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Carino v. Insular Government, 212 U.S. 449 (1909) Carino v. Insular Government of the Philippine Islands No.

72 Argued January 13, 1909 Decided February 23, 1909 212 U.S. 449 ERROR TO THE SUPREME COURT OF THE PHILIPPINE ISLANDS Syllabus Writ of error is the general, and appeal the exceptional, method of bringing Cases to this Court. The latter method is in the main confined to equity cases, and the former is proper to bring up a judgment of the Supreme Court of the Philippine Islands affirming a judgment of the Court of Land Registration dismissing an application for registration of land. Although a province may be excepted from the operation of Act No. 926 of 1903 of the Philippine Commission which provides for the registration and perfecting of new titles, one who actually owns property in such province is entitled to registration under Act No. 496 of 1902, which applies to the whole archipelago. While, in legal theory and as against foreign nations, sovereignty is absolute, practically it is a question of strength and of varying degree, and it is for a new sovereign to decide how far it will insist upon theoretical relations of the subject to the former sovereign and how far it will recognize actual facts. Page 212 U. S. 450 The acquisition of the Philippines was not for the purpose of acquiring the lands occupied by the inhabitants, and under the Organic Act of July 1, 1902, c. 1369, 32 Stat. 691, providing that property rights are to be administered for the benefit of the inhabitants, one who actually owned land for many years cannot be deprived of it for failure to comply with certain ceremonies prescribed either by the acts of the Philippine Commission or by Spanish law. The Organic Act of the Philippines made a bill of rights embodying safeguards of the Constitution, and, like the Constitution, extends those safeguards to all.

Every presumption of ownership is in favor of one actually occupying land for many years, and against the government which seeks to deprive him of it, for failure to comply with provisions of a subsequently enacted registration act. Title by prescription against the crown existed under Spanish law in force in the Philippine Islands prior to their acquisition by the United States, and one occupying land in the Province of Benguet for more than fifty years before the Treaty of Paris is entitled to the continued possession thereof. 7 Phil. 132 reversed. The facts are stated in the opinion. Page 212 U. S. 455 MR. JUSTICE HOLMES delivered the opinion of the Court. This was an application to the Philippine Court of Land Registration for the registration of certain land. The application was granted by the court on March 4, 1904. An appeal was taken to the Court of First Instance of the Province of Benguet on behalf of the government of the Philippines, and also on behalf of the United States, those governments having taken possession of the property for public and military purposes. The Court of First Instance found the facts and dismissed the application upon grounds of law. This judgment was affirmed by the supreme court, 7 Phil. 132, and the case then was brought here by writ of error. The material facts found are very few. The applicant and plaintiff in error is an Igorot of the Province of Benguet, where the land lies. For more than fifty years before the Treaty of Paris, April 11, 1899, as far back as the findings go, the plaintiff and his ancestors had held the land as owners. His grandfather had lived upon it, and had maintained fences sufficient for the holding of cattle, according to the custom of the country, some of the fences, it seems, having been of much earlier date. His father had cultivated parts and had used parts for pasturing cattle, and he had used it for pasture in his turn. They all had been recognized as owners by the Igorots, and he had inherited or received the land from his father in accordance with Igorot custom. No document of title, however, had issued from the Spanish Crown, and although, in 1893-1894 and again in 1896-1897, he made application for one under the royal decrees then in force, nothing seems to have come of it, unless, perhaps, information that lands in Benguet could not be conceded until those to be occupied for a sanatorium, etc., had been designated -- a purpose that has been carried out by the Philippine government and the United States. In 1901, the plaintiff filed a petition, alleging ownership, under the mortgage law, and the lands were registered to him, that process, however, establishing only a possessory title, it is said.

Before we deal with the merits, we must dispose of a technical point. The government has spent some energy in maintaining that this case should have been brought up by appeal, and not by writ of error. We are of opinion, however, that the mode adopted was right. The proceeding for registration is likened to bills in equity to quiet title, but it is different in principle. It is a proceeding in rem under a statute of the type of the Torrens Act, such as was discussed in Tyler v. Court of Registration, 175 Mass. 71. It is nearer to law than to equity, and is an assertion of legal title; but we think it unnecessary to put it into either pigeon hole. A writ of error is the general method of bringing cases to this Court, an appeal the exception, confined to equity in the main. There is no reason for not applying the general rule to this case. Ormsby v. Webb, 134 U. S. 47, 134 U. S. 65; Campbell v. Porter, 162 U. S. 478; Metropolitan R. Co. v. District of Columbia, 195 U. S. 322. Another preliminary matter may as well be disposed of here. It is suggested that, even if the applicant have title, he cannot have it registered, because the Philippine Commission's Act No. 926, of 1903, excepts the Province of Benguet among others from its operation. But that act deals with the acquisition of new titles by homestead entries, purchase, etc., and the perfecting of titles begun under the Spanish law. The applicant's claim is that he now owns the land, and is entitled to registration under the Philippine Commission's Act No. 496, of 1902, which established a court for that purpose with jurisdiction "throughout the Philippine Archipelago," § 2, and authorized in general terms applications to be made by persons claiming to own the legal estate in fee simple, as the applicant does. He is entitled to registration if his claim of ownership can be maintained. We come, then, to the question on which the case was decided below -- namely, whether the plaintiff owns the land. The position of the government, shortly stated, is that Spain assumed, asserted, and had title to all the land in the Philippines except so far as it saw fit to permit private titles to be acquired; that there was no prescription against the Crown, and that, if there was, a decree of June 25, 1880, required registration within a limited time to make the title good; that the plaintiff's land was not registered, and therefore became, if it was not always, public land; that the United States succeeded to the title of Spain, and so that the plaintiff has no rights that the Philippine government is bound to respect. If we suppose for the moment that the government's contention is so far correct that the Crown of Spain in form asserted a title to this land at the date of the Treaty of Paris, to which the United States succeeded, it is not to be assumed without argument that the plaintiff's case is at an end. It is true that Spain, in its earlier decrees, embodied the universal feudal theory that all lands were held from the Crown, and perhaps the general attitude of conquering

nations toward people not recognized as entitled to the treatment accorded to those in the same zone of civilization with themselves. It is true also that, in legal theory, sovereignty is absolute, and that, as against foreign nations, the United States may assert, as Spain asserted, absolute power. But it does not follow that, as against the inhabitants of the Philippines, the United States asserts that Spain had such power. When theory is left on one side, sovereignty is a question of strength, and may vary in degree. How far a new sovereign shall insist upon the theoretical relation of the subjects to the head in the past, and how far it shall recognize actual facts, are matters for it to decide. The Province of Benguet was inhabited by a tribe that the Solicitor General, in his argument, characterized as a savage tribe that never was brought under the civil or military government of the Spanish Crown. It seems probable, if not certain, that the Spanish officials would not have granted to anyone in that province the registration to which formerly the plaintiff was entitled by the Spanish laws, and which would have made his title beyond question good. Whatever may have been the technical position of Spain, it does not follow that, in the view of the United States, he had lost all rights and was a mere trespasser when the present government seized his land. The argument to that effect seems to amount to a denial of native titles throughout an important part of the island of Luzon, at least, for the want of ceremonies which the Spaniards would not have permitted and had not the power to enforce. The acquisition of the Philippines was not like the settlement of the white race in the United States. Whatever consideration may have been shown to the North American Indians, the dominant purpose of the whites in America was to occupy the land. It is obvious that, however stated, the reason for our taking over the Philippines was different. No one, we suppose, would deny that, so far as consistent with paramount necessities, our first object in the internal administration of the islands is to do justice to the natives, not to exploit their country for private gain. By the Organic Act of July 1, 1902, c. 1369, § 12, 32 Stat. 691, all the property and rights acquired there by the United States are to be administered "for the benefit of the inhabitants thereof." It is reasonable to suppose that the attitude thus assumed by the United States with regard to what was unquestionably its own is also its attitude in deciding what it will claim for its own. The same statute made a bill of rights, embodying the safeguards of the Constitution, and, like the Constitution, extends those safeguards to all. It provides that "no law shall be enacted in said islands which shall deprive any person of life, liberty, or property without due process of law, or deny to any person therein the equal protection of the laws."

5. In the light of the declaration that we have quoted from § 12, it is hard to believe that the United States was ready to declare in the next breath that "any person" did not embrace the inhabitants of Benguet, or that it meant by "property" only that which had become such by ceremonies of which presumably a large part of the inhabitants never had heard, and that it proposed to treat as public land what they, by native custom and by long association -- one of the profoundest factors in human thought -- regarded as their own. It is true that, by § 14, the government of the Philippines is empowered to enact rules and prescribe terms for perfecting titles to public lands where some, but not all, Spanish conditions had been fulfilled, and to issue patents to natives for not more than sixteen hectares of public lands actually occupied by the native or his ancestors before August 13, 1898. But this section perhaps might be satisfied if confined to cases where the occupation was of land admitted to be public land, and had not continued for such a length of time and under such circumstances as to give rise to the understanding that the occupants were owners at that date. We hesitate to suppose that it was intended to declare every native who had not a paper title a trespasser, and to set the claims of all the wilder tribes afloat. It is true again that there is excepted from the provision that we have quoted as to the administration of the property and rights acquired by the United States such land and property as shall be designated by the President for military or other reservations, as this land since has been. But there still remains the question what property and rights the United States asserted itself to have acquired. Whatever the law upon these points may be, and we mean to go no further than the necessities of decision demand, every presumption is and ought to be against the government in a case like the present. It might, perhaps, be proper and sufficient to say that when, as far back as testimony or memory goes, the land has been held by individuals under a claim of private ownership, it will be presumed to have been held in the same way from before the Spanish conquest, and never to have been public land. Certainly, in a case like this, if there is doubt or ambiguity in the Spanish law, we ought to give the applicant the benefit of the doubt. Whether justice to the natives and the import of the organic act ought not to carry us beyond a subtle examination of ancient texts, or perhaps even beyond the attitude of Spanish law, humane though it was, it is unnecessary to decide. If, in a tacit way, it was assumed that the wild tribes of the Philippines were to be dealt with as the power and inclination of the conqueror might dictate, Congress has not yet sanctioned the same course as the proper one "for the benefit of the inhabitants thereof." If the applicant's case is to be tried by the law of Spain, we do not discover such clear proof that it was bad by that law as to satisfy us that he does not own the land. To begin with, the older

decrees and laws cited by the counsel for the plaintiff in error seem to indicate pretty clearly that the natives were recognized as owning some lands, irrespective of any royal grant. In other words, Spain did not assume to convert all the native inhabitants of the Philippines into trespassers, or even into tenants at will. For instance, Book 4, Title 12, Law 14 of the Recopilacion de Leyes de las Indias, cited for a contrary conclusion in Valenton v. Murciano, 3 Phil. 537, while it commands viceroys and others, when it seems proper, to call for the exhibition of grants, directs them to confirm those who hold by good grants or justa prescripcion. It is true that it begins by the characteristic assertion of feudal overlordship and the origin of all titles in the King or his predecessors. That was theory and discourse. The fact was that titles were admitted to exist that owed nothing to the powers of Spain beyond this recognition in their books. Prescription is mentioned again in the royal cedula of October 15, 1754, cited in 3 Phil. 546: "Where such possessors shall not be able to produce title deeds, it shall be sufficient if they shall show that ancient possession, as a valid title by prescription." It may be that this means possession from before 1700; but, at all events, the principle is admitted. As prescription, even against Crown lands, was recognized by the laws of Spain, we see no sufficient reason for hesitating to admit that it was recognized in the Philippines in regard to lands over which Spain had only a paper sovereignty. The question comes, however, on the decree of June 25, 1880, for the adjustment of royal lands wrongfully occupied by private individuals in the Philippine Islands. This begins with the usual theoretic assertion that, for private ownership, there must have been a grant by competent authority; but instantly descends to fact by providing that, for all legal effects, those who have been in possession for certain times shall be deemed owners. For cultivated land, twenty years, uninterrupted, is enough. For uncultivated, thirty. Art. 5. So that, when this decree went into effect, the applicant's father was owner of the land by the very terms of the decree. But, it is said, the object of this law was to require the adjustment or registration proceedings that it described, and in that way to require everyone to get a document of title or lose his land. That purpose may have been entertained, but it does not appear clearly to have been applicable to all. The regulations purport to have been made "for the adjustment of royal lands wrongfully occupied by private individuals." (We follow the translation in the government's brief.) It does not appear that this land ever was royal land or wrongfully occupied. In Article 6, it is provided that "interested parties not included within the two preceding

