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G.R. No.

113549 July 5, 1996

REPUBLIC OF THE PHILIPPINES, (Represented by the DIRECTOR OF LANDS), petitioner,


vs.
COURT OF APPEALS and HEIRS OF LUIS RIBAYA, namely, ANDREA RIBAYA
BUENVIAJE, LUIS RIBAYA, ANTONIA RIBAYA-CONDE, and JOHN DOE RIBAYA, all
represented by ANDREA RIBAYA BUENVIAJE as Administratrix of the Estate of Luis
Ribaya, respondents.

DAVIDE, JR., J.:p

Petitioner seeks the reversal of the Resolution 1 of 24 January 1994 of the Court of Appeals in CA-G.R.
CV No. 17351, which set aside its earlier decision 2 of 9 January 1991. The latter affirmed the
decision 3 of 11 November 1987 of the Regional Trial Court (RTC), Branch 7, Legazpi City, in Civil Case
No. 6198 which declared null and void an original certificate of title issued pursuant to a decree and a
decision in a land registration case decided on 18 September 1925.

After the private respondents filed their Comment and the petitioner their Reply, we gave due course to
the petition and required the parties to submit their respective memoranda.

The Court of Appeals' reversal was primarily due to its disagreement with the trial court's findings of fact.
Hence, such removes this case from the general rule that factual findings of the Court of Appeals bind us
in a petition for review under Rule 45 of the Rules of Court. 4 We are thus compelled to review the factual
antecedents.

From the decisions of the trial court and the Court of Appeals and the pleadings of the parties, the
following were established:

On the basis of the private respondents' exhibits, 5 on 9, 10, 12-16, 23, 24, 26, and 27 July 1920, a parcel
of land located in the barrio of Magragondong, Municipality of Ligao, Province of Albay, was survived
for the spouses Luis Ribaya and Agustina Revatoris (hereinafter the spouses Ribaya) by Telesforo
Untalan, a Bureau of Lands surveyor. The parcel of land was found to comprise an area of 25,542,603
square meters. The survey plan was denominated as Plan II-13961 and allegedly approved by the Acting
Director of Lands on 3 January 1922. However, as noted by the Court of Appeals in its 9 January 1991 1
decision, 6 these exhibits do not at all show the surveyor's signature. Moreover, its per Land Classification
Map No. 871 of the Bureau of Forestry, the above parcel of land was considered part of the public forest
and released for disposition only on 31 December 1930. 7

In 1925, the spouses Ribaya applied for registration and confirmation of title of the lot covered by Plan II-
13961 before the then Court of First Instance (CFI) of Albay. The case was docketed as LRC Case No.
52, G.L.R.O. Record No. 26050. Notice of the application and hearing thereof were published in the 17
March 1925 issue of the Official Gazette, 8 and in its decision of 18 September 1925, 9 the CFI granted
the said application.

Sometime later, or on 18-21 November and 23-30 November 1925, a resurvey of the parcel of land
covered by Plan II-13961 was conducted at the instance of the spouses Ribaya. This gave rise to Plan II-
13961-Amd., which embraced, inter alia, four different parcels of land with an aggregate area of only
10,975,022 square meters, instead of the original 25,542,603 square meters. Plan II-13961-Amd. appeared
to have been approved by the Director of Lands on 26 February 1926. 10 The application was not amended
to reflect the resurvey and the amended plan was not published.

On 31 July 1926, the corresponding decree of registration was issued, 11 while on 19 August 1926,
Original Certificate of Title (OCT) No. 3947 covering the four lots embraced by Plan II-13961-Amd. was
issued in the names of the spouses Ribaya. 12

On 11 September 1958, OCT No. 3947 was administratively reconstituted from the owner's duplicate
copy thereof and the reconstituted title was denominated as OCT No. P0-10848 (3947). 13

In 1964, the heirs of Luis Ribaya (herein private respondents) received compensation from the Foreign
Claims Settlement Commission of the United States for damages sustained by the land during the war. 14

In 1968, pursuant to a deed of partition executed by the private respondents herein, the land covered by
OCT No. RO-10848 (3947) was subdivided per Subdivision Plan LRC Psd-96075, approved on 16
December 1968. 15 Then, OCT No. RO-10848 (3947) was cancelled and separate Transfer Certificates of
Title (TCT) were issued to the private respondents. 16

In a letter dated 6 January 1977, sixty-two (62) farmers occupying the land 17 and claiming ownership
thereof, requested the Director of Lands to institute an action to annul OCT No. RO-10848
(3947). 18 Finding merit in the request, herein petitioner filed a verified complaint, dated 17 August 1978,
with the CFI (now Regional Trial Court) of Albay, Branch V, for the declaration of nullity of OCT No.
3947, OCT No. RO-10848 (3947), and all subsequent titles emanating from the original title, viz., TCT
Nos. T-31333 to T-31358, inclusive. The case was docketed as Civil Case No. 6198.

The petitioner claimed therein that OCT No. 3947 was obtained through fraud and that the land
registration court did not acquire jurisdiction over the land for lack of republication of the amended plan,
neither did the spouses-applicants comply with Section 45 (],) of Act No. 2874. 19 The petitioner further
alleged that at the time the petition for registration was filed, the land covered therein was forest land, and
therefore, inalienable.

On 27 October 1979, the aforementioned 62 farmers filed a complaint-in-intervention and prayed that the
land revert to the petitioner and their titles over the portions respectively occupied by them confirmed.

In its decision of 11 November 1987, 20 the Regional Trial Court (RTC) held for the petitioner as follows:

WHEREFORE, decision is hereby rendered as follows:

1. Declaring Original Certificate of Title No. 3947 and administratively reconstituted


Original Certificate of Title No. RO-10848 (3947) as null and void ab initio and without
force and effect;

2. Declaring separate Transfer Certificates of Title, to wit: T-31333, T-31334, T-31335,


T-31336, T-31337, T-31338, T-31339, T-31340, T-31341, T-31342, T-31343, T-31344,
T-31345, T-31346, T-31347, T-31348, T-31349, T-31350, T-31351, T-31352, T-31353,
T-31354, T-31355, T-31356, T-31357 and T-31358, emanating from OCT No. 3947 and
OCT No. RO-10848 (3947), all issued to the heirs of Luis Ribaya and Agustina
Revatoris, as likewise null and void and without force and effect.
3. Ordering [respondents] Heirs of Luis Ribaya and Agustina Revatoris to surrender their
copy of OCT No. RO-10848 (3947) as well as their separate transfer certificates of title to
the Register of Deeds of Albay, who (sic) is thereafter directed or ordered to cancel the
same.

4. Ordering the reversion of the land to [petitioner] Republic of the Philippines, as


alienable and disposable land of the public domain.

5. And ordering the dismissal of the counterclaim.

The trial court found that at the time the spouses Ribaya filed their petition for registration, the land was
already classified as alienable and disposable agricultural land; however, the then CFI, as a land
registration court, did not acquire jurisdiction over the said lot due to lack of publication or republication
in the Official Gazette of Plan II-13961-Amd., which was the basis of the decree of registration and OCT
No. 3947. Consequently, said OCT No. 3947 and its derivative titles were void.21 In so finding, it relied
on Fewkes vs. Vasquez, 22 where it was held that any amendment or alteration in the description of the
land after its publication and decree of registration was not permissible unless coupled with republication.

The trial court likewise ruled that there was no evidence that the possession of the spouses Ribaya and
their predecessors-in-interests was open, continuous, and adverse under a bona fide claim of ownership
for the required number of years; moreover, they failed to present any tax declarations. It then concluded
that the said spouses may have occupied portions of the land at a later time, but not in the concept of bona
fide owners, for mere casual cultivation and raising of cattle on the land did not constitute "possession" as
contemplated by law.23

The private respondents appealed to the Court of Appeals (CA-G.R. CV No. 17351), which, in its
decision24 of 9 January 1991, affirmed in toto the appealed decision of the trial court. The appellate court
further pointed out another reason why the registration in favor of the applicants was invalid, thus:

[W]hen [the] spouses [Luis Ribaya and Agustina Revatoris] applied for registration
thereof in their names said land was still part of the public forest. The land was released
for public disposition only on December 31, 1930 as shown by the Land Classification
Map No. 871 of the Bureau of Forestry (Exhs. K, K-5). Consequently, OCT No. 3947 as
reconstituted by OCT No. RO-10848 is void ab initio.

It is well-settled that lands of the public domain classified as forest or timber lands, are
incapable of registration in the names of private persons and their inclusion in a title
nullifies the title (Director of Lands vs. Reyes, 68 SCRA 177 and cases cited therein.)25

In refuting the claim of the private respondents that publication of the amended survey plan was
unnecessary in light of the decision of this Court in Benin vs. Tuazon,26 the Court of Appeals held
that the facts in Benin were different. In Benin, an approved survey plan was submitted before the
property was decreed for registration, while in the present case:

[T]he land was decreed for registration on September 18, 1925 while its survey was
performed sometime in November and December 1925. The amended survey plan (plan
II-13961-Amd.) thereof was approved by the Director of Lands on February 26, 1926. In
other words, the survey plan (plan II-13961-Amd.) of the land in the instant case was
approved when the land was already decreed for registration. . . .27
There was then, the Court of Appeals concluded, a violation of Sections 23 and 26 of Act No.
496.28

The private respondents seasonably moved for a reconsideration of this decision.

In its resolution 29 of 24 January 1994, the Court of Appeals granted the motion for reconsideration and
set aside its decision of 9 January 1991, reversed that of the trial court of 11 November 1987, and
dismissed the complaint and the complaint-in-intervention in Civil Case No. 6198 of Branch 7 of the RTC
of Legazpi City. In overturning its previous decision, the Court of Appeals ruled that OCT No. 3947 "is
conclusive upon and against all persons, including the Government and all its branches (Sec. 38, Act No.
496) as to all matters contained therein (Sec. 47, Act No. 496). One (1) year after its transcription which
is the date of its effectivity (Sec. 42, Act No. 496), said certificate of title became incontrovertible (Sec.
38, Act No. 496)."30

It further applied the presumption of regularity in the grant of the land applied for by the spouses Ribaya,
and even extended said presumption to their compliance with all conditions required by law, in particular,
their "open, continuous, exclusive and notorious possession and occupation of the land under a bona
fide claim of ownership since July 26, 1894." It thus burdened the Republic "to prove otherwise." 31

It likewise ruled that the failure of the spouses Ribaya to present tax receipts was not fatal, and that
although they actually lived in Gas, Albay, such did not negate the character of their possession for
"[p]ossession in the eyes of the law does not mean that a men has to have his feet on every square meter
of ground before he can be said that he is in possession."32

The Court of Appeals also rejected the application of the Fewkes case and applied, instead, the decision
in Benin, where this Court held that republication could be dispensed with in an amendment in the
application or in the survey plan, where such amendment consisted of the exclusion of a portion covered
by the original application and the original survey plan as published. Accordingly, the land registration
court retained its jurisdiction.

Finally, the Court of Appeals withdrew its earlier finding that the land in question still formed part of the
public forest at the time of the application for registration. It asserted, instead, that there was insufficient
basis to conclude that a parcel of land only became open to disposition on the basis of the date of approval
of the land classification map, because such approval may have been made later by authority of a prior
executive declaration.33

Unsatisfied, the petitioner filed the instant petition and asserts that: (1) the indefeasibility of title does not
lie against the State in an action for reversion of land; (2) the spouses-applicants failed to prove
possession of the land for the period required by law, and the evidence shows that their possession was
not open, continuous, exclusive, and notorious under a bona fide claim of ownership; (3) the amended
survey plan was not published; (4) the land covered by OCT No. 3947 was then part of the forest land,
hence, inalienable; and (5) the accuracy of the land survey was doubtful.34

In their Comment, the private respondents allege that the petition merely raises factual matters and argue
that OCT No. 3947 is absolutely incontestable, considering that the land was no longer part of the public
forest when it was decreed in favor of their parents. They further contend, invoking Benin, that the issue
of republication is inapplicable since the publication of the original survey plan was already had in
compliance with law. Moreover, possession of the land by their parents, the spouses-applicants, was duly
proven, i.e., donations of portions thereof in favor of the government and the compensation they received
from the Foreign Claims Settlement Commission of the United States for damages sustained by the land
during the war sufficiently proved that they were the legitimate owners of the land. Finally, the original
survey plan could no longer be questioned by the petitioner.35

As the Court sees it, only two relevant issues need be resolved, to wit:

1. Whether the Republic of the Philippines is barred by prescription to bring the action
for annulment of OCT No. 3947 and all its derivative certificates of title; and

2. Whether the land registration court acquired jurisdiction over the four parcels of land
subject of the amended survey plan (Plan II-13961-Amd.) and covered by the decree
issued on 31 July 1926 by the General Land Registration Office pursuant to the decision
of the said court of 18 September 1925.

As to the first issue, we find that the Court of Appeals erred in holding that OCT No. 3947 was, to repeat:

[C]onclusive upon and against all persons, including the Government and all its branches
(Sec. 38, Act No. 496) as to all matters contained therein (Sec. 47, Act No. 496). One (1)
year after its transcription which is the date of its effectivity (Sec. 42, Act No. 496), said
certificate of title became incontrovertible (Sec. 38, Act No. 496).36

First, the one-year period provided for in Section 38 of Act No. 496 merely refers to a petition for
review and is reckoned from the entry of the decree. In the second place, there are other remedies
available to an aggrieved party after the said one-year period, e.g., reconveyance, covered by
Section 65 of Act No. 496 which, inter alia, provides that "in all cases of registration procured by
fraud, the owner may pursue all his legal and equitable remedies against the parties to such fraud,
without prejudice, however, to the rights of any innocent holder for value of a certificate of
title."3 7 Likewise, an action for damages is sanctioned in cases where the property has been
transferred to an innocent purchaser for value, which may be filed within four years from
discovery of the fraud.38 Recourse may also be had against the Assurance Fund.39

Finally, prescription never lies against the State for the reversion of property which is part of the public
forest or of a forest reservation which was registered in favor of any party. Then too, public land
registered under the Land Registration Act may be recovered by the State at any time. In Republic
vs. Animas,40 we ruled:

Public land fraudulently included in patents or certificates of title may be recovered or


reverted to the state in accordance with Section 101 of the Public Land Act. Prescription
does not lie against the state in such cases for the Statute of Limitations does not run
against the state. The right of reversion or reconveyance to the state is not barred by
prescription.

We therefore hold that since the land applied for by the spouses Ribaya was part of the public forest and
released only on 31 December 1930,41 the land registration court acquired no jurisdiction over the land,
which was not yet alienable and disposable. Hence, the State's action to annul the certificates of title
issued thereunder and for the reversion of the land is not barred by prescription.

Anent the second issue, we hold that the land registration court in LRC Case No. 52, G.L.R.O. Record
No. 26050 never acquired jurisdiction over the land covered by either the original plan (Plan II-13961) or
the amended plan (Plan II-13961-Amd.) for lack of sufficient publication of the first and total want of
publication of the second.
As found by both the trial court in Civil Case No. 6198 and the Court of Appeals, the notice of the
hearing of application of the spouses Ribaya for the registration of the land covered by the original plan
was published in the 17 March 1925 issue of the Official Gazette. In short, there was only one publication
thereof. Section 31 of Act No. 496, the governing law then, required two publications. Hence, the
decision of 18 September 1925 of the land registration court was void for want of the required
publications. The requirement of dual publication is one of the essential bases of the jurisdiction of the
registration court;42 it is a jurisdictional requisite.43 Land registration is a proceeding in rem and
jurisdiction in rem cannot be acquired unless there be constructive seizure of the land through publication
and service of notice.44

Worse, the decision of 18 September 1925 was entirely based on an alleged original survey plan. The fact
remains, however, that in November of that year that original plan was amended (Plan II-13961-Amd.)
and the amended plan was not published at all. There is no evidence that the court amended its decision to
conform to the amended plan, neither is there a showing that the parties even attempted publication
thereof. However, the decree that was subsequently issued was based on the amended plan insofar as the
four lots were concerned.

A decree of registration is required to recite the description of the land.45 On the basis of the decree, OCT
No. 3947 was issued. It follows then that the land registration court may have attended its decision to
conform to the amended plan for the four lots which ultimately found their way into the decree issued by
the General Land Registration Office, and finally, into OCT No. 3947. Whether it did so or not and the
General Land Registration Office merely adjusted the decree to conform to the amended plan, such aims
were fatally flawed due to the absence of publication of the amended plan. As such, the land registration
court acquired no jurisdiction over the land embraced by the amended plan.

The Court of Appeals in its challenged resolution of 24 January 1994 and the private respondents,
however, maintain that the publication of the amended plan was unnecessary under our pronouncements
in Benin vs. Tuazon.46 This case reiterates our rulings in Philippine Manufacturing
Co. vs. Imperial, 4 7 Juan and Chuongco vs. Ortiz,48 Bank of the Philippine Islands vs. Acuna,49 Lichauco
vs. Herederos de Corpus,50 and Director of Lands vs. Benitez,51 that only where the original survey plan is
amended during the registration proceedings, by the addition of land not previously included in the
original plan, should publication be made in order to confer jurisdiction on the court to order the
registration of the area added after the publication of the original plan. Conversely, if the amendment does
not involve an addition, but on the contrary, a reduction of the original area that was published, no new
publication is required.

Reliance on Benin and its predecessors is misplaced. In the first place, the amendment of the original
survey plan for the land applied for by the spouses Ribaya was made after the land registration court
rendered its decision. It follows then that a re-opening of the case was indispensable; however, no such
re-opening appears to have been done therein. Second, as earlier shown, the land registration court
acquired no jurisdiction over the land covered by the original plan because of insufficient publication in
the Official Gazette. Third, it has not been sufficiently shown that the four parcels of land covered by
OCT No. 3947, which are based on the amended plan, are but a small part of the same land covered by
the original survey plan. This conclusion is thoroughly discussed below.

In the 24 January 1994 resolution of the Court of Appeals, it found the original areas covered by Plan II-
13961 to be 25,542,603 square meters and the four parcels of land embraced in the amended plan, Plan II-
13961-Amd., to be in the aggregate of 10,975,022 square meters. Thus:
In the case at bar, in 1925, the spouses Ribaya sought for a judicial confirmation of
imperfect or incomplete title of the land described as follows:

Parcel of Land (plan II-13961) containing an area of 25,542,603 square


meters, with the buildings and improvements thereon, situated in the
Barrio Magragondong, Municipality of Ligao, Province of Albay, P.I. . .
. (Emphasis supplied).

Said 25,542,603 square meter land was surveyed on July 9, 10, 12-16, 23, 24, 26 and 27,
1920 by Telesforo Untalan, a surveyor of the Bureau of Lands which survey was
approved by the Acting Director of Lands on January 3, 1922. (Exh. 6).

The notice of application and hearing of the land as aforedescribed, was published in the
March 17, 1925 issue of the Official Gazette (Exhs. J and J-1).

The land registration court issued a decision in favor of the spouses Ribaya on September
18, 1925 but for a smaller parcel of land than the 25,542,603 square meters are applied
for. On November 23 and 30, 1925, said smaller parcel of land was surveyed by Land
Surveyor Wenceslao Manuel, and was approved by the Director of Lands on February
26, 1926 as Plan II-13961-Amd. (Exh. H and series).

Plan II-13961-Amd. embraced 4 parcels of land in the aggregate area of 10,975,022


square meters separately described as follows:

1. A parcel of land (Lot No. 1 Plan II-13961-Amd.), containing an area


of 3,318,454 square meters, more or less;

2. A parcel of land (Lot No. 2 Plan II-13961-Amd.), containing an area


of 1,575,195 square meters, more or less;

3. A parcel of land (Lot No. 3 Plan II-13961-Amd.), containing an area


of 4,844,205 square meters, more or less;

4. A parcel of land (Lot No. 4 Plan II-13961-Amd.), containing an area


of 1,237,368 square meters, more or less.52

This was also its finding in its earlier decision of 9 January 1991.53

In their Comment of 30 May 1994, the private respondents do not, for obvious reasons, dispute such
finding and so they not only quoted it therein, 54 they also explicitly assert that:

The undisputed facts are that the original plan of the land applied for which was
published in the Official Gazette contained an area of 25,542,603 square meters. The
land actually embraced in the decree of registration contained only 10,975,022 square
meters. 55 (emphasis supplied).

In hectares, the 25,542,603 square meters means Two Thousand Five Hundred and Fifty Four
Hectares, two ares, and six hundred and three centares (2,554 has., 2 ares, and 603 centares); and
the 10,975,022 square meters means one thousand and ninety seven hectares, five
ares, and twenty-two centares (1,097 has., 5 ares, and 22 centares).

However, the trial court is somewhat confused as to the area of the land covered by Plan II-
13961, as well as that covered by the amended plan (Plan II-13961-Amd.). Thus:

[A]nd on March 7, 1978 Land Investigator Selecio San Felipe wrote the Director of
Lands that the report of the ocular inspection and investigation conducted on May 14, 15
and 16, 1977 was true and correct, . . . that Plan II-13961-Amd., Sheet no. 1, surveyed for
Luis Ribaya, with an area of 489.3649 hectares, located at Magragondong, Ligao, Albay,
was surveyed on November 18-21, December 8-9, 1925 by Private Land Surveyor
Wenceslao Manuel, and was approved by the Director of Lands on February 26, 1926
(Exhibits G, G-1 and G-2 for plaintiff and Exhibits GG, GG-1 and GG-2 for Intervenors);
that Plan II-13961-Amd., Sheet no. 2, surveyed for Luis Ribaya, with an area of 608.1373
hectares, located at Magragondong, Ligao, Albay, was surveyed on November 23-30,
1925 by Private Land Surveyor Wenceslao Manuel, and was approved by the Director of
Lands on February 26, 1926 (Exhibits H, H-1 and H-2 for plaintiff and Exhibits HH, HH-
1 and HH-2 for intervenors); . . . that Original Certificate of Title No. RO-10848 (3947)
covers 4 parcels of land, to wit: Lot No. 1, plan II-13961-Amd.), containing an area
of 3,318.454 square meters more or less, Lot No. 2, plan II-13961-Amd.), containing an
area of 1,575.195 square meters more or less, Lot No. 3, plan II-13961-Amd.), containing
an area of 4,844.005 square meters more or less, and Lot No. 4, plan II-13961-Amd.),
containing an area of 1,237.368 square meters more or less, with a total of 10,975.022
square meters more or less; . . . that plan II-13961 of property as surveyed for Luis
Ribaya, situated in the barrio of Magragondong, Municipality of Ligao, province of
Albay, containing an area of 25,542.603 square meters, was surveyed on July 9, 10, 12-
16, 23, 24, 26 and 27, 1920 in accordance with Section 45 of Act 2874 by Telesforo
Untalan, a surveyor of the Bureau of Lands, and the said plan was approved by the
Acting Director of Lands on January 3, 1922 (Exhibits 6 and 6-A). . . .56 (emphasis
supplied)

Note that instead of a comma (,) before the last three digits in the areas of the four lots covered by
the amended plan, as well as the areas embraced in the original plan, the trial court placed a
period (.). The change from a comma to a period is of vital significance. For, translated into
hectares, the 25,542.603 square meters would be only Two (2) hectares, five (5) ares, and five
hundred and forty-two (542) centares; and the aggregate of 10,975.022 square meters for the four
lots embraced in Plan II-13961-Amd. would be one (1) hectare and nine hundred seventy-five
(975) centares.

Indeed, the disagreement between the Court of Appeals and the trial court as to the land area of the
original survey plan (Plan II-13961), i.e., whether it was 25,542,603 square meters, (twenty-five million,
five hundred and forty-two thousand and six hundred three square meters) as found by the former,
or 25,542.603 square meters (twenty-five thousand, five hundred forty-two point six hundred and three
square meters) as found by the latter, only shows the unreliability of the original plan sought to be
established through Exhibits "6" and "6-A." The Court of Appeals itself so found it to be in its decision of
9 January 1991 because these exhibits did not show that the survey plan was signed by the surveyor.
Thus:

Although the trial court said so (decision, p. 4) its basis, which is (original) plan II-13961
(Exhs. 6, 6-A), did not indubitably establish the same. In the first place, said original plan
(plan II-13961) does not bear the signature of the surveyor thereof, thereof casting doubt
on its genuiness and due execution. . . .57 (emphasis supplied).

Such doubt gains strength if we consider that if indeed the area embraced therein was that found
by the Court of Appeals, i.e., 25,542,603 square meters - with a comma before the last three digits
- it would have been physically impossible to finish the survey thereof in only eleven days (9, 10,
12-16, 23, 24, 26, and 27 July 1920). Plainly, the present-day sophisticated survey instruments
were not then available. Furthermore, the trial court indicated in its findings of fact that in
addition to the four lots covered by OCT No. 3947, there were other large tracts covered by the
amended survey plan (Plan II-13961-Amd.), viz.:

[T]hat Plan II-13961-Amd., Sheet no. 1, surveyed for Luis Ribaya, with an area
of 489.3649 hectares, located at Magragondong, Ligao, Albay, . . . (Exhibits G, G-1 and
G-2 for plaintiff and Exhibits GG, GG-1 and GG-2 for Intervenors); that Plan II-13961
Amd., Sheet no. 2, surveyed for Luis Ribaya, with an area of 608.1373 hectares, located
at Magragondong, Ligao, Albay, . . . (Exhibits H, H-1 and H-2 for plaintiff and Exhibits
HH, HH-1 and HH-2 for intervenors);58 (emphasis supplied)

The disagreement between the trial court and the Court of Appeals cannot be definitely resolved because
no reliable copy of the original Plan II-13961 was presented. Exhibits "6" and "6-A" are a machine copy
of the blueprint of the said Plan, which is not the best evidence under Section 3, Rule 130 of the Rules of
Court. They are, at most, secondary evidence, which are inadmissible for failure of the offeror to prove
any of the exceptions provided therein and to establish the conditions for their admissibility. Even if they
are admitted, they have no probative value.

Clearly then, there is absence of factual basis to conclude that the four parcels of land included in OCT
No. 3947 are but a part of the land covered by the original plan (Plan II-13961).

WHEREFORE, the petition is GRANTED. The challenged resolution of 24 January 1994 of the
respondent Court of Appeals in CA-G.R. CV No. 17351 is SET ASIDE, while its decision therein of 9
January 1991 affirming in toto that of Branch 7 of the Regional Trial Court of Legaspi City of 11
November 1987 in Civil Case No. 6198 is REINSTATED and AFFIRMED.

Costs against the private respondents.

SO ORDERED
G.R. No. 173289 February 17, 2010

ELAND PHILIPPINES, INC., Petitioner,


vs.
AZUCENA GARCIA, ELINO FAJARDO, AND HEIR OF TIBURCIO MALABANAN NAMED
TERESA MALABANAN, Respondents.

DECISION

PERALTA, J.:

This is a Petition for Review on Certiorari under Rule 45 of the Rules of Court, seeking to reverse and set
aside the decision1 dated February 28, 2006 of the Court of Appeals (CA) in CA-G.R. CV No. 67417,
which dismissed the appeal of petitioner Eland Philippines, Inc. and affirmed the Resolutions dated
November 3, 1999 and June 28, 2006 of Branch 18, Regional Trial Court (RTC) of Tagaytay City.

The facts of the case, as shown in the records, are the following:

Respondents Azucena Garcia, Elino Fajardo, and Teresa Malabanan, the heir of Tiburcio Malabanan,
filed a Complaint2 dated March 2, 1998 for Quieting of Title with Writ of Preliminary Injunction with the
RTC, Branch XVIII, Tagaytay City against petitioner Eland Philippines, Inc. Respondents claimed that
they are the owners, in fee simple title, of a parcel of land identified as Lot 9250 Cad-355, Tagaytay
Cadastre, Plan Ap-04-008367, situated in Barangay Iruhin, Tagaytay City, containing an area of Two
Hundred Forty-Four Thousand One Hundred Twelve (244,112) square meters, by occupation and
possession under the provisions of Sec. 48 (b)3 of the Public Land Law or Commonwealth Act No. 141,
as amended.

For having been in continuous, public, and adverse possession as owners of the said lot for at least thirty
years, respondents stated that they were not aware of any person or entity who had a legal or equitable
interest or claim on the same lot until the time they were requesting that the lot be declared for tax
purposes. They found out that the lot was the subject of a land registration proceeding that had already
been decided by the same court4 where their complaint was filed. They also found out that Decree No. N-
217313, LRC Record No. N-62686, was already issued on August 20, 1997 to the petitioner pursuant to
the Decision dated June 7, 1994 of the same court. They averred that they were not notified of the said
land registration case; thus, they claimed the presence of misrepresentation amounting to actual or
extrinsic fraud. Thus, they argued that they were also entitled to a writ of preliminary injunction in order
to restrain or enjoin petitioner, its privies, agents, representatives, and all other persons acting on its
behalf, to refrain from committing acts of dispossession on the subject lot.

Summons, together with a copy of the complaint, were served on the petitioner on April 7, 1998. On
April 29, 1998, petitioner filed an Entry of Appearance with Motion for Extension of Time,5 which the
trial court granted6 for a period of ten (10) days within which to file a responsive pleading. Petitioner filed
a Second Motion for Extension of Time to File Answer7 dated April 29, 1998, which the trial court
likewise granted.8

Thereafter, petitioner filed a Motion to Dismiss9 dated May 9, 1998, stating that the pleading asserting the
claim of respondents stated no cause of action, and that the latter were not entitled to the issuance of a
writ of preliminary injunction, setting the same for hearing on May 21, 1998. On the date of the hearing,
the trial court issued an Order,10 which granted the respondents ten (10) days from that day to file a
comment, and set the date of the hearing on July 23, 1998. Respondents filed a Motion to Admit
Comment/Opposition to Defendant Eland,11 together with the corresponding Comment/Opposition12 dated
June 8, 1998.

On the scheduled hearing of September 23, 1998, the trial court issued an Order,13 considering the Motion
to Dismiss submitted for resolution due to the non-appearance of the parties and their respective counsels.
The said motion was eventually denied by the trial court in an Order14 dated September 25, 1998, ruling
that the allegations in the complaint established a cause of action and enjoined petitioner Eland to file its
answer to the complaint within ten (10) days from receipt of the same. Petitioner then filed two Motions
for Extension to File an Answer.15

Petitioner, on November 9, 1998, filed a Motion for Reconsideration16 of the trial court's Order dated
September 25, 1998, denying the former's Motion to Dismiss. Again, petitioner filed a Motion for Final
Extension of Time to File Answer17 dated November 6, 1998. Respondents filed their
Comment/Opposition to Motion for Reconsideration dated November 24, 1998. Subsequently, the trial
court denied petitioner's motion for reconsideration in an Order18dated January 11, 1999.

Meanwhile, respondents filed a Motion to Declare Defendant Eland in Default19 dated November 17,
1998. On December 4, 1998 Petitioner Eland filed its Comment (on Plaintiff's Motion to Declare
Defendant Eland in Default)20dated December 2, 1998, while respondents filed a Reply to Comment (on
Plaintiff's Motion to Declare Defendant Eland in Default)21 dated December 29, 1998. Thereafter, the trial
court issued an Order22 dated January 11, 1999 declaring the petitioner in default and allowed the
respondents to present evidence ex parte. Petitioner filed a Motion for Reconsideration (of the Order
dated 11 January 1999)23 dated February 5, 1999 on the trial court's denial of its motion to dismiss and in
declaring it in default. The trial court in an Order24 dated March 18, 1999, denied the former and granted
the latter. In the same Order, the trial court admitted petitioner's Answer Ad Cautelam.

Earlier, petitioner filed its Answer Ad Cautelam (With Compulsory Counterclaim)25 dated November 12,
1998. Respondents countered by filing a Motion to Expunge Eland's Answer from the Records26 dated
December 2, 1998. Petitioner filed its Opposition (to Plaintiff's Motion to Expunge Eland's Answer from
the Records)27 dated December 21, 1998, as well as a Comment (on Plaintiff's Motion to Expunge Eland's
Answer from the Records)28 dated January 26, 1999.

