Republic of the Philippines

SUPREME COURT
Manila

EN BANC

G.R. No. 5246           September 16, 1910

MANUELA GREY ALBA, ET AL., petitioners-appellants,

vs.
ANACLETO R. DE LA CRUZ, objector-appellee.

Ramon Salinas, for appellants.

Aniceto G. Reyes, for appellee.

TRENT, J.:

These petitioners, Manuela, Jose, Juan, and Francisco, surnamed Grey y Alba, are the only heirs of Doña
Segunda Alba Clemente and Honorato Grey, deceased. Remedios Grey y Alba, a sister of the petitioners,
was married on the 21st day of March, 1903, to Vicente Reyes and died on the 13th of July, 1905, without
leaving any heirs except her husband. The four petitioners, as coowners, sought to have registered the
following-described property:

A parcel of land situated in the barrio of Talampas, municipality of Baliuag, Province of Bulacan,
upon which are situated three houses and one camarin of light material, having a superficial area
of 52 hectares, 51 ares, and 22 centares; bounded on the north by the highway (calzada) of
Talampas and the lands of Rita Ruiz Mateo; on the east by the lands of the said Rita Ruiz Mateo,
Hermenegildo Prado, Policarpo de Jesus, and a stream called Sapang Buslut; on the south by
the same stream and the lands of the capellania; and on the west by the stream called Sapang
Buslut, and the lands of Vicente de la Cruz, Jose Camacho and Domingo Ruiz Mateo.

This parcel of agricultural land is used for the raising of rice and sugar cane and is assessed at $1,000
United States currency. The petition, which was filed on the 18th of December, 1906, was accompanied
by a plan and technical description of the above-described parcel of land.

After hearing the proofs presented, the court entered, on the 12th of February, 1908, a decree in
accordance with the provisions of paragraph 6 of section 54 of Act No. 926, directing that the land
described in the petitioner be registered in the names of the four petitioners, as coowners, subject to the
usufructuary right of Vicente Reyes, widower of Remedios Grey.

On the 16th of June, 1908, Anacleto Ratilla de la Cruz filed a motion in the Court of Land Registration
asking for a revision of the case, including the decision, upon the ground that he is the absolute owner of
the two parcels of land which are described in said motion, and which, according to his allegations, are
included in the lands decreed to the petitioners. He alleged that the decree of February 12, 1908, was
obtained maliciously and fraudulently by the petitioners, thereby depriving him of said two parcels of land.
He further alleged that he was the absolute owner of the two parcels of land, having inherited them from
his father, Baldomero R. de la Cruz, who had a state grant for the same. He therefore asked, under the
provisions of section 38 of the Land Registration Act (No. 496), a revision of the case, and that the said
decree be modified so as to exclude the two parcels of land described in said motion. The Land Court
upon this motion reopened the case, and after hearing the additional evidence presented by both parties,
rendered, on the 23rd of November, 1908, its decision modifying the former decree by excluding from the
same the two parcels of land claimed by Anacleto Ratilla de la Cruz. From this decision and judgment the
petitioners appealed and now insist, first, that the trial court erred in reopening the case and modifying its
decree dated the 12th of February, 1908, for the reason that said decree was not obtained by means of
fraud; and, second, that the court erred in holding that the two parcels of land described in the appellee's
motion are not their property.

It was agreed by counsel that the two small parcels now in dispute forma part of the land described in the
petition and were included in the decree of February 12, 1908, and that the petitioners are the owners of
the remainder of the land described in the said decree.

The petitioners inherited this land from their parents, who acquired the same, including the two small
parcels in question, by purchase, as is evidenced by a public document dated the 26th of November,
1864, duly executed before Francisco Iriarte, alcalde mayor and judge of the Court of First Instance of the
Province of Bulacan.

Baldomero R. de la Cruz, father of the appellee, obtained in march, 1895, a state grant for several parcels
of land, including the two parcels in question. This grant was duly inscribed in the old register of property
in Bulacan on the 6th of April of the same year.

It is admitted that at the time the appellants presented their petition in this case the appellee was
occupying the two parcels of land now in question. It is also admitted that the name of the appellee does
not appear in the said petition as an occupant of the said two parcels. The petitioners insist that the
appellee was occupying these parcels as their tenant and for this reason they did not include his name in
their petition, as an occupant, while the appellee contends that he was occupying the said parcels as the
absolute owner under the estate grant by inheritance.

The court below held that the failure on the part of the petitioners to include the name of the appellee in
their petition, as an occupant of these two parcels of land, was a violation of section 21 of Act No. 496,
and that this constituted fraud within the meaning of section 38 of said Land Registration Act. The trial
court further held that the grant from the estate should prevail over the public document of purchase of
1864.

The mother of the petitioners died on November 15, 1881; their father died prior to that time. Manuela, the
oldest of the petitioners, was about six years of age when their mother died. So these children were
minors when the father of the appellee obtained the estate grant.

On the 13th of June, 1882, Jose Grey, uncle and representative of the petitioners, who were then minors,
rented the land owned by the petitioners' deceased parents to one Irineo Jose for a period of three years.
On the 23d of March, 1895, the said Jose Grey, as the representative of the petitioners, rented the same
land for a period of six years to Baldomero R. de la Cruz, father of the appellee. This rental contract was
duly executed in writing. This land was cultivated during these six years by Baldomero R. de la Cruz and
his children, one of whom is the appellee. On the 14th of December, 1905, Jose Grey, for himself and the
other petitioners, rented the same land to Estanislao R. de la Cruz for a period of two years. Estanislao de
la Cruz on entering into this rental contract with Jose Grey did so for himself and his brothers, one of
whom is the appellee. While the appellee admits that his father and brother entered into these rental
contracts and did, in fact, cultivate the petitioners' land, nevertheless he insists that the two small parcels
in question were not included in these contracts. In the rental contract between the uncle of the petitioners
and he father of the appellee the land is not described. In the rental contract between Jose Grey, one of
the petitioners, and Estanislao R. de la Cruz, brother of the appellee, the two small parcels of land in
question are included, according to the description given therein. This was found to be true by the court
below, but the said court held that as this contract was made by Estanislao R. de la Cruz it was not
binding upon Anacleto R. de la Cruz, the appellee.

The two small parcels of land in question were purchased by the parents of the petitioners in 1864, as is
evidenced by the public document of purchase and sale of that year. The same two parcels of land are
included in the state grant issued in favor of Baldomero Ratilla de la Cruz in 1895. This grant was
obtained after the death of the petitioners' parents and while they were minors. So it is clear that the
petitioners honestly believed that the appellee was occupying the said parcels as their lessee at the time
they presented their application for registration. They did not act in bad faith, nor with any fraudulent
intent, when they omitted to include in their application the name of the appellee as one of the occupants
of the land. They believed that it was not necessary nor required that they include in their application the
names of their tenants. Under these circumstances, did the court below commit an error in reopening this
case in June, 1908, after its decree had been entered in February of the same year?

The application for the registration is to be in writing, signed and sworn to by the applicant, or by some
person duly authorized in his behalf. It is to contain an accurate description of the land. It shall contain the
name in full and the address of the applicant, and also the names and addresses of all occupants of land
and of all adjoining owners, if known; and, if not known, it shall state what search has been made to find
them. In the form of notice given by statute, which shall be sworn to, the applicant is required to state and
set forth clearly all mortgages or encumbrances affecting said land, if any, the rights and interests, legal
or equitable, in the possession, remainder, reversion, or expectancy of all persons, with their names in
full, together with their place of residence and post office addresses. Upon receipt of the application the
clerk shall cause notice of the filling to be published twice in the Official Gazette. This published notice
shall be directed to all persons appearing to have an interest in the land sought to be registered and to
the adjoining owners, and also "to all whom it may concern."  In addition to the notice in the Official
Gazette the Land Court shall, within seven days after said publication, cause a copy of the notice, in
Spanish, to be mailed by the clerk to every person named in the application whose address is known; to
cause a duly attested copy of the notice, in Spanish, to be posted in a conspicuous place on every parcel
of land included in the application, and in a conspicuous place on the chief municipal building of the town
in which the land is situated. The court may also cause other or further notice of the application to be
given in such manner and to such persons as it may deem proper. The certificate of the clerk that he has
served the notice as directed by the court by publication or mailing shall be conclusive proof of such
service. Within the time allowed in the notices, if no person appears and answers, the court may at once,
upon motion of the applicant, no reason to the contrary appearing, order a general default. By the
description in the published notice "to all whom it may concern," and by express provisions of law "all the
word are made parties defendant and shall be concluded by the default an order." If the court, after
hearing, finds that the applicant has title, as stated in his application, a decree or registration shall be
entered.

Every decree of registration shall bind the land and quiet title thereto, subject only to the
exceptions stated in the following section. It shall be conclusive upon and against all persons,
including the Insular Government, and all the branches thereof, whether mentioned by name in
the application, notice, or citation, or included in the general description "to all whom it may
concern."  Such decree shall not be opened by reason of the absence, infancy, or other disability
of any person affected thereby, nor by any proceedings in any court for reversing judgments or
decrees; subject, however, to the right of any person deprived of land or of any estate or interest
therein by decree of registration obtained by fraud to file in the Court of Land Registration a
petition for review within one year. . . . (Sec. 38 of Act No. 496.)

The appellee is not included in any of the exceptions named in section 38 referred to above.

It will be seen that the applicant is required to mention not only the outstanding interest which he admits
but also all claims of interest, though denied by him. By express provision of law the world are made
parties defendant by the description in the notice "to all whom it may concern."

Although the appellee, occupying the two small parcels of land in question under the circumstances as we
have set forth, was not served with notice, he was made a party defendant by publication; and the
entering of a decree on the 12th of February, 1908, must be held to be conclusive against all persons,
including the appellee, whether his (appellee's) name is mentioned in the application, notice, or citation.

The said decree of February 12, 1908, should not have been opened on account of the absence, infancy,
or other disability of any person affected thereby, and could have been opened only on the ground that
the said decree had been obtained by fraud. That decree was not obtained by fraud on the part of the
applicants, inasmuch as they honestly believed that the appellee was occupying these two small parcels
of land as their tenant. One of the petitioner went upon the premises with the surveyor when the original
plan was made.

Proof of constructive fraud is not sufficient to authorize the Court of Land Registration to reopen a case
and modify its decree. Specific, intentional acts to deceive and deprive anther of his right, or in some
manner injure him, must be alleged and proved; that is, there must be actual or positive fraud as
distinguished from constructive fraud.

The question as to the meaning of the word "fraud" in the Australian statutes has been frequently raised.
Two distinctions have been noted by the Australian courts; the first is the distinction between the meaning
of the word "fraud" in the sections relating to the conclusive effect of certificates of title, and its meaning in
the sections relating to the protection of bona fide purchasers from registered proprietors. The second is
the distinction between "legal," "equitable," or "constructive" fraud, and "actual" or "moral" fraud. In none
of the groups of the sections of the Australian statutes relating to the conclusive effect of certificates of
title, and in which fraud is referred to, is there any express indication of the meaning of "fraud," with the
sole exception of that of the South Australian group. (Hogg on Australian Torrens System, p. 834.)

With regard to decisions on the sections relating to the conclusive effect of certificates of title, it
has been held in some cases that the "fraud" there mentioned means actual or moral fraud, not
merely constructive or legal fraud. In other cases "fraud" has been said to include constructive,
legal, and every kind of fraud. In other cases, against, knowledge of other persons' right, and the
deliberate acquisition of registered title in the face of such knowledge, has been held to be "fraud"
which rendered voidable the certificates of title so obtained; and voluntary ignorance is, for this
purpose, the same as knowledge. But in none of these three classes of cases was there absent
the element of intention to deprive another of just rights, which constitutes the essential
characteristics of actual — as distinguished from legal-fraud. (Id., p. 835, and cases cited in notes
Nos. 85, 86, 87, 88, and 89 at bottom of pages 835 and 836.)