Page 212 U. S. 462 articles [the articles recognizing prescription of twenty and thirty years] may legalize their possession, and thereby acquire the full ownership of the said lands, by means of adjustment proceedings, to be conducted in the following manner." This seems, by its very terms, not to apply to those declared already to be owners by lapse of time. Article 8 provides for the case of parties not asking an adjustment of the lands of which they are unlawfully enjoying the possession, within one year, and threatens that the treasury "will reassert the ownership of the state over the lands," and will sell at auction such part as it does not reserve. The applicant's possession was not unlawful, and no attempt at any such proceedings against him or his father ever was made. Finally, it should be noted that the natural construction of the decree is confirmed by the report of the council of state. That report puts forward as a reason for the regulations that, in view of the condition of almost all property in the Philippines, it is important to fix its status by general rules on the principle that the lapse of a fixed period legalizes completely all possession, recommends in two articles twenty and thirty years, as adopted in the decree, and then suggests that interested parties not included in those articles may legalize their possession and acquire ownership by adjustment at a certain price. It is true that the language of Articles 4 and 5 attributes title to those "who may prove" possession for the necessary time, and we do not overlook the argument that this means may prove in registration proceedings. It may be that an English conveyancer would have recommended an application under the foregoing decree, but certainly it was not calculated to convey to the mind of an Igorot chief the notion that ancient family possessions were in danger, if he had read every word of it. The words "may prove" (acrediten), as well, or better, in view of the other provisions, might be taken to mean when called upon to do so in any litigation. There are indications that registration was expected from all, but none sufficient to show that, for want of it, ownership actually gained would be lost. The effect of the proof, wherever made, was not to confer title, but simply to establish it, as already conferred by the decree, if not by earlier law. The royal decree of February 13, 1894, declaring forfeited titles that were capable of adjustment under the decree of 1880, for which adjustment had not been sought, should not be construed as a confiscation, but as the withdrawal of a privilege. As a matter of fact, the applicant never was disturbed. This same decree is quoted by the Court of Land Registration for another recognition of the common law prescription of thirty years as still running against alienable Crown land.

It will be perceived that the rights of the applicant under the Spanish law present a problem not without difficulties for courts of a different legal tradition. We have deemed it proper on that account to notice the possible effect of the change of sovereignty and the act of Congress establishing the fundamental principles now to be observed. Upon a consideration of the whole case, we are of opinion that law and justice require that the applicant should be granted what he seeks, and should not be deprived of what, by the practice and belief of those among whom he lived, was his property, through a refined interpretation of an almost forgotten law of Spain. Judgment reversed.

Republic SUPREME Manila EN BANC G.R. No. 5246

of

the

Philippines COURT

September 16, 1910 ET AL., petitioners-appellants,

MANUELA GREY ALBA, vs. ANACLETO R. DE LA CRUZ, objector-appellee. Ramon Salinas, Aniceto G. Reyes, for appellee. TRENT, J.:

for

appellants.

These petitioners, Manuela, Jose, Juan, and Francisco, surnamed Grey y Alba, are the only heirs of Doña Segunda Alba Clemente and Honorato Grey, deceased. Remedios Grey y Alba, a sister of the petitioners, was married on the 21st day of March, 1903, to Vicente Reyes and died on the 13th of July, 1905, without leaving any heirs except her husband. The four petitioners, as coowners, sought to have registered the following-described property: A parcel of land situated in the barrio of Talampas, municipality of Baliuag, Province of Bulacan, upon which are situated three houses and one camarin of light material, having a superficial area of 52 hectares, 51 ares, and 22 centares; bounded on the north by the highway (calzada) of Talampas and the lands of Rita Ruiz Mateo; on the east by the lands of the said Rita Ruiz Mateo, Hermenegildo Prado, Policarpo de Jesus, and a stream called Sapang Buslut; on the south by the same stream and the lands of the capellania; and on the west by the stream called Sapang Buslut, and the lands of Vicente de la Cruz, Jose Camacho and Domingo Ruiz Mateo.

This parcel of agricultural land is used for the raising of rice and sugar cane and is assessed at $1,000 United States currency. The petition, which was filed on the 18th of December, 1906, was accompanied by a plan and technical description of the above-described parcel of land. After hearing the proofs presented, the court entered, on the 12th of February, 1908, a decree in accordance with the provisions of paragraph 6 of section 54 of Act No. 926, directing that the land described in the petitioner be registered in the names of the four petitioners, as coowners, subject to the usufructuary right of Vicente Reyes, widower of Remedios Grey. On the 16th of June, 1908, Anacleto Ratilla de la Cruz filed a motion in the Court of Land Registration asking for a revision of the case, including the decision, upon the ground that he is the absolute owner of the two parcels of land which are described in said motion, and which, according to his allegations, are included in the lands decreed to the petitioners. He alleged that the decree of February 12, 1908, was obtained maliciously and fraudulently by the petitioners, thereby depriving him of said two parcels of land. He further alleged that he was the absolute owner of the two parcels of land, having inherited them from his father, Baldomero R. de la Cruz, who had a state grant for the same. He therefore asked, under the provisions of section 38 of the Land Registration Act (No. 496), a revision of the case, and that the said decree be modified so as to exclude the two parcels of land described in said motion. The Land Court upon this motion reopened the case, and after hearing the additional evidence presented by both parties, rendered, on the 23rd of November, 1908, its decision modifying the former decree by excluding from the same the two parcels of land claimed by Anacleto Ratilla de la Cruz. From this decision and judgment the petitioners appealed and now insist, first, that the trial court erred in reopening the case and modifying its decree dated the 12th of February, 1908, for the reason that said decree was not obtained by means of fraud; and, second, that the court erred in holding that the two parcels of land described in the appellee's motion are not their property. It was agreed by counsel that the two small parcels now in dispute forma part of the land described in the petition and were included in the decree of February 12, 1908, and that the petitioners are the owners of the remainder of the land described in the said decree. The petitioners inherited this land from their parents, who acquired the same, including the two small parcels in question, by purchase, as is evidenced by a public document dated the 26th of November, 1864, duly executed before Francisco Iriarte, alcalde mayor and judge of the Court of First Instance of the Province of Bulacan. Baldomero R. de la Cruz, father of the appellee, obtained in march, 1895, a state grant for several parcels of land, including the two parcels in question. This grant was duly inscribed in the old register of property in Bulacan on the 6th of April of the same year. It is admitted that at the time the appellants presented their petition in this case the appellee was occupying the two parcels of land now in question. It is also admitted that the name of the appellee does not appear in the said petition as an occupant of the said two parcels. The

petitioners insist that the appellee was occupying these parcels as their tenant and for this reason they did not include his name in their petition, as an occupant, while the appellee contends that he was occupying the said parcels as the absolute owner under the estate grant by inheritance. The court below held that the failure on the part of the petitioners to include the name of the appellee in their petition, as an occupant of these two parcels of land, was a violation of section 21 of Act No. 496, and that this constituted fraud within the meaning of section 38 of said Land Registration Act. The trial court further held that the grant from the estate should prevail over the public document of purchase of 1864. The mother of the petitioners died on November 15, 1881; their father died prior to that time. Manuela, the oldest of the petitioners, was about six years of age when their mother died. So these children were minors when the father of the appellee obtained the estate grant. On the 13th of June, 1882, Jose Grey, uncle and representative of the petitioners, who were then minors, rented the land owned by the petitioners' deceased parents to one Irineo Jose for a period of three years. On the 23d of March, 1895, the said Jose Grey, as the representative of the petitioners, rented the same land for a period of six years to Baldomero R. de la Cruz, father of the appellee. This rental contract was duly executed in writing. This land was cultivated during these six years by Baldomero R. de la Cruz and his children, one of whom is the appellee. On the 14th of December, 1905, Jose Grey, for himself and the other petitioners, rented the same land to Estanislao R. de la Cruz for a period of two years. Estanislao de la Cruz on entering into this rental contract with Jose Grey did so for himself and his brothers, one of whom is the appellee. While the appellee admits that his father and brother entered into these rental contracts and did, in fact, cultivate the petitioners' land, nevertheless he insists that the two small parcels in question were not included in these contracts. In the rental contract between the uncle of the petitioners and he father of the appellee the land is not described. In the rental contract between Jose Grey, one of the petitioners, and Estanislao R. de la Cruz, brother of the appellee, the two small parcels of land in question are included, according to the description given therein. This was found to be true by the court below, but the said court held that as this contract was made by Estanislao R. de la Cruz it was not binding upon Anacleto R. de la Cruz, the appellee. The two small parcels of land in question were purchased by the parents of the petitioners in 1864, as is evidenced by the public document of purchase and sale of that year. The same two parcels of land are included in the state grant issued in favor of Baldomero Ratilla de la Cruz in 1895. This grant was obtained after the death of the petitioners' parents and while they were minors. So it is clear that the petitioners honestly believed that the appellee was occupying the said parcels as their lessee at the time they presented their application for registration. They did not act in bad faith, nor with any fraudulent intent, when they omitted to include in their application the name of the appellee as one of the occupants of the land. They believed that it was not necessary nor required that they include in their application the names of their

tenants. Under these circumstances, did the court below commit an error in reopening this case in June, 1908, after its decree had been entered in February of the same year? The application for the registration is to be in writing, signed and sworn to by the applicant, or by some person duly authorized in his behalf. It is to contain an accurate description of the land. It shall contain the name in full and the address of the applicant, and also the names and addresses of all occupants of land and of all adjoining owners, if known; and, if not known, it shall state what search has been made to find them. In the form of notice given by statute, which shall be sworn to, the applicant is required to state and set forth clearly all mortgages or encumbrances affecting said land, if any, the rights and interests, legal or equitable, in the possession, remainder, reversion, or expectancy of all persons, with their names in full, together with their place of residence and post office addresses. Upon receipt of the application the clerk shall cause notice of the filling to be published twice in the Official Gazette. This published notice shall be directed to all persons appearing to have an interest in the land sought to be registered and to the adjoining owners, and also "to all whom it may concern." In addition to the notice in the Official Gazette the Land Court shall, within seven days after said publication, cause a copy of the notice, in Spanish, to be mailed by the clerk to every person named in the application whose address is known; to cause a duly attested copy of the notice, in Spanish, to be posted in a conspicuous place on every parcel of land included in the application, and in a conspicuous place on the chief municipal building of the town in which the land is situated. The court may also cause other or further notice of the application to be given in such manner and to such persons as it may deem proper. The certificate of the clerk that he has served the notice as directed by the court by publication or mailing shall be conclusive proof of such service. Within the time allowed in the notices, if no person appears and answers, the court may at once, upon motion of the applicant, no reason to the contrary appearing, order a general default. By the description in the published notice "to all whom it may concern," and by express provisions of law "all the word are made parties defendant and shall be concluded by the default an order." If the court, after hearing, finds that the applicant has title, as stated in his application, a decree or registration shall be entered. Every decree of registration shall bind the land and quiet title thereto, subject only to the exceptions stated in the following section. It shall be conclusive upon and against all persons, including the Insular Government, and all the branches thereof, whether mentioned by name in the application, notice, or citation, or included in the general description "to all whom it may concern." Such decree shall not be opened by reason of the absence, infancy, or other disability of any person affected thereby, nor by any proceedings in any court for reversing judgments or decrees; subject, however, to the right of any person deprived of land or of any estate or interest therein by decree of registration obtained by fraud to file in the Court of Land Registration a petition for review within one year. . . . (Sec. 38 of Act No. 496.) The appellee is not included in any of the exceptions named in section 38 referred to above.

