REMEDIES

REMEDIES UNDER THE PROPERTY REGISTRATION DECREE (IN CASES

OF FRAUDULENT REGISTRATION)
** PETITION FOR REVIEW OF DECREE**
*ON FRAUD*
PALANCA VS. AMERICAN FOOD MANUFACTURING CO.
ZALDIVAR, J.:
On May 14, 1958, petitioner-appellant Gregoria Palanca filed with the
Philippine Patent Office, Department of Commerce and Industry, an
application to register the trademark, "LION and the representation of a lion's
head," alleging that she had been using the trademark since January 5, 1958
on bechin (food seasoning). The application was opposed by herein
respondent-appelee. The American Food Manufacturing Company, on the
ground that petitioner's trademark was similar to its (respondent's)
trademark "LION and representation of a lion" previously adopted and used
by it on the same type of product since August 3, 1953.
After hearing, the Director of Patents, on June 14, 1961, rendered a decision,
the pertinent portion of which reads as follows:
The record of the case consisting of respondent-appellant's 1 application, the
testimonies on behalf of the parties with accompanying exhibits and the
opposer's2 memorandum have been given careful consideration. There is no
memorandum for respondent-applicant. "There can be no question but that
the trademarks and the goods of the parties are similar. Accordingly the only
issue presented is that of priority of use.
Opposer's record establishes that it has at least since 1957, prior to January
5, 1968, the earliest date of use asserted by respondent-applicant,
continuously used LION and representation thereof, as a trademark for bechin
(food seasoning). The opposer is therefore the prior user while the
respondent-applicant is the later user of substantially the same trademark.
IN VIEW OF THE ABOVE CONSIDERATIONS, the opposition is hereby sustained
and application Serial No. 6321 of Gregoria Palanca is rejected.
The record shows the petitioner's counsel was furnished with copy of the
decision on June 16, 1961. 3 No appeal was taken from the decision of the
Director of Patents within the reglementary period from June 16, 1961.
On December 14, 1961, however, herein petitioner-appellant filed with the
Patent Office a petition to set aside the aforementioned judgment of June 14,
1961, invoking section 2 of Rule 38 of the Rules of Court, alleging fraud
and/or negligence committed by her former counsel, Atty. Bienvenido Medel,
in that the latter failed to file a memorandum before the case was submitted
for decision; that she had been fraudulently kept in total ignorance of the
proceedings in the case; that her counsel had not informed her of the
decision thus preventing her from resorting to all the legal remedies available
to her; that she came to known of the decision only about the latter part of
October, 1961, through her friend, Mr. Domingo Adevoso; that she had
evidence to disprove the claim of opposer The American Food Manufacturing
Company that it had been using the same trademark even before 1958; and
that she had evidence to show that the bechin that the opposer sold prior to
1958 were not of the "Lion" brand but of the "Lion-Tiger" brand, another
trademark of opposer.
In its answer to the petition to set aside the judgment, the opposer, herein
respondent-appellee be American Food Manufacturing Company, denied the
allegations of the petition and put up special and affirmative defenses, to wit:
that the petition was filed out of time; that the evidence proposed to be
presented was not new but was already existing and available at the time of
the hearing of the case; and that the decision was not rendered through
fraud, accident, mistake, or excusable negligence, as is contemplated in
Section 2 of Rule 38 of the Rules of Court.
The petition to set aside the judgment was set for hearing, wherein petitionerappellant and a witness, Ricardo Monfero, testified. Witness Monfero testified
that he was the owner of a grocery store in San Pablo City, that the receipts
issued to him by the American Food Manufacturing Company on October 16,
1957 showing that Lion blue bechin had been sold to his store really referred
to Lion-Tiger brand bechin After this hearing, herein respondent-appellee
Director of Patents issued resolution No. 20, dated October 14, 1963, denying

the petition to set aside judgment, pertinent portions of which resolution

reads:
Therefore, from the facts established, no extrinsic or collateral fraud would
warrant the setting aside of the judgment herein already rendered.
This office has also carefully considered the possible value of the evidence
purportedly showing that the Opposer falsified its receipt to be proven
through the testimony of Ricardo Monfero. His testimony is of course,
immaterial to the issue because what should have been proven was the
alleged fraud but, inasmuch as the purpose for his presentation as witness
and the nature of his testimony has been revealed, this Office might as well
rule now that such character of evidence can not be considered as a new
evidence which would alter the result of the proceedings.
Her motion for reconsideration of the resolution denying the petition to set
aside judgment having been denied, petitioner-appellant filed a notice of
appeal "from the decision of the Director of Patents to the Supreme Court on
the ground that said decision is not supported by the evidence presented and
is contrary to law."
In her brief, petitioner-appellant contends that respondent Director of Patents
committed the following errors:1wph1.t
1. In denying the petition to set aside judgment and resolving that there was
no fraud perpetrated against petitioner-appellant, as contemplated under
section 2 of Rule 38 of the Rules of Court; .
2. In holding that a client is bound even by fraudulent and deliberate lapses
of his counsel;.
3. In holding that the testimony of the petitioner-appellant's witness, Ricardo
Monfero, is immaterial and that it cannot be considered as a newly
discovered evidence which would alter the result of the proceedings;
4. In holding that the prior user of the trademark in question is the
respondent-appellee, The American Food Manufacturing Company;
5. In giving more credence to the invoices of the respondent company than
on the testimony of the respondent company's customers denying the
genuineness and the truth of the facts contained in said invoices;
6. In not considering the failure of the respondent company to register the
trademark in question earlier than 1958 as negating its claim of its prior use
as early as 1953; and.
7. In rejecting the application for registration of trademark Lion and
Representation in the vetsin food products of petitioner-appellant and in
sustaining the opposition of the respondent company.
We have noted, upon a reading of herein appellant's notice of appeal and
appeal brief, that she does not only question the correctness of the resolution
of appellee Director of Patents denying the petition to set aside the decision
of June 14, 1961 but at the same time prays for the reversal of the said
decision. We believe that in this appeal the most that appellant can ask this
Court is to pass upon the correctness of the resolution denying the petition to
set aside the decision.
The record shows that the decision proper, which was rendered on June 14,
1961, had already become final, because counsel for the appellant had been
furnished with copy of said decision on June 16, 1961 and no appeal had been
taken from said decision within the reglementary period. Appellant admits
that she had lost completely her right to appeal from the decision. 4 It is a
settled rule that notice of any decision or order of a court to counsel is also
notice to the client.5 Appellant claims that she became aware of the decision
only during the last week of October, 1961. 6 Indeed she took the proper step
when on December 14, 1961 she filed a petition to set aside the decision
upon the alleged ground of fraud pursuant to Section 2 of Rule 38 of the
Rules of Court. That petition to set aside the decision, however, was denied
by the respondent-appellee Director of Patents on October 14, 1963. It is only
from this order denying the petition to set aside the decision that herein
appellant can now appeal to this Court, and not from the decision proper
which was rendered on June 14, 1961. We are, therefore, concerned only in
determining whether the respondent-appellee Director of Patents had
correctly denied the petition to set aside the decision of June 14, 1961. In this
connection, we shall dwell only on the first three errors that have been
assigned by the petitioner-appellant.

Petitioner-appellant, in support of the first three assigned errors which she

discussed jointly, argues that the acts committed by her former counsel, Atty.
Bienvenido Medel, constitute fraud that would warrant the setting aside of
the decision denying her application to register the controverted trademark.
These acts, allegedly, are: his having kept her ignorant of the proceedings of
the case; his having failed to file a memorandum after the hearing of the
evidence before the Patent Office; his having failed to notify her of the
adverse decision after receiving notice of it, of which decision she came to
know only after five months from the time it was rendered; his having
intentionally kept himself entirely out of her reach, thereby causing her to
lose the right to appeal in due time and preventing her from informing
counsel of the newly discovered evidence which might have changed the
decision had it been timely presented. Petitioner-appellant also claims that
the acts of her counsel also prevented her from presenting all her case before
the Patent Office and deprived her of other available legal remedies. She
claims, furthermore, that the acts and/or behavior of her counsel cannot be
considered honest mistakes, but are fraudulent and deliberate lapses or
omissions on his part, which cannot bind her as a client. She also claims that
the Director of Patents erred in finding that the testimony of Ricardo Monfero
during the hearing on the petition to set aside the decision was immaterial,
because this witness precisely testified that the invoices relied upon by the
Director of Patents in finding that respondent The American Food
Manufacturing Company had been using the trademark at least since 1957
referred to the trademark "Lion-Tiger" of said respondent and not to the
trademark in question, and so this testimony had directly refuted the basis of
the findings of facts of the respondent Director.
Respondent-appellee Director of Patents, on the other hand, contends that
the basic issue in the petition to set aside the decision of June 14, 1961 is
whether there was fraud, as contemplated in section 2 of Rule 38 of the Rules
of Court, to justify the setting aside of the decision. This respondent-appellee
maintains that the acts or omissions of her counsel, cited by petitionerappellant as constituting fraud, had not prevented her from presenting fully
her case, such that it could not be said that there had never been a real
contest before the Patent Office regarding the subject matter of the suit. He
further maintains that the acts of petitioner-appellant's counsel complained
of, including the failure to file the memorandum, refer to procedural matters,
and were binding on her. Regarding the merit, of the testimony of Monfero,
respondent-appellee Director of Patents contends that there is no use in
discussing the same because fraud as would warrant the setting aside of the
judgment had not been shown.
We uphold the stand of respondent-appellee Director of Patents.
Section 2 of Rule 38 of the Rules of Court provides that a judgment or order
entered against a party through fraud, accident, mistake or excusable
negligence may be set aside upon proper petition to that effect. Not every
kind of fraud, however, is sufficient ground to set aside a judgment. This
Court has held that only extrinsic or collateral, as distinguished from intrinsic,
fraud is a ground for annulling a judgment. 7 Extrinsic fraud refers to any
fraudulent act of the successful party in a litigation which is committed
outside the trial of a case against the defeated party, or his agents, attorneys
or witnesses, whereby said defeated party is prevented from presenting fully
and fairly his side of the case. On the other hand, intrinsic fraud refers to acts
of a party in a litigation during the trial, such as the use of forged instruments
on perjured testimony, which did not affect the presentation of the case, but
did prevent a fair and just determination of the case. 8 The distinctions are
pointed out in the case ofUnited States v. Throckmorton, 98 U.S. 61, 25 L. Ed.
93, the very case cited by petitioner-appellant where the court said:
Where the unsuccessful party had been prevented from exhibiting fully his
case, by fraud or deception practiced on him by his opponent, as by keeping
him away from court, a false promise of a compromise; or where the
defendant never had knowledge of the suit, being kept in ignorance by the
acts of the plaintiff; or where an attorney fraudulently or without authority
assumes to represent a party and connives at his defeat; or where the
attorney regularly employed corruptly sells out his client's interest to the
other side - these, and similar cases which show that there has never been a
real contest in the trial or hearing of the case, are reasons for which a new
suit may be sustained to set aside and annul the former judgment or decree,
and open the case for a new and fair hearing.
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On the other hand, the doctrine is equally well settled that the court will not
set aside a judgment because it was founded on a fraudulent instrument, or
perjured evidence, or for any matter which was actually presented and
considered in the judgment assailed.

In this connection, this Court, in the case of Varela vs. Villanueva, etc., et al.,
95 Phil. 248, 258, said:.
The rule is that an action to annul a judgment, upon the ground of fraud, will
not lie unless the fraud be extrinsic or collateral and the facts upon which it is
based have not been controverted or resolved in the case where the
judgment sought to be annulled was rendered, and that false testimony or
perjury is not a ground for assailing said judgment, unless the fraud refers to
jurisdiction (Labayen vs. Talisay-Silay Milling Co., 68 Phil. 376); that fraud has
been regarded as extrinsic or collateral, where it has prevented a party from
having a trial or from presenting all of his case to the court (33 Am. Jur. pp.
230-232). The reason for this rule has been aptly stated in Almeda, et al. vs.
Cruz, 47 Off. Gaz., 1179:
'Fraud to be ground for nullity of a judgment must be extrinsic to the
litigation. Were not this the rule there would be no end to litigations, perjury
being of such common occurrence in trials. In fact, under the opposite rule,
the losing party could attack the judgment at any time by attributing
imaginary falsehood to his adversary's proofs. But the settled law is that
judicial determination however erroneous of matters brought within the
court's jurisdiction cannot be invalidated in another proceeding. It is the
business of a party to meet and repel his opponent's perjured evidence.'
The acts complained of by petitioner-appellant, even if assumed to be true
and fraudulent, were all committed by her own counsel, and not by the
successful party or opponent in the case. Hence, petitioner-appellant had not
shown extrinsic fraud that would warrant the setting aside of the decision.
Negligence, mistake or fraud of one's own attorney is not ground for granting
a new trial. (O'Quinn v. Tate, [Tex.] Civ. App. 187 S.W. 2d 241).
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Fraud, such as would authorize the setting aside of the verdict at the instance
of the movant, is fraud of respondent or his counsel. She is not at liberty to
avail herself of the misconduct of her own counsel, for the purpose of
annulling the verdict obtained by respondent. (Ketchem v. Ketchem, 11 S.E.
2d 788).
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In order to obtain relief on this ground it must appear that the fraud was
practiced or participated in by the judgment creditor, or his agent or attorney.
The fraud must have been practiced upon the opposite party." (Amuran vs.
Aquino, 38 Phil. 29; Velayo vs. Shell Company of the Philippines, Ltd., G.R. No.
L-8883, July 14, 1959.).
The record shows that petitioner-appellant had all the opportunity to present
fully her side of the case before the decision was rendered, because she and
her witnesses. Estrellita Concepcion and Adela Palmario, testified in the case.
The decision in question itself states that "The record of the case consisting
of respondent-applicant's application, the testimonies on behalf of the parties
with accompanying exhibits and the opposer's memorandum have been
given careful consideration." 9 The failure to submit a memorandum was also
the negligence of her counsel and could not in any manner be attributed to
any fraud or deception practiced by her opponent.
This Court has held that mistakes of counsel as to the competency of
witnesses, the sufficiency and relevancy of evidence, the proper defense, or
the burden of proof, his failure to introduce certain evidence, or to summon
witnesses and to argue the case, are not proper grounds for a new trial,
unless the incompetence of counsel be so great that his client is prejudiced
and prevented from fairly presenting his case. 10
Anent appellant's not having been informed of the adverse decision, this
Court has held that:
The failure of counsel to notify her on time of the adverse judgment to enable
her to appeal therefrom does not constitute excusable negligence. Notice
sent to counsel of record is binding upon the client and the neglect or failure
of counsel to inform him of an adverse judgment resulting in the loss of his
right to appeal is not a ground for setting aside a judgment valid and regular
on its face. (Duran v. Pagarigan, L-12573, Jan. 29, 1960).
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Relief under Rule 38 will not be granted to a party who seeks relief from the
effects of a judgment on the ground of fraud, where the loss of the remedy is
due to his own fault or negligence or that of his counsel." (Echevarri v.
Velasco, 55 Phil. 570.)
The claim of petitioner-appellant that she had evidence, to disprove the claim
of opposer (herein appellee The American Food Manufacturing Company) that
it was the prior user of the trademark in question, and to show that the
receipts issued by opposer purporting to be in connection with the sale of
Lion brand bechin were falsified, is tantamount to saying that her adversary
in this case had presented false evidence consisting of perjured testimonies
and falsified documents. But even assuming that the evidence presented by
respondent-appellee The American Food Manufacturing Company was false,
this circumstance would not constitute extrinsic fraud, but only intrinsic fraud.
This Court, in a number of cases, held:
Assuming that there were falsities on the aspect of the case, they make out
merely intrinsic fraud which, as already noted, is not sufficient to annul a
judgment. (Varela vs. Villanueva, etc., et al., supra).
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And we have recently ruled that presentation of false testimony or the

concealment of evidentiary facts does not per se constitute extrinsic fraud,
the only kind of fraud sufficient to annul a court decision. (Cortes vs.
Brownell, Jr., etc., et al., 97 Phil. 542, 548).
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That the testimony upon which a judgment has been based was false or
perjured is no ground to assail said judgment, unless the fraud refers to
jurisdiction" (Labayen, et al. vs. Talisay-Silay Milling Co., 68 Phil. 376, 383,
quoting Scotten vs. Rosenblum, 231 Fed., 357; U.S. vs. Chung Shee, 71 Fed.
277; Giffen vs. Christ's Church, 48 Cal. A. 151; 191 P. 718; Pratt vs. Griffin,
223 Ill., 349; 79 N.E., 102).
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As a general rule, extrinsic or collateral fraud would warrant a court of justice

to set aside or annul a judgment, based on fraud (Labayen, et al. v. TalisaySilay Milling Co., G.R. No. 45843, June 30, 1939, L.J. Aug. 15, 1939). In
seeking the annulment of the decision of Civil Case No. 833 (CA-G.R. No.
8085-R), the alleged fraud does not refer to jurisdiction, but to the admission
by the trial court in said case, of supposedly false or forged documents, which
is intrinsic in character. (Velasco, et al. vs. Velasco, G.R. No. L-15129, June 30,
1961).
We find that respondent-appellee Director of Patents correctly ruled that the
testimony of Ricardo Monfero, a witness presented by the petitionerappellant during the hearing on the petition to set aside the decision is
immaterial to the issue of whether or not the decision should be set aside.
This witness did not testify on any matter which would establish extrinsic
fraud that would warrant the setting aside of the decision.
As we have adverted to at the early part of this opinion, this appeal must be
treated only as an appeal from the resolution of respondent-appellee Director
of Patents, dated October 14, 1963, denying the petition to set aside the
decision rendered on June 14, 1961. Having found that respondent Director of
Patents committed no error in denying the petition to set aside the decision,
we do not consider it necessary to discuss the other errors assigned by
petitioner-appellant because those other errors are not pertinent to the
appeal now before this Court.
WHEREFORE, the instant appeal is dismissed. The resolution of the Director of
Patents, dated October 14, 1963, denying petitioner-appellant's petition to
set aside the decision, dated June 14, 1961, in Inter Partes Case No. 130
before the Philippine Patent Office, is affirmed. Costs against petitionerappellant. It is so ordered.

On March 26, 1952, appellee spouses Alfredo N. Frias and Belen Lustre filed in
the Court of First Instance of Nueva Ecija an application to register a
residential lot situated in Jaen, Nueva Ecija, containing an area of about 2,974
square meters, more particularly bounded and described in Plan Psu-131405
Exhibit A.
On September 22, 1952, Santiago Esquivel and his sisters, Felisa, Rosalia,
Rosa, Ceferina, and his sister-in-law, Perpetua Pada-Esquivel, widow of their
brother, Alvaro, as legal guardian of her minor children, Ricardo, Vicente,
Aurelio, Raymundo and Prudencio (Reynaldo), all surnamed Esquivel, opposed
the application claiming ownership of a portion of 1,357 square meters of the
land sought to be registered, having inherited the same from their parents,
Victoriano Esquivel and Catalina Villamanca. They also sought the
postponement of the proceedings pending final determination of Civil Case
No. 998 of the same court between themselves as plaintiffs and the
applicants as defendants, involving the ownership and possession of the land
subject of their opposition.
In the civil case mentioned above, the plaintiffs alleged that they, together
with their youngest sister, Anastacia Esquivel de Yambao (who refused to be
joined as a party in the action), inherited pro-indiviso from their parents,
Victoriano Esquivel and, Catalina Villamanca, a parcel of land with
improvements thereon situated at Jaen, Nueva Ecija, containing an area of
about 1,357 square meters; that while said property was still owned in
common, on or about July 16, 1951, without their knowledge and consent,
Anastasia Esquivel de Yambao sold the whole of it to the defendants, the Frias
spouses, who knew, at the time of the sale, that their vendor owned only a
part thereof; that the defendants had taken possession of the land and had
refused to reconvey it to them despite repeated demands therefor.
On September 30, 1952, the Court issued an order postponing the hearing on
the application until after final adjudication of Civil Case No. 998, but on
March 24, 1953 issued an order of general default except as against the
oppositors and the Director of Lands.
On April 20, 1956 we rendered judgment in Civil Case No. 998 (G.R. No. 8825)
declaring the deed of sale executed by Anastacia Esquivel valid insofar as
Santiago, Felisa, Ceferina and Anastasia, all surnamed Esquivel, were
concerned, but invalid with respect to the minor heirs of the late Alvaro
Esquivel. In our decision we found the following facts as having been
established: The parcel of land in question originally belonged to the spouses
Victoriano Esquivel and Catalina Villamanca who seven children, namely,
Santiago, Felisa, Rosalia, Rosa, Ceferina, Anastacia and Alvaro. Alvaro died on
December 19, 1940 leaving his widow, Perpetua Pada, and children, Ricardo,
Vicente, Aurelio, Raymundo and Prudencio (Reynaldo). Victoriano Esquivel
died on January 7, 1943 leaving considerable real estate in Jaen, Nueva Ecija
consisting of rice and residential lands, which were extrajudicially partitioned
by and amongst his heirs sometime in 1946, the land in question having been
adjudicated to Anastacia, who sold it to the Frias spouse on July 16, 1951. The
minor heirs of the late Alvaro Esquivel were represented in the partition by
their mother Perpetua Pada, who was neither their legal guardian in the
administratrix of their property. As the partition made in 1946, the applicable
law was found to be Section 553 of the Code of Civil Procedure which
provided that the father or mother is only deemed to be the nature guardian
of his or her minor children and not of his estate unless appointed by the
court. As a result, the land in question was declared to be common property
of Anastacia Esquivel and the minor heirs of Alvaro Esquivel the time of its
sale by the former to the Frias spouses.
It appears that, subsequent to our decision, that is, on February 15, 1957, the
children of the deceased Alvaro Esquivel who had attained the age of
majority, with the exception of Alvaro and Reynaldo and their mother,
Perpetua Pada de Zaragosa (remarried to Eduardo Zaragaza), as natural
guardian of the two minors, executed a deed of sale conveying their oneseventh participation on the land to the Frias spouses. (Exhibit I)
On October 2, 1957, in the aforesaid registration proceedings, after due
notice and hearing, the Court rendered judgment adjudicating the lands
described in the plan, Exhibit A, in favor of the applicants and ordering its
registration in their name. After the same had become final and executory,
the Court ordered the issuance of the Decree of Registration, and on
December 11, 1957 the Chief of the General Land Registration Office issued
Decree of Registration No. 60798 in favor of the Frias spouses.

FRIAS VS. ESQUIVEL

DIZON, J.:

On December 8, 1958, Rosario Esquivel-Gonzales, as the duly appointed

guardian of the minors Reynaldo and Ricardo Esquivel, filed a verified petition
to reopen the decree of registration on the ground of fraud committed
according to the petition as follows:

5. That the herein applicants committed fraud in obtaining said decree of

registration, and such fraud consists of the following: the herein applicants
had falsely represented to this Honorable Court during the hearing of their
application that they were the owners of the entire residential lot included in
their plan marked as Exhibit "A" and now covered by the decree of
registration, when at that time they knew fully well they were not the owners
thereof in its entirety; that they were aware of such fraudulent representation
when they made it because they were parties in Civil Case No. 998 of this
Court involving precisely the validity of their title to the aforementioned lot;
they also knew that on appeal the case became G.R. No. L-8825 of the
Supreme Court which, in a decision promulgated on April 20, 1956, held that
the title (a deed of sale) to that residential lot claimed by the herein
applicants "is invalid with regard to the minor heirs of the late Alvaro
Esquivel", one of them being Reynaldo Esquivel, your petitioner's ward, in
whose behalf this petition is being presented;
6. That your petitioner has been informed, believes the information, and
therefore alleges that in order to perpetrate the aforesaid fraud upon this
Court and upon your petitioner's ward, Reynaldo Esquivel, the herein
applicants had maneuvered sometime in February of 1957 the execution in
their favor of a deed of sale of the share in the oft-repeated residential lot
pertaining to the minor heirs of the late Alvaro Esquivel, and that deed of sale
signed by Perpetua P. Zaragoza, widow and mother of the Esquivel minors,
but who has remarried many years before she was made to sign it and who
has taken up residence in Asingan, Pangasinan, since her remarriage, away
from her minor children aforesaid, particularly from the minor Reynaldo
Esquivel who had to be taken care of alternately by his uncle and his aunts;
On February 22, 1960, the Court denied the above mentioned petition. Hence
the present appeal.
To justify the setting aside or review of a decree of registration under Section
38 of Act No. 496, the party seeking relief must allege and prove, inter alia,
that the registration was procured through fraud actual and extrinsic. It has
been held in this connection that if the fraud alleged in the petition to set
aside the decree is involved in the same proceedings in which the party
seeking relief had ample opportunity to assert his right, to attack the
document presented by the applicant for registration and to cross-examine
the witnesses who testified relative thereto, then the fraud relied upon is
intrinsic. The fraud is extrinsic if it was employed to deprive a party of his day
in court, thus preventing him from asserting his right to the property
registered in the name of the applicant (Bagoyboy vs. Director of Lands, 77
O.G. 1956).
Upon consideration of the facts relied upon by appellants to justify a review of
the decree in question, we find that the same do not constitute the extrinsic
fraud require as justification for the granting of the relief sought by them.
WHEREFORE, the decision appealed from is affirmed, with costs.
DIRECTOR OF LANDS VS. CFI OF RIZAL
PARAS, J.:
This is a Petition for Review (Appeal by Certiorari) filed by the Director of
Lands from the Orders dated January 4, 1969 and July 14, 1969 of respondent
Court of First Instance of Rizal, Branch XII Caloocan City, in Land Registration
Case No. C-72, L.R.C. Record No. N-30167. Said order of January 4, 1969
denied the Petition for Review filed by the Director of Lands and the order of
February 3, 1969 denied the motion for reconsideration.
Briefly, the facts of the case are as follows:
On February 22, 1966, respondents Pablo, Angelita, Juan, Barcelisa, Israel,
Rebecca and Pedro, Jr., all surnamed Casaje, filed with the Court of First
Instance of Rizal, Land Registration Case No. C-72, L.R.C. Record No. N-30167,
for the confirmation and registration of their title to a parcel of land situated
in Barrio San Roque, Municipality of Navotas, Province of Rizal, more
particularly described on plan PSU-214300 with an area of 986 square
meters. They alleged that they are the owners in fee simple and in
possession of the aforementioned land and that their possession together
with their predecessors-in-interest has been from time immemorial and for a
period of more than thirty (30) years, public continuous, adverse to the whole
world, and in the concept of absolute owners thereof.
The Director of Lands, thru the Solicitor General, filed an Opposition dated
July 18, 1966 stating that neither the applicants nor their predecessors-ininterest possess sufficient title to the parcel of e land sought to be registered,

the same not having been acquired by them by composition title from the
Spanish government or by possessory information title under the Royal
Decree of February 13, 1894; that neither the applicants nor their
predecessors-in-interest have been in open, continuous, exclusive and
notorious possession and occupation of the land in question for at least 30
years immediately preceding the filing of the application and that the same is
a portion of the public domain belonging to the Republic of the Philippines.
Notice of the initial hearing scheduled on September 8, 1966 was furnished
the Director of lands. The corresponding publication was made in the official
Gazette and the required posting of Sheriff's notice was duly complied with.
At the said scheduled initial hearing, however, the Director of Lands did not
appear. Instead, counsel for the applicants presented to the court, the second
and third indorsements of the District Land Officer dated August 7, 1966,
manifesting that the Bureau of Lands is no longer interested in opposing the
application for registration, because after due investigation the land was
found to be of private ownership as certified to by the land investigator Mr.
Jose Sison, C/O District Land Officer III-1. The third indorsement, dated August
7, 1966 and signed by Mr. Arturo Pascual, recommend that in view of the
above findings as per investigation conducted by a representative of the
Bureau of Lands, no opposition be filed. A copy of the said 2nd Indorsement is
hereinbelow reproduced as follows

recommended that no opposition be interposed on the instant Registration

Case as far as our Office is concern.
(SGD.) JOSE SISON
Land Investigator
Also on September 8, 1966, respondent Court, for failure of the Oppositors to
appear despite due notice, entered an order of general default against the
whole world, with the exception of the provincial government of Rizal and the
municipal government of Navotas, thereby authorizing the applicants to
present their evidence before the Deputy Clerk of Court, who was
commissioned to receive the same.
On September 13, 1966, respondent court rendered a decision declaring the
applicants, the true and absolute owners of the land in question, and ordering
the registration thereof in their names but reserving for public easement a
3.00 meter strip of the land along the Navotas River.
On August 26, 1967, the private oppositors Roberto Lusterio, et al., filed a
Petition for Review from the order of general default and from the judgment
alleging fraud and evident bad faith. The petition was denied by respondent
court for failure on the part of private oppositors to prove their allegations of
fraud and evident bad faith allegedly employed by the applicants. No appeal
was interposed by the private oppositors from the said order.1avvphi1

SUBJECT:
Land. Reg. Case No. C-72
L.R.C. Rec. No. N-30167
Pablo Casaje, et al.
San Roque, Navotas,
Rizal
2nd Indorsement

On his part, the Director of Lands filed on October 11, 1967, a Petition for
review, pursuant to Sec. 38 of Act No. 496, alleging fraud in obtaining the
decree of registration and that the one (1) year period has not elapsed from
the issuance of the decree (the decrees was issued on June 5, 1967).

That the parcel of land sought to be registered is a residential lot located in

San Roque, Navotas, Rizal which was originally owned and possessed by
Leonardo Casaje, deceased and father of the herein registration applicants;

The applicants (the Casajes) filed an opposition contending among other

things, that the said petition for review "represents the interest of Eusebia
Cruz, Roberto Lusterio and Evangelina Laquindanum who were the original
oppositors represented by private counsel Atty. Artemio L. Agcaoili;" that
since the decree of registration was issued on June 5, 1967 and since the
corresponding certificate of title has already been issued by the Register of
Deeds, said petition for review is a mere harassment, and that the land in
dispute, as may be seen from the investigation report and indorsement of the
District Land Officer, is the private property of Leonardo Casaje: and that the
aforementioned Eusebia Cruz, Roberto Lusterio and Evangelina Laquindanum
were merely their tenants.

That the land subject of this registration was declared for taxation purposes
under Tax Dec.. No, 8800 in the names of the applicants and the taxes were
paid for and the latest is covered by O.R. No. D-1865945 dated May 31, 1966
with an assessed value of P990.00;

The petition for review was set for hearing on December 19, 1968. On
January 4, 1969, respondent court issued its Order denying the petition for
lack of evidence to support the same. From this order, after its motion for
reconsideration had been denied, herein petitioner interposed this petition.

That during the ocular investigation of the premises of the land subject of this
registration, it has been ascertained that a camarin and a residential house
are found thereon. The 3-meter legal easement has been set aside and
unoccupied for embankment of the Navotas, River:

The primordial question to be resolved in the case at bar is whether or not

respondent court erred in denying petitioner's petition for review filed
pursuant to Sec. 38 of Act 496, (Land Registration Act) which provides:

August 1, 1966
Respectfully returned to the Director of Lands thru the District Land Officer,
DLO III-1, Bureau of Lands, Manila, submitting hereunder the findings and
report of the undersigned on the above-noted Registration Case, to wit:

Section 38. Decree of registration, and remedies after entry of decree.

That it has been ascertained further that the subject of this registration case
is abutting Lot 12 of Psu-64860 of Leonardo Casaje which is a titled or private
property;
That the land has been found that the same is not covered by any public land
applications or patent neither it is within any public or quasi public
improvements;
That the undersigned has finally ascertained that the applicants are Filipino
citizens and no person, corporation, or association is either directly or
indirectly interested in the land sought to be registered; and
That the applicants thru their predecessors-in-interest and in concept of
owners have been in actual, open, adverse, public and continuous occupation
and possession for more than thirty (30) years which is believed to be not
later than July 4, 1926.
In view of the foregoing, and in as much as the applicants have satisfactorily
met all the conditions essential to entitle them to a Judicial legalization of
their imperfect claims over the land applied for under the provisions of
Section 48(b) of Com. Act No. 141, as amended by R.A. No. 1942, it is

If the court after hearing finds that the applicant or adverse claimant has title
as stated in his application or adverse claim and proper for registration, a
decree of confirmation and registration shall be entered. Every decree of
registration shall bind the land, and quiet title thereto, subject only to the
exceptions stated in the following section. It shall be conclusive upon and
against an persons, including the Insular Government and an the branches
thereof, whether mentioned by name in the application, notice of citation, or
included in the general description "To all whom it may concern." Such decree
shall not be opened by reason of the absence, infancy, or other disability of
any person affected thereby, nor by any proceeding in any court for reversing
judgments or decrees; subject, however, to the right of any person deprived
of land or of any estate or interest therein by decree of registration obtained
by fraud to file in the competent Court of First Instance a petition for review
within one year after entry of the decree provided no innocent purchaser for
value has acquired an interest. ...
The essential elements for the allowance of the reopening or review of a
decree are: (a) that the petitioner has a real and dominical right; (b) that he
has been deprived thereof; (c) through fraud; (d) that the petition is filed
within one year from the issuance of the decree; and (e) that the property has
not as yet been transferred to an innocent purchaser.

However, for fraud to justify the review of a decree, it must be extrinsic or

collateral and the facts upon which it is based have not been controverted or
resolved in the case where the judgment sought to be annulled was rendered.
The following ruling spells out the difference between extrinsic and intrinsic
fraud:
Extrinsic or collateral fraud, as distinguished from intrinsic fraud, connotes
any fraudulent scheme executed by a prevailing litigant "outside the trial of a
case against the defeated party, or his agents, attorneys or witnesses,
whereby said defeated party, is prevented from presenting fully and fairly his
side of the case." But intrinsic fraud takes the form of "acts of a party in a
litigation during the trial, such as the use of forged instruments or perjured
testimony, which did not affect the present action of the case, but did present
a fair and just determination of the case." (Libudan vs. Gil, 45 SCRA 17)

LEONARDO-DE CASTRO, J.:

Under consideration is this petition for review under Rule 45 of the Rules
of Court seeking the reversal and setting aside of the Decision [1] dated
January 17, 2000 of the Court of Appeals (CA) in CA-G.R. CV. No. 49939, and
its Resolution[2] dated June 9, 2000, denying petitioners motion for
reconsideration.
The assailed decision reversed and set aside the February 10, 1995
decision[3] of the Regional Trial Court (RTC) at Muntinlupa, Metro Manila,
Branch 276,[4] in its Civil Case No. 90-359, an action for Declaration of Nullity
of Contract and Cancellation of Transfer Certificate of Titles and
Damages, commenced by the petitioners against herein respondents.
The factual antecedents are as follows:

In other words, extrinsic fraud is one that affects and goes into the
jurisdiction of the Court.
In its Petition for Review filed before the respondent court, petitioner alleged
that the Casajes committed fraud in obtaining said decree of registration in
the following manner:
(a) By falsely alleging and misrepresenting that they have been in peaceful,
open, adverse and continuous possession of the land described in paragraph
1 hereof for more than 30 years, the truth being that said land had been in
the actual and exclusive possession of Eusebia Cruz, Roberto Lusterio and
Evangelina Laquindanum who are not and have never been in such
possession as tenants or representatives of the registration applicants;
(b) By falsely representing that the land was formed by alluvia and is thus an
accretion to their private property, the truth being that the entire land has
always been part of the public domain, formed as it was by the intervention
of human hands; and
(c) By misrepresenting that no other person, including the state, has any
interest whatsoever in the land in question. (pp. 47-48, Rollo)
Clearly, the foregoing allegations, even if proved, do not constitute extrinsic
fraud as would warrant a reopening of the decree.
The person(s) contemplated under Section 38 of Act 496, to be entitled to a
review of a decree of registration, are those who were fraudulently deprived
of their opportunity to be heard in the original registration case. Such is not
the situation of the petitioner here. It was not denied a day in court by fraud,
which the law provides as the sole ground for reopening of the decree of
registration. In fact, it opposed the application but failed to substantiate its
opposition because it did not appear at the hearing of the registration case
despite proper notice. In Solomon et al., vs. Bocauto et al., 71 Phil. 363, 365,
cited in Crisolo vs. Court of Appeals, 68 SCRA 435, 441, a petition for review
of a decree of registration was properly denied for "both petitioners had
notice of the original registration proceedings; but failed to put up any claim
and to show title in themselves. " Significantly, petitioner failed to explain
why it failed to appear at the hearing. Mere allegation of fraud is not enough.
Specific, intentional acts to deceive and deprive another of his right, or in
some manner injure him must be alleged and proved. There must be actual
or positive fraud as distinguished from constructive fraud to entitle one to the
reopening of a decree of registration. And it must be extrinsic and not
intrinsic fraud (Greg Alba vs. de la Cruz, 17 Phil. 49, 57). This is necessary to
maintain the stability of judicial decisions and save the precious time of the
courts from being wasted by unnecessary proceedings. Moreover, the fact
that the District Land Officer of the Bureau of Land conducted the
corresponding inspection and investigation of the land in question with its
findings and report submitted in court, renders the present appeal interposed
by the Director of Lands without valid basis. It cannot just simply deny the
report of its own investigator. Besides, there is always that presumption of
regularity in the performance of official function.

Petitioner Adoracion Rufloe is the wife of Angel Rufloe, now deceased,

while co-petitioners Alfredo and Rodrigo are their children. During the
marriage of Adoracion and Angel, they acquired a 371-square meter parcel of
land located at Barangay Bagbagan, Muntinlupa, and covered by Transfer
Certificate of Title (TCT) No. 406851 which is the subject of the present
controversy.
Sometime in 1978, respondent Elvira Delos Reyes forged the
signatures of Adoracion and Angel in a Deed of Sale dated September 8, 1978
to make it appear that the disputed property was sold to her by the spouses
Rufloe. On the basis of the said deed of sale, Delos Reyes succeeded in
obtaining a title in her name, TCT No. S-74933.
Thus, in November 1979, the Rufloes filed a complaint for damages against
Delos Reyes with the RTC of Pasay City alleging that the Deed of Sale was
falsified as the signatures appearing thereon were forged because Angel
Rufloe died in 1974, which was four (4) years before the alleged sale in favor
of Delos Reyes. The complaint was docketed as Civil Case No. M-7690.
[5]
They also filed a notice of adverse claim on November 5, 1979.
On December 4, 1984, during the pendency of Civil Case No. M-7690,
Delos Reyes sold the subject property to respondent siblings Anita, Angelina,
Angelito and Amy (Burgos siblings). A new title, TCT No. 135860, was then
issued in their names.
On December 12, 1985, the Burgos siblings, in turn, sold the same property
to their aunt, Leonarda Burgos. However, the sale in favor of Leonarda was
not registered. Thus, no title was issued in her name. The subject property
remained in the name of the Burgos siblings who also continued paying the
real estate taxes thereon.
[6]

On February 6, 1989, the RTC of Pasay City, Branch 108, rendered its
decision in Civil Case No. M-7690 declaring that the Deed of Sale in favor of
Delos Reyes was falsified as the signatures of the spouses Rufloe had been
forged. The trial court ruled that Delos Reyes did not acquire ownership over
the subject property. Said decision had become final and executory.
Such was the state of things when, on February 8, 1990, in the RTC of
Muntinlupa, the Rufloes filed their complaint for Declaration of Nullity of
Contract and Cancellation of Transfer Certificate of Titles against respondents
Leonarda and the Burgos siblings, and Delos Reyes. In their complaint,
docketed as Civil Case No. 90-359, the Rufloes basically alleged that
inasmuch as the Deed of Sale in favor of Delos Reyes was falsified, no valid
title was ever conveyed to the Burgos siblings.[7] The Burgos siblings
executed a simulated deed of sale in favor of Leonarda knowing fully well that
their title was a nullity.
In their common Answer, respondents maintained that they bought
the property in good faith after they were shown a genuine copy of the title of
the disputed property by Delos Reyes. They also insisted that they were
innocent purchasers in good faith and for value. [8]

WHEREFORE, this petition is DENIED for lack of merit. The order of

respondent judge denying the petition for review and/or to reopen the decree
of registration in Land Registration Case No. C-72, L.R.C. Record No. N-30167
is hereby AFFIRMED. SO ORDERED.

On February 10, 1995, the trial court rendered a decision declaring that
Leonarda and the Burgos siblings were not innocent purchasers for value and
did not have a better right to the property in question than the true and legal
owners, the Rufloes. The trial court also held that the subsequent
conveyance of the disputed property to Leonarda by the Burgos siblings was
simulated to make it appear that Leonarda was a buyer in good faith. The
trial court then directed the Register of Deeds of Makati, Rizal to reinstate the
title of the spouses Rufloe, and to cancel all other titles subsequent to the
said title particularly TCT No. S-74933 issued to Delos Reyes and TCT No.
135860 issued to the Burgos siblings.[9]

*PURCHASER IN GOOD FAITH*

Respondents interposed an appeal to the CA, whereat the appellate

recourse was docketed as CA-G.R. CV. No. 49939.

ROSALES VS. BURGOS

As stated at the threshold hereof, the CA, in its decision dated January 17,
2000, reversed and set aside that of the trial court, declaring in the process
that respondents were purchasers in good faith and for value. In so ruling, the
CA explained:
Measured by this yardstick, defendants-appellants [herein respondents] are
purchasers in good faith and for value. Amado Burgos bought the subject
property (for his children Anita, Angelina, Angelito and Amy) free from any
lien or encumbrance or any notice of adverse claim annotated thereto. He
was presented with a clean title already in the name of the seller. If a person
purchases a piece of land on the assurance that the sellers title thereto is
valid, he should not run the risk of being told later that his acquisition was
ineffectual after all. If we were to void a sale of property covered by a clean
and unencumbered torrens title, public confidence in the Torrens System
would be eroded and transactions would have to be attended by complicated
and inconclusive investigations and uncertain proof of ownership. The
consequences would be that land conflicts could proliferate and become more
abrasive, if not violent. (Words in bracket ours).[10]
Their motion for reconsideration having been denied by the CA in its equally
challenged resolution of June 9, 2000, petitioners are now with us via the
present recourse, faulting the CA as follows:
A.
THE HONORABLE COURT OF APPEALS DECIDED THIS CASE IN A WAY NOT
IN ACCORD WITH THE APPLICABLE DECISIONS OF THE HONORABLE SUPREME
COURT.
B.
THERE ARE SPECIAL AND IMPORTANT REASONS THAT REQUIRE A
REVIEW OF THE CA DECISION.
C.
THE HONORABLE CA ACTED WITH GRAVE ABUSE OF DISCRETION
AMOUNTING TO LACK OF JURISDICTION WHEN IT COUNTERMANDED THE
FINDINGS OF THE REGIONAL TRIAL COURT EVEN ON POINTS AND QUESTIONS
OF CREDIBILITY.
D.
THE CA JUDGMENT THAT REVERSED THE RTC DECISION IS NOT
SUPPORTED BY THE EVIDENCE ON RECORD AND IS CONTRARY TO
ESTABLISHED PRECEDENTS LAID DOWN BY THE HONORABLE SUPREME
COURT.
E.
THE CA ERRED IN LAW IN PRACTICALLY HOLDING THAT A DEAD MAN
ANGEL RUFLOE (ANGEL NEVER SIGNED) VALIDLY DISPOSED OF HIS PROPERTY
(A HOUSE AND LOT COVERED BY A TCT THROUGH A FALSIFIED DEED OF
SALE) AFTER HIS DEATH FOUR (4) YEARS BEFORE THE EXECUTION OF THE
DEED.
F.
THE CA ERRED IN LAW IN HOLDING ANITA, ANGELINA, AMY AND
ANGELITO BURGOS AND THEIR SUCCESOR-IN-INTEREST (THEIR AUNT)
LEONARDABURGOS ARE BUYERS IN GOOD FAITH.
G.
THE CA IGNORED THE PLAIN PROVISIONS OF THE CIVIL CODE THAT IN
ALL CONTRACTUAL, PROPERTY OR OTHER RELATIONS, WHEN ONE OF THE
PARTIES IS AT A DISADVANTAGE ON ACCOUNT OF HIS MORAL DEPENDENCE,
IGNORANCE, INDIGENCE, MENTAL WEAKNESS, TENDER AGE OR OTHER
HANDICAP, THE COURT MUST BE VIGILANT FOR HIS PROTECTION. [11]
In a gist, the issues to be resolved are (1) whether the sale of the subject
property by Delos Reyes to the Burgos siblings and the subsequent sale by
the siblings to Leonarda were valid and binding; and (2) whether respondents
were innocent purchasers in good faith and for value despite the forged deed
of sale of their transferor Delos Reyes.
The issues necessitate an inquiry into the facts. While, as a rule, factual
issues are not within the province of this Court, nonetheless, in light of the
conflicting factual findings of the two (2) courts below, an examination of the
facts obtaining in this case is in order.
The Rufloes aver that inasmuch as the Deed of Sale purportedly executed by
them in favor of Delos Reyes was a forgery, she could not pass any valid right
or title to the Burgos siblings and Leonarda. The Rufloes also contend that
since the Burgos siblings and Leonarda acquired the subject property with
notice that another person has a right to or interest in such property, they
cannot be considered innocent purchasers in good faith and for value.
For their part, the Burgos siblings and Leonarda insist that their title is valid
and binding. They maintain that under the Torrens System, a person dealing
with registered land may safely rely on the correctness on the certificate of
title without the need of further inquiry. For this reason, the Court cannot
disregard the right of an innocent third person who relies on the correctness
of the certificate of title even if the sale is void.
We find merit in the petition.

