATE COURT COMMITTED A REVERSIBLE ERROR;
IV.2. IN HOLDING THAT "NOTWITHSTANDING THE DISMISSAL OF THE AMENDED COMPLAINT AS AGAINST PNB, THE TRIAL COURT IN ITS DECISION NONETHELESS FULLY PASSED UPON THE MERITS OF APPELLANT'S CAUSE OF ACTION
AGAINST THE SAID MORTGAGEE BANK," THE APPELLATE COURT COMMITTED A REVERSIBLE ERROR;
IV.3. AS A NECESSARY CONSEQUENCE OF THE ERROR IV.2, THE RULING OF THE APPELLATE COURT THAT PNB IS A MORTGAGEE, BUYER AND LATER SELLER IN GOOD FAITH, IS A REVERSIBLE ERROR;
IV.4. THE DECISION, ANNEX A, ERRED IN REJECTING PETITIONER'S ARGUMENTS THAT PNB DID NOT ACQUIRE OWNERSHIP OVER THE PROPERTY IN QUESTION;
IV.5. THE DECISION, ANNEX A, ERRED IN RULING THAT PETITIONER'S CONTENTION THAT THE TRIAL COURT DECIDED THE CASE UPON SUCH ISSUES DIFFERENT FROM THOSE AGREED UPON DURING THE PRE-TRIAL CONFERENCE
DESERVES SCANT CONSIDERATION; AND
IV.6. THE DECISION, ANNEX A, ERRED IN RULING THAT PETITIONER IS NOT ENTITLED TO HER CAUSE OF ACTION OF RECONVEYANCE. 16
In her first assigned error, petitioner contends that Section 6, Rule 18 of the Rules of Court does not require another pre-trial, as well as the filing of another pre-trial brief, when the complaint is amended to implead another defendant.

The Court does not agree.


In Tiu v. Middleton,17 the Court, giving emphasis on the importance of a pre-trial, held that:
Pre-trial is an answer to the clarion call for the speedy disposition of cases. Although it was discretionary under the 1940 Rules of Court, it was made mandatory under the 1964 Rules and the subsequent amendments in 1997. Hailed
as "the most important procedural innovation in Anglo-Saxon justice in the nineteenth century, pre-trial seeks to achieve the following:
(a) The possibility of an amicable settlement or of a submission to alternative modes of dispute resolution;
(b) The simplification of the issues;
(c) The necessity or desirability of amendments to the pleadings;
(d) The possibility of obtaining stipulations or admissions of facts and of documents to avoid unnecessary proof;
(e) The limitation of the number of witnesses;
(f) The advisability of a preliminary reference of issues to a commissioner;
(g) The propriety of rendering judgment on the pleadings, or summary judgment, or of dismissing the action should a valid ground therefor be found to exist;
(h) The advisability or necessity of suspending the proceedings; and
(i) Such other matters as may aid in the prompt disposition of the action.18

In consonance with these objectives, Section 6, Rule 18 of the Rules of Court, as amended, provides:
SEC. 6. Pre-trial brief. The parties shall file with the court and serve on the adverse party, in such manner as shall ensure their receipt thereof at least three (3) days before the date of the pre-trial, their respective pre-trial briefs
which shall contain, among others:
(a) A statement of their willingness to enter into amicable settlement or alternative modes of dispute resolution, indicating the desired terms thereof;
(b) A summary of admitted facts and proposed stipulation of facts;
(c) The issues to be tried or resolved;
(d) The documents or exhibits to be presented, stating the purpose thereof;
(e) A manifestation of their having availed, or their intention to avail, themselves of discovery procedures or referral to commissioners; and
(f) The number and names of the witnesses, and the substance of their respective testimonies.

Failure to file the pre-trial brief shall have the same effect as failure to appear at the pre-trial.
The pre-trial brief serves as a guide during the pre-trial conference so as to simplify, abbreviate and expedite the trial if not to dispense with it. It is a devise essential to the speedy disposition of disputes, and parties cannot brush it
aside as a mere technicality.19 In addition, pre-trial rules are not to be belittled or dismissed, because their non-observance may result in prejudice to a partys substantive rights. Like all rules, they should be followed except only for
the most persuasive of reasons when they may be relaxed to relieve a litigant of an injustice not commensurate with the degree of his thought[less]ness in not complying with the procedure.20
Petitioner posits that even if an amended complaint is filed for the purpose of impleading another party as defendant, where no additional cause of action was alleged and the amount of prayer for damages in the original complaint
was the same, another pre-trial is not required and a second pre-trial brief need not be filed.
It must be pointed out, however, that in the cases21 cited by petitioner to support her argument, the Court found no need for a second pre-trial precisely because there are no additional causes of action alleged and the impleaded
defendants merely adopted and repleaded all the pleadings of the original defendants. Petitioner's reliance on the above-cited cases is misplaced because, in the present case, the RTC correctly found that petitioner had a separate
cause of action against PNB. A separate cause of action necessarily means additional cause of action. Moreover, the defenses adopted by PNB are completely different from the defenses of Lim and Rodriguez, necessitating a separate
determination of the matters enumerated under Section 6, Rule 18 of the Rules of Court insofar as PNB and petitioner are concerned. On these bases, we find no error in the ruling of the CA which sustained the trial court's dismissal
of the amended complaint against PNB for failure of petitioner to file her pre-trial brief.
Corollarily, Sections 4 and 5 of the same Rule state:
Sec. 4. Appearance of parties. It shall be the duty of the parties and their counsel to appear at the pre-trial. The non-appearance of a party may be excused only if a valid cause is shown therefor or if a representative shall appear in
his behalf fully authorized in writing to enter into an amicable settlement, to submit to alternative modes of dispute resolution, and to enter into stipulations or admissions of facts and of documents.
Sec. 5. Effect of failure to appear. The failure of the plaintiff to appear when so required pursuant to the next preceding section shall be cause for dismissal of the action. The dismissal shall be with prejudice, unless otherwise ordered
by the court.
In the present case, the Court observes that in the Order of the RTC dated June 6, 2000,22 the trial court noted the absence of both the petitioner and her counsel during the scheduled pre-trial conference with respect to the amended
complaint impleading PNB. Under the above-quoted Rules, such absence is an additional ground to dismiss the action against PNB.
Whether an order of dismissal should be maintained under the circumstances of a particular case or whether it should be set aside depends on the sound discretion of the trial court.23 Considering the circumstances established on
record in the instant case, the Court finds no cogent reason to set aside the order of the RTC dismissing the complaint of petitioner against PNB.
With respect to the second and third assignment of errors, petitioner argues that the CA erred in sustaining the RTC when it passed upon the merits of petitioner's cause of action against PNB notwithstanding the fact that the complaint
against the latter was already dismissed. Petitioner contends that a person who was not impleaded in a case could not be bound by the decision rendered therein. Petitioner then proceeds to conclude that the CA erred in sustaining
the trial court's finding that PNB was a mortgagee, buyer and seller in good faith.

The Court is not persuaded.


It is true that the judgment of the trial and appellate courts in the present case could not bind the PNB for the latter is not a party to the case. However, this does not mean that the trial and appellate courts are precluded from making
findings which are necessary for a just, complete and proper resolution of the issues raised in the present case. The Court finds no error in the determination by the trial and appellate courts of the question of whether or not PNB was
a mortgagee, buyer and, later on, seller in good faith as this would bear upon the ultimate issue of whether petitioner is entitled to reconveyance.
Petitioner insists that PNB is not a mortgagee in good faith asserting that, if it only exercised due diligence, it would have found out that petitioner and her husband were already in adverse possession of the subject property as early
as two years before the same was sold to them. This claim, however, is contradicted by no less than petitioner's averments in her Brief filed with the CA wherein she stated that "[i]mmediately after the sale, the land was delivered to
Isaac Agatep x x x Since that time up to the present, Isaac Agatep and after his death, the Appellant have been in continuous, uninterrupted, adverse and public possession of the said parcel of land."24 The foregoing assertion only
shows that petitioner's husband took possession of the subject lot only after the same was sold to him.
In any case, the Court finds no error in the findings of both the RTC and the CA that PNB is indeed an innocent mortgagee for value. When the lots were mortgaged to PNB by Lim, the titles thereto were in the latter's name, and they
showed neither vice nor infirmity. In accepting the mortgage, PNB was not required to make any further investigation of the titles to the properties being given as security, and could rely entirely on what was stated in the aforesaid
title. The public interest in upholding the indefeasibility of a certificate of title, as evidence of the lawful ownership of the land or of any encumbrance thereon, protects a buyer or mortgagee who, in good faith, relies upon what
appears on the face of the certificate of title.25
In her fourth assigned error, petitioner contends that PNB did not acquire ownership over the disputed lot because the said property was not delivered to it. Petitioner asserts that the execution of a public document does not constitute
sufficient delivery to PNB, considering that the subject property is in the adverse possession, under claim of ownership, of petitioner and her predecessor-in-interest. Petitioner further assails the ruling of the CA that PNB, who was
the buyer in the foreclosure sale, became the absolute owner of the property purchased when it consolidated its ownership thereof for failure of the mortgagor Lim to redeem the subject property during the period of one year after
the registration of the sale.
The Court finds petitioner's arguments untenable.
The Court's ruling in Manuel R. Dulay Enterprises, Inc. v. Court of Appeals 26 is instructive, to wit:
Petitioner's contention that private respondent Torres never acquired ownership over the subject property since the latter was never in actual possession of the subject property nor was the property delivered to him is also without
merit.
Paragraph 1, Article 1498 of the New Civil Code provides:
When the sale is made through a public instrument, the execution thereof shall be equivalent to the delivery of the thing which is the object of the contract, if from the deed the contrary does not appear or cannot clearly be inferred.
Under the aforementioned article, the mere execution of the deed of sale in a public document is equivalent to the delivery of the property. Likewise, this Court had held that:
It is settled that the buyer in a foreclosure sale becomes the absolute owner of the property purchased if it is not redeemed during the period of one year after the registration of the sale. As such, he is entitled to the possession of
the said property and can demand it at any time following the consolidation of ownership in his name and the issuance to him of a new transfer certificate of title. The buyer can, in fact, demand possession of the land even during the
redemption period except that he has to post a bond in accordance with Section 7 of Act No. 3133, as amended. No such bond is required after the redemption period if the property is not redeemed. Possession of the land then
becomes an absolute right of the purchaser as confirmed owner.
Therefore, prior physical delivery or possession is not legally required since the execution of the Deed of Sale is deemed equivalent to delivery. 27
This ruling was reiterated in Spouses Sabio v. The International Corporate Bank, Inc.28 wherein it was held that:
Notwithstanding the presence of illegal occupants on the subject property, transfer of ownership by symbolic delivery under Article 1498 can still be effected through the execution of the deed of conveyance. As we held in Power
Commercial and Industrial Corp. v. Court of Appeals [274 SCRA 597, 610], the key word is control, not possession, of the subject property. Considering that the deed of conveyance proposed by respondents did not stipulate or infer
that petitioners could not exercise control over said property, delivery can be effected through the mere execution of said deed.
It is sufficient that there are no legal impediments to prevent petitioners from gaining physical possession of the subject property. As stated above, prior physical delivery or possession is not legally required and the execution of the
deed of sale or conveyance is deemed equivalent to delivery. This deed operates as a formal or symbolic delivery of the property sold and authorizes the buyer or transferee to use the document as proof of ownership. Nothing more
is required.29
Thus, the execution of the Deed of Sale in favor of PNB, after the expiration of the redemption period, is deemed equivalent to delivery.1avvphi1
As to petitioner's contention that the execution of a public document in favor of PNB did not constitute sufficient delivery to it because the property involved is in the actual and adverse possession of petitioner and her husband, it
must be noted that petitioner and her husband's possession of the disputed lot is derived from their right as buyers of the subject parcel of land. As buyers or transferees, petitioner and her husband simply stepped into the shoes of
Lim, who, prior to selling the subject property to them, mortgaged the same to PNB. As Lim's successors-in-interest, their possession could not be said to be adverse to that of Lim. Thus, they are also bound to recognize and respect
the mortgage entered into by the latter. Their possession of the disputed lot could not, therefore, be considered as a legal impediment which could prevent PNB from acquiring ownership and possession thereof.
It bears to reiterate the undisputed fact, in the instant case, that Lim mortgaged the subject property to PNB prior to selling the same to petitioner's husband. Settled is the rule that a mortgage is an accessory contract intended to
secure the performance of the principal obligation. One of its characteristics is that it is inseparable from the property. It adheres to the property regardless of who its owner may subsequently be.30
This is true even in the case of a real estate mortgage because, pursuant to Article 2126 of the Civil Code, the mortgage directly and immediately subjects the property upon which it is imposed, whoever the possessor may be, to the
fulfillment of the obligation for whose security it was constituted. It is inseparable from the property mortgaged as it is a right in rem - a lien on the property whoever its owner may be. It subsists notwithstanding a change in ownership;
in short, the personality of the owner is disregarded. Thus, all subsequent purchasers must respect the mortgage whether the transfer to them be with or without the consent of the mortgagee, for such mortgage until discharged
follows the property.31
Petitioner avers that she and her husband were not aware of the mortgage contract which was executed between PNB and Lim prior to the sale of the subject property by the latter to her husband. The fact remains, however, that the
mortgage was registered and annotated on the certificate of title covering the subject property.
It is settled that registration in the public registry is notice to the whole world.32 Every conveyance, mortgage, lease, lien, attachment, order, judgment, instrument or entry affecting registered land shall, if registered, filed or entered
in the Office of the Register of Deeds of the province or city where the land to which it relates lies, be constructive notice to all persons from the time of such registering, filing or entering.33 Under the rule of notice, it is presumed that
the purchaser has examined every instrument of record affecting the title. Such presumption may not be rebutted. He is charged with notice of every fact shown by the record and is presumed to know every fact shown by the record
and to know every fact which an examination of the record would have disclosed. This presumption cannot be overcome by any claim of innocence or good faith. Otherwise, the very purpose and object of the law requiring a record
would be destroyed. Such presumption cannot be defeated by proof of want of knowledge of what the record contains any more than one may be permitted to show that he was ignorant of the provisions of the law. The rule that all
persons must take notice of the facts which the public record contains is a rule of law. The rule must be absolute; any variation would lead to endless confusion and useless litigation.34 In the present case, since the mortgage contract
was registered, petitioner may not claim lack of knowledge thereof as a valid defense. The subsequent sale of the property to petitioner's husband cannot defeat the rights of PNB as the mortgagee and, subsequently, the purchaser
at the auction sale whose rights were derived from a prior mortgage validly registered.
In her fifth assignment of error, petitioner contends that the trial court deviated from the issues identified in the Pre-Trial Order and that the case was decided on issues different from those agreed upon during the pre-trial. Settled is
the rule that a pre-trial order is not meant to be a detailed catalogue of each and every issue that is to be or may be taken up during the trial. Issues that are impliedly included therein or may be inferable therefrom by necessary
implication are as much integral parts of the pre-trial order as those that are expressly stipulated.35 In the case before us, a cursory reading of the issues enumerated in the Pre-Trial Order of the RTC would readily show that the
complete and proper resolution of these issues would necessarily include all other matters pertinent to determining whether herein petitioner is the lawful owner of the subject property and is, therefore, entitled to reconveyance. It
would be illogical not to touch on the question of whether the mortgage contract between Lim and PNB is binding on petitioner and her husband or whether PNB lawfully foreclosed and acquired ownership of the subject property
because a resolution of these issues is determinative of whether there are no impediments in petitioner and her husband's acquisition of ownership of the disputed lot.
Coming to the last assigned error, the Court agrees with the disquisition of the CA that an action for reconveyance is one that seeks to transfer property, wrongfully registered by another, to its rightful and legal owner. 36 From the
foregoing discussions, the Court finds no sufficient reason to depart from the findings of the RTC and the CA that, based on the evidence on record, there was no wrongful registration of the property, first in the name of PNB as the
purchaser when the property was auctioned and, subsequently, in the name of respondent Rodriguez who bought the subject property when the same was offered for sale by PNB. Hence, the CA did not commit error in affirming the
RTC's dismissal of herein petitioner's complaint for reconveyance.
WHEREFORE, the petition is DENIED. The assailed Decision and Resolution of the Court of Appeals, dated September 9, 2005 and November 16, 2005, respectively, in CA-G.R. CV No. 83163 are AFFIRMED.
G.R. No. 154450 July 28, 2008

JOSEPH L. SY, NELSON GOLPEO and JOHN TAN, Petitioners,


vs.
NICOLAS CAPISTRANO, JR., substituted by JOSEFA B. CAPISTRANO, REMEDIOS TERESITA B. CAPISTRANO and MARIO GREGORIO B. CAPISTRANO; NENITA F. SCOTT; SPS. JUANITO JAMILAR and JOSEFINA JAMILAR; SPS. MARIANO
GILTURA and ADELA GILTURA, Respondents.
DECIS ON

NACHURA, J.:
This is a petition for review on certiorari under Rule 45 of the Rules of Court of the Decision of the Court of Appeals (CA) dated July 23, 2002 in CA-G.R. CV No. 53314.
The case originated from an action for reconveyance of a large tract of land in Caloocan City before the Regional Trial Court (RTC), Branch 129, Caloocan City, entitled Nicolas Capistrano, Jr. v. Nenita F. Scott, Spouses Juanito and
Josefina Jamilar, Joseph L. Sy, Nelson Golpeo and John Tan, and the Register of Deeds, Caloocan City. Said case was docketed as Civil Case No. C-15791.
The antecedents are as follows:
Sometime in 1980, Nenita Scott (Scott) approached respondent Nicolas Capistrano, Jr. (Capistrano) and offered her services to help him sell his 13,785 square meters of land covered by Transfer Certificate of Title (TCT) No. 76496 of
the Register of Deeds of Caloocan City. Capistrano gave her a temporary authority to sell which expired without any sale transaction being made. To his shock, he discovered later that TCT No. 76496, which was in his name, had already
been cancelled on June 24, 1992 and a new one, TCT No. 249959, issued over the same property on the same date to Josefina A. Jamilar. TCT No. 249959 likewise had already been cancelled and replaced by three (3) TCTs (Nos. 251524,
251525, and 251526), all in the names of the Jamilar spouses. TCT Nos. 251524 and 251526 had also been cancelled and replaced by TCT Nos. 262286 and 262287 issued to Nelson Golpeo and John B. Tan, respectively.

Upon further inquiries, Capistrano also discovered the following:


1. The cancellation of his TCT No. 76496 and the issuance of TCT No. 249959 to Jamilar were based upon two (2) deeds of sale, i.e., a "Deed of Absolute Sale" purportedly executed by him in favor of Scott on March 9, 1980 and a "Deed
of Absolute Sale" allegedly executed by Scott in favor of Jamilar on May 17, 1990.
2. The supposed 1980 sale from him to Scott was for 150,000.00; but despite the lapse of more than 10 years thereafter, the alleged 1990 sale from Scott to Jamilar was also for 150,000.00.
3. Both deeds were presented for registration simultaneously on June 24, 1992.
4. Although the deed in favor of Scott states that it was executed on March 9, 1980, the annotation thereof at the back of TCT No. 76496 states that the date of the instrument is March 9, 1990.
5. Even if there was no direct sale from Capistrano to Jamilar, the transfer of title was made directly to the latter. No TCT was issued in favor of Scott.
6. The issuance of TCT No. 249959 in favor of Jamilar was with the help of Joseph Sy, who provided for (sic) money for the payment of the capital gains tax, documentary stamps, transfer fees and other expenses of registration of the
deeds of sale.
7. On July 8, 1992, an Affidavit of Adverse Claim was annotated at the back of Jamilars TCT No. 249959 at the instance of Sy, Golpeo, and Tan under a Contract to Sell in their favor by the Jamilar spouses. Said contract was executed
sometime in May, 1992 when the title to the property was still in the name of Capistrano.
8. Around July 28, 1992, upon request of the Jamilar spouses, TCT No. 249959 was cancelled and three (3) new certificates of title (TCT Nos. 251524, 251525, and 251526) all in the name of Jamilar on the basis of an alleged subdivision
plan (No. Psd-13-011917) without Capistranos knowledge and consent as registered owner. The notice of adverse claim of Sy, Golpeo, and Tan was carried over to the three new titles.
9. Around August 18, 1992, Sy, Golpeo, and Tan filed Civil Case No. C-15551 against the Jamilars and another couple, the Giltura spouses, for alleged violations of the Contract to Sell. They caused a notice of lis pendens to be annotated
on the three (3) TCTs in Jamilars name. Said civil case, however, was not prosecuted.
10. On January 26, 1993, a Deed of Absolute Sale was executed by the Jamilars and the Gilturas, in favor of Golpeo and Tan. Thus, TCT Nos. 251524 and 251526 were cancelled and TCT Nos. 262286 and 262287 were issued to Golpeo
and Tan, respectively. TCT No. 251525 remained in the name of Jamilar.1
Thus, the action for reconveyance filed by Capistrano, alleging that his and his wifes signatures on the purported deed of absolute sale in favor of Scott were forgeries; that the owners duplicate copy of TCT No. 76496 in his name had
always been in his possession; and that Scott, the Jamilar spouses, Golpeo, and Tan were not innocent purchasers for value because they all participated in defrauding him of his property. Capistrano claimed 1,000,000.00 from all
defendants as moral damages, 100,000.00 as exemplary damages; and 100,000.00 as attorneys fees.
In their Answer with Counterclaim, the Jamilar spouses denied the allegations in the complaint and claimed that Capistrano had no cause of action against them, as there was no privity of transaction between them; the issuance of
TCT No. 249959 in their names was proper, valid, and legal; and that Capistrano was in estoppel. By way of counterclaim, they sought 50,000.00 as actual damages, 50,000.00 as moral damages, 50,000.00 as exemplary damages,
and 50,000.00 as attorneys fees.
In their Answer, Sy, Golpeo, and Tan denied the allegations in the complaint and alleged that Capistrano had no cause of action against them; that at the time they bought the property from the Jamilars and the Gilturas as unregistered
owners, there was nothing in the certificates of title that would indicate any vice in its ownership; that a buyer in good faith of a registered realty need not look beyond the Torrens title to search for any defect; and that they were
innocent purchasers of the land for value. As counterclaim, they sought 500,000.00 as moral damages and 50,000.00 as attorneys fees.
In her Answer with Cross-claim, Scott denied the allegations in the complaint and alleged that she had no knowledge or any actual participation in the execution of the deeds of sale in her favor and the Jamilars; that she only knew of
the purported conveyances when she received a copy of the complaint; that her signatures appearing in both deeds of sale were forgeries; that when her authority to sell the land expired, she had no other dealings with it; that she
never received any amount of money as alleged consideration for the property; and that, even if she were the owner, she would never have sold it at so low a price.
By way of Cross-claim against Sy, Golpeo, Tan, and the Jamilars, Scott alleged that when she was looking for a buyer of the property, the Jamilars helped her locate the property, and they became conversant with the details of the
ownership and other particulars thereof; that only the other defendants were responsible for the seeming criminal conspiracy in defrauding Capistrano; that in the event she would be held liable to him, her other co-defendants should
be ordered to reimburse her of whatever amount she may be made to pay Capistrano; that she was entitled to 50,000.00 as moral damages and 50,000.00 as attorneys fees from her co-defendants due to their fraudulent conduct.
Later, Sy, Golpeo, and Tan filed a third-party complaint against the Giltura spouses who were the Jamilars alleged co-vendors of the subject property.
Thereafter, trial on the merits ensued.

Subsequently, the trial court decided in favor of Capistrano. In its Decision dated May 7, 1996, adopting the theory of Capistrano as presented in his memorandum, the trial court rendered judgment as follows:
1. Declaring plaintiff herein as the absolute owner of the parcel of land located at the Tala Estate, Bagumbong, Caloocan City and covered by TCT No. 76496;
2. Ordering defendant Register of Deeds to cause the cancellation of TCT No. 251525 registered in the name of defendant Josefina Jamilar;
3. Ordering defendant Register of Deeds to cause the cancellation of TCT Nos. 262286 and 262287 registered in the names of defendants Nelson Golpeo and John B. Tan;
4. Ordering defendant Register of Deeds to cause the issuance to plaintiff of three (3) new TCTs, in replacement of the aforesaid TCTs Nos. 251525, 262286 and 262287;
5. Ordering all the private defendants in the above-captioned case to pay plaintiff, jointly and severally, the reduced amount of 400,000.00 as moral damages;
6. Ordering all the private defendants in the above-captioned case to pay to plaintiff, jointly and severally, the reduced sum of 50,000.00 as exemplary damages;
7. Ordering all the private defendants in the above-captioned case to pay plaintiffs counsel, jointly and severally, the reduced amount of 70,000.00 as attorneys fees, plus costs of suit;
8. Ordering the dismissal of defendants Sy, Golpeo and Tans Cross-Claim against defendant spouses Jamilar;
9. Ordering the dismissal of defendants Sy, Golpeo and Tans Third-Party Complaint against defendant spouses Giltura; and
10. Ordering the dismissal of the Counterclaims against plaintiff.

SO ORDERED.2
On appeal, the CA, in its Decision dated July 23, 2002, affirmed the Decision of the trial court with the modification that the Jamilar spouses were ordered to return to Sy, Golpeo, and Tan the amount of 1,679,260.00 representing
their full payment for the property, with legal interest thereon from the date of the filing of the complaint until full payment.
Hence, this petition, with petitioners insisting that they were innocent purchasers for value of the parcels of land covered by TCT Nos. 262286 and 262287. They claim that when they negotiated with the Jamilars for the purchase of
the property, although the title thereto was still in the name of Capistrano, the documents shown to them the court order directing the issuance of a new owners duplicate copy of TCT No. 76496, the new owners duplicate copy
thereof, the tax declaration, the deed of absolute sale between Capistrano and Scott, the deed of absolute sale between Scott and Jamilar, and the real estate tax receipts there was nothing that aroused their suspicion so as to
compel them to look beyond the Torrens title. They asseverated that there was nothing wrong in financing the cancellation of Capistranos title and the issuance of titles to the Jamilars because the money they spent therefor was
considered part of the purchase price they paid for their property.

In their Comment, the heirs of Capistrano, who were substituted after the latters death, reiterated the factual circumstances which should have alerted the petitioners to conduct further investigation, thus
(a) Why the "Deed of Absolute Sale" supposedly executed by Capistrano had remained unregistered for so long, i.e., from March 9, 1980 up to June 1992, when they were negotiating with the Jamilars and the Gilturas for their purchase
of the subject property;
(b) Whether or not the owners copy of Capistranos certificate of title had really been lost;
(c) Whether Capistrano really sold his property to Scott and whether Scott actually sold it to the Jamilars, which matters were easily ascertainable as both Capistrano and Scott were still alive and their names appear on so many
documents;
(d) Why the consideration for both the March 9, 1980 sale and the May 17, 1990 sale was the same (150,000.00), despite the lapse of more than 10 years;
(e) Why the price was so low (10.88 per square meter, both in 1980 and in 1990) when the petitioners were willing to pay and actually paid 150.00 per square meter in May 1992; and
(f) Whether or not both deeds of sale were authentic.3

In addition, the heirs of Capistrano pointed out that petitioners entered into negotiations over the property, not with the registered owner thereof, but only with those claiming ownership thereof based on questionable deeds of sale.
The petition should be denied. The arguments proffered by petitioners all pertain to factual issues which have already been passed upon by both the trial court and the CA.
Findings of facts of the CA are final and conclusive and cannot be reviewed on appeal, as long as they are based on substantial evidence. While, admittedly, there are exceptions to this rule such as: (a) when the conclusion is a finding
grounded entirely on speculations, surmises or conjectures; (b) when the inference made is manifestly mistaken, absurd or impossible; (c) when there is grave abuse of discretion; (d) when the judgment is based on a misapprehension
of facts; (e) when the findings of facts are conflicting; (f) when the CA, in making its findings, went beyond the issues of the case and the same were contrary to the admissions of both the appellant and appellee.4 Not one of these
exceptional circumstances is present in this case.
First. The CA was correct in upholding the finding of the trial court that the purported sale of the property from Capistrano to Scott was a forgery, and resort to a handwriting expert was not even necessary as the specimen signature
submitted by Capistrano during trial showed marked variance from that found in the deed of absolute sale. The technical procedure utilized by handwriting experts, while usually helpful in the examination of forged documents, is not
mandatory or indispensable to the examination or comparison of handwritings. 5
By the same token, we agree with the CA when it held that the deed of sale between Scott and the Jamilars was also forged, as it noted the stark differences between the signatures of Scott in the deed of sale and those in her
handwritten letters to Capistrano.
Second. In finding that the Jamilar spouses were not innocent purchasers for value of the subject property, the CA properly held that they should have known that the signatures of Scott and Capistrano were forgeries due to the patent
variance of the signatures in the two deeds of sale shown to them by Scott, when Scott presented to them the deeds of sale, one allegedly executed by Capistrano in her favor covering his property; and the other allegedly executed
by Scott in favor of Capistrano over her property, the 40,000.00 consideration for which ostensibly constituted her initial and partial payment for the sale of Capistranos property to her.
The CA also correctly found the Gilturas not innocent purchasers for value, because they failed to check the veracity of the allegation of Jamilar that he acquired the property from Capistrano.
In ruling that Sy was not an innocent purchaser for value, we share the observation of the appellate court that Sy knew that the title to the property was still in the name of Capistrano, but failed to verify the claim of the Jamilar spouses
regarding the transfer of ownership of the property by asking for the copies of the deeds of absolute sale between Capistrano and Scott, and between Scott and Jamilar. Sy should have likewise inquired why the Gilturas had to affix
their conformity to the contract to sell by asking for a copy of the deed of sale between the Jamilars and the Gilturas. Had Sy done so, he would have learned that the Jamilars claimed that they purchased the property from Capistrano
and not from Scott.
We also note, as found by both the trial court and the CA, Tans testimony that he, Golpeo and Sy are brothers, he and Golpeo having been adopted by Sys father. Tan also testified that he and Golpeo were privy to the transaction
between Sy and the Jamilars and the Gilturas, as shown by their collective act of filing a complaint for specific performance to enforce the contract to sell.1avvphi1
Also noteworthy and something that would have ordinarily aroused suspicion is the fact that even before the supposed execution of the deed of sale by Scott in favor of the Jamilars, the latter had already caused the subdivision
of the property into nine (9) lots, with the title to the property still in the name of Capistrano.
Notable likewise is that the owners duplicate copy of TCT No. 76496 in the name of Capistrano had always been in his possession since he gave Scott only a photocopy thereof pursuant to the latters authority to look for a buyer of
the property. On the other hand, the Jamilars were able to acquire a new owners duplicate copy thereof by filing an affidavit of loss and a petition for the issuance of another owners duplicate copy of TCT No. 76496. The minimum
requirement of a good faith buyer is that the vendee of the real property should at least see the owners duplicate copy of the title.6 A person who deals with registered land through someone who is not the registered owner is
expected to look beyond the certificate of title and examine all the factual circumstances thereof in order to determine if the vendor has the capacity to transfer any interest in the land. He has the duty to ascertain the identity of the
person with whom he is dealing and the latters legal authority to convey. 7
Finally, there is the questionable cancellation of the certificate of title of Capistrano which resulted in the immediate issuance of a certificate of title in favor of the Jamilar spouses despite the claim that Capistrano sold his property to
Scott and it was Scott who sold the same to the Jamilars.
In light of the foregoing disquisitions, based on the evidence on record, we find no error in the findings of the CA as to warrant a discretionary judicial review by this Court.
WHEREFORE, the petition is DENIED DUE COURSE for failure to establish reversible error on the part of the Court of Appeals. Costs against petitioners.
G.R. No. 126236 January 26, 2007

DOMINGO REALTY, INC. and AYALA STEEL MANUFACTURING CO., INC., Petitioners,
vs.
COURT OF APPEALS and ANTONIO M. ACERO, Respondents.
DECISION

VELASCO, JR., J.:


The Case
This Petition for Review on Certiorari, under Rule 45 of the Revised Rules of Court, seeks the reversal of the October 31, 1995 Decision1 of the Court of Appeals (CA) in CA-G.R. SP No. 33407, entitled Antonio M. Acero v. Hon. Sofronio
G. Sayo, et al., which annulled the December 7, 1987 Decision based on a Compromise Agreement among petitioner Domingo Realty, Inc. (Domingo Realty), respondent Antonio M. Acero, and defendant Luis Recato Dy in Civil Case
No. 9581-P before the Pasay City Regional Trial Court (RTC), Branch CXI; and the August 28, 1996 Resolution 2 of the CA which denied petitioners Motion for Reconsideration of its October 31, 1995 Decision.
The Facts
On November 19, 1981, petitioner Domingo Realty filed its November 15, 1981 Complaint3 with the Pasay City RTC against Antonio M. Acero, who conducted business under the firm name A.M. Acero Trading, 4 David Victorio, John
Doe, and Peter Doe, for recovery of possession of three (3) parcels of land located in Cupang, Muntinlupa, Metro Manila, covered by (1) Transfer Certificate of Title (TCT) No. (75600) S-107639-Land Records of Rizal; (2) TCT No. (67006)
S-107640-Land Records of Rizal; and (3) TCT No. (67007) S-107643-Land Records of Rizal (the "subject properties"). The said lots have an aggregate area of 26,705 square meters, more or less, on a portion of which Acero had constructed
a factory building for the manufacture of hollow blocks, as alleged by Domingo Realty.
On January 4, 1982, defendants Acero and Victorio filed their December 21, 1981 Answer 5 to the Complaint in Civil Case No. 9581-P. Acero alleged that he merely leased the land from his co-defendant David Victorio, who, in turn,
claimed to own the property on which the hollow blocks factory of Acero stood. In the Answer, Victorio assailed the validity of the TCTs of Domingo Realty, alleging that the said TCTs emanated from spurious deeds of sale, and claimed
that he and his predecessors-in-interest had been in possession of the property for more than 70 years.

