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Republic of the Philippines It appears that on May 14, 1946, Simeon Gallego bought a parcel of land

SUPREME COURT from Loreto Martinez, Presentacion Jereza, Hermenigildo Jereza, Maria Luz
Manila Nele Jereza and Maria Elena Jereza, situated within the poblacion of
Jordan, Sub-Province of Guimaras with an area of 5,031 square meters and
FIRST DIVISION bounded on the North by Jordan River, Joaquin Galve and Custodia
Jalandoni; on the East by Roman Catholic Church and the Municipality of
Jordan; on the South by Graciana Martinez; and on the West by Jordan
G.R. No. 76148 December 20, 1989 River. The above-described parcel of land was then declared for taxation
purposes under Tax Declaration No. 6437. This land was later on sold by
ELISEO CARO, CARLOS CARO, BENITO CARO, CARMEN CARO, Simeon Gallego to Epifanio Caro in 1948. On May 15, 1962, Trinidad
BATAYOLA AND LORENZO CARO, petitioners, Castem, Rolando Iranaya and Eriberto Iranaya sold a parcel of land which
vs. they inherited from Custodia Jalandoni, situated in the poblacion of Jordan,
HON. COURT OF APPEALS, SERAFIN V. RONZALES, JOSE Sub-Province of Guimaras, with an area of 1,011 square meters and
RONZALES, JR. AND GEMME RONZALES, respondents. bounded on the North by Jordan River; on the East by Roman Catholic
Archbishop of Jaro; on the South by Rafael Gaylan; and on the West by
Resurreccion S. Salvilla for petitioners. Jordan River, to Epifanio Caro. The land was then declared for taxation
purposes under Tax Declaration No. 4135. In the same year, Epifanio Caro
bought another parcel of land from the heirs of Rafael Gaylan, situated in the
Tirol & Tirol for private respondents. poblacion of Jordan, Sub-Province of Guimaras, with an area of 1,750
square meters and bounded on the North and East by the heirs of Custodia
MEDIALDEA, J.: Jalandoni; on the South by Simeon Gallego; and on the West by Jordan
River, and declared for taxation purposes under Tax Declaration No. 3638.
This is a petition for review on certiorari of the decision of the Court of
Appeals in AC-G.R. CV No. 01016 entitled, "Epifanio Caro, Plaintiff- In 1963, Epifanio Caro had those three (3) parcels of land surveyed and
Appellant v. Serafin V. Ronsales, et al., Defendants-Appellees," dated were then designated as Lot No. 54. When Blas Gonzales conducted the
January 28, 1986 affirming the decision of the Court of First Instance (now survey, he prepared a plan. Epifanio Caro was given a copy of the plan and
Regional Trial Court) of Iloilo; and its resolution dated September 11, 1986 he just kept it. During that survey, Epifanio Caro pointed the boundaries of
denying the motion for reconsideration. his parcels of land to the survey team. These parcels of land were relocated
in 1968 by the Sirilan Surveying Company and Plan Psu-207820 was
prepared. The parcels of land of Epifanio Caro were denominated as Lot No.
The subject matter of the present controversy is a 260 square meter parcel
54 and the land claimed by the private respondents Serafin V. Ronzales,
of land which, according to petitioners, is included in the parcel of land
Jose Ronzales, Jr. and Gemme Ronzales, as Lot No. 55. Epifanio Caro had
purchased by their predecessor, Epifanio Caro, from Simeon Gallego; but
the three lots consolidated after the survey into one lot, and Tax Declaration
contradicted by the private respondents by claiming it as their own
No. 7688 was issued. During the cadastral proceeding, Epifanio Caro filed
evidenced by a certificate of title issued in their favor. We gathered from the
an answer for Lot 54. There is no showing whether or not a title was issued
records that the questioned land is the eastern portion allegedly included in
to him.
the parcel of land purchased from Simeon Gallego. The trial court ruled in
favor of the private respondents on the grounds of estoppel, absence of
fraud in the registration of the questioned land and prescription. This ruling On the other hand, the private respondents claim that the questioned land
was affirmed by the respondent court. Likewise, We affirm, based on the first was formerly owned by Pascuala Lacson and was declared in her name
two grounds but not on the ground of prescription. under Tax Declaration No. 4234. Pascuala Lacson was married to Domingo
Ronzales. Long before World War II, private respondents and their
predessors-in-interest had been living on the questioned land. When
The antecedent facts are as follows:
Epifanio Caro bought a parcel of land from Simeon Gallego, Jose Ronzales,
Sr., his brother Serafin Ronzales, and sister Gemme Ronzales children of
Domingo Ronzales, and Pascuala Lacson, were already living in a house of Petitioners contend that since private respondents do not own the
semi-strong materials on the questioned land. questioned land, they are mere trustees and this being the case, prescription
does not lie in an action for reconveyance.
Sometime in 1964, another survey was conducted. The parcels of land
claimed by Epifanio Caro were denominated as Lot No. 54 and the land In this regard, the trial court held (p. 413, Records):
claimed by the private respondents was denominated as Lot No. 55.
Epifanio Caro filed an answer for Lot No. 54 and Purificacion Ronzales, An action for reconveyance on the ground of fraud
mother of private respondent Jose Ronzales, Jr. filed an answer for Lot No. prescribes in four (4) years from the time of the decree of
55. No other person or persons filed an answer for Lot No. 55. registration, for the reason that the registration of the
Consequently, Original Certificate of Title No. 0-6836 was issued in the decree constitutes constructive notice to the whole world
names of the private respondents, in equal shares of 1/3 portion each on (Gerona v. de Guzman, G.R. No. L-19060, May 29, 1964,
September 17, 1970. citing the cases J.M. Tuason and Co. vs. Magdangal, G.R.
No. L-15539, June 30, 1962; Abdon v. Abella, C.A. G.R.
In June 1973, the spouses Epifanio Caro and Paz Caro filed an ejectment No. L-29846-R, August 31, 1964).
case against Augusta Chavez, Naciso Galila, Timoteo Parreno, Ramon
Aranduque and Rafael Galotera, involving Lot Nos. 56, 59 and 60. In 1974, Affirming, the respondent court said (p. 29, Rollo):
the spouses filed an ejectment and illegal detainer case against Ramon
Aranduque, Timoteo Parreno and Augusta Chavez, involving Lot No. 54.
... even if a trust relationship had existed, the right to seek
reconveyance prescribed ten (10) years after 1948 when
On June 4, 1975, Epifanio Caro flied a complaint before the Court of First Epifanio Caro was informed by the wife of Jose Ronzales,
Instance of Iloilo (Civil Case No. 10235) for cancellation of Certificate of Title that she inherited the land from her grandmother (de la
No. 0-6836, reconveyance, recovery of possession and damages on the Cerna vs. de la Cerna, 72 SCRA 515; Alzona vs.
ground of fraud. During the pendency of the case, Epifanio Caro died, so he Calupitan, 4 SCRA 450; Carantes vs. Court of Appeals, 76
was substituted by his heirs, namely, Eliseo Caro, Carlos Caro, Benito Caro, SCRA 516). Since there is no trust relationship between
Carmen Caro Batayola and Lorenzo Caro. the ancestors of and between plaintiffs and defendants,
the same action prescribed in 4 years from the issuance of
On November 22, 1982, the trial court dismissed the complaint. On appeal, title on September 17, 1970, because the complaint was
the dismissal was affirmed by the respondent Court of Appeals. The motion filed only on June 4,1975, as ruled by the lower court (de
for reconsideration was denied. Hence, the present petition for review la Cerna vs. de la Cerna, 72 SCRA 515).
on certiorari.
We disagree. The case of Liwalug Amerol, et al. v. Molok Bagumbaran, G.R.
The issues may be limited to the following: No. L-33261, September 30, 1987,154 SCRA 396 illuminated what used to
be a gray area on the prescriptive period for an action to reconvey the title to
1) Whether or not the action in Civil Case No. 10235 has real property and, corollarily, its point of reference:
prescribed;
... It must be remembered that before August 30,1950, the
2) Whether or not fraud attended the issuance of Original date of the effectivity of the new Civil Code, the old Code
Certificate of Title No. 0-6836; and of Civil Procedure (Act No. 190) governed prescription. It
provided:
3) Whether or not the plaintiff in said civil case was in
estoppel. 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 this variance can be explained by the erroneous reliance
accrues: on Gerona vs. de Guzman. But in Gerona, the fraud was
discovered on June 25,1948, hence Section 43(3) of act
xxx xxx xxx 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
3. Within four years: .... An action for relief on the ground 1456, are new provisions. They have no counterparts in
of fraud, but the right of action in such case shall not be the old Civil Code or in the old Code of Civil Procedure,
deemed to have accrued until the discovery of the fraud; the latter being then resorted to as legal basis of the four-
year prescriptive period for an action for reconveyance of
xxx xxx xxx title of real property acquired under false pretenses.

In contrast, under the present Civil Code, we find that just An action for reconveyance has its basis in Section 53, paragraph 3 of
as an implied or constructive trust is an offspring of the law Presidential Decree No. 1529, which provides:
(Art. 1456, Civil Code), so is the corresponding obligation
to reconvey the property and the title thereto in favor of the In all cases of registration procured by fraud, the owner
true owner. In this context, and vis-a-vis prescription, may pursue all his legal and equitable remedies against
Article 1144 of the Civil Code is applicable. the parties to such fraud without prejudice, however, to the
rights of any innocent holder of the decree of registration
Article 1144. The following actions must be brought within on the original petition or application, ...
ten years from the time the right of action accrues:
This provision should be read in conjunction with Article 1456 of the Civil
(1) Upon a written contract; Code, which provides:

(2) Upon an obligation created by law; Article 1456. If property is acquired through mistake or
fraud, the person obtaining it is, by force of law,
(3) Upon a judgment. considered a trustee of an implied trust for the benefit of
the person from whom the property comes.

xxxxxxxxx
The law thereby creates the obligation of the trustee to reconvey the
property and the title thereto in favor of the true owner. Correlating Section
(Emphasis supplied). 53, paragraph 3 of Presidential Decree No. 1529 and Article 1456 of the Civil
Code with Article 1144(2) of the Civil Code, supra, the prescriptive period for
An action for reconveyance based on an implied or the reconveyance of fraudulently registered real property is ten (10) years
constructive trust must perforce prescribe in ten years and reckoned from the date of the issuance of the certificate of title. In the
not otherwise. A long line of decisions of this Court, and of present case, therefore, inasmuch as Civil Case No. 10235 was filed on
very recent vintage at that, illustrates this rule. June 4, 1975, it was well-within the prescriptive period of ten (10) years from
Undoubtedly, it is now well-settled that an action for the date of the issuance of Original Certificate of Title No. 0-6836 on
reconveyance based on an implied or constructive trust September 17, 1970.
prescribes in ten years from the issuance of the Torrens
title over the property. The only discordant note, it seems, Unfortunately for the petitioners, however, We agree with the respondent
is Balbin vs. Medalla which states that the prescriptive court and the trial court that the private respondents did not employ any
period for a reconveyance action is four years. However,
fraud in securing title to the questioned land. A perusal of the pertinent We would like now to object to this line of questioning
portions of the deposition of Epifanio Caro supports this finding, to wit: because this is irrelevant, immaterial, and impertinent, not
being raised in the complaint. Not one of the issues in this
ATTY. TANEO: case.

Q Now, at the time you bought this land from Simeon ATTY. GRIJALVO:
Gallego in 1948, who was residing in that shack?
Subject to the objection, witness may answer.
A There was no more shack, but there was a big house.
WITNESS:
Q And who was residing on that big house?
A They told me that they will just pay the rent.
A Jose and his wife and children, and his sister.
ATTY. TANEO:
Q Since according to you at the time you bought this land
from Simeon Gallego there was already that big house Q Did you agree?
occupied by Jose Ronzales and his wife, their children and
sister, did you make any demand from them to vacate the A I agreed. I consented, but they merely promised and
premises since you have already purchased the land from promised to me, but they did not pay anything.
Simeon Gallego?
Q In other words you mean that after they suggested to
A I informed them that I have already bought the lot from rent the land and you agreed, you made several demands
Simeon Gallego, and I demanded from them rental of the from them to pay the rentals?
house, because their house was already there at the time I
bought the land.
A Yes, sir, I demanded from them the rentals. But later
when I demanded from them the payment of the rent, they
Q And what was their answer, if any, to your demand? told me that it is not my land being occupied by their
house, but it is the land of the municipality.
A They promised me that they will also pay the rent, or if I
wish to sell the land to them, they will buy the same. But I Q Around how many times did you demand from them for
told them that I will not sell the land. the payment of the rentals?

Q Now, since you told them that you did not want to sell to A Two times. And on the second time you demanded for
them the portion of the land occupied by their big house, the payment of rentals and they did not still pay, what was
what did they, if any, suggest to you regarding their their reason, if any?
occupancy of the land?
ATTY. ALINIO:
ATTY. ALINIO:
Objection, because the witness has already answered the
same or similar questions.
ATTY. TANEO: A Yes, sir.

The witness stated that he made around two demands for Q When was this when this Purit mentioned to you about
the payment of rentals. When he made the demand later this Lot 55?
after there was an agreement that they would just pay the
rental, they reasoned out that the land occupied by their A When I bought said land. (pp. 215-216, Records)
house is a portion of the land of the municipality. Since the
witness stated that there was a second demand, the
purpose now of the pending question is if there was any It is clear, therefore, that as early as 1948, Epifanio Caro was already aware
other reason stated by them. of the adverse claim of the private respondents. He should have been
vigilant of his right as the allegedly new owner of the questioned land. What
he did was the reverse, he slept on his rights for a number of years. In the
ATTY. GRIJALVO: recent case of Bagtas v. Court of Appeals, et al., G.R. No. L-50732, August
10, 1989, We held that considerable delay in asserting one's right before a
Subject to the objection, witness may answer. court of justice is strongly persuasive of the lack of merit of his claim, since it
is human nature for a person to enforce his right when same is threatened or
WITNESS: invaded. Thus, he is estopped by laches from questioning the ownership of
the questioned land. Not only that. There is also estoppel in pais in this case
because Epifanio Caro filed his answer with respect to Lot No. 54 only while
A They will not pay, because according to them the land Purificacion Villanueva flied her answer with respect to Lot No. 55 (see
on which their house stands is a portion of the land owned Tijam, et al. v. Sibonghanoy, et al., G.R. No. L-21450, April 15,1968, 23
by the municipality. But actually it is my own, and the SCRA 29). In addition, the trial court observed (pp. 414-415, Records):
municipality has nothing to do with it. (pp. 207-212,
Records) ...
The Tax Declaration of the land bought by Epifanio Caro,
Exhibit 4, states that its adjacent owner on the east is
ATTY. TANEO: Pascual (sic) Lacson who is the grandmother of the
defendants. When said land was declared in the name of
Q The last time you stated that you know Lot No. 55. Epifanio Caro in 1969, the adjacent owner on the East is
When for the first time did you know about this Lot 55? still Pascuala Lacson, Exhibit E. The Tax Declaration of
the land bought by Epifanio Caro from the heirs of
A I know this lot for the first time when I bought this lot Custodia Jalandoni, Exhibit 8 shows that the land in
from Simeon Gallego. question is not an adjacent property. The same is true with
the Tax Declaration of the land bought by Epifano Caro
from the heirs of Rafael Gaylan, Exhibit 9. This clearly
Q At that time did you know that this lot already bears Lot shows that Lot No. 55 which originally belonged to
No. 55? Pascuala Lacson is a different and distinct parcel from the
lands bought by Epifanio Caro from Simeon Gallego, from
A I know it because one Purit told me that she inherited the heirs of Custodia Jalandoni and from the heirs of
the same from her grandmother. Rafael Gaylan (sic).

Q This Purit you are mentioning, are you referring to While We commiserate with the petitioners because of Epifanio Caro's lack
Purificacion Villanueva Ronsales, who is the widow of of formal education still, his negligence and belated action were undoubtedly
Jose Ronsales? the root cause of the present controversy:
Q Is this the same survey plan which Mr. Gonzales gave A No, because I already knew that lot was owned by
you? Martinez.

A That is the one but I have not read it because I do not Q And therefore, I gather from you that you relied on your
understand English or Spanish because I have never gone knowledge, own knowledge when you purchased the land
to school (p. 217, Records). from Simeon Gallego about the boundaries of the land?

xxx xxx xxx A I relied on my own knowledge because I know it fully


well. "
Q Now, when the cadastral survey was conducted, did you
take occasion to verify also the cadastral survey of your Q You did not, you said, anymore examine the tax
lot? declaration?

A I did not bother anymore because I entrusted everything A I did not bother because I knew that the lot was owned
to them (p. 232, Records). by Martinez.

xxx xxx xxx Q Did you inquire also from the Martinezes the boundaries
of their lots?
Q Now, when you purchased the lot from Simeon Gallego
because you said you could not read English nor Spanish, A I did not bother because I knew fully well because since
did you ask the help of somebody else to explain to you 1909 I was aready there in the church (pp. 251-253,
the document? Records).

A I have not asked the help of anybody. In other words ACCORDINGLY, the petition is hereby DENIED. The decision dated
you did not read nor understand the sale in your favor January 28,1986 and the resolution dated September 11, 1986 of the
executed by Simeon Gallego? respondent Court of Appeals are AFFIRMED subject to the MODIFICATION
regarding prescription.
A I have confidence in him because it was prepared by the
father of the mayor. SO ORDERED.

Q Did you not inquire from Simeon Gallego of the


boundaries of the church from him?

A Before that I knew that the boundaries of the lot of


Loreta Martinez was the municipal building, a road and a
church.

Q Now, before you purchase the property from Simeon


Gallego did you not also ask the help of somebody to
examine the tax declaration in the name of Simeon
Gallego?
G.R. No. 156357 February 18, 2005 Subsequently, the property was surveyed by Cadastral Land Surveyor
Mauro U. Gabriel on January 22, 1964. The plan survey was approved on
ENGR. GABRIEL V. LEYSON, DR. JOSEFINA L. POBLETE, FE LEYSON September 30, 1966.10 The property covered by T.D. No. 008876 was
QUA, CARIDAD V. LEYSON and ESPERANZA V. LEYSON, petitioners, identified as Lot No. 17150 of Cebu Cadastre No. 12, while the property
vs. covered by T.D. No. 01979-R was identified as Lot No. 13272. On May 22,
NACIANSINO BONTUYAN and MAURECIA B. BONTUYAN, respondents. 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
₱4,000.00. Lourdes Leyson took possession of the property and had it
DECISION 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.
CALLEJO, SR., J.: No. 2382113 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.
This is a petition for review on certiorari of the Decision1 of the Court of 01-001-00646. All these tax declarations were in the names of the spouses
Appeals (CA), as well as its Resolution in CA-G.R. CV No. 64471 denying Noval.15
the motion for reconsideration of the said decision.
Meanwhile, Lourdes Leyson paid for the realty taxes over the property.
The Antecedents However, the tax declaration issued thereon continued to be under the
names of the spouses Noval.16

Calixto Gabud was the owner of a parcel of land located in Barangay


Adlawon, Mabolo, Cebu City, which was declared for taxation purposes Despite his knowledge that the property had been purchased by his son-in-
under Tax Declaration (T.D.) No. 03276-R in 19452 with the following law and daughter, the spouses Noval, Gregorio Bontuyan, who was then 91
boundaries: 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
North Calixto Gabud East Marcelo Cosido 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.
South Pedro Bontuyan West Asuncion Adulfo.3 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
Because of the construction of a provincial road, the property was divided
Gregorio Bontuyan under OCT No. 0-1618. He then declared Lot No. 17150
into two parcels of land covered by T.D. No. 03276-R and T.D. No. 01979-R.
for taxation purposes under T.D. No. 13596 effective 1974.19 On February
On February 14, 1948, Gabud executed a Deed of Absolute Sale 4 over the
20, 1976, Gregorio Bontuyan executed a Deed of Absolute Sale 20 over Lot
property covered by T.D. No. 03276-R, as well as the other lot covered by
No. 17150 in favor of his son, Naciansino Bontuyan.
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 On April 28, 1980, Gregorio Bontuyan, then 103 years old, executed another
January 5, 1959, Tabal executed a Deed of Sale 6 over the property covered Deed of Absolute Sale21 over Lot Nos. 13272 and 17150, covered by OCT
by T.D. No. 13615-R in favor of Simeon Noval, married to Vivencia No. 0-1618 and OCT No. 0-1619, respectively, in favor of Naciansino
Bontuyan, daughter of Gregorio Bontuyan, for ₱800.00. T.D. No. 13615-R Bontuyan for ₱3,000.00. On the basis of the said deed, OCT No. 0-1619
was cancelled by T.D. No. 100356 in the names of the spouses was cancelled by TCT No. 1392 in the name of Naciansino Bontuyan on
Noval.7 Gregorio Bontuyan received a copy of the said tax declaration in December 2, 1980.22 Gregorio Bontuyan died intestate on April 12, 1981.23
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 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 (b) Ordering defendant to pay the plaintiffs the amount of Twenty
₱11,200.00.24Naciansino Bontuyan had earlier executed an affidavit that the Thousand Pesos (₱20,000.00) as the share of the plaintiffs of the
property was not tenanted. Shortly thereafter, the spouses Bontuyan left the produce of the lots in question;
Philippines and resided in the United States. Meanwhile, Lourdes Leyson
died intestate. (c) Ordering defendant to pay plaintiffs the sum of ₱50,000.00 as
reimbursement of attorney’s fees and the further sum of ₱500.00 as
The spouses Bontuyan returned to the Philippines in 1988 to redeem the appearance fee every time the case is called for trial;
property from DBP only to discover that there were tenants living on the
property installed by Engineer Gabriel Leyson, one of the late Lourdes (d) Ordering the defendant to pay plaintiffs the sum of ₱50,000.00
Leyson’s children. Despite being informed that the said spouses owned the as moral damages and exemplary damages may be fixed by the
property, the tenants refused to vacate the same. The tenants also refused court;
to deliver to the spouses the produce from the property. The spouses
Bontuyan redeemed the property from DBP on September 22, 1989.
(e) Ordering defendant to pay plaintiffs the sum of ₱5,000.00 as
actual expenses for the preparation and filing of the complaint;
On February 12, 1993, Jose Bontuyan, Nieves Atilano, Pacifico Bontuyan,
Vivencia Noval and Naciansino Bontuyan, the surviving heirs of Gregorio
Bontuyan, executed an Extrajudicial Settlement25 of the latter’s estate and (f) Ordering defendant to pay the costs; 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 (g) Granting to plaintiffs such other reliefs and remedies just and
over the said property starting 1994. equitable in the premises.27

On June 24, 1993, Naciansino Bontuyan, through counsel, wrote Engr. In his answer to the complaint, Engr. Leyson averred, by way of affirmative
Gabriel Leyson, demanding that he be furnished with all the documents defenses, that the two lots were but portions of a parcel of land owned by
evidencing his ownership over the two lots, Lots Nos. 17150 and Calixto Gabud, covered by T.D. No. 03276-R, and was subdivided into two
13272.26 Engr. Leyson ignored the letter. 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
The spouses Bontuyan, thereafter, filed a complaint against Engr. Leyson in to Simeon Noval, married to Vivencia Bontuyan, one of the children of
the Regional Trial Court (RTC) of Cebu City for quieting of title and Gregorio Bontuyan; Simeon Noval later sold the property to Lourdes Leyson
damages. They alleged that they were the lawful owners of the two lots and on May 22, 1968 who, forthwith, took possession thereof as owner; and
when they discovered, upon their return from the United States, that the Gregorio Bontuyan was issued a free patent over the property through fraud.
property was occupied and cultivated by the tenants of Engr. Leyson, they Engr. Leyson concluded that the said patent, as well as OCT No. 0-1619
demanded the production of documents evidencing the latter’s ownership of and TCT No. 1392, were null and void and that the plaintiffs acquired no title
the property, which was ignored. over the property.

The spouses Bontuyan prayed that, after due proceedings, judgment be Engr. Leyson interposed a counterclaim against the spouses Bontuyan and
rendered in their favor, thus: 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:
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) Dismissing Plaintiffs’ complaint for failure to include
indispensable parties;
(a) Confirming the ownership of the plaintiffs on the lots in question;
b) Declaring the Defendant and his four (4) sisters, namely, Dr. b) Declaring the Defendant and his four (4) sisters, namely: Dr.
Josefina L. Poblete, Mrs. Fe L. Qua, Esperanza Leyson and Josefina L. Poblete; Mrs. Fe L. Qua, Esperanza Leyson and
Caridad Leyson as the true and legal owners and possessors of the Caridad Leyson as the true and legal owners and possessors of the
parcels of land in issue; parcels of land in issue;

c) Declaring OCT No. 0-1619 in the name of Gregorio Bontuyan c) Declaring OCT No. 0-1619 in the name of Gregorio Bontuyan
and TCT No. 1392 in the name of Naciansino Bontuyan null and 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 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 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, four (4) sisters, namely: Dr. Josefina L. Poblete, Mrs. Fe L. Qua,
Esperanza V. Leyson and Caridad V. Leyson; Esperanza V. Leyson and Caridad V. Leyson;

d) And on the Counterclaim, to order Plaintiffs to pay the Defendant d) On the Counterclaim, Plaintiffs should pay the Defendants the
the following sums: following sums:

d-1) ₱50,000.00 as attorney’s fees and appearance fee of d-1) ₱50,000.00 as attorney’s fees and appearance fee of
₱1,000.00 per hearing; ₱1,000.00 per hearing;

d-2) ₱500,000.00 as moral damages; d-2) ₱500,000.00 as moral damages to each Intervenor;

d-3) ₱20,000.00 as exemplary damages; d-3) ₱50,000.00 as exemplary damages;

d-4) ₱10,000.00 as expenses of litigation. d-4) ₱15,000.00 as expenses of litigation.

Defendant further prays for such other reliefs just and equitable in the Defendant further prays for such other reliefs just and equitable in the
premises.28 premises.29

In due course, the other children of Lourdes Leyson, namely, Dr. Josefina L. In their reply, the spouses Bontuyan averred that the counterclaim of the
Poblete, Fe Leyson Qua, Caridad V. Leyson and Esperanza V. Leyson, defendants for the nullity of TCT No. 1392 and the reconveyance of the
were allowed to intervene as defendants. They filed their answer-in- property was barred by laches and prescription.
intervention wherein they adopted, in their counterclaim, paragraphs 7 to 26
of the answer of their brother, Engr. Leyson, the original defendant. They On January 21, 1999, the trial court rendered judgment in favor of the
prayed that, after due hearing, judgment be rendered in their favor as Leyson heirs and against the spouses Bontuyan. The fallo of the decision
follows: reads:

Wherefore, this Honorable Court is prayed to render judgment in favor of the WHEREFORE, foregoing considered judgment is hereby rendered
Defendant and the Defendants-in-Intervention and against the Plaintiffs as dismissing plaintiff’s complaint for dearth of evidence declaring the
follows: 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
a) Promissory Plaintiffs’ complaint for failure to include Gregorio Bontuyan and TCT No. 1392 in the name of Naciansino Bontuyan
indispensable parties and for lack of cause of action; 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 Second Assignment of Error
intervenors Josefina Poblete, Fe Qua, Esperanza Leyson and Caridad
Leyson; ordering plaintiff to pay defendant and intervenors the following: THE HONORABLE COURT OF APPEALS GRAVELY ERRED WHEN IT
RULED THAT PETITIONERS’ ANSWER WITH COUNTERCLAIM,
a) ₱50,000.00 attorney’s fees; PRAYING FOR THE CANCELLATION OF PLAINTIFFS’ TORRENS
CERTIFICATE IS A MERE COLLATERAL ATTACK ON THE TITLE.31
b) 1,000.00 per appearance;
Third Assignment of Error
c) 100,000.00 moral damages for defendant and intervenors;
THE APPELLATE COURT GRAVELY ERRED WHEN IT MODIFIED THE
d) 10,000.00 exemplary damages; and 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
e) 10,000.00 litigation expenses. LOT 17150 UNDER OCT NO. 0-1619 AND PRESENTLY COVERED BY
TCT NO. 1392 IN THE NAME OF NACIANSINO BONTUYAN, DESPITE
SO ORDERED.30 THE APPELLATE COURT’S AFFIRMING THE FINDINGS OF THE TRIAL
COURT THAT FRAUD WAS COMMITTED BY GREGORIO BONTUYAN
The trial court held that Simeon Noval had sold the lots to Lourdes Leyson (RESPONDENTS’ PREDECESSOR-IN-INTEREST) IN ACQUIRING TITLE
on May 22, 1968, who thus acquired title over the property. OVER THE SUBJECT PROPERTIES.32

The spouses Bontuyan appealed the decision to the CA which affirmed, with Fourth Assignment of Error
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 THE HONORABLE COURT OF APPEALS GRAVELY ERRED WHEN IT
were the owners of Lot No. 17150. The CA ruled that the answer of the RULED THAT RECONVEYANCE OF TITLE OF LOT 17150 COVERED BY
Leyson heirs to the complaint constituted a collateral attack of OCT No. 0- OCT NO. 0-1619 AND PRESENTLY COVERED BY TCT NO. 1392, IN
1619 which was proscribed by law. The Leyson heirs filed a motion for FAVOR OF PETITIONERS HAD PRESCRIBED.33
reconsideration of the decision insofar as Lot No. 17150 was concerned,
contending that their counterclaim for the nullification of OCT No. 0-1619 Fifth Assignment of Error
contained in their answer constituted a direct attack on the said title. The CA
denied the motion.
THE APPELLATE COURT GRAVELY ERRED IN NOT GRANTING
ATTORNEY’S FEES AND APPEARANCE FEES DESPITE
The Leyson heirs then filed a petition for review with this Court and made the RESPONDENTS’ FRAUD IN ACQUIRING TITLE OVER THE SUBJECT
following assignments of error: PROPERTIES.34

First Assignment of Error 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 HONORABLE COURT OF APPEALS COMMITTED ERROR WHEN IT the validity of OCT No. 0-1619. They maintain that the appellate court’s
RULED THAT THE NULLITY OR THE VALIDITY OF OCT NO. 0-1619 reliance on the ruling of this Court in Cimafrancia v. Intermediate Appellate
CANNOT BE RULED UPON IN THESE PROCEEDINGS BROUGHT BY Court35 was misplaced. They assert that what is controlling is the ruling
THE RESPONDENTS FOR THE QUIETING OF THEIR TITLE. in Pro Line Sports Center, Inc. v. Court of Appeals36 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 This case involves two parcels of land – Lot 17150 and Lot 13273. Lot
complaint should be liberally construed so as to afford them substantial 17150 is registered under the Torrens System under the names of plaintiffs-
justice. appellants, while Lot 13273 remained to be unregistered.

On the other hand, the respondents assert that the decision of the CA is In this case, records show that defendant-appellee and intervenors-
correct. They claim that Lot No. 17150 was still public land when Lourdes appellees are the true owners of the subject lots. They have in their favor tax
Leyson purchased the same from Simeon Noval, and that the property receipts covering the subject lots issued since 1945.
became private land only when Free Patent No. 510463 was issued to and
under the name of Gregorio Bontuyan. While, indeed, tax receipts and declarations are not incontrovertible
evidence of ownership, such, however, if accompanied with open, adverse,
We agree with the contention of the petitioners that the CA erred in not continuous possession in the concept of an owner, as in this case, constitute
nullifying OCT No. 0-1619 and TCT No. 1392 and ordering the respondents evidence of great weight that person under whose name the real taxes were
to reconvey the property covered by the said title to the petitioners. declared has a claim of right over the land.