Consequently, respondents filed a Motion to Set Presentation of Evidence Ex Parte29 dated January 18,
1999, which was granted in an Order30 dated January 22, 1999.

On January 28, 1999, respondents presented their evidence before the Clerk of Court of the trial court
which ended on February 3, 1999; and, on February 10, 1999, respondents filed their Formal Offer of
Evidence.31 However, petitioner filed an Urgent Motion to Suspend Plaintiff's Ex Parte Presentation of
Evidence32 dated February 8, 1999. In that regard, the trial court issued an Order33 dated February 11,
1999 directing the Clerk of Court to suspend the proceedings.

On May 14, 1999, respondents filed a Motion for Clarification34 as to whether or not the evidence
presented ex parte was nullified by the admission of petitioner's Answer Ad Cautelam. Petitioner filed its
Comment35 dated May 13, 1999 on the said motion for clarification.

A pre-trial conference was scheduled on May 27, 1999, wherein the parties submitted their pre-trial
briefs.36However, petitioner filed a Motion to Suspend Proceedings37 dated May 24, 1999 on the ground
that the same petitioner had filed a petition for certiorari with the CA, asking for the nullification of the
Order dated March 18, 1999 of the trial court and for the affirmation of its earlier Order denying
petitioner's Motion to Dismiss. The petition for certiorari was subsequently denied; and a copy of the
Resolution38 dated June 14, 1999 was received by the trial court. Hence, in an Order39 dated July 7, 1999,
the trial court ruled that the reception of evidence already presented by the respondents before the Clerk
of Court remained as part of the records of the case, and that the petitioner had the right to cross-examine
the witness and to comment on the documentary exhibits already presented. Consequently, petitioner filed
a Motion for Reconsideration40 dated July 19, 1999, but it was denied by the trial court in an Omnibus
Order41 dated September 14, 1999.

Eventually, respondents filed a Motion for Summary Judgment42 dated August 5, 1999, while petitioner
filed its Opposition43 to the Motion dated August 31, 1999. In its Resolution44 dated November 3, 1999,
the trial court found favor on the respondents. The dispositive portion of the Resolution reads:

WHEREFORE, premises considered, the motion for summary judgment is hereby GRANTED and it is
hereby adjudged that:

1. Plaintiffs are the absolute owners and rightful possessors of Lot 9250, CAD-355, Tagaytay
Cadastre, subject to the rights of occupancy of the farm workers on the one-third area thereof;

2. The Judgment dated June 7, 1994 in Land Registration Case No. TG-423 is set aside and the
Decree No. N-217313, LRC Record No. N-62686 dated August 20, 1997 is null and void;

3. The Original Transfer Certificate of Title is ordered to be canceled, as well as tax declaration
covering Lot 9250, Cad-355.

SO ORDERED.

Petitioner appealed the Resolution of the trial court with the CA, which dismissed it in a Decision dated
February 28, 2006, which reads:

WHEREFORE, for lack of merit, the appeal is DISMISSED. The assailed Resolution dated November 3,
1999, of the RTC, Branch 18, Tagaytay City, in Civil Case No. TG-1784, is AFFIRMED. No
pronouncement as to cost.

SO ORDERED.

Hence, the present petition.

The grounds relied upon by the petitioner are the following:

5.1 THE COURT OF APPEALS ACTED IN A MANNER NOT IN ACCORD WITH LAW
AND WITH THE APPLICABLE DECISIONS OF THIS HONORABLE COURT WHEN IT
RULED THAT RESPONDENTS' MOTION FOR SUMMARY JUDGMENT DATED AUGUST
05, 1999 DID NOT VIOLATE THE TEN (10)-DAY NOTICE RULE UNDER SECTION 3,
RULE 35 OF THE 1997 RULES OF CIVIL PROCEDURE.

5.2 THE COURT OF APPEALS ACTED IN A MANNER NOT IN ACCORD WITH LAW
AND WITH THE APPLICABLE DECISIONS OF THIS HONORABLE COURT WHEN IT
RULED THAT A MOTION FOR SUMMARY JUDGMENT IS PROPER IN AN ACTION FOR
QUIETING OF TITLE.
5.3 THE COURT OF APPEALS ACTED IN A MANNER NOT IN ACCORD WITH LAW
AND WITH THE APPLICABLE DECISIONS OF THIS HONORABLE COURT WHEN IT
RULED THAT THERE ARE NO GENUINE FACTUAL AND TRIABLE ISSUES IN CIVIL
CASE NO. TG-1784.

5.4 THE COURT OF APPEALS ACTED IN A MANNER NOT IN ACCORD WITH LAW
AND WITH THE APPLICABLE DECISIONS OF THIS HONORABLE COURT WHEN IT
UPHELD THE RESOLUTION DATED NOVEMBER 03, 1999 OF THE COURT A QUO,
BASED ON TESTIMONIES OF RESPONDENTS' WITNESSES TAKEN WITHOUT
GRANTING HEREIN PETITIONER THE RIGHT TO CROSS-EXAMINE AND UPON
DOCUMENTARY EXHIBITS PRESENTED BUT NOT ADMITTED AS EVIDENCE.

5.5 THE COURT OF APPEALS ACTED IN A MANNER NOT IN ACCORD WITH LAW
AND WITH THE APPLICABLE DECISIONS OF THIS HONORABLE COURT WHEN IT
UPHELD THE RESOLUTION DATED NOVEMBER 03, 1999 OF THE COURT A QUO
BASED ON FALSIFIED "EVIDENCE."

5.6 THE COURT OF APPEALS ACTED IN A MANNER NOT IN ACCORD WITH LAW
AND WITH THE APPLICABLE DECISIONS OF THIS HONORABLE COURT WHEN IT
FAILED TO RULE THAT THE COURT A QUO PATENTLY DEPRIVED PETITIONER OF
ITS RIGHT TO DUE PROCESS IN RENDERING ITS SUMMARY JUDGMENT.

5.7 THE COURT OF APPEALS ACTED IN A MANNER NOT IN ACCORD WITH LAW
AND WITH THE APPLICABLE DECISIONS OF THIS HONORABLE COURT WHEN IT
HELD THAT THE COURT A QUO HAS JURISDICTION TO CANCEL PETITIONER'S
ORIGINAL CERTIFICATE OF TITLE (OCT) NO. 0-660 IN AN ACTION TO QUIET TITLE.

According to the petitioner, a motion for summary judgment must be served at least ten (10) days before
the date set for hearing thereof, and that a hearing must be held to hear the parties on the propriety of a
summary judgment, per Sec. 3 of Rule 35 of the Revised Rules of Court, which was not observed because
the petitioner received a copy of the respondents' motion for summary judgment only on August 20, 1999,
or the very same day that the motion was set for hearing. Petitioner further claims that the trial court never
conducted any hearing on the motion for summary judgment.

Petitioner also argued that a summary judgment is only available to a claimant seeking to recover upon a
claim, counterclaim or cross-claim or to obtain a declaratory relief, and does not include cases for
quieting of title. Furthermore, petitioner also averred that a summary judgment has no place in a case
where genuine factual and triable issues exist, like in the present case. It added that the genuine and
triable issues were all raised in its Answer Ad Cautelam.

Another ground relied upon by petitioner is its failure to cross-examine the witnesses for the respondents
without fault on its part. It also stated that the trial court did not issue any order admitting in evidence the
documentary exhibits presented by the respondents. Hence, according to the petitioner, the trial court
gravely erred in relying upon the testimonies of the witnesses for the respondents, without having the
latter cross-examined; and upon the documentary exhibits presented but not admitted as evidence.

Petitioner further claimed that the trial court based its Resolution dated November 3, 1999 on falsified
evidence.
Lastly, petitioner raised the issue that by rendering summary judgment, the trial court deprived the former
of its right to due process.

Respondents, in their Comment45 dated October 16, 2006, countered the first issue raised by the
petitioner, stating that their filing of the motion for summary judgment fourteen (14) days before the
requested hearing of the same motion was in compliance with Sec. 3, Rule 35 of the Rules of Court.

As to the second and third issues, respondents argued that petitioner had a constricted perception of the
coverage of the Rules of Summary Judgment, and that the latter's citation of cases decided by this Court
showed the diverse causes of action that could be the subject matters of summary judgment. Respondents
also posited that petitioner's statements in its Answer Ad Cautelam, although denominated as Specific
Denial, were really general denials that did not comply with the provisions of Section 10, Rule 8 of the
Rules of Court.

Anent the fourth and fifth issues, respondents claimed that despite the opportunity, or the right allowed in
the Order dated July 17, 1999 of the trial court, for the petitioner to cross-examine respondents' witnesses
and to comment on the documentary evidence presented ex parte after the default order against the same
petitioner, the latter evasively moved to set aside respondents' evidence in order to suspend further
proceedings that were intended to abort the pre-trial conference. They added that petitioner neglected to
avail itself of, or to comply with, the prescription of the rules found in Rule 35 of the Rules of Court by
opting not to avail itself of the hearing of its opposition to the summary judgment after receiving the
Order dated August 20, 1999; by failing to serve opposing affidavit, deposition or admission in the
records; and by not objecting to the decretal portion of the said Order dated August 20, 1999, which stated
that the motion for summary judgment has been submitted for resolution without further argument. With
regard to the contention of the petitioner that the trial court wrongly appreciated falsified evidence,
respondents asserted that petitioner's counsel failed to study carefully the records of the proceedings for
the presentation of the evidence ex parte to be able to know that it was not only a single-day proceeding,
and that more than one witness had been presented. They further averred that the trial court did not only
rely on the photographs of the houses of the occupants of the property in question.

Finally, as to the sixth and seventh issues, respondents asseverated that their complaint alleged joint
causes of action for quieting of title under Art. 476 of the New Civil Code and for the review of the
decree of registration pursuant to Sec. 32 of the Property Registration Decree or P.D. No. 1529, because
they are complimentary with each other.

The petition is impressed with merit.

The basic contention that must be resolved by this Court is the propriety of the summary judgment in this
particular case of quieting of title.

Rule 35 of the 1997 Rules of Civil Procedure provides:

SEC. 1. Summary judgment for claimant. - A party seeking to recover upon a claim, counterclaim, or
cross-claim or to obtain a declaratory relief may, at any time after the pleading in answer thereto has been
served, move with supporting affidavits for a summary judgment in his favor upon all or any part thereof

SEC. 3. Motion and proceedings thereon. - The motion shall be served at least ten (10) days before the
time specified for the hearing. The adverse party prior to the day of hearing may serve opposing
affidavits. After the hearing, the judgment sought shall be rendered forthwith if the pleading, depositions,
and admissions on file together with the affidavits, show that, except as to the amount of damages, there
is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter
of law.46

In the present case, it was the respondents who moved for a summary judgment.

Petitioner contended that the ten-day notice rule was violated, because the copy of the motion for
summary judgment was served only on August 20, 1999 or on the same day it was set for hearing. It also
added that even if the petitioner received a copy of the motion only on August 20, 1999, there was no
hearing conducted on that date because the trial court issued an order giving petitioner 10 days within
which to file its comment or opposition.

The above specific contention, however, is misguided. The CA was correct in its observation that there
was substantial compliance with due process. The CA ruled, as the records show, that the ten-day notice
rule was substantially complied with because when the respondents filed the motion for summary
judgment on August 9, 1999, they furnished petitioner with a copy thereof on the same day as shown in
the registry receipt and that the motion was set for hearing on August 20, 1999, or 10 days from the date
of the filing thereof.

Due process, a constitutional precept, does not, therefore, always and in all situations a trial-type
proceeding. The essence of due process is found in the reasonable opportunity to be heard and submit
one's evidence in support of his defense. What the law prohibits is not merely the absence of previous
notice, but the absence thereof and the lack of opportunity to be heard.47

Petitioner further argues that summary judgment is not proper in an action for quieting of title. This
particular argument, however, is misplaced. This Court has already ruled that any action can be the
subject of a summary judgment with the sole exception of actions for annulment of marriage or
declaration of its nullity or for legal separation.48

Proceeding to the main issue, this Court finds that the grant of summary judgment was not proper. A
summary judgment is permitted only if there is no genuine issue as to any material fact and a moving
party is entitled to a judgment as a matter of law. A summary judgment is proper if, while the pleadings
on their face appear to raise issues, the affidavits, depositions, and admissions presented by the moving
party show that such issues are not genuine.49

It must be remembered that the non-existence of a genuine issue is the determining factor in granting a
motion for summary judgment, and the movant has the burden of proving such nonexistence. The trial
court found no genuine issue as to any material fact that would necessitate conducting a full-blown trial.
However, a careful study of the case shows otherwise.

In their motion for summary judgment, the respondents failed to clearly demonstrate the absence of any
genuine issue of fact. They merely reiterated their averments in the complaint for quieting of title and
opposed some issues raised by the petitioner in its Answer Ad Cautelam, to wit:

Nonetheless, going by the records of the admitted and uncontroverted facts and facts established there is
no more litigious or genuine issue of basic fact to be the subject of further trial on the merits.

The first defense as to the identity of the subject property, the issue has already become nil because of not
only the lack of seriousness in the allegations but also because the identity of the subject parcel of land
Lot 9250 was proven by the approved plan Ap-04-008367 that was already presented and offered in
evidence as Exhibit "B" for the plaintiffs.
The second defense that plaintiffs' claim of the property is barred by prior judgment rule is unavailing
considering that the vital documentary evidence they presented in Land Registration Case No. TG-423
before this Honorable Court the markings and descriptions of such documents are stated in the Judgment
quoted as follows:

(1) Tax Declaration No. 015224-A (Exhibit "Q"; x x x.

(2) Tax Declaration No. 05019-B (Exhibit "R"; x x x.

(3) Tax Declaration No. 01926-B (Exhibit "S"; x x x.

(4) Tax Declaration No. GR-007-0007 (Exhibit "T" x x x.

are the very documentary evidence adopted and relied upon by the plaintiffs in seeking the review and
nullity of the Decree No. 217313 issued on August 20, 1997 under LRC Record No. N-62686 pursuant to
the Judgment dated June 7, 1994 rendered by this Honorable Court penned by the acting presiding Judge
Eleuterio F. Guerrero in said Land Registration Case No. TG-423.

On the other hand, as to the gravamen of the claims in the complaint, the plaintiffs have presented clear
and convincing evidence as the well-nigh or almost incontrovertible evidence of a registerable title to the
subject land in the proceedings conducted on the reception of evidence ex-parte for the plaintiffs
establishing in detail the specifications of continuous, open, exclusive possession as aspects of acquisitive
prescription as confirmed in the affidavit herein attached as Annex "A";

In ruling that there was indeed no genuine issue involved, the trial court merely stated that:

This Court, going by the records, observed keenly that plaintiffs’ cause of action for quieting of title on
the disputed parcel of land is based on the alleged fraud in the substitution of their landholdings of Lot
9250, Cad 355, Tagaytay Cadastre containing only an area of 244,112 square meters with Lot 9121, Cad
335, Tagaytay Cadastre, containing only an area of 19,356 square meters. While defendant Eland in its
answer practically and mainly interposed the defenses of: (a) the parcel of land being claimed by the
plaintiffs is not the parcel of land subject matter of Land Registration Case No. TG-423; (b) the claim of
the plaintiffs is barred by prior judgment of this Court in said Land Registration Case; and (c) plaintiffs'
complaint is barred by the Statute of Limitation since Original Certificate of Title No. 0-660 has become
incontrovertible.

Cross-reference of the above-cited Land Registration Case No. TG-423 that was decided previously by
this Court with the case at bench was imperatively made by this Court. Being minded that the Court has
and can take judicial notice of the said land registration case, this Court observed that there is no genuine
issue of fact to be tried on the merits. Firstly, because the supposed identity crisis of the controverted
parcel of land covered by the Land Registration Case No. TG-423 with the subject parcel of land is
established by Plan Ap-04-006275 (Exhibit "N") LRC Case No. 423 and by Plan A04 008367 (Exhibit
"B" of the plaintiffs) and the Technical Description of Lot 9250, Cad 355 (Exhibit "B-1" of the plaintiffs).
Secondly, the prior judgment rule cannot be availed of by defendant Eland since not only intrinsic fraud
but extrinsic fraud were alleged in and established by the records. (Heirs of Manuel Roxas v. Court of
Appeals, G. R. No. 1184436, pro. March 21, 1997). Thirdly, it is incontrovertible that the complaint in
this case seeking to review the judgment and annul the decree was filed on March 5, 1998 or within one
(1) year from August 20, 1997 or the date of issuance of Decree No. 217313, LRC Record No. N-62686,
hence, the Original Certificate of Title No. 0-660 issued to defendant Eland has not attained
incontrovertibility. (Heirs of Manuel Roxas v. Court of Appeals, G.R. No. 118436, prom. March 21,
1997).

Notwithstanding, the issue of possession is a question of fact by the interaction of the basic pleadings,
the observation of this Court is that the plaintiffs were able to prove by the well-nigh incontrovertible
evidence, the aspects of possession in accordance with Section 48 (b) of Commonwealth Act 141, as
amended, as hereinafter illustrated.

The CA, in affirming the above Resolution of the trial court, propounded thus:

The contention of defendant-appellant is untenable. Summary judgment is not only limited to solving
actions involving money claims. Under Rule 35 of the 1997 Rules of Court, except as to the amount of
damages, when there is no genuine issue as to any material fact and the moving party is entitled to a
judgment as a matter of law, summary judgment may be allowed. The term "genuine issue" has been
defined as an issue of fact which calls for the presentation of evidence as distinguished from an issue
which is sham, fictitious, contrived, set up in bad faith and patently unsubstantial so as not to constitute a
genuine issue for trial.

Thus, under the aforecited rule, summary judgment is appropriate when there are no genuine issues of
fact, which call for the presentation of evidence in a full-blown trial. Thus, even if on their face the
pleadings appear to raise issues, but when the affidavits, depositions and admissions show that such issues
are not genuine, then summary judgment as prescribed by the rules must ensue as a matter of law.

It should be stressed that the court a quo which rendered the assailed resolution in Civil Case No. TG-
1784 was the very court that decided the LRC Case No. TG-423. Such being the case, the court a quo was
privy to all relevant facts and rulings pertaining to LRC Case No. TG-423 which it considered and applied
to this case. Thus, where all the facts are within the judicial knowledge of the court, summary judgment
may be granted as a matter of right.

On the contrary, in petitioner's Answer Ad Cautelam, genuine, factual and triable issues were raised, aside
from specifically denying all the allegations in the complaint, thus:

2. SPECIFIC DENIALS

2.1 Answering defendant specifically denies the allegations contained in paragraphs 1 and 3 of
the Complaint insofar as it alleges the personal circumstances of the plaintiff and one A. F.
Development Corporation for lack of knowledge or information sufficient to form a belief as to
the truth thereof.

2.2 Answering defendant specifically denies the allegations contained in paragraphs 4, 5, 6 and 7
of the Complaint for lack of knowledge or information sufficient to form a belief as to the truth of
said allegations. And if the property referred to in said paragraphs is that parcel of land which was
the subject matter of Land Registration Case No. TG-423 which was previously decided by this
Honorable Court with finality, said allegations are likewise specifically denied for the obvious
reason that the said property had already been adjudged with finality by no less than this
Honorable Court as absolutely owned by herein answering defendant as will be further discussed
hereunder.

2.3 Answering defendant specifically denies the allegations contained in paragraph 8 of the
Complaint insofar as it alleged that "(u)pon exercise of further circumspection, counsel for the
plaintiffs once followed-up in writing the 1994 request of the plaintiffs to have the subject parcel
of land be declared for taxation purposes" and insofar as it is made to appear that parcel of land
being claimed by the plaintiffs is the same parcel of land subject matter of Land Registration Case
No. TG-423 for lack of knowledge or information sufficient to form a belief as to the truth thereof
and for the reason that the names of the herein plaintiffs were never mentioned during the entire
proceedings in said land registration case and by reason of the Affirmative Allegations contained
hereunder.

2.4 Answering defendant specifically denies the allegations contained in paragraphs 9, 10, 10 (a),
10 (b), 10 (c), 10 (d), 10 (e), 10 (f), 10 (g), 10 (h), and 11 for the reason that there is no showing
that the parcel of land being claimed by the plaintiff is the same parcel of land which was the
subject matter of Land Registration Case No. TG- 423, and in the remote possibility that the
parcel of land being claimed by the plaintiffs is the same as that parcel of land subject of Land
Registration Case No. TG-423, the allegations contained in said paragraphs are still specifically
denied for the reason that no less than the Honorable Court had decided with finality that the
parcel of land is absolutely owned by herein defendant to the exclusion of all other persons as
attested to by the subsequent issuance of an Original Certificate of Title in favor of answering
defendant and for reasons stated in the Affirmative Allegations.

2.5 Answering defendant specifically denies the allegations contained in paragraph 12 of the
Complaint for the obvious reason that it was the plaintiffs who appear to have been sleeping on
their rights considering that up to the present they still do not have any certificate of title covering
the parcel of land they are claiming in the instant case, while on the part of herein defendant, no
less than the Honorable Court had adjudged with finality that the parcel of land subject matter of
Land Registration Case No. TG-423 is absolutely owned by herein defendant.

2.6 Answering defendant specifically denies the allegations contained in paragraph 13 of the
complaint for the reason that defendant has never ladgrabbed any parcel of land belonging to
others, much less from the plaintiffs, and further, answering defendant specifically denies the
allegations therein that plaintiffs engaged the services of a lawyer for a fee for lack of knowledge
r information sufficient to form a belief as to the truth thereof.

2.7 Answering defendant specifically denies the allegations contained in paragraphs 14, 15, 16,
17 and 18 of the Complaint for lack of knowledge or information sufficient to form a belief as the
truth thereof.

2.8 Answering defendant specifically denies the allegations contained in paragraphs IV (a) to IV
(c) for the reason that, as above-stated, if the parcel of land being claimed by the plaintiffs is the
same as that parcel of land subject matter of Land Registration Case No. TG-423, this Honorable
Court had already decided with finality that said parcel of land is absolutely owned by herein
answering defendant and additionally, for those reasons stated in defendant's Motion to Dismiss.

2.9 Answering defendant specifically denies the allegations contained in paragraph IV (d) of the
Complaint for lack of knowledge or information sufficient to form a belief as to the truth thereof.

Special and affirmative defenses were also raised in the same Answer Ad Cautelam, to wit:

xxxx
4.1 The pleading asserting the claim of the plaintiff states no cause of action as asserted in the
Motion To Dismiss filed by herein answering defendant and for the reason that there is no
evidence whatsoever showing or attesting to the fact that the parcel of land being claimed by the
plaintiffs in the Complaint is the same parcel of land which was the subject matter of Land
Registration Case No. TG-423.

4.2 The complaint was barred by the prior judgment rendered by this Honorable in Land
Registration Case No. TG-423.

4.3 The complaint is barred by the Statute of Limitation in that OCT No. 0-660 had become
incontrovertible by virtue of the Torrens System of Registration; and to allow plaintiffs to
question the validity of answering defendant's title through the instant complaint would be a
collateral of OCT No. 0-660 which is not permissible under the law.

4.4 Plaintiffs are barred by their own acts and/or omission from filing the present complaint under
the principles of estoppel and laches.

4.5 Plaintiffs does not to the Court with clean hands as they appear to be well aware of the
proceedings in said Land Registration Case No. TG- 423 and inspite of such knowledge, plaintiffs
never bothered to present their alleged claims in the proceedings.

4.6 Answering defendant has always acted with justice, given everyone his due, and observed
honesty and good faith in his dealings.

Clearly, the facts pleaded by the respondents in their motion for summary judgment have been duly
disputed and contested by petitioner, raising genuine issues that must be resolved only after a full-blown
trial. When the facts as pleaded by the parties are disputed or contested, proceedings for summary
judgment cannot take the place of trial.50 In the present case, the petitioner was able to point out the
genuine issues. A "genuine issue" is an issue of fact that requires the presentation of evidence as
distinguished from a sham, fictitious, contrived or false claim.51

It is of utmost importance to remember that petitioner is already the registered owner (Original Certificate
of Title [OCT] No. 0-660 issued by the Register of Deeds) of the parcel of land in question, pursuant to a
decree of registration (Decree No. N-217313, LRC Record No. 62686) based on the ruling of the same
court that granted the summary judgment for the quieting of title.

Incidentally, the findings of the trial court contained in the disputed summary judgment were obtained
through judicial notice of the facts and rulings pertaining to that earlier case (LRC Case No. TG-423)
wherein the same trial court ruled in favor of the petitioner. It is, therefore, disorienting that the same trial
court reversed its earlier ruling, which categorically stated that:

x x x There is overwhelming evidence or proof on record that the vendors listed in Exhibit "HH," with
submarkings, are the previous owners of the parcel of land mentioned in the same deed of sale and aside
form the tax declarations covering the same property (Exhibits "Q" to "T," inclusive), the uncontroverted
testimony of Atty. Ruben Roxas establishes beyond any shadow of doubt that applicant's (referring to
herein defendant-appellant) sellers/predecessors-in-interest are the grandchildren, great grandchildren and
great great grandchildren of the spouses Lucio Petate and Maria Pobleta Petate, the former owners of the
same property, whose ownership is further bolstered by tax receipts showing payments of realty taxes
(Exhibits "U" to "GG," inclusive, with submarkings).
xxx

On the basis of the foregoing facts and circumstances, and considering that applicant is a domestic
corporation not otherwise disqualified from owning real properties in the Philippines, this Court finds that
applicant has satisfied all the conditions/requirements essential to the grant of its application pursuant to
the provisions of the Land Registration Law, as amended, inspite of the opposition filed by the Heirs of
the late Doroteo Miranda. Hence, the grant of applicant's petition appears to be inevitable.

WHEREFORE, this Court hereby approves the instant petition for land registration and, thus, places
under the operation of Act 141, Act 496 and/or P.D. 1529, otherwise known as the Property Registration
Law, the land described in Plan Ap-04-006275 and containing an area of Two Hundred Forty-Two
Thousand Seven Hundred Ninety-Four (242,794) square meters, as supported by its technical description
now forming part of the record of this case, in addition to other proofs adduced in the name of the
applicant, ELAND PHILIPPINES, INC., with principal office at No. 43 E. Rodriguez Ave. (España
Extension), Quezon City, Metro Manila.

Once this decision becomes final and executory, the corresponding decree of registration shall forthwith
issue.

SO ORDERED.

By granting the summary judgment, the trial court has in effect annulled its former ruling based on a
claim of possession and ownership of the same land for more than thirty years without the benefit of a
full-blown trial. The fact that the respondents seek to nullify the original certificate of title issued to the
petitioner on the claim that the former were in possession of the same land for a number of years, is
already a clear indicium that a genuine issue of a material fact exists. This, together with the failure of the
respondents to show that there were no genuine issues involved, should have been enough for the trial
court to give the motion for summary judgment, filed by respondents, scant consideration. Trial courts
have limited authority to render summary judgments and may do so only when there is clearly no genuine
issue as to any material fact.52

Based on the foregoing, this Court deems it necessary to delve briefly on the nature of the action of
quieting of title as applied in this case. This Court's ruling in Calacala, et al. v. Republic, et al.53 is
instructive on this matter, thus:

To begin with, it bears emphasis that an action for quieting of title is essentially a common law remedy
grounded on equity. As we held in Baricuatro, Jr. vs. CA:54

Regarding the nature of the action filed before the trial court, quieting of title is a common law remedy for
the removal of any cloud upon or doubt or uncertainty with respect to title to real property. Originating in
equity jurisprudence, its purpose is to secure ‘x x x an adjudication that a claim of title to or an interest in
property, adverse to that of the complainant, is invalid, so that the complainant and those claiming under
him may be forever afterward free from any danger of hostile claim.’ In an action for quieting of title, the
competent court is tasked to determine the respective rights of the complainant and other claimants, ‘x x x
not only to place things in their proper place, to make the one who has no rights to said immovable
respect and not disturb the other, but also for the benefit of both, so that he who has the right would see
every cloud of doubt over the property dissipated, and he could afterwards without fear introduce the
improvements he may desire, to use, and even to abuse the property as he deems best xxx.
Under Article 476 of the New Civil Code, the remedy may be availed of only when, by reason of any
instrument, record, claim, encumbrance or proceeding, which appears valid but is, in fact, invalid,
ineffective, voidable, or unenforceable, a cloud is thereby cast on the complainant’s title to real property
or any interest therein. The codal provision reads:

Article 476. Whenever there is a cloud on title to real property or any interest therein, by reason of any
instrument, record, claim, encumbrance or proceeding which is apparently valid or effective but is in truth
and in fact invalid, ineffective, voidable, or unenforceable, and may be prejudicial to said title, an action
may be brought to remove such cloud or to quiet the title.

An action may also be brought to prevent a cloud from being cast upon title to real property or any
interest therein.

In turn, Article 477 of the same Code identifies the party who may bring an action to quiet title, thus:

Article 477. The plaintiff must have legal or equitable title to, or interest in the real property which is the
subject-matter of the action. He need not be in possession of said property.

It can thus be seen that for an action for quieting of title to prosper, the plaintiff must first have a legal, or,
at least, an equitable title on the real property subject of the action and that the alleged cloud on his title
must be shown to be in fact invalid. So it is that in Robles, et al. vs. CA,55 we ruled:

It is essential for the plaintiff or complainant to have a legal title or an equitable title to or interest in the
real property which is the subject matter of the action. Also, the deed, claim, encumbrance or proceeding
that is being alleged as a cloud on plaintiff’s title must be shown to be in fact invalid or inoperative
despite its prima facie appearance of validity or legal efficacy.

Verily, for an action to quiet title to prosper, two (2) indispensable requisites must concur, namely: (1) the
plaintiff or complainant has a legal or an equitable title to or interest in the real property subject of
the action; and (2) the deed, claim, encumbrance, or proceeding claimed to be casting cloud on his
title must be shown to be in fact invalid or inoperative despite its prima facie appearance of validity
or legal efficacy.

Respondents, in their Complaint, claim that they have become the owners in fee-simple title of the subject
land by occupation and possession under the provisions of Sec. 48 (b) of the Public Land Law or
Commonwealth Act No. 141, as amended. Thus, it appears that the first requisite has been satisfied.
Anent the second requisite, respondents enumerated several facts that would tend to prove the invalidity
of the claim of the petitioner. All of these claims, which would correspond to the two requisites for the
quieting of title, are factual; and, as discussed earlier, the petitioner interposed its objections and duly
disputed the said claims, thus, presenting genuine issues that can only be resolved through a full-blown
trial.

Anent the propriety of the filing of an action for the quieting of title, the indefeasibility and
incontrovertibility of the decree of registration come into question. Under Sec. 32 of P.D. No. 1529 or the
Property Registration Decree:

Section 32. Review of decree of registration; Innocent purchaser for value. The decree of registration
shall not be reopened or revised by reason of absence, minority, or other disability of any person
adversely affected thereby, nor by any proceeding in any court for reversing judgments, subject, however,
to the right of any person, including the government and the branches thereof, deprived of land or of any
estate or interest therein by such adjudication or confirmation of title obtained by actual fraud, to file in
the proper Court of First Instance a petition for reopening and review of the decree of registration not later
than one year from and after the date of the entry of such decree of registration, but in no case shall such
petition be entertained by the court where an innocent purchaser for value has acquired the land or an
interest therein, whose rights may be prejudiced. Whenever the phrase "innocent purchaser for value" or
an equivalent phrase occurs in this Decree, it shall be deemed to include an innocent lessee, mortgagee, or
other encumbrancer for value.

Upon the expiration of said period of one year, the decree of registration and the certificate of title
issued shall become incontrovertible. Any person aggrieved by such decree of registration in any case
may pursue his remedy by action for damages against the applicant or any other persons responsible for
the fraud.

