LAND TITLES AND DEEDSCourse Outline

I. Review of Principles in Constitutional Law and Civil Law

II. Original RegistrationA. Purpose and Effect

Garcia vs Ca; G.R. No. L-48971; January 22, 1980 (OCT not cancelled, 2 TCTs were subse-quently issued)Sapto vs Fabiana GR 11285; May 16, 1958 (sale between paties not registered) When they were ordered to execute a deed of conveyance, they argued prescriptionSantos vs Robledo L-9197 (unregistered donation to the daughter of his wife from whom he sep-arated)

B. NatureChapter 1, Section 2 PD 1529Sandejas vs Robles 81 Phil 241 (no jurisdiction because in rem but the action was for a resolu-tion of a contract.)

C. ProcedureSections 14 – 19 PD 1529Santiago vs Cruz GR L-6276; March 21, 1911 (joint application)San Juan De Dios Hospital vs Government; L-46239 (amendments)Director of Lands vs IAC 146 SCRA 509 (tacking, can a corp register?)Aguilar vs Caogdan; 105 Phil 661 (NOTICE, jurisdiction)

D. Motions to Dismiss/Res judicataAbellera v Farol 74 Phil 285Daquis v Bustos 94 Phil 913

E. Evidence RequiredRepublic v Lee 197 SCRA 13

F. Applicability of the Rules of CourtDirector of Lands v Sanz 45 Phil 117Dir of Lands v Reyes GR No. L-27594

G. DefautHeirs of Lopez v Enriquez, GR No. 146262

H. Hearing, Judgment and Decree of RegistrationTurquesa v Valera, GR 76371 (2000)Republic v Sodsod, GR 116426I. Remedies after Judgment but BEFORE a decree is issued

a. Motion for Reconsideration/ New Trials Section 1, Rul3 37

b. Appeal Secs. 30 and 33 PD 1529

II. After Decree

a. Review of Decree, Sec 32 PD 1529

b. Relief from Judgment, Rule 38 Rules of Court

c. Reconveyance, Sec 55, Act 496

Lucena v CA GR L-77468Heirs of Brusas vs CA GR 126875

III Voluntary Dealings with Registered LandsA. General Principles, Section 51 and 52 PD 1529

1

Campillo v CA 129 SCRA 513Lara et al v Ayroso 95 Phil 185Inquimboy v Cruz 108 Phil 1054Consolidated Rural Bank v CA , GR 132161

B. Registration in relation to Tradition

Mamuyac v Abena, 67 Phil 289Suburban Development Corp. v Auditor Generla GR 19545

C. Consulta, Sec 117 PD 1529

In re Consulta of Vicente Francisco on behalf of Cabantog, 67 Phil 222Gurbax Singh Pabla and Co. v Reyes and Tantoco, 92 Phil 177

D. Registration of forged deeds

Sec 53, PD 1529Dir of Lands v Addison 49 Phil 19Blondeau v Nano, 61 Phil 625

E. Conveyances

Sections 57, 58, 59 PD 1529Sanchez v Director of Lands, 63 Phil 378Santa Ana v Hernandez, 18 SCRA 1973Manila Electric v CA, GR L-33794Doromal v CA, GR L-36083Blas v Dela Cruz, 37 Phil 1Macadangdang v Martinez, GR No. 158682

IV. Involuntary Dealings with Registered LandA. Lis Pendens

Sec 76 PD 1529Sec 14, Rule 13, Rules of CourtLaroza et al v Guia, GR L-45252Heirs of Marasigan v IAC, GR No. 69303Punongbayan v Pineda, GR L-58193Victoriano v Rovira, 55 Phil 1000Lazaro v Mariano, 59 Phil 627Capitol Subdivision v Montelibano, GR L-13389-90

B. Attachment

a. Purpose and Grounds

Rule 57, Rules of CourtSec 71, PD 1529Mabanag v Gallimore, 81 Phil 254Gotauco v Reg of Deeds, 59 Phil 756

C. Adverse Claim

Sec 70, PD 1529Sajonas v CA, 258 SCRA 71

V. Registration through Admin Proceedings

2

LAND TITLES AND DEEDSCourse Outline

I. Review of Principles in Constitutional Law and Civil Law

II. Original RegistrationA. Purpose and Effect

Garcia vs Ca; G.R. No. L-48971; January 22, 1980 (OCT not cancelled, 2 TCTs were subsequently issued)

G.R. Nos. L-48971 & 49011 January 22, 1980

PACIFICO GARCIA, petitioner-appellant, vs.BENJAMIN M. GOZON, TECLA GUTIERREZ, ROSARIO FELIX, PAULINO D. BUENAVENTURA, RAYMUNDO DIONISIO, VIRGILIO AUSTRIA and MARCEON VICENCIO, respondents-appellees;

PHILIPPINE NATIONAL BANK, petitioner-appellant, vs.COURT OF APPEALS (Third Division), CAROLINA LAPUZ- GOZON, assisted by her husband BENJAMIN M. GOZON, TECLA GUTIERREZ, ROSARIO FELIX, PAULINO D. BUENAVENTURA, RAYMUNDO DIONISIO, VIRGILIO AUSTRIA and MARCEON VICENCIO, respondents-appellees.

Agapito Mendoza & Antonio G. Ibarra for appellant Pacifico Garcia

Laurel Law Office and Flores Ocampo, Dizon & Domingo for private appellees.

 

AQUINO, J.:

This case is about the issuance of two or more transfer certificates of title to different persons for the same lots, or subdivisions thereof, due to the fact that the original title was allegedly not cancelled when the first transfer certificates of title were issued to replace the original title. The factual background is as follows:

1. On August 9, 1918, a deed of sale for two parcels of land, E and G (with a total area of more than seven hectares) of the Hacienda Maysilo, located in Malabon, Rizal and covered by Original Certificate of Title No. 983, was executed in favor of Ismael Lapus a bona fide occupant thereof. The deed was executed pursuant to an order of the Court of First Instance of Rizal in Civil Case No. 391, Negao vs. Vidal, a partition proceeding involving the said hacienda (See Bustamante vs. Tuason, 47 Phil. 433, 434).

3

2. The deed of sale was presented for registration at two-twenty five in the afternoon of January 15, 1920 and was recorded as Primary Entry No. 7710. That deed of sale itself contains the following entries showing that it was annotated on the back of OCT NO. 983:

Presentado en este Registro a las 2:25 de la tarde del dia de hoy segun el Asiento No. 7710 de tomo 10 del Libro Diario, Pasig, Rizal, Enero 15, 1920.

Register of Deeds (Exh. B-12)

Inscrito el documento que precede al dorso del certificado de Titulo Original No. 983 del Tomo A-9, de inscritor en las paginas 113 y 114 ambos del libro T-25 de registro como certificados de titulo Nos. 4910 y 4911, archivado en el legajo T-#4910. Pasig, Rizal, Enero 15, 1920.:

Register of Deeds (Exh. B-1).

However, it seemed that, contrary to the foregoing entry and the official routine or standard operating procedure, the deed of sale was not annotated on OCT No. 983 and that, consequently, that title was apparently not cancelled. Why that annotation did not appear in OCT No. 983 and why there was no notation of the cancellation of that title, as it appeared in 1962, is a mystifying circumstance in this case.

3. As a result of the registration of that deed of sale, Transfer Certificate of 'Title No. 4910 was issued to Lapus for the two parcels of land, E and G, and I Transfer Certificate of Title No. 4911 was issued for the remaining five lots covered by OCT No. 983 (which embrace an area of more than two hundred fifty-eight hectares registered in the names of more than twenty-six-co-owners). TCT Nos. 4910 and 4911 contain the following entries: "Transfer from No. 983. Originally registered on the 29th day of January, in the year 1917 in Book No. A-9, page 215, of the said Province of Rizal, pursuant to a decree entered in Case No. 3850."

4. Lapus on different occasions mortgaged the two parcels of land to secure his obligations to the Philippine National Bank, the Government and the Philippine Trust Company. He died in 1951. The two parcels of land were inherited by his daughter, Carolina Lapuz-Gozon. She became the registered owner of the two lots. She subdivided them into fifty-five lots. She sold some of the subdivision lots to her co-respondents-appellees herein. Lapus and his successors-in-interest have been in possession of the two parcels even before 1910 or for more than seventy years.

5. Meanwhile, in 1962, certain. alleged heirs (collectively known as the Riveras) of the late Maria de la Concepcion Vidal filed a motion in Land Registration Cases Nos. 4429 and 4496 of the Court of First Instance of Rizal, alleging that they were deprived of their participation in the Hacienda Maysilo covered by OCT No. 983 and for other titles and that, since only OCT No. 983 was supposedly unencumbered, all the land covered by that title should be adjudicated to them. The court granted the motion. It should be stressed that OCT No. 983 appears to have remained uncancelled notwithstanding the sale to Lapus of two parcels covered by it and the fact that it had been replaced by TCT Nos. 4910 and 4911.

6. On June 7, 1963, OCT No. 983 was definitely cancelled and in lieu thereof Transfer Certificate of Title No. 112236 was issued to the Riveras. Later, Lots 5 and 7 of the said title (corresponding to parcels E and G which were sold to Ismael Lapus in 1918 as stated earlier) were assigned by Bartolome Rivera to Sergio Cruz and Pacifico Garcia and TCT Nos. 112743 and 112742 were issued to Cruz and Garcia, respectively. Thus, two sets of transfer certificates of title for Lots E and G or 5 and 7, originally covered by OCT No. 983, were issued, one to the heir of Ismael Lapus and another set to the successors-in-interest of the Riveras.

7. On October 22, 1964, Garcia subdivided Lot 7 (G) into Lots A and B. Garcia retained Lot A and obtained TCT No. 134958 for it. He assigned Lot B to Antonio Muñoz on November 5, 1964. As a consequence of the assignment, TCT No. 112742 was cancelled and TCT No. 134957 was issued to

4

Muñoz. In 1965, he mortgaged Lot B to the Associated Banking Corporation to secure a loan of P200,000.

8. On the other hand, on July 17, 1964 Cruz sold to Santiago Go Lot 5 (E) covered by TCT No. 112743. TCT No. 131329 was issued to Go on August 25,1964. On December 23, 1964, Go mortgaged Lot 6 to the Philippine National Bank (PNB) to secure a loan of P50,000 which was later increased to P60,000.

9. Muñoz and Go did not pay their mortgage debts. The two banks foreclosed the mortgages. The PNB bought the mortgaged lot at the auction sale held on May 4. 1967. The sheriff issued to it a certificate of sale dated May 19, 1967 but at that time there was already a notice of lis pendens annotated on the title of the mortgaged lot. TCT Nos. 212163 and 236881 for the mortgaged lots were issued to the Associated Banking Corporation and the Philippine National Bank, respectively.

10. The Riveras and their successors-in-interest have never set foot on the disputed lots.

11. Mrs. Gozon later learned that the Riveras and their successors-in-interest had acquired the land (more than two hundred fifty-eight hectares) covered by OCT No. 983. Her lawyer and a surveyor informed her that parcels E and G, which she inherited from her father, were identical to Lots 5 and 7 which were conveyed to Cruz and Garcia. She registered adverse claims on the titles covering Lots 5 and 7. On December 27, 1965 she and the persons to whom she had transferred portions of parcels E and G filed with the Court of First Instance of Rizal at Caloocan City against the Riveras, Cruz, Muñoz, Garcia, Associated Banking Corporation, PNB and others an action to quiet title and for damages.

12. A notice of lis pendens was annotated on January 25, 1966 on the titles of Garcia, Muñoz and Go. The notice of lis pendens was annotated on the title of the PNB when the sale in its favor was registered on December 13, 1969.

13. The trial court in its decision of July 30, 1975 declared valid TCT Nos. 141802 to 141855 and 143512 issued to Mrs. Gozon and her co-plaintiffs. It voided TCT No. 112235 issued to the Riveras and all titles and transactions emanating therefrom insofar as those titles covered the lots embraced in plaintiffs' titles. The Riveras were ordered to pay the plaintiffs twenty thousand pesos as attorney's fees.

14. The trial court also ordered Muñoz to pay the Associated Banking Corporation, in the event that the bank would be evicted from the lot covered by TCT No. 212153, two hundred sixty-five thousand seventy-two pesos and fifteen centavos with twelve percent interest per annum from the date of the eviction plus ten thousand pesos as attorney's fees.

15. Santiago Go was ordered to pay the PNB, should it be evicted from the lot covered by TCT No. 236881, the sum of sixty thousand pesos plus nine percent interest per annum from the date of the eviction and six thousand pesos as attorney's fees.

16. That judgment of the trial court was affirmed by the Court of Appeals in its decision of May 25, 1978. Garcia and the PNB appealed from that decision. The Associated Banking Corporation, now the Associated Citizens Bank, tried to appeal but it was not able to file its petition for review (L-49010).

Garcia contends that the Court of Appeals erred in not holding that his title is valid and that the titles of Ismael Lapus and his successors-in-interest lost their right to the disputed lots due to their negligence or inaction.

The issue is whether the 1920 title issued to Lapus and the titles derived therefrom should prevail over the 1963title issued to the Riveras and the subsequent titles derived from it. Should Lapus' title prevail even if it was not annotated by the register of deeds on the anterior or parent title which was not cancelled before 1963? It was that noncancellation which led to the issuance of the duplicative title to the Riveras and eventually to the execution of the controversial mortgages and foreclosure sales to the two banks.

5

We hold that the two appeals have no merit. The title of Lapus and the titles derived therefrom should be given effect. The title of the Riveras and the titles springing from it are void.

There can be no doubt that Lapus was an innocent purchaser for value. He validly transmitted to his successors-in-interest his indefeasible title or ownership over the disputed lots or parcels of land. That title could not be nullified or defeated by the issuance forty-three Years later to other persons of another title over the same lots due to the failure of the register of deeds to cancel the title preceding the title issued to Lapuz. This must be so considering that Lapus and his interest remained in possession of the disputed successors in lots and the rival claimants never possessed the same.

"The general rule is that in the case of two certificates of title, purporting to include the same land,  the earlier in date prevail, whether the land comprised in the latter certificate be wholly, or only in part, comprised in the earlier certificate" (Hogg, Australian Torrens System 823, citing cases and cited in Legarda and Prieto vs. Saleeby, 31 Phil. 590, 595).

"Where two certificates (of title) purport to include the same land, the earlier in date prevails. ... In successive registrations, where more than once certificate is issued in respect of a party estate or interest in land, the Person claiming under the prior certificate is entitled to the estate or interest; and that person is deemed to hold under theprior 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 " (Niblack, Analysis of the Torrens System page 237, cited in Legarda and Prieto vs. Saleeby, supra, pages 595-6).

And the rule that in case of double registration the owner of the earlier certificate is the owner of the land applies to the successive vendees of the owners of such certificates. "The vendee of the earlier certificate would be the owner as against the vendee of the owner of the later certificate" (Legarda and Prieto vs. Saleeby, supra, pages 597-9).

It is settled that is this jurisdiction the maxim prior est in tempore, potior est in jure (he who is first in time is preferred in right) is followed in land registration matters (La Urbana vs. Bernardo, 62 Phil. 790, 806).

Appellant Garcia invokes the ruling that the mere entry of a document in the day or entry book without noting it on the certificate of title is not a sufficient registration (Bass vs. De la Rama, 73 Phil. 682, 685).

That ruling was superseded by the holding in the later six cases of Levin vs. Bass, 91 Phil. 420, where a distinction was made between voluntary and involuntary registration, such as the registration of an attachment, levy upon execution, notice of his pendens, and the like. In cases of involuntary registration, an entry thereof in the day book is a sufficient notice to all persons even if the owner's duplicate certificate of title is not presented to the register of deeds.

On the other hand, according to the said cases of Levin vs. Bass, in case of voluntary registration of documents an innocent purchaser for value of registered land becomes the registered owner, and, in contemplation of law the holder of a certificate of title, the moment he presents and files a duly notarized and valid deed of sale and the same is entered in the day book and at the same time he surrenders or presents the owner's duplicate certificate of title covering the land sold and pays the registration fees, because what remains to be done lies not within his power to perform. The register of deeds is duty bound to perform it. (See Potenciano vs. Dineros, 97 Phil. 196.)

The instant case is not Identical to the Bass cases. Here the deed of sale in favor of Lapus, which was judicially authorized, was entered in the entry book and a new title was issued to him. As already stated, and this point should be underscored, the deed of sale in favor of Lapus contains the notation that it was annotated on the back of OCT No. 983 (presumably, the original and owner's duplicate thereof).

But why in 1962 it appeared that no such annotation was found on the back of OCT No. 983, contrary to what was stated in the 1918 deed of sale, is a mystery that the trill court and the plaintiffs failed to

6

unravel during the trial. Moreover, the title issued to Lapus contains the usual notation that it was a transfer from a previous title which in this case was OCT No. 983.

It should be further observed that the deed of sale in favor of Lapus and the titles issued to him and his successors interest together with his mortgage in 1929 of the disputed lots to the PNB itself, are all a matter of public record in the registry of deeds.

As stressed in Legarda and Prieto vs. Saleeby, 31 Phil. 590, 600, "the record is 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.

"When a conveyance has been properly recorded, such record is constructive notice of its contents and all interests, legal and equitable, included therein." "Under the rule of notice, it is presumed that the purchaser has examined every instrument of record affecting the title. Such presumption is irrefutable. 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" (Legarda and Prieto vs. Saleeby, supra, page 600).

As Justice Johnson says, "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" (Legarda and Prieto vs. Saleeby, supra, pp. 600-601).

As to the PNB's claim that it was a mortgagee and purchaser in good faith and for value, the Appellate Court held that the bank should have made an on-the-spot investigation of the lot mortgaged by Go to ascertain whether he was in possession of it or it was claimed by other persons. Its failure to do so precludes the bank from being considered as a mortgagee in good faith and for value (Gatioan vs. Gaffud, L-21953, March 28, 1969, 27 SCRA 706).

On the other hand, the trial court held that the PNB was not a buyer in good faith when it bought Go's lot at the auction sale because there was already a notice of his pendens annotated on his title.

In the Gatioan case, it appears that in 1935 Rufina Permison secured a Torrens title for a parcel of land on the basis of a free patent. The land was sold to Encarnacion Gatioan and Transfer Certificate of Title No. T-1212 was issued to her. She mortgaged the land three times to the PNB

In 1956, the spouses Sixto Gaffud and Villamora Logan were able to secure a Torrens title for the same lot also on the basis of a free patent. They mortgaged the land also to the PNB. The Secretary of Agriculture and Natural Resources, on discovering that two Torrens titles were issued for the same land, recommended the cancellation of the later title issued to the Gaffud spouses. As the PNB refused to cancel the mortgaged executed by Gatioan, in spite of the fact that she had made full payment of the mortgage debt, she filed against the Gaffud spouses and the PNB an action to quiet title.

It was held that Gatioan's title should prevail over that of the Gaffud spouses and that the mortgage executed by them in favor of the PNB was void. The Gaffud spouse were ordered to pay damages to Gatioan.

Since the applicable rule in the instant case is that the earlier certificate of title should be recognized as superior and controlling there is no justification for relying on the doctrine laid down by Justice Holmes in Eliason vs. Wilborn 281 U.S. 457, that "as between two innocent persons, one of whom must suffer the consequence of a breach of trust, the one who made it possible by his act of confidence must bear the loss."

7

There was no breach of trust in this case. What is note. worthy in this case is that after it was recited in the registered deed of sale that sale was annotated at the back of the title covering the lots sold, it turned out that the title did not contain such an annotation and that the title was not cancelled. For that anomaly, the purchaser, Ismael Lapus, the how" of the earlier title, was not culpable or blameworthy.

WHEREFORE, the judgment of the Court of Appeals, affirming the decision of the trial court, should stand. Costs against the appellants.

SO ORDERED.

Sapto vs Fabiana GR 11285; May 16, 1958 (sale between paties not registered) When they were ordered to execute a deed of conveyance, they argued prescription

G.R. No. L-11285 May 16, 1958

VICENTE SAPTO, LAUREANA SAPTO and DORA (BAGONA), plaintiffs-appellants, vs.APOLONIO FABIANA, defendant-appellee.

Rodolfo A. Ta-Asan for appellants.Napoleon B. Nidea for appellee.

REYES, J.B.L., J.:

Sapto (Moro), now deceased was the registered owner of a parcel of land located in Alambre, Toril, Davao City, under Transfer Certificate of Title No. T-5701 (0-28) of the Register of Deeds of Davao City. When Sapto died, he left his children Samuel, Constancio, and Ramon as heirs of the property in question. Ramon pre-deceased his two brothers, leaving no, other heirs. On June 6, 1931, Samuel and Constancio Sapto executed a deed of sale of a portion of four hectares of the land aforementioned if favor of defendant Apolonio Fabiana, in consideration of the amount of P245.00. The sale was duly approved by the Provincial Governor of Davao, but was never registered. Possession of the land conveyed was, however, transferred to Fabiana and the latter has been in the possession thereof 1931 up to the present.

Thereafter, Constancio Sapto died without any issue, Samuel Sapto married one Dora (Bagoba) and upon his death was survived by his widow and two children, Laureana and Vicente Sapto. On October 19, 1954, the widow and children of Samuel Sapto filed this action in the Court of First Instance of Davao for the recovery of the parcel of land sold by their predecessors to defendant Apolonio Fabiana in 1931. After trial, the lower court held that although the sale between Samuel and Constancio Sapto and defendant in 1931 was never registered, it was valid and binding upon the parties and the vendors heirs, and ordered the plaintiffs to execute the necessary deed of conveyance in defendant's favor and its annotation in the certificate of title. From this judgment, plaintiffs appealed to this Court.

The issue is whether the deed of sale executed by appellants' predecessors in favor of the appellee over the land in question, although never registered, is valid and binding on appellants and operated to convey title and ownership to the appellee.

The question is not new. In a long line of cases already decided by this Court, we have consistently interpreted sec. 50 of the Land Registration Act providing that "no deed . . . shall take effect as a conveyance or bind the land, but shall operate only as a contract between the parties and as evidence of authority to the clerk or register of deeds to make registration" in the sense that as between the parties to a sale registration is not necessary to make it valid and effective, for actual notice is equivalent to registration (Obras Pias vs. Devera Ignacio, 17 Phil., 45; Gustilo vs. Maravilla, 48 Phil., 442; Quimson vs. Suarez, 45 Phil., 901; Winkleman vs. Veluz, 43 Phil., 609; Galasinao vs. Austria, 51 Off. Gaz. No. 6, 2874; Carillo vs. Salak, 91 Phil., 265). "The peculiar force of a title under Act No. 492", we said in Medina vs. Imaz and Warner Barnes and Co., 27 Phil., 314 (syllabus), "is exhibited only when the purchaser has sold to innocent third parties the land described in the conveyance. Generally

8

speaking, as between vendor and vendee, the same rights and remedies exist in relation to land not so registered". In Galanza vs. Nuesa, 95 Phil., 713, we held that "registration is intended to protect the buyer against claims of third persons arising from subsequent alienations by the vendor, and is certainly not necessary to give effect as between the parties to their deed of sale". And in the recent case of Casica vs. Villaseca, G.R. No. L-9590, April 30, 1957, we reiterated that "the purpose of registration is merely to notify and protect the interests of strangers to a given transaction, who may be ignorant thereof, and the non-registration of the deed evidencing said transaction does not relieve the parties thereto of their obligations thereunder".

No right of innocent third persons or subsequent transferees of the property in question is involved herein. The property has remained and still is in the possession of the vendee of appellants' predecessors, herein appellee. It is, therefore, clear that the conveyance between appellee and his vendors and valid and binding upon the latter, and is equally binding and effective against the heirs of the vendors, herein appellants. To hold otherwise would make of the Torrens system a shield for the commission of fraud by the vendors or his heirs (Gustilo vs. Maravilla, 48 Phil., 442), who would then be able to reconvey the same property to other persons.

Appellants cite several cases wherein we have held that under the Torrens system, registration is the operative act that gives validity to the transfer or creates a lien upon the land. The authorities cited refer, however, to cases involving conflicting rights over registered property and those of innocent transferees who relied on the clean titles of the properties in question. These cases have, therefore, no bearing on the instant case, where the appellee has always, remained in the possession of the land in question and no subsequent transfer thereof to other persons has been made either by appellants or their prodecessors-in-interest.

The appellants aver that it was error to require them to execute a deed of conveyance in favor of the plaintiff, appellee, and argue that the latter's action to obtain it had long prescribed, twenty years having elapsed since the original sale. This contention must be overruled, being predicated on the assumption that the reconveyance is sought by way of performance of the contract of sale entered into in 1931. No enforcement of the contract is in fact needed, since the delivery of possession of the land sold had consummated the sale and transferred title to the purchaser, registration of the contract not being indispensable as between the parties. Actually the action for conveyance was one to quiet title, i.e., to remove the cloud cast upon appellee's ownership by the refusal of the appellants to recognize the sale made by their predecessors. This action accrued only when appellant, initiated their suit to recover the land in 1954. Furthermore, it is an established rule of American jurisprudence (made applicable in this jurisdiction by Art. 480 of the New Civil Code) that actions to quiet title to property in the possession of the plaintiff are imprescriptible (44 Am. Jur. p. 47; Cooper vs. Rhea, 39 L. R. A. 930; Inland Empire Land Co. vs. Grant County, 138 Wash. 439, 245 Pac. 14).

The prevailing rule is that the right of a plaintiff to have his title to land quieted, as against one who is asserting some adverse claim or lien thereon, is not barred while the plaintiff or his grantors remain in actual possession of the land, claiming to be owners thereof, the reason for this rule being that while the owner in fee continues liable to an action, proceeding, or suit upon the adverse claim, he has a continuing right to the aid of a court of equity to ascertain and determine the nature of such claim and its effect on his title, or to assert any superior equity in his favor. He may wait until his possession is disturbed or his title is attacked before taking steps to vindicate his right. But the rule that the statute of limitations is not available as a defense to an action to remove a cloud from title can only be invoked by a complaint when he is in possession. One who claims property which is in the possession of another must, it seems, invoke his remedy within the statutory period. (44 Am. Jur., p. 47)

Wherefore, the judgment appealed from is affirmed. Costs against appellants. So ordered.

9

Santos vs Robledo L-9197 (unregistered donation to the daughter of his wife from whom he separated)

G.R. No. L-9197 October 22, 1914

HERMOGENA SANTOS, plaintiff-appellant, vs.MIGUEL ROBLEDO, ET AL., defendants-appellees.

Jose Santiago for appellant.Leodegario Azarraga for appellees.

 

TORRES, J.:

          In this action to recover possession of a parcel of land with three light-material warehouses and the collection of unpaid rents, together with the recovery of damages to the amount of P1,200, the plaintiff appealed by a bill of exceptions from the judgment rendered on May 6, 1913, by the Honorable Charles S. Lobingier, judge, wherein he held that the plaintiff had not established any right to the relief sought and therefore adjudged that she take nothing by her complaint and that the first two defendants recover their costs.

          On March 5, 1913, counsel for Hermogena Santos filed a complaint in the Court of First Instance of this city and alleged therein that on March 1, 1905, Santiago Herrera and his wife Basilia Tolentino, in an instrument ratified before a notary, deed to the plaintiff a building lot with three warehouses, the boundaries and area of the said land being described in the complaint; that the plaintiff entered into possession of this property on the date above mentioned and the same without opposition or interruption of any sort and collected the rents therefrom until January 28, 1913; that on this date, Miguel Robledo, who was found to be a creditor of the said Santiago Herrera, prayed for the execution of the said judgment; that at the instigation of Robledo, the sheriff proceeded to seize the said lot and, after the publication of notice, sold the same at public auction on the 17th of the following month of February; that, although the plaintiff had intervened and prayed for the recall of the writ for the reason that the lot levied upon was her property, the sheriff, under security of the bond furnished by the creditor Robledo, sold the said lot and Robledo himself purchased it; that the plaintiff was thus deprived of her property and of the rents accruing therefrom from the said 28th day of January up to the date of the complaint, and that she had suffered considerable damage because she had missed the opportunity to sell the property for P1,200, the price she had been offered for it. Counsel therefore prayed that judgment be rendered for the plaintiff ordering the defendant immediately to return and deliver to her the said lot, together with the uncollected rents therefrom, and to pay an indemnity of P1,200 and the costs.

          Counsel for the deputy sheriff of Manila alleged that his client had no personal interest in the subject matter of the complaint nor in the remedies sought; that he only took part in the action brought by Robledo against Herrera for the purpose of executing the orders of the court; that consequently he levied on the said lot and its three warehouses belonging to Santiago Herrera and subsequently, on February 17, 1913, sold them; that the lot was awarded to Robledo, the only bidder, for the sum of P1,000, and that the plaintiff, by an affidavit dated February 5, claimed the said property as the owner thereof, but, by reason of the bond furnished by Robledo, he, the deputy sheriff, proceeded to sell the property, since, it was recorded in the property registry in the name of Santiago Herrera in August, 1901, as being free of all encumbrance and that on January 28, 1913, a record was made of the levy thereon. Said counsel therefore prayed that the defendant be absolved from the complaint, with the costs against the plaintiff.

          The other defendants, Robledo and Azarraga, alleged, among other things, that the plaintiff had no legal capacity to sue and that her action was improper; that, by a judgment rendered in case No. 9874, Santiago Herrera was ordered to pay to his creditor, Miguel Robledo, the sum of P1,170, with

10

legal interest thereon at the rate of six per cent per annum from September 24, 1912, and the costs of the suit, and that, in executing the said judgment, the deputy sheriff of Manila, on January 28, 1913, levied upon the said lot, which was exclusively owned by the debtor Herrera, and upon all its improvements; that the first inscription of the aforementioned property was recorded in the property registry in August, 1901, in the name of Santiago Herrera, wherein it appears as being free of all charge and encumbrance; that on the 28th of the said month of January, 1913, the writ of execution on the aforementioned land which, together with the three warehouses thereon, was sold at public auction and knocked down to the said Robledo on February 17, 1913, for the sum of P1,000 Philippine currency, was recorded in the registry and the proper certificate of sale was issued to him by the sheriff; that the new owner, Robledo, then took possession of the property in good faith and was now peaceably holding the same; that the conveyance made to the plaintiff by Herrera and his wife Tolentino was effected by them with intent to defraud their creditors and could in no wise prevail as against the creditor Robledo, and that for this reason, the latter had suffered losses and damages to the amount of P200. These defendants therefore prayed be absolved from the complaint and that the said Hermogena Santos be ordered to pay them P200 as losses and damages, and to pay the costs.

          Counsel for Miguel Robledo, in a supplementary answer dated April 21, 1913, set forth that, subsequently to his original answer, Santiago Herrera sold and conveyed to him on March 24 of the same year, through a public instrument and for the sum of P85, Herrera's right to redeem the property in litigation within the period of one year counting from the 17th of February, 1913, the date of the sale of the lot at public auction; and prayed that his supplementary answer be admitted in accordance with section 105 of the Code of Civil Procedure.

          After a hearing of the case and the evidence submitted by both parties, the court rendered the judgment aforementioned.

          The question raised in the claim made by the plaintiff, Hermogena Santos, is whether or not the levy and sale of the lot and improvements in dispute, effected on petition of the creditor, Miguel Robledo, can prevail against the right of ownership she acquired by virtue of the gift made in her favor by the spouses Santiago Herrera and Basilia Tolentino.

          If the said lot and its improvements actually belonged to Hermogena Santos, and not to the debtor, Santiago Herrera, then it is unquestionable that the land could not be levied upon for the payment of a debt of the latter that in no wise concerned Hermogena Santos, as the latter was not a debtor of Miguel Robledo on February 17, 1913, for the sum of P1,000 Philippine currency, was recorded in the registry and the proper certificate of sale was issued to him by the sheriff; that the new owner, Robledo, then took possession of the property in good faith and was now peaceably holding the same; that the conveyance made to the plaintiff by Herrera and his wife Tolentino was effected by them with intent to defraud their creditors and could in no wise prevail as against the creditor Robledo, and that for this reason, the latter had suffered losses and damages to the amount of P200. These defendants therefore prayed that the plaintiff's petition be denied; that the said Hermogena Santos be ordered to pay them P200 as losses and damages, and to pay the costs.

          Counsel for Miguel Robledo, in a supplementary answer dated April 21, 1913, set forth that, subsequently to his original answer, Santiago Herrera sold and conveyed to him on March 24 of the same year, through a public instrument and for the sum of P85, Herrera's right to redeem the property in litigation within the period of one year counting from the 17th of February, 1913, the date of the sale of the lot at public auction; and prayed that his supplementary answer be admitted in accordance with section 105 of the Code of Civil Procedure.

          After a hearing of the case and the evidence submitted by both parties, the court rendered the judgment aforementioned.

          The question raised in the claim made by the plaintiff Hermogena Santos, is whether or not levy and sale of the lot and improvements in dispute, effected on petition of the creditor, Miguel Robledo,

11

can prevail against the right of ownership she acquired by virtue of the gift made in her favor by the spouses Santiago Herrera and Basilia Tolentino.

          If the said lot and its improvements actually belonged to Hermogena Santos, and not to the debtor, Santiago Herrera, then it is unquestionable that the land could not be levied upon for the payment of a debt of the latter that in no wise concerned Hermogena Santos, as the latter was not a debtor of Miguel Robledo.

          The property acquired by the plaintiff in the said land is derived from the gift made to her by Santiago Herrera and his wife Basilia Tolentino in an instrument ratified before the notary Eugenio de Lara on March 1, 1905 (Exhibit A). In this instrument, after reciting that the contracting parties had mutually agreed to live separately and to divide the conjugal partnership property therein inventoried and appraised at P2,494, the said spouses state, in paragraph 3, that they convey to the girl Hermogena Santos the said lot with its warehouse, item No. 4 of the inventory, with the express condition that the proceeds or rents derived from the lot and warehouse so conveyed should be collected by the wife Basilia Tolentino as long as she lived. It was also provided therein, among other things, that the value of the lot and its warehouse should be deducted from the total value of the conjugal property which was to be divided between the two spouses and which amounted to P2,200, a sum that divided equally, would amount to P1,100 each.

          According to article 618 of the Civil Code, a gift is an act of liberality by which a person disposes gratuitously of a thing in favor of another, who accepts it. Herrera and his wife Tolentino freely and gratuitously disposed of the said lot and its improvements in favor of the plaintiff; but it does not appear, however, that the latter accepted the gift in the manner provided by law.

          Article 633 of the same code prescribes:

          In order that a gift of real property may be valid it shall be made in a public instrument, stating therein in detail the property bestowed as a gift and the amount of the charges, which the donee must satisfy.

          The acceptance may be made in the same instrument bestowing the gift or in a different one; but it shall produce no effect if no made during the life of the donor.

          If made in a different instrument the acceptance shall be communicated to the donor in an authentic manner, and this proceeding shall be recorded in both instruments.

          The said instrument (p. 21 of the record) sets out the conveyance of the lot by th the donor to the donee, but the acceptance of that gift by the plaintiff Santos does not appear therein and the record reveals no other instrument that evidences such acceptance and notifies the donors thereof in an authentic manner. Therefore, the provisions of the law not having been complied with, the gift was invalid and could have no effect whatever, for the Civil Code prescribes, in article 629, that a gift does not bind the donor nor produce any effect until it has been formally accepted by the donee in accordance with law. Because of this essential defect, the gift was not perfected and the donee could not acquire any real and positive right in the warehouse (land) and its improvements.

          So important is the donee's acceptance with the notice to the donors of his acceptance in order that the latter may have full force and effect, that when the instrument which has been drawn up is recorded in the registry of property, the document that evidences the acceptance — if this has not been made in the deed of gift — should also be recorded. And in one or both documents, as the case may be, the notification of the acceptance as formally made the donor or donors should be duly set forth. These requisites, definitely prescribed at law, have not been complied with, and no proof that they have appears in the record.1awphi1.net

          Neither does it appear that Exhibit A, the instrument conveying the gift, was recorded in the property registry, an essential requisite of article 23 in connection with article 2 of the Mortgage Law to make it effective against third persons, but still supposing it were there recorded, even improperly, it could not produce any legal effect, inasmuch as it does not show the donee's acceptance and the

12

proper notification thereof to the donors. Therefore, with these defects, even if the said instrument of gift had been recorded, it could not in any way legally affect Robledo's rights.

          So, the gift in question, as specified in Exhibit A an instrument that was executed for other purposes, to wit, conjugal separation and division of conjugal property between the parties, could not transmit to the donee any positive and effective right in the lot in litigation, to the prejudice of the donors' creditor.

          Furthermore, on March 1, 1905, when the said instrument was executed, Santiago Herrera had owed Miguel Robledo, from March 12, 1903, the sum of P1,170, with interest at the rate of 6 per cent per annum. For the collection of this debt the creditor had to bring suit against the debtor. As the record does not show that the donors had reserved sufficient funds or property to satisfy the debt, nor that they possessed property other than the lot given away by them, we must conclude that the conveyance or gift made to the plaintiff by the spouses Herrera and Tolentino was for the purpose of defrauding the creditor, Miguel Robledo, by preventing him from collecting his credit.

          Article 643 of the Civil Code prescribes:

          Should there be no stipulation as to the payment of debts, the donee shall be liable for them only if the gift has been made to defraud creditors.

          The gift shall always be presumed as having been made to defraud creditors when, at the time of bestowing it, the donor has not reserved to himself property sufficient to pay the debts contracted prior thereto.

          Although some boats, a fishing device with nets, a light-material warehouse erected on another's land, and the lot in litigation, are listed in the inventory contained in the said instrument, the fact is that when demand was made upon the debtor for the payment of his debt to Robledo, he was unable to pay it, and the said lot was levied upon and afterwards sold at public auction in satisfaction thereof.

          The indebtedness was contracted by Santiago Herrera in 1903, during his marriage and before he and his wife gave the said lot away; consequently, its payment is a charge against the conjugal partnership. (Civil Code, art. 1408.)

          Santiago Herrera was the lawful and absolute owner of the lot in litigation and his ownership is shown to have been recorded in the property registry of Manila, Tondo section, first inscription, No. 1340, in August, 1901. The entry discloses that the property was then free of all charge and encumbrance and that, on January 28, 1913, a note was therein made of the writ of execution issued against the said lot and warehouses, issued in the proceeding instituted by the creditor Robledo against the debtor Herrera, the unquestionable owner of the property levied upon. Moreover, the right of the judgment debtor to redeem the lot in litigation was purchased by the creditor Robledo for P85 on February 17, 1913, the date of the sale of the land at public auction.

          The appellant alleges that as she was a minor, her mother, Gregoria Tolentino, appeared before the notary to accept the said gift in the name of the appellant, and that since the execution of the instrument making such bestowal her mother has been in possession of the donated land and has been collecting the rents from the tenants occupying it.

          This allegation is unfounded and cannot be sustained. The instrument Exhibit A does not show that the plaintiff's mother appeared or that she accepted the said gift in the name of the plaintiff. Her verbal acceptance, if made, would not be sufficient, since the law requires that the acceptance shall be in writing either in a separate public instrument or in the instrument whereby the gift is made, requirement which do not appear to have been fulfilled in the present case. Neither is it true that the plaintiff was in possession and collected the rents of the lot in question from the tenants who were occupying it.

13

          The strangest and most peculiar feature of this case is the testimony given by Santiago Herrera himself, the husband of Basilia Tolentino, these two being the donors. This witness stated under oath of the instrument Exhibit A, although he had not read this document, because he did not know how to read and was only able to write his own name thereon; that at the time the instrument was executed, the notary Lara merely told him that the paper he was about to sign referred to the conjugal separation, and that Lara did not tell him that a gift of the lot was therein made to Hermogena Santos; that, according to the terms of the separation agreed upon between himself and his wife, he conveyed to the latter his fishing tackle and was to keep the real estate for himself; that the said tackle was then worth P300 and the lot P500; that, upon his separating from his wife on account of her infidelity, he received no money from her, and denied having received any sum whatever from the hands of Eugenio de Lara; that he did not remember having signed the instrument relative to the appointment of the property, the payment to him of P500 and the gift of the lot; that he identified his signature at page 24 of the record, but not that on page 25; that a daughter of his had by his wife was still living and that it was the latter who collected the rents of the said lot. The certificate of baptism of the girl Catalina, the daughter of the said spouses, was exhibited at the trial (Exhibit 3, p. 40 of the record).

          This testimony and the contents of the said instrument, if we except from this latter the agreements relating to the conjugal separation and the division of the partnership property, give rise to the presumption that this instrument with regard to all else therein contained was framed by the direction of the woman Basilia Tolentino without the knowledge or consent of her husband, Santiago Herrera, especially with respect to the gift of the lot, the subject matter of the claim presented by the donee.lawphil.net

          However, leaving aside these circumstantial details which cast doubt upon a large part of the said instrument, and restricting ourselves to the matter of the gift of the lot in litigation, it is unquestionable that this gift is null and void in itself and can produce no effect whatever, since it fails to comply with the requirements of article 633 of the Civil Code, and because the said gift was made without proper consideration and for the purpose of defrauding the defendant creditor, whom it is to be presumed the donors intended seriously to prejudice when bestowing the property upon the plaintiff (arts. 643 and 1297, Civil Code). This intended injury to the defendant would be iniquitously consummated, should the plaintiff obtain a decision contrary to the judgment appealed from, which, moreover, is in accordance with the law and the merits of the case.

          Therefore, in consideration of the foregoing reasons whereby the errors assigned to the lower court have been refuted, the said judgment should be and is hereby affirmed, and the defendants are absolved from the plaintiff, with the costs against the appellant.

B. NatureChapter 1, Section 2 PD 1529

Section 2. Nature of registration proceedings; jurisdiction of courts. Judicial proceedings for the registration of lands throughout the Philippines shall be in rem and shall be based on the generally accepted principles underlying the Torrens system.

Courts of First Instance shall have exclusive jurisdiction over all applications for original registration of title to lands, including improvements and interests therein, and over all petitions filed after original registration of title, with power to hear and determine all questions arising upon such applications or petitions. The court through its clerk of court shall furnish the Land Registration Commission with two certified copies of all pleadings, exhibits, orders, and decisions filed or issued in applications or petitions for land registration, with the exception of stenographic notes, within five days from the filing or issuance thereof.

Sandejas vs Robles 81 Phil 241 (no jurisdiction because in rem but the action was for a resolution of a contract.)

14

G.R. No. L-803             August 27, 1948

JOSE P. SANDEJAS, plaintiff-appellant, vs.ZACARIAS C. ROBLES, ELENA C. VDA. DE ROBLES and ROSARIO Y. SINGSON, defendants-appellees.

Benjamin H. Tirol, Corazon C. Miraflores and Orlando M. Jesena for appellant.W. E. Greenbaum and Luis G. Hofilena for appellee Rosario Y. Singson.M. F. Zamora and Jose C. Robles for appellee Zacarias C. Robles and Elena C. Vda. de Robles.

FERIA, J.:

This is an appeal from an order of the Court of First Instance of Iloilo dismissing the plaintiff's action upon motion of the defendant on the ground that it is barred by prior judgment.

The pertinent facts alleged in the complaint to which a motion to dismiss on the ground that the cause of action is barred by a prior judgment is filed, are those relating to the cause of action and the parties, because if they are the same as the cause of action and the parties in the prior judgment, or though the parties are different they represent the same interest, and the court rendering the prior judgment had jurisdiction over the subject matter and the parties, the subsequent action is barred by the prior judgment and should be dismissed.

In the present appeal, there is no question that the parties in the present and prior action are the same or represent the same interest, and that the cause of action in both are the same, that is, the performance or non-performance of the terms and conditions of a contract of sale for the enforcement or resolution thereof. They only question to be determined is whether the Court which has rendered the former judgment had jurisdiction over the subject matter and the parties.

The appellants contend that the lower erred in upholding the validity of the judgment of the Court of First Instance of Iloilo during the Japanese occupation, because: (1) "The said court had no jurisdiction to try civil case No. 21, much less to render the decision in question on October 2, 1944;" and (2) "That granting for the sake of argument that the puppet Court of First Instance of Iloilo had jurisdiction, yet such decision was rendered after having deprived plaintiff of his day in court and is therefore in violation of the due process clause of the Constitution.

As to the first question, the appellants do not question the ruling of this Supreme Court on the validity of the judgments rendered by the courts established in these Islands during the Japanese occupation laid down in Co Kim Cham vs. Valdez Tan Keh,1 Off. Gaz., 779; but they contend that, as the three parcels of land involved or sold in the contract of the sale resolved by the prior judgment were located in the Municipality of Passi, Province of Iloilo, and "the puppet Republic of the Philippines since the middle of the month of September, 1944, could no longer assert its authority over the major portion of the territory of Iloilo including the Municipality of Passi," then under the possession and control of the Panay guerrilla forces, the Court of First Instance of Iloilo which rendered the prior judgment had no jurisdiction over the res or the property because the action was quasi in rem, and therefore the said judgment is null and void.

This contention is premised on the wrong assumption that the action for the resolution of a contract of sale of a real property is an action quasi in rem. The action instituted by the appellees to resolve the contract of sale of said parcels of land, is in personam and not quasi in rem.

This Court quoted with approval in Grey Alba vs. Dela Cruz, 17 Phil., 61-62, the following definition of an action in personam:

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

15

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 strength of alleging facts which, if true, show an inconsistent interest, the proceeding is in rem. (Tyler vs. Judges, supra.).

According to American Jurisprudence, Vol. I page 435, "An action in personam has for its object a judgment against the person, as distinguished from a judgment against property, to determine its status. Whether a proceeding is in rem or in personam is determined by its nature and purpose, and by these only. A proceeding in personam is a proceeding to enforce personal rights and obligations brought against the person and based on jurisdiction of the person, although it may involve his right to, or the exercise of ownership of, specific property, or seek to compel him to control or dispose of it in accordance with the mandate of the court.

In the case of Banco Espanol-Filipino vs. Palanca, 37 Phil., 921, we held that "The action quasi in rem differs from the true action in rem in the circumstances that in the former an individual is named as defendant, and the purpose of the proceeding is to subject his interest therein to the obligation or lien burdening the property. All proceedings having for their sole object the sale or other disposition of the property of the defendant, whether by attachment, foreclosure, or other form of remedy, are in a general way thus designated. The judgment entered in these proceedings is conclusive only between the parties.

With respect to the second question, from the prior judgment marked as Exhibit A of the motion to dismiss, it appears that the appellants had submitted themselves to the jurisdiction of the Court of First Instance of Iloilo by filing their answers to the complaint through their Atty. Benjamin H. Tirol, the same attorney who represents them now; that they were notified of the date set for the hearing of the action, but when the case was called for trial on September 29, 1944, their attorney asked and obtained permission from the court to withdraw his appearance as attorney for the appellants stating as ground therefor that it was difficult to communicate with his clients, who went to Arevalo, a suburb of and distant of about six or seven kilometers from the Iloilo City, capital of the Province of Iloilo; that to give the appellants opportunity to be heard, the hearing was postponed and set on the afternoon of the same date; and that as they did not appear on the afternoon the case was heard and judgment was rendered on October 2, 1944, declaring the resolution of the contract between the parties and ordering the appellees to return to the appellants the sum of P5,723.60, received by the former from the latter as payment on account of the sum of P35,000 agreed upon as purchase price.

And, according to the allegations in appellants' complaint, on October 25, 1944, the appellants filed a motion for reconsideration which was denied by the court, and when they tried to appeal from the decision the court denied the appeal on November 23, 1944, and declared the judgement final and executory; and, on November 29, the appellants filed a motion for reconsideration of the order denying the appeal, and up to the filing of the complaint in the present case no resolution of the motion has been received by the appellants.

In view of the foregoing facts set forth in the decision Exhibit A and not contradicted or denied by the appellants, which show that the absence from the trial of the appellants was due to their own fault, appellants' contention that they were deprived of their day in court is untenable. The appeal is therefore dismissed. So ordered.

Paras, Pablo, Bengzon, Briones, Padilla and Tuason, JJ., concur.

Separate Opinions

PERFECTO, J., dissenting:

We dissent:

16

We are of the opinion that the appealed decision should be reversed and the lower court ordered to proceed with the case and render decision on the merits.

This stand is based on the reasons stated in our opinion in Co Kim Cham vs. Valdez Tan Keh,141 Off. Gaz., 779.

C. ProcedureSections 14 – 19 PD 1529

CHAPTER IIIORIGINAL REGISTRATION

IORDINARY REGISTRATION PROCEEDINGS

A. APPLICATIONS

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

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

(2) Those who have acquired ownership of private lands by prescription under the provision of existing laws.

(3) Those who have acquired ownership of private lands or abandoned river beds by right of accession or accretion under the existing laws.

(4) Those who have acquired ownership of land in any other manner provided for by law.

Where the land is owned in common, all the co-owners shall file the application jointly.

Where the land has been sold under pacto de retro, the vendor a retro may file an application for the original registration of the land, provided, however, that should the period for redemption expire during the pendency of the registration proceedings and ownership to the property consolidated in the vendee a retro, the latter shall be substituted for the applicant and may continue the proceedings.

A trustee on behalf of his principal may apply for original registration of any land held in trust by him, unless prohibited by the instrument creating the trust.

Section 15. Form and contents. The application for land registration shall be in writing, signed by the application or the person duly authorized in his behalf, and sworn to before any officer authorized to administer oaths for the province or city where the application was actually signed. If there is more than one applicant, the application shall be signed and sworn to by and in behalf of each. The application shall contain a description of the land and shall state the citizenship and civil status of the applicant, whether single or married, and, if married, the name of the wife or husband, and, if the marriage has been legally dissolved, when and how the marriage relation terminated. It shall also state the full names and addresses of all occupants of the land and those of the adjoining owners, if known, and, if not known, it shall state the extent of the search made to find them.

The application, shall, in form, be substantially as follows:

Republic of the PhilippinesCourt of First Instance of _________________

17

The undersigned, ____________________________________________________________hereby applies (or apply) to have the land hereinafter described brought under the operation of the Property Registration Decree, and to have the title thereto registered and confirmed:

AND DECLARE . . . . .

1. That the applicants/s is/are the owners of the land (by virtue of inheritance or deed of sale or conveyance and/or possession in accordance with Section 14 of said Decree), together with the building and improvements thereon, with the exception of the following:__________________________________________________________________ which is/are the property of _________________________ residing at _________________________ The said land, consisting of ____________________ parcel/s is/are situated, bounded and described as shown on the plan and technical descriptions attached hereto and made a part hereof, with the following exception:___________________________________________________________________

2. That said land at the last assessment for taxation was assessed at P ____, Philippine currency, and the buildings and other improvements at P ___________, Philippine currency.

3. That to the best of my/our knowledge and belief, there is no mortgage or encumbrance of any kind whatsoever affecting said land, nor any other person having any interest therein, legal or equitable, or in possession, other than as follows: _______________________________________________________________________________

4. That the applicant/s has/have acquired said land in the following manner: ________________________________

(Note: Refer to Sec. 14 of said Decree. State also whether the property is conjugal, paraphernal or exclusive property of the applicant/s)

5. That said land is occupied by the following person: _____________________________ ______________________________________________

6. That the names in full and addresses, as far as known to the undersigned, of the owners of all adjoining properties, of the persons mentioned in paragraphs 3 and 5, and of the persons shown on the plan as claimants, are as follows: ________________________________________________________________________________________

7. That the applicant/s is/are single or married to ____________________ (Note: if marriage has been legally dissolved, state when and how the marriage relation terminated.)_________________________________________________________________ _____________________

8. That the applicant's/s' full name, age, citizenship, residence, and postal address/es is/are as follows: ___________________________________________________________________

9. That (Note: If the land included in the application is bounded by a public or private way or road, there should be stated in this paragraph whether or not the applicant claims any and what land within the limits of the way or road and whether the applicant desires to have the line of the way or road determined.) ________________________________________ ___________________________

10. That the following documents are attached hereto and made a part hereof: ___________________________________ ________________________________

18

Signed at ___________________ this _____________________ day of ____________________, in the year nineteen hundred and ______________________.

__________________________Applicant

_________________________(Post Office Address)

REPUBLIC OF THE PHILIPPINES PROVINCE (OR CITY) OF _______________

On this _______________ day of _________________________,19 ________ personally appeared before me the above- named __________________________________________________ known to me to be the person/s who executed the foregoing application and made oath that the statements therein are true of his/their knowledge, information and belief.

The Residence Certificate/s ______________________ of the applicant/s ______________ was/were exhibited to me being No. _________________ issued at ___________________ dated ____________, 19 __________.

 

________________________

(Notary Public, or other Officerauthorized to administer oaths)

PTR NO. _________________

Section 16. Non-resident applicant. If the applicant is not a resident of the Philippines, he shall file with his application an instrument in due form appointing an agent or representative residing in the Philippines, giving his full name and postal address, and shall therein agree that the service of any legal process in the proceedings under or growing out of the application made upon his agent or representative shall be of the same legal effect as if made upon the applicant within the Philippines. If the agent or representative dies, or leaves the Philippines, the applicant shall forthwith make another appointment for the substitute, and, if he fails to do so the court may dismiss the application.

Section 17. What and where to file. The application for land registration shall be filed with the Court of First Instance of the province or city where the land is situated. The applicant shall file together with the application all original muniments of titles or copies thereof and a survey plan of the land approved by the Bureau of Lands.

19

The clerk of court shall not accept any application unless it is shown that the applicant has furnished the Director of Lands with a copy of the application and all annexes.

Section 18. Application covering two or more parcels. An application may include two or more parcels of land belonging to the applicant/s provided they are situated within the same province or city. The court may at any time order an application to be amended by striking out one or more of the parcels or by a severance of the application.

Section 19. Amendments. Amendments to the application including joinder, substitution, or discontinuance as to parties may be allowed by the court at any stage of the proceedings upon just and reasonable terms.

Amendments which shall consist in a substantial change in the boundaries or an increase in area of the land applied for or which involve the inclusion of an additional land shall be subject to the same requirements of publication and notice as in an original application.

Santiago vs Cruz GR L-6276; March 21, 1911 (joint application)

G.R. No. L-6276            March 21, 1911

TOMASA M. SANTIAGO, ET AL., petitioners-appellants, vs.MARCELA C. CRUZ, ET AL., opponents-appellants.

Ramon Salinas for petitioners-appellants.Eugenio Paguia for opponents-appellants.

CARSON, J.:

This is an appeal from a decree entered in the Court of Land Registration in a proceeding wherein the appellants sought to have title to the land described in the application adjudicated in their favor and a decree entered for its registry.

The applicants are the widow and minor children of one Simon Tecson, deceased, and claim title to the land in question under a deed of sale to him from Eduvigis Manikis, widow of Estanislao C. Cruz, deceased.

The objectors, who opposed the registry of the land in favor of the applicants in the court below, claim title to an undivided one-half interest in the land, as the sole heirs of Estanislao C. Cruz, deceased, through his brother Pedro C. Cruz, deceased, their common ancestor.

It was satisfactorily proven, and, indeed, practically agreed in the court below that the land in question was originally public land, conveyed to Estanislao C. Cruz, deceased, by Government grant in the year 1886; that it thereafter became the communal property of Estanislao C. Cruz and his wife, Eduvigis Manikis; that after the death of Estanislao C. Cruz, his widow executed a deed of sale of the land on the 19th of May, 1896, to Simon Tecson, deceased, the husband and father, respectively, of the applicants, and that from that date to the date of the filing of the application in this proceeding, December 2, 1908 (a period of more than ten years' duration), Tecson and the appellants have successively been in quiet, peaceable and uninterrupted possession, under a claim of ownership.

It was further practically agreed and satisfactorily proven in the court below, that at the time of the death of Estanislao C. Cruz, his estate and his widow were each entitled to an undivided one-half interest in the land in question, it being a part of the bienes gananciales (communal property); that the objectors in this proceeding are legitimate heirs of the estate of Estanislao C. Cruz, and his only heirs, if it be a fact that Pedro C. Cruz (the brother of Estanislao C. Cruz, through whom they claim their right of inheritance) was lawfully married to Petra, his alleged wife; but that if Pedro C. Cruz and Petra were not lawfully married, then the land in question, as a part of the estate of Estanislao C. Cruz, went, at his death, to his widow, in accordance with the laws touching the distribution of intestate estates.

20

The applicants contend that the evidence does not sustain a finding that Pedro C. Cruz and Petra, his alleged wife, were lawfully married; and that even if it be granted that they were, and that the objectors are the lawful heirs of Estanislao C. Cruz, through his brother Pedro C. Cruz, nevertheless, the admitted occupation of the land in question for a period of more than ten years, under a claim of ownership, based on the deed of sale executed by the widow of Estanislao C. Cruz, establishes a prescriptive title, valid even against the heirs of the estate of her deceased husband.

The court below found against the applicants on both contentions, and was of opinion that they are entitled to but an undivided one-half interest in the land in question, that being all that the widow owned at the time when she executed the deed of sale. We think that the opinion of the trial judge in this regard must be sustained.

We have carefully examined the evidence of record touching the marriage of Pedro C. Cruz and Petra, his wife, and we agree with the trial judge that the evidence upon which the applicants attempt to raise a question as to its legality is of the flimsiest character, and wholly insufficient to justify us in holding that the trial court erred in finding the existence of a lawful marriage. True, the evidence in support of the marriage (and we might here add of the birth and baptism of the offspring therefrom) lacks the confirmation which would be furnished by duly authenticated copies of the pertinent extract from the parish registers (libros canonicos) of the church of San Rafael, in the Province of Bulacan, wherein it is alleged the formal record of these events was kept, but we think that the other evidence of record satisfactorily establishes the fact of the marriage, and further establishes the legitimacy of the alleged offspring therefrom. This evidence was properly taken into consideration by the trial court, not only because no objection was offered to its introduction in the court below but also because it appears from the record that the parish registers, wherein it was alleged the above mentioned entries were made, have been destroyed. (Chua Soco vs. Veloso, 2 Phil. Rep., 658; Loper vs. Standard Oil Co., 5 Phil. Rep., 549; City of Manila vs. Cabangis, 10 Phil. Rep., 151; Bowler vs. Alcazar, 13 Phil. Rep., 282; Marella vs. Reyes, 12 Phil. Rep., 1.)

Under the provisions of article 1950 of the Civil Code a prescriptive title to real estate is not acquired by the mere possession thereof, under a claim of ownership, for a period of ten years, unless a claim of ownership, or a period o ten years, unless it was originally acquired "con justo titulo y buena fe" (with color o title and good faith). Good faith, in this connection, while it is always to be presumed in the absence of proof to the contrary, requires a well-founded belie that the person from whom title was received was himself the owner of the land, with the right to convey it. In the case at bar, it affirmatively appears that Simon Tecson, through whom applicants claim title, was well aware that the widow, Eduvigis Manikis, was only entitled in her own right to an undivided one-half interest in the land in question at the time of her husband's death, and that the other undivided one-half interest was the property o her deceased husband's estate, and, as such, of his heirs; it also appears that, although the fact that the Government grant of the land in question was made to and in the name of Estanislao C. Cruz was well known to Tecson, the original title deeds having been delivered to him when he purchased the land from the widow, nevertheless he took from his vendor a deed which falsely makes it appear that the grant had been made to the widow herself, this false recital manifestly having for its object the concealment of the fact that the vendor was entitled, in her own right, to only an undivided one-half interest in the land conveyed; and it further appears that some, if not all, of the heirs of the estate of the deceased husband were living in the vicinity wherein the transaction took place, and could hardly fail to have been known as such to the purchaser of the land had be made reasonable inquiry to satisfy himself as to their existence or nonexistence. Under these circumstances we think that the finding of the lower court against the existence of good faith in the original purchase — that is to say, of well-founded belief that the vendor was the owner of all the land which she undertook to sell him, and had the right to convey it — must be sustained.

The trial court, however, having properly found that the appellants are only entitled to an undivided one-half interest in the land in question, and that the objectors (opositores) are entitled to the remaining undivided one-half interest therein, thereupon improperly directed the registry of the land as the property of both the applicants and the objectors in the proportions indicated. Under the provisions

21

of section 19 of the Land Registration Act, which requires "That one or more tenants claiming undivided shares less than a fee simple in the whole land described in the application shall not make application except jointly with the other tenant owning undivided shares, so that the whole fee shall be represented in the action;" and under our ruling in the case of Tecson vs. Corporation de los PP. Dominicos, decided March 16, 19111 (with which compare Foss vs. Atkins, 201 Mass., 158; id., 204 Mass., 337), wherein we held that under the general provisions of the Act, the court has no jurisdiction to decree the registry of title in favor of an objector (opositor); it is quite clear that the application should have been dismissed, without prejudice to the right of the various owners of the undivided interest in the land, jointly to present a new application for registry.

Twenty days hereafter judgment will be entered reversing the decree entered in the lower court without costs to either party in this instance, and ten days thereafter the record will be returned to the court below where the proper decree will be entered in accordance herewith. It is so ordered.

San Juan De Dios Hospital vs Government; L-46239 (amendments)

G.R. No. L-46239             April 4, 1939

THE SAN JUAN DE DIOS HOSPITAL, applicant-appellee. THE GOVERNMENT OF THE PHILIPPINE ISLANDS, oppositor, vs.ROSENDO MARCOS, ET AL., petitioners-appellants.

Juan S. Rustia for appellants.Orense and Belmonte for appellee.No appearance for the other party.

IMPERIAL, J.:

This is an appeal by the petitioners from the orders of the Court of First Instance of Bulacan dated March 23 and 30, 1938, wherein said court held that it had no jurisdiction to take cognizance of, decide, and grant petitioners' motions praying that the final decree issued in the land registration case, original certificate of title No. 335 and transfer certificate of title No. 19645 be cancelled and in their stead another certificate of title be issued in their favor covering the land they were soliciting.

During the proceedings for registration in the former Court of Land Registration, in G.L.R.O. Record No. 7972, the petitioners filed a motion entitled "Adverse Claim" in which, citing the provisions of section 112 of Act No. 496, they asked that original certificate of title No. 335, issued in favor of San Juan de Dios Hospital, be set aside and another issued in their favor. This motion was subsequently amended by another in which it was alleged that the land covered by certificate of title No. 335 had been transferred by the San Juan de Dios Hospital to Arsenio de Castro and Tomas de Castro, in whose favor was issued transfer certificate of title No. 19645, and petitioners asked that this title be likewise cancelled and another issued in their favor. Described in the aforementioned titles is a parcel of agricultural land located in the barrio of Coloong, municipality of Polo, Province of Bulacan, having an area of 486,912 square meters. In support of their motions, petitioners alleged: that the San Juan de Dios Hospital is not, for has ever been, a juridical person and therefore is without personality to apply for the inscription of the land in its name; that the land registered in the name of the San Juan de Dios Hospital was the property of the United States of America, under the administration of the Government of the Philippine Islands, and now belongs to the Government of the Commonwealth of the Philippines who administers it for the benefit of its inhabitants; that the petitioners are the absolute owners of said land having possessed it for more than fifty years openly, peacefully and publicly, building their homes on it and keeping it in constant cultivation; that their possession of the land since time immemorial has conferred upon them a title by prescription; and that the final decree and the title in favor of the San Juan de Dios Hospital were issued erroneously through the ignorance and negligence of the public officials who intervened in the registration proceedings. The San Juan de Dios

22

Hospital filed a special appearance in which it impugned the jurisdiction of the court to act upon the motions, review the final decree and set aside the title already issued. Both parties also filed other pleadings which are immaterial in the decision of the case. The incident thus raised having been submitted, and considering the grounds alleged in petitioners' motions, the trial court issued the appealed order aforementioned, declaring itself without jurisdiction to grant the remedies asked in the motions.

1. The petitioners content in their first assignment of error that the lower court should have set their motions for hearing and should have permitted them to adduce evidence, instead of declaring itself without jurisdiction to consider and decide the motions. They insist that the San Juan de Dios Hospital was not a juridical person and therefore had no legal personality to apply for the inscription of the land, which was later registered in its name. This point could be settled by merely pointing out that the same question was already squarely raised at the hearing in the registration proceedings, and the then Court of Land Registration held in its decision that the San Juan de Dios Hospital was a juridical person and was entitled to apply for the inscription of the land. Both the decision rendered to this effect and the final decree issued thereafter have become final. It is obvious, therefore, that the personality of the San Juan de Dios Hospital is res adjudicata.

But, as lack of personality is tenaciously insisted on the ground that the San Juan de Dios Hospital is not a juridical person, we cite the following legal provisions to prove the contrary:

Article 35 of the Civil Code provides in part:

Art. 35. The following are juridical persons:

1. Corporations, associations, and foundations of the public interest recognized by law.

Their personality begins from the very moment at which, in accordance with law, they have been validly constituted.

Counsel for the petitioners, on page 3 of his brief, cited Exhibit B presented by the San Juan de Dios Hospital at the hearing of the registration case, which shows that even the former regime, back in April 26, 1825, regarded the San Juan de Dios Hospital as a juridical entity, with properties and income of its own, among which is the land in question.

Section 19 of Act No. 496, as amended, provides that persons claiming, singly or collectively, to own a real estate in fee simple, may apply for the registration of their title in accordance with the Torrens system. The word "persons" includes both natural and juridical persons. Being a foundation of public interest, the San Juan de Dios Hospital is a juridical person, in accordance with article 35 of the Civil Code, and had rights and personality of its own to apply for registration and obtain a decree and title.

The Government itself recognized the legal personality of the San Juan de Dios Hospital when promulgated Act No. 1724 approving and ratifying the agreement entered into by the Secretary of War of the United States, as representative of the Government of the Philippine Islands, and the Archbishop of Manila, as representative of the Roman Catholic Church. Its pertinent provisions read as follows:

Whereas certain controversies have arisen between the Roman Catholic Church and the Government of the Philippine Islands as to the title to various estates and properties and as to the right of possession and administration thereof; and

x x x           x x x           x x x

Whereas, for the purpose of ending these controversies, William H. Taft, as Secretary of War of the United States, representing the Government of the Philippine Islands, and Jeremiah J. Harty, archbishop of Manila, representing the Roman Catholic Church in the Philippine Islands, and Jeremiah J. Harty, archbishop of Manila, representing and

23

controlling a majority of the capital stock of the Banco Español-Filipino, did, on the eighth day of June, nineteen hundred and seven, enter into the following agreement determining and settling the controversies between the Roman Catholic Church and the Government of the Philippine Islands, and between the Banco Español-Filipino and the Government of the Philippines Islands, to wit:

This memorandum of agreement, entered into by Archbishop Harty, archbishop of Manila, representing the Roman Catholic Church in the Philippine Islands, and the secretary of War, representing the Government of the Philippine Islands, is intented to form the basis of a compromise of a number of controversies arising between the Roman Catholic Church and the Government of the Philippine Islands, and to end all such controversies.

The controversies arising are as follows:

First. The right of the Roman Catholic Church, on the one had, and the Philippine Government, on the other, to administer certain charitable trusts, and to take possession of, and assume control of, the following estates, to wit:

x x x           x x x           x x x

Second. The building, estates and hospital plant of San Juan de Dios, including all other estates or investments of said Hospital of San Juan de Dios.

x x x           x x x           x x x

Now, therefore, for the purpose of ending all these controversies, the following informal agreement is entered into, to be subject to the approval of the Philippine Commission, and to be carried into effect by the entry of consent decrees, in the proper courts, in such form as to confirm the titles in the persons by this agreement to take the respective properties, and by such legislation of the Philippine Commission as may be necessary to further confirm and put into execution said agreement, and also subject to the approval of the Secretary of War, and of Archbishop Harty, through his agent, Festus J. Wade, of the statutes of the bank as they shall be revised, such revision to contain a restriction on the amount of money to be loaned by the Bank on real estate security.

In consideration of the foregoing, and in the manner prescribed herein, the Archbishop of the diocese of Manila, for the Roman Catholic Church in the Philippine Islands, is to take possession, and hold in absolute title, free from all claims or demands of the Philippine Government, the land and property, real, personal and mixed, set forth and described under sections one, two, three, four, and five hereof, namely: Hospicio San Jose; San Juan de Dios; Colegio de San Jose; Hospital of San Jose in Cavite, and the Colegio Santa Isabela.

x x x           x x x           x x x

SECTION 1. The said informal agreement so entered into on behalf of the Government of the Philippine Islands by William H. Taft, Secretary of War, with Jeremiah J. Harty, Archbishop of Manila, on behalf of the Roman Catholic Church, and representing and controlling a majority of the capital stock of the Banco Español-Filipino, is hereby confirmed, ratified, and approved in all its parts.

x x x           x x x           x x x

SEC. 5. The Governor-General of the Philippines Islands is hereby authorized and directed, upon the entry of the judgments provided for in sections two and three of this Act, and upon the execution and delivery of the deed referred to in section four hereof, to execute proper conveyances of title to the Roman Catholic Church as represented by

24

the Archbishop of Manila, conveying all the right, title, and interest of the Government of the Philippine Islands in and to the following described property, to wit: The buildings foundation, and property, real, personal, and mixed, pertaining and belonging to the Hospicio de San Jose, the Hospital de San Juan de Dios, the Hospital de San Jose in Cavite, and the Colegio de Santa Isabel.

2. The petitioners contend that it was the duty of the court to set their motions for hearing and receive evidence in support of their allegations. We hold that since a special appearance was filed, impugning the jurisdiction of the court, this could not proceed without first deciding, as it did, the question of law raised in the motion. The special appearance was equivalent to a demurrer, the resolution of which required an hypothetical admission of the allegations in both motions.

3. The lower court did not err in declaring that it had no jurisdiction to grant the motions of the petitioners entitled "Adverse Claims." The motions asked for the review of the final decree and the setting aside of the titles that were subsequently issued, which is tantamount to annulling rights legally inscribed. The lower court had no jurisdiction to do this.

4. In their second assignment of error the petitioners allege that under the provisions of section 112 of Act No. 496, the lower court should have set the motions for hearing. Said provision of law reads as follows:

SEC. 112. No, erasure, alteration, or amendment shall be made upon the registration book after the entry of a certificate of title or of a memorandum thereon and the attestation of the same by the clerk or any register of deeds except by order of the court. Any registered owner or other person in interest may at any time apply by petition to the court, upon the ground that registered interests of any description, whether vested, contingent, expectant, or inchoate, have terminated and ceased; or that new interests have arisen or been created which do not appear upon the certificate; or that any error, omission, or mistake was made in entering a certificate or any memorandum thereon or on any duplicate certificate; or that the name of any person on the certificate has been changed; or that the registered owner has been married; or, if registered as married, that the marriage has been terminated; or that a corporation which owned registered land and has been dissolved has not conveyed the same within three years after its dissolution; or upon any other reasonable ground; and the court shall have jurisdiction to hear and determine the petition after notice to all parties in the interest, and may order the entry of a new certificate, the entry or cancellation of a memorandum upon a certificate, or grant any other relief upon such terms and conditions, requiring security if necessary, as it may deem proper: Provided, however, that this section shall not be construed to give the court authority to open the original decree of registration, and that nothing shall be done or ordered by the court which shall impair the title or other interest of a purchaser holding a certificate for value and in good faith, or his heirs or assigns, without his or their written consent.

Any petition filed under this section and all petitions and motion filed under the provisions of this Act after original registration shall be filed and entitled in the original case in which the decree of registration was entered.

It is a settled question that under said section 112, at final decree issued in a registration case cannot be reviewed on the pretext of introducing amendments or authorized alterations (Garcia vs. Reyes, 51 Phil., 409). The remedy sought by the petitioners was evidently tantamount to a review of the final decree and the setting aside of the original certificate of title. The final decree issue in the case, after the lapse of one year allowed by law for its review on the ground of fraud, and the original certificate of title issued, are incontrovertible and cannot now be successfully assailed by the petitioners (sec. 38 Act No. 496; De los Reyes vs. Paterno, 34 Phil., 420; Reyes and Nadres vs. Borbon and Director of Lands, 50

25

Phil., 791; Clemente and Pichay vs. Lucban and Domingo, 53 Phil., 931). Since the allegations in the motions are groundless and the petitioners are not entitled to the remedy prayed for, and the lower court, on the other hand, having no jurisdiction to take cognizance of the motions it committed no error in refusing to grant a hearing of the said motions upon the merits.

5. Counsel for the petitioners moved to strike out the special appearance filed by the San Juan de Dios Hospital, which the court denied. The petitioners assign his resolution as an error committed by the court. We hold that the motion to strike was correctly denied because, as has been said, the trial court was under a duty to determine the merits of the special appearance.

The appealed orders are affirmed, with costs of this instance against the petitioners and appellants. So ordered.

Director of Lands vs IAC 146 SCRA 509 (tacking, can a corp register?)

G.R. No. 73002 December 29, 1986

THE DIRECTOR OF LANDS, petitioner, vs.INTERMEDIATE APPELLATE COURT and ACME PLYWOOD & VENEER CO. INC., ETC., respondents.

D. Nacion Law Office for private respondent.

 

NARVASA, J.:

The Director of Lands has brought this appeal by certiorari from a judgment of the Intermediate Appellate Court affirming a decision of the Court of First Instance of Isabela, which ordered registration in favor of Acme Plywood & Veneer Co., Inc. of five parcels of land measuring 481, 390 square meters, more or less, acquired by it from Mariano and Acer Infiel, members of the Dumagat tribe.