By "fraud" is meant actual fraud-dishonesty of some sort. (Judgment of Privy Council in Assets Co. vs.
Mere Roihi, and Assets Co. vs. Panapa Waihopi, decided in March, 1905, cited by Hogg in his
Supplementary Addendum to his work on Australian Torrens System, supra.) The same meaning should
be given to the word "fraud" used in section 38 of our statutes (Act No. 496).

The question as to whether any particular transaction shows fraud, within the meaning of the word as
used in our statutes, will in each case be a question of fact. We will not attempt to say what acts would
constitutes this kind of fraud in other cases. This must be determined from the fact an circumstances in
each particular case. The only question we are called upon to determine, and have determined, is
whether or not, under the facts and circumstances in this case, the petitioners did obtain the decree of
February 12, 1908, by means of fraud.

It might be urged that the appellee has been deprived of his property without due process of law, in
violation of section 5 of the Act of Congress of July 1, 1902, known as the Philippine Bill," which provides
"that no law shall be enacted in the said Islands which shall deprive any person of life, liberty, or property
without due process of law."

The Land Registration Act requires that all occupants be named in the petition and given notice by
registered mail. This did not do the appellee any good, as he was not notified; but he was made a party
defendant, as we have said, by means of the publication "to all whom it may concern." If this section of
the Act is to be upheld this must be declared to be due process of law.
Before examining the validity of this part of the Act it might be well to note the history and purpose of what
is known as the "Torrens Land Registration System." This system was introduced in South Australia by
Sir Robert Torrens in 1857 and was there worked out in its practicable form.

The main principle of registration is to make registered titles indefeasible. As we have said, upon the
presentation in the Court of Land Registration of an application for the registration of the title to lands,
under this system, the theory of the law is that all occupants, adjoining owners, adverse claimants, and
other interested persons are notified of the proceedings, and have have a right to appear in opposition to
such application. In other words, the proceeding is against the whole word. This system was evidently
considered by the Legislature to be a public project when it passed Act No. 496. The interest of the
community at large was considered to be preferred to that of private individuals.

At the close of this nineteenth century, all civilized nations are coming to registration of title to
land, because immovable property is becoming more and more a matter of commercial dealing,
and there can be no trade without security. (Dumas's Lectures, p. 23.)

The registered proprietor will no longer have reasons to fear that he may evicted because his
vendor had, unknown to him, already sold the and to a third person. . . The registered proprietor
may feel himself protected against any defect in his vendor's title. (Id., p. 21.)

The following summary of benefits of the system of registration of titles, made by Sir Robert
Torrens, has been fully justified in its use:

First. It has substituted security for insecurity.

Second. It has reduced the costs of conveyances from pounds to shillings, and the time occupied
from months to days.

Third. It has exchanged brevity and clearness for obscurity and verbiage.

Fourth. It has so simplified ordinary dealings that he who has mastered the "three R's" can
transact his own conveyancing.

Fifth. It affords protection against fraud.

Sixth. It has restored to their just value many estates held under good holding titles, but
depreciated in consequence of some blur or technical defect, and has barred the reoccurrence of
any similar faults. (Sheldon on Land Registration, pp. 75, 76.)

The boldest effort to grapple with the problem of simplification of title to land was made by Mr.
(afterwards Sir Robert) Torrens, a layman, in South Australia in 1857. . . . In the Torrens
system title by registration  takes the place of "title by deeds" of the system under the "general"
law. A sale of land, for example, is effected by a registered transfer, upon which a certificate of
title is issued. The certificate is guaranteed by statute, and, with certain exceptions, constitutes
indefeasible title to the land mentioned therein. Under the old system the same sale would be
effected by a conveyance, depending for its validity, apart from intrinsic flaws, on the correctness
of a long series of prior deeds, wills, etc. . . . The object of the Torrens system, them, is to do
away with the delay, uncertainty, and expense of the old conveyancing system. (Duffy &
Eagleson on The Transfer of Land Act, 1890, pp. 2, 3, 5, 7.)

By "Torrens" system generally are meant those systems of registration of transactions with
interest in land whose declared object . . . is, under governmental authority, to establish and
 certify to the ownership of an absolute and indefeasible title to realty, and to simplify its transfer.
(Hogg on Australian Torrens system, supra, pp. 1, 2.)

Compensation for errors from assurance funds is provided in all countries in which the Torrens system
has been enacted. Cases of error no doubt will always occur. The percentage of errors, as compared with
the number of registered dealings in Australia, is very small. In New South Wales there were, in 1889,
209, 894 registered dealings, the average risk of error being only 2 ½ cents for each dealing. In
Queensland the risk of error was only 1 ½ cents, the number of registered dealings being 233,309. In
Tasmania and in Western Australia not a cent was paid for compensation for errors during the whole time
of operation, (Dumas's Lectures, supra, p. 96.) This system has been adopted in various countries of the
civilized world, including some of the States of the American Union, and practical experience has
demonstrated that it has been successful as a public project.

The validity of some of the provisions of the statutes adopting the Torrens system has been the subject of
judicial decision in the courts of the United States. (People vs. Chase, 165 Ill., 527; State vs. Guilbert, 56
Ohio St., 575; People vs. Simon, 176 Ill., 165; Tyler vs. Judges, 175 Mass., 71.)

Act No. 496 of the Philippine Commission, known as the "Land Registration Act," was copied substantially
from the Massachussetts law of 1898.

The Illinois and Massachusetts statutes were upheld by the supreme courts of those States.

It is not enough to show a procedure to be unconstitutional to say that we never heard of it

before. (Tyler vs. Judges, supra; Hurtado vs. California, 110 U. S., 516.)

Looked at either from the point of view of history or of the necessary requirements of justice, a
proceeding in rem dealing with a tangible res may be instituted and carried to judgment without
personal service upon claimants within the State or notice by name to those outside of it, and not
encounter any provision of either constitution. Jurisdiction is secured by the power of the court
over the res. As we have said, such a proceeding would be impossible, were this not so, for it
hardly would do to make a distinction between the constitutional rights of claimants who were
known and those who were not known to the plaintiff, when the proceeding is to bar all. (Tyler vs.
Judges, supra.)

This same doctrine is annunciated in Pennoyer vs. Neff (95 U. S., 714); The Mary (9 Cranch, 126);
Mankin vs. Chandler (2 Brock., 125); Brown vs. Levee Commission (50 Miss., 468); 2 Freeman,
Judgments, 4th ed., secs. 606, 611.

If the technical object of the suit is to establish a claim against some particular person, with a
judgment which generally, in theory at least, binds his body, or to bar some individual claim or
objection, so that only certain persons are entitled to be heard in defense, the action is in
personam, although it may concern the right to or possession of a tangible thing. If, on the other
hand, the object is to bar indifferently all who might be minded to make an objection of any sort
against the right sought to be established, and if anyone in the world has a right to be heard on
the strenght of alleging facts which, if true, show an inconsistent interest, the proceeding is in
rem. (Tyler vs. Judges, supra.)

In the case of Hamilton vs. Brown (161 U. S., 256) a judgment of escheat was held conclusive upon
persons notified by advertisement to all persons interested. In this jurisdiction, by the provisions of the
Code of Civil Procedure, Act No. 190, a decree allowing or disallowing a will binds everybody, although
the only notice of the proceedings given is by general notice to all persons interested.

The supreme court Massachusetts, in the case of Tyler vs. Judges (supra), did not rest its judgment as to
the conclusive effect of the decree upon the ground that the State has absolute power to determine the
persons to whom a man's property shall go at his death, but upon the characteristics of a proceeding in
rem. So we conclude that the proceedings had in the case at bar, under all the facts and circumstances,
especially the absolute lack on the part of the petitioners of any dishonest intent to deprive the appellee of
any right, or in any way injure him, constitute due process of law.

As to whether or not the appellee can succesfully maintain an action under the provisions of sections 101
and 102 of the Land Registration Act (secs. 2365, 2366, Compilation) we do not decide.

For these reasons we are of the opinion, and so hold, that the judgment appealed from should be, and the
same is hereby reversed and judgment entered in favor of the petitioners in conformity with the decree of
the lower court of February 12, 1908, without special ruling as to costs. It is so ordered.

Arellano, C.J., Torres, Johnson and Moreland, JJ., concur.

 Republic of the Philippines
SUPREME COURT
Manila

EN BANC

G.R. No. L-8936             October 2, 1915

CONSUELO LEGARDA, with her husband MAURO PRIETO, plaintiffs-appellants,

vs.
N.M. SALEEBY, defendant-appellee.

Singson, Ledesma and Lim for appellants.

D.R. Williams for appellee.

JOHNSON, J.:

From the record the following facts appear:

First. That the plaintiffs and the defendant occupy, as owners, adjoining lots in the district of Ermita in the
city of Manila.

Second. That there exists and has existed a number of years a stone wall between the said lots. Said wall
is located on the lot of the plaintiffs.

Third. That the plaintiffs, on the 2d day of March, 1906, presented a petition in the Court of Land
Registration for the registration of their lot. After a consideration of said petition the court, on the 25th day
of October, 1906, decreed that the title of the plaintiffs should be registered and issued to them the
original certificate provided for under the torrens system. Said registration and certificate included the
wall.

Fourth. Later the predecessor of the defendant presented a petition in the Court of Land Registration for
the registration of the lot now occupied by him. On the 25th day of March, 1912, the court decreed the
registration of said title and issued the original certificate provided for under the torrens system. The
description of the lot given in the petition of the defendant also included said wall.

Fifth. Several months later (the 13th day of December, 1912) the plaintiffs discovered that the wall which
had been included in the certificate granted to them had also been included in the certificate granted to
the defendant .They immediately presented a petition in the Court of Land Registration for an adjustment
and correction of the error committed by including said wall in the registered title of each of said parties.
The lower court however, without notice to the defendant, denied said petition upon the theory that, during
the pendency of the petition for the registration of the defendant's land, they failed to make any objection
to the registration of said lot, including the wall, in the name of the defendant.

Sixth. That the land occupied by t he wall is registered in the name of each of the owners of the adjoining
lots. The wall is not a joint wall.

Under these facts, who is the owner of the wall and the land occupied by it?
The decision of the lower court is based upon the theory that the action for the registration of the lot of the
defendant was a judicial proceeding and that the judgment or decree was binding upon all parties who did
not appear and oppose it. In other words, by reason of the fact that the plaintiffs had not opposed the
registration of that part of the lot on which the wall was situate they had lost it, even though it had been
theretofore registered in their name. Granting that theory to be correct one, and granting even that the
wall and the land occupied by it, in fact, belonged to the defendant and his predecessors, then the same
theory should be applied to the defendant himself. Applying that theory to him, he had already lost
whatever right he had therein, by permitting the plaintiffs to have the same registered in their name, more
than six years before. Having thus lost hid right, may he be permitted to regain it by simply including it in a
petition for registration? The plaintiffs having secured the registration of their lot, including the wall, were
they obliged to constantly be on the alert and to watch all the proceedings in the land court to see that
some one else was not having all, or a portion of the same, registered? If that question is to be answered
in the affirmative, then the whole scheme and purpose of the torrens system of land registration must fail.
The real purpose of that system is to quiet title to land; to put a stop forever to any question of the legality
of the title, except claims which were noted at the time of registration, in the certificate, or which may arise
subsequent thereto. That being the purpose of the law, it would seem that once a title is registered the
owner may rest secure, without the necessity of waiting in the portals of the court, or sitting in the
"mirador de su casa," to avoid the possibility of losing his land. Of course, it can not be denied that the
proceeding for the registration of land under the torrens system is judicial (Escueta vs.  .Director of Lands,
16 Phil. Rep., 482). It is clothed with all the forms of an action and the result is final and binding upon all
the world. It is an action in rem. (Escueta vs. Director of Lands (supra); Grey Alba vs. De la Cruz, 17 Phil.
rep., 49 Roxas vs. Enriquez, 29 Phil. Rep., 31; Tyler vs. Judges, 175 Mass., 51 American Land
Co. vs. Zeiss, 219 U.S., 47.)