On December 3, 1987, Mariano Yu representing Domingo Realty, Luis Recato Dy 6, and Antonio M. Acero, all assisted by counsels, executed a Compromise Agreement, which contained the following stipulations, to wit:
1. That defendants admit and recognize the ownership of the plaintiff over the property subject of this case, covered by TCT No. S-107639 (75600), S-107643 (67007), and S-107640 (67006) with a total area of 26,705 square meters;
2. That defendant Luis Recato Dy admits and recognizes that his title covered by TCT No. 108027 has been proven not to be genuine and that the area indicated therein is inside the property of the plaintiff;
3. That defendant Acero admits that the property he is presently occupying by way of lease is encroaching on a portion of the property of the plaintiff and assume[s] and undertakes to vacate, remove and clear any and all structures
erected inside the property of the plaintiff by himself and other third parties, duly authorized and/or who have an existing agreement with defendant Acero, and shall deliver said portion of the property of the plaintiff free and clear
of any unauthorized structures, shanties, occupants, squatters or lessees within a period of sixty (60) days from date of signing of this compromise agreement. Should defendant Acero fail in his obligation to vacate, remove and clear
the structures erected inside the property of the plaintiff within the period of 60 days afore-mentioned, plaintiff shall be entitled to a writ of execution for the immediate demolition or removal of said structure to fully implement this
agreement; and ejectment of all squatters and occupants and lessees, including the dependents to fully implement this agreement;
4. That plaintiff admits and recognizes that defendant Luis Recato Dy bought and occupied the property in good faith and for value whereas defendant Acero leased the portion of said property likewise in good faith and for value
hereby waives absolutely and unconditionally all claims including attorneys fees against both defendants in all cases pending in any court whether by virtue of any judgment or under the present complaint and undertake to withdraw
and/or move to dismiss the same under the spirit of this agreement;
5. That defendants likewise waive all claims for damages including attorneys fees against the plaintiff;
6. That plaintiff acknowledges the benefit done by defendant Luis Recato Dy on the property by incurring expenses in protecting and preserving the property by way of construction of perimeter fence and maintaining a caretaker
therein and plaintiff has agreed to pay Luis Recato Dy the amount of P100,000.00 upon approval of this agreement by this Honorable Court.7
Acting on the Compromise Agreement, the Pasay City RTC rendered the December 7, 1987 Decision which adopted the aforequoted six (6) stipulations and approved the Compromise Agreement.
To implement the said Decision, Domingo Realty filed its January 21, 1988 Motion8 asking the trial court for permission to conduct a re-survey of the subject properties, which was granted in the January 22, 1988 Order.9
On February 2, 1988, respondent Acero filed his January 29, 1988 Motion to Nullify the Compromise Agreement,10 claiming that the January 22, 1988 Order authorizing the survey plan of petitioner Domingo Realty as the basis of a
resurvey would violate the Compromise Agreement since the whole area he occupied would be adjudged as owned by the realty firm.
On March 18, 1988, Acero filed a Motion to Resurvey,11 whereby it was alleged that the parties agreed to have the disputed lots re-surveyed by the Bureau of Lands. Thus, the trial court issued the March 21, 1988 Order12 directing the
Director of Lands to conduct a re-survey of the subject properties.
In his June 9, 1989 Report, Elpidio T. De Lara, Chief of the Technical Services Division of the Lands Management Section of the National Capital Region - Department of Environment and Natural Resources, submitted to the trial court
Verification Survey Plan No. Vs-13-000135. In the said Verification Survey Plan, petitioners TCTs covered the entire land occupied by the respondents hollow block factory.13
On April 10, 1990, petitioner Ayala Steel Manufacturing Co., Inc. (Ayala Steel) filed its March 30, 1990 Motion for Substitution alleging that it had purchased the subject lots, attaching to the motion TCT Nos. 152528, 152529, and
152530 all in its name, as proof of purchase. 14
The said motion was opposed by Acero claiming that "this case has already been terminated in accordance with the compromise agreement of the parties, hence, substitution will no longer be necessary and justified under the
circumstances."15 The motion was not resolved which explains why both transferor Domingo Realty and transferee Ayala Steel are co-petitioners in the instant petition.
In its December 28, 1990 Order,16 the trial court directed Acero to conduct his own re-survey of the lots based on the technical description appearing in the TCTs of Domingo Realty and to have the re-survey plans approved by the
Bureau of Lands. The Order resulted from Aceros contention that he occupied only 2,000 square meters of petitioners property.
Acero employed the services of Engr. Eligio L. Cruz who came up with Verification Survey Plan No. Vs-13-000185. However, when the said Verification Survey Plan was presented to the Bureau of Lands for approval, it was rejected
because Engr. Cruz failed to comply with the requirements of the Bureau.17
On April 8, 1991, petitioners filed a Manifestation with Motion praying for the denial of respondents Motion to Nullify the Compromise Agreement and for the approval of Verification Survey Plan No. Vs-13-000135 prepared by Engr.
Lara of the Bureau of Lands. The Pasay City RTC issued the December 6, 1991 Order18 denying respondent Aceros Motion to Nullify the Compromise Agreement. As a consequence, petitioners filed a Motion for Execution on December
10, 1991.19
On January 6, 1992, respondent filed an undated Manifestation20 claiming, among others, that it was on record that the Compromise Agreement was only as to a portion of the land being occupied by respondent, which is about 2,000
square meters, more or less. He reiterated the same contentions in his December 21, 1991 Manifestation. 21
On January 13, 1992, respondent filed a Motion to Modify Order Dated 6 December 91,22 claiming that the said Order modified the Compromise Agreement considering that it allegedly involved only 1,357 square meters and not the
entire lot;23 and if not amended, the Order would deviate from the principle that "no man shall enrich himself at the expense of the other."
In its January 15, 1992 Order,24 the trial court approved the issuance of a Writ of Execution to enforce the December 7, 1987 Decision. On February 3, 1992, respondent Acero subsequently filed a Motion for Reconsideration25 of the
January 15, 1992 Order arguing that the Order was premature and that Verification Survey Plan No. Vs-13-000135 violated the Compromise Agreement.
On January 18, 1992, the Pasay City Hall was gutted by fire, destroying the records of the lower court, including those of this case. Thus, after reconstituting the records, the trial court issued the October 6, 1992 Order,26 reiterating its
January 15, 1992 Order and ordering the issuance of a Writ of Execution.
On October 23, 1992, respondent filed a Manifestation and Compliance,27 alleging that Verification Survey Plan No. Vs-13-000185 had been approved by the Regional Director of the DENR; thus, he moved for the annulment of the
October 6, 1992 Order granting the Writ of Execution in favor of petitioners.
Given the conflicting Verification Survey Plans of the parties, the trial court issued the October 11, 1993 Order 28 requiring the Bureau of Lands Director to determine which of the two survey plans was correct.
Subsequently, Regional Technical Director Eriberto V. Almazan of the Land Registration Authority issued the November 24, 1993 Order29 cancelling Verification Survey Plan No. Vs-13-000185, submitted by Engineer Eligio Cruz, who
was hired by respondent Acero, and declared Verification Survey Plan No. Vs-13-000135, submitted by Engineer Lara of the Bureau of Lands, as the correct Plan.
Thereafter, petitioners filed their January 12, 1994 Ex-parte Manifestation with Motion,30 praying for the implementation of the Writ of Execution against the disputed lands, which was granted in the January 12, 1994 Order.31
Respondents Motion for Reconsideration32 of the January 12, 1994 Order was denied in the February 1, 1994 Order33 of the Pasay City RTC.
Aggrieved, respondent Acero filed before the CA his February 23, 1994 Petition for Certiorari and Mandamus with Urgent Prayer for Issuance of a Temporary Restraining Order,34 under Rule 65 of the Rules of Court, against petitioners
and Judge Sofronio G. Sayo as presiding judge of the lower court. In the petition, respondent sought to nullify and set aside the RTC Orders dated December 6, 1991, January 15, 1992, October 6, 1992, January 12, 1994, and February
1, 1994, all of which pertain to the execution of the December 7, 1987 Decision on the Compromise Agreement. Significantly, respondent did not seek the annulment of said judgment but merely reiterated the issue that under the
Compromise Agreement, he would only be vacating a portion of the property he was occupying.

The Ruling of the Court of Appeals


On October 31, 1995, the CA promulgated the assailed Decision, the fallo of which reads:
IN VIEW OF THE FOREGOING, the petition for certiorari is GRANTED and the Orders of respondent court dated December 6, 1991, January 15, 1992, October 6, 1992, and January 12, 1994, and February 1, 1994 are SET ASIDE. In the
interest of justice, and consistent with the views expressed by this Court, the Compromise Judgment dated December 7, 1987 of respondent court is likewise SET ASIDE. Respondent Court is likewise directed to proceed with the
hearing of Civil Case No. 9581-P on the merits and determine, once and for all, the respective proprietary rights of the litigants thereto.

SO ORDERED.35
In discarding the December 7, 1987 Decision based on the Compromise Agreement, the appellate court ratiocinated that David Victorio, the alleged lessor of Acero, was not a party to the Compromise Agreement; thus, there would
always remain the probability that he might eventually resurface and assail the Compromise Agreement, giving rise to another suit. Moreover, the CA found the Compromise Agreement vague, not having stipulated a mutually agreed
upon surveyor, "who would survey the properties using as a basis, survey plans acceptable to both, and to thereafter submit a report to the court."36
Likewise, the CA sustained Aceros belief that he would only have to vacate a portion of the property he was presently occupying, which was tantamount to a mistake that served as basis for the nullification of the Compromise
Agreement entered into.
On January 17, 1996, petitioners filed a Motion for Reconsideration37 of the adverse Decision, which was consequently rejected in the CAs August 28, 1996 Resolution.
Thus, the instant petition is in our hands.

The issues as stated in the petition are as follows:


1. The respondent Court of Appeals erred in nullifying and setting aside judgment on Compromise Agreement and the Compromise Agreement itself as well as the subsequent orders of the court a quo though there is no motion to
set aside the judgment on the Compromise Agreement before the court a quo on the ground of fraud, mistake or duress;
2. The respondent Court of Appeals erred in nullifying and setting aside the judgment on Compromise Agreement and the Compromise Agreement itself as well as the subsequent Orders of the Court of quo [sic] though in the Petition
for Certiorari and Mandamus before respondent Court of Appeals, private respondent argued that judgment on Compromise Agreement is final, executory, immutable and unalterable;
3. The respondent Court of Appeals erred in nullifying and setting aside Judgment on Compromise Agreement and the Compromise Agreement itself as well as the subsequent Orders of the Court a quo based on fraud or mistake
though said issues were not raised before the Court a quo, and no evidence was introduced to substantiate fraud or mistake before the court a quo;
4. The respondent Court of Appeals erred when it ruled that the non-inclusion of one of the parties in this case, and the vagueness of the Compromise Agreement are grounds to nullify and set aside the Compromise Agreement; and
5. The respondent Court of Appeals erred when it entertained the Petition for Certiorari and Mandamus though it was filed beyond reasonable time if not barred by laches.38

Restated, the issues are:


I.WHETHER THE PETITION BEFORE THE COURT OF APPEALS WAS FILED OUT OF TIME OR BARRED BY LACHES;
II.WHETHER THE NON-INCLUSION OF DAVID VICTORIO WOULD NULLIFY THE COMPROMISE AGREEMENT;
III.WHETHER THE JUDGMENT ON COMPROMISE AGREEMENT SHOULD BE SET ASIDE ON THE GROUND OF VAGUENESS; AND
IV.WHETHER THE JUDGMENT ON COMPROMISE AGREEMENT SHOULD BE SET ASIDE ON THE GROUND OF MISTAKE.

The Courts Ruling


The petition is meritorious.
The preliminary issue involves the query of what proper remedy is available to a party who believes that his consent in a compromise agreement was vitiated by mistake upon which a judgment was rendered by a court of law.
There is no question that a contract where the consent is given through mistake, violence, intimidation, undue influence, or fraud is voidable under Article 1330 of the Civil Code. If the contract assumes the form of a Compromise
Agreement between the parties in a civil case, then a judgment rendered on the basis of such covenant is final, unappealable, and immediately executory. If one of the parties claims that his consent was obtained through fraud,
mistake, or duress, he must file a motion with the trial court that approved the compromise agreement to reconsider the judgment and nullify or set aside said contract on any of the said grounds for annulment of contract within 15
days from notice of judgment. Under Rule 37, said party can either file a motion for new trial or reconsideration. A party can file a motion for new trial based on fraud, accident or mistake, excusable negligence, or newly discovered
evidence.
On the other hand, a party may decide to seek the recall or modification of the judgment by means of a motion for reconsideration on the ground that "the decision or final order is contrary to law" if the consent was procured through
fraud, mistake, or duress. Thus, the motion for a new trial or motion for reconsideration is the readily available remedy for a party to challenge a judgment if the 15-day period from receipt of judgment for taking an appeal has not yet
expired. This motion is the most plain, speedy, and adequate remedy in law to assail a judgment based on a compromise agreement which, even if it is immediately executory, can still be annulled for vices of consent or forgery. 39
Prior to the effectivity of the 1997 Rules of Civil Procedure on July 1, 1997, an order denying a motion for new trial or reconsideration was not appealable since the judgment in the case is not yet final. The remedy is to appeal from
the challenged decision and the denial of the motion for reconsideration or new trial is assigned as an error in the appeal.40 Under the present [1997] Rules of Civil Procedure, the same rule was maintained that the order denying said
motion is still unappealable and the rule is still to appeal from the judgment and not from the order rejecting the motion for reconsideration/new trial.
If the 15-day period for taking an appeal has lapsed, then the aggrieved party can avail of Rule 38 by filing a petition for relief from judgment which should be done within 60 days after the petitioner learns of the judgment, but not
more than six (6) months after such judgment or final order was entered. Prior to the effectivity of the 1997 Rules of Civil Procedure in 1997, if the court denies the petition under Rule 38, the remedy is to appeal from the order of
denial and not from the judgment since said decision has already become final and already unappealable.41 However, in the appeal from said order, the appellant may likewise assail the judgment. Under the 1997 Rules of Civil
Procedure, the aggrieved party can no longer appeal from the order denying the petition since this is proscribed under Section 1 of Rule 41. The remedy of the party is to file a special civil action for certiorari under Rule 65 from the
order rejecting the petition for relief from judgment.

The records of the case reveal the following:


1. December 3, 1987 the parties signed the Compromise Agreement;
2. December 7, 1987 a decision/judgment was rendered based on the December 3, 1987 Compromise Agreement;
3. February 2, 1988 Acero filed a Motion to Nullify the Compromise Agreement;
4. December 6, 1991 the trial court denied Aceros Motion to Nullify the Compromise Agreement;
5. December 11, 1991 defendant Acero received the December 6, 1991 Order which denied said motion; 42
6. December 26, 1991 the 15-day period to appeal to the CA expired by the failure of defendant Acero to file an appeal with said appellate court;
7. January 15, 1992 the trial court issued the Order which granted petitioners motion for the issuance of a Writ of Execution;
8. October 6, 1992 the trial court reiterated its January 15, 1992 Order directing the issuance of a Writ of Execution after the records of the case were lost in a fire that gutted the Pasay City Hall;
9. January 12, 1994 the trial court issued the Order which directed the implementation of the Writ of Execution prayed for by petitioners;
10. February 1, 1994 the trial court issued the Order which denied respondents Motion for Reconsideration of its January 12, 1994 Order; and
11. April 4, 1994 Acero filed with the CA a petition for certiorari in CA-G.R. SP No. 33407 entitled Antonio M. Acero v. Domingo Realty, Inc., et al.

In his undated Manifestation, respondent Acero admitted having received a copy of the December 7, 1987 Decision on December 11, 1987. However, it was only on February 2, 1988 when he filed a Motion to Nullify the Compromise
Agreement which was discarded for lack of merit by the trial court on December 6, 1991. If the Motion to Nullify the Compromise Agreement is treated as a motion for reconsideration and/or for new trial, then Acero should have filed
an appeal from the December 7, 1987 Decision and assigned as error the December 6, 1991 Order denying said motion pursuant to the rules existing prior to the 1997 Rules of Civil Procedure. He failed to file such appeal but instead
filed a petition for certiorari under Rule 65 with the CA on April 4, 1994. This is prejudicial to respondent Acero as the special civil action of certiorari is not the proper remedy. If the aggrieved party does not interpose a timely appeal
from the adverse decision, a special civil action for certiorari is not available as a substitute for a lost appeal. 43
What respondent Acero should have done was to file a petition for relief from judgment when he became aware that he lost his right of appeal on December 26, 1991. Even with this approach, defendant Acero was also remiss.
In sum, the petition for certiorari instituted by respondent Acero with the CA is a wrong remedy; a simple appeal to the CA would have sufficed. Since the certiorari action is an improper legal action, the petition should have been
rejected outright by the CA.
Assuming arguendo that a petition for certiorari with the CA is the appropriate remedy, still, said petition was filed out of time.
The petition before the CA was filed prior to the effectivity of the 1997 Rules of Court when there was still no prescribed period within which to file said petition, unlike in the present Section 4 of Rule 65 wherein a Petition for Certiorari
and Mandamus must be filed within 60 days from notice of the judgment, final order, or resolution appealed from, or of the denial of the petitioners motion for new trial or reconsideration after notice of judgment.
Section 4, Rule 65 previously read:
Section 4. Where petition filed.The petition may be filed in the Supreme Court, or, if it relates to the acts or omissions of an inferior court, or of a corporation, board or officer or person, in a Court of First Instance having jurisdiction
thereof. It may also be filed in the Court of Appeals if it is in aid of its appellate jurisdiction.
Petitions for certiorari under Rules 43, 44 and 45 shall be filed with the Supreme Court.
Before the 1997 Rules of Civil Procedure became effective on July 1, 1997, the yardstick to determine the timeliness of a petition for certiorari under Rule 65 was the reasonableness of the time that had elapsed from receipt of notice
of the assailed order/s of the trial court up to the filing of the appeal with the CA. 44 In a number of cases, the Court ruled that reasonable time can be pegged at three (3) months.45
In the present case, the Order denying the Motion to Nullify the Compromise Agreement was issued on December 6, 1991. The petition for certiorari was filed on April 4, 1994. The period of two (2) years and four (4) months cannot
be considered fair and reasonable. With respect to the January 15, 1992 Order granting the writ of execution and the October 6, 1992 Order directing the issuance of the writ, it is evident that the petition before the CA was filed more
than three (3) months after the receipt by respondent Acero of said orders and the filing of the petition is likewise unreasonably delayed.
On the second issue, petitioners assail the ruling of the appellate court that David Victorio who is claimed to be the lessor of Acero, and who is impleaded as a defendant in Civil Case No. 9581-P, was not made a party to the Compromise
Agreement and hence, he may later "assail the compromise agreement as not binding upon him, thereby giving rise to another suit." 46
We find merit in petitioners position.
The CA was unable to cite a law or jurisprudence that supports the annulment of a compromise agreement if one of the parties in a case is not included in the settlement. The only legal effect of the non-inclusion of a party in a
compromise agreement is that said party cannot be bound by the terms of the agreement. The Compromise Agreement shall however be "valid and binding as to the parties who signed thereto." 47
The issue of ownership between petitioners and David Victorio can be threshed out by the trial court in Civil Case No. 9581-P. The proper thing to do is to remand the case for continuation of the proceedings between petitioners and
defendant David Victorio but not to annul the partial judgment between petitioners and respondent Acero which has been pending execution for 20 years.
With regard to the third issue, petitioners assail the ruling of the CA that the Compromise Agreement is vague as there is still a need to determine the exact metes and bounds of the encroachment on the petitioners lot.
The object of a contract, in order to be considered as "certain," need not specify such object with absolute certainty. It is enough that the object is determinable in order for it to be considered as "certain." Article 1349 of the Civil Code
provides:
Article 1349. The object of every contract must be determinate as to its kind. The fact that the quantity is not determinate shall not be an obstacle to the existence of the contract, provided it is possible to determine the same, without
the need of a new contract between the parties.
In the instant case, the title over the subject property contains a technical description that provides the metes and bounds of the property of petitioners. Such technical description is the final determinant of the extent of the property
of petitioners. Thus, the area of petitioners property is determinable based on the technical descriptions contained in the TCTs.
Notably, the determination made by the Bureau of Landsthat Verification Survey Plan No. Vs-13-000135 is the correct Planis controlling and shall prevail over Verification Survey Plan No. Vs-13-000185 submitted by Acero. Findings
of fact by administrative agencies, having acquired expertise in their field of specialization, must be given great weight by this Court.48 Even if the exact area of encroachment is not specified in the agreement, it can still be determined
from the technical description of the title of plaintiff which defendant Acero admitted to be correct. Thus, the object of the Compromise Agreement is considered determinate and specific.
Moreover, "vagueness" is defined in Blacks Law Dictionary as: "indefinite, uncertain; not susceptible of being understood."
A perusal of the entire Compromise Agreement will negate any contention that there is vagueness in its provisions. It must be remembered that in the interpretation of contracts, an instrument must be construed so as to give effect
to all the provisions of these contracts.49 Thus, the Compromise Agreement must be considered as a whole.

The alleged vagueness revolves around the term "portion" in paragraph three (3) of the Compromise Agreement,50 taken together with paragraph one (1) which we quote:
1. That defendants admit and recognize the ownership of the plaintiff over the property subject of this case, covered by TCT No. S-107639 (75600), S-107643 (67007), and S-107640 (67006) with a total area of 26,705 square meters;x
x x x
3. That defendant Acero admits that the property he is presently occupying by way of lease is encroaching on a portion of the property of the plaintiff and assume and undertakes to vacate, remove and clear any and all structures
erected inside the property of the plaintiff by himself and other third parties, duly authorized and/or who have an existing agreement with defendant Acero, and shall deliver said portion of the property of the plaintiff free and clear
of any unauthorized structures, shanties, occupants, squatters or lessees within a period of sixty (60) days from date of signing of this compromise agreement. Should defendant Acero fail in his obligation to vacate, remove and clear
the structures erected inside the property of the plaintiff within the period of 60 days afore-mentioned, plaintiff shall be entitled to a writ of execution for the immediate demolition or removal of said structure to fully implement this
agreement; and ejectment of all squatters and occupants and lessees, including the dependents to fully implement this agreement. (Emphasis supplied.)
Respondent harps on their contention that the term "portion" in paragraph 3 of the Compromise Agreement refers to the property which they are occupying. Respondents interpretation of paragraph 3 of the Compromise Agreement
is mistaken as it is anchored on his belief that the encroachment on the property of petitioners is only a portion and not the entire lot he is occupying. This is apparent from his Supplement to his Petition for Certiorari and Mandamus
where he explained:
Petitioner [Acero] entered into this agreement because of his well-founded belief and conviction that a portion of the property he is occupying encroaches only a portion of the property of private respondent. In fine, only a portion of
the property petitioner is occupying (not all of it) encroaches on a portion of the property of private respondent. 51
This contention is incorrect. The agreement is clear that respondent Acero admitted that "the property he is presently occupying by way of lease is encroaching on a portion of the property of the plaintiff." Thus, whether it is only a
portion or the entire lot Acero is leasing that will be affected by the agreement is of no importance. What controls is the encroachment on the lot of petitioner Domingo Realty regardless of whether the entire lot or only a portion
occupied by Acero will be covered by the encroachment.
While it may be the honest belief of respondent Acero that only a portion of the lot he is occupying encroaches on the 26,705-square meter lot of petitioner Domingo Realty and later, Ayala Steel, the Court finds that the true and real
agreement between the parties is that any encroachment by respondent Acero on the lot of petitioners will be surrendered to the latter. This is apparent from the undertaking in paragraph 3 that defendant Acero "undertakes to
vacate, remove and clear any and all structures erected inside the property of the plaintiff." This prestation results from the admission against the interest of respondent Acero that he "admits and recognizes the ownership of the
plaintiff (Domingo Realty)" over the subject lot. The controlling word therefore is "encroachment"whether it involves a portion of or the entire lot claimed by defendant David Victorio. To reiterate, the word "portion" refers to
petitioners lot and not that of Aceros. Contrary to the disposition of the CA, we rule that the terms of the Compromise Agreement are clear and leave no doubt upon the intent of the parties that respondent Acero will vacate, remove,
and clear any and all structures erected inside petitioners property, the ownership of which is not denied by him. The literal meaning of the stipulations in the Compromise Agreement will control under Article 1370 of the Civil Code.
Thus, the alleged vagueness in the object of the agreement cannot be made an excuse for its nullification.
Finally, with regard to the fourth issue, petitioners question the finding of the CA that the compromise judgment can be set aside on the ground of mistake under Article 2038 of the Civil Code, because respondent Acero gave his
consent to the Compromise Agreement in good faith that he would only vacate a portion of his lot in favor of petitioner Domingo Realty.

We rule otherwise.
Articles 2038 and 1330 of the Civil Code allow a party to a contract, on the ground of mistake, to nullify a compromise agreement, viz:
Article 2038. A compromise in which there is mistake, fraud, violence, intimidation, undue influence, or falsity of documents, is subject to the provisions of Article 1330 of this Code.
Article 1330. A contract where the consent is given through mistake, violence, intimidation, undue influence, or fraud is voidable (emphasis supplied).
"Mistake" has been defined as a "misunderstanding of the meaning or implication of something" or "a wrong action or statement proceeding from a faulty judgment x x x."52
Article 1333 of the Civil Code of the Philippines however states that "there is no mistake if the party alleging it knew the doubt, contingency or risk affecting the object of the contract."
Under this provision of law, it is presumed that the parties to a contract know and understand the import of their agreement. Thus, civil law expert Arturo M. Tolentino opined that:

To invalidate consent, the error must be excusable. It must be real error, and not one that could have been avoided by the party alleging it. The error must arise from facts unknown to him. He cannot allege an error which refers to a
fact known to him, or which he should have known by ordinary diligent examination of the facts. An error so patent and obvious that nobody could have made it, or one which could have been avoided by ordinary prudence, cannot
be invoked by the one who made it in order to annul his contract. A mistake that is caused by manifest negligence cannot invalidate a juridical act.53 (Emphasis supplied.)
Prior to the execution of the Compromise Agreement, respondent Acero was already aware of the technical description of the titled lots of petitioner Domingo Realty and more so, of the boundaries and area of the lot he leased from
David Victorio. Before consenting to the agreement, he could have simply hired a geodetic engineer to conduct a verification survey and determine the actual encroachment of the area he was leasing on the titled lot of petitioner
Domingo Realty. Had he undertaken such a precautionary measure, he would have known that the entire area he was occupying intruded into the titled lot of petitioners and possibly, he would not have signed the agreement.
In this factual milieu, respondent Acero could have easily averted the alleged mistake in the contract; but through palpable neglect, he failed to undertake the measures expected of a person of ordinary prudence. Without doubt, this
kind of mistake cannot be resorted to by respondent Acero as a ground to nullify an otherwise clear, legal, and valid agreement, even though the document may become adverse and even ruinous to his business.
Moreover, respondent failed to state in the Compromise Agreement that he intended to vacate only a portion of the property he was leasing. Such provision being beneficial to respondent, he, in the exercise of the proper diligence
required, should have made sure that such matter was specified in the Compromise Agreement. Respondent Aceros failure to have the said stipulation incorporated in the Compromise Agreement is negligence on his part and
insufficient to abrogate said agreement.
In Torres v. Court of Appeals,54 which was also cited in LL and Company Development and Agro-Industrial Corporation v. Huang Chao Chun,55 it was held that:
Under Article 1315 of the Civil Code, contracts bind the parties not only to what has been expressly stipulated, but also to all necessary consequences thereof, as follows:
ART. 1315. Contracts are perfected by mere consent, and from that moment the parties are bound not only to the fulfillment of what has been expressly stipulated but also to all the consequences which, according to their nature,
may be in keeping with good faith, usage and law.
It is undisputed that petitioners are educated and are thus presumed to have understood the terms of the contract they voluntarily signed. If it was not in consonance with their expectations, they should have objected to it and insisted
on the provisions they wanted.
Courts are not authorized to extricate parties from the necessary consequences of their acts, and the fact that the contractual stipulations may turn out to be financially disadvantageous will not relieve parties thereto of their
obligations. They cannot now disavow the relationship formed from such agreement due to their supposed misunderstanding of its terms.
The mere fact that the Compromise Agreement favors one party does not render it invalid. We ruled in Amarante v. Court of Appeals that:
Compromises are generally to be favored and cannot be set aside if the parties acted in good faith and made reciprocal concessions to each other in order to terminate a case. This holds true even if all the gains appear to be on one
side and all the sacrifices on the other (emphasis supplied).56
One final note. While the Court can commiserate with respondent Acero in his sad plight, nonetheless we have no power to make or alter contracts in order to save him from the adverse stipulations in the Compromise Agreement.
Hopefully this case will serve as a precaution to prospective parties to a contract involving titled lands for them to exercise the diligence of a reasonably prudent person by undertaking measures to ensure the legality of the title and
the accurate metes and bounds of the lot embraced in the title. It is advisable that such parties (1) verify the origin, history, authenticity, and validity of the title with the Office of the Register of Deeds and the Land Registration
Authority; (2) engage the services of a competent and reliable geodetic engineer to verify the boundary, metes, and bounds of the lot subject of said title based on the technical description in the said title and the approved survey plan
in the Land Management Bureau; (3) conduct an actual ocular inspection of the lot; (4) inquire from the owners and possessors of adjoining lots with respect to the true and legal ownership of the lot in question; (5) put up signs that
said lot is being purchased, leased, or encumbered; and (6) undertake such other measures to make the general public aware that said lot will be subject to alienation, lease, or encumbrance by the parties. Respondent Acero, for all
his woes, may have a legal recourse against lessor David Victorio who inveigled him to lease the lot which turned out to be owned by another.
WHEREFORE, the petition is hereby GRANTED and the assailed Decision and Resolution of the CA are REVERSED. The questioned Orders of the Pasay City RTC dated December 6, 1991, January 15, 1992, October 6, 1992, January 12,
1994, and February 1, 1994, including the Decision dated December 7, 1987, are AFFIRMED. The case is remanded to the Pasay RTC, Branch III for further proceedings with respect to petitioner Domingo Realtys November 15, 1981
Complaint57 against one of the defendants, David Victorio. No costs.
G.R. No. 204369 September 17, 2014

ENRIQUETA M. LOCSIN, Petitioner,


vs.
BERNARDO HIZON, CARLOS HIZON, SPS. JOSE MANUEL & LOURDES GUEVARA, Respondents.
DECISION

VELASCO, JR., J.:


Nature of the Case
Before Us is a Petition for Review on Certiorari under Rule 45 assailing the Decision1 and Resolution of the Court of Appeals (CA), dated June 6, 2012 and October 30, 2012, respectively, in CA-G.R. CV No. 96659 entitled Enriqueta M
Locsin v. Marylou Bolos, et al. In reversing the ruling of the trial court, the CA held that respondents are innocent purchasers in good faith and for value of the subject property.
The Facts
Petitioner Enriqueta M. Locsin (Locsin) was the registered owner of a 760-sq.m. lot covered by Transfer Certificate of Title (TCT) No. 235094, located at 49 Don Vicente St., Don Antonio Heights Subdivision, Brgy. Holy Spirit, Capitol,
Quezon City. In 1992, she filed an ejectment case, Civil Case No. 38-6633,2 against one Billy Aceron (Aceron) before the Metropolitan Trial Court, Branch 3 8 in Quezon City (MTC) to recover possession over the land in issue. Eventually,
the two entered into a compromise agreement, which the MTC approved on August 6, 1993.3
Locsin later went to the United States without knowing whether Aceron has complied with his part of the bargain under the compromise agreement. In spite of her absence, however, she continued to pay the real property taxes on
the subject lot.