The registration proceedings were for confirmation of title under Section 48 of Commonwealth Act No. 141 (The Public Land Act). as amended: and the appealed judgment sums up the findings of the trial court in said proceedings in this wise:

1. That Acme Plywood & Veneer Co. Inc., represented by Mr. Rodolfo Nazario is a corporation duly organized in accordance with the laws of the Republic of the Philippines and registered with the Securities and Exchange Commission on December 23, 1959;

2. That Acme Plywood & Veneer Co. Inc., represented by Mr. Rodolfo Nazario can acquire real properties pursuant to the provisions of the Articles of Incorporation particularly on the provision of its secondary purposes (paragraph (9), Exhibit 'M-l');

3. That the land subject of the Land Registration proceeding was ancestrally acquired by Acme Plywood & Veneer Co., Inc., on October 29, 1962, from Mariano Infiel and Acer Infiel, both members of the Dumagat tribe and as such are cultural minorities;

4. That the constitution of the Republic of the Philippines of 1935 is applicable as the sale took place on October 29, 1962;

5. That the possession of the Infiels over the land relinquished or sold to Acme Plywood & Veneer Co., Inc., dates back before the Philippines was discovered by Magellan as the ancestors of the Infiels have possessed and occupied the land from generation to generation until the same came into the possession of Mariano Infiel and Acer Infiel;

26

6. That the possession of the applicant Acme Plywood & Veneer Co., Inc., is continuous, adverse and public from 1962 to the present and tacking the possession of the Infiels who were granted from whom the applicant bought said land on October 29, 1962, hence the possession is already considered from time immemorial.

7. That the land sought to be registered is a private land pursuant to the provisions of Republic Act No. 3872 granting absolute ownership to members of the non-Christian Tribes on land occupied by them or their ancestral lands, whether with the alienable or disposable public land or within the public domain;

8. That applicant Acme Plywood & Veneer Co. Inc., has introduced more than Forty-Five Million (P45,000,000.00) Pesos worth of improvements, said improvements were seen by the Court during its ocular investigation of the land sought to be registered on September 18, 1982;

9. That the ownership and possession of the land sought to be registered by the applicant was duly recognized by the government when the Municipal Officials of Maconacon, Isabela, have negotiated for the donation of the townsite from Acme Plywood & Veneer Co., Inc., and this negotiation came to reality when the Board of Directors of the Acme Plywood & Veneer Co., Inc., had donated a part of the land bought by the Company from the Infiels for the townsite of Maconacon Isabela (Exh. 'N') on November 15, 1979, and which donation was accepted by the Municipal Government of Maconacon, Isabela (Exh. 'N-l'), during their special session on November 22, 1979.

The Director of Lands takes no issue with any of these findings except as to the applicability of the 1935 Constitution to the matter at hand. Concerning this, he asserts that, the registration proceedings have been commenced only on July 17, 1981, or long after the 1973 Constitution had gone into effect, the latter is the correctly applicable law; and since section 11 of its Article XIV prohibits private corporations or associations from holding alienable lands of the public domain, except by lease not to exceed 1,000 hectares (a prohibition not found in the 1935 Constitution which was in force in 1962 when Acme purchased the lands in question from the Infiels), it was reversible error to decree registration in favor of Acme Section 48, paragraphs (b) and (c), of Commonwealth Act No. 141, as amended, reads:

SEC. 48. The following described citizens of the Philippines, occupying lands of the public domain or claiming to own any such lands or an interest therein, but whose titles have not been perfected or completed, may apply to the Court of First Instance of the province where the land is located for confirmation of their claims, and the issuance of a certificate of title therefor, under the Land Registration Act, to wit:

xxx xxx xxx

(b) Those who by themselves or through their predecessors-in-interest have been in open, continuous, exclusive and notorious possession and occupation of agricultural lands of the public domain, under a bona fide claim of acquisition or ownership, for at least thirty years immediately preceding the filing of the application for confirmation of title except when prevented by war or force majeure. These shall be conclusively presumed to have performed all the conditions essential to a Government grant and shall be entitled to a certificate of title under the provisions of this chapter.

(c) Members of the National Cultural minorities who by themselves or through their predecessors-in-interest have been in open. continuous, exclusive and notorious possession and occupation of lands of the public domain suitable to agriculture, whether disposable or not, under a bona fide claim of ownership for at least 30 years shall be entitled to the rights granted in subsection (b) hereof.

The Petition for Review does not dispute-indeed, in view of the quoted findings of the trial court which were cited and affirmed by the Intermediate Appellate Court, it can no longer controvert before this

27

Court-the fact that Mariano and Acer Infiel, from whom Acme purchased the lands in question on October 29, 1962, are members of the national cultural minorities who had, by themselves and through their progenitors, possessed and occupied those lands since time immemorial, or for more than the required 30-year period and were, by reason thereof, entitled to exercise the right granted in Section 48 of the Public Land Act to have their title judicially confirmed. Nor is there any pretension that Acme, as the successor-in-interest of the Infiels, is disqualified to acquire and register ownership of said lands under any provisions of the 1973 Constitution other than Section 11 of its Article XIV already referred to.

Given the foregoing, the question before this Court is whether or not the title that the Infiels had transferred to Acme in 1962 could be confirmed in favor of the latter in proceedings instituted by it in 1981 when the 1973 Constitution was already in effect, having in mind the prohibition therein against private corporations holding lands of the public domain except in lease not exceeding 1,000 hectares.

The question turns upon a determination of the character of the lands at the time of institution of the registration proceedings in 1981. If they were then still part of the public domain, it must be answered in the negative. If, on the other hand, they were then already private lands, the constitutional prohibition against their acquisition by private corporations or associations obviously does not apply.

In this regard, attention has been invited to Manila Electric Company vs. Castro-Bartolome, et al, 1 where a similar set of facts prevailed. In that case, Manila Electric Company, a domestic corporation more than 60% of the capital stock of which is Filipino-owned, had purchased in 1947 two lots in Tanay, Rizal from the Piguing spouses. The lots had been possessed by the vendors and, before them, by their predecessor-in-interest, Olimpia Ramos, since prior to the outbreak of the Pacific War in 1941. On December 1, 1976, Meralco applied to the Court of First Instance of Rizal, Makati Branch, for confirmation of title to said lots. The court, assuming that the lots were public land, dismissed the application on the ground that Meralco, a juridical person, was not qualified to apply for registration under Section 48(b) of the Public Land Act which allows only Filipino citizens or natural persons to apply for judicial confirmation of imperfect titles to public land. Meralco appealed, and a majority of this Court upheld the dismissal. It was held that:

..., the said land is still public land. It would cease to be public land only upon the issuance of the certificate of title to any Filipino citizen claiming it under section 48(b). Because it is still public land and the Meralco, as a juridical person, is disqualified to apply for its registration under section 48(b), Meralco's application cannot be given due course or has to be dismissed.

Finally, it may be observed that the constitutional prohibition makes no distinction between (on the one hand) alienable agricultural public lands as to which no occupant has an imperfect title and (on the other hand) alienable lands of the public domain as to which an occupant has on imperfect title subject to judicial confirmation.

Since section 11 of Article XIV does not distinguish, we should not make any distinction or qualification. The prohibition applies to alienable public lands as to which a Torrens title may be secured under section 48(b). The proceeding under section 48(b) 'presupposes that the land is public' (Mindanao vs. Director of Lands, L-19535, July 30, 1967, 20 SCRA 641, 644).

The present Chief Justice entered a vigorous dissent, tracing the line of cases beginning with Carino in 1909 2thru Susi in 1925 3 down to Herico in 1980, 4 which developed, affirmed and reaffirmed the doctrine that open, exclusive and undisputed possession of alienable public land for the period prescribed by law creates the legal fiction whereby the land, upon completion of the requisite period ipso jure and without the need of judicial or other sanction, ceases to be public land and becomes private property. That said dissent expressed what is the better — and, indeed, the correct, view-becomes evident from a consideration of some of the principal rulings cited therein,

The main theme was given birth, so to speak, in Carino involving the Decree/Regulations of June 25, 1880 for adjustment of royal lands wrongfully occupied by private individuals in the Philippine Islands. It was ruled that:

28

It is true that the language of articles 4 and 5 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. ...

That ruling assumed a more doctrinal character because expressed in more categorical language, in Susi:

.... In favor of Valentin Susi, there is, moreover, the presumption juris et de jure established in paragraph (b) of section 45 of Act No. 2874, amending Act No. 926, that all the necessary requirements for a grant by the Government were complied with, for he has been in actual and physical possession, personally and through his predecessors, of an agricultural land of the public domain openly, continuously, exclusively and publicly since July 26, 1984, with a right to a certificate of title to said land under the provisions of Chapter VIII of said Act. So that when Angela Razon applied for the grant in her favor, Valentin Susi had already acquired, by operation of law not only a right to a grant, but a grant of the Government, for it is not necessary that a certificate of title should be issued in order that said grant may be sanctioned by the courts, an application therefore is sufficient, under the provisions of section 47 of Act No. 2874. If by a legal fiction, Valentin Susi had acquired the land in question by a grant of the State, it had already ceased to be of the public domain and had become private property, at least by presumption, of Valentin Susi, beyond the control of the Director of Lands. Consequently, in selling the land in question of Angela Razon, the Director of Lands disposed of a land over which he had no longer any title or control, and the sale thus made was void and of no effect, and Angela Razon did not thereby acquire any right. 6

Succeeding cases, of which only some need be mentioned, likeof Lacaste vs. Director of Lands, 7 Mesina vs. Vda. de Sonza, 8 Manarpac vs. Cabanatuan, 9 Miguel vs. Court of Appeals 10 and Herico vs. Dar, supra, by invoking and affirming the Susi doctrine have firmly rooted it in jurisprudence.

Herico, in particular, appears to be squarely affirmative: 11

.... Secondly, under the provisions of Republic Act No. 1942, which the respondent Court held to be inapplicable to the petitioner's case, with the latter's proven occupation and cultivation for more than 30 years since 1914, by himself and by his predecessors-in-interest, title over the land has vested on petitioner so as to segregate the land from the mass of public land. Thereafter, it is no longer disposable under the Public Land Act as by free patent. ....

xxx xxx xxx

As interpreted in several cases, when the conditions as specified in the foregoing provision are complied with, the possessor is deemed to have acquired, by operation of law, a right to a grant, a government grant, without the necessity of a certificate of title being issued. The land, therefore, ceases to be of the public domain and beyond the authority of the Director of Lands to dispose of. The application for confirmation is mere formality, the lack of which does not affect the legal sufficiency of the title as would be evidenced by the patent and the Torrens title to be issued upon the strength of said patent. 12

Nothing can more clearly demonstrate the logical inevitability of considering possession of public land which is of the character and duration prescribed by statute as the equivalent of an express grant from

29

the State than the dictum of the statute itself 13 that the possessor(s) "... shall be conclusively presumed to have performed all the conditions essential to a Government grant and shall be entitled to a certificate of title .... " No proof being admissible to overcome a conclusive presumption, confirmation proceedings would, in truth be little more than a formality, at the most limited to ascertaining whether the possession claimed is of the required character and length of time; and registration thereunder would not confer title, but simply recognize a title already vested. The proceedings would not originally convert the land from public to private land, but only confirm such a conversion already affected by operation of law from the moment the required period of possession became complete. As was so well put in Carino, "... (T)here 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."

If it is accepted-as it must be-that the land was already private land to which the Infiels had a legally sufficient and transferable title on October 29, 1962 when Acme acquired it from said owners, it must also be conceded that Acme had a perfect right to make such acquisition, there being nothing in the 1935 Constitution then in force (or, for that matter, in the 1973 Constitution which came into effect later) prohibiting corporations from acquiring and owning private lands.

Even on the proposition that the land remained technically "public" land, despite immemorial possession of the Infiels and their ancestors, until title in their favor was actually confirmed in appropriate proceedings under the Public Land Act, there can be no serious question of Acmes right to acquire the land at the time it did, there also being nothing in the 1935 Constitution that might be construed to prohibit corporations from purchasing or acquiring interests in public land to which the vendor had already acquired that type of so-called "incomplete" or "imperfect" title. The only limitation then extant was that corporations could not acquire, hold or lease public agricultural lands in excess of 1,024 hectares. The purely accidental circumstance that confirmation proceedings were brought under the aegis of the 1973 Constitution which forbids corporations from owning lands of the public domain cannot defeat a right already vested before that law came into effect, or invalidate transactions then perfectly valid and proper. This Court has already held, in analogous circumstances, that the Constitution cannot impair vested rights.

We hold that the said constitutional prohibition 14 has no retroactive application to the sales application of Binan Development Co., Inc. because it had already acquired a vested right to the land applied for at the time the 1973 Constitution took effect.

That vested right has to be respected. It could not be abrogated by the new Constitution. Section 2, Article XIII of the 1935 Constitution allows private corporations to purchase public agricultural lands not exceeding one thousand and twenty-four hectares. Petitioner' prohibition action is barred by the doctrine of vested rights in constitutional law.

xxx xxx xxx

The due process clause prohibits the annihilation of vested rights. 'A state may not impair vested rights by legislative enactment, by the enactment or by the subsequent repeal of a municipal ordinance, or by a change in the constitution of the State, except in a legitimate exercise of the police power'(16 C.J.S. 1177-78).

xxx xxx xxx

In the instant case, it is incontestable that prior to the effectivity of the 1973 Constitution the right of the corporation to purchase the land in question had become fixed and established and was no longer open to doubt or controversy.

Its compliance with the requirements of the Public Land Law for the issuance of a patent had the effect of segregating the said land from the public domain. The corporation's right to obtain

30

a patent for the land is protected by law. It cannot be deprived of that right without due process (Director of Lands vs. CA, 123 Phil. 919).<äre||anº•1àw> 15

The fact, therefore, that the confirmation proceedings were instituted by Acme in its own name must be regarded as simply another accidental circumstance, productive of a defect hardly more than procedural and in nowise affecting the substance and merits of the right of ownership sought to be confirmed in said proceedings, there being no doubt of Acme's entitlement to the land. As it is unquestionable that in the light of the undisputed facts, the Infiels, under either the 1935 or the 1973 Constitution, could have had title in themselves confirmed and registered, only a rigid subservience to the letter of the law would deny the same benefit to their lawful successor-in-interest by valid conveyance which violates no constitutional mandate.

The Court, in the light of the foregoing, is of the view, and so holds, that the majority ruling in Meralco must be reconsidered and no longer deemed to be binding precedent. The correct rule, as enunciated in the line of cases already referred to, is that alienable public land held by a possessor, personally or through his predecessors-in-interest, openly, continuously and exclusively for the prescribed statutory period (30 years under The Public Land Act, as amended) is converted to private property by the mere lapse or completion of said period, ipso jure. Following that rule and on the basis of the undisputed facts, the land subject of this appeal was already private property at the time it was acquired from the Infiels by Acme. Acme thereby acquired a registrable title, there being at the time no prohibition against said corporation's holding or owning private land. The objection that, as a juridical person, Acme is not qualified to apply for judicial confirmation of title under section 48(b) of the Public Land Act is technical, rather than substantial and, again, finds its answer in the dissent in Meralco:

6. To uphold respondent judge's denial of Meralco's application on the technicality that the Public Land Act allows only citizens of the Philippines who are natural persons to apply for confirmation of their title would be impractical and would just give rise to multiplicity of court actions. Assuming that there was a technical error not having filed the application for registration in the name of the Piguing spouses as the original owners and vendors, still it is conceded that there is no prohibition against their sale of the land to the applicant Meralco and neither is there any prohibition against the application being refiled with retroactive effect in the name of the original owners and vendors (as such natural persons) with the end result of their application being granted, because of their indisputable acquisition of ownership by operation of law and the conclusive presumption therein provided in their favor. It should not be necessary to go through all the rituals at the great cost of refiling of all such applications in their names and adding to the overcrowded court dockets when the Court can after all these years dispose of it here and now. (See Francisco vs. City of Davao)

The ends of justice would best be served, therefore, by considering the applications for confirmation as amended to conform to the evidence, i.e. as filed in the names of the original persons who as natural persons are duly qualified to apply for formal confirmation of the title that they had acquired by conclusive presumption and mandate of the Public Land Act and who thereafter duly sold to the herein corporations (both admittedly Filipino corporations duly qualified to hold and own private lands) and granting the applications for confirmation of title to the private lands so acquired and sold or exchanged.

There is also nothing to prevent Acme from reconveying the lands to the Infiels and the latter from themselves applying for confirmation of title and, after issuance of the certificate/s of title in their names, deeding the lands back to Acme. But this would be merely indulging in empty charades, whereas the same result is more efficaciously and speedily obtained, with no prejudice to anyone, by a liberal application of the rule on amendment to conform to the evidence suggested in the dissent in Meralco.

While this opinion seemingly reverses an earlier ruling of comparatively recent vintage, in a real sense, it breaks no precedent, but only reaffirms and re-established, as it were, doctrines the soundness of which has passed the test of searching examination and inquiry in many past cases.

31

Indeed, it is worth noting that the majority opinion, as well as the concurring opinions of Chief Justice Fernando and Justice Abad Santos, in Meralco rested chiefly on the proposition that the petitioner therein, a juridical person, was disqualified from applying for confirmation of an imperfect title to public land under Section 48(b) of the Public Land Act. Reference to the 1973 Constitution and its Article XIV, Section 11, was only tangential limited to a brief paragraph in the main opinion, and may, in that context, be considered as essentially obiter. Meralco, in short, decided no constitutional question.

WHEREFORE, there being no reversible error in the appealed judgment of the Intermediate Appellate Court, the same is hereby affirmed, without costs in this instance.

SO ORDERED.

Feria, Yap, Fernan, Alampay, Cruz, Paras and Feliciano, JJ., concur.

 

 

Separate Opinions

GUTIERREZ, JR., J., concurring:

I reiterate my concurrence in Meralco v. Castro-Bartolome, and, therefore, dissent here.

 

TEEHANKEE, C.J., concurring:

I am honored by my brethren's judgment at bar that my dissenting opinion in the June, 1982 Meralco and Iglesia ni Cristo cases, 1 which is herein upheld, "expressed what is the better. . . . and indeed the correct view." My dissent was anchored on the landmark 1909 case of Carino 2 through the 1925 case of Susi 3 and the long line of cases cited therein to the latest 1980 case of Herico 4 that "it is established doctrine....... that an open, continuous, adverse and public possession of a land of the public domain for the period provided in the Public Land Act provision in force at the time (from July 26, 1894 in Susi under the old law [this period was reduced to 'at least thirty years immediately preceding the filing of the application for confirmation of title' by amendment of Commonwealth Act No. 141, equivalent to the period of acquisitive prescription 5 ]) by a private individual personally and through his predecessors confers an effective title on said possessor, whereby the land ceases to be land of the public domain and becomes private property." I hereby reproduce the same by reference for brevity's sake. But since we are reverting to the old above-cited established doctrine and precedents and discarding the Meralco and Iglesia ni Cristo cases which departed therefrom in the recent past, I feel constrained to write this concurrence in amplification of my views and ratio decidendi.

Under the express text and mandate of the cited Act, such possessors "shall be conclusively presumed to have performed all the conditions essential to a Government grant and shall be entitled to a certificate of title under the provisions of this chapter. "

The Court thus held in Susi that under the presumption juris et de jure established in the Act, the rightful possessor of the public land for the statutory period "already acquired, by operation of law, not only a right to a grant, but a grant of the Government, for it is not necessary that certificate of title should be issued an order that said grant may be sanctioned by the courts, an application therefore is sufficient . . . . If by a legal fiction, Valentin Susi had acquired the land in question by a grant of the State, it had already ceased to be of the public domainand had become private property, at least by presumption, of Valentin Susi, beyond the control of the Director of Lands [and beyond his authority to sell to any other person]. " 6

The root of the doctrine goes back to the pronouncement of Justice Oliver Wendell Holmes for the U.S. Supreme Court in the 1909 case of Carino (the Igorot chief who would have been deprived of ancestral family lands by the dismissal of his application for registration) which reversed the dismissal

32

of the registration court (as affirmed by the Supreme Court) and adopted the liberal view that under the decree and regulations of June 25, 1880, "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, whenever made, was not to confer title, but simply to establish it, as already conferred by the decree, if not by earlier law."

The Court's decision at bar now expressly overturns the Meralco and related cases subsequent thereto which failed to adhere to the aforecited established doctrine dating back to 1909 and was consistently applied up to June 29, 1982 (when the Meralco decision was promulgated). We reaffirm the established doctrine that such acquisitive prescription of alienable public lands takes place ipso jure or by operation of law without the necessity of a prior issuance of a certificate of title. The land ipso jure ceases to be of the public domain and becomes private property, which may be lawfully sold to and acquired by qualified corporations such as respondent corporation. (As stressed in Herico supra, "the application for confirmation is a mere formality, the lack of which does not affect the legal sufficiency of the title.")

Such ipso jure conversion into private property of public lands publicly held under a bona fide claim of acquisition or ownership is the public policy of the Act and is so expressly stated therein. By virtue of such conversion into private property, qualified corporations may lawfully acquire them and there is no "alteration or defeating" of the 1973 Constitution's prohibition against corporations holding or acquiring title to lands of the public domain, as claimed in the dissenting opinion, for the simple reason that no public lands are involved.

It should be noted that respondent corporation purchased the land from the Infiels on October 16, 1962 under the aegis of the 1935 Constitution which contained no prohibition against corporations holding public lands (except a limit of 1,024 hectares) unlike the later 1973 Constitution which imposed an absolute prohibition. Even on the erroneous assumption that the land remained public land despite the Infiels' open possession thereof as owners from time immemorial, respondent corporation's lawful purchase from them of the land in 1962 and P 45million investments redounding presumably to the welfare and progress of the community, particularly the municipality of Maconacon, Isabela to which it donated part of the land for the townsite created a vested right which could not be impaired by the prohibition adopted eleven years later. But as sufficiently stressed, the land of the Infiels had been ipso jure converted into private land and they had a legally sufficient and transferable title conferred by the conclusive presumption of the Public Land Act (which needed only to be established in confirmation of title proceedings for formalization and issuance of the certificate of title) which they lawfully and validly transferred to respondent corporation.

In fact, the many amendments to the Act extending the period for the filing of such applications for judicial confirmation of imperfect and incomplete titles to alienable and disposable public lands expressly reiterate that it has always been the "policy of the State to hasten the settlement, adjudication and quieting of titles to [such] unregistered lands," i.e. to recognize that such lands publicly and notoriously occupied and cultivated under bona fide claim of acquisition or ownership have ipso jure been converted into private property and grant the possessors the opportunity to establish and record such fact. Thus, the deadline for the filing of such application which would have originally expired first on December 31, 1938 was successively extended to December 31, 1941, then extended to December 31, 1957, then to December 31, 1968, further extended to December 31, 1976 and lastly extended to December 31, 1987. 7

The cited Act's provision that only natural persons may apply thereunder for confirmation of title is in effect a technicality of procedure and not of substance. My submittal in Meralco, mutatis mutandis, is properly applicable: "The ends of justice would best be served, therefore, by considering the applications for confirmation as amended to conform to the evidence, i.e. as filed in the names of the original persons who as natural persons are duly qualified to apply for formal confirmation of the title that they had acquired by conclusive presumption and mandate of the Public Land Act and who

33

thereafter duly sold to the herein corporations (both admittedly Filipino corporations duly qualified to hold and own private lands) and granting the applications for confirmation of title to the private lands so acquired and sold or exchanged." 8 Indeed, then Chief Justice Enrique M. Fernando likewise dissented along the same line from the majority ruling therein and held: "I dissent insofar as the opinion of the Court would characterize such jurisdictional defect that the applicant was Meralco, a juridical person rather than the natural persons-transferors, under the particular circumstances of this case, as an insurmountable obstacle to the relief sought. I would apply by analogy, although the facts could be distinguished, the approach followed by us in Francisco v. City of Davao, where the legal question raised, instead of being deferred and possibly taken up in another case, was resolved. By legal fiction and in the exercise of our equitable jurisdiction, I feel that the realistic solution would be to decide the matter as if the application under Section 48(b) were filed by the Piguing spouses, who I assume suffer from no such disability." 9 Justice Vicente Abad Santos, now retired, while concurring in the procedural result, likewise, in effect dissented from the therein majority ruling on the question of substance, and stated his opinion that "the lots which are sought to be registered have ceased to be lands of the public domain at the time they were acquired by the petitioner corporation. They are already private lands because of acquisitive prescription by the predecessors of the petitioner and all that is needed is the confirmation of the title. Accordingly, the constitutional provision that no private corporation or association may hold alienable lands of the public domain is inapplicable. " 10

To my mind, the reason why the Act limits the filing of such applications to natural citizens who may prove their undisputed and open possession of public lands for the required statutory thirty-year period, tacking on their predecessors'-in-interest possession is that only natural persons, to the exclusion of juridical persons such as corporations, can actually, physically and in reality possess public lands for the required statutory 30-year period. That juridical persons or corporations cannot do so is obvious. But when the natural persons have fulfilled the required statutory period of possession, the Act confers on them a legally sufficient and transferable title. It is preferable to follow the letter of the law that they file the applications for confirmation of their title, although they have lawfully transferred their title to the land. But such procedural failure cannot and should not defeat the substance of the law, as stressed in the above-cited opinions, that the lands are already private lands because ofacquisitive prescription by the corporation's predecessors and the realistic solution would be to consider the application for confirmation as filed by the natural persons-transferors, and in accordance with the evidence, confirm their title to the private lands so converted by operation of law and lawfully transferred by them to the corporation. The law, after all, recognizes the validity of the transfer and sale of the private land to the corporation. It should not be necessary to go in a round-about way and have the corporation reassign its rights to the private land to natural persons-(as I understand), was done after the decision in the Meralco and Iglesia ni Cristo cases) just for the purpose of complying on paper with the technicality of having natural persons file the application for confirmation of title to the private land.

 

MELENCIO-HERRERA, J., dissenting:

Section 48 of the Public Land Act, in part, provides:

SEC. 48. The following described citizens of the Philippines, occupying lands of the public domain or claiming to own any such lands or an interest therein, but whose titles have not been perfected or completed, may apply to the Court of First Instance of the province where the land is located for confirmation of their claims and the issuance of a certificate of title therefor, under the Land Registration Act, to wit:

(a) ...

(b) Those who by themselves or through their predecessors in interest have been in open, continuous, exclusive, and notorious possession and occupation of agricultural lands of the public domain, under a bona fide claim of acquisition of ownership, for at least thirty years

34

immediately preceding the filing of the application for confirmation of title except when prevented by war or force majeure. These shall be conclusively presumed to have performed are the conditions essential to a Government grant and shall be entitled to a certificate of title under the provisions of this chapter.

(c) ...

Article XIV, Section 11, of the 1973 Constitution, in part, provides:

SEC. 11. .... No private corporation or association may hold alienable lands of the public domain except by lease not to exceed one thousand hectares in area; nor may any citizen hold such lands by lease in excess of five hundred hectares ....

It has to be conceded that, literally, statutory law and constitutional provision prevent a corporation from directly applying to the Courts for the issuance of Original Certificates of Title to lands of the public domain (Manila Electric Company vs. Castro-Bartolome, 114 SCRA 799; Republic vs. Villanueva, 114 SCRA 875; Republic vs. Court of Appeals, 119 SCRA 449; Iglesia ni Cristo vs. Hon. Judge, CFI of Nueva Ecija, Br. 1). It is my opinion that the literalism should be adhered to in this case.

The reasoning of the majority can be restated in simple terms as follows:

(a) The INFIELS can successfully file an application for a certificate of title over the land involved in the case.

(b) After the INFIELS secure a certificate of title, they can sell the land to ACME.

(c) As ACME can eventually own the certificate of title, it should be allowed to directly apply to the Courts for the Certificate of Title, thus avoiding the circuituous "literal" requirement that the INFIELS should first apply to the courts for the titles, and afterwards transfer the title to ACME.

The majority opinion, in effect, adopted the following excerpt from a dissent in Manila Electric Company vs. Castro-Bartolome (114 SCRA 799, 823 [1982]).

To uphold respondent judge's denial of Meralco's application on the technicality that the Public Land Act allows only citizens of the Philippines who are natural persons to apply for confirmation of their title would be impractical and would just give rise to multiplicity of court actions. Assuming that there was a technical error in not having filed the application for registration in the name of the Piguing spouses as the original owners and vendors,

still it is conceded that there is no prohibition against their sale of the land to the applicant Meralco

and neither is there any prohibition against the application being refiled with retroactive effect in the name of the original owners and vendors (as such natural persons) with the end result of their application being granted, because of their indisputable acquisition of ownership by operation of law and the conclusive presumption therein provided in their favor.

It should not be necessary to go through all the rituals at the great cost of refiling of all such applications in their names and adding to the overcrowded court dockets when the Court can after all these years dispose of it here and now." (Paragraphing supplied)

The effect is that the majority opinion now nullifies the statutory provision that only citizens (natural persons) can apply for certificates of title under Section 48(b) of the Public Land Act, as well as the constitutional provision (Article XIV, Section 11) which prohibits corporations from acquiring title to lands of the public domain. That interpretation or construction adopted by the majority cannot be justified. "A construction adopted should not be such as to nullify, destroy or defeat the intention of the legislature" (New York State Dept. of Social Services v. Dublino [UST 37 L. Ed 2d 688, 93 S Ct 2507; United States v. Alpers 338 US 680, 94 L Ed 457, 70 S Ct 352; cited in 73 Am Jur. 2nd., p. 351).

It has also been said that:

35

In the construction of statutes, the courts start with the assumption that the legislature intended to enact an effective law, and the legislature is not to be presumed to have done a vain thing in the enactment of a statute. Hence, it is a general principle that the courts should, if reasonably possible to do so interpret the statute, or the provision being construed, so as to give it efficient operation and effect as a whole. An interpretation should, if possible, be avoided, under which the statute or provision being construed is defeated, or as otherwise expressed, nullified, destroyed, emasculated, repealed, explained away, or rendered insignificant, meaningless, inoperative, or nugatory. If a statute is fairly susceptible of two constructions, one of which will give effect to the act, while the other will defeat it, the former construction is preferred. One part of a statute may not be construed so as to render another part nugatory or of no effect. Moreover, notwithstanding the general rule against the enlargement of extension of a statute by construction, the meaning of a statute may be extended beyond the precise words used in the law, and words or phrases may be altered or supplied, where this is necessary to prevent a law from becoming a nullity. Wherever the provision of a statute is general everything which is necessary to make such provision effectual is supplied by implication. (Pliakos vs. Illinois Liquor Control Com. 11 III 2d 456, 143 NE2d 47; cited in 73 AM Jur. 2d pp. 422-423)

The statutory provision and the constitutional prohibition express a public policy. The proper course for the Court to take is to promote in the fullest manner the policy thus laid down and to avoid a construction which would alter or defeat that policy.

In fine, I confirm my adherence to the ruling of this Court in Meralco vs. Hon. Castro-Bartolome, 114 SCRA 799 [1982] and related cases.

 

 

Separate Opinions

GUTIERREZ, JR., J., concurring:

I reiterate my concurrence in Meralco v. Castro-Bartolome, and, therefore, dissent here.

 

TEEHANKEE, C.J., concurring:

I am honored by my brethren's judgment at bar that my dissenting opinion in the June, 1982 Meralco and Iglesia ni Cristo cases, 1 which is herein upheld, "expressed what is the better. . . . and indeed the correct view." My dissent was anchored on the landmark 1909 case of Carino 2 through the 1925 case of Susi 3 and the long line of cases cited therein to the latest 1980 case of Herico 4 that "it is established doctrine....... that an open, continuous, adverse and public possession of a land of the public domain for the period provided in the Public Land Act provision in force at the time (from July 26, 1894 in Susi under the old law [this period was reduced to 'at least thirty years immediately preceding the filing of the application for confirmation of title' by amendment of Commonwealth Act No. 141, equivalent to the period of acquisitive prescription 5 ]) by a private individual personally and through his predecessors confers an effective title on said possessor, whereby the land ceases to be land of the public domain and becomes private property." I hereby reproduce the same by reference for brevity's sake. But since we are reverting to the old above-cited established doctrine and precedents and discarding the Meralco and Iglesia ni Cristo cases which departed therefrom in the recent past, I feel constrained to write this concurrence in amplification of my views and ratio decidendi.

Under the express text and mandate of the cited Act, such possessors "shall be conclusively presumed to have performed all the conditions essential to a Government grant and shall be entitled to a certificate of title under the provisions of this chapter. "

36

The Court thus held in Susi that under the presumption juris et de jure established in the Act, the rightful possessor of the public land for the statutory period "already acquired, by operation of law, not only a right to a grant, but a grant of the Government, for it is not necessary that certificate of title should be issued an order that said grant may be sanctioned by the courts, an application therefore is sufficient . . . . If by a legal fiction, Valentin Susi had acquired the land in question by a grant of the State, it had already ceased to be of the public domainand had become private property, at least by presumption, of Valentin Susi, beyond the control of the Director of Lands [and beyond his authority to sell to any other person]. " 6

The root of the doctrine goes back to the pronouncement of Justice Oliver Wendell Holmes for the U.S. Supreme Court in the 1909 case of Carino (the Igorot chief who would have been deprived of ancestral family lands by the dismissal of his application for registration) which reversed the dismissal of the registration court (as affirmed by the Supreme Court) and adopted the liberal view that under the decree and regulations of June 25, 1880, "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, whenever made, was not to confer title, but simply to establish it, as already conferred by the decree, if not by earlier law."

The Court's decision at bar now expressly overturns the Meralco and related cases subsequent thereto which failed to adhere to the aforecited established doctrine dating back to 1909 and was consistently applied up to June 29, 1982 (when the Meralco decision was promulgated).<äre||anº•1àw> We reaffirm the established doctrine that such acquisitive prescription of alienable public lands takes place ipso jure or by operation of law without the necessity of a prior issuance of a certificate of title. The land ipso jure ceases to be of the public domain and becomes private property, which may be lawfully sold to and acquired by qualified corporations such as respondent corporation. (As stressed in Herico supra, "the application for confirmation is a mere formality, the lack of which does not affect the legal sufficiency of the title.")

Such ipso jure conversion into private property of public lands publicly held under a bona fide claim of acquisition or ownership is the public policy of the Act and is so expressly stated therein. By virtue of such conversion into private property, qualified corporations may lawfully acquire them and there is no "alteration or defeating" of the 1973 Constitution's prohibition against corporations holding or acquiring title to lands of the public domain, as claimed in the dissenting opinion, for the simple reason that no public lands are involved.

It should be noted that respondent corporation purchased the land from the Infiels on October 16, 1962 under the aegis of the 1935 Constitution which contained no prohibition against corporations holding public lands (except a limit of 1,024 hectares) unlike the later 1973 Constitution which imposed an absolute prohibition. Even on the erroneous assumption that the land remained public land despite the Infiels' open possession thereof as owners from time immemorial, respondent corporation's lawful purchase from them of the land in 1962 and P 45million investments redounding presumably to the welfare and progress of the community, particularly the municipality of Maconacon, Isabela to which it donated part of the land for the townsite created a vested right which could not be impaired by the prohibition adopted eleven years later. But as sufficiently stressed, the land of the Infiels had been ipso jure converted into private land and they had a legally sufficient and transferable title conferred by the conclusive presumption of the Public Land Act (which needed only to be established in confirmation of title proceedings for formalization and issuance of the certificate of title) which they lawfully and validly transferred to respondent corporation.

In fact, the many amendments to the Act extending the period for the filing of such applications for judicial confirmation of imperfect and incomplete titles to alienable and disposable public lands expressly reiterate that it has always been the "policy of the State to hasten the settlement, adjudication and quieting of titles to [such] unregistered lands," i.e. to recognize that such lands publicly and notoriously occupied and cultivated under bona fide claim of acquisition or ownership

37

have ipso jure been converted into private property and grant the possessors the opportunity to establish and record such fact. Thus, the deadline for the filing of such application which would have originally expired first on December 31, 1938 was successively extended to December 31, 1941, then extended to December 31, 1957, then to December 31, 1968, further extended to December 31, 1976 and lastly extended to December 31, 1987. 7

The cited Act's provision that only natural persons may apply thereunder for confirmation of title is in effect a technicality of procedure and not of substance. My submittal in Meralco, mutatis mutandis, is properly applicable: "The ends of justice would best be served, therefore, by considering the applications for confirmation as amended to conform to the evidence, i.e. as filed in the names of the original persons who as natural persons are duly qualified to apply for formal confirmation of the title that they had acquired by conclusive presumption and mandate of the Public Land Act and who thereafter duly sold to the herein corporations (both admittedly Filipino corporations duly qualified to hold and own private lands) and granting the applications for confirmation of title to the private lands so acquired and sold or exchanged." 8 Indeed, then Chief Justice Enrique M. Fernando likewise dissented along the same line from the majority ruling therein and held: "I dissent insofar as the opinion of the Court would characterize such jurisdictional defect that the applicant was Meralco, a juridical person rather than the natural persons-transferors, under the particular circumstances of this case, as an insurmountable obstacle to the relief sought. I would apply by analogy, although the facts could be distinguished, the approach followed by us in Francisco v. City of Davao, where the legal question raised, instead of being deferred and possibly taken up in another case, was resolved. By legal fiction and in the exercise of our equitable jurisdiction, I feel that the realistic solution would be to decide the matter as if the application under Section 48(b) were filed by the Piguing spouses, who I assume suffer from no such disability." 9 Justice Vicente Abad Santos, now retired, while concurring in the procedural result, likewise, in effect dissented from the therein majority ruling on the question of substance, and stated his opinion that "the lots which are sought to be registered have ceased to be lands of the public domain at the time they were acquired by the petitioner corporation. They are already private lands because of acquisitive prescription by the predecessors of the petitioner and all that is needed is the confirmation of the title. Accordingly, the constitutional provision that no private corporation or association may hold alienable lands of the public domain is inapplicable. " 10

To my mind, the reason why the Act limits the filing of such applications to natural citizens who may prove their undisputed and open possession of public lands for the required statutory thirty-year period, tacking on their predecessors'-in-interest possession is that only natural persons, to the exclusion of juridical persons such as corporations, can actually, physically and in reality possess public lands for the required statutory 30-year period. That juridical persons or corporations cannot do so is obvious. But when the natural persons have fulfilled the required statutory period of possession, the Act confers on them a legally sufficient and transferable title. It is preferable to follow the letter of the law that they file the applications for confirmation of their title, although they have lawfully transferred their title to the land. But such procedural failure cannot and should not defeat the substance of the law, as stressed in the above-cited opinions, that the lands are already private lands because ofacquisitive prescription by the corporation's predecessors and the realistic solution would be to consider the application for confirmation as filed by the natural persons-transferors, and in accordance with the evidence, confirm their title to the private lands so converted by operation of law and lawfully transferred by them to the corporation. The law, after all, recognizes the validity of the transfer and sale of the private land to the corporation. It should not be necessary to go in a round-about way and have the corporation reassign its rights to the private land to natural persons-(as I understand), was done after the decision in the Meralco and Iglesia ni Cristo cases) just for the purpose of complying on paper with the technicality of having natural persons file the application for confirmation of title to the private land.

 

MELENCIO-HERRERA, J., dissenting:

38

Section 48 of the Public Land Act, in part, provides:

SEC. 48. The following described citizens of the Philippines, occupying lands of the public domain or claiming to own any such lands or an interest therein, but whose titles have not been perfected or completed, may apply to the Court of First Instance of the province where the land is located for confirmation of their claims and the issuance of a certificate of title therefor, under the Land Registration Act, to wit:

(a) ...

(b) Those who by themselves or through their predecessors in interest have been in open, continuous, exclusive, and notorious possession and occupation of agricultural lands of the public domain, under a bona fide claim of acquisition of ownership, for at least thirty years immediately preceding the filing of the application for confirmation of title except when prevented by war or force majeure. These shall be conclusively presumed to have performed are the conditions essential to a Government grant and shall be entitled to a certificate of title under the provisions of this chapter.

(c) ...

Article XIV, Section 11, of the 1973 Constitution, in part, provides:

SEC. 11. .... No private corporation or association may hold alienable lands of the public domain except by lease not to exceed one thousand hectares in area; nor may any citizen hold such lands by lease in excess of five hundred hectares ....

It has to be conceded that, literally, statutory law and constitutional provision prevent a corporation from directly applying to the Courts for the issuance of Original Certificates of Title to lands of the public domain (Manila Electric Company vs. Castro-Bartolome, 114 SCRA 799; Republic vs. Villanueva, 114 SCRA 875; Republic vs. Court of Appeals, 119 SCRA 449; Iglesia ni Cristo vs. Hon. Judge, CFI of Nueva Ecija, Br. 1). It is my opinion that the literalism should be adhered to in this case.

The reasoning of the majority can be restated in simple terms as follows:

(a) The INFIELS can successfully file an application for a certificate of title over the land involved in the case.

(b) After the INFIELS secure a certificate of title, they can sell the land to ACME.

(c) As ACME can eventually own the certificate of title, it should be allowed to directly apply to the Courts for the Certificate of Title, thus avoiding the circuituous "literal" requirement that the INFIELS should first apply to the courts for the titles, and afterwards transfer the title to ACME.

The majority opinion, in effect, adopted the following excerpt from a dissent in Manila Electric Company vs. Castro-Bartolome (114 SCRA 799, 823 [1982]).

To uphold respondent judge's denial of Meralco's application on the technicality that the Public Land Act allows only citizens of the Philippines who are natural persons to apply for confirmation of their title would be impractical and would just give rise to multiplicity of court actions. Assuming that there was a technical error in not having filed the application for registration in the name of the Piguing spouses as the original owners and vendors,

still it is conceded that there is no prohibition against their sale of the land to the applicant Meralco

and neither is there any prohibition against the application being refiled with retroactive effect in the name of the original owners and vendors (as such natural persons) with the end result of their application being granted, because of their indisputable acquisition of ownership by operation of law and the conclusive presumption therein provided in their favor.

39

It should not be necessary to go through all the rituals at the great cost of refiling of all such applications in their names and adding to the overcrowded court dockets when the Court can after all these years dispose of it here and now." (Emphasis supplied)

The effect is that the majority opinion now nullifies the statutory provision that only citizens (natural persons) can apply for certificates of title under Section 48(b) of the Public Land Act, as well as the constitutional provision (Article XIV, Section 11) which prohibits corporations from acquiring title to lands of the public domain. That interpretation or construction adopted by the majority cannot be justified. "A construction adopted should not be such as to nullify, destroy or defeat the intention of the legislature" (New York State Dept. of Social Services v. Dublino [UST 37 L. Ed 2d 688, 93 S Ct 2507; United States v. Alpers 338 US 680, 94 L Ed 457, 70 S Ct 352; cited in 73 Am Jur. 2nd., p. 351).

It has also been said that:

In the construction of statutes, the courts start with the assumption that the legislature intended to enact an effective law, and the legislature is not to be presumed to have done a vain thing in the enactment of a statute. Hence, it is a general principle that the courts should, if reasonably possible to do so interpret the statute, or the provision being construed, so as to give it efficient operation and effect as a whole. An interpretation should, if possible, be avoided, under which the statute or provision being construed is defeated, or as otherwise expressed, nullified, destroyed, emasculated, repealed, explained away, or rendered insignificant, meaningless, inoperative, or nugatory. If a statute is fairly susceptible of two constructions, one of which will give effect to the act, while the other will defeat it, the former construction is preferred. One part of a statute may not be construed so as to render another part nugatory or of no effect. Moreover, notwithstanding the general rule against the enlargement of extension of a statute by construction, the meaning of a statute may be extended beyond the precise words used in the law, and words or phrases may be altered or supplied, where this is necessary to prevent a law from becoming a nullity. Wherever the provision of a statute is general everything which is necessary to make such provision effectual is supplied by implication. (Pliakos vs. Illinois Liquor Control Com. 11 III 2d 456, 143 NE2d 47; cited in 73 AM Jur. 2d pp. 422-423)

The statutory provision and the constitutional prohibition express a public policy. The proper course for the Court to take is to promote in the fullest manner the policy thus laid down and to avoid a construction which would alter or defeat that policy.

In fine, I confirm my adherence to the ruling of this Court in Meralco vs. Hon. Castro-Bartolome, 114 SCRA 799 [1982] and related cases.

Aguilar vs Caogdan; 105 Phil 661 (NOTICE, jurisdiction)

G.R. No. L-12580             April 30, 1959

TOMASA AGUILAR, ET AL., plaintiffs-appellees, vs.EMILIANO CAOAGDAN, ET AL., defendants-appellants.

Primicias and del Castillo for appellees.Maximino G. LLorente for appellants.

BAUTISTA ANGELO, J.:

Januario Hermitano, as grantee of original plaintiff Tomasa Aguilar, who died pendente lite, seeks to recover from defendants the possession of the portions of land they are occupying, plus damages representing the value of the produce of the land since he acquired it to the time they are surrendered to him. Alberta Aguilar, as heir of Tomasa Aguilar, likewise seeks to recover from defendants damages

40

representing the value of the produce of the land from 1947, when defendants took possession thereof, until it was sold to Januario Hermitano.

Plaintiff's action is based on the claim that the land in question originally belonged to Tomasa Aguilar to whom was issued Transfer Certificate of Title No. 10499 of the land records of the province of Tarlac; that when Aguilar died on August 4, 1952, it was inherited by her only heir Alberta Aguilar; and that the property was later sold to Januario Hermitano, who is now the present owner thereof.

Defendants seek to defeat the action of plaintiffs by claiming that the certificate of title issued to the predecessor in interest of Januario Hermitano is null and void because it was issued by a court that had no jurisdiction over the land and, therefore, the title upon which the action of plaintiffs is based is also null and void.

The trial court overruled the claim of defendants and sustained the action of plaintiffs. It ordered defendants to vacate the portions of land occupied by them and to pay plaintiffs damages representing the value of the produce of the land since they took possession thereof in 1947 until its possession is actually surrendered to Januario Hermitano.

The facts of this case are not disputed. They appear in the decision of the trial court as follows:

The registered land in question is the same identical property object of Registration Case No. 494 of this Court, G.L.R.O. Record No. 15951, filed in 1919, wherein the Director of Lands was the principal oppositor claiming the land as part of the public domain. The applicants therein were the spouses Simon Castro y Rufo and Tomasa Aguilar. In 1924, this Court rendered therein a decision declaring the land in question a part of the public domain. However, on appeal by the applicants, our Supreme Court, in 1926, reversed the decision of this lot covered by Plan Psu-15730, with the exception of the Canoac Creek, in favor of the applicants. In 1927, the corresponding decree and title was accordingly issued to the applicants (Original Certificate of Title No. 19960—Exhibit "A"; Records of Registration Case No. 494—Exhibit "L"). Said certificate of title was cancelled in 1936 and, in lieu thereof, Transfer Certificate of Title No. 10499 (Exhibit "B") was duly issued in the name of original plaintiff Tomasa Aguilar, who died on August 4, 1952. Before she died, however, she sold pendente life the land in question to plaintiff Januario Hermitano, and by virtue of said sale Transfer Certificate of Title No. 10499 was cancelled and, in lieu thereof, Transfer Certificate of Title No. 15763 (Exhibit "C") was issued in favor of Januario Hermitano on April 8, 1953.

Sometime before the commencement of this case, the defendants had filed individual free applications with the Bureau of Lands over several lots comprised within Plan Ps-84 (Exhibit "4") covering a big mass of land situated in Mangatarem, Pangasinan. The Bureau of Lands, however, in January to March, 1947, after due investigation and relocation of the registered property in question, ordered the exclusion from the respective free patent applications of the defendants (Exhibits "E", "E-1" to "E-31") of all portions thereof that where included by the Bureau of Lands from the respective free patent applications of the defendants, containing a total area of 419,824 square meters, more or less, are part and parcel of the registered land in question, (Exhibits "D" and "D-1"). Notwithstanding the aforesaid action of the Bureau of Lands, the defendants still insist that the several lots applied for by them in their respective individual free patent applications are part of the public domain. They also insist that the land applied for by them are actually situated within the municipality of Mangatarem, Province of Pangasinan, and, therefore, outside the territorial jurisdiction of this Court. It is this alleged fact, on which the defendants based their contention that this Court, acting as a land registration court, had no jurisdiction to decree the original registration of the land in question, because the jurisdiction of the Court in registration proceedings is confined and limited only to the territorial limits of this province. In contending that the title to the land in question was procured by the original registered owners in bad faith, the defendants claimed that they were not personally notified of the initial registration proceedings in the aforementioned Registration Case No. 494 and that they were misled and deceived by the pendency of another registration case filed by the

41

applicants before the Court of First Instance of Pangasinan over a bigger mass of land which includes the several portions now in dispute.

Appellants claim that the decree issued in Registration Case No. 4940 of the Court of First Instance of Tarlac in 1919, which is more than 30 years upon the filing of the complaint, adjudicating the land in question to Januario Hermitano's predecessor in interest is invalid for the reason that the court that had issued the decree had no jurisdiction to act on the case. In support of this claim, appellants advance the following reasons:

1. When the petition for registration of the land in question was filed in the Court of First Instance of Tarlac in 1919, there was already pending in the Court of First Instance of Pangasinan another registration case involving a bigger portion of land which embraces certain portion of the land subject of the Tarlac registration case, it being the theory of applicants that the Pangasinan court acquired original jurisdiction to the exclusion of all other courts with respect to the land covered by the registration case;

2. Appellants or their predecessor in interest were not included in the notice of the initial of the registration case pending in the Tarlac court and, therefore, were not personally notified of the proceedings as required by law; and

3. A bigger portion of land which one Antonio Fuster sought to register in her name in a later registration case before the Court of First Instance of Pangasinan and which happens to embrace the portions now in dispute was subsequently declared public land by the Supreme Court in G.R. No. 40129.

The first ground has no merit. It appears that the Pangasinan court of first instance dismissed the registration case originally filed by appellees when it found that the portions of the land covered by it which are now the subject of this case were actually situated within the municipality of San Clemente, province of Tarlac, and the dismissal was without prejudice. This dismissal has the effect of relinquishing the jurisdiction originally acquired by the Court of First Instance of Pangasinan and of transferring it to the court of Tarlac which is the proper court to take cognizance of the case. The fact that the registration case in Tarlac was filed sometime before the dismissal of the Pangasinan case can have no legal adverse consequence. On the contrary, it was rectification of an error committed as to venue for indeed the court that should take cognizance of this registration case is that which has territorial jurisdiction over the property. This court is the Court of First Instance of Tarlac. Thus, Section 10, Act No. 2347 provides that "all jurisdiction and power heretofore conferred by Act Numbered Four Hundred and Ninety-Six and its amendments upon the Court of Land Registration and upon the land registration Judges, are hereby conferred upon the Courts of First Instance and judges thereof, of the provinces in which the land which is to be registered is situate." (Emphasis supplied.)

With regard to the second ground, it is true that appellants were not personally notified of the pendency of the present registration case even if they were actually occupying, as they claim, portions of the land, but such procedural defect cannot affect the jurisdiction of the court because registration proceedings have the nature of actions in rem. This Court has held time and again that lack of personal notice in a registration proceeding to persons who may claim certain right or interest in the property cannot vitiate or invalidate the decree or title issued therein because proceedings to register land under Act No. 496 are in rem and not in personam.

A land registration proceeding is in rem, and therefore the decree of registration is binding upon and conclusive against all persons including the Government and its branches, irrespective of whether or not they were personally notified of the filing of the application for registration or have appeared and filed an answer to said application, because all interested parties are considered as notified by the publication required by law. (Soroñgon vs. Makalintal, 80 Phil., 259: See also Roxas vs. Enriquez, 20 Phil., 31; Alba vs. De la Cruz, 17 Phil., 49; Alcantara, et al. vs. De la Paz, et al., 92 Phil., 796; Sepagan vs. Dacillo, 63 Phil., 412; Castelo vs. Director of Lands, 48 Phil., 589.)

42

Moreover, it appears that appellants based their right to the land merely on the applications for homestead patent they filed with the Bureau of Lands which were then under investigation when the registration case was filed in the Court of First Instance of Tarlac wherein the Bureau of Lands was made party respondent. This Bureau filed an opposition to the registration claiming that the land subject of the registration was a portion of the public domain, but its opposition was overruled. As a result, the Bureau of lands ordered a relocation of the portions covered by the applications of appellants and, once relocated, they were ordered excluded from the land covered by the registration case. It can therefore be said that appellants were already indirectly represented in the registration case by the Bureau of Lands because their interest in the land can be considered as derivative of the Bureau's claim that it belong to the public domain.

But what makes the claim of appellants legally futile is that they are raising the nullity or invalidity of the decree and title of appellees over the property in question after the lapse of more than 30 years, which certainly can not be done considering the purpose of our Torrens system. As this Court has aptly said: "When once a decree of registration is made under the Torrens system and the time has passed within which that decree may be questioned, the title is perfect and cannot later be questioned. . . . The very purpose of the Torrens system would be destroyed if the same land may be subsequently brought under a second action for registration" (Reyes and Nadres vs. Borbon and Director of Lands, 50 Phil., 791, 792).

As the land in dispute is covered by plaintiff's Torrens certificate of Title and was registered in 1914, the decree of registration can no longer be impugned on the ground of fraud, error or lack of notice to defendant, as more than one year has already elapsed from the issuance and entry of the decree. Neither could the decree be collaterally attacked by any person claiming title to, or interest in, the land prior to the registration proceedings. (Soroñgon vs. Makalintal, 45 Off. Gaz. 3819.) (J.M. Tuason & Co., Inc. vs. Quirino Bolaños, 95 Phil., 106).

We also find no merit in the third ground, considering the express provision of Section 45 of Act No. 496 to the effect that land once registered shall be and always remain registered, title thereto becoming indefeasible after the lapse of one year. As this Court has said: "No rule is better settled in this jurisdiction than the one which prohibits the changing, altering or modifications of a decree in a land registration proceeding under the Torrens system after the lapse of one year" (Director of Lands vs. Gutierrez David, 50 Phil., 797). Following this ruling we may say that the inclusion, perhaps inadvertently, of the portion of land here in dispute in the Fuster case cannot have the effect of nullifying a decree issued in a previous registration case giving to appellants a Torrens title to the land. This is more so considering what said Section 45 provides: "The obtaining of a decree of registration and the entry of a certificate of title shall be regarded as an agreement running with the land, and binding upon the applicant and all successors in title that the land shall be and always remain registered land, and subject to the provisions of this Act and all Acts amendatory thereof."

Wherefore, the decision appealed from is affirmed, with costs against appellants.

D. Motions to Dismiss/Res judicataAbellera v Farol 74 Phil 285

G.R. No. L-48480             July 30, 1943

FABIAN B. S. ABELLERA, petitioner, vs.MEYNARDO M. FAROL, ET AL., respondents.

Fabian B.S. Abellera in his own behalf.Pedro C. Quinto and Agaton R. Yaranon for respondents.

BOCOBO, J.:

43

Whether in a cadastral case, the judge may upon motion of adverse claimants order the cancellation of the claimant's answer and keep the latter from introducing evidence to prove his ownership because the case is barred by a prior judgment, is the legal question at issue in this case. An order to that effect issued by the Court of First Instance of La Union, is impugned by Fabian B.S. Abellera in a petition for a writ of certiorari.

Abellera, in a previous case concerning the same real estate involved herein, sued Hermegildo Balanag and others who are either the same parties in this case or the latter's predecessors in interest, alleging ownership of the land. But his complaint was dismissed by the Court of First Instance on two grounds: (1) prescription in favor of defendants; and (2) the deed of donation of these lands to him had not been formally accepted according to Article 633 of the Civil Code. Upon appeal to this Court, the judgment of the trial court was affirmed on the second ground aforementioned (Abellera vs. Balanag G.R. No. 11970, promulgated March 22, 1918, and reported in 37 Phil. 865).

It appears in that decision of this Court that after the perfection of the appeal, Abellera executed a public document formally accepting the donation of the land, and presented and deed of acceptance together with proofs of notification of acceptance to the donor, as ground for new trial. This Court held that this was not newly-discovered evidence, and that Abellera had not acquired title to the hacienda until the execution of the deed of acceptance and the notification thereof to donor. This Court added:

So that whether rights he may have to institute and maintain a new action of ejectment in reliance upon his claim that he has acquired title to the hacienda, since the date of the dismissal of this action, it is clear that the present action was properly dismissed on the ground of failure of proof of title in the plaintiff at the time when the action was instituted and later when judgment of dismissal was entered by the trial court.

In July of 1918, or four months after the above-mentioned decision of this Court, petitioner herein brought another action for recovery of the land against the same defendants in the previous case. The second suit was later dismissed by the Court of First Instance and transferred to cadastral case No. 5 which included the hacienda in question that had in the meantime been subdivided into lots. When the cadastral case came up before the Hon. Meynardo M. Farol at Aringay, La Union, in July 1941, Fabian B.S. Abellera appeared as claimant while Narciso de Guzman and others appeared as adverse claimant. The latter through counsel moved that Abellera's claim over the lots concerned be dismissed on the grounds of res judicata and prescription.

A careful examination of the decision of this Court in the previous case (37 Phil., 865) convinces us that there is no res judicata. We merely held that Abellera had not acquired title to the hacienda until the execution of the deed of acceptance and the notification thereof, and we clearly refused to prevent Abellera from instituting a new action based upon his assertion that he had acquired title to the estate since the dismissal of his original action.

The other ground for the motion for dismissal, prescription, is not involved in the present proceedings.

The next question is: Did the cadastral court, on the ground of res judicata, have any power to entertain the motion to dismiss Abellera's claim and bar him from presenting evidence to prove his ownership of these lots?

Rule 132 of the Rules of Court provides:

These rules shall not apply to land registration, cadastral and election cases, naturalization and insolvency proceedings, and other cases not herein provided for, except by analogy or in a suppletory character and whenever practicable and convenient.

The Rules of Court may be applied in cadastral cases when two conditions are present: (1) analogy or need to supplement the cadastral law, and (2) practicability and convenience.

If the nature and objective of the cadastral scheme are kept in view, a motion to dismiss in a cadastral case on the ground of prior judgment would seem to be out of place. The Government initiates a

44

cadastral case, compelling all claimants in a municipality to litigate against one another regarding their respective claims of ownership. By this plan, all the private lands in a town are registered in one single collective proceeding. Thus, the piece-meal and isolated registration of lands, so inadequate in more ways than one, is avoided. The principal aim is to settle as much as possible all disputes over land and to remove all clouds over land titles, as far a practicable, in a community. To attain this purpose, the cadastral court should allow all claimants ample freedom to ventilate whatever right they may assert over real estate, permitting them, in keeping with the law of evidence, to offer proofs in support of their allegations. To countenance the contrary opinion, by suppressing the presentation of evidence in support of claims, would but serve to perpetuate conflicts over land, for such stifled affirmations of ownership will fester like wounds unskillfully treated. No sufficient leeway having been give all claimants to demonstrate the strength and consistently of their alleged rights, the stability of decrees of title is jeopardized.

In Haw Pia vs. Roman A. Cruz (G.R. No. 48506), we declared that the Court of First Instance in a cadastral proceeding cannot appoint a receiver because its jurisdiction is special and limited. We declined in that case to apply the new Rules of Court by analogy.

We are, therefore, of the opinion that while in a cadastral case res judicata is available to a claimant in order to defeat the alleged rights of another claimant, nevertheless prior judgment can not set up in a motion to dismiss.

The order appealed from is hereby reversed. Petitioner herein shall in the cadastral proceedings be allowed to present evidence to prove his claim over the lots in question. With costs against the adverse claimants who are respondents herein. So ordered.

Yulo, C.J., Moran and Ozaeta, JJ. concur.

Separate Opinions

PARAS, J., dissenting:

Years ago a judge of first instance said that res adjudicata cannot be set up as a defense in land registration proceedings. On appeal this Court held:

A final judgment in an ordinary civil case determining the ownership of certain land is res adjudicata in a registration proceedings when the parties and the property are the same as in the former case. (Menor vs.Quintana, 56 Phil., 657.)

This doctrine is a reiteration of that laid down in Verzosa vs. Nicolas, 29 Phil., 425, and Santiago vs. Santos, 54 Phil. 619, which stated:

A decision in ejectment bars a loser from opposing registration under Act No. 496 by the prevailing party.

When the same parties have heretofore litigated over the same land for the recovery of real property, the judgment in that case (48 Phil., 567) constitutes res adjudicata in proceedings for registration of the land. A party cannot by varying the form of action escape the operation of the principle that one and the same cause of action shall not be twice litigated.

In a revindicatory actions it was declared that the plaintiffs had no right to the land sued for. In a subsequent action some of the former or successful plaintiffs sought to recover various portions of the same land from certain individuals to whom such portions had been deeded by the principal defendant in the prior case. Held: Judgment in the first case was conclusive against the plaintiffs in the second case. (Baguinguito vs. Rivera, 56 Phil., 423.)

The answers in a cadastral proceedings partake of an action to recover title, as real rights are claimed therein. (Dais vs. Court of First Instance of Capiz, 51 Phil., 896)

45

The reason for the application of the rule must lie in the fact that actions and proceedings are analogous in so far as the Court is therein called upon to adjudicate land in favor of any of the conflicting parties or claimants.

The parcels of land involved in the instant case had been litigated between the same parties since the year 1914. The petitioner here, who was plaintiff in the case of Abellera vs. Balanag (37 Phil., 865), alleged that the defendants had been possessing the land since 1907. They are in fact still in possession thereof. Notwithstanding the decision of this Court in 1918 which affirmed the judgment of the lower court in the aforesaid case absolving the defendants-respondents from the complaint on the ground that the plaintiff-petitioner had failed to show title in his favor, the majority are now allowing the same parties to continue their odyssey in court.

I dissent because in my opinion Rule 132 in connection with Rule 8 of the Rules of Court, instead of prohibiting, expressly authorizes the lower court in land registration or cadastral proceedings to entertain a motion for dismissal on the ground of res adjudicata or prescription. Of course the dismissal of petitioner's claim will not necessarily or automatically mean adjudication of title to the individual respondents, but it will certainly facilitate the consideration of their claims which cease to be contested. Prompt disposal of cases or such claims is the main purpose of the said rules. Let there be no retrogression in the application of sound rules and doctrines.

The decision in Abellera vs. Balanag (37 Phil. 865) is on the merits and not one without prejudice to the filing of a new action against the same defendants. The dispositive part reads as follows:

Twenty days hereafter let judgment be entered affirming the judgment of dismissal in the court below, with the costs of this instance against the appellant, and ten days thereafter let the record be returned to the court wherein it originated. So ordered.

It must be borne in mind that the documentary title on which the plaintiff relied covers a large area of land and the defendants are occupying only small portions thereof. The new action contemplated must therefore refer to the remaining unoccupied portion, should any question be raised in relation thereto. And if the lower court had erred is granting the motion for dismissal, the remedy would have been an appeal from the said order.

Daquis v Bustos 94 Phil 913

G.R. No. L-6669             May 3, 1954

PEDRO DAQUIS, plaintiff-appellant, vs.MAXIMO BUSTOS, ET AL., defendants-appellees.

Santos K. Maranan for appellant.Ignacio Lugtu for appellees.

JUGO, J.:

This is an appeal from the final order of the Court of First Instance of Nueva Ecija, in which the appellant raises only questions of law. From said order, we gather the following facts, which are not disputed:

On September 21, 1921, Homestead Patent No. 3236 was issued to Pedro Daquis, plaintiff in Civil Case No. 1032 of the said court, and appellant herein, covering Lot No. 1662 of the Cadastral Survey of Muñoz, Nueva Ecija. This patent was filed and registered in the office of the Register of Deeds of said province, who, on November 6, 1921 issued to Pedro Daquis the corresponding Original Certificate of Title No. 1073.

46

On January 19, 1922, Daquis filed with said court in cadastral proceeding of Muñoz an answer in which he alleged that he had acquired said lot by virtue of the homestead patent above mentioned and prayed that same be adjudicated to him and his wife Feliciana Quiambao.

On March 9, 1922, Daquis filed another answer of the same tenor.

On September 6, 1926, Daquis, in an instrument acknowledged before Notary Public Ignacio Castelo, conveyed by way of absolute sale said lot to Maximo Bustos, defendant in said case and appellee herein, for the sum of P4,450.00.

On the next day, September 7, 1926, Bustos filed with the court of first instance of Nueva Ecija his cadastral answer claiming ownership of the lot in question by virtue of the purchase evidenced by said document, and prayed that the lot be adjudicated to him and his wife Elvira Buenaventura.

On the same day, Bustos, with the approval of Daquis, declared for tax purposes said property in his name by means of an affidavit of transfer of real property of the same date.

On June 23, 1934, the Chief of the General Land Registration Office in Manila issued an order directing the Register of Deeds of Nueva Ecija to cancel Original Certificate of Title No. 1073, and in lieu thereof issued a new Transfer Certificate of Title to Maximo Bustos and Elvira Buenaventura, pursuant to the order of Judge Enrique V. Filamor of the Court of First Instance of Nueva Ecija, dated November 18, 1932, in the cadastral proceedings.

On June 30, 1934, Transfer Certificate of title No. 8310 was issued by the Register of Deeds to the spouses Bustos and Buenaventura.

On September 24, 1952, Daquis filed a complaint with the court of first instance of Nueva Ecija, presided over by Judge L. Pasicolan, praying that the transferor's affidavit, dated September 7, 1926, and the Transfer Certificate of Title No. 8310 be canceled, and he, the plaintiff, be declared the owner of said Lot No. 1662, and that the defendants, the spouses Bustos and Buenaventura, be sentenced to pay jointly and severally plaintiff Daquis the sum of P20,000.00 as damages, plus the costs of the suit.

The defendants, Bustos and his wife, filed a motion to dismiss, based on the ground that the cause of action was barred by a prior judgment and by the statute of limitations.

The court of first instance dismissed the complaint. Daquis appealed to this Court, and in his brief makes the following assignment of errors:

I

The lower court erred in dismissing the complaint of the plaintiff-appellant on the ground that the present action is barred by a prior judgment.

II

The lower court erred in holding that the sale of lot No. 1662 covered by Homestead Patent No. 3236 and Original Certificate of Title No. 1073, which is now being assailed and impugned as null and void, was clearly settled in cadastral case . . . and that the matter must now be regarded to all intents and purposes as res adjudicata.

III

The lower court erred in holding that in the determination of the conflicting claims to the land in question the court had no occasion or need to inquire into the validity of the first title No. 1073, as the issue was not the indefeasibility of a Torrens Title acquired under the homestead patents.

The theory of the applicant is that, in the cadastral proceedings, the court of first instance could not nullify or cancel the certificate of title issued as a consequence of the homestead patent and order the issuance of a transfer certificate of title in favor of the Bustos spouses, for the reason that said

47

certificate of title issued to the homestead patentee was just as indefeasible as any other Torrens Certificate of Title. The only defect of this theory is that the court did not order the cancellation or nullification of either the patent or the corresponding certificate of title, but based the issuance of the transfer certificate of title in favor of the Bustos spouses on the sale of the land made by Daquis to said spouses, as evidenced by the transferor's affidavit and the declaration in favor of the Bustos spouses made with the consent of Daquis. The court below, far from annulling the patent and the certificate of title of Daquis, impliedly but necessarily recognized them, for Daquis could not have sold the property to Bustos without possessing the patent and the Torrens Certificate of Title.

However, Daquis contends that said sale was made four years, eleven months, and fifteen days after the issuance of the patent and the certificate of title, or, in other words, fifteen days short before the expiration of the five-year period after the issuance, in violation of Section 116 of Act No. 2874, which read as follows:

SEC. 116. Land acquired under the free patent or homestead provisions shall not be subject to encumbrance or alienation from the date of the approval of the application and for a term of five years from and after the date of issuance of the patent of grant, nor shall they become liable to the satisfaction of any debt contracted prior to the expiration of said period; but the improvements or crops on the land may be mortgaged or pledged to qualified persons, associations, or corporations.

In the first place, the decision of Judge Filamor in favor of the Bustos spouses was rendered on November 18, 1932, but the complaint in the present case (Civil Case No. 1032 of the court of first instance of Nueva Ecija) was filed on November 24, 1952, or more than twenty years after the rendition of the decision of Judge Filamor had become final for more than nineteen years before the complaint seeking its annulment was filed.

Even assuming that Judge Filamor's decision erroneously declared the sale valid, such error, not being jurisdictional, could have been corrected only by a regular appeal. Decisions, erroneous or not, become final after the period fixed by law; litigations would be endless; no questions would be finally settled; and titles to property would become precarious if the losing party were allowed to reopen them at any time in the future.

In view of the foregoing, the order appealed from is affirmed with costs against the appellant. It is so ordered.

E. Evidence RequiredRepublic v Lee 197 SCRA 13

G.R. No. L-64818 May 13, 1991

REPUBLIC OF THE PHILIPPINES, petitioner, vs.MARIA P. LEE and INTERMEDIATE APPELLATE COURT, respondents.

Pedro M. Surdilla for private respondent.

 

FERNAN, C.J.:p

In a land registration case, does the bare statement of the applicant that the land applied for has been in the possession of her predecessors-in- interest for more than 20 years constitute the "well-nigh incontrovertible" and "conclusive" evidence required in proceedings of this nature? This is the issue to be resolved in the instant petition for review.

48

On June 29, 1976, respondent Maria P. Lee filed before the then Court of First Instance (now Regional Trial Court) of Pangasinan, an application 1 for registration in her favor of a parcel of land consisting of 6,843 square meters, more or less, located at Mangaldan, Pangasinan.

The Director of Lands, in representation of the Republic of the Philippines, filed an opposition, alleging that neither the applicant nor her predecessors-in-interest have acquired the land under any of the Spanish titles or any other recognized mode for the acquisition of title; that neither she nor her predecessors-in-interest have been in open, continuous, exclusive and notorious possession of the land in concept of owner at least thirty (30) years immediately preceding the filing of the application; and that the land is a portion of the public domain belonging to the Republic of the Philippines. 2

After trial, the Court of First Instance 3 rendered judgment on December 29, 1976, disposing as follows:

WHEREFORE, pursuant to the Land Registration Law, Act No. 496, as amended by Republic Acts Nos. 1942 and 6236, the Court hereby confirms the title of the applicants over the parcel of land described in Plan Psu-251940 and hereby adjudicates the same in the name of the herein applicants, spouses Stephen Lee and Maria P. Lee, both of legal age, Filipino citizens and residents of Dagupan City, Philippines, as their conjugal property.

Once this decision becomes final, let the corresponding decree and title issue therefor.

SO ORDERED. 4

The Republic of the Philippines appealed to the then Intermediate Appellate Court (now Court of Appeals), which however affirmed the lower court's decision in toto on July 29, 1983. 5

Hence, this petition based on the following grounds: 6

The Intermediate Appellate Court erred:

A. IN NOT FINDING THAT THE RESPONDENT MARIA P. LEE HAS FAILED TO ESTABLISH BY CONCLUSIVE EVIDENCE HER FEE SIMPLE TITLE OR IMPERFECT TITLE WHICH ENTITLES HER TO REGISTRATION EITHER UNDER ACT NO. 496, AS AMENDED (LAND REGISTRATION ACT) OR SECTION 48 (B), C. A. NO. 141, AS AMENDED (PUBLIC LAND ACT);

B. IN GIVING WEIGHT AND CREDENCE TO THE CLEARLY INCOMPETENT, SELF-SERVING AND UNRESPONSIVE TESTIMONY OF RESPONDENT THAT THE SPOUSES URBANO DIAZ AND BERNARDA VINLUAN HAD BEEN IN POSSESSION OF THE PROPERTY FOR MORE THAN 20 YEARS LEADING TO REGISTRATION, THEREBY DEPRIVING THE STATE OF ITS PROPERTY WITHOUT DUE PROCESS;

C. IN ORDERING REGISTRATION SIMPLY BECAUSE PETITIONER FAILED TO ADDUCE EVIDENCE TO REBUT RESPONDENT'S EVIDENCE, WHICH, HOWEVER, STANDING ALONE, DOES NOT MEET THE QUANTUM OF PROOF—WHICH MUST BE CONCLUSIVE—REQUIRED FOR REGISTRATION;

D. IN NOT FINDING THAT RESPONDENT HAS MISERABLY FAILED TO OVERTHROW THE PRESCRIPTION THAT THE LAND IS PUBLIC LAND BELONGING TO THE STATE.

Private respondent, on the other hand, contends that she was able to prove her title to the land in question through documentary evidence consisting of Deeds of Sale and tax declarations and receipts as well as her testimony that her predecessors-in-interest had been in possession of the land in question for more than 20 years; that said testimony, which petitioner characterizes as superfluous and uncalled for, deserves weight and credence considering its spontaneity; that in any event, the attending fiscal should have cross-examined her on that point to test her credibility; and that, the

49

reason said fiscal failed to do so is that the latter is personally aware of facts showing that the land being applied for is a private land. 7

We find for petitioner Republic of the Philippines.

The evidence adduced in the trial court showed that the land in question was owned by the spouses Urbano Diaz and Bernarda Vinluan, who on August 11, 1960, sold separate half portions thereof to Mrs. Laureana Mataban and Mr. Sixto Espiritu. On March 18, 1963, and July 30, 1963, respectively, Mrs. Mataban and Mr. Espiritu sold their half portions to private respondent Maria P. Lee. Private respondent had the property recorded for taxation purposes in her name and that of her husband Stephen Lee, paying taxes thereon on March 25, 1975 and March 9, 1976 for the same years.

At the time of the filing of the application for registration on June 29, 1976, private respondent had been in possession of the subject area for about thirteen (13) years. She, however, sought to tack to her possession that of her predecessors-in-interest in order to comply with the requirement of Section 48 (b) of commonwealth Act No. 141, as amended, to wit:

(b) Those who by themselves or through their predecessors in interest have been in open, continuous, exclusive and notorious possession and occupation of agricultural lands of the public domain. under a bona fide claim of acquisition of ownership, since June 12, 1945, or earlier, immediately preceding the filing of the applications for confirmation of title," except when prevented by war or force majeure. These shall be conclusively presumed to have performed all the conditions essential to a Government grant and shall be entitled to a certificate of title under the provisions of this Chapter.