The issue concerning the validity of the deed of sale between the Rufloes
and Delos Reyes had already been resolved with finality in Civil Case No. M7690 by the RTC of Pasay City which declared that the signatures of the
alleged vendors, Angel and Adoracion Rufloe, had been forged. [12] It is
undisputed that the forged deed of sale was null and void and conveyed no
title. It is a well-settled principle that no one can give what one does not
have, nemo dat quod non habet. One can sell only what one owns or is
authorized to sell, and the buyer can acquire no more right than what the
seller can transfer legally.[13] Due to the forged deed of sale, Delos Reyes
acquired no right over the subject property which she could convey to
the Burgos siblings. All the transactions subsequent to the falsified sale
between the spouses Rufloe and Delos Reyes are likewise void, including the
sale made by the Burgos siblings to their aunt, Leonarda.
We now determine whether respondents Burgos siblings and Leonarda Burgos
were purchasers in good faith. It has been consistently ruled that a forged
deed can legally be the root of a valid title when an innocent purchaser for
value intervenes.[14]
An 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 it,
and who pays a full and fair price at the time of the purchase or before
receiving any notice of another persons claim. [15] The burden of proving the
status of a purchaser in good faith and for value lies upon one who asserts
that status. This onus probandi cannot be discharged by mere invocation of
the ordinary presumption of good faith. [16]
As a general rule, every person dealing with registered land, as in this
case, may safely rely on the correctness of the certificate of title issued
therefor and will in no way oblige him to go beyond the certificate to
determine the condition of the property. However, this rule admits of an
unchallenged exception:
a person dealing with registered land has a right to rely on the
Torrens certificate of title and to dispense with the need of inquiring
further except when the party has actual knowledge of facts and
circumstances that would impel a reasonably cautious man to make such
inquiry or when the purchaser has knowledge of a defect or the lack of title in
his vendor or of sufficient facts to induce a reasonably prudent man to
inquire into the status of the title of the property in litigation. The presence
of anything which excites or arouses suspicion should then prompt the
vendee to look beyond the certificate and investigate the title of the vendor
appearing on the face of said certificate. One who falls within the exception
can neither be denominated an innocent purchaser for value nor a purchaser
in good faith and, hence, does not merit the protection of the law. [17]
The circumstances surrounding this case point to the absolute lack of
good faith on the part of respondents. The evidence shows that the Rufloes
caused a notice of adverse claim to be annotated on the title of Delos Reyes
as early as November 5, 1979. [18] 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 may have a
better right than the registered owner thereof. Despite the notice of adverse
claim, the Burgos siblings still purchased the property in question.
Too, at the time the Burgos siblings bought the subject property on
December 4, 1984, Civil Case No. M-7690, [19] an action for damages, and
Criminal Case No. 10914-P,[20] for estafa, filed by the Rufloes against Delos
Reyes, were both pending before the RTC of Pasay City. This circumstance
should have alerted the Burgos siblings as to the validity of Delos Reyes title
and her authority and legal right to sell the property.
Equally significant is the fact that Delos Reyes was not in possession of the
subject property when she sold the same to the Burgos siblings. It was
Amado Burgos who bought the property for his children, the Burgos
siblings. Amado was not personally acquainted with Delos Reyes prior to the
sale because he bought the property through a real estate broker, a certain
Jose Anias, and not from Delos Reyes herself. There was no showing that
Amado or any of the Burgos siblings exerted any effort to personally verify
with the Register of Deeds if Delos Reyes certificate of title was clean and
authentic. They merely relied on the title as shown to them by the real estate
broker. An ordinarily prudent man would have inquired into the authenticity
of the certificate of title, the propertys location and its owners. Although it is
a recognized principle that a person dealing with registered land need not go
beyond its certificate of title, it is also a firmly established rule that where
circumstances exist which would put a purchaser on guard and prompt him to
investigate further, such as the presence of occupants/tenants on the
property offered for sale, it is expected that the purchaser would inquire first
into the nature of possession of the occupants, i.e., whether or not the
occupants possess the land in the concept of an owner. Settled is the rule
that a buyer of real property that is in the possession of a person other than
the seller must be wary and should investigate the rights of those in
possession. Otherwise, without such inquiry, the buyer can hardly be
regarded as a buyer in good faith.[21]

In the same vein, Leonarda cannot be categorized as a purchaser in

good faith. Since it was the Rufloes who continued to have actual possession
of the property, Leonarda should have investigated the nature of their
possession.
We cannot ascribe good faith to those who have not shown any
diligence in protecting their rights. Respondents had knowledge of facts that
should have led them to inquire and investigate in order to acquaint
themselves with possible defects in the title of the seller of the
property. However, they failed to do so. Thus, Leonarda, as well as the
Burgos siblings, cannot take cover under the protection the law accords to
purchasers in good faith and for value. They cannot claim valid title to the
property.
Moreover, the defense of indefeasibility of a Torrens title does not extend to a
transferee who takes it with notice of a flaw in the title of his transferor. To be
effective, the inscription in the registry must have been made in good
faith. A holder in bad faith of a certificate of title is not entitled to the
protection of the law, for the law cannot be used as a shield for fraud. [22]
We quote with approval the following findings of the trial court showing
that the sale between the Burgos siblings and Leonarda is simulated:
1. The sale was not registered, a circumstance which is inconceivable in a
legitimate transfer. A true vendee would not brook any delay in registering
the sale in his favor. Not only because registration is the operative act that
effects property covered by the Torrens System, but also because registration
and issuance of new title to the transferee, enable this transferee to assume
domiciliary and possessory rights over the property. These benefits of
ownership shall be denied him if the titles of the property shall remain in the
name of vendor. Therefore, it is inconceivable as contrary to behavioral
pattern of a true buyer and the empirical knowledge of man to assume that a
buyer who invested on the property he bought would be uninvolved and not
endeavor to register the property he bought. The nonchalance of Leonarda
amply demonstrates the pretended sale to her, and the evident scheme of
her brother Amado who invested on the property he bought.
2. Despite the sale of property to Leonarda, the sellers continued paying
taxes on the property from the time they acquired it from Elvira in 1984 up to
the present or a period of ten years. The tax payment receipts remained in
the name of Anita and her siblings, (Exhibits 16 to 16-H). On the other
hand, Leonarda does not even pretend to have paid any tax on the land she
allegedly bought in 1985. Even the Tax Declaration issued in 1988, three
years after the sale to her (Leonarda) is still in the name of her nieces and
nephew. These circumstances can only account for the fact that her nieces
and nephew remained the owners of the land and continued paying taxes
thereon.
3. Leonarda never exercised the attributes of ownership. Far from it, she
vested the exercise of domiciliary and possessory rights in her brother Amado
the father of Anita, Angelina, Angelito and Amy, by constituting him with full
power including the ejectment of plaintiffs, to defend and to enter a
compromise of any case he may file. She allowed the children of Amado to
remain as the registered owners of the property without pressing for its
transfer to her.
4. And, this simulated sale is the handiwork of Amado who apparently acted
advisedly to make it appear that his sister Leonarda as the second transferee
of the property is an innocent purchaser for value. Since he or his children
could not plausibly assume the stance of a buyer in good faith from the forger
Elvira Delos Reyes, knowing of Elviras defective title, Amado hoped that the
entry of his sister Leonarda, might conjure the image and who might pass off
as an innocent purchaser, specially considering that the notice of adverse
claim of the Plaintiffs which was annotated in Elviras title was not, strangely
enough, NOT carried over in the title of his children, who were made to
appear as the sellers to their Aunt Leonarda. It was a neat chicanery of
Amado to bring the property out of the reach of Plaintiffs thru a series of
transfers involving a third party, to make her appear as an innocent
purchaser for value. His sister could be manipulated to evict or oust the real
owners
from
their
own
property
thru
a
documentary
manipulation. Unfortunately, his scheme has not passed unnoticed by a
discerning and impartial evaluator, like this court. The Municipal Court of
Muntinlupa in Civil Case No. 17446 has even established that Amados
children Anita and others are buyers in bad faith who knew of the defective
title of their transferor Elvira Delos Reyes, the forger, as aforestated.
These circumstances taken altogether would show that the sale, which
occurred between Leonarda and the Burgos siblings, was simply a scheme
designed to cleanse the title passed on to them by the forger Delos Reyes.
Respondents had to resort to this strategy because they were fully aware that
their title, having originated from the forged deed of sale of Delos Reyes, was
not a clean and valid title. The trial court explained, thus:
And, this simulated sale is the handiwork of Amado who apparently acted
advisedly to make it appear that his sister Leonarda as the second transferee
of the property is an innocent purchaser for value. Since he or his children
could not plausibly assume the stamp of a buyer in good faith from the forger
Elvira Delos Reyes, knowing Elviras defective title, Amado had hoped that

the entry of his sister Leonarda, might conjure the image and might pass off
as an innocent purchaser. xxx. It was a neat chicanery of Amado to bring the
property out of the reach of plaintiffs [herein petitioners] thru a series of
transfers involving a third party, to make her appear as an innocent
purchaser for value. Unfortunately, his scheme has not passed unnoticed by
a discerning and impartial evaluator, like this Court. [23] (Words in bracket
ours)
Patently, the Burgos siblings were not innocent purchasers for value and the
simulated sale to Leonarda did not remove the defect in their title.
Accordingly, we sustain the trial courts award of P20,000.00 as moral
damages, P50,000.00 as exemplary damages, and P50,000.00 as attorneys
fees.[24]
However, the actual damages in the amount of P134,200.00 should be
deleted. In view of this Courts ruling that the property rightfully belongs to
petitioners and must be restored to them, there is no more basis for the
award of said actual damages to the Rufloes.
WHEREFORE, the petition for review is hereby GRANTED. The
assailed decision and resolution of the Court of Appeals in CA-G.R. CV. No.
49939 areREVERSED and SET ASIDE. Accordingly, the decision of the trial
court is hereby REVIVED, except the award of actual damages which must
be deleted. SO ORDERED.
FULE VS. DE LEGARE
REGALA, J.:
This is a petition for certiorari to review the decision of the Court of Appeals,
promulgated on November 16, 1960, in Civil Case No. 15728-R, entitled"
Emilia E. Legare, plaintiff-appellant, versus Conrado C. Fule and Lourdes F.
Aragon, defendants-appellants..
The facts of this case as found by the Court of Appeals in its decision are as
follows:
This is an action for annulment of certain deeds of sale and conveyance
covering a parcel of land, together with the improvements existing thereon,
situated in the municipality of San Juan, province of Rizal, and for damages.
It appears in evidence that the plaintiff, Emilia E. de Legare, was the owner of
a parcel of land, together with a residential house erected thereon, situated
at No. 146 Sta. Mesa Boulevard Extension, San Juan, Rizal, her ownership
being evidenced by Transfer Certificate of Title No. 21253, issued by the
Office of the Register of Deeds of the province of Rizal. She was living in that
house together with defendant John W. Legare, her adopted son, and a maid
named Purita Tarrosa. On September 26, 1951, the plaintiff, thru a public
deed, constituted on the above mentioned house and lot a first class
mortgage in favor of defendant Tomas Q. Soriano to guarantee the payment
of a loan in the amount of P8,000.00. This deed of mortgage was on the same
date recorded in the Office of the Register of Deeds of the province of Rizal
and annotated in the memorandum of encumbrances of transfer certificate of
title No. 21253. On account of certain partial payments made by the plaintiff
and the contracting by the latter of additional loans in small amounts from
Tomas Q. Soriano the debt guaranteed by the above mentioned mortgage
was reduced to the sum of P7,000.00 as of February 23, 1953. These
transactions, however, were not annotated on the memorandum of
encumbrances of the above mentioned certificate of title.
At about 9:00 o'clock in the evening of March 29, 1953, while the plaintiff,
John W. Legare, and Purita Tarrosa were seated in the drawing room of the
house above referred to, an unknown man intruded into the room,
approached the plaintiff, covered her mouth, and, pressing a knife on her
side, demanded that she give him P10,000.00 if she did not like to be killed.
The plaintiff replied that she did not have that amount. Thereupon, the
intruder told the plaintiff to raise the necessary amount as he would come
back the following morning and once more threatened to kill her if she would
fail to do so. After having made that threat, the intruder left the house. John
W. Legare did not call for help nor made any attempt to defend his mother,
and when Purita Tarrosa stood up to go down the house to call for a
policeman, he held the latter by the hand and slapped her on the face when
she persisted in going down, telling her that the man had companions waiting
downstairs.
After the intruder was gone John W. Legare approached the plaintiff, and
exhibiting to her a paper told her to sign it as with the same he could secure
from the U.S. Veterans Administration the amount which they needed to
deliver to that intruder. The plaintiff, who did not know how to read nor write,
although she could sign her name, asked John W. Legare what that paper
was. The latter answered that it was an application for payment of
compensation. As plaintiff had confidence in John W. Legare and prior to that

occasion she had received from the U.S. Veterans Administration a letter
concerning some compensation she was to receive, she signed that paper.
After the paper was signed by the plaintiff, John W. Legare had Purita Tarrosa
sign it as a witness, without however, allowing the latter to read it.
After that paper was thus signed, John W. Legare told the plaintiff and Purita
Tarrosa to pack up their things as they were leaving the house to hide in a
hotel, adding that the men who came earlier that evening were Huks. Early
the next morning John W. Legare took the plaintiff and Purita Tarrosa to the
Windsor Hotel in the City of Manila, and after conducting them to a room in
the hotel, told them not to leave the room or peep out of the window as they
might be seen by the men who came to their house in the previous evening.
This advise given, John W. Legare left the hotel. The plaintiff and Purita
Tarrosa stayed in that hotel for about a month and a half. John W. Legare
occasionally visited them there. In one of said occasional visits the plaintiff
told John that she wanted to go home. The latter told her that it was not yet
safe for her to go home. On May 7, 1953, however, John W. Legare came to
the hotel, gave the plaintiff a five-peso bill, and told her that she could use
the amount for transportation expenses if she wanted to leave the hotel. On
the following morning the plaintiff and Purita Tarrosa left the hotel and went
direct to her house at Sta. Mesa Boulevard Extension. When they arrived at
the house, however, they found that it was occupied by strangers, and that
all her furniture and personal belongings had disappeared. Inquiring from
those strangers how they happened to occupy the house, the latter told her
that John W. Legare had sold the house to them and that it was no longer
hers. The plaintiff thereupon sought the help of her attorney. It was then
discovered that the paper which John W. Legare had the plaintiff and Purita
Tarrosa sign in the evening of March 29, 1953 was a deed of sale of the lot
and house in question in favor of John W. Legare for the sum of P12,000.00,
and that it was supposed to have been executed on the 7th day of April,
1953, and acknowledged before a notary public on that date. Exhibit X.
It further appears that sometime prior to May 9, 1953, John W. Legare
approached Elias B. Fermin, the real estate broker who intervened in the
securing of the loan contracted by the plaintiff from Tomas Q. Soriano, and
sought said broker's help to sell the lot and house in question. Elias B. Fermin
accepted the commission and offered the property in sale to defendants
spouses Conrado C. Fule and Lourdes F. Aragon. Conrado C. Fule read the title
papers in the hand of John W. Legare and inspected the premises, and
satisfied with the result of his inspection, he agreed to purchase the property
for P12,000.00 on condition that the sum of P7,000, the unpaid balance of
plaintiff's indebtedness to Tomas Q. Soriano secured by a mortgage thereon,
would be deducted from the price, and that he would assume said mortgage.
The terms offered by Conrado C. Fule being acceptable to John W. Legare and
Tomas Soriano, the parties proceeded to formalize the contract. Accordingly,
on May 9, 1953, defendant Tomas Q. Soriano executed a deed of absolute
sale thereof, free of all liens and encumbrances, in favor of defendant
spouses Conrado C. Fule and Lourdes F. Aragon, Exhibit X-2, and said spouses
in turn executed in favor of Tomas Q. Soriano a deed of mortgage covering
the property for the sum of P7,000.00. Exhibit X-3. These three deeds,
together with transfer certificate of Title No. 21253, issued in the name of the
plaintiff, were on that same date presented for registration in the Office of the
Register of Deeds of the province of Rizal. The latter, following the usual
procedure, recorded, first, the deed of sale executed by the plaintiff in favor
of defendant John W. Legare (Exhibit 1) and issued in the name of the latter
transfer certificate of title No. 30126 which cancelled transfer certificate of
title No. 21253 (Exhibit Y), then the deed of sale executed by John W. Legare
in favor of the spouses Conrado C. Fule and Lourdes F. Aragon (Exhibit X-2)
and issued in favor of the latter transfer certificate of title No. 30127 (Exhibit
Y-1), which cancelled transfer certificate of title No. 30126, and then
annotated on the memorandum of encumbrances of transfer certificate of
title No. 30127 the deed of mortgage (Exhibit X-1) executed in favor of Tomas
Q. Soriano by said spouses. Once these were accomplished, Elias B. Fermin
and John W. Legare went back to the house of the spouses Conrado C. Fule
and Lourdes P. Aragon and gave the transfer certificate of title No. 30127.
Thereupon said spouses delivered to John W. Legare the balance of the
purchase price of the property after deducting therefrom the amount of the
mortgage constituted thereon in favor of Tomas Q. Soriano, the brokerage
fees and the expenses incident to the execution and registration of said
deeds and issuance of new certificates of title, which amounted to a little
P4,000.00.
Upon the evidence, the trial court rendered judgment, the dispositive part of
which reads as follows:
IN VIEW OF ALL THE FOREGOING, this Court hereby orders:
1) the cancellation of Certificates of Title Nos. 30127 and 10126, thereby
leaving valid TCT No. 21253 in the name of Emilia E. de Legare together with
the encumbrance thereon in favor of Tomas Q. Soriano;
2) the delivery of the possession of the premises to the plaintiff and the
monthly rental of P150.00 a month from May 9, 1953, up to and including the
date on which the delivery is to be made, this obligation being understood to

be joint and several insofar as the defendants Fule and Aragon are
concerned;
3) the award of P5,000.00 as moral damages in favor of the plaintiff and
enforceable against John W. Legare for the fraud perpetrated by the latter on
the former;
4) the award of P1,000.00 as attorney's is fees enforceable against the
defendants Fule and Aragon;

registered owner. They demanded more. They insisted that the sale in favor
of John W. Legare be first registered and that the transfer in their favor be
thereafter likewise registered. It was only after all these were complied with
that they paid the purchase price. In other words, the petitioner spouses
relied not really on the documents exhibited to them by John W. Legare, but,
on the registerability of those documents. This in Our view, satisfies the
measure of good faith contemplated by law.

And on the cross-claim, the court orders

It is true that at the time the herein petitioners purchased the properties from
John W. Legare, he was not yet the registered owner of the same. This fact
alone, however, could not have caused the herein petitioners to lose their
status as innocent purchasers for value. It should be recalled that although
the title was in the name of the respondent Emilia E. de Legare, the
certificate of title was in the possession of her adopted son, John. Under
Section 55 of Act 496, as amended, John's possession of the certificate and
his subsequent production of it to the herein petitioners operated as a
"conclusive authority from the registered owner to the register of deeds to
enter a new certificate."

1) John W. Legare to refund to the spouses Fule and Aragon the amount paid
by the latter on account of the sale contained in Exhibit X-2 plus interest
thereon at the legal rate from the date of the cross-claim;
2) the award of P5,000.00 as moral damages in favor of the spouses Fule and
Aragon and enforceable against John W. Legare for the misrepresentation
made by him;.
3) the reimbursement to the spouses Fule and Aragon by John W. Legare of all
amounts which may be paid by the former to the plaintiff by way of rentals
for the premises involved herein, as well as attorney's fees in the amount of
P1,000.00.
SO ORDERED.
The Court of Appeals, in deciding the appeal, entered a judgment the
dispositive portion of which follows:.
WHEREFORE, modified as indicated above, i.e., the transfer certificate of title
No. 21253 issued in the name of Emilia E. de Legare is revived with the
mortgage in favor of appellee Tomas Q. Soriano annotated on its
memorandum of encumbrances but reduced to the amount of P7,000.00, and
that the award of attorney's fees in the amount of P1,000.00 to be paid by
the spouses Conrado C. Fule and Lourdes F. Aragon, in favor of the plaintiff, is
eliminated therefrom, the judgment appealed from is hereby affirmed in all
other respects, without special pronouncement as to costs in this instance. IT
IS SO ORDERED.
In elevating the judgment of the Court of Appeals to this Tribunal for review,
herein petitioners discussed 6 assignments of error. However, this Court is of
the view that, in effect and substance, only one issue was raised.We have
always refrained from reviewing factual findings of the Court of Appeals and
the first two errors assigned were but attempts at disputing the same. The
other four were simply detailed aspects of the one, sole issue, to wit:
Were the herein petitioners purchasers in good faith and for value of the
properties here contested?
Guided by the facts found by the Court of Appeals, We hold the herein
petitioners innocent purchasers for value of the house and lot here disputed.
In consequence, they are here adjudged the lawful owners thereof.
A purchaser in good faith is one who buys property of another, without notice
that some other persons 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 claim or interest of some other persons in the property.
Good faith consists in an honest intention to abstain from taking any
unconscientious advantage of another (Cui and Joven v. Henson, 51 Phil.
606). We have measured the conduct of the petitioner spouses by this
yardstick.
These facts were uncontroverted. The negotiation and transaction which
eventually caused the certificate of title to be transferred from the herein
respondent to the petitioner spouses were conducted by a real estate broker
licensed since 1938. Nothing in John W. Legare's person or behaviour
suggested anything suspicious. He was the adopted son of the herein
respondent, and, to the time that he was contracting with the petitioner
spouses, he had not been known to commit crime or dishonesty. On the
contrary, John has had previous dealings with the real estate broker during
which he exhibited the expected degree of trustworthiness.
It should be noted that the deed of sale was regular upon its face, and no one
would have questioned its authenticity since it was duly acknowledged before
a notary public. Moreover, even if the petitioners had the opportunity to
compare the signature of the respondent on the deed of conveyance with a
specimen of her genuine signature, the effort, nonetheless, would have been
in vain since the respondent's signature on the document was admittedly
hers. Lastly, it should not be overlooked that the respondent, during the
whole period of the negotiation, was nowhere available to confirm or deny
the execution of the deed. She was then in hiding, or, hidden, at the Windsor
Hotel in Manila.
The diligence and precaution observed by the petitioners themselves could
hardly have been wanting. The records show that they did not rely solely and
fully upon the deed of sale in favor of John W. Legare and the fact that John
had then in his possession the corresponding certificate of title of the

SEC. 55.

xxx

xxx

xxx

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 or 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. ....
While it was true that the transfer in favor of John was still unregistered when
he sought to sell the property to the herein petitioners, it was not true that
the latter observed no precaution whatsoever from the complication of such
non-registration. As already discussed above, the petitioners required that
the registration of the previous sale (from the respondent to John W. Legare)
be first attended to and completed. After that was done and the certificate of
title thereof was issued to John by the Register of Deeds, they still withheld
payment till the second sale (from John to the petitioners) has in turn
registered and the corresponding certificate of title therefor was issued in
their names. It was only after all these were followed that the entire
negotiation was terminated with the payment of the balance of the purchase
price. All these, We hold, were adequate safeguards against the objection
interposed. A contrary conclusion would operate to weaken the reliance of
the general public on the indefeasibility of titles registered under the Torrens
System.
We have so far demonstrated the good faith of the petitioner spouses. By the
very facts established by the Court of Appeals, however, there is still another
reason why the property herein in question should be adjudged to the
petitioners.
Although the deed of sale in favor of John W. Legare was fraudulent, the fact
remains that he was able to secure a registered title to the house and lot. It
was this title which he subsequently conveyed to the herein petitioners. We
have indeed ruled that a forged or fraudulent deed is a nullity and conveys no
title (Director of Lands v. Addison, 49 Phil. 19). However, We have also laid
down the doctrine that there are instances when such a fraudulent document
may become the root of valid title. One such instance is where the certificate
of title was already transferred from the name of the true owner to the forger,
and while it remained that way, the land was subsequently sold to an
innocent purchaser. For then, the vendee had the right to rely upon what
appeared in the certificate (Inquimboy vs. Cruz, G.R. No. L-13953, July 28,
1960).
Wherefore, the parties respectfully pray that the foregoing stipulation of facts
be admitted and approved by this Honorable Court, without prejudice to the
parties adducing other evidence to prove their case not covered by this
stipulation of facts.
We have been constrained to adopt the conclusion here set forth because
under the Torrens system, "registration is the operative act that gives validity
to the transfer or creates a lien upon the land (Secs. 50 and 51, Land
Registration Act). Consequently, where there was nothing in the certificate of
title to indicate any cloud or vice in the ownership of the property, or any
encumbrance thereon, the purchaser is not required to explore farther 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. If the rule were
otherwise, the efficacy and conclusiveness of the certificate of title which the
Torrens system seeks to insure would entirely be futile and nugatory. (Reynes
vs. Barrera, 68 Phil. 656; De Lara and De Guzman vs. Ayroso, 50 O.G. No. 10,
4838). The public shall then be denied of its foremost motivation for
respecting and observing the Land Registration Act. In the end, the business
community stands to be inconvenienced and prejudiced immeasurably.

Furthermore, when the Register of Deeds issued a certificate of title in the

name of John W. Legare, and thereafter registered the same, John W. Legare,
insofar as third parties were concerned, acquired a valid title to the house
and lot here disputed. When, therefore, he transferred this title to the herein
petitioners, third persons, the entire transaction fell within the purview of
Article 1434 of the Civil Code. The registration in John W. Legare's name
effectively operated to convey the properties to him.
ART. 1434. When a person who is not the owner of a thing sells or alienates
and delivers it, and later the seller or grantor acquires title thereto, such title
passes by operation of law to the buyer or grantee.
This Court sympathizes with the respondent. It is aware of the treacherous,
painful fraud committed on her by her adopted son. But positive provisions of
law and settled jurisprudence cannot be subordinated to that feeling.
Besides, the records of this case reveal that the herein respondent is herself
not entirely free from blame. We note that when John presented to her the
document which turned out to be a bed of conveyance in his favor, she
readily affixed her signature thereto upon the simple representation of John
that it was a document pertaining to her claim with the U.S. Veterans
Administration. She could have asked her maid to read the contents of the
same for her and yet she did not. These, We believe, amount to a lack of
prudence and precaution on the part of Mrs. Emilia de Legare.
IN VIEW OF THE FOREGOING, the decision of the Court of Appeals is hereby
reversed and set aside. A new one is here entered dismissing the
respondent's complaint and declaring the petitioners herein the lawful owners
of the properties here involved. Without pronouncement as to costs.

YU VS. PACLEB, GR NO. 172172

PUNO, C.J.:
Before the Court is a Petition filed under Rule 45 of the Rules of Court
assailing: (i) the Decision[1] dated August 31, 2005 of the Court of Appeals in
CA-G.R. CV No. 78629 setting aside the Decision [2] dated December 27, 2002
of the Regional Trial Court in Civil Case No. 1325-96; and (ii) the
Resolution[3] dated April 3, 2006 of the Court of Appeals denying
reconsideration of the said decision.
The facts are well established.
Respondent Baltazar N. Pacleb and his late first wife, Angelita Chan, are the
registered owners of an 18,000-square meter parcel of land in Barrio
Langcaan, Dasmarias, Cavite, covered by Transfer Certificate of Title (TCT)
No. T-118375[4] (Langcaan Property).
In 1992, the Langcaan Property became the subject of three (3)
documents purporting to transfer its ownership. On February 27, 1992, a
Deed of Absolute Sale [5] was entered into between Spouses Baltazar N. Pacleb
and Angelita Chan and Rebecca Del Rosario. On May 7, 1992, a Deed of
Absolute Sale[6] was entered into between Rebecca Del Rosario and Ruperto L.
Javier (Javier). On November 10, 1992, a Contract to Sell [7] was entered into
between Javier and petitioner spouses Ernesto V. Yu and Elsie Ong Yu. In their
contract, petitioner spouses Yu agreed to pay Javier a total consideration
of P900,000. Six hundred thousand pesos (P600,000) (consisting of P200,000
as previous payment and P400,000 to be paid upon execution of the contract)
was acknowledged as received by Javier andP300,000 remained as
balance. Javier undertook to deliver possession of the Langcaan Property and
to sign a deed of absolute sale within thirty (30) days from execution of the
contract.
All the aforementioned sales were not registered.
On April 23, 1993, petitioner spouses Yu filed with the Regional Trial
Court of Imus, Cavite, a Complaint [8] for specific performance and damages
against Javier, docketed as Civil Case No. 741-93, to compel the latter to
deliver to them ownership and possession, as well as title to the Langcaan
Property. In their Complaint, they alleged that Javier represented to them
that the Langcaan Property was not tenanted. However, after they already
paid P200,000 as initial payment and entered into an Agreement dated
September 11, 1992 for the sale of the Langcaan Property, they discovered it
was tenanted by Ramon C. Pacleb (Ramon). [9]Petitioner spouses demanded
the cancellation of their agreement and the return of their initial
payment. Thereafter, petitioner spouses and Javier verified from Ramon if he
was willing to vacate the property and the latter was agreeable. Javier then
promised to make arrangements with Ramon to vacate the property and to
pay the latter his disturbance compensation. Hence, they proceeded to enter
into a Contract to Sell canceling the Agreement mentioned. However, Javier
failed to comply with his obligations.

Javier did not appear in the proceedings and was declared in

default. On September 8, 1994, the trial court rendered a Decision, [10] the
dispositive portion of which reads:

Accordingly, the appellate court ordered the cancellation of the annotation of

the Decision in Civil Case No. 741-93 on the title of the Langcaan
Property. The Court of Appeals denied reconsideration of said decision. [28]
Hence, this Petition.

WHEREFORE, judgment is hereby rendered for the plaintiff and

against the defendant based on the sale of subject parcel of land to the
former who is entitled thereby to the ownership and possession thereof from
the said defendant who is further directed to pay damages of Thirty Thousand
Pesos (P30,000.00) including attorneys fees and expenses incurred by the
plaintiff in this case as a consequence.

Two issues are involved in the instant petition. The first is whether
petitioner spouses are innocent purchasers for value and in good faith. The
second is whether ownership over the Langcaan Property was properly vested
in petitioner spouses by virtue of the Decision in Civil Case No. 741-93.

The defendant is further directed to deliver the certificate of title of the land
to the plaintiff who is entitled to it as transferee and new owner thereof upon
payment by the plaintiff of his balance of the purchase price in the sum of
Three Hundred Thousand Pesos (P300,000.00) with legal interest from date.

Petitioner spouses argue that they are purchasers in good faith. Further, they
contend that the Court of Appeals erred in finding that: Ramon told him
[Ernesto V. Yu] that the property is owned by his father, Baltazar, and that he
is the mere caretaker thereof [29] since Ramon clarified that his father was
the former owner of the Langcaan Property. In support of their stance, they
cite the following testimony of petitioner Ernesto V. Yu:

SO ORDERED.
The said Decision and its Certificate of Finality [11] were annotated on
TCT No. T-118375 as Entry No. 2676-75 [12] and Entry No. 2677-75,
[13]
respectively.
On March 10, 1995, petitioner spouses and Ramon and the latters
wife, Corazon Bodino, executed a Kusangloob na Pagsasauli ng Lupang
Sakahan at Pagpapahayag ng Pagtalikod sa Karapatan.[14] Under the said
agreement, petitioner spouses paid Ramon the amount of P500,000 in
exchange for the waiver of his tenancy rights over the Langcaan Property.
On October 12, 1995, respondent filed a Complaint [15] for annulment of
deed of sale and other documents arising from it, docketed as Civil Case No.
1199-95. He alleged that the deed of sale purportedly executed between him
and his late first wife and Rebecca Del Rosario was spurious as their
signatures thereon were forgeries. Respondent moved to have summons
served upon Rebecca Del Rosario by publication since the latters address
could not be found. The trial court, however, denied his motion.
[16]
Respondent then moved to dismiss the case, and the trial court granted
the motion in its Order[17] dated April 11, 1996, dismissing the case without
prejudice.
Meanwhile, on November 23, 1995, petitioner spouses filed an action for
forcible entry against respondent with the Municipal Trial Court (MTC). They
alleged that they had prior physical possession of the Langcaan Property
through their trustee, Ramon, until the latter was ousted by respondent in
September 1995. The MTC ruled in favor of petitioner spouses, which decision
was affirmed by the Regional Trial Court. [18] However, the Court of Appeals set
aside the decisions of the lower courts and found that it was respondent who
had prior physical possession of the property as shown by his payment of real
estate taxes thereon.[19]
On May 29, 1996, respondent filed the instant case for removal of cloud from
title with damages to cancel Entry No. 2676-75 and Entry No. 2677-75, the
annotated Decision in Civil Case No. 741-93 and its Certificate of Finality,
from the title of the Langcaan Property. [20] Respondent alleged that the deed
of sale between him and his late first wife and Rebecca Del Rosario, who is
not known to them, could not have been possibly executed on February 27,
1992, the date appearing thereon. He alleged that on said date, he was
residing in the United States[21] and his late first wife, Angelita Chan, died
twenty (20) years ago.[22]
On May 28, 1997, during the pendency of the instant case before the
trial court, respondent died without having testified on the merits of his
case. Hence, he was substituted by his surviving spouse, Antonieta S. Pacleb,
and Lorna Pacleb-Guerrero, Florencio C. Pacleb and Myrla C. Pacleb
representing the children with the first wife. [23]
On December 27, 2002, the trial court dismissed respondents case
and held that petitioner spouses are purchasers in good faith. [24] The trial
court ratiocinated that the dismissal of respondents complaint for annulment
of the successive sales at his instance sealed the regularity of the
purchase[25] by petitioner spouses and that he in effect admits that the said
salewas valid and in order. [26] Further, the trial court held that the Decision
in Civil Case No. 741-93 on petitioner spouses action for specific
performance against Javier is already final and can no longer be
altered. Accordingly, the trial court ordered the cancellation of TCT No. T118375 in the name of respondent and the issuance of a new title in the
name of petitioner spouses. The trial court also ordered the heirs of
respondent and all persons claiming under them to surrender possession of
the Langcaan Property to petitioner spouses.
On appeal by respondent, the Court of Appeals reversed and set aside
the decision of the trial court.[27] The Court of Appeals ruled that petitioner
spouses are not purchasers in good faith and that the Decision in Civil Case
No. 741-93 did not transfer ownership of the Langcaan Property to them.

Atty. Abalos: Mr. Witness, you testified during the direct that you acquired
the subject property from one Ruperto Javier, when for the first time have you
come to know Mr. Ruperto Javier?
A: I first came to know him in the year 1992 when he was accompanied by
Mr. Kalagayan. He showed me some papers to the office.
Q: Do you know the exact date Mr. Witness?
A: I forgot the exact date, maam.
Q: More or less can you estimate what month?
A: Sometime in February or March 1992.
Q: When you said that the subject property was offered to you for sale,
what did you do Mr. Witness, in preparation for a transaction?
A: I asked my lawyer Atty. Florencio Paredes to check and verify the Deed of
Sale.
Q:
And after Atty. Florencio Paredes verified the document you
decided to buy the property?
A: No, maam. We visited the place.
Q:

When was that?

A: I could not remember the exact date but I visited the place and I met the
son, Ramon Pacleb. I went there in order to verify if the property is
existing. When I verified that the property is existing Mr. Javier visited me
again to follow-up what decision I have but I told him that I will wait for my
lawyers advi[c]e.
Q: Mr. Witness, what particular instruction did you give to your lawyer?
A: To verify the title and the documents.
Court: Documents for the title?
A:

Yes, Your Honor.

Atty. Abalos: When you were able to get the title in whose name the title
was registered?
A: It was registered in the name of the older Pacleb.
Court: By the way Mr. Witness, when you said you met Ramon Pacleb the
son of the owner of the property, was he residing there or he was (sic) just
went there? When you visited the property did you find him to be residing in
that property?
A: No, Your Honor.
Atty. Abalos: You mean to say Mr. Witness, you just met Mr. Ramon Pacleb in
the place at the time you went there?
A: No, maam. He went to my office with Mr. Kalagayan. He was introduced
to me at the Kelly Hardware. I do not know Mr. Ruperto Javier. He told me
that there is a property that [is] tenanted and occupied by the son Ramon
Pacleb after that I went with them to visit the place. On (sic) there he
introduced me [to] Mr. Ramon Pacleb the caretaker of the property and I told
them that I will still look at the property and he gave me some documents
and that (sic) documents I gave it to my lawyer for verification.

Q: You said that Mr. Ruperto Javier went to your office with Mr. Kalagayan, so
the first time you visited the property you did not see Mr. Ramon Pacleb
there?
A: No, maam. When I went there I met Ramon Pacleb the caretaker and he
was the one who showed the place to us.
Q: Mr. Witness, since you visited the place you were able to see the allege[d]
caretaker Mr. Ramon Pacleb, did you ask him regarding the property or the
whereabouts of the registered owner, did you ask him?
A: When Ruperto introduced me to Mr. Ramon Pacleb he told me that he is
the son of the owner and he is the caretaker and his father is in the
States. He showed me the place, I verified and I saw the monuments and I
told him I will come back to check the papers and if it is okay I will bring with
me the surveyor.
Q: Could you estimate Mr. Witness, more or less what was the
month when you were able to talk to Mr. Ramon Pacleb?
A: I am not sure but it was morning of February.
Q: So it was in February, Mr. Witness?
A:

I am not sure if February or March.

Q: But definitely

sum of TWO HUNDRED THOUSAND PESOS (P200,000.00). [31] (Emphasis

supplied)
This inconsistency casts grave doubt as to whether petitioner spouses
personally inspected the property before purchasing it.
More importantly, however, several facts should have put petitioner spouses
on inquiry as to the alleged rights of their vendor, Javier, over the Langcaan
Property.
First, it should be noted that the property remains to be registered in the
name of respondent despite the two (2) Deeds of Absolute Sale [32] purporting
to transfer the Langcaan Property from respondent and his late first wife,
Angelita Chan, to Rebecca Del Rosario then from the latter to Javier. Both
deeds were not even annotated in the title of the Langcaan Property.
Second, a perusal of the two deeds of absolute sale reveals that they were
executed only about two (2) months apart and that they contain identical
provisions.
Third, it is undisputed that the Langcaan Property is in the possession of
Ramon, the son of the registered owner. Regardless of the representations
given by the latter, this bare fact alone should have made petitioner spouses
suspicious as to the veracity of the alleged title of their vendor. Moreover, as
noted by the Court of Appeals, petitioner spouses could have easily verified
the true status of the Langcaan Property from Ramons wife, since the latter
is their relative, as averred in paragraph 13 of their Answer in Civil Case No.
1199-95.[33] The case law is well settled, viz.:

A: Before I purchased the property I checked the property.

Q:
But that was definitely after Mr. Ruperto offered to you for sale the
subject property?
xxx
Atty. Abalos: Okay, Mr. Witness, you said that you talked to Mr. Ramon
Pacleb and he told you that his father is the owner of the property?
A: He told me that property is their former property and it was owned by
them. Now, he is the tenant of the property.[30] (Emphasis ours)
Petitioner spouses conclude that based on their personal inspection of the
property and the representations of the registered tenant thereon, they had
no reason to doubt the validity of the deeds of absolute sale since these were
duly notarized. Consequently, the alleged forgery of Angelita Chans
signature is of no moment since they had no notice of any claim or interest of
some other person in the property despite their diligent inquiry.
We find petitioner spouses contentions without merit.
At the outset, we note that in petitioner Ernesto V. Yus testimony, he
stated that he inspected the Langcaan Property and talked with the tenant,
Ramon, before he purchased the same. However, in his Complaint for
specific performance and damages which he filed against Javier, he alleged
that it was only after he had entered into an Agreement for the sale of the
property and his initial payment of P200,000 that he discovered that the
property was indeed being tenanted by Ramon who lives in the said
farm, viz.:
8. Sometime on September 11, 1992, defendant came again to the Office of
plaintiff reiterating his offer to sell said Lot No. 6853-D, containing an area of
18,000 square meters, at P75.00 per square meters (sic). Defendant
manifested to the plaintiff that if his offer is acceptable to the plaintiff, he
binds and obligates himself to pay the capital gains of previous transactions
with the BIR and register subject Lot No. 6853-D in his name (defendant). On
these conditions, plaintiff accepted the offer and made [the] initial
payment of TWO HUNDRED THOUSAND PESOS (P200,000.00) to
defendant by issuance and delivery of plaintiffs personal check.
9. Sometime on September 11, 1992, plaintiff and defendant
signed an AGREEMENT on the sale of Lot No. 6853-D of the subdivision
plan (LRC) Psd-282604, containing an area of 18,000 square meters, more or
less, located at Bo. Langcaan, Municipality of Dasmarinas, Province of Cavite,
at a selling price of P75.00 per square meter. A xerox copy of this
AGREEMENT signed by the parties thereto is hereto attached and marked as
ANNEX D of this complaint.
10. Thereafter, however, plaintiff and defendant, with their surveyor
discovered that subject Lot No. 6853-D offered for sale to the
plaintiff is indeed being tenanted by one RAMON PACLEB who lives in
the said farm.
11. In view of the foregoing developments, plaintiff informed defendant that
he wanted the Agreement be cancelled and for the defendant to return the

The law protects to a greater degree a purchaser who buys from the
registered owner himself. Corollarily, it requires a higher degree of
prudence from one who buys from a person who is not the
registered owner, although the land object of the transaction is
registered. While one who buys from the registered owner does not need to
look behind the certificate of title, one who buys from one who is not the
registered owner is expected to examine not only the certificate of
title but all factual circumstances necessary for him to determine if
there are any flaws in the title of the transferor, or in his capacity to
transfer the land.
This Court has consistently applied the stricter rule when it comes to
deciding the issue of good faith of one who buys from one who is not the
registered owner, but who exhibits a certificate of title. [34] (Emphasis supplied)
Finally, as correctly pointed out by the Court of Appeals, the dismissal of Civil
Case No. 1199-95 (the action to annul the successive sales of the property)
cannot serve to validate the sale to petitioner spouses since the dismissal
was ordered because Rebecca Del Rosario and Javier could no longer be
found. Indeed, the dismissal was without prejudice.
Based on the foregoing, therefore, petitioner spouses cannot be considered
as innocent purchasers in good faith.
We now go to the second issue.
Petitioner spouses argue that the decision of the Regional Trial Court in
Civil Case No. 741-93 as to the rightful owner of the Langcaan Property is
conclusive and binding upon respondent even if the latter was not a party
thereto since it involved the question of possession and ownership of real
property, and is thus not merely an action in personam but an action quasi in
rem.
In Domagas v. Jensen,[35] we
personam and actions quasi in rem.

distinguished

between

actions in

The settled rule is that the aim and object of an action determine its
character. Whether a proceeding is in rem, or in personam, or quasi in rem for
that matter, 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 is based on the
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. The purpose of a proceeding in personam is to impose, through the
judgment of a court, some responsibility or liability directly upon the person
of the defendant. Of this character are suits to compel a defendant to
specifically perform some act or actions to fasten a pecuniary liability on
him. An action in personam is said to be one which has for its object
a judgment against the person, as distinguished from a judgment
against the propriety (sic) to determine its state. It has been held that
an action in personam is a proceeding to enforce personal rights or
obligations; such action is brought against the person.
xxx

On the other hand, a proceeding quasi in rem is one brought against persons
seeking to subject the property of such persons to the discharge of the claims
assailed. In an actionquasi in rem, an individual is named as
defendant and the purpose of the proceeding is to subject his
interests therein to the obligation or loan burdening the property.
Actionsquasi in rem deal with the status, ownership or liability of a particular
property but which are intended to operate on these questions only as
between the particular parties to the proceedings and not to ascertain or cut
off the rights or interests of all possible claimants. The judgments therein are
binding only upon the parties who joined in the action.
Civil Case No. 741-93 is an action for specific performance and
damages filed by petitioner spouses against Javier to compel performance of
the latters undertakings under their Contract to Sell. As correctly held by the
Court of Appeals, its object is to compel Javier to accept the full payment of
the purchase price, and to execute a deed of absolute sale over the Langcaan
Property in their favor. The obligations of Javier under the contract to sell
attach to him alone, and do not burden the Langcaan Property. [36]
We have held in an unbroken string of cases that an action for specific
performance is an action in personam.[37] In Cabutihan v. Landcenter
Construction and Development Corporation,[38] we ruled that an action
for specific performance praying for the execution of a deed of sale in
connection with an undertaking in a contract, such as the contract to sell, in
this instance, is an action in personam.
Being a judgment in personam, Civil Case No. 741-93 is binding only
upon the parties properly impleaded therein and duly heard or given an
opportunity to be heard. [39] Therefore, it cannot bind respondent since he was
not a party therein. Neither can respondent be considered as privy thereto
since his signature and that of his late first wife, Angelita Chan, were forged
in the deed of sale.
All told, we affirm the ruling of the Court of Appeals finding that, as
between respondent and petitioner spouses, respondent has a better right
over the Langcaan Property as the true owner thereof.
IN VIEW WHEREOF, the petition is DENIED. The decision of the Court of
Appeals is affirmed. Costs against petitioners. SO ORDERED.

DOMINGO VS. REED, GR NO. 157701

PANGANIBAN, J.:
When dealing with registered land, prospective buyers are normally not
required by law to inquire further than what appears on the face of
the Torrens certificate of title on file with the Register of Deeds. Equally
settled is the principle, however, that purchasers cannot close their eyes to
known facts that should put a reasonable person on guard; they cannot
subsequently claim to have acted in good faith, in the belief that there was
no defect in the vendors certificate of title. Their mere refusal to face up to
that possibility will not make them innocent purchasers for value, if it later
becomes apparent that the title was indeed defective, and that they would
have discovered the fact, had they acted with the measure of precaution
required of a prudent person in a like situation.
The Case
Before us is a Petition for Review[1] on Certiorari under Rule 45 of the
Rules of Court, seeking to reverse the August 27, 2002 Decision[2] and
the March 20, 2003 Resolution[3] of the Court of Appeals (CA) in CA-GR CV No.
59544. The dispositive part of the Decision reads as follows:
WHEREFORE, the decision appealed from is REVERSED and SET
ASIDE.
The deeds of sale executed by Lolita Reed in favor of [herein
Petitioner-]spouses Danilo Domingo and Alberta Domingo and Eduardo
Quiteves over portions of the subject property covered by TCT No. 58195
registered in the name of Lolita R. Reed, married to Guillermo Reed, are
declared NULL andVOID.
The Register of Deeds of Pasig City is ordered to cancel TCT Nos.
84565 and 84567 issued in the names of [Petitioners] Eduardo Quiteves and
spouses Danilo Domingo and Alberta Domingo, respectively, covering the
portions of the subject property sold to them by Lolita Reed, and to reinstate
TCT No. 58195 in the name of Lolita Reed, married to Guillermo Reed, insofar
as the same covers the portions of the subject property sold to said
[petitioners].[4]

The assailed Resolution denied petitioners Motion for Reconsideration.

After trial on the merits, the court a quo rendered judgment, the dispositive
portion of which reads:

IV. Whether the case of Veloso vs. Court of Appeals, 260 SCRA 594-595 (21
August 1996) is apt to the case at bench.

WHEREFORE, in view of the foregoing, the Court hereby renders judgment in

favor of x x x Sps. Ardaniel & Natividad Villanera, Sps. Alberto (sic) &
Dominga (sic) Domingo, Eduardo Quiteves and the Register of Deeds of Pasig,
Metro Manila, and against [respondent] Guillermo Reed and orders the
DISMISSAL of the present case for lack of merit.

V.
Whether the established doctrine, i.e., trial courts are in a better
position to determine questions involving credibility having heard the
witnesses and having observed their deportment and manner of testifying
during the trial, was applied by the Court of Appeals to the case.