The respondents, as plaintiffs in the court a quo, were burdened to prove Further, defendant-appellee and intervenors-appellees presented before the
their claim in their complaint that Gregorio Bontuyan was the owner of Lot trial court the Deed of Absolute Sale dated February 14, 1948, executed by
No. 17150 and that they acquired the property in good faith and for valuable Calixto Gabud, conveying the subject lots in favor of Protacio Tabal. The
consideration from him.37 However, the respondents failed to discharge this deed is a notarial document.
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 Likewise presented is the Deed of Absolute Sale of the subject lots dated
property to Simeon Noval on January 5, 1959.39 Simeon Noval then sold the January 5, 1959, executed by Protacio Tabal in favor of spouses Simeon
property to Lourdes Leyson on May 22, 1968.40The respondents failed to Noval and Vivencia Bontuyan. The document is, likewise, a notarial
adduce any evidence to prove that Lourdes Leyson, or even Simeon Noval, document.
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 Defendant-appellee and intervenors-appellees also presented the Deed of
latter’s wife, the respondents herein. As the Latin adage goes: NEMO DAT Absolute Sale of the subject lots dated May 22, 1968, executed by spouses
QUOD NON HABET. Gregorio Bontuyan could not feign ignorance of Simeon Noval and Vivencia Bontuyan in favor of Lourdes Leyson. The deed
Simeon Noval’s ownership of the property, considering that the latter was his is a notarial document.
son-in-law, and that he (Gregorio Bontuyan) was the one who received the
owner’s copy of T.D. No. 100356 covering the property under the name of A notarial document is evidence of the facts in clear, unequivocal manner
Simeon Noval.41 At the dorsal portion of the said tax declaration, there was therein expressed. It has in its favor the presumption of regularity. It is
even an annotation that the property was transferred to Simeon Noval as admissible in evidence without necessity of preliminary proof as to its
shown by the deed of sale executed before Notary Public Gregorio A. Uriarte authenticity and due execution.
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 There exist (sic) no trace of irregularity in the transfers of ownership from the
respondents failed to adduce in evidence any receipts of real property tax original owner, Calixto Gabud, to defendant-appellee and intervenors-
payments made on the property under their names, which would have appellees.
fortified their claim that they were the owners of the property. We agree with
the findings of the CA, thus:
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 fraud. It does not permit one to enrich himself at the expense of another.
and intervenors-appellees should be disturbed in their ownership and Where one does not have any rightful claim over a real property, the torrens
possession of the same.43 system of registration can confirm or record nothing.45

As copiously shown by the record, Gregorio Bontuyan filed his application The findings of the CA affirmed the findings of the trial court in its decision,
for a free patent with the Bureau of Lands on December 4, 1968 in gross thus:
bad faith, thereby defrauding Lourdes Leyson of the said property through
deceit. Gregorio Bontuyan falsely declared in the said application: (a) that he After having thoroughly analyzed the records and the evidences adduced
entered upon and cultivated the property since 1918 and that the property during the trial of this case, this Court is convinced and sincerely believes
was not claimed or occupied by any person; and (b) that Lot No. 17150 was that the lots in question were originally owned by Calixto Gabud as
located in Sirao, Cebu City, when, in fact, the property was located in evidenced by T.D. [No.] 03276R marked as Exh. "1." In 1945, this consisted
Adlawon, Cebu City. Lourdes Leyson was not notified of the said application of only one lot in Adlawon, Cebu City, as there was no provincial road yet.
and failed to file any opposition thereto. Gregorio Bontuyan was then able to However in 1948, the said parcel of land was divided into two because a
secure Free Patent No. 510463 on November 19, 1971 and OCT No. 0-1619 provincial road was constructed passing through it. Hence, T.D. [No.]
on March 21, 1974. It appears in the said title that the property’s location 03276R and T.D. [No.] 01979-R were issued to Calixto Gabud. On February
was indicated as "Sirao, Cebu City."44 Indeed, the CA declared that Gregorio 16, 1948, Calixto Gabud sold the said parcels of land to spouses Protacio
Bontuyan had acquired title to the property through fraud: Tabal and Ludegaria (sic) Bontuyan as evidenced by an Absolute Deed of
Sale, Exh. "2." On January 5, 1959, spouses Protacio Tabal and Ludegaria
However, as to Lot No. 17150, We find that despite the fraud committed by (sic) Bontuyan, in turn, sold the same parcels of land to spouses Simeon
Gregorio Bontuyan (plaintiffs-appellants’ predecessor-in-interest) in Noval and Vivencia Bontuyan as evidenced by a Deed of Sale, Exh. "4." It is
acquiring his title over the said lot, ownership over the said lot should be noteworthy to mention at this point in time that Vivencia Bontuyan is one of
adjudged in favor of plaintiffs-appellants. the daughters of Gregorio Bontuyan, the father of herein plaintiff Naciansino
Bontuyan. In May 1968, spouses Simeon Noval and Vivencia Bontuyan sold
Records, indeed, show that, at the time when Gregorio Bontuyan applied for the subject parcels of land to Lourdes vs. (sic) Leyson, the mother of herein
Free Patent, Gregorio Bontuyan was living with his daughter, Vivencia defendant as evidenced by a Deed of Sale marked as Exh. "6." It is quite
Bontuyan (defendant-appellee’s predecessor-in-interest). Thus, Gregorio perplexing for the court to imagine that Gregorio Bontuyan, father of herein
Bontuyan must have known that at the time when he applied for free patent plaintiff, who was then residing with spouses Simeon Noval and Vivencia
on December 1968, the subject lots were already sold on May 1968 by his Bontuyan at 179 C San Jose dela Montaña, Mabolo, Cebu City, as reflected
daughter Vivencia Bontuyan in favor of Lourdes Leyson, predecessor-in- in his application for Free Patent (Exhs. "8" & "26") dated December 4, 1968
interest of defendants-appellees. 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
Moreover, records further show that Gregorio Bontuyan sold twice Lot [No.] 1968, Gregorio Bontuyan applied for Free Patent for the same parcels of
17150 to plaintiffs-appellants. The first was in 1976 and the other was in land in December 1968 claiming to have cultivated the land since 1918,
1980. Plaintiffs-appellants offered no reasonable explanation why Gregorio stating therein the location as Sirao and not Adlawon which is the true and
Bontuyan have (sic) to sell twice Lot No. 17150 in favor of plaintiffs- correct location. Sirao and Adlawon are two different barangays which are
appellants. 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#
As found by the trial court, these are badges of bad faith which affect the 0-1619 was issued to Gregorio Bontuyan covering subject property, the
validity of the title of Gregorio Bontuyan over the subject lots. location of which is in Barangay Sirao in consonance to his application.
Gregorio Bontuyan’s application for Free Patent over subject parcels of land
We are aware that the torrens system does not create or vest title. It only had raised in the mind of this Court reasonable badges of bad faith on his
confirms and records title already existing and vested. It does not protect a part as the subject parcels of land were already sold by his daughter
usurper from the true owner. It cannot be a shield for the commission of 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 issuance of the certificate of title over the property. In an action for
the subject parcels of land twice to his son Naciansino Bontuyan in 1976 and reconveyance, the decree of registration is highly regarded as
1980, respectively, wherein both Deeds of Sale were notarized by different incontrovertible. What is sought instead is the transfer of the property or its
Notary Publics, (Exhs. "10" & "16").46 title, which has been wrongfully or erroneously registered in another
person’s name, to its rightful or legal owner, or to one who has a better
Considering that Lourdes Leyson was in actual possession of the property, right.50
the respondents cannot, likewise, claim that they were in good faith when
Gregorio Bontuyan allegedly sold the property to them on April 28, However, in a series of cases, this Court declared that an action for
1980.1awphi1.nét 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
Anent the third and fourth assignments of error, we do not agree with the Appeals,51 the Court held:
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 ... [A]n action for reconveyance of a parcel of land based on implied or
answers to the complaint, the petitioners inserted therein a counterclaim constructive trust prescribes in ten years, the point of reference being the
wherein they repleaded all the material allegations in their affirmative date of registration of the deed or the date of the issuance of the certificate
defenses, that Gregorio Bontuyan secured OCT No. 0-1619 through fraud of title over the property, but this rule applies only when the plaintiff or the
and deceit and prayed for the nullification thereof. 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
While Section 47 of Act No. 496 provides that a certificate of title shall not be property, as the defendants are in the instant case, the right to seek
subject to collateral attack, the rule is that an action is an attack on a title if reconveyance, which in effect seeks to quiet title to the property, does not
its object is to nullify the same, and thus challenge the proceeding pursuant prescribe. The reason for this is that one who is in actual possession of a
to which the title was decreed.l^vvphi1.net The attack is considered direct piece of land claiming to be the owner thereof may wait until his possession
when the object of an action is to annul or set aside such proceeding, or is disturbed or his title is attacked before taking steps to vindicate his right,
enjoin its enforcement. On the other hand, an attack is indirect or collateral the reason for the rule being, that his undisturbed possession gives him a
when, in an action to obtain a different relief, an attack on the proceeding is continuing right to seek the aid of a court of equity to ascertain and
nevertheless made as an incident thereof.47 Such action to attack a determine the nature of the adverse claim of a third party and its effect on
certificate of title may be an original action or a counterclaim in which a his own title, which right can be claimed only by one who is in possession.
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 Similarly, in the case of David v. Malay,52 the same pronouncement was
becomes the defendant. It stands on the same footing and is to be tested by reiterated by the Court:
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 title’s validity are ... There is settled jurisprudence that one who is in actual possession of a
now before the Court, to require the party to institute cancellation piece of land claiming to be owner thereof may wait until his possession is
proceedings would be pointlessly circuitous and against the best interest of disturbed or his title is attacked before taking steps to vindicate his right, the
justice.49 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
The CA, likewise, erred in holding that the action of the petitioners to assail determine the nature of the adverse claim of a third party and its effect on
OCT No. 0-1619 and TCT No. 1392 and for the reconveyance of the his own title, which right can be claimed only by one who is in possession.
property covered by the said title had already prescribed when they filed No better situation can be conceived at the moment for Us to apply this rule
their answer to the complaint. 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
Case law has it that an action for reconveyance prescribes in ten years, the that the land she had been occupying and cultivating all these years, was
point of reference being the date of registration of the deed or the date of 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 owners thereof. The trial court’s award of ₱50,000.00 for attorney’s fees to
certificate of title covering it, accrued only from the time the one in the petitioners is AFFIRMED. No pronouncement as to costs.
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 SO ORDERED.
possessor.1awphi1.nét

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
attorney’s 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
attorney’s 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.1awphi1.nét

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 attorney’s 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-
G.R. No. 96829 December 9, 1991 the questioned property was issued by Friar Lands Agency No. 2 in his
name (Exhibit "3-A"). On October 7, 1945, Gabriel Beato died.
EMILIANO S. CASIPIT and ANTONIA C. CASIPIT VDA. DE
BEATO, petitioners, In 1945, Tax Declaration No. 2561 (Exhibit "C") over the questioned property
vs. was issued in the name of petitioner Emiliano S. Campit, but covering an
HON. COURT OF APPEALS, (FORMER SECOND DIVISION), SPOUSES area of 330 meters only. On February 9, 1949, he paid real estate taxes
SEVERINO B. DIAZ and ZENAIDA ALZONA-DIAZ, ROSA BEATO VDA. thereon for the years 1945 to 1949. He also paid taxes thereon for the years
DE DIAZ, FORTUNATO S. BEATO, JUANITA A. BEATO, FELICEDAD A. 1950 and 1954 (Exhibit "B").
BEATO, ARCADIO A. BEATO, ARCADIO A. BEATO, PACIENCIA A.
BEATO, AVELINO K. BEATO, ANTONIA K. BEATO, NILDA K. BEATO, On November 25, 1961, the heirs of Gabriel Beato namely, Ricardo, Rosa,
THE REGISTER OF DEEDS FOR THE PROVINCE OF LAGUNA, AND Narciso, Fortunata and Domingo, all surnamed Beato, executed a document
THE PROVINCIAL ASSESSOR OF LAGUNA, respondents. entitled "Kasulatan ng Pagmamana at Paghahati" wherein they adjudicated
to themselves the properties of Gabriel Beato. In the name document, they
Roldan M. Noynay for petitioners. sold to private respondents spouses Severino B. Diaz and Zenaida Alzona-
Ramon C. Casano for private respondents. Diaz the questioned property (Exhibits "F" and "l"). 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
MEDIALDEA, J.: Laguna a Petition for Reconsideration of Titles, which was granted on July
17, 1963. On August 30, 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
This is a petition for review on certiorari seeking reversal of the adverse turn cancelled by TXT No. T-27997 in the name of private respondents Diaz
decision of public respondent Court of Appeals dated August 22, 1990, in spouses (Exhibit "9").
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, In 1965, petitioner Antonia C. Casipit Vda. de Beato and Julian Almadovar
Laguna and ordered them to vacate the questioned property and pay to erected their respective houses on a portion of the questioned property. On
private respondents rentals, damages and attorney's fees; and its resolution October 8, 1981, a criminal complaint for violation of P.D. No. 772
dated January 11, 1991, which denied petitioners' motion for (Penalizing Squatting and Other Similar Acts) was filed before the Municipal
reconsideration. Court of Sta.Rosa, Laguna against them by private respondent Severino B.
Diaz (Exhibit "5"). This complaint was dismmissed at the instance of the
fiscal on March 26, 1985 because the questioned property is not among the
The antecedent facts, as found by the trial court are, are follows: areas approved for inclusion in the slum improvement and resettlement
program of the government thus, said decree does not apply (Exhibit "5-A").
On July 21, 1919, Urbano Casipit, father of petitioner Emiliano S. Casipit, On June 6, 1985, a complaint for ejectment (Civil Case No. 1601) was filed
bought Lot No. 144 (questioned property) located at Sinalhan, Sta. Rosa, against petitioner Antonia C. Casipit Vda. de Beato by private respondents
Laguna, containing an area of 661 square meters from the, government Diaz spouses before the Municipal Trial Court of Sta. Rosa, Laguna (Exhibit
(Exhibit "2"). On June 7, 1923, he assigned his rights to the questioned "6").
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 On April 27, 1987, a complaint was filed by petitioners agains private
Declaration No. 7233 over the questioned property (Exhibit "4") was issued respondents Diaz spouses, Rosa Beato Vda. de Diaz and Fortunate S.
in the name of Gabriel Beato. On February 23, 1933, Patent No. 31464 over 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 Such claims of the plaintiffs cannot be sustained by the Court for
complaint was amended. The ejectment case (Civil Case No. 1601) was the following reasons: (1) the testimonies of Antonia Casipit and
then suspended due to the filing of the present case. In their complaint, it Clara Casipit Calderon to the effect that they and their predecessor-
was alleged that petitioner Emiliano S. Casipit is the true and lawful owner of in-interest have been in continuous possession of Lot No. 144 since
the questioned property by virtue of continuous, uninterrupted, peaceful, time immemorial are self serving; (2) Tax Declaration No. 2561
open and public possession in the concept of owner since 1930. Petitioners (Extubit "C") in the name of Emiliano Casipit has been (sic) issued
were deprived of ownership thereof by the Beatos through Narciso Beato, only in 1945 and does not indicate the previous tax declaration it
who filed a Petition for Reconstitution of Titles in the name of Gabriel Beato, cancelled. likewise, it only covers 330 square meters of Lot No.
using fictitious documents. Petitioners therefore prayed that TCT No. RT- 144. On the other hand, tax declaration No. 7233 (Exhibit "4") in the
7880 and other succeeding titles be cancelled, as well as Tax Declaration name of Gabriel Beato was issued in 1932 and it covers the whole
No. 7192 (sic) and succeeding tax declarations; that the questioned property of Lot No.144; (3) the testimony of Antonia Casipit that her father
be reconveyed to them; that the document entitled, "Kasulatan ng Emiliano Casipit inherited from Urbano Casipit the land covered by
Pagmamana at Paghahati," insofar as it included the questioned property be tax declaration No. 2561 can not overcome the ancient documents
rescinded; and that private respondents be ordered to pay damages and introduced by the defendants showing that Urbano Casipit after
attorney's fees. defaulting in the payment of installments due the government
assigned in 1923 his rights over Lot No. 144 to Gabriel Beato
Private respondents disputed these allegations in their answer and by way of (Exhibits "2-A", "2-B"and "3"); and (4)the possession by the
counterclaim, prayed for petitioners and all persons deriving title from them plaintiffs of a portion of Lot No. 144 can not ripened (sic) into
to vacate the questioned property, and to pay reasonable rentals, moral and ownership, for land registered under the Torrens System may not
exemplary damages and attorney's fees. be acquired by prescription or adverse possession.

On July 11, 1989, the trial court rendered judgment, the dispositive portion of Manifestly, the defendants have a better right over Lot No. 144 than
which, reads (p. 571, Records): 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
IN VIEW OF THE FOREGOING, judgment is rendered in favor of reconstituted title over Lot No. 144 and its registration in the office
the defendants and against the plaintiffs and the Second Amended of the Register of Deeds of Laguna, in 1973 (sic) is the starling date
Complaint is dismissed. Further, the plaintiffs are ordered to pay for the prescriptive period to commence.
jointly and severally the Spouses Severino Diaz and Zenaida Diaz
the amount of P5,000.00 as attorney's fees. With costs against the
plaintiffs. 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
SO ORDERED. 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
In support of this ruling, the trial court ratiocinated (pp. 569-571, Records): LRC Record No. 23313 and such order having become final and
executory, it is conclusive on Gabriel Beato's title over Lot No. 144.
It must be noted that the plaintiffs' claim of ownership over Lot No.
144 is based on their alleged continuous possession of the same As to the third issue, the records show that the plaintiffs' (sic) have
and on Tax Declaration No. 2561 (Exhibit "C") in the name of miserably failed to present evidence to establish bad faith on the
Emiliano Casipit, as well as on the receipts showing payments of part of the defendants Severino Diaz and Zenaida Diaz. On
real estate taxes for the years starting 1945 to 1949, 1950 and contrary, Zenaida Diaz declared that when they bought Lot No. 144
1954. nobody was residing thereon and that Emiliano Casipit was the
living at the adjoining lot. Therefore, said defendants are buyers in
good faith and for value, for good faith is presumed unless the so considering the doctrine that 'payment of land taxes is not an
contrary is shown. evidence of ownership of the parcel of land for which payment is
made.' (Reyes vs. Serra, 93 SCRA 472; Director of Lands vs. C.A.,
Regarding the last issue, definitely, the plaintiffs are not entitle to 133 SCRA 701). During the pre-trial on November 2, 1988, the
damages, attorney's fees and costs, however, the defendants parties agreed, among other things —
Severino Diaz and Zenaida Diaz are. The Diazes since 1985 have
bee trying to eject from the land in question the plaintiffs but have 5. That Emiliano Casipit on February 9, 1949 paid the land
bee unsuccessful. For this reason, the Diazes are entitled to actual taxes for lot 144 for the years 1945, 1946, 1947, 1948 and
dam ages and attorney's fees. Unfortunately, the Diazes have not 1949; and on August 5, 1950 paid the land taxes for the
presented competent evidence to prove the actual damages they said lot for 1950 and on October 13, 1954 paid the land
sustained although as to attorney's fees they are entitled to the taxes for the said lot for 1954. (pp. 492-493, rec.)
amount o P5,000.00. The Court can not award moral damages in
favor of the Diazes since no bad faith or malice has been proven on Admittedly, therefore, it would appear that plaintiff-appellants paid
the part of plaintiffs. realty taxes for the land in dispute only 3 times and no more.
Certainly that kind of payment cannot convey the idea of
Both parties appealed to public respondent Court of Appeals Petitioners ownership.
questioned the dismissal of their complaint by the trial court whereas private
respondents questioned the fail of said court to grant them their prayer for ... Then, the record shows that on October 8, 1981, Severino Diaz
reasonable rentals actual and moral damages. On August 22, 1990, respond filed charges of anti-squatting against Casipit and Almadovar. On
court resolved the appeal in favor of private respondents, th dispositive June 6, 1985, the Diaz spouses again filed an ejectment suit
portion of which, reads (p. 32, Rollo): against Antonia Casipit. These undisputed facts would disprove the
claim of the plaintiffs-appellants to uninterrupted possession that
WHEREFORE, the appealed decision dismissing the complaint would have ripened to ownership.
should be as it is hereby AFFIRMED. On the counterclaim of
defendants, judgment is hereby rendered ordering plaintiffs to xxx xxx xxx
vacate lot No. 144, and to pay the reasonable rental in the amount
of P300.00 from October, 1981 until they should have vacatedthe
(sic) premises to pay moral damages in the amount of P30,000.00, ... Plaintiffs-appellants, ... failed to explain how Emiliano Casipit
and attorney's fees in the amount of P5,000.00. No costs. acquired a right over 1/2 of lot 144. ...

SO ORDERED. ... 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
In affirming the trial court's decision, respondent court expounded (pp. 27- declaration 142 (sic) was issued in the name of the heirs of Gabriel
29, Rollo): Beato, and, unlike tax declaration 2561 of Casipit, clearly stated
that is was cancelling tax declaration 7232 (sic) in the name of
... To make it worse, on its face the tax declaration (No. 2561) Gabriel Beato.
appears to have been cancelled by provincial form No. 183 in 1966.
Thereafter, no other tax declaration or any proof of ownership was On January 11, 1991, the motion for reconsideration was denied
issued in the name of plaintiffs-appellants. (p.17, Rollo). Hence, the present petition.

The payment of realty taxes by plaintiffs-appellants do not give any Petitioners assign as errors committed by respondent court the following
added weight to their claim of ownership of the lot in dispute. This is (pp.7-8, Rollo):
First Assignment of Error THE PETITIONERS ARE ENTITLED AS PETITIONER EMILLANO
CASIPIT IS NOT A PARTY TO SAID EJECTMENT SUIT AND THE
THE HONORABLE COURT OF APPEALS HAS GRAVELY TRIAL COURT ANDS NO EVIDENCE TO WARRANT
ERRED WHEN IT DENIED THE MOTION FOR EJECTMENT.
RECONSIDERATION FILED BY THE PETITIONERS AS THE
ISSUES RAISED THEREIN WERE NOT SQUARELY AND They allege that pursuant to the Certification issued by the Bureau of Lands
THOROUGHLY THRESHED OUT IN THE QUESTIONED (Exhibit "D") that Patent No. 31464 over the questioned property has not
RESOLUTION PROMULGATED ON JANUARY 11, 1991 AS THE been issued to Gabriel Beato, the "Kasulatan ng Pagmamana at Paghahati"
CERTIFICATION ISSUED BY THE BUREAU OF LANDS OR is therefore a void contract. This being the case, the action taken by
ANNEX "F" OR EXHIBIT "D" HAS PROBATIVE VALUE TO BE petitioners is imprescriptible. Private respondents Diaz spouses were buyers
GIVEN FULL CREDENCE AS THE SAME HAS BEEN ADMITTED in bad faith because they had full knowledge that Emiliano Casipit has been
BY THE PRIVATE RESPONDENTS AND THEREBY DECLARING in actual possession in the concept of owner of the questioned property and
AS NULL AND VOID THE "KASULATAN NG PAGMAMANA AT paid the real property taxes thereon. Private respondent Zenaida Alzona-
PAGHAHTI" OR EXHIBIT "l" EXECUTED ON NOVEMBER 25, Diaz testified that (pp. 46-48, tsn, March 20,1989):
1961 FOR WHICH REASON THE ACTION OF PETITIONERS IS
IMPRESCRIPTIBLE. ATTY. NOYNAY:

Second Assignment of Error xxx xxx xxx

THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN Q So, when was that year, if you still remember when
PROMULGATING ITS RESOLUTION OR ANNTEX "B" WHEN IT Emiliano Casipit came from lot 144?
DENIED THE MOTION FOR RECONSIDERATION OF
PETITIONERS AS THE QUESTIONED "KASULATAN NG
PAGMAMANA AT PAGHAHATI" EXECUTED ON NOVEMBER 25, A I saw in 1948, that is my first year in teaching, I saw the
1961 CANNOT BE MADE AS BASIS IN CANCELLING house of Emiliano Casipit situated on that Lot 144.
RECONSTITUTED TRANSFER CERTIFICATE OF TITLE NO. RT-
7880 WHICH WAS RECONSTITUTED ONLY ON AUGUST xxx xxx xxx
30,1963 AND NON-EXISTING ON NOVEMBER 25, 1961 WITHIN
THE KNOWLEDGE OF PRIVATE RESPONDENTS DIAZES Q So, in other words, Mrs. witness before 1948 you have
MAKING THEM AS BUYERS IN BAD FAITH AND BESIDES THE seen the house of Emiliano Casipit in lot 144?
SAID "KASULATAN NG PAGMAMANA AT PAGHAHATI" HAS TO
BE DECLARED NULL AND VOID AB INITIO.
A Yes, sir.
Third Assignment of Error
Likewise, private respondents Diaz spouses were aware that the
Beatos had no title over the questioned property as of November
THE HONORABLE COURT OF APPEALS HAS GRAVELY 25, 1961 when the "Kasulatan ng Pagmamang at Paghahati" was
ABUSED ITS DISCRETION IN PROMULGATING ITS executed because TCT No. RT-7880 was issued only on August
RESOLUTION OR ANNEX "B"AND ITS DECISION OR ANNEX "E" 30, 1963. This was revealed by Zenaida Diaz in her testimony (pp.
ORDERING THE EJECTMENT OF THE PETITIONERS FROM 45-46, supra):
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 ATTY. NOYNAY:
PROCESS OF LAW AND THE RIGHT TO BE HEARD WHICH
xxx xxx xxx prescription. In this regard, respondent court shares the
same view as the trial court that (p. 29, Rollo):
Q So, when you answered a while ago that
during the time when this Kasulatan was ... The issuance of the reconstituted title over lot
executed in 1961 and which according to you, No. 144 and its registration in the office of the
you were shown titles by the Beatos' is not (sic) Register of Deeds of Laguna in 1973 (sic) is the
correct? reckoning point for the prescriptive period to
commence. The 4-year period within which to file
WITNESS: 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
A At that time, sir, there was no title yet. elapsed. (emphasis supplied)

The ejectment of petitioners from the questioned property We were categorical in the case of Caro, et al. v. Court of
and the award of damages and attomey's fees are Appeals, et al., G.R. No. 76148, December 20, 1989, 180
violative of due process of law because petitioner Emiliano SCRA 401 citing the case of Liwalug Amerol, et al. v.
S. Casipit is not a party to the ejectment suit before the Molok Bagumbaran, G.R. No. L-33261, September 30,
trial court (Civil Case No. 1601). 1987, 154 SCRA 396 that 694 the prescriptive period for
the reconveyance of fraudulently registered real property
The petition is not impressed with merit. 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
There is no dispute that an action for reconveyance based Maria Revilleza Vda. de Vega, et al. v. Court of Appeals,
et al., G.R. No. 93507, July 12, 1991 that:
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, ... after numerous illuminating decisions by this
150 SCRA 59). However, We simply cannot apply this Court, nobody can successfully claim ignorance
principle to the present case because the action filed by of the rule that an action for reconveyance based
petitioner before the trial court was 1) for reconveyance on an implied or constructive trust prescribes in
based on fraud since the ownership of private respondents ten (10) years...
over the questioned property was allegedly established on
"false assertions, misrepresentations and deceptive Conformably with these settled jurisprudence, the
allegations" (p. 182, Records); and 2) for rescission of the prescriptive period for petitioners' action for reconveyance
"Kasulatan ng Pagmamana at Paghahati" (pp. 173, 187, is ten (10) years from August 30, 1963, the date of the
Records). Besides, as against said Certification issued by issuance of TCT No. RT-7880 (Exhibit "7-B"). Obviously,
the Bureau of Land (Exhibit "D") dated March 18, 1987, Our discussion on this subject matter is not beneficial to
which petitioners harp on, is the explicit Certification of petitioners because they filed the action for reconveyance
Friar Lands Agency No. 2 of the same Bureau dated June only on April 27, 1987.
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, While private respondent Zenaida Alzona-Diaz saw the
1933 in the name of Gabriel Beato of Sinalhan, Sta. Rosa, house of petitioner Emiliano S. Casipit on the questioned
Laguna." Thus, the action for reconveyance based on property before 1948, at the time of the sale, there was no
fraud filed by petitioners before the trial court is subject to 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 than that of the defendants-appellees Beatos.
"Kasulatan ng Pagmamana at Paghahati" was executed in However, We shall dwell briefly on this matter if
1961, she was referring to the reconstituted torrens title only to erase any doubt as to the good title of the
thereon. The other portions of her testimony which were Diazes over the property which they now own.
conveniently deleted by petitioners read 45-45, tsn, March When the Diazes bought the property in question
20, 1989): for a valuable consideration, they were shown the
Beatos' documents which show and prove how
Q In 1961, you mean to say that the Beatos had the latter acquired ownership thereof. These
already told you that they have already a consisted of Exhibits 2, 2-A, 3, and 4, which are
reconstituted title over the portion that was sold all ancient documents. Then, when the Diaz
to you? spouses purchased the lot in question, there was
no house or structure built thereon, nor anyone
living in the premises. Under the circumstance,
A None yet, sir. the Diaz spouses cannot be imputed with notice
of this adverse claim of the plaintiff (sic) or any
Q What (sic) is it that you were answering (sic) flaw, assuming there is any, in the title of the
Atty. Noynay that you were told about the vendors.
reconstituted title?
Regarding the last allegation of petitioners, We adopt
A My husband and I were informed that they will respondent court's reasoning thereon (pp. 31-32, Rollo):
file a petition for reconstitution on Lot No. (sic)
132, 134 and 144. ... the herein defendants-appellants are entitled
to lot 144, and thus, in effect, plaintiffs-appellees
A purchaser in good faith is one who buys the property of are unlawfully occupying portions of the said lot.
another without notice that some other person has a right The trial court thus may award actual (sic)
to, or interest in, such property and pays a full and fair damages in every case where a property right
price for the same, at the time of such purchase, or before has been invaded (Article 2222 of the New Civil
he has notice of the claim or interest of some other person Code). Defendant-appellant Zenaida Diaz
in the property (Vda. de Recinto v. Inciong, et al., G.R. No. testified that the reasonable rental for the area
L-26083, May 31, 1977, 77 SCRA 196 citing Cui and occupied by Antonio (sic) Casipit is P300.00 a
Joven v. Henson, 51 Phil. 606 and Fule v. De Legare, 7 month (p. 40, tsn; Mar. 20, 1987 (sic)). This
SCRA 351). In consonance with this definition, private testimony of Diaz was unrebutted. It is also
respondents Diaz spouses were purchasers in good faith. unrebutted that on October 8, 1981, Severino
They bought the property of private respondents Beatos Diaz filed a criminal complaint against Antonio
without notice that some other person has a right to, or (sic) Casipit and Julian Almadovar for violation of
interest in, the questioned property and paid the fun price P.D. 772, but was dismissed by the prosecuting
therefor at the time of such purchase. In addition, fiscal on the ground that the said law applies to
respondent court said (pp. 29-30, Rollo): urban land only. And on June 6,1987 (sic), a
complaint for ejectment was filed by the Diazes
The Diaz spouses who bought the land in against Antonia Casipit before the Municipal Trial
question from the Beatos are buyers in good Court which was suspended due to the filing of
faith. We find no need for an extended discussion this instant case. Thus, October 8, 1981, should
on this issue, considering that plaintiffs- be the reckoning point for the awed (sic) of
appellants failed to show a better title to the lot P300.00 a month in the form of reasonable
rentals to compensate the Diazes for the loss of appellants. It is best to grant the relief prayer (sic)
enjoyment of property that lawfully belongs to for, that of ejectment, in the case at bar, in order
them. to avoid multiplicity of suits. It will not only save
the parties and the court the rigors and expenses
An award of moral damages is justified since the of multitple (sic) litigations, but also avoid the
evidence indicate (sic) bad faith in the filing of remote probability that there might be conflicting
this complaint by plaintiffs-appellees. Apparently, decisions relative to one and the same imue.
plaintiffs-appellees are not even convinced of the
validity of their claim since they permitted a ACCORDINGLY, the petition is hereby DENIED. The
period of more than 30 years to lapse before they decision of the Court of Appeals dated August 22, 1990
went to court. It would seem that this complaint and its resolution dated January 11, 1991 are AFFIRMED.
filed by plaintiffs-appellees was merely an
afterthought in order to counteract the ejectment SO ORDERED.
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-
G.R. No. 71110 November 22, 1988 appoint a commissioner to partition the same without
pronouncement as to costs. 2
PAZ VILLAGONZALO, ESTELA VILLAGONZALO, AIDA
VILLAGONZALO, HERMINIA VILLAGONZALO, GWENDOLYN therein defendant appealed to the former Intermediate Appellate Court
VILLAGONZALO, JENSINE VILLAGONZALO and LEONILA which, in a decision 3 of the Second Civil Cases Division in AC-G.R. No.
VILLAGONZALO, petitioners, 65128, reversed the appealed judgment and dismissed the complaint for
vs. reconveyance.
INTERMEDIATE APPELLATE COURT and CECILIA A.
VILLAGONZALO, respondents. As found by the respondent Court—

Julio L. Falcone and Makilito B. Mahinay for petitioners. The facts in this regard show that on February 22, 1961,
Juan C. Villagonzalo, the predecessor-in-interest of the
Adelino B. Sitoy for private respondent. parties, purchased Lot No. 7429 of the Ormoc Cadastre,
situated at Barrio Dolores, Municipality of Ormoc,
containing an area of 97,213 sq. meters covered by
Transfer Certificate of Title No. 24611 of the Register of
Deeds of Ormoc City, from the Heirs of Roman Matuguina
REGALADO, J.: for Pl,500.00 (Exhibits A and 6, Folder of Exhibits, pp. 1,
15). It was made to appear however that the sale was in
From a decision rendered in favor of herein petitioners, as plaintiffs, against the name of his daughter, defendant Cecilia Villagonzalo,
herein private respondent, as defendant, in an action for reconveyance in who was single, since he borrowed from her the sum of
the then Court of First Instance of Leyte, 1 which reads: P500.00 to complete the full payment of the price of the
lot. Consequently, TCT No. 4259 was issued in the name
Wherefore, decision is hereby rendered in favor of the of defendant Cecilia A. Villagonzalo as the registered
plaintiffs and against defendant declaring Lot No. 7429 of owner (Exhibit 5, Ibid., p. 15) on July 18, 1962. The
the Ormoc Cadastre, situated at Bo. Dolores, Ormoc City, complaint was filed on April 2, 1975 thirteen (13) years
with an area of 97,213 square meters, more or less, as the after the issuance of Transfer Certificate of Title No. 4259
conjugal property of the deceased spouses, Juan on the subject land in the name of the defendant Cecilia
Villagonzalo and Felicisima Abella Villagonzalo hereby Villagonzalo. 4
ordering the cancellation of Transfer Certificate of Title No.
4259 in the name of Cecilia A. Villagonzalo and ordering On such factual moorings, the respondent court, now the Court of Appeals,
the Register of Deeds of Ormoc City to issue another held that the right of action of therein plaintiffs-appellees, petitioners herein,
Transfer Certificate of Title in the name of spouses Juan had prescribed for the reasons that follow. 5
C. Villagonzalo and Felicisima A. Villagonzalo, Filipinos, of
legal age, residents of Cebu City now deceased and It ratiocinated that when private respondent obtained Transfer Certificate of
survived by the present plaintiffs and defendants, each of Title No. 4259 in her name she thereby excluded herein petitioners from the
whom upon payment of the inheritance taxes with the BIR, estate of their deceased predecessor-in-interest and, consequently, she set
shall be entitled to 1/9 share of the land, subject to claims up a title to the land adverse to them. The registration of the deed of sale
by other heirs and creditors within a period of two (2) with the Register of Deeds, so it opined, was constructive notice to the whole
years as provided for by the Rules of Court, and further world of defendant's adverse claim to the property, thereby repudiating any
ordering the partition of the said land within a period of fiduciary or trust relationship involved. It anchored its conclusion on doctrinal
ninety (90) days from the finality of this decision and if the holdings that an action for reconveyance based on an implied or constructive
parties cannot agree on the partition this Court may
trust prescribes in ten years counted from the date when adverse title is late Mateo Pama and obtained Transfer Certificate of Title
asserted by the possessor of the property. No. T-4006 in his own name, he thereby excluded
petitioners from the estate of the deceased Mateo Pama
Prescinding therefrom into the field of laches, respondent court further noted and, consequently, set up a title adverse to them; that
that because of the neglect and inaction of the present petitioners, the such registration constitutes constructive notice to
private respondent was thereby made to feel secure in her belief that she petitioners of the respondent's adverse claim to the
had rightly acquired the controverted land and that no legal action would be property (Carantes vs. Court of Appeals, 76 SCRA 514,
filed against her. She was thus induced to spend time, money and effort for 523; Gerona vs. de Guzman, 11 SCRA 153, 157); and it
the cultivation of the land and the payment of the taxes thereon. It then appearing that petitioners filed their complaint for
further rested its conclusion on the established principle that inaction and reconveyance only on April 28, 1969, or twelve (12) years,
neglect of a party to assert a right can convert what could otherwise be a ten (10) months and ten (10) days after their cause of
valid claim into a stale demand. action had accrued on June 18, 1956; this Court resolved
to dismiss this petition and to affirm the questioned order
dismissing petitioner's complaint ... 10
Petitioners have come before Us contending that their action was
seasonably filed because private respondent's registration of the land in her
name was not a repudiation of the implied trust created between her and There is also evidence of record that as far back as 1961, private
their father; and, confusing extinctive for aquisitive prescription, that good respondent refused to give any share in the produce of the land to
faith and just title are essential requisites in this case. petitioners; that in 1963 she mortgaged the property in her own name; and
that in 1969, she leased the same to one Ramon Valera, without the
petitioners taking preventive or retaliatory legal action. 11
The respondent court is correct and certiorari must be denied.
The rule in this jurisdiction is that an action to enforce an implied trust may
It is now well settled that an action for reconveyance of real property to be barred not only by prescription but also by laches, in which case
enforce an implied trust shall prescribe after ten years, 6 since it is an action repudiation is not even required. 12 Whether the trust is resulting or
based upon an obligation created by law, 7 and there can be no doubt as to constructive, its enforcement may be barred by laches. 13 Petitioners were,
its prescriptibility. 8 therefore, correctly faulted for their unjustified inaction.