While the proceeding is judicial, it involves more in its consequences than does an ordinary action. All the
world are parties, including the government. After the registration is complete and final and there exists no
fraud, there are no innocent third parties who may claim an interest. The rights of all the world are
foreclosed by the decree of registration. The government itself assumes the burden of giving notice to all
parties. To permit persons who are parties in the registration proceeding (and they are all the world) to
again litigate the same questions, and to again cast doubt upon the validity of the registered title, would
destroy the very purpose and intent of the law. The registration, under the torrens system, does not give
the owner any better title than he had. If he does not already have a perfect title, he can not have it
registered. Fee simple titles only may be registered. The certificate of registration accumulates in open
document a precise and correct statement of the exact status of the fee held by its owner. The certificate,
in the absence of fraud, is the evidence of title and shows exactly the real interest of its owner.
The title  once registered, with very few exceptions, should not thereafter be impugned, altered, changed,
modified, enlarged, or diminished, except in some direct proceeding permitted by law. Otherwise all
security in registered titles would be lost. A registered title can not be altered, modified, enlarged, or
diminished in a collateral  proceeding and not even by a direct proceeding, after the lapse of the period
prescribed by law.

For the difficulty involved in the present case the Act (No. 496) providing for the registration of titles under
the torrens system affords us no remedy. There is no provision in said Act giving the parties relief under
conditions like the present. There is nothing in the Act which indicates who should be the owner of land
which has been registered in the name of two different persons.

The rule, we think, is well settled that the decree ordering the registration of a particular parcel of land is a
bar to future litigation over the same between the same parties .In view of the fact that all the world are
parties, it must follow that future litigation over the title is forever barred; there can be no persons who are
not parties to the action. This, we think, is the rule, except as to rights which are noted in the certificate or
which arise subsequently, and with certain other exceptions which need not be dismissed at present. A
title once registered can not be defeated, even by an adverse, open, and notorious possession.
Registered title under the torrens system can not be defeated by prescription (section 46, Act No. 496).
The title, once registered, is notice to the world. All persons must take notice. No one can plead ignorance
of the registration.
The question, who is the owner of land registered in the name of two different persons, has been
presented to the courts in other jurisdictions. In some jurisdictions, where the "torrens" system has been
adopted, the difficulty has been settled by express statutory provision. In others it has been settled by the
courts. Hogg, in his excellent discussion of the "Australian Torrens System," at page 823, says: "The
general rule is that in the case of two certificates of title, purporting to include the same land, the earlier in
date prevails, whether the land comprised in the latter certificate be wholly, or only in part, comprised in
the earlier certificate. (Oelkers vs. Merry, 2 Q.S.C.R., 193; Miller vs. Davy, 7 N.Z.R., 155;
Lloyd vs. Myfield, 7 A.L.T. (V.) 48; Stevens vs. Williams, 12 V.L. R., 152; Register of Titles, vs. Esperance
Land Co., 1 W.A.R., 118.)" Hogg adds however that, "if it can be very clearly ascertained by the ordinary
rules of construction relating to written documents, that the inclusion of the land in the certificate of title of
prior date is a mistake, the mistake may be rectified by holding the latter of the two certificates of title to
be conclusive." (See Hogg on the "Australian torrens System," supra, and cases cited. See also the
excellent work of Niblack in his "Analysis of the Torrens System," page 99.) Niblack, in discussing the
general question, said: "Where two certificates purport to include the same land the earlier in date
prevails. ... In successive registrations, where more than one certificate is issued in respect of a particular
estate or interest in land, the person claiming under the prior certificates is entitled to the estate or
interest; and that person is deemed to hold under the prior certificate who is the holder of, or whose claim
is derived directly or indirectly from the person who was the holder of the earliest certificate issued in
respect thereof. While the acts in this country do not expressly cover the case of the issue of two
certificates for the same land, they provide that a registered owner shall hold the title, and the effect of
this undoubtedly is that where two certificates purport to include the same registered land, the holder of
the earlier one continues to hold the title" (p. 237).

Section 38 of Act No. 496, provides that; "It (the decree of registration) shall be conclusive upon and
against all persons, including the Insular Government and all the branches thereof, whether mentioned by
name in the application, notice, or citation, or included in the general description "To all whom it may
concern." Such decree shall not be opened by reason of the absence, infancy, or other disability of any
person affected thereby, nor by any proceeding in any court for reversing judgments or decrees; subject,
however, to the right of any person deprived of land or of any estate or interest therein by decree of
registration obtained by fraud  to file in the Court of Land Registration a petition for review within one
year after entry of the decree (of registration), provided no innocent purchaser for value has acquired an
interest.

It will be noted, from said section, that the "decree of registration" shall not be opened, for any reason, in
any court, except for fraud, and not even for fraud, after the lapse of one year. If then the decree of
registration can not be opened for any reason, except for fraud, in a direct proceeding for that purpose,
may such decree be opened or set aside in a collateral proceeding by including a portion of the land in a
subsequent certificate or decree of registration? We do not believe the law contemplated that a person
could be deprived of his registered title in that way.

We have in this jurisdiction a general statutory provision which governs the right of the ownership of land
when the same is registered in the ordinary registry in the name of two persons. Article 1473 of the Civil
Code provides, among other things, that when one piece of real property had been sold to two different
persons it shall belong to the person acquiring it, who first inscribes it in the registry. This rule, of course,
presupposes that each of the vendees or purchasers has acquired title to the land. The real ownership in
such a case depends upon priority of registration. While we do not now decide that the general provisions
of the Civil Code are applicable to the Land Registration Act, even though we see no objection thereto,
yet we think, in the absence of other express provisions, they should have a persuasive influence in
adopting a rule for governing the effect of a double registration under said Act. Adopting the rule which we
believe to be more in consonance with the purposes and the real intent of the torrens system, we are of
the opinion and so decree that in case land has been registered under the Land Registration Act in the
name of two different persons, the earlier in date shall prevail.

In reaching the above conclusion, we have not overlooked the forceful argument of the appellee. He says,
among other things; "When Prieto et al. were served with notice of the application of Teus (the
predecessor of the defendant) they became defendants in a proceeding wherein he, Teus, was seeking to
foreclose their right, and that of orders, to the parcel of land described in his application. Through their
failure to appear and contest his right thereto, and the subsequent entry of a default judgment against
them, they became irrevocably bound by the decree adjudicating such land to Teus. They had their day in
court and can not set up their own omission as ground for impugning the validity of a judgment duly
entered by a court of competent jurisdiction. To decide otherwise would be to hold that lands with torrens
titles are above the law and beyond the jurisdiction of the courts".

As was said above, the primary and fundamental purpose of the torrens system is to quiet title. If the
holder of a certificate cannot rest secure in this registered title then the purpose of the law is defeated. If
those dealing with registered land cannot rely upon the certificate, then nothing has been gained by the
registration and the expense incurred thereby has been in vain. If the holder may lose a strip of his
registered land by the method adopted in the present case, he may lose it all. Suppose within the six
years which elapsed after the plaintiff had secured their title, they had mortgaged or sold their right, what
would be the position or right of the mortgagee or vendee? That mistakes are bound to occur cannot be
denied, and sometimes the damage done thereby is irreparable. It is the duty of the courts to adjust the
rights of the parties under such circumstances so as to minimize such damages, taking into consideration
al of the conditions and the diligence of the respective parties to avoid them. In the present case, the
appellee was the first negligent (granting that he was the real owner, and if he was not the real owner he
can not complain) in not opposing the registration in the name of the appellants. He was a party-
defendant in an action for the registration of the lot in question, in the name of the appellants, in 1906.
"Through his failure to appear and to oppose such registration, and the subsequent entry of a default
judgment against him, he became irrevocably bound by the decree adjudicating such land to the
appellants. He had his day in court and should not be permitted to set up his own omissions as the
ground for impugning the validity of a judgment duly entered by a court of competent jurisdiction."
Granting that he was the owner of the land upon which the wall is located, his failure to oppose the
registration of the same in the name of the appellants, in the absence of fraud, forever closes his mouth
against impugning the validity of that judgment. There is no more reason why the doctrine invoked by the
appellee should be applied to the appellants than to him.

We have decided, in case of double registration under the Land Registration Act, that the owner of the
earliest certificate is the owner of the land. That is the rule between original parties. May this rule be
applied to successive vendees of the owners of such certificates? Suppose that one or the other of the
parties, before the error is discovered, transfers his original certificate to an "innocent purchaser." The
general rule is that the vendee of land has no greater right, title, or interest than his vendor; that he
acquires the right which his vendor had, only. Under that rule the vendee of the earlier certificate would be
the owner as against the vendee of the owner of the later certificate.

We find statutory provisions which, upon first reading, seem to cast some doubt upon the rule that the
vendee acquires the interest of the vendor only. Sections 38, 55, and 112 of Act No. 496 indicate that the
vendee may acquire rights and be protected against defenses which the vendor would not. Said sections
speak of available rights in favor of third parties which are cut off by virtue of the sale of the land to an
"innocent purchaser." That is to say, persons who had had a right or interest in land wrongfully included in
an original certificate would be unable to enforce such rights against an "innocent purchaser," by virtue of
the provisions of said sections. In the present case Teus had his land, including the wall, registered in his
name. He subsequently sold the same to the appellee. Is the appellee an "innocent purchaser," as that
phrase is used in said sections? May those who have been deprived of their land by reason of a mistake
in the original certificate in favor of Teus be deprived of their right to the same, by virtue of the sale by him
to the appellee? Suppose the appellants had sold their lot, including the wall, to an "innocent purchaser,"
would such purchaser be included in the phrase "innocent purchaser," as the same is used in said
sections? Under these examples there would be two innocent purchasers of the same land, is said
sections are to be applied .Which of the two innocent purchasers, if they are both to be regarded as
innocent purchasers, should be protected under the provisions of said sections? These questions indicate
the difficulty with which we are met in giving meaning and effect to the phrase "innocent purchaser," in
said sections.
May the purchaser of land which has been included in a "second original certificate" ever be regarded as
an "innocent purchaser," as against the rights or interest of the owner of the first original certificate, his
heirs, assigns, or vendee? The first original certificate is recorded in the public registry. It is never issued
until it is recorded. The record notice to all the world. All persons are charged with the knowledge of what
it contains. All persons dealing with the land so recorded, or any portion of it, must be charged with notice
of whatever it contains. The purchaser is charged with notice of every fact shown by the record and is
presumed to know every fact which the record discloses .This rule is so well established that it is scarcely
necessary to cite authorities in its support (Northwestern National Bank vs. Freeman, 171 U.S., 620, 629;
Delvin on Real Estate, sections 710, 710 [a]).

