HEIRS OF MAXIMO LABANON, represented by
ALICIA LABANON CAÑEDO and the PROVINCIAL
ASSESSOR OF COTABATO, Petitioners, v. HEIRS OF
CONSTANCIO LABANON, represented by ALBERTO
MAKILANG, Respondents.
DECISION
VELASCO, JR., J.:
The Case
This Petition for Review on Certiorari under Rule 45 seeks
the recall and nullification of the May 8, 2003 Decision1 of
the Court of Appeals (CA) in CA-G.R. CV No. 65617
entitled Heirs of Constancio Labanon represented by
Alberto Makilang v. Heirs of Maximo Labanon represented
by Alicia Labanon Cañedo and the Provincial Assessor of
Cotabato, which reversed the August 18, 1999
Decision2 of the Kidapawan City, Cotabato Regional Trial
Court (RTC), Branch 17, in Civil Case No. 865. Likewise
assailed is the October 13, 2003 Resolution3 which
disregarded petitioners' Motion for Reconsideration.
The Facts
The CA culled the facts this way:
During the lifetime of Constancio Labanon, prior to the
outbreak of WWII, he settled upon a piece of alienable
and disposable public agricultural land situated at Brgy.
Lanao, Kidapawan, Cotabato x x x. Constancio cultivated
the said lot and introduced permanent improvements that
still exist up to the present. Being of very limited
educational attainment, he found it difficult to file his
public land application over said lot. Constancio then
asked his brother, Maximo Labanon who was better
educated to file the corresponding public land application
under the express agreement that they will divide the said
lot as soon as it would be feasible for them to do so. The
offer was accepted by Maximo. During the time of the
application it was Constancio who continued to cultivate
the said lot in order to comply with the cultivation
requirement set forth under Commonwealth Act 141, as
amended, on Homestead applications. After which, on
June 6, 1941, due to industry of Constancio, Homestead
Application No. 244742 (E-128802) of his brother Maximo
was approved with Homestead Patent No. 67512.
Eventually, Original Certificate of Title No. P-14320 was
issued by the Register of Deeds of Cotabato over said lot
in favor of Maximo Labanon.
On February 11, 1955, Maximo Labanon executed a
document denominated as "Assignment of Rights and
Ownership" and docketed as Doc. No. 20; Page No. 49;
Book No. V; Series of 1955 of the Notarial Register of
Atty. Florentino Kintanar. The document was executed to
safeguard the ownership and interest of his brother
Constancio Labanon. Pertinent portion of which is
reproduced as follows:
"That I, MAXIMO LABANON, of legal age, married to
Anastacia Sagarino, and a resident of Kidapawan,
Cotabato, for and in consideration of the expenses
incurred by my elder brother CONSTANCIO LABANON also
of legal age, Filipino, widower and a resident of
Kidapawan, Cotabato, for the clearing, cultivation and
improvements on the eastern portion xxx Lot No. 1, Blk.
22, Pls-59 xxx which expenses have been incurred by my
said brother xxx before the outbreak of the last world war
xxx I do hereby assign transfer and convey my rights to,
interests in and ownership on the said eastern portion of
said Lot No. 1, Block 22, Pls-59 ONE HUNDRED (100 M)
ALONG THE NATIONAL HIGHWAY, (DAVAO-COTABATO
ROAD) by TWO HUNDRED FIFTY METERS (250 M) going
inside the land to cover an area of TWO AND ONE HALF
HECTARES (25,000 SQ. M.), more or less, adjoining the
school site of barrio Lanao, Kidapawan, Cotabato, to the
said CONSTANCIO LABANON, his heirs and assigns, can
freely occupy for his own use and benefit xxx. crvll
IN WITNESS WHEREFOF, I have hereunto set my hand
this 11th day of February 1995 at Kidapawan, Cotabato.
(SGD) MAXIMO LABANON
With my marital consent.
(SGD) ANASTACIA SAGARINO
(Wife)" (p.16, rollo)
On April 25, 1962, Maximo Labanon executed a sworn
statement reiterating his desire that his elder brother
Constancio, his heirs and assigns shall own the eastern
portion of the Lot, pertinent portion of which reads:
"That I am the same and identical person who is a
homestead applicant (HA-224742, E-128802) of a tract of
land which is covered by Homestead Patent No. 67512
dated June 6, 1941, known as Lot No. 1, Block 22, Pls-59,
situated in [B]arrio Lanao, Municipality of Kidapawan,
Province of Cotabato, Philippines, and containing an area
of 5.0000 hectares, more or less;
That I am the same and identical person who executed a
deed of ASSIGNMENT OF RIGHTS AND OWNERSHIP in
favor of my brother Constancio Labanon, now deceased,
now for his heirs, for the eastern half portion of the land
above described, and which deed was duly notarized by
notary public Florentino P. Kintanar on February 11, 1955
at Kidapawan, Cotabato and entered in his Notarial
Register as Doc. No. 20, Page No. 49, Book No. V, Series
of 1955; and cralawlibrary
That in order that I and the Heirs of Constancio Labanon
will exercise our respective rights and ownership over the
aforementioned lot, and to give force and effect to said
deed of assignment, I hereby, by these presents, request
the Honorable Director of Lands and the Land Title
Commission to issue a separate title in my favor covering
the western half portion of the aforementioned lot and to
the Heirs of Constancio Labanon a title for the eastern half
portion thereof.
IN WITNESS THEREOF, I have hereunto set my hand this
25th day of April, 1962, at Pikit, Cotabato, Philippines."
(p. 9, records)
After the death of Constancio Labanon, his heirs executed
an [e]xtra-judicial settlement of estate with simultaneous
sale over the aforesaid eastern portion of the lot in favor
of Alberto Makilang, the husband of Visitacion Labanon,
one of the children of Constancio. Subsequently, the
parcel of land was declared for taxation purposes in the
name of Alberto under TD No. 11593. However, in March
1991, the defendants heirs of Maximo Labanon namely,
Alicia L. Caniedo, Leopoldo Labanon, Roberto Nieto and
Pancho Labanon, caused to be cancelled from the records
of the defendant Provincial Assessor of Cotabato the
aforesaid TD No. 11593 and the latter, without first
verifying the legality of the basis for said cancellation, did
cancel the same. x x x Further, after discovering that the
defendant-heirs of Maximo Labanon were taking steps to
deprive the heirs of Constancio Labanon of their
ownership over the eastern portion of said lot, the latter,
thru Alberto Makilang, demanded the owner's copy of the
certificate of title covering the aforesaid Lot to be
surrendered to the Register of Deeds of Cotabato so that
the ownership of the heirs of Constancio may be fully
effected but the defendants refused and still continue to
refuse to honor the trust agreement entered into by the
deceased brothers. x x x4
Thus, on November 12, 1991, petitioners filed a
complaint5 for Specific Performance, Recovery of
Ownership, Attorney's Fees and Damages with Writ of
Preliminary Injunction and Prayer for Temporary
Restraining Order against respondents docketed as Civil
Case No. 865 before the Kidapawan City RTC. After
hearing, the trial court rendered its August 18, 1999
Decision, the decretal portion of which reads:
Wherefore, prescinding from the foregoing facts and
considerations the Court finds and so holds that the
[defendant-heirs] of Maximo Labanon represented by
Alicia Labanon Caniedo have proved by preponderance of
evidence that they are entitled to the reliefs set forth in
their answer and consequently judgment is hereby
rendered as follows:
1. Ordering the dismissal of the complaint against the
Heirs of Maximo Labanon represented by Alicia Labanon
Caniedo for lack of merit;
2. Ordering the dismissal of the case against the
Provincial Assessor. The claim of the plaintiff is untenable,
because the duties of the Provincial Assessor are
ministerial. Moreover, the presumption of regularity in the
performance of his duty is in his favor;
3. Ordering the plaintiff to pay the defendants the amount
of P20,000.00 as exemplary damages, P10,000.00 for
Attorney's Fees, P500.00 per appearance in Court; and
cralawlibrary
4. To pay the costs of this suit.
IT IS SO ORDERED.6
Aggrieved, respondents elevated the adverse judgment to
the CA which issued the assailed May 8, 2003 Decision in
CA-G.R. CV No. 65617, the fallo of which states:
WHEREFORE, the appeal is hereby GRANTED for being
meritorious. The assailed decision of the Regional Trial
Court is hereby REVERSED and SET ASIDE and a new one
is hereby entered as follows:
1) Recognizing the lawful possession of the plaintiffs-
appellants over the eastern portion of the property in
dispute;
2) Declaring the plaintiffs-appellants as owners of the
eastern portion of the property by reason of lawful
possession;
3) Ordering the Provincial Assessor to reinstate TD No.
11593 and declaring TD No. 243-A null and void;
4) Ordering the defendants-appellees to pay the plaintiffs-
appellants the amount of P20,000 as moral damages,
P10,000 for attorney's fees, P500.00 per appearance in
Court and
5) To pay the costs of the suit.
SO ORDERED.
The Issues
Surprised by the turn of events, petitioners brought this
petition before us raising the following issues, to wit:
1. Whether or not Original Certificate of Title No. 41320
issued on April 10, 1975 in the name of MAXIMO
LABANON be now considered indefeasible and conclusive;
andcralawlibrary
2. Whether or not the Trust Agreement allegedly made by
Constancio Labanon and Maximo Labanon prescribed.7
The Court's Ruling
The petition must fail.
First Issue
Respondents are not precluded from challenging the
validity of Original Certificate of Title No. P-41320
Petitioners argue that respondents can no longer question
Maximo Labanon's ownership of the land after its
registration under the principle of indefeasibility of a
Transfer Certificate of Title (TCT).
Such argument is inaccurate.
The principle of indefeasibility of a TCT is embodied in
Section 32 of Presidential Decree No. (PD) 1529,
amending the Land Registration Act, which provides:
Section 32. Review of decree of registration; Innocent
purchaser for value. The decree of registration shall not
be reopened or revised by reason of absence, minority, or
other disability of any person adversely affected thereby,
nor by any proceeding in any court for reversing
judgments, subject, however, to the right of any person,
including the government and the branches thereof,
deprived of land or of any estate or interest therein by
such adjudication or confirmation of title obtained by
actual fraud, to file in the proper Court of First Instance a
petition for reopening and review of the decree of
registration not later than one year from and after the
date of the entry of such decree of registration, but in no
case shall such petition be entertained by the court where
an innocent purchaser for value has acquired the land or
an interest therein, whose rights may be prejudiced.
Whenever the phrase "innocent purchaser for value" or an
equivalent phrase occurs in this Decree, it shall be
deemed to include an innocent lessee, mortgagee, or
other encumbrancer for value.
Upon the expiration of said period of one year, the decree
of registration and the certificate of title issued shall
become incontrovertible. Any person aggrieved by such
decree of registration in any case may pursue his remedy
by action for damages against the applicant or any other
persons responsible for the fraud.
Contrary to petitioners' interpretation, the aforequoted
legal provision does not totally deprive a party of any
remedy to recover the property fraudulently registered in
the name of another. Section 32 of PD 1529 merely
precludes the reopening of the registration proceedings
for titles covered by the Torrens System, but does not
foreclose other remedies for the reconveyance of the
property to its rightful owner. As elaborated in Heirs of
Clemente Ermac v. Heirs of Vicente Ermac:
While it is true that Section 32 of PD 1529 provides that
the decree of registration becomes incontrovertible after a
year, it does not altogether deprive an aggrieved party of
a remedy in law. The acceptability of the Torrens System
would be impaired, if it is utilized to perpetuate fraud
against the real owners.8
A more succinct explanation is found in Vda. De Recinto v.
Inciong, thus:
The mere possession of a certificate of title under the
Torrens system does not necessarily make the possessor
a true owner of all the property described therein for he
does not by virtue of said certificate alone become the
owner of the land illegally included. It is evident from the
records that the petitioner owns the portion in question
and therefore the area should be conveyed to her. The
remedy of the land owner whose property has been
wrongfully or erroneously registered in another's name is,
after one year from the date of the decree, not to set
aside the decree, but, respecting the decree as
incontrovertible and no longer open to review, to bring an
ordinary action in the ordinary court of justice for
reconveyance or, if the property has passed into the
hands of an innocent purchaser for value, for
damages.9 (Emphasis supplied.)
Undeniably, respondents are not precluded from
recovering the eastern portion of Original Certificate of
Title (OCT) No. P-14320, with an area subject of the
"Assignment of Rights and Ownership" previously owned
by their father, Constancio Labanon. The action for
Recovery of Ownership before the RTC is indeed the
appropriate remedy.
Second Issue
The trust agreement between Maximo Labanon and
Constancio Labanon may still be enforced
Former Vice-President and Senator Arturo Tolentino, a
noted civilist, explained the nature and import of a trust:
Trust is the legal relationship between one person having
an equitable ownership in property and another person
owning the legal title to such property, the equitable
ownership of the former entitling him to the performance
of certain duties and the exercise of certain powers by the
latter.10
This legal relationship can be distinguished from other
relationships of a fiduciary character, such as deposit,
guardianship, and agency, in that the trustee has legal
title to the property.11 In the case at bench, this is exactly
the relationship established between the parties.
Trusts are classified under the Civil Code as either express
or implied. Such classification determines the prescriptive
period for enforcing such trust.
Article 1444 of the New Civil Code on express trust
provides that "[n]o particular words are required for the
creation of an express trust, it being sufficient that a trust
is clearly intended."
Civil law expert Tolentino further elucidated on the
express trust, thus:
No particular form of words or conduct is necessary for
the manifestation of intention to create a trust. It is
possible to create a trust without using the word "trust" or
"trustee". Conversely, the mere fact that these words are
used does not necessarily indicate an intention to create a
trust. The question in each case is whether the trustor
manifested an intention to create the kind of relationship
which to lawyers is known as trust. It is immaterial
whether or not he knows that the relationship which he
intends to create is called a trust, and whether or not he
knows the precise characteristics of the relationship which
is called a trust.12
Correlatively, we ruled in Estate of Edward Miller Grimm
v. Estate of Charles Parsons and Patrick C. Parsons, that:
An express trust is created by the direct and positive acts
of the parties, by some writing or deed or by words
evidencing an intention to create a trust; the use of the
word trust is not required or essential to its constitution, it
being sufficient that a trust is clearly intended.13 
chanrobles virtual law library
In the instant case, such intention to institute an express
trust between Maximo Labanon as trustee and Constancio
Labanon as trustor was contained in not just one but two
written documents, the Assignment of Rights and
Ownership as well as Maximo Labanon's April 25, 1962
Sworn Statement. In both documents, Maximo Labanon
recognized Constancio Labanon's ownership and
possession over the eastern portion of the property
covered by OCT No. P-14320, even as he recognized
himself as the applicant for the Homestead Patent over
the land. Thus, Maximo Labanon maintained the title over
the property while acknowledging the true ownership of
Constancio Labanon over the eastern portion of the land.
The existence of an express trust cannot be doubted nor
disputed.
On the issue of prescription, we had the opportunity to
rule in Bueno v. Reyes that unrepudiated written express
trusts are imprescriptible:
While there are some decisions which hold that an action
upon a trust is imprescriptible, without distinguishing
between express and implied trusts, the better rule, as
laid down by this Court in other decisions, is that
prescription does supervene where the trust is merely an
implied one. The reason has been expressed by Justice
J.B.L. Reyes in J.M. Tuason and Co., Inc. v. Magdangal, 4
SCRA 84, 88, as follows:
Under Section 40 of the old Code of Civil Procedure, all
actions for recovery of real property prescribed in 10
years, excepting only actions based on continuing or
subsisting trusts that were considered by section 38 as
imprescriptible. As held in the case of Diaz v. Gorricho, L-
11229, March 29, 1958, however, the continuing or
subsisting trusts contemplated in section 38 of the Code
of Civil Procedure referred only to express unrepudiated
trusts, and did not include constructive trusts (that are
imposed by law) where no fiduciary relation exists and the
trustee does not recognize the trust at all.14
This principle was amplified in Escay v. Court of Appeals
this way: "Express trusts prescribe 10 years from the
repudiation of the trust (Manuel Diaz, et al. v. Carmen
Gorricho et al., 54 0.G. p. 8429, Sec. 40, Code of Civil
Procedure)."15
In the more recent case of Secuya v. De Selma, we again
ruled that the prescriptive period for the enforcement of
an express trust of ten (10) years starts upon the
repudiation of the trust by the trustee.16
In the case at bar, Maximo Labanon never repudiated the
express trust instituted between him and Constancio
Labanon. And after Maximo Labanon's death, the trust
could no longer be renounced; thus, respondents' right to
enforce the trust agreement can no longer be restricted
nor prejudiced by prescription.
It must be noted that the Assignment of Rights and
Ownership and Maximo Labanon's Sworn Statement were
executed after the Homestead Patent was applied for and
eventually granted with the issuance of Homestead Patent
No. 67512 on June 6, 1942. Evidently, it was the intent of
Maximo Labanon to hold the title over the land in his
name while recognizing Constancio Labanon's equitable
ownership and actual possession of the eastern portion of
the land covered by OCT No. P-14320.
In addition, petitioners can no longer question the validity
of the positive declaration of Maximo Labanon in the
Assignment of Rights and Ownership in favor of the late
Constancio Labanon, as the agreement was not impugned
during the former's lifetime and the recognition of his
brother's rights over the eastern portion of the lot was
further affirmed and confirmed in the subsequent April 25,
1962 Sworn Statement.
Section 31, Rule 130 of the Rules of Court is the
repository of the settled precept that "[w]here one derives
title to property from another, the act, declaration, or
omission of the latter, while holding the title, in relation to
the property, is evidence against the former." Thus,
petitioners have accepted the declaration made by their
predecessor-in-interest, Maximo Labanon, that the
eastern portion of the land covered by OCT No. P-14320 is
owned and possessed by and rightfully belongs to
Constancio Labanon and the latter's heirs. Petitioners
cannot now feign ignorance of such acknowledgment by
their father, Maximo.
Lastly, the heirs of Maximo Labanon are bound to the
stipulations embodied in the Assignment of Rights and
Ownership pursuant to Article 1371 of the Civil Code that
contracts take effect between the parties, assigns, and
heirs.
Petitioners as heirs of Maximo cannot disarrow the
commitment made by their father with respect to the
subject property since they were merely subrogated to
the rights and obligations of their predecessor-in-interest.
They simply stepped into the shoes of their predecessor
and must therefore recognize the rights of the heirs of
Constancio over the eastern portion of the lot. As the old
adage goes, the spring cannot rise higher than its source.
WHEREFORE, the petition is DENIED. The May 8, 2003 CA
Decision and October 13, 2003 Resolution in CA-G.R. CV
No. 65617 are AFFIRMED with the modifications that the
Kidapawan City, Cotabato RTC, Branch 17 is directed to
have OCT No. P-14320 segregated and subdivided by the
Land Management Bureau into two (2) lots based on the
terms of the February 11, 1955 Assignment of Rights and
Ownership executed by Maximo Labanon and Constancio
Labanon; and after approval of the subdivision plan, to
order the Register of Deeds of Kidapawan City, Cotabato
to cancel OCT No. P-14320 and issue one title each to
petitioners and respondents based on the said subdivision
plan.
Costs against petitioners.
SO ORDERED.
G.R. No. 160895 October 30, 2006
JOSE R. MARTINEZ, petitioner,
vs.
REPUBLIC OF THE PHILIPPINES, respondents.
DECISION
TINGA, J.:
The central issue presented in this Petition for
Review is whether an order of general default
issued by a trial court in a land registration case
bars the Republic of the Philippines, through the
Office of the Solicitor General, from interposing an
appeal from the trial court’s subsequent decision in
favor of the applicant.
The antecedent facts follow.
On 24 February 1999, petitioner Jose R. Martinez
(Martinez) filed a petition for the registration in his
name of three (3) parcels of land included in the
Cortes, Surigao del Sur Cadastre. The lots,
individually identified as Lot No. 464-A, Lot No.
464-B, and Lot No. 370, Cad No. 597, collectively
comprised around 3,700 square meters. Martinez
alleged that he had purchased lots in 1952 from his
uncle, whose predecessors-in-interest were
traceable up to the 1870s. It was claimed that
Martinez had remained in continuous possession of
the lots; that the lots had remained unencumbered;
and that they became private property through
prescription pursuant to Section 48(b) of
Commonwealth Act No. 141. Martinez further
claimed that he had been constrained to initiate the
proceedings because the Director of the Land
Management Services had failed to do so despite
the completion of the cadastral survey of Cortes,
Surigao del Sur.1
The case was docketed as Land Registration Case
No. N-30 and raffled to the Regional Trial Court
(RTC) of Surigao del Sur, Branch 27. The Office of
the Solicitor General (OSG) was furnished a copy
of the petition. The trial court set the case for
hearing and directed the publication of the
corresponding Notice of Hearing in the Official
Gazette. On 30 September 1999, the OSG, in
behalf of the Republic of the Philippines, opposed
the petition on the grounds that appellee’s
possession was not in accordance with Section
48(b) of Commonwealth Act No. 141; that his
muniments of title were insufficient to prove bona-
fide acquisition and possession of the subject
parcels; and that the properties formed part of the
public domain and thus not susceptible to private
appropriation.2
Despite the opposition filed by the OSG, the RTC
issued an order of general default, even against the
Republic of the Philippines, on 29 March 2000. This
ensued when during the hearing of even date, no
party appeared before the Court to oppose
Martinez’s petition.3
Afterwards, the trial court proceeded to receive
Martinez’s oral and documentary evidence in
support of his petition. On 1 August 2000, the RTC
rendered a Decision4 concluding that Martinez and
his predecessors-in-interest had been for over 100
years in possession characterized as continuous,
open, public, and in the concept of an owner. The
RTC thus decreed the registration of the three (3)
lots in the name of Martinez.
From this Decision, the OSG filed a Notice of
Appeal dated 28 August 2000,5 which was
approved by the RTC. However, after the records
had been transmitted to the Court of Appeals, the
RTC received a letter dated 21 February 20016
from the Land Registration Authority (LRA) stating
that only Lot Nos. 464-A and 464-B were referred
to in the Notice of Hearing published in the Official
Gazette; and that Lot No. 370, Cad No. 597 had
been deliberately omitted due to the lack of an
approved survey plan for that property. Accordingly,
the LRA manifested that this lot should not have
been adjudicated to Martinez for lack of jurisdiction.
This letter was referred by the RTC to the Court of
Appeals for appropriate action.7
On 10 October 2003, the Court of Appeals
promulgated the assailed Decision,8 reversing the
RTC and instead ordering the dismissal of the
petition for registration. In light of the opposition
filed by the OSG, the appellate court found the
evidence presented by Martinez as insufficient to
support the registration of the subject lots. The
Court of Appeals concluded that the oral evidence
presented by Martinez merely consisted of general
declarations of ownership, without alluding to
specific acts of ownership performed by him or his
predecessors-in-interest. It likewise debunked the
documentary evidence presented by Martinez,
adjudging the same as either inadmissible or
ineffective to establish proof of ownership.
No motion for reconsideration appears to have
been filed with the Court of Appeals by Martinez,
who instead directly assailed its Decision before
this Court through the present petition.
We cannot help but observe that the petition, eight
(8) pages in all, was apparently prepared with all
deliberate effort to attain nothing more but the
perfunctory. The arguments raised center almost
exclusively on the claim that the OSG no longer
had personality to oppose the petition, or appeal its
allowance by the RTC, following the order of
general default. Starkly put, "the [OSG] has no
personality to raise any issue at all under the
circumstances pointed out hereinabove."9
Otherwise, it is content in alleging that "[Martinez]
presented sufficient and persuasive proof to
substantiate the fact that his title to Lot Nos. 464-A
and 464-B is worth the confirmation he seeks to be
done in this registration case";10 and that the RTC
had since issued a new Order dated 1 September
2003, confirming Martinez’s title over Lot No. 370.
In its Comment dated 24 May 2004,11 the OSG
raises several substantial points, including the fact
that it had duly opposed Martinez’s application for
registration before the RTC; that jurisprudence and
the Rules of Court acknowledge that a party in
default is not precluded from appealing the
unfavorable judgment; that the RTC had no
jurisdiction over Lot No. 370 since its technical
description was not published in the Official
Gazette; and that as found by the Court of Appeals
the evidence presented by Martinez is insufficient
for registering the lots in his name.12 Despite an
order from the Court requiring him to file a Reply to
the Comment, counsel for Martinez declined to do
so, explaining, among others, that "he felt he would
only be taxing the collective patience of this [Court]
if he merely repeats x x x what petitioner had
succinctly stated x x x on pages four (4) to seven
(7) of his said petition." Counsel for petitioner was
accordingly fined by the Court.13
The Court’s patience is taxed less by redundant
pleadings than by insubstantial arguments. The
inability of Martinez to offer an effective rebuttal to
the arguments of the OSG further debilitates what
is an already weak petition.
The central question, as posed by Martinez, is
whether the OSG could have still appealed the
RTC decision after it had been declared in default.
The OSG argues that a party in default is not
precluded from filing an appeal, citing Metropolitan
Bank & Trust Co. v. Court of Appeals,14 and
asserts that "[t]he Rules of Court expressly
provides that a party who has been declared in
default may appeal from the judgment rendered
against him."15
There is error in that latter, unequivocal averment,
though one which does not deter from the ultimate
correctness of the general postulate that a party
declared in default is allowed to pose an appeal.
Elaboration is in order.
We note at the onset that the OSG does not impute
before this Court that the RTC acted improperly in
declaring public respondent in default, even though
an opposition had been filed to Martinez’s petition.
Under Section 26 of Presidential Decree No. 1529,
as amended, the order of default may be issued "[i]f
no person appears and answers within the time
allowed." The RTC appears to have issued the
order of general default simply on the premise that
no oppositor appeared before it on the hearing of
29 March 2000. But it cannot be denied that the
OSG had already duly filed its Opposition to
Martinez’s petition long before the said hearing. As
we held in Director of Lands v. Santiago:16
[The] opposition or answer, which is based on
substantial grounds, having been formally filed, it
was improper for the respondent Judge taking
cognizance of such registration case to declare the
oppositor in default simply because he failed to
appear on the day set for the initial healing. The
pertinent provision of law which states: "If no
person appears and answers within the time
allowed, the court may at once upon motion of the
applicant, no reason to the contrary appearing,
order a general default to be recorded . . . ," cannot
be interpreted to mean that the court can just
disregard the answer before it, which has long been
filed, for such an interpretation would be nothing
less than illogical, unwarranted, and unjust. Had the
law intended that failure of the oppositor to appear
on the date of the initial hearing would be a ground
for default despite his having filed an answer, it
would have been so stated in unmistakable terms,
considering the serious consequences of an order
of default. Especially in this case where the greater
public interest is involved as the land sought to be
registered is alleged to be public land, the
respondent Judge should have received the
applicant's evidence and set another date for the
reception of the oppositor's evidence. The
oppositor in the Court below and petitioner herein
should have been accorded ample opportunity to
establish the government's claim.17
Strangely, the OSG did not challenge the propriety
of the default order, whether in its appeal before the
Court of Appeals or in its petition before this Court.
It would thus be improper for the Court to make a
pronouncement on the validity of the default order
since the same has not been put into issue.
Nonetheless, we can, with comfort, proceed from
same apparent premise of the OSG that the default
order was proper or regular.
The juridical utility of a declaration of default cannot
be disputed. By forgoing the need for adversarial
proceedings, it affords the opportunity for the
speedy resolution of cases even as it penalizes
parties who fail to give regard or obedience to the
judicial processes.
The extent to which a party in default loses
standing in court has been the subject of
considerable jurisprudential debate. Way back in
1920, in Velez v. Ramas,18 we declared that the
defaulting defendant "loses his standing in court, he
not being entitled to the service of notices in the
case, nor to appear in the suit in any way. He
cannot adduce evidence; nor can he be heard at
the final hearing."19 These restrictions were
controversially expanded in Lim Toco v. Go Fay,20
decided in 1948, where a divided Court pronounced
that a defendant in default had no right to appeal
the judgment rendered by the trial court, except
where a motion to set aside the order of default had
been filed. This, despite the point raised by Justice
Perfecto in dissent that there was no provision in
the then Rules of Court or any law "depriving a
defaulted defendant of the right to be heard on
appeal."21
The enactment of the 1964 Rules of Court
incontestably countermanded the Lim Toco ruling.
Section 2, Rule 41 therein expressly stated that "[a]
party who has been declared in default may
likewise appeal from the judgment rendered against
him as contrary to the evidence or to the law, even
if no petition for relief to set aside the order of
default has been presented by him in accordance
with Rule 38."22 By clearly specifying that the right
to appeal was available even if no petition for relief
to set aside the order of default had been filed, the
then fresh Rules clearly rendered the Lim Toco
ruling as moot.
Another provision in the 1964 Rules concerning the
effect of an order of default acknowledged that "a
party declared in default shall not be entitled to
notice of subsequent proceedings, nor to take part
in the trial."23 Though it might be argued that
appellate proceedings fall part of "the trial" since
there is no final termination of the case as of then,
the clear intent of the 1964 Rules was to
nonetheless allow the defaulted defendant to file an
appeal from the trial court decision. Indeed,
jurisprudence applying the 1964 Rules was
unhesitant to affirm a defaulted defendant’s right to
appeal, as guaranteed under Section 2 of Rule 41,
even as Lim Toco was not explicitly abandoned.
In the 1965 case of Antonio, et al. v. Jacinto,24 the
Court acknowledged that the prior necessity of a
ruling setting aside the order of default "however,
was changed by the Revised Rules of Court. Under
Rule 41, section 2, paragraph 3, a party who has
been declared in default may likewise appeal from
the judgment rendered against him as contrary to
the evidence or to the law, even if no petition for
relief to set aside the order of default has been
presented by him in accordance with Rule 38."25 It
was further qualified in Matute v. Court of
Appeals26 that the new availability of a defaulted
defendant’s right to appeal did not preclude "a
defendant who has been illegally declared in
default from pursuing a more speedy and
efficacious remedy, like a petition for certiorari to
have the judgment by default set aside as a
nullity."27
In Tanhu v. Ramolete,28 the Court cited with
approval the commentaries of Chief Justice Moran,
expressing the reformulated doctrine that following
Lim Toco, a defaulted defendant "cannot adduce
evidence; nor can he be heard at the final hearing,
although [under Section 2, Rule 41,] he may appeal
the judgment rendered against him on the
merits."29
Thus, for around thirty-odd years, there was no
cause to doubt that a defaulted defendant had the
right to appeal the adverse decision of the trial
court even without seeking to set aside the order of
default. Then, in 1997, the Rules of Civil Procedure
were amended, providing for a new Section 2, Rule
41. The new provision reads:
SECTION 1. Subject of appeal.—An appeal may be
taken from a judgment or final order that completely
disposes of the case, or of a particular matter
therein when declared by these Rules to be
appealable.
No appeal may be taken from:
(a) An order denying a motion for new trial or
reconsideration;
(b) An order denying a petition for relief or any
similar motion seeking relief from judgment;
(c) An interlocutory order;
(d) An order disallowing or dismissing an appeal;
(e) An order denying a motion to set aside a
judgment by consent, confession or compromise on
the ground of fraud, mistake or duress, or any other
ground vitiating consent;
(f) An order of execution;
(g) A judgment or final order for or against or one or
more of several parties or in separate claims,
counterclaims, cross-claims and third-party
complaints, while the main case is pending, unless
the court allows an appeal therefrom; and
(h) An order dismissing an action without prejudice.
In all the above instances where the judgment or
final order is not appealable, the aggrieved party
may file an appropriate special civil action under
Rule 65.
Evidently, the prior warrant that a defaulted
defendant had the right to appeal was removed
from Section 2, Rule 41. On the other hand,
Section 3 of Rule 9 of the 1997 Rules incorporated
the particular effects on the parties of an order of
default:
Sec. 3. Default; declaration of.—If the defending
party fails to answer within the time allowed
therefor, the court shall, upon motion of the
claiming party with notice to the defending party,
and proof of such failure, declare the defending
party in default. Thereupon, the court shall proceed
to render judgment granting the claimant such relief
as his pleading may warrant, unless the court in its
discretion requires the claimant to submit evidence.
Such reception of evidence may be delegated to
the clerk of court.
(a) Effect of order of default.—A party in default
shall be entitled to notice of subsequent
proceedings but shall not take part in the trial.
(b) Relief from order of default.—A party declared
in default may any time after notice thereof and
before judgment file a motion under oath to set
aside the order of default upon proper showing that
his failure to answer was due to fraud, accident,
mistake or excusable negligence and that he has a
meritorious defense. In such case, the order of
default may be set aside on such terms and
conditions as the judge may impose in the interest
of justice.
(c) Effect of partial default.—When a pleading
asserting a claim states a common cause of action
against several defending parties, some of whom
answer and the others fail to do so, the court shall
try the case against all upon the answers thus filed
and render judgment upon the evidence presented.
(d) Extent of relief to be awarded.—A judgment
rendered against a party in default shall not exceed
the amount or be different in kind from that prayed
for nor award unliquidated damages.
xxx
It cannot be escaped that the old provision
expressly guaranteeing the right of a defendant
declared in default to appeal the adverse decision
was not replicated in the 1997 Rules of Civil
Procedure. Should this be taken as a sign that
under the 1997 Rules a defaulted defendant no
longer has the right to appeal the trial court
decision, or that the Lim Toco doctrine has been
reinstated?
If post-1997 jurisprudence and the published
commentaries to the 1997 Rules were taken as an
indication, the answer should be in the negative.
The right of a defaulted defendant to appeal
remains extant.
By 1997, the doctrinal rule concerning the remedies
of a party declared in default had evolved into a
fairly comprehensive restatement as offered in Lina
v. Court of Appeals:30
a) The defendant in default may, at any time after
discovery thereof and before judgment, file a
motion, under oath, to set aside the order of default
on the ground that his failure to answer was due to
fraud, accident, mistake or excusable neglect, and
that he has meritorious defenses; (Sec 3, Rule 18)
b) If the judgment has already been rendered when
the defendant discovered the default, but before the
same has become final and executory, he may file
a motion for new trial under Section 1(a) of Rule 37;
c) If the defendant discovered the default after the
judgment has become final and executory, he may
file a petition for relief under Section 2 of Rule 38;
and
d) He may also appeal from the judgment rendered
against him as contrary to the evidence or to the
law, even if no petition to set aside the order of
default has been presented by him. (Sec. 2, Rule
41)31
The fourth remedy, that of appeal, is anchored on
Section 2, Rule 41 of the 1964 Rules. Yet even
after that provision’s deletion under the 1997 Rules,
the Court did not hesitate to expressly rely again on
the Lina doctrine, including the pronouncement that
a defaulted defendant may appeal from the
judgment rendered against him. This can be seen
in the cases of Indiana Aerospace University v.
Commission on Higher Education,32 Tan v.
Dumarpa,33 and Crisologo v. Globe Telecom,
Inc.34
Annotated textbooks on the 1997 Rules of Civil
Procedure similarly acknowledge that even under
the new rules, a defaulted defendant retains the
right to appeal as previously confirmed under the
old Section 2, Rule 41. In his textbook on Civil
Procedure, Justice Francisco answers the question
"What are the remedies available to a defending
party in default?" with a reiteration of the Lina
doctrine, including the remedy that a defaulted
defendant "may also appeal from the judgment
rendered against him as contrary to the evidence or
to the law, even if no petition to set aside the order
of default has been presented by him."35 Justice
Regalado also restates the Lina rule in his textbook
on Civil Procedure, opining that the remedies
enumerated therein, even if under the former Rules
of Procedure, "would hold true under the present
amended Rules."36 Former Court of Appeals
Justice Herrerra likewise reiterates the Lina
doctrine, though with the caveat that an appeal
from an order denying a petition for relief from
judgment was no longer appealable under Section
1, Rule 41 of the 1997 Rules.37 Herrera further
adds:
Section 2, paragraph [2] of the former Rule 41,
which allows an appeal from a denial of a petition
for relief, was deleted from the present Rule, and
confined appeals to cases from a final judgment or
final order that completely disposes of the case, or
of a particular matter therein, when declared by
these rules to be appealable. A judgment by default
may be considered as one that completely
disposes of the case.38
We are hard-pressed to find a published view that
the enactment of the 1997 Rules of Civil Procedure
accordingly withdrew the right, previously granted
under the 1964 Rules, of a defaulted defendant to
appeal the judgment by default against him. Neither
is there any provision under the 1997 Rules which
expressly denies the defaulted defendant such a
right. If it is perplexing why the 1997 Rules deleted
the previous authorization under the old Section 2,
Rule 41 (on subject of appeal), it is perhaps worth
noting that its counterpart provision in the 1997
Rules, now Section 1, Rule 41, is different in
orientation even as it also covers "subject of
appeal." Unlike in the old provision, the bulk of the
new provision is devoted to enumerating the
various rulings from which no appeal may be taken,
and nowhere therein is a judgment by default
included. A declaration therein that a defaulted
defendant may still appeal the judgment by default
would have seemed out of place.
Yet even if it were to assume the doubtful
proposition that this contested right of appeal finds
no anchor in the 1997 Rules, the doctrine still
exists, applying the principle of stare decisis.
Jurisprudence applying the 1997 Rules has
continued to acknowledge the Lina doctrine which
embodies this right to appeal as among the
remedies of a defendant, and no argument in this
petition persuades the Court to rule otherwise.
In Rural Bank of Sta. Catalina v. Land Bank of the
Philippines,39 the Court, through Justice Callejo,
Sr., again provided a comprehensive restatement
of the remedies of the defending party declared in
default, which we adopt for purposes of this
decision:
It bears stressing that a defending party declared in
default loses his standing in court and his right to
adduce evidence and to present his defense. He,
however, has the right to appeal from the judgment
by default and assail said judgment on the ground,
inter alia, that the amount of the judgment is
excessive or is different in kind from that prayed for,
or that the plaintiff failed to prove the material
allegations of his complaint, or that the decision is
contrary to law. Such party declared in default is
proscribed from seeking a modification or reversal
of the assailed decision on the basis of the
evidence submitted by him in the Court of Appeals,
for if it were otherwise, he would thereby be
allowed to regain his right to adduce evidence, a
right which he lost in the trial court when he was
declared in default, and which he failed to have
vacated. In this case, the petitioner sought the
modification of the decision of the trial court based
on the evidence submitted by it only in the Court of
Appeals.40
If it cannot be made any clearer, we hold that a
defendant party declared in default retains the right
to appeal from the judgment by default on the
ground that the plaintiff failed to prove the material
allegations of the complaint, or that the decision is
contrary to law, even without need of the prior filing
of a motion to set aside the order of default. We
reaffirm that the Lim Toco doctrine, denying such
right to appeal unless the order of default has been
set aside, was no longer controlling in this
jurisdiction upon the effectivity of the 1964 Rules of
Court, and up to this day.
Turning to the other issues, we affirm the
conclusion of the Court of Appeals that Martinez
failed to adduce the evidence needed to secure the
registration of the subject lots in his name.
It should be noted that the OSG, in appealing the
case to the Court of Appeals, did not introduce any
new evidence, but simply pointed to the
insufficiency of the evidence presented by Martinez
before the trial court. The Court of Appeals was
careful to point out that the case against Martinez
was established not by the OSG’s evidence, but by
petitioner’s own insufficient evidence. We adopt
with approval the following findings arrived at by the
Court of Appeals, thus:
The burden of proof in land registration cases is
incumbent on the applicant who must show that he
is the real and absolute owner in fee simple of the
land applied for. Unless the applicant succeeds in
showing by clear and convincing evidence that the
property involved was acquired by him or his
ancestors by any of the means provided for the
proper acquisition of public lands, the rule is settled
that the property must be held to be a part of the Q Before Julian Martinez and Juan Martinez sold
public domain. The applicant must, therefore, these parcels of land before you took possession
present competent and persuasive proof to who were the owners and in possession of these?
substantiate his claim. He may not rely on general
statements, or mere conclusions of law other than
factual evidence of possession and title. A Hilarion Martinez, the father of my predecessors-
in-interest and also my grandfather.