It is likewise established that said period of ten years is counted from the WHEREFORE, the judgment of the respondent Court is hereby AFFIRMED.
date adverse title to the property is asserted by the possessor thereof. In the
case at bar, that assertion of adverse title, which consequently was a
repudiation of the implied trust for the purpose of the statute of limitations, SO ORDERED.
took place when Transfer Certificate of Title No. 4259 was issued in the
name of private respondent on July 18, 1962. As succinctly but pithily
resolved inVda. de Pama vs. Pama, et al.: 9

... Considering the settled doctrine that an action for


reconveyance of real property based upon constructive or
implied trust prescribes in ten (10) years counted from the
date adverse title is asserted by the possessor of the
property (Diaz vs. Gorricho, 103 Phil. 261; Candelaria vs.
Romero, 109 Phil. 100; J. M. Tuazon vs. Magdangal, 114
Phil. 42); that when respondent Guillermo Pama caused
the registration on June 18, 1956 of the affidavit of
adjudication declaring himself to be the sole heir of the
Republic of the Philippines in proper perspective, there is need to state the facts of the case. On this
SUPREME COURT regard, the findings of the trial court would best serve the stated purposes.
Manila
xxx xxx xxx
SECOND DIVISION
From the evidence submitted during the trial there is no
G.R. No. L-33261 September 30, 1987 dispute concerning the fact relative to the Identity of the
land in litigation. It is commonly known as Lot No. 524,
LIWALUG AMEROL, MACATANTO AMEROL, TAIB AMEROL, Pls-126 and technically described and bounded in the
DIBARATUN AMEROL, DIBARATUN, MATABALAO, MINDALANO sketch (Exh. "7 "). This is the very tract of land alleged by
DIBARATUN, DIPUNDUGUN MORO, and MANUCAO MORO, petitioners, the plaintiff to have been forcibly entered into by the
vs. defendants and which plaintiff now w&s to recover
MOLOK BAGUMBARAN, respondent. 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
SARMIENTO, J.: December 27, 1954. There is also no question regarding
the fact that as to these two free patent applications, that
This is a petition for review on certiorari of the decision 1 of the then Court of of plaintiff Molok Bagumbaran was given due course as a
First Instance of Lanao del Sur, Branch III, Marawi City, in Civil Case No. result of which Free Patent No. V-19050 was issued on
1354, entitled, "Molok Bagumbaran vs. Liwalug Amerol et al.," under August 16,1955 by authority of the President of the
Republic Act No. 5400, "as only question of law is raised." 2 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 only issue for resolution is the prescriptive period of an action for the Province of Lanao (now Lanao del Sur) in the mm year
reconveyance of real property which has been wrongfully or erroneously whereupon Original Certificate of Title No. P-466 was duly
registered under the Torrens System in another's name. In other words, issued, owner's duplicate certificate having been furnished
what is the prescriptive period for the action to reconvey the title to real the herein plaintiff.
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 This court is also inclined to believe that defendant
court below, claims the prescriptive period is four years. The trial court ruled Liwalug Datomanong had never known of plaintiff's free
tor the plaintiff, now respondent. 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
We reverse. We hold that the prescriptive period for such an action for meantime, since the date he purchased the land from
reconveyance, as this case, is ten years. The point of reference is, or the Mandal Tondo, said defendant has been and up to the
ten-year prescriptive period commences to run from, the. date of the present in con. tinuous occupation and cultivation of the
issuance of the certificate of title over the real property. same. His co-defendants named in the complaint are
merely his tenants.
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 It is also incontrovertible fact that said defendant did not
to satisfy constitutional requirements as well as to place the question of law take appropriate action to annul the patent and title of the
plaintiff within one year from issuance thereof and that the above-mentioned improvements introduced by the said
first step taken by him to contest said patent and title was defendant.
a formal protest (Exh. "12", p. 408, Record) dated April 24,
1964, filed before the Bureau of Lands after the lapse of What is more, on or before filing his free patent
Nine (9) long years from the issuance of patent in favor of application, plaintiff knew that the land in question which
the plaintiff. The second step he took was his counterclaim was covered by his free patent application was then
contained in his answer to the complaint in the above actually occupied and cultivated by defendant Liwalug
entitled case, which answer was filed with this court on Datomanong if not by Mandal Tando, the original
December 4, 1964. In said counterclaim, defendant occupant. Be it remembered that Mandal Tando had
reiterated his stand that plaintiff secured patent on the transferred to defendant Liwalug Datomanong Twenty
land by means of deceit and fraud, wherefore, defendant Four (24) hectares, more than eleven hectares of which is
prayed that said title be annulled, or, alternatively, plaintiff (sic) outside the military reservation and designated as Lot
be ordered to reconvey the said land to the said defendant No. 524, Pls-126 and the rest which is in the southern
Liwalug Datomanong. portion lies within the military reservation. Now,
immediately adjacent thereto on the south is the land
First question to be resolved is whether or not the plaintiff claimed and occupied by the herein plaintiff also
is guilty of fraud or misrepresentation in securing the Free consisting of Twenty Four (24) hectares but wholly within
Patent No. V-19050 covering the land in question. the military reservation. It appears that plaintiff declared
this Twenty four hectares for the first time on October 24,
Upon a thorough examination of the evidence, proofs are 1950 for taxation purposes (Tax Declaration No. 1529,
sufficient to support defendant's contention that plaintiff is Record) and stated in said tax declaration (Exhs. "8" and
guilty of fraud and misrepresentation. In the first place, "8-A," p. 414, Record) regarding the boundaries that the
proofs are abundant tending to show that since 1952 when adjacent owner on the north is Mandal Tando. In other
Mandal Tando transferred the land to said defendant, the words, plaintiff had expressly recognized the fact that
latter occupied, took possession thereof and cultivated the Mandal Tando is an adjacent land owner north of plaintiff's
same continuously, publicly, adversely against any property. On February 19, 1951 herein plaintiff revised the
claimant and in the concept of owner up to the present; above-stated tax declaration and secured another (Tax
that said defendant had introduced considerable Declaration No. 1794, Exh. "9" and "9-A," p. 413, Record)
improvements such as coconut and coffee plantations and and still plaintiff stated therein that his boundary land
other fruit trees besides his farm house, a mosque, owner on the north is Hadji Abdul Gani. 3 [a.k.a.Liwalug
cassava plantation and clearing and full cultivation of the Datomanong(Amerol)]. 4
entire area. The fact of possession on the part of said
defendant has been attested to by competent and xxx xxx xxx
creditable witnesses like Mandal Tando who conveyed the
land to the defendant; Hadji Sirad Gomandang, the barrio Notwithstanding the aforequoted findings, very unequivocal to be sure, the
captain of Montay, Malabang, Lanao del Sur, Hadji Rasol trial court denied the counterclaim of the defendants, now petitioners, for the
Maruhom and Hadji Abdulcadir Pagayawan, both of Pialot, affirmative relief of reconveyance on the ground of prescription. Said the
Malabang, Lanao del Sur who are farmers and barrio- court:
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 xxx xxx xxx
inspection and investigation of the premises in connection
with the protest of said defendant found thereon the 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 The petitioners in their Brief 8 assign the following two errors allegedly
effort whatsoever either to annul the title or institute committed by the trial court:
proceedings for reconveyance except in his counterclaim
contained in his answer to the complaint in this case at bar I.
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 THE COURT ERRED IN ITS CONCLUSION OF LAW TOTHE EFFECT
reconveyance within the period of four (4) years from the THAT PETITIONERS RIGHT OF ACTION FOR RECONVEYANCE FOR
date of registration of said patent. 5 VIOLATION OF AN IMPLIED TRUST PRESCRIBED AFTER FOUR YEARS
FROM THE REGISTRATION OF THE PATENT OF RESPONDENT.
xxx xxx xxx
II.
Thus, the dispositive portion of the assailed decision stated:
THE COURT ERRED IN NOT REQUIRING THE INTRODUCTION OF
EVIDENCE AS BASIS IN THE ASSESSMENT OF THE FAIR MARKET
xxx xxx xxx VALUE OF THE IMPROVEMENT INTRODUCED ON THE LAND IN GOOD
FAITH BY PETITIONERS INSTEAD OF BASING SUCH ASSESSMENT
PREMISES CONSIDERED, judgment is hereby rendered UPON PURE AND SIMPLE GUESS WORKS AND WILD ESTIMATIONS.
as follows: (1) declaring the herein plaintiff the registered
owner of Lot No. 524, Pls-126 and sustaining and The first assignment of error is well-taken as adverted to at the outset.
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 Indubitably, the act of respondent in misrepresenting that he was in actual
and deliver possession thereof to the herein plaintiff under possession and occupation of the property in question, obtaining a patent
certain terms and conditions herein below stated; (3) and Original Certificate of Title No. P- 466 in his name, created an implied
denying and hereby dismissing the counterclaim of the trust in favor of the actual possessor of the said property. The Civil Code
herein defendants and consequently the prayer to annul provides:
the title and/or for reconveyance of the land to said
defendant Liwalug Datomanong must Likewise be denied; ARTICLE 1456. If property is acquired through mistake or
(4) that before plaintiff could take possession of said fraud, the person obtaining it is by force of law, considered
premises he must reimburse defendant Liwalug a trustee of an implied trust for the benefit of the person
Datomanong the total sum of Six Thousand Seven from whom the property comes.
Hundred Fifty-Two Pesos and Sixty-Two Centavos
(P6,752.62) which he incurred for the necessary and In this case, the land in question was patented and titled in respondent's
useful expenses on the land in question with the right of name by and through his false pretenses. Molok Bagumbaran fraudulently
said defendant to retain possession of the premises if said misrepresented that he was the occupant and actual possessor of the land
reimbursement be not completely made. No in question when he was not because it was Liwalug Datomanong.
pronouncement as to costs. 6 Bagumbaran falsely pretended that there was no prior applicant for a free
patent over the land but there was — Liwalug Datomanong. By such
xxx xxx xxx fraudulent acts, Molok Bagumbaran is deemed to hold the title of the
property in trust and for the benefit of petitioner Liwalug Datomanong.
Hence, this petition. 7 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 Finally, the case of Ramirez vs. Court of Appeals 14 can not be availed of
not designed to shield and protect one who had committed fraud or because the period of prescription was not there definitely and squarely
misrepresentation and thus holds title in bad faith. Further, contrary to the settled. In fact, Ramirez underscores a vacillation between the four-year and
erroneous claim of the respondent, 9 reconveyance does not work to set the ten-year rule. There it was stated that "an action for relief on the ground
aside and put under review anew the findings of facts of the Bureau of of fraud — to which class the remedy prayed for by Paguia belong — scan
Lands. In an action for reconveyance, the decree of registration is respected only be brought within four years after accrual of the right of action, or from
as incontrovertible. What is sought instead is the transfer of the property, in the discovery of the fraud." If the decision just stayed pat on that statement,
this case the title thereof, which has been wrongfully or erroneously there would be merit in the respondent's presentation. But Ramirez
registered in another person's name, to its rightful and legal owner, 10 or to continues: "(I)ndepedently, however, of the alleged fraud on the part of
one with a better right. That is what reconveyance is all about. 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
Yet, the right to seek reconveyance based on an implied or constructive trust patent and of the issuance of OCT No. 282- A in his name." 15
is not absolute. It is subject to extinctive prescription. 11 Happily, both
parties agree on this point. The seeming impediment however, is that while Significantly, the three cases cited by the respondent to buttress his position
the petitioners assert that the action prescribes in ten years, the respondent and support the ruling of the trial court have a common denominator, so to
avers that it does in only four years. 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
In support of his submission, the respondent invokes several cases. We the present Civil Code. The accrual of the cause of action in Fabian was in
have examined the invocations and find them inapplicable. For instance, the 1928, in Miguel, February, 1950, and in Ramirez, 1944. It must be
case of Fabian vs. Fabian, 12 relied on by the respondent, does not square remembered that before August 30, 1950, the date of the effectivity of the
with the present case. In Fabian, the party who prayed for reconveyance new Civil Code, the old Code of Civil Procedure (Act No. 190) governed
was not in actual possession and occupation of the property. It was instead prescription. It provided:
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 SEC. 43. Other civil actions; how limited-Civil actions other
possession of the registered owner for well-nigh over twenty-nine big years, than for the recovery of real property can only be brought
hence, reconveyance had been irretrievably lost. within the following periods after the right of action
accrues:
Miguel vs. Court of Appeals, 13 is, likewise, inapplicable. In Miguel, the
actual occupant and possessor of the controverted parcel of land, after xxx xxx xxx
having been enticed by Leonor Reyes, an ambulatory notary public, with
promise of help, engaged and retained the services of the latter to facilitate 3. Within four years: x x x An action for relief on the
the issuance of a patent for the said land in his (Miguel's) favor. Thus, there ground of fraud, but the right of action in such case shall
existed between the parties a relationship very much akin to that of lawyer- not be deemed to have accrued until the discovery of the
client and which is similarly fiduciary in character. But Reyes, inspite of his fraud;
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 xxx xxx xxx
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 In contrast, under the present Civil Code, we find that just as an implied or
fiduciary relations and/or fraud." It was shown that the parties were legally constructive trust is an offspring of the law (Art. 1456, Civil Code), so is the
bound to each other by a bond of fiduciary trust, a bond lacking in the case corresponding obligation to reconvey the property and the title thereto in
at bar. 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 litigation has already been mortgaged by him to the Development Bank of
ten years from the time the right of action accrues: 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
(1) Upon a written contract; 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
(2) Upon an obligation created by law; 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
(3) Upon a judgment. knowing that his Original Certificate of Title was issued under false
pretenses — must alone suffer the consequences.
xxx xxx xxx
Besides, given the undisputed facts, we cannot consider the mortgage
(Emphasis supplied) 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
An action for reconveyance based on an implied or constructive trust must lien not of his own making and from which he derived no benefit whatsoever.
perforce prescribed in ten years and not otherwise. A long line of decisions The consequences of the void mortgage must be left between the mortgagor
of this Court, and of very recent vintage at that, illustrates this rule. and the mortgagee. In no small measure the Development Bank of the
Undoubtedly, it is now well-settled that an action for reconveyance based on Philippines might even be faulted for not making the requisite investigation
an implied or constructive trust prescribes in ten years from the issuance of on the possession of the land mortgaged.
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 Premises considered, we deemed it superfluous to rule on the second
by the erroneous reliance on Gerona vs. de Guzman. 18 But in Gerona, the assignment of error raised by the petitioners.
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 WHEREFORE, the petition is GRANTED and the Decision dated June 3,
as mentioned earlier. It must be stressed, at this juncture, that Article 1144 1970 of the then Court of First Instance of Lanao del Sur in Civil Case No.
and Article 1456, are new provisions. They have no counterparts in the old 1354 is hereby ANNULLED and SET ASIDE and a new one entered
Civil Code or in the old Code of Civil Procedure, the latter being then ORDERING the respondent to RECONVEY Original Certificate of Title No.
resorted to as legal basis of the four-year prescriptive period for an action for P-466 in favor of petitioner Liwalug Datomanong, free of any encumbrance.
reconveyance of title of real property acquired under false pretenses. Costs against the respondent.

It is abundantly clear from all the foregoing that the action of petitioner SO ORDERED.
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
G.R. No. 83383 May 6, 1991 situated at Barrio Molino, Bacoor, Cavite, containing an area of 4
hectares, 81 ares and 82 centares. Said application was
SOLID STATE MULTI-PRODUCTS CORPORATION, petitioner, accompanied by a "SALAYSAY" (Exhibit "A") signed and sworn to
vs. by one Mabini Legaspi before said District Land Officer Cupino,
THE COURT OF APPEALS (Former Sixth Division) and THE INTESTATE purporting to transfer to, and to waive in favor of, Julian Peñaranda,
ESTATE OF ANTENOR S. VIRATA and the DEVELOPMENT BANK OF all the rights of executor to Lot No. 7449.
THE PHILIPPINES, respondents.
Following the routine in cases of this nature, District Land Officer
Antonio M. Chavez for petitioner. Cupino referred to Land Investigator Alberto Buhain for
Rodolfo M. Dela Rosa for respondent Intestate Estate of Antenor S. Virata. 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
MEDIALDEA, J.: No. III-8 Bureau of Lands, Rosario, Cavite, certifying that applicant
Julian Peñaranda is the actual occupant of Lot No. 7449, has
This is a petition for review on certiorari of the decision of the Court of introduced improvements consisting of upland rice and other
Appeals which affirmed the decision of the trial court dismissing the seasonal crops; that Peñaranda's occupation of the land is derived
complaint filed by petitioner for quieting of title and declaring Antenor Virata through a voluntary assignment of right of the former occupant,
as the true and lawful owner of the disputed property. Mabini Legaspi, and that the same is free from claims and conflicts
and that the said applicant has established his rights over the
The antecedent facts are as follows: subject land, in view of which, said investigator recommended that
said lot be awarded to applicant Julian Peñaranda according to law.

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 Thereafter, the Report having been submitted to Cupino, the latter
the registered owner of a parcel of land located at Imus, Cavite, with an area directed investigator Buhain to prepare an Information Sheet (Exh.
of 48,182 sq. meters, covered by Certificate of Title No. T-80889 of the "G" up to "G-3") and Cupino made the Appraisal Report (Exh. "E-
Register of Deeds of Cavite, which was issued on February 24, 1976; that 2"). The above requirements having been accomplished, District
Virata, during his lifetime thru the use of fraud, caused the issuance of Land Officer Cupino forwarded Peñaranda's application to the
Certificate of Title No. T-11520 RT 1660 on September 1, 1959 thru an Director of Lands, thru the Chief, Land Management Division,
administrative reconstitution of a nonexistent original title covering the same recommending disposition of Lot No. 7449 be made in accordance
parcel of land; that by reason of the said reconstitution and subsequent with the findings of his office, to Julian Peñaranda, pursuant to the
issuance of TCT No. T-11520 RT 1660, there now exists a cloud on the title provisions of C.A. of No. 32, as amended.
of petitioner.
By second Indorsement dated December 16, 1968, Higinio P.
As gathered by the respondent appellate court and trial court, the evidence Sunico, Chief, Land Management Division, acting for and in behalf
for the petitioner consists of the following: 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
Pursuant to the provisions of Act No. 32, as amended, Julian public auction for a sum of P1,198.00 (Exh. "I") and by a 3rd
Peñaranda submitted with the Bureau of Lands, thru its District Indorsement dated December 16, 1969, the application of Julian
Land Office at Rosario, Cavite an application dated November 22, Peñaranda was returned by the Secretary of Agriculture and
1968, in a verified Indorsement dated November 25, 1968, to Natural Resources, to the Director of Lands, Manila, approving that
purchase a friar land which was subscribed and sworn to before sale without auction, to Julian Peñaranda, of lot No. 7449. Pursuant
Manuel Cupino, Acting District Land Officer (Exh. "D"). The to this approval, the Director of Lands authorized the District Land
application covers Lot No. 7449 of the Imus Friar Lands Estate, Officer, Rosario, Cavite, to sell without auction to Julian Peñaranda,
and directing that the sales contract should be executed soonest on April 20, 1943, the Bureau of Friar Lands Agent Severo Rivera
(Exh- "I"). The Director of Lands and Julian Peñaranda executed, issued a Notice fixing the public auction of Lot No. 7449, among
therefore, Sales Contract No. V-447 (Exh. "K"), on February 28, others, on May 5, 1943 at 10:00 a.m. (Exh. 1). On said date, Mabini
1969, for a consideration of P1,198.00, to be paid in ten (10) Legaspi (appellee Virata's predecessor-in-interest) submitted a
monthly installments, the first installment of P290.00 having been winning bid of P290.00 and paid P29.00 (10% of the purchase
paid upon execution of the sales contract and the payment of the price) and even issued Bureau of Lands Official Receipt No. 77735
P1,198.00 was fully paid on August 6, 1969 (Exh. "O"). dated May 5, 1943 (Exh. 7). The subsequent installments were paid
on January 14, 1944, April 24, 1944, August 17, 1944, and
The contract price of the land having been paid by Peñaranda, September 20, 1944 in the amounts of P29.00, P29.00, 87.00 and
Undersecretary of Agriculture and Natural Resources Isoceles P116.00, respectively. The payments were evidenced by Official
Pascual, on August 13, 1969, issued the final deed of conveyance Receipts Nos. 78396, 783392, 784704 and 78466 (Exhs. 7-A, 7-B,
of lot No. 7449 (Exh."8") in favor of Julian Peñaranda and the said 7-C and V)
deed of conveyance contains the physical and technical description
of the lot in question (See Exh. "S-l"). On December 12, 1944, the Bureau of Lands, through Mr. Vicente
Tordesillas, sent a letter to the Register of Deeds at Imus, Cavite,
xxx xxx xxx 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
On the basis of said Deed of Conveyance No. 10431, the Register Bacoor, Cavite Exh. 2). Accordingly, the Register of Deeds of
of Deeds of Cavite issued on November 14, 1969 in favor of Julian Cavite issued TCT No. A-2188 to Mabini Legaspi who held
Peñaranda TCT No. T-39631 (Exh. "Z-6") which on its face shows it ownership of the property up to December 6, 1957 when he
to have come from a direct transfer from OCT no. 1002, and on executed a Deed of Sale transferring it to Antenor S. Virata (Exh.
February 17, 1976, the plaintiff, by way of a Deed of Absolute Sale 6). The deed was registered with the Registry of Deeds on
(Exh. "Z") bought said Lot No. 7449 as a consequence of which, December 10, 1957 . . . . On the same day, December 10, 1957,
TCT No. T-39631 was cancelled and new TCT No. T-80889 was the Register of Deeds issued TCT No. 11520 (Exh. 12) to Antenor
issued on February 24, 1976 to the plaintiff, Solid State Multi Virata . . .
Products Corporation.
However, on June 7, 1959, the Provincial Capitol building of Cavite
Plaintiff Solid State Multi-Products Corporation enrolled Lot No. which housed the Registry of Deeds was burned, destroying land
7449 with the issuance of Tax Declaration No. 20893 which was records and titles in d registry among which were the records
superseded by Tax Declaration No. 10973 and continued to relating to Lot No. 7449.
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 On September 1, 1959, the Registry of Deeds administratively
Peñaranda up to the present. (pp. 109-112, Rollo (Emphasis Ours) 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.
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: xxx xxx xxx

. . . on March 20, 1943, the Director of Lands, Mr. Jose F. Dans, The sentence of TCT No. 80889 issued in the name of appellant on
gave authority to sell at public auction Lot No. 7449 of the Imus February 24, 1976 came to the knowledge of Antenor Virata in
Estate, containing an area of 4.8182 hectares at the price of not August 1978 when he received a subpoena from the National
less than its appraised value of P290.00 (Exh. X-33). Accordingly Bureau of Investigation (NBI) in connection with its investigation of
the conflicting land titles on Lot No. 7449. Virata presented Mabini 1660 of the Register of Deeds of the Province of Cavite and holding
Legaspi as his witness. NBI Agent Manuel C. Dionisio took the that the same is valid;
sworn testimony of Mabini Legaspi on August 27, 1978 (Exh. 10)
and submitted a written report (Exhs. 9 to 9-H) of his investigation c. Declaring that Transfer Certificate of Title No. T-80889 in the
on October 27, 1978. Mabini Legaspi in her sworn testimony (Exh. name of plaintiff, the Solid State Multi Products Corporation is null
10) declared that she acquired Lot 7449 during the Japanese and void and of no force and effect and is, therefore, ordered
occupation and in support of her acquisition, she presented to NBI cancelled;
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 d. Sentencing the plaintiff to pay the costs of the proceeding.
requesting the issuance of a certificate of title in favor of Mabini
Legaspi, which documents were substituted on the same occasion SO ORDERED. (p. 70, Rollo).
with xerox copies (Exh. 1 and 2) also marked as Exhibits 10-C and
10-D, respectively, after a comparison with the duplicate originals. Not satisfied with the decision of the trial court, the petitioner appealed to the
Legaspi also presented the originals of the receipts of payment she Court of Appeals. On July 13, 1987, the respondent appellate court rendered
made to the Bureau of Lands, which were substituted with xerox its decision affirming the decision of the trial court.
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 Hence, this petition was filed with the petitioner assigning the following
December 6, 1957, presenting as proof thereof, the duplicate or errors:
carbon original of the Absolute Deed of Sale of Agricultural Land,
which was likewise, substituted with xerox copies (Exhs. 6 to 6-F, THE RESPONDENT COURT GROSSLY ERRED WHEN IT
inclusive, also marked Exh. 11). IGNORED THE BASIC CONSIDERATION THAT THE
CONTESTED PROPERTY CAME FROM THE FRIAR LANDS
Mabini Legaspi testified that the originals of Exhibits 1 and 2 got ESTATE THE DISPOSITION OF WHICH IS GOVERNED BY
lost. She said she placed the documents on the table in her house SPECIAL LAWS SPECIFYING THE REQUIREMENTS FOR ITS
after returning from the NBI investigation, thinking "all the while that ACQUISITION FROM THE GOVERNMENT THROUGH SALE,
those documents will be useless because I had my property sold." WHICH LAW AND SPECIAL REQUIREMENTS SHOULD SERVE
(Tsn., p. 17, December 19, 1984). She denied having sold the land AS THE MEASURE AGAINST WHICH THE EVIDENCE OF THE
to Julian Peñaranda, nor having waived her right over the land in PARTIES TO THIS CASE SHOULD BE WEIGHED, SUCH GROSS
his favor (tsn., p. 12, March 18, 1985). (pp. 113-116, Rollo). ERROR LEADING THE APPELLATE COURT TO—

On June 15, 1985, the trial court rendered its decision, the dispositive (A) ERRONEOUSLY INFER THE EXISTENCE AND/OR
portion of which reads: DUE ISSUANCE OF THE SUPPOSED TCT NO. A-2188
(IN THE NAME OF PRIVATE RESPONDENTS
PREDECESSOR-IN INTEREST), FROM DOCUMENTS
WHEREFORE, by preponderance of evidence, judgment is hereby THAT CAME AFTER WERE BASED ON SUCH TCT NO.
rendered for defendant Virata and against the plaintiff, to wit: A-2188, CLEARLY BEGGING THE ISSUE WHICH IS
PRECISELY WHETHER OR NOT THE TRANSFER
a. Dismissing the complaint which states no cause of action; CERTIFICATE OF TITLE WAS IN FACT ISSUED IN
COMPLIANCE WITH THE FRIAR LANDS ACT AND CA-
b. Recognizing that defendant Virata is the true and lawful owner of 32 TO COVER THE PROPERTY IN QUESTION;
the land covered by Transfer Certificate of Title No. (T-11520) RT
(B) ERRONEOUSLY BASE ITS DECISION IN FAVOR OF Petitioner does not question the factual findings made by the
PRIVATE RESPONDENT ON TCTs ISSUED BY THE respondent appellate court and supported by the records (p.
REGISTER OF DEEDS INSPITE OF THE FACT THAT IT 22, Rollo). It does not however accept the legal conclusion made by
IS THE BUREAU OF LANDS UNDER THE DIRECTION the appellate court and trial court that the registered title of private
OF THE SECRETARY OF AGRICULTURE AND respondent to the land should prevail over its own title.
COMMERCE (NATURAL RESOURCES) WHICH
DISPOSES FRIAR LANDS AND NOT THE REGISTER Petitioner contends that Act No. 1120, otherwise known as the Friar
OF DEEDS WHOSE RECORDS CAN BE NO BETTER Lands Act provides the procedure for the sale and disposition of the
THAN THE RIGHT IT HAS REGISTERED; friar lands to private persons; that pursuant thereto, the acquisition
by petitioner's predecessor-in-interest Julian Peñaranda of the
(C) ERRONEOUSLY DISREGARD THE PATENT disputed Lot 7449, which was formerly part of the friar lands estate,
INADMISSIBILITY OF THE DOCUMENTARY EVIDENCE was in compliance with all legal requisites laid down in Act No.
OFFERED BY THE PRIVATE RESPONDENT THE 1120, for the validity of the sale by the government in favor of
ORIGINALS OF WHICH WERE NEVER PRESENTED Peñaranda of such friar lands.
BEFORE THE TRIAL COURT;
It also argues that the sale of Lot No. 7449 to respondent's
(D) ERRONEOUSLY IGNORE THE LACK OF predecessor, Mabini Legaspi, and the issuance of a certificate of
PROBATIVE VALUE OF SUCH DOCUMENTARY title in her favor was in violation of the Friar Lands Act as there was
EVIDENCE SUCH LACK OF PROBATIVE VALUE BEING no required approval by the Secretary of Agriculture and Natural
PATENT ON THE FACE OF SUCH DOCUMENT; Resources.