The Facts
The facts were summarized by the CA as follows:
[Respondent] Guillermo Reed was an overseas contract worker from 1978 to
1986 and came home only for short vacations. He purchased from the
Government Service Insurance System [GSIS] on installment basis a 166
square meter property located at MRR Road, Mangahan, Pasig. Because he
was working abroad, it was his wife, Lolita Reed, who paid the consideration
to the GSIS. On July 9, 1986, TCT No. 58195 covering said property was
issued by the Registry of Deeds for the Province of Rizal, Metro Manila
District II in the name of Lolita Reed, married to Guillermo Reed. Guillermo
Reed had allowed his brother, Dominador, and the latters wife, Luz, to stay in
the house constructed on his property.
In December, 1991, Dominador and Luz Reed were summoned to the
barangay in connection with the complaint for ejectment filed against them
by Eduardo Quiteves, who claimed to be the owner of the lot where their
house stands. Dominador and Luz informed Guillermo of the complaint filed
against them. Guillermo accompanied Dominador and Luz to the barangay,
where they met Eduardo Quiteves and Alberta Domingo, who both claimed
ownership of the subject property. Guillermo denied having sold his property.
In view of the claims of Eduardo Quiteves and Alberta Domingo that they
bought the subject property, Guillermo Reed made a verification with the
Register of Deeds of Pasig. Guillermo discovered that his title over the
subject property had been cancelled and he was able to secure copies of the
following documents, to wit:
1. Special Power of Attorney, dated July 8, 1986, allegedly executed by him
authorizing his wife, Lolita Reed, to sell the subject property or a portion
thereof;
2. Deed of Sale of a Portion of Residential Land, dated July 14, 1986,
executed by Lolita Reed in favor of Danilo Domingo, married to Alberta Q.
Domingo covering 41.50 square meter portion of subject property;

No pronouncement as to cost. [5]

VI.
Whether the finding, assuming without admitting, that respondents
signature was falsified the right of petitioners, without any evidence as coconspirators of Lolita Reed in the forgery and as purchasers in good faith over
the subject properties, can be adversely affected. [9]

Ruling of the Court of Appeals

The Court of Appeals reversed the trial court. First, it should be clear that the
CA ruling concerned two transactions entered into by Petitioner-Intervenor
Lolita Reed. The first transaction involved the sale she executed in favor of
Spouses Danilo and Alberta Domingo. To them she sold a portion of the
subject property covered by TCT No. 58195; it measured 41.5 square meters
and was located at the southwest section. The second sale was effected by
the same vendor, this time in favor of Eduardo Quiteves; it covered 86 square
meters at the northern portion of the same property. Because of these
transactions, the vendees were able to have certificates of titles issued in
their respective names.
A third sale was made in favor of Spouses Ardaniel and Natividad Villanera.
The CA ruled, however, that they had not been validly served any summons.
Consequently, the trial court did not acquire jurisdiction over their persons;
hence, its Decision would not affect their rights.
Second, the CA held that the vendees were not purchasers for value in good
faith. It found that Spouses Danilo and Alberta Domingo had entered into the
Contract of Sale involving conjugal property without actually seeing any
Special Power of Attorney (SPA) authorizing Lolita Reed to convey the
property for and on behalf of the conjugal partnership. Also, the fact that the
Deed of Sale executed by them did not even mention any SPA showing that
Respondent Guillermo Reed had consented to the sale of the conjugal
property rendered the transaction questionable.

For her part, petitioner-intervenor submits the following:

I.
Whether the conveyance of subject property in favor of Petitioners
Danilo and Alberta Domingo and Eduardo Quiteves is valid considering that
the same was executed by Petitioner-intervenor Lolita Reed and the proceeds
arising therefrom were utilized to purchase things necessary for the support
of family including education of petitioner-intervenors and Guillermo Reeds
common children pursuant to Article 161 of the Civil Code in relation to
Article 115 of the same Code.
II.
Whether Guillermo Reed can recover the one-half (1/2) share of the
conjugal partnership despite that he had already donated the same to his and
Lolita Reeds common children pursuant to Article 162 of the Civil Code. [10]
The long-winded issues presented by petitioners and petitioner-intervenor
can be reduced to one procedural and three main questions. The three main
issues to be resolved are as follows: 1) whether the Special Power of Attorney
is authentic; 2) whether Lolita Reeds justification for selling the subject
property is tenable; and 3) whether petitioners are buyers in good faith. As
to the procedural matter, this Court will resolve whether jurisdiction over the
person of Lolita has been acquired.
This Courts Ruling
The Petition and the Petition-in-Intervention have no merit.

3. Absolute Deed of Sale of a Portion of Residential Land, dated July 22,

1987, executed by Lolita Reed, as vendor and attorney-in-fact of Guillermo
Reed, in favor of Natividad R. Villanera, married to Ardaniel Villanera,
covering 41.50 square meter portion of subject property;
4. Deed of Sale of a Portion of a Residential Land, dated January 10, 1989,
executed by Lolita Reed, for herself and as attorney-in-fact, in favor of
Eduardo Quiteves covering 86 square meter portion of subject property;

As for Eduardo Quiteves, he was faulted by the CA for not having inquired
into and investigated the authenticity and validity of the SPA shown to him by
Lolita, evidencing her husbands alleged consent to the sale of their conjugal
property. The appellate court opined that Quiteves should have been put on
guard, since the acknowledgment portion of the document stated that only
Lolita had appeared before the lawyer who had notarized it. Also, considering
that it had been issued two years before the property was offered to
Quiteves, he should have taken steps to verify the validity of the document
and to find out the whereabouts of Guillermo, who had allegedly executed it.

5. TCT No. 84565 in the name of Eduardo Quiteves;

6. TCT No. 84566 in the name of spouses Ardaniel and Natividad Villanera;
and
7. TCT No. 84567 in the name of spouses Danilo and Alberta Domingo.
On March 8, 1994, Guillermo Reed filed a complaint for reconveyance of
property against Lolita Reed, spouses Ardaniel and Natividad Villanera,
spouses Danilo and Alberta Domingo, Eduardo Quiteves and the Register of
Deeds of Pasig, Metro Manila alleging that his wife, Lolita Reed, from whom
he had been estranged, conspiring with the other [petitioners], except the
Register of Deeds of Pasig, caused the preparation of a special power of
attorney, dated July 8, 1986, wherein it was made to appear that he
authorized his wife to sell the subject property; that he did not sign the
special power of attorney nor appear before the notary public because he
was working abroad; that the special power of attorney was not submitted to
the Regional Trial Court [(RTC)] in Pasig City by Notary Public Macario C. Cruz,
as stated in the letter dated April 1, 1993 of Clerk of Court Grace S. Belvis;
and that spouses Villanera and Domingo and Eduardo Quiteves are
purchasers in bad faith because they knew, at the time they transacted with
Lolita Reed, that he was working abroad and estranged from the latter.

Finally, the CA found that the SPA, from which Lolita had derived her authority
to sell the property, was a forgery. The appellate court gave credence to the
consistent denial of Guillermo that he had signed the document. It did not
accept the Minutes[6] of the barangay meeting, containing his alleged
admission that he had signed the SPA. Furthermore, the CA gave weight to
the Certification[7] issued by the Office of the Clerk of Court of the Regional
Trial Court (RTC) of Pasig that the alleged SPA notarized by Atty. Macario Cruz
was not the same document submitted to that office.
Consequently, the CA declared the Deeds of Sale executed by Lolita in favor
of Spouses Danilo and Alberta Domingo and Eduardo Quiteves null and void.
It also ordered the cancellation of the Transfer Certificates of Titles (TCTs)
issued in their favor; and the reinstatement of TCT No. 58195 in the name of
Lolita Reed, married to Guillermo Reed, insofar as it covered the portions of
the property sold to petitioners.
Hence, this Petition.[8]

Per Sheriffs Return, Lolita Reed was not served with summons as she is no
longer residing at the given address while spouses Ardaniel and Natividad
Villanera were served with summons through Mrs. Alberta Domingo.

On the procedural question, petitioners contend that, for this case to stand,
the RTC should have first acquired jurisdiction over the person of Lolita Reed
-- an allegedly indispensable party. Petitioners argue that, since she had not
been served any summons, the trial court never acquired jurisdiction over
her; consequently, there can be no final determination of this controversy.
Thus, they contend, the case should have never proceeded in the first place.
This Court need not engage itself in a discussion of whether Lolita is an
indispensable party. Although the RTC may not have acquired jurisdiction
over her because she had not been served any summons, she has already
voluntarily appeared before this Court when she filed a Petition-inIntervention.[11] Thus, jurisdiction over her has been acquired, and she is
bound by any decision emanating from this Court.
The Rules of Court provide that the defendants voluntary appearance in the
action shall be equivalent to service of summons. [12] In fact, Lolita never
questioned the Supreme Courts alleged lack of jurisdiction over her. That
she recognizes and accepts it is shown by her voluntary appearance before
this Court and her decision to participate in this appeal. Her actions render
the alleged lack of jurisdiction moot and binds her to the outcome of this
case. There should be no more obstacle to the progress of this case.

I.
Whether the case for reconveyance filed by respondent against
petitioners sans the trial courts acquisition of jurisdiction over the person of
Lolita Reed, an indispensable party, can prosper.

We do not see any need to remand this case to the trial court to allow it to
receive evidence on the factual allegations of Lolita. As it stands now, this
Court is in a position to rule on the merits of this case. Primarily, Lolita
vouches for the authenticity of the Special Power of Attorney that she showed
to petitioners when the Deeds of Sale were executed. Significantly, she relies
on the same documents already presented by the other parties during the
trial. Based on the arguments proffered and the evidence on record, this
Court can now render a determination of the SPAs authenticity, which is one
of the main issues to be resolved here, as earlier adverted to.

II.
Whether entrenched jurisprudence assigns the onus probandi, or
burden of proof, showing forgery to the respondent after having asserted the
same in his complaint.

First Main Issue:

Authenticity of the
Special Power of Attorney

III. Whether the case of Voluntad vs. Dizon, 313 SCRA 210-211 (26 August
1999), utilized as basis to find petitioners not purchasers in good faith can
apply to the case at bench.

Prior to determining whether petitioners are buyers in good faith, the

essential question to be answered is whether the Special Power of Attorney

The Issues
Petitioners submit the following issues for this Courts resolution:

An [A]nswer to the complaint was filed by [Petitioners] Eduardo Quiteves and

spouses Danilo and Alberta Domingo alleging that the sale of the subject
property to them by Lolita Reed was valid inasmuch as Guillermo Reed gave
his written consent thereto, as shown in a letter dated July 26, 1986; that in a
proceeding before the [b]arangay [c]hairman, Guillermo Reed admitted that
he personally signed the special power of attorney; that they have the right
to rely on the presumption of regularity of the notarized special power of
attorney; and that they are buyers in good faith and for value.

Procedural Issue:
Jurisdiction over the Person

relied upon by the parties was indeed authentic. Petitioners maintained

before the courts below that it had not been proven to be a forgery, so it was
presumably authentic. The CA, however, held otherwise. We agree.
Most telling is the admission of Lolita that she merely sent an already
typewritten SPA to her husband, who was then working in the Middle East.[13]
She further admits that when it was brought back by her brother-in-law, it had
already been signed by Guillermo.[14] Thus, it is clear that she never saw him
sign it. Furthermore, she does not have any actual knowledge of whether he
even saw the typewritten document, much less signed it.
It then becomes dubious whether the witnesses affixed their signatures to the
SPA to attest that it had been signed in their presence by the principal and
the attorney-in-fact. How could they have attested to the signing, when the
principal denied it, while the attorney-in-fact admitted having merely sent it
to the Middle East for the principals signature?
This fact further explains why Notary Public Macario Cruz, in the
acknowledgment portion of the document, stated that only Lolita Reed had
appeared before him. But Atty. Cruz should have known better. Obviously,
since an SPA was being notarized, there should have been two parties to that
document -- the principal and the agent who was being constituted as
attorney-in-fact.
A document should not be notarized unless the persons who are executing it
are the very same ones who are personally appearing before the notary
public. The affiants should be present to attest to the truth of the contents of
the document[15] and to enable the notary to verify the genuineness of their
signature.[16] Notaries public are enjoined from notarizing a fictitious or
spurious document. In fact, it is their duty to demand that the document
presented to them for notarization be signed in their presence. [17] Their
function is, among others, to guard against illegal deeds.
Notarization is not an empty, meaningless and routinary act. [18] It converts a
private document into a public instrument, making it admissible in evidence
without the necessity of preliminary proof of its authenticity and due
execution.[19]
In not giving credence to the SPA, the Court agrees with the CA, which held
thus:
[T]he same [special power of attorney] was not reported by Atty. Macario
Cruz as having been notarized by him. Thus, in a letter dated April 1,
1993addressed to Luz Reed, Grace S. Belvis, Clerk of Court, Regional Trial
Court, Pasig stated that it was not the special power of attorney dated July 8,
1986 and recorded as Doc. 326, Page No. 66, Book No. XV, Series of 1986 in
the notarial report of Atty. Macario Cruz which was submitted by the latter to
the court. x x x.[20]
Guillermo Reed has consistently denied having signed the document.
Moreover, together with his witness, [21] he has denied other documents
allegedly showing that he admitted having signed it. Thus, we do not find
any cogent reason to disturb the CAs findings, as follows:
The alleged admission of Guillermo Reed before the Barangay Chairman that
he signed the special power of attorney, as shown in the minutes of the
meeting prepared by Barangay Secretary, does not appear to be credible.
Guillermo Reed has consistently denied having signed the special power of
attorney. In fact, he was not confronted during his cross-examination, of said
minutes of the meeting in the barangay, where he met Eduardo Quiteves and
Alberta Domingo for the first time, despite his insistence that the subject
property still belongs to him. Moreover, on rebuttal, Dominador Reed, whose
signature appears in the minutes of the meeting, testified that he affixed his
signature on a small piece of paper to show that he attended the meeting
and there were no entries therein regarding the alleged admission of
Guillermo Reed that he signed the special power of attorney; and that
Guillermo Reed stated in said meeting that his property is not for sale. x x
x.[22]
Petitioners insist that an expert witness, such as one from the National
Bureau of Investigation (NBI), should have been presented to show that
respondents signature was forged. But even without expert testimony, the
questionable circumstances surrounding the execution of the SPA already
casts serious doubt on its genuineness. As shown earlier, there is a plethora
of factual details that point to its falsity.
Additionally, the CA noted the date July 8, 1986, on the SPA authorizing
Lolita to sell the property covered by TCT No. 58195, issued by the Registry of
Deeds of Rizal, District II, Metro Manila. As of that date, however, TCT No.
58195 was not yet in existence, because it was issued only on the following
day, July 9, 1986.[23]
All the foregoing circumstances successfully challenge the integrity,
genuineness, and veracity of the questioned document. Petitioners,

therefore, cannot take refuge in the presumption of regularity of public

documents, a presumption that has been clearly rebutted in this case.

formers verbal claim of having been authorized to sell the property, and that
the sale would bind the conjugal partnership.

Second Main Issue:

Justification for the Sale
of the Conjugal Property

Neither was there any mention in the Deed of Sale that Lolita had the
authority to sell the property, and that respondent had consented to the
sale. In short, there was no mention of the SPA that she allegedly possessed.
Interestingly, the statement in the Deed that the subject of the sale
corresponded to her share in the conjugal assets is not equivalent to her
claim that she was authorized by her husband to sell them.

Lolita Reed argues that, even on the assumption that the SPA was indeed a
forgery, she was still justified in effecting a sale without her husbands
consent. We are not persuaded. In addition to the fact that her rights over
the property were merely inchoate prior to the liquidation of the conjugal
partnership,[24] there was absolutely no proof to her allegations that she used
the proceeds of the sale to purchase necessities for the maintenance and
support of the family.[25] Having failed to establish any of these
circumstances, she may not unilaterally bind the conjugal assets.
Additionally, the Civil Code provisions she cited pertain to what the conjugal
partnership is liable for. They do not specifically refer to whether the actual
transactions entered into by either spouse can validly bind the conjugal
partnership. The issues addressed by this Court in this case involve the
essential formalities determining the validity of contracts entered into by
either the husband or the wife for and on behalf of the partnership.
As to the assertions of Lolita regarding an alleged donation by respondent in
favor of their children, this matter is irrelevant to the disputed sales. We
need not belabor the point. Besides, it would mean that she should have sold
the subject property not only in her name, but for and on behalf of her
children as co-owners of the property. To accept her contention is to open a
whole gamut of issues that are not the subject of this appeal.
SThird Main Issue:
Buyers in Good Faith
The final question to be resolved is whether petitioners were buyers in good
faith. An 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
that same property, and who pays a full and fair price at the time of the
purchase or before receiving any notice of another persons claim. [26]
The honesty of intention that constitutes good faith implies freedom from
knowledge of circumstances that ought to put a prudent person on inquiry.
Good faith consists in the belief of the possessors that the persons from
whom they received the thing are its rightful owners who could convey their
title.[27] Good faith, while always presumed in the absence of proof to the
contrary, requires this well-founded belief.
When dealing with land that is registered and titled, as in this case, buyers
are not required by the law to inquire further than what the Torrens certificate
of title indicates on its face. [28] It is also settled, however, that purchasers
cannot close their eyes to known facts that should put a reasonable person
on guard. They cannot subsequently claim to have acted in good faith in the
belief that there was no defect in the vendors certificate of title. [29] Their
mere refusal to face up to that possibility will not make them innocent
purchasers for value, if it later becomes clear that the title was indeed
defective, and that they would have discovered the fact, had they acted with
the measure of precaution required of a prudent person in a like situation. [30]
Thus, the presence of anything that excites or arouses suspicion should then
prompt the vendee to look beyond the vendors certificate and investigate
the title appearing on the face of that certificate. [31] A vendee who does not
do so cannot be denominated either as an innocent purchaser for value or as
a purchaser in good faith and, hence, does not merit the protection of the
law.

Lolitas authority to sell the subject property and to bind respondent was not
questioned by Petitioner Quiteves, although he claimed to be close to
respondent, who was a classmates father. The findings of the CA clearly
demonstrate that factual circumstances present in this case should have
made Quiteves inquire about Lolitas authority to sell the property. The CA
negated the claim of good faith, as follows:
x x x. [H]e [Quiteves] should have noticed in the acknowledgement portion
of the special power of attorney the statement that only Lolita Reed appeared
before Atty. Cruz, who notarized the special power of attorney. Considering
that the special power of attorney is dated July 8, 1986 and it was only two
years later that the subject property was offered to him by Lolita Reed,
Eduardo should have taken steps to verify the whereabouts of Guillermo Reed
and inquire as to whether the special power of attorney was still valid. Had
Eduardo made the necessary verification from the daughter of Guillermo
Reed, he could have been informed that Guillermo Reed was estranged from
Lolita Reed, that Guillermo Reed returned home in 1986 and where the latter
was staying. Eduardo could [have then] contacted Guillermo Reed and
inquired from the latter about the authenticity of the special power of
attorney. Likewise, the admission of Atty. Cruz in the acknowledgement
portion of the special power of attorney that only Lolita Reed appeared before
him should have put Eduardo on guard and he should have consulted a
lawyer other than the one who notarized the special power of attorney as to
the validity thereof. x x x.[34]
Indeed, Quiteves should not have closed his eyes to these facts that should
have made him even more vigilant, as any other reasonable person would
have been.
Petitioners complain that the CA imposed on them a task too tedious, such as
to pry on whether respondent was estranged from Lolita Reed. [35] They
miss the whole point. What was required of them by the appellate court,
which we affirm, was merely to investigate -- as any prudent vendee should -the authority of Lolita to sell the property and to bind the partnership. They
had knowledge of facts that should have led them to inquire and to
investigate, in order to acquaint themselves with possible defects in her title.
The law requires them to act with the diligence of a prudent person; in this
case, their only prudent course of action was to investigate whether
respondent had indeed given his consent to the sale and authorized his wife
to sell the property.
Petitioners finally argue that, on the assumption that the Special Power of
Attorney was forged, there was still no proof that the forgery had resulted
from a conspiracy between them and Lolita. Thus, they conclude that the
titles issued in their favor cannot be revoked. We disagree. Petitioners
argument would stand if only they have been found to be innocent
purchasers for value.
WHEREFORE,
the
Petition
and
the
Petition-in-Intervention
hereby DENIED. Costs against petitioners. SO ORDERED.

are

ST. DOMINIC CORPORATION VS. IAC

The circumstances surrounding this case debunk the presumption of good

faith on the part of petitioners. To begin with, it was clear to them that, at the
time of the sales, Lolita was married to Respondent Guillermo Reed; and that
the property in question was part of their conjugal partnership. As to
Spouses Domingo, the CA found thus:

GUTIERREZ, JR., J.:

Alberta Domingo admitted that the subject property belongs to the conjugal
partnership of spouses Guillermo and Lolita Reed; that the Reed spouses were
no longer living together as husband and wife when the property was sold to
her and her husband by Lolita Reed; and that Guillermo Reed was in Saudi
Arabia. x x x.[32]

G.R. No. 70623 entitled "St. Dominic Corporation v. The Intermediate

Appellate Court. et al." is a petition to review on certiorari the decision of the
respondent appellate court, dated January 31, 1985 in AC-G. R. SP No. 00513
entitled "Francisca B. Bustamante, et al., v. Hon. Ricardo P. Tensuan, et al.,"
which set aside the orders of the then Court of First Instance of Rizal at
Quezon City, in Civil Case No. Q-11895, as well as the resolution dated April
16, 1985 denying the petitioner's motion for reconsideration.

The Deed of Sale[33] executed between the Domingo spouses and Lolita Reed
clearly stated that what was being sold was her share in the conjugal
property. Despite their knowledge of this fact, the couple did not inquire
about her authority to sell any portion of the property. According to Alberta
Domingo, Lolita told her that the latter had been authorized by Guillermo to
sell the property. When they executed the Deed of Sale, however, Lolita
allegedly showed no special power of attorney. Alberta merely relied on the

Arising from a common set of facts, these petitions are before us for
concurrent disposition.

On the other hand, G.R. No. L-48630, is a petition for certiorari assailing the
order of respondent Judge Ulpiano Sarmiento, dated April 27, 1976, directing
the issuance of a writ of possession against the petitioners covering the same
property involved in G.R. No. 70623.

The facts are not disputed.

On February 27, 1968, Civil Case No. Q-11895 entitled Ricardo Castulo and
Juan V. Ebreo v. Carlos Robes and wife Adalia Francisco and People's Homesite
and Housing Corporation" was filed seeking the cancellation of Transfer
Certificate of Title No. 83783 in the name of the spouses Carlos Robes and
Adaha Francisco, covering Lot No. 8, Block 101 of the Malaya Subdivision,
People's Homesite and Housing Corporation (PHHC). The original complaint
was superseded by an amended complaint filed on February 24, 1969.
It appears that sometime in 1961, the PHHC awarded the property in question
to one Cristobal Santiago, Jr., in whose favor a final deed of sale was executed
and Transfer Certificate of Title (TCT) No. 83783 was issued.
Subsequently, the Robes spouses mortgaged the realty to the Manufacturer's
Bank and Trust Company. The mortgage lien was duly annotated on TCT
84387 on February 9, 1965.

(b) declaring null and void and without force and effect the sale of said lot by
Cristobal Santiago, Jr., to spouses Adalia Francisco and Carlos Robes, and
cancelling Transfer Certificate of Title No. 84387 issued therefor in their
names;
(c) directing defendant PHHC (now NHA), to prgcess the application to
purchase said subject lot filed by intervenor Francisco Banzon Bustamante
and to execute or cause to be executed the requisite documents for the
award of said lot to her.
The complaint praying that an award of the subject lot be ordered made in
Lavor of plaintiffs Ricardo S. Castulo and Juan V. Ebreo, is hereby dismissed
for lack of showing that they or either of them ever filed the requisite
application to purchase the same. All other counterclaims are hereby
dismissed for lack of merit. (Annex "A". p. 26, Rollo G.R. No. 70623).
When the judgment became final, the Bustamante spouses applied for a writ
of execution.

Thereafter, on February 2, 1968, Civil Case No. Q- 1 1895 was filed.

Claiming legal interest in the property, the Bustamante spouses were allowed
to intervene in the case.
On March 25, 1968, a notice of lis pendens was annotated on TCT 84387 at
the instance of the Bustamante spouses.
For failure of the Robes' spouses to pay the mortgage obligation, the
Manufacturer's Bank and Trust Company foreclosed the lot and caused the
same to be sold at public auction on December 14, 1974.
The property was purchased by Aurora Francisco in whose favor a certificate
of sale was issued. The levy on execution was annotated on TCT 84387 on
March 16, 1974.
No redemption of said property was effected. Thus, on March 5, 1976, TCT
84387 in the name of the Robes spouseswas cancelled and in heu thereof,
TCT 217192 was issued to Aurora Francisco on the same date. The notice
of lis pendens on the title of the Robes spouses, however, was not carried
over to TCT 217192.
On April 20, 1976, before the sale of the land to St. Dominic, Aurora Francisco
applied for a writ of possession in LRC Case No. 851 (76) before Branch IX of
the then Court of First Instance of Rizal in Quezon City.
On April 27, 1976, said court issued the writ of possession.
The lower court (Branch IX, Court of First Instance of Rizal) having stood firm
in the grant of the writ of possession and having denied the motion to quash
the same, the Bustamante spouses filed with this Court a petition for
certiorari, docketed as G.R. No. L-48630 entitled "Flaviano Bustamante, et al.,
v. Hon. Sarmiento, etc., et al.", now before us for resolution.
On September 15, 1976, Aurora Francisco sold the property to petitioner, St.
Dominic Corporation. Consequently, TCT 222337 was issued to petitioner
corporation. As earlier stated, no notice of any lien or encumbrance appears
on the title.
Meanwhile, Civil Case No. Q-11895 proceeded to judgment. The dispositive
portion of the decision reads:
WHEREFORE, all the foregoing premises considered, judgment is hereby
rendered as follows:
(a) declaring null and void the allocation and sale of PHHC (now NHA) to
defendant Cristobal Santiago, Jr., of Lot 8, Block 101 of subdivision plan Psd88807, and cancelling Transfer Certifirate of Title No. 83783 issued therefor in
his name;

On June 29, 1982, Presiding Judge Tensuan issued an order granting the
application for a writ of execution with the qualification, however, that "said
writ may not be enforced and/or implemented as against the St. Dominic
Corporation."
The Bustamante spouses moved for a reconsideration, arguing that the order
of the court dated June 29, 1982 in effect amended a final and executory
judgment in violation of law. In an order dated November 26, 1982, Judge
Tensuan denied the motion. Whereupon, the Bustamante spouses filed a
petition for certiorari and mandamus docketed as AC-G.R. SP No. 00513,
before the Intermediate Appellate Court. Herein petitioner, St. Dominic
Corporation and Aurora Francisco who were not parties to Civil Case No. Q11895, were made respondents in the petition questioning the orders of
Judge Tensuan exempting the petitioner corporation from the enforcement of
the trial court's judgment and denying reconsideration thereof.
On January 31, 1985, the Intermediate Appellate Court rendered judgment.
The dispositive portion of the decision reads:
WHEREFORE, the writs of certiorari and mandamus prayed for are granted;
the orders of September 24, 1982 and November 26, 1982 complained of are
hereby set aside; and the respondent Judge is hereby ordered to cause the
issuance of a writ of execution in strict conformity with the dispositive portion
of the final and executory decision in subject Civil Case No. Q-11895. Costs
against the private respondents. (p. 55, Rollo-G.R. No. 70623)
On February 18, 1985, the petitioner filed its motion for reconsideration and
on February 18, 1985, Aurora Francisco followed suit. In a minute resolution
dated April 16, 1985, both motions were denied by the respondent appellate
court. Thus, the petition filed by St. Dominic Corporation in G.R. No. 70623.
The appellate court's ruling in AC-G.R. SP No. 00513 is tainted with error.
The trial court's statement exempting from execution one not a party to the
case nor privy to the interests of the parties therein, from the effects of its
pronouncements, cannot be considered an amendment of its final and
executory judgment in Civil Case No. Q- 1 1895.
Justice Lino M. Patajo's dissent in AC-G.R. SP No. 00513 is clear and to the
point elucidating the correct doctrine thus:
I believe that respondent Court cannot be held as having abused its
discretion or exceeded its jurisdiction in issuing the questioned orders. I find
no merit in the contention of petitioners that in so providing in said orders
that its decision should not be enforced or executed against St. Dominic,
respondent Court had actually amended its decision which had already
become final. Respondent Court was merely applying the provision of Rule
39, Section 49(b) which provides that the decision of the Court in cases other
than those provided for in sub-paragraph (a) of said section (judgment
against specific thing, probate of a will, administration of the estate of a
deceased person, or in respect to the personal, political, or legal condition or
status of a particular person or his relationship to another) is conclusive only
between the parties and their successors-ininterest by title subsequent to the
commencement of the action. .... (Annex "H". p. 58, Rollo-70323)

Indeed, a judgment cannot bind persons who are not parties to the action
(Vda. de Sengbengco v. Arellano, 1 SCRA 711; Hanopol v. Pilapil, 7 SCRA 452;
and Hollero v. Court of Appeals, 1 1 SCRA 3 1 0). It is elementary that
strangers to a case are not bound by the judgment rendered by the court
(Bien v. Sunga, 117 SCRA 249) and such judgment is not available as an
adjurtication either against or in favor of such other person. A decision of a
court will not operate to divest the rights of a person who has not and has
never been a party to a litigation, either as plaintiff or defendant (Granados v.
Monton, 86 Phil., 42). Verily, execution of a judgment can only be issued
against one who is a party to the action, and not against one who, not being
a party in the case, has not yet had his day in court (City of Bacolod, et al., v.
Hon. Enriquez, et al., 101 Phil., 644; Tayson v. Angeles v. Icasiano, et al., 83
Phil., 921; Manza v. Hon. Vicente Santiago, etc., 96 Phil., 938; and Angara v.
Gorospe, et al., 101 Phil., 79).
It is clear from the records that petitioner St. Dominic Corporation had never
been impleaded as a party to Civil Case No. Q-11895 filed by Ricardo Castulo
and Juan V. Ebreo. The complaint had for its purpose the nullification of the
award to Cristobal Santiago, Jr., and the subsequent sale between Santiago
and the spouses Adalia Francisco and Carlos Robes. Such proceedings neither
involved nor affected St. Dominic Corporation. Judgment therein was directed
only against the titles of Cristobal Santiago, Jr., and the Robes spouses. The
trial court could not execute the same against the petitioner as to deprive it
of its property without due process of law. This is what the trial court made
explicit in its order of execution. Its decision could not reach the petitioner's
rights. Yet, the respondent appellate court declined to pass upon this principal
issue in a rather ambiguous ruling.
In its decision the Court of Appeals held:
Decidedly, the present certiorari and mandamus proceedings is not the
appropriate forum for the determination of the legal effect, if any there be, of
the aforesaid final and executory judgment nullifying or declaring the nullity
of the sale of subject property in question by Cristobal Santiago, Jr., to
spouses Adalia Francisco and Carlos Robes and cancelling TCT No. T-83783 in
their names, on the alleged subsequent auction sale to respondent Aurora
Francisco and from the latter to St. Dominic Corporation over the same
property involved in said judgment. ...Whether or not the foreclosure
proceedings, auction sale and subsequent transactions had on subject
property during the pendency of the litigation thereover in the court below
are subject to the outcome of said case, need not be passed upon in this
disposition. What We are concerned with here are the assailed orders of the
respondent court. ... (Annex "H", p. 55, Rollo 70623).
The determination of whether or not the foreclosure proceedings, auction
sale, and subsequent transactions had on the subject property, during the
pendency of the litigation are subject to the outcome of said case bears
heavily on the issues at hand. The answer is determinative of whether or not
the trial court's order of execution should affect or be issued against the
petitioner.
Anent the effect of the trial court's judgment on the mortgagee bank's rights
and on the foreclosure of the property in question, this Court has held that
where a Torrens title was issued as a result of regular land registration
proceedings and was in the name of the mortgagor when given as a security
for a bank loan, the subsequent declaration of said title as null and void is not
a ground for nullifying the mortgage rights of the bank which had acted in
good faith (Philippine National Cooperative Bank v. Carandang-Villalon, 139
SCRA 570). As a matter of fact, there are instances when even a fraudulent
and forged document of sale may become the root of a valid title if the
certificate had already been transferred from the name of the true owner to
the name indicated by the forger (Duran v. Intermediate Appellate Court, 138
SCRA 489). Here, there is no forgery or fraud involved.
A mortgagee has the right to rely on what appears on the face of the
certificate of title. In the absence of anything to excite suspicion, it is under
no obligation to look beyond the certificate and investigate the title of the
mortgagor appearing on the face of said certificate. There is no showing in
the records that the mortgagee bank was aware of any shadow affecting the
title of the mortgaged property when it was mortgaged. As will be explained
later, the intervenors are only prospective awardees of the disputed lot. They
are not the owners. They have no title to the land.
The main purpose of the Torrens System is to avoid possible conflicts of title
to real estate, and to facilitate transactions relative thereto by giving the
public the right to rely upon the face of a Torrens certificate of title and to
dispense with the need of inquiring further, except when the party concerned
had actual knowledge of facts and circumstances that should impel a

reasonably cautious man to make such further inquiry (Pascua v. Capuyoc, 77

SCRA 78). Thus, where innocent third persons relying on the correctness of
the certificate of title thus issued, acquire rights over the property, the court
cannot disregard such rights (Director of Land v. Abache, et al., 73 Phil. 606).
The lien of the petitioner, an innocent mortgagee for value must be respected
and protected (Blanco v. Esquierdo, 110 Phil., 494).
The title to the property given as security to the Manufacturer's Bank and
Trust Co., by the spouses Robes was valid, regular, and free from any lien or
encumbrance. The mortgage was executed prior to the institution of Civil
Case No. Q-11895, thus establishing it as a lien superior to whatever claims
the plaintiffs therein may have as a result of the subsequent litigation. An
inquiry beyond the face of the mortgagor's title would certainly have yielded
no flaw at that time. This being so, the adverse claim in Civil Case No. Q11895 could not affect the rights of the mortgagee. The fact that the
foreclosure of the mortgage and the subsequent auction sale were effected
after the annotation of the adverse claim is of no moment. The foreclosure
sale retroacts to the date of registration of the mortgage (Bank of the
Philippine Islands v. Noblejas, 105 Phil., 418).
A person who takes a mortgage in good faith and for a valuable
consideration, the record showing a clear title in the mortgagor, will be
protected against any equitable titles to the premises or equitable claims on
the title, in favor of third persons, of which he had no notice, actual or
constructive. The protection extends to a purchaser at a Sheriff's sale under
proceedings on the mortgage although such purchaser had notice of the
alleged equity (59 CJS, Sec. 233, pp. 303-304).
Any subsequent lien or encumbrance annotated at the back of the certificate
of title cannot in any way prejudice the mortgage previously registered and
the lots subject thereto pass to the purchaser at public auction free from any
lien or encumbrance (Gonzalo Puyat & Sons, Inc., v. Philippine National Bank,
4 SCRA 1257). Otherwise, the value of the mortgage could be easily
destroyed by a subsequent record of an adverse claim, for no one would
purchase at a foreclosure sale if found by the posterior claim (Bank of the
Philippine Island v. Noblejas, supra). Aurora Francisco's title, as a purchaser at
the auction sale of the property in question, cannot be bound by the adverse
claims of the plaintiffs in Civil Case No. Q-11895. This is even more true with
petitioner St. Dominic Corporation which had acquired title from Aurora
Francisco without any notice or flaw.
Upon proper foreclosure of a first mortgage, all liens subordinate to the
mortgage are likewise foreclosed. The foreclosure as well as the sale of the
property were annotated on the title to the property, then still in the name of
Adalia Francisco and Carlos Robes. Such annotation serves as constructive
notice to the parties having any claim or nterest in the property to exercise
their right of redemption or to participate in the foreclosure sale. Certainly,
there was an opportunity for the claimants in Civil Case No. Q-1 1895 to
acquire the property at issue. St. Dominic's rights can no longer be disturbed.
It should also be noted that the intervenors in Civil Case Q-11895 possess no
enforceable lien over the property in question. They are merely prospective
awardees of the realty. The right they assert is purely speculative. No vested
rights exist in their favor. The award of the disputed lot to Cristobal Santiago,
Jr. may have been declared improper. As to who should get the lot, according
to law, still lies in the discretion of the PHHC. No assurance is given that the
lot would be awarded to the claimants-intervenors. The decision in Civil Case
Q-11895 may be deemed correct insofar as it called for a processing of the
Bustamante claim but erroneous when it assumed that after processing, the
award would be in the spouses' favor.
However, the PHHC is now estopped by circumstances from making any
further award. As earlier stated, the lower court cannot order the execution of
the decision as against the petitioner and, thereby, cancel St. Dominic's title
in favor of a future unknown person. It cannot disregard the rights already
vested in petitioner St. Dominic. To do so would impair confidence in
certificates of titles and orderly processes of law. Among the guarantees of
the Torrens system is that it renders title indefeasible. Section 31, Presidential
Decree 1529, The Land Registration Act, provides: "The decree of registration
shall bind the land and quiet title thereto, subject only to the exceptions or
liens as may be provided by law. It shall be conclusive upon and against all
persons, including the National Government and all branches thereof whether
mentioned by name in the application or notice, the same being included in
the general description "to all of whom it may concern". " This provision is
applicable under the facts of this case.
In its petition in G.R. No. 70623, petitioner St. Dominic "prays most earnestly
for such and any other relief as this Honorable Court, in its far greater

wisdom, may deem just, equitable and proper in the premises, such as the
dismissal of the petition in G.R. No. L-48630."

possession, may issue in favor of Aurora Francisco and/or St. Dominic

Corporation.

Petitioners Bustamante in G.R. No. L-48630, assail the grant ex parte by the
trial court of the writ of possession over the property, likewise the subject of
G.R. No. 70623, in favor of Aurora Francisco. It is alleged that a court has no
jurisdiction, power, and authority to eject a third person who is not a party to
the foreclosure proceedings or mortgage by a mere writ of possession
summarily issued in a foreclosure suit.

Be it noted that as the trial court had said "the writ of possession issued by us
has been complied with and satisfied," meaning to say that the movants
vacated the property. But in the hearing held in this case, it has been
admitted by the parties that the movants retumed to the land in question and
constructed again thereon their respective uses. This being so, the movants
must vacate and remove from the disputed premises whatever they have
built or constructed thereon. The writ of possession issued and enforced may
no longer be quashed.

Respondent St. Dominic Corporation moved and was allowed to intervene as

successor-in-interest by purchase to all the rights, title, and interest of
respondent Francisco over the lot in question.
Section 6 of Act No. 3135, as amended by Act 4118, the law that regulates
the methods of affecting extrajudicial foreclosure of mortgage makes
applicable Sections 464 to 466 of the Code of Civil Procedure, now sections
29 to 31 and 35 of Rule 39 of the Revised Rules which provide: "If no
redemption be made within twelve (12) months after the sale, the purchaser,
or his assignee, is entitled to a conveyance and possession of the property ...,
" and "The possession of the property shall be given to the purchaser or last
redemptioner by the officer unless a third person is actually holding the
property adversely to the judgment debtor." Petitioners capitalize on this last
proviso of the law.

WHEREFORE, judgment is hereby rendered in G.R. No. 70623, GRANTING the

petition of ST. DOMINIC CORPORATION. The decision of the Intermediate
Appellate Court, now Court of Appeals, dated January 31, 1985 in ACG.R. SP
No. 00513 and its resolution dated April 16, 1985, are REVERSED and SET
ASIDE. The writ of execution issued by the trial court in Civil Case No. Q11895, with the qualification excluding the petitioner, is in accord with the
facts and the applicable law and is accordingly sustained as correct. However,
the decision of the trial court directing the PHHC (now NHA) to process the
application of Francisco Banzon Bustamante to purchase the property in
question and to execute the requisite documents for the award of said lot to
her having been rendered ineffective by circumstances supervening in Civil
Case No. Q-11895, the writ of execution issued by the court a quo therefore is
hereby declared without force and effect.

On this point, the trial court held, and We quote with approval that:

G.R. No. L-48630 is DISMISSED for lack of merit. SO ORDERED.

The Court is aware of the limitation that writ of possession may not issue
when the property is in the possession of a third party who holds the property
adverse to the buyer in the foreclosure sale. But, by their express admission
in their motion, movants are merely 'occupants-applicants' for the purchase
of the land from the defunct PHHC. Under such claim which is, at best
inchoate, we cannot refuse to grant the writ of possession prayed for; to do
so, would be to becloud the integrity of the torrens title, and it would be in
derogation of its indefeasibility.
xxx xxx xxx
In the instant case, the property involved is covered by a certificate of title. It
has passed through different owners until it was bought by petitioner, Aurora
Francisco, at a public auction sale by reason of the foreclosure of the
mortgage in the property and subsequently sold by said Aurora Francisco to
intervenor St. Dominic. And movants here, would like us to quash the writ of
possession we issued, on the ground that the same was issued upon an ex
parte petition is permitted and allowed by virtue of Act 3135, and on the
allegation that movants "have been in possession of the subject property
since 1962 as occupants-applicants for the purchase thereof from the
defendant PHHC ... " (p. 3, Motion to Quash) which, as we said above is a
matter of expectancy (inchoate) and should not be allowed to prevail over the
clean title of the petitioner and/or intervenor herein. (pp. 73-74, Rollo-G.R.
No. 48630).
Indeed, the rules contemplate a situation where a third party holds the
property by adverse title or right such as a coowner, tenant or usufructuary.
In such cases, a grant of a writ of possession, would be denial of such third
person's rights without giving them their day in court. Especially, where
question of title is involved, the matter would well be threshed out in a
separate action and not in a motion for a writ of possession. But such is not
the state of affairs in the case at bar.
The right of the respondent to the possession of the property is clearly
unassailable. It is founded on the right of ownership. As the purchaser of the
properties in the foreclosure sale, and to which the respective titles thereto
have already been issued, the petitioner's rights over the property has
become absolute, vesting upon it the right of possession of the property
which the court must aid in affecting its delivery. After such delivery, the
purchaser becomes the absolute owner of the property. As we said in Tan Soo
Huat u. Ongwico (63 Phil., 746), the deed of conveyance entitled the
purchaser to have and to hold the purchased property. This means, that the
purchaser is entitled to go immediately upon the real property, and that it is
the sheriff's inescapable duty to place him in such possession. (Philippine
National Bank v. Adil, 118 SCRA 110). With more reason that the said writ of
possession should be granted Aurora Francisco or, in her stead, St. Dominic
Corporation in the light of our pronouncements in G.R. No. 70623. Ownership
has been consolidated in St. Dominic's favor. There being no clear title or
right enforceable by the Bustamante spouses, a writ of execution or a writ of

** ACTION FOR RECONVEYANCE**

HEIRS OF MAXIMO LABANON VS. HEIRS OF CONSTANCIO LABANON
VELASCO, JR., J.:
The Case
This Petition for Review on Certiorari under Rule 45 seeks the recall and
nullification of the May 8, 2003 Decision [1] of the Court of Appeals (CA) in CAG.R. CV No. 65617 entitled Heirs of Constancio Labanon represented by
Alberto Makilang v. Heirs of Maximo Labanon represented by Alicia Labanon
Caedo and the Provincial Assessor of Cotabato, which reversed the August
18, 1999 Decision[2] of the Kidapawan City, Cotabato Regional Trial Court
(RTC), Branch 17, in Civil Case No. 865. Likewise assailed is the October 13,
2003 Resolution[3] which disregarded petitioners Motion for Reconsideration.
The Facts
The CA culled the facts this way:
During the lifetime of Constancio Labanon, prior to the outbreak of WWII,
he settled upon a piece of alienable and disposable public agricultural land
situated at Brgy. Lanao, Kidapawan, Cotabato x x x. Constancio cultivated the
said lot and introduced permanent improvements that still exist up to the
present. Being of very limited educational attainment, he found it difficult to
file his public land application over said lot. Constancio then asked his
brother, Maximo Labanon who was better educated to file the corresponding
public land application under the express agreement that they will divide the
said lot as soon as it would be feasible for them to do so. The offer was
accepted by Maximo. During the time of the application it was Constancio
who continued to cultivate the said lot in order to comply with the cultivation
requirement set forth under Commonwealth Act 141, as amended,
onHomestead applications. After which, on June 6, 1941, due to industry of
Constancio, Homestead Application No. 244742 (E-128802) of his brother
Maximo was approved with Homestead Patent No. 67512. Eventually, Original
Certificate of Title No. P-14320 was issued by the Register of Deeds of
Cotabato over said lot in favor of Maximo Labanon.
On February 11, 1955, Maximo Labanon executed a document
denominated as Assignment of Rights and Ownership and docketed as Doc.
No. 20; Page No. 49; Book No. V; Series of 1955 of the Notarial Register of
Atty. Florentino Kintanar. The document was executed to safeguard the
ownership and interest of his brother Constancio Labanon. Pertinent portion
of which is reproduced as follows:
That I, MAXIMO LABANON, of legal age, married to Anastacia Sagarino,
and a resident of Kidapawan, Cotabato, for and in consideration of the
expenses incurred by my elder brother CONSTANCIO LABANON also of legal
age, Filipino, widower and a resident of Kidapawan, Cotabato, for the clearing,
cultivation and improvements on the eastern portion xxx Lot No. 1, Blk. 22,

Pls-59 xxx which expenses have been incurred by my said brother xxx before
the outbreak of the last world war xxx I do hereby assign transfer and convey
my rights to, interests in and ownership on the said eastern portion of said
Lot No. 1, Block 22, Pls-59 ONE HUNDRED (100 M) ALONG THE NATIONAL
HIGHWAY, (DAVAO-COTABATO ROAD) by TWO HUNDRED FIFTY METERS (250
M) going inside the land to cover an area of TWO AND ONE HALF HECTARES
(25,000 SQ. M.), more or less, adjoining the school site of barrio Lanao,
Kidapawan, Cotabato, to the said CONSTANCIO LABANON, his heirs and
assigns, can freely occupy for his own use and benefit xxx.
IN WITNESS WHEREFOF, I have hereunto set my hand this 11 th day of
February 1995 at Kidapawan, Cotabato.
(SGD) MAXIMO LABANON
With my marital consent.
(SGD) ANASTACIA SAGARINO
(Wife) (p.16, rollo)
On April 25, 1962, Maximo Labanon executed a sworn statement
reiterating his desire that his elder brother Constancio, his heirs and assigns
shall own the eastern portion of theLot, pertinent portion of which reads:

2.
Ordering the dismissal of the case against the Provincial Assessor.
The claim of the plaintiff is untenable, because the duties of the Provincial
Assessor are ministerial. Moreover, the presumption of regularity in the
performance of his duty is in his favor;
3.
Ordering the plaintiff to pay the defendants the amount of
P20,000.00 as exemplary damages, P10,000.00 for Attorneys Fees, P500.00
per appearance in Court; and
4.

WHEREFORE, the appeal is hereby GRANTED for being meritorious. The

assailed decision of the Regional Trial Court is hereby REVERSED and SET
ASIDE and a new one is hereby entered as follows:
1)
Recognizing the lawful possession of the plaintiffs-appellants
the eastern portion of the property in dispute;

over

That I am the same and identical person who is a homestead applicant

(HA-224742, E-128802) of a tract of land which is covered by Homestead
Patent No. 67512 dated June 6, 1941, known as Lot No. 1, Block 22, Pls-59,
situated in [B]arrio Lanao, Municipality of Kidapawan, Province of Cotabato,
Philippines, and containing an area of 5.0000 hectares, more or less;

2)
Declaring the plaintiffs-appellants as owners of the eastern portion of
the property by reason of lawful possession;

That I am the same and identical person who executed a deed of

ASSIGNMENT OF RIGHTS AND OWNERSHIP in favor of my brother Constancio
Labanon, now deceased, now for his heirs, for the eastern half portion of the
land above described, and which deed was duly notarized by notary public
Florentino P. Kintanar on February 11, 1955 at Kidapawan, Cotabato and
entered in his Notarial Register as Doc. No. 20, Page No. 49, Book No. V,
Series of 1955; and

4)
Ordering the defendants-appellees to pay the plaintiffs-appellants the
amount of P20,000 as moral damages, P10,000 for attorneys fees, P500.00
per appearance in Court and

That in order that I and the Heirs of Constancio Labanon will exercise our
respective rights and ownership over the aforementioned lot, and to give
force and effect to said deed of assignment, I hereby, by these presents,
request the Honorable Director of Lands and the Land Title Commission to
issue a separate title in my favor covering the western half portion of the
aforementioned lot and to the Heirs of Constancio Labanon a title for the
eastern half portion thereof.

