Case 1

G.R. No. 129644

China Banking Corporation v. CA
March 7, 2000
Ynares-Santiago, J.

Doctrine:
"Property" under civil law comprehends every species of title, inchoate or complete, legal
or equitable.

Facts:
Alfonso Roxas Chua and his wife Kiang Ming Chu Chua were the owners of a residential land
in San Juan, Metro Manila, covered by Transfer Certificate of Title No. 410603. On February 2, 1984,
a notice of levy affecting the property was issued. Kiang Ming Chu Chua filed a complaint against the
City Sheriff of Manila and Metropolitan Bank and Trust Company, questioning the levy of the property.
She alleged that the judgment of the court in Civil Case No. 82-14134 against Alfonso Roxas Chua
could not be enforced against TCT 410603 inasmuch as the land subject thereof was the conjugal
property of the spouses. The parties thereafter entered into a compromise agreement to the effect that
the levy on TCT 410603 was valid and enforceable only to the extent of the 1/2 undivided portion of
the property pertaining to the conjugal share of Alfonso Roxas Chua.
On June 19, 1985, petitioner China Bank filed with the RTC of Manila an action for collection
of sum of money against Pacific Multi Agro-Industrial Corporation and Alfonso Roxas Chua which the
trial court granted, ordering the defendants to pay jointly and severally the sum of P1,800,000.00 plus
21% interest per annum and penalties. On September 8, 1986, an alias notice of levy on execution on
the one-half (1/2) undivided portion of TCT 410603 belonging to Alfonso Chua was issued.
On November 21, 1988, Alfonso Roxas Chua executed a public instrument denominated as
"Assignment of Rights to Redeem," whereby he assigned his rights to redeem the one-half undivided
portion of the property to his son, private respondent Paulino Roxas Chua. Paulino redeemed said
one-half share on the very same day. On the otherhand, another notice of levy on execution was
issued on February 4, 1991 by the Deputy Sheriff of Manila against the right and interest of Alfonso
Roxas Chua in TCT 410603.
Paulino Roxas Chua and Kiang Ming Chu Chua instituted a civil case before the RTC of Pasig
against China Bank, averring that Paulino has a prior and better right over the rights, title, interest and
participation of China Banking Corporation in TCT 410603 and that Alfonso Roxas Chua sold his right
to redeem one-half of the aforesaid conjugal property in his favor on November 21, 1988 while China
Banking Corporation acquired its right from the notice of levy of execution dated January 30, 1991.
The trial court rendered a decision in favor of private respondent Paulino Roxas Chua. The
trial court ruled that the assignment was made for a valuable consideration and was executed two
years before petitioner China Bank levied the conjugal share of Alfonso Roxas Chua on TCT 410603.
The trial court found that Paulino redeemed the one-half portion of the property, using therefor the
amount of P100,000.00 which he withdrew from his savings account as evidenced by his bankbook
and the receipts of Metrobank for his payment of the redemption price. On appeal, the Court of Appeals
affirmed the ruling of the trial court. It held that petitioner China Bank had been remiss in the exercise
of its rights as creditor.

Issue:
Whether or not the assignment of the right of redemption made by Alfonso Roxas Chua in
favor of private respondent Paulino was done to defraud his creditors and may be rescinded under
Article 1387 of the Civil Code.

Ruling:
 Yes.
Under Article 1381(3) of the Civil Code, contracts which are undertaken in fraud of creditors
when the latter cannot in any manner collect the claims due them, are rescissible. The existence of
fraud or intent to defraud creditors may either be presumed in accordance with Article 1387 of the Civil
Code or duly proved in accordance with the ordinary rules of evidence. It should be noted that the
presumption of fraud or intention to defraud creditors is not just limited to the two instances set forth
in the first and second paragraphs of Article 1387 of the Civil Code. Under the third paragraph of the
same article, the design to defraud creditors may be proved in any other manner recognized by the
law of evidence. In the case Oria vs. Mcmicking, the Supreme Court considered the fact that the
transfer is made between father and son, when there are present other of the above circumstances
as one of the badges of fraud.
In the instant case, Alfonso Chua, despite his knowledge that he only had the subject
property in which his creditors could levy, he still assigned his right to redeem his one-half share of
the conjugal property from Metrobank in favor of his son, Paulino. Even thou Paulino had indeed paid
the redemption price of P1,463,375.39 to Metrobank and the sum of P100,000.00 to his father, it does
not necessarily negate the presumption of fraud under Article 1387 of the Civil Code. There has to be
a valuable consideration and the transaction must have been made bona fide. At the time a judgment
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was rendered in favor of China Bank against Alfonso and the corporation, Paulino was still living with
his parents in the subject property. Paulino himself admitted that he knew his father was heavily
indebted and could not afford to pay his debts. The transfer was undoubtedly made between father
and son at a time when the father was insolvent and had no other property to pay off his creditors.
Hence, it is of no consequence whether or not Paulino had given valuable consideration for the
conveyance. Therefore, the petition is granted. The Assignment of Rights to Redeem executed by
Alfonso Roxas Chua in favor of Paulino Roxas Chua is ordered rescinded. The levy on execution
dated February 4, 1991 and the Certificate of Sale dated April 30, 1992 in favor of petitioner are
declared valid against the one-half portion of the subject property.

Case 2
G.R. No. L-11075
Commissioner of Customs v. Capistrano
June 30, 1960
Paras, J.

Doctrine:
Merchandise, when used with reference to importations or exportations, includes goods,
wares, and in general anything that may be the subject of importation or exportation. It cannot be
gainsaid that money may be a commodity — an object of trade.