As borne out by the records and undisputed by the parties, OCT No. 0-660 of petitioner was issued on
August 29, 1997 pursuant to a Decree issued on August 20, 1997, while the complaint for the quieting of
title in Civil Case No. TG-1784 was filed and docketed on March 5, 1998; hence, applying the above
provisions, it would seem that the period of one (1) year from the issuance of the decree of registration
has not elapsed for the review thereof. However, a closer examination of the above provisions would
clearly indicate that the action filed, which was for quieting of title, was not the proper remedy.

Courts may reopen proceedings already closed by final decision or decree when an application for review
is filed by the party aggrieved within one year from the issuance of the decree of registration.56 However,
the basis of the aggrieved party must be anchored solely on actual fraud. Shedding light on the matter is a
discussion presented in one of the recognized textbooks on property registration,57 citing decisions of this
Court, thus:

The right of a person deprived of land or of any estate or interest therein by adjudication or confirmation
of title obtained by actual fraud is recognized by law as a valid and legal basis for reopening and revising
a decree of registration.58 One of the remedies available to him is a petition for review. To avail of a
petition for review, the following requisites must be satisfied:

(a) The petitioner must have an estate or interest in the land;

(b) He must show actual fraud in the procurement of the decree of registration;

(c) The petition must be filed within one year from the issuance of the decree by the Land
Registration Authority; and

(d) The property has not yet passed to an innocent purchaser for value.59

A mere claim of ownership is not sufficient to avoid a certificate of title obtained under the Torrens
system. An important feature of a certificate of title is its finality. The proceedings whereby such a
title is obtained are directed against all persons, known or unknown, whether actually served with notice
or not, and includes all who have an interest in the land. If they do not appear and oppose the registration
of their own estate or interest in the property in the name of another, judgment is rendered against them
by default, and, in the absence of fraud, such judgment is conclusive. If an interest in the land will not by
itself operate to vacate a decree of registration, a fortiori, fraud is not alone sufficient to do so.60

As further pointed out in the same book,61 the petition for review must be filed within one year from entry
of the decree of registration. As written:
As long as a final decree has not been entered by the Land Registration Authority and period of one year
has not elapsed from the date of entry of such decree, the title is not finally adjudicated and the decision
in the registration case continues to be under the control and sound discretion of the registration
court.62 After the lapse of said period, the decree becomes incontrovertible and no longer subject to
reopening or review.

Section 32 provides that a petition for review of the decree of registration may be filed "not later
than one year from and after the date of entry of such decree of registration." Giving this provision a
literal interpretation, it may at first blush seem that the petition for review cannot be presented until the
final decree has been entered. However, it has been ruled that the petition may be filed at any time after
the rendition of the court's decision and before the expiration of one year from the entry of the final
decree of registration for, as noted in Rivera v. Moran,63 there can be no possible reason requiring the
complaining party to wait until the final decree is entered before urging his claim for fraud.

The one-year period stated in Sec. 32 within which a petition to re-open and review the decree of
registration refers to the decree of registration described in Section 31, which decree is prepared and
issued by the Land Registration Administrator.64

The provision of Section 31 that every decree of registration shall bind the land, quiet title thereto, and be
conclusive upon and against all persons, including the national government, and Sec. 32 that the decree
shall not be reopened or revised by reason of absence, minority or other disability or by any proceeding in
court, save only in cases of actual fraud and then only for one year from the entry of the decree, must be
understood as referring to final and unappealable decrees of registration. A decision or, as it is sometimes
called after entry, a decree of a registration court, does not become final and unappealable until fifteen
days after the interested parties have been notified of its entry, and during that period may be set aside by
the trial judge on motion for new trial, upon any of the grounds stated in the Rules of Court.65 An appeal
from the decision of the trial court prevents the judgment from becoming final until that decree is
affirmed by the judgment of the appellate court.66

A petition for review under Section 32 is a remedy separate and distinct from a motion for new trial
and the right to the remedy is not affected by the denial of such a motion irrespective of the
grounds upon which it may have been presented. Thus, where petitioners acquired their interest in the
land before any final decree had been entered, the litigation was therefore in effect still pending and, in
these circumstances, they can hardly be considered innocent purchasers in good faith.671avvphi1

Where the petition for review of a decree of registration is filed within the one-year period from entry of
the decree, it is error for the court to deny the petition without hearing the evidence in support of the
allegation of actual and extrinsic fraud upon which the petition is predicated. The petitioner should be
afforded an opportunity to prove such allegation.68

In the present case, the one-year period before the Torrens title becomes indefeasible and incontrovertible
has not yet expired; thus, a review of the decree of registration would have been the appropriate remedy.

Based on the above disquisitions, the other issues raised by the petitioner are necessarily rendered
inconsequential.

WHEREFORE, the petition for review on certiorari of petitioner Eland Philippines, Inc. is
hereby GRANTED, and the decision dated February 28, 2006 of the Court of Appeals (CA) in CA-G.R.
CV No. 67417, which dismissed the appeal of petitioner Eland Philippines, Inc. and affirmed the
resolutions dated November 3, 1999 and June 28, 2006 of Branch 18, RTC of Tagaytay City, is
hereby REVERSED and SET ASIDE. Consequently, the resolutions dated November 3, 1999 and June
28, 2006 of Branch 18, RTC of Tagaytay City in Civil Case No. TG-1784 are hereby
declared NULL and VOID.

SO ORDERED.
G.R. No. 124605 June 18, 1999

ENRIQUITO SERNA and AMPARO RASCA, petitioners,


vs.
COURT OF APPEALS, SANTIAGO FONTANILLA, and RAFAELA RASING, respondents.

PARDO, J.:

The petition for review on certiorari before us seeks to review the decision of the Court of
Appeals,1 which affirmed that of the Regional Trial Court, Alaminos, Pangasinan,2 declaring respondents
as the absolute and lawful owners of the land covered by Original Certificate of Title No. 139 of the
Registry of Deeds of Pangasinan.

The antecedent facts are as follows:

Dionisio Fontanilla had four (4) children, namely, Rosa, Antonio, Jose and Lorenza, all surnamed
Fontanilla. Rosa married Estanislao Pajaro and their union produced Fructoso and Paciencia. Lorenza
married Alberto Rasca and they had a daughter, petitioner Amparo Rasca (married to Enriquito Serna).
Jose had a son, respondent Santiago Fontanilla (married to Rafaela Rasing). Hence, the parties involved
are first cousins.

Dionisio Fontanilla was the original owner and possessor of a parcel of land, containing an area of twelve
thousand five hundred eight square meters (12,508 sq. m.), located in Barangay Lucap, Alaminos,
Pangasinan. 3

In 1921, the property was declared in his name for taxation purposes. In the same year, Turner Land
Surveying Company surveyed the land for Dionisio Fontanilla, with the agreement that the cost of survey
would be paid upon approval of the plan by the Bureau of Lands. On March 2, 1923, the Bureau of Lands
approved the survey plan.

In 1938, for failing to pay the survey costs and to prevent foreclosure, Dionisio Fontanilla sold the land to
his daughter, Rosa Fontanilla. In 1939, Rosa began paying the real estate property tax thereon.

On August 21, 1955, for a consideration of one thousand seven hundred pesos (P1,700.00), Rosa sold the
land to her nephew, respondent Santiago Fontanilla, evidenced by a notarized deed of absolute sale,
signed by Rosa. The instrument was not registered.

In 1955, respondents constructed their house of strong materials on the lot in question, which was
completed in 1957.

On December 16, 1957, Rosa's heirs, Estanislao Pajaro and his two (2) children, Fructoso and Paciencia,
executed another deed of absolute sale over the same land in favor of respondent Santiago Fontanilla.

In 1978, respondents went to the United States to visit their daughter Mila Fontanilla Borillo. They stayed
there until 1981.
On December 20, 1978, talking advantage of respondents' absence from the country, petitioners Enriquito
and Amparo Serna applied to the land registration court of Pangasinan for registration4 of the said parcel
of land in their name.

In 1979, the land registration court approved the application, and pursuant to Decree N-176768, the
Register of Deeds of Pangasinan issued Original Certificate of Title No. 139 to petitioners. On January
10, 1980, the title was transcribed in the registration book of the Register of Deeds of Pangasinan.

On May 27, 1981, respondents filed with the Court of First Instance, Branch XIII, Alaminos, Pangasinan,
an action for reconveyance with damages, and sought the annulment of O.C.T. No. 139.5

In the trial court, petitioners admitted that Dionisio Fontanilla originally owned the land in dispute.
However, they claimed that in 1978 they bought the property for three thousand pesos (P3,000.00) from
Lorenza Fontanilla-Rasca. Lorenza, in turn, traced her title from her husband, Alberto Rasca.

Petitioner Amparo said that when Dionisio failed to pay the survey costs in 1921, Turner Land Surveying
Company took the property in question as payment for services. Her father, Alberto Rasca, redeemed the
property from Turner evidenced by a deed of sale, which, however, Amparo could not produce in court.
When her father died, Santiago Fontanilla borrowed from her mother the deed covering the transfer of the
property, which Santiago did not return. She said that the property was first declared in Alberto's name for
taxation purposes in 1951. Later, the property was ceded to her.

After due trial and consideration of the evidence presented before the trial court and in the land
registration case, on June 5, 1992, the trial court rendered judgment in favor of the plaintiffs (herein
respondents) spouses Santiago Fontanilla and Rafaela Rasing, decreeing:

WHEREFORE, judgment is hereby rendered:

(a) Declaring the plaintiffs as the absolute and legal owners of the land in question
particularly described and bounded and stated in paragraph two (2) of the complaint;

(b) Ordering the defendants to Transfer and Recover [sic] Original Certificate of Title
No. 139 to the plaintiffs;

(c) Ordering the defendants to pay plaintiffs the amount of P5,000.00 as attorney's fees;

(d) Ordering the defendants to pay the plaintiffs the amount of P5,000.00 as exemplary
damages;

(e) And to pay the costs, without pronouncement as to moral damages.

Done at Alaminos, Pangasinan, this 5th day of August, 1992

(t/s)
Vivenci
o A.
Bantug
an
Judge6

From the decision of the trial court, both parties appealed to the Court of Appeals. Respondents
questioned the court a quo's failure to grant their claim for moral damages. On the other hand, petitioners
claimed that the trial court committed serious error in the appreciation of facts and application of law and
jurisprudence.

On August 22, 1995, the Court of Appeals rendered decision affirming that of the trial court.

In a resolution dated February 26, 1996,7 the Court of Appeals denied petitioners' motion for
reconsideration.

Hence, this petition for review.

Petitioners submit these issues for resolution: (1) whether or not the appealed decision is supported by
evidence; (2) whether or not the decision is in accordance with law and jurisprudence.8

The first issue is factual, which we cannot review on appeal.9 However, petitioners make an issue of the
fact that the judge who penned the decision was not the one who presided over the proceedings.

"We have ruled in People vs. Rayray,10 that the fact that the judge who heard the evidence is not himself
the one who prepared, signed and promulgated the decision constitutes no compelling reason to jettison
his findings and conclusions, and does not per se render his decision void. While it is true that the trial
judge who conducted the hearing would be in a better position to ascertain the truth or falsity of the
testimonies of the witnesses, it does not necessarily follow that a judge who was not present during the
trial cannot render a valid and just decision. For a judge who was not present during the trial can rely on
the transcript of stenographic notes taken during the trial as basis of his decision. Such reliance does not
violate substantive and procedural due process."11

As a general rule, findings of fact of the Court of Appeals are binding and conclusive upon us, and we
will not normally disturb such factual findings. This is because in an appeal by certiorari to this Court,
only questions of law may be raised.12 And "for a question to be one of law it must involve no
examination of the probative value of the evidence presented by the litigants or any of them." 13 "To
reiterate the distinction between the two types of questions: there is a question of law in a given case
when the doubt or difference arises as to what the law is pertaining to a certain state of facts, and there is
a question of fact when the doubt arises as to the truth or the falsity of alleged facts." 14

Petitioners claim ownership of the land based on the deed of sale executed by Turner Land Surveying Co.
in favor of Alberto Rasca, which, however, they failed to present in court. The truth or falsity of this
claim is a question of fact, which, as aforesaid, is not reviewable in this appeal.

On the other hand, respondents proved that they were enjoying open, continuous and adverse possession
of the property for more than sixty (60) years tacking in the possession of their predecessors in interest,
Dionisio Fontanilla and Rosa Pajaro. As early as 1921, Dionisio Fontanilla was in adverse possession and
paying taxes over the land. Rosa in turn, paid taxes for the first time in 1939,15 while respondents began
paying taxes in 1967.16 They had their residential house built in 1955, which was completed in 1957. In
1980, Santiago executed a tenancy agreement17with Sixto Fontanilla. Until 1984, Santiago paid the taxes
together with his tenant Sixto.1âwphi1.nêt
Though mere tax declaration does not prove ownership of the property of the declarant,18 tax declarations
and receipts can be strong evidence of ownership of land when accompanied by possession for a period
sufficient for prescription.19

Going to the second issue that the appellate court's decision is not supported by law and jurisprudence, we
find this to be vague and without merit as well.

At the time material hereto, registration of untitled land was pursuant to Act No. 496, as amended. Later,
Presidential Decree 1529, the Property Registration Decree, amended and codified laws relative to
registration of property. "Adjudication of land in a registration (or cadastral) case does not become final
and incontrovertible until the expiration of one (1) year after the entry of the final decree." 20 After the
lapse of said period, the decree becomes incontrovertible and no longer subject to reopening or review.

However, the right of a person deprived of land or of any estate or interest therein by adjudication or
confirmation of title obtained by actual fraud is recognized by law21 as a valid and legal basis for
reopening and revising a decree of registration.

The fraud contemplated by the law is actual and extrinsic fraud, which includes an intentional omission of
a fact required by law. For fraud to justify a review of a decree, it must be extrinsic or collateral, and the
facts upon which it is based have not been controverted or resolved in the case where the judgment sought
to be annulled was rendered. Persons who were fraudulently deprived of their opportunity to be heard in
the original registration case are entitled to a review of a decree of registration.22

"An action based on implied or constructive trust prescribes in ten (10) years. This means that petitioners
should have enforced the trust within ten (10) years from the time of its creation or upon the alleged
fraudulent registration of the property."23 Discovery of the fraud must be deemed to have taken place
from the issuance of the certificate of title "because registration of real property is considered a
"constructive notice to all persons" and it shall be counted "from the time of such registering, filing or
entering."24

In the present case, respondents came to know of the fraud in securing title to the land sometime after its
registration, however, an innocent purchaser for value had not acquired the property. Extrinsic fraud
attended the application for the land registration. It was filed when respondents were out of the country
and they had no way of finding out that petitioners applied for a title under their name.

Fortunately, respondents' action for reconveyance was timely, as it was filed within ten (10) years from
the issuance of the torrens title over the property.25

WHEREFORE, we DENY the petition for review on certiorari for lack of merit. We AFFIRM the
decision and resolution of the Court of Appeals in CA-G.R. CV No. 39922.

No costs.1âwphi1.nêt

SO ORDERED.
G.R. No. 193787 April 7, 2014

SPOUSES JOSE C. ROQUE AND BEATRIZ DELA CRUZ ROQUE, with deceased Jose C. Roque
represented by his substitute heir JOVETTE ROQUE-LIBREA, Petitioners,
vs.
MA. PAMELA P. AGUADO, FRUCTUOSO C. SABUG, JR., NATIONAL COUNCIL OF
CHURCHES IN THE PHILIPPINES (NCCP), represented by its Secretary General SHARON
ROSE JOY RUIZ-DUREMDES, LAND BANK OF THE PHILIPPINES (LBP), represented by
Branch Manager EVELYN M. MONTERO, ATTY. MARIO S.P. DIAZ, in his Official Capacity as
Register of Deeds for Rizal, Morong Branch, and CECILIO U. PULAN, in his Official Capacity as
Sheriff, Office of the Clerk of Court, Regional Trial Court, Binangonan, Rizal,Respondents.

DECISION

PERLAS-BERNABE, J.:

Assailed in this petition for review on certiorari1 are the Decision2 dated May 12, 2010 and the
Resolution3 dated September 15, 2010 of the Court of Appeals (CA) in CA G.R. CV No. 92113 which
affirmed the Decision4 dated July 8, 2008 of the Regional Trial Court of Binangonan, Rizal, Branch 69
(RTC) that dismissed Civil Case Nos. 03-022 and 05-003 for reconveyance, annulment of sale, deed of
real estate mortgage, foreclosure and certificate of sale, and damages.

The Facts

The property subject of this case is a parcel of land with an area of 20,862 square meters (sq. m.), located
in Sitio Tagpos, Barangay Tayuman, Binangonan, Rizal, known as Lot 18089.5

On July 21, 1977, petitioners-spouses Jose C. Roque and Beatriz dela Cruz Roque (Sps. Roque) and the
original owners of the then unregistered Lot 18089 – namely, Velia R. Rivero (Rivero), Magdalena
Aguilar, Angela Gonzales, Herminia R. Bernardo, Antonio Rivero, Araceli R. Victa, Leonor R. Topacio,
and Augusto Rivero (Rivero, et al.) – executed a Deed of Conditional Sale of Real Property6 (1977 Deed
of Conditional Sale) over a 1,231-sq. m. portion of Lot 18089 (subject portion) for a consideration of
₱30,775.00. The parties agreed that Sps. Roque shall make an initial payment of ₱15,387.50 upon
signing, while the remaining balance of the purchase price shall be payable upon the registration of Lot
18089, as well as the segregation and the concomitant issuance of a separate title over the subject portion
in their names. After the deed’s execution, Sps. Roque took possession and introduced improvements on
the subject portion which they utilized as a balut factory.7

On August 12, 1991, Fructuoso Sabug, Jr. (Sabug, Jr.), former Treasurer of the National Council of
Churches in the Philippines (NCCP), applied for a free patent over the entire Lot 18089 and was
eventually issued Original Certificate of Title (OCT) No. M-59558 in his name on October 21, 1991. On
June 24, 1993, Sabug, Jr. and Rivero, in her personal capacity and in representation of Rivero, et al.,
executed a Joint Affidavit9 (1993 Joint Affidavit), acknowledging that the subject portion belongs to Sps.
Roque and expressed their willingness to segregate the same from the entire area of Lot 18089.

On December 8, 1999, however, Sabug, Jr., through a Deed of Absolute Sale10 (1999 Deed of Absolute
Sale), sold Lot 18089 to one Ma. Pamela P. Aguado (Aguado) for ₱2,500,000.00, who, in turn, caused the
cancellation of OCT No. M-5955 and the issuance of Transfer Certificate of Title (TCT) No. M-96692
dated December 17, 199911 in her name.
Thereafter, Aguado obtained an ₱8,000,000.00 loan from the Land Bank of the Philippines (Land Bank)
secured by a mortgage over Lot 18089.12 When she failed to pay her loan obligation, Land Bank
commenced extra-judicial foreclosure proceedings and eventually tendered the highest bid in the auction
sale. Upon Aguado’s failure to redeem the subject property, Land Bank consolidated its ownership, and
TCT No. M-11589513 was issued in its name on July 21, 2003.14

On June 16, 2003, Sps. Roque filed a complaint15 for reconveyance, annulment of sale, deed of real estate
mortgage, foreclosure, and certificate of sale, and damages before the RTC, docketed as Civil Case No.
03-022, against Aguado, Sabug, Jr., NCCP, Land Bank, the Register of Deeds of Morong, Rizal, and
Sheriff Cecilio U. Pulan, seeking to be declared as the true owners of the subject portion which had been
erroneously included in the sale between Aguado and Sabug, Jr., and, subsequently, the mortgage to Land
Bank, both covering Lot 18089 in its entirety.

In defense, NCCP and Sabug, Jr. denied any knowledge of the 1977 Deed of Conditional Sale through
which the subject portion had been purportedly conveyed to Sps. Roque.16

For her part, Aguado raised the defense of an innocent purchaser for value as she allegedly derived her
title (through the 1999 Deed of Absolute Sale) from Sabug, Jr., the registered owner in OCT No. M-5955,
covering Lot 18089, which certificate of title at the time of sale was free from any lien and/or
encumbrances. She also claimed that Sps. Roque’s cause of action had already prescribed because their
adverse claim was made only on April 21, 2003, or four (4) years from the date OCT No. M-5955 was
issued in Sabug, Jr.’s name on December 17, 1999.17

On the other hand, Land Bank averred that it had no knowledge of Sps. Roque’s claim relative to the
subject portion, considering that at the time the loan was taken out, Lot 18089 in its entirety was
registered in Aguado’s name and no lien and/or encumbrance was annotated on her certificate of title.18

Meanwhile, on January 18, 2005, NCCP filed a separate complaint19 also for declaration of nullity of
documents and certificates of title and damages, docketed as Civil Case No. 05-003. It claimed to be the
real owner of Lot 18089 which it supposedly acquired from Sabug, Jr. through an oral contract of sale20 in
the early part of 1998, followed by the execution of a Deed of Absolute Sale on December 2, 1998 (1998
Deed of Absolute Sale).21 NCCP also alleged that in October of the same year, it entered into a Joint
Venture Agreement (JVA) with Pilipinas Norin Construction Development Corporation (PNCDC), a
company owned by Aguado’s parents, for the development of its real properties, including Lot 18089,
into a subdivision project, and as such, turned over its copy of OCT No. M-5955 to PNCDC.22 Upon
knowledge of the purported sale of Lot 18089 to Aguado, Sabug, Jr. denied the transaction and alleged
forgery. Claiming that the Aguados23 and PNCDC conspired to defraud NCCP, it prayed that PNCDC’s
corporate veil be pierced and that the Aguados be ordered to pay the amount of ₱38,092,002.00
representing the unrealized profit from the JVA.24 Moreover, NCCP averred that Land Bank failed to
exercise the diligence required to ascertain the true owners of Lot 18089. Hence, it further prayed that: (a)
all acts of ownership and dominion over Lot 18089 that the bank might have done or caused to be done be
declared null and void; (b) it be declared the true and real owners of Lot 18089; and (c) the Register of
Deeds of Morong, Rizal be ordered to cancel any and all certificates of title covering the lot, and a new
one be issued in its name.25 In its answer, Land Bank reiterated its stance that Lot 18089 was used as
collateral for the ₱8,000,000.00 loan obtained by the Countryside Rural Bank, Aguado, and one Bella
Palasaga. There being no lien and/ or encumbrance annotated on its certificate of title, i.e., TCT No. M-
115895, it cannot be held liable for NCCP’s claims. Thus, it prayed for the dismissal of NCCP’s
complaint.26

On September 7, 2005, Civil Case Nos. 02-022 and 05-003 were ordered consolidated.27
The RTC Ruling

After due proceedings, the RTC rendered a Decision28 dated July 8, 2008, dismissing the complaints of
Sps. Roque and NCCP.

With respect to Sps. Roque’s complaint, the RTC found that the latter failed to establish their ownership
over the subject portion, considering the following: (a) the supposed owners-vendors, i.e., Rivero, et al.,
who executed the 1977 Deed of Conditional Sale, had no proof of their title over Lot 18089; (b) the 1977
Deed of Conditional Sale was not registered with the Office of the Register of Deeds;29 (c) the 1977 Deed
of Conditional Sale is neither a deed of conveyance nor a transfer document, as it only gives the holder
the right to compel the supposed vendors to execute a deed of absolute sale upon full payment of the
consideration; (d) neither Sps. Roque nor the alleged owners-vendors, i.e., Rivero, et al., have paid real
property taxes in relation to Lot 18089; and (e) Sps. Roque’s occupation of the subject portion did not
ripen into ownership that can be considered superior to the ownership of Land Bank.30 Moreover, the
RTC ruled that Sps. Roque’s action for reconveyance had already prescribed, having been filed ten (10)
years after the issuance of OCT No. M-5955.31

On the other hand, regarding NCCP’s complaint, the RTC observed that while it anchored its claim of
ownership over Lot 18089 on the 1998 Deed of Absolute Sale, the said deed was not annotated on OCT
No. M-5955. Neither was any certificate of title issued in its name nor did it take possession of Lot 18089
or paid the real property taxes therefor. Hence, NCCP’s claim cannot prevail against Land Bank’s title,
which was adjudged by the RTC as an innocent purchaser for value. Also, the RTC disregarded NCCP’s
allegation that the signature of Sabug, Jr. on the 1999 Deed of Absolute Sale in favor of Aguado was
forged because his signatures on both instruments bear semblances of similarity and appear genuine.
Besides, the examiner from the National Bureau of Investigation, who purportedly found that Sabug, Jr.’s
signature thereon was spurious leading to the dismissal of a criminal case against him, was not presented
as a witness in the civil action.32

Finally, the RTC denied the parties’ respective claims for damages.33

The CA Ruling

On appeal, the Court of Appeals (CA) affirmed the foregoing RTC findings in a Decision34 dated May 12,
2010. While Land Bank was not regarded as a mortgagee/purchaser in good faith with respect to the
subject portion considering Sps. Roque’s possession thereof,35 the CA did not order its reconveyance or
segregation in the latter’s favor because of Sps. Roque’s failure to pay the remaining balance of the
purchase price. Hence, it only directed Land Bank to respect Sps. Roque’s possession with the option to
appropriate the improvements introduced thereon upon payment of compensation.36

As regards NCCP, the CA found that it failed to establish its right over Lot 18089 for the following
reasons: (a) the sale to it of the lot by Sabug, Jr. was never registered; and (b) there is no showing that it
was in possession of Lot 18089 or any portion thereof from 1998. Thus, as far as NCCP is concerned,
Land Bank is a mortgagee/purchaser in good faith.37

Aggrieved, both Sps. Roque38 and NCCP39 moved for reconsideration but were denied by the CA in a
Resolution40dated September 15, 2010, prompting them to seek further recourse before the Court.

The Issue Before the Court


The central issue in this case is whether or not the CA erred in not ordering the reconveyance of the
subject portion in Sps. Roque’s favor.

Sps. Roque maintain that the CA erred in not declaring them as the lawful owners of the subject portion
despite having possessed the same since the execution of the 1977 Deed of Conditional Sale, sufficient
for acquisitive prescription to set in in their favor.41 To bolster their claim, they also point to the 1993
Joint Affidavit whereby Sabug, Jr. and Rivero acknowledged their ownership thereof.42 Being the first
purchasers and in actual possession of the disputed portion, they assert that they have a better right over
the 1,231- sq. m. portion of Lot 18089 and, hence, cannot be ousted therefrom by Land Bank, which was
adjudged as a ortgagee/purchaser in bad faith, pursuant to Article 1544 of the Civil Code.43

In opposition, Land Bank espouses that the instant petition should be dismissed for raising questions of
fact, in violation of the proscription under Rule 45 of the Rules of Court which allows only pure questions
of law to be raised.44 Moreover, it denied that ownership over the subject portion had been acquired by
Sps. Roque who admittedly failed to pay the remaining balance of the purchase price.45 Besides, Land
Bank points out that Sps. Roque’s action for reconveyance had already prescribed.46

Instead of traversing the arguments of Sps. Roque, NCCP, in its Comment47 dated December 19, 2011,
advanced its own case, arguing that the CA erred in holding that it failed to establish its claimed
ownership over Lot 18089 in its entirety. Incidentally, NCCP’s appeal from the CA Decision dated May
12, 2010 was already denied by the Court,48 and hence, will no longer be dealt with in this case.

The Court’s Ruling

The petition lacks merit.

The essence of an action for reconveyance is to seek the transfer of the property which was wrongfully or
erroneously registered in another person’s name to its rightful owner or to one with a better right.49 Thus,
it is incumbent upon the aggrieved party to show that he has a legal claim on the property superior to that
of the registered owner and that the property has not yet passed to the hands of an innocent purchaser for
value.50

Sps. Roque claim that the subject portion covered by the 1977 Deed of Conditional Sale between them
and Rivero, et al. was wrongfully included in the certificates of title covering Lot 18089, and, hence, must
be segregated therefrom and their ownership thereof be confirmed. The salient portions of the said deed
state:

DEED OF CONDITIONAL SALE OF REAL PROPERTY

KNOW ALL MEN BY THESE PRESENTS:

xxxx

That for and in consideration of the sum of THIRTY THOUSAND SEVEN HUNDRED SEVENTY
FIVE PESOS (₱30,775.00), Philippine Currency, payable in the manner hereinbelow specified, the
VENDORS do hereby sell, transfer and convey unto the VENDEE, or their heirs, executors,
administrators, or assignors, that unsegregated portion of the above lot, x x x.
That the aforesaid amount shall be paid in two installments, the first installment which is in the amount of
__________ (₱15,387.50) and the balance in the amount of __________ (₱15,387.50), shall be paid as
soon as the described portion of the property shall have been registered under the Land Registration Act
and a Certificate of Title issued accordingly;

That as soon as the total amount of the property has been paid and the Certificate of Title has been issued,
an absolute deed of sale shall be executed accordingly;

x x x x51

Examining its provisions, the Court finds that the stipulation above-highlighted shows that the 1977 Deed
of Conditional Sale is actually in the nature of a contract to sell and not one of sale contrary to Sps.
Roque’s belief.52 In this relation, it has been consistently ruled that where the seller promises to execute a
deed of absolute sale upon the completion by the buyer of the payment of the purchase price, the contract
is only a contract to sell even if their agreement is denominated as a Deed of Conditional Sale, 53 as in this
case. This treatment stems from the legal characterization of a contract to sell, that is, a bilateral contract
whereby the prospective seller, while expressly reserving the ownership of the subject property despite
delivery thereof to the prospective buyer, binds himself to sell the subject property exclusively to the
prospective buyer upon fulfillment of the condition agreed upon, such as, the full payment of the purchase
price.54 Elsewise stated, in a contract to sell, ownership is retained by the vendor and is not to pass to the
vendee until full payment of the purchase price.55 Explaining the subject matter further, the Court, in
Ursal v. CA,56 held that:

[I]n contracts to sell the obligation of the seller to sell becomes demandable only upon the happening of
the suspensive condition, that is, the full payment of the purchase price by the buyer. It is only upon the
existence of the contract of sale that the seller becomes obligated to transfer the ownership of the thing
sold to the buyer. Prior to the existence of the contract of sale, the seller is not obligated to transfer the
ownership to the buyer, even if there is a contract to sell between them.

Here, it is undisputed that Sps. Roque have not paid the final installment of the purchase price.57 As such,
the condition which would have triggered the parties’ obligation to enter into and thereby perfect a
contract of sale in order to effectively transfer the ownership of the subject portion from the sellers (i.e.,
Rivero et al.) to the buyers (Sps. Roque) cannot be deemed to have been fulfilled. Consequently, the latter
cannot validly claim ownership over the subject portion even if they had made an initial payment and
even took possession of the same.58

The Court further notes that Sps. Roque did not even take any active steps to protect their claim over the
disputed portion. This remains evident from the following circumstances appearing on record: (a) the
1977 Deed of Conditional Sale was never registered; (b) they did not seek the actual/physical segregation
of the disputed portion despite their knowledge of the fact that, as early as 1993, the entire Lot 18089 was
registered in Sabug, Jr.’s name under OCT No. M-5955; and (c) while they signified their willingness to
pay the balance of the purchase price,59Sps. Roque neither compelled Rivero et al., and/or Sabug, Jr. to
accept the same nor did they consign any amount to the court, the proper application of which would have
effectively fulfilled their obligation to pay the purchase price.60 Instead, Sps. Roque waited 26 years,
reckoned from the execution of the 1977 Deed of Conditional Sale, to institute an action for reconveyance
(in 2003), and only after Lot 18089 was sold to Land Bank in the foreclosure sale and title thereto was
consolidated in its name. Thus, in view of the foregoing, Sabug, Jr. – as the registered owner of Lot
18089 borne by the grant of his free patent application – could validly convey said property in its entirety
to Aguado who, in turn, mortgaged the same to Land Bank. Besides, as aptly observed by the RTC, Sps.
Roque failed to establish that the parties who sold the property to them, i.e., Rivero, et al., were indeed its
true and lawful owners.61 In fine, Sps. Roque failed to establish any superior right over the subject portion
as against the registered owner of Lot 18089, i.e., Land Bank, thereby warranting the dismissal of their
reconveyance action, without prejudice to their right to seek damages against the vendors, i.e., Rivero et
al.62 As applied in the case of Coronel v. CA:63

It is essential to distinguish between a contract to sell and a conditional contract of sale specially in cases
where the subject property is sold by the owner not to the party the seller contracted with, but to a third
person, as in the case at bench. In a contract to sell, there being no previous sale of the property, a third
person buying such property despite the fulfilment of the suspensive condition such as the full payment of
the purchase price, for instance, cannot be deemed a buyer in bad faith and the prospective buyer cannot
seek the relief of reconveyance of the property.

