You are on page 1of 260

FIRST DIVISION

[G.R. No. 128102. March 7, 2000]

AZNAR BROTHERS REALTY COMPANY, petitioner, vs. COURT OF APPEALS, LUIS


AYING, DEMETRIO SIDA, FELOMINO AUGUSTO, FEDERICO ABING, and ROMEO
AUGUSTO, respondents.

DECISION

DAVIDE, JR., C.J.:

This is a petition for review on certiorari under Rule 45 of the Revised Rules of Court seeking to
reverse and set aside the 26 March 1996 Decision[1] of the Court of Appeals declaring the private
respondents the rightful possessors de facto of the subject lot and permanently enjoining Sheriff
Juan Gato or his representative from effecting the demolition of private respondents houses.

Culled from the evidence proffered by petitioner Aznar Brothers Realty Co. (hereafter AZNAR), it
appears that Lot No. 4399 containing an area of 34,325 square meters located at Brgy. Mactan,
Lapu-Lapu City, was acquired by AZNAR from the heirs of Crisanta Maloloy-on by virtue of an
Extrajudicial Partition of Real Estate with Deed of Absolute Sale dated 3 March 1964. This deed
was registered with the Register of Deeds of Lapu-Lapu City on 6 March 1964 as shown on the
face thereof. After the sale, petitioner AZNAR declared this property under its name for taxation
purposes and regularly paid the taxes thereon. Herein private respondents were allegedly allowed
to occupy portions of Lot No. 4399 by mere tolerance provided that they leave the land in the
event that the company would use the property for its purposes. Later, AZNAR entered into a joint
venture with Sta. Lucia Realty Development Corporation for the development of the subject lot into
a multi-million peso housing subdivision and beach resort. When its demands for the private
respondents to vacate the land failed, AZNAR filed with the Municipal Trial Court (MTCC) of Lapu-
Lapu City a case for unlawful detainer and damages, which was docketed as Civil Case No. R-
1027.

On the other hand, the private respondents alleged that they are the successors and descendants
of the eight children of the late Crisanta Maloloy-on, whose names appear as the registered
owners in the Original Certificate of Title No. RC-2856. They had been residing and occupying the
subject portion of the land in the concept of owner since the time of their parents and
grandparents, except for Teodorica Andales who was not a resident in said premises. Private
respondents claimed that the Extrajudicial Partition of Real Estate with Deed of Absolute Sale
is void ab initio for being simulated and fraudulent, and they came to know of the fraud only when
AZNAR entered into the land in the last quarter of 1991 and destroyed its vegetation. They then
filed with the Regional Trial Court (RTC) of Lapu-Lapu City a complaint seeking to declare the
subject document null and void. This case was docketed as Civil Case No. 2930-L.

On 1 February 1994, the MTCC rendered a decision ordering the private respondents to (a)
vacate the land in question upon the finality of the judgment; and (b) pay P8,000 as attorneys fees
and P2,000 as litigation expenses, plus costs.[2]

The MTCC delved into the issue of ownership in order to resolve the issue of possession. It found
that petitioner AZNAR acquired ownership of Lot No. 4399 by virtue of the Extrajudicial Partition of
Real Estate with Deed of Absolute Sale executed by the Heirs of Crisanta Maloloy-on on 3 March
1964, which was registered with the Register of Deeds of Lapu-Lapu City on 6 March 1964 as
appearing on the face thereof. Private respondents allegation that two of the signatories were not
heirs of the registered owners; that some of the signatories were already dead at the date of the
execution of the deed; and that many heirs were not parties to the extrajudicial partition is a form
of a negative pregnant, which had the effect of admitting that the vendors, except those mentioned
in the specific denial, were heirs and had the legal right to sell the subject land to petitioner. The
fact that some or most heirs had not signed the deed did not make the document null and void ab
initio but only annullable, unless the action had already prescribed. Since the private respondents
occupied the land merely by tolerance, they could be judicially ejected therefrom. That the Deed
has not been annotated on OCT RO-2856 is of no moment, since said title was reconstituted only
on 25 August 1988, while the subject Deed was executed on 3 March 1964. Lastly, the
reconstituted title has not as yet been transferred to a purchaser for value.

Aggrieved by the decision of the MTCC, private respondents appealed to the RTC.

During the pendency of the appeal, or on 8 March 1994, the RTC, upon Aznars ex parte motion,
issued an order granting the issuance of a writ of execution pursuant to Section 8, Rule 70 of the
Revised Rules of Court in view of the failure of private respondents to put up a supersedeas bond.
A week later, a writ of execution was issued. The sheriff then served upon private respondents the
said writ of execution together with a notice to vacate. On 11 April 1994, the sheriff padlocked their
houses, but later in the day, private respondents re-entered their houses. Thus, on 6 May 1994,
AZNAR filed an omnibus motion for the issuance of a writ of demolition, which private respondents
opposed. This motion was set for hearing three times, but the parties opted to submit a
consolidated memorandum and agreed to submit the same for resolution.[3]

On 22 July 1994, the RTC affirmed the decision of the MTCC and ordered the issuance of a writ of
demolition directing the sheriff to demolish private respondents houses and other improvements
which might be found on the subject premises.[4]

On 29 July 1994, a writ of demolition was issued, and notices of demolition were served upon
private respondents. Per Sheriffs Report,[5] private respondents houses were demolished on 3
August 1994, except for two houses which were moved outside the premises in question upon the
plea of the owners thereof.

On appeal by the private respondents, the Court of Appeals reversed and set aside the decision of
the RTC; declared the private respondents as the rightful possessors de facto of the land in
question; and permanently enjoined Sheriff Juan Gato or whoever was acting in his stead from
effectuating the demolition of the houses of the private respondents.

In arriving at its challenged decision, the Court of Appeals noted that at the time AZNAR entered
the property, the private respondents had already been in possession thereof peacefully,
continuously, adversely and notoriously since time immemorial. There was no evidence that
petitioner was ever in possession of the property. Its claim of ownership was based only on an
Extrajudicial Partition with Deed of Absolute Sale, which private respondents, however, claimed to
be null and void for being simulated and fraudulently obtained. The Court of Appeals further held
that where not all the known heirs had participated in the extrajudicial agreement of partition, the
instrument would be null and void and therefore could not be registered. [6] Moreover, AZNAR was
estopped to assert ownership of the property in question, since it had admitted in a pleading in the
reconstitution proceedings that the property had never been conveyed by the decreed owners.
Additionally, from 1988 up to the filing of the ejectment case on 4 August 1993, AZNAR never
registered the extrajudicial partition despite opportunities to do so. Its allegation that private
respondents occupied the property by mere tolerance was not proved. Pursuant to the ruling
in Vda. de Legazpi v. Avendano,[7] the fact that the right of the private respondents was so
seriously placed in issue and the execution of the decision in the ejectment case would have
meant demolition of private respondents houses constituted an equitable reason to suspend the
enforcement of the writ of execution and order of demolition.
AZNAR then elevated the case to this Court, via this petition for review on certiorari, contending
that respondent Court of Appeals erred in

1. ... reversing the judgments of the Municipal Trial Court and the Regional Trial
Court of Lapu-Lapu City despite the finality of the judgments and the full
implementation thereof;

2. ... invoking lack of prior physical possession over the land in question by the
petitioner as one ground in its Decision sought to be reviewed;

3. ... holding that the Extrajudicial Partition with Deed of Absolute Sale was null and
void;

4. ...holding that petitioner was in estoppel in pais when it made the allegation that
the property was not sold or encumbered in its petition for reconstitution of title;

5. ... applying the ruling in the case of Vda. de Legazpi vs. Avendano (79 SCRA 135
[1977]).

We shall jointly discuss the first and fifth assigned errors for being interrelated with each other.

In its first assigned error, petitioner argues that the decision of the MTCC of Lapu-Lapu City had
become final and immediately executory in view of the undisputed failure of the private
respondents to post a supersedeas bond as required by Section 8, Rule 70 of the Revised Rules
of Court.

We do not agree. Since the private respondents had seasonably filed an appeal with the RTC of
Lapu-Lapu City, the judgment of the MTCC of Lapu-Lapu City did not become final. And for
reasons hereunder stated, the perfection of the appeal was enough to stay the execution of the
MTCC decision.

Under the former Section 8, Rule 70 of the Rules of Court,[8] if the judgment of the municipal trial
court in an ejectment case is adverse to the defendant, execution shall issue immediately. To stay
the immediate execution of the judgment, the defendant must (1) perfect his appeal; (2) file
a supersedeas bond to answer for the rents, damages, and costs accruing down to the time of the
judgment appealed from; and (3) periodically deposit the rentals falling due during the pendency of
the appeal.[9]

As a rule, the filing of a supersedeas bond is mandatory and if not filed, the plaintiff is entitled as a
matter of right to the immediate execution of the judgment. An exception is where the trial court did
not make any findings with respect to any amount in arrears, damages or costs against the
defendant,[10] in which case no bond is necessary to stay the execution of the judgment. Thus,
in Once v. Gonzales,[11] this Court ruled that the order of execution premised on the failure to file
a supersedeas bond was groundless and void because no such bond was necessary there being
no back rentals adjudged in the appealed judgment.

Similarly, in the instant case, there was no need for the private respondents to file
a supersedeas bond because the judgment of the MTCC did not award rentals in arrears or
damages. The attorneys fees of P8,000 and the litigation expenses of P2,000 awarded in favor of
the petitioner need not be covered by a bond, as these are not the damages contemplated in
Section 8 of Rule 70 of the Rules of Court. The damages referred to therein are the reasonable
compensation for the use and occupation of the property which are generally measured by its fair
rental value and cannot refer to other damages which are foreign to the enjoyment or material
possession of the property.[12] Neither were the private respondents obliged to deposit the rentals
falling due during the pendency of the appeal in order to secure a stay of execution because the
appealed judgment did not fix the reasonable rental or compensation for the use of the
premises.[13] Hence, it was error for the RTC to order the execution of the judgment of the MTCC.

At any rate, pursuant to Section 21 of the Revised Rules of Summary Procedure, the decision of
the RTC affirming the decision of the MTCC has become immediately executory, without prejudice
to the appeal before the Court of Appeals. The said Section repealed Section 10 of the Rules of
Court allowing during the pendency of the appeal with the Court of Appeals a stay of execution of
the RTC judgment with respect to the restoration of possession where the defendant makes a
periodic deposit of rentals. Thus, immediate execution of the judgment becomes a ministerial duty
of the court. No new writ of execution was, however, issued. Nevertheless, the writ of demolition
thereafter issued was sufficient to constitute a writ of execution, as it substantially complied with
the form and contents of a writ of execution as provided for under Section 8 of Rule 39 of the
Rules of Court. Moreover, private respondents were duly notified and heard on the omnibus
motion for the issuance of the writ of demolition and were given five days to remove their houses. [14]

Invoking Legaspi v. Avendao,[15] the Court of Appeals held that there was an equitable reason to
suspend the enforcement of the writ of execution and order of demolition until after the final
determination of the civil case for the nullification of the Extrajudicial Partition with Deed of
Absolute Sale.

In Legaspi, this Court held:

Where the action ... is one of illegal detainer ... and the right of the plaintiff to recover
the premises is seriously placed in issue in a proper judicial proceeding, it is more
equitable and just and less productive of confusion and disturbance of physical
possession, with all its concomitant inconvenience and expense [f]or the court in
which the issue of legal possession, whether involving ownership or not, is brought
to restrain, should a petition for preliminary injunction be filed with it, the effects of
any order or decision in the unlawful detainer case in order to await the final
judgment in the more substantive case involving legal possession or ownership.

In the instant case, private respondents petition for review with prayer for the immediate issuance
of a temporary restraining order (TRO) or preliminary injunction was mailed on 2 August 1994 but
was received by the Court of Appeals only on 30 August 1994. Meanwhile, on 3 August 1994, the
writ of demolition was implemented, resulting in the demolition of private respondents houses.
Hence, any relevant issue arising from the issuance or enforcement of the writ had been rendered
moot and academic. Injunction would not lie anymore, as the acts sought to have been enjoined
had already become a fait accompli or an accomplished or consummated act.

Now on the applicability to unlawful detainer cases of the requirement of prior physical possession
of the disputed property. Contrary to the ruling of the Court of Appeals, prior physical possession
by the plaintiff of the subject property is not an indispensable requirement in unlawful detainer
cases, although it is indispensable in an action for forcible entry.[16] The lack of prior physical
possession on the part of AZNAR is therefore of no moment, as its cause of action in the unlawful
detainer case is precisely to terminate private respondents possession of the property in
question.[17]

We now come to the issue of the validity of the Extrajudicial Partition with Deed of Absolute Sale.

In an action for ejectment, the only issue involved is possession de facto. However, when the
issue of possession cannot be decided without resolving the issue of ownership, the court may
receive evidence upon the question of title to the property but solely for the purpose of determining
the issue of possession.[18]
In the instant case, private respondents have set up the defense of ownership and questioned the
title of AZNAR to the subject lot, alleging that the Extrajudicial Partition with Deed of Absolute Sale
upon which petitioner bases its title is null and void for being simulated and fraudulently made.

First, private respondents claim that not all the known heirs of Crisanta Maloloy-on participated in
the extrajudicial partition, and that two persons who participated and were made parties thereto
were not heirs of Crisanta. This claim, even if true, would not warrant rescission of the deed.
Under Article 1104 of the Civil Code, "[a] partition made with preterition of any of the compulsory
heirs shall not be rescinded, unless it be proved that there was bad faith or fraud on the part of the
persons interested; but the latter shall be proportionately obliged to pay to the person omitted the
share which belongs to him." In the present case, no evidence of bad faith or fraud is extant from
the records. As to the two parties to the deed who were allegedly not heirs, Article 1105 is in point;
it provides: "A partition which includes a person believed to be an heir, but who is not, shall be void
only with respect to such person." In other words, the participation of non-heirs does not render
the partition void in its entirety but only to the extent corresponding to them.

Private respondents also allege that some of the persons who were made parties to the deed were
already dead, while others were still minors. Moreover, the names of some parties thereto were
misspelled, and others who knew how to read and write their names were made to appear to have
affixed only their thumbmark in the questioned document. Likewise, the signatures of those who
were made parties were forged.

The foregoing are bare allegations with no leg to stand on. No birth or death certificates were
presented before the MTCC to support the allegations that some of the parties to the deed were
minors and others were already dead at the time of the execution of the deed. What private
respondents adduced as evidence was merely a family tree, which was at most self-serving. It was
only when the case was on appeal with the RTC that the private respondents presented as Annex
"B" of their Memorandum and Appeal Brief a photocopy of the certificate of death of Francisco
Aying,[19] son of Crisanta Maloloy-on, who reportedly died on 7 March 1963. This certificate was
allegedly issued on 17 January 1992 by the Parish Priest of Virgen de Regla Parish, Lapu-Lapu
City. The fact remains, however, that this photocopy was not certified to be a true copy.

It is worthy to note that the Extrajudicial Partition with Deed of Absolute Sale is a notarized
document. As such, it has in its favor the presumption of regularity, and it carries the evidentiary
weight conferred upon it with respect to its due execution.[20] It is admissible in evidence without
further proof of authenticity[21] and is entitled to full faith and credit upon its face.[22] He who denies
its due execution has the burden of proving that contrary to the recital in the Acknowledgment he
never appeared before the notary public and acknowledged the deed to be his voluntary act.[23] It
must also be stressed that whoever alleges forgery has the burden of proving the same. Forgery
cannot be presumed but should be proved by clear and convincing evidence.[24] Private
respondents failed to discharge this burden of proof; hence, the presumption in favor of the
questioned deed stands.

Private respondents contend that there was violation of the Notarial Law because the lawyer who
prepared and notarized the document was AZNARs representative in the execution of the said
document. Under Section 22 of the Spanish Notarial Law of 1889, a notary public could not
authenticate a contract which contained provisions in his favor or to which any of the parties
interested is a relative of his within the fourth civil degree or second degree of affinity; otherwise,
pursuant to Section 28 thereof, the document would not have any effect. This rule on notarial
disqualification no longer holds true with the enactment of Act No. 496, which repealed the
Spanish Notarial Law.[25] Under the Notarial Law in force at the time of the notarization of the
questioned deed, Chapter 11 of the Revised Administrative Code, only those who had been
convicted of any crime involving moral turpitude were disqualified to notarize documents. Thus, a
representative of a person in whose favor a contract was executed was not necessarily so
disqualified. Besides, there is no proof that Atty. Ramon Igaa was a representative of petitioner in
1964; what appears on record is that he was the Chief of the petitioners Legal Department in
1993. Additionally, this alleged violation of the Notarial Law was raised only now.

Anent the non- annotation of the Extrajudicial Partition with Deed of Absolute Sale in the
reconstituted Original Certificate of Title No. RO-2856, the same does not render the deed legally
defective. It must be borne in mind that the act of registering a document is never necessary to
give the conveyance legal effect as between the parties[26] and the vendors heirs. As between the
parties to a sale, registration is not indispensable to make it valid and effective. The peculiar force
of a title is exhibited only when the purchaser has sold to innocent third parties the land described
in the conveyance. The purpose of registration is merely to notify and protect the interests of
strangers to a given transaction, who may be ignorant thereof, and the non-registration of the deed
evidencing said transaction does not relieve the parties thereto of their obligations
thereunder.[27] Here, no right of innocent third persons or subsequent transferees of the subject lot
is involved; thus, the conveyance executed in favor of AZNAR by private respondents and their
predecessors is valid and binding upon them, and is equally binding and effective against their
heirs.[28]

The principle that registration is the operative act that gives validity to the transfer or creates a lien
upon the land "refers to cases involving conflicting rights over registered property and those of
innocent transferees who relied on the clean title of the properties."[29] This principle has no bearing
on the present case, as no subsequent transfer of the subject lot to other persons has been made
either by private respondents or their predecessors-in-interest.[30]

By and large, it appears on the face of the Extrajudicial Partition with Deed of Absolute Sale that
the same was registered on 6 March 1964. The registration was under Act No. 3344 on
unregistered lands allegedly because at the time, no title was existing in the files of the Register of
Deeds of Lapu-Lapu City, as it was allegedly lost during the last world war. It was only on 8 August
1988 that the title was reconstituted at the instance of the petitioner.

As to the fourth assigned error, we do not agree with the Court of Appeals and the private
respondents that petitioner is in estoppel to assert ownership over the subject property because of
petitioners own allegation in the petition for reconstitution, to wit:

That certificates of title were issued thereto but were lost during the last world war.
That the same were not conveyed much less offered as a collateral for any debt
contracted or delivered for the security of payment of any obligation in favor of any
person or lending institution.

The words "the same" in the second sentence of the afore-quoted paragraph clearly refers to the
certificates of title. This means that the certificates of title, not necessarily the subject lot, were not
conveyed or offered as a collateral but were lost during the last world war. Indeed, as petitioner
contends, it would be very absurd and self-defeating construction if we were to interpret the
above-quoted allegation in the manner that the Court of Appeals and the private respondents did,
for how could petitioner, who is claiming ownership over the subject property, logically allege that
the property was not sold to it?

It bears repeating that petitioners claim of possession over the subject lot is anchored on its claim
of ownership on the basis of the Extrajudicial Partition with Deed of Absolute Sale. Our ruling on
the issue of the validity of the questioned deed is solely for the purpose of resolving the issue of
possession and is to be regarded merely as provisional, without prejudice, however, to the final
determination of the issue in the other case for the annulment or cancellation of the Extrajudicial
Partition with Deed of Absolute Sale.
WHEREFORE, the petition is GRANTED. The challenged decision of public respondent Court of
Appeals in CA-G.R. SP No. 35060 is hereby REVERSED, and the decision of the Regional Trial
Court, Branch 27, Lapu-Lapu City, is REINSTATED.

No pronouncement as to costs.

SO ORDERED.

Puno, Kapunan, Pardo, and Ynares-Santiago, JJ., concur.

[1]
Rollo, 41. Per Ibay-Somera, C., J., with Benipayo, A. and Lipana-Reyes, C., JJ., concurring.
[2]
Rollo, 17. Per Judge Alfredo B. Perez, Jr.
[3]
RTC Decision, 8-9; Rollo, 31-32.
[4]
Rollo, 24-33. Per Judge Teodoro K. Risos.
[5]
CA Rollo, 141.
[6]
Citing NARCISO PEA, ET AL., REGISTRATION OF LAND TITLES AND DEEDS 627 (1994) (hereafter PEA).
[7]
79 SCRA 135 [1977].
[8]
Now Section 19, Rule 70 of the 1997 Rules of Civil Procedure.
[9]
Chua v. Court of Appeals, 286 SCRA 437, 444 [1998]; Fernandez v. Espaol, 289 SCRA 1, 5-6 [1998].
[10]
1 FLORENZ D. REGALADO, REMEDIAL LAW COMPENDIUM 797 (1997).
[11]
76 SCRA 258, 261 [1977].
[12]
See De Laureano v. Adil, 72 SCRA 148, 155 [1976].
[13]
Lunsod v. Ortega, 46 Phil. 664, 674 [1921].
[14]
Rubio v. MTCC, Branch 4, Cagayan de Oro City, 252 SCRA 172, 181-182 [1996].
[15]
Supra note 7.
[16]
Aguilar v. Cabrera, 74 Phil. 658, 666 [1944]; Pangilinan v. Aguilar , 43 SCRA 136, 144 [1972]; Sumulong v. Court of Appeals,
232 SCRA 372, 383 [1994]; Javelosa v. Court of Appeals, 265 SCRA 493, 502 [1996].
[17]
Orellano v. Alvestir, 76 SCRA 536, 541 [1977].
[18]
Former Section 4, Rule 70, Rules of Court; Consing v. Jamandre, 64 SCRA 1, 8 [1975]; Wilmon Auto Supply Corp. v. Court of
Appeals, 208 SCRA 108, 121 [1992].
[19]
OR, 185.
[20]
See Garrido v. Court of Appeals, 236 SCRA 450, 457 [1994].
[21]
Nadayag v. Grageda, 237 SCRA 202, 206 [1994]; Lao v. Villones-Lao, G.R. No. 126777, 29 April 1999.
[22]
Arrieta v. Llosa, 282 SCRA 248 [1997].
[23]
Daroy v. Abecia, 298 SCRA 239, 251 [1998].
[24]
Veloso v. Court of Appeals, 260 SCRA 593, 602 [1996].
[25]
Kapunan v. Casilan, 109 Phil. 889, 892 [1960].
[26]
PEA, 9.
[27]
Sapto v. Fabiana, 103 Phil. 683, 685 [1958 ].
[28]
Supra note 27.
[29]
Supra note 27, at 686.
[30]
See Id.

Republic of the Philippines


SUPREME COURT
Manila

EN BANC

G.R. No. L-17951 February 28, 1963

CONRADO C. FULE and LOURDES F. ARAGON, petitioners,


vs.
EMILIA E. DE LEGARE and COURT OF APPEALS, respondents.

Teehankee, Tanada & Carreon for petitioners.


Ignacio M. Orendain for respondents.
REGALA, J.:

This is a petition for certiorari to review the decision of the Court of Appeals, promulgated on November 16,
1960, in Civil Case No. 15728-R, entitled" Emilia E. Legare, plaintiff-appellant, versus Conrado C. Fule and
Lourdes F. Aragon, defendants-appellants..

The facts of this case as found by the Court of Appeals in its decision are as follows:

This is an action for annulment of certain deeds of sale and conveyance covering a parcel of land,
together with the improvements existing thereon, situated in the municipality of San Juan, province of
Rizal, and for damages.

It appears in evidence that the plaintiff, Emilia E. de Legare, was the owner of a parcel of land, together
with a residential house erected thereon, situated at No. 146 Sta. Mesa Boulevard Extension, San Juan,
Rizal, her ownership being evidenced by Transfer Certificate of Title No. 21253, issued by the Office of
the Register of Deeds of the province of Rizal. She was living in that house together with defendant John
W. Legare, her adopted son, and a maid named Purita Tarrosa. On September 26, 1951, the plaintiff,
thru a public deed, constituted on the above mentioned house and lot a first class mortgage in favor of
defendant Tomas Q. Soriano to guarantee the payment of a loan in the amount of P8,000.00. This deed
of mortgage was on the same date recorded in the Office of the Register of Deeds of the province of
Rizal and annotated in the memorandum of encumbrances of transfer certificate of title No. 21253. On
account of certain partial payments made by the plaintiff and the contracting by the latter of additional
loans in small amounts from Tomas Q. Soriano the debt guaranteed by the above mentioned mortgage
was reduced to the sum of P7,000.00 as of February 23, 1953. These transactions, however, were not
annotated on the memorandum of encumbrances of the above mentioned certificate of title.

At about 9:00 o'clock in the evening of March 29, 1953, while the plaintiff, John W. Legare, and Purita
Tarrosa were seated in the drawing room of the house above referred to, an unknown man intruded into
the room, approached the plaintiff, covered her mouth, and, pressing a knife on her side, demanded that
she give him P10,000.00 if she did not like to be killed. The plaintiff replied that she did not have that
amount. Thereupon, the intruder told the plaintiff to raise the necessary amount as he would come back
the following morning and once more threatened to kill her if she would fail to do so. After having made
that threat, the intruder left the house. John W. Legare did not call for help nor made any attempt to
defend his mother, and when Purita Tarrosa stood up to go down the house to call for a policeman, he
held the latter by the hand and slapped her on the face when she persisted in going down, telling her
that the man had companions waiting downstairs.

After the intruder was gone John W. Legare approached the plaintiff, and exhibiting to her a paper told
her to sign it as with the same he could secure from the U.S. Veterans Administration the amount which
they needed to deliver to that intruder. The plaintiff, who did not know how to read nor write, although
she could sign her name, asked John W. Legare what that paper was. The latter answered that it was an
application for payment of compensation. As plaintiff had confidence in John W. Legare and prior to that
occasion she had received from the U.S. Veterans Administration a letter concerning some
compensation she was to receive, she signed that paper. After the paper was signed by the plaintiff,
John W. Legare had Purita Tarrosa sign it as a witness, without however, allowing the latter to read it.

After that paper was thus signed, John W. Legare told the plaintiff and Purita Tarrosa to pack up their
things as they were leaving the house to hide in a hotel, adding that the men who came earlier that
evening were Huks. Early the next morning John W. Legare took the plaintiff and Purita Tarrosa to the
Windsor Hotel in the City of Manila, and after conducting them to a room in the hotel, told them not to
leave the room or peep out of the window as they might be seen by the men who came to their house in
the previous evening. This advise given, John W. Legare left the hotel. The plaintiff and Purita Tarrosa
stayed in that hotel for about a month and a half. John W. Legare occasionally visited them there. In one
of said occasional visits the plaintiff told John that she wanted to go home. The latter told her that it was
not yet safe for her to go home. On May 7, 1953, however, John W. Legare came to the hotel, gave the
plaintiff a five-peso bill, and told her that she could use the amount for transportation expenses if she
wanted to leave the hotel. On the following morning the plaintiff and Purita Tarrosa left the hotel and
went direct to her house at Sta. Mesa Boulevard Extension. When they arrived at the house, however,
they found that it was occupied by strangers, and that all her furniture and personal belongings had
disappeared. Inquiring from those strangers how they happened to occupy the house, the latter told her
that John W. Legare had sold the house to them and that it was no longer hers. The plaintiff thereupon
sought the help of her attorney. It was then discovered that the paper which John W. Legare had the
plaintiff and Purita Tarrosa sign in the evening of March 29, 1953 was a deed of sale of the lot and house
in question in favor of John W. Legare for the sum of P12,000.00, and that it was supposed to have been
executed on the 7th day of April, 1953, and acknowledged before a notary public on that date. Exhibit X.

It further appears that sometime prior to May 9, 1953, John W. Legare approached Elias B. Fermin, the
real estate broker who intervened in the securing of the loan contracted by the plaintiff from Tomas Q.
Soriano, and sought said broker's help to sell the lot and house in question. Elias B. Fermin accepted the
commission and offered the property in sale to defendants spouses Conrado C. Fule and Lourdes F.
Aragon. Conrado C. Fule read the title papers in the hand of John W. Legare and inspected the
premises, and satisfied with the result of his inspection, he agreed to purchase the property for
P12,000.00 on condition that the sum of P7,000, the unpaid balance of plaintiff's indebtedness to Tomas
Q. Soriano secured by a mortgage thereon, would be deducted from the price, and that he would
assume said mortgage. The terms offered by Conrado C. Fule being acceptable to John W. Legare and
Tomas Soriano, the parties proceeded to formalize the contract. Accordingly, on May 9, 1953, defendant
Tomas Q. Soriano executed a deed of absolute sale thereof, free of all liens and encumbrances, in favor
of defendant spouses Conrado C. Fule and Lourdes F. Aragon, Exhibit X-2, and said spouses in turn
executed in favor of Tomas Q. Soriano a deed of mortgage covering the property for the sum of
P7,000.00. Exhibit X-3. These three deeds, together with transfer certificate of Title No. 21253, issued in
the name of the plaintiff, were on that same date presented for registration in the Office of the Register of
Deeds of the province of Rizal. The latter, following the usual procedure, recorded, first, the deed of sale
executed by the plaintiff in favor of defendant John W. Legare (Exhibit 1) and issued in the name of the
latter transfer certificate of title No. 30126 which cancelled transfer certificate of title No. 21253 (Exhibit
Y), then the deed of sale executed by John W. Legare in favor of the spouses Conrado C. Fule and
Lourdes F. Aragon (Exhibit X-2) and issued in favor of the latter transfer certificate of title No. 30127
(Exhibit Y-1), which cancelled transfer certificate of title No. 30126, and then annotated on the
memorandum of encumbrances of transfer certificate of title No. 30127 the deed of mortgage (Exhibit X-
1) executed in favor of Tomas Q. Soriano by said spouses. Once these were accomplished, Elias B.
Fermin and John W. Legare went back to the house of the spouses Conrado C. Fule and Lourdes P.
Aragon and gave the transfer certificate of title No. 30127. Thereupon said spouses delivered to John W.
Legare the balance of the purchase price of the property after deducting therefrom the amount of the
mortgage constituted thereon in favor of Tomas Q. Soriano, the brokerage fees and the expenses
incident to the execution and registration of said deeds and issuance of new certificates of title, which
amounted to a little P4,000.00.

Upon the evidence, the trial court rendered judgment, the dispositive part of which reads as follows:

IN VIEW OF ALL THE FOREGOING, this Court hereby orders:

1) the cancellation of Certificates of Title Nos. 30127 and 10126, thereby leaving valid TCT No. 21253 in
the name of Emilia E. de Legare together with the encumbrance thereon in favor of Tomas Q. Soriano;

2) the delivery of the possession of the premises to the plaintiff and the monthly rental of P150.00 a
month from May 9, 1953, up to and including the date on which the delivery is to be made, this obligation
being understood to be joint and several insofar as the defendants Fule and Aragon are concerned;

3) the award of P5,000.00 as moral damages in favor of the plaintiff and enforceable against John W.
Legare for the fraud perpetrated by the latter on the former;

4) the award of P1,000.00 as attorney's is fees enforceable against the defendants Fule and Aragon;

And on the cross-claim, the court orders —

1) John W. Legare to refund to the spouses Fule and Aragon the amount paid by the latter on account of
the sale contained in Exhibit X-2 plus interest thereon at the legal rate from the date of the cross-claim;

2) the award of P5,000.00 as moral damages in favor of the spouses Fule and Aragon and enforceable
against John W. Legare for the misrepresentation made by him;.

3) the reimbursement to the spouses Fule and Aragon by John W. Legare of all amounts which may be
paid by the former to the plaintiff by way of rentals for the premises involved herein, as well as attorney's
fees in the amount of P1,000.00.
SO ORDERED.

The Court of Appeals, in deciding the appeal, entered a judgment the dispositive portion of which follows:.

WHEREFORE, modified as indicated above, i.e., the transfer certificate of title No. 21253 issued in the
name of Emilia E. de Legare is revived with the mortgage in favor of appellee Tomas Q. Soriano
annotated on its memorandum of encumbrances but reduced to the amount of P7,000.00, and that the
award of attorney's fees in the amount of P1,000.00 to be paid by the spouses Conrado C. Fule and
Lourdes F. Aragon, in favor of the plaintiff, is eliminated therefrom, the judgment appealed from is hereby
affirmed in all other respects, without special pronouncement as to costs in this instance.

IT IS SO ORDERED.

In elevating the judgment of the Court of Appeals to this Tribunal for review, herein petitioners discussed 6
assignments of error. However, this Court is of the view that, in effect and substance, only one issue was
raised.We have always refrained from reviewing factual findings of the Court of Appeals and the first two errors
assigned were but attempts at disputing the same. The other four were simply detailed aspects of the one, sole
issue, to wit:

Were the herein petitioners purchasers in good faith and for value of the properties here contested?

Guided by the facts found by the Court of Appeals, We hold the herein petitioners innocent purchasers for value
of the house and lot here disputed. In consequence, they are here adjudged the lawful owners thereof.

A purchaser in good faith is one who buys property of another, without notice that some other persons 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 claim or interest of some other persons in the property. Good faith consists in an
honest intention to abstain from taking any unconscientious advantage of another (Cui and Joven v. Henson, 51
Phil. 606). We have measured the conduct of the petitioner spouses by this yardstick.

These facts were uncontroverted. The negotiation and transaction which eventually caused the certificate of title
to be transferred from the herein respondent to the petitioner spouses were conducted by a real estate broker
licensed since 1938. Nothing in John W. Legare's person or behaviour suggested anything suspicious. He was
the adopted son of the herein respondent, and, to the time that he was contracting with the petitioner spouses,
he had not been known to commit crime or dishonesty. On the contrary, John has had previous dealings with the
real estate broker during which he exhibited the expected degree of trustworthiness.

It should be noted that the deed of sale was regular upon its face, and no one would have questioned its
authenticity since it was duly acknowledged before a notary public. Moreover, even if the petitioners had the
opportunity to compare the signature of the respondent on the deed of conveyance with a specimen of her
genuine signature, the effort, nonetheless, would have been in vain since the respondent's signature on the
document was admittedly hers. Lastly, it should not be overlooked that the respondent, during the whole period
of the negotiation, was nowhere available to confirm or deny the execution of the deed. She was then in hiding,
or, hidden, at the Windsor Hotel in Manila.

The diligence and precaution observed by the petitioners themselves could hardly have been wanting. The
records show that they did not rely solely and fully upon the deed of sale in favor of John W. Legare and the fact
that John had then in his possession the corresponding certificate of title of the registered owner. They
demanded more. They insisted that the sale in favor of John W. Legare be first registered and that the transfer in
their favor be thereafter likewise registered. It was only after all these were complied with that they paid the
purchase price. In other words, the petitioner spouses relied not really on the documents exhibited to them by
John W. Legare, but, on the registerability of those documents. This in Our view, satisfies the measure of good
faith contemplated by law.

It is true that at the time the herein petitioners purchased the properties from John W. Legare, he was not yet the
registered owner of the same. This fact alone, however, could not have caused the herein petitioners to lose
their status as innocent purchasers for value. It should be recalled that although the title was in the name of the
respondent Emilia E. de Legare, the certificate of title was in the possession of her adopted son, John. Under
Section 55 of Act 496, as amended, John's possession of the certificate and his subsequent production of it to
the herein petitioners operated as a "conclusive authority from the registered owner to the register of deeds to
enter a new certificate."
SEC. 55. xxx xxx xxx

The production of the owner's duplicate certificate whenever any voluntary instrument is presented for
registration shall be conclusive authority from the registered owner to the register of deeds to enter a
new certificate or to make a memorandum or registration in accordance with such instrument, and the
new certificate or memorandum shall be binding upon the registered owner and upon all persons
claiming under him, in favor of every purchaser for value and in good faith. ....

While it was true that the transfer in favor of John was still unregistered when he sought to sell the property to
the herein petitioners, it was not true that the latter observed no precaution whatsoever from the complication of
such non-registration. As already discussed above, the petitioners required that the registration of the previous
sale (from the respondent to John W. Legare) be first attended to and completed. After that was done and the
certificate of title thereof was issued to John by the Register of Deeds, they still withheld payment till the second
sale (from John to the petitioners) has in turn registered and the corresponding certificate of title therefor was
issued in their names. It was only after all these were followed that the entire negotiation was terminated with the
payment of the balance of the purchase price. All these, We hold, were adequate safeguards against the
objection interposed. A contrary conclusion would operate to weaken the reliance of the general public on the
indefeasibility of titles registered under the Torrens System.

We have so far demonstrated the good faith of the petitioner spouses. By the very facts established by the Court
of Appeals, however, there is still another reason why the property herein in question should be adjudged to the
petitioners.

Although the deed of sale in favor of John W. Legare was fraudulent, the fact remains that he was able to secure
a registered title to the house and lot. It was this title which he subsequently conveyed to the herein petitioners.
We have indeed ruled that a forged or fraudulent deed is a nullity and conveys no title (Director of Lands v.
Addison, 49 Phil. 19). However, We have also laid down the doctrine that there are instances when such a
fraudulent document may become the root of valid title. One such instance is where the certificate of title was
already transferred from the name of the true owner to the forger, and while it remained that way, the land was
subsequently sold to an innocent purchaser. For then, the vendee had the right to rely upon what appeared in
the certificate (Inquimboy vs. Cruz, G.R. No. L-13953, July 28, 1960).

Wherefore, the parties respectfully pray that the foregoing stipulation of facts be admitted and approved by this
Honorable Court, without prejudice to the parties adducing other evidence to prove their case not covered by this
stipulation of facts.
1äw phï1.ñët

We have been constrained to adopt the conclusion here set forth because under the Torrens system,
"registration is the operative act that gives validity to the transfer or creates a lien upon the land (Secs. 50 and
51, Land Registration Act). Consequently, where there was nothing in 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
farther 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. If the rule were otherwise, the efficacy and conclusiveness of the
certificate of title which the Torrens system seeks to insure would entirely be futile and nugatory. (Reynes vs.
Barrera, 68 Phil. 656; De Lara and De Guzman vs. Ayroso, 50 O.G. No. 10, 4838). The public shall then be
denied of its foremost motivation for respecting and observing the Land Registration Act. In the end, the
business community stands to be inconvenienced and prejudiced immeasurably.

Furthermore, when the Register of Deeds issued a certificate of title in the name of John W. Legare, and
thereafter registered the same, John W. Legare, insofar as third parties were concerned, acquired a valid title to
the house and lot here disputed. When, therefore, he transferred this title to the herein petitioners, third persons,
the entire transaction fell within the purview of Article 1434 of the Civil Code. The registration in John W.
Legare's name effectively operated to convey the properties to him.

ART. 1434. When a person who is not the owner of a thing sells or alienates and delivers it, and later the
seller or grantor acquires title thereto, such title passes by operation of law to the buyer or grantee.

This Court sympathizes with the respondent. It is aware of the treacherous, painful fraud committed on her by
her adopted son. But positive provisions of law and settled jurisprudence cannot be subordinated to that feeling.

Besides, the records of this case reveal that the herein respondent is herself not entirely free from blame. We
note that when John presented to her the document which turned out to be a bed of conveyance in his favor, she
readily affixed her signature thereto upon the simple representation of John that it was a document pertaining to
her claim with the U.S. Veterans Administration. She could have asked her maid to read the contents of the
same for her and yet she did not. These, We believe, amount to a lack of prudence and precaution on the part of
Mrs. Emilia de Legare.

IN VIEW OF THE FOREGOING, the decision of the Court of Appeals is hereby reversed and set aside. A new
one is here entered dismissing the respondent's complaint and declaring the petitioners herein the lawful owners
of the properties here involved. Without pronouncement as to costs.

Padilla, Bautista Angelo, Labrador, Concepcion, Reyes. J.B.L. and Dizon, JJ., concur.
Bengzon, C.J., concurs in the result.
Barrera and Makalintal, JJ., took no part.

The Lawphil Project - Arellano Law Foundation

Republic of the Philippines


SUPREME COURT
Manila

SECOND DIVISION

G.R. No. 107967 March 1, 1994

CONSORCIA TENIO-OBSEQUIO, ORLANDO OBSEQUIO, and MANUEL, REGINA, TUNAY and MELITON, all
surnamed OBSEQUIO, petitioners,
vs.
COURT OF APPEALS, EUFRONIO ALIMPOOS, and PONCIANA ALIMPOOS respondents.

Estanislao G. Ebarle for petitioners.

Generoso S. Sansaet for private respondents.

REGALADO, J.:

This petition for review on certiorari seeks to annul and set aside the decision of the Court of Appeals in CA-G.R.
CV No. 22990, dated July 9, 1992, which reversed the judgment of the trial court, as well as its resolution of
November 6, 1992 denying the motion for reconsideration of its aforesaid decision.

The subject matter of the present petition is a parcel of land, designated as Lot No. 846, Pls-225 located at
Andanan, Baguyan, Agusan del Sur. This lot was previously covered by Original Certificate of Title No. P-1181
registered in the name of herein respondent Eufronio Alimpoos and which he acquired through a homestead
application.1 The said land is now registered in the name of herein petitioner, Consorcia Tenio-
Obsequio, as evidence by Transfer Certificate of Title No. T-1421. 2

On September 10, 1986, private respondents filed a complaint in the court a quo against herein petitioners
Consorcia Tenio and her husband, Orlando Obsequio, and the heirs of Eduardo Deguro for recovery of
possession and ownership, alleging that sometime in 1964, they mortgaged the land to Eduardo Deguro for
P10,000.00; that to guaranty the loan they delivered to the latter the original certificate of title to the land; that in
the meantime, they continued to cultivate the same and, at the end of the harvest season, they gave two-thirds
(2/3) of the harvest to Eduardo Deguro; that on June 25, 1965, Eduardo Deguro and his wife, without the
knowledge and consent of herein private respondents, prepared a document of sale and through
misrepresentation and other manipulations made it appear that private respondents sold the land to them.

This deed of sale was annotated at the back of the said certificate of title as Entry No. 16007. By virtue thereof,
Original Certificate of Title No. P-1181 in the name of Eufronio Alimpoos was cancelled and Transfer Certificate
of Title No. T-1360 was correspondingly issued in favor of Eduardo Deguro. After the death of Eduardo Deguro,
his heirs sold the land to Consorcia Tenio-Obsequio. On September 22, 1970, Transfer Certificate of Title No. T-
1421 was issued in her name. It was allegedly only in 1982, when Eufronio Alimpoos received a Certificate of
Agricultural Leasehold of his land from the Department of Agrarian Reform (DAR), that he learned that the land
was already titled in the name of another.

In their answer, the heirs of Eduardo Deguro claimed that respondent Alimpoos spouses sold the land to their
late parents on June 25, 1965 for a consideration of P10,000.00, as evidenced by the deed of absolute sale; that
as a result thereof, Transfer Certificate of Title No. T-1360 was issued in favor of their parents, that on April 23,
1970, after the death of their parents, they sold the said land to Consorcia Tenio-Obsequio; that on September
22, 1970, a new Transfer Certificate of Title No. 1421 was issued in the name of the latter. Consorcia Tenio-
Obsequio, on the other hand, maintains that she purchased the land in question from the heirs of Deguro in
good faith, for valuable consideration and without knowledge of any flaw or defect whatsoever.

The trial court, giving credence to the evidence presented by herein petitioners, defendants therein, ruled in their
favor and rendered judgment disposing as follows:

1) dismissing the herein complaint;

2) declaring defendant Consorcia Tenio Obsequio as the true and absolute owner
of the land in litis;

3) ordering plaintiffs to pay P10,000.00 by way of moral damages;

4) ordering plaintiffs to pay P10,000.00 by way of exemplary damages;

5) ordering plaintiffs to pay the expenses of litigation in the amount of P5,000.00;

6) ordering plaintiffs to pay (a)ttorney's fees in the amount of P5,000.00; and

7) to pay the costs.

In like manner, the money deposited in the Municipal Treasurer's Office of Bayugan in the
amounts of P2,724.95 covered by Official Receipt No. 0442623 dated September 7, 1988 and
P1,658.10 covered by Official Receipt No. 5497715 dated September 14, 1988, as well as the
sum of P3,927.00 deposited in Court pursuant to the Court's Orders of January 16, 1987 and
March 13, 1987, consisting of the proceeds from the sale of the harvest taken from the area
involved, is awarded to defendant Consorcia Tenio Obsequio, is owner thereof after deducting
the necessary expenses and Clerk of Court (s) commission fee.3

On appeal, respondent Court of Appeals reversed the decision of the lower court and rendered judgment:

1) Declaring the plaintiff Eufronio Alimpoos as the true and legal owner of the property subject of
this case;

2) Declaring null and void the Deed of Absolute Sale marked as Annex "C" or exhibit "D" and
ordering the cancellation of TCT Nos.
T-1360 and T-1421 in the names of Eduardo Deguro and Consorcia Tenio Obsequio,
respectively;

3) Ordering the heirs of Eduardo Deguro and Laureana Rabuya, namely, Gonzalo Deguro,
Manuel Deguro, Tunay Deguro and Regina Deguro to reconvey the said property to the plaintiffs:

4) Ordering the Register of Deeds to cancel the annotation of the Deed of Absolute Sale at the
back of TCT P-1181 in favor of Consorcia Tenio Obsequio and to clear said TCT of all
encumbrances executed by Eduardo Deguro and/or his heirs.

In addition, the defendants are ordered to pay the plaintiffs, jointly and severally, the sum of
P50,000.00 bay way of moral damages; P30,000.00 by way of compensatory damages and
P5,000.00 by way of attorney's fees and costs of litigation.4
Petitioners then filed a motion for reconsideration of the said decision which was denied by the Court of Appeals
in its resolution dated November 6, 1992,5 hence the instant recourse by petitioners.

After a careful review of the records of this case and the legal consideration applicable to the proven facts
thereof, we find the petition at bar to be meritorious. Reconveyance of the land in question to the original owner
is not in order.

Herein respondent Alimpoos, as the original owner of the said land, is assailing the title of petitioner on the
ground that their original certificate of title over the said land was cancelled by virtue of a forged deed of absolute
sale.

Under Section 55 the Land Registration Act, as amended by Section 53 of Presidential Decree No. 1529, an
original owner, of registered land may seek the annulment of a transfer thereof on the ground of fraud. However,
such a remedy is without prejudice to the rights of any innocent holder for value with a certificate of title.-

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 claim or interest of some other person in the property6 In consonance
with this accepted legal definition, petitioner Consorcia Tenio-Obsequio is a purchaser in good
faith. There is no showing whatsoever nor even an allegation that herein petitioner had any
participation, voluntarily or otherwise, in the alleged forgery.

Nor can we charge said petitioner with negligence since, at the time of the sale to her, the land was already
registered in the name of Eduardo Deguro7 and the tax declaration was also issued in the latter's
name. It was also clearly indicated at the back of the original certificate of title that Eduardo
8

Deguro acquired ownership over the said land by virtue of the deed of sale executed in his
favor. In fact, it is not disputed that one of his heirs was actually residing therein. There is no
9 10

annotation, defect or flaw in the title that would have aroused any suspicion as to its authenticity.
Such being the case, petitioner has the right to rely on what appears on the face of the certificate
of title.

The main purpose of the Torrens system is to avoid possible conflicts of title to real estate and to facilitate
transactions relative thereto by giving the public the right to rely upon the face of a Torrens certificate of title and
to dispense with the need of inquiring further, except when the party concerned has actual knowledge of facts
and circumstances that should impel a reasonably cautious man to make such further inquiry. 11 Where
innocent third persons, relying on the correctness of the certificate of title thus issued, acquire,
rights over the property, the court cannot disregard such rights and order the total cancellation of
the certificate. The effect of such an outright cancellation would be to impair public confidence in
the certificate of title, for everyone dealing with property registered under the Torrens system
would have to inquire in every instance as to whether the title has been regularly or irregularly
issued by the court. Every person dealing with registered land may safely rely on the correctness
of the certificate of title issued therefor and the law will in no way oblige him to go beyond the
certificate to determine the condition of property. 12

The Torrens system was adopted in this country because it was believed to be the most effective measure to
guarantee the integrity of land titles and to protect their indefeasibility once the claim of ownership is established
and recognized. If a person purchases a piece of land on the assurance that the seller's title thereto is valid, he
should not run the risk of being told later that his acquisition was ineffectual after all. This would not only be
unfair to him. What is worse is that if this were permitted, public confidence in the system would be eroded and
land transactions would have to be attended by complicated and not necessarily conclusive investigations and
proof of ownership. The further consequence would be that land conflicts could be even more numerous and
complex than they are now and possibly also more abrasive, if not even violent. The Government, recognizing
the worthy purposes of the Torrens system, should be the first to accept the validity of titles issued thereunder
once the conditions laid down by the law are satisfied.13

Moreover, there is no reason to doubt the authenticity of the deed of sale which constituted the basis for the
issuance of the transfer certificate of title in the name of Eduardo Deguro, considering that not only was the
contract notarized but that it was also approved by the Secretary of Agriculture and Natural Resources in
compliance with Section 118 of the Public Land Act. 14
There is no indubitable, legal and convincing reason for nullifying the deed of sale. Herein private respondents
have not presented any cogent, complete and convincing proof to override the evidentiary value of the duly
notarized deed of sale. A notarial document is evidence of the facts in the clear unequivocal manner therein
expressed. It has in its favor the presumption of regularity. To contradict all these, there must be evidence that is
clear, convincing and more than merely preponderant. 15

The fact alone that the signature of private respondent Eufronio Alimpoos appearing on the deed of sale of
Deguro differs in certain points from his signature appearing in the "Kasabutan sa Prenda" is not enough to
warrant the conclusion that the signature in said deed of sale is not genuine. The records show that the
signatures of private respondent Eufronio Alimpoos in one of the cash advance receipts 16 and in the notice of
the trial court's order dated March 4, 1988 are similar to the signature appearing in the deed of
17

sale. It is, therefore, not improbable that, as claimed by herein petitioners, private respondent
could have deliberately and purposely altered their signatures on the mortgage contract to
thereafter make it appear that a discrepancy actually exists.

Forgery cannot be presumed; it must be proved by clear, positive and convincing evidence. Those who make
the allegation of forgery have the burden of providing it since a mere allegation is not evidence. 18 Private
respondents in this case ruefully failed to substantiate with sufficient evidence their claim that their
signatures appearing on the deed of sale were forged.

At any rate, there are several reasons to doubt the authenticity of the "Kasabutan sa Prenda." Firstly, it has not
been sufficiently explained why, although it should normally be with the mortgagee, the original mortgage
contract remained in the possession of the mortgagor and it was only after the death of the alleged mortgagee
that the same was presented, which was more than twenty years from the date of its alleged execution.
Secondly, the consideration of P10,000.00 for a mortgage in 1964 of a piece of rural land consisting of only
81,882 square meters, with the mortgagee paying the taxes thereon, is too high or excessive, considering that
the same piece of land was coetaneously mortgaged with the Development Bank of the Philippine for only
P1,900.00. 19 Thirdly, the texture of the paper on which it was written and the clarity of the writing
show that the document, supposedly executed on July 25, 1964, is of recent vintage and could not
be more than twenty years old, even as of this late date. 20

Yet, even on the implausible assumption, ex gratia argumenti, that the deed of sale in favor of Eduardo Deguro
was forged and is, therefore, null and void, such fact cannot be successfully invoked to invalidate the title
subsequently issued to herein petitioner who, as earlier stated, is an innocent purchaser for value and in good
faith.

It has been consistently ruled that a forged deed can legally be the root of a valid title when an innocent
purchaser for value intervenes. 21 A deed of sale executed by an impostor without the authority of the
owner of the land sold is a nullity, and registration will not validate what otherwise is an invalid
document. However, where the certificate of title was already transferred from the name of the true
owner to the forger and, while it remained that way, the land was subsequently sold to an innocent
purchaser, the vendee had the right to rely upon what appeared in the certificate and, in the
absence of anything to excite suspicion, was under no obligation to look beyond the certificate and
investigate the title of the vendor appearing on the face of said certificate. 22

The Torrens Act, in order to prevent a forged transfer from being registered, erects a safeguard by requiring that
no transfer shall be registered unless the owner's certificate of title is produced along with the instrument of
transfer. However, an executed document of transfer of registered land placed by the registered owner thereof in
the hands of another operates as a representation to a third party that the holder of the document of transfer is
authorized to deal with the land. 23 In the case at bar, it was even private respondents who made the
allegation that they further delivered their certificate of title to Eduardo Deguro, allegedly to secure
the loan extended to them. Consequently, petitioner cannot be faulted and, as a matter of fact, she
is vested with the right to rely on the title of Eduardo Deguro.

Furthermore, it was the very act of the respondent Alimpoos spouses in entrusting their certificate of title to
Eduardo Deguro that made it possible for the commission of the alleged fraud, if indeed there was such a
fraudulent conduct as imputed to the latter. Hence, the rule of law and justice that should apply in this case is
that as between two innocent persons, one of whom must suffer the consequences of a breach of trust, the one
who made it possible by his act of confidence must bear the loss.24
The right of the innocent purchaser for value must be respected and protected, even if the seller obtained his
title through fraud. The remedy of the person prejudiced is to bring an action for damages against those who
caused or employed the fraud, and if the latter are insolvent, an action against the Treasurer of the Philippines
may be filed for recovery of damages against the Assurance Fund.25

It is also significant and worth noting that herein respondents filed the instant complaint only after twenty-two
years from the execution of the supposedly forged deed of absolute sale, and after sixteen years from the date
the title was transferred in the name of herein petitioner. An action for reconveyance is a legal remedy granted to
a landowner whose property has been wrongfully or erroneously registered in another's name, but then the
action must be filed within ten years from the issuance of the title since such issuance operates as a constructive
notice.26

WHEREFORE, the decision and resolution of respondent court now under review are hereby REVERSED and
the decision of the court a quo is accordingly REINSTATED.

SO ORDERED.

Narvasa, C.J., Padilla, Nocon and Puno, JJ. concur.

# Footnotes

1 Original Record, 5.

2 Ibid., 95.

3 Decision of the Regional Trial of Bayugan, Agusan, del Sur, in Civil Case No. 45, per Judge
Zenaida P. Placer; Original Record, 265-277.

4 Annex D; Rollo, 36-41; penned by Justice Jose C. Campos, Jr., with Justices Celso L. Magsino
and Salome A. Montoya, concurring.

5 Rollo, 50-51.

6 De Santos vs. Intermediate Appellate Court, et al., G.R. No. L-69591, January 25, 1988, 157
SCRA 295; Co, et al. vs. Court of Appeals, et al., G.R. No. 93687, May 6, 1991, 196 SCRA 705;
Casupit, et al. vs. Court of Appeals, et al., G.R. No. 96829, December 9, 1991, 204 SCRA 684.

7 Original Record, 49-50.

8 Ibid., 100-101.

9 Ibid., 6; Entry No. 16007.

10 TSN, March 4, 1988, 22; May 2, 1988, 13.

11 Gonzales vs. Intermediate Appellate Court, et al., G.R. No. L-69622, January 29, 1988, 157
SCRA 587; Rural Bank of Sariaya, Inc. vs. Yacon et al., G.R. No. 78011, July 5, 1989, 175
SCRA 62; Fernandez, et al. vs. Court of Appeals, et al., G.R. No. 83141, September 21, 1990,
189 SCRA 780.

12 Director of Lands vs. Abache, et al., 73 Phil., 606 (1942); Lopez, et al. vs. Court of Appeals, et
al., G.R. No. L-49739, January 20, 1989, 169 SCRA 271.

13 Republic, et al. vs. Umali, et al., G.R. No. 80687, April 10, 1989, 171 SCRA 647.

14 Original Record, 6-8; Entry No. 16008, Memorandum of Encumbrances, OCT No. P-1181.
15 Yturralde vs. Azurin, et al., G.R. No. L-22158, May 30, 1969, 28 SCRA 407; Cabrera vs.
Villanueva, et al., G.R. No. 75069, April 15, 1988, 160 SCRA 672; Almendra, et al. vs.
Intermediate Appellate Court, et al., G.R. No. 75111, November 21, 1991, 204 SCRA 142.

16 Exhibit 9; Original Record, 124.

17 Original Record, 83.

18 Melleza vs. Philippine National Bank, G.R. No. 83103, October 19, 1988, Third Division,
Minute Resolution; et al., G.R. No. 77029, August 30, 1990, 189 SCRA 201.

19 Original Record, 5-A; Entry No. 4445, Memorandum of Encumbrances, OTC No. P-1181.

20 Original Record, 46.

21 Mallorca, et al. vs. De Ocampo, et al., G.R. No. L-26852, March 25, 1970, 32 SCRA 48;
Torres vs. Court of Appeals et al., G.R. No. 63046, June 21, 1990, 186 SCRA 672; Philippine
National Bank vs. Court of Appeals, et al., G.R. No. 43972, July 24, 1990, 187 SCRA 735.

22 De Lara, et al. vs. Ayroso, 95 Phil. 185 (1954); Duran, et al. vs. Intermediate Appellate Court,
et al., G.R. No. 64159, September 10, 1985, 138 SCRA 489.

23 Blondeau, et al. v. Nano, et al., 6 Phil. 625 (1935), citing 53 C.J. 1141; Act No. 496 as
amended, Secs. 47, 51, 55.

24 De Lara vs. Ayroso, supra,; Manila Surety & Fidely Co. vs. Luna 107, Phil. 281 (1960).

25 Blanco et al. vs. Esquierdo, et al., 110 Phil. 494 (1960); torres vs. Court of Appeals, et
al., supra.; Philippine National Bank vs. Court of Appeals, et al., supra.

26 Pajarillo, et al. vs. Intermediate Appellate Court, et al., G.R. No. 72908, August 11, 1989, 176
SCRA 340; Tomas, et al. vs. Court of Appeals, et al., G.R. No. 79328, May 21, 1990, 185 SCRA
627.

The Lawphil Project - Arellano Law Foundation

Republic of the Philippines


SUPREME COURT
Manila

FIRST DIVISION

G.R. No. L-42805 August 31, 1987

THE TREASURER OF THE PHILIPPINES, petitioner,


vs.
THE COURT OF APPEALS and SPOUSES EDUARDO OCSON and NORA E. OCSON respondents.

CRUZ, J.:

The petitioner asks us to reverse a decision of the respondent court affirming that of the trial court holding the
Assurance Fund subsidiarily liable for damages sustained by the private respondents under the following
established facts.

Sometime in 1965, a person Identifying himself as Lawaan Lopez offered to sell to the private respondents a
parcel of land located in Quezon City and consisting of 1,316.8 square meters, which he claimed as his property.
His asking price was P85.00 per square meter but after a month's haggling the parties agreed on the reduced
price of P76.00 per square meter. The sale was deferred, however, because the prospective vendor said his
certificate of title had been burned in his house in Divisoria, and he would have to file a petition with the court of
first instance of Quezon City for a duplicate certificate of title. He did so and the petition was granted after
hearing without any opposition. Following the issuance of the new duplicate certificate of title, the said person
executed a deed of sale in favor of the private respondents, who paid him the stipulated purchase price of
P98,700.00 in full. The corresponding transfer certificate of title was subsequently issued to them after
cancellation of the duplicate certificate in the name of Lawaan Lopez. 1

Trouble began two years later when another person, this time a woman, appeared and, claiming to be the real Lawaan Lopez, filed a petition in the court of
first instance of Quezon City to declare as null and void the transfer of her land in favor of the private respondents, on the ground that it had been made by an
impostor. 2 After trial, the questioned deed of sale was annulled, (together with the duplicate certificate of title issued to the impostor and the transfer
certificate of title in the name of the private respondents) and the real owner's duplicate certificate of title was revalidated. 3 Neither the Solicitor General nor
the private respondents appealed the decision, but Lawaan Lopez did so, claiming that the defendants should have been required to pay damages to her and
the costs. The appeal was dismissed, with the finding by Justices Jose Leuterio, Magno Gatmaitan and Luis B. Reyes of the Court of Appeals that there was
no collusion between the private respondents and the impostor. 4

Subsequently the private respondents filed a complaint against the impostor Lawaan Lopez and the Treasurer of
the Philippines as custodian of the Assurance Fund for damages sustained by the plaintiffs as above narrated.
Both the trial court * ruled the respondent court ** ruled in their favor, holding the Assurance Fund subsidiarily liable for the sum of P138,264.00 with
legal interest from the date of filing of the complaint, in case the judgment could not be enforced against the other defendant who had been defaulted and
could not be located. 5 The petitioner, disclaiming liability, is now before us and prays for relief against the decision of the respondent court which he says is
not in accord with law and jurisprudence.

The applicable law is Section 101 of Act No. 496 (before its revision by P.D. No. 1529) providing as follows:

Sec. 101. Any person who without negligence on his part sustains loss or damage through any
omission, mistake or misfeasance of the clerk, or register of deeds, or of any examiner of titles,
or of any deputy or clerk or of the register of deeds in the performance of their respective duties
under the provisions of this Act, and any person who is wrongfully deprived of any land or any
interest therein, without negligence on his part, through the bringing of the same under the
provisions of this Act or by the registration of any other person as owner of such land, or by any
mistake, omission, or misdescription in any certificate or owner's duplicate, or in any entry or
memorandum in the register or other official book, or by any cancellation and who by the
provisions of this Act is barred or in any way precluded from bringing an action for the recovery of
such land or interest therein, or claim upon the same, may bring in any court or competent
jurisdiction an action against the Treasurer of the Philippine Archipelago for the recovery of
damages to be paid out of the Assurance Fund.

Commenting on this provision, Commissioner Antonio H. Noblejas, in his book on Land Titles and Deed 6 notes
that recovery from the Assurance Fund could be demanded by:

1) Any person who sustains loss or damage under the following conditions:

a) that there was no negligence on his part; and

b) that the loss or damage was sustained through any omission,


mistake, or misfeasance of the clerk of court, or the register of
deeds, his deputy or clerk, in the performance of their respective
duties under the provisions of the land Registration Act,' or

2) Any person who has been deprived of any land or any interest therein under the following
conditions:

a) that there was no negligence on his part;

b) that he was deprived as a consequence of the bringing of his


land or interest therein under the provisions of the Property
Registration Decree; or by the registration by any other persons
as owner of such land; or by mistake, omission or misdescription
in any certificate or owner's duplicate, or in any entry or
memorandum in the register or other official book, or by any
cancellation; and
c) that he is barred or in any way precluded from bringing an
action for the recovery of such land or interest therein, or claim
upon the same.

A careful reading of the above provision will readily show that the private respondents do not come under either
of the two situations above mentioned.

The first situation is clearly inapplicable as we are not dealing here with any omission, mistake or malfeasance of
the clerk of court or of the register of deeds or his personnel in the performance of their duties.

The second situation is also inapplicable. The strongest obstacle to recovery thereunder is that the private
respondents acquired no land or any interest therein as a result of the invalid sale made to them by the spurious
Lawaan Lopez.

The petition correctly points out that such sale conveyed no title or any interest at all to them for the simple
reason that the supposed vendor had no title or interest to transfer. He was not the owner of the land. He had no
right thereto he could convey. Manifestly, the deception imposed upon them by the impostor deprived the private
respondents of the money they delivered to him as consideration for the sale. But there is no question that the
subsequent cancellation of the sale did not deprive them of the land subject thereof, or of any interest wherein,
for they never acquired ownership over it in the first place.

The private respondents argue that from the time the new transfer certificate of title was issued in their name on
January 28, 1965, until it was cancelled on October 12, 1967, they were the true and exclusive owners of the
disputed property. Hence, the cancellation of their title on the latter date had the effect of depriving them of the
said land and so entitles them now to proceed against the Assurance Fund.

The flaw in this posture is that the real Lawaan Lopez had her own genuine certificate of title all the time and it
remained valid despite the issuance of the new certificate of title in the name of the private respondents. That
new certificate, as the trial court correctly declared, was null and void ab initio, which means that it had no legal
effect whatsoever and at any time. The private respondents were not for a single moment the owner of the
property in question and so cannot claim to have been unlawfully deprived thereof when their certificate of title
was found and declared to be a total nullity.

Additionally, the Court observes that the private respondents were not exactly diligent in verifying the credentials
of the impostor whom they had never met before he came to them with his bogus offer. The fact alone that he
claimed to have lost his duplicate certificate of title in a fire, not to mention the amount of the consideration
involved, would have put them on their guard and warned them to make a more thorough investigation of the
seller's Identity. They did not. Oddly, they seemed to be satisfied that he had an Ilongo accent to establish his
claim to be the Visayan owner of the property in question. They were apparently not concerned over the curious
fact that for his residence certificate B the supposed owner had paid only P1.00 although the property he was
selling was worth to him no less than P98,700.00. 7 Moreover, whereas address in that certificate was
Mandaluyong, Rizal, whereas the address indicated in the records of the Register of Deeds of the owner of the
land in question was Fara-on Fabrics, Negros Occidental. 8

As for the proceedings for the issuance of a duplicate certificate of title, the private respondents themselves
state in their complaint that the evidence of the petitioner therein was received by the clerk of court only, without
any opposition, and his report was thereafter accepted by the trial judge who thereupon granted the relief sought
by the impostor. 9 It is not likely, given the summary nature of these proceedings, that the necessary care was
taken by the court to establish the real identity of the person who claimed to be the owner of the property in
question.

While we may agree that there was no collusion between the parties respondents and the vanished vendor, we
are not prepared to rule under the circumstances of this case that they are entitled to even claim the status of
innocent purchasers of the land. On the contrary, we find that for failure to exercise the necessary diligence in
ascertaining the credentials and bona fides of the false Lawaan Lopez, and as a result of his deception, they
never acquired any title to the said land or any interest therein covered by Section 101 of Act No. 496.

As this Court held in La Urbana v. Bernardo 10 "it is a condition sine qua non that the person who brings an action for damages against the
Assurance Fund be the registered owner and as the holders of transfer certificates of title, that they be innocent purchasers in good faith and for value." Being
neither the registered owners nor innocent purchasers, the private respondents are not entitled to recover from the Assurance Fund.
They are, of course, not entirely without recourse, for they may still proceed against the impostor in a civil action
for recovery and damages or prosecute him under the Revised Penal Code, assuming he can be located and
arrested. The problem is that he has completely disappeared. That difficulty alone, however, should not make
the Assurance Fund liable to the private respondents for the serious wrong they have sustained from the false
Lawaan Lopez. The Government — like all governments, and for obvious reasons — is not an insurer of the
unwary citizen's property against the chicanery of scoundrels.

WHEREFORE, the petition is GRANTED. The decision of the respondent court dated January 26, 1976 is set
aside, and Civil Case No. 12426 of the then Court of First Instance of Rizal is dismissed. No costs.

SO ORDERED.

Teehankee, C.J., Narvasa and Paras, JJ., concur.

Gancayco, J., took no part.

Footnotes

1 Rollo, pp. 25-26.

2 Record on Appeal, pp. 18-20.

3 lbid.

4 lbid, p. 29.

* Judge Walfrido de los Angeles.

** Justice Emilio A. Gancayco, ponente, and Justices Mama busran and Samuel F. Reyes

5 Id., p. 27, 34.

6 1955 Edition, p. 105.

7 Rollo, pp. 17-18.

8 Rec. on Appeal, pp. 37-38,

9 Ibid, pp. 106-116.

10 62 Phil. 790.

Republic of the Philippines


SUPREME COURT
Manila

SECOND DIVISION

G.R. No. L-79787 June 29, 1989

APOLONIO EGAO AND BEATRIZ EGAO, petitioners,


vs.
THE HONORABLE COURT OF APPEALS (NINTH DIVISION), SEVERO DIGNOS AND SEVERO
BONTILAO, respondents.

Eliud J. Pailagao for petitioners.


Guerrero A. Adaza for private respondents.

PADILLA, J.:

This is a land dispute which culminated in the filing by private respondents Severo Dignos and Severo Bontilao
of a verified complaint for Quieting of Title and/or Recovery of Possession and Ownership before the RTC of
Manolo Fortich, Bukidnon, * against petitioners Apolonio and Beatriz Egao.

Private respondents' complaint alleged that they are the legitimate owners and possessors of two (2) parcels of
land situated at Lonocan, Manolo Fortich, Bukidnon, per deed of absolute sale dated 21 December 1979 which,
among others, recited thus:

WHEREAS, the abovementioned Parcels of land Lot No. 662 is covered by Original Certificate of
Title No. P-3559 Free Patent No. 298112 registered in the name of APOLONIO EGAO married to
Beatriz Menosa and Lot No. 661 is covered by Original Certificate of Title No. P-3558 Free
Patent No. 303249 registered in the name of RAULITA CONEJOS married to Pedro Conejos, all
transcribed in the Registration Book in the Register of Deeds for the Province of Bukidnon;

WHEREAS, Lot No. 662 has been transferred in ownership from BEATRIZ MENOSA EGAO,
married to Apolonio Egao in favor of ROBERTO N. MARFORI per Deed of Absolute Sale
executed before Tommy C. Pacana, Notary Public of Cagayan de Oro City entered in his Notarial
Registry under Doc. No. 75; Page No. 15; Book V Series of 1965; and Lot No. 661 likewise has
been transferred in ownership from RAULITA R. CONEJOS in favor of ROBERTO N. MARFORI
per Deed of Absolute Sale executed before Tommy C. Pacana, Notary Public of Cagayan de Oro
City, dated June 3, 1965, entered in his Notarial Registry under Doc. No. 20; Page 4; Book V;
Series of 1965.

WHEREAS, the VENDEES herein is [sic] aware of the fact that the Certificate of Title over the
abovementioned parcels of land have not yet been transferred in favor of ROBERTO N.
MARFORI except for the tax declarations but that the VENDOR herein is in actual, physical,
continuous, uninterrupted, and adverse possession of the above described parcels of land free
from all liens and encumbrances whatsoever; 1

Allegedly, upon purchase of Lot No. 662 from Roberto Marfori, improvements were introduced and taxes paid by
private respondents. Sometime in June 1983, herein petitioners allegedly occupied illegally portions of the land. 2

Petitioners' answer to the complaint asserted that Apolonio Egao is the registered owner of the parcel of land
known as Lot No. 662, Pls 854 with an area of 3,451 sq. meters evidenced by OCT No. P-3559 issued by the
Register of Deeds of Bukidnon pursuant to Free Patent No. 298112 dated 12 August 1965; that he (Apolonio
Egao) and his family have been in actual, physical, adverse, open and continuous possession thereof even
before the issuance to him of the free patent; that the land has never been sold by reason of the prohibition
against alienation under Commonwealth Act No. 141 (Public Land Law); and that the instant case was the fourth
in a series filed against the Egaos and is part of respondents' scheme to grab said parcel of land from the
petitioners.

Judge Felicidario M. Batoy ruled in favor of the Egaos, herein petitioners (defendants in the court a quo),
ordering respondent Severo Bontilao (plaintiff in the court a quo) to immediately deliver to the Egaos the owner's
duplicate copy of Original Certificate of Title No. P-3559. Said trial judge held:

In the instant case, granting arguendo, that defendants executed the 2 documents in favor of
Marfori (Exhs. A & B) after the filing of the application for free patent but before the issuance of
the latter, without the approval of the Director of Lands, upon issuance of Free Patent No. 29811
2 on August 12, 1965, the said deeds of sale (Exhs. A & B) were ipso facto cancelled or
superseded by said free patent. Moreover, it appears from the evidence that defendants never
vacated or abandoned their possession of Lot No. 662 as they have continuously lived on said lot
since 1950, a fact admitted by the plaintiffs themselves. And as long as Original Certificate of
Title No. P-3559 remains in the name of defendant Apolonio Egao, married to Beatriz Menoza
Egao, this is the ultimate and best evidence of title granted by the government which must be
honored and respected by the courts. In a nutshell, the plaintiffs miserably failed to present or
show any title to Lot No. 662, PLS-854 which should be quieted or freed from any cloud of doubt
as prayed for in their complaint and they further failed to show that they are entitled to the
ownership and possession to Lot No. 662, PLS-854. 3

Private respondents went to the Court of Appeals in CA-G.R. No. 09539. Setting aside the RTC decision, the
appellate court ** held, in part, thus-

That the land is titled in the name of defendant Apolonio Egao is not in question. The main point
in issue is whether defendants could validly sell the land to Marfori who in turn transferred
ownership thereof to the plaintiff. 4

Marfori and Egao were both held by the Court of Appeals in pari delicto for violating the five (5) year restriction
under Sec. 118, Commonwealth Act No. 141 as amended by Act No. 496 against encumbrance or alienation of
lands acquired under a free patent or homestead; hence, they cannot, according to the appellate court, seek
affirmative relief, but respondents on the other hand were declared innocent purchasers for value who obtained
the owner's duplicate copy of the OCT (still in the name of the Egaos) from Marfori who transferred to them
(respondents) physical possession of the property. Finally, the Court of Appeals held:

WHEREFORE, the decision appealed from is hereby SET ASIDE and a new one is rendered:

1. Declaring the plaintiffs as the absolute owners of the land known as Lot No.
662, Pls-854 of the Land Registry of Bukidnon;

2. Ordering the Register of Deeds of Bukidnon to effect the cancellation of


Original Certificate of Title No. P-3559 in the name of Apolonio Egao and in lieu
thereof, another one be issued in the names of plaintiffs, after payment of the
proper fees;

3. Ordering the defendants to surrender peaceful possession of the land to


plaintiffs and to desist from further disturbing the possession over the land of
plaintiffs;

4. Ordering the defendants to pay the costs.

SO ORDERED. 5

Petitioners turn to this Court for relief, assailing the appellate court for allegedly committing grave abuse of
discretion amounting to lack of jurisdiction in holding that:

a. Petitioners sold Lot 662 to Roberto Marfori;

b. It was only in 1983 when Petitioners wrested possession over the land from
private respondents;

c. Petitioners never denied the sales made in favor of Marfori, in their answer;

d. Private Respondents are "innocent purchasers for value. 6

and/or for allegedly deciding questions of substance not in accordance with law and/or applicable decisions of
this Court.

Without giving due course to the petition, the Court required respondents to comment. 7 After comment, the
Court resolved to require petitioners to file a reply, which they did. Respondents filed a rejoinder. Considering
the allegations, issues and arguments adduced, the Court resolved to give due course to the petition. Upon
submission by the parties of their respective memorandum, the petition was submitted for decision. 8

Validity of the Deeds of Sale executed between Marfori (as purchaser) and the petitioners (as sellers) is the
main issue to be resolved, in determining respondents' right over the disputed land, the respondents being the
transferees of Marfori.
It is undisputed that Free Patent No. 298112 was issued to petitioner Apolonio Egao over Lot No. 662 on 12
August, 1965. Sec. 118 of Commonwealth Act No. 141, as amended, prohibits the alienation or encumbrance,
within a period of five (5) years from the date of issuance of the patent, of lands acquired under free patent or
homestead. Assuming, arguendo, the authenticity of the Deeds of Sale executed by the Egaos in favor of Marfori
over portions of Lot No. 662 (the land in question), dated 7 May 1964, 14 January and 6 October 1965, it clearly
appears that all deeds were executed within the prohibited period of five (5) years. As correctly found by the
appellate court-

Section 124 of the Public Land Act provided [sic] that any acquisition, conveyance, abenation,
transfer or other contract made or executed inviolation of any of the provisions of Sections
118,121,120,122 and 123 of this Act shall be unlawful, null and void from its execution and shall
produce the effect of annulling and cancelling the grant, title, patent or permit originally issued,
recognized or confirmed, actually or prescriptively, and cause the reversion of the property and
its improvements to the state. 9

Petitioners deny the authenticity and due execution of the notarized deeds of sale in favor of Marfori, asserting
continued ownership over the land by virtue of a Torrens Certificate of Title issued in their name. While the Court
is not satisfied with respondents' explanation of their failure to present the notaries public (who were residents of
a neighboring province) to affirm their participation in the preparation of the Deeds, the Court also finds as
insufficient the mere denials by petitioners as to due execution and authenticity of said Deeds of Sale. A notarial
document is evidence of the facts in clear unequivocal mariner therein expressed. It has in its favor the
presumption of regularity To contradict all these there must be evidence that is clear, convincing and more than
merely preponderant. 10 The question of authenticity being one of fact, the Court will not disturb the conclusions
of the Court of Appeals on the matter.

Original Certificate of Title No. P-3559 over the land in dispute was issued on 1 March 1966, a few
months after the execution by the Egaos of the last Deed of Sale in favor of Marfori. 11 The OCT is registered in
the name of the Egaos, herein petitioners.

A Torrens title, once registered, cannot be defeated, even by adverse open and notorious possession. A
registered title under the Torrens system cannot be defeated by prescription. The title, once registered, is notice
to the world. All persons must take notice. No one can plead ignorance of the registration. 12

Contrary to the appellate court's conclusion, respondents are not innocent purchasers for value. 13 An "innocent
purchaser for value" is deemed, under the Torrens system, to include an innocent lessee, mortgagee or other
encumbrancer for value. 14 Where a purchaser neglects to make the necessary inquiries and closes his eyes to
facts which should put a reasonable man on his guard as to the possibility of the existence of a defect in his
vendor's title, and relying on the belief that there was no defect in the title of the vendor, purchases the property
without making any further investigation, he cannot claim that he is a purchaser in good faith for value. 15

Furthermore, a private individual may not bring an action for reversion or any action which would have the effect
of cancelling a free patent and the corresponding certificate of title issued on the basis thereof, with the result
that the land covered thereby will again form part of the public domain, as only the Solicitor General or the officer
acting in his stead may do so. 16

The rule of pari delicto non oritur actio (where two persons are equally at fault neither party may be entitled to
relief under the law), admits of exceptions and does not apply to an inexistent contract, such as, a sale void ab
initiounder the Public Land Act, when its enforcement or application runs counter to the public policy of
preserving the grantee's right to the land under the homestead law. 17

Sec. 51, par. 2 of the Property Registration Decree (PD 1529), formerly Sec. 50 of the Land Registration Act (Act
No. 496) expressly provides that the registration of the Deed is the operative act that binds or affects the land
insofar as third persons are concerned. The law requires a higher degree of prudence from one who buys from a
person who is not the registered owner, when the land object of the transaction is registered land. While one
who buys from the registered owner need not look behind the certificate of title, one who buys from another who
is notthe registered owner is expected to examine not only the certificate of title but all factual circumstances
necessary for him to determine if there are any flaws in the title of the transferor, or in his capacity to transfer the
land. Failing to exercise caution of any kind whatsoever is tantamount to bad faith.18

Deeds of sale of patented lands, perfected within the prohibited five (5) year period are null and void (Sec. 124,
Public Land Act). No title passed from the Egaos to Marfori which could be validly transferred to herein
respondents Bontilao and Dignos. Nemo dat quod non habet (nobody can dispose of that which does not belong
to him).19

While the government has not taken steps to assert its title, by reversion, to a homestead sold in violation of the
Public Land Act, the vendor or his heirs is better entitled to the possession of the said, the vendee being in no
better situation than any intruder.20

Accordingly, respondents who are not innocent purchasers for value have no standing to question petitioners'
right to the land and to file an action for quieting of title.

WHEREFORE, the appealed decision of the Court of Appeals in CA G.R. CV No. 09539 is REVERSED and
SET ASIDE. Meanwhile, petitioners as registered owners are entitled to remain in physical possession of the
disputed property. Respondents are ordered to deliver the owner's duplicate copy of the OCT (No. P-3559) to
petitioners, without prejudice to an action for reversion of the land, which may be instituted by the Solicitor
General for the State.

Let a copy of this decision be furnished the Solicitor General.

SO ORDERED.

Melencio-Herrera, (Chairperson), Sarmiento and Regalado, JJ., concur.

Paras, J., took no part.

Footnotes

* BR. XI, Judge Felicidario M. Batoy, presiding; case docketed as Civil Case No. 61.

1 Rollo at 16.

2 Rollo at 10.

3 Rollo at 28.

** Ninth Division-Associate Justice Jose C. Campos, Jr. ponente, JJ., Gloria C. Paras and
Conrado Limcaoco, concurring.

4 Rollo at 47.

5 Rollo at 48.

6 Rollo at 5.

7 Rollo at 56.

8 Rollo at 138-142,147-152.

9 Rollo at 48.

10 Yturalde v. Aganon, 28 SCRA 407; Cabrera v. Villanueva, No. 75069, April 15, 1988,160
SCRA 672.

11 Rollo at 47.

12 Legarda v. Saleeby, 31 Phil. 590, 595; see also Sec. 46 of Act 496, Land Registration Act.

13 T.s.n. p. 8, Oct. 24, 1984.


14 Peña, Narciso, Registration of Land Titles & Deeds, 1980 revised edition, p. 124.

15 Leung Yee vs. Strong Machinery Co., 37 Phil. 644.

16 Sec. 101, Public Land Act applied. (Sumail vs. Judge of the Court of First Instance G.R. No. I-
8278 prom., April 30, 1955; Lucas vs. Durian, G.R. No. L-7886, Sept. 23, 1957; Acot vs. Kempis,
55 O.G., p. 2907, April 20, 1959).

17 Castro v. Escutin, G.R. No. L,27406, May 31, 1979, 90 SCRA 349, Gonzales v. Trinidad, 67
Phil. 682 (1939), De los Santos vs. Roman Catholic Church of Midsayap,G.R. No. L-6088,
February 25, 1954, 50 O.G. 1588.

18 Barrios v. CA, No. L-32531, Aug. 31, 1977, 78 SCRA 427.

19 Art. 1458, New Civil Code —

By the contract of sale one of the contracting parties obligates himself to transfer the ownership
of and to deliver a determinate thing, and the other to pay therefor a price certain i money or its
equivalent Azcona v. Reyes and Larracas, 59 Phil. 446; Coronel v. Ona, 33 Phil. 456.

20 Noblejas, Antonio H., Land Titles and Deeds, 1968 edition with 1977 Supplement, p. 317. De
los Santos vs. Roman Catholic Church, G.R. No. L-6088, February 25, 1954.

The Lawphil Project - Arellano Law Foundation

FIRST DIVISION

[G.R. No. L-32723. October 28, 1977.]

JUAN DACASIN, JOSE MARAMBA, MARIA MARAMBA, SORAHAYDA MARAMBA, FLORDELIZA MARAMBA and FILIPINAS
MARAMBA, Petitioners, v. THE COURT OF APPEALS, FELIPE CAPUA, SINFOROSA PADILLA GUALBERTO CALULOT and
OLIMPIA LOMIBAO, Respondents.

Alberto R. de Joya, for Petitioners.

R. E. Gonzales for Respondents.

DECISION

GUERRERO, J.:

Petition for review on certiorari of the decision of the Court of Appeals in CA-G.R. No. 42404-R entitled "Felipe Capua, Et
Al., Plaintiffs-Appellants, v. Juan Dacasin, Et Al., Defendants-Appellees" reversing the judgment of the Court of First
Instance of Pangasinan which adjudicated the ownership of the land in controversy to the plaintiffs.

The original action instituted in the case at bar sought the complaint filed by the plaintiffs Felipe Capua, Sinforosa Padilla,
Gualberto Calulot and Olimpia Lomibao (herein respondents) against the defendants Juan Dacasin, Jose Maramba and
Filipinas Maramba (herein petitioners), docketed as Civil Case No. 1455, Court of First Instance of Pangasinan.

The facts as found by the Court of Appeals are as follows: jgc:chan roble s.com.p h

"IT RESULTING: That the antecedents are quite complicated and it will be the task of this Court to simplify; sometime
prior to January 19, 1943 the property in question, a parcel of rural land in the barrio of Patayac, Municipality of Sta.
Barbara, Province of Pangasinan described in paragraph 2 of the complaint was being possessed by Jose Maramba, Exh.
4; in that month and year a certain Sabina Capua with companions grabbed possession of the property; and since then
possessed; sometime afterwards on a date not very clear in the record, Jose Maramba filed Civil Case No. 895 of the
Court of First Instance of Pangasinan against Sabina Capua and companions for reivindicacion; but that notwithstanding,
Sabina remained; while Jose Maramba had his own declaration of land tax, it will appear that Sabina also had her own,
see Exh. F; while that Civil Case No. 895 was pending, Sabina sold the property unto Gualberto Calulot on 21 April, 1950
Exh. A and Gualberto took over; there is no evidence that Gualberto was informed or came to know of the pending
litigation between Jose Maramba and Sabina Capua: at any rate by decision dated 1 (September), 1952, the Court of
First Instance of Pangasinan declared Jose Maramba absolute owner and condemned Sabina and companions to vacate
and deliver to Maramba, unfortunately decision was not executed within the reglementary period of five (5) years from
the time it had become final pursuant to the Rules; and for his part several years later specifically on 27 May, 1960, Exh.
C Gualberto sold the same property unto now plaintiffs spouses Felipe Capua and Sinforosa Padilla; and these last came
in to possess thereafter: meantime the prevailing party in Civil Case No. 895 Jose Maramba having died, his heirs and
successors-in-interest sometime afterwards on 2 August, 1961, Exh. 1, sold the property to herein defendant Juan
Dacasin and his wife; it was at this stage where the trouble came to brew because Jose (Maramba) having tried to
possess and thwarted in his efforts by Felipe Capua, went to the Court in Civil (Case) No. 895 and secured a writ of
possession on 3 October, 1960, Exh. G and possession was unto him delivered by the Sheriff on 4 October, 1960, Exh.
G-1; from then on actual possession came to be a seesaw; notwithstanding the writ, Felipe Capua tried to come in once
again; (Jose Maramba) asked to punish him for contempt but the Pangasinan Court by order of 5 February, 1961 held
that there could be no contempt because the writ of possession having been issued more than 5 years from the date the
judgment had become final became a nullity under Rule 39, Sec. 6 and 90 it was that the Pangasinan Court restored
Felipe Capua to possession; with that development, the heirs of Jose Maramba filed Civil (Case) No. D-1292 in the
Pangasinan Court on 22 February, 1962 against Sabina Capua and companions in the old Civil Case No. 895 for revival of
the judgment, Exh. X; and in answer to that Sabina alleged that she had already disposed of the property more than ten
(10) years previous to Gualberto Calulot who in turn had sold afterwards to Felipe Capua, If Exh. Y; and the Pangasinan
Court after hearing the case for revival of judgment revived it by decision of 21 March, 1963 against Sabina Capua and
her old companions in Civil Case No. 895; now in anticipation of repercussions that would have to be produced by that
judgment, Felipe Capua began the present hostilities by filing together with his wife and his original vendors Gualberto
Calulot and wife the present Civil Case No. 1456 against Juan Dacasin and the heirs of Jose Maramba asking that he,
Felipe Capua and his wife be declared the absolute owners of the property, by virtue of his purchase in good faith and by
the continuous possession from 21 April, 1950 of his immediate predecessor-in-interest Gualberto Calulot succeeded by
himself on 27 May, 1960 under Exh. C; and defendant Juan Dacasin, Et. Al. in due time filed their answer on 30 April,
1963 alleging that he was the true owner, and that the question of ownership was already judicially settled in Civil (Case)
No. 895, and in the trial of the case both parties sought to sustain their respective positions by oral and documentary
proofs; the gist of plaintiff’s position sought to be developed in his evidence being that he was the true owner
notwithstanding Civil Case No. 895 because of his long continued possession tacked with that of his predecessors-in-
interest while defendants sought to show the reverse, that the holding on the issue of ownership was already impossible
to evade having been finally settled in Civil (Case) No. 895 in favor of their predecessor-in-interest Jose Maramba." cralaw virtua1aw l ibra ry

After trial, judgment was rendered in favor of the petitioners Juan Dacasin, Et. Al. in the following wise and manner: chan roble svirtualawl ibra ry

"WHEREFORE, in view of all the foregoing this Court rules that defendant Juan Dacasin is the true and lawful owner of
that certain parcel of land described in the above-entitled complaint, having shown that this title thereto has been
acquired in good faith from unpolluted sources, and is therefore, entitled to the full and complete possession of the same.
The plaintiffs are hereby ordered to respect defendants’ possession and to refrain from further molestine defendant Juan
Dacasin in the enjoyment of said property. The preliminary injunction issued by this Court is hereby dissolved and the
counterbond filed by the defendant Juan Dacasin is ordered cancelled. The plaintiffs are also ordered to pay the
defendants, jointly and severally, the amount of P500 00 spent by them in defending this suit. The claim made by the
defendants for damages in the amount of P5,000.00, the same not having been satisfactorily proven, is hereby denied.
Finally, the plaintiffs are also ordered to pay the costs of this proceedings.

SO ORDERED.

Dagupan City, July 8, 1968.

SIXTO A. DOMONDON

Judge"

Not satisfied with the decision of the trial court, the plaintiffs appealed to the appellate court. On July 17, 1970, the Court
of Appeals promulgated its decision reversing the judgment appealed from, adjudicating the ownership of the lot to the
defendant spouses Felipe Capua and Sinforosa Padilla; made the writ of injunction issued by the trial judge on March 28,
1963 against the defendants permanent; and set aside the order of the trial judge dated April 29, 1964 dissolving the
writ, with costs against the defendants. Plaintiffs therein now appeal to this Court in fourteen (14) assignment of errors
which can be reduced to only one issue, that is, whether the decision is in accordance with law and jurisprudence.

The Court of Appeals held "that the question of ownership was litigated by the parties’ respective predecessors-in-
interest in Civil Case No. 895 (and) if this were to be the only point involved there should be no question that Jose
Maramba, defendants’ predecessor-in-interest having been declared the true owner of the property as against Sabina
Capua, plaintiffs’ predecessor-in-interest, the present litigation must have to be decided in the same manner." To this
holding of respondent court, We are in full agreement for indeed the judgment in Civil Case No. 895 fitted and docketed
in the CFI of Pangasinan on September 8, 1944, and decided on September 1, 1952 in favor of Jose Maramba, resolved
the question of title and ownership of the property in litigation as follows: jgc:chan rob les.com. ph

"The Court hereby renders judgment in favor of plaintiff and against the defendant, declaring the plaintiffs, Jose
Maramba, the absolute owner, with rights of possession and enjoyment of the land in question and orders the defendant
to vacate the same and deliver to the plaintiff the possession." cralaw virt ua1aw lib ra ry

(Record on Appeal, p. 61)

We find in this case at bar the following requisites that concur: (1) there must be a first judgment or order; (2) the court
rendering the same must have jurisdiction over the subject matter and over the parties; (3) there must be a judgment or
order on the merits; and (4) there must be between the two cases identity of parties, identity of subject matter and
identity of action. (Santos v. San Gabriel, 45 SCRA 288; Viray v. Mariñas, 49 SCRA 44; Benin v. Tuason, 57 SCRA 531;
Pacific Commercial and Industrial Bank v. Pfleider, 65 SCRA 13).