Facts:
On March 31, 1955, Caridad Capistrano was booked as an outgoing passenger of a plane
bound for Hongkong. When she was subjected to the customary search by a woman agent of the
Bureau of Customs immediately before the plane she was to board took off, the agent found 156
pieces of Philippine 50-peso bills, 17 pieces of U.S. 20-dollar bills and a piece of U.S. 10-dollar
bill, although her license from the Central Bank allowed her to carry only $200. The bills were
seized for alleged violation of Central Bank Circulars Nos. 42 and 55, in relation to Section 1363
(f) of the Revised Administrative Code. In the seizure and forfeiture proceedings correspondingly
instituted, the Collector of Customs rendered on May 5, 1955, a decision ordering the forfeiture in
favor of the Government of the bills in question. This decision was affirmed by the Commissioner
of Customs on July 29, 1955. Dissatisfied, Caridad Capistrano brought the matter to the Court of
Tax Appeals.
 The Court of Tax Appeals ruled that while Circulars Nos. 37, 20, 42 and 55 were
promulgated by the Monetary Board pursuant to the provisions of Republic Act No. 265, said
circulars did not, however, authorize the seizure and forfeiture of the Philippine peso bills carried
by herein petitioner in excess of that allowed by the Central Bank regulations. The Tax Court
further said that neither could Section 1363 (f) of the Revised Administrative Code be invoked
because said section referred merely to "merchandise or prohibited importation or exportation."
Taking judicial notice of the fact that the United States dollar has already ceased to be legal tender
in the Philippines and that it could be bought and sold in the country, the Tax Court held that the
U. S. dollar falls within the term "merchandise". However, the same thing was not said of the
Philippine peso. Hence, the decision of the Commissioner of Customs, insofar as the 156 pieces
of Philippine 50-peso bills were concerned, was reversed, and said bills were ordered to be
returned to petitioner Caridad Capistrano.

Issue:
Whether or not the Court of Tax Appeals erred in revoking the order of forfeiture of the
Philippine peso bills and the ordering their release to the appellee.

Ruling:
Yes.
Under Section 1363 (f) of the Revised Administrative, any merchandise of prohibited
importation or exportation, the importation or exportation of which is effected or attempted contrary to
law, and all other merchandise which, in the opinion of the collector, have been used, are or were
intended to be used as instrument in the importation or exportation of the former.
The Court believe that Philippine peso bills come within the concept of "merchandise," as this
term is understood in Section 1363(f) of the Revised Administrative Code. As defined by the same
Code, merchandise, when used with reference to importations or exportations, includes goods, wares,
and in general anything that may be the subject of importation or exportation. It cannot be gainsaid
that money may be a commodity — an object of trade.
In the same manner that in the Philippines the United States dollar bills which have ceased to
be legal tender, are considered merchandise, the Philippine peso bills when attempted to be exported,
as in the present case, may be deemed to have been taken out of domestic circulation as legal tender
and treated as commodity. Hence, they may be forfeited pursuant to Central Bank Circular No. 37 in
relation to Section 1363 (f) of the Revised Administrative Code.

Case 3
G.R. No. 137705
Serg’s Products, Inc. v. PCI Leasing & Finance, Inc.,
August 22, 2000
Panganiban, J.

Doctrine:
The Court held that contracting parties may validly stipulate that a real property be considered
as personal. After agreeing to such stipulation, they are consequently estopped from claiming
otherwise.

Facts:
On February 13, 1998, respondent PCI Leasing and Finance, Inc. filed with the RTC-QC a
complaint for a sum of money, with an application for a writ of replevin against petitioner. On March 6,
1998, upon an ex-parte application of PCI Leasing, respondent judge issued a writ of replevin directing
its sheriff to seize and deliver the machineries and equipment to PCI Leasing after 5 days and upon
the payment of the necessary expenses. In implementation of said writ, the sheriff proceeded to
petitioner’s factory, seized one machinery with the word that he would return for the other machineries.
Petitioners filed a motion for special protective order, invoking the power of the court to control the
conduct of its officers and amend and control its processes, praying for a directive for the sheriff to
defer enforcement of the writ of replevin. This motion was opposed by PCI Leasing on the ground that
the properties were still personal and therefore still subject to seizure and a writ of replevin.
Petitioners asserted that the properties sought to be seized were immovable as defined in
Article 415 of the Civil Code. They argued that to give effect to the agreement would be prejudicial to
innocent third parties. They further stated that PCI Leasing was estopped from treating these
machineries as personal because the contracts in which the alleged agreement were embodied were
totally sham and farcical. On April 6, 1998, the sheriff again sought to enforce the writ of seizure and
take possession of the remaining properties. He was able to take two more but was prevented by the
workers from taking the rest. On April 7, 1998, peitioner went to the CA via an original action for
certiorari.. The CA held that the subject machines were personal property, and that they had only been
leased, not owned, by petitioners. It also ruled that the "words of the contract are clear and leave no
doubt upon the true intention of the contracting parties." Observing that Petitioner Goquiolay was an
experienced businessman who was "not unfamiliar with the ways of the trade," it ruled that he "should
have realized the import of the document he signed.

Issue:
Whether or not the machineries purchased and imported by SERG’S became real property by
virtue of immobilization.