Considered in the light of the opposition filed by the

Office of the Solicitor General, we find the evidence xxxx
adduced by appellee, on the whole, insufficient to
support the registration of the subject parcels in his
name. To prove the provenance of the land, for Court:
one, all that appellee proffered by way of oral
evidence is the following cursory testimony during
his direct examination, viz: Q Of your own knowledge[,] where [sic] did your
grandfather Hilarion Martinez acquire these lands?

xxxx
A According to my grandfather he bought that land
from a certain Juan Casano in the year 1870’s[,] I
Q You mentioned that you are the owner of these think.
three (3) parcels of land. How did you begin the
ownership of the same?
xxxx

A I bought it from my uncles Julian Martinez and

Juan Martinez. Q By the way[,] when did your grandfather Hilarion
Martinez die?

xxxx
A Either in 1920 or 1921.

Q x x x x Who took possession of these parcels of

land from then on? Q Since you said your immediate predecessors-in-
interest Julian Martinez and Juan Martinez inherited
the same from your grandfather. Can you say it the
A I took possession, sir same that your predecessors-in-interest were the
owners and possessors of the same since 1921 up
to the time they sold the land to you in 1952?
Q As owner?

A Yes, sir.
A Yes, as owner.

xxxx
Q Up to the present who is in possession as owner
of these parcels of land?
In the dreary tradition of most land registration
cases, appellee has apparently taken the absence
A I took possession. of representation for appellant at the hearing of his
petition as license to be perfunctory in the
presentation of his evidence. Actual possession of WHEREFORE, the petition is DISMISSED. Costs
land, however, consists in the manifestation of acts against petitioner.
of dominion over it of such a nature as a party
would naturally exercise over his own property. It is
not enough for an applicant to declare himself or SO ORDERED.
his predecessors-in-interest the possessors and
owners of the land for which registration is sought.
He must present specific acts of ownership to
substantiate the claim and cannot just offer general
statements which are mere conclusions of law
requiring evidentiary support and substantiation.

The record shows that appellee did not fare any

better with the documentary evidence he adduced
before the trial court. The October 20, 1952 Deed
of Sale by which appellee claims to have
purchased the subject parcels from his uncle,
Julian Martinez, was not translated from the
vernacular in which it was executed and, by said
token, was inadmissible in evidence. Having
submitted a white print copy of the survey plan for
Lot Nos. 464-A and 464-B, appellee also submitted
the tracing cloth plan for Lot No. 370 which does
not, however, appear to be approved by the
Director of Lands. In much the same manner that
the submission of the original tracing cloth plan is a
mandatory statutory requirement which cannot be
waived, the rule is settled that a survey plan not
approved by the Director of Lands is not admissible
in evidence.41

These findings of the Court of Appeals, arrived at

after a sufficiently extensive evaluation of the
evidence, stand in contrast to that contained in the
RTC decision, encapsulated in a one-paragraph
précis of the factual allegations of Martinez
concerning how he acquired possession of the
subject properties. The Court of Appeals, of course,
is an appropriate trier of facts, and a comparison
between the findings of fact of the Court of Appeals
and that of the RTC clearly demonstrates that it
was the appellate court which reached a more
thorough and considered evaluation of the
evidence.

As correctly held by the Court of Appeals, the

burden of proof expected of the petitioner in a land
registration case has not been matched in this
case.
G.R. No. 150629 June 30, 2004
RENATO TICHANGCO; ROMEO RAMOS, for
himself and the SAMAHANG
MAGKAKAPITBAHAY NG DULONG
GAGALANGIN; ANTONIO PASCO, for himself and
the SAMAHANG MAGKAKAPITBAHAY NG
BARANGAY 186; CELSO SANTIAGO, for himself
and the SAMAHANG NAGKAKAISANG
DAMDAMIN NG SUNOG APOG; and ARTURO
BALLO, for himself and the FEDERATION KAPIT-
BISIG HOMEOWNERS ASSOCIATION, INC.,
petitioners,
vs.
The Honorable ALFREDO ENRIQUEZ,
Administrator, Land Registration Authority; The
LAND REGISTRATION AUTHORITY; and/or The
SUCCESSORS-IN-INTEREST OF SEVERINO
MANOTOK, BENITA MANOTOK, AMBROSIO
MANOTOK and/or RICARDO MANOTOK, namely,
PATRICIA L. TIONGSON and/or ELISA V.
MANOTOK, respondents.
DECISION
PANGANIBAN, J.:
Unless contrary substantial evidence is presented
in the proper proceedings by the proper party, a
Torrens certificate of title cannot be overturned.
The Torrens system rests on stability -- on the
assurance that once ownership is recorded in the
proper registry, owners can rest easy on their
properties.
The Case
Before us is a Petition for Review1 challenging the
August 8, 2001 Decision2 and the October 29,
2002 Resolution3 of the Court of Appeals (CA) in
CA-GR SP No. 54648. The assailed Decision
affirmed the findings of the then Land Registration
Authority (LRA) administrator, Alfredo Enriquez,
that there were no legal grounds to initiate
appropriate proceedings to nullify Original
Certificate of Title (OCT) Nos. 820 and 7477 and
the subsequent titles derived therefrom: Transfer
Certificate of Title (TCT) Nos. 128240 to 128249,
inclusive, and TCT No. 128270 -- all covering
parcels of land in Tondo, Manila registered in the
names of private respondents.
The challenged Resolution denied reconsideration.
The Facts
The antecedents are summarized in the Decision of
the CA as follows:
Sometime in March 1996, Renato Tichangco, in
behalf of the homeowners’ association of
Gagalangin and Sunog Apog (Tondo, Manila), who
are occupants of various parcels of land in
Gagalangin, Tondo, filed a land title verification
request with the Land Registration Authority (LRA),
docketed as LTV No. 96-0376. The verification
request was prompted by an alleged claim of
ownership of a certain Manotok over the land which
petitioners occupy, and which they perceive as
public land, being portions of the dried or filled bed
of Estero de Maypajo and Sunog Apog area, and
which allegedly have already been identified as
Area for Priority Development under the Urban
Poor Law. Manotok’s claim is anchored upon
Survey Plan Psd-25141, allegedly covering Lots
62-B and 69, Blk. 2918 of the Manila Cadastre,
dated 22 December 1948 and Survey Plan (LRC)
Psd-44026, allegedly covering Lots 86-A to C and
80-C-1 to 3, also of the Manila Cadastre. On 23
October 1996, the LRA-Task Force issued a report
stating, among others, that "(a)s appearing on the
survey plan (i.e., plan Psd-25141), Lots 62 and 69
were bounded among others by ESTERO DE
MAYPAJO and Lot 55-C, Psd-11746." The task
force also found that Psd-25141 and (LRC) Psd-
44026 overlap with other surveys. Moreover, it
found that "(t)he Lands Management Bureau x x x
has no record showing that Lot 55-C, Psd-11746
was issued patent in favor of some private
persons," and that "(v)erification on MIS No. 1955
for Manila, in the file with this Authority, disclosed
no previous plotting of a title over ‘Lot 55-C, Psd-
11746’ located near the Estero de Maypajo, Tondo,
Manila and appearing as boundary in survey plan
Psd-25141 of Ricardo Manotok."
Subsequently, the Estero de Sunog Apog
homeowners, thru City Councilor Danilo Varona,
2nd District, Tondo, Manila, made similar requests action for the nullification of the assailed certificates
for verification of TCTs Nos. 12870, and 128240 to of title, public respondent ratiocinated that:
128249, inclusive, with the LRA, docketed as LTV-
98-1222. The LRA-Task Force found that "[s]ubject
titles covered ten (10) lots under (LRC) Pcs-14840, "Upon thorough examination of Lots 55-A (28,525
which were consolidation-subdivision of Psd-11746 sqm.), 55-B (28,525.4 sqm.) and 55-C (15,377.8
and (LRC) Psd-7815." TCT Nos. 128240 to 128249 sqm.) of Plan 11746 covered by TCTs Nos. 49286
had its origin from two Original Certificate of Title to 49288, respectively, which emanated from OCT
(OCT) No. 820, issued pursuant to Decree of No. 820, the following were established:
Registration No. 1424 (31 January 1905),
Expediente Number 302. These consist of Lots 1 to
[10] of the consolidation-subdivision plan (LRC)
1. That the adjoining on the S.W., N.W. of Lot 55-A,
Pcs-14840, portions of the consolidation of Lots 55-
Block 2918, of the subdivision plan Psd-11746,
B and 55-C, Block 2918, Psd-11746, B, (LRC) Psd-
covering TCT No. 42986 are by Lots 56, 70, Block
7815, LRC Record No. 302 & N-1555. TCT No.
2918, Manila Cadastre and Sapang Visita and by
128270, on the other hand, had its origin from OCT
Sunog Apog, respectively;
No. 520 (sic) and 7477, issued pursuant to Decree
Nos. 1424 and N-[23419], LRC Record No[s. 302,]
N-1555. This lot is more particularly identified as
Lot 10 of the consolidation-subdivision plan (LRC) 2. That the adjoining on the West of Lot 55-B, Block
Pcs-14686, portion of the consolidated Lots A, 2918 of the subdivision plan Psd-11746, covering
(LRC) Psd-7815, Psu-117259 & 55-A, Blk. 2918, TCT No. 42987 is by Estero de Sapang (sic) Apog;
Psd-11746, LRC Cad. No. 302 & Rec. No. N-1555.
Moreover, the task force found that "(i)n plotting,
based on the Manila Cadastral Map, surveys (LRC) 3. That the adjoining N.E., N.W. of Lot 55-C, Block
Pcs-14686 and (LRC) Pcs-14840, of the above 2918 of the subdivision plan Psd-11746, covering
subjects, have encroached: TCT No. 49288 are by Estero de Maypajo and
Estero de Sunog Apog, respectively;