The Issues

IN WITNESS THEREOF, I have hereunto set my hand this 25 th day of April,

1962, at Pikit, Cotabato, Philippines. (p. 9, records)
After the death of Constancio Labanon, his heirs executed an [e]xtrajudicial settlement of estate with simultaneous sale over the aforesaid
eastern portion of the lot in favor of Alberto Makilang, the husband of
Visitacion Labanon, one of the children of Constancio. Subsequently, the
parcel of land was declared for taxation purposes in the name of Alberto
under TD No. 11593. However, in March 1991, the defendants heirs of
Maximo Labanon namely, Alicia L. Caniedo, Leopoldo Labanon, Roberto Nieto
and Pancho Labanon, caused to be cancelled from the records of the
defendant Provincial Assessor of Cotabato the aforesaid TD No. 11593 and
the latter, without first verifying the legality of the basis for said cancellation,
did cancel the same. x x x Further, after discovering that the defendant-heirs
of Maximo Labanon were taking steps to deprive the heirs of Constancio
Labanon of their ownership over the eastern portion of said lot, the latter,
thru Alberto Makilang, demanded the owners copy of the certificate of title
covering the aforesaid Lot to be surrendered to the Register of Deeds of
Cotabato so that the ownership of the heirs of Constancio may be fully
effected but the defendants refused and still continue to refuse to honor the
trust agreement entered into by the deceased brothers. x x x[4]
Thus, on November 12, 1991, petitioners filed a complaint [5] for Specific
Performance, Recovery of Ownership, Attorneys Fees and Damages with Writ
of Preliminary Injunction and Prayer for Temporary Restraining Order against
respondents docketed as Civil Case No. 865 before the Kidapawan City
RTC. After hearing, the trial court rendered its August 18, 1999 Decision, the
decretal portion of which reads:
Wherefore, prescinding from the foregoing facts and considerations the
Court finds and so holds that the [defendant-heirs] of Maximo Labanon
represented by Alicia Labanon Caniedo have proved by preponderance of
evidence that they are entitled to the reliefs set forth in their answer and
consequently judgment is hereby rendered as follows:
1.
Ordering the dismissal of the complaint against the Heirs of
Maximo Labanon represented by Alicia Labanon Caniedo for lack of merit;

Upon the expiration of said period of one year, the decree of registration and
the certificate of title issued shall become incontrovertible. Any person
aggrieved by such decree of registration in any case may pursue his remedy
by action for damages against the applicant or any other persons responsible
for the fraud.

To pay the costs of this suit.

IT IS SO ORDERED.[6]
Aggrieved, respondents elevated the adverse judgment to the CA
which issued the assailed May 8, 2003 Decision in CA-G.R. CV No. 65617,
the fallo of which states:

3)
Ordering the Provincial Assessor to reinstate TD No. 11593 and
declaring TD No. 243-A null and void;

5)

this Decree, it shall be deemed to include an innocent lessee, mortgagee, or

other encumbrancer for value.

To pay the costs of the suit.

SO ORDERED.

Contrary to petitioners interpretation, the aforequoted legal provision

does not totally deprive a party of any remedy to recover the property
fraudulently registered in the name of another. Section 32 of PD 1529 merely
precludes the reopening of the registration proceedings for titles covered by
the Torrens System, but does not foreclose other remedies for the
reconveyance of the property to its rightful owner. As elaborated in Heirs of
Clemente Ermac v. Heirs of Vicente Ermac:
While it is true that Section 32 of PD 1529 provides that the decree of
registration becomes incontrovertible after a year, it does not altogether
deprive an aggrieved party of a remedy in law. The acceptability of the
Torrens System would be impaired, if it is utilized to perpetuate fraud against
the real owners.[8]
A more
Inciong, thus:

succinct

explanation

is

found

in Vda.

De

Recinto

v.

The mere possession of a certificate of title under the Torrens system does
not necessarily make the possessor a true owner of all the property described
therein for he does not by virtue of said certificate alone become the owner
of the land illegally included. It is evident from the records that the petitioner
owns the portion in question and therefore the area should be conveyed to
her. The remedy of the land owner whose property has been
wrongfully or erroneously registered in another's name is, after one
year from the date of the decree, not to set aside the decree, but,
respecting the decree as incontrovertible and no longer open to review, to
bring an ordinary action in the ordinary court of justice for
reconveyance or, if the property has passed into the hands of an
innocent purchaser for value, for damages.[9] (Emphasis supplied.)

Surprised by the turn of events, petitioners brought this petition before

us raising the following issues, to wit:
1. Whether or not Original Certificate of Title No.
on
April 10, 1975 in the name of MAXIMO
now
considered indefeasible and conclusive; and
2.
by

41320 issued
LABANON be

Whether
or
not
the
Trust
Agreement
allegedly
Constancio Labanon and Maximo Labanon prescribed. [7]

Undeniably, respondents are not precluded from recovering the eastern

portion of Original Certificate of Title (OCT) No. P-14320, with an area subject
of the Assignment of Rights and Ownership previously owned by their
father, Constancio Labanon. The action for Recovery of Ownership before the
RTC is indeed the appropriate remedy.

made
Second Issue
The trust agreement between Maximo Labanon and Constancio
Labanon may still be enforced

The Courts Ruling

The petition must fail.
First Issue
Respondents are not precluded from challenging the validity of
Original Certificate of Title No. P-41320
Petitioners argue that respondents can no longer question Maximo Labanons
ownership of the land after its registration under the principle of
indefeasibility of a Transfer Certificate of Title (TCT).
Such argument is inaccurate.
The principle of indefeasibility of a TCT is embodied in Section 32 of
Presidential Decree No. (PD) 1529, amending the Land Registration Act, which
provides:
Section 32. Review of decree of registration; Innocent purchaser for
value. The decree of registration shall not be reopened or revised by reason
of absence, minority, or other disability of any person adversely affected
thereby, nor by any proceeding in any court for reversing judgments, subject,
however, to the right of any person, including the government and the
branches thereof, deprived of land or of any estate or interest therein by such
adjudication or confirmation of title obtained by actual fraud, to file in the
proper Court of First Instance a petition for reopening and review of the
decree of registration not later than one year from and after the date of the
entry of such decree of registration, but in no case shall such petition be
entertained by the court where an innocent purchaser for value has acquired
the land or an interest therein, whose rights may be prejudiced. Whenever
the phrase innocent purchaser for value or an equivalent phrase occurs in

Former Vice-President and Senator Arturo Tolentino, a noted civilist, explained

the nature and import of a trust:
Trust is the legal relationship between one person having an equitable
ownership in property and another person owning the legal title to such
property, the equitable ownership of the former entitling him to the
performance of certain duties and the exercise of certain powers by the latter.
[10]

This legal relationship can be distinguished from other relationships of a

fiduciary character, such as deposit, guardianship, and agency, in that the
trustee has legal title to the property. [11] In the case at bench, this is exactly
the relationship established between the parties.
Trusts are classified under the Civil Code as either express or implied. Such
classification determines the prescriptive period for enforcing such trust.
Article 1444 of the New Civil Code on express trust provides that [n]o
particular words are required for the creation of an express trust, it being
sufficient that a trust is clearly intended.
Civil law expert Tolentino further elucidated on the express trust, thus:
No particular form of words or conduct is necessary for the manifestation
of intention to create a trust. It is possible to create a trust without using the
word trust or trustee. Conversely, the mere fact that these words are
used does not necessarily indicate an intention to create a trust. The question
in each case is whether the trustor manifested an intention to create the kind
of relationship which to lawyers is known as trust. It is immaterial whether or
not he knows that the relationship which he intends to create is called a trust,
and whether or not he knows the precise characteristics of the relationship
which is called a trust.[12]

Correlatively, we ruled in Estate of Edward Miller Grimm v. Estate of Charles

Parsons and Patrick C. Parsons, that:
An express trust is created by the direct and positive acts of the parties,
by some writing or deed or by words evidencing an intention to create a trust;
the use of the word trust is not required or essential to its constitution, it
being sufficient that a trust is clearly intended.[13]
In the instant case, such intention to institute an express trust between
Maximo Labanon as trustee and Constancio Labanon as trustor was contained
in not just one but two written documents, the Assignment of Rights and
Ownership as well as Maximo Labanons April 25, 1962 Sworn Statement. In
both documents, Maximo Labanon recognized Constancio Labanons
ownership and possession over the eastern portion of the property covered
by OCT No. P-14320, even as he recognized himself as the applicant for the
Homestead Patent over the land. Thus, Maximo Labanon maintained the title
over the property while acknowledging the true ownership of Constancio
Labanon over the eastern portion of the land. The existence of an express
trust cannot be doubted nor disputed.
On the issue of prescription, we had the opportunity to rule in Bueno v.
Reyes that unrepudiated written express trusts are imprescriptible:
While there are some decisions which hold that an action upon a trust is
imprescriptible, without distinguishing between express and implied trusts,
the better rule, as laid down by this Court in other decisions, is that
prescription does supervene where the trust is merely an implied one. The
reason has been expressed by Justice J.B.L. Reyes in J.M. Tuason and Co., Inc.
vs. Magdangal, 4 SCRA 84, 88, as follows:
Under Section 40 of the old Code of Civil Procedure, all actions for recovery of
real property prescribed in 10 years, excepting only actions based on
continuing or subsisting trusts that were considered by section 38 as
imprescriptible. As held in the case of Diaz v. Gorricho, L-11229, March 29,
1958, however, the continuing or subsisting trusts contemplated in section 38
of the Code of Civil Procedure referred only to express unrepudiated trusts,
and did not include constructive trusts (that are imposed by law) where no
fiduciary relation exists and the trustee does not recognize the trust at all. [14]
This principle was amplified in Escay v. Court of Appeals this way: Express
trusts prescribe 10 years from the repudiation of the trust (Manuel Diaz, et al.
vs. Carmen Gorricho et al., 54 0.G. p. 8429, Sec. 40, Code of Civil
Procedure).[15]
In the more recent case of Secuya v. De Selma, we again ruled that the
prescriptive period for the enforcement of an express trust of ten (10) years
starts upon the repudiation of the trust by the trustee. [16]
In the case at bar, Maximo Labanon never repudiated the express trust
instituted between him and Constancio Labanon. And after Maximo Labanons
death, the trust could no longer be renounced; thus, respondents right to
enforce the trust agreement can no longer be restricted nor prejudiced by
prescription.
It must be noted that the Assignment of Rights and Ownership and Maximo
Labanons Sworn Statement were executed after the Homestead Patent was
applied for and eventually granted with the issuance of Homestead Patent
No. 67512 on June 6, 1942. Evidently, it was the intent of Maximo Labanon to
hold the title over the land in his name while recognizing Constancio
Labanons equitable ownership and actual possession of the eastern portion
of the land covered by OCT No. P-14320.
In addition, petitioners can no longer question the validity of the positive
declaration of Maximo Labanon in the Assignment of Rights and Ownership in
favor of the late Constancio Labanon, as the agreement was not impugned
during the formers lifetime and the recognition of his brothers rights over
the eastern portion of the lot was further affirmed and confirmed in the
subsequent April 25, 1962 Sworn Statement.
Section 31, Rule 130 of the Rules of Court is the repository of the
settled precept that [w]here one derives title to property from another, the
act, declaration, or omission of the latter, while holding the title, in relation to
the property, is evidence against the former. Thus, petitioners have
accepted the declaration made by their predecessor-in-interest, Maximo
Labanon, that the eastern portion of the land covered by OCT No. P-14320 is
owned and possessed by and rightfully belongs to Constancio Labanon and
the latters heirs. Petitioners cannot now feign ignorance of such
acknowledgment by their father, Maximo.

Lastly, the heirs of Maximo Labanon are bound to the stipulations embodied
in the Assignment of Rights and Ownership pursuant to Article 1371 of the
Civil Code that contracts take effect between the parties, assigns, and heirs.
Petitioners as heirs of Maximo cannot disarrow the commitment made by
their father with respect to the subject property since they were merely
subrogated to the rights and obligations of their predecessor-ininterest. They simply stepped into the shoes of their predecessor and must
therefore recognize the rights of the heirs of Constancio over the eastern
portion of the lot. As the old adage goes, the spring cannot rise higher than
its source.
WHEREFORE, the petition is DENIED. The May 8, 2003 CA Decision and
October 13, 2003 Resolution in CA-G.R. CV No. 65617 are AFFIRMED with
the modifications that the Kidapawan City, Cotabato RTC, Branch 17 is
directed to have OCT No. P-14320 segregated and subdivided by the Land
Management Bureau into two (2) lots based on the terms of the February 11,
1955 Assignment of Rights and Ownership executed by Maximo Labanon and
Constancio Labanon; and after approval of the subdivision plan, to order the
Register of Deeds of Kidapawan City, Cotabato to cancel OCT No. P-14320
and issue one title each to petitioners and respondents based on the said
subdivision plan.
Costs against petitioners. SO ORDERED.

What he does contend in his brief is that, as a mere technical defense, res
judicata showed not prevail over his right to substantial justice, and
specifically to due process. The petitioner claims he was denied this
constitutional protection when the defendants were deprived of the
opportunity to submit their evidence in the said Civil Case No. 1552 and later
to appeal the decision of the trial court.
As a matter of fact, he was not denied that opportunity, which is precisely
and only what due process guarantees. The records show that he did have
that opportunity to be heard and to have the decision reviewed but forfeited
the right because of his own counsel, whom he criticized as follows:
Clearly, it was through the gross ineptitude of petitioner's original counsel
that he was precluded from presenting his evidence in Civil Case No. 1552;
that he lost his right to appeal; and that the Decision in the Id case became
final, executory and executed.
xxx xxx xxx
There is also no dispute that the Decision in Civil Case No. 1552 has already
become final, executory and executed, and this, all because of the gross
ineptitude of counsel for the defendants (herein petitioner and his wife) who
did not file the record on appeal within the extended period of time granted
by the Court and who later on pursued a wrong remedy before the Honorable
Court of appeals in CA. G.R. No. SP-04698 and before the Honorable Supreme
Court in G.R. No. L- 43388 thereby allowing the period for availing of the
remedy of Relief judgment judgment to lapse. 6

AGULLA VS. CFI OF BATANGAS

CRUZ, J.:
Juliana Matienzo had two husbands in succession, namely, Escolastico
Alabastro and, after his death, Daniel Aguila. The petitioner is claiming the
disputed property as the only surviving child of the second marriage. The
private respondents are resisting this claim as the children of Maria Alabastro,
the sole offspring of the first marriage. 1
In an earlier action between them, docketed as Civil Case No. 1552 in the
Court of First Instance of Batangas, the private respondents had sued for
partition and damages against the herein petitioner and his wife, alleging that
some properties held by them pertained to the first marriage as Juliana and
her second husband had not acquired anything during their marriage.
Judgment was rendered on January 7, 1974, in favor of the plaintiffs after the
defendants were precluded from presenting their own evidence owing to
what they later called "the gross ineptitude of their counsel," who had failed
to appear at two scheduled hearings. 2 A motion for reconsideration and a
second motion for reconsideration and/or to present their evidence were both
denied by the trial court. On September 5, 1974, the defendants were given
an extension of twenty days to file their record on appeal and on September
24, 1974, another extension of fifteen days was granted. On November 21,
1974, the trial court denied the defendants' record on appeal and appeal
bond on the ground that the decision had already become final and
executory. On motion of the plaintiffs, the trial court then issued a writ of
execution on December 2, 1974, amended the following day, pursuant to
which the properties held by the defendants were levied upon and sold at
public auction to the plaintiffs as the highest bidders. 3
The acts of the trial court were questioned by the defendants in a petition
for certiorari and mandamus with preliminary injunction, which was denied by
the Court of Appeals. So was their motion for reconsideration. The defendants
then came to this Court in a petition for review by certiorari which was also
denied. An "amended" petition was considered a motion for reconsideration
and was likewise denied. On August 16, 1976, another motion for
reconsideration was also denied with finality, with the warning that no further
motions would be entertained . 4\
Nothing daunted the defendants tried again, this time by filing on June 8,
1977, a complaint for reconveyance of the properties acquired by the
defendants in the earlier action for partition. This new complaint was
docketed as Civil Case No. 1728 in the Court of First Instance of Batangas. In
their answer, the defendants alleged res judicataas one of their affirmative
defenses, arguing that the complaint was barred by the prior judgment in
Civil Case No. 1552. After preliminary hearing of this defense, the trial court
considered the objection well-taken and dismissed the case. 5 The petitioner
then came to this court to challenge the order.
The petitioner does not seriously dispute that requisites of res judicata are
present, to wit: (1) the presence of a final former judgment; (2) the court
rendering the same must have jurisdiction over the subject matter and the
parties; (3) the former judgment must be on the merits; and (4) there must
be, between the two cases, Identity of parties, Identity of subject matter and
Identity of causes of action. 6 He says in fact that "he does not seek to do
away with the rule of res judicata but merely proposes to undo a grave and
serious wrong perpetuated in the name of justice." 7

Counsel are supposed to represent their clients by virtue of a valid

authorization from the latter and act on their behalf with binding effect.
Persons are allowed to practice law only after they shall have passed the bar
petitions, which merely determine if they have the minimum requirements to
engage in the exercise of the legal profession. This is no guaranty, of course,
that they will discharge their duties with full fidelity to their clients or with full
mastery or at least appreciation of the law. The law, to be fair, is not really all
that simple; there are parts that are rather complicated and may challenge
the skills of many lawyers. By and large, however, the practice of the law
should not present much difficulty unless by some unfortunate quirk of fate
the lawyer has been allowed to enter the bar despite his lack of preparation,
or, while familiar with the intricacies of his , is nevertheless neglectful of his
duties and does not pay proper attention to his work.
In the instant case, the petitioner should have noticed the succession of
errors committed by his counsel and taken appropriate steps for his
replacement before it was altogether too late. He did not. On the contrary, he
continued to retain his counsel through the series of proceedings that all
resulted in the rejection of his cause, obviously through such counsel's
"ineptitude" and, let it be added, the clients" forbearance. The petitioner"s
reverses should have cautioned him that his lawyer was mishandling his case
and moved him to seek the help of other counsel, which he did in the end but
rather tardily.
Now petitioner wants us to nullify all of the antecedent proceedings and
recognize his earlier claims to the disputed property on the justification that
his counsel was grossly inepet. Such a reason is hardly plausible as the
petitioner's new counsel should know. Otherwise, all a defeated party would
have to do to salvage his case is claim neglect or mistake on the part of his
counsel as a ground for reversing the adverse judgment. There would be no
end to litigation if this were allowed as every shortcoming of counsel could be
the subject of challenge by his client through another counsel who, if he is
also found wanting, would likewise be disowned by the same client through
another counsel, and so on ad infinitum. This would render court proceedings
indefinite, tentative and subject to reopening at any time by the mere
subterfuge of replacing counsel.
On the effects of counsel's acts upon his client, this Court has categorically
declared:
It has been repeatedly enunciated that "a client is bound by the action of his
counsel in the conduct of a case and cannot be heard to complain that the
result might have been different had he proceeded differently. A client is
bound by the mistakes of his lawyer. If such grounds were to be admitted and
reasons for reopening cases, there would never be an end to a suit so long as
new counsel could be employed who could allege and show that prior counsel
had not been sufficiently diligent or experienced or learned. ... Mistakes of
attorneys as to the competency of a witness, the sufficiency, relevancy or
irrelevancy of certain evidence, the proper defense, or the burden of proof, ...
failure to introduce certain evidence, to summon witnesses and to argue the
case are not paper grounds for a new trial, unless the incompetency of
counsel is so great that his client is prejudiced and prevented from properly
presence his case." (Vol. 2, Moran, Comments on the Rules of Court, pp. 218,
219-220, citing Rivero v. Santos, et al., 98 Phil. 500. 503-504; Isaac v.
Mendoza, 89 Phil. 279; Montes v. Court, 48 Phil. 64; People v. Manzanilla, 43
Phil. 167; U.S. v. Dungca, 27 Phil. 274, U.S. v. Umali, 15 Phil. 33; see also
People v. Ner 28 SCRA 1151, 1164). In the 1988 case of Palanca v. American

Food, etc. (24 SCRA 819, 828), this principle was reiterated. (Tesoro v. Court
of Appeals, 54 SCRA 296, 304).
At that, it is not even exactly true, as the petitioner claims, that his evidence
was not considered by the trial court in Civil Case No. 1552. The record shows
that when the defendants filed their second motion for reconsideration and/or
to allow them to present their evidence, which was attached, it was examined
by the court "in fairness to the defendants" but found to be "so vague and not
appearing to be indubitable as to warrant reopening of the case." 9This
conclusion was reached by the late Judge Jaime R. Agloro after he had made a
careful and lengthy analysis of such evidence, dwelling on each of the
disputed properties, their antecedent, description, and the basis of the
defendants' claims therefor. A mere reading of such discussion, which
covered two single spaced typewritten pages, will show that, although the
judge could have simply denied the second motion for reconsideration, he
nonetheless took the time and exerted painstaking efforts to study the
proffered evidence. The meticulous consideration of such evidence
commends the trial judge's thoroughness and sense of justice and clearly
belies the petitioner's complaint that he had been denied due process.
Perhaps it is for this reason that the petitioner does not strongly attack the
decision, preferring to train his sights on his own former counsel. As he says
in his petition, he "does not seek the nullity of the judgment rendered in Civil
Case No. 1552 which has already become final due to legal
technicality." 10 What he does ask for is a reconveyance of the subject
properties which he says were udjustly taken from him as a result of his
lawyer's mistakes. Such blunders, he contends, are correctable in an action
for reconveyance which the Court should allow in the exercise of its equity
jurisdiction.
The law on reconveyance is clear, and jurisprudence thereon is well-settled.
This remedy is available in cases where, as a result of mistake or fraud,
property is registered in the name of a person not its owner. 11 Clerical error in
designating the real owner is a valid ground for reconveyance after the
decree shall have become final following the lapse of one year therefrom.
Reconveyance may also be sought where it is established that a person not
entitled to the property succeeded in registering it in his name to the
prejudice of the real owner. However, it cannot be employed to negate the
effects of a valid decision of a court of justice determining the conflicting
claims of ownership of the parties in an appropriate proceeding, as in Civil
Case No. 1562. The decision in that case was a valid resolution of the
question of ownership over the disputed properties and cannot be reversed
now through the remedy of reconveyance.
For all its conceded merits, equity is available only in the absence of law and
not as its replacement. Equity is described as justice outside legality, which
simply means that it cannot supplant although it may, as often happens,
supplement the law. We said in an earlier case 12 and we repeat it now, that
all abstract arguments based only on equity should yield to positive rules,
which pre-empt and prevail over such persuasions. Emotional appeals for
justice, while they may wring the heart of the Court, cannot justify disregard
of the mandate of the law as long as it remains in force. The applicable
maxim, which goes back to the ancient days of the Roman jurists and is
now still reverently observed is "aequetas nunquam contravenit legis.
We find it unnecessary to rule on the other arguments raised by the
petitioner as they will not affect the decision we reach today. This decision
must again be adverse to him although he may this time be represented by
able counsel.

When Buenaventura Mabasa died, respondents siblings authorized her to

negotiate with DBP for the repurchase of the lots. DBP allowed respondent to
reacquire the foreclosed properties through a deed of conditional sale
for P25,875.[3]
Subsequently, respondent entered into an agreement with petitioners
father, Sabas Gasataya, for the latter to assume payment of her obligation to
DBP. They further agreed that Sabas Gasataya would take possession of the
lots for 20 years and develop them into a fishpond. As consideration thereof,
respondent
receivedP10,000
cash,
in
addition
to
the P25,000
that Sabas Gasataya had to pay DBP on her behalf.
Upon representation by Sabas Gasataya that respondents obligation to DBP
had already been settled, they entered into another agreement denominated
as Deed of Sale of Fishpond Lands with Right to Repurchase.
Eight years after the execution of the above deed of sale with right to
repurchase, respondent discovered that Sabas Gasataya had stopped paying
DBP. As a result, DBP revoked her right to repurchase the subject lots.
DBP later on held a public auction of the properties where petitioner
participated and bid the highest price of P27,200. Eventually, he acquired
titles to the lots for which he was issued TCT No. T-11720 in lieu of TCT No. T2447 (Lot 279) and TCT No. T-11721 for TCT No. T-2448 (Lots 272 and 972).
Respondent then filed a complaint in the RTC for reconveyance of titles of
lands with damages[4] against petitioner and Sabas Gasataya (Gasatayas).
She claimed that the latter deliberately reneged on his commitment to pay
DBP to: (1) revoke her right to repurchase the lots under the deed of
conditional sale and (2) subject the properties to another public auction
where petitioner could bid.
Petitioner and his father denied the allegations saying that the deed of
conditional sale assumed by the latter from respondent was rendered
ineffective by DBPsrefusal to accept payments thereon.
The trial court ruled in favor of respondent finding that the Gasatayas failed
to controvert her claim that they defrauded her just so petitioner could
acquire the lots at public auction.[5] According to the trial court,
the Gasatayas failed to prove that DBP indeed rejected payments
from Sabas Gasataya. The trial court ruled:
WHEREFORE, judgment is hereby rendered in favor of the [respondent] and
against [the Gasatayas] ordering [them] to wit:
a. Ordering [petitioner] to reconvey to [respondent] TCT. No.[T-11720] and
TCT No. T-11721, both of the Registry of Deeds for the Province of Lanao del
Norte, upon tender to and receipt by [petitioner] of the amount of P37,200.00
Philippine money;
b. Ordering
procure and
certificates
[respondent]

the Registrar of Deeds for the Province of Lanao del Norte to

cause the transfer and registration of the aforesaid transfer
of
title
in
favor
and
in
the
name
of
herein
Editha S. Mabasa;

c. Ordering [the Gasatayas] to cede, transfer and reconvey to [respondent]

the physical possession and occupancy of Lot 279, 272 and Lot 972as
covered by the aforesaid certificates of title;
d. Ordering [the Gasatayas] to pay [respondent] the sum of P5,000.00 for
attorneys fees; P5,000.00 as litigation expenses;

WHEREFORE, the petition is DENIED, with costs against the petitioner. It is so

ordered.

e.

GASATAYA VS. MABASA, GR NO. 148147

SO ORDERED.[6]

Ordering [the Gasatayas] to pay costs of this proceeding[s].

CORONA, J.:
Before us is an appeal by certiorari under Rule 45 of the 1997 Rules of Civil
Procedure assailing the decision[1] of the Court of Appeals (CA) in CA-G.R. CV
No. 55055 which, in turn, affirmed the decision of the Regional Trial Court
(RTC) of Lanao del Norte, Branch 7.[2]
The facts follow.
Respondent Editha Mabasas father, Buenaventura Mabasa, was granted a
homestead patent on Lots 279, 272 and 972 located in Lala, Lanao del Norte.
Buenaventura Mabasa mortgaged these lots to secure a loan from the
Development Bank of the Philippines (DBP). Because of his failure to pay his
indebtedness, DBP foreclosed on the lots and sold them at public auction
where it emerged as the highest bidder. DBP then obtained titles to the lots:
Lot 279 under TCT No. T-2247 and consolidated Lots 272 and 972 under TCT
No. T-2448.

Petitioner and his father appealed to the CA which affirmed the RTCs decision
and dismissed their appeal for lack of merit. The CA declared:
The contention of [respondent] that [the Gasatayas] deliberately chose not to
pay DBP as agreed, in order for them to acquire said properties in a
fraudulent and treacherous manner, was not fully controverted by [them].
[The Gasatayas] failed to produce evidence to support their defenses.
xxx

xxx

xxx

Moreover, [the Gasatayas] are in possession of said land[s] by virtue of a

Deed of Sale with a Right to Repurchase and not because the DBP granted it
to them[T]o facilitate their acquisition of the land in question, [they]
deliberately defaulted in the payment of the assumed obligation to the
damage and prejudice of [respondent]. Consequently, the lands in question
were subjected to public bidding wherein [petitioner] participated and
eventually won[the Gasatayas] committed a breach of trust amounting to
fraud which would warrant an action forreconveyance. [7]

Petitioner alone came to us via this appeal by certiorari seeking the reversal
of the CA decision.
Before us, petitioner contests the CA decision affirming the trial courts order
to reconvey his titles on the disputed lots to respondent who, according to
him, is not the owner thereof.
We affirm the CA.
Reconveyance is available not only to the legal owner of a property but also
to the person with a better right than the person under whose name said
property was erroneously registered. [8] While respondent is not the legal
owner of the disputed lots, she has a better right than petitioner to the
contested lots on the following grounds: first, the deed of conditional sale
executed by DBP vested on her the right to repurchase the lots and second,
her right to repurchase them would have subsisted had they (the Gasatayas)
not defrauded her.
The trial courts findings, as affirmed by the CA, that petitioner and his father
deceived respondent to acquire the disputed lots bind us. Well-settled is the
rule that factual conclusions of the trial court deserve respect and become
irrefutable especially when affirmed by the CA. [9] Absent any evidence that
the CA overlooked salient matters that could justify a reversal of the outcome
of this case, we decline to disturb such factual conclusions.
Petitioner, however, insists that respondent had no right to the disputed lots
since the conditional sale agreement where such right was based had long
been cancelled by DBP. According to petitioner, a void and inexistent deed
cannot override his right as registered owner of the lots.
We disagree.
Petitioner cannot discredit the deed of conditional sale just so he can to keep
his titles to the lots. Petitioner should be reminded that DBP revoked
respondents right to repurchase the lots under said deed because of the
deceitful maneuverings that he and his father employed. If we were to
sustain petitioners argument, then we would, in effect, reward him for his
misdeed.
Neither can this Court uphold petitioners contention that his titles are
unsullied on the mere fact that he purchased the properties at public auction.
Fraud overthrows the presumption that the public sale was attended with
regularity. The public sale did not vest petitioner with any valid title to the
properties since it was but the consequence of his and his fathers fraudulent
schemes.
The registration of the properties in petitioners name did not obliterate the
fact that fraud preceded and facilitated such registration. Actual or positive
fraud proceeds from an intentional deception practiced by means of
misrepresentation of material facts, [10] which in this case was the conscious
representation by petitioners father (Sabas Gasataya) that respondents
obligation to DBP had already been settled. It is fraud to knowingly omit or
conceal a fact, upon which benefit is obtained, to the prejudice of another.
[11]
Consequently, fraud is a ground for reconveyance.[12]
Moreover, the law only protects an innocent purchaser for value and not one
who has knowledge of and participation in the employment of fraud.
An 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 that same
property, and who pays a full and fair price at the time of the purchase or
before receiving any notice of another persons claim. [13] Obviously, petitioner
was not an innocent purchaser for value.
As a final point, the Court takes significant note of the fact that
respondents father originally acquired the subject lots through homestead
grant. Commonwealth Act 141 (Public Land Act) aims to confine and preserve
to the homesteader and his kin the homestead lots. We, therefore, agree with
the CAs disquisition that courts should lend a stout shoulder to help keep a
homestead in the homesteaders family for the stern reality cannot be belied
that homesteaders and their families are generally in the lower stratum of
life and most likely, when they alienate the homestead, it is out of dire
necessity.[14] According to the CA, desperation does not allow much of a
choice, hence homesteaders and their kin should be given every opportunity
to repurchase their homestead.
WHEREFORE, the assailed decision of the Court of Appeals in CA-G.R. CV No.
55055 is hereby AFFIRMED. Costs against petitioner. SO ORDERED.

BENIN VS. TUASON, GR NO. L-26127

ZALDIVAR, J.:

Appeal from the decision, dated January 18, 1965, of the Court of First
Instance of Rizal, the Hon. Judge Eulogio Mencias, presiding in Civil Cases
Nos. 3621, 3622, and 3623. 1
On May 19, 1955 three sets of plaintiffs filed three separate complaints
containing substantially the same allegations. 2
In Civil Case No. 3621, the plaintiffs alleged that they were the owners and
possessors of the three parcels of agricultural lands, described in paragraph V
of the complaint, located in the barrio of La Loma (now barrio of San Jose) in
the municipality (now city) of Caloocan, province of Rizal, having an
aggregate area of approximately 278,928 square meters; that they inherited
said parcels of land from their ancestor Sixto Benin, who in turn inherited the
same from his father, Eugenio Benin; that they and their predecessors in
interest had possessed these three parcels of land openly, adversely, and
peacefully, cultivated the same and exclusively enjoyed the fruits harvested
therefrom; that Eugenio Benin, plaintiff's grandfather, had said parcels of land
surveyed on March 4 and 6, 1894, that during the cadastral survey by the
Bureau of Lands of the lands in Barrio San Jose in 1933 Sixto Benin and herein
plaintiffs claim the ownership over said parcels of land; that they declared
said lands for taxation purposes in 1940 under Tax Declaration No. 2429; that
after the outbreak of the last World War, or sometime in 1942 and
subsequently thereafter, evacuees from Manila and other places, after having
secured the permission of the plaintiffs, constructed their houses thereon and
paid monthly rentals to plaintiffs.
In Civil Case No. 3622 the plaintiffs alleged that they were the owners and
possessors of two parcels of agricultural land, described in paragraph V of the
complaint, located in the Barrio of La Loma (now Barrio San Jose) in the
municipality of Caloocan, province of Rizal, having an aggregate area of
approximately 148,118 square meters; that these parcels of land were
inherited by them from their deceased father Bonoso Alcantara, who in turn
inherited the same from his father, Juan Alcantara; that plaintiffs Juan
Alcantara and Jose Alcantara were the children of Bonoso Alcantara; that
these two brothers inherited the land from their father, and they and their
predecessors in interest had been in open, adverse and continuous
possession of the same, planting therein palay and other agricultural
products and exclusively enjoying said products; that on March 28, 1894
plaintiffs' grandfather, Juan Alcantara, had said lands surveyed; that during
the cadastral survey by the Bureau of Lands of the lands in Barrio San Jose in
1933 Bonoso Alcantara and the plaintiffs filed and registered their claims of
ownership over said lands; that plaintiffs had said lands declared for taxation
purposes under Tax Declaration No. 2390, of Quezon City; that after the
outbreak of the last World War, or sometime in 1942 and subsequently
thereafter, evacuees from Manila and other places, after having secured
permission from plaintiffs, settled and constructed their houses on said lands
and plaintiffs collected monthly rentals from them.
In Civil Case No. 3623, plaintiffs alleged that they are the owners and
possessors of a parcel of agricultural land located in the Barrio of La Loma
(now San Jose), municipality of Caloocan, province of Rizal, having an area of
approximately 62,481 square meters; that this parcel of land was inherited by
plaintiffs from their ancestor Candido Pili who in turn inherited the same from
his parents; that Candido Pili and his predecessors in interest owned,
possessed, occupied and cultivated the said parcel of land from time
immemorial; that upon the death of Candido Pili his children Luisa Pili, Pascual
Pili, Diego Pili and Manuel Pili succeeded to the ownership and possession and
cultivation of said land; that plaintiffs and their predecessors in interest, as
owners and possessors of said land, had openly, adversely and continuously
cultivated the land, planting thereon palay and other agricultural products
and enjoying exclusively the products harvested therefrom; that during his
lifetime, Candido Pili ordered the survey of said land sometime on March 11,
1894, and when the cadastral survey of said land was conducted by the
Bureau of Lands in 1933 Candido Pili and plaintiffs filed and registered their
claim of ownership over the said parcel of land; that plaintiffs had the land
declared for taxation purposes under Tax Declaration No. 2597, Quezon City,
Philippines; that after the outbreak of the last World War, or sometime in
1942 and subsequently thereafter, evacuees from Manila and other places,
after securing permission from plaintiffs, settled and constructed their houses
in said land and plaintiffs collected monthly rentals from their lessees or
tenants.
The plaintiffs in these three civil cases uniformly alleged, in their respective
complaint, that sometime in the year 1951 while they were enjoying the
peaceful possession of their lands, the defendants, particularly the defendant
J.M. Tuason and Co. Inc., through their agents and representatives, with the
aid of armed men, by force and intimidation, using bulldozers and other
demolishing equipment, illegally entered and started defacing, demolishing
and destroying the dwellings and constructions of plaintiffs' lessees, as well
as the improvements consisting of rice paddies (pilapiles), bamboos and fruit
trees, and permanent improvements such as old roads, old bridges and other
permanent landmarks within and outside the lands in question, disregarding
the objections of plaintiffs, and as a result plaintiffs were deprived of the

rentals received from their lessees; that plaintiffs made inquiries regarding
the probable claim of defendants, and in 1953 they discovered for the first
time that their lands, as described in their respective complaint, had either
been fraudulently or erroneously included, by direct or constructive fraud, in
what appears as Parcel No. 1 (known as Santa Mesa Estate) in Original
Certificate of Title No. 735 of the Land Records of the province of Rizal in the
names of the original applicants for registration, now defendants, Mariano
Severo Tuason y de la Paz, Teresa Eriberta Tuason y de la Paz, Juan Jose
Tuason y de la Paz, Demetrio Asuncion Tuason y de la Paz, and Augusto
Huberto Tuason y de la Paz.
The plaintiffs in each of the three complaints also alleged that the registered
owners mentioned in Original Certificate of Title No. 735 had applied for the
registration of two parcels of land (known as the Santa Mesa Estate and the
Diliman Estate), located in the municipalities of Caloocan and San Juan del
Monte, province of Rizal, of which parcel No. 1 (Santa Mesa Estate) contained
an area of 8,798,617 square meters; that the registration proceedings were
docketed as LRC No. 7681 of the Court of Land Registration; that the
application for registration in LRC No. 7681, containing the boundaries,
technical descriptions and areas of parcel No. 1 (Santa Mesa Estate) and
parcel No. 2 (Diliman Estate) was published in the Official Gazette; that
before the decision was handed down in LRC No. 7681, the area, boundaries
and technical descriptions of parcel No. 1 were altered and amended; that the
amendments and alterations, which were made after the publication of the
original application, were never published; that on March 7, 1914 a decision
was rendered in LRC No. 7681 based on the amended plan; that pursuant to
the decision of March 7, 1914 a decree of registration was issued on July 6,
1914, known as Decree No. 17431, decreeing the registration in the names of
the applicants of the two parcels of land (Santa Mesa Estate and Diliman
Estate); that the decision dated March 7, 1914 in LRC No. 7681 is null and
void because the Land Registration Court had no jurisdiction to render the
decision for lack of publication; that Decree No. 17431 issued pursuant to the
decision of March 7, 1914 in LRC No. 7681 is likewise null and void from the
beginning, because it was issued pursuant to a void decision and because the
boundaries, technical descriptions and areas appearing in the decree are
different and not identical with the boundaries, technical descriptions and
areas in the application for registration as published in the Official Gazette;
that the area of parcel No. 1 as mentioned in Decree No. 17431 is bigger than
the area of parcel No. 1 appearing in the application for registration as
published in the Official Gazette; that Original Certificate of Title No. 735,
referring to parcel 1 (Santa Mesa Estate), is also null and void from the
beginning because it was issued pursuant to a void decree of registration;
that the area, boundaries and technical description of Parcel No. 1 appearing
in Decree of Registration No. 17431 and in the Original Certificate of Title No.
735 are different from the area, boundaries and technical description
appearing in the application for registration as published in the Official
Gazette; that the plaintiffs had not been notified of the proceedings in LRC
No. 7681 although the applicants knew, or could have known, by the exercise
of necessary diligence, the names and addresses of the plaintiffs and their
predecessors in interest who were then, and up to the time the complaints
were filed, in possession and were cultivating the lands described in
paragraph V of their respective complaint; and that during, before, and even
after the issuance of Original Certificate of Title No. 735 the defendants had
tacitly recognized the ownership of the plaintiffs over their respective lands
because said defendants had never disturbed the possession and cultivation
of the lands by the plaintiffs until the year 1951; and that all transfer
certificates of title issued subsequently, based on Original Certificate of Title
No. 735, are also null and void. 3
The plaintiffs in each of the three cases prayed the court: (1) to declare them
owners and entitled to the possession of the parcel, or parcels, of land
described in their respective complaint, as the case may be; (2) to revoke the
decision of the Court of Land Registration, dated March 7, 1914 in LRC No.
7681, and to declare Decree No. 17431, dated July 6, 1914 null and void from
the beginning with respect to Parcel No. 1(Santa Mesa Estate) in Original
Certificate of Title No. 735 which include the lands of the plaintiffs; (3) to
declare Original Certificate of Title No. 735, particularly as it refers to Parcel
No. 1 (Santa Mesa Estate) also null and void; (4) to declare null and void all
transfer certificates of titles issued by the Register of Deeds of Rizal and of
Quezon City subsequent to, and based on, Original Certificate of Title No.
735; (5) to order the defendants, in the event Original Certificate of Title No.
735 is declared valid, to reconvey and transfer title over the land described in
their respective complaint in favor of the plaintiffs in each case, as the case
may be; (6) to order the defendants to pay the plaintiffs the market value of
the lands in question in case of defendants' inability to reconvey the same;
(7) to order the defendants to pay damages to the plaintiffs; (8) to issue a
writ of preliminary injunction against the defendants, their lawyers, their
agents and representatives from disturbing the ownership and possession of
the plaintiffs during the pendency of these cases.
The plaintiffs, in the three cases, were allowed by the trial court to litigate as
paupers.

Only defendant J.M. Tuason & Co., Inc. was actually served with summons.
The other defendants were ordered summoned by publication in accordance
with Sections 16 and 17 of the Rules of Court. Only defendant J.M. Tuason &
Co., Inc. appeared. The other defendants were all declared in default.
On June 23, 1955 defendant J.M. Tuason & Co., Inc. filed a motion to dismiss
in each of the three cases. This motion to dismiss was denied by the trial
court on July 20, 1955.
On July 18, 1955 the trial court issued an order granting the writ of
preliminary injunction prayed for by the plaintiffs in their complaints. The
preliminary injunction, however, was lifted by order of the trial court on
October 3, 1955, upon the posting by defendant J.M. Tuason & Co., Inc. of
bonds in the total amount of P14,000.00 pursuant to the order of the court of
September 26, 1955.
On August 11, 1955 defendant J.M. Tuason & Co., Inc. filed in the three cases
a motion for reconsideration of the order of July 20, 1955 denying the motion
to dismiss. This motion for reconsideration was denied by order of the court
of September 26, 1955.
On November 29, 1955 defendant J.M. Tuason & Co., Inc. filed an answer in
each of the three cases. In its answer, this defendant, among others,
specifically denied plaintiffs' claim of ownership of the lands involved in each
case. The answer contains special and affirmative defenses, to wit: (1) that
the plaintiffs' cause of action is barred by prior judgment and res judicata in
view of the judgment of the Court of First Instance of Rizal in its Civil Case No.
Q-156 which was subsequently elevated to the Supreme Court as G.R. No. L4998, in which latter case the Supreme Court affirmed in toto the order of the
lower court dismissing the case; (2) that the complaints failed to state facts
sufficient to constitute a cause of action against the defendants; (3) that the
plaintiffs' action, assuming that their complaints state sufficient cause of
action, had prescribed either under Act No. 496 or under statutes governing
prescription of action; (4) that defendant J.M. Tuason & Co., Inc. is a buyer in
good faith and for valuable consideration of the parcels of land involved in
the three cases; (5) that the registration proceedings had in LRC No. 7681
instituted by the defendant's predecessors in interest was in accordance with
law, and the requirements for a valid registration of title were complied with.
By way of counterclaim the defendant prayed that the plaintiffs be ordered to
pay damages as therein specified.
The plaintiffs, amended their complaints in the three cases, by including
additional parties as plaintiffs, and the amended complaints were admitted
by the trial court. The defendant, J.M. Tuason & Co., Inc., filed a manifestation
that it was reproducing and realleging its answers to the original complaints
as its answers to the amended complaints in view of the fact that the
amendments to the complaints consist merely in the inclusion of additional
indispensable as well as necessary parties-plaintiffs. 4
On June 7, 1962, after the plaintiffs had presented their evidence, defendant
J.M. Tuason & Co., Inc. presented a motion to dismiss the cases upon grounds
that (1) the actions were barred by the statute of limitations; (2) that the
actions barred by a prior judgment; and (3) that plaintiffs had not presented
any evidence to prove their claim of ownership. The defendant later filed a
motion to withdraw the third ground of its motion to dismiss. The plaintiffs
filed their opposition to the motion to dismiss, as well as to the motion of
defendant to withdraw its third ground to dismiss. The trial court, in an order
dated December 3, 1962, granted defendant's motion to withdraw the third
ground of its motion to dismiss but denied the motion to dismiss. 5
After trial, on January 18, 1965, the lower court rendered a decision for the
three cases, the dispositive portion of which reads as follows:
WHEREFORE, IN VIEW OF ALL THE FOREGOING, judgment is hereby rendered
in favor of the Plaintiffs and against the Defendants as follows:
A Declaring that the decision, the decree and the title issued in LRC No.
7681, are null and void, ab initio, and of no effect whatsoever;
B Declaring that Original Certificate of Title No. 735 found on page 136 Vol.
A-7 of the Registration Book of Rizal is null and void from the very beginning
(and) of no effect whatsoever;
C Declaring that all Transfer Certificates of Title emanating or allegedly
derived from Original Certificate of Title No. 735 of the Province of Rizal are
likewise null and void;
D Declaring that the plaintiff in Civil Cases Nos. 3621, 3622 and 3623 are
the owners and entitled to the possession of the parcels of land claimed and
described in paragraph V of their respective complaints;
E Ordering the defendants and all persons claiming under them to vacate
and restore to the plaintiffs the possesion of the parcels of land described in

paragraph V of the complaint in Civil Case No. 3621 and indicated as Parcel A,
Parcel B and Parcel C, in SWO-40187 (Exh. "UU" and Exh. "VV");
F Ordering the defendants and all persons claiming under them to vacate
and restore to the plaintiffs the possession of the parcels of land described in
paragraph V of the complaint in Civil Case No. 3623 and indicated as Parcel D
and Parcel F, in SWO-40187 (Exh. "UU" and Exh. 'VV");
G Ordering the Defendants and all persons claiming under them to vacate
and restore to the plaintiffs the possession of the parcels of land described in
paragraph V of the complaint in Civil Case No. 3623 and indicated in Parcel E,
in SWO-491187 (Exh. "UU and Exh. "VV");
H Ordering the defendants to pay plaintiffs in Civil Case No. 3621 the sum
of P600.00 a month as actual damages for uncollected rentals from 1951 until
such possession is restored to them;
I Ordering the defendants to pay the plaintiffs in Civil Case No. 3623 the
sum of P600.00 a month, as actual damages for uncollected rentals from
1951 until such possession is restored to them;.
J Ordering the defendants to pay the plaintiffs in Civil Case No. 3623 the
sum of P150.00 a month as actual damages for uncollected rentals from 1951
until such possession is restored to them; .
K Ordering the defendants to pay the costs; .
L The defendants' counterclaim is hereby declared dismissed for lack of
merit." 6
A motion for new trial was filed by defendant J.M. Tuason & Co., Inc. on
January 30, 1965. However, before the motion for new trial was resolved by
the court, said defendant, on February 11, 1965, filed a notice of appeal to
this Court and an appeal bond, and on February 12, 1965 he filed the record
on appeal. 7 The record on appeal, after it had been corrected and amended,
as ordered and/or authorized by the trial court, was approved on September
29, 1965. 8
Appellant J.M. Tuason & Co. Inc., in this appeal, contends that the trial court
committed the following errors:
I. The lower court erred in holding that the Land Registration Court in GLRO
No. 7681 lacked or was without jurisdiction to issue decree No. 17431 for the
alleged reason that:
(1)

The amendment to the original plan was not published;

(2)
The description of Parcel 1 in the decree is not identical with the
description of Parcel 1 as applied for and as published in the Official Gazette;
(3)

Parcel 1 as decreed is bigger in area than Parcel 1 as applied for;

(4)

A. Bonifacio Road is the only boundary on the West of Parcel 1.

II. The trial court erred in finding that the transcription of the decree No.
17431 was not in accordance with the law and that, therefore, said OCT 735
was a complete nullity and the land remains unregistered.
III. The trial court erred in taking cognizance of these cases despite its lack of
jurisdiction to hear and decide the same.
IV. The trial court erred in not dismissing these cases on the grounds of
prescription and laches, and in denying the motions to dismiss filed on said
grounds.
V. The trial court erred in not dismissing these cases on the ground of res
judicata and in denying the motion to dismiss filed on said ground.
VI. The trial court erred in declaring null and void all certificates of title
emanating from OCT 735.
VII. The trial court erred in holding that J.M. Tuason & Co., Inc. is not a
purchaser in good faith and for value.
VIII. The trial court erred in awarding ownership of the lands claimed by, and
in awarding damages to, the appellees.
IX. The trial court erred in denying and in dismissing appellant's counterclaim
and in sentencing appellant to pay the costs of these suits.
As stated by the trial court in its decision, "These cases involve the validity of
the decision and the decree issued in LRC No. 7681 resulting in the issuance
of Title No. 735, and the ownership and possession of several parcels of land,
claimed by the plaintiffs in their respective complaints...."