"The doctrine of res judicata precludes parties from re-litigating issues actually litigated and determined by a prior and
final judgment. It is a rule pervading every well-regulated system of jurisprudence, and is put upon two grounds
embodied in various maxims of the common law; the one, public policy and necessity, which makes it to the interest of
the State that there should be an end to litigation; the other the hardship on the individual that he should be vexed twice
for the same cause. A contrary doctrine would subject the public peace and quiet to the will and neglect of individuals
and prefer the gratification of a litigations disposition on the part of the suitors to the preservation of public tranquility
and happiness." (Yusingco, Et Al., v. Ong Lian, 42 SCRA 589)

Respondent court, however, went further, stating that "the trouble is that plaintiff Felipe Capua has squarely raised the
question of his own title obtained thru acquisitive prescription; paragraph 6, complaint, and it must have to be admitted
that the property being unregistered, ownership therein could be defeated by acquisitive prescription." The Court held
that "throughout the intervening period from 1943 to 1960, or for a space of seventeen (17) years not Jose Maramba but
Sabina Capua and after the sale by Sabina to Gualberto on 21 April, 1950 under Exh. A afterwards Gualberto, were the
ones in possession in the concept of owner of the property, and as Gualberto in turn was succeeded on 27 May, 1960 by
herein plaintiff, Felipe Capua, pursuant to the document Exh. C, and that possession was exclusive, adverse and
continuous, the said successive possession of, namely Sabina Capua from 1943 to 1950, Gualberto Calulot from 1950 to
1960 and Felipe Capua herein plaintiff from 1960 up to the institution of the present case was enough to perfect a title of
ownership." cralaw vi rtua1aw l ibra ry

We do not agree to this holding of the Court of Appeals.

1. In the first place, when Jose Maramba sued Sabina Capua on September 8, 1944 in Civil Case No. 895, the possession
of Sabina Capua was thereby interrupted by the issuance of the judicial summons (Article 1123, New Civil Code). During
the pendency of the litigation, from September 8, 1944 to September 1, 1952 when judgment was rendered, or a period
of eight (8) years, the possession of Sabina Capua over the land did not run. It remained interrupted. The land was in
custodia legis. The fact that Sabina Capua sold the land on April 21, 1950 during the pendency of the case to Gualberto
Calulot cannot revive or restore the possession of the vendor, which we repeat was rendered interrupted by the judicial
summons. The successor-in-interest of Sabina Capua who is the vendee Gualberto Calulot cannot tack his possession to
that of his vendor Sabina Capua not only because the judicial summons interrupted the latter’s possession but also
because she finally lost in the litigation.

By reason of this interruption, it is not correct to say that through the intervening periods of 1943 to 1950 (the
possession of Sabina Capua), then from 1950 to 1960 (possession of Gualberto Calulot and from 1960 to 1963
(possession of Felipe Capua up to the institution of the present suit) the possession was a continuing and uninterrupted
occupancy enough to perfect a title of ownership, because there was a gap from 1944 to 1952 (interruption due to
judicial summons up to the termination of the litigation). c ha nroble s lawlib ra ry : rednad

2. The New Civil Code of the Philippines took effect on August 30, 1950. At this point in time, the possession of Sabina
Capua was not running for it had been interrupted by the judicial summons in Civil Case No. 895. Her possession of the
land remained interrupted, passive or suspended up to the date when the judgment was rendered against her on
September 1, 1952.

We hold that the vendee Gualberto Calulot cannot legally acquire possession during the pendency of the litigation; it can
only commence after the decision is rendered therein, which was promulgated on September 1, 1952. By this time, the
New Civil Code was already enforced and the possession of Gualberto Calulot including its legal effects must be governed
by the New Civil Code. Under Article 1131 and 1128, N.C.C., good faith and just title are necessary for ordinary
prescription of real property.

When possession of the property was taken from Felipe Capua and given to Jose Maramba by the Provincial Sheriff on
October 4, 1960 by virtue of a writ of possession issued by the court in Civil Case No. 895, Felipe Capua became aware
or came to know that there existed a flaw in his title or mode of acquisition. Felipe Capua may have acquired the land in
good faith on May 27, 1960 when he bought the property from Gualberto Calulot but his eviction therefrom thru the writ
of possession, although later annulled in January, 1961, made him aware that he possessed the land improperly or
wrongfully. Consequently, Felipe Capua cannot claim good faith as to ripe his possession to acquisitive prescription.

3. The facts are also undisputed that the deed of sale executed between Jose Maramba as vendee and Emiliana Abad as
vendor in 1958 was duly registered in the Registry of Deeds as well as the deed of sale executed in 1929 between
Emiliana Abad and the original owner Florentino Quinajon. Under the law, Article 709 of the New Civil Code, titles of
ownership or of other rights over immovable property duly inscribed or annotated in the Registry of Property constitute
notice to third persons and affords protection in favor of him who in good faith relies upon what appears in the registry.
As between two parties relying on their respective instruments of sale of the same property, law and justice command
that he who has registered his deed must prevail over his adversary who has not done so. The rule of caveat emptor
requires the purchaser to be aware of the supposed title of the vendor and he who buys without checking the vendor’s
title takes all the risks and losses consequent to such failure. None of the deeds of sale evidencing the ownership of
Gualberto Calulot and Felipe Capua were registered in the Registry of Property, hence they cannot prevail over the rights
of the petitioner who holds in his favor the instrument of sale duly registered.

4. The Court has ignored or failed to consider material evidence found in the records that disproves clearly and positively
respondent Felipe Capua’s claim of acquisitive prescription, this evidence showing that Felipe Capua’s possession was not
in truth and in fact in the concept of owner during the required period of time. The deed of sale executed by Sabina
Capua to Gualberto Calulot (Exhibit A) describes the land sold to be "assessed at P240.00 under Tax No. 17426 for the
current year," that is, 1950, the deed having been executed April 21, 1950. When the spouses Gualberto Calulot and
Olimpia Lomibao sold the same property to Felipe Capua under Exhibit C, the land as described in the deed still bears the
same description as in Exhibit A, that is, "assessed at P240.00 under Tax No. 17426 for the current year." i.e. 1960 as
the deed was executed on May 27, 1960. The tax number of the lot in 1950 is the same tax number in 1960. The name
of Sabina Capua as the declared owner remained from 1950 to 1964. The tax receipts, Exhibits F-1, F-2, F-3, F-4,
showed that Sabina Capua was the declared owner. In other words, Gualberto Calulot had not declared the land in his
own name for tax purposes. He had not sought the cancellation of the tax declaration in the name of Sabina Capua to
him as the vendee, hence the inevitable conclusion is that said Gualberto Calulot did not deem himself the owner thereof
and, therefore, his possession was not in the concept of owner. This being so, Calulot’s occupancy failed in one essential
requisite of acquisitive prescription, which is possession in the concept of owner. The same is true with Felipe Capua.
Although Gualberto Calulot paid taxes on the land for the year in 1958, there is no evidence that he paid taxes in his
name or that he paid taxes any other year before or after 1958. chan roble s law lib rary : red

The claim of the respondents based on acquisitive prescription is, therefore, without merit. What remains, therefore, is
the sole question of ownership which as respondent court itself held — if respondents’ claim of acquisitive prescription is
defeated — must unquestionably be rendered in favor of petitioner Jose Maramba and his co-petitioners by right of res
judicata. (Supra at p. 4)

WHEREFORE, the judgment of the respondent Court of Appeals is hereby reversed and the decision of the Court of First
Instance of Pangasinan in Civil Case No. 1455 affirmed, with costs against the respondents.

Petition granted.

SO ORDERED.

Teehankee (Chairman), Makasiar, Muñoz Palma, Martin and Fernandez, JJ., concur.

FIRST DIVISION

[G.R. No. 138660. February 5, 2004]

HEIRS OF TRINIDAD DE LEON VDA. DE ROXAS, petitioners, vs. COURT OF


APPEALS and MAGUESUN MANAGEMENT AND DEVELOPMENT
CORPORATION, respondents.

DECISION
CARPIO, J.:

The Case

This is a petition to cite for indirect contempt the officers of Meycauayan Central Realty
Corporation (Meycauayan) for defying the final and executory Decision and Resolution of this
Court in G.R. No. 118436 entitled Heirs of Manuel A. Roxas and Trinidad de Leon Vda. De Roxas
v. Court of Appeals and Maguesun Management & Development Corporation (G.R. No. 118436). [1]

The Antecedents

This petition stems from a case filed by Trinidad de Leon Vda. De Roxas to set aside the
decree of registration over two unregistered parcels of land in Tagaytay City granted to Maguesun
Management and Development Corporation (Maguesun) before the Regional Trial Court on the
ground of actual fraud. The trial court dismissed the petition to set aside the decree of registration.
On appeal, the Court of Appeals denied the petition for review and affirmed the findings of the trial
court. On 21 March 1997, this Court reversed the appellate courts decision in G.R. No. 118436.
The dispositive portion reads:

WHEREFORE, the instant petition is hereby GRANTED. The Decision of the Court of Appeals
in C.A. G.R. CV No. 38328 (Trinidad de Leon Vda. de Roxas v. Maguesun Management &
Development Corporation, et al.) promulgated on December 8, 1994 is hereby REVERSED
AND SET ASIDE. Accordingly, registration of title over the subject parcels of land, described
in Plan AS-04-000108, Lot Nos. 7231 and 7239, with an area of 3,461 and 10,674 square
meters, respectively, as shown and supported by the corresponding technical descriptions now
forming part of the Records of LRC No. TG-373, is awarded to herein petitioner Trinidad de
Leon vda. de Roxas and her heirs, herein substituted as petitioners. Upon finality of this
Decision, the Land Registration Authority is hereby directed to ISSUE with reasonable dispatch
the corresponding decree of registration and certificate of title pursuant to Section 39 of
Presidential Decree No. 1529. [2]

On 22 May 1997, Meycauayan filed a Petition for Intervention in G.R. No.


118436. Meycauayan alleged that on 14 May 1992, it purchased three parcels of land from
Maguesun which form part of the property awarded to the heirs of Trinidad de Leon Vda. De
Roxas (Roxas heirs). Meycauayan contended that since it is a purchaser in good faith and for
value, the Court should afford it the opportunity to be heard. Meycauayan contends that the
adverse decision in G.R. No. 118436 cannot impair its rights as a purchaser in good faith and for
value.
On 25 June 1997, this Court denied the Petition for Intervention. This Court also denied the
Motion for Reconsideration filed by Maguesun. Thus, on 21 August 1997, the Decision dated 21
March 1997 in G.R. No. 118436 became final and executory.
On 13 April 1998, the Land Registration Authority (LRA) submitted a Report to the Regional
Trial Court of Tagaytay City, Branch 18 (land registration court), in LR Case No. TG-373, praying
that the land registration court:

a) Order the LRA to cancel Decree No. N-197092 in the name of Maguesun to enable it
to issue another decree in favor of the heirs of Manuel A. Roxas and Trinidad de
Leon Vda. de Roxas;

b) Order the Register of Deeds to cancel OCT No. 0-515 and all its derivative titles; and

c) Order the issuance of the Decree with respect to the decision of the Supreme Court
dated 21 March 1997.

Meycauayan filed with the land registration court a Motion For Leave To Intervene And For
Period Of Time To File Opposition To The Report Dated March 25, 1998 Filed By The LRA And
To File Complaint-in-Intervention.
On 4 June 1998, the Roxas heirs filed a Motion for Clarification with this Court raising the
following issues:

a) Whether it is necessary for the trial court to first order the LRA to cancel Decree No. N-
197092 in the name of Maguesun Management and Development Corporation to enable (the
LRA) to issue another decree in favor of the Heirs of Manuel A. Roxas and Trinidad de Leon
Vda. de Roxas? Or is that order necessarily included in the dispositive portion of the Supreme
Court decision directing the LRA to issue with reasonable dispatch the corresponding decree of
registration and certificate of title in favor of the Roxas heirs? Please note that this necessary
implication is a consequence of the Supreme Court finding that the decree in favor of Maguesun
was wrongfully issued because it was not entitled to the registration decree as it had no
registrable title, since Zenaida Melliza (from whom Maguesun supposedly bought the lots)
conveyed no title over the subject parcels of land to Maguesun Corporation as she was not the
owner thereof.

b) Whether an order from the trial court is necessary for the Register of Deeds concerned to
cancel OCT No. 0-515 and all its derivative titles? Or is that order necessarily included in the
dispositive portion of the Supreme Court decision directing the LRA to issue
the corresponding decree of registration and certificate of title in favor of the Roxas heirs,
considering that the original certificate of title issued to Maguesun was based on an illegal
decree of registration as found by this Honorable Court. Further, the unconditional order of the
Supreme Court to LRA to issue the corresponding certificate of title to the Roxas heirs
necessarily implies that the OCT issued to Maguesun and its derivative titles shall be canceled,
for it cannot [be] assumed that the Supreme Court intended that the same parcel of land shall be
covered by more than one certificate of title.

c) Whether an order from the trial court is necessary before the LRA can comply with the
Supreme Court decision directing the LRA to issue with reasonable dispatch the
corresponding decree of registration and certificate of title in favor of the Roxas heirs?

On 23 June 1998, the Roxas heirs filed a Supplement to Motion for Clarification, the pertinent
portions of which are:

1. In petitioners Motion for Clarification, one of the items sought to be clarified is whether the
derivative titles (i.e., the titles derived from Maguesun Management and Development
Corporations [Maguesun] Original Certificate of Title No. 0-515 and issued to Meycauayan
Central Realty Corp.) should be canceled, together with Maguesuns certificates of title, so that
new decree of registration and certificate of title can be issued to petitioners, as ordered in the
decision of this Honorable Court dated 21 March 1997, which has become final and executory?

2. From the Petition for Intervention filed by Meycauayan Central Realty Corporation
(Meycauayan) with this Honorable Court on 22 May 1997, the following statements, among
others, are alleged:

a. That on May 14, 1992, the intervenor purchased for value several parcels of real
property from private respondent Maguesun Management and Development
Corp. covered by TCT Nos. 24294, 24295 and 24296 containing an area of
2,019 square meters each, more or less.

b. That prior to paying the agreed purchase price in full to respondent Maguesun, an
investigation with the Tagaytay City Office of the Register of Deeds was
made to determine and ascertain the authenticity, status and condition of the
titles of Maguesun over the aforesaid properties.

c. That investigation made by the intervenor with the Office of Register of Deeds of
Tagaytay City showed that in all the certified true copies of the titles to the
properties above-mentioned which were registered in the name of
Maguesun, the last entry which appeared was the following, to wit: x x x.
d. Appearing that the properties to be purchased by the herein intervenor from
respondent Maguesun have no existing liens and/or encumbrances and
considering that the properties do not appear to be the subject of a pending
case which would affect the titles of those who may subsequently purchase
the same, the herein intervenor proceeded to pay, in full, the total amount of
ONE MILLION FIVE HUNDRED THOUSAND PESOS (P1,500,000.00)
to Maguesun. Immediately thereafter, Maguesun, through its duly
authorized officer, executed the corresponding Deeds of Absolute Sale.

e. That after the corresponding taxes and/or fees were paid by herein intervenor, the
aforementioned TCT Nos. T-24294, 24295 and 24296, were canceled and in
lieu thereof, new titles in the name of intervenor were issued by the Register
of Deeds of Tagaytay City.

f. That on March 25, 1997, an officer of the intervenor corporation was informed of
a newspaper report stating, in big bold letters, the following sub-headline, to
wit:

SC RULES ON ROXAS FAMILY


LAND ROW IN TAGAYTAY.

g. The President of herein intervenor right after secured from the Tagaytay City
Office of the Register of Deeds certified true copies of torrens titles over its
Tagaytay City properties.

h. That only then, after it secured certified true copies of the titles mentioned in the
preceding paragraph from the Office of the Register of Deeds of Tagaytay
City, did intervenor come to know of the existence of a case involving the
properties sold to it by respondent Maguesun on May 14, 1992.

3. Meycauayans Petition for Intervention was denied by this Honorable Court in its Resolution
dated 25 June 1997, a denial that has since become final and executory. However, as stated in
petitioners Motion for Clarification, Meycauayan committed the proscribed act of forum-
shopping by filing with the trial court a motion for leave to intervene raising again the issue of
its alleged ownership of portions of the land.

4. In order to settle once and for all Meycauayans allegation that it was a buyer in good faith,
and to show that its derivative titles should be declared void and canceled by this Honorable
Court, petitioners will show herein that the sale to Meycauayan was spurious or, at the very
least, it was a buyer in bad faith.

In a Resolution dated 29 July 1998, this Court acted favorably on the Roxas heirs Motion for
Clarification and its Supplement. The pertinent portions of the Resolution read:

Upon careful consideration of the points made by petitioners in their motions, this Court finds
the same meritorious and, hence, a clarification is in order. We, therefore, declare that our
directive on the LRA to issue with reasonable dispatch the corresponding decree of registration
and certificate of title also includes, as part thereof, the cancellation, without need of an order of
the land registration court, of Decree No. N-197092, as well as OCT No. 0-515, and all its
derivative titles.This is a necessary consequence of the Courts earlier finding that the foregoing
documents were illegally issued in the name of respondent. But in light of Section 39 of
Presidential Decree No. 1529 (the Property Registration Decree), Decree No. N-197092 which
originated from the LRA must be cancelled by the LRA itself. On account of this cancellation, it
is now incumbent upon the LRA to issue in lieu of the cancelled decree a new one in the name
of petitioners as well as the corresponding original certificate of title. Cancellation of OCT No.
0-515, on the other hand, properly devolves upon the Register of Deeds who, under Section 40
of P.D. No. 1529, has earlier entered a copy thereof in his record book. OCT No. 0-515 having
been nullified, all titles derived therefrom must also be considered void it appearing
that there had been no intervening rights of an innocent purchaser for value involving the lots in
dispute.

ACCORDINGLY, the Court hereby resolves to GRANT petitioners Motion for Clarification
together with the Supplement thereto. For this reason, the dispositive portion of our decision
dated March 21, 1997 is clarified, thus:

First, the Register of Deeds shall CANCEL OCT No. 0-515 and all its derivative titles, namely,
TCT Nos. T-25625, T-25626, T-25627, T-25628, T-25688, T-25689, and T-25690, the latter
three being already in the name of Meycauayan Realty and Development Corporation (also
designated as Meycauayan Central Realty, Inc. and Meycauayan Realty Corporation).

Thereafter, the Land Registration Authority shall:

(a) CANCEL Decree No. N-197092 originally issued in the name of Maguesun
Management and Development Corporation without need of an order from
the land registration court; and

(b) ISSUE with reasonable dispatch a new decree of registration and a new original
certificate of title (OCT) in favor of petitioners pursuant to Section 39 of
Presidential Decree No. 1529. (Emphasis added)

On 11 December 1998, the land registration court issued an order denying the LRA Report
dated 25 March 1998 and the Motion for Leave to Intervene filed by Meycauayan since the
Supreme Court Resolution of 29 July 1998 had rendered them moot.

The Register of Deeds of Tagaytay City then canceled TCT Nos. T-25626, T-25627, T-25628,
T-25688, T-25689, T-25690 and T-27390. TCT Nos. T-25688, T-25689, T-25690 and T-27390
[3]

were derivative titles already in the name of Meycauayan.

On 5 April 1999, the Roxas heirs filed a Motion for Issuance of Writ of Possession with the
land registration court.
On 20 April 1999, Meycauayan filed a Complaint for reconveyance, damages and quieting of
title with the trial court entitled Meycauayan Central Realty Corp. v. Heirs of Manuel A. Roxas and
Trinidad de Leon Vda. de Roxas, Maguesun Management and Development Corp., Register of
Deeds of Tagaytay City, City Assessor of Tagaytay City and Land Registration Authority. [4] The
Complaint is almost an exact reproduction of the Petition for Intervention filed by Meycauayan
before this Court. The Complaint prayed for judgment:

1. Ordering the defendants Land Registration Authority and the Register of Deeds of Tagaytay
City to cancel the titles and decree of registration they issued in lieu of TCT Nos. 25688, 25689,
25690 and 27390 registered in the name of plaintiff Meycauayan Central Realty Corporation
and reconvey said properties to the plaintiff corporation by reinstating the said cancelled titles or
if the same not be possible, cause the issuance of new decrees and titles thereto;

2. Ordering the defendant City Assessor of Tagaytay City to reinstate the Assessments for real
estate taxes it previously cancelled covering the properties of plaintiff;

3. Ordering the defendants Roxas and Maguesun to jointly and solidarily pay the plaintiff actual
and/or compensatory damages in the total amount of FIVE HUNDRED THOUSAND PESOS
(P500,000.00);

4. Ordering the defendants Roxas and Maguesun to jointly and solidarily pay the plaintiff the
amount of TWO HUNDRED THOUSAND PESOS (P200,000.00) as and by way of nominal
damages;

5. Ordering the defendants Roxas and Maguesun to jointly and solidarily pay the plaintiff
exemplary damages in the amount of TWO HUNDRED THOUSAND PESOS (P200,000.00);

6. Ordering the defendants Roxas and Maguesun to jointly and solidarily pay the plaintiff
Attorneys fees in the amount of ONE HUNDRED THOUSAND PESOS (P100,000.00); and

7. Ordering the defendants Roxas and Maguesun to jointly and solidarily pay the plaintiff the
costs of suit.
[5]

On 6 May 1999, Meycauayan filed a Special Appearance Questioning Court Jurisdiction and
Opposition to the Motion for Issuance of Writ of Possession Against Meycauayan Central Realty
Corporation with the land registration court.
On 2 September 1999, the land registration court issued an order, the dispositive portion of
which reads:

WHEREFORE, in the light of the foregoing, let a Writ of Possession be issued against
Maguesun Management and Development Corporation in these cases. However, insofar as
Meycauayan Central Realty is concerned, let a resolution of the motion filed by the movants
herein be deferred until the Supreme Court had resolved with finality the petition for contempt
of herein movant in G.R. No. 138660.

On 7 March 2000, the trial court dismissed for lack of merit Meycauayans complaint for
reconveyance, damages and quieting of title. The trial court held that (1) the nullity of OCT No. 0-
515, which is the source of Meycauayans titles, is now res judicata; (2) the complaints prayer for
the trial court to annul the decision of the Supreme Court in G.R. No. 118436 is beyond the trial
courts jurisdiction; and (3) Meycauayan is guilty of forum shopping. [6] The trial court likewise denied
Meycauayans Motion for Reconsideration in an Order dated 20 June 2000. [7] On 24 August 2000,
Meycauayan filed a petition for certiorari under Rule 65 of the Rules of Court with the Court of
Appeals assailing the trial courts dismissal of the complaint.
Meanwhile, the Roxas heirs filed on 2 June 1999 this petition to cite for indirect contempt the
officers of Meycauayan.

The Issues

The parties raised the following issues:


1. Whether this Courts Decision and Resolution in G.R. No. 118436 bind Meycauayan;

2. Whether Meycauayans act of filing with the trial court a complaint for reconveyance,
damages and quieting of title involving parcels of land, which were the subject of
this Courts Decision and Resolution in G.R. No. 118436, constitutes indirect
contempt under Section 3, Rule 71 of the Rules of Civil Procedure; and

3. Whether Meycauayan is guilty of forum shopping.

The Courts Ruling

The petition is meritorious. We find Meycauayans Executive Vice-President Juan M. Lamson,


Jr. guilty of indirect contempt. We also find that Meycauayan committed forum shopping, and thus
Meycauayan and its Executive Vice President Juan M. Lamson, Jr. are guilty of direct contempt.
The Roxas heirs allege that the following acts of Meycauayan constitute indirect contempt
under Section 3, Rule 71 of the Rules of Civil Procedure: (1)Meycauayans defiance of the final
and executory Decision and Resolution of this Court in G.R. No. 118436; (2) its act of filing
pleadings before the land registration court to prevent execution of the Decision and Resolution;
(3) its act of filing a Complaint raising the same issues in its Petition for Intervention which this
Court had already denied and urging the trial court to ignore and countermand the orders of this
Court.
On the other hand, Meycauayan alleges that the Decision in G.R. No. 118436 does not bind
Meycauayan because it was not a party in the case. According to Meycauayan, the Decision in
G.R. No. 118436 may be enforced against Maguesun but not against Meycauayan which is a
stranger to the case. Meycauayan insists that as a purchaser in good faith and for value its rights
cannot be prejudiced by the alleged fraudulent acquisition by Maguesun of the subject properties.
Meycauayan, therefore, is not liable for contempt of court for filing an action for reconveyance,
quieting of title and damages.
The issue of whether the Decision in G.R. No. 118436 binds Meycauayan was already
addressed by this Court when it denied Meycauayans Petition for Intervention. Furthermore, this
Courts Resolution dated 29 July 1998 clarified the Decision dated 21 March 1997 by ordering the
Register of Deeds to CANCEL OCT No. 0-515 and all its derivative titles, namely, TCT Nos. T-
25625, T-25626, T-25627, T-25628, T-25688, T-25689, and T-25690, the latter three already in
the name of Meycauayan Realty and Development Corporation (also designated as Meycauayan
Central Realty, Inc. and Meycauayan Realty Corporation). This Court also found that there had
been no intervening rights of an innocent purchaser for value involving the lots in dispute.

Indirect Contempt

Meycauayans obstinate refusal to abide by the Courts Decision in G.R. No. 118436 has no
basis in view of this Courts clear pronouncement to the contrary. The fact that this Court
specifically ordered the cancelation of Meycauayans titles to the disputed parcels of land in the
Resolution dated 29 July 1998 should have laid to rest the issue of whether the Decision and
Resolution in G.R. No. 118436 is binding on Meycauayan. Clearly, Meycauayans defiance of this
Courts Decision and Resolution by filing an action for reconveyance, quieting of title and damages
involving the same parcels of land which this Court already decided with finality constitutes indirect
contempt under Section 3(d), Rule 71 of the Rules of Civil Procedure. Section 3(d) of Rule 71
reads:
SEC. 3. Indirect contempt to be punished after charge and hearing. After a charge in writing has
been filed, and an opportunity given to the respondent to comment thereon within such period as
may be fixed by the court and to be heard by himself or counsel, a person guilty of any of the
following acts may be punished for indirect contempt:

xxx

(d) Any improper conduct tending, directly or indirectly, to impede, obstruct, or degrade the
administration of justice;

In Halili, et al. v. CIR, et al.,[8] this Court explained the concept of contempt of court:

Contempt of court is a defiance of the authority, justice or dignity of the court; such conduct as
tends to bring the authority and administration of the law into disrespect or to interfere with or
prejudice parties litigant or their witnesses during litigation (12 Am. Jur. 389, cited in 14 SCRA
813).

Contempt of court is defined as a disobedience to the Court by acting in opposition to its


authority, justice and dignity. It signifies not only a willful disregard or disobedience of the
courts orders, but such conduct as tends to bring the authority of the court and the administration
of law into disrepute or in some manner to impede the due administration of justice (17 C.J.S.
4).

This Court has thus repeatedly declared that the power to punish for contempt is inherent in all
courts and is essential to the preservation of order in judicial proceedings and to the enforcement
of judgments, orders, and mandates of the court, and consequently, to the due administration of
justice (Slade Perkins vs. Director of Prisons, 58 Phil. 271; In re Kelly, 35 Phil. 944;
Commissioner of Immigration vs. Cloribel, 20 SCRA 1241; Montalban vs. Canonoy, 38 SCRA
1).

Meycauayans continuing resistance to this Courts judgment is an affront to the Court and to
the sovereign dignity with which it is clothed.[9] Meycauayans persistent attempts to raise issues
long since laid to rest by a final and executory judgment of no less than the highest tribunal of the
land constitute contumacious defiance of the authority of this Court and impede the speedy
administration of justice.[10]
Well-settled is the rule that when a court of competent jurisdiction has tried and decided a right
or fact, so long as the decision remains unreversed, it is conclusive on the parties and those in
privity with them.[11] More so where the Supreme Court has already decided the issue since the
Court is the final arbiter of all justiciable controversies properly brought before it. [12] As held
in Buaya v. Stronghold Insurance Co., Inc.:[13]

x x x An existing final judgment or decree rendered upon the merits, without fraud or collusion,
by a court of competent jurisdiction acting upon a matter within its authority is conclusive of the
rights of the parties and their privies. This ruling holds in all other actions or suits, in the same
or any other judicial tribunal of concurrent jurisdiction, touching on the points or matters in
issue in the first suit.

xxx

Courts will simply refuse to reopen what has been decided. They will not allow the same parties
or their privies to litigate anew a question, once it has been considered and decided with
finality. Litigations must end and terminate sometime and somewhere. The effective and
efficient administration of justice requires that once a judgment has become final, the prevailing
party should not be deprived of the fruits of the verdict by subsequent suits on the same issues
filed by the same parties.

This is in accordance with the doctrine of res judicata which has the following elements: (1) the
former judgment must be final; (2) the court which rendered it had jurisdiction over the subject
matter and the parties; (3) the judgment must be on the merits; and (4) there must be between the
first and the second actions, identity of parties, subject matter and causes of action. [14] The
application of the doctrine of res judicata does not require absolute identity of parties but merely
substantial identity of parties.[15] There is substantial identity of parties when there is community of
interest or privity of interest between a party in the first and a party in the second case even if the
first case did not implead the latter.[16]
The Court ruled in G.R. No. 118436 that Meycauayans predecessor-in-interest, Maguesun,
committed actual fraud in obtaining the decree of registration of the subject properties. The
Decision in G.R. No. 118436 binds Meycauayan under the principle of privity of interest since it
was a successor-in-interest of Maguesun. Meycauayan, however, insists that it was a purchaser in
good faith because it had no knowledge of any pending case involving the lots. Meycauayan
claims that the trial court had already canceled the notice of lis pendens on the titles when it
purchased the lots from Maguesun. In its Memorandum, Meycauayan stresses that to ensure the
authenticity of the titles and the annotations appearing on the titles, particularly the cancelation of
the notice of lis pendens, Meycauayan checked with the Register of Deeds and the Regional Trial
Court of Tagaytay City.[17]Since Meycauayan checked with the Regional Trial Court of Tagaytay
City, Meycauayan then had actual knowledge, before it purchased the lots, of the pending case
involving the lots despite the cancelation of the notice of lis pendens on the titles.
Furthermore, as found by this Court in G.R. No. 118436, the Roxas family has been in
possession of the property uninterruptedly through their caretaker, Jose Ramirez, who resided on
the property.[18] Where the land sold is in the possession of a person other than the vendor, the
purchaser must go beyond the certificates of title and make inquiries concerning the rights of the
actual possessor.[19] Meycauayan therefore cannot invoke the right of a purchaser in good faith and
could not have acquired a better right than its predecessor-in-interest. This Court has already
rejected Meycauayans claim that it was a purchaser in good faith when it ruled in G.R. No. 118436
that there had been no intervening rights of an innocent purchaser for value involving the lots in
dispute. As held in Heirs of Pael v. Court of Appeals:[20]

In the case of Santiago Land Development Corporation vs. Court of Appeals (G.R. No. 106194,
276 SCRA 674 [1997]), petitioner maintained that as a purchaser pendente lite of the land in
litigation, it had a right to intervene under Rule 12, Section 2. We rejected this position and said
that since petitioner is not a stranger to the action between Quisumbing and the PNB, petitioner
in fact having stepped into the shoes of PNB in a manner of speaking, it follows that it cannot
claim any further right to intervene in the action. As in the instant Petition, it was argued that the
denial of the Motion to Intervene would be a denial likewise of due process. But this, too, was
struck down in Santiago Land where we held that petitioner is not really denied protection. It is
represented in the action by its predecessor in interest. Indeed, since petitioner is a
transferee pendente lite with notice of the pending litigation between Reyes and private
respondent Carreon, petitioner stands exactly in the shoes of Reyes and is bound by any
judgment or decree which may be rendered for or against the latter.

Indeed, one who buys property with full knowledge of the flaws and defects of the title of his
vendor and of a pending litigation over the property gambles on the result of the litigation and is
bound by the outcome of his indifference.[21] A purchaser cannot close his eyes to facts which
should put a reasonable man on guard and then claim that he acted in good faith believing that
there was no defect in the title of the vendor.[22]
For the penalty for indirect contempt, Section 7 of Rule 71 of the Rules of Court provides:

SEC. 7. Punishment for indirect contempt. If the respondent is adjudged guilty of indirect
contempt committed against a Regional Trial Court or a court of equivalent or higher rank, he
may be punished by a fine not exceeding thirty thousand pesos or imprisonment not exceeding
six (6) months or both. x x x

In this case, Meycauayan Executive Vice President Juan M. Lamson, Jr. caused the
preparation and the filing of the Petition for Intervention in G.R. No. 118436 and the Complaint for
Reconveyance, Damages and Quieting of Title with the trial court.[23] Juan M. Lamson, Jr. signed
the verification and certification of non-forum shopping for the Petition for Intervention and the
Complaint for Reconveyance, Damages and Quieting of Title. Even though a judgment, decree, or
order is addressed to the corporation only, the officers, as well as the corporation itself, may be
punished for contempt for disobedience to its terms, at least if they knowingly disobey the courts
mandate, since a lawful judicial command to a corporation is in effect a command to the
officers.[24] Thus, for improper conduct tending to impede the orderly administration of justice,
Meycauayan Executive Vice President Juan M. Lamson, Jr. should be fined ten thousand pesos
(P10,000).[25]

Direct Contempt

Meycauayans act of filing a Complaint for Reconveyance, Quieting of Title and Damages
raising the same issues in its Petition for Intervention, which this Court had already denied, also
constitutes forum shopping.Forum shopping is the act of a party against whom an adverse
judgment has been rendered in one forum, seeking another and possibly favorable opinion in
another forum other than by appeal or special civil action of certiorari. There is also forum
shopping when a party institutes two or more actions based on the same cause on the expectation
that one or the other court might look with favor on the party. [26]
In this case, the Court had already rejected Meycauayans claim on the subject lots when the
Court denied Meycauayans Petition for Intervention in G.R. No. 118436. The Court ruled that there
had been no intervening rights of an innocent purchaser for value involving the lots in dispute. The
Decision of this Court in G.R. No. 118436 is already final and executory. The filing by Meycauayan
of an action to re-litigate the title to the same property, which this Court had already adjudicated
with finality, is an abuse of the courts processes and constitutes direct contempt.
Section 5 of Rule 7 of the Rules of Court provides that if the acts of the party or his counsel
clearly constitute willful and deliberate forum shopping, the same shall be a ground for summary
dismissal with prejudice and shall constitute direct contempt, as well as a cause for administrative
sanctions. The fact that Meycauayan did mention in its certification of non-forum shopping its
attempt to intervene in G.R. No. 118436, which this Court denied,[27] does not negate the existence
of forum shopping. This disclosure does not exculpate Meycauayan for deliberately seeking a
friendlier forum for its case and re-litigating an issue which this Court had already decided with
finality.[28]
The general rule is that a corporation and its officers and agents may be held liable for
contempt. A corporation and those who are officially responsible for the conduct of its affairs may
be punished for contempt in disobeying judgments, decrees, or orders of a court made in a case
within its jurisdiction.[29]
Under Section 1 of Rule 71 of the Rules of Court, direct contempt is punishable by a fine not
exceeding two thousand pesos (P2,000) or imprisonment not exceeding ten (10) days, or both, if
committed against a Regional Trial Court or a court of equivalent or higher rank. Hence,
Meycauayan[30] and its Executive Vice President Juan M. Lamson, Jr. are each fined P2,000 for
direct contempt of court for forum shopping.
WHEREFORE, we find Meycauayan Central Realty Corporations Executive Vice President
Juan M. Lamson, Jr. GUILTY of INDIRECT CONTEMPT and FINE him TEN THOUSAND PESOS
(P10,000). Furthermore, we find Meycauayan Central Realty Corporation and its Executive Vice
President Juan M. Lamson, Jr. GUILTY of DIRECT CONTEMPT for forum shopping and FINE
them TWO THOUSAND PESOS (P2,000) each. The Court warns them that a repetition of the
same or similar offense shall merit a more severe penalty.
SO ORDERED.
Davide, Jr., C.J., (Chairman), Panganiban, and Ynares-Santiago, JJ., concur.
Azcuna, J., on official leave.

[1]
337 Phil. 41 (1997).
[2]
Ibid.
[3]
TCT No. 27390 was the new title issued in the name of Meycauayan in lieu of the canceled TCT No. 25625
registered in the name of Maguesun.
[4]
Civil Case No. TG-1893.
[5]
Rollo, pp. 62-63.
[6]
Ibid., pp. 283-287.
[7]
Ibid., p. 288.
[8]
220 Phil. 507 (1985).
[9]
People v. Godoy, 312 Phil. 977 (1995).
[10]
See Pacquing v. Court of Appeals, et al., 200 Phil. 516 (1982).
[11]
Fulgencio, et al. v. National labor Relations Commission (First Division) and Raycor Aircontrol Systems, Inc., G.R.
No. 141600, 12 September 2003; Bardillon v. Barangay Masili of Calamba, Laguna, G.R. No. 146886, 30
April, 2003; Oropeza Marketing Corporation, et al. v. Allied Banking Corporation, G.R. No. 129788, 3
December 2002.
[12]
Firestone Ceramics, Inc. v. Court of Appeals, 372 Phil. 401 (1999).
[13]
G.R. No. 139020, 11 October 2000, 342 SCRA 576.
[14]
Rovels Enterprises, Inc. v. Ocampo, G.R. No. 136821, 17 October 2002, 391 SCRA 176; Quezon Province v. Hon.
Marte, 420 Phil. 177 (2001).
[15]
Development Bank of the Philippines v. Court of Appeals, G.R. No. 110203, 9 May 2001, 357 SCRA 626.
[16]
Sendon v. Ruiz, 415 Phil. 376 (2001).
[17]
Rollo, pp. 226-227, 229.
[18]
Heirs of Manuel A. Roxas v. Court of Appeals, 337 Phil. 41 (1997).
[19]
Development Bank of the Phils. v. CA, 387 Phil. 283 (2000).
[20]
382 Phil. 222, 255-256 (2000), citing Seveses v. Court of Appeals, 375 Phil. 64, 72 (1999).
[21]
Liu v. Loy, G.R. No. 145982, 3 July 2003, citing Toledo-Banaga v. Court of Appeals, G.R. No. 127941, 28 January
1999, 302 SCRA 331.
[22]
Domingo v. Roces, G.R. No. 147468, 9 April 2003; Development Bank of the Phils. v. CA, 387 Phil. 283 (2000).
[23]
Rollo, pp. 32-33, 63.
[24]
17 C.J.S. Contempt 34 (1963).
[25]
In Ang Bagong Bayani-OFW Labor Party v. COMELEC (G.R. Nos. 147589 &. 147613, 18 February 2003), the
Court found the COMELEC members guilty of contempt for (1) issuing three Resolutions which are outside
the jurisdiction of the COMELEC, (2) for degrading the dignity of this Court, (3) for brazen disobedience to this
Courts lawful directives, and (4) for delaying the ultimate resolution of the many incidents of the party-list
case, to the prejudice of the litigants and of the country. The COMELEC Chairman and four COMELEC
Commissioners were each fined P20,000 while the two remaining Commissioners, whose actions were less
serious in degree than their colleagues, were each fined P5,000. In Gamido v. New Bilibid Prison (G.R. No.
146783, 29 July 2002, 385 SCRA 325), the Court sentenced the petitioner to pay a fine of P10,000 or suffer
imprisonment for a period of one month and one day, for appearing as counsel in the case without license to
practice law. In In Re: Published Alleged Threats Against Members of the Court in the Plunder Law Case
Hurled by Atty. Leonardo De Vera (A.M. No. 01-12-03-SC, 29 July 2002, 385 SCRA 285), respondent lawyer
was fined P20,000 for uttering statements aimed at influencing and threatening the Court in deciding in favor
of the constitutionality of the Plunder Law. In United BF Homeowners v. Sandoval-Gutierrez (A.M. No. CA-99-
30, 16 October 2000, 343 SCRA 162), the Court imposed a fine of P10,000 on one of the complainants whose
scurrilous attacks on the honor and integrity of two justices as well as that of the members of this Court,
undermined the Courts capacity to render justice.
[26]
United Special Watchman Agency v. Court of Appeals, G.R. No. 152476, 8 July 2003; Santos v. Commission on
Elections (First Division), G.R. No. 155618, 26 March 2003; New Sampaguita Builders Construction,
Inc. v. The Estate of Fermina Canoso, G.R. No. 151447, 14 February 2003.
[27]
Rollo, p. 63.
[28]
See Request for Consolidation of Civil Case Nos. R-1169 & 3640, 416 Phil. 562 (2001).
[29]
17 Am. Jur. 2d Contempt 60 (1990).
[30]
Under Rule 71 of the Rules of Court, direct contempt may be punished summarily while indirect contempt requires a
written charge and due hearing. Thus, although Meycauayan cannot be held guilty of indirect contempt
because only the officers of Meycauayan were included in the charge for indirect contempt, Meycauayan can
still be held guilty for direct contempt.

Republic of the Philippines


SUPREME COURT
Manila

FIRST DIVISION

G.R. No. L-28740 February 24, 1981

FERMIN Z. CARAM, JR., petitioner,


vs.
CLARO L. LAURETA, respondent.

FERNANDEZ, J.:

This is a petition for certiorari to review the decision of the Court of Appeals promulgated on January 29, 1968 in
CA-G. R. NO. 35721-R entitled "Claro L. Laureta, plaintiff-appellee versus Marcos Mata, Codidi Mata and
Fermin Caram, Jr., defendants- appellants; Tampino (Mansaca), et al. Intervenors-appellants," affirming the
decision of the Court of First Instance of Davao in Civil Case No. 3083. 1

On June 25, 1959, Claro L. Laureta filed in the Court of First Instance of Davao an action for nullity, recovery of
ownership and/or reconveyance with damages and attorney's fees against Marcos Mata, Codidi Mata, Fermin Z.
Caram, Jr. and the Register of Deeds of Davao City. 2

On June 10, 1945, Marcos Mata conveyed a large tract of agricultural land covered by Original Certificate of Title
No. 3019 in favor of Claro Laureta, plaintiff, the respondent herein. The deed of absolute sale in favor of the
plaintiff was not registered because it was not acknowledged before a notary public or any other authorized
officer. At the time the sale was executed, there was no authorized officer before whom the sale could be
acknowledged inasmuch as the civil government in Tagum, Davao was not as yet organized. However, the
defendant Marcos Mata delivered to Laureta the peaceful and lawful possession of the premises of the land
together with the pertinent papers thereof such as the Owner's Duplicate Original Certificate of Title No. 3019,
sketch plan, tax declaration, tax receipts and other papers related thereto. 3 Since June 10, 1945, the plaintiff
Laureta had been and is stin in continuous, adverse and notorious occupation of said land, without being
molested, disturbed or stopped by any of the defendants or their representatives. In fact, Laureta had been
paying realty taxes due thereon and had introduced improvements worth not less than P20,000.00 at the time of
the filing of the complaint. 4
On May 5, 1947, the same land covered by Original Certificate of Title No. 3019 was sold by Marcos Mata to
defendant Fermin Z. Caram, Jr., petitioner herein. The deed of sale in favor of Caram was acknowledged before
Atty. Abelardo Aportadera. On May 22, 1947, Marcos Mata, through Attys. Abelardo Aportadera and
Gumercindo Arcilla, filed with the Court of First Instance of Davao a petition for the issuance of a new Owner's
Duplicate of Original Certificate of Title No. 3019, alleging as ground therefor the loss of said title in the
evacuation place of defendant Marcos Mata in Magugpo, Tagum, Davao. On June 5, 1947, the Court of First
Instance of Davao issued an order directing the Register of Deeds of Davao to issue a new Owner's Duplicate
Certificate of Title No. 3019 in favor of Marcos Mata and declaring the lost title as null and void. On December 9,
1947, the second sale between Marcos Mata and Fermin Caram, Jr. was registered with the Register of Deeds.
On the same date, Transfer Certificate of Title No. 140 was issued in favor of Fermin Caram Jr. 5

On August 29, 1959, the defendants Marcos Mata and Codidi Mata filed their answer with counterclaim
admitting the existence of a private absolute deed of sale of his only property in favor of Claro L. Laureta but
alleging that he signed the same as he was subjected to duress, threat and intimidation for the plaintiff was the
commanding officer of the 10th division USFIP operating in the unoccupied areas of Northern Davao with its
headquarters at Project No. 7 (Km. 60, Davao Agusan Highways), in the Municipality of Tagum, Province of
Davao; that Laureta's words and requests were laws; that although the defendant Mata did not like to sell his
property or sign the document without even understanding the same, he was ordered to accept P650.00
Mindanao Emergency notes; and that due to his fear of harm or danger that will happen to him or to his family, if
he refused he had no other alternative but to sign the document. 6

The defendants Marcos Mata and Codidi Mata also admit the existence of a record in the Registry of Deeds
regarding a document allegedly signed by him in favor of his co-defendant Fermin Caram, Jr. but denies that he
ever signed the document for he knew before hand that he had signed a deed of sale in favor of the plaintiff and
that the plaintiff was in possession of the certificate of title; that if ever his thumb mark appeared in the document
purportedly alienating the property to Fermin Caram, did his consent was obtained through fraud and
misrepresentation for the defendant Mata is illiterate and ignorant and did not know what he was signing; and
that he did not receive a consideration for the said sale. 7

The defendant Fermin Caram Jr. filed his answer on October 23, 1959 alleging that he has no knowledge or
information about the previous encumbrances, transactions, and alienations in favor of plaintiff until the filing of
the complaints. 8

The trial court rendered a decision dated February 29, 1964, the dispositive portion of which reads: 9

1. Declaring that the deed of sale, Exhibit A, executed by Marcos Mata in favor of Claro L.
Laureta stands and prevails over the deed of sale, Exhibit F, in favor of Fermin Caram, Jr.;

2. Declaring as null and void the deed of sale Exhibit F, in favor of Fermin Caram, Jr.;

3. Directing Marcos Mata to acknowledge the deed of sale, Exhibit A, in favor of Claro L. Laureta;

4. Directing Claro L. Laureta to secure the approval of the Secretary of Agriculture and Natural
Resources on the deed, Exhibit A, after Marcos Mata shall have acknowledged the same before
a notary public;

5. Directing Claro L. Laureta to surrender to the Register of Deeds for the City and Province of
Davao the Owner's Duplicate of Original Certificate of Title No. 3019 and the latter to cancel the
same;

6. Ordering the Register of Deeds for the City and Province of Davao to cancel Transfer
Certificate of Title No. T-140 in the name of Fermin Caram, Jr.;

7. Directing the Register of Deeds for the City and Province of Davao to issue a title in favor of
Claro L. Laureta, Filipino, resident of Quezon City, upon presentation of the deed executed by
Marcos Mata in his favor, Exhibit A, duly acknowledged by him and approved by the Secretary of
Agriculture and Natural Resources, and

8. Dismissing the counterclaim and cross claim of Marcos Mata and Codidi Mata, the
counterclaim of Caram, Jr., the answer in intervention, counterclaim and cross-claim of the
Mansacas.
The Court makes no pronouncement as to costs.

SO ORDERED.

The defendants appealed from the judgment to the Court of Appeals. 10 The appeal was docketed as CA-G.R.
NO. 35721- R.

The Court of Appeals promulgated its decision on January 29, 1968 affirming the judgment of the trial court.

In his brief, the petitioner assigns the following errors: 11

THE RESPONDENT COURT OF APPEALS ERRED IN CONCLUDING THAT IRESPE AND


APORTADERA WERE ATTORNEYS-IN-FACT OF PETITIONER CARAM FOR THE PURPOSE
OF BUYING THE PROPERTY IN QUESTION.

II

THE RESPONDENT COURT OF APPEALS ERRED IN CONCLUDING THAT THE EVIDENCE


ADDUCED IN THE TRIAL COURT CONSTITUTE LEGAL EVIDENCE OF FRAUD ON THE
PART OF IRESPE AND APORTADERA AT TRIBUTABLE TO PETITIONER.

III

THE RESPONDENT COURT OF APPEALS COMMITTED GRAVE ERROR OF LAW IN


HOLDING THAT KNOWLEDGE OF IRESPE AND APORTADERA OF A PRIOR
UNREGISTERED SALE OF A TITLED PROPERTY ATTRIBUTABLE TO PETITIONER AND
EQUIVALENT IN LAW OF REGISTRATION OF SAID SALE.

IV

THE RESPONDENT COURT OF APPEALS ERRED IN NOT HOLDING THAT AN ACTION FOR
RECONVEYANCE ON THE GROUND OF FRAUD PRESCRIBES WITHIN FOUR (4) YEARS.

The petitioner assails the finding of the trial court that the second sale of the property was made through his
representatives, Pedro Irespe and Atty. Abelardo Aportadera. He argues that Pedro Irespe was acting merely as
a broker or intermediary with the specific task and duty to pay Marcos Mata the sum of P1,000.00 for the latter's
property and to see to it that the requisite deed of sale covering the purchase was properly executed by Marcos
Mata; that the Identity of the property to be bought and the price of the purchase had already been agreed upon
by the parties; and that the other alleged representative, Atty. Aportadera, merely acted as a notary public in the
execution of the deed of sale.

The contention of the petitioner has no merit. The facts of record show that Mata, the vendor, and Caram, the
second vendee had never met. During the trial, Marcos Mata testified that he knows Atty. Aportadera but did not
know Caram. 12 Thus, the sale of the property could have only been through Caram's representatives, Irespe and
Aportadera. The petitioner, in his answer, admitted that Atty. Aportadera acted as his notary public and attorney-
in-fact at the same time in the purchase of the property. 13

The petitioner contends that he cannot be considered to have acted in bad faith because there is no direct proof
showing that Irespe and Aportadera, his alleged agents, had knowledge of the first sale to Laureta. This
contention is also without merit.

The Court of Appeals, in affirming the decision of the trial court, said: 14

The trial court, in holding that appellant Caram. Jr. was not a purchaser in good faith, at the time
he bought the same property from appellant Mata, on May 5, 1947, entirely discredited the
testimony of Aportadera. Thus it stated in its decision:
The testimony of Atty. Aportadera quoted elsewhere in this decision is hollow. There is every
reason to believe that Irespe and he had known of the sale of the property in question to Laureta
on the day Mata and Irespe, accompanied by Leaning Mansaca, went to the office of Atty.
Aportadera for the sale of the same property to Caram, Jr., represented by Irespe as attorney-in-
fact. Ining Mansaca was with the two — Irespe and Mata — to engage the services 6f Atty.
Aportadera in the annulment of the sale of his land to Laureta. When Leaning Mansaca narrated
to Atty. Aportadera the circumstances under which his property had been sold to Laureta, he
must have included in the narration the sale of the land of Mata, for the two properties had been
sold on the same occassion and under the same circumstances. Even as early as immediately
after liberation, Irespe, who was the witness in most of the cases filed by Atty. Aportadera in his
capacity as Provincial Fiscal of Davao against Laureta, must have known of the purchases of
lands made by Laureta when he was regimental commander, one of which was the sale made by
Mata. It was not a mere coincidence that Irespe was made guardian ad litem of Leaning
Mansaca, at the suggestion of Atty. Aportadera and attorney-in-fact of Caram, Jr.

The Court cannot help being convinced that Irespe, attorney-in-fact of Caram, Jr. had knowledge
of the prior existing transaction, Exhibit A, between Mata and Laureta over the land, subject
matter of this litigation, when the deed, Exhibit F, was executed by Mata in favor of Caram, Jr.
And this knowledge has the effect of registration as to Caram, Jr. RA pp. 123-124)

We agree with His Honor's conclusion on this particular point, on two grounds — the first, the
same concerns matters affecting the credibility of a witness of which the findings of the trial court
command great weight, and second, the same is borne out by the testimony of Atty. Aportadera
himself. (t.s.n., pp. 187-190, 213-215, Restauro).

Even if Irespe and Aportadera did not have actual knowledge of the first sale, still their actions have not satisfied
the requirement of good faith. Bad faith is not based solely on the fact that a vendee had knowledge of the
defect or lack of title of his vendor. In the case of Leung Yee vs. F. L. Strong Machinery Co. and Williamson, this
Court held: 15

One who purchases real estate with knowledge of a defect or lack of title in his vendor can not
claim that he has acquired title thereto in good faith, as against the true owner of the land or of
an interest therein, and the same rule must be applied to one who has knowledge of facts which
should have put him upon such inquiry and investigation as might be necessary to acquaint him
with the defects in the title of his vendor.

In the instant case, Irespe and Aportadera had knowledge of circumstances which ought to have put them an
inquiry. Both of them knew that Mata's certificate of title together with other papers pertaining to the land was
taken by soldiers under the command of Col. Claro L. Laureta. 16 Added to this is the fact that at the time of the
second sale Laureta was already in possession of the land. Irespe and Aportadera should have investigated the
nature of Laureta's possession. If they failed to exercise the ordinary care expected of a buyer of real estate they
must suffer the consequences. The rule of caveat emptor requires the purchaser to be aware of the supposed
title of the vendor and one who buys without checking the vendor's title takes all the risks and losses consequent
to such failure. 17

The principle that a person dealing with the owner of the registered land is not bound to go behind the certificate
and inquire into transactions the existence of which is not there intimated 18 should not apply in this case. It was
of common knowledge that at the time the soldiers of Laureta took the documents from Mata, the civil
government of Tagum was not yet established and that there were no officials to ratify contracts of sale and
make them registerable. Obviously, Aportadera and Irespe knew that even if Mata previously had sold t he
Disputed such sale could not have been registered.

There is no doubt then that Irespe and Aportadera, acting as agents of Caram, purchased the property of Mata
in bad faith. Applying the principle of agency, Caram as principal, should also be deemed to have acted in bad
faith.

Article 1544 of the New Civil Code provides that:

Art. 1544. If the same thing should have been sold to different vendees, the ownership shall be
transferred to the person who may have first taken possession thereof in good faith, if it should
be movable property.
Should it be immovable property, the ownership shall belong to the person acquiring it who in
good faith first recordered it in the Registry of Property.

Should there be no inscription, the ownership shag pertain to the person who in good faith was
first in the possession; and, in the absence thereof, to the person who presents the oldest title,
provided there is good faith. (1473)

Since Caram was a registrant in bad faith, the situation is as if there was no registration at all. 19

The question to be determined now is, who was first in possession in good faith? A possessor in good faith is
one who is not aware that there exists in his title or mode of acquisition any flaw which invalidates it. 20 Laureta
was first in possession of the property. He is also a possessor in good faith. It is true that Mata had alleged that
the deed of sale in favor of Laureta was procured by force. 21 Such defect, however, was cured when, after the
lapse of four years from the time the intimidation ceased, Marcos Mata lost both his rights to file an action for
annulment or to set up nullity of the contract as a defense in an action to enforce the same.

Anent the fourth error assigned, the petitioner contends that the second deed of sale, Exhibit "F", is a voidable
contract. Being a voidable contract, the action for annulment of the same on the ground of fraud must be brought
within four (4) years from the discovery of the fraud. In the case at bar, Laureta is deemed to have discovered
that the land in question has been sold to Caram to his prejudice on December 9, 1947, when the Deed of Sale,
Exhibit "F" was recorded and entered in the Original Certificate of Title by the Register of Deeds and a new
Certificate of Title No. 140 was issued in the name of Caram. Therefore, when the present case was filed on
June 29, 1959, plaintiff's cause of action had long prescribed.

The petitioner's conclusion that the second deed of sale, "Exhibit F", is a voidable contract is not correct. I n
order that fraud can be a ground for the annulment of a contract, it must be employed prior to or simultaneous to
the, consent or creation of the contract. The fraud or dolo causante must be that which determines or is the
essential cause of the contract. Dolo causante as a ground for the annulment of contract is specifically described
in Article 1338 of the New Civil Code of the Philippines as "insidious words or machinations of one of the
contracting parties" which induced the other to enter into a contract, and "without them, he would not have
agreed to".

The second deed of sale in favor of Caram is not a voidable contract. No evidence whatsoever was shown that
through insidious words or machinations, the representatives of Caram, Irespe and Aportadera had induced
Mata to enter into the contract.

Since the second deed of sale is not a voidable contract, Article 1391, Civil Code of the Philippines which
provides that the action for annulment shall be brought within four (4) years from the time of the discovery of
fraud does not apply. Moreover, Laureta has been in continuous possession of the land since he bought it in
June 1945.

A more important reason why Laureta's action could not have prescribed is that the second contract of sale,
having been registered in bad faith, is null and void. Article 1410 of the Civil Code of the Philippines provides
that any action or defense for the declaration of the inexistence of a contract does not prescribe.

In a Memorandum of Authorities 22 submitted to this Court on March 13, 1978, the petitioner insists that the action
of Laureta against Caram has prescribed because the second contract of sale is not void under Article 1409 23 of
the Civil Code of the Philippines which enumerates the kinds of contracts which are considered void. Moreover,
Article 1544 of the New Civil Code of the Philippines does not declare void a second sale of immovable
registered in bad faith.

The fact that the second contract is not considered void under Article 1409 and that Article 1544 does not
declare void a deed of sale registered in bad faith does not mean that said contract is not void. Article 1544
specifically provides who shall be the owner in case of a double sale of an immovable property. To give full
effect to this provision, the status of the two contracts must be declared valid so that one vendee may contract
must be declared void to cut off all rights which may arise from said contract. Otherwise, Article 1544 win be
meaningless.

The first sale in favor of Laureta prevails over the sale in favor of Caram.
WHEREFORE, the petition is hereby denied and the decision of the Court of Appeals sought to be reviewed is
affirmed, without pronouncement as to costs.

SO ORDERED.

Makasiar Guerrero, De Castro* and Melencio-Herrera concur.

Footnotes

1 Annex "A", Rollo, pp. 35-48. Written by Justice Nicasio Yatco and concurred in by Justice
Salvador Esquerra and Justice Eulogio S. Serrano.

2 Record on Appeal, pp. 2-13, Rollo, p. 61.

3 Ibid., pp. 3-4.

4 Ibid., P.10; TSN, January 22, 1964, pp. 108, 110-111.

5 Ibid., pp. 6-8.

6 Ibid., p. 27.

7 Ibid., p. 29.

8 Ibid., p. 39.

9 Ibid., pp. 126-127.

10 Ibid., pp. 128-129.

11 Brief for Petitioner, pp. 1-2, Rollo, p. 139.

12 TSN, January 22, 1964, p. 98.

13 Record on Appeal, p. 38, Rollo, p. 61.

14 Rollo, pp. 45-47.

15 Leung Yee vs. Strong Machinery Co. and Williamson, 37 Phil. 644.

16 TSN, January 22, 1964, pp. 187-188.

17 Salvoro vs. Tañega, 87 SCRA 349. 361.

18 Quimson vs. Suarez, 45 Phil. 906.

19 Salvorro vs. Tañega, 87 SCRA 363.

20 Article 526, Civil Code of the Philippines.

21 The trial court found that the contract in favor of Laureta is voidable, but the action to annul
the same has long prescribed. See Record on Appeal, p. 120, Rollo, p. 61.

22 Rollo, pp. 159-177.

23 Article 1409, Civil Code of the Philippines - The following contracts are inexistent and void
from the beginning:
(1) Those whose cause, object or purpose is contrary to law, morals, good customs, public order
or public policy;

(2) Those which are absolutely simulated or fictitious;

(3) Those whose cause or object did not exist at the time of the transaction;

(4) Those whose object is outside the commerce of men

(5) Those which contemplate an impossible service;

(6) Those where the intention of the parties relative to the principal object of the contract cannot
be ascertained;

(7) Those expressly prohibited or declared void by law

These contracts cannot be ratified. Neither can the right to set the defense of illegality be waived.

* Mr. Justice de Castro was designation to sit with the First Division.

The Lawphil Project - Arellano Law Foundation

Republic of the Philippines


SUPREME COURT
Manila

SECOND DIVISION

G.R. Nos. 91383-84 May 31, 1991

SOCORRO COSTA CRISOSTOMO, petitioner,


vs.
COURT OF APPEALS and NORMA SAN JOSE, DIANA J. TORRES, respondents.

Quiason, Makalintal, Barot, Torres, Ibarra & Sison for petitioner.


Augusto J. Salas for Diana J. Torres.

PARAS, J.:

This is a petition for review on certiorari of the: (1) decision * of the Court of Appeals dated July 31, 1989 in CA-
G.R. CV Nos. 11816 and 11817, entitled "Socorro Costa Crisostomo vs. Norma San Jose and Diana Torres",
which modified the decision of the Regional Trial Court, Branch 154, Pasig, Metro Manila, and (2) resolution
dated December 11, 1989, which denied the motion for reconsideration.

As gathered from the records, the facts of the case are as follows:

Socorro Costa Crisostomo (Crisostomo for short) was the registered owner of a residential house and lot known
as Lot No. 6, Block 60, located in Mandaluyong, Metro Manila and covered by Transfer Certificate of Title No.
39286 of the Register of Deeds of Pasig. Crisostomo has occupied the property ever since she had the house
built and has introduced other improvements thereon like fruit bearing trees and ornamental plants (Rollo,
Petition, p. 9).

Sometime in 1978, Norma San Jose (San Jose for short) offered to buy the above-mentioned parcel of land
including the house thereon for the sum of P300,000.00 which amount was agreed upon to be paid from the
proceeds of a loan that was to be obtained by said respondent San Jose from a bank using petitioner
Crisostomo's title as collateral. As payment, San Jose issued three (3) post dated Far East Bank and Trust
Company checks in the total amount of P300,000.00 (Ibid., p. 4).

Crisostomo accepted the offer, lent her title to San Jose and on May 17, 1978 executed a Deed of Absolute Sale
in favor of San Jose (Rollo, Petitioner's Memorandum, p. 106).

On May 22, 1978, Crisostomo, upon San Jose's request, executed another deed of sale over the same property
with the understanding that said document was for the purpose of reducing San Jose's registration fees and tax
liabilities (Ibid.).

On May 26, 1978, San Jose registered the second deed of absolute sale with the Registry of Deeds of Pasig. At
the same time, Transfer Certificate of Title No. 39286 was cancelled, and in its place, Transfer Certificate of Title
No. 11835 was issued (Rollo, Petition, pp. 10-11).

After Crisostomo got tired of San Jose's unfulfilled promises to make good the postdated checks, the former
decided to encash the postdated checks after their maturity dates with Far East Bank and Trust Company.
Unfortunately, the same were all dishonored and returned to Crisostomo with the notation of the Bank as
"Account Closed." (Ibid.).

Upon inquiry by Crisostomo, San Jose replied that when her application for a loan with a second bank, the
Philippine Commercial and Industrial Bank, was not approved, she shifted to Security Bank and Trust Company.
Soon enough, Crisostomo discovered that San Jose's loan application was disapproved because the collateral
was insufficient for the amount of the loan she was borrowing (Ibid.).

For Crisostomo's protection, San Jose signed a written undertaking for the forfeiture of the earnest money in the
amount of P20,000.00 in favor of herein petitioner with a certification that the title to the property will be returned
within one (1) month after non-effectivity of its sale, duly registered in petitioner's name. The aforementioned
amount of P20,000.00 was the only payment Crisostomo ever received from San Jose (Ibid.).

Upon Crisostomo's insistence for the return of the title, San Jose informed Crisostomo that the title was in the
possession of Diana J. Torres, the mortgagee (Rollo, Memorandum for Petitioner, p. 108).

San Jose never returned the said title as she had promised nor did she ever make any payment to the petitioner
(Ibid.).

Crisostomo made a written demand to Diana J. Torres (Torres for short) to reconvey the subject property to her.
This demand was not satisfied (Ibid.).

Petitioner was thus compelled to file Civil Case No. 34356 on September 3, 1979 against San Jose but this was
later amended to include Torres (Ibid.).

On the other hand, San Jose filed in an apparent attempt to forestall the extra-judicial foreclosure and public
auction sale scheduled on September 18, 1979, Civil Case No. 34489 on September 17, 1979 against
respondent Torres. On January 9, 1980 both actions were consolidated on motion of the parties and were jointly
tried thereafter (Ibid.).

In a decision dated March 31, 1986, the Regional Trial Court of Pasig, Branch CLIV (154) decided in favor of the
petitioner, the dispositive portion of which decision reads:

WHEREFORE, judgment is hereby rendered against the defendants in favor of the plaintiff as follows:

In Civil Case No. 34356—

1) The Deed of Absolute Sale executed by plaintiff over the property covered by Transfer Certificate of
Title No. 39286 of the Register of Deeds of Pasig, Metro Manila, is hereby ordered rescinded;

2) Transfer Certificate of Title No. 11835 of the Register of Deeds of Pasig, Metro Manila, in the name of
defendant Norma San Jose is hereby ordered cancelled;

3) Defendant Norma San Jose is hereby ordered to reconvey the title covering subject property within
twenty (20) days from the finality of this judgment;
4) Defendants are also hereby ordered, jointly and severally, to pay plaintiff (a) the amount of
P100,000.00 representing moral damages, (b) P20,000.00 as attorney's fees, and (c) the costs;

5) As a consequence of the rescission of the sale, plaintiff is ordered to return the amount of P20,000.00
which she received as earnest money. However, this amount shall be off-set against the amount of
damages assessed against defendants;

6) The Deed of Real Estate Mortgage executed by defendant Norma San Jose in favor of defendant
Diana Torres is hereby order (sic) nullified. The Register of Deeds of Pasig, Metro Manila is authorized to
cancel the annotation of said mortgage on the title to be issued in favor of plaintiff.

In Civil Case No. 34489—

1) Defendant Norma San Jose is hereby ordered to pay defendant Diana Torres the amount of
P100,000.00.

SO ORDERED. (Rollo, Annex "A", pp. 37-38).

Torres appealed the above-stated decision to the Court of Appeals which modified the judgment of the trial court
in a decision, the dispositive portion of which reads as follows:

WHEREFORE, the decision appealed from is hereby MODIFIED in that the Deed of Real Estate
Mortgage in favor of appellant Diana Torres be noted on the Certificate of Title which is to be re-issued to
the appellee, and, appellant Diana Torres is hereby excluded from indemnifying the appellee the
amounts representing moral damages, attorney's fees, and costs, but is AFFIRMED in all other respects.

SO ORDERED. (Rollo, Annex "A", p. 41).

Petitioner filed a motion for partial reconsideration of the appellate court's decision but the same was denied in a
Resolution dated December 11, 1989 (Rollo, Annex "B", p. 45).

Hence, the petition.

The Court in its resolution dated June 27, 1990 gave due course to the petition and required both parties to
submit their respective memoranda (Rollo, Resolution, p. 78).

The only issue to be resolved in the instant case is whether or not private respondent Diana Torres is a
mortgagee in good faith.

The petition is impressed with merit.

While it is settled that the jurisdiction of the Supreme Court in cases brought to it from the Court of Appeals is
limited to reviewing and revising errors of law imputed to the latter, the findings of fact of the Court of Appeals
may be set aside, among others, on the following grounds: ". . . (2) the inference made is manifestly mistaken; . .
. (6) the findings of fact of the Court of Appeals are contrary to those of the trial court; . . .," (Tolentino vs. De
Jesus, 56 SCRA 167 [1974]; Villamor vs. Court of Appeals, 162 SCRA 574 [1988]; Layugan vs. Intermediate
Appellate Court, 167 SCRA 363 [1988]).

A careful study of the records shows that the Court of Appeals erred in finding that private respondent Diana
Torres is a mortgagee in good faith on the basis of the evidence.

There are strong indications that Atty. Flor Martinez, the lawyer of Diana J. Torres, the mortgagee, knew of the
defect of San Jose's title.

Atty. Martinez is a close acquaintance of Norma San Jose, their long relationship dating back to 1974 (Rollo, p.
60). When the subject property was offered by San Jose as collateral for a loan, Atty. Martinez referred her to a
client, Diana Torres. For her part, Torres instructed and authorized Atty. Martinez to view and inspect the
property as well as to ascertain the genuineness and authenticity of San Jose's title (Hearing of October 6, 1989,
TSN, p. 6; Rollo, p. 113).
While feigning ignorance of the owner of subject property, she admitted later on cross-examination that Socorro
Crisostomo was the owner from whom San Jose allegedly bought the property (Hearing of April 20, 1983, TSN,
pp. 6-11).

Even more persuasive is the fact that when Atty. Martinez personally inspected the property with San Jose for
her client Torres, she allowed herself to be introduced to Socorro Crisostomo who was then actually occupying
the house, as a Bank Inspector of the Development Bank of Meycauayan, Bulacan from whom the loan was
being obtained, obviously to convince Crisostomo that the procedure is in accordance with her agreement with
San Jose.

Thus, petitioner Crisostomo and Atty. Flor Martinez testified as follows in the trial court:

TESTIMONY OF PETITIONER SOCORRO COSTA CRISOSTOMO:

Atty. Beltran —

Q Do you know Atty. Martinez here, have you ever met Atty. Martinez?

A I met her June 17, 1978.

Q Where did you meet Atty. Martinez?

A She came at home that evening with Norma San Jose.

Q Where were you when Atty. Martinez and Norma San Jose came to your house?

A I was at home.

Q Did you have any companion there?

A I was with my maid.

Q Before that date, did you have occasion to meet Atty. Martinez?

A Yes. (sic) That was my first time to meet her.

Q Was there any introduction made to you?

A She was introduced as a Bank Inspector of Private Development Bank of Meycauayan, Bulacan.
(Emphasis supplied)

Q Who introduced her to you?

A Norma San Jose.

Q You mean she was introduced to you to inspect that property in question?

A Yes.

Q Why was that supposed inspection to be made on behalf of the Meycauayan Bank?

A She claimed that that was the bank wherein she was borrowing her loan.

Q In connection with that inspection supposed to be made, what was the purpose, if you know?

A To facilitate to (sic) processing, according to them." (T.S.N., pp. 16-17, Feb. 5, 1981)

xxx xxx xxx


On cross-examination of Atty. Flor Martinez by Atty. Beltran, she stated:

xxx xxx xxx

Q But your visit of the premises was purposely for the benefit of this Diana Torres, am I right?

A Of course, because she is my client.

Q And so in that visit of yours, you saw the plaintiff here personally?

A Yes, I saw her then.

Q And you had a conversation with her?

A I had.

xxx xxx xxx

Q Will you please tell the Honorable Court what was the main purpose of your visit at the
premises?

A As the lawyer of the prospective mortgagee, I was duty bound to make a fair assessment as to
whether the proposed collateral (sic) commensurate to the amount applied for. In other words, it
was in connection with the mortgage.

xxx xxx xxx

Q And did you inquire from the plaintiff why was she there at the moment?

A She was introduced to me as the Tia Coring.

Q And from your conversation, did you come to know that the plaintiff here, Socorro Crisostomo,
is the same Tia Coring whom she mentioned to you she bought the property from? (Emphasis
supplied)

A Yes, the same Tia Coring who sold the property to her. (Emphasis supplied)

xxx xxx xxx

Q And under these circumstances, you never inquired from the plaintiff whom you personally saw
why she was there in the property or until when she would remain in that place? (Emphasis
supplied)

A No, because it would be unethical to ask that question, she being the Tia Coring of (sic) the
owner. (Emphasis supplied) (T.S.N., pp. 81-85, April 28, 1983)

xxx xxx xxx

Finally, when Torres herself visited the property she carefully evaded seeing Crisostomo personally, the actual
occupant thereof, who could have easily enlightened her as to the true owner (Rollo, p. 116). Such unnatural
behavior points more convincingly to the fact that she was aware that San Jose was not its real owner.

In Philippine National Bank vs. Court of Appeals (153 SCRA 435 [1987]), the Supreme Court had the occasion
to rule that a person dealing with registered land has a right to rely upon the fact of the Torrens Certificate of
Title and to dispense with the need of inquiring further, except when the party concerned has actual knowledge
of facts and circumstances that would impel a reasonably cautious man to make further inquiries (Gonzales vs.
Intermediate Appellate Court, 157 SCRA 587 [1988]).
Even assuming that Torres does not in fact know the circumstances of the sale, she is bound by the knowledge
of Atty. Martinez or by the latter's negligence in her haphazard investigation because the negligence of her
agents is her own negligence (PCIB vs. Villalva, 48 SCRA 37 [1972]).

It is a well-settled rule that a purchaser or mortgagee cannot close his eyes to facts which should put a
reasonable man upon his guard, and then claim that he acted in good faith under the belief that there was no
defect in the title of the vendor or mortgagor. His mere refusal to believe that such defect exists, or his willful
closing of his eyes to the possibility of the existence of a defect in the vendor's or mortgagor's title, will not make
him an innocent purchaser or mortgagee for value, if it afterwards develops that the title was in fact defective,
and it appears that he had such notice of the defects as would have led to its discovery had he acted with the
measure of precaution which may be required of a prudent man in a like situation (Leung Yee vs. Strong
Machinery Co., 37 Phil. 644; RFC vs. Javillonar,57 O.G. 39, September 25, 1961; C.N. Hodges vs. Dy Buncio
and Co., Inc., 116 Phil. 595; Manacop vs. Cansino, 61 O.G. 21, August 2, 1965, 1 SCRA 527; Gaticana vs.
Gaffud, 27 SCRA 706 [1969]).

The appellate court, therefore, gravely erred in the appreciation of evidence on the good faith of private
respondent Diana Torres. Consequently, because respondent Torres was not a mortgagee in good faith, there
1âwphi1

is no sufficient basis for the appellate court to order the notation of the Deed of Real Estate Mortgage in favor of
private respondent Diana Torres on the Certificate of title which is to be re-issued to herein petitioner.

PREMISES CONSIDERED, the decision of the respondent appellate court is REVERSED and SET ASIDE, and
the decision of the trial court is REINSTATED.

SO ORDERED.

Melencio-Herrera, Padilla and Sarmiento, JJ., concur.


Regalado, J., took no part.

Footnotes

* Penned by Associate Justice Antonio M. Martinez and concurred in by Associate Justices Floreliana
Castro-Bartolome and Jesus M. Elbinias.

The Lawphil Project - Arellano Law Foundation

Republic of the Philippines


SUPREME COURT
Manila

FIRST DIVISION

G.R. No. 51457 June 27, 1994

LUCIA EMBRADO and ORESTE TORREGIANI, petitioners,


vs.
COURT OF APPEALS, PACIFICO CIMAFRANCA, MARCOS SALIMBAGAT, EDA JIMENEZ and SANTIAGO
JIMENEZ, respondents.

Alerio P. Acosta for petitioner.

Roseller L. Barinaga & Venancio M. Carpio for respondents Santiago and Eda Jimenez.
Pacifico Cimafranca for and in his own behalf.

BELLOSILLO, J.:

LUCIA EMBRADO and ORESTE TORREGIANI, spouses, filed this petition for review on certiorari from the
decision of respondent Court of Appeals 1 upholding the validity of the Deed of Sale over Lot No. 564 executed
by petitioner Lucia Embrado in favor of private respondent Eda Jimenez.

Lot No. 564 is a 366-square meter lot situated in Dipolog City originally owned by Juan, Pastor and Matias
Carpitanos. On 2 July 1946, a Venta Definitiva, a notarized document written entirely in Spanish, was executed
by the Carpitanos whereby they sold Lot No. 564 to "Srta. LUCIA C. EMBRADO . . . soltera, con residencia y
direccion postal Municipio de Dipolog, Provincia de Zamboanga." 2 The document provided that even though the
deed was prepared and signed on 2 July 1946, the effects of the document would retroact to the 15th day of
April 1941, the date the lot and its improvements were actually sold to Lucia C. Embrado.

The sale was registered and Transfer Certificate of Title No. T-99 3 was issued on 13 February 1948 in the name
of Lucia Embrado alone, who was by then already married to petitioner Oreste Torregiani since 1943. However,
by virtue of a court order in Misc. Sp. Proc. No. 2330 of the then Court of First Instance of Zamboanga del Norte,
the word "single" appearing in TCT No. T-99 was canceled and replaced on 19 October 1970 by the phrase
"married to Oreste Torregiani." The Torregianis then made their conjugal abode on the lot and in 1958
constructed a residential/commercial building thereon. 4

As appearing from a document entitled Absolute Deed of Sale dated 1 May 1971 5, Lucia Embrado Torregiani
sold Lot No. 564, described as her "own paraphernal property," to her adopted daughter, herein private
respondent Eda Jimenez, for the sum of P1,000.00. Transfer Certificate of Title No. T-99 was canceled to give
way to TCT No. T-17103 6 in the name of Eda Jimenez, married to Santiago Jimenez.

On 6 March 1972, Eda Jimenez sold sixty-five (65) square meters of Lot 564 to Marcos Salimbagat for
P6,500.00, and on 1 August 1972, conveyed 301 square meters of the same lot to Pacifico Cimafranca 8 for
P30,000. Both sales were duly annotated on TCT No. T-17103.

On 25 September 1972, the Torregianis instituted in the Court of First Instance, now Regional Trial Court, of
Zamboanga del Norte an action for declaration of nullity of contract, annulment of sales, reconveyance and
damages 9 against the spouses Santiago and Eda Jimenez, Marcos Salimbagat and Pacifico Cimafranca
alleging that the sale of Lot 564 by Lucia Embrado to Eda Jimenez was void not only for lack of consideration
but also because Oreste Torregiani did not consent to the sale, which consent was necessary because Lot 564
was conjugal property. In addition, the petitioners claim that Lucia was misled into signing the deed of sale
marked as Exh. "D" on the belief that Lot 564 was merely intended as security for a loan that the Jimenez
spouses were then negotiating with the First Insular Bank of Cebu. Since the Jimenez spouses did not acquire
valid title to the land, the subsequent sales in favor of Salimbagat and Cimafranca were without legal effect.

The Torregianis were sustained by the CFI of Zamboanga del Norte 10 which held that the sale of Lot 564 to Eda
Jimenez and its subsequent transfers to Marcos Salimbagat and Pacifico Cimafranca, who were declared
buyers in bad faith, were void and of no effect. More specifically, the judgment (a) declared Exhs. "D," "G" and
"H" as well as TCT No. 17103 null and void and of no force and effect; (b) ordered defendants jointly and
severally to pay plaintiffs the sum of P2,000.00 as actual damages and P1,500.00 for attorney’s fees; (c) ordered
the Register of Deeds of Dipolog City to cancel TCT No. 17103 in the name of Eda Jimenez and issue another
one in favor of plaintiff Lucia Embrado, married to Oreste Torregiani, and to cancel all the annotations thereon
emanating from the void transfers in favor of Marcos Salimbagat and Pacifico Cimafranca; (d) ordered
defendants Eda and Santiago Jimenez to return to defendant Pacifico Cimafranca the sum of P30,000.00 paid
by him for the 301 square meters and the house in question, and to defendant Marcos Salimbagat the P6,500.00
paid by him for the 65 square meters occupied by Comendador Clinic with legal interest of six percent (6%) until
fully paid; and, (e) ordered defendant Cimafranca to pay plaintiffs all the rents he has been collecting from the
lessees of the first floor of the house with legal interest thereon from the time he started collecting them until fully
paid, with costs against defendants. 11

The foregoing judgment was reversed by the Court of Appeals which held that since Lucia Embrado actually
agreed with Juan, Pastor and Matias Carpitanos, the original owners, to the purchase of Lot 564 on 15 April
1941 12 when she was not yet married, then the lot was her paraphernal property since a sale is considered
perfected the moment the parties agree on the object and cause of the contract. In addition, the respondent
court declared Salimbagat and Cimafranca buyers in good faith since the contrary was not proved.
Consequently, the complaint in the trial court was ordered dismissed by respondent Court of Appeals.

Three (3) issues are herein involved: (a) whether Lot 564 was paraphernal property of Lucia Embrado or
conjugal with her husband Oreste Torregiani; (b) whether the sale in favor of Eda Jimenez was valid; and, (c)
whether vendees Marcos Salimbagat and Pacifico Cimafranca were buyers in good faith so that the sale to them
was valid, hence, would bar reconveyance.

We sustain petitioners. While we agree with respondent court that Lot 564 was originally the paraphernal
property of Lucia, we cannot adopt its conclusion that because Lucia and the original owners agreed in 1941 for
its purchase and sale, ownership was already acquired by Lucia at that moment. Under Art. 1496 of the Civil
Code, "ownership of the thing sold is acquired by the vendee from the moment it is delivered to him in any of the
ways specified in articles 1497 to 1501, or in any other manner signifying an agreement that the possession is
transferred from the vendor to the vendee," and under Art. 1498, "(w)hen 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."

In the case at bar, the Venta Definitiva over Lot 564 in favor of Lucia Embrado was executed by the
Carpitanoses on 2 July 1946 when her marriage to petitioner Oreste Torregiani was already subsisting. Although
ownership was acquired during the marriage and hence presumed conjugal, the presumption of
conjugality 13 was successfully overcome by the terms of the Venta Definitiva which contains a positive assertion
of exclusive ownership, which was duly supported by the testimony of Matias Carpitanos, one of the original
sellers of the lot. 14

However, a decisive fact appears which prevents us from ultimately affirming the validity of her sale of Lot 564 to
private respondent Eda Jimenez. The trial court found as a fact the construction in 1958 of a
residential/commercial building 15 on said lot a part of which was leased to third persons and another part serving
as the Torregianis’ conjugal dwelling.

Although no evidence was presented on the source of funds used in the construction to determine whether the
same was conjugal or paraphernal, other than the testimony of Torregiani, 16 petitioners nevertheless enjoy in
their favor the presumption that the funds used were conjugal. 17

The second paragraph of Art. 158 of the Civil Code provides that "[b]uildings constructed, at the expense of the
partnership, during the marriage on land belonging to one of the spouses, also pertain to the partnership, but the
value of the land shall be reimbursed to the spouse who owns the same." Under this article, the land becomes
conjugal upon the construction of the building without awaiting reimbursement before or at the liquidation of the
partnership upon the concurrence of two conditions, to wit: (a) the construction of the building at the expense of
the partnership; and, (b) the ownership of the land by one of the spouses. 18 The conditions have been fully met
in the case at bench. Thus, even if Lot 564 was originally the paraphernal property of Lucia as evident from the
"Venta Definitiva", the same became conjugal upon the construction of the residential/commercial building in
1958.

Lucia claims that she was misled by her daughter and son-in-law into signing a deed of absolute sale in their
favor thinking that she would be helping them obtain a loan from a bank if they could mortgage the property as
security for their loan; that although she signed the deed of sale, she did not consent to the sale nor did she
intend to convey or transfer her title to Eda Jimenez; and, that she never received the alleged amount of
P1,000.00 as consideration for the sale of the property.

While it is true that a notarized document is admissible in evidence without proof of its due execution and is
conclusive as to the truthfulness of its contents, this rule is not absolute and may be rebutted by evidence to the
contrary. 19 In this case, it was clearly shown that Eda and Santiago Jimenez had no sufficient means of
livelihood and that they were totally dependent on their mother Lucia for the support of their family. This fact
strengthens the claim of Lucia that the price of the property was fictitious and that Eda Jimenez could not have
paid the price of the property as she was financially incapable to do so. In fact, Eda Jimenez did not prove as to
how she obtained the money to pay for the property she supposedly bought from Lucia. When the source of the
purchase price is "intriguing" and is not convincingly shown to have been given by the "buyer" to the "seller," the
claim of the latter that she signed the deed of sale without her consent may be upheld. 20

Even assuming in gratia argumenti that Lucia signed the document knowing that it was a deed of sale of the
property, the sale thereof by Lucia to Eda Jimenez without her husband’s conformity should be considered
void ab initio being contrary to law. 21 Since "(t)he wife cannot bind the conjugal partnership without the
husband’s consent, except in cases provided by law," 22 it follows that Lucia Embrado Torregiani could not, by
herself, validly dispose of Lot 564 without her husband’s consent. Consequently, Eda Jimenez likewise could not
have acquired ownership over the land. The issuance of a certificate of title in favor of Eda Jimenez did not vest
upon her ownership over the property. Neither did it validate the alleged purchase thereof which is null and
void. Registration does not vest title. It is merely evidence of such title. Our land registration laws do not give the
holder any better title than what he actually has. 23 Being null and void, the sale to Eda Jimenez and the transfer
of the property she made to Salimbagat and Cimafranca produced no legal effects whatsoever. Quod nullum est,
nullum producit effectum. There being no valid title to the land that Eda Jimenez acquired from Lucia, it follows
that no title to the same land could be conveyed by the former to Salimbagat and
Cimafranca. 24

It is worthy to note that Salimbagat and Cimafranca, as buyers of Eda Jimenez, have not proved their status as
purchasers in good faith and for value of the land which, in the first place, Eda Jimenez had no right to sell. The
burden of proving the status of a purchaser in good faith and for value lies upon him who asserts that status. In
discharging the burden, it is not enough to invoke the ordinary presumption of good faith, i.e., that everyone is
presumed to act in good faith. The good faith that is here essential is integral with the very status which must be
proved. 25

We agree with the trial court when it found that Salimbagat and Cimafranca purchased the disputed lot from Eda
and Santiago Jimenez with knowledge of facts and circumstances which should have put them upon such
inquiry and investigation as might be necessary to acquaint them with the defects in the title of their vendor. A
purchaser cannot close his eyes to facts which should put a reasonable man on his guard and then claim that he
acted in good faith under the belief that there was no defect in the title of the vendor. His mere refusal to believe
that such defect exists, or his willful closing of his eyes to the possibility of the existence of a defect in the
vendor’s title will not make him an innocent purchaser for value if afterwards it develops that the title is in fact
defective, and it appears that he had such notice of the defect as would have led to its discovery had he acted
with the measure of precaution which may reasonably be required of a prudent man in like situation. 26

Cimafranca is a close relative of Santiago Jimenez and at the same time godfather to one of his children. As
such, there can be no doubt that Cimafranca was aware of the personal circumstances and financial standing of
the Jimenez spouses, including their financial ability to acquire any property. It would be impossible for
Cimafranca not to know that Santiago Jimenez was only twenty-two years old, a working student earning six
pesos per day 27 with a wife and three children to support. 28 With these facts, there is every reason for him to
inquire further as to how Eda Jimenez came up with the sum of P1,000.00 to buy the property. When there is a
clear showing that Eda Jimenez, being the transferee of a registered property, is not gainfully employed or did
not have an independent source of income or is financially incapable of paying the price of the property she
bought, this is sufficient to engender doubt as to whether Eda validly bought the property from Lucia. 29

On the part of Salimbagat, he has been a resident of Dipolog for about thirty (30) years. He has a daughter
renting a portion of the building with her husband for more than a year prior to the sale by Eda Jimenez to
Salimbagat on 6 March 1972. 30 This means that the lease of the building by Salimbagat’s daughter already
commenced while Lucia Torregiani was still the registered owner and this was prior to the alleged sale by Lucia
Torregiani of the property to Eda Jimenez on 1 May 1971. There can be no doubt that Salimbagat’s daughter
was aware of the factual background of the property and the personal circumstances of the owners thereof
especially that they are all occupying the same building. During the time that Salimbagat was already interested
in buying the property, it would have been usual and part of ordinary human nature for him to inquire about the
property from his daughter who was living very near the supposed owners. Considering that the Torregiani and
Jimenez families are not total strangers to Salimbagat, it is safe to conclude that Salimbagat had some
knowledge of the financial status of the supposed vendors which should have put him on guard before buying
the property. Moreover, the records show that this would not have escaped the notice of Salimbagat and
Cimafranca that at the time of the sale to them petitioners were in actual possession of the property with
Salimbagat’s daughter renting a portion thereof. For that matter, at the time of the sale to Salimbagat and
Cimafranca, petitioners had already been in continuous possession of the property for fourteen (14) years, or
since 1958. Santiago Jimenez admitted that after his marriage he and his wife Eda lived and stayed with her
parents, herein petitioners, and dependent on them for support. 31

Before buying the property, Salimbagat and Cimafranca allegedly inquired from the office of the Register of
Deeds concerning the genuineness of the certificate of title of Eda Jimenez, and from the Clerk of Court of the
Court of First Instance of Dipolog City as to whether the property was involved in any litigation. 32 However, they
failed to inquire from petitioners as to why they were the ones in actual possession of the property.
The rule is settled that a buyer of real property which is in the possession of persons other than the seller must
be wary and should investigate the rights of those in possession. Otherwise, without such inquiry, the buyer can
hardly be regarded as a buyer in good faith. 33 When a man proposes to buy or deal with realty, his first duty is to
read the public manuscript, i.e., to look and see who is there upon it, and what are his rights. A want of caution
and diligence which an honest man of ordinary prudence is accustomed to exercise in making purchases is, in
contemplation of law, a want of good faith. The buyer who has failed to know or discover that the land sold to
him is in the adverse possession of another, is a buyer in bad faith. 34

The fact that Lucia Embrado resides in the premises, coupled with the relatively young age and meager financial
standing of the Jimenez spouses, should have been sufficient for Cimafranca to hesitate accepting Eda’s
transfer certificate of title at its face value. Cimafranca, after deliberately closing his eyes to such a vital
information, is now claiming good faith. For obvious reasons, we cannot accept his contention. We thus declare
him, together with Marcos Salimbagat, to be purchasers in bad faith hence not entitled to protection under the
Torrens system of registration.

Lot 564 is now registered in the name of Eda Jimenez "married to Santiago Jimenez" under Transfer Certificate
of Title No. T-17103 which was issued pursuant to the "Absolute Deed of Sale" executed in her favor by
petitioner Lucia Embrado. We have already declared said deed of sale as null and void since its object, Lot 564,
is conjugal property which was sold by Lucia Embrado without her husband’s conformity. The present vendees,
Marcos Salimbagat and Pacifico Cimafranca, who bought the property from Eda Jimenez have failed to
persuade us that they acquired the property in good faith.

WHEREFORE, the decision of respondent Court of Appeals dated 26 April 1979 is REVERSED and SET ASIDE
and the Decision of the then Court of First Instance (now Regional Trial Court) of Zamboanga del Norte dated 14
June 1976 is REINSTATED and ADOPTED herein as the decision in this case.

SO ORDERED.

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

#Footnotes

1 Decision penned by then Presiding Justice Andres Reyes, concurred in by Associate Justices
Samuel F. Reyes and Carlos L. Sundiam, promulgated 26 April 1979, Rollo, pp. 37-45.

2 Exh. "1," Folder of Exhibits, p. 33.

3 Id., p. 3.

4 TSN, 27 June 1973, p. 24.

5 Folder of Exhibits, p. 7.

6 Id., p. 23.

7 See Exh. "G," Folder of Exhibits, p. 10.

8 See Exh. "H," Folder of Exhibits, p. 11.

9 Docketed as Civil Case No. 2314.

10 Decision penned by Presiding Judge Dimalanes B. Buissan of the then Court of First Instance
of Zamboanga del Norte dated 14 June 1976, Rollo, pp. 22-36.