1. Over the Estero de Sunog Apog by an estimated

30 meters; and 4. That it was mentioned on the decision dated
April 25, 1955 that the parcel of land Psu-117186
and Psu-117259 decreed under N-23419, issued in
2. Over all of the Sapang Visita." the name of Severino Manotoc, are the adjoining
properties of Lot 55-A, 55-B and 55-C, Block No.
2918 of the subdivision plan Psd-11746, covered
by TCTs Nos. 49286, 24542 and 24522,
The task force hence referred the matter to the
respectively, and was further mentioned in the said
LRA-OSG Task Force for appropriate action.
decision that the said land were really acquired by
accretion as the Sapang Visita is no longer
navigable and Estero de Maypajo and Sapang (sic)
Petitioners sought the assistance of the Office of Apog Creek is generally dried[;]
the Solicitor General (OSG) for legal action on
OCTs Nos. 820 and 7477. On 18 February 1999,
the OSG wrote a letter to public respondent for a
5. That in the course of examining the subdivision
review and evaluation of the records on the
plan (LRC) Psd-7815, it appears that the adjoining
issuance of TCTs Nos. 128240 to 128249, and
on the N.E. and S.W. are Lots 1 and 3 of Plan Psu-
128270 covering parcels of land in Gagalangin,
174649 and Psu-11259 in the name of Severino
Tondo, Manila, docketed as Task Force TM No. 98-
Manotoc and beyond of which are Estero de
0087. In reply, public respondent issued the
Maypajo (10 to 12 meters wide), Estero de Sunog
assailed "final resolution", stating, inter alia, that the
Apog (20 meters wide) and Sapang Visita,
parcels of land described in TCTs Nos. 128240 to
respectively.
128249 were originally registered on 09 January
1907 in the Manila Registry of Deeds as OCT No.
820 pursuant to Decree No. 1424 in Record No.
702 [sic]. In finding no legal grounds to initiate an "On the other hand, Lot 10 of Plan (LRC) Pcs-
14684, ‘being a portion of the consolidation of Lots
A, (LRC) Psd-7815, Psu-117259 & 55-A, Blk. 2918,
Psd-11746’, was originally registered in Manila
Registry of Deeds as OCT No. 820 (erroneously
typed therein as OCT No. ‘520’) and OCT No.
7477. In other words, Lot 10 is the result of the
earlier consolidation and subdivision of certain
parcels of land covered by certificates of title which
emanated from OCT No. 820 and OCT No. 7477,
as evidenced by Plan (LRC) Pcs- 14648 (approved
by LRA on 19 December 1972), Plan (LRC) Psd-
7815 (approved by LRA on 24 July 1969), Plan
Psu-117259 (appears to have been approved by
the Bureau of Lands on 11 February 1936).
"OCT No. 7477 was issued by the Manila Register
of Deeds in 1955 pursuant to Decree No. N-23419
in Land Registration Case No. N-1-LRC Record No.
N-1555 in favor of Severino Manotok, covering two
(2) parcels of land described in Plan Psu-117186
(8,838 sq. meters) and Plan Psu-117259 (1,689.30
sq. meters). Decree No. N-23419 was issued by
this Authority on 18 June 1955 pursuant to the
Decision dated 25 A[pril] 1955 of former Judge
Bienvenido A. Tan of the then Court of First
Instance of Manila in GLRO Record No. 1555
(Severino Manotok, applicant vs. The Director of
Lands, Oppositor), the pertinent portions of which
read:
‘It is conceded that the two parcels of land are
agricultural in nature, and the only question to be
decided is whether they are public or private lands.
The decision of the Court of Appeals raises no
other question but the following:
‘Applicant likewise contended that he, his coheirs
and his late father, (Severino), had always believed
that the land, sought for registration was a part, and
in fact included, in their old registered property.
Such contention could have been properly
substantiated by the certificate of title covering the
old property and the tax declaration for assessment
purposes, showing whether it was bounded by the
creeks now cited as boundaries of the Lot in
question. But they were not presented as evidence.
‘Now that the said certificates of title were
presented together with the memorandum of the
Commissioner of Land Registration, the contention
of the applicant is duly corroborated. The parcels of
land sought to be registered are not included in the
titles issued; but are adjoining the lots covered by
said certificates of title. There is no question that
the said parcels of land have been in the actual
possession of the applicant and that his possession
as well as that of his predecessors have been
open, exclusive, continuous, adverse and in the
concept of owner for the number of years required
by law as the Sapang Visita is no longer navigable
and its bed is dry, and that the Sunog Apog Creek
is generally dried up due to the ordinary course of
its current. The fact that his physical possession of
these two parcels of land for the number of years
required cannot be denied, and has not been
denied or contradicted by any other evidence
submitted by the oppositor. As well remarked by
the Court of Appeals in its decision, the oppositor
by a mere inference would make us believe that the
applicant or his predecessors could not have
occupied these Lots from time immemorial, as
alleged. They got flooded at high tide, and only on
Lot B does bacaoan grow and sparsely.’
"Based on the said decision, it would appear that
the parcels of land covered by OCT No. 7477 were
formerly part of Estero de Maypajo, Sapang Visita
and Estero de Sunog Apog which had dried up.
"Accordingly, and considering that the dried up
portion of the esteros were the subject of regular
land registration proceedings; and that a period of
one (1) year form the decree of registration and
original certificate of title had already lapsed without
said decrees being controverted by any adverse
party within the reglementary period, the certificate
of title become incontrovertible. (Sec. 32, PD 1529;
Pamintuan vs. San Agustin, 343 Phil. 558)
"As narrated above, the issuance of TCTs Nos.
128240 to 128249, which emanated from OCT No.
820, are supported by the records of the Manila
Registry of Deeds."4
Ruling of the Court of Appeals
The CA held that OCT No. 820 had been issued on
January 7, 1907, not on January 31, 1905, as
petitioners claim. True, Decree No. 1424 had been
issued on January 31, 1905, but it was entered or
transcribed in the registration book of the Register
of Deeds only in 1907. Pursuant to Section 42 of
Act No. 4965 (otherwise known as the Land
Registration Act), OCT No. 820 took effect on
January 7, 1907, the date of the transcription of the
decree. The record number of Decree No. 1424,
however, should be 786. Further, the appellate
court held that an OCT was conclusive on all
matters stated therein. Hence, the fact that the
copy of Decree No. 1424 was no longer extant in
the records of the LRA was of no moment.
The CA also held that OCT No. 7477 was already
incontrovertible, because it had been the subject of
regular land registration proceedings. More than
one year after its registration, the decree was not
controverted by any adverse party.
In their Motion for Reconsideration, petitioners
raised the minority of the land registration
applicants -- Severino, Benita, Ambrosio and
Ricardo, all surnamed Manotok -- as an additional
ground to nullify OCT No. 820. Ostensibly, they had
filed their application without the assistance of a
legally appointed guardian. The CA, however,
denied petitioners’ Motion for Reconsideration for
lack of merit.6
Hence, this present recourse entitled by petitioners
as a "Petition for Certiorari under Rule 65," filed on
November 20, 2001.
On December 10, 2001, this Court (Third Division)
dismissed the Petition, because certiorari was not a
substitute for the lost remedy of appeal.7
On February 6, 2002, the Court -- upon
reconsideration -- deemed the Petition as one filed
under Rule 45 and required respondents to
comment thereon.8 After all, it had been submitted
within the 15-day period required by Rule 45.
Issues
Petitioners raise the following issues:
"A. With respect to OCT No. 820
(10) Did respondent Court of Appeals commit grave
abuse of discretion tantamount to or in excess of
jurisdiction when it failed to declare null and void
OCT No. 820, despite the following undisputed
facts:
(1) OCT No. 820 was issued in the name of
[m]inors Severino, Benita, Ambrosio and Ricardo,
all surnamed Manotok, aged 17, 14, 12 and 10,
without a court appointed guardian; and
(2) Decree of Registration No. 1424 of January 31,
1905 (which led to the issuance of OCT No. 820)
was issued before completion of the magnetic
survey of the parcels of land covered by OCT No.
820 on November 15, 1906.
(11) Did respondent Court of Appeals violate
Section 14, Article VIII, 1987 Constitution when it
omitted in its narration of facts that the Magnetic
Survey of the parcels of land covered by OCT No.
820 was made and completed only on November
15, 1906?
"B. With respect to OCT No. 7477
(12) Did respondent Court of Appeals commit grave
abuse of discretion tantamount to or in excess of
jurisdiction when it failed to declare OCT No. 7477
null and void despite the undisputed and conclusive
fact that the parcels of land it covers were formerly
part of the Estero de Maypajo, Estero de Sunog
Apog and Sapang Visita, or inalienable lands of the
public domain intended for public use?"9
In simpler and more understandable language, the
issues raised by petitioners are as follows: 1)
whether OCT Nos. 820 and 7477 are valid; and 2)
whether the CA complied with Section 14 of Article
VIII of the 1987 Constitution.
The Court’s Ruling
The Petition has no merit.
Preliminary Issue:
Propriety of Petition for Certiorari Under Rule 65
At the outset, this Court notes that petitioners
erroneously anchor their Petition on Rule 65. Their
remedy should be based on Rule 45, because they
are appealing a final disposition of the Court of
Appeals.
"Certiorari under Rule 65 is a remedy narrow in
scope and inflexible in character. It is not a general
utility tool in the legal workshop."10 It involves a
correction of errors of jurisdiction only, or grave
abuse of discretion amounting to lack or excess of
jurisdiction. It is not a substitute for an appeal,
when the latter remedy is available.11
Indubitably, the CA had jurisdiction over petitioners’
appeal from the Resolution of the LRA and
rendered the assailed Decision in the proper
exercise of that jurisdiction. Under the
circumstances, Rule 45 was the plain, speedy and
adequate remedy in the ordinary course of law.
Since the Petition was filed within the 15-day
period, in the interest of justice it shall be treated as
one for review under Rule 45, and not for certiorari
under Rule 65.
First Issue:
Validity of OCT Nos. 820 and 7477
The fundamental purpose of the Land Registration
Law (Act No. 496, now PD 1529) is to finally settle
title to real property12 in order to preempt any
question on the legality of the title -- except claims
that were noted on the certificate itself at the time of
registration or those that arose subsequent
thereto.13 Consequently, once the title is registered
under the said law, owners can rest secure on their
ownership and possession.
The proceedings for the judicial registration of land
under the Torrens system involve more
consequences than an ordinary action would.14
Once a decree of registration is made under the
Torrens system, and the reglementary period has
passed within which the decree may be questioned,
the title is perfected and cannot be collaterally
questioned later on.15
OCT No. 820
In assailing the validity of OCT No. 820, petitioners
capitalize on the plain statement written on the face
of the Certificate that the magnetic survey was
completed only on November 15, 1906, while the
decree had been issued earlier on January 31,
1905. They insist that the land registration court
acquired no jurisdiction over the land that was the
subject of the registration proceedings; and that --
as no survey had been made, completed and
submitted to it -- therefore, the court had no
authority to issue the decree.
We are not persuaded. Petitioners erroneously and
baselessly speculate that the magnetic survey of
the land was the only survey conducted, or that no
other plan was submitted to the registration court,
or that the land was not surveyed at all. Mere
conclusions and speculations are not sufficient to
defeat or impair the title of private respondents.
OCT No. 820 was issued more than 90 years ago
in 1907, but the original Certificate is still existing in
the records of the Register of Deeds. Having been
issued under the Torrens system, the original
Certificate enjoys a presumption of validity.16
Correlatively, it also carries a strong presumption
that the provisions of the law governing the
registration of land under the Torrens system have
duly been followed.
The law applicable at the time of registration of
OCT No. 820, Act No. 496, provides thus:
"SEC. 26. The applicant shall file with the
application a plan of the land, and an original
muniments of title within his control mentioned in
the schedule of documents, such original
muniments to be produced before the court at the
hearing when required. When an application is
dismissed or discontinued, the applicant may, with
the consent of the court, withdraw such original
muniments of title."
"SEC. 36. x x x. The court may in any case before
decree require a survey to be made for the purpose
of determining boundaries, and may order durable
bounds to be set, and referred to in the application,
by amendment. x x x."
"SEC. 40. Every decree of registration shall bear
the day of the year, hour, and minute of its entry,
and shall be signed by the clerk. x x x. It shall
contain a description of the land as finally
determined by the court, x x x."
Based on the foregoing, an original survey plan
other than that completed in 1906 was presumably
submitted to the land registration court prior to the
issuance of the decree. In his Comment,17 then
LRA Director Benjamin A. Flestado quoted a
portion of the Decision in Land Registration Case
No. N-1-LRC, Record No. N-1555, pertaining to the
history of the two lots embraced in OCT No. 820.
The Decision stated that a survey of those lots had
been undertaken by American surveyors on or
before 1905. That Decision is certainly more
reliable than the plain assertions of petitioners, who
obviously had no personal knowledge of the
original land registration proceedings.
The completion of the magnetic survey does not
discount the existence and the submission of a
prior survey plan. Relevant is the Court’s ruling in
Francisco v. Borja,18 from which we quote:
"x x x. When surveys under the old system are not
correct and differ from the result obtained by the
modern and more scientific way of surveying,
corrections of errors contained in the old plan
should be permitted by the court so long as the
boundaries laid down in the description as
enclosing the land and indicating its limits are not
changed. If they are not allowed in the expediente
of the case, no other remedy may be resorted to by
which errors or imperfections in the old plan can be
cured and to permit a decree based on such
erroneous survey to stand would be absurd. The
decree is not reopened and thereby modified. It is
the new plan that is made to conform to the decree,
which procedure should be allowed and even
encouraged in these Islands where, as court
records show, many certificates of title are still
based on the old and highly defective surveys. x x
x."19
From the above, it is clear that a new survey may
be conducted to conform to a decree, even after it
has been issued.
In the same Comment, Director Flestado stated
that Decree No. 1424, issued before the Second
World War, had either been lost or destroyed
during that war. Thus, it could no longer be the
basis for determining which parcels of land were
covered by the decree and on what date they had
originally been surveyed.20
At any rate, by legal presumption, public officers
are deemed to have regularly performed their
official duties. Thus, the proceedings for land
registration that led to the issuance of OCT No. 820
are presumed to have regularly and properly been
conducted. To overturn this legal presumption
carelessly -- more than 90 years since the
termination of the case -- will not only endanger
judicial stability, but also violate the underlying
principle of the Torrens system. Indeed, to do so
would reduce the vaunted legal indefeasibility of
Torrens titles to meaningless verbiage.
In the same vein, we reject the contention of
petitioners that OCT No. 820 is null and void on the
ground that the applicants for land registration were
minors who were not assisted by a legal guardian.
They allege that while the names of the minor
applicants were contained in the title, no legal
guardian was named therein.
Again, petitioners rely on mere speculations and
conjectures, which cannot be sustained by this
Court. The mere failure to mention on the title the
names of the legal guardians does not necessarily
imply their absence during the actual land
registration proceedings. Besides, the absence of
legal guardians cannot be used as a basis for
depriving minors of benefits that have accrued to
them. If at all, it could be a ground to invalidate an
imprudent attack against their interest, not to
deprive them of any advantage or gain.
OCT No. 7477
It cannot be denied that OCT No. 7477 was the
subject of judicial proceedings in which the
government, represented by the director of lands,
amply participated. We quote hereunder pertinent
portions of the April 25, 1955 Decision of Judge
Bienvenido A. Tan of the then Court of First
Instance of Manila in GLRO (General Land
Registration Office) Record No. 1555, entitled
Severino Manotok, Applicant v. The Director of
Lands, Oppositor:
The Director of Lands filed an opposition alleging
that the parcels of land are public domain belonging
to the Republic of the Philippines and the applicant
has no title and possession under claim of
ownership since 26 July 1894; that on 18
November 1950, a decision was rendered denying
the application, which decision was appealed to the
Court of Appeals in due time; that eventually the
Decision dated 18 November 1950 was set aside
and a new trial was ordered; that pursuant to the
order of CA for new trial, the Chief Surveyor of LRC
was ordered "to determine whether or not said
parcels of land. . . are included in any certificate of
title of the applicant"; that in due time, the LRC
submitted a report stating that the lands "are not
included in any of the TCT Nos. 49286, 24542 and
24522 submitted to this Commission by the
applicant" and that said certificates of title "cover
Lots 55-A, 55-B and 55-C, Block No. 2918 of the
subdivision plan Psd-11746" which lots adjoin the
parcels of land subject matter of the instant case
(Record No. 1555); that during the trial, the
applicant testified that the lands in question are not
included in the land described in OCT No. 820; that
the said parcels of land were believed by him and
his predecessors as included therein "because on
the West the first parcel in OCT No. 820, the
boundary is the Sunog Apog Creek, and that on the
South, the boundary is the Sapang Visita"; that the
first parcel of land covered by OCT No. 820 was
subdivided into 3 Lots, known as Lots 55-a, 55-b
and 55-c, the last two Lots were bought by the
applicant from Ricardo Manotok (1 August 1946)
and Benita Manotok de Geronimo (17 September
1949) while Lot 55-a was adjudicated to him and
now covered by TCT No. 49286.
Public Land Surveyor Gregorio M. Aranzas testified
on cross examination that the shore-line of Sunog
Apog Creek "is traced by him by dotted lines on
Exh. A and marked as Exh. O" and the shoreline of
Sapang Visita "is that traced by him, also by a
dotted line, and marked as Exh. P on Exh. B"; that
while the applicant testified that the lands in
question "are now high and are dry even during
rainy season", no evidence to the contrary "has
been presented by the oppositor", thus it "only goes
to show that the lands in question are no longer
banks of the Sunog Apog Creek and the Sapang
Visita, as previously contended by the Director of
Lands."
That the parcels of land sought to be registered are
not included in titles already issued; that the lands
have been in the actual possession of the applicant
and his possession, as well as that of his
predecessors, "has been open, exclusive,
continuous, adverse and in the concept of owner
for the number of years required by law"; that
portions of said land "were really acquired by
accretions as the Sapang Visita is no longer
navigable and its bed is dry, and that the Sunog
Apog Creek is generally dried up due to the
ordinary course of its current"; that the herein
applicant sought registration of these land only in
1947 "as it was then that he discovered that the
lands were not included in the old title."21
As things stand now, private respondents have in
their favor a judicial pronouncement showing, prima
facie at least, that the expanded areas do not
belong to the public domain, and that they have
acquired rights of ownership over them by
accretion. In brief, they have overcome the
presumption that the land is within an unclassified
property of the public domain.22
While registration proceedings are judicial, they
involve more consequences than an ordinary action
would. The entire world, including the government,
is given a chance to participate in the case.
After the registration is completed and finalized in
the regular course, the rights of all adverse
claimants are foreclosed by the decree of
registration.23 The government itself assumes the
burden of giving notice to all parties. The very
purpose and intent of the law, however, would be
defeated by permitting persons to litigate again on
the basis of the same adverse claims in the
registration proceedings, after they have already
been given the opportunity to do so. For them to
raise the same questions anew would be to cast
doubt again upon the validity of the registered
title.24
Even assuming that petitioners may still institute an
action for the nullification of OCT No. 7477, the
review of a decree of registration under Section 38
of Act No. 496 (Section 32 of Presidential Decree
No. 1529) would prosper only upon proof that the
registration was procured through actual fraud.25
"The fraud must be actual and extrinsic, not merely
constructive or intrinsic; the evidence thereof must
be clear, convincing and more than merely
preponderant, because the proceedings which are
assailed as having been fraudulent are judicial
proceedings which by law, are presumed to have
been fair and regular."26
Actual fraud proceeds from an intentional deception
perpetrated through the misrepresentation or the
concealment of a material fact.27 The fraud is
extrinsic if it is employed to deprive parties of their
day in court and thus prevent them from asserting
their right to the property registered in the name of
the applicant. The fraud is intrinsic if that which is
alleged in the petition to set aside the decree is the
fraud involved in the same proceedings in which
the parties seeking relief have had ample
opportunity to assert their right, to attack the
document presented by the applicant for
registration, and to cross-examine the witnesses
who have testified thereon.28 Inquiry into this latter
kind of fraud is barred after the judgment of the
land registration court has become final.
Petitioners fail to convince the Court that the facts
they rely upon to justify a review of the decree in
question constitute actual extrinsic fraud.
Legal Standing
Finally, assuming arguendo that the validity of the
two titles may still be impugned, petitioners do not
have any legal standing to ask directly for their
annulment.
We can only infer the interest, supposedly in their
favor, from their allegation that they were
occupants of a portion of the parcel covered by
OCT Nos. 820 and 7477, which they perceive to be
public land. Petitioners were neither applicants nor
claimants of any preferential right over the
aforesaid disputed lands. Being too vague, too
highly speculative and uncertain, their presumed
interest does not suffice to constitute a legal right or
interest that would grant them standing in court.
"Legal standing has been defined as a personal
and substantial interest in the case, such that the
party has sustained or will sustain direct injury as a
result of the challenged act. Interest means a
material interest in issue that is affected by the
questioned act or instrument, as distinguished from
a mere incidental interest in the question
involved."29 Since the parcels they claim are
properties of the public domain, only the
government can bring an action to nullify the
TCTs.30
Second Issue:
Compliance with the Constitution
The first paragraph of Section 14 of Article VIII of
the Constitution mandates that "[n]o decision shall
be rendered by any court without expressing
therein clearly and distinctly the facts and the law
on which it is based."
Petitioners attack the validity of the assailed CA
Decision for its failure to mention that a magnetic
survey was completed only on November 15, 1906,
a fact that they perceived to be crucial to the
determination of the case. The untenability of such
grasping at straws can easily be demonstrated.

In its assailed Decision, the CA affirmed the
resolution of LRA Administrator Enriquez. The
appellate court deliberated on the law and the
reasons it relied upon in its determination of the
issues presented only after giving a detailed
account and assessment of the factual antecedents
found by respondent administrator.
Since the Decision of the CA contains the
necessary antecedents to warrant its conclusions,
the appellate court cannot be said to have withheld
"any specific finding of facts." What the law insists
on is that a decision state the "essential ultimate
facts." Indeed, the "mere failure to specify x x x the
contentions of the petitioner and the reasons for
refusing to believe them is not sufficient to hold the
same contrary to the requirements of the provision
of law and the Constitution."731
This constitutional provision deals with the
disposition of petitions for review and of motions for
reconsideration. In appellate courts, the rule does
not require any comprehensive statement of facts
or mention of the applicable law, but merely a
statement of the "legal basis" for denying due
course.32
Thus, there is sufficient compliance with the
constitutional requirement when a collegiate
appellate court, after deliberation, decides to deny
a motion; states that the questions raised are
factual or have already been passed upon; or cites
some other legal basis.33 There is no need to
explain fully the court’s denial, since the facts and
the law have already been laid out in the assailed
Decision.
WHEREFORE, the Petition is DENIED and the
assailed Decision and Resolution AFFIRMED.
Costs against petitioners.
SO ORDERED.
G.R. No. 140528 December 7, 2011
MARIA TORBELA, represented by her heirs,
namely: EULOGIO TOSINO, husband and children:
CLARO, MAXIMINO, CORNELIO, OLIVIA and
CALIXTA, all surnamed TOSINO, APOLONIA
TOSINO VDA. DE RAMIREZ and JULITA TOSINO
DEAN; PEDRO TORBELA, represented by his
heirs, namely: JOSE and DIONISIO, both
surnamed TORBELA; EUFROSINA TORBELA
ROSARIO, represented by her heirs, namely:
ESTEBAN T. ROSARIO, MANUEL T. ROSARIO,
ROMULO T. ROSARIO and ANDREA ROSARIO-
HADUCA; LEONILA TORBELA TAMIN;
FERNANDO TORBELA, represented by his heirs,
namely: SERGIO T. TORBELA, EUTROPIA T.
VELASCO, PILAR T. ZULUETA, CANDIDO T.
TORBELA, FLORENTINA T. TORBELA and
PANTALEON T. TORBELA; DOLORES TORBELA
TABLADA; LEONORA TORBELA AGUSTIN,
represented by her heirs, namely: PATRICIO,
SEGUNDO, CONSUELO and FELIX, all surnamed
AGUSTIN; and SEVERINA TORBELA
ILDEFONSO, Petitioners,
vs.
SPOUSES ANDRES T. ROSARIO and LENA
DUQUE-ROSARIO and BANCO FILIPINO
SAVINGS AND MORTGAGE BANK, Respondents.
x - - - - - - - - - - - - - - - - - - - - - - -x
G.R. No. 140553
LENA DUQUE-ROSARIO, Petitioner,
vs.
BANCO FILIPINO SAVINGS AND MORTGAGE
BANK, Respondent.
DECISION
LEONARDO-DE CASTRO, J.:
Presently before the Court are two consolidated
Petitions for Review on Certiorari under Rule 45 of
the Rules of Court, both assailing the Decision1
dated June 29, 1999 and Resolution2 dated
October 22, 1999 of the Court of Appeals in CA-
G.R. CV No. 39770.

The petitioners in G.R. No. 140528 are siblings
Maria Torbela,3 Pedro Torbela,4 Eufrosina Torbela
Rosario,5 Leonila Torbela Tamin, Fernando
Torbela,6 Dolores Torbela Tablada, Leonora
Torbela Agustin,7 and Severina Torbela Ildefonso
(Torbela siblings).
The petitioner in G.R. No. 140553 is Lena Duque-
Rosario (Duque-Rosario), who was married to, but
now legally separated from, Dr. Andres T. Rosario
(Dr. Rosario). Dr. Rosario is the son of Eufrosina
Torbela Rosario and the nephew of the other
Torbela siblings.
The controversy began with a parcel of land, with
an area of 374 square meters, located in Urdaneta
City, Pangasinan (Lot No. 356-A). It was originally
part of a larger parcel of land, known as Lot No.
356 of the Cadastral Survey of Urdaneta,
measuring 749 square meters, and covered by
Original Certificate of Title (OCT) No. 16676,8 in
the name of Valeriano Semilla (Valeriano), married
to Potenciana Acosta. Under unexplained
circumstances, Valeriano gave Lot No. 356-A to his
sister Marta Semilla, married to Eugenio Torbela
(spouses Torbela). Upon the deaths of the spouses
Torbela, Lot No. 356-A was adjudicated in equal
shares among their children, the Torbela siblings,
by virtue of a Deed of Extrajudicial Partition9 dated
December 3, 1962.
On December 12, 1964, the Torbela siblings
executed a Deed of Absolute Quitclaim10 over Lot
No. 356-A in favor of Dr. Rosario. According to the
said Deed, the Torbela siblings "for and in
consideration of the sum of NINE PESOS (₱9.00) x
x x transfer[red] and convey[ed] x x x unto the said
Andres T. Rosario, that undivided portion of
THREE HUNDRED SEVENTY-FOUR square
meters of that parcel of land embraced in Original
Certificate of Title No. 16676 of the land records of
Pangasinan x x x."11 Four days later, on December
16, 1964, OCT No. 16676 in Valeriano’s name was
partially cancelled as to Lot No. 356-A and TCT No.
5275112 was issued in Dr. Rosario’s name
covering the said property.
Another Deed of Absolute Quitclaim13 was
subsequently executed on December 28, 1964, this
time by Dr. Rosario, acknowledging that he only
borrowed Lot No. 356-A from the Torbela siblings
and was already returning the same to the latter for
₱1.00. The Deed stated:
That for and in consideration of the sum of one
peso (₱1.00), Philippine Currency and the fact that
I only borrowed the above described parcel of land
from MARIA TORBELA, married to Eulogio Tosino,
EUFROSINA TORBELA, married to Pedro Rosario,
PEDRO TORBELA, married to Petra Pagador,
LEONILA TORBELA, married to Fortunato Tamen,
FERNANDO TORBELA, married to Victoriana
Tablada, DOLORES TORBELA, widow, LEONORA
TORBELA, married to Matias Agustin and
SEVERINA TORBELA, married to Jorge Ildefonso,
x x x by these presents do hereby cede, transfer
and convey by way of this ABSOLUTE QUITCLAIM
unto the said Maria, Eufrosina, Pedro, Leonila,
Fernando, Dolores, Leonora and Severina, all
surnamed Torbela the parcel of land described
above.14 (Emphasis ours.)
The aforequoted Deed was notarized, but was not
immediately annotated on TCT No. 52751.
Following the issuance of TCT No. 52751, Dr.
Rosario obtained a loan from the Development
Bank of the Philippines (DBP) on February 21,
1965 in the sum of ₱70,200.00, secured by a
mortgage constituted on Lot No. 356-A. The
mortgage was annotated on TCT No. 52751 on
September 21, 1965 as Entry No. 243537.15 Dr.
Rosario used the proceeds of the loan for the
construction of improvements on Lot No. 356-A.
On May 16, 1967, Cornelio T. Tosino (Cornelio)
executed an Affidavit of Adverse Claim,16 on
behalf of the Torbela siblings. Cornelio deposed in
said Affidavit:
3. That ANDRES T. ROSARIO later quitclaimed his
rights in favor of the former owners by virtue of a
Deed of Absolute Quitclaim which he executed
before Notary Public Banaga, and entered in his
Notarial Registry as Dec. No. 43; Page No. 9; Book
No. I; Series of 1964;
4. That it is the desire of the parties, my aforestated
kins, to register ownership over the above-
described property or to perfect their title over the
same but their Deed could not be registered
because the registered owner now, ANDRES T.
ROSARIO mortgaged the property with the
DEVELOPMENT BANK OF THE PHILIPPINES, on
September 21, 1965, and for which reason, the
Title is still impounded and held by the said bank;
5. That pending payment of the obligation with the
DEVELOPMENT BANK OF THE PHILIPPINES or
redemption of the Title from said bank, I,
CORNELIO T. TOSINO, in behalf of my mother
MARIA TORBELA-TOSINO, and my Aunts
EUFROSINA TORBELA, LEONILA TORBELA-
TAMEN, DOLORES TORBELA, LEONORA
TORBELA-AGUSTIN, SEVERINA TORBELA-
ILDEFONSO, and my Uncles PEDRO TORBELA
and FERNANDO, also surnamed TORBELA, I
request the Register of Deeds of Pangasinan to
annotate their adverse claim at the back of Transfer
Certificate of Title No. 52751, based on the
annexed document, Deed of Absolute Quitclaim by
ANDRES T. ROSARIO, dated December 28, 1964,
marked as Annex "A" and made a part of this
Affidavit, and it is also requested that the
DEVELOPMENT BANK OF THE PHILIPPINES be
informed accordingly.17
The very next day, on May 17, 1967, the Torbela
siblings had Cornelio’s Affidavit of Adverse Claim
dated May 16, 1967 and Dr. Rosario’s Deed of
Absolute Quitclaim dated December 28, 1964
annotated on TCT No. 52751 as Entry Nos.
27447118 and 274472,19 respectively.
The construction of a four-storey building on Lot
No. 356-A was eventually completed. The building
was initially used as a hospital, but was later
converted to a commercial building. Part of the
building was leased to PT&T; and the rest to Mrs.
Andrea Rosario-Haduca, Dr. Rosario’s sister, who
operated the Rose Inn Hotel and Restaurant.
Dr. Rosario was able to fully pay his loan from
DBP. Under Entry No. 520197 on TCT No.
5275120 dated March 6, 1981, the mortgage
appearing under Entry No. 243537 was cancelled
per the Cancellation and Discharge of Mortgage
executed by DBP in favor of Dr. Rosario and
ratified before a notary public on July 11, 1980.
In the meantime, Dr. Rosario acquired another loan
from the Philippine National Bank (PNB) sometime
in 1979-1981. Records do not reveal though the
original amount of the loan from PNB, but the loan
agreement was amended on March 5, 1981 and
the loan amount was increased to ₱450,000.00.
The loan was secured by mortgages constituted on
the following properties: (1) Lot No. 356-A, covered
by TCT No. 52751 in Dr. Rosario’s name; (2) Lot
No. 4489, with an area of 1,862 square meters,
located in Dagupan City, Pangasinan, covered by
TCT No. 24832; and (3) Lot No. 5-F-8-C-2-B-2-A,
with an area of 1,001 square meters, located in
Nancayasan, Urdaneta, Pangasinan, covered by
TCT No. 104189.21 The amended loan agreement
and mortgage on Lot No. 356-A was annotated on
TCT No. 52751 on March 6, 1981 as Entry No.
520099.22
Five days later, on March 11, 1981, another
annotation, Entry No. 520469,23 was made on TCT
No. 52751, canceling the adverse claim on Lot No.
356-A under Entry Nos. 274471-274472, on the
basis of the Cancellation and Discharge of
Mortgage executed by Dr. Rosario on March 5,
1981. Entry No. 520469 consisted of both stamped
and handwritten portions, and exactly reads:
Entry No. 520469. Cancellation of Adverse Claim
executed by Andres Rosario in favor of same. The
incumbrance/mortgage appearing under Entry No.
274471-72 is now cancelled as per Cancellation
and Discharge of Mortgage Ratified before Notary
Public Mauro G. Meris on March 5, 1981: Doc. No.
215; Page No. 44; Book No. 1; Series Of 1981.
Lingayen, Pangasinan, 3-11, 19981
[Signed: Pedro dela Cruz]
Register of Deeds 24
On December 8, 1981, Dr. Rosario and his wife,
Duque-Rosario (spouses Rosario), acquired a third
loan in the amount of ₱1,200,000.00 from Banco
Filipino Savings and Mortgage Bank (Banco
Filipino). To secure said loan, the spouses Rosario
again constituted mortgages on Lot No. 356-A, Lot
No. 4489, and Lot No. 5-F-8-C-2-B-2-A. The
mortgage on Lot No. 356-A was annotated on TCT
No. 52751 as Entry No. 53328325 on December
18, 1981. Since the construction of a two-storey
commercial building on Lot No. 5-F-8-C-2-B-2-A
was still incomplete, the loan value thereof as
collateral was deducted from the approved loan
amount. Thus, the spouses Rosario could only avail
of the maximum loan amount of ₱830,064.00 from
Banco Filipino.
Because Banco Filipino paid the balance of Dr.
Rosario’s loan from PNB, the mortgage on Lot No.
356-A in favor of PNB was cancelled per Entry No.
53347826 on TCT No. 52751 dated December 23,
1981.
On February 13, 1986, the Torbela siblings filed
before the Regional Trial Court (RTC) of Urdaneta,
Pangasinan, a Complaint for recovery of ownership
and possession of Lot No. 356-A, plus damages,
against the spouses Rosario, which was docketed
as Civil Case No. U-4359. On the same day, Entry
Nos. 593493 and 593494 were made on TCT No.
52751 that read as follows:
Entry No. 593494 – Complaint – Civil Case No. U-
4359 (For: Recovery of Ownership and Possession
and Damages. (Sup. Paper).
Entry No. 593493 – Notice of Lis Pendens – The
parcel of land described in this title is subject to Lis
Pendens executed by Liliosa B. Rosario, CLAO,
Trial Attorney dated February 13, 1986. Filed to
TCT No. 52751
February 13, 1986-1986 February 13 – 3:30 p.m.
(SGD.) PACIFICO M. BRAGANZA
Register of Deeds27
The spouses Rosario afterwards failed to pay their
loan from Banco Filipino. As of April 2, 1987, the
spouses Rosario’s outstanding principal obligation
and penalty charges amounted to ₱743,296.82 and
₱151,524.00, respectively.28
Banco Filipino extrajudicially foreclosed the
mortgages on Lot No. 356-A, Lot No. 4489, and Lot
No. 5-F-8-C-2-B-2-A. During the public auction on
April 2, 1987, Banco Filipino was the lone bidder for
the three foreclosed properties for the price of
₱1,372,387.04. The Certificate of Sale29 dated
April 2, 1987, in favor of Banco Filipino, was
annotated on TCT No. 52751 on April 14, 1987 as
Entry No. 610623.30
On December 9, 1987, the Torbela siblings filed
before the RTC their Amended Complaint,31
impleading Banco Filipino as additional defendant
in Civil Case No. U-4359 and praying that the
spouses Rosario be ordered to redeem Lot No.
356-A from Banco Filipino.
The spouses Rosario instituted before the RTC on
March 4, 1988 a case for annulment of extrajudicial
foreclosure and damages, with prayer for a writ of
preliminary injunction and temporary restraining
order, against Banco Filipino, the Provincial Ex
Officio Sheriff and his Deputy, and the Register of
Deeds of Pangasinan. The case was docketed as
Civil Case No. U-4667. Another notice of lis
pendens was annotated on TCT No. 52751 on
March 10, 1988 as Entry No. 627059, viz:
Entry No. 627059 – Lis Pendens – Dr. Andres T.
Rosario and Lena Duque Rosario, Plaintiff versus
Banco Filipino, et. al. Civil Case No. U-4667 or
Annulment of ExtraJudicial Foreclosure of Real
Estate Mortgage – The parcel of land described in
this title is subject to Notice of Lis Pendens
subscribed and sworn to before Notary Public
Mauro G. Meris, as Doc. No. 21; Page No. 5; Book
111; S-1988. March 7, 1988-1988 March 10, 1:00
p.m.
(SGD.) RUFINO M. MORENO, SR.
Register of Deeds32
The Torbela siblings intervened in Civil Case No.
U-4667. Eventually, on October 17, 1990, the RTC
issued an Order33 dismissing without prejudice
Civil Case No. U-4667 due to the spouses
Rosario’s failure to prosecute.
Meanwhile, the Torbela siblings tried to redeem Lot
No. 356-A from Banco Filipino, but their efforts
were unsuccessful. Upon the expiration of the one-
year redemption period in April 1988, the Certificate
of Final Sale34 and Affidavit of Consolidation35
covering all three foreclosed properties were
executed on May 24, 1988 and May 25, 1988,
respectively.
On June 7, 1988, new certificates of title were
issued in the name of Banco Filipino, particularly,
TCT No. 165812 for Lot No. 5-F-8-C-2-B-2-A and
TCT No. 165813 for Lot No. 356-A .36
over Lot 356-A covered by TCT No. 52751 legal
and valid;
3. Declaring Banco Filipino the owner of Lot 356-A
covered by TCT No. 52751 (now TCT 165813);
4. Banco Filipino is entitled to a Writ of Possession
over Lot 356-A together with the improvements
thereon (Rose Inn Building). The Branch Clerk of
Court is hereby ordered to issue a writ of
possession in favor of Banco Filipino;