Private respondent's testimony on her predecessors-in-interest's possession is contained in a one-page declaration given before a commissioner on December 22, 1976. It reads in full as follows: 8

Commissioner: Atty. Surdilla, you can now present your evidence.

Atty. Surdilla: I am presenting the applicant, your Honor.

Commissioner: Swearing under oath the applicant.

Atty. Surdilla:

Q Please state your name and other personal circumstances.

A Maria P. Lee, of legal age, Filipino citizen, married to Stephen Lee, proprietor, and resident of Dagupan City.

Q Are you the applicant in this case now?

A Yes, sir, including that of my husband, Stephen Lee.

Q From whom did you acquire said property, subject of registration now?

A From Mr. Sixto Espiritu and Mrs. Laureana T. Mataban, sir.

Q Do you have evidence of such acquisition of yours over said property?

A Yes, sir.

Q Showing to you these documents styled as Deed of Absolute Sale dated March 18, 1963 and also Deed of Absolute Sale dated July 30, 1963, what can you say to them?

A The deed of sale dated March 18, 1963 is the conveyance to us by Mrs. Laureana T. Mataban over the 1/2 portion of the property and the deed of sale dated July 30, 1963 likewise refers to sale of the 1/2 portion of the property by Sixto Espiritu to us, sir.

50

Atty. Surdilla: At this juncture, may I pray that said Deeds of Absolute Sale adverted to above be marked as Exhibits "I" and "J", your Honor.

Commissioner: Please mark them accordingly.

Q Do you know from whom did Mr. Sixto Espiritu and Mrs. Laureana Mataban (your vendors) acquired likewise the property sought by you to be registered?

A Yes, sir. They purchased it from the spouses Urbano Diaz and Bernarda Vinluan who possessed the same for more than 20 years.

Q Showing to you this document styled as Deed of Absolute Sale, dated August 11, 1970, is this the sale adverted or referred by you?

A Yes, sir.

Atty. Surdilla: At this juncture, may I pray that said deed be marked as Exhibit "H", your Honor.

Commissioner: Please mark it.

Q Who is in possession of the property now? What is the nature thereof?

A I and my husband are in possession of the property, which possession tacked to that of our predecessors-in-interest is adverse, continuous, open, public, peaceful and in concept of owner, your Honor.

Q Whose name/names is the property declared for taxation purposes?

A We spouses Stephen Lee and Maria P. Lee, sir.

Atty. Surdilla: At this juncture, may I pray, sir, that Tax Declaration Nos. 22253 and 24126, be marked as Exhibits "K" and "K-1", respectively.

Commissioner: Please mark them accordingly.

Q Who has been paying taxes over the property?

A We the spouses Stephen Lee and myself, sir.

Atty. Surdilla: At this juncture, may I pray that Official Receipts Nos. H-6048922 and G-9581024, dated March 9, 1976 and March 25, 1975 be marked as Exhibits "L" and 'L-1",' respectively.

Commissioner: Please mark them accordingly.

Q Is the property ever mortgaged or encumbered in the bank or private person/persons?

A No sir. It is free from liens and encumbrances.

That's all, your Honor.

The most basic rule in land registration cases is that "no person is entitled to have land registered under the Cadastral or Torrens system unless he is the owner in fee simple of the same, even though there is no opposition presented against such registration by third persons. . . . In order that the petitioner for the registration of his land shag be permitted to have the same registered, and to have the benefit resulting from the certificate of title, finally, issued, the burden is upon him to show that he is the real and absolute owner, in fee simple." 9

Equally basic is the rule that no public land can be acquired by private persons without any grant, express or implied, from government. A grant is conclusively presumed by law when the claimant, by

51

himself or through his predecessors-in-interest, has occupied the land openly, continuously, exclusively, and under a claim of title since July 26, 1894 10 or prior thereto. 11

The doctrine upon which these rules are based is that all lands that were not acquired from the government, either by purchase or by grant, belong to the public domain. As enunciated in the case of Santiago vs. de los Santos: 12

. . . Both under the 1935 and the present Constitutions, the conservation no less than the utilization of the natural resources is ordained. There would be a failure to abide by its command if the judiciary does not scrutinize with care applications to private ownership of real estate. To be granted, they must be grounded in well-nigh incontrovertible evidence. Where, as in this case, no such proof would be forthcoming, there is no justification for viewing such claim with favor. It is a basic assumption of our polity that lands of whatever classification belong to the state. Unless alienated in accordance with law, it retains its rights over the same as dominus . . .

Based on the foregoing, it is incumbent upon private respondent to prove that the alleged twenty year or more possession of the spouses Urbano Diaz and Bernarda Vinluan which supposedly formed part of the thirty (30) year period prior to the filing of the application, was open, continuous, exclusive, notorious and in concept of owners. This burden, private respondent failed to discharge to the satisfaction of the Court. The bare assertion that the spouses Urbano Diaz and Bernarda Vinluan had been in possession of the property for more than twenty (20) years found in private respondent's declaration is hardly the "well-nigh incontrovertible" evidence required in cases of this nature. Private respondent should have presented specific facts that would have shown the nature of such possession. The phrase "adverse, continuous, open, public, peaceful and in concept of owner" by which she described her own possession in relation to that of her predecessors-in-interest are mere conclusions of law which require factual support and substantiation.

That the representing fiscal did not cross-examine her on this point does not help her cause because the burden is upon her to prove by clear, positive and absolute evidence that her predecessors' possession was indeed adverse, continuous, open, public, peaceful and in concept of owner. Her bare allegation, without more, did not constitute such preponderant evidence that would shift the burden of proof to the oppositor.

Neither does the supposition that the fiscal had knowledge of facts showing that the land applied for is private land helpful to private respondent. Suffice it to say that it is not the fiscal, but the court which should be convinced, by competent proof, of private respondent's registerable right over the subject parcel of land.

Private respondent having failed to prove by convincing, positive proof that she has complied with the requirements of the law for confirmation of her title to the land applied for, it was grave error on the part of the lower court to have granted her application.

WHEREFORE, the instant petition is hereby GRANTED. The decision appealed from is SET ASIDE. No pronouncement as to costs.

SO ORDERED.

F. Applicability of the Rules of CourtDirector of Lands v Sanz 45 Phil 117

G.R. No. L-21183             August 31, 1923

THE GOVERNMENT OF THE PHILIPPINE ISLANDS ex rel., THE DIRECTOR OF LANDS, applicant, vs.JESUS SANZ, ET AL., objectors. 

52

GABINO BARRETO PO EJAP, objector-appellee. THE MUNICIPALITY OF TACLOBAN, objector-appellant.

Deputy Provincial Fiscal Bayona for appellant.Ruperto Kapunan for the appellee Barretto Po Ejap.

JOHNSON, J.:

The appellee, Gabino Barretto Po Ejap, presented a motion to dismiss the appeal of the municipality of Tacloban. The action was commenced by the Director of Lands in cadastral survey No. 3, G. L. R. O. No. 153. The motion is based upon the ground that the bill of exceptions was not presented within a period of thirty days from the date of the notice of the decision. It is alleged in the motion to dismiss that the lower court rendered its decision on the 30th day of January, 1923; that the attorney for the municipality of Tacloban received notice of said decision on the second day of February, 1923, and that the motion for a new trial was presented on the 6th day of February, 1923.

The motion to dismiss further alleges that the motion presented in the lower court for a new trial did not state "generally the nature and grounds of the motion and when and where it would be heard," and that said motion did not have the effect of extending the time with in which the bill of exceptions should have been presented, and cites in support of that allegation the case of Manakil and Tison vs. Revilla and Tuaño (42 Phil., 81).

In reply to the motion of the appellee, the attorney for the appellant alleges the final decision by the lower court was not rendered until the 2d day of June, 1923; that he had thirty days from notice of that decision within which to present his bill of exceptions, and that the bill of exceptions was presented within thirty days from notice of said decision.

An examination of the bill of exceptions shows that the same was presented, in the Court of First Instance of the Province of Leyte, on the 20th day of June, 1923. It will be seen, therefore, that if the allegation of the appellant is correct, that the decision of the lower court was not rendered until the 2nd day of June, 1923, that his bill of exceptions was presented within thirty days required for presentation of bills of exceptions in land registration cases.

An examination of the record, in relation with the motion to dismiss and the answer thereto, shows the following facts:

(1) That after the close of the trial of the cause on the 12th day of September, 1922, the Honorable Eulalio E. Causing, judge, rendered what is generally known as a "sin perjuicio" decision on the 30th day of January, 1923, which decision was a mere pronouncement of his judgment, without stating any of the facts in support of his conclusion;

(2) That notice of said decision (30th day of January, 1923) was sent and received by the attorney for the municipality of Tacloban, the appellant herein; that the attorney for the appellant (municipality of Tacloban) on the 6th day of February, 1923, presented a motion for a new trial, together with an exception to the decision of the 30th day of January, 1923, and that a copy of said decision was served personally upon the attorney for the defendant, Gabino Barretto Po Ejap on the 5th day of February, 1923;

(3) That on the 2nd day of June, 1923, the attorney for Gabino Barretto Po Ejap presented a motion praying that so-called motion of the appellant for a new trial should be disregarded, for the reason that it had not complied with the rules of the Court of First Instance, and that the decision of the 30th day of January, 1923, be declared final and cited in support of his motion the case of Manakil and Tison vs. Revilla and Tuaño (42 Phil., 81). The judge denied the motion for a new trial upon the ground "that it was unfounded and had not been presented in accordance with the rules of the court."

(4) That on the same day (2nd day of June, 1923) the Judge denied the motion presented by the attorney for the appellee, Gabino Barretto Po Ejap, to dismiss the motion of the appellant

53

for the reason "that he had not presented any objections thereto with reference to its sufficiency and had renounced his right to be notified of said motion;"

(5) That on the same day 2nd day of June, 1923), the trial judge prepared and filed with the clerk his decision amplifying his decision theretofore rendered on the 30th day of January, 1923, in which he sets out in full all of the facts upon which he relied to justify the conclusion announced in his "sin prejuicio" decision of the 30th day of January, 1923;

(6) That on the 8th day of June, 1923, the attorney for the municipality of Tacloban presented an exception to the decision of the 2d day of June, 1923, and on the 12th day of June, 1923, he gave notice of his intention to present a bill of exceptions. On the 15th day of June, 1923, he presented a motion for a new trial upon the ground that the decision of the lower court was "contrary to the law and the evidence adduced during the trial of the cause," which motion for a new trial was denied by the court on the 19th day of June, 1923. On the 20th day of June, 1923, the attorney for the appellant excepted to the order denying his motion for a new trial and gave notice of his intention to present a bill of exceptions;

(7) That on the 20th day of June, 1923, the bill of exceptions was presented in the Court of First Instance of the Province of Leyte.

Granting, for the purposes of the argument, (a) that the "sin perjuicio" decision of January 30, 1923, was a final decision; (b) that the motion presented by the appellant on the 6th day of February, 1923, complied with the rules of the Court of First Instance; (c) that the appellee had due notice thereof, and (d) that said motion was not acted upon until the 2d day of June, 1923, then, and under those conditions, the bill of exceptions which was presented on the 20th day of June, 1923, was presented within thirty days, eliminating the time during which the court was considering said motion (from the 6th day of February, 1923 to the 2nd day of June, 1923). (Layda vs. Legazpi 39 Phil., 83; Roman Catholic Bishop of Tuguegarao vs. Director of Lands, 34 Phil., 623; Estate of Cordoba, and Zarate vs. Alabado, 34 Phil., 920; Bermudez vs. Director of Lands, 36 Phil., 774; Director of Lands vs. Municipality of Dingras, 40 Phil., 242; Director of Lands vs. Maurera and Tiongson, 37 Phil., 410; Santiago vs. Manuel and Tumale, 39 Phil., 869; Government of the Philippine Islands vs. Abural, 39 Phil., 996.)

The purpose of the law and the rules requiring that a bill of exceptions shall be presented within a definitely fixed period, is to definitely and finally fix the time when a decision is final so that it may be executed and the litigation terminated. Without some fixed way of determining when a decision is final, the parties litigant could never know they could enforce their rights under the judgment or when the litigation is, in fact, terminated.

But was the "sin perjuicio" decision of January 30, 1923, a final decision? Suppose the defeated party had perfected his appeal and presented his bill of exceptions, would this court have considered the appeal, in view of the provisions of section 133 of Act No. 190? A reading of the "sin perjuicio" decision shows that it was nothing more or less than the conclusion of the lower court with reference to the rights of the parties. It did not contain a statement of the facts which were essential to a clear understanding of the issues presented by the respective parties as to the facts involved. Had the appeal come to this court it would, undoubtedly, in view of what it has done heretofore, have returned the record to the lower court, requiring it to comply with the mandatory provisions of said section 133. (Braga vs. Millora, 3 Phil., 458.) That being true, did not the appellant have a right to wait until the lower court should render a decision in accordance with the requirements of the law?

In view of the decision of this court in the case of Braga vs. Millora, supra, and many other published decisions, in which the doctrine there announced has been followed, we are of the opinion, and so declare, that the appellant, even though he attempted to perfect an appeal against the "sin perjuicio" decision, had a perfect right to wait until the final decision was filed, complying with said section 133, and then to perfect his appeal, thereby avoiding a possible delay of having the record returned to the

54

lower court with directions to prepare and file a decision in accordance with the provisions of said section.

If we are correct in that conclusion, then the bill of exceptions in the present case was presented within the thirty days required by law, and the motion to dismiss the appeal should be, and is hereby, denied, without any findings as to costs.

The practice of the lower court in pronouncing "sin perjuicio" decisions and then later, after the expiration of many months, complying with section 133, is a practice which should not be followed and cannot be looked upon with favor. So ordered.

Dir of Lands v Reyes GR No. L-27594

G.R. No. L-27594 November 28, 1975

THE DIRECTOR OF LANDS, THE DIRECTOR OF FORESTRY, and the ARMED FORCES OF THE PHILIPPINES, petitioners, vs.HON. SALVADOR C. REYES, as Judge of the Court of First Instance of Nueva Ecija, Branch III, PARAÑAQUE INVESTMENT and DEVELOPMENT CORPORATION, ROMAN C. TAMAYO, THE COMMISIONER OF THE LAND REGISTRATION COMMISSION and the REGISTER OF DEEDS OF NUEVA ECIJA, respondents.

G.R. No. L-28144 November 28, 1975

ALIPIO ALINSUNURIN, now substituted by PARAÑAQUE INVESTMENT and DEVELOPMENT CORPORATION, applicant-appellee, vs.THE DIRECTOR OF LANDS, THE DIRECTOR OF FORESTRY and the ARMED FORCES OF THE PHILIPPINES, oppositors-appellants.

Acting Solicitor General Hugo E. Gutierrez, Jr. and Assistant Solicitor General Reynato S. Puno for The Director of Lands, etc.

Jaime B. Lumasag Jr. and Jose J. Roy and Associates Law Office for Roman C. Tamayo.

Nemesio P. Diaz and Celso B. Fernandez, Jr. for Alipio Alinsunurin, etc.

 

ANTONIO, J.:

These cases are interrelated, and so are decided jointly.

In his application originally filed on February 24, 1964 with the Court of First Instance of Nueva Ecija, the applicant Alipio Alinsunurin, claiming ownership in fee simple by inheritance from the late Maria Padilla, sought the registration of title under Act 496, as amended, of a vast tract of land, containing an area of 16,800 hectares, more or less, situated at the municipality of Laur, province of Nueva Ecija, admittedly inside the boundary of the military reservation of Fort Magsaysay. 1

On May 5, 1966, the Director of Lands, Director of Forestry, and the Armed Forces of the Philippines opposed the application, claiming that the applicant was without sufficient title and was not in open, exclusive, continuous and notorious possession and occupation of the land in question for at least thirty (30) years immediately preceding the filing of the application; that approximately 13,957 hectares of said land consist of the military reservation of Fort Magsaysay established under Proclamation No. 237, dated December 10, 1955 of the President. 2

On May 10, 1966, the applicant Alipio Alinsunurin filed a motion for substitution of parties, requesting

55

that the Parañaque Investment and Development Corporation be considered as the applicant in his place, it having acquired all his rights, interests, ownership and dominion over the property subject matter of the application. 3The motion was granted by the lower court in its order dated June 10, 1966. 4

It is beyond dispute that the land subject of the application is included within the area reserved for military purposes under Proclamation No. 237, dated December 19, 1955, of the President. The land is largely uncultivated, mountainous and thickly forested with a heavy growth of timber of commercial quantities. 5 Except for a small area cultivated for vegetation by homesteaders issued patents by the Director of Lands, there were no occupants on the land. 6

It is claimed by the applicant that Melecio Padilla acquired the land by virtue of a possessory information title issued during the Spanish regime on March 5, 1895, and upon his death in 1900, he transmitted the ownership and possession thereof to his daughter and sole heir, Maria Padilla. The latter in turn continued to cultivate the land thru tenants and utilized portions for pasture, until her death sometime in 1944.

On November 19, 1966, the lower court rendered decision holding that the parcel of land applied for, described in the technical description Plan II-6752, is adjudicated to and ordered to be registered in favor of (a) Parañaque Investment and Development Corporation, a Philippine corporation wholly owned by Filipino citizens, with address at Manila, Philippines, two-thirds (2/3) portion, subject to the rights of Ariosto Santos per Joint Manifestation of Alipio Alinsunurin and Encarnacion Caballero-Alinsunurin, Ariosto Santos and Parañaque Investment and Development Corporation dated July 19, 1966 and marked as Exhibit "AA-4 " 7 and (b) Roman C. Tamayo, Filipino citizen, married, resident of Cullit, Lallo, Cagayan, one-third (1/3) portion of the said property.

On December 12, 1966, the oppositors Director of Lands, Director of Forestry and the Armed Forces of the Philippines filed a Notice of Appeal from the said decision to the Supreme Court,  8 copy of which notice was furnished counsel for the applicant Parañaque Investment and Development Corporation; however, no copy was furnished to counsel for Roman C. Tamayo, to whom one-third (1/3) portion of the land was adjudicated.

On January 18, 1967, within the extended period granted by the court, the oppositors-appellants filed the corresponding Record on Appeal, copy of which was duly served upon appellees Parañaque Investment and Development Corporation and Roman C. Tamayo.

By an order dated March 8, 1967, the lower court required the Provincial Fiscal to file an Amended Record on Appeal, so as to include therein certain orders and pleadings, within ten (10) days from receipt of the order. 9

On March 16, 1967, the Amended Record on Appeal was duly filed and copies served upon the appellees.

Pending the approval of the Record on Appeal, the applicant Parañaque Investment and Development Corporation filed a motion for the issuance of a decree of registration pending appeal. Likewise, Roman C. Tamayo, thru counsel, filed a motion for the issuance of a decree of registration. Both motions were opposed by the Government.

On March 11, 1967, the lower court, ruling that its decision of November 19, 1966 had become final as to the share of Roman C. Tamayo, directed the issuance of a decree of registration of the entire land, one-third (1/3)pro-indiviso in favor of Roman C. Tamayo, and two-thirds (2/3) pro indiviso in favor of Parañaque Investment and Development Corporation, subject to the final outcome of the appeal.

On March 14, 1967, the Commissioner of Land Registration forthwith issued Decree No. 113485 pursuant to the said order, and, on March 15, 1967, the Register of Deeds issued Original Certificate of Title No. 0-3151 of the Register of Deeds of the Province of Nueva Ecija.

On April 12, 1967, the lower court approved the Amended Record on Appeal which, together with the

56

evidence and transcripts, was forwarded to this Court in due course of appeal.

As the lower court denied reconsideration of the order directing the issuance of a decree of registration, on May 29, 1967, the Director of Lands, Director of Forestry and the Armed Forces of the Philippines instituted before this Court a special civil action for certiorari and mandamus with preliminary injunction (L-27594), seeking to nullify the order dated March 11, 1967, the decree of registration issued pursuant thereto (Decree No. 113485 dated March 14, 1967) and Original Certificate of Title No. 0-3151 of the Register of Deeds for the province of Nueva Ecija, and to command the respondent court to certify the entire proceedings and to allow appeal to the Supreme Court from its decision in toto in LRC Case No. N-675, LRC Rec. No. N-25545.

On June 5, 1967, We issued a writ of preliminary injunction as follows:

NOW, THEREFORE, until further orders from this Court, You (respondent Judge) are hereby restrained from issuing a writ of possession in Land Registration Case No. N-675, LRC Rec. No. 25545 of the Court of First Instance of Nueva Ecija, entitled "Parañaque Investment and Development Corporation versus Director of Lands, et al."; You (respondent Parañaque Investment and Development Corporation and Roman C. Tamayo), your agents or representatives are hereby restrained from taking possession and/or excercising acts of ownership, occupancy or possession over the property in question subject matter of Land Registration Case No. N-675, LRC Rec. No. N-25545; and You (respondent Register of Deeds) are hereby restrained from accepting for registration documents referring to the subject land until petitioners shall have filed a notice of lis pendens as to the title certificates of Roman Tamayo and Parañaque Investment and Development Corporation, under Sec. 24, Rule 14, Rules of Court, subject of the above-mentioned Land Registration Case No. N-675, LRC Rec. No. N-25545.

Accordingly, petitioners-appellants caused the entry of a notice of lis pendens to be duly inscribed in the primary entry book of the Registry of Deeds of Nueva Ecija and annotated in the memorandum of encumbrances in Original Certificate of Title No. 0-3151.

In due time, the respondents filed their answers to the petition for certiorari. The parties having filed their respective memoranda, the case is deemed submitted for decision.

At the outset, We shall resolve the petition for certiorari and mandamus (L-27594).

I

Under the circumstances of this case, the failure of the appellants to serve a copy of their Notice of Appeal to the counsel for adjudicatee Roman C. Tamayo is not fatal to the appeal because, admittedly, he was served with a copy of the original, as well as the Amended Record on Appeal in both of which the Notice of Appeal is embodied. 10 Hence, such failure cannot impair the right of appeal. 11

What is more, the appeal taken by the Government was from the entire decision, which is not severable. Thus, the appeal affects the whole decision. 12

In any event, We rule that execution pending appeal is not applicable in a land registration proceeding. It is fraught with dangerous consequences. Innocent purchasers may be misled into purchasing real properties upon reliance on a judgment which may be reversed on appeal.

A Torrens title issued on the basis of a judgment that is not final is a nullity, as it is violative of the explicit provisions of the Land Registration Act which requires that a decree shall be issued only after the decision adjudicating the title becomes final and executory, and it is on the basis of said decree that the Register of Deeds concerned issues the corresponding certificate of title.

Consequently, the lower court acted without jurisdiction or exceeded its jurisdiction in ordering the issuance of a decree of registration despite the appeal timely taken from the entire decision a quo.

57

II

In the instant case, as a precaution, oppositors-appellants caused notice of lis pendens to be duly inscribed in Original Certificate of Title No. 0-3151 of the Register of Deeds of Nueva Ecija, thereby keeping the whole land subject matter of the appeal within the power of the court until the litigation is terminated. 13

Such entry of notice of lis pendens cannot be cancelled until the final termination of the litigation. The notice of lis pendens must be carried over in all titles subsequently issued, which will yield to the ultimate result of the appeal.14

During the pendency of the appeal, it appears that Honofre A. Andrada, et al., filed with the Court of First Instance of Nueva Ecija (Branch I, not the land registration court), a complaint against the appellee Parañaque Investment and Development Corporation, Rodolfo A. Cenidoza and Roman C. Tamayo, for reconveyance of a portion of the land in question (Civil Case No. 4696). The trial court assumed jurisdiction over the case despite the pendency of the appeal involving the same land, and decided the case in favor of plaintiffs. In violation of Our injunction adverted to above, Parañaque Investment and Development Corporation executed a subdivision plan of the original single parcel of land subject of the land registration proceedings covered by Original Certificate of Title No. 0-3151, and deeded over six (6) lots of the subdivision plan to plaintiffs Honofre A. Andrada and Nemesio P. Diaz. By an order dated September 23, 1968, entered in Civil Case No. 4696, the Register of Deeds of Nueva Ecija was directed to cancel Original Certificate of title No. 0-3151 and to issue new titles to the above-named transferees "free from all liens and encumbrances." Immediately, transfer certificates of title were issued to them and other transferees in which the Register of Deeds of Nueva Ecija did not carry over the notice of lis pendens originally inscribed in Original Certificate of Title No. 0-3151. Subsequently, other transactions were entered into involving portions of the land reconveyed in Civil Case No. 4696, including a transfer of about 4,000 hectares to the Land Bank of the Philippines in consideration of P8,940,000.00.

We find the order to cancel Original Certificate of Title No. 03151 and to issue subsequent titles free from all liens and encumbrances to be void ab initio.

Civil Case No. 4696 is an action in personam to which the appellants are not parties; its object was to decree reconveyance to plaintiffs of a portion of the area adjudicated to the Parañaque Investment and Development Corporation and Roman C. Tamayo in Land Registration Case No. N-675, LRC Rec. No. N-25545, which is subject to the outcome of the appeal. Such action is barred by the pendency of the appeal. In that case, the court is without jurisdiction to order the Register of Deeds to cancel Original Certificate of title No. 0-3151 and to issue titles to transferees "free from all liens and encumbrances ." 15 Nor can such order be construed to authorize the Register of Deeds to cancel the notice of lis pendens, which was not entered by virtue of the reconveyance case. Thus, the Register of Deeds was duty bound to carry over the said notice of lis pendens on all titles subsequently issued. But, in plain violation of lis pendens in said titles; such act constitutes misfeasance in the performance of his duties for which he may be held civilly and even criminally liable for any prejudice caused to innocent third parties, but cannot affect the petitioners-appellants who are protected by Our writ of injunction and the notice of lis pendens inscribed in the original title. It must be remembered that Our injunction restrained the Register of Deeds "from accepting for registration documents referring to the subject land until the petitioners shall have filed a notice of lis pendens as to the title certificates of Roman C. Tamayo and Parañaque Investment and Development Corporation under section 24, Rule 14, Rules of Court, subject of the above-mentioned Land Registration Case No. N-675, LRC Rec. No. 25545." Its plain meaning is to enjoin registration of documents and transactions unless the notice of lis pendens is annotated and so subject the same to the outcome of the litigation. In such case, subsequent transferees cannot be considered innocent purchasers for value.

On the other hand, the lower court's order dated September 23, 1968, in Civil Case No. 4696, cannot overrule an injunction of this Court (in L-27594). As a result, We consider the notice of lis pendens entered in virtue of this litigation to remain in full force and effect, and affects all subsequent

58

transferees of the title of the land subject of this appeal.

At any rate, it is well-settled that entry of the notice of lis pendens in the day book (primary entry book) is sufficient to constitute registration and such entry is notice to all persons of such adverse claim. 16

III

We now consider the appeal on the merits.

1. To begin with, the original tracing cloth plan of the land applied for, which must be approved by the Director of Lands, was not submitted in evidence. The submission of such plan is a statutory requirement of mandatory character. 17 Unless a plan and its technical description are duly approved by the Director of Lands, the same are not of much value. 18

It is true that blueprints of two survey plans were presented before the trial court (both marked Exhibit "D"). The first blueprint copy of a plan of land as surveyed for Maria Padilla (Exhibit "D", p. 4, Exhibits of Applicant), was not formally offered in evidence. The second plan of the land, as surveyed for Parañaque Investment and Development Corporation (also marked as Exhibit "D", p. 3, Exhibits of Applicant) was submitted by the said applicant, but it lacks the approval of the Director of Lands.

Of course, the applicant attempts to justify the non-submission of the original tracing cloth plan by claiming that the same must be with the Land Registration Commission which checked or verified the survey plan and the technical descriptions thereof. It is not the function of the LRC to check the original survey plan as it has no authority to approve original survey plans. If, for any reason, the original tracing cloth plan was forwarded there, the applicant may easily retrieve the same therefrom and submit the same in evidence. This was not done.

It is also asserted that a blue print copy of the plan (Exhibit "D", p. 5, Exhibits of Applicant) was superimposed in the military plan of the reservation under Proclamation No. 237, which military plan was presented in evidence by the oppositors-appellants (Exhibit "6"), and it was agreed by the parties that the plan, Exhibit "D", superimposed in the plan of the area covered by the proclamation, is the plan of the land applied for (p. 15, Brief for Applicant-Appellee).

Obviously, the superimposition of the copy of the survey plan of land as surveyed for applicant in the military map of the area under Proclamation No. 237 was for the sole purpose of showing that the land applied for is situated within the area covered by the military reservation of Fort Magsaysay appropriately indicated in the perimeter map of said reservation (Exhibit "6"). But the applicant is not relieved from the original tracing cloth plan approved by the Director of Lands as required by law. One of the distinguishing marks of the Torrens System is the absolute certainty of the identity of a registered land. Consequently the primary purpose of the aforesaid requirement is to fix the exact or definite identity of the land as shown in the plan and technical descriptions. Hence, the applicant is not relieved of his duty of submitting the original tracing cloth of the survey plan of the land duly approved by the Director of Lands.

It will be noticed that the plan (Exhibit "D", p. 5, Exhibits of Applicant) does not bear the approval of any officer authorized by law.

In similar manner, the surveyor's certificate, also required in original land registration proceedings, was not offered in evidence.

2. We next consider the question of whether the applicant has a registerable title to the land applied for.

The applicant relies on a purported titulo de informacion posesoria issued in the name of Melecio Padilla (Exhibit "T" pp. 64-68, Exhibits of Applicant). However, neither the original of the said titulo de informacion posesoria, nor a duly authenticated copy thereof, was submitted in evidence, and there are serious flaws on the faces of the alleged copies of the document, as in the circumstances surrounding their execution. Thus, the two (2) purported photostat copies of the said informacion posesoria title materially differ on the date when said informacion posesoria was issued. One copy

59

showed that the said document was issued on March 5, 1895 (Exhibit "T") while the other indicated that it was issued twelve (12) years earlier, or on March 5, 1883 (Exhibit "2").

Moreover, according to the official records of the Register of Deeds of Nueva Ecija, on the basis of the "List of Possessory Information Titles (Spanish Titles) of Nueva Ecija", the corresponding supporting documents of which are kept in the vault of said office, the name of Melecio Padilla does not appear among those listed as holders ofinformacion posesoria titles as of the year 1898 covering lands situated in Santor (now Laur) Nueva Ecija. According to said document, the name Melecio Padilla appears only in the list of holders of possessory information titles over lands situated in Peñaranda, Nueva Ecija, but of a substantially smaller acreage. 19 Thus, the seven (7) parcels recorded in the name of Melecio Padilla covered only a total area of 49 hectares, 18 acres and 325 centares. 20 In addition, the list of property owners in Santor (now Laur), Nueva Ecija existing in the Division of Archives does not include the name of Melecio Padilla. 21 It is true that an alleged copy of aninformacion posesoria in the name of Melecio Padilla, was recorded in the office of the Register of Deeds on November 10, 1942 by one Rodolfo Baltazar, Register of Deeds (Exhibit "H"), but the Register of Deeds of Nueva Ecija could not certify to its veracity, as the supposed document does not exist in their records. 22 There is another factor which weighs heavily against the claim of the applicant. The alleged informacion posesoria covers an area of "seis mil quiñiones, poco mas e menos" or an equivalent of 16,800 hectares. Under the Royal Decrees in force at the time of the supposed acquisition, no one could acquire public land in excess of 1,000 hectares. Thus, the Royal Decrees of November 25, 1880 and October 26, 1881, prohibited any grant of public land in excess of one thousand (1,000) hectares. 23

Besides, the document described in Exhibit "H" is not the titulo de informacion posesoria, because it was merely a certification of possession of Melecio Padilla over the property, and was issued without prejudice to a third party or parties having a better right. 24 Thus, it states: "En su virtud habiendo examinado el Registro nuevamente formado por la perdida o destruccion del mismo y no hallando en ningun asiento contrario a lo relacionado reinscribe la posesion de la finca de este numero a favor de Don Melecio Padilla sin perjuicio de tercero que puede tener mejor derecho a la propiedad." Under Spanish law, in order that an informacion posesoria may be considered as title of ownership, it must be proven that the holder thereof has complied with the provisions of Article 393 of the Spanish Mortgage Law.

It cannot be claimed that the registration of possession has been legally converted into a registration of ownership because Melecio Padilla had not complied with the requirements of Article 393 of the Spanish Mortgage Law, to wit: "that the applicant has been in open possession of the land; that an application to this effect be filed after the expiration of 20 years from the date of such registration; that such conversion be announced by means of a proclamation in a proper official bulletin; that the Court order the conversion of the registration of possession into a record of ownership; and that the Registrar make the proper record thereof in the Registry." 25 Evidently, Melecio Padilla, having died on February 9, 1900, barely five (5) years after the inscription of the informacion posesoria, could not have converted the same into a record of ownership twenty (20) years after such inscription, pursuant to Article 393 of the Spanish Mortgage Law.

One year after the promulgation of the Maura Law, or on April 17, 1895, the right to perfect possessory information title under the law expired. After that date, full property right of the land reverted to the government and the right of the cultivator and possessor to obtain gratuitous title was extinguished. 26

Before the military reservation was established, the evidence is inconclusive as to possession, for it is shown by the evidence that the land involved is largely mountainous and forested. As a matter of fact, at the time of the hearing, it was conceded that approximately 13,957 hectares of said land consist of public forest. During the lifetime of Melecio Padilla, only a small portion thereof was cleared and cultivated under the "kaingin" system, while some portions were used as grazing land. After his death, his daughter, Maria Padilla, caused the planting of vegetables and had about forty (40) tenants for the purpose. 27 During the Japanese occupation, Maria Padilla died. Alipio Alinsunurin and Encarnacion

60

Caballero took possession of the land approximately in 1950, but they had to abandon the place due to the unsettled peace and order conditions in the area. In 1955, entry by them was prevented by the Army.

It seems obvious, on the basis of the facts in the record, that neither applicant Parañaque Investment and Development Corporation nor Alipio Alinsunurin nor the latter's predecessors-in-interest have been "in open, continuous, exclusive, and notorious possession and occupation" of the property in question, "under a bona fideclaim of acquisition or ownership, for at least thirty years immediately preceding the filing of the application for confirmation of title." 28

A mere casual cultivation of portions of the land by the claimant, and the raising thereon of cattle, do not constitute possession under claim of ownership. In that sense, possession is not exclusive and notorious so as to give rise to a presumptive grant from the State. 29 While grazing livestock over land is of course to be considered with other acts of dominion to show possession, the mere occupancy of land by grazing livestock upon it, without substantial inclosures or other permanent improvements, is not sufficient to support a claim of title thru acquisitive prescription. 30 The possession of public land, however long the period may have extended, never confers title thereto upon the possessor because the statute of limitations with regard to public land does not operate against the State, unless the occupant can prove possession and occupation of the same under claim of ownership for the required number of years to constitute a grant from the State. 31

Apart from the aforesaid inconclusive evidence of possession to support the applicant's claim of title, it does not appear that the said property has ever been declared for taxation purposes by either applicant or applicant's predecessors-in-interest. Thus, the only tax declarations submitted were those of Mamerto Garcia and Honofre Andrada, et al. (Exhibit "G", Tax Declaration No. 5576, covering an area of 7,340 hectares) and Mamerto Garcia, et al. (Exhibit "H-1", Tax Declaration No. 5577, over an area of 9,547 hectares) but both were filed only in 1958. The latter declaration contains an annotation that the property described therein is an unidentified property, as the declarant failed to identify the same, and it "was only through his insistence" that it was assessed. Neither applicant Parañaque Investment and Development Corporation nor its predecessor, Alipio Alinsunurin had submitted any tax declaration supporting its/his claim over the property. It is true that tax receipts and declarations of ownership for taxation purposes are not incontrovertible evidence of ownership, but they constitute at least proof that the holder had a claim of title over the property.

It is obvious that the applicant has failed to submit convincing proof of actual, peaceful and adverse possession in the concept of owner of the entire area in question during the period required by law. This is especially true in view of the basic presumption that lands of whatever classification belong to the State and evidence of a land grant must be "well-nigh incontrovertible." 32

Even more important, Section 48[b] of CA No. 141, as amended, applies exclusively to public agricultural land. Forest lands or areas covered with forest are excluded. 33 It is well-settled that forest land is incapable of registration; and its inclusion in a title, whether such title be one issued during the Spanish sovereignty or under the present Torrens system of registration, nullifies the title. 34

Finally, the applicant urges that Proclamation No. 237 recognizes the existence of private property within the military reservation. It is true that the proclamation states that the same is subject "to private rights, if any there be", but applicant must prove its private rights over the property, which said party failed to do. 35 For it is well-settled that, unless the applicant has shown by clear and convincing evidence that the property in question was ever acquired by the applicant or his ancestors either by composition title from the Spanish Government or by possessory information title, or any other means for the acquisition of public lands, the property must be held to be part of the public domain. 36

WHEREFORE, decision in the above case is hereby rendered:

(1) in G. R. No. L-27594, the petition for certiorari is granted; the order dated March 11, 1967 in LRC Case No. N-675, LRC Rec. No. N-25545, the decree of registration issued pursuant thereto (Decree No. 113485 dated March 14, 1967), and Original Certificate of Title No. 0-3151 of the Registry of

61

Deeds of Nueva Ecija are all declared void; the Registry of Deeds of Nueva Ecija is ordered to recall and cancel all transfer certificates of title, including owners' duplicates and mortgagees' copies, if any, arising out of Original Certificate of Title No. 0-3151; the preliminary injunction issued on June 5, 1967 and the temporary restraining order issued on June 1, 1973 are made final and permanent, with costs against respondents (except respondent Judge); and

(2) in G. R. No. L-28144, the appealed decision is hereby reversed and set aside, and judgment is rendered dismissing the application for registration. Costs against appellee.

G. DefautHeirs of Lopez v Enriquez, GR No. 146262

G.R. No. 146262            January 21, 2005

HEIRS OF EUGENIO LOPEZ, SR., petitioners, vs.HON. ALFREDO R. ENRIQUEZ, in his capacity as Administrator of the Land Registration Authority and the REGISTER OF DEEDS OF MARIKINA CITY, respondents.

D E C I S I O N

CARPIO, J.:

The Case

This is a petition for review1 to reverse the Decision2 dated 29 November 2000 of the Court of Appeals ("appellate court") in CA-G.R. SP No. 55993. The appellate court affirmed the Resolution3 dated 21 May 1999 issued by the Land Registration Authority ("LRA") in Consulta No. 2879. The LRA ruled that a notice of lis pendens based on a motion is not registrable.

The Facts

Alfonso Sandoval ("Sandoval") and Roman Ozaeta, Jr. ("Ozaeta") filed an application for registration of title before the Regional Trial Court of Pasig City, Branch 152 ("land registration court"), docketed as Case No. 2858, Land Registration Case No. N-18887 ("LRC No. N-18887"). The land registration court issued an order of general default and hearings on the application followed. On 31 May 1966, the land registration court granted the application. The decision became final and executory, and the land registration court issued a certificate of finality dated 8 March 1991.4

The National Land Titles and Deeds Administration (now LRA) issued on 20 October 1977 Decree Nos. N-217643 and N-217644 in the names of Sandoval and his wife Rosa Ruiz, and Ozaeta and his wife Ma. Salome Lao.5

On 16 July 1997, petitioners Eugenio Lopez, Jr., Manolo Lopez, Oscar Lopez, and Presentacion L. Psinakis ("petitioners"), heirs of Eugenio Lopez, Sr., filed a motion6 in LRC No. N-18887. The motion alleged that Sandoval and Ozaeta sold the lots subject of the application to the late Eugenio Lopez, Sr. on 23 September 1970. Petitioners prayed that the court consider in the land registration case the Deed of Absolute Sale7 over the lots executed by Sandoval and Ozaeta and their respective spouses in favor of Eugenio Lopez, Sr. Invoking Section 22 of Presidential Decree No. 1529 ("PD 1529"),8 petitioners also prayed that the court issue the decree of registration in their names as the successors-in-interest of Eugenio Lopez, Sr.

The land registration court gave due course to the motion and conducted hearings.9

The Register of Deeds of Marikina City issued the corresponding OCT Nos. O-1603 and O-1604 in favor of Sandoval and Ozaeta and their spouses only on 18 August 1998.10 The pertinent entries11 in the Decrees read:

62

This Decree is issued pursuant to the Decision dated 31st day of May, 1966 of the Hon. Pedro C. Navarro, Judge of [Court of First Instance of Rizal, Branch II, Pasig, Rizal], and the Honorable Briccio C. Ygaña, this 3rd day of July, 1998.

Issued at the National Land Titles and Deeds Registration Administration, Quezon City, this 20th day of October, in the year of Our Lord nineteen hundred and ninety-seven at 8:01 a.m.

(signed)ALFREDO R. ENRIQUEZADMINISTRATORNational Land Titles and Deeds Registration Administration

Entered in the "Registration Book" for Marikina, pursuant to the provisions of section 39 of PD No. 1529, on the 18th day of August nineteen hundred and ninety-eight, at 1:16 p.m.

(signed)EDGAR D. SANTOSRegister of Deeds (Emphasis added)

Petitioners filed another motion on 25 November 1998 to declare void Decree Nos. N-217643 and N-217644 and Original Certificate of Title ("OCT") Nos. O-1603 and O-1604. Petitioners pointed out that the OCTs show that incumbent Administrator Alfredo R. Enriquez signed the Decrees on 20 October 1997, before he assumed office on 8 July 1998 and even before Hon. Briccio C. Ygaña issued the Order of 3 July 1998.12

Petitioners questioned the inconsistencies in the dates and requested the LRA to recall the decrees. The LRA Administrator denied the request and explained the inconsistencies in the dates in a letter13 dated 1 December 1998. The entire letter states:

Republic of the PhilippinesDepartment of Justice

LAND REGISTRATION AUTHORITYQuezon City

1 December 1998

Atty. Crisostomo A. QuizonQuiason Makalintal Barot Torres & Ibarra Law Offices2nd Floor Benpres BuildingExchange Road corner Meralco Ave.Ortigas Center, Pasig City

Sir:

This concerns your letter requesting the recall of Decree Nos. N-217643 and N-217644 issued in Land Registration Case No. N-2858, LRC Record No. N-18887, both in the names of Alfonso Sandoval and his wife, Rosa Ruiz, and Roman Ozaeta, Jr., and his wife, Ma. Salome Lao.

63

Records of this Authority show that aforesaid decrees of registration were prepared on October 20, 1977 pursuant to the decision of the court dated May 31, 1966 and the order for issuance of decree dated August 24, 1993. Said decrees were forwarded to the Office of the Administrator on August 8, 1998 and was [sic] released therefrom on August 13, 1998. Consequently, said decrees were signed sometime between August 8 and 13 1998 and definitely not on October 20, 1997 as what is reflected thereon because the undersigned Administrator assumed office only on July 8, 1998. Apparently, at the time the decrees were signed it was not noticed, through oversight, that they were dated October 20, 1977. It is therefore hereby clarified that Decree Nos. N-217643 and N-217644 were actually issued sometime between August 8 and 13 1998 and not on October 20, 1997.

Regarding the claim that these decrees were prematurely issued as the motion for the issuance of the decrees in favor of the Heirs of Eugenio Lopez, the properties involved having been sold to him by the applicants, is still pending with the court, it is informed that no copy of said motion nor of the order directing this Office to comment thereon appears on file in the records of the case. Hence, these matters could not have been taken into consideration in the issuance of the decrees. Had the Administration been apprised of these incidents, perhaps the issuance of the decrees could have been held in abeyance until the court has resolved the same.

As to the recall of the decrees of registration, we regret to inform you that since the certificates of title transcribed pursuant to said decrees have already been issued and released by the Registrar of Deeds concerned, it is now beyond our authority to recall them unless duly authorized by the court.

We hope that we have satisfactorily disposed of the concerns raised in your letter.

Very truly yours,

(signed)ALFREDO R. ENRIQUEZAdministrator

On 25 November 1998, petitioners filed with the Register of Deeds of Marikina City an application to annotate the notice of lis pendens at the back of OCT Nos. O-1603 and O-1604 on the ground that petitioners have filed with the land registration court a motion to declare OCT Nos. O-1603 and O-1604 void.14 Petitioners attached to the application a copy of the 25 November 1998 motion and the pertinent OCTs.

In a letter15 dated 15 December 1998, the Register of Deeds of Marikina City denied the application to annotate the notice of lis pendens. The entire letter states:

Republic of the PhilippinesDepartment of Justice

LAND REGISTRATION AUTHORITYRegistry of Deeds, Marikina City

15 December 1998

Atty. Crisostomo A. Quizon2nd Floor, Benpres Bldg.

64

Exchange Road cor. Meralco AvenuePasig City

Sir:

This is in connection to [sic] your application to have a Notice of Lis Pendens [annotated] at the back of OCT Nos. O-1603 and O-1604 issued in the name of ALFONSO SANDOVAL AND SPOUSE.

Pursuant to Sec. 76, PD No. 1529[,] the contents of the notice are the name[s] of the parties, the court where the action is pending, the date the action was instituted and a copy of the compalint [sic] in order to determine if the person named in the title is impleaded.

We regret to inform you that the application, bereft of the original petition or compaint [sic] upon which this office will base its action, is DENIED.

If you do not agree with our findings, you can, without withdrawing the documents you submitted, elevate the matter en consulta five (5) days from receipt hereof to the Office of the Administrator, Land Registration Authority, East Avenue cor. NIA Road, Quezon City.

Very truly yours,

(signed)EDGAR D. SANTOSRegister of Deeds

On 14 January 1999, three days after receipt of the letter, petitioners elevated the denial in consulta to the LRA. The case was docketed as Consulta No. 2879.

The Ruling of the Land Registration Authority

In its resolution16 dated 21 May 1999, the LRA stated that the sole question for resolution is whether a notice oflis pendens is registrable based on a motion to declare void the decrees and titles. The LRA agreed with the Register of Deeds that a notice of lis pendens based on a motion is not registrable. Relying on Section 24, Rule 14 of the Rules of Court, the LRA ruled that only a party to a case has the legal personality to file a notice of lis pendens relative to the pending case.

The LRA focused on petitioners’ standing in LRC No. N-18887. The LRA declared that petitioners are not parties in LRC No. N-18887. Since a land registration case is a proceeding in rem, an order of general default binds the whole world as a party in the case. Petitioners are mere movants whose personality the court has not admitted. Based on Section 26 of PD 1529, the LRA ruled that petitioners should have filed a motion to lift the order of general default. Pertinent portions of the LRA decision read:

Until and after the Order of General Default in LRC Case No. 18887 is lifted, petitioners cannot be clothed with personality as oppositors in said land registration case by merely filing a motion after a judgement has been rendered. Such being the case, a notice of lis pendens on the basis of the motion filed by petitioners cannot be admitted for registration. To rule otherwise would preempt the judgment of the Court in so far as the personalities of the movants as oppositors in the land registration case is concerned.

WHEREFORE, premises considered, this Authority is of the opinion and so holds that the notice of lis pendens is not registrable.

65

SO ORDERED.17

The Ruling of the Court of Appeals

Undaunted, petitioners filed before the appellate court a petition for review of the LRA’s decision. Petitioners filed the petition on the ground of manifest error and grave abuse of discretion on the part of the LRA Administrator when he ruled in Consulta No. 2879 that the notice of lis pendens is not registrable.

The appellate court dismissed the petition for lack of merit. The appellate court reiterated the LRA’s ruling that only a party to a case has the legal personality to file a notice of lis pendens. Petitioners have no legal personality because they failed to file a motion to lift the order of general default in the land registration case.

Issues

Petitioners present the following issues for resolution of this Court:

1. WHETHER PETITIONERS’ MOTION TO DECLARE VOID THE DECREES ISSUED BY THE LAND REGISTRATION AUTHORITY IS A PROPER BASIS FOR FILING THE NOTICE OF LIS PENDENS, and

2. WHETHER PETITIONERS CAN FILE THE MOTION TO DECLARE VOID THE DECREES ISSUED BY THE LAND REGISTRATION COURT IN LRC CASE NO. N-18887 DESPITE THE FACT THAT THE COURT HAS NOT LIFTED THE GENERAL ORDER OF DEFAULT.18

The Ruling of the Court

The petition has no merit.

We agree with the observation of the appellate court that the pleadings filed by petitioners, public respondents and the Office of the Solicitor General cite "more or less the same provisions of the laws as applicable in support of their respective contentions but differ x x x only with respect to their interpretation thereof."19 With this observation in mind, we quote the pertinent provisions of the 1997 Rules of Civil Procedure and of PD 1529.

Section 14, Rule 13 of the 1997 Rules of Civil Procedure provides:

SECTION 14. Notice of lis pendens. – In an action affecting the title or the right of possession of real property, the plaintiff and the defendant, when affirmative relief is claimed in his answer, may record in the office of the registry of deeds of the province in which the property is situated a notice of the pendency of the action. Said notice shall contain the names of the parties and the object of the action or defense, and a description of the property in that province affected thereby. Only from the time of filing such notice for record shall a purchaser, or encumbrancer of the property affected thereby, be deemed to have constructive notice of the pendency of the action, and only of its pendency against the parties designated by their real names.

The notice of lis pendens hereinabove mentioned may be cancelled only upon order of the court, after proper showing that the notice is for the purpose of molesting the adverse party, or that it is not necessary to protect the rights of the party who caused it to be recorded.

Section 76 of PD 1529 states:

SECTION 76. Notice of lis pendens. – No action to recover possession of real estate, or to quiet title thereto, or to remove clouds upon the title thereof, or for partition or other proceedings of any kind in court directly affecting the title to land or the use or occupation thereof or the buildings thereon, and no judgment, and no proceeding to vacate or reverse any judgment, shall have any effect upon registered land as against persons other than the parties thereto, unless a memorandum or notice stating the institution of such action or proceeding and the court wherein the same is pending, as well as the date of the institution thereof, together with a reference to the number of the certificate of title, and an

66

adequate description of the land affected and the registered owner thereof, shall have been filed and registered.

Notice of Lis Pendens

Lis pendens literally means a pending suit. The doctrine of lis pendens refers to the jurisdiction, power or control which a court acquires over property involved in a suit, pending the continuance of the action, and until final judgment.20

The purposes of lis pendens are (1) to protect the rights of the party causing the registration of the lis pendens, and (2) to advise third persons who purchase or contract on the subject property that they do so at their peril and subject to the result of the pending litigation.21

The filing of a notice of lis pendens has a two-fold effect. First, it keeps the subject matter of the litigation within the power of the court until the entry of the final judgment to prevent the defeat of the final judgment by successive alienations. Second, it binds a purchaser, bona fide or not, of the land subject of the litigation to the judgment or decree that the court will promulgate subsequently. However, the filing of a notice of lis pendensdoes not create a right or lien that previously did not exist.22

Without a notice of lis pendens, a third party who acquires the property after relying only on the certificate of title is a purchaser in good faith. Against such third party, the supposed rights of a litigant cannot prevail, because the former is not bound by the property owner’s undertakings not annotated in the transfer certificate of title.23 Thus, we have consistently held that —

The notice of lis pendens x x x is ordinarily recorded without the intervention of the court where the action is pending. The notice is but an incident in an action, an extrajudicial one, to be sure. It does not affect the merits thereof. It is intended merely to constructively advise, or warn, all people who deal with the property that they so deal with it at their own risk, and whatever rights they may acquire in the property in any voluntary transaction are subject to the results of the action, and may well be inferior and subordinate to those which may be finally determined and laid down therein. The cancellation of such a precautionary notice is therefore also a mere incident in the action, and may be ordered by the Court having jurisdiction of it at any given time. And its continuance or removal x x x is not contingent on the existence of a final judgment in the action, and ordinarily has no effect on the merits thereof.24

A notice of lis pendens may involve actions that deal not only with title or possession of a property, but also with the use or occupation of a property.25 The litigation must directly involve a specific property which is necessarily affected by the judgment. Magdalena Homeowners Association, Inc. v. Court of Appeals26 enumerated the cases where a notice of lis pendens is appropriate:

[A] notice of lis pendens is proper in the following cases, viz:

a) An action to recover possession of real estate;

b) An action to quiet title thereto;

c) An action to remove clouds thereon;

d) An action for partition; and

e) Any other proceedings of any kind in Court directly affecting the title to the land or the use or occupation thereof or the buildings thereon.

On the other hand, the doctrine of lis pendens has no application in the following cases:

a) Preliminary attachments;

b) Proceedings for the probate of wills;

c) Levies on execution;

d) Proceedings for administration of estate of deceased persons; and

67

e) Proceedings in which the only object is the recovery of a money judgment.27

As decreed by Section 76 of PD 1529, a notice of lis pendens should contain a statement of the institution of an action or proceeding, the court where the same is pending, and the date of its institution. A notice of lis pendensshould also contain a reference to the number of the certificate of title of the land, an adequate description of the land affected and its registered owner.l^vvphi1.net

The Register of Deeds denied registration of the notice of lis pendens because "the application was bereft of the original petition or complaint upon which this office will base its action."28 In consulta to the LRA, petitioners pointed out that they have complied with the requirements for the registration of the notice of lis pendens, as follows:

7.2.1 The Notice of Lis Pendens contains a statement of the filing by the Heirs of Eugenio Lopez of a motion to declare Original Certificates of Title Nos. O-1603 and O-1604 null and void;

7.2.2 It contains the name of the court wherein the motion is pending which is "the registration court, Regional Trial Court, Branch 152, Pasig City." The date of the filing of the motion is shown on the motion itself wherein the receipt of said motion by the land registration court on November 25, 1998 is duly stamped;

7.2.3 The numbers of the Original Certificates of Title Nos. O-1603 and O-1604 are clearly indicated in the notice;

7.2.4 There is adequate description of the land affected in the Notice of Lis Pendens;

7.2.5 The names of the registered owners are indicated in Paragraph 4 of the Motion attached to the Notice;

7.2.6 A copy of the motion to declare OCT Nos. O-1603 and O-1604 null and void, dated November 25, 1998 upon which the Register of Deeds of the Province of Rizal will base its action is attached as Annex "A" of the Notice of Lis Pendens. (Emphasis in the original)29

Petitioners’ enumeration readily reveals that they have not complied with the requisites. Both the LRA and the appellate court denied the application for a notice of lis pendens because petitioners are mere movants, and not original parties, in LRC No. N-18887. As petitioners are not parties to an action as contemplated in Section 76 of PD 1529, they failed to present the requisite pleading to the Register of Deeds of Marikina City. We hold that the Register of Deeds correctly denied the application for a notice of lis pendens.

Reconveyance

Petitioners committed a fatal procedural error when they filed a motion in LRC No. N-18887 on 16 July 1997. The remedy of petitioners is an action for reconveyance against Sandoval, Ozaeta and their spouses. Reconveyance is based on Section 55 of Act No. 496, as amended by Act No. 3322, which states that "xxx in all cases of registration procured by fraud the owner may pursue all his legal and equitable remedies against the parties to such fraud, without prejudice, however, to the rights of any innocent holder for value of a certificate of title xxx."

An action for reconveyance is an action in personam available to a person whose property has been wrongfully registered under the Torrens system in another’s name. Although the decree is recognized as incontrovertible and no longer open to review, the registered owner is not necessarily held free from liens. As a remedy, an action for reconveyance is filed as an ordinary action in the ordinary courts of justice and not with the land registration court.30 Reconveyance is always available as long as the property has not passed to an innocent third person for value.1awphi1.nét A notice of lis pendens may thus be annotated on the certificate of title immediately upon the institution of the action in court. The notice of lis pendens will avoid transfer to an innocent third person for value and preserve the claim of the real owner.31

68

Necessity of a Motion to Lift the Order of General Default

In its comment,32 the LRA states that under Section 26 of PD 1529 the order of default includes petitioners. Therefore, petitioners’ failure to move to lift the default order did not give them standing in the case. As long as the court does not lift the order of general default, petitioners have no legal standing to file the motion to declare void the decrees of registration issued to the applicant. Section 26 of PD 1529 provides thus:

Sec. 26. Order of default; effect. – If no person appears and answers within the time allowed, the court shall, upon motion of the applicant, no reason to the contrary appearing, order a default to be recorded and require the applicant to present evidence. By the description in the notice "To All Whom It May Concern", all the world are made parties defendant and shall be concluded by the default order.

Where an appearance has been entered and an answer filed, a default order shall be entered against persons who did not appear and answer.

Petitioners’ justification for filing a motion to annul the decrees and titles, as opposed to filing a motion to lift the order of general default, rests on two related assumptions. First, with the filing of the 16 July 1997 motion and giving of due course to the motion by the land registration court, petitioners assert that they acquired legal standing in the registration proceedings. Second, buyer Eugenio Lopez, Sr. stepped into the shoes of the sellers-applicants Sandoval and Ozaeta when applicants sold the property to him. As successors-in-interest of the buyer, petitioners contend that they are not strangers to the proceedings.

To justify their two assumptions, petitioners traced the antecedent of Section 22 of PD 1529 to Section 29 of Act 49633 and its judicial interpretation in Mendoza v. Court of Appeals.34

Section 22 of PD 1529 provides:

SECTION 22. Dealings with land pending original registration.—After the filing of the application and before the issuance of the decree of registration, the land therein described may still be the subject of dealings in whole or in part, in which case the interested party shall present to the court the pertinent instruments together with the subdivision plan approved by the Director of Lands in case of transfer of portions thereof, and the court, after notice to the parties, shall order such land registered subject to the conveyance or encumbrance created by said instruments, or order that the decree of registration be issued in the name of the person to whom the property has been conveyed by said instruments.

The pertinent portion of Section 29 of Act 496 provides:

SECTION 29. After the filing of the application and before the issuance of the decree of title by the Chief of the General Land Registration Office, the land therein described may be dealt with and instruments relating thereto shall be recorded in the office of the register of deeds at any time before issuance of the decree of title, in the same manner as if no application had been made. The interested party may, however, present such instruments to the Court of First Instance instead of presenting them to the office of the Register of Deeds, together with a motion that the same be considered in relation with the application, and the court, after notice to the parties shall order such land registered subject to the encumbrance created by said instruments, or order the decree of registration issued in the name of the buyer or of the person to whom the property has been conveyed by said instruments. x x x

Mendoza v. Court of Appeals35 explains the procedure in cases of conveyance of the land subject of a registration proceeding by an instrument executed between the time of filing of the application for registration and the issuance of the decree of title.

The law does not require that the application for registration be amended by substituting the "buyer" or the "person to whom the property has been conveyed" for the applicant. Neither does it require that the "buyer" or the "person to whom the property has been conveyed" be a party to the case. He may thus be a total stranger to the land registration proceedings. The only requirements of the law are: (1) that the instrument be presented to the court by the interested party together with a motion that the

69

same be considered in relation with the application; and (2) that prior notice be given to the parties to the case xxx.361awphi1.nét

Petitioners also assert that they do not dispute the judgment of the land registration court. However, this position is in conflict with their 25 November 1998 motion to have the decree and the titles declared void. Petitioners now assume the roles of both successors-in-interest and oppositors. This confusion of roles brought about petitioners’ grave error in procedure.

The land registration court granted the application in LRC No. N-18887 on 31 May 1966 and issued a certificate of finality dated 8 March 1991. Petitioners filed their motion to consider the deed of sale in the registration on 16 July 1997. Petitioners filed their motion to have the decrees and the corresponding certificates of title declared void on 25 November 1998. Petitioners filed both motions long after the decision in LRC No. N-18887 became final and executory. Neither petitioners nor even the applicants from whom they base their claim presented the Deed of Sale before the land registration court while the action was pending.

Considering the facts and arguments as presented above, we hold that the motion filed by petitioners is insufficient to give them standing in the land registration proceedings for purposes of filing an application of a notice of lis pendens. However, we disagree with the LRA and the appellate court’s observation that petitioners need to file a motion to lift the order of general default. A motion to lift the order of general default should be filed before entry of final judgment. The land registration court granted the application for registration of title on 31 May 1966 and issued a certificate of finality on 8 March 1991. Petitioners filed their motion on 16 July 1997. Thus, even if petitioners filed a motion to lift the order of general default, the order of default could not be set aside because the motion was filed out of time.

In Lim Toco v. Go Fay,37 this Court explained the effect of an order of default to the party defaulted. A party declared in default loses his standing in court. As a result of his loss of standing, a party in default cannot appear in court, adduce evidence, be heard, or be entitled to notice. A party in default cannot even appeal from the judgment rendered by the court, unless he files a motion to set aside the order of default under the grounds provided in what is now Section 3, Rule 9 of the 1997 Rules of Civil Procedure.

Indeed, in its comment before this Court, the LRA stated thus:

Under Section 26, PD 1429, petitioners are deemed to have been included by the default order. Those who did not file an answer should be considered as having lost their standing in court from that stage (Republic v. Dela Rosa, 173 SCRA 12) except when they file a motion to set aside the order [of] default on the grounds mentioned in Section 3, Rule 18 of the Rules of Court (Toco v. Fay, 80 Phil. 166).

In land registration cases (as in the said LRC No. N-18887), an order of general default was deemed to have been issued based on the presumption of regularity in judicial proceedings (Pascual, et al. v. Ortega, et al., 58 O.G. 12 March 1962 C.A.). Petitioners failed to adduce any evidence showing that the order of general default was lifted. Records disclosed that without first filing a motion to lift the order of general default, petitioners filed a motion to declare as null and void the decrees and titles. Until the order of general default is lifted by the court, petitioner could not be considered as a party to the action. They are deemed movants whose personality as far as the case is concerned is not yet admitted by the court considering that the order of default has not been lifted.38

One should be careful, however, to distinguish between movants as mere interested parties prescribed under Section 22 of PD 1529 and movants as intervenors-oppositors to the land registration proceedings. It is only in the latter case that a motion to lift the order of general default is required. It is only in the latter case that the doctrine pronounced in Serrano v. Palacio,39 as repeatedly invoked by the LRA and OSG, is applicable:

70

x x x [P]etitioners committed an error of procedure when they filed a motion to intervene in the x x x land registration case for the proper procedure would have been for them to ask first for the lifting of the order of general default, and then, if lifted, to file an opposition to the application of the applicants. This is so because proceedings in land registration are in rem, and not in personam, the sole object being the registration applied for, and not the determination of any right not connected with the registration (Estila vs. Alvero, 37 Phil. 498).

Petitioners are not mere interested parties in this case. By filing their motion to have the decrees and the corresponding certificates of title declared void, they took the role of oppositors to the application for land registration.

The appellate court stated that "in as much as it would want to oblige to the plea of petitioners to hasten or expedite the proceedings and to avoid further expenses on the part of the petitioners, however[,] (it) could not."40Indeed, it requires a delicate balancing act between the objective of the Rules of Court to secure a just, speedy and inexpensive disposition of every action and proceeding41 and the strict requirements for a notice of lis pendens. The facts in this case show that petitioners have not complied with the requirements.

WHEREFORE, we DENY the petition. We AFFIRM the Decision of the Court of Appeals in CA-G.R. SP No. 55993 dated 29 November 2000.

SO ORDERED.

H. Hearing, Judgment and Decree of RegistrationTurquesa v Valera, GR 76371 (2000)

G.R. No. 76371           January 20, 2000

MARIANO TURQUESA, ABRAHAM LALUGAN and LAYAO, MANUEL MAGALA substituted by his Heirs, OTILIO DAMASEN and SEGUNDINA DAMASEN, ANTONIO ESCALANTE, METODIO TULLAS, FLORA LABUGUEN and JUANA LABUGUEN, LOURDES SINDON BAYUBAY, MANUEL MEDRANO and JOSE MEDRANO, petitioners, vs.ROSARIO VALERA and the HONORABLE COURT of APPEALS, respondents.

YNARES-SANTIAGO, J.:

More than half a century ago,1 private respondent applied for the registration of two parcels of land located in Barrio Pulot, Laguyan, Abra described in Plan PSU-119561 with a total land area of 232,908 square meters. The first lot (hereinafter referred to as Lot 1) has an area of 210,767 square meters whereas the other lot (Lot 2) has an area of 22,141 square meters. In support of her application, private respondent presented documents showing that when she was still single, she bought Lot 1 during the years 1929-1932 from Cristeta Trangued and the heirs of Juan Valera Rufino who were allegedly in possession thereof since the Spanish regime in the concept of owners and who declared it in their name for taxation purposes. From 1929, she continued possession of said land in the concept of owner and continued to pay the tax thereon in her name. Notices of the application for registration were published in the Official Gazette, with copies thereof sent to persons mentioned therein and posted in the proper places.

The Director of Lands together with petitioners and other persons2 opposed the application of private respondent. These oppositors were excluded from the order of general default issued by the lower court on June 16, 1950.3 In the course of the hearing, the oppositors (except the Director of Lands) aver that their lands were included in Lot 1 which private respondent sought to register in her name. In support thereof, they contend that the land embraced by Lot 1 at the time it was bought by private respondent is not the same land covered in her application for registration. To avoid confusion, oppositors moved for an ocular inspection in order to determine the correct boundary limits of the

71

lands they respectively claim, however, the same was not allowed by the court a quo. For his part, the Director of Lands' opposition was denied for failure to substantiate his claim that the subject lands were part of the public domain. The opposition of the oppositors other than the herein petitioners were likewise denied for various reasons including failure to present their evidence.

After trial, in a decision dated April 23, 1956, the lower court disposed of the application for registration as follows:

In view of all the foregoing, the applicant Rosario Valera married to Juan Valera, a resident of Bangued, Abra, has proven that she has a registerable title to Lot 1, Psu-119561, with an area of 210,767 square meters as her exclusive property, subject to the encumbrance in favor of the Philippine National Bank in the sum of P1,000.00; and to Lot 2 in the same plan, with an area of 22,141 square meters, without liens or encumbrances, as conjugal partnership property with her husband, Juan Valera.

After this decision has become final, let the corresponding decree be entered and the corresponding title issue in accordance with law.4

Oppositors appealed to the Court of Appeals (CA) insofar only as Lot 1 is concerned, arguing, among others, that the trial court erred in not granting their motion for new trial and their demand for ocular inspection. On March 15, 1966, the Court of Appeals set aside the appealed decision and remanded the case to the lower court for further proceedings, and ordered the conduct of an ocular inspection. The dispositive portion of the CA decision reads:

WHEREFORE, the judgment appealed from is reversed and set aside. This case shall be remanded to the trial court for further proceedings which shall include an ocular inspection of the land applied with a view to determine its identity, location and boundary limits whether the latter have been included in Lot 1 of the applicant's plan to warrant their exclusion from the plan, or their registration in the names of the oppositors who have presented evidence in support of their claim. Thereafter judgment shall be accordingly rendered.5

In accordance with the CA directive, three commissioners were appointed by the trial court to conduct the ocular inspection. The commissioners found:

That the property sought to be registered under survey plan Psu-119561 was relocated and the extent and bounds of the portions claimed by the oppositors were pointed to by them personally or by their supposed representative, the results of which are clearly shown in the accompanying sketch plan marked as Annex "A" of their report by the corresponding names, area and dimensions.

That the survey of the claims was continued the following day, January 29, 1967.

OBSERVATIONS AND FINDINGS

1. The claims of Manuel Magala, Abraham Lalugan, and Layao, Juan Medrano and Eugenio Medrano as shown now in the sketch plan Annex "A" are not shown in the original survey plan Psu-119561;

2. That claims of Otilio Damasen, Nicolas Bigornia, Ricardo Bersamira, Bonifacio Brangan, Cristeta Medrano, Matias Turdil, Mariano Turqueza, Flora Labuguen, Cornelio Bayubay, Ponce Talape, and Metodio Tullar, appeared in the original survey plan Psu-119561 and likewise in sketch plan Annex "A" although three of these claims bear different identifying names in the sketch Annex "A";

3. That out of the original area of 210,767 square meters in original survey plan Psu-119561, the remaining portion not subject of opposition as appearing in sketch plan Annex "A" is 69,683 square meters;

72

4. That the "Calle para Collago" which according to the decision of the Court of Appeals and is stoutly maintained until the present by the oppositors to be the extent or boundary of the property of the applicant on the South side is existing and still is the boundary on the South and on the Southeast side, as shown in the Sketch Plan, Exh. "A";

That the property of Francisco Santua abound also the applicant's property sought to be registered on the South sides, at present as was the case during the original survey.6

The oppositors filed an opposition to the commissioner's report, whereupon a second ocular inspection was ordered by the trial court. After the second inspection, the trial court, on August 28, 1967 again rendered judgment reiterating its original decision ordering the registration of the aforesaid Lot 1 of PSU 119561 with an area of 210,7677 square meters in the name of private respondent. The judge made the following observations based on the ocular inspection:

The Commissioners and the Presiding Judge, upon their ocular inspection, found out a visible boundary on the South-east side of Lot 1 known as "Calle para Collago" which is represented in the relocation plan Exh. HH running from the intersection to Lagayan between points 22 and 21 down to point 18. This, in the opinion of the Court, is the extension of the "Calle para Collago" referred to by the applicant Rosario Valera as boundary exactly on the South but which was converted into ricefields by Francisco Santua. This circumstance now could explain the presence of Francisco Santua as boundary owner on the South which the parties stoutly maintained in the former proceedings that the "Calle para Collago" was on the South but which oppositors now repudiate claiming that the "Calle para Collago" is on the East. Taking a good view over Lot 1, it could safely be concluded that the existing "Calle para Collago" is more to the South than to the East.

With respect to the claim of the Damasens over Lot A mentioned in Exh. D which the Court inadvertently failed to pass upon, the Court has found that it is within the property of the applicant.8

The dispositive portion of the trial court's decision reads:

WHEREFORE, this Court reiterates its former decision ordering the registration of Lot 1 of Plan Psu-119561, Exh. D, with an area of 210,767 square meters in the name of applicant ROSARIO VALERA of Bangued, Abra, and a conjugal property with her husband Juan Valera of the same municipality. The encumbrance with the Philippine National Bank in the amount of P1,000.00 having already been settled (Exh. JJ-1) same shall no longer be annotated on the title henceforth to be issued.

Upon this decision becoming final, let the corresponding decree issue.

The applicant Rosario Valera is hereby directed to pay within seventy two hours from notice hereof the sum of P182.00 as fees for the commissioner Santiago Alejandre who made the relocation survey.9

The case was again appealed to the Court of Appeals (CA-G.R. 40796-R) by the oppositors, some of whom are now the petitioners in this case. 10 They argue that the lower court erred in not excluding the areas they claimed as their own which were wrongfully included in Lot 1 but was ordered registered in private respondent's name. Disposing of the appeal, the CA ruled:

WHEREFORE, in view of the foregoing, with the modification that the registration of Lot 1 of appellees (private respondent herein) should be confined to the extent only as indicated in the sketch annexed to the Commissioner's report, Exhibit HH, and excluding therefrom the landholding of the oppositors, as indicated in the same sketch, the judgment of the trial court is hereby AFFIRMED. Without costs.

SO ORDERED. 11

73

The decision became final and executory for which a corresponding entry of judgment was issued by the Court of Appeals. 12 Later, private respondent filed with the trial court a motion for the issuance of writ of possession over two lots respectively tenanted by Trium Donato and Rudy Donato which were likewise respectively claimed by Santiago Partolan (not an oppositor in the land registration case) and Crispin Baltar (one of the oppositors). 13 In an Order issued on September 14, 1981, the court a quo denied the motion. 14 When her subsequent motion for reconsideration was also denied in another Order dated November 25, 1981, 15 private respondent appealed to the then Intermediate Appellate Court (IAC) which reversed the said two orders and forthwith issued a decision with the following disposition:

WHEREFORE, PREMISES, CONSIDERED, the ORDERS appealed from are hereby REVERSED and judgment is hereby entered ordering:

1. The issuance of a WRIT OF POSSESSION in favor of applicant-appellant covering the landholding claimed by oppositor Crispin Baltar and tenanted by Rudy Donato;

2. Confirming the word "Landholding" in the dispositive portion of the decision in CA-G.R. No. 40796-R as singular and referring only to the landholding opposed by oppositors Segundina and Otilio Damasen as the only landholding excluded from lot 1; and

3. Ordering the issuance of the WRIT OF POSSESSION in favor of the applicant-appellant covering the landholdings opposed by the other oppositors who did not appeal the decision of the lower court dated August 28, 1967.

Without any special pronouncement as to cost.

SO ORDERED. 16

Oppositors filed a motion for reconsideration but the same was denied by the Court of Appeals. 17 Hence this petition for review initiated by some of the oppositors in the trial court. The petition was initially denied by the Court. On motion for reconsideration filed by petitioners, the case was reinstated and respondent was required to submit her comment to the petition. 18

After a painstaking review of the vintage records of this case and after deciphering the ambiguous discussions in the petition, 19 the assailed ruling of the respondent court cannot be sustained. The burden of proof in land registration cases is incumbent on the applicant 20 who must show that he is the real and absolute owner in fee simple of the land applied for. 21 On him also rests the burden to overcome the presumption that the land sought to be registered forms part of the public domain 22 considering that the inclusion in a of the public domain nullifies the title. 23 Undoubtedly, a land registration proceeding is one which is in rem in character, so that the default order issued by the court binds the whole world and all persons whether known or unknown, 24 except those who have appeared and filed their pleadings in the registration case. 25 In the case at bar, those exempted from the order of general default are the petitioners and the other oppositors mentioned in footnote number 2.