There is no double sale in such case.1âwphi1 Title to the property will transfer to the buyer after
registration because there is no defect in the owner-seller’s title per se, but the latter, of course, may be
sued for damages by the intending buyer. (Emphasis supplied)

On the matter of double sales, suffice it to state that Sps. Roque’s reliance64 on Article 154465 of the Civil
Code has been misplaced since the contract they base their claim of ownership on is, as earlier stated, a
contract to sell, and not one of sale. In Cheng v. Genato,66 the Court stated the circumstances which must
concur in order to determine the applicability of Article 1544, none of which are obtaining in this case,
viz.:

(a) The two (or more) sales transactions in issue must pertain to exactly the same subject matter,
and must be valid sales transactions;

(b) The two (or more) buyers at odds over the rightful ownership of the subject matter must each
represent conflicting interests; and

(c) The two (or more) buyers at odds over the rightful ownership of the subject matter must each
have bought from the same seller.

Finally, regarding Sps. Roque’s claims of acquisitive prescription and reimbursement for the value of the
improvements they have introduced on the subject property,67 it is keenly observed that none of the
arguments therefor were raised before the trial court or the CA.68 Accordingly, the Court applies the well-
settled rule that litigants cannot raise an issue for the first time on appeal as this would contravene the
basic rules of fair play and justice. In any event, such claims appear to involve questions of fact which are
generally prohibited under a Rule 45 petition.69

With the conclusions herein reached, the Court need not belabor on the other points raised by the parties,
and ultimately finds it proper to proceed with the denial of the petition.

WHEREFORE, the petition is DENIED. The Decision dated May 12, 2010 and the Resolution dated
September 15, 2010 of the Court of Appeals in CAG.R. CV No. 92113 are hereby AFFIRMED.

SO ORDERED
G.R. No. 166516 September 3, 2009

EMMA VER REYES and RAMON REYES, Petitioners,


vs.
IRENE MONTEMAYOR and THE REGISTER OF DEEDS OF CAVITE, Respondents.

DECISION

CHICO-NAZARIO, J.:

This is a Petition for Review on Certiorari under Rule 45 of the Rules of Court, assailing the
Decision1 dated 20 May 2004, rendered by the Court of Appeals in CA-G.R. CV No. 54517, which
affirmed the Decision2 dated 7 October 1996, of the Regional Trial Court (RTC), Branch 21, of Imus,
Cavite, in Civil Case No. 878-94, dismissing the Complaint for Reconveyance of petitioners, spouses
Emma Ver-Reyes (Emma) and Ramon Reyes (Ramon), and declaring private respondent Irene
Montemayor as the owner of the subject property.

On 18 February 1994, petitioners filed before the RTC a Complaint for Reconveyance3 against private
respondent and the Register of Deeds of Cavite. The Complaint was docketed as Civil Case No. 878-94.
Petitioners alleged in their Complaint that they were the owners of a parcel of land covered by Transfer
Certificate of Title (TCT) No. T-584594 situated in Paliparan, Dasmariñas, Cavite (subject property).
They bought the subject property from the previous owner, Marciano Cuevas (Marciano), as evidenced by
a Deed of Absolute Sale dated 8 October 1976.5Thereafter, Marciano surrendered to petitioners the
Owner’s Duplicate Copy of TCT No. T-58459. Petitioners accordingly paid the taxes on the sale of the
subject property. However, they were unable to register the sale and effect the transfer of the certificate of
title to the subject property to their names.

Petitioners claimed that they had consistently paid the real estate taxes on the subject property since their
acquisition of the same in 1976 until 1991. In 1993, when they went to the Office of the Register of
Deeds of Cavite to pay their real estate taxes for the years 1992 and 1993, they were informed that the
subject property was sold by Marciano to private respondent on 10 November 1992, and TCT No. T-
369793 covering it was issued in private respondent’s name on 4 January 1993.

Petitioners asserted that private respondent was able to cause the issuance of TCT No. T-369793 in her
name by presenting a simulated and fictitious Deed of Absolute Sale dated 10 November 1992. The
signatures of the sellers, spouses Virginia (Virginia) and Marciano Cuevas (spouses Cuevas), were forged
in the said Deed.6

Hence, petitioners prayed for the cancellation of TCT No. T-369793 in private respondent’s name; the
issuance of a new certificate of title in petitioners’ names; the award of nominal damages of ₱50,000.00
and exemplary damages of ₱100,000.00, by reason of the fraud employed by private respondent in having
the subject property registered in her name; the award of attorney’s fees of not less than ₱50,000; and the
costs of suit. 7

On 18 April 1994, private respondent filed with the RTC her Answer with Counterclaim, wherein she
denied petitioners’ allegation that the signatures of the spouses Cuevas in the Deed of Absolute Sale dated
10 November 1992 were forged. Private respondent averred that the subject property was offered to her
for sale, but she did not disclose who actually made the offer. She discovered that there was no adverse
claim or any kind of encumbrance annotated on the certificate of title of the spouses Cuevas covering the
subject property. She had purchased the subject property for value and in good faith and had been in
possession thereof. Private respondent insisted that she had a better title to the subject property, since she
was the first registrant of its sale. Private respondent thus prayed for the award of moral damages in the
amount of not less than ₱100,000.00 for the mental anguish, serious anxiety, and besmirched reputation
she suffered by reason of the unjustified filing by petitioners of the case; the award of exemplary damages
in the amount of ₱100,000.00 for petitioners’ malicious filing of the case; and the award of attorney’s
fees, and costs of suit. 8

After the conduct of pre-trial, petitioners offered the testimonies of Marciano, petitioner Emma, and
Carolyn Moldez-Pitoy (Carolyn).

Marciano testified that he and his wife Virginia signed, on 8 October 1976, a Deed of Absolute Sale
covering the subject property in petitioner Emma’s favor. He denied selling the subject property to any
other person, including private respondent. Marciano, when shown the Deed of Absolute Sale dated 10
November 1992, involving the same property, in private respondent’s favor, flatly stated that the
signatures found therein were not his or his wife’s. 9

Petitioner Emma personally confirmed that Marciano sold the subject property to her in 1976. She had
faithfully paid the real property taxes on it from 1976 until 1993, when she learned that it had been
registered in private respondent’s name. Upon examining the Deed of Absolute Sale dated 10 November
1992, supposedly executed by the spouses Cuevas over the subject property in private respondent’s favor,
petitioner Emma observed that the spouses Cuevas’ signatures found therein appeared to have been
forged. She further claimed that after finding that the subject property had been registered in private
respondent’s name, she suffered from nervousness and the aggravation of her rheumatoid arthritis. She
was compelled to engage the services of a lawyer to prosecute her case against private respondent, which
could cost her ₱100,000.00 or more. During the cross-examination and re-direct examination, petitioner
Emma explained that she had not been able to register the subject property in her name because of her
diabetes and rheumatoid arthritis.10

Carolyn introduced herself as a Senior Document Examiner in the National Bureau of Investigation
(NBI), performing, among her other duties, handwriting analysis. She admitted to preparing Questioned
Documents Report No. 548-795, dated 18 July 1995.11

Questioned Documents Report No. 548-795, prepared by Carolyn, was submitted by petitioners as
evidence and was marked as Exhibit "G".12 They had obtained the report for the purpose of finding out
whether (1) the signatures of the spouses Cuevas in the Deed of Absolute Sale dated 10 November 1992,
which they purportedly executed in private respondent’s favor; and (2) the signature of Escolastico
Cuevas (Escolastico), Registrar of Deeds (ROD) of Cavite, in the Owner’s Duplicate Copy of TCT No. T-
58459, which Mariano surrendered to petitioners in 1972, were forged, by comparing them with the
specimen signatures given by the spouses Cuevas and ROD Escolastico. As stated in her Report, Carolyn
found that:

1. The questioned and the standard/specimen signatures VIRGINIA M. CUEVAS were


not written by one and the same person.

2. The questioned and the standard /specimen signatures of ESCOLASTICO CUEVAS were
written by one and the same person.

3. No definite opinion on MARCIANO CUEVAS per above stated findings no. 3.13
On the other hand, private respondent offered the testimonies of Jaime Laudato (Jaime) and Angelina
Cortez (Angelina) in support of her version of events.

Jaime disclosed that it was Vice-Mayor Lauro Carungcong (Carungcong) of Dasmariñas who supposedly
brokered the sale of the subject property, and who instructed Jaime to verify with the Register of Deeds
the existence of the Original Copy of TCT No. T-58459, and to check for any encumbrances thereon.
Three weeks thereafter, Vice-Mayor Carungcong gave Jaime a copy of the Deed of Absolute Sale dated
10 November 1992 executed by the spouses Cuevas over the subject property in private respondent’s
favor, and directed Jaime to pay the obligatory taxes and to register the subject property in private
respondent’s name. On cross-examination, Jaime admitted that he had never met nor was he acquainted
with either of the spouses Cuevas, the alleged vendors of the subject property.14

Angelina, employed as a Deeds Examiner in the Register of Deeds of Cavite, was tasked, as part of her
duties, to examine the documents related to the transfer of the subject property in private respondent’s
name before issuing the corresponding certificate of title. However, she admitted during cross-
examination that she was not in a position to determine the authenticity of the documents presented to
her.15

The RTC rendered a Decision16 in Civil Case No. 878-94 on 7 October 1996, dismissing petitioners’
Complaint. The RTC found that the statements of their witness Marciano and the results of Questioned
Documents Report No. 548-795 issued by the NBI were contradictory. The RTC noted that Marciano
testified that the signatures found in the Deed of Absolute Sale dated 8 October 1976 and the Kasunduan
sa Bilihan ng Lupa17 dated 15 June 1971 were Virginia’s; but the NBI Report stated that "the questioned
and the standard/specimen signatures VIRGINIA M. CUEVAS were not written by one and the same
person." The RTC also gave little credence to Marciano’s denial of the sale of the subject property to
private respondent, on the ground that it was self-serving. Although the RTC did observe differences in
Marciano’s signature in the Kasunduan ng Bilihan ng Lupa dated 15 June 1971 and the Deed of Absolute
Sale dated 10 November 1992, the trial court dismissed the same as mere changes in a person’s
penmanship or signature that could occur over the years. The RTC concluded that Civil Case No. 878-94
involved a double sale of the subject property, wherein private respondent, an innocent purchaser for
value who first registered the property in her name, should be adjudged to have a better title. The
dispositive part of the RTC Decision dated 7 October 1996 reads:

WHEREFORE, judgment is hereby rendered dismissing this case and declaring that the true and lawful
owner of the subject property as described in, and covered by, TCT No. T-369793 is [herein respondent]
Irene Montemayor.

All other claims of the parties are dismissed for inadequate substantiation.18

On 11 July 1997, petitioners filed an appeal with the Court of Appeals, docketed as CA-G.R. CV No.
54517, which challenged the afore-mentioned RTC judgment.

During the pendency of CA-G.R. CV No. 54517, petitioners filed with the Court of Appeals an Urgent
Manifestation19 on 20 October 1998. According to them, they obtained information that private
respondent’s TCT No. T-369793 covering the subject property had already been canceled; that a new
certificate of title, TCT No. T-784707, had been issued in the name of another person, Engracia Isip
(Engracia); and that a mortgage was constituted on the subject property. It began with private respondent
executing a Waiver and Quitclaim on 15 January 1998, wherein she confessed to obtaining TCT No. T-
369793 over the subject property in bad faith. In the same document, private respondent recognized
Engracia’s title to the subject property and, thus, private respondent relinquished her right over it to
Engracia and the latter’s heirs and successors-in-interest. The Register of Deeds, impleaded as a party in
CA-G.R. CV No. 54517, canceled TCT No. T-369793 in private respondent’s name; issued TCT No. T-
784707 in the names of Engracia’s heirs; and annotated on the latest certificate of title private
respondent’s Waiver and Quitclaim dated 15 January 1998.

On 18 November 1998, Perfecto Dumay-as, Deputy ROD of Trece Martires City, Cavite, filed a
Comment/Manifestation stating that Civil Case No. 878-94 was not inscribed on private respondent’s
TCT No. T-369793, since the case before the RTC had already been resolved in favor of private
respondent, thus, the presentation of the owner’s original certificate of title along with the
Waiver/Quitclaim, dated 15 January 1998, complied with the requirements of a voluntary transaction,
justifying the issuance of TCT No. T-784707 in the name of Engracia’s heirs.20

In its Decision dated 20 May 2004 in CA-G.R. CV No. 54517, the Court of Appeals denied petitioners’
appeal and affirmed the RTC Decision dated 7 October 1996 in Civil Case No. 878-94. The appellate
court held that petitioners were negligent in failing to register the subject property in their names. And,
just like the RTC, the Court of Appeals declared Marciano’s denial of the sale of the subject property in
private respondent’s favor as self-serving. The appellate court also pointed out that the findings of the
NBI were not definite as regards the alleged forgery of Marciano’s signature in the Deed of Absolute Sale
dated 10 November 1992. Lastly, the Court of Appeals took judicial notice of the
Comment/Manifestation of Perfecto Dumay-as, Deputy ROD of Trece Martires City, Cavite, stating that
Civil Case No. 878-94 was not inscribed on private respondent’s TCT No. T-369793, since the case
before the RTC had already been resolved in favor of private respondent, and the acquisition by
Engracia’s heirs of the subject property and TCT No. T-784707 over the same was in good faith and,
therefore, valid. The Court of Appeals decreed:

WHEREFORE, premises considered, the appealed Decision dated October 7, 1996 of the Regional Trial
Court of Cavite is hereby AFFIRMED.21

Petitioners filed a Motion for Reconsideration22 of the foregoing Decision on 25 June 2004, which the
Court of Appeals denied in a Resolution23 dated 28 December 2004.

Hence, the present Petition, where petitioners made the following assignment of errors:

RESPONDENT COURT COMMITTED SERIOUS ERROR IN RENDERING THE DECISION AND


RESOLUTION IN QUESTION IN COMPLETE DISREGARD OF LAW AND JURISPRUDENCE BY
SUSTAINING THE ORDER OF THE REGIONAL TRIAL COURT (BRANCH 21) OF CAVITE
NOTWITHSTANDING THE CLEAR AND AUTHENTIC RECORDS PRESENTED DURING TRIAL
WHICH NEGATE AND CONTRADICT ITS FINDINGS.

II

RESPONDENT COURT COMMITED GRAVE AND REVERSIBLE ERROR IN RENDERING THE


DECISION AND RESOLUTION IN QUESTION IN VIOLATION OF LAW AND JURISPRUDENCE
BY SUSTAINING THE ORDER OF THE REGIONAL TRIAL COURT (BRANCH 21) OF CAVITE
THEREBY IGNORING THE EVIDENCE ON RECORD SHOWING THE PETITIONERS’ CLEAR
RIGHTS OF OWNERSHIP OVER THE SUBJECT PROPERTY.

III
RESPONDENT COURT COMMITTED SERIOUS ERROR IN AFFIRMING THAT THE TRUE AND
LAWFUL OWNER OVER (sic) THE SUBJECT PROPERTY AS DESCRIBED IN AND COVERED
BY TCT NO. T-369793 IS PRIVATE RESPONDENT IRENE MONTEMAYOR DESPITE
DOCUMENTARY AND TESTIMONIAL EVIDENCE TO THE CONTRARY.24

The fundamental issue for resolution of this Court in this case is who has better right to the subject
property. Before the Court can settle the same, it must first determine the question of whether there was a
double sale of the subject property to both petitioners and private respondent, which is essentially a
question of fact requiring the Court to review, examine and evaluate, or weigh the probative value of the
evidence presented by the parties.

Rule 45 of the Rules of Court provides that only questions of law shall be raised in a Petition for Review
before this Court. This rule, however, admits of certain exceptions, namely, (1) when the findings are
grounded entirely on speculations, surmises, or conjectures; (2) when the inference made is manifestly
mistaken, absurd or impossible; (3) when there is grave abuse of discretion; (4) when the judgment is
based on a misappreciation of facts; (5) when the findings of fact are conflicting; (6) when, in making its
findings, the same are contrary to the admissions of both appellant and appellee; (7) when the findings are
contrary to those of the trial court; (8) when the findings are conclusions without citation of specific
evidence on which they are based; (9) when the facts set forth in the petition as well as in the petitioner’s
main and reply briefs are not disputed by the respondent; and (10) when the findings of fact are premised
on the supposed absence of evidence and contradicted by the evidence on record.25

While as a general rule appellate courts do not usually disturb the lower court's findings of fact, unless
said findings are not supported by or are totally devoid of or inconsistent with the evidence on record,
such finding must of necessity be modified to conform with the evidence if the reviewing tribunal were to
arrive at the proper and just resolution of the controversy.26 Thus, although the findings of fact of the
Court of Appeals are generally conclusive on this Court, which is not a trier of facts, if said factual
findings do not conform to the evidence on record, this Court will not hesitate to review and reverse the
factual findings of the lower courts. In the instant case, the Court finds sufficient basis to deviate from the
rule since the extant evidence and prevailing law support a finding different from the conclusion of the
Court of Appeals and the RTC.27

Contrary to the findings of both the Court of Appeals and the RTC, the evidence on record reveals that the
spouses Cuevas, the previous owners of the subject property, did not sell the said property to private
respondent.

Marciano’s explicit statements, made under oath before the trial court, that he did not sell the subject
property to anyone other than petitioners, and that the signatures of the vendors appearing in the Deed of
Absolute Sale dated 10 November 1992 were not made by him and his wife, were not refuted. Private
respondent’s witness, Jaime, who was tasked to verify if there was no encumbrance on the spouses
Cuevas’ title to the subject property and to register it in private respondent’s name after the alleged sale,
admitted that he had never met the supposed vendors of the subject property and, thus, could not
competently testify on whether it was actually the spouses Cuevas who executed the Deed of Absolute
Sale dated 10 November 1992 in private respondent’s favor.

The pronouncement of the RTC, affirmed by the Court of Appeals, that Marciano’s testimony was self-
serving was utterly baseless. Neither the RTC nor the Court of Appeals explained how Marciano’s
confirmation of the sale of the subject property to petitioners, and his renunciation of the supposed sale of
the same property to private respondent, would accrue to Marciano’s benefit. In giving such a testimony
in 1994, Marciano did not stand to gain back the subject property, which he had already admitted to
selling to petitioners 18 years prior, in 1976. On the other hand, if Marciano falsely testified in open court
that he and his wife did not sell the subject property to private respondent, Marciano was risking
prosecution for the crime of perjury and liability for damages.

Additionally, although Questioned Documents Report No. 548-795 of the NBI did not make a definitive
finding on whether Marciano’s purported signature on the Deed of Sale dated 10 November 1992 was
actually his or a forgery, the same Report did unqualifiedly state that the signature that Virginia
supposedly affixed to the said Deed and the specimen signatures that she provided the NBI were not
written by the same person. Clearly, Questioned Documents Report No. 548-795 of the NBI established
that her purported signature in the Deed of Absolute Sale dated 10 November 1992 was forged.

It is true that a finding of forgery does not depend exclusively on the testimonies of expert witnesses and
that judges must use their own judgment, through an independent examination of the questioned
signature, in determining the authenticity of the handwriting.28 However, it is important to note that in this
case neither the RTC nor the Court of Appeals made any finding through an independent examination of
Virginia’s signatures. The RTC gave credence to Questioned Documents Report No. 548-795 of the NBI,
but misread it as saying that the two specimen signatures given by Virginia were not written by the same
person. Hence, Questioned Documents Report No. 548-795 of the NBI, finding that the signature of
Virginia in the Deed of Absolute Sale dated 10 November 1992 is a forgery, stands unquestioned.

That at least one of the signatures of the alleged vendors was indubitably established as a forgery should
have already raised serious doubts as to the authenticity and validity of the Deed of Absolute Sale dated
10 November 1992. This, taken together with Marciano’s candid and categorical testimony that he and his
wife did not sell the subject property to private respondent or executed any deed to evidence the same,
strongly militates against the existence of a second sale of the subject property to private respondent.

In comparison, the circumstances surrounding the alleged second sale of the subject property by the
spouses Cuevas to private respondent are sketchy at best. Vice Mayor Carungcong, who allegedly
brokered the sale, had already died during the pendency of the case and was not presented as witness. It
was not made clear whether he was duly authorized by the spouses Cuevas to broker such sale. Private
respondent’s witness, Jaime, did not claim to have been present during the negotiations or in any part of
the sale transaction, and had not even met the spouses Cuevas. All he was able to testify on was that he
verified with the Register of Deeds that there was no encumbrance annotated on TCT No. T-58459 of the
spouses Cuevas, and eventually, he was able to cause the cancellation of TCT No. T-58459 in the spouses
Cuevas’ names and the issuance of TCT No. T-369793 in private respondent’s name based on the
questionable Deed of Absolute Sale dated 10 November 1992. Similarly ambiguous was how Jaime was
able to have TCT No. T-58459 of the spouses Cuevas cancelled when the Owner’s Duplicate Copy
thereof was with petitioners. When a certificate of title is cancelled, the owner’s duplicate must also be
surrendered to the Register of Deeds for cancellation, in accordance with Section 5329 of Presidential
Decree No. 1529, otherwise known as the Property Registration Decree, as amended.

Other than the forged Deed of Absolute Sale dated 10 November 1992, private respondent’s bad faith in
registering the subject property in her name and her dishonest scheme in appropriating the land for herself
are further evidenced by her own admissions in the Waiver and Quitclaim dated 15 January 1998, which
she executed in favor of Engracia’s heirs, to wit30:

1. That, I am the holder of Transfer Certificate of Title No. 369793 covering a parcel of land (Lot
No. 6961-N) with an area of Forty One Thousand Eight Hundred and Thirty Seven square meters
(41, 837 sq. m.) situated in Barangay Paliparan, Dasmariñas, Cavite and declared for taxation
purposes under Tax Declaration No. 151746 Dasmariñas, Cavite;
2. That, I know (sic) from the very beginning the dubiousness of my title to the above described
roperty (sic);

3. That, I have neither legal or equitable title to the said property as the previous document (Deed
of Conveyance) which is the basis of immediate transfer from OCT No. 1002 is of questionable
origin;

4. That, all documents relative to the issuance of subsequent transfer certificate of titles including
TCT No. 369793 under my name were in reality, entirely simulated and fictitious;

5. That, I am recognizing the genuineness of Transfer Certificate of Title No. 769357-3911 in the
name of ENGRACIA ISIP with Tax Declaration No. 151745, which has been transferred to her
heirs, APOLONIA I.R. ALCARAZ, ELIZA I. REYES-GLORIA, VICTOR ISIP REYES and
EPITACIO ISIP REYES, covered by TCT. No. T-784707;

6. That, in the light of the foregoing, I do hereby waive and renounce, now and forever, all claims
of whatever nature to the said property in favor of the said ENGRACIA ISIP, her heirs,
executors, administrator or assigns.

Private respondent’s unabashed confession that she knew of the dubiousness of her title from the
very beginning is contrary to the concept of good faith. Good faith consists in the belief of the
possessors that the persons from whom they received the thing are its rightful owners who could
convey their title.31

Based on the foregoing, the preponderance of evidence in this case is in petitioners’ favor. The spouses
Cuevas only sold the subject property to them in 1976, and did not sell it a second time to private
respondent in 1992. As a consequence, the rules on the double sale of registered property are not relevant
herein. The Court then proceeds to rule on the consequence of private respondent’s fraudulent registration
of the subject property in her name.

The Deed of Absolute Sale dated 10 November 1992, a forged deed, is a nullity and conveys no
title.32 Paragraph 2 of Section 53 of Presidential Decree No. 1529 reads:

In all cases of registration procured by fraud, the owner may pursue all his legal and equitable remedies
against the parties to such fraud without prejudice, however, to the rights of any innocent holder for value
of a certificate of title. After the entry of the decree of registration on the original petition or application,
any subsequent registration procured by the presentation of a forged duplicate certificate of title, or of a
forged deed or other instrument, shall be null and void.

Insofar as a person who fraudulently obtained a property is concerned, the registration of the property in
said person’s name would not be sufficient to vest in him or her the title to the property. A certificate of
title merely confirms or records title already existing and vested. The indefeasibility of the Torrens title
should not be used as a means to perpetrate fraud against the rightful owner of real property. Good faith
must concur with registration because, otherwise, registration would be an exercise in futility.33 A Torrens
title does not furnish a shield for fraud, notwithstanding the long-standing rule that registration is a
constructive notice of title binding upon the whole world. The legal principle is that if the registration of
the land is fraudulent, the person in whose name the land is registered holds it as a mere trustee.34

It has long been established that the sole remedy of the landowner whose property has been wrongfully or
erroneously registered in another's name is to bring an ordinary action in an ordinary court of justice for
reconveyance or, if the property has passed into the hands of an innocent purchaser for value, for
damages. "It is one thing to protect an innocent third party; it is entirely a different matter and one devoid
of justification if deceit would be rewarded by allowing the perpetrator to enjoy the fruits of his nefarious
deed."35 Reconveyance is all about the transfer of the property, in this case the title thereto, which has
been wrongfully or erroneously registered in another person's name, to its rightful and legal owner, or to
one with a better right.36 Evidently, petitioners, being the rightful owners of the subject property, are
entitled to the reconveyance of the title over the same.

However, as a further demonstration of private respondent’s continuing bad faith and persistent effort to
unlawfully deprive petitioners of the subject property, private respondent executed the Waiver and
Quitclaim dated 15 January 1998, in which she admitted that her title to the said property was void and,
instead, recognized the title of Engracia, who owned the subject property prior to the spouses Cuevas.
Pursuant to said Waiver and Quitclaim, the Register of Deeds cancelled TCT No. T-369793 in private
respondent’s name and issued TCT No. T-784707 in the names of Engracia’s heirs.

It must be stressed that Engracia, whose TCT No. T-13105 over the subject property was already
cancelled on 26 April 1965, had never filed a case questioning the cancellation of said certificate of title
during her lifetime.37 There is also nothing in the records that would show that after Engracia’s death in
1981, her heirs attempted to recover title to the subject property.

The Waiver and Quitclaim dated 15 January 1998 deserves little evidentiary weight as to the truth or
veracity of the statements contained therein, considering that they were unilaterally made by private
respondent. There is no independent evidence that all certificates of title subsequent to OCT No. 1002
covering the subject property were simulated and fictitious. In fact, private respondent contradicted
herself by acknowledging in the very same document that Engracia’s title, which was transferred to her
heirs, was genuine. The only fact that said Waiver and Quitclaim established was private respondent’s
bad faith in having the subject property registered in her name. For the Court to make such finding of bad
faith on private respondent’s part, it need not actually be true that all titles to the subject property, prior to
private respondent’s, were simulated and fictitious, only, private respondent believed them to be so, but
still persisted in acquiring and registering in her name what she already knew was a dubious title.

What is apparent to this Court is that private respondent executed the Waiver and Quitclaim dated 15
January 1998 so as to effect the transfer of the subject property to third persons, i.e., Engracia’s heirs, and
defeat any judgment granting the petitioners the remedy of reconveyance of the subject property.

In connection therewith, this Court expresses its disfavor over the cavalier attitude of the Register of
Deeds of Cavite in canceling TCT No. T-369793 in private respondent’s name and issuing TCT No. T-
784707 in the names of Engracia’s heirs, on the sole basis of the Waiver and Quitclaim dated 15 January
1998, executed by private respondent. The Register of Deeds of Cavite, who was a party to petitioners’
case for reconveyance, and was undoubtedly aware of the issues involved in the said case and the
pendency of the same. Yet it blindly allowed the registration of the alleged title to the subject property of
Engracia and her heirs, in effect, reviving a title that had already been cancelled way back in 1965, and
disregarding all other titles issued in between, based entirely on the unilateral claims of a self-confessed
fraud. Moreover, in placing its faith in the unsupported statements of the private respondent, who had
confessed to having acquired and registered the property in bad faith, against the presumed good faith of
the former owners, the Register of Deeds acted in a manner that was highly irregular.1avvphi1

This having been said, an action for reconveyance is an action in personam available to a person whose
property has been wrongfully registered under the Torrens system in another’s name. Reconveyance is
always available as long as the property has not passed to an innocent person for value.38
Engracia’s heirs cannot be considered "innocent" persons or persons who acquired the subject property
"for value." Engracia’s heirs "re-acquired" the subject property by virtue of the private respondent’s
Waiver and Quitclaim dated 15 January 1998. That the said document was executed by private
respondent, who admitted to holding a dubious title to the subject property, should be sufficient to put
Engracia’s heirs on notice and to cause the latter to investigate the other transfers and titles issued for the
subject property. The Waiver and Quitclaim dated 15 January 1998 also does not establish that the subject
property was transferred to Engracia’s heirs for value, it appearing to have been executed by private
respondent in favor of Engracia’s heirs without any consideration at all. Hence, the cancellation of TCT
No. T-369793 in private respondent’s name and the issuance of TCT No. T-784707 in the names of
Engracia’s heirs cannot bar the reconveyance of the subject property to petitioners.

A judgment directing a party to deliver possession of a property to another is in personam; it is binding


only against the parties and their successors in interest by title subsequent to the commencement of the
action.39 The Court may deem Engracia’s heirs as private respondent’s successors-in-interest, having
acquired title to the subject property through private respondent after the commencement of petitioners’
action for reconveyance of the same property.

Since private respondent’s fraudulent registration of the subject property in her name violated petitioners’
right to remain in peaceful possession of the subject property, petitioners are entitled to nominal damages
under Article 2221 of the Civil Code, which provides:

Art. 2221. Nominal damages are adjudicated in order that a right of the plaintiff which has been violated
or invaded by the defendant, may be vindicated or recognized, and not for the purpose of indemnifying
the plaintiff for any loss suffered by him.

This Court finds that petitioners’ prayer for nominal damages in the amount of ₱50,000.00 is proper and
reasonable.The award of attorney’s fees is also in order because private respondent acted in gross and
evident bad faith in refusing to satisfy petitioners’ plainly valid, just and demandable claim.40 Given the
time spent on the present case, which lasted for more than 15 years, the extent of services rendered by
petitioners’ lawyers, the benefits resulting in favor of the client, as well as said lawyer’s professional
standing, the award of ₱100,000.00 is proper.41

However, exemplary damages cannot be imposed in this case, where petitioners only prayed for the
award of nominal damages and attorney’s fees, but not for moral, temperate, liquidated, or compensatory
damages. Article 2229 of the Civil Code imposes exemplary damages only under the following
circumstances:

Art. 2229. Exemplary or corrective damages are imposed, by way of example or correction for public
good, in addition to the moral, temperate, liquidated or compensatory damages.

IN VIEW OF THE FOREGOING, the instant Petition is GRANTED. The assailed Decision dated 20
May 2004 of the Court of Appeals in CA-G.R. CV No. 54517 is REVERSED and SET ASIDE. The
Register of Deeds is ORDERED to (1) CANCEL TCT No. T-784707 over the subject property in the
name of Engracia’s heirs, which was derived, not in good faith or for value, but from the fraudulently
procured TCT No. T-369793 in private respondent’s name; and (2) ISSUE a new certificate of title over
the subject property in the name of petitioners, the rightful owners thereof. Private respondent is
ORDERED to PAY petitioners nominal damages in the amount of ₱50,000.00 and attorneys fees in the
amount of ₱100,000.00. Costs against private respondent.