5. [The Torbela siblings] are hereby ordered to

The Torbela siblings thereafter filed before the RTC render accounting to Banco Filipino the rental they
on August 29, 1988 a Complaint37 for annulment of received from tenants of Rose Inn Building from
the Certificate of Final Sale dated May 24, 1988, May 14, 1988;
judicial cancelation of TCT No. 165813, and
damages, against Banco Filipino, the Ex Officio
Provincial Sheriff, and the Register of Deeds of
6. [The Torbela siblings] are hereby ordered to pay
Pangasinan, which was docketed as Civil Case No.
Banco Filipino the sum of ₱20,000.00 as attorney’s
U-4733.
fees;

On June 19, 1991, Banco Filipino filed before the

7. Banco Filipino is hereby ordered to give [the
RTC of Urdaneta City a Petition for the issuance of
Torbela siblings] the right of first refusal over Lot
a writ of possession. In said Petition, docketed as
356-A. The Register of Deeds is hereby ordered to
Pet. Case No. U-822, Banco Filipino prayed that a
annotate the right of [the Torbela siblings] at the
writ of possession be issued in its favor over Lot
back of TCT No. 165813 after payment of the
No. 5-F-8-C-2-B-2-A and Lot No. 356-A, plus the
required fees;
improvements thereon, and the spouses Rosario
and other persons presently in possession of said
properties be directed to abide by said writ.
8. Dr. Rosario and Lena Rosario are hereby
ordered to reimburse [the Torbela siblings] the
market value of Lot 356-A as of December, 1964
The RTC jointly heard Civil Case Nos. U-4359 and
minus payments made by the former;
U-4733 and Pet. Case No. U-822. The Decision38
on these three cases was promulgated on January
15, 1992, the dispositive portion of which reads:
9. Dismissing the complaint of [the Torbela siblings]
against Banco Filipino, Pedro Habon and Rufino
Moreno in Civil Case No. U-4733; and against
WHEREFORE, judgment is rendered:
Banco Filipino in Civil Case No. U-4359.39

1. Declaring the real estate mortgage over Lot 356-

The RTC released an Amended Decision40 dated
A covered by TCT 52751 executed by Spouses
January 29, 1992, adding the following paragraph
Andres Rosario in favor of Banco Filipino, legal and
to the dispositive:
valid;

Banco Filipino is entitled to a Writ of Possession

2. Declaring the sheriff’s sale dated April 2, 1987
over Lot-5-F-8-C-2-[B]-2-A of the subdivision plan
over Lot 356-A covered by TCT 52751 and
(LRC) Psd-122471, covered by Transfer Certificate
subsequent final Deed of Sale dated May 14, 1988
of Title 104189 of the Registry of Deeds of
Pangasinan[.]41
The Torbela siblings and Dr. Rosario appealed the
foregoing RTC judgment before the Court of
Appeals. Their appeal was docketed as CA-G.R.
CV No. 39770.
In its Decision42 dated June 29, 1999, the Court of
Appeals decreed:
WHEREFORE, foregoing considered, the appealed
decision is hereby AFFIRMED with modification.
Items No. 6 and 7 of the appealed decision are
DELETED. Item No. 8 is modified requiring [Dr.
Rosario] to pay [the Torbela siblings] actual
damages, in the amount of ₱1,200,000.00 with 6%
per annum interest from finality of this decision until
fully paid. [Dr. Rosario] is further ORDERED to pay
[the Torbela siblings] the amount of ₱300,000.00 as
moral damages; ₱200,000.00 as exemplary
damages and ₱100,000.00 as attorney’s fees.
Costs against [Dr. Rosario].43
The Court of Appeals, in a Resolution44 dated
October 22, 1999, denied the separate Motions for
Reconsideration of the Torbela siblings and Dr.
Rosario.
The Torbela siblings come before this Court via the
Petition for Review in G.R. No. 140528, with the
following assignment of errors:
First Issue and Assignment of Error:
THE HONORABLE COURT OF APPEALS
GRAVELY ERRED IN NOT FINDING THAT THE
REGISTRATION OF THE DEED OF ABSOLUTE
QUITCLAIM EXECUTED BY [DR. ANDRES T.
ROSARIO] IN FAVOR OF THE [TORBELA
SIBLINGS] DATED DECEMBER 28, 1964 AND
THE REGISTRATION OF THE NOTICE OF
ADVERSE CLAIM EXECUTED BY THE
[TORBELA SIBLINGS], SERVE AS THE
OPERATIVE ACT TO CONVEY OR AFFECT THE
LAND AND IMPROVEMENTS THEREOF IN SO
FAR AS THIRD PERSONS ARE CONCERNED.
Second Issue and Assignment of Error:
THE HONORABLE COURT OF APPEALS
GRAVELY ERRED IN FINDING THAT THE
SUBJECT PROPERTY COVERED BY T.C.T. NO.
52751 IS CLEAN AND FREE, DESPITE OF THE
ANNOTATION OF ENCUMBRANCES OF THE
NOTICE OF ADVERSE CLAIM AND THE DEED
OF ABSOLUTE QUITCLAIM APPEARING AT THE
BACK THEREOF AS ENTRY NOS. 274471 AND
274472, RESPECTIVELY.
Third Issue and Assignment of Error:
THE HONORABLE COURT OF APPEALS
GRAVELY ERRED IN FINDING THAT THE
NOTICE OF ADVERSE CLAIM OF THE
[TORBELA SIBLINGS] UNDER ENTRY NO.
274471 WAS VALIDLY CANCELLED BY THE
REGISTER OF DEEDS, IN THE ABSENCE OF A
PETITION DULY FILED IN COURT FOR ITS
CANCELLATION.
Fourth Issue and Assignment of Error:
THE HONORABLE COURT OF APPEALS
GRAVELY ERRED IN FINDING THAT
RESPONDENT BANCO FILIPINO SAVINGS AND
MORTGAGE BANK IS A MORTGAGEE IN GOOD
FAITH.
Fifth Issue and Assignment of Error:
THE HONORABLE COURT OF APPEALS
GRAVELY ERRED IN NOT FINDING THAT THE
FILING OF A CIVIL CASE NO. U-4359 ON
DECEMBER 9, 1987, IMPLEADING
RESPONDENT BANCO FILIPINO AS
ADDITIONAL PARTY DEFENDANT, TOLL OR
SUSPEND THE RUNNING OF THE ONE YEAR
PERIOD OF REDEMPTION.
Sixth Issue and Assignment of Error:
THE HONORABLE COURT OF APPEALS
GRAVELY ERRED IN NOT FINDING THAT THE
OWNERSHIP OVER THE SUBJECT PROPERTY
WAS PREMATURELY CONSOLIDATED IN
FAVOR OF RESPONDENT BANCO FILIPINO
SAVINGS AND MORTGAGE BANK.
Seventh Issue and Assignment of Error:
THE HONORABLE COURT OF APPEALS
GRAVELY ERRED IN FINDING THAT THE
SUBJECT PROPERTY IS AT LEAST WORTH
₱1,200,000.00.45
The Torbela siblings ask of this Court:
WHEREFORE, in the light of the foregoing
considerations, the [Torbela siblings] most
respectfully pray that the questioned DECISION
promulgated on June 29, 1999 (Annex "A", Petition)
and the RESOLUTION dated October 22, 1999
(Annex "B", Petition) be REVERSED and SET
ASIDE, and/or further MODIFIED in favor of the
[Torbela siblings], and another DECISION issue
ordering, among other reliefs, the respondent
Banco Filipino to reconvey back Lot No. 356-A,
covered by T.C.T. No. 52751, in favor of the
[Torbela siblings] who are the actual owners of the
same.
The [Torbela siblings] likewise pray for such other
reliefs and further remedies as may be deemed just
and equitable under the premises.46
Duque-Rosario, now legally separated from Dr.
Rosario, avers in her Petition for Review in G.R.
No. 140553 that Lot No. 4489 and Lot No. 5-F-8-C-
2-B-2-A were registered in her name, and she was
unlawfully deprived of ownership of said properties
because of the following errors of the Court of
Appeals:
A
THE HON. COURT OF APPEALS PATENTLY
ERRED IN NOT FINDING THAT THE PERIOD TO
REDEEM THE PROPERTY HAS NOT
COMMENCED, HENCE, THE CERTIFICATE OF
SALE, THE CONSOLIDATION OF OWNERSHIP
BY [BANCO FILIPINO], ARE NULL AND VOID.
B
THE COURT OF APPEALS PATENTLY ERRED IN
REFUSING TO RULE THAT THE FILING OF THE
COMPLAINT BEFORE THE COURT A QUO BY
THE [TORBELA SIBLINGS] HAD ALREADY BEEN
PRESCRIBED.47
Duque-Rosario prays that the appealed decision of
the Court of Appeals be reversed and set aside,
and that Lot No. 4489 and Lot No. 5-F-8-C-2-B-2-A
be freed from all obligations and encumbrances
and returned to her.
Review of findings of fact by the RTC and the Court
of Appeals warranted.
A disquisition of the issues raised and/or errors
assigned in the Petitions at bar unavoidably
requires a re-evaluation of the facts and evidence
presented by the parties in the court a quo.
In Republic v. Heirs of Julia Ramos,48 the Court
summed up the rules governing the power of
review of the Court:
Ordinarily, this Court will not review, much less
reverse, the factual findings of the Court of
Appeals, especially where such findings coincide
with those of the trial
court.http://sc.judiciary.gov.ph/jurisprudence/2010/f
ebruary2010/169481.htm - _ftn The findings of
facts of the Court of Appeals are, as a general rule,
conclusive and binding upon this Court, since this
Court is not a trier of facts and does not routinely
undertake the re-examination of the evidence
presented by the contending parties during the trial
of the case.
The above rule, however, is subject to a number of
exceptions, such as (1) when the inference made is
manifestly mistaken, absurd or impossible; (2)
when there is grave abuse of discretion; (3) when
the finding is grounded entirely on speculations,
surmises, or conjectures; (4) when the judgment of
the Court of Appeals is based on misapprehension
of facts; (5) when the findings of fact are conflicting;
(6) when the Court of Appeals, in making its
findings, went beyond the issues of the case and
the same is contrary to the admissions of both
parties; (7) when the findings of the Court of
Appeals are contrary to those of the trial court; (8)
when the findings of fact are conclusions without
citation of specific evidence on which they are
based; (9) when the Court of Appeals manifestly
overlooked certain relevant facts not disputed by
the parties and which, if properly considered, would
justify a different conclusion; and (10) when the
findings of fact of the Court of Appeals are
premised on the absence of evidence and are
contradicted by the evidence on record.49
As the succeeding discussion will bear out, the first,
fourth, and ninth exceptions are extant in these
case.
Barangay conciliation was not a pre-requisite to the
institution of Civil Case No. U-4359.
Dr. Rosario contends that Civil Case No. U-4359,
the Complaint of the Torbela siblings for recovery of
ownership and possession of Lot No. 356-A, plus
damages, should have been dismissed by the RTC
because of the failure of the Torbela siblings to
comply with the prior requirement of submitting the
dispute to barangay conciliation.
The Torbela siblings instituted Civil Case No. U-
4359 on February 13, 1986, when Presidential
Decree No. 1508, Establishing a System of
Amicably Settling Disputes at the Barangay Level,
was still in effect.50 Pertinent provisions of said
issuance read:
Section 2. Subject matters for amicable settlement.
The Lupon of each barangay shall have authority to
bring together the parties actually residing in the
same city or municipality for amicable settlement of
all disputes except:
1. Where one party is the government, or any
subdivision or instrumentality thereof;
2. Where one party is a public officer or employee,
and the dispute relates to the performance of his
official functions;
3. Offenses punishable by imprisonment exceeding
30 days, or a fine exceeding ₱200.00;
4. Offenses where there is no private offended
party;
5. Such other classes of disputes which the Prime
Minister may in the interest of justice determine
upon recommendation of the Minister of Justice
and the Minister of Local Government.
Section 3. Venue. Disputes between or among
persons actually residing in the same barangay
shall be brought for amicable settlement before the
Lupon of said barangay. Those involving actual
residents of different barangays within the same
city or municipality shall be brought in the barangay
where the respondent or any of the respondents
actually resides, at the election of the complainant.
However, all disputes which involved real property
or any interest therein shall be brought in the
barangay where the real property or any part
thereof is situated.
The Lupon shall have no authority over disputes:
1. involving parties who actually reside in
barangays of different cities or municipalities,
except where such barangays adjoin each other;
and
2. involving real property located in different
municipalities.
xxxx
Section 6. Conciliation, pre-condition to filing of
complaint. – No complaint, petition, action or
proceeding involving any matter within the authority
of the Lupon as provided in Section 2 hereof shall
be filed or instituted in court or any other
government office for adjudication unless there has
been a confrontation of the parties before the
Lupon Chairman or the Pangkat and no conciliation
or settlement has been reached as certified by the
Lupon Secretary or the Pangkat Secretary, attested
by the Lupon or Pangkat Chairman, or unless the
settlement has been repudiated. x x x. (Emphases
supplied.)
The Court gave the following elucidation on the
jurisdiction of the Lupong Tagapayapa in Tavora v.
Hon. Veloso51 :
The foregoing provisions are quite clear. Section 2
specifies the conditions under which the Lupon of a
barangay "shall have authority" to bring together
the disputants for amicable settlement of their
dispute: The parties must be "actually residing in
the same city or municipality." At the same time,
Section 3 — while reiterating that the disputants
must be "actually residing in the same barangay" or
in "different barangays" within the same city or
municipality — unequivocably declares that the
Lupon shall have "no authority" over disputes
"involving parties who actually reside in barangays
of different cities or municipalities," except where
such barangays adjoin each other.
Thus, by express statutory inclusion and exclusion,
the Lupon shall have no jurisdiction over disputes
where the parties are not actual residents of the
same city or municipality, except where the
barangays in which they actually reside adjoin each
other.
It is true that immediately after specifying the
barangay whose Lupon shall take cognizance of a
given dispute, Sec. 3 of PD 1508 adds:
"However, all disputes which involve real property
or any interest therein shall be brought in the
barangay where the real property or any part
thereof is situated."
Actually, however, this added sentence is just an
ordinary proviso and should operate as such.
The operation of a proviso, as a rule, should be
limited to its normal function, which is to restrict or
vary the operation of the principal clause, rather
than expand its scope, in the absence of a clear
indication to the contrary.
"The natural and appropriate office of a proviso
is . . . to except something from the enacting
clause; to limit, restrict, or qualify the statute in
whole or in part; or to exclude from the scope of the
statute that which otherwise would be within its
terms." (73 Am Jur 2d 467.)
Therefore, the quoted proviso should simply be
deemed to restrict or vary the rule on venue
prescribed in the principal clauses of the first
paragraph of Section 3, thus: Although venue is
generally determined by the residence of the
parties, disputes involving real property shall be
brought in the barangay where the real property or
any part thereof is situated, notwithstanding that the
parties reside elsewhere within the same
city/municipality.52 (Emphases supplied.)
The original parties in Civil Case No. U-4359 (the
Torbela siblings and the spouses Rosario) do not
reside in the same barangay, or in different
barangays within the same city or municipality, or in
different barangays of different cities or
municipalities but are adjoining each other. Some
of them reside outside Pangasinan and even
outside of the country altogether. The Torbela
siblings reside separately in Barangay Macalong,
Urdaneta, Pangasinan; Barangay Consolacion,
Urdaneta, Pangasinan; Pangil, Laguna; Chicago,
United States of America; and Canada. The
spouses Rosario are residents of Calle Garcia,
Poblacion, Urdaneta, Pangasinan. Resultantly, the
Lupon had no jurisdiction over the dispute and
barangay conciliation was not a pre-condition for
the filing of Civil Case No. U-4359.
The Court now looks into the merits of Civil Case
No. U-4359.
There was an express trust between the Torbela
siblings and Dr. Rosario.
There is no dispute that the Torbela sibling
inherited the title to Lot No. 356-A from their
parents, the Torbela spouses, who, in turn,
acquired the same from the first registered owner of
Lot No. 356-A, Valeriano.
Indeed, the Torbela siblings executed a Deed of
Absolute Quitclaim on December 12, 1964 in which
they transferred and conveyed Lot No. 356-A to Dr.
Rosario for the consideration of ₱9.00. However,
the Torbela siblings explained that they only
executed the Deed as an accommodation so that
Dr. Rosario could have Lot No. 356-A registered in
his name and use said property to secure a loan
from DBP, the proceeds of which would be used for
building a hospital on Lot No. 356-A – a claim
supported by testimonial and documentary
evidence, and borne out by the sequence of events
immediately following the execution by the Torbela
siblings of said Deed. On December 16, 1964, TCT
No. 52751, covering Lot No. 356-A, was already
issued in Dr. Rosario’s name. On December 28,
1964, Dr. Rosario executed his own Deed of
Absolute Quitclaim, in which he expressly
acknowledged that he "only borrowed" Lot No. 356-
A and was transferring and conveying the same
back to the Torbela siblings for the consideration of
₱1.00. On February 21, 1965, Dr. Rosario’s loan in
the amount of ₱70,200.00, secured by a mortgage
on Lot No. 356-A, was approved by DBP. Soon
thereafter, construction of a hospital building
started on Lot No. 356-A.
Among the notable evidence presented by the
Torbela siblings is the testimony of Atty. Lorenza
Alcantara (Atty. Alcantara), who had no apparent
personal interest in the present case. Atty.
Alcantara, when she was still a boarder at the
house of Eufrosina Torbela Rosario (Dr. Rosario’s
mother), was consulted by the Torbela siblings as
regards the extrajudicial partition of Lot No. 356-A.
She also witnessed the execution of the two Deeds
of Absolute Quitclaim by the Torbela siblings and
Dr. Rosario.
In contrast, Dr. Rosario presented TCT No. 52751,
issued in his name, to prove his purported title to
Lot No. 356-A. In Lee Tek Sheng v. Court of
Appeals,53 the Court made a clear distinction
between title and the certificate of title:
The certificate referred to is that document issued
by the Register of Deeds known as the Transfer
Certificate of Title (TCT). By title, the law refers to
ownership which is represented by that document.
Petitioner apparently confuses certificate with title.
Placing a parcel of land under the mantle of the
Torrens system does not mean that ownership
thereof can no longer be disputed. Ownership is
different from a certificate of title. The TCT is only
the best proof of ownership of a piece of land.
Besides, the certificate cannot always be
considered as conclusive evidence of ownership.
Mere issuance of the certificate of title in the name
of any person does not foreclose the possibility that
the real property may be under co-ownership with
persons not named in the certificate or that the
registrant may only be a trustee or that other
parties may have acquired interest subsequent to
the issuance of the certificate of title. To repeat,
registration is not the equivalent of title, but is only
the best evidence thereof. Title as a concept of
ownership should not be confused with the
certificate of title as evidence of such ownership
although both are interchangeably used. x x x.54
(Emphases supplied.)
Registration does not vest title; it is merely the
evidence of such title. Land registration laws do not
give the holder any better title than what he actually
has.55 Consequently, Dr. Rosario must still prove
herein his acquisition of title to Lot No. 356-A, apart
from his submission of TCT No. 52751 in his name.
Dr. Rosario testified that he obtained Lot No. 356-A
after paying the Torbela siblings ₱25,000.00,
pursuant to a verbal agreement with the latter. The
Court though observes that Dr. Rosario’s testimony
on the execution and existence of the verbal
agreement with the Torbela siblings lacks
significant details (such as the names of the parties
present, dates, places, etc.) and is not corroborated
by independent evidence.
In addition, Dr. Rosario acknowledged the
execution of the two Deeds of Absolute Quitclaim
dated December 12, 1964 and December 28, 1964,
even affirming his own signature on the latter Deed.
The Parol Evidence Rule provides that when the
terms of the agreement have been reduced into siblings, the latter having relied upon his
writing, it is considered as containing all the terms representation.
agreed upon and there can be, between the parties
and their successors in interest, no evidence of
such terms other than the contents of the written Considering the foregoing, the Court agrees with
agreement.56 Dr. Rosario may not modify, explain, the RTC and the Court of Appeals that Dr. Rosario
or add to the terms in the two written Deeds of only holds Lot No. 356-A in trust for the Torbela
Absolute Quitclaim since he did not put in issue in siblings.
his pleadings (1) an intrinsic ambiguity, mistake, or
imperfection in the Deeds; (2) failure of the Deeds
to express the true intent and the agreement of the
Trust is the right to the beneficial enjoyment of
parties thereto; (3) the validity of the Deeds; or (4)
property, the legal title to which is vested in
the existence of other terms agreed to by the
another. It is a fiduciary relationship that obliges the
Torbela siblings and Dr. Rosario after the execution
trustee to deal with the property for the benefit of
of the Deeds.57
the beneficiary. Trust relations between parties may
either be express or implied. An express trust is
created by the intention of the trustor or of the
Even if the Court considers Dr. Rosario’s testimony parties, while an implied trust comes into being by
on his alleged verbal agreement with the Torbela operation of law.61
siblings, the Court finds the same unsatisfactory.
Dr. Rosario averred that the two Deeds were
executed only because he was "planning to secure
Express trusts are created by direct and positive
loan from the Development Bank of the Philippines
acts of the parties, by some writing or deed, or will,
and Philippine National Bank and the bank needed
or by words either expressly or impliedly evincing
absolute quitclaim[.]"58 While Dr. Rosario’s
an intention to create a trust. Under Article 1444 of
explanation makes sense for the first Deed of
the Civil Code, "[n]o particular words are required
Absolute Quitclaim dated December 12, 1964
for the creation of an express trust, it being
executed by the Torbela siblings (which transferred
sufficient that a trust is clearly intended."62 It is
Lot No. 356-A to Dr. Rosario for ₱9.00.00), the
possible to create a trust without using the word
same could not be said for the second Deed of
"trust" or "trustee." Conversely, the mere fact that
Absolute Quitclaim dated December 28, 1964
these words are used does not necessarily indicate
executed by Dr. Rosario. In fact, Dr. Rosario’s
an intention to create a trust. The question in each
Deed of Absolute Quitclaim (in which he admitted
case is whether the trustor manifested an intention
that he only borrowed Lot No. 356-A and was
to create the kind of relationship which to lawyers is
transferring the same to the Torbela siblings for
known as trust. It is immaterial whether or not he
₱1.00.00) would actually work against the approval
knows that the relationship which he intends to
of Dr. Rosario’s loan by the banks. Since Dr.
create is called a trust, and whether or not he
Rosario’s Deed of Absolute Quitclaim dated
knows the precise characteristics of the relationship
December 28, 1964 is a declaration against his
which is called a trust.63
self-interest, it must be taken as favoring the
truthfulness of the contents of said Deed.59