The lower court, summarizing its findings, among others, concluded that: (1)
the decision and the decree in LRC No. 7681 are null and void ab initio,
having been rendered without jurisdiction; (2) Original Certificate of Title No.
735 issued pursuant to the decree in LRC No. 7681 is null and void, having
been issued pursuant to a void degree; (3) Original Certificate of Title No. 735
is null and void because the No. 17431 in LRC No. 7681, assuming the degree
to be valid, had not been inscribed in accordance with the provisions of
Section 41 of Act 496; (4) all Transfer Certificates of Title allegedly emanating
and derived from the void Original Certificate of Title No. 735 are likewise null
and void; and (5) the plaintiffs in these three civil are the owners and entitled
to the possession of the parcels of land described in their respective
complaints.
We have carefully examined and studied the voluminous records, and the
numerous documentary evidence, of these three cases, and We find that the
conclusions of the trial court are not supported by the evidence and the
applicable decisions of this Court.
The Original Certificate of Title No. 735 that had been declared null and void
ab initio by the trial court covers two big parcels of land, mentioned in said
title as Parcel 1, having an area of 8,778,644.10 square meters more or less,
known as the Santa Mesa Estate; and Parcel 2, having an area of 15,961,246
square meters more or less, known as the Diliman Estate. The three parcels
of land involved in Civil Case No. 3621, having an aggregate area of 278,853
square meters, more or less; the two parcels of land involved in Civil Case No.
3622 having an aggregate area of 154,119.7 square meters, more or less;
and the one parcel of land involved in Civil Case No. 3623, having an area of
62,481 square meters, more or less, are all included in the area of Parcel 1. 9
The trial court, in its decision, states that the identity of the parcels of land
claimed by the plaintiffs is not disputed and that both the plaintiffs and the
defendant admit that the parcels of land litigated are found within the
boundaries of the present Sta. Mesa Heights Subdivision (Parcel 1) covered by
Original Certificate of Title No. 735. 10 It is shown in the survey plans,
presented by both the plaintiffs and the defendant, that the six parcels of
lands involved in these three cases are located at the northwestern portion of
Parcel 1. (Exhs. UU, VV; and Exh. 29).
The records show, and it is established by the evidence, that sometime in
1911 Mariano Severo Tuason y de la Paz, Teresa Eriberta Tuason y de la Paz,
Juan Jose Tuason y de la Paz, Demetrio Asuncion Tuason y de la Paz, and
Augusto Huberto Tuason y de la Paz, filed with the Court of Land Registration
an application for the registration of their title over two parcels of land,
designated in the survey plans accompanying the application as Parcel 1 with
an area of 8,798,617 square meters, and Parcel 2 with an area of 16,254,037
square meters. The application was docketed as LRC No. 7681. There was
another application covering three other parcels of land, docketed as LRC No.
7680. The application in LRC No. 7681 was set for hearing on November 20,
1911 (Exh. X). The application and the notice of hearing, containing the
technical descriptions of the two parcels of land applied for, were published in
the issue of the Official Gazette of October 25, 1911 (Exh. YY). On November
20, 1911 the Court of Land Registration issued an order of general default
against the whole world except the Insular Government, the Director of Lands
and the municipalities of Caloocan and San Juan del Monte (Exh. 28). On
December 23, 1911 the court issued an order authorizing the amendment of
the plan in LRC No. 7681 (Exh. 23). November 11, 1913 the applicants and
the Government entered into an agreement whereby the Government agreed
to withdraw its opposition to the application for registration of title over the
portion known as Hacienda Diliman (Parcel 2) on condition that the roads
existing on said tract of land be allowed to remain, and it was further agreed
"that the issuance, of the title to applicants shall be made subject to all the
exceptions established by Section 39 of Act 496 as amended by Section 1 of
Act 2011" (Exh. 21). On December 29, 1913 the Court of Land Registration
rendered a decision (Exh. 24) in both LRC No. 7680 and LRC No. 7681 which,
among others, stated that during the registration proceedings the plans
accompanying the two applications were amended in order to exclude certain
areas that were the subject of opposition, that the order of general default
was confirmed, that the Chief of the Surveyor's Division of the Court of Land
Registration was ordered to submit a report as to whether or not the new
(amended) plans had included lands which were not by the original plans,
and whether or not the new plans had excluded the lands that had already
been covered by the decree in LRC No. 3563. The decision further stated that
in the event that the new plans did not include new parcels of land and that
the lands that were the subject of the proceedings in LRC No. 3563 had been
excluded, an additional decision would be made decreeing the adjudication
and registration of the lands that were the subject of the registration
proceedings in favor of the applicants, as follows: To Mariano Severo Tuason y
de la Paz, two sixths (2/6) undivided portion to Teresa Eriberta Tuason y de la
Paz, one sixth (1/6) undivided portion; to Juan Jose Tuason y de la Paz, one
sixth (1/6) undivided portion; to Demetrio Asuncion Tuason y de la Paz, one
sixth (1/6)undivided portion; and to Augusto Huberto Tuason y de la Paz, one
sixth (1/6) undivided portion.

In compliance with the order contained in the decision of December 29, 1913,
the Chief of the Survey Division of the Court of Land Registration, on January
24, 1914, submitted a report (Exh. 22) to the court which, among others,
stated that the new plan of Parcel 1 in LRC No. 7681 did not include any land
that had not been previously included in the original plan.
On March 7, 1914 the Court of Land Registration rendered a supplemental
decision declaring that, on the basis of the decision of December 29, 1913
and of the report of the Surveyor of Court of Land Registration, the applicants
Mariano Severo Tuason y de la Paz and others were the owners of the land
applied for, as described in the amended plan, in the proportion mentioned in
the decision, and ordering that the land applied for be registered in the
names of the applicants and that a decree of registration be issued in
accordance with the decision and the amended plan. On March 27, 1914 the
Chief of the Survey Division addressed a communication to the registration
court, in connection with LRC No. 7681, suggesting that the decision of the
court of March 7, 1914 be modified such that the decree of registration be
based upon the original plan as published and not upon the amended plan
(Exh. Z-3). The Court of Land Registration did not follow the recommendation
of the Chief of the Survey Division. On July 6, 1914 Decree of Registration No.
17431 was issued by the Chief of the General Land Registration Office
pursuant to the decision of the Court of Land Registration of March 7, 1914 in
LRC No. 7681. The decree contains the technical description of the two
parcels of land in accordance with the plan as amended. It appears in the
decree that Parcel 1 has an area of 8,798,644.10 square meters, more or less,
or an increase of 27.10 square meters over the area of 8,798,617 square
meters that was stated in the application for registration and in the notice of
hearing which were published in the Official Gazette of October 25, 1911; and
that Parcel 2 has an area of 15,961,246 square meters, more or less, or a
decrease of 292,791 square meters from the area of 16,254,037 square
meters that was stated in the application and in the notice of hearing that
were published in the Official Gazette (Exhs. 25 and YY). All in all, there is a
decrease of 292,763.90 square meters in the aggregate area of the two
parcels of land sought to be registered.
Subsequently, on July 8, 1914, the Register of Deeds of the province of Rizal
issued Original Certificate of Title No. 735 in the names of the applicants,
Mariano Severo Tuason y de la Paz, Teresa Eriberta Tuason y de la Paz, Juan
Jose Tuason y de la Paz, Demetrio Asuncion Tuason y de la Paz, and Augusto
Huberto Tuason y de la Paz (Exh. 30).
1. We shall now deal with the first error assigned by the appellant.
The lower court declared Original Certificate of Title No. 735 null and void ab
initio because, according to said court, that title was based on Decree of
Registration No. 17431 in LRC No. 7681 that was null and void, said decree
having been issued pursuant to a decision of the Court of Land Registration in
LRC No. 7681 which had no jurisdiction to render said decision.
As We have adverted to, Original Certificate of Title No. 735 covers two big
parcels of land: Parcel 1, known as the Santa Mesa Estate, and Parcel 2,
known as the Diliman Estate. The records show that these two parcels of land
had been subdivided into numerous lots, and most of those lots had sold to
numerous parties Parcel 1 having been converted into a subdivision known
as the Santa Mesa Heights Subdivision, and the lots had been sold to private
individual and entities, such that in that subdivision now are located the
National Orthopedic Hospital, the station of Pangasinan Transportation Co.
(Pantranco), Sto. Domingo Church, Lourdes Church and others. Necessarily,
as a result of the sales of the lots into which Parcel 1 was subdivided, transfer
certificates of title were issued to the purchasers of the lots, and these
transfer certificates of title were based upon transfer certificates of title that
emanated from Original Certificate of Title No. 735. The trial court declared
null and void all transfer certificates of title emanating, or derived, from
Original Certificate of No. 735.
The decision of the trial court declaring null and void ab initio Original
Certificate of Title No. 735 would invalidate the title over the entire area
included in Parcel 1 which admittedly includes the six parcels of land
claimed by the plaintiffs-and also the title over the entire area included in
Parcel 2. Let it be noted that Parcel 1 has an area of 8,798,644.10 square
meters, more or less, and Parcel 2 has an area of 15,961,246 square meters,
more or less; while the six parcels of land claimed by the plaintiffs have an
aggregate area of only 495,453.7 square meters, more or less. In other
words, the area of the six parcels of land claimed by the plaintiffs is only a
little over two per cent (2%) of the aggregate area of Parcel 1 and Parcel 2.
But the decision of the trial court nullified Original Certificate of Title No. 785,
without any qualification.
The trial court held that the Court of Land Registration had no jurisdiction to
render the decision in LRC No. 7681 because during the registration
proceedings, after the original application and notice of hearing had been
duly published, the plan of Parcel 1 was amended and no publication
regarding the amended plan was made. The trial court pointed out that the
area and the description of Parcel 1 in Decree of Registration No. 17431 are

not identical with the area and description of Parcel 1 applied for and
published in the Official Gazette. The trial court stressed on the point that
publication is one of the essential bases of the jurisdiction of the court to hear
and decide an application for registration and to order the issuance of a
decree of registration, as provided in Act 496 (Land Registration Act).
We believe that the lower court erred when it held that the Land Registration
Court was without jurisdiction to render the decision in LRC No. 7681. Under
Section 23 of Act 496, the registration court may allow, or order, an
amendment of the application for registration when it appears to the court
that the amendment is necessary and proper. Under Section 24 of the same
act the court may at any time order an application to be amended by striking
out one or more parcels or by severance of the application. The amendment
may be made in the application or in the survey plan, or in both, since the
application and the survey plan go together. If the amendment consists in the
inclusion in the application for registration of an area or parcel of land not
previously included in the original application, as published, a new publication
of the amended application must be made. The purpose of the new
publication is to give notice to all persons concerned regarding the amended
application. Without a new publication the registration court can not acquire
jurisdiction over the area or parcel of land that is added to the area covered
by the original application, and the decision of the registration court would be
a nullity insofar as the decision concerns the newly included land. 11 The
reason is because without a new publication, the law is infringed with respect
to the publicity that is required in registration proceedings, and third parties
who have not had the opportunity to present their claim might be prejudiced
in their rights because of failure of notice. 12 But if the amendment consists
in the exclusion of a portion of the area covered by the original application
and the original plan as previously published, a new publication is not
necessary. 13 In the latter case, the jurisdiction of the court over the
remaining area is not affected by the failure of a new publication. 14
In the case at bar We find that the original plan covering Parcel 1 and Parcel 2
that accompanied the application for registration in LRC No. 7681 was
amended in order to exclude certain areas that were the subject of
opposition, or which were the subject of another registration case; and the
Chief of the Survey Division of the Court of Land Registration was ordered to
determine whether the amended plan included lands or areas not included in
the original plan. In compliance with the order of the registration court said
Chief of the Survey Division informed the court that no new parcels were
included in the new (or amended) plan. Thus, in the decision of the Court of
Land Registration in LRC Nos. 7680 and 7681, dated December 29, 1913
(Exh. 24), We read the following:
Despues de las notificaciones y avisos de las dos solicitudes en ambos
expedientes, se enmendaron los planos unidos a los mismos para excluir
ciertas porciones que habian sido objeto de oposicion.
xxx

xxx

xxx

POR TANTO, ratificando como por la presente se ratifica la declaracion de

rebeldia general, se ordena:
"1.o Que el Jefe de la Division de Agrimensores de este Tribunal terreno que
no haya sido comprendido en los planos originales ...." 15
On January 24, 1914, the Chief of the Survey Division of the Court of Land
Registration made a report to the court (Exh. 22), from which the report We
read the following:.
Cumpliendo lo mandado por el Tribunal en el No. 1 de la parte dispositiva de
su Decision de fecha 29 de Diciembre proximo pasado, el que suscribe,
despues de un detenido estudio de los planos unidos a los Expedientes arriba
citados, tiene el honor de informar:
1.o Que los nuevos planos presentados por los solicitantes corresponden a las
parcelas 1.a 2.a, y 3.a, del Expedients No. 7680 y a la 1.a parcela del No.
7681, que son las mismas a que se refiere el plano Exhibito A del No. 7680.
xxx

xxx

xxx

4.
Que los nuevos planos presentados de las parcelas 1.a, 2.a y 3.a
del Expediente 7680, y de la 1.a del 7681 no incluyen terreno alguno que no
haya sido comprendido en los planos originales. 16
And so, in the supplemental decision of the Court of Land Registration in LRC
No. 7681, dated March 7, 1914 (Exh. 24-A), the report of the Chief of the
Survey Division was taken into consideration and the court ordered the
registration of the lands applied for by the applicants as described in the
amended plan ("como esta descrito en el plano enmendado"). It is thus
shown that the amended plan in LRC No. 7681 did not cover parcels, or areas,
that were not previously included in the original plan which accompanied the
application that had been published in the Official Gazette. There was,
therefore, no necessity for a new publication of the amended plan in order to

vest the Court of Land Registration with jurisdiction to hear and decide the
application for registration in LRC No. 7681 and to order the issuance of
Decree of Registration No. 17431 upon which Original Certificate of Title No.
735 was based.

the amended plan, boundary descriptions, and additional lands comprised

within Parcel 1 in Decree No. 17431, a republication of such amended plan,
boundary description, technical description and additional areas is necessary
to confer jurisdiction upon the Court." 20

Way back in 1933, this Court had occasion to rule on the validity of the very
same Original Certificate of Title No. 735 which the trial court had declared
null and void in the three cases now before this Court. In the case of the Bank
of the Philippine Islands vs. Acua (59 Phil. 183) the validity of Original
Certificate of Title No. 735 was assailed by the appellants (Pascual Acua and
others) precisely upon the ground that during the registration proceedings,
which brought about the issuance of Original Certificate of Title No. 735, the
original plan of the applicants was ordered amended, and no new publication
was made of the amended plan and so it was urged that the registration
court did not have jurisdiction to order the issuance of the decree of
registration in favor of the applicants. The action in this case was instituted
by the Bank of the Philippine Islands as receiver of the Tuason Entail for the
purpose, among others, of recovering from Pascual Acua and others certain
lands included in the Santa Mesa and Diliman hacienda located in the barrios
of Bagobantay and Diliman, in the municipalities of Caloocan and San Juan
del Monte Province of Rizal. Upon hearing, the Court of First Instance of Rizal
declared that none of the defendants owned any part of the land in
controversy. On appeal, this Court observed that the character in which the
plaintiff sued was not open to question, and the material facts were as
follows: The heirs of the Tuason estate, referred to as the Tuason Entail, held
a Torrens title to a tract of land with an area of about 1,600 hectares located
in the province of Rizal. This property was then covered by Transfer
Certificate of Title No. 3792 issued in lieu of older certificates dating from July
8, 1914. This Transfer Certificate of Title No. 3792 emanated from Or
Certificate of Title No. 735. 17 The appellants precisely sought to nullify the
title of the heirs of the Tuason estate, which emanated from Original
Certificate of Title No. 735, upon the ground, as now urged by the appellees
in the three cases at bar, that during the registration proceedings the original
plan of the lands known as the Sta. Mesa and Diliman was amended, and no
publication was made of the amended plan. Regarding the question of the
non-publication of the amended plan, this Court said:

Oddly enough, when the lower court said that the area of Parcel 1 in the
decree of registration is bigger than the area of Parcel 1 in the application as
published, it did not mention the fact that the difference in area is only 27.10
square meters. We believe that this difference of 27.10 square meters is too
minimal to be of decisive consequence in the determination of the validity of
Original Certificate of Title No. 735. It was error on the part of the lower court
to lay stress on this circumstance and made it a basis for ruling that because
in the amended plan there is this increase in area as compared to the area
appearing in the application as published, the Land Registration Court did not
have jurisdiction to render the decision decreeing the registration of Parcel 1
in LRC No. 7681. The Chief of the Survey Division of the Court of Land
Registration, in his report to the court of January 24, 1914 (Exh. 22), stated
that the new plan of Parcel 1 did not include any land that was not included in
the original plan. That report was made precisely in compliance with the
order of the registration court, in the decision of December 29, 1913 in LRC
No. 7681, to inform the court "si los nuevos planos incluyen o no terreno que
no haya sido comprendido en los planos originales". That report was
submitted by the Chief Surveyor "despues de un detenido estudio de los
planos unidos a los expedientes". Under the foregoing circumstances, our
inference is that the area of 27.10 square meters was already included in the
original plan, and that the computation of the area in the original survey must
have been inaccurate; and the error was corrected in the recomputation of
the area when the amended plan was prepared. We made a careful study and
comparison of the technical description of Parcel 1 appearing in the
application as published, and the technical description appearing in Decree of
Registration No. 17431 (Exhs. 19, 19-A and Z-6), and We accept the
explanation of counsel for the appellant that this seeming increase of 27.10
square meters had been brought about "by the fact that when the
amendment of the plan was made, the distances and bearings in a few points
along the southwestern boundary (Please see Exh. 19) were brought to the
nearest millimeter and to the nearest second respectively; whereas, the
computation of the survey in the original plan was to the nearest decimeter
and to the nearest minute only". 21 We believe that this very slight increase
of 27.10 square meters would not justify the conclusion of the lower court
that "the amended plan ... included additional lands which were not originally
included in Parcel 1 as published in the Official Gazette." It being undisputed
that Parcel 1 has an area of more than 8,798,600 square meters (or 879.86
hectares), We believe that this difference of 27.10 square meters, between
the computation of the area when the original plan was made and the
computation of the area when the amended plan was prepared, can not be
considered substantial as would affect the identity of Parcel 1.

Among the arguments made by the appellants of the Bagobantay group, it is

alleged that the Torrens title relied by the plaintiff is void, and in support of
this contention it stated that, during the course of the registration
proceedings, an order was made by the court for the amendment of the
applicants and that this order was not followed by new publication,
wherefore, it is supposed the court was without jurisdiction to decree the title
to the applicants. In this connection reliance is placed upon the doctrine
stated in the Philippine Manufacturing Co. vs. Imperial (49 Phil. 122). But the
brief for the appellants fails to call attention to the fact that the rule stated in
the case cited has reference to an amendment of the plan by which
additional land, different from that included in the original survey is intended
to be brought within the process of registration. In the case before us, the
order referred to was for the exclusion of certain portions of the land covered
by the original survey, and the doctrine of the case cited cannot apply. Apart
from this it does not appear that the portion intended to be excluded
comprehended any part of the land which had been usurped. 18
The appellees, however, asserts that the case of the Bank of the Philippine
Islands vs. Acua, supra, is not applicable to the three cases now before this
Court because what was involved in said case was Parcel 2 of Original
Certificate of Title No. 735, and not Parcel 1 which is the land involved in
these cases. This assertion of the appellees is not correct. The decision in that
case states that the action was instituted by the Bank of the Philippine
Islands, as receiver of the Tuason Entail, for the purpose, among others, of
recovering from Pascual Acua and others "certain lands contained in the Sta.
Mesa and Diliman Hacienda located in the barrios of Bagobantay and Diliman
in the municipalities of Caloocan and San Juan del Monte." 19 But what
matters is the doctrine that was laid down by this Court in that case that is:
that when the original survey plan is amended, after the publication of the
application in order to include land not previously included in the original
survey, a new publication of the amended plan is necessary in order to confer
jurisdiction upon the registration court to order the registration of the land
that is added to what was included in the original survey plan. The ruling of
this Court in the Bank of the Philippine Islands case has a decisive application
in the three cases now before this Court.
The trial court laid stress on the point that publication of the amended plan of
Parcel 1 should have been made because it appears in the Decree of
Registration No. 17431, and as reproduced in Original Certificate of Title No.
735, that the area of said parcel is "bigger" than the area stated in the
application as published in the Official Gazette; and, also, that the boundaries
of Parcel 1 stated in the decree are not identical with the boundaries stated in
the application as published in the Official Gazette. We paid particular
attention on this point of the lower court's decision, and our impression is
that the trial court had exploited certain minor discrepancies between the
description of Parcel 1 in the decree of registration and its description in the
original application, in order to bolster its ruling that "to render a decision on

Moreover, no evidence was presented to identify this area of 27.10 square

meters, nor to show its location, in relation to the entire area of Parcel 1. The
appellees did not even attempt to show that this excess area of 27.10 square
meters is included within the parcels that they are claiming. We cannot,
therefore; consider this area of 27.10 square meters as an area that was
separate and distinct from, and was added to, the land that was covered by
the original survey plan, such that the publication of the amended plan would
be necessary in order that the registration court could acquire jurisdiction
over that area. As We have pointed out, this increase of 27.10 square meters
was simply the result of the recomputation of the area when the original plan
was amended. There is no showing that the recomputation is incorrect.
Neither is there a showing that this small area of 27.10 square meters
belongs to any person and that person had been deprived of his property, or
had failed to claim that particular area because of the non-publication of the
amended plan. On the other hand, there is the report of the Chief of the
Survey Division of the Court of Land Registration (Exh. 22) stating that the
amended plan of Parcel 1 in LRC No. 7681 did not include any land which was
not included in the original plan.
It is the settled rule in this jurisdiction that only in cases where the original
survey plan is amended during the registration proceedings by the addition of
lands not previously included in the original plan should publication be made
in order to confer jurisdiction on the court to order the registration of the area
that was added after the publication of the original plan. 22
The settled rule, further, is that once the registration court had acquired
jurisdiction over a certain parcel, or parcels, of land in the registration
proceedings in virtue of the publication of the application, that jurisdiction
attaches to the land or lands mentioned and described in the application. If it
is later shown that the decree of registration had included land or lands not
included in the original application as published, then the registration
proceedings and the decree of registration must be declared null and void in
so far but only in so far as the land not included in the publication is
concerned. This is so, because the court did not acquire jurisdiction over the
land not included in the publication-the publication being the basis: of the
jurisdiction of the court. But the proceedings and the decree of registration,
relating to the lands that were included in the publication, are valid. Thus, if it

is shown that a certificate of title had been issued covering lands where the
registration court had no jurisdiction, the certificate of title is null and void
insofar as it concerns the land or lands over which the registration court had
not acquired jurisdiction. 23
And so in the three cases now before this Court, even granting that the
registration court had no jurisdiction over the increased area of 27.10 square
meters (as alleged by appellees), the most that the lower court could have
done was to nullify the decree and the certificate of title insofar as that area
of 27.10 square meters is concerned, if that area can be identified. But,
certainly, the lower court could not declare, and should not have declared,
null and void the whole proceedings in LRC No. 7681; and, certainly, the
lower court erred in declaring null and void ab initio Original Certificate of
Title 735 which covers not only the supposed excess area of 27.10 square
meters but also the remaining area of 8,798,617 square meters of Parcel 1
and the entire area of 15,961,246 square meters of Parcel 2. The trial court,
in its decision, declared Original Certificate of Title No. 735 "null and void
from the very beginning and of no effect whatsoever", without any
qualification. This declaration by the lower court, if sanctioned by this Court
and given effect, would nullify the title that covers two big parcels of land
(Parcels 1 and 2) that have a total area of 24,759,890.10 square meters, or
almost 2,476 hectares. And not only that. The trial court declared null and
void all transfer certificates of title that are derived, or that emanated, from
Original Certificate of Title No. 735, regardless of whether those transfer
certificates of title are the results of transactions done in good faith and for
value by the holder of those transfer certificates of title.
It must be noted that the appellees in the present cases claim six parcels that
have an area of some 495,453.7 square meters (about 49.5 hectares),
whereas the combined area of Parcel 1 and Parcel 2 is 24,759,890.10 square
meters (about 2,476 hectares). It must also be noted that both Parcel 1 and
Parcel 2 have been subdivided into numerous lots (Exhs. 14 and 14-B) which
have already been acquired by numerous persons and/or entities that are
now holding certificates of title which can be traced back to Original
Certificate of Title No. 735. The decision of the lower court, however, would
render useless Original Certificate of Title No. 735 and all transfer certificates
of title emanating, or derived, therefrom. The decision of the lower court
would certainly prejudice the rights of the persons, both natural and juridical,
who had acquired portions of Parcel 1 and Parcel 2, relying on the doctrine of
the indefeasibility of Torrens title. The decision of the lower court would,
indeed, prejudice the rights of persons who are not parties in the present
cases. And this is so, because the trial court, in its decision, did not adhere to
the applicable decisions of this Court in resolving the pertinent issues in these
cases.
Another reason mentioned by the lower court to support its ruling that Decree
of Registration No. 17431 is null and void is that the description of Parcel 1 in
the decree of registration is different from the description of the same parcel
in the notice of hearing of the original application for registration as published
in the Official Gazette. The different description that appears in the decree of
registration, according to the lower court, is an amendment to the Original
survey plan that accompanied the application and the amended survey plan
should have been republished; and because there was no such republication
the registration court was without jurisdiction to issue the decree of
registration. The lower court also committed an error in making this ruling.
We find that the lower court incorrectly laid stress on differences in the
names of the owners, and on differences in the designations, of the lands that
adjoin Parcel 1 along its southwestern boundary. We find, however, that these
differences are well explained in the record.
In the notice of hearing in LRC No. 7681 (Exhibits YY and YY-2) the boundaries
of Parcel 1 are stated as follows:
Bounded on the N. by property of Rosario Negrao and others (Maysilo Estate);
E. by the San Juan River; SW. by Parcel 3, properties of Benito Legarda,
Hospital de San Juan de Dios, by Parcel 2, Santa Clara Monastery, by Parcel 1;
and W. by a road, Cementerio del Norte and the Roman Catholic Church.
As described in Decree of Registration No. 17431 (Exh. 25), the boundaries of
Parcel 1 are as follows:
PARCEL 1. Bounded on the N. by property of Rosario Negrao y Escobar, et al.,
(Maysilo Estate): On the E. by San Juan River; on the SW. by properties of
Mariano Severo Tuason y de la Paz, et al., Benito Legarda, Hospital de San
Juan de Dios and C.W. Rosenstock & Co.; and on the W. by a road, Cementerio
del Norte and property of the Roman Catholic Church ...
It will thus be noted that the boundaries of Parcel 1 on the northern, eastern,
and western sides, as they appear in the notice of hearing that was published
and in Decree of Registration No. 17431, are the same. It is in the
southwestern boundary where there appear some differences in the names of
the owners, or in the designations, of the adjoining lands. Thus, in the
published notice of hearing, it appears that the names of the owners, or the
designations, of the lands that bound Parcel 1 (of LRC No. 7681) on the

Southwest are parcel 3, properties of Benito Legarda, Hospital de San Juan de

Dios, parcel 2, Monasterio de Santa Clara and parcel 1; while in the decree of
registration it appears that the lands that bound Parcel 1 (of LRC No. 7681) on
the Southwest are the properties of Mariano Severo Tuason y de la Paz, et al.,
Benito Legarda, Hospital de San Juan de Dios and C.W. Rosenstock & Co.
Upon a careful examination of the records, We find that the lands that adjoin
Parcel 1 at its southwestern boundary, as indicated in the notice of hearing
that was published in the Official Gazette, are the same lands that are
indicated in the decree of registration as the lands that adjoin Parcel 1 at its
southwestern boundary. There is simply a change in the names of the owners
or in the designations, of the lands. We find that parcels 3, 2 and 1, appearing
as the boundary lands on the southwestern side of Parcel 1 in LRC No. 7681,
as published, are in fact parcels of land that are owned, and had been applied
for registration, by Mariano Severo Tuason y de la Paz, et al. in LRC No. 7680.
This LRC No. 7680 was heard and decided jointly with LRC No. 7681 by the
Land Registration Court (Exh. 24). These parcels 3, 2 and 1 of LRC No. 7680,
being lands owned by Mariano Severo Tuason y de la Paz, et al., it may as
well be stated in the decree of registration that those lands on the
southwestern side of Parcel 1 in LRC No. 7681 are the properties of Mariano
Severo Tuason y de la Paz, et al., instead of designating them as parcel 3,
parcel 2, and parcel 1 (of LRC 1680). And so, what appears in Decree of
Registration No. 17431 as the properties of Mariano Severo Tuason y de la
Paz, et al., at the southwestern side of Parcel 1 are no other than those very
parcels 3, 2 and 1 that appear in the notice of hearing as the lands that
bound Parcel 1 on the southwest.
In the description of Parcel 1 as published, it appears that one of the
boundaries on the southwestern side is Santa Clara Monastery, while in the
decree of registration the words "Santa Clara Monastery" do not appear but,
instead, are replaced by the words "C. W. Rosenstock & Co." It will be
remembered that during the registration proceedings the plan of Parcel 1 was
ordered amended, and the surveyor, who prepared the amended plan must
have found that what used to be the property of the Santa Clara Monastery at
the time of the original Survey was already the property of C. W. Rosenstock
& Co. when the amended plan was prepared. This can simply mean that there
was a change of ownership from Santa Clara Monastery to C.W. Rosenstock &
Co. It must be considered that the original survey took place from December,
1910 to June, 1911 (Exhibits 18 and 19), while the registration case was
decided on March 7, 1914.
Under Section 40 of Act 496, the decree of registration "shall contain a
description of the land as finally determined by the court." Evidently, the
Court of Land Registration acted in consonance with this provision of the law
when, in its decision in LRC 7681, it took into consideration the actual
description of Parcel 1 as shown in the amended survey plan, and when it
disregarded the recommendation of the Chief of the Survey Division, dated
March 27, 1914, that the decision of the court of March 7, 1914 "be based
upon the original plans, as published, and not upon the amended plan." It
may well be said that Decree of Registration N. 17431 simply contains the
correct area of Parcel 1 and the correct names of the owners of the lands that
bound Parcel 1 in LRC No. 1681 as of the time when the decision of the land
registration court was rendered.
In this connection, the following pronouncement of this Court in the case of
Domingo vs. Ongsiako, 55 Phil. 361, 373-4, is pertinent:
We may further observe that underlying the contention of the plaintiffs is the
idea that errors in the plans nullify the decrees of registration. This is
erroneous. It is the land and not the plan which is registered. Prior to the
enactment of Act No. 1875, practically all plans for land registration were
defective especially in regard to errors of closures and areas, but so far no
such errors have been permitted to affect the validity of the decrees. If the
boundaries of the land registered can be determined, the technical
description in the certificate of title may be corrected without cancelling the
decree. Such corrections have been made in this case by approved surveys
which embrace all of the land here in question. To nullify and cancel final
decrees merely by reason of faulty technical descriptions would lead to
chaos.
We have taken note of the fact that the six parcels of land that are claimed by
the plaintiffs in the three cases now before this Court are on the northwestern
portion of Parcel 1 (parcels labelled A, B, C, D, E and F, in Exh. UU; and Exhs.
17, 29 and 29-B). They are far from the southwestern boundary. The
circumstance, therefore, regarding the dissimilarity in the names of the
owners, or the designations, of the lands that adjoin the southwestern side of
Parcel 1 is of no moment insofar as the lots claimed by appellees are
concerned. What matters is that the lots claimed by the appellees are
included in Parcel 1 of LRC No. 1681 and are located at the northwestern
portion of said Parcel 1. Indeed, it was error on the part of the lower court to
make as one of the bases in declaring Decree of Registration No. 17431 and
Original Certificate of Title No. 735 null and void and of no effect whatsoever
the aforestated dissimilarities in the names of the owners, or in the
designations, of the lands on the southwestern side of Parcel 1, because
those dissimilarities are well explained in the records of these cases.

The lower court committed still another error when it made the finding that
the only boundary of Parcel 1 on the western side is "A. Bonifacio road" and
then declared that the lands situated west of the A. Bonifacio road were never
the subject of the registration proceedings in LRC No. 7681. The lower court
declared the lands west of A. Bonifacio road as unregistered lands and
awarded the ownership of those lands to the plaintiffs in Civil Cases Nos.
3621 and 3622 (appellees in G.R. Nos. L-26127 and L-26128). This finding of
the lower court is contrary to the evidence presented by the parties in these
cases. Both the appellees and the appellant submitted as their evidence the
notice of hearing of the application as published in the Official Gazette
(Exhibit X, YY and YY-2; and Exhibit 26) and the decree of registration No.
17431 (Exhibit Y, and Exh. 25) wherein are clearly stated that the boundaries
of Parcel 1 on the West are: (1) a road, (2) Cementerio del Norte and (3)
Roman Catholic Church (Exhs. Z-6, UU, and Exhs. 6, 18, 19 and 20). But the
lower court considered the A. Bonifacio road as the only boundary on the
West, and ignored the two other boundaries on the West that are mentioned
both in the notice of hearing as published and in the decree of registration.
The sketches and the survey plans, forming part of the evidence on record,
show that the road, labelled as "A. Bonifacio", goes alongside the western
boundary of Parcel 1 (separating Parcel 1 and the Cementerio del Norte), until
it reaches a point where it traverses the northwestern portion of Parcel 1,
such that from the point where it enters the area of Parcel 1 what is left as
the boundaries on the western side are the Cementerio del Norte and the
Roman Catholic Church (Exhibits UU, VV, 17, 19 and 29). Ignoring the
existence of the Cementerio del Norte and the Roman Catholic Church as the
other boundaries of Parcel 1 on the West, the lower court declared that the
lands west of the A. Bonifacio road, which form part of the lands that are
claimed by the plaintiffs in Civil Cases Nos. 3621 and 3622, are outside the
boundary of Parcel 1 on the west and that those particular areas had
remained as unregistered lands and are not covered by Original Certificate of
Title No. 735. This finding of the lower court is contrary to the very admission
of the appellees in these three cases that all the lands (six parcels in all) that
they claim are included in the area of Parcel 1 mentioned in Original
Certificate of Title No. 735. In paragraph XIV of the original, as well as in the
amended complaint, in each of these three cases, the plaintiffs alleged that
the lands that they claim "had either been fraudulently or erroneously
included ... in Parcel 1 (known as Santa Mesa Estate) of the Original
Certificate of Title No. 735 of the Land Records of the Province of Rizal." 24 In
their appeal brief, the appellees categorically stated that "Both the appellees
and the appellant admit that these parcels of land claimed by the plaintiffs in
these three (3) civil cases are located within Parcel 1 (Santa Mesa Estate)
covered by Original Certificate of Title No. 735". 25 In the pre-trial order of
the lower court of December 18, 1957, it was stated that the parcels of land
litigated in these are portions of the lands covered by OCT No. 735. 26 The
lower court itself, at the earlier part of its decision, stated that "both the
plaintiffs and the defendants admit that the parcels of land litigated in Civil
Cases Nos. 3621, 3622 and 3623 are found within the boundaries of the
present Santa Mesa Heights Subdivision covered by Original Certificate of
Title No. 735" 27 The appellees in these two cases had never asserted that
part of the lands that they claim are outside the boundaries of Parcel 1, nor
did they assert that part of the lands that they claim have remained
unregistered and not covered by Original Certificate of Title No. 735. The
lower court had made a finding not only contrary to the evidence of the
appellees but even more than what the appellees asked when it said in its
decision that the western boundary of Parcel 1 is only the A. Bonifacio road
and that the lands claimed by the appellees west of this road had never been
registered. This Court certainly can not give its approval to the findings and
rulings of the lower court that are patently erroneous.
2. The lower court also erred when it declared Original Certificate of Title No.
735 null and void upon the ground that the decree of registration was not
transcribed in the Registration Book in accordance with the provisions of
Section 41 of Act 496. In its decision, the lower court said:
During the trial, the Book of Original Certificate of Title was brought to the
Court. The Court had occasion to see and examine the `ENTRY' made in the
Registration Book. The Court found that the Face of the Title which, under
ordinary circumstances, should be Page 1 is found as Page 2. The sheet
containing the technical description which should be page 2 is Page 1. The
FACE of the Title, which should have been Page 1, contained the last portion
of the description of the land described in the decree. The sheet containing
the bulk of the description of the lands decreed should have been Page 2. The
so-called Original Certificate of Title No. 735 found on Page 138, Book A-7 of
the Register of Deeds of Rizal is, therefore, null and void because the
provisions of Section 41 of the Land Registration Law have not been complied
with. Said Section requires that the entry in the Registration Book must be a
transcription of the Decree and the paging should consist of a leaf or leaves
in consecutive order .... 28
The pertinent provisions of Section 41 of Act 496 reads, as follows:
SEC. 41.
Immediately after final decision by the court directing the
registration of any property, the clerk shall send a certified copy of such

decision to the Chief of the General Land Registration Office, who shall
prepare the decree in accordance with section forty of Act numbered four
hundred and ninety-six, and he shall forward a certified copy of said decree to
the register of deeds of the province or city in which the property is situated.
The register of deeds shall transcribe the decree in a book to be called the
"Registration Book" in which a leaf, or leaves in consecutive order, shall be
devoted exclusively to each title. The entry made by the register of deeds in
this book in each case shall be the original certificate of title, and shall be
signed by him and sealed with the seal of his office....
The pertinent provisions of Section 40 of Act 496 reads, as follows:
SEC. 40.
Every decree of registration shall bear the day of the year, hour,
and minute of its entry, and shall be signed by the clerk. It shall state
whether the owner is married or unmarried, and if married, the name of the
husband or wife. If the owner is under disability, it shall state the nature of
the disability, and if a minor, shall state his age. It shall contain a description
of the land as finally determined by the court , . . The decree shall be stated
in a convenient form for transcription upon the certificates of title hereinafter
mentioned.
Section 29 of Act 496 provides that as soon as the decree of title has been
registered in the office of the register of deeds, as provided in Section fortyone, the property included in said decree shall become registered land under
the Act. Section 42 of Act 496 provides that the certificate shall take effect
upon the date of the transcription of the decree.
This Court has held that as defined in Section 41 of Act 496, the certificate of
title is the transcript of the decree of registration made by the register of
deeds in the registry. 29
The appellant presented as evidence a photostat of Original Certificate of
Title No. 735, as found in the Registration Book in the office of the register of
deeds of Rizal (Exhibit 50). 30 We have examined this document very
carefully, and We find that it is a copy of the original that satisfies all the
requirements of a valid Torrens title as provided for in Sections 40 and 41 of
Act 496.
On the face, or on the first page, of this title, there is the certification of the
Chief of the Land Registration Office that the decree of registration was
registered in Manila on July 6, 1914 at 7:41 a.m.; and the certification of the
Register of Deeds of Rizal that the decree was received for transcription in his
office on July 8, 1914 at 3:30 P.M. It is also stated on the face of this title that
it was entered pursuant to Decree No. 17431 of the Court of Land
Registration, dated at Manila on the 7th day of March 1914, in Case No. 7681
of said court. The names of the declared owners, their civil status, their
spouses if married, and their respective interest or share in the lands covered
by the title are stated on the face of this title. We have noted that the
technical descriptions of the lands (Parcels 1 and 2) covered by the title are
copied on the sheets constituting the title. We have compared the technical
descriptions of Parcels 1 and 2 as they appear on this photostat of Original
Certificate of Title No. 735 (Exhibit 50) with the technical descriptions of
these lands as they appear in the decree of registration (Exhibit Y for the
plaintiffs, and Exhibit 25 for the defendant), and We find that the technical
descriptions appearing on the title are the complete and faithful reproduction,
or transcription, of the technical descriptions appearing in the decree of
registration.
We have noted what the lower court found, that the technical descriptions of
Parcels 1 and 2 do not begin on the face, or on the first page, of this title, as a
technical description is ordinarily copied on the certificate of title. What
appears on the face of this title is the last part of the technical description of
Parcel 2. The technical descriptions of Parcels 1 and 2 begin on the second
page and end on the first page. This circumstance, that is, that the technical
descriptions of Parcels 1 and 2 do not begin on the face, or on the first page,
of the title, is the basis of the lower court in ruling that the decree of
registration was not transcribed in the registration book in accordance with
Section 41 of Act 496, and so Original Certificate of Title No. 735 is null and
void. We have noted, however, that in its decision the lower court made no
mention that in the transcription of the decree in the registration book any of
the data that is required in Section 40 of Act 496 to be included had been
omitted. We have also noted and this fact is undenied that the technical
descriptions of Parcels 1 and 2 as they appear in Decree of Registration No.
17431 are fully and faithfully transcribed on the photostat of Original
Certificate of Title No. 735 (Exhibit 50). There is no showing that the manner
of transcribing the decree, as it appears on that photostat, was done for a
fraudulent purpose, or was done in order to mislead. Considering that the
decree of registration is fully transcribed in the Registration Book, and also as
copied in Original Certificate of Title No. 735, the circumstance that the
beginning of the technical descriptions is not found on the face, or on the first
page, of Original Certificate of Title No. 735 is not a ground to nullify the said
certificate of title. We agree with the lower court that the transcription of the
technical descriptions should begin, or should have been started, on the face,
or on the first page, of the title. We hold, however, that the fact that this was

not so done in the case of Original Certificate of Title No. 735 should not be
taken as a factor in determining the validity of Original Certificate of Title No.
735. This defect in the manner of transcribing the technical descriptions
should be considered as a formal, and not a substantial, defect. What matters
is that the original certificate of title contains the full transcription of the
decree of registration, and that the required data provided for in Section 40 of
Act 496 are stated in the original certificate of title. The lower court made a
literal construction of the provisions of Section 41 of Act 496 and strictly
applied its construction in the determination of the validity of Original
Certificate of Title No. 735. We believe that the provisions of Section 41 of Act
496 should be interpreted liberally, in keeping with Section 123 of said Act
which provides that "This Act shall be construed liberally so far as may be
necessary for the purpose of effecting its general intent." If We adopt a literal
construction of the provisions of Section 41 of Act 496, as was done by the
lower court, such that the defect in the manner or form of transcribing the
decree in the registration book would render null and void the original
certificate of title, then it can happen that the validity or the invalidity of a
certificate of title would depend on the register of deeds, or on the personnel
in the office of the register of deeds. The register of deeds, or an employee in
his office, can wittingly or unwittingly render useless a decree of registration
regularly issued pursuant to a decision of a registration court and thus nullify
by the error that he commits in the transcription of the decree in the
Registration Book an original certificate of title that has been existing for
years. This strict interpretation or construction of Section 41 of Act 496 would
certainly not promote the purpose of the Land Registration Law (Act 496),
which generally are to ascertain once and for all the absolute title over a
given landed property 31; to make, so far as it is possible, a certificate of title
issued by the court to the owner of the land absolute proof of such title 32; to
quiet title to land and to put a stop forever to any question of legality of title
33; and to decree that land title shall be final, irrevocable and
indisputable. 34
We, therefore, hold that the formal defect in the transcription of Decree of
Registration No. 17431 in the Registration Book did not render null and void
Original Certificate of Title No. 735. Consequently, We declare that the two
parcels of land (Parcel 1 which includes the lands claimed by the appellees,
and Parcel 2) covered by Original Certificate of Title No. 735 are properly
registered under the Torrens System of registration.
3. The principal issue that has to be resolved in the present appeal is whether
or not the lower court had correctly declared that "Original Certificate of Title
No. 735 ... is null and void from the very beginning and of no effect
whatsoever. 35
In the preceding discussions, We have held that the lower court erred when it
declared null and void Original Certificate of Title No. 735. We have found that
the registration proceedings that brought about the decree of registration
upon which was based the issuance of Original Certificate of Title No. 735
were in accordance with the provisions of Act 496, as amended. We have held
that the Land Registration Court that ordered the issuance of the decree of
registration had jurisdiction to hear and decide the application for registration
filed by Mariano Severo, Teresa Eriberta, Juan Jose, Demetrio Asuncion, and
Augusto Huberto, all surnamed Tuason y de la Paz. The records show that the
notice of hearing of the application, which embodied the technical
descriptions of the two parcels of land (Parcel 1, known as the Sta. Mesa
Estate, and Parcel 2, known as the Diliman Estate), was duly published as
required by law. The records show that the hearing on the application was
regularly held, and that the registration court had seen to it that no land
which was not included in the original survey plan and not covered by the
original application was made the subject of the registration proceedings. We
have found that the decree of registration was properly issued by the Land
Registration Office pursuant to the decision of the Land Registration Court,
and that said decree of registration was fully transcribed in the Registration
Book in the office of the Register of Deeds of the province of Rizal. We have
found also that the six parcels of land that are claimed by the appellees. in
the three cases now before Us are all included in Parcel 1 that is covered by
Original Certificate of Title No. 735.
In view of Our findings and conclusion that Original Certificate of Title No. 735
was issued in accordance with the provisions of Act 496, and that the six
parcels of land that are claimed by the appellees in the present cases are
covered by said certificate of title, what is left for this Court to decide is
whether or not the appellees still have any legal right over the six parcels of
land that they claim.
Let it be noted that, as maintained by counsel for the appellees, the action of
the appellees is principally to recover the ownership and possession of the six
parcels of land mentioned and described in their complaints. The appellees
would accomplish their objective through alternative ways: (1) secure the
nullification of the decision of the Land Registration Court in LRC No. 6781,
the nullification of the Decree of Registration No. 17431 and the nullification
of Original Certificate of Title No. 735; (2) if they fail in their efforts to secure
the desired nullifications, with Original Certificate of Title No. 735 being
considered valid and effective, they seek the reconveyance to them by the