(E) ERRONEOUSLY IGNORE THE VERITY THAT THE There is no dispute here that the land involved in this case is a friar
DOCUMENTARY EVIDENCE COULD SUPPORT NO land and that the laws which are applicable are Act No. 1120, know
MORE THAN THE FACT THAT THE RESPONDENTS as the Friar Lands Act, providing for the administration and
PREDECESSOR-IN-INTEREST HAD MERELY A temporary leasing and sale of certain haciendas and parcels of
QUESTIONABLE INCHOATE AND INCOMPLETE RIGHT land, commonly known as friar lands, and Commonwealth Act No.
TO ACQUIRE THE PROPERTY IN QUESTION, WHICH 32 dated September 15, 1936 as amended by Commonwealth Act
QUESTIONABLE INCHOATE AND IN FACT No. 316 dated June 9, 1938, which provided for the subdivision and
UNCOMPLETED RIGHT CANNOT PREVAIL OVER THE sale of all the portions of the friar lands estated remaining
TITLE OF PETITIONER'S PREDECESSOR IN INTEREST undisposed of.
WHO WAS THE ACTUAL POSSESSOR THAT APPLIED
FOR THE PURCHASE OF THE LAND EVERY NEEDED Sec. 12 of Act No. 1120 provides in part:
STEP FOR THE PURCHASE HAVING BEEN PASSED
UPON AND RECORDED BY THE BUREAU OF LANDS
WHOSE RECORDS SHOW ONE AND ONLY TITLE . . . the Chief of the Bureau of Public Lands shall give the
ISSUED OVER THE LAND, THAT IS, THE TITLE OF THE said settler and occupant a certificate which shall set forth
PETITIONER'S PREDECESSOR-IN-INTEREST (pp. 20, in detail that the Government has agreed to sell to such
22, Rollo) 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
We find the petition impressed with merit. that upon the payment of the final installment together with
all accrued interest the Government will convey to such
Since the assigned errors were interrelated, it would be well for this settler and occupant the said land so held by him by
Court to discuss them jointly. proper instrument of conveyance, which shall be issued
and become effective in the manner provided in section Upon the payment of the final installment together with all accrued interests,
one hundred and twenty two of the Land Registration Act. 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
Also, Sec. 18 of the same Act provides: 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
No lease or sale made by the Chief of the Bureau of Agriculture and Commerce is indispensable for the validity of the sale.
Public Lands under the provisions of this Act shall be valid
until approved by the Secretary of the Interior. (Emphasis
ours) 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
Similarly, Sec. 2 of C.A. No. 32, as amended by C.A. No. 316 Agriculture and Natural Resources approved the sale of the lot without
provides in part: auction to Peñaranda; that a sales contract was executed between the
Director of Lands and Peñaranda on February 28, 1969 for a consideration
. . . The persons who, at the time of the subdivision survey of P 1,198.00 payable in 10 monthly installments; that upon the full payment
are actual and bona fide occupants of any portion of the of the price, the Undersecretary of Agriculture and Natural Resources issued
Friar Lands Estates, not exceeding ten hectares, shall be the final deed of conveyance of Lot No. 7449 in favor of Peñaranda.
given preference to purchase the portion occupied at a Subsequently, the Register of Deeds of Cavite issued TCT No. 39631 in the
private sale and at a price to be fixed in such case, by the name of Peñaranda, and when the latter sold the land to petitioner, TCT No.
Director of Lands, subject to the approval of the Secretary 39631 was cancelled and TCT No. T-80889 was issued in favor of the latter.
of Agriculture and Commerce, after taking into
consideration its location, quality, and any other Clearly, the purchase of the friar land made by Peñaranda was in
circumstances as may affect its value, the provisions of compliance with law. The execution of the sales contract vested the right of
section twelve of Act Numbered Eleven hundred and ownership in Peñaranda over the land. There is no doubt whatsoever that
twenty, as amended, to the contrary, . . . (Emphasis ours) 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
It is clear from the foregoing provisions that the friar lands were purchased petitioner transferred the ownership of the land in favor of the latter resulting
by the government for sale to actual settlers and occupants at the time said in the proper issuance of TCT No. T-80889 in its name.
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 On the other hand, the antecedents leading to the acquisition of title by
such settler or occupant. The latter then shall accept the certificate and respondent Virata are clearly shown in the records. The latter's predecessor,
agree to pay the purchase price so fixed and in the installments and at the Mabini Legaspi bought Lot 7449 in a sale by public auction held on May 5,
interest specified in the certificate. 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
The conveyance executed in favor of a buyer or purchaser, or the so called December 12, 1944, the Bureau of Lands sent a letter to the Register of
certificate of sale, is a conveyance of the ownership of the property, subject Deeds of Cavite requesting the issuance of certificates of title to several
only to the resolutory condition that the sale may be cancelled if the price persons including Mabini Legaspi, in whose favor TCT A-2188 was issued;
agreed upon is not paid for in full. The purchaser becomes the owner upon that subsequently on December 6, 1957, she sold the disputed land to
the issuance of the certificate of sale in his favorsubject only to the respondent Virata, which was evidenced by a deed of sale registered with
cancellation thereof in case the price agreed upon is not paid (Pugeda vs. the Registry of Deeds of Cavite on December 10, 1957; that on the same
Trias, No. L-16925, March 31, 1962, 4 SCRA 849.) 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 Appeals, G.R. L- 46935 December 21, 1987, 156 SCRA 701; Cruz vs.
as TCT No. 1120 RT 1660. Cabana, No. 56232, June 22, 1984, 129 SCRA 656).

Apparently, the sale of the lot to Mabini Legaspi occurred much earlier than Although a period of one year has already expired from the time the
the date of acquisition of same lot by petitioner's predecessor, and the certificate of title was issued to Mabini Legaspi pursuant to the alleged sale
evidence presented by respondent Virata indicates that the latter's from the government, said title does not become incontrovertible but is null
predecessor paid the purchase price of Lot No. 7449 on installments. 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
Nowhere in the evidence for the respondent or in the records of this case to quiet title is imprescriptible (Coronel vs. Intermediate Appellate Court, No.
however, would show that a certificate of sale was ever issued by the 70191, October 29, 1987, 155 SCRA 270).1âwphi1 In one case, this Court
Bureau of Lands, which would vest ownership and title over the land in favor ruled that an adverse claimant of a registered land who is in possession
of Mabini Legaspi. The existence of the official receipts showing payment of thereof for a long period of time is not barred from bringing an action for
the price of the land by Legaspi does not prove that the land was legally reconveyance which in effect seeks to quiet title to the property against a
conveyed to her without any contract of sale having been executed by the registered owner relying upon a Torrens title which was illegally or wrongfully
government in her favor. Viewed from all angles, the acquisition of the lot by acquired (Caragay-Layno vs. Court of Appeals, 133 SCRA 718). In actions
Legaspi was highly irregular and void, and not in compliance with the for reconveyance of property predicated on the fact that the conveyance
procedure mandated by law for the sale of friar lands. For one thing, Mabini complained of was void ab initio, a claim of prescription of the action would
Legaspi allegedly purchased the land in a sale at public auction, which be unavailing (Corpus, et al. vs. Beltran, et al., 97 Phil. 722; Agne vs.
procedure is nowhere provided in Act No. 1120 or in C.A. 32, as amended Director of Lands, G.R. L-40399, February 6, 1990, 181 SCRA 793). Being
by C.A. 316. The laws expressly state that an actual occupant of the land null and void, the sale made to Mabini Legaspi and the subsequent titles
shall purchase the lot occupied by him at a private sale and not in a sale at issued pursuant thereto produced no legal effects whatsoever. Quod nullum
public auction (Sec. 2, C.A. 32 as amended). Further, neither was there any est nullum producit affectum (Agnes vs. Director of Lands, supra). There
deed of conveyance issued to Legaspi by the government after the full being no title to the land that Mabini Legaspi acquired from the government,
payment of the installments on the disputed lot. it follows that no title to the same land could be conveyed by the former to
respondent Virata.
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 Even assuming that respondent Virata was a purchaser in good faith and for
Commerce. The absence of such approval made the supposed sale null and value, the law is, as between two persons both of whom are in good faith
void ab initio. Without the certificate of sale to prove the transfer of the and both innocent of any negligence, the law must protect and prefer the
ownership of the land from the government Mabini Legaspi and without the lawful holder of registered title over the transferee of a vendor bereft of any
required approval of the sale by the Secretary of Agriculture and Commerce, transmissible rights (Baltazar vs. Court of Appeals, G.R. 78728, December
We find that Mabini Legaspi did not in any manner acquire ownership over 8, 1988, 168 SCRA 354, emphasis ours). Further if a person happened to
the land in 1943. The ownership or title over the friar land, specifically Lot obtain property by mistake or to the prejudice of another with or without bad
No. 7449 remained in the government until Peñaranda, petitioners faith, the certificate of title which may have been issued to him under the
predecessor, lawfully acquired ownership over the same lot on February 28, circumstances may and should be cancelled or corrected.
1969 by virtue of a sales contract executed in his favor.
Our unavoidable conclusion in this case is that the title of petitioner under
The issuance of a certificate of title in favor of Mabini Legaspi did not vest the Torrens land system should be upheld considering that no previous valid
ownership upon her over the land nor did it validate the alleged purchase of title to the same land existed.
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 ACCORDINGLY, the petition is hereby GRANTED and the decision of the
particular property. Our land registration laws do not give the holder any respondent Court of Appeals dated July 13, 1987 is hereby REVERSED.
better title than that what he actually has (De man et al. vs. Court of 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.
[G.R. No. 121658. March 27, 1998] 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.
NESTOR LACSAMANA,* EL DORADO PLANTATION, INC., LBJ
DEVELOPMENT CORPORATION and CONRAD C. On 11 November 1983 Ester, Leon Jr. and Dulce Clara, all surnamed
LEVISTE, petitioners, vs. COURT OF APPEALS, ESTER Robles, as surviving heirs of Leon Robles, filed a complaint with the
GAITOS ROBLES, LEON GAITOS ROBLES and DULCE CLARA Regional Trial Court of Lipa City[3] gainst Nestor Lacsamana, EL DORADO,
ROBLES, respondents. 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
DECISION 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
BELLOSILLO, J.: 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
This is a petition to review the decision of the Court of Appeals Leviste family with defendant Conrad C. Leviste as its President, was not a
affirming that of the Regional Trial Court in an action by private respondents buyer in good faith since facts existed which should have put it on guard as
against petitioners for reconveyance and cancellation of certificates of title.[1] to defects in the title of Lacsamana; and, that defendant EL DORADO,
likewise owned and controlled by the Leviste family with Conrad C. Leviste
Leon Robles and his niece Amparo Robles were the registered co- as President, participated in the fraud by surrendering the only co-owner's
owners in equal shares of Lot No. 13535, a 56,864-square meter piece of duplicate copy of TCT No. 15261 in its name and that of Leon Robles thus
land situated in Bo. Inosloban, Lipa City, covered by OCT No. 0-363-R paving the way for the issuance of a new TCT in the name of Nestor
issued on 3 March 1965 by the local Register of Deeds. [2] Lacsamana as co-owner in place of Leon Robles.
On 26 April 1965 Amparo sold her one-half (1/2) undivided share to El Defendants LBJ and EL DORADO invoked the defense of prescription
Dorado Corporation (EL DORADO). Consequently, OCT No. 0-363-R was and/or laches and alleged that LBJ was a buyer in good faith and for
cancelled and TCT No. 15261 issued in the names of EL DORADO and value. However, their defenses were rejected by the court a quo which ruled
Leon Robles as co-owners. 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
On 24 September 1969 Leon Robles, who was then residing in San Deed of Absolute Sale on 22 January 1980 was timely filed since actions for
Francisco, California, U.S.A., died survived by his wife Ester Gaitos Robles reconveyance of real property on ground of fraud may be filed within four (4)
and children Leon Jr. and Dulce Clara as his sole heirs. However, in a Deed years from its discovery.
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 As regards the second issue, the trial court ruled that LBJ was not an
Lot No. 13535 to one Nestor Lacsamana. Nine (9) years later, or on 22 innocent purchaser because facts existed which should have put it on inquiry
January 1980, the Deed of Absolute Sale was registered in the Registry of as to possible defects in the title of Lacsamana, e.g., while the questioned
Deeds of Lipa City by one Philip Neri Gonzales. Consequently, TCT No. Deed of Absolute Sale purportedly executed in Manila stated that Leon and
15261 in the names of EL DORADO and Leon Robles was cancelled and Ester Robles personally appeared before Notary Public Engracio S.
TCT No. 46245 issued in the names of EL DORADO and Nestor Concepcion and presented their Residence Certificates issued in Makati, the
Lacsamana. same document showed that the spouses were residing at 695 22nd
Avenue, San Francisco, California, U.S.A., and did not indicate that they
On 22 July 1980, Nestor Lacsamana purportedly sold his one-half (1/2) were temporarily staying in the Philippines at the time of its execution; and,
share to LBJ Development Corporation (LBJ) represented by its President, the Deed of Absolute Sale was registered in the Office of the Register of
Conrad C. Leviste. A certain Rolando Lumanglas registered the deed of sale Deeds of Lipa City only in 1980, or after the lapse of more than eight (8)
in the Registry of Deeds resulting in the cancellation of TCT No. 46245 and years. Additionally, the court found that Leon Robles and Roman Payumo,
the issuance of TCT No. 47475 in the names of EL DORADO and LBJ. 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 Petitioners insist that the action instituted by private respondents has
Lacsamana was a non-existent person;[5] and, that EL DORADO, Leon already prescribed, but even if it has not, it is already barred by laches and
Robles' co-owner at the time of the alleged sale in favor of Lacsamana, and reiterate their position that LBJ was a buyer in good faith.
LBJ, to whom Lacsamana purportedly sold Leon's one-half share, were both
corporations owned and controlled by the Leviste family with defendant We affirm the decision of respondent appellate court. On the issue of
Conrad C. Leviste as its common President.[6] Thus, on the basis of the prescription, we agree that the present action has not yet prescribed
foregoing, the court a quo rendered judgment in favor of plaintiffs[7] the because the right to file an action for reconveyance on the ground that the
dispositive portion of which read - 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
WHEREFORE, the Court holds that defendant LBJ Development prescribe.[10] Hence, the fact that the alleged sale took place in 1971 and the
Corporation is not a purchaser in good faith. Accordingly, the action to have it declared void or inexistent was filed in 1983 is of no
Court hereby orders the Register of Deeds of Lipa City to cancel moment.[11] To reiterate, an action for reconveyance based on a void
all the present titles covering the parcel of land formerly covered contract is imprescriptible.[12]
by Transfer Certificate of Title No. T-47475 in the names of
defendants El Dorado Plantation, Inc., and LBJ Development Neither can the defense of laches be sustained. We cannot see how
Corporation and to reinstate Transfer Certificate of Title No. T- private respondents may be considered guilty of laches. It should be noted
15261 in the names of Leon Robles and El Dorado Plantation, Inc. 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
In the event that reconveyance of the property involved is not investigation to be made for the purpose of finding out the author and the
possible due to any subsequent transfer of the property to third circumstances behind the execution of the fictitious 1971 Deed of Absolute
persons or persons not parties to this suit, the Court hereby orders Sale. Thus, in less than two (2) months after it was discovered by the
defendant LBJ Development Corporation to pay plaintiffs the National Bureau of Investigation that Nestor Lacsamana was in fact a
present fair market value of plaintiffs' one-half (1/2) share in the fictitious/non-existent person,[13] private respondents through their attorney-
property, which fair market value shall be determined by an in-fact Petronilo Gaitos instituted on 11 November
appraiser to be agreed upon by the parties, and in case of 1983,the present action i.e., barely three (3) years and nine (9) months after
disagreement the parties shall recommend to the Court the the fraudulent registration on 22 January 1980. Thus, it is said, the concept
appraisers of their choice who shall appraise the property jointly of laches is not concerned with the lapse of time but only with the effect of
and submit the corresponding report for approval or resolution of unreasonable lapse.[14]
the Court.
We are urged by petitioners to rule that LBJ was a buyer in good
The Court further orders defendants LBJ Development faith. We cannot. Besides being a factual finding shared by both the trial
Corporation, El Dorado Plantation, Inc., and Conrad Leviste to pay court and the Court of Appeals that it was not, and supported by the
jointly and severally plaintiffs attorney's fees in the sum of Twenty evidence on record, it is conclusive upon us.[15]
Thousand Pesos (P20,000.00), since the latter was compelled
to institute this case to protect their interests, and to pay the costs Three (3) reasons, at least, militate against petitioner LBJ's claim of
of suit.[8] good faith. First, Conrad C. Leviste, President of LBJ, claimed that the
company came to know of the disputed property through its driver Jovito
The Court of Appeals affirmed the findings and conclusions of the trial Lacsamana who allegedly introduced his nephew Nestor Lacsamana as its
court on appeal by EL DORADO, LBJ and Conrad C. Leviste.[9] They owner who was interested in selling his share in the property. On this point,
differed only insofar as the issue of prescription was concerned. Instead of without necessarily underestimating the capacity of driver Jovito's nephew
the period of four (4) years for filing actions for reconveyance on ground of Nestor to own one-half of a 5.6-hectare parcel of land, Leviste's curiosity
fraud cited by the trial court, respondent appellate court ruled that the should have been aroused just the same as to how Nestor came to own his
present action had not yet prescribed since actions to declare the nullity of a portion of the property. The records fail to disclose any inquiry, formal or
void contract was imprescriptible. 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 AntonioEscutin, 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.
G.R. No. L-11285 May 16, 1958 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
VICENTE SAPTO, LAUREANA SAPTO and DORA (BAGONA), plaintiffs- providing that "no deed . . . shall take effect as a conveyance or bind the
appellants, land, but shall operate only as a contract between the parties and as
vs. evidence of authority to the clerk or register of deeds to make registration" in
APOLONIO FABIANA, defendant-appellee. 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.,
Rodolfo A. Ta-Asan for appellants. 442; Quimson vs. Suarez, 45 Phil., 901; Winkleman vs. Veluz, 43 Phil., 609;
Napoleon B. Nidea for appellee. 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.
REYES, J.B.L., J.: 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
Sapto (Moro), now deceased was the registered owner of a parcel of land the conveyance. Generally speaking, as between vendor and vendee, the
located in Alambre, Toril, Davao City, under Transfer Certificate of Title No. same rights and remedies exist in relation to land not so registered". In
T-5701 (0-28) of the Register of Deeds of Davao City. When Sapto died, he Galanza vs. Nuesa, 95 Phil., 713, we held that "registration is intended to
left his children Samuel, Constancio, and Ramon as heirs of the property in protect the buyer against claims of third persons arising from subsequent
question. Ramon pre-deceased his two brothers, leaving no, other heirs. On alienations by the vendor, and is certainly not necessary to give effect as
June 6, 1931, Samuel and Constancio Sapto executed a deed of sale of a between the parties to their deed of sale". And in the recent case of
portion of four hectares of the land aforementioned if favor of defendant Casica vs. Villaseca, G.R. No. L-9590, April 30, 1957, we reiterated that "the
Apolonio Fabiana, in consideration of the amount of P245.00. The sale was purpose of registration is merely to notify and protect the interests of
duly approved by the Provincial Governor of Davao, but was never strangers to a given transaction, who may be ignorant thereof, and the non-
registered. Possession of the land conveyed was, however, transferred to registration of the deed evidencing said transaction does not relieve the
Fabiana and the latter has been in the possession thereof 1931 up to the parties thereto of their obligations thereunder".
present.
No right of innocent third persons or subsequent transferees of the property
Thereafter, Constancio Sapto died without any issue, Samuel Sapto married in question is involved herein. The property has remained and still is in the
one Dora (Bagoba) and upon his death was survived by his widow and two possession of the vendee of appellants' predecessors, herein appellee. It is,
children, Laureana and Vicente Sapto. On October 19, 1954, the widow and therefore, clear that the conveyance between appellee and his vendors and
children of Samuel Sapto filed this action in the Court of First Instance of valid and binding upon the latter, and is equally binding and effective against
Davao for the recovery of the parcel of land sold by their predecessors to the heirs of the vendors, herein appellants. To hold otherwise would make of
defendant Apolonio Fabiana in 1931. After trial, the lower court held that the Torrens system a shield for the commission of fraud by the vendors or
although the sale between Samuel and Constancio Sapto and defendant in his heirs (Gustilo vs. Maravilla, 48 Phil., 442), who would then be able to
1931 was never registered, it was valid and binding upon the parties and the reconvey the same property to other persons.
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. Appellants cite several cases wherein we have held that under the Torrens
From this judgment, plaintiffs appealed to this Court. 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
The issue is whether the deed of sale executed by appellants' predecessors involving conflicting rights over registered property and those of innocent
in favor of the appellee over the land in question, although never registered, transferees who relied on the clean titles of the properties in question. These
is valid and binding on appellants and operated to convey title and cases have, therefore, no bearing on the instant case, where the appellee
ownership to 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.
G.R. No. L-52064 December 26, 1984 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
JULIANA CARAGAY-LAYNO, Assisted by Her Husband, BENITO meters, ESTRADA repaired to the Disputed Property and found that the
LAYNO, petitioner, northwestern portion, subsequently surveyed to be 3,732 square meters,
vs. was occupied by petitioner-spouses Juliana Caragay Layno and Benito
HONORABLE COURT OF APPEALS and SALVADOR ESTRADA as Layno. ESTRADA demanded that they vacate the Disputed Portion since it
Administrator of the Estate of the Deceased, MARIANO DE was titled in the name of the deceased DE VERA, but petitioners refused
VERA, respondents. claiming that the land belonged to them and, before them, to JULIANA's
father Juan Caragay.
Pedro Peralta for petitioner.
ESTRADA then instituted suit against JULIANA for the recovery of the
Disputed Portion (Civil Case No. D-2007), which she resisted, mainly on the
Andres T. Gutierrez for private respondent. 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.
MELENCIO-HERRERA, J.:
After hearing, the Trial Court rendered judgment ordering JULIANA to vacate
Respondent Appellate Court, then the Court of Appeal, affirmed in toto the the Disputed Portion.
judgment of the former Court of First Instance of Pangasinan, Branch III, at
Dagupan adjudging private respondent entitled to recover possession of a On appeal respondent Appellate Court affirmed the Decision in toto.
parcel of land and ordering petitioners, as defendants below, to vacate the
premises. Petitioners, as paupers, now seek a reversal of that judgment. Before us, JULIANA takes issue with the following finding of respondent
Court:
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, Although Section 102 of Act 496 allows a Petition to
Psu-24206 [Case No. 44, GLRO Rec. No. 117]), with a total area of 8,752 compel a Trustee to reconvey a registered land to
square meters, situated at Calasiao, Pangasinan. The entire parcel is the cestui que trust (Severino vs. Severino, 44 Phil 343;
covered by Original Certificate of Title No. 63, and includes the adjoining Escobar vs. Locsin, 74 PhiL 86) this remedy is no longer
Lots 2 and 3, issued on 11 September 1947 in the name of Mariano M. DE available to Juliana Caragay. Mariano de Vera's land, Lot
VERA, who died in 1951 without issue. His intestate estate was 1, Psu-24206, was registered on September 11, 1947
administered first by his widow and later by her nephew, respondent (Exhibit"C") and it was only on March 28, 1967 when the
Salvador Estrada. defendants filed their original answer that Caragay sought
the reconveyance to her of the 3,732 square meters.
Petitioner, JULIANA Caragay, and the decedent, Mariano DE VERA, were Thus, her claim for reconveyance based on implied or
first cousins, "both orphans, who lived together under one roof in the care of constructive trust has prescribed after 10 years (Banaga
a common aunt." vs. Soler, L-15717, June 30,1961; J.M. Tuason & Co. vs.
Magdangal, L-15539, Jan. 30, 1962; Alzona vs.
As Administratrix, DE VERA's widow filed in Special Proceedings No. 4058 Capunitan, 4 SCRA 450). In other words, Mariano de
of the former Court of First Instance of Pangasinan, Branch III, an Inventory Vera's Original Certificate of Title No. 63 (Exhibit "C") has
become indefeasible. 1
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." We are constrained to reverse.
The evidence discloses that the Disputed Portion was originally possessed of Lot 1 in OCT No. 63, the difference is 5,020 sq. ms., which closely
openly, continuously and uninterruptedly in the concept of an owner by Juan approximates the area of 5,147 sq. ms., indicated in the Inventory of
Caragay, the deceased father of JULIANA, and had been declared in his Property of DE VERA. In fact, the widow by limiting the area in said
name under Tax Declaration No. 28694 beginning with the year 1921 Inventory to only 5,147 sq. ms., in effect, recognized and admitted that the
(Exhibit "2-C"), later revised by Tax Declaration No. 2298 in 1951 (Exhibit "2- Disputed Portion of 3,132 sq. ms., did not form part of the decedent's estate.
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 The foregoing conclusion does not necessarily wreak havoc on the
name under Tax Declaration No. 22522 beginning with the year 1959 indefeasibility of a Torrens title. For, mere possession of a certificate of title
(Exhibit "2-A"), later cancelled by TD No. 3539 in 1966 (Exhibit "2"). Realty under the Torrens System is not conclusive as to the holder's true ownership
taxes were also religiously paid from 1938 to 1972 (Exhibits "3-A" to "3-H"). of all the property described therein for he does not by virtue of said
Tacking the previous possession of her father to her own, they had been in certificate alone become the owner of the land illegally included. 2 A Land
actual open, continuous and uninterrupted possession in the concept of Registration Court has no jurisdiction to decree a lot to persons who have
owner for about forty five (45) years, until said possession was disturbed in never asserted any right of ownership over it.
1966 when ESTRADA informed JULIANA that the Disputed Portion was
registered in Mariano DE VERA's name.
... Obviously then, the inclusion of said area in the title of
Lot No. 8151 is void and of no effect for a land registration
To substantiate her claim of fraud in the inclusion of the Disputed Portion in Court has no jurisdiction to decree a lot to persons who
OCT No. 63, JULIANA, an unlettered woman, declared that during his have put no claim in it and who have never asserted any
lifetime, DE VERA, her first cousin, and whom she regarded as a father as right of ownership over it. The Land Registration Act as
he was much older, borrowed from her the Tax Declaration of her land well as the Cadastral Act protects only the holders of a title
purportedly to be used as collateral for his loan and sugar quota application; in good faith and does not permit its provisions to be used
that relying on her cousin's assurances, she acceded to his request and was as a shield for the commission of fraud, or that one should
made to sign some documents the contents of which she did not even know enrich himself at the expense of another. 3
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. 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.
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 The remedy of the landowner whose property has been
to the time of his death in 1951, nor his successors-in-interest, had taken wrongfully or erroneously registered in another's name is,
steps to possess or lay adverse claim to the Disputed Portion. They may, after one year from the date of the decree, not to set aside
therefore be said to be guilty of laches as would effectively derail their cause the decree, but, respecting the decree as incontrovertible
of action. Administrator ESTRADA took interest in recovering the said and no longer open to review, to bring an ordinary action
portion only when he noticed the discrepancy in areas in the Inventory of in the ordinary court of justice for reconveyance or, if the
Property and in the title. property has passed into the hands of an innocent
purchaser for value, for damages. 4
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 Prescription cannot be invoked against JULIANA for the reason that as
it for a single moment: but that, JULIANA had been in actual, continuous and lawful possessor and owner of the Disputed Portion, her cause of action for
open possession thereof to the exclusion of all and sundry, the inescapable reconveyance which, in effect, seeks to quiet title to the property, falls within
inference is, fraud having been unsubstantiated, that it had been erroneously settled jurisprudence that an action to quiet title to property in one's
included in OCT No. 63. The mistake is confirmed by the fact that deducting possession is imprescriptible. 5 Her undisturbed possession over a period of
3,732 sq. ms., the area of the Disputed Portion from 8,752 sq. ms., the area 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 Estrada, as Administrator of the Estate of the Deceased, Mariano de Vera,
effect on her own title. 6 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,
Besides, under the circumstances, JULIANA's right to quiet title, to seek presently occupied by petitioner Juliana Caragay-Layno, and to reconvey the
reconveyance, and to annul OCT. No. 63 accrued only in 1966 when she same to said petitioner. After the segregation shall have been accomplished,
was made aware of a claim adverse to her own. It was only then that the the Register of Deeds of Pangasinan is hereby ordered to issue a new
statutory period of prescription may be said to have commenced to run certificate of title covering said 3,732 sq. m. portion in favor of petitioner, and
against her, following the pronouncement in Faja vs. Court of Appeals, another crtificate of title in favor of the Estate of the deceased, Mariano de
supra, a case almost Identical to this one. Vera covering the remaining portion of 5,0520 square meters. No costs.

... Inasmuch as it is alleged in paragraph 3 of Frial's SO ORDERED


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
[G.R. No. 156357. February 18, 2005] 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,
ENGR. GABRIEL V. LEYSON, DR. JOSEFINA L. POBLETE, FE LEYSON
1968, the spouses Noval executed a Deed of Absolute Sale [11] over the two
QUA, CARIDAD V. LEYSON and ESPERANZA V. LEYSON,
lots covered by T.D. No. 008876 in favor of Lourdes V. Leyson
petitioners, vs. NACIANSINO BONTUYAN and MAURECIA B.
for P4,000.00. Lourdes Leyson took possession of the property and had it
BONTUYAN, respondents.
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.
DECISION 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.
CALLEJO, SR., J.:
01-001-00646. All these tax declarations were in the names of the spouses
Noval.[15]
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 Meanwhile, Lourdes Leyson paid for the realty taxes over the property.
the motion for reconsideration of the said decision. 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
The Antecedents 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
Calixto Gabud was the owner of a parcel of land located in Barangay
person,[17] and that he first entered upon and began cultivating the same in
Adlawon, Mabolo, Cebu City, which was declared for taxation purposes
under Tax Declaration (T.D.) No. 03276-R in 1945[2] with the following 1918. Thus, on November 19, 1971, Free Patent No. 510463 was issued
boundaries: 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,
North Calixto Gabud East Marcelo Cosido 1974.[18] Another parcel of land, Lot No. 13272, was also registered under
South Pedro Bontuyan West Asuncion Adulfo.[3] 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
Because of the construction of a provincial road, the property was 1974.[19] On February 20, 1976, Gregorio Bontuyan executed a Deed of
divided into two parcels of land covered by T.D. No. 03276-R and T.D. No. Absolute Sale[20] over Lot No. 17150 in favor of his son, Naciansino
01979-R. On February 14, 1948, Gabud executed a Deed of Absolute Bontuyan.
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 On April 28, 1980, Gregorio Bontuyan, then 103 years old, executed
Leodegaria Bontuyan. On the basis of the said deed, T.D. No. 03276-R was another Deed of Absolute Sale[21] over Lot Nos. 13272 and 17150, covered
cancelled by T.D. No. 13615-R in the name of Protacio Tabal effective by OCT No. 0-1618 and OCT No. 0-1619, respectively, in favor of
1949.[5] On January 5, 1959, Tabal executed a Deed of Sale [6] over the Naciansino Bontuyan for P3,000.00. On the basis of the said deed, OCT No.
property covered by T.D. No. 13615-R in favor of Simeon Noval, married to 0-1619 was cancelled by TCT No. 1392 in the name of Naciansino Bontuyan
Vivencia Bontuyan, daughter of Gregorio Bontuyan, for P800.00. T.D. No. on December 2, 1980.[22] Gregorio Bontuyan died intestate on April 12,
13615-R was cancelled by T.D. No. 100356 in the names of the spouses 1981.[23]
Noval.[7] Gregorio Bontuyan received a copy of the said tax declaration in
On March 30, 1981, the spouses Bontuyan executed a Real Estate
behalf of the spouses Noval.[8]The latter tax declaration was then cancelled
Mortgage over Lot No. 17150 covered by OCT No. 0-1619 in favor of the
by T.D. No. 008876 under the same names effective 1967. [9]
Development Bank of the Philippines (DBP) as security for a loan
of P11,200.00.[24] Naciansino Bontuyan had earlier executed an affidavit that (c) Ordering defendant to pay plaintiffs the sum of P50,000.00 as reimbursement of
the property was not tenanted. Shortly thereafter, the spouses Bontuyan left attorneys fees and the further sum of P500.00 as appearance fee every time the case
the Philippines and resided in the United States. Meanwhile, Lourdes is called for trial;
Leyson died intestate.
The spouses Bontuyan returned to the Philippines in 1988 to redeem (d) Ordering the defendant to pay plaintiffs the sum of P50,000.00 as moral damages
the property from DBP only to discover that there were tenants living on the and exemplary damages may be fixed by the court;
property installed by Engineer Gabriel Leyson, one of the late Lourdes
Leysons children. Despite being informed that the said spouses owned the (e) Ordering defendant to pay plaintiffs the sum of P5,000.00 as actual expenses for
property, the tenants refused to vacate the same. The tenants also refused the preparation and filing of the complaint;
to deliver to the spouses the produce from the property. The spouses
Bontuyan redeemed the property from DBP on September 22, 1989. (f) Ordering defendant to pay the costs; and
On February 12, 1993, Jose Bontuyan, Nieves Atilano, Pacifico
Bontuyan, Vivencia Noval and Naciansino Bontuyan, the surviving heirs of (g) Granting to plaintiffs such other reliefs and remedies just and equitable in the
Gregorio Bontuyan, executed an Extrajudicial Settlement [25] of the latters premises.[27]
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 In his answer to the complaint, Engr. Leyson averred, by way of
Naciansino over the said property starting 1994. affirmative defenses, that the two lots were but portions of a parcel of land
On June 24, 1993, Naciansino Bontuyan, through counsel, wrote Engr. owned by Calixto Gabud, covered by T.D. No. 03276-R, and was subdivided
Gabriel Leyson, demanding that he be furnished with all the documents into two parcels of land because of the construction of a provincial road on
evidencing his ownership over the two lots, Lots Nos. 17150 and the property; Gabud later sold the two lots to Protacio Tabal, who sold the
13272.[26] Engr. Leyson ignored the letter. same to Simeon Noval, married to Vivencia Bontuyan, one of the children of
Gregorio Bontuyan; Simeon Noval later sold the property to Lourdes Leyson
The spouses Bontuyan, thereafter, filed a complaint against Engr. on May 22, 1968 who, forthwith, took possession thereof as owner; and
Leyson in the Regional Trial Court (RTC) of Cebu City for quieting of title Gregorio Bontuyan was issued a free patent over the property through fraud.
and damages. They alleged that they were the lawful owners of the two lots Engr. Leyson concluded that the said patent, as well as OCT No. 0-1619
and when they discovered, upon their return from the United States, that the and TCT No. 1392, were null and void and that the plaintiffs acquired no title
property was occupied and cultivated by the tenants of Engr. Leyson, they over the property.
demanded the production of documents evidencing the latters ownership of
the property, which was ignored. Engr. Leyson interposed a counterclaim against the spouses Bontuyan
and repleaded as an integral part thereof all the material allegations in his
The spouses Bontuyan prayed that, after due proceedings, judgment affirmative defense. He prayed that, after due proceedings, judgment be
be rendered in their favor, thus: rendered in his favor, thus:

WHEREFORE, premises considered, it is most respectfully prayed of this a) Dismissing Plaintiffs complaint for failure to include indispensable parties;
Honorable Court to render judgment against the defendant and in favor of the
plaintiffs, to wit: 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
(a) Confirming the ownership of the plaintiffs on the lots in question; and possessors of the parcels of land in issue;

(b) Ordering defendant to pay the plaintiffs the amount of Twenty Thousand Pesos c) Declaring OCT No. 0-1619 in the name of Gregorio Bontuyan and TCT No. 1392
(P20,000.00) as the share of the plaintiffs of the produce of the lots in question; 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, d-1) P50,000.00 as attorneys fees and appearance fee
Esperanza V. Leyson and Caridad V. Leyson; of P1,000.00 per hearing;
d-2) P500,000.00 as moral damages to each Intervenor;
d) And on the Counterclaim, to order Plaintiffs to pay the Defendant the following d-3) P50,000.00 as exemplary damages;
sums: d-4) P15,000.00 as expenses of litigation.

d-1) P50,000.00 as attorneys fees and appearance fee Defendant further prays for such other reliefs just and equitable in the premises.[29]
of P1,000.00 per hearing;
d-2) P500,000.00 as moral damages; In their reply, the spouses Bontuyan averred that the counterclaim of
d-3) P20,000.00 as exemplary damages; the defendants for the nullity of TCT No. 1392 and the reconveyance of the
d-4) P10,000.00 as expenses of litigation. property was barred by laches and prescription.
On January 21, 1999, the trial court rendered judgment in favor of the
Defendant further prays for such other reliefs just and equitable in the premises. [28] Leyson heirs and against the spouses Bontuyan. The fallo of the decision
reads:
In due course, the other children of Lourdes Leyson, namely, Dr.
Josefina L. Poblete, Fe Leyson Qua, Caridad V. Leyson and Esperanza V. WHEREFORE, foregoing considered judgment is hereby rendered dismissing
Leyson, were allowed to intervene as defendants. They filed their answer-in- plaintiffs complaint for dearth of evidence declaring the defendant and the
intervention wherein they adopted, in their counterclaim, paragraphs 7 to 26 intervenors as the true and legal owners and possessors of the subject parcels of
of the answer of their brother, Engr. Leyson, the original defendant. They land; declaring OCT No. 0-1619 in the name of Gregorio Bontuyan and TCT No.
prayed that, after due hearing, judgment be rendered in their favor as 1392 in the name of Naciansino Bontuyan null and void; ordering the Register of
follows: 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
Wherefore, this Honorable Court is prayed to render judgment in favor of the Leyson and Caridad Leyson; ordering plaintiff to pay defendant and intervenors the
Defendant and the Defendants-in-Intervention and against the Plaintiffs as follows: following:

a) Promissory Plaintiffs complaint for failure to include indispensable parties and for a) P50,000.00 attorneys fees;
lack of cause of action; b) 1,000.00 per appearance;
c) 100,000.00 moral damages for defendant and
b) Declaring the Defendant and his four (4) sisters, namely: Dr. Josefina L. Poblete; intervenors;
Mrs. Fe L. Qua, Esperanza Leyson and Caridad Leyson as the true and legal owners d) 10,000.00 exemplary damages; and
and possessors of the parcels of land in issue; e) 10,000.00 litigation expenses.

c) Declaring OCT No. 0-1619 in the name of Gregorio Bontuyan and TCT No. 1392 SO ORDERED.[30]
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. The trial court held that Simeon Noval had sold the lots to Lourdes
Leyson and his four (4) sisters, namely: Dr. Josefina L. Poblete, Mrs. Fe L. Qua, Leyson on May 22, 1968, who thus acquired title over the property.
Esperanza V. Leyson and Caridad V. Leyson;
The spouses Bontuyan appealed the decision to the CA which
affirmed, with modification, the decision of the RTC. The appellate court held
d) On the Counterclaim, Plaintiffs should pay the Defendants the following sums: 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 Fifth Assignment of Error
reconsideration of the decision insofar as Lot No. 17150 was concerned,
contending that their counterclaim for the nullification of OCT No. 0-1619 THE APPELLATE COURT GRAVELY ERRED IN NOT GRANTING
contained in their answer constituted a direct attack on the said title. The CA ATTORNEYS FEES AND APPEARANCE FEES DESPITE RESPONDENTS
denied the motion. FRAUD IN ACQUIRING TITLE OVER THE SUBJECT PROPERTIES.[34]
The Leyson heirs then filed a petition for review with this Court and
made the following assignments of error: On the first two assignments of errors, the petitioners aver that the
counterclaim in their answer to the complaint constituted a direct attack of
First Assignment of Error 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
THE HONORABLE COURT OF APPEALS COMMITTED ERROR WHEN IT in Pro Line Sports Center, Inc. v. Court of Appeals[36] wherein this Court held
RULED THAT THE NULLITY OR THE VALIDITY OF OCT NO. 0-1619 that the counterclaim of the petitioners therein constituted a direct attack on
CANNOT BE RULED UPON IN THESE PROCEEDINGS BROUGHT BY THE a certificate of title. The petitioners, likewise, cited Section 55 of Act No. 496,
RESPONDENTS FOR THE QUIETING OF THEIR TITLE. as amended, to buttress their stance. They plead that their answer to the
complaint should be liberally construed so as to afford them substantial
Second Assignment of Error justice.
On the other hand, the respondents assert that the decision of the CA
THE HONORABLE COURT OF APPEALS GRAVELY ERRED WHEN IT is correct. They claim that Lot No. 17150 was still public land when Lourdes
RULED THAT PETITIONERS ANSWER WITH COUNTERCLAIM, PRAYING Leyson purchased the same from Simeon Noval, and that the property
FOR THE CANCELLATION OF PLAINTIFFS TORRENS CERTIFICATE IS A became private land only when Free Patent No. 510463 was issued to and
MERE COLLATERAL ATTACK ON THE TITLE.[31] under the name of Gregorio Bontuyan.

Third Assignment of Error 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 APPELLATE COURT GRAVELY ERRED WHEN IT MODIFIED THE
DECISION OF THE REGIONAL TRIAL COURT DATED JANUARY 21, 1999 The respondents, as plaintiffs in the court a quo, were burdened to
BY RULING THAT PETITIONERS ARE DECLARED THE OWNERS OF LOT prove their claim in their complaint that Gregorio Bontuyan was the owner of
13273 BUT RESPONDENTS ARE DECLARED THE OWNERS OF LOT 17150 Lot No. 17150 and that they acquired the property in good faith and for
UNDER OCT NO. 0-1619 AND PRESENTLY COVERED BY TCT NO. 1392 IN valuable consideration from him.[37] However, the respondents failed to
THE NAME OF NACIANSINO BONTUYAN, DESPITE THE APPELLATE discharge this burden. The evidence on record shows that Calixto Gabud
COURTS AFFIRMING THE FINDINGS OF THE TRIAL COURT THAT FRAUD sold the property to Protacio Tabal on February 14, 1948, [38] and that the
WAS COMMITTED BY GREGORIO BONTUYAN (RESPONDENTS latter sold the property to Simeon Noval on January 5, 1959. [39] Simeon
PREDECESSOR-IN-INTEREST) IN ACQUIRING TITLE OVER THE SUBJECT Noval then sold the property to Lourdes Leyson on May 22, 1968. [40] The
PROPERTIES.[32] 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
Fourth Assignment of Error 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
THE HONORABLE COURT OF APPEALS GRAVELY ERRED WHEN IT goes: NEMO DAT QUOD NON HABET. Gregorio Bontuyan could not feign
RULED THAT RECONVEYANCE OF TITLE OF LOT 17150 COVERED BY ignorance of Simeon Novals ownership of the property, considering that the
OCT NO. 0-1619 AND PRESENTLY COVERED BY TCT NO. 1392, IN FAVOR latter was his son-in-law, and that he (Gregorio Bontuyan) was the one who
OF PETITIONERS HAD PRESCRIBED.[33] 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 There exist (sic) no trace of irregularity in the transfers of ownership from the
declaration, there was even an annotation that the property was transferred original owner, Calixto Gabud, to defendant-appellee and intervenors-appellees.
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 Plaintiffs-appellants, on the other hand, offered no convincing evidence as to how
executed by Protacio Tabal in favor of Simeon Noval on January 5, their predecessor-in-interest, Gregorio Bontuyan, acquired the subject lots.
1959.[42] We note that the respondents failed to adduce in evidence any Plaintiffs-appellants presented only the Free Patent and OCT No. 0-1619, covering
receipts of real property tax payments made on the property under their Lot No. 17150, issued in the name of Gregorio Bontuyan.
names, which would have fortified their claim that they were the owners of
the property. We agree with the findings of the CA, thus:
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
This case involves two parcels of land Lot 17150 and Lot 13273. Lot 17150 is same.[43]
registered under the Torrens System under the names of plaintiffs-appellants, while
Lot 13273 remained to be unregistered.
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 this case, records show that defendant-appellee and intervenors-appellees are the in gross bad faith, thereby defrauding Lourdes Leyson of the said property
true owners of the subject lots. They have in their favor tax receipts covering the through deceit. Gregorio Bontuyan falsely declared in the said application:
subject lots issued since 1945. (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.
While, indeed, tax receipts and declarations are not incontrovertible evidence of 17150 was located in Sirao, Cebu City, when, in fact, the property was
ownership, such, however, if accompanied with open, adverse, continuous located in Adlawon, Cebu City. Lourdes Leyson was not notified of the said
possession in the concept of an owner, as in this case, constitute evidence of great application and failed to file any opposition thereto. Gregorio Bontuyan was
weight that person under whose name the real taxes were declared has a claim of then able to secure Free Patent No. 510463 on November 19, 1971 and
right over the land. 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
Further, defendant-appellee and intervenors-appellees presented before the trial declared that Gregorio Bontuyan had acquired title to the property through
court the Deed of Absolute Sale dated February 14, 1948, executed by Calixto fraud:
Gabud, conveying the subject lots in favor of Protacio Tabal. The deed is a notarial
document. However, as to Lot No. 17150, We find that despite the fraud committed by
Gregorio Bontuyan (plaintiffs-appellants predecessor-in-interest) in acquiring his
Likewise presented is the Deed of Absolute Sale of the subject lots dated January 5, title over the said lot, ownership over the said lot should be adjudged in favor of
1959, executed by Protacio Tabal in favor of spouses Simeon Noval and Vivencia plaintiffs-appellants.
Bontuyan. The document is, likewise, a notarial document.
Records, indeed, show that, at the time when Gregorio Bontuyan applied for Free
Defendant-appellee and intervenors-appellees also presented the Deed of Absolute Patent, Gregorio Bontuyan was living with his daughter, Vivencia Bontuyan
Sale of the subject lots dated May 22, 1968, executed by spouses Simeon Noval and (defendant-appellees predecessor-in-interest). Thus, Gregorio Bontuyan must have
Vivencia Bontuyan in favor of Lourdes Leyson. The deed is a notarial document. 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.
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 Moreover, records further show that Gregorio Bontuyan sold twice Lot [No.] 17150
execution. 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 land had raised in the mind of this Court reasonable badges of bad faith on his part
the title of Gregorio Bontuyan over the subject lots. 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
We are aware that the torrens system does not create or vest title. It only confirms in the mind of this Court when he (Gregorio) sold the subject parcels of land twice
and records title already existing and vested. It does not protect a usurper from the to his son Naciansino Bontuyan in 1976 and 1980, respectively, wherein both Deeds
true owner. It cannot be a shield for the commission of fraud. It does not permit one of Sale were notarized by different Notary Publics, (Exhs. 10 & 16).[46]
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 Considering that Lourdes Leyson was in actual possession of the
nothing.[45] property, the respondents cannot, likewise, claim that they were in good faith
when Gregorio Bontuyan allegedly sold the property to them on April 28,
The findings of the CA affirmed the findings of the trial court in its 1980.
decision, thus: 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
After having thoroughly analyzed the records and the evidences adduced during the OCT No. 0-1619. The CA failed to consider the fact that, in their respective
trial of this case, this Court is convinced and sincerely believes that the lots in answers to the complaint, the petitioners inserted therein a counterclaim
question were originally owned by Calixto Gabud as evidenced by T.D. [No.] wherein they repleaded all the material allegations in their affirmative
03276R marked as Exh. 1. In 1945, this consisted of only one lot in Adlawon, Cebu defenses, that Gregorio Bontuyan secured OCT No. 0-1619 through fraud
City, as there was no provincial road yet. However in 1948, the said parcel of land and deceit and prayed for the nullification thereof.
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. While Section 47 of Act No. 496 provides that a certificate of title shall
On February 16, 1948, Calixto Gabud sold the said parcels of land to spouses not be subject to collateral attack, the rule is that an action is an attack on a
Protacio Tabal and Ludegaria (sic) Bontuyan as evidenced by an Absolute Deed of title if its object is to nullify the same, and thus challenge the proceeding
Sale, Exh. 2. On January 5, 1959, spouses Protacio Tabal and Ludegaria (sic) pursuant to which the title was decreed. The attack is considered direct
Bontuyan, in turn, sold the same parcels of land to spouses Simeon Noval and when the object of an action is to annul or set aside such proceeding, or
Vivencia Bontuyan as evidenced by a Deed of Sale, Exh. 4. It is noteworthy to enjoin its enforcement. On the other hand, an attack is indirect or collateral
mention at this point in time that Vivencia Bontuyan is one of the daughters of when, in an action to obtain a different relief, an attack on the proceeding is
Gregorio Bontuyan, the father of herein plaintiff Naciansino Bontuyan. In May nevertheless made as an incident thereof.[47] Such action to attack a
1968, spouses Simeon Noval and Vivencia Bontuyan sold the subject parcels of land certificate of title may be an original action or a counterclaim in which a
to Lourdes vs. (sic) Leyson, the mother of herein defendant as evidenced by a Deed certificate of title is assailed as void. A counterclaim is considered a new suit
of Sale marked as Exh. 6. It is quite perplexing for the court to imagine that in which the defendant is the plaintiff and the plaintiff in the complaint
Gregorio Bontuyan, father of herein plaintiff, who was then residing with spouses becomes the defendant. It stands on the same footing and is to be tested by
Simeon Noval and Vivencia Bontuyan at 179 C San Jose dela Montaa, Mabolo, the same rules as if it were an independent action.[48] Furthermore, since all
Cebu City, as reflected in his application for Free Patent (Exhs. 8 & 26) dated the essential facts of the case for the determination of the titles validity are
December 4, 1968 was unaware of the sale of the subject parcels of land made by now before the Court, to require the party to institute cancellation
his daughter Vivencia Bontuyan and spouse Simeon Noval to Lourdes Leyson. It is proceedings would be pointlessly circuitous and against the best interest of
evident that, after the sale from spouses Noval to Lourdes Leyson in May 1968, justice.[49]
Gregorio Bontuyan applied for Free Patent for the same parcels of land in December The CA, likewise, erred in holding that the action of the petitioners to
1968 claiming to have cultivated the land since 1918, stating therein the location as assail OCT No. 0-1619 and TCT No. 1392 and for the reconveyance of the
Sirao and not Adlawon which is the true and correct location. Sirao and Adlawon property covered by the said title had already prescribed when they filed
are two different barangays which are not even adjacent to each other. In fact, as their answer to the complaint.
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 Case law has it that an action for reconveyance prescribes in ten
property, the location of which is in Barangay Sirao in consonance to his years, the point of reference being the date of registration of the deed or the
application. Gregorio Bontuyans application for Free Patent over subject parcels of date of issuance of the certificate of title over the property. In an action for
reconveyance, the decree of registration is highly regarded as The paramount reason for this exception is based on the theory that
incontrovertible. What is sought instead is the transfer of the property or its registration proceedings could not be used as a shield for
title, which has been wrongfully or erroneously registered in another persons fraud.[53] Moreover, to hold otherwise would be to put premium on land-
name, to its rightful or legal owner, or to one who has a better right.[50] grabbing and transgressing the broader principle in human relations that no
person shall unjustly enrich himself at the expense of another. [54]
However, in a series of cases, this Court declared that an action for
reconveyance based on fraud is imprescriptible where the plaintiff is in In the present case, Lourdes Leyson and, after her death, the
possession of the property subject of the acts. In Vda. de Cabrera v. Court of petitioners, had been in actual possession of the property. The petitioners
Appeals,[51] the Court held: were still in possession of the property when they filed their answers to the
complaint which contained their counterclaims for the nullification of OCT
... [A]n action for reconveyance of a parcel of land based on implied or constructive No. 0-1619 and TCT No. 1392, and for the consequent reconveyance of the
trust prescribes in ten years, the point of reference being the date of registration of property to them. The reconveyance is just and proper in order to put a stop
the deed or the date of the issuance of the certificate of title over the property, but to the unendurable anomaly that the patentees should have a Torrens title
this rule applies only when the plaintiff or the person enforcing the trust is not in for the land which they and their predecessors never possessed and which
possession of the property, since if a person claiming to be the owner thereof is in has been possessed by another in the concept of an owner. [55]
actual possession of the property, as the defendants are in the instant case, the right On the fifth assignment of error, we rule for the petitioners. The award
to seek reconveyance, which in effect seeks to quiet title to the property, does not of attorneys and appearance fees is better left to the sound discretion of the
prescribe. The reason for this is that one who is in actual possession of a piece of trial court, and if such discretion is well exercised, as in this case, it will not
land claiming to be the owner thereof may wait until his possession is disturbed or be disturbed on appeal.[56] With the trial and the appellate courts findings
his title is attacked before taking steps to vindicate his right, the reason for the rule that the respondents were in bad faith, there is sufficient basis to award
being, that his undisturbed possession gives him a continuing right to seek the aid of attorneys and appearance fees to the petitioners. Had it not been for the
a court of equity to ascertain and determine the nature of the adverse claim of a third filing of a baseless suit by the respondents against the petitioners, the latter
party and its effect on his own title, which right can be claimed only by one who is would not have sought the services of counsel to defend their interests and
in possession. represent them in this case.

Similarly, in the case of David v. Malay,[52] the same pronouncement IN LIGHT OF ALL THE FOREGOING, the petition is GRANTED. The
was reiterated by the Court: 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
... There is settled jurisprudence that one who is in actual possession of a piece of Trial Court are REVERSED AND SET ASIDE.
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 The Court hereby AFFIRMS the ownership of the petitioners of Lot No.
being, that his undisturbed possession gives him a continuing right to seek the aid of 17150. OCT No. 0-1619 and TCT No. 1392 covering the said lot are hereby
the court of equity to ascertain and determine the nature of the adverse claim of a nullified. The Register of Deeds is ORDERED to cancel TCT No. 1392 and
third party and its effect on his own title, which right can be claimed only by one to issue another title over the property in favor of the petitioners as co-
who is in possession. No better situation can be conceived at the moment for Us to owners thereof. The trial courts award of P50,000.00 for attorneys fees to
apply this rule on equity than that of herein petitioners whose ... possession of the the petitioners is AFFIRMED. No pronouncement as to costs.
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 SO ORDERED.
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.
[G.R. No. L-9335. October 31, 1956.] 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
CONCORDIA MEJIA DE LUCAS, Plaintiff-Appellee, vs. ANDRES
be acquired by prescription or adverse possession.
GAMPONIA, Defendant-Appellant.
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
DECISION 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
LABRADOR, J.: registered owner Domingo Mejia does not lie, but that of the equitable defense of
Appeal from the judgment of the Court of First Instance of Nueva Vizcaya, laches. Otherwise, stated, we hold that while Defendant may not be considered as
Honorable Jose de Venecia, presiding, and appealed directly to this court as having acquired title by virtue of his and his predecessors’ long continued
judgment was rendered on a stipulation of facts and only questions of law are possession for 37 years, the original owner’s right to recover back the possession of
raised in the appeal. 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.
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. In Go Chi Gun, et al., vs. Co Cho, et al., (96 Phil., 622) we held that the equitable
This patent was transcribed in the Office of the Register of Deeds of Nueva Vizcaya defense of laches requires four elements:chanroblesvirtuallawlibrary (1) conduct
on July 26, 1916 and certificate of title No. 380 issued in the name of Domingo on the part of the Defendant, or of one under whom he claims, giving rise to the
Mejia. On March 24, 1916, after the issuance of the patent but before the situation of which complaint is made and for which the complaint seeks a
registration of the same, patentee Domingo Mejia deeded the land to Zacarias remedy; chan roblesvirtualawlibrary(2) delay in asserting the complainant’s rights,
Ciscar, who immediately took possession thereof and enjoyed its fruits. Upon his the complainant having had knowledge or notice, of the Defendant’s conduct and
death the property was included in the distribution of his estate and adjudicated to having been afforded an opportunity to institute a suit, (3) lack of knowledge or
Roque Sanchez. Roque Sanchez in turn sold the land on January 21, 1940 to Andres notice on the part of the Defendant that the complainant would assert the right on
Gamponia, Defendant herein. Sanchez was in possession and enjoyment of the land which he bases his suit; chan roblesvirtualawlibraryand (4) injury or prejudice to
from the time he acquired it by inheritance from Ciscar up to the time he sold it the Defendant in the event relief is accorded to the complainant, or the suit is not
to Defendant Andres Gamponia, the latter has also possessed and enjoyed the held to be barred.
property from the time he bought it to date. All the four elements mentioned above are present in the case at bar. The first
Domingo Mejia, upon his death, left no descendants or ascendants and his only element is present because on March 24, 1916 Domingo Mejia sold the land which
surviving kin was his brother Pedro Mejia. Pedro Mejia is now also dead and is was covered by a free patent title dated March 13, 1916 and said sale or
survived by his daughter Concordia Mejia de Lucas, Plaintiff herein. Upon the conveyance was made in violation of Section 35 of the Public Land Act. The second
above facts the court a quo held that the sale by the patentee to Zacarias Ciscar is element is also present because from the date of the sale on March 24, 1916 the
null and void, as the sale was made only 11 days after the issuance of a patent in patentee and vendor Domingo Mejia could have instituted the action to annul the
violation of the provisions of section 35 of Act No. 926. The Court further held that conveyance and obtain back the possession and ownership of the land, but
since the land is registered land no title in derogation to that of the registered notwithstanding the apparent invalidity of the sale, neither patentee nor his
owner could have been acquired either by Zacarias Ciscar or his successors in successors in interest, his brother, or the latter’s daughter, Plaintiff herein, who
interest, namely, Roque Sanchez and Defendant Andres Gamponia. 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,
The main defense presented in the answer, is that Plaintiff’s right of action has instituted no suit to annul the sale or to recover the land for a period of 37 years.
already prescribed by virtue of the possession of the land by the Defendant and his Again the Defendant and his predecessors in interest, the original vendee and
predecessors in interest for a period of 37 years. This defense was overruled by the purchaser Zacarias Ciscar, as well as vendee’s successors in interest, Roque
court a quo on the ground that as the land is registered, with a certificate of title in Sanchez, and later, Andres Gamponia, never expected or believed that the original
the name of patentee Domingo Mejia, title thereto may not be acquired by patentee or his successors in interest would bring an action to annul the sale.
the Defendant and his predecessors in interest against said registered owner. This
These circumstances constitute the third element of laches. The fourth element is lot who failed to appear in the proceedings, as a result of which his land was
also present, not only because Zacarias Ciscar paid for the land but this same land declared public property, who brings an action 10 years later, is guilty of laches and
was divided among the heirs of Zacarias Ciscar in the proceedings for the inexcusable negligence and his action under Section 513 of the Code of Civil
settlement of his estate (Civil Case No. 301 of the Court of First Instance of Nueva Procedure can no longer be maintained. In another case where the Plaintiff loaned
Vizcaya) and Roque Sanchez, to whom the land was adjudicated, sold the property money to a couple and when the wife died and the conjugal properties divided
for P800 to the present Defendant Andres Gamponia. All of these transfer from between her heirs and her husband, the vendor did not present his claim against
Zacarias Ciscar to his heirs, to Roque Sanchez and to Defendant Andres Gamponia, the estate and only did so four years later against the widower, it was held that the
acts which covered a period of 37 years, would all have to be undone and the lender was guilty of laches in so far as the estate of the deceased spouse is
respective rights and obligations of the parties affected adjusted, unless the concerned because it would be inequitable and unjust to permit him to revive any
defense is sustained. 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
It is to be noted that all the above complications would never had been occasioned
Phil., 818). In a third case (Kambal vs. Director of Lands, 62 Phil., 293), cadastral
had the original patentee and his successors in interest not slept on their rights for
proceedings for compulsory registration of certain parcels of land in Cotabato were
more than a generation. Add to this the fact that the original conveyance made by
instituted. These proceedings included two lands belonging to
the patentee is not absolutely null and void. The prohibition against the sale of free
the Petitioner. Petitioner failed to claim said lands in said proceedings and in 1917
patents is for a period of seven years (Section 35, Act No. 926); chan
the titles to the lands of the Petitioner were cancelled. Petitioner alleges that he
roblesvirtualawlibraryafter that period of time a patentee would be free to dispose
came to know by accident of the cancellation of his titles in the year 1933 or 1935.
of the land. Within seven years from the conveyance the original patentee could
It was held that because of the lapse of 16 years from the date the decision was
have brought an action to recover back his property. Since nothing of this sort was
rendered in the said registration case to the filing of the petition, no relief can be
done by him, it was certainly natural for the purchase to have assumed that the
granted the Petitioner as he has been guilty of laches. In the three cases decided
original patentee gave up his right to recover back the property and acquiesced in
previously by this Court, the periods of inaction were from 10 to 16 years. In the
vendee’s right and title. The successor in interest of the original purchaser must
case at bar it was a full period of 37 years.
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 The judgment appealed from is hereby reversed and one is hereby entered
successors in interest. By this inaction for a period of 37 years to the consequent absolving the Defendant from the action. Without costs.
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
[G.R. No. 138660. February 5, 2004] 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
HEIRS OF TRINIDAD DE LEON VDA. DE ROXAS, petitioners, vs.
directed to ISSUE with reasonable dispatch the corresponding decree of registration
COURT OF APPEALS and MAGUESUN MANAGEMENT AND
and certificate of title pursuant to Section 39 of Presidential Decree No. 1529.[2]
DEVELOPMENT CORPORATION, respondents.

On 22 May 1997, Meycauayan filed a Petition for Intervention in G.R.


DECISION
No. 118436. Meycauayan alleged that on 14 May 1992, it purchased three
CARPIO, J.: 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
The Case adverse decision in G.R. No. 118436 cannot impair its rights as a purchaser
in good faith and for value.

This is a petition to cite for indirect contempt the officers of On 25 June 1997, this Court denied the Petition for Intervention. This
Meycauayan Central Realty Corporation (Meycauayan) for defying the final Court also denied the Motion for Reconsideration filed by Maguesun. Thus,
and executory Decision and Resolution of this Court in G.R. No. 118436 on 21 August 1997, the Decision dated 21 March 1997 in G.R. No. 118436
entitled Heirs of Manuel A. Roxas and Trinidad de Leon Vda. De Roxas v. became final and executory.
Court of Appeals and Maguesun Management & Development Corporation On 13 April 1998, the Land Registration Authority (LRA) submitted a
(G.R. No. 118436).[1] 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:
The Antecedents
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
This petition stems from a case filed by Trinidad de Leon Vda. De heirs of Manuel A. Roxas and Trinidad de Leon Vda. de Roxas;
Roxas to set aside the decree of registration over two unregistered parcels
of land in Tagaytay City granted to Maguesun Management and b) Order the Register of Deeds to cancel OCT No. 0-515 and all its
Development Corporation (Maguesun) before the Regional Trial Court on derivative titles; and
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
c) Order the issuance of the Decree with respect to the decision of the
petition for review and affirmed the findings of the trial court. On 21 March
Supreme Court dated 21 March 1997.
1997, this Court reversed the appellate courts decision in G.R. No. 118436.
The dispositive portion reads:
Meycauayan filed with the land registration court a Motion For Leave
To Intervene And For Period Of Time To File Opposition To The Report
WHEREFORE, the instant petition is hereby GRANTED. The Decision of the Court
Dated March 25, 1998 Filed By The LRA And To File Complaint-in-
of Appeals in C.A. G.R. CV No. 38328 (Trinidad de Leon Vda. de Roxas v.
Intervention.
Maguesun Management & Development Corporation, et al.) promulgated on
December 8, 1994 is hereby REVERSED AND SET ASIDE. Accordingly, On 4 June 1998, the Roxas heirs filed a Motion for Clarification with
registration of title over the subject parcels of land, described in Plan AS-04-000108, this Court raising the following issues:
a) Whether it is necessary for the trial court to first order the LRA to cancel Decree 2. From the Petition for Intervention filed by Meycauayan Central Realty
No. N-197092 in the name of Maguesun Management and Development Corporation (Meycauayan) with this Honorable Court on 22 May 1997, the
Corporation to enable (the LRA) to issue another decree in favor of the Heirs of following statements, among others, are alleged:
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 a. That on May 14, 1992, the intervenor purchased for value
to issue with reasonable dispatch the corresponding decree of registration and several parcels of real property from private
certificate of title in favor of the Roxas heirs? Please note that this necessary respondent Maguesun Management and Development
implication is a consequence of the Supreme Court finding that the decree in favor Corp. covered by TCT Nos. 24294, 24295 and 24296
of Maguesun was wrongfully issued because it was not entitled to the registration containing an area of 2,019 square meters each, more
decree as it had no registrable title, since Zenaida Melliza (from whom Maguesun or less.
supposedly bought the lots) conveyed no title over the subject parcels of land to
Maguesun Corporation as she was not the owner thereof.
b. That prior to paying the agreed purchase price in full to
respondent Maguesun, an investigation with the
b) Whether an order from the trial court is necessary for the Register of Deeds Tagaytay City Office of the Register of Deeds was
concerned to cancel OCT No. 0-515 and all its derivative titles? Or is that order made to determine and ascertain the authenticity,
necessarily included in the dispositive portion of the Supreme Court decision status and condition of the titles of Maguesun over the
directing the LRA to issue the corresponding decree of registration and certificate of aforesaid properties.
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 c. That investigation made by the intervenor with the Office of
issue the corresponding certificate of title to the Roxas heirs necessarily implies that Register of Deeds of Tagaytay City showed that in all
the OCT issued to Maguesun and its derivative titles shall be canceled, for it cannot the certified true copies of the titles to the properties
[be] assumed that the Supreme Court intended that the same parcel of land shall be above-mentioned which were registered in the name
covered by more than one certificate of title. of Maguesun, the last entry which appeared was the
following, to wit: x x x.
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 d. Appearing that the properties to be purchased by the herein
dispatch the corresponding decree of registration and certificate of title in favor of intervenor from respondent Maguesun have no
the Roxas heirs? 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
On 23 June 1998, the Roxas heirs filed a Supplement to Motion for who may subsequently purchase the same, the herein
Clarification, the pertinent portions of which are: intervenor proceeded to pay, in full, the total amount
of ONE MILLION FIVE HUNDRED THOUSAND
1. In petitioners Motion for Clarification, one of the items sought to be clarified is PESOS (P1,500,000.00) to Maguesun. Immediately
whether the derivative titles (i.e., the titles derived from Maguesun Management and thereafter, Maguesun, through its duly authorized
Development Corporations [Maguesun] Original Certificate of Title No. 0-515 and officer, executed the corresponding Deeds of Absolute
issued to Meycauayan Central Realty Corp.) should be canceled, together with Sale.
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 e. That after the corresponding taxes and/or fees were paid by
dated 21 March 1997, which has become final and executory? 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 were illegally issued in the name of respondent. But in light of Section 39 of
was informed of a newspaper report stating, in big Presidential Decree No. 1529 (the Property Registration Decree), Decree No. N-
bold letters, the following sub-headline, to wit: 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
SC RULES ON ROXAS FAMILY cancelled decree a new one in the name of petitioners as well as the
LAND ROW IN TAGAYTAY. 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
g. The President of herein intervenor right after secured from the having been nullified, all titles derived therefrom must also be considered void it
Tagaytay City Office of the Register of Deeds appearing that there had been no intervening rights of an innocent purchaser for
certified true copies of torrens titles over its Tagaytay value involving the lots in dispute.
City properties.
ACCORDINGLY, the Court hereby resolves to GRANT petitioners Motion for
h. That only then, after it secured certified true copies of the titles Clarification together with the Supplement thereto. For this reason, the dispositive
mentioned in the preceding paragraph from the Office portion of our decision dated March 21, 1997 is clarified, thus:
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 First, the Register of Deeds shall CANCEL OCT No. 0-515 and all its derivative
Maguesun on May 14, 1992. 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,
3. Meycauayans Petition for Intervention was denied by this Honorable Court in its Inc. and Meycauayan Realty Corporation).
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 Thereafter, the Land Registration Authority shall:
motion for leave to intervene raising again the issue of its alleged ownership of
portions of the land. (a) CANCEL Decree No. N-197092 originally issued in the name
of Maguesun Management and Development
4. In order to settle once and for all Meycauayans allegation that it was a buyer in Corporation without need of an order from the land
good faith, and to show that its derivative titles should be declared void and registration court; 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. (b) ISSUE with reasonable dispatch a new decree of registration
and a new original certificate of title (OCT) in favor of
In a Resolution dated 29 July 1998, this Court acted favorably on the petitioners pursuant to Section 39 of Presidential
Roxas heirs Motion for Clarification and its Supplement. The pertinent Decree No. 1529. (Emphasis added)
portions of the Resolution read:
On 11 December 1998, the land registration court issued an order denying the LRA
Upon careful consideration of the points made by petitioners in their motions, this Report dated 25 March 1998 and the Motion for Leave to Intervene filed by
Court finds the same meritorious and, hence, a clarification is in order. We, Meycauayan since the Supreme Court Resolution of 29 July 1998 had rendered them
therefore, declare that our directive on the LRA to issue with reasonable dispatch the moot.
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 The Register of Deeds of Tagaytay City then canceled TCT Nos. T-25626, T-25627,
Decree No. N-197092, as well as OCT No. 0-515, and all its derivative titles. This is T-25628, T-25688, T-25689, T-25690 and T-27390.[3] TCT Nos. T-25688, T-
a necessary consequence of the Courts earlier finding that the foregoing documents
25689, T-25690 and T-27390 were derivative titles already in the name of 7. Ordering the defendants Roxas and Maguesun to jointly and solidarily pay the
Meycauayan. plaintiff the costs of suit.[5]