In Tamayo v. Callejo,64 the Court recognized that a

trust may have a constructive or implied nature in
It can also be said that Dr. Rosario is estopped
the beginning, but the registered owner’s
from claiming or asserting ownership over Lot No.
subsequent express acknowledgement in a public
356-A based on his Deed of Absolute Quitclaim
document of a previous sale of the property to
dated December 28, 1964. Dr. Rosario's admission
another party, had the effect of imparting to the
in the said Deed that he merely borrowed Lot No.
aforementioned trust the nature of an express trust.
356-A is deemed conclusive upon him. Under
The same situation exists in this case. When Dr.
Article 1431 of the Civil Code, "[t]hrough estoppel
Rosario was able to register Lot No. 356-A in his
an admission or representation is rendered
name under TCT No. 52751 on December 16,
conclusive upon the person making it, and cannot
1964, an implied trust was initially established
be denied or disproved as against the person
between him and the Torbela siblings under Article
relying thereon."60 That admission cannot now be
1451 of the Civil Code, which provides:
denied by Dr. Rosario as against the Torbela
ART. 1451. When land passes by succession to
any person and he causes the legal title to be put in
the name of another, a trust is established by
implication of law for the benefit of the true owner.
Dr. Rosario’s execution of the Deed of Absolute
Quitclaim on December 28, 1964, containing his
express admission that he only borrowed Lot No.
356-A from the Torbela siblings, eventually
transformed the nature of the trust to an express
one. The express trust continued despite Dr.
Rosario stating in his Deed of Absolute Quitclaim
that he was already returning Lot No. 356-A to the
Torbela siblings as Lot No. 356-A remained
registered in Dr. Rosario’s name under TCT No.
52751 and Dr. Rosario kept possession of said
property, together with the improvements thereon.
The right of the Torbela siblings to recover Lot No.
356-A has not yet prescribed.
The Court extensively discussed the prescriptive
period for express trusts in the Heirs of Maximo
Labanon v. Heirs of Constancio Labanon,65 to wit:
On the issue of prescription, we had the opportunity
to rule in Bueno v. Reyes that unrepudiated written
express trusts are imprescriptible:
"While there are some decisions which hold that an
action upon a trust is imprescriptible, without
distinguishing between express and implied trusts,
the better rule, as laid down by this Court in other
decisions, is that prescription does supervene
where the trust is merely an implied one. The
reason has been expressed by Justice J.B.L.
Reyes in J.M. Tuason and Co., Inc. vs. Magdangal,
4 SCRA 84, 88, as follows:
Under Section 40 of the old Code of Civil
Procedure, all actions for recovery of real property
prescribed in 10 years, excepting only actions
based on continuing or subsisting trusts that were
considered by section 38 as imprescriptible. As
held in the case of Diaz v. Gorricho, L-11229,
March 29, 1958, however, the continuing or
subsisting trusts contemplated in section 38 of the
Code of Civil Procedure referred only to express
unrepudiated trusts, and did not include
constructive trusts (that are imposed by law) where
no fiduciary relation exists and the trustee does not
recognize the trust at all."
This principle was amplified in Escay v. Court of
Appeals this way: "Express trusts prescribe 10
years from the repudiation of the trust (Manuel
Diaz, et al. vs. Carmen Gorricho et al., 54 O.G. p.
8429, Sec. 40, Code of Civil Procedure)."
In the more recent case of Secuya v. De Selma, we
again ruled that the prescriptive period for the
enforcement of an express trust of ten (10) years
starts upon the repudiation of the trust by the
trustee.66
To apply the 10-year prescriptive period, which
would bar a beneficiary’s action to recover in an
express trust, the repudiation of the trust must be
proven by clear and convincing evidence and made
known to the beneficiary.67 The express trust
disables the trustee from acquiring for his own
benefit the property committed to his management
or custody, at least while he does not openly
repudiate the trust, and makes such repudiation
known to the beneficiary or cestui que trust. For this
reason, the old Code of Civil Procedure (Act 190)
declared that the rules on adverse possession do
not apply to "continuing and subsisting" (i.e.,
unrepudiated) trusts. In an express trust, the delay
of the beneficiary is directly attributable to the
trustee who undertakes to hold the property for the
former, or who is linked to the beneficiary by
confidential or fiduciary relations. The trustee's
possession is, therefore, not adverse to the
beneficiary, until and unless the latter is made
aware that the trust has been repudiated.68
Dr. Rosario argues that he is deemed to have
repudiated the trust on December 16, 1964, when
he registered Lot No. 356-A in his name under TCT
No. 52751, so when on February 13, 1986, the
Torbela siblings instituted before the RTC Civil
Case No. U-4359, for the recovery of ownership
and possession of Lot No. 356-A from the spouses
Rosario, over 21 years had passed. Civil Case No.
U-4359 was already barred by prescription, as well
as laches.
The Court already rejected a similar argument in
Ringor v. Ringor69 for the following reasons:
A trustee who obtains a Torrens title over a
property held in trust for him by another cannot
repudiate the trust by relying on the registration. A
Torrens Certificate of Title in Jose’s name did not
vest ownership of the land upon him. The Torrens
system does not create or vest title. It only confirms
and records title already existing and vested. It
does not protect a usurper from the true owner. The
Torrens system was not intended to foment
betrayal in the performance of a trust. It does not
permit one to enrich himself at the expense of
another. Where one does not have a rightful claim
to the property, the Torrens system of registration
can confirm or record nothing. Petitioners cannot
rely on the registration of the lands in Jose’s name
nor in the name of the Heirs of Jose M. Ringor, Inc.,
for the wrong result they seek. For Jose could not
repudiate a trust by relying on a Torrens title he
held in trust for his co-heirs. The beneficiaries are
entitled to enforce the trust, notwithstanding the
irrevocability of the Torrens title. The intended trust
must be sustained.70 (Emphasis supplied.)
In the more recent case of Heirs of Tranquilino
Labiste v. Heirs of Jose Labiste,71 the Court
refused to apply prescription and laches and
reiterated that:
[P]rescription and laches will run only from the time
the express trust is repudiated. The Court has held
that for acquisitive prescription to bar the action of
the beneficiary against the trustee in an express
trust for the recovery of the property held in trust it
must be shown that: (a) the trustee has performed
unequivocal acts of repudiation amounting to an
ouster of the cestui que trust; (b) such positive acts
of repudiation have been made known to the cestui
que trust, and (c) the evidence thereon is clear and
conclusive. Respondents cannot rely on the fact
that the Torrens title was issued in the name of
Epifanio and the other heirs of Jose. It has been
held that a trustee who obtains a Torrens title over
property held in trust by him for another cannot
repudiate the trust by relying on the registration.
The rule requires a clear repudiation of the trust
duly communicated to the beneficiary. The only act
that can be construed as repudiation was when
respondents filed the petition for reconstitution in
October 1993. And since petitioners filed their
complaint in January 1995, their cause of action
has not yet prescribed, laches cannot be attributed
to them.72 (Emphasis supplied.)
It is clear that under the foregoing jurisprudence,
the registration of Lot No. 356-A by Dr. Rosario in
his name under TCT No. 52751 on December 16,
1964 is not the repudiation that would have caused
the 10-year prescriptive period for the enforcement
of an express trust to run.
The Court of Appeals held that Dr. Rosario
repudiated the express trust when he acquired
another loan from PNB and constituted a second
mortgage on Lot No. 356-A sometime in 1979,
which, unlike the first mortgage to DBP in 1965,
was without the knowledge and/or consent of the
Torbela siblings.
The Court only concurs in part with the Court of
Appeals on this matter.
For repudiation of an express trust to be effective,
the unequivocal act of repudiation had to be made
known to the Torbela siblings as the cestuis que
trust and must be proven by clear and conclusive
evidence. A scrutiny of TCT No. 52751 reveals the
following inscription:
Entry No. 520099
Amendment of the mortgage in favor of PNB
inscribed under Entry No. 490658 in the sense that
the consideration thereof has been increased to
PHILIPPINE PESOS Four Hundred Fifty Thousand
Pesos only (₱450,000.00) and to secure any and
all negotiations with PNB, whether contracted
before, during or after the date of this instrument,
acknowledged before Notary Public of Pangasinan
Alejo M. Dato as Doc. No. 198, Page No. 41, Book
No. 11, Series of 1985.
Date of Instrument March 5, 1981
Date of Inscription March 6, 198173
Although according to Entry No. 520099, the
original loan and mortgage agreement of Lot No.
356-A between Dr. Rosario and PNB was
previously inscribed as Entry No. 490658, Entry No.
490658 does not actually appear on TCT No.
52751 and, thus, it cannot be used as the
reckoning date for the start of the prescriptive
period.
The Torbela siblings can only be charged with
knowledge of the mortgage of Lot No. 356-A to
PNB on March 6, 1981 when the amended loan
and mortgage agreement was registered on TCT
No. 52751 as Entry No. 520099. Entry No. 520099
is constructive notice to the whole world74 that Lot
No. 356-A was mortgaged by Dr. Rosario to PNB
as security for a loan, the amount of which was
increased to ₱450,000.00. Hence, Dr. Rosario is
deemed to have effectively repudiated the express
trust between him and the Torbela siblings on
March 6, 1981, on which day, the prescriptive
period for the enforcement of the express trust by
the Torbela siblings began to run.
From March 6, 1981, when the amended loan and
mortgage agreement was registered on TCT No.
52751, to February 13, 1986, when the Torbela
siblings instituted before the RTC Civil Case No. U-
4359 against the spouses Rosario, only about five
years had passed. The Torbela siblings were able
to institute Civil Case No. U-4359 well before the
lapse of the 10-year prescriptive period for the
enforcement of their express trust with Dr. Rosario.
Civil Case No. U-4359 is likewise not barred by
laches. Laches means the failure or neglect, for an
unreasonable and unexplained length of time, to do
that which by exercising due diligence could or
should have been done earlier. It is negligence or
omission to assert a right within a reasonable time,
warranting a presumption that the party entitled to
assert it either has abandoned it or declined to
assert it. As the Court explained in the preceding
paragraphs, the Torbela siblings instituted Civil
Case No. U-4359 five years after Dr. Rosario’s
repudiation of the express trust, still within the 10-
year prescriptive period for enforcement of such
trusts. This does not constitute an unreasonable
delay in asserting one's right. A delay within the
prescriptive period is sanctioned by law and is not
considered to be a delay that would bar relief.
Laches apply only in the absence of a statutory
prescriptive period.75
Banco Filipino is not a mortgagee and buyer in
good faith.
Having determined that the Torbela siblings are the
true owners and Dr. Rosario merely the trustee of
Lot No. 356-A, the Court is next faced with the
issue of whether or not the Torbela siblings may
still recover Lot No. 356-A considering that Dr.
Rosario had already mortgaged Lot No. 356-A to
Banco Filipino, and upon Dr. Rosario’s default on
his loan obligations, Banco Filipino foreclosed the
mortgage, acquired Lot No. 356-A as the highest
bidder at the foreclosure sale, and consolidated title
in its name under TCT No. 165813. The resolution
of this issue depends on the answer to the question
of whether or not Banco Filipino was a mortgagee
in good faith.
Under Article 2085 of the Civil Code, one of the
essential requisites of the contract of mortgage is
that the mortgagor should be the absolute owner of
the property to be mortgaged; otherwise, the
mortgage is considered null and void. However, an
exception to this rule is the doctrine of "mortgagee
in good faith." Under this doctrine, even if the
mortgagor is not the owner of the mortgaged
property, the mortgage contract and any
foreclosure sale arising therefrom are given effect
by reason of public policy. This principle is based
on the rule that all persons dealing with property
covered by a Torrens Certificate of Title, as buyers
or mortgagees, are not required to go beyond what
appears on the face of the title. This is the same
rule that underlies the principle of "innocent
purchasers for value." The prevailing jurisprudence
is that a mortgagee has a right to rely in good faith
on the certificate of title of the mortgagor to the
property given as security and in the absence of
any sign that might arouse suspicion, has no
obligation to undertake further investigation. Hence,
even if the mortgagor is not the rightful owner of, or
does not have a valid title to, the mortgaged
property, the mortgagee in good faith is,
nonetheless, entitled to protection.76
On one hand, the Torbela siblings aver that Banco
Filipino is not a mortgagee in good faith because as
early as May 17, 1967, they had already annotated
Cornelio’s Adverse Claim dated May 16, 1967 and
Dr. Rosario’s Deed of Absolute Quitclaim dated
December 28, 1964 on TCT No. 52751 as Entry
Nos. 274471-274472, respectively.
On the other hand, Banco Filipino asseverates that
it is a mortgagee in good faith because per Section
70 of Presidential Decree No. 1529, otherwise
known as the Property Registration Decree, the
notice of adverse claim, registered on May 17,
1967 by the Torbela siblings under Entry Nos.
274471-274472 on TCT No. 52751, already lapsed
after 30 days or on June 16, 1967. Additionally,
there was an express cancellation of Entry Nos.
274471-274472 by Entry No. 520469 dated March
11, 1981. So when Banco Filipino approved Dr.
Rosario’s loan for ₱1,200,000.00 and constituted a
mortgage on Lot No. 356-A (together with two other
properties) on December 8, 1981, the only other
encumbrance on TCT No. 52751 was Entry No.
520099 dated March 6, 1981, i.e., the amended
loan and mortgage agreement between Dr. Rosario
and PNB (which was eventually cancelled after it
was paid off with part of the proceeds from Dr.
Rosario’s loan from Banco Filipino). Hence, Banco
Filipino was not aware that the Torbela siblings’
adverse claim on Lot No. 356-A still subsisted.
The Court finds that Banco Filipino is not a
mortgagee in good faith. Entry Nos. 274471-
274472 were not validly cancelled, and the
improper cancellation should have been apparent
to Banco Filipino and aroused suspicion in said
bank of some defect in Dr. Rosario’s title.
The purpose of annotating the adverse claim on the
title of the disputed land is to apprise third persons
that there is a controversy over the ownership of
the land and to preserve and protect the right of the
adverse claimant during the pendency of the
controversy. It is a notice to third persons that any
transaction regarding the disputed land is subject to
the outcome of the dispute.77
Adverse claims were previously governed by
Section 110 of Act No. 496, otherwise known as the
Land Registration Act, quoted in full below:
ADVERSE CLAIM
SEC. 110. Whoever claims any part or interest in
registered land adverse to the registered owner,
arising subsequent to the date of the original
registration, may, if no other provision is made in
this Act for registering the same, make a statement
in writing setting forth fully his alleged right or
interest, and how or under whom acquired, and a
reference to the volume and page of the certificate
of title of the registered owner, and a description of
the land in which the right or interest is claimed.
The statement shall be signed and sworn to, and
shall state the adverse claimant’s residence, and
designate a place at which all notices may be
served upon him. This statement shall be entitled to
registration as an adverse claim, and the court,
upon a petition of any party in interest, shall grant a
speedy hearing upon the question of the validity of
such adverse claim and shall enter such decree
therein as justice and equity may require. If the
claim is adjudged to be invalid, the registration shall
be cancelled. If in any case the court after notice
and hearing shall find that a claim thus registered
was frivolous or vexatious, it may tax the adverse
claimant double or treble costs in its discretion.
Construing the aforequoted provision, the Court
stressed in Ty Sin Tei v. Lee Dy Piao78 that "[t]he
validity or efficaciousness of the [adverse] claim x x
x may only be determined by the Court upon
petition by an interested party, in which event, the
Court shall order the immediate hearing thereof and
make the proper adjudication as justice and equity
may warrant. And it is ONLY when such claim is
found unmeritorious that the registration thereof
may be cancelled." The Court likewise pointed out
in the same case that while a notice of lis pendens
may be cancelled in a number of ways, "the same
is not true in a registered adverse claim, for it may
be cancelled only in one instance, i.e., after the
claim is adjudged invalid or unmeritorious by the
Court x x x;" and "if any of the registrations should
be considered unnecessary or superfluous, it would
be the notice of lis pendens and not the annotation
of the adverse claim which is more permanent and
cannot be cancelled without adequate hearing and
proper disposition of the claim."
With the enactment of the Property Registration
Decree on June 11, 1978, Section 70 thereof now
applies to adverse claims:
SEC. 70. Adverse claim. – Whoever claims any
part or interest in registered land adverse to the
registered owner, arising subsequent to the date of
the original registrations, may, if no other provision
is made in this Decree for registering the same,
make a statement in writing setting forth fully his
alleged right, or interest, and how or under whom
acquired, a reference to the number of the
certificate of title of the registered owner, the name
of the registered owner, and a description of the
land in which the right or interest is claimed.
The statement shall be signed and sworn to, and
shall state the adverse claimant’s residence, and a
place at which all notices may be served upon him.
This statement shall be entitled to registration as an
adverse claim on the certificate of title. The adverse
claim shall be effective for a period of thirty days
from the date of registration. After the lapse of said
period, the annotation of adverse claim may be
cancelled upon filing of a verified petition therefor
by the party in interest: Provided, however, that
after cancellation, no second adverse claim based
on the same ground shall be registered by the
same claimant.
Before the lapse of thirty days aforesaid, any party
in interest may file a petition in the Court of First
Instance where the land is situated for the
cancellation of the adverse claim, and the court
shall grant a speedy hearing upon the question of
the validity of such adverse claim, and shall render
judgment as may be just and equitable. If the
adverse claim is adjudged to be invalid, the
registration thereof shall be ordered cancelled. If, in
any case, the court, after notice and hearing, shall
find that the adverse claim thus registered was
frivolous, it may fine the claimant in an amount not
less than one thousand pesos nor more than five
thousand pesos, in its discretion. Before the lapse
of thirty days, the claimant may withdraw his
adverse claim by filing with the Register of Deeds a
sworn petition to that effect. (Emphases supplied.)
In Sajonas v. Court of Appeals,79 the Court
squarely interpreted Section 70 of the Property
Registration Decree, particularly, the new 30-day
period not previously found in Section 110 of the
Land Registration Act, thus:
In construing the law aforesaid, care should be
taken that every part thereof be given effect and a
construction that could render a provision
inoperative should be avoided, and inconsistent
provisions should be reconciled whenever possible
as parts of a harmonious whole. For taken in
solitude, a word or phrase might easily convey a
meaning quite different from the one actually
intended and evident when a word or phrase is
considered with those with which it is associated. In
ascertaining the period of effectivity of an
inscription of adverse claim, we must read the law
in its entirety. Sentence three, paragraph two of
Section 70 of P.D. 1529 provides:
"The adverse claim shall be effective for a period of
thirty days from the date of registration."
At first blush, the provision in question would seem
to restrict the effectivity of the adverse claim to
thirty days. But the above provision cannot and
should not be treated separately, but should be
read in relation to the sentence following, which
reads:
"After the lapse of said period, the annotation of
adverse claim may be cancelled upon filing of a
verified petition therefor by the party in interest."
If the rationale of the law was for the adverse claim
to ipso facto lose force and effect after the lapse of
thirty days, then it would not have been necessary
to include the foregoing caveat to clarify and
complete the rule. For then, no adverse claim need
be cancelled. If it has been automatically
terminated by mere lapse of time, the law would not
have required the party in interest to do a useless
act.
A statute's clauses and phrases must not be taken
separately, but in its relation to the statute's totality.
Each statute must, in fact, be construed as to
harmonize it with the pre-existing body of laws.
Unless clearly repugnant, provisions of statutes
must be reconciled. The printed pages of the
published Act, its history, origin, and its purposes
may be examined by the courts in their
construction. x x x.
xxxx
Construing the provision as a whole would
reconcile the apparent inconsistency between the
portions of the law such that the provision on
cancellation of adverse claim by verified petition
would serve to qualify the provision on the
effectivity period. The law, taken together, simply
means that the cancellation of the adverse claim is
still necessary to render it ineffective, otherwise, the
inscription will remain annotated and shall continue
as a lien upon the property. For if the adverse claim
has already ceased to be effective upon the lapse
of said period, its cancellation is no longer
necessary and the process of cancellation would be
a useless ceremony.
It should be noted that the law employs the phrase
"may be cancelled," which obviously indicates, as
inherent in its decision making power, that the court
may or may not order the cancellation of an
adverse claim, notwithstanding such provision
limiting the effectivity of an adverse claim for thirty
days from the date of registration. The court cannot
be bound by such period as it would be inconsistent
with the very authority vested in it. A fortiori, the
limitation on the period of effectivity is immaterial in
determining the validity or invalidity of an adverse
claim which is the principal issue to be decided in
the court hearing. It will therefore depend upon the
evidence at a proper hearing for the court to
determine whether it will order the cancellation of
the adverse claim or not.
To interpret the effectivity period of the adverse
claim as absolute and without qualification limited
to thirty days defeats the very purpose for which the
statute provides for the remedy of an inscription of
adverse claim, as the annotation of an adverse
claim is a measure designed to protect the interest
of a person over a piece of real property where the
registration of such interest or right is not otherwise
provided for by the Land Registration Act or Act
496 (now P.D. 1529 or the Property Registration
Decree), and serves as a warning to third parties
dealing with said property that someone is claiming
an interest or the same or a better right than the
registered owner thereof.
The reason why the law provides for a hearing
where the validity of the adverse claim is to be
threshed out is to afford the adverse claimant an
opportunity to be heard, providing a venue where
the propriety of his claimed interest can be
established or revoked, all for the purpose of
determining at last the existence of any
encumbrance on the title arising from such adverse
claim. This is in line with the provision immediately
following:
"Provided, however, that after cancellation, no
second adverse claim shall be registered by the
same claimant."
Should the adverse claimant fail to sustain his
interest in the property, the adverse claimant will be
precluded from registering a second adverse claim
based on the same ground.
It was held that "validity or efficaciousness of the
claim may only be determined by the Court upon
petition by an interested party, in which event, the
Court shall order the immediate hearing thereof and
make the proper adjudication as justice and equity
may warrant. And it is only when such claim is
found unmeritorious that the registration of the
adverse claim may be cancelled, thereby protecting
the interest of the adverse claimant and giving
notice and warning to third parties."80 (Emphases
supplied.)
Whether under Section 110 of the Land
Registration Act or Section 70 of the Property
Registration Decree, notice of adverse claim can
only be cancelled after a party in interest files a
petition for cancellation before the RTC wherein the
property is located, and the RTC conducts a
hearing and determines the said claim to be invalid
or unmeritorious.
No petition for cancellation has been filed and no
hearing has been conducted herein to determine
the validity or merit of the adverse claim of the
Torbela siblings. Entry No. 520469 cancelled the
adverse claim of the Torbela siblings, annotated as
Entry Nos. 274471-774472, upon the presentation
by Dr. Rosario of a mere Cancellation and
Discharge of Mortgage.
Regardless of whether or not the Register of Deeds
should have inscribed Entry No. 520469 on TCT
No. 52751, Banco Filipino could not invoke said
inscription in support of its claim of good faith.
There were several things amiss in Entry No.
520469 which should have already aroused
suspicions in Banco Filipino, and compelled the
bank to look beyond TCT No. 52751 and inquire
into Dr. Rosario’s title. First, Entry No. 520469 does
not mention any court order as basis for the
cancellation of the adverse claim. Second, the
adverse claim was not a mortgage which could be
cancelled with Dr. Rosario’s Cancellation and
Discharge of Mortgage. And third, the adverse
claim was against Dr. Rosario, yet it was cancelled
based on a document also executed by Dr.
Rosario.
It is a well-settled rule that a purchaser or
mortgagee cannot close his eyes to facts which
should put a reasonable man upon his guard, and
then claim that he acted in good faith under the
belief that there was no defect in the title of the
vendor or mortgagor. His mere refusal to believe
that such defect exists, or his willful closing of his
eyes to the possibility of the existence of a defect in
the vendor's or mortgagor's title, will not make him
an innocent purchaser or mortgagee for value, if it
afterwards develops that the title was in fact
defective, and it appears that he had such notice of
the defects as would have led to its discovery had
he acted with the measure of precaution which may
be required of a prudent man in a like situation.81
While the defective cancellation of Entry Nos.
274471-274472 by Entry No. 520469 might not be
evident to a private individual, the same should
have been apparent to Banco Filipino. Banco
Filipino is not an ordinary mortgagee, but is a
mortgagee-bank, whose business is impressed with
public interest. In fact, in one case, 82 the Court
explicitly declared that the rule that persons dealing
with registered lands can rely solely on the
certificate of title does not apply to banks. In
another case,83 the Court adjudged that unlike
private individuals, a bank is expected to exercise
greater care and prudence in its dealings, including
those involving registered lands. A banking
institution is expected to exercise due diligence
before entering into a mortgage contract. The
ascertainment of the status or condition of a
property offered to it as security for a loan must be
a standard and indispensable part of its operations.
Banco Filipino cannot be deemed a mortgagee in
good faith, much less a purchaser in good faith at
the foreclosure sale of Lot No. 356-A. Hence, the
right of the Torbela siblings over Lot No. 356-A is
superior over that of Banco Filipino; and as the true
owners of Lot No. 356-A, the Torbela siblings are
entitled to a reconveyance of said property even
from Banco Filipino.
Nonetheless, the failure of Banco Filipino to comply
with the due diligence requirement was not the
result of a dishonest purpose, some moral obliquity,
or breach of a known duty for some interest or ill
will that partakes of fraud that would justify
damages.84
Given the reconveyance of Lot No. 356-A to the
Torbela siblings, there is no more need to address
issues concerning redemption, annulment of the
foreclosure sale and certificate of sale (subject
matter of Civil Case No. U-4733), or issuance of a
writ of possession in favor of Banco Filipino
(subject matter of Pet. Case No. U-822) insofar as
Lot No. 356-A is concerned. Such would only be
superfluous. Banco Filipino, however, is not left
without any recourse should the foreclosure and
sale of the two other mortgaged properties be
insufficient to cover Dr. Rosario’s loan, for the bank
may still bring a proper suit against Dr. Rosario to
collect the unpaid balance.
The rules on accession shall govern the
improvements on Lot No. 356-A and the rents
thereof.
The accessory follows the principal. The right of
accession is recognized under Article 440 of the
Civil Code which states that "[t]he ownership of
property gives the right by accession to everything
which is produced thereby, or which is incorporated
or attached thereto, either naturally or artificially."
There is no question that Dr. Rosario is the builder
of the improvements on Lot No. 356-A. The Torbela
siblings themselves alleged that they allowed Dr.
Rosario to register Lot No. 356-A in his name so he
could obtain a loan from DBP, using said parcel of
land as security; and with the proceeds of the loan,
Dr. Rosario had a building constructed on Lot No.
356-A, initially used as a hospital, and then later for
other commercial purposes. Dr. Rosario supervised
the construction of the building, which began in
1965; fully liquidated the loan from DBP; and
maintained and administered the building, as well
as collected the rental income therefrom, until the
Torbela siblings instituted Civil Case No. U-4359
before the RTC on February 13, 1986.
When it comes to the improvements on Lot No.
356-A, both the Torbela siblings (as landowners)
and Dr. Rosario (as builder) are deemed in bad
faith. The Torbela siblings were aware of the
construction of a building by Dr. Rosario on Lot No.
356-A, while Dr. Rosario proceeded with the said
construction despite his knowledge that Lot No.
356-A belonged to the Torbela siblings. This is the
case contemplated under Article 453 of the Civil
Code, which reads:
ART. 453. If there was bad faith, not only on the
part of the person who built, planted or sowed on
the land of another, but also on the part of the
owner of such land, the rights of one and the other
shall be the same as though both had acted in
good faith.
It is understood that there is bad faith on the part of
the landowner whenever the act was done with his
knowledge and without opposition on his part.
(Emphasis supplied.)
When both the landowner and the builder are in
good faith, the following rules govern:
ART. 448. The owner of the land on which anything
has been built, sown or planted in good faith, shall
have the right to appropriate as his own the works,
sowing or planting, after payment of the indemnity
provided for in articles 546 and 548, or to oblige the
one who built or planted to pay the price of the
land, and the one who sowed, the proper rent.
However, the builder or planter cannot be obliged
to buy the land if its value is considerably more
than that of the building or trees. In such case, he
shall pay reasonable rent, if the owner of the land
does not choose to appropriate the building or trees
after proper indemnity. The parties shall agree
upon the terms of the lease and in case of
disagreement, the court shall fix the terms thereof.
ART. 546. Necessary expenses shall be refunded
to every possessor; but only the possessor in good
faith may retain the thing until he has been
reimbursed therefor.
Useful expenses shall be refunded only to the
possessor in good faith with the same right of
retention, the person who has defeated him in the
possession having the option of refunding the
amount of the expenses or of paying the increase
in value which the thing may have acquired by
reason thereof.
ART. 548. Expenses for pure luxury or mere
pleasure shall not be refunded to the possessor in
good faith; but he may remove the ornaments with
which he has embellished the principal thing if it
suffers no injury thereby, and if his successor in the
possession does not prefer to refund the amount
expended.
Whatever is built, planted, or sown on the land of
another, and the improvements or repairs made
thereon, belong to the owner of the land. Where,
however, the planter, builder, or sower has acted in
good faith, a conflict of rights arises between the
owners and it becomes necessary to protect the
owner of the improvements without causing
injustice to the owner of the land. In view of the
impracticability of creating what Manresa calls a
state of "forced co-ownership," the law has
provided a just and equitable solution by giving the
owner of the land the option to acquire the
improvements after payment of the proper
indemnity or to oblige the builder or planter to pay
for the land and the sower to pay the proper rent. It
is the owner of the land who is allowed to exercise
the option because his right is older and because,
by the principle of accession, he is entitled to the
ownership of the accessory thing.85
The landowner has to make a choice between
appropriating the building by paying the proper
indemnity or obliging the builder to pay the price of
the land. But even as the option lies with the
landowner, the grant to him, nevertheless, is
preclusive. He must choose one. He cannot, for
instance, compel the owner of the building to
remove the building from the land without first
exercising either option. It is only if the owner
chooses to sell his land, and the builder or planter
fails to purchase it where its value is not more than
the value of the improvements, that the owner may
remove the improvements from the land. The
owner is entitled to such remotion only when, after
having chosen to sell his land, the other party fails
to pay for the same.86
This case then must be remanded to the RTC for
the determination of matters necessary for the
proper application of Article 448, in relation to
Article 546, of the Civil Code. Such matters include
the option that the Torbela siblings will choose; the
amount of indemnity that they will pay if they decide
to appropriate the improvements on Lot No. 356-A;
the value of Lot No. 356-A if they prefer to sell it to
Dr. Rosario; or the reasonable rent if they opt to sell
Lot No. 356-A to Dr. Rosario but the value of the
land is considerably more than the improvements.
The determination made by the Court of Appeals in
its Decision dated June 29, 1999 that the current
value of Lot No. 356-A is ₱1,200,000.00 is not
supported by any evidence on record.
Should the Torbela siblings choose to appropriate
the improvements on Lot No. 356-A, the following
ruling of the Court in Pecson v. Court of Appeals87
is relevant in the determination of the amount of
indemnity under Article 546 of the Civil Code:
Article 546 does not specifically state how the value
of the useful improvements should be determined.
The respondent court and the private respondents
espouse the belief that the cost of construction of
the apartment building in 1965, and not its current
market value, is sufficient reimbursement for
necessary and useful improvements made by the
petitioner. This position is, however, not in
consonance with previous rulings of this Court in
similar cases. In Javier vs. Concepcion, Jr., this
Court pegged the value of the useful improvements
consisting of various fruits, bamboos, a house and
camarin made of strong material based on the
market value of the said improvements. In
Sarmiento vs. Agana, despite the finding that the
useful improvement, a residential house, was built
in 1967 at a cost of between eight thousand pesos
(₱8,000.00) to ten thousand pesos (₱10,000.00),
the landowner was ordered to reimburse the builder
in the amount of forty thousand pesos
(₱40,000.00), the value of the house at the time of
the trial. In the same way, the landowner was
required to pay the "present value" of the house, a
useful improvement, in the case of De Guzman vs.
De la Fuente, cited by the petitioner.
The objective of Article 546 of the Civil Code is to
administer justice between the parties involved. In
this regard, this Court had long ago stated in Rivera
vs. Roman Catholic Archbishop of Manila that the
said provision was formulated in trying to adjust the
rights of the owner and possessor in good faith of a
piece of land, to administer complete justice to both
of them in such a way as neither one nor the other
may enrich himself of that which does not belong to
him. Guided by this precept, it is therefore the
current market value of the improvements which
should be made the basis of reimbursement. A
contrary ruling would unjustly enrich the private
respondents who would otherwise be allowed to
acquire a highly valued income-yielding four-unit
apartment building for a measly amount.
Consequently, the parties should therefore be
allowed to adduce evidence on the present market
value of the apartment building upon which the trial
court should base its finding as to the amount of
reimbursement to be paid by the landowner.88
(Emphases supplied.)
Still following the rules of accession, civil fruits,
such as rents, belong to the owner of the
building.89 Thus, Dr. Rosario has a right to the
rents of the improvements on Lot No. 356-A and is
under no obligation to render an accounting of the
same to anyone. In fact, it is the Torbela siblings
who are required to account for the rents they had
collected from the lessees of the commercial
building and turn over any balance to Dr. Rosario.
Dr. Rosario’s right to the rents of the improvements
on Lot No. 356-A shall continue until the Torbela
siblings have chosen their option under Article 448
of the Civil Code. And in case the Torbela siblings
decide to appropriate the improvements, Dr.
Rosario shall have the right to retain said
improvements, as well as the rents thereof, until the
indemnity for the same has been paid.90
Dr. Rosario is liable for damages to the Torbela
siblings.
The Court of Appeals ordered Dr. Rosario to pay
the Torbela siblings ₱300,000.00 as moral
damages; ₱200,000.00 as exemplary damages;
and ₱100,000.00 as attorney’s fees.
Indeed, Dr. Rosario’s deceit and bad faith is evident
when, being fully aware that he only held Lot No.
356-A in trust for the Torbela siblings, he
mortgaged said property to PNB and Banco Filipino
absent the consent of the Torbela siblings, and
caused the irregular cancellation of the Torbela
siblings’ adverse claim on TCT No. 52751.
Irrefragably, Dr. Rosario’s betrayal had caused the
Torbela siblings (which included Dr. Rosario’s own
mother, Eufrosina Torbela Rosario) mental
anguish, serious anxiety, and wounded feelings.
Resultantly, the award of moral damages is
justified, but the amount thereof is reduced to
₱200,000.00.
In addition to the moral damages, exemplary
damages may also be imposed given that Dr.
Rosario’s wrongful acts were accompanied by bad
faith. However, judicial discretion granted to the
courts in the assessment of damages must always
be exercised with balanced restraint and measured
objectivity. The circumstances of the case call for a
reduction of the award of exemplary damages to
₱100,000.00.
As regards attorney's fees, they may be awarded
when the defendant's act or omission has
compelled the plaintiff to litigate with third persons
or to incur expenses to protect his interest.
Because of Dr. Rosario’s acts, the Torbela siblings
were constrained to institute several cases against
Dr. Rosario and his spouse, Duque-Rosario, as
well as Banco Filipino, which had lasted for more
than 25 years. Consequently, the Torbela siblings
are entitled to an award of attorney's fees and the
amount of ₱100,000.00 may be considered
rational, fair, and reasonable.
Banco Filipino is entitled to a writ of possession for
Lot No. 5-F-8-C-2-B-2-A.
The Court emphasizes that Pet. Case No. U-822,
instituted by Banco Filipino for the issuance of a
writ of possession before the RTC of Urdaneta,
included only Lot No. 5-F-8-C-2-B-2-A and Lot No.
356-A (Lot No. 4489, the third property mortgaged
to secure Dr. Rosario’s loan from Banco Filipino, is
located in Dagupan City, Pangasinan, and the
petition for issuance of a writ of possession for the
same should be separately filed with the RTC of
Dagupan City). Since the Court has already
granted herein the reconveyance of Lot No. 356-A
from Banco Filipino to the Torbela siblings, the writ
of possession now pertains only to Lot No. 5-F-8-C-
2-B-2-A.
To recall, the Court of Appeals affirmed the
issuance by the RTC of a writ of possession in
favor of Banco Filipino. Dr. Rosario no longer
appealed from said judgment of the appellate court.
Already legally separated from Dr. Rosario, Duque-
Rosario alone challenges the writ of possession
before this Court through her Petition in G.R. No.
140553.
Duque-Rosario alleges in her Petition that Lot No.
5-F-8-C-2-B-2-A had been registered in her name
under TCT No. 104189. Yet, without a copy of TCT
No. 104189 on record, the Court cannot give much
credence to Duque-Rosario’s claim of sole
ownership of Lot No. 5-F-8-C-2-B-2-A. Also, the
question of whether Lot No. 5-F-8-C-2-B-2-A was
the paraphernal property of Duque-Rosario or the
conjugal property of the spouses Rosario would not
alter the outcome of Duque-Rosario’s Petition.
The following facts are undisputed: Banco Filipino
extrajudicially foreclosed the mortgage constituted
on Lot No. 5-F-8-C-2-B-2-A and the two other
properties after Dr. Rosario defaulted on the
payment of his loan; Banco Filipino was the highest
bidder for all three properties at the foreclosure sale
on April 2, 1987; the Certificate of Sale dated April
2, 1987 was registered in April 1987; and based on
the Certificate of Final Sale dated May 24, 1988
and Affidavit of Consolidation dated May 25, 1988,
the Register of Deeds cancelled TCT No. 104189
and issued TCT No. 165812 in the name of Banco
Filipino for Lot No. 5-F-8-C-2-B-2-A on June 7,
1988.
The Court has consistently ruled that the one-year
redemption period should be counted not from the
date of foreclosure sale, but from the time the
certificate of sale is registered with the Registry of
Deeds.91 No copy of TCT No. 104189 can be
found in the records of this case, but the fact of
annotation of the Certificate of Sale thereon was
admitted by the parties, only differing on the date it
was made: April 14, 1987 according to Banco
Filipino and April 15, 1987 as maintained by
Duque-Rosario. Even if the Court concedes that the
Certificate of Sale was annotated on TCT No.
104189 on the later date, April 15, 1987, the one-
year redemption period already expired on April 14,
1988.92 The Certificate of Final Sale and Affidavit
of Consolidation were executed more than a month
thereafter, on May 24, 1988 and May 25, 1988,
respectively, and were clearly not premature.
It is true that the rule on redemption is liberally
construed in favor of the original owner of the
property. The policy of the law is to aid rather than
to defeat him in the exercise of his right of
redemption.93 However, the liberal interpretation of
the rule on redemption is inapplicable herein as
neither Duque-Rosario nor Dr. Rosario had made
any attempt to redeem Lot No. 5-F-8-C-2-B-2-A.
Duque-Rosario could only rely on the efforts of the
Torbela siblings at redemption, which were
unsuccessful. While the Torbela siblings made
several offers to redeem Lot No. 356-A, as well as
the two other properties mortgaged by Dr. Rosario,
they did not make any valid tender of the
redemption price to effect a valid redemption. The
general rule in redemption is that it is not sufficient
that a person offering to redeem manifests his
desire to do so. The statement of intention must be
accompanied by an actual and simultaneous tender
of payment. The redemption price should either be
fully offered in legal tender or else validly consigned
in court. Only by such means can the auction
winner be assured that the offer to redeem is being
made in good faith.94 In case of disagreement over
the redemption price, the redemptioner may
preserve his right of redemption through judicial
action, which in every case, must be filed within the
one-year period of redemption. The filing of the
court action to enforce redemption, being
equivalent to a formal offer to redeem, would have
the effect of preserving his redemptive rights and
"freezing" the expiration of the one-year period.95
But no such action was instituted by the Torbela
siblings or either of the spouses Rosario.
Duque-Rosario also cannot bar the issuance of the
writ of possession over Lot No. 5-F-8-C-2-B-2-A in
favor of Banco Filipino by invoking the pendency of
Civil Case No. U-4359, the Torbela siblings’ action
for recovery of ownership and possession and
damages, which supposedly tolled the period for
redemption of the foreclosed properties. Without
belaboring the issue of Civil Case No. U-4359
suspending the redemption period, the Court simply
points out to Duque-Rosario that Civil Case No. U-
4359 involved Lot No. 356-A only, and the legal
consequences of the institution, pendency, and
resolution of Civil Case No. U-4359 apply to Lot No.
356-A alone.
Equally unpersuasive is Duque-Rosario’s argument
that the writ of possession over Lot No. 5-F-8-C-2-
B-2-A should not be issued given the defects in the
conduct of the foreclosure sale (i.e., lack of
personal notice to Duque-Rosario) and
consolidation of title (i.e., failure to provide Duque-
Rosario with copies of the Certificate of Final Sale).
The right of the purchaser to the possession of the
foreclosed property becomes absolute upon the
expiration of the redemption period. The basis of
this right to possession is the purchaser's
ownership of the property. After the consolidation of
title in the buyer's name for failure of the mortgagor
to redeem, the writ of possession becomes a
matter of right and its issuance to a purchaser in an
extrajudicial foreclosure is merely a ministerial
function.961avvphi1
The judge with whom an application for a writ of
possession is filed need not look into the validity of
the mortgage or the manner of its foreclosure. Any
question regarding the validity of the mortgage or
its foreclosure cannot be a legal ground for the
refusal to issue a writ of possession. Regardless of
whether or not there is a pending suit for the
annulment of the mortgage or the foreclosure itself,
the purchaser is entitled to a writ of possession,
without prejudice, of course, to the eventual
outcome of the pending annulment case. The
issuance of a writ of possession in favor of the
purchaser in a foreclosure sale is a ministerial act
and does not entail the exercise of discretion.97
WHEREFORE, in view of the foregoing, the Petition
of the Torbela siblings in G.R. No. 140528 is
GRANTED, while the Petition of Lena Duque-
Rosario in G.R. No. 140553 is DENIED for lack of
merit. The Decision dated June 29, 1999 of the
Court of Appeals in CA-G.R. CV No. 39770, which
affirmed with modification the Amended Decision
dated January 29, 1992 of the RTC in Civil Case
Nos. U-4359 and U-4733 and Pet. Case No. U-822,
is AFFIRMED WITH MODIFICATIONS, to now
read as follows:
(1) Banco Filipino is ORDERED to reconvey Lot
No. 356-A to the Torbela siblings;
(2) The Register of Deeds of Pangasinan is
ORDERED to cancel TCT No. 165813 in the name
of Banco Filipino and to issue a new certificate of
title in the name of the Torbela siblings for Lot No.
356-A;
(3) The case is REMANDED to the RTC for further
proceedings to determine the facts essential to the
proper application of Articles 448 and 546 of the
Civil Code, particularly: (a) the present fair market
value of Lot No. 356-A; (b) the present fair market
value of the improvements thereon; (c) the option of
the Torbela siblings to appropriate the
improvements on Lot No. 356-A or require Dr.
Rosario to purchase Lot No. 356-A; and (d) in the
event that the Torbela siblings choose to require
Dr. Rosario to purchase Lot No. 356-A but the
value thereof is considerably more than the
improvements, then the reasonable rent of Lot No.
356-A to be paid by Dr. Rosario to the Torbela
siblings;
(4) The Torbela siblings are DIRECTED to submit
an accounting of the rents of the improvements on
Lot No. 356-A which they had received and to turn
over any balance thereof to Dr. Rosario;
(5) Dr. Rosario is ORDERED to pay the Torbela
siblings ₱200,000.00 as moral damages,
₱100,000.00 as exemplary damages, and
₱100,000.00 as attorney’s fees; and
(6) Banco Filipino is entitled to a writ of possession
over Lot-5-F-8-C-2-B-2-A, covered by TCT No.
165812. The RTC Branch Clerk of Court is
ORDERED to issue a writ of possession for the
said property in favor of Banco Filipino.
SO ORDERED.
G.R. No. 189647 February 6, 2012
NANCY T. LORZANO, Petitioner,
vs.
JUAN TABAYAG, JR., Respondent.
DECISION
REYES, J.:
Nature of the Petition
This is a petition for review on certiorari under Rule
45 of the Rules of Court filed by Nancy T. Lorzano
(petitioner) assailing the Court of Appeals (CA)
Decision1 dated March 18, 2009 and Resolution2
dated September 16, 2009 in CA-G.R. CV No.
87762 entitled "Juan Tabayag, Jr. v. Nancy T.
Lorzano."
The Antecedent Facts
The instant case stemmed from an amended
complaint3 for annulment of document and
reconveyance filed by Juan Tabayag, Jr.
(respondent) against the petitioner, docketed as
Civil Case No. Ir-3286, with the Regional Trial
Court (RTC) of Iriga City.
The petitioner and the respondent are two of the
children of the late Juan Tabayag (Tabayag) who
died on June 2, 1992. Tabayag owned a parcel of
land situated in Sto. Domingo, Iriga City (subject
property). Right after the burial of their father, the
petitioner allegedly requested from her siblings that
she be allowed to take possession of and receive
the income generated by the subject property until
after her eldest son could graduate from college.
The petitioner’s siblings acceded to the said
request.
After the petitioner’s eldest son finished college, her
siblings asked her to return to them the possession
of the subject property so that they could partition it
among themselves. However, the petitioner refused On April 28, 2006, the RTC rendered an Amended
to relinquish her possession of the subject property Decision7 the decretal portion of which reads:
claiming that she purchased the subject property
from their father as evidenced by a Deed of
Absolute Sale of Real Property4 executed by the WHEREFORE, Judgment is hereby rendered[:]
latter on May 25, 1992.