SO ORDERED
G.R. No. 148147 February 16, 2007

JESSIE GASATAYA, Petitioner,


vs.
EDITHA MABASA, Respondent.

DECISION

CORONA, J.:

Before us is an appeal by certiorari under Rule 45 of the 1997 Rules of Civil Procedure assailing the
decision1 of the Court of Appeals (CA) in CA-G.R. CV No. 55055 which, in turn, affirmed the decision
of the Regional Trial Court (RTC) of Lanao del Norte, Branch 7.2

The facts follow.

Respondent Editha Mabasa’s father, Buenaventura Mabasa, was granted a homestead patent on Lots 279,
272 and 972 located in Lala, Lanao del Norte. Buenaventura Mabasa mortgaged these lots to secure a
loan from the Development Bank of the Philippines (DBP). Because of his failure to pay his
indebtedness, DBP foreclosed on the lots and sold them at public auction where it emerged as the highest
bidder. DBP then obtained titles to the lots: Lot 279 under TCT No. T-2247 and consolidated Lots 272
and 972 under TCT No. T-2448.

When Buenaventura Mabasa died, respondent’s siblings authorized her to negotiate with DBP for the
repurchase of the lots. DBP allowed respondent to reacquire the foreclosed properties through a deed of
conditional sale for ₱25,875.3

Subsequently, respondent entered into an agreement with petitioner’s father, Sabas Gasataya, for the latter
to assume payment of her obligation to DBP. They further agreed that Sabas Gasataya would take
possession of the lots for 20 years and develop them into a fishpond. As consideration thereof, respondent
received ₱10,000 cash, in addition to the ₱25,000 that Sabas Gasataya had to pay DBP on her behalf.

Upon representation by Sabas Gasataya that respondent’s obligation to DBP had already been settled,
they entered into another agreement denominated as "Deed of Sale of Fishpond Lands with Right to
Repurchase."

Eight years after the execution of the above deed of sale with right to repurchase, respondent discovered
that Sabas Gasataya had stopped paying DBP. As a result, DBP revoked her right to repurchase the
subject lots.1awphi1.net

DBP later on held a public auction of the properties where petitioner participated and bid the highest price
of ₱27,200. Eventually, he acquired titles to the lots for which he was issued TCT No. T-11720 in lieu of
TCT No. T-2447 (Lot 279) and TCT No. T-11721 for TCT No. T-2448 (Lots 272 and 972).

Respondent then filed a complaint in the RTC for reconveyance of titles of lands with damages4 against
petitioner and Sabas Gasataya (Gasatayas). She claimed that the latter deliberately reneged on his
commitment to pay DBP to: (1) revoke her right to repurchase the lots under the deed of conditional sale
and (2) subject the properties to another public auction where petitioner could bid.
Petitioner and his father denied the allegations saying that the deed of conditional sale assumed by the
latter from respondent was rendered ineffective by DBP’s refusal to accept payments thereon.

The trial court ruled in favor of respondent finding that the Gasatayas failed to controvert her claim that
they defrauded her just so petitioner could acquire the lots at public auction.5 According to the trial court,
the Gasatayas failed to prove that DBP indeed rejected payments from Sabas Gasataya. The trial court
ruled:

WHEREFORE, judgment is hereby rendered in favor of the [respondent] and against [the Gasatayas]
ordering [them] to wit:

a. Ordering [petitioner] to reconvey to [respondent] TCT. No.[T-11720] and TCT No. T-11721,
both of the Registry of Deeds for the Province of Lanao del Norte, upon tender to and receipt by
[petitioner] of the amount of ₱37,200.00 Philippine money;

b. Ordering the Registrar of Deeds for the Province of Lanao del Norte to procure and cause the
transfer and registration of the aforesaid transfer certificates of title in favor and in the name of
herein [respondent] Editha S. Mabasa;

c. Ordering [the Gasatayas] to cede, transfer and reconvey to [respondent] the physical possession
and occupancy of Lot 279, 272 and Lot 972…as covered by the aforesaid certificates of title;

d. Ordering [the Gasatayas] to pay [respondent] the sum of ₱5,000.00 for attorney’s fees;
₱5,000.00 as litigation expenses;

e. Ordering [the Gasatayas] to pay costs of this proceeding[s].

SO ORDERED.6

Petitioner and his father appealed to the CA which affirmed the RTC’s decision and dismissed their
appeal for lack of merit. The CA declared:

The contention of [respondent] that [the Gasatayas] deliberately chose not to pay DBP as agreed, in order
for them to acquire said properties in a fraudulent and treacherous manner, was not fully controverted by
[them]. [The Gasatayas] failed to produce evidence to support their defenses.

xxx xxx xxx

Moreover, [the Gasatayas] are in possession of said land[s] by virtue of a Deed of Sale with a Right to
Repurchase and not because the DBP granted it to them…[T]o facilitate their acquisition of the land in
question, [they] deliberately defaulted in the payment of the assumed obligation to the damage and
prejudice of [respondent]. Consequently, the lands in question were subjected to public bidding wherein
[petitioner] participated and eventually won…[the Gasatayas] committed a breach of trust amounting to
fraud which would warrant an action for reconveyance.7

Petitioner alone came to us via this appeal by certiorari seeking the reversal of the CA decision.

Before us, petitioner contests the CA decision affirming the trial court’s order to reconvey his titles on the
disputed lots to respondent who, according to him, is not the owner thereof.
We affirm the CA.

Reconveyance is available not only to the legal owner of a property but also to the person with a better
right than the person under whose name said property was erroneously registered.8 While respondent is
not the legal owner of the disputed lots, she has a better right than petitioner to the contested lots on the
following grounds: first, the deed of conditional sale executed by DBP vested on her the right to
repurchase the lots and second, her right to repurchase them would have subsisted had they (the
Gasatayas) not defrauded her.

The trial court’s findings, as affirmed by the CA, that petitioner and his father deceived respondent to
acquire the disputed lots bind us. Well-settled is the rule that factual conclusions of the trial court deserve
respect and become irrefutable especially when affirmed by the CA.9 Absent any evidence that the CA
overlooked salient matters that could justify a reversal of the outcome of this case, we decline to disturb
such factual conclusions.

Petitioner, however, insists that respondent had no right to the disputed lots since the conditional sale
agreement where such right was based had long been cancelled by DBP. According to petitioner, a void
and inexistent deed cannot override his right as registered owner of the lots.

We disagree.

Petitioner cannot discredit the deed of conditional sale just so he can to keep his titles to the lots.
Petitioner should be reminded that DBP revoked respondent’s right to repurchase the lots under said deed
because of the deceitful maneuverings that he and his father employed. If we were to sustain petitioner’s
argument, then we would, in effect, reward him for his misdeed.

Neither can this Court uphold petitioner’s contention that his titles are unsullied on the mere fact that he
purchased the properties at public auction. Fraud overthrows the presumption that the public sale was
attended with regularity. The public sale did not vest petitioner with any valid title to the properties since
it was but the consequence of his and his father’s fraudulent schemes.

The registration of the properties in petitioner’s name did not obliterate the fact that fraud preceded and
facilitated such registration. Actual or positive fraud proceeds from an intentional deception practiced by
means of misrepresentation of material facts,10 which in this case was the conscious representation by
petitioner’s father (Sabas Gasataya) that respondent’s obligation to DBP had already been settled. It is
fraud to knowingly omit or conceal a fact, upon which benefit is obtained, to the prejudice of
another.11 Consequently, fraud is a ground for reconveyance.12

Moreover, the law only protects an innocent purchaser for value and not one who has knowledge of and
participation in the employment of fraud. An innocent purchaser for value is one who buys the property of
another without notice that some other person has a right to or interest in that same property, and who
pays a full and fair price at the time of the purchase or before receiving any notice of another person’s
claim.13 Obviously, petitioner was not an innocent purchaser for value.

As a final point, the Court takes significant note of the fact that respondent’s father originally acquired the
subject lots through homestead grant. Commonwealth Act 141 (Public Land Act) aims to confine and
preserve to the homesteader and his kin the homestead lots. We, therefore, agree with the CA’s
disquisition that courts should "lend a stout shoulder to help keep a homestead in the homesteader’s
family" for the stern reality cannot be belied that "homesteaders and their families are generally in the
lower stratum of life" and most likely, when they alienate the homestead, it is "out of dire
necessity."14 According to the CA, desperation does not allow much of a choice, hence homesteaders and
their kin should be given every opportunity to repurchase their homestead.

WHEREFORE, the assailed decision of the Court of Appeals in CA-G.R. CV No. 55055 is
hereby AFFIRMED.

Costs against petitioner.

SO ORDERED
G.R. No. L-33261 September 30, 1987

LIWALUG AMEROL, MACATANTO AMEROL, TAIB AMEROL, DIBARATUN AMEROL,


DIBARATUN, MATABALAO, MINDALANO DIBARATUN, DIPUNDUGUN MORO, and
MANUCAO MORO, petitioners,
vs.
MOLOK BAGUMBARAN, respondent.

SARMIENTO, J.:

This is a petition for review on certiorari of the decision 1 of the then Court of First Instance of Lanao del
Sur, Branch III, Marawi City, in Civil Case No. 1354, entitled, "Molok Bagumbaran vs. Liwalug Amerol
et al.," under Republic Act No. 5400, "as only question of law is raised." 2

The only issue for resolution is the prescriptive period of an action for reconveyance of real property
which has been wrongfully or erroneously registered under the Torrens System in another's name. In
other words, what is the prescriptive period for the action to reconvey the title to real property arising
from an implied or constructive trust and, corrolarily reference. The petitioners herein, defendants in the
trial court, assert that they have ten years to bring the action, while the respondent, plaintiff in the court
below, claims the prescriptive period is four years. The trial court ruled tor the plaintiff, now respondent.

We reverse. We hold that the prescriptive period for such an action for reconveyance, as this case, is ten
years. The point of reference is, or the ten-year prescriptive period commences to run from, the. date of
the issuance of the certificate of title over the real property.

There is no issue as to the facts, this case having been elevated to this Court, as aforestated, on purely a
question of law. Be that as it may, in order to satisfy constitutional requirements as well as to place the
question of law in proper perspective, there is need to state the facts of the case. On this regard, the
findings of the trial court would best serve the stated purposes.

xxx xxx xxx

From the evidence submitted during the trial there is no dispute concerning the fact
relative to the Identity of the land in litigation. It is commonly known as Lot No. 524,
Pls-126 and technically described and bounded in the sketch (Exh. "7 "). This is the very
tract of land alleged by the plaintiff to have been forcibly entered into by the defendants
and which plaintiff now w&s to recover possession thereof. It has also been proven that
the same lot was covered by two free patent applications: — (l) that of defendant Liwalug
Datomanong (erroneously surnamed Amerol) which he filed on the 4th day of
September, 1953, and (2) that of Molok Bagumbaran which was filed on December 27,
1954. There is also no question regarding the fact that as to these two free patent
applications, that of plaintiff Molok Bagumbaran was given due course as a result of
which Free Patent No. V-19050 was issued on August 16,1955 by authority of the
President of the Philippines Ramon Magsaysay, by Jaime Ferrer, Undersecretary of
Agriculture and Natural Resources and duly registered with the office of the Register of
Deeds of the Province of Lanao (now Lanao del Sur) in the mm year whereupon Original
Certificate of Title No. P-466 was duly issued, owner's duplicate certificate having been
furnished the herein plaintiff.
This court is also inclined to believe that defendant Liwalug Datomanong had never
known of plaintiff's free patent application on the land in question nor was he ever
notified or participated in the administrative proceedings relative to plaintiff's free patent
application. In the meantime, since the date he purchased the land from Mandal Tondo,
said defendant has been and up to the present in con. tinuous occupation and cultivation
of the same. His co-defendants named in the complaint are merely his tenants.

It is also incontrovertible fact that said defendant did not take appropriate action to annul
the patent and title of the plaintiff within one year from issuance thereof and that the first
step taken by him to contest said patent and title was a formal protest (Exh. "12", p. 408,
Record) dated April 24, 1964, filed before the Bureau of Lands after the lapse of Nine (9)
long years from the issuance of patent in favor of the plaintiff. The second step he took
was his counterclaim contained in his answer to the complaint in the above entitled case,
which answer was filed with this court on December 4, 1964. In said counterclaim,
defendant reiterated his stand that plaintiff secured patent on the land by means of deceit
and fraud, wherefore, defendant prayed that said title be annulled, or, alternatively,
plaintiff be ordered to reconvey the said land to the said defendant Liwalug Datomanong.

First question to be resolved is whether or not the plaintiff is guilty of fraud or


misrepresentation in securing the Free Patent No. V-19050 covering the land in question.

Upon a thorough examination of the evidence, proofs are sufficient to support defendant's
contention that plaintiff is guilty of fraud and misrepresentation. In the first place, proofs
are abundant tending to show that since 1952 when Mandal Tando transferred the land to
said defendant, the latter occupied, took possession thereof and cultivated the same
continuously, publicly, adversely against any claimant and in the concept of owner up to
the present; that said defendant had introduced considerable improvements such as
coconut and coffee plantations and other fruit trees besides his farm house, a mosque,
cassava plantation and clearing and full cultivation of the entire area. The fact of
possession on the part of said defendant has been attested to by competent and creditable
witnesses like Mandal Tando who conveyed the land to the defendant; Hadji Sirad
Gomandang, the barrio captain of Montay, Malabang, Lanao del Sur, Hadji Rasol
Maruhom and Hadji Abdulcadir Pagayawan, both of Pialot, Malabang, Lanao del Sur
who are farmers and barrio-mates of said defendant; and also Disomnong Dimna
Macabuat, an employee in the office of the District Land Officer at Marawi City who had
officially conducted occular inspection and investigation of the premises in connection
with the protest of said defendant found thereon the above-mentioned improvements
introduced by the said defendant.

What is more, on or before filing his free patent application, plaintiff knew that the land
in question which was covered by his free patent application was then actually occupied
and cultivated by defendant Liwalug Datomanong if not by Mandal Tando, the original
occupant. Be it remembered that Mandal Tando had transferred to defendant Liwalug
Datomanong Twenty Four (24) hectares, more than eleven hectares of which is (sic)
outside the military reservation and designated as Lot No. 524, Pls-126 and the rest which
is in the southern portion lies within the military reservation. Now, immediately adjacent
thereto on the south is the land claimed and occupied by the herein plaintiff also
consisting of Twenty Four (24) hectares but wholly within the military reservation. It
appears that plaintiff declared this Twenty four hectares for the first time on October 24,
1950 for taxation purposes (Tax Declaration No. 1529, Record) and stated in said tax
declaration (Exhs. "8" and "8-A," p. 414, Record) regarding the boundaries that the
adjacent owner on the north is Mandal Tando. In other words, plaintiff had expressly
recognized the fact that Mandal Tando is an adjacent land owner north of plaintiff's
property. On February 19, 1951 herein plaintiff revised the above-stated tax declaration
and secured another (Tax Declaration No. 1794, Exh. "9" and "9-A," p. 413, Record) and
still plaintiff stated therein that his boundary land owner on the north is Hadji Abdul
Gani. 3 [a.k.a.Liwalug Datomanong(Amerol)]. 4

xxx xxx xxx

Notwithstanding the aforequoted findings, very unequivocal to be sure, the trial court denied the
counterclaim of the defendants, now petitioners, for the affirmative relief of reconveyance on the ground
of prescription. Said the court:

xxx xxx xxx

The patent of the plaintiff having been registered back in 1955 and in contemplation of
law registration thereof is notice to the whole world and yet defendant exerted no effort
whatsoever either to annul the title or institute proceedings for reconveyance except in his
counterclaim contained in his answer to the complaint in this case at bar which answer
and counter-claim was filed on December 4, 1964, some nine long years from the date of
registration of the patent, defendant unfortunately lost his right to reconveyance within
the period of four (4) years from the date of registration of said patent. 5

xxx xxx xxx

Thus, the dispositive portion of the assailed decision stated:

xxx xxx xxx

PREMISES CONSIDERED, judgment is hereby rendered as follows: (1) declaring the


herein plaintiff the registered owner of Lot No. 524, Pls-126 and sustaining and
respecting the validity of the plaintiff's Original Certificate of Title No. P-466 covering
the said land; (2) ordering the defendants to vacate the premises of Lot No. 524; Pls-126
and deliver possession thereof to the herein plaintiff under certain terms and conditions
herein below stated; (3) denying and hereby dismissing the counterclaim of the herein
defendants and consequently the prayer to annul the title and/or for reconveyance of the
land to said defendant Liwalug Datomanong must Likewise be denied; (4) that before
plaintiff could take possession of said premises he must reimburse defendant Liwalug
Datomanong the total sum of Six Thousand Seven Hundred Fifty-Two Pesos and Sixty-
Two Centavos (P6,752.62) which he incurred for the necessary and useful expenses on
the land in question with the right of said defendant to retain possession of the premises if
said reimbursement be not completely made. No pronouncement as to costs. 6

xxx xxx xxx

Hence, this petition. 7

The petitioners in their Brief 8 assign the following two errors allegedly committed by the trial court:
I.

THE COURT ERRED IN ITS CONCLUSION OF LAW TOTHE EFFECT THAT PETITIONERS
RIGHT OF ACTION FOR RECONVEYANCE FOR VIOLATION OF AN IMPLIED TRUST
PRESCRIBED AFTER FOUR YEARS FROM THE REGISTRATION OF THE PATENT OF
RESPONDENT.

II.

THE COURT ERRED IN NOT REQUIRING THE INTRODUCTION OF EVIDENCE AS BASIS IN


THE ASSESSMENT OF THE FAIR MARKET VALUE OF THE IMPROVEMENT INTRODUCED
ON THE LAND IN GOOD FAITH BY PETITIONERS INSTEAD OF BASING SUCH ASSESSMENT
UPON PURE AND SIMPLE GUESS WORKS AND WILD ESTIMATIONS.

The first assignment of error is well-taken as adverted to at the outset.

Indubitably, the act of respondent in misrepresenting that he was in actual possession and occupation of
the property in question, obtaining a patent and Original Certificate of Title No. P- 466 in his name,
created an implied trust in favor of the actual possessor of the said property. The Civil Code provides:

ARTICLE 1456. If property is acquired through mistake or fraud, the person obtaining it
is by force of law, considered a trustee of an implied trust for the benefit of the person
from whom the property comes.

In this case, the land in question was patented and titled in respondent's name by and through his false
pretenses. Molok Bagumbaran fraudulently misrepresented that he was the occupant and actual possessor
of the land in question when he was not because it was Liwalug Datomanong. Bagumbaran falsely
pretended that there was no prior applicant for a free patent over the land but there was — Liwalug
Datomanong. By such fraudulent acts, Molok Bagumbaran is deemed to hold the title of the property in
trust and for the benefit of petitioner Liwalug Datomanong. Notwithstanding the irrevocability of the
Torrens title already issued in the name of respondent, he, even being already the registered owner under
the Torrens system, may still be compelled under the law to reconvey the subject property to Liwalug
Datomanong. After all, the Torrens system was not designed to shield and protect one who had committed
fraud or misrepresentation and thus holds title in bad faith. Further, contrary to the erroneous claim of the
respondent, 9 reconveyance does not work to set aside and put under review anew the findings of facts of
the Bureau of Lands. In an action for reconveyance, the decree of registration is respected as
incontrovertible. What is sought instead is the transfer of the property, in this case the title thereof, which
has been wrongfully or erroneously registered in another person's name, to its rightful and legal
owner, 10 or to one with a better right. That is what reconveyance is all about.

Yet, the right to seek reconveyance based on an implied or constructive trust is not absolute. It is subject
to extinctive prescription. 11 Happily, both parties agree on this point. The seeming impediment however,
is that while the petitioners assert that the action prescribes in ten years, the respondent avers that it does
in only four years.

In support of his submission, the respondent invokes several cases. We have examined the invocations
and find them inapplicable. For instance, the case of Fabian vs. Fabian, 12 relied on by the respondent,
does not square with the present case. In Fabian, the party who prayed for reconveyance was not in actual
possession and occupation of the property. It was instead the party to whom title over the property had
been issued who occupied and possessed it. Further, the litigated property had been in the adverse
possession of the registered owner for well-nigh over twenty-nine big years, hence, reconveyance had
been irretrievably lost.

Miguel vs. Court of Appeals, 13 is, likewise, inapplicable. In Miguel, the actual occupant and possessor of
the controverted parcel of land, after having been enticed by Leonor Reyes, an ambulatory notary public,
with promise of help, engaged and retained the services of the latter to facilitate the issuance of a patent
for the said land in his (Miguel's) favor. Thus, there existed between the parties a relationship very much
akin to that of lawyer-client and which is similarly fiduciary in character. But Reyes, inspite of his
compensation of one-fifth of the yearly produce of the property, still violated the trust reposed on him and
instead worked for the issuance of the patent in the name of his own wife. So, after the demise of Leonor
Reyes, the property was fraudulently patented and titled in his widow's favor. The reconveyance of the
property was decreed by the Court based on "breach of fiduciary relations and/or fraud." It was shown
that the parties were legally bound to each other by a bond of fiduciary trust, a bond lacking in the case at
bar.

Finally, the case of Ramirez vs. Court of Appeals 14 can not be availed of because the period of
prescription was not there definitely and squarely settled. In fact, Ramirez underscores a vacillation
between the four-year and the ten-year rule. There it was stated that "an action for relief on the ground of
fraud — to which class the remedy prayed for by Paguia belong — scan only be brought within four years
after accrual of the right of action, or from the discovery of the fraud." If the decision just stayed pat on
that statement, there would be merit in the respondent's presentation. But Ramirez continues:
"(I)ndepedently, however, of the alleged fraud on the part of Ramirez, the right to demand a reconveyance
prescribes after 10 years from accrual of the cause of action, June 22, 1944, the date of registration of the
patent and of the issuance of OCT No. 282- A in his name." 15

Significantly, the three cases cited by the respondent to buttress his position and support the ruling of the
trial court have a common denominator, so to speak. The cause of action assailing the frauds committed
and impugning the Torrens titles issued in those cases, all accrued prior to the effectivity of the present
Civil Code. The accrual of the cause of action in Fabian was in 1928, in Miguel, February, 1950, and in
Ramirez, 1944. It must be remembered that before August 30, 1950, the date of the effectivity of the new
Civil Code, the old Code of Civil Procedure (Act No. 190) governed prescription. It provided:

SEC. 43. Other civil actions; how limited-Civil actions other than for the recovery of real
property can only be brought within the following periods after the right of action
accrues:

xxx xxx xxx

3. Within four years: x x x An action for relief on the ground of fraud, but the right of
action in such case shall not be deemed to have accrued until the discovery of the fraud;

xxx xxx xxx

In contrast, under the present Civil Code, we find that just as an implied or constructive trust is an
offspring of the law (Art. 1456, Civil Code), so is the corresponding obligation to reconvey the property
and the title thereto in favor of the true owner. In this context, and vis-a-vis prescription, Article 1144 of
the Civil Code is applicable.

Article 1144. The following actions must be brought within ten years from the time the
right of action accrues:
(1) Upon a written contract;

(2) Upon an obligation created by law;

(3) Upon a judgment.

xxx xxx xxx

(Emphasis supplied)

An action for reconveyance based on an implied or constructive trust must perforce prescribed in ten
years and not otherwise. A long line of decisions of this Court, and of very recent vintage at that,
illustrates this rule. Undoubtedly, it is now well-settled that an action for reconveyance based on an
implied or constructive trust prescribes in ten years from the issuance of the Torrens title over the
property. 16 The only discordant note, it seems, is Balbin vs. Medalla, 17 which states that the
prescriptive period for a reconveyance action is four years. However, this variance can be explained by
the erroneous reliance on Gerona vs. de Guzman. 18 But in Gerona, the fraud was discovered on June 25,
1948, hence Section 43(3) of Act No. 190, was applied, the new Civil Code not coming into effect until
August 30, 1950 as mentioned earlier. It must be stressed, at this juncture, that Article 1144 and Article
1456, are new provisions. They have no counterparts in the old Civil Code or in the old Code of Civil
Procedure, the latter being then resorted to as legal basis of the four-year prescriptive period for an action
for reconveyance of title of real property acquired under false pretenses.

It is abundantly clear from all the foregoing that the action of petitioner Datomanong for reconveyance, in
the nature of a counterclaim interposed in his Answer, filed on December 4, 1964, to the complaint for
recovery of possession instituted by the respondent, has not yet prescribed. Between August 16, 1955, the
date of reference, being the date of the issuance of the Original Certificate of Title in the name of the
respondent, and December 4, 1964, when the period of prescription was interrupted by the filing of the
Answer cum Counterclaim, is less than ten years.

The respondent also interposed as a deterrent to reconveyance the existence of a mortgage on the
property. It is claimed by the respondent that reconveyance would not be legally possible because the
property under litigation has already been mortgaged by him to the Development Bank of the
Philippines. 19 This claim is untenable otherwise the judgment for reconveyance could be negated at the
will of the holder of the title. By the simple expedient of constituting a mortgage or other encumbrance on
the property, the remedy of reconveyance would become illusory. In the instant case, the respondent
being doubly in bad faith — for applying for and obtaining a patent and the Original Certificate of Title
therefor without being in possession of the land and for mortgaging it to the Development Bank knowing
that his Original Certificate of Title was issued under false pretenses — must alone suffer the
consequences.

Besides, given the undisputed facts, we cannot consider the mortgage contracted by the respondent in
favor of the Development Bank of the Philippines as valid and binding against petitioner Liwalug
Datomanong. It would be most unjust to saddle him, as owner of the land, with a mortgage lien not of his
own making and from which he derived no benefit whatsoever. The consequences of the void mortgage
must be left between the mortgagor and the mortgagee. In no small measure the Development Bank of the
Philippines might even be faulted for not making the requisite investigation on the possession of the land
mortgaged.
Premises considered, we deemed it superfluous to rule on the second assignment of error raised by the
petitioners.

WHEREFORE, the petition is GRANTED and the Decision dated June 3, 1970 of the then Court of First
Instance of Lanao del Sur in Civil Case No. 1354 is hereby ANNULLED and SET ASIDE and a new one
entered ORDERING the respondent to RECONVEY Original Certificate of Title No. P-466 in favor of
petitioner Liwalug Datomanong, free of any encumbrance. Costs against the respondent.

SO ORDERED.
G.R. No. 140457 January 19, 2005

HEIRS OF MAXIMO SANJORJO, namely, VICENTE SANJORJO, MACARIA SANJORJO,


DOMINGO SANJORJO, ALFREDO CASTRO, and SPOUSES SANTOS AND LOLITA
INOT, petitioners,
vs.
HEIRS OF MANUEL Y. QUIJANO, namely, ROSA Q. LEDESMA, MILAGROS Q.
YULIONGSIU, ALAN P. QUIJANO AND GWENDOLYN P. ENRIQUEZ, and VICENTE Z.
GULBE, respondents.

DECISION

CALLEJO, SR., J.:

This is a petition for review on certiorari under Rule 45 of the Revised Rules of Court of the
Decision1 dated February 17, 1999 of the Court of Appeals (CA) in CA-G.R. CV No. 50246 and its
Resolution2 dated October 12, 1999 denying the petitioners’ motion for reconsideration.

The Antecedents

On August 29, 1988, Free Patent No. VII-4-2974 was issued to Alan P. Quijano, married to Mila
Matutina, over a parcel of land located in Antipolo, Medellin, Cebu, with an area of 14,197 square meters
identified as Lot 374, Cadastre 374-D. Based on the said patent, Original Certificate of Title (OCT) No.
OP-38221 was issued by the Register of Deeds to and in the name of Alan P. Quijano on September 6,
1988.3 On November 11, 1988, Free Patent No. VII-4-3088 was issued to and in favor of Gwendolyn Q.
Enriquez, married to Eugenio G. Enriquez, over a parcel of land located in Antipolo, Medellin, Cebu,
identified as Lot 379, Cadastre 374-D, with an area of 6,640 square meters. Based on the said patent,
OCT No. OP-39847 was issued in her favor on February 11, 1989.4

In the meantime, Gwendolyn Enriquez filed an application for a free patent over Lot 376 of Cadastre 374-
D with the Department of Environment and Natural Resources (DENR). The application was docketed as
Free Patent Application (F.P.A.) No. VII-4-3152. She also filed an application for a free patent over Lot
378, docketed as F.P.A. No. VII-4-3152-A. However, the heirs of Guillermo Sanjorjo, namely,
Tranquilina, Pablo, Boir, Erlinda, Josefina, Maria, Maximo, Isabel, Jose, Dario, Vicente, Noel, Albina,
Ramon, Domingo, Adriano and Celedonia, all surnamed Sanjorjo, filed a protest/complaint with the
DENR on May 22, 1991, praying for the cancellation of Free Patent No. VII-4-2974, as well as Free
Patent No. VII-4-3088, and for the dismissal of the free patent applications over Lots 376 and 378.5 The
complaint was docketed as PENRO Claim No. PN 072231-4, and was assigned to the Regional Executive
Director for hearing and decision.

The protestants/claimants alleged that the said parcels of land were originally owned by Ananias Ursal
but were exchanged for a parcel of land located in San Remegio, Cebu, owned by their predecessor,
Guillermo Sanjorjo, married to Maria Ursal, and from whom they inherited the property. They prayed
that:

WHEREFORE, premises considered and after hearing on the merits, it is most respectfully prayed of this
most Honorable Office to render judgment ordering:
1. The cancellation of Free Patent Titles Nos. VII-4-2974 and VII-4-3088 issued to respondents
Alan P. Quijano and Gwendolyn Quijano Enriquez concerning Lot Nos. 374 and 379,
respectively.

2. The cancellation of Free Patent Application Nos. VII-4-3152, VII-4-3152-A, and VII-1-18277-
I of respondents concerning Lot Nos. 376 and 378.

3. The return of possession and ownership of these lots to the complainants/protestants who are
the rightful owners by inheritance.