On 5 April 1999, the Roxas heirs filed a Motion for Issuance of Writ of On 6 May 1999, Meycauayan filed a Special Appearance Questioning
Possession with the land registration court. Court Jurisdiction and Opposition to the Motion for Issuance of Writ of
Possession Against Meycauayan Central Realty Corporation with the land
On 20 April 1999, Meycauayan filed a Complaint for reconveyance, registration court.
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 On 2 September 1999, the land registration court issued an order, the
Roxas, Maguesun Management and Development Corp., Register of Deeds dispositive portion of which reads:
of Tagaytay City, City Assessor of Tagaytay City and Land Registration
Authority.[4] The Complaint is almost an exact reproduction of the Petition for WHEREFORE, in the light of the foregoing, let a Writ of Possession be issued
Intervention filed by Meycauayan before this Court. The Complaint prayed against Maguesun Management and Development Corporation in these
for judgment: 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
1. Ordering the defendants Land Registration Authority and the Register of Deeds of resolved with finality the petition for contempt of herein movant in G.R. No.
Tagaytay City to cancel the titles and decree of registration they issued in lieu of 138660.
TCT Nos. 25688, 25689, 25690 and 27390 registered in the name of plaintiff
Meycauayan Central Realty Corporation and reconvey said properties to the plaintiff On 7 March 2000, the trial court dismissed for lack of merit
corporation by reinstating the said cancelled titles or if the same not be possible, Meycauayans complaint for reconveyance, damages and quieting of title.
cause the issuance of new decrees and titles thereto; 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
2. Ordering the defendant City Assessor of Tagaytay City to reinstate the trial court to annul the decision of the Supreme Court in G.R. No. 118436 is
Assessments for real estate taxes it previously cancelled covering the properties of beyond the trial courts jurisdiction; and (3) Meycauayan is guilty of forum
plaintiff; shopping.[6] The trial court likewise denied Meycauayans Motion for
Reconsideration in an Order dated 20 June 2000.[7] On 24 August 2000,
3. Ordering the defendants Roxas and Maguesun to jointly and solidarily pay the Meycauayan filed a petition for certiorari under Rule 65 of the Rules of Court
plaintiff actual and/or compensatory damages in the total amount of FIVE with the Court of Appeals assailing the trial courts dismissal of the complaint.
HUNDRED THOUSAND PESOS (P500,000.00); Meanwhile, the Roxas heirs filed on 2 June 1999 this petition to cite for
indirect contempt the officers of Meycauayan.
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;
The Issues
5. Ordering the defendants Roxas and Maguesun to jointly and solidarily pay the
plaintiff exemplary damages in the amount of TWO HUNDRED THOUSAND
The parties raised the following issues:
PESOS (P200,000.00);

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


6. Ordering the defendants Roxas and Maguesun to jointly and solidarily pay the
bind Meycauayan;
plaintiff Attorneys fees in the amount of ONE HUNDRED THOUSAND PESOS
(P100,000.00); and
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 also found that there had been no intervening rights of an innocent
Resolution in G.R. No. 118436, constitutes indirect contempt purchaser for value involving the lots in dispute.
under Section 3, Rule 71 of the Rules of Civil Procedure; and

3. Whether Meycauayan is guilty of forum shopping.


Indirect Contempt

The Courts Ruling 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
The petition is meritorious. We find Meycauayans Executive Vice- Meycauayans titles to the disputed parcels of land in the Resolution dated
President Juan M. Lamson, Jr. guilty of indirect contempt. We also find that 29 July 1998 should have laid to rest the issue of whether the Decision and
Meycauayan committed forum shopping, and thus Meycauayan and its Resolution in G.R. No. 118436 is binding on Meycauayan. Clearly,
Executive Vice President Juan M. Lamson, Jr. are guilty of direct contempt. Meycauayans defiance of this Courts Decision and Resolution by filing an
action for reconveyance, quieting of title and damages involving the same
The Roxas heirs allege that the following acts of Meycauayan parcels of land which this Court already decided with finality constitutes
constitute indirect contempt under Section 3, Rule 71 of the Rules of Civil indirect contempt under Section 3(d), Rule 71 of the Rules of Civil
Procedure: (1)Meycauayans defiance of the final and executory Decision Procedure. Section 3(d) of Rule 71 reads:
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 SEC. 3. Indirect contempt to be punished after charge and hearing. After a charge
Resolution; (3) its act of filing a Complaint raising the same issues in its in writing has been filed, and an opportunity given to the respondent to comment
Petition for Intervention which this Court had already denied and urging the thereon within such period as may be fixed by the court and to be heard by himself
trial court to ignore and countermand the orders of this Court. or counsel, a person guilty of any of the following acts may be punished for indirect
On the other hand, Meycauayan alleges that the Decision in G.R. No. contempt:
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 xxx
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 (d) Any improper conduct tending, directly or indirectly, to impede, obstruct, or
value its rights cannot be prejudiced by the alleged fraudulent acquisition by degrade the administration of justice;
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. In Halili, et al. v. CIR, et al.,[8] this Court explained the concept of
contempt of court:
The issue of whether the Decision in G.R. No. 118436 binds
Meycauayan was already addressed by this Court when it denied Contempt of court is a defiance of the authority, justice or dignity of the court; such
Meycauayans Petition for Intervention. Furthermore, this Courts Resolution conduct as tends to bring the authority and administration of the law into disrespect
dated 29 July 1998 clarified the Decision dated 21 March 1997 by ordering or to interfere with or prejudice parties litigant or their witnesses during litigation
the Register of Deeds to CANCEL OCT No. 0-515 and all its derivative (12 Am. Jur. 389, cited in 14 SCRA 813).
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 Contempt of court is defined as a disobedience to the Court by acting in opposition
Central Realty, Inc. and Meycauayan Realty Corporation). This Court 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 second actions, identity of parties, subject matter and causes of
the due administration of justice (17 C.J.S. 4). 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
This Court has thus repeatedly declared that the power to punish for contempt is is substantial identity of parties when there is community of interest
inherent in all courts and is essential to the preservation of order in judicial or privity of interest between a party in the first and a party in the
proceedings and to the enforcement of judgments, orders, and mandates of the court, second case even if the first case did not implead the latter.[16]
and consequently, to the due administration of justice (Slade Perkins vs. Director of The Court ruled in G.R. No. 118436 that Meycauayans predecessor-in-
Prisons, 58 Phil. 271; In re Kelly, 35 Phil. 944; Commissioner of Immigration vs. interest, Maguesun, committed actual fraud in obtaining the decree of
Cloribel, 20 SCRA 1241; Montalban vs. Canonoy, 38 SCRA 1). 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
Meycauayans continuing resistance to this Courts judgment is an successor-in-interest of Maguesun. Meycauayan, however, insists that it was
affront to the Court and to the sovereign dignity with which it is a purchaser in good faith because it had no knowledge of any pending case
clothed.[9] Meycauayans persistent attempts to raise issues long since laid to involving the lots. Meycauayan claims that the trial court had already
rest by a final and executory judgment of no less than the highest tribunal of canceled the notice of lis pendens on the titles when it purchased the lots
the land constitute contumacious defiance of the authority of this Court and from Maguesun. In its Memorandum, Meycauayan stresses that to ensure
impede the speedy administration of justice.[10] the authenticity of the titles and the annotations appearing on the titles,
particularly the cancelation of the notice of lis pendens, Meycauayan
Well-settled is the rule that when a court of competent jurisdiction has checked with the Register of Deeds and the Regional Trial Court of
tried and decided a right or fact, so long as the decision remains unreversed, Tagaytay City.[17] Since Meycauayan checked with the Regional Trial Court
it is conclusive on the parties and those in privity with them. [11] More so of Tagaytay City, Meycauayan then had actual knowledge, before it
where the Supreme Court has already decided the issue since the Court is purchased the lots, of the pending case involving the lots despite the
the final arbiter of all justiciable controversies properly brought before cancelation of the notice of lis pendens on the titles.
it.[12] As held in Buaya v. Stronghold Insurance Co., Inc.:[13]
Furthermore, as found by this Court in G.R. No. 118436, the Roxas
x x x An existing final judgment or decree rendered upon the merits, without fraud family has been in possession of the property uninterruptedly through their
or collusion, by a court of competent jurisdiction acting upon a matter within its caretaker, Jose Ramirez, who resided on the property.[18] Where the land
authority is conclusive of the rights of the parties and their privies. This ruling holds sold is in the possession of a person other than the vendor, the purchaser
in all other actions or suits, in the same or any other judicial tribunal of concurrent must go beyond the certificates of title and make inquiries concerning the
jurisdiction, touching on the points or matters in issue in the first suit. 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
xxx 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
Courts will simply refuse to reopen what has been decided. They will not allow the purchaser for value involving the lots in dispute. As held in Heirs of Pael v.
same parties or their privies to litigate anew a question, once it has been considered Court of Appeals:[20]
and decided with finality. Litigations must end and terminate sometime and
somewhere. The effective and efficient administration of justice requires that once a In the case of Santiago Land Development Corporation vs. Court of Appeals (G.R.
judgment has become final, the prevailing party should not be deprived of the fruits No. 106194, 276 SCRA 674 [1997]), petitioner maintained that as a
of the verdict by subsequent suits on the same issues filed by the same parties. 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
This is in accordance with the doctrine of res judicata which has the stranger to the action between Quisumbing and the PNB, petitioner in fact having
following elements: (1) the former judgment must be final; (2) the court which stepped into the shoes of PNB in a manner of speaking, it follows that it cannot
rendered it had jurisdiction over the subject matter and the parties; (3) the claim any further right to intervene in the action. As in the instant Petition, it was
judgment must be on the merits; and (4) there must be between the first and 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 which this Court had already denied, also constitutes forum shopping. Forum
petitioner is not really denied protection. It is represented in the action by its shopping is the act of a party against whom an adverse judgment has been
predecessor in interest. Indeed, since petitioner is a transferee pendente lite with rendered in one forum, seeking another and possibly favorable opinion in
notice of the pending litigation between Reyes and private respondent Carreon, another forum other than by appeal or special civil action of certiorari. There
petitioner stands exactly in the shoes of Reyes and is bound by any judgment or is also forum shopping when a party institutes two or more actions based on
decree which may be rendered for or against the latter. the same cause on the expectation that one or the other court might look
with favor on the party.[26]
Indeed, one who buys property with full knowledge of the flaws and In this case, the Court had already rejected Meycauayans claim on the
defects of the title of his vendor and of a pending litigation over the property subject lots when the Court denied Meycauayans Petition for Intervention in
gambles on the result of the litigation and is bound by the outcome of his G.R. No. 118436. The Court ruled that there had been no intervening rights
indifference.[21] A purchaser cannot close his eyes to facts which should put of an innocent purchaser for value involving the lots in dispute. The Decision
a reasonable man on guard and then claim that he acted in good faith of this Court in G.R. No. 118436 is already final and executory. The filing by
believing that there was no defect in the title of the vendor. [22] Meycauayan of an action to re-litigate the title to the same property, which
For the penalty for indirect contempt, Section 7 of Rule 71 of the Rules this Court had already adjudicated with finality, is an abuse of the courts
of Court provides: processes and constitutes direct contempt.
Section 5 of Rule 7 of the Rules of Court provides that if the acts of the
SEC. 7. Punishment for indirect contempt. If the respondent is adjudged guilty of party or his counsel clearly constitute willful and deliberate forum shopping,
indirect contempt committed against a Regional Trial Court or a court of equivalent the same shall be a ground for summary dismissal with prejudice and shall
or higher rank, he may be punished by a fine not exceeding thirty thousand pesos or constitute direct contempt, as well as a cause for administrative sanctions.
imprisonment not exceeding six (6) months or both. x x x 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
In this case, Meycauayan Executive Vice President Juan M. Lamson, denied,[27] does not negate the existence of forum shopping. This disclosure
Jr. caused the preparation and the filing of the Petition for Intervention in does not exculpate Meycauayan for deliberately seeking a friendlier forum
G.R. No. 118436 and the Complaint for Reconveyance, Damages and for its case and re-litigating an issue which this Court had already decided
Quieting of Title with the trial court.[23] Juan M. Lamson, Jr. signed the with finality.[28]
verification and certification of non-forum shopping for the Petition for The general rule is that a corporation and its officers and agents may
Intervention and the Complaint for Reconveyance, Damages and Quieting of be held liable for contempt. A corporation and those who are officially
Title. Even though a judgment, decree, or order is addressed to the responsible for the conduct of its affairs may be punished for contempt in
corporation only, the officers, as well as the corporation itself, may be disobeying judgments, decrees, or orders of a court made in a case within its
punished for contempt for disobedience to its terms, at least if they jurisdiction.[29]
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 Under Section 1 of Rule 71 of the Rules of Court, direct contempt is
conduct tending to impede the orderly administration of justice, Meycauayan punishable by a fine not exceeding two thousand pesos (P2,000)
Executive Vice President Juan M. Lamson, Jr. should be fined ten thousand or imprisonment not exceeding ten (10) days, or both, if committed against a
pesos (P10,000).[25] 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.
Direct Contempt WHEREFORE, we find Meycauayan Central Realty Corporations
Executive Vice President Juan M. Lamson, Jr. GUILTY of INDIRECT
CONTEMPT and FINE him TEN THOUSAND PESOS
Meycauayans act of filing a Complaint for Reconveyance, Quieting of (P10,000). Furthermore, we find Meycauayan Central Realty Corporation
Title and Damages raising the same issues in its Petition for Intervention, 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.
G.R. No. L-28740 February 24, 1981 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
FERMIN Z. CARAM, JR., petitioner, said title in the evacuation place of defendant Marcos Mata in Magugpo,
vs. Tagum, Davao. On June 5, 1947, the Court of First Instance of Davao
CLARO L. LAURETA, respondent. 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
FERNANDEZ, J.: 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
This is a petition for certiorari to review the decision of the Court of Appeals was issued in favor of Fermin Caram Jr. 5
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 On August 29, 1959, the defendants Marcos Mata and Codidi Mata filed
Caram, Jr., defendants- appellants; Tampino (Mansaca), et al. Intervenors- their answer with counterclaim admitting the existence of a private absolute
appellants," affirming the decision of the Court of First Instance of Davao in deed of sale of his only property in favor of Claro L. Laureta but alleging that
Civil Case No. 3083. 1 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
On June 25, 1959, Claro L. Laureta filed in the Court of First Instance of operating in the unoccupied areas of Northern Davao with its headquarters
Davao an action for nullity, recovery of ownership and/or reconveyance with at Project No. 7 (Km. 60, Davao Agusan Highways), in the Municipality of
damages and attorney's fees against Marcos Mata, Codidi Mata, Fermin Z. Tagum, Province of Davao; that Laureta's words and requests were laws;
Caram, Jr. and the Register of Deeds of Davao City. 2 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
On June 10, 1945, Marcos Mata conveyed a large tract of agricultural land P650.00 Mindanao Emergency notes; and that due to his fear of harm or
covered by Original Certificate of Title No. 3019 in favor of Claro Laureta, danger that will happen to him or to his family, if he refused he had no other
plaintiff, the respondent herein. The deed of absolute sale in favor of the alternative but to sign the document. 6
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, The defendants Marcos Mata and Codidi Mata also admit the existence of a
there was no authorized officer before whom the sale could be record in the Registry of Deeds regarding a document allegedly signed by
acknowledged inasmuch as the civil government in Tagum, Davao was not him in favor of his co-defendant Fermin Caram, Jr. but denies that he ever
as yet organized. However, the defendant Marcos Mata delivered to Laureta signed the document for he knew before hand that he had signed a deed of
the peaceful and lawful possession of the premises of the land together with sale in favor of the plaintiff and that the plaintiff was in possession of the
the pertinent papers thereof such as the Owner's Duplicate Original certificate of title; that if ever his thumb mark appeared in the document
Certificate of Title No. 3019, sketch plan, tax declaration, tax receipts and purportedly alienating the property to Fermin Caram, did his consent was
other papers related thereto. 3 Since June 10, 1945, the plaintiff Laureta had obtained through fraud and misrepresentation for the defendant Mata is
been and is stin in continuous, adverse and notorious occupation of said illiterate and ignorant and did not know what he was signing; and that he did
land, without being molested, disturbed or stopped by any of the defendants not receive a consideration for the said sale. 7
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 defendant Fermin Caram Jr. filed his answer on October 23, 1959
the time of the filing of the complaint. 4 alleging that he has no knowledge or information about the previous
encumbrances, transactions, and alienations in favor of plaintiff until the
On May 5, 1947, the same land covered by Original Certificate of Title No. filing of the complaints. 8
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. The trial court rendered a decision dated February 29, 1964, the dispositive
Abelardo Aportadera. On May 22, 1947, Marcos Mata, through Attys. portion of which reads: 9
Abelardo Aportadera and Gumercindo Arcilla, filed with the Court of First
10
1. Declaring that the deed of sale, Exhibit A, executed by The defendants appealed from the judgment to the Court of Appeals. The
Marcos Mata in favor of Claro L. Laureta stands and appeal was docketed as CA-G.R. NO. 35721- R.
prevails over the deed of sale, Exhibit F, in favor of Fermin
Caram, Jr.; The Court of Appeals promulgated its decision on January 29, 1968
affirming the judgment of the trial court.
2. Declaring as null and void the deed of sale Exhibit F, in
favor of Fermin Caram, Jr.; In his brief, the petitioner assigns the following errors: 11

3. Directing Marcos Mata to acknowledge the deed of I


sale, Exhibit A, in favor of Claro L. Laureta;
THE RESPONDENT COURT OF APPEALS ERRED IN
4. Directing Claro L. Laureta to secure the approval of the CONCLUDING THAT IRESPE AND APORTADERA
Secretary of Agriculture and Natural Resources on the WERE ATTORNEYS-IN-FACT OF PETITIONER CARAM
deed, Exhibit A, after Marcos Mata shall have FOR THE PURPOSE OF BUYING THE PROPERTY IN
acknowledged the same before a notary public; QUESTION.

5. Directing Claro L. Laureta to surrender to the Register II


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; THE RESPONDENT COURT OF APPEALS ERRED IN
CONCLUDING THAT THE EVIDENCE ADDUCED IN
THE TRIAL COURT CONSTITUTE LEGAL EVIDENCE
6. Ordering the Register of Deeds for the City and OF FRAUD ON THE PART OF IRESPE AND
Province of Davao to cancel Transfer Certificate of Title APORTADERA AT TRIBUTABLE TO PETITIONER.
No. T-140 in the name of Fermin Caram, Jr.;
III
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 THE RESPONDENT COURT OF APPEALS COMMITTED
presentation of the deed executed by Marcos Mata in his GRAVE ERROR OF LAW IN HOLDING THAT
favor, Exhibit A, duly acknowledged by him and approved KNOWLEDGE OF IRESPE AND APORTADERA OF A
by the Secretary of Agriculture and Natural Resources, PRIOR UNREGISTERED SALE OF A TITLED
and PROPERTY ATTRIBUTABLE TO PETITIONER AND
EQUIVALENT IN LAW OF REGISTRATION OF SAID
SALE.
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 IV
the Mansacas.
THE RESPONDENT COURT OF APPEALS ERRED IN
The Court makes no pronouncement as to costs. NOT HOLDING THAT AN ACTION FOR
RECONVEYANCE ON THE GROUND OF FRAUD
PRESCRIBES WITHIN FOUR (4) YEARS.
SO ORDERED.
The petitioner assails the finding of the trial court that the second sale of the which his property had been sold to Laureta, he must have
property was made through his representatives, Pedro Irespe and Atty. included in the narration the sale of the land of Mata, for
Abelardo Aportadera. He argues that Pedro Irespe was acting merely as a the two properties had been sold on the same occassion
broker or intermediary with the specific task and duty to pay Marcos Mata and under the same circumstances. Even as early as
the sum of P1,000.00 for the latter's property and to see to it that the immediately after liberation, Irespe, who was the witness
requisite deed of sale covering the purchase was properly executed by in most of the cases filed by Atty. Aportadera in his
Marcos Mata; that the Identity of the property to be bought and the price of capacity as Provincial Fiscal of Davao against Laureta,
the purchase had already been agreed upon by the parties; and that the must have known of the purchases of lands made by
other alleged representative, Atty. Aportadera, merely acted as a notary Laureta when he was regimental commander, one of
public in the execution of the deed of sale. which was the sale made by Mata. It was not a mere
coincidence that Irespe was made guardian ad litem of
The contention of the petitioner has no merit. The facts of record show that Leaning Mansaca, at the suggestion of Atty. Aportadera
Mata, the vendor, and Caram, the second vendee had never met. During the and attorney-in-fact of Caram, Jr.
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 The Court cannot help being convinced that Irespe,
Caram's representatives, Irespe and Aportadera. The petitioner, in his attorney-in-fact of Caram, Jr. had knowledge of the prior
answer, admitted that Atty. Aportadera acted as his notary public and existing transaction, Exhibit A, between Mata and Laureta
attorney-in-fact at the same time in the purchase of the property. 13 over the land, subject matter of this litigation, when the
deed, Exhibit F, was executed by Mata in favor of Caram,
The petitioner contends that he cannot be considered to have acted in bad Jr. And this knowledge has the effect of registration as to
faith because there is no direct proof showing that Irespe and Aportadera, Caram, Jr. RA pp. 123-124)
his alleged agents, had knowledge of the first sale to Laureta. This
contention is also without merit. We agree with His Honor's conclusion on this particular
point, on two grounds — the first, the same concerns
The Court of Appeals, in affirming the decision of the trial court, said: 14 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.
The trial court, in holding that appellant Caram. Jr. was not Aportadera himself. (t.s.n., pp. 187-190, 213-215,
a purchaser in good faith, at the time he bought the same Restauro).
property from appellant Mata, on May 5, 1947, entirely
discredited the testimony of Aportadera. Thus it stated in
its decision: 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
The testimony of Atty. Aportadera quoted elsewhere in this defect or lack of title of his vendor. In the case of Leung Yee vs. F. L. Strong
decision is hollow. There is every reason to believe that Machinery Co. and Williamson, this Court held: 15
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 One who purchases real estate with knowledge of a defect
Atty. Aportadera for the sale of the same property to or lack of title in his vendor can not claim that he has
Caram, Jr., represented by Irespe as attorney-in-fact. Ining acquired title thereto in good faith, as against the true
Mansaca was with the two — Irespe and Mata — to owner of the land or of an interest therein, and the same
engage the services 6f Atty. Aportadera in the annulment rule must be applied to one who has knowledge of facts
of the sale of his land to Laureta. When Leaning Mansaca which should have put him upon such inquiry and
narrated to Atty. Aportadera the circumstances under
investigation as might be necessary to acquaint him with Should there be no inscription, the ownership shag pertain
the defects in the title of his vendor. to the person who in good faith was first in the possession;
and, in the absence thereof, to the person who presents
In the instant case, Irespe and Aportadera had knowledge of circumstances the oldest title, provided there is good faith. (1473)
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 Since Caram was a registrant in bad faith, the situation is as if there was no
by soldiers under the command of Col. Claro L. Laureta. 16 Added to this is registration at all. 19
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 The question to be determined now is, who was first in possession in good
nature of Laureta's possession. If they failed to exercise the ordinary care faith? A possessor in good faith is one who is not aware that there exists in
expected of a buyer of real estate they must suffer the consequences. The his title or mode of acquisition any flaw which invalidates it. 20 Laureta was
rule of caveat emptor requires the purchaser to be aware of the supposed first in possession of the property. He is also a possessor in good faith. It is
title of the vendor and one who buys without checking the vendor's title takes true that Mata had alleged that the deed of sale in favor of Laureta was
all the risks and losses consequent to such failure. 17 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
The principle that a person dealing with the owner of the registered land is his rights to file an action for annulment or to set up nullity of the contract as
not bound to go behind the certificate and inquire into transactions the a defense in an action to enforce the same.
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 Anent the fourth error assigned, the petitioner contends that the second
documents from Mata, the civil government of Tagum was not yet deed of sale, Exhibit "F", is a voidable contract. Being a voidable contract,
established and that there were no officials to ratify contracts of sale and the action for annulment of the same on the ground of fraud must be brought
make them registerable. Obviously, Aportadera and Irespe knew that even if within four (4) years from the discovery of the fraud. In the case at bar,
Mata previously had sold t he Disputed such sale could not have been Laureta is deemed to have discovered that the land in question has been
registered. 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
There is no doubt then that Irespe and Aportadera, acting as agents of by the Register of Deeds and a new Certificate of Title No. 140 was issued
Caram, purchased the property of Mata in bad faith. Applying the principle of in the name of Caram. Therefore, when the present case was filed on June
agency, Caram as principal, should also be deemed to have acted in bad 29, 1959, plaintiff's cause of action had long prescribed.
faith.
The petitioner's conclusion that the second deed of sale, "Exhibit F", is a
Article 1544 of the New Civil Code provides that: 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,
Art. 1544. If the same thing should have been sold to consent or creation of the contract. The fraud or dolo causante must be that
different vendees, the ownership shall be transferred to which determines or is the essential cause of the contract. Dolo causante as
the person who may have first taken possession thereof in a ground for the annulment of contract is specifically described in Article
good faith, if it should be movable property. 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".
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. 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.
G.R. Nos. 91383-84 May 31, 1991 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,
SOCORRO COSTA CRISOSTOMO, petitioner, Petitioner's Memorandum, p. 106).
vs.
COURT OF APPEALS and NORMA SAN JOSE, DIANA J. On May 22, 1978, Crisostomo, upon San Jose's request, executed another
TORRES, respondents. 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
Quiason, Makalintal, Barot, Torres, Ibarra & Sison for petitioner. tax liabilities (Ibid.).
Augusto J. Salas for Diana J. Torres.
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).
PARAS, J.:
After Crisostomo got tired of San Jose's unfulfilled promises to make good
the postdated checks, the former decided to encash the postdated checks
This is a petition for review on certiorari of the: (1) decision * of the Court of after their maturity dates with Far East Bank and Trust Company.
Appeals dated July 31, 1989 in CA-G.R. CV Nos. 11816 and 11817, entitled Unfortunately, the same were all dishonored and returned to Crisostomo
"Socorro Costa Crisostomo vs. Norma San Jose and Diana Torres", which with the notation of the Bank as "Account Closed." (Ibid.).
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. 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
As gathered from the records, the facts of the case are as follows: enough, Crisostomo discovered that San Jose's loan application was
disapproved because the collateral was insufficient for the amount of the
Socorro Costa Crisostomo (Crisostomo for short) was the registered owner loan she was borrowing (Ibid.).
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. For Crisostomo's protection, San Jose signed a written undertaking for the
39286 of the Register of Deeds of Pasig. Crisostomo has occupied the forfeiture of the earnest money in the amount of P20,000.00 in favor of
property ever since she had the house built and has introduced other herein petitioner with a certification that the title to the property will be
improvements thereon like fruit bearing trees and ornamental plants (Rollo, returned within one (1) month after non-effectivity of its sale, duly registered
Petition, p. 9). in petitioner's name. The aforementioned amount of P20,000.00 was the
only payment Crisostomo ever received from San Jose (Ibid.).
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 Upon Crisostomo's insistence for the return of the title, San Jose informed
P300,000.00 which amount was agreed upon to be paid from the proceeds Crisostomo that the title was in the possession of Diana J. Torres, the
of a loan that was to be obtained by said respondent San Jose from a bank mortgagee (Rollo, Memorandum for Petitioner, p. 108).
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). 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 earnest money. However, this amount shall be off-set against the
reconvey the subject property to her. This demand was not satisfied (Ibid.). amount of damages assessed against defendants;

Petitioner was thus compelled to file Civil Case No. 34356 on September 3, 6) The Deed of Real Estate Mortgage executed by defendant
1979 against San Jose but this was later amended to include Torres (Ibid.). Norma San Jose in favor of defendant Diana Torres is hereby order
(sic) nullified. The Register of Deeds of Pasig, Metro Manila is
On the other hand, San Jose filed in an apparent attempt to forestall the authorized to cancel the annotation of said mortgage on the title to
extra-judicial foreclosure and public auction sale scheduled on September be issued in favor of plaintiff.
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 In Civil Case No. 34489—
parties and were jointly tried thereafter (Ibid.).
1) Defendant Norma San Jose is hereby ordered to pay defendant
In a decision dated March 31, 1986, the Regional Trial Court of Pasig, Diana Torres the amount of P100,000.00.
Branch CLIV (154) decided in favor of the petitioner, the dispositive portion
of which decision reads: SO ORDERED. (Rollo, Annex "A", pp. 37-38).

WHEREFORE, judgment is hereby rendered against the Torres appealed the above-stated decision to the Court of Appeals which
defendants in favor of the plaintiff as follows: modified the judgment of the trial court in a decision, the dispositive portion
of which reads as follows:
In Civil Case No. 34356—
WHEREFORE, the decision appealed from is hereby MODIFIED in
1) The Deed of Absolute Sale executed by plaintiff over the that the Deed of Real Estate Mortgage in favor of appellant Diana
property covered by Transfer Certificate of Title No. 39286 of the Torres be noted on the Certificate of Title which is to be re-issued
Register of Deeds of Pasig, Metro Manila, is hereby ordered to the appellee, and, appellant Diana Torres is hereby excluded
rescinded; from indemnifying the appellee the amounts representing moral
damages, attorney's fees, and costs, but is AFFIRMED in all other
2) Transfer Certificate of Title No. 11835 of the Register of Deeds respects.
of Pasig, Metro Manila, in the name of defendant Norma San Jose
is hereby ordered cancelled; SO ORDERED. (Rollo, Annex "A", p. 41).

3) Defendant Norma San Jose is hereby ordered to reconvey the Petitioner filed a motion for partial reconsideration of the appellate court's
title covering subject property within twenty (20) days from the decision but the same was denied in a Resolution dated December 11, 1989
finality of this judgment; (Rollo, Annex "B", p. 45).

4) Defendants are also hereby ordered, jointly and severally, to pay Hence, the petition.
plaintiff (a) the amount of P100,000.00 representing moral
damages, (b) P20,000.00 as attorney's fees, and (c) the costs; The Court in its resolution dated June 27, 1990 gave due course to the
petition and required both parties to submit their respective memoranda
5) As a consequence of the rescission of the sale, plaintiff is (Rollo, Resolution, p. 78).
ordered to return the amount of P20,000.00 which she received as
The only issue to be resolved in the instant case is whether or not private Thus, petitioner Crisostomo and Atty. Flor Martinez testified as follows in the
respondent Diana Torres is a mortgagee in good faith. trial court:

The petition is impressed with merit. TESTIMONY OF PETITIONER SOCORRO COSTA


CRISOSTOMO:
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 Atty. Beltran —
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 Q Do you know Atty. Martinez here, have you ever met Atty.
made is manifestly mistaken; . . . (6) the findings of fact of the Court of Martinez?
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 I met her June 17, 1978.