a. Declaring the supposed Deed of Sale null and

The respondent claimed that their father did not void and of no legal effect;
execute the said deed of sale. He pointed out that
the signature of their father appearing in the said
deed of sale was a forgery as the same is markedly
b. Ordering the [petitioner] to reconvey to the heirs
different from the real signature of Tabayag.
of the late Juan Tabayag, Sr. the land subject
matter of this case[;]

Further, the respondent asserted that the said deed

of sale was acknowledged before a person who
c. Declaring the property described in the complaint
was not a duly commissioned Notary Public. The
and in the spurious deed of sale to be owned in
deed of sale was acknowledged by the petitioner
common by the heirs of Juan Tabayag, Sr. as part
before a certain Julian P. Cabañes (Cabañes) on
of their inheritance from said Juan Tabayag, Sr[.];
May 25, 1992 at Iriga City. However, as per the
Certification5 issued by the Office of the Clerk of
Court of the RTC on May 16, 2002, Cabañes has
never been commissioned as a Notary Public for d. Ordering [petitioner] to pay plaintiff the sum of
and in the Province of Camarines Sur and in the One Hundred Thousand Pesos (P100,000.00)by
Cities of Iriga and Naga. way of moral damages;

The respondent alleged that the petitioner
purposely forged the signature of Tabayag in the
said deed of sale to deprive him and their other
siblings of their share in the subject property. He
then averred that the subject property was already
covered by Original Certificate of Title (OCT) No.
17866 issued by the Register of Deeds of Iriga City
on January 9, 2001 registered under the name of
the petitioner. OCT No. 1786 was issued pursuant
to Free Patent No. 051716 which was procured by
the petitioner on June 24, 1996.
For her part, the petitioner maintained she is the
owner of the subject parcel of land having
purchased the same from Tabayag as evidenced
by the May 25, 1992 deed of sale. Further, the
petitioner asserted that the respondent failed to
establish that the signature of Tabayag appearing
on the said deed of sale was a forgery considering
that it was not submitted for examination by a
handwriting expert.
The RTC Decision
e. Ordering defendant to pay plaintiff the attorney’s
fees in the sum of Fifteen Thousand Pesos
(P15,000.00), based on quantum meruit;
f. Dismissing the counterclaim for lack of merit[;]
g. Costs against the defendant.
SO ORDERED.8
The RTC opined that a cursory comparison
between the signature of Tabayag appearing on the
said deed of sale and his signatures appearing on
other documents would clearly yield a conclusion
that the former was indeed a forgery. Moreover, the
RTC asserted that the nullity of the said May 25,
1992 deed of sale all the more becomes glaring
considering that the same was purportedly
acknowledged before a person who is not a duly
commissioned Notary Public.