When a conveyance has been properly recorded such record is constructive notice of its contents and all
interests, legal and equitable, included therein. (Grandin vs. Anderson, 15 Ohio State, 286, 289;
Orvis vs. Newell, 17 Conn., 97; Buchanan vs. Intentional Bank, 78 Ill., 500; Youngs vs. Wilson, 27 N.Y.,
351; McCabe vs. Grey, 20 Cal., 509; Montefiore vs. Browne, 7 House of Lords Cases, 341.)

Under the rule of notice, it is presumed that the purchaser has examined every instrument of record
affecting the title. Such presumption is irrebutable. He is charged with notice of every fact shown by the
record and is presumed to know every fact which an examination of the record would have disclosed.
This presumption cannot be overcome by proof of innocence or good faith. Otherwise the very purpose
and object of the law requiring a record would be destroyed. Such presumption cannot be defeated by
proof of want of knowledge of what the record contains any more than one may be permitted to show that
he was ignorant of the provisions of the law. The rule that all persons must take notice of the facts which
the public record contains is a rule of law. The rule must be absolute. Any variation would lead to endless
confusion and useless litigation.

While there is no statutory provision in force here requiring that original deeds of conveyance of real
property be recorded, yet there is a rule requiring mortgages to be recorded. (Arts. 1875 and 606 of the
Civil Code.) The record of a mortgage is indispensable to its validity. (Art .1875.) In the face of that statute
would the courts allow a mortgage to be valid which had not been recorded, upon the plea of ignorance of
the statutory provision, when third parties were interested? May a purchaser of land, subsequent to the
recorded mortgage, plead ignorance of its existence, and by reason of such ignorance have the land
released from such lien? Could a purchaser of land, after the recorded mortgage, be relieved from the
mortgage lien by the plea that he was a bona fide purchaser? May there be a bona fide purchaser of said
land, bona fide in the sense that he had no knowledge of the existence of the mortgage? We believe the
rule that all persons must take notice of what the public record contains in just as obligatory upon all
persons as the rule that all men must know the law; that no one can plead ignorance of the law. The fact
that all men know the law is contrary to the presumption. The conduct of men, at times, shows clearly that
they do not know the law. The rule, however, is mandatory and obligatory, notwithstanding. It would be
just as logical to allow the defense of ignorance of the existence and contents of a public record.

In view, therefore, of the foregoing rules of law, may the purchaser of land from the owner of the second
original certificate be an "innocent purchaser," when a part or all of such land had theretofore been
registered in the name of another, not the vendor? We are of the opinion that said sections 38, 55, and
112 should not be applied to such purchasers. We do not believe that the phrase "innocent purchaser
should be applied to such a purchaser. He cannot be regarded as an "innocent purchaser" because of the
facts contained in the record of the first original certificate. The rule should not be applied to the purchaser
of a parcel of land the vendor of which is not the owner of the original certificate, or his successors. He, in
nonsense, can be an "innocent purchaser" of the portion of the land included in another earlier original
certificate. The rule of notice of what the record contains precludes the idea of innocence. By reason of
the prior registry there cannot be an innocent purchaser of land included in a prior original certificate and
in a name other than that of the vendor, or his successors. In order to minimize the difficulties we think
this is the safe rule to establish. We believe the phrase "innocent purchaser," used in said sections,
should be limited only to cases where unregistered land has been wrongfully included in a certificate
under the torrens system. When land is once brought under the torrens system, the record of the original
certificate and all subsequent transfers thereof is notice to all the world. That being the rule, could Teus
even regarded as the holder in good fifth of that part of the land included in his certificate of the
appellants? We think not. Suppose, for example, that Teus had never had his lot registered under the
torrens system. Suppose he had sold his lot to the appellee and had included in his deed of transfer the
very strip of land now in question. Could his vendee be regarded as an "innocent purchaser" of said strip?
Would his vendee be an "innocent purchaser" of said strip? Certainly not. The record of the original
certificate of the appellants precludes the possibility. Has the appellee gained any right by reason of the
registration of the strip of land in the name of his vendor? Applying the rule of notice resulting from the
record of the title of the appellants, the question must be answered in the negative. We are of the opinion
that these rules are more in harmony with the purpose of Act No. 496 than the rule contended for by the
appellee. We believe that the purchaser from the owner of the later certificate, and his successors, should
be required to resort to his vendor for damages, in case of a mistake like the present, rather than to
molest the holder of the first certificate who has been guilty of no negligence. The holder of the first
original certificate and his successors should be permitted to rest secure in their title, against one who
had acquired rights in conflict therewith and who had full and complete knowledge of their rights. The
purchaser of land included in the second original certificate, by reason of the facts contained in the public
record and the knowledge with which he is charged and by reason of his negligence, should suffer the
loss, if any, resulting from such purchase, rather than he who has obtained the first certificate and who
was innocent of any act of negligence.

The foregoing decision does not solve, nor pretend to solve, all the difficulties resulting from double
registration under the torrens system and the subsequent transfer of the land. Neither do we now attempt
to decide the effect of the former registration in the ordinary registry upon the registration under the
torrens system. We are inclined to the view, without deciding it, that the record under the torrens system,
supersede all other registries. If that view is correct then it will be sufficient, in dealing with land registered
and recorded alone. Once land is registered and recorded under the torrens system, that record alone
can be examined for the purpose of ascertaining the real status of the title to the land.

It would be seen to a just and equitable rule, when two persons have acquired equal rights in the same
thing, to hold that the one who acquired it first and who has complied with all the requirements of the law
should be protected.

In view of our conclusions, above stated, the judgment of the lower court should be and is hereby
revoked. The record is hereby returned to the court now having and exercising the jurisdiction heretofore
exercised by the land court, with direction to make such orders and decrees in the premises as may
correct the error heretofore made in including the land in the second original certificate issued in favor of
the predecessor of the appellee, as well as in all other duplicate certificates issued.

Without any findings as to costs, it is so ordered.

Arellano, C.J., Torrens, and Araullo, JJ., concur.

Separate Opinions

TRENT, J.,  dissenting:
I dissent.

In cases of double or overlapping registration, I am inclined to agree with the reasoning and authority on
which it is held in the majority opinion (first) that the original holder of the prior certificate is entitled to the
land as against the original holder of the later certificate, where there has been no transfer of title by
either party to an innocent purchaser; both, as is shown in the majority opinion, being at fault in permitting
the double registration to take place; (second) that an innocent purchaser claiming under the prior
certificate is entitled to the land as against the original holder of the later certificate, and also as against
innocent purchasers from the holder of the later certificate; the innocent purchaser being in no wise at
fault in connection with the issuance of the later certificate.

But I am of opinion that neither the authorities cited, nor the reasoning of the majority opinion sustains the
proposition that the original holder of the prior certificate is entitled to the land as against an innocent
purchaser from the holder of the later certificate.

As to the text-book authorities cited in the majority opinion, it is sufficient to say that the rules laid down by
both Hogg and Niblack are mere general rules, admittedly subject to exception, and of course of no
binding force or authority where the reasoning upon which these rules are based is applicable to the facts
developed in a particular case.

In its last analysis the general rule laid down in the majority opinion rests upon the proposition set forth in
the last page of the opinion wherein it is said that "it would seem to be a just and equitable rule, when two
persons have acquired equal rights in the same thing, to hold that the one who acquired it first and who
has complied with all the requirements of the law should be protected." The rule, as applied to the matter
in hand, may be stated as follows: It would seem to be a just and equitable rule when two persons have
acquired separate and independent registered titles to the same land, under the Land Registration Act, to
hold that the one who first acquired registered title and who has complied with all the requirements of the
law in that regard should be protected, in the absence of any express statutory provision to the contrary.

Thus stated I have no quarrel with the doctrine as a statement of the  general rule to be applied in cases
of double or overlapping registration under the Land Registration Act; for it is true as stated in the majority
opinion that in the adjudication and registration of titles by the Courts of Land Registration "mistakes are
bound to occur, and sometimes the damage done thereby is irreparable;" and that in the absence of
statutory provisions covering such cases, "it is the duty of the courts to adjust the rights of the parties,
under such circumstances, so as to minimize such damages, taking into consideration all of the
conditions, and the diligence of the respective parties to avoid them."

But like most such general rules, it has its exceptions and should not be applied in a case wherein the
reasons on which it is based do not exist, or in cases wherein still more forceful reasons demand the
application of a contrary rule.

The general rule relied upon in the majority opinion is a mere application of a well settled equity rule that:
"Where conflicting equities are otherwise equal in merit, that which first occurred will be given the
preference." But it is universally laid down by all the courts which have had occasion to apply this equity
rule that "it should be the last test resorted to," and that "it never prevails when any other equitable ground
for preference exists." (See 19 Cent. Dig., tit. Equity, par. 181; and may cases cited in 16 Cyc., 139, note
57.) It follows that the general rules, that in cases of double or overlapping registration the earlier
certificate should be protected, ought not to prevail so as to deprive an innocent purchaser under the later
certificate of his title of the earlier certificate contributed to the issuance of the later certificate. Hence the
holder of the earlier certificate of title should not be heard to invoke the "just and equitable rule" as laid
down in the majority opinion, in order to have his own title protected and the title of an innocent purchaser
of a later certificate cancelled or annulled, in any case wherein it appears that the holder of the later
certificate was wholly without fault, while the holder of the issuance of the later certificate, in that he might
have prevented its issuance by merely entering his appearance in court in response to lawful summons
personally served upon him in the course of the proceedings for the issuance of the second certificate,
and pleading his superior rights under the earlier certificate, instead of keeping silent and by his silence
permitting a default judgment to be entered against him adjudicating title in favor of the second applicant.

The majority opinion clearly recognizes the soundness of the principles I am contending for by reasoning
(with which I am inclined to agree) whereby it undertakes to demonstrate that as between the original
holders of the double or overlapping registration the general rule should prevail, because  both such
original parties must held to have been fault and, their equities being equal, preference should be given to
the earlier title.

The majority opinion further recognizes the soundness of my contention by the reasoning whereby it
undertakes to sustain the application of the general rule in favor of the original holder of the earlier
certificate against purchasers from the original holder of the later certificate, by an attempt to demonstrate
that such purchasers can in no event be held to be innocent purchasers; because, as it is said,
negligence may and should always be imputed to such a purchaser, so that in no event can he claim to
be without fault when it appears that the lands purchased by him from the holder of a duly registered
certificate of title are included within the bounds of the lands described in a certificate of title of an earlier
date.

At considerable length the majority opinion (in reliance upon the general rule laid down under the various
systems of land registration, other than those based on the torrens system) insists that a purchaser of
land land duly registered in the Land Registration Court, is charged with notice of the contents of each
and every one of the thousands and tens of thousands of certificates of registry on file in the land registry
office, so that negligence  may be imputed to him if he does not ascertain that all or any part of the land
purchased by him is included within the boundary lines of any one of the thousands or tens of thousands
of tracts of land whose original registry bears an earlier date than the date of the original registry of the
land purchased by him. It is contended that he cannot claim to be without fault should he buy such land
because, as it is said, it was possible for him to discover that the land purchased by him had been made
the subject of double or overlapping registration by a comparison of the description and boundary lines of
the thousands of tracts and parcels of land to be found in the land registry office.

But such ruling goes far to defeat one of the principal objects sought to be attained by the introduction
and adoption of the so-called torrens system for the registration of land. The avowed intent of that system
of land registration is to relieve the purchase of registered lands from the necessity of looking farther than
the certificate of title of the vendor in order that he may rest secure as to the validity of the title to the
lands conveyed to him. And yet it is said in the majority opinion that he is charged with notice of the
contents of every other certificate of title in the office of the registrar so that his failure to acquaint himself
with its contents may be imputed to him as negligence.