It will be seen that the applicant is required to mention not only the outstanding interest which he admits but also all claims of interest, though denied by him. By express provision of law the world are made parties defendant by the description in the notice "to all whom it may concern." Although the appellee, occupying the two small parcels of land in question under the circumstances as we have set forth, was not served with notice, he was made a party defendant by publication; and the entering of a decree on the 12th of February, 1908, must be held to be conclusive against all persons, including the appellee, whether his (appellee's) name is mentioned in the application, notice, or citation. The said decree of February 12, 1908, should not have been opened on account of the absence, infancy, or other disability of any person affected thereby, and could have been opened only on the ground that the said decree had been obtained by fraud. That decree was not obtained by fraud on the part of the applicants, inasmuch as they honestly believed that the appellee was occupying these two small parcels of land as their tenant. One of the petitioner went upon the premises with the surveyor when the original plan was made. Proof of constructive fraud is not sufficient to authorize the Court of Land Registration to reopen a case and modify its decree. Specific, intentional acts to deceive and deprive anther of his right, or in some manner injure him, must be alleged and proved; that is, there must be actual or positive fraud as distinguished from constructive fraud. The question as to the meaning of the word "fraud" in the Australian statutes has been frequently raised. Two distinctions have been noted by the Australian courts; the first is the distinction between the meaning of the word "fraud" in the sections relating to the conclusive effect of certificates of title, and its meaning in the sections relating to the protection of bona fide purchasers from registered proprietors. The second is the distinction between "legal," "equitable," or "constructive" fraud, and "actual" or "moral" fraud. In none of the groups of the sections of the Australian statutes relating to the conclusive effect of certificates of title, and in which fraud is referred to, is there any express indication of the meaning of "fraud," with the sole exception of that of the South Australian group. (Hogg on Australian Torrens System, p. 834.) With regard to decisions on the sections relating to the conclusive effect of certificates of title, it has been held in some cases that the "fraud" there mentioned means actual or moral fraud, not merely constructive or legal fraud. In other cases "fraud" has been said to include constructive, legal, and every kind of fraud. In other cases, against, knowledge of other persons' right, and the deliberate acquisition of registered title in the face of such knowledge, has been held to be "fraud" which rendered voidable the certificates of title so obtained; and voluntary ignorance is, for this purpose, the same as knowledge. But in none of these three classes of cases was there absent the element of intention to deprive another of just rights, which constitutes the essential characteristics of actual —

as distinguished from legal-fraud. (Id., p. 835, and cases cited in notes Nos. 85, 86, 87, 88, and 89 at bottom of pages 835 and 836.) By "fraud" is meant actual fraud-dishonesty of some sort. (Judgment of Privy Council in Assets Co. vs. Mere Roihi, and Assets Co. vs. Panapa Waihopi, decided in March, 1905, cited by Hogg in his Supplementary Addendum to his work on Australian Torrens System, supra.) The same meaning should be given to the word "fraud" used in section 38 of our statutes (Act No. 496). The question as to whether any particular transaction shows fraud, within the meaning of the word as used in our statutes, will in each case be a question of fact. We will not attempt to say what acts would constitutes this kind of fraud in other cases. This must be determined from the fact an circumstances in each particular case. The only question we are called upon to determine, and have determined, is whether or not, under the facts and circumstances in this case, the petitioners did obtain the decree of February 12, 1908, by means of fraud. It might be urged that the appellee has been deprived of his property without due process of law, in violation of section 5 of the Act of Congress of July 1, 1902, known as the Philippine Bill," which provides "that no law shall be enacted in the said Islands which shall deprive any person of life, liberty, or property without due process of law." The Land Registration Act requires that all occupants be named in the petition and given notice by registered mail. This did not do the appellee any good, as he was not notified; but he was made a party defendant, as we have said, by means of the publication "to all whom it may concern." If this section of the Act is to be upheld this must be declared to be due process of law. Before examining the validity of this part of the Act it might be well to note the history and purpose of what is known as the "Torrens Land Registration System." This system was introduced in South Australia by Sir Robert Torrens in 1857 and was there worked out in its practicable form. The main principle of registration is to make registered titles indefeasible. As we have said, upon the presentation in the Court of Land Registration of an application for the registration of the title to lands, under this system, the theory of the law is that all occupants, adjoining owners, adverse claimants, and other interested persons are notified of the proceedings, and have have a right to appear in opposition to such application. In other words, the proceeding is against the whole word. This system was evidently considered by the Legislature to be a public project when it passed Act No. 496. The interest of the community at large was considered to be preferred to that of private individuals. At the close of this nineteenth century, all civilized nations are coming to registration of title to land, because immovable property is becoming more and more a matter of commercial dealing, and there can be no trade without security. (Dumas's Lectures, p. 23.)

The registered proprietor will no longer have reasons to fear that he may evicted because his vendor had, unknown to him, already sold the and to a third person. . . The registered proprietor may feel himself protected against any defect in his vendor's title. (Id., p. 21.) The following summary of benefits of the system of registration of titles, made by Sir Robert Torrens, has been fully justified in its use: First. It has substituted security for insecurity. Second. It has reduced the costs of conveyances from pounds to shillings, and the time occupied from months to days. Third. It has exchanged brevity and clearness for obscurity and verbiage. Fourth. It has so simplified ordinary dealings that he who has mastered the "three R's" can transact his own conveyancing. Fifth. It affords protection against fraud. Sixth. It has restored to their just value many estates held under good holding titles, but depreciated in consequence of some blur or technical defect, and has barred the reoccurrence of any similar faults. (Sheldon on Land Registration, pp. 75, 76.) The boldest effort to grapple with the problem of simplification of title to land was made by Mr. (afterwards Sir Robert) Torrens, a layman, in South Australia in 1857. . . . In the Torrens system title by registration takes the place of "title by deeds" of the system under the "general" law. A sale of land, for example, is effected by a registered transfer, upon which a certificate of title is issued. The certificate is guaranteed by statute, and, with certain exceptions, constitutes indefeasible title to the land mentioned therein. Under the old system the same sale would be effected by a conveyance, depending for its validity, apart from intrinsic flaws, on the correctness of a long series of prior deeds, wills, etc. . . . The object of the Torrens system, them, is to do away with the delay, uncertainty, and expense of the old conveyancing system. (Duffy & Eagleson on The Transfer of Land Act, 1890, pp. 2, 3, 5, 7.) By "Torrens" system generally are meant those systems of registration of transactions with interest in land whose declared object . . . is, under governmental authority, to establish and certify to the ownership of an absolute and indefeasible title to realty, and to simplify its transfer. (Hogg on Australian Torrens system, supra, pp. 1, 2.) Compensation for errors from assurance funds is provided in all countries in which the Torrens system has been enacted. Cases of error no doubt will always occur. The percentage of errors, as compared with the number of registered dealings in Australia, is very small. In New South

Wales there were, in 1889, 209, 894 registered dealings, the average risk of error being only 2 ½ cents for each dealing. In Queensland the risk of error was only 1 ½ cents, the number of registered dealings being 233,309. In Tasmania and in Western Australia not a cent was paid for compensation for errors during the whole time of operation, (Dumas's Lectures, supra, p. 96.) This system has been adopted in various countries of the civilized world, including some of the States of the American Union, and practical experience has demonstrated that it has been successful as a public project. The validity of some of the provisions of the statutes adopting the Torrens system has been the subject of judicial decision in the courts of the United States. (People vs. Chase, 165 Ill., 527; State vs. Guilbert, 56 Ohio St., 575; People vs. Simon, 176 Ill., 165; Tyler vs. Judges, 175 Mass., 71.) Act No. 496 of the Philippine Commission, known as the "Land Registration Act," was copied substantially from the Massachussetts law of 1898. The Illinois and Massachusetts statutes were upheld by the supreme courts of those States. It is not enough to show a procedure to be unconstitutional to say that we never heard of it before. (Tyler vs. Judges, supra; Hurtado vs. California, 110 U. S., 516.) Looked at either from the point of view of history or of the necessary requirements of justice, a proceeding in rem dealing with a tangible res may be instituted and carried to judgment without personal service upon claimants within the State or notice by name to those outside of it, and not encounter any provision of either constitution. Jurisdiction is secured by the power of the court over the res. As we have said, such a proceeding would be impossible, were this not so, for it hardly would do to make a distinction between the constitutional rights of claimants who were known and those who were not known to the plaintiff, when the proceeding is to bar all. (Tyler vs. Judges, supra.) This same doctrine is annunciated in Pennoyer vs. Neff (95 U. S., 714); The Mary (9 Cranch, 126); Mankin vs. Chandler (2 Brock., 125); Brown vs. Levee Commission (50 Miss., 468); 2 Freeman, Judgments, 4th ed., secs. 606, 611. If the technical object of the suit is to establish a claim against some particular person, with a judgment which generally, in theory at least, binds his body, or to bar some individual claim or objection, so that only certain persons are entitled to be heard in defense, the action is in personam, although it may concern the right to or possession of a tangible thing. If, on the other hand, the object is to bar indifferently all who might be minded to make an objection of any sort against the right sought to be established, and if anyone in the world has a right to be heard on the strenght of alleging facts which, if true, show an inconsistent interest, the proceeding is in rem. (Tyler vs. Judges, supra.)

In the case of Hamilton vs. Brown (161 U. S., 256) a judgment of escheat was held conclusive upon persons notified by advertisement to all persons interested. In this jurisdiction, by the provisions of the Code of Civil Procedure, Act No. 190, a decree allowing or disallowing a will binds everybody, although the only notice of the proceedings given is by general notice to all persons interested. The supreme court Massachusetts, in the case of Tyler vs. Judges (supra), did not rest its judgment as to the conclusive effect of the decree upon the ground that the State has absolute power to determine the persons to whom a man's property shall go at his death, but upon the characteristics of a proceeding in rem. So we conclude that the proceedings had in the case at bar, under all the facts and circumstances, especially the absolute lack on the part of the petitioners of any dishonest intent to deprive the appellee of any right, or in any way injure him, constitute due process of law. As to whether or not the appellee can succesfully maintain an action under the provisions of sections 101 and 102 of the Land Registration Act (secs. 2365, 2366, Compilation) we do not decide. For these reasons we are of the opinion, and so hold, that the judgment appealed from should be, and the same is hereby reversed and judgment entered in favor of the petitioners in conformity with the decree of the lower court of February 12, 1908, without special ruling as to costs. It is so ordered. Arellano, C.J., Torres, Johnson and Moreland, JJ., concur. Republic SUPREME Manila EN BANC G.R. No. L-8936 October 2, 1915 husband MAURO PRIETO, plaintiffs-appellants, of the Philippines COURT

CONSUELO LEGARDA, with her vs. N.M. SALEEBY, defendant-appellee. Singson, Ledesma D.R. Williams for appellee.

and

Lim

for

appellants.

JOHNSON, J.:

From the record the following facts appear: First. That the plaintiffs and the defendant occupy, as owners, adjoining lots in the district of Ermita in the city of Manila. Second. That there exists and has existed a number of years a stone wall between the said lots. Said wall is located on the lot of the plaintiffs. Third. That the plaintiffs, on the 2d day of March, 1906, presented a petition in the Court of Land Registration for the registration of their lot. After a consideration of said petition the court, on the 25th day of October, 1906, decreed that the title of the plaintiffs should be registered and issued to them the original certificate provided for under the torrens system. Said registration and certificate included the wall. Fourth. Later the predecessor of the defendant presented a petition in the Court of Land Registration for the registration of the lot now occupied by him. On the 25th day of March, 1912, the court decreed the registration of said title and issued the original certificate provided for under the torrens system. The description of the lot given in the petition of the defendant also included said wall. Fifth. Several months later (the 13th day of December, 1912) the plaintiffs discovered that the wall which had been included in the certificate granted to them had also been included in the certificate granted to the defendant .They immediately presented a petition in the Court of Land Registration for an adjustment and correction of the error committed by including said wall in the registered title of each of said parties. The lower court however, without notice to the defendant, denied said petition upon the theory that, during the pendency of the petition for the registration of the defendant's land, they failed to make any objection to the registration of said lot, including the wall, in the name of the defendant. Sixth. That the land occupied by t he wall is registered in the name of each of the owners of the adjoining lots. The wall is not a joint wall. Under these facts, who is the owner of the wall and the land occupied by it? The decision of the lower court is based upon the theory that the action for the registration of the lot of the defendant was a judicial proceeding and that the judgment or decree was binding upon all parties who did not appear and oppose it. In other words, by reason of the fact that the plaintiffs had not opposed the registration of that part of the lot on which the wall was situate they had lost it, even though it had been theretofore registered in their name. Granting that theory to be correct one, and granting even that the wall and the land occupied by it, in fact, belonged to the defendant and his predecessors, then the same theory should be applied to the defendant himself. Applying that theory to him, he had already lost whatever right he had therein, by permitting the plaintiffs to have the same registered in their name, more than six years before. Having thus lost hid right, may he be permitted to