The CA Decision

Thereafter, the petitioner appealed the decision
with the CA. On March 18, 2009, the CA rendered
the assailed decision affirming in toto the RTC
decision.9 The CA held that the testimony of a
handwriting expert in this case is not indispensable
as the similarity and dissimilarity between the
questioned signature of Tabayag as compared to
other signatures of the latter in other documents
could be determined by a visual comparison.
Further, the CA upheld the award of moral
damages and attorney’s fees in favor of the
respondent as the petitioner’s conduct caused
"great concern and anxiety" to the respondent and
that the latter had to go to court and retain the
services of counsel to pursue his rights and protect
his interests.
Undaunted, the petitioner instituted the instant
petition for review on certiorari before this Court
asserting the following: (1) the questioned signature
of Tabayag in the May 25, 1992 deed of sale could
not be declared spurious unless first examined and
declared to be so by a handwriting expert; (2)
considering that the subject property was registered
under the petitioner’s name pursuant to a free
patent, reconveyance of the same in favor of the
respondent is improper since only the Government,
through the Office of the Solicitor General (OSG),
could assail her title thereto in an action for
reversion; and (3) the respondent is not entitled to
an award for moral damages and attorney’s fees.
In his Comment,10 the respondent claimed that the
issues raised in the instant petition are factual in
nature and, hence, could not be passed upon by
this Court in a petition for review on certiorari under
Rule 45. Likewise, the respondent asserted that the
petitioner’s free patent, having been issued on the
basis of a falsified document, does not create a
right over the subject property in her favor.
Issues
In sum, the threshold issues for resolution are the
following: (a) whether the lower courts erred in
declaring the May 25, 1992 deed of sale a nullity;
(b) whether an action for reconveyance is proper in
the instant case; and (c) whether the respondent is
entitled to an award of moral damages and
attorney’s fees.
The Court’s Ruling
First and Third Issues: Nullity of the Deed of Sale
and Award of Moral Damages and Attorney’s Fees
This Court shall jointly discuss the first and third
issues as the resolution of the same are
interrelated.
Primarily, Section 1, Rule 45 of the Rules of Court
categorically states that the petition filed shall raise
only questions of law, which must be distinctly set
forth. A question of law arises when there is doubt
as to what the law is on a certain state of facts,
while there is a question of fact when the doubt
arises as to the truth or falsity of the alleged facts.
For a question to be one of law, the same must not
involve an examination of the probative value of the
evidence presented by the litigants or any of them.
The resolution of the issue must rest solely on what
the law provides on the given set of circumstances.
Once it is clear that the issue invites a review of the
evidence presented, the question posed is one of
fact.11
That the signature of Tabayag in the May 25, 1992
deed of sale was a forgery is a conclusion derived
by the RTC and the CA on a question of fact. The
same is conclusive upon this Court as it involves
the truth or falsehood of an alleged fact, which is a
matter not for this Court to resolve.12 Where a
petitioner casts doubt on the findings of the lower
court as affirmed by the CA regarding the existence
of forgery is a question of fact.13
In any case, the CA aptly ruled that a handwriting
expert is not indispensable to prove that the
signature of Tabayag in the questioned deed of
sale was indeed a forgery. It is true that the opinion
of handwriting experts are not necessarily binding
upon the court, the expert’s function being to place
before the court data upon which the court can form
its own opinion. Handwriting experts are usually
helpful in the examination of forged documents
because of the technical procedure involved in
analyzing them. But resort to these experts is not
mandatory or indispensable to the examination or
the comparison of handwriting. A finding of forgery
does not depend entirely on the testimonies of
handwriting experts, because the judge must
conduct an independent examination of the
questioned signature in order to arrive at a
reasonable conclusion as to its authenticity.14
For the same reason, we would ordinarily disregard
the petitioner’s allegation as to the propriety of the
award of moral damages and attorney’s fees in
favor of the respondent as it is a question of fact.
Thus, questions on whether or not there was a
preponderance of evidence to justify the award of
damages or whether or not there was a causal
connection between the given set of facts and the
damage suffered by the private complainant or
whether or not the act from which civil liability might
arise exists are questions of fact.15
Essentially, the petitioner is questioning the award
of moral damages and attorney’s fees in favor of
the respondent as the same is supposedly not fully
supported by evidence. However, in the final
analysis, the question of whether the said award is
fully supported by evidence is a factual question as
it would necessitate whether the evidence adduced
in support of the same has any probative value. For
a question to be one of law, it must involve no
examination of the probative value of the evidence
presented by the litigants or any of them.16
Nevertheless, a review of the amount of moral
damages actually awarded by the lower courts in
favor of the respondent is necessary.
Here, the lower courts ordered the petitioner to pay
the respondent moral damages in the amount of
₱100,000.00. We find the said amount to be
excessive.
Moral damages are not intended to enrich the
complainant at the expense of the defendant.
Rather, these are awarded only to enable the
injured party to obtain "means, diversions or
amusements" that will serve to alleviate the moral
suffering that resulted by reason of the defendant’s
culpable action. The purpose of such damages is
essentially indemnity or reparation, not punishment
or correction. In other words, the award thereof is
aimed at a restoration within the limits of the
possible, of the spiritual status quo ante; therefore,
it must always reasonably approximate the extent
of injury and be proportional to the wrong
committed.17
Accordingly, the amount of moral damages must be
reduced to ₱30,000.00, an amount reasonably
commensurate to the injury sustained by the
respondent.
Second Issue: Propriety of the Reconveyance of
the Subject Property to the Heirs of the late Juan
Tabayag
The petitioner asserted that the CA erred in not
finding that her ownership over the subject property
was by virtue of a free patent issued by the
government and, thus, even assuming that the
subject deed of sale is invalid, her title and
ownership of the subject property cannot be
divested or much less ordered reconveyed to the
heirs of Tabayag.
Simply put, the petitioner points out that the subject
property, being acquired by her through a grant of
free patent from the government, originally
belonged to the public domain. As such, the lower
courts could not order the reconveyance of the
subject property to the heirs of Tabayag as the
latter are not the original owners thereof. If at all,
the subject property could only be ordered reverted
to the public domain.
An issue cannot be raised for the first time on
appeal as it is already barred by estoppel.
This Court notes that the foregoing argument is
being raised by the petitioner for the first time in the
instant petition. It is well-settled that no question will
be entertained on appeal unless it has been raised
in the proceedings below. Points of law, theories,
issues and arguments not brought to the attention
of the lower court, administrative agency or quasi-
judicial body, need not be considered by a
reviewing court, as they cannot be raised for the
first time at that late stage. Basic considerations of
fairness and due process impel this rule. Any issue
raised for the first time on appeal is barred by
estoppel.18
Accordingly, the petitioner’s attack on the propriety
of the action for reconveyance in this case ought to
be disregarded. However, in order to obviate any
lingering doubt on the resolution of the issues
involved in the instant case, this Court would
proceed to discuss the cogency of the petitioner’s
foregoing argument.
Title emanating from a free patent fraudulently
secured does not become indefeasible.
The petitioner asserts that the amended complaint
for annulment of document, reconveyance and
damages that was filed by the respondent with the
RTC is a collateral attack on her title over the
subject property. She avers that, when the said
amended compliant was filed, more than a year
had already lapsed since OCT No. 1786 over the
subject property was issued under her name. Thus,
the petitioner maintains that her title over the
subject property is already indefeasible and, hence,
could not be attacked collaterally.
We do not agree.
A Free Patent may be issued where the applicant is
a natural-born citizen of the Philippines; is not the
owner of more than twelve (12) hectares of land;
has continuously occupied and cultivated, either by
himself or through his predecessors-in-interest, a
tract or tracts of agricultural public land subject to
disposition, for at least 30 years prior to the
effectivity of Republic Act No. 6940; and has paid
the real taxes thereon while the same has not been
occupied by any person.19
Once a patent is registered and the corresponding
certificate of title is issued, the land covered
thereby ceases to be part of public domain and
becomes private property, and the Torrens Title
issued pursuant to the patent becomes indefeasible
upon the expiration of one year from the date of
such issuance.20 However, a title emanating from
a free patent which was secured through fraud
does not become indefeasible, precisely because
the patent from whence the title sprung is itself void
and of no effect whatsoever.21
On this point, our ruling in Republic v. Heirs of
Felipe Alejaga, Sr.22 is instructive:
True, once a patent is registered and the
corresponding certificate of title [is] issued, the land
covered by them ceases to be part of the public
domain and becomes private property. Further, the
Torrens Title issued pursuant to the patent
becomes indefeasible a year after the issuance of
the latter. However, this indefeasibility of a title
does not attach to titles secured by fraud and
misrepresentation. Well-settled is the doctrine that
the registration of a patent under the Torrens
System does not by itself vest title; it merely
confirms the registrant’s already existing one.
Verily, registration under the Torrens System is not
a mode of acquiring ownership.23 (citations
omitted)
A fraudulently acquired free patent may only be
assailed by the government in an action for
reversion.
Nonetheless, a free patent that was fraudulently
acquired, and the certificate of title issued pursuant
to the same, may only be assailed by the
government in an action for reversion pursuant to
Section 101 of the Public Land Act.24 In Sherwill
Development Corporation v. Sitio Sto. Niño
Residents Association, Inc.,25 this Court pointed
out that:
It is also to the public interest that one who
succeeds in fraudulently acquiring title to a public
land should not be allowed to benefit therefrom,
and the State should, therefore, have an even
existing authority, thru its duly-authorized officers,
to inquire into the circumstances surrounding the
issuance of any such title, to the end that the
Republic, thru the Solicitor General or any other
officer who may be authorized by law, may file the
corresponding action for the reversion of the land
involved to the public domain, subject thereafter to
disposal to other qualified persons in accordance
with law. In other words, the indefeasibility of a title
over land previously public is not a bar to an
investigation by the Director of Lands as to how
such title has been acquired, if the purpose of such
investigation is to determine whether or not fraud
had been committed in securing such title in order
that the appropriate action for reversion may be
filed by the Government.26
In Kayaban, et al. v. Republic, et al.,27 this Court
explained the reason for the rule that only the
government, through the OSG, upon the
recommendation of the Director of Lands, may
bring an action assailing a certificate of title issued
pursuant to a fraudulently acquired free patent:
Since it was the Director of Lands who processed
and approved the applications of the appellants and
who ordered the issuance of the corresponding free
patents in their favor in his capacity as
administrator of the disposable lands of the public
domain, the action for annulment should have been
initiated by him, or at least with his prior authority
and consent.28
An action for reconveyance is proper in this case.
However, the foregoing rule is not without an
exception. A recognized exception is that situation
where plaintiff-claimant seeks direct reconveyance
from defendant public land unlawfully and in breach
of trust titled by him, on the principle of
enforcement of a constructive trust.29
A private individual may bring an action for
reconveyance of a parcel of land even if the title
thereof was issued through a free patent since such
action does not aim or purport to re-open the
registration proceeding and set aside the decree of
registration, but only to show that the person who
secured the registration of the questioned property
is not the real owner thereof.30
In Roco, et al. v. Gimeda,31 we stated that if a
patent had already been issued through fraud or
mistake and has been registered, the remedy of a
party who has been injured by the fraudulent
registration is an action for reconveyance, thus:
It is to be noted that the petition does not seek for a
reconsideration of the granting of the patent or of
the decree issued in the registration proceeding.
The purpose is not to annul the title but to have it
conveyed to plaintiffs. Fraudulent statements were
made in the application for the patent and no notice
thereof was given to plaintiffs, nor knowledge of the
petition known to the actual possessors and
occupants of the property. The action is one based
on fraud and under the law, it can be instituted
within four years from the discovery of the fraud.
(Art. 1146, Civil Code, as based on Section 3,
paragraph 43 of Act No. 190.) It is to be noted that
as the patent here has already been issued, the
land has the character of registered property in
accordance with the provisions of Section 122 of
Act No. 496, as amended by Act No. 2332, and the
remedy of the party who has been injured by the
fraudulent registration is an action for
reconveyance. (Director of Lands vs. Registered of
Deeds, 92 Phil., 826; 49 Off. Gaz. [3] 935; Section
55 of Act No. 496.)32
In the same vein, in Quiñiano, et al. v. Court of
Appeals, et al.,33 we stressed that:
The controlling legal norm was set forth in succinct
language by Justice Tuason in a 1953 decision,
Director of Lands v. Register of Deeds of Rizal.
Thus: "The sole remedy of the land owner whose
property has been wrongfully or erroneously
registered in another's name is, after one year from
the date of the decree, not to set aside the decree,
as was done in the instant case, but, respecting the
decree as incontrovertible and no longer open to
review, to bring an ordinary action in the ordinary
court of justice for reconveyance or, if the property
has passed into the hands of an innocent
purchaser for value, for damages." Such a doctrine
goes back to the 1919 landmark decision of
Cabanos v. Register of Deeds of Laguna. If it were
otherwise the institution of registration would, to
quote from Justice Torres, serve "as a protecting
mantle to cover and shelter bad faith ...." In the
language of the then Justice, later Chief Justice,
Bengzon: "A different view would encourage fraud
and permit one person unjustly to enrich himself at
the expense of another." It would indeed be a
signal failing of any legal system if under the
circumstances disclosed, the aggrieved party is
considered as having lost his right to a property to
which he is entitled. It is one thing to protect an
innocent third party; it is entirely a different matter,
and one devoid of justification, if [deceit] would be
rewarded by allowing the perpetrator to enjoy the
fruits of his nefarious deed. As clearly revealed by
the undeviating line of decisions coming from this
Court, such an undesirable eventuality is precisely
sought to be guarded against. So it has been
before; so it should continue to be.34 (citations
omitted)
Here, the respondent, in filing the amended
complaint for annulment of documents,
reconveyance and damages, was not seeking a
reconsideration of the granting of the patent or the
decree issued in the registration proceedings. What
the respondent sought was the reconveyance of
the subject property to the heirs of the late Tabayag
on account of the fraud committed by the petitioner.
Thus, the lower courts did not err in upholding the
respondent’s right to ask for the reconveyance of
the subject property. To hold otherwise would be to
make the Torrens system a shield for the
commission of fraud.
That the subject property was not registered under
the name of the heirs of Tabayag prior to the
issuance of OCT No. 1786 in the name of the
petitioner would not effectively deny the remedy of
reconveyance to the former. An action for
reconveyance is a legal and equitable remedy
granted to the rightful landowner, whose land was
wrongfully or erroneously registered in the name of
another, to compel the registered owner to transfer
or reconvey the land to him.35
It cannot be gainsaid that the heirs of Tabayag, by
themselves and through their predecessors-in-
interest, had already acquired a vested right over
the subject property. An open, continuous, adverse
and public possession of a land of the public
domain from time immemorial by a private
individual personally and through his predecessors
confers an effective title on said possessors
whereby the land ceases to be public, to become
private property, at least by presumption.36 Hence,
the right of the heirs of Tabayag to ask for the
reconveyance of the subject property is
irrefutable.1âwphi1
At this juncture, we deem it necessary to reiterate
our disquisition in Naval v. Court of Appeals,37
thus:
The fact that petitioner was able to secure a title in
her name did not operate to vest ownership upon
her of the subject land. Registration of a piece of
land under the Torrens System does not create or
vest title, because it is not a mode of acquiring
ownership. A certificate of title is merely an
evidence of ownership or title over the particular
property described therein. It cannot be used to
protect a usurper from the true owner; nor can it be
used as a shield for the commission of fraud;
neither does it permit one to enrich himself at the
expense of others. Its issuance in favor of a
particular person does not foreclose the possibility
that the real property may be co-owned with
persons not named in the certificate, or that it may
be held in trust for another person by the registered
owner.38 (citations omitted)
WHEREFORE, in consideration of the foregoing
disquisitions, the petition is DENIED. The Decision
dated March 18, 2009 and Resolution dated
September 16, 2009 issued by the Court of
Appeals in CA-G.R. CV No. 87762 are hereby
AFFIRMED with MODIFICATION. The petitioner is
ordered to pay the respondent moral damages in
the amount of Thirty Thousand Pesos
(₱30,000.00).
G.R. No. 168661 October 26, 2007
ESTATE OF THE LATE JESUS S. YUJUICO,
represented by ADMINISTRATORS BENEDICTO
V. YUJUICO and EDILBERTO V. YUJUICO; and
AUGUSTO Y. CARPIO, Petitioners,
vs.
REPUBLIC OF THE PHILIPPINES and the
COURT OF APPEALS, Respondents.
DECISION
VELASCO, JR., J.:
In 1973, Fermina Castro filed an application for the
registration and confirmation of her title over a
parcel of land with an area of 17,343 square meters
covered by plan (LRC) Psu-964 located in the
Municipality of Parañaque, Province of Rizal (now
Parañaque City), in the Pasig-Rizal Court of First
Instance (CFI), Branch 22. The application was
docketed LRC Case No. N-8239. The application
was opposed by the Office of the Solicitor General
(OSG) on behalf of the Director of Lands, and by
Mercedes Dizon, a private party. Both oppositions
were stricken from the records since the opposition
of Dizon was filed after the expiration of the period
given by the court, and the opposition of the
Director of Lands was filed after the entry of the
order of general default. After considering the
evidence, the trial court rendered its April 26, 1974
Decision. The dispositive portion reads:
____________________________
* As per September 3, 2007 raffle.
WHEREFORE, the Court hereby declares the
applicant, Fermina Castro, of legal age, single,
Filipino and a resident of 1515 F. Agoncillo St.,
Corner J. Escoda St., Ermita, Manila, the true and
absolute owner of the land applied for situated in
the Municipality of Parañaque, Province of Rizal,
with an area of 17,343 square meters and covered
by plan (LRC) Psu-964 and orders the registration
of said parcel of land in her name with her
aforementioned personal circumstances.
Once this decision becomes final and executory, let
the corresponding order for the issuance of the
decree be issued.
SO ORDERED.1
The Director of Lands and Mercedes Dizon did not
appeal from the adverse decision of the Pasig-Rizal
CFI. Thus, the order for the issuance of a decree of
registration became final, and Decree No. N-
150912 was issued by the Land Registration
Commission (LRC).2 Original Certificate of Title
(OCT) No. 10215 was issued in the name of
Fermina Castro by the Register of Deeds for the
Province of Rizal on May 29, 1974.3
The land was then sold to Jesus S. Yujuico, and
OCT No. 10215 was cancelled. On May 31, 1974,4
Transfer Certificate of Title (TCT) No. 445863 was
issued in Yujuico’s name, who subdivided the land
into two lots. TCT No. 4463865 over Lot 1 was
issued in his name, while TCT No. S-293616 over
Lot 2 was issued in the name of petitioner Augusto
Y. Carpio.
Annotations at the back of TCT No. 446386 show
that Yujuico had, at one time or another, mortgaged
the lot to the Philippine Investments System
Organization (PISO) and Citibank, N.A. Annotations
in the title of petitioner Carpio reveal the lot was
mortgaged in favor of Private Development
Corporation (PDC), Rizal Commercial Banking
Corporation (RCBC) and then Philippine
Commercial and Industrial Bank (PCIB) and the
Development Bank of the Philippines (DBP) to
secure various loans.
Sometime in 1977, Presidential Decree No. (PD)
1085 entitled Conveying the Land Reclaimed in the
Foreshore and Offshore of the Manila Bay (The
Manila-Cavite Coastal Road Project) as Property of
the Public Estates Authority as well as Rights and
Interests with Assumptions of Obligations in the
Reclamation Contract Covering Areas of the Manila
Bay between the Republic of the Philippines and
the Construction and Development Corporation of
the Philippines (1977) was issued. Land reclaimed
in the foreshore and offshore areas of Manila Bay
became the properties of the Public Estates
Authority (PEA), a government corporation that
undertook the reclamation of lands or the
acquisition of reclaimed lands. On January 13,
1989, OCT No. SP 02 was issued in favor of PEA.
The PEA also acquired ownership of other parcels
of land along the Manila Bay coast, some of which
were subsequently sold to the Manila Bay
Development Corporation (MBDC), which in turn
leased portions to Uniwide Holdings, Inc.7
The PEA undertook the construction of the Manila
Coastal Road. As this was being planned, Yujuico
and Carpio discovered that a verification survey
they commissioned showed that the road directly
overlapped their property, and that they owned a
portion of the land sold by the PEA to the MBDC.
On July 24, 1996, Yujuico and Carpio filed before
the Parañaque City Regional Trial Court (RTC), a
complaint for the Removal of Cloud and Annulment
of Title with Damages docketed as Civil Case No.
96-0317 against the PEA. On May 15, 1998 the
parties entered into a compromise agreement
approved by the trial court in a Resolution dated
May 18, 1998. On June 17, 1998, the parties
executed a Deed of Exchange of Real Property,
pursuant to the compromise agreement, where the
PEA property with an area of 1.4007 hectares
would be conveyed to Jesus Yujuico and petitioner
Carpio in exchange for their property with a
combined area of 1.7343 hectares.
On July 31, 1998, the incumbent PEA General
Manager, Carlos P. Doble, informed the OSG that
the new PEA board and management had reviewed
the compromise agreement and had decided to
defer its implementation and hold it in abeyance
following the view of the former PEA General
Manager, Atty. Arsenio Yulo, Jr., that the
compromise agreement did not reflect a condition
of the previous PEA Board, requiring the approval
of the Office of the President. The new PEA
management then filed a petition for relief from the
resolution approving the compromise agreement on
the ground of mistake and excusable negligence.
The petition was dismissed by the trial court on the
ground that it was filed out of time and that the
allegation of mistake and excusable negligence
lacked basis.
The PEA fared no better in the Court of Appeals
(CA), as the petition was dismissed for failure to
pay the required docket fees and for lack of merit.
The matter was raised to the Supreme Court in
Public Estates Authority v. Yujuico8 but PEA’s
petition was denied, upholding the trial court’s
dismissal of the petition for relief for having been
filed out of time. The allegation of fraud in the titling
of the subject property in the name of Fermina
Castro was not taken up by the Court.
On June 8, 2001, in a Complaint for Annulment and
Cancellation of Decree No. N-150912 and its
Derivative Titles, entitled Republic of the
Philippines v. Fermina Castro, Jesus S. Yujuico,
August Y. Carpio and the Registry of Deeds of
Parañaque City docketed as Civil Case No. 01-
0222, filed with the Parañaque City RTC,
respondent Republic of the Philippines, through the
OSG, alleged that when the land registered to
Castro was surveyed by Engr. H. Obreto on August
3, 1972 and subsequently approved by the LRC on
April 23, 1973, the land was still a portion of Manila
Bay as evidenced by Namria Hydrographic Map
No. 4243, Surveys to 1980; 1st Ed/. January 9/61:
Revised 80-11-2; that Roman Mataverde, the then
OIC of the Surveys Division, Bureau of Lands,
informed the OIC of the Legal Division that "[w]hen
projected on Cadastral Maps CM 14 deg. 13’ N-120
deg, 59’E, Sec.2-A of Parañaque Cadastre (Cad.
299), (LRC) Psu-964 falls inside Manila Bay,
outside Cad. 299"; that then Acting Regional Lands
Director Narciso V. Villapando issued a Report
dated November 15, 1973 stating that plan (LRC)
Psu-964 is a portion of Manila Bay; that then
Officer-in-Charge, Assistant Director of Lands,
Ernesto C. Mendiola, submitted his Comment and
Recommendation re: Application for Registration of
Title of FERMINA CASTRO, LRC Case No. N-
8239, dated Dec. 1, 1977, praying that the instant
registration case be dismissed; and that Fermina
Castro had no registrable rights over the property.
More significantly, respondent Republic argued
that, first, since the subject land was still
underwater, it could not be registered in the name
of Fermina Castro. Second, the land registration
court did not have jurisdiction to adjudicate
inalienable lands, thus the decision adjudicating the
subject parcel of land to Fermina Castro was void.
And third, the titles of Yujuico and Carpio, being
derived from a void title, were likewise void.9
On September 13, 2001, Yujuico and Carpio filed a
Motion to Dismiss (With Cancellation of Notice of
Lis Pendens),10 on the grounds that: (1) the cause
of action was barred by prior judgment; (2) the
claim had been waived, abandoned, or otherwise
extinguished; (3) a condition precedent for the filing
of the complaint was not complied with; and (4) the
complaint was not verified and the certification
against forum shopping was not duly executed by
the plaintiff or principal party.
On November 27, 2001, respondent Republic filed
an Opposition11 to the motion to dismiss to which
defendants filed a Reply12 on January 14, 2002,
reiterating the grounds for the motion to dismiss.
In the August 7, 2002 Order of the RTC,13 Civil
Case No. 01-0222 was dismissed. The trial court
stated that the matter had already been decided in
LRC Case No. N-8239, and that after 28 years
without being contested, the case had already
become final and executory.1âwphi1 The trial court
also found that the OSG had participated in the
LRC case, and could have questioned the validity
of the decision but did not. Civil Case No. 01-0222
was thus found barred by prior judgment.
On appeal to the CA, in CA-G.R. CV No. 76212,
respondent Republic alleged that the trial court
erred in disregarding that appellant had evidence to
prove that the subject parcel of land used to be
foreshore land of the Manila Bay and that the trial
court erred in dismissing Civil Case No. 01-0222 on
the ground of res judicata.14
The CA observed that shores are properties of the
public domain intended for public use and,
therefore, not registrable and their inclusion in a
certificate of title does not convert the same into
properties of private ownership or confer title upon
the registrant.
Further, according to the appellate court res
judicata does not apply to lands of public domain,
nor does possession of the land automatically
divest the land of its public character.
The appellate court explained that rulings of the
Supreme Court have made exceptions in cases
where the findings of the Director of Lands and the
Department of Environment and Natural Resources
(DENR) were conflicting as to the true nature of the
land in as much as reversion efforts pertaining
foreshore lands are embued with public interest.
The dispositive portion of the CA decision reads,
WHEREFORE, premises considered, the present
appeal is hereby GRANTED. The appealed Order
dated August 7, 2002 of the trial court in Civil Case
No. 01-0222 is hereby REVERSED and SET
ASIDE. The case is hereby REMANDED to said
court for further proceedings and a full-blown trial
on the merits with utmost dispatch.15
Hence, this petition.
The Issues
Petitioners now raise the following issues before
this Court:
THE COURT OF APPEALS COMMITTED
REVERSIBLE ERROR AND DECIDED A
QUESTION OF SUBSTANCE IN A WAY NOT IN
ACCORDANCE WITH LAW AND THE
APPLICABLE DECISIONS OF THE HONORABLE
COURT AND HAS DEPARTED FROM THE
ACCEPTED AND USUAL COURSE OF JUDICIAL
PROCEEDINGS NECESSITATING THE
HONORABLE COURT’S EXERCISE OF ITS
POWER OF SUPERVISION CONSIDERING
THAT:
I. THE REVERSAL BY THE COURT OF APPEALS
OF THE TRIAL COURT’S APPLICATION OF THE
PRINCIPLE OF RES JUDICATA IN THE INSTANT
CASE IS BASED ON ITS ERRONEOUS
ASSUMPTION THAT THE SUBJECT LAND IS OF
PUBLIC DOMAIN, ALLEGEDLY PART OF MANILA
BAY.
A. IN THE FIRESTONE CASE, THE HONORABLE
COURT APPLIED THE PRINCIPLE OF RES
JUDICATA NOTWITHSTANDING ALLEGATIONS
OF LACK OF JURISDICTION OF A LAND
REGISTRATION COURT, FORECLOSING ANY
FURTHER ATTEMPT BY RESPONDENT
THEREIN, AS IN THE INSTANT CASE, TO
RESURRECT A LONG-SETTLED JUDICIAL
DETERMINATION OF REGISTRABILITY OF A
PARCEL OF LAND BASED ON THE SHEER
ALLEGATION THAT THE SAME IS PART OF THE
PUBLIC DOMAIN.
B. THE LAND REGISTRATION COURT HAD
JURISDICTION TO DETERMINE WHETHER THE
SUBJECT LAND WAS PART OF THE PUBLIC
DOMAIN.
C. RESPONDENT’S REVERSION CASE SEEKS
TO RETRY THE VERY SAME FACTUAL ISSUES
THAT HAVE ALREADY BEEN JUDICIALLY
DETERMINED OVER THIRTY (30) YEARS AGO.

D. THE JURISPRUDENTIAL BASES APPLIED BY
THE COURT OF APPEALS IN ITS QUESTIONED
DECISION ARE MISPLACED, CONSIDERING
THAT THEY ARE ALL PREDICATED ON THE
ERRONEOUS PREMISE THAT IT IS
UNDISPUTED THAT THE SUBJECT LAND IS
PART OF THE PUBLIC DOMAIN.
II. RESPONDENT IS BARRED BY
JURISDICTIONAL ESTOPPEL AND LACHES
FROM QUESTIONING THE JURISDICTION OF
THE LAND REGISTRATION COURT.
III. RELIANCE BY THE COURT OF APPEALS ON
THE ISOLATED PRONOUNCEMENT OF THE
HONORABLE COURT IN THE PEA CASE IS
UNWARRANTED AND MISLEADING
CONSIDERING THAT THE MATTER OF
WHETHER RES JUDICATA APPLIES WITH
RESPECT TO THE LAND REGISTRATION
COURT’S DECISION IN 1974 WAS NOT IN ISSUE
IN SAID CASE.
A. THE INSTANT REVERSION CASE IS NOT THE
PROPER RECOURSE.
B. THE VALIDITY OF THE COURT-APPROVED
COMPROMISE AGREEMENT 15 MAY 1998 HAS
ALREADY BEEN AFFIRMED BY THE
HONORABLE COURT IN THE PEA CASE.
IV. EQUITABLE CONSIDERATIONS MANDATE
THE APPLICATION OF THE RULE ON
ORDINARY ESTOPPEL AND LACHES IN THE
INSTANT CASE AGAINST RESPONDENT.
V. RESPONDENT CANNOT BE GIVEN SPECIAL
CONSIDERATION AND EXCUSED FOR
TRANSGRESSING RULES OF PROCEDURE.16
Essentially, the issues boil down to three: (1) Is a
reversion suit proper in this case? (2) Is the present
petition estopped by laches? (3) Did the CA
erroneously apply the principle of res judicata?
An action for reversion seeks to restore public land
fraudulently awarded and disposed of to private
individuals or corporations to the mass of public
domain.17 This remedy is provided under
Commonwealth Act (CA) No. 141 (Public Land Act)
which became effective on December 1, 1936. Said
law recognized the power of the state to recover
lands of public domain. Section 124 of CA No. 141
reads:
SEC. 124. Any acquisition, conveyance, alienation,
transfer, or other contract made or executed in
violation of any of the provisions of Sections one
hundred and eighteen, one hundred and twenty,
one hundred and twenty one, one hundred and
twenty-two, and one hundred twenty-three of this
Act shall be unlawful and null and void from its
execution and shall produce the effect of annulling
and cancelling the grant, title, patent, or permit
originally issued, recognized or confirmed, actually
or presumptively, and cause the reversion of the
property and its improvements to the State.
(Emphasis supplied.)
Pursuant to Section 124 of the Public Land Act,
reversion suits are proper in the following
instances, to wit:
1. Alienations of land acquired under free patent or
homestead provisions in violation of Section 118,
CA No. 141;
2. Conveyances made by non-Christians in
violation of Section 120, CA No. 141; and
3. Alienations of lands acquired under CA No. 141
in favor of persons not qualified under Sections
121, 122, and 123 of CA No. 141.
From the foregoing, an action for reversion to
cancel titles derived from homestead patents or
free patents based on transfers and conveyances
in violation of CA No. 141 is filed by the OSG
pursuant to its authority under the Administrative
Code with the RTC. It is clear therefore that
reversion suits were originally utilized to annul titles
or patents administratively issued by the Director of
the Land Management Bureau or the Secretary of
the DENR.

While CA No. 141 did not specify whether judicial
confirmation of titles by a land registration court can
be subject of a reversion suit, the government
availed of such remedy by filing actions with the
RTC to cancel titles and decrees granted in land
registration applications.
The situation changed on August 14, 1981 upon
effectivity of Batas Pambansa (BP) Blg. 129 which
gave the Intermediate Appellate Court the exclusive
original jurisdiction over actions for annulment of
judgments of RTCs.
When the 1997 Rules of Civil Procedure became
effective on July 1, 1997, it incorporated Rule 47 on
annulment of judgments or final orders and
resolutions of the RTCs. The two grounds for
annulment under Sec. 2, Rule 47 are extrinsic fraud
and lack of jurisdiction. If based on extrinsic fraud,
the action must be filed within four (4) years from its
discovery, and if based on lack of jurisdiction,
before it is barred by laches or estoppel as
provided by Section 3, Rule 47. Thus, effective July
1, 1997, any action for reversion of public land
instituted by the Government was already covered
by Rule 47.
The instant Civil Case No. 01-0222 for annulment
and cancellation of Decree No. N-150912 and its
derivative titles was filed on June 8, 2001 with the
Parañaque City RTC. It is clear therefore that the
reversion suit was erroneously instituted in the
Parañaque RTC and should have been dismissed
for lack of jurisdiction. The proper court is the CA
which is the body mandated by BP Blg. 129 and
prescribed by Rule 47 to handle annulment of
judgments of RTCs.
In Collado v. Court of Appeals,18 the government,
represented by the Solicitor General pursuant to
Section 9(2) of BP Blg. 129, filed a petition for
annulment of judgment with the CA. Similarly in the
case of Republic v. Court of Appeals,19 the
Solicitor General correctly filed the annulment of
judgment with the said appellate court.
This was not done in this case. The Republic
misfiled the reversion suit with the Parañaque RTC.
It should have been filed with the CA as required by
Rule 47. Evidently, the Parañaque RTC had no
jurisdiction over the instant reversion case.
Assuming that the Parañaque RTC has jurisdiction
over the reversion case, still the lapse of almost
three decades in filing the instant case, the
inexplicable lack of action of the Republic and the
injury this would cause constrain us to rule for
petitioners. While it may be true that estoppel does
not operate against the state or its agents,20
deviations have been allowed. In Manila Lodge No.
761 v. Court of Appeals, we said:
Estoppels against the public are little favored. They
should not be invoked except in rare and unusual
circumstances, and may not be invoked where they
would operate to defeat the effective operation of a
policy adopted to protect the public. They must be
applied with circumspection and should be applied
only in those special cases where the interests of
justice clearly require it. Nevertheless, the
government must not be allowed to deal
dishonorably or capriciously with its citizens, and
must not play an ignoble part or do a shabby thing;
and subject to limitations x x x, the doctrine of
equitable estoppel may be invoked against public
authorities as well as against private individuals.21
(Emphasis supplied.)
Equitable estoppel may be invoked against public
authorities when as in this case, the lot was already
alienated to innocent buyers for value and the
government did not undertake any act to contest
the title for an unreasonable length of time.
In Republic v. Court of Appeals, where the title of
an innocent purchaser for value who relied on the
clean certificates of the title was sought to be
cancelled and the excess land to be reverted to the
Government, we ruled that "[i]t is only fair and
reasonable to apply the equitable principle of
estoppel by laches against the government to avoid
an injustice to innocent purchasers for value
(emphasis supplied)."22 We explained:
Likewise time-settled is the doctrine that where
innocent third persons, relying on the correctness
of the certificate of title, acquire rights over the
property, courts cannot disregard such rights and
order the cancellation of the certificate. Such
cancellation would impair public confidence in the
certificate of title, for everyone dealing with property
registered under the Torrens system would have to
inquire in every instance whether the title has been
regularly issued or not. This would be contrary to
the very purpose of the law, which is to stabilize
land titles. Verily, all persons dealing with
registered land may safely rely on the correctness
of the certificate of title issued therefore, and the
law or the courts do not oblige them to go behind
the certificate in order to investigate again the true
condition of the property. They are only charged
with notice of the liens and encumbrances on the
property that are noted on the certificate.23
xxxx
But in the interest of justice and equity, neither may
the titleholder be made to bear the unfavorable
effect of the mistake or negligence of the State’s
agents, in the absence of proof of his complicity in
a fraud or of manifest damage to third persons.
First, the real purpose of the Torrens system is to
quiet title to land to put a stop forever to any
question as to the legality of the title, except claims
that were noted in the certificate at the time of the
registration or that may arise subsequent thereto.
Second, as we discussed earlier, estoppel by
laches now bars petitioner from questioning private
respondents’ titles to the subdivision lots. Third, it
was never proven that Private Respondent St. Jude
was a party to the fraud that led to the increase in
the area of the property after its subdivision. Finally,
because petitioner even failed to give sufficient
proof of any error that might have been committed
by its agents who had surveyed the property, the
presumption of regularity in the performance of
their functions must be respected. Otherwise, the
integrity of the Torrens system, which petitioner
purportedly aims to protect by filing this case, shall
forever be sullied by the ineptitude and inefficiency
of land registration officials, who are ordinarily
presumed to have regularly performed their
duties.24
Republic v. Court of Appeals is reinforced by our
ruling in Republic v. Umali,25 where, in a reversion
case, we held that even if the original grantee of a
patent and title has obtained the same through
fraud, reversion will no longer prosper as the land
had become private land and the fraudulent
acquisition cannot affect the titles of innocent
purchasers for value.
Considering that innocent purchaser for value
Yujuico bought the lot in 1974, and more than 27
years had elapsed before the action for reversion
was filed, then said action is now barred by laches.
While the general rule is that an action to recover
lands of public domain is imprescriptible, said right
can be barred by laches or estoppel. Section 32 of
PD 1592 recognized the rights of an innocent
purchaser for value over and above the interests of
the government. Section 32 provides:
SEC. 32. Review of decree of registration; Innocent
purchaser for value.—The decree of registration
shall not be reopened or revised by reason of
absence, minority, or other disability of any person
adversely affected thereby, nor by any proceeding
in any court for reversing judgments, subject,
however, to the right of any person, including the
government and the branches thereof, deprived of
land or of any estate or interest therein by such
adjudication or confirmation of title obtained by
actual fraud, to file in the proper Court of First
Instance a petition for reopening and review of the
decree of registration not later than one year from
and after the date of the entry of such decree of
registration, but in no case shall such petition be
entertained by the court where an innocent
purchaser for value has acquired the land or an
interest therein, whose rights may be prejudiced.
Whenever the phrase "innocent purchaser for
value" or an equivalent phrase occurs in this
Decree, it shall be deemed to include an innocent
lessee, mortgagee, or other encumbrances for
value. (Emphasis supplied.)
In this petition, the LRC (now LRA), on May 30,
1974, issued Decree No. N-150912 in favor of
Fermina Castro and OCT No. 10215 was issued by
the Rizal Registrar of Deeds on May 29, 1974. OCT
No. 10215 does not show any annotation, lien, or
encumbrance on its face. Relying on the clean title,
Yujuico bought the same in good faith and for value
from her. He was issued TCT No. 445863 on May
31, 1974. There is no allegation that Yujuico was a
buyer in bad faith, nor did he acquire the land
fraudulently. He thus had the protection of the
Torrens System that every subsequent purchaser
of registered land taking a certificate of title for
value and in good faith shall hold the same free
from all encumbrances except those noted on the
certificate and any of the x x x encumbrances which
may be subsisting.26 The same legal shield
redounds to his successors-in-interest, the Yujuicos
and Carpio, more particularly the latter since Carpio
bought the lot from Jesus Y. Yujuico for value and
in good faith.
Likewise protected are the rights of innocent
mortgagees for value, the PISO, Citibank, N.A.,
PDC, RCBC, PCIB, and DBP. Even if the
mortgagor’s title was proved fraudulent and the title
declared null and void, such declaration cannot
nullify the mortgage rights of a mortgagee in good
faith.27
All told, a reversion suit will no longer be allowed at
this stage.
More on the issue of laches. Laches is the failure or
neglect, for an unreasonable and unexplained
length of time, to do that which by exercising due
diligence could or should have been done earlier. It
is negligence or omission to assert a right within a
reasonable time, warranting a presumption that the
party entitled thereto has either abandoned or
declined to assert it.28
When respondent government filed the reversion
case in 2001, 27 years had already elapsed from
the time the late Jesus Yujuico purchased the land
from the original owner Castro. After the issuance
of OCT No. 10215 to Castro, no further action was
taken by the government to question the issuance
of the title to Castro until the case of Public Estates
Authority, brought up in the oral argument before
this Court on September 6, 2000.29 We then held
that allegation of fraud in the issuance of the title
was not proper for consideration and determination
at that stage of the case.
From the undisputed facts of the case, it is easily
revealed that respondent Republic took its sweet
time to nullify Castro’s title, notwithstanding the
easy access to ample remedies which were readily
available after OCT No. 10215 was registered in
the name of Castro. First, it could have appealed to
the CA when the Pasig-Rizal CFI rendered a
decision ordering the registration of title in the
name of applicant Castro on April 26, 1974. Had it
done so, it could have elevated the matter to this
Court if the appellate court affirms the decision of
the land registration court. Second, when the entry
of Decree No. N-150912 was made on May 29,
1974 by the Rizal Register of Deeds, the Republic
had one (1) year from said date or up to May 28,
1975 to file a petition for the reopening and review
of Decree No. N-150912 with the Rizal CFI (now
RTC) on the ground of actual fraud under section
32 of PD 1592. Again, respondent Republic did not
avail of such remedy. Third, when Jesus Yujuico
filed a complaint for Removal of Cloud and
Annulment of Title with Damages against PEA
before the Parañaque RTC in Civil Case No. 96-
0317, respondent could have persevered to
question and nullify Castro’s title. Instead, PEA
undertook a compromise agreement on which the
May 18, 1998 Resolution30 was issued. PEA in
effect admitted that the disputed land was owned
by the predecessors-in-interest of petitioners and
their title legal and valid; and impliedly waived its
right to contest the validity of said title; respondent
Republic even filed the petition for relief from
judgment beyond the time frames allowed by the
rules, a fact even acknowledged by this Court in
Public Estates Authority. Lastly, respondent only
filed the reversion suit on June 8, 2001 after the
passage of 27 years from the date the decree of
registration was issued to Fermina Castro.
Such a Rip Van Winkle, coupled with the signing of
the settlement with PEA, understandably misled
petitioners to believe that the government no longer
had any right or interest in the disputed lot to the
extent that the two lots were even mortgaged to
several banks including a government financing
institution. Any nullification of title at this stage
would unsettle and prejudice the rights and
obligations of innocent parties. All told, we are
constrained to conclude that laches had set in.
Even granting arguendo that respondent Republic
is not precluded by laches from challenging the title
of petitioners in the case at bar, still we find that the
instant action for reversion is already barred by res
judicata.
Petitioners relying on Firestone Ceramics, Inc. v.
Court of Appeals31 as a precedent to the case at
bar contend that the instant reversion suit is now
barred by res judicata.