11 Id., pp. 35-36.

12 Testimony of Matias Carpitanos, TSN, 9 October 1975, pp. 38-40.


13 Art. 160. All property of the marriage is presumed to belong to the conjugal partnership,
unless it is proved that it pertains exclusively to the husband or to the wife.

14 TSN, 10 July 1975, pp. 38-39; 58-59.

15 Rollo, p. 23.

16 TSN, 8 August 1974, p. 16.

17 Vitug v. Montemayor, et al., 91 Phil. 286, 290-291 (1952).

18 Vda. de Padilla v. Paterno, No. L-8748, 26 December 1961, 3 SCRA 678, 691; see also Vitug,
J. C., Compendium of Civil Law and Jurisprudence, 1993 ed., p. 67; Tolentino, A., Commentaries
and Jurisprudence on the Civil Code of the Philippines, Vol. I, 1983 ed., pp. 423-424.

19 Mendezona v. Phil. Sugar Estate Dev. Co., 41 Phil. 475 (1921).

20 Baranda v. Baranda, G.R. No. 73275, 20 May 1987, 150 SCRA 59.

21 Tolentino, Civil Code of the Philippines, Vol. I, 1983 ed., p. 453; see also La Urbana v.
Villasor, 59 Phil. 644 (1934); Paras, Civil Code of the Philippines, Vol. I, 1984 ed. p. 545.

22 Art. 172, Civil Code of the Philippines; see also Tinitigan v. Tinitigan, Sr., No.
L-45418, 30 October 1980, 100 SCRA 619, 636.

23 De Guzman v. Court of Appeals, No. L-46935, 21 December 1987, 156 SCRA 701; Cruz v.
Cabana, G.R. No. 56232, 22 June 1984, 129 SCRA 656.

24 Solid State Multi-Products Corporations v. Court of Appeals, G.R. No. 83383, 6 May 1991,
196 SCRA 631.

25 Baltazar v. Court of Appeals, G.R. No. 78728, 8 December 1988, 168 SCRA 354.

26 Francisco v. Court of Appeals, G.R. 30162, 31 August 1987, 156 SCRA 330; Cardente v.
Intermediate Appellate Court, G.R. No. 73651, 27 November 1987, 155 SCRA 685, 690-691;
J.M. Tuason & Co., Inc., v. Court of Appeals, No. L-41233, 21 November 1979, 94 SCRA 413,
422-423; Barrios v. Court of Appeals, No. L-32531, 31 August 1977, 78 SCRA 427, 435; Paylago
v. Jarabe, No. L-20046, 27 March 1968, 22 SCRA 1247, 1252; Manacop, Jr. v. Cansino, No. L-
13971, 27 February 1961, 1 SCRA 572, 576; Leung Yee v. Strong Machinery Company, 37 Phil.
645, 651 (1918).

27 TSN, 9 October 1975, p. 81.

28 TSN, 27 June 1973, p. 21.

29 See Note 21.

30 TSN, 7 August 1975, p. 8.

31 TSN, 9 October 1975, pp. 78-79.

32 TSN, 10 July 1975 p. 21; 7 August 1975, pp. 11-12.

33 Cardente v. Intermediate Appellate Court, G.R. No. 73651, 27 November 1987, 155 SCRA
685, 690-691; J.M. Tuason & Co., Inc. v. Court of Appeals, No. L-41233, 21 November 1979, 94
SCRA 413, 422-423; Barrios v. Court of Appeals, No. L-32531, 31 August 197, 78 SCRA 427,
435; Paylago v. Jarabe, No. L-20046, 27 March 1968, 22 SCRA 1247, 1252; Manacop, Jr. v.
Cansino, No. L-13971, 27 February 1961, 1 SCRA 572, 576; Leung Yee v. Strong Machinery
Company, 37 Phil. 645, 651 (1918).
34 J.M. Tuason & Co., Inc. v. Court of Appeals, No. L-41233, 21 November 1979, 94 SCRA 413,
422-423; see also Angelo v. Pacheco, 56 Phil. 70 (1931); ANdaya v. Manansala, 107 Phil. 1151
(1960).

The Lawphil Project - Arellano Law Foundation

Republic of the Philippines


SUPREME COURT
Manila

SECOND DIVISION

G.R. No. L-40399 February 6, 1990

MARCELINO C. AGNE, FELIX ORIANE, AGATON TAGANAS, HILARIO ESCORPIZO, ISABELO MAURICIO,
HEIRS OF ROMAN DAMASO, NAMELY: JORGE DAMASO and ALEJANDRO DAMASO, HEIRS OF
FRANCISCO RAMOS, NAMELY: ENCARNACION R. LEANO and DOMINGA R. MEDRANO, HEIRS OF
SABINA GELACIO AGAPITO, NAMELY: SERAPIO AGAPITO, and NICOLASA AGAPITO, FELISA DICCION
AGNE, ESTANISLAO GOROSPE, LIBRADO BADUA, NICOLAS VILLANUEVA, HEIRS OF CARLOS PALADO,
NAMELY: FORTUNATA PALADO and ISABELITA PALADO, PRIMITIVO TAGANAS, PANFILO SOINGCO,
BERNARDO PALATTAO, MARCELINO S. SANTOS and PAULINO D. AGNE JR. (Minor), represented by his
mother FELISA DICCION AGNE, petitioners,
vs.
THE DIRECTOR OF LANDS, PRESENTACION AGPOON GASCON, JOAQUIN GASCON and HON. ROSALIO
C. SEGUNDO, Presiding Judge, Court of First Instance of Pangasinan, Branch V, respondents.

G.R. No. L-72255 February 6,1990

MARCELINO C. AGNE, FELIX ORIANE, AGATON TAGANAS (deceased), represented by FLORENTINO C.


TAGANAS, FELISA DICCION AGNE, HILARIO ESCORPIZO, NICOLAS VILLANUEVA, ISABELO MAURICIO,
ESTANISLAO GOROSPE (deceased), represented by ELIZABETH G. BADUA and SILVINA G. VALERIO,
LIBRADO BADUA, JOSE ALSISTO, SERAPIO AGAPITO, NICOLASA AGAPITO, JORGE DAMASO,
ALEJANDRO DAMASO, ENCARNACION RAMOS, DOMINGA RAMOS and CARLOS PALADO, petitioners,
vs.
HON. INTERMEDIATE APPELLATE COURT, PRESENTACION AGPOON GASCON and JOAQUIN
GASCON, respondents.

Espiritu Taganas for petitioners.

Adriatico T. Bruno for private respondents.

REGALADO, J.:

Before us are two separate petitions for review on certiorari of the order of the defunct Court of First Instance of
Pangasinan, Branch V, in Civil Case No. 2649, entitled "Marcelino Agne et al. vs. The Director of Lands, et al.,"
dismissing the complaint filed by herein petitioners in said case; 1 and the decision of the then Intermediate
Appellate Court in AC-G.R. CV No. 60388-R, entitled "Presentacion Agpoon Gascon vs. Marcelino C. Agne et
al.," promulgated on January 30, 1985, affirming in toto the decision of the trial court in favor of herein private
respondents 2 which cases are docketed herein as G.R. No. L-40399 and G.R. No. 72255, respectively.

These two petitions, arising from the same facts and involving the same parties and common questions of law,
were ordered consolidated in our resolution of August 9, 1989.

As found by respondent court and disclosed by the records, the land subject matter of this case was originally
covered by Free Patent No. 23263 issued on April 17, 1937 in the name of Herminigildo Agpoon. On May 21,
1937, pursuant to the said patent, the Register of Deeds of Pangasinan issued to said Herminigildo Agpoon
Original Certificate of Title No. 2370. 3 Presentacion Agpoon Gascon inherited the said parcel of land upon the
death of her father, Herminigildo, and was issued Transfer Certificate of Title No. 32209 on April 6,1960.
Respondent Presentacion declared the said land for taxation purposes in her name under Tax Declaration No.
11506 and taxes were paid thereon in her name. 4

On April 13, 1971, private respondent spouses filed Civil Case No. U-2286 in the then Court of First Instance of
Pangasinan for recovery of possession and damages against petitioners. Their complaint states that they are the
registered owners under the aforesaid Transfer Certificate of Title No. 32209 of the parcel of land situated in
Barrio Bantog, Asingan, Pangasinan which is now in the possession of petitioners; that during the Japanese
occupation, petitioners, taking advantage of the abnormal conditions then obtaining, took possession of said
land by means of fraud, stealth, strategy and intimidation; that private respondents repeatedly demanded the
surrender of the physical possession of said property but the latter refused. 5

Petitioners, in answer to said complaint, alleged that the land in question was formerly a part of the river bed of
the Agno-Chico River; that in the year 1920, a big flood occurred which caused the said river to change its
course and abandon its original bed; that by virtue of the provisions of Article 370 of the Spanish Civil Code
which was then the law in force, petitioners, by operation of law, became the owners by accession or accretion
of the respective aliquot parts of said river bed bordering their properties; that since 1920, they and their
predecessors in interest occupied and exercised dominion openly and adversely over said portion of the
abandoned river bed in question abutting their respective riparian lands continuously up to the present to the
exclusion of all other persons, particularly Herminigildo Agpoon; that they have introduced improvements
thereon by constructing irrigation canals and planting trees and agricultural crops thereon 6 and converted the
land into a productive area.

In their joint stipulation of facts, the parties agreed as follows:

1. That the parties admit the identity and area of the land in question, which forms part of the
river bed of the Agno-Chico River, and further admit that the said river bed was abandoned as a
result of a flood in 1920 and opened a new bed. The location and course of the aforesaid
abandoned river bed as well as the relative position of the lands bordering the same can be
gleaned from Cadastral Survey Plan of Asingan, Pangasinan, Street No. 49 thereof, as approved
by the Director of Lands on October 12, 1912, a photostat copy of which is hereto attached and
made an integral part hereof a Annex "A".

2. That the parties admit that the defendants are the riparian owners of the area in question and
further admit that the defendants are in possession thereof but that each of them is in possession
only of an aliquot part of the said area proportionate to the length of their respective lands. (As
amended).

3. That the parties likewise admit that a Free Patent No. 23263 in the name of Herminigildo
Agpoon covering the area in question was issued on April 17, 1937 and that they admit O.C.T.
No. 2370 of the Register of Deeds of Pangasinan covering the same parcel of land was issued to
the same Herminigildo Agpoon on May 21, 1937, a photostat copy of said O.C.T. is hereto
attached as Annex "B".

4. That the parties admit that the property in controversy is now covered by T.C.T. No. 32209 in
the name of Presentacion Agpoon Gascon and by Tax Declaration No. 11506 in the name of
said Presentacion Agpoon Gascon, a photostat reproduction of said T.C.T. No. and Tax
Declaration are hereto attached and marked as Annexes "C" and "F", respectively. 7

On March 6, 1974, while the above-mentioned case was still pending, petitioners filed a complaint against the
respondents Director of Lands and spouses Agpoon with the former Court of First Instance of Pangasinan for
annulment of title, reconveyance of and/or action to clear title to a parcel of land, which action was docketed as
Civil Case No. U-2649. Petitioners alleged in their said complaint that the land in question, which was formerly a
portion of the bed of Agno-Chico river which was abandoned as a result of the big flood in 1920, belongs to them
pursuant to the provision of Article 370 of the old Civil Code; that it was only on April 13, 1971, when respondent
spouses filed a complaint against them, that they found out that the said land was granted by the Government to
Herminigildo Agpoon under Free Patent No. 23263, pursuant to which Original Certificate of Title No. 2370 was
issued in the latter's name; and that the said patent and subsequent titles issued pursuant thereto are null and
void since the said land, an abandoned river bed, is of private ownership and, therefore, cannot be the subject of
a public land grant. 8
On June 21, 1974, the trial court rendered a decision in Civil Case No. U-2286, the dispositive part of which
reads as follows:

WHEREFORE, IN VIEW OF ALL THE FOREGOING, the Court renders judgment:

1. Ordering the defendants to surrender to the plaintiffs the physical possession of the land in
question described in paragraph 3 of the amended complaint;

2. Ordering the defendants to pay jointly and severally to the plaintiff the produce of the land in
question in the total sum of P5,000.00 per year from the date of the filing of the present action at
the rate of 6% interest per annum until fully paid;

3. Ordering the defendants to pay jointly and severally the amount of P800.00 representing
attorney's fees;

4. And to pay the costs.

SO ORDERED. 9

Not satisfied with said decision, petitioners appealed to respondent court. As earlier stated, on January 30, 1985
the former Intermediate Appellate Court affirmed in toto in AC-G.R. CV No. 60388-R the said decision of the
court a quo, 10 and with the denial of petitioner's motion for reconsideration, 11 the case came up to us as G.R. No.
72255.

On June 24, 1974, the aforesaid Court of First Instance of Pangasinan, acting on the motion to dismiss filed by
respondents Director of Lands and spouses Agpoon, issued an order dismissing Civil Case No. U-2649 for
annulment of title by merely citing the statement in the case of Antonio, et al. vs. Barroga, et al. 12 that an action
to annul a free patent many years after it had become final and indefeasible states no cause of action
. 13 Petitioners' motion for the reconsideration of said order was denied on September 11, 1974, 14 hence the
recourse to us in G.R. No. L-40399.

In these petitions, petitioners raise the following issues:

1. Whether or not the lower court is justified in dismissing the complaint by simply invoking the ruling in the
aforestated case of Antonio although the facts and circumstances set forth in the complaint show that the land in
question was private land under Article 370 of the old Civil Code and that the subsequent derivative certificates
of title in question were null and void ab initio because the said land was not within the authority of the
government to dispose of in favor of any party and must be ordered annulled, cancelled or rescinded; 15

2. Whether or not the trial court and the former Intermediate Appellate Court were justified in not basing their
judgments on the judicial admissions of private respondents in the stipulation of facts of the parties, since such
admissions have the legal force and effect of precluding private respondents from disputing such admission;

3. Whether or not respondent court can presume that private respondents or their predecessor had prior
possession of the land in dispute in the light of provisions of law which oblige them to prove such possession, as
well as the stipulated facts and other facts and circumstances on record showing that private respondents or
their predecessor were not in actual occupancy of the said land, and without appreciating the evidence put up by
petitioners to prove their prior possession thereof;

4. Whether or not respondent court was justified in its application of Section 41 of the Code of Civil Procedure in
favor of private respondents, although the private respondents did not invoke said law in this case and did not
adduce any evidence or proof that all the essential requisites of acquisitive prescription under the said law were
present in their favor;

5. Whether or not the Government had the right to convey by way of free patent to any party the land in dispute
which belonged to the riparian owners as decreed by Article 370 of the old Civil Code, the law then in force, and
despite the fact that the patentee herein never occupied the said land during the period prescribed by Act No.
2874; and

6. Whether or not private respondents are guilty of laches for not having attempted to file suit to recover the land
in dispute during an interval of 50 or 30 years. 16
The issues and arguments raised by the proponents in these petitions are well taken.

We agree with petitioners that the lower court erred in ordering the dismissal of Civil Case No. U-2649. The
aforesaid case of Antonio relied upon by the lower court in its dismissal order is not controlling. In that case, the
complaint was dismissed for failure to state a cause of action, not only because of the delay in the filing of the
complaint but specifically since the ground relied upon by the plaintiff therein, that is, that the land was
previously covered by a titulo real, even if true, would not warrant the annulment of the free patent and the
subsequent original certificate of title issued to defendant. Thus:

It is true that by filing the application for a free patent Barroga impliedly admitted either the
invalidity or insufficiency of Titulo Real No. 12479 issued in the name of his predecessor in
interest on July 22, 1894, but neither the allegation made in his answer that his aforesaid
predecessor in interest was the absolute owner of the property covered by said Titulo Real nor
his implied admission of the latter's invalidity or insufficiency are grounds for the annulment of the
free patent and original certificate of title in question. Evidently, it was Barroga's privilege to rely
or not to rely upon his claim of private ownership in favor of his predecessor in interest and of
whatever the latter's Titulo Real was worth. He decided not to rely upon them and to consider
that the property covered by the Titulo Real was still part of the public domain. Acting accordingly
he applied for a free patent and was successful. It must be borne in mind that the Titulo Real was
not an indefeasible title and that its holder still had to prove that he had possessed the land
covered by it without interruption during a period of ten years by virtue of a good title and in good
faith (Royal Decree of June 25,1880). We may well presume that Barroga felt that he had no
sufficient evidence to prove this, for which reason he decided to acquire the land as part of the
public domain.

In the case at bar, the facts alleged in the complaint, which are deemed hypothetically admitted upon the filing of
the motion to dismiss, constitute a sufficient cause of action against private respondents. Petitioners in their
complaint in Civil Case No. U-2649 alleged, among others, that the disputed area was formerly an abandoned
river bed formed due to natural causes in 1920; that the riparian owners of the lands abutting said abandoned
river bed were the plaintiffs and/or their predecessors in interest; that since then and up to the present, they
have been occupying and cultivating aliquot portions of the said land proportionate to the respective lengths of
their riparian lands; that they are the real and lawful owners of the said land as decreed by Article 370 of the old
Civil Code, the law then in force; that since the said area was a private land, the same could not have been the
subject matter of an application for free patent; and that all these facts were known to the private respondents
and their predecessor in interest.

If the said averments are true, and the factual recitals thereon have been admitted in the stipulation of facts
hereinbefore quoted, then the land in question was and is of private ownership and, therefore, beyond the
jurisdiction of the Director of Lands. The free patent and subsequent title issued pursuant thereto are null and
void. The indefeasibility and imprescriptibility of a Torrens title issued pursuant to a patent may be invoked only
when the land involved originally formed part of the public domain. If it was a private land, the patent and
certificate of title issued upon the patent are a nullity. 17

The rule on the incontrovertibility of a certificate of title upon the expiration of one year, after the entry of the
decree, pursuant to the provisions of the Land Registration Act, does not apply where an action for the
cancellation of a patent and a certificate of title issued pursuant thereto is instituted on the ground that they are
null and void because the Bureau of Lands had no jurisdiction to issue them at all, the land in question having
been withdrawn from the public domain prior to the subsequent award of the patent and the grant of a certificate
of title to another person. Such an action is different from a review of the decree of title on the ground of fraud. 18

Although a period of one year has already expired from the time a certificate of title was issued pursuant to a
public grant, said title does not become incontrovertible but is null and void if the property covered thereby is
originally of private ownership, and an action to annul the same does not prescribe. 19 Moreover, since herein
petitioners are in possession of the land in dispute, an action to quiet title is imprescriptible. 20 Their action for
reconveyance which, in effect, seeks to quiet title to property in one's possession is imprescriptible. Their
undisturbed possession for a number of years gave them a continuing right to seek the aid of a court of equity to
determine the nature of the adverse claims of a third party and the effect on her title. 21 As held in Caragay-Layno
vs. Court of Appeals, et al., 22an adverse claimant of a registered land, undisturbed in his possession thereof for
a period of more than fifty years and not knowing that the land he actually occupied had been registered in the
name of another, is not precluded from filing an action for reconveyance which, in effect, seeks to quiet title to
property as against the registered owner who was relying upon a Torrens title which could have been
fraudulently acquired. To such adverse claimant, the remedy of an action to quiet title is imprescriptible. In
actions for reconveyance of property predicated on the fact that the conveyance complained of was void ab
initio, a claim of prescription of the action would be unavailing. 23

The resolution of the other assigned errors hinges on the issue of who, as between the riparian owner presently
in possession and the registered owner by virtue of a free patent, has a better right over the abandoned river
bed in dispute.

We rule in favor of petitioners.

The claim of ownership of herein petitioners is based on the old Civil Code, the law then in force, which provides:

The beds of rivers which remain abandoned because the course of the water has naturally
changed belong to the owners of the riparian lands throughout their respective lengths. If the
abandoned bed divided estates belonging to different owners, the new dividing line shall run at
equal distance therefrom. 24

It is thus clear under this provision that once the river bed has been abandoned, the riparian owners become the
owners of the abandoned bed to the extent provided by this article. The acquisition of ownership is
automatic. 25There need be no act on the part of the riparian owners to subject the accession to their ownership,
as it is subject thereto ipso jure from the moment the mode of acquisition becomes evident, without the need of
any formal act of acquisition. 26 Such abandoned river bed had fallen to the private ownership of the owner of the
riparian land even without any formal act of his will and any unauthorized occupant thereof will be considered as
a trespasser. The right in re to the principal is likewise a right in re to the accessory, as it is a mode of acquisition
provided by law, as the result of the right of accretion. Since the accessory follows the nature of the principal,
there need not be any tendency to the thing or manifestation of the purpose to subject it to our ownership, as it is
subject thereto ipso jurefrom the moment the mode of acquisition becomes evident. 27

The right of the owner of land to additions thereto by accretion has been said to rest in the law of nature, and to
be analogous to the right of the owner of a tree to its fruits, and the owner of flocks and herds to their natural
increase. 28 Petitioners herein became owners of aliquot portions of said abandoned river bed as early as 1920,
when the Agno River changed its course, without the necessity of any action or exercise of possession on their
part, it being an admitted fact that the land in dispute, prior to its registration, was an abandoned bed of the Agno
River and that petitioners are the riparian owners of the lands adjoining the said bed.

The failure of herein petitioners to register the accretion in their names and declare it for purposes of taxation did
not divest it of its character as a private property. Although we take cognizance of the rule that an accretion to
registered land is not automatically registered and therefore not entitled or subject to the protection of
imprescriptibility enjoyed by registered property under the Torrens system. 29 The said rule is not applicable to
this case since the title claimed by private respondents is not based on acquisitive prescription but is anchored
on a public grant from the Government, which presupposes that it was inceptively a public land. Ownership over
the accession is governed by the Civil Code. Imprescriptibility of registered land is a concern of the Land
Registration Act.

Under the provisions of Act No. 2874 pursuant to which the title of private respondents' predecessor in interest
was issued, the President of the Philippines or his alter ego, the Director of Lands, has no authority to grant a
free patent for land that has ceased to be a public land and has passed to private ownership, and a title so
issued is null and void. 30 The nullity arises, not from the fraud or deceit, but from the fact that the land is not
under the jurisdiction of the Bureau of Lands. 31 The jurisdiction of the Director of Lands is limited only to public
lands and does not cover lands privately owned. 32 The purpose of the Legislature in adopting the former Public
Land Act, Act No. 2874, was and is to limit its application to lands of the public domain, and lands held in private
ownership are not included therein and are not affected in any manner whatsoever thereby. Land held in
freehold or fee title, or of private ownership, constitute no part of the public domain and cannot possibly come
within the purview of said Act No. 2874, inasmuch as the "subject" of such freehold or private land is not
embraced in any manner in the title of the Act 33 and the same are excluded from the provisions or text thereof.

We reiterate that private ownership of land is not affected by the issuance of a free patent over the same land
because the Public Land Act applies only to lands of the public domain. 34 Only public land may be disposed of
by the Director of Lands. 35 Since as early as 1920, the land in dispute was already under the private ownership
of herein petitioners and no longer a part of the lands of the public domain, the same could not have been the
subject matter of a free patent. The patentee and his successors in interest acquired no right or title to the said
land. Necessarily, Free Patent No. 23263 issued to Herminigildo Agpoon is null and void and the subsequent
titles issued pursuant thereto cannot become final and indefeasible. Hence, we ruled in Director of Lands
vs. Sisican, et al. 36that if at the time the free patents were issued in 1953 the land covered therein were already
private property of another and, therefore, not part of the disposable land of the public domain, then applicants
patentees acquired no right or title to the land.

Now, a certificate of title fraudulently secured is null and void ab initio if the fraud consisted in misrepresenting
that the land is part of the public domain, although it is not. As earlier stated, the nullity arises, not from the fraud
or deceit but, from the fact that the land is not under the jurisdiction of the Bureau of Lands. 37 Being null and
void, the free patent granted and the subsequent titles produce no legal effects whatsoever. Quod nullum est,
nullum producit effectum. 38

A free patent which purports to convey land to which the Government did not have any title at the time of its
issuance does not vest any title in the patentee as against the true owner. 39 The Court has previously held that
the Land Registration Act and the Cadastral Act do not give anybody who resorts to the provisions thereof a
better title than what he really and lawfully has.

. . . The Land Registration Act as well as the Cadastral Act protects only the holders of a title in
good faith and does not permit its provisions to be used as a shield for the commission of fraud,
or that one should enrich himself at the expense of another (Gustilo vs. Maravilla, 48 Phil. 838).
The above-stated Acts do not give anybody, who resorts to the provisions thereof, a better title
than he really and lawfully has. If he happened to obtain it by mistake or to secure, to the
prejudice of his neighbor, more land than he really owns, with or without bad faith on his part, the
certificate of title, which may have been issued to him under the circumstances, may and should
be cancelled or corrected (Legarda and Prieto vs. Saleeby, 31 Phil., 590). . . . 40

We have, therefore, to arrive at the unavoidable conclusion that the title of herein petitioners over the land in
dispute is superior to the title of the registered owner which is a total nullity. The long and continued possession
of petitioners under a valid claim of title cannot be defeated by the claim of a registered owner whose title is
defective from the beginning.

The quality of conclusiveness of a Torrens title is not available for use to perpetrate fraud and chicanery. To
paraphrase from Angeles vs. Samia, supra, the Land Registration Act does not create or vest title. It only
confirms and records title already existing and vested. It does not protect a usurper from the true owner. It
cannot be a shield for the commission of fraud. It does not permit one to enrich himself at the expense of
another. Stated elsewise, the Torrens system was not established as a means for the acquisition of title to
private land. It is intended merely to confirm and register the title which one may already have on the land.
Where the applicant possesses no title or ownership over the parcel of land, he cannot acquire one under the
Torrens system of registration. 41 Resort to the provisions of the Land Registration Act does not give one a better
title than he really and lawfully has. 42 Registration does not vest title. It is not a mode of acquiring property. It is
merely evidence of such title over a particular property. It does not give the holder any better title than what he
actually has, especially if the registration was done in bad faith. The effect is that it is as if no registration was
made at all. 43

Moreover, the failure of herein private respondents to assert their claim over the disputed property for almost
thirty 30 years constitute laches 44 and bars an action to recover the same. 45 The registered owners' right to
recover possession of the property and title thereto from petitioners has, by long inaction or inexcusable neglect,
been converted into a stale demand. 46

Considering that petitioners were well within their rights in taking possession of the lot in question, the findings of
respondent court that herein petitioners took advantage of the infirmities and weakness of the preceding
claimant, Herminigildo Agpoon, in taking possession of said land during the Japanese occupation is neither
tenable in law nor sustained by preponderant evidence in fact.

Where the evidence show that the plaintiff is the true owner of the land subject of the free patent and title
granted to another and that the defendant and his predecessor in interest were never in possession thereof, the
Court, in the exercise of its equity jurisdiction and without ordering the cancellation of said title issued upon the
patent, may direct the defendant registered owner to reconvey the property to the plaintiff. 47 Further, if the
determinative facts are before the Court and it is in a position to finally resolve the dispute, the expeditious
administration of justice will be subserved by such a resolution and thereby obviate the needless protracted
proceedings consequent to the remand of the case of the trial court. 48 On these considerations, as well as the
fact that these cases have been pending for a long period of time, we see no need for remanding Civil Case No.
2649 for further proceedings, and we hold that the facts and the ends of justice in this case require the
reconveyance by private respondents to petitioners of the disputed lot.
WHEREFORE, the assailed decision of respondent court in its AC-G.R. CV No. 60388-R and the questioned
order of dismissal of the trial court in its Civil Case No. 2649 are hereby REVERSED and SET ASIDE and
judgment is hereby rendered ORDERING private respondents to reconvey the aforesaid parcel of land to
petitioners.

SO ORDERED.

Melencio-Herrera, Paras, Padilla and Sarmiento, JJ., concur.

Footnotes

1 Presided over by Judge Rosalio C. Segundo.

2 Penned by Justice Ma. Rosario Quetulio-Losa, with the concurrence of Justices Ramon G.
Gaviola, Jr., Eduardo P. Caguioa (in the result), and Leonor Ines-Luciano.

3 Folder of Exhibits for the Plaintiff, Original Record. Civil Case No. U-2286, 12.

4 Rollo, G.R. No. 72255. 6.

5 Record on Appeal, AC-G.R. CV No. 60388-Pt. 2-8; Rollo, G.R. No. 72255, 98.

6 (Ibid)., id., 8-20; ibid., id., id.

7 Rollo, G.R. No. 72255, 6-7.

8 Rollo, G.R. No. L-40399, 34-39.

9 Ibid., id., 117.

10 Ibid., G.R. No. 72255, 5-14.

11 Ibid., id., 15.

12 23 SCRA 357 (1968).

13 Rollo., G.R. No. L-40399, 52.

14 Ibid., id., 59-60.

15 Ibid., id. 18.

16 Rollo, G.R. 72255, 21-22.

17 Vital vs. Anore, et al., 90 Phil. 855 (1952); Heirs of Parco vs. Haw Pia, 45 SCRA 164 (1972).

18 Director of Lands vs. Court of Appeals, et al., 17 SCRA 71 (1966).

19 Baladjay vs. Castrillo, etc., et al., 1 SCRA 1064 (1961); Villanueva, et al vs. Portigo, et al., 29
SCRA 99,(1969); Ramirez vs. Court of Appeals, et al., 30 SCRA 297 (1969).

20 Coronel vs. Intermediate Appellate Court, et al., 155 SCRA 270 (1987).

21 Almarza vs. Arguelles, et al., 156 SCRA 718 (1987).

22 133 SCRA 718 (1984).


23 Laguna vs. Lavantino 71 Phil 566 (1941); Corpus, et al. vs. Beltran, et al., 97 PMI. 722 (1955).

24 As quoted in Pascual vs. Sarmiento, et al., 37 Phil. 170 (1917).

25 Fitzsimmons vs. Cassity (La. App.) 172 So 824.

26 Sanchez vs. Pascual, 11 Phil. 395 (1908); Pascual vs. Sarmiento et al., ante.

27 Villanueva, et al. vs. Claustro, 23 Phil. 54 (1912).

28 178 Am Jur. 2d, 860.

29 Grande vs. Court of Appeals, et al., 5 SCRA 524 (1962).

30 Lizada vs. Omanan, et al., 59 Phil. 547 (1934); Lacaste vs. Director of Lands, 63 Phil. 654
(1936); Garcia vs. Dinero, et al., 80 Phil. 474 (1948).

31 Ramirez vs. Court of Appeals, et al., 30 SCRA 297 (1969).

32 De los Angeles, et al. vs. Santos, et al., 12 SCRA 622 (1964).

33 Central Capiz vs. Ramirez, 40 Phil. 883 (1920). The pertinent provisions of Act No. 2874 read:
"Sec. 2. The provisions of this Act shall apply to the lands of the public domain; . . . Sec. 8. Only
those lands shall be declared open to disposition or concession which have been officially
delimited and classified and, when practicable, surveyed and which have not been reserved for
public or quasi-public uses, nor appropriated by the government, nor in any manner become
private property, nor on which a private right authorized or recognized by this Act or any other
valid law may be claimed, or which having been reserved or appropriated, have ceased to be so.
. . ." These provisions are reproduced in Secs. 2 and 8 of the present Public Land Act, C.A. No.
141, as amended.

34 De la Concha, et al. vs. Magtira, et al., 18 SCRA 398 (1966); Baladjay et al. vs. Castrillo, etc.,
et al., supra; Villanueva, et al., vs. Portigo, et al., supra.

35 Cabonitalla et al. vs. Santiago, etc., et al, 27 SCRA 211 (1969).

36 13 SCRA 516 (1965).

37 Ramirez vs. Court of Appeals, et al., supra.

38 3 Castan, 7th Ed., 410.

39 Vital vs. Anore, et al., supra; Director of Lands vs. Reyes, 69 Phil. 497; Ramoso vs. Obligado,
et al., 70 Phil. 86 (1940); Azarcon, et al. vs. Vallarta, et al., 100 SCRA 450 (1980).

40 Angeles vs. Samia, 66 Phil. 444 (1938); Gabriel, et al. vs. Court of Appeals, et al., 159 SCRA
461 (1988).

41 Municipality of Victorias vs. Court of Appeals, et al., 149 SCRA 32 (1987).

42 Vda. de Recinto vs. Inciong, et al., 77 SCRA 196 (1977).

43 De Guzman vs. Court of Appeals, et al., 156 SCRA 701 (1987).

44 Edralin vs. Edralin, et al.. 1 SCRA 222 (1961).

45 Varsity Hills, Inc., et al. vs. Navarro, etc., et al., 43 SCRA 503 (1972).

46 Wright, Jr., et al. vs. Lepanto Consolidated Mining Co., et al., 11 SCRA 508 (1964); Pabalate,
et al. vs. Echarri, Jr.. et al., 37 SCRA 518 (1971).
47 Vital vs. Anore, et al., supra; Gomez, et al. vs. Court of Appeals, et al., G.R. No. 77770,
December 15,1988.

48 Lianga Bay Logging Co., Inc., et al., vs. Court of Appeals, et al., 157 SCRA 357 (1988);
Escudero vs. Dulay, 158 SCRA 69 (1988).

The Lawphil Project - Arellano Law Foundation

Republic of the Philippines


SUPREME COURT
Manila

SECOND DIVISION .

G.R. No. L-47491 May 4, 1989

GALICANO GOLLOY, petitioner,


vs.
HONORABLE COURT OF APPEALS, JOSE VALDEZ, JR., CONSOLACION VALDEZ, LOURDES VALDEZ,
SOLEDAD VALDEZ and BENNY MADRIAGA, respondents. respondents. respondents. .

Crispulo B. Ducusin for petitioner. Celso M. Alviar for private respondents. .

PARAS, J.:

This is a petition for review on certiorari of the September 29, 1977 Decision ** of the Court of Appeals in CA-G.R. No. L-
43359R, entitled, Galicano Golloy vs. Jose J. Valdez Jr., et. al., affirming the judgment of the then Court of First Instance of Tarlac; and the November
29,1977 Resolution of the same court denying the motion for reconsideration. .

Herein petitioner, for more than twenty (20) years, has been the registered owner and in possession of a 41,545-
square meter parcel of land covered by Transfer Certificate of Title No. 45764. The Southwest portion of this
land is bounded by herein private respondents' land which is covered by Certificate of Title No. 8565. Sometime
in February, 1966, private respondents subdivided their land among themselves. In the course of the
subdivision, private respondents caused to be placed two (2) monuments inside the Southwest, portion of
petitioner's land. Hence, petitioner filed with the then Court of First Instance of Tarlac, presided over by Judge
Arturo B. Santos an action to quiet title. The same was docketed therein as Civil Case No. 4312. .

Private respondents, in their filed motion to dismiss with counterclaim, alleged that they never encroached upon
the landholding of petitioner and nothing has been placed on his land which would create any cloud thereon; and
that the truth of the matter was that they merely subdivided their own land according to their title and therefore
there was nothing for petitioner to quiet or remove cloud on his title. .

In the pre-trial of December 12, 1967, the parties agreed that inasmuch as the only issue in dispute referred
ultimately to the question of the boundaries of their respective lots, the same might be resolved by appointing a
public surveyor of the Bureau of Lands to relocate the disputed area with the end in view of determining the true
and correct boundaries of their parcels. .

The trial court, in line with the above-said agreement, in an Order dated December 13, 1968, ordered the
Director of Lands to appoint an impartial public land surveyor to conduct the relocation survey on the disputed
area. .

On May 20, 1968, Jovino B. Dauz, Surveyor of the Bureau of Lands, Dagupan City, submitted his Report
(Record on Appeal, pp. 21-28, Rollo, p. 34), which states in substance, that petitioner's land is Lot A of the
Subdivision plan, Psd-1413, being a portion of the land described in Original Certificate of Title No. 126 in the
name of Agustin Golloy (No. 11, Record on Appeal, p. 23); that the land titled under OCT No. 126 was surveyed
on March 18, 1918 and subsequently titled and registered on August 15, 1919 (No. 12, Ibid); that on the other
hand, private respondents' land is Lot No. 1, 11-8218 in the name of Domingo Balanga, surveyed on March 11,
1913 and originally titled and registered on March 1, 1918 (No. 15, Ibid.); that there are overlappings on the
boundaries of the two (2) lands (Nos. 226, 27, 28 and 29, Ibid.); and that the overlappings are due to the defect
in the survey on petitioner's land since it did not duly conform with the previously approved survey of Lot 1, 11-
3218 under OCT 8565 (No. 25, lbid). He ended his report by submitting that private respondents' land, TCT No.
8565, prevails over petitioner's land, TCT No. 45764, since the former was surveyed and titled ahead. .

On July 8, 1968, petitioner filed a Memorandum (Record on Appeal, pp. 28-35). .

On October 21, 1968, the trial court ruled in favor of private respondents. The decretal portion of the decision,
reads: .

WHEREFORE, conformably to the agreement of the parties during the pre-trial on December 12, 1967, this
Court renders judgment in accordance with the aforesaid surveyor's Report and Relocation Plan; and the plaintiff
and the defendants are accordingly directed to abide by and respect the boundaries indicated on the relocation
plan of Surveyor Dauz which he found to be the true and correct boundaries of the properties covered by TCT
Nos. 8567 and 45764 of the land records of Tarlac. .

For lack of proof, the claim for damages by plaintiff and the defendants are both denied. .

No pronouncement on costs. .

SO ORDERED. (Rollo, p. 14) .

Petitioner, after his motion for reconsideration was denied by the trial court, appealed the said decision, which
was affirmed by the Court of Appeals, in a Decision promulgated on September 29, 1977 (Rollo, pp. 22-29). A
motion for reconsideration was filed, but the same was denied in a Resolution promulgated on November 29,
1977 (Ibid., pp. 30-32). Hence, the instant petition. .

The Second Division of this Court, in a Resolution dated January 4, 1978, resolved to require the respondents to
comment (lbid., p. 36); which comment was filed on February 14, 1978 (Ibid., pp. 41-42). Petitioners filed a reply
thereto on March 27, 1978 (lbid., p. 47) in compliance with the resolution of February 14, 1978 (Ibid., p. 44). .

In a Resolution dated April 5, 1978 the Court gave due course to the petition (Ibid., p. 52). Petitioner filed his
Brief on January 10, 1981 (Ibid., p. 60). Private respondents having failed to file their brief within the required
period, the case was considered submitted for decision without private respondents' brief in the resolution of
February 8, 1981 (Ibid., p. 66). .

The sole issue in this case is who between the two title holders is entitled to the land in dispute? .

The instant petition is impressed with merit. .

It must be stated that private respondents and their predecessor or predecessors never possessed, much less,
claimed the overlapped portions. Petitioner has been always in possession of the same in the concept of an
owner, and his possession was disturbed only in February, 1966, when the private respondents caused to be
placed two (2) monuments inside his land. It will be recalled that, as per report of Surveyor Jovino B. Dauz
(Record on Appeal, pp. 21-28), private respondents' land (TCT-8565 is Lot No. 1, 11- 8218) was surveyed on
March 11, 1913 and originally titled and registered on March 1, 1918 in the name of Dominga Balanga. On the
other hand, petitioner's land (TCT No. 45764) is Lot-A of Subdivision plan, Psd-14013, a portion of land
described in OCT No. 126) was surveyed on March 18, 1918 and subsequently titled and registered in the name
of Agustin Golloy. The said lands, having been surveyed and thereafter registered, it follows that monuments
were placed therein to indicate their respective boundaries. It is hardly persuasive that private respondents'
predecessor, Dominga Balanga, believing that she has a rightful claim to the overlapped portions, did not make
any move to question the placement of the monuments. She could have easily objected to the placement and
pointed out that the placement of the monuments excluded the overlapped portions from her property. However,
no such objection was made. These facts could only be construed to mean that private respondents'
predecessor, Dominga Balanga, never believed that she has a right and legal claim to the overlapped portion.
There appears to be no evidence to support claims of repeated demands against petitioner to refrain from
cultivating the contested portion, much less an action filed in court to enforce such demands. .

Besides, considering that petitioner and his predecessor or predecessors have been in continuous possession in
the concept of an owner, for almost fifty (50) years (from August 15, 1919, when the property was registered, up
to February, 1966, when the private respondents caused the placement of two (2) monuments inside his land),
the latter if they have any right at all to the overlapped portion, are guilty of laches. .
In the case of Caragay-Layno vs. Court of Appeals (133 SCRA 718, 723- 724 [1984], this Court stated- .

Of significance is the fact, as disclosed by the evidence, that for twenty (20) years from the date of registration of
title in 1947 up to 1967 when this suit for recovery of possession was instituted, neither the deceased DE VERA
up to the time of his death in 1951, nor his successors-in-interest, had taken steps to possess or lay adverse
claim to the disputed portion. They may, therefore be said to be guilty of laches as would effectively derail their
cause of action. Administrator ESTRADA took interest in recovering the said portion only when he noticed the
discrepancy in areas in the Inventory of Property and in the title. .

The foregoing conclusion does not necessarily wreak havoc on the indefeasibility of a Torrens title. For, mere
possession of certificate of title under the Torrens System is not conclusive as to the holder's true ownership of
all the property described therein for he does not by virtue of said certificate alone become the owner of the land
illegally included. In a more recent case, the case of Lola vs. Court of Appeals (145 SCRA 439, 449 [1986]), this
Court ruled: .

We also agree with the petitioners that laches effectively bars the respondent from recovering the lot in dispute. .

Although the defense of prescription is unavailing to the petitioners because, admittedly, the title to Lot No. 5517
is still registered in the name of respondent, still the petitioners have acquired title to it by virtue of the equitable
principle of laches due to respondent's failure to assert her claims and ownership for thirty two (32) years. .

There are precedents for this ruling. In the following cases, we upheld the equitable defense of laches and ruled
that the long inaction and delay of the title holder in assertings right over the disputed lot bars him from
recovering the same. .

PREMISES CONSIDERED, the decision of the Court of Appeals under review is REVERSED and SET ASIDE
and a new one rendered ordering, private respondents to cause the segregation of the disputed portion
presently occupied by the petitioner Galicano Golloy and reconvey the same to the latter and after the
segregation to order the Register of Deeds of Tarlac to issue a new certificate of title covering said portion in
favor of the petitioner. .

SO ORDERED. .

Padilla, Sarmiento and Regalado, JJ., concur. .

Melencio-Herrera, J., took no part.

Footnotes

** Tenth Division; Penned by Justice Simeon M. Gopengco and concurred by Justice Ameurfina
Melencio Herrera and Vicente G. Ericta.

The Lawphil Project - Arellano Law Foundation

Republic of the Philippines


SUPREME COURT
Manila

FIRST DIVISION

G.R. No. L-52064 December 26, 1984

JULIANA CARAGAY-LAYNO, Assisted by Her Husband, BENITO LAYNO, petitioner,


vs.
HONORABLE COURT OF APPEALS and SALVADOR ESTRADA as Administrator of the Estate of the
Deceased, MARIANO DE VERA, respondents.
Pedro Peralta for petitioner.

Andres T. Gutierrez for private respondent.

MELENCIO-HERRERA, J.:

Respondent Appellate Court, then the Court of Appeal, affirmed in toto the judgment of the former Court of First
Instance of Pangasinan, Branch III, at Dagupan adjudging private respondent entitled to recover possession of a
parcel of land and ordering petitioners, as defendants below, to vacate the premises. Petitioners, as paupers,
now seek a reversal of that judgment.

It was established by a relocation survey that the Disputed Portion is a 3,732 square-meter-area of a bigger
parcel of sugar and coconut land (Lot No. 1, Psu-24206 [Case No. 44, GLRO Rec. No. 117]), with a total area of
8,752 square meters, situated at Calasiao, Pangasinan. The entire parcel is covered by Original Certificate of
Title No. 63, and includes the adjoining Lots 2 and 3, issued on 11 September 1947 in the name of Mariano M.
DE VERA, who died in 1951 without issue. His intestate estate was administered first by his widow and later by
her nephew, respondent Salvador Estrada.

Petitioner, JULIANA Caragay, and the decedent, Mariano DE VERA, were first cousins, "both orphans, who lived
together under one roof in the care of a common aunt."

As Administratrix, DE VERA's widow filed in Special Proceedings No. 4058 of the former Court of First Instance
of Pangasinan, Branch III, an Inventory of all properties of the deceased, which included "a parcel of land in the
poblacion of Calasiao, Pangasinan, containing an area of 5,417 square meters, more or less, and covered by
Tax Declaration No. 12664."

Because of the discrepancy in area mentioned in the Inventory as 5,147 square meters (as filed by the widow),
and that in the title as 8,752 square meters, ESTRADA repaired to the Disputed Property and found that the
northwestern portion, subsequently surveyed to be 3,732 square meters, was occupied by petitioner-spouses
Juliana Caragay Layno and Benito Layno. ESTRADA demanded that they vacate the Disputed Portion since it
was titled in the name of the deceased DE VERA, but petitioners refused claiming that the land belonged to
them and, before them, to JULIANA's father Juan Caragay.

ESTRADA then instituted suit against JULIANA for the recovery of the Disputed Portion (Civil Case No. D-2007),
which she resisted, mainly on the ground that the Disputed Portion had been fraudulently or mistakenly included
in OCT No. 63, so that an implied or constructive trust existed in her favor. She then counterclaimed for
reconveyance of property in the sense that title be issued in her favor.

After hearing, the Trial Court rendered judgment ordering JULIANA to vacate the Disputed Portion.

On appeal respondent Appellate Court affirmed the Decision in toto.

Before us, JULIANA takes issue with the following finding of respondent Court:

Although Section 102 of Act 496 allows a Petition to compel a Trustee to reconvey a registered
land to the cestui que trust (Severino vs. Severino, 44 Phil 343; Escobar vs. Locsin, 74 PhiL 86)
this remedy is no longer available to Juliana Caragay. Mariano de Vera's land, Lot 1, Psu-24206,
was registered on September 11, 1947 (Exhibit"C") and it was only on March 28, 1967 when the
defendants filed their original answer that Caragay sought the reconveyance to her of the 3,732
square meters. Thus, her claim for reconveyance based on implied or constructive trust has
prescribed after 10 years (Banaga vs. Soler, L-15717, June 30,1961; J.M. Tuason & Co. vs.
Magdangal, L-15539, Jan. 30, 1962; Alzona vs. Capunitan, 4 SCRA 450). In other words,
Mariano de Vera's Original Certificate of Title No. 63 (Exhibit "C") has become indefeasible. 1

We are constrained to reverse.

The evidence discloses that the Disputed Portion was originally possessed openly, continuously and
uninterruptedly in the concept of an owner by Juan Caragay, the deceased father of JULIANA, and had been
declared in his name under Tax Declaration No. 28694 beginning with the year 1921 (Exhibit "2-C"), later
revised by Tax Declaration No. 2298 in 1951 (Exhibit "2-B"). Upon the demise of her father in 1914, JULIANA
adjudicated the property to herself as his sole heir in 1958 (Exhibit "4"), and declared it in her name under Tax
Declaration No. 22522 beginning with the year 1959 (Exhibit "2-A"), later cancelled by TD No. 3539 in 1966
(Exhibit "2"). Realty taxes were also religiously paid from 1938 to 1972 (Exhibits "3-A" to "3-H"). Tacking the
previous possession of her father to her own, they had been in actual open, continuous and uninterrupted
possession in the concept of owner for about forty five (45) years, until said possession was disturbed in 1966
when ESTRADA informed JULIANA that the Disputed Portion was registered in Mariano DE VERA's name.

To substantiate her claim of fraud in the inclusion of the Disputed Portion in OCT No. 63, JULIANA, an
unlettered woman, declared that during his lifetime, DE VERA, her first cousin, and whom she regarded as a
father as he was much older, borrowed from her the Tax Declaration of her land purportedly to be used as
collateral for his loan and sugar quota application; that relying on her cousin's assurances, she acceded to his
request and was made to sign some documents the contents of which she did not even know because of her
ignorance; that she discovered the fraudulent inclusion of the Disputed Portion in OCT No. 63 only in 1966 when
ESTRADA so informed her and sought to eject them.

Of significance is the fact, as disclosed by the evidence, that for twenty (20) years from the date of registration of
title in 1947 up to 1967 when this suit for recovery of possession was instituted, neither the deceased DE VERA
up to the time of his death in 1951, nor his successors-in-interest, had taken steps to possess or lay adverse
claim to the Disputed Portion. They may, therefore be said to be guilty of laches as would effectively derail their
cause of action. Administrator ESTRADA took interest in recovering the said portion only when he noticed the
discrepancy in areas in the Inventory of Property and in the title.

Inasmuch as DE VERA had failed to assert any rights over the Disputed Portion during his lifetime, nor did he
nor his successors-in-interest possess it for a single moment: but that, JULIANA had been in actual, continuous
and open possession thereof to the exclusion of all and sundry, the inescapable inference is, fraud having been
unsubstantiated, that it had been erroneously included in OCT No. 63. The mistake is confirmed by the fact that
deducting 3,732 sq. ms., the area of the Disputed Portion from 8,752 sq. ms., the area of Lot 1 in OCT No. 63,
the difference is 5,020 sq. ms., which closely approximates the area of 5,147 sq. ms., indicated in the Inventory
of Property of DE VERA. In fact, the widow by limiting the area in said Inventory to only 5,147 sq. ms., in effect,
recognized and admitted that the Disputed Portion of 3,132 sq. ms., did not form part of the decedent's estate.

The foregoing conclusion does not necessarily wreak havoc on the indefeasibility of a Torrens title. For, mere
possession of a certificate of title under the Torrens System is not conclusive as to the holder's true ownership of
all the property described therein for he does not by virtue of said certificate alone become the owner of the land
illegally included. 2 A Land Registration Court has no jurisdiction to decree a lot to persons who have never
asserted any right of ownership over it.

... Obviously then, the inclusion of said area in the title of Lot No. 8151 is void and of no effect for
a land registration Court has no jurisdiction to decree a lot to persons who have put no claim in it
and who have never asserted any right of ownership over it. The Land Registration Act as well as
the Cadastral Act protects only the holders of a title in good faith and does not permit its
provisions to be used as a shield for the commission of fraud, or that one should enrich himself at
the expense of another. 3

JULIANA, whose property had been wrongfully registered in the name of another, but which had not yet passed
into the hands of third parties, can properly seek its reconveyance.

The remedy of the landowner whose property has been wrongfully or erroneously registered in
another's name is, after one year from the date of the decree, not to set aside the decree, but,
respecting the decree as incontrovertible and no longer open to review, to bring an ordinary
action in the ordinary court of justice for reconveyance or, if the property has passed into the
hands of an innocent purchaser for value, for damages. 4

Prescription cannot be invoked against JULIANA for the reason that as lawful possessor and owner of the
Disputed Portion, her cause of action for reconveyance which, in effect, seeks to quiet title to the property, falls
within settled jurisprudence that an action to quiet title to property in one's possession is imprescriptible. 5 Her
undisturbed possession over a period of fifty two (52) years gave her a continuing right to seek the aid of a Court
of equity to determine the nature of the adverse claim of a third party and the effect on her own title. 6

Besides, under the circumstances, JULIANA's right to quiet title, to seek reconveyance, and to annul OCT. No.
63 accrued only in 1966 when she was made aware of a claim adverse to her own. It was only then that the
statutory period of prescription may be said to have commenced to run against her, following the pronouncement
in Faja vs. Court of Appeals, supra, a case almost Identical to this one.

... Inasmuch as it is alleged in paragraph 3 of Frial's complaint, that Felipa Faja has been in
possession of the property since 1945 up to the present for a period of 30 years, her cause of
action for reconveyance, which in effect seeks to quiet her title to the property, falls within that
rule. If at all, the period of prescription began to run against Felipa Faja only from the time she
was served with copy of the complaint in 1975 giving her notice that the property she was
occupying was titled in the name of Indalecio Frial. There is settled jurisprudence that one who is
in actual possession of a piece of land claiming to be owner thereof may wait until his possession
is disturbed or his title is attacked before taking steps to vindicate his right, the reason for the rule
being, that his undisturbed possession gives him a continuing right to seek the aid of a court of
equity to ascertain and determine the nature of the adverse claim of a third party and its effect on
his own title, which right can be claimed only by one who is in possession. No better situation can
be conceived at the moment for Us to apply this rule on equity than that of herein petitioners
whose mother, Felipa Faja, was in possession of the litigated property for no less than 30 years
and was suddenly confronted with a claim that the land she had been occupying and cultivating
all these years, was titled in the name of a third person. We hold that in such a situation the right
to quiet title to the property, to seek its reconveyance and annul any certificate of title covering it,
accrued only from the time the one in possession was made aware of a claim adverse to his
own, and it is only then that the statutory period of prescription commences to run against such
possessor.

WHEREFORE, the judgment under review is hereby REVERSED and SET ASIDE, and another one entered
ordering private respondent Salvador Estrada, as Administrator of the Estate of the Deceased, Mariano de Vera,
to cause the segregation of the disputed portion of 3,732 square meters forming part of Lot No. 1, Psu-24206,
Case No. 44, GLRO Rec. No. 117, presently occupied by petitioner Juliana Caragay-Layno, and to reconvey the
same to said petitioner. After the segregation shall have been accomplished, the Register of Deeds of
Pangasinan is hereby ordered to issue a new certificate of title covering said 3,732 sq. m. portion in favor of
petitioner, and another crtificate of title in favor of the Estate of the deceased, Mariano de Vera covering the
remaining portion of 5,0520 square meters. No costs.

SO ORDERED

Teehankee (Chairman), Plana, De la Fuente and Cuevas, * JJ., concur.

Relova and Gutierrez, Jr., JJ., took no part.

Footnotes

1 Rollo, p. 33.

2 Ledesma vs. Municipality of Iloilo, 49 Phil. 769 (1926), cited in Vda. de Recinto vs. Inciong, 77
SCRA 201 (1977).

3 Vda. de Recinto vs. Inciong, supra.

4 Ibid.

5 Sapto, et al. vs. Fabiana, 103 Phil. 683, 687 (1958).

6 Faja vs. Court of Appeals, 75 SCRA 441 (1977).

* Justice Serafin R. Cuevas was designated to sit in the First Division per Special Order No. 307,
dated November 26, 1984.

The Lawphil Project - Arellano Law Foundation


Republic of the Philippines
SUPREME COURT
Manila

FIRST DIVISION

G.R. No. L-26083 May 31, 1977

CONSUELO MALALUAN VDA. DE RECINTO, petitioner,


vs.
RUPERTO INCIONG and COURT OF APPEALS, respondents.

Remegio L. Perez for petitioner.

Amado M. Salazar for private respondent.

MARTIN, J.:

Petition for review on certiorari of the decision of the Court of Appeals which reversed the decision of the trial
court in a suit for recovery of possession of a parcel of land.

Ruperto Inciong (hereinafter referred to as private respondent) is the registered owner of a parcel of land located
in Barrio Santol, Mataasnakahoy, Batangas, with an area of 34,263 square meters covered by Transfer
Certificate of Title No. Rt-379 (T-211) of the Register of Deeds of Batangas. The land was formerly Identified as
Lot No. 8151 of the Cadastral Survey in the area during the cadastral proceedings from 1936 to 1940. Private
respondent acquired this land in 1946 by purchase from Matias Amurao. In 1961, after a relocation survey of the
land was effected it was discovered that its southern boundary covering an area of 8,591 square meters was in
the possession of petitioner, Consuelo Malaluan Vda. de Recinto. In due time private respondent filed an action
for recovery of possession of the portion held by the petitioner. In her answer to private respondent's complaint,
petitioner claimed to be the owner of the area in question and as counter-claim demanded its reconveyance from
the private respondent.

After trial, the lower court rendered judgment declaring the petitioner to be the lawful owner of the land in
question and ordering private respondent to execute a deed of reconveyance over the same in favor of
petitioner. However, on appeal said judgment was reversed by the Court of Appeals in a decision the dispositive
portion of which, reads:

WHEREFORE, the judgment rendered by the trial court is hereby ordered reversed, and another
one entered, by ordering defendant-appellee to return that portion of 8,591 square meters of the
land in question to plaintiff-appellant; to pay damages in the sum of P100.00 a month from the
time of the filing of the action until the property is returned; to pay further the sum of P1,000.00
for attorney's fees; and for defendant to pay the costs in both instances.

A motion to reconsider said decision proved unavailing. Hence, this petition for review, petitioner faulting the
Court of Appeals —

I. IN NOT CONSIDERING THAT IT WAS THRU ERROR THAT THE AREA IN DISPUTE WAS
INCLUDED IN THE TITLE OF RESPONDENT RUPERTO INCIONG AND HIS
PREDECESSORS, AND THAT THE DECREE OF REGISTRATION WAS NULL AND VOID AB
INITIO WITH RESPECT TO SAID AREA;

II. IN NOT CONSIDERING THAT THE LAND IN QUESTION WAS NOT INCLUDED IN THE
SALE BY MATIAS AMURAO TO RESPONDENT RUPERTO INCIONG, AND THAT IT HAS NOT
YET PASSED INTO THE HANDS OF AN "INNOCENT PURCHASER FOR VALUE";

III. IN NOT SEEING THAT RESPONDENT RUPERTO INCIONG, IN CLAIMING THE LAND IN
QUESTION, IS ACTING IN BAD FAITH AND TRYING TO ENRICH HIMSELF AT THE
EXPENSE OF PETITIONER;
IV. IN DECLARING IN EFFECT THAT PETITIONER'S EXHIBIT "4", DEED OF DONATION
PROPTER NUPTIAS AND EXHIBIT "3-A", DEED OF SALE, ARE INVALID AND WITHOUT
LEGAL FORCE AND EFFECT;

V. IN REVERSING THE DECISION OF THE TRIAL COURT.

It is evident from the records that the area in dispute is a part of the land formerly owned by Petronilo Acar. On
March 11, 1918, Petronilo Acar sold the same to the spouses Mariano Recinto and Marta Magsumbol (Exhibit 3-
A). On July 2, 1931, said spouses conveyed the said property by way of a donation propter nuptias to petitioner
Consuelo Malaluan Vda, de Recinto and her late husband, Juanario Recinto. Since then, petitioner and her late
husband have been in open, public and continuous possession of the entire property including that portion now
in question which adjoins private respondent's land on the north. The adjoining lands have since then been
separated by a fence consisting of morado, madre cacao, antipolo and other kinds of living trees. The land north
of the disputed area which is now in the name of the private respondent was previously owned by Norberto
Leyesa, the Templos, Atty. Ponciano Hernandez and Matias Amurao. All of these previous owners of the land
admitted that they recognize the fence of the property in question and disclaimed any interest or right over the
disputed portion. Private respondent acquired his land from Matias Amurao while the latter purchased the same
from Atty. Ponciano Hernandez. Atty. Hernandez disclosed that the area he acquired from his predecessor-in-
interest was only that parcel north of the disputed area separated by the fence (Exhibit I) and that he never
exercised nor claimed any right over the land in question. Said land was the same piece of land that he sold to
Matias Amurao who also had only occupied the same area and did not go over the dividing line. The only
boundary that Matias Amurao could point to the private respondent as separating the land that he was then
selling from that owned by petitioner was the fence (Exhibit I). It was also the same parcel of land which Matias
Amurao conveyed to private respondent in 1946. During the ocular inspection conducted by the trial court it was
found out that the disputed portion and the land adjoining it on the north (private respondent's) are separated by
a long fence consisting of morado, madre cacao, antipolo and other kinds of trees which could not be less than
25 years old, with a single line of a rusty barbed wire. Inside the disputed area were coconut trees and other
plants similar to those found in the land of the petitioner but different from those improvements in the land of the
private respondent. As found by the trial court the preponderance of evidence shows that the area in question
has been erroneously included in the cadastral survey of Lot No. 8151 and in the original certificate of title
without the knowledge of the, parties concerned. As a result, the same description in the original certificate of
title was carried over into the succeeding transfer certificates of title of the subsequent owners covering the
same parcel of land. This is confirmed by the fact that private respondent's predecessors-in-interest and later,
private respondent himself, have all along treated the area in question as belonging to the petitioner. What
seemed to have prompted private respondent to get interested over the disputed area was when he came to
learn after the relocation survey in 1961 that said disputed area was included in his title. Obviously then, the
inclusion of said area in the title of Lot No. 8151 is void and of no effect for a land registration Court has no
jurisdiction to decree a lot to persons who have put no claim in it and who have never asserted any right of
ownership over it. 1 the Land Registration Act as well as the Cadastral Act protects only the holders of a title in good
faith and does not permit its provisions to be used as a shield for the commission of fraud, or that one should enrich
himself at the expense of another. Resort to the provisions of said Acts do not give one a better title than he really and
lawfully has. 2 In the case at bar, private respondent could not have acquired an area more than what was actually
conveyed to him by Matias Amurao which extended only as far as the dividing fence on the south thereof (Exhibit I).
The mere possession of a certificate of title under the Torrens system does not necessarily make the possessor a true
owner of all the property described therein for he does not by virtue of said certificate alone become the owner of the
land illegally included. 3It is evident from the records that the petitioner owns the portion in question and therefore the
area should be conveyed to her. The remedy of the land owner whose property has been wrongfully or erroneously
registered in another's name is, after one year from the date of the decree, not to set aside the decree, but, respecting
the decree as incontrovertible and no longer open to review, to bring an ordinary action in the ordinary court of justice
for reconveyance or, if the property has passed into the hands of an innocent purchaser for value, for damages. 4 This
was what petitioner did. But was private respondent an innocent purchaser for value? We can hardly consider private
respondent one because at the time he purchased the land covered by the certificate of title now in his hands he was
aware that the disputed portion was not included in the area conveyed to him by Matias Amurao. This is clearly
evident when he acknowledged as the true boundary the one (Exhibit I) pointed to him by Matias Amurao. between his
land and the disputed portion by not raising any question about it and not disturbing the possession of the petitioner
over the area in dispute for almost 15 years. A purchaser in good faith 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 claim or interest of some other person in the property. 5

In its decision, the Court of Appeals underscored the alleged defects in the deed of sale executed by Petronilo
Acar in favor of the spouses Marta Magsumbol and Mariano Recinto, in 1918 (Exhibit 3-A) and of the
donation propter nuptias made by the latter in favor of the petitioner and her late husband, Juanario Recinto, in
1931 as having substantially weakened the case of the latter. It appears that the deed of sale executed by
Petronilo Acar was not registered in the office of the Register of Deeds and that the donation propter
nuptias was only embodied in a private instrument. We note, however, that said alleged defects were not raised
in issue by the private respondent before the trial court. Hence, it was improper for the Court of Appeals to have
considered them as the same could not have even been raised for the first time on appeal. 6

As to the claim of private respondent that petitioner's action for reconveyance of the land in the form of a
counterclaim has long been barred by prescription. suffice it to state that private respondent and his
predecessors-in-interest have never possessed the land in question nor claimed it to be their own and if private
respondent ever claimed it after fifteen (15) years from the time he acquired the land covered by his title, it was
because the same was erroneously included in his title. 7 Moreover, the defense of prescription interposed by the
8
private respondent cannot be entertained as it has been raised only for the first time in this instance.

IN VIEW OF ALL THE FOREGOING, the decision of the respondent Court of Appeals is hereby reversed and set
aside and another one entered, ordering private respondent to return to petitioner the disputed portion of the land in
question covering an area of 8,591 square meters; to pay petitioner damages in the sum of 100.00 a month from the
time of the filing of the action until the property is returned and the sum of P1,000.00 for attorney's fees. The Register
of Deeds of Batangas is further ordered to segregate said disputed portion from the entire portion embraced by
Transfer Certificate of Title No. Rt-379 (T-211) and issue anew certificate of title in favor of petitioner over said
disputed portion and another new certificate of title over the remaining portion of the land in question in favor of private
respondent after cancelling Transfer Certificate of Title No. Rt-379 (T-211). With costs against private respondent.

SO ORDERED.

Teehankee (Chairman), Makasiar, Antonio and Muñoz Palma, JJ., concur.

Antonio, J., is designated to sit in the First Division.

Footnotes

1 Director of Lands vs. Abache, 73 Phil. 117, citing P.I vs. Trino, 50 Phil. 708.

2 Angeles vs. Samia, 66 Phil. 444, citing Gustilo vs. Maravilla, 48 Phil. 442; Angelo vs. Director
of Lands, 49 Phil. 838.

3 Ledesma vs. Municipality of Iloilo, 49 Phil. 769.

4 Marta Quinano vs. Court of Appeals, et al., 39 SCRA 221, citing Cabanas vs. Register of
Deeds, 92 Phil. 826. Cf. Avecilla vs. Yatco, 103 Phil. 666; Nebrada vs. Heirs of Alivio, 104 Phil.
126; Roco vs. Gimeda, 104 Phil. 1011; Aragon vs. Aragon, 105 Phil. 365; Republic vs, Heirs of
Carle, 105 Phil. 1227; Moldero vs. Yandoc, 3 SCRA 246; Alzona vs. Capunitan, 4 SCRA 450;
Juan vs. Zuniga, 4 SCRA 1221; J.M. Tuazon & Co. vs. Macalindong, 6 SCRA 938; Gonzales vs.
Jimenez, 13 SCRA 80; also Palma vs. Cristobal, 77 Phil. 713; Manarpac vs. Cabanatan, 21
SCRA 743, citing Casilan vs. Espartero, 95 Phil, 799; Caladiao vs. Vda. de Blas, 10 SCRA 691.

5 Cui and Joven vs. Henson, 51 Phil. 606; Fule vs. De Legare, 7 SCRA 351.

6 Ng Chi Cio vs. Ng Diong, 1 SCRA 275; City of Manila vs. Ebay, 1 SCRA 1086; Republic vs.
Aricheta, 2 SCRA 469; Zambales Chromite Mining Co. vs. Robles, 2 SCRA 1051; Republic vs.
Albert, 4 SCRA 173; Ferrer vs. Commissioner of Internal Revenue, 5 SCRA 1022; Rebodos vs.
WCC, 6 SCRA 717; J.M. Tuazon vs. Macalindong, 6 SCRA 938; Mendoza vs. Mella, 17 SCRA
798; Dirige vs. Biranya, 17 SCRA 840; Ramos vs. Pepsi-Cola Bottling Co., 19 SCRA 289;
Sumarariz vs. DBP, 21 SCRA 1374; Manila Port Service vs. Court of Appeals, 22 SCRA 1364;
San Miguel Brewery vs. Joves, 23 SCRA 1093; Luzon Surety vs. De Garcia, 30 SCRA 111; De
Tanedo vs. De la Cruz, 32 SCRA 63; Atlas Consolidated Mining and Development Corp. vs.
WCC, 33 SCRA 132; Reparations Commission vs. Northern Lines, 34 SCRA 203; National
Marketing Corp. vs. Federation of United Namarco Distributors, 49 SCRA 238; Ardisa vs, Baloso,
49 SCRA 296.

7 Angeles vs. Samia, supra.


8 J. M. Tuason vs. Macalindong, 6 SCRA 938; Phil. Iron Mines vs. Abear, 21 SCRA 652; Blanco
vs. WCC, 29 SCRA 8.

The Lawphil Project - Arellano Law Foundation

Republic of the Philippines


SUPREME COURT
Manila

EN BANC

G.R. No. L-30240 March 25, 1988

REPUBLIC OF THE PHILIPPINES as Lessor, ZOILA DE CHAVEZ, assisted by her husband Col. Isaac Chavez,
DEOGRACIAS MERCADO, ROSENDO IBANEZ and GUILLERMO MERCADO, as permittees and/or Lessees
of public fishponds, petitioners,
vs.
HON. JUDGE JAIME DE LOS ANGELES of the court of First Instance of Batangas, (BR. III, Balayan) [later
replaced by JUDGE JESUS ARLEGUI] SHERIFF OF BATANGAS, ENRIQUE ZOBEL and THE REGISTER OF
DEEDS AT BALAYAN, BATANGAS, respondents.

TEEHANKEE, C.J.:

The moment of truth is finally at hand. It is about time to cause the execution in favor of the Republic of the Philippines of the 1965 final and executory
judgment of this Court (Republic vs. Ayala y Cia ) 1affirming that of the CFI of Batangas in Civil Case No. 373 thereof and to recover for the Republic what
"Ayala y Cia Hacienda de Calatagan and/or Alfonso Zobel had illegally expanded [in] the original area of their TCT No. 722 (derived from OCT No. 20) from
9,652.583 hectares to about 12,000 hectares thereby usurping about 2,000 hectares consisting of portions of the territorial sea, the foreshore, the beach and
navigable waters properly belong(ing) to the public domain."2

The Court's decision in said case found that

We have gone over the evidence presented in this case and found no reason to disturb the
factual findings of the trial court. It has been established that certain areas originally portions of
the navigable water or of the foreshores of the bay were converted into fishponds or sold by
defendant company to third persons. There is also no controversy as to the fact that the said
defendant was able to effect these sales after it has obtained a certificate of title (TCT No. 722)
and prepared a "composite plan" wherein the aforesaid foreshore areas appeared to be parts of
Hacienda Calatagan. Defendants- appellants do not deny that there is an excess in area
between those delimited as boundaries of the hacienda in TCT No. 722 and the plan prepared by
its surveyor. This, however, was justified by claiming that it could have been caused by the
system (magnetic survey) used in the preparation of the original titles, and, anyway, the excess
in area (536 hectares, according to defendants) is within the allowable margin given to a
magnetic survey.

But even assuming for the sake of argument that this contention is correct, the fact remains that
the areas in dispute (those covered by permits issued by the Bureau of Fisheries), were found to
be portions of the foreshore, beach, or of the navigable water itself And, it is an elementary
principle of law that said areas not being capable of registration, their inclusion in a certificate of
title does not convert the same into properties of private ownership or confer title on the
registrant. 3

The Solicitor General's Memorandum 4 further points out

... that the modus operandi in said usurpation, i.e. grabbing lands of the public domain, was
expressly made of record in the case of Dizon v. Rodriguez, 13 SCRA 704 (April 30, 1965),
where it was recounted that Hacienda de Calatagan, owned by Alfonso and Jacobo Zobel, was
originally covered by TCT No. 722, and that in 1948, upon the cessation of their sugar mill
operations, the hacienda owners converted the pier (used by vessels loading sugar) which
stretched to about 600 meters off the shore into the navigable waters of the Pagaspas Bay" into
a fishpond dike by enclosing 30 and 37 hectares of the bay on both sides of the pier in the
process.

Subsequently, in 1949, the owners of the hacienda ordered its subdivision which enabled them to
acquire titles to the subdivided lots which were outside the hacienda's perimeter. Thus, these
subdivided lots, which were converted into fishponds were illegally absorbed as part of the
hacienda and titled in the name of Jacobo Zobel which were subsequently sold and transferred
to the Dizons, Gocos and others. In said Dizon case, "this Honorable Court affirmed the court a
quo's findings that the subdivision plan was prepared not in accordance with the technical
description in TCT No. 722 but in disregard of it." And that the appropriated fishpond lots "are
actually part of the territorial waters and belong to the State.

But all through the years, as stressed in the Republic's memorandum, "the technical maneuvers employed by
Ayala and Zobel [of which the instant petition is an off-shoot] .... undercut the Republic's efforts to execute the
aforesaid 1965 final judgment" 5 to recover the estimated 2,000 hectares of territorial sea, foreshore, beach and
navigable waters and marshy land of the public domain.

It may seem incredible that execution of such 1965 final judgment in favor of the Republic no less could have
been thwarted for twenty-three years now. But the Republic's odyssey and travails since 1965 through the
martial law regime to now are recorded in the annals of our jurisprudence. Suffice it to point out that upon
petition of the Republic and its co- petitioners (as permittees and/or lessees of the Republic), mandamus was
issued on June 30, 1967 by unanimous decision with one abstention in Republic vs. De los Angeles, 6 overruling
the therein respondent-judge's refusal to issue a writ of execution of the aforesaid 1965 final judgment and
ordering him to issue such writ. The Court denied reconsideration on September 19, 1967, but on a second and
supplemental motion for reconsideration, it set aside the original decision of Jane 30, 1967 and dismissed the
petition for mandamus and denied execution, per its Resolution of October 4, 1971 by a split 6-3-2 vote. 7 The
court denied the Republic, et al motions for reconsideration by the same split 6-3-2 vote per its Resolution of
April 11, 1972. 8 An undermanned Court subsequently denied the Republic's co-petitioner Tolentino's second
motion for reconsideration for lack of necessary votes per its Resolution of April 27, 1973.9

Parenthetically, the complexity magnitude and persistence of respondents' maneuvers are set forth in the series
of decisions and extended resolutions and majority and dissenting opinions reported in the Supreme Court
Reports Annotated as per the citations — hereinabove given. A reading of said reports together with the
Memorandum for Granting of the Petition at bar (and giving the case's backgrounder) which I had circulated in
the Court as against the proposed contrary draft of Justice Estanislao A. Fernandez (which did not gain the
concurrence of the majority of the Court during his seventeen-month incumbency from October 20, 1973 to
March 28, 1975) shows the full extent background and scope of these maneuvers, particularly those in the
present case. For the sake of brevity and conciseness, I attach the said Memorandum as Annex A hereof and
make the same an integral part of this decision, instead of reproducing the same in the body of this opinion.

Pending respondents' maneuvers in this Court for thwarting the issuance of a writ for execution of the aforesaid
1965 final judgment for the Republic's recovery of land and waters of the public domain in the 1967 mandamus
case brought by the Republic, supra, they intensified their maneuvers to defeat the Republic's judgment for
recovery of the public lands and waters when they got the trial judge, notwithstanding this Court's final 1965
judgment for reversion of the public lands, to uphold their refusal to recognize the rights of the Republic's public
fishponds permittees and/or lessees to the lands leased by the Republic to them. Thus, the Republic as lessor
and said permittees/lessees as co-petitioners filed through then Solicitor General Antonio P. Barredo their
Amended Complaint of August 2, 1967 in Civil Case No. 653 against herein respondent Enrique Zobel as
defendant and the Register of Deeds of Batangas. As summarized by the Solicitor General in his Memorandum
of June 1, 1984:

Respondent Zobel had ousted Zoila de Chavez, a government's fishpond permittee from a portion of the subject
fishpond lot described as Lot 33 of Plan Swo-30999 (also known as Lots 55 and 66 of subdivision TCT No.
3699) by bulldozing the same, and threatened to eject fishpond permittees Zoila de Chavez, Guillermo Mercado,
Deogracias Mercado and Rosendo Ibañez from their respective fishpond lots described as Lots 4, 5, 6 and 7
and Lots 55 and 56, of Plan Swo-30999, embraced in the void subdivision titles TCT No. 3699 and TCT No.
9262 claimed by said respondent. Thus, on August 2, 1967, the Republic filed an Amended Complaint captioned
Accion Reinvidicatoria with Preliminary Injunction" against respondent Zobel and the Register of Deeds of
Batangas, docketed as Civil Case No. 653, for cancellation of Zobel's void subdivision titles TCT No. 3699 and
TCT No. 9262, and the reconveyance of the same to the government; to place aforenamed fishpond permittees
in peaceful and adequate possession thereof; to require respondent Zobel to pay back rentals to the Republic;
and to enjoin said respondent from usurping and exercising further acts of dominion and ownership over the
subject land of public domain;

Respondent Zobel, however, filed a Motion to Dismiss Amended Complaint, dated August 16, 1967,
contendinginter alia that said Amended Complaint (Civil Case No. 653) is barred by prior judgment in Civil Case
No. 373 (G.R. No. 20950, the 1965 final judgment in favor of the Republic), and arguing that "if TCT Nos. T-3699
and T-9262 had been declared null and void in Civil Case No. 373, the proper procedure would be to secure the
proper execution of the decision in the same proceedings and not thru the filing of a new case." He further
contended "that there is another action pending between the same parties for the same cause," and points to the
abovementioned mandamus case, G.R. No. 26112 anent execution of Civil Case No. 373 as the said pending
case. His aforesaid motion, however, was denied by the trial court in its order of December 13, 1967, and
accordingly he was required to file his answer.

But in his answer with counterclaim, respondent Zobel averred, among others, that the subject TCT Nos. 3699
and 9262 registered in his name are valid and subsisting since in the decision under G. R. No. L-20950 "only
TCT No. T-9550 was specifically declared as null and void and no other;" and that when Civil Case No. 373 was
docketed, respondent Enrique Zobel "was and still is at present one of the members and managing .ng partners
of Ayala y Cia one of the defendants in the 91 said civil case, and, therefore, privy thereto." He then prayed for a
writ of preliminary mandatory injunction restoring to him possession of the subject land, and further prayed for
judgment ordering Zoila de Chavez and Guillermo Mercado to vacate the premises in question and to surrender
possession thereof to defendant Zobel. This was unfortunately granted by respondent Judge De los Angeles per
the impugned order at bar of October 1, 1968. (Annex D, petition). Hence, the filing of the instant petition.

On March 7, 1969, the Court issued a restraining order in the case at bar, enjoining respondent judge from
enforcing the writ of preliminary mandatory injunction until further orders.

While G.R. No. L-26112 re: execution) and G.R. No. L-30240 (the case at bar) were pending, the Republic filed
its motion of July 8, 1970 in Civil Case No. 373, for authority to conduct the necessary resurvey of the lands
affected so as to properly segregate from Ayala and Zobel's private land originally covered by TCT No. 722 the
areas outside thereof comprising about 2,000 hectares of public land, beach, foreshore and territorial sea. Ayala
and Zobel vigorously opposed the same, contending again that the proper step for the government was to ask
for a writ of execution; that no other subdivision titles, besides TCT No. T- 9550 were really declared null and
void in the 1965 judgment; and that the lower court could not make a ruling on the motion for resurvey "without
requiring the presentation of additional evidence, and that, in effect, would be tantamount to reopening a case
where the judgment is already final and executory and that the Government's failure to seek a "clarification of the
decision to find out what other titles should have been declared null and void" precludes it from doing so now, I
since the decision is now final and executory." The respondent judge, having earlier denied execution of the
1965 final judgment, issued his order of October 27, 1970 denying the Government's motion for authority to
conduct such prerequisite re-survey;

Ayala and Zobel's technical maneuvers to impede execution of the 1965 final judgment again bore fruit, as
above indicated, when their second motion for reconsideration in G.R. No. L26112 was granted by a split Court
in a Resolution dated October 4, 1971 (41 SCRA 422). As a result, the earlier decision of June 30, 1967
directing the issuance of the writ of execution was set aside and the Republic's petition for certiorari and
mandamus impugning the lower court's quashal and denial of the writ of execution was dismissed.

While the Court's new majority denied the Republic's motion for reconsideration of aforesaid resolution, per its
resolution of April 11, 1972, it, however, made the important modification that said denial "does not constitute a
denial of the right of the Republic to the cancellation of the titles nullified by the decision of Judge Tengco (in
Civil Case No. 373) affirmed by this Court (in G.R. No. L-20950)." It also stated that: "(E)ven the (trial court's)
order of October 27, 1970 about the resurvey merely held the remedy to be premature until the decision in this
case has become final. Of course, it is understood that in such eventuality, the resurvey requested by the
Provincial Fiscal would be in order and as soon as the same is completed, the proper writ of execution for the
delivery of possession of the portions found to be public land should issue." (G.R. No. I, 26112, 44 SCRA 255,
262 [19721) Thus, the majority's denial of the motions for reconsideration was made expressly "with the
clarification aforemade of the rights of the Republic."

[Note: My attached Memorandum, Annex A hereof (at pages 2 to 6 thereof), quotes more extensively the same
pronouncements of the ponente, Justice Villamor, speaking for the majority, that the Resolution simply cancelled
out the final damage award in favor of intervenor Tolentino, as government permittee/lessee it covers as well
similar pronouncements from Justice Makalintal in his separate concurrence that "The resolution in no way
affects the rights of the Government as declared in the decision," and Justice Barredo's separate concurrence
that "I am sure that the five justices whom I am joining in denying Petitioners motion for reconsideration are
as firm as the three distinguished dissenters in the resolution not to allow this Court to be an instrument of land-
grabbing as they are against the reversal or even modification in any substantial degree of any final and
executory judgment whether of this Court or any other court in this country, and, that if there were such
possibilities in consequence of the resolution of October 4, 1971 and the present resolution of denial, they would
not give their assent to said resolutions. We are certain that in deciding against Petitioner Tolentino, We are not
condoning nor permitting that the lands in question remain with the Dizons or with "the Ayalas."

In my dissenting opinion, I expressed gratification that the dissents (submitted by then Chief Justice Roberto
Concepcion and myself, both concurred in by Justice J.B.L. Reyes) had contributed to the overriding clarification
"that the majority's position although it denies reconsideration and maintains reversal of the June 30, 1967
decision at bar-is that the Government may now finally effect reversion and recover possession of all usurped
areas of the public domain "outside (Ayala's) private land covered by TCT No. 722, which including the lots in T-
9550 (Lots 360, 362, 363 and 182) are hereby reverted to public dominion." (Paragraph [al of 1965 judgment). 10

After said G.R. No. L-26112 was finally disposed of, herein petitioner filed in Civil Case No. 373, a "Motion to Re-
survey." This was granted in an Order dated August 21, 1973, as well as in the Orders of December 27, 1973
and February 26, 1974, respectively. About three (3) years later, a Report on the Re-survey dated August 5,
1977 (Annex "A" to Republic's Comment dated March 30, 1981), as well as the "Final Report" thereon dated
September 2, 1977 and the "Resurvey Plan" (Annexes "B" and "C", Ibid.) were approved by the Director of
Lands and the Secretary of Agriculture and Natural Resources. The Re-survey further confirmed the
uncontroverted fact that the disputed areas in the case at bar form part of the expanded area already reverted to
public dominion.

Upon approval of said Re-survey Plan and Report, petitioner submitted the same to the trial court in Civil Case
No. 373. However, notwithstanding its approval by the Director of Lands, and the Secretary of Agriculture and
Natural Resources, Judge Jesus P. Arlegui [who had been assigned to respondent Judge De los Angeles" court
in Batangas upon the latter's retirement] arrogating unto himself the function which properly belongs to the
Director of Lands, disapproved the said Report and Re-survey Plan, thereby preventing execution of the
subdivision (a) of the decision in Civil Case No. 373. In effect, such disapproval by Judge Arlegui was intended
to negate the earlier resolution in G.R. No. L-26112 (44 SCRA 255, 263) that as soon as resurvey "is completed
the proper writ of execution for the delivery of possession of the portions found to be public land should issue;"

Earlier, in Civil Case No. 653, respondent Zobel filed on July 10, 1969 a Motion to Suspend Further
Hearing, etc., praying that the hearings in said Civil Case be indefinitely suspended until the case at bar is
resolved by this Honorable Court. He contended that the issues raised in the case at bar are the very issues
pending in the case below, Civil Case No. 653, and that the decision that the Court renders here "would greatly
affect the respective claims of said parties in (said) case." (G.R. No. 1, 46396, Record, pp. 128-130)

The aforesaid motion was followed by respondent Zobel's Motion for Immediate Resolution of Defendant-
Movant's Motion to Suspend, etc., dated August 20, 1969. An opposition thereto was filed by plaintiff therein and
a reply was filed in turn by respondent Zobel on July 30, 1 969. Acting on the said motions, the trial court issued
an order on September 2, 1969 giving the parties certain periods to file their pleadings and cancelling a
scheduled hearing until it shall have resolved the motion to suspend.

Since that time, however, the trial court chose not, or failed, to act formally on the aforesaid motion to suspend
hearings. Then after five (5) years, with the trial court now presided by Judge Arlegui, respondent Zobel flip-
flopped and filed a Motion to Dismiss the case below dated January 14, 1976, claiming alleged failure to
prosecute and res judicata, which was vigorously opposed by herein petitioner. Judge Arlegui, robot-like,
nonetheless dismissed the Republic's complaint for Zobel's alleged grounds of failure to prosecute for an
unreasonable length of time and res judicata per his order of January 12, 1977.

A 35-page motion for reconsideration thereof was filed by Petitioner within the extended period sought for in an
earlier motion. The then Presiding Judge Arlegui summarily denied the motion for extension of time earlier filed,
per its order of March 3, 1977.

The "Motion for Reconsideration of Order" dated March 3, 1977, and "Supplement to Motion for Reconsideration
of Order" dated March 3,1977, were similarly denied by Judge Arlegui in his order dated June 14, 1977.
Petitioner Republic thus elevated the matter to this Court by certiorari and mandamus which was docketed as
G.R. No. L-46396 11 and asked that it be consolidated with the case at bar which from the beginning was
assigned to the Court en banc. However, G.R. No. L-46396 was somehow assigned to the Second Division of
the Court which peremptorily dismissed the petition per its minute resolution dated December 1 7, 1977, which
reads:

Acting on the petition for certiorari and mandamus in this case as well as the comment thereon of
the private respondent and the reply of petitioner and rejoinder thereto of said respondent, the
Court resolved to DISMISS the petition, considering that although the motion for extension of
time to file a motion for reconsideration of petitioner dated February 19, 1977 may be deemed as
filed within the reglementary period for appeal, the same did not suspend said period which
expired on February 21, 1977 (Gibbs v. Court of First Instance of Manila, 80 Phil. 160, where the
appeal albeit late by one day, was nevertheless allowed on the ground that under the peculiar
circumstances of the case showing utmost effort on the part of appellant to make the same on
time, there was excusable neglect, which does not obtain here) because "the petition for
extension of time should not .interrupt the period fixed by law for the taking of the appeal" on the
ground that "the only purpose of said petition is to ask the court to grant an additional period to
that fixed by law to that end." (Alejandro v. Endencia 64 Phil, 321)

Soon after the dismissal of the petition in G.R. No. 46396, respondent Zobel filed in this case a "Motion to
Dismiss Petition" and "Manifestation and Motion to Lift Temporary Restraining Order" issued on March 7, 1969,
and another supplemental motion, on the ground that the instant case has become moot and academic by the
dismissal of the complaint in Civil Case No. 653 in the court below. This was refuted by the herein petitioner in
its Comment dated March 30, 1981.

On December 15, 1981, Judge Arlegui precipitately rendered in Civil Case No. 653 a decision on the
Counterclaim of herein respondent Zobel, declaring him the true, absolute and registered owner of the lands
covered by Transfer Certificate of Title Nos. 3699, T-7702 and 9262 (now No. 10031) and directing the
Government's licensees and permittees occupying the same to vacate the lands held by them.

Subsequently, on March 9, 1982, Judge Arlegui issued a writ of execution in Civil Case No. 653, prompting the
heirs of Guillermo Mercado to file in this case an Urgent Motion dated March 22,1982 to stay the same. Acting
on the Urgent Motion, the "Court issued another restraining order dated June 17, 1982, emphasizing the
necessity therefor in this wise:

... the issuance of the restraining order now prayed for by movants-heirs of Guillermo Mercado is
necessary to retain the status quo since whatever rights they have are only in representation of
the petitioner Republic who claims the said lands by virtue of their reversion to the public
dominion as specifically adjudged by this court in G.R. No. L- 26112.,

Respondent Zobel then moved for a reconsideration and lifting of aforesaid restraining order. The heirs of
intervenor Zoila de Chavez on the other hand, moved for a preliminary mandatory injunction to restore them in
possession of a Portion of the land in dispute from where they had been ousted by virtue of the writ of execution
issued in Civil Case No. 653.

In a Consolidated Comment dated September 30, 1982, petitioner Republic opposed the said motion of
respondent Zobel, and at the same time concurred with the motion filed by the heirs of Zoila de Chavez for the
issuance of a writ of preliminary mandatory injunction.

On or about November 8, 1983, the heirs of intervenor Guillermo Mercado filed an "Urgent Motion for Contempt
and Issuance of a Temporary Restraining Order, etc.," as respondent Zobel's representative, in spite of the
restraining order enjoining them from enforcing the writ of execution, had begun to acquire possession of the
land in question by cutting off trees in the undeveloped fishpond being leased by Mercado from the 7
government.

On November 10, 1983, the Court issued the corresponding restraining order prayed for "enjoining respondent
Enrique Zobel or his duly authorized representative from further cutting off the trees in the undeveloped fishpond
of Guillermo Mercado having an area of two (2) hectares, more or less, and from hauling the big trees already
cut off costing P10,000.00 "Resolution dated November 13, 1983).

On or about November 23, 1983, the heirs of Guillermo Mercado filed a "Second Urgent Motion for Contempt
and a Second Restraining Order, etc." since, in spite of the foregoing restraining order issued by this Court,
respondent Zobel and his agent were still cutting off the trees in the disputed areas.
On December 6, 1983, after the hearing en banc of this case on the merits, a resolution was rendered by this
Court "to ISSUE a second temporary restraining order enjoining respondent Enrique Zobel and his agents,
representatives and/or any other person or persons acting on his behalf to desist from cutting off or removing
any tree in the questioned areas which were declared reverted to the public domain and which are claimed by
the Republic, effective immediately and until further orders by the Court.

Against this background, respondent Zobel now contends that his TCT No. 3699 and TCT No. 9262 (now T-
10031) are valid and subsisting as said titles "cannot be considered automatically annulled" by the decision in
G.R. No. L-20950; that the decision in G.R. No. L-20950 annulled only TCT No. 9550 and no other; that he
cannot be bound by the decision in said G.R. No. L-20950 since he was not a party thereto; that the dismissal of
Civil Case No. 653 and of the appeal therefrom by the Republic has quieted his questioned titles and has
rendered the instant petition moot and academic; that the decision on his counterclaim in Civil Case No. 653
declaring him to be the true and registered owner of the subject land had long become final and executory, and
that under the principle of res judicata the present petition ought to be dismissed; and that intervenors Mercado
and Chavez have no right of possession over the land in question.

The Republic's petition is patently meritorious.

1. On the original issue at bar brought against respondent Judge Angeles" issuance of preliminary mandatory
injunction per the questioned Order of October 1, 1968, petitioner Republic and its co-petitioner licensees are
manifestly entitled to the restraining orders issued by the Court on March 7, 1969 enjoining respondent judge
from enforcing the preliminary mandatory injunction that he had issued that would oust the Republic and its
licensees from the public lands in question and transfer possession thereof to respondent Zobel; that issued on
June 17, 1982 enjoining enforcement of respondent Judge Arlegui's writ of execution issued on March 9, 1982
declaring without trial respondent Zobel (on his counterclaim to the dismissed complaint) as the true and
registered owner of the lands covered by TCT Nos. 3699, 7702 and 9262 (now 10031) and directing the
Republic's licensees to vacate the same; and that issued on December 6, 1983 after the hearing on the merits,
"enjoining respondent Enrique Zobel and his agents, representatives and/ or any other person or persons acting
on his behalf to desist from cutting off or removing any tree in the questioned areas which were declared
reverted to the public domain and which are claimed by the Republic."