regain it by simply including it in a petition for registration? The plaintiffs having secured the registration of their lot, including the wall, were they obliged to constantly be on the alert and to watch all the proceedings in the land court to see that some one else was not having all, or a portion of the same, registered? If that question is to be answered in the affirmative, then the whole scheme and purpose of the torrens system of land registration must fail. The real purpose of that system is to quiet title to land; to put a stop forever to any question of the legality of the title, except claims which were noted at the time of registration, in the certificate, or which may arise subsequent thereto. That being the purpose of the law, it would seem that once a title is registered the owner may rest secure, without the necessity of waiting in the portals of the court, or sitting in the "mirador de su casa," to avoid the possibility of losing his land. Of course, it can not be denied that the proceeding for the registration of land under the torrens system is judicial (Escueta vs. .Director of Lands, 16 Phil. Rep., 482). It is clothed with all the forms of an action and the result is final and binding upon all the world. It is an action in rem. (Escueta vs. Director of Lands (supra); Grey Alba vs. De la Cruz, 17 Phil. rep., 49 Roxas vs. Enriquez, 29 Phil. Rep., 31; Tyler vs. Judges, 175 Mass., 51 American Land Co. vs. Zeiss, 219 U.S., 47.) While the proceeding is judicial, it involves more in its consequences than does an ordinary action. All the world are parties, including the government. After the registration is complete and final and there exists no fraud, there are no innocent third parties who may claim an interest. The rights of all the world are foreclosed by the decree of registration. The government itself assumes the burden of giving notice to all parties. To permit persons who are parties in the registration proceeding (and they are all the world) to again litigate the same questions, and to again cast doubt upon the validity of the registered title, would destroy the very purpose and intent of the law. The registration, under the torrens system, does not give the owner any better title than he had. If he does not already have a perfect title, he can not have it registered. Fee simple titles only may be registered. The certificate of registration accumulates in open document a precise and correct statement of the exact status of the fee held by its owner. The certificate, in the absence of fraud, is the evidence of title and shows exactly the real interest of its owner. The title once registered, with very few exceptions, should not thereafter be impugned, altered, changed, modified, enlarged, or diminished, except in some direct proceeding permitted by law. Otherwise all security in registered titles would be lost. A registered title can not be altered, modified, enlarged, or diminished in a collateral proceeding and not even by a direct proceeding, after the lapse of the period prescribed by law. For the difficulty involved in the present case the Act (No. 496) providing for the registration of titles under the torrens system affords us no remedy. There is no provision in said Act giving the parties relief under conditions like the present. There is nothing in the Act which indicates who should be the owner of land which has been registered in the name of two different persons. The rule, we think, is well settled that the decree ordering the registration of a particular parcel of land is a bar to future litigation over the same between the same parties .In view of

the fact that all the world are parties, it must follow that future litigation over the title is forever barred; there can be no persons who are not parties to the action. This, we think, is the rule, except as to rights which are noted in the certificate or which arise subsequently, and with certain other exceptions which need not be dismissed at present. A title once registered can not be defeated, even by an adverse, open, and notorious possession. Registered title under the torrens system can not be defeated by prescription (section 46, Act No. 496). The title, once registered, is notice to the world. All persons must take notice. No one can plead ignorance of the registration. The question, who is the owner of land registered in the name of two different persons, has been presented to the courts in other jurisdictions. In some jurisdictions, where the "torrens" system has been adopted, the difficulty has been settled by express statutory provision. In others it has been settled by the courts. Hogg, in his excellent discussion of the "Australian Torrens System," at page 823, says: "The general rule is that in the case of two certificates of title, purporting to include the same land, the earlier in date prevails, whether the land comprised in the latter certificate be wholly, or only in part, comprised in the earlier certificate. (Oelkers vs. Merry, 2 Q.S.C.R., 193; Miller vs. Davy, 7 N.Z.R., 155; Lloyd vs. Myfield, 7 A.L.T. (V.) 48; Stevens vs. Williams, 12 V.L. R., 152; Register of Titles, vs.Esperance Land Co., 1 W.A.R., 118.)" Hogg adds however that, "if it can be very clearly ascertained by the ordinary rules of construction relating to written documents, that the inclusion of the land in the certificate of title of prior date is a mistake, the mistake may be rectified by holding the latter of the two certificates of title to be conclusive." (See Hogg on the "Australian torrens System," supra, and cases cited. See also the excellent work of Niblack in his "Analysis of the Torrens System," page 99.) Niblack, in discussing the general question, said: "Where two certificates purport to include the same land the earlier in date prevails. ... In successive registrations, where more than one certificate is issued in respect of a particular estate or interest in land, the person claiming under the prior certificates is entitled to the estate or interest; and that person is deemed to hold under the prior certificate who is the holder of, or whose claim is derived directly or indirectly from the person who was the holder of the earliest certificate issued in respect thereof. While the acts in this country do not expressly cover the case of the issue of two certificates for the same land, they provide that a registered owner shall hold the title, and the effect of this undoubtedly is that where two certificates purport to include the same registered land, the holder of the earlier one continues to hold the title" (p. 237). Section 38 of Act No. 496, provides that; "It (the decree of registration) shall be conclusive upon and against all persons, including the Insular Government and all the branches thereof, whether mentioned by name in the application, notice, or citation, or included in the general description "To all whom it may concern." Such decree shall not be opened by reason of the absence, infancy, or other disability of any person affected thereby, nor by any proceeding in any court for reversing judgments or decrees; subject, however, to the right of any person deprived of land or of any estate or interest therein by decree of registration obtained by fraud to file in the Court of Land Registration a petition for review within one year after

entry of the decree (of registration), provided no innocent purchaser for value has acquired an interest. It will be noted, from said section, that the "decree of registration" shall not be opened, for any reason, in any court, except for fraud, and not even for fraud, after the lapse of one year. If then the decree of registration can not be opened for any reason, except for fraud, in a direct proceeding for that purpose, may such decree be opened or set aside in a collateral proceeding by including a portion of the land in a subsequent certificate or decree of registration? We do not believe the law contemplated that a person could be deprived of his registered title in that way. We have in this jurisdiction a general statutory provision which governs the right of the ownership of land when the same is registered in the ordinary registry in the name of two persons. Article 1473 of the Civil Code provides, among other things, that when one piece of real property had been sold to two different persons it shall belong to the person acquiring it, who first inscribes it in the registry. This rule, of course, presupposes that each of the vendees or purchasers has acquired title to the land. The real ownership in such a case depends upon priority of registration. While we do not now decide that the general provisions of the Civil Code are applicable to the Land Registration Act, even though we see no objection thereto, yet we think, in the absence of other express provisions, they should have a persuasive influence in adopting a rule for governing the effect of a double registration under said Act. Adopting the rule which we believe to be more in consonance with the purposes and the real intent of the torrens system, we are of the opinion and so decree that in case land has been registered under the Land Registration Act in the name of two different persons, the earlier in date shall prevail. In reaching the above conclusion, we have not overlooked the forceful argument of the appellee. He says, among other things; "When Prieto et al. were served with notice of the application of Teus (the predecessor of the defendant) they became defendants in a proceeding wherein he, Teus, was seeking to foreclose their right, and that of orders, to the parcel of land described in his application. Through their failure to appear and contest his right thereto, and the subsequent entry of a default judgment against them, they became irrevocably bound by the decree adjudicating such land to Teus. They had their day in court and can not set up their own omission as ground for impugning the validity of a judgment duly entered by a court of competent jurisdiction. To decide otherwise would be to hold that lands with torrens titles are above the law and beyond the jurisdiction of the courts". As was said above, the primary and fundamental purpose of the torrens system is to quiet title. If the holder of a certificate cannot rest secure in this registered title then the purpose of the law is defeated. If those dealing with registered land cannot rely upon the certificate, then nothing has been gained by the registration and the expense incurred thereby has been in vain. If the holder may lose a strip of his registered land by the method adopted in the present case, he may lose it all. Suppose within the six years which elapsed after the plaintiff had secured their title, they had mortgaged or sold their right, what would be the position or right of the mortgagee or vendee? That mistakes are bound to occur cannot be denied, and sometimes the

damage done thereby is irreparable. It is the duty of the courts to adjust the rights of the parties under such circumstances so as to minimize such damages, taking into consideration al of the conditions and the diligence of the respective parties to avoid them. In the present case, the appellee was the first negligent (granting that he was the real owner, and if he was not the real owner he can not complain) in not opposing the registration in the name of the appellants. He was a party-defendant in an action for the registration of the lot in question, in the name of the appellants, in 1906. "Through his failure to appear and to oppose such registration, and the subsequent entry of a default judgment against him, he became irrevocably bound by the decree adjudicating such land to the appellants. He had his day in court and should not be permitted to set up his own omissions as the ground for impugning the validity of a judgment duly entered by a court of competent jurisdiction." Granting that he was the owner of the land upon which the wall is located, his failure to oppose the registration of the same in the name of the appellants, in the absence of fraud, forever closes his mouth against impugning the validity of that judgment. There is no more reason why the doctrine invoked by the appellee should be applied to the appellants than to him. We have decided, in case of double registration under the Land Registration Act, that the owner of the earliest certificate is the owner of the land. That is the rule between original parties. May this rule be applied to successive vendees of the owners of such certificates? Suppose that one or the other of the parties, before the error is discovered, transfers his original certificate to an "innocent purchaser." The general rule is that the vendee of land has no greater right, title, or interest than his vendor; that he acquires the right which his vendor had, only. Under that rule the vendee of the earlier certificate would be the owner as against the vendee of the owner of the later certificate. We find statutory provisions which, upon first reading, seem to cast some doubt upon the rule that the vendee acquires the interest of the vendor only. Sections 38, 55, and 112 of Act No. 496 indicate that the vendee may acquire rights and be protected against defenses which the vendor would not. Said sections speak of available rights in favor of third parties which are cut off by virtue of the sale of the land to an "innocent purchaser." That is to say, persons who had had a right or interest in land wrongfully included in an original certificate would be unable to enforce such rights against an "innocent purchaser," by virtue of the provisions of said sections. In the present case Teus had his land, including the wall, registered in his name. He subsequently sold the same to the appellee. Is the appellee an "innocent purchaser," as that phrase is used in said sections? May those who have been deprived of their land by reason of a mistake in the original certificate in favor of Teus be deprived of their right to the same, by virtue of the sale by him to the appellee? Suppose the appellants had sold their lot, including the wall, to an "innocent purchaser," would such purchaser be included in the phrase "innocent purchaser," as the same is used in said sections? Under these examples there would be two innocent purchasers of the same land, is said sections are to be applied .Which of the two innocent purchasers, if they are both to be regarded as innocent purchasers, should be protected under the provisions of said sections? These questions indicate the difficulty with which we are met in giving meaning and effect to the phrase "innocent purchaser," in said sections.

May the purchaser of land which has been included in a "second original certificate" ever be regarded as an "innocent purchaser," as against the rights or interest of the owner of the first original certificate, his heirs, assigns, or vendee? The first original certificate is recorded in the public registry. It is never issued until it is recorded. The record notice to all the world. All persons are charged with the knowledge of what it contains. All persons dealing with the land so recorded, or any portion of it, must be charged with notice of whatever it contains. The purchaser is charged with notice of every fact shown by the record and is presumed to know every fact which the record discloses .This rule is so well established that it is scarcely necessary to cite authorities in its support (Northwestern National Bank vs.Freeman, 171 U.S., 620, 629; Delvin on Real Estate, sections 710, 710 [a]). When a conveyance has been properly recorded such record is constructive notice of its contents and all interests, legal and equitable, included therein. (Grandin vs. Anderson, 15 Ohio State, 286, 289; Orvis vs. Newell, 17 Conn., 97; Buchanan vs. Intentional Bank, 78 Ill., 500; Youngs vs. Wilson, 27 N.Y., 351; McCabe vs. Grey, 20 Cal., 509; Montefiore vs. Browne, 7 House of Lords Cases, 341.) Under the rule of notice, it is presumed that the purchaser has examined every instrument of record affecting the title. Such presumption is irrebutable. He is charged with notice of every fact shown by the record and is presumed to know every fact which an examination of the record would have disclosed. This presumption cannot be overcome by proof of innocence or good faith. Otherwise the very purpose and object of the law requiring a record would be destroyed. Such presumption cannot be defeated by proof of want of knowledge of what the record contains any more than one may be permitted to show that he was ignorant of the provisions of the law. The rule that all persons must take notice of the facts which the public record contains is a rule of law. The rule must be absolute. Any variation would lead to endless confusion and useless litigation. While there is no statutory provision in force here requiring that original deeds of conveyance of real property be recorded, yet there is a rule requiring mortgages to be recorded. (Arts. 1875 and 606 of the Civil Code.) The record of a mortgage is indispensable to its validity. (Art .1875.) In the face of that statute would the courts allow a mortgage to be valid which had not been recorded, upon the plea of ignorance of the statutory provision, when third parties were interested? May a purchaser of land, subsequent to the recorded mortgage, plead ignorance of its existence, and by reason of such ignorance have the land released from such lien? Could a purchaser of land, after the recorded mortgage, be relieved from the mortgage lien by the plea that he was a bona fide purchaser? May there be a bona fide purchaser of said land, bona fide in the sense that he had no knowledge of the existence of the mortgage? We believe the rule that all persons must take notice of what the public record contains in just as obligatory upon all persons as the rule that all men must know the law; that no one can plead ignorance of the law. The fact that all men know the law is contrary to the presumption. The conduct of men, at times, shows clearly that they do not know the law. The rule, however, is mandatory and obligatory, notwithstanding. It would be just as logical to allow the defense of ignorance of the existence and contents of a public record.