We agree with petitioners.
The doctrine on precedents is expressed in the latin
maxim—Stare decisis et non quieta movere. Follow
past precedents and do not disturb what has been
settled.32 In order however that a case can be
considered as a precedent to another case which is
pending consideration, the facts of the first case
should be similar or analogous to the second case.
A perusal of the facts of the Firestone case and
those of the case at bar reveals that the facts in the
two (2) cases are parallel. First, in Firestone and in
this case, the claimants filed land registration
applications with the CFI; both claimants obtained
decrees for registration of lots applied for and were
issued OCTs. Second, in Firestone, the Republic
filed a reversion case alleging that the land covered
by the OCT was still inalienable forest land at the
time of the application and hence the Land
Registration Court did not acquire jurisdiction to
adjudicate the property to the claimant. In the
instant case, respondent Republic contend that the
land applied for by Yujuico was within Manila Bay
at the time of application and therefore the CFI had
no jurisdiction over the subject matter of the
complaint. Third, in Firestone, the validity of the title
of the claimant was favorably ruled upon by this
Court in G.R. No. 109490 entitled Patrocinio E.
Margolles v. CA. In the case at bar, the validity of
the compromise agreement involving the disputed
lot was in effect upheld when this Court in Public
Estates Authority v. Yujuico dismissed the petition
of PEA seeking to reinstate the petition for relief
from the May 18, 1998 Resolution approving said
compromise agreement. With the dismissal of the
petition, the May 18, 1998 Resolution became final
and executory and herein respondent Republic
through PEA was deemed to have recognized
Castro’s title over the disputed land as legal and
valid. In Romero v. Tan,33 we ruled that "a judicial
compromise has the effect of res judicata." We also
made clear that a judgment based on a
compromise agreement is a judgment on the
merits, wherein the parties have validly entered into
stipulations and the evidence was duly considered
by the trial court that approved the agreement. In
the instant case, the May 18, 1998 Resolution
approving the compromise agreement confirmed
the favorable decision directing the registration of
the lot to Castro’s name in LRC Case No. N-8239.
Similarly, in Firestone, the Margolles case
confirmed the decision rendered in favor of Gana in
Land Registration Case No. 672 ordering the
issuance of the decree to said applicant. Fourth, in
Firestone, the Supreme Court relied on the letter of
then Solicitor General Francisco Chavez that the
evidence of the Bureau of Lands and the LRC was
not sufficient to support an action for cancellation of
OCT No. 4216. In the instant case, both the
Solicitor General and the Government Corporate
Counsel opined that the Yujuico land was not under
water and that "there appears to be no sufficient
basis for the Government to institute the action for
annulment." Fifth, in Firestone, we ruled that "the
Margolles case had long become final, thus the
validity of OCT No. 4216 should no longer be
disturbed and should be applied in the instant case
(reversion suit) based on the principle of res
judicata or, otherwise, the rule on conclusiveness of
judgment."34
Clearly from the above, Firestone is a precedent
case. The Public Estates Authority had become
final and thus the validity of OCT No. 10215 issued
to Castro could no longer be questioned.
While we said in Public Estates Authority that the
court does not foreclose the right of the Republic
from pursuing the proper recourse in a separate
proceedings as it may deem warranted, the
statement was obiter dictum since the inquiry on
whether or not the disputed land was still under
water at the time of its registration was a non-issue
in the said case.
Even granting for the sake of argument that
Firestone is not squarely applicable, still we find the
reversion suit already barred by res judicata.
For res judicata to serve as an absolute bar to a
subsequent action, the following requisites must
concur: (1) there must be a final judgment or order;
(2) the court rendering it must have jurisdiction over
the subject matter and the parties; (3) it must be a
judgment or order on the merits; and (4) there must
be between the two cases, identity of parties,
subject matter and causes of action.35
There is no question as to the first, third and last
requisites. The threshold question pertains to the
second requisite, whether or not the then Pasig-
Rizal CFI, Branch 22 had jurisdiction over the
subject matter in LRC Case No. N-8239. In Civil
Case No. 01-0222, the Parañaque City RTC,
Branch 257 held that the CFI had jurisdiction. The
CA reversed the decision of the Parañaque City
RTC based on the assertion of respondent
Republic that the Pasig-Rizal CFI had no
jurisdiction over the subject matter, and that there
was a need to determine the character of the land
in question.
The Parañaque City RTC Order dismissing the
case for res judicata must be upheld.
The CA, in rejecting the dismissal of the reversion
case by the Parañaque RTC, relied on two cases,
namely: Municipality of Antipolo v. Zapanta36 and
Republic v. Vda. De Castillo.37
In Municipality of Antipolo, we held that the land
registration court had no jurisdiction to entertain
any land registration application if the land was
public property, thus:
Since the Land Registration Court had no
jurisdiction to entertain the application for
registration of public property of ANTIPOLO, its
Decision adjudicating the DISPUTED PROPERTY
as of private ownership is null and void. It never
attained finality, and can be attacked at any time. It
was not a bar to the action brought by ANTIPOLO
for its annulment by reason of res judicata.
"[x x x] the want of jurisdiction by a court over the
subject matter renders the judgment void and a
mere nullity, and considering that a void judgment
is in legal effect no judgment, by which no rights
are divested, from which no rights can be obtained,
which neither binds nor bars any one, and under
which all acts performed and all claims flowing out
of are void, and considering, further, that the
decision, for want of jurisdiction of the court, is not
a decision in contemplation of law, and hence, can
never become executory, it follows that such a void
judgment cannot constitute a bar to another case
by reason of res judicata."
xxxx
"It follows that ‘if a person obtains a title under the
Public Land Act which includes, by oversight, lands
which cannot be registered under the Torrens
System, or when the Director of Lands did not have
jurisdiction over the same because it is a public
forest, the grantee does not, by virtue of the said
certificate of title alone, become the owner of the
land illegally included’ (Republic vs. Animas, 56
SCRA 499, 503; Ledesma vs. Municipality of Iloilo,
49 Phil. 769)."
[x x x x]
"Under these circumstances, the certificate of title
may be ordered cancelled (Republic vs. Animas, et
al., supra), and the cancellation maybe pursued
through an ordinary action therefore. This action
cannot be barred by the prior judgment of the land
registration court, since the said court had no
jurisdiction over the subject matter. And if there was
no such jurisdiction, then the principle of res
judicata does not apply. [x x x] Certainly, one of the
essential requisites, i.e., jurisdiction over the
subject matter, is absent in this case." (Italics
supplied).38
The plain import of Municipality of Antipolo is that a
land registration court, the RTC at present, has no
jurisdiction over the subject matter of the
application which respondent Republic claims is
public land. This ruling needs elucidation.
Firmly entrenched is the principle that jurisdiction
over the subject matter is conferred by law.39
Consequently, the proper CFI (now the RTC) under
Section 14 of PD 152940 (Property Registration
Decree) has jurisdiction over applications for
registration of title to land.
Section 14 of PD 1592 provides:
SEC. 14. Who may apply.—The following persons
may file in the proper Court of First Instance an
application for registration of title to land, whether
personally or through their duly authorized
representatives:
(1) Those who by themselves or through their
predecessors-in-interest have been in open,
continuous, exclusive and notorious possession
and occupation of alienable and disposable lands
of the public domain under a bona fide claim of
ownership since June 12, 1945, or earlier.
(Emphasis supplied.)
Conformably, the Pasig-Rizal CFI, Branch XXII has
jurisdiction over the subject matter of the land
registration case filed by Fermina Castro,
petitioners’ predecessor-in-interest, since
jurisdiction over the subject matter is determined by
the allegations of the initiatory pleading¾the
application.41 Settled is the rule that "the authority
to decide a case and not the decision rendered
therein is what makes up jurisdiction. When there is
jurisdiction, the decision of all questions arising in
the case is but an exercise of jurisdiction."42
In our view, it was imprecise to state in Municipality
of Antipolo that the "Land Registration Court [has]
no jurisdiction to entertain the application for
registration of public property x x x" for such court
precisely has the jurisdiction to entertain land
registration applications since that is conferred by
PD 1529. The applicant in a land registration case
usually claims the land subject matter of the
application as his/her private property, as in the
case of the application of Castro. Thus, the
conclusion of the CA that the Pasig-Rizal CFI has
no jurisdiction over the subject matter of the
application of Castro has no legal mooring. The
land registration court initially has jurisdiction over
the land applied for at the time of the filing of the
application. After trial, the court, in the exercise of
its jurisdiction, can determine whether the title to
the land applied for is registrable and can be
confirmed. In the event that the subject matter of
the application turns out to be inalienable public
land, then it has no jurisdiction to order the
registration of the land and perforce must dismiss
the application.
Based on our ruling in Antipolo, the threshold
question is whether the land covered by the titles of
petitioners is under water and forms part of Manila
Bay at the time of the land registration application
in 1974. If the land was within Manila Bay, then res
judicata does not apply. Otherwise, the decision of
the land registration court is a bar to the instant
reversion suit.
After a scrutiny of the case records and pleadings
of the parties in LRC Case No. N-8239 and in the
instant petition, we rule that the land of Fermina
Castro is registrable and not part of Manila Bay at
the time of the filing of the land registration
application.
The trial court’s Decision in 1974 easily reveals the
basis for its conclusion that the subject matter was
a dry land, thus:
On February 1, 1974, the applicant presented her
evidence before the Deputy Clerk of this Court and
among the evidence presented by her were certain
documents which were marked as Exhibits D to J,
inclusive. The applicant testified in her behalf and
substantially declared that: she was 62 years old,
single, housekeeper and residing at 1550 J.
Escoda, Ermita, Manila; that she was born on June
3, 1911; that she first came to know of the land
applied for which is situated in the Municipality of
Parañaque, province of Rizal, with an area of
17,343 square meters and covered by plan (LRC)
Psu-964 while she was still ten (10) years old or
sometime in 1921; that when she first came to
know of the land applied for, the person who was in
possession and owner of said land was her father,
Catalino Castro; that during that time her father
used to plant on said land various crops like
pechay, mustard, eggplant, etc.; that during that
time, her father built a house on said land which
was used by her father and the other members of
the family, including the applicant, as their
residential house; that the land applied for was
inherited by her father from her grandfather Sergio
Castro; that Catalino Castro continuously
possessed and owned the land in question from
1921 up to the time of his death in 1952; and that
during that period of time nobody ever disturbed the
possession and ownership of her father over the
said parcel of land; that after the death of her father
in 1952 she left the place and transferred her place
of residence but she had also occasions to visit
said land twice or thrice a week and sometimes
once a week; that after she left the land in question
in 1952, she still continued possessing said land,
through her caretaker Eliseo Salonga; that her
possession over the land in question from the time
she inherited it up to the time of the filing of the
application has been continuous, public, adverse
against the whole world and in the concept of an
owner; that it was never encumbered, mortgaged,
or disposed of by her father during his lifetime and
neither did she ever encumber or sell the same;
that it was declared for taxation purposes by her
father when he was still alive and her father also
paid the real estate taxes due to the government
although the receipt evidencing the payment of said
real estate taxes for the property applied for have
been lost and could no longer be found inspite of
diligent effort exerted to locate the same.
The other witness presented by the applicant was
Emiliano de Leon, who declared that he was 70
years old, married, farmer and residing at San
Jose, Baliwag, Bulacan; that he knew Catalino
Castro, the father of the applicant because said
Catalino Castro was his neighbor in Tambo,
Parañaque, Rizal, he had a house erected on the
land of Catalino Castro; that he was born in 1903
and he first came to know of the land in question
when in 1918 when he was about 18 years old; that
the area of the land owned and possessed by
Catalino Castro where he constructed a residential
house has an area of more than one and one-half
(1 ½) hectares; that the possession of Catalino
Castro over the land in question was peaceful,
continuous, notorious, adverse against the whole
world and in the concept of an owner; that during
the time that Catalino Castro was in possession of
the land applied for he planted on said parcel of
land mango, coconut and banana, etc.; that
Catalino Castro continuously possessed and
owned said parcel of land up to the year 1952 when
he died; that during the time that Catalino Castro
was in possession of said land, nobody ever laid
claim over the said property; that said land is not
within any military or naval reservation; that upon
the death of Catalino Castro, the applicant took
possession of the land applied for and that up to
the present the applicant is in possession of said
land; that he resided in the land in question from
1918 up to the time he transferred his place of
residence in Baliwag, Bulacan in the year 1958.
On February 11, 1974, the Court, pursuant to the
provision of Presidential Decree No. 230 issued by
his Excellency, Ferdinand E. Marcos dated July 9,
1973 held in abeyance the rendition of a decision in
this case and directed the applicant to submit a
white print copy of plan (LRC) Psu-964 to the
Director of lands who was directed by the Court to
submit his comment and recommendation thereon.
The property in question is declared for taxation
purposes under Tax Declaration No. 51842 (Exhibit
G) and real estate taxes due thereon have been
paid up to the year 1973 (Exhibit H).
In compliance with the Order of this Court February
11, 1974, the Director of Lands, thru Special
Attorney Saturnino A. Pacubas, submitted a report
to this Court dated April 25, 1974, stating among
other things, that upon ocular inspection conducted
by Land Inspector Adelino G. Gorospe and the
subsequent joint ocular inspection conducted by
Geodetic Engineer Manuel A. Cervantes and
Administrative Assistant Lazaro G. Berania, it was
established that the parcel of land covered by plan
(LRC) Psu-964 no longer forms part of the Manila
Bay but is definitely solid and dry land.
In this connection, it should be noted that
Administrative Assistant Lazaro G. Berania and
Geodetic Engineer Manuel A. Cervantes, in their
report dated March 22, 1974 have also stated that
the land applied for cannot be reached by water
even in the highest tide and that the said land is
occupied by squatter families who have erected
makeshift shanties and a basketball court which
only prove that the same is dry and solid land away
from the shores of Manila Bay.
Furthermore, Land Inspector Adelino G. Gorospe in
his letter-report dated November 28, 1973 has also
stated that there is a house of pre-war vintage
owned by the applicant on the land in question
which in effect corroborates the testimony of the
applicant and her witness that they have lived on
the land in question even prior to the outbreak of
the second world war and that the applicant has
been in possession of the land in question long
time ago.43
To counter the evidence of applicant Castro, and
bolster its claim that she has no valid title,
respondent Republic relies on the July 18, 1973
Office Memorandum44 of Roman Mataverde, OIC,
Surveys Division, to the OIC, Legal Division, of the
Bureau of Lands, stating that "when projected on
cadastral maps CM 14º 13’N - 120º 59’ E., Sec. 3-D
and CM 14º 30’N - 120º 59’E., Sec. 2-A of
Paranaque [sic] Cadastre (Cad-299), (LRC) Psu-
964 falls inside Manila Bay, outside Cad-299."45
The same conclusion was adopted in a November
15, 1973 letter of Narciso Villapando, Acting
Regional Lands Director to the Chief, Legal
Division, Bureau of Lands and in the Comment and
Recommendation of Ernesto C. Mendiola, Assistant
Director, also of the Bureau of Lands.
Respondent likewise cites Namria Hydrographic
Map No. 4243 Revised 80-11-2 to support its
position that Castro’s lot is a portion of Manila Bay.
The burden of proving these averments falls to the
shoulders of respondent Republic. The difficulty is
locating the witnesses of the government. Roman
Mataverde, then OIC of the Surveys Division retired
from the government service in 1982. He should by
this time be in his 90s. Moreover, Asst. Regional
Director Narciso Villapando and Asst. Director
Ernesto C. Mendiola are no longer connected with
the Bureau of Lands since 1986.
Assuming that OIC Roman Mataverde, Asst.
Regional Director Narciso Villapando and Assistant
Director Ernesto C. Mendiola are still available as
witnesses, the projections made on the cadastral
maps of the then Bureau of Lands cannot prevail
over the results of the two ocular inspections by
several Bureau of Lands officials that the disputed
lot is definitely "dry and solid land" and not part of
Manila Bay. Special Attorney Saturnino A.
Pacubas, Land Inspector Adelino G. Gorospe,
Geodetic Engineer Manuel A. Cervantes and
Administrative Asst. Lazaro A. Berana, all officials
of the Bureau of Lands, were positive that the
disputed land is solid and dry land and no longer
forms part of Manila Bay. Evidence gathered from
the ocular inspection is considered direct and
firsthand information entitled to great weight and
credit while the Mataverde and Villapando reports
are evidence weak in probative value, being merely
based on theoretical projections "in the cadastral
map or table surveys."46 Said projections must be
confirmed by the actual inspection and verification
survey by the land inspectors and geodetic
engineers of the Bureau of Lands. Unfortunately for
respondent Republic, the bureau land inspectors
attested and affirmed that the disputed land is
already dry land and not within Manila Bay.
On the other hand, the Namria Hydrographic Map
No. 4243 does not reveal what portion of Manila
Bay was Castro’s lot located in 1974. Moreover, a
hydrographic map is not the best evidence to show
the nature and location of the lot subject of a land
registration application. It is derived from a
hydrographic survey which is mainly used for
navigation purposes, thus:
Surveys whose principal purpose is the
determination of data relating to bodies of water. A
hydrographic survey may consist of the
determination of one or several of the following
classes of data: depth water; configuration and
nature of the bottom; directions and force of
currents; heights and times of tides and water
stages; and location of fixed objects for survey and
navigation purposes.47
Juxtaposed with finding of the ocular inspection by
Bureau of Lands Special Attorney Pacubas and
others that Castro’s lot is dry land in 1974, Namria
Hydrographic Map No. 4243 is therefore inferior
evidence and lacking in probative force.
Moreover, the reliability and veracity of the July 18,
1973 report of Roman Mataverde based on the
alleged projection on cadastral maps and the
Villapando report dated November 15, 1973 are put
to serious doubt in the face of the opinion dated
October 13, 1997 of the Government Corporate
Counsel, the lawyer of the PEA, which upheld the
validity of the titles of petitioners, thus:
We maintain to agree with the findings of the court
that the property of Fermina Castro was registrable
land, as based on the two (2) ocular inspections
conducted on March 22, 1974 by Lands
Administrative Assistant Lazaro G. Berania and
Lands Geodetic Engr. Manuel Cervantes, finding
‘… the same no longer forms part of Manila Bay but
is definitely solid land which cannot be reached by
water even in the highest of tides’. This Berania-
Cervantes report based on ocular inspections
literally overturned the findings and
recommendations of Land Director Narciso V.
Villapando dated November 15, 1973, and that of
Director Ernesto C. Mendiola dated December 1,
1977, and the fact that the Villapando-Mendiola
reports were merely based on projections in the
cadastral map or table surveys.
xxxx
A. The Legal prognosis of the case is not promising
in favor of PEA.
4.1 LRC Case No. N-8239 has already become
final and executory and OCT No. 10215 was
already issued in favor of Fermina Castro. Any and
all attempts to question its validity can only be
entertained in a quo warranto proceedings (sic),
assuming that there are legal grounds (not factual
grounds) to support its nullification. Subjecting it to
a collateral attack is not allowed under the Torrens
Title System. In Calalang vs. Register of Deeds of
Quezon City, 208 SCRA 215, the Supreme Court
held that the present petition is not the proper
remedy in challenging the validity of certificates of
titles since the judicial action required is a direct
and not a collateral attack (refer also to: Toyota
Motor Philippine Corporation vs. CA, 216 SCRA
236).
4.2 OCT No. 10215 in favor of Fermina Castro was
issued pursuant to a cadastral proceeding, hence is
a rem proceedings which is translated as a
constructive notice to the whole world, as held in
Adez Realty Incorporated vs. CA, 212 SCRA 623.
4.3 From the cursory and intent reading of the
decision of Judge Sison in LRC Case No. N-8239,
we cannot find any iota of fraud having been
committed by the court and the parties. In fact, due
process was observed when the Office of the
Solicitor General represented ably the Bureau of
Lands. In Balangcad vs. Justices of the Court of
Appeals, 206 SCRA 169, the Supreme Court held
that title to registered property becomes
indefeasible after one-year from date of registration
except where there is actual fraud in which case it
may be challenged in a direct proceeding within
that period. This is also the ruling in Bishop vs. CA,
208 SCRA 636, that to sustain an action for
annulment of a torrens certificate for being void ab
initio, it must be shown that the registration court
had not acquired jurisdiction over the case and
there was actual fraud in securing the title.
4.4 As to priority of torrens title, PEA has no
defense, assuming that both PEA and Yujuico titles
are valid, as held in Metropolitan Waterworks and
Sewerage System vs. CA, 215 SCRA 783, where
two (2) certificates purport to include the same
land, the earlier in date prevails.
4.5 The documents so far submitted by the parties
to the court indicate that the mother title of the
Yujuico land when registered in 1974 was not
underwater. This was shown in the two (2) ocular
inspections conducted by the officials of the Land
Bureau.
4.6 The provision of P.D. 239 that no decree of
registration may be issued by the court unless upon
approval and recommendation of the Bureau of
Lands was substantially complied with in the Report
of Lands Special Attorney Saturnino Pacubas,
submitted to the court.48
Even the counsel of respondent Republic, the
OSG, arrived at the conclusion that there is no
sufficient legal basis for said respondent to institute
action to annul the titles of petitioners, thus:
It may be stated at the outset that a petition for
annulment of certificate of title or reconveyance of
land may be based on fraud which attended the
issuance of the decree of registration and the
corresponding certificate of title.
Based on the decision in the LRC Case No. N-8239
involving the petition for registration and
confirmation of title filed by Fermina Castro, there is
no showing that fraud attended the issuance of
OCT No. 10215. it appears that the evidence
presented by Fermina Castro was sufficient for the
trial court to grant her petition.
The testimony of Fermina Castro, which was
corroborated by Emiliano de Leon, that she and her
predecessors-in-interest had been in possession of
the land for more than thirty (30) years sufficiently
established her vested right over the property
initially covered by OCT No. 10215. The report
dated April 25, 1974 which was submitted to the
trial court by the Director of Lands through Special
Attorney Saturnino Pacubas showed that the parcel
of land was solid and dry land when Fermina
Castro’s application for registration of title was filed.
It was based on the ocular inspection conducted by
Land Inspector Adelino Gorospe and the joint
circular inspection conducted by Geodetic Engineer
Manuel A. Cervantes and Administrative Assistant
Lazaro Berania on November 28, 1973 and March
22, 1974 respectively.
The aforesaid report must be requested unless
there is a concrete proof that there was an
irregularity in the issuance thereof. In the absence
of evidence to the contrary, the ocular inspection of
the parcel of land, which was made the basis of
said report, is presumed to be in order.
Based on the available records, there appears to
be no sufficient basis for the Government to
institute an action for the annulment of OCT No.
10215 and its derivative titles. It is opined that a
petition for cancellation/annulment of Decree No.
N-150912 and OCT No. 10215 and all its derivative
titles will not prosper unless there is convincing
evidence to negate the report of the then Land
Management Bureau through Special Attorney
Pacubas. Should the Government pursue the filing
of such an action, the possibility of winning the
case is remote.49
More so, respondent Government, through its
counsel, admits that the land applied by Fermina
Castro in 1973 was solid and dry land, negating the
nebulous allegation that said land is underwater.
The only conclusion that can be derived from the
admissions of the Solicitor General and
Government Corporate Counsel is that the land
subject of the titles of petitioners is alienable land
beyond the reach of the reversion suit of the state.
Notably, the land in question has been the subject
of a compromise agreement upheld by this Court in
Public Estates Authority.50 In that compromise
agreement, among other provisions, it was held
that the property covered by TCT Nos. 446386 and
S-29361, the land subject of the instant case, would
be exchanged for PEA property. The fact that PEA
signed the May 15, 1998 Compromise Agreement
is already a clear admission that it recognized
petitioners as true and legal owners of the land
subject of this controversy.
Moreover, PEA has waived its right to contest the
legality and validity of Castro’s title. Such waiver is
clearly within the powers of PEA since it was
created by PD 1084 as a body corporate "which
shall have the attribute of perpetual succession and
possessed of the powers of the corporations, to be
exercised in conformity with the provisions of this
Charter [PD 1084]."51 It has the power "to enter
into, make, perform and carry out contracts of every
class and description, including loan agreements,
mortgages and other types of security
arrangements, necessary or incidental to the
realization of its purposes with any person, firm or
corporation, private or public, and with any foreign
government or entity."52 It also has the power to
sue and be sued in its corporate name.53 Thus, the
Compromise Agreement and the Deed of
Exchange of Real Property signed by PEA with the
petitioners are legal, valid and binding on PEA. In
the Compromise Agreement, it is provided that it
"settles in full all the claims/counterclaims of the
parties against each other."54 The waiver by PEA
of its right to question petitioners’ title is fortified by
the manifestation by PEA in the Joint Motion for
Judgment based on Compromise Agreement that
4. The parties herein hereto waive and abandon
any and all other claims and counterclaims which
they may have against each other arising from this
case or related thereto.55
Thus, there was a valid waiver of the right of
respondent Republic through PEA to challenge
petitioners’ titles.
The recognition of petitioners’ legal ownership of
the land is further bolstered by the categorical and
unequivocal acknowledgment made by PEA in its
September 30, 2003 letter where it stated that:
"Your ownership thereof was acknowledged by
PEA when it did not object to your membership in
the CBP-IA Association, in which an owner of a
piece of land in CBP-IA automatically becomes a
member thereof."56 Section 26, Rule 130 provides
that "the act, declaration or omission of a party as
to a relevant fact may be given in evidence against
him." The admissions of PEA which is the real
party-in-interest in this case on the nature of the
land of Fermina Castro are valid and binding on
respondent Republic. Respondent’s claim that the
disputed land is underwater falls flat in the face of
the admissions of PEA against its interests. Hence,
res judicata now effectively precludes the
relitigation of the issue of registrability of petitioners’
lot.
In sum, the Court finds that the reversion case
should be dismissed for lack of jurisdiction on the
part of the Parañaque RTC. Even if we treat said
case as a petition for annulment of judgment under
Rule 47 of the 1997 Rules of Civil Procedure, the
dismissal of the case nevertheless has to be upheld
because it is already barred by laches. Even if
laches is disregarded, still the suit is already
precluded by res judicata in view of the peculiar
facts and circumstances obtaining therein.

WHEREFORE, premises considered, the petition is

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

No costs.

SO ORDERED.