Respondent Judge Arlegui, after he succeeded Judge Angeles as presiding judge, committed the gravest abuse
of discretion, when, instead of granting the preliminary injunction sought by the Republic and its co-petitioners to
enjoin respondent Zobel from usurping lands of the public domain covered by his voided expanded subdivision
titles, he dismissed the complaint on January 12, 1977 and almost four years later on December 15, 1981,
without any trial, granted said respondent's counter prayer in his Answer to the complaint in Civil Case No. 653
for the issuance of a mandatory injunction upon a P10,000.00 bond to oust petitioner Republic and its permittees
and/or lessees from the property and to deliver possession thereof to respondent Zobel. It is settled doctrine that
as a preliminary mandatory injunction usually tends to do more than to maintain the status quo, it is generally
improper to issue such an injunction prior to the final hearing and that it may issue only in cases of extreme
urgency, where the right is very clear. 12

Contrary to respondent Zobel's assertion, the 1965 final judgment in favor of the Republic declared as null and
void, not only TCT No. 9550, but also "other subdivision titles" issued over the expanded areas outside the
private land of Hacienda Calatagan covered by TCT No. 722. As shown at the outset,13 after respondents
ordered subdivision of the Hacienda Calatagan which enabled them to acquire titles to and "illegally absorb" the
subdivided lots which were outside the hacienda's perimeter, they converted the same into fishponds and sold
them to third parties, But as the Court stressed in the 1965 judgment and time and again in other cases, 'it is an
elementary principle of law that said areas not being capable of registration, their inclusion in a certificate of title
does not convert the same into properties of private ownership or confer title on the registrant." 14 This is crystal
clear from the dispositive portion or judgment which reads:

WHEREFORE, judgment is hereby rendered as follows:

(a) Declaring as null and void Transfer Certificate of Title No. T 550 (or Exhibit "24") of the
Register of Deeds of the Province of Batangas and other subdivision titles issued in favor of
Ayala y Cia and/or Hacienda de Calatagan over the areas outside its private land covered by
TCT No. 722, which including the lots in T-9550 (lots 360, 362, 363 and 182) are hereby reverted
to public dominion."

This final 1965 judgment reverting to public dominion all public lands unlawfully titled by respondent Zobel and
Ayala and/or Hacienda Calatagan is now beyond question, review or reversal by any court, although as sadly
shown hereinabove, respondents' tactics and technical maneuvers have all these 23 long years thwarted its
execution petition and the Republic's recovery of the lands and waters of the public domain.

Respondent Zobel is bound by his admission in his Answer to the Complaint below that when Civil Case No. 373
was docketed, he "was and still is at present one of the members and managing partners of Ayala y Cia one of
the defendants in the said civil case, and, therefore. privy thereto."

Clearly, the burden of proof lies on respondent Zobel and other transferees to show that his subdivision titles are
not among the unlawful expanded subdivision titles declared null and void by the said 1965 judgment.
Respondent Zobel not only -did not controvert the Republic's assertion that his titles are embraced within the
phrase "other subdivision titles" ordered cancelled but failed to show that the sub division titles in his name cover
lands within the original area covered by Ayala's TCT No. 722 (derived from OCT No. 20) and not part of the
beach, foreshore and territorial sea belonging and ordered reverted to public dominion in the aforesaid 1965
judgment.

2. The issues at bar have been expanded by the parties, as shown by the voluminous records of the case (which
have expanded to 2,690 pages in three volumes), to cover the questioned actions of respondent Judge Arlegui
(a) in dismissing the Republic's complaint in Civil Case No. 653 of his court per his Order of January 12, 1977
(subject of the Court's Second Division's Resolution of December 17, 1979 dismissing the Republic's petition for
review in Case G.R. No. L,46396); and (b) his decision of December 15, 1981, after almost four years, on
respondent Zobel's counterclaim in the same case, declaring him the true and registered owner of the lands
covered by some three subdivision titles in his name, 15 as well as (c) the resurvey of the lands affected so as to
properly segregate from Ayala's expanded TCT No. 722 the estimated 2,000 hectares of territorial sea,
foreshore, and navigable waters, etc., of the public domain and enforcement and execution of the 1965 final
judgment reverting these usurped public areas to public dominion. 16

3. On the first question of the precipitate dismissal of the Republic's complaint in the case below, Civil Case No.
653, the . records show respondent judge's action to have been capricious , arbitrary and whimsical. His first
ground of non-prosecution of the action by the Republic is belied by his very Order which shows that the
proceedings had been suspended all the while since its filing in 1967 upon insistent motions of respondent
Zobel. against petitioner's vigorous opposition, that it was necessary as a cuestion previa to await the Court's
resolution of the case at bar.

His second ground of res judicata is likewise devoid of logic and reason. The first case (the 1965 judgment in
Case L-20950) decreeing the reversion to public dominion of the public lands and waters usurped by
respondent's unlawfully expanded titles -and ordering the cancellation of all such titles and their transfers could
not possibly be invoked as res judicata in the case at bar on respondent Zobel's untenable submission that his
unlawfully expanded titles were not specifically mentioned in the 1965 judgment. The Court in said 1965
judgment had stressed the elementary rule that the generally incontestable and indefeasible character of a
Torrens Certificate of Title does not operate when the land covered thereby is not capable of registration, as in
this case, being part of the sea, beach, foreshore or navigable water or other public lands incapable of
registration. 17 It should be noted further that the doctrine of estoppel or laches does not apply when the
Government sues as a Sovereign or asserts governmental rights, nor does estoppel or laches validate an act
that contravenes law or public policy 18 and that res judicata is to be disregarded if its application would involve
the sacrifice of justice to technicality. 19

Respondent Judge Arlegui's refusal to grant the Republic a simple 15-day extension of time to file a Motion for
Reconsideration on the ground that such motion was filed on the last day (following a Sunday) and he could no
longer act thereon within the original period per his Orders of March 3, 1977 and June 14, 1977 20 depict an
incomprehensible disregard of the cardinal principle that procedural rules are supposed to help and not hinder
the administration of justice and crass indifference, if not outright hostility against the public interest.

At any rate, such dismissal of the complaint and dismissal on December 17, 1979 of the petition for certiorari
thereof by the Court's Second Division, based on purely procedural and technical grounds, does not and cannot
in any way have any legal significance or prejudice the Republic's case. Such dismissal by the Second Division
cannot in any way affect, much less render nugatory, the final and executory 1965 judgment in G.R. No. L-20950
reverting the public lands and waters to public dominion. Much more so when we take into account the
mandatory provisions of Article VIII, Section 4(3) of the 1987 Constitution (and its counterpart Article X, Section
2(3) of the 1973 Constitution) to the effect that only the Supreme Court en banc may modify or reverse a
doctrine or principle of law or ruling laid down by the Court in a decision rendered en banc or in division.
3. Respondent judge's "decision" on respondent Zobel's counterclaim and declaring him, four years after
dismissal of the Republic's complaint, as the true owner of the lands unlawfully titled in Zobel's name is properly
before the Court in the case at bar. We declare the same null and void for want of jurisdiction over the subject
properties which were reverted to public dominion in the final 1965 judgment which annulled all expanded titles
unlawfully secured by respondents and their transferees to public waters and lands.

4. As to the third and most important question of finally executing and enforcing the 1965 judgment in favor of
the Republic and reverting all usurped areas to public dominion, the Solicitor General has complained rightfully
in his Memorandum that "mass usurpation of public domain remains unabated . ... for almost (23) years now
execution of the 1965 final judgment in G.R. No. L-20950, ordering the cancellation of the subdivision titles
covering the expanded areas outside the private lands of Hacienda Calatagan, is being frustrated by respondent
Zobel, the Ayala and/or Hacienda Calatagan. As a consequence, the mass usurpation of lands of public domain
consisting of portions of the territorial sea, the foreshore, beach and navigable water bordering Balayan Bay,
Pagaspas Bay and the China Sea, still remain unabated . ... (T)he efforts of Ayala and Zobel to prevent
execution of said final judgment are evident from the heretofore-mentioned technical maneuvers they have
resorted to. In brief, they moved to quash and secured the quashal of the writ of execution, succeeded in
opposing the issuance of another writ of execution, opposed the motion to conduct re-survey, opposed the
approval and secured a disapproval of resurvey plan, moved to dismiss and got a dismissal of Civil Case No.
653, ousted government fishpond permittees from the subject lands and threatened to eject the other permittees
therefrom, and secured from the lower court a declaration of validity of their void titles. Also, in this case,
respondent Zobel is trying to prevent the cancellation of his void titles by resorting to frivolous technicalities thus
flouting this Honorable Court's decision in G.R. No. L-20950 . " 21

We heed the Republic's pleas that

"It bears stressing that the Re-survey Plan (Annex "C", together with Annexes "A" and "B" of Republic's
Comment dated March 30,1981, being a Report on the Re-survey dated August 5,1977 and the "Final Report"
dated September 2, 1977, respectively) delineating the expanded areas covered by subdivision titles derived
from TCT No. 722 has been prepared by a Committee created by the Secretary of Agriculture and Natural
Resources wherein Ayala and/or Hacienda Calatagan was represented by Engineer Tomas Sanchez, Jr. and
approved by the Director of Lands. Well to recall that under G.R. No. 26112 (44 SCRA 255, 263), this Honorable
Court, in a Resolution dated April 11, 1972, declared that as soon as said resurvey Is completed the proper writ
of execution for the delivery of possession of the portion found to be public land should issue." Thus: [See pages
3-5 of Annex "A" hereof for text of Resolution.]

"By virtue of the aforesaid resolution, therefore, there should no longer be any legal impediment against the
execution of the final judgment in Civil Case No. 373 (G.R. No. L-20950), the issuance of which is purely
ministerial the dubious decision in Civil Case No. 653 notwithstanding. Accordingly, to give legal significance to
the earlier decision and resolution of this Honorable Court in G.R. No. L-20950 and 26112, respectively, and to
foreclose any further legal obstacle on the matter, we pray this Honorable Court to declare the proceedings
conducted by respondent judge in Civil Case No. 653 null and void ab initio, and to consider the resurvey plan
as sufficient basis for the immediate issuance of the corresponding writ of execution in Civil Case No. 373. For it
is only upon said execution that the oft revived issues of ownership and possession over the land in question, as
well as over all other lots covered by the subdivision titles outside the private land covered by TCT No. 722, may
be finally laid to rest. Indeed, under the facts and circumstances obtaining in the case at bar, execution of the
final judgment in Civil Case No. 373 is long overdue ." 22

To allow repetition after repetition of the maneuvers hereinabove set forth in detail, notwithstanding the final
1965 judgment in favor of the Republic, and to protract further the return to the Republic of the usurped lands
pertaining to the public domain would be to sanction a legal abomination As stated by the late Chief Justice
Roberto Concepcion, to frustrate delivery and return of the usurped lands to the Republic would:

(1) Establish a precedent-fraught with possibilities tending to impair the stability of judicial
decisions and affording a means to prolong court proceedings or justify the institution of new
ones, despite the finality of the judgment or decree rendered in the main case, by sanctioning a
departure from the clear, plain and natural meaning of said judgment or decree;

(2) Contribute to the further increase of the steadily mounting number of cases pending before
our courts of justice, and thus generate greater delay in the determination of said cases, as well
as offset the effect of legislative and administrative measures taken-some upon the suggestion or
initiative of the Supreme Court to promote the early disposal of such cases;
(3) Impair a normal and legitimate means to implement the constitutional mandate for the
protection and conservation of our natural resources and the patrimony of the nation; and

(4) Promote usurpations of the public domain, as well as the simulation of sales thereof by the
original usurper, by exempting him from responsibility for damage which would not have been
sustained were it not for the irregularities committed by him so long as he has conveyed the
subject matter thereof to a purchaser for value, in good faith. 23

As in Air Manila, Inc. v. CIR 24 and several other cases in order to avoid further intolerable delay and finally bring
to reality the execution of the 1965 judgment that would enable the State to recover at last the estimated 2,000
hectares of lands and waters of the public domain, the Court will order its Clerk of Court to issue directly the
corresponding writ of execution of judgment addressed to the sheriffs of the locality. We declare respondent
judge's gratuitous "disapproval" of the Re-survey Plan and Report duly approved by the Director of Lands and
the then Secretary of Agriculture and Natural Resources as null and void for being ultra vires and lack of
jurisdiction over the same. It is well-recognized principle that purely administrative and discretionary functions
may not be interfered with by the courts. In general, courts have no supervising " power over the proceedings
and actions of the administrative departments of government. This is generally true with respect to acts involving
the exercise of judgment or discretion, and findings of fact. 25 There should be no thought of disregarding the
traditional line separating judicial and administrative competence, the former being entrusted with the
determination of legal questions and the latter being limited as a result of its expertise to the ascertainment of
the decisive facts.26

WHEREFORE, judgment is hereby rendered

1. Annulling the questioned mandatory injunction of October 1, 1968 issued by respondent-judge and making
permanent the restraining orders issued by the Court;

2. Declaring as null and void the questioned decision of December 15, 1981, as well as the corresponding writ of
execution therefore having been issued by respondent judge with grave abuse of discretion and without
jurisdiction, and for being in contravention of the final 1965 decision in Civil Case No. 373 as affirmed in G.R.
No. L-20950;

3. Declaring the Re-survey Plan duly approved by the Director of Lands as sufficient basis for the execution of
the final judgment in the aforesaid Civil Case No. 373 as affirmed in G.R. No. L- 20950; and

4. Directing the Clerk of this Court to forthwith issue the corresponding writ of execution in the case at bar for
Civil Case No. 373 of the Regional Trial Court (formerly Court of First Instance) of Batangas (Balayan Branch)
reverting to public dominion and delivering to the duly authorized representatives of the Republic all public lands
and lots, fishponds, territorial bay waters, rivers, manglares foreshores and beaches, etc. as delineated in the
aforesaid duly approved Re-survey Plan (Annex "C") and any supplemental Re-survey Plan as may be found
necessary * and duly approved by the Secretary of Agriculture. This decision is IMMEDIATELY EXECUTORY and no motion for extension of time to file a
motion for reconsideration will be granted.

Yap, Fernan, Narvasa, Melencio-Herrera, Gutierrez, Jr., Cruz, Paras, Feliciano, Gancayco, Bidin, Sarmiento and
Cortes, JJ., concur.

Padilla, J., and Griño-Aquino, J., took no part.

MEMORANDUM FOR GRANTING OF PETITION

Backgrounder

The case directly stems from Civil Case No. 653 of the Batangas court of first instance filed on August 2,
1967 by then Solicitor General now Justice Antonio P. Barredo on behalf of the Republic of the Philippines and
its co- petitioners as co-plaintiffs (as permittees and/or lessees of public fishponds) for the cancellation of TCT
Nos. 3699 and 9262 issued in the name of respondent (defendant) Enrique Zobel (covering the fishponds
granted in lease by the Republic) and for the reconveyance of the properties covered in part thereby and of other
properties of the public domain to the Republic, to enable it to maintain its co-plaintiffs in peaceful possession of
their respective fishponds. Besides, damages and back rentals, the complaint further prayed for the issuance of
a preliminary injunction restraining Zobel and his agents "from usurping and exercising further acts of dominion
and ownership over the land subject matter of this litigation.
The Republic's position is simple: By virtue of this Court's judgment in Republic vs. Ayala (14 SCRA 259, May
31, 1965) affirming (with modification affecting the Dizons only as transferees of Ayala) the trial court's judgment
in Civil Case 373, an expanded subdivision titles of Ayala (derived from its TCT No. 722) covering an estimated
excess of from 1,091 hectares to 2,500 hectares of the public domain, including over 400 hectares of the beach,
foreshore and territorial sea which are manifestly not capable of private appropriation or registration, were
declared null and void, as follows:

WHEREFORE, judgment is hereby rendered as follows:

(a) Declaring as null and void Transfer Certificate of "title No. T-9550 (or Exhibit 24) of the
Register of Deeds of the Province of Batangas and other subdivision titles issued in favor of
Ayala y Cia. and/or Hacienda Calatagan over the areas outside its private land covered by CT
No 722 which, including the lots in T-9550 (Lots 360, 362, 363 and 182) are hereby reverted to
public dominion.

xxx xxx xxx

(CFI judgment as affirmed by Supreme Court)

The Republic's position is supported by all the series of decisions and extended resolutions rendered
subsequently (to its May 31, 1965 judgment in the basic case of Republic vs. Ayala) by this Court: — Decision
in Republic vs. Angeles (20 SCRA 608, June 30,1967) issuing a writ of mandamus ordering the court a quo to
enforce the judgment; Resolution of October 4, 1971 reversing on respondents" second and
supplemental motion for reconsideration the decision of June 30, 1967 and dismissing the petition for
mandamus (41 SCRA 422); Resolution of April 11, 1972, denying petitioners" first motion for reconsideration (44
SCRA 255) and Resolution of April 27, 1973 denying petitioners' second motion for reconsideration "for lack of
necessary votes" 1 unreported in SCRA). 1-a

Although the writ of mandamus for execution of judgment with a preliminary resurvey to determine specifically by
metes and bounds the huge excess area encroached and usurped by Ayala's expanded subdivision titles) was
denied by this Court when the majority of six reversed the original unanimous decision of June 30, 1967, still
even the majority made it clear that its disposition "does not affect at all the interests of the Republic but only
those of intervenor Tolentino ... "

Thus, the ponente, Justice Villamor, stressed this for the majority in the Resolution of April 11, 1972 (in response
to the point raised in the dissenting opinion that there was "no justification for denying writ of execution for
cancellation of void titles [of Ayala and reversion of public lands covered thereby to public dominion. The writ of
mandamus should issue at least for this purpose as ordered in the original decision of June 30, 1967 now set
aside," as follows:

At this juncture, it seems necessary to clarify a point, which surprisingly is not raised in the
motion for reconsideration of the Solicitor General, limited as it is to invoking or reiterating the
arguments advanced in the dissenting opinions of the Chief Justice and Justice Teehankee
justifying the award, not to the government but to petitioner Tolentino, namely, the effect of the
resolution of October 4, 1971, upon the refusal of the court a quo to issue, per its order of
February 8, 1966, the writ of execution prayed for by the Republic for the implementation of
paragraph (a) of the dispositive part of Judge Tengco decision of June 2, 1962 in Civil Case No.
373, the said resolution having denied the petition for certiorari and mandamus unqualifiedly. It is
suggested in the motions for reconsideration of petitioner Tolentino that such denial leaves the
government practically with an empty victory, since it looks as if respondent judge is determined
not to give full effect to the annulment of the titles referred to in the aforementioned paragraph (a)
of Judge Tengco's judgment. In fact, the same apprehensive suggestion may be gleaned from
the "Reply to Opposition" dated January 31, 1972 of petitioner Tolentino wherein the attention of
this Court is invited to a subsequent order of respondent Judge of October 27, 1970 denying the
motion filed by the Provincial Fiscal of Batangas praying for authority to conduct a re-survey of
the lands herein in question preparatory to implementing the same paragraph of Judge Tengco's
judgment already referred to.

We do not believe there is real ground such fear, no matter how apparent it does appear that
private respondents are very cautious in seeing to it that the implementation of Judge Tengco's
judgment does not go beyond what they feel it warrants or contemplates Examined objectively
and overlooking their infelicitous phraseology, We cannot discern from the orders in question any
repudiation by Judge de los Angeles of the declaration of nullity not only of TCT No.
9550, covering lots 360, 362, 363 and 182, but also of other subdivision titles issued in favor of
Ayala v Cia. and/"or Hacienda Calatagan over the areas outside its private land covered TCT No
722 . . . which are hereby reverted to public dominion" per Judge Tengco's decision. Surely, no
one can deduce such a repudiation from the positive holding in the order of February 8, 1966
that "there is no need of issuing a writ of execution because the declaration of nullity in itself is
already, executory. "One might perhaps question the legal correctness of such proposition, but it
is clear to Us that there is here a reaffirmation rather than a denial of the rights of the
Government in the premises, albeit His Honor could be mistaken in his view that it would be only
after private respondents and Dizon have refused or failed to surrender their titles for cancellation
that "resort" to the court would be proper. And with respect to the holding in said order that "it is
clear that the Dizons being purchasers in good faith have the right to retain possession of all the
lots covered by TCT 9550 is obvious that such was the judgment of this Court in G.R. No. L-
20950, and it would have been a manifest error of His Honor had he ruled otherwise. It is thus
clear that even after the issuance of the order of February 8, 1966, nothing adverse to the
government or the Republic was being done by anyone that was not expressly authorized by the
final and executory decision of this Court.

Coming now to the order of October 27, 1970, which, incidentally, was never brought to the
attention of this Court before October 4, 1971, We cannot see how the same can be cause for
apprehension on the part of the Republic because as We read the same, it does not actually
deny the right of the government to a re-survey; rather, it simply held basically that it is only wise,
prudent and proper not to give due course to the instant motion (to re-survey) which .... is
tantamount to giving due course to a motion for execution even before the Supreme Court had
ruled on the matter of whether or not to grant the mandamus ordering the court to execute the
final decision in Civil Case 373." And having declared itself without authority to act in the
meanwhile, it stands to reason that anything else it might have said in the order which could be
interpreted as adversely affecting the government's position in any respect would be of no
consequence, the same being pure obiter dictum.

Upon these premises, We hold that even if the prayer for certiorari and mandamus in the basic
petition herein is denied, still it is clear that what this Court is disposing of in the present case
does not affect at all the interests of the Republic but only those of Intervenor Tolentino in
relation to the lower court's orders of January 18, 1966, February 2, 1966 and April 13, 1966. As
already explained, the order of February 8, 1966 does not constitute a denial of the right of the
Republic to the cancellation of the titles nullified by the decision of Judge Tengco affirmed by this
Court. Indeed, the respondent Judge expressly made the reservation for the Republic to "resort"
to the court should private respondents refuse or fail to have their titles cancelled. Incidentally,
even the order of October 27, 1970 about the resurvey merely held the remedy to be premature
until the decision in this case has become final. Of course it is understood that in such
eventuality, the resurvey requested by the Provincial Fiscal would be in order and as soon as the
same is completed the proper writ of execution for the delivery of possession of the portions
found to be public land should issue.

WHEREFORE, and with the clarification aforemade of the rights of the Republic, the motion and
supplemental motion for reconsideration of petitioner Tolentino are denied for lack of merit. The
motion for reconsideration of the Solicitor General, which is no more than a duplication of
Petitioner Tolentinos motions in support of his private claim for damages, is likewise denied . 2

Then Justice Makalintal in his separate concurrence stressed that "The resolution in no way affects the rights of
the Government as declared in the decision. 3

Justice Barredo in his separate concurrence even more vigorously stressed also that —

... .If in any manner the dispositive portion of the resolution of October 4, 1971 denying the
mandamus did give rise to apprehensions, the present resolution should serve to make it
definitely clear that such denial cannot affect the Government adversely. I am sure that the five
justices whom I am joining in denying Petitioner's motion for reconsideration are as firm as the
three distinguished dissenters in the resolution not to alow this Court to be an instrument of land-
grabbing as they are against the reversal or even modification in any substantial degree of any
final and executory judgment whether of this Court or any other court in this country, and, that if
there were such possibilities in consequence of the resolution of October 4, 1971 and the present
resolution of denial, they would not give their assent to said resolutions. We are certain that in
deciding against Petitioner Tolentino, We are not condoning nor permitting that the lands in
question remain with the Dizons or with the Ayalas. What We see very clearly is that the
respondent Judge has not denied any right of the Government, and if he has refused to take
definite action so far, it is only because he disagrees with the procedure of execution pursued by
the representatives of the Government or is otherwise awaiting the final judgment of this Court in
deference to its superiority. 4

Respondent court, however, instead of granting the preliminary injunction sought by the Republic, et al. to enjoin
Ayala from usurping the lands of the public domain covered by Ayala's voided expanded subdivision titles,
granted Zobel's (as Ayala's transferee of said void title) counter-prayer in his answer to the complaint for the
issuance of a mandatory injunction upon a P10,000 — bond per its orders of October 1 and 21, 1968 and of
February 21, 1969 (denying reconsideration) to oust petitioner Republic and its permittees and/or lessees
(particularly Chavez and Mercado) from the fishponds in question and to restore Zobel to the possession
thereof, notwithstanding that the case of accion reivindicatoria filed below is still pending trial on the merits.

Hence, the present petition for certiorari as filed on March 3, 1969 filed by then Solicitor General now Justice
Felix V. Makasiar on behalf of the Republic and its co-petitioners for the setting aside of such mandatory
injunction. As prayed for, the Court issued on March 7, 1969 a restraining order enjoining the enforcement of
respondent court's mandatory injunction.

The issue

The issue as posed by Justice Fernandez" draft is "whether it is the private petitioners (particularly Chavez and
Mercado) or the private respondent Enrique Zobel, who at this stage of Civil Case No. 653 of the court a
quo which is still pending trial on the merits has a better right to the possession of certain areas constituting
portions of properties covered by Transfer Certificates of Title in the name of the latter [Zobel] but allegedly
covered by fishpond permits and/or applications therefor in favor of the former" (at pages 2-3) is incomplete as it
goes and omits three essential factors:

1. The main protagonists are really the Republic of the Philippines on one side (with Chavez and Mercado as its
permittees and/or lessees) and Zobel on the other;

2. The lands in question are alleged to be lands of the public domain covered by void expanded subdivision titles
wrongfully secured by Ayala (Zobel's predecessor) and which were declared null and void and the lands ordered
reverted to the public domain by this Court's May 31, 1965 decision in Republic vs. Ayala, supra; and

3. The question at issue in the case below is not one merely of possession but of ownership as found and held
by respondent court itself in its order of December 13, 1967 (Annex B, petition) denying Zobel's motion to
dismiss, in this wise: "the issue in the instant case is ownership, "that is, whether defendant Enrique Zobel's
Transfer Certificate of Title Nos. 3699 and 9262 can be considered valid as it is alleged by plaintiffs that they
actually cover portions of the territorial waters of the Philippines." 5

Reasons for Granting of Petition

Basic and fundamental reasons abound for maintaining the status quo and maintaining the possession by the
Republic of the lands in litigation (which it has placed with the lessees or permittees rather than respondent
court's arbitrarily transferring possession to Zobel by mandatory injunction while awaiting trial on the merits of
the case below, among them the following:

1. As was stressed by the Solicitor-General in his comment of November 23, 1972 on Zobel's motion for
modification and/or dissolution of temporary restraining order filed on November 2, 1972 (Reno, p. 180), the
property herein involved is "part of the public domain;"this Court had in its May 31, 1965 decision affirmed the
Batangas court of first instance decision dated June 2,1962 in Civil Case No. 373 "which orders the cancellation
as null and void of all expanded subdivision titles secured by Ayala y Cia. over the original area of Hacienda
Calatagan as stated in TCT No. 722 and the reversion to public dominion of the public lands usurped thereby . . .
.;" "(I)t cannot be overemphasized that portions of the public domain are not subject to private appropriation and,
therefore, not registerable under the Torrens System" (cases cited); and that "it would certainly be condoning an
illegal act if the private respondent-movant is allowed to perpetuate what he has committed-an affront and an
offense against the State. What is asked for in the instant motion is a prayer which, if granted, would be to the
prejudice of the Government. "6
The Court per its resolution of January 23, 1973 after considering the pleadings of the parties consequently
"Resolved to deny the motion for lack of merit."7

2. When Zobel renewed on December 18, 1973 under the guise of a "supplemental memorandum" his motion to
dissolve the same restraining order, the Solicitor General after invoking this Court's previous resolution of
January 23, 1973 which denied "for lack of merit" the same relief now sought again, underscored the following in
his Opposition of January 4, 1974;

a) The alleged copy of a plan and aerial photograph submitted by Zobel as showing that the lots
possessed by co-petitioners Chavez and Mercado under permit from the Republic "are very well
within the boundaries of the parcel of land embraced in and covered by (Ayala's) Transfer
Certificate of Title No. 722" cannot serve to overturn the final and executory judgment of the
court of first instance in Civil Case No. 373 as affirmed by this Court's May 31, 1965 judgment
in Republic vs. Ayala and its subsequent resolutions of October 4, 1971 and April 11, 1972
in Republic vs. Angeles, supra;

b) Respondent court's very order of October 1, 1968 (Annex D, petition) for the issuance of a
mandatory injunction justified the same on the premise that the judgment declaring Ayala's
expanded titles null and void "cannot as yet be executed because the matter of execution
is still the subject of a motion for reconsideration which is still pending in the Supreme Court."
This premise is no longer true-for both the majority and dissenting opinions in resolving the
motion for reconsideration left no doubt that all such expanded titles of Ayala were and are null
and void and cannot be honored;

c) Thus, Solicitor General stressed that "There is, to us, no question as it is obvious from the
record that the lots or fishponds herein involved were adjudged as included in those "other
subdivision titles" outside of Transfer Certificate of Title No. 722, and that, as described, the
transfer certificates of title, in the name of the private respondent concerning said lots encroach
upon and cover res publicae;"8

d) The plan submitted by Zobel "merely illustrates what had been previously surveyed under TCT
No. 722 . . I . and the different surveys under fishpond permit applications" and cannot overcome
this Court's findings in Republic vs. Ayala affirming those of the court of first instance decision in
Civil Case 373 that even assuming to be true Ayala's contention that the fishpond permit
applications were for areas covered by its T.C.T. 722, nevertheless the areas in dispute (covered
by permits issued to Chavez, Mercado, et al. who were also parties in said Case 373) "were
found to be portions of the foreshore, beach or of the navigable water itself. And it is an
elementary principle of law that said areas not being capable of registration, their inclusion in a
certificate of title does not convert the same into properties of private ownership or confer title on
the registrant."

3. At any rate, it appears that such map and plan raise questions of fact as to the actual location of the fishponds
and properties which according to the Republic are part of the public domain and were reverted to the public
dominion under the May 31, 1965 decision in Republic vs. Ayala wherein Ayala's (and Zobel's as successor-
transferee) expanded subdivision titles were declared null and void while Zobel as defendant claims the contrary
in his answer. As far as the record shows, said map and plan have not yet been presented to respondent court-
which has yet to hold trial on the merits of petitioners' complaint below, but
were submitted to this Court only on December 18,1973 with Zobel's supplemental memo and second motion to
dissolve restraining order long (over 4 years) after this case was submitted for decision on June 25, 1969.

It is elementary that this Court is not a trier nor even a reviewer of facts and certainly cannot at this stage
consider such map and plan which have not yet even been presented to the court below.

4. Respondent court issued the mandatory injunction on the basis of the counterclaim in Zobel's answer that co-
petitioners Chavez and Mercado allegedly dispossessed him of the fishponds and properties in question by
having illegally and forcibly taken possession thereof in the first week of June, 1966. 9 Such a bare allegation is
contrary to the admitted facts of record, as witness respondent court's own order of December 13, 1967, wherein
in denying Zobel's motion to dismiss, it made of record that the Republic's co-petitioners and private plaintiffs
"were entitled to be placed in possession" of the fishponds as "lessees of the Republic of the Philippines," as
follows:
The third ground is also untenable because the private plaintiffs in this case being lessees of
the Republic of the Philippines with regards to the areas covered by "Transfer Certificates of Title
Nos. 3699 and 9692, they are therefore entitled to be placed in possession thereof as their
applications had been duly approved. in fact it has been alleged that plaintiffs-lessees have
introduced substantial improvements and incurred expenses on their leased properties. 10

5. The previous successful action for ejectment of Zobel against Chavez, et al. on May 25, 1960 under color of
his torrens subdivision title (which had not yet been voided then by this Court's May 31, 1965 judgment
in Republic vs. Ayala) and which per his own averments was executed with the ouster of Chavez, et al. in 1961
patently has no relevance here. The situation has completely changed since this Court's May 31, 1965 judgment
voiding of all the expanded subdivision titles of Ayala and the Zobels (Alfonso and Jacob, father of respondent
Enrique here), whereby the Republic placed back the Chavezes, et al. in possession of the fishponds as
its permittees and lessees. Such leases as official acts of the Government have the presumption of
regularity and cannot be summarily, prematurely and capriciously set aside without trial as respondent court has
done.

Furthermore, if it be true that the Chavezes et al. forcibly took possession of the fishponds in June 1966 as per
Zobel's bare allegation in his counterclaim, why did he not file an action for forcible entry within one year instead
of just making such an allegation in his answer with counterclaim dated January 12, 1968?

Since no forcible entry case was filed by Zobel, it is obvious no writ of preliminary mandatory injunction to
restore him in his alleged prior possession can issue, since the requirements of Article 539 11 for such issuance
are not present.

The inference that by virtue of the ouster in 1961 by execution, of the judgment of forcible entry effected by
Zobel against the Chavezes, respondent court's mandatory injunction issued seven years later in a completely
separate case for reinvindicacion filed by the Republic as the judicially recognized owner of the lands of the
public dominion encroached upon and usurped by Zobel's expanded subdivision titles would serve 'to re-
establish and maintain a pre-existing continuing relation between f the parties, recently and arbitrarily interrupted
by the defendant, than to establish a new relation 12 is manifestly untenable and baseless.

A third party, the Republic, has stepped into the picture as the judicially recognized owner of the public domain
usurped by Zobel's expanded titles. The Chavezes are duly in possession of the fishponds as
permittees/lessees of the Republic (as respondent court itself recognizes in its order of December 13,
1967, supra at page 10). There is no "continuing relation" between the Chavezes et al as the Government's
lessees and Zobel that is "re-established and maintained" by respondent court's arbitrary writ of mandatory
injunction.

6. The whole prop of respondent court's mandatory writ, to wit that the titles of Zobel are presumed to be valid
and must be honored until judicially voided has thus been shown to be bereft of basis, in fact and in law.

It has no basis in fact — because as indisputably shown above, all expanded subdivision titles of Ayala and the
Zobels (cover- ing an estimated 1,091 hectares to 2,500 hectares of public lands) in excess of the original area
of Hacienda Calatagan as stated in TCT 722 were declared null and void (not merely T- 9550 which covered
only the Dizons" fishponds in Civil Case 373 as Zobel would contend now in his answer below, 13 contrary to the
express and undisputed holding of both majority and minority in the supplemental case of Republic vs. Angeles,
supra, at pages 3-6) and the lands ordered reverted to the public dominion under this Court's final judgment of
May 31, 1965 in Republic vs. Ayala.

It has no basis in law-because the burden has thus been ,4 shifted to Ayala and the Zobels to show that their
subdivision titles are not among the expanded titles declared null and void. Zobel's titles therefore do not enjoy
the presumption of validity as erroneously presumed by respondent court in view of the congenital infirmity of
usurpation of inalienable lands of the public domain which accompanied their wrongful issuance. Zobel's titles
have to undergo the test of scrutiny and survey as to whether they fall under the usurped public domain or within
the original area of Hacienda Calatagan and this can only be determined after due trial on the merits which has
yet to be held.

7. Respondent court, in issuing the disputed mandatory injunction while awaiting trial on the merits utterly
disregarding the Republic's rights as judicially recognized owner of lands of the public domain usurped by
Zobel's expanded titles and ordering in effect that the Republic and its permittees/lessees be ousted from their
lawful possession of the fishponds and that possession be restored to Zobel despite its express and correct
finding in its December 13, 1967 order Annex B) that the issue in the case below is ownership (between the
Republic of the Philippines and Zobel) and that the private petitioners are entitled to possession as lessees of
the government acted with grave abuse of discretion and in gross violation of elementary and fundamental
principles of injunctions (many of which principles respondent court correctly cited in its disputed basic order of
October 1, 1968, Annex D, but unfortunately failed to apply correctly and instead misapplied) as to call for the
corrective process of certiorari, as follows:

a—A mandatory injunction will not issue in favor of a party whose rights are not clear and free from doubt or are
as yet undetermined;

b—No advantage may be unduly given to one litigant to the prejudice of the other, hence a court should not by
preliminary injunction transfer the property in litigation from the possession of one party to another where
the legal title is in dispute and the party having possession (the Republic) asserts ownership thereto by right of a
final decision of the Supreme Court and claims the lands involved as lands of the public domain.

c—The primary purpose of a preliminary injunction is the preservation of the status quo. The court must leave
the parties where they are until it is able to hold trial and determine the conflicting claims of ownership between
the Republic and Zobel:

d—Respondent court's mandatory injunction prematurely prejudged the Republic's complaint without trial or
evidence by arbitrarily ordering the restoration of possession of the fishponds in favor of Zobel (when Zobel had
failed to even file a forcible entry case against petitioners) and in gross disregard of this Court's final decisions
and resolutions in Republic vs. Ayala (1965) and Republic vs. Angeles (1967) et seq., supra) all declaring the
nullity of Ayala's and the Zobel's expanded subdivision titles which usurped the public domain;

e—Contrary to the mistaken assumption in Justice Fernandez" draft 14 that the judgment in Civil Case 373, as
affirmed by this Court, was limited to declaring void only TCT T-9550 of Ayala, the judgment proper, as affirmed
by this Court, clearly and indisputably declared null and void all "other subdivision titles (of Ayala and/or Hda
Calatagan) over the areas outside its private land covered by TCT No. 722 which ... are hereby reverted to
public dominion." (Supra, at page 2).

Respondent court thus violated the fundamental rule that a party should not be deprived of possession until the
court is prepared to adjudicate the controverted light in favor of the adverse party (Zobel) and until the
controverted question (of ownership) is adjudicated, the status quo should be preserved and the party in
possession (the Republic through its lessees, the private plaintiffs) should not be ousted.

The question raised by Zobel that if all his expanded titles were declared null and void in the 1962 judgment of
the lower court as affirmed by this Court's May 31, 1965 judgment, then all that petitioners have to do is to have
that decision executed without need of the separate action below would be well taken, were it not for two factors:
(1) The Republic did seek execution of the judgment but the lower court hedged and refused on the ground that
there was no need for execution "because the declaration of nullity in itself is already executory" (supra, at page
4) and (2) The Republic filed mandamus for a writ of execution in Republic vs. Angeles which was at first
unanimously granted by this Court in its decision of June 30, 1967 but which underwent a series of modificatory
resolutions until April 27, 1973 (supra, at page 2,) but finally ended up with the pronouncement that such
execution would issue upon the finality of said April 27, 1973 resolution should further obstacles towards keeping
Ayala and the Zobel' s in possession of the usurped public lands come up supra at page 5)"

8. In the writer's dissenting opinion against the April 11, 1972 resolution, he expressed gratification "that the
majority's position-although it denies reconsideration and maintains reversal of the June 30, 1967 decision at
bar-is that the Government may now finally effect reversion and recover possession of all usurped areas of the
public domain outside (Ayala's) private land covered by TCT No. 722, which including the lots in T9550 (Lots
360, 362, 363 and 182) are hereby reverted to public dominion (Paragraph (a) of 1965
judgment) 15 hereinabove. 16

It would be, a terrible retrogression if these ringing pronouncements against further frustration of reversion of the
public lands and waters decreed in the May 31, 1965 judgment and further retention by Ayala and the Zobels
and their purchasers and transferees of usurped public lands were to be now negated by systaining the arbitrary,
capricious and untenable disputed orders of respondent court.

(In his same dissenting opinion, the writer did recount how up to then and up to now, Ayala and Zobel as its
successor have succesfully blocked at every turn the Government's efforts to enforce the 1965 judgment,
contending that the proper step is for the Government to ask for execution of the judgment and yet opposing the
Government's motion to re-survey the lands affected to determine the precise extent of their usurpation by
expansion of their titles of lands and waters of the public domain and taking below actions that are "diametrically
the opposite of Ayala's posture before this Court of avowed adherence and submission to the judgment reverting
all its usurped lands to public dominion and declaring null and void its subdivision on titles thereto .") 17

It would be incomprehensible if the claim to the lands and fishponds in question as lands of the public domain of
the Republic of the Philippines itself, fully supported by final j judgments of this Supreme Court were not to be
givenfaith and credit and were to be arbitrarily disregarded (without trial and evidence and on the basis of mere
assumptions and conjectures of fact made by this Court on the very lis mota, viz whether Zobel's expanded titles
are for lands of the public domain duly voided by this Court's 1965 judgment) and instead the Republic would be
arbitrarily ousted of the possession that it enjoys through its lessees and that possession transferred pending
trial on the merits to private respondent whose predecessor ,Ayala) has been found by final judgment of this
Supreme Court to be a usurper by unlawfal expanded subdivision titles immense areas of inalienable lands and
waters of the public domain.

The petition for certiorari should therefore be granted and the temporary restraining order issued by the Court
against lie enforcement of respondent court's disputed orders should be made permanent, With costs against
private respondent.

Footnotes

1 Rep. of the Phil. vs. Ayala y Cia. and/or Hacienda Calatagan, Alfonso Zobel, et al.; Miguel
Tolentino, et al., intervenors, reported in 14 SCRA 259, per Barrera, J. (May 31, 1965).

2 Solicitor General's Memorandum of June 1, 1984, page 2.

3 14 SCRA at pp, 262-263, emphasis supplied.

4 At pages 3-4; see fn 2, supra.

5 Idem, at page 1.

6 Reported in 20 SCRA 608, per Concepcion, C.J., Reyes, J.B.L., Makalintal, Bengzon, J.P.,
Zaldivar, Sanchez and Ruiz Castro, JJ., concurring; Dizon, J., took no part.

7 Reported in 41 SCRA 422, per Villamor, J., Makalintal, Zaldivar, Ruiz Castro, Fernando and
Barredo,JJ. concurring; Concepcion, C.J., Reyes, J.B.L., and Teehankee, JJ., dissenting; Dizon
and Makasiar, JJ., took no part.

8 Reported in 44 SCRA 264.

9 Reported in 60 SCRA 497. Villamor, J. had retired. Four members, Makalintal, Zaldivar, Ruiz
Castro and Fernando, JJ. voted for denial. Teehankee, J., joined by Esguerra, J., voted to grant.
(Concepcion,C.J., and Reyes, J.B.L., J. had retired.) The remaining three members of the 9-
member Court (namely, Barredo, Makasiar and Antonio, JJ.) did not take part.

Justice Barredo took no part because of petitioners' supplemental motion for reconsideration to
declare him disqualified and nullify his vote in the Resolution of October 4, 1971 which would
revive the original decision of June 30,1967.

The following pertinent excerpts from my dissenting opinion against the Resolution of April 27,
1973 would be of interest to legal scholars and researchers who have followed this classic case
on finality (or non-finality) of judgments (since it was not given much currency at the time and
was reported quite late in 60 SCRA 497, more than a year after its promulgation):

6. A word as to petitioner's motion-incorporated in his pending second motion for reconsideration


of May 11, 1972-to strike out the remarks of Justice Makalintal in his concurring opinion of 11
April 1972 with reference to my dissenting opinion of the same date that . . . The undisguised
bitterness of the dissent, it would seem, proceeds from the fact that Tolentino has failed to collect
this huge and, in our view, undeserved largesse."
As per the Court's resolution of 2 August 1972, the Court unanimously denied the motion to
strike out. The writer himself was first to vote for such denial, in view of his conviction that every
member of this Court should be perfectly free to express his views in any manner he deems fit
when he chooses to write a separate personal opinion accountable to no one except to himself,
his conscience and his own sense of propriety and decorum.

Hence, the incident was disposed of much earlier on 2 August 1972, without the Court as yet
having deliberated upon the merits of petitioner's second motion for reconsideration, contrary to
respondents' erroneous conjecture in their urgent motion for resolution dated January 16, 1973
that the Court then already took up the merits of said motion for reconsideration.

7. From the writer's own viewpoint, he strove, as has been his norm, to state the grounds of his
dissent forcefully, but objectively and with due regard for the contrary views of his colleagues He
was solely concerned with upholding the views shared by him with Chief Justice Concepcion
(who had penned the original decision at bar of 30 June 1967 overturned by the resolution of 4
October 1971 and who filed the main dissenting opinion thereto) against usurpations of the public
domain and violating the settled rules on finality and conclusiveness of the law of the case and
the accepted norms of due process and fair play. These were the very views expounded and
amplified by him when he wrote the main dissenting opinion against the resolution of 11 April
1972 denying the State's and Tolentinos motions for reconsideration."

10 60 SCRA at page 503.

11 Entitled "Republic of the Philippines v. Hon. Jesus Arlegui, presiding judge, Court of First
Instance of Batangas, Br. VII (Balayan), Enrique Zobel and the Register of Deeds of Batangas'.

12 Manila Electric Railroad & Light Company v. Del Rosario, et al 22 Phil. 433.

13 Supra, pp. 1-4 hereof.

14 SCRA at pp. 262-263.

15 Supra, at page 19 hereof.

16 Supra, at pages 1-4 hereof.

17 Dizon v. Rodriguez, 13 SCRA 704, per Barrera, J.

18 Go Tian An v. Republic, 17 SCRA 1053.

19 Santiago v. Ramirez, 8 SCRA 157 (1963); Ronquillo v. Marasigan, 5 SCRA 304 (1962).

20 Record in G.R. No. L-46396, pp. 329-347; 348- 357; and 358-368.

21 Solicitor General's Memo of June 1, 1984, pp. 23-24,

22 Idem, pp. 33-35.

23 Record in G.R. No. L-26112, pp, 735-736 separate opinion.

24 101 SCRA 472, 484.

25 Abejo v. de la Cruz, 149 SCRA 654 (1987); Pajo v. Ago, 108 Phil. 905; Lim, Sr. v. Secretary
of Agriculture and Natural Resources, 34 SCRA 751.

26 Ozaeta v. Oil Industry Commission, 49 SCRA 409.

* Deletion of "Natural Resources" which was converted to a separate department.


1 The existence of an eight-member quorum to act on the matter and issue this resolution as
required under Article Y, section 2 of the 1973 Constitution then being implemented is open to
grave question, since only six members of the then nine-member Court took part in the issuance
thereof Makalintal Acting C.J. and Zaldivar, Castro and Fernando, JJ, voted to deny, with
Teehankee and Esguerra, JJ., dissenting Barredo, Makasiar and Antonio, JJ., took no part).

1-a The April 27,1973 Resolution is reported in 60 SCRA 497.

2 44 SCRA, at pp. 261-264; emphasis and notes in brackets supplied.

3 Idem, at page 271.

4 Idem, at page 276. emphasis supplied.

5 Page 40, Rollo.

6 Rollo, pp. 203-205; emphasis supplied.

7 Rollo, p. 224.

8 Rollo, p. 240.

9 Rollo, pp. 47, 48.

10 Rollo, p. 41; emphasis supplied.

11 ART. 539. Every possessor has a right to be respected in possession; and should he be
disturbed therein he shall be protected in or restored to said possession by the means
established by the laws and the Rules of Court.

A possessor deprived of his possession through forcible entry may within ten days from the filing
of the complaint present a motion to secure from the competent court, in the action for forcible
entry, a writ of preliminary mandatory injunction to restore him in his possession. The Court shall-
11 decide the motion within thirty (30) days from the filing thereof. (44 6a)" (,Civil Code)

12 Order of Oct. 1, 1968; Annex D, in Rollo, p. 53.

13 Rollo, at page 45.

14 At page 9 thereof.

15 44 SCRA at pp. 285-286,

16 Supra, at pages 3-6 hereof

17 44 SCRA, at pages 286-289.

The Lawphil Project - Arellano Law Foundation

FIRST DIVISION

[G.R. No. 96259. September 3, 1996]


HEIRS OF LUIS J. GONZAGA, namely ROMANA, FERNANDO, PAZ, LUISA and
LUIS ANTONIO, all surnamed GONZAGA, petitioners, vs. HON. COURT OF
APPEALS and SPOUSES JOSE LEELIN and LILIA SEVILLA, respondents.

[G.R. No. 96274. September 3, 1996]

GUILLERMO Y. MASCARIAS, petitioner, vs. HON. COURT OF APPEALS and


SPOUSES JOSE LEELIN and LILIA SEVILLA, respondents.

DECISION
HERMOSISIMA, JR., J.:

Assailed in these consolidated petitions is the decision [1] of the Court of Appeals[2] in the
exercise of its review jurisdiction over a case for annulment of Torrens title and/or quieting of title
with damages[3] filed before the then Court of First Instance, now the Regional Trial Court of
Caloocan City.[4]
There were two (2) defendants in the said case, namely, Luis J. Gonzaga, now deceased, and
petitioner Guillermo Y. Mascarias. The latters appeal from the herein assailed decision was
docketed as G.R. No. 96274, while the former was substituted by his heirs whose appeal from the
same decision was docketed as G.R. No. 96259. Considering that the two appeals raised the
same questions and issues and involved the same private respondents, we ordered them
consolidated upon petitioner Mascarias motion.[5]
The irreconcilable conflict between petitioners and private respondents centers on two parcels
of land which they each claim in full exclusive ownership.
We gather from the records that one Jose Eugenio had once been the registered owner of lot
nos. 3619 and 3620 of the Cadastral Survey of Caloocan under Transfer Certificate of Title (TCT)
No. 17519. Sometime in 1960, Eugenio sold the two lots to deceased defendant Luis J.
Gonzaga.[6] Consequently, Eugenios TCT No. 17519 was cancelled, and the Registry of Deeds for
the Province of Rizal issued on November 29, 1960, TCT No. 81338[7] in the name of Gonzaga.
On September 28, 1981, Gonzaga sold the two lots to petitioner Mascarias. [8] Following the
conveyance, Gonzagas TCT No. 81338 was cancelled, and issued in the name of Mascarias was
TCT No. 48078[9] covering the same two lots.
Equally borne out by the records, however, is the fact that another subsisting Torrens title
covers the same two lots subject of the sale between Eugenio and Gonzaga and that between
Gonzaga and petitioner Mascarias. This other title is TCT No. C-26086[10]in the name of private
respondent Lilia Sevilla, married to Jose Seelin, issued on August 2, 1979 by the Registry of
Deeds for Metro Manila, District III. TCT No. C-26086 covers a number of lots, among them, lot
nos. 65 and 66 which are identical with lot nos. 3619 and 3620 embraced by the titles issued in the
names of Eugenio, Gonzaga and petitioner Mascarias.
We note on the face of TCT No. C-26086 that the same is a transfer from Original Certificate
of Title (OCT) No. 994 which was registered on April 19, 1917 pursuant to Decree No. 36455. The
court a quo made the following findings of fact as regards the circumstances of that transfer, as
follows:

x x x plaintiff [private respondent] purchased the two lots described as Lots No. 65 and 66 from
Felicidad Rivera, Benito Rivera and Victoria Rivera, the legal heirs of Bartolome Rivera, as
evidenced by a deed of absolute sale x x x which was registered on August 2, 1979, under
Transfer Certificate of Title No. 26086 x x x
xxx

Bartolome Rivera and his co-plaintiffs in Civil Case No. C-424 are the successors-in-interests of
Maria de la Concepcion Vidal, and in a Decision, dated December 29, 1965, rendered by the
Court of First Instance of Rizal in Civil Case No. C-424, an action for partition and accounting
x x x it ordered the partition for the plaintiffs of the properties described under Original
Certificates of Titles Nos. 982, 983, 984, 985 and 994. [emphasis supplied]

In Civil Case No. 4557, the then Court of First Instance of Rizal, under Presiding Judge Cecilia
Muoz-Palma, ordered the Register of Deeds of Rizal to cancel the name of Maria de la
Concepcion Vidal from Original Certificate of Title NO. 994 and substitute in lieu thereof the
name of Bartolome Rivera and his co-plaintiffs.

Evidently, Bartolome Rivera, the predecessor-in-interest of herein plaintiffs appears as co-


owner in the Original Certificate of Title No. 994 x x x.[11]

The present controversy arose when private respondents filed on October 14, 1981, a
complaint for annulment of Gonzagas Torrens title insofar as it embraced lot nos. 3619 and 3620
which are identical with those described in private respondents own title as lot nos. 65 and 66.
Before the court a quo, Gonzaga interposed an answer asserting that since he had already sold
and conveyed the subject lots on September 28, 1981 to petitioner Mascarias, private respondents
no longer have any cause of action against him. Consequently, private respondents filed an
amended complaint to include petitioner Mascarias as party-defendant.
Both the court a quo and the respondent appellate court recognize that the two conflicting
TCTs were derived from one common OCT, viz., OCT No. 994. However, while both the
court a quo and the respondent appellate court found that OCT No. 994 was registered on May 3,
1917, we find that on the one hand, petitioners titles indicate original registration to have been
made on May 3, 1917, but on the other hand, private respondents title indicates original
registration to have been made on April 19, 1917.
The court a quo resolved the conflicting claims in favor of private respondents. It ratiocinated
in this wise:

As matters stand, the Court is once more called upon to determine which of the conflicting titles
is valid.

Let us examine the hard facts.

A deepening scrutiny over the evidence in record bares a relevant distinction between
plaintiffs [private respondents] and defendants [petitioners] titles as to their origin. As may be
seen, defendants [petitioners] titles were registered under Cadastral Proceedings in Cadastral
Case No. 34, Cadastral Record No. 1606, Cadastral Survey of Caloocan.

Whereas, as the Court finds, plaintiffs [private respondents] title was derived from the Original
Certificate of Title No. 994, issued in Land Registration Case No. 4429, pursuant to Decree
36455 in 1917.

As indubitably shown in a Deed of Absolute Sale dated January 14, 1977 x x x plaintiffs [private
respondents] acquired the two properties in question, together with other several parcels of
land, from Felicidad Rivera, Benito Rivera and Victoria Rivera, the legal heirs of one
Bartolome Rivera.
Bartolome Rivera and other co-plaintiffs are the successors-in-interests to the undivided share
of Maria Concepcion Vidal in several parcels of land under Original Certificates of Titles Nos.
982, 983, 984, 985, and 994, as duly established in the two Decisions rendered in Civil Case No.
C-424 and in Civil Case No. C-1796 by the Court of First Instance of Rizal x x x

As may be seen, Maria Concepcion Vidal was one of the original co-owners of the properties
registered under the Original Certificate of Title No. 994, issued by the Land Registration Court
in Land Registration Case No. 4429, pursuant to Decree NO. 36455 x x x

Thus, in said Decision x x x dated December 29, 1965, it ordered a partition of the subject
properties among the plaintiffs being the successors-in-interest of Maria Concepcion Vidal.

It bears emphasis that in said Decision of December 29, 1965 x x x it states, in part, to wit:

x x x This undivided share of Maria de la Concepcion Vidal, consisting of 1-189/1000 per cent
of the properties described in Original Certificates of Title Nos. 982, 983, 984, 985 and 994, has
never been sold or disposed of by said Maria de la Concepcion Vidal, and therefore, her said
share now belongs to the herein plaintiffs who are the surviving heirs of the said Maria de la
Concepcion Vidal and entitled to said undivided share in the following proportions: Bartolome
Rivera, 1/3 of 1-189/1000 per cent x x x These plaintiffs, therefore, are now co-owners of the
parcels of land described in Original Certificates of Title Nos. 982, 983, 984, 985 and 994, in
the aforestated proportions and entitled to demand the partition of said
properties. (emphasis supplied)

Evidently, the sale of the property by Jose Eugenio to defendant Luis Gonzaga on November 29,
1960 has no valid basis.

In final focus is the Court Order issued by the Court of First Instance of Rizal x x x in Civil Case
No. C-1796 ordering the issuance of a transfer certificate of title in favor of plaintiffs [private
respondents] over several parcels of land including the two lots in question.

xxx

Considering the findings and the dispositive portion of the Decision of the then Court of First
Instance x x x to the effect that there being no valid ground why the torrens title should not be
issued to the petitioners x x x [private respondents], considering the deed of sale executed by
Victoria, Benito and Felicidad all surnamed Rivera x x x in favor of petitioners [private
respondents] were duly acknowledged before a notary public and the same found to be regular
and in due form, thereby divesting the land in fee simple form, the registered owner Bartolome
Rivera or his heirs in favor of petitioners x x x [private respondents] their corresponding
technical descriptions having been approved and verified by the Bureau of Lands, this Court
finds plaintiffs [private respondents] rights and title over the properties in question indubitably
established.

True, it is that defendants [petitioners] title was issued by a Cadastral Court in Cadastral Case
No. 34, G.L.R.O. Cadastral Record No. 1106, which was undeniably subsequent to the Land
Registration Case No. 4429 of 1917 x x x but well-settled in a catenna [sic] of cases is the
doctrine that in a cadastral case the Court has no jurisdiction to decree again the registration of
land already decreed in an earlier land registration case and a second decree for the same land
is NULL and VOID.[12]
Accordingly, the court a quo rendered judgment declaring private respondents TCT No. C-
26086 as valid and legal and ordering the Register of Deeds of Caloocan City to cancel Gonzagas
TCT No. 81338 and petitioner Mascarias TCT No. 48079, the same being null and void.
Petitioners appealed that decision to the respondent court. Petitioners reiterated specific
errors allegedly committed by the court a quo, especially as regards appreciation of the document
denominated as Report and Recommendation issued by the Land Registration Commission
(LRC). Said document was formally offered by petitioner Mascarias[13] but had been apparently
ignored by the court a quo and considered of little probative value by respondent court for being a
mere xerox copy. In that Report and Recommendation, the LRC concluded that all titles
emanating from Bartolome Rivera under OCT No. 994 have been issued through fraud and
misrepresentation essentially because Maria de la Concepcion Vidal, indicated on the LRC
records to have died at the age of only nine (9) years old, could not have possibly borne children,
among them, Severo who is said to be the ascendant of Bartolome Rivera from whose heirs, in
turn, private respondents purchased the subject lots.
Likewise rebuffed by the respondent court, petitioners filed a motion for reconsideration, which
was however denied in a resolution[14] dated November 13, 1990.
The respondent Court of Appeals, in affirming the findings and ruling of the court a quo, gave
nary a significance to the aforecited LRC Report and Recommendation. It ruled:

While We agree with appellants [petitioners] thesis that their respective titles are valid, the same
observation must likewise be extended as regards appellee [private respondent] Sevillas title, the
contrary view not having been adequately substantiated through relevant and competent
evidence. This benefit of the doubt stands notwithstanding the xeroxed copy of the Land
Registration Commissions purported Report and Recommendation x x x the appended [sic] copy
purportedly to be that of the Commissions report was merely a xerox copy and never a certified
true copy thereof as expressly mandated by Sections 25 and 26, Rule 132, of the Revised Rules
of Court as reiterated in Section 7, Rule 130, of the Revised Rules of Evidence. Moreover, worth
noting is the fact that said xerox copy bore no signatures of the supposed officials who executed
the same x x x No wonder the court a quo did not bother to lend any weight to this piece of
evidence, notwithstanding the failure of Sevilla to interpose a timely objection thereto. The lack
of objection may make any incompetent evidence admissible x x x But admissibility of evidence
should not be equated with weight of evidence x x x Failure to object to the presentation of
incompetent evidence does not give probative value to the evidence x x x

Granting arguendo, that the Land Registration Commission issued such a report on February 2,
1981, We believe that the same suffers from a congenital infirmity as it could not have possibly
overruled the final decisions of the various branches of the then Court of First Instance of Rizal
in Civil Case No. C-424, enjoining Bartolome Rivera and his co-heirs to partition the properties
described under OCT Nos. 982, 983, 984, 985, and 994 x x x Civil Case No. 4557, ordering the
cancellation of the name of Maria de la Concepcion Vidal from OCT No. 994 and substitute in
lieu thereof the name of Bartolome Rivera and his co-heirs; and in Land Registration Case No.
1796, in which the subject realty was ordered to be registered in the name of herein
appellee [private respondent] x x x. Incidentally, LRC No. 1796, dealt with a Land Registration
case which is a proceeding in rem, dealing with a tangible res, and may be instituted and
carried to judgment without personal service upon the claimants within the state or notice by
mail to those outside of it x x x. Jurisdiction is secured by the power of the court over the res x x
x Accordingly, in a registration proceeding, such as LRC-1796, instituted with or without
opposition, the judgment of the court confirming the title of the applicant x x x [private
respondent] and ordering its registration in his [sic] name constitutes, when final, res judicata
against the whole world (Grey Alba vs. De la Cruz, 17 Phil. 49), herein
appellants [petitioners] included.[15]

Petitioners now come before us seeking a reversal of the aforecited decisions of the trial court
and the respondent appellate court on the basis of the following issues:

(1) Whether or not the trial court may invalidate transfer certificate of title which
have [sic] been previously cancelled.

(2) Whether or not there is a cause of action against Luis Gonzaga.

(3) Whether or not the respondent court should rule on Mascarias motion to hold in
abeyance.

(4) Whether or not Sevillas petition to order the City Register of Deeds of Caloocan City to
issue Transfer Certificate of Title in the Name of the Petitioner in case #C-1796 in
CFI Rizal Branch 32 Caloocan City is a proceeding in rem.

(5) Whether or not Luis Gonzaga was barred from questioning the title of Sevilla for his
failure to file a petition for review within one year from the decree of registration
issued in favor of Sevilla.[16]

Unfortunately neither can we accord petitioners the relief they seek. In fact, we must affirm the
decisions assailed in this petition, for we are confronted with facts that are exactly the same as
those that we have passed and ruled upon in the case of Metropolitan Waterworks and Sewerage
Systems (MWSS) vs. Court of Appeals.[17]
The antecedent facts of that case are as follows:

Jose B. Dimson was the registered owner of a parcel of land situated in Balintawak, Kalookan
City x x x and covered by TCT No. C-15167 which was registered on June 8, 1978. Said parcel
of land was originally Lot 28 of the Maysilo Estate (LRC 5268) covered by Original Certificate
of Title (OCT) No. 994 which was registered on April 19, 1917 pursuant to Decree No. 36455
issued in Land Registration Case No. 4429.

It appears that one of the original owners of OCT No. 994 was the late Maria Concepcion Vidal
married to Pioquinto Rivera. Among the four children was Severo Rivera y Vidal who died in
1907 leaving Bartolome Rivera as the sole surviving heir.

Bartolome Rivera executed a Deed of Transfer and Conveyance in favor of Jose B. Dimson
whereby he agreed to transfer twenty-five percent (25%) of whatever land he is entitled in Lot
28 and Lots 25, 26, 27 and 29, all of which are covered by OCT No. 994.

In an action for partition and accounting docketed as Civil Case No. C-424 filed by Bartolome
Rivera and his co-heirs, the then Court of First Instance of Rizal rendered a decision dated
December 29, 1965 ordering the partition of the properties described in OCT Nos. 994, 983,
984 and 985 among Bartolome Rivera and his co-heirs being co-owners and successors-in-
interest of the late Maria Concepcion Vidal.

In an Order dated June 13, 1966, the then Court of First Instance of Rizal approved the Deed of
Transfer and Conveyance executed by Bartolome Rivera in favor of Jose B. Dimson over Lot 28
and directed the Register of Deeds of Rizal to cancel the name of Maria Concepcion Vidal from
OCT No. 994 and to substitute the names of Bartolome Rivera and his co-heirs.

In a verified petition docketed as Special Proceedings No. 732 filed by Jose B. Dimson, the
validity of the court Order dated June 13, 1966 was confirmed x x x.

xxx

On the other hand, Metropolitan Waterworks and Sewerage System (MWSS, for brevity)
claimed that it is the registered owner of Lots 2693 and 2695, both with an area of 599 square
meters covered by TCT No. 41028 issued by the Register of Deeds of Kalookan City on July 29,
1940 and based on the Cadastral Survey of Kalookan City, Cadastral Case No. 34. It appeared
that both lots covered or included the parcels of land owned by Jose B. Dimson x x x It further
appeared on the face of TCT No. 41028 that it was a transfer from TCT No. 36957 which was
derived from OCT No. 994 dated May 3, 1917.[18]

In the present controversy, judicial adjudication hinges on the question as to who, between
petitioners and private respondents, have the legal and valid title to the two lots. In resolving this
question, we are bound by our ruling in the aforecited earlier case of MWSS, not only because the
latter involved the same OCT No. 994 and the same Cadastral Survey of Kaloocan City under
Cadastral Case No. 34, but also because we squarely dealt with and ruled upon this same issue in
the case of MWSS. In that case we had ruled:

The main issue to be resolved is: In case of overlapping titles, which titles should prevail.

It is the contention of petitioner MWSS that since its TCT No. 41028 was issued in 1940 while
the TCT No. 15167 of private respondents was issued only in 1978, petitioners title prevails over
that of private respondents in point of priority of issuance.

We do not agree.

Although petitioners title was issued in 1940, it will be noted that petitioners title over Lots 2693
and 2695 both with an area of 599 square meters was based on the Cadastral Survey of
Kaloocan City, Cadastral Case No. 34, while private respondents title was derived from OCT
No. 994 issued on April 19, 1917. In the case of Pamintuan vs. San Agustin, this Court ruled
that in a cadastral case the court has no jurisdiction in an earlier land registration case and a
second decree for the same land is null and void.

It must be observed that the title of petitioner MWSS was a transfer from TCT No. 36957 which
was derived from OCT No. 994 registered on May 3, 1917. Upon the other hand, private
respondents title was derived from the same OCT No. 994 but dated April 19, 1917. Where two
certificates (of title) purport to include the same land, the earlier in date prevails x x x. In
successive registrations, where more than one certificate is issued in respect of a particular
estate or interest in land, the person claiming under the prior certificate is entitled to the estate
or interest; and the person is deemed to hold under the prior certificate who is the holder of, or
whose claim is derived directly or indirectly from the person who was the holder of the earliest
certificate issued in respect thereof. Hence, in point of priority of issuance, private respondents
title prevails over that of petitioner MWSS.

Lastly, a certificate is not conclusive evidence of title if it is shown that the same land had
already been registered and an earlier certificate for the same is in existence. Since the land in
question has already been registered under OCT No. 994 dated April 19, 1917, the subsequent
registration of the same land on May 3, 1917 is null and void.[19]

We empathize with petitioner Mascarias who may be a purchaser for value and in good faith,
but whose title, which is only a derivative of the void OCT No. 994 dated May 3, 1917, could not
possibly be of force and effect more than its parent title. Certainly the spring cannot rise higher
than its source.
WHEREFORE, the consolidated petitions are hereby DISMISSED. Costs against petitioners.
SO ORDERED.
Padilla (Chairman), Bellosillo, Vitug, and Kapunan, JJ., concur.

[1] Dated May 17, 1990, penned by Justice Antonio M. Martinez, Rollo of G.R. No. 96259, pp. 88-93; Rollo of G.R.
96274, pp. 102-107.
[2] Second Division with members, Associate Justices M. Martinez, Jose A.R. Melo, and Filemon H. Mendoza.
[3] Civil Case No. C-9581.
[4] Branch 120, presided by Judge Arturo A. Romero.
[5] Resolution dated March 13, 1991, Rollo of G.R. No. 96274, p. 154.
[6]6 Deed of Absolute Sale dated November 28, 1960, Rollo of G.R. No. 96259, p. 45; Rollo of GR. No. 96274, p. 37.
[7] Rollo of G.R. No. 96259, pp. 46-48; Rollo of G.R. No. 96274, pp. 29-31.
[8] Deed of Absolute Sale dated September 24, 1981; Rollo of G.R. NO. 96259, pp. 49-50; Rollo of G.R. NO. 96274,

pp. 41-42.
[9] Rollo of G.R. No. 96259, pp. 51-52; Rollo of G.R. No. 96274, pp. 43-44.
[10] Rollo of G.R. No. 96259, pp. 23-24; Rollo of G.R. No. 96274, pp. 27-28.
[11] Decision of the RTC dated November 3, 1988, penned by Judge Arturo A. Romero, pp. 1-2; Rollo of G.R. No.

96259, pp. 75-76.


[12] Decision supra pp. 3-5, Rollo of G.R. No. 96259, pp. 77-79.
[13] Formal offer of Evidence for Defendant Mascarias dated March 16, 1987, p. 2; Rollo of G.R. No. 96259, p. 72.
[14] Rollo of G.R. No. 96259, pp. 127-129.
[15] Decision of the Court of Appeals in CA-G.R. CV No. 21240, dated May 17, 1990, pp. 3-4; Rollo of G.R. No. 96274,

pp. 104-105.
[16] Petition, p. 5; Rollo of G.R. No. 96259, p. 10.
[17] 215 SCRA 783 (1992).
[18] MWSS vs. Court of Appeals, supra, pp. 784-786.
[19] Ibid, pp. 787-788.

Republic of the Philippines


SUPREME COURT
Manila

THIRD DIVISION

G.R. No. L-67451 September 28, 1987

REALTY SALES ENTERPRISE, INC. and MACONDRAY FARMS, INC., petitioners,


vs.
INTERMEDIATE APPELLATE COURT (Special Third Civil Cases Division), HON. RIZALINA BONIFACIO
VERA, as Judge, Court of First Instance of Rizal, Branch XXIII, MORRIS G. CARPO, QUEZON CITY
DEVELOPMENT AND FINANCING CORPORATION, and COMMISSIONER OF LAND
REGISTRATION, respondents.

CORTES, J.:

The litigation over the ownership of the parcels of land which are the subject of this petition started in 1927 when
an application for their registration under the Torrens System was first filed. In the present petition for review
Realty Sales Enterprise, Inc. (hereafter referred to as Realty) and Macondray Farms, Inc. (hereafter referred to
as Macondray) seek a reversal of the Resolution of May 2, 1984 of the Intermediate Appellate Court, and an
affirmance of the Court of Appeals Decision of December 29, 1982.

Two (2) adjacent parcels of land located in Almanza, Las Piñas, Metro Manila, having an aggregate area of
373,868 sq. m., situated in the vicinity of the Ayala Alabang Project and BF Homes Parañaque are covered by
three (3) distinct sets of Torrens titles to wit:

1) TCT No. 20408 issued on May 29, 1975 in the name of Realty Sales Enterprise, Inc., which
was derived from OCT No. 1609, issued on May 21, 1958, pursuant to Decree No. N-63394 in
LRC Cases Nos. 657, 758 and 976, GLRO Record Nos. N-29882, N-33721 and N-43516,
respectively.

2) TCT No. 303961 issued on October 13, 1970 in the name of Morris G. Carpo, which was
derived from OCT No. 8629, issued on October 13, 1970 pursuant to decree No. N-131349 in
LRC Case No. N-11-M (N-6217), GLRO Record No. N-32166.

3) TCTs Nos. 333982 and 333985, issued on July 27, 1971 in the name of Quezon City
Development and Financing Corporation, derived from OCT No. 8931 which was issued on July
27, 1971 pursuant to LRC Case No. P-206 GLRO Record No. N-31777.

On December 29, 1977, Morris Carpo filed a complaint with the Court of First Instance of Rizal, Branch XXIII,
presided over by Judge Rizalina Bonifacio Vera (hereafter referred to as Vera Court), for "declaration of nullity of
Decree No. N-63394 and TCT No. 20408." Named defendants were Realty Sales Enterprise, Inc., Macondray
Farms, Inc. and the Commissioner of Land Registration. Subsequently, however, Carpo withdrew his complaint
as against the last named defendant, and the answer filed on behalf of said government official was ordered
stricken off the record. The complaint alleged that TCT No. 20408 as well as OCT No. 1609 from which it was
derived, is a nullity as the CFI of Rizal, Branch VI, then presided over by Judge Andres Reyes (hereafter referred
to as the Reyes Court) which issued the order dated May 21, 1958 directing the issuance of a decree of
registration, was not sitting as a land registration court, but as a court of ordinary jurisdiction. It was further
alleged that the original records of LRC Case No. 657, GLRO Record No. 29882 which was the basis for the
issuance of said order of May 21, 1958, were lost and/or destroyed during World War II and were still pending
reconstitution; hence, the Reyes Court had no authority to order the issuance of a certificate of title.

Realty and Macondray alleged in their answer that the Reyes Court was acting as a court of land registration
and in issuing the order of May 21, 1958, was actually performing a purely ministerial duty for the registration
court in Case No. 657, GLRO Record No. 29882 (and the two other cases, Cases Nos. 758 and 976, with which
said case had been jointly tried and decided) which on August 19, 1935 had rendered a decision adjudicating
the two (2) lots in question to Estanislao Mayuga (father of Dominador Mayuga, predecessor-in-interest of Realty
and Macondray), which decision was upheld by the Court of Appeals. It was alleged that it is the title of Carpo
which is null and void, having been issued over a parcel of land previously registered under the Torrens System
in favor of another.

With leave of court, Realty and Macondray filed a third-party complaint against the Quezon City Development
and Financing Corporation (hereafter referred to as QCDFC) and the Commissioner of Land Registration
alleging that TCTs Nos. 333982 and 333985 in the name of QCDFC also covered the same parcels of land
subject of the dispute between Carpo and the two corporations, Realty and Macondray. They thus prayed that
Decree No. N-135938 issued on July 22, 1971, OCT No. 8931 issued on July 27, 1971, as well as TCTs Nos.
333982 and 333985 derived from OCT No. 8931 be declared null and void.

In its answer to the third-party complaint, QCDFC asserted the validity of its own title alleging that it is the title in
the name of Realty which is null and void. QCDFC also filed a fourth-party complaint against Carmelino
Alvendia, Esperanza Alvendia, Felicisimo Alvendia, Josefina Alvendia, Jacinto G. Miranda, Rosa G. Miranda,
Isabel G. Miranda, and Feliciano G. Miranda, alleging that it bought said parcels of land from them. It prayed that
in the event of an unfavorable judgment against it, fourth-party defendants be ordered to reimburse the purchase
price which the corporation paid to them. However, QCDFC failed to prosecute its case, and the fourth-party
complaint was dismissed for lack of interest.

After hearing, the Vera Court rendered judgment on January 20, 1981, sustaining the title of Morris G. Carpo to
the two (2) lots in question and declaring the titles of Realty Sales Enterprise, Inc. and QCDFC null and void.
On March 20, 1981, Realty filed a Petition for certiorari with this Court docketed as G.R. No. L-56471
questioning the decision of the lower court. It also asked that it be allowed to appear directly to this Court as it
was raising only questions of law. After respondents filed their comments to said petition, this Court passed a
resolution dated October 19, 1981 referring the case to the Court of Appeals "in aid of its appellate jurisdiction
for proper determination on the merits of the appeal."

In its decision dated December 29, 1982, the Court of Appeals, through its Ninth Division, with Justice Patajo
asponente, concurred in by Justices Gopengco and Kapunan, set aside the decision of the trial court and
rendered a new one upholding the validity of the title in the name of Realty Sales Enterprise, Inc. and declaring
null and void the titles in the name of Carpo and QCDFC.

Carpo filed a motion for reconsideration with the appellate court. In the meantime, by virtue and pursuant to
Batas Pambansa Bldg. 129, or the Judiciary Reorganization Act of 1980, the Court of Appeals was reorganized
into the Intermediate Appellate Court (IAC). As a consequence, there was a re-raffling of cases and the case
was assigned to the Second Special Cases Division which, however, returned the records of the case for
another re-raffling to the Civil Cases Divisions as it deemed itself without authority to act on a civil case in view
of the allocation of cases to the different divisions of the IAC under Section 8 of BP 129. The case was then
assigned to the Third Civil Cases Division, composed of Justices de la Fuente, Coquia, Zosa and Bartolome.

Justices Coquia and Bartolome inhibited themselves, and Justices Camilon and Bidin were assigned to the Third
Civil Cases Division.

On May 2, 1984, the IAC, through its Special Third Civil Cases Division, with Justice Zosa
as ponente; concurred in by Justices Camilon and Bidin, promulgated its Resolution granting Carpo's motion for
reconsideration, reversing and setting aside the decision of December 29, 1982, and affirming the decision of
the trial court. Hence, this petition docketed as G.R. No. 67451.

Petitioners assign the following errors:

The SPECIAL THIRD CIVIL CASES DIVISION of the Intermediate Appellate Court (for brevity,
referred to herein as SPECIAL DIVISION) which promulgated the disputed RESOLUTION of May
2, 1984 had no legal standing under the provisions of Batas Pambansa Bldg. 129 and, as such,
not vested with jurisdiction and adjudicatory power to pronounce any decision of final resolution
for the Court.

II

On the assumption that the SPECIAL DIVISION is legally vested with jurisdiction and
adjudicatory powers under the provisions of BP 129, it decided questions of substance contrary
to law and the applicable decisions of the Supreme Court because:

(a) The SPECIAL DIVISION'S Resolution of May 2, 1984 amounted to a denial to


the Petitioners of their right to appeal and judicial review over fundamental issues
of law duly raised by them in their Petition for Review on certiorari (G.R. No.
56471), as authorized by the Constitution (Art. X, sec. 5 (2) (e), the provisions of
the Judiciary Act of 1948 and Rule 42, Sec. 2 of the Rules of Court; and

(b) By its RESOLUTION of May 2, 1984, it ruled that the decision of the Court of
Appeals could not have gained the nature of a proper and valid judgment as the
latter had no power to pass upon the appealed judgment of the Court of First
Instance of Rizal (the Vera Court), as appeal and not certiorari was the proper
remedy;

Furthermore, the said SPECIAL DIVISION grossly departed from the accepted and usual course
of judicial proceedings by giving a perverted and obviously unjustified and illogical interpretation
of the RESOLUTION of July 25, 1983, of the Ninth Division of the Court of Appeals, holding and
declaring that "it has in effect erased or cancelled the validity of (the DECISION of December 29,
1982), when the said RESOLUTION merely "RESOLVED to return the records of the case ... for
re-raffling and reassignment ... in view of the allocation of cases to the different Divisions of the
Intermediate Appellate Court under Section 8 of BP 129.

III

The SPECIAL DIVISION by confirming the appealed judgment of the lower court in effect
sanctioned the contemptible disregard of law and jurisprudence committed by Judge Vera, which
call for an exercise of the power of supervision;

IV

The SPECIAL DIVISION did state in its RESOLUTION of May 2, 1984 a deliberate falsehood,
namely, that Morris G. Carpo is a purchaser in good faith and for value when there is absolutely
no evidence, whether written or testimonial, that was presented by Carpo, or by anyone else that
he was, in fact, a purchaser for value and in good faith — a material matter which was neither
alleged nor referred to in the complaint and in all the pleadings, nor covered by any of the
exhibits presented by all of the parties herein and solely on the bases of which the case at bar
was submitted by the parties for consideration and decision.

1. To support their contention that the Special Third Civil Cases Division of the Intermediate Appellate Court
which promulgated the Resolution of May 2, 1984 had no legal standing under the provisions of BP 129 and, as
such, not vested with jurisdiction and adjudicatory power, petitioners cite Sections 4 and 8 of BP 129, to wit:

Sec. 4. Exercise of powers and functions.—The Intermediate Appellate Court shall exercise its
powers, functions and duties, through ten (10) divisions, each composed of five members. The
Court may sit en banc only for the purpose of exercise administrative, ceremonial or other non-
adjudicatory functions.

Sec. 8. Grouping of Divisions.—Of the ten (10) divisions, of the Court, four (4) divisions, to be
known as Civil case Divisions, shall take cognizance of appeals in civil cases originating from the
Regional Trial Court; two (2) divisions, to be known as Criminal Cases Divisions, of appeals in
cases originating from the Regional Trial Courts; and four (4) divisions, to be known as Special
Cases Divisions, of original actions or petitions, petitions for review, and appeals in all other
cases, including those from administrative agencies, except as provided in Section 9 hereof.

Except with respect to the Presiding Appellate Justice, the appointment of a member of the court
should specifically indicate whether it is for the Civil Cases Divisions, the Criminal Cases
Divisions, or the Special Cases Divisions of the Court. No member of the Court appointed to any
of the three classes of conclusions shall be assigned to any of the other classes of
division except when authorized by the Supreme Court, upon recommendation of the
Intermediate Appellate Court en banc, if the exigencies of the service so require. . . . (emphasis
supplied)

As officially constituted, the Third Civil Cases Division was composed of Justice B.S. de la Fuente, as Chairman,
Justices Jorge Coquia, Mariano Zosa, and Flores Bartolome, as Members. In view, however, of the voluntary
inhibition of Justices Coquia and Bartolome from taking part in the case, Justices Bidin and Camilon were
reassigned to the Third Civil Cases Division to form the Special Third Civil Cases Division.

Petitioners argue that the so-called Special Third Civil Cases Division, not being one of the ten (10) Divisions of
the Court duly vested with jurisdiction, had no adjudicatory powers. It is also alleged that the reassignment of
Justices Bidin and Camilon is violative of the injunction against appointment of an appellate Justice to a class of
divisions other than that to which he is appointed. (Petition, pp. 21-26.)

This contention has no merit. A reading of the law will readily show that what BP 129 prohibits is appointment
from one class of divisions to another class. For instance, a Justice appointed to the Criminal Cases Divisions
cannot be assigned to the Civil Cases Divisions.

Justice Bidin was reassigned from the Fourth Civil Cases Division, while Justice Camilon was reassigned from
the Second Civil Cases Division. The two therefore come from the same class of divisions to which they were
appointed.
Thus, the reassignment of Justices Bidin and Camilon to form the Special Third Civil Cases Division in view of
the voluntary inhibition of two (2) "regular" members, is still within legal bounds. Otherwise, a situation would
have arisen where a regular division could not decide a particular case because some members thereof inhibited
themselves from participating in said case.

2. The second assigned error involves a determination of the correctness of the ruling of the IAC that the CA
Decision of December 29, 1982 could not have gained the nature of a proper and valid judgment (since appeal
and not certiorari was the proper remedy) and that the Resolution of July 25, 1983 had in effect erased or
cancelled the validity of said Decision.

The IAC said in its Resolution of May 2,1984:

Said resolution of July 25, 1983, to Our view, was effectively an acknowledgment by the Division
that promulgated it that the earlier Decision dated December 29, 1983 rendered in a Special Civil
Action case for certiorari, CA-G.R. No. SP-13530, was not appropriate and beyond the authority
of the Ninth Division of the Court of Appeals to promulgate. The said Resolution was actually a
statement that the Ninth Division of the Court of Appeals had over-stepped its bounds by
reviewing in certiorari proceedings a decision in a purely civil case that should have passed
through the processes of an ordinary appeal. We are not aware of any legal doctrine that permits
an appellate court to treat a petition for review on certiorari upon purely questions of law, such as
that filed by petitioners herein, as an ordinary appeal. Neither can we find any legal basis or
justification for the election by the appellate court of the essential requisites then prescribed for
the validity of an appeal, such as the submission of a formal notice of appeal, an appeal bond
and approved record on appeal. Without any of these mandatory requisites, the appeal could not
have been deemed perfected and ought to have been dismissed outright.

The Court does not agree.

There are two modes by which cases decided by the then Courts of First Instance in their original jurisdiction
may be reviewed: (1) an ordinary appeal either to the Supreme Court or to the Court of Appeals, or (2) an appeal
on certiorari to the Supreme Court. To the latter category belong cases in which only errors or questions of law
are involved. Each of these modes have different procedural requirements.

As stated earlier, Realty originally filed a Petition for certiorari with this Court docketed as G.R. No. L-56471
questioning the decision of the Vera Court, and asking that it be allowed to appeal directly to this Court as it was
raising only questions of law. However, this Court referred the case to the Court of Appeals "in aid of its
appellate jurisdiction for proper determination on the merits of the appeal."

It may thus be observed that even this Court treated the petition first filed as an appeal, and not as a special civil
action for certiorari. After as, a petition for review by certiorari is also a form of appeal. (People v. Resuello L-
30165, August 22, 1969, 69 SCRA 35).

This mode of appeal under Rule 42 is in the form and procedure outlined in Rule 45 which, unlike ordinary
appeals, does not require a notice of appeal, an appeal bond and a record on appeal.

Thus it was error for the IAC to hold that the Decision of the Vera Court "cannot be passed upon anymore in the
Court of Appeals decision because appeal and not certiorari was the proper remedy." Precisely, petitioners
brought the case to this Court on appeal, albeit by way of certiorari.

Respondent Carpo cited authorities holding that certiorari is not a substitute for appeal. Those cases are not in
point. They refer to the special civil action of certiorari under Rule 65, and not to appeal by way of certiorari
under Rule 45.

Similarly, the IAC Special Civil Cases Division erred in interpreting the Resolution dated July 25, 1983 of the
Second Special Cases Division (to which the case was assigned after the reorganization under BP 129) as
having "erased or cancellation" the validity of the Decision of the Ninth Division. A perusal of said Resolution
shows that it merely made clarification about the nature of the case and why it should be reassigned to the Civil
Cases Division of the IAC. There was not the slightest implication that it "erased or cancelled" the validity of the
Decision of the Ninth Division.
Even the IAC Special Third Civil Cases Division impliedly admitted the validity of the Decision of the Ninth
Division when it granted Carpo's motion for reconsideration. It would have been incongruous to grant a motion to
reconsider a decision, reverse and set it aside, if in the first place it did not have any validity. It would have been
necessary only to decide its invalidity.

3. In the third assigned error, Petitioners contend that the Vera Court, and the IAC Special Third Civil Cases
Division, erred in upholding the validity of the title in the name of Carpo and declaring null and void the titles in
the names of Realty and of QCDFC.

The basis of the complaint fired by Carpo, which was the same basis for the of the Vera Court and the IAC
Special Division, is that the Reyes Court had no authority to issue the order of May 21, 1958 directing the
issuance of a decree of registration in favor of Mayuga, predecessor-in-interest of Realty, as it was not sitting as
a land registration court and also because the original records of LRC Case No. 657, Record No. N-29882 were
lost and/or destroyed during World War II and were still pending reconstitution.

Under Act No. 496, Land Registration Act, (1902) as amended by Act No. 2347 (1914), jurisdiction over all
applications for registration of title to and was conferred upon the Courts of First Instance of the respective
provinces in which the land sought to be registered is situated.

Jurisdiction over land registration cases, as in ordinary actions, is acquired upon the filing in court of the
application for registration, and is retained up to the end of the litigation. The issuance of a decree of registration
is but a step in the entire land registration process; and as such, does not constitute a separate proceeding.

In the case at bar, it appears that it was Estanislao Mayuga, father of Dominador Mayuga, predecessor-in-
interest of Realty, who originally filed on June 24, 1927 a registration proceeding docketed as LRC Case No.
657, GLRO Record No. N-29882 in the Court of First Instance of Rizal to confirm his title over parcels of land
described as Lots 1, 2 and 3, Plan Psu-47035. (Lots 2 and 3 the subject of the instant litigation among Carpo,
RRealty and QCDFC.) Case No. 657 was jointly tried with two other cases, LRC Case No. 976, GLRO Record
No. 43516 filed by Eduardo Guico and LRC Case No. 758, GLRO Record No. 33721 filed by Florentino Baltazar,
as the three cases involved Identical parcels of land, and Identical applicants/oppositors.

On August 19, 1935 the CFI-Rizal acting as a land registration court issued a consolidated decision on the three
cases, the dispositive portion of which reads:

En meritos de to do lo expuesto, se ordena el registro de los lotes, 1, 2 y 3 del plans PSU-47035


a nombre de Estanislao Mayuga, desist oposicion de Florentino Baltazar y Eduardo Guico con
respects a dichos lotes....

On appeal, the above decision of the CFI was affirmed by the Court of Appeals in its decision
dated November 17, 1939. the dispositive portion of which reads:

Por todas last consideraciones expuestas confirmamos la decision apelada en cuanto adjudica a
Estanislao Mayuga los lotes, 1, 2 y 3 de such piano y que equivalent a lost lotes, 4, 5 y 6 del
plano de Baltazar y 4 y 5 del plans de Guico.

xxx xxx xxx

Guico filed a petition for review on certiorari before this Court, but the petition was dismissed and the Court of
Appeals decision was affirmed (See Guico v. San Pedro, 72 Phil. 415 [1941]).

Before he could secure a decree of registration in his name, Estanislao died.

On May 13, 1958 Dominador Mayuga, son of Estanislao, filed a petition with the Reyes Court docketed as Case
No. 2689 alleging that he was the only heir of the deceased Estanislao Mayuga and praying for the issuance of a
decree of registration over the property adjudicated in favor of Estanislao. At this point, it cannot be
overemphasized that the petition filed by Dominador is NOT a distinct and separate proceeding from, but a
continuation of, the original land registration proceedings initiated by Estanislao Mayuga, Florentino Baltazar and
Eduardo Guico. In the same vein, the Reyes Court, as Branch VI of the Court of First Instance of Rizal, was
continuing in the exercise of jurisdiction over the case, which jurisdiction was vested in the CFI-Rizal upon filing
of the original applications.
On May 21, 1958 the Reyes Court issued an order granting the petition of Dominador Mayuga and directing the
Commissioner of Land Registration to issue a decree of registration over Lots 1, 2 and 3 of Plan Psu-47035,
substituting therein as registered owner Dominador Mayuga in liue of Estanislao.

Respondent Carpo, however, contends, that since the records of LRC Case No. 657 were not properly
reconstituted, then there was no pending land registration case. And since the Reyes Court was acting without a
pending case, it was acting without jurisdiction. (Respondent Carpo's Memorandum, pp, 2-8.)

He cites the case of Villegas v. Fernando (L-27347, April 29, 1969, 27 SCRA 1119) where this Court said that
upon failure to reconstitute pursuant to law, "the parties are deemed to have waived the effects of the decision
rendered in their favor and their only alternative is to file an action anew for the registration in their names of the
lots in question," citing the case of Ambat v. Director of Lands, (92) Phil. 567 [1953]) and other cases. The basis
of said ruling is Section 29 of Act No. 3110, an Act to provide an adequate procedure for the reconstitution of the
records of pending judicial proceedings and books, documents, and files of the office of the register of deeds,
destroyed by fire or other public calamities, and for other purposes.

However, the Ambat case, in so far as it ruled on the effect of failure to reconstitute records on the status of the
case in its entirety, was modified in the case of Nacua v. de Beltran, (93) Phil. 595 [1953]). where this Court said:

(W)e are inclined to modify the ruling (in the Ambat case) in the sense that Section 29 of Act No.
3110 should be applied only where the records in the Court of First Instance as well as in the
appellate court were destroyed or lost and were not reconstituted, but not where the records of
the Court of First Instance are intact and complete, and only the records in the appellate court
were lost or destroyed, and were not reconstituted. One reason for this view is that section 29 of
Act 3110 is found among the sections and provisions dealing with the reconstitution of records in
the Court of First Instance in pending civil cases, special proceedings, cadastral cases and
criminal cases. A study of Act (No.) 3110 ... who show that there are separate procedures for the
reconstitution of records in the Justice of the Peace Courts, from Sec. 48 to Sec. 53; for the
reconstitution of records in the Supreme Court, now including the Court of Appeals, from Sec. 54
to Sec. 74; for the reconstitution of records in the office of the Register of Deeds, from Sec. 75 to
Sec. 90 and for the reconstitution of destroyed records in the Courts of First Instance, from Sec.
1 to Sec. 47, under which sections, Sec. 29 is obviously comprehended.

The whole theory of reconstitution is to reproduce or replace records lost or destroyed so that
said records may be complete and court proceedings may continue from the point or stage
where said proceedings stopped due to the loss of the records. The law contemplates different
stages for purposes of reconstitution. . . .