If the rule announced in the majority opinion is to prevail, the new system of land registration, instead of
making transfers of real estate simple, expenditious and secure, and instead of avoiding the necessity for
expensive and oftimes uncertain searches of the land record and registries, in order to ascertain the true
condition of the title before purchase, will, in many instances, add to the labor, expense and uncertainty of
any attempt by a purchaser to satisfy himself as to the validity of the title to lands purchased by him.

As I have said before, one of the principal objects, if not the principal object, of the torrens system of land
registration upon which our Land Registration Act is avowedly modelled is to facilitate the transfer of real
estate. To that end the Legislature undertakes to relieve prospective purchasers and all others dealing in
registered lands from the necessity of looking farther than the certificate of title to such lands furnished by
the Court of Land Registration, and I cannot, therefore, give my consent to a ruling which charges a
purchaser or mortgage of registered lands with notice of the contents of every other certificate of title in
the land registry, so that negligence and fault may be imputed to him should he be exposed to loss or
damages as a result of the lack of such knowledge.
Suppose a prospective purchaser of lands registered under the Land Registration Act desires to avoid the
imputation of negligence in the event that, unknown to him, such lands have been made the subject of
double or overlapping registration, what course should he pursue? What measures should he adopt in
order to search out the information with notice of which he is charged? There are no indexes to guide him
nor is there anything in the record or the certificate of title of the land he proposes to buy which
necessarily or even with reasonable probability will furnish him a clue as to the fact of the existence of
such double or overlapping registration. Indeed the only course open to him, if he desires to assure
himself against the possibility of double or overlapping registration, would even seem to be a careful,
laborious and extensive comparison of the registered boundary lines contained in the certificate of title of
the tract of land he proposes to buy with those contained in all the earlier certificates of title to be found in
the land registry. Assuredly it was never the intention of the author of the new Land Registration Act to
impose such a burden on a purchaser of duly registered real estate, under penalty that a lack of the
knowledge which might thus be acquired may be imputed to him by this court as negligence in ruling upon
the respective equities of the holders of lands which have been the subject of double or overlapping
registration.

On the other hand, I think that negligence and fault may fairly be imputed to a holder of a registered
certificate of title who stood supinely by and let a default judgment be entered against him, adjudicating all
or any part of his registered lands to another applicant, if it appears that he was served with notice or had
actual notice of the pendency of the proceedings in the Court of Land Registration wherein such default
judgment was entered.

The owner of land who enjoys the benefits secured to him by its registry in the Court of Land Registration
may reasonably be required to appear and defend his title when he has actual notice that proceedings are
pending in that court wherein another applicant, claiming the land as his own, is seeking to secure its
registry in his name. All that is necessary for him to do is to enter his appearance in those proceedings,
invite the court's attention to the certificate of title registered in his name, and thus, at the cost of the
applicant, avoid all the damage and inconvenience flowing from the double or overlapping registration of
the land in question. There is nothing in the new system of land registration which seems to render it
either expedient or necessary to relieve a holder of a registered title of the duty of appearing and
defending that title, when he has actual notice that it is being attacked in a court of competent jurisdiction,
and if, as a result of his neglect or failure so to do, his lands become subject to double or overlapping
registration, he should not be permitted to subject an innocent purchaser, holding under the later
certificate, to all the loss and damage resulting from the double or overlapping registration, while he goes
scot free and holds the land under a manifest misapplication of the equitable rule that "where conflicting
equities are otherwise equal in merit, that which first accrued will be given the preference." It is only
where both or neither of the parties are at fault that the rule is properly applicable as between opposing
claimants under an earlier and a later certificate of registry to the same land.

Of course all that is said in the briefs of counsel and the majority opinion as to the right of the holder of a
certificate to rest secure in his registered title so that those dealing with registered lands can confidently
rely upon registry certificates thereto is equally forceful by way of argument in favor of the holder of one or
the other certificate in case of double or overlapping registration. The problem is to determine which of the
certificate holders is entitled to the land. The decision of that question in favor of either one must
necessarily have the effect of destroying the value of the registered title of the other and to that extent
shaking the public confidence in the value of the whole system for the registration of lands. But, in the
language of the majority opinion, "that mistakes are bound to occur cannot be denied and sometimes the
damage done thereby is irreparable. It is the duty of the courts to adjust the rights of the parties under
such circumstances so as to minimize the damages, taking into consideration all the conditions and the
diligence of the respective parties to avoid them." lawphil.net

It will be observed that I limit the exception to the general equitable rule, as laid down in the majority
opinion, to case wherein the holder of the earlier certificate of title has actual notice of the pendency of the
proceedings in the course of which the latter certificate of title was issued, or to cases in which he has
received personal notice of the pendency of those proceedings. Unless he has actual notice of the
pendency of such proceedings I readily agree with the reasoning of the majority opinion so far as it holds
that negligence, culpable negligence, should not be imputed to him for failure to appear and defend his
title so as to defeat his right to the benefit of the equitable rule. It is true that the order of publication in
such cases having been duly complied with, all the world is charged with notice thereof, but it does not
necessarily follow that, in the absence of actual notice, culpable negligence in permitting a default
judgment to be entered against him may be imputed to the holder of the earlier certificate so as to defeat
his right to the land under the equitable rule favoring the earlier certificate. Such a holding would have the
effect (to quote the language of the majority opinion) of requiring the holder of a certificate of title to wait
indefinitely "in the portals of the court" and to sit in the "mirador de su casa"  in order to avoid the
possibility of losing his lands; and I agree with the writer of the majority opinion that to do so would place
an unreasonable burden on the holders of such certificate, which was not contemplated by the authors of
the Land Registration Act. But no unreasonable burden is placed upon the holder of a registered title by a
rule which imputes culpable negligence to him when he sits supinely by and lets a judgment in default be
entered against him adjudicating title to his lands in favor of another applicant, despite the fact that he has
actual knowledge of the pendency of the proceedings in which such judgment is entered and despite the
fact that he has been personally served with summons to appear and default his title.

"Taking into consideration all of the conditions and the diligence of the respective parties," it seems to me
that there is no "equality in merit" between the conflicting equities set up by an innocent purchaser who
acquires title to the land under a registered certificate, and the holder of an earlier certificate who
permitted a default judgment to be entered against him, despite actual notice of the pendency of the
proceedings in the course of which the later certificate was issued.

I am convinced, furthermore, that aside from the superior equities of the innocent purchaser in cases such
as that now under discussion, there are strong reasons of convenience and public policy which militate in
favor of the recognition of his title rather than that of the holder of the earlier title.

One ruling exposes all persons purchasing or dealing in registered lands to unknown, unspecified and
uncertain dangers, to guard against which all such persons will be put to additional cost, annoyance and
labor on every occasion when any transaction is had with regard to such lands; while the other ruling
tends to eliminate consequences so directly adverse to the purpose and object for which the land
registration law was enacted, and imposes no burden upon any holder of a certificate of registered lands
other than that of defending his title on those rare, definite and specific occasions wherein he has actual
notice that his title is being challenged in a Court of Land Registration, a proceeding in which the cost and
expense is reduced to the minimum by the conclusive character of his certificate of title in support of his
claim of ownership. Furthermore, judgment against the innocent purchaser and in favor of the holder of
the earlier certificate in a case such as that under consideration must inevitably tend to increase the
danger of double or overlapping registrations by encouraging holders of registered titles, negligently or
fraudulently and conclusively, to permit default judgments to be entered against them adjudicating title to
all or a part of their registered lands in favor of other applicants, despite actual notice of the pendency of
judicial proceedings had for that purpose, and this, without adding in any appreciable degree to the
security of thir titles, and merely to save them the very slight trouble or inconvenience incident to an entry
of appearance in the court in which their own titles were secured, and inviting attention to the fact that
their right, title and ownership in the lands in questions has already been conclusively adjudicated.

The cases wherein there is a practical possibility of double or overlapping registration without actual
notice to the holder of the earlier certificate must in the very nature of things to be so rare as to be
practically negligible. Double or overlapping registration almost invariably occurs in relation to lands held
by adjoining occupants or claimants. It is difficult to conceive of a case wherein double registration can
take place, in the absence of fraud, without personal service of notice of the pendency of the proceedings
upon the holder of the earlier certificate, the statute requiring such notice to be served upon the owner or
occupant of all lands adjoining those for which application for registration is made; and the cases wherein
an adjoining land owner can, even by the use of fraud, conduct proceedings for the registration of his land
to a successful conclusion without actual notice to the adjoining property owners must be rare indeed.
In the case at bar the defendant purchased the land in question from the original holder of a certificate of
title issued by the Court of Land Registration, relying upon the records of the Court of Land Registration
with reference thereto and with no knowledge that any part of the land thus purchased was included in an
earlier certificate of title issued to the plaintiff. The plaintiff, the holder of the earlier certificate of title,
negligently permitted a default judgment to be entered against him in the Court of Land Registration,
adjudicating part of the lands included in his own certificate of title in favor of another applicant, from
whom the defendant in this action acquired title, and this despite the fact that he was an adjoining land
owner, had actual notice of the pendency of the proceedings and was personally served with summons to
appear and defends his rights in the premises. It seems to me that there can be no reason for doubt as to
the respective merits of the equities of the parties, and further that the judgment of the majority in favor of
the plaintiff will inevitably tend to increase the number of cases wherein registered land owners in the
future will fail to appear and defend their titles when challenged in other proceedings in the Courts of Land
Registration, thereby enormously increasing the possibility and probability of loss and damage to innocent
third parties and dealers in registered lands generally, arising out of erroneous, double or overlapping
registration of lands by the Courts of Land Registration.

Carson, J., concurs.

 EN BANC

[G.R. No. 14167. August 14, 1919. ]

THE GOVERNMENT OF THE PHILIPPINE ISLANDS, petitioner and appellee.

ANTIPAS VAZQUEZ and BASILIO GAYARES, Petitioners-Appellants, v. RUFINA
ABURAL ET. AL., objectors-appellees.

Cohn & Fisher, for Appellants.

Hilado & Hilado, for Appellees.

SYLLABUS

1. LAND REGISTRATION; TORRENS SYSTEM; PURPOSE. — The prime purpose of the

Torrens System, as established in the Philippine Islands by the Land Registration Law (Act
No. 496), is to decree land titles that shall be final, irrevocable, and indisputable.

2. ID.; CADASTRAL SYSTEM; PURPOSE. — The purpose of the offspring of the Torrens
System here known as the Cadastral System, as established in the Philippine Islands by the
Cadastral Act (No. 2259), is, like the purpose of the Torrens System, proper incontestability
of title. As stated in Section 1 of the Cadastral Act, the purpose is to serve the public
interest, by requiring that the titles to any lands "be settled and adjudicated." cralaw virtua1aw library

3. ID.; ID.; PROCEEDINGS. — Many precautions are taken to guard against injustice.

4. ID.; ID.; ID. — After trial in a cadastral case, three actions are taken. The first
adjudicates ownership in favor of one of the claimants. This constitutes the decision — the
judgment — the decree of the court. The second action is the declaration by the court that
the decree is final and its order for the issuance of the certificates of title by the Chief of the
Land Registration Office. Such order is made if within thirty days from the date of receipt of
a copy of the decision no appeal is taken from the decision. The third and last action
devolves upon the General Land Registration Office.

5. ID.; ID.; ID.; FINALITY OF DECREE. — For a decree to exist in legal contemplation, it is
not necessary to await the preparation of a so-called decree by the Land Registration Office.