Protestants further pray for other relief, just and equitable, under the premises.6

During the pre-trial conference of August 2, 1991, the protestants/claimants manifested that they were
withdrawing their protest/complaint. Thus, on April 14, 1992, the Regional Executive Director rendered a
decision7 giving due course to the applications. However, he ruled that the free patents over Lots 374 and
379 could no longer be disturbed since the complaint for the cancellation was filed more than one year
from their issuance. The dispositive portion of the decision reads:

WHEREFORE, it is hereby ordered that the above-entitled administrative case be dismissed and dropped
from the records. It is further ordered that the Free Patent Application of applicants-respondents over Lot
Nos. 376 and 378 be given due course for being in the actual adverse and continuous possession of the
land in controversy. Patent/Titles already issued and entered in the Registry Book in favor of applicants-
respondents on Lot Nos. 374 and 379 in 1988 and 1989 need not be disturbed anymore, for failure to
show evidence of actual fraud in the procurement of such titles.8

On September 13, 1993, Vicente Sanjorjo, the heirs of Maximo Sanjorjo, namely, Macaria Sanjorjo,
Domingo Sanjorjo, Alfredo Castro, and the Spouses Santos and Lolita Inot, herein petitioners, filed a
complaint for cancellation of titles under tax declarations and reconveyance of possession of real property
covering Lots 374, 376, 378 and 379 located in Medellin, Cebu, against the private respondents, the heirs
of Manuel Quijano, namely, Rosa Q. Ledesma, Milagros Q. Yuliongsiu, Alan P. Quijano and Gwendolyn
P. Enriquez, and Vicente Gulbe. The petitioners did not implead the rest of the heirs of Guillermo
Sanjorjo, including his daughter Tranquilina Sanjorjo, as parties-plaintiffs, and alleged, inter alia –

3. That the plaintiffs are the owners of several parcels of land in Antipolo, Medellin, Cebu, which
are more particularly described as follows:

(a) Lot No. 374 with an area of 14,179 sq.m. and covered by Tax Declaration No. 00718
in the name of PONCIANO DEMIAR and Tax Declaration No. 01042 in the name of
TRANQUILINA SANJORJO;

(b) Lot No. 376 with an area of 6,177 sq.m. and covered by Tax Declaration No. 01038 in
the name of MAURO SANJORJO;

(c) Lot No. 378 with an area of 3,201 sq.m. and covered by Tax Declaration No. 01035 in
the name of FLORENTINO SANJORJO;

(d) Lot No. 379 with an area of 6,640 sq.m. and covered by Tax Declaration No. 00772 in
the name of SANTOS INOT and Tax Declaration No. 01039 in the name of
SABINIANO SANJORJO;
The said Tax Declarations are hereto attached and marked as Annexes "A," "B," "C," "D," "E"
and "F," respectively, and made integral parts of this complaint;

4. That the aforestated lots originally belonged to the late MAXIMO SANJORJO who died
during World War II. His children MAURO, FLORENTINO, SABINIANO, TRANQUILINA
and RAYMUNDA, all surnamed SANJORJO, inherited the said properties. They have also
passed away and the plaintiffs, who are the children of MAXIMO SANJORJO’s children are now
the rightful heirs of the aforementioned parcels of land;

5. That sometime in 1983, the parcels of land in question were leased to MANUEL QUIJANO for
a two (2) year period at the rate of ₱4,500.00 per year. However, the lease was never paid for nor
was possession of the said properties ever returned to the plaintiffs, despite repeated demands on
QUIJANO to return the same;

6. That MANUEL QUIJANO died in 1987 and the herein defendants, the heirs of MANUEL
QUIJANO, divided among themselves the land belonging to the plaintiffs. Titles and Tax
Declarations were then issued on the said lots in the name of the defendants, as follows:

(a) Lot No. 374 is now covered by OCT No. OP-38221 in the name of defendant ALAN
P. QUIJANO. A copy of the title is hereto attached and marked as Annex "G" and made
an integral part of this complaint;

(b) Lot No. 376 is now covered by Tax Declaration No. 10015 in the name of MANUEL
Y. QUIJANO married to FLAVIANA P. QUIJANO. A copy of the said tax declaration is
hereto attached and marked as Annex "H" and made an integral part of this complaint;

(c) Lot No. 379 is now covered by OCT No. OP-39847 in the name of GWENDOLYN
Q. ENRIQUEZ. A copy of the title is hereto attached and marked as Annex "I" and made
an integral part of this complaint;

7. That the plaintiffs nor their ascendants have never sold, donated, or mortgaged any of these lots
in question to the defendants or their ascendants;

8. That sometime in September 1991, the defendant ALAN QUIJANO charged plaintiff
ALFREDO CASTRO with QUALIFIED THEFT for allegedly having stolen the coconuts on the
properties in question. Subsequently, the Municipal Court of Medellin acquitted CASTRO on the
ground that he was the real owner of the lot. It was only on that time that plaintiffs discovered
that defendants had already titled their lots. Furthermore, in 1992, the herein plaintiffs were sued
by the defendants for Quieting of Title, which case they subsequently withdrew. This case made
the plaintiffs realize that all their properties had already been titled in defendants’ names;

9. That, at present, defendants have leased these lots to a certain VICENTE GULBE, who is
named as a defendant in this case. Plaintiffs also demanded from defendant GULBE the return of
their possession over these lots but to no avail. The Certification to File Action from the barangay
captain of Antipolo, Medellin, Cebu, is hereto attached and marked as Annex "J" and made an
integral part of this complaint;

10. That upon their discovery of defendants’ fraudulent acts, plaintiffs demanded the return of
their properties but the defendants have failed and refused and continue to fail and refuse to do
so.9
The petitioners prayed that, after due proceedings, judgment be rendered in their favor:

(a) Ordering the cancellation of OCT Nos. OP-38221 and OP-39847 and Tax Declaration No.
10015;

(b) Ordering the defendants to pay rentals to the plaintiffs in the amount of ₱4,500.00 per year
from 1983 up to the time the properties are returned to the plaintiffs; and

(c) Ordering the defendants to pay the plaintiffs moral damages in the amount of not less than
₱20,000.00.

Plaintiffs further pray for such other relief and remedies as this Court may deem just and equitable under
the premises.10

The private respondents filed a motion to dismiss the complaint on the ground of res judicata based on
the decision of the Regional Executive Director on April 14, 1992. They maintained that the decision of
the Regional Executive Director had become final and executory and, as such, barred the petitioners’
action.

The petitioners opposed the motion. In their reply to such opposition, the private respondents invoked
another ground – that the petitioners’ action was barred by the issuance of OCT No. OP-38221 covering
Lot 374 on August 29, 1988, and OCT No. OP-39847 covering Lot 379 on November 11, 1988.

On September 13, 1994, the trial court issued an Order dismissing the complaint on the ground of res
judicata. The petitioners appealed the order to the CA.

We note that the petitioners limited the issues to the two titled lots, Lots 374 and 379, arguing that there
can be no res judicata in this case because one of its elements, i.e., that the former judgment is a judgment
on the merits, was lacking. The petitioners did not assail the trial court’s order dismissing the complaint
insofar as Lots 376 and 378 are concerned. Moreover, according to the petitioners, the April 14, 1992
Decision of the Regional Executive Director was not a decision on the merits of the complaint, as they
had yet to prove their allegation of fraud as regards the said lots.

In its Decision promulgated on February 17, 1999, the appellate court affirmed the assailed order of the
trial court, albeit for a different reason, i.e., prescription. Citing Section 32 of Presidential Decree No.
1529,11 it held that the OCTs issued to the respondents on the basis of their respective free patents became
as indefeasible as one which was judicially secured upon the expiration of one year from the date of the
issuance of the patent. The CA did not deem it necessary to rule on the issue of res judicata since it
dismissed the case on the ground of prescription.12

When their motion for reconsideration of the said decision of the CA was denied,13 the petitioners filed
the instant petition for review, contending that:

THE HONORABLE COURT OF APPEALS (THIRD DIVISION) GRAVELY ERRED IN AFFIRMING


THE DECISION OF THE REGIONAL TRIAL COURT, BRANCH 13, CEBU CITY, DATED
SEPTEMBER 13, 1994.

PETITIONERS BEG THAT THIS PETITION BE GIVEN DUE COURSE IN THE INTEREST OF
SUBSTANTIAL JUSTICE, [SINCE] THE DECISION OF THE COURT OF APPEALS, IF NOT
CORRECTED, WOULD CAUSE IRREPARABLE INJURY TO THE PREJUDICE OF HEREIN
PETITIONERS WHO ARE THE REAL OWNERS OF THE LOTS IN QUESTION.14

The petitioners maintain that the appellate court erred in holding that their action in Civil Case No. CEB
14580 was barred by the Decision dated April 14, 1992 of the DENR Regional Executive Director. They
contend that the latter decision is not a decision on its merits so as to bar their complaint.

We agree.

The elements of res judicata are the following: (1) the previous judgment has become final; (2) the prior
judgment was rendered by a court having jurisdiction over the subject matter and the parties; (3) the first
judgment was made on the merits; and (4) there was substantial identity of parties, subject matter and
causes of action, as between the prior and subsequent actions.15

A judgment on the merits is one rendered after argument and investigation, and when there is
determination which party is right, as distinguished from a judgment rendered upon some preliminary or
formal or merely technical point, or by default and without trial.16

As gleaned from the decision of the DENR Regional Executive Director, he dismissed the petitioners’
complaint for the cancellation of Free Patent Nos. VII-4-2974 and VII-4-3088 on the ground that it was
filed only on May 22, 1991, more than three years from the issuance of the said patents on August 29,
1988 and November 11, 1988, respectively. In the said decision, the Regional Executive Director declared
that after the lapse of one year from the issuance of patent and registry thereof in the Registry Book of the
Register of Deeds, Cebu Province, only the regular courts of justice have jurisdiction on the matter of
cancellation of title.17 The petitioners agreed with the Regional Executive Director and withdrew their
complaint, opting to file an appropriate action in court for the nullification of the said patents and titles.
Hence, the decision of the Regional Executive Director was not a decision on the merits of the petitioners’
complaint.

On the second issue, we agree with the petitioners that their action against the private respondents for the
reconveyance of Lots 374 and 379, covered by OCT No. OP-38221 issued on September 6, 1988 and
OCT No. OP-39847 issued on February 11, 1989, respectively, was not barred by Section 32 of P.D. No.
1529, which reads:

SEC. 32. Review of decree of registration; Innocent purchaser for value. – The decree of registration
shall not be reopened or revised by reason of absence, minority, or other disability of any person
adversely affected thereby, nor by any proceeding in any court for reversing judgments, subject, however,
to the right of any person, including the government and the branches thereof, deprived of land or of any
estate or interest therein by such adjudication or confirmation of title obtained by actual fraud, to file in
the proper Court of First Instance a petition for reopening and review of the decree of registration not later
than one year from and after the date of the entry of such decree of registration, but in no case shall such
petition be entertained by the court where an innocent purchaser for value has acquired the land or an
interest therein, whose rights may be prejudiced. Whenever the phrase "innocent purchaser for value" or
any equivalent phrase occurs in this Decree, it shall be deemed to include an innocent lessee, mortgagee,
or other encumbrancer for value.18

We agree with the ruling of the CA that the torrens title issued on the basis of the free patents became as
indefeasible as one which was judicially secured upon the expiration of one year from date of issuance of
the patent.19 The order or decision of the DENR granting an application for a free patent can be reviewed
only within one year thereafter, on the ground of actual fraud via a petition for review in the Regional
Trial Court (RTC) provided that no innocent purchaser for value has acquired the property or any interest
thereon. However, an aggrieved party may still file an action for reconveyance based on implied or
constructive trust, which prescribes in ten years from the date of the issuance of the Certificate of Title
over the property provided that the property has not been acquired by an innocent purchaser for value.
Thus:

… The basic rule is that after the lapse of one (1) year, a decree of registration is no longer open to review
or attack although its issuance is attended with actual fraud. This does not mean, however, that the
aggrieved party is without a remedy at law. If the property has not yet passed to an innocent purchaser for
value, an action for reconveyance is still available. The decree becomes incontrovertible and can no
longer be reviewed after one (1) year from the date of the decree so that the only remedy of the landowner
whose property has been wrongfully or erroneously registered in another’s name is to bring an ordinary
action in court for reconveyance, which is an action in personamand is always available as long as the
property has not passed to an innocent third party for value. If the property has passed into the hands of an
innocent purchaser for value, the remedy is an action for damages. In this case, the disputed property is
still registered in the name of respondent Demetrio Caringal, so that petitioner was correct in availing
himself of the procedural remedy of reconveyance.20

An action for reconveyance is one that seeks to transfer property, wrongfully registered by another, to its
rightful and legal owner.21 All that must be alleged in the complaint are two (2) facts which, admitting
them to be true, would entitle the plaintiff to recover title to the disputed land, namely, (1) that the
plaintiff was the owner of the land and, (2) that the defendant had illegally dispossessed him of the
same.22 The body of the pleading or complaint determines the nature of an action, not its title or
heading.23 In their complaint, the petitioners clearly asserted that their predecessors-in-interest have long
been the absolute and exclusive owners of the lots in question and that they were fraudulently deprived of
ownership thereof when the private respondents obtained free patents and certificates of title in their
names.24 These allegations certainly measure up to the requisite statement of facts to constitute an action
for reconveyance.

Article 1456 of the New Civil Code provides that a person acquiring property through fraud becomes by
operation of law a trustee of an implied trust for the benefit of the real owner of the property. The
presence of fraud in this case created an implied trust in favor of the petitioners, giving them the right to
seek reconveyance of the property from the private respondents. However, because of the trial court’s
dismissal order adverted to above, the petitioners have been unable to prove their charges of fraud and
misrepresentation.

The petitioners’ action for reconveyance may not be said to have prescribed, for, basing the present action
on implied trust, the prescriptive period is ten years.25 The questioned titles were obtained on August 29,
1988 and November 11, 1988, in OCT Nos. OP-38221 and OP-39847, respectively. The petitioners
commenced their action for reconveyance on September 13, 1993. Since the petitioners’ cause of action is
based on fraud, deemed to have taken place when the certificates of title were issued,26 the complaint filed
on September 13, 1993 is, therefore, well within the prescriptive period.

IN LIGHT OF ALL THE FOREGOING, the petition is PARTIALLY GRANTED. The Decision of
the Court of Appeals is MODIFIED. Accordingly, the Regional Trial Court of Cebu City, Branch 13, is
DIRECTED to reinstate the complaint insofar as Lots 374 and 379 are concerned. No costs.

SO ORDERED.
G.R. No. L-21362 November 29, 1968

DEVELOPMENT BANK OF THE PHILIPPINES, plaintiff-appellant,


vs.
LOURDES GASPAR BAUTISTA, THE DIRECTOR OF THE LANDS and THE NATIONAL
TREASURER OF THE PHILIPPINES, defendants-appellees.

Jesus A. Avanceña for plaintiff-appellant.


Lourdes Gaspar Bautista in her own behalf as defendant-appellee.
Assistant Solicitor General Antonio Torres, Solicitor Francisco J. Bautista and Special Attorney Daniel
G. Florida for defendants-appelles Director of Lands, et al.

FERNANDO, J.:

The question this appeal from a judgment of a lower court presents is one that possesses both novelty and
significance. It is this: What is the right, if any, of a creditor which previously satisfied its claim by
foreclosing extrajudicially on a mortgage executed by the debtor, whose title was thereafter nullified in a
judicial proceeding where she was not brought in as a party?

As creditor, the Development Bank of the Philippines now appellant, filed a complaint against one of its
debtors, Lourdes Gaspar Bautista, now appellee, for the recovery of a sum of money representing the
unpaid mortgage indebtedness, which previously had been wiped out with the creditor bank acquiring the
title of the mortgaged property in an extrajudicial sale. Thereafter, the title was nullified in a judicial
proceeding, the land in question being adjudged as belonging to another claimant, without, however, such
debtor, as above noted, having been cited to appear in such court action.

The Development Bank was unsuccessful, the lower court being of the view that with the due process
requirement thus flagrantly disregarded, since she was not a party in such action where her title was set
aside, such a judgment could in no wise be binding on her and be the source of a claim by the appellant
bank. The complaint was thus dismissed by the lower court, then presided by Judge, now Justice, Magno
Gatmaitan of the Court of Appeals. Hence, this appeal by appellant bank.

Such dismissal is in accordance with law. There is no occasion for us to repudiate the lower court.

From the very statement of facts in the brief for appellant bank, the following appears: "On or before May
31, 1949, the defendant-appellee, Lourdes Gaspar Bautista, who shall hereafter be referred to as Bautista,
applied to the Government for the sale favor of a parcel of land with an area of 12 has., 44 ares, and 22
centares, located at Bo. Barbara, San Jose, Nueva Ecija. After proper investigation, Sales Patent no. V-
132 covering said property was issued in her favor on June 1, 1949 (Exh. A-1) by the Director of Lands.
Sales Patent No. V-132 was registered in the office of the Register of Deeds of Nueva Ecija pursuant to
Section 122 of Act 496 on June 3, 1949 (Exh. A), as a result of which Original Certificate of Title No. P-
389 was issued in her favor."1

How the loan was contracted by now appellee Bautista was therein set forth. Thus: "On July 16, 1949,
Bautista applied for a loan with the Rehabilitation Finance Corporation (RFC), predecessor in interest of
the plaintiff-appellee Development Bank of the Philippines (DBP), offering as security the parcel of land
covered by O.C.T. No. P-389. Aside from her certificate of title, Bautista also submitted to the RFC other
documents to show her ownership and possession of the land in question, namely, Tax Declaration No.
5153 (Exh. A-4) in her name and the blueprint plan of the land. On the basis of the documents mentioned
and the appraisal of the property by its appraiser, the RFC approved a loan of P4,000.00 in favor of
Bautista. On July 16, 1949, Bautista executed the mortgage contract over the property covered by O.C.T.
No. P-389 and the promissory note for P4,000.00 in favor of RFC (Exhs. C and C-1), after which the
proceeds of the loan were released."2

The satisfaction of the mortgage debt with the acquisition of the title to such property by appellant Bank,
by virtue of an extrajudicial foreclosure sale, and such title losing its validity in view of a court
proceeding, where however, appellee Bautista, was not made a party, was next taken up in the brief of
plaintiff-appellant. Thus: "Bautista failed to pay the amortization on the loan so that the RFC took steps to
foreclose the mortgage extra-judicially under Act 3135, as amended. In the ensuing auction sale
conducted by the sheriff of Nueva Ecija on June 27, 1951, the RFC acquired the mortgaged property as
the highest bidder (Exh. D). On the date of the sale, the total obligation of Bautista with the RFC was
P4,858.48 (Exh. I). On July 21, 1952, upon failure of Bautista to redeem the property within the one (1)
year period as provided bylaw, plaintiff-appellant RFC consolidated its ownership thereon (Exhs. E and
E-I). On July 26, 1952, the Register of Deeds of Nueva Ecija cancelled O.C.T. No. P-389 and replaced it
with T.C.T. No. NT-12108 in the name of the RFC (Exhs. F and F-1). On or about this time, however, an
action (Civil Case No. 870) was filed by Rufino Ramos and Juan Ramos in the Court of First Instance of
Nueva Ecija against the Government of the Republic of the Philippines and the RFC (as successor in
interest of Bautista) claiming ownership of the land in question and seeking the annulment of T.C.T. No.
2336 in the name of the Government, O.C.T. No. P-389 in the name of Bautista and T.C.TG. No. NT-
12108 in the name of the RFC. A decision thereon was rendered on June 27, 1955 (Exhs. G, G-1, and G-
3) whereby the aformentioned certificates of title were declared null and void."3

Why the complaint had to be dismissed was explained thus in the decision now on appeal: "The Court
after examining the proofs, is constrained to sustain her on that; it will really appear that she had never
been placed within the jurisdiction of the Nueva Ecija Court; as the action there was one to annual the
title, it was an action strictly in personam, if that was the case as it was, the judgment there could not in
any way bind Lourdes who had not acquired in said decision in any way for what only happened is that as
to the mortgage, the Bank foreclosed, and then sold unto Conrada and when the title had been annulled,
the Bank reimbursed Conrada; stated otherwise, the annulment of Lourdes' title was a proceeding ex parte
as far as she was concerned and could not bind her at all; and her mortgage was foreclosed an the Bank
realized on it, when the Bank afterwards acquiesced in the annulment of the title and took it upon itself to
reimburse Conrada, the Bank was acting on its own peril because it could not have by that, bound
Lourdes at all."4

As stated at the outset, the decision must be affirmed. The fundamental due process requirement having
been disregarded, appellee Bautista could not in any wise be made to suffer, whether directly or
indirectly, from the effects of such decision. After appellant bank had acquired her title by such
extrajudicial foreclosure sale and thus, through its own act, seen to it that her obligation had been
satisfied, it could not thereafter, seek to revive the same on the allegation that the title in question was
subsequently annulled, considering that she was not made a party on the occasion of such nullification.

If it were otherwise, then the cardinal requirement that no party should be made to suffer in person or
property without being given a hearing would be brushed aside. The doctrine consistently adhered to by
this Court whenever such a question arises in a series of decisions is that a denial of due process suffices
to cast on the official act taken by whatever branch of the government the impress of nullity.5

A recent decision, Macabingkil v. Yatco,6 possesses relevance. "A 1957 decision, Cruzcosa v.
Concepcion, is even more illuminating in so far as the availability of the remedy sought is concerned. In
the language of this Court, speaking through Justice J.B.L. Reyes: 'The petition is clearly meritorious.
Petitioners were conclusively found by the Court of Appeals to be co-owners of the building in question.
Having an interest therein, they should have been made parties to the ejectment proceedings to give them
a chance to protect their rights: and not having been made parties thereto, they are not bound and can not
be affected by the judgment rendered therein against their co-owner Catalino Cruzcosa. Jr. ....' Two due
process cases deal specifically with a writ of execution that could not validly be enforced against a party
who was not given his day in court, Sicat v. Reyes, and Hamoy v. Batingoplo. According to the former:
'The above agreement, which served as basis for the ejectment of Alipio Sicat, cannot be binding and
conclusive upon the latter, who is not a party to the case. Indeed, that order, as well as the writ of
execution, cannot legally be enforced against Alipio Sicat for the simple reason that he was not given his
day in court.' From the latter: 'The issue raised in the motion of Rangar is not involved in the appeal for it
concerns a right which he claims over the property which has not so far been litigated for the reason that
he was not made a party to the case either as plaintiff for a defendant. He only came to know of the
litigation when he was forced out of the property by the sheriff, and so he filed the present motion to be
heard and prove his title to the property. This he has the right to do as the most expeditious manner to
protect his interest instead of filing a separate action which generally is long, tedious and protracted.'"

Reinforcement to the above conclusion comes from a codal provision. According to the Civil Code:7 "The
vendor shall not be obliged to make good the proper warranty, unless he is summoned in the suit for
eviction at the instance of the vendee. "While not directly in point, the principle on which the above
requirement is based sustains the decision of the lower court. In effect, appellant bank would hold
appellee Bautista liable for the warranty on her title, its annullment having the same effect as that of an
eviction. In such a case, it is wisely provided by the Civil Code that appellee Bautista, as vendor, should
have been summoned and given the opportunity to defend herself. In view of her being denied her day in
court, it would to be respected, that she is not "obliged to made good the proper warranty."

In the suit before the lower court, the Director of Lands and the National Treasurer of the Philippines
were likewise made defendants by appellant bank because of its belief that if no right existed as against
appellee Bautista, recovery could be had from the Assurance Fund. Such a belief finds no support in the
applicable, law, which allows recovery only upon a showing that there be no negligence on the part of the
party sustaining any loss or damage or being deprived of any land or interest therein by the operation of
the Land Registration Act.8 This certainly is not the case here, plaintiff-appellant being solely responsible
for the light in which it now finds itself. Accordingly, the Director of Lands and the National Treasurer of
the Philippines are likewise exempt from any liability.

WHEREFORE, the judgment appealed from is affirmed, with costs against the Development Bank of the
Philippines.
G.R. No. 170207 April 19, 2010

VICENTE CAWIS (substituted by his son, EMILIO CAWIS), PEDRO BACLANGEN, FELIZA
DOMILIES, IVAN MANDI-IT a.k.a. IVAN MANDI-IT LUPADIT, DOMINGO CAWIS and
GERARD LIBATIQUE, Petitioners,
vs.
HON. ANTONIO CERILLES, in his capacity as the DENR Secretary, HON. MANUEL
GEROCHI, in his capacity as the Director, Lands, Management Bureau, and MA. EDELIZA
PERALTA, Respondents.

DECISION

CARPIO, J.:

The Case

This is a petition for review1 of the 17 February 2005 Decision2 and the 6 September 2005 Resolution3 of
the Court of Appeals (appellate court) in CA-G.R. CV No. 66685. In its 17 February 2005 Decision, the
appellate court affirmed the 3 November 1999 Resolution4 of Branch 61 of the Regional Trial Court of
Baguio City (trial court), which dismissed the complaint filed by Vicente Cawis, Pedro Baclangen, Feliza
Domilies, Ivan Mandi-it, Domingo Cawis, and Gerard Libatique (collectively petitioners). In its 6
September 2005 Resolution, the appellate court denied petitioners’ motion for reconsideration.

The Facts

On 23 September 1957, the Department of Environment and Natural Resources (DENR), pursuant to
Section 795 of the Public Land Act,6 approved the sales patent application of Jose V. Andrada (Andrada)
for Lot No. 47 with an area of 1,339 square meters situated within Holy Ghost Hill Subdivision in Baguio
City. Sales Patent No. 1319 was issued to Andrada upon full payment of the purchase price of the lot on
20 November 1968, as evidenced by O.R. No. 459651.7

On 4 August 1969, Republic Act No. 60998 took effect. It provided that subject to certain conditions,
parcels of land within the Holy Ghost Hill Subdivision, which included Lot No. 47, would be sold to the
actual occupants without the necessity of a public bidding, in accordance with the provisions of Republic
Act No. 730.9

Claiming to be the actual occupants referred to in R.A. No. 6099, petitioners protested the sales patent
awarded to Andrada. The Bureau of Lands denied their protest on the ground that R.A. No. 6099, being of
later passage, could no longer affect the earlier award of sales patent to Andrada. Petitioners sought
reconsideration, but the Bureau of Lands denied it on 19 May 1987. Petitioners failed to appeal the
adverse decision of the Bureau of Lands to any higher administrative authority or to the courts. Thus, the
decision had attained finality.10

Sometime in 1987, private respondent Ma. Edeliza S. Peralta (Peralta) purchased Lot No. 47 from
Andrada. On 28 October 1987, the Deputy Public Land Inspector, in his final report of
investigation,11 found that neither Andrada nor Peralta had constructed a residential house on the lot,
which was required in the Order of Award and set as a condition precedent for the issuance of the sales
patent. Apparently, it was Vicente Cawis, one of the petitioners, who had built a house on Lot No. 47.
On 13 November 1987, Sales Patent No. 1319 was nonetheless transferred to Peralta. In the Order for the
Issuance of Patent,12 the Assistant Director of Lands verified the investigation conducted by the Land
Inspector, whose report was fully endorsed by the District Land Officer, that Peralta had complied with
the requirements of the law regarding the construction of improvements on the land applied for. In the
Order for Transfer of Sales Rights,13 the Director of Lands confirmed that before the transfer of the sales
patent to Peralta, Andrada had complied with the construction requirement. On 4 December 1987,
Original Certificate of Title (OCT) No. P-160414 was duly issued in Peralta’s name.

On 8 September 1998, petitioners filed a complaint15 before the trial court alleging fraud, deceit, and
misrepresentation in the issuance of the sales patent and the original certificate of title over Lot No. 47.
They claimed they had interest in the lot as qualified beneficiaries of R.A. No. 6099 who met the
conditions prescribed in R.A. No. 730. They argued that upon the enactment of R.A. No. 6099, Andrada’s
sales patent was deemed cancelled and revoked in their favor.

In her answer with a motion to dismiss,16 Peralta averred that petitioners have no cause of action against
her, that she obtained her title after compliance with the legal requirements, that her title was issued more
than ten years prior to the filing of the complaint, that the action was a collateral attack on a title, and that
even if the action was a direct attack, petitioners were not the proper parties.

The Ruling of the Trial Court

The trial court issued a Resolution dated 3 November 1999 dismissing the complaint filed by petitioners.
The trial court held that reversion of title on the ground of fraud must be initiated by the government
through the Office of the Solicitor General (OSG). In its 13 January 2000 Order,17 the trial court denied
petitioners’ motion for reconsideration.

The Ruling of the Appellate Court

In its 17 February 2005 Decision, the appellate court affirmed the resolution of the trial court. The
appellate court explained that under Section 218 of R.A. No. 6099, ownership of public land within the
Holy Ghost Hill Subdivision was not automatically conferred on petitioners as occupants. The appellate
court stated that petitioners must first apply for a sales patent in order to avail of the benefits of the law.
The appellate court agreed with the trial court that petitioners had no standing to file a suit for annulment
of Sales Patent No. 1319 and OCT No. P-1604. It cited Section 10119 of the Public Land Act, which
provides that only the government, through the OSG, could file an action for reversion. In its 6 September
2005 Resolution, the appellate court denied petitioners’ motion for reconsideration.

The Issues

The twin issues raised by petitioners are (1) whether the actual occupants of parcels of land covered by
R.A. No. 6099, which includes Lot No. 47, have standing to question the validity of the sales patent and
the original certificate of title issued over Lot No. 47; and (2) whether the suit for annulment of title
allegedly issued through fraud, deceit, or misrepresentation, has prescribed.

The Court’s Ruling

The petition has no merit.

Petitioners contend private respondent misrepresented that there was no improvement on Lot No. 47 at
the time she filed her sales patent application when in fact, there were numerous improvements consisting
of residential houses erected by them. Petitioners argue neither private respondent nor her predecessor-in-
interest has introduced any improvement on Lot No. 47, which is a condition precedent before she can be
a qualified awardee. Petitioners take exception to the rule that only the OSG is allowed to file a suit
questioning the validity of the sales patent and the original certificate of title. As to the second issue,
petitioners argue that since the sales patent and the original certificate of title are void from the beginning,
the complaint filed by petitioners cannot be deemed to have prescribed.

In her Comment, private respondent asserts that petitioners have no personality to question the validity of
the sales patent and the original certificate of title issued in her name. She maintains that only the
government, through the OSG, may file an action for reversion on the ground of fraud, deceit, or
misrepresentation. As to the second issue, private respondent claims that petitioners’ annulment suit has
prescribed pursuant to Section 3220 of Presidential Decree No. 1529.21

At the outset, we must point out that petitioners’ complaint questioning the validity of the sales patent and
the original certificate of title over Lot No. 47 is, in reality, a reversion suit. The objective of an action for
reversion of public land is the cancellation of the certificate of title and the resulting reversion of the land
covered by the title to the State. This is why an action for reversion is oftentimes designated as an
annulment suit or a cancellation suit.

Coming now to the first issue, Section 101 of the Public Land Act22 clearly states:

SEC. 101. All actions for the reversion to the Government of lands of the public domain or improvements
thereon shall be instituted by the Solicitor General or the officer acting in his stead, in the proper courts,
in the name of the Republic of the Philippines.

Even assuming that private respondent indeed acquired title to Lot No. 47 in bad faith, only the State can
institute reversion proceedings, pursuant to Section 101 of the Public Land Act and our ruling in Alvarico
v. Sola.23 Private persons may not bring an action for reversion or any action which would have the effect
of canceling a land patent and the corresponding certificate of title issued on the basis of the patent, such
that the land covered thereby will again form part of the public domain.24 Only the OSG or the officer
acting in his stead may do so. Since the title originated from a grant by the government, its cancellation is
a matter between the grantor and the grantee.251avvphi1

Similarly, in Urquiaga v. CA,26 this Court held that there is no need to pass upon any allegation of actual
fraud in the acquisition of a title based on a sales patent. Private persons have no right or interest over
land considered public at the time the sales application was filed. They have no personality to question the
validity of the title. We further stated that granting, for the sake of argument, that fraud was committed in
obtaining the title, it is the State, in a reversion case, which is the proper party to file the necessary
action.27

In this case, it is clear that Lot No. 47 was public land when Andrada filed the sales patent application.
Any subsequent action questioning the validity of the award of sales patent on the ground of fraud, deceit,
or misrepresentation should thus be initiated by the State. The State has not done so and thus, we have to
uphold the validity and regularity of the sales patent as well as the corresponding original certificate of
title issued based on the patent.

At any rate, the Court, in the exercise of its equity jurisdiction, may directly resolve the issue of alleged
fraud in the acquisition of a sales patent although the action is instituted by a private person. In this
connection, the 19 May 1987 letter of the Director of Lands to petitioner Vicente Cawis is instructive:
As to your allegation that the award in favor of applicant-respondent (Andrada) should be cancelled as he
failed to introduce improvements on the land, we find the said contention to be untenable. Somewhere in
your letter dated July 11, 1983, you stated that you took possession of the lot in question in the early
1950’s, introduced improvements thereon, and resided therein continuously up to the present. By your
own admission, it would appear that you were the ones who made it impossible for Mr. Andrada to take
possession of the said lot and to improve the same. This being the case, the failure of the applicant-
respondent (Andrada) to introduce improvements on the land in question is not attributable to him.