defendants named in their complaints, including herein appellant J.M. Tuason

& Co., Inc., of the six parcels of land that they claim; and (3) if they cannot
secure a reconveyance, they seek to secure payment to them by the
defendants named in their complaints of the actual value of the six parcels of
land that they claim.
It appears to Us that the appellees are not sure of their stand, or have not
adopted a definite stand, in asserting the rights that they claim.
It is the settled rule that a party seeking the reconveyance to him of his land
that he claims had been wrongly registered in the name of another person
must recognize the validity of the certificate of title of the latter. It is also the
rule that a reconveyance may only take place if the land that is claimed to be
wrongly registered is still registered in the name of the person who procured
the wrongful registration. No action for reconveyance can take place as
against a third party who had acquired title over the registered property in
good faith and for value. And if no reconveyance can be made, the value of
the property registered may be demanded only from the person (or persons)
who procured the wrongful registration in his name. 36
The lower court accepted, and sustained, the assertion of the appellees that
the proceedings in LRC No. 7681 of the Court of Land Registration were null
and void and that Original Certificate of Title No. 735 is null and void ab initio
and of no effect. The trial court even went to the extent of declaring that
some of the parcels of land claimed by the appellees in Civil Cases Nos. 3621
and 3622 (now G.R. Nos. L-26127 and L-26128 before this Court) were not
covered by Original Certificate of Title No. 735. The lower court forthwith
declared the appellees the owners of the parcels of land claimed by them, as
described in their complaints. Strangely enough, the lower court, upon
declaring Original Certificate of Title No. 735 null and void, did not make any
statement, or observation, regarding the status or situation of the remaining
lands (Parcels 1 and 2) covered by Original Certificate of Title No. 735 after
adjudicating to the appellees the six parcels of land claimed by them in their
complaints.
In the present appeal counsel for the appellees had maintained, and has
endeavored to show, that the lower court was correct in annulling Original
Certificate of Title No. 735 and in adjudicating in favor of the appellees the
ownership and possession of the six parcels of land claimed by them in their
complaints.
But, as hereinbefore held by Us, the lower court erred in declaring Original
Certificate of Title No. 735 void and of no effect. We have held that Original
Certificate of Title No. 735 was issued as a result of the registration
proceedings in LRC No, 7681 which was regular and that said certificate of
title is valid and effective. The proceedings in LRC 7681 being in rem, the
decree of registration issued pursuant to the decision rendered in said
registration case bound the lands covered by the decree and quieted title
thereto, and is conclusive upon and against all persons, including the
government and all the branches thereof, whether mentioned by name in the
application, notice or citation, or included in the general inscription "To whom
it may concern", and such decree will not be opened by reason of the
absence, infancy, or other disability of any person affected thereby, nor by
any proceedings in any court for reversing judgment or decree. Such decree
may only be reopened if any person deprived of land or of any estate or
interest therein by decree of registration obtained by fraud would file in the
competent court of first instance a petition for review within one year after
entry of the decree, provided no innocent purchaser for value had acquired
an interest on the land, and upon the expiration of said period of one year,
the decree, or the certificate of title issued pursuant to the decree, is
incontrovertible (See. 38, Act 496). In the case now before Us, the Decree of
Registration No. 17431 in LRC 7681 was entered on July 8, 1914. It is
undisputed that no person had filed any petition for review of the decree of
registration in LRC 7681 within the period of one year from July 8, 1914. That
decree of registration, and Original Certificate of Title No. 735 issued
pursuant thereto, therefore, had been incontrovertible since July 9, 1915.
Moreover, innocent purchases for value had acquired interest in the lands
covered by Original Certificate of Title No. 735. 37
The Original Certificate of Title No. 735 was issued on July 8, 1914 in the
names of the original an applicants for registration, namely, Mariano Tuason y
de la Paz, Teresa Eriberta Tuason y de la Paz, Juan Jose Tuason y de la Paz,
Demetrio Asuncion Tuason y de la Paz and Augusta Huberto Tuason y de la
Paz. Herein appellant J.M. Tuason & Co., Inc. is not one of those who were
registered as the original owners mentioned in Original Certificate of Title No.
735. When the original complaints were filed in these three cases in the Court
of First Instance of Rizal the parties named defendants in each of the three
cases were Mariano Severo Tuason y de la Paz, Teresa Eriberta Tuason y de la
Paz, Juan Jose Tuason y de la Paz, Demetrio Asuncion Tuason y de la Paz,
Augusta Huberto Tuason y de la Paz, the heirs of each one of these
defendants (without naming them), and J.M. Tuason & Co., Inc. Of all the
defendants named in the three complaints only defendant J.M. Tuason & Co.,
Inc. appeared and filed its answer to the complaints. All the other defendants

did not appear, and so they were all declared in default. 38 It had to happen
that way because as of the time when the three complaints were filed on May
19, 1955 the ownership of Parcel 1 that was originally covered by Original
Certificate of Title No. 735 had already passed to defendant J.M. Tuason & Co.,
Inc. In fact this defendant had caused Parcel 1 to be subdivided and had sold
the subdivision lots.
The records show that Parcel 1 in Original Certificate of Title No. 735 was part
of the properties of the Mayorasgo Tuason (Tuason Entail) which became
involved in a litigation in the Court of First Instance of Manila. 39 During the
pendency of the case the properties of the Mayorasgo Tuason were
administered by the Bank of the Philippine Islands as the judicial receiver. In
the order of the Court of First Instance of Manila, dated May 5, 1938, in Civil
Case No. 24803, the Bank of the Philippine Islands, as receiver, was
authorized, directed and ordered to execute, upon payment to it of the sum
of P763,925.75, a deed of transfer and assignment in favor of the Heirs of D.
Tuason, Inc. of the property covered by Transfer Certificate of Title No. 31997,
which was originally Parcel 1 included in Original Certificate of Title No. 735
(Exh. 13-B). On June 13, 1938 the receiver Bank of the Philippine Islands
executed the deed of transfer and assignment (Exh. 13-A). Transfer
Certificate of Title No. 34853 of the Register of Deeds of Rizal was forthwith
issued in the name of the Heirs of D. Tuason, Inc. (Exhs. 12-b and 36). The
deed of transfer and assignment was approved by the court in an order dated
June 17, 1938. This conveyance to the Heirs of D. Tuason, Inc. took place at a
time when the Supreme Court had already decided the case of Bank of the
Philippine Islands vs. Acua (59 Phil. 183) wherein this Court upheld the
validity of Original Certificate of Title No. 735 and also the validity of the
transfer certificate of title emanating therefrom. 40
The circumstances attending the acquisition by the Heirs of D. Tuason, Inc. of
the land covered by Transfer Certificate of Title No. 31997 which was
formerly Parcel 1 covered by Original Certificate of Title No. 735 clearly
indicate that said corporation acquired its title in a regular transaction as
purchaser in good faith and for value. On June 15, 1938 the Heirs of D.
Tuason, Inc. in turn sold the same property to J.M. Tuason & Co., Inc., and
Transfer Certificate of Title No. 35073 was issued in the name of the latter
(Exhs. 12-c and 37).
The lower court declared that herein appellant J.M. Tuason & Co., Inc. was a
purchaser in bad faith. We do not find any evidence in the record that would
sustain such a finding of the lower court. One reason given by the lower court
in declaring appellant J.M. Tuason & Co., Inc. a purchaser in bad faith is the
fact that the incorporators of the Heirs of D. Tuason, Inc. and the
incorporators of J. M. Tuason & Co., Inc. were practically the same persons
belonging to the same Tuason family. We do not see anything wrong if some
incorporators of the Heirs of D. Tuason Inc. are also incorporators of the J.M.
Tuason & Co., Inc. During these days when businesses are promoted,
operated, and managed, through corporate entities, it is not surprising to see
two or more corporations organized by the same persons or group of persons
with different purposes, for different lines of business and with distinct or
separate assets and interests. Besides, as has been shown, the Heirs of D.
Tuason, Inc. acquired the land (Parcel 1 in Original Certificate of Title No. 735)
from the Bank of the Philippine Islands, the receiver of the properties of the
Mayorasgo Tuason, in a sale that was authorized, and subsequently approved,
by the court. The Heirs of D. Tuason, Inc. paid the sum of P763,950.80 for the
property. Certainly if the Heirs of D. Tuason, Inc. had acquired the land
originally covered by Original Certificate of Title No. 735 in a transaction that
was authorized by the court, for a valuable consideration, thereby acquiring a
good title over the property as a purchaser in good faith and for value, the
title that it transferred to J. M. Tuason & Co., Inc. when it sold same property
to the latter was also a good title, and J.M. Tuason & Co., Inc. was also a
purchaser in good faith and for value even if it appears that the
incorporators of the two corporations belong to the same Tuason family. The
records of these cases are bereft of any evidence which would indicate that
the sale of Parcel 1 in question by the Heirs of D. Tuason, Inc. to J. M. Tuason
& Co., Inc. was fraudulent.
Another reason given by the lower court in declaring appellant J.M. Tuason &
Co., Inc. a buyer in bad faith is that when said appellant bought Parcel 1
originally covered by Original Certificate of Title No. 735 it was aware of the
fact that the appellees or their predecessors in interest were in possession of,
and were cultivating, the six parcels of land that they now claim in these
cases. The conclusion of the lower court is too strained. It should be
remembered that the registered property bought by J.M. Tuason & Co., Inc.
had an area of some 879 hectares. It could happen that certain relatives or
ancestors of appellees had been squatting on some portions of the land and
claimed certain areas as their own, to the extent of having the areas claimed
by them declared for taxation purposes in their names. Thus the appellees
presented in evidence tax declarations that appear to have taken effect as of
1941. We have noted, however, that at the back of those tax declarations are
written the words "This parcel is a duplicate of the land under Tax No. 764-J.
M. Tuason & Co., Inc." (Exhs. E-Alcantara, F-Alcantara, FF-1-Benin, GG-Benin,
HH-Benin, BBB-Pili, and BBB-1-Pili). 41 These annotations simply reveal that
when the predecessors of the appellees had those tax declarations made to

cover the lands that they claim, those lands were already included in the tax
declaration of appellant J. M. Tuason & Co., Inc. Appellant J. M. Tuason & Co.,
Inc. had been exercising, and asserting, its proprietary rights over the lands
in question after it bought the same from the Heirs of D. Tuason, Inc. 42 This
is borne by the statement in the order, dated September 26, 1955, issued by
Judge Juan P. Enriquez who at the time was presiding the branch of the Court
of First Instance of Rizal where these three were pending, as follows:
3.
It having been shown that J. M. Tuason & Co. had title covering
the land in question which they are subdividing into small lots for sale and in
view of the observation under paragraph 2 hereof the Court finds that there is
no justifiable reason to maintain the writ of preliminary injunction that has
been issued. This is particularly true in Civil Case No. 2622, defendants
having secured a final judgment against plaintiffs Juan Alcantara and Jose
Alcantara for ejectment before the Municipal court of Quezon City; and such
injunction would annul the order of the execution issued by the Quezon City
courts. It should be noted that the herein plaintiffs at the beginning pleaded
to the Court that the area on which their respective houses stand be not
touched and their possession thereof be respected by defendant J. M. & Co. In
other words, each plaintiff is merely asking for about 250 square meters each
which represents the land on which the house stands and their immediate
yard, and not the whole land covered by these three or 68 hectares. On the
other hand, the Court requires J. M. Tuason & Co. to put up a bond of P2,000
in favor of each of the defendant (sic) to answer for whatever damages he
may suffer by reason of the continuance during the action of the acts
complained
of. 43
Besides, the possession by the appellees, either by themselves or through
their predecessors in interest, if there was such possession at all, would be
unavailing against title holder of a Torrens certificate of title covering the
parcels Of lands now in question. From July 8, 1914 when Certificate of Title
No. 735 was issued, no possession by any person of any portion of the lands
covered by said original certificate of title, or covered by a subsequent
transfer certificate of title derived from said original certificate of title, could
defeat the title of the registered owner of the lands covered by the certificate
of title. In this connection, let it be noted that appellant J. M. Tuason & Co.,
Inc. became the registered owner of Parcel 1, which was originally covered by
Original Certificate of Title No. 735, only on June 15, 1938, or almost 24 years
after Original Certificate of Title No. 735 was issued.
It can well be said that J. M. Tuason & Co., Inc. had relied on the title of the
Heirs of D. Tuason, Inc. when it bought the land covered by Transfer
Certificate of Title No.34853, and the Heirs of D. Tuason, Inc. likewise had
relied on the title of the Mayorasgo Tuason (Mariano Severo Tuason y de la
Paz, et al.) when it bought the land covered by Transfer Certificate of Title No.
31997 from the judicial receiver, duly authorized and approved by the court.
We, therefore, can not agree with the lower court when it declared appellant
J. M. Tuason & Co., Inc. a purchaser on bad faith.
The evidence shows that appellant J. M. Tuason & Co., Inc. had converted the
land originally covered by Original Certificate of Title No. 735, including the
six parcels claimed by appellees into a subdivision, and numerous persons
and entities had purchased the subdivision lots, and the purchasers in turn
were issued transfer certificates of title covering the lots that they bought,
based on the transfer certificate of title in the name of J. M Tuason & Co., Inc.
The buyers of the lots relied upon the certificate of title in the name of J. M.
Tuason & Co., Inc. and because they paid for the lots they certainly are
purchasers in good faith and for value. The purchasers of these lots have built
thereon residential houses, office buildings, shops, hospital, even churches.
But the lower court, disregarding these circumstances, declared null and void
all transfer certificates of title that emanated, or that were derived, from
Original Certificate of Title No. 735. This is a grave error committed by the
lower court. And the error is compounded when the lower court ordered
appellant J. M. Tuason & Co., Inc. and all those claiming under said appellant,
to vacate and restore to the appellees the possession of the parcels of lands
that are claimed by them in the present cases. The possessors of the lots
comprised within the six parcels of land in question, and who hold certificates
of title covering the lots that they bought, are not parties in the present
cases, and yet the decision of the lower court would annul their titles and
compel them to give up the possession of their properties. To give effect to
the decision of the lower court is to deprive persons of their property without
due process of law. 44 The decision of the lower court would set at naught
the settled doctrine that the holder of a certificate of title who acquired the
property covered by the title in good faith and for value can rest assured that
his title is perfect and incontrovertible. 45
In view of the foregoing discussions, it is obvious that the action of the
appellees in the three cases now before this Court must fail..
It has been shown that appellant J. M. Tuason & Co., Inc. had acquired a valid
title over the land which includes the six parcels that are claimed by the
appellees. The fact, that the predecessors in interest of the appellees or
any person, for that matter had not filed a petition for the review of the

decree of registration in LRC No. 7681 within a period of one year from July 8,
1914 when the decree of registration was issued, is a circumstance that had
forever foreclosed any proceeding for the review of said decree. As We have
adverted to, that decree of registration had become incontrovertible. An
action, similar to one brought by the appellees in each of the present cases,
which attack collaterally the said decree of registration cannot be
entertained. 46 Neither may the action of the appellees for reconveyance of
the lands in question be entertained because such action had already
prescribed, barred by laches, considering that Original Certificate of Title No.
735 had been issued way back in 1914 and the complaint in the present
cases were filed only on May 19, 1955, or after a lapse of some 41 years.
Moreover, as of the time when these complaints were filed the six parcels of
land claimed by the appellees are no longer covered by the certificate of title
in the names of the persons who procured the original registration of those
lands. The title to Parcel 1, which includes the six parcels of land claimed by
the appellees, had passed to the hands parties who were innocent purchase
for value. This Parcel 1 which was one of the two parcels originally covered by
Original Certificate of Title No. 735, was subsequently covered by Transfer
Certificate of Title No. 31997. As has been shown, this Parcel 1 was part of
the properties of the Mayorasgo Tuason and it was conveyed by order of the
court in Civil Case No. 24803 of the Court of First Instance of Manila to the
Heirs of D. Tuason, Inc., and the latter in turn conveyed the same to J. M.
Tuason & Co., Inc. Transfer Certificate of Title No. 34853 in the name of the
Heirs of D. Tuason, Inc. was cancelled and transfer Certificate of Title No.
35073 was issued in the name of J. M. Tuason & Co., Inc. It has also been
shown that J. M. Tuason & Co., Inc. had converted Parcel 1 to a subdivision.
Numerous persons and entities bought those subdivision lots, and to those
buyers were issued transfer certificates of title covering the lots that they
acquired. It is very clear, therefore, that an action for reconveyance cannot
prosper against appellant J. M. Tuason & Co., much less against the registered
owners of the lots that form parts of the six parcels of land that are claimed
by the appellees. 47
Neither may the appellees have a cause of Action for damages against
appellant J. M. Tuason & Co., Inc., considering that said appellant is not one of
the original registered owners that procured the registration of the land.
There is no evidence that J. M. Tuason & Co., Inc. had anything to do with the
registration proceedings which brought about the issuance of Original
Certificate of Title No. 735 even supposing that the registration was
procured fraudulently.
4. Numerous cases have been decided by this Court, dealing on questions
regarding the validity and ineffectiveness of Original Certificate of Title No.
735. The rulings of this Court in those cases are necessarily relevant to, and
of decisive bearing in, the resolution of the issues involved in the three cases
now at bar.
(a) We have earlier cited the case of the Bank of the Philippine Islands vs.
Acua (59 Phil., 183), where the jurisdiction of the Court of Land Registration
that issued the decree which was the basis of Original Certificate of Title No.
735 was questioned, and this Court upheld the jurisdiction of the registration
court and categorically pronounced the validity of Original Certificate of Title
No. 735.
(b) There is the case of Jose Alcantara, et al., versus Mariano Tuason y de la
Paz, et al. (G.R. No. L-4998, Mar. 13, 1953, 92 Phil. 796), where this Court
declared that Original Certificate of Title No. 735 is incontrovertible and is
conclusive against all persons claiming, either by themselves or by their
predecessors in interest, rights over the lands covered by said certificate of
title.
We find that the Alcantara case is intimately related to the three cases at bar,
and the rulings of this Court in that former case are of decisive application to
these three cases.
On August 29, 1950 a complaint was filed in the Court of First Instance of
Rizal (Quezon City Branch) by Jose Alcantara, Elias Benin, Pascual Pili,
Alejandro de Dios, Tomas Bagagonio, Quintina Sandoval, and Tomasa Lazaro
against Mariano Tuason y de la Paz, Heirs of Mariano Tuason, J. M. Tuason &
Co., Inc. and Gregorio Araneta, Inc. This case was docketed as Civil Case No.
Q-156. It will be noted that three of the plaintiffs in Civil Case No. Q-156,
namely, Jose Alcantara, Elias Benin, and Pascual Pili, are among the original
plaintiffs in the three cases now before this Court; Elias Benin, in Civil Case
No. 3621; Jose Alcantara, in Civil Case No. 3622; and Pascual Pili, in Civil Case
No. 3623. Jose Alcantara, Elias Benin and Pascual Pili, as plaintiffs in that Civil
Case No. Q-156 claimed that they were the lawful owners of six (of the ten)
parcels of land described in paragraph 2 of their complaint Jose Alcantara
claiming two parcels, Elias Benin claiming three parcels, and Pascual Pili
claiming one parcel. Substantially, it is alleged in the complaint 48 that each
plaintiff, by himself and by his predecessors in interest, as lawful owner, had
been in the actual, open and continuous possession of his own respective
parcel, or parcels, of land from time immemorial until January 1950 when the
defendants by force and by the use of armed men started to convert their
lands into a subdivision; that on July 8, 1914 the defendants had obtained

Original Certificate of Title No. 735 over a parcel of land which included the
lands possessed by them (plaintiffs) and which they and their ancestors had
been enjoying as owners, for more than thirty years before the issuance of
the title; that the silence and inaction of the defendants since the date of
their original certificate of title showed that said certificate of title did not
express the status of the their claim to the said parcels, that plaintiffs were
not given formal notice by the defendants of the registration of the lands,
such that defendants' certificate of title No. 735 was not in accordance with
law, and that defendants did not have proper title for registration to the
parcels of land owned by the plaintiffs, as described in the complaint; and
that because the certificate of title issued by the register of deeds was still in
the names of the defendants, successors in interest of the Tuasons y de la
Paz, and has not passed to innocent parties for valuable consideration, the
conveyance of the same to the plaintiffs was in order. The plaintiffs prayed
that therein defendants be ordered to execute deeds of conveyance of the
parcels of land described in their complaint in favor of the plaintiffs, that the
defendants' certificate of title be cancelled and the corresponding certificate
be ordered issued in the names of the plaintiffs. We quote from the decision:
The material allegations of the complaint are: that plaintiffs are owners of the
parcels of land set forth in their complaint, which parcels are situated along
Bonifacio street, barrio of San Jose, Quezon City, and that they have been in
actual, open, and continuous possession and enjoyment thereof without
molestation from defendants from time immemorial to the present; that on
July 8, 1914, defendants obtained a certificate of title (No. 735) over a parcel
of land, which included the lands by plaintiffs, and which they and their
ancestors had been enjoying as owners more than 30 years before the
issuance of said title; that on June 23, 1950, defendants caused the removal
of two houses of plaintiffs on the land; and that defendants did not file any
action against plaintiffs before the inclusion of the lands in their title, in
violation of the "due process of law" clause of the Constitution. There are
other allegations which really are arguments of legal discussion, thus: that
defendants could not acquire title by the registration proceedings against the
lawful holder, especially without formal notice, because registration is to
confirm title, not to acquire it; that the silence of the defendants since the
issuance of their title shows that this does not express the lawful status of
their claim, etc. The defendants moved to dismiss the complaint on the
ground that it states no of action and that, if it does, the same is barred by
the statute of limitations. The court sustained this motion on the second
ground. Subsequently, plaintiffs filed an amended complaint with the same
substantial allegations, but with new ones, i.e., that it was in January, 1950,
that they learned that their lands were included in the registration
proceedings which culminated in the issuance of defendants' title; that
defendants never claimed ownership to the lands, but directly or indirectly
allowed plaintiffs to continue exercising their rights of ownership over the
same. This amended complaint was denied admission, and the motion for the
reconsideration of the order of dismiss was also denied. Hence the appeal.
In affirming the order of the lower court dismissing the complaint, this Court
held:
Without considering whether the trial court's refusal to admit the amended
complaint is erroneous or not we are constrained to hold that the dismissal of
the action, even with the amended complaint is a basis thereof, is correct.
From the allegations of both the original and amended complaints, it appears
that the defendants are holders of a certificate of title issued on July 8, 1914
as a consequence of registration proceedings. There is no allegation in both
original and amended complaints that the plaintiffs were not notified, or were
not aware, of the registration proceedings. It is presumed, therefore, that as
occupants proper notices thereof were served on them and that they were
aware of said proceedings. If this is so, then the plaintiffs, who were, or whose
predecessors in interest were, on the land during the registration
proceedings, were bound by said proceedings. The latter are in rem and bind
the whole world, whether served with notice personally or not. (Grey Alba vs.
De la Cruz, 17 Phil., 49). And the decree of registration, in pursuance of which
defendants' title was issued, binds the land and quiets title thereto, and is
conclusive against the plaintiffs. (Section 38, Land Registration Act). The
supposed right of plaintiffs by reason of their alleged continued possession
for thirty years was, therefore, destroyed fully and completely by the
registration proceedings, and their supposed ignorance of the inclusion of the
lands can not exclude them from the effects of the registration proceedings,
and the supposed conduct of defendants in allowing plaintiffs to continue on
the land after registration can not serve as basis of any title or right thereto,
because acts of a possessory character by tolerance of an owner does not
constitute possession (Article 1942, Spanish Civil Code), and because no title
to registered land in derogation to that of the registered owner shall be
acquired by prescription or adverse possession (Section 46, Land Registration
Act).
Thus, in the Alcantara case, as in the Bank of the Philippine Island vs. Acua
case, supra, this Court upheld the validity of the registration proceedings
which culminated in the issuance of Original Certificate of Title No. 735. This
Court declared that "the decree of registration, in pursuance of which
defendants' title was issued, binds the land and quiets title thereto and is

conclusive against the plaintiffs." In other words, in virtue of that decision,

the plaintiffs in Civil Case No. Q-156, among them Jose Alcantara, Elias Benin
and Pascual Pili, and their successors-in-interest, could no longer question the
validity of Original Certificate of Title No. 735, nor claim any right of
ownership over any portion of the land that is covered by said certificate of
title.
But Elias Benin, Jose Alcantara, and Pascual Pili again came to court to claim
ownership over portions of the land covered by Original Certificate of Title No.
735. On May 19, 1955 Elias Benin, joined by his brother Victor Benin and his
sister Marta Benin, filed Civil Case No. 3621; Jose Alcantara joined by his
brother Juan Alcantara, filed Civil Case No. 3622; and Pascual Pili, joined by
his sister Luisa Pili, filed Civil Case No. 3623. These are the three cases which
originated in the Court of First Instance of Rizal (Quezon City Branch) which
are now before this Court on appeal.
In the earlier part of this decision, We have pointed out that the complaints in
these three cases had been amended so as to include as parties plaintiffs all
the heirs of the persons who were alleged to be the owners of the parcels of
land claimed by the plaintiffs in each case. Thus, the complaint in Civil Case
No. 3621 was amended to include all the heirs of Sixto Benin, the alleged
owner of the three parcels of land described in the complaint and the
common predecessor in interest of all the plaintiffs in the case. The complaint
in Civil Case No. 3622 was amended to include all the heirs of Bonoso
Alcantara, the alleged owner of the two parcels of land described in the
complaint and the common predecessor in interest of all the plaintiffs in the
case. The complaint in Civil Case No. 3623 was amended to include all the
heirs of Candido Pili, the alleged owner of the one parcel of land described in
the complaint and the common predecessor in interest of all the plaintiffs in
the case.
In those three cases, in the court below, herein appellant J.M. Tuason & Co.,
Inc. (defendant therein) filed a motion to dismiss upon the principal ground
"that the cause of action (assuming there is one) is barred by prior judgment,
or by the statute of limitation". In its motion to dismiss J.M. Tuason & Co., Inc.
contended that the decision of the Supreme Court in the Alcantara case is a
bar to the action of the plaintiffs in Civil Cases Nos. 3621, 3622 and 3623 of
the Court of the First Instance of Rizal. The lower court, however, denied the
motion to dismiss. In its answer to the complaint in each of these three cases,
J.M. Tuason & Co., Inc. set up as affirmative defenses the very grounds of its
motion to dismiss. After the plaintiffs had closed their direct evidence, J.M.
Tuason & Co., Inc. filed another motion to dismiss upon the ground that the
action was barred by the statute of limitations and by a prior judgment, and
that the plaintiffs had not presented evidence to prove their claim of
ownership. This second motion to dismiss was also denied by the lower court.
49
In its decision, which is now on appeal before this Court, the lower court held
that the decision in the Alcantara case was not a bar to the action in these
three cases, ruling that there is no identity, of the parties, of the subject
matter, and of the cause of action, between Civil Case No. Q-156, on the one
hand, and Civil Cases Nos. 3621, 3622, and 3623, on the other.
It is now contended by appellant J.M. Tuason & Co. Inc., in the present appeal,
that "the trial court erred in not dismissing these cases on the ground of res
judicata and in denying the motion to dismiss filed on said ground." 50
Does the judgment in the aforementioned Alcantara case operate as a bar to
the action of the appellees in the three cases at bar?
In order that the rule of res judicata may apply, the following requisites must
be present: (a) the former judgment must be final; (b) it must have been
rendered by a court having jurisdiction of the subject-matter and of the
parties; (c) it must be a judgment on the merits; and (d) there must be,
between the first and the second actions, identity of parties, of subjectmatter, and of cause of action (San Diego vs. Cardona, 70 Phil. 281-283).
We find that the judgment in Civil Case No. Q-156 (G.R. No. L-4998) is a final
judgment on the merits that was rendered by a court having jurisdiction over
the subject matter and over the parties. The only requisite for res judicata
which we have to determine is whether between Civil Case Q-156 (G.R. No.
4998), on the one hand, and Civil Cases Nos. 8621, 3622 and 3623 (G.R. Nos.
L-26127, 26128 and 26129), on the other, there is identity of parties, of
subject matter and of cause of action.
In our examination of the records and the evidence, We find that there is
identity of subject matter. In the lower court's pretrial order dated December
18, 1957, which was based on the agreement of the parties, it is stated
That the parcels of land in litigation in Case No. Q-156 are substantially
identical to the same parcels of land litigated in them cases Nos. 3621, 8622
and
3623. 51

We also find that there is identity of cause of action. It is apparent, upon

reading the original complaint (Exhibit 1) in Civil Case Q-156 and the decision
in the Alcantara case (G.R. No. L-4998), that the cause of action in Civil Case
Q-156 was based on the alleged fact that the defendants had dispossessed
and deprived the plaintiff therein of the parcels of land described in the
complaint, which were claimed by the plaintiffs as their own and of which
they had been in actual, open and continuous possession from time
immemorial, and that said lands were wrongly included in Certificate of Title
No. 735 that was obtained by the defendants. In the three cases at bar,
plaintiffs (now appellees) also complain of having been dispossessed and
deprived by the defendants of the parcels of land of which they were absolute
owners and possessors, by themselves and through their predecessors in
interest, since time immemorial and that their said lands wrongly included in
Parcel 1 of Original Certificate of Title No. 735 that was obtained by the
defendants. In Civil Case No. Q-156, on the one hand, and in the three cases
now at bar, on the other, the plaintiffs therein seek the nullification of Original
Certificate of Title No. 735, and the reconveyance to them of the parcels of
land that they claim as theirs. 52 It appears clear to Us that in Civil Case No.
Q-156 and in the three cases at bar, the object or purpose of the plaintiffs is
to recover the ownership and possession of the same parcels of land.
As far as the parties are concerned, We find that there is no exact identity of
parties between Civil Case No. Q-156, on the one hand, and Civil Cases Nos.
3621, 3622 and 3623, on the other. It appears that of the plaintiffs in Civil
Cases Nos. 3621, 3622 and 3623 only Elias Benin, Jose Alcantara and Pascual
Pili were plaintiffs in Civil Case No. Q-156. In Civil Case No. Q-156, the
defendants were Mariano Tuason y de la Paz, Heirs of Mariano Tuason, J.M.
Tuason & Co., Inc. and Gregorio Araneta, Inc., while in Civil Cases Nos. 3621,
3622 and 3623 the defendants were Mariano Severo, Teresa Eriberta, Juan
Jose, Demetrio Asuncion, Augusta Huberto, all surnamed Tuason y de la Paz
(the persons appearing as registered owners in Original Certificate of Title No.
735), their heirs, and J.M. Tuason and Co., Inc. We find that the natural
persons surnamed Tuason, and the heirs, refer to the persons who belong to
the Tuason family that secured the registration of Parcel 1 in Original
Certificate of Title No. 735. The defendant Gregorio Araneta Inc. in Civil Case
No. Q-156 is the administrator of the Tuason properties. So, the parties
defendants in all these cases are practically the same. We find, however, that
in Civil Case No. Q-156 as well as in Civil Cases Nos. 3621, 3622 and 3623, it
was the defendant J. M. Tuason & Co., Inc. that actually controverted the
claims of the plaintiffs.
After a careful study, We are of the considered view that the judgment in the
Alcantara case is a bar to the action of the plaintiffs who are the heirs of Elias
Benin in Civil Case No. 3621 (G.R. No. 26127), of plaintiff Jose Alcantara in
Civil Case No. 3622 (G.R. No. 26128), and of plaintiff Pascual Pili in Civil Case
No. 3623 (G. R. No. 26129) under the doctrine of res adjudicata. We are
likewise of the considered view that the decision in the Alcantara case would
serve to rule out the action of the other plaintiffs in Civil Cases Nos. 3621,
3622 and 3623 under the doctrine of stare decisis.
In Civil Case No. 3621 the original plaintiffs were Victor Benin, Marta Benin,
and Elias Benin--two brothers and a sister. In the amended complaint it was
alleged that these three original plaintiffs had another brother, and another
sister, namely Esteban Benin and Felipa Benin. But because all the five Benin
brothers and sisters died, they were all substituted by their heirs, such that
as of the time when Civil Case No. 3621 was decided the plaintiffs were: (1)
the heirs of Victor Benin; (2) the heirs of Marta Benin; (3) the heirs of Elias
Benin; (4) the heirs of Esteban Benin, and (5) the heirs of Felipa Benin.
In Civil Case No. 3622 the original plaintiffs were Juan Alcantara and Jose
Alcantara. Juan Alcantara died, and he was substituted by his heirs, such that
as of the time Civil Case No. 3622 was decided the plaintiffs were: (1) the
heirs of Juan Alcantara, and (2) Jose A. Alcantara.
In Civil Case No. 3623 the original plaintiffs were Pascual Pili and Luisa Pili. In
the amended complaint, it was alleged that Luisa Pili and Pascual Pili had two
brothers who were already dead, namely, Diego Pili and Manuel Pili, so they
were substituted by their heirs. Luisa Pili died, and she was substituted by her
heirs, such that as of the time Civil Case No. 3623 was decided, the plaintiffs
were: (1) the heirs of Diego Pili; (2) the heirs of Manuel Pili; (3) the heirs of
Luisa Pili, and (4) Pascual Pili.
It would thus appear that of the plaintiffs in Civil Case No. 3621 Elias Benin is
the only one who was a plaintiff in Civil Case No. Q-156; of the plaintiffs in
Civil Case No. 3622 Jose E. Alcantara, who is still living, is the only one who
was a plaintiff in Civil Case No. Q-156; of the plaintiffs in Civil Case No. 3623
Pascual Pili, who is still living, is the only one who was a plaintiff in Civil Case
No. Q-156.
It being Our finding that the judgment in Civil Case No. Q-156 (G.R. No. L4998-the Alcantara case) is a final judgment on the merits that was rendered
by a court that had jurisdiction over the subject matter and over the parties,
and that there is identity of subject matter and cause of action between Civil
Case No. Q-156, on the one hand, and Civil Cases Nos. 3621, 3622, and 3623,

on the other; and it appearing that Elias Benin is a party-plaintiff both in Civil
Case Q-156 and Civil Case No. 3621; that Jose Alcantara is a party-plaintiff in
both Civil Case No. Q-156 and Civil Case No. 3622; that Pascual Pili is a partyplaintiff in both Civil Case No. Q-156 and Civil Case No. 3623; and that the
defendants in Civil Case No. Q-156 and in Civil Cases Nos. 3621, 3622 and
3623 are practically the same persons and/or entities, We hold that the
doctrine of bar by a previous judgment or res adjudicata squarely applies to
Elias Benin, or to his heirs and successors in interest in Civil Case No. 3621;
to Jose Alcantara and his heirs or successors in interest in Civil Case No.
3622; and to Pascual Pili and his heirs or successors in interest in Civil Case
No. 3623. 53
We now consider the case of the other plaintiffs in Civil Cases Nos. 3621,
3622 and 3623.
It will be noted that in Civil Case No. 3621 the plaintiffs base their claim of
ownership of the three parcels of land described in the complaint on their
being heirs or successors in interest of Sixto Benin who died in 1936. In Civil
Case No. 3622 the plaintiffs base their claim of ownership over the two
parcels of land described in their complaint on their being the heirs and
successors in interest of Bonoso Alcantara who died in 1934. In Civil Case No.
3623 the plaintiffs base their claim of ownership of the one parcel of land
described in their complaint on their being the heirs and successors in
interest of Candido Pili who died in 1931.
When Jose Alcantara, Elias Benin and Pascual Pili, alleged in their complaint in
Civil Case No. Q-156 (which was filed in 1950) that they were the owners of
the parcels of land specified in their complaint, having inherited the same
from their ancestors and had been in possession of the same from time
immemorial, each was claiming a right as an heir of Bonoso Alcantara, Sixto
Benin, and Candido Pili, respectively. Similarly, in Civil Cases Nos. 3621, 3622
and 3623, the source of the rights claimed by the plaintiffs Jose Alcantara,
Elias Benin and Pascual Pili and all the other plaintiffs were their respective
ancestor, or predecessor in interest, namely Bonoso Alcantara, Sixto Benin
and Candido Pili, as the case may be.
Inasmuch as Sixto Benin died in 1936, Bonoso Alcantara died in 1934, and
Candido Pili died in 1931, it is obvious that during all the time when the
registration proceedings in LRC No. 7681 were taking place before the Court
of Land Registration, which culminated in the issuance of Original Certificate
of Title No. 735 on July 8, 1914, Sixto Benin, Bonoso Alcantara and Candido
Pili were living. The records show that no one of these three persons, or their
representative, had filed any opposition to the application for registration in
said LRC 7681, nor did any one of them, or their representative, file any
petition for review of the decree of registration No. 17431 that was issued in
said LRC No. 7681.
It is Our view, therefore, that the decision of this Court, in G.R. No. L-4998,
which affirmed the order of the Court of First Instance of Rizal dismissing the
complaint of Jose Alcantara, Elias Benin and Pascual Pili (along with four other
plaintiffs) in Civil Case No. Q-156 should apply not only against the heirs, of
Elias Benin, against Jose Alcantara, and against Pascual Pili, as plaintiffs in
Civil Cases Nos. 3621, 3622 and 3623, respectively, but also against all the
other plaintiffs in those cases. We find that the plaintiffs in Civil Case No.
3621 do not claim a right which is different from that claimed by Elias Benin
in Civil Case No. Q-156. Likewise, the plaintiffs in Civil Case No. 3622 do not
claim a right different from that claimed by Jose Alcantara in Civil Case No Q156. And, also, the plaintiffs in Civil Case No. 3623 do not claim a right
different from that claimed by Pascual Pili in Civil Case No. Q-156. They all
claim the same right, based on the alleged ownership of their respective
common predecessor in interest in Civil Case No. 3621 the common
predecessor in interest being Sixto Benin; in Civil Case No. 3622 the common
predecessor in interest being Bonoso Alcantara; and in Civil Case No. 3623
the common predecessor in interest being Candido Pili. In Civil Case No. Q156 Elias Benin based his claim of ownership upon the ownership of his
predecessor in interest who necessarily must be Sixto Benin; Jose Alcantara,
upon the ownership of his predecessor in interest who necessarily must be
Bonoso Alcantara; and Pascual Pili, upon the ownership of his predecessor in
interest who necessarily must be Candido Pili. It follows, therefore, that the
decision of this Court in G.R. No. L-4998 (Civil Case No. Q-156), which held
untenable the cause of action of the successors in interest, of Sixto Benin, of
Bonoso Alcantara and of Candido Pili, to recover the ownership and
possession of any land covered by Original Certificate of Title No. 735, would
also foreclose a similar cause of action of all other persons who claim to be
successors in interest of Sixto Benin, of Bonoso Alcantara and of Candido Pili
over any land covered by said certificate of title. As We have adverted to,
Sixto Benin died in 1936, Bonoso Alcantara died in 1934, and Candido Pili
died in 1931. These three predecessors in interest of the appellees died long
after the issuance of Original Certificate of Title No. 735, which took place on
July 8, 1914.
And so, even if there are plaintiffs (now appellees) in these three cases who
are not privies to plaintiffs Jose Alcantara, Elias Benin, and Pascual Pili in Civil
Case No. Q-156 (G.R. No. L-4998 the Alcantara case) and were not parties

in that case, still the ruling of this Court in that former case, to the effect that
therein plaintiffs or their predecessors in interest were bound by the
proceedings in the registration court which culminated in the issuance of
Original Certificate of Title No. 735, holds and applies to those plaintiffs in
these three cases, because the claim of ownership of these plaintiffs is based
on the same predecessors in interest of plaintiffs Jose Alcantara, Elias Benin
and Pascual Pili in said Civil Case No. Q-156. 54 It may well be said that the
interests of the appellees in G.R. No. L-26127 (Civil Case No. 3621) who claim
rights as heirs or successors in interest of Sixto Benin were represented by
Elias Benin in Civil Case No. Q-156 (G.R. No. L-4998); the appellees in G.R. No.
26128 (Civil Case No. 3622) who claim rights as heirs or successors in
interest of Bonoso Alcantara were represented by Jose Alcantara in Civil Case
No. Q-156 (G.R. No. L-4998); the appellees in G.R. No. 26129 (Civil Case No.
3623) who claim rights as heirs or successors in interest of Candido Pili were
represented by Pascual Pili in Civil Case No. Q-156 (G.R. No. L-4998).

We agree with appellants that the decision in the preceding suit to quiet title,
prosecuted by the appellee Tuason & Co. against other heirs of Ynocencio
Santiago (99 Phil., 615; 50 Off. Gaz. 11, 5727), can not constitute res judicata
against these appellants who were not parties to that suit and do not derive
their title from the defendants in the previous litigation (Rule 39, sec. 44 (b).
There is authority for the proposition that a judgment may be made binding
in a subsequent litigation upon one who, although not a formal party to a
previous suit, has actually conducted or controlled the action or defense
therein (65 ALR 1134), or who was adequately represented in such previous
litigation; but no clear proof of the existence of such exceptional
circumstance is before us in the present case. On the other hand, the rule is
that co-owners are not privies inter se in relation to the property owned in
common.

(c) In the case of Albina Santiago, et al. vs. J.M. Tuason & Co., Inc. (G.R. No. L14223, November 23, 1960) 55, where Original Certificate of Title No. 735,
was also in question, this Court ruled on issues akin to the issues involved in
the three cases now at bar. Albina Santiago and her co-plaintiffs filed a
complaint in the Court of First Instance of Quezon City, docketed as Civil Case
No. Q-2918, against J. M. Tuason & Co. Inc. alleging, substantially, that their
ancestor, Inocencio Santiago, was the owner of a parcel of land, evidenced by
a document (attached to their complaint as Annex A) issued by the Spanish
government on May 12, 1848 56; that Inocencio Santiago had since then
been in possession of the aforesaid land as owner, publicly, continuously and
adversely until his death, when his two children, Isaias and Albina, succeeded
and continued to own and possess said land pro indiviso in the same
character as that of their predecessor that upon the death of Isaias Santiago
his one-half share of the land was inherited by his eleven children who,
together with their aunt Albina, continued to own and possess the land in the
same character as that of their predecessors; that Albina and her co-plaintiffs
came to know that J.M. Tuason & Co., Inc. had previously filed in the Court of
First Instance of Quezon City Civil Case No. Q-27 for "quieting of title and
recovery of possession" against five of the children of Isaias Santiago
involving the parcel of land of which they were co-owners; that J.M. Tuason &
Co., Inc. had claimed that parcel to be part of the land covered by its Transfer
Certificate of Title No. 119; that the judgment in Civil. Case No. Q-27, in which
they (Albina Santiago, et al.) were never impleaded as parties, had already
become
final 57; that J.M. Tuason & Co., Inc. had executed the judgment against them,
excluding and rusting them from the enjoyment and possession of the land.
Albina and her co-plaintiffs also alleged that Transfer Certificate of Title No.
119 (37679) of J.M. Tuason & Co., Inc., as well as Original Certificate of Title
No. 735 from which the former was derived, did not include the parcel
claimed by them; that even granting that Transfer Certificate of Title No. 119
included the parcel claimed by them the inclusion of that parcel in the
certificate of title of J.M. Tuason & Co., Inc. was done through fraud because
they, nor their predecessors, were not actually notified of the registration
proceedings. As ground for cancellation of the certificate of title of J.M. Tuason
& Co., Inc. Albina Santiago and her co-plaintiffs further alleged that the
technical description in Original Certificate of Title No. 735 had been falsified
to include areas never brought within the jurisdiction of the Land Registration
Court, since they were areas not included in the application and publication in
the registration proceedings; that long before the predecessors of J.M. Tuason
& Co., Inc. applied for, and secured, registration of the land which included
their parcel of land they had already acquired ownership thereof not only by
the document, Annex A of their complaint, but also by acquisitive
prescription. Albina Santiago and her co-plaintiffs prayed, that J.M. Tuason &
Co., Inc. be ordered to desist from enforcing Civil Case No. Q-27 against
them; that a resurvey be ordered to determine whether or not Transfer
Certificate of Title No. 119 (37679) included the land described in their
complaint; that a reconveyance to them be ordered of whatever portion of
the land claimed by them may be found included in transfer Certificate of
Title No. 119; that Transfer Certificate of Title No. 119 and Original Certificate
of Title No. 735 be ordered cancelled and substituted with a new certificate of
title embracing only those lands included in the application, publication
and/or decree in LRC No. 7681 of the Court of Land Registration.

But granting that the plaintiffs-appellants herein are not privies of the
defendants Santiago in the former litigation over this same property (S.C.G.R.
No.
L-5079), still the pronouncement of this Court, made in the former case, to
the effect that the Spanish document (Annex A) issued in favor of Ynocencio
Santiago (ancestor of appellants herein) was neither a titulo de informacion
posesoria nor a title by composicion con el estado, and, therefore, vested no
ownership over the land therein described in favor of Ynocencio Santiago,
holds and applies to herein appellants, since the quality or the legal effect of
the document does not depend upon the person who invoke it.