. . . (S)ection 4 covers the stage were a civil case was pending trial in the Court of
First Instance at the time the record was destroyed or lost; section 6 evidently
refers to the stage where the case had been tried and decided but was still
pending in the Court of First Instance at the time the record was destroyed or
lost; section 6 covers the stage where the case was pending in the Supreme
Court (or Court of Appeals) at the time the record was destroyed or lost. *

If the records up to a certain point or stage are lost and they are not reconstituted, the parties
and the court should go back to the next preceding age where records are available, but not
beyond that; otherwise to ignore and go beyond the stage next preceding would be voiding and
unnecessarily ignoring proceedings which are duly recorded and documented, to the great
prejudice not only of the parties and their witnesses, but also of the court which must again
perforce admit pleadings, rule upon them and then try the case and decide it anew,-all of these,
when the records up to said point or stage are intact and complete, and uncontroverted.

xxx xxx xxx

. . . (T)o require the parties to file their action anew and incur the expenses and (suffer) the
annoyance and vexation incident to the filing of pleadings and the conduct of hearings, aside
from the possibility that some of the witnesses may have died or left the jurisdiction, and also to
require the court to again rule on the pleadings and hear the witnesses and then decide the case,
when an along and all the time the record of the former pleadings of the trial and evidence and
decision are there and are not disputed, all this would appear to be not exactly logical or
reasonable, or fair and just to the parties, including the trial court which has not committed any
negligence or fault at all.

The ruling in Nacua is more in keeping with the spirit and intention of the reconstitution law. As stated therein,
"Act 3110 was not promulgated to penalize people for failure to observe or invoke its provisions. It contains no
penal sanction. It was enacted rather to aid and benefit litigants, so that when court records are destroyed at any
stage of judicial proceedings, instead of instituting a new case and starting all over again, they may reconstitute
the records lost and continue the case. If they fail to ask for reconstitution, the worst that can happen to them is
that they lose the advantages provided by the reconstitution law" (e.g. having the case at the stage when the
records were destroyed).

Applying the doctrine in the Nacua decision to LRC Case No. 657, the parties thereto did not have to commence
a new action but only had to go back to the preceding stage where records are available. The land registration
case itself re. mained pending and the Court of First Instance of Rizal continued to have jurisdiction over it.

The records were destroyed at that stage of the case when an that remained to be done was the ministerial duty
of the Land Registration Office to issue a decree of registration (which would be the basis for the issuance of an
Original Certificate of Title) to implement a judgment which had become final (See Government v. Abural, 39
Phil. 996 [1919] at 1002; Sta. Ana v. Menla, 111 Phil. 947 [1961], 1 SCRA 1294; Heirs of Cristobal Marcos v. De
Banuvar, 134 Phil. 257 [1968], 26 SCRA 316). There are however authentic copies of the decisions of the CFI
and the Court of Appeals adjudicating Lots 1, 2 and 3 of Plan Psu-47035 to Estanislao Mayuga. Moreover, there
is an official report of the decision of this Court affirming both the CFI and the CA decisions. A final order of
adjudication forms the basis for the issuance of a decree of registration.

Considering that the Reyes court was actually in the exercise of its jurisdiction as a land registration court when
it issued the order directing the issuance of a decree of registration, "substituting therein as registered owner
Dominador Mayuga, in hue of the original adjudicates, Estanislao Mayuga, based on the affidavit of self-
adjudication, subject to the provisions of Sec. 4, Rule 74 of the Rules of Court," which order is in consonance
with the ruling of this Court in the Guico decision, and the decisions of the CFI-Rizal and the CA dated August
19, 1935 and November 17, 1939, respectively, We uphold the validity of said order and rule that Judge Vera
was without jurisdiction to set it aside.

4. In upholding the title of Carpo as against those of Realty and QCDFC, the Special Division also relied on
Carpo's being an innocent purchaser for value.

Whether or not Carpo is an innocent purchaser for value was never raised as an issue in the trial court. A
perusal of the records of the case reveals that no factual basis exists to support such a conclusion. Even Carpo
himself cites no factual proof of his being an innocent purchaser for value. He merely relies on the presumption
of good faith under Article 527 of the Civil Code.

It is settled that one is considered an innocent purchaser for value only if, relying on the certificate of title, he
bought the property from the registered owner, "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 claim or interest of some other persons in the property." (Cui v. Henson, 51 Phil. 606 [1928], Fule v.
De Legare, 117 Phil. 367 [1963], 7 SCRA 351.) He is not required to explore farther than what the Torrens title
upon its face indicates. (Fule v. De Legare supra.)

Carpo bought the disputed property from the Baltazars, the original registered owners, by virtue of a deed
executed before Iluminada Figueroa, Notary Public of Manila dated October 9, 1970. However, it was only later,
on October 13, 1970, that the decree of registration in favor of the Baltazars was transcribed in the Registration
Book for the Province of Rizal and that an Original Certificate of Title was issued. It was on the same day,
October 13, 1970, that the deed evidencing the sale between the Baltazars and Carpo was inscribed in the
Registry of Property, and the Original Certificate of Title was cancelled as Transfer Certificate of Title No.
303961 in the name of Carpo was issued. (Exhibit 12, Rollo pp. 270-273.)

Thus, at the time of sale there was as yet no Torrens title which Carpo could have relied upon so that he may
qualify as an innocent purchaser for value. Not being a purchaser for value and in good faith, he is in no better
position than his predecessors-in-interest.

The Baltazars, predecessors-in-interest of Carpo are heirs of Florentino Baltazar, an oppositor in the original
application filed by Estanislao Mayuga in 1927. As stated earlier, the CFI-Rizal confirmed the title of Estanislao
to Lots 1, 2 and 3 of Plan Psu-47035 "desestimando oposicion de Florentino Baltazar . . . con respeto a dichos
lotes . . ." As such successors of Florentino, they could not pretend ignorance of the land registration
proceedings over the disputed parcels of land earlier initiated by Eduardo Guico, Florentino Baltazar and
Estanislao Mayuga, as when as the decisions rendered therein.

Moreover, it is not disputed that the title in the name of Dominador Mayuga, from whom Realty derived its title,
was issued in 1958, or twelve years before the issuance of the title in the name of the Baltazars in 1970.

In this jurisdiction, it is settled that "(t)he general rule is that in the case of two certificates of title, purporting to
include the same land, the earlier in date prevails . . . . In successive registrations, where more than one
certificate is issued in respect of a particular estate or interest in land, the person claiming under the prior
certificate is entitled to the estate or interest; and that person is deemed to hold under the prior certificate who is
the holder of, or whose claim is derived directly or indirectly from the person who was the holder of the earliest
certificate issued in respect thereof . . . ." (Legarda and Prieto v. Saleeby, 31 Phil. 590 [1915] at 595-596; Garcia
V. CA, Nos. L-48971 and 49011, January 22, 1980, 95 SCRA 380.)

TCT No. 20408 derived from OCT 1609, is therefore superior to TCT No. 303961 derived from OCT 8629.

5. For its part, respondent Quezon City Development and Financing Corporation (QCDFC) alleges that it has
been improperly impleaded as thirty-party defendant inasmuch as Realty's alleged cause of action against it is
neither for contribution, indemnity, subrogation or any other relief in respect of Carpo's claim against Realty. It
likewise alleges that Realty had no cause of action against it since the third party complaint did not allege that
QCDFC violated any legal right of Realty, QCDFC also assails the Vera Court decision in that it declares
QCDFC directly liable to Carpo and not to Realty.

In the first place, QCDFC did not appeal from the decision of the Vera Court, nor from the decision of the Court
of Appeals dated December 29, 1982, nor from the resolution of the IAC Special Third Civil Cases Division dated
May 2, 1984 — all of which voided QCDFCs title to the disputed property. Hence, said decisions/resolution have
become final and executory as regards QCDFC.

Moreover, even as this Court agrees with QCDFC that the third-party complaint filed against it by Realty was
procedurally defective in that the relief being sought by the latter from the former is not in respect of Carpo's
claim, policy considerations and the factual circumstances of the case compel this Court now to rule as well on
QCDFC's claim to the disputed property. ** To rule on QCDFC's claim now is to avoid multiplicity of suits and to put to rest these conflicting
claims over the property. After an, QCDFC was afforded fun opportunity, and exercised its right, to prove its claim over the land. It presented documentary as
well as testimonial evidence. It was even permitted to file a fourth-party complaint which, however, was dismissed since it failed to prosecute its case.

QCDFC derived its title from Carmelino Alvendia et. al., the original registered owners. Original Certificate of
Title No. 8931 in the name of Spouses Carmelino Alvendia, et. al. was issued on July 27, 1971, or thirteen (13)
years after the issuance of Mayuga's title in 1958.

Since Realty is claiming under TCT No. 1609 which was issued earlier than OCT No. 8931 from which QCDFC's
title was derived, Realty's title must prevail over that of QCDFC.

6. During the pendency of this case, Petitioners filed a manifestation alleging that the case at bar is closely
connected with G.R. No. L-469953, Jose N. Mayuga et. al. v. The Court of Appeals, Macondray Farms, Inc.,
Realty Sales Enterprise, inc., et. al. and moved for consolidation of the two cases involving as they do the same
property. By Resolution of August 29, 1984, this Court denied the motion for consolidation.

In this connection, it must be emphasized that the action filed by Carpo against Realty is in the nature of an
action to remove clouds from title to real property. By asserting its own title to the property in question and
asking that Carpo's title be declared null and void instead, and by filing the third-party complaint against QCDFC,
Realty was similarly asking the court to remove clouds from its own title. Actions of such nature are governed by
Articles 476 to 481, Quieting of Title, Civil Code (Republic Act No. 386), and Rule 64, Declaratory Relief and
Similar Remedies, Rules of Court.

Suits to quiet title are not technically suits in rem, nor are they, strictly speaking, in personam, but being against
the person in respect of the res, these proceedings are characterized as quasi in rem. (McDaniel v. McElvy, 108
So. 820 [1926].) The judgment in such proceedings is conclusive only between the parties. (Sandejas v. Robles,
81 Phil. 421 [1948]).

The ruling in this case is therefore without any prejudice to this Court's final determination of G.R. No. L-46953.
WHEREFORE, the Resolution of May 2,1984 of the Intermediate Appellate Court and the Decision of January
20, 1981 of the CFI-Rizal Branch XXIII, are SET ASIDE and the Decision of December 29, 1982 of the Court of
Appeals is AFFIRMED.

SO ORDERED.

Fernan and Feliciano, JJ., concur.

Gutierrez, Jr. and Bidin, JJ., took no part.

Footnotes

* Section 65 covers the stage where the decision of the Supreme Court on the case had become
final but something has still to be done on the case, e.g. execution.

** See Balbastro, et. al. v. CA, No. L-33255, November 29, 1972, 48 SCRA 231, and Rubio v.
Mariano, L-30403, January 31, 1973, 49 SCRA 319, where this Court glossed over procedural
technicalities to do substantial justice.

The Lawphil Project - Arellano Law Foundation

Republic of the Philippines


SUPREME COURT
Manila

FIRST DIVISION

G.R. No. L-43679 October 28, 1980

LEONARDO N. AZARCON and ROSA CAJUCOM AZARCON, plaintiffs-appellants,


vs.
LEOPOLDO VALLARTA, LUIS T. VALLARTA, JULIAN T. VALLARTA, CORAZON VALLARTA and EMILIO
LORENZO (Husband), defendants- appellees.

MELENCIO-HERRERA, J.:,

Appeal certified to this Tribunal in 1976 by the Court of Appeals on a question of law in that the issue is the
construction or interpretation placed upon pleadings and documentary evidence or the correctness of the
conclusions drawn therefrom.

The plaintiffs are the spouses ROSA Cajucom-Azarcon and Leonardo Azarcon, hereinafter referred to as the
appellants Azarcons. The defendants are Leopoldo Vallarta, Luis T. Vallarta, Julian T. Vallarta, Corazon Vallarta
and her husband Emilio Lorenzo, who shall collectively be called the appellees Vallartas.

The controversy centers around a parcel of irrigated riceland situated at Sitio Bagnoy, San Juan de Dios, Aliaga,
Nueva Ecija, of approximately ten hectares, previously owned by Dr. Jose V. Cajucom, father of appellant ROSA
Cajucom-Azarcon. It used to be covered by two titles, namely, Original Certificate of Title No. P-28151 in the
name of appellants Azarcons, and Original Certificate of Title No. L-3093 2 previously in the names of the
appellees Vallartas, but now covered by several Transfer Certificates of Title in their individual names. 3

Evidence for the appellees Vallartas shows that on March .14, 1932, Dr. Jose V. Cajucom sold to Julian Vallarta
Sr., and his first wife Francisca Trinidad, parents of the Vallartas, a parcel of agricultural land of nine hectares
situated in Sitio Bagnoy, San Juan de Dios, Aliaga, Nueva Ecija. The Vallartas claim that in a resurvey made on
September 6, 1959, their parents discovered that the land sold, believed to be only nine hectares, was actually
nineteen hectares. Consequently, on October 7, 1960, Dr. Cajucom executed, in favor of Julian Vallarta, Sr., a
"Waiver and Quit claim" over the excess ten hectares, now in dispute, in consideration of the amount of P5,
000.00. 4 The land referred to in said document was that described in Psu-171661, a survey plan prepared for
Dr. Cajucom on November 7, 1958, with an area of 106,632 square meters. A subsequent survey on September
6, 1959 (psu-177178) disclosed an actual area of 102,704 sq. m. after deducting the areas covered by irrigation
canals.

On the other hand, evidence for the appellants Azarcons also show that on October 20, 1959, a year before the
aforementioned waiver, Dr. Cajucom executed a "Deed of Absolut0e Sale" of the same land in favor of the
Azarcons, in the amount of P20,000.00. The document also referred to the same plan Psu-171661 and recited
that the property was unregistered land and that it was the "paraphernal" property of Dr. Cajucom having been
inherited by him from his father Nicolas Sarenas Cajucom.5

In 1961, appellant ROSA filed a Free Patent Application over the disputed property. 6 In support of her
application, ROSA presented the affidavits of Antonio Puno, Antonio de la Cruz, Bruno Santos and Emilio
Sanguesa attesting to the actual occupation and cultivation of the land in dispute since 1934 by herself and/or
her predecessors-in-interest. 7 The Free Patent Application was approved on February 26, 1961 and Free Patent
Entry No. 18504 was thereafter issued by the Director of Lands. 8

On May 8, 1961, the Register of Deeds of Nueva Ecija issued Original Certificate of Title No. P-2815 in the
name of the Azarcons.

Going back to the Vallartas, their evidence further discloses that on May 12, 1964, Julian Vallarta, Sr. sold his
one half portion of the disputed property to his children by his first wife who died in 1959, namely, Jaime, Julian,
Jr., Francisca, Luis, Corazon, Librada, Cesar, Roberto, Mariano and Leopoldo, all surnamed Vallarta, in the
amount of P10,000.00. 9

Sometime in 1965, the Vallarta heirs, including appellees, filed with the Court of First Instance, Branch III, Nueva
Ecija, an application for registration of the disputed property (LRC Rec. No. L-26618). The opposition of the
Director of Lands and the Director of Forestry having been withdrawn, decision was rendered on April 18, 1966
affirming the title of the Vallarta heirs and ordering registration in their names, 10 Conformably thereto, on July 18,
1966, the Register of Deeds of Nueva Ecija issued Original Certificate of Title No. L-3093 in the name of the
aforementioned Vallarta heirs.

Later, the disputed property was subdivided and the appellees herein secured for themselves Transfer
Certificates of Title in their names as previously mentioned. Appellees also secured the corresponding Tax
Declarations in their names 11 and paid real estate taxes on the property 12 from 1966-1969, as well as irrigation
fees from 1956-1963 fully and partially for the years 1964-1968. 13

The resultant situation then is a 10-hectare irrigated riceland sold successively by its previous owner to the two
sets of opposing parties herein, and covered by two distinct original certificates of title in their respective favor.

The Azarcon letters of demand to vacate, dated March 5 and 22, 1968, having been ignored by the Vallartas, on
March 18, 1969, appellants Azarcons filed a petition with the Court of First Instance, Branch III, of Nueva Ecija in
LRC No. 26618 for the cancellation of the Vallarta titles. On a motion to dismiss filed by the Vallartas and without
going into the merits of the case, the Court dismissed the same on the ground that it could not entertain in the
same registration proceedings a petition where its decision had long become final and executory. The dismissal,
however, was without prejudice to the filing of the proper action before the competent Court. 14

Thus, on May 6, 1968, the Azarcons filed the instant Complaint for Cancellation and Annulment of Titles with the
Court a quo, which the Vallartas traversed and controverted, and with each set of litigants asserting the validity,
superiority, and indefeasibility of their respective titles. Without trial and only on the basis of memoranda and
documentary evidence submitted the lower Court rendered a Decision in favor of the Vallartas on December 27,
1969, the dispositive portion of which reads:

WHEREFORE, judgment is hereby rendered in favor of the defendants and against the plaintiffs,
and declaring plaintiff's Free Patent No. 167650 and/or OCT No. P-2815 of the Land Records of
Nueva Ecija null and void, and ordering the Register of Deeds of this Province to cancel the
same, at plaintiff's expense.

Dissatisfied with the judgment and with the denial of their Motion for Reconsideration, the Azarcons elevated the
case to the Court of Appeals which certified the same to this Court.
The Azarcons ascribe the following errors to the lower Court:

1. ... in holding that the land covered by the Free Patent Title of the plaintiffs-appellants is the
private property of Jose V. Cajucom, Sr. and not a part of the public domain;

II. ... in holding that Free Patent No.16750 issued on May 8, 1961 and registered in the Registry
of Deeds of Nueva Ecija on July 18, 1961 under Original Certificate of Title No. P-2815 is under
section 91 of CA 141, ipso facto cancelled is null and void;

III. ... in holding that the defendants are the owners and in actual possession of the land in
question since March 14, 1932, the same having been sold by Jose V. Cajucom in favor of Julian
Vallarta;

IV. ... in considering that the Land Title no. 3093 of the defendants is superior to the Free Patent
Title of the plaintiff-appellants

V. ... in not considering the counterclaim filed by defendants for which they paid no docket fee to
the clerk of court a collateral attack to the title of the plaintiffs-appellants.

The foregoing take issue with the following findings of the trial Court:

In view of the existence of two distinct titles over the same property it is thus clear that the only
issue to be resolved by this Court is: which of the two titles must prevail, is it Free Patent No.
167690 of the plaintiffs or Original Certificate of Title No. L-3093 (now Transfer Certificate of
Titles Nos. 67396, 67397, 80934 and 80936) of the defendants?

Upon consideration of the applicable laws and jurisprudence, the Court decides the foregoing
issues in favor of the defendants.

A free patent which purports to convey land to which the government did not have any title at the
time of its issuance does not vest any title in the patentee as against the true owner (Suva vs.
Ventura, 40 Off. Gaz., pp. 47-48, 4th Supp., Aug. 2341, Ct. App; Ramoso vs. Obligado, 70 Phil.
86; Director of Lands vs. Reyes, 69 Phil. 497: Vital vs. Anora, G. R. No. L-4176, February 29,
1952). Plaintiffs were fully aware that on February 26, 1961 when their application was approved,
the land in question was not a part of the public domain as to be disposable by the Director of
Lands, because as early as October 20, 1959 by virtue of their Exh. 'A' they knew too well that
the land of the private ownership of the patentees' father Jose V. Cajucom from when they
allegedly bought the same for P 2,000.00. That said land was no longer a part of the public
domain but of the private ownership of Jose V. Cajucom even before the Second World War is
further attested by the fact that as early as March 14, 1932 the Same owner had disposed of his
private property to defendant's predecessors and reaffirmed by him on October 7, 1960 (Exh. '3').
Pursuant to the abovecited cases, where a person, who obtained free patent, knowingly made a
false statement of material and essential facts in his application, by stating that the land applied
for was part of the public domain not occupied or claimed by any other person, when in fact, the
same had formally belonged to another as his private property from whom he alleged to have
acquired it, it was held that in accordance with Section 91 of Com Act No. 141 his title ipso
facto cancelled, and consequently, rendered null and void.

Another fatal misrepresentation in plaintiffs' application which legally results in the nullity of their
free patent are their statements that they and their predecessors were in actual possession of the
land since 1926 and that they have paid continuously since July 4, 1926 the real estate tax
thereof, both of which are cont contrary to the evidence adduced in this case. As to possession,
the defendants or their predecessors were in continuous possession of the disputed land since
March 14, 1932. In fact, it was only on March 5, 1968 when plaintiffs attempted, to take over said
possession. The same is true on the matter of payments of the realty tax (Exhs. B-C, plaintiffs;
Exhs. 5 to 18, inclusive, defendant).

On the other hand, the Court finds no defect, fatal or otherwise, in defendants' titles, much less
any legal ground to nullify them. On the contrary, Original Certificate of Title No. 3093 was
obtained by them in a decision of this Court (Branch III) in L.R.C. Rec. No. L-26618 on April 18,
1966, without the plaintiffs opposing the registration thereof and with no opposition on the part of
the Director of Lands (Exh. '2'). At any rate, said title is now indefeasible and incontestable. 15
We find the foregoing conclusions drawn by the trial Court from the documentary evidence submitted by the
parties to be in order. The document of sale in favor of he Azarcons executed on October 20, 1959 explicitly
recites that the land sold was the exclusive property of the vendor, Dr. Jose Cajucom, who had inherited it from
his father. Indeed, if were private property but still public land, he could not have disposed of it in favor of Julian
Vallarta, Sr. as early as 1932. That was obviously the reason why both the Director of Lands and the Director of
Forestry withdrew their respective oppositions to the application for registration filed by the Vallartas. Not having
been part of the public domain, the Government was bereft of title to convey to any applicant. Again, ROSA's
allegation in support of her application for Free Patent regarding her possession was, in fact, a
misrepresentation, because the Vallartas had been in possession since the sale in 1932 and had continued in
such occupancy, as shown by the demand by the Azarcons in 1968, reiterated in their Complaint, that the
Vallartas vacate the disputed property.

We are fully cognizant of the well-settled rule that where two certificates of title are issued to different persons
covering the same land in whole or in part, the earlier date must prevail as between the original parties, and in
case of successive registration where more than one certificate is issued over the land the person holding under
the prior certificate is entitled to the land as against the person who relies on the second certificate. 16 This
presupposes, however, that the prior title is a valid one. Where, as in the case at bar, it is evident that the prior
title of the Azarcons suffers from an inherent informity, such a rule cannot be invoked in their favor.

Finally, the Azarcons' contention that appellees' counterclaim assailing the Azarcon title should have been
considered by the trial Court as merely a permissive counterclaim for which they should have been made to pay
docketing fees, is untenable. It is a compulsory counterclaim, which could have been barred if. not set up.
Accordingly, no fees therefor need have been paid. Nor can it be successfully argued that said counterclaim was
a collateral attack on the Azarcon title. On the contrary the validity of both titles of the opposing parties was
directly and squarely put in issue and formed the crux of the controversy.

We cannot but decry the carelessness of the Bureau of Lands in having issued the Free Patent in ROSA's favor.
Surely, a more diligent search into their records would have revealed the true character of the disputed property
as private land. It should also be noted that in the voluntary registration proceedings filed by the Vallartas (LRC
Rec. No. L-26618), the Director of Lands, through the Provincial Fiscal who represented him, should have
known of the Free Patent previously issued and should have informed the Court accordingly. Had more vigilance
been exercise by a government agency entrusted specifically with the task of administering and disposing of
public lands, the present litigation could have been averted.

WHEREFORE, the judgment appealed from, being in conformity with law, is hereby affirmed.

Costs against plaintiffs-appellants.

SO ORDERED.

Teehankee, Acting C.J., Makasiar, Fernandez and Guerrero, JJ., concur.

Footnotes

1 Free Patent No. 167650,Exh. D.

2 Exhibit 1.

3 Exhibit 24-28.

4 Exhibit 3.

5 Exhibit A.

6 Exhibit F.

7 Exhibits G and H.

8 Exhibit E.

9 Exhibit 4.
10 Exhibit 20.

11 Exhibits 7-12.

12 Exhibits 13-18.

13 Exhibit 19.

14 p. 60, Record on Appeal.

15 pp. 77-80, Record on Appeal,

16 Pajomayo,et.al.,.vs. Manipon,39 SCRA 677 (1971).

The Lawphil Project - Arellano Law Foundation

Republic of the Philippines


SUPREME COURT
Manila

EN BANC

G.R. No. L-18861 June 30, 1964

DEVELOPMENT BANK OF THE PHILIPPINES, plaintiff-appellant,


vs.
LAZARO MANGAWANG, ET AL., defendants-appellees.

Jesus A. Avanceña for plaintiff-appellant.


Pablo Q. Ilaya for defendants-appellees.

BAUTISTA ANGELO, J.:

This is an appeal from a decision of the Court Of First instance of Bataan declaring the Mangawang brothers
owners of Lot No. 1633 of the Balanga cadastre.

It appears that Gavino Amposta applied with the Director of Lands for the issuance of a homestead patent over a
parcel of land situated at Balanga, Bataan. Pending action on his application, cadastral proceedings were
instituted by the government in said municipality wherein Amposta filed an answer praying for the adjudication of
the same land in his favor which was designated therein as Lot No. 1633. On March 8, 1920, the cadastral court
rendered decision awarding the land to Amposta. Since no advice on this matter was given either to the Bureau
of Lands or to the Governor General, the latter, on November 2, 1920, issued in favor of Amposta Homestead
Patent No. 2388 covering the same land, and on November 29, 1920, Original Certificate of Title No. 100 was
issued to him by the Governor-General.

On December 20, 1922, the cadastral court issued a decree of registration of the land in favor of Amposta
pursuant to the decision rendered in the cadastral case, and or, July 5, 1924, Original Certificate of Title No.
2668 was issued to him covering the same property.

On November 24, 1941, Amposta sold the land to Santos Camacho surrendering to him Original Certificate of
Title No. 100, and because of this transfer said title was cancelled and transfer Certificate of Title No. 5506 was
issued in the name of Camacho. On November 18, 1946, Santos-Camacho sold the land to Bonifacio Camacho
as a result of which Transfer Certificate of Title No. 248 was issued to the latter. On April 28, 1948, Bonifacio
Camacho mortgaged the land to the Rehabilitation Finance Corporation (now Development Bank of the
Philippines), and having failed to pay the loan as agreed upon the land was sold at public auction to said bank
as the highest bidder. The period of redemption having elapsed without Camacho being able to redeem the
property, a final deed of sale was executed in favor of the bank, and Transfer Certificate of Title No. 6961 was
issued in its name on June 29, 1957.
Meanwhile, or on June 11, 1947, Gavino Amposta again sold the same property to Lazaro and Arsenio
Mangawang for the sum of P2,000.00, the vendees executing a mortgage on the land to secure the payment of
the balance. On March 17, 1948, the vendees paid the balance of the purchase price, and an absolute deed of
sale was executed in their favor. In connection with this transaction, Amposta surrendered to the vendees the
title that was issued to him in the cadastral case, which was later substituted by Transfer Certificate of Title No.
1098 issued in the name of the vendees. 1äwphï1.ñët

As a consequence of their purchase of the land, the Mangawang brothers took possession thereof, and upon
learning of this transfer, the Development Bank of the Philippines, which as already stated became the owner of
the property, commenced the present action against them in the Court of First Instance of Bataan to recover its
possession and damages. In this case, the parties submitted a stipulation of facts, and on the strength thereof,
the court a quo rendered decision awarding the land to the Mangawang brothers. Seasonably, the bank
appealed to this Court.

Appellees contend that their right over the property in litigation should be restored because the certificate of title
they are holding is derived from that issued pursuant to a decision rendered by a cadastral court, while the title
being held by appellant was merely based on the title issued in an administrative proceeding, upon the theory
that a judicial title is deemed preferred to one issued administratively. They further contend that since the
decision which gave rise to their title was rendered on March 8, 1920, which became final thirty days thereafter,
their right over the land must be deemed vested on said date, whereas the title of appellant is merely a
deprivation of the one issued to Amposta on November 29, 1920, or seven months after the decision rendered in
the cadastral case.

There is no doubt that if the two original certificates of title were issued on different occasions to two different
persons the contention of appellees would be correct it being in line with the several decisions rendered by this
Court.1 But the case at bar is different. Here two certificates of title were issued to Gavino Amposta over the
same parcel of land, one under the Homestead Law and another under the Cadastral Act. Said titles were
regularly issued and on their face both appear to be valid, and under such predicament it behooves Amposta to
choose which of them he would prefer, as he could not validly make use of both of them. But this Amposta did
not do. On the contrary, he took advantage of the situation by selling the land to two different persons
surrendering to each purchaser the pertinent certificate of title. The question then that arises is: Who of the two
buyers should be considered as the rightful owner of the land?

On this score, it is important to consider the facts that led to the sale of the land to the parties herein. Note that
Amposta first sold the land to Santos Camacho on November 24, 1941, who registered it in his name on the
same date. And seven years thereafter, or on March 17, 1948, Amposta again sold the land to the Mangawang
brother, who also registered it in their name on the same date. Since both purchasers apparently have acted in
good faith, as there is nothing in the evidence to show that they did otherwise, we cannot but conclude that the
sale made by Amposta to Santos Camacho is the valid one considering that when Amposta sold the same land
to the Mangawang brothers he had nothing more to sell even if the title he surrendered to them is one issued
covering the same property. In legal contemplation, therefore, Amposta sold a property he no longer owned, and
hence the transaction is legally ineffective.

On the other hand, the case under consideration can also be viewed under a different angle. It can also be
treated as one of double sale, where a person sells the same land to two different persons who are unaware of
the flaw that lies in its title, and where the law adjudicates the property to the purchaser who first registers the
transaction in his name in the registry of property.2 And applying this principle, we cannot conclude that the title
should likewise be adjudicated to appellant whose predecessor-in-interest acquired and registered the property
much ahead in point of time than the appellees. Verily, the title acquired by the latter is invalid and ineffective,
contrary to the finding of the court a quo.

WHEREFORE, the decision appealed from is reversed. We hereby declare appellant owner of Lot No. 1633 of
the Balanga cadastre and uphold the validity of Transfer Certificate of Title No. 6961 issued in its favor. Transfer
Certificate of Title No. 1098 issued in the name of appellees is hereby ordered cancelled. No pronouncement as
to costs.

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

Footnotes
1Government of the Philippine Islands v. Abural, 39 Phil. 996; De la Merced v. Court of Appeals, L-
17737, May 30, 1962; Nieto v. Quines, et al., L-14643, September 29, 1962. .

2
Article 1473, old Civil Codes now Article 1544, new Civil Code; Granados v. Monton, 47. O.G., 5607;
Beatriz, et al. v. Cederia, et al., L-17703, February 28, 1962; Soriano, et al. v. Heirs of Magali, et al., L-
15133, July 1, 1963.

The Lawphil Project - Arellano Law Foundation

Republic of the Philippines


SUPREME COURT
Manila

EN BANC

G.R. No. L-17955 May 31, 1962

PILAR LAZARO VDA. DE JACINTO, ET AL., petitioners,


vs.
SALUD DEL ROSARIO VDA. DE JACINTO, ET AL., respondents.

-----------------------------

G.R. No. L-17957 May 31, 1962

SALUD DEL ROSARIO VDA. DE JACINTO, ET AL., petitioners,


vs.
PILAR LAZARO VDA. DE JACINTO, ET AL., respondents.

Antonio Barredo for petitioners.


Alfredo V. Granados and Edmundo R. Jacinto for respondents.

DIZON, J.:

The present action filed in the Court of First Instance of Bulacan by Pilar Lazaro Vda. de Jacinto and her son,
Melchor Jacinto, Jr., against Salud del Rosario Vda. de Jacinto and her children, is for the reconveyance to them
of a parcel of land located in barrio Sto. Rosario, Paombong, Bulacan, with an area of 5.4574 hectares, covered
originally by OCT No. 12515 and at present by TCT No. 5380 issued by the Register of Deeds of Bulacan in the
name of the now deceased Pedro Jacinto.

Their complaint alleged, in substance that the land subject matter thereof was a portion of a bigger parcel
allotted to their predecessor-in-interest, Melchor Jacinto, Sr., when the estate of the deceased spouses Andres
Jacinto and Maria C. Santos was partitioned, and that Melchor's surviving brother, Pedro, predecessor-in-
interest of the defendants, had succeeded in registering it in his name through fraud and with breach of trust, to
their prejudice.

The defendants denied the allegations of the complaint and further alleged that their predecessor-in-interest had
acquired ownership of the property in litigation by virtue of the provisions of Act 496 and/or by prescription.

After due trial the action was dismissed. On appeal to the Court of Appeals, however, the latter reversed the
decision and rendered judgment as follows:

IN VIEW OF ALL THE FOREGOING, we find that the errors assigned are well taken. The decision
appealed from, not being in conformity with the evidence and the law on the matter, should be, as it is
hereby reversed and another entered declaring the plaintiffs-appellants owners of the land described in
their complaint and designated as Lot No. 5, plan S.C. No. 11075 (under TCT No. 5830) of the Register
of Deeds of Bulacan, and ordering the defendants-appellees, upon finality of this decision, to reconvey
the same to said plaintiffs-appellants. We find that appellants' claim for damages are abandoned by them
in their appeal, and that appellees' counterclaim, is unmeritorious. Costs is taxed against the defendant-
appellees, proportionately.

From the above decision both parties appealed by certiorari. The appeal of Pilar Lazaro and her son is now G.R.
No. L-17955, and that Salud del Rosario and children is G.R. No. L-17957.

There is no dispute — and the Court of Appeals so found — that the land in question originally belonged to the
now deceased spouses Andres Jacinto and Maria C. Santos, both of whom died intestate survived by their
children named Melchor, Sr., (husband of Pilar Lazaro and father of Melchor, Jr.,) and Pedro (husband of Salud
del Rosario and father of her co-parties). Melchor, Sr. also died intestate before the estate of his parents could
be partitioned. After the estate was partitioned (Exhibit A), their surviving son, Pedro, besides receiving his
share, continued administering the property which corresponded to the heirs of his deceased brother. Among
them was a richland located in barrio Sto. Rosario, Paombong, with an area of 11 hectares, 34 ares and 3
centiares, Pedro Jacinto himself, according to Exhibit A, received as part of his share a richland in the same
barrio, but with an area of 3 hectares, 57 ares and 69 centiares only.

In the year 1926 Pedro Jacinto delivered to the widow of his deceased brother the properties that corresponded
to the latter. This delivery, according to the Court of Appeals, was made only "in paper" because Pedro did not
make an actual delivery of the properties but limited himself to telling his sister-in-law that there were "kasamas"
working for her. One year thereafter, although the properties composing the estate of his deceased parents had
already been surveyed since June 10, 1913, as shown by Exhibit B, Pedro caused them to be resurveyed, this
resulting in the drawing of Exhibit C. The practical result of the resurvey — as found by the Court of Appeals —
was that a portion of lot 2 described in Exhibit B, which was subsequently one of the properties allotted to the
heirs of Melchor, was segregated therefrom and was designated as lot 5 in Exh. C. After the resurvey, Pedro
applied to register, and succeeded in having lot 5 and other properties registered in his name, for which reason
OCT No. 12515 was issued covering three lots numbered 2, 4 and 5. Lot 2 was subsequently sold, so the
original certificate of title was cancelled and TCT No. 583 was issued. 1äw phï1.ñët

From all the evidence of record the Court of Appeals found that Pilar Lazaro and her son "were always of the
belief, until the latter part of 1953, that he (Pedro) delivered to them all that which were rightfully theirs"; that they
discovered the shortage only when Pilar — less than one year before the action was filed — decided to sell the
parcel of more than 11 hectares that she was supposed to have received from her brother-in-law; that it was only
then that she realized for the first time that the parcel delivered to her had only an area of 5.8829 hectares. The
Court further found that the land in question was not the same parcel allotted to Pedro Jacinto, and located in
the same barrio, which had an area of a little over three hectares only.

On the basis of the facts stated above — which are now final and beyond review — the Court of Appeals made
the following considerations:

It is not also controverted that upon a survey of the property (item No. 1 of Exhibit "A", which should have
an area of 11.3403 hectares), when appellant Pilar Lazaro Vda. de Jacinto decided to sell four (4)
hectares of the supposed 11.3403 hectares, there was lacking 54,574 square meters therefrom which
incidentally corresponded exactly to Lot No. 5, item No. 2 of TCT No. 5830, in the name of Pedro
Jacinto. Appellees claim, however, that the supposed 11,3403 hectares appearing in Exhibit "A", could
have been short of 54,574 square meters and that the 3.5769 hectares appearing in the receipt Exhibit
"1", item No. 3 thereof, could have been really 5.5474 hectares, which is not the lot in question. The
striking coincidence in the area disputed and that registered in the name of appellees' predecessor-in-
interest, more than catches the eye. Under the partition, the appellants were to receive as one of the
properties, 11.3403 hectares of riceland. This being the case, there are no reasons discernible in the
records why, after an actual survey of the said property, 54,574 meters should be lacking therefrom. It
could not be said that the area was just a product of a calculation. When Exhibit "A" was executed, the
boundaries were plainly indicated thereon. As a matter of fact, Exhibit "A" designated the number of
hectares, ares and centiares, which is indicative of the preciseness of the area to be delivered to the
respective heirs. The fact that the lacking measurement fits exactly with Lot No. 5 of Pedro Jacinto under
TCT No. 5830, warrants the conclusion that Pedro Jacinto to had deprived the appellants herein of their
just share. . . .

There are sufficient proofs to show that fraud was practiced by Pedro Jacinto against the appellants
herein. When Pedro supposedly delivered the property, he did it only in paper, without bringing plaintiff
Pilar Lazaro to the premises, although he told her that there were "kasamas" working for her. On
December 15, 1927, Pedro Jacinto caused that the properties be resurveyed, which resulted in the
drawing of Exhibit "C", which in effect amended Exhibit "B". Part of Lot 2 was segregated and had been
designed as lot 5 in Exhibits "C". And this Lot 5 has an area exactly equal to the area which was found
lacking in the 11.3403 hectares belonging to the plaintiffs-appellants. (pp. 6-7 & 9, decision)

As a result of the foregoing, the Court of Appeals held that Pedro Jacinto must be deemed to have registered the
land in question as a trustee for and in behalf of the widow and son of his deceased brother. The pertinent
portion of its decision reads as follows:

Implied Trusts have been said to be those which are raised by legal implication from the facts and
circumstances of the case, to effect the presumed intention of the parties or to satisfy demands of justice
or to protect against fraud (65 C.J. 222), or those enforced by equity because morality, justice,
conscience, and fair dealing demand that the relation be established (supra). The new Civil Code
provides that, "If property is acquired through mistake or fraud, the person obtaining it is, by force of law,
considered a trustee of an implied trust for the benefit of the person from whom the property comes" (Art.
1456). That there was fraud on the part of Pedro Jacinto in registering the property in his name to the
prejudice of the appellants is revealed by the records. It will be seen that on Exhibit "C", the amended
survey of the properties which Pedro Jacinto and Melchor Jacinto, Sr. inherited from their parents,
changes were made. This resurvey was done at the instance of Pedro Jacinto, in spite of the fact that on
June 10, 1913, the same, properties were already surveyed, divided and delineated (Exhibit "B"). The
boundaries of Lot 5 as appearing in Exhibit "G" (the amended plan) are the same as those appearing in
Exhibit "B" minus the designation as Lot 5 and its segregation from the greater mass of Lot 2. In Exhibit
"E" or "I", a receipt of the properties inherited by Pedro Jacinto from his father Andres, no property
coincide in boundaries with the properties given to Pedro. Under the above set of facts, it is quite evident
that the property in question rightfully belonged to the plaintiffs and that an implied trust was created
between the plaintiffs and the appellees' father Pedro Jacinto. (pp. 9-10, decision)

The heirs of Pedro Jacinto now contend that the Court of Appeals erred in applying to this case the law of
implied or constructive trusts, and, in holding that, under the facts of the case, the right of the heirs of Melchor
Jacinto to recover the property in question is imprescriptible. We find these contentions to be without merit.

The following findings of fact made by the Court of Appeals cannot now be questioned: (1) after the partition of
the estate of the deceased spouses Andres Jacinto and Maria C. Santos, Pedro Jacinto, their surviving
son, continuedadministering the properties allotted to the heirs of his deceased brother; (2) when he delivered
the share of the latter, he withheld delivery of the parcel of more than 11 hectares allotted, among others, to his
aforesaid co-heirs; (3) one year thereafter he caused the portion withheld from co-heirs to be registered in his
name; (4) the widow and son of his deceased brother did not know that the parcel of land delivered to them by
their co-heir was short of 5 hectares, 45 ares and 74 centiares, and said parties "were always of the belief, until
the latter part of 1953, that he (Pedro) delivered to them all that which were rightfully theirs". In view of these
facts, it would be against reason and good conscience not to hold that Pedro Jacinto committed a breach of trust
which enabled him to secure registration of the land in question to the prejudice of his co-heirs. Therefore, in an
lotion like the present, he may be ordered to make reconveyance of the property to the person rightfully entitled
to it. In fact, it has been held that even in the absence of fraud in obtaining registration, or even after the lapse of
one year after the issuance of a decree of registration, a co-owner of land who applied for and secured its
adjudication and registration in his name knowing that it had not been allotted to him in the partition, may be
compelled to convey the same to whoever received it in the apportionment, so long as no innocent third party
had acquired rights therein, in the meantime, for a valuable consideration (Palet vs. Tejedor, 55 Phil. 790-798).
Indeed, any rule to the contrary would sanction one's enrichment at the expense of another. Public policy
demands that a person guilty of fraud or, it least, of breach of trust, should not be allowed to use a Torrens title
as a shield against the consequences of his wrongdoing (Cabanos vs. Register of Deeds, etc., 40 Phil. 620;
Severino vs. Severino, 41 Phil. 343).

Lastly, the claim of the heirs of Pedro Jacinto that the latter had acquired ownership of the property in litigation
by prescription, is likewise untenable. As we have recently held in Juan, et al. vs. Zuñiga, G.R. No. L-17044,
April 28, 1962, an action to enforce a trust is imprescriptible. Consequently, a cohier who, through fraud,
succeeds in obtaining a certificate of title in his name to the prejudice of his co-heirs, is deemed to hold the land
in trust for the latter, and the action by them to recover the property does not prescribe.

On the other hand, in their appeal Pilar Lazaro and her son contend that the Court of Appeals erred in holding
that they had abandoned their claim for damages. We also find this to be without merit.

As stated heretofore, the Court of First Instance of Bulacan, after the trial, dismissed this case and the plaintiffs
(Pilar Lazaro Vda. de Jacinto and her son) appealed to the Court of Appeals. In rendering judgment the latter
court held that said appellants had abandoned their claim for damages, presumably because of their failure to
make in their brief in assignment of error to the effect that the Court of First Instance had erred in not awarding
them damages. It is now their contention that having appealed from the dismissal, they were no longer in duty
bound to make a separate specific assignment of error regarding the court's failure to award damages, because
their right to them was entirely dependent upon the favorable resolution of the assignment of errors made in their
brief assailing the dismissal. This argument loses force upon consideration of the fact that their right to have the
reconveyance was one thing, and their right to damage, another. There could be reconveyance in their favor,
without this necessarily entitling them to damages, as for instance, if they produced no evidence to prove them,
or that produced does not sufficiently prove the claim. It seems clear, therefore, that it was their duty as
appellants to bring up before the Court of Appeals, by specific assignment of error, this particular question.

WHEREFORE, the decision appealed from being in accordance with law, the same is hereby affirmed, with
costs.

Padilla, Labrador, Concepcion, Reyes, J.B.L. and Barrera, JJ., concur.


Bautista Angelo and Paredes, JJ., took no part.

The Lawphil Project - Arellano Law Foundation

Republic of the Philippines


SUPREME COURT
Manila

THIRD DIVISION

G.R. No. 91797 August 28, 1991

WIDOWS AND ORPHANS ASSOCIATION, INC., petitioner,


vs.
COURT OF APPEALS and ORTIGAS & COMPANY LIMITED PARTNERSHIP, respondents.

Quijano & Padilla for petitioner.


Santiago & Santiago for private respondent.
Jose Teodorico V. Molina for intervenor-oppositor.

BIDIN, J.:

From the decision rendered by respondent court dated November 27, 1989, declaring respondent Ortigas and
Company Limited Partnership (Ortigas) as the registered owner of the disputed parcel of land, petitioner Widows
and Orphans Association, Inc. (Widora), interposes this petition for review seeking ng to annul the aforesaid
judgment and prays that the case be remanded to the trial court and there be tried on the merits. The facts, as
found by respondent court, are as follows:

On August 27, 1974, respondent Widora filed LRC Case No. Q-336 before the respondent (trial) court an
application for registration of title of a parcel of land as shown in Plan No. LRC (SWO)-l5352. Widora
alleged that the parcel of land is covered by Titulo de Propriedad Numero 4136, dated April 25, 1894,
issued in the name of the deceased Mariano San Pedro y Esteban. Later, on June 14, 1978, Widora filed
an amended application for registration of the said parcel of land. It alleged that the parcel of land is
situated at Malitlit-Uoogong, Quezon City, with an area of 156 hectares, more or less, described in Plan
No. LRC (SWO)-15352; and that the applicant acquired said property from the heirs of Don Mariano San
Pedro on December 12, 1954. The amended application prayed that said parcel of land be ordered
registered in the name of Widora.
On August 25, 1978, respondent Dolores Molina filed an opposition, claiming ownership over 12 to 14
hectares of Lot 8 (LRC) SWO-15352, and praying for a decree of registration over said portions of Lot 8.

On October 24, 1978, petitioner Ortigas filed a motion to dismiss the case alleging, among others, that
respondent court had no jurisdiction over the case, the land being applied for having been already
registered under the Torrens System and in the name of Ortigas under TCT 77652 and TCT 77653.

On April 20, 1979, the respondent (trial) court issued an order directing the applicant to prove its
contention that TCT 77652 and TCT 77653 are not proper derivatives of the original certificates of titles
from which they were purportedly issued, and setting the case for hearing on June 28, 1979, at 8:30 a.m.

On June 27, 1979, petitioner Ortigas filed a motion for reconsideration of said order of April 20, 1979,
alleging that a Torrens title becomes indefeasible after a year and that the same becomes conclusive
upon the entire world; that the Land Registration Commission itself has advised the court that the 156
hectare property sought to be registered is covered by valid and subsisting titles in the name of Ortigas;
that Courts of First Instance and the appellate courts in previous cases had sustained the Ortigas titles
over the land in question.

On October 3, 1979, the motion for reconsideration of petitioner Ortigas was denied by the respondent
(trial) court, but the latter set the motion to dismiss for hearing on October 18 and 19, 1979 at 8:30 a.m.,
for the purpose of enabling the applicant to prove its contention that TCT Nos. 77652 and 77653 are not
proper derivatives of the original certificates of title from which they were purportedly issued.

The parties presented their testimonial and documentary evidence before the respondent (trial) court in
support of their respective positions.

On March 30, 1988, the respondent (trial) court denied the motion to dismiss of petitioner Ortigas,
holding, among others, that TCT 77652 and TCT 77653 on their face show that they were derived from
OCT 337, 19, 336, 334, pursuant to Decree 1425; that if there was error in the correct number of OCT on
said titles, no step or measure to rectify the same was taken; that Decree No. 1425 shows that it covers
a total area of only 17 hectares, more or less, located in Sta. Ana, Manila, which was four kilometers
away from the land subject of the application for registration which covers an area of 156 hectares, more
or less, described in Plan No. LRC (SWO)-15352 situated at Malitlit-Uoogong, Quezon City; that the
contention of Ortigas that Decree No. 1425 covers an area in Manila and also a part of Rizal is not
credible, for if this were true then the area of said Rizal portion should appear on the face of said decree
of registration, which is not the case; that TCT 77652 and TCT 77653 were not derived from any decree
of registration, and that the said TCTs being null and void, cannot be used as basis to contest the right of
the applicant to apply for registration over the subject land. The order of March 30, 1988, in its
dispositive portion stated:

"WHEREFORE, premises considered, the Omnibus Motion dated October 4, 1978 and Motion to
Dismiss, dated, October 23, 1978 filed by oppositor Ortigas & Company, Limited Partnership are
both DENIED for lack of merit; while this Court's order of September 15, 1978 directing the City
Assessor of Quezon City to issue a separate tax declaration corresponding to the 12 or 14
hectares which is an undivided portion of the land applied for registration and now belonging to
the said Dolores V. Molina; further, authorizing the City Treasurer of Quezon City to accept the
corresponding realty taxes due thereon; and further the said Dolores V. Molina is allowed to
intervene in these proceedings, is hereby affirmed; likewise, the City Treasurer is directed to
accept the whole of the taxes due on the property subject of the instant petition from applicants
Widows & Orphans Association, Inc., as prayed for in its Manifestation with Motion subject to the
right of the oppositor Dolores V. Molina as contained in this Court's order of September 15,
1978."

On April 26, 1988, petitioner Ortigas filed a motion for reconsider consideration of the said order of
March 30, 1988, taking exception to the ruling that TCT Nos. 77652 and 77653 are null and void, and
alleging, among others, that respondent (trial) court had no jurisdiction to hear an application for
registration of a previously registered land; that the parcels of land applied for are covered by TCT 77652
and TCT 77653 in the name of Ortigas; that the parcels of land covered by TCT 77652 and TCT 77653
are within the parcel of land covered by OCT 351; and that OCT 351 is a copy of Decree No. 1425
issued on April 26, 1905. The motion for reconsideration prayed the respondent court to reconsider its
order of March 30, 1988 on the ground that it had no jurisdiction over the application for registration, the
parcels of land subject thereof being already covered by Torrens Certificates of Title.
On May 19, 1989, the respondent (trial) court issued an order, denying the motion for reconsideration of
Ortigas, and setting the hearing on the merits on July 26, 1989, ... for the "eventual presentation of the
parties' respective evidence respecting their alleged ownership of the property subject of this petition."
(Rollo, pp. 24-26)

Not satisfied, respondent Ortigas instituted an action for certiorari, prohibition and mandamus before respondent
court praying for the annulment of the March 30, 1988 and May 19, 1989 orders of the trial court. It also prayed
that the trial court be ordered to dismiss the land registration case.

On November 27, 1989, respondent court rendered the decision sought to be reviewed, the decretal portion of
which reads:

WHEREFORE, the petition for certiorari, prohibition and mandamus of petitioner Ortigas & Company
Limited Partnership is GRANTED. The orders of March 30, 1988 and May 19, 1989 of the Regional Trial
Court of Quezon City, Branch 83, in LRC Case No. Q-336, are REVERSED and ANNULLED, and said
LRC Case No. Q-336 is DISMISSED. The injunction issued by the Court, per Resolution of August 8,
1989, is made permanent. (Rollo, p. 35)

Based on the plan and other evidence submitted by respondent Ortigas at the hearing of its application for
preliminary injunction to enjoin the trial court from proceeding with the hearing of LRC Case No. Q-336,
respondent court held that TCT Nos. 77652 and 77653, albeit reflecting their origins as OCT Nos. 337, 19, 336
and 334, are actually derivatives of OCT No. 351, the latter having been issued pursuant to Decree 1425 and
that since OCT 351 is allegedly a copy of Decree 1425, the mere fact that the original copy of Decree 1425, or a
certified copy thereof, can no longer be located or produced, does not mean that Decree 1425 covering the lots
embraced in TCT Nos. 77652 and 77653 was not issued. Concluding, respondent court said:

It may be that TCT 77652 and 77653 do not show on their face (sic) that they were derived from OCT
351. But the fact remains, as shown above, that the parcel of land covered by OCT 351 embraced the
parcels of land, Lots 7 and 8, of TCT 77652 and 77653. There was, therefore a mistake in the entries in
TCT 77652 and 77653 when the same referred to OCTs 337, 19, 336, 337 (sic) and 334, as their source,
for the correct OCT insofar as Lots 7 and 8 are concerned, should be OCT 351. (Rollo, p. 27)

In this petition, petitioner WIDORA avers that the respondent Court of Appeals has decided questions of
substance contrary to law and the applicable decisions of this Court because:

THE COURT OF APPEALS INSISTED IN UPHOLDING THE EXISTENCE OR VALIDITY OF TCTs


77652 and 77653 DESPITE THE ABSENCE OF A SUPPORTING DECREE OF REGISTRATION.

II

THE QUESTIONED DECISION UTILIZED SECONDARY EVIDENCE DESPITE THE EXISTENCE AND
AVAILABILITY OF THE ORIGINAL DOCUMENT.

III

THE RESPONDENT COURT HAS NO POWER OR AUTHORITY TO ENJOIN THE TRIAL ON THE
MERITS OF LRC NO. Q-336 SINCE JURISDICTION RESIDES WITH THE RTC ACTING AS A LAND
REGISTRATION COURT.

In essence, it is the contention of petitioner that respondent court's grounds and reasoning in support of its
findings that respondent Ortigas is the registered owner of the disputed property are baseless in law and fact.
Petitioner argues that respondent court erred in sustaining the validity of TCTs Nos. 77652 and 77653 despite
the absence of a supporting decree of registration and instead utilized secondary evidence, OCT 351 which is
supposedly a copy of Decree 1425. Petitioner maintains that Decree 1425 is itself existing and available at the
Register of Deeds of Manila and on its face shows that it covers a parcel of land with an area of only 17 hectares
in Sta. Ana, Manila while the parcel of land applied for contains an area of 156 hectares, located at Malitlit-
Uoogong Quezon City, four (4) kilometers away from Sta. Ana, Manila and is certified by the Bureau of Lands
and the Bureau of Forestry as alienable and disposable.
Respondent Ortigas claims that respondent court committed no error in rectifying the mistake in the entries in
TCT Nos. 77652 and 77653 as regards their sources and/or origins arguing that the correction was justified by
the fact that the plan of OCT 351 coincides with the parcels of land covered by TCT Nos. 77652 and 77653; that
OCT 351 was issued pursuant to Decree 1425 and that OCT 351 is a copy of the Decree itself.

We find the petition impressed with merit.

Undoubtedly, the evidence (i.e., plan submitted by respondent Ortigas, testimony of its surveyor and OCT 351)
adduced by private respondent to prove the contents of Decree 1425 and admitted by respondent court is
merely secondary and should not have been admitted in the first place.

Before secondary evidence may be admitted, there must be 1) proof of the execution of the original writing and
2) that it has been lost or destroyed or cannot be produced in court or that it is in the possession of the adverse
party who has failed to produce it after reasonable notice (Michael and Co. v. Enriquez, 33 Phil. 87 [1915];
Republic v. Court of Appeals, 73 SCRA 146 [1976]). Private respondent has not shown compliance with the
above requisites which would justify the admission of the secondary evidence used and erroneously relied upon
by respondent court.

Furthermore, the unilateral action of respondent court in substituting its own findings regarding the extent of the
coverage of the land included in TCT Nos. 77652 and 77653, ostensibly to correct the error in, and conform with,
the technical description found in OCT 351 based on the plan and other evidence submitted by respondent
Ortigas cannot be sustained. That function is properly lodged with the office of the trial court sitting as a land
registration court and only after a full-dress investigation of the matter on the merits. It is before the land
registration court that private respondent must adduce the proof that the disputed parcels of land is legally
registered in its favor.

In Dioquino v. Intermediate Appellate Court (179 SCRA 163 [1989]), this Court held that "(w)hile it is true that the
Court of Appeals is vested with the 'power to try cases and conduct hearings, receive evidence and perform any
and all acts necessary to resolve factual issues raised ..." (Sec. 9 [3], BP 129), there was not even a request for
evidentiary hearing filed in this case. The Court of Appeals therefore should not have admitted said evidence
without giving the adverse party opportunity to present counter evidence, if any. Besides, "evidence necessary in
regards to factual issues raised in cases falling within the Appellate Court's original and appellate jurisdiction
contemplates incidental facts which were not touched upon, or fully heard by the trial or respondent Court. The
law could not have intended that the Appellate Court would hold an original and full trial of a main factual issue in
a case, which properly pertains to trial courts" (citing Lingner & Fisher GMBH v. IAC, 125 SCRA 522 [1983]). In
the case at bar, it appears that the parties have yet to fully present their respective evidence in support of their
claims before the trial court. As a matter of fact, the trial court had set the case for hearing on the merits in its
order dated May 19, 1989. What is more, the case involves a vast tract of land consisting of 156 hectares,
separately situated in two outlaying localities (i.e., Quezon City and Sta. Ana, Manila.) The resolution of this
controversy calls for a full-blown trial on the merits if only to afford the contending parties their respective days in
court. Further, a ground for dismissal based on disputed facts, as in this case is not proper in a motion to dismiss
(Spouses Jayme and Solidarios v. Alampay, 62 SCRA 131 [1975]).

In the case at bar, respondent Ortigas alleges that Decree 1425 embraces the lots covered by its TCT Nos.
77652 and 77653 which are identical to the lots applied for by petitioner. On the other hand, petitioner maintains
that Decree 1425 covers a 17-hectare lot located at Sta. Ana, Manila while the lot applied for is alienable and
disposable as certified by the Bureau of Lands and by the Bureau of Forestry and has an area of 156 hectares
located in Quezon City four (4) kilometers away from Sta. Ana, Manila. Hence, the necessity of a trial on the
merits to ascertain the disputed facts, i.e., whether the lot applied for is covered by Decree No. 1425 or is
alienable and disposable. Under Act 496, it is the decree of registration issued by the Land Registration
Commission which is the basis for the subsequent issuance of the certificate of title by the corresponding
Register of Deeds that quiets the title to and binds the land (De la Merced v. Court of Appeals, 5 SCRA 240
[1962]). Consequently, if no decree of registration had been issued covering the parcel of land applied for, then
the certificate of title issued over the said parcel of land does not quiet the title to nor bind the land and is null
and void.

Besides, an order denying a motion to dismiss is merely interlocutory and, unless it constitutes clearly a grave
abuse of discretion or was issued without or in excess of jurisdiction, the error, if any, should be corrected by
appeal in due time, after trial and judgment on the merits and not by the extraordinary writ of prohibition (Moreno
v. Macadaeg, 7 SCRA 700 [1963]; National Investment and Development Corporation v. Aquino, 163 SCRA 53
[1988]).
Furthermore, on grounds of pre-maturity, interlocutory orders cannot be decided by the appellate courts until the
lower court shall have decided the merit of the case. Thus, in Villegas v. Fernando (27 SCRA 1119 [1969]), this
Court held:

This first assigned error (assailing the personality of the appellees to ask for a review of the decision and
decree in the registration case) is actually directed at an earlier order dated 26 April 1961 denying
appellants heirs' motion to dismiss the petitions for review filed by the present appellees. And inasmuch
as said order of 26 April 1961 is interlocutory, there being as yet no trial and decision on the merits of the
petition for review, it is premature to raise said assigned error in appellants heirs' instant appeal. We
shall rule thereon only when the proper time comes, i. e., after the lower court shall have settled not only
the still unresolved status and rights of the parties, particularly those of petitioners (sic) for review, now
appellees herein, almost all of whom are claiming that they are not mere homestead or free patent
applicants but patent or title holders, but also whether the original decision should be maintained or not.
For the court below, after receiving and hearing the parties, may still conclude in favor of appellants
herein. (Emphasis supplied)

But not only that. Respondent court committed a procedural lapse in correcting the alleged error in the
questioned TCTs. A certificate of title cannot be altered, amended or cancelled except in a direct proceeding in
1âw phi 1

accordance with law (Sec. 48, PD 1529; Natalia Realty Corp. v. Vallez, 173 SCRA 534 [1989]; Legarda v.
Saleeby, 31 Phil. 590 [1915]). Also, no correction of certificate of title shall be made except by order of the court
in a petition filed for the purpose and entitled in the original case in which the decree of registration was entered
(Sec. 112, Act 496; now Sec. 108, PD 1529). While the law fixes no prescriptive period therefor, the court,
however, is not authorized to alter or correct the certificate of title if it would mean the reopening of the decree of
registration beyond the period allowed by law (Rodriguez, v. Tirona, 68 Phil. 264 [1939]).

Respondent Ortigas, on the other hand, argues that this Court has already recognized the fact that the parcel of
land under TCT No. 227758 from which TCT Nos. 77652 and 77653 were issued, are covered by, among
others, Decree 1425 issued in GLRO Record No. 917 (Rollo, p. 94).

The argument is without merit True this Court declared in Ortigas & Company, Limited Partnership v. Ruiz (148
SCRA 326 [1987]) that "petitioner is the duly registered owner of the land * (then) in dispute as evidenced by
OCT Nos. 13, 33, 334, and 337 by virtue of Decrees Nos. 240, 1942 and 1925 issued in GLRO Record Nos.
699, 875 and 917 ..." Nowhere in said decision, however, is a pronouncement that TCT Nos. 77652 and 77653
were issued from TCT No. 227758. On the contrary, it is not disputed by the parties that TCT Nos. 77652 and
77653 themselves show that they were derived from OCT No. 337, 19, 336 and 334 and not from OCT 351 or
TCT 227758. If indeed, the real origin thereof is OCT No. 351, what respondent Ortigas should have done was
to file a petition for the correction of the TCTs in question as stated earlier.

While it may be true, as respondent Ortigas argues, that a land registration court has no jurisdiction over parcels
of land already covered by a certificate of title, it is nevertheless true that the aforesaid rule only applies where
there exists no serious controversy as to the certificate's authenticity visa vis the land covered therein. In the
case at bar, the claimed origin of the questioned TCTs evidently appear to be different from what is stated
therein. It does not appear indubitable that the disputed parcels of land are properly reflected in the TCTs relied
upon by private respondent. Off-hand, and as the parties admit, the TCTs do not show that they are actually
derivatives of OCT 351. Such being the case, the rule relied upon cannot therefore apply. One who relies on a
document evidencing his title to the property must prove not only the genuineness thereof but also the identity of
the land therein referred to (CF. Lasam v. Director of Lands, 65 Phil. 637 [1938]). In the case at bar, private
respondent's TCT Nos. 77652 and 77653 trace their origins from OCT Nos. 337, 19, 336 and 334 and not from
OCT 351 as it is now claimed by respondent Ortigas.

The trial court cannot be faulted for not having granted respondent Ortigas' motion to dismiss simply because
the TCTs relied upon by the latter do not accurately reflect their supposed origin. Thus, in Ledesma v.
Municipality of Iloilo (49 Phil. 769 [1926]) this Court held that the "simple possession of a certificate of title, under
the Torrens System, does not make the possessor the true owner of all the property described therein. If a
person obtains a title, under the Torrens System, which includes by mistake or oversight land which cannot be
registered under the Torrens System, he does not, by virtue of said certificate alone, become the owner of the
lands illegally included (citing Legarda and Prieto v. Saleeby, 31 Phil. 590 [1915])." TMs pronouncement was
reiterated by the Court in Caragay-Layno v. Court of Appeals (133 SCRA 718 [1984]; Coronel v. Intermediate
Appellate Court (155 SCRA 270 [1987]; Goloy v. Court of Appeals (173 SCRA 26 [1989]; and Miranda v. Court
of Appeals (177 SCRA 303 [1989]). As it is in this case, a certificate of title cannot be considered conclusive
evidence of ownership where the certificate itself is faulty as to its purported origin.
Further, the fact that respondent Ortigas' motion to dismiss was denied does not mean that it could no longer
participate in the resolution of the case and factual determination of the parties' allegations. As correctly stated
by the trial court, "(i)t is to be stressed, however, that the denial of oppositor Ortigas' instant motion for
reconsideration does not necessarily mean that it is deprived of any participation in the instant petition. For as
already stated, what follows after its denial is the eventual presentation of all the parties' respective evidence
respecting their alleged ownership of the property subject of this petition." (Rollo, p. 65)

WHEREFORE, the assailed judgment of respondent court is SET ASIDE and the orders of the trial court in LRC
Case No. Q336 entitled, "In Re-Application for Registration of Title, WIDOWS and ORPHANS ASSOCIATION,
Inc., Applicant, ORTIGAS & COMPANY LIMITED PARTNERSHIP and DOLORES V. MOLINA, Oppositors",
dated March 30, 1988 and May 19, 1989 are hereby REINSTATED insofar as the denial of oppositor Ortigas'
motion to dismiss and motion for reconsideration, respectively, are concerned and the case remanded to the trial
court for trial and adjudication on the merits.

SO ORDERED.

Davide, Jr., J., concur.


Fernan, C.J., concur in the majority opinion and in the separate concurring opinion of Justice Gutierrez.
Feliciano, J., is on leave.

Separate Opinions

GUTIERREZ, JR., J., concurring:

Titulo de Propriedad Numero 4136 purports to cover extensive portions of several provinces and cities in Luzon
and Metro Manila from Dingalan Bay in the north to Tayabas Bay in the south. It is the most fantastic land claim
in the history of the country and has spawned countless land swindles and rackets not to mention tedious
litigation in so many trial courts, the Court of Appeals and this Court.

I fail to understand why the appropriate government authorities do not take determined efforts to slay the dragon
once and for all. Cases involving lots sold or conveyed by the Mariano San Pedro y Esteban estate, which
incidentally claims all land on which government buildings are constructed in Quezon City including the
sprawling University of the Philippines campus, the Batasan and Commission on Audit complex, the areas
around and including the Quezon Memorial Circle all the way to and beyond EDSA, etc., are periodically taken
to court and just as periodically disposed of after years of litigation. To avoid having the Government as an
adversary, the Estate has reportedly in a spirit of "magnanimity" waived its rights to lots on which government
buildings are located. I understand that certain Torrens Title owners have been "awarded" similar assurances in
the past. However, squatters and innocent buyers have been given lease rights or outright deeds of sale over
land possessed and owned by other persons resulting in litigation.

I concur in the decision because the Court has to accord due process to all litigants and apply basic rules of
procedure fairly and evenly. While I have background knowledge of so many scams arising from the dubious
Titulo de Propriedad, we are bound to act only on evidence found in the records. The association's name of
Widows and Orphans Association, Inc. is a heart tugging appellation. Who are the members? Are they victims of
a scam? Or are they being used by smart operators? Since Ortigas and Company admits to an error in its title,
the extent and import of the error have to be ascertained. These call for presentation of evidence which will be to
everybody's interest if adduced.

I believe the Department of Justice should look more carefully into the Titulo de Propriedad situation. Instead of
running after individual termites gnawing away in all directions, the Government should ferret out the mother of
the termites and dispose of it once and for all, if indeed it is a termite and not the legitimate and aggrieved owner
it claims to be.

Fernan, C.J., concurs.


Footnotes

* Situated in Ugong Sur, Pasig, Rizal, bounded by Ortigas Ave., E. Rodriguez, Jr. Ave. and Escarpment
Road, containing an area of 162 hectares, more or less, consolidated into one parcel, under TCT No.
227758 of the Register of Deeds of Rizal.

The Lawphil Project - Arellano Law Foundation

Republic of the Philippines


SUPREME COURT
Manila

EN BANC

G.R. No. L-18210 December 29, 1966

LAURENTIO ARMENTIA, plaintiff-appellant,


vs.
ERLINDA PATRIARCA, FLORENCIA SOMECIERA JULIANA ARMENTIA JOSE SOMECIERA and SOFRONIO
FLORES in his capacity as The Register of Deeds for the Province of Iloilo, defendants-appellees.

Cesar T. Martin for plaintiff and appellant.


Benjamin M. Moreno for defendants and appellees.

SANCHEZ, J.:

Plaintiff Laurentio Armentia, and Juliana and Marta Armentia, were brother and sisters of the full blood. Jose
Someciera is the acknowledged natural son of their deceased mother. Defendant Florencia Someciera is a
daughter of Jose Someciera. Defendant Erlinda Patriarea is a granddaughter of Juliana Armentia. Marta
Armentia was married to Gregorio Bueno who died sometime in 1942.

By notarial document, Annex A of the complaint, dated July 22, 1955, Marta Armentia did two things: First, she
adjudicated to herself a parcel of land (Lot 5482, Pototan cadastre, [Iloilo]) with the improvements thereon,
covered by Transfer Certificate of Title 21328. — and which she inherited from her deceased husband —
pursuant to Section 1, Rule 74 of the 1940 Rules of Court;1 and second, for and in consideration of P-99.00,
which she acknowledged to have received from Erlinda Patriarca, 13 years of age, single, and Florencia
Someciera, 20 years of age, single, she sold to them the property just mentioned. The foregoing document was,
on July 22, 1955, recorded in the registry of deeds. - Whereupon, Torrens title 21323 was cancelled by Transfer
Certificate of Title 18797 in the names of Erlinda Patriarca and Florencia Someciera.

Marta Armentia died intestate and without forced heirs on May 28, 1960.

On September 17, 1960, Laurentio Armentia commenced suit2 against Erlinda Patriarca and Florencia
Someciera as principal defendants.3 The complaint, as amended, and reamended, avers: That the sale made by
Marta in favor of Erlinda and Florencia "is null and void because it is simulated and fictitious and if not null and
void it is voidable because the said defendants were minors at the time the contract was executed and could not
then have given their consent to the sale"; that "the said sale was fraudulently executed, and after the supposed
sale, Marta Armentia remained in possession of the house and lot, as owner paying the taxes on the land until
she died"; that "even assuming hypothetically that there was consideration in the supposed sale, the
consideration was grossly inadequate"; that "plaintiff only came to know of the supposed sale in Annex A one
week before the suit was filed that "at the time of the alleged sale in Annex A", the "house was already standing
on the land", and that "after its execution Marta Armentia repaired the house"; and that "the defendants Erlinda
Patriarca, Florencia Someciera, Juliana Armentia and Jose Someciera are personally possessing the land and
the house in question". The complaint further avers that Marta Armentia also left a "Singer" sewing machine.
Paragraph 8 thereof says that said sewing machine is "now in the possession of Erlinda Patriarca and Florencia
Someciera". However, paragraph 20 of the very same complaint speaks of said sewing machine as "now in the
possession of the defendants Erlinda Patriarca, Florencia Someciera, Jose Someciera and Juliana Armentia"4
The complaint winds up with the prayer that the deed of sale be "declared inexistent or in the alternative
annulled"; that plaintiff Laurentio Armentia and defendant Juliana Armentia, as heir of Marta Armentia, be
declared owners of the land in dispute; that the Register of Deeds be directed to cancel Torrens title 18797 in
the names of Erlinda Patriarca and Florencia Someciera, and, in lieu thereof, to issue a new title in the names of
Laurentio Armentia and Juliana Armentia; that the house and lot and sewing machine be partitioned and
plaintiff's share be delivered to him; and that should partition not be feasible, said properties be sold and plaintiff
given his share.

The complaint was met by defendant's motion to dismiss upon two grounds: (1) lack of cause of action and (2)
prescription.

On November 21, 1960, over plaintiff's opposition, the lower court dismissed the case for the reason that
plaintiff's action to annul the sale had prescribed. A move to reconsider was thwarted by the court in its order of
December 17, 1960.

The case is now before us on plaintiff's appeal in forma pauperis.

1. Plaintiff's attack is primarily directed at the sale. Plaintiff charges that the contract therefor was fraudulently
executed, but in the same breadth characterizes it, as simulated and fictitious. These statements and but
conclusions of law. Controlling, of course, is the statement of' ultimate facts.6

Let us then look at the factual recitals. Particularly striking is the fact that plaintiff does not dispute the self-
adjudication made by Marta Armentia in the deed. Plaintiff does not impugn the genuineness of Marta's
signature thereon. He solo puts in issue that portion of the document where the sale appears to have been made
to Erlinda Patriarca and Florencia Someciera.

To drive home his averment of nullity, plaintiff summons to his aid the following circumstances: At the time of the
sale, the vendees were still minors and the consideration was grossly inadequate; after the sale, Marta Armentia
repaired the house, continued possession of the premises, paid the taxes thereon until her demise.

Hypothetically admitting the truth of these allegations, the conclusion is irresistible that the sale is merely
voidable. Because Marta Armentia executed the document, and this is not controverted by plaintiff. Besides, —
the fact that the vendees were minors, makes the contract, at worst, annullable by them. Then again,
inadequacy of consideration does not imply total want of consideration. Without more, the purported acts of
Marta Armentia after the sale did not indicate that said sale was void from the beginning.

The sum total of all of these is that, in essence, plaintiff's case is bottomed on fraud, which renders the contract
voidable.

2. May plaintiff annul the sale on the theory of fraud? Plaintiff was but a brother of the deceased Marta Armentia.
True, he is an intestate heir of Marta; but he is not a forced heir. Upon the other hand, Marta was free to dispose
of her properties the way she liked it. She had neither ascendants nor descendants.

By Article 1397 of the Civil Code, "[t]he action for annulment of contracts may be instituted by all who are
thereby obliged principally or subsidiarily". This must be construed in conjunction with Article 1311 of the same
code providing that "[c]on tracts take effect only between the parties, their assigns and heirs, except in case
where the rights and obligations arising from the contract are not transmissible by their nature, or by stipulation
or by provision of law", and that "the heir is not liable beyond the value of the property he received from the
decedent". Plaintiff is not a forced heir. He is not obliged principally or subsidiarily under the contract. Marta
Armentia did not transmit to him by devise or otherwise any rights to the property, the subject thereof. On the
contrary, Marta voluntarily disposed of it. No creditors are defrauded; there are none. No legitimes are impaired.
Therefore, plaintiff has no cause of action to annul or to rescind the sale.

In point is Concepcion vs. Sta. Ana, 87 Phil. 787. The facts there may well be analogized with those of the
present. In the Concepcion case, plaintiff Monico Concepcion was the only surviving legitimate brother of
Perpetua Concepcion, who died without issue and without leaving any will. In her lifetime, or more precisely, on
June 29, 1945, said Perpetua Concepcion, "in connivance with the defendant and with intent to defraud the
plaintiff, sold and conveyed three parcels of land for a false and fictitious consideration to the defendant, who
secured transfer certificate of title of said lands issued under her name and that the defendant has been in
possession of the properties sold since the death of Perpetua Concepcion, thereby causing damages to the
plaintiff in the amount of not less than two hundred (P200) pesos".6 On motion to dismiss, the lower court threw
the complaint out of court upon the ground that "the plaintiff is not a party to the deed of sale executed by
Perpetua Concepcion in favor of the defendant"; that even on the assumption "that the consideration of the
contract is fictitious, the plaintiff has no right of action against the defendant"; that under Article 1302 of the old
Civil Code, "the action to annul a contract may be brought by any person principally bound thereby"; that
"plaintiff is not bound by the deed of sale executed by the d ceased in favor of the defendant"; and that he has
"no obligations under the deed."

The following reproduced in haec verba from the Concepcion opinion is illuminating:

(2) As to the appellant's second and last contention, under the law action to annul a contract entered into
with all the requisites mentioned in article 12617 whenever they are tainted with the vice which invalidate
them in accordance with law, may be brought not only by any person principally bound or who made
them, but also by his heir to whom the right and obligation arising from the contract are
transmitted. Hence if no such rights, actions or obligations have been transmitted to the heir, the latter
can not bring an action to annul the contract in representation of the contracting party who made it.
In Wolfson vs. Estate of Martinez, 20 Phil., 340, this Supreme Court quoted with approval the judgment
of the Supreme Court of Spain of April 18, 1901, in which it was held that "he who is not a party to a
contract, or an assignee thereunder, or does not represent those who took part therein, has under
Articles 1257 and 13028of the Civil Code no legal capacity to challenge the validity of such contract". And
in Irlanda vs. Pitargue (22 Phil. 383) we held that "the testamentary or legal heir continues in law as the
juridical personality of his predecessor in interest, who transmit to him from the moment of his death
such of his rights, actions and obligations as are not extinguished thereby".

The question to be resolved is, therefore, whether the deceased Perpetua Concepcion has transmitted
to the plaintiff any right arising from the contract under consideration in order that he can bring an action
to annul the sale voluntarily made by her to the defendant with a false consideration.

We are of the opinion and so hold, that the late Perpetua Concepcion has not transmitted to the plaintiff
any right arising from the contract of conveyance or sale of her lands to the defendant, and therefore the
plaintiff cannot file an action to annul such contract as representative of the deceased.

According to the complaint the deceased, in connivance with the defendant and with intent to defraud the
plaintiff, (that is, in order not to leave the properties above mentioned upon her death to the plaintiff) sold
and conveyed them to the latter, for a false and fictitious consideration. It is, therefore obvious, that the
conveyance or sale of said properties to the defendant was voluntarily made by the deceased to said
defendant. As the deceased had no forced heir, she was free to dispose of all her properties as absolute
owner thereof, without further limitation than those established by law, and the right to dispose of a thing
involves the light to give or convey it to another without any consideration. The only limitation established
by law on her right to convey said properties to the defendant without any consideration is, that she
could not dispose of or transfer her property to another in fraud of her creditors. And this court, in Solis
vs. Chua Pua Hermanos (50 Phil. 636), through Mr. Justice Street, held that a "voluntary conveyance,
without any consideration whatever, is prima facie good as between the parties, and such an instrument
can not be declared fraudulent as against creditors in the absence of proof, that there was at the time of
the execution of the conveyance a creditor who could be defrauded by the conveyance, 27 C.J., 4770".

xxx xxx xxx

The reason why a forced heir has the right to institute an action of rescission is that the right to the
legitime is similar to a credit of a creditor. As the same Spanish author Manresal correctly states in
commenting on article 12919 of the Civil Code: "The rights of a forced heir to the legitime are
undoubtedly similar to a credit of a creditor in so far as the rights to the legitime may be defeated by
fraudulent contracts" and are superior to the will of those bound to respect them. In its judgment of
October 28, 1897, the Supreme Court of Spain held that the forced heirs instituted as such by their father
to the latter's testament have the undeniable right to institute an action to annul contracts entered into by
the father to their prejudice. As it is seen the action is called action of nullity, but is rather an action of
rescission taking into account the purpose for which it is instituted and the confusion of ideas that has
prevailed in this matter. The doctrine we shall expound in commenting on articles 1302 and 1306 10 will
confirm what we have just stated'. (Manresa, Codigo Civil, 4th edition, Vol. 8, pp. 667 and 668.)11

Our opinion in Concepcion needs no further elaboration. It would suffice to say that plaintiff here has no cause of
action.
3. But even if a right of action be conceded, plaintiff's case fails just the same. An action to annul a contract
based on fraud must be filed within four (4) years from the discovery thereof.12 In legal contemplation, discovery
must be reckoned to have taken place from the time the document was registered in the office of the register of
deeds. For, the familiar rule is that registration is notice to the whole world, including plaintiff.13 As aforestated,
the document in question was recorded on July 22, 1955. Action was started only on September 17, 1960. The
four-year period has elapsed. And, plaintiff's cause of action, if any, is time-barred.

4. All that remains is the small item of plaintiff's share in the "Singer" sewing machine which was not the subject
of the sale aforesaid. The Court may well take judicial notice14 of the fact that such share does not exceed
P5,000.15Plaintiff's separate action — if any he had — to obtain said share, should have been addressed to the
Municipal Court.

Premised on the foregoing considerations, the appealed order of November 21, 1960 dismissing the second
amended complaint is, as it should be, affirmed. No cots So ordered.

Concepcion, C.J., Dizon, Regala, Makalintal, Bengzon, JP Zaldivar and Castro, JJ., concur.

Separate Opinions

REYES, J.B.L., J., concurring:

I concur with the main decision, but can not bring myself to agree to the proposition that the heirs intestate would
have no legal standing to contest the conveyance by the deceased if the same were made without any
consideration, or for a false and fictitious consideration. For under the Civil Code of the Philippines, Article 1409,
par. 3, contracts with a cause that did not exist at the time of the transaction are inexistent and void from the
beginning. The same is true of contracts stating a false cause (consideration) unless the persons interested in
upholding the contract should prove that there is another true and lawful consideration therefor (Ibid., Art. 1353).

If therefore the contract has no causa or considerations or the causa is false and fictitious (and no true
hidden causa is proved) the property allegedly conveys never really leaves the patrimony of the transferor, and
upon the latter's death without a testament, such property would pass to the transferor's heirs intestate and be
recoverable by them or by the Administrator of the transferor's estate, should there be any. The cause of action
of the plaintiffs would not be then on fraud of creditors at all, but upon the fact that the property in question is still
part of the transferor's estate. In this particular regard, I think Concepcion vs. Sta. Ana, 87 Phil. 787 and Solis vs.
Chua Pua Hermanos, 50 Phil. 536, do not correctly state the present law, and must be clarified.

It is unquestionable that the owner of property has the right to convey it to another person, either for a
consideration (onerous contract) or out of sheer liberality (gratuitous transfer). But it must not be overlooked that
while the law does not limit the lawful consideration as the transferor deems adequate (and he is the primary
judge of its adequacy), gratuitous transfers are by no means equally untrammeled The law, justifiably or not,
looks with suspicion at gratuitous conveyances (perhaps considering them contrary to man's innate egotism) and
subjects their validity to the observance of specific formalities designed to assure that the nature of the
conveyance is well understood, and that it is not done impulsively, without due deliberation. It is well known that
our law only recognizes two forms of gratuitous conveyances: inter vivos by way of donation and mortis
causa by way of last will and testament. In either case, the validity of the transfer of ownership is subordinated to
the observance of the formalities prescribed by law. Where Ian — or tenements are conveyed, a donation and its
acceptance must appear in a public document, with the acceptance duly notified to the donor (Civ. Code, Art.
749); in case of movables, there must be at least a private writing unless the donation is accompanied by
simultaneous delivery of the donated chattel (Art. 748). In last wills and testaments, the formalities ordained by
law must be necessarily observed (Arts. 804, et seq.) and ' in addition, the will must be judicially allowed or
probated (Art. 838, Civil Code).

It is a consequence of all the preceding considerations that a purported sale of property would not vest
ownership in the transferee if it is established that the transfer was really gratuitous, and that the alleged price is
non-existent. Such a "sale" would then either be void for lack of an essential requisite, or else be a 'disguised
donation, that would not be operative unless the formalities prescribed for a valid donation are observed.1 If they
are not, then no title passes to the transferee, regardless of the voluntary accomplishment of the deed of
conveyance by the transferor, because the naked intent to convey, without the required solemnities, does not
suffice for gratuitous alienations, even as between the parties inter se.
Of course, in the case at bar, it has not been satisfactorily established that the price is non-existent, and for that
reason the transaction, being onerous and not gratuitous, must be upheld.

Footnotes

1 Now also Section 1, Rule 74 of the 1964 Rules of Court.

2Civil Case No. 5555 of the Court of First Instance of Iloilo, entitled "Laurentio Armentia, plaintiff, vs.
Erlinda Patriarca, et al., defendants".

3 Juliana Armentia and Jose Someciera are named defendants because these two were "unwilling to
join" plaintiff in the complaint. Sofronio Flores is sued in his capacity as Regir of Deeds of Iloilo.

4In the original complaint and in the first amended complaint, plaintiff states that the sewing machine
was in the possession solely of defendants Erlinda Patriarca and Florencia Someciera.

5Vivar vs. Vivar, L-18667, August 31, 1963; Jorngles et al. vs. Central Azucarera de Bais, et al., L-
15287, September 30, 1963; Almendra, et al. vs. Alvero, L-19820, September 20, 1965; Remitere et al.
vs. Yulo, et al., L-19751, February 28, 1966; Dy Poco vs. Commissioner of Immigration, et al., L-22313,
March 31, 1966.

6 p. 789; italics supplied.

7 Now Article 1318 of the Civil Code.

8 These two are now Articles 1311 and 1397, respectively, of the Civil Code.

9 Now Article 1381, Civil Code.

10 Article 1302, supra; Article 1306 now is Article 1412, Civil Code.

11 Concepcion vs. Sta. Ana, supra, pp. 791-793, 793-794; emphasis supplied.

12 Articles 1146(l) and 1391, Civil Code. Mauricio vs. Villanueva, et al., L-11072, September 24, 1959.

13Section 51, Land Registration Act. Mauricio vs. Villanueva, et al., supra; Gerona, et al. vs. De Guzman,
et al., L-19060, May 29, 1964, citing: Diaz vs. Gorricho, I,11229, March 29, 1958; Avecilla vs. Yatco,
1,11578, May 14, 1958; J.M. Tuason & Co., Inc. vs. Magdangal, L-15539, January 30, 1962; pez vs.
Gonzaga, I-18788, January 31, 1964.

14 People vs. De la Cruz, 43 O.G. No. 8, pp. 3202, 3207.

15Maximum limit of the civil jurisdiction of the Municipal Court on September 17, 1960, when suit was
started. Judiciary Act of 1948, Section 88, as amended by R.A. 2613, approved August 1, 1959. Said
maximum limit was raised to P10,000 by R.A. 3828, approved June 22, 1963.

REYES, J., concurring:

1See decisions of the Spanish Tribunal Supremo, 22 Feb. 1940; 23 June 1953; 29 Oct. 1956; 5 Nov.
1956; and 7 Oct. 1958.

The Lawphil Project - Arellano Law Foundation


Republic of the Philippines
SUPREME COURT
Manila

FIRST DIVISION

G.R. No. L-48430 December 3, 1985

CONSUELO MACONO CULTURA, JOSE CUBILLAS and PANFILO SALINAS, petitioners,


vs.
HON. LAURO L. TAPUCAR, BERNARDA E. ANDAYA and ANDAYA REALTY CORPORATION, respondents.

Manuel S. Ozarraga for respondents.

PATAJO, J.:

This is a petition for review by certiorari of the order of the Court of First Instance of Agusan del Norte and
Butuan City in Civil Case No. 1949 granting the motion of the defendants in said case, the herein private
respondents, to dismiss the complaint on the ground that plaintiffs' action had already prescribed.

In a complaint filed on May 31, 1977 by petitioners, the children and grandchildren of the deceased Juana
Macono, it was alleged that during her lifetime she acquired by free patent a parcel of land with an area of
3,0974 hectares situated in Langihan, Butuan City, but that on November 26, 1934 defendant Bernarda E.
Andaya by means of fraud, succeeded in having said Juana Macono execute in her favor a deed of sale of said
property in consideration of the sum P110.00, and subsequently secured a new certificate of title for said
property in her name, and disposed plaintiffs thereof. The complaint further alleged that at the time the alleged
deed of sale was executed petitioners were still minors, except Silvestre, and did not sign said deed of sale but
after the death of Juana Macono on March 11, 1951, Bernarda E. Andaya reconstituted the certificate of title of
the property in October 1951 and then sold the property to other defendants. Plaintiffs, therefore, prayed that
defendants be ordered to restore possession of the property to them and to pay jointly and severally actual
damages of P3,000.00, moral damages of P30,000.00, exemplary damages of P3,000.00 and the sum of
P50.00 a month from November 1934 until such time as possession of the property be restored to plaintiff.

Defendants filed a motion to dismiss the complaint principally on the ground that plaintiffs' action had already
prescribed and that defendant had acquired ownership of the property by acquisitive prescription having been in
possession thereof continuously in concept of owner since November 26, 1934 when the property was sold to
defendant Bernarda E. Andaya by Juana Macono.

On August 8, 1977, the Trial Court sustained defendants' motion to dismiss, said Court ruling that plaintiffs'
action had already prescribed under the provisions of the Code of Civil Procedure, which was the law applicable
to the case since the period of prescription had commenced running before the New Civil Code went into effect.

In this present petition for review filed with this Court, petitioners contend that the lower court erred in finding that
plaintiffs' cause of action had already prescribed under the provisions of the Code of Civil Procedure because
the deed of sale allegedly executed in favor of Bernarda E. Andaya on November 26, 1934 was executed within
the period of five years from the time of the issuance of the free patent in favor of Juana Macono and
consequently said deed of sale was void ab initio and the action to have it so declared null and void does not
prescribe.

An examination of the allegations of plaintiffs' complaint as well as the amended complaint shows that it was an
action filed to annul a deed of sale executed by means of fraud. There is no allegation in said complaint
regarding the deed of sale of November 26, 1934 being null and void ab initio because it was executed within
the period of five years from the issuance of the free patent granted Juana Macono in violation of Section 118 of
Commonwealth Act 141, as amended. What determines the nature of an action are the allegations of the
complaint (Pamintuan vs. Court of Appeals, 14 SCRA 438). And in Rone vs. Claro, 91 Phil. 250, this Court held
that the purpose of an action or suit and the law to govern it, including the period of prescription, is to be
determined not by the claim of the party filing the action, made in his argument or brief, but rather by the
complaint itself, its allegations and the prayer for relief. Said ruling was reiterated in Piano vs. Cayarong, 7
SCRA 397.
In the present case, it would appear very clearly from the allegations of the complaint as well as the amended
complaint and the prayer thereof that what plaintiffs sought was the annulment of the deed of sale executed by
means of fraud. Paraphrasing Rone vs. Claro, supra, recovery of possession of the property may be the ultimate
objective of plaintiffs, but to attain such goal they must need first travel over the road of relief sought to annul the
deed of sale of November 26, 1934 on ground of fraud, otherwise even if the case were to be regarded as a
direct action to recover title and possession, it would, nevertheless, be futile and could not prosper for the reason
that defendants could always defeat it by merely presenting the deed of sale which is good and valid to legalize
and justify the. transfer of the land to the defendants, until annulled by the courts. Plaintiffs' action, therefore,
prescribed in four years from the time the deed of sale in favor of Bernarda E. Andaya was registered with the
Office of the Register of Deeds, which was on December 12, 1934. From said date petitioners are deemed to
have constructive notice of the existence of said deed of sale. Armentia vs. Patriarca, 18 SCRA 1253; Gatioan
vs. Gaffud, 27 SCRA 706.

Parenthetically, it may be added that there is no merit to the claim of petitioners that the deed of sale of
November 26, 1934 in favor of Bernarda E. Andaya was executed within the period of five years from the
issuance of the free patent in favor of Juana Macono and void ab initio. Said free patent was granted on
November 25, 1929 pursuant to which Original Certificate Title No. 226 was issued in the name of Juana
Macono. The deed of sale claimed to be executed by means of fraud on November 26, 1934 was executed after
the lapse of the period of five years.

There is, therefore, no basis for the claim of petitioners that their action to declare said deed of sale null and void
has not prescribed since it is void ab initio, having been executed within the prohibited period of five years. The
period of five years is to be reckoned from and after the date of the approval of the application for free patent up
to and including the fifth year from and after the date of the issuance of the patent. Section 118 Commonwealth
Act 141; Beniga vs. Bugas, 35 SCRA 111. The period of prescription that governs the present case, is therefore
four years according to Section 43 of Act 190, the old Code of Civil Procedure, from the discovery of the fraud,
which is December 12, 1934 when the deed of sale sought to be annulled was registered. Article 1116 Civil
Code; Philippine National Bank vs. Dionisio, 9 SCRA 10.