In view of the foregoing facts and circumstances, we regret to inform you that we cannot reconsider our
position on this matter. It is further advised that you vacate the premises and remove all your
improvements thereon so that the applicant-awardee (Andrada) can take immediate possession of the land
in question.28

Clearly then, fraud cannot be imputed to Andrada. His supposed failure to introduce improvements on Lot
No. 47 is simply due to petitioners’ refusal to vacate the lot. It appears from the factual finding of the
Director of Lands that petitioners are the ones in bad faith. Contrary to petitioners’ claim, R.A. No. 6099
did not automatically confer on them ownership of the public land within Holy Ghost Hill Subdivision.
The law itself, Section 2 of R.A. No. 6099, provides that the occupants must first apply for a sales patent
in order to avail of the benefits of the law, thus:

SEC. 2. Except those contrary to the provisions of Republic Act Numbered Seven Hundred and Thirty, all
other provisions of Commonwealth Act Numbered One hundred and Forty-One governing the procedure
of issuing titles shall apply in the disposition of the parcels above-described to the beneficiaries of this
Act.

The complaint filed by petitioners did not state that they had filed an application for a sales patent over
Lot No. 47. Even if it did, an application for a sales patent could only create, at most, an inchoate right.
Not being the real parties-in-interest, petitioners have no personality to file the reversion suit in this case.

Consequently, the prescription issue pertaining to the action for reversion initiated by petitioners who
could not have successfully initiated the reversion suit in the first place, is now moot.

WHEREFORE, we DENY the petition for review. We AFFIRM the 17 February 2005 Decision and the
6 September 2005 Resolution of the Court of Appeals in CA-G.R. CV No. 66685.

Costs against petitioners.

SO ORDERED.
G.R. No. L-45202 September 11, 1980

REPUBLIC OF THE PHILIPPINES, petitioner,


vs.
THE HONORABLE COURT OF APPEALS, LANDOLINO ALPUERTO, PAZ ALPUERTO,
NORMA ALPUERTO, FRANCISCA ALPUERTO, in their capacity as heirs of PERPETUO
ALPUERTO, HENRY O. ANTONIO ANGELES, AUREA ANGELES, INDUSTRIAL
MARKETING & INVESTMENT CORP., LANDOLINO ALPUERTO, LUCILA UNLAYAO,
ARTEMIO CALUSIN, LUCIANO POTESTADES, ELPIDIO BANAGAN, LUZ OLIVEROS,
DIONISIO LLAMAS, ALICIA CAPARROS, CORAZON ALFUENTE, EMILIO CALIWARA,
ANDRES LARIEDO, LAND REGISTRATION COMMISSIONER and REGISTER OF DEEDS
OF QUEZON, respondents.

MAKASIAR, J.:

Appeal by certiorari from the decision of the Court of Appeals in CA-G.R. No. 52323-R,
entitled Republic of the Philippines, vs. Landolino Alpuerto, et al., affirming the order of the Court of
First Instance of Quezon which dismissed the complaint for annulment and cancellation of titles and
reversion of lands filed by petitioner, as well as from the resolution dated November 22, 1976 of the
Court of Appeals, denying petitioner's motion for reconsideration.

This case involves Lot No. 7718 of the cadastral survey of Mauban, Quezon, containing an area of
19,873,835 square meters, more or less.

On May 16, 1966, Perpetuo Alpuerto, now deceased, filed with the Court of First Instance of Quezon
(Branch II), a motion to reopen Cadastral Case No. 97, LCR Cad. Rec. No. 1555, and to admit his answer
over Lot No. 7718 of the Mauban (Quezon) cadastre. After trial, the lower court rendered its decision
dated August 3, 1966, adjudicating to said Perpetuo Alpuerto Lot No. 7718 together with its
improvements, and ordering the issuance in his favor of the corresponding decree of registration. On
September 22, 1966, the lower court issued an order for the issuance of a decree of registration over the
said lot, and pursuant thereto, the Land Registration Commission issued Decree No. 127177 which was
subsequently transcribed in the Registration book of the Register of Deeds of Quezon on November 18,
1969. This was the basis of the issuance of Original Certificate of Title No. 0-13541 in favor of Perpetuo
Alpuerto. Portions of the lot were subsequently transferred to various persons who were issued their
respective transfer certificates of title, among whom are private respondents Henry O. Antonio Angeles,
Industrial Marketing & Investment Corporation, Landolino Alpuerto, Artemio Calusin, Luciano
Potestades, Alpidio Banagan, Dionisio Llamas, Corazon Alpuente and Andres Laredo.

On September 26, 1966, the Provincial Fiscal of Quezon filed a Motion for Reconsideration (pp. 78-80,
rec.) of the decision dated August 3, 1966, on the ground that the said decision was obtained through
fraud, misrepresentation and deceit. Then on March 14, 1967, Attys. Amado Aquino and Francisco
Lopez, special attorneys of the Office of the Solicitor General, filed, also for the Director of Lands, a
Supplemental Motion for Reconsideration and/or for New Trial (pp. 82-87, rec.), alleging that the
cadastral case was improperly reopened despite the absence of the necessary conditions for such
reopening, and that the Director of Lands was not duly notified of the hearing and therefore denied his
day in court. Both these motions were denied by the lower court on June 19, 1970. (Please note that no
copy of said order of denial is found in the record).
Before the issuance of the order of denial dated June 18, 1970, the Provincial Fiscal of Quezon again filed
on May 25, 1970 a motion for cancellation of titles and for preliminary injunction (pp. 89-90, rec.),
assailing the order for the issuance of the decree of registration dated September 22, 1966 for being
illegal, invalid and without effect because it was issued when the decision of August 3, 1966 had not yet
become final and his timely motion for reconsideration was still pending. On July 14, 1970, the Director
of Lands, again through Attys. Aquino and Lopez, filed a motion for reconsideration (pp. 91-92, rec.) of
the order dated June 18, 1970 on the ground that the same was issued on the wrong premise, i.e., that the
decision of the court had already become final and executory when in fact it had not. These two motions
were likewise denied by the court in its order of July 27, 1970 (Note: no copy of said order in the
records).

On April 6, 1971, the Solicitor General filed for the government a complaint for annulment, cancellation
of titles and for reversion of Lot No. 7718 of Cadastral Survey of Mauban, Quezon to the State (pp. 96-
100, rec.), on the ground that the decision of the court dated August 3, 1966 adjudicating Lot No. 7718 to
Perpetuo Alpuerto, its order for the issuance of the decree of registration dated September 22, 1966, as
well as the Original Certificate of Title No. 013541 and all the transfer certificates of title derived
therefrom, are all null and void and without legal effect because the court had no jurisdiction to allocate
the subject land, which is inalienable.

On May 11, 1971, defendants Industrial Marketing and Investments Corporation, Henry O. Antonio
Angeles and Aurea Angeles filed a motion to dismiss the complaint (pp. 103-105, rec.), alleging that the
action is barred by a prior judgment and that the court lacks jurisdiction over the nature of the action or
suit. Another defendant, Andres Laredo, likewise on May 17, 1971, filed a motion for dismissal of the
complaint, based on the grounds that the complaint states no cause of action and that venue is improperly
laid.

After hearing the motions for dismissal and the opposition thereto, the lower court, on September 28,
1971, issued an order denying the motion to dismiss filed by defendant Andres Laredo, but granting the
motion to dismiss tied by defendants Industrial Marketing and Investments Corporation, Henry O.
Antonio Angeles and Aurea Angeles and dismissing the complaint filed by petitioner.

Petitioner filed on October 29, 1971 a motion seeking to reconsider the lower court's order of dismissal
(pp. 119-124, rec.) which, however, was denied by the said court in an order dated December 24, 1971
(pp. 130-134, rec.). Consequently, petitioner appealed the case to the Court of Appeals which, on August
25, 1976, promulgated a decision (pp. 27-37, rec.), affirming the order of dismissal by the lower court.
Petitioner again filed a motion for reconsideration, but the same was likewise denied (p. 38, rec.).

Forthwith, petitioner elevated the matter to US through the present petition, which WE find to be
meritorious.

In the first place, the land in question is not within the jurisdiction of the Director of Lands but of the
Director of Forestry. Although the Public Land Act vests upon the Director of Lands, subject to the
immediate control of the Secretary of Agriculture and Commerce, direct executive control of the survey,
classification, lease, sale or any other form of concession or disposition and management of the lands of
the public domain (Sec. 4, Commonwealth Act No. 141), the same law explicitly states that timber and
mineral lands shall be governed by special laws. And the Forestry Law (Secs. 1814-1842, Revised
Administrative Code, as amended) now vests in the Director of Forestry (now Director of Forest
Development under P.D. No. 705) the jurisdiction and authority over forest or timberland.
As held in the case of Mejia Vda. de Alfafara vs. Mapa, et al. (95 Phil. 125) wherein WE upheld the
findings of the Secretary of Agriculture and Natural Resources thus: "Where the land covered by the
homestead application of petitioner was still within the forest zone or under the jurisdiction of the Bureau
of Forestry, the Director of Lands had no jurisdiction to dispose of said land under the provisions of the
Public Land Law, and the petitioner acquired no right to the land." It follows that "if a person obtains a
title under the Public Land Act which includes, by oversight, lands which cannot be registered under the
Torrens system, or when the Director of Lands did not have jurisdiction over the same because it is a
public forest, the grantee does not, by virtue of the said certificate of title alone, become the owner of the
land illegally included" (Republic vs. Animas, 56 SCRA 499, 503; Ledesma vs. Municipality of Iloilo, 49
Phil. 769).

The patent or title thus issued is void at law, since the officer who issued it had no authority to do so
(Republic vs. de la Cruz, 67 SCRA, 221).

Under these circumstances, the certificate of title may be ordered cancelled (Republic vs. Animas, et
al., supra), and the cancellation may be pursued through an ordinary action therefor. This action cannot be
barred by the prior judgment of the land registration court, since the said court had no jurisdiction over
the subject matter. And if there was no such jurisdiction, then the principle of res judicata does not apply.
For it is a well-settled rule that for a prior judgment to constitute a bar to a subsequent case, the following
requisites must concur; (1) it must be a final judgment; (2) it must have been rendered by a court having
jurisdiction over the subject matter and over the parties; (3) it must be a judgment on the merits; and (4)
there must be, between the first and second actions, Identity of parties, Identity of subject matter and
Identity of cause of action (Municipality of Daet vs. CA, 93 SCRA 503; Mendoza vs. Arrieta, et al., 91
SCRA 113). Certainly, one of the essential requisites, i.e., jurisdiction over the subject matter, is absent in
this case.

The argument that the subject land being a timberland is urged only now, is not well-taken. So also is the
contention that it is not enough for the land to be within a timberland in the absence of evidence showing
conclusively that it is covered by natural growth of trees of such considerable extent to bring it within the
definition of forest land. This is because the Director of Forestry was not notified of the proceedings.
Under the law, the Director of Forestry is the official clothed with jurisdiction and authority over the
demarcation, protection, management, reproduction, reforestation, occupancy, and use of all forests and
forest resources (Sec. 1816, Revised Administrative Code, as amended).

In any case, even granting that the said official was negligent, the doctrine of estoppel cannot operate
against the State. "It is a well-settled rule in our jurisdiction that the Republic or its government is usually
not estopped by mistake or error on the part of its officials or agents (Manila Lodge No. 761 vs. CA, 73
SCRA 166, 186; Republic vs. Marcos, 52 SCRA 238, 244; Luciano vs. Estrella, 34 SCRA 769).

Consequently, the State may still seek the cancellation of the title issued to Perpetuo Alpuerto and his
successors-interest pursuant to Section 101 of the Public Land Act. Such title has not become
indefeasible, for prescription cannot be invoked against the State (Republic vs. Animas, supra).

WHEREFORE, THE INSTANT PETITION IS GRANTED, THE DECISION OF THE RESPONDENT


COURT DATED AUGUST 25, 1976 AND ITS RESOLUTION OF NOVEMBER 22, 1976 ARE
HEREBY VACATED AND SET ASIDE. LET THIS CASE BE REMANDED TO THE COURT OF
FIRST INSTANCE OF QUEZON FOR FURTHER PROCEEDINGS.

Teehankee (Chairman), Fernandez, Guerrero, De Castro and Melencio-Herrera, JJ., concur.


G.R. No. 168661 October 26, 2007

ESTATE OF THE LATE JESUS S. YUJUICO, represented by ADMINISTRATORS


BENEDICTO V. YUJUICO and EDILBERTO V. YUJUICO; and AUGUSTO Y.
CARPIO, Petitioners,
vs.
REPUBLIC OF THE PHILIPPINES and the COURT OF APPEALS, Respondents.

DECISION

VELASCO, JR., J.:

In 1973, Fermina Castro filed an application for the registration and confirmation of her title over a parcel
of land with an area of 17,343 square meters covered by plan (LRC) Psu-964 located in the Municipality
of Parañaque, Province of Rizal (now Parañaque City), in the Pasig-Rizal Court of First Instance (CFI),
Branch 22. The application was docketed LRC Case No. N-8239. The application was opposed by the
Office of the Solicitor General (OSG) on behalf of the Director of Lands, and by Mercedes Dizon, a
private party. Both oppositions were stricken from the records since the opposition of Dizon was filed
after the expiration of the period given by the court, and the opposition of the Director of Lands was filed
after the entry of the order of general default. After considering the evidence, the trial court rendered its
April 26, 1974 Decision. The dispositive portion reads:

____________________________
* As per September 3, 2007 raffle.

WHEREFORE, the Court hereby declares the applicant, Fermina Castro, of legal age, single, Filipino and
a resident of 1515 F. Agoncillo St., Corner J. Escoda St., Ermita, Manila, the true and absolute owner of
the land applied for situated in the Municipality of Parañaque, Province of Rizal, with an area of 17,343
square meters and covered by plan (LRC) Psu-964 and orders the registration of said parcel of land in her
name with her aforementioned personal circumstances.

Once this decision becomes final and executory, let the corresponding order for the issuance of the decree
be issued.

SO ORDERED.1

The Director of Lands and Mercedes Dizon did not appeal from the adverse decision of the Pasig-Rizal
CFI. Thus, the order for the issuance of a decree of registration became final, and Decree No. N-150912
was issued by the Land Registration Commission (LRC).2 Original Certificate of Title (OCT) No. 10215
was issued in the name of Fermina Castro by the Register of Deeds for the Province of Rizal on May 29,
1974.3

The land was then sold to Jesus S. Yujuico, and OCT No. 10215 was cancelled. On May 31,
1974,4 Transfer Certificate of Title (TCT) No. 445863 was issued in Yujuico’s name, who subdivided the
land into two lots. TCT No. 4463865 over Lot 1 was issued in his name, while TCT No. S-293616 over
Lot 2 was issued in the name of petitioner Augusto Y. Carpio.

Annotations at the back of TCT No. 446386 show that Yujuico had, at one time or another, mortgaged the
lot to the Philippine Investments System Organization (PISO) and Citibank, N.A. Annotations in the title
of petitioner Carpio reveal the lot was mortgaged in favor of Private Development Corporation (PDC),
Rizal Commercial Banking Corporation (RCBC) and then Philippine Commercial and Industrial Bank
(PCIB) and the Development Bank of the Philippines (DBP) to secure various loans.

Sometime in 1977, Presidential Decree No. (PD) 1085 entitled Conveying the Land Reclaimed in the
Foreshore and Offshore of the Manila Bay (The Manila-Cavite Coastal Road Project) as Property of the
Public Estates Authority as well as Rights and Interests with Assumptions of Obligations in the
Reclamation Contract Covering Areas of the Manila Bay between the Republic of the Philippines and the
Construction and Development Corporation of the Philippines (1977) was issued. Land reclaimed in the
foreshore and offshore areas of Manila Bay became the properties of the Public Estates Authority (PEA),
a government corporation that undertook the reclamation of lands or the acquisition of reclaimed lands.
On January 13, 1989, OCT No. SP 02 was issued in favor of PEA. The PEA also acquired ownership of
other parcels of land along the Manila Bay coast, some of which were subsequently sold to the Manila
Bay Development Corporation (MBDC), which in turn leased portions to Uniwide Holdings, Inc.7

The PEA undertook the construction of the Manila Coastal Road. As this was being planned, Yujuico and
Carpio discovered that a verification survey they commissioned showed that the road directly overlapped
their property, and that they owned a portion of the land sold by the PEA to the MBDC.

On July 24, 1996, Yujuico and Carpio filed before the Parañaque City Regional Trial Court (RTC), a
complaint for the Removal of Cloud and Annulment of Title with Damages docketed as Civil Case No.
96-0317 against the PEA. On May 15, 1998 the parties entered into a compromise agreement approved by
the trial court in a Resolution dated May 18, 1998. On June 17, 1998, the parties executed a Deed of
Exchange of Real Property, pursuant to the compromise agreement, where the PEA property with an area
of 1.4007 hectares would be conveyed to Jesus Yujuico and petitioner Carpio in exchange for their
property with a combined area of 1.7343 hectares.

On July 31, 1998, the incumbent PEA General Manager, Carlos P. Doble, informed the OSG that the new
PEA board and management had reviewed the compromise agreement and had decided to defer its
implementation and hold it in abeyance following the view of the former PEA General Manager, Atty.
Arsenio Yulo, Jr., that the compromise agreement did not reflect a condition of the previous PEA Board,
requiring the approval of the Office of the President. The new PEA management then filed a petition for
relief from the resolution approving the compromise agreement on the ground of mistake and excusable
negligence.

The petition was dismissed by the trial court on the ground that it was filed out of time and that the
allegation of mistake and excusable negligence lacked basis.

The PEA fared no better in the Court of Appeals (CA), as the petition was dismissed for failure to pay the
required docket fees and for lack of merit.

The matter was raised to the Supreme Court in Public Estates Authority v. Yujuico8 but PEA’s petition
was denied, upholding the trial court’s dismissal of the petition for relief for having been filed out of time.
The allegation of fraud in the titling of the subject property in the name of Fermina Castro was not taken
up by the Court.

On June 8, 2001, in a Complaint for Annulment and Cancellation of Decree No. N-150912 and its
Derivative Titles, entitled Republic of the Philippines v. Fermina Castro, Jesus S. Yujuico, August Y.
Carpio and the Registry of Deeds of Parañaque City docketed as Civil Case No. 01-0222, filed with the
Parañaque City RTC, respondent Republic of the Philippines, through the OSG, alleged that when the
land registered to Castro was surveyed by Engr. H. Obreto on August 3, 1972 and subsequently approved
by the LRC on April 23, 1973, the land was still a portion of Manila Bay as evidenced by Namria
Hydrographic Map No. 4243, Surveys to 1980; 1st Ed/. January 9/61: Revised 80-11-2; that Roman
Mataverde, the then OIC of the Surveys Division, Bureau of Lands, informed the OIC of the Legal
Division that "[w]hen projected on Cadastral Maps CM 14 deg. 13’ N-120 deg, 59’E, Sec.2-A of
Parañaque Cadastre (Cad. 299), (LRC) Psu-964 falls inside Manila Bay, outside Cad. 299"; that then
Acting Regional Lands Director Narciso V. Villapando issued a Report dated November 15, 1973 stating
that plan (LRC) Psu-964 is a portion of Manila Bay; that then Officer-in-Charge, Assistant Director of
Lands, Ernesto C. Mendiola, submitted his Comment and Recommendation re: Application for
Registration of Title of FERMINA CASTRO, LRC Case No. N-8239, dated Dec. 1, 1977, praying that
the instant registration case be dismissed; and that Fermina Castro had no registrable rights over the
property.

More significantly, respondent Republic argued that, first, since the subject land was still underwater, it
could not be registered in the name of Fermina Castro. Second, the land registration court did not have
jurisdiction to adjudicate inalienable lands, thus the decision adjudicating the subject parcel of land to
Fermina Castro was void. And third, the titles of Yujuico and Carpio, being derived from a void title,
were likewise void.9

On September 13, 2001, Yujuico and Carpio filed a Motion to Dismiss (With Cancellation of Notice of
Lis Pendens),10 on the grounds that: (1) the cause of action was barred by prior judgment; (2) the claim
had been waived, abandoned, or otherwise extinguished; (3) a condition precedent for the filing of the
complaint was not complied with; and (4) the complaint was not verified and the certification against
forum shopping was not duly executed by the plaintiff or principal party.

On November 27, 2001, respondent Republic filed an Opposition11 to the motion to dismiss to which
defendants filed a Reply12 on January 14, 2002, reiterating the grounds for the motion to dismiss.

In the August 7, 2002 Order of the RTC,13 Civil Case No. 01-0222 was dismissed. The trial court stated
that the matter had already been decided in LRC Case No. N-8239, and that after 28 years without being
contested, the case had already become final and executory.1âwphi1 The trial court also found that the
OSG had participated in the LRC case, and could have questioned the validity of the decision but did not.
Civil Case No. 01-0222 was thus found barred by prior judgment.

On appeal to the CA, in CA-G.R. CV No. 76212, respondent Republic alleged that the trial court erred in
disregarding that appellant had evidence to prove that the subject parcel of land used to be foreshore land
of the Manila Bay and that the trial court erred in dismissing Civil Case No. 01-0222 on the ground of res
judicata.14

The CA observed that shores are properties of the public domain intended for public use and, therefore,
not registrable and their inclusion in a certificate of title does not convert the same into properties of
private ownership or confer title upon the registrant.

Further, according to the appellate court res judicata does not apply to lands of public domain, nor does
possession of the land automatically divest the land of its public character.

The appellate court explained that rulings of the Supreme Court have made exceptions in cases where the
findings of the Director of Lands and the Department of Environment and Natural Resources (DENR)
were conflicting as to the true nature of the land in as much as reversion efforts pertaining foreshore lands
are embued with public interest.
The dispositive portion of the CA decision reads,

WHEREFORE, premises considered, the present appeal is hereby GRANTED. The appealed Order dated
August 7, 2002 of the trial court in Civil Case No. 01-0222 is hereby REVERSED and SET ASIDE. The
case is hereby REMANDED to said court for further proceedings and a full-blown trial on the merits with
utmost dispatch.15

Hence, this petition.

The Issues

Petitioners now raise the following issues before this Court:

THE COURT OF APPEALS COMMITTED REVERSIBLE ERROR AND DECIDED A QUESTION


OF SUBSTANCE IN A WAY NOT IN ACCORDANCE WITH LAW AND THE APPLICABLE
DECISIONS OF THE HONORABLE COURT AND HAS DEPARTED FROM THE ACCEPTED AND
USUAL COURSE OF JUDICIAL PROCEEDINGS NECESSITATING THE HONORABLE COURT’S
EXERCISE OF ITS POWER OF SUPERVISION CONSIDERING THAT:

I. THE REVERSAL BY THE COURT OF APPEALS OF THE TRIAL COURT’S APPLICATION OF


THE PRINCIPLE OF RES JUDICATA IN THE INSTANT CASE IS BASED ON ITS ERRONEOUS
ASSUMPTION THAT THE SUBJECT LAND IS OF PUBLIC DOMAIN, ALLEGEDLY PART OF
MANILA BAY.

A. IN THE FIRESTONE CASE, THE HONORABLE COURT APPLIED THE PRINCIPLE OF


RES JUDICATA NOTWITHSTANDING ALLEGATIONS OF LACK OF JURISDICTION OF
A LAND REGISTRATION COURT, FORECLOSING ANY FURTHER ATTEMPT BY
RESPONDENT THEREIN, AS IN THE INSTANT CASE, TO RESURRECT A LONG-
SETTLED JUDICIAL DETERMINATION OF REGISTRABILITY OF A PARCEL OF LAND
BASED ON THE SHEER ALLEGATION THAT THE SAME IS PART OF THE PUBLIC
DOMAIN.

B. THE LAND REGISTRATION COURT HAD JURISDICTION TO DETERMINE


WHETHER THE SUBJECT LAND WAS PART OF THE PUBLIC DOMAIN.

C. RESPONDENT’S REVERSION CASE SEEKS TO RETRY THE VERY SAME FACTUAL


ISSUES THAT HAVE ALREADY BEEN JUDICIALLY DETERMINED OVER THIRTY (30)
YEARS AGO.

D. THE JURISPRUDENTIAL BASES APPLIED BY THE COURT OF APPEALS IN ITS


QUESTIONED DECISION ARE MISPLACED, CONSIDERING THAT THEY ARE ALL
PREDICATED ON THE ERRONEOUS PREMISE THAT IT IS UNDISPUTED THAT THE
SUBJECT LAND IS PART OF THE PUBLIC DOMAIN.

II. RESPONDENT IS BARRED BY JURISDICTIONAL ESTOPPEL AND LACHES FROM


QUESTIONING THE JURISDICTION OF THE LAND REGISTRATION COURT.

III. RELIANCE BY THE COURT OF APPEALS ON THE ISOLATED PRONOUNCEMENT OF THE


HONORABLE COURT IN THE PEA CASE IS UNWARRANTED AND MISLEADING
CONSIDERING THAT THE MATTER OF WHETHER RES JUDICATA APPLIES WITH RESPECT
TO THE LAND REGISTRATION COURT’S DECISION IN 1974 WAS NOT IN ISSUE IN SAID
CASE.

A. THE INSTANT REVERSION CASE IS NOT THE PROPER RECOURSE.

B. THE VALIDITY OF THE COURT-APPROVED COMPROMISE AGREEMENT 15 MAY


1998 HAS ALREADY BEEN AFFIRMED BY THE HONORABLE COURT IN THE PEA
CASE.

IV. EQUITABLE CONSIDERATIONS MANDATE THE APPLICATION OF THE RULE ON


ORDINARY ESTOPPEL AND LACHES IN THE INSTANT CASE AGAINST RESPONDENT.

V. RESPONDENT CANNOT BE GIVEN SPECIAL CONSIDERATION AND EXCUSED FOR


TRANSGRESSING RULES OF PROCEDURE.16

Essentially, the issues boil down to three: (1) Is a reversion suit proper in this case? (2) Is the present
petition estopped by laches? (3) Did the CA erroneously apply the principle of res judicata?

An action for reversion seeks to restore public land fraudulently awarded and disposed of to private
individuals or corporations to the mass of public domain.17 This remedy is provided under
Commonwealth Act (CA) No. 141 (Public Land Act) which became effective on December 1, 1936. Said
law recognized the power of the state to recover lands of public domain. Section 124 of CA No. 141
reads:

SEC. 124. Any acquisition, conveyance, alienation, transfer, or other contract made or executed in
violation of any of the provisions of Sections one hundred and eighteen, one hundred and twenty, one
hundred and twenty one, one hundred and twenty-two, and one hundred twenty-three of this Act shall be
unlawful and null and void from its execution and shall produce the effect of annulling and cancelling the
grant, title, patent, or permit originally issued, recognized or confirmed, actually or presumptively, and
cause the reversion of the property and its improvements to the State. (Emphasis supplied.)

Pursuant to Section 124 of the Public Land Act, reversion suits are proper in the following instances, to
wit:

1. Alienations of land acquired under free patent or homestead provisions in violation of Section
118, CA No. 141;

2. Conveyances made by non-Christians in violation of Section 120, CA No. 141; and

3. Alienations of lands acquired under CA No. 141 in favor of persons not qualified under
Sections 121, 122, and 123 of CA No. 141.

From the foregoing, an action for reversion to cancel titles derived from homestead patents or free patents
based on transfers and conveyances in violation of CA No. 141 is filed by the OSG pursuant to its
authority under the Administrative Code with the RTC. It is clear therefore that reversion suits were
originally utilized to annul titles or patents administratively issued by the Director of the Land
Management Bureau or the Secretary of the DENR.
While CA No. 141 did not specify whether judicial confirmation of titles by a land registration court can
be subject of a reversion suit, the government availed of such remedy by filing actions with the RTC to
cancel titles and decrees granted in land registration applications.

The situation changed on August 14, 1981 upon effectivity of Batas Pambansa (BP) Blg. 129 which gave
the Intermediate Appellate Court the exclusive original jurisdiction over actions for annulment of
judgments of RTCs.

When the 1997 Rules of Civil Procedure became effective on July 1, 1997, it incorporated Rule 47 on
annulment of judgments or final orders and resolutions of the RTCs. The two grounds for annulment
under Sec. 2, Rule 47 are extrinsic fraud and lack of jurisdiction. If based on extrinsic fraud, the action
must be filed within four (4) years from its discovery, and if based on lack of jurisdiction, before it is
barred by laches or estoppel as provided by Section 3, Rule 47. Thus, effective July 1, 1997, any action
for reversion of public land instituted by the Government was already covered by Rule 47.

The instant Civil Case No. 01-0222 for annulment and cancellation of Decree No. N-150912 and its
derivative titles was filed on June 8, 2001 with the Parañaque City RTC. It is clear therefore that the
reversion suit was erroneously instituted in the Parañaque RTC and should have been dismissed for lack
of jurisdiction. The proper court is the CA which is the body mandated by BP Blg. 129 and prescribed by
Rule 47 to handle annulment of judgments of RTCs.

In Collado v. Court of Appeals,18 the government, represented by the Solicitor General pursuant to
Section 9(2) of BP Blg. 129, filed a petition for annulment of judgment with the CA. Similarly in the case
of Republic v. Court of Appeals,19 the Solicitor General correctly filed the annulment of judgment with
the said appellate court.

This was not done in this case. The Republic misfiled the reversion suit with the Parañaque RTC. It
should have been filed with the CA as required by Rule 47. Evidently, the Parañaque RTC had no
jurisdiction over the instant reversion case.

Assuming that the Parañaque RTC has jurisdiction over the reversion case, still the lapse of almost three
decades in filing the instant case, the inexplicable lack of action of the Republic and the injury this would
cause constrain us to rule for petitioners. While it may be true that estoppel does not operate against the
state or its agents,20 deviations have been allowed. In Manila Lodge No. 761 v. Court of Appeals, we said:

Estoppels against the public are little favored. They should not be invoked except in rare and unusual
circumstances, and may not be invoked where they would operate to defeat the effective operation of a
policy adopted to protect the public. They must be applied with circumspection and should be applied
only in those special cases where the interests of justice clearly require it. Nevertheless, the government
must not be allowed to deal dishonorably or capriciously with its citizens, and must not play an ignoble
part or do a shabby thing; and subject to limitations x x x, the doctrine of equitable estoppel may be
invoked against public authorities as well as against private individuals.21 (Emphasis supplied.)

Equitable estoppel may be invoked against public authorities when as in this case, the lot was already
alienated to innocent buyers for value and the government did not undertake any act to contest the title for
an unreasonable length of time.

In Republic v. Court of Appeals, where the title of an innocent purchaser for value who relied on the
clean certificates of the title was sought to be cancelled and the excess land to be reverted to the
Government, we ruled that "[i]t is only fair and reasonable to apply the equitable principle of estoppel by
laches against the government to avoid an injustice to innocent purchasers for value (emphasis
supplied)."22 We explained:

Likewise time-settled is the doctrine that where innocent third persons, relying on the correctness of the
certificate of title, acquire rights over the property, courts cannot disregard such rights and order the
cancellation of the certificate. Such cancellation would impair public confidence in the certificate of title,
for everyone dealing with property registered under the Torrens system would have to inquire in every
instance whether the title has been regularly issued or not. This would be contrary to the very purpose of
the law, which is to stabilize land titles. Verily, all persons dealing with registered land may safely rely on
the correctness of the certificate of title issued therefore, and the law or the courts do not oblige them to
go behind the certificate in order to investigate again the true condition of the property. They are only
charged with notice of the liens and encumbrances on the property that are noted on the certificate.23

xxxx

But in the interest of justice and equity, neither may the titleholder be made to bear the unfavorable effect
of the mistake or negligence of the State’s agents, in the absence of proof of his complicity in a fraud or
of manifest damage to third persons. First, the real purpose of the Torrens system is to quiet title to land
to put a stop forever to any question as to the legality of the title, except claims that were noted in the
certificate at the time of the registration or that may arise subsequent thereto. Second, as we discussed
earlier, estoppel by laches now bars petitioner from questioning private respondents’ titles to the
subdivision lots. Third, it was never proven that Private Respondent St. Jude was a party to the fraud that
led to the increase in the area of the property after its subdivision. Finally, because petitioner even failed
to give sufficient proof of any error that might have been committed by its agents who had surveyed the
property, the presumption of regularity in the performance of their functions must be respected.
Otherwise, the integrity of the Torrens system, which petitioner purportedly aims to protect by filing this
case, shall forever be sullied by the ineptitude and inefficiency of land registration officials, who are
ordinarily presumed to have regularly performed their duties.24

Republic v. Court of Appeals is reinforced by our ruling in Republic v. Umali,25 where, in a reversion
case, we held that even if the original grantee of a patent and title has obtained the same through fraud,
reversion will no longer prosper as the land had become private land and the fraudulent acquisition cannot
affect the titles of innocent purchasers for value.