6. ID.; ID.; ID.; ID. — Cadastral proceedings commenced. Notice published in the Official
Gazette. Trial judge also issued general notice. S asks for the registration in his name of lot
No. 1608. Hearing had. On September 21, 1916, the court in a decree awarded the lot to S.
On November 23, 1916, the time for an appeal having passed, the court declares the decree
final. On July 23, 1917, before the issuance by the Land Registration Office of the so-called
technical decree, V and G ask that the case be reopened to receive proof relative to the
ownership of the lot. Motion denied by the trial court. Held: That since the judgment of the
Court of First Instance of September 21, 1916, has become final, and since no action was
taken within the time provided by law for the prosecution of an appeal by bill of exceptions,
the Supreme Court is without jurisdiction, and the appeal must be dismissed.
7. ID.; ID.; RELIEF FROM JUDGMENT. — Whether Sections 113 and 513 of the Code of Civil
Procedure apply to cadastral proceedings, quare.

8. GENERAL LAND REGISTRATION OFFICE. — The General Land Registration Office has
been instituted "for the due effectuation and accomplishment of the laws relative to the
registration of land." (Administrative Code of 1917, Sec. 174.)

DECISION

MALCOLM, J.  :

The principal question which this appeal presents is — When does the
registration of title, under the Torrens System of Land Registration,
especially under the different Philippine laws establishing the Cadastral
System, become final, conclusive, and indisputable? The supplementary
questions are — At what stage of the cadastral proceedings does a decree
exist in legal contemplation? Does it exist from the moment that the court,
after hearing the evidence, adjudicates the land in favor of a person and
then, or later decrees the land in favor of this person, or does it exist when
the Chief of the Land Registration Office transcribes the adjudication in the
prescribed form?

STATEMENT OF THE CASE.

Cadastral proceedings were commenced in the municipality of Hinigaran,

Province of Occidental Negros, upon an application of the Director of Lands,
on June 16, 1916. Notice of the proceedings were published in the Official
Gazette as provided by law. The trial judge also issued general notice to all
interested parties. Among others, Victoriano Siguenza presented an answer
asking for registration in his name of lot No. 1608. The instant petitioners,
Antipas Vazquez and Basilio Gayares, although said to reside in this
municipality, and although said to have participated in other cadastral cases,
did not enter any opposition as to this lot. Hearing was had during
September, 1916. On September 21 of this year, the court issued the
following decree:jgc:chanrobles.com.ph

"It is hereby decreed that, upon a previous declaration of general default,

the following lots be adjudged and registered in the names of those persons
whose names appear next after the lots, and in accordance with the
following conditions: . . .
"Lot No. 1608 with the improvements thereon to the conjugal partnership of
Victoriano Siguenza and Marcela Guanzon."cralaw virtua1aw library

On November 23 of the same year, the court declared final the foregoing
decree in the following language:jgc:chanrobles.com.ph

"The decision rendered by the court in the above-entitled case having

become final on September 21, 1916, it is hereby ordered that the Chief of
the General Land Registration Office issue the decrees corresponding to the
lots adjudged by said decision.

"An appeal having however been interposed as to the lots enumerated as

follows, the decrees thereon, must be suspended until further order by this
court:jgc:chanrobles.com.ph

"Lot No. 521.

Eight months later, that is, on July 23, 1917, but before the issuance by the
Land Registration Office of the so-called technical decree, Antipas Vazquez
and Basilio Gayares, the latter as guardian of the minor Estrella Vazquez,
came into the case for the first time. The petitioners, after setting forth their
right of ownership in lot No. 1608, and that it was included in their
"Hacienda Santa Filomena," and after stating that they were in complete
ignorance of the proceedings, asked that the judgment of the court be
annulled and that the case be reopened to receive proof relative to the
ownership of the lot. Counsel for Victoriano Siguenza answered by counter-
motion, asking the court to dismiss the motion presented on behalf of
Vazquez and Gayares. The court denied the motion for a new trial on the
theory that there being a decree already rendered and no allegation of fraud
having been made, the court lacked jurisdiction. It may also be stated
parenthetically that counsel for Vazquez and Gayares made an unsuccessful
attempt in the Supreme Court, through mandamus, to have the record
completed by the taking of evidence.

In order that the matter may not be confused, let it again be made clear
that counsel for petitioners have not raised the question of fraud as provided
for in Section 38 of the Land Registration Law, nor have they asked to be
relieved from a judgment or order, pursuant to Section 113 of the Code of
Civil Procedure, because of mistake, inadvertence, surprise, or excusable
neglect. As a matter of fact, they could not well claim fraud because all the
proceedings were public and free from any suspicion of chicanery. As a
matter of fact, also, any special reliance on Section 113 of the Code of Civil
Procedure would not get them anywhere because more than six months had
elapsed after the issuance of a judgment in this case. The issue
fundamentally becomes one of whether or not the Supreme Court has
jurisdiction over the appeal, since if the judgment and the supplemental
decree issued by the Judge of the Court of First Instance on September 21,
1916, and November 23, 1916, respectively, have become final, petitioners
may no bring their appeal before this court, because the time for the filing of
their bill of exceptions has expired; while, if the cadastral proceedings did
not become final until the formal decree was issued by the Land Registration
Office, then it was proper for them to ask for a reopening of the case, and it
would, consequently, be just as proper for this court to order the trial court
to permit the same.

OPINION.

The prime purpose of the Torrens System is, as has been repeatedly stated,
to decree land titles that shall be final, irrevocable, and indisputable.
Incontestability of title is the goal. All due precaution must accordingly be
taken to guard against injustice to interested individuals who, for some good
reason, may not be able to protect their rights. Nevertheless, even at the
cost of possible cruelty which may result in exceptional cases, it does
become necessary in the interest of the public weal to enforce registration
laws. No stronger words can be found than those appearing in Section 38 of
the Land Registration Law (Act No. 496) wherein it is said that: "Every
decree of registration shall bind the land, and quiet title thereto. . . . It shall
be conclusive upon and against all persons, including the Insular
Government and all the branches thereof, whether mentioned by name in
the application, notice, or citation, or included in the general description ’To
all whom it may concern,’ Such decree shall not be opened by reason of the
absence, infancy, or other disability of any person affected thereby, nor by
any proceeding in any court for reversing judgments or decrees; subject,
however, to the right of any person deprived of land or of any estate or
interest therein by decree of registration obtained by fraud to file in the
Court of Land Registration (Court of First Instance) a petition for review
within one year after entry of the decree, provided no innocent purchaser for
value has acquired an interest."cralaw virtua1aw library

While such statements can be made of the Torrens System proper, they
become even more incisive and peremptory when we come to consider the
offspring of this system, here known as the Cadastral System. Under the
Torrens System proper, whether action shall or shall not be taken is optional
with the solicitant. Under the Cadastral System, pursuant to initiative on the
part of the Government, titles for all the land within a stated area, are
adjudicated whether or not the people living within this district desire to
have titles issued. The purpose, as stated in section one of the Cadastral Act
(NO. 2259), is to serve the public interests, by requiring that the titles to
any lands "be settled and adjudicated."cralaw virtua1aw library

Admitting that such compulsory registration of land and such excessive

interference with private property constitutes due process of law and that
the Acts providing for the same are constitutional, a question not here
raised, yet a study of the law indicates that many precautions are taken to
guard against injustice. The proceedings are initiated by a notice of survey.
When the lands have been surveyed and plotted, the Director of Lands,
represented by the Attorney General, files a petition in court praying that the
titles to the lands named be settled and adjudicated. Notice of the filing of
the petition is then published twice in successive issues of the Official
Gazette in both the English and Spanish languages. All persons interested
are given the benefit of assistance by competent officials and are informed
of their rights. A trial is had. "All conflicting interests shall be adjudicated by
the court and decrees awarded in favor of the persons entitled to the lands
or the various parts thereof, and such decrees, when final, shall be the bases
of original certificates of title in favor of said persons." (Act No. 2259, Sec.
11.) Aside from this, the commotion caused by the survey and a trial
affecting ordinarily many people, together with the presence of strangers in
the community, should serve to put all those affected on their guard.

After trial in a cadastral case, three actions are taken. The first adjudicates
ownership in favor of one of the claimants. This constitutes the decision —
the judgment — the decree of the court, and speaks in a judicial manner.
The second action is the declaration by the court that the decree is final and
its order for the issuance of the certificates of title by the Chief of the Land
Registration Office. Such order is made if within thirty days from the date of
receipt of a copy of the decision no appeal is taken from the decision. This
again is judicial action, although to a less degree than the first.

The third and last action devolves upon the General Land Registration Office.
This office has been instituted "for the due effectuation and accomplishment
of the laws relative to the registration of land." (Administrative Code of
1917, Sec. 174.) An official found in the office, known as the chief surveyor,
has as one of his duties "to prepare final decrees in all adjudicated cases."
(Administrative Code of 1917, Sec. 177.) This latter decree contains the
technical description of the land and may not be issued until a considerable
time after the promulgation of the judgment. The form for the decree used
by the General Land Registration Office concludes with the words: "Witness,
the Honorable (name of the judge), on this the (date)." The date that is
used as authority for the issuance of the decree is the date when, after
hearing the evidence, the trial court decreed the adjudication and
registration of the land.
The judgment in a cadastral survey, including the rendition of the decree, is
a judicial act. As the law says, the judicial decree when final is the base of
the certificate of title. The issuance of the decree by the Land Registration
Office is ministerial act. The date of the judgment, or more correctly stated,
the date on which the defeated party receives a copy of the decision, begins
the running of the time for the interposition of a motion for a new trial or for
the perfection of an appeal to the Supreme Court. The date of the title
prepared by the Chief Surveyor is unimportant, for the adjudication has
taken place and all that is left to be performed is the mere formulation of the
technical description. If an unknown individual could wait possibly years until
the day before a surveyor gets around to transcribing a technical description
of a piece of land, the defeated party could just as reasonably expect the
same consideration for his appeal. As a matter of fact, the so-called
unknown is a party just as much as the known oppositor for notice is to all
the world, and the decree binds all the world.

Both counsel for petitioners and respondents rely upon the decision of this
court in the case of Tambunting v. Manuel ([1916], 35 Phil.; 699) . That
case and the instant case are not the same. In the Tambunting case the
contest was really between two parties each claiming to have a Torrens title;
here one party has the title and the other is seeking to oust him from his
fortress. In the Tambunting case the declaration of ownership but not the
decree of registration had issued; here both declaration and decree have
issued. The doctrines announced in the decision in Grey Alba v. De la Cruz
([1910], 17 Phil., 49) relating to general notice and the indefensibility of
land titles under the Torrens system are much more applicable and can, with
as much reason, be applied to the cadastral system.

As a general rule, registration of title under the cadastral system is final,

conclusive and indisputable, after the passage of the thirty-day period
allowed for an appeal from the date of receipt by the party of a copy of the
judgment of the court adjudicating ownership without any step having been
taken to perfect an appeal. The prevailing party may then have execution of
the judgment as of right and is entitled to the certificate of title issued by
the chief of the Land Registration Office. The exception is the special
provision providing for fraud.

Counsel for appellants and appellees have favored the court with able
arguments relative to the applicability of Sections 113 and 513 of the Code
of Civil Procedure to cadastral proceedings. The view we take of the case
would make unprofitable any discussion of this question.

It appearing that the judgment of the Court of First Instance of Occidental

Negros of September 21, 1916, has become final, and that no action was
taken within the time provided by law for the prosecution of an appeal by bill
of exceptions, this court is without jurisdiction. Accordingly the appeal is
dismissed with costs against the appellants. So ordered.

Arellano, C.J., Torres, Johnson, Street, Avanceña and Moir, JJ., concur.