There is no dispute that the lands occupied and claimed by oppositors-petitioners Segundina and Otilio Damasen were already finally adjudged excluded from Lot 1 and cannot be registered in private respondent's name. In other words, the Damasens were declared to have a rightful and registrable right over their claims of specific portions of Lot 1. What private respondent wants is that she be installed in possession of the area claimed by Santiago Partolan and Crispin Baltar. Of these two, only Baltar entered his opposition to private respondent's application for land registration. Being a proceeding in rem, Partolan is charged with knowledge of the application of private respondent since the notice was published in accordance with law.

Notwithstanding the foregoing, however, private respondent is not entitled to a writ of possession of that portion of Lot 1 occupied by Partolan and Baltar. No evidence was shown that private respondent had a rightful claim whether possessory or proprietary with respect to those areas. Even if Partolan was excluded by the order of general default and Baltar did not appeal from the trial court's decision of

74

April 23, 1956, the applicant must still prove and establish that she has registrable rights over the land which must be grounded on inconvertible evidence and based on positive and absolute proof. The declaration by the applicant that the land applied for has been in the possession of her predecessor-in-interest for a certain period, does not constitute the "well-nigh inconvertible" and "conclusive" evidence required in land registration. 26 Allegations of her predecessors' ownership of the lot during the Spanish period is self-serving 27 and the declaration of ownership for purposes of assessment on the payment of tax is not sufficient evidence to prove ownership. 28 It should be noted that tax declaration, by itself, is not considered conclusive evidence of ownership in land registration cases. 29 Private respondent should have substantiated her claim with clear and convincing evidence specifically showing the nature of her claim. Her description of the circumstances of her own possession in relation to that of her predecessors-in-interest are mere conclusions of law which require further factual support and substantiation. If an applicant does not have any rightful claim over real property, the Torrens system of registration can confirm or record nothing. 30

Private respondent, being the applicant for registration of land and one who relies on some documents enforcing her alleged title thereto, must prove not only the genuineness of said title but also the identity of the land therein referred to, 31 inasmuch as this is required by law. The dispute in this case pertains to the correctness of the survey of specific areas of lands. It must be borne in mind what defines a piece of land is not the size or area mentioned in its description, but the boundaries therein laid down, as enclosing the land and indicating its limits.32 Considering that the writ of possession was sought by private respondent against persons who were in "actual possession under claim of ownership," the latter's possession raises a disputable presumption of ownership. 33This unrebutted resumption militates against the claim of private respondent, especially considering the evidentiary rule under Article 434 of the Civil Code that a claimant of a parcel of land, such as private respondent, must rely on the strength of his title and not on the weakness of the defendant's claim. 34

Private respondent's contention that the dispositive portion of the CA decision on April 30, 1979 in CA GR 40796-R which mentioned only "landholding" and not "landholdings", thus referring only to that area claimed by the Damasen spouses, is too trivial. A reading of the said decision and the foregoing discussion clearly indicates that the land to be registered in private respondent's name is limited to a certain area stated in the sketch annexed to the Commissioner's report. It categorically excluded those portions pertaining to the oppositors. Since private respondent failed to show that she has a proprietary right over the excluded areas, such as the portions occupied by those against whom the writ of possession was sought for, then the trial court was correct in refusing to grant the writ as the same has no basis.

WHEREFORE, in view of the foregoing, the decision of the Court of Appeals is REVERSED and SET ASIDE and the two orders of the trial court dated September 14, 1981 and November 25, 1981 are REINSTATED.

SO ORDERED.1âwphi1.nêt

Republic v Sodsod, GR 116426

G.R. No. 116426             April 12, 2000

REPUBLIC OF THE PHILIPPINES, represented by the Director of Lands, petitioner, vs.GERARDO SODSOD, Respondent.

PARDO, J.:

75

What is before the Court for review via appeal by certiorari is the decision of the Court of Appeals 1 affirming that of the trial court 2 ordering Lot No. 10367 of the Cadastral Survey of Oas, Albay to be registered and confirmed in the names of Gerardo Sodsod and Felicidad Rellores.

The facts are as follows:

Sometime prior to July 1973, the Director of Lands filed with the Court of First Instance of Albay, Ligao cadastral proceedings 3 for the coverage under the torrens system of the lands in Oas Cadastre, Oas, Albay.

On July 19, 1973, spouses Gerardo Sodsod and Felicidad Rellores filed an answer to the petition, claiming ownership of Lot No. 10367, Oas Cadastre, consisting of 52,847 square meters, located at Tablon, Oas, Albay, by virtue of their more than thirty (30) years possession including that of their predecessor-in-interest.

During the cadastral hearings, the lot was uncontested.

The evidence showed that respondent Sodsod and his predecessor-in-interest occupied and possessed the lot in question in the concept of owner, openly, continuously, adversely, notoriously and exclusively since 1929, or for more than thirty (30) years.

On July 27, 1990, the Regional Trial Court rendered decision, the dispositive portion of which reads:

WHEREFORE, Lot No. 10367 of the Cadastral Survey of Oas, Albay more particularly described in the plan and technical description thereof is hereby ordered registered and confirmed in the names of the SPOUSES GERARDO SODSOD and FELICIANO RELLORES, Filipinos, of legal ages, and residents of Tablon, Oas, Albay.

Once this decision becomes final, let the decree and original certificate of title be issued in their favor.

SO ORDERED.

Ligao, Albay, Philippines, July 27, 1990. 4

In due time, petitioner appealed to the Court of Appeals. 5

On July 25, 1994, the Court of Appeals promulgated its decision affirming that of the trial court. 6

Hence, this petition. 7

We deny the petition. The issue is whether respondent and his predecessor-in-interest possessed the land in question for more than thirty years sufficient to vest in him registrable title over the same.

The issue is factual. The factual findings of the Court of Appeals are conclusive and may not be reviewed on appeal. 8

Nonetheless, looking into the facts of this case, we agree with the Court of Appeals that respondent has fully complied with the requirements under Section 48 (b), C. A. No. 141 for confirmation of title over the lot in question. Ipso jure, respondent has acquired private ownership of the land by mere possession and occupation for more than thirty (30) years under claim of ownership. 9

Since 1929 up to the filing of the cadastral case, respondent and his predecessor had been in actual, open, continuous, exclusive, peaceful and notorious possession and occupation of the lot involved in the concept of owners.1âwphi1

Hence, they have acquired private ownership of the land, and are entitled to confirmation of registrable title.

WHEREFORE, we DISMISS the appeal and AFFIRM in toto the decision of the Court of Appeals in CA - G. R. CV No. 29577.

No costs.1âwphi1.nêt

76

SO ORDERED.

I. Remedies after Judgment but BEFORE a decree is issueda. Motion for Reconsideration/ New Trials Section 1, Rule 37

NEW TRIAL OR RECONSIDERATION

SECTION 1. Grounds of and period for filing motion for new trial or reconsideration.—Within the period for taking an appeal, the aggrieved party may move the trial court to set aside the judgment or final order and grant a new trial for one or more of the following causes materially affecting the substantial rights of said party:

(a) Fraud, accident, mistake or excusable negligence which ordinary prudence could not have guarded against and by reason of which such aggrieved party has probably been impaired in his rights; or

(b) Newly discovered evidence, which he could not, with reasonable diligence, have discovered and produced at the trial, and which if presented would probably alter the result.

Within the same period, the aggrieved party may also move for reconsideration upon the grounds that the damages awarded are excessive, that the evidence is insufficient to justify the decision or final order, or that the decision or final order is contrary to law. (1a)

b. Appeal Secs. 30 and 33 PD 1529

Section 30. When judgment becomes final; duty to cause issuance of decree. The judgment rendered in a land registration proceedings becomes final upon the expiration of thirty days to be counted from the data of receipt of notice of the judgment. An appeal may be taken from the judgment of the court as in ordinary civil cases.

After judgment has become final and executory, it shall devolve upon the court to forthwith issue an order in accordance with Section 39 of this Decree to the Commissioner for the issuance of the decree of registration and the corresponding certificate of title in favor of the person adjudged entitled to registration.

Section 33. Appeal from judgment, etc. The judgment and orders of the court hearing the land registration case are appealable to the Court of Appeals or to the Supreme Court in the same manner as in ordinary actions:

II. After Decreea. Review of Decree, Sec 32 PD 1529

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

77

interest therein, whose rights may be prejudiced. Whenever the phrase "innocent purchaser for value" or an equivalent phrase occurs in this Decree, it shall be deemed to include an innocent lessee, mortgagee, or other encumbrancer for value.

b. Relief from Judgment, Rule 38 Rules of Court

Section 38. Hearing, Judgment, Decree. The trial of the case may occur at any convenient place within the province in which the lands are situated and shall be conducted, and orders for default and confessions entered, in the same manner as in ordinary land registration proceedings and shall be governed by the same rules. All conflicting interests shall be adjudicated by the court and decrees awarded in favor of the persons entitled to the lands or to parts thereof and such decrees shall be the basis for issuance of original certificates of title in favor of said persons and shall have the same effect as certificates of title granted on application for registration of land under ordinary land registration proceedings.

c. Reconveyance, Sec 55, Act 496

Reconveyance is based on Section 55 of Act No. 496, as amended by Act No. 3322, which states that “xxx in all cases of registration procured by fraud the owner may pursue all his legal and equitable remedies against the parties to such fraud, without prejudice, however, to the rights of any innocent holder for value of a certificate of title xxx.”

An action for reconveyance is an action in personam available to a person whose property has been wrongfully registered under the Torrens system in another’s name.  Although the decree is recognized as incontrovertible and no longer open to review, the registered owner is not necessarily held free from liens.  As a remedy, an action for reconveyance is filed as an ordinary action in the ordinary courts of justice and not with the land registration court.[30] Reconveyance is always available as long as the property has not passed to an innocent third person for value.  A notice of lis pendens may thus be annotated on the certificate of title immediately upon the institution of the action in court.  The notice of lis pendens will avoid transfer to an innocent third person for value and preserve the claim of the real owner.[31]

Lucena v CA GR L-77468

G.R. No. L-77468           August 25, 1999

EDUARDO LUCENA and NATIVIDAD PARALES, petitioners, vs.COURT OF APPEALS and RURAL BANK OF NAUJAN, INC., ROGELIO PINEDA, MARIANITO BAJA, PATRICIA ARAJA, BRAULIO BAGUS, REYNALBO MAMBIL and RAMON GARCIA, respondents.

QUISUMBING, J.:

This is a petition for review of the Decision dated January 20, 1987 of the Court of Appeals in CA - G.R. CV No. 65526-R entitled Eduardo Lucena, et al. vs. Rural Bank of Naujan, Inc., et al. as well as its Resolution dated February 16, 1987 denying petitioners' motion for reconsideration.1 The assailed decision reversed the judgment of the then Court of First Instance of Oriental Mindoro in Civil Case No. R-3004, "Eduardo Lucena, et al. vs. Rural Bank of Naujan, et al. (Reconveyance with Damages)" and dismissed herein petitioners' complaint.2

The factual antecedents are as follows:.

Petitioners allege they are the registered owners of a parcel of land located at the barrio of Mag-asawang Tubig, Municipality of Naujan, Oriental Mindoro, covered by Transfer Certificate of Title No. T-41512 of the Registry of Deeds of Oriental Mindoro. On October 29, 1969, petitioner Eduardo

78

Lucena obtained a loan from the private respondent Rural Bank of Naujan, Inc. in the amount of three-thousand pesos (P3,000.00) secured by a real estate mortgage constituted on said parcel of land. On October 1, 1970, after the loan had matured, petitioners paid to the Rural Bank of Naujan, Inc., the sum of two-thousand six pesos and ninety centavos (P2,006.90) in partial satisfaction of their debt, thereby leaving a balance of one-thousand pesos (P1,000.00) in its favor.1âwphi1.nêt

On May 7, 1974, after previous demand by the rural bank for the petitioners to settle the balance of their matured loan went unheeded, the subject property was extrajudicially foreclosed and sold at public auction where the rural bank as highest bidder acquired the property. Prior to the auction sale, notices of foreclosure were posted in at least three conspicuous public places in the municipality where the subject property was located, as indicated in the affidavit of posting dated May 6, 1974.3 No notices were posted in the barrio where the property was located, nor were any published in a newspaper of general circulation. The Certificate of Sale dated May 7, 1974 issued by private respondent Deputy Sheriff Braulio Bagus was registered with the Registry of Deeds of Oriental Mindoro only on January 9, 1975.4

On June 26, 1975, an affidavit of consolidation of ownership was executed by the Rural Bank of Naujan through its manager, private respondent Rogelio P. Pineda. The affidavit of consolidation was subsequently registered by private respondent Reynaldo Mambil in his capacity as acting Register of Deeds on July 8, 1975, under Entry No. 134351. Transfer Certificate of Title No. T-41512 in the name of the petitioners was thus cancelled and Transfer Certificate of Title No. T-68547 of the Registry of Deeds of Oriental Mindoro was then issued in favor of the rural bank also on July 8, 1975. Thereafter, on July 14, 1975, a deed of sale was executed by the rural bank through its manager whereby the subject property was sold to private respondent spouses Marianito Baja and Patricia Araja, resulting in the cancellation of TCT No. T-68547 and the subsequent issuance of TCT No. T-68680 in the name of said respondents. Said deed of sale dated July 14, 1975 was accepted and registered by private respondent Ramon G. Garcia, then acting Register of Deeds of Oriental Mindoro.5

On January 12, 1977, petitioners filed a complaint for reconveyance and damages against private respondents before the then Court of First Instance of Oriental Mindoro, to recover the subject property from private respondents and to compel the latter to compensate them for damages and losses suffered.6 After trial, the courta quo promulgated its decision dated September 12, 1978, ruling in sum that there was no valid foreclosure sale of the subject property. The dispositive portion thereof reads:

WHEREFORE, in view of the foregoing the Court believes and so holds that the preponderance of evidence militates in favor of the plaintiffs and against the defendants, and the Court renders judgment, to wit:

(1) Orders the defendants Marianito Baja and Patricia Araja to reconvey the parcel of land registered in their name under TCT No. T-68680 of the Register of Deeds of Oriental Mindoro in favor of herein plaintiffs Eduardo Lucena and Natividad Parales, free from all liens and encumbrances, except the remaining unpaid balance including accrued interest thereon in favor of the Rural Bank of Naujan, Inc.;

(2) Orders the Rural Bank of Naujan, Inc. and its manager Rogelio Pineda, jointly and severally, to pay the herein plaintiffs actual damages in the amount of P17,500.00 for unrealized rentals from subject property;

(3) Orders the Rural Bank of Naujan, Inc. and its manager Rogelio Pineda, jointly and severally, to pay herein plaintiffs moral damages in the amount of P10,000.00;

(4) Orders the Rural Bank of Naujan, Inc. and its manager Rogelio Pineda, jointly and severally, to pay plaintiffs attorney's fees in the amount of P5,000.00, and to pay the costs of suit.

SO ORDERED.7

79

Not satisfied with the judgment, both petitioners and private respondents elevated the case to the Court of Appeals. On January 20, 1987, the respondent court rendered its decision reversing and setting aside the trial court's judgment. It ruled in sum that (a) posting of notices in the barrio where the property is situated is not required, as all the law requires is posting in the municipality or city where the property is located; (b) there is no need to publish the notice of auction sale in a newspaper of general circulation, because the balance of the loan was only one-thousand pesos (P1,000.00); (c) personal notice of the auction sale to the petitioners was not required; (d) the trial court was correct in holding that the date of registration of the sheriff's certificate of sale and not the date of the sale itself was the reckoning point for the start of the one-year redemption period of the petitioners; and (e) the petitioners did not redeem their property within the one-year period from the date of registration of the certificate of sale, and having lost their right of redemption, cannot squirm their way out of their predicament by asking for reconveyance of the subject property.8

Petitioners now seek recourse through this petition. They assign the following errors:

(1) ABSENCE OF POSTING OF NOTICES IN THE BARRIO OF MAGASAWANG TUBIG, WHERE THE LAND IS LOCATED, AS REQUIRED BY REPUBLIC ACT NO. 5939, RENDERED NULL AND VOID THE SALE IN QUESTION.

(2) PUBLICATION WAS A REQUISITE SINE QUA NON IN THIS CASE, BECAUSE THE AMOUNT OF THE LOAN WAS P3,000.00; HENCE, PARAGRAPH 3, SECTION 5 OF REPUBLIC ACT NO. 720, WAS NOT APPLICABLE, BECAUSE THE LAW DOES NOT SPEAK OF THE "BALANCE UNPAID" BUT THE "AMOUNT OF THE LOAN".

(3) THE PREMATURE AND FRAUDULENT CONSOLIDATION OF OWNERSHIP AND MALICIOUS IMMEDIATE SALE OF THE LAND IN QUESTION IN FAVOR OF MARIANITO BAJA AND PATRICIA ARAJA BEFORE THE EXPIRATION OF THE PERIOD OF REDEMPTION CLOSED THE DOOR FOR LEGAL REDEMPTION; SO THAT AN ACTION FOR RECONVEYANCE, BECAME THE PROPER REMEDY.

(4) THE AFFIDAVIT OF CONSOLIDATION OF OWNERSHIP HEREIN WAS NULL AND VOID FOR LACK OF NOTARIZATION.9

We find that the pertinent issues to be resolved are: (1) whether or not a valid foreclosure sale of the subject property was conducted and (2) whether or not reconveyance and damages is the proper remedy available to petitioners.

With respect to the first issue, this Court has ruled that failure to comply with statutory requirements as to publication of notice of auction sale constitutes a jurisdictional defect which invalidates the sale.10 Even slight deviations therefrom are not allowed.11 Section 5 of Republic Act No. 720 as amended by Republic Act No. 5939 provides:12

The foreclosure of mortgages covering loans granted by rural banks shall be exempt from the publication in newspapers were the total amount of the loan, including interests due and unpaid, does not exceed three thousand pesos. It shall be sufficient publication in such cases if the notices of foreclosure are posted in at least three of the most conspicuous public places in the municipality and barrio were the land mortgaged is situated during the period of sixty days immediately preceding the public auction. Proof of publication as required herein shall be accomplished by affidavit of the sheriff or officer conducting the foreclosure sale and shall be attached with the records of the case: . . . . (emphasis supplied)

In the case at bar, the affidavit of posting executed by the sheriff states that notices of the public auction sale were posted in three (3) conspicuous public places in the municipality such as (1) the bulletin board of the Municipal Building (2) the Public Market and (3) the Bus Station. There is no

80

indication that notices were posted in the barrio where the subject property lies. Clearly, there was a failure to publish the notices of auction sale as required by law.

In Roxas vs. Court of Appeals,13 this Court has ruled that the foreclosure and public auction sale of a parcel of land foreclosed by a rural bank were null and void when there was failure to post notices of auction sale in the barrio where the subject property was located. This Court finds that the same situation obtains in the case at bar. Further still, there was a failure on the part of private respondents to publish notices of foreclosure sale in a newspaper of general circulation. Section 5 of R.A. 720 as amended by R.A. 5939 provides that such foreclosures are exempt from the publication requirement when the total amount of the loan including interests due and unpaid does not exceed three-thousand pesos (P3,000.00). The law clearly refers to the total amount of the loan along with interests and not merely the balance thereof, as stressed by the use of the word "total." At the time of foreclosure, the total amount of petitioners' loan including interests due and unpaid was P3,006.90. Publication of notices of auction sale in a newspaper was thus necessary.

In light of private respondents' failure to comply with the statutory requirements of notice and publication, we rule that the foreclosure and public auction sale of petitioners' property are null and void. Hence, the Rural Bank of Naujan did not acquire valid title to the property in question. This reversal of the Court of Appeals disposes of the other errors assigned by petitioners.

Anent the second issue, the above conclusion requires a determination of whether or not petitioners are entitled to a reconveyance of their property. If the property has not yet passed to an innocent purchaser for value, an action for reconveyance is still available.14 It is a condition sine qua non for an action for reconveyance to prosper that the property should not have passed to the hands of an innocent purchaser for value.15 He is considered an innocent purchaser who acquired the property for a valuable consideration not knowing that the title of the vendor or grantor was null and void.16 Good faith or its absence must thus be established on the part of spouses Marianito Baja and Patricia Araja at the time that they purchased the subject property from the Rural Bank of Naujan.

Good faith, or the lack of it, is in the last analysis a question of intention; but in ascertaining the intention by which one is actuated on a given occasion, we are necessarily controlled by the evidence as to the conduct and outward acts by which alone the inward motive may, with safety, be determined.17 To determine whether or not the Baja spouses were in good faith at the time they purchased the subject property from the Rural Bank of Naujan thus entails a review of the evidence on record.

The trial court concluded that Marianito Baja and Patricia Araja were purchasers in bad faith. The trial court noted that when Marianito Baja verified the title of the subject property at the rural bank, he must have noticed that the certificate of sale was registered with the Office of the Register of Deeds only on January 9, 1975, so that he is presumed to know that the petitioners had at least one year from that date or up to January 8, 1976 to redeem the subject property.18

It is a well-settled rule that a purchaser cannot close his eyes to facts which should put a reasonable man upon his guard, and then claim that he acted in good faith under the belief that there was no defect in the title of the vendor. His mere refusal to believe that such defect exists, or his willful closing of his eyes to the possibility of the existence of a defect in his vendor's title, will not make him an innocent purchaser for value, if it afterwards develops that the title was in fact defective, and it appears that he had such notice of the defect as would have led to its discovery had he acted with that measure of precaution which may reasonably be required of a prudent man in a like situation.19

In the case at bar, Marianito Baja testified on cross-examination that Victor Atienza, Baja's cousin and petitioners' tenant on the subject property, informed him of the rural bank's intention to sell the land in question.20 He said that from the time this information was relayed to him until the execution of the deed of sale by the bank in favor of the Baja spouses on July 14, 1975, a period of about half a year elapsed.21 He further stated that upon learning from Victor Atienza that the property was being sold, he immediately went to the rural bank to verify this information, as well as ascertain if the land was

81

titled.22 Baja also said that before the deed of sale was executed on July 14, 1975, he made his offer to buy the property from the bank about one month before said date.23 On direct examination, however, Baja claimed that he verified the title to the subject property to be in the rural bank's name before the sale was effected.24

From the records, it appears that title to the property was issued in the rural bank's name only on July 8, 1975, when the bank's affidavit of consolidation of ownership dated June 26, 1975 was registered with the Registry of Deeds of Oriental Mindoro.25 Said registration was the operative act to prompt the Register of Deeds to cancel the title in the name of petitioners and to issue a new one in the name of the rural bank. Hence, if Marianito Baja claims to have offered to buy the property one month before July 14, 1975, or sometime in the middle of June of that year, he must have noticed that the title was not yet in the rural bank's name. More so, he also would have noticed that the title was not yet in the bank's name when he verified the status of the property and the title thereto immediately after Victor Atienza told him that the property was being sold, which, according to him, was about half a year before July 14, 1975.

What Baja should have noticed, if we follow his own chronological estimates, was that the title was still in the petitioners' name when he verified the status of the land in question. Thus, he must have seen that the certificate of auction sale was registered only on January 9, 1975. As the trial court has said, he is presumed by law to know that the petitioners had one year from this date or until January 8, 1976 to redeem the subject property.

In addition, Baja was completely aware of the fact that Victor Atienza was a tenant of the petitioners. Hence, at the time the property in question was being sold to him by the rural bank, possession thereof was with the petitioners, exercised through their tenant Victor Atienza. In Santiago vs. Court of Appeals,26 we cited De Guzman, Jr. vs.Court of Appeals (156 SCRA 701 [1987]):

The failure of appellees to take the ordinary precautions which a prudent man would have taken under the circumstances, specially in buying a piece of land in the actual, visible and public possession of another person, other than the vendor, constitutes gross negligence amounting to bad faith.

In this connection, it has been held that were, as in this case, the land sold is in the possession of a person other than the vendor, the purchaser is required to go beyond the certificate of title and ma[k]e inquiries concerning the rights of the actual possessor. (Incala vs. Mendoza, CA-G.R. No. 13677-R, November 9, 1965; De Jesus vs. Revilla, CA-G.R. No. 13562-R, October 5, 1965; Martelino vs. Manikan, CA-G.R. No. 32792-R, June 22, 1956)

x x x           x x x           x x x

One who purchases real property which is in the actual possession of another should, at least make some inquiry concerning the right of those in possession. The actual possession by other than the vendor should, at least put the purchaser upon inquiry. He can scarcely, in the absence of such inquiry, be regarded as a bona fide purchaser as against such possessors" (Conspecto vs. Fruto, 31 Phil. 144)."

x x x           x x x           x x x

Marianito Baja testified on cross-examination that he was working for about half a year in another area about a hundred meters away from the subject property before the same was offered to him for sale.27 Her thus had visual notice that petitioners' tenant Victor Atienza was working on the land in question. He also learned from Atienza that petitioner Eduardo Lucena was the landlord of the former.28 In fact, prior to the date that he acquired the property, Baja instructed Atienza to inform said petitioner that the rural bank was selling the property to him.29Baja, however, never communicated directly with petitioner Eduardo Lucena, nor did he receive any response coming from said petitioner.30 He did learn, however, that Lucena scolded Victor Atienza when the latter went to see

82

him, indicating that he was aware of said petitioner's aversion to the sale of the property by the rural bank.31

All things considered, Marianito Baja did not make any reasonable inquiry regarding the status of the land in question, despite being aware that the property was still in the possession of the petitioners. He did not even make any effort to communicate directly with petitioner Eduardo Lucena. All he did was to instruct Victor Atienza to inform Lucena of the proposed sale of the property. He did not instruct Atienza, however, to make inquiries concerning the status of the property. Furthermore, Baja's claim that he saw that title to the property was in the name of the rural bank prior to the sale is not credible. Granting arguendo that the title was in the name of the rural bank when he first saw it, he nonetheless had notice that the possession of the property was with persons other than the vendors thereof. It was thus incumbent upon him to look beyond the title to the subject property and make the necessary inquiries. This he neglected to do.

When the Baja spouses purchased the subject property from the rural bank on July 14, 1975, they did so well within the one-year redemption period of petitioners. In doing so, not only did said respondents have notice of a defect in the title of the rural bank over the subject property, but by purchasing the latter, they also closed the door on the petitioners' right to redeem it. Accordingly, we adopt the finding of the lower court that said respondents purchased the subject property in bad faith. We rule that petitioners are entitled to a reconveyance of the property as it has not yet passed to an innocent purchaser for value.

In their petition, petitioners also pray that this Court render a decision pursuant to their prayers as appellants in the Court of Appeals. Essentially, petitioners implored the respondent court to raise the amount of damages awarded them by the trial court and to find private respondents Braulio Bagus, Reynaldo Mambil and Ramon Garcia liable for damages as well. Petitioners also asked for the inclusion of exemplary damages and litigation fees in the award.

We find that there is no substantial reason to modify the trial court's award of damages. There is no convincing proof to support petitioners' allegations that private respondents Braulio Bagus, Reynaldo Mambil and Ramon Garcia performed their duties as Deputy Provincial Sheriff and Registers of Deeds with unlawful intent and in bad faith. Furthermore, petitioners' allegations as to the amount of unrealized rentals due them as actual damages are mere assertions unsupported by factual evidence. In determining actual damages, the court cannot rely on mere assertions, speculations, conjectures or guesswork but must depend on competent proof and on the best evidence obtainable regarding the actual amount of loss.32

There is also no sound basis for increasing the award of moral damages. The well-entrenched rule is that the grant of moral damages depends upon the discretion of the court based on the circumstances of each case.33We find that the trial court exercised its sound discretion in awarding actual and moral damages as it did to the petitioners, as well as in not granting the exemplary damages for lack of sufficient basis.

WHEREFORE, the petition is hereby GRANTED. The decision of the Court of Appeals dated January 20, 1987 is hereby SET ASIDE; and the decision of the CFI of Oriental Mindoro dated September 12, 1978, is hereby REINSTATED and AFFIRMED.1âwphi1.nêt

Costs against private respondents.

SO ORDERED.

Heirs of Brusas vs CA GR 126875

G.R. No. 126875           August 26, 1999

HEIRS OF MARIANO, JUAN, TARCELA and JOSEFA, all surnamed BRUSAS, petitioners, vs.

83

COURT OF APPEALS and HEIRS OF SPOUSES INES BRUSAS and CLETO REBOSA, respondents.

BELLOSILLO, J.:

This is a bitter dispute spanning more than two (2) decades of protracted legal entanglements and deep-seated enmity among the protagonists, even descending to their children, each claiming ownership over a 19-hectare land located in San Francisco, Baao, Camarines Sur. In view of the prolonged litigation, the original parties have since died and are now substituted by their heirs.

Petitioners, heirs of Juan, Mariano, Tarcela and Josefa, all surnamed Brusas, claimed that the disputed property, formerly a public land, was part of the 33-hectare land in the actual physical possession of their grandfather Sixto Brusas since 1924, having inherited the same from their great grandfather Pedro Brusas. Sometime in 1946 Sixto Brusas caused the property to be surveyed in the name of his five (5) children, namely, Juan, Ines, Mariano, Tarcela and Josefa. The survey was approved as Psu-116520.1 As indicated in the survey plan the property was traversed by the Barit River, and the eastern portion thereof with an aggregate area of 19.8992 hectares was denominated as Lots 1 and 2, while the western portion measuring 13.2439 hectares was designated as Lots 3 and 4. In the same year, the property was subdivided among the five (5) children of Sixto Brusas. The partition was made lengthwise so that each heir would have access to the river and, as was the custom of the place, the distribution was made according to their age: the southernmost lot was assigned to Juan being the eldest, followed successively by Ines, Mariano, Tarcela and Josefa.2 All of them purportedly took immediate possession of their respective shares.1âwphi1.nêt

On 17 July 1968 Ines Brusas applied for and was granted a free patent over Lots 1 and 2 of Psu-116520 with an aggregate area of 19.8992 hectares for which OCT No. 23356 was issued in her name. Thus, when Mariano Brusas and Josefa Brusas filed their sworn statements of landholdings in 1973 they supposedly discovered that their properties were already titled in the name of their sister Ines. The discovery triggered a controversy among the Brusas siblings and earnest efforts to settle the conflict before the barangay officials, the local police and the PC Provincial Commander proved futile.

Private respondents, heirs of Ines Brusas and Cleto Rebosa, denied on the other hand that Lots 1 and 2 were owned and possessed by their grandfather Sixto Brusas during his lifetime. They asserted that Ines Brusas was the absolute owner having entered the property as early as 1924. Since then Ines Brusas and her husband Cleto Rebosa were clearing the land on their own by cutting down trees and removing their roots it being a forested area. In 1957 Ines Brusas applied for a free patent which was approved and the corresponding certificate of title issued in 1967.

Sometime in 1974 Ines Brusas filed a complaint for recovery of six (6) hectares of land alleging that her brothers and sisters forcibly entered and deprived her of that portion of the property.3 Juan, Josefa, Mariano and Tarcela countered by instituting in the same court an action for reconveyance imputing fraud, misrepresentation and bad faith to Ines Brusas in using a forged affidavit to obtain title over Lots 1 and 2 despite full knowledge that she owned only 1/5 portion thereof.4

After the cases were consolidated trial dragged on for nineteen (19) years. The lower court finally rendered its decision in 1993 dismissing the complaint filed by Ines Brusas, declaring Lots 1 and 2 as the pro-indiviso property of the Brusas siblings, and ordering Ines Brusas to reconvey to her brothers and sisters their respective shares in the disputed property.

On appeal, however, the Court of Appeals in its Decision of 16 July 1996 reversed and set aside the decision of the trial court thus —

WHEREFORE . . . . the appealed decision is REVERSED and SET ASIDE and another judgment is hereby rendered as follows:

1. In Civil Case No. IR-1058, ordering defendants and/or their successors-in-interest to vacate the land described in paragraph 4 of the complaint and/or to deliver possession thereof to plaintiffs or their successors-in-interest;

84

2. Dismissing the complaint for reconveyance and damages in Civil Case No. IR-1059.

The Court of Appeals ratiocinated —

Apart from the self-serving and bare allegations of appellees, no competent evidence was adduced to substantiate their claim of fraud on the part of Ines Brusas in her application for a free patent over the land in dispute. They submitted specimens of their signatures to the NBI office at Naga City for examination but failed to submit to the court the result thereof. Such failure indicates either that they did not pursue their request for examination or that, if they did, the result thereof is adverse to their cause.

It is significant to note that aside from the supposedly falsified affidavit, Exhibit 4, another affidavit was executed by Ines, together with Tarcela, Juan and Josefa, all surnamed Brusas, renouncing their rights to Lots 3 and 4 in favor of Mariano Brusas (Exhibit 11). Both appear to have been notarized by the same Notary Public on April 22, 1960. The existence of the two affidavits, Exhibits 4 and 11, strongly suggests that the Brusas recognized Ines Brusas as the sole claimant of Lots 1 and 2 and Mariano Brusas, the sole claimant of lots 3 and 4.

There is likewise a presumption of regularity in the performance of official duty. There is no showing that the grant of a free patent in favor of Ines Brusas was predicated solely on the affidavit of waiver, Exhibit 4, or that without it her application would not have been given due course.

It must be borne in mind, in this regard, that the land in dispute was originally a public land. The occupation and cultivation thereof by Sixto Brusas, the father of Ines, Tarcela, Josefa, Juan and Mariano Brusas, did not make it a part of his hereditary estate. If he had complied with all the legal requirements for the grant of a free patent, he could have filed the corresponding application therefor. But he did not. Hence, he could not have transmitted ownership thereof to his heirs upon his death (citing Naval v. Jonsay, 50 O.G. 4792)

Their motion for reconsideration having been denied by the Court of Appeals in its Resolution of 30 September 1996, petitioners now come to us through this petition for review.

The pivotal issues to be resolved are: first, who are the rightful owners of the disputed property — is it the heirs of Mariano, Juan, Josefa and Tarcela Brusas, whose claim of ownership is evidenced by a survey and subdivision plan; or, is it the heirs of spouses Ines Brusas and Cleto Rebosa, whose claim of ownership flows from an original certificate of title in the name of their parents, and covering the litigated property? And second, was there fraud on the part of Ines Brusas in causing the registration of the disputed land under her name thus entitling petitioners to the reconveyance of their shares therein?

It is a fundamental principle in land registration that the certificate of title serves as evidence of an indefeasible and incontrovertible title to the property in favor of the person whose name appears therein. A title once registered under the Torrens System cannot be defeated even by adverse, open and notorious possession; neither can it be defeated by prescription. It is notice to the whole world and as such all persons are bound by it and no one can plead ignorance of the registration.5

The real purpose of the Torrens System of land registration is to quiet title to land and stop forever any question as to its legality. Once a title is registered the owner may rest secure without the necessity of waiting in the portals of the court, or sitting on the mirador de su casa, to avoid the possibility of losing his land.6 Indeed, titles over lands under the Torrens system should be given stability for on it greatly depends the stability of the country's economy. Interest reipublicae ut sit finis litium.

This does not mean, however, that the landowner whose property has been wrongfully or erroneously registered in another's name is without remedy in law. When a person obtains a certificate of title to a land belonging to another and he has full knowledge of the rights of the true owner, he is considered guilty of fraud. He may then be compelled to transfer the land to the defrauded owner so long as the property has not passed to the hands of an innocent purchaser for value.7

85

In the instant case, the litigated property is still registered in the name of Ines Brusas, so that insofar as procedure is concerned, petitioners were correct in availing of the remedy of reconveyance. However, an action for reconveyance presupposes the existence of a defrauded party who is the lawful owner of the disputed property. It is thus essential for petitioners to prove by clear and convincing evidence their title to the property, and the fact of fraud committed by Ines Brusas in registering their property in her name, which they miserably failed to do.

Primarily, the survey and subdivision plan submitted in evidence by petitioners are inferior proofs of ownership and cannot prevail against the original certificate of title in the name of Ines Brusas who remains and is recognized as the registered owner of the disputed property.

The survey of the land in the name of the five (5) children of Sixto Brusas is only an indication that each has an interest over the property, but it does not define the nature and extent of those interests, nor the particular portions of the property to which those interests appertain. The subdivision plan, on the other hand, is of doubtful evidentiary value and can hardly be the basis of a claim of ownership. A careful examination thereof shows that it is nothing but a sketch of the land purportedly prepared by a private land surveyor. It is not apparent therein when and where the partition was made, or who caused the property to be subdivided. Worse, this document was not even signed by any of the parties to the supposed partition to show their conformity thereto, nor acknowledged in writing by any of them or their heirs.

Even petitioners' tax declarations and tax receipts are unavailing. It is well-settled that they are not conclusive evidence of ownership or of the right to possess land, in the absence of any other strong evidence to support them.8 The fact that the disputed property may have been declared for taxation purposes in the names of the brothers and sisters of Ines Brusas does not necessarily prove their ownership thereof. The tax receipts and tax declarations are merely indicia of a claim of ownership.

What perhaps militates heavily against petitioners is the Affidavit (of waiver) marked Exh. "4" executed sometime in 1960 by Mariano, Tarcela, Juan and Josefa, whereby they relinquished, ceded and transferred to Ines Brusas their rights and interests over the controversial property, and recognized her as the absolute owner thereof, thus —

WE, MARIANO BRUSAS, JUAN BRUSAS, TARCELA BRUSAS and JOSEFA BRUSAS, all of legal age, married except the last who is a widow, residence (sic) and with postal address at Baao, Camarines Sur, after having been duly sworn to according to law, state the following, to wit —

That we are the brothers and sisters of Ines Brusas, applicant of Free Patent Application No. 10-4375 covering Lots 1 and 2, Psu-116520, situated in Baao, Camarines Sur;

That by virtue of this instrument, we relinquish, cede and transfer whatever rights and interests we might have over Lots 1 and 2, Psu-116520 in favor of our sister, Ines Brusas;

That we do not have any opposition to Ines Brusas acquiring title to said Lots 1 and 2, Psu-116520 by virtue of her Free Patent Application No. 10-4375;

That we recognize our sister, Ines Brusas as the legal and absolute owner of Lots 1 and 2, Psu-116520 as covered by her Free Patent Application No. 10-4375;

WHEREFORE, we sign this instrument of our own will and voluntary act and after the same has been translated in our own native dialect and understood fully its contents, this April 20, 1960 at Naga City.

(SGD) MARIANO BRUSAS             (SGD) JUAN BRUSAS

(SGD) TARCELA BRUSAS             (SGD) JOSEFA BRUSAS

On the basis of the foregoing reasons alone the instant case should immediately be dismissed. Having failed to show any valid title to the land involved petitioners are not the proper parties who can

86

rightfully claim to have been fraudulently deprived thereof. Nonetheless, for the satisfaction of all and sundry, we shall proceed to refute their accusation of fraud.

First, Ines Brusas allegedly misrepresented in her application for free patent that she was the only claimant of the disputed property, without disclosing that her other brothers and sisters were claiming portions that supposedly belonged to them. It is worthy to emphasize, to the point of being repetitious, that Juan, Tarcela, Mariano and Josefa executed an affidavit of waiver recognizing Ines Brusas as the legal and absolute owner of Lots 1 and 2, and manifesting that they have no opposition to Ines Brusas' acquiring certificates of title over those lots. It was on the basis of this affidavit of waiver that Ines stated in her application for free patent that she was the sole claimant of Lots 1 and 2. Certainly this is not fraud. At any rate, it appears from the records that Juan, Tarcela, Mariano and Josefa were notified of the application for free patent of Ines Brusas and duly afforded the opportunity to object to the registration and to substantiate their claims, which they failed to do. Hence their opposition was accordingly disregarded and Ines Brusas' application was given due course.9 Petitioners cannot thus feign ignorance of the registration. Moreover, it is significant that petitioners never contested the order of the Bureau of Lands disregarding their claims, i.e., by filing a motion for reconsideration, or an appeal, for that purpose. This could only mean that they either agreed with the order or decided to abandon their claims.

Petitioners next assailed the genuineness of Exh. "4" asserting that the signatures therein were forged. However, no evidence was adduced by them to substantiate their allegation. It appears that they submitted for examination by the NBI eighteen (18) specimen signatures of Juan, Tarcela, Mariano and Josefa. Unfortunately, no standard signature could be found for the year 1960 when Exh. "4" was executed.10 Petitioners admitted that they were unable to produce what was required by the NBI, hence, they "just had to give up."11

Furthermore, there was another Affidavit (Exh. "11") signed in the same year by the Brusases, Ines included, recognizing Mariano Brusas as the sole claimant of Lots 3 and 4 and waiving their interests therein in his favor. This fact all the more confirms that the affidavit of waiver in favor of Ines Brusas was authentic. As correctly observed by the appellate court —

It is significant to note that aside from the supposedly falsified affidavit, Exhibit 4, another affidavit, was executed by Ines, together with Tarcela, Juan and Josefa, all surnamed Brusas, renouncing their rights to Lots 3 and 4 in favor of Mariano Brusas (Exhibit 11). Both appear to have been notarized by the same Notary Public on April 22, 1960. The existence of the two affidavits, Exhibits 4 and 11, strongly suggests that the Brusas[es] recognized Ines Brusas as the sole claimant of Lots 1 and 2 and Mariano Brusas, the sole claimant of Lots 3 and 4.12

It is not for private respondents to deny forgery. The burden of proof that the affidavit of waiver is indeed spurious rests on petitioners. Yet, significantly, even as they insist on forgery they never really took serious efforts in establishing such allegation by preponderant evidence. It must be stressed that mere allegations of fraud are not enough. Intentional acts to deceive and deprive another of his right, or in some manner injure him, must be specifically alleged and proved.

The affidavit of waiver in favor of Ines, being a public document duly acknowledged before a notary public, under his hand and seal, with his certificate thereto attached, is prima facie evidence of the facts stated therein.13Petitioners cannot impugn its validity by mere self-serving allegations. There must be evidence of the clearest and most satisfactory character. Correlatively, in granting the application of Ines Brusas for free patent, the Bureau of Lands enjoyed the presumption of regularity in the performance of its official duties. This presumption has not been rebutted by petitioners as there was likewise no evidence of any anomaly or irregularity in the proceedings which led to the registration of the land.

Finally, as we are not trier of facts, we generally rely upon and are bound by the conclusions of the lower courts, which are better equipped and have better opportunity to assess the evidence first-hand, including the testimony of witnesses. We have consistently adhered to the rule that findings of the

87

Court of Appeals are final and conclusive, and cannot ordinarily be reviewed by this Court as long as they are based on substantial evidence. Among the exceptions to this rule are: (a) when the conclusion is grounded entirely on speculations, surmises or conjectures; (b) when the inference made is manifestly mistaken, absurd or impossible; (c) where there is grave abuse of discretion; (d) when the judgment is based on a misapprehension of facts; (e) when the findings of facts are conflicting; and, (f) when the Court of Appeals, in making its findings, goes beyond the issues of the case and the same is contrary to the admissions of both the appellant and appellee. We emphasize that none of these exceptions is present in this case.

WHEREFORE, the petition is DENIED. The 16 July 1996 Decision of the Court of Appeals ordering petitioners to vacate the disputed property and restore respondents in possession thereof, as well as its 30 September 1996 Resolution denying reconsideration, is AFFIRMED. Costs against petitioners.1âwphi1.nêt

SO ORDERED.

III Voluntary Dealings with Registered LandsA. General Principles, Section 51 and 52 PD 1529

Section 51. Conveyance and other dealings by registered owner. An owner of registered land may convey, mortgage, lease, charge or otherwise deal with the same in accordance with existing laws. He may use such forms of deeds, mortgages, leases or other voluntary instruments as are sufficient in law. But no deed, mortgage, lease, or other voluntary instrument, except a will purporting to convey or affect registered land shall take effect as a conveyance or bind the land, but shall operate only as a contract between the parties and as evidence of authority to the Register of Deeds to make registration.

The act of registration shall be the operative act to convey or affect the land insofar as third persons are concerned, and in all cases under this Decree, the registration shall be made in the office of the Register of Deeds for the province or city where the land lies.

Section 52. Constructive notice upon registration. Every conveyance, mortgage, lease, lien, attachment, order, judgment, instrument or entry affecting registered land shall, if registered, filed or entered in the office of the Register of Deeds for the province or city where the land to which it relates lies, be constructive notice to all persons from the time of such registering, filing or entering.

Campillo v CA 129 SCRA 513

G.R. No. L-56483 May 29, 1984

SOSTENES CAMPILLO, petitioner, vs.HON. COURT OF APPEALS and ZENAIDA DIAZ VDA. DE SANTOS, in her capacity as Administratrix of the Intestate Estate of the late SIMPLICIO S. SANTOS, respondents.

Rosendo J. Tansinsin for petitioner.

Buenaventura Evangelista for private respondent.

 

DE CASTRO, J.:

88

In this petition for review on certiorari of the decision of the defunct Court of Appeals in CA-G.R. No. 62842-R issued on March 9, 1981, the only issue is whether who has a better right or title to the herein disputed two (2) parcels of land — Simplicio Santos who earlier purchased them in a private sale but failed to register his sale, or petitioner Sostenes Campillo who subsequently purchased them at an execution sale and obtained a certificate of title.

The pertinent undisputed facts, may be summarized as follows: On February 27, 1961, Tomas de Vera and his wife Felisa Serafico sold two (2) parcels of land located in Tondo, Manila, designated as Lots 1 and 2 of the consolidation and subdivision plan (LRC) Pcs. 888 and segregated from Transfer Certificate of Title No. 37277 under Transfer Certificate of Title No. 63559, to Simplicio Santos, now deceased and is represented by his administratrix, Zenaida Diaz Vda. de Santos, the herein private respondent. Said sale was however never presented for registration in the office of the Registry of Deeds of Manila nor noted in the title covering the property.

On January 27, 1962, petitioner Sostenes Campillo obtained a judgment for a sum of money against Tomas de Vera in Civil Case No. 49060 of the Court of First Instance of Manila. That judgment became final and executory, and petitioner obtained an order for the issuance of a writ of execution. The writ was issued on April 4, 1962 and pursuant thereto, the City Sheriff levied on three (3) parcels of land covered by TCT No. 63559 in the name of Tomas de Vera, including the two (2) parcels of land which the latter previously sold to Simplicio Santos.

On June 26, 1962, notice of the sale of said lots was issued by the Sheriff and published in the "Daily Record" and La Nueva Era."

On July 25, 1962, the three parcels of land were sold at public auction for P17,550.81 in favor of petitioner who was issued the corresponding certificate of sale. After the lapse of one year, the City Sheriff executed the final deed of sale in favor of petitioner over the three (3) parcels of land levied and sold on execution. On February 4, 1964, TCT No. 63559 was cancelled and in lieu thereof, TCT No. 73969 was issued by the Registry of Deeds of Manila in the name of petitioner Sostenes Campillo. Upon petition by the latter, the Registry of Deeds cancelled TCT No. 73969 and issued in hell thereof TCT Nos. 74019 and 74020 over the disputed Lots 1 and 2, respectively.

Claiming to be the owner of the two parcels of land by reason of the previous sale to him by Tomas de Vera, Simplicio Santos filed an action to annul the levy, notice of sale, sale at public auction and final deed of sale of Lots 1 and 2 in favor of petitioner Campillo, with damages. In resisting the complaint, the herein petitioner as one of the defendants below, alleged that he is an innocent purchaser for value and that the supposed previous sale could not be preferred over the levy and sale at public action because it was not registered.

After due trial, the lower court rendered judgment sustaining the validity of the levy and sale at public auction primarily because at the time of the levy and sale, the disputed properties were still registered in the name of the judgment debtor, Tomas de Vera. Besides, the trial court ruled, the sale to Simplicio Santos which was not registered nor noted in the title of the subject lots, cannot bind third persons.

On appeal at the instance of the herein private respondent, the respondent appellate court modified the decision of the lower court, as follows:

WHEREFORE, the judgment of the trial court is hereby modified as follows:

(1) The dismissal of the amended complaint as against defendant Sostenes Campillo only and ordering the plaintiff to pay the costs of suit are set aside;

(2) Declaring the levy, sheriff's sale and sheriff's certificate in favor of defendant Sostenes Campillo null and void and of no effect;

(3) Declaring plaintiff Simplicio Santos, now his estate, to be the owner of the two parcels of land under litigation and embraced in Transfer Certificate of Title No. 63559; and

89

(4) Ordering the Register of Deeds of Manila to cancel Transfer Certificate of Title Nos. 74019 and 74020 in the name of defendant Sostenes Campillo and to issue the proper certificate of title in the name of the estate of Simplicio Santos.

The rest of the judgment appealed from is hereby affirmed. (p. 45, Rollo)

Rationalizing its stand, the appellate court said that the subject lots could not be legally levied upon to satisfy the judgment debt of the de Veras in favor of petitioner because at the time of the execution sale, the judgment debtor, having previously sold said properties, was no longer the owner thereof; that since the judgment debtor had no more right to or interest on the said properties, then the purchaser at the auction sale acquires nothing considering that a judgment creditor only acquires the Identical interest possessed by the judgment debtor in the property which is the subject of the auction sale, and he takes the property subject to all existing equities to which the property would have been subject in the hands of the debtor; and, while it may be true that Simplicio Santos did not record or register the sale of the disputed lots, the levy on execution does not take precedence over the unrecorded deed of sale to the same property made by the judgment debtor anterior to the said levy since the judgment creditor is not a third party within the meaning of the law and could not therefore be considered as purchaser for value in good faith.

After a conscientious review and scrutiny of the records of this case as well as existing legislations and jurisprudence on the matter, We are constrained to reverse the judgment of the respondent appellate court and rule in favor of the herein petitioner.

It is settled in this jurisdiction that a sale of real estate, whether made as a result of a private transaction or of a foreclosure or execution sale, becomes legally effective against third persons only from the date of its registration.1 Consequently, and considering that the properties subject matter hereof were actually attached and levied upon at a time when said properties stood in the official records of the Registry of Deeds as still owned by and registered in the name of the judgment debtor, Tomas de Vera, the attachment, levy and subsequent sale of said properties are proper and legal. The net result is that the execution sale made in favor of the herein petitioner transferred to him all the rights, interest and participation of the judgment debtor in the aforestated properties as actually appearing in the certificate of title, unaffected by any transfer or encumbrance not so recorded therein.

Section 51, PD No. 1529, otherwise known as the Property Registration Decree, provides as follows:

Section 51. Conveyance and other dealings by registered owner. — An owner of registered land may convey, mortgage, lease, charge or otherwise deal with the same in accordance with existing laws. He may use such forms of deeds, mortgages, leases or other voluntary instruments as are sufficient in law. But no deed, mortgage, lease or other voluntary instrument, except a will purporting to convey or affect registered land shall take effect as a conveyance or bind the land, but shall operate only as a contract between the parties and as evidence of authority to the Register of Deeds to make registration.

The act of registration shall be the operative act to convey or affect the land insofar as third persons are concerned, and in all cases under this Decree, the registration shall be made in the office of the Register of Deeds for the province or city where the land lies. (Italics for emphasis)

As succinctly stated in the case of Philippine National Bank vs. Court of Appeals, 98 SCRA 207:

Whatever might have been generally or unqualifiedly stated in the cases heretofore decided by this Court, We hold that under the Torrens System registration is the operative act that gives validity to the transfer or creates a hen upon the land. A person dealing with registered land is not required to go behind the register to determine the condition of the property. He is only charged with notice of the burdens on the property which are noted on the face of the register or the certificate of title. To require him to do

90

more is to defeat one of the primary objects of the Torrens system. A bona fide purchaser for value of such property at an auction sale acquires good title as against a prior transferee of same property if such transfer was unrecorded at the time of the auction sale. (Italics for emphasis)

The case of Leyson vs. Tanada, 2 invoked by the private respondent is not in point. In that case, a notice of lis pendens was inscribed at the back of the certificate of title of the land subject therein before it was sold at public auction. Necessarily, the purchaser at public auction is bound by the outcome of the pending case referred to therein. Since it turned out that the judgment debtor is merely a co-owner of the property sold at public auction, then the puchaser thereat is not entitled to the entirety of the land. As the Court held: "The interest acquired by a purchaser in an execution sale is limited to that which is possessed by the debtor. If there is more than one person owning property in common and an execution against one only is levied thereon, the sale effected by the Sheriff under such execution operates exclusively upon the interest of the execution debtor, without being in any wise prejudicial to the interest of the other owners. The result in such case merely is that one new owner in common is substituted for the owner whose interest is alienated by process of law."

While it may be true as stated in the aforesaid case of Leyson vs. Tanada, that purchasers at execution sales should bear in mind that the rule of caveat emptor applies to such sales, that the sheriff does not warrant the title to real property sold by him as sheriff, and that it is not incumbent on him to place the purchaser in possession of such property, still the rule applies that a person dealing with registered land is not required to go behind the register to determine the condition of the property and he is merely charged with notice of the burdens on the property which are noted on the face of the register or the certificate of title. Hence, the petitioner herein, as the purchaser in the execution sale of the registered land in suit, acquires such right and interest as appears in the certificate of title unaffected by prior lien or encumbrances not noted therein. This must be so in order to preserve the efficacy and conclusiveness of the certificate of title which is sanctified under our Torrens system of land registration.

WHEREFORE, the questioned decision of the respondent appellate court is hereby reversed and set aside, and the judgment of the lower court is reinstated. Without pronouncement as to costs.

SO ORDERED.

Guerrero, J., concur.

Escolin, J., concurs in the result.

Concepcion Jr., J., is on leave.

 

 

Separate Opinions

 

AQUINO, J., concurring:

In case of double sale of realty, the ownership passes to the vendee who in good faith first recorded it in the Registry of Property (Art. 1544, Civil Code). Hence, the petitioner has the better right to the disputed parcels of land because the sale in his favor was recorded.

ABAD SANTOS, J., concurring:

The question posed in this case is which of the two sales of the two parcels of registered lands should be accorded legal protection.

The voluntary sale to Simplicio Santos was made in 1961. The sale was not registered in the Registry of Property.

91

The involuntary sale to Sostenes Campillo was made in 1962. The sale was registered in the Registry of Property. In fact, Campillo was issued a transfer certificate of title and later two transfer certificates of title for each of the parcels.

The contract of sale is a consensual contract, i.e. it is perfected by mere consent. But ownership of the thing sold shall be transferred to the vendee only upon the actual or constitutive delivery thereof. (Art. 1477, Civil Code). In other words, there must be tradition.

In the case of lands registered under Act No. 496, as amended, said law provides for a special kind of tradition. Sec. 50 provides:

Sec. 50. An owner of registered land may convey, mortgage, lease, charge, or otherwise deal with the same as fully as if it had not been registered. He may use forms of deeds, mortgages, leases, or other voluntary instruments like those now in use and sufficient in law for the purpose intended. But no deed, mortgage, lease, or other voluntary instrument, except a will, purporting to convey or affect registered land, shall take effect as a conveyance or bind the land, but shall operate only as a contract between the parties and as evidence of authority to the clerk or register of deeds to make registration The act of registration shall be the operative act to convey and affect the land, and in all cases under this Act the registration shall be made in the office of the register of deeds of the province or provinces or city where the land lies.

Since the sale made in favor of the first vendee did not comply with the above-quoted provision, the transaction was ineffectual as to third persons. And since the sale made in favor of the second vendee complied with the relevant provision, the sale to him was good and should be protected.

Makasiar, J., (Chairman)

 

 

Separate Opinions

AQUINO, J., concurring:

In case of double sale of realty, the ownership passes to the vendee who in good faith first recorded it in the Registry of Property (Art. 1544, Civil Code). Hence, the petitioner has the better right to the disputed parcels of land because the sale in his favor was recorded.

ABAD SANTOS, J., concurring:

The question posed in this case is which of the two sales of the two parcels of registered lands should be accorded legal protection.

The voluntary sale to Simplicio Santos was made in 1961. The sale was not registered in the Registry of Property.

The involuntary sale to Sostenes Campillo was made in 1962. The sale was registered in the Registry of Property. In fact, Campillo was issued a transfer certificate of title and later two transfer certificates of title for each of the parcels.

The contract of sale is a consensual contract, i.e. it is perfected by mere consent. But ownership of the thing sold shall be transferred to the vendee only upon the actual or constitutive delivery thereof. (Art. 1477, Civil Code). In other words, there must be tradition.

In the case of lands registered under Act No. 496, as amended, said law provides for a special kind of tradition. Sec. 50 provides:

Sec. 50. An owner of registered land may convey, mortgage, lease, charge, or otherwise deal with the same as fully as if it had not been registered. He may use forms of deeds, mortgages, leases, or other voluntary instruments like those now in use and

92

sufficient in law for the purpose intended. But no deed, mortgage, lease, or other voluntary instrument, except a will, purporting to convey or affect registered land, shall take effect as a conveyance or bind the land, but shall operate only as a contract between the parties and as evidence of authority to the clerk or register of deeds to make registration The act of registration shall be the operative act to convey and affect the land, and in all cases under this Act the registration shall be made in the office of the register of deeds of the province or provinces or city where the land lies.

Since the sale made in favor of the first vendee did not comply with the above-quoted provision, the transaction was ineffectual as to third persons. And since the sale made in favor of the second vendee complied with the relevant provision, the sale to him was good and should be protected.

Lara et al v Ayroso 95 Phil 185

G.R. No. L-6122             May 31, 1954AURELIA DE LARA and RUFINO S. DE GUZMAN, plaintiffs-appellants, vs.JACINTO AYROSO, defendant-appellant.Lauro Esteban for appellants.Alfonso G. Espinosa for appellee.REYES, J.:This is an action for foreclosure of mortgage.From the stipulation of facts and the additional evidence submitted at the hearing the lower court found and it is not disputed that the spouses Jacinto Ayroso and Manuela Lacanilao were the registered owners of a parcel of land, situated in the municipality of Cabanatuan, Nueva Ecija, their title thereto being evidenced by Transfer Certificate No. 4203 of the land records of that province. The land had an area of a little over 3 1/2 hectares, but according to an annotation on the back of the certificate a large portion of that area — a little less than 3 hectares-had already been alienated, sold to the Pilgrim Holiness Church in 1940. The certificate was kept in Jacinto Ayroso's trunk in his house in the poblacion of Cabanatuan, but somehow his daughter, Juliana Ayroso, managed to get possession of it without his knowledge and consent and gave it to a man whose name does not appear in the record. With the certificate in his possession and representing himself to be Jacinto Ayroso, this man was able to obtain from the plaintiff spouses the sum of P2,000, which he agreed to pay back in three months and as security therefor constituted a mortgage on Jacinto Ayroso's interest in the land covered by the certificate, signing the deed of mortgage with the latter's name. At that time, April 19, 1949, Jacinto Ayroso was already a widower, his wife having died on the 31st of the preceding month. Neither Jacinto Ayroso nor the man who impersonated him was personally known to the plaintiffs, though the latter believed in good faith that the two were one and the same person, the impostor being then accompanied by Ayroso's daughter Juliana whom they knew personally and who also signed as a witness to the mortgage deed. The mortgage was later registered in the office of the Register of Deeds of Nueva Ecija and annotated on the back of the certificate of title. Jacinto Ayroso never authorized anyone to mortgage the land and received no part of the mortgage loan.Upon the foregoing facts, the trial court rendered judgment declaring the mortgage invalid, ordering the Register of Deeds of Nueva Ecija to cancel the corresponding annotation on Transfer Certificate of Title No. 4203 and dismissing the complaint with costs. From this

93

judgment an appeal has been taken directly to this court, and the question for determination is whether the said mortgage may be enforced by plaintiffs against the defendant Jacinto Ayroso.There can be no question that the mortgage under consideration is a nullity, the same having been executed by an impostor without the authority of the owner of the interest mortgaged. Its registration under the Land Registration Law lends it no validity because, according to the last proviso to the second paragraph of section 55 of that law, registration procured by the presentation of a forged deed is null and void.Plaintiffs, however, allege that they are innocent holders for value of a Torrens certificate of title, and on the authority of Eliason vs. Wilborn (281 U. S., 457), De la Cruz vs. Fabie (35 Phil., 144), and Blondeau et al. vs. Nano andVallejo (61 Phil., 625), invoke the protection accordedto such holders. But an examination of those cases willshow that they have no application to the one before us.In the case first cited, Eliason vs. Wilborn, the appellants, owners of registered land, delivered the certificate of title to a party under an agreement to sell and the said party forged a deed to himself, had the certificate issued in his name and then conveyed it to others, who were good faith purchasers for value. Upholding the last conveyance, the U. S. Supreme Court said: "The appellants saw fit to entrust it (the certificate) to Napletone and they took the risk ... . As between two innocent persons, one of whom must suffer the consequences of a breach of trust, the one who made it possible by his act of confidence must bear the loss."In the second case, De la Cruz vs. Fabie, the attorney-in-fact of the owner of registered land, having been entrusted with the title to said property, abused the confidence thus reposed upon him, forged a deed in his favor, had anew title issued to himself and then conveyed it to another, who thereafter was issued a new certificate of title. This court held the purchaser to be the absolute owner of the land as an innocent holder of a title for value under section 55 of Act No. 496.It will be noted that in both of the above cases the certificate of title was already in the name of the forger when the land was sold to an innocent purchaser. In such case the vendee had the right to rely on what appeared in the certificate and, in the absence of anything to excite suspicion, was under no obligation to look beyond the certificate and investigate the title of the vendor appearing on the face of said certificate to be the registered owner. It should also be noted that in both cases fraud was made possible by the owner's act in entrusting the certificate of title to another. And this should be emphasized because it is what impelled this court to apply in those cases the principle of equity that "as between two innocent persons, one of whom must suffer the consequences of a breach of trust, the one who made it possible by his act of confidence must bear the loss."In the present case the title was still in the name of the real owner when the land was mortgaged to the plaintiffs by the impostor. And it is obvious that plaintiffs were defrauded not because they relied upon what appeared in a Torrens certificate of title — there was nothing wrong with the certificate — but because they believed the words of the impostor when he told them that he was the person named as owner in the certificate. As the learned trial judge says in his decision, it was not incumbent upon plaintiffs to inquire into the ownership of the property and go beyond what was stated on the face of the certificate of title, but it was their duty to ascertain the identity of the man with whom they were dealing, as well as his legal authority to convey, if they did not want to be imposed upon. That duty devolves upon all persons buying property of any kind, and one who neglects it does so at his peril. It should be added that the appellee has not entrusted the certificate of title to anybody, an element essential to the application of the principle of equity abovecited. It is thus clear that the circumstances which impelled this court, in the cases cited to extend protection to the innocent holders for value of the Torrens certificates, at the expense of the owner of the registered property, are not present in the case at bar.

94

Nor could the third case cited, Blondeau et al. vs. Nano and Vallejo, serve as a good precedent for the one now before us. That case, it is true, was also for foreclosure of mortgage, and the defense set up by the registered owner was also forgery. But it should be noted that in that case this court found as a fact that the mortgage had not been forged and in addition there was the circumstance that the registered owner had by his negligence or acquiescence, if not actual connivance, made it possible for the fraud to be committed. It is thus obvious that the case called for the application of the same principle of equity already mentioned, and the decision rendered by this court was in line with the two previous cases. But that decision does not fit the facts of the present case, where the mortgage is admittedly a forgery and the registered owner has not been shown to have been negligent or in connivance with the forger. The contention that it was negligence on appellee's part to leave the Torrens title in his trunk in his house in the poblacion when most of the time he was in the farm, was we think well answered by the trial court when it said:. . . it was not shown that the defendant has acted with negligence in keeping the certificate of title in his trunk in his own house. That his daughter was able to steal it or take it from the trunk without his knowledge and consent and was able to make use of it for a fraudulent purpose, (it) does not necessarily follow that he was negligent. It is in keeping with ordinary prudence in common Filipino homes for the owners thereof to keep their valuables in their trunks. It would be too much to expect of him that he should carry said certificate with him to wherever he goes.On the other hand the considerations underlying the decision in the case of Ch. Veloso and Rosales vs. La Urbana and Del Mar (58 Phil., 681), cited by the appelle, would seem to be applicable to the present case. In the case cited, the plaintiff Veloso, owner of certain parcels of registered land, brought action to annul certain mortgages constituted thereon by her brother-in-law, the defendant Del Mar, using two powers of attorney purportedly executed for that purpose by plaintiff and her husband Rosales, but which were in reality forged, the forgery having been committed by Del Mar himself. How Del Mar obtained possession of the certificate of title the report does not show, but the mortgages were duly registered and noted on the certificates of title. In holding the mortgages void, this court said:. . . Inasmuch as Del Mar is not the registered owner of the mortgaged properties and inasmuch as the appellant was fully aware of the fact that it was dealing with him on the strength of the alleged powers of attorney purporting to have been conferred upon him by the plaintiff, it was his duty to ascertain the genuineness of said instruments and not rely absolutely and exclusively upon the fact that the said powers of attorney appeared to have been registered. In view of its failure to proceed in this manner, it acted negligently and should suffer the consequences and damages resulting from such transactions. (P. 683.)Appellants, however, contend that the doctrine laid down in that case has already been overruled by the Blondeau case, supra. This is not so, and to show that it is still good jurisprudence, this court quotes it with approval inLopez vs. Seva et al. (69 Phil., 311), a case decided after the Blondeau decision.We are with the learned trial judge in applying to the present case the principle underlying the decision in the Veloso case, which, as His Honor well says, "is fair and just because it stands for the security and stability of property rights under any system of laws, including the Torrens system," affording protection against the dangerous tendency of unprincipled individuals "to enrich themselves at the expense of others thru illegal or seemingly lawful operations." And as His Honor also says, "as between an interpretation and application of the law which serves as an effective weapon to curb such dangerous tendency or that which technically may aid or foment it, the choice is clear and unavoidable." For, as repeatedly stated by this court, although the underlying purpose of the Land Registration Law is to impart stability and conclusiveness to transactions that have been placed within its operations, still that law does not permit its provisions to be used as a shield for the

95

commission of fraud.In view of the foregoing, the judgment appealed from is affirmed, with costs against the appellants.

Inquimboy v Cruz 108 Phil 1054G.R. No. L-13953             July 26, 1960MONS. CARLOS INQUIMBOY, plaintiff-appellant, vs.MARIA CONCEPCION PAEZ VDA. DE CRUZ, defendant-appellee.Mamerto N. Makapagal for appellant.Conrado T. Reyes for appellee.GUTIERREZ DAVID, J.:This appeal brings up for the review of the decision of the Court of First Instance of Nueva Ecija dismissing plaintiff's complaint.The facts are: Plaintiff's Carlos Inquimboy was the registered owner of the disputed land located in Bongabon, Nueva Ecija, as per T.C.T. No. 15600, Register of Deeds of Nueva Ecija (Annex B). On October 31, 1941, he sold the land, together with another parcel described in T.C.T. No. 15599, for the sum of P4,000.00 to Cenon Albea, who after making the down payment, promised to pay the balance in two installments, that is, P500.00 in may, 1942 (Annex C). On two other registered parcels, to Pedro Cruz (Annex D). This deed of sale was presented for registration on January 3, 1944. As to the two other piece of land, registration was duly had, but with respect to the disputed land, registration was refused because the land was still in the Inquimboy's name, Albea not having registered his deed of sale. On February 18, 1944, the sale in Albea not having registered his deed of sale. On February 18, 1944, the sale in Albea's favor was registered, Inquimboy's title was cancelled and in lieu thereof T.C.T. No. 20142 was issued to Albea (Annex E).On February 23, 1944, Inquimboy filed against Albea in the Court of First Instance of Nueva Ecija a complaint alleging, inter alia, that Albea failed to pay him on November 15, 1941, the sum of P2,500.00 and in May, 1942, the sum of P500.00 stipulated in the contract between them and therefore prayed that the contract of sale be rescinded, and that Albea be ordered to returned to him T.C.T. Nos. 15599 and 15600 (Civil Case No. 93-J).On May 26, 1944, T.C.T. No. 20142 in Albea's name was cancelled and in lieu thereof T.C.T. No. 20584 was issued to Pedro Cruz.The civil case which Inquimboy had filed against Albea was passed upon by the lower court, then by the Court of Appeals and finally by this Court, which in a decision rendered in May 19, 1950 (89 Phil., 1601; 47 Off. Gaz. [12] 131) ordered Albea to reconvey and deliver to Inquimboy the properties litigated therein (one of which is now in litigation), unless within thirty days after final judgment he should pay the balance of the purchase price and P500.00 as liquidated damages and attorney's fees (Annex A).On October 11, 1957, Inquimboy instituted in the Court of First Instance of Nueva Ecija the present action against Maria Concepcion Paez Vda. de Cruz, surviving spouse of the now deceased Pedro Cruz, seeking annulment of T.C.T. No. 20584 and issuance of a new one in his name. The parties admitted the case in stipulation of facts, which, together with the annexes thereto, disclosed the above-narrated facts. The lower court dismissed the complaint.Reversal of the lower court's decision is sought by plaintiff on three grounds, namely, (1) Pedro Cruz was not a buyer in good faith; (2) Cruz was bound by this Court's decision in G. R. No. L-1601; and (3) appellant is not guilty of laches in asserting his right.Contrary to appellant's principal contention, Pedro Cruz was a buyer in good faith.It is true that we have several decisions wherein we enunciated the general rule that one who buys from a person who is not the registered owner is not a purchaser in good faith (Veloso and Rosales vs. La Urbana and Del Mar, 58 Phil., 681 ; Mari vs. Bonilla, 83 Phil., 137; 46 Off. Gaz., 4258; Mirasol vs. Gerochi, 93 Phil., 480; De Lara and De Guzman vs. Ayroso, 95 Phil., 185; 50 Off. Gaz., [10] 4838; Revilla and Fajardo vs. Galindez, 107 Phil., 480). But in deciding the question of good faith , the legal environment of each case must be considered. In all the instances where the above rule was followed, it should be noted that the buyer never dealt with the registered owner, yet the certificate of title was transferred from the registered owner directly to the buyer — a fact which should have made the buyer investigate the right of his transferor was not and never became the registered owner of the litigated land. Herein, the sale in favor of Cruz was executed by Albea on December 20, 1943, when the land February 18, 1944, appellant's certificate of title was cancelled and another issued to Albea. And May 26, 1944, Albea's title was cancelled and in lieu thereof T.C.T. No. 20584 was issued to Cruz. Hence,

96

while Albea may not have been a registered owner at the time he executed the deed of sale of favor of Cruz, he nevertheless subsequently acquired valid title in his own name which title he later transferred to Cruz. When a person who is not the owner of a thing sells and delivers it, and later the seller acquires title thereto, such tittle passes by operation of law to the buyer(Article 1434, New Civil Code).A purchaser in good faith is one who buys property of another without notice that some other person has a right to, or interest in such property and prays in full and fair price for the same, at the time of such purchase, and before he has notice of the claim or interest of some other person in the property (Cui and Joven vs. Henson, 51 Phil., 612). This definition fits Pedro Cruz. At the time he brought the property from Albea, he did not have knowledge, actual or imputable, of the right of another person on the property. His transferor, Albea, had in his possession the proper deed of conveyance executed by appellant in his favor, as well as appellant's certificate of title. So as between appellant and Albea, the land already belonged to the latter (Section 50, Act 496). And the registration of the land in Albea's name effectively operated to convey it to him. Albea's title was clean — there was no lien or encumbrance annotated thereon. Of course, Albea's title was cancelled and another issue to Cruz only on May 26, 1944, while as early as February 23, 1944, appellant had already instituted a suit against Albea for recovery of the land. But since appellant never filed a notice of lis pendens, Cruz could not have known of the pending action, and consequently cannot be bound by the result thereof (Section 79, Act 496).Having found that Cruz' purchase of the land was characterized by good faith, we deem it unnecessary to take up the other points raised by appellant.Wherefore, the appealed decision is hereby affirmed with costs against appellant.

Consolidated Rural Bank v CA , GR 132161

G.R. No. 132161 January 17, 2005

CONSOLIDATED RURAL BANK (CAGAYAN VALLEY), INC., petitioner, vs.THE HONORABLE COURT OF APPEALS and HEIRS OF TEODORO DELA CRUZ, respondents.

D E C I S I O N

TINGA, J.:

Petitioner Consolidated Rural Bank, Inc. of Cagayan Valley filed the instant Petition for Certiorari1 under Rule 45 of the Revised Rules of Court, seeking the review of the Decision2 of the Court of Appeals Twelfth Division in CA-G.R. CV No. 33662, promulgated on 27 May 1997, which reversed the judgment3 of the lower court in favor of petitioner; and the Resolution4 of the Court of Appeals, promulgated on 5 January 1998, which reiterated its Decision insofar as respondents Heirs of Teodoro dela Cruz (the Heirs) are concerned.

From the record, the following are the established facts:

Rizal, Anselmo, Gregorio, Filomeno and Domingo, all surnamed Madrid (hereafter the Madrid brothers), were the registered owners of Lot No. 7036-A of plan Psd-10188, Cadastral Survey 211, situated in San Mateo, Isabela per Transfer Certificate of Title (TCT) No. T-8121 issued by the Register of Deeds of Isabela in September 1956.5

On 23 and 24 October 1956, Lot No. 7036-A was subdivided into several lots under subdivision plan Psd- 50390. One of the resulting subdivision lots was Lot No. 7036-A-7 with an area of Five Thousand Nine Hundred Fifty-Eight (5,958) square meters.6

On 15 August 1957, Rizal Madrid sold part of his share identified as Lot No. 7036-A-7, to Aleja Gamiao (hereafter Gamiao) and Felisa Dayag (hereafter, Dayag) by virtue of a Deed of Sale,7 to which his brothers Anselmo, Gregorio, Filomeno and Domingo offered no objection as evidenced by their Joint Affidavit dated 14 August 1957.8 The deed of sale was not registered with the Office of the Register of Deeds of Isabela. However, Gamiao and Dayag declared the property for taxation purposes in their names on March 1964 under Tax Declaration No. 7981.9

97

On 28 May 1964, Gamiao and Dayag sold the southern half of Lot No. 7036-A-7, denominated as Lot No. 7036-A-7-B, to Teodoro dela Cruz,10 and the northern half, identified as Lot No. 7036-A-7-A,11 to Restituto Hernandez.12 Thereupon, Teodoro dela Cruz and Restituto Hernandez took possession of and cultivated the portions of the property respectively sold to them.13

Later, on 28 December 1986, Restituto Hernandez donated the northern half to his daughter, Evangeline Hernandez-del Rosario.14 The children of Teodoro dela Cruz continued possession of the southern half after their father’s death on 7 June 1970.