Ruling:
No.
Under Article 415 (5) of the Civil Code, the following are immovable property: (5) Machinery,
receptacles, instruments or implements intended by the owner of the tenement for an industry or works
which may be carried on in a building or on a piece of land, and which tend directly to meet the needs
of the said industry or works;
In the present case, the machines that were the subjects of the Writ of Seizure were placed
by petitioners in the factory built on their own land. Indisputably, they were essential and principal
elements of their chocolate-making industry. Hence, although each of them was movable or personal
property on its own, all of them have become "immobilized by destination because they are essential
and principal elements in the industry." In that sense, petitioners are correct in arguing that the said
machines are real, not personal, property pursuant to Article 415 (5) of the Civil Code.
But the Court disagree with the submission of the petitioners that the said machines are not
proper subjects of the Writ of Seizure. The Court held that contracting parties may validly stipulate that
a real property be considered as personal. After agreeing to such stipulation, they are consequently
estopped from claiming otherwise. Under the principle of estoppel, a party to a contract is ordinarily
precluded from denying the truth of any material fact found therein.
In the present case, the Lease Agreement clearly provides that the machines in question are to be
considered as personal property. Specifically, Section 12.1 of the Agreement reads as follows:
"12.1 The PROPERTY is, and shall at all times be and remain, personal property
notwithstanding that the PROPERTY or any part thereof may now be, or hereafter become, in
any manner affixed or attached to or embedded in, or permanently resting upon, real property
or any building thereon, or attached in any manner to what is permanent."
Clearly, petitioners are estopped from denying the characterization of the subject machines as
personal property. Under the circumstances, they are proper subjects of the Writ of Seizure. Therefore,
the petition is denied.

Case 4
G.R. No. 175540
Alano v. Magud-Logmao
April 7, 2014
Peralta, J.
Facts:
In the evening of March 1, 1988, Arnelito Logmao was brought to the East Avenue Medical
Center in Quezon City. The patient’s data sheet identified the patient as Angelito Lugmoso of Boni
Avenue, Mandaluyong. However, the clinical abstract prepared by Dr. Paterno F. Cabrera, the surgical
resident on-duty at the Emergency Room of EAMC, stated that the patient is Angelito Logmao.
Dr. Cabrera reported that Logmao was drowsy with alcoholic breath, was conscious and
coherent and that the skull x-ray showed no fracture however at around 4:00 o’clock in the morning,
Logmao developed generalized seizures. After that, the condition of Logmao progressively
deteriorated and due to lack of available bed and ventilator in the ICU, a resident physician of NKI,
suggested that Logmao be transferred to NKI.
At the NKI, the name Angelito Logmao was recorded as Angelito Lugmoso. Lugmoso was
immediately attended to and given the necessary medical treatment. As Lugmoso had no relatives
around, Jennifer B. Misa, Transplant Coordinator, was asked to locate his family by enlisting police
and media assistance. Dr. Enrique T. Ona, Chairman of the Department of Surgery, observed that the
severity of the brain injury of Lugmoso manifested symptoms of brain death. He requested the
Laboratory Section to conduct a tissue typing and tissue cross-matching examination in order to
preserve other organs in case Logmao expired. Jennifer Misa contacted several radio and television
stations to request for airtime for the purpose of locating the family of Angelito Lugmoso of Boni
Avenue, Mandaluyong.
On March 3, 1988, Dr. Ona was informed that Lugmoso had been pronounced brain. Upon
learning that Lugmoso was a suitable organ donor and that some NKI patients awaiting organ donation
had blood and tissue types compatible with Lugmoso, Dr. Ona inquired from Jennifer Misa whether
the relatives of Lugmoso had been located so that the necessary consent for organ donation could be
obtained but yielded no positive result. Dr. Ona requested Dr. Filoteo A. Alano, Executive Director of
NKI, to authorize the removal of specific organs from the body of Lugmoso for transplantation
purposes. Dr. Ona likewise instructed Dr. Rose Marie Rosete-Liquete to secure permission for the
planned organ retrieval and transplantation from the Medico-Legal Office of the National Bureau of
Investigation (NBI), on the assumption that the incident which lead to the brain injury and death of
Lugmoso was a medico legal case.
On March 3, 1988, Dr. Alano issued to Dr. Ona a Memorandum granting the request to retrieve
and remove some organs of said deceased patient and to transplant it to any compatible patient. The
NBI also issued a certification confirming that Dr. Maximo Reyes, Medico-Legal Officer of the NBI,
verbally confirmed to the organ retrieval. On the same day, they conducted the retrieval of the organ
with Dr. Ona as the principal surgeon.
The NKI issued a press release announcing its successful double organ transplantation. Aida
Doromal, a cousin of plaintiff, heard the news aired on television that the donor was an eighteen (18)
year old boy whose remains were at La Funeraria Oro in Quezon City. As the name of the donor
sounded like Arnelito Logmao, Aida informed plaintiff of the news report. It appears that on March 3,
1988, Arlen Logmao, a brother of Arnelito, reported to Police Station No. 5, that the latter did not return
home after seeing a movie in Cubao, Quezon City and that the relatives of Arnelito were informed that
the latter was missing. Upon receiving the news from Aida, plaintiff and her other children went to La
Funeraria Oro, where they saw Arnelito inside a cheap casket.
On April 29, 1988, plaintiff filed a complaint for damages against Dr. Emmanuel Lenon,
Taurean Protectors Agency, National Kidney Institute, and La Funeraria Oro, Inc in connection with
the death of her son Arnelito. Plaintiff alleged that defendants conspired to remove the organs of
Arnelito while the latter was still alive and that they concealed his true identity. On January 17, 2000,
the court a quo rendered judgment finding only Dr. Filoteo Alano liable for damages to plaintiff and
dismissing the complaint against the other defendants for lack of legal basis. On appeal, the CA
affirmed with modification the decision of the trial court.
Issue:
Whether or not petitioner is liable for damages.