In view, therefore, of the foregoing rules of law, may the purchaser of land from the owner of the second original certificate be an "innocent purchaser," when a part or all of such land had theretofore been registered in the name of another, not the vendor? We are of the opinion that said sections 38, 55, and 112 should not be applied to such purchasers. We do not believe that the phrase "innocent purchaser should be applied to such a purchaser. He cannot be regarded as an "innocent purchaser" because of the facts contained in the record of the first original certificate. The rule should not be applied to the purchaser of a parcel of land the vendor of which is not the owner of the original certificate, or his successors. He, in nonsense, can be an "innocent purchaser" of the portion of the land included in another earlier original certificate. The rule of notice of what the record contains precludes the idea of innocence. By reason of the prior registry there cannot be an innocent purchaser of land included in a prior original certificate and in a name other than that of the vendor, or his successors. In order to minimize the difficulties we think this is the safe rule to establish. We believe the phrase "innocent purchaser," used in said sections, should be limited only to cases where unregistered land has been wrongfully included in a certificate under the torrens system. When land is once brought under the torrens system, the record of the original certificate and all subsequent transfers thereof is notice to all the world. That being the rule, could Teus even regarded as the holder in good fifth of that part of the land included in his certificate of the appellants? We think not. Suppose, for example, that Teus had never had his lot registered under the torrens system. Suppose he had sold his lot to the appellee and had included in his deed of transfer the very strip of land now in question. Could his vendee be regarded as an "innocent purchaser" of said strip? Would his vendee be an "innocent purchaser" of said strip? Certainly not. The record of the original certificate of the appellants precludes the possibility. Has the appellee gained any right by reason of the registration of the strip of land in the name of his vendor? Applying the rule of notice resulting from the record of the title of the appellants, the question must be answered in the negative. We are of the opinion that these rules are more in harmony with the purpose of Act No. 496 than the rule contended for by the appellee. We believe that the purchaser from the owner of the later certificate, and his successors, should be required to resort to his vendor for damages, in case of a mistake like the present, rather than to molest the holder of the first certificate who has been guilty of no negligence. The holder of the first original certificate and his successors should be permitted to rest secure in their title, against one who had acquired rights in conflict therewith and who had full and complete knowledge of their rights. The purchaser of land included in the second original certificate, by reason of the facts contained in the public record and the knowledge with which he is charged and by reason of his negligence, should suffer the loss, if any, resulting from such purchase, rather than he who has obtained the first certificate and who was innocent of any act of negligence. The foregoing decision does not solve, nor pretend to solve, all the difficulties resulting from double registration under the torrens system and the subsequent transfer of the land. Neither do we now attempt to decide the effect of the former registration in the ordinary registry upon the registration under the torrens system. We are inclined to the view, without deciding it, that the record under the torrens system, supersede all other registries. If that view is correct then it will be sufficient, in dealing with land registered and recorded alone. Once

land is registered and recorded under the torrens system, that record alone can be examined for the purpose of ascertaining the real status of the title to the land. It would be seen to a just and equitable rule, when two persons have acquired equal rights in the same thing, to hold that the one who acquired it first and who has complied with all the requirements of the law should be protected. In view of our conclusions, above stated, the judgment of the lower court should be and is hereby revoked. The record is hereby returned to the court now having and exercising the jurisdiction heretofore exercised by the land court, with direction to make such orders and decrees in the premises as may correct the error heretofore made in including the land in the second original certificate issued in favor of the predecessor of the appellee, as well as in all other duplicate certificates issued. Without any findings as to costs, it is so ordered. Arellano, C.J., Torrens, and Araullo, JJ., concur.

THIRD DIVISION SM PRIME HOLDINGS, INC., Petitioner, Present: YNARES-SANTIAGO, J., Chairperson, AUSTRIA-MARTINEZ, - versus CHICO-NAZARIO, NACHURA, and PERALTA, JJ. G.R. No. 164687

Promulgated:

ANGELA V. MADAYAG, Respondent.

February 12, 2009

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DECISION

NACHURA, J.:

This is a petition for review on certiorari of the Decision[1] of the Court of Appeals (CA) dated March 19, 2004 and Resolution dated July 15, 2004, which set aside the lower court’s order to suspend the proceedings on respondent’s application for land registration.

On July 12, 2001, respondent Angela V. Madayag filed with the Regional Trial Court (RTC) of Urdaneta, Pangasinan an application for registration of a parcel of land with an area of 1,492 square meters located in Barangay Anonas, Urdaneta City, Pangasinan.[2] Attached to the application was a tracing cloth of Survey Plan Psu-01-008438, approved by the Land Management Services (LMS) of the Department of Environment and Natural Resources (DENR), Region 1, San Fernando City.

On August 20, 2001, petitioner SM Prime Holdings, Inc., through counsel, wrote the Chief, Regional Survey Division, DENR, Region I, demanding the cancellation of the respondent’s survey plan because the lot encroached on the properties it recently purchased from several lot owners and that, despite being the new owner of the adjoining lots, it was not notified of the survey conducted on June 8, 2001.[3]

Petitioner then manifested its opposition to the respondent’s application for registration. The Republic of the Philippines, through the Office of the Solicitor General, and the heirs of Romulo Visperas also filed their respective oppositions.

On February 6, 2002, petitioner filed its formal opposition. Petitioner alleged that it had recently bought seven parcels of land in Barangay Anonas, Urdaneta, delineated as Lots B, C, D, E, G, H and I in Consolidation-Subdivision Plan No. (LRC) Pcs-21329, approved by the Land Registration Commission on August 26, 1976, and previously covered by Survey Plan No. Psu236090 approved by the Bureau of Lands on December 29, 1970. These parcels of land are covered by separate certificates of title, some of which are already in the name of the petitioner while the others are still in the name of the previous owners.

On February 20, 2002, the RTC declared a general default, except as to the petitioner, the Republic, and the heirs of Romulo Visperas. Thereafter, respondent commenced the presentation of evidence.

Meanwhile, acting on petitioner’s request for the cancellation of the respondent’s survey plan, DENR Assistant Regional Executive Director for Legal Services and Public Affairs, Allan V. Barcena, advised the petitioner to file a petition for cancellation in due form so that the DENR could properly act on the same.[4]Accordingly, petitioner formally filed with the DENR a petition[5] for cancellation of the survey plan sometime in March 2002, alleging the following grounds:

I.THERE IS NO SUCH THING AS ALIENABLE OR DISPOSABLE PROPERTY WHICH IS THE SUBJECT LOT IN THIS CASE

II.NO NOTICE WAS MADE UPON PETITIONER (AS ADJOINING LANDOWNER AND WHO BEARS INTEREST OVER THE SUBJECT LOT) MUCH LESS THE OWNERS OF ADJOINING LANDS.

III.THE CIRCUMSTANCES EVIDENTLY SHOW THAT BAD FAITH AND/OR MALICE ATTENDED THE APPROVAL OF (PLAN WITH PSU NO. 01-008438).[6]

On July 17, 2002, petitioner filed an Urgent Motion to Suspend Proceedings [7] in the land registration case, alleging that the court should await the DENR resolution of the petition for the cancellation of the survey plan “as the administrative case is prejudicial to the determination” of the land registration case.

On October 8, 2002, the RTC issued an Order granting the motion, thus:

WHEREFORE, PREMISES CONSIDERED, the Court hereby GRANTS the instant motion and suspends the proceedings herein. In the meantime, and until receipt by this Court of a copy of the resolution of the petition for cancellation by the DENR, the instant case is hereby ARCHIVED.

SO ORDERED.[8]

Emphasizing that a survey plan is one of the mandatory requirements in land registration proceedings, the RTC agreed with the petitioner that the cancellation of the survey plan would be prejudicial to the petition for land registration.[9]

On February 13, 2003, the RTC denied the respondent’s motion for reconsideration of its order.[10] Respondent thereafter filed a petition for certiorari with the CA assailing the order suspending the proceedings.

On March 19, 2004, finding that the RTC committed grave abuse of discretion in suspending the proceedings, the CA granted the petition for certiorari, thus:

WHEREFORE, premises considered, the instant petition is hereby GRANTED. The challenged Orders dated October 8, 2002 and February 13, 2003 of the respondent Court are declared NULL and VOID.

The Court a quo is directed to continue the proceedings until its final determination. No pronouncement as to costs.

SO ORDERED.[11]

The CA ratiocinated that the survey plan which was duly approved by the DENR should be accorded the presumption of regularity, and that the RTC has the power to hear and determine all questions arising from an application for registration.[12]

On July 15, 2004, the CA issued a Resolution[13] denying the petitioner’s motion for reconsideration. Petitioner was, thus, compelled to file this petition for review, ascribing the following errors to the CA:

I.

THE COURT OF APPEALS COMMITTED MANIFEST ERROR IN NOT FINDING THAT THE SUSPENSION OF THE PROCEEDINGS IN THE LAND REGISTRATION CASE IS LEGAL AND PROPER PENDING THE DETERMINATION AND RESOLUTION OF THE ADMINISTRATIVE CASE BEFORE THE DEPARTMENT OF ENVIRONMENT AND NATURAL RESOURCES-REGION 1.

II.

THE COURT OF APPEALS COMMITTED MANIFEST ERROR IN FAILING TO FIND THAT THE ASSAILED ORDERS OF THE LOWER COURT HAVE PROPER AND SUFFICIENT BASES IN FACT AND IN LAW.

III.

THE COURT OF APPEALS COMMITTED MANIFEST ERROR IN HOLDING THAT THE LOWER COURT HAS ACTED WITH GRAVE ABUSE OF DISCRETION IN SUSPENDING THE PROCEEDINGS AND ARCHIVING THE CASE.

IV.

THE COURT OF APPEALS COMMITTED MANIFEST ERROR IN FAILING TO FIND THAT THE FILING OF THE PETITION FOR CERTIORARI, UNDER RULE 65 OF THE REVISED RULES OF CIVIL PROCEDURE, IS NOT THE ONLY PLAIN, SPEEDY AND ADEQUATE REMEDY IN THE ORDINARY COURSE OF LAW ON THE PART OF HEREIN RESPONDENT.[14]

The petition has no merit.

Petitioner contends that, since the respondent’s cause of action in the land registration case depends heavily on the survey plan, it was only prudent for the RTC to suspend the proceedings therein pending the resolution of the petition for cancellation of the survey plan by the DENR.[15] It, therefore, insists that recourse to a petition for certiorari was not proper considering that respondent was not arbitrarily deprived of her right to prosecute her application for registration.[16]

Undeniably, the power to stay proceedings is an incident to the power inherent in every court to control the disposition of the cases in its dockets, with economy of time and effort for the court, counsel and litigants. But courts should be mindful of the right of every party to a speedy disposition of his case and, thus, should not be too eager to suspend proceedings of the cases before them. Hence, every order suspending proceedings must be guided by the following precepts: it shall be done in order to avoid multiplicity of suits and prevent vexatious litigations, conflicting judgments, confusion between litigants and courts,[17] or when the rights of parties to the second action cannot be properly determined until the questions raised in the first action are settled.[18] Otherwise, the suspension will be regarded as an arbitrary exercise of the court’s discretion and can be corrected only by a petition for certiorari. None of the circumstances that would justify the stay of proceedings is present. In fact, to await the resolution of the petition for cancellation would only delay the resolution of the land registration case and undermine the purpose of land registration.