In a Deed of Sale15 dated 15 June 1976, the Madrid brothers conveyed all their rights and interests over Lot No. 7036-A-7 to Pacifico Marquez (hereafter, Marquez), which the former confirmed16 on 28 February 1983.17 The deed of sale was registered with the Office of the Register of Deeds of Isabela on 2 March 1982.18

Subsequently, Marquez subdivided Lot No. 7036-A-7 into eight (8) lots, namely: Lot Nos. 7036-A-7-A to 7036-A-7-H, for which TCT Nos. T-149375 to T-149382 were issued to him on 29 March 1984.19 On the same date, Marquez and his spouse, Mercedita Mariana, mortgaged Lots Nos. 7036-A-7-A to 7036-A-7-D to the Consolidated Rural Bank, Inc. of Cagayan Valley (hereafter, CRB) to secure a loan of One Hundred Thousand Pesos (P100,000.00).20 These deeds of real estate mortgage were registered with the Office of the Register of Deeds on 2 April 1984.

On 6 February 1985, Marquez mortgaged Lot No. 7036-A-7-E likewise to the Rural Bank of Cauayan (RBC) to secure a loan of Ten Thousand Pesos (P10,000.00).21

As Marquez defaulted in the payment of his loan, CRB caused the foreclosure of the mortgages in its favor and the lots were sold to it as the highest bidder on 25 April 1986.22

On 31 October 1985, Marquez sold Lot No. 7036-A-7-G to Romeo Calixto (Calixto).23

Claiming to be null and void the issuance of TCT Nos. T-149375 to T-149382; the foreclosure sale of Lot Nos. 7036-A-7-A to 7036-A-7-D; the mortgage to RBC; and the sale to Calixto, the Heirs-now respondents herein-represented by Edronel dela Cruz, filed a case24 for reconveyance and damages the southern portion of Lot No. 7036-A (hereafter, the subject property) against Marquez, Calixto, RBC and CRB in December 1986.

Evangeline del Rosario, the successor-in-interest of Restituto Hernandez, filed with leave of court a Complaint in Intervention25 wherein she claimed the northern portion of Lot No. 7036-A-7.

In the Answer to the Amended Complaint,26 Marquez, as defendant, alleged that apart from being the first registrant, he was a buyer in good faith and for value. He also argued that the sale executed by Rizal Madrid to Gamiao and Dayag was not binding upon him, it being unregistered. For his part, Calixto manifested that he had no interest in the subject property as he ceased to be the owner thereof, the same having been reacquired by defendant Marquez.27

CRB, as defendant, and co-defendant RBC insisted that they were mortgagees in good faith and that they had the right to rely on the titles of Marquez which were free from any lien or encumbrance.28

After trial, the Regional Trial Court, Branch 19 of Cauayan, Isabela (hereafter, RTC) handed down a decision in favor of the defendants, disposing as follows:

WHEREFORE, in view of the foregoing considerations, judgment is hereby rendered:

1. Dismissing the amended complaint and the complaint in intervention;

2. Declaring Pacifico V. Marquez the lawful owner of Lots 7036-A-7 now Lots 7036-A-7-A to 7036-A-7-H, inclusive, covered by TCT Nos. T-149375 to T-149382, inclusive;

98

3. Declaring the mortgage of Lots 7036-A-7-A, 7036-A-7-B, 7036-A-7-C and 7036-A-7-D in favor of the defendant Consolidated Rural Bank (Cagayan Valley) and of Lot 7036-A-7-E in favor of defendant Rural Bank of Cauayan by Pacifico V. Marquez valid;

4. Dismissing the counterclaim of Pacifico V. Marquez; and

5. Declaring the Heirs of Teodoro dela Cruz the lawful owners of the lots covered by TCT Nos. T-33119, T-33220 and T-7583.

No pronouncement as to costs.

SO ORDERED.29

In support of its decision, the RTC made the following findings:

With respect to issues numbers 1-3, the Court therefore holds that the sale of Lot 7036-A-7 made by Rizal Madrid to Aleja Gamiao and Felisa Dayag and the subsequent conveyances to the plaintiffs and intervenors are all valid and the Madrid brothers are bound by said contracts by virtue of the confirmation made by them on August 14, 1957 (Exh. B).

Are the defendants Pacifico V. Marquez and Romeo B. Calixto buyers in good faith and for value of Lot 7036-A-7?

It must be borne in mind that good faith is always presumed and he who imputes bad faith has the burden of proving the same (Art. 527, Civil Code). The Court has carefully scrutinized the evidence presented but finds nothing to show that Marquez was aware of the plaintiffs’ and intervenors’ claim of ownership over this lot. TCT No. T-8121 covering said property, before the issuance of Marquez’ title, reveals nothing about the plaintiffs’ and intervenors’ right thereto for it is an admitted fact that the conveyances in their favor are not registered.

The Court is therefore confronted with two sales over the same property. Article 1544 of the Civil Code provides:

"ART. 1544. If the same thing should have been sold to different vendees, the ownership shall be transferred to the person who may have first taken possession thereof in good faith, if it should be movable property.

Should it be immovable property, the ownership shall belong to the person acquiring it who in good faith first recorded it in the Registry of Property. x x x " (Underscoring supplied).

From the foregoing provisions and in the absence of proof that Marquez has actual or constructive knowledge of plaintiffs’ and intervenors’ claim, the Court has to rule that as the vendee who first registered his sale, Marquez’ ownership over Lot 7036-A-7 must be upheld.30

The Heirs interposed an appeal with the Court of Appeals. In their Appellant’s Brief,31 they ascribed the following errors to the RTC: (1) it erred in finding that Marquez was a buyer in good faith; (2) it erred in validating the mortgage of the properties to RBC and CRB; and (3) it erred in not reconveying Lot No. 7036-A-7-B to them.32

Intervenor Evangeline del Rosario filed a separate appeal with the Court of Appeals. It was, however, dismissed in a Resolution dated 20 September 1993 for her failure to pay docket fees. Thus, she lost her standing as an appellant.33

On 27 May 1997, the Court of Appeals rendered its assailed Decision34 reversing the RTC’s judgment. The dispositive portion reads:

WHEREFORE, the decision appealed from is hereby REVERSED and SET ASIDE. Accordingly, judgment is hereby rendered as follows:

99

1. Declaring the heirs of Teodoro dela Cruz the lawful owners of the southern half portion and Evangeline Hernandez-del Rosario the northern half portion of Lot No. 7036-A-7, now covered by TCT Nos. T-149375 to T-149382, inclusive;

2. Declaring null and void the deed of sale dated June 15, 1976 between Pacifico V. Marquez and the Madrid brothers covering said Lot 7036-A-7;

3. Declaring null and void the mortgage made by defendant Pacifico V. Marquez of Lot Nos. 7036-A-7-A, 7036-A-7-B, 7036-A-7-C and 7036-A-7-D in favor of the defendant Consolidated Rural Bank and of Lot 7036-A-7-E in favor of defendant Rural Bank of Cauayan; and

4. Ordering Pacifico V. Marquez to reconvey Lot 7036-A-7 to the heirs of Teodoro dela Cruz and Evangeline Hernandez-del Rosario.

No pronouncement as to costs.

SO ORDERED.35

In upholding the claim of the Heirs, the Court of Appeals held that Marquez failed to prove that he was a purchaser in good faith and for value. It noted that while Marquez was the first registrant, there was no showing that the registration of the deed of sale in his favor was coupled with good faith. Marquez admitted having knowledge that the subject property was "being taken" by the Heirs at the time of the sale.36 The Heirs were also in possession of the land at the time. According to the Decision, these circumstances along with the subject property’s attractive location—it was situated along the National Highway and was across a gasoline station—should have put Marquez on inquiry as to its status. Instead, Marquez closed his eyes to these matters and failed to exercise the ordinary care expected of a buyer of real estate.37

Anent the mortgagees RBC and CRB, the Court of Appeals found that they merely relied on the certificates of title of the mortgaged properties. They did not ascertain the status and condition thereof according to standard banking practice. For failure to observe the ordinary banking procedure, the Court of Appeals considered them to have acted in bad faith and on that basis declared null and void the mortgages made by Marquez in their favor.38

Dissatisfied, CRB filed a Motion for Reconsideration39 pointing out, among others, that the Decision promulgated on 27 May 1997 failed to establish good faith on the part of the Heirs. Absent proof of possession in good faith, CRB avers, the Heirs cannot claim ownership over the subject property.

In a Resolution40 dated 5 January 1998, the Court of Appeals stressed its disbelief in CRB’s allegation that it did not merely rely on the certificates of title of the properties and that it conducted credit investigation and standard ocular inspection. But recalling that intervenor Evangeline del Rosario had lost her standing as an appellant, the Court of Appeals accordingly modified its previous Decision, as follows:

WHEREFORE, the decision dated May 27, 1997, is hereby MODIFIED to read as follows:

WHEREFORE, the decision appealed from is hereby REVERSED and SET ASIDE insofar as plaintiffs-appellants are concerned. Accordingly, judgment is hereby rendered as follows:

1. Declaring the Heirs of Teodoro dela Cruz the lawful owners of the southern half portion of Lot No. 7036-A-7;

2. Declaring null and void the deed of sale dated June 15, 1976 between Pacifico V. Marquez and the Madrid brothers insofar as the southern half portion of Lot NO. (sic) 7036-A-7 is concerned;

3. Declaring the mortgage made by defendant Pacifico V. Marquez in favor of defendant Consolidated Rural Bank (Cagayan Valley) and defendant Rural Bank of Cauayan as null and void insofar as the southern half portion of Lot No. 7036-A-7 is concerned;

100

4. Ordering defendant Pacifico V. Marquez to reconvey the southern portion of Lot No. 7036-A-7 to the Heirs of Teodoro dela Cruz.

No pronouncement as to costs.

SO ORDERED.41

Hence, the instant CRB petition. However, both Marquez and RBC elected not to challenge the Decision of the appellate court.

Petitioner CRB, in essence, alleges that the Court of Appeals committed serious error of law in upholding the Heirs’ ownership claim over the subject property considering that there was no finding that they acted in good faith in taking possession thereof nor was there proof that the first buyers, Gamiao and Dayag, ever took possession of the subject property. CRB also makes issue of the fact that the sale to Gamiao and Dayag was confirmed a day ahead of the actual sale, clearly evincing bad faith, it adds. Further, CRB asserts Marquez’s right over the property being its registered owner.

The petition is devoid of merit. However, the dismissal of the petition is justified by reasons different from those employed by the Court of Appeals.

Like the lower court, the appellate court resolved the present controversy by applying the rule on double sale provided in Article 1544 of the Civil Code. They, however, arrived at different conclusions. The RTC made CRB and the other defendants win, while the Court of Appeals decided the case in favor of the Heirs.

Article 1544 of the Civil Code reads, thus:

ART. 1544. If the same thing should have been sold to different vendees, the ownership shall be transferred to the person who may have first taken possession thereof in good faith, if it should be movable property.

Should it be immovable property, the ownership shall belong to the person acquiring it who in good faith first recorded it in the Registry of Property.

Should there be no inscription, the ownership shall pertain to the person who in good faith was first in possession; and, in the absence thereof, to the person who presents the oldest title, provided there is good faith.

The provision is not applicable in the present case. It contemplates a case of double or multiple sales by a single vendor. More specifically, it covers a situation where a single vendor sold one and the same immovable property to two or more buyers.42 According to a noted civil law author, it is necessary that the conveyance must have been made by a party who has an existing right in the thing and the power to dispose of it.43 It cannot be invoked where the two different contracts of sale are made by two different persons, one of them not being the owner of the property sold.44 And even if the sale was made by the same person, if the second sale was made when such person was no longer the owner of the property, because it had been acquired by the first purchaser in full dominion, the second purchaser cannot acquire any right.45

In the case at bar, the subject property was not transferred to several purchasers by a single vendor. In the first deed of sale, the vendors were Gamiao and Dayag whose right to the subject property originated from their acquisition thereof from Rizal Madrid with the conformity of all the other Madrid brothers in 1957, followed by their declaration of the property in its entirety for taxation purposes in their names. On the other hand, the vendors in the other or later deed were the Madrid brothers but at that time they were no longer the owners since they had long before disposed of the property in favor of Gamiao and Dayag.

Citing Manresa, the Court of Appeals in 1936 had occasion to explain the proper application of Article 1473 of the Old Civil Code (now Article 1544 of the New Civil Code) in the case of  Carpio v. Exevea,46 thus:

101

In order that tradition may be considered performed, it is necessary that the requisites which it implies must have been fulfilled, and one of the indispensable requisites, according to the most exact Roman concept, is that the conveyor had the right and the will to convey the thing. The intention to transfer is not sufficient; it only constitutes the will. It is, furthermore, necessary that the conveyor could juridically perform that act; that he had the right to do so, since a right which he did not possess could not be vested by him in the transferee.

This is what Article 1473 has failed to express: the necessity for the preexistence of the right on the part of the conveyor. But even if the article does not express it, it would be understood, in our opinion, that that circumstance constitutes one of the assumptions upon which the article is based.

This construction is not repugnant to the text of Article 1473, and not only is it not contrary to it, but it explains and justifies the same. (Vol. 10, 4th ed., p. 159)47

In that case, the property was transferred to the first purchaser in 1908 by its original owner, Juan Millante. Thereafter, it was sold to plaintiff Carpio in June 1929. Both conveyances were unregistered. On the same date that the property was sold to the plaintiff, Juan Millante sold the same to defendant Exevea. This time, the sale was registered in the Registry of Deeds. But despite the fact of registration in defendant’s favor, the Court of Appeals found for the plaintiff and refused to apply the provisions of Art. 1473 of the Old Civil Code, reasoning that "on the date of the execution of the document, Exhibit 1, Juan Millante did not and could not have any right whatsoever to the parcel of land in question."48

Citing a portion of a judgment dated 24 November 1894 of the Supreme Court of Spain, the Court of Appeals elucidated further:

Article 1473 of the Civil Code presupposes the right of the vendor to dispose of the thing sold, and does not limit or alter in this respect the provisions of the Mortgage Law in force, which upholds the principle that registration does not validate acts or contracts which are void, and that although acts and contracts executed by persons who, in the Registry, appear to be entitled to do so are not invalidated once recorded, even if afterwards the right of such vendor is annulled or resolved by virtue of a previous unrecorded title, nevertheless this refers only to third parties.49

In a situation where not all the requisites are present which would warrant the application of Art. 1544, the principle of prior tempore, potior jure or simply "he who is first in time is preferred in right,"50 should apply.51 The only essential requisite of this rule is priority in time; in other words, the only one who can invoke this is the first vendee. Undisputedly, he is a purchaser in good faith because at the time he bought the real property, there was still no sale to a second vendee.52 In the instant case, the sale to the Heirs by Gamiao and Dayag, who first bought it from Rizal Madrid, was anterior to the sale by the Madrid brothers to Marquez. The Heirs also had possessed the subject property first in time. Thus, applying the principle, the Heirs, without a scintilla of doubt, have a superior right to the subject property.

Moreover, it is an established principle that no one can give what one does not have¾nemo dat quod non habet. Accordingly, one can sell only what one owns or is authorized to sell, and the buyer can acquire no more than what the seller can transfer legally.53 In this case, since the Madrid brothers were no longer the owners of the subject property at the time of the sale to Marquez, the latter did not acquire any right to it.

In any event, assuming arguendo that Article 1544 applies to the present case, the claim of Marquez still cannot prevail over the right of the Heirs since according to the evidence he was not a purchaser and registrant in good faith.

Following Article 1544, in the double sale of an immovable, the rules of preference are:

(a) the first registrant in good faith;

(b) should there be no entry, the first in possession in good faith; and

102

(c) in the absence thereof, the buyer who presents the oldest title in good faith. 54

Prior registration of the subject property does not by itself confer ownership or a better right over the property. Article 1544 requires that before the second buyer can obtain priority over the first, he must show that he acted in good faith throughout (i.e., in ignorance of the first sale and of the first buyer’s rights)¾from the time of acquisition until the title is transferred to him by registration or failing registration, by delivery of possession.55

In the instant case, the actions of Marquez have not satisfied the requirement of good faith from the time of the purchase of the subject property to the time of registration. Found by the Court of Appeals, Marquez knew at the time of the sale that the subject property was being claimed or "taken" by the Heirs. This was a detail which could indicate a defect in the vendor’s title which he failed to inquire into. Marquez also admitted that he did not take possession of the property and at the time he testified he did not even know who was in possession. Thus, he testified on direct examination in the RTC as follows:

ATTY. CALIXTO –

Q Can you tell us the circumstances to your buying the land in question?

A In 1976 the Madrid brothers confessed to me their problems about their lots in San Mateo that they were being taken by Teodoro dela Cruz and Atty. Teofilo A. Leonin; that they have to pay the lawyer’s fee ofP10,000.00 otherwise Atty. Leonin will confiscate the land. So they begged me to buy their properties, some of it. So that on June 3, 1976, they came to Cabagan where I was and gave them P14,000.00, I think. We have talked that they will execute the deed of sale.

Q Why is it, doctor, that you have already this deed of sale, Exh. 14, why did you find it necessary to have this Deed of Confirmation of a Prior Sale, Exh. 15?

A Because as I said a while ago that the first deed of sale was submitted to the Register of Deeds by Romeo Badua so that I said that because when I became a Municipal Health Officer in San Mateo, Isabela, I heard so many rumors, so many things about the land and so I requested them to execute a deed of confirmation.56

. . .

ATTY. CALIXTO-

Q At present, who is in possession on the Riceland portion of the lot in question?

A I can not say because the people working on that are changing from time to time.

Q Why, have you not taken over the cultivation of the land in question?

A Well, the Dela Cruzes are prohibiting that we will occupy the place.

Q So, you do not have any possession?

A None, sir.57

One who purchases real property which is in actual possession of others should, at least, make some inquiry concerning the rights of those in possession. The actual possession by people other than the vendor should, at least, put the purchaser upon inquiry. He can scarcely, in the absence of such inquiry, be regarded as a bona fidepurchaser as against such possessions.58 The rule of caveat emptor requires the purchaser to be aware of the supposed title of the vendor and one who buys without checking the vendor’s title takes all the risks and losses consequent to such failure.59

It is further perplexing that Marquez did not fight for the possession of the property if it were true that he had a better right to it. In our opinion, there were circumstances at the time of the sale, and even at the time of registration, which would reasonably require a purchaser of real property to investigate to

103

determine whether defects existed in his vendor’s title. Instead, Marquez willfully closed his eyes to the possibility of the existence of these flaws. For failure to exercise the measure of precaution which may be required of a prudent man in a like situation, he cannot be called a purchaser in good faith.60

As this Court explained in the case of Spouses Mathay v. Court of Appeals:61

Although it is a recognized principle that a person dealing on a registered land need not go beyond its certificate of title, it is also a firmly settled rule that where there are circumstances which would put a party on guard and prompt him to investigate or inspect the property being sold to him, such as the presence of occupants/tenants thereon, it is, of course, expected from the purchaser of a valued piece of land to inquire first into the status or nature of possession of the occupants, i.e., whether or not the occupants possess the land en concepto de dueño, in concept of owner. As is the common practice in the real estate industry, an ocular inspection of the premises involved is a safeguard a cautious and prudent purchaser usually takes. Should he find out that the land he intends to buy is occupied by anybody else other than the seller who, as in this case, is not in actual possession, it would then be incumbent upon the purchaser to verify the extent of the occupant’s possessory rights. The failure of a prospective buyer to take such precautionary steps would mean negligence on his part and would thereby preclude him from claiming or invoking the rights of a "purchaser in good faith."62

This rule equally applies to mortgagees of real property. In the case of Crisostomo v. Court of Appeals,63 the Court held:

It is a well-settled rule that a purchaser or mortgagee cannot close his eyes to facts which should put a reasonable man upon his guard, and then claim that he acted in good faith under the belief that there was no defect in the title of the vendor or mortgagor. His mere refusal to believe that such defect exists, or his willful closing of his eyes to the possibility of the existence of a defect in the vendor’s or mortgagor’s title, will not make him an innocent purchaser or mortgagee for value, if it afterwards develops that the title was in fact defective, and it appears that he had such notice of the defects as would have led to its discovery had he acted with the measure of a prudent man in a like situation.64

Banks, their business being impressed with public interest, are expected to exercise more care and prudence than private individuals in their dealings, even those involving registered lands. Hence, for merely relying on the certificates of title and for its failure to ascertain the status of the mortgaged properties as is the standard procedure in its operations, we agree with the Court of Appeals that CRB is a mortgagee in bad faith.

In this connection, Marquez’s obstention of title to the property and the subsequent transfer thereof to CRB cannot help the latter’s cause. In a situation where a party has actual knowledge of the claimant’s actual, open and notorious possession of the disputed property at the time of registration, as in this case, the actual notice and knowledge are equivalent to registration, because to hold otherwise would be to tolerate fraud and the Torrens system cannot be used to shield fraud. 65

While certificates of title are indefeasible, unassailable and binding against the whole world, they merely confirm or record title already existing and vested. They cannot be used to protect a usurper from the true owner, nor can they be used for the perpetration of fraud; neither do they permit one to enrich himself at the expense of others.66

We also find that the Court of Appeals did not err in awarding the subject property to the Heirs absent proof of good faith in their possession of the subject property and without any showing of possession thereof by Gamiao and Dayag.

As correctly argued by the Heirs in their Comment,67 the requirement of good faith in the possession of the property finds no application in cases where there is no second sale.68 In the case at bar, Teodoro dela Cruz took possession of the property in 1964 long before the sale to Marquez transpired in 1976 and a considerable length of time—eighteen (18) years in fact¾before the Heirs had knowledge of the registration of said sale in 1982. As Article 526 of the Civil Code aptly provides, "(H)e is deemed a possessor in good faith who is not aware that there exists in his title or mode of

104

acquisition any flaw which invalidates it." Thus, there was no need for the appellate court to consider the issue of good faith or bad faith with regard to Teodoro dela Cruz’s possession of the subject property.

Likewise, we are of the opinion that it is not necessary that there should be any finding of possession by Gamiao and Dayag of the subject property. It should be recalled that the regularity of the sale to Gamiao and Dayag was never contested by Marquez.69 In fact the RTC upheld the validity of this sale, holding that the Madrid brothers are bound by the sale by virtue of their confirmation thereof in the Joint Affidavit dated 14 August 1957. That this was executed a day ahead of the actual sale on 15 August 1957 does not diminish its integrity as it was made before there was even any shadow of controversy regarding the ownership of the subject property.

Moreover, as this Court declared in the case of Heirs of Simplicio Santiago v. Heirs of Mariano E. Santiago ,70 tax declarations "are good indicia of possession in the concept of an owner, for no one in his right mind would be paying taxes for a property that is not in his actual or constructive possession."71

WHEREFORE, the Petition is DENIED. The dispositive portion of the Court of Appeals’ Decision, as modified by its Resolution dated 5 January 1998, is AFFIRMED. Costs against petitioner.

SO ORDERED.

B. Registration in relation to TraditionMamuyac v Abena, 67 Phil 289

April 12, 1939

G.R. No. L-45742TIBURCIO MAMUYAC, petitioner-appellant,vs.PEDRO ABENA (alias Indong), respondent-appellee.Nicanor Tavora for petitioner.Pedro C. Quinto for respondent.Laurel, J.:This is a petition for writ of certiorari to review the decision of the Court of Appeals promulgated on July 30, 1937 in CA-G. R. No. 43446.Gregoria Pimentel was the owner of the two parcels of land which she sold and conveyed on June 1, 1926, to Pedro Abena, the respondent-appellee herein. On January 27, 1927, Gregoria Pimentel again sold and conveyed the same parcels to Tiburcio Mamuyac, the petitioner-appellant herein. The document of sale, Exhibit 1, in favor of Abena was duly inscribed in the registry of property of the province on January 31, 1927, and from April, 1927, said parcels of land were declared for taxation in the name said Abena. The document executed in favor of the petitioner on January 27, 1927, was neither inscribed in the registry of property nor were the parcels of the land declared for taxation in the name of the latter.To determine the conflict, petitioner-appellant instituted an action in the Court of First Instance of La Union against the respondent-appellee for the recovery of the two controverted parcels of land. After hearing, the trial court rendered judgment in favor of the defendant, respondent-appellee here. From this judgment, the petitioner-appellant appealed to the Court of Appeals. This latter court, with one member dissenting, affirmed the decision of the Court of First Instance of La Union. The dispositive part of the majority decision of the appellate court is:De cualquier modo que se considere la cuestion, ya bajo la teoria de la parte demandante sobre la posesion, ya bajo el articulo 1473 del Codigo Civil que tiene exacta aplicacion al caso de autos, el juzgado no incurrio en ningun error al dictar sentencia a favor del demandado, la cual confirmamos en todas sus partes, con las costas en esta instancia al apelante.Plaintiff, petitioner-appellant here, elevated the case to this court by writ of certiorari as adverted to in the beginning of this opinion.The first assignment of error of the petitioner-appellant challenges the findings of fact of the Court of Appeals. This cannot be done.The appellate jurisdiction of the Supreme Court in cases brought to it from the Court of Appeals is limited to reviewing and revising the errors of law incurred by the latter, the findings of fact of said Court of Appeals being final as to the former. (Guico vs. Mayuga and Heirs of Mayuga [1936], 35 O.G., 861.)

105

Review of judgments and decrees of the Court of Appeals is limited to “cases in which only errors or questions of law are involved.” (Sec 2, Commonwealth Act No. 3, amending section 138 of the Administrative Code, in relation to sec. 2, Art. VIII, Constitution of the Philippines.) (Mateo vs. Collector of Customs and Court of Appeals [1936], 35 O.G., 915.)The petitioner-appellant under his under his second and third assignments of error contends that he has a better right over the two parcels of land involved because of possession claimed by him in virtue of an alleged private contract of mortgaged executed in his favor on January 4, 1935 (Exhibit B.) It is sufficient answer to this contention that “in order that a mortgage may be deemed to be legally constituted, it is undispensable that the instrument in which it appears be a public document and be recorded in the property register. Therefore, a mortgage in legal form was not constituted by said private document.” (Tuason vs. Goduco, 23 Phil. 342, 347.) Even were we to accord validity to the mortgage, Exhibit B, article 1473 of the Civil Code, invoked by him, applies only to the determination of presence between sale and sale:El precepto que acaba de consignarse viene a determinar los casos de preferencia cuando una misma cosa hubiere sido vendida a dos o mas personas, casos de los que ya se ocupo la ley 15, tit. 32, lib. 3.º del Codigo Romano, y la ley 50, tit. 5.º part. 5. a (4 Bonel, Codigo Civil, p 483) and the same cannot be availed of in case of conflict between a sale and a mortgage.¿Es aplicable el precepto del articulo 1473 del Codigo Civil para resolver el resolver el pleito entre el comprador de un inmueble y el acreedor del vendedor, con hipoteca sobre el mismo inmueble vendido?El Tribunal Supremo declaro no haber lugar al recurso.Considerando que es inaplicable al caso el articulo 1473 del Codigo Civil, que se supone infringido en el primer motivo del recurso, porque no se ha tratado en este pleito del caso a que se refiere dicho articulo, ni el recurrente tenia inscrita la propiedad de la finca de que se trata cuando se instruyo el expedienteposesorio, ni poseia con la buena fe que exige el ultimo parrafo del articulo citado, siendo, como era, conocedor de que la Godinez y de los gravamenes que sobre esta pesaban, lo cual le coloca en condiciones que n son las del tercero a que hace referencia el articulo 606 del citado Codigo, cuya infraccion se invoca en el segundo motivo, por no haberlo aplicado, cuando realmente no lo es este caso. (Sentencia de 7 de julio 1896, 15 Codigo Civil, Martinez Ruiz 2. a ed., 330, 332.)Upon the other hand, even if we were to accept the contention of the petitioner-appellant that he had been in possession of said properties by reason of the alleged contract of mortgage executed in his favor, on January 4, 1925, and were to accord legal effect to the document of sale of January 27, 1927, which was not recorded in the registry of property, still his right cannot prevail over that of Abena who had duly registered his deed of sale. (Exhibit 1.)The contention of the appellant that respondent’s ownership and preference over the property over the property in question is not complete because of lack of material delivery of the possession to him by the vendor is not well taken, for the reason that the execution of the public document of sale in favor of the respondent-appellee is equivalent to the delivery of the realty sold. (Sanchez vs. Ramos, 40, Phil. 614, 616.).The petitioner is hereby dismissed with costs against the petitioner. So ordered.Avanceña, C.J., Villa-Real, Imperial, Concepcion and Moran, JJ., concur.

Suburban Development Corp. v Auditor Generla GR 19545

G.R. No. L-19545 April 18, 1975

PHILIPPINE SUBURBAN DEVELOPMENT CORPORATION, petitioner, vs.THE AUDITOR GENERAL, PEDRO M. GIMENEZ, respondent.

Magno L. Dajao for petitioner.

First Assistant Solicitor General Esmeraldo Umali and Solicitor Sumilang V. Bernardo for respondent.

 

ANTONIO, J.:ñé+.£ªwph!1

Appeal by certiorari from the decision dated December 11, 1961, of then Auditor General Pedro M. Gimenez, disallowing the request of petitioner for the refund of real estate tax in the amount of P30,460.90 paid to the Provincial Treasurer of Bulacan.

The facts of the case are as follows:

On June 8, 1960, at a meeting with the Cabinet, the President of the Philippines, acting on the reports of the Committee created to survey suitable lots for relocating squatters in Manila and suburbs, and of the

106

Social Welfare Administrator together with the recommendation of the Manager of the Government Service Insurance System, approved in principle the acquisition by the People's Homesite and Housing Corporation of the unoccupied portion of the Sapang Palay Estate in Sta. Maria, Bulacan for relocating the squatters who desire to settle north of Manila, and of another area either in Las Piñas or Parañaque, Rizal, or Bacoor, Cavite for those who desire to settle south of Manila. The project was to be financed through the flotation of bonds under the charter of the PHHC in the amount of P4.5 million, the same to be absorbed by the Government Service Insurance System. The President, through the Executive Secretary, informed the PHHC of such approval by letter bearing the same date (Annex "B").

On June 10, 1960, the Board of Directors of the PHHC passed Resolution No. 700 (Annex "C") authorizing the purchase of the unoccupied portion of the Sapang Palay Estate at P0.45 per square meter "subject to the following conditions precedent: têñ.£îhqwâ£

1. That the confirmation by the OEC and the President of the purchase price of P0.45 per sq. m. shall first be secured, pursuant to OEC Memorandum Circular No. 114, dated May 6, 1957.

2. That the portion of the estate to be acquired shall first be defined and delineated.

3. That the President of the Philippines shall first provide the PHHC with the necessary funds to effect the purchase and development of this property from the proposed P4.5 million bond issue to be absorbed by the GSIS.

4. That the contract of sale shall first be approved by the Auditor General pursuant to Executive Order dated February 3, 1959.

5. The vendor shall agree to the dismissal with prejudice of Civil Case No. Q-3332 C.F.I. Quezon City, entitled "Phil. Suburban Dev. Corp. V. Ortiz, et al."

On July 13, 1960, the President authorized the floating of bonds under Republic Act Nos. 1000 and 1322 in the amount of P7,500,000.00 to be absorbed by the GSIS, in order to finance the acquisition by the PHHC of the entire Sapang Palay Estate at a price not to exceed P0.45 per sq. meter.

On December 29,1960, after an exchange of communications, Petitioner Philippine Suburban Development Corporation, as owner of the unoccupied portion of the Sapang Palay Estate (specifically two parcels covered by TCT Nos. T-23807 and T-23808), and the People's Homesite and Housing Corporation, entered into a contract embodied in a public instrument entitled "Deed of Absolute Sale" (Annex "F") whereby the former conveyed unto the latter the two parcels of land abovementioned, under the following terms and conditions, among others: têñ.£îhqwâ£

1. That for and in consideration of the sum of THREE MILLION THREE HUNDRED EIGHTY-SIX THOUSAND TWO HUNDRED TWENTY THREE (P3,386,223.00) PESOS, Philippine currency, to be paid by the VENDEE to the herein VENDOR in the manner outlined hereinbelow, the VENDOR by these presents does hereby sell, transfer and convey by way of absolute sale unto the VENDEE, its successors, administrators or assigns, the above described two (2) parcels of land, together with all the improvements existing thereon;

2. That the payment of the consideration mentioned in paragraph 1 above shall be made as follows:

(a) The vendee is presently negotiating or securing from the GOVERNMENT SERVICE INSURANCE SYSTEM, by virtue of a directive of the President of the Philippines, a loan for the purchase of the above described two (2) parcels of land in anticipation of the purchase by the said GOVERNMENT SERVICE INSURANCE SYSTEM of the bonds to be floated by the National Government to enable the VENDEE to make this purchase, and from whatever amount may be granted as loan by the GOVERNMENT SERVICE INSURANCE SYSTEM to the VENDEE, ONE MILLION SEVEN HUNDRED TEN THOUSAND (P1,710,000.00) PESOS shall be retained by the said VENDEE for the purpose of paying and clearing the existing lien annotated at the back of the aforesaid Transfer Certificates of Title Nos. T-23807 and T-23808, said payment to be made directly to the MORTGAGEES and the

107

difference shall be paid to the VENDOR, provided that this first payment shall not be less than ONE MILLION SEVEN HUNDRED TEN THOUSAND (P1,710,000.00) PESOS and the VENDOR is hereby constituted as Attorney-in-fact and authorized to receive from, and the GOVERNMENT SERVICE INSURANCE SYSTEM is directed to pay the balance of the loan direct to the herein VENDOR chargeable against VENDEE's loan from the GOVERNMENT SERVICE INSURANCE SYSTEM; provided, however, That should this amount be more than sufficient to cover the said mortgage lien, the VENDEE shall pay the difference to the VENDOR; and provided, further, That the VENDOR shall take charge of the preparation and registration of the documents necessary in clearing the above referred to mortgage lien, with the understanding that the expenses for preparation, notarization, registration, including documentary stamps, and other expenses for the cancellation of said mortgage lien shall be for the account of the VENDOR and shall be advanced by the VENDEE to the VENDOR;

(b) That out of the sum of P1,710,000.00 to be retained by the VENDEE mentioned in the immediately preceding paragraph 2(a) for the purpose of discharging the said mortgage lien, the VENDEE shall deduct and further retain or keep as a trust fund the amount of FORTY THOUSAND (P40,000) PESOS, Philippine Currency, to answer for the remaining Notice of Lis Pendens annotated at the back of Transfer Certificate of Title Nos. T-23807 and T-23808 until such lien shall have been discharged or cancelled, the VENDEE binding itself to deliver forthwith the said amount of P40,000.00 unto the successful party involved in said Notice of Lis Pendens;

(c) The remaining balance of the total consideration in the amount of ONE MILLION SIX HUNDRED SEVENTY-SIX THOUSAND TWO HUNDRED TWENTY-THREE PESOS (P1,676,223.00), Philippine Currency, or whatever amount is not paid by virtue of the first payment mentioned in paragraph (a) above, shall be paid by the VENDEE unto the VENDOR immediately upon the VENDEE's obtaining sufficient funds from proceeds of bonds floated by the VENDEE or the Government for the purchase of the properties subject of this transaction; provided, however, That full and complete payment of the balance mentioned in this particular paragraph 2(c) shall be made or paid by the VENDEE within a period of sixty (60) days from date of delivery of title by the VENDOR in the name of the VENDEE; and provided, further, That this sixty (60) days period may be extended for another period of sixty (60) days upon written request by the VENDEE at least five (5) days prior to the expiration of the said sixty (60) days period. Should there be instituted any legal action, however, for the collection of any amounts due from the VENDEE in favor of the VENDOR, the VENDEE binds itself to pay unto the VENDOR a sum equivalent to twenty-five (25%) per centum of the total balance due from the, VENDEE in favor of the VENDOR as and by way of attorney's fees, and the costs of suit;

3. That the VENDOR hereby warrants to defend the title and ownership of the VENDEE to the two (2) parcels of land above described from any claim or claims of third parties whomsoever;

(4.) That all expenses for the preparation and notarization of this document shall be for the account of the VENDOR; provided, however, That registration and issuance of certificates of title in the name of the VENDEE shall be for the account of the VENDEE." (Annex "F")

The above document was not registered in the Office of the Register of Deeds until March 14, 1961, due to the fact, petitioner claims, that the PHHC could not at once advance the money needed for registration expenses. In the meantime, the Auditor General, to whom a copy of the contract had been submitted for approval in conformity with Executive Order No. 290, expressed objections thereto and requested a re-examination of the contract, in view of the fact that from 1948 to December 20, 1960, the entire hacienda was assessed at P131,590.00, and reassessed beginning December 21, 1960 in the greatly increased amount of P4,898,110.00. Said objections were embodied in a letter to the President, dated January 9, 1961, but this notwithstanding, the President, through the Executive Secretary, approved the Deed of Absolute Sale on February 1, 1961.

108

It appears that as early as the first week of June, 1960, prior to the signing of the deed by the parties, the PHHC acquired possession of the property, with the consent of petitioner, to enable the said PHHC to proceed immediately with the construction of roads in the new settlement and to resettle the squatters and flood victims in Manila who were rendered homeless by the floods or ejected from the lots which they were then occupying (Annexes "D" and "D-1").

On April 12, 1961, the Provincial Treasurer of Bulacan requested the PHHC to withhold the amount of P30,099.79 from the purchase price to be paid by it to the Philippine Suburban Development Corporation. Said amount represented the realty tax due on the property involved for the calendar year 1961 (Annex "G").

Petitioner, through the PHHC, paid under protest the abovementioned amount to the Provincial Treasurer of Bulacan and thereafter, or on June 13, 1961, by letter, requested then Secretary of Finance Dominador Aytona to order a refund of the amount so paid. Petitioner claimed that it ceased to be the owner of the land in question upon the execution of the Deed of Absolute Sale on December 29, 1960. Upon recommendation of the Provincial Treasurer of Bulacan, said request was denied by the Secretary of Finance in a letter-decision dated August 22, 1961. Pertinent portions of this decision are quoted hereunder: têñ.£îhqwâ£

.... the records show that the deed of sale executed on December 29, 1960 ... was approved by the President upon favorable recommendation of the Cabinet and the Committee created for the purpose of surveying suitable lots which may be acquired for relocating squatters in Manila on February 1, 1961 only and that said instrument of sale was registered with the Register of Deeds on March 14, 1961.

That Corporation, as vendor, maintains that in view of the execution of the deed of sale on December 29, 1960 it ceased to be the owner of the property involved and that consequently it was under no obligation to pay the real property tax thereon effective January 1, 1961. In support of its stand, that Corporation cites Article 1498 of the New Civil Code of the Philippines which provides that "when the sale is made through a public instrument, the execution thereof shall be equivalent to the delivery of the thing which is the object of the contract, if from the deed the contrary does not appear or cannot clearly be inferred" and Article 1496 of the same Code which states that "the ownership of the thing sold is acquired by the vendee from the moment it is delivered to him in any of the ways specified in Articles 1497 to 1501, or in any other manner signifying an agreement that the possession is transferred from the vendor to the vendee." On the other hand, the Provincial Treasurer contends that, as under the Land Registration Act (Act No. 496) the Philippine Suburban Development Corporation is still the owner of the property until the deed of sale covering the same has been actually registered, the vendor is still liable to the payment of real property tax for the calendar year 1961.

It is now claimed in this appeal that the Auditor General erred in disallowing the refund of the real estate tax in the amount of P30,460.90 because aside from the presumptive delivery of the property by the execution of the deed of sale on December 29, 1960, the possession of the property was actually delivered to the vendee prior to the sale, and, therefore, by the transmission of ownership to the vendee, petitioner has ceased to be the owner of the property involved, and, consequently, under no obligation to pay the real property tax for the year 1961.

Respondent, however, argues that the presumptive delivery of the property under Article 1498 of the Civil Code does not apply because of the requirement in the contract that the sale shall first be approved by the Auditor General, pursuant to the Executive Order dated February 3, 1959 and later by the President, and that the petitioner should register the deed and secure a new title in the name of the vendee before the government can be compelled to pay the balance of P1,676,223.00 of the purchase price. Respondent further contends that since the property involved is a land registered under the Land Registration Act (Act No. 496), until the deed of sale has been actually registered, the vendor remains as the owner of the said property, and, therefore, liable for the payment of real property tax.

We find the petition meritorious.

109

I .

It cannot be denied that the President of the Philippines, on June 8, 1960, at his Cabinet meeting, approved and authorized the purchase by the national government, through the PHHC, of the unoccupied portion of the property of petitioner; that on June 10, 1960, the PHHC, acting pursuant to the aforecited approval of the President, passed its Resolution No. 700 approving and authorizing the purchase of the unoccupied portion of said property; and that after the PHHC took possession of the aforementioned property on the first week of June, 1960 to use it as a resettlement area for squatters and flood victims from Manila and suburbs, the President of the Philippines at his Cabinet meeting on June 13, 1960, approved and authorized the purchase by the PHHC of the entire property consisting of 752.4940 hectares, instead of only the unoccupied portion thereof as was previously authorized.

Considering the aforementioned approval and authorization by the President of the Philippines of the specific transaction in question, and the fact that the contract here involved — which is for a special purpose to meet a special situation — was entered into precisely to implement the Presidential directive, the prior approval by the Auditor General envisioned by Administrative Order No. 290, dated February 3, 1959, would therefore, not be necessary.

As We held in Federation of the United NAMARCO Distributors v. National Marketing Corporation, 1 the approval by the Auditor General contemplated by Administrative Order No. 290 dated February 3, 1959, refers to contracts in general, ordinarily entered into by government offices and government-owned or controlled corporations, and not to a contract for a special purpose, to meet a special situation and entered into in implementation of a Presidential directive to solve and emergency. In other words, where the contract already bears the approval of the President, the action of the Auditor General would no longer be necessary because under the said Administrative Order, the President has, at any rate, the final say.

II

Under the civil law, delivery (tradition) as a mode of transmission of ownership maybe actual (real tradition) or constructive (constructive tradition). 2 When the sale of real property is made in a public instrument, the execution thereof is equivalent to the delivery of the thing object of the contract, if from the deed the contrary does not appear or cannot clearly be inferred. 3

In other words, there is symbolic delivery of the property subject of the sale by the execution of the public instrument, unless from the express terms of the instrument, or by clear inference therefrom, this was not the intention of the parties. Such would be the case, for instance, when a certain date is fixed for the purchaser to take possession of the property subject of the conveyance, or where, in case of sale by installments, it is stipulated that until the last installment is made, the title to the property should remain with the vendor, or when the vendor reserves the right to use and enjoy the properties until the gathering of the pending crops, 4 or where the vendor has no control over the thing sold at the moment of the sale, and, therefore, its material delivery could not have been made. 5

In the case at bar, there is no question that the vendor had actually placed the vendee in possession and control over the thing sold, even before the date of the sale. The condition that petitioner should first register the deed of sale and secure a new title in the name of the vendee before the latter shall pay the balance of the purchase price, did not preclude the transmission of ownership. In the absence of an express stipulation to the contrary, the payment of the purchase price of the good is not a condition, precedent to the transfer of title to the buyer, but title passes by the delivery of the goods. 6

III .

We fail to see the merit in respondent's insistence that, although possession was transferred to the vendee and the deed of sale was executed in a public instrument on December 29, l960, the vendor still remains as owner of the property until the deed of sale is actually registered with the Office of the Register of Deeds, because the land sold is registered under the Torrens System. In a long line of cases already decided by this Court, the constant doctrine has been that, as between the parties to a contract of sale, registration is not necessary to make it valid and effective, for actual notice is equivalent to registration. 7 Indeed, Section 50 of the Land Registration Act provides that, even without the act of registration, a deed purporting to convey or affect registered land shall operate as a contract between the parties. The registration is intended to protect the buyer against claims of third persons arising from subsequent alienations by the

110

vendor, and is certainly not necessary to give effect to the deed of sale, as between the parties to the contract. 8

The case of Vargas v. Tancioco, 9 cited by respondent, refers to a case involving conflicting rights over registered property and those of innocent transferees who relied on the clean titles of the properties in question. It is, therefore, not relevant to the case at bar.

In the case at bar, no rights of third persons are involved, much less is there any subsequent alienation of the same property. It is undisputed that the property is in the possession of the vendee, even as early as the first week of June, 1960, or six (6) months prior to the execution of the Deed of Absolute Sale on December 29, 1960. Since the delivery of possession, coupled with the execution of the Deed of Absolute Sale, had consummated the sale and transferred the title to the purchaser, 10 We, therefore, hold that the payment of the real estate tax after such transfer is the responsibility of the purchaser. However, in the case at bar, the purchaser PHHC is a government entity not subject to real property tax. 11

WHEREFORE, the appealed decision is hereby reversed, and the real property tax paid under protest to the Provincial Treasurer of Bulacan by petitioner Philippine Suburban Development Corporation, in the amount of P30,460,90, is hereby ordered refunded. Without any pronouncement as to costs.

C. Consulta, Sec 117 PD 1529

CHAPTER XVCONSULTAS

Section 117. Procedure. When the Register of Deeds is in doubt with regard to the proper step to be taken or memorandum to be made in pursuance of any deed, mortgage or other instrument presented to him for registration, or where any party in interest does not agree with the action taken by the Register of Deeds with reference to any such instrument, the question shall be submitted to the Commissioner of Land Registration by the Register of Deeds, or by the party in interest thru the Register of Deeds.

Where the instrument is denied registration, the Register of Deeds shall notify the interested party in writing, setting forth the defects of the instrument or legal grounds relied upon, and advising him that if he is not agreeable to such ruling, he may, without withdrawing the documents from the Registry, elevate the matter by consulta within five days from receipt of notice of the denial of registration to the Commissioner of Land Registration.

The Register of Deeds shall make a memorandum of the pending consulta on the certificate of title which shall be canceled motu proprio by the Register of Deeds after final resolution or decision thereof, or before resolution, if withdrawn by petitioner.

The Commissioner of Land Registration, considering the consulta and the records certified to him after notice to the parties and hearing, shall enter an order prescribing the step to be taken or memorandum to be made. His resolution or ruling in consultas shall be conclusive and binding upon all Registers of Deeds, provided, that the party in interest who disagrees with the final resolution, ruling or order of the Commissioner relative to consultas may appeal to the Court of Appeals within the period and in manner provided in Republic Act No. 5434.

In re Consulta of Vicente Francisco on behalf of Cabantog, 67 Phil 222

G.R. No. L-45192             April 10, 1939

In re Consulta filed by Attorney VICENTE J. FRANCISCO on behalf of DOMINGO CABANTOG.

Sumulong, Lavides and Sumulong for appellant.Vicente J. Francisco for appellee.

LAUREL, J.:

111

On January 21, 1936, the spouses Francisco Vicuña and Maxima Caballes made an absolute sale of three parcels of land, covered by transfer certificates of title Nos. 13395, 13396, and 13397, in favor of Domingo Cabantog for the sum of P2,500. The deed of sale was presented for registration, and the senior clerk in the office of the register of deeds of Laguna, in the absence of the latter official, made a notation thereon to the effect that the same was presented at 12.15 o'clock on January 25, 1936, as per entry number 18624, vol. II of the day book. On his return to duty on January 27, 1936, the register of deeds had the aforesaid notation cancelled and substituted by the following:

18624. — The inscription of the proceeding deed of sale is hereby suspended until after the resolution to be rendered by the Supreme Court on the appeal intended to be presented by Maxima Caballes against the decision of the Court of First Instance of Laguna in Civil Case No. 6600 instituted by Apolonia Coronado et al. vs. Maxima Caballes et al., in which the latter has been condemned to pay to the plaintiff the amount of P1,000,000 (should be P100,000).

The undersigned is of the opinion that it is the duty of the register of deeds to aid the courts, avoiding that their decisions may be effective due to transfers of properties made by the party losing in a case after same have been handled down; and also to protect the interest of the winning party by preventing the multiplicity of litigations.

Pending the appeal of Maxima Caballes to this court from the decision in civil case No. 6600 sentencing her to pay Apolonia Coronado the sum of P100,000, the latter secured an attachment of the three parcels of land sold by Maxima Caballes to Domingo Cabantog, which attachment was entered in the day book of the register of deeds of Laguna on January 27, 1936. Against the refusal of the register of deeds to register the deed of sale in favor of Domingo Cabantog, his counsel elevated a consulta to the judge of the Fourth Branch of the Court of First Instance of Manila, through the Chief of the General Land Registration Office, requesting answer to the following:

QUESTIONS

1. Is it not the ministerial duty of the register of deeds of Laguna, upon presentation to him of the absolute deed of sale in favor of Domingo Cabantog of the three (3) parcels of land in question, with the corresponding owners' duplicate certificates of title, to register said deed of sale, cancel said outstanding certificates in the name of the vendors, and prepare and issue the proper transfer certificates of title in the name of the vendee, the proper registration fees having been tendered and accepted and there being no judicial order suspending such action?

2. Does the register of deeds of Laguna have the authority to deny issuance of the proper transfer certificates of title in favor of the vendee on the ground alleged by him that, "it is the duty of the register of deeds to aid the courts, avoiding that their decision may be effective (or ineffective) due to transfers of properties made by the party losing in case after same have been handed down; and also to protect the interest of the winning party by preventing the multiplicity of litigations', or should the register of deeds leave this question to the determination of the proper court in case the same is submitted to it for determination by any interested party?

A copy of the consulta having been served on the register of deeds, the latter filed his answer thereto justifying his action upon the following grounds, among others:

La resolucion del que suscribe al suspender la inscripcion de la escritura de venta otorgada por Maxima Caballes a favor del recurrente Domingo Cabantog y la negativa del mismo a expedir nuevos certificados de titulo libre de gravamen a favor del comprador Domingo Cabantog, se basa en que dicha escritura de venta es un traspaso hecho en fraude de la acreedora Apolonia Coronado, demandante en la Causa Civil No. 6600 del Juzgado de Primera Instancia de Laguna, en la cual la vendedora Maxima Caballes ha sido condenada a pagar a dicha Apolonia Coronado la suma de P100,000. En apoyo de esta afirmacion, se hace constar que la sentencia dictada en contra de dicha vendedora esta fechada el 14 de diciembre de 1935, mientras que la venta de que aqui se trata y cuya inscripcion se pide por Domingo Cabantog ha sido otorgada por Maxima Caballes el 21 de enero de 1936, o sea, mas de un mes despues de haber recaido el pronunciamiento judicial de condena. Se hace constar igualmente que el valor de todos los bienes inmuebles registrados a nombre de Maxima Caballes no puede llegar a cubrir la mitad siquiera del

112

importe de la sentencia dictada contra ella, pues los mismos apenas si valen P30,000 vendiendolos al precio corriente.

El que suscribe cree sinceramente que es su deber denegar o al menos suspender la inscripcion de traspasos fraudulentos, sobre todo cuando como en el presente caso le consta a el personalmente que hay un pronunciamiento judicial condenatorio previo al otorgamiento de la escritura cuya inscripcion se pide, mientras tanto o hasta que un tribunal competente pueda decidir la naturaleza verdadera de dicho traspaso. Este es un paso prudente que evita no solamente el perjuicio que se puede irrogar a los acreedores del vendedor sino tambien al gobierno por los litigios que puedan entablar terceras personas que aleguen despues ser compradores inocentes. Se evita asi mismo el que una sentencia judicial quede ineficaz por actos imprudentes y precipitados sometidos por un Registrador de Titulos en la inscripcion de documentos de dudosa legalidad.

The case came up to the oral hearing, at which attorney Vicente J. Francisco for Domingo Cabantog, Fiscal Villanueva for the register of deeds, and Attorney Lorenzo Sumulong for Apolonia Coronado extensively argued their respective sides of the controversy. After hearing, the Fourth Branch of the Court of First Instance of Manila, His Honor, Judge Montemayor presiding, entered a resolution setting out the controlling facts and closing with the following conclusion:

After carefully studying the case, the court agrees with Attorney Francisco and Fiscal Villanueva that, without considering the merits of the contention of Apolonia Coronado as to the alleged fraud in the transfer of the three parcels of land, strictly as a matter of procedure, the register of deeds should have given due course to the registration of the deed of sale in favor of Cabantog. Without doubting the good faith of the register of deeds and even commending his civic spirit and his desire to help the courts, it is believed that in the present case the law did not expect, much less require him to make use of his personal knowledge of the facts or of what he believed to be the intention of the parties, in the performance of his official duties as register of deeds, namely the registration of instruments presented to him for recording. The parties interested are supposed and expected by the law to take the steps necessary to protect their own interests and take the necessary precautions. The undersigned does not understand why long before the deed of sale presented for registration, and even pending trial of civil case No. 6600, Apolonia did not take the steps necessary to protect her interests and insure the satisfaction of the judgment which she expected from the court. Again, if the defendant Maxima Caballes received copy of the decision in civil case No. 6600 on January 17, 1936, it is reasonable to presume that Apolonia Coronado must have received copy of the same about the same time, if not earlier, and yet we find that attachment of the three parcels of land was not presented for recording or registration with the register of deeds until January 27, 1936, that is, two days after the presentation of deed of sale. Moreover, there is no evidence to show, as far as the presentconsulta is concerned, that Maxima Caballes is now insolvent and that the deed of sale under consideration was really made in fraud of creditors. There is no showing either that by authorizing and directing the register of deeds to admit the deed of sale of registration in his office, Apolonia would be losing and be deprived of all under her remedies against the said parcels of land. It should also be borne in mind that civil case No. 6600 of the Court of First Instance is now pending appeal in the Supreme Court.

In view of the foregoing, this court rules that the register of deeds of the Province of Laguna should have registered the deed executed by Maxima Caballes and Francisco Vicuna in favor of Domingo Cabantog. It should be understood, however, that this ruling is without prejudice to any action that may be taken be Apolonia Coronado in the proper court to guide or control the action of the register of deeds with respect to the deed in question. Furthermore, this ruling does not in any manner touch upon the nature, propriety or validity of the transfer of the three parcels of land to Cabantog.

Apolonia Coronado moved for reconsideration but was unsuccessful, and has appealed from the foregoing resolution of the lower court, assigning various errors specified in her brief.

Consolidating the several errors assigned, the present appeal calls for a determination of the nature of the function of a register of deeds with reference to the registration of a deed of sale of a registered land. Is

113

that function ministerial or discretional under the law? Section 57 of the Land Registration Act (No. 496) provides:

SEC. 57. An owner desiring to convey in fee his registered land or any portion thereof shall execute a deed of conveyance, which the grantor or grantee may present to the register of deeds in the province where the land lies. The grantor's duplicate certificate shall be produced and presented at the fame time. The register of deeds shall thereupon, in accordance with the rules and instructions of the court, make out in the registration book a new certificate of title to the grantee, and shall prepare and deliver to him an owner's duplicate certificate. The register of deeds shall note upon the original and duplicate certificates the date of transfer, the volume and page of the registration book where the new certificate is registered, and a reference by number to last prior certificate. The grantor's duplicate certificate shall be surrendered, and the word "canceled" stamped upon it. The original certificate shall also be stamped `canceled'. The deed of conveyance shall be filed and endorsed with the number and place of registration of the certificate of title of the land conveyed.

According to this provision of the law, upon presentation of a deed of conveyance of a registered land, together with the grantor's duplicate certificate, the register of deeds shall (1) make out in the registration book new certificate of title; (2) prepare and deliver to the grantee an owner's duplicate certificate of title; (3) note upon the original and duplicate certificates the date of transfer, the volume and page of the registration book where the new certificate is registered, and a reference by number to the last prior certificate; (4) require the surrender of the grantor's duplicate certificate for purposes of cancellation; (5) cancel likewise the original certificate and (6) file and endorse in the manner required the deed of conveyance presented for registration. The duties enjoined upon the register of deed by the aforecited section of the Land Registration Act are clearly ministerial and mandatory in character not only as is indicated by the auxiliary "shall" but by the nature of such functions required to be performed by him. Upon the other hand, section 193 of the Administrative Code, in referring to the "general functions of register of deeds" provides that "it is the duty of a register of deeds to record in proper form all instruments relative to such lands, the recording whereof shall be required or allowed by law." We have not overlooked reference to the case of Debrunner vs. Jaramillo (12 Phil., 316), in which it was said that the duties of a registrar of property when he is acting under the Mortgage Law, are to a large extent judicial, as indicated in articles 18, 100 and 101 et seq. of that law, and to the case of Betco vs. La Flor de Intal (43 Phil., 517), where it was said that "registers of deeds perform both functions of an administrative character and functions which are at least of a quasi-judicial nature." Notwithstanding divergence of facts between these cases and the present case, we have given weight to what seem are logical inferences of counsel for the appellant in the application of general principles, but we find that as plausible an argument to the contrary may be found in Standard Oil Co. of New York vs. Jaramillo (44 Phil., 630); and Garcia Sanchez vs. Rosauro (40 Phil., 231); and Williams vs. Suñer (49 Phil., 534) with the same divergence of facts and the laws involved.

Limiting ourselves to the facts of the present case, we are of the opinion that it is the duty of the register of deeds of Laguna under the law to register the deed executed by Maxima Caballes and Francisco Vicuna in favor of Domingo Cabantog. If the register of deed is on doubt as to the propriety of recording any given instrument, section 200 of the Administrative Code provides the procedure to be followed:

SEC. 200. Reference of doubtful matter to judge of fourth branch of Court of First Instance at Manila. — Where the register of deeds is in doubt with regard to the proper step to be taken or memorandum to be made in pursuance of any deed, mortgage, or other instruments presented for registration or where any party in interest does not agree with the register of deeds with reference to any such matter, the question shall be referred to the judge of the Fourth Branch of the Court of First Instance of the Ninth Judicial District either on the certificate of the register of deeds stating the question upon which he is in doubt or upon the suggestion in writing of the party in interest; and thereupon said judge, upon consideration of the matter as shown by the record certified to him, and in case of registered lands, after notice to the parties and hearing, shall enter an order prescribing the step to be taken or memorandum to be made.

The question of whether or not the conveyance was made for defraud creditors of the transferor should better be left for determination by the proper court. There is as much danger in giving this authority to the register of deeds without judicial intervention as there would be injustice in the suggested frustration of a judicial victory for Apolonia Coronado.

114

The resolution of the lower court is confirmed with costs against the appellant. So ordered.

Gurbax Singh Pabla and Co. v Reyes and Tantoco, 92 Phil 177

G.R. No. L-3970           October 29, 1952

GURBAX SINGH PABLA & CO., GURBAX SINGH PABLA, BELA SINGH PABLA, OJAGAR SINGH, DHARAM SINGH, TALOK SINGH and CIPRIANO TAN ENG KIAT, petitioners-appellees, vs.HERMOGENES REYES and TEODORA TANTOCO, respondents-appellants.

The facts are stated in the opinion of the Court.Jose N. Buendia for appellants.Eliseo Caunca for appellees.

LABRADOR, J.:

This is an appeal prosecuted by the respondents-appellants against an order of the Court of First Instance of Manila dated November 29, 1949, compelling them to surrender owner's duplicates of Transfer Certificates of Title Nos. 8071 and 8072, so that the contract of lease entered into between petitioners-appellees and the owner of the land covered by said certificates of title be annotated thereon. John Tan Chin Eng is the owner of the land covered by the above-mentioned certificates of title, and on July 23, 1948, he entered into a contract (Exhibit A) with the petitioner-appellees, under the terms of which petitioners-appellees were to construct thereon a three-story building of concrete and of strong materials valued at from P80,000 to P90,000. The contract also provided that the building shall become the exclusive property of the owner of the land, but that the petitioner-appellees were to occupy, hold, or possess it as lessees for a period of three years and six months from its completion, without paying any rentals therefor, the sum spent in the construction being considered as the rentals; that after the above period of three years and six months petitioners-appellees were to continue occupying the said building for another two years at a monthly rental of P2,000. This contract of lease was filed and registered in the office of the Register of Deeds of Manila on August 10, 1948, under Primary Entry No. 3352, Volume 15. At the time that the contract was entered into there was an existing mortgage over the land in favor of Jose Calvo and Carlos Calvo for the sum of P110,000. This mortgage in favor of the Calvos was cancelled, and a new mortgage was executed by the owner in favor of respondents-appellants herein, Honorable Hermogenes Reyes and his spouse Teodora Tantoco, dated March 8, 1949, which was registered on the same date in the office of the Register of Deeds of Manila under Primary Entry No. 5014. On May 14, 1949, the original contract of lease, Exhibit A, was amended by Exh. C, by virtue of which the period under which the lessees were to hold any occupy the property without rentals was extended to seven years and four months, and the rental for the additional two years thereafter reduced to P1,148. This amended contract of lease, Exhibit C, was also registered in the office of the Register of Deeds of Manila under Primary Entry No. 5014, Volume 16, on May 20, 1949.

On May 25, 1949, counsel for petitioners-appellees wrote respondents-appellants requesting them to allow him to take the certificates of title to the office of the Register of Deeds of Manila for the annotation of the contracts of lease entered into by the owner with them (Exhibit D), and on May 27, 1949, the son of respondents-appellants acknowledged receipt of the said letter but informed counsel for the petitioner-appellees that the request could not be granted without the written consent of the owner of the certificates of title (Exhibit E). On June 16, 1949, respondents-appellants' son wrote the owner of the land (Exhibit M) demanding the payment of the overdue interest on the mortgage with the following statement:

. . . For this reason, I wish to request that you come over to my office before 12:00 noon to pay the said interest before we can deliver your Transfer Certificate of Title to Atty. Manuel P. Calanog who will take charge of registering the lease contract between Mr. Singh Pabla and your goodself.

On June 3, 1949, the petitioners-appellees filed a motion in the Court of First Instance of Manila praying that an order issue to the owner for the delivery of the owner's duplicates of transfer certificates of title Nos. 8071 and 8072 to the petitioners in order that the Register of Deeds of Manila may be able to make the annotation thereon of the contract of lease, Exhibit A, and its amendment, Exhibit C. Against this petition

115

Hermogenes Reyes and Teodora Tantoco filed an opposition, alleging that they had no knowledge whatsoever of the contract of lease, Exhibit A, or of its amendments, Exhibit C, and that the execution of the amendment, Exhibit C, violated the express provision of the mortgage, to the effect that the owner could not sell, assign, or encumber the mortgaged premises without the written consent of the mortgages. It is to be noted that with respect to the original contract of lease, Exhibit A, no allegation is made in the opposition of the respondents-appellants that they were not aware of the existence of the contract, Exhibit A, their only allegation being that the only annotation on the certificates of title at the time they entered into the contract of mortgage was the mortgage in favor of Jose Calvo and Carlos Calvo. It is also to be noted that respondents-appellants do not deny an express allegation of paragraph 13 of the amended petition to the effect that notice was given to the public by a big sign board placed on the premises while the building was under construction that petitioners-appellees are the owners of the building. The amended petition further states, without denial on the part of the respondents-appellants, that as early as October 9, 1948, the Register of Deeds of Manila had demanded in writing from the owner of the land the submission of his duplicate certificates of title Nos. 8071 and 8072 in order that the lease executed by him in favor of the petitioners-appellees may be given due course. At the hearing of the motion no oral evidence was submitted; only documentary evidence was presented.

Thereafter the Court of First Instance of Manila issued the order already mentioned above, directing respondents to surrender the certificates of title to the Register of Deeds of Manila in order that petitioners-appellees' contract of lease may be noted thereon. It expressly found that respondents-appellants had knowledge of the lease contract, Exhibit A, but that respondents' deed of mortgage of March 8, 1949, has priority over petitioner's amended contract of lease, Exhibit C. As regards the (supposed) prohibition contained in the contract of mortgage, the court held that the prohibition gives a right of foreclosure; in other words, that in spite of the prohibition the amended contract of lease, Exhibit C, may not be considered as null and void.

In this court on appeal claim is made on behalf of the respondents-appellants that the court a quo erred in holding that respondents-appellants had knowledge of the contract of lease, Exhibit A; that it erred in holding that Tirso T. Reyes is the attorney-in-fact of the respondents-appellants; that it erred in ordering the registration of the contract of lease, Exhibit A; and that it erred in not holding that the registration of the contracts, Exhibits A and C, will prejudice the rights and interest of respondents-appellants.

It should be noted that all that the petitioners demand or pray for is the surrender of the titles to the Register of Deeds so that their contracts of lease, Exhibits A and C, may be noted thereon. The only issue, therefore, is whether petitioners have a right to have said deeds registered. It is not denied that the contracts have been executed by the registered owner of the land, or that they have been lawfully executed, or that they have all the qualities of registerable documents. Indeed, the owner is agreeable to the registration. The objections interposed by respondents, who are mortgagees merely, that they had no knowledge of the contract of lease, or that their mortgage has priority, or that they will be prejudiced, are beside the issue.

The purpose of registering an instrument is to give notice thereof to all persons (section 51, Act No. 496); it is not intended by the proceedings for registration to seek to destroy or otherwise affect already registered rights over the land, subsisting or existing at the time of the registration. The rights of these parties, who have registered their rights, are not put in issue when an instrument is subsequently presented for registration; nor are its effects on other instruments previously registered put in issue by the procedure of registration. Thus, the objections raised by respondents-appellants that they had no knowledge of the contract of lease, Exhibit A, before the property was mortgaged to them, or that the same violates their contract of mortgage with the owner of the land — these are not passed upon by the order for the registration of petitioners-appellees' contract of lease. The objections, as well as the relative rights of all parties who have registered their deeds, shall be decided in the proper suit or proceeding when the opportune occasion arises; but they are not now in issue, nor may they be adjudicated upon, simply because petitioners-appellees have applied for the registration of their contract of lease.

The impropriety and inconvenience of proceeding to determine completely and in advance all the possible consequences of a document, upon all parties affected thereby, in the proceeding for its registration becomes apparent when, as in this case, important and complicated questions of fact and of law were presented by the respondents-appellants about their alleged lack of knowledge of the contracts of lease

116

and the invalidity thereof. The court a quo passed upon vital issues of fact upon the motion and the opposition thereto, and upon the documents, letters, and receipts presented, without any other evidence than the above. Yet the question of knowledge is mainly a question of fact and requires inquiry into many and complicated circumstances, which can not be satisfactorily shown except by testimony.

On the other hand, the supposed invalidity of the contracts of lease is no valid objection to their registration, because invalidity is no proof of their non-existence or a valid excuse for denying their registration. The law on registration does not require that only valid instruments shall be registered. How can parties affected thereby be supposed to know their invalidity before they become aware, actually or constructively, of their existence or of their provisions? If the purpose of registration is merely to give notice, then questions regarding the effect or invalidity of instruments are expected to be decided after, not before, registration. It must follow as a necessary consequence that registration must first be allowed, and validity or effect litigated afterwards.

The foregoing, however, must not be understood as an absolute and invariable rule of procedure, for parties may, by mutual consent, submit issues for determination at the time of the proceeding to register a document. But the court should only proceed therewith (determination of the issues) upon giving all the parties concerned sufficient opportunity to present their respective sides and the evidence in support thereof, and that if this can not be done, the determination of the issues should be reserved in a subsequent proceeding and the registration of the document ordered.

In accordance with the above opinion, we find that the issues raised by respondents-appellants, namely, that the contracts of lease, Exhibits A and C, are invalid because they violate the contracts of mortgage executed in favor of the owner of the land, that Tirso T. Reyes is not the attorney-in-fact of the respondents-appellants, and that the respondents-appellants had no knowledge of the execution of the contract of lease, Exhibits A and C — these issues were not properly investigated because respondents-appellants did not have the opportunity to present evidence thereon and did not even present copy of their mortgage at the hearing, and the trial court decided the questions without full and complete investigation. The ruling of the trial court on the above issues should, therefore, be set aside and their determination reserved in a proper proceeding.

Wherefore, the opposition to the motion for the surrender of the certificates of title to the Register of Deeds of Manila is overruled, and the order appealed from, in so far as it orders the surrender of the certificates of title for the registration of the contracts of lease, is hereby affirmed, but the other rulings are reversed, and the other issues raised by respondents-appellants reserved for determination in a proper proceeding. With costs against the respondents-appellants.

Paras, C. J., Bengzon, Padilla, Montemayor and Jugo, JJ., concur.

D. Registration of forged deedsSec 53, PD 1529

Section 53. Presentation of owner's duplicate upon entry of new certificate. No voluntary instrument shall be registered by the Register of Deeds, unless the owner's duplicate certificate is presented with such instrument, except in cases expressly provided for in this Decree or upon order of the court, for cause shown.

The production of the owner's duplicate certificate, whenever any voluntary instrument is presented for registration, shall be conclusive authority from the registered owner to the Register of Deeds to enter a new certificate or to make a memorandum of registration in accordance with such instrument, and the new certificate or memorandum shall be binding upon the registered owner and upon all persons claiming under him, in favor of every purchaser for value and in good faith.

In all cases of registration procured by fraud, the owner may pursue all his legal and equitable remedies against the parties to such fraud without prejudice, however, to the rights of any innocent holder for value of a certificate of title. After the entry of the decree of registration on the original petition or application, any

117

subsequent registration procured by the presentation of a forged duplicate certificate of title, or a forged deed or other instrument, shall be null and void.

Dir of Lands v Addison 49 Phil 19

March 25, 1926

G.R. No. L-23148THE DIRECTOR OF LANDS, applicant,vs.SEYMOUR ADDISON, ET AL., claimants, SOLEDAD P. HERNANDEZ, claimant-appellee; TOMAS ANGELES, ET AL., claimants-appellants.I. P. Santos and Feria & La O for appellants.Valentina J. Alcid and Vicente Sotto for appellee.Ostrand, J.:Omitting the features not strictly relevant to the points of law involved, the facts of the present case are briefly as follows: On February 8, 1916, a Torrens certificate of title (No. 414) to a parcel of land containing an area of nearly 61 hectares, in the barrio of Santo Niño, municipality of Concepcion, in the Province of Tarlac, was issued in favor of Juana Angeles and seventeen others as tenants in common (hereinafter referred to collectively as the “Angeles heirs,” though a few of them in fact bear other surnames). The certificate of title was issued in pursuance of a decree of registration entered in land registration case No. 6540.On April 29, 1921, a deed purporting to be executed by eleven of the persons in interest in said land and to have been acknowledged before the notary public, and conveying about 47 hectares consisting of a western portion of the tract described in the certificate of title to Pedro Manuntag, the son of Juana Angeles, was presented to the register of deeds of Tarlac together with the owner’s duplicate of said certificate of title No. 414. The deed contained no technical description of the land conveyed, the aforesaid certificate of title was not cancelled, and no transfer certificate of title was issued neither to the vendors nor to the vendee; in fact no attempt was made to comply with the provisions of section 57 and 58 of the Land Registration Act, the register of deeds contenting himself by noting the transaction by way of a memorandum on the original certificate of title. It has been proven beyond dispute that the deed was a forgery, at least one of the purported conveyors being dead at the time of the date of the instrument.Armed with the owner’s duplicate of the original certificate of title containing the memorandum of the alleged sale to him, Pedro Manuntag proceeded to mortgage the property to Soledad P. Hernandez for the sum of P3,000. This mortgage was also noted on the owner’s duplicate of the original certificate of title, the memorandum bearing the date of August 1, 1921. On July 22, 1922, the mortgage was cancelled and an absolute deed of conveyance of the property made by the same Pedro Manuntag to said Soledad P. Hernandez, the consideration stated in the deed being P3,940. The deed was presented to the register of deeds of Tarlac who repeated the error committed in connection with the deed from the Angeles heirs to Pedro Manuntag and simply entered the transaction by memorandum on the back of the original certificate of title without complying with sections 57 and 58, supra. The memorandum is dated August 1, 1921. The owner’s duplicate of the original certificate of title remained in possession of Soledad P. Hernandez who, on October 4, 1923, executed a deed of sale with pacto de retro for the term of one year and in consideration of the sum of P2,000 in favor of Arturo Sanchez Mijarez. This transaction was also noted on the original certificate of title, the entry bearing the date of October 12, 1923.In the meantime a cadastral proceeding was instituted by the Director of Lands in the municipality of Concepcion including among other lands the tract covered by certificate of title No. 414. In this cadastral proceeding the Angeles heirs appeared as claimants and as no other person at first appeared to contend with them, the court on November 17, 1921, entered a decision awarding the property to them though in some respects erroneously stating the respective shares of the coowners. After the period allowed by law for an appeal from this decision has passed, Soledad P. Hernandez appeared by her attorney and, representing that she had acquired the property now in question by purchase from Pedro Manuntag, asked that the corresponding certificate of title be issued to her in the cadastral case. This motion was denied by Judge Anacleto Diaz, then presiding over the Court of First Instance in Tarlac, on the ground that the judgment had become final.However, on July 26, 1923, the chief surveyor of the General Land Registration Office, having found certain errors in the decision in the cadastral case and having observed the memoranda aforementioned upon certificate of title No. 414, asked the court to set the cause for hearing in order that after notification to the various parties in interest, the question of ownership might be finally and definitely determined. This suggestion was opposed by Tomas Angeles in behalf of the Angeles heirs, and Soledad P. Hernandez again came forward and asked that the proper certificate be issued in her name. The judge presiding over the court (now Judge Cayetano Lukban) accepted the suggestion of the chief surveyor and, and after the parties had all been notified, proceeded to determine the controversy between the Angeles heirs and Soledad P. Hernandez.