Ruling:
No.
Internal organs of the deceased were removed only after he had been declared brain dead;
thus, the emotional pain suffered by respondent due to the death of her son cannot in any way be
attributed to petitioner. Neither can the Court find evidence on record to show that respondent's
emotional suffering at the sight of the pitiful state in which she found her son's lifeless body be
categorically attributed to petitioner's conduct.
Thus, there can be no cavil that petitioner employed reasonable means to disseminate
notifications intended to reach the relatives of the deceased. The only question that remains pertains
to the sufficiency of time allowed for notices to reach the relatives of the deceased.
If respondent failed to immediately receive notice of her son's death because the notices did
not properly state the name or identity of the deceased, fault cannot be laid at petitioner's door. The
trial and appellate courts found that it was the EAMC, who had the opportunity to ascertain the name
of the deceased, who recorded the wrong information regarding the deceased's identity to NKI. The
NKI could not have obtained the information about his name from the patient, because as found by
the lower courts, the deceased was already unconscious by the time he was brought to the NKI.
Therefore, petition was granted.

Case 6
G.R. No. 224678
Spouses Stilianopoulos v. Register of Deeds for Legazpi City
July 03, 2018
Perlas-Bernabe, J.

Facts:
A Complaint for Declaration of Nullity of Transfer Certificate of Title No. 42486, Annulment
of TCT No. 52392 and TCT No. 59654, and Recovery of Possession of Lot No. 1320 with
Damages was filed by petitioners against respondents The Register of Deeds for Legazpi City
and The National Treasurer before the RTC.
Petitioners alleged that they own a 6,425-square meter property known as Lot No. 1320, in
the name of Jose Manuel, who is a resident of Spain and without any administrator of said
property in the Philippines. On October 9, 1995, Anduiza caused the cancellation of TCT No.
13450 and issuance of TCT No. 42486 in his name and mortgaged Lot No. 1320 to Rowena. As
a result of Anduiza's default, Rowena foreclosed the mortgage, and consequently, caused the
cancellation of TCT No. 42486 and issuance of TCT No. 52392 in her name on July 19, 2001. On
April 15, 2008, Rowena then sold Lot No. 1320 to the Co Group.
According to petitioners, their discovery of the aforesaid transactions only on January 28,
2008 prompted them to file a complaint for recovery of title on May 2, 2008. However, such
complaint was dismissed for petitioners' failure to allege the assessed value of Lot No. 1320.
Thus, they filed the subject complaint on March 18, 2009, praying that: (a) TCT Nos. 42486,
52392, and 59654 in the respective names of Anduiza, Rowena, and the Co Group be annulled;
(b) all defendants be held solidarily liable to pay petitioners damages and attorney's fees; and (c)
the RD-Legazpi and the National Treasurer be ordered to pay petitioners' claims should the
defendants be unable to pay the same in whole or in part.
The RTC dismissed the case against Spouses Amurao and the Co Group as they were
shown to be purchasers in good faith and for value and found Anduiza guilty of fraud in causing
the cancellation of petitioners' TCT over Lot No. 1320, and held the National Treasurer, as
custodian of the Assurance Fund, subsidiarily liable to Anduiza's monetary liability should the
latter be unable to fully pay the same.
Aggrieved, petitioners moved for reconsideration, while the RD Legazpi and the National
Treasurer moved for a partial reconsideration; both of which were denied. RD Legazpi appealed
to CA. The CA reversed and set aside the RTC's ruling insofar as the National Treasurer's
subsidiary liability was concerned. It held that petitioners only had six (6) years from the time
Anduiza caused the cancellation of TCT No. 13450 on October 9, 1995, or until October 9, 2001,
within which to claim compensation from the Assurance Fund. Since petitioners only filed their
claim on March 18, 2009, their claim against the Assurance Fund is already barred by prescription.

Issue:
Whether or not the CA correctly held that petitioners' claim against the Assurance Fund
has already been barred by prescription.

Ruling:

No. The petitioners’ claim against the Assurance Fund is not yet barred by prescription.
The Assurance Fund is a long-standing feature of our property registration system which
is intended "to relieve innocent persons from the harshness of the doctrine that a certificate
is conclusive evidence of an indefeasible title to land x x x." Originally, claims against the
Assurance Fund were governed by Section 101 of Act No. 496, otherwise known as the "Land
Registration Act." The language of this provision was substantially carried over to our present
"Property Registration Decree," i.e., Presidential Decree No. (PD) 1529, Section 95.
In the case of Register of Deeds of Negros Occidental v. Anglo, Sr. the Court held that "based
solely on Section 95 of Presidential Decree No. 1529, the following conditions must be met:
First, the individual must sustain loss or damage, or the individual is deprived of land or
any estate or interest.
Second, the individual must not be negligent.
Third, the loss, damage, or deprivation is the consequence of either (a) fraudulent
registration under the Torrens system after the land's original registration, or (b) any
error, omission, mistake, or misdescription in any certificate of title or in any entry or
memorandum in the registration book. [And]
Fourth, the individual must be barred or otherwise precluded under the provision of any
law from bringing an action for the recovery of such land or the estate or interest therein."

It should be clarified that loss, damage, or deprivation of land or any estate or interest
therein through fraudulent registration alone is not a valid ground to recover damages against the
Assurance Fund. Section 101 of PD 1529 explicitly provides that "the Assurance Fund
shall not be liable for any loss, damage or deprivation caused or occasioned by a breach of
trust, whether express, implied or constructive or by any mistake in the resurvey or
subdivision of registered land resulting in the expansion of area in the certificate of title."
Instead, the loss, damage or deprivation becomes compensable under the
Assurance Fund when the property has been further registered in the name of an innocent
purchaser for value. This is because in this instance, the loss, damage or deprivation are not
actually caused by any breach of trust but rather, by the operation of the Torrens system of
registration which renders indefeasible the title of the innocent purchaser for value.
The Court held that an action against the Assurance Fund on the ground of "fraudulent
registration under the Torrens system after the land's original registration" may be brought only
after the claimant's property is registered in the name of an innocent purchaser for value. This is
because it is only after the registration of the innocent purchaser for value's title (and not the
usurper's title which constitutes a breach of trust) can it be said that the claimant effectively
"sustains loss or damage, or is deprived of land or any estate or interest therein in consequence
of the bringing of the land under the operation of the Torrens system." The registration of
the innocent purchaser for value's title is therefore a condition sine qua non in order to properly
claim against the Assurance Fund.