In 1994, after discovering thather copy of TCT No. 235094 was missing, Locsin filed a petition for administrative reconstruction in order to secure a new one, TCT No. RT-97467. Sometime in early 2002, she then requested her counsel
to check the status of the subject lot. It was then that they discovered the following:
1. One Marylou Bolos (Bolos) had TCT No. RT-97467 cancelled on February 11, 1999, and then secured a new one, TCT No. N-200074, in her favor by registering a Deed of Absolute Sale dated November 3, 1979 allegedly executed by
Locsin with the Registry of Deeds;
2. Bolos later sold the subject lot to Bernardo Hizon (Bernardo) for PhP 1.5 million, but it was titled under Carlos Hizons (Carlos) name on August 12, 1999. Carlos is Bernardos son;
3. On October 1, 1999, Bernardo, claiming to be the owner of the property, filed a Motion for Issuance of Writ of Execution for the enforcement of the court-approved compromise agreement in Civil Case No. 38-6633;
4. The property was already occupied and was, in fact, up for sale.

On May 9, 2002, Locsin, through counsel, sent Carlos a letter requesting the return of the property since her signature in the purported deed of sale in favor of Bolos was a forgery. In a letter-reply dated May 20, 2002, Carlos denied
Locsins request, claiming that he was unaware of any defect or flaw in Bolos title and he is, thus, an innocent purchaser for value and good faith. On June 13, 2002,4 Bernardo met with Locsins counsel and discussed the possibility of
a compromise. He ended the meeting with a promise to come up with a win-win situation for his son and Locsin, a promise which turned out to be deceitful, for, on July 15, 2002, Locsin learned that Carlos had already sold the property
for PhP 1.5 million to his sister and her husband, herein respondents Lourdes and Jose Manuel Guevara (spouses Guevara), respectively, who, as early as May 24, 2002, had a new certificate of title, TCT No. N-237083, issued in their
names. The spouses Guevara then immediately mortgaged the said property to secure a PhP 2.5 million loan/credit facility with Damar Credit Corporation (DCC).
It was against the foregoing backdrop of events that Locsin filed an action for reconveyance, annulment ofTCT No. N-237083, the cancellation of the mortgage lien annotated thereon, and damages, against Bolos, Bernardo, Carlos, the
Sps. Guevara, DCC, and the Register of Deeds, Quezon City, docketed as Civil Case No. Q-02-47925, which was tried by the Regional Trial Court, Branch 77 in Quezon City (RTC). The charges against DCC, however, weredropped on joint
motion ofthe parties. This is in view of the cancellation of the mortgage for failure of the spouses Guevara to avail of the loan/credit facility DCC extended in their favor.5
Ruling of the Trial Court
On November 19, 2010, the RTC rendered a Decision6 dismissing the complaint and finding for respondents,as defendants thereat, holding that: (a) there is insufficient evidence to showthat Locsins signature in the Deed of Absolute
Sale between her and Bolos is a forgery; (b) the questioned deed is a public document, having been notarized; thus, it has, in its favor, the presumption of regularity; (c) Locsin cannot simply rely on the apparent difference of the
signatures in the deed and in the documents presented by her to prove her allegation of forgery; (d) the transfers of title from Bolos to Carlos and from Carlos to the spouses Guevara are valid and regular; (e) Bernardo, Carlos, and the
spouses Guevara are all buyers in good faith. Aggrieved, petitioner appealed the case to the CA.
Ruling of the Court of Appeals
The CA, in its assailed Decision, ruled that it was erroneous for the RTC to hold that Locsin failed to prove that her signature was forged. In its appreciation of the evidence, the CA found that, indeed, Locsins signature in the Deed of
Absolute Sale in favor of Bolos differs from her signatures in the other documents offered as evidence.
The CA, however, affirmed the RTCs finding that herein respondents are innocent purchasers for value. Citing Casimiro Development Corp. v. Renato L. Mateo,7 the appellate court held that respondents, having dealt with property
registered under the Torrens System, need not go beyond the certificate of title, but only has to rely on the said certificate. Moreover, as the CA added, any notice of defect or flaw in the title of the vendor should encompass facts and
circumstances that would impel a reasonably prudent man to inquire into the status of the title of the property in order to amount to bad faith.
Accordingly, the CA ruled that Locsin can no longer recover the subject lot.8 Hence, the insant petition.
Arguments
Petitioner Locsin insists that Bernardo was well aware, at the time he purchased the subject property, of a possible defect in Bolos title since he knew that another person, Aceron, was then occupying the lot in issue.9 As a matter of
fact, Bernardo even moved for the execution of the compromise agreement between Locsin and Aceron inCivil Case No. 38-6633 in order to enforce to oust Aceron of his possession over the property.10
Thus, petitioner maintains that Bernardo, knowing as he did the incidents involving the subject property,should have acted as a reasonably diligent buyer in verifying the authenticity of Bolostitle instead of closing his eyes to the
possibility of a defecttherein. Essentially, petitioner argues that Bernardos stubborn refusal to make an inquiry beyond the face of Bolos title is indicative of his lack of prudence in protecting himself from possible defects or flaws
therein, and consequently bars him from interposing the protection accorded toan innocent purchaser for value.
As regards Carlos and the Sps. Guevaras admissions and testimonies, petitioner points out that when these are placed side-by-side with the concurrent circumstances in the case, it is readily revealed that the transfer from the former
to the latter was only simulated and intended to keep the property out of petitioners reach.
For their part, respondents maintain that they had the right to rely solely upon the face of Bolos clean title, considering that it was free from any lien or encumbrance. They are not even required, so they claim, to check on the validity
of the sale from which they derived their title.11 Too, respondents claim that their knowledge of Acerons possession cannot be the basis for an allegation of bad faith, for the property was purchased on an "asis where-is" basis. The
Issue
Considering that the finding of the CAthat Locsins signature in the Deed of Absolute Sale in favor of Bolos was indeed bogus commands itself for concurrence, the resolution of the present petition lies on this singular issuewhether
or not respondents are innocent purchasers for value.12
The Courts Ruling
The petition is meritorious.
Procedural issue
As a general rule, only questions of law may be raised in a petition for review on certiorari.13 This Court is not a trier offacts; and in the exercise of the power of review, we do not normally undertake the re-examination of the evidence
presented by the contending parties during the trial of the case.14 This rule, however, admits of exceptions.For one, the findings of fact of the CA will not bind the parties in cases where the inference made on the evidence is mistaken,
as here.15
That being said, we now proceed to the core of the controversy.
Precautionary measures for buyers of real property
An innocent purchaser for value is one who buys the property of another without notice that some other person has a right to or interest in it, and who pays a full and fair price atthe time of the purchase or before receiving any notice
of another persons claim.16 As such, a defective title or one the procurement of which is tainted with fraud and misrepresentationmay be the source of a completely legal and valid title, provided that the buyer is an innocent
third person who, in good faith, relied on the correctness of the certificate of title, or an innocent purchaser for value.17
Complementing this is the mirror doctrine which echoes the doctrinal rule that every person dealing with registered land may safely rely on the correctness of the certificate of title issued therefor and is in no way obliged to go beyond
the certificate to determine the condition of the property.18 The recognized exceptions to this rule are stated as follows:
[A] person dealing with registeredland has a right to rely on the Torrens certificate of title and to dispense with the need of inquiring further except when the party has actual knowledge of facts and circumstances that would impel a
reasonably cautious man to make such inquiry or when the purchaser has knowledge of a defect or the lack of title in his vendor or of sufficient facts to induce a reasonably prudent man to inquire into the status of the title of the
property in litigation. The presence of anything which excites or arouses suspicion should then prompt the vendee to look beyond the certificate and investigate the title of the vendor appearing on the face of said certificate. One who
falls within the exception can neither be denominated an innocent purchaser for value nor a purchaser in good faith and, hence, does not merit the protection of the law.19 (emphasis added)

Thus, in Domingo Realty, Inc. v. CA,20 we emphasized the need for prospective parties to a contract involving titled lands to exercise the diligence of a reasonably prudent person in ensuring the legality of the title, and the accuracy of
the metes and bounds of the lot embraced therein, by undertaking precautionary measures, such as:
1. Verifying the origin, history, authenticity, and validity of the title with the Office of the Register of Deeds and the Land Registration Authority;
2. Engaging the services of a competent and reliable geodetic engineer to verify the boundary,metes, and bounds of the lot subject of said title based on the technical description in the said title and the approved survey plan in the
Land Management Bureau;
3. Conducting an actual ocular inspection of the lot;
4. Inquiring from the owners and possessors of adjoining lots with respect to the true and legal ownership of the lot in question;
5. Putting up of signs that said lot is being purchased, leased, or encumbered; and
6. Undertaking such other measures to make the general public aware that said lot will be subject to alienation, lease, or encumbrance by the parties.

In the case at bar, Bolos certificate of title was concededly free from liens and encumbrances on its face. However, the failure of Carlos and the spouses Guevara to exercise the necessary level ofcaution in light of the factual milieu
surrounding the sequence of transfers from Bolos to respondents bars the application of the mirror doctrine and inspires the Courts concurrence withpetitioners proposition.
Carlos is not an innocent purchaser for value
Foremost, the Court is of the view that Bernardo negotiated with Bolos for the property as Carlos agent. This is bolstered by the fact that he was the one who arranged for the saleand eventual registration of the property in Carlos
favor. Carlos testified during the May 27, 2009 hearing:21

Q: Are you privy with the negotiations between your father, Mr. Bernardo Hizon, and your co-defendant, Marylou Bolos, the alleged seller?
A: No, Maam.
Q: Do you remember having signed a Deed of Absolute Sale, dated August 12, 1999?
A: Yes, Maam.
Q: And, at that time that you have signed the Deed, was Marylou Bolos present?
A: No, Maam.
Q: Who negotiated and arranged for the sale of the property between Marylou Bolos and you? A: It was my father. (emphasis ours)

Consistent with the rule that the principal is chargeable and bound by the knowledge of, or notice to, his agent received in that capacity,22 any information available and known to Bernardo is deemed similarly available and known to
Carlos, including the following:
1. Bernardo knew that Bolos, from whom he purchased the subject property, never acquired possession over the lot. As a matter of fact, in his March 11, 2009 direct testimony,23 Bernardo admitted having knowledge of Acerons lot
possession as well as the compromise agreement between petitioner and Aceron.
2. Bolos purported Deed of Sale was executed on November 3, 1979 but the ejectment case commenced by Locsin against Aceron was in 1992, or thirteen (13)years after the property was supposedly transferred to Bolos.
3. The August 6, 1993 Judgment,24 issued by the MTC on the compromise agreement between Locsin and Aceron, clearly stated therein that "[o]n August 2, 1993,the parties [Aceron and Locsin] submitted to [the MTC] for approval a
Compromise Agreement dated July 28, 1993." It further indicated that "[Aceron] acknowledges [Locsins] right of possessionto [the subject property], being the registered owner thereof."

Having knowledge of the foregoing facts, Bernardo and Carlos, to our mind, should have been impelled to investigate the reason behind the arrangement. They should have been pressed to inquire into the status of the title of the
property in litigation in order to protect Carlos interest. It should have struck them as odd that it was Locsin, not Bolos, who sought the recovery of possession by commencing an ejectment case against Aceron, and even entered into
a compromiseagreement with the latter years afterthe purported sale in Bolos favor. Instead, Bernardo and Carlos took inconsistent positions when they argued for the validity of the transfer of the property in favor of Bolos, but in
the same breath prayed for the enforcement of the compromise agreement entered into by Locsin.
At this point it is well to emphasize that entering into a compromise agreement is an act of strict dominion.25 If Bolos already acquired ownership of the property as early as 1979, it should have been her who entered into a compromise
agreement with Aceron in 1993, not her predecessor-in-interest, Locsin, who, theoretically, had already divested herself of ownership thereof.
The spouses Guevara are not innocent purchasers for value

As regards the transfer of the property from Carlos to the spouses Guevara, We find the existence of the sale highly suspicious. For one, there is a dearth of evidence to support the respondent spouses position that the sale was a
bona fide transaction. Evenif we repeatedly sift through the evidence on record, still we cannot findany document, contract, or deed evidencing the sale in favor of the spouses Guevara. The same goes for the purported payment of
the purchase price of the property in the amount of PhP 1.5 million in favor of Carlos. As a matter of fact, the only documentary evidence that they presented were as follows:
1. Deed of Sale between Locsin and Bolos;
2. TCT No. 200074 issued in Bolos name;
3. TCT No. N-205332 in Carlos name;
4. TCT No. N-237083 in the nameof the Sps. Guevara.

To bridge the gap in their documentary evidence, respondents proffer their own testimonies explaining the circumstances surrounding the alleged sale.26 However, basic is the rule that bare and self-serving allegations, unsubstantiated
by evidence, are not equivalent to proof under the Rules.27 As such, we cannot give credence to their representations that the sale between them actually transpired.
Furthermore, and noticeably enough,the transfer from Carlos to the spouses Guevara was effected only fifteen(15) days after Locsin demanded the surrender of the property fromCarlos. Reviewing the timeline:
May 9, 2002: Locsins counsel sent a letter to Carlos, requesting that he return the property to Locsin since the latters signature in the purported deed of sale between her and Bolos was a forgery.
May 20, 2002:Carlos counsel replied to Locsins May 9, 2002 letter, claiming that Carlos was unaware of any defect or flaw in Bolos title, making him an innocent purchaserof the subject property.
May 24, 2002: The Sps. Guevara allegedly purchased the property from Carlos.

When Bernardo met with Locsinscounsel on June 13, 2002, and personally made a commitment to comeup with a win-win situation for his son and Locsin, he knew fully well, too,that the property had already been purportedly
transferred to his daughter and son-in-law, the spouses Guevara, for he, no less, facilitated the same. This, to us, isglaring evidence of bad faith and an apparent intention to mislead Locsin into believing that she could no longer recover
the subject property.
Also, the fact that Lourdes Guevara and Carlos are siblings, and that Carlos agent in his dealings concerning the property is his own father, renders incredible the argument thatLourdes had no knowledge whatsoever of Locsins claim
of ownership atthe time of the purported sale.
Indeed, the fact that the spouses Guevara never intended to be the owner in good faith and for value of the lot is further made manifest by their lack of interest in protecting themselvesin the case. It does not even appear in their
testimonies that they, at the very least, intended to vigilantly protect their claim over the property and prevent Locsin take it away from them. What they did was to simply appoint Bernardo as their attorney-in-fact to handle the
situation and never bothered acquainting themselves with the developments in the case.28 To be sure, respondent Jose Manuel Guevara was not even presented asa witness in the case.
There is also strong reason to believethat even the mortgage in favor of DCC was a mere ploy tomake it appear that the Sps. Guevara exercised acts of dominion over the subject property. This is so considering the proximity between
the propertys registration in their names and its being subjected to the mortgage. Most telling is that the credit line secured by the mortgage was never used by the spouses, resulting in the mortgages cancellation and the exclusion
of DCC as a party in Civil Case No. Q-02-47925.1wphi1
These circumstances, taken altogether, strongly indicate that Carlos and the spouses Guevara failed to exercise the necessary level of caution expected of a bona fide buyer and even performed acts that are highly suspect. Consequently,
this Court could not give respondents the protection accorded to innocent purchasers in good faith and for value.
Locsin is entitled to nominal damages
We now delve into petitioners prayer for exemplary damages, attorneys fees, and costs of suit. Here, the Court notes that petitioner failed to specifically pray that moral damages be awarded. Additionally, she never invoked any of
the grounds that would have warranted the award of moral damages. As can be gleaned from the records, lacking from her testimony is any claim that she suffered any form of physical suffering, mental anguish, fright, serious anxiety,
besmirched reputation, wounded feelings, moral shock, social humiliation, or any other similar circumstance.29 Thus, we are constrained to refrain from awarding moral damages in favor of petitioner.
In the same vein, exemplary damages cannot be awarded in favor of petitioner. Well-settled that this species of damages is allowed only in addition to moral damages such that no exemplary damages can be awarded unless the
claimant first establishes his clear right to moral damages.30 Consequently, despite our finding that respondents acted in a fraudulent manner, petitioners claim for exemplary damages is unavailing at this point.
Nevertheless, we find an award for nominal damages to be in order. Under prevailing jurisprudence, nominal damages are "recoverable where a legal right is technically violated and must be vindicated against an invasion that has
produced no actual present loss of any kind or where there has been a breach of contract and no substantial injury or actual damages whatsoever have been or can be shown."31 As expounded in Almeda v. Cario,32 a violation of the
plaintiffs right, even if only technical, is sufficient to support an award of nominal damages. So long as there is a showing of a violation of the right of the plaintiff, as herein petitioner, an award of nominal damages is proper.33
In the case at bar, this Court recognizes that petitioner was unduly deprived of her ownership rights overthe property, and was compelled to litigate for its recovery, for almost ten (10) years. Clearly, this could have entitled her to
actual or compensatory damages had she quantified and proved, during trial, the amounts which could have accrued in her favor, including commercial fruits such as reasonable rent covering the pendency of the case. Nonetheless,
petitioners failure to prove actual or compensatory damages does not erase the fact that her property rights were unlawfully invaded by respondents, entitling her to nominal damages.
As to the amount to be awarded, it bears stressing that the same is addressed to the sound discretion ofthe court, taking into account the relevant circumstances.34 Considering the length of time petitioner was deprived of her
property and the bad faith attending respondents actuations in the extant case, we find the amount of seventy-five thousand pesos (PhP 75,000) as sufficient nominal damages. Moreover, respondents should be held jointly and
severally liable for the said amount, attorneys fees in the amount of an additional seventy-fivethousand pesos (PhP 75,000), and the costs of the suit.
WHEREFORE, in light of the foregoing, the Petition is hereby GRANTED. The assailed Decision of the Court of Appeals dated June 6, 2012 in CA-G.R. CV No. 96659 affirming the Decision of the Regional Trial Court, Branch 77, Quezon
City, in Civil Case No. Q-02-47925; as well as its Resolution dated October 30, 2012, denying reconsideration thereof, are hereby REVERSED and SET ASIDE. TCT No. N-200074 in the name of Marylou Bolos, and the titles descending
therefrom, namely, TCT Nos. N-205332 and N-237083 in the name of Carlos Hizon, and the Spouses Jose Manuel & Lourdes Guevara, respectively, are hereby declared NULL and VOID. Respondents and all other persons acting under
their authority are hereby DIRECTED to surrender possession of the subject property in favor of petitioner. Respondents Bernardo Hizon, Carlos Hizon, and the spouses Jose Manuel and Lourdes Guevara shall jointly and severally pay
petitioner PhP 75,000 as nominal damages, PhP 75,000 as attorney's fees, and costs of suit.
The Register of Deeds of Quezon City is hereby ORDERED to (1) cancel TCT No. N-237083; (2) reinstate TCT No. RT-97467; and (3) reissue TCT No. RT-97467 in favor of petitioner, without requiring from petitioner payment for any and
all expenses in performing the three acts.
G.R. No. 102377 July 5, 1996

ALFREDO SAJONAS and CONCHITA SAJONAS, petitioners,


vs.
THE COURT OF APPEALS, DOMINGO A. PILARES, SHERIFF ROBERTO GARCIA OF QUEZON CITY and REGISTER OF DEEDS OF MARIKINA, respondents.
DECISION

TORRES, JR., J.:p


A word or group of words conveys intentions. When used truncatedly, its meaning disappears and breeds conflict. Thus, it is written -- "By thy words shalt thou be justified, and by thy words shalt thou be condemned."
(Matthew, 12:37)
Construing the new words of a statute separately is the raison d'etre of this appeal.
Essentially, the case before us is for cancellation of the inscription of a Notice of Levy on Execution from a certificate of Title covering a parcel of real property. The inscription was caused to be made by the private
respondent on Transfer Certificate of Title No. N-79073 of the Register of Deeds of Marikina, issued in the name of the spouses Ernesto B. Uychocde and Lucita Jarin, and was later carried over to and annotated on
Transfer Certificate of Title No. N-109417 of the same registry, issued in the name of the spouses Alfredo Sajonas and Conchita H. Sajonas, who purchased the parcel of land from the Uychocdes, and are now the
petitioners in this case.

The facts are not disputed, and are hereby reproduced as follows:
On September 22, 1983, the spouses Ernesto Uychocde and Lucita Jarin agreed to sell a parcel of residential land located in Antipolo, Rizal to the spouses Alfredo Sajonas and Conchita R. Sajonas on installment
basis as evidenced by a Contract to Sell dated September 22, 1983. The property was registered in the names of the Uychocde spouses under TCT No. N-79073 of the Register of Deeds of Marikina, Rizal. On
August 27, 1984, the Sajonas couple caused the annotation of an adverse claim based on the said Contract to Sell on the title of the subject property, which was inscribed as Entry No. 116017. Upon full payment of
the purchase price, the Uychocdes executed a Deed of Sale involving the property in question in favor of the Sajonas couple on September 4, 1984. The deed of absolute sale was registered almost a year after, or
on August 28, 1985.
Meanwhile, it appears that Domingo Pilares (defendant-appellant) filed Civil Case No. Q-28850 for collection of sum of money against Ernesto Uychocde. On June 25, 1980, a Compromise Agreement was entered
into by the parties in the said case under which Ernesto Uychocde acknowledged his monetary obligation to Domingo Pilares amounting to P27,800 and agreed to pay the same in. two years from June 25, 1980.
When Uychocde failed to comply with his undertaking in the compromise agreement, defendant-appellant Pilares move d for the issuance of a writ of execution to enforce the decision based on the compromise
agreement, which the court granted in its order dated August 3, 1982. Accordingly, a writ of execution was issued on August 12, 1982 by the CFI of Quezon City where the civil case was pending. Pursuant to the
order of execution dated August 3, 1982, a notice of levy on execution was issued on February 12, 1985, On February 12, 1985, defendant sheriff Roberto Garcia of Quezon City presented said notice of levy on
execution before the Register of Deeds of Marikina and the same was annotated at the back of TCT No. 79073 as Entry No. 123283.
When the deed of absolute sale dated September 4, 1984 was registered on August 28, 1985, TCT No. N-79073 was cancelled and in lieu thereof, TCT No. N-109417 was issued in the name of the Sajonas couple.
The notice of levy on execution annotated by defendant sheriff was carried over to the new title. On October 21, 1985, the Sajonas couple filed a Third Party Claim with the sheriff of Quezon city, hence the auction
sale of the subject property did not push through as scheduled.
On January 10, 1986, the Sajonas spouses demanded the cancellation of the notice of levy on execution upon defendant-appellant Pilares, through a letter to their lawyer, Atty. Melchor Flores. Despite said demand,
defendant-appellant Pilares refused to cause the cancellation of said annotation. In view thereof, plaintiffs-appellees filed this complaint dated January 11, 1986 on February 5, 1986.1

The Sajonases filed their complaint2 in the Regional Trial Court of Rizal, Branch 71, against Domingo Pilares, the judgment creditor of the Uychocdes. The relevant portion of the complaint alleges:
7. That at the time the notice of levy was annotated by the defendant, the Uychocde spouses, debtors of the defendant, have already transferred, conveyed and assigned all their title, rights and interests to the
plaintiffs and there was no more title, rights or interests therein which the defendant could levy upon;
8. That the annotation of the levy on execution which was carried over to the title of said plaintiffs is illegal and invalid and was made in utter bad faith, in view of the existence of the Adverse Claim annotated by the
plaintiffs on the corresponding title of the Uychocde spouses;
9. That a demand was made by the plaintiffs upon the defendant Domingo A. Pilares, to cause the cancellation of the said notice of levy but the latter, without justifiable reason and with the sole purpose of harassing
and embarrassing the plaintiffs ignored and refused plaintiffs' demand;
10. That in view of the neglect, failure and refusal of the defendant to cause the cancellation of the notice of levy on execution, the plaintiffs were compelled to litigate and engage the services of the undersigned
counsel, to protect their rights and interests, for which they agreed to pay attorney's fees in the amount of P10,000 and appearance fees of P500 per day in court.3

Pilares filed his answer with compulsory counterclaim4 on March 8, 1986, raising special and affirmative defenses, the relevant portions of which are as follows:
10. Plaintiff has no cause of action against herein defendants;
11. Assuming without however admitting that they filed an adverse claim against the property covered by TCT No. 79073 registered under the name of spouses Ernesto Uychocde on August 27, 1984, the same
ceases to have any legal force and effect (30) days thereafter pursuant to Section 70 of P.D. 1529;
12 The Notice of Levy annotated at the back of TCT No. 79073 being effected pursuant to the Writ of Execution dated August 31, 1982, duly issued by the CFI (now RTC) of Quezon proceeding from a decision
rendered in Civil Case No. 28859 in favor of herein defendant against Ernesto Uychocde, is undoubtedly proper and appropriate because the property is registered in the name of the judgment debtor and is not
among those exempted from execution;
13. Assuming without admitting that the property subject matter of this case was in fact sold by the registered owner in favor of the herein plaintiffs, the sale is the null and void (sic) and without any legal force and
effect because it was done in fraud of a judgment creditor, the defendant Pilares.5

Pilares likewise sought moral and exemplary damages in a counterclaim against the Sajonas spouses. The parties appeared at pre-trial proceedings on January 21, 1987,6 after which, trial on the merits ensued.
The trial court rendered its decision on February 15, 1989.7 It found in favor of the Sajonas couple, and ordered the cancellation of the Notice of Levy from Transfer Certificate of Title No. N-109417.
The court a quo stated, thus:
After going over the evidence presented by the parties, the court finds that although the title of the subject matter of the Notice of Levy on Execution was still in the name of the Spouses Uychocde when the same
was annotated on the said title, an earlier Affidavit of Adverse of claim was annotated on the same title by the plaintiffs who earlier bought said property from the Uychocdes.
It is a well settled rule in this jurisdiction (Guidote vs. Maravilla, 48 Phil. 442) that actual notice of an adverse claim is equivalent to registration and the subsequent registration of the Notice of Levy could not have any
legal effect in any respect on account of prior inscription of the adverse claim annotated on the title of the Uychocdes.
On the issue of whether or not plaintiffs are buyers in good faith of the property of the spouses Uychocde even notwithstanding the claim of the defendant that said sale executed by the spouses was made in fraud
of creditors, the Court finds that the evidence in this instance is bare of any indication that said plaintiffs as purchasers had notice beforehand of the claim of the defendant over said property or that the same is
involved in a litigation between said spouses and the defendant. Good faith is the opposite of fraud and bad faith, and the existence of any bad faith must be established by competent proof.8 (Cai vs. Henson, 51
Phil 606)

In view of the foregoing, the Court renders judgment in favor of the plaintiffs and against the defendant Pilares, as follows:
1. Ordering the cancellation of the Notice of Levy on Execution annotated on Transfer Certificate of Title No. N-109417.
2. Ordering said defendant to pay the amount of P5,000 as attorney's fees.
3. Dismissing the Counterclaim interposed by said defendant.

Said defendant is likewise ordered to pay the costs.


Dissatisfied, Pilares appealed to the Court of Appeals", assigning errors on the part of the lower court. The appellate court reversed the lower court's decision, and upheld the annotation of the levy on execution on
the certificate of title, thus:
WHEREFORE, the decision of the lower court dated February 15, 1989 is reversed and set aside and this complaint is dismissed.
Costs against the plaintiffs-appellees. 10
The Sajonas couple are now before us, on a Petition for Review on Certiorari, 11 praying inter alia to set aside the Court of Appeals' decision, and to reinstate that of the Regional Trial Court
Private respondent filed his Comment 12 on March 5, 1992, after which, the parties were ordered to file their respective Memoranda. Private respondent complied thereto on April 27, 1994 13, while petitioners were
able to submit their Memorandum on September 29, 1992. 14
Petitioner assigns the following as errors of the appellate court, to wit:
THE LOWER COURT ERRED IN HOLDING THAT THE RULE ON THE 30-DAY PERIOD FOR ADVERSE CLAIM UNDER SECTION 70 OF P.D. NO. 1529 IS ABSOLUTE INASMUCH AS IT FAILED TO READ OR
CONSTRUE THE PROVISION IN ITS ENTIRETY AND TO RECONCILE THE APPARENT INCONSISTENCY WITHIN THE PROVISION IN ORDER TO GIVE EFFECT TO IT AS A WHOLE.
II THE LOWER COURT ERRED IN INTERPRETING SECTION 70 OF P.D. NO. 1529 IN SUCH WISE ON THE GROUND THAT IT VIOLATES PETITIONERS' SUBSTANTIAL RIGHT TO DUE PROCESS.
Primarily, we are being asked to ascertain who among the parties in suit has a better right over the property in question. The petitioners derive their claim from the right of ownership arising from a perfected contract
of absolute sale between them and the registered owners of the property, such right being attested to by the notice of adverse claim 15 annotated on TCT No. N-79073 as early as August 27, 1984. Private respondent
on the other hand, claims the right to levy on the property, and have it sold on execution to satisfy his judgment credit, arising from Civil Case No. Q-28850 16 against the Uychocdes, from whose title, petitioners
derived their own.
Concededly, annotation of an adverse claim is a measure designed to protect the interest of a person over a piece of real property where the registration of such interest or right not otherwise provided for by the Land
Registration Act or Act 496 (now P.D. 1529 or the Property Registration Decree), and serves a warning to third parties dealing with said property that someone is claiming an interest on the same or a better right than
that of the registered owner thereof. Such notice is registered by filing a sworn statement with the Register of Deeds of the province where the property is located, setting forth the basis of the claimed right together
with other dates pertinent thereto. 17
The registration of an adverse claim is expressly recognized under Section 70 of P.D. No. 1529. *
Noting the changes made in the terminology of the provisions of the law, private respondent interpreted this to mean that a Notice of Adverse Claim remains effective only for a period of 30 days from its annotation,
and does not automatically lose its force afterwards. Private respondent further maintains that the notice of adverse claim was annotated on August 27, 1984, hence, it will be effective only up to September 26, 1984,
after which it will no longer have any binding force and effect pursuant to Section 70 of P.D. No. 1529. Thus, the sale in favor of the petitioners by the Uychocdes was made in order to defraud their creditor (Pilares),
as the same was executed subsequent to their having defaulted in the payment of their obligation based on a compromise
agreement. 18

The respondent appellate court upheld private respondents' theory when it ruled:
The above staled conclusion of the lower court is based on the premise that the adverse claim filed by plaintiffs-appellees is still effective despite the lapse of 30 days from the date of registration. However, under
the provisions of Section 70 of P.D. 1529, an adverse claim shall be effective only for a period of 30 days from the date of its registration. The provision of this Decree is clear and specific.
It should be noted that the adverse claim provision in Section 110 of the Land Registration Act (Act 496) does not provide for a period of effectivity of the annotation of an adverse claim. P.D. No. 1529, however, now
specifically provides for only 30 days. If the intention of the law was for the adverse claim to remain effective until cancelled by petition of the interested party, then the aforecited provision in P.D. No. 1529 stating the
period of effectivity would not have been inserted in the law.
Since the adverse claim was annotated On August 27, 1984, it was effective only until September 26, 1984. Hence, when the defendant sheriff annotated the notice of levy on execution on February 12, 1985, said
adverse claim was already ineffective. It cannot be said that actual or prior knowledge of the existence of the adverse claim on the Uychocdes' title is equivalent to registration inasmuch as the adverse claim was
already ineffective when the notice of levy on execution was annotated. Thus, the act of defendant sheriff in annotating the notice of levy on execution was proper and justified.
The appellate court relied on the rule of statutory construction that Section 70 is specific and unambiguous and hence, needs no interpretation nor construction. 19 Perforce, the appellate court stated, the provision
was clear enough to warrant immediate enforcement, and no interpretation was needed to give it force and effect. A fortiori, an adverse claim shall be effective only for a period of thirty (30) days from the date of its
registration, after which it shall be without force and effect. Continuing, the court further stated;
clearly, the issue now has been reduced to one of preference -- which should be preferred between the notice of levy on execution and the deed of absolute sate. The Deed of Absolute Sale was executed on
September 4, 1984, but was registered only on August 28, 1985, while the notice of levy on execution was annotated six (6) months prior to the registration of the sale on February 12, 1985.
In the case of Landig vs. U.S. Commercial Co., 89 Phil. 638 Commere it was held that where a sale is recorded later than an attachment, although the former is of an earlier date, the sale must give way to the
attachment on the ground that the act of registration is the operative act to affect the land. A similar ruling was restated in Campillo vs. Court of Appeals (129 SCRA 513).
The reason for these rulings may be found in Section 51 of P.D. 1529, otherwise known as the Property Registration Decree, which provides as follows:
Sec. 1. Conveyance and other dealings by the registered owner. -- An owner of registered land may convey, mortgage, lease, charge, 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 Deeds to make of registration.
The act of registration shall be the operative act to convey or affect the land in so far as third persons are concerned and in all cases under the Decree, the registration shall be made in the office of the Register of
Deeds for the province or city where the land lies. (Emphasis supplied by the lower court.)
Under the Torrens system, registration is the operative act which gives validity to the transfer or creates a lien upon the land. A person dealing with registered land is not required to go behind the register to determine
the condition of the property. He is only charged with notice of the burdens on the property which are noted on the face of the register or certificate of title. 20
Although we have relied on the foregoing rule, in many cases coming before us, the same, however, does not fit in the case at bar. While it is the act of registration which is the operative act which conveys or affects
the land insofar as third persons are concerned, it is likewise true, that the subsequent sale of property covered by a Certificate of Title cannot prevail over an adverse claim, duly sworn to and annotated on the
certificate of title previous to the sale. 21 While it is true that under the provisions of the Property Registration Decree, deeds of conveyance of property registered under the system, or any interest therein only take
effect as a conveyance to bind the land upon its registration, and that a purchaser is not required to explore further than what the Torrens title, upon its face, indicates in quest for any hidden defect or inchoate right
that may subsequently defeat his right thereto, nonetheless, this rule is not absolute. Thus, one who buys from the registered owner need not have to look behind the certificate of title, he is, nevertheless, bound by
the liens and encumbrances annotated thereon. One who buys without checking the vendor's title takes all the risks and losses consequent to such failure.22
In PNB vs. Court of Appeals, we held that "the subsequent sale of the property to the De Castro spouses cannot prevail over the adverse claim of Perez, which was inscribed on the bank' s certificate of title on
October 6, 1958. That should have put said spouses on notice, and they can claim no better legal right over and above that of Perez. The TCT issued in the spouses' names on July, 1959 also carried the said
annotation of adverse claim. Consequently, they are not entitled to any interest on the price they paid for the property. 23
Then again, in Gardner vs. Court of Appeals, we said that "the statement of respondent court in its resolution of reversal that 'until the validity of an adverse claim is determined judicially, it cannot be considered a
flaw in the vendor's title' contradicts the very object of adverse claims. As stated earlier, the annotation of an adverse claim is a measure designed to protect the interest of a person over a piece of real property, and
serves as a notice and warning to third parties dealing with said property that someone is claiming an interest on the same or has a better right than the registered owner thereof. A subsequent sale cannot prevail
over the adverse claim which was previously annotated in the certificate of title over the property. 24
The question may be posed, was the adverse claim inscribed in the Transfer Certificate of Title No. N-109417 still in force when private respondent caused the notice of levy on execution to be registered and
annotated in the said title, considering that more than thirty days had already lapsed since it was annotated?
This is a decisive factor in the resolution of this instant case.
If the adverse claim was still in effect, then respondents are charged with knowledge of pre-existing interest over the subject property, and thus, petitioners are entitled to the cancellation of the notice of levy attached
to the certificate of title.
For a definitive answer to this query, we refer to the law itself. Section 110 of Act 496 or the Land Registration Act reads:
Sec. 110. Whoever claims any part or interest in registered lands adverse to the registered owner, arising subsequent to the date of the original registration, may, if no other provision is made in this Act for registering
the same, make a statement in writing setting forth fully his alleged right or interest, and how or under whom acquired, and a reference to the volume and page of the certificate of title of the registered owner, and a
description of the land in which the right or interest is claimed.
The statement shall be signed and sworn to, and shall state the adverse claimant's residence, and designate a place at which all notices may be served upon him. The statement shall be entitled to registration as an
adverse claim, and the court, upon a petition of any party in interest, shall grant a speedy hearing upon the question of the validity of such adverse claim and shall enter such decree therein as justice and equity may
require. If the claim is adjudged to be invalid, the registration shall be cancelled. If in any case, the court after notice and hearing shall find that a claim thus registered was frivolous or vexatious, it may tax the adverse
claimant double or treble the costs in its discretion."