118

Upon hearing the court found that the document of April 21, 1921, purporting to be a deed of conveyance of the land from the Angeles heirs to Pedro Manuntag, was a forgery, but nevertheless on the authority of the decision of this court in the case of De la Cruz vs. Fabie (35 Phil., 144), decided the controversy in favor of Soledad P. Hernandez by an order dated August 27, 1924, from which the present appeal is taken.Of the various questions raised by the assignments of error only one need be answered, namely, whether the court erred in holding that Soledad P. Hernandez had acquired title to the property, notwithstanding the fact that the deed of eleven of the Angeles heirs to Pedro Manuntag had been shown to be a forgery.The principle that a forged deed is an absolute nullity and conveys no title is firmly embedded in our jurisprudence and it is clear that standing alone the need purporting to be executed by the Angeles heirs did not make Pedro Manuntag the owner of the land. But citing the case of De la Cruz vs. Fabie (35 Phil., 144), it is argued that under our Torrens registration system the act of registration is, in the language of section 50 of the Land Registration Act, “the operative Act to convey and affect the land” and that a deed of conveyance of registered land “shall operate only as a contract between the parties and as evidence of authority to the clerk of register of deeds to make registration,” and it is therefore urged that the presentation of the owner’s duplicate certificate and the entry thereupon of the memorandum of a transfer in fee simple to Soledad P. Hernandez, an innocent third party, constituted in itself a valid conveyance of the title to the land in question.It must be conceded that if the transfers to Pedro Manuntag and by him to Soledad P. Hernandez were duly registered, it would be difficult to differentiate the present case from that of De la Cruz vs. Fabie. But, in our opinion, the entry of a mere memorandum of a conveyance in fee simple upon the original certificate of title to the purchaser is not a sufficient registration of the conveyance of the fee. Sections 57 and 58 of the Land Registration Act prescribe how conveyances in fee registered land must be made and read as follows:SEC. 57. An owner desiring to convey in fee his registered or an any portion shall execute a deed of conveyance, which the grantor or grantee where the lands lies. The grantor’s duplicate certificate shall be produced and presented at the same time. The register of deeds shall thereupon, in accordance with the rules and instructions of the court, make out in the registration book a new certificate of title to the grantee, and shall prepare and deliver to him an owner’s duplicate certificate. The register of deeds shall note upon the original and duplicate certificates the date of transfer, the volume and page of the registration book where the new certificate is registered, and a reference by number to the last prior certificate. The grantor’s duplicate shall be surrendered, and the word “canceled” stamped upon it. The original certificate shall be also stamped “canceled.” The deed of conveyance shall be filed and indorsed with the number and place of registration of the certificate of title of the land conveyed.SEC. 58. When a deed in fee is for a part only of the land described in a certificate of title, the register of deeds shall also enter a new certificate and issue an owner’s duplicate to the grantor for the part of the land not included in the deed. In every case of transfer the new certificate or certificates shall include all the land described in the original and surrendered certificates: Provided, however, That no new certificate to a grantee of a part only of the land shall be invalid by reason of failure of the register of deeds to enter a new certificate to the grantor for the remaining unconveyed portion: And provided further, That in case the land described in a certificate of title is divided into lots, designated by numbers or letters, with measurement of all the bounds, and a plan of said has been filed with the clerk and verified pursuant to section forty-four of this Act, and a certified copy thereof is recorded in the registration book with the original certificate, when the original owner makes a deed of transfer in fee of one or more of such lots, the register of deeds may, instead of canceling such certificate and entering a new certificate to the grantor for the part of the land not included in the deed of transfer, enter on the original certificate and on the owners’ duplicate certificate a memorandum of such deed of transfer, with a reference to the lots thereby conveyed as designated on such plan, and that the certificate is canceled as to such lot or lots; and every certificate with such memorandum shall be effectual for the purpose of showing the grantor’s title to the remainder of the land not conveyed as if the old certificate had been canceled and a new certificate of such land had been entered; and such process may be repeated so long as there is convenient space upon the original certificate and the owner’s duplicate certificate for making such memorandum of sale lots.As will be seen, the issuance of a transfer certificate of title to the purchaser is one of the essential features of a conveyance in fee by registration and in order to enjoy the full protection of the registration system, the purchaser must be a holder in good faith of such certificate. This appears clearly from section 39 of the Land Registration Act which provides that “every applicant receiving a certificate of title in pursuance of a decree of registration, and every subsequent purchaser of registered land who takes a certificate of title for value in good faith, shall hold the same free of all incumbrance except those noted on said certificate, and any of the following incumbrances which may be subsisting, namely, (enumeration of subsisting incumbrances).” In fact the register of deeds has no authority to register a conveyance in fee without the presentation of the conveyor’s duplicate certificate unless he is ordered to do so by a court of competent jurisdiction (see Land Registration Act, section 55). As we have already shown, neither Pedro Manuntag nor Soledad P. Hernandez ever held a certificate of title to the land here in question and there had therefore been no sufficient legal conveyance in fee to them neither by deed nor by registration. The original certificate of title No. 414 in favor of the Angeles heirs has never cancelled and is the only certificate in existence in regard to the property.

119

In the case of De la Cruz vs. Fabie, supra, the situation was entirely different. There the registration of the property in question was decreed in the name of Gregoria Hernandez and a duplicate original certificate of title issued to her. She returned the duplicate certificate over to her nephew, the defendant Vedasto Velasquez, who forged a deed to himself of the property and presenting the same with the duplicate certificate of title to the register of deeds obtained a transfer certificate with its corresponding duplicate in his own name. He thereafter sold the land to his codefendant Ramon Fabie to whom a transfer certificate of title was issued upon the cancellation of Velasquez’ certificate. There was therefore a complete chain of registered title. The purchaser was guilty of no negligence and was justified in relying on the certificate of title held by the vendor. In the present case, on the other hand, the vendor held no certificate of title and there had therefore been no complete conveyance of the fee to him. The purchaser was charged with presumptive knowledge of the law relating to the conveyance of land by registration and, in purchasing from a person who did not exhibit the proper muniments of title, must be considered to have been guilty of negligence and is not in position to complain of his loss.We may say further that the distinction we have drawn between the two cases is not a mere technicality; if in the present case the procedure prescribed by section 58 of the Land Registration Act had been followed and which, in accordance with paragraph 3 of section 30 of the Rules for the Uniform Administration of the Registries of Deeds, as amended by Circular No. 31 of the General Land Registration Office, dated September 28, 1921, and approved by the Secretary of Justice, would have required the presentation of a subdivision plan and through the publicity attending the necessary monumenting of the dividing lines, the forgery of deed would in all probility have been discovered before any harm could have been done.It appears to be conceded by the parties that Pedro Manuntag has legitimately acquired the interests of Juana Angeles and Silvino Angeles, amounting in all to a one-eight share in the land, which interests passed to Soledad P. Hernandez through the deed executed by Manuntag in her favor; the rest of the land is, as we have seen, still the property of the remaining Angeles heirs.It appears that Bernardino Angeles and Matias Angeles have died since certificate of title No. 414 was issued and it is possible that some of the other original coowners have suffered the same fate. The evidence before us is hardly sufficient to definitely or exactly determine the present ownership of the shares of the various original heirs, but the record indicates that Soledad P. Hernadez is the owner of a one-eight interest in the land; the estate of Bernardino Angeles of one-twelfth; Leonarda, Tomasa, Ambrosia, Tomas, and Pelagia Angeles of one-twelfth each; the estate of Matias Angeles of one-twelfth; Alberto, Florencio and Agustin Angeles of one-twenty-fourth each; Maria, Romana, and Matias Angeles 2d one-thirty-sixth each’ and Clemente, Eulalia, and Aquilino Tullo of one-thirty- sixth each.The order appealed from is reversed and it is ordered that certificate of title No. 414 be cancelled and that in its stead a transfer certificate of title be issued describing the land in accordance with the cadastral survey and stating the names and shares of the various coowners as hereinabove set forth it should be found that recent changes in ownership have occurred, in which case the court below may upon motion and hearing, in accordance with section 112 of the Land Registration Act, make such modifications as the evidence before its justifies. All memoranda existing on certificate of title No. 414 will be cancelled except the one entered under document. No. 1425, evidencing the sale with the right of repurchase in favor of Arturo Sanchez, which memorandum shall, however, effect only the one-eight interest of Soledad P. Hernandez. No costs will be allowed in this instance. So ordered.Avanceña, C. J., Malcolm, Villamor, Johns, Romualdez and Villa-Real, JJ., concur.Separate OpinionsSTREET, J., concurring:I agree, but in order that my concurrence may not be taken in any wise as an indorsement of the doctrine of De la Cruz vs. Fabie (35 Phil., 144), I hasten to add that in my opinion that case was wrongly decided and should be entirely overruled.

Blondeau v Nano, 61 Phil 625

G.R. No. L-41377 July 26, 1935

ANGELA BLONDEAU and FERNANDO DE LA CANTERA Y UZQUIANO, plaintiffs-appellants, vs.AGUSTIN NANO and JOSE VALLEJO, defendants-appellees.

John R. McFie, Jr., for appellants.Evangelista and Santos for appellee Vallejo.No appearance for the other appellee.

MALCOLM, J.:

120

This action was brought in the Court of First Instance of Manila to foreclose a mortgage alleged to have been made by the defendants Agustin Nano and Jose Vallejo to the plaintiff Angela Blondeau, bearing date November 5, 1931, to secure the payment of the sum of P12,000, and covering property situated on Calle Georgia, Manila. Nano, purporting to represent both defendants, after filing an answer, was found in contempt of court. The other defendant Vallejo thereupon presented an amended answer in which it was alleged that his signature to the mortgage was a forgery. Following the trial, judgment was rendered against Nano but not against Vallejo. From this judgment the plaintiffs have taken an appeal.

With all due deference to the findings of the trial judge, now an honored member of this court, we are inclined to the view, first, that the accessorias bearing Nos. 905A to 905F, Calle Georgia, Manila, were as indicated in the mortgage, the property of the defendant Agustin Nano, and second, that the purported signature of the defendant Vallejo to the mortgage was not a forgery. In support of the first of our statements, attention need only be invited to a series of documents, including the transfer certificate of title, showing that Vallejo was considered the owner of the land only. As to the second statement, it needs be recalled that the mortgage was executed in the home of the plaintiffs, and that of those present, the principal plaintiff Angela Blondeau and her husband Fernando de la Cantera, together with the instrumental witness Pedro Jimenez Zoboli, identified Vallejo as the person who signed the document. As against their testimony stands the alibi of Vallejo, partially corroborated by the testimony of the notary public Gregorio Bilog. It is expecting a great deal to have us believe that not only the mortgage but the power of attorney of Vallejo in favor of Nano and a series of documents were the product of the evil machinations of Nano, and that although Nano and Vallejo, members of same family, lived together, Vallejo was entirely unacquainted with the activities of Nano in dealing with their joint property. It is significant that the proper cedulas of Vallejo were presented for the accomplishment of the documents, and that if there was fraud, not one but a number of notaries public were deceived thereby.

We repeat that upon its face, the mortgage appears to be regular and to have been duly executed and accepted by Vallejo on November 5, 1931. The evidence then resolves itself into a question of the execution of the mortgage by Vallejo on the one hand, and the denial of its execution on the other hand. That there was a conflict between experts as to the handwriting, one being of the opinion that the signatures of Vallejo were genuine, and the other being of the opinion that they were not genuine, is not unexpected. Under such conditions, the question is, which side produced the weightier testimony, and as hereinbefore indicated, we are of the opinion that the balance inclined in favor of the plaintiffs.

But there is a narrower ground on which the defenses of the defendant-appellee must be overruled. Agustin Nano had possession of Jose Vallejo's title papers. Without those title papers handed over to Nano with the acquiescence of Vallejo, a fraud could not have been perpetrated. When Fernando de la Cantera, a member of the Philippine bar and the husband of Angela Blondeau, the principal plaintiff, searched the registration records, he found them in due form, including the power of attorney of Vallejo, in favor of Nano. If this had not been so and if thereafter the proper notation of the encumbrance could not have been made, Angela Blondeau would not have lent P12,000 to the defendant Vallejo.

The Torrens system is intended for the registration of title, rather than the muniments of title. It represents a departure from the orthodox principles of property law. Under the common law, if the pretended signature of the mortgagor is a forgery, the instrument is invalid for every purpose and will pass on the title or rights to anyone, unless the spurious document is ratified and accepted by the mortgagor. The Torrens Act on the contrary permits a forged transfer, when duly entered in the registry, to become the root of a valid title in a bona fide purchaser. The act erects a safeguard against a forged transfer being registered, by the requirement that no transfer shall be registered unless the owner's certificate was produced along with the instrument of transfer. An executed transfer of registered lands placed by the registered owner thereof in the hands of another operates as a representation to a third party that the holder of the transfer is authorized to deal with the lands. (53 C.J., 1141, 1142; Act No. 496, as amended, secs. 47, 51, 55.)

With respect to the conclusiveness of the Torrens title and the binding force and effect of annotations thereon even when through a forged deed the land passes into the possession of an innocent purchaser for value, the basic rule is found in the opinion delivered by Mr. Chief Justice Arellano in De la Cruz vs. Fabie ( [1916], 35 Phil., 144). The history of the case was as follows:

121

Vedasto Velazquez was attorney in fact of Gregoria Hernandez. Gregoria Hernandez registered her title of ownership to the land in question in the property registry and was issued certificate of title No. 121. Vedasto Velazquez, being the attorney in fact of Gregoria Hernandez, had in his possession all the muniments of title of the land, including the certificate of title No. 121, and, abusing her confidence in him, a few days after the registration of the land, forged a notarial instrument wherein he made it appear that she had sold the said land to him for the price of P8,000.

Vedasto Velazquez then went to the register of deeds and applied for the registration of the land in his own name, presenting Gregoria Hernandez' certificate of title No. 121 for cancellation, and the deed of conveyance which was purported to have been made by Gregoria Hernandez in his favor in order that he might be registered as the true owner of the land. All this was done; Gregoria Hernandez' title was cancelled and certificate of title No. 43 was issued to Vedasto Velazquez.

x x x           x x x           x x x

On May 31, 1907, Vedasto Velazquez sold the land finally and absolutely to Ramon Fabie, who presented to the register of deeds the notarial instrument executed for the purpose and was thereupon furnished with the certificate of title No. 766." On these facts, it was held that Fabie was an innocent holder of a title for value and that, under section 55 of the Land Registration Law, he was the absolute owner of the land.

The decision above cited has repeatedly been reexamined by this court, one of the most recent instances being found in the case of El Hogar Filipino vs. Olviga ( [1934], 60 Phil., 17). While counsel for the appellee is undoubtedly correct in his contention that neither the case of Fabie nor the case of Olgiva nor any other case relied upon by the appellants is on all fours with the present facts, the principle on which these cases rest should here be carried forward and given application.

The recent decision of the United States Supreme Court in the case of Eliason vs. Wilborn ( [1930], 281 U.S., 457), is of enlightening interest. Plaintiffs in this case, purchasers of land previously brought under the Illinois Torrens Act, delivered the certificate of title to a party under an agreement to sell, who forged a deed to himself, had a certificate issue in his name, and then conveyed to defendants who were good faith purchasers for value. Plaintiffs informed the register of the forgery after the defendants had bought, and demanded the cancellation of the deeds and certificates, and the reissue of a certificate to themselves. The register refused, and a petition was brought to compel such action. The Circuit Court for Cook County, Illinois, the Supreme Court of Illinois, and the United States Supreme Court, united in dismissing the petition. Mr. Justice Holmes, delivering the opinion of the latter court, said:

. . . The statute requires the production of the outstanding certificate, as a condition to the issue of a new one. The appellants saw fit no entrust it to Napletone and they took the risk. They say that according to the construction of the act adopted the registrar's certificate would have had the same effect even if the old certificate had not been produced. But that, if correct, is no answer. Presumably the register will do his duty, and if he does he will require the old certificate to be handed in. It does not justify the omission of a precaution that probably would be sufficient, to point out that a dishonest official could get around it. There is not the slightest reason to suppose that Napletone would have got a certificate on which the Wilborns could rely, without the delivery of the old one by the appellants. As between two innocent persons, one of whom must suffer the consequence of a breach of trust, the one who made it possible by his act of confidence must bear the loss.

Vargas & Mañalac in their treatise on the Philippine Land Registration Law quote with approval the comment of Mr. Powell in his book on Land Registration, section 213. The question which the author propounded was: Why does the law say that the person who had no title at all and only a forged deed as a color of title should become the true owner of the land by merely continuing to occupy and enjoy the land which in fact does not belong to him, but which belongs to the victim of the forgery? His answer was:

. . . that public policy, expediency, and the need of a statute of repose as to the possession of land, demand such a rule. Likewise, public policy, expediency, and the need of repose and certainty as to land titles demand that the bona fide purchaser of a certificate of title to registered land, who, though he buys on a forged transfer, succeeds in having the land registered in his name, should nevertheless hold an unimpeachable title. There is more natural justice in recognizing his title as

122

being valid than there is in recognizing as valid the title of one who has succeeded in ripening a forged color of title by prescription.

In the first place, a forger cannot effectuate his forgery in the case of registered land by executing a transfer which can be registered, unless the owner has allowed him, in some way, to get possession of the owner's certificate. The Act has erected in favor of the owner, as a safeguard, against a forged transfer being perpetrated against him, the requirement that no voluntary transfer shall be registered unless the owner's certificate is produced along with the instrument of transfer. Therefore, if the owner has voluntarily or carelessly allowed the forger to come into possession of his owner's certificate he is to be judged according to the maxim, that when one of two innocent persons must suffer by the wrongful act of a third person the loss fall on him who put it into the power of that third person to perpetrate the wrong. Furthermore, even if the forger stole the owner's certificate, the owner is up against no greater hardship than is experienced by one whose money or negotiable paper payable to bearer is stolen and transferred by the thief to an innocent purchaser.

Other incidental facts might be mentioned and other incidental legal propositions might be discussed, but in its final analysis this is a case of a mortgagee relying upon a Torrens title, and loaning money in all good faith on the basis of the title standing in the name of the mortgagors only thereafter to discover one defendant to be an alleged forger and the other defendant, if not a party to the conspiracy, at least having by his negligence or acquiescence made it possible for the fraud to transpire. Giving to the facts the most favorable interpretation for Vallejo, yet, as announced by the United States Supreme Court, the maxim is, as between two innocent persons, in this case Angela Blondeau and Jose Vallejo, one of whom must suffer the consequence of a breach of trust, the one who made it possible by his act of confidence must bear the loss, in this case Jose Vallejo. Accordingly, the four errors assigned will be sustained, the judgment reversed, and in the court of origin a new one entered sustaining plaintiff's mortgage and granting her the relief prayed for in her complaints .So ordered, without special pronouncement as to the costs in either instance.

E. ConveyancesSections 57, 58, 59 PD 1529

(A) CONVEYANCES AND TRANSFERS

Section 57. Procedure in registration of conveyances. An owner desiring to convey his registered land in fee simple shall execute and register a deed of conveyance in a form sufficient in law. The Register of Deeds shall thereafter make out in the registration book a new certificate of title to the grantee and shall prepare and deliver to him an owner's duplicate certificate. The Register of Deeds shall note upon the original and duplicate certificate the date of transfer, the volume and page of the registration book in which the new certificate is registered and a reference by number to the last preceding certificate. The original and the owner's duplicate of the grantor's certificate shall be stamped "canceled". The deed of conveyance shall be filled and indorsed with the number and the place of registration of the certificate of title of the land conveyed.

Section 58. Procedure where conveyance involves portion of land. If a deed or conveyance is for a part only of the land described in a certificate of title, the Register of Deeds shall not enter any transfer certificate to the grantee until a plan of such land showing all the portions or lots into which it has been subdivided and the corresponding technical descriptions shall have been verified and approved pursuant to Section 50 of this Decree. Meanwhile, such deed may only be annotated by way of memorandum upon the grantor's certificate of title, original and duplicate, said memorandum to serve as a notice to third persons of the fact that certain unsegregated portion of the land described therein has been conveyed, and every certificate with such memorandum shall be effectual for the purpose of showing the grantee's title to the portion conveyed to him, pending the actual issuance of the corresponding certificate in his name.

Upon the approval of the plan and technical descriptions, the original of the plan, together with a certified copy of the technical descriptions shall be filed with the Register of Deeds for annotation in the corresponding certificate of title and thereupon said officer shall issue a new certificate of title to the grantee for the portion conveyed, and at the same time cancel the grantor's certificate partially with respect

123

only to said portion conveyed, or, if the grantor so desires, his certificate may be canceled totally and a new one issued to him describing therein the remaining portion: Provided, however, that pending approval of said plan, no further registration or annotation of any subsequent deed or other voluntary instrument involving the unsegregated portion conveyed shall be effected by the Register of Deeds, except where such unsegregated portion was purchased from the Government or any of its instrumentalities. If the land has been subdivided into several lots, designated by numbers or letters, the Register of Deeds may, if desired by the grantor, instead of canceling the latter's certificate and issuing a new one to the same for the remaining unconveyed lots, enter on said certificate and on its owner's duplicate a memorandum of such deed of conveyance and of the issuance of the transfer certificate to the grantee for the lot or lots thus conveyed, and that the grantor's certificate is canceled as to such lot or lots.

Section 59. Carry over of encumbrances. If, at the time of any transfer, subsisting encumbrances or annotations appear in the registration book, they shall be carried over and stated in the new certificate or certificates; except so far as they may be simultaneously released or discharged.

Sanchez v Director of Lands, 63 Phil 378

G.R. No. L-43094             August 31, 1936MATEO C. SANCHEZ, applicant-appellee, vs.THE DIRECTOR OF LANDS, THE DIRECTOR OF FORESTRY, MARTINA ARIZALETA, ET AL., oppositors. THE DIRECTOR OF LANDS, appellant.Office of the Solicitor-General Hilado for appellant.Leonardo Abola for appellee.LAUREL, J.:On January 9, 1932, Mateo C. Sanchez filed with the Court of First Instance of Masbate an application for the registration of three parcels of land situated in the barrio of Uson, municipality of Dimasalang, Province of Masbate, described in the plan (Exhibit A) and in the technical description (Exhibit A-1) to the application. The application was opposed by the Director of Lands on the ground that the said parcels of land are public lands and that the petitioner does not possess any title fit for registration; by the Director of Forestry on the ground that portions thereof are public forests; and by Martina Arizaleta and Jose, Isidro and Francisco Moraza who claimed lot No. 1 indicated in the plan. The oppositions filed by the last-named persons and by the Director of Forestry were later on withdrawn.On October 8, 1934, the trial court rendered a decision overruling the opposition of the Director of Lands and ordering the registration of the three parcels of land in question in favor of the conjugal partnership of Mateo C. Sanchez and Priscila Zamora subject to a right of way indicated by the red line in Exhibit 1 of the Bureau of Forestry.On December 12, 1934, the provincial fiscal of Masbate, on behalf of the Director of Lands and the Director of Forestry, filed a motion for new trial on the ground that the decision of the trial court was contrary to law and the weight of the evidence, which motion was set for hearing on December 22, 1934. On December 15, 1934, prior to the date set for the hearing of the motion for new trial, the provincial fiscal of Masbate, on behalf of the Director of Lands and the Director of Forestry, filed the bill of exceptions in this case which was approved by the trial court on January 7, 1935.It is admitted by the appellant Director of Lands that the provincial fiscal of Masbate who represented him, filed the bill of exceptions while the motion for new trial was still pending resolution by the trial court. The presentation of the bill of exceptions prior to the resolution of a motion for new trial has the effect of withdrawing such motion for new trial. (Conspecto vs. Fruto (1915], 31 Phil., 144, 147, cited with approval in Dimaliwat vs. Dimaliwat [1931], 55 Phil., 673, 679; Heirs of Advincula vs. Imperial [1932], 56 Phil., 837; Laxamana vs. Carlos [1932], 57 Phil., 722, 725, 726.) The fact that the case before us is one of registration is immaterial because the rule with reference to the order of filing the motion for new trial, exception, appeal and bill of exceptions is the same in ordinary civil actions and in registration proceedings. (Laxamana vs. Carlos, supra, citing sec. 14, Act No. 496, as amended by Act No. 1108, and Director of Lands vs. Court of First Instance of Tarlac [1928], 51 Phil., 805.) It is well-settled that in order that the evidence adduced before the trial court may be reviewed by this court it is necessary, under section 497, subsection 2, of the Code of Civil Procedure, (a) that the excepting party file in the trial court a motion for new trial on the ground that the evidence was insufficient to justify the decision; (b) that said motion be overruled by the trial judge; and (c) that due exception be taken to the overruling of the motion. (See Lopez vs.Orozco [1908], 11 Phil., 53, 54; De la Rama vs. De la Rama [1906], 201 U. S., 303; 11 Phil., 746,

124

751; Lazarte vs.Nolan [1921], 42 Phil., 563, 566, citing Singayan vs. Mabborang [1908], 10 Phil., 601, Sandeliz vs. Reyes [1909], 12 Phil., 506, Buencamino vs. Soriano [1915], 29 Phil., 230, and Layda vs. Legazpi [1918], 39 Phil., 83; Granados and Granados vs. Bandelaria [1923], 45 Phil., 505, 507-509 and cases cited; Dais vs. Torres and Ibañez [1933], 57 Phil., 897, 904.) It has also been held that the motion and exception should be incorporated in the bill of exceptions (Rubert and Guamis vs. Luengo and Martinez [1907], 8 Phil., 732) and that in his brief the appellant should assign errors raising questions of fact (Granados and Granados vs. Bandelaria, supra; Dais vs. Torres and Ibañez, supra; Enriquez vs. Enriquez [1907], 8 Phil., 565, 566; Capellania de Tambobong vs. Antonio [1907], 8 Phil., 683, 684; Paterno vs. City of Manila [1910], 17 Phil., 26-29; Santiago vs. Felix [1913], 24 Phil., 378, 383, 384) and cite the pages of the record where evidence relied upon may be found. (Palarca vs. Baguisi [1918], 38 Phil., 177, 178.) We are, therefore, constrained to accept the findings of fact made by the trial judge.Even accepting, however, the facts found by the trial judge, we do not feel justified in granting to the applicant, Mateo C. Sanchez, more land than what his title calls for.The findings of fact of the lower court are contained in the following paragraph of its decision:Se ha demostrado por las pruebas del solicitante, a satisfaccion del Juzgado, que desde el año 1886 Juan Perez de Tagle estaba en posesion de los tres lotes de terreno cuyo registro se solicita, y desde el año 1889 hasta 1894 se han tomado los pasos por el mismo para adquirir dichos terrenos por compra del Estado, habiendo sido dichas parcelas medidas y tasadas por la Inspeccion General de Montes (exhibits B y B-1); que en 1896, dichos tres lotes de terreno, que forman una sola parcela, fueron vendidos por Juan Perez de Tagle a favor de Dolores Ramirez; que la muerte de esta, ocurrida en 1904, le heredo y le sucedio en la posesion su hija Remedios Medina, quien, a su vez, en 10 de abril de 1917 lo vendio, con consentimiento de su esposo, el testigo Antero Zafra, a favor de Jose Y. de Egurrola (Exhibit C), y este a su vez, en 10 de septiemtbre de 1921, lo traspaso en venta a favor del aqui solicitante Mateo C. Sanchez y que tanto la posesion de este asi como la de sus anteceros sobre el terreno en cuestion, ha sido siempre quieta, publica, continuada y adversa y en concepto de dueño, habiendolo dedicado desde entonces hasta ahora para pasto de ganados.It should be observed that the land found to have been occupied by Juan Perez de Tagle since 1896 is that in reference to which "se han tomado los pasos por el mismo para adquirir dichos terrenos por compra del Estado, habiendo sido dichas parcelas medidas y tasadas por la Inspeccion General de Montes (exhibits B y B-1)" Exhibit B refers to the preliminary steps of inspection and survey ordered in connection with the application of Juan Perez de Tagle for the acquisition by purchase from the Government of one parcel of land "que linda por el norte con bosques del Estado, por el sur con cogonales del Estado, por el este y este con bosques tambien del Estado."Exhibit B-1 is entitled "expediente general referente a la enajenacion en publica subasta de un terreno situado en la jurisdiccion del Pueblo de Uson (Masbate y Ticao) promovido por D. Juan Perez de Tagle" and adjudicated on May 13, 1894 to the applicant Tagle "el terreno de referenda radica en el Sitio de Bagsulan jurisdiccion de dicho pueblo y distrito dista unos veinte kilometros de la Yglesia del pueblo y fuera de la que por la principalia se considera como legua comunal, sus limites son: al norte, este, sur y oeste con terrenos del Estado cuya superficie es de Ciento treinta y una hectareas y mil trescientos metros cuadrados tasados a tres pesos cincuenta centimos la hectarea," for P458.88.Mateo C. Sanchez, however, seeks the judicial confirmation of a title to 1,107 hectares, 91 ares and 70 centares of public land. Why is there a difference of 976 hectares, 78 ares and 70 centares between the area stated in the grant and that stated in the application? In his brief, the applicant accounts for this gross discrepancy by stating that "surveys made during the Spanish regime were inaccurate, because of lack of proper means and scientific instruments", so that, in his opinion, the area of 131 hectares and 13 ares stated in Exhibit B-1 "can not be exact."We are not inclined to hold that the area stated in Exhibit B-1 is erroneous. In accordance with the Royal Decree of June 25, 1880 (published in the Gazeta de Manila on September 8, 1880), said to have marked the beginning of modern Spanish land legislation in the Philippines (Vargas & Mañalac, Philippine Land Registration Law, pp. 11-14), the "Decreto del Gobierno General de 1880" was promulgated providing, among other things, that no title could be issued without a correct survey of the land covered thereby being first made and without the corresponding plan thereof showing the correct boundaries and areas or, to use the very language of the decree, con exactitud (de) la cabida y linderos." For a better understanding of the said decree, we shall quote its pertinent provisions:Considerando que la demanda de terrenos baldios realengos y de composiciones de tierras cultivadas, aument diariamente en proporcion considerable, haciendo cada vez mss imposible que los empleados de Montes puedan desempenar elservicio de medicion y tasacion, on la brevedad conveniente.Considerando que es de sumo interes facilitar todo lo posible el establecimiento de la verdadera propiedad rural, este Gobierno General viene en decretar lo siguiente:

125

1.º La clasificacion de los terrenos realengos que los particulares deseen adquirir por compra o composicion, se hara siempre por los empleados facultativos de Montes, los cuales previo reconocimiento si fuere necesario, o con omision del mismo si tuviese ya conocimiento detallado de la localidad en que el terreno denunciado radique, determinaran si por razones cosmologicas, hidrologicas o de aptitud para el cultivo agrario permanente, debe o no accederse a la enajenacion.2.º Los interesados presentaran un croquis del terreno levantado a su costa por un agrimensor, debiendo hacer constar en aquel con exactitud la cabida y linderos.3.º A las operaciones de medicion asistiran el gobernadorcillo o un teniente de justicia y dos principales, extendiendose un acta firmada por todos los cocurrentes en que conste la distancia del predio a la iglesia del pueblo, si el terreno esta o no baldio en todo o en parte, si contien o no arbolado maderable y de que clase, quienes son los poseedores de las roturaciones en caso de haberlas, la cabida de cada una de estas y si se han presentado o no reclamaciones antes de la operacion o durante la misma, a cuyo efecto se anunciara por bandillo, durante tres dias consecutivos, aquel en que las operaciones hayan de ejecutarse, constando dicha publicacion en el acta.4.º Los gobernadorcillos no podran negar el concurso de la comision antes indicada, a los particulares que lo soliciten quedando de lo contrario incursos en la multa que en cada caso se determine. (Berriz, Guia del Comprador de Terrenos, pp. 336-338.) (Emphasis supplied.)It is to be presumed that in the grant (Exhibit B-1) the requirements of the law above-quoted have been followed. (Sec. 334, pars. 14 and 31, Code of Civil Procedure.) The area of the land sold to Juan Perez de Tagle as stated should, therefore, be accepted as true.The applicant also cites the cases of Escudero and Marasigan Director of Lands ([1922], 44 Phil., 83) and Smith, Bell & Co. vs. Director of Lands ([1924], 50 Phil., 879, 882), as authority for the proposition that the area given is not the principal element for the identification of land. The applicant, indeed, could have cited many more cases holding that what really defines a piece of land is not the area mentioned in its description but rather the boundaries therein laid down. As stated in the case of Loyola vs. Bartolome ([1919], 39 Phil., 544, 550): "It is not of vital consequence that a deed or contract for the sale of land should declare that the area with mathematical accuracy. It is sufficient if its extent is objectively indicated with sufficient precision to enable one to identify it; and where the boundaries given are adequate for this purpose, an error as to the superficial area is immaterial." (See also Government of the Philippine Islands vs. Franco [1926], 49 Phil., 328, 329; Prieto vs. Director of Lands [1926], 50 Phil., 971-973; Government of the Philippine Islands vs. Abaja [1928], 52 Phil., 261, 265.) But a careful review of the applicable cases will show that it is only when the boundaries given are sufficiently certain and the identity of the land clearly proved by the boundaries thus indicated that an erroneous statement concerning the area can be disregarded or ignored. Otherwise, the area stated is followed. A few illustrative cases will be given.In the case of Pamintuan vs. Insular Government ([1907], 8 Phil., 512, 515), it appears that the Spanish Government made a grant of 92 hectares and 10 ares of public land to the ancestors of the petitioner. The petitioner, however, claimed in is application 626 hectares, 38 ares and 95 centiares of land. This court said:While the proposition of law laid down by the court below may be true to the effect that natural boundaries will prevail over area, yet when the land sought to be registered is almost seven times as much as that described in the deed, the evidence as to natural boundaries must be very clear and convincing before that rule can be applied. No such evidence was given in this case, and the judgment of the court below can not stand.For a quite similar reason, in the case of Paras vs. Insular Government ([1908], 11 Phil., 378), the petitioner failed in his attempt to prove his ownership of 67 hectares of land by presenting a patent from the Spanish Government for 43 hectares, and in the case of Carrillo vs. Insular Government ([1908], 11 Phil., 379), the petitioner failed in his attempt to prove his ownership of 107 hectares of land by presenting a patent from the Spanish Government for 26 hectares.In the case of Waldroop vs. Castañeda ([1913], 25 Phil., 50, 56) it appears that the Spanish Government conveyed to Hilario Castañeda 23 hectares, 11 ares and 12 centiares of public land. This parcel of land was later on conveyed to the petitioners. Due to the absence of proof that the land which Hilario Castañeda had obtained from the Government had natural boundaries sufficient to clearly segregate it from the adjoining lands, it was held that the only land to which the petitioners were entitled was the land which Hilario Castañeda had obtained from the Spanish Government. In this case, the following doctrine was laid down by this court:In order that natural boundaries of land may be accepted for the purpose of varying the extent of the land included in a deed of conveyance, the evidence as to such natural boundaries must be clear and convincing. Such natural boundaries must be of such a character as to definitely and accurately segregate the land in question from the adjoining property. There must be no doubt left that the land included within the natural boundaries is the, same land which was intended to be sold by the deed of conveyance. (See also Sales vs. Director of Lands, 61 Phil., 759.)

126

As already indicated above, the boundaries of the land purchased by Juan Perez de Tagle from the Spanish Government in 1894 were as follows: "Al norte, este, sur y este con terrenos del Estado." (Exhibit B-1.) Nothing can be more uncertain and indefinite!It should be observed in this connection that the Royal Decrees in force at the time of the acquisition by Juan Perez de Tagle did not recognize any grant of public land in excess of one thousand hectares. (See Valdez vs.Director of Lands, 62 Phil., 362.)The Royal Decree of November 25, 1880 provides:Considerando que la naturaleza e importancia del asunto aconsejan adopter algunas precauciones para evitar ciertos abusos de trascendencia, que al amparo de disposiciones transitoriales pudieran cometerse, y que redundarian en perjuicio del Tesoro publico y de los particulares que se dedican a cultivar y no a especular con la venta a otros, de los terrenos que se les conceden: Considerando por ultimo que deben exigirse por el Estado ciertas garantias para aceptar las mediciones y tasaciones que practiquen los agrimensores particulares en terrenos que son de su pertinencia; S. M. el Rey (q. D. g.) ha tenido a bien aprobar el decreto de ese Gobierno General de 28 de agosto ultimo con las modificiones siguientes:"1.ª La extension de los terrenos a los cuales se refiere dicho decreto, no podra exceder de mil hectareas para los terrenos de secano; quinientas para los de igual clase poblados de arbolado maderable, y ciento para los clasificados en el articulo 6. del mismo decreto con la frase "que a poca costa puedan hacerse de regadio"."The Royal Decree of October 26, 1881, repeats the same restriction in more vigorous terms:Es asimismo preciso, que para favorecer la division de la propiedad territorial y el fomento del cultivo intensivo y el de las producciones como el tabaco, la calla de azucar, el cafe y otros semejantes, que se atienda con mais interes a las solicitudes en demanda de pequenas extensiones de terreno para dedicarlos a los cultivos citados, que a las que no hallen en ese caso y se comprenda que no solo no han de ponerse desde luego en condiciones de produccion, sino que lo que busca es acaparar los mejores terrenos para poderse despues lucrar con su venta. — En su consecuencia S. M. el Rey (q. D. g.) ha tenido a bien disponer lo siguiente:"1.º Que a fin de favorecer la division de la propiedad, en las ventas de terrenos se tenga en cuenta lo prevenido en el parrafo 1. de la Real Orden de 25 de noviembre de 1880, para que no se verifique ninguna concesion que exceda de mil hectareas en terrenos de secano, de quinientas cuando esten poblados de arbolado y de ciento cuando sean tierras que a poca costa puedan hacerse de regadio."It should also be observed that the amount of permissible error in the measurement of public land was only five per cent of the total area. Royal Decree of January 19, 1883, article 27.)There is still another point which weigh heavily against the claims of the applicant. It appears that Juan Perez de Tagle contracted with the Spanish Government for the sale of the parcel of land in question at a fixed price per unit of measure or at P3.50 per hectare, to be exact. There can be no mistake as to the intention of the parties, no doubt as to the area conveyed by the Government to Tagle. And if Tagle bought 131 hectares and 13 ares of land paying the sum of P3.50 per hectare, it is not seen why the same land having been conveyed to the applicant, the latter should now be allowed to claim a bigger tract of land. This would be unfair to the State.Under the laws in force at the time the purchase by Tagle was made, lands of the public domain were sold only by unit of measure, that is to say, at a fixed price per hectare or per quiñon, and not in the mass (cuerpos ciertos). (See Valdez vs. Director of Lands, 62 Phil., 362.)Articles 1469 and 1470 of the Spanish Civil Code embody a rule of construction which has been followed, according to Manresa, by the Spanish Government in the sale of public lands. Article 1469, in part, provides:If a sale of real property should be made with a statement of its area, at a certain price for each unit of measure or number, the vendor shall be obliged to deliver to the vendee, if the latter should require it, all that which has been specified in the contract; but should, this not be possible, the vendee may choose between a proportional reduction in the price or the rescission of the contract, provided that in the latter case the deficiency be not less than one-tenth of the stated area of the property. And article 1470 provides:If in the case mentioned in the next preceding article the area of the realty should be greater than that specified in the contract, the vendee shall be obliged to pay the price of the excess if the greater area should not exceed one-twentieth of that specified in the contract; but it should be more than one-twentieth, the vendee may choose between paying the greater value of the property or withdrawing from the contract.This court recognized and gave effect to the principle governing the sale of public lands in the case of Barretto vs. Director of Lands (G. R. No. 29717, promulgated December 29, 1928, not reported). In this case, the title conveying a tract of public land in the Province of Zambales to Antonio Lorenzo Barretto was described by natural boundaries as follows: "Baldios y realengos unos terrenos situados en la Provincia de Zambales, jurisdiccion del Pueblo de Cabungan, Sitio de Balintagac, lindando al sur, con el Monte de Carmen; al norte, el Rio Anonang; al este, el rincon de Balintagac y al oeste el Monte de Tictic." The are was stated to be 200 quiñones and for eachquiñon four reales were paid.This court said:

127

Dado que, excepto el Rio Anonang al lado norte, los demas linderos consignados en este titulo no son puntos o lineas especificas por no constar claramente ni en tal documento ni en las pruebas aportadas donde empiezan determinadamente el monte del Carmen, el rincon de Balintagac o el Monte de Tictic, y teniendo en cuenta que la venta efectuada por el Gobierno espanol a favor de D. Antonio Lorenzo Barretto causante del aqui solicitante, no fue a cuerpo cierto toda vez que los linderos son inciertos sino de 200 quinones a razon de cuatro reales cada quinon, es decir, a un tanto por unidad de medida, entendemos acertada la alegacion de los abogados del apelante de que la verdadera intencion del Estado como vendedor y del referido D. Antonio Lorenzo Barretto como comprador fue transferir a este 200 quinones de terreno en aquel Sitio de Balintagac extendiendose desde el Rio Aninang hacia el sur, este u oeste. Y tal intencion, del Estado de celebrar la venta, no a cuerpo cierto, sino a un la tanto por unidad de medida y que, antes del 7 de abril de 1869 todavia daba lugar a incertidumbres en casos dudosos, quedo desde dicha fecha definitivamente reconocida por el orden del Poder Ejecutivo, la cual se refiere Manresa en el parrafo que trascribimos a continuacion:"Desde esta fecha de 7 de abril de 1869 es, por lo tanto, indudable que las ventas de bienes del Estado no se hacen a cuerpo cierto, sino a razon de un tanto por unidad de medida o numero. Por otra parte, las sentencias del Tribunal Supremo de 5 de mayo de 1870 y de 11 de febrero de 1877, y el Real Decreto sentencia de 20 de marzo de 1885, coinciden en afirmar que la doctrina de los cuerpos ciertos no pueden tener aplicacion a las ventas del bienes del Estado, sea cual fuere su fecha." (10 Manresa, Comentarios al Codigo Civil Español, pag. 164, Edicion de 1908.)The same principle has been embodied in several decrees. In the Royal Decree of November 27, 1880, published in the Gaceta de Manila, No. 65, of March 6, 1881, it was said, among other things:Acreditado por los mismos titulos que presenta Ramirez, que lo que verdaderamente adquirio del Estado o mejor sus causantes D. Mariano Albea y D. Felix Guianzo, se reduce solo a 2438 hectareas, poco mas o menos, es evidente que la pretension de que se le reconozca como legitimo poseedor de 16,000, a pretexto de lo que adjudicado ha de etenderse como cuerpo cierto, si se apoya en disposicion alguna positiva, ni en doctrina, ni principios atendibles bajo ningun concepto, pues la teoria de cuerpos ciertos,desechada ya en la Peninsula absolutamente, segun se declara en varias disposiciones del Gobierno, no ha regido nunca en Filipinas, ni aun cuando hubiera estado en vigor, seria aplicable a este caso dados los terminos e que se hicieron las respectivas adjudicaciones. Otro tanto puede decirse de las demis pretensiones formuladas por el recurrente Ramirez, invocando los principios de aquidad porque esta no puede ser decisiva cuando se perjudican los intereses de una de las partes; y es notorio que aqui se perjudicarian notablemente los del Estado, tolerando una usurpacion tan considerable o recibiendo como precio muchisimo menos del que realmente tienen los terrenos que al mismo Estado pertenecen.In paragraph 5 of the "Decreta del Gobierno General de 20 de agosto de 1880", hereinbefore referred to, the principle regarding the conclusiveness of area was plainly recognized:En cualquiera epoca en que se descubra error o ocultacion en la medida del terreno, que exceda de un quinto de la cabida total, y en caso de que se averigue que no ha sido consignada en el acta la reclamacion hecha por alguna persona, o que los limites no se han expresado con exactitud, se anulara la adjudicacion y el Estado reivindicara la propiedad del terreno, cualesquiera que sean las condiciones en que se halle, sin indemnizacion alguna por las mejoras que el poseedor hubiere hecho, ni reintegro de lo satisfecho. Of the same tenor is paragraph 3 of the Royal Decree of June 22, 1882:Si entablase reclamacion sobre exceso o falta de cabida del terreno subastado y del expediente resultase que dicha falta o exceso iguala a la quinta parte de la expresada en el anuncio, sera nula la venta; quedando en el caso contrario, firme y subsistente y sin derecho a indemnicacion la Hacienda ni el comprador. Article 27, Royal Decree of January 19, 1883, provided:El error tolerable en las mediciones de baldios realengos sera el de cinco por ciento de la cabida total. Cuando exceda de dicha cantidad y no pase del quince por ciento, el miismo poseedor del terreno tendra derecho a la composicion de la parte sobrante por el precio de la tasacionque corresponda considerado como baldio; pero si el exceso fuese mayor de quince por ciento se sacara a subasta con obligacion por parte del rematante de indemnizar al poseeder el importe de las mejoras se, hara por un perito nombrado por cada parte y por un tercerto nombrado por la Administracion en caso de discordia. Cuando el error de la medicion exceda del quince por ciento, se instruira expediente para exigir a los peritos la responsabilidad que corresponda.In three recent cases involving also lands situated in the Province of Masbate, this court applied the foregoing principle governing the sale of lands of the public domain and denied the application for registration of lands in excess of those stated in the titles concerned. These are the cases of Rosado vs. Director of Lands (58 Phil., 833); Martinez vs. Director of Lands (G. R. No. 37303, promulgated January 19, 1934 [59, Phil., 958]); and Valdez vs. Director of Lands (62 Phil., 362).In the first of these cases, the title described the land as follows: "Al norte y oeste, terrenos del Estado; al este, playa, y al sur, bosque y terrenos del Estado." The area was stated to be 144 hectares, 89 ares and 76

128

centiares. The applicant, however, sought the registration in his favor of 966 hectares, 30 ares and 95 centiares of public pasture land. In rejecting the application, this court said:It is doubtless true that when a deed describes a tract of land by definite and ascertainable boundaries, an additional statement as to the area included is of secondary importance, because it is presumed that the parties to the deed contracted with reference to the land specifically delimited in the description. But this rule, has no application in the present case for two reasons: First, because the land is not specifically delimited by definite and ascertainable boundaries; and second, because the record shows, as above set out, that the Spanish Government and Alejandro Danao contracted with reference to a definite area, because the minimum acceptable bid was based on the area of 144 hectares, 89 ares and 70 centares.In the second case, the title described the land as bounded on the north by the Boracay River and public land; on the east by the sea; on the south, by the Bangad River and public land; and on the west, by public cogon land. The area was stated to be 80 hectares, 71 ares and 30 centiares but the applicant sought the registration of 866 hectares, 54 ares and 17 centiares of land. After quoting the rule laid down in the case of Rosado vs. Director of Lands, supra, this court said:In the case before us the price of the grant was estimated on the basis of two pesos per hectare and the price paid for 80 hectares, 71 ares and 30 centares amounted to only about P161. This does not show a right to the 866 hectares and a fraction claimed by the appellant.In the third and last case, the total area sold by the Spanish Government and purchased by the grantees in 19 titles was 2,225.9194 hectares of land. The lands were sold to the grantees at fixed price per hectare. In denying the application for the 28,006.5959 hectares of public land, this court referred to the two cases above discussed and said:Under the Royal Decree of October 28, 1869, the decisions of the Intendencia General de Haciendaadjudicating titles to public lands were required to be published in the Gaceta de Manila of which we take judicial notice. (Director of Lands vs. Absolo, 46 Phil., 282, 307.) From these decisions as well as from the recitals in the nineteen titulos themselves, which are the origin of the claimants' title in the case before us, it appears that each of the nineteen tracts was sold to the purchaser at a fixed price per hectare, that is to say, both the government and the purchaser contracted specifically with reference to the area stated in thetitulos. For each title the government was paid by the hectare for the number of hectares indicated in the title and no more. Any area granted to these applicants in excess of the percentage of permissible error would be a pure gift without consideration whatever to the State.In view of the foregoing, we conclude that the applicant, Mateo C. Sanchez, is entitled to the registration only of 131 hectares and 13 ares of the land claimed by him and to the issuance to him of a certificate of title covering this area. Judgment is accordingly modified and upon the submission of an amended and approved plan in conformity with this decision, the lower court will order the issuance of the corresponding decree of registration and confirmation of the title. No costs will be charged in this instance. So ordered.

Santa Ana v Hernandez, 18 SCRA 1973

G.R. No. L-16394      December 17, 1966JOSE SANTA ANA, JR. and LOURDES STO. DOMINGO, petitioners, vs.ROSA HERNANDEZ, respondent.Manuel J. Serapio for petitioners..J. T. de los Santos for respondent.REYES, J.B.L., J.:Appeal from the decision of the Court of Appeals in its Case CA-G.R. No. 20582-R, in effect reversing the decision of the Court of First Instance of Bulacan in its Civil Case No. 1036.The petitioners herein, spouses Jose Santa Ana, Jr. and Lourdes Sto. Domingo, owned a 115,850-square meter parcel of land situated in barrio Balasing, Sta. Maria, Bulacan, and covered by Transfer Certificate of Title No. T-3598. On 28 May 1954, they sold two (2) separate portions of the land for P11,000.00 to the herein respondent Rosa Hernandez. These portions were described in the deed of sale as follows:Bahaguing nasa gawing Hilagaan. Humahanga sa Hilaga, kina Maria Perez, at Aurelio Perez; sa Timugan, sa lupang kasanib; sa Silanganan, kay Mariano Flores at Emilio Ignacio; sa Kanluran, kay Cornelio Ignacio; Mayroong (12,500), m.c. humigit kumulang.

129

Bahaguing nasa gawing Silanganan Humahanga sa Hilagaan, sa kay Rosa Hernandez; sa Silanganan, kay Domingo Hernandez at Antonio Hernandez; sa Timugan, sa Sta. Maria-Tigbi Road; at sa Kanluran, sa lupang kasanib (Jose Sta. Ana, Jr.), mayroong (26,500) metros cuadrados, humigit kumulang.After the sale (there were two other previous sales to different vendees of other portions of the land), the petitioners-spouses caused the preparation of a subdivision plan, Psd-43187, was approved on 13 January 1955 by the Director of Lands. Rosa Hernandez, however, unlike the previous vendees, did not conform to the plan and refused to execute an agreement of subdivision and partition for registration with the Register of Deeds of Bulacan; and she, likewise, refused to vacate the areas that she had occupied. Instead, she caused the preparation of a different subdivision plan, which was approved by the Director of Lands on 24 February 1955. This plan, Psd-42844, tallied with the areas that the defendant, Rosa Hernandez, had actually occupied.On 28 February 1955, herein petitioners-spouses filed suit against respondent Rosa Hernandez in the Court of First Instance of Bulacan, claiming that said defendant was occupying an excess of 17,000 square meters in area of what she had bought from them. Defendant Rosa Hernandez, on the other hand, claimed that the alleged excess, was part of the areas that she bought.The trial court observed:The only question, therefore, to be determined by the Court is whether or not the plaintiffs had sold two portions without clear boundaries but with exact areas (12,500 sq. m. and 26,000 sq. m.) at the rate of P.29 per square meter or, as defendant Rosa Hernandez claimed, two portions, the areas of which were not definite but which were well defined on the land and with definite boundaries and sold for the lump sum of P11,000.00.Finding for the plaintiffs, the said court ordered the defendant, among other things, to vacate "the excess portions actually occupied by her and to confine her occupation only to Lots 4-a and 4-b as shown in the plan, Exhibit E, of the plaintiffs . . .," referring to Psd-43187.Not satisfied with the judgment, defendant Hernandez appealed to the Court of Appeals.The Court of Appeals dismissed the complaint and declared Rosa Hernandez the owner of lots 4-a and 4-b in her plan, Psd-42844, upon the following findings:The contract between appellees and appellant (Exhibit D) provided for the sale of two separate portions of the same land for the single consideration of P11,000.00. Appellee Jose Santa Ana, Jr. said the transaction was by a unit of measure or per square meter, and that although the actual total purchase price of the two parcels of land was P11,300.00 at P0.29 per square meter the parties agreed to the sale at the reduced price of P11,000.00. The appellant denied this claim of appellees. Gonzalo V. Ignacio, the notarial officer before the contract of sale was executed, failed to corroborate Sta. Ana upon this point. Upon the contrary, Ignacio testified that appellant complained to him and the appellees to the effect that the areas stated in the contract were less than the actual areas of the parcels of land being sold and here we quote the notarial officer's own words:"That the area stated in the document will not be the one to prevail but the one to prevail is the boundary of the land which you already know." (p. 74, Innocencio).Sta. Ana is the nephew of the appellant, and the former's assurance probably appeased the latter against insisting in the correction of the areas stated in the contract of sale.Two witnesses testified for the appellant. Jesus Policarpio divulged that the same parcels of land involved in this case were previously offered to him by the appellees for the single purchase price of P12,000.00. Julio Hernandez stated that his sister, the herein appellant, had offered P10,000.00 as against the appellees' price of P12,000.00, and that he was able to persuade the parties to meet halfway on the price. Furthermore the previous conveyances made by the appellees for other portions of the same property (Exhibits B and C) are also for lump sums.The difference in area of 17,000 square meters is about one-half of the total area of the two parcels of land stated in the document, but not for this alone may we infer gross mistake on the part of appellees. The appellees admit the lands in question were separated from the rest of their property by a long and continuous "pilapil" or dike, and there is convincing proof to show that the bigger lot (Lot 4-a) was wholly tenanted for appellees by Ciriaco Nicolas and Santiago Castillo and the smaller lot (Lot 4-b) was wholly tenanted for said appellees by Gregorio Gatchalian. These facts support the theory that

130

the two parcels of land sold to the appellant were identified by the conspicuous boundaries and the extent or area each tenant used to till for the vendors. Again, appellees should not be heard to complain about the deficiency in the area because as registered owners and possessors of the entire land since 1949 they can rightly be presumed to have acquired a good estimate of the value and areas of the portions they subsequently sold.The Court of Appeals concluded by applying to the case Article 1542 of the new Civil Code:In the sale of real estate, made for a lump sum and not at the rate of a certain sum for a unit of measure or number, there shall be no increase or decrease of the price, although there be greater or less area or number than that stated in the contract.The same rule shall be applied when two or more immovables are sold for a single price; but if, besides mentioning the boundaries, which is indispensable in every conveyance of real estate, its area or number should be designated in the contract, the vendor shall be bound to deliver all that is included within said boundaries, even when it exceeds the area or number specified in the contract; and, should he not be able to do so, he shall suffer a reduction in the price, in proportion to what is lacking in the area or number, unless the contract is rescinded because the vendee does not accede to the failure to deliver what has been stipulated.and declared Rosa Hernandez the owner of the whole of lots 4-a and 4-b of her own subdivision Plan Psd-42844, notwithstanding their increased area as compared to that specified in the deed of sale.In turn, the Sta. Ana spouses appealed to this Court, assigning the following errors:The Court of Appeals committed a grave error of law when it departed from the accepted and usual course of judicial proceedings, by disturbing the findings of fact of the trial court, made upon conflicting testimonies of the witnesses for the plaintiffs, now in the petitioners, and the defendant, now the respondent, Rosa Hernandez.The Court of Appeals committed a grave error of law when it held that the deed of sale, Exhibit D, was for a lump sum, despite the fact that the boundaries given therein were not sufficiently certain and the boundaries indicated did not clearly identify the land, thereby erroneously deciding a question of substance in a way not in accord with law and the applicable decisions of this Honorable Court.On the face of the foregoing assignments of error and the petitioners' discussions thereabout, their position can be summarized as follows: that the Court of Appeals erred in substituting its own findings of fact for that of the trial court's, without strong and cogent reasons for the substitution, contrary to the rule that appellate courts shall not disturb the findings of fact of trial courts in the absence of such strong and cogent reasons; and that Article 1542 of the Civil Code of the Philippines does not apply, allegedly because the boundaries, as shown in the deed of sale, are not definite.In the first assignment of error, the petitioner spouses complain against the failure of the Court of Appeals to accept the findings of fact made by the Court of First Instance. The credibility of witnesses and the weighing of conflicting evidence are matters within the exclusive authority of the Court of Appeals, and it is not necessarily bound by the conclusions of the trial court. Both the Judiciary Act (R.A. 296, section 29) and the Rules of Court (Rule 45, section 2) only allow a review of decisions of the Court of Appeals on questions of law; and numerous decisions of this Court have invariably and repeatedly held that findings of fact by the Court of Appeals are conclusive and not reviewable by the Supreme Court (Galang vs. Court of Appeals, L-17248, 29 January 1962; Fonacier vs. Court of Appeals, 96 Phil. 418, 421; and cases therein cited; Onglengco vs. Ozaeta, 70 Phil. 43; Nazareno vs. Magwagi, 71 Phil. 101). Barring, therefore, a showing that the findings complained of are totally devoid of support in the record, or that they are so glaringly erroneous as to constitute serious abuse of discretion, such findings must stand, for this Court is not expected or required to examine and contrast the oral and documentary evidence submitted by the parties. As pointed out by former Chief Justice Moran in his Comments on the Rules of Court (1963 Ed., Vol. 2, p. 412), the law creating the Court of Appeals was intended mainly to take away from the Supreme Court the work of examining the evidence, and confine its task for the determination of questions which do not call for the reading and study of transcripts containing the testimony of witnesses.The first assignment of error must, therefore, be overruled. We now turn to the second.Despite the incontestable fact that the deed of sale in favor of Rosa Hernandez recites a price in a lump sum (P11,000.00) for both lots (Annex "C", Complaint, Rec. on App., p. 21), appellants insist that

131

the recited area should be taken as controlling. They combat the application of Article 1542 of the Civil Code, on the ground that the boundaries given in the deed are indefinite. They point out that the southern boundary of the small parcel is merely given as "lupang kasanib" and that the same occurs with the western boundary of the bigger lot, which is recited as "lupang kasanib (Jose Sta. Ana, Jr.)". The Court of Appeals, however, found as a fact that —the two parcels of land sold to appellant (i.e., appellee herein, Rosa Hernandez) were identified by the conspicuous boundaries. (Emphasis supplied)consisting in a long and continuous pilapil or dike that separated the lands in question from the rest of the property. On the basis of such findings, that can not be questioned at this stage, for reasons already shown, it is unquestionable that the sale made was of a definite and identified tract, a corpus certum, that obligated the vendors to deliver to the buyer all the land within the boundaries, irrespective of whether its real area should be greater or smaller than what is recited in the deed (Goyena vs. Tambunting, 1 Phil. 490; Teran vs. Villanueva, 56 Phil. 677; Azarraga vs. Gay, 52 Phil. 599; Mondragon vs. Santos, 87 Phil. 471). And this is particularly true where, as in the case now before this Court, the area given is qualified to be approximate only ("humigit kumulang", i.e., more or less Rec. on App., p. 22).To hold the buyer to no more than the area recited on the deed, it must be made clear therein that the sale was made by unit of measure at a definite price for each unit.If the defendant intended to buy by the meter be should have so stated in the contract (Goyena vs. Tambunting, supra).The ruling of the Supreme Court of Spain, in construing Article 1471 of the Spanish Civil Code (copied verbatim in our Article 1542) is highly persuasive that as between the absence of a recital of a given price per unit of measurement, and the specification of the total area sold, the former must prevail and determines the applicability of the norms concerning sales for a lump sum.La venta a cuerpo cierto indudablemente se verifica cuando en el contrato no solo no es precisado el precio singular por unidad de medida, sino que tampoco son indicadas los dimensiones globales bales del inmueble, pero tambien se verifica cuando aun ng habiendo sido indicado un precio singular por unidad de medida, sin embargo es especificada la dimension total del inmueble, en cuyo ultimo caso entre los dos indices en contraste, constituido uno por la falta de un precio singular por unidad de medida, y otro por la concrecion de las dimensiones globales del unmueble, la Ley da prevalencia al mero y presume que aquella individualizacion no habia tenido para las partes valor esencial, que solo constituia una superabundancia, y no significa que las partes hayan convenido aquel precio global solo en cuanto el inmueble tuviese efectivamente aquellas dimensiones totales, siendo de estimar que esta es una presuncion absoluta, contra la cual ni el comprador ni el vendedor pueden articular prueba contraria.Por tanto, ni el comprador ni el vendedor pueden pretender una disminucicion o, respectivamente un suplemento de precio, cuando las dimensiones globales del unmueble resulten despues mayores o menores de las indicadas en el contrato, aunque aduzcan que solo en tanto han convenido el aquel precio en cuanto creian que las dimensiones de la cosa fueran las precisadas en el contrato. (Tribunal Supreme de España, Sent. de 26 Junio 1956; Rep. Jurisp. Aranzadi, 2.729) (Emphasis supplied)The Civil Code's rule as to sales "a cuerpo cierto" was not modified by Act 496, section 58, prohibiting the issuance of a certificate of title to a grantee of part of a registered tract until a subdivision plan and technical description are duly approved by the Director of Lands, and authorizing only the entry of a memorandum on the grantor's certificate of title in default of such plan. The latter provision is purely a procedural directive to Registers of Deeds that does not attempt to govern the rights of vendor and vendee inter se, that remain controlled by the Civil Code of the Philippines. It does not even bar the registration of the contract itself to bind the land.WHEREFORE, the decision of the Court of Appeals, in its case No. 20582-R, is hereby affirmed. Costs against the appellants, Jose Santa Ana, Jr. and Lourdes Sto. Domingo.

Manila Electric v CA, GR L-33794G.R. No. L-33794 May 31, 1982MANILA ELECTRIC COMPANY, petitioner, 

132

vs.COURT OF APPEALS and PEDRO J. VELASCO, respondents. MELENCIO-HERRERA, J.:In this Petition for the review of a Decision of the Court of Appeals, 1 judgment may be rendered on the basis of the following enumeration of facts:1. On February 12, 1948, respondent Pedro J. Velasco (VELASCO, for short) purchased three (3) lots from the People's Homesite and Housing Corporation (PHHC, for short), located at the corner of the then South D and South 6 Streets of Quezon City.2. The Deed of Sale, among others, provided that:(b) The properties herein sold and any other construction that shall be made thereon shall be usedexclusively for residential purposes and no business, industry or factory of whatever kind or nature shall be allowed or permitted within the premises.xxx xxx xxx(c) The vendor ... shall have the right to enter the premises ... for the purpose of ... installing electric ... lines or any other utility for the community.xxx xxx xxxII. This sale is made under the following terms and conditions the violation of any of which shall entitle the Vendor to rescind this contract and seek the cancellation of the title issued as a result hereof and to repossess the property and dispose of the same as if there had been no previous sale thereof, and said terms and conditions shall likewise be annotated on the certificate or title concerned and considered a burden to the property.xxx xxx xxxIII. The terms, burdens, conditions, limitations, incumbrances and restrictions herein contained shall be binding upon the heirs, executors, administrators, successors and assigns of the respective parties hereto and any reference to the Vendor or Vendee herein shall be understood to include their respective heirs, executors, administrators, successors and assigns.The foregoing conditions were substantially, but not word for word, annotated on the title issued to VELASCO.3. On January 31, 1952, VELASCO sold two of the aforesaid three lots (the PROPERTY, for short) to petitioner Manila Electric Company (MERALCO, for short), which is the public service company furnishing electric current to the Manila area, including Quezon City.4. The following year, MERALCO established a substation within the PROPERTY, the construction of which "was started in September, 1953 and was finished the following November". 2

5. On November 29, 1954, VELASCO wrote a letter to MERALCO stating, inter-alia:In mild spirit, the time has come when the undersigned is compelled to call your attention to a previously anticipated would-be effect of your electric sub-station, in order to avoid possible bad effects and "repercussions and complications" which might be too late to remedy.xxx xxx xxxThe undersigned with his family tried to tolerate for a while, but the severe noise without let up, plus the electrification of the ground, especially that in which the artesian well of the undersigned is located, made life of the whole family unbearable, in a residential district which, by your sub-station, was illegally converted into dangerous factory-like site. (Exhibit "J")6. The following year, on February 1, 1955, VELASCO filed a complaint in Civil Case No. Q-1355 of the Court of First Instance of Rizal (the NUISANCE CASE, for short) praying that MERALCO be ordered " to remove and abate the nuisances herein complained against," with damages. The trial Court dismissed the complaint but, on appeal to this Court, the dismissal was set aside and, on August 6, 1971, MERALCO was "ordered to either transfer its sub-station at South D and South 6 Streets, Diliman, Quezon City, or take appropriate measures to reduce its noise at the property line between the defendant company's compound and that of the plaintiff-appellant to an average of forty (40) to fifty 50 decibels within 90 days from finality of this decision;" 3

7. In the meanwhile, on November 23, 1957, VELASCO had instituted a complaint in Civil Case No Q-2716 of the Court of First Instance of Rizal (the CANCELLATION CASE, for short) for the rescission of the sale of the PROPERTY to MERALCO and to collect rentals for the use and occupation of the PROPERTY while in the latter's possession. The complaint was dismissed by the trial Court on the ground that the NUISANCE CASE and the CANCELLATION CASE had split VELASCO'S cause of action such that the CANCELLATION CASE was precluded from being instituted. On appeal to the Court of Appeals, the judgment of the trial Court was reversed on the finding that no cause of action was split, considering that abatement of nuisance was distinct and separate from rescission of the contract of sale in favor of ME RALCOUpon the recited facts, we have resolved to set aside the decision of the Appellate Tribunal, and to dismiss the

133

complaint in the CANCELLATION CASE. The factors relied upon are:THE RIGHT OF ACTION.- The contract of sale between PHHC and VELASCO provided that only constructions exclusively for "residential purposes" shall be built on the PROPERTY. That requirement, naturally, was binding on VELASCO himself, as it is also binding on MERALCO as his assignee. Be that as it may, that contract implies that it is PHHC itself which has the right of action against any assignee of VELASCO. Cancellation of the title to the PROPERTY would be by virtue of the condition imposed in the PHHC- VELASCO contract, and not by virtue of the contract between VELASCO and MERALCO.The exact relevant wording of the contract between PHHC and VELASCO was as follows:... the violation of any of which (inclusive of the "residential purposes" restriction) shall entitle the vendor (PHHC) to rescind this contract and seek the cancellation of the title issued as a result hereof and to repossess the property.It will be seen that if the PROPERTY were used by VELASCO himself not for "residential purposes", PHHC can rescind "this contract", which is the contract between PHHC and VELASCO, and PHHC can "seek the cancellation of the title" issued as a result "of this contract". The PROPERTY' having been transferred to MERALCO, PHHC cannot rescind the contract between VELASCO and MERALCO because PHHC was not a party to that VELASCO-MERALCO contract. PHHC's redress would be to directly "seek cancellation of the title" of MERALCO, and torepossess the PROPERTY.Considering that redress for the use of the PROPERTY for non-residential purposes is the cancellation of the title and repossession by PHHC, it should be clear that the right of action based on violation of the restriction has to be with PHHC and not with VELASCO. If title to the PROPERTY is cancelled, and PHHC repossesses, no damage will be suffered by VELASCO who had already sold and had received the value thereof. The damage will be borne solely by MERALCO. Hence, it cannot be that VELASCO can have a right of action against MERALCO for violation of the restriction.RESIDENTIAL PURPOSES.—As the Court understands it, PHHC's requirement in regards to "residential purposes" has not been made particularly in reference to the three lots sold to VELASCO, but it relates to the entirety of a bigger parcel of land subdivided for sale to the public by PHHC. the term "residential purposes", therefore, should be given a meaning viewed from the standpoint of PHHC, and not from that of VELASCO.From the PHHC, or community, point of view, the construction of an electric sub-station by the local electric public service company within the subdivision can be deemed encompassed within "residential purposes" for the simple reason that residences are expected to be furnished with electrical connection. If there is no electric current because of the lack of a sub- station, the residences within the entire subdivision area could be valueless for residential purposes.The need for public services in residential areas is even recognized in the PHHC Deed of Sale in favor of VELASCO which provides that "the vendor ... shall have the right ... to enter the premises ... for the purpose of ... installing water pipes, gas, electric and telephone lines or any other utility for the community where the property herein involved is located"It may further be pointed out that, in respect of Quezon City as a municipal corporation, the PROPERTY was within a residential district. Notwithstanding, the authorities of Quezon City granted a permit for the construction of the sub-station, thereby conceding that a sub-station is not necessarily non-residential.CONTRACTUAL ESTOPPEL.- Even if the requirement for "residential purposes" were a condition imposed by VELASCO himself in the contract of sale between VELASCO and MERALCO, the former can no longer cancel the contract on the alleged violation of the condition. When MERALCO erected the sub-station in September, 1953, VELASCO did not object to its construction as such. In his letter, Exhibit "M", dated September 26, 1953, VELASCO merey asked for "technical assurance that your electric sub-station is not dangerous to neighbors nor would that be a nuisance". It could not be that he did not then realize that the sub-station was not a residence. He must have viewed it as for "residential purposes". According to Exhibit "J", VELASCO's letter of September 29, 1954, or one year after the sub-station had been established, he "with his family tried to tolerate (it) for a while". Actually, what was ultimately objected to by VELASCO was the noise of the sub-station; but there was no original and timely objection to the establishment itself of the sub-station as being not for residential purposes. If there had been no noise whatsoever from the sub-station, no controversy would have arisen.Contracts should be given effect as the parties construe it. "Acts done by the parties to a contract in the course of its performance are admissible in evidence upon the question of its meaning as being their own contemporaneous interpretation of , its terms". 4 Thus, VELASCO should be held as estopped from seeking cancellation of his sale of the PROPERTY to MERALCO because the sub-station, while it was built, was considered by VELASCO as not violative of the requirement for "residential purposes". Estoppel against VELASCO has set in.COLLATERAL ESTOPPEL BY JUDGEMENT-MERALCO had pleaded before the trial Court that the filing of the NUISANCE CASE "has barred the filing of the complaint in this" CANCELLATION CASE. The trial Judge

134

dismissed the Complaint on the ground that the NUISANCE CASE and the CANCELLATION CASE had split a single cause of action and that the CANCELLATION CASE being the later proceeding was improperly instituted. We agree with the Appellate Tribunal that there was no split of a single cause of action, because the cause of action for abatement of nuisance is different from a cause of action for cancellation of contract. However, it does not mean that a judicial proceeding cannot be barred by a previous case involving another cause of action. The principle applicable would be estoppel by judgment or, more specifically, "collateral estoppel by judgment". That procedural matter is treated in 46 Am Jur 2d. pp. 563-566 as follows: 5

Although there are some cases that confine the term "res judicata" to that aspect of the doctrine which precludes the relitigation of the same cause of action the term, in its literal meaning of a "matter adjudged", is broad enough to include, in addition, the other aspect of the doctrine, which precludes the relitigation of the same facts or issues in a subsequent action on a different cause of action, and the term "res judicata" is, indeed, so used in numerous cases. In this respect, it has been declared that if a party is barred from relitigating a matter, it can make little difference to him by what name the lethal doctrine is called. On the other hand, the confusion and looseness of thought resulting from the absence of distinctive terms to describe each aspect of the doctrine has been well pointed out.The term "estoppel" has frequently been used in connection with the doctrine of res judicata, not only with respect to the relitigation of particular issues in a subsequent action on a different cause of action, but also with respect to the relitigation of the same cause of action. In some cases, the term "estoppel by judgment" has been used to described the effect of a judgment to preclude relitigation of the same cause of action, and the phrase, "estoppel by verdict", to describe the effect of the former proceeding to preclude further litigation of the particular facts on which the jury necessarily made findings in the former action. The decisions have not, however, been uniform in this respect, and in some opinions the term 'estoppel by judgment' has been used to describe the rule precluding the litigation of particular issues in a subsequent action on a different cause of action. Sometimes, the term "estoppel by record" is so used. The more recent tendency is to describe the latter aspect of the doctrine of res judicata as a "collateral estoppel" or a "collateral estoppel by judgment", as distinguished from the "direct estoppel by judgment" where the earlier and later causes of action are Identical.6

More and more, the tendency of procedural law is to obviate multiplicity of suit such that if an issue has been resolved in one cause of action, it cannot be relitigated in a subsequent case filed on a different cause of action. In Hoag v. New Jersey, 2L Ed. 2d., 913-919, the following was said by the United States Supreme Court:A common statement of the rule of collateral estoppel is that "where a question of fact essential to the judgment is actually litigated and determined by a valid and final judgment, the determination is conclusive between the parties in a subsequent action on a different cause of action". Restatement, Judgments, #68(l). As an aspect of the broader doctrine of res judicata, collateral estoppel is designed to eliminate the expense, vexation, waste, and possible inconsistent results of duplicatory litigation. See Developments in the Law Res Judicata, 65 Hary L Rev. 818, 820. (Emphasis supplied)In a previous case, this Court has similarly stated:The basis of the judgment was the stipulation of facts submitted by the parties and their agreement fixing the liability of the defendant therein for rentals and the manner in which the same was to be paid by him. It was a final judgment on the merits, and said judgment, under the express provisions of section 44, paragraph (b) of Rule 39 of the Rules of Court, is conclusive between the parties, not only as to the question on which the parties made stipulation but also as to any other possible issue which the parties could have raised in the case. The fact that the defendant in that action, plaintiff-appellant in this, did not raise that issue in the previous case is no reason for allowing him to raise the same issue in the action he has instituted to annul the said judgment.The principle of res judicata applicable is what is known as estoppel by judgment and in the language of Mr. Justice Field in the case of Cromwell vs. Sac Country, 94 U.S., 351, cited in Peñaloza vs. Tuason, 22 Phil., 303, It is a finality as to the claim or demand in controversy, concluding parties and those in privity with them, not only as to every matter which was offered and received to sustain or defeat the claim or demand, but as to any other admissible matter which might have been offered for that purpose. 7

When VELASCO instituted the NUISANCE CASE, he conceded, which he is now estopped to deny, that MERALCO had the right to establish the sub-station within the PROPERTY without violation of the restriction to "residential purposes". What he subsequently alleged, after the sub-station had become operative, was that the sub-station, because of the generated noise, had become a nuisance which should be abated. Although the propriety of the establishment of the sub-station was not a controverted matter in the NUISANCE CASE, it was a tacit admission on the part of VELASCO, which can form part of an estoppel within the NUISANCE CASE. It would not be good law to allow him now to take the position, even if he had the right of action, that the construction of the sub-station violated the restriction provided for by PHHC. If the present standpoint of VELASCO should be upheld, then the procedurally wrong result would be that, after this Court had decided that the sub-station can remain within the PROPERTY with reduction of the noise, the Appellate Tribunal, a

135

subordinate tribunal, can subsequently nullify the decision of this Court and order the removal of the sub-station from the PROPERTY.WHEREFORE, considering the foregoing legal considerations, the Decision and Resolution of respondent Court of Appeals in its CA-G.R. No. 30488-R are reversed, and the Complaint filed in the case at bar is ordered dismissed.