Upon motion of defendant J.M. Tuason & Co., Inc., the Court of First Instance
of Quezon City dismissed the complaint of Albina Santiago, et al., upon the
grounds that there was no cause of action, that the case was barred by a
prior judgment in Civil Case No. Q-27 which was affirmed by the Supreme
Court in G.R. No. L-5079, and that the action of the plaintiffs, if they had any,
had prescribed.
This Court affirmed the order of the lower court dismissing the complaint of
Albina Santiago and her co-plaintiffs. 58 Regarding the contention of Albina
Santiago and her co-plaintiffs that the judgment in the previous case (Civil
Case No. Q-27, affirmed in G.R. No. L-5079) would not operate as res judicata
against them because they were not parties in that suit, and that they did not
derive their title from the defendants in the previous suit, this Court held:

xxx

xxx

xxx

If the late Ynocencio Santiago did not become the owner of the disputed
property by virtue of the document Annex A, then appellants herein, as heirs
of Ynocencio have not acquired such ownership either. It follows that the first
and second causes of action of their complaint, predicated as they are on the
assumption that such ownership and its consequential rights resulted from
Annex A, must necessarily fail. Not being owners, they can complain of no
invasion of dominical rights.
It will thus be noted that in the aforementioned decision in the Santiago case,
even if Albina Santiago and her co-plaintiffs were not considered privies to
the defendants in Civil Case No. Q-27, and even if they were not parties in
that previous case, this Court nevertheless applied to them the judgment (G.
R. No. L-5079) in that previous case where it was pronounced that the
document, Annex A of the complaint of Albina Santiago, et al., was neither a
titulo de informacion posesoria nor a title by composision con el estado, and
it did not establish the right of ownership of their predecessor in interest,
Inocencio Santiago, Albina Santiago and her co-plaintiffs had based their
claim of ownership on that document (Annex A). 59 This Court held in that
previous case that the document was unavailing against Transfer Certificate
of Title No. 119 of J. M. Tuason & Co., Inc. and against Original Certificate of
Title No. 735.
And so, following the logic of this Court in its decision in the Santiago case, in
the three cases at bar We hold that even if the plaintiffs in Civil Case No.
3621, except the heirs of Elias Benin, are not privies to Elias Benin and were
not parties in Civil Case No. Q-156; even if the plaintiffs in Civil Case No.
3622, except Jose Alcantara, are not privies to Jose Alcantara and were not
parties in Civil Case No. Q-156; and even if the plaintiffs in Civil Case No.
3623, except Pascual Pili, are not privies to Pascual Pili and were not parties in
Civil Case No. Q156, still the pronouncement of this Court in the judgment in
that previous case (G.R. No. L-4998), to the effect that the plaintiffs in that
case and their predecessors in interest were bound by the registration
proceedings which culminated in the issuance of Original Certificate of Title
No. 735, holds and applies to all the plaintiffs (now appellees) in these three
cases. In that judgment this Court ruled out, or did not sustain, the rights
claimed by the predecessors in interest of herein appellees over the land
covered by Original Certificate of Title No. 735. These appellees, therefore,
have not succeeded to any right that can derrogate the validity and
conclusiveness of Original Certificate of Title No. 735, and of the certificates
of title that are derived from said original certificate of title.
Coming back to the Santiago case, as regards the contention of Albina
Santiago and her co-plaintiffs that the registration proceedings which resulted
in the issuance of Original Certificate of Title No. 735 were irregular and
fraudulent, this Court held:
(T)he mere fact that appellants herein were not personally notified of the
registration proceedings that resulted in a decree of registration of title in
favor of the Tuasons in 1914 does not constitute in itself a case of fraud that
would invalidate the decree. The registration proceedings, as proceedings in
rem, operate as against the whole world and the decree issued therein is
conclusive adjudication of the ownership of the lands registered, not only
against those parties who appeared in such proceedings but also against
parties who were summoned by publication but did not appear. The
registration by the appellee's predecessors-in-interest freed the lands from
claims and liens of whatever character that existed against the lands prior to
the issuance of the certificates of title, except those noted in the certificate

and legal encumbrances saved by law (Yumol vs. Rivera and Dizon, 64 Phil.
13, 17 and cases cited therein). In addition, there being no allegation that the
registered owners procured the non-appearance of appellants at the
registration proceedings, and very much more than one year having elapsed
from the issuance of the decree of registration in 1914, neither revocation of
such decree nor a decree of reconveyance are obtainable any more.
Regarding the claim of Albina Santiago and her co-plaintiffs that they had
acquired title by prescription over the parcel of land claimed by them, this
Court held:
It follows also that the allegation of prescriptive title in favor of plaintiffs does
not suffice to establish a cause of action. If such prescription was completed
before the registration of the land in favor of the Tuasons, the resulting
prescriptive title was cut off and extinguished by the decree of registration. If,
on the contrary, the prescription was either begun or completed after the
decree of registration, it conferred no title because, by express provision of
law, prescription cannot operate against the registered owner (Act 496,
section 46).
Thus, in this Santiago case, as in the Alcantara case, this Court declared
conclusive and indefeasible Original Certificate of Title No. 735 which was
issued as a result of the registration proceedings in L.R.C. No. 7681 of the
Court of Land Registration. There are many other cases where this Court has
made a similar pronouncement regarding Original Certificate of Title No. 735.
60
In view of the findings, and the rulings, that We have hereinbefore made, it
follows that, as contended by the appellant, the lower court also erred when
it declared the appellees the owners of the lands claimed by them and in
awarding damages to them, in these three cases. 61
We consider it unnecessary to rule on the counterclaim of appellant J.M.
Tuason & Co., Inc., for damages and attorneys fees against the appellees 62,
considering, as the records show, that the appellees are persons who are not
in a position to pay damages in any form. 63 We believe that the appellees
had filed their complaints in the honest, but mistaken, belief that they have a
good cause of action against the appellant corporation and not because they
meant to embarrass or humiliate the persons who are identified or connected
with the appellant.
WHEREFORE, the joint decision of the Court of First Instance of Rizal (Quezon
City Branch) in Civil Cages Nos. 3621, 3622 and 3623, appealed from, is
reversed and set aside. The bond filed by appellant in the three cases in the
court below for the lifting of the writ of preliminary injunction is ordered
cancelled. No pronouncement as to costs. IT IS SO ORDERED.

of Barangay Captain Hadji Hassan Abato and his councilmen be declared

invalid, and that petitioner be ordered to pay respondent damages in the
amount of P10,000.00 and attorneys fees.
In his Answer,[5] defendant Datu Kiram Sampaco, petitioner herein, denied
the material allegations of the Complaint. Petitioner asserted that he and his
predecessors-in-interest are the ones who had been in open, public,
continuous, and exclusive possession of the property in dispute. Petitioner
alleged that OCT No. P-658 was secured in violation of laws and through
fraud, deception and misrepresentation, considering that the subject parcel of
land is a residential lot and the title issued is a free patent. Moreover,
respondent and his predecessors-in-interest had never taken actual
possession or occupied the land under litigation. On the contrary, petitioner
has all the evidence of actual possession and ownership of permanent
improvements and other plants on the land in dispute.

This is a petition for review on certiorari of the Court of Appeals Decision

dated August 15, 2003 in CA-G.R. CV No. 63801 and its Resolution dated May
13, 2004, denying petitioners motion for reconsideration.
The facts, as stated by the Court of Appeals, are as follows:
On September 14, 1984, respondent Hadji Serad Mingca Lantud, the plaintiff
in the lower court, filed an action to quiet title with damages[1] with the
Regional Trial Court (RTC) of Lanao del Sur, Branch 8, Marawi City (trial court),
against petitioner Datu Kiram Sampaco (deceased), the defendant in the
lower court, who has been substituted by his heirs, represented by Hadji
Soraya Sampaco-Macabando.[2]
Respondent alleged in his Complaint[3] that he is the owner in fee simple of
a parcel of residential lot located at Marinaut, Marawi City, with an area of
897 square meters covered by Original Certificate of Title (OCT) No. P-658.
On August 25, 1984, petitioner Datu Kiram Sampaco, through his daughter
Soraya Sampaco-Macabando with several armed men, forcibly and unlawfully
entered his property and destroyed the nursery buildings, cabbage seedlings
and other improvements therein worth P10,000.00. On August 30, 1984,
Barangay Captain Hadji Hassan Abato and his councilmen prepared and
issued a decision[4] in writing stating that petitioner Datu Kiram Sampaco is
the owner of the subject parcel of land. Respondent stated that the acts of
petitioner and the said decision of the Barangay Captain may cast a cloud
over or otherwise prejudice his title. Respondent stated that he and his
predecessors-in-interest have been in open, public and exclusive possession
of the subject property. He prayed that the acts of petitioner and the decision

On the other hand, the trial court stated that petitioner offered documentary
evidence, consisting of a contract of real estate mortgage of the subject
property, tax declarations, an official tax receipt, and testimonial evidence to
prove that he had been in open, public, continuous, and lawful possession of
the subject property in the concept of owner.
Respondent appealed the decision of the trial court to the Court of
Appeals.

Petitioner filed a counterclaim for actual and moral damages, and attorney's
fees for the unfounded complaint and prayed for its dismissal. He also sought
the cancellation of respondents OCT No. P-658 and the reconveyance of the
subject parcel of land.

During the trial, respondent Hadji Lantud testified that he acquired the
subject lot from his grandmother, Intumo Pagsidan, a portion thereof from his
grandmothers helper, Totop Malacop, pursuant to a court decision after
litigating with him.[6] Respondent had been residing on the lot for more than
30 years, applied for a title thereto and was issued OCT No. P-658.[7] He
paid the corresponding real estate taxes for the land.[8] He planted assorted
trees and plants on the lot like bananas, jackfruits, coconuts and others.[9]
He testified that he was not aware of the alleged litigation over the lot before
Barangay Captain Hadji Hassan Abato, although he was furnished a copy of
the decision.[10]
On the other hand, petitioner Datu Kiram Sampaco testified that the land
under litigation is only a portion of the 1,800 square meters of land that he
inherited in 1952 from his father, Datu Sampaco Gubat.[11] Since then, he
had been in adverse possession and ownership of the subject lot, cultivating
and planting trees and plants through his caretaker Hadji Mustapha
Macawadib.[12] In 1962, he mortgaged the land (1,800 square meters) with
the Development Bank of the Philippines, Ozamis branch.[13] He declared
the land (1,800 square meters) for taxation purposes[14] and paid real
estate taxes, and adduced in evidence the latest Tax Receipt No. 1756386
dated September 15, 19[9]3.[15] Petitioner presented four corroborating
witnesses as regards his possession of the subject property.

DATU KIRIAM SAMPACO VS. HADJI SERAD MINGCA LATUD

PERALTA, J.:

Moreover, the trial court stated that respondent failed to establish with
competent and credible evidence that he was in prior possession of the
subject property. No corroborative witness was presented to further prove his
prior possession.

On August 15, 2003, the Court of Appeals rendered a Decision reversing the
decision of the trial court, the dispositive portion of which reads:
WHEREFORE:
1.
The appeal is granted and the appealed judgment is hereby totally
REVERSED.
2.
To quiet his title, plaintiff-appelant Hadji Serad Mingca Lantud is
confirmed the owner of the parcel of land covered by Original Certificate of
Title No. P-658;
3.
The defendant-appellee is ordered to pay P50,000.00 as attorneys fees
to the plaintiff-appellant; and
4.
Costs against the defendant-appellee.[17]
Petitioners motion for reconsideration was denied by the Court of Appeals in
its Resolution[18] dated May 13, 2004.
The Court of Appeals held that there is no controversy that respondent is a
holder of a Torrens title; hence, he is the owner of the subject property. The
appellate court stressed that Section 47[19] of the Land Registration Act (Act
No. 496) provides that the certificate of title covering registered land shall be
received as evidence in all courts of the Philippines and shall be conclusive as
to all matters stated therein.
The Court of Appeals stated that the Torrens title has three attributes: (1) a
Torrens title is the best evidence of ownership over registered land and,
unless annulled in an appropriate proceeding, the title is conclusive on the
issue of ownership; (2) a Torrens title is incontrovertible and indefeasible
upon the expiration of one year from the date of the entry of the decree of
registration;[20] and (3) a Torrens title is not subject to collateral attack.[21]

After trial on the merits, the trial court rendered a Decision on March 31, 1999
in favor of petitioner, the dispositive portion of which reads:
WHEREFORE, premises considered the court is of the opinion and so holds
that the preponderance of evidence is in favor of the defendant and against
the plaintiff. Judgment is hereby rendered as follows:
1.
Dismissing plaintiffs complaint for lack of merit;
2.
Declaring Original Certificate of Title No. P-658 (Exh. A) null and void
and of no legal effect;
3.
Declaring the defendant the absolute or true owner and possessor
of the land in dispute; and
4.
Ordering the plaintiff to pay the defendant the sum of P10,000.00
for attorneys fees plus P500.00 per appearance.[16]

The trial court held that the issuance of respondents title, OCT No. P-658,
was tainted with fraud and irregularities and the title is, therefore, spurious;
hence, it is null and void, and without any probative value. The finding of
fraud was based on: (1) the Certification issued by Datu Samra Andam,
A/Adm. Assistant II, Natural Resources District No. XII-3, Marawi City, stating
that the data contained in respondents title were verified and had no record
in the said office; (2) the said Certification was not refuted or rebutted by
respondent; (3) while free patents are normally issued for agricultural lands,
respondents title is a free patent title issued over a residential land as the
lot is described in the Complaint as a residential lot; and (4) Yusoph
Lumampa, an employee of the local Bureau of Lands, to whom respondent
allegedly entrusted the paperwork of the land titling, was not presented as a
witness.

The Court of Appeals held that petitioners counterclaim filed on October 15,
1984 for cancellation of respondents original certificate of title issued on May
22, 1981 was filed beyond the statutory one-year period; hence, petitioners
title had become indefeasible, and cannot be affected by the decision made
by Barangay Captain Hadji Hassan Abato and his councilmen. Moreover, the
appellate court held that petitioners prayer for the cancellation of
respondents title, OCT No. P-658, through a counterclaim included in his
Answer is a collateral attack, which the law does not allow, citing Cimafranca
v. Court of Appeals[22] and Natalia Realty Corporation v. Valdez.[23]
The allegation of fraud in securing OCT No. P-658 on the ground that the
property in dispute is a residential lot and not subject of a free patent was not
given weight by the appellate court as it was supported only by testimonial
evidence that did not show how (by metes and bounds) and why the property
in dispute could not have been the subject of a free patent. The appellate
court stated that a mere preponderance of evidence is not adequate to prove
fraud;[24] it must be established by clear and convincing evidence.
The Court of Appeals also noted that petitioner claimed that the subject
property is only part of his larger property. Although petitioner introduced
proof of payment of the real estate taxes of the said property, as well as a
previous mortgage of the property, petitioner did not show that the disputed
property is part of his larger property. Hence, the appellate court stated that
under such circumstances, it cannot rule that petitioner owned the land under
litigation, since petitioner failed to show that it is part of his larger property.
The Court of Appeals did not award actual and moral damages, because
respondent failed to prove the amount of any actual damages sustained, and

the instances enumerated under Article 2219 of the Civil Code warranting the
award of moral damages were not present.

However, the Court of Appeals awarded attorney's fees in the amount of

P50,000.00, considering that respondent was forced to incur expenses to
protect his right through the action to quiet title.
Petitioner filed this petition raising the following issues:
I THE COURT OF APPEALS MISERABLY FAILED TO CONSIDER THE FACT THAT
THE TORRENS TITLE INVOLVED HEREIN WAS ISSUED PURSUANT TO A FREE
PATENT WHICH COULD NOT BE VALIDLY ISSUED OVER A PRIVATE LAND.
II THE COURT OF APPEALS ERRED IN DISREGARDING THE FACT THAT AS
CERTIFIED TO BY THE BUREAU OF LANDS ITSELF NO SUCH FREE PATENT OVER
THE SUBJECT LAND WAS ISSUED BY IT; HENCE, SAID FREE PATENT IS
SPURIOUS.
III THE COURT OF APPEALS ERRED IN REVERSING THE DECISION OF THE TRIAL
COURT THAT THE SUBJECT LOT HAD LONG BEEN OWNED, POSSESSED AND
CULTIVATED BY THE DEFENDANT (PETITIONER HEREIN) OR HIS
PREDECESSORS-IN-INTEREST SINCE TIME IMMEMORIAL IN THE CONCEPT OF
AN OWNER.
IV THE COURT OF APPEALS ERRED IN RULING THAT THE PETITIONERS
COUNTERCLAIM FOR CANCELLATION OF RESPONDENTS TITLE IS BARRED.
V THE COURT OF APPEALS ERRED IN RULING THAT THE COUNTERCLAIM IN
THE INSTANT CASE IS A COLLATERAL ATTACK ON RESPONDENT-PLAINTIFFS
TITLE.
VI THE COURT OF APPEALS ERRED IN DENYING PETITIONERS MOTION FOR
RECONSIDERATION.[25]
The main issue is whether or not the Court of Appeals erred in sustaining the
validity of OCT No. P-658 and confirming respondent as owner of the property
in dispute.
Petitioner contends that the Court of Appeals erred in disregarding the fact
that the Torrens title was issued to respondent by virtue of a free patent
covering a residential lot that is private land as it has been acquired by
petitioner through open, public, continuous and lawful possession of the land
in the concept of owner. Petitioner thus prayed for the cancellation of
respondents title and the reconveyance of the subject property. Hence, the
Court of Appeals erred in declaring that the subject lot belongs to respondent.
The contention is without merit.
The Torrens title is conclusive evidence with respect to the ownership of the
land described therein, and other matters which can be litigated and decided
in land registration proceedings.[26] Tax declarations and tax receipts cannot
prevail over a certificate of title which is an incontrovertible proof of
ownership.[27] An original certificate of title issued by the Register of Deeds
under an administrative proceeding is as indefeasible as a certificate of title
issued under judicial proceedings.[28] However, the Court has ruled that
indefeasibility of title does not attach to titles secured by fraud and
misrepresentation.[29]
In this case, petitioner alleged in his Answer to respondents Complaint in the
trial court that respondents title, OCT No. P-658, was secured in violation of
the law and through fraud, deception and misrepresentation, because the
subject parcel of land is a residential lot, which cannot be subject of a free
patent, since only agricultural lands are subject of a free patent.
The trial court found that [t]he lot under litigation as clearly described in the
complaint is a residential lot and a free patent title thereto cannot validly be
issued. This finding was one of the bases for the trial courts declaration that

the issuance of OCT was tainted with fraud and irregularities and is,
therefore, spurious; thus, OCT No. P-658 is null and void.
It should be pointed out that the allegation in the Complaint that the land is
residential was made only by respondent, but the true classification of the
disputed land as residential was not shown to have been made by the
President, upon recommendation by the Secretary of Environment and
Natural Resources, pursuant to Section 9 of Commonwealth Act No. 141,
otherwise known as The Public Land Act.[30] Hence, the trial court erred in
concluding that there was fraud in the issuance of respondents free patent
title on the ground that it covered residential land based only on the
Complaint which stated that the property was residential land when it was
not shown that it was the President who classified the disputed property as
residential, and OCT No. P-658 itself stated that the free patent title covered
agricultural land. It has been stated that at present, not only agricultural
lands, but also residential lands, have been made available by recent
legislation for acquisition by free patent by any natural born Filipino citizen.
[31] Nevertheless, the fact is that in this case, the free patent title was
granted over agricultural land as stated in OCT No. P-658.
Moreover, petitioner contends in his petition that the Certification[32] dated
July 24, 1987 issued by Datu Samra I. Andam, A/Adm. Assistant II, Natural
Resources District No. XII-3, Bureau of Lands, Marawi City, certifying that the
data contained in OCT No. P-658 in respondents name had no records in the
said office, showed that respondents Torrens title was spurious.
The Court holds that the certification, by itself, is insufficient to prove the
alleged fraud. Fraud and misrepresentation, as grounds for cancellation of
patent and annulment of title, should never be presumed, but must be
proved by clear and convincing evidence, mere preponderance of evidence
not being adequate.[33] Fraud is a question of fact which must be proved.
[34] The signatory of the certification, Datu Samra Andam, A/Adm. Assistant
II, Natural Resources District No. XII-3, Marawi City, was not presented in
court to testify on the due issuance of the certification, and to testify on the
details of his certification, particularly the reason why the said office had no
records of the data contained in OCT No. P-658 or to testify on the fact of
fraud, if any.
Thus, the Court holds that the evidence on record is insufficient to prove that
fraud was committed in the issuance of respondents Torrens title. Hence,
respondents Torrens title is a valid evidence of his ownership of the land in
dispute.
On the other hand, petitioner claims ownership of the subject lot, which is
merely a portion of a larger property (1,800 square meters) that he
allegedly inherited from his father in 1952, by virtue of open, public and
continuous possession of the land in the concept of owner making it
petitioners private property. Hence, petitioner prays for reconveyance of the
said property.
Article 434 of the Civil Code governs an action for reconveyance, thus:
Art. 434. In an action to recover, the property must be identified, and the
plaintiff must rely on the strength of his title and not on the weakness of the
defendants claim.

Under Article 434 of the Civil Code, to successfully maintain an action to

recover the ownership of a real property, the person who claims a better right
to it must prove two (2) things: first, the identity of the land claimed; and
second, his title thereto.[35]
In regard to the first requisite, in an accion reinvindicatoria, the person who
claims that he has a better right to the property must first fix the identity of
the land he is claiming by describing the location, area and boundaries
thereof.[36]
In this case, petitioner claims that the property in dispute is part of his larger
property.
However, petitioner failed to identify his larger property by
providing evidence of the metes and bounds thereof, so that the same may
be compared with the technical description contained in the title of
respondent, which would have shown whether the disputed property really
formed part of petitioners larger property. The appellate court correctly held
in its Resolution dated May 13, 2004 that petitioners claim is solely

supported by testimonial evidence, which did not conclusively show the

metes and bounds of petitioners larger property in relation to the metes and
bounds of the disputed property; thus, there is no sufficient evidence on
record to support petitioners claim that the disputed property is part of his
larger property.
In regard to the second requisite of title to property, both petitioner and
respondent separately claim that they are entitled to ownership of the
property by virtue of open, public, continuous and exclusive possession of the
same in the concept of owner. Petitioner claims that he inherited the subject
property from his father in 1952, while respondent claims that he acquired
the property from his grandmother Intumo Pagsidan, a portion thereof from
his grandmothers helper Totop Malacop pursuant to a court decision after
litigating with him.[37] Respondent has OCT No. P-658 to prove his title to
the subject property, while petitioner merely claims that the property is
already his private land by virtue of his open, public, continuous possession
of the same in the concept of owner.
The Court holds that petitioner failed to prove the requisites of reconveyance
as he failed to prove the identity of his larger property in relation to the
disputed property, and his claim of title by virtue of open, public and
continuous possession of the disputed property in the concept of owner is
nebulous in the light of a similar claim by respondent who holds a free patent
title over the subject property. As stated in Ybaez v. Intermediate Appellate
Court,[38] it is relatively easy to declare and claim that one owns and
possesses public agricultural land, but it is entirely a different matter to
affirmatively declare and to prove before a court of law that one actually
possessed and cultivated the entire area to the exclusion of other claimants
who stand on equal footing under the Public Land Act (Commonwealth Act
No. 141, as amended) as any other pioneering claimants.
Further, petitioner contends that the Court of Appeals erred in ruling that
petitioners counterclaim is time-barred, since the one-year prescriptive
period does not apply when the person seeking annulment of title or
reconveyance is in possession of the lot, citing Heirs of Simplicio Santiago v.
Heirs of Mariano E. Santiago.[39] Petitioner also contends that the Court of
Appeals erred in ruling that the counterclaim in this case is a collateral attack
on respondents title, citing Cimafranca v. Intermediate Appellate Court.[40]
Petitioner cites the case of Heirs of Simplicio Santiago v. Heirs of Mariano E.
Santiago,[41] which held that a counterclaim can be considered a direct
attack on the title.
The Court notes that the case of Cimafranca v. Intermediate Appellate Court,
[42] cited by the Court of Appeals to support its ruling that the prayer for the
cancellation of respondents title through a counterclaim included in
petitioners Answer is a collateral attack on the said title, is inapplicable to
this case. In Cimafranca, petitioners therein filed a complaint for Partition
and Damages, and respondents therein indirectly attacked the validity of the
title involved in their counterclaim. Hence, the Court ruled that a Torrens title
cannot be attacked collaterally, and the issue on its validity can be raised
only in an action expressly instituted for that purpose.
Here, the case cited by petitioner, Heirs of Simplicio Santiago v. Heirs of
Mariano E. Santiago, declared that the one-year prescriptive period does not
apply when the party seeking annulment of title or reconveyance is in
possession of the lot, as well as distinguished a collateral attack under
Section 48 of PD No. 1529 from a direct attack, and held that a counterclaim
may be considered as a complaint or an independent action and can be
considered a direct attack on the title, thus:
The one-year prescriptive period, however, does not apply when the person
seeking annulment of title or reconveyance is in possession of the lot. This is
because the action partakes of a suit to quiet title which is imprescriptible. In
David v. Malay, we held that a person in actual possession of a piece of land
under claim of ownership may wait until his possession is disturbed or his title
is attacked before taking steps to vindicate his right, and his undisturbed
possession gives him the continuing right to seek the aid of a court of equity
to ascertain and determine the nature of the adverse claim of a third party
and its effect on his title.
xxxx
Section 48 of P.D. 1529, the Property Registration Decree, provides that
a certificate of title shall not be subject to collateral attack and cannot be
altered, modified, or canceled except in a direct proceeding. An action is an
attack on a title when the object of the action is to nullify the title, and thus
challenge the judgment or proceeding pursuant to which the title was
decreed. The attack is direct when the object of an action is to annul or set
aside such judgment, or enjoin its enforcement. On the other hand, the
attack is indirect or collateral when, in an action to obtain a different relief, an

attack on the judgment or proceeding is nevertheless made as an incident

thereof.
x x x A counterclaim can be considered a direct attack on the title. In
Development Bank of the Philippines v. Court Appeals, we ruled on the
validity of a certificate of title despite the fact that the nullity thereof was
raised only as a counterclaim. It was held that a counterclaim is considered a
complaint, only this time, it is the original defendant who becomes the
plaintiff. It stands on the same footing and is to be tested by the same rules
as if it were an independent action. x x x[43]

The above ruling of the court on the definition of collateral attack under
Section 48 of P.D. No. 1529 was reiterated in Leyson v. Bontuyan,[44] Heirs of
Enrique
Based on the foregoing, the Court holds that petitioners counterclaim for
cancellation of respondents title is not a collateral attack, but a direct attack
on the Torrens title of petitioner. However, the counterclaim seeking for the
cancellation of title and reconveyance of the subject property has prescribed
as petitioner has not proven actual possession and ownership of the property
due to his failure to prove the identity of his larger property that would show
that the disputed property is a part thereof, and his claim of title to the
subject property by virtue of open, public and continuous possession in the
concept of owner is nebulous in the light of a similar claim by respondent who
holds a Torrens title to the subject property.
Respondents original certificate of title was issued on May 22, 1981, while
the counterclaim was filed by petitioner on October 15, 1984, which is clearly
beyond the one-year prescriptive period.
In fine, the Court of Appeals did not err in confirming that respondent is the
owner of the parcel of land covered by OCT No. P-658.
WHEREFORE, the petition is DENIED. The Court of Appeals decision dated
August 15, 2003, and its Resolution dated May 13, 2004 in CA-G.R. CV No.
63801, are hereby AFFIRMED. No costs. SO ORDERED.
*WHERE TO FILE*
REPUBLIC VS. MANGOTARA, GE NO. 170375

G.R. No. 170505 is a Petition for Review on Certiorari under Rule 45 of

the Rules of Court in which LANDTRADE urges the Court to reverse and set
aside the Decision[6] dated November 23, 2005 of the Court of Appeals in
CA-G.R. SP Nos. 85714 and 85841. The appellate court annulled several
issuances of the Regional Trial Court, Branch 5 (RTC-Branch 5) of Iligan City,
Lanao del Norte, and its sheriff, in Civil Case No. 6613, specifically, the: (1)
Order[7] dated August 9, 2004 granting the Motion for Execution Pending
Appeal of LANDTRADE; (2) Writ of Execution[8] dated August 10, 2004; (3)
two Notices of Garnishment[9] both dated August 11, 2004, and (4)
Notification[10] dated August 11, 2004. These issuances of the RTC-Branch 5
allowed and/or enabled execution pending appeal of the Decision[11] dated
February 17, 2004 of the Municipal Trial Court in Cities (MTCC), Branch 2 of
Iligan City, Lanao del Norte, favoring LANDTRADE in Civil Case No. 11475-AF,
the ejectment case said corporation instituted against the National Power
Corporation (NAPOCOR) and the National Transmission Corporation
(TRANSCO).
G.R. Nos. 173355-56 and 173563-64 are two Petitions for Certiorari and
Prohibition under Rule 65 of the Rules of Court with prayer for the immediate
issuance of a Temporary Restraining Order (TRO) and/or Writ of Preliminary
Injunction filed separately by NAPOCOR and TRANSCO. Both Petitions seek to
annul the Resolution[12] dated June 30, 2006 of the Court of Appeals in the
consolidated cases of CA-G.R. SP Nos. 00854 and 00889, which (1) granted
the Omnibus Motion of LANDTRADE for the issuance of a writ of execution
and the designation of a special sheriff for the enforcement of the
Decision[13] dated December 12, 2005 of the RTC-Branch 1 in Civil Case No.
6613, and (2) denied the applications of NAPOCOR and TRANSCO for a writ of
preliminary injunction to enjoin the execution of the same RTC Decision. The
Decision dated December 12, 2005 of RTC-Branch 1 in Civil Case No. 6613
affirmed the Decision dated February 17, 2004 of the MTCC in Civil Case No.
11475-AF, favoring LANDTRADE.
G.R. No. 173401 involves a Petition for Review on Certiorari under Rule 45 of
the Rules of Court filed by the Republic, which raises pure questions of law
and seeks the reversal of the following issuances of the Regional Trial Court,
Branch 4 (RTC-Branch 4) of Iligan City, Lanao del Norte, in Civil Case No.
6686, an action for cancellation of titles and reversion: (1) Order[14] dated
December 13, 2005 dismissing the Complaint in Civil Case No. 6686; and (2)
Order[15] dated May 16, 2006, denying the Motion for Reconsideration of the
Republic.
I
THE PRECEDING CASES
The consolidated seven cases have for their common genesis the 1914 case
of Cacho v. Government of the United States[16] (1914 Cacho case).

LEONARDO-DE CASTRO, J.:

The 1914 Cacho Case
Before the Court are seven consolidated Petitions for Review on
Certiorari and a Petition for Certiorari under Rules 45 and 65 of the Rules of
Court, respectively, arising from actions for quieting of title, expropriation,
ejectment, and reversion, which all involve the same parcels of land.
In G.R. No. 170375, the Republic of the Philippines (Republic), by way of
consolidated Petitions for Review on Certiorari and for Certiorari under Rules
45 and 65 of the Rules of Court, respectively, seeks to set aside the issuances
of Judge Mamindiara P. Mangotara (Judge Mangotara) of the Regional Trial
Court, Branch 1 (RTC-Branch 1) of Iligan City, Lanao del Norte, in Civil Case
No. 106, particularly, the: (1) Resolution[1] dated July 12, 2005 which, in part,
dismissed the Complaint for Expropriation of the Republic for the latters
failure to implead indispensable parties and forum shopping; and (2)
Resolution[2] dated October 24, 2005, which denied the Partial Motion for
Reconsideration of the Republic.
G.R. Nos. 178779 and 178894 are two Petitions for Review on Certiorari under
Rule 45 of the Rules of Court, where Landtrade Realty Corporation
(LANDTRADE), Teofilo Cacho, and/or Atty. Godofredo Cabildo assail the
Decision[3] dated January 19, 2007 and Resolution[4] dated July 4, 2007 of
the Court of Appeals in CA-G.R. CV No. 00456. The Court of Appeals affirmed
the Decision[5] dated July 17, 2004 of the Regional Trial Court, Branch 3 (RTCBranch 3) of Iligan City, Lanao del Norte, in Civil Case No. 4452, granting the
Petition for Quieting of Title, Injunction and Damages filed by Demetria Vidal
and Azimuth International Development Corporation (AZIMUTH) against
Teofilo Cacho and Atty. Godofredo Cabildo.

Sometime in the early 1900s, the late Doa Demetria Cacho (Doa Demetria)
applied for the registration of two parcels of land: (1) Lot 1 of Plan II-3732, the
smaller parcel with an area of 3,635 square meters or 0.36 hectares (Lot 1);
and (2) Lot 2 of Plan II-3732, the larger parcel with an area of 378,707 square
meters or 37.87 hectares (Lot 2). Both parcels are situated in what was then
the Municipality of Iligan, Moro Province, which later became Sitio Nunucan,
then Brgy. Suarez, in Iligan City, Lanao del Norte.
Doa Demetrias
applications for registration were docketed as GLRO Record Nos. 6908 and
6909.
The application in GLRO Record No. 6908 covered Lot 1, the smaller parcel of
land. Doa Demetria allegedly acquired Lot 1 by purchase from Gabriel
Salzos (Salzos). Salzos, in turn, bought Lot 1 from Datto Darondon and his
wife Alanga, evidenced by a deed of sale in favor of Salzos signed solely by
Alanga, on behalf of Datto Darondon.
The application in GLRO Record No. 6909 involved Lot 2, the bigger parcel of
land. Doa Demetria purportedly purchased Lot 2 from Datto Bunglay. Datto
Bunglay claimed to have inherited Lot 2 from his uncle, Datto Anandog, who
died without issue.
Only the Government opposed Doa Demetrias applications for registration
on the ground that the two parcels of land were the property of the United
States and formed part of a military reservation, generally known as Camp
Overton.

On December 10, 1912, the land registration court (LRC) rendered its
Decision in GLRO Record Nos. 6908 and 6909.
Based on the evidence, the LRC made the following findings in GLRO Record
No. 6908:
6th. The court is convinced from the proofs that the small parcel of land sold
by the Moro woman Alanga was the home of herself and her husband,
Darondon, and was their conjugal property; and the court so finds.
xxxx
As we have seen, the deed on which applicants title to the small parcel rests,
is executed only by the Moro woman Alanga, wife of Datto Darondon, which is
not permitted either by the Moro laws or the Civil Code of the Philippine
Islands. It appears that the husband of Alanga, Datto Darondon, is alive yet,
and before admitting this parcel to registration it is ordered that a deed from
Datto Darondon, husband of Alanga, be presented, renouncing all his rights in
the small parcel of land object of Case No. 6908, in favor of the applicant.[17]
(Emphases supplied.)
In GLRO Record No. 6909, the LRC observed and concluded that:
A tract of land 37 hectares in area, which is the extent of the land under
discussion, is larger than is cultivated ordinarily by the Christian Filipinos. In
the Zamboanga cadastral case of thousands of parcels now on trial before
this court, the average size of the parcels is not above 3 or 4 hectares, and
the court doubts very much if a Moro with all his family could cultivate as
extensive a parcel of land as the one in question. x x x
xxxx
The court is also convinced from the proofs that the small portion in the
southern part of the larger parcel, where, according to the proofs, Datto
Anandog had his house and where there still exist some cocos and fruit trees,
was the home of the said Moro Datto Anandog; and the court so finds. As to
the rest of the large parcel the court does not find the title of Datto Bunglay
established. According to his own declaration his residence on this land
commenced only a few days before the sale. He admitted that the coco trees
he is supposed to have planted had not yet begun to bear fruit at the time of
the sale, and were very small. Datto Duroc positively denies that Bunglay
lived on the land, and it clearly appears that he was not on the land when it
was first occupied by the military. Nor does Datto Bunglay claim to have
planted the three mango trees by the roadside near point 25 of the plan. The
court believes that all the rest of this parcel, not occupied nor cultivated by
Datto Anandog, was land claimed by Datto Duroc and also by Datto Anandog
and possibly by other dattos as a part of their general jurisdiction, and that it
is the class of land that Act No. 718 prohibits the sale of, by the dattos,
without the express approval of the Government.
It is also found that Datto Bunglay is the nephew of Dato Anandog, and that
the Moro woman Alanga, grantor of the small parcel, is the sister of Datto
Anandog, and that he died without issue.
xxxx
It appears also that according to the provisions of the Civil Code as also the
provisions of the Luwaran Code of the Moros, the Moro woman Alanga has
an interest in the portion of land left by her deceased brother, Datto
Anandog. By article LXXXV, section 3, of the Luwaran Code, it will be seen
that the brothers and sisters of a deceased Moro inherit his property to the
exclusion of the more distant relatives. Therefore Datto Bunglay had no legal
interest whatever in the land to sell to the applicant, Doa Demetria Cacho.
But the Moro woman, Alanga, having appeared as a witness for the applicant
without having made any claim to the land, the court finds from this fact that
she has ratified the sale made by her nephew.
The court therefore finds that the applicant Doa Demetria Cacho is owner of
the portion of land occupied and planted by the deceased Datto Anandog in
the southern part of the large parcel object of expediente No. 6909 only; and

her application as to all the rest of the land solicited in said case is denied.
And it is ordered that a new survey of the land be made and a corrected plan
be presented, excluding all the land not occupied and cultivated by Datto
Anandog; that said survey be made and the corrected plan presented on or
before the 30th day of March, 1913, with previous notice to the commanding
general of the Division of the Philippines.
On the 8th day of December, the court was at Camp Overton and had
another ocular inspection of the land for the purpose of fixing the limits of the
part cultivated by Datto Anandog, so often mentioned herein, with previous
notice to the applicant and her husband and representative, Seor Dionisio
Vidal. Having arrived late, Seor Vidal did not assist in the ocular inspection,
which was fixed for 3 oclock, p.m. of the day mentioned. But the court,
nevertheless, set stakes marking the N.E., S.E., and S.W. corners of the land
found to have been cultivated by the deceased Anandog. The N.E. limit of
said land is a brook, and the N.W. corner is the point where the brook
intersects the shore line of the sea, the other corners mentioned being
marked with pine stakes. And it is ordered that the new survey be made in
accordance with the points mentioned, by tracing four straight lines
connecting these four points. Between the portion cultivated by Datto
Anandog and the mouth of the River Agus there is a high steep hill and the
court does not believe it possible to cultivate said hill, it being covered with
rocks and forest.[18] (Emphases supplied.)
The LRC additionally decreed at the end of its December 10, 1912 Decision:
It is further ordered that one-half of the costs of the new survey be paid by
the applicant and the other half by the Government of the United States, and
that the applicant present the corresponding deed from Datto Darondon on or
before the above-mentioned 30th day of March, 1913. Final decision in these
cases is reserved until the presentation of the said deed and the new plan.
[19]
Apparently dissatisfied with the foregoing LRC judgment, Doa Demetria
appealed to this Court. In its Decision dated December 10, 1914, the Court
affirmed in toto the LRC Decision of December 10, 1912, well satisfied that
the findings of fact of the court below were fully sustained by the evidence
adduced during trial.
Eighty-three years later, in 1997, the Court was again called upon to
settle a matter concerning the registration of Lots 1 and 2 in the case of
Cacho v. Court of Appeals[20] (1997 Cacho case).
The 1997 Cacho Case
On June 29, 1978, Teofilo Cacho (Teofilo), claiming to be the late Doa
Demetrias son and sole heir, filed before the RTC a petition for reconstitution
of two original certificates of title (OCTs), docketed under the original GLRO
Record Nos. 6908 and 6909.
Teofilos petition was opposed by the Republic, National Steel Corporation
(NSC), and the City of Iligan.
Acting on the motion for judgment on demurrer to evidence filed by the
Republic and NSC, the RTC initially dismissed Teofilos petition for
reconstitution of titles because there was inadequate evidence to show the
prior existence of the titles sought to be restored. According to the RTC, the
proper remedy was a petition for the reconstitution of decrees since it is
undisputed that in Cases No. 6908 and 6909, Decrees No. 10364 and 18969,
respectively, were issued. Teofilo sought leave of court for the filing and
admission of his amended petition, but the RTC refused. When elevated to
this Court in Cacho v. Mangotara, docketed as G.R. No. 85495, the Court
resolved to remand the case to the RTC, with an order to the said trial court
to accept Teofilos amended petition and to hear it as one for re-issuance of
decrees.
In opposing Teofilos petition, the Republic and NSC argued that the same
suffered from jurisdictional infirmities; that Teofilo was not the real party-ininterest; that Teofilo was guilty of laches; that Doa Demetria was not the
registered owner of the subject parcels of land; that no decrees were ever
issued in Doa Demetrias name; and that the issuance of the decrees was
dubious and irregular.

After trial, on June 9, 1993, the RTC rendered its Decision granting Teofilos
petition and ordering the reconstitution and re-issuance of Decree Nos. 10364
and 18969. The RTC held that the issuance of Decree No. 10364 in GLRO No.
6908 on May 9, 1913 and Decree No. 18969 in GLRO Record No. 6909 on July
8, 1915 was sufficiently established by the certifications and testimonies of
concerned officials. The original issuance of these decrees presupposed a
prior judgment that had become final.
On appeal, the Court of Appeals reversed the RTC Decision dated June 9,
1993 and dismissed the petition for re-issuance of Decree Nos. 10364 and
18969 because: (1) re-issuance of Decree No. 18969 in GLRO Record No.
6909 could not be made in the absence of the new survey ordered by this
Court in the 1914 Cacho case; (2) the heir of a registered owner may lose his
right to recover possession of the property and title thereto by laches; and (3)
Teofilo failed to establish his identity and existence and that he was a real
party-in-interest.
Teofilo then sought recourse from this Court in the 1997 Cacho case. The
Court reversed the judgment of the Court of Appeals and reinstated the
decision of the RTC approving the re-issuance of Decree Nos. 10364 and
18969. The Court found that such decrees had in fact been issued and had
attained finality, as certified by the Acting Commissioner, Deputy Clerk of
Court III, Geodetic Engineer, and Chief of Registration of the then Land
Registration Commission, now National Land Titles and Deeds Registration
Administration (NALTDRA). The Court further reasoned that:
[T]o sustain the Court of Appeals ruling as regards requiring petitioners to
fulfill the conditions set forth in Cacho vs. U.S. would constitute a derogation
of the doctrine of res judicata. Significantly, the issuance of the subject
decrees presupposes a prior final judgment because the issuance of such
decrees is a mere ministerial act on part of the Land Registration Commission
(now the NALTDRA), upon presentation of a final judgment. It is also worth
noting that the judgment in Cacho vs. U.S. could not have acquired finality
without the prior fulfillment of the conditions in GLRO Record No. 6908, the
presentation of the corresponding deed of sale from Datto Dorondon on or
before March 30, 1913 (upon which Decree No. 10364 was issued on May 9,
1913); and in GLRO Record No. 6909, the presentation of a new survey per
decision of Judge Jorge on December 10, 1912 and affirmed by this Court on
December 10, 1914 (upon which Decree No. 18969 was issued on July 8,
1915).
Requiring the submission of a new plan as a condition for the reissuance of the decree would render the finality attained by the Cacho vs.
U.S. case nugatory, thus, violating the fundamental rule regarding res
judicata. It must be stressed that the judgment and the resulting decree are
res judicata, and these are binding upon the whole world, the proceedings
being in the nature of proceedings in rem. Besides, such a requirement is an
impermissible assault upon the integrity and stability of the Torrens System of
registration because it also effectively renders the decree inconclusive.[21]
As to the issue of laches, the Court referred to the settled doctrine that laches
cannot bar the issuance of a decree. A final decision in land registration
cases can neither be rendered inefficacious by the statute of limitations nor
by laches.
Anent the issue of the identity and existence of Teofilo and he being a real
party-in-interest, the Court found that these were sufficiently established by
the records. The Court relied on Teofilos Affidavit of Adjudication as Doa
Demetrias sole heir, which he executed before the Philippine Consulate
General in Chicago, United States of America (U.S.A.); as well as the
publication in the Times Journal of the fact of adjudication of Doa Demetrias
estate. Teofilo also appeared personally before the Vice Consul of the
Philippine Consulate General in Chicago to execute a Special Power of
Attorney in favor of Atty. Godofredo Cabildo (Atty. Cabildo) who represented
him in this case. The Court stressed that the execution of public documents
is entitled to the presumption of regularity and proof is required to assail and
controvert the same.
In the Resolution dated July 28, 1997,[22] the Court denied the Motions for
Reconsideration of the Republic and NSC.
As a result of the 1997 Cacho case, the decrees of registration were re-issued
bearing new numbers and OCTs were issued for the two parcels of land in
Doa Demetrias name. OCT No. 0-1200 (a.f.) was based on re-issued Decree
No. N-219464 in GLRO Record No. 6908, while OCT No. 0-1201 (a.f.) was
based on re-issued Decree No. N-219465 in GLRO Record No. 6909.

II
THE ANTECENT FACTS
OF THE PETITIONS AT BAR
The dispute over Lots 1 and 2 did not end with the termination of the 1997
Cacho case. Another four cases involving the same parcels of land were
instituted before the trial courts during and after the pendency of the 1997
Cacho case. These cases are: (1) the Expropriation Case, G.R. No. 170375;
(2) the Quieting of Title Case, G.R. Nos. 178779 and 178894; (3) the
Ejectment or Unlawful Detainer Case, G.R. No. 170505 (execution pending
appeal before the RTC) and G.R. Nos. 173355-56 and 173563-64 (execution
pending appeal before the Court of Appeals); and (4) the Cancellation of
Titles and Reversion Case, G.R. No. 173401.
These cases proceeded
independently of each other in the courts a quo until they reached this Court
via the present Petitions. In the Resolution[23] dated October 3, 2007, the
Court consolidated the seven Petitions considering that they either originated
from the same case or involved similar issues.
Expropriation Case
(G.R. No. 170375)
The Complaint for Expropriation was originally filed on August 15, 1983
by the Iron and Steel Authority (ISA), now the NSC, against Maria Cristina
Fertilizer Corporation (MCFC), and the latters mortgagee, the Philippine
National Bank (PNB). The Complaint was docketed as Civil Case No. 106 and
raffled to RTC-Branch 1, presided over by Judge Mangotara.
ISA was created pursuant to Presidential Decree No. 2729[24] dated
August 9, 1973, to strengthen, develop, and promote the iron and steel
industry in the Philippines. Its existence was extended until October 10,
1988.
On November 16, 1982, during the existence of ISA, then President Ferdinand
E. Marcos issued Presidential Proclamation No. 2239,[25] reserving in favor of
ISA a parcel of land in Iligan City, measuring 302,532 square meters or 30.25
hectares, to be devoted to the integrated steel program of the Government.
MCFC occupied certain portions of this parcel of land. When negotiations with
MCFC failed, ISA was compelled to file a Complaint for Expropriation.
When the statutory existence of ISA expired during the pendency of Civil
Case No. 106, MCFC filed a Motion to Dismiss the case alleging the lack of
capacity to sue of ISA. The RTC-Branch 1 granted the Motion to Dismiss in an
Order dated November 9, 1988. ISA moved for reconsideration or, in the
alternative, for the substitution of the Republic as plaintiff in Civil Case No.
106, but the motion was denied by RTC-Branch 1. The dismissal of Civil Case
No. 106 was affirmed by the Court of Appeals, thus, ISA appealed to this
Court. In Iron and Steel Authority v. Court of Appeals[26] (ISA case), the
Court remanded the case to RTC-Branch 1, which was ordered to allow the
substitution of the Republic for ISA as plaintiff. Entry of Judgment was made
in the ISA case on August 31, 1998. In an Order[27] dated November 16,
2001, the RTC-Branch 1 allowed the substitution of the Republic for ISA as
plaintiff in Civil Case No. 106.
Alleging that Lots 1 and 2 involved in the 1997 Cacho case encroached
and overlapped the parcel of land subject of Civil Case No. 106, the Republic
filed with the RTC-Branch 1 a Motion for Leave to File Supplemental Complaint
dated October 7, 2004 and to Admit the Attached Supplemental Complaint
dated September 28, 2004[28] seeking to implead in Civil Case No. 106
Teofilo Cacho and Demetria Vidal and their respective successors-in-interest,
LANDTRADE and AZIMUTH.
MCFC opposed the Motion for leave to file and to admit the
Supplemental Complaint on the ground that the Republic was without legal
personality to file the same because ISA was the plaintiff in Civil Case No.
106. MCFC argued that the Republic failed to move for the execution of the
decision in the ISA case within the prescriptive period of five years, hence,
the only remedy left was for the Republic to file an independent action to
revive the judgment. MCFC further pointed out that the unreasonable delay
of more than six years of the Republic in seeking the substitution and
continuation of the action for expropriation effectively barred any further
proceedings therein on the ground of estoppel by laches.
In its Reply, the Republic referred to the Order dated November 16, 2001 of
the RTC-Branch 1 allowing the substitution of the Republic for ISA.