The validity of the above-mentioned rules on adverse claims has to be reexamined in the light of the changes introduced by P.D. 1529, which provides:
Sec . 70 Adverse Claim -- Whoever claims any part or interest in registered land adverse to the registered owner, arising subsequent to the date of the original registration, may, if no other provision is made in this
decree for registering the same, make a statement in writing setting forth fully his alleged right or interest, and how or under whom acquired, a reference to the number of certificate of title of the registered owner, the
name of the registered owner, and a description of the land in which the right or interest is claimed.
The statement shall be signed and sworn to, and shall state the adverse claimant's residence, and a place at which all notices may be served upon him. This statement shall be entitled to registration as an adverse
claim on the certificate of title. The adverse claim shall be effective for a period of thirty days from the date of registration. After the lapse of said period, the annotation of adverse claim may be cancelled upon filing
of a verified petition therefor by the party in-interest: Provided, however, that after cancellation, no second adverse claim based on the same ground shall be registered by the same claimant.
Before the lapse of thirty days aforesaid, any party in interest may file a petition in the Court of First Instance where the land is situated for the cancellation the adverse claim, and the court shall grant a speedy hearing
upon the question of the validity of such adverse claim, and shall render judgment as may be just and equitable. If the adverse claim is adjudged to be invalid, the registration thereof shall be ordered cancelled. If, in
any case, the court, after notice and hearing shall find that the adverse claim thus registered was frivolous, it may fine the claimant in an amount not less than one thousand pesos, nor more than five thousand pesos,
in its discretion. Before the lapse of thirty days, the claimant may withdraw his adverse claim by filing with the Register of Deeds a sworn petition to that effect. (Emphasis ours).
In construing the law aforesaid, care should be taken that every part thereof be given effect and a construction that could render a provision inoperative should be avoided, and inconsistent provisions should be
reconciled whenever possible as parts of a harmonious whole. 25 For taken in solitude, a word or phrase might easily convey a meaning quite different from the one actually intended and evident when a word or
phrase is considered with those with which it is associated." 26 In ascertaining the period of effectivity of an inscription of adverse claim, we must read the law in its entirety. Sentence three, paragraph two of Section
70 of P.D. 1529 provides:
The adverse claim shall be effective for a period of thirty days from the date of registration."

At first blush, the provision in question would seem to restrict the effectivity of the adverse claim to thirty days. But the above provision cannot and should not be treated separately, but should be read in relation to
the sentence following, which reads:
After the lapse of said period, the annotation of adverse claim may be cancelled upon filing of a verified petition therefor by the party in interest.
If the rationale of the law was for the adverse claim to ipso facto lose force and effect after the lapse of thirty days, then it would not have been necessary to include the foregoing caveat to clarify and complete the
rule. For then, no adverse claim need be cancelled. If it has been automatically terminated by mere lapse of time, the law would not have required the party in interest to do a useless act.
A statute's clauses and phrases must not be taken separately, but in its relation to the statute's totality. Each statute must, in fact, be construed as to harmonize it with the pre-existing body of laws. Unless clearly
repugnant, provisions of statutes must be reconciled. The printed pages of the published Act, its history, origin, and its purposes may be examined by the courts in their construction. 27 An eminent authority on the
subject matter states the rule candidly:
A statute is passed as a whole and not in parts sections, and is animated by one general purpose and intent. Consequently, each part or section should be construed in connection with every other part section so as
to produce a harmonious whole. It is not proper to confine its intention to the one section construed. It is always an unsafe way of construing a statute or contract to divide it by a process of etymological dissection,
into separate words, and then apply to each, thus separated from the context, some particular meaning to be attached to any word or phrase usually to be ascertained from the as context. 28
Construing the provision as a whole would reconcile the apparent inconsistency between the portions of the law such that the provision on cancellation of adverse claim by verified petition would serve to qualify the
provision on the effectivity period. The law, taken together, simply means that the cancellation of the adverse claim is still necessary to render it ineffective, otherwise, the inscription will remain annotated and shall
continue as a lien upon the property. For if the adverse claim has already ceased to be effective upon the lapse of said period, its cancellation is no longer necessary and the process of cancellation would be a
useless ceremony. 29
It should be noted that the law employs the phrase "may be cancelled", which obviously indicates, as inherent in its decision making power, that the court may or not order the cancellation of an adverse claim,
nothwitstanding such provision limiting the effectivity of an adverse claim for thirty days from the date of registration. The court cannot be bound by such period as it would be inconsistent with the very authority vested
in it. A fortiori, the limitation on the period of effectivity is immaterial in determining the validity or invalidity of an adverse claim which is the principal issue to be decided in the court hearing. It will therefore depend
upon the evidence at a proper hearing for the court to determine whether it will order the cancellation of the adverse claim or not. 30
To interpret the effectivity period of the adverse claim as absolute and without qualification limited to thirty days defeats the very purpose for which the statute provides for the remedy of an inscription of adverse
claim, as the annotation of an adverse claim is a measure designed to protect the interest of a person over a piece of real property where the registration of such interest or right is not otherwise provided for by the
Land Registration Act or Act 496 (now P.D. 1529 or the Property Registration Decree), and serves as a warning to third parties dealing with said property that someone is claiming an interest or the same or a better
right than the registered owner thereof. 31
The reason why the law provides for a hearing where the validity of the adverse claim is to be threshed out is to afford the adverse claimant an opportunity to be heard, providing a venue where the propriety of his
claimed interest can be established or revoked, all for the purpose of determining at last the existence of any encumbrance on the title arising from such adverse claim. This is in line with the provision immediately
following:
Provided, however, that after cancellation, no second adverse claim shall be registered by the same claimant.
Should the adverse claimant fail to sustain his interest in the property, the adverse claimant will be precluded from registering a second adverse claim based on the same ground.
It was held that "validity or efficaciousness of the claim may only be determined by the Court upon petition by an interested party, in which event, the Court shall. order the immediate hearing thereof and make the
proper adjudication a justice and equity may warrant. And it is only when such claim is found unmeritorious that the registration of the adverse claim may be cancelled, thereby protecting the interest of the adverse
claimant and giving notice and warning to third parties". 32
In sum, the disputed inscription of an adverse claim on the Transfer Certificate of Title No. N-79073 was still in effect on February 12, 1985 when Quezon City Sheriff Roberto Garcia annotated the notice of levy on
execution thereto. Consequently, he is charged with knowledge that the property sought to be levied upon the execution was encumbered by an interest the same as or better than that of the registered owner thereof.
Such notice of levy cannot prevail over the existing adverse claim inscribed on the certificate of title in favor of the petitioners. This can be deduced from the pertinent provision of the Rules of Court, to wit:
Sec. 16. Effect of levy on execution as to third persons -- The levy on execution shall create a lien in favor of the judgment creditor over the right, title and interest of the judgment debtor in such property at the time
of the levy, subject to liens or encumbrances then existing. (Emphasis supplied)
To hold otherwise would be to deprive petitioners of their property, who waited a long time to complete payments on their property, convinced that their interest was amply protected by the inscribed adverse claim.
As lucidly observed by the trial court in the challenged decision:
True, the foregoing section provides that an adverse claim shall be effective for a period of thirty days from the date of registration. Does this mean however, that the plaintiffs thereby lost their right over the property
in question? Stated in another, did the lapse of the thirty day period automatically nullify the contract to sell between the plaintiffs and the Uychocdes thereby depriving the former of their vested right over the property?
It is respectfully submitted that it did not. 33
As to whether or not the petitioners are buyers in good faith of the subject property, the same should be made to rest on the findings of the trial court. As pointedly observed by the appellate court, "there is no question
that plaintiffs-appellees were not aware of the pending case filed by Pilares against Uychocde at the time of the sale of the property by the latter in their favor. This was clearly elicited from the testimony of Conchita
Sajonas, wife of plaintiff, during cross-examination on April 21, 1988". 34

ATTY. REYES.
Q Madam Witness, when Engr. Uychocde and his wife offered to you and your husband the property subject matter of this case, they showed you the owner's transfer certificate, is it not?
A Yes, sir.
Q That was shown to you the very first time that this lot was offered to you for sale?
A Yes.
Q After you were shown a copy of the title and after you were informed that they are desirous in selling the same, did you and your husband decide to buy the same?
A No, we did not decide right after seeing the title. Of course, we visited. . .
Q No, you just answer my question. You did not immediately decide?
A Yes.
Q When did you finally decide to buy the same?
A After seeing the site and after verifying from the Register of Deeds in Marikina that it is free from encumbrances, that was the time we decided.
Q How soon after you were offered this lot did you verify the exact location and the genuineness of the title, as soon after this was offered to you?
A I think it' s one week after they were offered. 35

A purchaser in good faith and for value is one who buys property of another without notice that some other person has a right to or interest in such property and pays a full and fair price for the same, at the time of
such purchase, or before he has notice of the claims or interest of some other person in the property.36 Good faith consists in an honest intention to abstain from taking an unconscientious advantage of another, 3
7 Thus, the claim of the private respondent that the sale executed by the spouses was made in fraud of creditors has no basis in fact, there being no evidence that the petitioners had any knowledge or notice of the
debt of the Uychocdes in favor of the private respondent, nor of any claim by the latter over the Uychocdes' properties or that the same was involved in any litigation between said spouses and the private respondent.
While it may be stated that good faith is presumed, conversely, bad faith must be established by competent proof by the party alleging the same. Sans such proof, the petitioners are deemed to be purchasers in good
faith, and their interest in the subject property must not be disturbed.
At any rate, the Land Registration Act (Property Registration Decree) guarantees to every purchaser of registered land in good faith that they can take and hold the same free from any and all prior claims, liens an
encumbrances except those set forth on the Certificate of Title and those expressly mentioned in the ACT as having been reserved against it. Otherwise, the efficacy of the conclusiveness of the Certificate of Title
which the Torrens system seeks to insure would be futile and nugatory. 38
ACCORDINGLY, the assailed decision of the respondent Court of Appeals dated October 17, 1991 is hereby REVERSED and SET ASIDE. The decision of the Regional Trial Court dated February 15, 1989 finding
for the cancellation of the notice of levy on execution from Transfer Certificate of Title No. N-109417 is hereby REINSTATED.
The inscription of the notice of levy On execution on TCT No. N-109417 is hereby CANCELLED.
Costs against private respondent.
G.R. No. 142687 July 20, 2006

SPOUSES FRANCISCO and BERNARDINA RODRIGUEZ, petitioners,


vs.
HON. COURT OF APPEALS, SPOUSES CHRISTOPHER and MA. ANGELICA BARRAMEDA, and SPOUSES ANTONIO and MARIDEL CALINGO, respondents.
DECISION

PUNO, J.:

This is a petition for review of the decision of the Court of Appeals dated September 7, 1999 in CA-G.R. CV No. 48772 and its resolution dated March 31, 2000. The Court of Appeals reversed the decision of the Regional Trial Court of
Makati in Civil Case No. 92-3524.
The facts show that herein respondent Spouses Antonio and Maridel Calingo (respondents Calingo) were the registered owners of a house and lot located at No. 7903 Redwood Street, Marcelo Green Village, Paraaque, Metro Manila.
The property was mortgaged to the Development Bank of the Philippines, which mortgage was later absorbed by the Home Mutual Development Fund (HMDF) or Pag-ibig.
On April 27, 1992, respondents Calingo and respondent Spouses Christopher and Ma. Angelica Barrameda (respondents Barrameda) entered into a contract of sale with assumption of mortgage where the former sold to the latter the
property in question and the latter assumed to pay the outstanding loan balance to the Development Bank of the Philippines.1 Respondents Barrameda issued two checks in the amounts of P150,000.00 and P528,539.76, for which
respondents Calingo issued a receipt dated April 24, 1992.2
In a letter dated April 23, 1992, respondent Antonio S. Calingo informed HMDF/Pag-ibig about the sale of the property with assumption of mortgage. Said letter, however, together with an affidavit by respondents Calingo, was served
upon HMDF/Pag-ibig on October 2, 1992.3
On May 29, 1992, respondents Barrameda filed with the Register of Deeds of Paraaque an affidavit of adverse claim on the property. The adverse claim was inscribed at the back of the certificate of title as Entry No. 3439. 4
On June 1, 1992, respondent Ma. Angelica Paez-Barrameda wrote HMDF, Mortgage and Loans Division informing the office that they have purchased the subject property from the Calingo spouses and that they filed a notice of adverse
claim with the Register of Deeds of Paraaque. They also sought assistance from said office as regards the procedure for the full settlement of the loan arrearages and the transfer of the property in their names. 5
Respondents Barrameda moved into the property on June 2, 1992.
On July 13, 1992, a notice of levy with attachment on real property by virtue of a writ of execution was annotated at the back of the certificate of title of the property in question. The writ of execution was issued by Judge Salvador
Abad Santos, Regional Trial Court of Makati, Branch 65 in connection with Civil Case No. 88-2159 involving a claim by herein petitioners, Spouses Francisco and Bernardina Rodriguez, against respondents Calingo. Judge Abad Santos
issued the writ in favor of petitioners Rodriguez.6
On July 21, 1992, petitioners counsel, Atty. Nelson A. Loyola, sent a letter to respondents Barrameda inquiring about the basis of their occupation of the property in question.
On August 21, 1992, respondents Barrameda remitted to respondents Calingo the amount of P364,992.07 to complete the payment of the agreed purchase price. Respondents Calingo acknowledged receipt of said amount and waived
all their rights to the property in favor of the Barrameda spouses. They also guaranteed that the property was clear and free from any liens and encumbrances, except the real estate mortgage assumed by respondents Barrameda. 7
On October 7, 1992, respondents Barrameda executed a joint affidavit stating that they are the owners of the property in question by virtue of a deed of sale with assumption of mortgage; that they registered an affidavit of adverse
claim with the Register of Deeds of Paraaque; that the Sheriff of the Regional Trial Court, Branch 65, Makati, Sheriff Manuel C. Dolor, levied said property despite their adverse claim; and that they have acquired the property long
before the levy was made, and therefore, said levy was illegal. They served a copy of the affidavit on petitioners counsel, Atty. Loyola, who made a reply thereto on October 15, 1992.
In his letter to Christopher Barrameda dated October 15, 1992, Atty. Loyola pointed out that the alleged deed of sale with assumption of mortgage was not registered with the Register of Deeds and that the records of the HMDF show
that the property is owned by the Calingo spouses. He urged the Barrameda spouses to confer with the petitioners to amicably settle the controversy.8
On November 9, 1992, respondents Barrameda found a Notice of Sheriffs Sale posted on their front gate, announcing the auction sale of their house and lot on December 3, 1992 at 10:00 in the morning.9
On November 20, 1992, pursuant to Rule 39, Section 17 of the Revised Rules of Court, respondents Barrameda served a Notice of Third Party Claim upon Sheriff Manuel C. Dolor, accompanied by their affidavit of title.
On December 2, 1992, respondents Barrameda filed with the Regional Trial Court of Makati a petition for quieting of title with prayer for preliminary injunction. The petition prayed, among others, that the execution sale of the property
be enjoined, the notice of levy and attachment inscribed on the certificate of title be cancelled, and that respondents Barrameda be declared the lawful and sole owners of the property in question.10
The trial court ruled in favor of herein petitioners and dismissed respondents Barramedas petition for quieting of title. It ruled that the annotation of respondents Barramedas adverse claim at the back of the certificate of title was
insufficient to establish their claim over the property. It said that respondents Barrameda, as buyers of the property, should have registered the title in their names. Furthermore, respondents Barramedas adverse claim had lost its
efficacy after the lapse of thirty days in accordance with the provisions of the Land Registration Act. The trial court also found that there was collusion between respondents Barrameda and respondents Calingo to transfer the property
to defraud third parties who may have a claim against the Calingos. 11
The Court of Appeals, however, reversed the decision of the trial court. Citing the ruling in Sajonas v. Court of Appeals,12 the appellate court held that respondents Barramedas adverse claim inscribed on the certificate of title was still
effective at the time the property was levied on execution. It said:
Therefore, the disputed inscription of adverse claim on TCT No. 83612/57286 was still in effect on July 13, 1992 when the Rodriguezes caused the annotation of the notice of levy on execution thereto. Consequently, they are charged
with knowledge that the property sought to be levied upon on execution was encumbered by an interest the same as or better than that of the registered owner thereof. Such notice of levy cannot prevail over the existing adverse
claim inscribed on the certificate of title in favor of the Barramedas. Xxx
The court held, therefore, that the notice of levy could not prevail over respondents Barramedas adverse claim.
Petitioners moved for a reconsideration of the appellate courts ruling, but the motion was denied.
Hence, this petition. Petitioners essentially argue that the remedy of a petition for quieting of title was not available to respondents Barrameda as they did not have a valid title to the property in question; that the affidavit of adverse
claim inscribed by respondents Barrameda at the back of the certificate of title was not sufficient to establish their claim to the property; and there was collusion between respondents Barrameda and respondents Calingo.
The principal issue that needs to be resolved in this case is whether respondents Barramedas adverse claim on the property should prevail over the levy on execution issued by another court in satisfaction of a judgment against
respondents Calingo.
We hold that it cannot.
Respondents Barrameda anchor their claim on the property on the deed of sale with assumption of mortgage executed by them and respondents Calingo on April 27, 1992. The Property Registration Decree13 requires that such
document be registered with the Register of Deeds in order to be binding on third persons. The law provides:
Sec. 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. (emphasis supplied)
It is admitted in this case that the deed of sale with assumption of mortgage was not registered, but instead, respondents Barrameda filed an affidavit of adverse claim with the Register of Deeds. The question now is whether the
adverse claim is sufficient to bind third parties such as herein petitioners.

In L.P. Leviste and Company, Inc. v. Noblejas,14 we explained when an inscription of an adverse claim is sufficient to affect third parties, thus:
The basis of respondent Villanuevas adverse claim was an agreement to sell executed in her favor by Garcia Realty. An agreement to sell is a voluntary instrument as it is a wilful act of the registered owner. As such voluntary instrument,
Section 50 of Act No. 496 [now Presidential Decree No. 1529] expressly provides that the act of registration shall be the operative act to convey and affect the land. And Section 55 of the same Act requires the presentation of the
owners duplicate certificate of title for the registration of any deed or voluntary instrument. As the agreement to sell involves an interest less than an estate in fee simple, the same should have been registered by filing it with the
Register of Deeds who, in turn, makes a brief memorandum thereof upon the original and owners duplicate certificate of title. The reason for requiring the production of the owners duplicate certificate in the registration of a voluntary
instrument is that, being a wilful act of the registered owner, it is to be presumed that he is interested in registering the instrument and would willingly surrender, present or produce his duplicate certificate of title to the Register of
Deeds in order to accomplish such registration. However, where the owner refuses to surrender the duplicate certificate for the annotation of the voluntary instrument, the grantee may file with the Register of Deeds a statement
setting forth his adverse claim, as provided for in Section 110 of Act No. 496. In such a case, the annotation of the instrument upon the entry book is sufficient to affect the real estate to which it relates, although Section 72 of Act No.
496 imposes upon the Register of Deeds the duty to require the production by the [r]egistered owner of his duplicate certificate for the inscription of the adverse claim. The annotation of an adverse claim is a measure designed to
protect the interest of a person over a piece of real property where the registration of such interest or right is not otherwise provided for by the Land Registration Act, and serves as a notice and warning to third parties dealing with
said property that someone is claiming an interest on the same or a better right than the registered owner thereof. (emphases supplied)
In the case at bar, the reason given for the non-registration of the deed of sale with assumption of mortgage was that the owners duplicate copy of the certificate of title was in the possession of HMDF. It was not shown, however,
that either respondents Barrameda or respondents Calingo exerted any effort to retrieve the owners duplicate copy from the HMDF for the purpose of registering the deed of sale with assumption of mortgage. In fact, the parties did
not even seek to obtain the consent of, much less inform, the HMDF of the sale of the property. This, despite the provision in the contract of mortgage prohibiting the mortgagor (respondents Calingo) from selling or disposing the
property without the written consent of the mortgagee.15 Respondents Calingo, as party to the contract of mortgage, are charged with the knowledge of such provision and are bound to comply therewith. Apparently, there was haste
in disposing the property that respondents Calingo informed HMDF of the sale only on October 2, 1992 when they served a copy of their letter to said office regarding the transfer of the property to respondents Barrameda. There was
no reason for the parties failure to seek the approval of the HMDF to the sale as it appears from the letter of respondent Angelica Paez-Barrameda to HMDF that they were ready to pay in full the balance of the loan plus interest.
What is more suspect is that the judgment against respondents Calingo ordering them to pay the petitioners the sum of P1,159,355.90 was rendered on January 28, 1992, before the sale of the property on April 27, 1992. We also find
it unsettling that respondents Barrameda, without any reservation or inquiry, readily remitted to respondents Calingo the full payment for the property on August 21, 1992 despite knowledge of the levy on execution over the property
in July of the same year. Any prudent buyer of real property, before parting with his money, is expected to first ensure that the title to the property he is about to purchase is clear and free from any liabilities and that the sellers have
the proper authority to deal on the property.
Again, we stress that the annotation of an adverse claim is a measure designed to protect the interest of a person over a piece of property where the registration of such interest or right is not otherwise provided for by the law on
registration of real property. Section 70 of Presidential Decree No. 1529 is clear:
Sec. 70. Adverse claim. Whoever claims any part or interest in registered land adverse to the registered owner, arising subsequent to the date of the original registration, may, if no other provision is made in this Decree for registering
the same, make a statement in writing setting forth his alleged right or interest, and how or under whom acquired, a reference to the number of the certificate of title of the registered owner, the name of the registered owner, and a
description of the land in which the right or interest is claimed. Xxx
The deed of sale with assumption of mortgage executed by respondents Calingo and Barrameda is a registrable instrument. In order to bind third parties, it must be registered with the Office of the Register of Deeds. It was not shown
in this case that there was justifiable reason why the deed could not be registered. Hence, the remedy of adverse claim cannot substitute for registration.
IN VIEW WHEREOF, the petition is GRANTED. The assailed decision and resolution of the Court of Appeals are SET ASIDE and the decision of the Regional Trial Court, Makati in Civil Case No. 92-3524 is REINSTATED. No cost.
G.R. No. 188265

GOLDEN HAVEN MEMORIAL PARK, INC. Petitioner,


vs.
FILINVEST DEVELOPMENT CORPORATION, Respondent.
DECISION

ABAD, J.:
These cases are about which of two real estate developers, both buyers of the same lands, acted in good faith and has a better title to the same.
The Facts and the Case
Petronila Yap (Yap), Victoriano and Policarpio Vivar (the Vivars), Benjamin Cruz (Cruz), Juan Aquino (Aquino), Gideon Corpuz (Corpuz), and Francisco Sobremesana (Sobremesana), and some other relatives inherited a parcel of land in
Las Pias City covered by Transfer Certificate of Title (TCT) 67462 RT-1. Subsequently, the heirs had the land divided into 13 lots and, in a judicial partition, the court distributed four of the lots as follows: a) Lots 1 and 12 to Aquino; b)
Lot 2 to Corpuz and Sobremesana; and (c) Lot 6 to Yap, Cruz, and the Vivars. The other lots were distributed to the other heirs.
On March 6, 1989 Yap, acting for herself and for Cruz and the Vivars, executed an agreement to sell Lot 6 in favor of Golden Haven Memorial Park, Inc. (GHM), payable in three installments. On July 31, 1989 another heir, Aquino, acting
for himself and for Corpuz and Sobremesana, also executed an agreement to sell Lots 1, 2, and 12 in favor of GHM, payable in the same manner. In both instances, GHM paid the first installment upon execution of the contract. On
August 4, 1989 GHM caused to be annotated a Notice of Adverse Claim on TCT 67462 RT-1. On September 20, 1989 the sellers of the four lots wrote GHM that they were still working on the titling of the lots in their names and wanted
to know if GHM was still interested in proceeding with their agreements. GHM replied in the affirmative on September 21, 1989 and said that it was just waiting for the sellers titles so it can pay the second installments.
Sometime in August of 1989, Filinvest Development Corporation (Filinvest) applied for the transfer in its name of the titles over Lots 2, 4, and 5 but the Las Pias Register of Deeds declined its application. Upon inquiry, Filinvest learned
that Lot 8, a lot belonging to some other heir or heirs and covered by the same mother title, had been sold to Household Development Corporation (HDC), a sister company of GHM, and HDC held the owners duplicate copy of that
title. Filinvest immediately filed against HDC a petition for the surrender and cancellation of the co-owners duplicate copy of TCT 67462 RT-1. Filinvest alleged that it bought Lots 1, 2, 6, and 12 of the property from their respective
owners as evidenced by three deeds of absolute sale in its favor dated September 10, November 18, and December 29, 1989 and that Filinvest was entitled to the registrations of such sales.
On January 14, 1991 GHM filed against the sellers and Filinvest a complaint for the annulment of the deeds of sale issued in the latters favor before the Regional Trial Court (RTC) of Las Pias City in Civil Case 91-098. On March 16,
2006 the RTC rendered a decision after trial, declaring the contracts to sell executed by some of the heirs in GHMs favor valid and enforceable and the sale in favor of Filinvest null and void. Only Filinvest appealed among the
defendants.
On November 25, 2008 the Court of Appeals (CA) affirmed the RTC decision with respect to the validity of the contract to sell Lot 6 in GHMs favor. But the CA declared the contracts to sell Lots 1, 2, and 12 in GHMs favor void and the
sale of the same lots in favor of Filinvest valid.
Both parties filed their petitions for review before this Court, Filinvest in G.R. 187824, and GHM in G.R. 188265.
The Issue Presented
The issue presented in these cases is whether or not the contracts to sell that the sellers executed in GHMs favor covering the same lots sold to Filinvest are valid and enforceable.
The Courts Ruling
To prove good faith, the rule is that the buyer of registered land needs only show that he relied on the title that covers the property. But this is true only when, at the time of the sale, the buyer was unaware of any adverse claim to
the property.1 Otherwise, the law requires the buyer to exercise a higher degree of diligence before proceeding with his purchase. He must examine not only the certificate of title, but also the sellers right and capacity to transfer any
interest in the property.2 In such a situation, the buyer must show that he exercised reasonable precaution by inquiring beyond the four corners of the title.3 Failing in these, he may be deemed a buyer in bad faith.4
Here, Filinvest was on notice that GHM had caused to be annotated on TCT 67462 RT-1, the mother title, as early as August 4, 1989 a notice of adverse claim covering Lot 6. This notwithstanding, Filinvest still proceeded to buy Lots 1,
2, 6, and 12 on September 10, November 18, and December 29, 1989.
Filinvest of course contends that, although the title carried a notice of adverse claim, that notice was only with respect to seller Yaps interest in Lot 6 and it did not affect Lots 1, 2, 12, and the remaining interests in Lot 6. The Court
disagrees.
The annotation of an adverse claim is intended to protect the claimants interest in the property.1avvphi1 The notice is a warning to third parties dealing with the property that someone claims an interest in it or asserts a better right
than the registered owner.5 Such notice constitutes, by operation of law, notice to the whole world.6 Here, although the notice of adverse claim pertained to only one lot and Filinvest wanted to acquire interest in some other lots
under the same title, the notice served as warning to it that one of the owners was engaged in double selling.
What is more, upon inquiry with the Register of Deeds of Las Pias, Filinvest also learned that the heirs of Andres Aldana sold Lot 8 to HDC and turned over the co-owners duplicate copy of TCT 67462 RT-1 to that company which had
since then kept the title. Filinvest (referred to below as FDC) admits this fact in its petition,7 thus:
Sometime in August 1989, FDC applied with the Register of Deeds of Las Pias for the transfer and registration of Lots 2, 4, and 5 in its name and surrendered the co-owners duplicate copy of TCT No. (67462) RT-1 given to it by the
Vivar family, but the Register of Deeds of Las Pias City refused to do the transfer of title in the name of FDC and instead demanded from FDC to surrender as well the other co-owner's duplicate copy of TCT No. (67462) RT-1 which
was issued to the heirs of Andres Aldana. Upon further inquiry, FDC came to know that the heirs of Andres Aldana sold Lot 8 and delivered their co-owner's duplicate copy of TCT No. (67462) RT-1 to Household Development Corporation,
a sister company of respondent GHMPI. FDC made representations to Household Development Corporation for the surrender of said co-owner's duplicate copy of TCT No. (67462) RT-1 to the Register of Deeds of Las Pias City, but
Household Development Corporation refused to do so.
Filinvests knowledge that GHM, a competitor, had bought Lot 6 in which Filinvest was interested, that GHM had annotated an adverse claim to that Lot 6, and that GHM had physical possession of the title, should have put Filinvest
on its toes regarding the prospects it faced if it bought the other lots covered by the title in question. Filinvest should have investigated the true status of Lots 1, 2, 6, and 12 by asking GHM the size and shape of its interest in the lands
covered by the same title, especially since both companies were engaged in the business of developing lands. One who has knowledge of facts which should have put him upon such inquiry and investigation cannot claim that he has
acquired title to the property in good faith as against the true owner of the land or of an interest in it. 8
The Court upholds the validity of the contracts between GHM and its sellers. As the trial court aptly observed, GHM entered into valid contracts with its sellers but the latter simply and knowingly refused without just cause to honor
their obligations. The sellers apparently had a sudden change of heart when they found out that Filinvest was willing to pay more.
As to the award of exemplary damages, the Court sustains the CA ruling. This species of damages is allowed only in addition to moral damages such that exemplary damages cannot be awarded unless the claimant first establishes a
clear right to moral damages.9 Here, since GHM failed to prove that it is entitled to moral damages, the RTCs award of exemplary damages had no basis. But the grant of attorneys fees is proper. As the RTC noted, this case has been
pending since 1991, or for 19 years now. GHM was forced to litigate and incur expenses in order to protect its rights and interests.
WHEREFORE, the Court GRANTS the petition in G.R. 188265 and DISMISSES the petition in G.R. 187824. The Court likewise REVERSES and SETS ASIDE the decision of the Court of Appeals dated November 25, 2008 in CA-G.R. CV 89448,
and REINSTATES the decision of the Regional Trial Court in Civil Case 91-098 dated March 16, 2006 with the MODIFICATION that the award of exemplary damages is DELETED.
G.R No. 166536 February 4 2010
FLOR MARTINEZ, represented by MACARIO MARTINEZ, authorized representative and Attorney-in-Fact, Petitioner
vs.
ERNESTO G. GARCIA AND EDILBERTO M. BRUA, Respondents.
DECISION