Doromal v CA, GR L-36083G.R. No. L-36083 September 5, 1975Spouses RAMON DOROMAL, SR., and ROSARIO SALAS, and Spouses RAMON DOROMAL, JR., and GAUDELIA VEGA, petitioners, vs.HON. COURT OF APPEALS and FILOMENA JAVELLANA, respondents.Salonga, Ordonez, Yap, Parlade and Associates and Marvin J. Mirasol for petitioners. Arturo H. Villanueva, Jr. for private respondent. BARREDO, J.:Petition for review of the decision of the Court of Appeals in CA-G.R. No. 47945-R entitled Filomena Javellana vs. Spouses Ramon Doromal, Sr., et al. which reversed the decision of the Court of First Instance of Iloilo that had in turn dismissed herein private respondent Filomena Javellana's action for redemption of a certain property sold by her co-owners to herein petitioners for having been made out of time.The factual background found by the Court of Appeals and which is binding on this Court, the same not being assailed by petitioners as being capricious, is as follows:IT RESULTING: That the facts are quite simple; Lot 3504 of the cadastral survey of Iloilo, situated in the poblacion of La Paz, one of its districts, with an area of a little more than 2-½ hectares was originally decreed in the name of the late Justice Antonio Horilleno, in 1916, under Original Certificate of Title No. 1314, Exh. A; but before he died, on a date not particularized in the record, he executed a last will and testament attesting to the fact that it was a co-ownership between himself and his brothers and sisters, Exh. C; so that the truth was that the owners or better stated, the co-owners were; beside Justice Horilleno,"Luis, Soledad, Fe, Rosita, Carlos and Esperanza,"all surnamed Horilleno, and since Esperanza had already died, she was succeeded by her only daughter and heir herein plaintiff. Filomena Javellana, in the proportion of 1/7 undivided ownership each; now then, even though their right had not as yet been annotated in the title, the co-owners led by Carlos, and as to deceased Justice Antonio Horilleno, his daughter Mary, sometime since early 1967, had wanted to sell their shares, or if possible if Filomena Javellana were agreeable, to sell the entire property, and they hired an acquaintance Cresencia Harder, to look for buyers, and the latter came to interest defendants, the father and son, named Ramon Doromal, Sr. and Jr., and in preparation for the execution of the sale, since the brothers and sisters Horilleno were scattered in various parts of the country, Carlos in Ilocos Sur, Mary in Baguio, Soledad and Fe, in Mandaluyong, Rizal, and Rosita in Basilan City, they all executed various powers of attorney in favor of their niece, Mary H. Jimenez Exh. 1-8, they also caused preparation of a power of attorney of identical tenor for signature by plaintiff, Filomena Javellana, Exh. M, and sent it with a letter of Carlos, Exh. 7 dated 18 January, 1968 unto her thru Mrs. Harder, and here, Carlos informed her that the price was P4.00 a square meter, — although it now turns out according to Exh. 3 that as early as 22 October, 1967, Carlos had received in check as earnest money from defendant Ramon Doromal, Jr., the sum of P5,000.00 and the price therein agreed upon was five (P5.00) pesos a square meter as indeed in another letter also of Carlos to Plaintiff in 5 November, 1967, Exh. 6, he had told her that the Doromals had given the earnest money of P5,000.00 at P5.00 a square meter, — at any rate, plaintiff not being agreeable, did not sign the power of attorney, and the rest of the co-owners went ahead with their sale of their 6/7, Carlos first seeing to it that the deed of sale by their common attorney in fact, Mary H. Jimenez be signed and ratified as it was signed and ratified in Candon, Ilocos Sur, on 15 January, 1968, Exh. 2, then brought to Iloilo by Carlos in the same month, and because the Register of Deeds of Iloilo refused to register right away, since the original registered owner, Justice Antonio Horilleno was already dead, Carlos had to ask as he did, hire Atty. Teotimo Arandela to file a petition within the cadastral case, on 26 February, 1968, for the purpose, Exh. C, after which Carlos returned to Luzon, and after compliance with the requisites of publication, hearing and notice, the petition was approved, and we now see that on 29 April, 1968, Carlos already back in Iloilo went to the Register of Deeds and caused the registration of the order of the cadastral court approving the issuance of a new title in the name of the co-owners, as well as of the deed of sale to the Doromals, as a result of which on that same date, a new title was issued TCT No. 23152, in the name of the Horillenos to 6/7 and plaintiff Filomena Javellana to 1/7, Exh. D, only to be cancelled on the same day under

136

TCT No. 23153, Exh. 2, already in the names of the vendees Doromals for 6/7 and to herein plaintiff, Filomena Javellana, 1/7, and the next day 30 April, 1968, the Doromals paid unto Carlos by check, the sum of P97,000.00 Exh. 1, of Chartered Bank which was later substituted by check of Phil. National Bank, because there was no Chartered Bank Branch in Ilocos Sur, but besides this amount paid in check, the Doromals according to their evidence still paid an additional amount in cash of P18,250.00 since the agreed price was P5.00 a square meter; and thus was consummated the transaction, but it is here where complications set in,On 10 June, 1968, there came to the residence of the Doromals in Dumangas, Iloilo, plaintiff's lawyer, Atty. Arturo H. Villanueva, bringing with him her letter of that date, reading,"P.O. Box 189, Bacolod CityJune 10, 1968Mr. & Mrs. Ramon Doromal, Sr.and Mr. and Mrs. Ramon Doromal, Jr."Dumangas IloiloDear Mr. and Mrs. Doromal:The bearer of this letter is my nephew, Atty. Arturo H. Villanueva, Jr., of this City. Through him, I am making a formal offer to repurchase or redeem from you the 6/7 undivided share in Lot No. 3504, of the Iloilo Cadastre, which you bought from my erstwhile co-owners, the Horillenos, for the sum of P30,000.00, Atty. Villanueva has with him the sum of P30,000.00 in cash, which he will deliver to you as soon as you execute the contract of sale in my favor.Thank you very much for whatever favorable consideration you can give this request.Very truly yours,(SIGNED)Mrs. FILOMENA JAVELLANA"p. 26, Exh. "J", Manual of Exhibits.and then and there said lawyer manifested to the Doromals that he had the P30,000.00 with him in cash, and tendered it to them, for the exercise of the legal redemption, the Doromals were aghast, and refused. and the very next day as has been said. 11 June, 1968, plaintiff filed this case, and in the trial, thru oral and documentary proofs sought to show that as co-owner, she had the right to redeem at the price stated in the deed of sale, Exh. 2, namely P30,000.00 of the but defendants in answer, and in their evidence, oral and documentary sought to show that plaintiff had no more right to redeem and that if ever she should have, that it should be at the true and real price by them paid, namely, the total sum of P115,250.00, and trial judge, after hearing the evidence, believed defendants, that plaintiff had no more right, to redeem, because,"Plaintiff was informed of the intended sale of the 6/7 share belonging to the Horillenos."and that,"The plaintiff have every reason to be grateful to Atty. Carlos Horilleno because in the petition for declaration of heirs of her late uncle Antonio Horilleno in whose name only the Original Certificate of Title covering the Lot in question was issued, her uncle Atty. Carlos Horilleno included her as one of the heirs of said Antonio Horilleno. Instead, she filed this case to redeem the 6/7 share sold to the Doromals for the simple reason that the consideration in the deed of sale is the sum of P30,000.00 only instead of P115,250.00 approximately which was actually paid by the defendants to her co-owners, thus she wants to enrich herself at the expense of her own blood relatives who are her aunts, uncles and cousins. The consideration of P30,000.00 only was placed in the deed of sale to minimize the payment of the registration fees, stamps, and sales tax. pp. 77-78, R.A.,and dismiss and further condemned plaintiff to pay attorney's fees, and moral and exemplary damages as set forth in few pages back, it is because of this that plaintiff has come here and contends, that Lower Court erred:"I. ... in denying plaintiff-appellant, as a co-owner of Lot No. 3504, of the Iloilo Cadastre, the right of legal redemption under Art. 1620, of the Civil Code:"II. ... as a consequence of the above error, in refusing to order the defendants-appellees, the vendees of a portion of the aforesaid Lot No. 3504 which they bought from the co-owners of the plaintiff-appellant, to reconvey the portion they purchased to the herein plaintiff-appellant.."III. ... in admitting extrinsic evidence in the determination of the consideration of the sale, instead of simply adhering to the purchase price of P30,000.00, set forth in the pertinent Deed of Sale executed by the vendors and owners of the plaintiff-appellant in favor of the defendants-appellees."IV. ... in dismissing the complaint filed in this case." pp. 1-3, Appellant's Brief,.which can be reduced to the simple question of whether or not on tile basis of the evidence and the law, the judgment appealed from should be maintained; (Pp. 16-22, Record.) .Upon these facts, the Court of Appeals reversed the trial court's decision and held that although respondent Javellana was informed of her co-owners' proposal to sell the land in question to petitioners she was, however, "never notified ... least of all, in writing", of the actual execution and registration of the corresponding deed of

137

sale, hence, said respondent's right to redeem had not yet expired at the time she made her offer for that purpose thru her letter of June 10, 1968 delivered to petitioners on even date. The intermediate court further held that the redemption price to be paid by respondent should be that stated in the deed of sale which is P30,000 notwithstanding that the preponderance of the evidence proves that the actual price paid by petitioners was P115,250. Thus, in their brief, petitioners assign the following alleged errors:IIT IS ERROR FOR THE COURT OF APPEALS TO HOLD THAT THE NOTICE IN WRITING OF THE SALE CONTEMPLATED IN ARTICLE 1623 OF THE CIVIL CODE REFERS TO A NOTICE IN WRITING AFTER THE EXECUTION AND REGISTRATION OF THE INSTRUMENT OF SALE, HENCE, OF THE DOCUMENT OF SALE.IITHE COURT OF APPEALS ERRED IN NOT HOLDING THAT THE INSCRIPTION OF THE SALE IN THE REGISTRY OF PROPERTY TAKES EFFECT AS AGAINST THIRD PERSONS INCLUDING CLAIMS OF POSSIBLE REDEMPTIONERS.ASSUMING, ARGUENDO THAT PRIVATE RESPONDENT HAS THE RIGHT TO REDEEM, THE COURT OF APPEALS ERRED IN HOLDING THAT THE REDEMPTION PRICE SHOULD BE THAT STATED IN THE DEED OF SALE. (Pp. 1-2, Brief for Petitioner, page 74-Rec.)We cannot agree with petitioners.Petitioners do not question respondent's right to redeem, she being admittedly a 1/7 co-owner of the property in dispute. The thrust of their first assignment of error is that for purposes of Article 1623 of the Civil Code which provides that:ART. 1623. The right of legal pre-emption or redemption shall not be exercised except within thirty days from the notice in writing by the prospective vendor, or by the vendor, as the case may be. The deed of sale shall not be recorded in the Registry of Property, unless accompanied by an affidavit of the vendor that he has given written notice thereof to all possible redemptioners.The right of redemption of co-owners excludes that of adjoining owners.the letters sent by Carlos Horilleno to respondent and dated January 18, 1968, Exhibit 7, and November 5, 1967, Exhibit 6, constituted the required notice in writing from which the 30-day period fixed in said provision should be computed. But to start with, there is no showing that said letters were in fact received by respondent and when they were actually received. Besides, petitioners do not pinpoint which of these two letters, their dates being more than two months apart, is the required notice. In any event, as found by the appellate court, neither of said letters referred to a consummated sale. As may be observed, it was Carlos Horilleno alone who signed them, and as of January 18, 1968, powers of attorney from the various co-owners were still to be secured. Indeed, the later letter of January 18, 1968 mentioned that the price was P4.00 per square meter whereas in the earlier letter of November 5, 1967 it was P5.00, as in fact, on that basis, as early as October 27, 1967, Carlos had already received P5,000 from petitioners supposedly as earnest money, of which, however, mention was made by him to his niece only in the later letter of January 18, 1968, the explanation being that "at later negotiation it was increased to P5.00 per square meter." (p. 4 of petitioners' brief as appellees in the Court of Appeals quoting from the decision of the trial court.) In other words, while the letters relied upon by petitioners could convey the idea that more or less some kind of consensus had been arrived at among the other co-owners to sell the property in dispute to petitioners, it cannot be said definitely that such a sale had even been actually perfected. The fact alone that in the later letter of January 18, 1968 the price indicated was P4.00 per square meter while in that of November 5, 1967, what was stated was P5.00 per square meter negatives the possibility that a "price definite" had already been agreed upon. While P5,000 might have indeed been paid to Carlos in October, 1967, there is nothing to show that the same was in the concept of the earnest money contemplated in Article 1482 of the Civil Code, invoked by petitioner, as signifying perfection of the sale. Viewed in the backdrop of the factual milieu thereof extant in the record, We are more inclined to believe that the said P5,000 were paid in the concept of earnest money as the term was understood under the Old Civil Code, that is, as a guarantee that the buyer would not back out, considering that it is not clear that there was already a definite agreement as to the price then and that petitioners were decided to buy 6/7 only of the property should respondent Javellana refuse to agree to part with her 1/7 share.In the light of these considerations, it cannot be said that the Court of Appeals erred in holding that the letters aforementioned sufficed to comply with the requirement of notice of a sale by co-owners under Article 1623 of the Civil Code. We are of the considered opinion and so hold that for purposes of the co-owner's right of redemption granted by Article 1620 of the Civil Code, the notice in writing which Article 1623 requires to be made to the other co-owners and from receipt of which the 30-day period to redeem should be counted is a notice not only of a perfected sale but of the actual execution and delivery of the deed of sale. This is implied from the latter portion of Article 1623 which requires that before a register of deeds can record a sale by a co-owner, there must

138

be presented to him, an affidavit to the effect that the notice of the sale had been sent in writing to the other co-owners. A sale may not be presented to the register of deeds for registration unless it be in the form of a duly executed public instrument. Moreover, the law prefers that all the terms and conditions of the sale should be definite and in writing. As aptly observed by Justice Gatmaitan in the decision under review, Article 1619 of the Civil Code bestows unto a co-owner the right to redeem and "to be subrogated under the same terms and conditions stipulated in the contract", and to avoid any controversy as to the terms and conditions under which the right to redeem may be exercised, it is best that the period therefor should not be deemed to have commenced unless the notice of the disposition is made after the formal deed of disposal has been duly executed. And it being beyond dispute that respondent herein has never been notified in writing of the execution of the deed of sale by which petitioners acquired the subject property, it necessarily follows that her tender to redeem the same made on June 10, 1968 was well within the period prescribed by law. Indeed, it is immaterial when she might have actually come to know about said deed, it appearing she has never been shown a copy thereof through a written communication by either any of the petitioners-purchasers or any of her co-owners-vendees. (Cornejo et al. vs.CA et al., 16 SCRA 775.)The only other pivotal issue raised by petitioners relates to the price which respondent offered for the redemption in question. In this connection, from the decision of the Court of Appeals, We gather that there is "decisive preponderance of evidence" establishing "that the price paid by defendants was not that stated in the document, Exhibit 2, of P30,000 but much more, at least P97,000, according to the check, Exhibit 1, if not a total of P115,250.00 because another amount in cash of P18,250 was paid afterwards."It is, therefore, the contention of petitioners here that considering said finding of fact of the intermediate court, it erred in holding nevertheless that "the redemption price should be that stated in the deed of sale."Again, petitioners' contention cannot be sustained. As stated in the decision under review, the trial court found that "the consideration of P30,000 only was placed in the deed of sale to minimize the payment of the registration fees, stamps and sales tax." With this undisputed fact in mind, it is impossible for the Supreme Court to sanction petitioners' pragmatic but immoral posture. Being patently violative of public policy and injurious to public interest, the seemingly wide practice of understating considerations of transactions for the purpose of evading taxes and fees due to the government must be condemned and all parties guilty thereof must be made to suffer the consequences of their ill-advised agreement to defraud the state. Verily, the trial court fell short of its devotion and loyalty to the Republic in officially giving its stamp of approval to the stand of petitioners and even berating respondent Javellana as wanting to enrich herself "at the expense of her own blood relatives who are her aunts, uncles and cousins." On the contrary, said "blood relatives" should have been sternly told, as We here hold, that they are in pari-delicto with petitioners in committing tax evasion and should not receive any consideration from any court in respect to the money paid for the sale in dispute. Their situation is similar to that of parties to an illegal contract. 1

Of course, the Court of Appeals was also eminently correct in its considerations supporting the conclusion that the redemption in controversy should be only for the price stipulated in the deed, regardless of what might have been actually paid by petitioners that style inimitable and all his own, Justice Gatmaitan states those considerations thus:CONSIDERING: As to this that the evidence has established with decisive preponderance that the price paid by defendants was not that stated in the document, Exh. 2 of P30,000.00 but much more, at least P97,000.00 according to the check, Exh. 1 if not a total of P115,250.00 because another amount in cash of P18,250.00 was paid afterwards, perhaps it would be neither correct nor just that plaintiff should be permitted to redeem at only P30,000.00, that at first glance would practically enrich her by the difference, on the other hand, after some reflection, this Court can not but have to bear in mind certain definite points.1st — According to Art. 1619"Legal redemption is the right to be subrogated, upon the same terms and conditions stipulated in the contract, in the place of one who acquires a thing by purchase or dation in payment, or by any other transaction whereby ownership is transmitted by onerous title." pp. 471-472, New Civil Code,and note that redemptioner right is to be subrogated"upon the same terms and conditions stipulated in the contract."and here, the stipulation in the public evidence of the contract, made public by both vendors and vendees is that the price was P30,000.00;2nd — According to Art. 1620,"A co-owner of a thing may exercise the right of redemption in case the share of all the other co-owners or any of them, are sold to a third person. If the price of the alienation is grossly excessive, the redemptioner shall pay only a reasonable one. p. 472, New Civil Code, .from which it is seen that if the price paid is 'grossly excessive' redemptioner is required to pay only a reasonable one; not that actually paid by the vendee, going to show that the law seeks to protect redemptioner and converts

139

his position into one not that of a contractually but of a legally subrogated creditor as to the right of redemption, if the price is not 'grossly excessive', what the law had intended redemptioner to pay can be read in Art. 1623.The right of a legal pre-emption or redemption shall not be exercised except within thirty (30) days from the notice in writing by the prospective vendor, or by the vendor as the case may be. The deed of sale shall not be recorded in the Registry of Property, unless accompanied by an affidavit of the vendor that he has given written notice thereof of all possible redemptioners.' p. 473, New Civil Code,if that be so that affidavit must have been intended by the lawmakers for a definite purpose, to argue that this affidavit has no purpose is to go against all canons of statutory construction, no law mandatory in character and worse, prohibitive should be understood to have no purpose at all, that would be an absurdity, that purpose could not but have been to give a clear and unmistakable guide to redemptioner, on how much he should pay and when he should redeem; from this must follow that that notice must have been intended to state the truth and if vendor and vendee should have instead, decided to state an untruth therein, it is they who should bear the consequences of having thereby misled the redemptioner who had the right to rely and act thereon and on nothing else; stated otherwise, all the elements of equitable estoppel are here since the requirement of the law is to submit the affidavit of notice to all possible redemptioners, that affidavit to be a condition precedent to registration of the sale therefore, the law must have intended that it be by the parties understood that they were there asking a solemn representation to all possible redemptioners, who upon faith of that are thus induced to act, and here worse for the parties to the sale, they sought to avoid compliance with the law and certainly refusal to comply cannot be rewarded with exception and acceptance of the plea that they cannot be now estopped by their own representation, and this Court notes that in the trial and to this appeal, plaintiff earnestly insisted and insists on their estoppel;3rd — If therefore, here vendors had only attempted to comply with the law, they would have been obligated to send a copy of the deed of sale unto Filomena Javellana and from that copy, Filomena would have been notified that she should if she had wanted to redeem, offered no more, no less, that P30,000.00, within 30 days, it would have been impossible for vendors and vendees to have inserted in the affidavit that the price was truly P97,000.00 plus P18,250.00 or a total of P115,250.00; in other words, if defendants had only complied with the law, they would have been obligated to accept the redemption money of only P30,000.00;4th — If it be argued that foregoing solution would mean unjust enrichment for plaintiff, it need only be remembered that plaintiff's right is not contractual, but a mere legal one, the exercise of a right granted by the law, and the law is definite that she can subrogate herself in place of the buyer,"upon the same terms and conditions stipulated in the contract,"in the words of Art. 1619, and here the price"stipulated in the contract"was P30,000.00, in other words, if this be possible enrichment on the part of Filomena, it was not unjust but just enrichment because permitted by the law; if it still be argued that plaintiff would thus be enabled to abuse her right, the answer simply is that what she is seeking to enforce is not an abuse but a mere exercise of a right; if it be stated that just the same, the effect of sustaining plaintiff would be to promote not justice but injustice, the answer again simply is that this solution is not unjust because it only binds the parties to make good their solemn representation to possible redemptioners on the price of the sale, to what they had solemnly averred in a public document required by the law to be the only basis for that exercise of redemption; (Pp. 24-27, Record.)

Blas v Dela Cruz, 37 Phil 1G.R. No. L-11284        October 13, 1917SIMEON BLAS, plaintiff-appellant, vs.VICENTE DE LA CRUZ and MARIANO MELENDRES, as sheriff of Rizal, defendants-appellees.J. Bernales for appellants. No appearance for appellees. JOHNSON, J.:          The purpose of the present action was to obtain an injunction against the defendants to prevent them from destroying certain buildings and improvements upon a certain piece or parcel of land particular described in paragraph 2 of the complaint. The present action had it original in the following facts:          That sometime prior to the commencement of the present action (March 20, 1911) an action was commenced in the Court of Land Registration by the defendant Vicente de la Cruz for the registration under the torrens system of several pieces or parcels of land particularly described in paragraph 1 of that complaint; that to the registration of said parcel of land the present plaintiff, Simeon Blas, on the 14th day of June, 1912, presented his opposition, alleging that he was the owner of a portion of the lands described in the petition of the plaintiff;

140

that a hearing was had in the Court of Land registration; that portion of the land claimed by Simeon Blas was excluded from the lands included in the petition of the plaintiff Vicente de la Cruz; that from that decision Vicente de la Cruz appealed to the Supreme Court where, after due hearing and consideration, the decision of the lower court was modified on the 16th day of March, 1915, 1 and that portion which was claimed by Simeon Blas was ordered to be registered in the name of Vicente de la Cruz; that a final judgment was rendered in the cause and the case was returned to the lower court upon the 19 day of April, 1915; that the land involved in the present action is the same land which was brought into question in the decision of the Supreme Court above referred to.          To the petition of the plaintiff in the present action the defendants demurred. Upon a consideration of the demurrer the Honorable Jose C. Abreu, judge, sustained the demurrer and dissolved the temporary injunction theretofore granted and gave the plaintiff an opportunity to amend his petition. Instead of amending his petition he excepted to the order of the lower court sustaining the demurrer and appealed to this court.          Without discussing the assignments of error in detail, and after an examination of the arguments presented by the appellants in support of the same, we find that the following question is presented for solution; Does the decree ordering the registration of land under the Torrens system include the buildings and improvements thereon when they have not been expressly excluded in said decree? In other words, A presents a petition for the registration of a part of said parcel. This opposition is overruled and all of the parcel of land is decreed to be registered in the name of A. May B thereafter, not having made any claim to said improvements during the proceedings for the registration, claim said building and improvements as his property and remove the same or prevent the owner of the land under said decree from removing or destroying the same?          The general purpose of the Torrens system is to forever foreclose litigation concerning the title to land. Every decree of registration shall bind the land, and quiet title thereto, subject only to the exceptions stated by the law. The decree of registration shall be conclusive upon and against all persons, unless fraud is proved within a period of one year after said decree is rendered (section 38 of Act No. 496).          Section 39 of said Act (No. 496), as amended by Act No. 2011, makes certain exceptions to the rule just stated. Section 39, as amended, provides that, "every applicant receiving a certificate of title in pursuance of a decree of registration . . . shall hold the same free of all incumbrance except those noted on said certificate, and any of the following incumbrances which may be subsisting, namely:First. Liens, claims, or rights arising or existing under the laws or Constitution of the United States or of the Philippines Islands which the statutes of the Philippine Islands can not require to appear of record in the registry.Second. Taxes within two years after the same have become due and payable.Third. Any public highway, way, private way established by law, or any Government irrigation canal or lateral therefor, where the certificate of title does not state that the boundaries of such highway, way, or irrigation canal or lateral thereof, have been determined. 1awphil.net          But if there are easements or other rights appurtenant to a parcel of registered land which for any reason have failed to be registered, such easements or rights shall remain so appurtenant notwithstanding such failure, and shall be held to pass with the land until cut off or extinguished by the registration of the servient estate, or in any other manner.          Does the claim of the plaintiff come within any of the exceptions mentioned in said section 39? Certainly the contention of the appellant does not come within the provisions of the second and third exceptions quoted above in said section 39. Neither is there any claim made that his right arises or exists under the laws of the Constitution of the United States. If his claim falls under any of the provisions of said section 39 it must be that part of the same which provides for "liens, claims or rights arising or existing under the laws of the Philippine Islands which the statutes of the Philippine Islands cannot require to appear of record in the registry." The appellant urges that such claims are provided for under article 453 of the Civil Code. Said article 453 guarantees to the possessor of real estate, when it is proved that he has occupied the same in good faith, the benefits of the improvements which he made thereon during his occupation. Does said article permit the objector, in an action for the registration of the land occupied by him, when he has failed to make a claim to the improvement during the litigation, to claim said improvements after a certificate of registration is issued, without his having raised that question during the litigation? If the objector may, during the pendency of the litigation for the registration of the land, remain silent as to certain rights, interests or claims existing in or upon the land, and then later, by a separate action, have such interest litigated, then the purpose of the Torrens system, to wit, to forever foreclose litigation with reference to the title to said land, will be defeated.          Without attempting at this time to define the character of the "liens, claims, or rights arising or existing under the laws of the Philippine Islands which the statutes of the Philippine Islands cannot require to appear of record in the registry Islands cannot require to appear of record in the registry," we are of the opinion that buildings and improvements upon land are not included in that exception, and that, unless the objector, during the pendency of the litigation for the registration of land makes claims to improvements of the character of those in the present action, and does have them excluded from the decree of registration, they will be included as a

141

part and parcel and appurtenances to the land; and that the objector will not be permitted, in a separate action subsequently brought, to question the right of such improvements. If he may, then the certificate of registration does not guarantee to the owner of the land the quiet and peaceable enjoyment of his title which the Torrens system was adopted to secure.          For the foregoing reasons, we are of the opinion and so hold that, inasmuch as the plaintiff herein did not, during the pendency of the litigation for the registration of the lands in question, have excluded therefrom and have noted upon the certificate of title his alleged rights and interests in the improvements mentioned herein and noted upon the certificate of title issued, he thereby lost his right to such improvements; and therefore, the judgment of the lower court is hereby affirmed. And it is hereby ordered and decreed that a judgment in accordance herein be entered and that the cause be remanded to the lower court, with instruction to enter a final judgment in accordance with this decree, unless the plaintiff within a period of five days from the receipt of the notice of the same amend his original petition. It is so ordered with costs.

Macadangdang v Martinez, GR No. 158682G.R. No. 158682            January 31, 2005SPOUSES BIENVENIDO R. MACADANGDANG and VIRGINIA C. MACADANGDANG, petitioners vs.SPOUSES RAMON MARTINEZ and GLORIA F. MARTINEZ, respondents.D E C I S I O NCORONA, J.:Petitioners, spouses Bienvenido and Virginia Macadangdang (Macadangdang spouses), assail the October 25, 2001 decision1 of the Court of Appeals in CA-G.R. CV No. 32018, modifying the November 13, 1990 decision2 of Branch 149 of the Makati Regional Trial Court in Civil Case No. 88-796.The present controversy involves a house and lot in Lot 6, Block 22-A, Phase 5-A, Parkhomes Subdivision, Tunasan, Muntinlupa, Metro Manila, covered by TCT No. 146553 in the name of Emma A. Omalin.On December 20, 1986, the Macadangdang spouses offered to buy the subject property from Omalin forP380,000 on installment basis.On the same date, the Macadangdang spouses made a downpayment of P5,000 through the broker, Sto. Nino Realty Services, Inc. On January 3, 1987, they paid another P175,000. Thereafter, Omalin executed a deed of sale with mortgage dated January 5, 1987. The deed provided for the payment of the balance of P200,000 in three installments.The Macadangdang spouses took possession of the house and lot on January 18, 1987. On April 22, 1987, they paid P60,000 and on October 1, 1987, another P30,000. After the Macadangdangs had paid a total of P270,000, the parties agreed that the balance of P110,000 was to be paid upon delivery of the TCT.On January 29, 1988, Omalin executed a deed of absolute sale in favor of the Macadangdang spouses. However, the latter did not pay the P110,000 balance because Omalin failed to deliver the TCT. It turned out that the property was mortgaged to private respondent spouses Ramon and Gloria Martinez (Martinez spouses).It appears that on March 5, 1987, a certain Atty. Paterno Santos, a broker, offered to mortgage the subject property to the Martinez spouses for P200,000. Atty. Santos was in possession of a "clean" TCT No. 146553 and a fire insurance policy covering said property. The spouses Martinez accepted the mortgage with interest at 36% p.a. and duly recorded it at the Registry of Deeds of Makati. The proper annotation was made at the back of the title.From September 1987 to March 9, 1988, Omalin paid the monthly interest of P6,000 but failed to pay the subsequent interest from April 1988 to October 1989 amounting to P114,000.The Macadangdang spouses filed a criminal case for estafa against Omalin and a combined action for specific performance, annulment of contract and damages against the spouses Martinez and Omalin.After trial, the Makati RTC rendered a decision in favor of the Macadangdang spouses:WHEREFORE, in view of the foregoing, judgment is rendered as follows:1. The defendants Emma A. Omalin, Ramon Martinez and Gloria Martinez are hereby ordered to deliver to the plaintiffs the owner’s duplicate copy of TCT No. 146553, free from the encumbrance under Entry No. 30110 of the Register of Deeds of Makati, upon plaintiffs’ payment of the balance of P100.000.2. The defendant Emma A. Omalin is hereby ordered to pay plaintiffs the amount of P30,000 as moral damages and P20,000 as attorney’s fees and costs of suit.3

On appeal, however, the appellate court modified the decision of the Makati RTC:Considering that defendant Omalin remains to be the owner of the property despite the existence of a valid mortgage, she has the right to sell it. Hence, we rule that the sale in favor of plaintiffs-appellee is likewise valid, subject to the right of defendants-appellants to foreclose the property for failure of defendant Omalin to pay her indebtedness.

142

xxx xxx xxxWHEREFORE, the appealed decision is MODIFIED. A new one is hereby entered:1. Declaring defendants-appellants Ramon and Gloria Martinez as mortgagees in good faith.2. Declaring the deed of sale with mortgage in favor of plaintiffs-appellees Bienvenido and Virginia Macadangdang as valid and ordering them to pay defendant Omalin the balance of the price in the sum ofP110,000.3. Ordering defendants-appellants to deliver the owner’s duplicate copy of TCT No. 146553 to plaintiffs-appellees, subject to the existing encumbrance and the right of defendants-appellants to foreclose the property should defendant Omalin fail to pay her obligation.4. Ordering defendant Emma A. Omalin to pay plaintiffs-appellees the amount of P30,000 as moral damages and P20,000 as attorney’s fees and costs of suit.The Macadangdang spouses are now before the Court with the following assignments of error:FIRST ASSIGNED ERRORTHE COURT OF APPEALS’ "DECISION" OPENLY DISREGARDED AND OVERTURNED EXISTING JURISPRUDENCE INVOLVING SIMILAR FACTS.SECOND ASSIGNED ERRORUNLESS REVERSED AND/OR MODIFIED, THE COURT OF APPEALS’ DECISION, IF EVENTUALLY IMPLEMENTED, MIGHT GIVE RISE TO ABSURD RESULTS.THIRD ASSIGNED ERRORTHE COURT OF APPEALS GRAVELY ERRED IN REVERSING THE TRIAL COURT’S DECISION DATED NOVEMBER 13, 1990.4

The petition lacks merit.The subject matter of the instant petition involves registered land. Unlike the case of unregistered land, in which an earlier instrument, be it sale or mortgage, prevails over a latter one, and the registration of any one of them is immaterial,5 with respect to registered land, the rule is different. Between two transactions concerning the same parcel of land, the registered transaction prevails over the earlier unregistered right.6 The act of registration operates to convey and affect the registered land so that a bonafide purchaser of such land acquires good title as against a prior transferee, if such prior transfer was unrecorded.7

Sections 51 and 52 of PD 1529, otherwise known as the Property Registration Decree, are pertinent:Sec. 51. Conveyance and other dealings by registered owner. – An owner of registered land may convey, mortgage, lease, charge or otherwise deal with the same in accordance with existing laws. He may use such forms of deeds, mortgages, lease or other voluntary instruments as are sufficient in law. But no deed, mortgage, lease or other voluntary instrument, except a will purporting to convey or affect registered land shall take effect as a conveyance or bind the land, but shall operate only as a contract between the parties and as evidence of authority to the Register of Deeds to make Registration.The act of registration shall be the operative act to convey or affect the land insofar as third persons are concerned, and in all cases under this Decree, the registration shall be made in the office of the Register of Deeds for the province or city where the land lies.Sec. 52. Constructive notice upon registration. – Every conveyance, mortgage, lease, lien attachment, order, judgment, instrument or entry affecting registered land shall, if registered, filed or entered in the office of the Register of Deeds for the province or city where the land to which it relates lies, be constructive notice to all persons from the time of such registering, filing or entering.It is clear from the foregoing that the registration of the deed is the effectual act which binds the land insofar as third persons are concerned. Prior registration of a lien creates a preference as the act of registration is the operative act that conveys and affects the land.8 Considering that the prior sale of the subject property to the Macadangdang spouses was not registered, it was the registered mortgage to the spouses Martinez that was valid and effective. For sure, it was binding on Omalin and, for that matter, even on the Macadangdang spouses, the parties to the prior sale.The rule on prior registration is subject only to one exception, that is, when a party has knowledge of a prior existing interest which is unregistered at the time he acquires a right to the same land, his knowledge of that prior unregistered interest has the effect of registration as to him.9

The Martinez spouses claimed they had never met the Macadangdang spouses and were unaware that Omalin had already sold the property to them. Hence, the appellate court declared the Martinez spouses as mortgagees in good faith and innocent mortgagees for value.An innocent mortgagee for value is akin to an innocent purchaser for value. The phrase "innocent purchaser for value" is deemed to include an innocent lessee, mortgagee or other (beneficiary of an) encumbrance for value.10An innocent purchaser for value is one who buys the property of another without notice that some other person has a right to or interest in such property and pays a full and fair price for the same at the time of such

143

purchase or before he has notice of the claim of another person.11 As a general rule, where the certificate of title is in the name of the vendor when the land is sold, the vendee for value has the right to rely on what appears on the face of the title and is not obligated to look beyond what appears on the face of the certificate of title of the vendor. As an exception, the vendee is required to make the necessary inquiries if there is anything in the certificate of title which raises any cloud or vice in the ownership of the property.12 Otherwise, his mere refusal to believe that such defect exists, or his willful disregard of the possibility of the existence of a defect in his vendor’s title will not make him an innocent purchaser for value if it afterwards develops that the title is in fact defective, and it appears that he had such notice of the defect as would have led to its discovery had he acted with that measure of precaution which may reasonably be required of a prudent man in a like situation.13

Nothing on record shows that the title of Omalin, the mortgagor, was flawed when it was presented to the spouses Martinez. Their reliance on the title was therefore reasonable and correct. They were in no way obliged to go beyond the TCT to determine the legal condition of the property since there was nothing that should have aroused their suspicion about any defect or problem about the title.Where innocent third persons rely on the lack of defect of a certificate of title and acquire rights over the property, the Court cannot disregard such rights. Otherwise, public confidence in the certificate of title and ultimately, in the entire Torrens system will be impaired, for every one dealing with registered property will have to inquire at every instance whether the title has been regularly or irregularly issued.14

On this note, being innocent registered mortgagees for value, the Martinez spouses acquired a superior right over the property.Accordingly, we find no reversible error by the appellate court in upholding the existing encumbrance over the subject property acquired by the Macadangdang spouses, in declaring the spouses Martinez as mortgagees in good faith and in recognizing their right to foreclose on the mortgage should Omalin fail to pay her obligation.The assailed decision of the appellate court is neither absurd nor unjust. The registered mortgage contract of the Martinez spouses has given them the superior right, not as owners but only as mortgagees. Consequently, they are entitled to be paid the amounts due them under the real estate mortgage registered in their favor. In the event Omalin, as mortgagor, fails to pay the mortgage obligation or, should any party, for that matter, who may have an interest in the mortgaged property like the petitioners herein fail to redeem it from the mortgagees, the latter, as declared by the Court of Appeals, may enforce their rights against the property by foreclosing on the mortgage, regardless of who its owner may be, considering that the registered mortgage attaches to the property.WHEREFORE, the instant petition is hereby DENIED and the October 25, 2001 decision of the Court of Appeals in CA-G.R. CV No. 32018 is AFFIRMED.

IV. Involuntary Dealings with Registered LandA. Lis Pendens

Sec 76 PD 1529Section 76. Notice of lis pendens. No action to recover possession of real estate, or to quiet title thereto, or to remove clouds upon the title thereof, or for partition, or other proceedings of any kind in court directly affecting the title to land or the use or occupation thereof or the buildings thereon, and no judgment, and no proceeding to vacate or reverse any judgment, shall have any effect upon registered land as against persons other than the parties thereto, unless a memorandum or notice stating the institution of such action or proceeding and the court wherein the same is pending, as well as the date of the institution thereof, together with a reference to the number of the certificate of title, and an adequate description of the land affected and the registered owner thereof, shall have been filed and registered.

Sec 14, Rule 13, Rules of CourtSEC. 14.  Unknown identity or name of defendant.—Whenever the identity or name of a defendant is unknown, he may be sued as the unknown owner, heir, devisee, or by such other designation as the case may require; when his identity or true name is discovered, the pleading must be amended accordingly.

Laroza et al v Guia, GR L-45252G.R. No. L-45252 January 31, 1985TIMOTEO LAROZA and CONCHITA URI, plaintiffs-appellants, vs.DONALDO GUIA, defendant-appellee. RELOVA, J.:

144

Action to quiet title filed by appellants Timoteo Laroza and Conchita Uri in the then Court of First Instance of Laguna and San Pablo City versus appellee Donaldo Guia over a parcel of land described as follows:Isang (1) lagay na lupang tirikan at niyugan na natatayo sa Nayon ng San Francisco, Lunsod ng San Pablo; may luwang na 200 metrong parisukat humigit kumulang ang tirikan at 2210 na metrong parisukat, humigit kumulang ang niyugan. May tanim na 46 puno ng niyog at 29 puno ng lanzones na pawang nabunga. Ang kabalantay sa SE-Remedios Bautista; sa SW Provincial Road; sa SW at SE-Maria Umali at sa NW Buenaventura Guia Ito ay hinahalagahan ng Pamahalaan ng P730.00 para sa taong kasalukuyan at ito ay mayroong Katibayan sa pagmamay-ari Blg. 31068. Ang mga hangganan nito ay may palatandaang buhay na madre-cacao. (pp. 4-5, Record on Appeal)Appellants, in their complaint, alleged that they bought the above-described property in good faith and for valuable considerations from Francisco Guia on June 30, 1973, after they had seen the documents of ownership of said Francisco Guia which consisted of the following:(a) Deed of Extra-Judicial Partition executed before Notary Public Alfonso Farcon of San Pablo City dated August 5, 1961. Copy of which is hereto attached as Annex "B;"(b) Deed of Absolute Sale executed by Manuel Guia in favor of Francisco Guia, Buenaventura Guia and Felimon Guia, dated March 5, 1940 executed before Notary Public Enrique Estrellado of San Pablo City, and duly registered with the Register of Deeds of Sta. Cruz, Laguna on March 8, 1940, copy of which is hereto attached as Annex "C;"(c) Deed of Donation Inter Vivos executed by Cayetana Garcia dated March 5, 1940 executed before Notary Public Enrique Estrellado of San Pablo City, copy of which is hereto attached as Annex "D" (P. 6, Record on Appeal);that they were in continuous possession of the said property from the time they acquired the same from Francisco Guia until appellee, "through the commissioners appointed by this Honorable Court in Civil Case No. SP-488, namely: Aproniano Mls. Magsino, Clerk of Court; Rogaciano Borja, Deputy Clerk of Court; Atty. Ricardo Fabros, then represented by Mr. Armadilla; and, Engr. Danilo Dichoso, the surveyor, intruded upon the said peaceful possession by attempting to survey the above-described property and to partition the same by virtue of a decision of this Honorable Court dated December 29, 1966 in Civil Case No. SP-488; that the attempt of herein defendant to survey and partition the above-described property beclouds the title of herein plaintiffs for which reason, they were constrained to institute the present action with the assistance of counsel at the agreed amount of P5,000.00 and were compelled to incur litigation expenses of not less than P500.00." (p. 7, Record on Appeal)Appellee, through counsel, filed a motion to dismiss the complaint alleging, among others, "that the land subject matter of the complaint has already been the subject of a final and executory judgment in Civil Case No. SP-488, hence, plaintiffs (appellants) have no cause of action, or if there be any, the same is barred by a prior judgment." (p. 39, Record on Appeal)Appellants opposed the motion to dismiss maintaining that the complaint states a sufficient cause of action and prayed that the motion to dismiss be denied.The lower court, on October 30, 1974, issued an order dismissing appellants' complaint saying that:The motion to dismiss is well taken. It is beyond debate or question that the land over which plaintiffs seek herein to quiet title has already been declared the property of defendant by the final and executory judgment of this Court in SP-488, which was affirmed by the Court of Appeals and a further attempt to challenge the adjudication by certiorari was thrown out perfunctorily by the Supreme Court. There is no room for doubt or for controversy that all the requisite elements of res judicata or bar by prior judgment are present here. Plaintiffs are the supposed purchasers of the property from Francisco Guia, defendant in SP-488. Needless to say, a judgment against a party binds his successors in interest. A sale or similar transmission of right does not disturb the Identity of party for purposes of res judicata. In this regard, for further enlightenment on the issues generated by this dismissal motion, the Court hereby refers to its order of March 22, 1971 in SP-488.Contrary to plaintiffs contention, the ground of res judicata raised by defendant is indubitable and patent from paragraphs 4 and 5 of the complaint. (pp. 77-78, Record on Appeal)Appellants went to the then Court of Appeals alleging that the lower court erred (1) in holding that the instant case is already barred by a previous judgment; (2) in dismissing the complaint without a hearing which although preliminary should be conducted as ordinary hearings; and, (3) in holding that the ground of res judicata raised by appellee is indubitable and patent from paragraphs 4 and 5 of the complaint. (pp. 1-2, Brief for the Appellants)The appellate court forwarded the records of the case to Us because "no factual issue is involved" and "the issues raised in the instant case are purely legal questions which are beyond the jurisdiction of the Court to determine." (p. 5, CA Resolution)There is no merit in this appeal.Records show that long before appellants had acquired subject property, a notice of lis pendens (Civil Case No. SP 488) had already been registered with the Office of the Register of Deeds of San Pablo City affecting the

145

property. Lis pendens is a notice of pending litigation; a warning to the whole world that one who buys the property so annotated does so at his own risk (Rehabilitation Finance Corporation vs. Morales, 101 Phil. 175). Notwithstanding, appellants bought the land from Francisco Guia, defendant in Civil Case No. SP 488. Having purchased the property with notice of lis pendens, appellants took the risk of losing it in case the decision in the said civil case, as what actually happened, is adverse to their predecessor-in-interest, Francisco Guia Time and again, We have decreed that the filing of a notice of lis pendens charges all strangers with a notice of the particular litigation referred to therein and, therefore, any right they may thereafter acquired on the property is subject to the eventuality of the suit. The doctrine of lis pendens is founded upon reason of public policy and necessity, the purpose of which is to keep the subject matter of the litigation within the power of the Court until the judgment or decree shall have been entered; otherwise, by successive alienation's pending the litigation, its judgment or decree shall be rendered abortive and impossible of execution. On this score alone, appellants case would necessarily fall.In their first assigned error appellants argue that there is no res judicata because there is no Identity of causes of action since the case at bar is an action to quiet title, whereas, Civil Case No. SP-488 is one of filiation and partition. In National Bank vs. Barreto, 52 Phil. 818, We held that "a judgment for the plaintiff sweeps away every defense that should have been raised against the action, and this for the purpose of every subsequent suit, whether founded upon the same or a different cause." in Civil Case No. SP-488, appellee Donaldo Guia maintained that he is a co-owner of that parcel of land, including the land in question, which was later adjudicated to him as his share in the inheritance from the late Cayetana Garcia; whereas, Francisco Guia, appellants' predecessor-in interest, alleged that he is the sole owner of the property. Thus, both parties claim ownership over the same property appellee Donaldo Guia, by virtue of a final judgment rendered in Civil Case No. SP-488, and appellants Timoteo Laroza and Conchita Uri, by virtue of the sale executed by Francisco Guia, who lost in said civil case. In both cases, the question boils down to ownership of the land. Thus, there is Identity of causes of action.Anent the second assigned error, records reveal that a hearing on appellee's motion to dismiss appellants' complaint was conducted on August 12, 1974. There is, therefore, no basis for appellants to say that a hearing was never held in the case.Finally, appellants claim that the lower court erred in declaring that res judicata is indubitable and patent from the face of the complaint itself, without the appellee pleading the same as an affirmative defense. From a cursory reading of the pleadings, extant in the records of the case, We find that in his motion to dismiss, appellee had thoroughly discussed the issue of res judicata and, coupled by the fact that it was the same court which heard and decided Civil Case No. SP 488, the trial court can rightfully rule on said issue.ACCORDINGLY, for lack of merit, the appeal is hereby DISMISSED.

Heirs of Marasigan v IAC, GR No. 69303G.R. No. L-69303               July 23, 1987HEIRS OF MARIA MARASIGAN, namely, Teofilo, Isabel, Maximina, Anicia, and Francisco, all surnamed Marasigan, petitioners, vs.THE INTERMEDIATE APPELLATE COURT and MARIA MARRON, respondents.GUTIERREZ, JR., J.:Who has a better right to the property in question, the party who bought it with a notice of lis pendens annotated at the back of her title or the party in whose favor the notice of lis pendens was made? The appellate court answered this question in favor of the party who had the notice annotated and who won the litigation over the property. We affirm.The disputed property in this case is a residential lot (Lot No. 2-A) covered by Transfer Certificate of Title No. 100612 issued by the Register of Deeds of the City of Manila in the name of one Fe Springael-Bazar, married to Felicisimo Bazar.The pertinent facts as disclosed by the record are as follows:On April 24, 1975, Civil Case No. 97479 entitled "Maria Marron v. Felicisimo Bazar and Fe S. Bazaar" was filed before the then Court of First Instance of Manila, Branch XIII. The action sought to compel defendants Bazar to execute a registrable Deed of Absolute Sale of their lot covered by T.C.T. No. 100612 in favor of Maria Marron.On January 27, 1976, while Civil Case No. 97479 was still pending, the private respondent caused the annotation of a notice of lis pendens at the back of T.C.T. No. 100612.On February 24, 1976, judgment was rendered in Civil Case No. 97479. The dispositive portion reads:WHEREFORE, the Court hereby renders judgment in favor of the plaintiff and against the defendants as follows:a) Ordering the defendants Fe Springael Bazar and Felicisimo Bazar as vendors (1) to execute in favor of the plaintiff Maria Marron as vendee a Deed of Absolute Sale in a public instrument over the residential lot covered

146

by Transfer Certificate of Title No. 100612 issued by the Registry of Deeds of the City of Manila to and in the name of Fe S. Bazar, married to Felicisimo Bazaar; and (2) to deliver to plaintiff sufficient copies of such deed of sale, together with the Owner's copy of said Transfer Certificate of Title No. 100612, in order that the plaintiff can register the Deed of Absolute Sale with the Registry of Deeds of the City of Manila and secure a transfer certificate of title for the land in her name.b) Ordering the defendants to pay to the plaintiff the sum of P500.00 Philippine Currency, as and for attorney's fees; andc) Ordering the defendants to pay the costs of the suit. (Rollo, p. 15).The above judgment became final and executory so Maria Marron filed a motion for execution which was granted. A writ of execution was issued by the court on July 12, 1976. The spouses Bazar, however, refused to surrender their title to the property in question and to execute the required deed of sale in Marron's favor. On November 29, 1978, the lower court finally ordered the Clerk of Court to execute the deed of sale in behalf of the erring spouses. When the said deed was presented to the Register of Deeds of Manila for registration, the Deputy Clerk of Court was advised to secure a court order in order that the new title issued in the name of herein petitioner Maria Marasigan could be cancelled.It appears that on December 18, 1974, a deed of absolute sale of Lot 2-A covered by T.C.T. No. 100612 was executed by Fe S. Bazar in favor of Maria Marasigan for and in consideration of the sum of Fifteen Thousand Pesos (P15,000.00). However, it was only on July 5, 1977 that said deed was registered with the Registry of Deeds of Manila. Consequently, T.C.T. No. 100612 was cancelled and a new title was issued in Maria Marasigan's name. When the Register of Deeds of Manila issued Transfer Certificate of Title No. 126056 naming Maria Marasigan as the new owner of Lot 2-A, the notice of lis pendens caused to be annotated by Marron on the Bazar's title was carried over on the said new title.Meanwhile, on May 26, 1977, the Bazaars filed a petition for relief from the judgment dated February 24, 1976 in Civil Case No. 97479. While their petition was still pending, they moved to set aside the said judgment on June 22, 1979 on the ground of lack of jurisdiction over their persons.On the other hand, on February 24, 1979, Marron instituted L.R.C. Case No. 7680 captioned "Maria Marron v. Maria Marasigan" which prayed for a court order requiring the Register of Deeds of Manila to register the deed of sale executed by the Deputy Clerk of Court in behalf of the Bazaars pursuant to the order dated November 29, 1978 of the Court of First Instance, Manila, Branch XIII. L.R.C. Case No. 7680 was tried by the Court of First Instance of Manila, Branch IV acting as a land registration court. Said case was dismissed for the following reason:... This court acting as a Land Registration Court, with limited and special jurisdiction cannot act on this petition under summary proceedings but (sic) should be ventilated before a court of general jurisdiction Branch XIII, which issued the aforesaid Order dated November 29, 1978, the said petition is hereby dismissed for lack of jurisdiction without prejudice on the part of the petitioner to institute the appropriate civil action before the proper court. ... (Annex "A," p. 4, Rollo, p. 138)On September 6, 1979, Marron filed another case docketed as Civil Case No. 126378 to have Marasigan's TCT 126056 cancelled conformably to the procedure outlined in the decision of the above land registration court. On July 30, 1980, the parties submitted said case for decision.On February 18, 1982, the Court of First Instance of Manila, Branch IV to which Civil Case No. 126378 was assigned dismissed Marron's complaint for being premature since the decision rendered by the CFI, Branch XIII in Civil Case No. 97479 had not yet become final and executory considering that it was still the subject of a petition for relief from judgment.On appeal, the Intermediate Appellate Court, on August 7, 1984, ruled that Marron is entitled to the property under litigation by virtue of the notice of lis pendens annotated at the back of Maria Marasigan's title. The appellate court further ruled that the decision in Civil Case No. 97479 had become final and executory because the petition for relief from judgment of the spouses Bazar was filed out of time. The dispositive portion of the appellate court's decision reads:WHEREFORE, the appealed decision is hereby REVERSED and another one entered —(a) Ordering the Register of Deeds of Manila to cancel T.C.T. No. 126056 in the name of Maria Marasigan and issue another in the name of Maria Marron by virtue of the Deed of Sale executed by the Branch Clerk of Court of Branch XIII;(b) Ordering the said Register of Deeds, during the pendency of this case, to refrain from registering any deed of sale pertaining to T.C.T. No. 126056 in the name of Maria Marasigan other than that of the herein plaintiff; and(c) Ordering the defendant Maria Marasigan to pay attorney's fees in the amount of P10,000.00. (IAC, Decision. Rollo, pp. 17-18).Maria Marasigan who died in the course of the proceedings is now represented by her heirs in the instant petition which assigns the following errors:

147

ITHAT THE INTERMEDIATE APPELLATE COURT FAILED TO APPREHEND THAT THE RIGHT OF ACTION OF RESPONDENT MARIA MARRON (AS PLAINTIFF) IN CIVIL CASE NO. 97479 HAD PRESCRIBED AND SHE INCURRED IN LACHES.IITHAT THE INTERMEDIATE APPELLATE COURT FAILED TO APPREHEND THAT RESPONDENT ABANDONED OR WAIVED HER PROPERTY RIGHTS AND EFFECTS TO/OF THE DECISION IN CIVIL CASE NO. 97479, WHEN SHE FILED CIVIL CASES NO. 7680 AND 126378, DURING ITS EFFECTIVITY.IIITHAT THE INTERMEDIATE APPELLATE COURT ERRED IN CONCLUDING THAT THE DECISION IN CIVIL CASE NO. 97479 HAS BECOME FINAL AND EXECUTORY.IVTHAT THE INTERMEDIATE APPELLATE COURT FAILED TO APPREHEND THE LACK OF JURISDICTION OF THE TRIAL COURT IN CIVIL CASES NO. 7680 AND 126378 OVER THE PERSONS OF PETITIONERS.VTHAT THE INTERMEDIATE APPELLATE COURT ERRED IN CONSIDERING THAT THE TRIAL COURT IN CIVIL CASE NO. 97479 HAS JURISDICTION OVER THE PERSONS OF DEFENDANTS SPOUSES FELICISIMO BAZAAR AND FE S. BAZAAR.VITHAT THE INTERMEDIATE APPELLATE COURT FAILED TO APPREHEND THAT THE DEED OF ABSOLUTE SALE EXECUTED BY THE DEPUTY CLERK OF COURT, WAS NOT LEGAL AND VALID AND WITHOUT PROOF AND EFFECT. (Brief for the appellant, pp. 1 and 2)We find no merit in the present petition.There is a clear showing that although the late Maria Marasigan acquired the property in question from the Bazaars pursuant to a deed of absolute sale on December 18, 1974 or a little over four months before the filing of Civil Case No. 97479, the transaction became effective as against third persons only on July 5, 1977 when it was registered with the Registry of Deeds of Manila. It is the act of registration which creates constructive notice to the whole world. Section 51 of Act 496, as amended by Section 52 of the Property Registration Decree (P.D. 1529) provides:Sec. 52. Constructive notice upon registration. — Every conveyance ... affecting registered land shall, if registered, filed or entered in the office of the Register of Deeds for the province or city where the land to which it relates lies, be constructive notice to all persons from the time of such registering, filing or entering.Moreover, there is no question that when the late Maria Marasigan was issued her transfer certificate of title to the subject property (T.C.T. No. 126056), the Registrar of Deeds of Manila then carried over to the new title the notice of lis pendens which the private respondent had caused to be annotated at the back of the Bazar's title. In case of subsequent sales or transfers, the Registrar of Deeds is duty bound to carry over the notice of lis pendens on all titles to be issued. Otherwise, if he cancels any notice of lis pendens in violation of his duty, he may be held civilly and even criminally liable for any prejudice caused to innocent third persons (The Director of Lands, et al. v. Reyes, 68 SCRA 177).A notice of lis pendens means that a certain property is involved in a litigation and serves as notice to the whole world that one who buys the same does it at his own risk (Rehabilitation Finance Corporation v. Morales, 101 Phil. 171). It was also a clear notice to Maria Marasigan that there was a court case affecting her rights to the property she had purchased.1avvphi1As earlier stated it was only on July 5, 1977 that the sale between Maria Marasigan and the Bazaars became effective as against third persons. The registration of the deed of sale over the subject property was definitely subsequent to the annotation made on January 27, 1976. Consequently, Marasigan was bound by the outcome of the litigation against her vendors or transferors. (See Rivera v. Tirona, et al., 109 Phil. 505).We reiterate the established rule that:... the filing of a notice of lis pendens charges all strangers with a notice of the particular litigation referred to therein and, therefore, any right they may thereafter acquire on the property is subject to the eventuality of the suit. The doctrine of lis pendens is founded upon reason of public policy and necessity, the purpose of which is to keep the subject matter of the litigation within the power of the Court until the judgment or decree shall have been entered; otherwise, by successive alienations pending the litigation, its judgment or decree shall be rendered abortive and impossible of execution. ... (Laroza v. Guia, 134 SCRA 34 1)The late Marasigan's transferors did not interpose any appeal from the adverse judgment dated February 24, 1976 in Civil Case No. 97479. The 30-day period under the old rule (Rule 41, section 3 of the Revised Rules of court now amended by Batas Pambansa Bilang 129, section 39) within which the Bazaars may have taken an appeal started to run from May 12, 1976 when they were served with a copy of the said decision. On June 11,

148

1976, the February 24, 1976 decision in Civil Case No. 97479 became final and executory. At this point after the finality of the said decision, the Bazaars no longer had the right to alienate the property subject of the litigation. Any transaction effective during the period of litigation is subject to the risks implicit in the notice of  lis pendensand to the eventual outcome of the litigation.Moreover, we agree with the finding of the appellate court that the petition for relief from judgment by the Bazaars dated May 26, 1977 was filed beyond the two periods provided in Section 3 Rule 38 of the Revised Rules of Court. There may have been some errors in the computations but the petition itself was out of time.Rule 38, Section 3 of said Rules provides, in part, that:Sec. 3. Time for filing petition. ... — A petition provided for in either of the preceding sections of this rule must be verified, filed within sixty (60) days after the petitioner learns of the judgment, order or other proceeding to be set aside, and not more than six (6) months after such judgment or order was entered or such proceeding was taken. ...The 60-day period must be reckoned from May 12, 1976 when the Bazaars were served with a copy of the assailed decision. Therefore, the 60-day period expired on July 11, 1976. It was only after 379 days or more than 12 months after they learned of the judgment that the Bazaars filed their petition for relief from said judgment. (See Domingo v. Dela Cruz, 23 SCRA 1121) The appellate court computed the 6-month period from the date of the judgment was rendered. Rule 38 states that the counting should commence from the entry of the judgment or order. (See Dirige v. Biranya, 17 SCRA 840). A judgment is entered only after its finality and Civil Case No. 97479 became final on June 11, 1976. Since the records do not bear the exact date the questioned judgment was entered, the 6-month period can be counted for purposes of our decision from July 12, 1976 when the writ of execution of the final judgment was issued. The phrase "or other proceeding" in Section 3 of Rule 38 includes a writ of execution (Aquino v. Blanco, 79 Phil. 647). The 6-month period from July 12, 1976 lapsed on January 8, 1977. A period of ten (10) months had already lapsed when the Bazaars filed their petition for relief from judgment on May 26, 1977. Obviously, the petitioners cannot now question the effects of the final and executory judgment in Civil Case No. 97479. In the words of Laroza v. Guia (supra) they cannot render the final judgment abortive and impossible of execution. The deed of sale executed by the Deputy Clerk of Court on behalf of the Bazar spouses pursuant to the court's judgment was valid and binding.The petitioners cannot also raise before us the issues of prescription or laches and lack of jurisdiction over the persons of the Bazar spouses in Civil Case No. 97479. This cannot be done in this petition which stems from Civil Case No. 126378 in the trial court and AC-G.R. No. 00183 in the appellate court. The Bazaars were the proper parties who ought to have raised them as defenses either in a motion to dismiss or in their answer. Since they did not do so, the same were deemed waived. (See Rule 9, section 2 of the Revised Rules of Court; MD Transit & Taxi Co., Inc. v. Estrella, 113 SCRA 378; Torreda v. Boncaros, 69 SCRA 247; Visayan Electric Co., Inc. v. Commissioner of Internal Revenue, 39 SCRA 43; Republic v. Mambulao Lumber Company, 6 SCRA 858).WHEREFORE, in view of all the foregoing, the petition is hereby DISMISSED for lack of merit. The appellate court's decision is AFFIRMED.SO ORDERED.

Punongbayan v Pineda, GR L-58193G.R. No. L-58193 August 30, 1984LEONORA A. PUNONGBAYAN, petitioner, vs.HON. GREGORIO G. PINEDA, as Presiding Judge of the Court of First Instance of Rizal, Branch XXI, ANGEL L. BAUTISTA and REGISTER OF DEEDS OF ILIGAN CITY, respondents.Manuel Punzalan for petitioner.Arellano, Bolasa, Bacani & Associates Law Office for private respondents. CONCEPCION, JR., J.:Petition for certiorari with preliminary mandatory injunction with prayer for a restraining order to annul and set aside the order of the respondent judge directing the cancellation of the adverse claim and notice of lis pendensannotated at the back of TCT No. 19417 of the Register of Deeds of Iligan City, registered in the name of Angel L. Bautista appearing thereon as Entry No. 434.The pertinent facts as gathered from the pleadings are as follows:Leonora Punongbayan and St. Peter's College, Inc. were the owners of two parcels of land described in TCT No. 296 and TCT No. 7546, respectively. They mortgaged the two properties to the Manila Banking Corporation (Manila Bank, for short) to guarantee a loan of P550,000.00. Subsequently, St. Peter's College, Inc. sold the property with TCT No. 7546 to Angel Bautista, the latter to assume the obligation of paying the outstanding balance of the mortgage to the Manila Bank. 1 Angel Bautista, however, failed to pay the assumed obligation

149

and as a result, the properties were extrajudicially foreclosed and sold at public auction to the Manila Bank as the highest bidder for the price of P131,467.58. Within the one year redemption period, Leonora Punongbayan, represented by Danilo Punongbayan redeemed the property with TCT No. 296 for the amount of P28,327.09 and a certificate of redemption was issued in her favor and the owner's duplicate copy of TCT No. 296 was likewise delivered to her by the Manila Bank. Within almost the same period, Angel Bautista paid the amount of P148,316.05 to the Manila Bank as payment of the redemption price of the two parcels of land. The Manila Bank issued a certificate of redemption 2 in favor of Angel Bautista with respect to the land with TCT No. 10937 (formerly TCT No. 7546) only, alleging that the redemption referred to his property only as the other property with TCT No. 296 had been redeemed by Leonora Punongbayan. The Manila Bank likewise returned to Angel Bautista the amount of P28,327.09, which the latter refused to accept and instead made several demands from the Manila Bank to issue a certificate of redemption in his favor with respect to the two parcels of land. The Manila Bank denied the request. Thus a complaint was filed by Angel Bautista against the Manila Bank (Civil Case No. 24992) for Specific Performance with Damages before the Court of First Instance of Rizal, Branch XXI.After trial, the trial court rendered a decision in favor of Angel L. Bautista. The Manila Bank appealed to the Court of Appeals. Pending appeal, Angel L. Bautista filed an ex-parte petition before the lower court for the issuance of a certificate of final conveyance (sale) over the two properties, which the trial court granted. By virtue of such certificate of final conveyance, TCT No. 296 was cancelled and a new TCT No. 19417 was issued in the name of Angel L. Bautista. Upon knowing this, Leonora Punongbayan caused the annotation of an adverse claim and notice of lis pendens (Entry No. 434) at the back of TCT No. 19417 3 and filed before the lower court a motion to set aside the order of the respondent judge directing the issuance of a certificate of final conveyance (sale), which the trial court denied. Angel L. Bautista thereafter filed an ex-parte manifestation and motion praying for the cancellation of Entry No. 434. 4 The trial court issued an order granting the motion 5 without giving Leonora Punongbayan a chance to be heard. Leonora Punongbayan then filed a motion to set aside such order, 6 which the trial court denied. 7 Thus, by virtue of such order, the Register of Deeds of Iligan City cancelled the adverse claim and notice of lis pendens. Hence, this petition for certiorari with preliminary mandatory injunction with prayer for a restraining order to annul and set aside the order of respondent judge with respect to the cancellation of the notice of lis pendens to reannotate the notice of lis pendens on TCT No. 19417 and to restrain the private respondent from making a transfer of the land covered by TCT No. 19417. As prayed for, the Court issued a temporary restraining order. 8

The issue for resolution is whether or not the notice of lis pendens annotated at the back of TCT No. T-19417, under Entry No. 434, was properly and legally ordered cancelled.The petitioner, Leonora Punongbayan claims that the cancellation was illegal since no notice was sent to her concerning the hearing of the motion for cancellation of said annotation and was consequently denied the right to be heard.We find merit in the contention of the petitioner.The rule for the cancellation of a notice of lis pendens provides that there should be notice to the party who caused it to be recorded so that he may be given a chance to be heard and show to the court that the notice is not for the purpose of molesting the adverse party and that it is necessary to protect his right. The last paragraph of Section 24, Rule 14 of the Rules of Court provides that:The notice of lis pendens hereinabove mentioned may be cancelled only upon order of the court, after proper showing that the notice is for the purpose of molesting the adverse party, or that it is not necessary to protect the rights of the party who caused it to be recorded.In the case of Sarmiento vs. Ortiz, et al., the Court ruled:A trial court commits grave abuse of discretion in ordering the cancellation of a notice of lis pendens on a certificate of title where there was no unnecessary delay attributable to plaintiff and his counsel in the resolution of the main case for annulment of said certificate; especially when such cancellation was ordered without notice to plaintiff's counsel. 9

And in the case of Natano vs. Esteban et al., the Court ruledFor three reasons, the order directing the cancellation of the notice of lis pendens should be set aside: First, it was granted ex-parte. Plaintiffs were thus deprived of their right to be heard on notice. Second, the order dismissing the complaint had not yet become final. That order in effect had placed plaintiffs at a disadvantage. It opened the floodgate to the commission of a fraud. What if, after the cancellation of the notice of lis pendens in the office of the Register of Deeds, defendants should thereafter sell the land to a purchaser in good faith and for value ? Third, There is no showing that the notice of lis pendens "is for the purpose of molesting the adverse party, or that it is not necessary to protect the rights of the party who caused it to be recorded." 10In view of the foregoing, the respondent judge committed grave abuse of discretion in issuing the questioned order directing the cancellation of the notice of lis pendens without notice to the party who caused its annotation.WHEREFORE, the writ prayed for is hereby GRANTED and the questioned order directing cancellation of the

150

notice of lis pendens is hereby ANNULLED and SET ASIDE. The Register of Deeds of Iligan City is hereby ordered to reannotate the notice of lis pendens on TCT No. 19417. The temporary restraining order issued by the court is hereby made permanent. With costs against the private respondent Angel L. Bautista.SO ORDERED.

Victoriano v Rovira, 55 Phil 1000G.R. No. L-33770             August 8, 1930PACIFICO VICTORIANO, petitioner, vs.LEOPOLDO ROVIRA and PEDRO MA. SISON, Judges of First Instance, FRANCISCO J. GONZALEZ, JOSE MARTINEZ DE SAN AGUSTIN, and THE REGISTRAR OF DEEDS OF THE CITY OF MANILA, respondents.Adolfo Brillantes for petitioner.Jose Martinez de San Agustin in his own behalf and for respondent Gonzalez.No appearance for other respondents.OSTRAND, J.:This is a petition for a writ of prohibition, the petitioner, Dr. Pacifico Victoriano, alleging that the respondent judges exceeded their jurisdiction in ordering the cancellation of a notice of lis pendens.It appears from the records before us that on May 29, 1922, the petitioner purchased a lot, with the buildings thereon, from one Narciso Javier for the sum of P80,000. The property was incumbered with two mortgages to the total amount of P72,000, and the petitioner paid only P8,000 in actual cash and assumed the payment of the mortgages, the remaining part of purchase money. In the meantime, the petitioner organized a school named "Colegio Liceo de Manila" of which he was the director, and the property referred to was used for the purposes of the school. The respondent Gonzalez also seems to have had an interest in the school and held one of the mortgages which was given as security for the sum of P47,000. The other mortgage was held by the Shanghai Life Insurance Company, Ltd., and it being a first mortgage, it seems that it eventually became necessary for Gonzalez to settle the matter with the insurance company in order to protect the second mortgage held by him.The petitioner seems to have been unable to pay the interest on the mortgages, and in the beginning of May, 1928, Gonzalez threatened to foreclose the mortgages and thus compelled the petitioner to make a settlement so as to prevent the transfer of the school to other quarters. The accounts then showed that, including overdue interest, the amount due Gonzalez on the mortgages was P78,426.61, and on May 3, 1928, two documents were executed, one of which was a deed of sale to Gonzalez of the petitioner's remaining interest in the aforesaid property in consideration of the payment of P2,500. The other document was a lease of the property executed by Gonzalez in favor of the petitioner, the stipulated rent being P700 per month. Two days later, transfer certificate of title to the property was issued in favor of Gonzalez.The petitioner failed to pay the rent, and on May 2, 1929, an action of unlawful detainer was brought against him by Gonzalez in the municipal court of the City of Manila. Five days later, the petitioner brought an action against Gonzalez and the latter's attorney, Jose Martinez de San Agustin, for the annulment of the documents executed on May 3, 1928, on the ground that he, the petitioner was led to execute said documents by reason of insidious and fraudulent machinations of the defendants and by their threats. As a result of similar allegations, the municipal court refused to take jurisdiction of the unlawful detainer suit and certified it to the Court of First Instance, where it eventually was consolidated with the action for the annulment of the aforesaid documents. The cases were assigned for hearing several times, but were continued at the instance of counsel for the herein petitioner, and no evidence was taken until February 27 of the present year, when Doctor Victoriano and three of his assistants testified. The cases were again continued, and, so far, no further evidence appears to have been presented.Apparently becoming impatient, the defendant Gonzalez, on May 21, filed a motion in the Court of First Instance praying that the plaintiff, Pacifico Victoriano, be ordered to give a bond in the sum of P10,000 to respond for the damages resulting from the fact that said plaintiff, in connection with the action brought by him, had filed a notice of lis pendens with the register of deeds of Manila, which prevented Gonzalez from disposing of the property in question. Judge Rovira, the vacation judge, after hearing counsel, issued an order, the dispositive part of which reads as follows in translation:You are hereby notified that on June 3, 1930, this court issued an order in the above-entitled case, to the plaintiff advising him that if he desired to have the lis pendens annotation continued, he must within five days from notice hereof give bond in the amount of five thousand pesos to answer for any damages that may be occasioned the defendant by such annotation; provided, however, that should he fail to do so, the register of deeds shall proceed to cancel the lis pendens annotation, leaving it without effect.A motion for reconsideration was presented by Doctor Victorano's counsel, but the then acting judge, Pedro Ma.

151

Sison, denied the motion.The present petition for a writ of prohibition was thereupon brought before this court, the petitioner maintaining that his notice of lis pendens was duly filed in accordance with the provisions of section 79 of the Land Registration Act and that under our laws, the courts had no power to order the cancellation of the notice before a final judgment of the case to which it related had been rendered.At first sight, it may seem that the petitioner's contention is correct; ordinarily a notice of pendency which has been filed in a proper case cannot be cancelled, while the action is pending and undetermined, except in cases expressly provided for by statute (38 C.J., 45). But there may be exceptions, and it has been held that a court has the inherent power in the absence of statute to cancel a lis pendens in a proper case (Sternberger vs. Tunison, 92 N. J. Eq., 159).It may be conceded that the present case is rather close, but taking into consideration the peculiar circumstances, we do not feel justified in holding that the respondent judges exceeded their jurisdiction. The petitioner did not bring his action until over a year after the sale to Gonzalez, and the evidence he has presented up to the present time does not bear out the main allegations of the complaint. He must also be held responsible for most of the continuances of the trial of the two cases before the Court of First Instance, a matter which lends color to the assertion of counsel for the respondent that he desired to prolong the litigation with a view to hold possession of the property in question as long as possible without paying rent. When we further take into consideration that the rent stipulated in the lease was P700 per month and that the petitioner therefore must have owed Gonzalez over P17,000 in overdue rent, we cannot say that the court below erred in requiring him to give bond in the modest sum of P5,000 and in ordering the cancellation of the list pendens in the event that the petitioner failed to present the bond.There are also other circumstances which have important bearing on the matter now before us, but inasmuch as they are directly connected with the aforesaid undecided cases pending in the Court of First Instance, we refrain from discussing them at the present time.Writs of prohibition go to the jurisdiction, and as we cannot hold that the court below exceeded such jurisdiction, the petition is denied with the costs against the petitioner. So ordered.