IN VIEW OF THE FOREGOING, the petition is DISMISSED for lack of merit, with costs against petitioners.

SO ORDERED.

Plana, Guitierrez, Jr. and De la Fuente, JJ., concur.

Teehankee, J., concur in the result.

Melencio-Herrera and Relova, JJ., are on leave.

The Lawphil Project - Arellano Law Foundation

Republic of the Philippines


SUPREME COURT
Manila

FIRST DIVISION

G.R. No. L-46001 March 25, 1982

LUZ CARO, petitioner,


vs.
HONORABLE COURT OF APPEALS and BASILIA LAHORRA VDA. DE BENITO, AS ADMINISTRATRIX OF
THE INTESTATE ESTATE OF MARIO BENITO, respondents.

GUERRERO, J.:

This is a petition for certiorari under Rule 45 of the Revised Rules of Court seeking a review of the decision of
the Court of Appeals, 1 promulgated on February 11, 1977, in CA-G.R. No. 52570-R entitled "Basilia Lahorra Vda. de
Benito, as Administratrix of the Intestate Estate of Mario Benito vs. Luz Caro", as well as the resolution of the
respondent Court, dated May 13, 1977, denying petitioner's Motion for Reconsideration.

The facts of the case are as follows:

Alfredo Benito, Mario Benito and Benjamin Benito were the original co-owners of two parcels of land covered by
Transfer Certificates of Title Nos. T-609 and T-610 of the Registry of Deeds of Sorsogon. Mario died sometime
in January, 1957. His surviving wife, Basilia Lahorra and his father, Saturnino Benito, were subsequently
appointed in Special Proceeding No. 508 of the Court of First Instance of Sorsogon as joint administrators of
Mario's estate.

On August 26, 1959, one of the co-owners, Benjamin Benito, executed a deed of absolute sale of his one-third
undivided portion over said parcels of land in favor of herein petitioner, Luz Caro, for the sum of P10,000.00.
This was registered on September 29, 1959. Subsequently, with the consent of Saturnino Benito and Alfredo
Benito as shown in their affidavits both dated September 15, 1960, Exhibits G and F respectively, a subdivision
title was issued to petitioner Luz Caro over Lot I-C, under T.C.T. No. T-4978.

Sometime in the month of May, 1966, private respondent Basilia Lahorra Vda. de Benito learned from an
allegation in a pleading presented by petitioner in Special Proceeding No. 508 that the latter acquired by
purchase from Benjamin Benito the aforesaid one-third undivided share in each of the two parcels of land. After
further verification, she sent to petitioner thru her counsel, a written offer to redeem the said one-third undivided
share dated August 25, 1966. Inasmuch as petitioner ignored said offer, private respondent sought to intervene
in Civil Case No. 2105 entitled "Rosa Amador Vda. de Benito vs. Luz Caro" for annulment of sale and mortgage
and cancellation of the annotation of the sale and mortgage involving the same parcels of land, but did not
succeed as the principal case was dismissed on a technicality, that is, for failure to prosecute and the proposed
intervenor failed to pay the docketing fees. Private respondent, thus, filed the present case as an independent
one and in the trial sought to prove that as a joint administrator of the estate of Mario Benito, she had not been
notified of the sale as required by Article 1620 in connection with Article 1623 of the New Civil Code.

On the other hand, petitioner presented during the hearing of the case secondary evidence of the service of
written notice of the intended sale to possible redemptioners in as much as the best thereof, the written notices
itself sent to and Saturnino Benito, could not be presented for the reason that said notices were sent to persons
who were already dead when the complaint for legal redemption was brought. Instead, the affidavit of Benjamin
Benito, executed ante litem motam, attesting to the fact that the possible redemptioners were formally notified in
writing of his intention to sell his undivided share, was presented in evidence. The deposition of Saturnino's
widow was likewise taken and introduced in evidence, wherein she testified that she received and gave to her
husband the written notice of the intended sale but that the latter expressed disinterest in buying the property.

After hearing the evidence, the trial judge dismissed the complaint on the grounds that: (a) private respondent,
as administratrix of the intestate estate of Mario Benito, does not have the power to exercise the right of legal
redemption, and (b) Benjamin Benito substantially complied with his obligation of furnishing written notice of the
sale of his one-third undivided portion to possible redemptioners.

Private respondent's Motion for Reconsideration of the trial court's decision having been denied, she appealed to
the respondent Court of Appeals contending that the trial Judge erred in

I. . . not inhibiting himself from trying and deciding the case because his son is an associate or
member of the law office of Atty. Rodolfo A. Madrid, the attorney of record of defendant-appellee
in the instant case;

II. . contending that Benjamin Benito complied with the provisions of Article 1623 of the Revised
Civil Code that before a co-owner could sell his share of the property owned in common with the
other co-heirs, he must first give written notice of his desire to his co-heirs; (p. 49, R.A.)

III. concluding that the fact that one of the administrators who was actively managing the estate
was furnished a written notice by the co-owner of his desire to sell his share was enough
compliance of the provisions of Article 1623 of the Civil Code for the reason that the intention of
the law is only to give a chance to the new co-owner to buy the share intended to be sold if he
desires to buy the same; (p. 50, R.A.)
IV. . refusing to allow plaintiff to redeem the subject property upon authority of Butte vs. Manuel
Uy & Sons, L-15499, Feb. 28, 1962 (p. 51, R.A.) and in consequently dismissing the complaint
(p. 52, R.A.).

In disposing of the aforesaid errors, the Court of Appeals finding for plaintiff (herein private respondent) held:

1. That it is not clear that Atty. Arcangel, son of the trial Judge, was legally associated as practitioner with
counsel for Luz Caro; that it is not shown at any rate that plaintiff had asked for Judge Arcangel's disqualification
and that at any rate also, in such factual situation, an optional ground for disqualification is addressed to his
sound discretion with which it would not be correct for appellate court to interfere or overrule.

2. That since the right of the co-owner to redeem in case his share be sold to a stranger arose after the death of
Mario Benito, such right did not form part of the hereditary estate of Mario but instead was the personal right of
the heirs, one of whom is Mario's widow. Thus, it behooved either the vendor, Benjamin, or his vendee, Luz
Caro, to have made a written notice of the intended or consummated sale under Article 1620 of the Civil Code.

3. That the recital in the deed of sale that the vendor notified his co-owners of his desire to dispose of his share,
who all declined to buy, was but a unilateral statement and could not be proof of the notice required by the law.

4. That the registration of the deed of sale did not erase that right.

5. That the affidavit of notice executed on January 20, 1960 of Benjamin Benito declaring that written notices of
the sale as required by law were duly sent to Alfredo Benito and Saturnino Benito, the latter in his capacity as
administrator of the estate of Mario Benito, as well as the sworn statement of Saturnino Benito's widow dated
November 18, 1968 confirming that her husband received the written notice of the sale referred to in Benjamin
Benito's affidavit of notice would not satisfy that there was clear notice in writing of the specific term of the
intended sale. Worse, Saturnino was only a co-administrator and hence, his unilateral act could not bind the
principal because there was no less than a renunciation of a right pertaining to the heirs, under Article 1818,
NCC, apart from the fact that the right of redemption is not within their administration.

6. That the further claim of defendant that offer to redeem was filed out of time and that there was no actual
tender loses all importance, there being no date from which to count the 30-day period to redeem because there
was no notice given.

The dispositive part of the decision of the Court of Appeals reads as follows:

IN VIEW THEREOF, this Court is constrained to reverse, as it now reverses, judgment appealed
from, upon payment by plaintiff or deposit in Court, within 30 days after this judgment should
have become final, of the sum of P10,000.00, defendant is ordered to execute a deed of
redemption over the one-third share of BENJAMIN BENITO in favor of plaintiff for herself and as
representative of the children of Mario Benito and therefrom, to deliver said one-third share of
BENJAMIN BENITO, costs against defendant-appellee.

SO ORDERED.

Upon denial of the motion for reconsideration, petitioner brought this petition for review raising the following
errors:

1. Respondent Court erred in allowing the exercise of the right of legal redemption with respect to the lots in
question.

2. Respondent Court erred when it made the finding that there was no notice in law from which to count the
tolling of the period of redemption and that the sale was not made known at all to private respondent.

The alleged first error of respondent Court is premised on the fact that the lot in question sought to be redeemed
is no longer owned in common. Petitioner contends that the right sought to be exercised by private respondent in
the case assumes that the land in question is under co-ownership, the action being based on Article 1620 of the
New Civil Code which provides:
A co-owner of a thing may exercise the right of redemption in case the shares of all the other co-
owners or any of them, are sold to a third person. If the price of alienation is grossly excessive,
the petitioner shall pay only a reasonable price.

Should two or more co-owners desire to exercise the right of redemption, they may only do so in
proportion to the share they may respectively have in the thing owned in common.

However, the fact is that as early as 1960, co-ownership of the parcels of land covered by Transfer Certificates
of Title Nos. T-609 and T-610 was terminated when Alfredo Benito, Luz Caro and the Intestate Estate of Mario
Benito, represented by administrators Saturnino Benito, as trustee and representative of the heirs of Mario
Benito, agreed to subdivide the property.

An agreement of partition, though oral, is valid and consequently binding upon the parties.
(Hernandez vs. Andal, et al., 78 Phil. 196)

A petition for subdivision was then filed for the purpose. This was accompanied by the affidavits of Alfredo
Benito and Saturnino Benito, both dated September 15, 1960 to the effect that they agree to the segregation of
the land formerly owned in common by Mario Benito, Alfredo Benito and Benjamin Benito. A subdivision plan
was made and by common agreement Lot I-C thereof, with an area of 163 hectares, more or less, was ceded to
petitioner. Thereafter, the co-owners took actual and exclusive possession of the specific portions respectively
assigned to them. A subdivision title was subsequently issued on the lot assigned to petitioner, to wit, Transfer
Certificate of Title No. T-4978.

In Caram, et al. vs. Court of Appeals, et al., 101 Phil. 315, a case squarely in point, this Court held:

Inasmuch as the purpose of the law in establishing the right of legal redemption between co-
owners is to reduce the number of participants until the community is done away with (Viola vs.
Tecson, 49 Phil. 808), once the property is subdivided and distributed among the co-owners, the
community has terminated and there is no reason to sustain any right of legal redemption.

Although the foregoing pronouncement has reference to the sale made after partition, this Court therein saw no
difference with respect to a conveyance which took place before the partition agreement and approval by the
court. Thus, it held:

Nevertheless, the result is the same, because We held in Saturnino vs. Paulino, 97 Phil. 50, that
the right of redemption under Article 1067 may be exercised only before partition. In this case the
right was asserted not only after partition but after the property inherited had actually
been subdivided into several parcels which were assigned by lot to the several heirs.

In refutation, private respondent argues that petitioner Luz Caro acted in bad faith and in fraud of the rights of
the heirs of a deceased Mario Benito in obtaining a subdivision title over a one-third portion of the land in
question which she brought from Benjamin Benito, and for this reason, she is deemed to hold said property in
trust for said heirs. The rule, however, is it fraud in securing the registration of titles to the land should be
supported by clear and convincing evidence. (Jaramil vs. Court of Appeals, 78 SCRA 420). As private
respondent has not shown and proved the circumstances constituting fraud, it cannot be held to exist in this
case.

As aforesaid, a subdivision title has been issued in the name petitioner on the lot ceded to her. Upon the
expiration of the term of one year from the date of the entry of the subdivision title, the Certificate of Title shall be
incontrovertible (Section 38, Act 496). Since the title of petitioner is now indefeasible, private respondent cannot,
by means of the present action, directly attack the validity thereof.

Even on the assumption that there still is co-ownership here and that therefore, the right of legal redemption
exists, private respondent as administratrix, has no personality to exercise said right for and in behalf of the
intestate estate of Mario Benito. She is on the same footing as co-administrator Saturnino Benito. Hence, if
Saturnino's consent to the sale of the one-third portion to petitioner cannot bind the intestate estate of Mario
Benito on the ground that the right of redemption was not within the powers of administration, in the same
manner, private respondent as co-administrator has no power exercise the right of redemption — the very power
which the Court of Appeals ruled to be not within the powers of administration.
While under Sec. 3, Rule 85, Rules of Court, the administrator has the right to the possession of
the real and personal estate of the deceased, so far as needed for the payment of the expenses
of administration, and the administrator may bring and defend action for the recovery or
protection of the property or right of the deceased (Sec. 2, Rule 88), such right of possession and
administration do not include the right of legal redemption of the undivided share sold to a
stranger by one of the co-owners after the death of another, because in such case, the right of
legal redemption only came into existence when the sale to the stranger was perfected and
formed no part of the estate of the deceased co-owner; hence, that right cannot be transmitted to
the heir of the deceased co-owner. (Butte vs. Manuel Uy and Sons, Inc., 4 SCRA 526).

Private respondent cannot be considered to have brought this action in her behalf and in behalf of the heirs of
Mario Benito because the jurisdictional allegations of the complaint specifically stated that she brought the action
in her capacity as administratrix of the intestate estate of Mario Benito.

It is petitioner's contention that, assuming that private respondent may exercise the right of redemption, there
was no compliance with the conditions precedent for the valid exercise thereof.

In Conejero et al. vs. Court of Appeals, et al., 16 SCRA 775, this Court explained the nature of the right of
redemption in this wise:

While the co-owner's right of legal redemption is a substantive right, it is exceptional in nature,
limited in its duration and subject to strict compliance with the legal requirements. One of these is
that the redemptioner should tender payment of the redemption money within thirty (30) days
from written notice of the sale by the co-owner.

It has been held that this thirty-day period is peremptory because the policy of the law is not to leave the
purchaser's title in uncertainty beyond the established 30-day period. (Butte vs. Manuel Uy and Sons, Inc., 4
SCRA 526). It is not a prescriptive period but is more a requisite or condition precedent to the exercise of the
right of legal redemption.

In the case at bar, private respondent alleged in her complaint that she learned of the sale sometime in May,
1966 upon receipt of a pleading in Special Proceeding No. 508 of the Court of First Instance of Sorsogon. She
likewise alleged that she gave a letter informing petitioner of her desire to redeem the land on August 25, 1966.
Clearly, three months have elapsed since the notice of the sale. Hence, petitioner claims that the thirty-day
period of redemption has already expired. In addition, petitioner makes capital of the admission of private
respondent that she already knew of the said transaction even before receipt of the said pleading (t.s.n., p. 16)
as well as of the evidence presented that Saturnino Benito, the admittedly active administrator until 1966, duly
received a written notice of the intended sale of Benjamin Benito's share. Said evidence consists of the affidavit
of the vendor stating that the required notice had been duly given to possible redemptioners, the statement in
the deed of sale itself and the deposition of Saturnino Benito's widow with respect to her receipt of the written
notice. Finally, petitioner points to the records which disclose that private respondent knew of the subdivision
(t.s.n., p. 25) and hence, rationalized that private respondent should have known also of the previous sale.

Since We have ruled that the right of legal redemption does not exist nor apply in this case because admittedly a
subdivision title (T.C.T. No. T-4978) has already been issued in the name of the petitioner on Lot I-C sold to her,
it becomes moot and academic, if not unnecessary to decide whether private respondent complied with the
notice requirements for the exercise of the right of legal redemption under Article 1623 of the New Civil Code.

WHEREFORE, IN VIEW OF THE FOREGOING, the decision of the Court of Appeals is hereby REVERSED and
SET ASIDE, and judgment is hereby rendered DISMISSING the complaint.

SO ORDERED.

Makasiar, Fernandez and Melencio-Herrera, JJ., concur.

Teehankee, J., took no part.

Plana, J., concur in the result.


Footnotes

1 First Division, Gatmaitan, Acting Pres. J., ponente; with Reyes and Domondon, JJ., concurring.

The Lawphil Project - Arellano Law Foundation

Republic of the Philippines


SUPREME COURT
Manila

SECOND DIVISION

G.R. No. 107112 February 24, 1994

NAGA TELEPHONE CO., INC. (NATELCO) AND LUCIANO M. MAGGAY, petitioners,


vs.
THE COURT OF APPEALS AND CAMARINES SUR II ELECTRIC COOPERATIVE, INC. (CASURECO
II), respondents.

Ernesto P. Pangalangan for petitioners.

Luis General, Jr. for private respondent.

NOCON, J.:

The case of Reyes v. Caltex (Philippines), Inc.1 enunciated the doctrine that where a person by his contract
charges himself with an obligation possible to be performed, he must perform it, unless its performance is
rendered impossible by the act of God, by the law, or by the other party, it being the rule that in case the party
desires to be excused from performance in the event of contingencies arising thereto, it is his duty to provide the
basis therefor in his contract.

With the enactment of the New Civil Code, a new provision was included therein, namely, Article 1267 which
provides:

When the service has become so difficult as to be manifestly beyond the contemplation of the
parties, the obligor may also be released therefrom, in whole or in part.

In the report of the Code Commission, the rationale behind this innovation was explained, thus:

The general rule is that impossibility of performance releases the obligor. However, it is
submitted that when the service has become so difficult as to be manifestly beyond the
contemplation of the parties, the court should be authorized to release the obligor in whole or in
part. The intention of the parties should govern and if it appears that the service turns out to be
so difficult as to have been beyond their contemplation, it would be doing violence to that
intention to hold their contemplation, it would be doing violence to that intention to hold the
obligor still responsible.2

In other words, fair and square consideration underscores the legal precept therein.

Naga Telephone Co., Inc. remonstrates mainly against the application by the Court of Appeals of Article 1267 in
favor of Camarines Sur II Electric Cooperative, Inc. in the case before us. Stated differently, the former insists
that the complaint should have been dismissed for failure to state a cause of action.

The antecedent facts, as narrated by respondent Court of Appeals are, as follows:


Petitioner Naga Telephone Co., Inc. (NATELCO) is a telephone company rendering local as well as long
distance telephone service in Naga City while private respondent Camarines Sur II Electric Cooperative, Inc.
(CASURECO II) is a private corporation established for the purpose of operating an electric power service in the
same city.

On November 1, 1977, the parties entered into a contract (Exh. "A") for the use by petitioners in the operation of
its telephone service the electric light posts of private respondent in Naga City. In consideration therefor,
petitioners agreed to install, free of charge, ten (10) telephone connections for the use by private respondent in
the following places:

(a) 3 units — The Main Office of (private respondent);

(b) 2 Units — The Warehouse of (private respondent);

(c) 1 Unit — The Sub-Station of (private respondent) at Concepcion Pequeña;

(d) 1 Unit — The Residence of (private respondent's) President;

(e) 1 Unit — The Residence of (private respondent's) Acting General Manager; &

(f) 2 Units — To be determined by the General Manager.3

Said contract also provided:

(a) That the term or period of this contract shall be as long as the party of the first part has need
for the electric light posts of the party of the second part it being understood that this contract
shall terminate when for any reason whatsoever, the party of the second part is forced to stop,
abandoned [sic] its operation as a public service and it becomes necessary to remove the
electric lightpost; (sic)4

It was prepared by or with the assistance of the other petitioner, Atty. Luciano M. Maggay, then a member of the
Board of Directors of private respondent and at the same time the legal counsel of petitioner.

After the contract had been enforced for over ten (10) years, private respondent filed on January 2, 1989 with
the Regional Trial Court of Naga City (Br. 28) C.C. No. 89-1642 against petitioners for reformation of the contract
with damages, on the ground that it is too one-sided in favor of petitioners; that it is not in conformity with the
guidelines of the National Electrification Administration (NEA) which direct that the reasonable compensation for
the use of the posts is P10.00 per post, per month; that after eleven (11) years of petitioners' use of the posts,
the telephone cables strung by them thereon have become much heavier with the increase in the volume of their
subscribers, worsened by the fact that their linemen bore holes through the posts at which points those posts
were broken during typhoons; that a post now costs as much as P2,630.00; so that justice and equity demand
that the contract be reformed to abolish the inequities thereon.

As second cause of action, private respondent alleged that starting with the year 1981, petitioners have used
319 posts in the towns of Pili, Canaman, Magarao and Milaor, Camarines Sur, all outside Naga City, without any
contract with it; that at the rate of P10.00 per post, petitioners should pay private respondent for the use thereof
the total amount of P267,960.00 from 1981 up to the filing of its complaint; and that petitioners had refused to
pay private respondent said amount despite demands.

And as third cause of action, private respondent complained about the poor servicing by petitioners of the ten
(10) telephone units which had caused it great inconvenience and damages to the tune of not less than
P100,000.00

In petitioners' answer to the first cause of action, they averred that it should be dismissed because (1) it does not
sufficiently state a cause of action for reformation of contract; (2) it is barred by prescription, the same having
been filed more than ten (10) years after the execution of the contract; and (3) it is barred by estoppel, since
private respondent seeks to enforce the contract in the same action. Petitioners further alleged that their
utilization of private respondent's posts could not have caused their deterioration because they have already
been in use for eleven (11) years; and that the value of their expenses for the ten (10) telephone lines long
enjoyed by private respondent free of charge are far in excess of the amounts claimed by the latter for the use of
the posts, so that if there was any inequity, it was suffered by them.
Regarding the second cause of action, petitioners claimed that private respondent had asked for telephone lines
in areas outside Naga City for which its posts were used by them; and that if petitioners had refused to comply
with private respondent's demands for payment for the use of the posts outside Naga City, it was probably
because what is due to them from private respondent is more than its claim against them.

And with respect to the third cause of action, petitioners claimed, inter alia, that their telephone service had been
categorized by the National Telecommunication Corporation (NTC) as "very high" and of "superior quality."

During the trial, private respondent presented the following witnesses:

(1) Dioscoro Ragragio, one of the two officials who signed the contract in its behalf, declared that it was
petitioner Maggay who prepared the contract; that the understanding between private respondent and petitioners
was that the latter would only use the posts in Naga City because at that time, petitioners' capability was very
limited and they had no expectation of expansion because of legal squabbles within the company; that private
respondent agreed to allow petitioners to use its posts in Naga City because there were many subscribers
therein who could not be served by them because of lack of facilities; and that while the telephone lines strung to
the posts were very light in 1977, said posts have become heavily loaded in 1989.

(2) Engr. Antonio Borja, Chief of private respondent's Line Operation and Maintenance Department, declared
that the posts being used by petitioners totalled 1,403 as of April 17, 1989, 192 of which were in the towns of Pili,
Canaman, and Magarao, all outside Naga City (Exhs. "B" and "B-1"); that petitioners' cables strung to the posts
in 1989 are much bigger than those in November, 1977; that in 1987, almost 100 posts were destroyed by
typhoon Sisang: around 20 posts were located between Naga City and the town of Pili while the posts in
barangay Concepcion, Naga City were broken at the middle which had been bored by petitioner's linemen to
enable them to string bigger telephone lines; that while the cost per post in 1977 was only from P700.00 to
P1,000.00, their costs in 1989 went up from P1,500.00 to P2,000.00, depending on the size; that some lines that
were strung to the posts did not follow the minimum vertical clearance required by the National Building Code,
so that there were cases in 1988 where, because of the low clearance of the cables, passing trucks would
accidentally touch said cables causing the posts to fall and resulting in brown-outs until the electric lines were
repaired.

(3) Dario Bernardez, Project Supervisor and Acting General Manager of private respondent and Manager of
Region V of NEA, declared that according to NEA guidelines in 1985 (Exh. "C"), for the use by private telephone
systems of electric cooperatives' posts, they should pay a minimum monthly rental of P4.00 per post, and
considering the escalation of prices since 1985, electric cooperatives have been charging from P10.00 to P15.00
per post, which is what petitioners should pay for the use of the posts.

(4) Engineer Antonio Macandog, Department Head of the Office of Services of private respondent, testified on
the poor service rendered by petitioner's telephone lines, like the telephone in their Complaints Section which
was usually out of order such that they could not respond to the calls of their customers. In case of disruption of
their telephone lines, it would take two to three hours for petitioners to reactivate them notwithstanding their calls
on the emergency line.

(5) Finally, Atty. Luis General, Jr., private respondent's counsel, testified that the Board of Directors asked him to
study the contract sometime during the latter part of 1982 or in 1983, as it had appeared very disadvantageous
to private respondent. Notwithstanding his recommendation for the filing of a court action to reform the contract,
the former general managers of private respondent wanted to adopt a soft approach with petitioners about the
matter until the term of General Manager Henry Pascual who, after failing to settle the matter amicably with
petitioners, finally agreed for him to file the present action for reformation of contract.

On the other hand, petitioner Maggay testified to the following effect:

(1) It is true that he was a member of the Board of Directors of private respondent and at the same time the
lawyer of petitioner when the contract was executed, but Atty. Gaudioso Tena, who was also a member of the
Board of Directors of private respondent, was the one who saw to it that the contract was fair to both parties.

(2) With regard to the first cause of action:

(a) Private respondent has the right under the contract to use ten (10) telephone units of petitioners for as long
as it wishes without paying anything therefor except for long distance calls through PLDT out of which the latter
get only 10% of the charges.
(b) In most cases, only drop wires and not telephone cables have been strung to the posts, which posts have
remained erect up to the present;

(c) Petitioner's linemen have strung only small messenger wires to many of the posts and they need only small
holes to pass through; and

(d) Documents existing in the NTC show that the stringing of petitioners' cables in Naga City are according to
standard and comparable to those of PLDT. The accidents mentioned by private respondent involved trucks that
were either overloaded or had loads that protruded upwards, causing them to hit the cables.

(3) Concerning the second cause of action, the intention of the parties when they entered into the contract was
that the coverage thereof would include the whole area serviced by petitioners because at that time, they already
had subscribers outside Naga City. Private respondent, in fact, had asked for telephone connections outside
Naga City for its officers and employees residing there in addition to the ten (10) telephone units mentioned in
the contract. Petitioners have not been charging private respondent for the installation, transfers and re-
connections of said telephones so that naturally, they use the posts for those telephone lines.

(4) With respect to the third cause of action, the NTC has found petitioners' cable installations to be in
accordance with engineering standards and practice and comparable to the best in the country.

On the basis of the foregoing countervailing evidence of the parties, the trial court found, as regards private
respondent's first cause of action, that while the contract appeared to be fair to both parties when it was entered
into by them during the first year of private respondent's operation and when its Board of Directors did not yet
have any experience in that business, it had become disadvantageous and unfair to private respondent because
of subsequent events and conditions, particularly the increase in the volume of the subscribers of petitioners for
more than ten (10) years without the corresponding increase in the number of telephone connections to private
respondent free of charge. The trial court concluded that while in an action for reformation of contract, it cannot
make another contract for the parties, it can, however, for reasons of justice and equity, order that the contract
be reformed to abolish the inequities therein. Thus, said court ruled that the contract should be reformed by
ordering petitioners to pay private respondent compensation for the use of their posts in Naga City, while private
respondent should also be ordered to pay the monthly bills for the use of the telephones also in Naga City. And
taking into consideration the guidelines of the NEA on the rental of posts by telephone companies and the
increase in the costs of such posts, the trial court opined that a monthly rental of P10.00 for each post of private
respondent used by petitioners is reasonable, which rental it should pay from the filing of the complaint in this
case on January 2, 1989. And in like manner, private respondent should pay petitioners from the same date its
monthly bills for the use and transfers of its telephones in Naga City at the same rate that the public are paying.

On private respondent's second cause of action, the trial court found that the contract does not mention anything
about the use by petitioners of private respondent's posts outside Naga City. Therefore, the trial court held that
for reason of equity, the contract should be reformed by including therein the provision that for the use of private
respondent's posts outside Naga City, petitioners should pay a monthly rental of P10.00 per post, the payment to
start on the date this case was filed, or on January 2, 1989, and private respondent should also pay petitioners
the monthly dues on its telephone connections located outside Naga City beginning January, 1989.

And with respect to private respondent's third cause of action, the trial court found the claim not sufficiently
proved.

Thus, the following decretal portion of the trial court's decision dated July 20, 1990:

WHEREFORE, in view of all the foregoing, decision is hereby rendered ordering the reformation
of the agreement (Exh. A); ordering the defendants to pay plaintiff's electric poles in Naga City
and in the towns of Milaor, Canaman, Magarao and Pili, Camarines Sur and in other places
where defendant NATELCO uses plaintiff's electric poles, the sum of TEN (P10.00) PESOS per
plaintiff's pole, per month beginning January, 1989 and ordering also the plaintiff to pay
defendant NATELCO the monthly dues of all its telephones including those installed at the
residence of its officers, namely; Engr. Joventino Cruz, Engr. Antonio Borja, Engr. Antonio
Macandog, Mr. Jesus Opiana and Atty. Luis General, Jr. beginning January, 1989. Plaintiff's
claim for attorney's fees and expenses of litigation and defendants' counterclaim are both hereby
ordered dismissed. Without pronouncement as to costs.

Disagreeing with the foregoing judgment, petitioners appealed to respondent Court of Appeals. In the decision
dated May 28, 1992, respondent court affirmed the decision of the trial court,5 but based on different grounds to
wit: (1) that Article 1267 of the New Civil Code is applicable and (2) that the contract was subject to a potestative
condition which rendered said condition void. The motion for reconsideration was denied in the resolution dated
September 10, 1992.6 Hence, the present petition.

Petitioners assign the following pertinent errors committed by respondent court:

1) in making a contract for the parties by invoking Article 1267 of the New Civil Code;

2) in ruling that prescription of the action for reformation of the contract in this case commenced
from the time it became disadvantageous to private respondent; and

3) in ruling that the contract was subject to a potestative condition in favor of petitioners.

Petitioners assert earnestly that Article 1267 of the New Civil Code is not applicable primarily because the
contract does not involve the rendition of service or a personal prestation and it is not for future service with
future unusual change. Instead, the ruling in the case of Occeña, et al. v. Jabson, etc., et al.,7 which interpreted
the article, should be followed in resolving this case. Besides, said article was never raised by the parties in their
pleadings and was never the subject of trial and evidence.

In applying Article 1267, respondent court rationalized:

We agree with appellant that in order that an action for reformation of contract would lie and may
prosper, there must be sufficient allegations as well as proof that the contract in question failed to
express the true intention of the parties due to error or mistake, accident, or fraud. Indeed, in
embodying the equitable remedy of reformation of instruments in the New Civil Code, the Code
Commission gave its reasons as follows:

Equity dictates the reformation of an instrument in order that the true intention of
the contracting parties may be expressed. The courts by the reformation do not
attempt to make a new contract for the parties, but to make the instrument
express their real agreement. The rationale of the doctrine is that it would be
unjust and inequitable to allow the enforcement of a written instrument which
does not reflect or disclose the real meeting of the minds of the parties. The rigor
of the legalistic rule that a written instrument should be the final and inflexible
criterion and measure of the rights and obligations of the contracting parties is
thus tempered to forestall the effects of mistake, fraud, inequitable conduct, or
accident. (pp. 55-56, Report of Code Commission)

Thus, Articles 1359, 1361, 1362, 1363 and 1364 of the New Civil Code provide in essence that
where through mistake or accident on the part of either or both of the parties or mistake or fraud
on the part of the clerk or typist who prepared the instrument, the true intention of the parties is
not expressed therein, then the instrument may be reformed at the instance of either party if
there was mutual mistake on their part, or by the injured party if only he was mistaken.

Here, plaintiff-appellee did not allege in its complaint, nor does its evidence prove, that there was
a mistake on its part or mutual mistake on the part of both parties when they entered into the
agreement Exh. "A", and that because of this mistake, said agreement failed to express their true
intention. Rather, plaintiff's evidence shows that said agreement was prepared by Atty. Luciano
Maggay, then a member of plaintiff's Board of Directors and its legal counsel at that time, who
was also the legal counsel for defendant-appellant, so that as legal counsel for both companies
and presumably with the interests of both companies in mind when he prepared the aforesaid
agreement, Atty. Maggay must have considered the same fair and equitable to both sides, and
this was affirmed by the lower court when it found said contract to have been fair to both parties
at the time of its execution. In fact, there were no complaints on the part of both sides at the time
of and after the execution of said contract, and according to 73-year old Justino de Jesus, Vice
President and General manager of appellant at the time who signed the agreement Exh. "A" in its
behalf and who was one of the witnesses for the plaintiff (sic), both parties complied with said
contract "from the very beginning" (p. 5, tsn, April 17, 1989).

That the aforesaid contract has become inequitous or unfavorable or disadvantageous to the
plaintiff with the expansion of the business of appellant and the increase in the volume of its
subscribers in Naga City and environs through the years, necessitating the stringing of more and
bigger telephone cable wires by appellant to plaintiff's electric posts without a corresponding
increase in the ten (10) telephone connections given by appellant to plaintiff free of charge in the
agreement Exh. "A" as consideration for its use of the latter's electric posts in Naga City, appear,
however, undisputed from the totality of the evidence on record and the lower court so found.
And it was for this reason that in the later (sic) part of 1982 or 1983 (or five or six years after the
subject agreement was entered into by the parties), plaintiff's Board of Directors already asked
Atty. Luis General who had become their legal counsel in 1982, to study said agreement which
they believed had become disadvantageous to their company and to make the proper
recommendation, which study Atty. General did, and thereafter, he already recommended to the
Board the filing of a court action to reform said contract, but no action was taken on Atty.
General's recommendation because the former general managers of plaintiff wanted to adopt a
soft approach in discussing the matter with appellant, until, during the term of General Manager
Henry Pascual, the latter, after failing to settle the problem with Atty. Luciano Maggay who had
become the president and general manager of appellant, already agreed for Atty. General's filing
of the present action. The fact that said contract has become inequitous or disadvantageous to
plaintiff as the years went by did not, however, give plaintiff a cause of action for reformation of
said contract, for the reasons already pointed out earlier. But this does not mean that plaintiff is
completely without a remedy, for we believe that the allegations of its complaint herein and the
evidence it has presented sufficiently make out a cause of action under Art. 1267 of the New Civil
Code for its release from the agreement in question.

xxx xxx xxx

The understanding of the parties when they entered into the Agreement Exh. "A" on November 1,
1977 and the prevailing circumstances and conditions at the time, were described by Dioscoro
Ragragio, the President of plaintiff in 1977 and one of its two officials who signed said agreement
in its behalf, as follows:

Our understanding at that time is that we will allow NATELCO to utilize the posts
of CASURECO II only in the City of Naga because at that time the capability of
NATELCO was very limited, as a matter of fact we do [sic] not expect to be able
to expand because of the legal squabbles going on in the NATELCO. So, even at
that time there were so many subscribers in Naga City that cannot be served by
the NATELCO, so as a mater of public service we allowed them to sue (sic) our
posts within the Naga City. (p. 8, tsn April 3, 1989)

Ragragio also declared that while the telephone wires strung to the electric posts of plaintiff were
very light and that very few telephone lines were attached to the posts of CASURECO II in 1977,
said posts have become "heavily loaded" in 1989 (tsn, id.).

In truth, as also correctly found by the lower court, despite the increase in the volume of
appellant's subscribers and the corresponding increase in the telephone cables and wires strung
by it to plaintiff's electric posts in Naga City for the more 10 years that the agreement Exh. "A" of
the parties has been in effect, there has been no corresponding increase in the ten (10)
telephone units connected by appellant free of charge to plaintiff's offices and other places
chosen by plaintiff's general manager which was the only consideration provided for in said
agreement for appellant's use of plaintiffs electric posts. Not only that, appellant even started
using plaintiff's electric posts outside Naga City although this was not provided for in the
agreement Exh. "A" as it extended and expanded its telephone services to towns outside said
city. Hence, while very few of plaintiff's electric posts were being used by appellant in 1977 and
they were all in the City of Naga, the number of plaintiff's electric posts that appellant was using
in 1989 had jumped to 1,403,192 of which are outside Naga City (Exh. "B"). Add to this the
destruction of some of plaintiff's poles during typhoons like the strong typhoon Sisang in 1987
because of the heavy telephone cables attached thereto, and the escalation of the costs of
electric poles from 1977 to 1989, and the conclusion is indeed ineluctable that the agreement
Exh. "A" has already become too one-sided in favor of appellant to the great disadvantage of
plaintiff, in short, the continued enforcement of said contract has manifestly gone far beyond the
contemplation of plaintiff, so much so that it should now be released therefrom under Art. 1267 of
the New Civil Code to avoid appellant's unjust enrichment at its (plaintiff's) expense. As stated by
Tolentino in his commentaries on the Civil Code citing foreign civilist Ruggiero, "equity demands
a certain economic equilibrium between the prestation and the counter-prestation, and does not
permit the unlimited impoverishment of one party for the benefit of the other by the excessive
rigidity of the principle of the obligatory force of contracts (IV Tolentino, Civil Code of the
Philippines, 1986 ed.,
pp. 247-248).

We therefore, find nothing wrong with the ruling of the trial court, although based on a different
and wrong premise (i.e., reformation of contract), that from the date of the filing of this case,
appellant must pay for the use of plaintiff's electric posts in Naga City at the reasonable monthly
rental of P10.00 per post, while plaintiff should pay appellant for the telephones in the same City
that it was formerly using free of charge under the terms of the agreement Exh. "A" at the same
rate being paid by the general public. In affirming said ruling, we are not making a new contract
for the parties herein, but we find it necessary to do so in order not to disrupt the basic and
essential services being rendered by both parties herein to the public and to avoid unjust
enrichment by appellant at the expense of plaintiff, said arrangement to continue only until such
time as said parties can re-negotiate another agreement over the same
subject-matter covered by the agreement Exh. "A". Once said agreement is reached and
executed by the parties, the aforesaid ruling of the lower court and affirmed by us shall cease to
exist and shall be substituted and superseded by their new agreement. . . ..8

Article 1267 speaks of "service" which has become so difficult. Taking into consideration the rationale behind
this provision,9 the term "service" should be understood as referring to the "performance" of the obligation. In the
present case, the obligation of private respondent consists in allowing petitioners to use its posts in Naga City,
which is the service contemplated in said article. Furthermore, a bare reading of this article reveals that it is not a
requirement thereunder that the contract be for future service with future unusual change. According to Senator
Arturo M. Tolentino,10 Article 1267 states in our law the doctrine of unforseen events. This is said to be based on
the discredited theory of rebus sic stantibus in public international law; under this theory, the parties stipulate in
the light of certain prevailing conditions, and once these conditions cease to exist the contract also ceases to
exist. Considering practical needs and the demands of equity and good faith, the disappearance of the basis of a
contract gives rise to a right to relief in favor of the party prejudiced.

In a nutshell, private respondent in the Occeña case filed a complaint against petitioner before the trial court
praying for modification of the terms and conditions of the contract that they entered into by fixing the proper
shares that should pertain to them out of the gross proceeds from the sales of subdivided lots. We ordered the
dismissal of the complaint therein for failure to state a sufficient cause of action. We rationalized that the Court of
Appeals misapplied Article 1267 because:

. . . respondent's complaint seeks not release from the subdivision contract but that the court
"render judgment modifying the terms and conditions of the contract . . . by fixing the proper
shares that should pertain to the herein parties out of the gross proceeds from the sales of
subdivided lots of subject subdivision". The cited article (Article 1267) does not grant the courts
(the) authority to remake, modify or revise the contract or to fix the division of shares between the
parties as contractually stipulated with the force of law between the parties, so as to substitute its
own terms for those covenanted by the parties themselves. Respondent's complaint for
modification of contract manifestly has no basis in law and therefore states no cause of action.
Under the particular allegations of respondent's complaint and the circumstances therein
averred, the courts cannot even in equity grant the relief sought.11

The ruling in the Occeña case is not applicable because we agree with respondent court that the allegations in
private respondent's complaint and the evidence it has presented sufficiently made out a cause of action under
Article 1267. We, therefore, release the parties from their correlative obligations under the contract. However,
our disposition of the present controversy does not end here. We have to take into account the possible
consequences of merely releasing the parties therefrom: petitioners will remove the telephone wires/cables in
the posts of private respondent, resulting in disruption of their service to the public; while private respondent, in
consonance with the contract12 will return all the telephone units to petitioners, causing prejudice to its business.
We shall not allow such eventuality. Rather, we require, as ordered by the trial court: 1) petitioners to pay private
respondent for the use of its posts in Naga City and in the towns of Milaor, Canaman, Magarao and Pili,
Camarines Sur and in other places where petitioners use private respondent's posts, the sum of ten (P10.00)
pesos per post, per month, beginning January, 1989; and 2) private respondent to pay petitioner the monthly
dues of all its telephones at the same rate being paid by the public beginning January, 1989. The peculiar
circumstances of the present case, as distinguished further from the Occeña case, necessitates exercise of our
equity jurisdiction.13 By way of emphasis, we reiterate the rationalization of respondent court that:
. . . In affirming said ruling, we are not making a new contract for the parties herein, but we find it
necessary to do so in order not to disrupt the basic and essential services being rendered by
both parties herein to the public and to avoid unjust enrichment by appellant at the expense of
plaintiff . . . .14

Petitioners' assertion that Article 1267 was never raised by the parties in their pleadings and was never the
subject of trial and evidence has been passed upon by respondent court in its well reasoned resolution, which
we hereunder quote as our own:

First, we do not agree with defendant-appellant that in applying Art. 1267 of the New Civil Code
to this case, we have changed its theory and decided the same on an issue not invoked by
plaintiff in the lower court. For basically, the main and pivotal issue in this case is whether the
continued enforcement of the contract Exh. "A" between the parties has, through the years (since
1977), become too inequitous or disadvantageous to the plaintiff and too one-sided in favor of
defendant-appellant, so that a solution must be found to relieve plaintiff from the continued
operation of said agreement and to prevent defendant-appellant from further unjustly enriching
itself at plaintiff's expense. It is indeed unfortunate that defendant had turned deaf ears to
plaintiffs requests for renegotiation, constraining the latter to go to court. But although plaintiff
cannot, as we have held, correctly invoke reformation of contract as a proper remedy (there
having been no showing of a mistake or error in said contract on the part of any of the parties so
as to result in its failure to express their true intent), this does not mean that plaintiff is absolutely
without a remedy in order to relieve itself from a contract that has gone far beyond its
contemplation and has become so highly inequitous and disadvantageous to it through the years
because of the expansion of defendant-appellant's business and the increase in the volume of its
subscribers. And as it is the duty of the Court to administer justice, it must do so in this case in
the best way and manner it can in the light of the proven facts and the law or laws applicable
thereto.

It is settled that when the trial court decides a case in favor of a party on a certain ground, the
appellant court may uphold the decision below upon some other point which was ignored or
erroneously decided by the trial court (Garcia Valdez v. Tuazon, 40 Phil. 943; Relativo v. Castro,
76 Phil. 563; Carillo v. Salak de Paz, 18 SCRA 467). Furthermore, the appellate court has the
discretion to consider an unassigned error that is closely related to an error properly assigned
(Paterno v. Jao Yan, 1 SCRA 631; Hernandez v. Andal, 78 Phil. 196). It has also been held that
the Supreme Court (and this Court as well) has the authority to review matters, even if they are
not assigned as errors in the appeal, if it is found that their consideration is necessary in arriving
at a just decision of the case (Saura Import & Export Co., Inc. v. Phil. International Surety Co.
and PNB, 8 SCRA 143). For it is the material allegations of fact in the complaint, not the legal
conclusion made therein or the prayer, that determines the relief to which the plaintiff is entitled,
and the plaintiff is entitled to as much relief as the facts warrant although that relief is not
specifically prayed for in the complaint (Rosales v. Reyes and Ordoveza, 25 Phil. 495; Cabigao
v. Lim, 50 Phil. 844; Baguioro v. Barrios, 77 Phil. 120). To quote an old but very illuminating
decision of our Supreme Court through the pen of American jurist Adam C. Carson:

"Under our system of pleading it is the duty of the courts to grant the relief to
which the parties are shown to be entitled by the allegations in their pleadings
and the facts proven at the trial, and the mere fact that they themselves
misconstrue the legal effect of the facts thus alleged and proven will not prevent
the court from placing the just construction thereon and adjudicating the issues
accordingly." (Alzua v. Johnson, 21 Phil. 308)

And in the fairly recent case of Caltex Phil., Inc. v IAC, 176 SCRA 741, the Honorable Supreme
Court also held:

We rule that the respondent court did not commit any error in taking cognizance
of the aforesaid issues, although not raised before the trial court. The presence of
strong consideration of substantial justice has led this Court to relax the well-
entrenched rule that, except questions on jurisdiction, no question will be
entertained on appeal unless it has been raised in the court below and it is within
the issues made by the parties in their pleadings (Cordero v. Cabral, L-36789,
July 25, 1983, 123 SCRA 532). . . .
We believe that the above authorities suffice to show that this Court did not err in applying Art.
1267 of the New Civil Code to this case. Defendant-appellant stresses that the applicability of
said provision is a question of fact, and that it should have been given the opportunity to present
evidence on said question. But defendant-appellant cannot honestly and truthfully claim that it
(did) not (have) the opportunity to present evidence on the issue of whether the continued
operation of the contract Exh. "A" has now become too one-sided in its favor and too inequitous,
unfair, and disadvantageous to plaintiff. As held in our decision, the abundant and copious
evidence presented by both parties in this case and summarized in said decision established the
following essential and vital facts which led us to apply Art. 1267 of the New Civil Code to this
case:

xxx xxx xxx 15

On the issue of prescription of private respondent's action for reformation of contract, petitioners allege that
respondent court's ruling that the right of action "arose only after said contract had already become
disadvantageous and unfair to it due to subsequent events and conditions, which must be sometime during the
latter part of 1982 or in 1983 . . ." 16 is erroneous. In reformation of contracts, what is reformed is not the contract
itself, but the instrument embodying the contract. It follows that whether the contract is disadvantageous or not is
irrelevant to reformation and therefore, cannot be an element in the determination of the period for prescription
of the action to reform.

Article 1144 of the New Civil Code provides, inter alia, that an action upon a written contract must be brought
within ten (10) years from the time the right of action accrues. Clearly, the ten (10) year period is to be
reckoned from the time the right of action accrues which is not necessarily the date of execution of the contract.
As correctly ruled by respondent court, private respondent's right of action arose "sometime during the latter part
of 1982 or in 1983 when according to Atty. Luis General, Jr. . . ., he was asked by (private respondent's) Board
of Directors to study said contract as it already appeared disadvantageous to (private respondent) (p. 31, tsn,
May 8, 1989). (Private respondent's) cause of action to ask for reformation of said contract should thus be
considered to have arisen only in 1982 or 1983, and from 1982 to January 2, 1989 when the complaint in this
case was filed, ten (10) years had not yet elapsed." 17

Regarding the last issue, petitioners allege that there is nothing purely potestative about the prestations of either
party because petitioner's permission for free use of telephones is not made to depend purely on their will,
neither is private respondent's permission for free use of its posts dependent purely on its will.

Apart from applying Article 1267, respondent court cited another legal remedy available to private respondent
under the allegations of its complaint and the preponderant evidence presented by it:

. . . we believe that the provision in said agreement —

(a) That the term or period of this contract shall be as long as the party of the first
part [herein appellant] has need for the electric light posts of the party of the
second part [herein plaintiff] it being understood that this contract shall terminate
when for any reason whatsoever, the party of the second part is forced to stop,
abandoned [sic] its operation as a public service and it becomes necessary to
remove the electric light post [sic]"; (Emphasis supplied)

is invalid for being purely potestative on the part of appellant as it leaves the continued effectivity
of the aforesaid agreement to the latter's sole and exclusive will as long as plaintiff is in
operation. A similar provision in a contract of lease wherein the parties agreed that the lessee
could stay on the leased premises "for as long as the defendant needed the premises and can
meet and pay said increases" was recently held by the Supreme Court in Lim v. C.A., 191 SCRA
150, citing the much earlier case of Encarnacion v. Baldomar, 77 Phil. 470, as invalid for being "a
purely potestative condition because it leaves the effectivity and enjoyment of leasehold rights to
the sole and exclusive will of the lessee." Further held the High Court in the Lim case:

The continuance, effectivity and fulfillment of a contract of lease cannot be made


to depend exclusively upon the free and uncontrolled choice of the lessee
between continuing the payment of the rentals or not, completely depriving the
owner of any say in the matter. Mutuality does not obtain in such a contract of
lease of no equality exists between the lessor and the lessee since the life of the
contract is dictated solely by the lessee.
The above can also be said of the agreement Exh. "A" between the parties in this case. There is
no mutuality and equality between them under the afore-quoted provision thereof since the life
and continuity of said agreement is made to depend as long as appellant needs plaintiff's electric
posts. And this is precisely why, since 1977 when said agreement was executed and up to 1989
when this case was finally filed by plaintiff, it could do nothing to be released from or terminate
said agreement notwithstanding that its continued effectivity has become very disadvantageous
and inequitous to it due to the expansion and increase of appellant's telephone services within
Naga City and even outside the same, without a corresponding increase in the ten (10)
telephone units being used by plaintiff free of charge, as well as the bad and inefficient service of
said telephones to the prejudice and inconvenience of plaintiff and its customers. . . . 18

Petitioners' allegations must be upheld in this regard. A potestative condition is a condition, the fulfillment of
which depends upon the sole will of the debtor, in which case, the conditional obligation is void. 19 Based on this
definition, respondent court's finding that the provision in the contract, to wit:

(a) That the term or period of this contract shall be as long as the party of the first part (petitioner)
has need for the electric light posts of the party of the second part (private respondent) . . ..

is a potestative condition, is correct. However, it must have overlooked the other conditions in the same
provision, to wit:

. . . it being understood that this contract shall terminate when for any reason whatsoever, the
party of the second part (private respondent) is forced to stop, abandoned (sic) its operation as a
public service and it becomes necessary to remove the electric light post (sic);

which are casual conditions since they depend on chance, hazard, or the will of a third person. 20 In sum, the
contract is subject to mixed conditions, that is, they depend partly on the will of the debtor and partly on chance,
hazard or the will of a third person, which do not invalidate the aforementioned provision. 21 Nevertheless, in view
of our discussions under the first and second issues raised by petitioners, there is no reason to set aside the
questioned decision and resolution of respondent court.

WHEREFORE, the petition is hereby DENIED. The decision of the Court of Appeals dated May 28, 1992 and its
resolution dated September 10, 1992 are AFFIRMED.

SO ORDERED.

Narvasa, C.J., Padilla, Regalado and Puno, JJ., concur.

#Footnotes

1 84 Phil. 654.

2 Report of the Code Commission, p. 133; cited in Rollo, p. 57.

3 Records, p. 6.

4 Ibid, pp. 6-7.

5 Rollo, p. 62.

6 Rollo, p. 71.

7 G.R. No. L-44349, October 29, 1976, 73 SCRA 637.

8 Rollo, pp. 54-59.

9 Supra.
10 Commentaries and Jurisprudence on the Civil Code of the Philippines, 1991 Edition p. 347.

11 At p. 641.

12 Records, p. 7.

13 Agne, et al. v. Director of Lands, et al., G.R. No. L-40399, February 9, 1990, 181 SCRA 793.

14 Rollo, p.59.

15 Rollo, pp. 66-69.

16 Rollo, pp. 53-54.

17 Rollo, pp. 53-54.

18 Rollo, pp. 59-61.

19 Article 1182 of the New Civil Code.

20 Civil Code of the Philippines Annotated by Edgardo L. Paras, 1985 Edition,


p. 171.

21 Ibid.

The Lawphil Project - Arellano Law Foundation

SECOND DIVISION

[G.R. No. 156357. February 18, 2005]

ENGR. GABRIEL V. LEYSON, DR. JOSEFINA L. POBLETE, FE LEYSON QUA,


CARIDAD V. LEYSON and ESPERANZA V. LEYSON, petitioners, vs.
NACIANSINO BONTUYAN and MAURECIA B. BONTUYAN, respondents.

DECISION
CALLEJO, SR., J.:

This is a petition for review on certiorari of the Decision[1] of the Court of Appeals (CA), as well
as its Resolution in CA-G.R. CV No. 64471 denying the motion for reconsideration of the said
decision.

The Antecedents

Calixto Gabud was the owner of a parcel of land located in Barangay Adlawon, Mabolo, Cebu
City, which was declared for taxation purposes under Tax Declaration (T.D.) No. 03276-R in
1945[2] with the following boundaries:
North Calixto Gabud East Marcelo Cosido
South Pedro Bontuyan West Asuncion Adulfo.[3]
Because of the construction of a provincial road, the property was divided into two parcels of
land covered by T.D. No. 03276-R and T.D. No. 01979-R. On February 14, 1948, Gabud executed
a Deed of Absolute Sale[4] over the property covered by T.D. No. 03276-R, as well as the other lot
covered by T.D. No. 01979-R, in favor of Protacio Tabal, married to Leodegaria Bontuyan. On the
basis of the said deed, T.D. No. 03276-R was cancelled by T.D. No. 13615-R in the name of
Protacio Tabal effective 1949.[5] On January 5, 1959, Tabal executed a Deed of Sale[6] over the
property covered by T.D. No. 13615-R in favor of Simeon Noval, married to Vivencia Bontuyan,
daughter of Gregorio Bontuyan, for P800.00. T.D. No. 13615-R was cancelled by T.D. No. 100356
in the names of the spouses Noval.[7] Gregorio Bontuyan received a copy of the said tax
declaration in behalf of the spouses Noval.[8] The latter tax declaration was then cancelled by T.D.
No. 008876 under the same names effective 1967.[9]
Subsequently, the property was surveyed by Cadastral Land Surveyor Mauro U. Gabriel on
January 22, 1964. The plan survey was approved on September 30, 1966.[10] The property
covered by T.D. No. 008876 was identified as Lot No. 17150 of Cebu Cadastre No. 12, while the
property covered by T.D. No. 01979-R was identified as Lot No. 13272. On May 22, 1968, the
spouses Noval executed a Deed of Absolute Sale [11] over the two lots covered by T.D. No. 008876
in favor of Lourdes V. Leyson for P4,000.00. Lourdes Leyson took possession of the property and
had it fenced. Despite the said sale, T.D. No. 008876 was cancelled by T.D. No. 21267 effective
1974.[12] Thereafter, T.D. No. 21267 was cancelled by T.D. No. 23821[13] which, in turn, was
cancelled by T.D. No. 01-17455 effective 1980.[14] In 1989, the latter was cancelled by a new tax
declaration, T.D. No. 01-001-00646. All these tax declarations were in the names of the spouses
Noval.[15]
Meanwhile, Lourdes Leyson paid for the realty taxes over the property. However, the tax
declaration issued thereon continued to be under the names of the spouses Noval. [16]
Despite his knowledge that the property had been purchased by his son-in-law and daughter,
the spouses Noval, Gregorio Bontuyan, who was then 91 years old, filed an application with the
Bureau of Lands for a free patent over Lot No. 17150 on December 4, 1968. He alleged therein
that the property was public land and was neither claimed nor occupied by any person, [17] and that
he first entered upon and began cultivating the same in 1918. Thus, on November 19, 1971, Free
Patent No. 510463 was issued over Lot No. 17150 in his favor, on the basis of which Original
Certificate of Title (OCT) No. 0-1619 was issued to and under his name on March 21,
1974.[18] Another parcel of land, Lot No. 13272, was also registered under the name of Gregorio
Bontuyan under OCT No. 0-1618. He then declared Lot No. 17150 for taxation purposes under
T.D. No. 13596 effective 1974.[19] On February 20, 1976, Gregorio Bontuyan executed a Deed of
Absolute Sale[20] over Lot No. 17150 in favor of his son, Naciansino Bontuyan.
On April 28, 1980, Gregorio Bontuyan, then 103 years old, executed another Deed of Absolute
Sale[21] over Lot Nos. 13272 and 17150, covered by OCT No. 0-1618 and OCT No. 0-1619,
respectively, in favor of Naciansino Bontuyan for P3,000.00. On the basis of the said deed, OCT
No. 0-1619 was cancelled by TCT No. 1392 in the name of Naciansino Bontuyan on December 2,
1980.[22] Gregorio Bontuyan died intestate on April 12, 1981.[23]
On March 30, 1981, the spouses Bontuyan executed a Real Estate Mortgage over Lot No.
17150 covered by OCT No. 0-1619 in favor of the Development Bank of the Philippines (DBP) as
security for a loan of P11,200.00.[24] Naciansino Bontuyan had earlier executed an affidavit that the
property was not tenanted. Shortly thereafter, the spouses Bontuyan left the Philippines and
resided in the United States. Meanwhile, Lourdes Leyson died intestate.
The spouses Bontuyan returned to the Philippines in 1988 to redeem the property from DBP
only to discover that there were tenants living on the property installed by Engineer Gabriel
Leyson, one of the late Lourdes Leysons children. Despite being informed that the said spouses
owned the property, the tenants refused to vacate the same. The tenants also refused to deliver to
the spouses the produce from the property. The spouses Bontuyan redeemed the property from
DBP on September 22, 1989.
On February 12, 1993, Jose Bontuyan, Nieves Atilano, Pacifico Bontuyan, Vivencia Noval and
Naciansino Bontuyan, the surviving heirs of Gregorio Bontuyan, executed an Extrajudicial
Settlement[25] of the latters estate and adjudicated Lot No. 13272 in favor of Naciansino. Based on
the said deed, T.D. No. 01-001-00877 was issued to and under the name of Naciansino over the
said property starting 1994.
On June 24, 1993, Naciansino Bontuyan, through counsel, wrote Engr. Gabriel Leyson,
demanding that he be furnished with all the documents evidencing his ownership over the two lots,
Lots Nos. 17150 and 13272.[26] Engr. Leyson ignored the letter.
The spouses Bontuyan, thereafter, filed a complaint against Engr. Leyson in the Regional Trial
Court (RTC) of Cebu City for quieting of title and damages. They alleged that they were the lawful
owners of the two lots and when they discovered, upon their return from the United States, that the
property was occupied and cultivated by the tenants of Engr. Leyson, they demanded the
production of documents evidencing the latters ownership of the property, which was ignored.
The spouses Bontuyan prayed that, after due proceedings, judgment be rendered in their
favor, thus:

WHEREFORE, premises considered, it is most respectfully prayed of this Honorable Court to


render judgment against the defendant and in favor of the plaintiffs, to wit:

(a) Confirming the ownership of the plaintiffs on the lots in question;

(b) Ordering defendant to pay the plaintiffs the amount of Twenty Thousand Pesos (P20,000.00)
as the share of the plaintiffs of the produce of the lots in question;

(c) Ordering defendant to pay plaintiffs the sum of P50,000.00 as reimbursement of attorneys
fees and the further sum of P500.00 as appearance fee every time the case is called for trial;

(d) Ordering the defendant to pay plaintiffs the sum of P50,000.00 as moral damages and
exemplary damages may be fixed by the court;

(e) Ordering defendant to pay plaintiffs the sum of P5,000.00 as actual expenses for the
preparation and filing of the complaint;

(f) Ordering defendant to pay the costs; and

(g) Granting to plaintiffs such other reliefs and remedies just and equitable in the premises. [27]

In his answer to the complaint, Engr. Leyson averred, by way of affirmative defenses, that the
two lots were but portions of a parcel of land owned by Calixto Gabud, covered by T.D. No. 03276-
R, and was subdivided into two parcels of land because of the construction of a provincial road on
the property; Gabud later sold the two lots to Protacio Tabal, who sold the same to Simeon Noval,
married to Vivencia Bontuyan, one of the children of Gregorio Bontuyan; Simeon Noval later sold
the property to Lourdes Leyson on May 22, 1968 who, forthwith, took possession thereof as
owner; and Gregorio Bontuyan was issued a free patent over the property through fraud. Engr.
Leyson concluded that the said patent, as well as OCT No. 0-1619 and TCT No. 1392, were null
and void and that the plaintiffs acquired no title over the property.
Engr. Leyson interposed a counterclaim against the spouses Bontuyan and repleaded as an
integral part thereof all the material allegations in his affirmative defense. He prayed that, after due
proceedings, judgment be rendered in his favor, thus:

a) Dismissing Plaintiffs complaint for failure to include indispensable parties;


b) Declaring the Defendant and his four (4) sisters, namely, Dr. Josefina L. Poblete, Mrs. Fe L.
Qua, Esperanza Leyson and Caridad Leyson as the true and legal owners and possessors of the
parcels of land in issue;

c) Declaring OCT No. 0-1619 in the name of Gregorio Bontuyan and TCT No. 1392 in the name
of Naciansino Bontuyan null and void and to order the Register of Deeds to cancel the same and
issue new ones in favor of the Defendant Gabriel V. Leyson and his four (4) sisters, namely: Dr.
Josefina L. Poblete, Mrs. Fe L. Qua, Esperanza V. Leyson and Caridad V. Leyson;

d) And on the Counterclaim, to order Plaintiffs to pay the Defendant the following sums:

d-1) P50,000.00 as attorneys fees and appearance fee of P1,000.00 per hearing;
d-2) P500,000.00 as moral damages;
d-3) P20,000.00 as exemplary damages;
d-4) P10,000.00 as expenses of litigation.

Defendant further prays for such other reliefs just and equitable in the premises. [28]

In due course, the other children of Lourdes Leyson, namely, Dr. Josefina L. Poblete, Fe
Leyson Qua, Caridad V. Leyson and Esperanza V. Leyson, were allowed to intervene as
defendants. They filed their answer-in-intervention wherein they adopted, in their counterclaim,
paragraphs 7 to 26 of the answer of their brother, Engr. Leyson, the original defendant. They
prayed that, after due hearing, judgment be rendered in their favor as follows:

Wherefore, this Honorable Court is prayed to render judgment in favor of the Defendant and the
Defendants-in-Intervention and against the Plaintiffs as follows:

a) Promissory Plaintiffs complaint for failure to include indispensable parties and for lack of
cause of action;

b) Declaring the Defendant and his four (4) sisters, namely: Dr. Josefina L. Poblete; Mrs. Fe L.
Qua, Esperanza Leyson and Caridad Leyson as the true and legal owners and possessors of the
parcels of land in issue;

c) Declaring OCT No. 0-1619 in the name of Gregorio Bontuyan and TCT No. 1392 in the name
of Naciansino Bontuyan null and void and to order the Register of Deeds to cancel the same and
issue new ones in favor of the Defendant Gabriel V. Leyson and his four (4) sisters, namely: Dr.
Josefina L. Poblete, Mrs. Fe L. Qua, Esperanza V. Leyson and Caridad V. Leyson;

d) On the Counterclaim, Plaintiffs should pay the Defendants the following sums:

d-1) P50,000.00 as attorneys fees and appearance fee of P1,000.00 per hearing;
d-2) P500,000.00 as moral damages to each Intervenor;
d-3) P50,000.00 as exemplary damages;
d-4) P15,000.00 as expenses of litigation.

Defendant further prays for such other reliefs just and equitable in the premises. [29]

In their reply, the spouses Bontuyan averred that the counterclaim of the defendants for the
nullity of TCT No. 1392 and the reconveyance of the property was barred by laches and
prescription.
On January 21, 1999, the trial court rendered judgment in favor of the Leyson heirs and
against the spouses Bontuyan. The fallo of the decision reads:
WHEREFORE, foregoing considered judgment is hereby rendered dismissing plaintiffs
complaint for dearth of evidence declaring the defendant and the intervenors as the true and
legal owners and possessors of the subject parcels of land; declaring OCT No. 0-1619 in the
name of Gregorio Bontuyan and TCT No. 1392 in the name of Naciansino Bontuyan null and
void; ordering the Register of Deeds to cancel OCT No. 0-1619 and TCT No. 1392 and issue
new ones in favor of defendant Gabriel Leyson and intervenors Josefina Poblete, Fe Qua,
Esperanza Leyson and Caridad Leyson; ordering plaintiff to pay defendant and intervenors the
following:

a) P50,000.00 attorneys fees;


b) 1,000.00 per appearance;
c) 100,000.00 moral damages for defendant and
intervenors;
d) 10,000.00 exemplary damages; and
e) 10,000.00 litigation expenses.

SO ORDERED.[30]

The trial court held that Simeon Noval had sold the lots to Lourdes Leyson on May 22, 1968,
who thus acquired title over the property.
The spouses Bontuyan appealed the decision to the CA which affirmed, with modification, the
decision of the RTC. The appellate court held that the Leyson heirs were the owners of Lot No.
13273, while the spouses Bontuyan were the owners of Lot No. 17150. The CA ruled that the
answer of the Leyson heirs to the complaint constituted a collateral attack of OCT No. 0-1619
which was proscribed by law. The Leyson heirs filed a motion for reconsideration of the decision
insofar as Lot No. 17150 was concerned, contending that their counterclaim for the nullification of
OCT No. 0-1619 contained in their answer constituted a direct attack on the said title. The CA
denied the motion.
The Leyson heirs then filed a petition for review with this Court and made the following
assignments of error:

First Assignment of Error

THE HONORABLE COURT OF APPEALS COMMITTED ERROR WHEN IT RULED


THAT THE NULLITY OR THE VALIDITY OF OCT NO. 0-1619 CANNOT BE RULED
UPON IN THESE PROCEEDINGS BROUGHT BY THE RESPONDENTS FOR THE
QUIETING OF THEIR TITLE.

Second Assignment of Error

THE HONORABLE COURT OF APPEALS GRAVELY ERRED WHEN IT RULED THAT


PETITIONERS ANSWER WITH COUNTERCLAIM, PRAYING FOR THE
CANCELLATION OF PLAINTIFFS TORRENS CERTIFICATE IS A MERE COLLATERAL
ATTACK ON THE TITLE.[31]

Third Assignment of Error

THE APPELLATE COURT GRAVELY ERRED WHEN IT MODIFIED THE DECISION OF


THE REGIONAL TRIAL COURT DATED JANUARY 21, 1999 BY RULING THAT
PETITIONERS ARE DECLARED THE OWNERS OF LOT 13273 BUT RESPONDENTS
ARE DECLARED THE OWNERS OF LOT 17150 UNDER OCT NO. 0-1619 AND
PRESENTLY COVERED BY TCT NO. 1392 IN THE NAME OF NACIANSINO
BONTUYAN, DESPITE THE APPELLATE COURTS AFFIRMING THE FINDINGS OF
THE TRIAL COURT THAT FRAUD WAS COMMITTED BY GREGORIO BONTUYAN
(RESPONDENTS PREDECESSOR-IN-INTEREST) IN ACQUIRING TITLE OVER THE
SUBJECT PROPERTIES.[32]

Fourth Assignment of Error

THE HONORABLE COURT OF APPEALS GRAVELY ERRED WHEN IT RULED THAT


RECONVEYANCE OF TITLE OF LOT 17150 COVERED BY OCT NO. 0-1619 AND
PRESENTLY COVERED BY TCT NO. 1392, IN FAVOR OF PETITIONERS HAD
PRESCRIBED.[33]

Fifth Assignment of Error

THE APPELLATE COURT GRAVELY ERRED IN NOT GRANTING ATTORNEYS FEES


AND APPEARANCE FEES DESPITE RESPONDENTS FRAUD IN ACQUIRING TITLE
OVER THE SUBJECT PROPERTIES.[34]

On the first two assignments of errors, the petitioners aver that the counterclaim in their
answer to the complaint constituted a direct attack of the validity of OCT No. 0-1619. They
maintain that the appellate courts reliance on the ruling of this Court in Cimafrancia v. Intermediate
Appellate Court[35] was misplaced. They assert that what is controlling is the ruling in Pro Line
Sports Center, Inc. v. Court of Appeals[36] wherein this Court held that the counterclaim of the
petitioners therein constituted a direct attack on a certificate of title. The petitioners, likewise, cited
Section 55 of Act No. 496, as amended, to buttress their stance. They plead that their answer to
the complaint should be liberally construed so as to afford them substantial justice.
On the other hand, the respondents assert that the decision of the CA is correct. They claim
that Lot No. 17150 was still public land when Lourdes Leyson purchased the same from Simeon
Noval, and that the property became private land only when Free Patent No. 510463 was issued
to and under the name of Gregorio Bontuyan.
We agree with the contention of the petitioners that the CA erred in not nullifying OCT No. 0-
1619 and TCT No. 1392 and ordering the respondents to reconvey the property covered by the
said title to the petitioners.
The respondents, as plaintiffs in the court a quo, were burdened to prove their claim in their
complaint that Gregorio Bontuyan was the owner of Lot No. 17150 and that they acquired the
property in good faith and for valuable consideration from him.[37] However, the respondents failed
to discharge this burden. The evidence on record shows that Calixto Gabud sold the property to
Protacio Tabal on February 14, 1948,[38] and that the latter sold the property to Simeon Noval on
January 5, 1959.[39] Simeon Noval then sold the property to Lourdes Leyson on May 22,
1968.[40] The respondents failed to adduce any evidence to prove that Lourdes Leyson, or even
Simeon Noval, sold the property to Gregorio Bontuyan, or to any of the respondents for that
matter. Since Gregorio Bontuyan was not the owner of the property, he could not have sold the
same to his son Naciansino Bontuyan and the latters wife, the respondents herein. As the Latin
adage goes: NEMO DAT QUOD NON HABET. Gregorio Bontuyan could not feign ignorance of
Simeon Novals ownership of the property, considering that the latter was his son-in-law, and that
he (Gregorio Bontuyan) was the one who received the owners copy of T.D. No. 100356 covering
the property under the name of Simeon Noval.[41] At the dorsal portion of the said tax declaration,
there was even an annotation that the property was transferred to Simeon Noval as shown by the
deed of sale executed before Notary Public Gregorio A. Uriarte who notarized the deed of sale
over the property executed by Protacio Tabal in favor of Simeon Noval on January 5, 1959. [42] We
note that the respondents failed to adduce in evidence any receipts of real property tax payments
made on the property under their names, which would have fortified their claim that they were the
owners of the property. We agree with the findings of the CA, thus:

This case involves two parcels of land Lot 17150 and Lot 13273. Lot 17150 is registered under
the Torrens System under the names of plaintiffs-appellants, while Lot 13273 remained to be
unregistered.

In this case, records show that defendant-appellee and intervenors-appellees are the true owners
of the subject lots. They have in their favor tax receipts covering the subject lots issued since
1945.

While, indeed, tax receipts and declarations are not incontrovertible evidence of ownership,
such, however, if accompanied with open, adverse, continuous possession in the concept of an
owner, as in this case, constitute evidence of great weight that person under whose name the real
taxes were declared has a claim of right over the land.

Further, defendant-appellee and intervenors-appellees presented before the trial court the Deed
of Absolute Sale dated February 14, 1948, executed by Calixto Gabud, conveying the subject
lots in favor of Protacio Tabal. The deed is a notarial document.

Likewise presented is the Deed of Absolute Sale of the subject lots dated January 5, 1959,
executed by Protacio Tabal in favor of spouses Simeon Noval and Vivencia Bontuyan. The
document is, likewise, a notarial document.

Defendant-appellee and intervenors-appellees also presented the Deed of Absolute Sale of the
subject lots dated May 22, 1968, executed by spouses Simeon Noval and Vivencia Bontuyan in
favor of Lourdes Leyson. The deed is a notarial document.

A notarial document is evidence of the facts in clear, unequivocal manner therein expressed. It
has in its favor the presumption of regularity. It is admissible in evidence without necessity of
preliminary proof as to its authenticity and due execution.

There exist (sic) no trace of irregularity in the transfers of ownership from the original owner,
Calixto Gabud, to defendant-appellee and intervenors-appellees.

Plaintiffs-appellants, on the other hand, offered no convincing evidence as to how their


predecessor-in-interest, Gregorio Bontuyan, acquired the subject lots. Plaintiffs-appellants
presented only the Free Patent and OCT No. 0-1619, covering Lot No. 17150, issued in the
name of Gregorio Bontuyan.

As to Lot No. 13273, We find no sufficient reason why defendant-appellee and intervenors-
appellees should be disturbed in their ownership and possession of the same. [43]

As copiously shown by the record, Gregorio Bontuyan filed his application for a free patent
with the Bureau of Lands on December 4, 1968 in gross bad faith, thereby defrauding Lourdes
Leyson of the said property through deceit. Gregorio Bontuyan falsely declared in the said
application: (a) that he entered upon and cultivated the property since 1918 and that the property
was not claimed or occupied by any person; and (b) that Lot No. 17150 was located in Sirao, Cebu
City, when, in fact, the property was located in Adlawon, Cebu City. Lourdes Leyson was not
notified of the said application and failed to file any opposition thereto. Gregorio Bontuyan was
then able to secure Free Patent No. 510463 on November 19, 1971 and OCT No. 0-1619 on
March 21, 1974. It appears in the said title that the propertys location was indicated as Sirao,
Cebu City.[44] Indeed, the CA declared that Gregorio Bontuyan had acquired title to the property
through fraud:

However, as to Lot No. 17150, We find that despite the fraud committed by Gregorio Bontuyan
(plaintiffs-appellants predecessor-in-interest) in acquiring his title over the said lot, ownership
over the said lot should be adjudged in favor of plaintiffs-appellants.

Records, indeed, show that, at the time when Gregorio Bontuyan applied for Free Patent,
Gregorio Bontuyan was living with his daughter, Vivencia Bontuyan (defendant-appellees
predecessor-in-interest). Thus, Gregorio Bontuyan must have known that at the time when he
applied for free patent on December 1968, the subject lots were already sold on May 1968 by his
daughter Vivencia Bontuyan in favor of Lourdes Leyson, predecessor-in-interest of defendants-
appellees.

Moreover, records further show that Gregorio Bontuyan sold twice Lot [No.] 17150 to
plaintiffs-appellants. The first was in 1976 and the other was in 1980. Plaintiffs-appellants
offered no reasonable explanation why Gregorio Bontuyan have (sic) to sell twice Lot No.
17150 in favor of plaintiffs-appellants.

As found by the trial court, these are badges of bad faith which affect the validity of the title of
Gregorio Bontuyan over the subject lots.

We are aware that the torrens system does not create or vest title. It only confirms and records
title already existing and vested. It does not protect a usurper from the true owner. It cannot be a
shield for the commission of fraud. It does not permit one to enrich himself at the expense of
another. Where one does not have any rightful claim over a real property, the torrens system of
registration can confirm or record nothing.[45]

The findings of the CA affirmed the findings of the trial court in its decision, thus:

After having thoroughly analyzed the records and the evidences adduced during the trial of this
case, this Court is convinced and sincerely believes that the lots in question were originally
owned by Calixto Gabud as evidenced by T.D. [No.] 03276R marked as Exh. 1. In 1945, this
consisted of only one lot in Adlawon, Cebu City, as there was no provincial road yet. However
in 1948, the said parcel of land was divided into two because a provincial road was constructed
passing through it. Hence, T.D. [No.] 03276R and T.D. [No.] 01979-R were issued to Calixto
Gabud. On February 16, 1948, Calixto Gabud sold the said parcels of land to spouses Protacio
Tabal and Ludegaria (sic) Bontuyan as evidenced by an Absolute Deed of Sale, Exh. 2. On
January 5, 1959, spouses Protacio Tabal and Ludegaria (sic) Bontuyan, in turn, sold the same
parcels of land to spouses Simeon Noval and Vivencia Bontuyan as evidenced by a Deed of
Sale, Exh. 4. It is noteworthy to mention at this point in time that Vivencia Bontuyan is one of
the daughters of Gregorio Bontuyan, the father of herein plaintiff Naciansino Bontuyan. In May
1968, spouses Simeon Noval and Vivencia Bontuyan sold the subject parcels of land to Lourdes
vs. (sic) Leyson, the mother of herein defendant as evidenced by a Deed of Sale marked as Exh.
6. It is quite perplexing for the court to imagine that Gregorio Bontuyan, father of herein
plaintiff, who was then residing with spouses Simeon Noval and Vivencia Bontuyan at 179 C
San Jose dela Montaa, Mabolo, Cebu City, as reflected in his application for Free Patent (Exhs.
8 & 26) dated December 4, 1968 was unaware of the sale of the subject parcels of land made by
his daughter Vivencia Bontuyan and spouse Simeon Noval to Lourdes Leyson. It is evident that,
after the sale from spouses Noval to Lourdes Leyson in May 1968, Gregorio Bontuyan applied
for Free Patent for the same parcels of land in December 1968 claiming to have cultivated the
land since 1918, stating therein the location as Sirao and not Adlawon which is the true and
correct location. Sirao and Adlawon are two different barangays which are not even adjacent to
each other. In fact, as borne out by Exh. 25, it is separated by Barangay Guba. In 1974, Free
Patent No. 510463 and OCT# 0-1619 was issued to Gregorio Bontuyan covering subject
property, the location of which is in Barangay Sirao in consonance to his application. Gregorio
Bontuyans application for Free Patent over subject parcels of land had raised in the mind of this
Court reasonable badges of bad faith on his part as the subject parcels of land were already sold
by his daughter Vivencia Bontuyan and spouse Simeon Noval to Lourdes Leyson. Another
badge of bad faith is raised in the mind of this Court when he (Gregorio) sold the subject parcels
of land twice to his son Naciansino Bontuyan in 1976 and 1980, respectively, wherein both
Deeds of Sale were notarized by different Notary Publics, (Exhs. 10 & 16).[46]

Considering that Lourdes Leyson was in actual possession of the property, the respondents
cannot, likewise, claim that they were in good faith when Gregorio Bontuyan allegedly sold the
property to them on April 28, 1980.
Anent the third and fourth assignments of error, we do not agree with the ruling of the CA that
the petitioners failed to directly attack the validity of OCT No. 0-1619. The CA failed to consider
the fact that, in their respective answers to the complaint, the petitioners inserted therein a
counterclaim wherein they repleaded all the material allegations in their affirmative defenses, that
Gregorio Bontuyan secured OCT No. 0-1619 through fraud and deceit and prayed for the
nullification thereof.
While Section 47 of Act No. 496 provides that a certificate of title shall not be subject to
collateral attack, the rule is that an action is an attack on a title if its object is to nullify the same,
and thus challenge the proceeding pursuant to which the title was decreed. The attack is
considered direct when the object of an action is to annul or set aside such proceeding, or enjoin
its enforcement. On the other hand, an attack is indirect or collateral when, in an action to obtain a
different relief, an attack on the proceeding is nevertheless made as an incident thereof.[47] Such
action to attack a certificate of title may be an original action or a counterclaim in which a
certificate of title is assailed as void. A counterclaim is considered a new suit in which the
defendant is the plaintiff and the plaintiff in the complaint becomes the defendant. It stands on the
same footing and is to be tested by the same rules as if it were an independent
action.[48] Furthermore, since all the essential facts of the case for the determination of the titles
validity are now before the Court, to require the party to institute cancellation proceedings would
be pointlessly circuitous and against the best interest of justice.[49]
The CA, likewise, erred in holding that the action of the petitioners to assail OCT No. 0-1619
and TCT No. 1392 and for the reconveyance of the property covered by the said title had already
prescribed when they filed their answer to the complaint.
Case law has it that an action for reconveyance prescribes in ten years, the point of reference
being the date of registration of the deed or the date of issuance of the certificate of title over the
property. In an action for reconveyance, the decree of registration is highly regarded as
incontrovertible. What is sought instead is the transfer of the property or its title, which has been
wrongfully or erroneously registered in another persons name, to its rightful or legal owner, or to
one who has a better right.[50]
However, in a series of cases, this Court declared that an action for reconveyance based on
fraud is imprescriptible where the plaintiff is in possession of the property subject of the acts.
In Vda. de Cabrera v. Court of Appeals,[51] the Court held:

... [A]n action for reconveyance of a parcel of land based on implied or constructive trust
prescribes in ten years, the point of reference being the date of registration of the deed or the
date of the issuance of the certificate of title over the property, but this rule applies only when
the plaintiff or the person enforcing the trust is not in possession of the property, since if a
person claiming to be the owner thereof is in actual possession of the property, as the defendants
are in the instant case, the right to seek reconveyance, which in effect seeks to quiet title to the
property, does not prescribe. The reason for this is that one who is in actual possession of a
piece of land claiming to be the owner thereof may wait until his possession is disturbed or his
title is attacked before taking steps to vindicate his right, the reason for the rule being, that his
undisturbed possession gives him a continuing right to seek the aid of a court of equity to
ascertain and determine the nature of the adverse claim of a third party and its effect on his own
title, which right can be claimed only by one who is in possession.

Similarly, in the case of David v. Malay,[52] the same pronouncement was reiterated by the
Court:

... There is settled jurisprudence that one who is in actual possession of a piece of land claiming
to be owner thereof may wait until his possession is disturbed or his title is attacked before
taking steps to vindicate his right, the reason for the rule being, that his undisturbed possession
gives him a continuing right to seek the aid of the court of equity to ascertain and determine the
nature of the adverse claim of a third party and its effect on his own title, which right can be
claimed only by one who is in possession. No better situation can be conceived at the moment
for Us to apply this rule on equity than that of herein petitioners whose ... possession of the
litigated property for no less than 30 years and was suddenly confronted with a claim that the
land she had been occupying and cultivating all these years, was titled in the name of a third
person. We hold that in such a situation the right to quiet title to the property, to seek its
reconveyance and annul any certificate of title covering it, accrued only from the time the one in
possession was made aware of a claim adverse to his own, and it is only then that the statutory
period of prescription commences to run against such possessor.

The paramount reason for this exception is based on the theory that registration proceedings
could not be used as a shield for fraud.[53] Moreover, to hold otherwise would be to put premium on
land-grabbing and transgressing the broader principle in human relations that no person shall
unjustly enrich himself at the expense of another.[54]
In the present case, Lourdes Leyson and, after her death, the petitioners, had been in actual
possession of the property. The petitioners were still in possession of the property when they filed
their answers to the complaint which contained their counterclaims for the nullification of OCT No.
0-1619 and TCT No. 1392, and for the consequent reconveyance of the property to them. The
reconveyance is just and proper in order to put a stop to the unendurable anomaly that the
patentees should have a Torrens title for the land which they and their predecessors never
possessed and which has been possessed by another in the concept of an owner. [55]
On the fifth assignment of error, we rule for the petitioners. The award of attorneys and
appearance fees is better left to the sound discretion of the trial court, and if such discretion is well
exercised, as in this case, it will not be disturbed on appeal.[56] With the trial and the appellate
courts findings that the respondents were in bad faith, there is sufficient basis to award attorneys
and appearance fees to the petitioners. Had it not been for the filing of a baseless suit by the
respondents against the petitioners, the latter would not have sought the services of counsel to
defend their interests and represent them in this case.
IN LIGHT OF ALL THE FOREGOING, the petition is GRANTED. The Decision of the Court of
Appeals declaring the respondents the owners of Lot No. 17150 covered by OCT No. 0-1619 and
TCT No. 1392; and setting aside the award of attorneys fees in favor of the petitioners by the
Regional Trial Court are REVERSED AND SET ASIDE.
The Court hereby AFFIRMS the ownership of the petitioners of Lot No. 17150. OCT No. 0-
1619 and TCT No. 1392 covering the said lot are hereby nullified. The Register of Deeds is
ORDERED to cancel TCT No. 1392 and to issue another title over the property in favor of the
petitioners as co-owners thereof. The trial courts award of P50,000.00 for attorneys fees to the
petitioners is AFFIRMED. No pronouncement as to costs.
SO ORDERED.
Puno, (Chairman), Austria-Martinez, Tinga, and Chico-Nazario, JJ., concur.

[1] Penned by Associate Justice Eugenio S. Labitoria, with Associate Justices Teodoro P. Regino (retired) and
Rebecca De Guia-Salvador, concurring.
[2] Records, p. 30. (Exhibit 1)
[3] Ibid.
[4] Id. at 31. (Exhibit 2)
[5] Id. at 32. (Exhibit 3)
[6] Id. (Exhibit 4)
[7] Id. at 33. (Exhibit 5)
[8] Id. (Exhibit 5-A)
[9] Id. at 34.
[10] Id. at 42.
[11] Id. at 35. (Exhibit 6)
[12] Id. at 36. (Exhibit 7)
[13] Id. at 37. (Exhibit 7-A)
[14] Id. at 38. (Exhibit 7-B)
[15] Id. at 39. (Exhibit 7-C)
[16] Id. at 357-400. (Exhibits 28 to 28-QQ)
[17] Id. at 346. (Exhibit 8)
[18] Id. at 347. (Exhibit 9)
[19] Id. at 405. (Exhibit 21)
[20] Id. at 356. (Exhibit 16)
[21] Id. at 350. (Exhibit 10)
[22] Id. at 220. (Exhibit B)
[23] Id. at 351. (Exhibit 11)
[24] Id. at 355. (Exhibit 15)
[25] Id. at 227. (Exhibit C)
[26] Id. at 8.
[27] Id. at 3-4.
[28] Id. at 28.
[29] Id. at 93-94.
[30] Id. at 453-459.
[31] Rollo, p. 15.
[32] Id. at 20.
[33] Id. at 24.
[34] Id. at 25.
[35] 147 SCRA 611 (1987).
[36] 281 SCRA 162 (1997).
[37] Section 1, Rule 131 of the Revised Rules of Evidence.
[38] Supra at No. 4. (Exhibit 2)
[39] Supra at No. 6. (Exhibit 4)
[40] Supra at No. 11. (Exhibit 6)
[41] Supra at No. 8. (Exhibit 5-A)
[42] Supra at No. 6. (Exhibit 4)
[43] Rollo, pp. 35-36.
[44] Records, p. 347. (Exhibit 9-A)
[45] Rollo, p. 37.
[46] Records, pp. 458-459.
[47] Mallilin, Jr. v. Castillo, 333 SCRA 628 (2000), citing Co v. Court of Appeals, 196 SCRA 705 (1991).
[48] Pro Line Sports Center, Inc. v. Court of Appeals, 281 SCRA 162 (1997).
[49] Mendoza v. Court of Appeals, 158 SCRA 508 (1988).
[50] Heirs of Pomposa Saludares v. Court of Appeals, 420 SCRA 51 (2004).
[51] 267 SCRA 339 (1997), citing Heirs of Jose Olviga v. Court of Appeals, 227 SCRA 330 (1990).
[52] 318 SCRA 711 (1999), citing Faja v. Court of Appeals, 75 SCRA 441 (1977).
[53] Heirs of Pomposa Saludares v. Court of Appeals, supra, p. 49.
[54] Almarza v. Arguelles, 156 SCRA 718 (1987).
[55] Linaza v. Intermediate Appellate Court, 182 SCRA 855 (1990).
[56] De Castro v. Court of Appeals, 384 SCRA 607 (2002).
FIRST DIVISION

[G.R. No. 96829. December 9, 1991.]

EMILLANO S. CASIPIT and ANTONIA C. CASIPIT VDA. DE BEATO, Petitioners, v. HON. COURT OF APPEALS, (FORMER
SECOND DIVISION), SPOUSES SEVERINO B. DIAZ and ZENAIDA ALZONA-DIAZ, ROSA BEATO VDA. DE DIAZ,
FORTUNATO S. BEATO, JUANITA A. BEATO, FELICIDAD A. BEATO, ARCADIO A. BEATO, PACIENCIA A. BEATO, AVELINO
K. BEATO, ANTONIA K. BEATO, NILDA K. BEATO, THE REGISTER OF DEEDS FOR THE PROVINCE OF LAGUNA, AND THE
PROVINCIAL ASSESSOR OF LAGUNA, Respondents.

Roldan M. Noynay, for Petitioners.

Ramon C. Casano for Private Respondents.

SYLLABUS

1. CIVIL LAW; MODES OF ACQUIRING OWNERSHIP; PRESCRIPTION; ACTION FOR RECONVEYANCE BASED ON FRAUD IS
SUBJECT TO PRESCRIPTION. — There is no dispute that an action for reconveyance based on a void contract is
imprescriptible (Castillo, Et. Al. v. Madrigal, Et Al., G.R. No. 62650, June 27, 1991. However, We simply cannot apply this
principle to the present case because the action filed by petitioners before the trial court was 1) for reconveyance based
on fraud since the ownership of private respondents over the questioned property was allegedly established on "false
assertions, misrepresentations and deceptive allegations" ; and 2) for rescission of the "Kasulatan ng Pagmamana at
Paghahati." Besides, as against said Certification issued by the Bureau of Lands dated March 18, 1987, which petitioners
harp on, is the explicit Certification of Friar Lands Agency No. 2 of the same Bureau dated June 17, 1951, that." . .
according to the records of this Office, Lot No. 144 of the SANTA ROSA (DETACHED) ESTATE, was deeded under Patent
No. 31464 dated February 23, 1933 in the name of Gabriel Beato of Sinalhan, Sta. Rosa, Laguna." Thus, the action for
reconveyance based on fraud filed by petitioners before the trial court is subject to prescription.
2. ID.; ID.; ID.; ID.; PRESCRIPTIVE PERIOD IS TEN YEARS FROM ISSUANCE OF TITLE. — We were categorical in the
case of Caro, Et. Al. v. Court of Appeals, Et Al., G.R. No. 76148, December 20, 1989, 180 SCRA 401 citing the case of
Liwalug Amerol, Et Al., v. Molok Bagumbaruan, G.R. No. L-33261, September 30, 1987, 154 SCRA 396 that the
prescriptive period for the reconveyance of fraudulently registered real property is ten 10 years reckoned from the date
of the issuance of the certificate of title.

3. ID.; SALES; PURCHASER IN GOOD FAITH; DEFINITION; CASE AT BAR. — A purchaser in good faith 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 claim or interest of some other
person in the property (Vda. de Recinto v. Inciong, Et Al., G.R. No. L-26083, May 31, 1977, 77 SCRA 196 citing Cui and
Joven v. Henson, 51 Phil. 606 and Fule v. De Legare, 7 SCRA 351). In consonance with this definition, private
respondents Diaz spouses were purchasers in good faith. They bought the property of private respondents Beatos without
notice that some other person has a right to, or interest in, the questioned property and paid the full price therefor at the
time of such purchase.

DECISION

MEDIALDEA, J.:

This is a petition for review on certiorari seeking reversal of the adverse decision of public respondent Court of Appeals
dated August 22, 1990, in C.A G.R. CV- No. 22671, entitled Emiliano S. Casipit, Et. Al. v. Spouses Severino B. Diaz and
Zenaida Alzona-Diaz, Et Al.," which affirmed the dismissal of petitioners’ complaint by the Regional Trial Court of
Calamba, Laguna and ordered them to vacate the questioned property and pay to private respondents rentals, damages
and attorney’s fees; and its resolution dated January 11, 1991, which denied petitioners’ motion for reconsideration.

The antecedent facts, as found by the trial court are, as follows: cha nro b1es vi rtua l 1aw lib ra ry

On July 21, 1919, Urbano Casipit, father of petitioner Emiliano S. Casipit, bought Lot No. 144 (questioned property)
located at Sinalhan, Sta. Rosa, Laguna, containing an area of 661 square meters from the government (Exhibit "2"). On
June 7, 1923, he assigned his rights to the questioned property to Gabriel Beato (Exhibit "3") due to his (Urbano Casipit)
default in paying the installments due thereon (Exhibits "2-A" and "2-B"). In 1932, Tax Declaration No. 7233 over the
questioned property (Exhibit "4") was issued in the name of Gabriel Beato. On February 23,1933, Patent No. 31464 over
the questioned property was issued by Friar Lands Agency No. 2 in his name (Exhibit "3-A"). On October 7, 1945, Gabriel
Beato died.