PERALTA, J.:
Before us is a special civil action for certiorari under Rule 65 of the Rules of Court to annul and set aside the Decision[1] dated August 12, 2004 and the Resolution[2] dated November 18, 2004 of the Court of Appeals (CA) in CA-G.R.
CV No. 61591, which reversed and set aside the Decision[3] dated April 15, 1998 and Order[4] dated August 11, 1998 of the Regional Trial Court (RTC) of Pasig, Branch 267, in Special Civil Action No. 574.
The factual antecedents are as follows:
Respondent Edilberto Brua was the registered owner of a parcel of land located in Mandaluyong, Rizal, covered by Transfer Certificate of Title (TCT) No. 346026 of the Registry of Deeds of Rizal, which is the subject matter of this case.
The property was first mortgaged to the Government Service Insurance System (GSIS), and such mortgage was annotated at the back of TCT No. 346026 as Entry No. 91370, inscribed on June 5, 1974.[5] On February 5, 1980, respondent
Brua obtained a loan from his brother-in-law, respondent Ernesto Garcia, in the amount of One Hundred Fifty Thousand Pesos (P150,000.00) and, to secure the payment of said loan, respondent Brua mortgaged the subject property
to respondent Garcia, as evidenced by a Deed of Real Estate Mortgage[6] executed in respondent Garcia's favor. Since the title to the subject property was in the possession of the GSIS and respondent Garcia could not register the
Deed of Real Estate Mortgage, he then executed an Affidavit of Adverse Claim[7] and registered it with the Registry of Deeds of Rizal on June 23, 1980 as Entry No. 49853/T-346026,[8] which remained uncanceled up to this time.
Sometime in October 1991, respondent Brua requested respondent Garcia to pay the former's loan with the GSIS, so that the title to the subject property would be released to the latter. Respondent Garcia then paid GSIS the amount
of P400,000.00 and, thus, the title to the subject property was released to him.
On October 22, 1991, a Deed of Absolute Sale[9] was executed between respondents Garcia and Brua over the subject property, where respondent Brua sold the property in the amount of P705,000.00. In the same deed, it was stated
that the subject property was only a partial payment of respondent Brua's mortgage indebtedness to respondent Garcia, which he could no longer redeem from the latter. Respondent Garcia then registered the Deed of Sale with the
Registry of Deeds of Rizal on October 24 1991, and a new TCT No. 5204[10] was issued in the names of respondent Garcia and his wife. However, the annotations at the back of the previous title were carried over to the new title, to
wit: Entry No. 56837, a Notice of Levy on Attachment and/or Levy inscribed on January 8, 1981;[11] Entry No. 2881 showing a Notice of Levy on Execution in favor of petitioner Flor Martinez, which was inscribed on July 11, 1988;[12]
Entry No. 3706, which was a Certificate of Sale in favor of petitioner inscribed on September 2, 1988;[13] Entry No. 72854, which was a Notice of Levy on Execution in favor of Pilipinas Bank inscribed on December 8, 1981;[14] and
Entry No. 16611 inscribed on October 24, 1991, which was the cancellation of respondent Brua's mortgage with GSIS.[15]
It appeared that the annotations found at the back of the title of the subject property in favor of petitioner, i.e., Notice of Levy on Attachment and/or Levy, Notice of Levy on Execution, and Certificate of Sale, were all made in connection
with petitioner's action for Collection of Sum of Money, which she filed against respondent Brua at the RTC of Makati City, Branch 60, docketed as Civil Case No. 39633. In that case, a decision was rendered in favor of petitioner, where
the RTC ordered respondent Brua to pay the former the amount of P244,594.10, representing the value of the dishonored checks plus 12% interest per annum as damages and the premium paid by petitioner for the attachment bond.
The decision became final and executory as respondent Brua failed to appeal the same, and a notice of levy on execution was issued. A public auction was subsequently conducted, where the subject property was awarded to petitioner
as the sole bidder in the amount of P10,000.00, and a Certificate of Sale was issued in her favor.
The annotation of Pilipinas Bank's Notice of Levy on Execution annotated as Entry No. 72854 on the title of the subject property was by virtue of a civil case filed by Filipinas Manufacturers Bank, now known as Pilipinas Bank, against
respondent Brua.
On February 9, 1994, respondents Garcia and Brua filed with the RTC of Pasig, Branch 267, an Action to Quiet Title, initially against petitioner due to the encumbrances/liens annotated on respondent Garcia's new title. They contended
that these encumbrances/liens were registered subsequent to the annotation of respondent Garcia's adverse claim made in 1980, and prayed that these be canceled. Subsequently, the complaint was amended to include Pilipinas
Bank as an additional defendant. Petitioner and Pilipinas Bank filed their respective Answers thereto.
Trial thereafter ensued.
On April 15, 1998, the RTC rendered its decision dismissing respondent Garcia's action for quieting of title, the dispositive portion of which reads:
WHEREFORE, PREMISES CONSIDERED, the instant complaint is hereby dismissed for lack of merit and judgment is hereby rendered in favor of defendants Flor Martinez and Pilipinas Bank as against plaintiffs Ernesto Garcia and Edilberto
Brua who are further directed to pay both defendants attorney's fees in the amount of P50,000.00 each.
Accordingly, the judicial inscriptions particularly, Entry No. 3706/T-346026, annotation of certificate of sale and Entry No. 72854/T-346026 are held to be valid, subsisting liens which do not constitute a cloud on Transfer Certificate of
Title No. 5204.[16]
In so ruling, the RTC found that the adverse claim which respondent Garcia caused to be annotated on the previous title of the subject property, i.e, TCT No. 346026, on June 23, 1980 was predicated on his interest as a mortgagee of
a loan of P150,000.00, which he extended to respondent Brua; that respondent Garcia's adverse interest was merely that of a second mortgagee, as he was not yet the purchaser of the subject property as of said date; that when the
judicial liens, i.e., Notice of Levy on Attachment and/or Levy and Notice of Levy on Execution, were caused to be registered by petitioner on respondent Brua's title on January 8, 1981 and July 8, 1998, respectively, by virtue of petitioner
being adjudged judgment creditor by Branch 60 of RTC Makati, respondent Garcia's claim became inferior to that of petitioner. The RTC said that respondent Garcia's inaction to preserve his adverse claim as a second mortgagee,
which was inscribed on June 23, 1980, and his sudden decision to redeem and purchase the subject property from the GSIS in October 1991 -- when petitioner's Notice of Levy on Attachment and/or Levy, Notice of Levy on Execution
and Certificate of Sale were already inscribed at the back of respondent Brua's title -- showed bad faith on the part of respondent Garcia; that respondent Brua did not even testify or participate in the case, except when he was
impleaded as a plaintiff in the case. The RTC did not give credit to respondent Garcia's claim that he and respondent Brua had no prior knowledge of the occurrence of a public auction and the consequent annotation of the certificate
of sale, and found respondent Garcia to be a buyer in bad faith of the subject property.
The RTC also ruled that the Notice of Levy on Execution, which was annotated on December 8, 1981 as Entry No. 72854 on respondent Brua's title arising from Civil Case No. 7262 entitled Pilipinas Bank v. Edilberto Brua, was a valid
levy on the subject property in favor of Pilipinas Bank. The levy could not be canceled, as this would impair the interest of the bank which had been decided upon by a co-equal court. The RTC found that the sale between respondents
appeared to be tainted with bad faith, which constrained petitioner and Pilipinas Bank from engaging the services of lawyers; thus, the award of attorney's fees in the latter's favor.
Respondents' motion for reconsideration was denied by the RTC on August 11, 1998.
Respondents filed their appeal with the CA. However, respondent Brua failed to file his appellant's brief; thus, his appeal was considered abandoned and dismissed. Petitioner and Pilipinas Bank filed their respective appellees' briefs.
On August 12, 2004, the CA reversed and set aside the RTC decision, the dispositive portion of which reads:
WHEREFORE, the appealed Decision dated April 15, 1998 is REVERSED and SET ASIDE. Granting the instant appeal, Entry No. 72854 (Notice of Levy on Execution in favor of Pilipinas Bank), Entry No. 2881 (Notice of Levy on Execution
in favor of Flor Martinez) and Entry No. 3706 (Certificate of Sale in favor of Flor Martinez) inscribed in TCT No. 346026 and carried over to TCT No. 5204, are hereby CANCELLED.[17]
The CA said that a subsequent sale of property covered by a certificate of title cannot prevail over an adverse claim, duly sworn to and annotated on the certificate of title previous to the sale; that while one who buys a property from
the registered owner need not have to look behind the title, he is nevertheless bound by the liens and encumbrances annotated thereon; and, thus, one who buys without checking the vendor's title takes all the risks and losses
consequent to such failure. The CA found that in order to protect his interest, respondent Garcia executed an Affidavit of Adverse Claim on June 23, 1980, annotated it on the title of the subject property under Entry No. 49853 and it
has remained uncanceled up to this time; that such adverse claim was registered prior to the inscription of the Certificate of Sale in favor of petitioner under Entry No. 3706 and Pilipinas Bank's Notice of Levy on Execution under Entry
No. 72854; that the prior registration of respondent Garcia's adverse claim effectively gave petitioner and Pilipinas Bank notice of the former's right to the subject property and, thus, petitioner was deemed to have knowledge of
respondent Garcia's claim and could not be considered as a buyer in good faith at the time she purchased the subject property in the public auction; that petitioner could not claim that she was a purchaser in good faith, since
respondent Garcia's adverse claim was entered on June 23, 1980, eight years ahead of petitioner's Certificate of Sale on September 2, 1988; that when the Notice of Levy on Execution in favor of Pilipinas Bank was annotated on
respondent Brua's title, the sheriff who caused the annotation was charged with knowledge that the property sought to be levied upon on execution was encumbered by an interest, which was the same if not better than that of the
registered owner thereof; and that such notice of levy could not prevail over the existing adverse claim of respondent Garcia inscribed on the title as can be deduced from Section 12, Rule 39 of the Rules of Court.
The CA found that the RTC erred in concluding that respondent Garcia was a purchaser in bad faith, since his adverse claim was entered in respondent Brua's title in 1980, and respondent Garcia could not have foretold at the time he
caused such annotation of adverse claim that petitioner would purchase the same property eight years thereafter; and that while good faith is presumed, bad faith must be established by competent proof by the party alleging the
same; and, thus, in the absence of respondent Garcia's bad faith, he is deemed to be a purchaser in good faith, and his interest in the property must not be disturbed.
The CA also found that a Notice of Adverse Claim remains valid even after the lapse of 30 days, as provided for in Sec. 70 of Presidential Decree No. (PD) 1529 pursuant to our ruling in Sajonas v. CA; that since no petition was filed by
petitioner for the cancellation of respondent Garcia's Notice of Adverse Claim, the adverse claim subsisted and his rights over the subject property must consequently be upheld.
Petitioners motion for reconsideration was denied by the CA in a Resolution dated November 18, 2004.
Petitioner is now before us via a petition for certiorari under Rule 65, alleging grave abuse of discretion amounting to lack or excess of jurisdiction committed by the CA in issuing its assailed decision and resolution.
Petitioner contends that respondent Garcia's adverse claim is nothing but a notice that he has an interest adverse to that of respondent Brua to the extent of P150,000.00, which was the amount of the loan secured by a Deed of Real
Estate Mortgage executed by respondent Brua in favor of respondent Garcia; that the adverse claim cannot be said to be superior to a final sale conducted by the sheriff by authority of the court pursuant to a judgment that has
attained finality; that Sajonas v. CA, on which the CA anchored its decision, differs from this case, since the adverse claim made in the title by therein petitioner Sajonas was by virtue of a contract to sell; that unlike in this case,
respondent Garcia caused the annotation of his adverse claim as a mortgagee of respondent Brua in the amount of P150,000.00 in 1980; and respondent Garcia's payment of the GSIS loan in 1991, upon the request of respondent
Brua, was presumably for the reason that respondent Brua could no longer discharge the GSIS obligation; and to avoid the foreclosure of the property by the GSIS, respondent Brua asked Garcia to redeem it; that respondent Garcia's
adverse claim in 1980 was not as a vendee of the property like in Sajonas, but merely as a mortgagee.
Petitioner admits that respondent Garcia, as a mortgagee on the basis of which an adverse claim was inscribed on the title of the subject property, is protected by Sec. 12, Rule 39 of the Rules of Court; and, thus, petitioner knows that
she is obliged as a vendee in the public sale to pay liens and encumbrances then existing at the time of the sale on September 2, 1988, which necessarily included the adverse claim of respondent Garcia in the amount of P150,000.00.
In his Comment, respondent Garcia claims that the petition faces outright dismissal, since the appropriate remedy of the petitioner should have been a petition for review under Rule 45 which had already lapsed; that when the CA
reversed the RTC decision, such action did not constitute grave abuse of discretion since it had legal basis; that any lien or adverse claim earlier inscribed prevails over those liens or adverse claims inscribed subsequent thereto.
Respondent Brua did not file his comment. Thus, we dispensed with the filing of the same in a Resolution dated June 19, 2006.
Petitioner filed her Reply, arguing that a petition for certiorari may be availed of where appeal is inadequate and ineffectual.
The parties submitted their respective memoranda as required in Our Resolution dated August 30, 2006.
We dismiss the petition.
Petitioner should have filed a petition for review under Rule 45 of the Rules of Court instead of a petition for certiorari under Rule 65, since she is assailing the CA decision and resolution which are final judgments. Rule 45 clearly
provides that decisions, final orders or resolutions of the CA in any case, i.e., regardless of the nature of the action or proceedings involved, may be appealed to us by filing a petition for review, which is just a continuation of the
appellate process over the original case.[18] And the petition for review must be filed within fifteen (15) days from notice of the judgment or final order or resolution appealed from, or of the denial of petitioner's motion for a new
trial or reconsideration filed in due time after notice of the judgment.[19]
In this case, petitioner received a copy of the CA Resolution denying her motion for reconsideration on November 24, 2004; and, thus, under Rule 45, she has 15 days from receipt of such resolution, or until December 9, 2004, to file
a petition for review. However, petitioner did not file a petition for review; instead, she filed a petition for certiorari under Rule 65 on January 24, 2005.[20] Hence, the CA decision and resolution have already attained finality, and
petitioner has lost her right to appeal.
A petition for certiorari under Rule 65 is proper if a tribunal, a board or an officer exercising judicial or quasi-judicial functions has acted without or in excess of jurisdiction or with grave abuse of discretion amounting to lack or excess
of jurisdiction and there is no appeal, or any plain, speedy and adequate remedy in the ordinary course of law.[21] In this case, petitioner had the remedy of appeal, and it was the speedy and adequate remedy in the ordinary course
of law. Thus, a special civil action for certiorari cannot be used as a substitute for an appeal that the petitioner has already lost. Certiorari cannot be allowed when a party to a case fails to appeal a judgment to the proper forum despite
the availability of that remedy, certiorari not being a substitute for a lost appeal.[22] Certiorari will not be a cure for failure to timely file a petition for review on certiorari under Rule 45.[23]
While there are instances where the extraordinary remedy of certiorari may be resorted to despite the availability of an appeal, the long line of decisions denying the special civil action for certiorari, either before appeal was availed
of or in instances where the appeal period had lapsed, far outnumber the instances where certiorari was given due course.[24] The few significant exceptions are: (1) when public welfare and the advancement of public policy dictate;
(2) when the broader interests of justice so require; (3) when the writs issued are null; (4) when the questioned order amounts to an oppressive exercise of judicial authority,[25] which we find to be not present in this case. Notably,
petitioner did not even fail to advance an explanation why appeal was not availed of, nor was there any showing that the issue raised in the petition for certiorari could not be raised on appeal. Concomitant to a liberal application of
the rules of procedure should be an effort on the part of the party invoking liberality to adequately explain his failure to abide by the rules.[26]
In fact, the argument raised by petitioner, i.e., that the Court of Appeals had no legal authority to vary the findings of the trial court and substitute its own conclusion, which were patently contrary to the trial court's findings, and
conclusion, relates to the wisdom and soundness of the assailed CA decision and resolution. Where the issue or question involved affects the wisdom or legal soundness of the decision not the jurisdiction of the court to render said
decision the same is beyond the province of a special civil action for certiorari.[27] Erroneous findings and conclusions do not render the appellate court vulnerable to the corrective writ of certiorari, for where the court has jurisdiction
over the case, even if its findings are not correct, these would, at the most, constitute errors of law and not abuse of discretion correctible by certiorari.[28] For if every error committed by the trial court or quasi-judicial agency were
to be the proper subject of review by certiorari, then trial would never end, and the dockets of appellate courts would be clogged beyond measure.[29]
Even if we consider this petition for certiorari under Rule 65, it must be shown that the CA committed grave abuse of discretion equivalent to lack or excess of jurisdiction, and not mere errors of judgment, for the petition to be
granted.[30] As we said, certiorari is not a remedy for errors of judgment, which are correctible by appeal. By grave abuse of discretion is meant such capricious and whimsical exercise of judgment as is equivalent to lack of jurisdiction,
and mere abuse of discretion is not enough -- it must be grave.[31]
Petitioner contends that the adverse claim of respondent Garcia inscribed on the title of the subject property is but a notice that the latter has an interest adverse to respondent Brua's title, to the extent of P150,000.00 secured by a
real estate mortgage, and such adverse claim cannot be considered superior to that of a final sale conducted by the sheriff by virtue of a court judgment that has attained finality.

Sec. 12, Rule 39 of the Rules of Court provides:


SEC. 12. Effect of levy on execution as to third persons. The levy on execution shall create a lien in favor of the judgment obligee over the right, title and interest of the judgment obligor in such property at the time of the levy, subject
to liens and encumbrances then existing.
Clearly, the levy does not make the judgment creditor the owner of the property levied upon. He merely obtains a lien.[32] Such levy on execution is subject and subordinate to all valid claims and liens existing against the property at
the time the execution lien attached, such as real estate mortgages.[33]
Respondent Garcia's adverse claim, which refers to the deed of mortgage executed by respondent Brua in his favor, was annotated on respondent Brua's title registered with the Registry of Deeds of Rizal on June 23, 1980 as Entry No.
49853. The adverse claim was already existing when the Notice of Levy on Execution, as well as the Certificate of Sale in favor of petitioner, was inscribed on July 11, 1988 and September 2, 1988, respectively; and, hence, the adverse
claim is sufficient to constitute constructive notice to petitioner regarding the subject property. When petitioner registered her Notice of Levy on Execution on the title of the subject property, she was charged with the knowledge that
the subject property sought to be levied upon on execution was encumbered by an interest the same as or better than that of the registered owner thereof.[34] Thus, no grave abuse of discretion was committed by the CA when it
held that the notice of levy and subsequent sale of the subject property could not prevail over respondent Garcia's existing adverse claim inscribed on respondent Brua's certificate of title.
The annotation of an adverse claim is a measure designed to protect the interest of a person over a piece of real property, where the registration of such interest or right is not otherwise provided for by the Land Registration Act or
Act No. 496 (now P.D. No.1529 or the Property Registration Decree), and serves a warning to third parties dealing with said property that someone is claiming an interest on the same or a better right than that of the registered owner
thereof.[35]
Petitioner cannot be considered as a buyer in good faith. A purchaser in good faith and for value is one who buys the property of another without notice that some other person has a right to or interest in such property and pays a
full and fair price for the same at the time of such purchase, or before he has notice of the claims or interest of some other person in the property.[36] Here, petitioner admitted on cross-examination that when she registered her
notice of attachment in 1981 and the levy on execution on July 11, 1988, she already saw respondent Garcia's adverse claim inscribed on respondent Brua's title on June 23, 1980.[37]
Petitioner claims that Sajonas v. CA[38] is not applicable, since the adverse claim registered on the title of the subject property made by the Sajonases in 1984 was by virtue of a contract to sell, so that when the full purchase price was
eventually paid on September 4, 1984, a deed of sale of the property was subsequently executed and registered in the Registry of Deeds of Marikina on August 28, 1985; that when the respondent therein registered his notice levy on
execution on February 12, 1985, such notice of levy could not have precedence over the adverse claim, because there was no more property to levy upon. In this case, however, respondent Garcia caused the annotation of his adverse
claim only as a mortgagee of respondent Brua in the amount of P150,000.00 in 1980. The subsequent deed of sale was executed in 1991 between respondents Garcia and Brua after the former paid the latter's loan from with the GSIS.
When a new title was issued in respondent Garcia's name, the notice of levy on execution and the certificate of sale were already annotated on the title of the subject property; and, thus, the sale in favor of respondent Garcia could
not prevail over the previous auction sale in petitioner's favor.
We are not impressed.
The issue posed in Sajonas was whether the adverse claim inscribed on TCT No. N-190417 was still in force when private respondent therein caused the annotation of the notice of levy on execution on the title; if the adverse claim
was still in effect, then respondent therein was charged with the knowledge of pre-existing interest over the subject property and, thus, the Sajonases were entitled to the cancellation of the notice of levy inscribed on the title.
We ruled in Sajonas that the inscription of the adverse claim on the title of the subject property was still in effect on February 12, 1985, when the sheriff annotated the notice of levy on execution in favor of respondent therein; that
respondent therein was charged with knowledge that the subject property sought to be levied upon on execution was encumbered by an interest the same as or better than that of the registered owner thereof. We then said that
such notice of levy could not prevail over the existing adverse claim inscribed on the certificate of title in favor of the Sajonases.
As in that case, the adverse claim of respondent Garcia based on the Deed of Mortgage executed by respondent Brua over the subject land in the formers favor was existing when the Notice of Levy on Execution was inscribed in favor
of petitioner. Although the deed of sale between respondents Brua and Garcia was done after the notice of levy on execution and certificate of sale were inscribed on the title, it was clearly stated in the deed that the subject property
was only a partial payment for respondent Brua's mortgage indebtedness to respondent Garcia, which the former could no longer redeem from the latter. Thus, the sale of the subject property by respondent Brua to respondent Garcia
was by reason of respondent Brua's prior loan from respondent Garcia, which was secured by a mortgage on the subject property; and this mortgage was registered and already existing on the title of the subject property when the
Notice of Levy on Execution and Certificate of Sale in favor of petitioner were inscribed thereon. Thus, petitioner's claim over the subject property must yield to the earlier encumbrance registered by respondent Garcia.
WHEREFORE, the petition is DISMISSED. The Decision dated August 12, 2004 and Resolution dated November 18, 2004 of the Court of Appeals in CA-G.R. CV No. 61591 are AFFIRMED.
G.R. No. 141256 July 15, 2005

ESTANISLAO PADILLA, JR., Petitioner,


vs.
PHILIPPINE PRODUCERS COOPERATIVE MARKETING ASSOCIATION, INC., Respondent.
DECISION

CORONA, J.:
In implementing the involuntary transfer of title of real property levied and sold on execution, is it enough for the executing party to file a motion with the court which rendered judgment, or does he need to file a separate action with
the Regional Trial Court?
This is a petition for review on certiorari1 from a decision
of the Court of Appeals in CA-G.R. CV No. 53085,2 and its resolution denying reconsideration,3 both of which affirmed the orders of the Regional Trial Court of Bacolod City, Branch 51.4
The undisputed facts of the case follow.5
Petitioner and his wife are the registered owners of the following real properties: Lot Nos. 2904-A (covered by TCT No. T-36090), 2312-C-5 (covered by TCT No. T-3849), and 2654 (covered by TCT No. T-8053), all situated in Bago City.
Respondent is a marketing cooperative which had a money claim against petitioner.
On April 24, 1987, respondent filed a civil case against petitioner for collection of a sum of money in the Regional Trial Court of Bacolod City.6 Despite receipt of summons on May 18, 1987, petitioner (then defendant) opted not to file
an answer.7 On March 3, 1988, respondent (then plaintiff) moved to have petitioner-defendant declared in default, which the trial court granted on April 15, 1988.8 Respondent presented its evidence on October 9, 1989.9 On November
28, 1989, the trial court rendered a decision in respondents favor.10 Petitioner was furnished a copy of this decision by mail on November 29, 1989 but, because of his failure to claim it, the copy was returned.11
On May 31, 1990, the Court issued a writ of execution. On June 4, 1990, the three lots (Lot 2904-A, Lot 2312-C-5 and Lot 2654), all of the Bago Cadastre and registered in petitioners name, were levied by virtue of that writ. On July 4,
1990, sheriff Renato T. Arimas auctioned off the lots to satisfy the judgment, with respondent as the only bidder. On July 10, 1990, ex-officio provincial sheriff and clerk of court Antonio Arbis executed a certificate of sale in favor of
respondent. On August 13, 1990, the certificate of sale was recorded in the Register of Deeds. 12
When petitioner failed to exercise his right of redemption within the 12-month period allowed by law, the court, on motion of respondent, ordered on February 5, 1992 the issuance of a writ of possession for the sheriff to cause the
delivery of the physical possession of the properties in favor of respondent.13
On May 17, 1995, respondent filed a motion to direct the Register of Deeds to issue new titles over the properties in its name, alleging that the Register of Deeds (RD) of Bago City would not issue new titles (in respondents name)
unless the owners copies were first surrendered to him. Respondent countered that such surrender was impossible because this was an involuntary sale and the owners copies were with petitioner.14
On July 3, 1995, the trial court issued an order granting the motion. In a subsequent order dated August 8, 1995, it denied petitioners motion for reconsideration. Petitioner appealed. Four years later, the Court of Appeals rendered
the assailed decision affirming the order of the trial court.
Petitioner contends that respondents motion for the RD to cancel the existing certificates of title and issue new ones in its name was in fact a real action and that the motion was procedurally infirm because respondent did not furnish
him a copy.15 He also claims that under Section 6 of Rule 39 of the 1997 Rules of Civil Procedure, the execution of the judgment was barred by prescription, given that the motion was filed more than 5 years after the writ of execution
was issued on March 23, 1990.16 He also argues that respondent failed to follow the correct procedure for the cancellation of a certificate of title and the issuance of a new one, which is contained in Section 107 of PD 1529. 17
In its comment,18 respondent claims that the motion dated May 15, 1995 to direct the RD to issue new certificates of title was but a continuation of the series of events that began with the decision in its favor on November 28, 1989,
and from there, the auction of the properties and the issuance of a certificate of sale in 1990.

The two principal issues for consideration are:


(1) whether or not respondents right to have new titles issued in its name is now barred by prescription and
(2) whether or not the motion in question is the proper remedy for cancelling petitioners certificates of title and new ones issued in its name.

On the first issue, we rule that the respondents right to petition the court for the issuance of new certificates of title has not yet prescribed.
In Heirs of Blancaflor vs. Court of Appeals,19 Sarmiento Trading Corporation, predecessor-in-interest of the private respondent Greater Manila Equipment Marketing Corporation, secured a writ of execution in 1968 by virtue of which
it levied real property belonging to petitioners predecessor-in-interest, Blancaflor. When the property was auctioned, Sarmiento Trading bid successfully and, in 1970, after the lapse of the one-year redemption period, consolidated
its ownership over the lot.
Sarmiento Trading then filed a petition with the Court of First Instance to order the cancellation of Blancaflors title and the issuance of a new one in its name. In 1972, Sarmiento Trading sold the lot to private respondent which, at
the time, went by the name Sarmiento Distributors Corporation.
In 1988, the Deputy Register of Deeds of Iloilo wrote to Blancaflor requesting him to surrender his owners duplicate copy of the TCT. Blancaflor did not comply and the RD refused to issue a new title. On May 25, 1989, private
respondent filed a petition in the Regional Trial Court praying that the petitioners be ordered to surrender the owners duplicate copy of the title. The petitioners refused, claiming that respondents cause of action had already
prescribed. Ruling otherwise, we stated:
It is settled that execution is enforced by the fact of levy and sale. The result of such execution salewith Sarmiento Trading Corporation as the highest bidderwas that title to Lot No. 22 of TCT No. 14749 vested immediately in the
purchaser subject only to the judgment debtors right to repurchase. Therefore, upon Sarmiento Trading Corporations purchase of Lot No. 22 covered by TCT No. 14749 at the auction sale, private respondents successor-in-interest
had acquired a right over said title.
The right acquired by the purchaser at an execution sale is inchoate and does not become absolute until after the expiration of the redemption period without the right of redemption having been exercised. But inchoate though it be,
it is like any other right, entitled to protection and must be respected until extinguished by redemption. Gaudencio Blancaflor was not able to redeem his property after the expiration of the redemption period, which was 12 months
after the entry or annotation of the certificate of sale made on the back of TCT No. 14749. Consequently, he had been divested of all his rights to the property. (underscoring ours)
In this case, the rule being invoked by petitioner20 states:
SEC. 6. Execution by motion or by independent action.A final and executory judgment or order may be executed on motion within five (5) years from the date of its entry. After the lapse of such time, and before it is barred by the
statute of limitations, a judgment may be enforced by action. The revived judgment may also be enforced by motion within five (5) years from the date of its entry and thereafter by action before it is barred by the statute of limitations.
As should be evident from Blancaflor, petitioner Padillas reliance on Section 6 of Rule 39 of the 1997 Revised Rules of Civil Procedure is misplaced. The fact of levy and sale constitutes execution, and not the action for the issuance of
a new title. Here, because the levy and sale of the properties took place in June and July of 1990, respectively, or less than a year after the decision became final and executory, the respondent clearly exercised its rights in timely
fashion.
In addition, petitioner himself admits his failure to redeem the properties within the one-year period by adopting the facts stated in the Court of Appeals decision.21 There is thus no doubt he had been divested of his ownership of the
contested lots.
Respondents position hinges on petitioners failure to redeem the properties 12 months after the certificate of sale was recorded in the Register of Deeds on August 13, 1990. There is no uncertainty about respondents having become
the new lawful owner of the lots in question by virtue of the levy and the execution sale.
On the other hand, the issue of whether to acquire new titles by mere motion or through a separate petition is an entirely different matter.
Petitioner is correct in assailing as improper respondents filing of a mere motion for the cancellation of the old TCTs and the issuance of new ones as a result of petitioners refusal to surrender his owners duplicate TCTs.
Indeed, this called for a separate cadastral action initiated via petition.
Section 107 of PD 1529,22 formerly Section 111 of Act 496,23 provides:
Sec. 107. Surrender of withheld duplicate certificates.Where it is necessary to issue a new certificate of title pursuant to any involuntary instrument which divests the title of the registered owner against his consent or where a
voluntary instrument cannot be registered by reason of the refusal or failure of the holder to surrender the owners duplicate certificate of title, the party in interest may file a petition in court to compel the surrender of the same to
the Register of Deeds. The court, after hearing, may order the registered owner or any person withholding the duplicate certificate to surrender the same, and direct the entry of a new certificate or memorandum upon such surrender.
If the person withholding the duplicate certificate is not amenable to the process of the court, or if for any reason the outstanding owners duplicate certificate cannot be delivered, the court may order the annulment of the same as
well as the issuance of a new certificate of title in lieu thereof. Such new certificate and all duplicates thereof shall contain a memorandum of the annulment of the outstanding duplicate.
Respondent alleges that it resorted to filing the contested motion because it could not obtain new certificates of title, considering that petitioner refused to surrender his owners duplicate TCTs. This contention is incorrect. The proper
course of action was to file a petition in court, rather than merely move, for the issuance of new titles. This was the procedure followed in Blancaflor by Sarmiento Trading which was in more or less the same situation as the respondent
in this case:24
Petitioners reliance on prescription and laches is unavailing in this instance. It was proper for Sarmiento Trading Corporation to file a petition with the Court of First Instance of Iloilo, acting as a cadastral court, for the cancellation of
TCT No. 14749 in the name of Gaudencio Blancaflor and the issuance of another in its name. This is a procedure provided for under Section 78 of Act No. 496 and Section 75 of PD No. 1529
Section 78 of Act 496 reads:
Sec. 78. Upon the expiration of the time, if any allowed by law for redemption after registered land has been sold on any execution, or taken or sold for the enforcement of any lien of any description, the person claiming under the
execution or under any deed or other instrument made in the course of the proceedings to levy such execution or enforce any lien, may petition the court for the entry of a new certificate to him, and the application may be granted:
Provided, however, That every new certificate entered under this section shall contain a memorandum of the nature of the proceeding on which it is based: Provided, further, That at any time prior to the entry of a new certificate the
registered owner may pursue all his lawful remedies to impeach or annul proceedings under execution or to enforce liens of any description.