Lazaro v Mariano, 59 Phil 627G.R. No. L-4091             May 28, 1952MARIANO M. PARAS, SR., petitioner, vs.COURT OF APPEALS, LAZARO LEODONES and DEMETRIO LEODONES, respondents.Bausa and Ampil for petitioner.Pedro D. Maldia for respondents.MONTEMAYOR, J.:Respondent Lazaro Leodones was originally the owner of lot No. 2817 of the Penaranda Cadastre No. 226, with an area of about seventeen hectares acquired by him by virtue of Homestead Patent No. 32378, covered by Original Certificate of Title No. 2443 of the Register of Deeds of Nueva Ecija. It was assessed for tax purposes in the sum of P3,283.68.On July 31, 1935, Lazaro mortgage the homestead in favor of the Philippine National Bank, Cabanatuan Branch, to secure the payment of a loan in the sum of P650.00. Failing to pay said loan, the Bank instituted extrajudicial foreclosure proceedings under the provisions of Act 3135 as amended. At the auction sale held on September 7, 1940, the Bank was the sole bidder and bought the land for P400 although the mortgage indebtedness of Lazaro at the time of the auction amounted to P668.25, thereby leaving Lazaro still indebted to the Bank in the sum of P268.25. Because of his failure to repurchase the lot within one year, the Bank on October 23, 1941, executed an affidavit of consolidation of ownership, and upon the registration of the same in the office of the Register of Deeds, Homestead Patent No. 32378 as well as Original Certificate of Title No. 2443, both in the name of Lorenzo, were cancelled and in lieu thereof, Transfer Certificate of Title No. 18876 was issued in favor of the Bank.On October 7, 1942, The Philippine National Bank executed a deed of promise to sell the land in question in favor of petitioner Mariano M. Paras Sr. upon his making a down payment of P1,000; and because Paras complied with the terms contained in said promise to sell, the Bank on May 25, 1943 executed a deed of absolute sale of the property to him for the total sum of P1,800. By virtue of this deed of absolute sale, the Register of Deeds issued in favor of Paras Transfer Certificate of Title No. 19339.On November 19, 1941, however, about a year before the Bank executed the deed of promise to sell in favor of Paras, and about a month after said Bank had consolidated its ownership over the property, Lazaro made a written offer to the Bank to repurchase the property subject to the auction sale, and show his good faith, he

152

deposited the sum of P200 with the Bank. According to the evidence as found by the Court of Appeals, on November 20, 1942, Lazaro withdrew this deposit because Paras after he had received the deed of promise to sell by the Bank in October 1942, approached Lazaro and persuaded him to make the withdrawal, telling him that he was unnecessary inasmuch as he (Paras) would reconvey the same land to him when it shall have been definitely sold to him (Paras), for a sum in genuine Philippine currency not a centavo more than what he paid the Bank.The Court of Appeals equally found that immediately after liberation Lazaro offered to repurchase the land from the appellant with genuine Philippine currency but the appellant turned down the offer unless he was paid P4,000. Again Lazaro offered to buy the land from Paras on November 23, 1945 and on February 12, 1946, but Paras refused both offers.Despite the purchase of the land at the auction sale by the Bank and its subsequent conveyance to Paras, Lazaro Leodones and his son Demetrio Leodones continued in possession of the property and presumably in the enjoyment of the fruits thereof. Because of this, Paras brought the original action, Civil Case No. 44, in the Court of First Instance of Nueva Ecija against Lazaro and Demetrio to have himself declared absolute owner of the property, to obtain possession from defendants, and to compel them render accounting of the products of the land from the year 1943. In an amendment decision, Judge Melendres of the trial court annulled the auction sale on foreclosure on the ground that it was not held in the place required by law and also because the inadequacy of the price of P400 paid by the Bank was shocking to the conscience, and so ordered that upon payment by Lazaro of the sum of P668.25 with interest at the rate of P0.13 a day from June 30, 1940, the Register of Deeds was to cancel Transfer Certificate of Title Nos. 19339 in the name of Paras, and in lieu thereof issue a Certificate of Title in the name of Lazaro, with the annotation of the mortgage in favor of the Bank originally noted in Original Certificate of Title No. 2443, but with a memorandum to the effect that said mortgage was already redeemed. On appeal to the Court of Appeals by Paras, this Tribunal affirmed the decision appealed from. We quote:. . ., the decision appealed from is hereby affirmed in so far it grants appellee Lazaro Leodones the right to redeem the property described in Original Certificate of Title No. 2443 of the Registry of Deeds of Nueva Ecija, upon payment by said appellee to the appellant of the sum of P668.25 with interest thereon at the rate of P0.13 daily from June 20, 1940 until fully paid; and in so far it orders the Register of Deeds of Nueva Ecija, — after such payment-to cancel Transfer Certificate of Title No. 19339, issued to the appellant, and to issue in lieu thereof, another in the name of appellee Lazaro Leodones making appear therein the mortgage in favor of the Philippine National Bank executed on July 31, 1935 (Exhibit D) with subsequent memorandum to the effect that the same has been paid and redeemed. With the costs against the appellant.The Court of Appeals did not agree with the trial court as to the annulment of the auction sale, and considered that sale valid. However, it held that Lazaro had offered to purchase the land within the five-year period provided by the Public Land Act. Paras has now brought the case to us on appeal by certiorari.Although petitioner assigns six errors said to have been committed by the Court of Appeals, all of them may be consolidated into the single question of how to compute the five-year within which a homesteader may repurchase his homestead of having conveyed the same.Section 119 of Commonwealth Act 141 reads as follows:SEC. 119. Every conveyance of land acquired under the free patent or homestead provisions, when proper, shall be subject to repurchase by the applicant, his widow, or legal heirs, within a period of five years from the date of the conveyance. (Emphasis supplied).In this connection the Court of Appeals said:In the instant case, we believe, and so hold that the five-year period shall be counted from October 27, 1941 when the Transfer Certificate of Title No. 18876, Exhibit N, was issued to the Philippine National Bank or, at most, from September 8, 1941, the day following the expiration of the right to redemption reserved to the appellee pursuant to the Certificate of Sale, Exhibit 1, and from which date the final Ceritificate of Sale could have been properly issued in favor the bank as purchaser, Certificate Exhibit I, issued to the Bank, was only provisional in character and intended to be a mere memorial of the fact that purchase was made by the person named therein as buyer. "It is not intended to operate as an absolute transfer of the property but merely to identify the property, to show the price paid and the date when the right of redemption expires.The effective conveyance of the land is accomplished by the deed which is issued only after the period of redemption has expired." (Gonzales vs. Calimbas and Poblete, 51 Phil., 355-358, Emphasis supplied.) "The rights secured by an execution purchaser are inchoate before the deed, and it is necessary for the purchaser to procure his deed to complete his title." (Pike vs. Halpin, 181 Mich. 447, 450). Since the term "conveyance" imports the transfer of legal title to land from one person or class of persons to another (Frame vs. Bivens, 89 F., 789 citing Bouviers" Law Dictionary, p. 434) it stands to reason that only from the dates above mentioned; after the expiration of the term of the redemption, should the property be considered as conveyed for the purposes of sec. 119 of Act 141. It being conceded that the defendant-appellee herein "offered to buy the land in question on November 23, 1945

153

and on February 25, 1946 but that the plaintiff (appellant) refused the offer" (See No. 20 Stipulation of Facts) said offer to redeem was seasonably made. Hence the trial court was correct in granting appellee Lazaro Leodones the right to redeem the land in question.We share the feeling of the trial court as to the inadequacy of the price paid by the Bank at the auction sale. It will be remembered that the homestead mortgaged to the Philippine National Bank, Cabanatuan Branch, was assessed for purposes of taxation in the sum of P3,283.68. To realize the extreme discrepancy between the real value of the property and price at which the Bank bought it, we all know that the assessed value of real property, especially in the provinces is much below its real market value, sometimes only a fraction thereof. So that at the time of the auction sale, the homestead must have been worth several thousand pesos. In fact, the Bank sold it to Paras for P1,800, and the latter demanded P4,000 as sales price to Lazaro. At the time of the foreclosure of the mortgage, homesteader Lazaro was indebtedness to said Bank in the sum of P668.25 and yet said Bank in the absence of the other bidders purchased the mortgaged property not even in the same amount of the indebtedness but only for the merge sum of P400, leaving still a balance of P268.25 against the mortgage-debtor. The Bank certainly not only was able to recover the full indebtedness of the mortgage-debtor but also made a clean profit of P1,000 in the transaction. One cannot say that the mortgagor-homesteader received a fair deal. That the price paid by the Bank at the auction sale for the homestead was grossly inadequate and shocking to the conscience, is obvious, and for this reason alone, we are disposed to annul said sale. However, because of our view as to the validity of the offer repurchase made by Lazaro, resulting in the return of the land to him upon payment of his indebtedness, we find that to hold the auction sale void, would be unnecessary.After a careful study of the point raised in the present appeal by certiorari, we agree with the Court of Appeals that the five year period within which a homesteader or his widow or heirs may repurchase a homestead sold at public auction or foreclosure sale under Act 3135 as amended, begins not at the date of the sale when merely a certificate is issued by the Sheriff or other official, but rather on the day after the expiration of the period of repurchase when the deed of absolute sale is executed and the property formally transferred to the purchaser. As this Court said in the case of Gonzales vs. Calimbas and Poblete, 51 Phil., 355, the certificate of sale issued to the purchaser at an auction sale is intended to be a mere memorandum of the purchase. It does not transfer the property but merely identifies the purchaser and the property, states the price and the date when the right of redemption expires. The effective conveyance is made by the deed of absolute sale executed after the expiration of the period of redemption.In the present case it is clear that whether the five-year period fixed by section 119 of Commonwealth Act No. 141 be computed as commencing to run from the date of the expiration of the one year for repurchase or from the date of the affidavit of consolidation of ownership and the issuance of the corresponding Transfer Certificate of Title in favor of the Bank, the offer repurchase by Lazaro in November 1945, was made on time. Not only this, but according to the findings of the Court of Appeals, Lazaro made the first offer to repurchase the property as early as November 1941, although he desisted from it because of the promise made by Paras. Again Lazaro made another offer immediately after liberation which must have been around April or May, 1945, considering the date when Nueva Ecija was liberated from the Japanese, which date was certainly less than five years even from the day of the auction sale made in September, 1940. So that in all respects and from whatever angle we view this case, respondent Lazaro Leodones is entitled to repurchase his homestead.Finding no reversible error in the decision of the Court of Appeals appealed from, the same is hereby affirmed with costs against appellant.

Capitol Subdivision v Montelibano, GR L-13389-90G.R. Nos. L-13389-90             September 30, 1960CAPITOL SUBDIVISION, INC., and MONTELIBANO SUBDIVISIONS, movants-appellees, vs.ALFREDO LOPEZ MONTELIBANO and CONCEPCION MONTELIBANO HOJILLA, oppositors-appellants.E.A. Fernandez and R.B. Antonio for appellants.San Juan, Africa and Benedicto for appellees.PADILLA, J.:          These are appeals from two orders entered by the Court of First Instance of Occidental Negros, acting as land registration court, in Cadastral Case No. 9, LRC (GLRO) Rec. No. 86.G.R. No. L-13389          On 10 April 1957, the Capitol Subdivision, Inc. and Montelibano Subdivisions filed a motion in the above mentioned court and cadastral case alleging that Lot No. 21 of subdivision plan No. Psd-12392, a part of Lot No. 77 of the Silay Cadastre, registered in the names of Alfredo Montelibano and Alejandro M. Montelibano, share and share alike, covered by TCT No. T-5979, was sold to Corazon J. Lacson of Silay, Occidental Negros, payable by installment; that prior to the sale, sometime in August 1947, the vendors mortgaged the said parcel of

154

land together with other properties of the petitioners to the Philippine National Bank, Bacolod Branch, to secure the payment of an obligation, which mortgaged was duly noted at the back of TCT No. T-5979 under entry No. 4999; that on 24 September 1954 the vendee paid in full the agreed price of the parcel of land and on the same date the vendors executed the deed of sale in her favor; that on 29 January 1957 the mortgagee executed a deed of release of real estate mortgage on the parcel of land in question; that on 12 March 1957 Alfredo L. Montelibano and Concepcion Montelibano Hojilla brought an action against Alfredo Montelibano in the Court of First Instance of Occidental Negros civil case No. 4272) and, pursuant to the provisions of section 79, Act No. 496, as amended, and section 24, Rule 7, of the Rule of Court, caused a notice of lis pendens to be annotated in the title to all the realities of the defendant in the province of Occidental of Negros, including that sold to Corazon J. Lacson; and that the vendee was an innocent purchaser. They prayed that the Register of Deeds of the province of Occidental Negros be directed to cancel the notice of lis pendens annotated on the back of TCT No. T-5979, insofar as it affects Lot No. 21, and issue the corresponding transfer certificate of title in favor of Corazon J. Lacson free from the annotation of the notice of lis pendens. On 10 May 1957 the Court, presided over by Hon. Jose F. Fernandez, entered an order dated 27 April 1957 granting the petitioners' motion. On 22 may 1957 the oppositors Alfredo L. Montelibano and Concepcion Montelibano Hojilla filed a motion for reconsideration. On 3 June 1957 the petitioners filed an objection thereto. On 11 November 1957 the Court denied their motion. Hence this appeal interposed by the oppositors.G.R. No. L-13390          On 6 May 1957 the same petitioners filed a motion in the same court and cadastral case alleging that Lot No. 28 of the same subdivision plan, registered also in the names of Alfredo Montelibano and Alejandro M. Montelibano, share and share alike, covered by TCT No. T-5986, was sold to Marcelino Lalantakan of Silay, Occidental Negros, payable by installment; that on 29 of June 1936 the vendee paid in full the agreed price of the parcel of land and on the same date the vendors executed the deed of sale in his favor; that the parcel of land together with other realities of the petitioners was among those mortgaged by the vendors to the Philippines National Bank to secure the payment of a loan of P81,900; that on 17 January 1957 the mortgagee executed a deed of release of real estate mortgage on the parcel of land in question; that on 12 March 1957 Alfredo L. Montelibano and Concepcion Montelibano Hojilla brought an action against Alfredo Montelibano in the Court of First Instance of Occidental Negros (civil case No. 4274), and cause a similar notice of lis pendens mentioned in the first case to be annotated in the title to all the realities of the defendant in the province of Occidental Negros, including that sold to Marcelino Lalantakan; and that the vendee was an innocent purchaser. The petitioners prayed the same relief as that asked in the first case. On 24 May 1957 the same oppositors filed an objection to the motion to cancel the notice of lis pendens. On 30 May 1957 the petitioners filed an answer thereto. On 14 November 1957 the Court, presided over by Hon. Jose S. de la Cruz, entered an order granting the petitioners' motion. Hence this appeal interposed by the oppositors.          In the first case, the deed of sale in favor of Corazon J. Lacson, executed by the vendors on 24 September 1954, was registered in the office of the Register of Deeds on 9 May 1957 (entry No. 48590), after the notice of lis pendens had been noted on back of the title to the property on 12 March 1957. In the second case, the deed of sale in favor of Marcelino Lalantakan executed by the vendors on 29 June 1936 was not registered at all.          The parcels of land in question covered by transfer certificates of title Nos. 5979 and 5986 were registered in the name of Alfredo Montelibano and Alejandro Montelibano and Alejandro M. Montelibano, share and share alike.          In the brief filed jointly in these two cases, counsel for the appellants quoted the prayer of their complaint in civil case No. 4274, as follows:a) Declaring null and void the Project of Partition, Annex "B", and the order approving the same, Annex "C", hereof, and, ordering a new partition among the plaintiffs Concepcion Montelibano and Alfredo L. Montelibano, and the properties left by the deceased spouses Alejandro M. Montelibano, on the basis of ½ each, of the properties left by the deceased spouses Alejandro Montelibano and Gliceria Montelibano, as listed and specified on pages 1 to 3 of the Project of Partition, Annex "B" hereof, minus the share already given to Alejandro M. Montelibano;b) In the alternative, for the plaintiff Concepcion Montelibano, ordering the defendant to transfer to her (Concepcion Montelibano) in full ownership of one-fourth of the urban lots which he received as his share under the Project of Partition, Annex "B" hereof;c) In the alternative, also, ordering the herein defendant to transfer in full ownership one-half of all the properties which he received under the Project of Partition, Annex "B" hereof, and specified on pages 3 to 6 thereof, to the plaintiff Alfredo L. Montelibano;.d) Sentencing the defendant to pay the plaintiffs Concepcion Montelibano and Matias Hojilla damages in the sum of not less than P100,000.00, and the plaintiff Alfredo L. Montelibano damages in the sum of not less than

155

P200,000.00, both with the legal rate of interest from the time of the filing of this complaint until full payment; ande) Sentencing the defendant to pay the plaintiffs as attorney's fees, the sum of P50,000.00 (Pp. 2-3, appellants' brief.)1awphîl.nèt          Although an unrecorded sale of a parcel of land registered under the Torrens System is binding upon the parties, yet "The act of registration shall be the operative act to convey and affect the land . . . ."  1 Such being the law any acquired right in a registered land is effective as between and binding upon the parties and their privies but not as to third parties. The sale made of the two lots by the registered owners to Corazon J. Lacson and Marcelino Lalantakan, respectively, not having been registered, such sales do not affect third parties. The lots continue or remain the property of the registered owners. And when the latter are sued by a party concerning or involving or affecting the lots thus sold by the registered owners and the suing party causes a notice of lis pendens to be noted on the back of the certificates of title to the lots sold, such notice cannot be cancelled upon motion of the vendors or vendees predicated upon the fact that the vendees had acquired the lots prior to the noting of the notice of lis pendens. If judgment is rendered in favor of the plaintiffs in the action brought against the registered owners, the unrecorded right acquired by the vendees in the lots sold to them is subject or subordinate to the right of the plaintiffs in whose favor judgment is rendered. If judgment is rendered against the plaintiffs in the action, the notice of lis pendens noted on the certificate of title to the lots loses its efficacy or is ipso facto cancelled.          The orders appealed from are reversed, with costs against the petitioners and appellees.Paras, C.J., Bengzon, Labrador, Reyes, J.B.L., Barrera, Gutierrez David, Paredes and Dizon, JJ., concur.

B. Attachmenta. Purpose and Grounds

Rule 57, Rules of CourtRULE 57PRELIMINARY ATTACHMENTSECTION 1. Grounds upon which attachment may issue.—At the commencement of the action or at any time before entry of judgment, a plaintiff or any proper party may have the property of the adverse party attached as security for the satisfaction of any judgment that may be recovered in the following cases:(a) In an action for the recovery of a specified amount of money or damages, other than moral and exemplary, on a cause of action arising from law, contract, quasi-contract, delict or quasi-delict against a party who is about to depart from the Philippines with intent to defraud his creditors;(b) In an action for money or property embezzled or fraudulently misapplied or converted to his own use by a public officer, or an officer of a corporation, or an attorney, factor, broker, agent, or clerk, in the course of his employment as such, or by any other person in a fiduciary capacity, or for a willful violation of duty;(c) In an action to recover the possession of property unjustly or fraudulently taken, detained or converted, when the property, or any part thereof, has been concealed, removed, or disposed of to prevent its being found or taken by the applicant or an authorized person;(d) In an action against a party who has been guilty of a fraud in contracting the debt or incurring the obligation upon which the action is brought, or in the performance thereof;(e) In an action against a party who has removed or disposed of his property, or is about to do so, with intent to defraud his creditors; or(f)  In an action against a party who does not reside and is not found in the Philippines, or on whom summons may be served by publication. (1a)SEC. 2. Issuance and contents of order.—An order of attachment may be issued either ex parte or upon motion with notice and hearing by the court in which the action is pending, or by the Court of Appeals or the Supreme Court, and must require the sheriff of the court to attach so much of the property in the Philippines of the party against whom it is issued, not exempt from execution, as may be sufficient to satisfy the applicant’s demand, unless such party makes deposit or gives a bond as hereinafter provided in an amount equal to that fixed in the order, which may be the amount sufficient to satisfy the applicant’s demand or the value of the property to be attached as stated by the applicant, exclusive of costs. Several writs may be issued at the same time to the sheriffs of the courts of different judicial regions. (2a)SEC. 3. Affidavit and bond required.—An order of attachment shall be granted only when it appears by the affidavit of the applicant, or of some other person who personally knows the facts, that a sufficient cause of action exists, that the case is one of those mentioned in section 1 hereof that there is no other sufficient security for the claim sought to be enforced by the action, and that the amount due to the applicant, or the value of the property the possession of which he is entitled to recover, is as much as

156

the sum for which the order is granted above all legal counterclaims. The affidavit, and the bond required by the next succeeding section, must be duly filed with the court before the order issues. (3a)SEC. 4. Condition of applicant’s bond—The party applying for the order must thereafter give a bond executed to the adverse party in the amount fixed by the court in its order granting the issuance of the writ, conditioned that the latter will pay all the costs which may be adjudged to the adverse party and all damages which he may sustain by reason of the attachment, if the court shall finally adjudge that the applicant was not entitled thereto. (4a)SEC. 5. Manner of attaching property.—The sheriff enforcing the writ shall without delay and with all reasonable diligence attach, to await judgment and execution in the action, only so much of the property in the Philippines of the party against whom the writ is issued, not exempt from execution, as may be sufficient to satisfy the applicant’s demand, unless the former makes a deposit with the court from which the writ is issued, or gives a counter-bond executed to the applicant, in an amount equal to the bond fixed by the court in the order of attachment or to the value of the property to be attached, exclusive of costs. No levy on attachment pursuant to the writ issued under section 2 hereof shall be enforced unless it is preceded, or contemporaneously accompanied, by service of summons, together with a copy of the complaint, the application for attachment, the applicant’s affidavit and bond, and the order and writ of attachment, on the defendant within the Philippines.The requirement of prior or contemporaneous service of summons shall not apply where the summons could not be served personally or by substituted service despite diligent efforts, or the defendant is a resident of the Philippines temporarily absent therefrom, or the defendant is a non-resident of the Philippines, or the action is one in rem or quasi in rem. (5a)SEC. 6. Sheriff’s return—After enforcing the writ, the sheriff must likewise without delay make a return thereon to the court from which the writ issued, with a full statement of his proceedings under the writ and a complete inventory of the property attached, together with any counter-bond given by the party against whom attachment is issued, and serve copies thereof on the applicant. (6a)SEC. 7. Attachment of real and personal property; recording thereof—Real and personal property shall be attached by the sheriff executing the writ in the following manner:(a)            Real property, or growing crops thereon, or any interest therein, standing upon the record of the registry of deeds of the province in the name of the party against whom attachment is issued, or not appearing at all upon such records, or belonging to the party against whom attachment is issued and held by any other person, or standing on the records of the registry of deeds in the name of any other person, by filing with the registry of deeds a copy of the order, together with a description of the property attached, and a notice that it is attached, or that such real property and any interest therein held by or standing in the name of such other person are attached, and by leaving a copy of such order, description, and notice with the occupant of the property, if any, or with such other person or his agent if found within the province.  Where the property has been brought under the operation of either the Land Registration Act or the Property Registration Decree, the notice shall contain a reference to the number of the certificate of title, the volume and page in the registration book where the certificate is registered, and the registered owner or owners thereof.The registrar of deeds must index attachments filed under this section in the names of the applicant, the adverse party, or the person by whom the property is held or in whose name it stands in the records. If the attachment is not claimed on the entire area of the land covered by the certificate of title, a description sufficiently accurate for the identification of the land or interest to be affected shall be included in the registration of such attachment;(b)            Personal property capable of manual delivery, by taking and safely keeping it in his custody, after issuing the corresponding receipt therefor;(c)            Stocks or shares, or an interest in stocks or shares, of any corporation or company, by leaving with the president or managing agent thereof, a copy of the writ, and a notice stating that the stock or interest of the party against whom the attachment is issued is attached in pursuance of such writ;(d)            Debts and credits, including bank deposits, financial interest, royalties, commissions and other personal property not capable of manual delivery, by leaving with the person owing such debts, or having in his possession or under his control, such credits or other personal property, or with his agent, a copy of the writ, and notice that the debts owing by him to the party against whom attachment is issued, and the credits and other personal property in his possession, or under his control, belonging to said party, are attached in pursuance of such writ;(e)            The interest of the party against whom attachment is issued in property belonging to the estate of the decedent, whether as heir, legatee, or devisee, by serving the executor or administrator or other personal representative of the decedent with a copy of the writ and notice that said interest is

157

attached. A copy of said writ of attachment and of said notice shall also be filed in the office of the clerk of the court in which said estate is being settled and served upon the heir, legatee or devisee concerned.If the property sought to be attached is in custodia legis, a copy of the writ of attachment shall be filed with the proper court or quasi-judicial agency, and notice of the attachment served upon the custodian of such property. (7a)SEC. 8. Effect of attachment of debts, credits and all other similar personal property.—All persons having in their possession or under their control any credits or other similar personal property belonging to the party against whom attachment is issued, or owing any debts to him, at the time of service upon them of the copy of the writ of attachment and notice as provided in the last preceding section, shall be liable to the applicant for the amount of such credits, debts or other similar personal property, until the attachment is discharged, or any judgment recovered by him is satisfied, unless such property is delivered or transferred, or such debts are paid, to the clerk, sheriff, or other proper officer of the court issuing the attachment. (8a)SEC. 9. Effect of attachment of interest in property belonging to the estate of a decedent—The attachment of the interest of an heir, legatee, or devisee in the property belonging to the estate of a decedent shall not impair the powers of the executor, administrator, or other personal representative of the decedent over such property for the purpose of administration.  Such personal representative, however, shall report the attachment to the court when any petition for distribution is filed, and in the order made upon such petition, distribution may be awarded to such heir, legatee, or devisee, but the property attached shall be ordered delivered to the sheriff making the levy, subject to the claim of such heir, legatee, or devisee, or any person claiming under him. (9a)SEC. 10. Examination of party whose property is attached and persons indebted to him or controlling his property; delivery of property to sheriff.—Any person owing debts to the party whose property is attached or having in his possession or under his control any credit or other personal property belonging to such party, may be required to attend before the court in which the action is pending, or before a commissioner appointed by the court, and be examined on oath respecting the same.  The party whose property is attached may also be required to attend for the purpose of giving information respecting his property, and may be examined on oath. The court may, after such examination, order personal property capable of manual delivery belonging to him, in the possession of the person so required to attend before the court, to be delivered to the clerk of the court or sheriff on such terms as may be just, having reference to any lien thereon or claim against the same, to await the judgment in the action. (10a)SEC. 11. When attached property may be sold after levy on attachment and before entry of judgment—Whenever it shall be made to appear to the court in which the action is pending, upon hearing with notice to both parties, that the property attached is perishable, or that the interests of all the parties to the action will be subserved by the sale thereof, the court may order such property to be sold at public auction in such manner as it may direct, and the proceeds of such sale to be deposited in court to abide the judgment in the action. (11a)SEC. 12. Discharge of attachment upon giving counter-bond.—After a writ of attachment has been enforced, the party whose property has been attached, or the person appearing on his behalf, may move for the discharge of the attachment wholly or in part on the security given.  The court shall, after due notice and hearing, order the discharge of the attachment if the movant makes a cash deposit, or files a counter-bond executed to the attaching party with the clerk of the court where the application is made, in an amount equal to that fixed by the court in the order of attachment, exclusive of costs.  But if the attachment is sought to be discharged with respect to a particular property, the counter-bond shall be equal to the value of that property as determined by the court. In either case, the cash deposit or the counter-bond shall secure the payment of any judgment that the attaching party may recover in the action.  A notice of the deposit shall forthwith be served on the attaching party.  Upon the discharge of an attachment in accordance with the provisions of this section, the property attached, or the proceeds of any sale thereof, shall be delivered to the party making the deposit or giving the counter-bond, or to the person appearing on his behalf, the deposit or counter-bond aforesaid standing in place of the property so released. Should such counter-bond for any reason be found to be or become insufficient, and the party furnishing the same fail to file an additional counter-bond, the attaching party may apply for a new order of attachment. (12a)SEC. 13. Discharge of attachment on other grounds.—The party whose property has been ordered attached may file a motion with the court in which the action is pending, before or after levy or even after the release of the attached property, for an order to set aside or discharge the attachment on the ground that the same was improperly or irregularly issued or enforced, or that the bond is insufficient. If the attachment is excessive, the discharge shall be limited to the excess.  If the motion be made on

158

affidavits on the part of the movant but not otherwise, the attaching party may oppose the motion by counter-affidavits or other evidence in addition to that on which the attachment was made.  After due notice and hearing, the court shall order the setting aside or the corresponding discharge of the attachment if it appears that it was improperly or irregularly issued or enforced, or that the bond is insufficient, or that the attachment is excessive, and the defect is not cured forthwith. (13a)SEC. 14. Proceedings where property claimed by third person.—If the property attached is claimed by any person other than the party against whom attachment had been issued or his agent, and such person makes an affidavit of his title thereto, or right to the possession thereof, stating the grounds of such right or title, and serves such affidavit upon the sheriff while the latter has possession of the attached property, and a copy thereof upon the attaching party, the sheriff shall not be bound to keep the property under attachment, unless the attaching party or his agent, on demand of the sheriff, shall file a bond approved by the court to indemnify the third-party claimant in a sum not less than the value of the property levied upon.  In case of disagreement as to such value, the same shall be decided by the court issuing the writ of attachment.  No claim for damages for the taking or keeping of the property may be enforced against the bond unless the action therefor is filed within one hundred twenty (120) days from the date of the filing of the bond.The sheriff shall not be liable for damages for the taking or keeping of such property, to any such third-party claimant, if such bond shall be filed.  Nothing herein contained shall prevent such claimant or any third person from vindicating his claim to the property, or prevent the attaching party from claiming damages against a third-party claimant who filed a frivolous or plainly spurious claim, in the same or a separate action.When the writ of attachment is issued in favor of the Republic of the Philippines, or any officer duly representing it, the filing of such bond shall not be required, and in case the sheriff is sued for damages as a result of the attachment, he shall be represented by the Solicitor General, and if held liable therefor, the actual damages adjudged by the court shall be paid by the National Treasurer out of the funds to be appropriated for the purpose. (14a)SEC. 15. Satisfaction of judgment out of property attached; return of sheriff —If judgment be recovered by the attaching party and execution issue thereon, the sheriff may cause the judgment to be satisfied out of the property attached, if it be sufficient for that purpose in the following manner:(a)            By paying to the judgment obligee the proceeds of all sales of perishable or other property sold in pursuance of the order of the court, or so much as shall be necessary to satisfy the judgment;(b)            If any balance remains due, by selling so much of the property, real or personal, as may be necessary to satisfy the balance, if enough for that purpose remain in the sheriff’s hands, or in those of the clerk of the court;(c)                        By collecting from all persons having in their possession credits belonging to the judgment obligor, or owing debts to the latter at the time of the attachment of such credits or debts, the amount of such credits and debts as determined by the court in the action, and stated in the judgment, and paying the proceeds of such collection over to the judgment obligee.The sheriff shall forthwith make a return in writing to the court of his proceedings under this section and furnish the parties with copies thereof. (15a)SEC. 16. Balance due collected upon an execution; excess delivered to judgment obligor.—If after realizing upon all the property attached, including the proceeds of any debts or credits collected, and applying the proceeds to the satisfaction of the judgment, less the expenses of proceedings upon the judgment, any balance shall remain due, the sheriff must proceed to collect such balance as upon ordinary execution. Whenever the judgment shall have been paid, the sheriff, upon reasonable demand, must return to the judgment obligor the attached property remaining in his hands, and any proceeds of the sale of the property attached not applied to the judgment. (16a)SEC. 17. Recovery upon the counter-bond.—When the judgment has become executory, the surety or sureties on any counter-bond given pursuant to the provisions of this Rule to secure the payment of the judgment shall become charged on such counter-bond and bound to pay the judgment obligee upon demand the amount due under the judgment, which amount may be recovered from such surety or sureties after notice and summary hearing in the same action. (17a)SEC. 18. Disposition of money deposited.—Where the party against whom attachment had been issued has deposited money instead of giving counter-bond, it shall be applied under the direction of the court to the satisfaction of any judgment rendered in favor of the attaching party, and after satisfying the judgment the balance shall be refunded to the depositor or his assignee. If the judgment is in favor of the party against whom attachment was issued, the whole sum deposited must be refunded to him or his assignee. (18a)

159

SEC. 19. Disposition of attached property where judgment is for party against whom attachment was issued.—If judgment be rendered against the attaching party, all the proceeds of sales and money collected or received by the sheriff, under the order of attachment, and all property attached remaining in any such officer’s hands, shall be delivered to the party against whom attachment was issued, and the order of attachment discharged. (19a)SEC. 20. Claim for damages on account of improper, irregular or excessive attachment.—An application for damages on account of improper, irregular or excessive attachment must be filed before the trial or before appeal is perfected or before the judgment becomes executory, with due notice to the attaching party and his surety or sureties, setting forth the facts showing his right to damages and the amount thereof.  Such damages may be awarded only after proper hearing and shall be included in the judgment on the main case.If the judgment of the appellate court be favorable to the party against whom the attachment was issued, he must claim damages sustained during the pendency of the appeal by filing an application in the appellate court, with notice to the party in whose favor the attachment was issued or his surety or sureties, before the judgment of the appellate court becomes executory.  The appellate court may allow the application to be heard and decided by the trial court.Nothing herein contained shall prevent the party against whom the attachment was issued from recovering in the same action the damages awarded to him from any property of the attaching party not exempt from execution should the bond or deposit given by the latter be insufficient or fail to fully satisfy the award. (20a)

Sec 71, PD 1529Section 71. Surrender of certificate in involuntary dealings. If an attachment or other lien in the nature of involuntary dealing in registered land is registered, and the duplicate certificate is not presented at the time of registration, the Register of Deeds shall, within thirty-six hours thereafter, send notice by mail to the registered owner, stating that such paper has been registered, and requesting him to send or produce his duplicate certificate so that a memorandum of the attachment or other lien may be made thereon. If the owner neglects or refuses to comply within a reasonable time, the Register of Deeds shall report the matter to the court, and it shall, after notice, enter an order to the owner, to produce his certificate at a time and place named therein, and may enforce the order by suitable process.

Mabanag v Gallimore, 81 Phil 254G.R. No. L-825             July 20, 1948ROMAN MABANAG, plaintiff-appellant, vs.JOSEPH M. GALLEMORE, defendant-appellee.Santiago Catane for appellant.No appearance for appellee.TUASON, J.:This case, here on appeal from an order dismissal by the Court of First Instance of Occidental Misamis, raises the question of the court's jurisdiction. More specifically, the question is whether the action is in personam or one in rem. The trial court opined that it is the first and that it "has no authority nor jurisdiction to render judgment against the herein defendant, Joseph M. Gallemore for being a non-resident.The purpose of the action is to recover P735.18, an amount said to have been paid by the plaintiff to the defendant for two parcels of land whose sale was afterward annulled. The defendant is said to be residing in Los Angeles, California, U. S. A. He has no property in the Philippine except an alleged debt owing him by a resident of the municipality of Occidental Misamis. This debt, upon petition of the plaintiff, after the filing of the complaint and before the suit was dismissed, was attached to the extent of plaintiff's claim for the payment of which the action was brought. But the attachment was dissolved in the same order dismissing the case.It was Atty. Valeriano S. Kaamino who has amicus curiæ filed the motion to dismiss and to set aside the attachment. There is no appearance before this Court to oppose the appeal.Section 2, Rule 5, of the Rules of Court provides:If any of the defendants does not reside and is not found in the Philippines, and the action effects the personal status of the plaintiff, or any property of the defendant located in the Philippines, the action may be commenced and tried in the province where the plaintiff resides or the property, or any portion

160

thereof, is situated or found.The Philippine leading cases in which this Rule, or its counterpart in the former Code of Civil Procedure, section 377 and 395, were cited and applied, are Banco Español-Filipino vs. Palanca, 37 Phil. 921, and Slade Perkins vs. Dizon, 40 Off. Gaz., [3d Suppl.], No. 7, p. 216. The gist of this Court's ruling in these cases, in so far as it is relevant to the present issues, is given in I Moran's Comments on the Rules of Court, 2d Ed., 105:As a general rule, when the defendant is not residing and is not found in the Philippines, the Philippine courts cannot try any case against him because of the impossibility of acquiring jurisdiction over his person, unless he voluntarily appears in court. But, when the action affects the personal status of the plaintiff residing in the Philippines, or is intended to seize or dispose of any property, real or personal, of the defendant, located in the Philippines, it may be validly tried by the Philippine courts, for then, they have jurisdiction over the res, i.e., the personal status of the plaintiff or the property of the defendant, and their jurisdiction over the person of the non-resident defendant is not essential. Venue in such cases may be laid in the province where the plaintiff whose personal status is in question resides, or where the property of the defendant or a part thereof involved in the litigation is located.Literally this Court said:Jurisdiction over the property which is the subject of litigation may result either from a seizure of the property under legal process, whereby it is brought into the actual custody of the law, or it may result from the institution of legal proceedings wherein, under special provisions of law, the power of the court over the property is recognized and made effective. In the latter case the property, though at all times within the potential power of the court, may never be taken into actual custody at all. An illustration of the jurisdiction acquired by actual seizure is found in attachment proceedings, where the property is seized at the beginning of the action, or some subsequent stage of its progress, and held to abide the final event of the litigation. An illustration of what we term potential jurisdiction over the res, is found in the proceeding to register the title of land under our system for the registration of land. Here the court, without taking actual physical control over the property assumes, at the instance of some person claiming to be owner, to exercise a jurisdiction in rem over the property and to adjudicate the title in favor of the petitioner against all the world. (Banco Español-Filipino vs. Palanca, supra, 927-928.).In an ordinary attachment proceeding, if the defendant is not personally served, the preliminary seizure is to be considered necessary in order to confer jurisdiction upon the court. In this case the lien on the property is acquired by the seizure; and the purpose of the proceeding is to subject the property to that lien. If a lien already exists, whether created by mortgage, contract, or statute, the preliminary seizure is not necessary; and the court proceeds to enforce such lien in the manner provided by law precisely as though the property had been seized upon attachment. (Roller vs. Holly, 176 U.S., 398, 405; 44 Law. ed., 520.) It results that the mere circumstance that in an attachment the property may be seized at the inception of the proceedings, while in the foreclosure suit it is not taken into legal custody until the time comes for the sale, does not materially affect the fundamental principle involved in both cases, which is that the court is here exercising a jurisdiction over the property in a proceeding directed essentially in rem. (Id., 929-930.).When, however, the action relates to property located in the Philippines, the Philippine courts may validly try the case, upon the principles that a "State, through its tribunals, may subject property situated within its limit owned by non-residents to the payment of the demand of its own citizens against them; and the exercise of this jurisdiction in no respect infringes upon the sovereignty of the State were the owners are domiciled. Every State owes protection to its own citizens; and, when non-residents deal with them, it is a legitimate and just exercise of authority to hold any appropriate any property owned by such non-residents to satisfy the claims of its citizens. It is in virtue of the State's jurisdiction over the property of the non-resident situated within its limits that its tribunals can inquire into the non-resident's obligations to its own citizens, and the inquiry can then be carried only to the extent necessary to control disposition of the property. If the non-resident has no property in the State, there is nothing upon which the tribunals can adjudicate. (Slade Perkins vs. Dizon, 40 Off. Gaz. [3d Supplement], No. 7, p. 216.).A fuller statement of the principle whereunder attachment or garnishment of property of a non-resident defendant confers jurisdiction on the court in an otherwise personal action, appears in two well known and authoritative works:The main action in an attachment or garnishment suit is in rem until jurisdiction of the defendant is secured. Thereafter, it is in personam and also in rem, unless jurisdiction of the res is lost as by dissolution of the attachment. If jurisdiction of the defendant is acquired but jurisdiction of the res is lost, it is then purely in personam. . . a proceeding against property without jurisdiction of the person of the defendant is in substance a proceeding in rem; and where there is jurisdiction of the defendant, but the

161

proceedings against the property continues, that proceedings is none the less necessarily in rem, although in form there is but a single proceeding. (4 Am. Jur., 556-557.)As the remedy is administered in some states, the theory of an attachment, whether it is by process against or to subject the property or effects of a resident or non-resident of the state, is that it partakes essentially of the nature and character of the proceeding in personam and not of a proceeding in rem. And if the defendant appears the action proceeds in accordance with the practice governing proceedings in personam. But were the defendant fails to appear in the action, the proceeding is to be considered as one in the nature of a proceeding in rem. And where the court acts directly on the property, the title thereof being charged by the court without the intervention of the party, the proceeding unquestionably is one in rem in the fullest meaning of the term.In attachment proceedings against a non-resident defendant where personal service on him is lacking, it is elementary that the court must obtain jurisdiction of the property of the defendant. If no steps have been taken to acquire jurisdiction of the defendant's person, and he has not appeared and answered or otherwise submitted himself to the jurisdiction of the court, the court is without jurisdiction to render judgment until there has been a lawful seizure of property owned by him within the jurisdiction of the court. (2 R. C. L., 800-804.).Tested by the foregoing decisions and authorities, the Court has acquired jurisdiction of the case at bar by virtue of the attachment of the defendant's credit. Those authorities and decisions, so plain and comprehensive as to make any discussion unnecessary, are in agreement that though no jurisdiction is obtained over the debtor's person, the case may proceed to judgment if there is property in the custody of the court that can be applied to its satisfaction.It is our judgment that the court below erred in dismissing the case and dissolving the attachment; and it is ordered that, upon petition of the plaintiff, it issue a new writ of attachment and then proceed to trial. The costs of this appeal will be charged to defendant and appellee.

Gotauco v Reg of Deeds, 59 Phil 756G.R. No. L-39596             March 23, 1934"CONSULTA" No. 1013 OF THE REGISTER OF DEEDS OF TAYABAS. GOTAUCO & CO., applicant-appellant, vs.THE REGISTER OF DEEDS OF TAYABAS, oppositor-appellee.Godofredo Reyes for appellant.Office of the Solicitor-General Hilado for appellee.BUTTE, J.:This is an appeal from a judgment of the Fourth Branch of the Court of First Instance of Manila in a consultasubmitted by the register of deeds of Tayabas.Our decision upon this appeal has been facilitated because both the appellant and the appellee, the latter being represented by the Solicitor-General, agreed that the judgment should be reversed.On August 12, 1932, when Exhibits A and B were presented to the register, by which a levy of execution against the judgment debtor, Rafael Vilar was made on fifteen contracts of land described in Exhibit B and registered in the name of Florentino Vilar, the register properly denied the inscription of said levy of execution because the title to the lands was in the name of Florentino Vilar and no evidence was submitted that Rafael Vilar had any present or possible future interest in the land. On September 17, 1932, there was presented to him a copy of a petition filed in the Court of First Instance of the province, entitled, "Intestado del Finado Florentino Vilar", from which he could properly infer that Florentino Vilar was dead and that the judgment debtor Rafael Vilar is one of the heirs of the deceased Florentino Vilar. Although the value of the participation of Rafael Vilar in the estate of Florentino Vilar was indeterminable before the final liquidation of the estate, nevertheless, the right of participation in the estate and the lands thereof may be attached and sold. The real test was laid down by this court in the case ofReyes vs. Grey (21 Phil., 73, 76), namely: Does the judgment debtor hold such a beneficial interest in the property that he can sell or otherwise dispose of it for value? Nothing appears in this record to indicate that Rafael Vilar being sui juris could not dispose of his interest or share as heir in the estate of Florentina Vilar. Having this right, he could by a conveyance defeat pro tanto the provisions of section 450 of the Code of Civil Procedure and thus deprive the judgment creditor of the benefit of a lawful execution. (See also Consulta No. 441 de los Abogados de Smith, Bell & Co., 48 Phil., 656, 664, 665.)On October 12, 1932, with the knowledge which he them had, the register should have accepted and inscribed Exhibit A, B and D.

162

The judgment in this consulta is reversed without special pronouncement as to costs.1ªv

C. Adverse ClaimSec 70, PD 1529Section 70. Adverse claim. Whoever claims any part or interest in registered land adverse to the registered owner, arising subsequent to the date of the original registration, may, if no other provision is made in this Decree for registering the same, make a statement in writing setting forth fully his alleged right or interest, and how or under whom acquired, a reference to the number of the certificate of title of the registered owner, the name of the registered owner, and a description of the land in which the right or interest is claimed.The statement shall be signed and sworn to, and shall state the adverse claimant's residence, and a place at which all notices may be served upon him. This statement shall be entitled to registration as an adverse claim on the certificate of title. The adverse claim shall be effective for a period of thirty days from the date of registration. After the lapse of said period, the annotation of adverse claim may be canceled upon filing of a verified petition therefor by the party in interest: Provided, however, that after cancellation, no second adverse claim based on the same ground shall be registered by the same claimant.Before the lapse of thirty days aforesaid, any party in interest may file a petition in the Court of First Instance where the land is situated for the cancellation of the adverse claim, and the court shall grant a speedy hearing upon the question of the validity of such adverse claim, and shall render judgment as may be just and equitable. If the adverse claim is adjudged to be invalid, the registration thereof shall be ordered canceled. If, in any case, the court, after notice and hearing, shall find that the adverse claim thus registered was frivolous, it may fine the claimant in an amount not less than one thousand pesos nor more than five thousand pesos, in its discretion. Before the lapse of thirty days, the claimant may withdraw his adverse claim by filing with the Register of Deeds a sworn petition to that effect.

Sajonas v CA, 258 SCRA 71G.R. No. 102377 July 5, 1996ALFREDO SAJONAS and CONCHITA SAJONAS, petitioners, vs.THE COURT OF APPEALS, DOMINGO A. PILARES, SHERIFF ROBERTO GARCIA OF QUEZON CITY and REGISTER OF DEEDS OF MARIKINA, respondents. TORRES, JR., J.:pA word or group of words conveys intentions. When used truncatedly, its meaning disappears and breeds conflict. Thus, it is written -- "By thy words shalt thou be justified, and by thy words shalt thou be condemned." (Matthew, 12:37)Construing the new words of a statute separately is the raison d'etre of this appeal.Essentially, the case before us is for cancellation of the inscription of a Notice of Levy on Execution from a certificate of Title covering a parcel of real property. The inscription was caused to be made by the private respondent on Transfer Certificate of Title No. N-79073 of the Register of Deeds of Marikina, issued in the name of the spouses Ernesto B. Uychocde and Lucita Jarin, and was later carried over to and annotated on Transfer Certificate of Title No. N-109417 of the same registry, issued in the name of the spouses Alfredo Sajonas and Conchita H. Sajonas, who purchased the parcel of land from the Uychocdes, and are now the petitioners in this case.The facts are not disputed, and are hereby reproduced as follows:On September 22, 1983, the spouses Ernesto Uychocde and Lucita Jarin agreed to sell a parcel of residential land located in Antipolo, Rizal to the spouses Alfredo Sajonas and Conchita R. Sajonas on installment basis as evidenced by a Contract to Sell dated September 22, 1983. The property was registered in the names of the Uychocde spouses under TCT No. N-79073 of the Register of Deeds of Marikina, Rizal. On August 27, 1984, the Sajonas couple caused the annotation of an adverse claim based on the said Contract to Sell on the title of the subject property, which was inscribed as Entry No. 116017. Upon full payment of the purchase price, the Uychocdes executed a Deed of Sale involving the property in question in favor of the Sajonas couple on September 4, 1984. The deed of absolute sale was registered almost a year after, or on August 28, 1985.Meanwhile, it appears that Domingo Pilares (defendant-appellant) filed Civil Case No. Q-28850 for collection of sum of money against Ernesto Uychocde. On June 25, 1980, a Compromise Agreement was entered into by the parties in the said case under which Ernesto Uychocde acknowledged his monetary obligation to Domingo

163

Pilares amounting to P27,800 and agreed to pay the same in. two years from June 25, 1980. When Uychocde failed to comply with his undertaking in the compromise agreement, defendant-appellant Pilares move d for the issuance of a writ of execution to enforce the decision based on the compromise agreement, which the court granted in its order dated August 3, 1982. Accordingly, a writ of execution was issued on August 12, 1982 by the CFI of Quezon City where the civil case was pending. Pursuant to the order of execution dated August 3, 1982, a notice of levy on execution was issued on February 12, 1985, On February 12, 1985, defendant sheriff Roberto Garcia of Quezon City presented said notice of levy on execution before the Register of Deeds of Marikina and the same was annotated at the back of TCT No. 79073 as Entry No. 123283.When the deed of absolute sale dated September 4, 1984 was registered on August 28, 1985, TCT No. N-79073 was cancelled and in lieu thereof, TCT No. N-109417 was issued in the name of the Sajonas couple. The notice of levy on execution annotated by defendant sheriff was carried over to the new title. On October 21, 1985, the Sajonas couple filed a Third Party Claim with the sheriff of Quezon city, hence the auction sale of the subject property did not push through as scheduled.On January 10, 1986, the Sajonas spouses demanded the cancellation of the notice of levy on execution upon defendant-appellant Pilares, through a letter to their lawyer, Atty. Melchor Flores. Despite said demand, defendant-appellant Pilares refused to cause the cancellation of said annotation. In view thereof, plaintiffs-appellees filed this complaint dated January 11, 1986 on February 5, 1986. 1

The Sajonases filed their complaint 2 in the Regional Trial Court of Rizal, Branch 71, against Domingo Pilares, the judgment creditor of the Uychocdes. The relevant portion of the complaint alleges:7. That at the time the notice of levy was annotated by the defendant, the Uychocde spouses, debtors of the defendant, have already transferred, conveyed and assigned all their title, rights and interests to the plaintiffs and there was no more title, rights or interests therein which the defendant could levy upon;8. That the annotation of the levy on execution which was carried over to the title of said plaintiffs is illegal and invalid and was made in utter bad faith, in view of the existence of the Adverse Claim annotated by the plaintiffs on the corresponding title of the Uychocde spouses;9. That a demand was made by the plaintiffs upon the defendant Domingo A. Pilares, to cause the cancellation of the said notice of levy but the latter, without justifiable reason and with the sole purpose of harassing and embarrassing the plaintiffs ignored and refused plaintiffs' demand;10. That in view of the neglect, failure and refusal of the defendant to cause the cancellation of the notice of levy on execution, the plaintiffs were compelled to litigate and engage the services of the undersigned counsel, to protect their rights and interests, for which they agreed to pay attorney's fees in the amount of P10,000 and appearance fees of P500 per day in court. 3

Pilares filed his answer with compulsory counterclaim 4 on March 8, 1986, raising special and affirmative defenses, the relevant portions of which are as follows:10. Plaintiff has no cause of action against herein defendants;11. Assuming without however admitting that they filed an adverse claim against the property covered by TCT No. 79073 registered under the name of spouses Ernesto Uychocde on August 27, 1984, the same ceases to have any legal force and effect (30) days thereafter pursuant to Section 70 of P.D. 1529;12 The Notice of Levy annotated at the back of TCT No. 79073 being effected pursuant to the Writ of Execution dated August 31, 1982, duly issued by the CFI (now RTC) of Quezon proceeding from a decision rendered in Civil Case No. 28859 in favor of herein defendant against Ernesto Uychocde, is undoubtedly proper and appropriate because the property is registered in the name of the judgment debtor and is not among those exempted from execution;13. Assuming without admitting that the property subject matter of this case was in fact sold by the registered owner in favor of the herein plaintiffs, the sale is the null and void (sic) and without any legal force and effect because it was done in fraud of a judgment creditor, the defendant Pilares. 5

Pilares likewise sought moral and exemplary damages in a counterclaim against the Sajonas spouses. The parties appeared at pre-trial proceedings on January 21, 1987, 6 after which, trial on the merits ensued.The trial court rendered its decision on February 15, 1989. 7 It found in favor of the Sajonas couple, and ordered the cancellation of the Notice of Levy from Transfer Certificate of Title No. N-109417.The court a quo stated, thus:After going over the evidence presented by the parties, the court finds that although the title of the subject matter of the Notice of Levy on Execution was still in the name of the Spouses Uychocde when the same was annotated on the said title, an earlier Affidavit of Adverse of claim was annotated on the same title by the plaintiffs who earlier bought said property from the Uychocdes.It is a well settled rule in this jurisdiction (Guidote vs. Maravilla, 48 Phil. 442) that actual notice of an adverse claim is equivalent to registration and the subsequent registration of the Notice of Levy could not have any legal effect in any respect on account of prior inscription of the adverse claim annotated on the title of the Uychocdes.

164

xxx xxx xxxOn the issue of whether or not plaintiffs are buyers in good faith of the property of the spouses Uychocde even notwithstanding the claim of the defendant that said sale executed by the spouses was made in fraud of creditors, the Court finds that the evidence in this instance is bare of any indication that said plaintiffs as purchasers had notice beforehand of the claim of the defendant over said property or that the same is involved in a litigation between said spouses and the defendant. Good faith is the opposite of fraud and bad faith, and the existence of any bad faith must be established by competent proof. 8 (Cai vs. Henson, 51 Phil 606)xxx xxx xxxIn view of the foregoing, the Court renders judgment in favor of the plaintiffs and against the defendant Pilares, as follows:1. Ordering the cancellation of the Notice of Levy on Execution annotated on Transfer Certificate of Title No. N-109417.2. Ordering said defendant to pay the amount of P5,000 as attorney's fees.3. Dismissing the Counterclaim interposed by said defendant.Said defendant is likewise ordered to pay the costs.Dissatisfied, Pilares appealed to the Court of Appeals", assigning errors on the part of the lower court. The appellate court reversed the lower court's decision, and upheld the annotation of the levy on execution on the certificate of title, thus:WHEREFORE, the decision of the lower court dated February 15, 1989 is reversed and set aside and this complaint is dismissed.Costs against the plaintiffs-appellees. 10

The Sajonas couple are now before us, on a Petition for Review on Certiorari, 11 praying inter alia to set aside the Court of Appeals' decision, and to reinstate that of the Regional Trial CourtPrivate respondent filed his Comment 12 on March 5, 1992, after which, the parties were ordered to file their respective Memoranda. Private respondent complied thereto on April 27, 1994 13, while petitioners were able to submit their Memorandum on September 29, 1992. 14

Petitioner assigns the following as errors of the appellate court, to wit:ITHE LOWER COURT ERRED IN HOLDING THAT THE RULE ON THE 30-DAY PERIOD FOR ADVERSE CLAIM UNDER SECTION 70 OF P.D. NO. 1529 IS ABSOLUTE INASMUCH AS IT FAILED TO READ OR CONSTRUE THE PROVISION IN ITS ENTIRETY AND TO RECONCILE THE APPARENT INCONSISTENCY WITHIN THE PROVISION IN ORDER TO GIVE EFFECT TO IT AS A WHOLE.IITHE LOWER COURT ERRED IN INTERPRETING SECTION 70 OF P.D. NO. 1529 IN SUCH WISE ON THE GROUND THAT IT VIOLATES PETITIONERS' SUBSTANTIAL RIGHT TO DUE PROCESS.Primarily, we are being asked to ascertain who among the parties in suit has a better right over the property in question. The petitioners derive their claim from the right of ownership arising from a perfected contract of absolute sale between them and the registered owners of the property, such right being attested to by the notice of adverse claim 15 annotated on TCT No. N-79073 as early as August 27, 1984. Private respondent on the other hand, claims the right to levy on the property, and have it sold on execution to satisfy his judgment credit, arising from Civil Case No. Q-28850 16 against the Uychocdes, from whose title, petitioners derived their own.Concededly, annotation of an adverse claim is a measure designed to protect the interest of a person over a piece of real property where the registration of such interest or right not otherwise provided for by the Land Registration Act or Act 496 (now P.D. 1529 or the Property Registration Decree), and serves a warning to third parties dealing with said property that someone is claiming an interest on the same or a better right than that of the registered owner thereof. Such notice is registered by filing a sworn statement with the Register of Deeds of the province where the property is located, setting forth the basis of the claimed right together with other dates pertinent thereto. 17The registration of an adverse claim is expressly recognized under Section 70 of P.D. No. 1529. *Noting the changes made in the terminology of the provisions of the law, private respondent interpreted this to mean that a Notice of Adverse Claim remains effective only for a period of 30 days from its annotation, and does not automatically lose its force afterwards. Private respondent further maintains that the notice of adverse claim was annotated on August 27, 1984, hence, it will be effective only up to September 26, 1984, after which it will no longer have any binding force and effect pursuant to Section 70 of P.D. No. 1529. Thus, the sale in favor of the petitioners by the Uychocdes was made in order to defraud their creditor (Pilares), as the same was executed subsequent to their having defaulted in the payment of their obligation based on a compromiseagreement. 18

The respondent appellate court upheld private respondents' theory when it ruled:

165

The above staled conclusion of the lower court is based on the premise that the adverse claim filed by plaintiffs-appellees is still effective despite the lapse of 30 days from the date of registration. However, under the provisions of Section 70 of P.D. 1529, an adverse claim shall be effective only for a period of 30 days from the date of its registration. The provision of this Decree is clear and specific.xxx xxx xxxIt should be noted that the adverse claim provision in Section 110 of the Land Registration Act (Act 496) does not provide for a period of effectivity of the annotation of an adverse claim. P.D. No. 1529, however, now specifically provides for only 30 days. If the intention of the law was for the adverse claim to remain effective until cancelled by petition of the interested party, then the aforecited provision in P.D. No. 1529 stating the period of effectivity would not have been inserted in the law.Since the adverse claim was annotated On August 27, 1984, it was effective only until September 26, 1984. Hence, when the defendant sheriff annotated the notice of levy on execution on February 12, 1985, said adverse claim was already ineffective. It cannot be said that actual or prior knowledge of the existence of the adverse claim on the Uychocdes' title is equivalent to registration inasmuch as the adverse claim was already ineffective when the notice of levy on execution was annotated. Thus, the act of defendant sheriff in annotating the notice of levy on execution was proper and justified.The appellate court relied on the rule of statutory construction that Section 70 is specific and unambiguous and hence, needs no interpretation nor construction. 19 Perforce, the appellate court stated, the provision was clear enough to warrant immediate enforcement, and no interpretation was needed to give it force and effect. A fortiori, an adverse claim shall be effective only for a period of thirty (30) days from the date of its registration, after which it shall be without force and effect. Continuing, the court further stated;. . . clearly, the issue now has been reduced to one of preference -- which should be preferred between the notice of levy on execution and the deed of absolute sate. The Deed of Absolute Sale was executed on September 4, 1984, but was registered only on August 28, 1985, while the notice of levy on execution was annotated six (6) months prior to the registration of the sale on February 12, 1985.In the case of Landig vs. U.S. Commercial Co., 89 Phil. 638 Commere it was held that where a sale is recorded later than an attachment, although the former is of an earlier date, the sale must give way to the attachment on the ground that the act of registration is the operative act to affect the land. A similar ruling was restated in Campillo vs. Court of Appeals (129 SCRA 513).xxx xxx xxxThe reason for these rulings may be found in Section 51 of P.D. 1529, otherwise known as the Property Registration Decree, which provides as follows:Sec. 1. Conveyance and other dealings by the registered owner. -- An owner of registered land may convey, mortgage, lease, charge, otherwise deal with the same in accordance with existing laws. He may use such forms of deeds, mortgages, leases or other voluntary instruments as are sufficient in law. But no deed, mortgage, lease or other voluntary instrument, except a will purporting to convey or affect registered land shall take effect as a conveyance or bind the land, but shall operate only as a contract between the parties and as evidence of authority to the Register Deeds to make of registration.The act of registration shall be the operative act to convey or affect the land in so far as third persons are concerned and in all cases under the Decree, the registration shall be made in the office of the Register of Deeds for the province or city where the land lies. (Emphasis supplied by the lower court.)Under the Torrens system, registration is the operative act which gives validity to the transfer or creates a lien upon the land. A person dealing with registered land is not required to go behind the register to determine the condition of the property. He is only charged with notice of the burdens on the property which are noted on the face of the register or certificate of title. 20

Although we have relied on the foregoing rule, in many cases coming before us, the same, however, does not fit in the case at bar. While it is the act of registration which is the operative act which conveys or affects the land insofar as third persons are concerned, it is likewise true, that the subsequent sale of property covered by a Certificate of Title cannot prevail over an adverse claim, duly sworn to and annotated on the certificate of title previous to the sale. 21 While it is true that under the provisions of the Property Registration Decree, deeds of conveyance of property registered under the system, or any interest therein only take effect as a conveyance to bind the land upon its registration, and that a purchaser is not required to explore further than what the Torrens title, upon its face, indicates in quest for any hidden defect or inchoate right that may subsequently defeat his right thereto, nonetheless, this rule is not absolute. Thus, one who buys from the registered owner need not have to look behind the certificate of title, he is, nevertheless, bound by the liens and encumbrances annotated thereon. One who buys without checking the vendor's title takes all the risks and losses consequent to such failure. 22

In PNB vs. Court of Appeals, we held that "the subsequent sale of the property to the De Castro spouses cannot

166

prevail over the adverse claim of Perez, which was inscribed on the bank' s certificate of title on October 6, 1958. That should have put said spouses on notice, and they can claim no better legal right over and above that of Perez. The TCT issued in the spouses' names on July, 1959 also carried the said annotation of adverse claim. Consequently, they are not entitled to any interest on the price they paid for the property. 23

Then again, in Gardner vs. Court of Appeals, we said that "the statement of respondent court in its resolution of reversal that 'until the validity of an adverse claim is determined judicially, it cannot be considered a flaw in the vendor's title' contradicts the very object of adverse claims. As stated earlier, the annotation of an adverse claim is a measure designed to protect the interest of a person over a piece of real property, and serves as a notice and warning to third parties dealing with said property that someone is claiming an interest on the same or has a better right than the registered owner thereof. A subsequent sale cannot prevail over the adverse claim which was previously annotated in the certificate of title over the property. 24

The question may be posed, was the adverse claim inscribed in the Transfer Certificate of Title No. N-109417 still in force when private respondent caused the notice of levy on execution to be registered and annotated in the said title, considering that more than thirty days had already lapsed since it was annotated?This is a decisive factor in the resolution of this instant case.If the adverse claim was still in effect, then respondents are charged with knowledge of pre-existing interest over the subject property, and thus, petitioners are entitled to the cancellation of the notice of levy attached to the certificate of title.For a definitive answer to this query, we refer to the law itself. Section 110 of Act 496 or the Land Registration Act reads:Sec. 110. Whoever claims any part or interest in registered lands adverse to the registered owner, arising subsequent to the date of the original registration, may, if no other provision is made in this Act for registering the same, make a statement in writing setting forth fully his alleged right or interest, and how or under whom acquired, and a reference to the volume and page of the certificate of title of the registered owner, and a description of the land in which the right or interest is claimed.The statement shall be signed and sworn to, and shall state the adverse claimant's residence, and designate a place at which all notices may be served upon him. The statement shall be entitled to registration as an adverse claim, and the court, upon a petition of any party in interest, shall grant a speedy hearing upon the question of the validity of such adverse claim and shall enter such decree therein as justice and equity may require. If the claim is adjudged to be invalid, the registration shall be cancelled. If in any case, the court after notice and hearing shall find that a claim thus registered was frivolous or vexatious, it may tax the adverse claimant double or treble the costs in its discretion."The validity of the above-mentioned rules on adverse claims has to be reexamined in the light of the changes introduced by P.D. 1529, which provides:Sec . 70 Adverse Claim -- Whoever claims any part or interest in registered land adverse to the registered owner, arising subsequent to the date of the original registration, may, if no other provision is made in this decree for registering the same, make a statement in writing setting forth fully his alleged right or interest, and how or under whom acquired, a reference to the number of certificate of title of the registered owner, the name of the registered owner, and a description of the land in which the right or interest is claimed.The statement shall be signed and sworn to, and shall state the adverse claimant's residence, and a place at which all notices may be served upon him. This statement shall be entitled to registration as an adverse claim on the certificate of title. The adverse claim shall be effective for a period of thirty days from the date of registration. After the lapse of said period, the annotation of adverse claim may be cancelled upon filing of a verified petition therefor by the party in-interest: Provided, however, that after cancellation, no second adverse claim based on the same ground shall be registered by the same claimant.Before the lapse of thirty days aforesaid, any party in interest may file a petition in the Court of First Instance where the land is situated for the cancellation the adverse claim, and the court shall grant a speedy hearing upon the question of the validity of such adverse claim, and shall render judgment as may be just and equitable. If the adverse claim is adjudged to be invalid, the registration thereof shall be ordered cancelled. If, in any case, the court, after notice and hearing shall find that the adverse claim thus registered was frivolous, it may fine the claimant in an amount not less than one thousand pesos, nor more than five thousand pesos, in its discretion. Before the lapse of thirty days, the claimant may withdraw his adverse claim by filing with the Register of Deeds a sworn petition to that effect. (Emphasis ours).In construing the law aforesaid, care should be taken that every part thereof be given effect and a construction that could render a provision inoperative should be avoided, and inconsistent provisions should be reconciled whenever possible as parts of a harmonious whole. 25 For taken in solitude, a word or phrase might easily convey a meaning quite different from the one actually intended and evident when a word or phrase is considered with those with which it is associated." 26 In ascertaining the period of effectivity of an inscription of

167

adverse claim, we must read the law in its entirety. Sentence three, paragraph two of Section 70 of P.D. 1529 provides:The adverse claim shall be effective for a period of thirty days from the date of registration."At first blush, the provision in question would seem to restrict the effectivity of the adverse claim to thirty days. But the above provision cannot and should not be treated separately, but should be read in relation to the sentence following, which reads:After the lapse of said period, the annotation of adverse claim may be cancelled upon filing of a verified petition therefor by the party in interest.If the rationale of the law was for the adverse claim to ipso facto lose force and effect after the lapse of thirty days, then it would not have been necessary to include the foregoing caveat to clarify and complete the rule. For then, no adverse claim need be cancelled. If it has been automatically terminated by mere lapse of time, the law would not have required the party in interest to do a useless act.A statute's clauses and phrases must not be taken separately, but in its relation to the statute's totality. Each statute must, in fact, be construed as to harmonize it with the pre-existing body of laws. Unless clearly repugnant, provisions of statutes must be reconciled. The printed pages of the published Act, its history, origin, and its purposes may be examined by the courts in their construction. 27 An eminent authority on the subject matter states the rule candidly:A statute is passed as a whole and not in parts sections, and is animated by one general purpose and intent. Consequently, each part or section should be construed in connection with every other part section so as to produce a harmonious whole. It is not proper to confine its intention to the one section construed. It is always an unsafe way of construing a statute or contract to divide it by a process of etymological dissection, into separate words, and then apply to each, thus separated from the context, some particular meaning to be attached to any word or phrase usually to be ascertained from the as context. 28

Construing the provision as a whole would reconcile the apparent inconsistency between the portions of the law such that the provision on cancellation of adverse claim by verified petition would serve to qualify the provision on the effectivity period. The law, taken together, simply means that the cancellation of the adverse claim is still necessary to render it ineffective, otherwise, the inscription will remain annotated and shall continue as a lien upon the property. For if the adverse claim has already ceased to be effective upon the lapse of said period, its cancellation is no longer necessary and the process of cancellation would be a useless ceremony. 29

It should be noted that the law employs the phrase "may be cancelled", which obviously indicates, as inherent in its decision making power, that the court may or not order the cancellation of an adverse claim, nothwitstanding such provision limiting the effectivity of an adverse claim for thirty days from the date of registration. The court cannot be bound by such period as it would be inconsistent with the very authority vested in it. A  fortiori, the limitation on the period of effectivity is immaterial in determining the validity or invalidity of an adverse claim which is the principal issue to be decided in the court hearing. It will therefore depend upon the evidence at a proper hearing for the court to determine whether it will order the cancellation of the adverse claim or not. 30

To interpret the effectivity period of the adverse claim as absolute and without qualification limited to thirty days defeats the very purpose for which the statute provides for the remedy of an inscription of adverse claim, as the annotation of an adverse claim is a measure designed to protect the interest of a person over a piece of real property where the registration of such interest or right is not otherwise provided for by the Land Registration Act or Act 496 (now P.D. 1529 or the Property Registration Decree), and serves as a warning to third parties dealing with said property that someone is claiming an interest or the same or a better right than the registered owner thereof. 31

The reason why the law provides for a hearing where the validity of the adverse claim is to be threshed out is to afford the adverse claimant an opportunity to be heard, providing a venue where the propriety of his claimed interest can be established or revoked, all for the purpose of determining at last the existence of any encumbrance on the title arising from such adverse claim. This is in line with the provision immediately following:Provided, however, that after cancellation, no second adverse claim shall be registered by the same claimant.Should the adverse claimant fail to sustain his interest in the property, the adverse claimant will be precluded from registering a second adverse claim based on the same ground.It was held that "validity or efficaciousness of the claim may only be determined by the Court upon petition by an interested party, in which event, the Court shall. order the immediate hearing thereof and make the proper adjudication a justice and equity may warrant. And it is only when such claim is found unmeritorious that the registration of the adverse claim may be cancelled, thereby protecting the interest of the adverse claimant and giving notice and warning to third parties". 32

In sum, the disputed inscription of an adverse claim on the Transfer Certificate of Title No. N-79073 was still in effect on February 12, 1985 when Quezon City Sheriff Roberto Garcia annotated the notice of levy on execution thereto. Consequently, he is charged with knowledge that the property sought to be levied upon the execution

168

was encumbered by an interest the same as or better than that of the registered owner thereof. Such notice of levy cannot prevail over the existing adverse claim inscribed on the certificate of title in favor of the petitioners. This can be deduced from the pertinent provision of the Rules of Court, to wit:Sec. 16. Effect of levy on execution as to third persons -- The levy on execution shall create a lien in favor of the judgment creditor over the right, title and interest of the judgment debtor in such property at the time of the levy, subject to liens or encumbrances then existing. (Emphasis supplied)To hold otherwise would be to deprive petitioners of their property, who waited a long time to complete payments on their property, convinced that their interest was amply protected by the inscribed adverse claim.As lucidly observed by the trial court in the challenged decision:True, the foregoing section provides that an adverse claim shall be effective for a period of thirty days from the date of registration. Does this mean however, that the plaintiffs thereby lost their right over the property in question? Stated in another, did the lapse of the thirty day period automatically nullify the contract to sell between the plaintiffs and the Uychocdes thereby depriving the former of their vested right over the property?It is respectfully submitted that it did not. 33

As to whether or not the petitioners are buyers in good faith of the subject property, the same should be made to rest on the findings of the trial court. As pointedly observed by the appellate court, "there is no question that plaintiffs-appellees were not aware of the pending case filed by Pilares against Uychocde at the time of the sale of the property by the latter in their favor. This was clearly elicited from the testimony of Conchita Sajonas, wife of plaintiff, during cross-examination on April 21, 1988". 34

ATTY. REYES.Q Madam Witness, when Engr. Uychocde and his wife offered to you and your husband the property subject matter of this case, they showed you the owner's transfer certificate, is it not?A Yes, sir.Q That was shown to you the very first time that this lot was offered to you for sale?A Yes.Q After you were shown a copy of the title and after you were informed that they are desirous in selling the same, did you and your husband decide to buy the same?A No, we did not decide right after seeing the title. Of course, we visited. . .Q No, you just answer my question. You did not immediately decide?A Yes.Q When did you finally decide to buy the same?A After seeing the site and after verifying from the Register of Deeds in Marikina that it is free from encumbrances, that was the time we decided.Q How soon after you were offered this lot did you verify the exact location and the genuineness of the title, as soon after this was offered to you?A I think it' s one week after they were offered. 35

A purchaser in good faith and for value is one who buys property of another without notice that some other person has a right to or interest in such property and pays a full and fair price for the same, at the time of such purchase, or before he has notice of the claims or interest of some other person in the property. 36 Good faith consists in an honest intention to abstain from taking an unconscientious advantage of another, 37 Thus, the claim of the private respondent that the sale executed by the spouses was made in fraud of creditors has no basis in fact, there being no evidence that the petitioners had any knowledge or notice of the debt of the Uychocdes in favor of the private respondent, nor of any claim by the latter over the Uychocdes' properties or that the same was involved in any litigation between said spouses and the private respondent. While it may be stated that good faith is presumed, conversely, bad faith must be established by competent proof by the party alleging the same. Sans such proof, the petitioners are deemed to be purchasers in good faith, and their interest in the subject property must not be disturbed.At any rate, the Land Registration Act (Property Registration Decree) guarantees to every purchaser of registered land in good faith that they can take and hold the same free from any and all prior claims, liens an encumbrances except those set forth on the Certificate of Title and those expressly mentioned in the ACT as having been reserved against it. Otherwise, the efficacy of the conclusiveness of the Certificate of Title which the Torrens system seeks to insure would be futile and nugatory. 38

ACCORDINGLY, the assailed decision of the respondent Court of Appeals dated October 17, 1991 is hereby REVERSED and SET ASIDE. The decision of the Regional Trial Court dated February 15, 1989 finding for the cancellation of the notice of levy on execution from Transfer Certificate of Title No. N-109417 is hereby REINSTATED.The inscription of the notice of levy On execution on TCT No. N-109417 is hereby CANCELLED.Costs against private respondent.

169

SO ORDERED.

V. Registration through Admin Proceedings

170