In 1945, Tax Declaration No. 2561 (Exhibit "C") over the questioned property was issued in the name of petitioner
Emiliano S. Casipit, but covering an area of 330 square meters only. On February 9, 1949, he paid real estate taxes
thereon for the years 1945 to 1949. He also paid taxes thereon for the years 1950 and 1954 (Exhibit "B"). chanrobles. com:c ralaw:red

On November 25, 1961, the heirs of Gabriel Beato namely, Ricardo, Rosa, Narciso, Fortunata and Domingo, all surnamed
Beato, executed a document entitled "Kasulatan ng Pagmamana at Paghahati" wherein they adjudicated to themselves
the properties of Gabriel Beato. In the same document, they sold to private respondents spouses Severino B. Diaz and
Zenaida Alzona-Diaz the questioned property (Exhibits "F" and "1"). At the time of the sale, there was no occupant on
the questioned property and petitioner Emiliano S. Casipit was then residing in an adjoining lot.

On January 6, 1962, Narciso Beato filed before the Court of First Instance of Laguna a Petition for Reconstitution of
Titles, which was granted on July 17, 1963. On August 30, 1963, TCT No. RT-7880 over the questioned property was
issued in the name of Gabriel Beato (Exhibit "7-B"). On September 20, 1963, TCT No. RT-7880 was cancelled by TCT No.
T-27996 in the name of the heirs of Gabriel Beato (Exhibit "8") which was in turn cancelled by TCT No. T-27997 in the
name of private respondents Diaz spouses (Exhibit "9").

In 1965, petitioner Antonia C. Casipit Vda. de Beato and Julian Almador erected their respective houses on a portion of
the questioned property. On October 8,1981, a criminal complaint for violation of P.D. No. 772 (Penalizing Squatting and
Other Similar Acts) was filed before the Municipal Court of Sta. Rosa, Laguna against them by private respondent
Severino B. Diaz (Exhibit "5"). This complaint was dismissed at the instance of the fiscal on March 26, 1985 because the
questioned property is not among the areas approved for inclusion in the slum improvement and resettlement program of
the government thus, said decree does not apply (Exhibit "5-A"). On June 6, 1985, a complaint for ejectment (Civil Case
No. 1601) was filed against petitioner Antonia C. Casipit Vda. de Beato by private respondents Diaz spouses before the
Municipal Trial Court of Sta. Rosa, Laguna (Exhibit "6").

On April 27, 1987, a complaint was filed by petitioners against private respondents Diaz spouses, Rosa Beato Vda. de
Diaz and Fortunata S. Beato mainly for recovery of ownership over the questioned property before the Regional Trial
Court of Biñan, Laguna (pp. 1-14, Records). On June 23, 1987 (pp. 84-98, Records) and April 15, 1988 (pp. 173-188,
Records), the complaint was amended. The ejectment case (Civil Case No. 1601) was then suspended due to the filing of
the present case. In their complaint, it was alleged that petitioner Emiliano S. Casipit is the true and lawful owner of the
questioned property by virtue of continuous, uninterrupted, peaceful, open and public possession in the concept of owner
since 1930. Petitioners were deprived of ownership thereof by the Beatos through Narciso Beato, who filed a Petition for
Reconstitution of Titles in the name of Gabriel Beato, using fictitious documents. Petitioners therefore prayed that TCT
No. RT-7880 and other succeeding titles be cancelled, as well as Tax Declaration No. 7192 (sic) and succeeding tax
declarations; that the questioned property be reconveyed to them; that the document entitled, "Kasulatan ng
Pagmamana at Paghahati," insofar as it included the questioned property be rescinded; and that private respondents be
ordered to pay damages and attorney’s fees.

Private respondents disputed these allegations in their answer and by way of counterclaim, prayed for petitioners and all
persons deriving title from them to vacate the questioned property, and to pay reasonable rentals, moral and exemplary
damages and attorney’s fees. chanrob lesvi rtua lawlib rary

On July 11, 1989, the trial court rendered judgment, the dispositive portion of which, reads (p. 571, Records): jgc:chan roble s.com. p h

"IN VIEW OF THE FOREGOING, judgment is rendered in favor of the defendants and against the plaintiffs and the Second
Amended Complaint is dismissed. Further, the plaintiffs are ordered to pay jointly and severally the Spouses Severino
Diaz and Zenaida Diaz the amount of P6,000.00 as attorney’s fees. With costs against the plaintiffs.

"SO ORDERED." cralaw virtua1aw lib rary

In support of this ruling, the trial court ratiocinated (pp. 569-571, Records): jgc: chan roble s.com.p h

"It must be noted that the plaintiffs’ claim of ownership over Lot No. 144 is based on their alleged continuous possession
of the same and on Tax Declaration No. 2561 (Exhibit ‘C’) in the name of Emiliano Casipit, as well as on the receipts
showing payments of real estate taxes for the years starting 1945 to 1949, 1950 and 1964.

"Such claims of the plaintiffs cannot be sustained by the Court for the following reasons: (1) the testimonies of Antonia
Casipit and Clara Casipit Calderon to the effect that they and their predecessor-in-interest have been in continuous
possession of Lot No. 144 since time immemorial are self serving; (2) Tax Declaration No. 2661 (Exhibit ‘C’) in the name
of Emiliano Casipit has been (sic) issued only in 1945 and does not indicate the previous tax declaration it cancelled.
Likewise, it only covers 330 square meters of Lot No. 144. On the other hand, tax declaration No. 7233 (Exhibit ‘4’) in
the name of Gabriel Beato was issued in 1932 and it covers the whole of Lot No. 144; (3) the testimony of Antonia
Casipit that her father Emiliano Casipit inherited from Urbano Casipit the land covered by tax declaration No. 2661 can
not overcome the ancient documents introduced by the defendants showing that Urbano Casipit after defaulting in the
payment of installments due the government assigned in 1923 his rights over Lot No. 144 to Gabriel Beato (Exhibits ‘2-
A’, ‘2-B’ and ‘3’); and (4) the possession by the plaintiffs of a portion of Lot No. 144 can not ripened (sic) into ownership,
for land registered under the Torrens System may not be acquired by prescription or adverse possession.

"Manifestly, the defendants have a better right over Lot No. 144 than the plaintiffs. Besides, the cause of action of the
plaintiffs being based on fraud, has prescribed for it must be filed within four (4) years after the cause of action arose.
The issuance of the reconstituted title over Lot No. 144 and its registration in the office of the Register of Deeds of
Laguna, in 1973 (sic) is the starting date for the prescriptive period to commence.

"Anent the second issue, the Court finds no justifiable reason to order the cancellation of TCT No. (T-27997) T-13161,
since the plaintiffs have failed to prove that they are the owners of the land covered by the said title. The fact that the
Petition for Reconstitution of Titles was granted by the Court of First Instance of Laguna in LRC Record No. 23313 and
such order having become final and executory, it is now conclusive on Gabriel Beato’s title over Lot No. 144. chanrob les vi rtual awlib rary c han robles. co m:chanro bles. com.ph

"As to the third issue, the records show that the plaintiffs’ (sic) have miserably failed to present evidence to establish bad
faith on the part of the defendants Severino Diaz and Zenaida Diaz. On the contrary, Zenaida Diaz declared that when
they bought Lot No. 144 nobody was residing thereon and that Emiliano Casipit was then living at the adjoining lot.
Therefore, said defendants are buyers in good faith and for value, for good faith is presumed unless the contrary is
shown.

"Regarding the last issue, definitely, the plaintiffs are not entitled to damages, attorney’s fees and costs, however, the
defendants Severino Diaz and Zenaida Diaz are. The Diazes since 1985 have been trying to eject from the land in
question the plaintiffs but have been unsuccessful. For this reason, the Diazes are entitled to actual damages and
attorney’s fees. Unfortunately, the Diazes have not presented competent evidence to prove the actual damages they
sustained although as to attorney’s fees they are entitled to the amount of P5,000.00. The Court can not award moral
damages in favor of the Diazes since no bed faith or malice has been proven on the part of the plaintiffs." cralaw virtua 1aw lib rary

Both parties appealed to public respondent Court of Appeals. Petitioners questioned the dismissal of their complaint by
the trial court whereas private respondents questioned the failure of said court to grant them their prayer for reasonable
rentals, actual and moral damages. On August 22, 1990, respondent court resolved the appeal in favor of private
respondents, the dispositive portion of which, reads (p. 32, Rollo): jg c:chan roble s.com.p h

"WHEREFORE, the appealed decision dismissing the complaint should be as it is hereby AFFIRMED. On the counterclaim
of defendants, judgment is hereby rendered ordering plaintiffs to vacate lot No. 144, and to pay the reasonable rental in
the amount of P300.00 from October, 1981 until they should have vacated the (sic) premises; to pay moral damages in
the amount of P30,000.00, and attorney’s fees in the amount of P5,000.00. No costs.

"SO ORDERED." cralaw virtua1aw lib rary

In affirming the trial court’s decision, respondent court expounded (pp. 27-29, Rollo): jgc:chan roble s.com.p h

". . . To make it worse, or its face the tax declaration (No. 2561) appears to have been cancelled by provincial form No.
183 in 1966. Thereafter, no other tax declaration or any proof of ownership was issued in the name of plaintiffs-
appellants.
"The payment of realty taxes by plaintiffs-appellants do not give any added weight to their claim of ownership of the lot
in dispute. This is so considering the doctrine that ‘payment of land taxes is not an evidence of ownership of the parcel of
land for which payment is made.’ (Reyes v. Serra, 93 SCRA 472; Director of Lands v. C.A., 133 SCRA 701). During the
pre-trial or November 2, 1988, the parties agreed, among other things —

‘5. That Emiliano Casipit on February 9, 1949 paid the land taxes for lot 144 for the years 1945, 1946, 1947, 1948 and
1949; and on August 5, 1950 paid the land taxes for the said lot for 1950 and on October 13, 1954 paid the land taxes
for the said lot for 1954.’ (pp. 492-493, rec.). chanro bles. com.ph : vi rtua l law lib rary

"Admittedly, therefore, it would appear that plaintiff-appellants paid realty taxes for the land in dispute only 3 times and
no more. Certainly that kind of payment cannot convey the idea of ownership.

". . . Then, the record shows that on October 8, 1981, Severino Diaz filed charges of anti-squatting against Casipit and
Almadovar. On June 6, 1985, the Diaz spouses again filed an ejectment suit against Antonia Casipit. These undisputed
facts would disprove the claim of the plaintiffs-appellants to uninterrupted possession that would have ripened to
ownership.

"x x x.

". . . Plaintiffs-appellants, . . ., failed to explain how Emiliano Casipit acquired a right over 112 of lot 144. . . .

". . . Then, tax declaration 7232 (sic) shows on its dorsal side that it was the very first or original tax declaration issued
for lot 144, as shown by the notation: ‘New’. Thereafter, in the same year, tax declaration 142 (sic) was issued in the
name of the heirs of Gabriel Beato, and, unlike tax declaration 2561 of Casipit, clearly stated that is was cancelling tax
declaration 7232 (sic) in the name of Gabriel Beato." cralaw virt ua1aw li bra ry

On January 11, 1991, the motion for reconsideration was denied (p. 17, Rollo). Hence, the present petition.

Petitioners assign as errors committed by respondent court the following (pp. 7-8, Rollo): jg c:chan roble s.com.p h

"First Assignment of Error

"THE HONORABLE COURT OF APPEALS HAS GRAVELY ERRED WHEN IT DENIED THE MOTION FOR RECONSIDERATION
FILED BY THE PETITIONERS AS THE ISSUES RAISED THEREIN WERE NOT SQUARELY AND THOROUGHLY THRESHED OUT
IN THE QUESTIONED RESOLUTION PROMULGATED ON JANUARY 11, 1991 AS THE CERTIFICATION ISSUED BY THE
BUREAU OF LANDS OR ANNEX ‘F’ OR EXHIBIT ‘D’ HAS PROBATIVE VALUE TO BE GIVEN FULL CREDENCE AS THE SAME
HAS BEEN ADMITTED BY THE PRIVATE RESPONDENTS AND THEREBY DECLARING AS NULL AND VOID THE ‘KASULATAN
NG PAGMAMANA AT PAGHAHATI’ OR EXHIBIT ‘1’ EXECUTED ON NOVEMBER 25, 1961 FOR WHICH REASON THE ACTION
OF PETITIONERS IS IMPRESCRIPTIBLE.

"Second Assignment of Error

"THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN PROMULGATING ITS RESOLUTION OR ANNEX ‘B’ WHEN IT
DENIED THE MOTION FOR RECONSIDERATION OF PETITIONERS AS THE QUESTIONED ‘KASULATAN NG PAGMAMANA AT
PAGHAHATI’ EXECUTED ON NOVEMBER 25, 1961 CANNOT BE MADE AS BASIS IN CANCELLING RECONSTITUTED
TRANSFER CERTIFICATE OF TITLE NO. RT-7880 WHICH WAS RECONSTITUTED ONLY ON AUGUST 30, 1963 AND NON-
EXISTING ON NOVEMBER 25, 1961 WITHIN THE KNOWLEDGE OF PRIVATE RESPONDENTS DIAZES MAKING THEM AS
BUYERS IN BAD FAITH AND BESIDES THE SAID ‘KASULATAN NG PAGMAMANA AT PAGHAHATI’ HAS TO BE DECLARED
NULL AND VOID AB INITIO. chanroblesvi rtualaw lib rary

"Third Assignment of Error

"THE HONORABLE COURT OF APPEALS HAS GRAVELY ABUSED ITS DISCRETION IN PROMULGATING ITS RESOLUTION OR
ANNEX ‘B’ AND ITS DECISION OR ANNEX ‘E’ ORDERING THE EJECTMENT OF THE PETITIONERS FROM THE PREMISES
AND AWARD OF DAMAGES AND ATTORNEY’S FEES AS SAID ORDER OF EJECTMENT IS EQUIVALENT TO VIOLATION OF
THE CONSTITUTIONAL RIGHT OF DUE PROCESS OF LAW AND THE RIGHT TO BE HEARD WHICH THE PETITIONERS ARE
ENTITLED AS PETITIONER EMILIANO CASIPIT IS NOT A PARTY TO SAID EJECTMENT SUIT AND THE TRIAL COURT FINDS
NO EVIDENCE TO WARRANT EJECTMENT." cralaw virt ua1aw lib rary

They allege that pursuant to the Certification issued by the Bureau of Lands (Exhibit "D") that Patent No. 31464 over the
questioned property has not been issued to Gabriel Beato, the "Kasulatan ng Pagmamana at Paghahati" is therefore a
void contract. This being the case, the action taken by petitioners is imprescriptible. Private respondents Diaz spouses
were buyers in bad faith because they had full knowledge that Emiliano Casipit has been in actual possession in the
concept of owner of the questioned property and paid the real property taxes thereon. Private respondent Zenaida
Alzona-Diaz testified that (pp. 4648, tsn, March 20, 1989): jgc:chan rob les.com. ph

"ATTY. NOYNAY: jgc:chanrobles .com.p h

"x x x

"Q. So, when was that year, if you still remember when Emiliano Casipit came from lot 144?

"A. I saw in 1948, that is my first year in teaching, I saw the house of Emiliano Casipit situated on that Lot 144.
"x x x.

"Q. So, in other words, Mrs. witness before 1948 you have seen the house of Emiliano Casipit in lot 144?

"A. Yes, sir." cralaw virtua1aw l ibrary

Likewise, private respondents Diaz spouses were aware that the Beatos had no title over the questioned property as of
November 25, 1961 when the "Kasulatan ng Pagmamana at Paghahati" was executed because TCT No. RT-7880 was
issued only on August 30, 1963. This was revealed by Zenaida Diaz in her testimony (pp. 46-46, supra): chanro bles vi rtua l lawli bra ry

"ATTY. NOYNAY: jgc:chanrobles .com.p h

"x x x.

"Q. So, when you answered a while ago that during the time when this Kasulatan was executed in 1901 and which
according to you, you were shown titles by the Beatos’ is not (sic) correct?

"WITNESS: jgc:chanrobles. com.ph

"A. At that time, sir, there was no title yet.

The ejectment of petitioners from the questioned property and the award of damages and attorney’s fees are violative of
due process of law because petitioner Emiliano S. Casipit is not a party to the ejectment suit before the trial court (Civil
Case No. 1601).

The petition is not impressed with merit.

There is no dispute that an action for reconveyance based on a void contract is imprescriptible (Castillo, Et. Al. v.
Madrigal, Et Al., G.R. No. 62650, June 27, 1991; Baranda, Et. Al. v. Baranda, Et Al., G.R. No. 73275, May 20, 1987, 150
SCRA 59). However, We simply cannot apply this principle to the present case because the action filed by petitioner
before the trial court was 1) for reconveyance based on fraud since the ownership of private respondents over the
questioned property was allegedly established on "false assertions, misrepresentations and deceptive allegations" (p.
182, Records); and 2) for rescission of the "Kasulatan ng Pagmamana at Paghahati" (pp. 173, 187, Records). Besides, as
against said Certification issued by the Bureau of Land (Exhibit "D") dated March 18, 1987, which petitioners harp on, is
the explicit Certification of Friar Lands Agency No. 2 of the same Bureau dated June 17, 1951, that." . . according to the
records of this Office, Lot No. 144 of the SANTA ROSA (DETACHED) ESTATE, was deeded under Patent No. 31464 dated
February 23, 1933 in the name of Gabriel Beato of Sinalhan, Sta. Rosa, Laguna." Thus, the action for reconveyance
based on fraud filed by petitioners before the trial court is subject to prescription. In this regard, respondent court shares
the same view as the trial court that (p. 29, Rollo): jgc:chan roble s.com.p h

". . . The issuance of the reconstituted title over lot No. 144 and its registration in the office of the Register of Deeds of
Laguna in 1973 (sic) is the reckoning point for the prescriptive period to commence. The 4-year period within which to
file this case for cancellation of title based on fraud must be done within 4 years after the cause of action arose. Here,
more than 4 years has elapsed." (Italics supplied).

We were categorical in the case of Caro, Et. Al. v. Court of Appeals, Et Al., G.R. No. 76148, December 20, 1989, 180
SCRA 401 citing the case of Liwalug Amerol, Et. Al. v. Molok Bagumbaran, G.R. No. L-33261, September 30, 1987, 154
SCRA 396 that the prescriptive period for the reconveyance of fraudulently registered real property is ten (10) years
reckoned from the date of the issuance of the certificate of title. We even said in the case of Heirs of Maria Revilleza Vda.
de Vega, Et. Al. v. Court of Appeals, Et Al., G.R. No. 93507, July 12, 1991 that: chanroble s lawlib rary : rednad

". . ., after numerous illuminating decisions by this Court, nobody can successfully claim ignorance of the rule that an
action for reconveyance based on an implied or constructive trust prescribes in ten (10) years . . ." cralaw virt ua1aw li bra ry

Conformably with these settled jurisprudence, the prescriptive period for petitioners’ action for reconveyance is ten (10)
years from August 30, 1963, the date of the issuance of TCT No. RT-7880 (Exhibit "7-B"). Obviously, Our discussion on
this subject matter is not beneficial to petitioners because they filed the action for reconveyance only on April 27, 1987.

While private respondent Zenaida Alzona-Diaz saw the house of petitioner Emiliano S. Casipit on the questioned property
before 1948, at the time of the sale, there was no occupant on the questioned property and he (Emiliano S. Casipit) was
then residing in an adjoining lot (supra). When she testified that there was no title yet when the "Kasulatan ng
Pagmamana at Paghahati" was executed in 1961, she was referring to the reconstituted torrens title thereon. The other
portions of her testimony which were conveniently deleted by petitioners read (pp. 45-45, tsn, March 20, 1989): jgc:chan roble s.com.p h

"Q. In 1961, you mean to say that the Beatos had already told you that they have already a reconstituted title over the
portion that was sold to you?

"A. None yet, sir.

"Q. What (sic) is it that you were answering (sic) Atty. Noynay that you were told about the reconstituted title?

"A. My husband and I were informed that they will file a petition for reconstitution on Lot No. (sic) 132, 134 and 144." cralaw virt ua1aw lib ra ry

A purchaser in good faith 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 claim or interest of some other person in the property (Vda. de Recinto v. Inciong, Et Al., G.R. No. L-26083,
May 31, 1977, 77 SCRA 196 citing Cui and Joven v. Henson, 61 Phil. 606 and Fule v. De Legare, 7 SCRA 351). In
consonance with this definition, private respondents Diaz spouses were purchasers in good faith. They bought the
property of private respondents Beatos without notice that some other person has a right to, or interest in, the
questioned property and paid the full price therefor at the time of such purchase. In addition, respondent court said (pp.
29-30, Rollo):j gc:cha nrob les.com. ph

"The Diaz spouses who bought the land in question from the Beatos are buyers in good faith. We find no need for an
extended discussion on this issue, considering that plaintiffs-appellants failed to show a better title to the lot than that of
the defendants-appellees Beatos. However, We shall dwell briefly on this matter if only to erase any doubt as to the good
title of the Diazes over the property which they now own. When the Diazes bought the property in question for a valuable
consideration, they were shown the Beatos’ documents which show and prove how the latter acquired ownership thereof.
These consisted of Exhibits 2, 2-A, 3, and 4, which are all ancient documents. Then, when the Diaz spouses purchased
the lot in question, there was no house or structure built thereon, nor anyone living in the premises. Under the
circumstance, the Diaz spouses cannot be imputed with notice of this adverse claim of the plaintiff (sic) or any flaw,
assuming there is any, in the title of the vendors." chanro blesvi rt ualawlib ra ry

Regarding the last allegation of petitioners, We adopt respondent court’s reasoning thereon (pp. 31-32, Rollo): jgc:c hanro bles. co m.ph

". . ., the herein defendants-appellants are entitled to lot 144, and thus, in effect, plaintiffs-appellees are unlawfully
occupying portions of the said lot. The trial court thus may award actual (sic) damages in every case where a property
right has been invaded (Article 2222 of the New Civil Code). Defendant-appellant Zenaida Diaz testified that the
reasonable rental for the area occupied by Antonio (sic) Casipit is P300.00 a month (p. 40, tsn; Mar. 20, 1987 (sic)). This
testimony of Diaz was unrebutted. It is also unrebutted that on October 8, 1981, Severino Diaz filed a criminal complaint
against Antonio (sic) Casipit and Julian Almadovar for violation of P.D. 772, but was dismissed by the prosecuting fiscal
on the ground that the said law applies to urban land only. And on June 5, 1987 (sic), a complaint for ejectment was filed
by the Diazes against Antonia Casipit before the Municipal Trial Court which was suspended due to the filing of this
instant case. Thus, October 8, 1981, should be the reckoning point for the ward (sic) of P300.00 a month in the form of
reasonable rentals to compensate the Diazes for the loss of enjoyment of property that lawfully belongs to them.

"An award of moral damages is justified since the evidence indicate (sic) bad faith in the filing of this complaint by
plaintiffs-appellees. Apparently, plaintiffs-appellees are not even convinced of the validity of their claim since they
permitted a period of more than 30 years to lapse before they went to court. It would seem that this complaint filed by
plaintiffs-appellees was merely an afterthought in order to counteract the ejectment suit filed by defendants-appellants
Diazes on June 6, 1985. The numerous court cases relative to the lot in dispute have caused the Diazes sleepless nights
and thus they should be entitled to moral damages in the amount of P30,000.00.

"In order to give complete relief to the Diazes, plaintiffs-appellees must vacate the lot in dispute. True, there is now a
pending ejectment case in the Municipal Trial Court of Sta. Rosa, Laguna. However, the pendency of the said ejectment
case should not constitute a bar to the grant of the relief prayed for by appellants Diazes in their answer, i.e., to vacate
the premises. In the case at bar, the issue of ownership has in effect settled the issue of possession which would be
litigated upon in the ejectment suit. The trial court took into account the fact that appellants Diazes first filed a criminal
complaint against plaintiff-appellees in 1981; and, in 1985, a complaint for ejectment. The Diazes, therefore, being the
lawful owners of the property in dispute, and in this case, the issue of possession having been properly ventilated, should
be awarded immediate possession of the property. This is necessary in order to finish once and for all the controversy
between the defendants-appellants and the plaintiffs-appellees. To leave the issue of ejectment in the hands of the
Municipal Trial Court where a complaint has been pending, would be to deny complete relief to defendants-appellants. It
is best to grant the relief prayer (sic) for, that of ejectment, in the case at bar, in order to avoid multiplicity of suits. It
will not only save the parties and the court the rigors and expenses of multiple (sic) litigations, but also avoid the remote
probability that there might be conflicting decisions relative to one and the same issue." cralaw virt ua1aw lib ra ry

ACCORDINGLY, the petition is hereby DENIED. The decision of the Court of Appeals dated August 22, 1990 and its
resolution dated January 11, 1991 are AFFIRMED.

SO ORDERED

Narvasa, C.J., Cruz, Feliciano and Griño-Aquino, JJ., concur.

Republic of the Philippines


SUPREME COURT
Manila

SECOND DIVISION

G.R. No. L-33261 September 30, 1987

LIWALUG AMEROL, MACATANTO AMEROL, TAIB AMEROL, DIBARATUN AMEROL, DIBARATUN,


MATABALAO, MINDALANO DIBARATUN, DIPUNDUGUN MORO, and MANUCAO MORO, petitioners,
vs.
MOLOK BAGUMBARAN, respondent.

SARMIENTO, J.:

This is a petition for review on certiorari of the decision 1 of the then Court of First Instance of Lanao del Sur, Branch III, Marawi City, in
Civil Case No. 1354, entitled, "Molok Bagumbaran vs. Liwalug Amerol et al.," under Republic Act No. 5400, "as only question of law is raised." 2

The only issue for resolution is the prescriptive period of an action for reconveyance of real property which has
been wrongfully or erroneously registered under the Torrens System in another's name. In other words, what is
the prescriptive period for the action to reconvey the title to real property arising from an implied or constructive
trust and, corrolarily reference. The petitioners herein, defendants in the trial court, assert that they have ten
years to bring the action, while the respondent, plaintiff in the court below, claims the prescriptive period is four
years. The trial court ruled tor the plaintiff, now respondent.

We reverse. We hold that the prescriptive period for such an action for reconveyance, as this case, is ten years.
The point of reference is, or the ten-year prescriptive period commences to run from, the. date of the issuance of
the certificate of title over the real property.

There is no issue as to the facts, this case having been elevated to this Court, as aforestated, on purely a
question of law. Be that as it may, in order to satisfy constitutional requirements as well as to place the question
of law in proper perspective, there is need to state the facts of the case. On this regard, the findings of the trial
court would best serve the stated purposes.

xxx xxx xxx

From the evidence submitted during the trial there is no dispute concerning the fact relative to the
Identity of the land in litigation. It is commonly known as Lot No. 524, Pls-126 and technically
described and bounded in the sketch (Exh. "7 "). This is the very tract of land alleged by the
plaintiff to have been forcibly entered into by the defendants and which plaintiff now w&s to
recover possession thereof. It has also been proven that the same lot was covered by two free
patent applications: — (l) that of defendant Liwalug Datomanong (erroneously surnamed Amerol)
which he filed on the 4th day of September, 1953, and (2) that of Molok Bagumbaran which was
filed on December 27, 1954. There is also no question regarding the fact that as to these two
free patent applications, that of plaintiff Molok Bagumbaran was given due course as a result of
which Free Patent No. V-19050 was issued on August 16,1955 by authority of the President of
the Philippines Ramon Magsaysay, by Jaime Ferrer, Undersecretary of Agriculture and Natural
Resources and duly registered with the office of the Register of Deeds of the Province of Lanao
(now Lanao del Sur) in the mm year whereupon Original Certificate of Title No. P-466 was duly
issued, owner's duplicate certificate having been furnished the herein plaintiff.

This court is also inclined to believe that defendant Liwalug Datomanong had never known of
plaintiff's free patent application on the land in question nor was he ever notified or participated in
the administrative proceedings relative to plaintiff's free patent application. In the meantime,
since the date he purchased the land from Mandal Tondo, said defendant has been and up to the
present in con. tinuous occupation and cultivation of the same. His co-defendants named in the
complaint are merely his tenants.

It is also incontrovertible fact that said defendant did not take appropriate action to annul the
patent and title of the plaintiff within one year from issuance thereof and that the first step taken
by him to contest said patent and title was a formal protest (Exh. "12", p. 408, Record) dated
April 24, 1964, filed before the Bureau of Lands after the lapse of Nine (9) long years from the
issuance of patent in favor of the plaintiff. The second step he took was his counterclaim
contained in his answer to the complaint in the above entitled case, which answer was filed with
this court on December 4, 1964. In said counterclaim, defendant reiterated his stand that plaintiff
secured patent on the land by means of deceit and fraud, wherefore, defendant prayed that said
title be annulled, or, alternatively, plaintiff be ordered to reconvey the said land to the said
defendant Liwalug Datomanong.
First question to be resolved is whether or not the plaintiff is guilty of fraud or misrepresentation
in securing the Free Patent No. V-19050 covering the land in question.

Upon a thorough examination of the evidence, proofs are sufficient to support defendant's
contention that plaintiff is guilty of fraud and misrepresentation. In the first place, proofs are
abundant tending to show that since 1952 when Mandal Tando transferred the land to said
defendant, the latter occupied, took possession thereof and cultivated the same continuously,
publicly, adversely against any claimant and in the concept of owner up to the present; that said
defendant had introduced considerable improvements such as coconut and coffee plantations
and other fruit trees besides his farm house, a mosque, cassava plantation and clearing and full
cultivation of the entire area. The fact of possession on the part of said defendant has been
attested to by competent and creditable witnesses like Mandal Tando who conveyed the land to
the defendant; Hadji Sirad Gomandang, the barrio captain of Montay, Malabang, Lanao del Sur,
Hadji Rasol Maruhom and Hadji Abdulcadir Pagayawan, both of Pialot, Malabang, Lanao del Sur
who are farmers and barrio-mates of said defendant; and also Disomnong Dimna Macabuat, an
employee in the office of the District Land Officer at Marawi City who had officially conducted
occular inspection and investigation of the premises in connection with the protest of said
defendant found thereon the above-mentioned improvements introduced by the said defendant.

What is more, on or before filing his free patent application, plaintiff knew that the land in
question which was covered by his free patent application was then actually occupied and
cultivated by defendant Liwalug Datomanong if not by Mandal Tando, the original occupant. Be it
remembered that Mandal Tando had transferred to defendant Liwalug Datomanong Twenty Four
(24) hectares, more than eleven hectares of which is (sic) outside the military reservation and
designated as Lot No. 524, Pls-126 and the rest which is in the southern portion lies within the
military reservation. Now, immediately adjacent thereto on the south is the land claimed and
occupied by the herein plaintiff also consisting of Twenty Four (24) hectares but wholly within the
military reservation. It appears that plaintiff declared this Twenty four hectares for the first time on
October 24, 1950 for taxation purposes (Tax Declaration No. 1529, Record) and stated in said
tax declaration (Exhs. "8" and "8-A," p. 414, Record) regarding the boundaries that the adjacent
owner on the north is Mandal Tando. In other words, plaintiff had expressly recognized the fact
that Mandal Tando is an adjacent land owner north of plaintiff's property. On February 19, 1951
herein plaintiff revised the above-stated tax declaration and secured another (Tax Declaration
No. 1794, Exh. "9" and "9-A," p. 413, Record) and still plaintiff stated therein that his boundary
land owner on the north is Hadji Abdul Gani. 3 [a.k.a.Liwalug Datomanong(Amerol)]. 4

xxx xxx xxx

Notwithstanding the aforequoted findings, very unequivocal to be sure, the trial court denied the counterclaim of
the defendants, now petitioners, for the affirmative relief of reconveyance on the ground of prescription. Said the
court:

xxx xxx xxx

The patent of the plaintiff having been registered back in 1955 and in contemplation of law
registration thereof is notice to the whole world and yet defendant exerted no effort whatsoever
either to annul the title or institute proceedings for reconveyance except in his counterclaim
contained in his answer to the complaint in this case at bar which answer and counter-claim was
filed on December 4, 1964, some nine long years from the date of registration of the patent,
defendant unfortunately lost his right to reconveyance within the period of four (4) years from the
date of registration of said patent. 5

xxx xxx xxx

Thus, the dispositive portion of the assailed decision stated:

xxx xxx xxx

PREMISES CONSIDERED, judgment is hereby rendered as follows: (1) declaring the herein
plaintiff the registered owner of Lot No. 524, Pls-126 and sustaining and respecting the validity of
the plaintiff's Original Certificate of Title No. P-466 covering the said land; (2) ordering the
defendants to vacate the premises of Lot No. 524; Pls-126 and deliver possession thereof to the
herein plaintiff under certain terms and conditions herein below stated; (3) denying and hereby
dismissing the counterclaim of the herein defendants and consequently the prayer to annul the
title and/or for reconveyance of the land to said defendant Liwalug Datomanong must Likewise
be denied; (4) that before plaintiff could take possession of said premises he must reimburse
defendant Liwalug Datomanong the total sum of Six Thousand Seven Hundred Fifty-Two Pesos
and Sixty-Two Centavos (P6,752.62) which he incurred for the necessary and useful expenses
on the land in question with the right of said defendant to retain possession of the premises if
said reimbursement be not completely made. No pronouncement as to costs. 6

xxx xxx xxx

Hence, this petition. 7

The petitioners in their Brief 8 assign the following two errors allegedly committed by the trial court:

I.

THE COURT ERRED IN ITS CONCLUSION OF LAW TOTHE EFFECT THAT PETITIONERS RIGHT OF
ACTION FOR RECONVEYANCE FOR VIOLATION OF AN IMPLIED TRUST PRESCRIBED AFTER FOUR
YEARS FROM THE REGISTRATION OF THE PATENT OF RESPONDENT.

II.

THE COURT ERRED IN NOT REQUIRING THE INTRODUCTION OF EVIDENCE AS BASIS IN THE
ASSESSMENT OF THE FAIR MARKET VALUE OF THE IMPROVEMENT INTRODUCED ON THE LAND IN
GOOD FAITH BY PETITIONERS INSTEAD OF BASING SUCH ASSESSMENT UPON PURE AND SIMPLE
GUESS WORKS AND WILD ESTIMATIONS.

The first assignment of error is well-taken as adverted to at the outset.

Indubitably, the act of respondent in misrepresenting that he was in actual possession and occupation of the
property in question, obtaining a patent and Original Certificate of Title No. P- 466 in his name, created an
implied trust in favor of the actual possessor of the said property. The Civil Code provides:

ARTICLE 1456. If property is acquired through mistake or fraud, the person obtaining it is by
force of law, considered a trustee of an implied trust for the benefit of the person from whom the
property comes.

In this case, the land in question was patented and titled in respondent's name by and through his false
pretenses. Molok Bagumbaran fraudulently misrepresented that he was the occupant and actual possessor of
the land in question when he was not because it was Liwalug Datomanong. Bagumbaran falsely pretended that
there was no prior applicant for a free patent over the land but there was — Liwalug Datomanong. By such
fraudulent acts, Molok Bagumbaran is deemed to hold the title of the property in trust and for the benefit of
petitioner Liwalug Datomanong. Notwithstanding the irrevocability of the Torrens title already issued in the name
of respondent, he, even being already the registered owner under the Torrens system, may still be compelled
under the law to reconvey the subject property to Liwalug Datomanong. After all, the Torrens system was not
designed to shield and protect one who had committed fraud or misrepresentation and thus holds title in bad
faith. Further, contrary to the erroneous claim of the respondent, 9 reconveyance does not work to set aside and
put under review anew the findings of facts of the Bureau of Lands. In an action for reconveyance, the decree of
registration is respected as incontrovertible. What is sought instead is the transfer of the property, in this case
the title thereof, which has been wrongfully or erroneously registered in another person's name, to its rightful and
legal owner, 10 or to one with a better right. That is what reconveyance is all about.

Yet, the right to seek reconveyance based on an implied or constructive trust is not absolute. It is subject to
extinctive prescription. 11 Happily, both parties agree on this point. The seeming impediment however, is that while the petitioners assert that the
action prescribes in ten years, the respondent avers that it does in only four years.

In support of his submission, the respondent invokes several cases. We have examined the invocations and find
them inapplicable. For instance, the case of Fabian vs. Fabian, 12 relied on by the respondent, does not square with the present
case. In Fabian, the party who prayed for reconveyance was not in actual possession and occupation of the property. It was instead the party to whom title
over the property had been issued who occupied and possessed it. Further, the litigated property had been in the adverse possession of the registered owner
for well-nigh over twenty-nine big years, hence, reconveyance had been irretrievably lost.
Miguel vs. Court of Appeals, 13 is, likewise, inapplicable. In Miguel, the actual occupant and possessor of the controverted parcel of land, after
having been enticed by Leonor Reyes, an ambulatory notary public, with promise of help, engaged and retained the services of the latter to facilitate the
issuance of a patent for the said land in his (Miguel's) favor. Thus, there existed between the parties a relationship very much akin to that of lawyer-client and
which is similarly fiduciary in character. But Reyes, inspite of his compensation of one-fifth of the yearly produce of the property, still violated the trust reposed
on him and instead worked for the issuance of the patent in the name of his own wife. So, after the demise of Leonor Reyes, the property was fraudulently
patented and titled in his widow's favor. The reconveyance of the property was decreed by the Court based on "breach of fiduciary relations and/or fraud." It
was shown that the parties were legally bound to each other by a bond of fiduciary trust, a bond lacking in the case at bar.

Finally, the case of Ramirez vs. Court of Appeals 14 can not be availed of because the period of prescription was not there definitely and
squarely settled. In fact, Ramirez underscores a vacillation between the four-year and the ten-year rule. There it was stated that "an action for relief on the
ground of fraud — to which class the remedy prayed for by Paguia belong — scan only be brought within four years after accrual of the right of action, or from
the discovery of the fraud." If the decision just stayed pat on that statement, there would be merit in the respondent's presentation. But Ramirez continues:
"(I)ndepedently, however, of the alleged fraud on the part of Ramirez, the right to demand a reconveyance prescribes after 10 years from accrual of the cause
of action, June 22, 1944, the date of registration of the patent and of the issuance of OCT No. 282- A in his name." 15

Significantly, the three cases cited by the respondent to buttress his position and support the ruling of the trial
court have a common denominator, so to speak. The cause of action assailing the frauds committed and
impugning the Torrens titles issued in those cases, all accrued prior to the effectivity of the present Civil Code.
The accrual of the cause of action in Fabian was in 1928, in Miguel, February, 1950, and in Ramirez, 1944. It
must be remembered that before August 30, 1950, the date of the effectivity of the new Civil Code, the old Code
of Civil Procedure (Act No. 190) governed prescription. It provided:

SEC. 43. Other civil actions; how limited-Civil actions other than for the recovery of real property
can only be brought within the following periods after the right of action accrues:

xxx xxx xxx

3. Within four years: x x x An action for relief on the ground of fraud, but the right of action in
such case shall not be deemed to have accrued until the discovery of the fraud;

xxx xxx xxx

In contrast, under the present Civil Code, we find that just as an implied or constructive trust is an offspring of
the law (Art. 1456, Civil Code), so is the corresponding obligation to reconvey the property and the title thereto in
favor of the true owner. In this context, and vis-a-vis prescription, Article 1144 of the Civil Code is applicable.

Article 1144. The following actions must be brought within ten years from the time the right of
action accrues:

(1) Upon a written contract;

(2) Upon an obligation created by law;

(3) Upon a judgment.

xxx xxx xxx

(Emphasis supplied)

An action for reconveyance based on an implied or constructive trust must perforce prescribed in ten years and
not otherwise. A long line of decisions of this Court, and of very recent vintage at that, illustrates this rule.
Undoubtedly, it is now well-settled that an action for reconveyance based on an implied or constructive trust
prescribes in ten years from the issuance of the Torrens title over the property. 16 The only discordant note, it seems,
is Balbin vs. Medalla, 17 which states that the prescriptive period for a reconveyance action is four years. However, this variance can be explained by the
erroneous reliance on Gerona vs. de Guzman. 18 But in Gerona, the fraud was discovered on June 25, 1948, hence Section 43(3) of Act No. 190, was
applied, the new Civil Code not coming into effect until August 30, 1950 as mentioned earlier. It must be stressed, at this juncture, that Article 1144 and Article
1456, are new provisions. They have no counterparts in the old Civil Code or in the old Code of Civil Procedure, the latter being then resorted to as legal
basis of the four-year prescriptive period for an action for reconveyance of title of real property acquired under false pretenses.

It is abundantly clear from all the foregoing that the action of petitioner Datomanong for reconveyance, in the
nature of a counterclaim interposed in his Answer, filed on December 4, 1964, to the complaint for recovery of
possession instituted by the respondent, has not yet prescribed. Between August 16, 1955, the date of
reference, being the date of the issuance of the Original Certificate of Title in the name of the respondent, and
December 4, 1964, when the period of prescription was interrupted by the filing of the Answer cum
Counterclaim, is less than ten years.
The respondent also interposed as a deterrent to reconveyance the existence of a mortgage on the property. It
is claimed by the respondent that reconveyance would not be legally possible because the property under
litigation has already been mortgaged by him to the Development Bank of the Philippines. 19 This claim is untenable
otherwise the judgment for reconveyance could be negated at the will of the holder of the title. By the simple expedient of constituting a mortgage or other
encumbrance on the property, the remedy of reconveyance would become illusory. In the instant case, the respondent being doubly in bad faith — for
applying for and obtaining a patent and the Original Certificate of Title therefor without being in possession of the land and for mortgaging it to the
Development Bank knowing that his Original Certificate of Title was issued under false pretenses — must alone suffer the consequences.

Besides, given the undisputed facts, we cannot consider the mortgage contracted by the respondent in favor of
the Development Bank of the Philippines as valid and binding against petitioner Liwalug Datomanong. It would
be most unjust to saddle him, as owner of the land, with a mortgage lien not of his own making and from which
he derived no benefit whatsoever. The consequences of the void mortgage must be left between the mortgagor
and the mortgagee. In no small measure the Development Bank of the Philippines might even be faulted for not
making the requisite investigation on the possession of the land mortgaged.

Premises considered, we deemed it superfluous to rule on the second assignment of error raised by the
petitioners.

WHEREFORE, the petition is GRANTED and the Decision dated June 3, 1970 of the then Court of First Instance
of Lanao del Sur in Civil Case No. 1354 is hereby ANNULLED and SET ASIDE and a new one entered
ORDERING the respondent to RECONVEY Original Certificate of Title No. P-466 in favor of petitioner Liwalug
Datomanong, free of any encumbrance. Costs against the respondent.

SO ORDERED.

Yap (Chairman), Melencio-Herrera and Paras, JJ., concur.

Separate Opinions

PADILLA, J, concurring and dissenting:

I concur in the result. I do not however agree with the sweeping proposition that all actions for reconveyance,
based upon the ground of fraud, prescribed in ten (10) years. A distinction should be made. Fraud, or dolo it
should be recalled, is of two (2) kinds: dolo causante or that which determines or is the essential cause of the
consent; and dolo incidente, or that which does not have such decisive influence and by itself cannot cause the
giving of consent by refers only to some particular or accident of obligation. (Tolentino, Civil Code of the
Philippines, 1956 ed., Vol. IV, p. 463).

If the fraud committed was but an incident to the registration of land (dolo incidents), as in the case at bar, then I
would agree that the action for reconveyance prescribes in ten (10) years. But, where it is necessary to annul a
deed or title before relief could be granted, as when fraud, which vitiates consent dolo causante is alleged to
have been committed in the execution of the deed which became the basis for the registration of a parcel of
land, the action for reconveyance should be filed within four (4) years from the discovery of the fraud.

In Rone vs. Claro and Baquiring (91 Phil. 250, 251), the Court held that an action for the recovery of title to
parcel of registered land, where it was alleged that the defendants or one of them, through fraud, deceit and
breach of faith, succeeded in getting the original certificate of title from one of the plaintiffs, and then, again, with
use of fraud, deceit, breach of faith, and other machinations, succeeded in having the plaintiffs execute a deed
of sale of the lot in question in favor of the defendants, and, thereafter, obtained a certificate of title in their
names: "It may be that the recovery of title and possession of the lot was the ultimate objective of plaintiffs, but
to attain that goal, they must need first travel over the road of relief on the ground of fraud."
Separate Opinions

PADILLA, J, concurring and dissenting:

I concur in the result. I do not however agree with the sweeping proposition that all actions for reconveyance,
based upon the ground of fraud, prescribed in ten (10) years. A distinction should be made. Fraud, or dolo it
should be recalled, is of two (2) kinds: dolo causante or that which determines or is the essential cause of the
consent; and dolo incidente, or that which does not have such decisive influence and by itself cannot cause the
giving of consent by refers only to some particular or accident of obligation. (Tolentino, Civil Code of the
Philippines, 1956 ed., Vol. IV, p. 463).

If the fraud committed was but an incident to the registration of land (dolo incidents), as in the case at bar, then I
would agree that the action for reconveyance prescribes in ten (10) years. But, where it is necessary to annul a
deed or title before relief could be granted, as when fraud, which vitiates consent dolo causante is alleged to
have been committed in the execution of the deed which became the basis for the registration of a parcel of
land, the action for reconveyance should be filed within four (4) years from the discovery of the fraud.

In Rone vs. Claro and Baquiring (91 Phil. 250, 251), the Court held that an action for the recovery of title to
parcel of registered land, where it was alleged that the defendants or one of them, through fraud, deceit and
breach of faith, succeeded in getting the original certificate of title from one of the plaintiffs, and then, again, with
use of fraud, deceit, breach of faith, and other machinations, succeeded in having the plaintiffs execute a deed
of sale of the lot in question in favor of the defendants, and, thereafter, obtained a certificate of title in their
names: "It may be that the recovery of title and possession of the lot was the ultimate objective of plaintiffs, but
to attain that goal, they must need first travel over the road of relief on the ground of fraud."

Footnotes

1 Penned by Judge Demetrio B. Benitez.

2 Rollo, 15.

3 Decision, 11-14; Reno, 44-47; emphasis supplied.

4 Id., 5; Rollo, 38.

5 Id 18; Rollo, 55-56; emphasis supplied.

6 Id 21-22; Rollo, 577-579). emphasis supplied.

7 Filed on November 24, 1970.

8 Rollo, 104.

9 Brief for the respondent, 3; Rollo 130.

10 Director of Lands, et al. vs. Register of Deeds of Rizal, et al. 92 Phil. 826 (1953)

11 Diaz, et al. vs. Gorricho and Aguado, 103 Phil. 261 (1958); Candelaria, etc. vs. Romero, et al.,
109 Phil. 500 (1960); J.M. Tuazon & Co., Inc. vs. Magdangal, 114 Phil. 42 (1962); Alzona, et al.
vs. Capunitan and Reyes, 114 Phil. 377 (1962); Gerona vs. De Guzman, No. L-19060, May 29,
1964, 11 SCRA 153 (1964); Gonzales vs. Jimenez, Sr., No. L-19073, January 30, 1965, 13
SCRA 80 (1965); Cuaycong, et al. vs. Cuaycong, et al., No. L-21616, December 1 1, 1967, 21
SCRA 1192 (1967); Armamento vs. Guerrero, No. L-34228, February 21, 1980, 96 SCRA 178
(1980); and Ramos vs. Court of Appeals, No. L-5274 1, March 15, 1982, 112 SCRA 542 (1982).

12 No. L-20449, January 29, 1968, 22 SCRA 231 (1968).

13 No. L-20274, October 30, 1969, 29 SCRA 760 (1969).

14 No. L-28591, October 31, 1969, 30 SCRA 297 (1969).


15 Supra, 307.

16 Gonzales vs. Jimenez, supra; Cuaycong vs. Cuaycong, supra; De la Cerna vs. Dela Cerna,
No. L-28838, August 31, 1976, 72 SCRA 516 (1976); Carantes vs. Court of Appeals, No. L-
33360, April 25, 1977, 76 SCRA 516 (1977), Jaramil vs. Court of Appeals, No. L31858, August
31, 1977, 78 SCRA 420 (1977); Ruiz vs. Court of Appeals, No. L-29213, October 21, 1977, 79
SCRA 525 (1977); Vda. de Nacalaban vs. Court of Appeals, No. L-39478, November 29, 1977,
80 SCRA 428 (1977); Duque vs. Domingo, No. L-33762, December 29, 1977, 80 SCRA 654
(1977); Armamento vs. Guerrero, supra; Amansec vs. Melendez No. L-25422, July 23, 1980; 98
SCRA 639 (1980): Heirs of Tamak Pangawaran Patiwayan vs. Martinez, No. L49027. June 10,
1986,142 SCRA 252 (1986).

17 No.L-46410, October 30, l981, 108 SCRA 666 (1981).

18 No. L-19060, May 29, 164, 11 SCRA 153 (1964).

19 Brief for the Respondent, 5, 1968. Rollo, 130.

The Lawphil Project - Arellano Law Foundation

Republic of the Philippines


SUPREME COURT
Manila

FIRST DIVISION

G.R. No. 83383 May 6, 1991

SOLID STATE MULTI-PRODUCTS CORPORATION, petitioner,


vs.
THE COURT OF APPEALS (Former Sixth Division) and THE INTESTATE ESTATE OF ANTENOR S. VIRATA
and the DEVELOPMENT BANK OF THE PHILIPPINES, respondents.

Antonio M. Chavez for petitioner.


Rodolfo M. Dela Rosa for respondent Intestate Estate of Antenor S. Virata.

MEDIALDEA, J.:

This is a petition for review on certiorari of the decision of the Court of Appeals which affirmed the decision of the
trial court dismissing the complaint filed by petitioner for quieting of title and declaring Antenor Virata as the true
and lawful owner of the disputed property.

The antecedent facts are as follows:

On September 28, 1982, petitioner, a domestic corporation, filed an action for quieting of title against the
respondent estate of Virata alleging that it is the registered owner of a parcel of land located at Imus, Cavite,
with an area of 48,182 sq. meters, covered by Certificate of Title No. T-80889 of the Register of Deeds of Cavite,
which was issued on February 24, 1976; that Virata, during his lifetime thru the use of fraud, caused the
issuance of Certificate of Title No. T-11520 RT 1660 on September 1, 1959 thru an administrative reconstitution
of a nonexistent original title covering the same parcel of land; that by reason of the said reconstitution and
subsequent issuance of TCT No. T-11520 RT 1660, there now exists a cloud on the title of petitioner.

As gathered by the respondent appellate court and trial court, the evidence for the petitioner consists of the
following:

Pursuant to the provisions of Act No. 32, as amended, Julian Peñaranda submitted with the Bureau of
Lands, thru its District Land Office at Rosario, Cavite an application dated November 22, 1968, in a
verified Indorsement dated November 25, 1968, to purchase a friar land which was subscribed and
sworn to before Manuel Cupino, Acting District Land Officer (Exh. "D"). The application covers Lot No.
7449 of the Imus Friar Lands Estate, situated at Barrio Molino, Bacoor, Cavite, containing an area of 4
hectares, 81 ares and 82 centares. Said application was accompanied by a "SALAYSAY" (Exhibit "A")
signed and sworn to by one Mabini Legaspi before said District Land Officer Cupino, purporting to
transfer to, and to waive in favor of, Julian Peñaranda, all the rights of executor to Lot No. 7449.

Following the routine in cases of this nature, District Land Officer Cupino referred to Land Investigator
Alberto Buhain for investigation and in a verified Indorsement dated November 25, 1968, said
investigator made a Report (Exh. "B") on the result of his investigation, to District Land Officer Cupino,
District Land Office No. III-8 Bureau of Lands, Rosario, Cavite, certifying that applicant Julian Peñaranda
is the actual occupant of Lot No. 7449, has introduced improvements consisting of upland rice and other
seasonal crops; that Peñaranda's occupation of the land is derived through a voluntary assignment of
right of the former occupant, Mabini Legaspi, and that the same is free from claims and conflicts and that
the said applicant has established his rights over the subject land, in view of which, said investigator
recommended that said lot be awarded to applicant Julian Peñaranda according to law.

Thereafter, the Report having been submitted to Cupino, the latter directed investigator Buhain to
prepare an Information Sheet (Exh. "G" up to "G-3") and Cupino made the Appraisal Report (Exh. "E-2").
The above requirements having been accomplished, District Land Officer Cupino forwarded Peñaranda's
application to the Director of Lands, thru the Chief, Land Management Division, recommending
disposition of Lot No. 7449 be made in accordance with the findings of his office, to Julian Peñaranda,
pursuant to the provisions of C.A. of No. 32, as amended.

By second Indorsement dated December 16, 1968, Higinio P. Sunico, Chief, Land Management Division,
acting for and in behalf of the Director of Lands, forwarded to the Secretary of Agriculture and Natural
Resources, the application of Julian Peñaranda, recommending that Lot No. 7449 be sold to said
applicant without public auction for a sum of P1,198.00 (Exh. "I") and by a 3rd Indorsement dated
December 16, 1969, the application of Julian Peñaranda was returned by the Secretary of Agriculture
and Natural Resources, to the Director of Lands, Manila, approving that sale without auction, to Julian
Peñaranda, of lot No. 7449. Pursuant to this approval, the Director of Lands authorized the District Land
Officer, Rosario, Cavite, to sell without auction to Julian Peñaranda, and directing that the sales contract
should be executed soonest (Exh- "I"). The Director of Lands and Julian Peñaranda executed, therefore,
Sales Contract No. V-447 (Exh. "K"), on February 28, 1969, for a consideration of P1,198.00, to be paid
in ten (10) monthly installments, the first installment of P290.00 having been paid upon execution of the
sales contract and the payment of the P1,198.00 was fully paid on August 6, 1969 (Exh. "O").

The contract price of the land having been paid by Peñaranda, Undersecretary of Agriculture and Natural
Resources Isoceles Pascual, on August 13, 1969, issued the final deed of conveyance of lot No. 7449
(Exh."8") in favor of Julian Peñaranda and the said deed of conveyance contains the physical and
technical description of the lot in question (See Exh. "S-l").

xxx xxx xxx

On the basis of said Deed of Conveyance No. 10431, the Register of Deeds of Cavite issued on
November 14, 1969 in favor of Julian Peñaranda TCT No. T-39631 (Exh. "Z-6") which on its face shows
it to have come from a direct transfer from OCT no. 1002, and on February 17, 1976, the plaintiff, by way
of a Deed of Absolute Sale (Exh. "Z") bought said Lot No. 7449 as a consequence of which, TCT No. T-
39631 was cancelled and new TCT No. T-80889 was issued on February 24, 1976 to the plaintiff, Solid
State Multi Products Corporation.

Plaintiff Solid State Multi-Products Corporation enrolled Lot No. 7449 with the issuance of Tax
Declaration No. 20893 which was superseded by Tax Declaration No. 10973 and continued to religiously
pay the realty taxes as covered by receipts of tax payments (Exh. for 1977 and Exh. "7-19" for 1984) and
the subject property is in its actual possession since its acquisition from Peñaranda up to the present.
(pp. 109-112, Rollo (Emphasis Ours)

On the other hand, respondent Virata denied the allegations in the complaint and presented evidence to prove
his claim over the land. The appellate court and trial court made the following findings:

. . . on March 20, 1943, the Director of Lands, Mr. Jose F. Dans, gave authority to sell at public auction
Lot No. 7449 of the Imus Estate, containing an area of 4.8182 hectares at the price of not less than its
appraised value of P290.00 (Exh. X-33). Accordingly on April 20, 1943, the Bureau of Friar Lands Agent
Severo Rivera issued a Notice fixing the public auction of Lot No. 7449, among others, on May 5, 1943
at 10:00 a.m. (Exh. 1). On said date, Mabini Legaspi (appellee Virata's predecessor-in-interest)
submitted a winning bid of P290.00 and paid P29.00 (10% of the purchase price) and even issued
Bureau of Lands Official Receipt No. 77735 dated May 5, 1943 (Exh. 7). The subsequent installments
were paid on January 14, 1944, April 24, 1944, August 17, 1944, and September 20, 1944 in the
amounts of P29.00, P29.00, 87.00 and P116.00, respectively. The payments were evidenced by Official
Receipts Nos. 78396, 783392, 784704 and 78466 (Exhs. 7-A, 7-B, 7-C and V)

On December 12, 1944, the Bureau of Lands, through Mr. Vicente Tordesillas, sent a letter to the
Register of Deeds at Imus, Cavite, requesting the issuance of the corresponding certificates of title to
eight persons, among whom was Mabini Legaspi, specifying with respect to him Lot No. 7449 with an
area of 4.8182 located at Bacoor, Cavite Exh. 2). Accordingly, the Register of Deeds of Cavite issued
TCT No. A-2188 to Mabini Legaspi who held ownership of the property up to December 6, 1957 when he
executed a Deed of Sale transferring it to Antenor S. Virata (Exh. 6). The deed was registered with the
Registry of Deeds on December 10, 1957 . . . . On the same day, December 10, 1957, the Register of
Deeds issued TCT No. 11520 (Exh. 12) to Antenor Virata . . .

However, on June 7, 1959, the Provincial Capitol building of Cavite which housed the Registry of Deeds
was burned, destroying land records and titles in d registry among which were the records relating to Lot
No. 7449.

On September 1, 1959, the Registry of Deeds administratively reconstituted the original of TCT No. T-
11520 based on owner's duplicate certificate (Exh. 12) and renumbered the same as TCT No. (T-11520)
RT-1660.

xxx xxx xxx

The sentence of TCT No. 80889 issued in the name of appellant on February 24, 1976 came to the
knowledge of Antenor Virata in August 1978 when he received a subpoena from the National Bureau of
Investigation (NBI) in connection with its investigation of the conflicting land titles on Lot No. 7449. Virata
presented Mabini Legaspi as his witness. NBI Agent Manuel C. Dionisio took the sworn testimony of
Mabini Legaspi on August 27, 1978 (Exh. 10) and submitted a written report (Exhs. 9 to 9-H) of his
investigation on October 27, 1978. Mabini Legaspi in her sworn testimony (Exh. 10) declared that she
acquired Lot 7449 during the Japanese occupation and in support of her acquisition, she presented to
NBI agent Dionisio the carbon or duplicate original of the notice of public auction and the letters dated
December 12, 1944 of Vicente Tordesillas of the Bureau of Lands to the Register of Deeds requesting
the issuance of a certificate of title in favor of Mabini Legaspi, which documents were substituted on the
same occasion with xerox copies (Exh. 1 and 2) also marked as Exhibits 10-C and 10-D, respectively,
after a comparison with the duplicate originals. Legaspi also presented the originals of the receipts of
payment she made to the Bureau of Lands, which were substituted with xerox copies (Exhs. 7, 7-A, 7-B
and 7-C, also marked as Exhibit 10-E, 10-F 10-G and 10-H) after comparison with the original. She
(Mabini) also testified on the sale of the lot in favor of Antenor Virata on December 6, 1957, presenting
as proof thereof, the duplicate or carbon original of the Absolute Deed of Sale of Agricultural Land, which
was likewise, substituted with xerox copies (Exhs. 6 to 6-F, inclusive, also marked Exh. 11).

Mabini Legaspi testified that the originals of Exhibits 1 and 2 got lost. She said she placed the
documents on the table in her house after returning from the NBI investigation, thinking "all the while that
those documents will be useless because I had my property sold." (Tsn., p. 17, December 19, 1984).
She denied having sold the land to Julian Peñaranda, nor having waived her right over the land in his
favor (tsn., p. 12, March 18, 1985). (pp. 113-116, Rollo).

On June 15, 1985, the trial court rendered its decision, the dispositive portion of which reads:

WHEREFORE, by preponderance of evidence, judgment is hereby rendered for defendant Virata and
against the plaintiff, to wit:

a. Dismissing the complaint which states no cause of action;

b. Recognizing that defendant Virata is the true and lawful owner of the land covered by Transfer
Certificate of Title No. (T-11520) RT 1660 of the Register of Deeds of the Province of Cavite and holding
that the same is valid;
c. Declaring that Transfer Certificate of Title No. T-80889 in the name of plaintiff, the Solid State Multi
Products Corporation is null and void and of no force and effect and is, therefore, ordered cancelled;

d. Sentencing the plaintiff to pay the costs of the proceeding.

SO ORDERED. (p. 70, Rollo).

Not satisfied with the decision of the trial court, the petitioner appealed to the Court of Appeals. On July 13,
1987, the respondent appellate court rendered its decision affirming the decision of the trial court.

Hence, this petition was filed with the petitioner assigning the following errors:

THE RESPONDENT COURT GROSSLY ERRED WHEN IT IGNORED THE BASIC CONSIDERATION
THAT THE CONTESTED PROPERTY CAME FROM THE FRIAR LANDS ESTATE THE DISPOSITION
OF WHICH IS GOVERNED BY SPECIAL LAWS SPECIFYING THE REQUIREMENTS FOR ITS
ACQUISITION FROM THE GOVERNMENT THROUGH SALE, WHICH LAW AND SPECIAL
REQUIREMENTS SHOULD SERVE AS THE MEASURE AGAINST WHICH THE EVIDENCE OF THE
PARTIES TO THIS CASE SHOULD BE WEIGHED, SUCH GROSS ERROR LEADING THE
APPELLATE COURT TO—

(A) ERRONEOUSLY INFER THE EXISTENCE AND/OR DUE ISSUANCE OF THE SUPPOSED
TCT NO. A-2188 (IN THE NAME OF PRIVATE RESPONDENTS PREDECESSOR-IN
INTEREST), FROM DOCUMENTS THAT CAME AFTER WERE BASED ON SUCH TCT NO. A-
2188, CLEARLY BEGGING THE ISSUE WHICH IS PRECISELY WHETHER OR NOT THE
TRANSFER CERTIFICATE OF TITLE WAS IN FACT ISSUED IN COMPLIANCE WITH THE
FRIAR LANDS ACT AND CA-32 TO COVER THE PROPERTY IN QUESTION;

(B) ERRONEOUSLY BASE ITS DECISION IN FAVOR OF PRIVATE RESPONDENT ON TCTs


ISSUED BY THE REGISTER OF DEEDS INSPITE OF THE FACT THAT IT IS THE BUREAU
OF LANDS UNDER THE DIRECTION OF THE SECRETARY OF AGRICULTURE AND
COMMERCE (NATURAL RESOURCES) WHICH DISPOSES FRIAR LANDS AND NOT THE
REGISTER OF DEEDS WHOSE RECORDS CAN BE NO BETTER THAN THE RIGHT IT HAS
REGISTERED;

(C) ERRONEOUSLY DISREGARD THE PATENT INADMISSIBILITY OF THE DOCUMENTARY


EVIDENCE OFFERED BY THE PRIVATE RESPONDENT THE ORIGINALS OF WHICH WERE
NEVER PRESENTED BEFORE THE TRIAL COURT;

(D) ERRONEOUSLY IGNORE THE LACK OF PROBATIVE VALUE OF SUCH DOCUMENTARY


EVIDENCE SUCH LACK OF PROBATIVE VALUE BEING PATENT ON THE FACE OF SUCH
DOCUMENT;

(E) ERRONEOUSLY IGNORE THE VERITY THAT THE DOCUMENTARY EVIDENCE COULD
SUPPORT NO MORE THAN THE FACT THAT THE RESPONDENTS PREDECESSOR-IN-
INTEREST HAD MERELY A QUESTIONABLE INCHOATE AND INCOMPLETE RIGHT TO
ACQUIRE THE PROPERTY IN QUESTION, WHICH QUESTIONABLE INCHOATE AND IN
FACT UNCOMPLETED RIGHT CANNOT PREVAIL OVER THE TITLE OF PETITIONER'S
PREDECESSOR IN INTEREST WHO WAS THE ACTUAL POSSESSOR THAT APPLIED FOR
THE PURCHASE OF THE LAND EVERY NEEDED STEP FOR THE PURCHASE HAVING
BEEN PASSED UPON AND RECORDED BY THE BUREAU OF LANDS WHOSE RECORDS
SHOW ONE AND ONLY TITLE ISSUED OVER THE LAND, THAT IS, THE TITLE OF THE
PETITIONER'S PREDECESSOR-IN-INTEREST (pp. 20, 22, Rollo)

We find the petition impressed with merit.

Since the assigned errors were interrelated, it would be well for this Court to discuss them jointly.

Petitioner does not question the factual findings made by the respondent appellate court and supported
by the records (p. 22, Rollo). It does not however accept the legal conclusion made by the appellate
court and trial court that the registered title of private respondent to the land should prevail over its own
title.
Petitioner contends that Act No. 1120, otherwise known as the Friar Lands Act provides the procedure
for the sale and disposition of the friar lands to private persons; that pursuant thereto, the acquisition by
petitioner's predecessor-in-interest Julian Peñaranda of the disputed Lot 7449, which was formerly part
of the friar lands estate, was in compliance with all legal requisites laid down in Act No. 1120, for the
validity of the sale by the government in favor of Peñaranda of such friar lands.

It also argues that the sale of Lot No. 7449 to respondent's predecessor, Mabini Legaspi, and the
issuance of a certificate of title in her favor was in violation of the Friar Lands Act as there was no
required approval by the Secretary of Agriculture and Natural Resources.

There is no dispute here that the land involved in this case is a friar land and that the laws which are
applicable are Act No. 1120, know as the Friar Lands Act, providing for the administration and temporary
leasing and sale of certain haciendas and parcels of land, commonly known as friar lands, and
Commonwealth Act No. 32 dated September 15, 1936 as amended by Commonwealth Act No. 316
dated June 9, 1938, which provided for the subdivision and sale of all the portions of the friar lands
estated remaining undisposed of.

Sec. 12 of Act No. 1120 provides in part:

. . . the Chief of the Bureau of Public Lands shall give the said settler and occupant a certificate
which shall set forth in detail that the Government has agreed to sell to such settler and occupant
the amount of land so held by him at the price so fixed payable as provided in this Act at the
Office of the Chief of the Bureau of Public Lands . . . and that upon the payment of the final
installment together with all accrued interest the Government will convey to such settler and
occupant the said land so held by him by proper instrument of conveyance, which shall be issued
and become effective in the manner provided in section one hundred and twenty two of the Land
Registration Act.

Also, Sec. 18 of the same Act provides:

No lease or sale made by the Chief of the Bureau of Public Lands under the provisions of this Act
shall be valid until approved by the Secretary of the Interior. (Emphasis ours)

Similarly, Sec. 2 of C.A. No. 32, as amended by C.A. No. 316 provides in part:

. . . The persons who, at the time of the subdivision survey are actual and bona fide occupants of
any portion of the Friar Lands Estates, not exceeding ten hectares, shall be given preference to
purchase the portion occupied at a private sale and at a price to be fixed in such case, by the
Director of Lands, subject to the approval of the Secretary of Agriculture and Commerce, after
taking into consideration its location, quality, and any other circumstances as may affect its
value, the provisions of section twelve of Act Numbered Eleven hundred and twenty, as
amended, to the contrary, . . . (Emphasis ours)

It is clear from the foregoing provisions that the friar lands were purchased by the government for sale to actual
settlers and occupants at the time said lands are acquired by the government. The Bureau of Lands shall first
issue a certificate stating therein that the government has agreed to sell the land to such settler or occupant. The
latter then shall accept the certificate and agree to pay the purchase price so fixed and in the installments and at
the interest specified in the certificate.

The conveyance executed in favor of a buyer or purchaser, or the so called certificate of sale, is a conveyance of
the ownership of the property, subject only to the resolutory condition that the sale may be cancelled if the price
agreed upon is not paid for in full. The purchaser becomes the owner upon the issuance of the certificate of sale
in his favorsubject only to the cancellation thereof in case the price agreed upon is not paid (Pugeda vs. Trias,
No. L-16925, March 31, 1962, 4 SCRA 849.)

Upon the payment of the final installment together with all accrued interests, the government shall then issue a
final deed of conveyance in favor of the purchaser. However, the sale of such friar lands shall be valid only if
approved by the Secretary of Interior as provided in Act No. 1120. Later laws, however, required that the sale
shall be approved by the Secretary of Agriculture and Commerce. In short, the approval by the Secretary of
Agriculture and Commerce is indispensable for the validity of the sale.
It is undisputed that petitioner's predecessor, Julian Peñaranda was the actual occupant of Lot 7449 when he
filed his application to purchase the said lot on November 22, 1968; that on December 16, 1989, the Secretary of
Agriculture and Natural Resources approved the sale of the lot without auction to Peñaranda; that a sales
contract was executed between the Director of Lands and Peñaranda on February 28, 1969 for a consideration
of P 1,198.00 payable in 10 monthly installments; that upon the full payment of the price, the Undersecretary of
Agriculture and Natural Resources issued the final deed of conveyance of Lot No. 7449 in favor of Peñaranda.
Subsequently, the Register of Deeds of Cavite issued TCT No. 39631 in the name of Peñaranda, and when the
latter sold the land to petitioner, TCT No. 39631 was cancelled and TCT No. T-80889 was issued in favor of the
latter.

Clearly, the purchase of the friar land made by Peñaranda was in compliance with law. The execution of the
sales contract vested the right of ownership in Peñaranda over the land. There is no doubt whatsoever that the
said sale was valid as it was approved by the Secretary of Agriculture and Natural Resources. Hence, the sale
made by Peñaranda in favor of the petitioner transferred the ownership of the land in favor of the latter resulting
in the proper issuance of TCT No. T-80889 in its name.

On the other hand, the antecedents leading to the acquisition of title by respondent Virata are clearly shown in
the records. The latter's predecessor, Mabini Legaspi bought Lot 7449 in a sale by public auction held on May 5,
1943 conducted by the Bureau of Lands and friar lands agent Severino Rivera, and paid the purchase price
thereof in installments in 1943; that on December 12, 1944, the Bureau of Lands sent a letter to the Register of
Deeds of Cavite requesting the issuance of certificates of title to several persons including Mabini Legaspi, in
whose favor TCT A-2188 was issued; that subsequently on December 6, 1957, she sold the disputed land to
respondent Virata, which was evidenced by a deed of sale registered with the Registry of Deeds of Cavite on
December 10, 1957; that on the same date, TCT No. 11520 was issued in the name of Virata. Due to the fire
which gutted the building housing the Registry of Cavite on June 7, 1959, the latter administratively reconstituted
the original of TCT No. 11520 on September 1, 1959, based on the owner's duplicate certificate and renumbered
the same as TCT No. 1120 RT 1660.

Apparently, the sale of the lot to Mabini Legaspi occurred much earlier than the date of acquisition of same lot by
petitioner's predecessor, and the evidence presented by respondent Virata indicates that the latter's predecessor
paid the purchase price of Lot No. 7449 on installments.

Nowhere in the evidence for the respondent or in the records of this case however, would show that a certificate
of sale was ever issued by the Bureau of Lands, which would vest ownership and title over the land in favor of
Mabini Legaspi. The existence of the official receipts showing payment of the price of the land by Legaspi does
not prove that the land was legally conveyed to her without any contract of sale having been executed by the
government in her favor. Viewed from all angles, the acquisition of the lot by Legaspi was highly irregular and
void, and not in compliance with the procedure mandated by law for the sale of friar lands. For one thing, Mabini
Legaspi allegedly purchased the land in a sale at public auction, which procedure is nowhere provided in Act No.
1120 or in C.A. 32, as amended by C.A. 316. The laws expressly state that an actual occupant of the land shall
purchase the lot occupied by him at a private sale and not in a sale at public auction (Sec. 2, C.A. 32 as
amended). Further, neither was there any deed of conveyance issued to Legaspi by the government after the full
payment of the installments on the disputed lot.

Highly significant at this point is the fact that there was neither allegation nor proof that the sale was with the
approval of the Secretary of Agriculture and Commerce. The absence of such approval made the supposed sale
null and void ab initio. Without the certificate of sale to prove the transfer of the ownership of the land from the
government Mabini Legaspi and without the required approval of the sale by the Secretary of Agriculture and
Commerce, We find that Mabini Legaspi did not in any manner acquire ownership over the land in 1943. The
ownership or title over the friar land, specifically Lot No. 7449 remained in the government until Peñaranda,
petitioners predecessor, lawfully acquired ownership over the same lot on February 28, 1969 by virtue of a sales
contract executed in his favor.

The issuance of a certificate of title in favor of Mabini Legaspi did not vest ownership upon her over the land nor
did it validate the alleged purchase of the lot, which is null and void. Time and again, it has been held that
registration does not vest title. It is merely evidence of such title over a particular property. Our land registration
laws do not give the holder any better title than that what he actually has (De man et al. vs. Court of Appeals,
G.R. L- 46935 December 21, 1987, 156 SCRA 701; Cruz vs. Cabana, No. 56232, June 22, 1984, 129 SCRA
656).

Although a period of one year has already expired from the time the certificate of title was issued to Mabini
Legaspi pursuant to the alleged sale from the government, said title does not become incontrovertible but is null
and void since the acquisition of the property was in violation of law. Further, the petitioner herein is in
possession of the land in dispute. Hence, its action to quiet title is imprescriptible (Coronel vs. Intermediate
Appellate Court, No. 70191, October 29, 1987, 155 SCRA 270). In one case, this Court ruled that an adverse
1âw phi 1

claimant of a registered land who is in possession thereof for a long period of time is not barred from bringing an
action for reconveyance which in effect seeks to quiet title to the property against a registered owner relying
upon a Torrens title which was illegally or wrongfully acquired (Caragay-Layno vs. Court of Appeals, 133 SCRA
718). In actions for reconveyance of property predicated on the fact that the conveyance complained of was
void ab initio, a claim of prescription of the action would be unavailing (Corpus, et al. vs. Beltran, et al., 97 Phil.
722; Agne vs. Director of Lands, G.R. L-40399, February 6, 1990, 181 SCRA 793). Being null and void, the sale
made to Mabini Legaspi and the subsequent titles issued pursuant thereto produced no legal effects
whatsoever. Quod nullum est nullum producit affectum (Agnes vs. Director of Lands, supra). There being no title
to the land that Mabini Legaspi acquired from the government, it follows that no title to the same land could be
conveyed by the former to respondent Virata.

Even assuming that respondent Virata was a purchaser in good faith and for value, the law is, as between two
persons both of whom are in good faith and both innocent of any negligence, the law must protect and prefer the
lawful holder of registered title over the transferee of a vendor bereft of any transmissible rights (Baltazar vs.
Court of Appeals, G.R. 78728, December 8, 1988, 168 SCRA 354, emphasis ours). Further if a person
happened to obtain property by mistake or to the prejudice of another with or without bad faith, the certificate of
title which may have been issued to him under the circumstances may and should be cancelled or corrected.

Our unavoidable conclusion in this case is that the title of petitioner under the Torrens land system should be
upheld considering that no previous valid title to the same land existed.

ACCORDINGLY, the petition is hereby GRANTED and the decision of the respondent Court of Appeals dated
July 13, 1987 is hereby REVERSED. Petitioner Solid State Multi-Products Corporation is hereby declared the
true owner of the land covered by Transfer Certificate of Title No. T-80889. The Register of Deeds of Cavite is
ordered to cancer transfer Certificate of Title No. (T-11520) RT 1660 in the name of respondent Antenor Virata.

SO ORDERED.

Narvasa, Cruz, Gancayco and Griño-Aquino, JJ., concur.

The Lawphil Project - Arellano Law Foundation

Republic of the Philippines


SUPREME COURT
Manila

FIRST DIVISION

G.R. No. 121658 March 27, 1998

NESTOR LACSAMANA, * EL DORADO PLANTATION, INC., LBJ DEVELOPMENT CORPORATION and


CONRAD C. LEVISTE, petitioners,
vs.
COURT OF APPEALS, ESTER GAITOS ROBLES, LEON GAITOS ROBLES and DULCE CLARA
ROBLES, respondents

BELLOSILLO, J.:

This is a petition to review the decision of the Court of Appeals affirming that of the Regional Trial Court in an
action by private respondents against petitioners for reconveyance and cancellation of certificates of title. 1
Leon Robles and his niece Amparo Robles were the registered co-owners in equal shares of Lot No. 13535, a
56,864-square meter piece of land situated in Bo. Inosloban, Lipa City, covered by OCT No. 0-363-R issued on
3 March 1965 by the local Register of Deeds.2

On 26 April 1965 Amparo sold her one-half (1/2) undivided share to El Dorado Corporation (EL DORADO).
Consequently, OCT No. 0-363-R was cancelled and TCT No. 15261 issued in the names of EL DORADO and
Leon Robles as co-owners.

On 24 September 1969 Leon Robles, who was then residing in San Francisco, California, U.S.A., died survived
by his wife Ester Gaitos Robles and children Leon Jr. and Dulce Clara as his sole heirs. However, in a Deed of
Absolute Sale dated 22 July 1971, Leon Robles purportedly with the marital consent of his wife Ester sold his
one-half (1/2) undivided share in Lot No. 13535 to one Nestor Lacsamana. Nine (9) years later, or on 22 January
1980, the Deed of Absolute Sale was registered in the Registry of Deeds of Lipa City by one Philip Neri
Gonzales. Consequently, TCT No. 15261 in the names of EL DORADO and Leon Robles was cancelled and
TCT No. 46245 issued in the names of EL DORADO and Nestor Lacsamana.

On 22 July 1980, Nestor Lacsamana purportedly sold his one-half (1/2) share to LBJ Development Corporation
(LBJ) represented by its President, Conrad C. Leviste. A certain Rolando Lumanglas registered the deed of sale
in the Registry of Deeds resulting in the cancellation of TCT No. 46245 and the issuance of TCT No. 47475 in
the names of EL DORADO and LBJ.

On 26 January 1982 LBJ became the owner of the entire Lot No. 13535 when EL DORADO sold its one-half
share for P30,000.00. Consequently, TCT No. 47475 was cancelled and TCT Nos. 49915 to 49990 were issued
in the name of LBJ conformably with an approved consolidated subdivision plan.

On 11 November 1983 Ester, Leon Jr. and Dulce Clara, all surnamed Robles, as surviving heirs of Leon Robles,
filed a complaint with the Regional Trial Court of Lipa City3 against Nestor Lacsamana, EL DORADO, LBJ and
Conrad C. Leviste for the recovery of the one-half undivided share of Leon in Lot No. 13535 and the cancellation
of TCT Nos. 49915 to 49990. The complaint alleged that the signature of Leon Robles in the Deed of Absolute
Sale dated 22 July 1971 in favor of defendant Nestor Lacsamana was a forgery as Leon was already dead at the
time of the alleged sale; that defendant LBJ, a corporation owned and controlled by the Leviste family with
defendant Conrad C. Leviste as its President, was not a buyer in good faith since facts existed which should
have put it on guard as to defects in the title of Lacsamana; and, that defendant EL DORADO, likewise owned
and controlled by the Leviste family with Conrad C. Leviste as President, participated in the fraud by
surrendering the only co-owner's duplicate copy of TCT No. 15261 in its name and that of Leon Robles thus
paving the way for the issuance of a new TCT in the name of Nestor Lacsamana as co-owner in place of Leon
Robles.

Defendants LBJ and EL DORADO invoked the defense of prescription and/or laches and alleged that LBJ was a
buyer in good faith and for value. However, their defenses were rejected by the court a quo which ruled that the
complaint filed by plaintiffs on 11 November 1983, i.e., almost three (3) years and nine (9) months from the date
of registration of the questioned Deed of Absolute Sale on 22 January 1980 was timely filed since actions for
reconveyance of real property on ground of fraud may be filed within four (4) years from its discovery.

As regards the second issue, the trial court ruled that LBJ was not an innocent purchaser because facts existed
which should have put it on inquiry as to possible defects in the title of Lacsamana, e.g., while the questioned
Deed of Absolute Sale purportedly executed in Manila stated that Leon and Ester Robles personally appeared
before Notary Public Engracio S. Concepcion and presented their Residence Certificates issued in Makati, the
same document showed that the spouses were residing at 695 22nd Avenue, San Francisco, California, U.S.A.,
and did not indicate that they were temporarily staying in the Philippines at the time of its execution; and, the
Deed of Absolute Sale was registered in the Office of the Register of Deeds of Lipa City only in 1980, or after the
lapse of more than eight (8) years. Additionally, the court found that Leon Robles and Roman Payumo, one of
the supposed instrumental witnesses to the deed of sale, were already dead at the time of the execution of the
sale;4 that Nestor Lacsamana was a non-existent person;5 and, that EL DORADO, Leon Robles' co-owner at the
time of the alleged sale in favor of Lacsamana, and LBJ, to whom Lacsamana purportedly sold Leon's one-half
share, were both corporations owned and controlled by the Leviste family with defendant Conrad C. Leviste as
its common President.6 Thus, on the basis of the foregoing, the court a quo rendered judgment in favor of
plaintiffs7 the dispositive portion of which read —

WHEREFORE, the Court holds that defendant LBJ Development Corporation is not a purchaser
in good faith. Accordingly, the Court hereby orders the Register of Deeds of Lipa City to cancel
all the present titles covering the parcel of land formerly covered by Transfer Certificate of Title
No. T- 47475 in the names of defendants El Dorado Plantation, Inc., and LBJ Development
Corporation and to reinstate Transfer Certificate of Title No. T-15261 in the names of Leon
Robles and El Dorado Plantation, Inc.

In the event that reconveyance of the property involved is not possible due to any subsequent
transfer of the property to third persons or persons not parties to this suit, the Court hereby
orders defendant LBJ Development Corporation to pay plaintiffs the present fair market value of
plaintiffs' one-half (1/2) share in the property, which fair market value shall be determined by an
appraiser to be agreed upon by the parties, and in case of disagreement the parties shall
recommend to the Court the appraisers of their choice who shall appraise the property jointly and
submit the corresponding report for approval or resolution of the Court.

The Court further orders defendants LBJ Development Corporation, El Dorado Plantation, Inc.,
and Conrad Leviste to pay jointly and severally plaintiffs attorney's fees in the sum of Twenty
Thousand Pesos (P20,000.00), since the latter was compelled to institute this case to protect
their interests, and to pay the costs of suit.8

The Court of Appeals affirmed the findings and conclusions of the trial court on appeal by EL DORADO, LBJ and
Conrad C. Leviste.9 They differed only insofar as the issue of prescription was concerned. Instead of the period
of four (4) years for filing actions for reconveyance on ground of fraud cited by the trial court, respondent
appellate court ruled that the present action had not yet prescribed since actions to declare the nullity of a void
contract was imprescriptible.

Petitioners insist that the action instituted by private respondents has already prescribed, but even if it has not, it
is already barred by laches and reiterate their position that LBJ was a buyer in good faith.

We affirm the decision of respondent appellate court. On the issue of prescription, we agree that the present
action has not yet prescribed because the right to file an action for reconveyance on the ground that the
certificate of title was obtained by means of a fictitious deed of sale is virtually an action for the declaration of its
nullity, which action does not prescribe. 10 Hence, the fact that the alleged sale took place in 1971 and the action
to have it declared void or inexistent was filed in 1983 is of no moment. 11 To reiterate, an action for
reconveyance based on a void contract is imprescriptible. 12

Neither can the defense of laches be sustained. We cannot see how private respondents may be considered
guilty of laches. It should be noted that private respondents, upon learning that the relevant portion of Lot No.
13535 was no longer registered in the name of Leon, immediately caused an investigation to be made for the
purpose of finding out the author and the circumstances behind the execution of the fictitious 1971 Deed of
Absolute Sale. Thus, in less than two (2) months after it was discovered by the National Bureau of Investigation
that Nestor Lacsamana was in fact a fictitious/non-existent person, 13 private respondents through their attorney-
in-fact Petronilo Gaitos instituted on 11 November 1983, the present action i.e., barely three (3) years and nine
(9) months after the fraudulent registration on 22 January 1980. Thus, it is said, the concept of laches is not
concerned with the lapse of time but only with the effect of unreasonable lapse.14

We are urged by petitioners to rule that LBJ was a buyer in good faith. We cannot. Besides being a factual
finding shared by both the trial court and the Court of Appeals that it was not, and supported by the evidence on
record, it is conclusive upon us.15

Three (3) reasons, at least, militate against petitioner LBJ's claim of good faith. First, Conrad C. Leviste,
President of LBJ, claimed that the company came to know of the disputed property through its driver Jovito
Lacsamana who allegedly introduced his nephew Nestor Lacsamana as its owner who was interested in selling
his share in the property. On this point, without necessarily underestimating the capacity of driver Jovito's
nephew Nestor to own one-half of a 5.6-hectare parcel of land, Leviste's curiosity should have been aroused just
the same as to how Nestor came to own his portion of the property. The records fail to disclose any inquiry,
formal or informal, to determine how Nestor acquired his portion. Second, Nestor Lacsamana allegedly
presented a copy of TCT No. 46425 in his name and that of EL DORADO as co-owners. However, it is a fact
that, as testified to by Register of Deeds Antonio Escutin, the only co-owner's duplicate copy of TCT No. 46425
was issued to EL DORADO, LBJ's sister company. 16 Third, the fictitious 1971 Deed of Absolute Sale in favor of
Nestor Lacsamana, the root of the issuance of TCT No. 46245, was only registered more than eight (8) years
later.17

Given the attendant circumstances, in addition to the defects of the 1971 Deed of Absolute Sale found by the
trial court and affirmed by respondent Court of Appeals, petitioner LBJ cannot claim to be a buyer in good faith.
But even if we concede that petitioner LBJ was innocent of the fraud perpetrated against private respondents,
the records abound with facts which should have impelled it to investigate deeper into the title of Lacsamana,
more so when such effort would not have entailed additional hardship, nay, would have been quite easy, since
the titled co-owner of Lacsamana is LBJ's own sister company EL DORADO.

The rule that a person dealing with registered land has the right to rely on the Torrens title will not apply when
such person has actual knowledge of facts that would impel a reasonably cautious man to make an inquiry. 18 He
cannot close his eyes to such facts and later claim that he acted in good faith. 19 Thus, LBJ is not entitled to the
mantle of protection accorded by the Torrens System of registration which protects only the title holder in good
faith. It has never been created as a shield to fraud. 20

WHEREFORE, premises considered, the petition is DENIED. The questioned decision of respondent Court of
Appeals dated 20 July 1995 in CA-G.R. CV No. 38246 affirming that of the Regional Trial Court of Lipa City
dated 8 April 1992 is AFFIRMED, with costs against petitioners.

SO ORDERED.

Davide, Jr., Panganiban and Quisumbing, JJ., concur.

Vitug, J., concurs in the result.

Footnotes

* Nestor Lacsamana was found by the National Bureau of Investigation to be a fictitious


person. See Resolution dated 15 December 1987 of then Undersecretary of Justice Silvestre
Bello III (Exh. "P-1"), pp. 188-193, original records, Civil Case No. V-359, RTC-Br. XIII, Lipa City.

1 Decision penned by Justice Angelina Sandoval-Gutierrez with Justices Emeterio C. Cui and
Conrado M. Vasquez, Jr., concurring; Rollo, pp. 23-36.

2 Exh. "E," Original Records, p. 33.

3 Docketed as Civil Case No. V-359.

4 Certificate of Death issued by the Department of Public Health, California, U.S.A., marked Exh.
"H-2;" id., p. 38.

5 Resolution dated 15 December 1987 issued by them Undersecretary of Justice Silvestre Bello
III (Exh. "P-1").

6 TSN, 1 August 1991, p. 14; Cross-examination of defendant Conrad C. Leviste, one of


petitioners herein.

7 Penned by Judge Ireneo V. Mendoza, RTC-Lipa City, Br. 13; Original Records, 450-457.

8 Id., p. 457.

9 See Note 1.

10 Art. 1410, Civil Code of the Philippines.

11 Yanas v. Acaylar, G.R. No. 54538, 25 April 1985, 136 SCRA 52, 56.

12 Casipit v. Court of Appeals, G.R. No. 96829, 9 December 1991, 204 SCRA 684, 693; Castillo
v. Madrigal, G.R. No. 62650, 27 June 1991, 198 SCRA 556, 561-562; Baranda v. Baranda, G.R.
No. 73275, 20 May 1987, 150 SCRA 59, 73.

13 The NBI reported on its investigation on 13 September 1983; Original Records, pp. 186-187.

14 Palmera v. Civil Service Commission, G.R. No. 110168, 4 August 1994, 235 SCRA 87, 94.
15 Paylago v. Jarabe, No. L-20046, 27 March 1968, 22 SCRA 1247, 1251-1252.

16 TSN, 29 August 1991, pp. 18-19.

17 See Note 11; Office of the Court Administrator v. Yambao, A.M. No. P-91-593, 7 April 1993,
221 SCRA 77, 86.

18 Santos v. Court of Appeals, G.R. No. 90380, 13 September 1990, 189 SCRA 550, 560.

19 De la Cruz v. Intermediate Appellate Court, G.R. No. 72981, 29 January 1988, 157 SCRA
660, 671; Republic v. Court of Appeals, No. L-40402, 16 March 1987, 148 SCRA 480, 492;
Paylago v. Jarabe, No. L-20046, 27 March 1968, 22 SCRA 1247, 1252; Mañacop, Jr. v. Cansino,
No. L-13971, 27 February 1961, 1 SCRA 572, 576.

20 Balangcad v. Justices of the Court of Appeals, G.R. No. 84888, 12 February 1992, 206 SCRA
169, 175; Claudel v. Court of Appeals, G.R. No. 85240, 12 July 1991, 199 SCRA 113, 112;
Bornales v. Intermediate Appellate Court, G.R. No. 75336, 18 October 1988, 166 SCRA 519,
524-525; Adille v. Court of Appeals, No. L-44546, 29 January 1988, 157 SCRA 455, 462;
Director of Lands v. Abanilla, No. L-26324, 31 August 1983, 124 SCRA 358, 368; Vda. de
Carvajal v. Coronado, No. L-23250, 12 November 1966, 18 SCRA 635, 642.

The Lawphil Project - Arellano Law Foundation

Republic of the Philippines


SUPREME COURT
Manila

EN BANC

G.R. No. L-11285 May 16, 1958

VICENTE SAPTO, LAUREANA SAPTO and DORA (BAGONA), plaintiffs-appellants,


vs.
APOLONIO FABIANA, defendant-appellee.

Rodolfo A. Ta-Asan for appellants.


Napoleon B. Nidea for appellee.