With regard to the prescription of the action. Under Chapter VII of PD 1529 is Section 102,
it states that:
Section 102. Limitation of Action. – Any action for compensation against the
Assurance Fund by reason of any loss, damage or deprivation of land or any
interest therein shall be instituted within a period of six years from the time the
right to bring such action first occurred: Provided, That the right of action herein
provided shall survive to the legal representative of the person sustaining loss or
damage, unless barred in his lifetime; and Provided, further, That if at the time
such right of action first accrued the person entitled to bring such action was a
minor or insane or imprisoned, or otherwise under legal disability, such person or
anyone claiming from, by or under him may bring the proper action at any time
within two years after such disability has been removed, notwithstanding the
expiration of the original period of six years first above provided.

The general rule is that "a right of action accrues only from the moment the right to
commence the action comes into existence, and prescription begins to run from that time."
However, in cases involving fraud, the common acceptation is that the period of prescription runs
from the discovery of the fraud. Under the old Code of Civil Procedure, an action for relief on the
ground of fraud prescribes in four years, "but the right of action in such case shall not be deemed
to have accrued until the discovery of the fraud." Meanwhile, under prevailing case law, "when an
action for reconveyance is based on fraud, it must be filed within four (4) years from discovery of
the fraud, and such discovery is deemed to have taken place from the issuance of the original
certificate of title. The rule is that the registration of an instrument in the Office of the RD
constitutes constructive notice to the whole world and therefore the discovery of the fraud is
deemed to have taken place at the time of registration."
However, in actions for compensation against the Assurance Fund grounded on fraud,
registration of the innocent purchaser for value's title should only be considered as a
condition sine qua non to file such an action and not as a form of constructive notice for the
purpose of reckoning prescription. This is because the concept of registration as a form of
constructive notice is essentially premised on the policy of protecting the innocent purchaser for
value's title, which consideration does not, however, obtain in Assurance Fund cases.
The actual title holder cannot be deprived of his or her rights twice – first, by fraudulent
registration of the title in the name of the usurper and second, by operation of the constructive
notice rule upon registration of the title in the name of the innocent purchaser for value. As such,
prescription, for purposes of determining the right to bring an action against the
Assurance Fund, should be reckoned from the moment the innocent purchaser for value
registers his or her title and upon actual knowledge thereof of the original title
holder/claimant.
In this case, it has been established that petitioners are residents of Spain and designated
no administrator over their property in the Philippines. They remain in possession of the owner's
duplicate copy of TCT No. 13450 in their names, the surrender of which was necessary in order
to effect a valid transfer of title to another person through a voluntary instrument. As the records
show, not only did Anduiza, the usurper, forge a deed of sale purportedly transferring petitioners'
property in his favor, they were also not required by the RD-Legazpi or through a court order to
surrender possession of their owner's duplicate certificate of title for the proper entry of a new
certificate of title in Anduiza's favor. Neither was the issuance of TCT No. 42486 in the name of
Anduiza recorded/registered in the Primary Entry Book, nor was a copy of the deed of sale in his
favor kept on file with the RD-Legazpi. Consequently, petitioners were not in any way negligent
as they, in fact, had the right to rely on their owner's duplicate certificate of title and the
concomitant protection afforded thereto by the Torrens system, unless a better right, i.e., in favor
of an innocent purchaser for value, intervenes. As it turned out, Anduiza mortgaged Lot No. 1320
to Spouses Amurao, particularly Rowena. As a result of Anduiza's default, Rowena foreclosed
the mortgage, and consequently, caused the cancellation of TCT No. 42486 and issuance of TCT
No. 52392 in her name on July 19, 2001. Spouses Amurao and later, the Co group, in whose
favor the subject lot was sold – by virtue of the final judgment of the RTC – were conclusively
deemed as innocent purchasers for value. Their status as such had therefore been settled and
hence, cannot be revisited, lest this Court deviate from the long-standing principle of immutability
of judgments, which states:
In this regard, the RTC held that the Assurance Fund would be subsidiarily liable to
petitioners, should the judgment debt be left unsatisfied from the land or personal property of
Anduiza. If the constructive notice rule were to be applied, then petitioners' claim against the
Assurance Fund filed on March 18, 2009 would be barred, considering the lapse of more than six
(6) years from the registration of Spouses Amurao's title over the subject lot on July 19, 2001.
However, as earlier explained, the constructive notice rule holds no application insofar as
reckoning the prescriptive period for Assurance Fund cases. Instead, the six (6)-year prescriptive
period under Section 102 of PD 1529 should be counted from January 28, 2008, or the date
when petitioners discovered the anomalous transactions over their property, which included the
registration of Rowena's title over the same. Thus, when they filed their complaint on March 18,
2009, petitioners' claim against the Assurance Fund has not yet prescribed. Wherefore, the
petition is granted. The decision of RTC is hereby reinstated.