The fundamental purpose of the Land Registration Law (Presidential Decree No. 1529) is to finally settle title to real property 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. Consequently, once the title is registered under the said law, owners can rest secure on their ownership and possession.[19]

Glaringly, the petition for cancellation raises practically the very same issues that the herein petitioner raised in its opposition to the respondent’s application for registration. Principally, it alleges that the survey plan should be cancelled because it includes portions of the seven properties that it purchased from several landowners, which properties are already covered by existing certificates of title.

Petitioner posits that it is the DENR that has the sole authority to decide the validity of the survey plan that was approved by the LMS.[20] It cites Section 4(15), Chapter 1, Title XIV, Administrative Code of 1987 which provides that the DENR shall (15) Exercise (of) exclusive jurisdiction on the management and disposition of all lands of the public domain and serve as the sole agency responsible for classification, sub-classification, surveying and titling of lands in consultation with appropriate agencies.

However, respondent argues that the land registration court is clothed with adequate authority to resolve the conflicting claims of the parties, and that even if the DENR cancels her survey plan, the land registration court is not by duty bound to dismiss the application for registration based solely on the cancellation of the survey plan.[21]

Without delving into the jurisdiction of the DENR to resolve the petition for cancellation, we hold that, as an incident to its authority to settle all questions over the title of the subject property, the land registration court may resolve the underlying issue of whether the subject property overlaps the petitioner’s properties without necessarily having to declare the survey plan as void.

It is well to note at this point that, in its bid to avoid multiplicity of suits and to promote the expeditious resolution of cases, Presidential Decree (P.D.) No. 1529 eliminated the distinction between the general jurisdiction vested in the RTC and the latter’s limited jurisdiction when acting merely as a land registration court. Land registration courts, as such, can now hear and decide even controversial and contentious cases, as well as those involving substantial issues.[22] When the law confers jurisdiction upon a court, the latter is deemed to have all the necessary powers to exercise such jurisdiction to make it effective.[23] It may, therefore, hear and determine all questions that arise from a petition for registration.

In view of the nature of a Torrens title, a land registration court has the duty to determine whether the issuance of a new certificate of title will alter a valid and existing certificate of title.[24] An application for registration of an already titled land constitutes a collateral attack on the existing title, [25] which is not allowed by law.[26] But the RTC need not wait for the decision of the DENR in the petition to cancel the survey plan in order to determine whether the subject property is already titled or forms part of already titled property. The court may now verify this allegation based on the respondent’s survey plan vis-à-vis the certificates of title of the petitioner and its predecessors-in-interest. After all, a survey plan precisely serves to establish the true identity of the land to ensure that it does not overlap a parcel of land or a portion thereof already covered by a previous land registration, and to forestall the possibility that it will be overlapped by a subsequent registration of any adjoining land.[27]

Should the court find it difficult to do so, the court may require the filing of additional papers to aid in its determination of the propriety of the application, based on Section 21 of P.D. No. 1529: SEC. 21. Requirement of additional facts and papers; ocular inspection. – The court may require facts to be stated in the application in addition to those prescribed by this Decree not inconsistent therewith and may require the filing of any additional papers.

The court may also directly require the DENR and the Land Registration Authority to submit a report on whether the subject property has already been registered and covered by certificates of title, like what the court did in Carvajal v. Court of Appeals.[28] In that case, we commended such move by

the land registration court for being “in accordance with the purposes of the Land Registration Law.”[29] WHEREFORE, premises considered, the petition is DENIED. The Court of Appeals Decision dated March 19, 2004 and Resolution dated July 15, 2004 areAFFIRMED. The Regional Trial Court of Urdaneta, Pangasinan is DIRECTED to continue with the proceedings in L.R.C. Case No. U-1134 and to resolve the same with dispatch.

SO ORDERED.

FIRST DIVISION

CAMILO F. BORROMEO, Petitioner,

G.R. No. 159310

Present:

PUNO, C.J., Chairperson, - versus CARPIO, CORONA, LEONARDO-DE CASTRO, and BRION, JJ.

ANTONIETTA O. DESCALLAR, Respondent.

Promulgated: February 24, 2009

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DECISION PUNO, C.J.: What are the rights of an alien (and his successor-in-interest) who acquired real properties in the country as against his former Filipina girlfriend in whose sole name the properties were registered under the Torrens system? The facts are as follows: Wilhelm Jambrich, an Austrian, arrived in the Philippines in 1983 after he was assigned by his employer, Simmering-Graz Panker A.G., an Austrian company, to work at a project in Mindoro. In 1984, he transferred to Cebu and worked at the Naga II Project of the National Power Corporation. There, he met respondent Antonietta Opalla-Descallar, a separated mother of two boys who was working as a waitress at St. Moritz Hotel. Jambrich befriended respondent and asked her to tutor him in English. In dire need of additional income to support her children, respondent agreed. The tutorials were held in Antonietta’s residence at a squatters’ area in Gorordo Avenue. Jambrich and respondent fell in love and decided to live together in a rented house in Hernan Cortes, Mandaue City. Later, they transferred to their own house and lots at AgroMacro Subdivision, Cabancalan, Mandaue City. In the Contracts to Sell dated November 18, 1985[1] and March 10, 1986[2] covering the properties, Jambrich and respondent were referred to as the buyers. A Deed of Absolute Sale dated November 16, 1987[3] was likewise issued in their favor. However, when the Deed of Absolute Sale was presented for registration before the Register of Deeds, registration was refused on the ground that Jambrich was an alien and could not acquire alienable lands of the public domain. Consequently, Jambrich’s name was erased from the document. But it could be noted that his signature remained on the left hand margin of page 1, beside respondent’s signature as buyer on page 3, and at the bottom of page 4 which is the last page. Transfer Certificate of Title (TCT)Nos. 24790, 24791 and 24792 over the properties were issued in respondent’s name alone.

Jambrich also formally adopted respondent’s two sons in Sp. Proc. No. 39-MAN,[4] and per Decision of the Regional Trial Court of Mandaue City dated May 5, 1988.[5] However, the idyll lasted only until April 1991. By then, respondent found a new boyfriend while Jambrich began to live with another woman in Danao City. Jambrich supported respondent’s sons for only two months after the break up. Jambrich met petitioner Camilo F. Borromeo sometime in 1986. Petitioner was engaged in the real estate business. He also built and repaired speedboats as a hobby. In 1989, Jambrich purchased an engine and some accessories for his boat from petitioner, for which he became indebted to the latter for about P150,000.00. To pay for his debt, he sold his rights and interests in the Agro-Macro properties to petitioner for P250,000, as evidenced by a “Deed of Absolute Sale/Assignment.”[6] On July 26, 1991, when petitioner sought to register the deed of assignment, he discovered that titles to the three lots have been transferred in the name of respondent, and that the subject property has already been mortgaged. On August 2, 1991, petitioner filed a complaint against respondent for recovery of real property before the Regional Trial Court of Mandaue City. Petitioner alleged that the Contracts to Sell dated November 18, 1985 and March 10, 1986 and the Deed of Absolute Sale dated November 16, 1987 over the properties which identified both Jambrich and respondent as buyers do not reflect the true agreement of the parties since respondent did not pay a single centavo of the purchase price and was not in fact a buyer; that it was Jambrich alone who paid for the properties using his exclusive funds; that Jambrich was the real and absolute owner of the properties; and, that petitioner acquired absolute ownership by virtue of the Deed of Absolute Sale/Assignment dated July 11, 1991 which Jambrich executed in his favor. In her Answer, respondent belied the allegation that she did not pay a single centavo of the purchase price. On the contrary, she claimed that she “solely and exclusively used her own personal funds to defray and pay for the purchase price of the subject lots in question,” and that Jambrich, being an alien, was prohibited to acquire or own real property in the Philippines.

At the trial, respondent presented evidence showing her alleged financial capacity to buy the disputed property with money from a supposed copra business. Petitioner, in turn, presented Jambrich as his witness and documentary evidence showing the substantial salaries which Jambrich received while still employed by the Austrian company, Simmering-Graz Panker A.G.

In its decision, the court a quo found— Evidence on hand clearly show that at the time of the purchase and acquisition of [the] properties under litigation that Wilhelm Jambrich was still working and earning much. This fact of Jambrich earning much is not only supported by documentary evidence but also by the admission made by the defendant Antoniet[t]a Opalla. So that, Jambrich’s financial capacity to acquire and purchase the properties . . . is not disputed.[7] x x x On the other hand, evidence . . . clearly show that before defendant met Jambrich sometime in the latter part of 1984, she was only working as a waitress at the St. Moritz Hotel with an income of P1,000.00 a month and was . . . renting and living only in . . . [a] room at . . . [a] squatter area at Gorordo Ave., Cebu City; that Jambrich took pity of her and the situation of her children that he offered her a better life which she readily accepted. In fact, this miserable financial situation of hers and her two children . . . are all stated and reflected in the Child Study Report dated April 20, 1983 (Exhs. “G” and “G-1”) which facts she supplied to the Social Worker who prepared the same when she was personally interviewed by her in connection with the adoption of her two children by Wilhelm Jambrich. So that, if such facts were not true because these are now denied by her . . . and if it was also true that during this time she was already earning as much as P8,000.00 to P9,000.00 as profit per month from her copra business, it would be highly unbelievable and impossible for her to be living only in such a miserable condition since it is the observation of this Court that she is not only an extravagant but also an expensive person and not thrifty as she wanted to impress this Court in order to have a big saving as clearly shown by her actuation when she was already cohabiting and living with Jambrich that according to her . . . the allowance given . . . by him in the amount of $500.00 a month is not enough to maintain the education and maintenance of her children.[8] This being the case, it is highly improbable and impossible that she could acquire the properties under litigation or could contribute any amount

for their acquisition which according to her is worth more than P700,000.00 when while she was working as [a] waitress at St. Moritz Hotel earning P1,000.00 a month as salary and tips of more or lessP2,000.00 she could not even provide [for] the daily needs of her family so much so that it is safe to conclude that she was really in financial distress when she met and accepted the offer of Jambrich to come and live with him because that was a big financial opportunity for her and her children who were already abandoned by her husband.[9] x x x The only probable and possible reason why her name appeared and was included in [the contracts to sell dated November 18, 1985 and March 10, 1986 and finally, the deed of absolute sale dated November 16, 1987] as buyer is because as observed by the Court, she being a scheming and exploitive woman, she has taken advantage of the goodness of Jambrich who at that time was still bewitched by her beauty, sweetness, and good attitude shown by her to him since he could still very well provide for everything she needs, he being earning (sic) much yet at that time. In fact, as observed by this Court, the acquisition of these properties under litigation was at the time when their relationship was still going smoothly and harmoniously.[10][Emphasis supplied.] The dispositive portion of the Decision states: WHEREFORE, . . . Decision is hereby rendered in favor of the plaintiff and against the defendant Antoniet[t]a Opalla by: 1) Declaring plaintiff as the owner in fee simple over the residential house of strong materials and three parcels of land designated as Lot Nos. 1, 3 and 5 which are covered by TCT Nos. 24790, 24791 and 24792 issued by the Register of Deeds of Mandaue City; 2) Declaring as null and void TCT Nos. 24790, 24791 and 24792 issued in the name of defendant Antoniet[t]a Descallar by the Register of Deeds of Mandaue City; 3) Ordering the Register of Deeds of Mandaue City to cancel TCT Nos. 24790, 24791 and 24792 in the name of defendant Antoniet[t]a Descallar and to issue new ones in the name of plaintiff Camilo F. Borromeo; 4) Declaring the contracts now marked as Exhibits “I,” “K” and “L” as avoided insofar as they appear to convey rights and interests over the properties in question to the defendant Antoniet[t]a Descallar;

5) Ordering the defendant to pay plaintiff attorney’s fees in the amount of P25,000.00 and litigation expenses in the amount of P10,000.00; and, 6) To pay the costs.[11]

Respondent appealed to the Court of Appeals. In a Decision dated April 10, 2002,[12] the appellate court reversed the decision of the trial court. In ruling for the respondent, the Court of Appeals held: We disagree with the lower court’s conclusion. The circumstances involved in the case cited by the lower court and similar cases decided on by the Supreme Court which upheld the validity of the title of the subsequent Filipino purchasers are absent in the case at bar. It should be noted that in said cases, the title to the subject property has been issued in the name of the alien transferee (Godinez et al., vs. Fong Pak Luen et al., 120 SCRA 223 citing Krivenko vs. Register of Deeds of Manila, 79 Phils. 461; United Church Board for World Ministries vs. Sebastian, 159 SCRA 446, citing the case of Sarsosa Vda. De Barsobia vs. Cuenco, 113 SCRA 547; Tejido vs. Zamacoma, 138 SCRA 78). In the case at bar, the title of the subject property is not in the name of Jambrich but in the name of defendant-appellant. Thus, Jambrich could not have transferred a property he has no title thereto.[13]

Petitioner’s motion for reconsideration was denied. Hence, this petition for review.