REYES, J.B.L., J.:

Sapto (Moro), now deceased was the registered owner of a parcel of land located in Alambre, Toril, Davao City,
under Transfer Certificate of Title No. T-5701 (0-28) of the Register of Deeds of Davao City. When Sapto died,
he left his children Samuel, Constancio, and Ramon as heirs of the property in question. Ramon pre-deceased
his two brothers, leaving no, other heirs. On June 6, 1931, Samuel and Constancio Sapto executed a deed of
sale of a portion of four hectares of the land aforementioned if favor of defendant Apolonio Fabiana, in
consideration of the amount of P245.00. The sale was duly approved by the Provincial Governor of Davao, but
was never registered. Possession of the land conveyed was, however, transferred to Fabiana and the latter has
been in the possession thereof 1931 up to the present.

Thereafter, Constancio Sapto died without any issue, Samuel Sapto married one Dora (Bagoba) and upon his
death was survived by his widow and two children, Laureana and Vicente Sapto. On October 19, 1954, the
widow and children of Samuel Sapto filed this action in the Court of First Instance of Davao for the recovery of
the parcel of land sold by their predecessors to defendant Apolonio Fabiana in 1931. After trial, the lower court
held that although the sale between Samuel and Constancio Sapto and defendant in 1931 was never registered,
it was valid and binding upon the parties and the vendors heirs, and ordered the plaintiffs to execute the
necessary deed of conveyance in defendant's favor and its annotation in the certificate of title. From this
judgment, plaintiffs appealed to this Court.
The issue is whether the deed of sale executed by appellants' predecessors in favor of the appellee over the
land in question, although never registered, is valid and binding on appellants and operated to convey title and
ownership to the appellee.

The question is not new. In a long line of cases already decided by this Court, we have consistently interpreted
sec. 50 of the Land Registration Act providing that "no deed . . . 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 clerk or register
of deeds to make registration" in the sense that as between the parties to a sale registration is not necessary to
make it valid and effective, for actual notice is equivalent to registration (Obras Pias vs. Devera Ignacio, 17 Phil.,
45; Gustilo vs. Maravilla, 48 Phil., 442; Quimson vs. Suarez, 45 Phil., 901; Winkleman vs. Veluz, 43 Phil., 609;
Galasinao vs. Austria, 51 Off. Gaz. No. 6, 2874; Carillo vs. Salak, 91 Phil., 265). "The peculiar force of a title
under Act No. 492", we said in Medina vs. Imaz and Warner Barnes and Co., 27 Phil., 314 (syllabus), "is
exhibited only when the purchaser has sold to innocent third parties the land described in the conveyance.
Generally speaking, as between vendor and vendee, the same rights and remedies exist in relation to land not
so registered". In Galanza vs. Nuesa, 95 Phil., 713, we held that "registration is intended to protect the buyer
against claims of third persons arising from subsequent alienations by the vendor, and is certainly not necessary
to give effect as between the parties to their deed of sale". And in the recent case of Casica vs. Villaseca, G.R.
No. L-9590, April 30, 1957, we reiterated that "the purpose of registration is merely to notify and protect the
interests of strangers to a given transaction, who may be ignorant thereof, and the non-registration of the deed
evidencing said transaction does not relieve the parties thereto of their obligations thereunder".

No right of innocent third persons or subsequent transferees of the property in question is involved herein. The
property has remained and still is in the possession of the vendee of appellants' predecessors, herein appellee.
It is, therefore, clear that the conveyance between appellee and his vendors and valid and binding upon the
latter, and is equally binding and effective against the heirs of the vendors, herein appellants. To hold otherwise
would make of the Torrens system a shield for the commission of fraud by the vendors or his heirs (Gustilo vs.
Maravilla, 48 Phil., 442), who would then be able to reconvey the same property to other persons.

Appellants cite several cases wherein we have held that under the Torrens system, registration is the operative
act that gives validity to the transfer or creates a lien upon the land. The authorities cited refer, however, to
cases involving conflicting rights over registered property and those of innocent transferees who relied on the
clean titles of the properties in question. These cases have, therefore, no bearing on the instant case, where the
appellee has always, remained in the possession of the land in question and no subsequent transfer thereof to
other persons has been made either by appellants or their prodecessors-in-interest.

The appellants aver that it was error to require them to execute a deed of conveyance in favor of the plaintiff,
appellee, and argue that the latter's action to obtain it had long prescribed, twenty years having elapsed since
the original sale. This contention must be overruled, being predicated on the assumption that the reconveyance
is sought by way of performance of the contract of sale entered into in 1931. No enforcement of the contract is in
fact needed, since the delivery of possession of the land sold had consummated the sale and transferred title to
the purchaser, registration of the contract not being indispensable as between the parties. Actually the action for
conveyance was one to quiet title, i.e., to remove the cloud cast upon appellee's ownership by the refusal of the
appellants to recognize the sale made by their predecessors. This action accrued only when appellant, initiated
their suit to recover the land in 1954. Furthermore, it is an established rule of American jurisprudence (made
applicable in this jurisdiction by Art. 480 of the New Civil Code) that actions to quiet title to property in the
possession of the plaintiff are imprescriptible (44 Am. Jur. p. 47; Cooper vs. Rhea, 39 L. R. A. 930; Inland
Empire Land Co. vs. Grant County, 138 Wash. 439, 245 Pac. 14).

The prevailing rule is that the right of a plaintiff to have his title to land quieted, as against one who is
asserting some adverse claim or lien thereon, is not barred while the plaintiff or his grantors remain in
actual possession of the land, claiming to be owners thereof, the reason for this rule being that while the
owner in fee continues liable to an action, proceeding, or suit upon the adverse claim, he has a
continuing right to the aid of a court of equity to ascertain and determine the nature of such claim and its
effect on his title, or to assert any superior equity in his favor. He may wait until his possession is
disturbed or his title is attacked before taking steps to vindicate his right. But the rule that the statute of
limitations is not available as a defense to an action to remove a cloud from title can only be invoked by
a complaint when he is in possession. One who claims property which is in the possession of another
must, it seems, invoke his remedy within the statutory period. (44 Am. Jur., p. 47)

Wherefore, the judgment appealed from is affirmed. Costs against appellants. So ordered.
Paras, C.J., Bengzon, Montemayor, Reyes, A., Bautista Angelo, Labrador, Concepcion, Endencia, and Felix,
JJ.,concur.

The Lawphil Project - Arellano Law Foundation

Republic of the Philippines


SUPREME COURT
Manila

FIRST DIVISION

G.R. No. L-52064 December 26, 1984

JULIANA CARAGAY-LAYNO, Assisted by Her Husband, BENITO LAYNO, petitioner,


vs.
HONORABLE COURT OF APPEALS and SALVADOR ESTRADA as Administrator of the Estate of the
Deceased, MARIANO DE VERA, respondents.

Pedro Peralta for petitioner.

Andres T. Gutierrez for private respondent.

MELENCIO-HERRERA, J.:

Respondent Appellate Court, then the Court of Appeal, affirmed in toto the judgment of the former Court of First
Instance of Pangasinan, Branch III, at Dagupan adjudging private respondent entitled to recover possession of a
parcel of land and ordering petitioners, as defendants below, to vacate the premises. Petitioners, as paupers,
now seek a reversal of that judgment.

It was established by a relocation survey that the Disputed Portion is a 3,732 square-meter-area of a bigger
parcel of sugar and coconut land (Lot No. 1, Psu-24206 [Case No. 44, GLRO Rec. No. 117]), with a total area of
8,752 square meters, situated at Calasiao, Pangasinan. The entire parcel is covered by Original Certificate of
Title No. 63, and includes the adjoining Lots 2 and 3, issued on 11 September 1947 in the name of Mariano M.
DE VERA, who died in 1951 without issue. His intestate estate was administered first by his widow and later by
her nephew, respondent Salvador Estrada.

Petitioner, JULIANA Caragay, and the decedent, Mariano DE VERA, were first cousins, "both orphans, who lived
together under one roof in the care of a common aunt."

As Administratrix, DE VERA's widow filed in Special Proceedings No. 4058 of the former Court of First Instance
of Pangasinan, Branch III, an Inventory of all properties of the deceased, which included "a parcel of land in the
poblacion of Calasiao, Pangasinan, containing an area of 5,417 square meters, more or less, and covered by
Tax Declaration No. 12664."

Because of the discrepancy in area mentioned in the Inventory as 5,147 square meters (as filed by the widow),
and that in the title as 8,752 square meters, ESTRADA repaired to the Disputed Property and found that the
northwestern portion, subsequently surveyed to be 3,732 square meters, was occupied by petitioner-spouses
Juliana Caragay Layno and Benito Layno. ESTRADA demanded that they vacate the Disputed Portion since it
was titled in the name of the deceased DE VERA, but petitioners refused claiming that the land belonged to
them and, before them, to JULIANA's father Juan Caragay.

ESTRADA then instituted suit against JULIANA for the recovery of the Disputed Portion (Civil Case No. D-2007),
which she resisted, mainly on the ground that the Disputed Portion had been fraudulently or mistakenly included
in OCT No. 63, so that an implied or constructive trust existed in her favor. She then counterclaimed for
reconveyance of property in the sense that title be issued in her favor.
After hearing, the Trial Court rendered judgment ordering JULIANA to vacate the Disputed Portion.

On appeal respondent Appellate Court affirmed the Decision in toto.

Before us, JULIANA takes issue with the following finding of respondent Court:

Although Section 102 of Act 496 allows a Petition to compel a Trustee to reconvey a registered
land to the cestui que trust (Severino vs. Severino, 44 Phil 343; Escobar vs. Locsin, 74 PhiL 86)
this remedy is no longer available to Juliana Caragay. Mariano de Vera's land, Lot 1, Psu-24206,
was registered on September 11, 1947 (Exhibit"C") and it was only on March 28, 1967 when the
defendants filed their original answer that Caragay sought the reconveyance to her of the 3,732
square meters. Thus, her claim for reconveyance based on implied or constructive trust has
prescribed after 10 years (Banaga vs. Soler, L-15717, June 30,1961; J.M. Tuason & Co. vs.
Magdangal, L-15539, Jan. 30, 1962; Alzona vs. Capunitan, 4 SCRA 450). In other words,
Mariano de Vera's Original Certificate of Title No. 63 (Exhibit "C") has become indefeasible. 1

We are constrained to reverse.

The evidence discloses that the Disputed Portion was originally possessed openly, continuously and
uninterruptedly in the concept of an owner by Juan Caragay, the deceased father of JULIANA, and had been
declared in his name under Tax Declaration No. 28694 beginning with the year 1921 (Exhibit "2-C"), later
revised by Tax Declaration No. 2298 in 1951 (Exhibit "2-B"). Upon the demise of her father in 1914, JULIANA
adjudicated the property to herself as his sole heir in 1958 (Exhibit "4"), and declared it in her name under Tax
Declaration No. 22522 beginning with the year 1959 (Exhibit "2-A"), later cancelled by TD No. 3539 in 1966
(Exhibit "2"). Realty taxes were also religiously paid from 1938 to 1972 (Exhibits "3-A" to "3-H"). Tacking the
previous possession of her father to her own, they had been in actual open, continuous and uninterrupted
possession in the concept of owner for about forty five (45) years, until said possession was disturbed in 1966
when ESTRADA informed JULIANA that the Disputed Portion was registered in Mariano DE VERA's name.

To substantiate her claim of fraud in the inclusion of the Disputed Portion in OCT No. 63, JULIANA, an
unlettered woman, declared that during his lifetime, DE VERA, her first cousin, and whom she regarded as a
father as he was much older, borrowed from her the Tax Declaration of her land purportedly to be used as
collateral for his loan and sugar quota application; that relying on her cousin's assurances, she acceded to his
request and was made to sign some documents the contents of which she did not even know because of her
ignorance; that she discovered the fraudulent inclusion of the Disputed Portion in OCT No. 63 only in 1966 when
ESTRADA so informed her and sought to eject them.

Of significance is the fact, as disclosed by the evidence, that for twenty (20) years from the date of registration of
title in 1947 up to 1967 when this suit for recovery of possession was instituted, neither the deceased DE VERA
up to the time of his death in 1951, nor his successors-in-interest, had taken steps to possess or lay adverse
claim to the Disputed Portion. They may, therefore be said to be guilty of laches as would effectively derail their
cause of action. Administrator ESTRADA took interest in recovering the said portion only when he noticed the
discrepancy in areas in the Inventory of Property and in the title.

Inasmuch as DE VERA had failed to assert any rights over the Disputed Portion during his lifetime, nor did he
nor his successors-in-interest possess it for a single moment: but that, JULIANA had been in actual, continuous
and open possession thereof to the exclusion of all and sundry, the inescapable inference is, fraud having been
unsubstantiated, that it had been erroneously included in OCT No. 63. The mistake is confirmed by the fact that
deducting 3,732 sq. ms., the area of the Disputed Portion from 8,752 sq. ms., the area of Lot 1 in OCT No. 63,
the difference is 5,020 sq. ms., which closely approximates the area of 5,147 sq. ms., indicated in the Inventory
of Property of DE VERA. In fact, the widow by limiting the area in said Inventory to only 5,147 sq. ms., in effect,
recognized and admitted that the Disputed Portion of 3,132 sq. ms., did not form part of the decedent's estate.

The foregoing conclusion does not necessarily wreak havoc on the indefeasibility of a Torrens title. For, mere
possession of a certificate of title under the Torrens System is not conclusive as to the holder's true ownership of
all the property described therein for he does not by virtue of said certificate alone become the owner of the land
illegally included. 2 A Land Registration Court has no jurisdiction to decree a lot to persons who have never
asserted any right of ownership over it.

... Obviously then, the inclusion of said area in the title of Lot No. 8151 is void and of no effect for
a land registration Court has no jurisdiction to decree a lot to persons who have put no claim in it
and who have never asserted any right of ownership over it. The Land Registration Act as well as
the Cadastral Act protects only the holders of a title in good faith and does not permit its
provisions to be used as a shield for the commission of fraud, or that one should enrich himself at
the expense of another. 3

JULIANA, whose property had been wrongfully registered in the name of another, but which had not yet passed
into the hands of third parties, can properly seek its reconveyance.

The remedy of the landowner whose property has been wrongfully or erroneously registered in
another's name is, after one year from the date of the decree, not to set aside the decree, but,
respecting the decree as incontrovertible and no longer open to review, to bring an ordinary
action in the ordinary court of justice for reconveyance or, if the property has passed into the
hands of an innocent purchaser for value, for damages. 4

Prescription cannot be invoked against JULIANA for the reason that as lawful possessor and owner of the
Disputed Portion, her cause of action for reconveyance which, in effect, seeks to quiet title to the property, falls
within settled jurisprudence that an action to quiet title to property in one's possession is imprescriptible. 5 Her
undisturbed possession over a period of fifty two (52) years gave her a continuing right to seek the aid of a Court
of equity to determine the nature of the adverse claim of a third party and the effect on her own title. 6

Besides, under the circumstances, JULIANA's right to quiet title, to seek reconveyance, and to annul OCT. No.
63 accrued only in 1966 when she was made aware of a claim adverse to her own. It was only then that the
statutory period of prescription may be said to have commenced to run against her, following the pronouncement
in Faja vs. Court of Appeals, supra, a case almost Identical to this one.

... Inasmuch as it is alleged in paragraph 3 of Frial's complaint, that Felipa Faja has been in
possession of the property since 1945 up to the present for a period of 30 years, her cause of
action for reconveyance, which in effect seeks to quiet her title to the property, falls within that
rule. If at all, the period of prescription began to run against Felipa Faja only from the time she
was served with copy of the complaint in 1975 giving her notice that the property she was
occupying was titled in the name of Indalecio Frial. There is settled jurisprudence that one who is
in actual possession of a piece of land claiming to be owner thereof may wait until his possession
is disturbed or his title is attacked before taking steps to vindicate his right, the reason for the rule
being, that his undisturbed possession gives him a continuing right to seek the aid of a court of
equity to ascertain and determine the nature of the adverse claim of a third party and its effect on
his own title, which right can be claimed only by one who is in possession. No better situation can
be conceived at the moment for Us to apply this rule on equity than that of herein petitioners
whose mother, Felipa Faja, was in possession of the litigated property for no less than 30 years
and was suddenly confronted with a claim that the land she had been occupying and cultivating
all these years, was titled in the name of a third person. We hold that in such a situation the right
to quiet title to the property, to seek its reconveyance and annul any certificate of title covering it,
accrued only from the time the one in possession was made aware of a claim adverse to his
own, and it is only then that the statutory period of prescription commences to run against such
possessor.

WHEREFORE, the judgment under review is hereby REVERSED and SET ASIDE, and another one entered
ordering private respondent Salvador Estrada, as Administrator of the Estate of the Deceased, Mariano de Vera,
to cause the segregation of the disputed portion of 3,732 square meters forming part of Lot No. 1, Psu-24206,
Case No. 44, GLRO Rec. No. 117, presently occupied by petitioner Juliana Caragay-Layno, and to reconvey the
same to said petitioner. After the segregation shall have been accomplished, the Register of Deeds of
Pangasinan is hereby ordered to issue a new certificate of title covering said 3,732 sq. m. portion in favor of
petitioner, and another crtificate of title in favor of the Estate of the deceased, Mariano de Vera covering the
remaining portion of 5,0520 square meters. No costs.

SO ORDERED

Teehankee (Chairman), Plana, De la Fuente and Cuevas, * JJ., concur.

Relova and Gutierrez, Jr., JJ., took no part.

Footnotes
1 Rollo, p. 33.

2 Ledesma vs. Municipality of Iloilo, 49 Phil. 769 (1926), cited in Vda. de Recinto vs. Inciong, 77
SCRA 201 (1977).

3 Vda. de Recinto vs. Inciong, supra.

4 Ibid.

5 Sapto, et al. vs. Fabiana, 103 Phil. 683, 687 (1958).

6 Faja vs. Court of Appeals, 75 SCRA 441 (1977).

* Justice Serafin R. Cuevas was designated to sit in the First Division per Special Order No. 307,
dated November 26, 1984.

The Lawphil Project - Arellano Law Foundation

EN BANC
[G.R. No. L-9335. October 31, 1956.]
CONCORDIA MEJIA DE LUCAS, Plaintiff-Appellee, vs. ANDRES GAMPONIA, Defendant-Appellant.

DECISION
LABRADOR, J.:
Appeal from the judgment of the Court of First Instance of Nueva Vizcaya, Honorable Jose de Venecia, presiding, and
appealed directly to this court as judgment was rendered on a stipulation of facts and only questions of law are
raised in the appeal.
By the stipulation of the parties it appears that on March 13, 1916, free patent No. 3699 was issued over the land
subject of the action in the name of Domingo Mejia. This patent was transcribed in the Office of the Register of
Deeds of Nueva Vizcaya on July 26, 1916 and certificate of title No. 380 issued in the name of Domingo Mejia. On
March 24, 1916, after the issuance of the patent but before the registration of the same, patentee Domingo Mejia
deeded the land to Zacarias Ciscar, who immediately took possession thereof and enjoyed its fruits. Upon his death
the property was included in the distribution of his estate and adjudicated to Roque Sanchez. Roque Sanchez in turn
sold the land on January 21, 1940 to Andres Gamponia, Defendant herein. Sanchez was in possession and enjoyment
of the land from the time he acquired it by inheritance from Ciscar up to the time he sold it to Defendant Andres
Gamponia, the latter has also possessed and enjoyed the property from the time he bought it to date.
Domingo Mejia, upon his death, left no descendants or ascendants and his only surviving kin was his brother Pedro
Mejia. Pedro Mejia is now also dead and is survived by his daughter Concordia Mejia de Lucas, Plaintiff herein. Upon
the above facts the court a quo held that the sale by the patentee to Zacarias Ciscar is null and void, as the sale was
made only 11 days after the issuance of a patent in violation of the provisions of section 35 of Act No. 926. The Court
further held that since the land is registered land no title in derogation to that of the registered owner could have
been acquired either by Zacarias Ciscar or his successors in interest, namely, Roque Sanchez and Defendant Andres
Gamponia.
The main defense presented in the answer, is that Plaintiff’s right of action has already prescribed by virtue of the
possession of the land by the Defendant and his predecessors in interest for a period of 37 years. This defense was
overruled by the court a quo on the ground that as the land is registered, with a certificate of title in the name of
patentee Domingo Mejia, title thereto may not be acquired by the Defendant and his predecessors in interest
against said registered owner. This ruling is evidently based on Section 46 of the Land Registration Act, which
provides that “no title to registered land in derogation to that of the registered owner shall be acquired by
prescription or adverse possession.
Upon a careful consideration of the facts and circumstances, we are constrained to find, however, that while no legal
defense to the action lies, an equitable one lies in favor of the Defendant and that is, the equitable defense of laches.
No hold that the defense of prescription or adverse possession in derogation of the title of the registered owner
Domingo Mejia does not lie, but that of the equitable defense of laches. Otherwise, stated, we hold that
while Defendant may not be considered as having acquired title by virtue of his and his predecessors’ long continued
possession for 37 years, the original owner’s right to recover back the possession of the property and the title
thereto from the Defendant has, by the long period of 37 years and by patentee’s inaction and neglect, been
converted into a stale demand.
In Go Chi Gun, et al., vs. Co Cho, et al., (96 Phil., 622) we held that the equitable defense of laches requires four
elements: (1) conduct on the part of the Defendant, or of one under whom he claims, giving rise to the situation of
chanroble svirtuallawlibrary

which complaint is made and for which the complaint seeks a remedy; (2) delay in asserting the complainant’s chan roblesvirtualawlibrary

rights, the complainant having had knowledge or notice, of the Defendant’s conduct and having been afforded an
opportunity to institute a suit, (3) lack of knowledge or notice on the part of the Defendant that the complainant
would assert the right on which he bases his suit; and (4) injury or prejudice to the Defendant in the event relief is
chan roblesvirtualawlibrary

accorded to the complainant, or the suit is not held to be barred.


All the four elements mentioned above are present in the case at bar. The first element is present because on March
24, 1916 Domingo Mejia sold the land which was covered by a free patent title dated March 13, 1916 and said sale
or conveyance was made in violation of Section 35 of the Public Land Act. The second element is also present
because from the date of the sale on March 24, 1916 the patentee and vendor Domingo Mejia could have instituted
the action to annul the conveyance and obtain back the possession and ownership of the land, but notwithstanding
the apparent invalidity of the sale, neither patentee nor his successors in interest, his brother, or the latter’s
daughter, Plaintiff herein, who should have known of the invalidity of the sale because it is a matter of law and had
all the opportunity to institute an action for the annulment of the sale, instituted no suit to annul the sale or to
recover the land for a period of 37 years. Again the Defendant and his predecessors in interest, the original vendee
and purchaser Zacarias Ciscar, as well as vendee’s successors in interest, Roque Sanchez, and later, Andres
Gamponia, never expected or believed that the original patentee or his successors in interest would bring an action
to annul the sale. These circumstances constitute the third element of laches. The fourth element is also present, not
only because Zacarias Ciscar paid for the land but this same land was divided among the heirs of Zacarias Ciscar in
the proceedings for the settlement of his estate (Civil Case No. 301 of the Court of First Instance of Nueva Vizcaya)
and Roque Sanchez, to whom the land was adjudicated, sold the property for P800 to the present Defendant Andres
Gamponia. All of these transfer from Zacarias Ciscar to his heirs, to Roque Sanchez and to Defendant Andres
Gamponia, acts which covered a period of 37 years, would all have to be undone and the respective rights and
obligations of the parties affected adjusted, unless the defense is sustained.
It is to be noted that all the above complications would never had been occasioned had the original patentee and his
successors in interest not slept on their rights for more than a generation. Add to this the fact that the original
conveyance made by the patentee is not absolutely null and void. The prohibition against the sale of free patents is
for a period of seven years (Section 35, Act No. 926); after that period of time a patentee would be free to dispose
chan roblesvirt ualawlibrary

of the land. Within seven years from the conveyance the original patentee could have brought an action to recover
back his property. Since nothing of this sort was done by him, it was certainly natural for the purchase to have
assumed that the original patentee gave up his right to recover back the property and acquiesced in vendee’s right
and title. The successor in interest of the original purchaser must also have believed in good faith that the patentee
and his successors in interest were reconciled to the idea of allowing the property to stay in the hands of the
successors in interest. By this inaction for a period of 37 years to the consequent prejudice that annulment of the
original sale would entail upon so many successive owners, the equitable principle now stands up as a bar.
“The reason upon which the rule is based is not alone the lapse of time during which the neglect to enforce the right
has existed, but the changes of condition which may have arisen during the period in which there has been neglect.
In other words, where a court of equity finds that the position of the parties has to change that equitable relief
cannot be afforded without doing injustice, or that the intervening rights of third persons may be destroyed or
seriously impaired, it will not exert its equitable powers in order to save one from the consequences of his own
neglect.” (Penn Mutual Life Inc. Co., et al., vs. City of Austin et al., U. S. 962.)
In effect, the principle is one of estoppel because it prevents people who have slept on their rights from prejudicing
the rights of third parties who have placed reliance on the inaction of the original patentee and his successors in
interest.
The equitable defense of laches has been held to exist in this jurisdiction for periods less than the period in the case
at bar. Thus in the case of Gonzales vs. Director of Lands, 52 Phil. 895, it was held in a cadastral case that the owner
of a lot who failed to appear in the proceedings, as a result of which his land was declared public property, who
brings an action 10 years later, is guilty of laches and inexcusable negligence and his action under Section 513 of the
Code of Civil Procedure can no longer be maintained. In another case where the Plaintiff loaned money to a couple
and when the wife died and the conjugal properties divided between her heirs and her husband, the vendor did not
present his claim against the estate and only did so four years later against the widower, it was held that the lender
was guilty of laches in so far as the estate of the deceased spouse is concerned because it would be inequitable and
unjust to permit him to revive any claims which he may have had, which claims he did not present during the
distribution of the estate of the deceased wife. (Yaptico vs. Marina Yulo, et al., 57 Phil., 818). In a third case (Kambal
vs. Director of Lands, 62 Phil., 293), cadastral proceedings for compulsory registration of certain parcels of land in
Cotabato were instituted. These proceedings included two lands belonging to the Petitioner. Petitioner failed to
claim said lands in said proceedings and in 1917 the titles to the lands of the Petitioner were
cancelled. Petitioner alleges that he came to know by accident of the cancellation of his titles in the year 1933 or
1935. It was held that because of the lapse of 16 years from the date the decision was rendered in the said
registration case to the filing of the petition, no relief can be granted the Petitioner as he has been guilty of laches. In
the three cases decided previously by this Court, the periods of inaction were from 10 to 16 years. In the case at bar
it was a full period of 37 years.
The judgment appealed from is hereby reversed and one is hereby entered absolving the Defendant from the action.
Without costs.
Paras, C.J., Padilla, Montemayor, Bautista Angelo, Concepcion, Reyes, J. B. L., Endencia and Felix, JJ., concur.

FIRST DIVISION

[G.R. No. 138660. February 5, 2004]

HEIRS OF TRINIDAD DE LEON VDA. DE ROXAS, petitioners, vs. COURT OF


APPEALS and MAGUESUN MANAGEMENT AND DEVELOPMENT
CORPORATION, respondents.

DECISION
CARPIO, J.:

The Case

This is a petition to cite for indirect contempt the officers of Meycauayan Central Realty
Corporation (Meycauayan) for defying the final and executory Decision and Resolution of this
Court in G.R. No. 118436 entitled Heirs of Manuel A. Roxas and Trinidad de Leon Vda. De Roxas
v. Court of Appeals and Maguesun Management & Development Corporation (G.R. No. 118436). [1]

The Antecedents

This petition stems from a case filed by Trinidad de Leon Vda. De Roxas to set aside the
decree of registration over two unregistered parcels of land in Tagaytay City granted to Maguesun
Management and Development Corporation (Maguesun) before the Regional Trial Court on the
ground of actual fraud. The trial court dismissed the petition to set aside the decree of registration.
On appeal, the Court of Appeals denied the petition for review and affirmed the findings of the trial
court. On 21 March 1997, this Court reversed the appellate courts decision in G.R. No. 118436.
The dispositive portion reads:

WHEREFORE, the instant petition is hereby GRANTED. The Decision of the Court of Appeals
in C.A. G.R. CV No. 38328 (Trinidad de Leon Vda. de Roxas v. Maguesun Management &
Development Corporation, et al.) promulgated on December 8, 1994 is hereby REVERSED
AND SET ASIDE. Accordingly, registration of title over the subject parcels of land, described
in Plan AS-04-000108, Lot Nos. 7231 and 7239, with an area of 3,461 and 10,674 square
meters, respectively, as shown and supported by the corresponding technical descriptions now
forming part of the Records of LRC No. TG-373, is awarded to herein petitioner Trinidad de
Leon vda. de Roxas and her heirs, herein substituted as petitioners. Upon finality of this
Decision, the Land Registration Authority is hereby directed to ISSUE with reasonable dispatch
the corresponding decree of registration and certificate of title pursuant to Section 39 of
Presidential Decree No. 1529. [2]

On 22 May 1997, Meycauayan filed a Petition for Intervention in G.R. No.


118436. Meycauayan alleged that on 14 May 1992, it purchased three parcels of land from
Maguesun which form part of the property awarded to the heirs of Trinidad de Leon Vda. De
Roxas (Roxas heirs). Meycauayan contended that since it is a purchaser in good faith and for
value, the Court should afford it the opportunity to be heard. Meycauayan contends that the
adverse decision in G.R. No. 118436 cannot impair its rights as a purchaser in good faith and for
value.
On 25 June 1997, this Court denied the Petition for Intervention. This Court also denied the
Motion for Reconsideration filed by Maguesun. Thus, on 21 August 1997, the Decision dated 21
March 1997 in G.R. No. 118436 became final and executory.
On 13 April 1998, the Land Registration Authority (LRA) submitted a Report to the Regional
Trial Court of Tagaytay City, Branch 18 (land registration court), in LR Case No. TG-373, praying
that the land registration court:

a) Order the LRA to cancel Decree No. N-197092 in the name of Maguesun to enable it
to issue another decree in favor of the heirs of Manuel A. Roxas and Trinidad de
Leon Vda. de Roxas;

b) Order the Register of Deeds to cancel OCT No. 0-515 and all its derivative titles; and

c) Order the issuance of the Decree with respect to the decision of the Supreme Court
dated 21 March 1997.

Meycauayan filed with the land registration court a Motion For Leave To Intervene And For
Period Of Time To File Opposition To The Report Dated March 25, 1998 Filed By The LRA And
To File Complaint-in-Intervention.
On 4 June 1998, the Roxas heirs filed a Motion for Clarification with this Court raising the
following issues:

a) Whether it is necessary for the trial court to first order the LRA to cancel Decree No. N-
197092 in the name of Maguesun Management and Development Corporation to enable (the
LRA) to issue another decree in favor of the Heirs of Manuel A. Roxas and Trinidad de Leon
Vda. de Roxas? Or is that order necessarily included in the dispositive portion of the Supreme
Court decision directing the LRA to issue with reasonable dispatch the corresponding decree of
registration and certificate of title in favor of the Roxas heirs? Please note that this necessary
implication is a consequence of the Supreme Court finding that the decree in favor of Maguesun
was wrongfully issued because it was not entitled to the registration decree as it had no
registrable title, since Zenaida Melliza (from whom Maguesun supposedly bought the lots)
conveyed no title over the subject parcels of land to Maguesun Corporation as she was not the
owner thereof.

b) Whether an order from the trial court is necessary for the Register of Deeds concerned to
cancel OCT No. 0-515 and all its derivative titles? Or is that order necessarily included in the
dispositive portion of the Supreme Court decision directing the LRA to issue
the corresponding decree of registration and certificate of title in favor of the Roxas heirs,
considering that the original certificate of title issued to Maguesun was based on an illegal
decree of registration as found by this Honorable Court. Further, the unconditional order of the
Supreme Court to LRA to issue the corresponding certificate of title to the Roxas heirs
necessarily implies that the OCT issued to Maguesun and its derivative titles shall be canceled,
for it cannot [be] assumed that the Supreme Court intended that the same parcel of land shall be
covered by more than one certificate of title.

c) Whether an order from the trial court is necessary before the LRA can comply with the
Supreme Court decision directing the LRA to issue with reasonable dispatch the
corresponding decree of registration and certificate of title in favor of the Roxas heirs?

On 23 June 1998, the Roxas heirs filed a Supplement to Motion for Clarification, the pertinent
portions of which are:

1. In petitioners Motion for Clarification, one of the items sought to be clarified is whether the
derivative titles (i.e., the titles derived from Maguesun Management and Development
Corporations [Maguesun] Original Certificate of Title No. 0-515 and issued to Meycauayan
Central Realty Corp.) should be canceled, together with Maguesuns certificates of title, so that
new decree of registration and certificate of title can be issued to petitioners, as ordered in the
decision of this Honorable Court dated 21 March 1997, which has become final and executory?

2. From the Petition for Intervention filed by Meycauayan Central Realty Corporation
(Meycauayan) with this Honorable Court on 22 May 1997, the following statements, among
others, are alleged:

a. That on May 14, 1992, the intervenor purchased for value several parcels of real
property from private respondent Maguesun Management and Development
Corp. covered by TCT Nos. 24294, 24295 and 24296 containing an area of
2,019 square meters each, more or less.

b. That prior to paying the agreed purchase price in full to respondent Maguesun, an
investigation with the Tagaytay City Office of the Register of Deeds was
made to determine and ascertain the authenticity, status and condition of the
titles of Maguesun over the aforesaid properties.

c. That investigation made by the intervenor with the Office of Register of Deeds of
Tagaytay City showed that in all the certified true copies of the titles to the
properties above-mentioned which were registered in the name of
Maguesun, the last entry which appeared was the following, to wit: x x x.
d. Appearing that the properties to be purchased by the herein intervenor from
respondent Maguesun have no existing liens and/or encumbrances and
considering that the properties do not appear to be the subject of a pending
case which would affect the titles of those who may subsequently purchase
the same, the herein intervenor proceeded to pay, in full, the total amount of
ONE MILLION FIVE HUNDRED THOUSAND PESOS (P1,500,000.00)
to Maguesun. Immediately thereafter, Maguesun, through its duly
authorized officer, executed the corresponding Deeds of Absolute Sale.

e. That after the corresponding taxes and/or fees were paid by herein intervenor, the
aforementioned TCT Nos. T-24294, 24295 and 24296, were canceled and in
lieu thereof, new titles in the name of intervenor were issued by the Register
of Deeds of Tagaytay City.

f. That on March 25, 1997, an officer of the intervenor corporation was informed of
a newspaper report stating, in big bold letters, the following sub-headline, to
wit:

SC RULES ON ROXAS FAMILY


LAND ROW IN TAGAYTAY.

g. The President of herein intervenor right after secured from the Tagaytay City
Office of the Register of Deeds certified true copies of torrens titles over its
Tagaytay City properties.

h. That only then, after it secured certified true copies of the titles mentioned in the
preceding paragraph from the Office of the Register of Deeds of Tagaytay
City, did intervenor come to know of the existence of a case involving the
properties sold to it by respondent Maguesun on May 14, 1992.

3. Meycauayans Petition for Intervention was denied by this Honorable Court in its Resolution
dated 25 June 1997, a denial that has since become final and executory. However, as stated in
petitioners Motion for Clarification, Meycauayan committed the proscribed act of forum-
shopping by filing with the trial court a motion for leave to intervene raising again the issue of
its alleged ownership of portions of the land.

4. In order to settle once and for all Meycauayans allegation that it was a buyer in good faith,
and to show that its derivative titles should be declared void and canceled by this Honorable
Court, petitioners will show herein that the sale to Meycauayan was spurious or, at the very
least, it was a buyer in bad faith.

In a Resolution dated 29 July 1998, this Court acted favorably on the Roxas heirs Motion for
Clarification and its Supplement. The pertinent portions of the Resolution read:

Upon careful consideration of the points made by petitioners in their motions, this Court finds
the same meritorious and, hence, a clarification is in order. We, therefore, declare that our
directive on the LRA to issue with reasonable dispatch the corresponding decree of registration
and certificate of title also includes, as part thereof, the cancellation, without need of an order of
the land registration court, of Decree No. N-197092, as well as OCT No. 0-515, and all its
derivative titles.This is a necessary consequence of the Courts earlier finding that the foregoing
documents were illegally issued in the name of respondent. But in light of Section 39 of
Presidential Decree No. 1529 (the Property Registration Decree), Decree No. N-197092 which
originated from the LRA must be cancelled by the LRA itself. On account of this cancellation, it
is now incumbent upon the LRA to issue in lieu of the cancelled decree a new one in the name
of petitioners as well as the corresponding original certificate of title. Cancellation of OCT No.
0-515, on the other hand, properly devolves upon the Register of Deeds who, under Section 40
of P.D. No. 1529, has earlier entered a copy thereof in his record book. OCT No. 0-515 having
been nullified, all titles derived therefrom must also be considered void it appearing
that there had been no intervening rights of an innocent purchaser for value involving the lots in
dispute.

ACCORDINGLY, the Court hereby resolves to GRANT petitioners Motion for Clarification
together with the Supplement thereto. For this reason, the dispositive portion of our decision
dated March 21, 1997 is clarified, thus:

First, the Register of Deeds shall CANCEL OCT No. 0-515 and all its derivative titles, namely,
TCT Nos. T-25625, T-25626, T-25627, T-25628, T-25688, T-25689, and T-25690, the latter
three being already in the name of Meycauayan Realty and Development Corporation (also
designated as Meycauayan Central Realty, Inc. and Meycauayan Realty Corporation).

Thereafter, the Land Registration Authority shall:

(a) CANCEL Decree No. N-197092 originally issued in the name of Maguesun
Management and Development Corporation without need of an order from
the land registration court; and

(b) ISSUE with reasonable dispatch a new decree of registration and a new original
certificate of title (OCT) in favor of petitioners pursuant to Section 39 of
Presidential Decree No. 1529. (Emphasis added)

On 11 December 1998, the land registration court issued an order denying the LRA Report
dated 25 March 1998 and the Motion for Leave to Intervene filed by Meycauayan since the
Supreme Court Resolution of 29 July 1998 had rendered them moot.

The Register of Deeds of Tagaytay City then canceled TCT Nos. T-25626, T-25627, T-25628,
T-25688, T-25689, T-25690 and T-27390. TCT Nos. T-25688, T-25689, T-25690 and T-27390
[3]

were derivative titles already in the name of Meycauayan.

On 5 April 1999, the Roxas heirs filed a Motion for Issuance of Writ of Possession with the
land registration court.
On 20 April 1999, Meycauayan filed a Complaint for reconveyance, damages and quieting of
title with the trial court entitled Meycauayan Central Realty Corp. v. Heirs of Manuel A. Roxas and
Trinidad de Leon Vda. de Roxas, Maguesun Management and Development Corp., Register of
Deeds of Tagaytay City, City Assessor of Tagaytay City and Land Registration Authority. [4] The
Complaint is almost an exact reproduction of the Petition for Intervention filed by Meycauayan
before this Court. The Complaint prayed for judgment:

1. Ordering the defendants Land Registration Authority and the Register of Deeds of Tagaytay
City to cancel the titles and decree of registration they issued in lieu of TCT Nos. 25688, 25689,
25690 and 27390 registered in the name of plaintiff Meycauayan Central Realty Corporation
and reconvey said properties to the plaintiff corporation by reinstating the said cancelled titles or
if the same not be possible, cause the issuance of new decrees and titles thereto;

2. Ordering the defendant City Assessor of Tagaytay City to reinstate the Assessments for real
estate taxes it previously cancelled covering the properties of plaintiff;

3. Ordering the defendants Roxas and Maguesun to jointly and solidarily pay the plaintiff actual
and/or compensatory damages in the total amount of FIVE HUNDRED THOUSAND PESOS
(P500,000.00);

4. Ordering the defendants Roxas and Maguesun to jointly and solidarily pay the plaintiff the
amount of TWO HUNDRED THOUSAND PESOS (P200,000.00) as and by way of nominal
damages;

5. Ordering the defendants Roxas and Maguesun to jointly and solidarily pay the plaintiff
exemplary damages in the amount of TWO HUNDRED THOUSAND PESOS (P200,000.00);

6. Ordering the defendants Roxas and Maguesun to jointly and solidarily pay the plaintiff
Attorneys fees in the amount of ONE HUNDRED THOUSAND PESOS (P100,000.00); and

7. Ordering the defendants Roxas and Maguesun to jointly and solidarily pay the plaintiff the
costs of suit.
[5]

On 6 May 1999, Meycauayan filed a Special Appearance Questioning Court Jurisdiction and
Opposition to the Motion for Issuance of Writ of Possession Against Meycauayan Central Realty
Corporation with the land registration court.
On 2 September 1999, the land registration court issued an order, the dispositive portion of
which reads:

WHEREFORE, in the light of the foregoing, let a Writ of Possession be issued against
Maguesun Management and Development Corporation in these cases. However, insofar as
Meycauayan Central Realty is concerned, let a resolution of the motion filed by the movants
herein be deferred until the Supreme Court had resolved with finality the petition for contempt
of herein movant in G.R. No. 138660.

On 7 March 2000, the trial court dismissed for lack of merit Meycauayans complaint for
reconveyance, damages and quieting of title. The trial court held that (1) the nullity of OCT No. 0-
515, which is the source of Meycauayans titles, is now res judicata; (2) the complaints prayer for
the trial court to annul the decision of the Supreme Court in G.R. No. 118436 is beyond the trial
courts jurisdiction; and (3) Meycauayan is guilty of forum shopping.[6] The trial court likewise denied
Meycauayans Motion for Reconsideration in an Order dated 20 June 2000. [7] On 24 August 2000,
Meycauayan filed a petition for certiorari under Rule 65 of the Rules of Court with the Court of
Appeals assailing the trial courts dismissal of the complaint.
Meanwhile, the Roxas heirs filed on 2 June 1999 this petition to cite for indirect contempt the
officers of Meycauayan.

The Issues

The parties raised the following issues:


1. Whether this Courts Decision and Resolution in G.R. No. 118436 bind Meycauayan;

2. Whether Meycauayans act of filing with the trial court a complaint for reconveyance,
damages and quieting of title involving parcels of land, which were the subject of
this Courts Decision and Resolution in G.R. No. 118436, constitutes indirect
contempt under Section 3, Rule 71 of the Rules of Civil Procedure; and

3. Whether Meycauayan is guilty of forum shopping.

The Courts Ruling

The petition is meritorious. We find Meycauayans Executive Vice-President Juan M. Lamson,


Jr. guilty of indirect contempt. We also find that Meycauayan committed forum shopping, and thus
Meycauayan and its Executive Vice President Juan M. Lamson, Jr. are guilty of direct contempt.
The Roxas heirs allege that the following acts of Meycauayan constitute indirect contempt
under Section 3, Rule 71 of the Rules of Civil Procedure: (1)Meycauayans defiance of the final
and executory Decision and Resolution of this Court in G.R. No. 118436; (2) its act of filing
pleadings before the land registration court to prevent execution of the Decision and Resolution;
(3) its act of filing a Complaint raising the same issues in its Petition for Intervention which this
Court had already denied and urging the trial court to ignore and countermand the orders of this
Court.
On the other hand, Meycauayan alleges that the Decision in G.R. No. 118436 does not bind
Meycauayan because it was not a party in the case. According to Meycauayan, the Decision in
G.R. No. 118436 may be enforced against Maguesun but not against Meycauayan which is a
stranger to the case. Meycauayan insists that as a purchaser in good faith and for value its rights
cannot be prejudiced by the alleged fraudulent acquisition by Maguesun of the subject properties.
Meycauayan, therefore, is not liable for contempt of court for filing an action for reconveyance,
quieting of title and damages.
The issue of whether the Decision in G.R. No. 118436 binds Meycauayan was already
addressed by this Court when it denied Meycauayans Petition for Intervention. Furthermore, this
Courts Resolution dated 29 July 1998 clarified the Decision dated 21 March 1997 by ordering the
Register of Deeds to CANCEL OCT No. 0-515 and all its derivative titles, namely, TCT Nos. T-
25625, T-25626, T-25627, T-25628, T-25688, T-25689, and T-25690, the latter three already in
the name of Meycauayan Realty and Development Corporation (also designated as Meycauayan
Central Realty, Inc. and Meycauayan Realty Corporation). This Court also found that there had
been no intervening rights of an innocent purchaser for value involving the lots in dispute.

Indirect Contempt

Meycauayans obstinate refusal to abide by the Courts Decision in G.R. No. 118436 has no
basis in view of this Courts clear pronouncement to the contrary. The fact that this Court
specifically ordered the cancelation of Meycauayans titles to the disputed parcels of land in the
Resolution dated 29 July 1998 should have laid to rest the issue of whether the Decision and
Resolution in G.R. No. 118436 is binding on Meycauayan. Clearly, Meycauayans defiance of this
Courts Decision and Resolution by filing an action for reconveyance, quieting of title and damages
involving the same parcels of land which this Court already decided with finality constitutes indirect
contempt under Section 3(d), Rule 71 of the Rules of Civil Procedure. Section 3(d) of Rule 71
reads:
SEC. 3. Indirect contempt to be punished after charge and hearing. After a charge in writing has
been filed, and an opportunity given to the respondent to comment thereon within such period as
may be fixed by the court and to be heard by himself or counsel, a person guilty of any of the
following acts may be punished for indirect contempt:

xxx

(d) Any improper conduct tending, directly or indirectly, to impede, obstruct, or degrade the
administration of justice;

In Halili, et al. v. CIR, et al.,[8] this Court explained the concept of contempt of court:

Contempt of court is a defiance of the authority, justice or dignity of the court; such conduct as
tends to bring the authority and administration of the law into disrespect or to interfere with or
prejudice parties litigant or their witnesses during litigation (12 Am. Jur. 389, cited in 14 SCRA
813).

Contempt of court is defined as a disobedience to the Court by acting in opposition to its


authority, justice and dignity. It signifies not only a willful disregard or disobedience of the
courts orders, but such conduct as tends to bring the authority of the court and the administration
of law into disrepute or in some manner to impede the due administration of justice (17 C.J.S.
4).

This Court has thus repeatedly declared that the power to punish for contempt is inherent in all
courts and is essential to the preservation of order in judicial proceedings and to the enforcement
of judgments, orders, and mandates of the court, and consequently, to the due administration of
justice (Slade Perkins vs. Director of Prisons, 58 Phil. 271; In re Kelly, 35 Phil. 944;
Commissioner of Immigration vs. Cloribel, 20 SCRA 1241; Montalban vs. Canonoy, 38 SCRA
1).

Meycauayans continuing resistance to this Courts judgment is an affront to the Court and to
the sovereign dignity with which it is clothed.[9] Meycauayans persistent attempts to raise issues
long since laid to rest by a final and executory judgment of no less than the highest tribunal of the
land constitute contumacious defiance of the authority of this Court and impede the speedy
administration of justice.[10]
Well-settled is the rule that when a court of competent jurisdiction has tried and decided a right
or fact, so long as the decision remains unreversed, it is conclusive on the parties and those in
privity with them.[11] More so where the Supreme Court has already decided the issue since the
Court is the final arbiter of all justiciable controversies properly brought before it. [12] As held
in Buaya v. Stronghold Insurance Co., Inc.:[13]

x x x An existing final judgment or decree rendered upon the merits, without fraud or collusion,
by a court of competent jurisdiction acting upon a matter within its authority is conclusive of the
rights of the parties and their privies. This ruling holds in all other actions or suits, in the same
or any other judicial tribunal of concurrent jurisdiction, touching on the points or matters in
issue in the first suit.

xxx

Courts will simply refuse to reopen what has been decided. They will not allow the same parties
or their privies to litigate anew a question, once it has been considered and decided with
finality. Litigations must end and terminate sometime and somewhere. The effective and
efficient administration of justice requires that once a judgment has become final, the prevailing
party should not be deprived of the fruits of the verdict by subsequent suits on the same issues
filed by the same parties.

This is in accordance with the doctrine of res judicata which has the following elements: (1) the
former judgment must be final; (2) the court which rendered it had jurisdiction over the subject
matter and the parties; (3) the judgment must be on the merits; and (4) there must be between the
first and the second actions, identity of parties, subject matter and causes of action.[14] The
application of the doctrine of res judicata does not require absolute identity of parties but merely
substantial identity of parties.[15] There is substantial identity of parties when there is community of
interest or privity of interest between a party in the first and a party in the second case even if the
first case did not implead the latter.[16]
The Court ruled in G.R. No. 118436 that Meycauayans predecessor-in-interest, Maguesun,
committed actual fraud in obtaining the decree of registration of the subject properties. The
Decision in G.R. No. 118436 binds Meycauayan under the principle of privity of interest since it
was a successor-in-interest of Maguesun. Meycauayan, however, insists that it was a purchaser in
good faith because it had no knowledge of any pending case involving the lots. Meycauayan
claims that the trial court had already canceled the notice of lis pendens on the titles when it
purchased the lots from Maguesun. In its Memorandum, Meycauayan stresses that to ensure the
authenticity of the titles and the annotations appearing on the titles, particularly the cancelation of
the notice of lis pendens, Meycauayan checked with the Register of Deeds and the Regional Trial
Court of Tagaytay City.[17]Since Meycauayan checked with the Regional Trial Court of Tagaytay
City, Meycauayan then had actual knowledge, before it purchased the lots, of the pending case
involving the lots despite the cancelation of the notice of lis pendens on the titles.
Furthermore, as found by this Court in G.R. No. 118436, the Roxas family has been in
possession of the property uninterruptedly through their caretaker, Jose Ramirez, who resided on
the property.[18] Where the land sold is in the possession of a person other than the vendor, the
purchaser must go beyond the certificates of title and make inquiries concerning the rights of the
actual possessor.[19] Meycauayan therefore cannot invoke the right of a purchaser in good faith and
could not have acquired a better right than its predecessor-in-interest. This Court has already
rejected Meycauayans claim that it was a purchaser in good faith when it ruled in G.R. No. 118436
that there had been no intervening rights of an innocent purchaser for value involving the lots in
dispute. As held in Heirs of Pael v. Court of Appeals:[20]

In the case of Santiago Land Development Corporation vs. Court of Appeals (G.R. No. 106194,
276 SCRA 674 [1997]), petitioner maintained that as a purchaser pendente lite of the land in
litigation, it had a right to intervene under Rule 12, Section 2. We rejected this position and said
that since petitioner is not a stranger to the action between Quisumbing and the PNB, petitioner
in fact having stepped into the shoes of PNB in a manner of speaking, it follows that it cannot
claim any further right to intervene in the action. As in the instant Petition, it was argued that the
denial of the Motion to Intervene would be a denial likewise of due process. But this, too, was
struck down in Santiago Land where we held that petitioner is not really denied protection. It is
represented in the action by its predecessor in interest. Indeed, since petitioner is a
transferee pendente lite with notice of the pending litigation between Reyes and private
respondent Carreon, petitioner stands exactly in the shoes of Reyes and is bound by any
judgment or decree which may be rendered for or against the latter.

Indeed, one who buys property with full knowledge of the flaws and defects of the title of his
vendor and of a pending litigation over the property gambles on the result of the litigation and is
bound by the outcome of his indifference.[21] A purchaser cannot close his eyes to facts which
should put a reasonable man on guard and then claim that he acted in good faith believing that
there was no defect in the title of the vendor.[22]
For the penalty for indirect contempt, Section 7 of Rule 71 of the Rules of Court provides:

SEC. 7. Punishment for indirect contempt. If the respondent is adjudged guilty of indirect
contempt committed against a Regional Trial Court or a court of equivalent or higher rank, he
may be punished by a fine not exceeding thirty thousand pesos or imprisonment not exceeding
six (6) months or both. x x x

In this case, Meycauayan Executive Vice President Juan M. Lamson, Jr. caused the
preparation and the filing of the Petition for Intervention in G.R. No. 118436 and the Complaint for
Reconveyance, Damages and Quieting of Title with the trial court. [23] Juan M. Lamson, Jr. signed
the verification and certification of non-forum shopping for the Petition for Intervention and the
Complaint for Reconveyance, Damages and Quieting of Title. Even though a judgment, decree, or
order is addressed to the corporation only, the officers, as well as the corporation itself, may be
punished for contempt for disobedience to its terms, at least if they knowingly disobey the courts
mandate, since a lawful judicial command to a corporation is in effect a command to the
officers.[24] Thus, for improper conduct tending to impede the orderly administration of justice,
Meycauayan Executive Vice President Juan M. Lamson, Jr. should be fined ten thousand pesos
(P10,000).[25]

Direct Contempt

Meycauayans act of filing a Complaint for Reconveyance, Quieting of Title and Damages
raising the same issues in its Petition for Intervention, which this Court had already denied, also
constitutes forum shopping.Forum shopping is the act of a party against whom an adverse
judgment has been rendered in one forum, seeking another and possibly favorable opinion in
another forum other than by appeal or special civil action of certiorari. There is also forum
shopping when a party institutes two or more actions based on the same cause on the expectation
that one or the other court might look with favor on the party. [26]
In this case, the Court had already rejected Meycauayans claim on the subject lots when the
Court denied Meycauayans Petition for Intervention in G.R. No. 118436. The Court ruled that there
had been no intervening rights of an innocent purchaser for value involving the lots in dispute. The
Decision of this Court in G.R. No. 118436 is already final and executory. The filing by Meycauayan
of an action to re-litigate the title to the same property, which this Court had already adjudicated
with finality, is an abuse of the courts processes and constitutes direct contempt.
Section 5 of Rule 7 of the Rules of Court provides that if the acts of the party or his counsel
clearly constitute willful and deliberate forum shopping, the same shall be a ground for summary
dismissal with prejudice and shall constitute direct contempt, as well as a cause for administrative
sanctions. The fact that Meycauayan did mention in its certification of non-forum shopping its
attempt to intervene in G.R. No. 118436, which this Court denied,[27] does not negate the existence
of forum shopping. This disclosure does not exculpate Meycauayan for deliberately seeking a
friendlier forum for its case and re-litigating an issue which this Court had already decided with
finality.[28]
The general rule is that a corporation and its officers and agents may be held liable for
contempt. A corporation and those who are officially responsible for the conduct of its affairs may
be punished for contempt in disobeying judgments, decrees, or orders of a court made in a case
within its jurisdiction.[29]
Under Section 1 of Rule 71 of the Rules of Court, direct contempt is punishable by a fine not
exceeding two thousand pesos (P2,000) or imprisonment not exceeding ten (10) days, or both, if
committed against a Regional Trial Court or a court of equivalent or higher rank. Hence,
Meycauayan[30] and its Executive Vice President Juan M. Lamson, Jr. are each fined P2,000 for
direct contempt of court for forum shopping.
WHEREFORE, we find Meycauayan Central Realty Corporations Executive Vice President
Juan M. Lamson, Jr. GUILTY of INDIRECT CONTEMPT and FINE him TEN THOUSAND PESOS
(P10,000). Furthermore, we find Meycauayan Central Realty Corporation and its Executive Vice
President Juan M. Lamson, Jr. GUILTY of DIRECT CONTEMPT for forum shopping and FINE
them TWO THOUSAND PESOS (P2,000) each. The Court warns them that a repetition of the
same or similar offense shall merit a more severe penalty.
SO ORDERED.
Davide, Jr., C.J., (Chairman), Panganiban, and Ynares-Santiago, JJ., concur.
Azcuna, J., on official leave.

[1]
337 Phil. 41 (1997).
[2]
Ibid.
[3]
TCT No. 27390 was the new title issued in the name of Meycauayan in lieu of the canceled TCT No. 25625
registered in the name of Maguesun.
[4]
Civil Case No. TG-1893.
[5]
Rollo, pp. 62-63.
[6]
Ibid., pp. 283-287.
[7]
Ibid., p. 288.
[8]
220 Phil. 507 (1985).
[9]
People v. Godoy, 312 Phil. 977 (1995).
[10]
See Pacquing v. Court of Appeals, et al., 200 Phil. 516 (1982).
[11]
Fulgencio, et al. v. National labor Relations Commission (First Division) and Raycor Aircontrol Systems, Inc., G.R.
No. 141600, 12 September 2003; Bardillon v. Barangay Masili of Calamba, Laguna, G.R. No. 146886, 30
April, 2003; Oropeza Marketing Corporation, et al. v. Allied Banking Corporation, G.R. No. 129788, 3
December 2002.
[12]
Firestone Ceramics, Inc. v. Court of Appeals, 372 Phil. 401 (1999).
[13]
G.R. No. 139020, 11 October 2000, 342 SCRA 576.
[14]
Rovels Enterprises, Inc. v. Ocampo, G.R. No. 136821, 17 October 2002, 391 SCRA 176; Quezon Province v. Hon.
Marte, 420 Phil. 177 (2001).
[15]
Development Bank of the Philippines v. Court of Appeals, G.R. No. 110203, 9 May 2001, 357 SCRA 626.
[16]
Sendon v. Ruiz, 415 Phil. 376 (2001).
[17]
Rollo, pp. 226-227, 229.
[18]
Heirs of Manuel A. Roxas v. Court of Appeals, 337 Phil. 41 (1997).
[19]
Development Bank of the Phils. v. CA, 387 Phil. 283 (2000).
[20]
382 Phil. 222, 255-256 (2000), citing Seveses v. Court of Appeals, 375 Phil. 64, 72 (1999).
[21]
Liu v. Loy, G.R. No. 145982, 3 July 2003, citing Toledo-Banaga v. Court of Appeals, G.R. No. 127941, 28 January
1999, 302 SCRA 331.
[22]
Domingo v. Roces, G.R. No. 147468, 9 April 2003; Development Bank of the Phils. v. CA, 387 Phil. 283 (2000).
[23]
Rollo, pp. 32-33, 63.
[24]
17 C.J.S. Contempt 34 (1963).
[25]
In Ang Bagong Bayani-OFW Labor Party v. COMELEC (G.R. Nos. 147589 &. 147613, 18 February 2003), the
Court found the COMELEC members guilty of contempt for (1) issuing three Resolutions which are outside
the jurisdiction of the COMELEC, (2) for degrading the dignity of this Court, (3) for brazen disobedience to this
Courts lawful directives, and (4) for delaying the ultimate resolution of the many incidents of the party-list
case, to the prejudice of the litigants and of the country. The COMELEC Chairman and four COMELEC
Commissioners were each fined P20,000 while the two remaining Commissioners, whose actions were less
serious in degree than their colleagues, were each fined P5,000. In Gamido v. New Bilibid Prison (G.R. No.
146783, 29 July 2002, 385 SCRA 325), the Court sentenced the petitioner to pay a fine of P10,000 or suffer
imprisonment for a period of one month and one day, for appearing as counsel in the case without license to
practice law. In In Re: Published Alleged Threats Against Members of the Court in the Plunder Law Case
Hurled by Atty. Leonardo De Vera (A.M. No. 01-12-03-SC, 29 July 2002, 385 SCRA 285), respondent lawyer
was fined P20,000 for uttering statements aimed at influencing and threatening the Court in deciding in favor
of the constitutionality of the Plunder Law. In United BF Homeowners v. Sandoval-Gutierrez (A.M. No. CA-99-
30, 16 October 2000, 343 SCRA 162), the Court imposed a fine of P10,000 on one of the complainants whose
scurrilous attacks on the honor and integrity of two justices as well as that of the members of this Court,
undermined the Courts capacity to render justice.
[26]
United Special Watchman Agency v. Court of Appeals, G.R. No. 152476, 8 July 2003; Santos v. Commission on
Elections (First Division), G.R. No. 155618, 26 March 2003; New Sampaguita Builders Construction,
Inc. v. The Estate of Fermina Canoso, G.R. No. 151447, 14 February 2003.
[27]
Rollo, p. 63.
[28]
See Request for Consolidation of Civil Case Nos. R-1169 & 3640, 416 Phil. 562 (2001).
[29]
17 Am. Jur. 2d Contempt 60 (1990).
[30]
Under Rule 71 of the Rules of Court, direct contempt may be punished summarily while indirect contempt requires a
written charge and due hearing. Thus, although Meycauayan cannot be held guilty of indirect contempt
because only the officers of Meycauayan were included in the charge for indirect contempt, Meycauayan can
still be held guilty for direct contempt.

Republic of the Philippines


SUPREME COURT
Manila

FIRST DIVISION

G.R. No. L-31271 April 29, 1974

ROMEO MARTINEZ and LEONOR SUAREZ, spouses, petitioners-appellants,


vs.
HON. COURT OF APPEALS, SECRETARY and UNDERSECRETARY OF PUBLIC WORKS &
COMMUNICATIONS, respondents-appellees.

Flores Macapagal, Ocampo and Balbastro for petitioners-appellants.

Office of the Solicitor General Felix Q. Antonio, Acting Assistant Solicitor General Dominador L. Quiroz and
Solicitor Concepcion T. Agapinan for respondents-appellees.

ESGUERRA, J.:p

Petition for review by certiorari of the judgment of the Court of Appeals dated November 17, 1969 in its CA-G.R. 27655-R which reverses the judgment of the
Court of First Instance of Pampanga in favor of petitioners-appellants against the Secretary and Undersecretary of Public Works & Communications in the
case instituted to annul the order of November 25, 1958 of respondent Secretary of Public Works & Communications directing the removal by the petitioners
of the dikes they had constructed on Lot No. 15856 of the Register of Deeds of Pampanga, which order was issued pursuant to the provisions of Republic Act
No. 2056. The dispositive portion of the judgment of reversal of the Court of Appeals reads as follows:

IN VIEW OF THE FOREGOING CONSIDERATIONS, the judgment appealed from is hereby


reversed, and another entered: [1] upholding the validity of the decision reached by the
respondent officials in the administrative case; [2] dissolving the injunction issued by the Court
below; and [3] cancelling the registration of Lot No. 2, the disputed area, and ordering its
reconveyance to the public domain. No costs in this instance.
The background facts are stated by the Court of Appeals as follows:

The spouses Romeo Martinez and Leonor Suarez, now petitioners-appellees, are the registered
owners of two (2) parcels of land located in Lubao, Pampanga, covered by transfer certificate of
title No. 15856 of the Register of Deeds of the said province. Both parcels of land are fishponds.
The property involved in the instant case is the second parcel mentioned in the above-named
transfer certificate of title.

The disputed property was originally owned by one Paulino Montemayor, who secured a "titulo
real" over it way back in 1883. After the death of Paulino Montemayor the said property passed
to his successors-in-interest, Maria Montemayor and Donata Montemayor, who in turn, sold it, as
well as the first parcel, to a certain Potenciano Garcia.

Because Potenciano Garcia was prevented by the then municipal president of Lubao, Pedro
Beltran, from restoring the dikes constructed on the contested property, the former, on June 22,
1914, filed Civil Case No. 1407 with the Court of First Instance against the said Pedro Beltran to
restrain the latter in his official capacity from molesting him in the possession of said second
parcel, and on even date, applied for a writ of preliminary injunction, which was issued against
said municipal president. The Court, by decision promulgated June 12, 1916, declared
permanent the preliminary injunction, which, decision, on appeal, was affirmed by the Supreme
Court on August 21, 1918. From June 22, 1914, the dikes around the property in question
remained closed until a portion thereof was again opened just before the outbreak of the Pacific
War.

On April 17, 1925. Potenciano Garcia applied for the registration of both parcels of land in his
name, and the Court of First Instance of Pampanga, sitting as land registration court, granted the
registration over and against the opposition of the Attorney-General and the Director of Forestry.
Pursuant to the Court's decision, original certificate of title No. 14318, covering said parcels 1
and 2 was issued to the spouses Potenciano Garcia and Lorenza Sioson.

These parcels of land were subsequently bought by Emilio Cruz de Dios in whose name transfer
certificate of title No. 1421 was first issued on November 9, 1925.

Thereafter, the ownership of these properties changed hands until eventually they were acquired
by the herein appellee spouses who hold them by virtue of transfer certificate of title No. 15856.

To avoid any untoward incident, the disputants agreed to refer the matter to the Committee on
Rivers and Streams, by then composed of the Honorable Pedro Tuason, at that time Secretary of
Justice, as chairman, and the Honorable Salvador Araneta and Vicente Orosa, Secretary of
Agriculture and National Resources and Secretary of Public Works and Communications,
respectively, as members. This committee thereafter appointed a Sub-Committee to investigate
the case and to conduct an ocular inspection of the contested property, and on March 11, 1954,
said Sub-Committee submitted its report to the Committee on Rivers and Streams to the effect
that Parcel No. 2 of transfer certificate of title No. 15856 was not a public river but a private
fishpond owned by the herein spouses.

On July 7, 1954, the Committee on Rivers and Streams rendered its decision the dispositive part
of which reads:

"In view of the foregoing considerations, the spouses Romeo Martinez and
Leonor Suarez should be restored to the exclusive possession, use and
enjoyment of the creek in question which forms part of their registered property
and the decision of the courts on the matter be given full force and effect."

The municipal officials of Lubao, led by Acting Mayor Mariano Zagad, apparently refused to
recognize the above decision, because on September 1, 1954, the spouses Romeo Martinez and
Leonor Suarez instituted Civil Case No. 751 before the Court of First Instance of Pampanga
against said Mayor Zagad, praying that the latter be enjoined from molesting them in their
possession of their property and in the construction of the dikes therein. The writ of preliminary
injunction applied for was issued against the respondent municipal Mayor, who immediately
elevated the injunction suit for review to the Supreme Court, which dismissed Mayor Zagad's
petition on September 7, 1953. With this dismissal order herein appellee spouses proceeded to
construct the dikes in the disputed parcel of land.

Some four (4) years later, and while Civil Case No. 751 was still pending the Honorable Florencio
Moreno, then Secretary of Public Works and Communications, ordered another investigation of
the said parcel of land, directing the appellees herein to remove the dikes they had constructed,
on the strength of the authority vested in him by Republic Act No. 2056, approved on June 13,
1958, entitled "An Act To Prohibit, Remove and/or Demolish the Construction of Dams. Dikes, Or
Any Other Walls In Public Navigable Waters, Or Waterways and In Communal Fishing Grounds,
To Regulate Works in Such Waters or Waterways And In Communal Fishing Grounds, And To
Provide Penalties For Its Violation, And For Other Purposes. 1 The said order which gave rise to
the instant proceedings, embodied a threat that the dikes would be demolished should the herein
appellees fail to comply therewith within thirty (30) days.

The spouses Martinez replied to the order by commencing on January 2, 1959 the present case,
which was decided in their favor by the lower Court in a decision dated August 10, 1959, the
dispositive part of which reads:

"WHEREFORE, in view of the foregoing considerations, the Court hereby


declares the decision, Exhibit S, rendered by the Undersecretary of Public Works
and Communications null and void; declares the preliminary injunction, hereto for
issued, permanent, and forever enjoining both respondents from molesting the
spouses Romeo Martinez and Leonor Suarez in their possession, use and
enjoyment of their property described in Plan Psu-9992 and referred to in their
petition."

"Without pronouncement as to costs."

"SO ORDERED."

As against this judgment respondent officials of the Department of Public Works and
Communications took the instant appeal, contending that the lower Court erred:

1. In holding that then Senator Rogelio de la Rosa, complainant in the administrative case, is not
an interested party and his letter-complaint dated August 15, 1958 did not confer jurisdiction
upon the respondent Undersecretary of Public Works and Communications to investigate the
said administrative case;

2. In holding that the duty to investigate encroachments upon public rivers conferred upon the
respondent Secretary under Republic Act No. 7056 cannot be lawfully delegated by him to his
subordinates;

3. In holding that the investigation ordered by the respondent Secretary in this case is illegal on
the ground that the said respondent Secretary has arrogated unto himself the power, which he
does not possess, of reversing, making nugatory, and setting aside the two lawful decisions of
the Court Exhibits K and I, and even annulling thereby, the one rendered by the highest Tribunal
of the land;

4. In not sustaining respondent's claim that petitioners have no cause of action because the
property in dispute is a public river and in holding that the said claim has no basis in fact and in
law;

5. In not passing upon and disposing of respondent's counterclaim;

6. In not sustaining respondent's claim that the petition should not have been entertained on the
ground that the petitioners have not exhausted administrative remedies; and

7. In holding that the decision of the respondents is illegal on the ground that it violates the
principles that laws shall have no retroactive effect unless the contrary is provided and in holding
that the said Republic Act No. 2056 is unconstitutional on the ground that respondents' threat of
prosecuting petitioners under Section 3 thereof for acts done four years before its enactment
renders the said law ex post facto.

The Court of Appeals sustained the above-mentioned assignment of errors committed by the Court of First
Instance of Pampanga and, as previously stated, reversed the judgment of the latter court. From this reversal
this appeal by certiorari was taken, and before this Court, petitioners-appellants assigned the following errors
allegedly committed by the Court of Appeals:

1. THE COURT OF APPEALS ERRED IN DECLARING IN THE INSTANT CASE THAT PARCEL
NO. 2 OF TRANSFER CERTIFICATE OF TITLE NO. 15856 IS A PUBLIC RIVER AND
ORDERING THE CANCELLATION OF ITS REGISTRATION BECAUSE THIS CONSTITUTES A
COLLATERAL ATTACK ON A TORRENS TITLE IN VIOLATION OF THE LAW AND THE WELL-
SETTLED JURISPRUDENCE ON THE MATTER.

2. THE COURT OF APPEALS ERRED IN REOPENING AND RE-LITIGATING THE ISSUE AS


TO WHETHER OR NOT LOT NO. 2 OF TRANSFER CERTIFICATE OF TITLE NO. 15856
REGISTER OF DEEDS OF PAMPANGA, IS A PUBLIC RIVER NOTWITHSTANDING THE
FACT THAT THIS ISSUE HAS BEEN LONG RESOLVED AND SETTLED BY THE LAND
REGISTRATION COURT OF PAMPANGA IN LAND REGISTRATION PROCEEDING NO. 692
AND IS NOW RES JUDICATA.

3. THE COURT OF APPEALS ERRED IN ORDERING THE CANCELLATION OF THE


REGISTRATION OF LOT NO. 2 OF TRANSFER CERTIFICATE OF TITLE NO. 15856
NOTWITHSTANDING THE FACT THAT THE TORRENS TITLE COVERING IT HAS BEEN
VESTED IN THE PETITIONERS WHO ARE THE SEVENTH OF THE SUCCESSIVE
INNOCENT PURCHASERS THEREOF AND WHO IN PURCHASING THE SAME RELIED ON
THE PRINCIPLE THAT THE PERSONS DEALING WITH REGISTERED LAND NEED NOT GO
BEHIND THE REGISTER TO DETERMINE THE CONDITION OF THE PROPERTY.

The 1st and 2nd assignment of errors, being closely related, will be taken up together.

The ruling of the Court of Appeals that Lot No. 2 covered by Transfer Certificate of Title No. 15856 of the
petitioners-appellants is a public stream and that said title should be cancelled and the river covered reverted to
public domain, is assailed by the petitioners-appellants as being a collateral attack on the indefeasibility of the
torrens title originally issued in 1925 in favor of the petitioners-appellants' predecessor-in-interest, Potenciano
Garcia, which is violative of the rule of res judicata. It is argued that as the decree of registration issued by the
Land Registration Court was not re-opened through a petition for review filed within one (1) year from the entry
of the decree of title, the certificate of title issued pursuant thereto in favor of the appellants for the land covered
thereby is no longer open to attack under Section 38 of the Land Registration Act (Act 496) and the
jurisprudence on the matter established by this Tribunal. Section 38 of the Land Registration Act cited by
appellants expressly makes a decree of registration, which ordinarily makes the title absolute and indefeasible,
subject to the exemption stated in Section 39 of the said Act among which are: "liens, claims or rights arising or
existing under the laws or Constitution of the United States or of the Philippine Islands which the statute of the
Philippine Islands cannot require to appear of record in the registry."

At the time of the enactment of Section 496, one right recognized or existing under the law is that provided for in
Article 339 of the old Civil Code which reads as follows:

Property of public ownership is:

1. That destined to the public use, such as roads, canals, rivers, torrents, ports, and bridges
constructed by the State, and banks shores, roadsteads, and that of a similar character. (Par. 1)

The above-mentioned properties are parts of the public domain intended for public use, are outside the
commerce of men and, therefore, not subject to private appropriation. ( 3 Manresa, 6th ed. 101-104.)

In Ledesma v. Municipality of Iloilo, 49 Phil. 769, this Court held:

A simple possession of a certificate of title under the Torrens system does not necessarily make
the possessor a true owner of all the property described therein. If a person obtains title under
the Torrens system which includes by mistake or oversight, lands which cannot be registered
under the Torrens system, he does not by virtue of said certificate alone become the owner of
the land illegally included.

In Mercado v. Municipal President of Macabebe, 59 Phil. 592, it was also said:

It is useless for the appellant now to allege that she has obtained certificate of title No. 329 in her
favor because the said certificate does not confer upon her any right to the creek in question,
inasmuch as the said creek, being of the public domain, is included among the various
exceptions enumerated in Section 39 of Act 496 to which the said certificate is subject by
express provision of the law.

The same ruling was laid down in Director of Lands v. Roman Catholic Bishop of Zamboanga, 61 Phil. 644, as
regards public plaza.

In Dizon, et al. v. Rodriguez, et al., G.R. No. L-20300-01 and G.R. No. L-20355-56, April 30, 1965, 20 SCRA
704, it was held that the incontestable and indefeasible character of a Torrens certificate of title does not operate
when the land covered thereby is not capable of registration.

It is, therefore, clear that the authorities cited by the appellants as to the conclusiveness and incontestability of a
Torrens certificate of title do not apply here. The Land Registration Court has no jurisdiction over non-
registerable properties, such as public navigable rivers which are parts of the public domain, and cannot validly
adjudge the registration of title in favor of a private applicant. Hence, the judgment of the Court of First Instance
of Pampanga as regards the Lot No. 2 of Certificate of Title No. 15856 in the name of petitioners-appellants may
be attacked at any time, either directly or collaterally, by the State which is not bound by any prescriptive period
provided for by the Statute of Limitations (Article 1108, par. 4, new Civil Code). The right of reversion or
reconveyance to the State of the public properties fraudulently registered and which are not capable of private
appropriation or private acquisition does not prescribe. (Republic v. Ramona Ruiz, et al., G.R. No. L-23712, April
29, 1968, 23 SCRA 348; Republic v. Ramos, G.R. No.
L-15484, January 31, 1963, 7 SCRA 47.)

When it comes to registered properties, the jurisdiction of the Secretary of Public Works & Communications
under Republic Act 2056 to order the removal or obstruction to navigation along a public and navigable creek or
river included therein, has been definitely settled and is no longer open to question (Lovina v. Moreno, G.R. No
L-17821, November 29, 1963, 9 SCRA 557; Taleon v. Secretary of Public Works & Communications G.R. No. L-
24281, May 16, 1961, 20 SCRA 69, 74).

The evidence submitted before the trial court which was passed upon by the respondent Court of Appeals shows
that Lot No. 2 (Plan Psu 992) of Transfer Certificate of Title No. 15856, is a river of the public domain. The
technical description of both Lots Nos. 1 and 2 appearing in Original Certificate of Title No. 14318 of the Register
of Deeds of Pampanga, from which the present Transfer Certificate of Title No. 15856 was derived, confirms the
fact that Lot No. 2 embraced in said title is bounded practically on all sides by rivers. As held by the Court of First
Instance of Pampanga in Civil Case No. 1247 for injunction filed by the petitioners' predecessors-in-interest
against the Municipal Mayor of Lubao and decided in 1916 (Exh. "L"), Lot No. 2 is a branch of the main river that
has been covered with water since time immemorial and, therefore, part of the public domain. This finding
having been affirmed by the Supreme Court, there is no longer any doubt that Lot No. 2 of Transfer Certificate of
Title No. 15856 of petitioners is a river which is not capable of private appropriation or acquisition by
prescription. (Palanca v. Com. of the Philippines, 69 Phil. 449; Meneses v. Com. of the Philippines, 69 Phil. 647).
Consequently, appellants' title does not include said river.

II

As regards the 3rd assignment of error, there is no weight in the appellants' argument that, being a purchaser for
value and in good faith of Lot No. 2, the nullification of its registration would be contrary to the law and to the
applicable decisions of the Supreme Court as it would destroy the stability of the title which is the core of the
system of registration. Appellants cannot be deemed purchasers for value and in good faith as in the deed of
absolute conveyance executed in their favor, the following appears:

6. Que la segunda parcela arriba descrita y mencionada esta actualmente abierta, sin
malecones y excluida de la primera parcela en virtud de la Orden Administrative No. 103, tal
como fue enmendada, del pasado regimen o Gobierno.
7. Que los citados compradores Romeo Martinez y Leonor Suarez se encargan de gestionar de
las autoridades correspondientes para que la citada segunda parcela pueda ser convertida de
nuevo en pesqueria, corriendo a cuenta y cargo de los mismos todos los gastos.

8. Que en el caso de que dichos compradores no pudiesen conseguir sus propositos de


convertir de nuevo en pesquera la citada segunda parcela, los aqui vendedores no devolveran
ninguna cantidad de dinero a los referidos compradores; este es, no se disminuiriat el precio de
esta venta. (Exh. 13-a, p. 52, respondents record of exhibits)

These stipulations were accepted by the petitioners-appellants in the same conveyance in the following terms:

Romeo Martinez y Leonor Suarez, mayores de edad, filipinos y residentes en al Barrio de Julo
Municipio de Malabon, Provincia de Rizal, por la presente, declaran que estan enterados del
contenido de este documento y lo aceptan en los precisos terminos en que arriba uedan
consignados. (Exh. 13-a, ibid)

Before purchasing a parcel of land, it cannot be contended that the appellants who were the vendees did not
know exactly the condition of the land that they were buying and the obstacles or restrictions thereon that may
be put up by the government in connection with their project of converting Lot No. 2 in question into a fishpond.
Nevertheless, they willfully and voluntarily assumed the risks attendant to the sale of said lot. One who buys
something with knowledge of defect or lack of title in his vendor cannot claim that he acquired it in good faith
(Leung Lee v. Strong Machinery Co., et al., 37 Phil. 664).

The ruling that a purchaser of a registered property cannot go beyond the record to make inquiries as to the
legality of the title of the registered owner, but may rely on the registry to determine if there is no lien or
encumbrances over the same, cannot be availed of as against the law and the accepted principle that rivers are
parts of the public domain for public use and not capable of private appropriation or acquisition by prescription.

FOR ALL THE FOREGOING, the judgment of the Court of Appeals appealed from is in accordance with law,
and the same is hereby affirmed with costs against the petitioners-appellants.

Makalintal, C.J., Castro, Teehankee and Muñoz Palma, JJ., concur.

Makasiar, J., is on leave.

The Lawphil Project - Arellano Law Foundation

EN BANC

[G.R. No. L-23712. April 29, 1968.]

REPUBLIC OF THE PHILIPPINES, Plaintiff-Appellee, v. RAMONA RUIZ, DOMINGO PINTO, BONIFACIO PINTO, VICTORIA
PINTO, MARIA PINTO, ET AL., Defendants-Appellants.

Solicitor General Arturo A. Alafriz, Assistant Solicitor General Isidro G. Borromeo, Asst. Antonio G. Ibarra, Solicitor Crispin
V. Bautista and Special Attorney Oswald D. Agcaoili for plaintiff- appellee.

Silvestre Br. Bello, for Defendants-Appellants.

SYLLABUS

1. PUBLIC LAND ACT; HOMESTEAD; PROHIBITORY PROVISION AGAINST ALIENATION OR ENCUMBRANCE, MANDATORY
AND A RESOLUTORY CONDITION TO THE APPROVAL OF THE GRANT OF PATENT. — By express provision of Section 118
Commonwealth Act 141, any transfer or alienation of a homestead grant within five years from the issuance of the patent
is forbidden, making said alienation null and void and constituting a cause for reversion of the homestead to the State. In
other words, it is the transgression of the law that nullifies and renders the deed of conveyance null and void and without
effect; not vice-versa.

2. ID.; ID.; POLICY OF THE STATE CANNOT BE INVOKED TO CONDONE VIOLATION OF PUBLIC LAND ACT. — It may
likewise be stated that while the prohibition against alienation of the land grant is designed to preserve it within the
family of the homesteader and to promote small landownership in this country, it is equally true that this policy of the
State cannot be invoked to condone a violation of the Public Land Act and withold enforcement of the provision directing
the reversion of the property to the grantor in case of such violation. For the prohibitory provision against any alienation
or encumbrance of the land grant is not only mandatory, but is considered a condition attached to the approval of every
application.

3. ID.; ID.; CONVEYANCE MADE BY A DECEASED HOMESTEADER BINDING UPON HIS HEIRS. — There is no merit in the
proposition that the heirs should not be made to suffer on account of a violation of law committed by their predecessor.
The heirs may not be considered innocent third parties because there is a privity of interest between them and their
predecessor. They only succeed to whatever rights he had himself and what is valid and binding against him is also valid
and binding against them. (Cruz v. Buenaventura, 84 Phil., 82).

4. ID.; ID.; PATENT REGISTERED UNDER THE LAND REGISTRATION ACT, STILL SUBJECT TO THE PROHIBITION AGAINST
ALIENATION AND ENCUMBRANCE. — Where a grantee is found not entitled to hold and possess the land in fee simple, by
reason of his having violated Section 118 of the Public Land Law, the Court may properly order its reconveyance to the
State, although the property has already been brought under the operation of the Torrens System. The right of the
government to bring an appropriate action for reconveyance is not barred by the lapse of time - the Statute of
Limitations does not run against the State.

DECISION

REYES, J.B.L., Actg. C.J. p: chanrob1es virtua l 1aw lib rary

This is an appeal from the decision of the Court of First Instance of Isabela (in its Civil Case No. Br. II-419), ordering the
cancellation of Original Certificate of Title No. I-1600, substituted by Transfer Certificate of Title No. T-7196, issued in the
names of therein defendants heirs of Cayetano Pinto, and declaring the reversion to the State of the land covered
thereof.

During the hearing of the case in the lower court, the parties submitted the following stipulation of facts: jgc:chanrob les.com. ph

"1. That the plaintiff (Republic of the Philippines) instituted the present action filed with the Court on October 12, 1958
for the reversion of the entire land containing an area of 23 hectares, 97 ares and 57 hectares, covered by Homestead
Patent No. 22711, granted on June 13, 1933 corresponding to Original Certificate of Title No. I- 1600, issued on July 7,
1933 as per Annex ‘1’ of the Complaint in the name of Cayetano Pinto, who died in 1945;

"2. That on May 28, 1937 the registered owner, Cayetano Pinto, married to Ramona Ruiz, sold a portion of 3 hectares of
land covered by Original Certificate of Title No. I-1600 in favor of Jacobo Pinto, married to Herminia Tinonas, for the sum
of of P500.00 as per Annex ‘3’ of the Complaint;

"3. That the Deed of Sale executed by the deceased Cayetano Pinto in favor of Jacobo Pinto who died sometime in 1950,
was never registered in the Office of the Register of Deeds of Isabela, nor annotated at the back of the Original
Certificate of Title No I-1600, as could be verified in Annex ‘1’ of the Complaint;

"4. That Ramona Ruiz and her children executed an extra-judicial partition of the entire land on October 12, 1951 which
was registered on February 2, 1956, reason for the issuance of Transfer Certificate of Title No. T-7196, as per Annex ‘2’
of the Complaint;

"5. That on June 29, 1956, the widow Herminia Tinonas and heirs of the late Jacobo Pinto filed an action against the
widow Ramona Ruiz and heirs of the late Cayetano Pinto for the conveyance of the portion of 3 hectares, sold and
conveyed by the late Cayetano Pinto in favor of the late Jacobo Pinto on May 28, 1937, which case was docketed in the
Court of First Instance of Isabela (Second Branch) as Civil Case No. Br. II-90;

"6. That on August 5, 1958 the Court of First Instance of Isabela, Second Branch, rendered a decision Annex ‘4’ of the
Complaint, declaring that the Deed of Sale executed by the deceased Cayetano Pinto in favor of the deceased Jacobo
Pinto (Annex 3) null and void ab initio, for being in violation of Section 116 of the Public Land Law and dismissed the
complaint with costs against the plaintiffs;

"7. That from the decision of the Court of First Instance of Isabela, Second Branch, mentioned in the next preceding
paragraph, the plaintiffs appealed to the Supreme Court on September 4, 1958, which appeal was dismissed on
November 6, 1959, thereby terminating Civil Case No. Br. II-90 of the Second Branch of the Court of First Instance of
Isabela, whereby the appealed decision became final and executory;

"8. That before the appeal of the plaintiffs in Civil Case No. Br. II-90 has been perfected and the record elevated to the
Supreme Court, the plaintiffs in the above-entitled case filed the instant action against the widow and heirs of the late
Cayetano Pinto, namely: Ramona Ruiz, Domingo Pinto, Bonifacio Pinto, Victoria Pinto, Maria Pinto, Rufina Pinto, Jesusa
Pinto and Teodoro Pinto on October 12, 1958 for cancellation of the Original Certificate of Title No. I-1600 and Transfer
Certificate of Title No T-7196 and the reversion of the land covered by the said titles to the State; and

"9. That on April 23, 1956, the registered owners in Transfer Certificate of Title No. T-7196 mortgaged the entire parcel
of land covered therein to the Philippines National Bank, Santiago Branch, to secure a loan of P4,000.00 and the
mortgaged instrument was registered in the Office of the Register of Deeds of Isabela and annotated at the back of the
Transfer Certificate of Title No. T-7196, on April 24, 1956, as per Annex 2 of the Complaint." cralaw virt ua1aw li bra ry
Based upon the foregoing stipulation, the court ruled that the execution by the homesteader Cayetano Pinto of the
document, Exhibit "C", within the prohibited 5 year period from the issuance of the patent, being in violation of Section
118 of Commonwealth Act 141, produced the effect of annulling and canceling the said patent and thus caused the
reversion to the State of the property thereby covered.

Defendants interposed the present appeal, raising as main issue the alleged lack of cause of action of the complaint. It is
now claimed that (1) the document, Exhibit C, executed by Cayetano Pinto was not a consummated contract of sale, but
a mere unilateral promise to sell without consideration and, consequently, was unenforceable and without effect; (2)
assuming the contract to be one of sale within the prohibited 5-year period and, therefore, null and void, then under
Article 1409 of the Civil Code, said contract is inexistent and without effect and Cayetano Pinto can not be considered to
have committed any violation of the Public Land law at all; (3) to order the reversion of the land to the government
would render nugatory the policy of the State to promote the spread of small land-ownership and presence land grants in
the hands of the underprivileged; (4) the violation of Commonwealth Act 141 by Cayetano Pinto, if there was any, can
not affect the rights of his heirs, particularly of his widow, who allegedly owned 1/2 of the land; (5) the Original
Certificate of Title No. I-1600 in the name of Cayetano Pinto having been canceled and substituted by Transfer Certificate
of Title No. T-7196, issued in the names of his widow and heirs of February 2, 1956, to order their cancellation and the
reversion of the property to the government would be contrary to the principle underlying the Torrens System and (6)
the prohibition under Section 118 of Commonwealth Act 141 contemplates of the alienation or encumbrance of the entire
land grant and not merely of a portion thereof like the one in the present case.

There is no merit to this appeal.

Appellants cannot be heard to question the nature of the document, Exhibit "C", executed by their predecessor-in-
interest. It appears on record that in their motion to dismiss the complaint filed in the court below, appellants, as therein
defendants, averred among others: "While it is true as alleged in the complaint that on May 28, 1937, the late Cayetano
Pinto executed an absolute deed of sale over a portion of three hectares, of the parcel of land covered by Original
Certificate of Title No. I-1600, in favor of one Jacobo Pinto . . ." (p. 51, Record on Appeal) And, when the aforesaid
motion was denied, defendants-appellants admitted in their answer the allegation of the complaint that,." . . on May 28,
1937, four years after the late Cayetano Pinto had been granted the said homestead patent, he executed an absolute
deed of sale over a portion of 3 hectares of the parcel covered by Original Certificate of Title No. I-1600 in favor of one
Jacobo Pinto." (pp. 3, 93, Record on Appeal). The stipulation of facts, submitted by the parties and approved by the
court, likewise stated that Cayetano Pinto "sold a portion of 3 hectares of land covered by Original Certificate of Title No.
I-1600 in favor of Jacobo Pinto, married to Herminia Tinonas, for the sum of P500.00" (p. 121, Record on Appeal). By
defendants’ own admissions in the lower court, therefore, the character of Exhibit C as a deed of sale executed almost
four years after the issuance of the patent to the homesteader Cayetano Pinto has become a settled matter, which they
cannot now dispute on appeal.

We also find as erroneous appellants’ argument that because the deed of sale was null and void, then it may be treated
as not having ever existed, with the result that the grantee Cayetano Pinto cannot be considered to have violated the
Public Land Law. Carried to its logical conclusion, this argument would mean that no violation of law could be punished.

This case is actually no necessity for logical reasoning; by express provision of Section 118 of Commonwealth Act 141,
any transfer or alienation of a homestead grant within five years from the issuance of the patent is forbidden, making
said alienation null and void, 1 and constituting a cause for reversion of the homestead to the State. 2 In other words, it
was the transgression of the law that nullifies and renders the deed of conveyance null and void and without effect; not
vice-versa. Inexistence in law merely signifies that the act cannot be taken into account as source of rights or obligations
for parties as well as strangers; as if it had never existed. Certainly, the law cannot destroy or wipe out physical
existence, and it has never attempted to do so.

It may likewise be stated that while the prohibition against the alienation of the land grant is designed to preserve it
within the family of the homesteader and to promote small land ownership in this country, it is equally true that this
policy of the State cannot be invoked to condone a violation of the Public Land Act and withhold enforcement of the
provision directing the reversion of the property to the grantor in case of such violation. 3 For, the prohibitory provision
against any alienation or encumbrance of the land grant is not only mandatory, 4 but is considered a condition attached
to the approval of every application. 5

Neither is there merit in the proposition that Cayetano Pinto’s heirs should not be made to suffer on account of a violation
of law committed by their said predecessor. In a previous case wherein the same contention was made, this Court
ruled: jgc: chan robles .com.p h

"One other point remains to be explained and that is whether the parties plaintiffs in this case, the widow and children of
the deceased homesteader Jose Lagon, can be considered as bound by the sale made by the husband and whether they
can claim to be third parties as to whom registration should be considered as the operative act of conveyance. As to the
widow, the sale was executed by Jose Lagon in his capacity as administrator of the conjugal partnership. Jose Lagon was
the agent of the conjugal partnership, of which the widow is a partner, and under general principles the act of the
authorized agent is the act of the partners themselves (2 American Jurisprudence, 169, 276). It is not, therefore,
necessary that the widow had actual notice of the sale, and the can not be considered a third person or party in relation
thereto. The sale made by the husband is binding on her. (Cruz v. Buenaventura, 84 Phil. 12, 46 Off. Gaz., 6032).

"As respect the children of Jose Lagon, the other plaintiffs- appellees, they may not be considered third parties because
there is a privity of int