Section 75 of PD 1529 provides:


Sec. 75. Application for new certificate upon expiration of redemption period.Upon the expiration of the time, if any, allowed by law for redemption after the registered land has been sold on execution, or taken or sold for the
enforcement of a lien of any description, except a mortgage lien, the purchaser at such sale or anyone claiming under him may petition the court for the entry of a new certificate to him.
Before the entry of a new certificate of title, the registered owner may pursue all legal and equitable remedies to impeach or annul such proceedings.
It is clear that PD 1529 provides the solution to respondents quandary. The reasons behind the law make a lot of sense; it provides due process to a registered landowner (in this case the petitioner) and prevents the fraudulent or
mistaken conveyance of land, the value of which may exceed the judgment obligation. Petitioner contends that only his interest in the subject lots, and not that of his wife who was not a party to the suit, should have been subjected
to execution, and he should have had the opportunity to prove as much.
While we certainly will not condone any attempt by petitioner to frustrate the ends of justice the only way to describe his refusal to surrender his owners duplicates of the certificates of title despite the final and executory judgment
against him respondent, on the other hand, cannot simply disregard proper procedure for the issuance to it of new certificates of title. There was a law on the matter and respondent should have followed it.
In any event, respondent can still file the proper petition with the cadastral court for the issuance of new titles in its name.
WHEREFORE, the instant petition is hereby GRANTED. The decision of the Court of Appeals in CA-G.R. CV No. 53085 is hereby REVERSED. The order of the Regional Trial Court of Bacolod City ordering the Register of Deeds of Bago City
to issue new certificates of title in favor of respondent is ANULLED.
G.R. No. 185620 December 14, 2011

RUBEN C. REYES, Petitioner,


vs.
TANG SOAT ING (JOANNA TANG) and ANDO G. SY, Respondents.
DECISION

PEREZ, J.:
Challenged in this petition for review on certiorari under Rule 45 of the Rules of Court is the Decision1 of the Court of Appeals in CA-G.R. SP No. 96913 annulling and setting aside the Orders2 of the Regional Trial Court (RTC), Branch 7,
Malolos, Bulacan which denied respondents Tang Soat Ings (Joanna Tangs) and Ando Sys Opposition (To MFR Farm, Inc.s Motion dated 25 April 2006) and Motion (To declare void the sale of the property covered by TCT No. 198753)
dated May 23, 2006.
The controversy arose from a complaint for Enforcement of Easement and Damages with Prayer for Preliminary Injunction and Restraining Order filed by MFR Farms, Inc. (MFR) against respondents docketed as Civil Case No. 1245-M.
MFR complained of respondents commercial and industrial use of their property covered by Transfer Certificate of Title (TCT) No. T-198753, and sought the enforcement of the encumbrance contained in their title. MFR likewise asked
for the payment of damages suffered by its pig farm resulting from respondents illegal use of their property.
After trial, the RTC granted MFRs complaint and specifically held that:
[Respondents] have defied the clear undertaking stated in the title to the subject property to limit the use thereof to purposes not commercial or industrial in character. x x x [U]sing the land as a chemical processing site and as a
storage facility for chemicals is devoting it to industrial purposes, which is not allowed under the subsisting encumbrance on the property.
[R]elief is owing to [MFR], but the grant thereof is rendered all the more imperative in light of the manifestly injurious effects which the business of [respondents] is causing to the neighboring estate, if not to the entire locality. x x x
By more than mere preponderance of evidence has it been established that the gaseous by-products of the chemical manufacturing process are outright pollutants which cause direct and manifest harm to humans and animals alike,
not to mention other living things.
WHEREFORE, judgment is hereby rendered: (a) ordering [respondents] to desist from the further conduct of industrial or commercial activities on the parcel of land covered by TCT No. T-198753 of the Registry of Deeds of Bulacan,
particularly the manufacture and storage of chemicals thereat, including the construction of buildings intended for purposes prohibited by the title to the property; (b) making permanent the injunctions issued by this Courts orders
of May 3, 1982 and December 7, 1983; (c) ordering [respondents] to pay [MFR] actual damages in the amount of Six hundred Thirty-Nine Thousand Six hundred Fifty (639,650.00) Pesos, with legal rate of Twelve (12%) percent interest
from the filing of the complaint on January 15, 1982, until the same is fully paid; (d) ordering [respondents] to pay [MFR] exemplary damages in the amount One Hundred Thousand (100,000.00) Pesos by way of example of correction
for the public good; (e) ordering [respondents] to pay MFR attorneys fees in the amount of One Hundred Thousand (100,000.00) Pesos and to pay the costs of suit. 3
On appeal by respondents docketed as CA G.R. CV No. 37808, the Court of Appeals affirmed with modification the ruling of the RTC: the Court of Appeals reduced the rate of interest to six percent (6%) and deleted the award of
exemplary damages and attorneys fees.4
MFR and respondents filed separate appeals by certiorari5 to this Court questioning the appellate courts ruling. Unfortunately for the parties, we dismissed both appeals for "late payment of legal fees and late filing of the petition." 6
By December 1, 1997, the decision of the Court of Appeals in CA G.R. CV No. 37808 became final and executory, and was recorded in the Book of Entries of Judgment. 7
On September 28, 1998, upon motion of MFR, the RTC issued a Writ of Execution.8 Pursuant thereto, the Branch Clerk of Court commanded the Sheriff of RTC, Branch 7, Malolos, Bulacan, Mr. Leovino Legaspi (Sheriff Legaspi), to
execute the Decision dated September 12, 1991 as modified by the Court of Appeals.9 Sheriff Legaspi was likewise ordered to accomplish a return of the proceedings taken thereon in accordance with Section 14, Rule 39 of the Rules
of Court.
On January 4, 1999, Sheriff Legaspi submitted a Sheriffs Report manifesting:
That on October 2, 1998[,] the undersigned was in receipt of the Writ of Execution issued by Hon. Danilo A. Manalastas for service thereof;
That on October 9, 1998[,] the undersigned served copy of the Writ of Execution and copy of the Notice dated October 9, 1998 to [respondent] Tang Soat Ing giving him five (5) days to comply [with] his obligations under the Writ of
Execution, thru Rodolfo Mendez, caretaker of the [respondents], at Tungkong Mangga, San Jose del Monte, Bulacan. The undersigned inquired from the said caretaker about the personal properties of Tang Soat Ing but he was told
that Tang Soat Ing has no more properties and the factory located in the compound is being leased to other people;
That on December 10, 1998[,] the undersigned went back to Tang Soat Ing at Tungkong Mangga, Sa Jose del Monte, Bulacan but said person was not there and also Rodolfo Mendez was not around because he was in Manila;
That on December 28, 1998[,] the undersigned went back to Tungkong Mangga, San Jose del Monte, Bulacan and talked to the caretaker[,] Rodolfo Mendez[,] and asked him what happened to the papers he gave to [respondent] Tang
Soat Ing. The caretaker said that [respondent Tang Soat Ing] called his lawyer and informed [the latter] about the papers he received. The caretaker also told the undersigned that he [did] not know what the lawyer said.10
A few days thereafter, on January 7, 1999, Sheriff Legaspi presented the Writ of Execution and the Notice of Levy on Execution of Real Property11 covering TCT No. T-198753 to the Register of Deeds of Bulacan Province.
On February 4, 1999, the Notice of Levy was inscribed on TCT No. T-198753.12
On May 7, 1999, Sheriff Legaspi issued a Notice of Sale on Execution of Real Property 13 which he likewise posted on the following places:
(a) The Bulletin Board of Municipal Hall of San Jose del Monte, Bulacan;
(b) The Bulletin Board of the Church of San Jose del Monte, Bulacan;
(c) The Bulletin Board of the Chapel of Gaya-gaya, San Jose del Monte, Bulacan;
(d) The Bulletin Board of the main entrance of the Provincial Capitol Building of Malolos, Bulacan; and
(e) The Posting Board of the Office of the Ex-Officio Sheriff located at the back of the Bulwagan ng Katarungan Building, Malolos, Bulacan.14

On June 12, 19 & 26, 1999, the Notice of Sale on Execution of Real Property was published in The Times Newsweekly. 15
On July 19, 1999, at the public auction of the subject property covered by TCT No. T-198753, MFR was declared as the highest bidder. On even date, Sheriff Legaspi issued a Certificate of Sale16 which was registered with the Register
of Deeds of Bulacan Province.
After more than five (5) years, on September 17, 2004, with respondents failing to exercise their right of redemption, MFR filed a Motion17 asking the RTC to issue an order directing the Register of Deeds of Bulacan Province to cancel
TCT No. T-198753 in the name of respondents, and issue a new certificate of title in the name of MFR.
On September 28, 2004, the RTC denied the Motion holding that a mere motion is not sufficient for the cancellation of a certificate of title. The RTC ruled that under Section 10718 of Presidential Decree No. 1529, the Property
Registration Decree, a petition and a hearing are required for the issuance of a new certificate of title.
On December 1, 2004, MFR filed a Petition19 in the same case, under the same docket number, Civil Case No. 1245-M, before the same execution court. In this new petition, MFR impleaded the Register of Deeds as additional defendant
and prayed for the same reliefs as those prayed for in their previous motion with an additional prayer for the issuance of an order directing respondents to immediately surrender the Owners Duplicate Copy of TCT No. T-198753.
On three separate occasions, December 9, 2004 and February 8 and 17, 2005, respondents, through their counsel of record, Atty. T. J. Sumawang (Atty. Sumawang), received a copy of the Petition.20
Respondents failed to file an Answer or any responsive pleading to MFRs Petition. Consequently, MFR moved to declare respondents in default. The Motion to Declare Respondents in Default was served on Atty. Sumawang on June
11, 2005.
The RTC granted MFRs Motion to Declare Respondents in Default: thereafter, MFR presented evidence ex-parte.
During presentation of evidence ex-parte, MFR filed a Motion for Substitution of Party Petitioner attaching thereto a Deed of Transfer of Interest declaring petitioner Ruben C. Reyes (Reyes) acquisition of MFRs rights over the subject
property. On January 2, 2006, the RTC issued an Order granting this latest motion: MFR was substituted by Reyes as party-petitioner.
In an Order dated January 10, 2006, the RTC granted the Petition, thus:
WHEREFORE, finding merit in the instant petition, the same is hereby granted. Accordingly, defendant/private respondent Tang Soat Ing (Joanna Tang) is hereby directed to surrender to the Court her duplicate owners copy of TCT
No. T-198753 within thirty (30) days from receipt of this Order. In [the event said] defendant/private respondent fails to surrender such owners duplicate copy as directed hereinabove, the Register of Deeds of Bulacan is hereby
directed to cancel TCT No. T-198753 and issue in lieu thereof a new owners duplicate certificate of title in the name of Ruben C. Reyes, who has substituted [MFR] by virtue of a Deed of Transfer of Interest and pursuant to the order
of this court dated January 02, 2006.21
Copies of the Order were separately served on Atty. Sumawang, Atty. Anacleto Diaz (Reyes counsel) and the Register of Deeds of Bulacan Province on January 20 and February 2, 2006, respectively.22 However, service thereof to
respondents counsel was returned and rendered impossible. Apparently, Atty. Sumawang had already died in December 2005. 23
On April 27, 2006, Reyes filed another Motion praying that the Register of Deeds of Bulacan Province be directed to cancel TCT No. T-198753 in the name of respondents and to issue a new one in his (Reyes) name.
On May 19, 2006, new counsel for respondents entered its appearance. Forthwith, on May 23, 2006, respondents, through their new counsel, filed the previously adverted to Opposition and Motion,24 opposing Reyes April 27, 2006
Motion and moving to declare void the sale of the subject property.
After an exchange of pleadings from the parties, the RTC issued the Order denying respondents Opposition and Motion for lack of merit. The RTC ruled that, "Section 107 of PD 1529 does not categorically state that the petition x x x
should be in the form of a separate, distinct and original action to be filed in another court, as otherwise it will create a situation in which the final judgment of a court, and its enforcement, may be subject to a review of, or even
reversal by another court of co-equal jurisdiction."25 As regards the motion to declare void the execution sale of the subject property covered by TCT No. T-198753, the RTC noted that "there was substantial compliance with the
requirements of [Section 15, Rule 39 of the Rules of Court evidenced] in the Sheriffs Report dated January 4, 1999, as well as the publication and posting requirements, extant in the records of this case."26 In conclusion, the RTC ruled
that respondents are estopped from questioning the proceedings, after keeping silent thereon for a long time, despite notice thereof.
Respondents filed a Motion for Reconsideration which the RTC denied in its Order dated October 20, 2006.
Gaining no reprieve from the RTC, respondents filed a petition for certiorari before the Court of Appeals seeking to: (1) nullify the trial courts twin Orders dated July 17, 2006 and October 20, 2006, respectively; and (2) declare void
the execution proceedings relating to the sale of the subject property and the cancellation of TCT No. T-198753.
In yet another turn of events, the appellate court annulled and set aside the July 17, 2006 and October 20, 2006 Orders of the RTC:
WHEREFORE, the Petition is GRANTED and the Orders issued on July 17 and October 20, 2006 are ANNULLED and SET ASIDE. The public auction sale of the property held on July 19, 1999 is declared invald and the Certificate of Sale
issued by Sheriff Leovino G. Legaspi on July 19, 1999 in favor of [petitioner Reyes, substituting MFR] covering the parcel of land embraced in Transfer Certificate of Title No. T-198753 is likewise declared null and void.27
Aggrieved, Reyes filed a Motion for Reconsideration which resulted in another exchange of pleadings between the parties. On December 9, 2008, the Court of Appeals denied the motion.

Hence, this impasse with the following issues for our resolution:
1. Whether the execution sale of the subject property covered by TCT No. T-198753 is void;
2. Proceeding from the validity of the execution sale and the consolidation of Reyes ownership over the subject property, whether Section 107 of Presidential Decree No. 1529 contemplates the filing of a separate cadastral case before
the RTC acting as a land registration court.

The petition is partially impressed with merit.


In declaring void the execution sale, the appellate court noted that petitioner did not strictly comply with the requirements of Section 15, Rule 39 of the Rules of Court. The Court of Appeals relied on our holding in Villaceran v.
Beltejar,28 an administrative case finding therein respondent Sheriff guilty of simple neglect of duty for failure to strictly comply with the rules on execution sale. The Court of Appeals ruled that the deficiencies in the notice of execution
sale were substantial and of such nature as to prevent the court from applying the presumption of regularity in the performance of official functions by Sheriff Legaspi at the time of the execution sale. On this score, the Court of
Appeals pointed out that it was incumbent upon Reyes part to prove that the requirements of the law on execution sale have been fully complied with.

We disagree.

Contrary to the Court of Appeals holding, the burden of evidence to prove lack of compliance with Section 15, Rule 39 of the Rules of Court rests on the party claiming lack thereof i.e., respondents.
In Venzon v. Spouses Juan,29 we declared that the judgment debtor, as herein respondents, alleging lack of compliance with the posting and publication requirements of the auction sale in accordance with the rules, is behooved to
prove such allegation. We held, thus:
Whoever asserts a right dependent for its existence upon a negative, must establish the truth of the negative by a preponderance of the evidence. This must be the rule, or it must follow that rights, of which a negative forms an
essential element, may be enforced without proof. Thus, whenever the [partys] right depends upon the truth of a negative, upon him is cast the onus probandi, except in cases where the matter is peculiarly within the knowledge of
the adverse party.

It was error, therefore, for the trial court to hold that:


Defendants did not present evidence to rebut the "no notice" allegation of the plaintiff. Although in the defendant spouses pre-trial brief, there is that general allegation that the auction sale was made in accordance with law, however,
there is no showing in the record that the requirements with respect to publication/posting of notices were complied with by the defendants.
Deliberating on the absence of notice, the fact that the plaintiff did not come to know that Lot 12 was being subjected to an auction sale proves two things: one, that no notice was posted in the place where the property is located
[and, two, that] there was no auction sale that took place on March 30, 1992. . . .
Further, the defendants, particularly defendant sheriff, who is the most competent person to testify that a written notice of sale was made and posted in accordance with law, was not presented to the witness stand. Neither was a
document presented like Sheriffs Certificate of Posting to attest to the fact that a written notice of sale was posted before the property was allegedly sold at public auction. In fact, the record is silent as (to) where the auction sale was
conducted.
By ruling in the foregoing manner, the trial court incorrectly shifted the plaintiffs burden of proof to the defendants. It is true that the fact of posting and publication of the notices is a matter "peculiarly within the knowledge" of the
Deputy Sheriff. However, the trial court did not acquire jurisdiction over him, as he was not served with summons. At the time of the filing of the complaint, he was "no longer connected" with the Caloocan RTC, Branch 126, which
issued the writ of execution. Hence, he could not testify in his own behalf
[T]he duty imposed by Section [18] (c) is reposed upon the sheriff, who is charged with the enforcement of the writ. Respondent spouses had a right to presume that he had regularly performed his duty. It was not incumbent upon
them to present him as a witness for, in the absence of the sheriff, the burden to prove lack of posting and publication remained with petitioner.30 (Emphasis supplied)
Respondents made no attempt to meet this burden of evidence, simply maintaining lack of notice of the entire proceedings (execution and issuance of a new title over the subject property) before the trial court.
We cannot subscribe to respondents belated posturing. The disputable presumption that official duty has been regularly performed was not overcome by respondents.31 The documents on record lead us to the inevitable conclusion
that respondents had constructive, if not actual, notice of the execution proceedings from the issuance of the Writ of Execution, the levy on the subject property,32 its subjection to execution sale, up to and until the proceedings in the
RTC relating to the issuance of a new certificate of title over the subject property. Certainly, respondents are precluded from feigning ignorance of MFR (substituted by Reyes) staking a claim thereon.
There was substantial compliance with Section 15, Rule 39 of the Rules of Court: the documents in support thereof, i.e., the Certificate of Posting issued by Sheriff Legaspi and the Affidavit of Publication executed by the publisher of
The Times Newsweekly, appear to be in order.33 In this case, the purpose of giving notice through posting and publication under Section 15(c) of the same ruleto let the public know of the sale to the end that the best price or a
better bid may be made possible to minimize prejudice to the judgment debtorwas realized.
Another thing militates against respondents claim of lack of knowledge of the encumbrance on their propertythe separate registrations of: (1) the Notice of Levy on TCT No. T-198753; (2) the Certificate of Sale.
In this jurisdiction, we adhere to the doctrine that registration in a public registry works as constructive notice to the whole world.34 Section 51 of Act No. 496, as amended by Section 52 of Presidential Decree No. 1529, provides:
SECTION 52. Constructive notice upon registration.Every conveyance, mortgage, lease, lien, attachment, order, judgment, instrument or entry affecting registered land shall, if registered, filed or entered in the Office of the Register
of Deeds for the province or city where the land to which it relates lies, be constructive notice to all persons from the time of such registering, filing, or entering.
And, quite undeniably, respondents had constructive notice that their property is subject of execution proceedings arising from their judgment debt and in danger of forfeiture to their judgment creditor.
Respondents consistently flouted the judgment in Civil Case No. 1245-M, as amended by the Decision of the Court of Appeals in CA G.R. CV No. 37808, which became final and executory on December 1, 1997, by their utter failure to
respond to the processes of the RTC in the execution proceedings despite their receipt of notice at each stage thereof. At the very least, respondents attack on the validity of the execution proceedings, culminating in the execution
sale of the subject property, is barred by laches.
Laches is the failure or neglect, for an unreasonable and unexplained length of time, to do that which by exercising due diligence could or should have been done earlier; it is negligence or omission to assert a right within a reasonable
time, warranting a presumption that the party entitled to assert it either has abandoned it or declined to assert it.35 Laches thus operates as a bar in equity.36

We hearken to the time-honored rule anchored on public policy:


[R]elief will be denied to a litigant whose claim or demand has become "stale," or who has acquiesced for an unreasonable length of time, or who has not been vigilant or who has slept on his rights either by negligence, folly or
inattention. In other words, public policy requires, for peace of society, the discouragement of claims grown stale for non-assertion; thus laches is an impediment to the assertion or enforcement of a right which has become, under
the circumstances, inequitable or unfair to permit.37 (Emphasis supplied)
The records bear out that as of October 9, 1998, and on two occasions thereafter, December 10 & 28, 1998, Sheriff Legaspi served a copy of the Writ of Execution on respondents, and followed up thereon. With no action forthcoming
from respondents, who are ostensibly evading payment of their judgment debt, the Sheriff correctly levied on the subject property. For more than five (5) years from the execution sale thereof, with respondents not exercising their
right of redemption, up to the filing of a Motion, and subsequently, a Petition for the issuance of a new certificate of title over the property in Reyes name, respondents made no effort to settle their judgment debt, much less, to
ascertain the status of the execution proceedings against them and the levy on, and consequent sale of, their property. Truly significant is the fact that eight (8) years had lapsed, from the time respondents received a copy of the Writ
of Execution in October 1998 until they, through their new counsel, filed the Opposition and Motion in May 2006, before respondents were prodded into action.
We find obvious respondents brazen ploy to forestall and thwart the execution of a final and executory judgment against them. The death of their counsel, Atty. Sumawang, and their engagement of a new one, does not minimize the
hard fact that respondents had notice of, not only the execution proceedings, but also, the proceedings on the issuance of a new title over the subject property. Yet, respondents did not act on any of these notices which were duly
received by Atty. Sumawang. Respondents Motion to nullify the execution proceedings, from the levy on the subject property and sale thereof, is an afterthought, a last-ditch effort to evade payment of their judgment debt. Their
claim of ignorance of the execution proceedings flies in the face of the documents on record. This bare-faced claim cannot trump the disputable presumption that a person takes ordinary care of his concerns. 38 Consequently,
respondents are estopped and barred from assailing the execution proceedings before the RTC.
Time and again, we have held that once a judgment becomes final and executory, the prevailing party should not be denied the fruits of his victory by some subterfuge devised by the losing party.39 We completely agree with the RTCs
disquisition, thus:
Finally, after [MFR] had filed the petition in question pursuant to and in compliance with the order of this court dated September 28, 2004, to which no answer or any responsive pleading was filed by respondents or thru their lawyer,
as the latter was certainly notified of the proceedings in said petition, respondents cannot now assail said proceedings after keeping silent thereon for a long time, and if indeed there was neglect on the part of their lawyer in informing
them of or in taking part in said proceedings, such negligence of their counsel binds them as client. There is likewise an evident lack of prudence and due diligence on the part of the respondents by their failure to inform this court of
the withdrawal of their former counsel for a long period of time, and they cannot now, by feigning ignorance of the proceedings had in the petition in question, assail the same thru a new counsel. In other words, respondents cannot
be allowed to keep silent on or refuse to participate in proceedings that they know were taking place in connection with a final judgment rendered against them and then suddenly, after said proceedings were long terminated, come
to court to question the same through a new counsel. The respondents are clearly in estoppel. Also, the court finds no practical purpose and benefit in sustaining the theory posited by respondents which, aside from the reasons
advanced earlier, will have no other effect than to further unduly delay the execution of a judgment that had long acquired finality.40
Respondents are clearly estopped from assailing the proceedings in question by their failure or refusal to participate therein despite their or their counsels knowledge thereof, and it would be unjust for the plaintiff to allow respondents
to put in issue the validity of said proceedings at this late stage, thru another counsel, as they are bound by the action or inaction of their former counsel.41
The Court of Appeals reliance on Villaceran v. Beltejar42 is misplaced. Villaceran is an administrative case finding the Sheriff guilty of simple neglect of duty for failure to strictly comply with the rules on execution sale. We held therein
that there was no substantial compliance by the Sheriff with Section 15(c), Rule 39 of the Rules of Court. Our declaration that "[n]o reason exists not to apply the principle in the extrajudicial foreclosure sales of real property (statutory
requirements of posting and publication must be strictly complied with since non-compliance could constitute a jurisdictional defect that would invalidate the sale) to execution sales of real property under Rule 39 of the Rules of
Court"43 is an obiter which should not be definitive of the facts obtaining herein.
The facts of this case demonstrate respondents stubborn refusal to comply with the judgment against them by claiming lack of notice of the execution proceedings. We reiterate that this claim is belied by the evidence on record and
cannot invalidate the enforcement and execution of a final and executory judgment of this Court. On the whole, respondents silence and inaction for eight (8) years from the time the subject property was validly levied upon by the
RTC, bars them from claiming invalidity of the execution proceedings.
Notwithstanding the validity of the execution sale and Reyes consolidation of ownership over the subject property upon the lapse of the redemption period, we hold that Section 107 of Presidential Decree No. 1529 contemplates the
filing of a separate and original action before the RTC, acting as a land registration court.1avvphi1
Reyes argues that to require him to "file his petition in another court would unduly divest the RTC of its jurisdiction to enforce its final and executory decision." Reyes invokes our ruling in Natalia Realty, Inc. v. Court of Appeals44 where
we declared that "jurisdiction of the court to execute its judgment continues even after the judgment has become final for the purpose of enforcement of judgment."45
Reyes reasoning is off tangent. Natalia is inapplicable because the execution proceedings in this case have been completed and was terminated upon the execution sale of the subject property. Reyes already consolidated ownership
over the subject property; as owner, he has a right to have the same registered in his name. This transfer of title to the subject property in Reyes name is no longer part of the execution proceedings: the fact of levy and sale constitutes
execution, not so is the action for the issuance of a new title.46
Indeed, the subsequent filing of a separate and original action for the titling of the subject property in Reyes name, no longer involves the execution of the judgment in Civil Case No. 1245-M.
Section 107 of the Property Registration Decree falls under PETITIONS AND ACTIONS AFTER ORIGINAL REGISTRATION, Chapter X thereof. The provision reads:
SECTION 107. Surrender of withhold duplicate certificates. Where it is necessary to issue a new certificate of title pursuant to any involuntary instrument which divests the title of the registered owner against his consent or where a
voluntary instrument cannot be registered by reason of the refusal or failure of the holder to surrender the owner's duplicate certificate of title, the party in interest may file a petition in court to compel surrender of the same to the
Register of Deeds. The court, after hearing, may order the registered owner or any person withholding the duplicate certificate to surrender the same, and direct the entry of a new certificate or memorandum upon such surrender. If
the person withholding the duplicate certificate is not amenable to the process of the court, or if not any reason the outstanding owner's duplicate certificate cannot be delivered, the court may order the annulment of the same as
well as the issuance of a new certificate of title in lieu thereof. Such new certificate and all duplicates thereof shall contain a memorandum of the annulment of the outstanding duplicate.
That a succeeding registration of property in anothers name, after its original registration, contemplates a separate original action is reinforced by our ruling in Padilla v. Philippine Producers Cooperative Marketing Association, Inc.47
Answering the question: "In implementing the involuntary transfer of title of real property levied and sold on execution, is it enough for the executing party to file a motion with the court which rendered judgment, or does he need to
file a separate action with the Regional Trial Court," we unequivocally declared, thus:

Petitioner is correct in assailing as improper respondents filing of a mere motion for the cancellation of the old TCTs and the issuance of new ones as a result of petitioners refusal to surrender his owners duplicate TCTs.
Indeed, this called for a separate cadastral action initiated via petition.
Section 107 of PD 1529, formerly Section 111 of Act 496, provides:

Respondent alleges that it resorted to filing the contested motion because it could not obtain new certificates of title, considering that petitioner refused to surrender his owners duplicate TCTs. This contention is incorrect. The proper
course of action was to file a petition in court, rather than merely move, for the issuance of new titles. This was the procedure followed in Blancaflor by Sarmiento Trading which was in more or less the same situation as the respondent
in this case:
Petitioners reliance on prescription and laches is unavailing in this instance. It was proper for Sarmiento Trading Corporation to file a petition with the Court of First Instance of Iloilo, acting as a cadastral court, for the cancellation of
TCT No. 14749 in the name of Gaudencio Blancaflor and the issuance of another in its name. This is a procedure provided for under Section 78 of Act No. 496 and Section 75 of PD No. 1529. . . .

Section 78 of Act 496 reads:


Sec. 78. Upon the expiration of the time, if any allowed by law for redemption after registered land has been sold on any execution, or taken or sold for the enforcement of any lien of any description, the person claiming under the
execution or under any deed or other instrument made in the course of the proceedings to levy such execution or enforce any lien, may petition the court for the entry of a new certificate to him, and the application may be granted:
Provided, however, That every new certificate entered under this section shall contain a memorandum of the nature of the proceeding on which it is based: Provided, further, That at any time prior to the entry of a new certificate the
registered owner may pursue all his lawful remedies to impeach or annul proceedings under execution or to enforce liens of any description.

Section 75 of PD 1529 provides:


Sec. 75. Application for new certificate upon expiration of redemption period. Upon the expiration of the time, if any, allowed by law for redemption after the registered land has been sold on execution, or taken or sold for the
enforcement of a lien of any description, except a mortgage lien, the purchaser at such sale or anyone claiming under him may petition the court for the entry of a new certificate to him.
Before the entry of a new certificate of title, the registered owner may pursue all legal and equitable remedies to impeach or annul such proceedings.
It is clear that PD 1529 provides the solution to respondents quandary.1avvphi1 The reasons behind the law make a lot of sense; it provides due process to a registered landowner (in this case the petitioner) and prevents the fraudulent
or mistaken conveyance of land, the value of which may exceed the judgment obligation. x x x.
While we certainly will not condone any attempt by petitioner to frustrate the ends of justice the only way to describe his refusal to surrender his owners duplicates of the certificates of title despite the final and executory judgment
against him respondent, on the other hand, cannot simply disregard proper procedure for the issuance to it of new certificates of title. There was a law on the matter and respondent should have followed it.
In any event, respondent can still file the proper petition with the cadastral court for the issuance of new titles in its name.48 (Emphasis supplied).
Plainly, Reyes must institute a separate cadastral action initiated via petition.

WHEREFORE, the petition is PARTLY GRANTED. The Decision of the Court of Appeals in CA G.R. SP No. 96913 annulling and setting aside the Orders dated July 17, 2006 and October 20, 2006 issued by the Regional Trial Court, Branch
7, Malolos, Bulacan in Civil Case No. 1245-M is MODIFIED:
1. The public auction sale of the subject property covered by TCT No. T-198753 on July 19, 1999 is declared VALID;
2. The Certificate of Sale issued by Sheriff Leovino Legaspi on July 19, 1999 in favor of MFR Farms, Inc. (substituted by petitioner Ruben C. Reyes) covering the parcel of land embraced in Transfer Certificate of Title No. T-198753 is
likewise declared VALID; and
3. The Petition49 dated October 29, 2004 filed by MFR Farms, Inc. (substituted by Ruben C. Reyes) is DISMISSED without prejudice to re-filing as a separate original action pursuant to Section 107 of Presidential Decree No. 1529.
G.R. No. 136283 February 29, 2000

VIEWMASTER CONSTRUCTION CORPORATION, petitioner,


vs.
HON. REYNALDO Y. MAULIT in his official capacity as administrator of the Land Registration Authority; and EDGARDO CASTRO, acting register of deeds of Las Pias, Metro Manila, respondent
DECISION

PANGANIBAN, J.:
A notice of lis pendens may be registered when an action or a proceeding directly affects the title to the land or the buildings thereon; or the possession, the use or the occupation thereof. Hence, the registration of such notice should
be allowed if the litigation involves the enforcement of an agreement for the co-development of a parcel of land.
Statement of the Case
Before us is a Petition for Review on Certiorari 1 assailing the February 27, 1998 Decision 2 of the Court of Appeals (CA) 3 in CA-GR SP No. 39649 and its November 12, 1998 Resolution 4 denying reconsideration. The assailed Decision
affirmed the Resolution 5 of the Land Registration Authority (LRA) in Consulta No. 2381, which ruled as follows:
PREMISES CONSIDERED, this Authority is of the considered view and so holds that the Notice of Lis Pendens subject of this consulta is not registrable. 6

The Facts
The undisputed facts were summarized by the Court of Appeals as follows:
The subject property is known as the Las Pias property registered in the name of Peltan Development Inc. (now State Properties Corporation) covered by Transfer Certificate of Title No. (S-17882) 12473-A situated in Barrio Tindig na
Manga, Las Pias, Rizal.
The Chiong/Roxas family collectively owns and controls State Investment Trust, Inc. (formerly State Investment House, Inc.) and is the major shareholder of the following corporations, namely: State Land Investment Corporation,
Philippine Development and Industrial Corporation and Stronghold Realty Development.
Sometime in 1995, the said family decided to give control and ownership over the said corporations to only one member of the family, through the process of bidding among the family members/stockholders of the said companies. It
was agreed that the bidder who acquires 51% or more of the said companies shall be deemed the winner.
Defendant Allen Roxas, one of the stockholders of State Investment Trust, Inc. applied for a loan with First Metro Investment, Inc. (First Metro for brevity) in the amount of P36,500,000.00 in order to participate in the bidding.
First Metro granted Alien Roxas' loan application without collateral provided, however, that he procure a guarantor/surety/solidary co-debtor to secure the payment of the said loan.
Petitioner Viewmaster agreed to act as guarantor for the aforementioned loan in consideration for its participation in a Joint Venture Project to co-develop the real estate assets of State Investment Trust, Inc.
After a series of negotiations, petitioner Viewmaster and defendant Allen Roxas agreed that should the latter prevail and win in the bidding, he shall sell to petitioner fifty percent (50%) of the total eventual acquisitions of shares of
and stock in the State Investment Trust, Inc., at a purchase price equivalent to the successful bid price per share plus an additional ten percent (10%) per share.
As a result of the loans granted by First Metro in consideration of and upon the guaranty of petitioner Viewmaster, defendant Allen Roxas, eventually gained control and ownership of State Investment Trust, Inc.
However, notwithstanding the lapse of two (2) years since defendant Allen Roxas became the controlling stockholder of State Investment Trust, Inc., he failed to take the necessary action to implement the Joint Venture Project with
petitioner Viewmaster to co-develop the subject properties.1wphi1.nt
Thus, petitioner's counsel wrote defendant Allen Roxas, reiterating petitioner's demand to comply with the agreement to co-develop the Las Pias Property and to set in operation all the necessary steps towards the realization of the
said project.
On September 8, 1995, petitioner Viewmaster filed a Complaint for Specific Performance, Enforcement of Implied Trust and Damages against State Investment Trust, Inc. Northeast Land Development, Inc., State Properties Corporation
(formerly Peltan Development, Inc.) and defendant Allen Roxas, in his capacity as Vice-Chairman of State Investment Trust, Inc., and Chairman of Northeast Land Development, Inc., State Properties Corporation, which was docketed
as Civil Case No. 65277.
On September 11, 1995, petitioner Viewmaster filed a Notice of Lis Pendens with the Register of Deeds of Quezon City and Las Pias for the annotation of a Notice of Lis Pendens on Transfer Certificate of Title No. (S-17992) 12473-A,
registered in the name of Peltan Development, Inc. (now State Properties Corporation).
In a letter dated September 15, 1995, the respondent Register of Deeds of Las Pias denied the request for annotation of the Notice of Lis Pendens on the following grounds:
1. the request for annotation and the complaint [do] not contain an adequate description of the subject property;
2. petitioner's action only has an incidental effect on the property in question.