Considering that innocent purchaser for value Yujuico bought the lot in 1974, and more than 27 years had
elapsed before the action for reversion was filed, then said action is now barred by laches.

While the general rule is that an action to recover lands of public domain is imprescriptible, said right can
be barred by laches or estoppel. Section 32 of PD 1592 recognized the rights of an innocent purchaser for
value over and above the interests of the government. Section 32 provides:

SEC. 32. Review of decree of registration; Innocent purchaser for value.—The decree of registration shall
not be reopened or revised by reason of absence, minority, or other disability of any person adversely
affected thereby, nor by any proceeding in any court for reversing judgments, subject, however, to the
right of any person, including the government and the branches thereof, deprived of land or of any estate
or interest therein by such adjudication or confirmation of title obtained by actual fraud, to file in the
proper Court of First Instance a petition for reopening and review of the decree of registration not later
than one year from and after the date of the entry of such decree of registration, but in no case shall such
petition be entertained by the court where an innocent purchaser for value has acquired the land or an
interest therein, whose rights may be prejudiced. Whenever the phrase "innocent purchaser for value" or
an equivalent phrase occurs in this Decree, it shall be deemed to include an innocent lessee, mortgagee, or
other encumbrances for value. (Emphasis supplied.)

In this petition, the LRC (now LRA), on May 30, 1974, issued Decree No. N-150912 in favor of Fermina
Castro and OCT No. 10215 was issued by the Rizal Registrar of Deeds on May 29, 1974. OCT No. 10215
does not show any annotation, lien, or encumbrance on its face. Relying on the clean title, Yujuico bought
the same in good faith and for value from her. He was issued TCT No. 445863 on May 31, 1974. There is
no allegation that Yujuico was a buyer in bad faith, nor did he acquire the land fraudulently. He thus had
the protection of the Torrens System that every subsequent purchaser of registered land taking a
certificate of title for value and in good faith shall hold the same free from all encumbrances except those
noted on the certificate and any of the x x x encumbrances which may be subsisting.26 The same legal
shield redounds to his successors-in-interest, the Yujuicos and Carpio, more particularly the latter since
Carpio bought the lot from Jesus Y. Yujuico for value and in good faith.

Likewise protected are the rights of innocent mortgagees for value, the PISO, Citibank, N.A., PDC,
RCBC, PCIB, and DBP. Even if the mortgagor’s title was proved fraudulent and the title declared null
and void, such declaration cannot nullify the mortgage rights of a mortgagee in good faith.27

All told, a reversion suit will no longer be allowed at this stage.

More on the issue of laches. Laches is the failure or neglect, for an unreasonable and unexplained length
of time, to do that which by exercising due diligence could or should have been done earlier. It is
negligence or omission to assert a right within a reasonable time, warranting a presumption that the party
entitled thereto has either abandoned or declined to assert it.28

When respondent government filed the reversion case in 2001, 27 years had already elapsed from the time
the late Jesus Yujuico purchased the land from the original owner Castro. After the issuance of OCT No.
10215 to Castro, no further action was taken by the government to question the issuance of the title to
Castro until the case of Public Estates Authority, brought up in the oral argument before this Court on
September 6, 2000.29 We then held that allegation of fraud in the issuance of the title was not proper for
consideration and determination at that stage of the case.

From the undisputed facts of the case, it is easily revealed that respondent Republic took its sweet time to
nullify Castro’s title, notwithstanding the easy access to ample remedies which were readily available
after OCT No. 10215 was registered in the name of Castro. First, it could have appealed to the CA when
the Pasig-Rizal CFI rendered a decision ordering the registration of title in the name of applicant Castro
on April 26, 1974. Had it done so, it could have elevated the matter to this Court if the appellate court
affirms the decision of the land registration court. Second, when the entry of Decree No. N-150912 was
made on May 29, 1974 by the Rizal Register of Deeds, the Republic had one (1) year from said date or up
to May 28, 1975 to file a petition for the reopening and review of Decree No. N-150912 with the Rizal
CFI (now RTC) on the ground of actual fraud under section 32 of PD 1592. Again, respondent Republic
did not avail of such remedy. Third, when Jesus Yujuico filed a complaint for Removal of Cloud and
Annulment of Title with Damages against PEA before the Parañaque RTC in Civil Case No. 96-0317,
respondent could have persevered to question and nullify Castro’s title. Instead, PEA undertook a
compromise agreement on which the May 18, 1998 Resolution30 was issued. PEA in effect admitted that
the disputed land was owned by the predecessors-in-interest of petitioners and their title legal and valid;
and impliedly waived its right to contest the validity of said title; respondent Republic even filed the
petition for relief from judgment beyond the time frames allowed by the rules, a fact even acknowledged
by this Court in Public Estates Authority. Lastly, respondent only filed the reversion suit on June 8, 2001
after the passage of 27 years from the date the decree of registration was issued to Fermina Castro.
Such a Rip Van Winkle, coupled with the signing of the settlement with PEA, understandably misled
petitioners to believe that the government no longer had any right or interest in the disputed lot to the
extent that the two lots were even mortgaged to several banks including a government financing
institution. Any nullification of title at this stage would unsettle and prejudice the rights and obligations of
innocent parties. All told, we are constrained to conclude that laches had set in.

Even granting arguendo that respondent Republic is not precluded by laches from challenging the title of
petitioners in the case at bar, still we find that the instant action for reversion is already barred by res
judicata.

Petitioners relying on Firestone Ceramics, Inc. v. Court of Appeals31 as a precedent to the case at bar
contend that the instant reversion suit is now barred by res judicata.

We agree with petitioners.

The doctrine on precedents is expressed in the latin maxim—Stare decisis et non quieta movere. Follow
past precedents and do not disturb what has been settled.32 In order however that a case can be considered
as a precedent to another case which is pending consideration, the facts of the first case should be similar
or analogous to the second case.

A perusal of the facts of the Firestone case and those of the case at bar reveals that the facts in the two (2)
cases are parallel. First, in Firestone and in this case, the claimants filed land registration applications
with the CFI; both claimants obtained decrees for registration of lots applied for and were issued
OCTs. Second, in Firestone, the Republic filed a reversion case alleging that the land covered by the OCT
was still inalienable forest land at the time of the application and hence the Land Registration Court did
not acquire jurisdiction to adjudicate the property to the claimant. In the instant case, respondent Republic
contend that the land applied for by Yujuico was within Manila Bay at the time of application and
therefore the CFI had no jurisdiction over the subject matter of the complaint. Third, in Firestone, the
validity of the title of the claimant was favorably ruled upon by this Court in G.R. No.
109490entitled Patrocinio E. Margolles v. CA. In the case at bar, the validity of the compromise
agreement involving the disputed lot was in effect upheld when this Court in Public Estates Authority v.
Yujuico dismissed the petition of PEA seeking to reinstate the petition for relief from the May 18, 1998
Resolution approving said compromise agreement. With the dismissal of the petition, the May 18, 1998
Resolution became final and executory and herein respondent Republic through PEA was deemed to have
recognized Castro’s title over the disputed land as legal and valid. In Romero v. Tan,33 we ruled that "a
judicial compromise has the effect of res judicata." We also made clear that a judgment based on a
compromise agreement is a judgment on the merits, wherein the parties have validly entered into
stipulations and the evidence was duly considered by the trial court that approved the agreement. In the
instant case, the May 18, 1998 Resolution approving the compromise agreement confirmed the favorable
decision directing the registration of the lot to Castro’s name in LRC Case No. N-8239. Similarly,
in Firestone, the Margolles case confirmed the decision rendered in favor of Gana in Land Registration
Case No. 672 ordering the issuance of the decree to said applicant. Fourth, in Firestone, the Supreme
Court relied on the letter of then Solicitor General Francisco Chavez that the evidence of the Bureau of
Lands and the LRC was not sufficient to support an action for cancellation of OCT No. 4216. In the
instant case, both the Solicitor General and the Government Corporate Counsel opined that the Yujuico
land was not under water and that "there appears to be no sufficient basis for the Government to institute
the action for annulment." Fifth, in Firestone, we ruled that "the Margolles case had long become final,
thus the validity of OCT No. 4216 should no longer be disturbed and should be applied in the instant case
(reversion suit) based on the principle of res judicata or, otherwise, the rule on conclusiveness of
judgment."34
Clearly from the above, Firestone is a precedent case. The Public Estates Authority had become final and
thus the validity of OCT No. 10215 issued to Castro could no longer be questioned.

While we said in Public Estates Authority that the court does not foreclose the right of the Republic from
pursuing the proper recourse in a separate proceedings as it may deem warranted, the statement was obiter
dictum since the inquiry on whether or not the disputed land was still under water at the time of its
registration was a non-issue in the said case.

Even granting for the sake of argument that Firestone is not squarely applicable, still we find the reversion
suit already barred by res judicata.

For res judicata to serve as an absolute bar to a subsequent action, the following requisites must concur:
(1) there must be a final judgment or order; (2) the court rendering it must have jurisdiction over the
subject matter and the parties; (3) it must be a judgment or order on the merits; and (4) there must be
between the two cases, identity of parties, subject matter and causes of action.35

There is no question as to the first, third and last requisites. The threshold question pertains to the second
requisite, whether or not the then Pasig-Rizal CFI, Branch 22 had jurisdiction over the subject matter in
LRC Case No. N-8239. In Civil Case No. 01-0222, the Parañaque City RTC, Branch 257 held that the
CFI had jurisdiction. The CA reversed the decision of the Parañaque City RTC based on the assertion of
respondent Republic that the Pasig-Rizal CFI had no jurisdiction over the subject matter, and that there
was a need to determine the character of the land in question.

The Parañaque City RTC Order dismissing the case for res judicata must be upheld.

The CA, in rejecting the dismissal of the reversion case by the Parañaque RTC, relied on two cases,
namely: Municipality of Antipolo v. Zapanta36 and Republic v. Vda. De Castillo.37

In Municipality of Antipolo, we held that the land registration court had no jurisdiction to entertain any
land registration application if the land was public property, thus:

Since the Land Registration Court had no jurisdiction to entertain the application for registration of public
property of ANTIPOLO, its Decision adjudicating the DISPUTED PROPERTY as of private ownership
is null and void. It never attained finality, and can be attacked at any time. It was not a bar to the action
brought by ANTIPOLO for its annulment by reason of res judicata.

"[x x x] the want of jurisdiction by a court over the subject matter renders the judgment void and a mere
nullity, and considering that a void judgment is in legal effect no judgment, by which no rights are
divested, from which no rights can be obtained, which neither binds nor bars any one, and under which all
acts performed and all claims flowing out of are void, and considering, further, that the decision, for want
of jurisdiction of the court, is not a decision in contemplation of law, and hence, can never become
executory, it follows that such a void judgment cannot constitute a bar to another case by reason of res
judicata."

xxxx

"It follows that ‘if a person obtains a title under the Public Land Act which includes, by oversight, lands
which cannot be registered under the Torrens System, or when the Director of Lands did not have
jurisdiction over the same because it is a public forest, the grantee does not, by virtue of the said
certificate of title alone, become the owner of the land illegally included’ (Republic vs. Animas, 56 SCRA
499, 503; Ledesma vs. Municipality of Iloilo, 49 Phil. 769)."

[x x x x]

"Under these circumstances, the certificate of title may be ordered cancelled (Republic vs. Animas, et al.,
supra), and the cancellation maybe pursued through an ordinary action therefore. This action cannot be
barred by the prior judgment of the land registration court, since the said court had no jurisdiction over
the subject matter. And if there was no such jurisdiction, then the principle of res judicata does not apply.
[x x x] Certainly, one of the essential requisites, i.e., jurisdiction over the subject matter, is absent in this
case." (Italics supplied).38

The plain import of Municipality of Antipolo is that a land registration court, the RTC at present, has no
jurisdiction over the subject matter of the application which respondent Republic claims is public land.
This ruling needs elucidation.

Firmly entrenched is the principle that jurisdiction over the subject matter is conferred by
law.39 Consequently, the proper CFI (now the RTC) under Section 14 of PD 152940 (Property Registration
Decree) has jurisdiction over applications for registration of title to land.

Section 14 of PD 1592 provides:

SEC. 14. Who may apply.—The following persons may file in the proper Court of First Instance an
application for registration of title to land, whether personally or through their duly authorized
representatives:

(1) Those who by themselves or through their predecessors-in-interest have been in open, continuous,
exclusive and notorious possession and occupation of alienable and disposable lands of the public domain
under a bona fide claim of ownership since June 12, 1945, or earlier. (Emphasis supplied.)

Conformably, the Pasig-Rizal CFI, Branch XXII has jurisdiction over the subject matter of the land
registration case filed by Fermina Castro, petitioners’ predecessor-in-interest, since jurisdiction over the
subject matter is determined by the allegations of the initiatory pleading¾the application.41 Settled is the
rule that "the authority to decide a case and not the decision rendered therein is what makes up
jurisdiction. When there is jurisdiction, the decision of all questions arising in the case is but an exercise
of jurisdiction."42

In our view, it was imprecise to state in Municipality of Antipolo that the "Land Registration Court [has]
no jurisdiction to entertain the application for registration of public property x x x" for such court
precisely has the jurisdiction to entertain land registration applications since that is conferred by PD 1529.
The applicant in a land registration case usually claims the land subject matter of the application as
his/her private property, as in the case of the application of Castro. Thus, the conclusion of the CA that
the Pasig-Rizal CFI has no jurisdiction over the subject matter of the application of Castro has no legal
mooring. The land registration court initially has jurisdiction over the land applied for at the time of the
filing of the application. After trial, the court, in the exercise of its jurisdiction, can determine whether the
title to the land applied for is registrable and can be confirmed. In the event that the subject matter of the
application turns out to be inalienable public land, then it has no jurisdiction to order the registration of
the land and perforce must dismiss the application.
Based on our ruling in Antipolo, the threshold question is whether the land covered by the titles of
petitioners is under water and forms part of Manila Bay at the time of the land registration application in
1974. If the land was within Manila Bay, then res judicata does not apply. Otherwise, the decision of the
land registration court is a bar to the instant reversion suit.

After a scrutiny of the case records and pleadings of the parties in LRC Case No. N-8239 and in the
instant petition, we rule that the land of Fermina Castro is registrable and not part of Manila Bay at the
time of the filing of the land registration application.

The trial court’s Decision in 1974 easily reveals the basis for its conclusion that the subject matter was a
dry land, thus:

On February 1, 1974, the applicant presented her evidence before the Deputy Clerk of this Court and
among the evidence presented by her were certain documents which were marked as Exhibits D to J,
inclusive. The applicant testified in her behalf and substantially declared that: she was 62 years old,
single, housekeeper and residing at 1550 J. Escoda, Ermita, Manila; that she was born on June 3, 1911;
that she first came to know of the land applied for which is situated in the Municipality of Parañaque,
province of Rizal, with an area of 17,343 square meters and covered by plan (LRC) Psu-964 while she
was still ten (10) years old or sometime in 1921; that when she first came to know of the land applied for,
the person who was in possession and owner of said land was her father, Catalino Castro; that during that
time her father used to plant on said land various crops like pechay, mustard, eggplant, etc.; that during
that time, her father built a house on said land which was used by her father and the other members of the
family, including the applicant, as their residential house; that the land applied for was inherited by her
father from her grandfather Sergio Castro; that Catalino Castro continuously possessed and owned the
land in question from 1921 up to the time of his death in 1952; and that during that period of time nobody
ever disturbed the possession and ownership of her father over the said parcel of land; that after the death
of her father in 1952 she left the place and transferred her place of residence but she had also occasions to
visit said land twice or thrice a week and sometimes once a week; that after she left the land in question in
1952, she still continued possessing said land, through her caretaker Eliseo Salonga; that her possession
over the land in question from the time she inherited it up to the time of the filing of the application has
been continuous, public, adverse against the whole world and in the concept of an owner; that it was
never encumbered, mortgaged, or disposed of by her father during his lifetime and neither did she ever
encumber or sell the same; that it was declared for taxation purposes by her father when he was still alive
and her father also paid the real estate taxes due to the government although the receipt evidencing the
payment of said real estate taxes for the property applied for have been lost and could no longer be found
inspite of diligent effort exerted to locate the same.

The other witness presented by the applicant was Emiliano de Leon, who declared that he was 70 years
old, married, farmer and residing at San Jose, Baliwag, Bulacan; that he knew Catalino Castro, the father
of the applicant because said Catalino Castro was his neighbor in Tambo, Parañaque, Rizal, he had a
house erected on the land of Catalino Castro; that he was born in 1903 and he first came to know of the
land in question when in 1918 when he was about 18 years old; that the area of the land owned and
possessed by Catalino Castro where he constructed a residential house has an area of more than one and
one-half (1 ½) hectares; that the possession of Catalino Castro over the land in question was peaceful,
continuous, notorious, adverse against the whole world and in the concept of an owner; that during the
time that Catalino Castro was in possession of the land applied for he planted on said parcel of land
mango, coconut and banana, etc.; that Catalino Castro continuously possessed and owned said parcel of
land up to the year 1952 when he died; that during the time that Catalino Castro was in possession of said
land, nobody ever laid claim over the said property; that said land is not within any military or naval
reservation; that upon the death of Catalino Castro, the applicant took possession of the land applied for
and that up to the present the applicant is in possession of said land; that he resided in the land in question
from 1918 up to the time he transferred his place of residence in Baliwag, Bulacan in the year 1958.

On February 11, 1974, the Court, pursuant to the provision of Presidential Decree No. 230 issued by his
Excellency, Ferdinand E. Marcos dated July 9, 1973 held in abeyance the rendition of a decision in this
case and directed the applicant to submit a white print copy of plan (LRC) Psu-964 to the Director of
lands who was directed by the Court to submit his comment and recommendation thereon.

The property in question is declared for taxation purposes under Tax Declaration No. 51842 (Exhibit G)
and real estate taxes due thereon have been paid up to the year 1973 (Exhibit H).

In compliance with the Order of this Court February 11, 1974, the Director of Lands, thru Special
Attorney Saturnino A. Pacubas, submitted a report to this Court dated April 25, 1974, stating among other
things, that upon ocular inspection conducted by Land Inspector Adelino G. Gorospe and the subsequent
joint ocular inspection conducted by Geodetic Engineer Manuel A. Cervantes and Administrative
Assistant Lazaro G. Berania, it was established that the parcel of land covered by plan (LRC) Psu-964 no
longer forms part of the Manila Bay but is definitely solid and dry land.

In this connection, it should be noted that Administrative Assistant Lazaro G. Berania and Geodetic
Engineer Manuel A. Cervantes, in their report dated March 22, 1974 have also stated that the land applied
for cannot be reached by water even in the highest tide and that the said land is occupied by squatter
families who have erected makeshift shanties and a basketball court which only prove that the same is dry
and solid land away from the shores of Manila Bay.

Furthermore, Land Inspector Adelino G. Gorospe in his letter-report dated November 28, 1973 has also
stated that there is a house of pre-war vintage owned by the applicant on the land in question which in
effect corroborates the testimony of the applicant and her witness that they have lived on the land in
question even prior to the outbreak of the second world war and that the applicant has been in possession
of the land in question long time ago.43

To counter the evidence of applicant Castro, and bolster its claim that she has no valid title, respondent
Republic relies on the July 18, 1973 Office Memorandum44 of Roman Mataverde, OIC, Surveys Division,
to the OIC, Legal Division, of the Bureau of Lands, stating that "when projected on cadastral maps CM
14º 13’N - 120º 59’ E., Sec. 3-D and CM 14º 30’N - 120º 59’E., Sec. 2-A of Paranaque [sic] Cadastre
(Cad-299), (LRC) Psu-964 falls inside Manila Bay, outside Cad-299."45

The same conclusion was adopted in a November 15, 1973 letter of Narciso Villapando, Acting Regional
Lands Director to the Chief, Legal Division, Bureau of Lands and in the Comment and Recommendation
of Ernesto C. Mendiola, Assistant Director, also of the Bureau of Lands.

Respondent likewise cites Namria Hydrographic Map No. 4243 Revised 80-11-2 to support its position
that Castro’s lot is a portion of Manila Bay.

The burden of proving these averments falls to the shoulders of respondent Republic. The difficulty is
locating the witnesses of the government. Roman Mataverde, then OIC of the Surveys Division retired
from the government service in 1982. He should by this time be in his 90s. Moreover, Asst. Regional
Director Narciso Villapando and Asst. Director Ernesto C. Mendiola are no longer connected with the
Bureau of Lands since 1986.
Assuming that OIC Roman Mataverde, Asst. Regional Director Narciso Villapando and Assistant
Director Ernesto C. Mendiola are still available as witnesses, the projections made on the cadastral maps
of the then Bureau of Lands cannot prevail over the results of the two ocular inspections by several
Bureau of Lands officials that the disputed lot is definitely "dry and solid land" and not part of Manila
Bay. Special Attorney Saturnino A. Pacubas, Land Inspector Adelino G. Gorospe, Geodetic Engineer
Manuel A. Cervantes and Administrative Asst. Lazaro A. Berana, all officials of the Bureau of Lands,
were positive that the disputed land is solid and dry land and no longer forms part of Manila Bay.
Evidence gathered from the ocular inspection is considered direct and firsthand information entitled to
great weight and credit while the Mataverde and Villapando reports are evidence weak in probative value,
being merely based on theoretical projections "in the cadastral map or table surveys."46 Said projections
must be confirmed by the actual inspection and verification survey by the land inspectors and geodetic
engineers of the Bureau of Lands. Unfortunately for respondent Republic, the bureau land inspectors
attested and affirmed that the disputed land is already dry land and not within Manila Bay.

On the other hand, the Namria Hydrographic Map No. 4243 does not reveal what portion of Manila Bay
was Castro’s lot located in 1974. Moreover, a hydrographic map is not the best evidence to show the
nature and location of the lot subject of a land registration application. It is derived from a hydrographic
survey which is mainly used for navigation purposes, thus:

Surveys whose principal purpose is the determination of data relating to bodies of water. A hydrographic
survey may consist of the determination of one or several of the following classes of data: depth water;
configuration and nature of the bottom; directions and force of currents; heights and times of tides and
water stages; and location of fixed objects for survey and navigation purposes.47

Juxtaposed with finding of the ocular inspection by Bureau of Lands Special Attorney Pacubas and others
that Castro’s lot is dry land in 1974, Namria Hydrographic Map No. 4243 is therefore inferior evidence
and lacking in probative force.

Moreover, the reliability and veracity of the July 18, 1973 report of Roman Mataverde based on the
alleged projection on cadastral maps and the Villapando report dated November 15, 1973 are put to
serious doubt in the face of the opinion dated October 13, 1997 of the Government Corporate Counsel,
the lawyer of the PEA, which upheld the validity of the titles of petitioners, thus:

We maintain to agree with the findings of the court that the property of Fermina Castro was registrable
land, as based on the two (2) ocular inspections conducted on March 22, 1974 by Lands Administrative
Assistant Lazaro G. Berania and Lands Geodetic Engr. Manuel Cervantes, finding ‘… the same no longer
forms part of Manila Bay but is definitely solid land which cannot be reached by water even in the highest
of tides’. This Berania-Cervantes report based on ocular inspections literally overturned the findings and
recommendations of Land Director Narciso V. Villapando dated November 15, 1973, and that of Director
Ernesto C. Mendiola dated December 1, 1977, and the fact that the Villapando-Mendiola reports were
merely based on projections in the cadastral map or table surveys.

xxxx

A. The Legal prognosis of the case is not promising in favor of PEA.

4.1 LRC Case No. N-8239 has already become final and executory and OCT No. 10215 was
already issued in favor of Fermina Castro. Any and all attempts to question its validity can only
be entertained in a quo warranto proceedings (sic), assuming that there are legal grounds (not
factual grounds) to support its nullification. Subjecting it to a collateral attack is not allowed
under the Torrens Title System. In Calalang vs. Register of Deeds of Quezon City, 208 SCRA
215, the Supreme Court held that the present petition is not the proper remedy in challenging the
validity of certificates of titles since the judicial action required is a direct and not a collateral
attack (refer also to: Toyota Motor Philippine Corporation vs. CA, 216 SCRA 236).

4.2 OCT No. 10215 in favor of Fermina Castro was issued pursuant to a cadastral proceeding,
hence is a rem proceedings which is translated as a constructive notice to the whole world, as held
in Adez Realty Incorporated vs. CA, 212 SCRA 623.

4.3 From the cursory and intent reading of the decision of Judge Sison in LRC Case No. N-8239,
we cannot find any iota of fraud having been committed by the court and the parties. In fact, due
process was observed when the Office of the Solicitor General represented ably the Bureau of
Lands. In Balangcad vs. Justices of the Court of Appeals, 206 SCRA 169, the Supreme Court
held that title to registered property becomes indefeasible after one-year from date of registration
except where there is actual fraud in which case it may be challenged in a direct proceeding
within that period. This is also the ruling in Bishop vs. CA, 208 SCRA 636, that to sustain an
action for annulment of a torrens certificate for being void ab initio, it must be shown that the
registration court had not acquired jurisdiction over the case and there was actual fraud in
securing the title.

4.4 As to priority of torrens title, PEA has no defense, assuming that both PEA and Yujuico titles
are valid, as held in Metropolitan Waterworks and Sewerage System vs. CA, 215 SCRA 783,
where two (2) certificates purport to include the same land, the earlier in date prevails.

4.5 The documents so far submitted by the parties to the court indicate that the mother title of the
Yujuico land when registered in 1974 was not underwater. This was shown in the two (2) ocular
inspections conducted by the officials of the Land Bureau.

4.6 The provision of P.D. 239 that no decree of registration may be issued by the court unless
upon approval and recommendation of the Bureau of Lands was substantially complied with in
the Report of Lands Special Attorney Saturnino Pacubas, submitted to the court.48

Even the counsel of respondent Republic, the OSG, arrived at the conclusion that there is no sufficient
legal basis for said respondent to institute action to annul the titles of petitioners, thus:

It may be stated at the outset that a petition for annulment of certificate of title or reconveyance of land
may be based on fraud which attended the issuance of the decree of registration and the corresponding
certificate of title.

Based on the decision in the LRC Case No. N-8239 involving the petition for registration and
confirmation of title filed by Fermina Castro, there is no showing that fraud attended the issuance of OCT
No. 10215. it appears that the evidence presented by Fermina Castro was sufficient for the trial court to
grant her petition.

The testimony of Fermina Castro, which was corroborated by Emiliano de Leon, that she and her
predecessors-in-interest had been in possession of the land for more than thirty (30) years sufficiently
established her vested right over the property initially covered by OCT No. 10215. The report dated April
25, 1974 which was submitted to the trial court by the Director of Lands through Special Attorney
Saturnino Pacubas showed that the parcel of land was solid and dry land when Fermina Castro’s
application for registration of title was filed. It was based on the ocular inspection conducted by Land
Inspector Adelino Gorospe and the joint circular inspection conducted by Geodetic Engineer Manuel A.
Cervantes and Administrative Assistant Lazaro Berania on November 28, 1973 and March 22, 1974
respectively.

The aforesaid report must be requested unless there is a concrete proof that there was an irregularity in the
issuance thereof. In the absence of evidence to the contrary, the ocular inspection of the parcel of land,
which was made the basis of said report, is presumed to be in order.

Based on the available records, there appears to be no sufficient basis for the Government to institute an
action for the annulment of OCT No. 10215 and its derivative titles. It is opined that a petition for
cancellation/annulment of Decree No. N-150912 and OCT No. 10215 and all its derivative titles will not
prosper unless there is convincing evidence to negate the report of the then Land Management Bureau
through Special Attorney Pacubas. Should the Government pursue the filing of such an action, the
possibility of winning the case is remote.49

More so, respondent Government, through its counsel, admits that the land applied by Fermina Castro in
1973 was solid and dry land, negating the nebulous allegation that said land is underwater. The only
conclusion that can be derived from the admissions of the Solicitor General and Government Corporate
Counsel is that the land subject of the titles of petitioners is alienable land beyond the reach of the
reversion suit of the state.

Notably, the land in question has been the subject of a compromise agreement upheld by this Court in
Public Estates Authority.50 In that compromise agreement, among other provisions, it was held that the
property covered by TCT Nos. 446386 and S-29361, the land subject of the instant case, would be
exchanged for PEA property. The fact that PEA signed the May 15, 1998 Compromise Agreement is
already a clear admission that it recognized petitioners as true and legal owners of the land subject of this
controversy.

Moreover, PEA has waived its right to contest the legality and validity of Castro’s title. Such waiver is
clearly within the powers of PEA since it was created by PD 1084 as a body corporate "which shall have
the attribute of perpetual succession and possessed of the powers of the corporations, to be exercised in
conformity with the provisions of this Charter [PD 1084]."51 It has the power "to enter into, make,
perform and carry out contracts of every class and description, including loan agreements, mortgages and
other types of security arrangements, necessary or incidental to the realization of its purposes with any
person, firm or corporation, private or public, and with any foreign government or entity."52 It also has the
power to sue and be sued in its corporate name.53 Thus, the Compromise Agreement and the Deed of
Exchange of Real Property signed by PEA with the petitioners are legal, valid and binding on PEA. In the
Compromise Agreement, it is provided that it "settles in full all the claims/counterclaims of the parties
against each other."54 The waiver by PEA of its right to question petitioners’ title is fortified by the
manifestation by PEA in the Joint Motion for Judgment based on Compromise Agreement that

4. The parties herein hereto waive and abandon any and all other claims and counterclaims which they
may have against each other arising from this case or related thereto.55

Thus, there was a valid waiver of the right of respondent Republic through PEA to challenge petitioners’
titles.

The recognition of petitioners’ legal ownership of the land is further bolstered by the categorical and
unequivocal acknowledgment made by PEA in its September 30, 2003 letter where it stated that: "Your
ownership thereof was acknowledged by PEA when it did not object to your membership in the CBP-IA
Association, in which an owner of a piece of land in CBP-IA automatically becomes a member
thereof."56 Section 26, Rule 130 provides that "the act, declaration or omission of a party as to a relevant
fact may be given in evidence against him." The admissions of PEA which is the real party-in-interest in
this case on the nature of the land of Fermina Castro are valid and binding on respondent Republic.
Respondent’s claim that the disputed land is underwater falls flat in the face of the admissions of PEA
against its interests. Hence, res judicata now effectively precludes the relitigation of the issue of
registrability of petitioners’ lot.

In sum, the Court finds that the reversion case should be dismissed for lack of jurisdiction on the part of
the Parañaque RTC. Even if we treat said case as a petition for annulment of judgment under Rule 47 of
the 1997 Rules of Civil Procedure, the dismissal of the case nevertheless has to be upheld because it is
already barred by laches. Even if laches is disregarded, still the suit is already precluded by res judicata in
view of the peculiar facts and circumstances obtaining therein.

WHEREFORE, premises considered, the petition is GRANTED. The Decision of the Court of Appeals in
CA-G.R. CV No. 76212 is REVERSED and SET ASIDE, and the August 7, 2002 Order of the Parañaque
City RTC, Branch 257 in Civil Case No. 01-0222 entitled Republic of the Philippines v. Fermina Castro,
et al. dismissing the complaint is AFFIRMED.

No costs.

SO ORDERED.