SEPARATE CONCURRING OPINION

LEONEN, J.:
I concur.
The present case involves the interpretation of Section 102 of Presidential Decree No.
1529, which provides for the prescriptive period of actions to claim compensation from the
assurance fund.
The first part of Section 102 of Presidential Decree No. 1529 provides that "any action for
compensation against the assurance fund by reason of any loss, damage or deprivation of land
or any interest therein shall be instituted within a period of six years from the time the right to bring
such action first occurred.” The right to bring an action for compensation against the assurance
fund depends upon compliance with the requisites provided under Chapter VII of Presidential
Decree No. 1529.
First, the claimant must have sustained "loss or damage, or is deprived of land or any
estate or interest therein."
Second, the loss, damage, or deprivation must be caused by either the fraudulent
registration of the land after its original registration, or an "error, omission, mistake, or
misdescription in any certificate of title or in any entry or memorandum in the registration
book."2 Furthermore, the loss, damage, or deprivation must not be caused by breach of
trust or by mistakes in the resurvey or subdivision of registered land.
Third, the claimant must not have been negligent. Otherwise, his or her claim shall be
barred.
Fourth, the claimant must be barred by or is precluded by law from bringing an action to
recover the land or estate.
Fifth, the claim must be brought "within a period of six years from the time the right to bring
such action first occurred."
 I concur that the loss, damage, or deprivation becomes compensable once the property
has been registered in the name of an innocent purchaser for value. I agree that the registration
of the property in the name of an innocent purchaser for value should not be the reckoning point
of the six (6)-year prescriptive period. Prescriptive statutes safeguard the diligent and vigilant.
They operate primarily against those who have slept on their rights not against those who wanted
to act but could not do so for reasons beyond their control.
Petitioners in this case were neither negligent nor was it shown that they lacked the
interest in protecting their rights. Petitioners immediately filed a complaint less than four (4)
months after they discovered the transactions involving their land. The actual title holder cannot
be deprived of his or her rights twice—first, by the fraudulent registration of the title in the name
of the forger and second, by the operation of the constructive notice rule upon the registration of
the title in the name of the innocent purchaser for value.
The innocent purchaser for value is amply protected by the rule that a Torrens certificate
of title is indefeasible and binding upon the whole world. An innocent purchase for value, by relying
on the correctness of the certificate of title, is shielded from any claims that other persons might
have over the property. The constructive notice rule should not be made to apply to title holders
who have been unjustly deprived of their land without their negligence. The assurance fund was
established upon the recognition that our Torrens system is not infallible. It is a measure intended
to safeguard the rights of persons who have been divested of their title. The assurance fund works
for the protection of the defeated title holder. In this case, petitioners have been defeated in their
title twice. In equity, this Court should not allow that they also lose their right to bring an action.

CAGUIOA, J.:
I agree with the ponencia insofar as it grants the Petition. However, I submit that in view
of the particular circumstances attendant in this case, the six-year prescriptive period herein
should be reckoned from the day Spouses Stilianopoulos received notice of the partial entry of
the RTC's decision in the Second Action which characterized Amurao and Co, et al. as
IPVs. Since Spouses Stilianopoulos were the ones who filed the Second Action against Anduiza,
Amurao, Co, et al., and the Assurance Fund, then their six-year prescriptive period to claim
against the latter did not even begin to run.
The IPV principle and constructive notice rule proceed from the indefeasibility of titles
issued under the Torrens system. These features are set forth in Sections 32 and 52 of PD 1529.
Both features stand to protect the registered title holder from any form of encroachment upon
his/her right of ownership. Such protection, as already explained, only extends to holders of
Torrens titles issued in accordance with PD 1529. Hence, those who claim to possess rights
over real property which have not come under the Torrens system by virtue of registration can
neither be accorded the status of being IPVs, nor can third persons be deemed to have
constructive notice of their rights in the absence of actual registration, filing or entry in the RD.
With these principles in mind, it becomes clear that Amurao and Co, et al. assume the status of
IPVs not by virtue of law, but merely because the RTC judgment holding them as such has
become final and immutable.
During the course of trial before the RTC, it was established that (i) the owner's duplicate
copy of Spouses Stilianopoulos' TCT No. 13450 was not presented to the RD for cancellation;
and (ii) the issuance of Anduiza's TCT No. 42486 had not been recorded in the PEB. These
undisputed findings clearly show that the mandatory requirements for registration of voluntary
instruments under Sections 53 and 56 of PD 1529 had not been complied.
The Court's ruling in the early case of Levin v. Bass is instructive:
Levin thus teaches that an IPV "becomes the registered owner and in the
contemplation of law the holder of a certificate thereof the moment he does the
following: (i) presents and files a duly notarized and lawful deed of sale; (ii) causes
 the same to be entered in the day book; (iii) he surrenders or presents the owner's
duplicate certificate of title to the property sold; and (iv) pays the full amount of
registration fees.
The facts in this case show that at least three of the above four requirements had not been
complied with.
First, as attested to in separate certifications dated January 8, 2008 and February 14,
2008 (Certifications), the RD confirmed that no copy of the DAS had been found on file;36
Second, the DAS was not entered in the PEB — indeed, even the issuance of TCT No.
42486 was not entered in the PEB;37 and
Third, the Spouses Stilianopoulos' owner's duplicate certificate was not presented to the
RD and was not entered in the PEB.

These irregularities precluded, prevented and averted the completion of the registration
process — thus rendering TCT No. 42486, issued only because of the complicity of the RD,
as totally inexistent. Verily, the issuance of TCT No. 42486 did not have, as it could not have
had, the effect of conveying any right in Anduiza's favor, because no registration had in fact
taken place. In light of the foregoing, I cannot agree that TCT No. 42486 serves as a source of a
valid title in the hands of Amurao and Co, et al.
As stated, the IPV principle and the constructive notice rule both operate as a consequence
of the Torrens system of registration, in order to secure the registered owner's Torrens title and
to protect subsequent purchasers in good faith and for value against all liens and encumbrances
which have not been registered and do not appear on the face of their Torrens titles. However,
the IPV principle and the constructive notice rule cannot be made to apply where, as
here, no actual registration had in fact taken place.