On September 20, 1995, petitioner filed an appeal to the respondent Land Registration Authority, which was docketed as Consulta No. 2381.
On December 14, 1995, the Respondent Land Registration Authority issued the assailed Resolution holding that petitioner's "Notice of Lis Pendens" was not registrable. 7
Ruling of the Court of Appeals
In affirming the ruling of the LRA, the Court of Appeals held that petitioner failed to adequately describe the subject property in the Complaint and in the application for the registration of a notice of lis pendens. The CA noted that
while Transfer Certificate of Title No. (S-17992) 12473-A indicated six parcels of land, petitioner's application mentioned only one parcel.
Moreover, the CA also ruled that a notice of lis pendens may be registered only when an action directly affects the title to or possession of the real property. In the present case, the proceedings instituted by petitioner affected the
title or possession incidentally only, not directly.
Hence, this Petition. 8

Issues
Petitioner submits for the consideration of the Court the following issues:
I. Whether or not the petitioner failed to adequately describe the subject property in its complaint and in the notice of lis pendens.
II. Whether or not the Las Pias property is directly involved in Civil Case No. 65277. 9

The Court's Ruling


The Petition is meritorious.
First Issue:
Description of Property
Petitioner contends that the absence of the property's technical description in either the notice of lis pendens or the Complaint is not a sufficient ground for rejecting its application, because a copy of TCT No. (S-17992) 12473-A
specifically describing the property was attached to and made an integral part of both documents.
On the other hand, respondents argue that petitioner failed to provide an accurate description of the Las Pias property, which was merely referred to as a "parcel of land."
The notice of lis pendens described the property as follows:
A parcel of land situated in the Barrio of Tindig na Manga, Municipality of Las Pias, Province of Rizal . . . containing an area of Seven Hundred Eighty Six Thousand One Hundred Sixty Seven (786,167) square meters, more or less.
By itself, the above does not adequately describe the subject property, pursuant to Section 14 of Rule 13 of the Rules of Court and Section 76 of Presidential Decree (PD) No. 1529. It does not distinguish the said property from other
properties similarly located in the Barrio of Tindig na Manga, Municipality of Las Pias, Province of Rizal. Indeed, by the above description alone, it would be impossible to identify the property.
In the paragraph directly preceding the description quoted above, however, petitioner specifically stated that the property referred to in the notice of lis pendens was the same parcel of land covered by TCT No. (S-17992) 12473-A:
Please be notified that on 08 September 1995, the [p]laintiff in the above-entitled case filed an action against the above-named [d]efendants for specific performance, enforcement of an implied trust and damages, now pending in
the Regional Trial Court of Pasig, Branch 166, which action involves a parcel of land covered by Transfer Certificate Title (TCT) No. (S-17992) 12473-A, registered in the name of Peltan Development Incorporated which changed its
corporate name to State Properties Corporation, one of the [d]efendants in the aforesaid case. The said parcel of land is more particularly described as follows:
A parcel of land situated in the Barrio of Tindig na Manga, Municipality of Las Pias, Province of Rizal . . . containing an area of Seven Hundred Eighty Six Thousand One Hundred Sixty Seven (786,167) square meters, more or less.
Request is therefore made [for] your good office to record this notice of pendency of the aforementioned action in TCT No. (S-17892) 12473-A for all legal purposes. 10
As earlier noted, a copy of the TCT was attached to and made an integral part of both documents. Consequently, the notice of lis pendens submitted for registration, taken as a whole, leaves no doubt as to the identity of the property,
the technical description of which appears on the attached TCT. We stress that the main purpose of the requirement that the notice should contain a technical description of the property is to ensure that the same can be distinguished
and readily identified. In this case, we agree with petitioner that there was substantial compliance with this requirement.
Second Issue:
Property Directly Involved
In upholding the LRA, the Court of Appeals held that "the doctrine of lis pendens has no application to a proceeding in which the only object sought is the recovery of [a] money judgment, though the title [to] or right or possession [of]
a property may be incidentally affected. It is thus essential that the property be directly affected where the relief sought in the action or suit includes the recovery of possession, or the enforcement [thereof], or an adjudication between
the conflicting claims of title, possession or right of possession to specific property, or requiring its transfer or sale." 11

On the other hand, petitioner contends that the civil case subject of the notice of lis pendens directly involved the land in question, because it prayed for the enforcement of a prior agreement between herein petitioner and Defendant
Allen Roxas to co-develop the latter's property.
We agree with the petitioner. A notice of lis pendens, which literally means "pending suit," may involve actions that deal not only with the title or possession of a property, but even with the use or occupation thereof. Thus, Section
76 of PD 1529 reads:
Sec. 76. Notice of lis pendens. No action to recover possession of real estate, or to quiet title thereto, or to remove clouds upon the title thereof, or for partition, or other proceedings of any kind in court directly affecting the title to
land or the use or occupation thereof or the buildings thereon, and no judgment, and no proceeding to vacate or reverse any judgment, shall have any effect upon registered land as against persons other than the parties thereto, unless
a memorandum or notice stating the institution of such action or proceeding and the court wherein the same is pending, as well as the date of the institution thereof, together with a reference to the number of the certificate of title,
and an adequate description of the land affected and the registered owner thereof, shall have been filed and registered.
In Magdalena Homeowners Association, Inc. v. Court of Appeals, 12 the Court did not confine the availability of lis pendens to cases involving the title to or possession of real property. Thus, it held:

According to Section 24, Rule 14 13 of the Rules of Court and Section 76 of Presidential Decree No. 1529, a notice of lis pendens is proper in the following cases, viz.:
a) An action to recover possession of real estate;
b) An action to quiet title thereto;
c) An action to remove clouds thereon;
d) An action for partition; and
e) Any other proceedings of any kind in Court directly affecting the title to the land or the use or occupation thereof or the buildings thereon.

In Villanueva v. Court of Appeals, 14 this Court further declared that the rule of lis pendens applied to suits brought "to establish an equitable estate, interest, or right in specific real property or to enforce any lien, charge, or encumbrance
against it . . . ." Thus, this Court observed that the said notice pertained to the following:
all suits or actions which directly affect real property and not only those which involve the question of title, but also those which are brought to establish an equitable estate, interest, or right, in specific real property or to enforce any
lien, charge, or encumbrance against it, there being in some cases a lis pendens, although at the commencement of the suit there is no present vested interest, claim, or lien in or on the property which it seeks to charge. It has also
been held to apply in the core of a proceeding to declare an absolute deed of mortgage, or to redeem from a foreclosure sale, or to establish a trust, or to suits for the settlement and adjustment of partnership interests.

In the present case, petitioner's Complaint docketed as Civil Case No. 65277 clearly warrants the registration of a notice of lis pendens. The Complaint prayed for the following reliefs:
1. Render judgment ordering the Defendant Allen Roxas to sell fifty percent (50%) of his shareholdings in Defendant State Investment to Plaintiff at the price equivalent to the successful bid price per share plus an additional ten percent
(10%) per share and directing Defendants to co-develop with the Plaintiff the subject real properties;
2. Render judgment ordering the Defendant Allen Roxas to:
a. Pay the Plaintiff the amount of at least Twenty Million Pesos (P20,000,000.00) and/or such other amounts as may be proven during the course of the trial, by way of actual damages;
b. Pay the Plaintiff the amount of at least One Million Pesos (P1,000,000.00), by way of moral damages;
c. Pay the Plaintiff the amount of at least One Million Pesos (P1000,000.00), by way of exemplary damages;
d. Pay the Plaintiff the amount of Two Hundred Fifty Thousand Pesos (P250,000.00) by way of attorney's fees; and
e. Pay expenses of litigation and costs of suit. 15

Undeniably, the prayer that Defendant Allen Roxas be ordered to sell 50 percent of his shareholdings in State Investment does not directly involve title to the property and is therefore not a proper subject of a notice of lis pendens.
Neither do the various amounts of damages prayed for justify such annotation.
We disagree, however, with the Court of Appeals and the respondents that the prayer for the co-development of the land was merely incidental to the sale of shares of defendant company.
The Complaint shows that the loan obtained by Allen Roxas (one of the defendants in the civil case) from First Metro was guaranteed by petitioner for two distinct considerations: (a) to enable it to purchase 50 percent of the stocks
that the said defendant may acquire in State Investment and (b) to co-develop with the defendants the Quezon City and the Las Pias properties of the corporation. In other words, the co-development of the said properties is a
separate undertaking that did not arise from petitioner's acquisition of the defendant's shares in the corporation. To repeat, the co-development is not merely auxiliary or incidental to the purchase of the shares; it is a distinct
consideration for Viewmaster's guaranty. 16

Hence, by virtue of the alleged agreement with Allen Roxas, petitioner has a direct not merely incidental interest in the Las Pias property. Contrary to respondents' contention, 17 the action involves not only the collection of a
money judgment, but also the enforcement of petitioner's right to co-develop and use the property.
The Court must stress that the purpose of lis pendens is (1) to protect the rights of the party causing the registration thereof 18 and (2) to advise third persons who purchase or contract on the subject property that they do so at their
peril and subject to the result of the pending litigation. 19 One who deals with property subject of a notice of lis pendens cannot acquire better rights than those of his predecessors-in-interest. 20 In Tanchoco v. Aquino, 21 the Court
held:
The doctrine of lis pendens is founded upon reason of public policy and necessity, the purpose of which is to keep the subject matter of the litigation within the power of the court until the judgment or decree shall have been entered;
otherwise, by successive alienations pending the litigation, its judgment or decree shall be rendered abortive and impossible of execution. Purchasers pendente lite of the property subject of the litigation after the notice of lis pendens
is inscribed in the Office of the Register of Deeds are bound by the judgment against their predecessors. . . .
Without a notice of lis pendens, a third party who acquires the property after relying only on the Certificate of Title would be deemed a purchaser in good faith. Against such third party, the supposed rights of petitioner cannot be
enforced, because the former is not bound by the property owner's undertakings not annotated in the TCT. 22

Likewise, there exists the possibility that the res of the civil case would leave the control of the court and render ineffectual a judgment therein. Indeed, according to petitioner, it was not even informed when Allen Roxas exchanged
the Quezon City property for shares of stock in Northeast Land Development, Inc. 23 Hence, it maintains that there is a clear risk that the same thing would be done with the Las Pias property.
In this light, the CA ruling left unprotected petitioner's claim of co-development over the Las Pias property. Hence, until the conflicting rights and interests are threshed out in the civil case pending before the RTC, it will be in the best
interest of the parties and the public at large that a notice of the suit be given to the whole world.
The Court is not here saying that petitioner is entitled to the reliefs prayed for in its Complaint pending in the RTC. Verily, there is no requirement that the right to or the interest in the property subject of a lis pendens be proven by
the applicant. The Rule merely requires that an affirmative relief be claimed. 24 A notation of lis pendens neither affects the merits of a case nor creates a right or a lien. 25 It merely protects the applicant's rights, which will be determined
during the trial.
WHEREFORE, the Petition is hereby GRANTED and the assailed Decision of the Court of Appeals REVERSED and SET ASIDE. The Las Pias Register of Deeds is directed to cause the annotation of lis pendens in TCT No. (S-17992) 12473-
A. No costs.
G.R. No. 148568 March 20, 2003
ATLANTIC ERECTORS, INC., petitioner
vs.
HERBAL COVE REALTY COORPORATION, respondent
DECISION

PANGANIBAN, J.:
The pendency of a simple collection suit arising from the alleged nonpayment of construction services, materials, unrealized income and damages does not justify the annotation of a notice of lis pendens on the title to a property
where construction has been done.
Statement of the Case
Before the Court is a Petition for Review on Certiorari[1] under Rule 45 of the Rules of Court, challenging the May 30, 2000 Decision[2] of the Court of Appeals (CA) in CA-GR SP No. 56432. The dispositive portion of the Decision is
reproduced as follows:
WHEREFORE, the petition is granted and the assailed November 4, 1998 and October 22, 1999 orders annulled and set aside. The July 30, 1998 order of respondent judge is reinstated granting the cancellation of the notices of lis
pendens subject of this petition.[3]
In its July 21, 2001 Resolution,[4] the CA denied petitioners Motion for Reconsideration.
The Facts
The factual antecedents of the case are summarized by the CA in this wise:
On June 20, 1996, [respondent] and [petitioner] entered into a Construction Contract whereby the former agreed to construct four (4) units of [townhouses] designated as 16-A, 16-B, 17-A and 17-B and one (1) single detached unit
for an original contract price of P15,726,745.19 which was late[r] adjusted to P16,726,745.19 as a result of additional works. The contract period is 180 days commencing [on] July 7, 1996 and to terminate on January 7, 1997. [Petitioner]
claimed that the said period was not followed due to reasons attributable to [respondent], namely: suspension orders, additional works, force majeure, and unjustifiable acts of omission or delay on the part of said [respondent].
[Respondent], however, denied such claim and instead pointed to [petitioner] as having exceeded the 180 day contract period aggravated by defective workmanship and utilization of materials which are not in compliance with
specifications.
On November 21, 1997, [petitioner] filed a complaint for sum of money with damages (Civil Case No. 97-2707) with the Regional Trial Court of Makati entitled Atlantic Erectors, Incorporated vs. Herbal Cove Realty Corp. and Ernest C.
Escal[e]r. This case was raffled to Branch 137, x x x Judge Santiago J. Ranada presiding. In said initiatory pleading, [petitioner] AEI asked for the following reliefs:

AFTER DUE NOTICE AND HEARING, to order x x x defendant to:


1. Pay plaintiff the sum of P4,854,229.94 for the unpaid construction services already rendered;
2. To x x x pay plaintiff the sum of P1,595,551.00 for the construction materials, equipment and tools of plaintiff held by defendant;
3. To x x x pay plaintiff the sum of P2,250,000.00 for the [loss] x x x of expected income from the construction project;
4. [T]o x x x pay plaintiff the sum of P800,000.00 for the cost of income by way of rental from the equipment of plaintiff held by defendants;
5. To x x x pay plaintiff the sum of P5,000,000.00 for moral damages;
6. To x x x pay plaintiff the sum of P5,000,000.00 for exemplary damages;
7. To x x x pay plaintiff the sum equivalent of 25% of the total money claim plus P200,000.00 acceptance fee and P2,500.00 per court appearance;
8. To x x x pay the cost of suit.

On the same day of November 21, 1997, [petitioner] filed a notice of lis pendens for annotation of the pendency of Civil Case No. 97-707 on titles TCTs nos. T-30228, 30229, 30230, 30231 and 30232. When the lots covered by said
titles were subsequently subdivided into 50 lots, the notices of lis pendens were carried over to the titles of the subdivided lots, i.e., Transfer Certificate of Title Nos. T-36179 to T-36226 and T-36245 to T-36246 of the Register of Deeds
of Tagaytay City.
On January 30, 1998, [respondent] and x x x Ernest L. Escaler, filed a Motion to Dismiss [petitioners] Complaint for lack of jurisdiction and for failure to state a cause of action. They claimed [that] the Makati RTC has no jurisdiction over
the subject matter of the case because the parties Construction Contract contained a clause requiring them to submit their dispute to arbitration.
On March 17, 1998, [RTC Judge Ranada] dismissed the Complaint as against [respondent] for [petitioners] failure to comply with a condition precedent to the filing of a court action which is the prior resort to arbitration and as against
x x x Escaler for failure of the Complaint to state a cause of action x x x.
[Petitioner] filed a Motion for Reconsideration of the March 17, 1998 dismissal order. [Respondent] filed its Opposition thereto.
On April 24, 1998, [respondent] filed a Motion to Cancel Notice of Lis Pendens. It argued that the notices of lis pendens are without basis because [petitioners] action is a purely personal action to collect a sum of money and recover
damages and x x x does not directly affect title to, use or possession of real property.
In his July 30, 1998 Order, [Judge Ranada] granted [respondents] Motion to Cancel Notice of Lis Pendens x x x:
[Petitioner] filed a Motion for Reconsideration of the aforesaid July 30, 1998 Order to which [respondent] filed an Opposition.

In a November 4, 1998 Order, [Judge Ranada,] while finding no merit in the grounds raised by [petitioner] in its Motion for Reconsideration, reversed his July 30, 1998 Order and reinstated the notices of lis pendens, as follows:
1. The Court finds no merit in plaintiffs contention that in dismissing the above-entitled case for lack of jurisdiction, and at the same time granting defendant Herbal Coves motion to cancel notice of lis pendens, the Court [took] an
inconsistent posture. The Rules provide that prior to the transmittal of the original record on appeal, the court may issue orders for the protection and preservation of the rights of the parties which do not involve any matter litigated
by the appeal (3rd par., Sec. 10, Rule 41). Even as it declared itself without jurisdiction, this Court still has power to act on incidents in this case, such as acting on motions for reconsideration, for correction, for lifting of lis pendens, or
approving appeals, etc.

As correctly argued by defendant Herbal Cove, a notice of lis pendens serves only as a precautionary measure or warning to prospective buyers of a property that there is a pending litigation involving the same.
The Court notes that when it issued the Order of 30 July 1998 lifting the notice of lis pendens, there was as yet no appeal filed by plaintiff. Subsequently, on 10 September 1998, after a notice of appeal was filed by plaintiff on 4
September 1998, the Branch Clerk of Court was ordered by the Court to elevate the entire records of the above-entitled case to the Court of Appeals. It therefore results that the above-entitled case is still pending. After a careful
consideration of all matters relevant to the lis pendens, the Court believes that justice will be better served by setting aside the Order of 30 July 1998.
On November 27, 1998, [respondent] filed a Motion for Reconsideration of the November 4, 1998 Order arguing that allowing the notice of lis pendens to remain annotated on the titles would defeat, not serve, the ends of justice and
that equitable considerations cannot be resorted to when there is an applicable provision of law.

On October 22, 1999, [Judge Ranada] issued an order denying [respondents] Motion for Reconsideration of the November 4, 1998 Order for lack of sufficient merit.[5]
Thereafter, Respondent Herbal Cove filed with the CA a Petition for Certiorari.
Ruling of the Court of Appeals
Setting aside the Orders of the RTC dated November 4, 1998 and October 22, 1999, the CA reinstated the formers July 30, 1998 Order [6] granting Herbal Coves Motion to Cancel the Notice of Lis Pendens. According to the appellate
court, the re-annotation of those notices was improper for want of any legal basis. It specifically cited Section 76 of Presidential Decree No. 1529 (the Property Registration Decree). The decree provides that the registration of such
notices is allowed only when court proceedings directly affect the title to, or the use or the occupation of, the land or any building thereon.
The CA opined that the Complaint filed by petitioner in Civil Case No. 97-2707 was intended purely to collect a sum of money and to recover damages. The appellate court ruled that the Complaint did not aver any ownership claim to
the subject land or any right of possession over the buildings constructed thereon. It further declared that absent any claim on the title to the buildings or on the possession thereof, the notices of lis pendens had no leg to stand on.
Likewise, the CA held that Judge Ranada should have maintained the notice cancellations, which he had directed in his July 30, 1998 Order. Those notices were no longer necessary to protect the rights of petitioner, inasmuch as it
could have procured protective relief from the Construction Industry Arbitral Commission (CIAC), where provisional remedies were available. The CA also mentioned petitioners admission that there was already a pending case before
the CIAC, which in fact rendered a decision on March 11, 1999.
The appellate court further explained that the re-annotation of the Notice of Lis Pendens was no longer warranted after the court a quo had ruled that the latter had no jurisdiction over the case. The former held that the rationale
behind the principle of lis pendens -- to keep the subject matter of the litigation within the power of the court until the entry of final judgment -- was no longer applicable. The reason for such inapplicability was that the Makati RTC
already declared that it had no jurisdiction or power over the subject matter of the case.
Finally, the CA opined that petitioners Complaint had not alleged or claimed, as basis for the continued annotation of the Notice of Lis Pendens, the lien of contractors and laborers under Article 2242 of the New Civil Code. Moreover,
petitioner had not even referred to any lien of whatever nature. Verily, the CA ruled that the failure to allege and claim the contractors lien did not warrant the continued annotation on the property titles of Respondent Herbal Cove.
Hence, this Petition.[7]
The Issues

Petitioner raises the following issues for our consideration:


I. Whether or not money claims representing cost of materials [for] and labor [on] the houses constructed on a property [are] a proper lien for annotation of lis pendens on the property title[.]
II. Whether or not the trial court[,] after having declared itself without jurisdiction to try the case[,] may still decide on [the] substantial issue of the case.[8]
This Courts Ruling
The Petition has no merit.
First Issue:
Proper Basis for a
Notice of Lis Pendens
Petitioner avers that its money claim on the cost of labor and materials for the townhouses it constructed on the respondents land is a proper lien that justifies the annotation of a notice of lis pendens on the land titles. According to
petitioner, the money claim constitutes a lien that can be enforced to secure payment for the said obligations. It argues that, to preserve the alleged improvement it had made on the subject land, such annotation on the property
titles of respondent is necessary.
On the other hand, Respondent Herbal Cove argues that the annotation is bereft of any factual or legal basis, because petitioners Complaint[9] does not directly affect the title to the property, or the use or the possession thereof. It
also claims that petitioners Complaint did not assert ownership of the property or any right to possess it. Moreover, respondent attacks as baseless the annotation of the Notice of Lis Pendens through the enforcement of a contractors
lien under Article 2242 of the Civil Code. It points out that the said provision applies only to cases in which there are several creditors carrying on a legal action against an insolvent debtor.
As a general rule, the only instances in which a notice of lis pendens may be availed of are as follows: (a) an action to recover possession of real estate; (b) an action for partition; and (c) any other court proceedings that directly affect
the title to the land or the building thereon or the use or the occupation thereof.[10] Additionally, this Court has held that resorting to lis pendens is not necessarily confined to cases that involve title to or possession of real property.
This annotation also applies to suits seeking to establish a right to, or an equitable estate or interest in, a specific real property; or to enforce a lien, a charge or an encumbrance against it.[11]
Apparently, petitioner proceeds on the premise that its money claim involves the enforcement of a lien. Since the money claim is for the nonpayment of materials and labor used in the construction of townhouses, the lien referred to
would have to be that provided under Article 2242 of the Civil Code. This provision describes a contractors lien over an immovable property as follows:
Art. 2242. With reference to specific immovable property and real rights of the debtor, the following claims, mortgages and liens shall be preferred, and shall constitute an encumbrance on the immovable or real right:
(3) Claims of laborers, masons, mechanics and other workmen, as well as of architects, engineers and contractors, engaged in the construction, reconstruction or repair of buildings, canals or other works, upon said buildings, canals or
other works;
(4) Claims of furnishers of materials used in the construction, reconstruction, or repair of buildings, canals or other works, upon said buildings, canals or other works[.] (Emphasis supplied)
However, a careful examination of petitioners Complaint, as well as the reliefs it seeks, reveals that no such lien or interest over the property was ever alleged. The Complaint merely asked for the payment of construction services and
materials plus damages, without mentioning -- much less asserting -- a lien or an encumbrance over the property. Verily, it was a purely personal action and a simple collection case. It did not contain any material averment of any
enforceable right, interest or lien in connection with the subject property.

As it is, petitioners money claim cannot be characterized as an action that involves the enforcement of a lien or an encumbrance, one that would thus warrant the annotation of the Notice of Lis Pendens. Indeed, the nature of an
action is determined by the allegations of the complaint. [12]
Even assuming that petitioner had sufficiently alleged such lien or encumbrance in its Complaint, the annotation of the Notice of Lis Pendens would still be unjustified, because a complaint for collection and damages is not the proper
mode for the enforcement of a contractors lien.
In J.L. Bernardo Construction v. Court of Appeals,[13] the Court explained the concept of a contractors lien under Article 2242 of the Civil Code and the proper mode for its enforcement as follows:
Articles 2241 and 2242 of the Civil Code enumerates certain credits which enjoy preference with respect to specific personal or real property of the debtor. Specifically, the contractors lien claimed by the petitioners is granted under
the third paragraph of Article 2242 which provides that the claims of contractors engaged in the construction, reconstruction or repair of buildings or other works shall be preferred with respect to the specific building or other
immovable property constructed.
However, Article 2242 finds application when there is a concurrence of credits, i.e., when the same specific property of the debtor is subjected to the claims of several creditors and the value of such property of the debtor is insufficient
to pay in full all the creditors. In such a situation, the question of preference will arise, that is, there will be a need to determine which of the creditors will be paid ahead of the others. Fundamental tenets of due process will dictate
that this statutory lien should then only be enforced in the context of some kind of a proceeding where the claims of all the preferred creditors may be bindingly adjudicated, such as insolvency proceedings.[14] (Emphasis supplied)
Clearly then, neither Article 2242 of the Civil Code nor the enforcement of the lien thereunder is applicable here, because petitioners Complaint failed to satisfy the foregoing requirements. Nowhere does it show that respondents
property was subject to the claims of other creditors or was insufficient to pay for all concurring debts. Moreover, the Complaint did not pertain to insolvency proceedings or to any other action in which the adjudication of claims of
preferred creditors could be ascertained.
Another factor negates the argument of petitioner that its money claim involves the enforcement of a lien or the assertion of title to or possession of the subject property: the fact that it filed its action with the RTC of Makati, which
is undisputedly bereft of any jurisdiction over respondents property in Tagaytay City. Certainly, actions affecting title to or possession of real property or the assertion of any interest therein should be commenced and tried in the
proper court that has jurisdiction over the area, where the real property involved or a portion thereof is situated.[15] If petitioner really intended to assert its claim or enforce its supposed lien, interest or right over respondents subject
properties, it would have instituted the proper proceedings or filed a real action with the RTC of Tagaytay City, which clearly had jurisdiction over those properties.[16]
Narciso Pea, a leading authority on the subject of land titles and registration, gives an explicit exposition on the inapplicability of the doctrine of lis pendens to certain actions and proceedings that specifically include money claims. He
explains in this wise:
By express provision of law, the doctrine of lis pendens does not apply to attachments, levies of execution, or to proceedings for the probate of wills, or for administration of the estate of deceased persons in the Court of First Instance.
Also, it is held generally that the doctrine of lis pendens has no application to a proceeding in which the only object sought is the recovery of a money judgment, though the title or right of possession to property be incidentally affected.
It is essential that the property be directly affected, as where the relief sought in the action or suit includes the recovery of possession, or the enforcement of a lien, or an adjudication between conflicting claims of title, possession, or
the right of possession to specific property, or requiring its transfer or sale[17] (Emphasis supplied)
Pea adds that even if a party initially avails itself of a notice of lis pendens upon the filing of a case in court, such notice is rendered nugatory if the case turns out to be a purely personal action. We quote him as follows:
It may be possible also that the case when commenced may justify a resort to lis pendens, but during the progress thereof, it develops to be purely a personal action for damages or otherwise. In such event, the notice of lis pendens
has become functus officio.[18] (Emphasis supplied)
Thus, when a complaint or an action is determined by the courts to be in personam, the rationale for or purpose of the notice of lis pendens ceases to exist. To be sure, this Court has expressly and categorically declared that the
annotation of a notice of lis pendens on titles to properties is not proper in cases wherein the proceedings instituted are actions in personam.[19]
Second Issue:
Jurisdiction of the Trial Court
Petitioner argues that the RTC had no jurisdiction to issue the Order canceling the Notice of Lis Pendens as well as the Order reinstating it. Supposedly, since both Orders were issued by the trial court without jurisdiction, the annotation
made by the Register of Deeds of Tagaytay City must remain in force.
Petitioner avers that the trial court finally declared that the latter had no jurisdiction over the case on July 27, 1998, in an Order denying the formers Motion for Reconsideration of the March 17, 1998 Order dismissing the Complaint.
Petitioner insists that the subsequent July 30, 1998 Order cancelling the subject Notice of Lis Pendens is void, because it was issued by a court that had no more jurisdiction over the case.
Rule 41 of the 1997 Rules on Civil Procedure, which governs appeals from regional trial courts, expressly provides that RTCs lose jurisdiction over a case when an appeal is filed. The rule reads thus:
SEC. 9. Perfection of appeal; effect thereof. -- A partys appeal by notice of appeal is deemed perfected as to him upon the filing of the notice of appeal in due time.
In appeals by notice of appeal, the court loses jurisdiction over the case upon the perfection of the appeals filed in due time and the expiration of the time to appeal of the other parties. (Emphasis supplied)
On the basis of the foregoing rule, the trial court lost jurisdiction over the case only on August 31, 1998, when petitioner filed its Notice of Appeal. [20] Thus, any order issued by the RTC prior to that date should be considered valid,
because the court still had jurisdiction over the case. Accordingly, it still had the authority or jurisdiction to issue the July 30, 1998 Order canceling the Notice of Lis Pendens. On the other hand, the November 4, 1998 Order that set
aside the July 30, 1998 Order and reinstated that Notice should be considered without force and effect, because it was issued by the trial court after it had already lost jurisdiction.
In any case, even if we were to adopt petitioners theory that both the July 30, 1998 and the November 4, 1998 Orders were void for having been issued without jurisdiction, the annotation is still improper for lack of factual and legal
bases.
As discussed previously, erroneously misplaced is the reliance of petitioner on the premise that its money claim is an action for the enforcement of a contractors lien. Verily, the annotation of the Notice of Lis Pendens on the subject
property titles should not have been made in the first place. The Complaint filed before the Makati RTC -- for the collection of a sum of money and for damages -- did not provide sufficient legal basis for such annotation.
Finally, petitioner vehemently insists that the trial court had no jurisdiction to cancel the Notice. Yet, the former filed before the CA an appeal, docketed as CA-GR CV No. 65647,[21] questioning the RTCs dismissal of the Complaint for
lack of jurisdiction. Moreover, it must be remembered that it was petitioner which had initially invoked the jurisdiction of the trial court when the former sought a judgment for the recovery of money and damages against respondent.
Yet again, it was also petitioner which assailed that same jurisdiction for issuing an order unfavorable to the formers cause. Indeed, parties cannot invoke the jurisdiction of a court to secure affirmative relief, then repudiate or question
that same jurisdiction after obtaining or failing to obtain such relief. [22]
WHEREFORE, the Petition is hereby DENIED and the assailed Decision AFFIRMED. Costs against petitioner.
G.R. No. 189477 February 26, 2014

HOMEOWNERS SAVINGS AND LOAN BANK, Petitioner-Appellant,


vs.
ASUNCION P. FELONIA and LYDIA C. DE GUZMAN, represented by MARIBEL FRIAS, Respondents-Appellees.
MARIE MICHELLE P. DELGADO, REGISTER OF DEEDS OF LAS PINAS CITY and RHANDOLFO B. AMANSEC, in his capacity as Clerk of Court Ex-Officio Sheriff, Office of the Clerk of Court, Las Pias City, Respondents-Defendants.
DECISION