Petitioner assigns the following errors: I. THE HONORABLE COURT OF APPEALS SERIOUSLY ERRED IN DISREGARDING RESPONDENT’S JUDICIAL ADMISSION AND OTHER OVERWHELMING EVIDENCE ESTABLISHING JAMBRICH’S PARTICIPATION, INTEREST AND OWNERSHIP OF THE PROPERTIES IN QUESTION AS FOUND BY THE HONORABLE TRIAL COURT. II. THE HONORABLE COURT OF APPEALS SERIOUSLY ERRED IN HOLDING THAT JAMBRICH HAS NO TITLE TO THE PROPERTIES IN QUESTION AND MAY NOT THEREFORE TRANSFER AND ASSIGN ANY RIGHTS AND INTERESTS IN FAVOR OF PETITIONER.

III.

THE HONORABLE COURT OF APPEALS SERIOUSLY ERRED IN REVERSING THE WELL-REASONED DECISION OF THE TRIAL COURT AND IN IMPOSING DOUBLE COSTS AGAINST HEREIN PETITIONER (THEN, PLAINTIFFAPPELLEE).[14]

First, who purchased the subject properties? The evidence clearly shows, as pointed out by the trial court, who between respondent and Jambrich possesses the financial capacity to acquire the properties in dispute. At the time of the acquisition of the properties in 1985 to 1986, Jambrich was gainfully employed at Simmering-Graz Panker A.G., an Austrian company. He was earning an estimated monthly salary of P50,000.00. Then, Jambrich was assigned to Syria for almost one year where his monthly salary was approximatelyP90,000.00. On the other hand, respondent was employed as a waitress from 1984 to 1985 with a monthly salary of not more than P1,000.00. In 1986, when the parcels of land were acquired, she was unemployed, as admitted by her during the pre-trial conference. Her allegations of income from a copra business were unsubstantiated. The supposed copra business was actually the business of her mother and their family, with ten siblings. She has no license to sell copra, and had not filed any income tax return. All the motorized bancas of her mother were lost to fire, and the last one left standing was already scrap. Further, the Child Study Report[15] submitted by the Department of Social Welfare and Development (DSWD) in the adoption proceedings of respondent’s two sons by Jambrich disclosed that: Antonietta tried all types of job to support the children until she was accepted as a waitress at St. Moritz Restaurant in 1984. At first she had no problem with money because most of the customers of St. Moritz are (sic) foreigners and they gave good tips but towards the end of 1984 there were no more foreigners coming because of the situation in the Philippines at that time. Her financial problem started then. She was even renting a small room in a squatters area in Gorordo Ave., Cebu City. It was during her time of great financial distress that she met Wilhelm Jambrich who later offered her a decent place for herself and her children.[16]

The DSWD Home Study Report[17] further disclosed that: [Jambrich] was then at the Restaurant of St. Moritz when he saw Antonietta Descallar, one of the waitresses of the said Restaurants. He made friends with the girl and asked her to tutor him in [the] English language. Antonietta accepted the offer because she was in need of additional income to support [her] 2 young children who were abandoned by their father. Their session was agreed to be scheduled every afternoon at the residence of Antonietta in the squatters area in Gorordo Avenue, Cebu City. The Austrian was observing the situation of the family particularly the children who were malnourished. After a few months sessions, Mr. Jambrich offered to transfer the family into a decent place. He told Antonietta that the place is not good for the children. Antonietta who was miserable and financially distressed at that time accepted the offer for the sake of the children.[18]

Further, the following additional pieces of evidence point to Jambrich as the source of fund used to purchase the three parcels of land, and to construct the house thereon: (1) Respondent Descallar herself affirmed under oath, during her re-direct

examination and during the proceedings for the adoption of her minor children, that Jambrich was the owner of the properties in question, but that his name was deleted in the Deed of Absolute Sale because of legal constraints. Nonetheless, his signature remained in the deed of sale, where he signed as buyer. (2) The money used to pay the subject parcels of land in installments was in postdated

checks issued by Jambrich. Respondent has never opened any account with any bank. Receipts of the installment payments were also in the name of Jambrich and respondent. (3) In 1986-1987, respondent lived in Syria with Jambrich and her two children for ten

months, where she was completely under the support of Jambrich. (4) Jambrich executed a Last Will and Testament, where he, as owner, bequeathed

the subject properties to respondent. Thus, Jambrich has all authority to transfer all his rights, interests and participation over the subject properties to petitioner by virtue of the Deed of Assignment he executed on July 11, 1991.

Well-settled is the rule that this Court is not a trier of facts. The findings of fact of the trial court are accorded great weight and respect, if not finality by this Court, subject to a number of exceptions. In the instant case, we find no reason to disturb the factual findings of the trial court. Even the appellate court did not controvert the factual findings of the trial court. They differed only in their conclusions of law.

Further, the fact that the disputed properties were acquired during the couple’s cohabitation also does not help respondent. The rule that co-ownership applies to a man and a woman living exclusively with each other as husband and wife without the benefit of marriage, but are otherwise capacitated to marry each other, does not apply. [19] In the instant case, respondent was still legally married to another when she and Jambrich lived together. In such an adulterous relationship, no co-ownership exists between the parties. It is necessary for each of the partners to prove his or her actual contribution to the acquisition of property in order to be able to lay claim to any portion of it. Presumptions of co-ownership and equal contribution do not apply.[20]

Second, we dispose of the issue of registration of the properties in the name of respondent alone. Having found that the true buyer of the disputed house and lots was the Austrian Wilhelm Jambrich, what now is the effect of registration of the properties in the name of respondent? It is settled that registration is not a mode of acquiring ownership. [21] It is only a means of confirming the fact of its existence with notice to the world at large.[22] Certificates of title are not a source of right. The mere possession of a title does not make one the true owner of the property. Thus, the mere fact that respondent has the titles of the disputed properties in her name does not necessarily, conclusively and absolutely make her the owner. The rule on indefeasibility of title likewise does not apply to respondent. A certificate of title implies that the title is quiet,[23] and that it is perfect, absolute and indefeasible.[24] However, there are well-defined exceptions to this rule, as when the transferee is not a holder in good faith and did not acquire the subject properties for a valuable consideration. [25] This is the situation in the

instant case. Respondent did not contribute a single centavo in the acquisition of the properties. She had no income of her own at that time, nor did she have any savings. She and her two sons were then fully supported by Jambrich. Respondent argued that aliens are prohibited from acquiring private land. This is embodied in Section 7, Article XII of the 1987 Constitution,[26] which is basically a reproduction of Section 5, Article XIII of the 1935 Constitution,[27] and Section 14, Article XIV of the 1973 Constitution.[28] The capacity to acquire private land is dependent on the capacity “to acquire or hold lands of the public domain.” Private land may be transferred only to individuals or entities “qualified to acquire or hold lands of the public domain.” Only Filipino citizens or corporations at least 60% of the capital of which is owned by Filipinos are qualified to acquire or hold lands of the public domain. Thus, as the rule now stands, the fundamental law explicitly prohibits non-Filipinos from acquiring or holding title to private lands, except only by way of legal succession or if the acquisition was made by a former natural-born citizen.[29] Therefore, in the instant case, the transfer of land from Agro-Macro Development Corporation to Jambrich, who is an Austrian, would have been declared invalid if challenged, had not Jambrich conveyed the properties to petitioner who is a Filipino citizen. In United Church Board for World Ministries v. Sebastian,[30] the Court reiterated the consistent ruling in a number of cases[31] that if land is invalidly transferred to an alien who subsequently becomes a Filipino citizen or transfers it to a Filipino, the flaw in the original transaction is considered cured and the title of the transferee is rendered valid. Applying United Church Board for World Ministries, the trial court ruled in favor of petitioner, viz.: [W]hile the acquisition and the purchase of (sic) Wilhelm Jambrich of the properties under litigation [were] void ab initio since [they were] contrary to the Constitution of the Philippines, he being a foreigner, yet, the acquisition of these properties by plaintiff who is a Filipino citizen from him, has cured the flaw in the original transaction and the title of the transferee is valid. The trial court upheld the sale by Jambrich in favor of petitioner and ordered the cancellation of the TCTs in the name of respondent. It declared petitioner as owner in fee simple of the residential house of strong materials and three parcels of land designated as Lot Nos. 1, 3 and

5, and ordered the Register of Deeds of Mandaue City to issue new certificates of title in his name. The trial court likewise ordered respondent to pay petitioner P25,000 as attorney’s fees and P10,000 as litigation expenses, as well as the costs of suit.

We affirm the Regional Trial Court. The rationale behind the Court’s ruling in United Church Board for World Ministries, as reiterated in subsequent cases,[32] is this – since the ban on aliens is intended to preserve the nation’s land for future generations of Filipinos, that aim is achieved by making lawful the acquisition of real estate by aliens who became Filipino citizens by naturalization or those transfers made by aliens to Filipino citizens. As the property in dispute is already in the hands of a qualified person, a Filipino citizen, there would be no more public policy to be protected. The objective of the constitutional provision to keep our lands in Filipino hands has been achieved. IN VIEW WHEREOF, the petition is GRANTED. The Decision of the Court of Appeals in C.A. G.R. CV No. 42929 dated April 10, 2002 and its Resolution dated July 8, 2003 are REVERSED and SET ASIDE. The Decision of the Regional Trial Court of Mandaue City in Civil Case No. MAN1148 is REINSTATED. SO ORDERED.

EN BANC
[G.R. No. 14167. August 14, 1919.] THE GOVERNMENT OF THE PHILIPPINE ISLANDS, petitioner and appellee. ANTIPAS VAZQUEZ and BASILIO GAYARES,petitionersappellants, vs. RUFINA ABURAL ET. AL., objectors-appellees.

Cohn & Fisher, for appellants. Hilado & Hilado, for appellees.

SYLLABUS

1.LAND REGISTRATION; TORRENS SYSTEM; PURPOSE. — The prime purpose of the Torrens System, as established in the Philippine Islands by the

Land Registration Law (Act No. 496), is to decree land titles that shall be final, irrevocable, and indisputable. 2.ID.; CADASTRAL SYSTEM; PURPOSE. — The purpose of the offspring of the Torrens System here known as the Cadastral System, as established in the Philippine Islands by the Cadastral Act (No. 2259), is, like the purpose of the Torrens System, proper incontestability of title. As stated in Section 1 of the Cadastral Act, the purpose is to serve the public interest, by requiring that the titles to any lands "be settled and adjudicated." 3.ID.; ID.; PROCEEDINGS. — Many precautions are taken to guard against injustice. 4.ID.; ID.; ID. — After trial in a cadastral case, three actions are taken. The first adjudicates ownership in favor of one of the claimants. This constitutes the decision — the judgment — the decree of the court. The second action is the declaration by the court that the decree is final and its order for the issuance of the certificates of title by the Chief of the Land Registration Office. Such order is made if within thirty days from the date of receipt of a copy of the decision no appeal is taken from the decision. The third and last action devolves upon the General Land Registration Office. 5.ID.; ID.; ID.; FINALITY OF DECREE. — For a decree to exist in legal contemplation, it is not necessary to await the preparation of a so-called decree by the Land Registration Office. 6.ID.; ID.; ID.; ID. — Cadastral proceedings commenced. Notice published in the Official Gazette. Trial judge also issued general notice. S asks for the registration in his name of lot No. 1608. Hearing had. On September 21, 1916, the court in a decree awarded the lot to S. On November 23, 1916, the time for an appeal having passed, the court declares the decree final. On July 23, 1917, before the issuance by the Land Registration Office of the so-called technical decree, V and G ask that the case be reopened to receive proof relative to the ownership of the lot. Motion denied by the trial court. Held: That since the judgment of the Court of First Instance of September 21, 1916, has become final, and since no action was taken within the time provided by law for the prosecution of an appeal by bill of exceptions, the Supreme Court is without jurisdiction, and the appeal must be dismissed. 7.ID.; ID.; RELIEF FROM JUDGMENT. — Whether Sections 113 and 513 of the Code of Civil Procedure apply to cadastral proceedings, quare. 8.GENERAL LAND REGISTRATION OFFICE. — The General Land Registration Office has been instituted "for the due effectuation and accomplishment of the laws relative to the registration of land." (Administrative Code of 1917, Sec. 174.)