A careful study of the records shows that the Court of Appeals erred in Q Where did you meet Atty. Martinez?
finding that private respondent Diana Torres is a mortgagee in good faith on
the basis of the evidence. A She came at home that evening with Norma San Jose.

There are strong indications that Atty. Flor Martinez, the lawyer of Diana J. Q Where were you when Atty. Martinez and Norma San Jose came
Torres, the mortgagee, knew of the defect of San Jose's title. to your house?

Atty. Martinez is a close acquaintance of Norma San Jose, their long A I was at home.
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 Q Did you have any companion there?
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, A I was with my maid.
TSN, p. 6; Rollo, p. 113).
Q Before that date, did you have occasion to meet Atty. Martinez?
While feigning ignorance of the owner of subject property, she admitted later
on cross-examination that Socorro Crisostomo was the owner from whom A Yes. (sic) That was my first time to meet her.
San Jose allegedly bought the property (Hearing of April 20, 1983, TSN, pp.
6-11).
Q Was there any introduction made to you?

Even more persuasive is the fact that when Atty. Martinez personally
A She was introduced as a Bank Inspector of Private Development
inspected the property with San Jose for her client Torres, she allowed
Bank of Meycauayan, Bulacan. (Emphasis supplied)
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 Q Who introduced her to you?
to convince Crisostomo that the procedure is in accordance with her
agreement with San Jose. A Norma San Jose.
Q You mean she was introduced to you to inspect that property in Q Will you please tell the Honorable Court what was the
question? main purpose of your visit at the premises?

A Yes. A As the lawyer of the prospective mortgagee, I was duty


bound to make a fair assessment as to whether the
Q Why was that supposed inspection to be made on behalf of proposed collateral (sic) commensurate to the amount
the Meycauayan Bank? applied for. In other words, it was in connection with the
mortgage.
A She claimed that that was the bank wherein she was borrowing
her loan. xxx xxx xxx

Q In connection with that inspection supposed to be made, what Q And did you inquire from the plaintiff why was she there
was the purpose, if you know? at the moment?

A To facilitate to (sic) processing, according to them." (T.S.N., pp. A She was introduced to me as the Tia Coring.
16-17, Feb. 5, 1981)
Q And from your conversation, did you come to know that
xxx xxx xxx the plaintiff here, Socorro Crisostomo, is the same Tia
Coring whom she mentioned to you she bought the
property from? (Emphasis supplied)
On cross-examination of Atty. Flor Martinez by Atty. Beltran, she stated:
A Yes, the same Tia Coring who sold the property to her.
xxx xxx xxx (Emphasis supplied)

Q But your visit of the premises was purposely for the xxx xxx xxx
benefit of this Diana Torres, am I right?
Q And under these circumstances, you never inquired
A Of course, because she is my client. from the plaintiff whom you personally saw why she was
there in the property or until when she would remain in
Q And so in that visit of yours, you saw the plaintiff here that place? (Emphasis supplied)
personally?
A No, because it would be unethical to ask that question,
A Yes, I saw her then. she being the Tia Coring of (sic) the owner. (Emphasis
supplied) (T.S.N., pp. 81-85, April 28, 1983)
Q And you had a conversation with her?
xxx xxx xxx
A I had.
Finally, when Torres herself visited the property she carefully evaded seeing
xxx xxx xxx 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.1âwphi1 Consequently,
because respondent Torres was not a mortgagee in good faith, there 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.
G.R. No. 91797 August 28, 1991 (LRC) SWO-15352, and praying for a decree of registration over
said portions of Lot 8.
WIDOWS AND ORPHANS ASSOCIATION, INC., petitioner,
vs. On October 24, 1978, petitioner Ortigas filed a motion to dismiss
COURT OF APPEALS and ORTIGAS & COMPANY LIMITED the case alleging, among others, that respondent court had no
PARTNERSHIP, respondents. jurisdiction over the case, the land being applied for having been
already registered under the Torrens System and in the name of
Quijano & Padilla for petitioner. Ortigas under TCT 77652 and TCT 77653.
Santiago & Santiago for private respondent.
Jose Teodorico V. Molina for intervenor-oppositor. 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.
BIDIN, J.:
On June 27, 1979, petitioner Ortigas filed a motion for
reconsideration of said order of April 20, 1979, alleging that a
From the decision rendered by respondent court dated November 27, 1989, Torrens title becomes indefeasible after a year and that the same
declaring respondent Ortigas and Company Limited Partnership (Ortigas) as becomes conclusive upon the entire world; that the Land
the registered owner of the disputed parcel of land, petitioner Widows and Registration Commission itself has advised the court that the 156
Orphans Association, Inc. (Widora), interposes this petition for review hectare property sought to be registered is covered by valid and
seeking ng to annul the aforesaid judgment and prays that the case be subsisting titles in the name of Ortigas; that Courts of First Instance
remanded to the trial court and there be tried on the merits. The facts, as and the appellate courts in previous cases had sustained the
found by respondent court, are as follows: Ortigas titles over the land in question.

On August 27, 1974, respondent Widora filed LRC Case No. Q-336 On October 3, 1979, the motion for reconsideration of petitioner
before the respondent (trial) court an application for registration of Ortigas was denied by the respondent (trial) court, but the latter set
title of a parcel of land as shown in Plan No. LRC (SWO)-l5352. the motion to dismiss for hearing on October 18 and 19, 1979 at
Widora alleged that the parcel of land is covered by Titulo de 8:30 a.m., for the purpose of enabling the applicant to prove its
Propriedad Numero 4136, dated April 25, 1894, issued in the name contention that TCT Nos. 77652 and 77653 are not proper
of the deceased Mariano San Pedro y Esteban. Later, on June 14, derivatives of the original certificates of title from which they were
1978, Widora filed an amended application for registration of the purportedly issued.
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 The parties presented their testimonial and documentary evidence
applicant acquired said property from the heirs of Don Mariano San before the respondent (trial) court in support of their respective
Pedro on December 12, 1954. The amended application prayed positions.
that said parcel of land be ordered registered in the name of
Widora. On March 30, 1988, the respondent (trial) court denied the motion
to dismiss of petitioner Ortigas, holding, among others, that TCT
On August 25, 1978, respondent Dolores Molina filed an 77652 and TCT 77653 on their face show that they were derived
opposition, claiming ownership over 12 to 14 hectares of Lot 8 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, No. 1425 issued on April 26, 1905. The motion for reconsideration
located in Sta. Ana, Manila, which was four kilometers away from prayed the respondent court to reconsider its order of March 30,
the land subject of the application for registration which covers an 1988 on the ground that it had no jurisdiction over the application
area of 156 hectares, more or less, described in Plan No. LRC for registration, the parcels of land subject thereof being already
(SWO)-15352 situated at Malitlit-Uoogong, Quezon City; that the covered by Torrens Certificates of Title.
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 On May 19, 1989, the respondent (trial) court issued an order,
then the area of said Rizal portion should appear on the face of denying the motion for reconsideration of Ortigas, and setting the
said decree of registration, which is not the case; that TCT 77652 hearing on the merits on July 26, 1989, ... for the "eventual
and TCT 77653 were not derived from any decree of registration, presentation of the parties' respective evidence respecting their
and that the said TCTs being null and void, cannot be used as alleged ownership of the property subject of this petition." (Rollo,
basis to contest the right of the applicant to apply for registration pp. 24-26)
over the subject land. The order of March 30, 1988, in its
dispositive portion stated:
Not satisfied, respondent Ortigas instituted an action for certiorari, prohibition
and mandamus before respondent court praying for the annulment of the
"WHEREFORE, premises considered, the Omnibus March 30, 1988 and May 19, 1989 orders of the trial court. It also prayed
Motion dated October 4, 1978 and Motion to Dismiss, that the trial court be ordered to dismiss the land registration case.
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 On November 27, 1989, respondent court rendered the decision sought to
directing the City Assessor of Quezon City to issue a be reviewed, the decretal portion of which reads:
separate tax declaration corresponding to the 12 or 14
hectares which is an undivided portion of the land applied WHEREFORE, the petition for certiorari, prohibition
for registration and now belonging to the said Dolores V. and mandamus of petitioner Ortigas & Company Limited
Molina; further, authorizing the City Treasurer of Quezon Partnership is GRANTED. The orders of March 30, 1988 and May
City to accept the corresponding realty taxes due thereon; 19, 1989 of the Regional Trial Court of Quezon City, Branch 83, in
and further the said Dolores V. Molina is allowed to LRC Case No. Q-336, are REVERSED and ANNULLED, and said
intervene in these proceedings, is hereby affirmed; LRC Case No. Q-336 is DISMISSED. The injunction issued by the
likewise, the City Treasurer is directed to accept the whole Court, per Resolution of August 8, 1989, is made permanent.
of the taxes due on the property subject of the instant (Rollo, p. 35)
petition from applicants Widows & Orphans Association,
Inc., as prayed for in its Manifestation with Motion subject Based on the plan and other evidence submitted by respondent Ortigas at
to the right of the oppositor Dolores V. Molina as the hearing of its application for preliminary injunction to enjoin the trial court
contained in this Court's order of September 15, 1978." 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
On April 26, 1988, petitioner Ortigas filed a motion for reconsider Nos. 337, 19, 336 and 334, are actually derivatives of OCT No. 351, the
consideration of the said order of March 30, 1988, taking exception latter having been issued pursuant to Decree 1425 and that since OCT 351
to the ruling that TCT Nos. 77652 and 77653 are null and void, and is allegedly a copy of Decree 1425, the mere fact that the original copy of
alleging, among others, that respondent (trial) court had no Decree 1425, or a certified copy thereof, can no longer be located or
jurisdiction to hear an application for registration of a previously produced, does not mean that Decree 1425 covering the lots embraced in
registered land; that the parcels of land applied for are covered by TCT Nos. 77652 and 77653 was not issued. Concluding, respondent court
TCT 77652 and TCT 77653 in the name of Ortigas; that the parcels said:
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
It may be that TCT 77652 and 77653 do not show on their face (sic) Sta. Ana, Manila while the parcel of land applied for contains an area of 156
that they were derived from OCT 351. But the fact remains, as hectares, located at Malitlit-Uoogong Quezon City, four (4) kilometers away
shown above, that the parcel of land covered by OCT 351 from Sta. Ana, Manila and is certified by the Bureau of Lands and the
embraced the parcels of land, Lots 7 and 8, of TCT 77652 and Bureau of Forestry as alienable and disposable.
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) Respondent Ortigas claims that respondent court committed no error in
and 334, as their source, for the correct OCT insofar as Lots 7 and rectifying the mistake in the entries in TCT Nos. 77652 and 77653 as
8 are concerned, should be OCT 351. (Rollo, p. 27) 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
In this petition, petitioner WIDORA avers that the respondent Court of covered by TCT Nos. 77652 and 77653; that OCT 351 was issued pursuant
Appeals has decided questions of substance contrary to law and the to Decree 1425 and that OCT 351 is a copy of the Decree itself.
applicable decisions of this Court because:
We find the petition impressed with merit.
I
Undoubtedly, the evidence (i.e., plan submitted by respondent Ortigas,
THE COURT OF APPEALS INSISTED IN UPHOLDING THE testimony of its surveyor and OCT 351) adduced by private respondent to
EXISTENCE OR VALIDITY OF TCTs 77652 and 77653 DESPITE prove the contents of Decree 1425 and admitted by respondent court is
THE ABSENCE OF A SUPPORTING DECREE OF merely secondary and should not have been admitted in the first place.
REGISTRATION.
Before secondary evidence may be admitted, there must be 1) proof of the
II 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
THE QUESTIONED DECISION UTILIZED SECONDARY party who has failed to produce it after reasonable notice (Michael and Co.
EVIDENCE DESPITE THE EXISTENCE AND AVAILABILITY OF v. Enriquez, 33 Phil. 87 [1915]; Republic v. Court of Appeals, 73 SCRA 146
THE ORIGINAL DOCUMENT. [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.
III
Furthermore, the unilateral action of respondent court in substituting its own
THE RESPONDENT COURT HAS NO POWER OR AUTHORITY findings regarding the extent of the coverage of the land included in TCT
TO ENJOIN THE TRIAL ON THE MERITS OF LRC NO. Q-336 Nos. 77652 and 77653, ostensibly to correct the error in, and conform with,
SINCE JURISDICTION RESIDES WITH THE RTC ACTING AS A the technical description found in OCT 351 based on the plan and other
LAND REGISTRATION COURT. evidence submitted by respondent Ortigas cannot be sustained. That
function is properly lodged with the office of the trial court sitting as a land
In essence, it is the contention of petitioner that respondent court's grounds registration court and only after a full-dress investigation of the matter on the
and reasoning in support of its findings that respondent Ortigas is the merits. It is before the land registration court that private respondent must
registered owner of the disputed property are baseless in law and fact. adduce the proof that the disputed parcels of land is legally registered in its
Petitioner argues that respondent court erred in sustaining the validity of favor.
TCTs Nos. 77652 and 77653 despite the absence of a supporting decree of
registration and instead utilized secondary evidence, OCT 351 which is In Dioquino v. Intermediate Appellate Court (179 SCRA 163 [1989]), this
supposedly a copy of Decree 1425. Petitioner maintains that Decree 1425 is Court held that "(w)hile it is true that the Court of Appeals is vested with the
itself existing and available at the Register of Deeds of Manila and on its 'power to try cases and conduct hearings, receive evidence and perform any
face shows that it covers a parcel of land with an area of only 17 hectares in 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. National Investment and Development Corporation v. Aquino, 163 SCRA 53
The Court of Appeals therefore should not have admitted said evidence [1988]).
without giving the adverse party opportunity to present counter evidence, if
any. Besides, "evidence necessary in regards to factual issues raised in Furthermore, on grounds of pre-maturity, interlocutory orders cannot be
cases falling within the Appellate Court's original and appellate jurisdiction decided by the appellate courts until the lower court shall have decided the
contemplates incidental facts which were not touched upon, or fully heard by merit of the case. Thus, in Villegas v. Fernando (27 SCRA 1119 [1969]), this
the trial or respondent Court. The law could not have intended that the Court held:
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 This first assigned error (assailing the personality of the appellees
have yet to fully present their respective evidence in support of their claims to ask for a review of the decision and decree in the registration
before the trial court. As a matter of fact, the trial court had set the case for case) is actually directed at an earlier order dated 26 April 1961
hearing on the merits in its order dated May 19, 1989. What is more, the denying appellants heirs' motion to dismiss the petitions for review
case involves a vast tract of land consisting of 156 hectares, separately filed by the present appellees. And inasmuch as said order of 26
situated in two outlaying localities (i.e., Quezon City and Sta. Ana, Manila.) April 1961 is interlocutory, there being as yet no trial and decision
The resolution of this controversy calls for a full-blown trial on the merits if on the merits of the petition for review, it is premature to raise said
only to afford the contending parties their respective days in court. Further, a assigned error in appellants heirs' instant appeal. We shall rule
ground for dismissal based on disputed facts, as in this case is not proper in thereon only when the proper time comes, i. e., after the lower court
a motion to dismiss (Spouses Jayme and Solidarios v. Alampay, 62 SCRA shall have settled not only the still unresolved status and rights of
131 [1975]). 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
In the case at bar, respondent Ortigas alleges that Decree 1425 embraces holders, but also whether the original decision should be
the lots covered by its TCT Nos. 77652 and 77653 which are identical to the maintained or not. For the court below, after receiving and hearing
lots applied for by petitioner. On the other hand, petitioner maintains that the parties, may still conclude in favor of appellants
Decree 1425 covers a 17-hectare lot located at Sta. Ana, Manila while the lot herein. (Emphasis supplied)
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 But not only that. Respondent court committed a procedural lapse in
necessity of a trial on the merits to ascertain the disputed facts, i.e., whether correcting the alleged error in the questioned TCTs.1âwphi1 A certificate of
the lot applied for is covered by Decree No. 1425 or is alienable and title cannot be altered, amended or cancelled except in a direct proceeding
disposable. Under Act 496, it is the decree of registration issued by the Land in accordance with law (Sec. 48, PD 1529; Natalia Realty Corp. v. Vallez,
Registration Commission which is the basis for the subsequent issuance of 173 SCRA 534 [1989]; Legarda v. Saleeby, 31 Phil. 590 [1915]). Also, no
the certificate of title by the corresponding Register of Deeds that quiets the correction of certificate of title shall be made except by order of the court in a
title to and binds the land (De la Merced v. Court of Appeals, 5 SCRA 240 petition filed for the purpose and entitled in the original case in which the
[1962]). Consequently, if no decree of registration had been issued covering decree of registration was entered (Sec. 112, Act 496; now Sec. 108, PD
the parcel of land applied for, then the certificate of title issued over the said 1529). While the law fixes no prescriptive period therefor, the court,
parcel of land does not quiet the title to nor bind the land and is null and however, is not authorized to alter or correct the certificate of title if it would
void. mean the reopening of the decree of registration beyond the period allowed
by law (Rodriguez, v. Tirona, 68 Phil. 264 [1939]).
Besides, an order denying a motion to dismiss is merely interlocutory and,
unless it constitutes clearly a grave abuse of discretion or was issued Respondent Ortigas, on the other hand, argues that this Court has already
without or in excess of jurisdiction, the error, if any, should be corrected by recognized the fact that the parcel of land under TCT No. 227758 from which
appeal in due time, after trial and judgment on the merits and not by the TCT Nos. 77652 and 77653 were issued, are covered by, among others,
extraordinary writ of prohibition (Moreno v. Macadaeg, 7 SCRA 700 [1963]; Decree 1425 issued in GLRO Record No. 917 (Rollo, p. 94).
The argument is without merit True this Court declared in Ortigas & case, a certificate of title cannot be considered conclusive evidence of
Company, Limited Partnership v. Ruiz (148 SCRA 326 [1987]) that ownership where the certificate itself is faulty as to its purported origin.
"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, Further, the fact that respondent Ortigas' motion to dismiss was denied does
1942 and 1925 issued in GLRO Record Nos. 699, 875 and 917 ..." Nowhere not mean that it could no longer participate in the resolution of the case and
in said decision, however, is a pronouncement that TCT Nos. 77652 and factual determination of the parties' allegations. As correctly stated by the
77653 were issued from TCT No. 227758. On the contrary, it is not disputed trial court, "(i)t is to be stressed, however, that the denial of oppositor
by the parties that TCT Nos. 77652 and 77653 themselves show that they Ortigas' instant motion for reconsideration does not necessarily mean that it
were derived from OCT No. 337, 19, 336 and 334 and not from OCT 351 or is deprived of any participation in the instant petition. For as already stated,
TCT 227758. If indeed, the real origin thereof is OCT No. 351, what what follows after its denial is the eventual presentation of all the parties'
respondent Ortigas should have done was to file a petition for the correction respective evidence respecting their alleged ownership of the property
of the TCTs in question as stated earlier. subject of this petition." (Rollo, p. 65)

While it may be true, as respondent Ortigas argues, that a land registration WHEREFORE, the assailed judgment of respondent court is SET ASIDE
court has no jurisdiction over parcels of land already covered by a certificate and the orders of the trial court in LRC Case No. Q336 entitled, "In Re-
of title, it is nevertheless true that the aforesaid rule only applies where there Application for Registration of Title, WIDOWS and ORPHANS
exists no serious controversy as to the certificate's authenticity visa vis the ASSOCIATION, Inc., Applicant, ORTIGAS & COMPANY LIMITED
land covered therein. In the case at bar, the claimed origin of the questioned PARTNERSHIP and DOLORES V. MOLINA, Oppositors", dated March 30,
TCTs evidently appear to be different from what is stated therein. It does not 1988 and May 19, 1989 are hereby REINSTATED insofar as the denial of
appear indubitable that the disputed parcels of land are properly reflected in oppositor Ortigas' motion to dismiss and motion for reconsideration,
the TCTs relied upon by private respondent. Off-hand, and as the parties respectively, are concerned and the case remanded to the trial court for trial
admit, the TCTs do not show that they are actually derivatives of OCT 351. and adjudication on the merits.
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 SO ORDERED.
(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
[G.R. No. 128531. October 26, 1999] SEC. 109. Notice and replacement of lost duplicate certificate. In case of lost or
theft of an owners duplicate certificate of title, due notice under oath shall be sent by
the owner or by someone in his behalf to the Register of Deeds of the province or
city where the land lies as soon as the loss or theft is discovered. If a duplicate
certificate is lost or destroyed, or cannot be produced by a person applying for the
REPUBLIC OF THE PHILIPPINES, petitioner, vs. COURT OF APPEALS
entry of a new certificate to him or for the registration of any instrument, a sworn
and VICENTE L. YUPANGCO, JR., respondents.
statement of the facts of such loss or destruction may be filed by the registered
owner or other person in interest and registered.
DECISION
MENDOZA, J.: Upon the petition of the registered owner or other person in interest, the court
may, after notice and due hearing, direct the issuance of a new duplicate certificate,
which shall contain a memorandum of the fact that it is issued in place of the lost
The question for decision in this case is whether in a proceeding for the duplicate certificate, but shall in all respects be entitled to like faith and credit as the
issuance of an owners duplicate certificate of title, the Solicitor General is required original duplicate, and shall thereafter be regarded as such for all purposes of this
to be notified, such that failure to give such notice would render the proceedings decree.[2] (Emphasis added)
void. Both the Regional Trial Court and the Court of Appeals ruled in the
negative. Hence, this petition for review on certiorari.
Nothing in the law, however, requires that the Office of the Solicitor General
The facts are as follows: be notified and heard in proceeding for the issuance of an owners duplicate
certificate of title. In contrast, 23 of the same law, involving original registration
Private respondent Vicente Yupangco is the owner of a unit in a condominium proceedings, specifically mentions the Solicitor General as among those who must
building in Legaspi Street, Makati City, as evidenced by Certificate of Title No. be notified of the petition. Similarly, 36 provides that the petition for registration in
7648. Because his aforesaid certificate could not be located, he filed, on January 28, cadastral proceedings must be filed by the Solicitor General, in behalf of the
1994, in the Regional Trial Court, Branch 136, Makati, a petition for the issuance of Director of Lands.
a new duplicate certificate of title in lieu of his lost copy, pursuant to 109 of P.D.
No. 1529 (Property Registration Decree). The trial court ordered the Register of The Solicitor General, on the other hand, invokes 35(5), Chapter 12, Title III,
Deeds of Makati to comment on the petition and thereafter set the case for initial Book IV of the 1987 Administrative Code which provides:
hearing.
On February 11, 1994, the Registrar of Deeds of Makati filed a manifestation SEC. 35. Powers and Functions. The Office of the Solicitor General shall represent
that she had no objection to the petition. After hearing private respondents evidence, the Government of the Philippines, its agencies and instrumentalities and its officials
the trial court rendered, on December 15, 1995, its decision granting the petition, and agents in any litigation, proceeding, investigation or matter requiring the
declaring as invalid the missing copy of the certificate of title, and ordering the services of lawyers. When authorized by the President or head of the office
Registrar of Deeds of Makati to issue a new owners duplicate certificate of title in concerned, it shall also represent government owned or controlled corporations.The
the name of private respondent. A copy of this decision was furnished the Solicitor Office of the Solicitor General shall discharge duties requiring the services of
General. lawyers. It shall have the following specific powers and functions:

On February 5, 1996, the Solicitor General moved for reconsideration of the ....
trial courts decision on the ground that no copy of private respondents petition or
notice thereof had been given to him. His motion was, however, denied. The Office
of the Solicitor General then elevated the case to the Court of Appeals, which, in a (5) Represent the Government in all land registration and related proceedings. . .
decision[1] dated March 5, 1997, affirmed the order of the trial court. Hence, this
petition. He contends that, in view of this provision, it was mandatory for the trial court to
notify him of private respondents petition and that its failure to do so rendered the
Private respondents petition before the trial court was anchored on 109 of P.D. proceedings before it null and void.[3]
No. 1529 (Property Registration Decree) which provides:
The contention has no merit. The provision of the Administrative Code relied The important role of the Office of the solicitor General as the governments
upon by the Solicitor General is not new. It is simply a codification of 1(e) of P.D. law office cannot be overemphasized. Its powers and functions, however, should not
No. 478 (Defining the Powers and Functions of the Office of the Solicitor General) be rigidly applied in such a manner that innocuous omissions, as in the case at bar,
which similarly provided: should be visited with so grave a consequence as the nullification of
proceedings. After all, no prejudice to the government has been shown.
SECTION 1. Powers and Functions. (1) The Office of the Solicitor General shall WHEREFORE, the decision of the Court of Appeals is AFFIRMED.
represent the Government of the Philippines, its agencies and instrumentalities and
its officials and agents in any litigation, proceeding, investigation or matter requiring SO ORDERED.
the services of a lawyer. When authorized by the President or head of the Office
concerned, it shall also represent government owned or controlled corporations. The
Office of the Solicitor General shall constitute the law office of the Government and,
as such, shall discharge duties requiring the services of a lawyer. It shall have the
following specific powers and functions:

....

e. Represent the Government in all land registration and related proceedings. . . .

It is only now that the Solicitor General is claiming the right to be notified of
proceedings for the issuance of the owners duplicate certificate of title. Indeed, the
only basis for such claim is that the Office of the Solicitor General represents the
government in land registration and related proceedings. Even so, however, the
request for representation should have come from the Registrar of Deeds of Makati
who was the proper party to the case. Here, there is no dispute that the Registrar of
Deeds of Makati was notified of private respondents petition, but she manifested
that her office had no objection thereto. The Solicitor General does not question the
propriety of the action and manifestation of the Registrar of Deeds, nor does he give
any reason why private respondents petition for the issuance of a new owners
duplicate certificate of title should be denied. Instead, he claims that the fact that he
was given a copy of the decision is an admission that he is entitled to be notified of
all incidents relating to the proceedings.
This is not correct. Considering that the law does not impose such notice
requirement in proceedings for the issuance of a new owners duplicate certificate of
title, the lack of notice to the Solicitor General, as counsel for the Registrar of
Deeds, was at most only a formal and not a jurisdictional defect.
This case should be distinguished from our rulings in cadastral registration
cases[4] and original land registration proceedings[5] which require that the Solicitor
General be notified of decisions and hold as decisive, for the purpose of determining
the timeliness of the appeal filed by the government, the date of his receipt of the
decisions therein and not that of the Director of Lands or of his other
representatives.[6] The issue and the applicable laws in those cases are different.
G.R. No. 107653 February 5, 1996 On March 1, 1982, before judgment could become final in the ejectment
case, private respondents filed a complaint for annulment of sale, partition
FELIPA GARBIN, petitioner, and damages with the Regional Trial Court of Tarlac. The issue presented
vs. therein was whether or not private respondents, as the alleged first vendees
THE HONORABLE COURT OF APPEALS (FORMER TENTH DIVISION) in a double sale, (who annotated the same as an adverse claim on the
and SPOUSES ANTONIO JULIAN and CASIMIRA GARBIN, respondents. covering title) have a superior right over petitioner, the subsequent vendee
(who received a transfer certificate of title for the entire lot despite prior
inscription of the adverse claim).
DECISION
The RTC ruled in favor of petitioner and dismissed the complaint. Aggrieved,
ROMERO, J.: private respondents went to the Court of Appeals which reversed and set
aside the decision of the trial court.
This is a petition for review on certiorari of the decision of the Court of
Appeals reversing the Regional Trial Court of Tarlac, Tarlac which had The appellate court said:
earlier dismissed the complaint for annulment of sale filed by private
respondents.
. . . it is Our view, and so We hold, that, at the very least, the
inscription of the adverse claim of plaintiffs-appellants on vendor
The facts are the following: Pablo Garbin's OCT No. 33251 did constitute a sufficient notice to
the whole world, defendant-appellee Felipa Garbin included, that
Pablo Garbin and Leoncia Garbin are the parents of petitioner Felipa Garbin the northern half of subject Lot 12712 was deeded out by the
(Felipa) and private respondent Casimira Garbin (Casimira) married to registered owner to plaintiffs-appellants. Therefore, defendant-
private respondent Antonio Julian. Pablo Garbin is the original owner of Lot appellee is a buyer in bad faith, with full awareness of the prior sale
12712, Camiling, Tarlac Cadastre with an area of 25,681 square meters, title of the northern half of Lot 12712 to her sister Casimira Garbin, and
thereto being evidenced by Original Certificate of Title No. 33251. consequently, the registration of the sale in favor of defendant-
appellee did not cleanse her bad faith and the legal consequences
On October 31, 1955, Pablo Garbin and his wife Leoncia executed a "Deed thereof, and did not vest in her (appellee) the ownership over the
of Absolute Sale of Real Estate" purportedly conveying to private respondent northern half of Lot 12712, as against the first buyer thereof,
Casimira Garbin the undivided northern half of the said lot. Casimira then plaintiff-appellant Casimira Garbin.
registered an adverse claim over the property.
It is well-settled that in a double sale of real property, ownership
On May 24, 1970, Pablo Garbin sold the entire Lot 12712, including the thereof "shall belong to the person acquiring it who in good faith
northern portion, to petitioner Felipa by virtue of a Deed of Sale. first recorded it in the Registry of Property" (2nd paragraph, Article
Consequently, Transfer Certificate of Title No. 88932 was issued in favor of 1544, New Civil Code of the Philippines). Under this applicable
Felipa. On July 29, 1974, Felipa and Pablo Garbin filed an ejectment case provision of law, mere registration of the sale of real or immovable
against private respondent spouses. In that case, the Municipal Trial Court property is not enough. The good faith of the buyer registering the
of Camiling, Tarlac decided against private respondents. They appealed the sale must concur. In the case of defendant-appellee she cannot be
case to the Regional Trial Court of Tarlac which affirmed the questioned considered in good faith, within legal contemplation, and her
decision. Private respondents then filed a petition for review with the Court of profession of innocence or lack of knowledge of the prior sale is
Appeals, but said petition was dismissed. They questioned the dismissal in incredible and unworthy of belief. To be sure, the annotation of
this Court docketed as G.R. No. 59817 but the petition was denied due plaintiffs-appellants' adverse claim on the title of vendor Pablo
course. Garbin made defendant-appellee fully aware of such earlier sale.
As regards the defense of prescription or laches invoked by which portion added to what appellants bought from Pablo Garbin,
defendant-appellee to defeat the claim of plaintiffs-appellants over made appellant's area 7/12 of Lot 12712.
the portion of land in question; We find the same equally
undeserving of serious consideration. Considering that before WHEREFORE, the decision appealed from is hereby SET ASIDE;
instituting this action on March 2, 1982, plaintiffs-appellants were the sale by Pablo Garbin to defendant-appellee Felipa Garbin of the
pre-occupied with the ejectment proceedings commenced against entire Lot 12712, Camiling, Tarlac Cadastre (Exh. "B") is hereby
them by defendant-appellee on July 29, 1970; it cannot be said, declared null and void and without force and effect, and the
then, that plaintiffs-appellants slumbered on their rights and had resulting TCT No. T-88932 of the latter (Exh. "C") is ordered
failed to assert their claim seasonably. As a matter of fact, even canceled; plaintiffs-appellants are adjudged the owners pro-
during the pendency of the ejectment case they did find time to indiviso of seven-twelfth (7/12), including the northern half, of the
initiate this case under consideration. Plaintiffs-appellants having said lot, with defendant-appellee as the owner of the remaining five-
been busy defending themselves in said ejectment case against twelfth (5/12) southern portion thereof.
them; their inability to file the present action sooner is
understandable. It should be borne in mind that the running of the
period of prescription is capable of interruption. And, to repeat; To avoid multiplicity of suits; the plaintiffs-appellants and defendant-
during the pendency of the ejectment case aforementioned; We appellee are hereby given thirty (30) days from finality of this
believe that the running of the period of prescription of plaintiffs- disposition, to submit to the trial court of origin a scheme of partition
appellants' cause of action had been interrupted. for subject lot on the basis of their undivided co-ownership of
seven-twelfth (7/12) and five-twelfth (5/12), respectively; otherwise,
pursuant to Rule 69, Revised Rules of Court, the lower court shall
As regards the equitable principle of laches, the attendant facts and by order appoint not more than three (3) competent and
circumstances come to the fore. Whether or not laches set in disinterested commissioners to effect the partition in accordance
depends on the surrounding facts and circumstances. Here, We herewith. Costs against defendant-appellee.
believe that plaintiffs-appellants have not faltered or failed for an
unreasonable length of time to assert their claim of ownership.
SO ORDERED.
With respect to the southern half of Lot 12712; plaintiffs-appellants'
stance is also meritorious. When the wife of Pablo Garbin died, her Petitioner, before this Court, now questions the appellate court's decision
estate was transmitted by operation of the law on intestate stating that:
succession to plaintiff-appellant Casimira Garbin, defendant-
appellee Felipa-Garbin, and surviving spouse Pablo Garbin. So, 1. No evidence has been presented by private respondents to
when Pablo Garbin executed the deed of sale in favor of defendant- prove the validity of the "Deed of Absolute Sale of Real Estate"
appellee, he could only convey to the latter his undivided share executed in their favor by Pablo Garbin.
therein, which was 4/6 of the southern portion of Lot 12712
because as hereinabove pointed out, the northern half of the said 2. The annotation on the title of the adverse claim is not sufficient to
lot was effectively conveyed to plaintiffs-appellants, so that he could prove validity of the said claim.
only dispose of 4/6 of the southern portion. Plaintiff-appellant
Casimira Garbin inherited 1/6, and the remaining 1/6 of the
southern portion went to defendant-appellee as her inheritance 3. Pablo Garbin himself repudiated the alleged sale to private
from their mother. Therefore, plaintiffs-appellants own 7/12 of Lot respondent spouses in testimony before the trial court in the
12712 while defendant-appellee owns 5/12; the northern half being ejectment case, denying knowledge of the sale of subject property
equivalent to 6/12, and out of the other 6/12, Pablo Garbin to them.
conveyed 4/12 to appellee Felipa Garbin, who inherited 1/12 in her
own right. Plaintiff-appellant Casimira Garbin also inherited 1/12
4. Pablo Garbin solely owned the subject lot, as shown by the that someone is claiming an interest on the same or a better right than the
Original Certificate of Title, and thus the property could not be registered owner.1
considered conjugal.
It is undisputed that the adverse claim of private respondents was registered
5. Private respondents' cause of action had already prescribed. pursuant to Sec. 110 of Act No. 496, the same having been accomplished by
the filing of a sworn statement with the Register of Deeds of the province
We find the petition meritorious. where the property was located. However, what was registered was merely
the adverse claim and not the Deed of Sale, which supposedly conveyed the
northern half portion of the subject property. Therefore, there is still need to
The central issue to be resolved here is: does the registration of the said resolve the validity of the adverse claim in separate proceedings, as there is
adverse claim by private respondents prevail over the title of petitioner which an absence of registration of the actual conveyance of the portion of land
was registered subsequent to the adverse claim? herein claimed by private respondents.