PEREZ, J.:
Assailed in this Petition for Review on Certiorari is the Decision1 and Resolution2 of the Court of Appeals (CA), in CA-G.R. CV No. 87540, which affirmed with modifications, the Decision3 of the Regional Trial Court (RTC), reinstating the
title of respondents Asuncion Felonia (Felonia) and Lydia de Guzman (De Guzman) and cancelling the title of Marie Michelle Delgado (Delgado).
The facts as culled from the records are as follows:
Felonia and De Guzman were the registered owners of a parcel of land consisting of 532 square meters with a five-bedroom house, covered by Transfer of Certificate of Title (TCT) No. T-402 issued by the register of deeds of Las Pias
City.
Sometime in June 1990, Felonia and De Guzman mortgaged the property to Delgado to secure the loan in the amount of 1,655,000.00. However, instead of a real estate mortgage, the parties executed a Deed of Absolute Sale with
an Option to Repurchase.4
On 20 December 1991, Felonia and De Guzman filed an action for Reformation of Contract (Reformation case), docketed as Civil Case No. 91-59654, before the RTC of Manila. On the findings that it is "very apparent that the transaction
had between the parties is one of a mortgage and not a deed of sale with right to repurchase,"5 the RTC, on 21 March 1995 rendered a judgment favorable to Felonia and De Guzman. Thus:
WHEREFORE, judgment is hereby rendered directing the [Felonia and De Guzman] and the [Delgado] to execute a deed of mortgage over the property in question taking into account the payments made and the imposition of the legal
interests on the principal loan.
On the other hand, the counterclaim is hereby dismissed for lack of merit.
No pronouncements as to attorneys fees and damages in both instances as the parties must bear their respective expenses incident to this suit.6
Aggrieved, Delgado elevated the case to the CA where it was docketed as CA-G.R. CV No. 49317. The CA affirmed the trial court decision. On 16 October 2000, the CA decision became final and executory.7
Inspite of the pendency of the Reformation case in which she was the defendant, Delgado filed a "Petition for Consolidation of Ownership of Property Sold with an Option to Repurchase and Issuance of a New Certificate of Title"
(Consolidation case) in the RTC of Las Pias, on 20 June 1994.8 After an ex-parte hearing, the RTC ordered the issuance of a new title under Delgados name, thus:

WHEREFORE, judgment is rendered-


1. Declaring [DELGADO] as absolute owner of the subject parcel of land covered by Transfer Certificate of Title No. T-402 of the Register of Deeds of Las Pias, Metro Manila;
2. Ordering the Register of Deeds of Las Pias, Metro Manila to cancel Transfer Certificate of Title No. T-402 and issue in lieu thereof a new certificate of title and owners duplicate copy thereof in the name of [DELGADO].9

By virtue of the RTC decision, Delgado transferred the title to her name. Hence, TCT No. T-402, registered in the names of Felonia and De Guzman, was canceled and TCT No. 44848 in the name of Delgado, was issued.
Aggrieved, Felonia and De Guzman elevated the case to the CA through a Petition for Annulment of Judgment.10
Meanwhile, on 2 June 1995, Delgado mortgaged the subject property to Homeowners Savings and Loan Bank (HSLB) using her newly registered title. Three (3) days later, or on 5 June 1995, HSLB caused the annotation of the mortgage.
On 14 September 1995, Felonia and De Guzman caused the annotation of a Notice of Lis Pendens on Delgados title, TCT No. 44848. The Notice states:
Entry No. 8219/T-44848 NOTICE OF LIS PENDENS filed by Atty. Humberto A. Jambora, Counsel for the Plaintiff, that a case been commenced in the RTC, Branch 38, Manila, entitled ASUNCION P. FELONIA and LYDIA DE GUZMAN
thru VERONICA P. BELMONTE, as Atty-in-fact (Plaintiffs) v.s. MARIE MICHELLE DELGADO defendant in Civil Case No. 91-59654 for Reformation of Instrument.
Copy on file in this Registry.
Date of Instrument Sept. 11, 1995
Date of Inscription Sept. 14, 1995 at 9:55 a.m.11
On 20 November1997, HSLB foreclosed the subject property and later consolidated ownership in its favor, causing the issuance of a new title in its name, TCT No. 64668.
On 27 October 2000, the CA annulled and set aside the decision of the RTC, Las Pias City in the Consolidation case. The decision of the CA, declaring Felonia and De Guzman as the absolute owners of the subject property and ordering
the cancellation of Delgados title, became final and executory on 1 December 2000.12 Thus:
WHEREFORE, the petition is GRANTED and the subject judgment of the court a quo is ANNULLED and SET ASIDE.13
On 29 April 2003, Felonia and De Guzman, represented by Maribel Frias (Frias), claiming to be the absolute owners of the subject property, instituted the instant complaint against Delgado, HSLB, Register of Deeds of Las Pias City and
Rhandolfo B. Amansec before the RTC of Las Pias City for Nullity of Mortgage and Foreclosure Sale, Annulment of Titles of Delgado and HSLB, and finally, Reconveyance of Possession and Ownership of the subject property in their
favor.
As defendant, HSLB asserted that Felonia and De Guzman are barred from laches as they had slept on their rights to timely annotate, by way of Notice of Lis Pendens, the pendency of the Reformation case. HSLB also claimed that it
should not be bound by the decisions of the CA in the Reformation and Consolidation cases because it was not a party therein.
Finally, HSLB asserted that it was a mortgagee in good faith because the mortgage between Delgado and HSLB was annotated on the title on 5 June 1995, whereas the Notice of Lis Pendens was annotated only on 14 September 1995.
After trial, the RTC ruled in favor of Felonia and De Guzman as the absolute owners of the subject property. The dispositive portion of the RTC decision reads:

WHEREFORE, premises considered, the Court hereby finds for the [Felonia and De Guzman] with references to the decision of the Court of Appeals in CA-G.R. CV No. 49317 and CA-G.R. SP No. 43711 as THESE TWO DECISIONS CANNOT
BE IGNORED and against [Delgado] and [HSLB], Register of Deeds of Las Pias City ordering the (sic) as follows:

1. The Register of Deeds of Las Pias City to cancel Transfer Certificate of Title Nos. 44848 and T-64668 as null and void and reinstating Transfer Certificate of Title No. T-402 which shall contain a memorandum of the fact and shall in
all respect be entitled to like faith and credit as the original certificate of title and shall, thereafter be regarded as such for all intents and purposes under the law;
2. Declaring the Mortgage Sheriffs Sale and the Certificate of Sale issued in favor of HSLB null and void, without prejudice to whatever rights the said Bank may have against [Delgado];
3. Ordering [Delgado] to pay [Felonia and De Guzman] the amount of PH500,000.00 for compensatory damages;
4. Ordering [Delgado] to pay [Felonia and De Guzman] the amount of PH500,000.00 for exemplary damages;
5. Ordering [Delgado] to pay [Felonia and De Guzman] the amount of PH500,000.00 for moral damages;
6. Ordering [Delgado] to pay 20% of the total obligations as and by way of attorneys fees;
7. Ordering [Delgado] to pay cost of suit.14

On appeal, the CA affirmed with modifications the trial court decision. The dispositive portion of the appealed Decision reads:
WHEREFORE, in the light of the foregoing, the decision appealed from is AFFIRMED with the MODIFICATIONS that the awards of actual damages and attorneys fees are DELETED, moral and exemplary damages are REDUCED to
50,000.00 each, and Delgado is ordered to pay the appellees 25,000.00 as nominal damages.15
Hence, this petition.
Notably, HSLB does not question the affirmance by the CA of the trial courts ruling that TCT No. 44848, the certificate of title of its mortgagor-vendor, and TCT No. 64668, the certificate of title that was secured by virtue of the Sheriffs
sale in its favor, should be cancelled "as null and void" and that TCT No. T-402 in the name of Felonia and De Guzman should be reinstated.
Recognizing the validity of TCT No. T-402 restored in the name of Felonia and De Guzman, petitioners pray that the decision of the CA be modified "to the effect that the mortgage lien in favor of petitioner HSLB annotated as entry
No. 4708-12 on TCT No. 44848 be [ordered] carried over on TCT No. T-402 after it is reinstated in the name of [Felonia and De Guzman]."16
Proceeding from the ruling of the CA that it is a mortgagee in good faith, HSLB argues that a denial of its prayer would run counter to jurisprudence giving protection to a mortgagee in good faith by reason of public policy.
We cannot grant the prayer of petitioner. The priorly registered mortgage lien of HSLB is now worthless.
Arguably, HSLB was initially a mortgagee in good faith. In Bank of Commerce v. San Pablo, Jr.,17 the doctrine of mortgagee in good faith was explained:
There is, however, a situation where, despite the fact that the mortgagor is not the owner of the mortgaged property, his title being fraudulent, the mortgage contract and any foreclosure sale arising there from are given effect by
reason of public policy. This is the doctrine of "the mortgagee in good faith" based on the rule that all persons dealing with property covered by the Torrens Certificates of Title, as buyers or mortgagees, are not required to go beyond
what appears on the face of the title. The public interest in upholding indefeasibility of a certificate of title, as evidence of lawful ownership of the land or of any encumbrance thereon, protects a buyer or mortgagee who, in good
faith, relied upon what appears on the face of the certificate of title.
When the property was mortgaged to HSLB, the registered owner of the subject property was Delgado who had in her name TCT No. 44848. Thus, HSLB cannot be faulted in relying on the face of Delgados title. The records indicate
that Delgado was at the time of the mortgage in possession of the subject property and Delgados title did not contain any annotation that would arouse HSLBs suspicion. HSLB, as a mortgagee, had a right to rely in good faith on
Delgados title, and in the absence of any sign that might arouse suspicion, HSLB had no obligation to undertake further investigation. As held by this Court in Cebu International Finance Corp. V.
CA:18
The prevailing jurisprudence is that a mortgagee has a right to rely in good faith on the certificate of title of the mortgagor of the property given as security and in the absence of any sign that might arouse suspicion, has no obligation
to undertake further investigation. Hence, even if the mortgagor is not the rightful owner of, or does not have a valid title to, the mortgaged property, the mortgagee or transferee in good faith is nonetheless entitled to protection.
However, the rights of the parties to the present case are defined not by the determination of whether or not HSLB is a mortgagee in good faith, but of whether or not HSLB is a purchaser in good faith. And, HSLB is not such a purchaser.
A purchaser in good faith is defined as one who buys a property without notice that some other person has a right to, or interest in, the property and pays full and fair price at the time of purchase or before he has notice of the claim
or interest of other persons in the property.19
When a prospective buyer is faced with facts and circumstances as to arouse his suspicion, he must take precautionary steps to qualify as a purchaser in good faith. In Spouses Mathay v. CA,20 we determined the duty of a prospective
buyer:
Although it is a recognized principle that a person dealing on a registered land need not go beyond its certificate of title, it is also a firmly settled rule that where there are circumstances which would put a party on guard and prompt
him to investigate or inspect the property being sold to him, such as the presence of occupants/tenants thereon, it is of course, expected from the purchaser of a valued piece of land to inquire first into the status or nature of possession
of the occupants, i.e., whether or not the occupants possess the land en concepto de dueo, in the concept of the owner. As is the common practice in the real estate industry, an ocular inspection of the premises involved is a safeguard
a cautious and prudent purchaser usually takes. Should he find out that the land he intends to buy is occupied by anybody else other than the seller who, as in this case, is not in actual possession, it would then be incumbent upon the
purchaser to verify the extent of the occupants possessory rights. The failure of a prospective buyer to take such precautionary steps would mean negligence on his part and would thereby preclude him from claiming or invoking the
rights of a purchaser in good faith.
In the case at bar, HSLB utterly failed to take the necessary precautions.1wphi1 At the time the subject property was mortgaged, there was yet no annotated Notice of Lis Pendens. However, at the time HSLB purchased the subject
property, the Notice of Lis Pendens was already annotated on the title.21
Lis pendens is a Latin term which literally means, "a pending suit or a pending litigation" while a notice of lis pendens is an announcement to the whole world that a real property is in litigation, serving as a warning that anyone who
acquires an interest over the property does so at his/her own risk, or that he/she gambles on the result of the litigation over the property.22 It is a warning to prospective buyers to take precautions and investigate the pending
litigation.
The purpose of a notice of lis pendens is to protect the rights of the registrant while the case is pending resolution or decision. With the notice of lis pendens duly recorded and remaining uncancelled, the registrant could rest secure
that he/she will not lose the property or any part thereof during litigation.
The doctrine of lis pendens is founded upon reason of public policy and necessity, the purpose of which is to keep the subject matter of the litigation within the Courts jurisdiction until the judgment or the decree have been entered;
otherwise, by successive alienations pending the litigation, its judgment or decree shall be rendered abortive and impossible of execution.23
Indeed, at the time HSLB bought the subject property, HSLB had actual knowledge of the annotated Notice of Lis Pendens. Instead of heeding the same, HSLB continued with the purchase knowing the legal repercussions a notice of
lis pendens entails. HSLB took upon itself the risk that the Notice of Lis Pendens leads to.1wphi1 As correctly found by the CA, "the notice of lis pendens was annotated on 14 September 1995, whereas the foreclosure sale, where the
appellant was declared as the highest bidder, took place sometime in 1997. There is no doubt that at the time appellant purchased the subject property, it was aware of the pending litigation concerning the same property and thus,
the title issued in its favor was subject to the outcome of said litigation."24
This ruling is in accord with Rehabilitation Finance Corp. v. Morales,25 which underscored the significance of a lis pendens, then defined in Sec. 24, Rule 7 now Sec. 14 of Rule 13 in relation to a mortgage priorly annotated on the title
covering the property. Thus:
The notice of lis pendens in question was annotated on the back of the certificate of title as a necessary incident of the civil action to recover the ownership of the property affected by it. The mortgage executed in favor of petitioner
corporation was annotated on the same title prior to the annotation of the notice of lis pendens; but when petitioner bought the property as the highest bidder at the auction sale made as an aftermath of the foreclosure of the
mortgage, the title already bore the notice of lis pendens. Held: While the notice of lis pendens cannot affect petitioners right as mortgagee, because the same was annotated subsequent to the mortgage, yet the said notice affects
its right as purchaser because notice of lis pendens simply means that a certain property is involved in a litigation and serves as a notice to the whole world that one who buys the same does so at his own risk.26
The subject of the lis pendens on the title of HSLBs vendor, Delgado, is the "Reformation case" filed against Delgado by the herein respondents. The case was decided with finality by the CA in favor of herein respondents. The contract
of sale in favor of Delgado was ordered reformed into a contract of mortgage. By final decision of the CA, HSLBs vendor, Delgado, is not the property owner but only a mortgagee. As it turned out, Delgado could not have constituted
a valid mortgage on the property. That the mortgagor be the absolute owner of the thing mortgaged is an essential requisite of a contract of mortgage. Article 2085 (2) of the Civil Code specifically says so:

Art. 2085. The following requisites are essential to the contracts of pledge and mortgage:
(2) That the pledgor or mortagagor be the absolute owner of the thing pledged or mortgaged.
Succinctly, for a valid mortgage to exist, ownership of the property is an essential requisite.27
Reyes v. De Leon28 cited the case of Philippine National Bank v. Rocha29 where it was pronounced that "a mortgage of real property executed by one who is not an owner thereof at the time of the execution of the mortgage is without
legal existence." Such that, according to DBP v. Prudential Bank,30 there being no valid mortgage, there could also be no valid foreclosure or valid auction sale.
We go back to Bank of Commerce v. San Pablo, Jr.31 where the doctrine of mortgagee in good faith, upon which petitioner relies, was clarified as "based on the rule that all persons dealing with property covered by the Torrens
Certificate of Title, as buyers or mortgagees, are not required to go beyond what appears on the face of the title. In turn, the rule is based on "x x x public interest in upholding the indefeasibility of a certificate of title, as evidence of
lawful ownership of the land or of any encumbrance thereon."32
Insofar as the HSLB is concerned, there is no longer any public interest in upholding the indefeasibility of the certificate of title of its mortgagor, Delgado. Such title has been nullified in a decision that had become final and executory.
Its own title, derived from the foreclosure of Delgado's mortgage in its favor, has likewise been nullified in the very same decision that restored the certificate of title in respondents' name. There is absolutely no reason that can support
the prayer of HSLB to have its mortgage lien carried over and into the restored certificate of title of respondents.
WHEREFORE, the Petition is DENIED. The Decision of the Court of Appeals in CA-G.R. CV No. 87540 is AFFIRMED.
G.R. No. 168655 July 2, 2010

J. CASIM CONSTRUCTION SUPPLIES, INC., Petitioner,


vs.
REGISTRAR OF DEEDS OF LAS PIAS, Respondent.
INTESTATE ESTATE OF BRUNEO F. CASIM, (Purported) Intervenor.
DECISION

PERALTA, J.:
This is a petition for review under Rule 45 of the Rules of Court, taken directly on a pure question of law from the April 14, 2005 Resolution1 and June 24, 2005 Order2 issued by the Regional Trial Court (RTC) of Las Pias City, Branch
253 in Civil Case No. LP-04-00713 one for cancellation of notice of lis pendens. The assailed Resolution dismissed for lack of jurisdiction the petition filed by J. Casim Construction Supplies Inc. for cancellation of notice of lis pendens
annotated on its certificate of title, whereas the assailed Order denied reconsideration.
The facts follow.
Petitioner, represented herein by Rogelio C. Casim, is a duly organized domestic corporation4 in whose name Transfer Certificate of Title (TCT) No. 49936,5 covering a 10,715-square meter land was registered. Sometime in 1982,
petitioner acquired the covered property by virtue of a Deed of Absolute Sale6 and as a result the mother title, TCT No. 30459 was cancelled and TCT No. 49936 was issued in its stead. 7
On March 22, 2004, petitioner filed with the RTC of Las Pias City, Branch 253 an original petition for the cancellation of the notice of lis pendens, as well as of all the other entries of involuntary encumbrances annotated on the original
copy of TCT No. 49936. Invoking the inherent power of the trial court to grant relief according to the petition, petitioner prayed that the notice of lis pendens as well as all the other annotations on the said title be cancelled. Petitioner
claimed that its owner's duplicate copy of the TCT was clean at the time of its delivery and that it was surprised to learn later on that the original copy of its TCT, on file with the Register of Deeds, contained several entries which all
signified that the covered property had been subjected to various claims. The subject notice of lis pendens is one of such entries.8 The notations appearing on the title's memorandum of encumbrances are as follows:
Entry No. 81-8334/T-30459 - ADVERSE CLAIM - In an affidavit duly subscribed and sworn to, BRUNO F. CASIM claims, among other things, that he has the right and interest over the property described herein in accordance with Doc.
No. 336; Page No. 69; Book No. 1; s. of 1981 of Not. Pub. of Makati, M.M., Romarie G. Villonco, dated August 4, 1981.
Date of inscription - Aug. 5, 1981 - 2:55 p.m.
(Sgd) VICTORIANO S. TORRES, Actg. Reg. of Deeds
Entry No. 82-4676/T-49936 - CANCELLATION OF ADVERSE CLAIM inscribed hereon under Entry No. 81-8334/T-30459 in accordance with Doc. No. 247; Page 50; Book No. CXLI; s. of 1982 of Not. Pub. of Pasay City, M.M., Julian G. Tubig,
dated April 21, 1982.
Date of inscription - April 21, 1982 - 8:40 a.m.
(Sgd) VICTORIANO S. TORRES, Actg. Reg. of Deeds
Entry No. 82-4678/T-49936 - AFFIDAVIT - In accordance with the affidavit duly executed by the herein registered owners, this title is hereby cancelled and in lieu thereof TCT No. 49936/T-228 has been issued in accordance with Doc.
No. 249; Page No. 80; Book No. CXLI; s. of 1982 of Not. Pub. of Pasay City, M.M., Julian G. Tubig, dated April 21, 1982.
Date of inscription - April 21, 1982 - 8:44 a.m.
(Sgd) VICTORIANO S. TORRES, Actg. Reg. of Deeds
Entry No. 81-12423/T-30459 - NOTICE OF LIS PENDENS: By virtue of the notice of Lis Pendens presented and filed by CESAR P. MANALAYSAY, counsel for the plaintiff, notice is hereby given that a petition for review has been commenced
and now pending in the Court of First Instance of Rizal, Branch XXIX, Pasay, M.M, in Civil Case No. LP-9438-P, BRUNEO F. CASIM, Plaintiff, vs. SPS. JESUS A. CASIM & MARGARITA CHAVEZ and Sps. Urbano Nobleza and Cristita J. Nobleza,
and Filomena C. Antonio, Defendants, involving the property described herein.
Date of the instrument - Sept. 17, 1981
Date of the inscription - Sept. 18, 1981 - 3:55 p.m.
(Sgd) VICTORIANO S. TORRES, Actg. Reg. of Deeds9
To justify the cancellation, petitioner alleged that the notice of lis pendens, in particular, was a forgery judging from the inconsistencies in the inscriber's signature as well as from the fact that the notice was entered non-chronologically,
that is, the date thereof is much earlier than that of the preceding entry. In this regard, it noted the lack of any transaction record on file with the Register of Deeds that would support the notice of lis pendens annotation. 10
Petitioner also stated that while Section 59 of Presidential Decree (P.D.) No. 1529 requires the carry-over of subsisting encumbrances in the new issuances of TCTs, petitioner's duplicate copy of the title did not contain any such carry-
over, which means that it was an innocent purchaser for value, especially since it was never a party to the civil case referred to in the notice of lis pendens. Lastly, it alludes to the indefeasibility of its title despite the fact that the
mother title, TCT No. 30459, might have suffered from certain defects and constraints. 11
The Intestate Estate of Bruneo F. Casim, representing Bruneo F. Casim, intervened in the instant case and filed a Comment/Opposition12 in which it maintained that the RTC of Las Pias did not have jurisdiction over the present action,
because the matter of canceling a notice of lis pendens lies within the jurisdiction of the court before which the main action referred to in the notice is pending. In this regard, it emphasized that the case referred to in the said notice
had already attained finality as the Supreme Court had issued an entry of judgment therein and that the RTC of Makati City had ordered execution in that case.13 It cited the lack of legal basis for the petition in that nothing in the
allegations hints at any of the legal grounds for the cancellation of notice of lis pendens. 14 And, as opposed to petitioner's claim that there was no carry-over of encumbrances made in TCT No. 49936 from the mother title TCT No.
30459, the latter would show that it also had the same inscriptions as those found in TCT No. 49936 only that they were entered in the original copy on file with the Register of Deeds. Also, as per Certification15 issued by the Register
of Deeds, petitioner's claim of lack of transaction record could not stand, because the said certification stated merely that the corresponding transaction record could no longer be retrieved and might, therefore, be considered as
either lost or destroyed.
On April 14, 2005, the trial court, ruling that it did not have jurisdiction over the action, resolved to dismiss the petition and declared that the action must have been filed before the same court and in the same action in relation to
which the annotation of the notice of lis pendens had been sought. Anent the allegation that the entries in the TCT were forged, the trial court pointed out that not only did petitioner resort to the wrong forum to determine the
existence of forgery, but also that forgery could not be presumed merely from the alleged non-chronological entries in the TCT but instead must be positively proved. In this connection, the trial court noted petitioner's failure to name
exactly who had committed the forgery, as well as the lack of evidence on which the allegation could be based. 16 The petition was disposed of as follows:
IN VIEW OF THE FOREGOING, the instant petition is hereby DISMISSED.
SO ORDERED.17
Petitioner moved for reconsideration,18 but it was denied in the trial court's June 24, 2005 Order.19
Now, raising the purely legal question of whether the RTC of Las Pias City, Branch 253 has jurisdiction in an original action to cancel the notice of lis pendens annotated on the subject title as an incident in a previous case, petitioner,
in this present petition, ascribes error to the trial court in dismissing its petition for cancellation. An action for cancellation of notice of lis pendens, petitioner believes, is not always ancillary to an existing main action because a trial
court has the inherent power to cause such cancellation, especially in this case that petitioner was never a party to the litigation to which the notice of lis pendens relates.20 Petitioner further posits that the trial court has committed
an error in declining to rule on the allegation of forgery, especially since there is no transaction record on file with the Register of Deeds relative to said entries. It likewise points out that granting the notice of lis pendens has been
properly annotated on the title, the fact that its owner's duplicate title is clean suggests that it was never a party to the civil case referred to in the notice.21 Finally, petitioner posits that TCT No. 49936 is indefeasible and holds it free
from any liens and encumbrances which its mother title, TCT No. 30459, might have suffered. 22
The Intestate Estate of Bruneo F. Casim (intervenor), in its Comment on the present petition, reiterates that the court a quo does not have jurisdiction to order the cancellation of the subject notice of lis pendens because it is only the
court exercising jurisdiction over the property which may order the same that is, the court having jurisdiction over the main action in relation to which the registration of the notice has been sought. Also, it notes that even on the
assumption that the trial court had such jurisdiction, the petition for cancellation still has no legal basis as petitioner failed to establish the grounds therefor. Also, the subject notice of lis pendens was validly carried over to TCT No.
49936 from the mother title, TCT No. 30459.
In its Reply,23 petitioner, in a semantic slur, dealt primarily with the supposed inconsistencies in intervenor's arguments. Yet the core of its contention is that the non-chronological annotation of the notice stands to be the best evidence
of forgery. From this, it advances the notion that forgery of the notice of lis pendens suffices as a ground for the cancellation thereof which may be availed of in an independent action by the aggrieved party.
The petition is utterly unmeritorious.
Lis pendens which literally means pending suit refers to the jurisdiction, power or control which a court acquires over the property involved in a suit, pending the continuance of the action, and until final judgment.24 Founded upon
public policy and necessity, lis pendens is intended to keep the properties in litigation within the power of the court until the litigation is terminated, and to prevent the defeat of the judgment or decree by subsequent alienation.25 Its
notice is an announcement to the whole world that a particular property is in litigation and serves as a warning that one who acquires an interest over said property does so at his own risk, or that he gambles on the result of the
litigation over said property.26
A notice of lis pendens, once duly registered, may be cancelled by the trial court before which the action involving the property is pending. This power is said to be inherent in the trial court and is exercised only under express provisions
of law.27 Accordingly, Section 14, Rule 13 of the 1997 Rules of Civil Procedure authorizes the trial court to cancel a notice of lis pendens where it is properly shown that the purpose of its annotation is for molesting the adverse party,
or that it is not necessary to protect the rights of the party who caused it to be annotated. Be that as it may, the power to cancel a notice of lis pendens is exercised only under exceptional circumstances, such as: where such
circumstances are imputable to the party who caused the annotation; where the litigation was unduly prolonged to the prejudice of the other party because of several continuances procured by petitioner; where the case which is the
basis for the lis pendens notation was dismissed for non prosequitur on the part of the plaintiff; or where judgment was rendered against the party who caused such a notation. In such instances, said notice is deemed ipso facto
cancelled.28
In theorizing that the RTC of Las Pias City, Branch 253 has the inherent power to cancel the notice of lis pendens that was incidentally registered in relation to Civil Case No. 2137, a case which had been decided by the RTC of Makati
City, Branch 62 and affirmed by the Supreme Court on appeal, petitioner advocates that the cancellation of such a notice is not always ancillary to a main action.
The argument fails.
From the available records, it appears that the subject notice of lis pendens had been recorded at the instance of Bruneo F. Casim (Bruneo) in relation to Civil Case No. 213729 one for annulment of sale and recovery of real property
which he filed before the RTC of Makati City, Branch 62 against the spouses Jesus and Margarita Casim, predecessors-in-interest and stockholders of petitioner corporation. That case involved the property subject of the present
case, then covered by TCT No. 30459. At the close of the trial on the merits therein, the RTC of Makati rendered a decision adverse to Bruneo and dismissed the complaint for lack of merit.30 Aggrieved, Bruneo lodged an appeal with
the Court of Appeals, docketed as CA-G.R. CV No. 54204, which reversed and set aside the trial court's decision.31 Expectedly, the spouses Jesus and Margarita Casim elevated the case to the Supreme Court, docketed as G.R. No.
151957, but their appeal was dismissed for being filed out of time. 32
A necessary incident of registering a notice of lis pendens is that the property covered thereby is effectively placed, until the litigation attains finality, under the power and control of the court having jurisdiction over the case to which
the notice relates.33 In this sense, parties dealing with the given property are charged with the knowledge of the existence of the action and are deemed to take the property subject to the outcome of the litigation.34 It is also in this
sense that the power possessed by a trial court to cancel the notice of lis pendens is said to be inherent as the same is merely ancillary to the main action.351avvphi1
Thus, in Vda. de Kilayko v. Judge Tengco,36 Heirs of Maria Marasigan v. Intermediate Appellate Court37 and Tanchoco v. Aquino,38 it was held that the precautionary notice of lis pendens may be ordered cancelled at any time by the
court having jurisdiction over the main action inasmuch as the same is merely an incident to the said action. The pronouncement in Heirs of Eugenio Lopez, Sr. v. Enriquez, citing Magdalena Homeowners Association, Inc. v. Court of
Appeals,39 is equally instructive
The notice of lis pendens x x x is ordinarily recorded without the intervention of the court where the action is pending. The notice is but an incident in an action, an extrajudicial one, to be sure. It does not affect the merits thereof. It
is intended merely to constructively advise, or warn, all people who deal with the property that they so deal with it at their own risk, and whatever rights they may acquire in the property in any voluntary transaction are subject to the
results of the action, and may well be inferior and subordinate to those which may be finally determined and laid down therein. The cancellation of such a precautionary notice is therefore also a mere incident in the action, and may
be ordered by the Court having jurisdiction of it at any given time. x x x40
Clearly, the action for cancellation of the notice of lis pendens in this case must have been filed not before the court a quo via an original action but rather, before the RTC of Makati City, Branch 62 as an incident of the annulment case
in relation to which its registration was sought. Thus, it is the latter court that has jurisdiction over the main case referred to in the notice and it is that same court which exercises power and control over the real property subject of
the notice.
But even so, the petition could no longer be expected to pursue before the proper forum inasmuch as the decision rendered in the annulment case has already attained finality before both the Court of Appeals and the Supreme Court
on the appellate level, unless of course there exists substantial and genuine claims against the parties relative to the main case subject of the notice of lis pendens.41 There is none in this case. It is thus well to note that the precautionary
notice that has been registered relative to the annulment case then pending before the RTC of Makati City, Branch 62 has served its purpose. With the finality of the decision therein on appeal, the notice has already been rendered
functus officio. The rights of the parties, as well as of their successors-in-interest, petitioner included, in relation to the subject property, are hence to be decided according the said final decision.
To be sure, petitioner is not altogether precluded from pursuing a specific remedy, only that the suitable course of action legally available is not judicial but rather administrative. Section 77 of P.D. No. 1529 provides the appropriate
measure to have a notice of lis pendens cancelled out from the title, that is by presenting to the Register of Deeds, after finality of the judgment rendered in the main action, a certificate executed by the clerk of court before which
the main action was pending to the effect that the case has already been finally decided by the court, stating the manner of the disposal thereof. Section 77 materially states:
SEC. 77. Cancellation of lis pendens. - Before final judgment, a notice of lis pendens may be cancelled upon order of the court, after proper showing that the notice is for the purpose of molesting the adverse party, or that it is not
necessary to protect the rights of the party who caused it to be registered. It may also be cancelled by the Register of Deeds upon verified petition of the party who caused the registration thereof.
At any time after final judgment in favor of the defendant, or other disposition of the action such as to terminate finally all rights of the plaintiff in and to the land and/or buildings involved, in any case in which a memorandum or
notice of lis pendens has been registered as provided in the preceding section, the notice of lis pendens shall be deemed cancelled upon the registration of a certificate of the clerk of court in which the action or proceeding was pending
stating the manner of disposal thereof. 42

Lastly, petitioner tends to make an issue out of the fact that while the original TCT on file with the Register of Deeds does contain the annotations and notice referred to in this petition, its owner's duplicate copy of the title nevertheless
does not reflect the same non-chronological inscriptions. From this, petitioner submits its puerile argument that the said annotations appearing on the original copy of the TCT are all a forgery, and goes on to assert the indefeasibility
of its Torrens title as well as its supposed status as an innocent purchaser for value in good faith. Yet we decline to rule on these assumptions principally because they raise matters that call for factual determination which certainly
are beyond the competence of the Court to dispose of in this petition.

All told, we find that the RTC of Las Pias City, Branch 253 has committed no reversible error in issuing the assailed Resolution and Order dismissing for lack of jurisdiction the petition for cancellation of notice of lis pendens filed by
petitioner, and in denying reconsideration.

WHEREFORE, the petition is DENIED. The April 14, 2005 Resolution and the June 24, 2005 Order issued by the Regional Trial Court of Las Pias City, Branch 253, in Civil Case No. LP-04-0071, are hereby AFFIRMED.