DECISION MALCOLM, J :
p

The principal question which this appeal presents is — When does the registration of title, under the Torrens System of Land Registration, especially under the different Philippine laws establishing the Cadastral System, become final, conclusive, and indisputable ? The supplementary questions are — At what stage of the cadastral proceedings does a decree exist in legal contemplation? Does it exist from the moment that the court, after hearing the evidence, adjudicates the land in favor of a person and then, or later decrees the land in favor of this person, or does it exist when the Chief of the Land Registration Office transcribes the adjudication in the prescribed form? STATEMENT OF THE CASE. Cadastral proceedings were commenced in the municipality of Hinigaran, Province of Occidental Negros, upon an application of the Director of Lands, on June 16, 1916. Notice of the proceedings were published in the Official Gazette as provided by law. The trial judge also issued general notice to all interested parties. Among others, Victoriano Siguenza presented an answer asking for registration in his name of lot No. 1608. The instant petitioners, Antipas Vazquez and Basilio Gayares, although said to reside in this municipality, and although said to have participated in other cadastral cases, did not enter any opposition as to this lot. Hearing was had during September, 1916. On September 21 of this year, the court issued the following decree:
"It is hereby decreed that, upon a previous declaration of general default, the following lots be adjudged and registered in the names of those persons whose names appear next after the lots, and in accordance with the following conditions: . . . "Lot No. 1608 with the improvements thereon to the conjugal partnership of Victoriano Siguenza and Marcela Guanzon." On November 23 of the same year, the court declared final the foregoing decree in the following language: "The decision rendered by the court in the above-entitled case having become final on September 21, 1916, it is hereby ordered that the Chief of the General Land Registration Office issue the decrees corresponding to the lots adjudged by said decision. "An appeal having however been interposed as to the lots enumerated as follows, the decrees thereon, must be suspended until further order by this court: "Lot No. 521.

Eight months later, that is, on July 23, 1917, but before the issuance by the Land Registration Office of the so-called technical decree, Antipas Vazquez

and Basilio Gayares, the latter as guardian of the minor Estrella Vazquez, came into the case for the first time. The petitioners, after setting forth their right of ownership in lot No. 1608, and that it was included in their "Hacienda Santa Filomena," and after stating that they were in complete ignorance of the proceedings, asked that the judgment of the court be annulled and that the case be reopened to receive proof relative to the ownership of the lot. Counsel for Victoriano Siguenza answered by counter-motion, asking the court to dismiss the motion presented on behalf of Vazquez and Gayares. The court denied the motion for a new trial on the theory that there being a decree already rendered and no allegation of fraud having been made, the court lacked jurisdiction. It may also be stated parenthetically that counsel for Vazquez and Gayares made an unsuccessful attempt in the Supreme Court, through mandamus, to have the record completed by the taking of evidence. In order that the matter may not be confused, let it again be made clear that counsel for petitioners have not raised the question of fraud as provided for in Section 38 of the Land Registration Law, nor have they asked to be relieved from a judgment or order, pursuant to Section 113 of the Code of Civil Procedure, because of mistake, inadvertence, surprise, or excusable neglect. As a matter of fact, they could not well claim fraud because all the proceedings were public and free from any suspicion of chicanery. As a matter of fact, also, any special reliance on Section 113 of the Code of Civil Procedure would not get them anywhere because more than six months had elapsed after the issuance of a judgment in this case. The issue fundamentally becomes one of whether or not the Supreme Court has jurisdiction over the appeal, since if the judgment and the supplemental decree issued by the Judge of the Court of First Instance on September 21, 1916, and November 23, 1916, respectively, have become final, petitioners may no bring their appeal before this court, because the time for the filing of their bill of exceptions has expired; while, if the cadastral proceedings did not become final until the formal decree was issued by the Land Registration Office, then it was proper for them to ask for a reopening of the case, and it would, consequently, be just as proper for this court to order the trial court to permit the same. OPINION. The prime purpose of the Torrens System is, as has been repeatedly stated, to decree land titles that shall be final, irrevocable, and indisputable. Incontestability of title is the goal. All due precaution must accordingly be taken to guard against injustice to interested individuals who, for some good reason, may not be able to protect their rights. Nevertheless, even at the cost of possible cruelty which may result in exceptional cases, it does become necessary in the interest of the public weal to enforce registration laws. No stronger words can be

found than those appearing in Section 38 of the Land Registration Law (Act No. 496) wherein it is said that: "Every decree of registration shall bind the land, and quiet title thereto. . . . It shall be conclusive upon and against all persons, including the Insular Government and all the branches thereof, whether mentioned by name in the application, notice, or citation, or included in the general description 'To all whom it may concern,' Such decree shall not be opened by reason of the absence, infancy, or other disability of any person affected thereby, nor by any proceeding in any court for reversing judgments or decrees; subject, however, to the right of any person deprived of land or of any estate or interest therein by decree of registration obtained by fraud to file in the Court of Land Registration (Court of First Instance) a petition for review within one year after entry of the decree, provided no innocent purchaser for value has acquired an interest." While such statements can be made of the Torrens System proper, they become even more incisive and peremptory when we come to consider the offspring of this system, here known as the Cadastral System. Under the Torrens System proper, whether action shall or shall not be taken is optional with the solicitant. Under the Cadastral System, pursuant to initiative on the part of the Government, titles for all the land within a stated area, are adjudicated whether or not the people living within this district desire to have titles issued. The purpose, as stated in section one of the Cadastral Act (NO. 2259), is to serve the public interests, by requiring that the titles to any lands "be settled and adjudicated." Admitting that such compulsory registration of land and such excessive interference with private property constitutes due process of law and that the Acts providing for the same are constitutional, a question not here raised, yet a study of the law indicates that many precautions are taken to guard against injustice. The proceedings are initiated by a notice of survey. When the lands have been surveyed and plotted, the Director of Lands, represented by the Attorney General, files a petition in court praying that the titles to the lands named be settled and adjudicated. Notice of the filing of the petition is then published twice in successive issues of the Official Gazette in both the English and Spanish languages. All persons interested are given the benefit of assistance by competent officials and are informed of their rights. A trial is had. "All conflicting interests shall be adjudicated by the court and decrees awarded in favor of the persons entitled to the lands or the various parts thereof, and such decrees, when final, shall be the bases of original certificates of title in favor of said persons." (Act No. 2259, Sec. 11.) Aside from this, the commotion caused by the survey and a trial affecting ordinarily many people, together with the

presence of strangers in the community, should serve to put all those affected on their guard. After trial in a cadastral case, three actions are taken. The first adjudicates ownership in favor of one of the claimants. This constitutes the decision — the judgment — the decree of the court, and speaks in a judicial manner. The second action is the declaration by the court that the decree is final and its order for the issuance of the certificates of title by the Chief of the Land Registration Office. Such order is made if within thirty days from the date of receipt of a copy of the decision no appeal is taken from the decision. This again is judicial action, although to a less degree than the first. The third and last action devolves upon the General Land Registration Office. This office has been instituted "for the due effectuation and accomplishment of the laws relative to the registration of land." (Administrative Code of 1917, Sec. 174.) An official found in the office, known as the chief surveyor, has as one of his duties "to prepare final decrees in all adjudicated cases." (Administrative Code of 1917, Sec. 177.) This latter decree contains the technical description of the land and may not be issued until a considerable time after the promulgation of the judgment. The form for the decree used by the General Land Registration Office concludes with the words: "Witness, the Honorable (name of the judge), on this the (date)." The date that is used as authority for the issuance of the decree is the date when, after hearing the evidence, the trial court decreed the adjudication and registration of the land. The judgment in a cadastral survey, including the rendition of the decree, is a judicial act. As the law says, the judicial decree when final is the base of the certificate of title. The issuance of the decree by the Land Registration Office is ministerial act. The date of the judgment, or more correctly stated, the date on which the defeated party receives a copy of the decision, begins the running of the time for the interposition of a motion for a new trial or for the perfection of an appeal to the Supreme Court. The date of the title prepared by the Chief Surveyor is unimportant, for the adjudication has taken place and all that is left to be performed is the mere formulation of the technical description. If an unknown individual could wait possibly years until the day before a surveyor gets around to transcribing a technical description of a piece of land, the defeated party could just as reasonably expect the same consideration for his appeal. As a matter of fact, the so-called unknown is a party just as much as the known oppositor for notice is to all the world, and the decree binds all the world. Both counsel for petitioners and respondents rely upon the decision of this court in the case of Tambunting vs. Manuel ([1916], 35 Phil.; 699) . That case and the instant case are not the same. In the Tambunting case the contest was really between two parties each claiming to have a Torrens title; here one party

has the title and the other is seeking to oust him from his fortress. In the Tambunting case the declaration of ownership but not the decree of registration had issued; here both declaration and decree have issued. The doctrines announced in the decision in Grey Alba vs. De la Cruz ([1910], 17 Phil., 49) relating to general notice and the indefensibility of land titles under the Torrens system are much more applicable and can, with as much reason, be applied to the cadastral system. As a general rule, registration of title under the cadastral system is final, conclusive and indisputable, after the passage of the thirty-day period allowed for an appeal from the date of receipt by the party of a copy of the judgment of the court adjudicating ownership without any step having been taken to perfect an appeal. The prevailing party may then have execution of the judgment as of right and is entitled to the certificate of title issued by the chief of the Land Registration Office. The exception is the special provision providing for fraud. Counsel for appellants and appellees have favored the court with able arguments relative to the applicability of Sections 113 and 513 of the Code of Civil Procedure to cadastral proceedings. The view we take of the case would make unprofitable any discussion of this question. It appearing that the judgment of the Court of First Instance of Occidental Negros of September 21, 1916, has become final, and that no action was taken within the time provided by law for the prosecution of an appeal by bill of exceptions, this court is without jurisdiction. Accordingly the appeal is dismissed with costs against the appellants. So ordered.

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

ARTICLE XII 1987 constituion: Section 2. All lands of the public domain, waters, minerals, coal, petroleum, and other mineral oils, all forces of potential energy, fisheries, forests or timber, wildlife, flora and fauna, and other natural resources are owned by the State. With the exception of agricultural lands, all other natural resources shall not be alienated. The exploration, development, and utilization of natural resources shall be under the full control and supervision of the State. The State may directly undertake such activities, or it may enter into co-production, joint venture, or production-sharing agreements with Filipino citizens, or corporations or associations at least sixty per centum of whose capital is owned by such citizens. Such agreements may be for a period not exceeding twenty-five years, renewable for not more than twenty-five years, and

under such terms and conditions as may be provided by law. In cases of water rights for irrigation, water supply fisheries, or industrial uses other than the development of water power, beneficial use may be the measure and limit of the grant.

The State shall protect the nation's marine wealth in its archipelagic waters, territorial sea, and exclusive economic zone, and reserve its use and enjoyment exclusively to Filipino citizens.

The Congress may, by law, allow small-scale utilization of natural resources by Filipino citizens, as well as cooperative fish farming, with priority to subsistence fishermen and fish- workers in rivers, lakes, bays, and lagoons.

The President may enter into agreements with foreign-owned corporations involving either technical or financial assistance for large-scale exploration, development, and utilization of minerals, petroleum, and other mineral oils according to the general terms and conditions provided by law, based on real contributions to the economic growth and general welfare of the country. In such agreements, the State shall promote the development and use of local scientific and technical resources.

The President shall notify the Congress of every contract entered into in accordance with this provision, within thirty days from its execution.