In the case of Escobar v. Luna:

Petitioners state that the law insulates registered titles obtained under the Torrens system
from the dangers of frivolous suits. Respondents did not even bother to discuss the issue,
and for good reason. Even if petitioners were innocent purchasers for value and in
good faith, no right passed to a transferee from a vendor who did not have any right
in the first place. Void ab initio land titles issued cannot ripen into private
ownership. A spring cannot rise higher than its source.

Similar to Anduiza's title, the fraudulent titles subject of the dispute in Escobar were
spurious and inexistent in the records of the RD. Like the fraudulent titles in Escobar,
Anduiza's title cannot have the effect of conveying any right in Anduiza's favor, for, in fact
and in law, no registration had taken place. The fact that there is no record in the RD of the
registration of Anduiza's title makes his title spurious if not completely fabricated. In other
words, the RTC's finding that Amurao and Co, et al. are IPVs was erroneous because, in so
ruling, the RTC afforded them protection under the Torrens system notwithstanding the fact that
the Torrens title from which they sourced their respective TCTs is unregistered, inexistent and
spurious. The subsequent certificates of title issued to Amurao and Co, et al., which are derived
from Anduiza's unregistered certificate of title, are likewise spurious and legally inexistent.
In any case, even if it is assumed, arguendo, that Anduiza's title had in fact been duly
registered, such did not have the effect of conveying title in Anduiza's favor, as registration does
not operate to confirm ownership over real property which, in fact and in law, does not exist. PD
1529 governs registration of title under the Torrens system. Registration under the Torrens
system presupposes that ownership over the real property subject of the application had already
been acquired through any of the modes of acquisition prescribed by law, as registration merely
serves as the process through which existing ownership is confirmed.
 In turn, ownership over real property is acquired and transmitted by the concurrence of a
title and a mode of acquisition. Mode "is the specific cause which produces dominion and other
real rights as a result of the co existence of special status of things, capacity, x x x intention of
person and [the] fulfillment of the requisites of law." On the other hand, title is "the juridical right
which gives a means to the acquisition of [such] rights." Thus:
x x x [A]n asserted right or claim to ownership or a real right over a thing arising from a
juridical act, however justified, is not per se sufficient to give rise to ownership over the res. That
right or title must be completed by fulfilling certain conditions imposed by law. Hence, ownership
and real rights are acquired only pursuant to a legal mode or process. While title is the
juridical justification, mode is the actual process of acquisition or transfer of ownership
over a thing in question.
Article 712 of the Civil Code provides the following modes of acquiring and transmitting
ownership and other real rights over property: by occupation, by intellectual creation, by law, by
donation, by testate and intestate succession, by prescription, and in consequence of certain
contracts, by tradition.
In order that ownership may be transmitted by one person to another, the thing to be
transmitted "must form part of his patrimony." As a corollary, actual ownership should neither be
confused nor deemed synonymous with the existence of a Torrens title in one's name. A Torrens
title merely serves as evidence of ownership or title over the particular property described therein.
Consequently, registration neither operates to confirm nor convey ownership over land
which does not in fact exist.
Here, Spouses Stilianopoulos, the owners of the land, had no intention to convey Lot 1320
in favor of Anduiza. The DAS allegedly executed between them does not even exist in the records
of the RD. Verily, Anduiza's unregistered Torrens title did not proceed from any title or mode, and
thus, did not have the effect of conveying ownership of Lot 1320 in his favor. Necessarily, Anduiza
could not subsequently convey ownership and any other real rights over Lot 1320, as it never
formed part of his patrimony. Again, the spring cannot rise higher than its source. It cannot be
stressed enough that Spouses Stilianopoulos have been in possession of their owner's duplicate
certificate since its issuance, and as such, were not expected to wait in the portals of the court to
avoid the possibility of losing their land. The denial of their Petition would have the effect of unduly
leaving Spouses Stilianopoulos without any remedy whatsoever for what is effectively a
robbery of their property — and thereby defeat the very purpose of the land registration system.

Case 7
G.R. No. L-11139
Evangelista v. Alto Surety & Ins. Co.
April 23, 1958
Concepcio, J.

Doctrine:
A true building (not merely superimposed on the soil) is immovable or real property, whether
it is erected by the owner of the land or by usufructuary or lessee.

Facts:
On June 4, 1949, petitioner, Santos Evangelista, instituted a Civil Case before the Court of
First, Instance of Manila for a sum of money against Rivera. On the same date, he obtained a writ of
attachment, which levied upon a house, built by Rivera on a land situated in Manila and leased to him.
Judgment was rendered in favor of Evangelista, who bought the house at public auction. The
corresponding definite deed of sale was issued to him on October 22, 1952, upon expiration of the
period of redemption. When Evangelista sought to take possession of the house, Rivera refused to
surrender it, upon the ground that he had leased the property from the Alto Surety & Insurance Co.,
Inc., respondent. It appears that on May 10, 1952, a definite deed of sale of the same house had been
issued to respondent, as the highest bidder at an auction sale held, on September 29, 1950, in
compliance with a writ of execution issued in Civil Case No. 6268 of the same court in which judgment,
for the sum of money, had been rendered in favor to Alto Surety. Hence, on June 13, 1953, Evangelista
instituted the present action against respondent and Ricardo Rivera, for the purpose of establishing
his title over said house, securing possession thereof, apart from recovering damages.
Respondent alleged that it has a better right to the house, because the sale made, and the
definite deed of sale executed, on September 29, 1950 and May 10, 1952, respectively, precede the
sale to Evangelista and the definite deed of sale in his favor. After due trial, the Court of First Instance
of Manila rendered judgment for Evangelista, sentencing Rivera and respondent to deliver the house
in question to petitioner herein and to pay him, jointly and severally, forty pesos a month from October,
1952, until said delivery, plus costs.
On appeal taken by respondent, this decision was reversed by the Court of Appeals, which
absolved said respondent from the complaint, upon the ground that, although the writ of attachment
in favor of Evangelista had been filed with the Register of Deeds of Manila prior to the sale in favor of
respondent, Evangelista did not acquire thereby a preferential lien, the attachment having been levied
as if the house in question were immovable property, although in the opinion of the Court of Appeals,
it is "ostensibly a personal property."