Considering the circumstances peculiar to the present case, we must rule in From the provisions of the law, it is clear that mere registration of an adverse
the negative. claim does not make such claim valid, nor is it permanent in character. More
importantly, such registration does not confer instant title of ownership since
Sec. 110 of Act No. 496 (otherwise known as the Land Registration Act) judicial determination on the issue of the ownership is still necessary. 2
states:
Regarding the alleged Deed of Sale by Pablo Garbin in favor of private
whoever claims any right or interest in registered land adverse to respondents, the trial court correctly observed:
the registered owner, arising subsequent to the date of the original
registration, may, if no other provision is made in the Land On the assumption that the deed in favor of the plaintiffs was
Registration Act for registering the same, make a statement in presented for registration as claimed, it should, however, be
writing setting forth fully his alleged right or interest, and how or underscored that the entry in the day book is but a preliminary step
under whom acquired, and a reference to the volume and page of of registration, the actual annotation of the memorandum or the
the certificate of title of the registered owner, and a description of issuance of a new certificate of title being the final step to
the land in which the right or interest is claimed. The statement accomplish registration.
shall be signed and sworn to, and shall state the adverse claimant's
residence, and designate a place at which all notices may be
served upon him. This statement shall be entitled to registration as In Pilapil v. CA,3 we said:
an adverse claim, and the court, upon a petition of any party in
interest, shall grant a speedy hearing upon the question of the To affect the land sold, the presentation of the Deed of Sale and its
validity of such adverse claim and shall enter such decree therein entry in the day book must be done with the surrender of the
as justice and equity may require. If the claim is adjudged to be owner's duplicate of the certificate of title.
invalid, the registration shall be canceled. If in any case the court
after notice and hearing finds that a claim thus registered was Considering further that Pablo Garbin himself denied the sale of the subject
frivolous or vexatious, it may tax the adverse claimant double or property, it is evident that the sale never transpired.
treble costs in its discretion. (Emphasis supplied)
In view of the above, the entry in the day book automatically loses force and
The purpose of the annotation of an adverse claim is to protect the interest effect. Thus, it is the Deed of Sale that petitioner registered in her favor and
of a person over a piece of real property where the registration of such the Transfer Certificate of Title subsequently obtained over the property,
interest or right is not otherwise provided for by the Land Registration Act, which has a superior right thereon.
and serve as a notice and warning to third parties dealing with said property
As regards the issue of the ownership by Pablo Garbin of the property, the
Original Certificate of Title clearly states that he is the sole owner thereof.
There is no basis, therefore, for the ruling of the appellate court that said
property is conjugal in character and also for its computation of the shares
that Pablo Garbin could dispose of when he executed the Deed of Sale on
May 24, 1970 to Felipa.

Lastly, on the issue of prescription, we agree with the trial court which found
that the action for annulment of sale had already prescribed.

. . . the title of the defendant must be upheld for failure or the


neglect of the plaintiffs for an unreasonable and unexplained length
of time of more than fifteen (15) years since they registered their
adverse claim, or for a period of more than three (3) decades since
the execution of the deed of sale in their favor upon which their
adverse claim is based, to do that which, by exercising diligence,
could or should have been done earlier. For it is this negligence or
omission to assert a right within reasonable time that is construed
that plaintiffs had abandoned their right to claim ownership under
the deed of sale, or declined to assert it. Thus, when a person slept
in his rights for 28 years from the time of the transaction, before
filing the action amounts to laches which cannot be excused even
by ignorance resulting from unexcusable negligence (Vda. de Lima
vs. Tiu, 52 SCRA 516 [1970].

Private respondents, having waited for 36 long years before filing an action
to annul the sale to Felipa in the trial court we hold that this constitutes
laches.

The unexplained interval of 29 years that the plaintiffs allowed to


elapse before making any claim or instituting action constitutes
laches that places them in estoppel to question the validity of the
probate court's order and of the sale executed in pursuant thereof. 4

WHEREFORE, the decision of the Court of Appeals is hereby SET ASIDE


and that of the Regional Trial Court REINSTATED. Private respondents'
complaint for annulment of sale is hereby DISMISSED.

SO ORDERED.
G.R. No. L-33360 April 25, 1977 brothers and sisters, or the latter's surviving children Apparently because
negotiations were, by that time, under way for the purchase by the
MAXIMINO CARANTES (Substituted by Engracia Mabanta Government of Lots Nos. 44-B and 44-C for the purpose of widening the
Carantes), petitioner, Loakan Airport, the only property listed by Maximino in the project of partition
vs. was the remaining portion of Lot No. 44.
COURT OF APPEALS, BILAD CARANTES, LAURO CARANTES,
EDUARDO CARANTES and MICHAEL TUMPAO, respondents, On October 23, 1939 a deed denominated "Assignment of Right to
Inheritance" was executed by four of Mateo Carantes children, namely,
Sinforoso Fingonil and Sinai C. Hamada for petitioner. Bilad, Sianang, Lauro and Crispino, and the heirs of Apung Carantes (also a
son of Mateo who died in 1923), namely, Pitag, Bill, Alson, Eduardo and
Juan, assigning to Maximino Carantes their rights to inheritance in Lot No.
Ruben C. Ayson for private respondents. 44. The stated monetary consideration for the assignment was P1.00.
However, the document contains a recital to the effect that the said lots, "by
agreement of all the direct heirs and heirs by representation of the deceased
Mateo Carantes as expressed and conveyed verbally. by him during his
CASTRO, C.J: lifetime, rightly and exclusively belong to the particular heir, Maximino
Carantes, now and in the past in the exclusive, continuous, peaceful and
notorious possession of the same for more than ten years."
This is an appeal by certiorari from the decision of the Court of Appeals in
CA-G.R. 36078-R promulgated on December 23, 1970 reversing the
judgment of the Court of First Instance of Baguio City, Branch II, in Civil On the same date Maximino Carantes sold to the Government Lots Nos. 44-
Case 804, and from the appellate court's resolution dated March 7, 1971 B and 44-C and divided the proceeds of the sale among himself and the
denying herein petitioner's motion for reconsideration. other heirs of Mateo.

Mateo Carantes was the original owner of Lot No. 44 situated at Loakan, On February 6, 1940, upon joint petition of the heirs of Mateo Carantes, the
Baguio City, as evidenced by Original Certificate of Title No. 3 issued in his Court of First Instance of Baguio City issued an Order in another proceeding
name on September 22, 1910 by virtue of Free Patent No. 5 granted to him — Administrative Case No. 368 — cancelling O.C.T. No. 3. Pursuant thereto
on the same date. In 1913 Mateo died. He was survived by his widow the said title was cancelled, and in its place Transfer Certificate of Title No.
Ogasia and six children, namely, Bilad, Lauro, Crispino, Maximino, Apung 2533 was issued in the joint names of the five children of Mateo Carantes
and Sianang, all surnamed Carantes. and the children of Apung Carantes (representing their deceased father) as
co-owners pro indiviso, or one-sixth share for each child.

In 1930 construction of the Loakan Airport was commenced by the


Government. Because a portion of Lot No. 44 was needed for the landing On March 16, 1940 Maximino Carantes registered the deed of "Assignment
field, the Government instituted proceedings (Civil Case 338) for its of Right to Inheritance." Accordingly, T.C.T. No. 2533 in the names of the
expropriation. For the purpose, Lot No. 44 was subdivided into Lots Nos. 44- heirs was cancelled, and in lieu thereof Transfer Certificate of Title No. 2540
A, 44-B, 44-C, 44-D and 44-E. The portion expropriated by the Government was issued on the same date in the name of Maximino Carantes. Also on
was Lot No. 44-A. the same date, Maximino, acting as exclusive owner of the land covered by
T.C.T. No. 2540, executed a formal deed of sale in favor of the Government
over Lots Nos. 44-B and 44-C.
In 1933 Special Proceedings Nos. 409 to 413 were filed with the court for the
settlement of the estate of the late Mateo Carantes. One of his sons, herein
petitioner Maximino Carantes, was appointed and qualified as judicial On February 21, 1947, as a result of the approval of the Subdivision Survey
administrator of the estate. In his capacity as administrator, Maximino filed Plan psd-16786, and pursuant to the deed of sale executed in 1940 by
on June 20, 1939 a project of partition wherein he listed as the heirs of Maximino Carantes in favor of the Government, T.C.T. No. 2540 in
Mateo Carantes who were entitled to inherit the estate, himself and his Maximino's name was cancelled, and in lieu thereof Transfer Certificate of
Title No. T98, covering Lots Nos. 44-A, 44-B arid 44-C, was issued in the In an Order dated September 30, 1958, the trial court denied the motion to
name of the Government, while Transfer Certificate of Title No. T-99, dismiss on the grounds that there are allegations of co-ownership and trust
covering the remaining Lots Nos. 44-D (100, 345 square meters) and 44-E in the complaint, and, therefore, prescription did not lie, and that the
(10,070 square meters) was issued in the name of Maximino Carantes, who complaint alleges that the plaintiffs discovered the alleged fraud only in
has up to the present remained the registered owner of said lots. February, 1958.

On September 4, 1958 the present complaint was filed by three children of In their answer filed on October 7, 1958, the defendants traversed the
the late Mateo Carantes, namely, Bilad, Lauro and Crispino, and by some of material averments of the complaint and alleged inter alia that the property
the surviving heirs of Apung and of Sianang ('also children of Mateo of the deceased Mateo Carantes and his wife had been divided and
Carantes). Maximino Carantes was named principal defendant, and some of distributed among their six children; that the deed of "Assignment of Right to
the heirs of Apung and Sianang were impleaded as parties-defendants in Inheritance" was an acknowledgment of the fact of designation of the
view of their alleged reluctance to join as parties-plaintiffs. property therein described as specifically pertaining or belonging by right of
inheritance to the defendant Maximino Carantes: that there was never any
In their complaint the plaintiffs alleged inter alia that they and/or their agreement between the assignors and the assignee authorizing the latter to
predecessors-in-interest executed the deed of "Assignment of Right to merely represent his co-heirs in negotiations with the Government; and that
Inheritance" on October 23, 1939, only because they were made to believe the assignors knew fully well that the deed of assignment contained what, on
by the defendant Maximino Carantes that the said instrument embodied the its face, it represented, By way of special defenses, the defendants alleged
understanding among the parties that it merely authorized the defendant that any supposed agreement between the plaintiffs and/or their
Maximino to convey portions of Lot No. 44 to the Government in their behalf predecessors-in-interest and the defendant Maximino Carantes, other than
to minimize expenses and facilitate the transaction; and that it was only on the deed of assignment, is barred by the statute of frauds and is null and
February 18, 1958, when the plaintiffs secured a copy of the deed, that they void because not in writing, much less, in a public instrument; that the only
came to know that the same purported to assign in favor of Maximino their agreement between the parties is what appears in the deed of assignment;
rights to inheritance from Mateo Carantes. The plaintiffs prayed that the that the plaintiffs' right of action has already prescribed; that the defendant
deed of "Assignment of Right to Inheritance" be declared null and void; that Maximino Carantes acquired absolute ownership over the property in
Lots Nos. 44-D and 44-E covered by T.C.T. No. T99 be ordered partitioned question by acquisitive prescription and registration; and that any obligation
into six (6) equal shares and the defendant Maximino Carantes be on the part of the defendants in relation to the property had been discharged
accordingly ordered to execute the necessary deeds of conveyance in favor by novation, condonation and compensation. The defendants set up the
of the other distributees and that the said defendant be ordered to pay the counterclaim that in the event the rights of the heirs are disturbed, the
plaintiffs the sum of P1,000 as attorney's fees and the sum of P200 as costs produce from the lands inherited by the plaintiffs from Mateo Carantes as
of suit. well as the real estate taxes on the land paid by the defendant Maximino
Carantes should be collated; and that the filing of the complaint being
malicious, the defendants should be awarded the sum of P4,500 by way of
On September 10, 1958 the defendants filed a motion to dismiss on the nominal, compensatory, moral and corrective damages, including attorney's
grounds (1) that the plaintiffs' cause of action is barred by the statute of fees and expenses of litigation. The defendants prayed for the dismissal of
limitations because the deed of assignment was recorded in the Registry of the complaint and payment of damages to them.
Property at the latest on February 21, 1947, hence, plaintiffs' cause of action
accrued from the said date, and since pursuant to article 1144 of the new
Civil Code an action based on a written contract must be brought within ten An answer to the counterclaim was filed by the plaintiffs on November 7,
years from the time the right of action accrues, plaintiffs' right to file the 1958 denying the material allegations of the counterclaim.
complaint had already prescribed on September 4, 1958; and (2) that the
complaint states no cause of action because ownership over the property After trial, the court rendered its decision on January 28, 1965. It was the
became vested in Maximino Carantes by acquisitive prescription ten years trial court's opinion that since an action based on fraud prescribes in four
from its registration in his name on February, 21, 1947. years from the discovery of the fraud, and in this case the fraud allegedly
perpetrated by the defendant Maximino Carantes must be deemed to have
been discovered on March 16, 1940 when the deed of assignment was
registered, the plaintiffs' right of action had already prescribed when they Consequently, we have to disregard the petitioner's theory that the action is
filed the action in 1958; and even assuming that the land remained the for reformation of an instrument, and must proceed on the basis of the
common property of the plaintiffs and the defendant Maximino Carantes issues properly raised and ventilated before the trial court.
notwithstanding the execution of the deed of assignment, the co-ownership
was completely repudiated by the said defendant by performance of several - II -
acts, the first of which was his execution of a deed of sale in favor of the
Government on October 23, 1939, hence, ownership had vested in the
defendant Maximino Carantes by acquisitive prescription. The court We do not agree with the respondent court's legal conclusion that the deed
accordingly dismissed the complaint. It likewise dismissed the counterclaim. of "Assignment of Right to Inheritance" is void ab initio and inexistent on the
grounds that real consent was wanting and the consideration of P1.00 is so
shocking to the conscience that there was in fact no consideration, hence,
The plaintiffs moved for reconsideration. Their motion having been denied in the action for the declaration of the contract's inexistence does not prescribe
an Order dated March 8, 1965, they appealed to the Court of Appeals. pursuant to article 1410 of the new Civil Code.

As adverted to above, the Court of Appeals reversed the judgment of the Article 1409 (2) of the new Civil Code relied upon by the respondent court
trial court, hence the present recourse. provides that contracts "which are absolutely simulated or fictitious" are
inexistent and void from the beginning. The basic characteristic of simulation
-I- is the fact that the apparent contract is not really desired or intended to
produce legal effects or in any way alter the juridical situation of the parties. 4
In her brief filed with this Court, the petitioner argues that the private
respondents' action is not actually one for annulment of the deed of The respondents' action may not be considered as one to declare the
"Assignment of Right to Inheritance" but for the reformation thereof, hence, inexistence of a contract for lack of consideration. It is total absence of
the said action has prescribed long before the filing of the complaint. cause or consideration that renders a contract absolutely void and
inexistent. 5 In the case at bar consideration was not absent. The sum of
The petitioner's theory that the private respondents' action is for reformation P1.00 appears in the document as one of the considerations for the
of an instrument is a new one, adopted by the petitioner for the first time on assignment of inheritance. In addition — and this of great legal import — the
appeal to this Court. Her husband did not raise it as a defense in his answer document recites that the decedent Mateo Carantes had, during his lifetime,
filed with the trial court, where, consequently, trial proceeded on the theory expressed to the signatories to the contract that the property subject-matter
that the action sought the declaration of nullity of the deed of assignment. thereof rightly and exclusively belonged to the petitioner Maximino Carantes.
When the case reached the respondent court the petitioner likewise did not This acknowledgment by the signatories definitely constitutes valuable
raise this issue, although in truth, even had she done so, it would have been consideration for the contract.
a belated and futile exercise. She cannot be allowed to change her theory of
the case at this stage of the proceedings. - III -

The settled rule is that defenses not pleaded in the answer may not be The present action is one to annul the contract entitled "Assignment of Right
raised for the first time on appeal. 1 A party cannot, on appeal, change to Inheritance" on the ground of fraud.
fundamentally the nature of the issue in the case. 2 When a party
deliberately adopts a certain theory and the case is decided upon that theory Article 1390 of the new Civil code provides that a contract "where the
in the court below, he will not be permitted to change the same on appeal, consent is vitiated by mistake, violence, intimidation, undue influence or
because to permit him to do so would be unfair to the adverse party. 3 fraud," is voidable or annullable. Even article 1359, which deals on
reformation of instruments, provides in its paragraph 2 that "If mistake, fraud,
inequitable conduct, or accident has prevented a meeting of the minds of the
parties, the proper remedy is not reformation of the instrument but
annulment of the contract," When the consent to a contract was fraudulently Definitely, no express trust was created in favor of the private respondents. If
obtained, the contract is avoidable. 6 Fraud or deceit does not render a trust there was, it could only be — as held by respondent court — a
contract void ab initio and can only be a ground for rendering the contract constructive trust, which is imposed by law. In constructive trusts there is
voidable or annullable pursuant to article 1390 of the new Civil Code by a neither promise nor fiduciary relations; the so-called trustee does not
proper action in court. 7 recognize any trust and has no intent to hold the property for the
beneficiary. 10 In at least two cases, the rule of constructive notice was
The present action being one to annul a contract on the ground of fraud, its applied by this Court although a constructive trust had been created. Thus,
prescriptive period is four years from the time of the discovery of the fraud. 8 in Lopez, et al. vs. Gonzaga, et al., 11 where the plaintiffs and the defendants
were co-heirs and the decedent owner of the lands had merely allowed the
principal defendant to use the products and rentals of the lands for purposes
The next question that must be resolved is: from what time must fraud, of coconut oil experimentation, but said defendant later caused the transfer
assuming that there was fraud, be deemed to have been discovered in the of the certificates of title in his own name through the registration of certain
case at bar? From February, 1958, when, according to the private judicial orders, this Court held that the recording of the judicial orders
respondents, and as found by the respondent court, the private respondents sufficed as notice to the other heirs, for the rule is that knowledge of what
actually discovered that they were defrauded by the petitioner Maximino might have been revealed by proper inquiry is imputable to the inquirer.
Carantes when rumors spread that he was selling the property for half a In Gerona, et al. vs. De Guzman, et a., supra, the petitioners and the private
million pesos? Or from March 16, 1940, when, as admitted by the parties respondents were co-heirs, and the petitioners' action for partition and
and found by both the trial court and the respondent court, the deed of reconveyance was based upon a constructive trust resulting from fraud. This
"Assignment of Right to Inheritance" was registered by the petitioner in the Court held that the discovery of the fraud "is deemed to have taken place, in
Office of the Register of Deeds? the case at bar, on June 25, 1948, when said instrument was filed with the
Register of Deeds and new certificates of title were issued in the name of
The weight of authorities is to the effect that the registration of an instrument respondents exclusively, for the registration of the deed of extra-judicial
in the Office of the Register of Deeds constitutes constructive notice to the settlement constituted constructive notice to the whole world."
whole world, and, therefore, discovery of the fraud is deemed to have taken
place at the time of the registration. 9 In this case the deed of assignment - IV -
was registered on March 16, 1940, and in fact on the same date T.C.T. No.
2533 in the names of the heirs of Mateo Carantes was cancelled, and T.C.T.
No. 2540 in the name of the petitioner was issued in lieu thereof. The four- The decision under review found that a constructive trust was created in
year period within which the private respondents could have filed the present favor of the private respondents, and, holding that an action for
action consequently commenced on March 16, 1940; and since they filed it reconveyance based on constructive trust is imprescriptible, recognized the
only on September 4, 1958, it follows that the same is barred by the statute right of the private respondents to file an action for reconveyance regardless
of limitations. of the lapse of time, citing Gayandato vs. Treasurer of the Philippine Islands,
et al. 12

The respondent court refused to accord recognition to the rule of


constructive notice, because, according to it, there was a fiduciary We have examined Gayandato, and have failed to find support therein for
relationship between the parties. Upon this premise it concluded that the the holding of the respondent court. In any event, it is now settled that an
four-year prescriptive period should be deemed to have commenced in action for reconveyance based on implied or constructive trust is
February, 1958 when private respondents had actual notice of the fraud. prescriptible it prescribes in ten years. 13 In this case the ten-year
Without resolving the question of whether or not constructive notice applies prescriptive period began on March 16, 1940, when the petitioner registered
when a fiduciary relationship exists between the parties — a point which is the deed of "Assignment of Right to Inheritance" and secured the
not in issue in this case — we hold that the respondent court's conclusion, cancellation of the certificate of title in the joint names of the heirs of Mateo
lacking the necessary premise upon which it should be predicated, is Carantes, and, in lieu thereof, the issuance of a new title exclusively in his
erroneous. name. 14 Since the present action was commenced only on September 4,
1958, it is clear that the same is barred by extinctive prescription.
-V-

It was also held by the respondent court that the petitioner was merely
holding the property in trust for the benefit of his co-heirs as administrator,
hence, there was a continuing and subsisting trust, and pursuant to section
38 of the Code of Civil Procedure, the provisions of the said Code on
prescription (Secs. 40-41) do not apply. It is our view, however, that there
was no continuing and subsisting trust.

From March 16, 1940, when the petitioner registered the deed of assignment
and had the Certificate of title in the names of the heirs cancelled and a new
certificate of title issued in his own name, he began to hold the property in
open and clear repudiation of any trust. 15 It will be noted that on the same
date, the petitioner also executed a formal deed of sale over portions of Lot
No. 44 in favor of the Government. In 1948 he mortgaged Lot No. 44-D with
the Philippine National Bank as his exclusive property. The petitioner's
exercise of such rights of dominion is anathema to the concept of a
continuing and subsisting trust. The circumstances, found by the respondent
court, that the name of Mateo Carantes still appeared in the tax declaration
as owner of the land and the name of the petitioner as administrator, that the
real estate taxes, were shared by the other heirs with the petitioner, and that
some of the heirs are living in houses erected by them on the land, wane in
legal significance in the face of the petitioner's aforesaid uncontroverted acts
of strict dominion. In connection with the payment of real estate taxes, it is to
be noted that the respondent court also found that all the receipts were
issued in the name of the petitioner. The circumstances mentioned above do
not make out a case of a continuing and subsisting trust.

ACCORDINGLY, the judgment of the Court of Appeals appealed from is set


aside, and another entered dismissing the complaint in Civil Case No. 804 of
the Court of First Instance of Baguio. No costs.

Makasiar, Muñoz-Palma and Martin, JJ., concur.


[G.R. No. 137887. February 28, 2000] Deogracias Ermitao De Guzman, Zenaida Ermitao De
Guzman, Alicia Ermitao De Guzman and Salvador De
REPUBLIC OF THE PHILIPPINES, petitioner, vs. DAMIAN ERMITAO DE Guzman, all married, of legal age and with residence and
GUZMAN, DEOGRACIAS ERMITAO DE GUZMAN, ZENAIDA ERMITAO postal addresses at Magallanes Street, Carmona, Cavite,
DE GUZMAN, ALICIA ERMITAO DE GUZMAN, SALVADOR ERMITAO DE subject to the claims of oppositors Dominga Ermitao,
GUZMAN, DOMINGA ERMITAON, NATIVIDAD ENCARNACION, MELBA Natividad Encarnacion, Melba E. Torres, Flora Manalo,
E. TORRES, FLORA MANALO, SOCORRO DELA ROSA, JOSE Socorro de la Rosa, Jose Ermitao and Esmeranso Ermitao
ERMITAO, ESMERANDO ERMITAO, TRICOM DEVELOPMENT under an instrument entitled 'Waiver of Rights with
CORPORATION and FILOMENO ERMITAO, respondents. francis Conformity" the terms and conditions of which are hereby
ordered by this Court to be annotated at the back of the
certificates of title to be issued to the petitioners pursuant
DECISION to the judgment of this Court. brnado

YNARES_SANTIAGO, J.: SO ORDERED."[3]

Before us is a Petition for Review on Certiorari of a decision of the Court of As earlier mentioned, on appeal to the Court of Appeals, said judgment was
Appeals[1] affirming the judgment of the Regional Trial Court of Tagaytay, affirmed and the petition for registration of private respondents over the
Branch 18, in LRC Cases No. TG-362 and TG-396.[2] subject parcels of land was approved.

The facts are simple: Hence, the instant Petition, anchored upon the following assignments of
error
Conflicting applications for confirmation of imperfect title were filed by Norma
Almanzor and private respondent Salvador De Guzman over parcels of land I
located in Silang, Cavite. After trial on the merits, the lower court rendered
judgment in favor of private respondent De Guzman, to wit -
THE TRIAL COURT ERRED IN NOT FINDING THAT THE
DE GUZMANS HAVE NOT SUBMITTED PROOF OF
"WHEREFORE, judgment is hereby rendered by this THEIR FEE SIMPLE TITLE OR POSSESSION IN THE
Court as follows: nigel MANNER AND FOR THE LENGTH OF TIME REQUIRED
BY LAW TO JUSTIFY CONFIRMATION OF AN
(1) In LRC Case No. TG-362, this Court hereby denies the IMPERFECT TITLE. novero
application for registration of the parcels of land mentioned
therein by applicant Norma R. Almanzor for lack of factual II
and legal bases;
THE TRIAL COURT ERRED IN NOT DECLARING THAT
(2) In LRC Case No. 396, this Court hereby approves the THE DE GUZMANS HAVE NOT OVERTHROWN THE
petition for registration and thus places under the PRESUMPTION THAT THE LANDS ARE PORTIONS OF
operation of Act 141, Act 946 and/or P.D. 1529, otherwise THE PUBLIC DOMAIN BELONGING TO THE REPUBLIC
known as the Property Registration Law, the land OF THE PHILIPPINES.[4]
described in Plan Psu-67537-Amd-2 and containing an
area of 308,638 square meters, as supported by its
technical descriptions now forming parts of the records of We find merit in the instant Petition.
these cases, in addition to other proofs adduced in the
names of petitioners Damian Ermitao De Guzman,
It is not disputed that the subject parcels of land were released as part of the disposable lands of the public domain, the rules
agricultural land only in 1965[5] while the petition for confirmation of imperfect on confirmation of imperfect title do not apply (Amunategui
title was filed by private respondents only in 1991.[6] Thus the period of vs. Director of Forestry, 126 SCRA 69; Director of Lands
occupancy of the subject parcels of land from 1965 until the time the vs. Court of Appeals, 129 SCRA 689; Director of Lands vs.
application was filed in 1991 was only twenty six (26) years, four (4) years Court of Appeals, 133 SCRA 701; Republic vs. Court of
short of the required thirty (30) year period possession requirement Appeals, 148 SCRA 480; Vallarta vs. Intermediate
under Sec. 14, P.D. 29 and R.A. No. 6940. Appellate Court, 151 SCRA 679).

In finding that private respondents' possession of the subject property 'Thus possession of forest lands, however long, cannot
complied with law, the Court of Appeals reasoned out that - nigel ripen into private ownership (Vamo vs. Government, 41
Phil. 161 [1920]; Adorable vs. Director of Forestry, 17 Phil.
"(W)hile it is true that the land became alienable and 410 [1960]). A parcel of forest land is within the exclusive
disposable only in December, 1965, however, records jurisdiction of the Bureau of Forestry and beyond the
indicate that as early as 1928, Pedro Ermitao, appellees' power and jurisdiction of the cadastral court to register
predecessor-in-interest, was already in possession of the under the Torrens System (Republic vs. Court of Appeals,
property, cultivating it and planting various crops thereon. 89 SCRA 648; Republic vs. Vera, 120 SCRA 210 [1983];
It follows that appellees' possession as of the time of the Director of Lands vs. Court of Appeals, 129 SCRA 689
filing of the petition in 1991 when tacked to Pedro [1984])." (emphasis ours)
Ermitao's possession is 63 years or more than the
required 30 years period of possession. The land, which is So, too, is the Court of Appeals' reliance on the case of Director of Land
agricultural, has been converted to private property ." [7] Management vs. Court of Appeals[9] misplaced. There, while the period of
possession of the applicant's predecessor-in-interest was tacked to his own
We disagree. possession to comply with the required thirty year period possession
requirement, the land involved therein was not forest land but alienable
public land. On the other hand, in the case before us, the property subject of
The Court of Appeals' consideration of the period of possession prior to the private respondents' application was only declared alienable in 1965. Prior to
time the subject land was released as agricultural is in direct contravention such date, the same was forest land incapable of private appropriation. It
of the pronouncement in Almeda vs. Court of Appeals,[8] to wit - was not registrable and possession thereof, no matter how lengthy, could
not convert it into private property, (unless) and until such lands were
"The Court of Appeals correctly ruled that the private reclassified and considered disposable and alienable.[10] alonzo
respondents had not qualified for a grant under Section
48(b) of the Public Land Act because their possession of In summary, therefore, prior to its declaration as alienable land in 1965, any
the land while it was still inalienable forest land, or occupation or possession thereon cannot be considered in the counting of
before it was declared alienable and disposable land the thirty year possession requirement. This is in accord with the ruling
of the public domain on January 13, 1968, could not in Almeda vs. Court of Appeals, (supra), and because the rules on the
ripen into private ownership, and should be excluded confirmation of imperfect titles do not apply unless and until the land
from the computation of the 30-year open and classified as forest land is released in an official proclamation to that effect
continuous possession in concept of owner required so that it may form part of the disposable agricultural lands of the public
under Section 48(b) of Com. Act 141. It accords with our domain.[11]
ruling in Director of Lands vs. Court of Appeals, Ibarra
Bishar, et al., 178 SCRA 708, that: marinella
While we acknowledge the Court of Appeals' finding that private respondents
and their predecessors-in-interest have been in possession of the subject
'Unless and until the land classified as forest is released in land for sixty three (63) years at the time of the application of their petition,
an official proclamation to that effect so that it may form
our hands are tied by the applicable laws and jurisprudence in giving
practical relief to them. The fact remains that from the time the subject land
was declared alienable until the time of their application, private
respondents' occupation thereof was only twenty six (26) years. We cannot
consider their thirty seven (37) years of possession prior to the release of the
land as alienable because absent the fact of declassification prior to the
possession and cultivation in good faith by petitioner, the property occupied
by him remained classified as forest or timberland, which he could not have
acquired by prescription. Further, jurisprudence is replete with cases which
reiterate that forest lands or forest reserves are not capable of private
appropriation and possession thereof, however long, cannot convert them
into private property. Possession of the land by private respondents, whether
spanning decades or centuries, could never ripen into ownership. This Court
is constrained to abide by the latin maxim "(d)ura lex, sed lex".[12] iska

WHEREFORE, the instant Petition is GRANTED and the February 26, 1998
decision of the Court of Appeals in CA-G.R. CV No. 48785 as well as that of
the Regional Trial Court of Cavite, Branch 38, in LRC Case No. TG-396 are
both REVERSED. Judgment is rendered dismissing LRC Case No. 396 for
failure of the applicants therein to comply with the thirty year occupancy and
possessory requirements of law for confirmation of imperfect title. No
pronouncement as to costs.

SO ORDERED.