 Republic of the Philippines
SUPREME COURT
Manila

FIRST DIVISION

G.R. No. 166838               June 15, 2011

STA. LUCIA REALTY & DEVELOPMENT, Inc., Petitioner,

vs.
CITY OF PASIG, Respondent,
MUNICIPALITY OF CAINTA, PROVINCE OF RIZAL, Intervenor.

DECISION

LEONARDO-DE CASTRO, J.:

For review is the June 30, 2004 Decision1 and the January 27, 2005 Resolution2 of the Court of Appeals in
CA-G.R. CV No. 69603, which affirmed with modification the August 10, 1998 Decision 3 and October 9,
1998 Order4 of the Regional Trial Court (RTC) of Pasig City, Branch 157, in Civil Case No. 65420.

Petitioner Sta. Lucia Realty & Development, Inc. (Sta. Lucia) is the registered owner of several parcels of
land with Transfer Certificates of Title (TCT) Nos. 39112, 39110 and 38457, all of which indicated that the
lots were located in Barrio Tatlong Kawayan, Municipality of Pasig 5 (Pasig).

The parcel of land covered by TCT No. 39112 was consolidated with that covered by TCT No. 518403,
which was situated in Barrio Tatlong Kawayan, Municipality of Cainta, Province of Rizal (Cainta). The two
combined lots were subsequently partitioned into three, for which TCT Nos. 532250, 598424, and
599131, now all bearing the Cainta address, were issued.

TCT No. 39110 was also divided into two lots, becoming TCT Nos. 92869 and 92870.

The lot covered by TCT No. 38457 was not segregated, but a commercial building owned by Sta. Lucia
East Commercial Center, Inc., a separate corporation, was built on it. 6

Upon Pasig’s petition to correct the location stated in TCT Nos. 532250, 598424, and 599131, the Land
Registration Court, on June 9, 1995, ordered the amendment of the TCTs to read that the lots with
respect to TCT No. 39112 were located in Barrio Tatlong Kawayan, Pasig City. 7

On January 31, 1994, Cainta filed a petition8 for the settlement of its land boundary dispute with Pasig
before the RTC, Branch 74 of Antipolo City (Antipolo RTC). This case, docketed as Civil Case No. 94-
3006, is still pending up to this date.

On November 28, 1995, Pasig filed a Complaint,9 docketed as Civil Case No. 65420, against Sta. Lucia
for the collection of real estate taxes, including penalties and interests, on the lots covered by TCT Nos.
532250, 598424, 599131, 92869, 92870 and 38457, including the improvements thereon (the subject
properties).

Sta. Lucia, in its Answer, alleged that it had been religiously paying its real estate taxes to Cainta, just like
what its predecessors-in-interest did, by virtue of the demands and assessments made and the Tax
Declarations issued by Cainta on the claim that the subject properties were within its territorial jurisdiction.
Sta. Lucia further argued that since 1913, the real estate taxes for the lots covered by the above TCTs
had been paid to Cainta.10

Cainta was allowed to file its own Answer-in-Intervention when it moved to intervene on the ground that
its interest would be greatly affected by the outcome of the case. It averred that it had been collecting the
real property taxes on the subject properties even before Sta. Lucia acquired them. Cainta further
asseverated that the establishment of the boundary monuments would show that the subject properties
are within its metes and bounds.11

Sta. Lucia and Cainta thereafter moved for the suspension of the proceedings, and claimed that the
pending petition in the Antipolo RTC, for the settlement of boundary dispute between Cainta and Pasig,
presented a "prejudicial question" to the resolution of the case. 12

The RTC denied this in an Order dated December 4, 1996 for lack of merit. Holding that the TCTs were
conclusive evidence as to its ownership and location,13 the RTC, on August 10, 1998, rendered a Decision
in favor of Pasig:

WHEREFORE, in view of the foregoing, judgment is hereby rendered in favor of [Pasig], ordering Sta.
Lucia Realty and Development, Inc. to pay [Pasig]:

1) ₱273,349.14 representing unpaid real estate taxes and penalties as of 1996, plus interest of
2% per month until fully paid;

2) ₱50,000.00 as and by way of attorney’s fees; and

3) The costs of suit.

Judgment is likewise rendered against the intervenor Municipality of Cainta, Rizal, ordering it to refund to
Sta. Lucia Realty and Development, Inc. the realty tax payments improperly collected and received by the
former from the latter in the aggregate amount of ₱358, 403.68. 14

After Sta. Lucia and Cainta filed their Notices of Appeal, Pasig, on September 11, 1998, filed a Motion for
Reconsideration of the RTC’s August 10, 1998 Decision.

The RTC, on October 9, 1998, granted Pasig’s motion in an Order 15 and modified its earlier decision to
include the realty taxes due on the improvements on the subject lots:

WHEREFORE, premises considered, the plaintiff’s motion for reconsideration is hereby granted.
Accordingly, the Decision, dated August 10, 1998 is hereby modified in that the defendant is hereby
ordered to pay plaintiff the amount of ₱5,627,757.07 representing the unpaid taxes and penalties on the
improvements on the subject parcels of land whereon real estate taxes are adjudged as due for the year
1996.16

Accordingly, Sta. Lucia filed an Amended Notice of Appeal to include the RTC’s October 9, 1998 Order in
its protest.

On October 16, 1998, Pasig filed a Motion for Execution Pending Appeal, to which both Sta. Lucia and
Cainta filed several oppositions, on the assertion that there were no good reasons to warrant the
execution pending appeal.17

On April 15, 1999, the RTC ordered the issuance of a Writ of Execution against Sta. Lucia.
On May 21, 1999, Sta. Lucia filed a Petition for Certiorari under Rule 65 of the Rules of Court with the
Court of Appeals to assail the RTC’s order granting the execution. Docketed as CA-G.R. SP No. 52874,
the petition was raffled to the First Division of the Court of Appeals, which on September 22, 2000, ruled
in favor of Sta. Lucia, to wit:

WHEREFORE, in view of the foregoing, the instant petition is hereby GIVEN DUE COURSE and
GRANTED by this Court. The assailed Order dated April 15, 1999 in Civil Case No. 65420 granting the
motion for execution pending appeal and ordering the issuance of a writ of execution pending appeal is
hereby SET ASIDE and declared NULL and VOID.18

The Court of Appeals added that the boundary dispute case presented a "prejudicial question which must
be decided before x x x Pasig can collect the realty taxes due over the subject properties." 19

Pasig sought to have this decision reversed in a Petition for Certiorari filed before this Court on November
29, 2000, but this was denied on June 25, 2001 for being filed out of time. 20

Meanwhile, the appeal filed by Sta. Lucia and Cainta was raffled to the (former) Seventh Division of the
Court of Appeals and docketed as CA-G.R. CV No. 69603. On June 30, 2004, the Court of Appeals
rendered its Decision, wherein it agreed with the RTC’s judgment:

WHEREFORE, the appealed Decision is hereby AFFIRMED with the MODIFICATION that the award of
P50,000.00 attorney’s fees is DELETED.21

In affirming the RTC, the Court of Appeals declared that there was no proper legal basis to suspend the
proceedings.22 Elucidating on the legal meaning of a "prejudicial question," it held that "there can be no
prejudicial question when the cases involved are both civil." 23 The Court of Appeals further held that the
elements of litis pendentia and forum shopping, as alleged by Cainta to be present, were not met.

Sta. Lucia and Cainta filed separate Motions for Reconsideration, which the Court of Appeals denied in a
Resolution dated January 27, 2005.

Undaunted, Sta. Lucia and Cainta filed separate Petitions for Certiorari with this Court. Cainta’s petition,
docketed as G.R. No. 166856 was denied on April 13, 2005 for Cainta’s failure to show any reversible
error. Sta. Lucia’s own petition is the one subject of this decision. 24

In praying for the reversal of the June 30, 2004 judgment of the Court of Appeals, Sta. Lucia assigned the
following errors:

ASSIGNMENT OF ERRORS

THE HONORABLE COURT OF APPEALS ERRED IN AFFIRMING [WITH MODIFICATION] THE

DECISION OF THE REGIONAL TRIAL COURT IN PASIG CITY

II.

THE HONORABLE COURT OF APPEALS ERRED IN NOT SUSPENDING THE CASE IN VIEW OF THE
PENDENCY OF THE BOUNDARY DISPUTE WHICH WILL FINALLY DETERMINE THE SITUS OF THE
SUBJECT PROPERTIES

III.
THE HONORABLE COURT OF APPEALS ERRED IN NOT HOLDING THAT THE PAYMENT OF
REALTY TAXES THROUGH THE MUNICIPALITY OF CAINTA WAS VALID PAYMENT OF REALTY
TAXES

IV.

THE HONORABLE COURT OF APPEALS ERRED IN NOT HOLDING THAT IN THE MEANTIME THAT
THE BOUNDARY DISPUTE CASE IN ANTIPOLO CITY REGIONAL TRIAL COURT IS BEING FINALLY
RESOLVED, THE PETITIONER STA. LUCIA SHOULD BE PAYING THE REALTY TAXES ON THE
SUBJECT PROPERTIES THROUGH THE INTERVENOR CAINTA TO PRESERVE THE STATUS
QUO.25

Pasig, countering each error, claims that the lower courts correctly decided the case considering that the
TCTs are clear on their faces that the subject properties are situated in its territorial jurisdiction. Pasig
contends that the principles of litis pendentia, forum shopping, and res judicata are all inapplicable, due to
the absence of their requisite elements. Pasig maintains that the boundary dispute case before the
Antipolo RTC is independent of the complaint for collection of realty taxes which was filed before the
Pasig RTC. It avers that the doctrine of "prejudicial question," which has a definite meaning in law, cannot
be invoked where the two cases involved are both civil. Thus, Pasig argues, since there is no legal
ground to preclude the simultaneous hearing of both cases, the suspension of the proceedings in the
Pasig RTC is baseless.

Cainta also filed its own comment reiterating its legal authority over the subject properties, which fall
within its territorial jurisdiction. Cainta claims that while it has been collecting the realty taxes over the
subject properties since way back 1913, Pasig only covered the same for real property tax purposes in
1990, 1992, and 1993. Cainta also insists that there is a discrepancy between the locational entries and
the technical descriptions in the TCTs, which further supports the need to await the settlement of the
boundary dispute case it initiated.

The errors presented before this Court can be narrowed down into two basic issues:

1) Whether the RTC and the CA were correct in deciding Pasig’s Complaint without waiting for
the resolution of the boundary dispute case between Pasig and Cainta; and

2) Whether Sta. Lucia should continue paying its real property taxes to Cainta, as it alleged to
have always done, or to Pasig, as the location stated in Sta. Lucia’s TCTs.

We agree with the First Division of the Court of Appeals in CA-G.R. SP No. 52874 that the resolution of
the boundary dispute between Pasig and Cainta would determine which local government unit is entitled
to collect realty taxes from Sta. Lucia.26

The Local Government Unit entitled

To Collect Real Property Taxes

The Former Seventh Division of the Court of Appeals held that the resolution of the complaint lodged
before the Pasig RTC did not necessitate the assessment of the parties’ evidence on the metes and
bounds of their respective territories. It cited our ruling in Odsigue v. Court of Appeals 27 wherein we said
that a certificate of title is conclusive evidence of both its ownership and location. 28 The Court of Appeals
even referred to specific provisions of the 1991 Local Government Code and Act. No. 496 to support its
ruling that Pasig had the right to collect the realty taxes on the subject properties as the titles of the
subject properties show on their faces that they are situated in Pasig. 29
Under Presidential Decree No. 464 or the "Real Property Tax Code," the authority to collect real property
taxes is vested in the locality where the property is situated:

Sec. 5. Appraisal of Real Property. — All real property, whether taxable or exempt, shall be appraised at
the current and fair market value prevailing in the locality where the property is situated.

xxxx

Sec. 57. Collection of tax to be the responsibility of treasurers. — The collection of the real property tax
and all penalties accruing thereto, and the enforcement of the remedies provided for in this Code or any
applicable laws, shall be the responsibility of the treasurer of the province, city or municipality where the
property is situated. (Emphases ours.)