Issue:
Whether or not a house, constructed the lessee of the land on which it is built, should be dealt
with, for purpose, of attachment, as immovable property, or as personal property.

Ruling:
The house is an immovable property.
In the case of Laddera vs. Hodges, "a true building (not merely superimposed on the soil) is
immovable or real property, whether it is erected by the owner of the land or by usufructuary or lessee.”
It is true that the parties to a deed of chattel mortgage may agree to consider a house as
personal property for purposes of said contract. However, this view is good only insofar as
the contracting parties are concerned. It is based, partly, upon the principle of estoppel. Neither this
principle, nor said view, is applicable to strangers to said contract. Much less is it in point where there
has been no contract whatsoever, with respect to the status of the house involved, as in the case at
bar.
In the case of Manarang vs. Ofilada, the Court held that sales on execution affect the public
and third persons. The regulation governing sales on execution are for public officials to follow. The
form of proceedings prescribed for each kind of property is suited to its character, not to the character,
which the parties have given to it or desire to give it. When the rules speak of personal property,
property which is ordinarily so considered is meant; and when real property is spoken of, it means
property which is generally known as real property. The regulations were never intended to suit the
consideration that parties may have privately given to the property levied upon. Enforcement of
regulations would be difficult were the convenience or agreement of private parties to determine or
govern the nature of the proceedings. The Court therefore hold that the mere fact that a house was
the subject of the chattel mortgage and was considered as personal property by the parties does not
make said house personal property for purposes of the notice to be given for its sale of public auction.
The house of mixed materials levied upon on execution, although subject of a contract of chattel
mortgage between the owner and a third person, is real property within the purview of Rule 39, section
16, of the Rules of Court as it has become a permanent fixture of the land, which, is real property.

Case 8
G.R. Nos. L-10817-18
Lopez v. Orosa
February 28, 1958
Felix, J.

Facts:
Enrique Lopez is a resident of Balayan, Batangas, doing business under the trade name of
Lopez-Castelo Sawmill. Sometime in May, 1946, Vicente Orosa, Jr., also a resident of the same
province, dropped at Lopez' house and invited him to make an investment in the theatre business.
Although Lopez expressed his unwillingness to invest of the same, he agreed to supply the lumber
necessary for the construction of the proposed theatre, and at Orosa's behest and assurance that the
latter would be personally liable for any account that the said construction might incur, Lopez further
agreed that payment therefor would be on demand and not cash on delivery basis. Pursuant to said
verbal agreement, Lopez delivered the lumber which was used for the construction of the Plaza
Theatre on May 17, 1946, up to December 4 of the same year. But of the total cost of the materials
amounting to P62,255.85, Lopez was paid only P20,848.50, thus leaving a balance of P41,771.35.
The Plaza Theatre was erected on a piece of land formerly owned by Vicente Orosa, Jr., and
was acquired by the corporation. As Lopez was pressing Orosa for payment of the remaining unpaid
obligation, the latter and Belarmino Rustia, the president of the corporation, promised to obtain a bank
loan by mortgaging the properties of the Plaza Theatre.
Persistent demand from Lopez for the payment of the amount due him caused Vicente
Orosa, Jr. to execute on March 17, 1947, an alleged "deed of assignment" of his 420 shares of
stock of the Plaza Theater, Inc., at P100 per share or with a total value of P42,000 in favor of the
creditor, and as the obligation still remained unsettled, Lopez filed on November 12, 1947, a
complaint with the Court of First Instance of Batangas against Vicente Orosa, Jr. and Plaza
Theater, Inc., praying that defendants be sentenced to pay him jointly and severally the sum of
P41,771.35, with legal interest from the filing of the action. The lower Court held that defendants
Vicente Orosa, Jr., and the Plaza Theatre, Inc., were jointly liable for the unpaid balance of the
cost of lumber used in the construction of the building and the plaintiff thus acquired the
materialman's lien over the same.

Issue:
1. Whether or not the lien for the value of the material attaches to the building alone
and does not extend to the land.
2. Whether or not the Court of First Instance and Court of Appeals erred
in providing the material man’s claim superior to the mortgage executed in favor of
the surety company not only on the building but also on the land.

Ruling:
Yes, the lien attaches to the building does not extend to the land.
Under Article 1923(5) which states that, with respect to determinate real property and real
rights of the debtor, the following are preferred: 5. Credits for refection, not entered or recorded, with
respect to the estate upon which the refection was made, and only with respect to other credits different
from those mentioned in four preceding paragraphs. Appellant reveals that the law invoked by him
gives preference to unregistered refectionary credits only with respect to the real estate upon which
the refection or work was made. This being so, the inevitable conclusion must be that the lien so
created attaches merely to the immovable property for the construction or repair of which the obligation
was incurred. Evidently, therefore, the lien in favor of appellant for the unpaid value of the lumber used
in the construction of the building attaches only to said structure and to no other property of the
obligors.
 Considering the conclusion thus arrived at that the materialman's lien could be charged only
to the building for which the credit was made, or which received the benefit of refection, the lower court
was right in, holding at the interest of the mortgagee over the land is superior and cannot be made
subject to the said materialman's lien. Therefore, the lower court’s decision is affirmed.