This requisite was reiterated in Republic Act No. 7160, also known as the 1991 the Local Government
Code, to wit:

Section 201. Appraisal of Real Property. – All real property, whether taxable or exempt, shall be
appraised at the current and fair market value prevailing in the locality where the property is situated. The
Department of Finance shall promulgate the necessary rules and regulations for the classification,
appraisal, and assessment of real property pursuant to the provisions of this Code.

Section 233. Rates of Levy. – A province or city or a municipality within the Metropolitan Manila Area
shall fix a uniform rate of basic real property tax applicable to their respective localities as follows: x x x.
(Emphases ours.)

The only import of these provisions is that, while a local government unit is authorized under several laws
to collect real estate tax on properties falling under its territorial jurisdiction, it is imperative to first show
that these properties are unquestionably within its geographical boundaries.

Accentuating on the importance of delineating territorial boundaries, this Court, in Mariano, Jr. v.
Commission on Elections30 said:

The importance of drawing with precise strokes the territorial boundaries of a local unit of government
cannot be overemphasized. The boundaries must be clear for they define the limits of the territorial
jurisdiction of a local government unit. It can legitimately exercise powers of government only within the
limits of its territorial jurisdiction. Beyond these limits, its acts are ultra vires. Needless to state, any
uncertainty in the boundaries of local government units will sow costly conflicts in the exercise of
governmental powers which ultimately will prejudice the people's welfare. This is the evil sought to be
avoided by the Local Government Code in requiring that the land area of a local government unit must be
spelled out in metes and bounds, with technical descriptions. 31 (Emphasis ours.)

The significance of accurately defining a local government unit’s boundaries was stressed in City of Pasig
v. Commission on Elections,32 which involved the consolidated petitions filed by the parties herein, Pasig
and Cainta, against two decisions of the Commission on Elections (COMELEC) with respect to the
plebiscites scheduled by Pasig for the ratification of its creation of two new Barangays. Ruling on the
contradictory reliefs sought by Pasig and Cainta, this Court affirmed the COMELEC decision to hold in
abeyance the plebiscite to ratify the creation of Barangay Karangalan; but set aside the COMELEC’s
other decision, and nullified the plebiscite that ratified the creation of Barangay Napico in Pasig, until the
boundary dispute before the Antipolo RTC had been resolved. The aforementioned case held as follows:

1. The Petition of the City of Pasig in G.R. No. 125646 is DISMISSED for lack of merit; while
 2. The Petition of the Municipality of Cainta in G.R. No. 128663 is GRANTED. The COMELEC
Order in UND No. 97-002, dated March 21, 1997, is SET ASIDE and the plebiscite held on March
15, 1997 to ratify the creation of Barangay Napico in the City of Pasig is declared null and void.
Plebiscite on the same is ordered held in abeyance until after the courts settle with finality the
boundary dispute between the City of Pasig and the Municipality of Cainta, in Civil Case No. 94-
3006.33

Clearly therefore, the local government unit entitled to collect real property taxes from Sta. Lucia must
undoubtedly show that the subject properties are situated within its territorial jurisdiction; otherwise, it
would be acting beyond the powers vested to it by law.

Certificates of Title as
Conclusive Evidence of Location

While we fully agree that a certificate of title is conclusive as to its ownership and location, this does not
preclude the filing of an action for the very purpose of attacking the statements therein. In De Pedro v.
Romasan Development Corporation,34 we proclaimed that:

We agree with the petitioners that, generally, a certificate of title shall be conclusive as to all matters
contained therein and conclusive evidence of the ownership of the land referred to therein. However, it
bears stressing that while certificates of title are indefeasible, unassailable and binding against the whole
world, including the government itself, they do not create or vest title. They merely confirm or record title
already existing and vested. They cannot be used to protect a usurper from the true owner, nor can they
be used as a shield for the commission of fraud; neither do they permit one to enrich himself at the
expense of other.35

In Pioneer Insurance and Surety Corporation v. Heirs of Vicente Coronado, 36 we set aside the lower
courts’ ruling that the property subject of the case was not situated in the location stated and described in
the TCT, for lack of adequate basis. Our decision was in line with the doctrine that the TCT is conclusive
evidence of ownership and location. However, we refused to simply uphold the veracity of the disputed
TCT, and instead, we remanded the case back to the trial court for the determination of the exact location
of the property seeing that it was the issue in the complaint filed before it. 37

In City Government of Tagaytay v. Guerrero,38 this Court reprimanded the City of Tagaytay for levying
taxes on a property that was outside its territorial jurisdiction, viz:

In this case, it is basic that before the City of Tagaytay may levy a certain property for sale due to tax
delinquency, the subject property should be under its territorial jurisdiction. The city officials are expected
to know such basic principle of law. The failure of the city officials of Tagaytay to verify if the property is
within its jurisdiction before levying taxes on the same constitutes gross negligence. 39 (Emphasis ours.)

Although it is true that "Pasig" is the locality stated in the TCTs of the subject properties, both Sta. Lucia
and Cainta aver that the metes and bounds of the subject properties, as they are described in the TCTs,
reveal that they are within Cainta’s boundaries.40 This only means that there may be a conflict between
the location as stated and the location as technically described in the TCTs. Mere reliance therefore on
the face of the TCTs will not suffice as they can only be conclusive evidence of the subject properties’
locations if both the stated and described locations point to the same area.

The Antipolo RTC, wherein the boundary dispute case between Pasig and Cainta is pending, would be
able to best determine once and for all the precise metes and bounds of both Pasig’s and Cainta’s
respective territorial jurisdictions. The resolution of this dispute would necessarily ascertain the extent and
reach of each local government’s authority, a prerequisite in the proper exercise of their powers, one of
which is the power of taxation. This was the conclusion reached by this Court in City of Pasig v.
Commission on Elections,41 and by the First Division of the Court of Appeals in CA-G.R. SP No. 52874.
We do not see any reason why we cannot adhere to the same logic and reasoning in this case.

The "Prejudicial Question" Debate

It would be unfair to hold Sta. Lucia liable again for real property taxes it already paid simply because
Pasig cannot wait for its boundary dispute with Cainta to be decided. Pasig has consistently argued that
the boundary dispute case is not a prejudicial question that would entail the suspension of its collection
case against Sta. Lucia. This was also its argument in City of Pasig v. Commission on Elections, 42 when it
sought to nullify the COMELEC’s ruling to hold in abeyance (until the settlement of the boundary dispute
case), the plebiscite that will ratify its creation of Barangay Karangalan. We agreed with the COMELEC
therein that the boundary dispute case presented a prejudicial question and explained our statement in
this wise:

To begin with, we agree with the position of the COMELEC that Civil Case No. 94-3006 involving the
boundary dispute between the Municipality of Cainta and the City of Pasig presents a prejudicial question
which must first be decided before plebiscites for the creation of the proposed barangays may be held.

The City of Pasig argues that there is no prejudicial question since the same contemplates a civil and
criminal action and does not come into play where both cases are civil, as in the instant case. While this
may be the general rule, this Court has held in Vidad v. RTC of Negros Oriental, Br. 42, that, in the
interest of good order, we can very well suspend action on one case pending the final outcome of another
case closely interrelated or linked to the first.

In the case at bar, while the City of Pasig vigorously claims that the areas covered by the proposed
Barangays Karangalan and Napico are within its territory, it can not deny that portions of the same area
are included in the boundary dispute case pending before the Regional Trial Court of Antipolo. Surely,
whether the areas in controversy shall be decided as within the territorial jurisdiction of the Municipality of
Cainta or the City of Pasig has material bearing to the creation of the proposed Barangays Karangalan
and Napico. Indeed, a requisite for the creation of a barangay is for its territorial jurisdiction to be properly
identified by metes and bounds or by more or less permanent natural boundaries. Precisely because
territorial jurisdiction is an issue raised in the pending civil case, until and unless such issue is resolved
with finality, to define the territorial jurisdiction of the proposed barangays would only be an exercise in
futility. Not only that, we would be paving the way for potentially ultra vires acts of such barangays. x x
x.43 (Emphases ours.)

It is obvious from the foregoing, that the term "prejudicial question," as appearing in the cases involving
the parties herein, had been used loosely. Its usage had been more in reference to its ordinary meaning,
than to its strict legal meaning under the Rules of Court. 44 Nevertheless, even without the impact of the
connotation derived from the term, our own Rules of Court state that a trial court may control its own
proceedings according to its sound discretion:

POWERS AND DUTIES OF COURTS AND JUDICIAL OFFICERS

Rule 135

SEC. 5. Inherent powers of courts. – Every court shall have power:

xxxx

(g) To amend and control its process and orders so as to make them comformable to law and justice.

Furthermore, we have acknowledged and affirmed this inherent power in our own decisions, to wit:
The court in which an action is pending may, in the exercise of a sound discretion, upon proper
application for a stay of that action, hold the action in abeyance to abide the outcome of another pending
in another court, especially where the parties and the issues are the same, for there is power inherent in
every court to control the disposition of causes (sic) on its dockets with economy of time and effort for
itself, for counsel, and for litigants. Where the rights of parties to the second action cannot be properly
determined until the questions raised in the first action are settled the second action should be stayed.

The power to stay proceedings is incidental to the power inherent in every court to control the disposition
of the cases on its dockets, considering its time and effort, that of counsel and the litigants. But if
proceedings must be stayed, it must be done in order to avoid multiplicity of suits and prevent vexatious
litigations, conflicting judgments, confusion between litigants and courts. It bears stressing that whether or
not the RTC would suspend the proceedings in the SECOND CASE is submitted to its sound discretion. 45 1avvphil

In light of the foregoing, we hold that the Pasig RTC should have held in abeyance the proceedings in
Civil Case No. 65420, in view of the fact that the outcome of the boundary dispute case before the
Antipolo RTC will undeniably affect both Pasig’s and Cainta’s rights. In fact, the only reason Pasig had to
file a tax collection case against Sta. Lucia was not that Sta. Lucia refused to pay, but that Sta. Lucia had
already paid, albeit to another local government unit. Evidently, had the territorial boundaries of the
contending local government units herein been delineated with accuracy, then there would be no
controversy at all.

In the meantime, to avoid further animosity, Sta. Lucia is directed to deposit the succeeding real property
taxes due on the subject properties, in an escrow account with the Land Bank of the Philippines.

WHEREFORE, the instant petition is GRANTED. The June 30, 2004 Decision and the January 27, 2005
Resolution of the Court of Appeals in CA-G.R. CV No. 69603 are SET ASIDE. The City of Pasig and the
Municipality of Cainta are both directed to await the judgment in their boundary dispute case (Civil Case
No. 94-3006), pending before Branch 74 of the Regional Trial Court in Antipolo City, to determine which
local government unit is entitled to exercise its powers, including the collection of real property taxes, on
the properties subject of the dispute. In the meantime, Sta. Lucia Realty and Development, Inc. is directed
to deposit the succeeding real property taxes due on the lots and improvements covered by TCT Nos.
532250, 598424, 599131, 92869, 92870 and 38457 in an escrow account with the Land Bank of the
Philippines.

SO ORDERED.