Conveyance dated August 13, 2004, which Vidal executed in favor of

AZIMUTH.
In an Order dated April 4, 2005, the RTC-Branch 1 denied the Motion of
the Republic for leave to file and to admit its Supplemental Complaint. The
RTC-Branch 1 agreed with MCFC that the Republic did not file any motion for
execution of the judgment of this Court in the ISA case. Since no such motion
for execution had been filed, the RTC-Branch 1 ruled that its Order dated
November 16, 2001, which effected the substitution of the Republic for ISA as
plaintiff in Civil Case No. 106, was an honest mistake. The Republic filed a
Motion for Reconsideration of the April 4, 2005 Order of the RTC-Branch 1.
MCFC then filed a Motion to Dismiss Civil Case No. 106 for: (1) failure of
the Republic to implead indispensable parties because MCFC insisted it was
not the owner of the parcels of land sought to be expropriated; and (2) forum
shopping considering the institution by the Republic on October 13, 2004 of
an action for the reversion of the same parcels subject of the instant case for
expropriation.
Judge Mangotara of RTC-Branch 1 issued a Resolution[29] on July 12,
2005, denying for lack of merit the Motion for Reconsideration of the Order
dated April 4, 2005 filed by the Republic, and granting the Motion to Dismiss
Civil Case No. 106 filed by MCFC. Judge Mangotara justified the dismissal of
the Expropriation Case thus:
What the Republic seeks [herein] is the expropriation of the subject parcels of
land. Since the exercise of the power of eminent domain involves the taking
of private lands intended for public use upon payment of just compensation
to the owner x x x, then a complaint for expropriation must, of necessity, be
directed against the owner of the land subject thereof. In the case at bar, the
decision of the Supreme Court in Cacho v. Government of the United States x
x x, decreeing the registration of the subject parcels of land in the name of
the late Doa Demetria Cacho has long attained finality and is conclusive as
to the question of ownership thereof. Since MCFC, the only defendant left in
this case, is not a proper party defendant in this complaint for expropriation,
the present case should be dismissed.

Teofilo opposed the Petition contending that it stated no cause of action

because there was no title being disturbed or in danger of being lost due to
the claim of a third party, and Vidal had neither legal nor beneficial ownership
of the parcels of land in question; that the matter and issues raised in the
Petition had already been tried, heard, and decided by the RTC of Iligan City
and affirmed with finality by this Court in the 1997 Cacho case; and that the
Petition was barred by the Statute of Limitations and laches.
LANDTRADE, among other parties, was allowed by the RTC-Branch 3 to
intervene in Civil Case No. 4452. LANDTRADE alleged that it is the owner of a
portion of the subject parcels of land, measuring 270,255 square meters or
about 27.03 hectares, which it purportedly acquired through a Deed of
Absolute Sale dated October 1, 1996 from Teofilo, represented by Atty.
Cabildo. LANDTRADE essentially argued that Vidal's right as heir should be
adjudicated upon in a separate and independent proceeding and not in the
instant Quieting of Title Case.
During the pre-trial conference, the parties manifested that there was no
possibility of any amicable settlement among them.
Vidal and AZIMUTH submitted testimonial and documentary evidence during
the trial before the RTC-Branch 3. Teofilo and Atty. Cabildo failed to present
any evidence as they did not appear at all during the trial, while LANDTRADE
was declared by the RTC-Branch 3 to have waived its right to present
evidence on its defense and counterclaim.
On July 17, 2004, the RTC-Branch 3 rendered its Decision[33] in Civil Case No.
4452 in favor of Vidal and AZIMUTH, the dispositive portion of which reads:
WHEREFORE, judgment is hereby rendered in favor of the petitioners and
against the respondents and intervenors:

This Court notes that the Republic [has filed reversion proceedings] dated
September 27, 2004, involving the same parcels of land, docketed as Case
No. 6686 pending before the Regional Trial Court of Lanao del Norte, Iligan
City Branch 4. [The Republic], however, did not state such fact in its
Verification and Certification of Non-Forum Shopping attached to its
Supplemental Complaint dated September 28, 2004. [It is therefore] guilty of
forum shopping. Moreover, considering that in the Reversion case, [the
Republic] asserts ownership over the subject parcels of land, it cannot be
allowed to take an inconsistent position in this expropriation case without
making a mockery of justice.[30]
The Republic filed a Motion for Reconsideration of the Resolution dated
July 12, 2005, insofar as it dismissed Civil Case No. 106, but said Motion was
denied by Judge Mangatora in a Resolution[31] dated October 24, 2005.
On January 16, 2006, the Republic filed with this Court the
consolidated Petition for Review on Certiorari and Petition for Certiorari under
Rules 45 and 65 of the Rules of Court, respectively, docketed as G.R. No.
170375.

1) DECLARING:
a.) Petitioner Demetria C. Vidal the sole surviving heir of the late Doa
Demetria Cacho;
b.) Petitioner Demetria C. Vidal alone has the hereditary right to and interest
in the Subject Property;
c.) Petitioner Azimuth International Development Corporation is the
successor-in-interest of petitioner Demetria C. Vidal to a portion of the
Subject Property to the extent provided in their 2 April 1998 Memorandum of
Agreement and 13 August 1998 Deed of Conditional Conveyance;
d.) Respondent Teofilo Cacho is not a son or heir of the late Dona Demetria
Cacho; and
e.)
Respondent Teofilo Cacho, Godofredo Cabildo and any of their
transferees/assignees have no valid right to or interest in the Subject
Property.
2) ORDERING:

The Quieting of Title Case

(G.R. Nos. 178779 and 178894)

Demetria Vidal (Vidal) and AZIMUTH filed on November 18, 1998, a

Petition[32] for Quieting of Title against Teofilo, Atty. Cabildo, and the Register
of Deeds of Iligan City, which was docketed as Civil Case No. 4452 and raffled
to RTC-Branch 3.
In the Petition, Vidal claimed that she, and not Teofilo, was the late Doa
Demetrias sole surviving heir, entitled to the parcels of land covered by OCT
Nos. 0-1200 (a.f.) and 0-1201 (a.f.). She averred that she is the daughter of
Francisco Cacho Vidal (Francisco) and Fidela Arellano Confesor. Francisco was
the only child of Don Dionisio Vidal and Doa Demetria.
AZIMUTH, for its part, filed the Petition as Vidals successor-in-interest with
respect to a 23-hectare portion of the subject parcels of land pursuant to the
Memorandum of Agreement dated April 2, 1998 and Deed of Conditional

a.) Respondent Register of Deeds of Iligan City, and any other person acting
in his behalf, stop, cease and desist:
i) From accepting or registering any affidavit of self- adjudication or any other
document executed by respondents Teofilo Cacho, Godofredo Cabildo and/or
any other person which in any way transfers the title to the Subject Property
from Dona Demetria Cacho to respondent Teofilo Cacho, Godofredo Cabildo
and/or any of their transferees/assignees, including the intervenors.
ii) From cancelling the OCTs or any certificate of title over the Subject
Property in the name of Demetria Cacho or any successor certificate of title,
and from issuing new certificates of title in the name of respondents Teofilo
Cacho, Godofredo Cabildo their transferees/assignees, including the
intervenors.
b)
Respondents
Teofilo
Cacho,
Godofredo
Cabildo,
their
transferees/assignees, and any other person acting in their behalf, to stop,
cease and desist:

i) From executing, submitting to any Register of Deeds, or registering or

causing to be registered therein, any affidavit of self-adjudication or any other
document which in any way transfers title to the Subject Property from
Demetria Cacho to respondents Teofilo Cacho, Godofredo Cabildo and/or any
of their transferees/assignees, including the intervenors.
ii) From canceling or causing the cancellation of OCTs or any certificate of title
over the Subject Property in the name of Demetria Cacho or any successor
certificate of title, and from issuing new certificates of title in the name of
respondent Teofilo Cacho, Godofredo Cabildo and/or any of their
transferees/assignees, including the intervenors.
iii) From claiming or representing in any manner that respondent Teofilo
Cacho is the son or heir of Demetria Cacho or has rights to or interest in the
Subject Property.
3) ORDERING respondents Teofilo Cacho and Atty. Godofredo Cabildo to pay
petitioners, jointly and severally, the following:
a) For temperate damages
P 80,000.00
b) For nominal damages
P 60,000.00
c) For moral damages
P500,000.00
d) For exemplary damages
P 500,000.00
e) For attorney's fees (ACCRA Law)-P1,000,000.00
f) For Attorney's fees
P500,000.00
(Atty. Voltaire Rovira)
g) For litigation expenses
P300,000.00
For lack of factual and legal basis, the counterclaim of Teofilo Cacho and Atty.
Godofredo Cabildo is hereby dismissed.
Likewise, the counterclaim of intervenor IDD/Investa is dismissed for lack of
basis as the petitioners succeeded in proving their cause of action.
On the cross-claim of intervenor IDD/Investa, respondents Teofilo Cacho and
Atty. Godofredo Cabildo are ORDERED to pay IDD/Investa, jointly and
severally, the principal sum of P5,433,036 with 15% interest per annum.
For lack of legal basis, the counterclaim of Intervenor Landtrade Realty
Development Corporation is dismissed.
Likewise, Intervenor Manguera's counterclaim is dismissed for lack of legal
basis.[34]
The joint appeal filed by LANDTRADE, Teofilo, and Atty. Cabildo with the Court
of Appeals was docketed as CA-G.R. CV No. 00456. The Court of Appeals, in
its Decision[35] of January 19, 2007, affirmed in toto the Decision dated July
17, 2004 of the RTC-Branch 3.
According to the Court of Appeals, the RTC-Branch 3 did not err in resolving
the issue on Vidals status, filiation, and hereditary rights as it is
determinative of the issue on ownership of the subject properties.
It was
indubitable that the RTC-Branch 3 had jurisdiction over the person of Teofilo
and juridical personality of LANDTRADE as they both filed their Answers to
the Petition for Quieting of Title thereby voluntarily submitting themselves to
the jurisdiction of said trial court. Likewise, the Petition for Quieting of Title is
in itself within the jurisdiction of the RTC-Branch 3. Hence, where there is
jurisdiction over the person and subject matter, the resolution of all other
questions arising in the case is but an exercise by the court of its jurisdiction.
Moreover, Teofilo and LANDTRADE were guilty of estoppel by laches for failing
to assail the jurisdiction of the RTC-Branch 3 at the first opportunity and even
actively participating in the trial of the case and seeking affirmative reliefs.
In addition, the Court of Appeals held that the 1997 Cacho case only
determined the validity and efficacy of the Affidavit of Adjudication that
Teofilo executed before the Philippine Consulate General in the U.S.A. The
decision of this Court in the 1997 Cacho case, which had become final and
executory, did not vest upon Teofilo ownership of the parcels of land as it
merely ordered the re-issuance of a lost duplicate certificate of title in its
original form and condition.
The Court of Appeals agreed in the finding of the RTC-Branch 3 that the
evidence on record preponderantly supports Vidals claim of being the
granddaughter and sole heiress of the late Doa Demetria. The appellate
court further adjudged that Vidal did not delay in asserting her rights over the

subject parcels of land.

The prescriptive period for real actions over
immovables is 30 years. Vidals rights as Doa Demetrias successor-ininterest accrued upon the latters death in 1974, and only 24 years
thereafter, in 1998, Vidal already filed the present Petition for Quieting of
Title. Thus, Vidals cause of action had not yet prescribed. And, where the
action was filed within the prescriptive period provided by law, the doctrine of
laches was also inapplicable.
LANDTRADE, Teofilo, and Atty. Cabildo filed separate Motions for
Reconsideration of the January 19, 2007 Decision of the Court of Appeals,
which were denied in the July 4, 2007 Resolution[36] of the same court.
On August 24, 2007, LANDTRADE filed with this Court a Petition for
Review on Certiorari under Rule 45 of the Rules of Court, which was docketed
as G.R. No. 178779. On September 6, 2007, Teofilo and Atty. Cabildo filed
their own Petition for Review on Certiorari under Rule 45 of the Rules of Court,
which was docketed as G.R. No. 178894.
The Ejectment or Unlawful Detainer Case
(G.R. Nos. 170505, 173355-56, and 173563-64)
Three Petitions before this Court are rooted in the Unlawful Detainer Case
instituted by LANDTRADE against NAPOCOR and TRANSCO.
On August 9, 1952, NAPOCOR took possession of two parcels of land in Sitio
Nunucan, Overton, Fuentes, Iligan City, denominated as Lots 2029 and 2043,
consisting of 3,588 square meters (or 0.36 hectares) and 3,177 square
meters (or 0.32 hectares), respectively. On Lot 2029, NAPOCOR constructed
its power sub-station, known as the Overton Sub-station, while on Lot 2043, it
built a warehouse, known as the Agus 7 Warehouse, both for the use of its
Agus 7 Hydro-Electric Power Plant. For more than 30 years, NAPOCOR
occupied and possessed said parcels of land pursuant to its charter, Republic
Act No. 6395.[37] With the enactment in 2001 of Republic Act No. 9136,
otherwise known as the Electric Power Industry Reform Act (EPIRA), TRANSCO
assumed the functions of NAPOCOR with regard to electrical transmissions
and took over possession of the Overton Sub-station.
Claiming ownership of the parcels of land where the Overton Sub-station and
Agus 7 Warehouse are located, LANDTRADE filed with the MTCC on April 9,
2003 a Complaint for Unlawful Detainer against NAPOCOR and TRANSCO,
which was docketed as Civil Case No. 11475-AF.
In its Complaint, LANDTRADE alleged that it acquired from Teofilo, through
Atty. Cabildo, two parcels of land at Sitio Nunucan, Overton, Fuentes, Brgy.
Maria Cristina, Iligan City, with a combined area of 270,255 square meters or
around 27.03 hectares, as evidenced by a Deed of Absolute Sale[38] dated
October 1, 1996. Certain portions of said parcels of land were being occupied
by the Overton Sub-station and Agus 7 Warehouse of NAPOCOR and
TRANSCO, through the tolerance of LANDTRADE. Upon failure of NAPOCOR
and TRANSCO to pay rentals or to vacate the subject properties after
demands to do so, LANDTRADE filed the present Complaint for Unlawful
Detainer, plus damages in the amount of P450,000.00 as yearly rental from
date of the first extra-judicial demand until NAPOCOR and TRANSCO vacate
the subject properties.
In their separate Answers, NAPOCOR and TRANSCO denied the material
allegations in the Complaint and countered, by way of special and affirmative
defenses, that the Complaint was barred by res judicata; that the MTCC has
no jurisdiction over the subject matter of the action; and that LANDTRADE
lacked the legal capacity to sue.
On February 17, 2004, the MTCC rendered its Decision[39] in favor of
LANDTRADE. The MTCC disposed:
WHEREFORE, premises considered, judgment is hereby rendered in
favor of Plaintiff Land Trade Realty Corporation represented by Atty. Max C.
Tabimina and against defendant National Power Corporation represented by
its President, Mr. Rogelio M. Murga and co-defendant TRANSCO represented
by its President Dr. Allan T. Ortiz and Engr. Lorrymir A. Adaza, Manager,
NAPOCOR-Mindanao, Regional Center, Ma. Cristina, Iligan City, ordering:

1. Defendants National Power Corporation and TRANSCO, their agents or

representatives or any person/s acting on its behalf or under its authority to
vacate the premises;

Five days later, on August 9, 2004, the RTC-Branch 5 issued another

Order[43] granting the Motion of LANDTRADE for execution of the MTCC
judgment pending appeal.

2. Defendants NAPOCOR and TRANSCO to pay Plaintiff jointly and solidarily:

a. Php500,000.00 a month representing fair rental value or compensation
since June 29, 1978 until defendant shall have vacated the premises;
b. Php20,000.00 for and as attorneys fees and
c. Cost of suit.
Execution shall issue immediately upon motion, unless an appeal has been
perfected and the defendant to stay execution files a sufficient supersedeas
bond, approved by this Court and executed in favor of the plaintiff, to pay the
rents, damages, and costs accruing down to the time of judgment appealed
from, and unless, during the pendency of the appeal, defendants deposit with
the appellate court the amount of P500,000.00 per month, as reasonable
value of the use and occupancy of the premises for the preceding month or
period on or before the tenth day of each succeeding month or period.[40]
NAPOCOR and TRANSCO seasonably filed a Joint Notice of Appeal. Their
appeal, docketed as Civil Case No. 6613, was initially assigned to the RTCBranch 5, presided over by Judge Maximino Magno Libre (Judge Libre).
LANDTRADE filed on June 24, 2004 a Motion for Execution, asserting that
NAPOCOR and TRANSCO had neither filed a supersedeas bond with the MTCC
nor periodically deposited with the RTC the monthly rental for the properties
in question, so as to stay the immediate execution pending appeal of the
MTCC judgment. However, the said Motion failed to comply with the required
notice of hearing under Rule 15, Section 5 of the Rules of Court. LANDTRADE
then filed a Motion to Withdraw and/or Replace Notice of Hearing.
NAPOCOR and TRANSCO filed on July 13, 2004 a Joint Motion to Suspend
Proceedings citing Amagan v. Marayag,[41] in which the Court ruled that if
circumstances should require, the proceedings in an ejectment case may be
suspended in whatever stage it may be found. Since LANDTRADE anchors its
right to possession of the subject parcels of land on the Deed of Sale
executed in its favor by Teofilo on October 1, 1996, the ejectment case should
be held in abeyance pending the resolution of other cases in which title over
the same properties are in issue, i.e., (1) Civil Case No. 6600, the action for
the annulment of the Deed of Sale dated October 1, 1996 filed by Teofilo
against LANDTRADE pending before the RTC-Branch 4; and (2) Civil Case No.
4452, the Quieting of Title Case filed by Vidal and AZIMUTH against Teofilo
and Atty. Cabildo pending before the RTC-Branch 3.
LANDTRADE filed on July 19, 2004 another Motion for Execution, which was
heard together with the Joint Motion to Suspend Proceedings of NAPOCOR
and TRANSCO. After said hearing, the RTC-Branch 5 directed the parties to
file their memoranda on the two pending Motions.
LANDTRADE, in its Memorandum, maintained that the pendency of Civil Case
No. 4452, the Quieting of Title Case, should not preclude the execution of the
MTCC judgment in the Unlawful Detainer Case because the issue involved in
the latter was only the material possession or possession de facto of the
parcels of land in question. LANDTRADE also reported that Civil Case No.
6600, the action for annulment of the Deed of Sale dated October 1, 1996
instituted by Teofilo, was already dismissed given that the RTC-Branch 4 had
approved the Compromise Agreement executed between LANDTRADE and
Teofilo.
NAPOCOR and TRANSCO likewise filed their respective Memoranda.
Subsequently, NAPOCOR filed a Supplement to its Memorandum to bring to
the attention of the RTC-Branch 5 the Decision rendered on July 17, 2004 by
the RTC-Branch 3 in Civil Case No. 4452, the Quieting of Title Case,
categorically declaring Teofilo, the predecessor-in-interest of LANDTRADE, as
having no right at all to the subject parcels of land. Resultantly, the right of
LANDTRADE to the two properties, which merely emanated from Teofilo, was
effectively declared as non-existent too.
On August 4, 2004, the RTC-Branch 5 issued an Order[42] denying the Joint
Motion to Suspend Proceedings of NAPOCOR and TRANSCO. The RTC held
that the pendency of other actions involving the same parcels of land could
not stay execution pending appeal of the MTCC judgment because NAPOCOR
and TRANSCO failed to post the required bond and pay the monthly rentals.

The next day, on August 10, 2004, the Acting Clerk of Court, Atty. Joel M.
Macaraya, Jr., issued a Writ of Execution Pending Appeal[44] which directed
Sheriff IV Alberto O. Borres (Sheriff Borres) to execute the MTCC Decision
dated February 17, 2004.
A day later, on August 11, 2004, Sheriff Borres issued two Notices of
Garnishment[45] addressed to PNB and Land Bank of the Philippines in Iligan
City, garnishing all the goods, effects, stocks, interests in stocks and shares,
and any other personal properties belonging to NAPOCOR and TRANSCO
which were being held by and under the possession and control of said banks.
On even date, Sheriff Borres also issued a Notification[46] to NAPOCOR and
TRANSCO for them to vacate the subject parcels of land; and to pay
LANDTRADE the sums of (a) P156,000,000.00, representing the total fair
rental value for the said properties, computed at P500,000.00 per month,
beginning June 29, 1978 until June 29, 2004, or for a period of 26 years, and
(b) P20,000.00 as attorney's fees.
Thereafter, NAPOCOR and TRANSCO each filed before the Court of
Appeals in Cagayan de Oro City a Petition for Certiorari, under Rule 65 of the
Rules of Court, with prayer for the issuance of a TRO and writ of preliminary
injunction. The Petitions, docketed as CA-G.R. SP Nos. 85174 and 85841,
were eventually consolidated.
The Court of Appeals issued on August 18, 2004 a TRO[47] enjoining the
enforcement and implementation of the Order of Execution and Writ of
Execution Pending Appeal of the RTC-Branch 5 and Notices of Garnishment
and Notification of Sheriff Borres.
The Court of Appeals, in its Decision[48] dated November 23, 2005,
determined that public respondents did commit grave abuse of discretion in
allowing and/or effecting the execution of the MTCC judgment pending
appeal, since NAPOCOR and TRANSCO were legally excused from complying
with the requirements for a stay of execution specified in Rule 70, Section 19
of the Rules of Court, particularly, the posting of a supersedeas bond and
periodic deposits of rental payments. The decretal portion of said appellate
court Decision states:
ACCORDINGLY, the two petitions at bench are GRANTED; the Order dated 9
August 2004, the Writ of Execution Pending Appeal dated 10 August 2004,
the two Notices of Garnishment dated 11 August 2004, and the Notification
dated 11 August 2004, are ANNULLED and SET ASIDE.[49]

Displeased, LANDTRADE elevated the case to this Court on January 10, 2006
via a Petition for Review on Certiorari under Rule 45 of the Rules of Court,
which was docketed as G.R. No. 170505.
In the meantime, with the retirement of Judge Libre and the inhibition[50] of
Judge Oscar Badelles, the new presiding judge of RTC-Branch 5, Civil Case No.
6613 was re-raffled to the RTC-Branch 1, presided over by Judge Mangotara.
The RTC-Branch 1 promulgated on December 12, 2005 a Decision[51] in Civil
Case No. 6613 which affirmed in toto the February 17, 2004 Decision of the
MTCC in Civil Case No. 11475-AF favoring LANDTRADE.
NAPOCOR and TRANSCO filed with the RTC-Branch 1 twin Motions,
namely: (1) Motion for Reconsideration of the Decision dated December 12,
2005; and (2) Motion for Inhibition of Judge Mangotara. The RTC-Branch 1
denied both Motions in a Resolution dated January 30, 2006.
NAPOCOR and TRANSCO filed with the Court of Appeals separate Petitions for
Review with prayer for TRO and/or a writ of preliminary injunction, which were
docketed as CA-G.R. SP Nos. 00854 and 00889, respectively. In a Resolution
dated March 24, 2006, the Court of Appeals granted the prayer for TRO of
NAPOCOR and TRANSCO.

With the impending lapse of the effectivity of the TRO on May 23, 2006,
NAPOCOR filed on May 15, 2006 with the Court of Appeals a Manifestation
and Motion praying for the resolution of its application for preliminary
injunction.
On May 23, 2006, the same day the TRO lapsed, the Court of Appeals
granted the motions for extension of time to file a consolidated comment of
LANDTRADE. Two days later, LANDTRADE filed an Omnibus Motion seeking
the issuance of (1) a writ of execution pending appeal, and (2) the
designation of a special sheriff in accordance with Rule 70, Section 21 of the
Rules of Court.

xxxx
6.
The afore-stated titles were issued in implementation of a decision
rendered in LRC (GLRO) Record Nos. 6908 and 6909 dated December 10,
1912, as affirmed by the Honorable Supreme Court in Cacho v. Government
of the United States, 28 Phil. 616 (December 10, 1914),
7.
The decision in LRC (GLRO) Record Nos. 6908 and 6909, upon which
the titles were issued, did not grant the entire area applied for therein. x x x

14.
The decision in LRC (GLRO) Record Nos. 6908 and 6909 has
become final and executory, and it cannot be modified, much less result in an
increased area of the property decreed therein.
xxxx
16.
In sum, Original Certificates of Title Nos. 0-1200 (a.f.) and 01201 (a.f.), as issued, are null and void since the technical descriptions vis-vis the areas of the parcels of land covered therein went beyond the areas
granted by the land registration court in LRC (GLRO) Record Nos. 6908 and
6909.[56]

xxxx
In a Resolution[52] dated June 30, 2006, the Court of Appeals granted
the Omnibus Motion of LANDTRADE and denied the applications for the
issuance of a writ of preliminary injunction of NAPOCOR and TRANSCO. In
effect, the appellate court authorized the execution pending appeal of the
judgment of the MTCC, affirmed by the RTC-Branch 1, thus:
IN LIGHT OF THE ABOVE DISQUISITIONS, this Court resolves to grant the
[LANDRADE]s omnibus motion for execution pending appeal of the decision
rendered in its favor which is being assailed in these consolidated petitions
for review.
Accordingly, the [NAPOCOR and TRANSCOs] respective
applications for issuance of writ of preliminary injunction are both denied for
lack of factual and legal bases. The Municipal Trial Court in Cities, Branch 2,
Iligan City, which at present has the custody of the records of the case a quo,
is hereby ordered to cause the immediate issuance of a writ of execution
relative to its decision dated 17 February 2004 in Civil Case No. 11475-AF.[53]

9.
As events turned out, the titles issued in connection with LRC (GLRO)
Record Nos. 6908 and 6909 i.e. OCT Nos. 0-1200 (a.f.) and 0-1201 (a.f.)
cover property MUCH LARGER in area than that granted by the land
registration court in its corresponding decision, supra.
10.
While the LRC Decision, as affirmed by the Honorable Supreme Court,
granted only the southern part of the 37.87 hectare land subject of LRC
(GLRO) Record Case No. 6909, the ENTIRE 37.87 hectares is indicated as the
property covered by OCT 0-1200 (a.f.). Worse, OCT No. 0-1200 (a.f.) made
reference to Case No. 6908 as basis thereof, yet, the decision in said case is
clear:
(i)
The parcel object of Case No. 6908 is small (Cacho vs.
Government of the United States, 28 Phil. 616, p. 619)

On July 20, 2006, NAPOCOR filed with this Court a Petition for Certiorari and
Prohibition under Rule 65 of the Rules of Court with an urgent plea for a TRO,
docketed as G.R. No. 173355-56. On August 2, 2006, TRANSCO filed with this
Court its own Petition for Certiorari, docketed as G.R. No. 173563-64.
On July 21, 2006, NAPOCOR filed an Urgent Motion for the Issuance of a TRO
in G.R. No. 173355-56. In a Resolution[54] dated July 26, 2006, the Court
granted the Motion of NAPOCOR and issued a TRO,[55] effective immediately,
which enjoined public and private respondents from implementing the
Resolution dated June 30, 2006 of the Court of Appeals in CA-G.R. SP Nos.
00854 and 00889 and the Decision dated February 17, 2004 of the MTCC in
Civil Case No. 11475-AF.
On July 31, 2006, Vidal and AZIMUTH filed a Motion for Leave to
Intervene and to Admit Attached Comment-in-Intervention, contending
therein that Vidal was the lawful owner of the parcels of land subject of the
Unlawful Detainer Case as confirmed in the Decision dated July 17, 2004 of
the RTC-Branch 3 in Civil Case No. 4452. In a Resolution dated September 30,
2006, the Court required the parties to comment on the Motion of Vidal and
AZIMUTH, and deferred action on the said Motion pending the submission of
such comments.

(ii)
The parcel of land claimed by the applicant in Case No. 6909 is
the bigger of two parcels and contains 37.87 hectares
11.
More significantly, the technical description in Original Certificate of
Title No. 0-1200 (a.f.) specifies the date of survey as August 31 to September
1, 1910, which is EARLIER than the date the Supreme Court, in Cacho supra,
resolved LRC (GLRO) Record No. 6909 (involving 37.87 hectares). In resolving
the application involving the 37.87 hectares, the Honorable Supreme Court
declared that only the southern part of the 37.87 hectare property applied for
is granted and that a new survey specifying the southern part thereof
should be submitted.
Accordingly, any survey involving the granted
southern part should bear a date subsequent to the December 10, 1914
Supreme Court decision. x x x
xxxx
12.
The Honorable Supreme Court further declared that the Decision in
LRC (GLRO) Record No. 6909 was reserved:
Final decision in these case is reserved until the presentation of the new
plan. (28 Phil. 616, p. 631; Underscoring supplied)

The Cancellation of Titles and Reversion Case

(G.R. No. 173401)
On October 13, 2004, the Republic filed a Complaint for the Cancellation of
OCT Nos. 0-1200 (a.f.) and 0-1201 (a.f.) and Reversion against the late Doa
Demetria, represented by her alleged heirs, Vidal and/or Teofilo, together with
AZIMUTH and LANDTRADE. The Complaint, docketed as Civil Case No. 6686,
was raffled to the RTC-Branch 4.
The Republic sought the cancellation of OCT Nos. 0-1200 (a.f.) and 0-1201
(a.f.) and the reversion of the parcels of land covered thereby to the
Government based on the following allegations in its Complaint, under the
heading Cause of Action:
5.
On October 15, 1998, Original Certificates of Title (OCTs) Nos. 0-1200
(a.f.) and 0-1201 (a.f.) were issued in the name of Demetria Cacho, widow,
now deceased consisting of a total area of Three Hundred Seventy-Eight
Thousand Seven Hundred and Seven (378,707) square meters and Three
Thousand Seven Hundred Thirty-Five (3,635) square meters, respectively,
situated in Iligan City, x x x

In other words, as of December 10, 1914, when the Honorable Supreme Court
rendered its Decision on appeal in LRC (GLRO) Record No. 6909, final
decision of the case was still reserved until the presentation of a new plan.
The metes and bounds of OCT No. 0-1200 (a.f.) could not have been the
technical description of the property granted by the court described as the
southern part of the large parcel object of expediente 6909 only (Cacho vs.
Government of the United States, 28 Phil. 617, 629). As earlier stated, the
technical description appearing in said title was the result of a survey
conducted in 1910 or before the Supreme Court decision was rendered in
1914.
13.
In the same vein, Original Certificate of Title No. 0-1201 (a.f.)
specifies LRC (GLRO) Record No. 6909 as the basis thereof (see front page of
OCT No. 0-1201 (a.f.)). Yet, the technical description makes, as its reference,
Lot 1, Plan II-3732, LR Case No. 047, LRC (GLRO) Record No. 6908 (see page 2
of said title). A title issued pursuant to a decision may only cover the
property subject of the case. A title cannot properly be issued pursuant to a
decision in Case 6909, but whose technical description is based on Case
6908.

Vidal and AZIMUTH filed a Motion to Dismiss dated December 23, 2004 on the
grounds that (1) the Republic has no cause of action; (2) assuming arguendo
that the Republic has a cause of action, its Complaint failed to state a cause
of action; (3) assuming arguendo that the Republic has a cause of action, the
same is barred by prior judgment; (4) assuming further that the Republic has
a cause of action, the same was extinguished by prescription; and (4) the
Republic is guilty of forum shopping.
Upon motion of the Republic, the RTC-Branch 4 issued an Order[57] dated
October 4, 2005, declaring LANDTRADE and Teofilo, as represented by Atty.
Cabildo, in default since they failed to submit their respective answers to the
Complaint despite the proper service of summons upon them.
LANDTRADE subsequently filed its Answer with Compulsory Counterclaim
dated September 28, 2005.
It also moved for the setting aside and
reconsideration of the Order of Default issued against it by the RTC-Branch 4
on October 20, 2005.
On December 13, 2005, the RTC-Branch 4 issued an Order[58] dismissing the
Complaint of the Republic in Civil Case No. 6686, completely agreeing with
Vidal and AZIMUTH.
The RTC-Branch 4 reasoned that the Republic had no cause of action because
there was no showing that the late Doa Demetria committed any wrongful
act or omission in violation of any right of the Republic. Doa Demetria had
sufficiently proven her ownership over the parcels of land as borne in the
ruling of the LRC in GLRO Record Nos. 6908 and 6909. On the other hand,
the Republic had no more right to the said parcels of land. The Regalian
doctrine does not apply in this case because the titles were already issued to
Doa Demetria and segregated from the mass of the public domain.
The RTC-Branch 4 likewise held that the Republic failed to state a cause of
action in its Complaint. The arguments of the Republic i.e., the absence of a
new survey plan and deed, the titles covered properties with much larger
area than that granted by the LRC had been answered squarely in the 1997
Cacho case. Also, the Complaint failed to allege that fraud had been
committed in having the titles registered and that the Director of Lands
requested the reversion of the subject parcels of land.
The RTC-Branch 4 was convinced that the Complaint was barred by res
judicata because the 1914 Cacho case already decreed the registration of the
parcels of land in the late Doa Demetrias name and the 1997 Cacho case
settled that there was no merit in the argument that the conditions imposed
in the first case have not been complied with.
The RTC-Branch 4 was likewise persuaded that the cause of action or remedy
of the Republic was lost or extinguished by prescription pursuant to Article
1106 of the Civil Code and Section 32 of Presidential Decree No. 1529,
otherwise known as the Land Registration Decree, which prescribes a oneyear period within which to file an action for the review of a decree of
registration.
Finally, the RTC-Branch 4 found the Republic guilty of forum shopping
because there is between this case, on one hand, and the 1914 and 1997
Cacho cases, on the other, identity of parties, as well as rights asserted and
reliefs prayed for, as the contending parties are claiming rights of ownership
over the same parcels of land.
The Republic filed a Motion for Reconsideration of the dismissal of its
Complaint but the same was denied by the RTC-Branch 4 in its Order[59]
dated May 16, 2006.

of appeal and certiorari are mutually exclusive and not alternative nor
successive.
Assailing the Orders dated December 13, 2005 and May 16, 2006 of the RTCBranch 4, the Republic filed on August 11, 2006 a Petition for Review on
Certiorari under Rule 45 of the Rules of Court, which was docketed as G.R. No.
173401.
III
ISSUES AND DISCUSSIONS
Expropriation Case
(G.R. No. 170375)
The Republic, in its consolidated Petitions challenging the Resolutions dated
July 12, 2005 and October 24, 2005 of the RTC-Branch 1 in Civil Case No. 106,
made the following assignment of errors:
RESPONDENT JUDGE GRAVELY ERRED IN ORDERING THE DISMISSAL OF THE
EXPROPRIATION COMPLAINT IN CIVIL CASE NO. 106 CONSIDERING THAT:
(a) THE NON-JOINDER OF PARTIES IS NOT A GROUND FOR THE DISMISSAL OF
AN ACTION PURSUANT TO SECTION 11, RULE 3 OF THE 1997 RULES OF CIVIL
PROCEDURE;
(b) AN EXPROPRIATION PROCEEDING IS AN ACTION QUASI IN REM WHEREIN
THE FACT THAT THE OWNER OF THE PROPERTY IS MADE A PARTY TO THE
ACTION IS NOT ESSENTIALLY INDISPENSABLE;
(c) PETITIONER DID NOT COMMIT ANY FORUM SHOPPING WITH THE FILING
OF THE REVERSION COMPLAINT DOCKETED AS CIVIL CASE NO. 6686 WHICH
IS PENDING BEFORE BRANCH 4 OF THE REGIONAL TRIAL COURT OF ILIGAN
CITY.[60]
Filing of consolidated petitions under both Rules 45 and 65
At the outset, the Court notes that the Republic filed a pleading with
the caption Consolidated Petitions for Review on Certiorari (Under Rule 45)
and Certiorari (Under Rule 65) of the Rules of Court. The Republic explains
that it filed the Consolidated Petitions pursuant to Metropolitan Waterworks
and Sewerage System (MWSS) v. Court of Appeals[61] (MWSS case).
The reliance of the Republic on the MWSS case to justify its mode of
appeal is misplaced, taking the pronouncements of this Court in said case out
of context.
The issue in the MWSS case was whether a possessor in good faith has
the right to remove useful improvements, and not whether consolidated
petitions under both Rules 45 and 65 of the Rules of Court can be filed.
Therein petitioner MWSS simply filed an appeal by certiorari under Rule 45 of
the Rules of Court, but named the Court of Appeals as a respondent. The
Court clarified that the only parties in an appeal by certiorari under Rule 45 of
the Rules of Court are the appellant as petitioner and the appellee as
respondent. The court which rendered the judgment appealed from is not a
party in said appeal. It is in the special civil action of certiorari under Rule 65
of the Rules of Court where the court or judge is required to be joined as
party defendant or respondent. The Court, however, also acknowledged that
there may be an instance when in an appeal by certiorari under Rule 45, the
petitioner-appellant would also claim that the court that rendered the
appealed judgment acted without or in excess of its jurisdiction or with grave
abuse of discretion, in which case, such court should be joined as a partydefendant or respondent. While the Court may have stated that in such an
instance, the petition for review on certiorari under Rule 45 of the Rules of
Court is at the same time a petition for certiorari under Rule 65, the Court
did not hold that consolidated petitions under both Rules 45 and 65 could or
should be filed.
The Court, in more recent cases, had been stricter and clearer on the
distinction between these two modes of appeal. In Nunez v. GSIS Family
Bank,[62] the Court elucidated:
In Ligon v. Court of Appeals where the therein petitioner described her
petition as an appeal under Rule 45 and at the same time as a special civil
action of certiorari under Rule 65 of the Rules of Court, this Court, in
frowning over what it described as a chimera, reiterated that the remedies

To be sure, the distinctions between Rules 45 and 65 are far and wide.
However, the most apparent is that errors of jurisdiction are best reviewed in
a special civil action for certiorari under Rule 65 while errors of judgment can
only be corrected by appeal in a petition for review under Rule 45.
But in the same case, the Court also held that:
This Court, x x x, in accordance with the liberal spirit which pervades the
Rules of Court and in the interest of justice may treat a petition for certiorari
as having been filed under Rule 45, more so if the same was filed within the
reglementary period for filing a petition for review.[63]
It is apparent in the case at bar that the Republic availed itself of the wrong
mode of appeal by filing Consolidated Petitions for Review under Rule 45 and
for Certiorari under Rule 65, when these are two separate remedies that are
mutually exclusive and neither alternative nor successive. Nevertheless, the
Court shall treat the Consolidated Petitions as a Petition for Review on
Certiorari under Rule 45 and the allegations therein as errors of judgment. As
the records show, the Petition was filed on time under Rules 45. Before the
lapse of the 15-day reglementary period to appeal under Rule 45, the
Republic filed with the Court a motion for extension of time to file its petition.
The Court, in a Resolution[64] dated January 23, 2006, granted the Republic a
30-day extension, which was to expire on December 29, 2005. The Republic
was able to file its Petition on the last day of the extension period.
Hierarchy of courts
The direct filing of the instant Petition with this Court did not violate the
doctrine of hierarchy of courts.
According to Rule 41, Section 2(c)[65] of the Rules of Court, a decision
or order of the RTC may be appealed to the Supreme Court by petition for
review on certiorari under Rule 45, provided that such petition raises only
questions of law.[66]
A question of law exists when the doubt or controversy concerns the correct
application of law or jurisprudence to a certain set of facts; or when the issue
does not call for an examination of the probative value of the evidence
presented, the truth or falsehood of facts being admitted.[67] A question of
fact exists when the doubt or difference arises as to the truth or falsehood of
facts or when the query invites calibration of the whole evidence considering
mainly the credibility of the witnesses, the existence and relevancy of specific
surrounding circumstances, as well as their relation to each other and to the
whole, and the probability of the situation.[68]
Here, the Petition of the Republic raises pure questions of law, i.e., whether
Civil Case No. 106 should have been dismissed for failure to implead
indispensable parties and for forum shopping. Thus, the direct resort by the
Republic to this Court is proper.
The Court shall now consider the propriety of the dismissal by the RTC-Branch
1 of the Complaint for Expropriation of the Republic.

The proper parties in the expropriation proceedings

The right of the Republic to be substituted for ISA as plaintiff in Civil Case No.
106 had long been affirmed by no less than this Court in the ISA case. The
dispositive portion of the ISA case reads:
WHEREFORE, for all the foregoing, the Decision of the Court of Appeals dated
8 October 1991 to the extent that it affirmed the trial courts order dismissing
the expropriation proceedings, is hereby REVERSED and SET ASIDE and the
case is REMANDED to the court a quo which shall allow the substitution of the
Republic of the Philippines for petitioner Iron Steel Authority for further
proceedings consistent with this Decision. No pronouncement as to costs.
[69]

The ISA case had already become final and executory, and entry of judgment
was made in said case on August 31, 1998. The RTC-Branch 1, in an Order
dated November 16, 2001, effected the substitution of the Republic for ISA.
The failure of the Republic to actually file a motion for execution does not
render the substitution void. A writ of execution requires the sheriff or other
proper officer to whom it is directed to enforce the terms of the writ.[70] The
November 16, 2001 Order of the RTC-Branch 1 should be deemed as
voluntary compliance with a final and executory judgment of this Court,
already rendering a motion for and issuance of a writ of execution
superfluous.
Besides, no substantive right was violated by the voluntary compliance by
the RTC-Branch 1 with the directive in the ISA case even without a motion for
execution having been filed. To the contrary, the RTC-Branch 1 merely
enforced the judicially determined right of the Republic to the substitution.
While it is desirable that the Rules of Court be faithfully and even
meticulously observed, courts should not be so strict about procedural lapses
that do not really impair the administration of justice. If the rules are
intended to insure the orderly conduct of litigation it is because of the higher
objective they seek which is the protection of the substantive rights of the
parties.[71]
The Court also observes that MCFC did not seek any remedy from the Order
dated November 16, 2001 of the RTC-Branch 1. Consequently, the said Order
already became final, which even the RTC-Branch 1 itself cannot reverse and
set aside on the ground of honest mistake.
The RTC-Branch 1 dismissed the Complaint in Civil Case No. 106 on another
ground: that MCFC is not a proper party to the expropriation proceedings, not
being the owner of the parcels of land sought to be expropriated. The RTCBranch 1 ratiocinated that since the exercise of the power of eminent domain
involves the taking of private land intended for public use upon payment of
just compensation to the owner, then a complaint for expropriation must be
directed against the owner of the land sought to be expropriated.
The Republic insists, however, that MCFC is a real party-in-interest, impleaded
as a defendant in the Complaint for Expropriation because of its possessory
or occupancy rights over the subject parcels of land, and not by reason of its
ownership of the said properties. In addition, the Republic maintains that
non-joinder of parties is not a ground for the dismissal of an action.
Rule 67, Section 1 of the then Rules of Court[72] described how expropriation
proceedings should be instituted:
Section 1. The complaint. The right of eminent domain shall be exercised
by the filing of a complaint which shall state with certainty the right and
purpose of condemnation, describe the real or personal property sought to be
condemned, and join as defendants all persons owning or claiming to own, or
occupying, any part thereof or interest therein, showing, so far as practicable,
the interest of each defendant separately. If the title to any property sought
to be condemned appears to be in the Republic of the Philippines, although
occupied by private individuals, or if the title is otherwise obscure or doubtful
so that the plaintiff cannot with accuracy or certainty specify who are the real
owners, averment to that effect may be made in the complaint.[73]
(Emphases supplied.)
For sure, defendants in an expropriation case are not limited to the
owners of the property to be expropriated, and just compensation is not due
to the property owner alone. As this Court held in De Knecht v. Court of
Appeals[74]:
The defendants in an expropriation case are not limited to the owners of the
property condemned. They include all other persons owning, occupying or
claiming to own the property. When [property] is taken by eminent domain,
the owner x x x is not necessarily the only person who is entitled to
compensation. In the American jurisdiction, the term owner when employed
in statutes relating to eminent domain to designate the persons who are to
be made parties to the proceeding, refer, as is the rule in respect of those
entitled to compensation, to all those who have lawful interest in the property
to be condemned, including a mortgagee, a lessee and a vendee in
possession under an executory contract. Every person having an estate or
interest at law or in equity in the land taken is entitled to share in the award.
If a person claiming an interest in the land sought to be condemned is not

made a party, he is given the right to intervene and lay claim to the
compensation. (Emphasis supplied.)
At the time of the filing of the Complaint for Expropriation in 1983,
possessory/occupancy rights of MCFC over the parcels of land sought to be
expropriated were undisputed. In fact, Letter of Instructions No. 1277[75]
dated November 16, 1982 expressly recognized that portions of the lands
reserved by Presidential Proclamation No. 2239, also dated November 16,
1982, for the use and immediate occupation by the NSC, were then occupied
by an idle fertilizer plant/factory and related facilities of MCFC. It was ordered
in the same Letter of Instruction that:
(1)
NSC shall negotiate with the owners of MCFC, for and on behalf of the
Government, for the compensation of MCFC's present occupancy rights on
the subject lands at an amount of Thirty (P30.00) Pesos per square meter or
equivalent to the assessed value thereof (as determined by the City Assessor
of Iligan), whichever is higher. NSC shall give MCFC the option to either
remove its aforesaid plant, structures, equipment, machinery and other
facilities from the lands or to sell or cede ownership thereof to NSC at a price
equivalent to the fair market value thereof as appraised by the Asian
Appraisal Inc. as may be mutually agreed upon by NSC and MCFC.
(2)
In the event that NSC and MCFC fail to agree on the foregoing within
sixty (60) days from the date hereof, the Iron and Steel Authority (ISA) shall
exercise its authority under Presidential Decree (PD) No. 272, as amended, to
initiate the expropriation of the aforementioned occupancy rights of MCFC on
the subject lands as well as the plant, structures, equipment, machinery and
related facilities, for and on behalf of NSC, and thereafter cede the same to
NSC. During the pendency of the expropriation proceedings, NSC shall take
possession of the properties, subject to bonding and other requirements of
P.D. 1533. (Emphasis supplied.)
Being the occupant of the parcel of land sought to be expropriated,
MCFC could very well be named a defendant in Civil Case No. 106. The RTCBranch 1 evidently erred in dismissing the Complaint for Expropriation
against MCFC for not being a proper party.
Also erroneous was the dismissal by the RTC-Branch 1 of the original
Complaint for Expropriation for having been filed only against MCFC, the
occupant of the subject land, but not the owner/s of the said property.
Dismissal is not the remedy for misjoinder or non-joinder of parties.
According to Rule 3, Section 11 of the Rules of Court:

determine the just compensation for said occupancy rights. Therefore, the
owner of the property is not an indispensable party in the original Complaint
for Expropriation in Civil Case No. 106.
Assuming for the sake of argument that the owner of the property is an
indispensable party in the expropriation proceedings, the non-joinder of said
party would still not warrant immediate dismissal of the complaint for
expropriation. In Vda. De Manguerra v. Risos,[77] the Court applied Rule 3,
Section 11 of the Rules of Court even in case of non-joinder of an
indispensable party, viz:
[F]ailure to implead an indispensable party is not a ground for the dismissal
of an action. In such a case, the remedy is to implead the non-party claimed
to be indispensable. Parties may be added by order of the court, on motion of
the party or on its own initiative at any stage of the action and/or such times
as are just. If the petitioner/plaintiff refuses to implead an indispensable party
despite the order of the court, the latter may dismiss the complaint/petition
for the petitioner's/plaintiff's failure to comply. (Emphasis supplied.)
In this case, the RTC-Branch 1 did not first require the Republic to implead the
alleged owner/s of the parcel of land sought to be expropriated. Despite the
absence of any order from the Court, the Republic upon becoming aware
that the parcels of land involved in the 1914 Cacho case and 1997 Cacho
case, claimed by Teofilo and LANDTRADE, and Vidal and AZIMUTH,
encroached into and overlapped with the parcel of land subject of Civil Case
No. 106 sought leave of court to file a Supplemental Complaint to implead
these four parties.
The RTC-Branch 1 did not take the Supplemental
Complaint of the Republic into consideration. Instead, it dismissed outright
the original Complaint for Expropriation against MCFC.
Forum shopping
The RTC-Branch 1 further erred in finding that the Republic committed
forum shopping by (1) simultaneously instituting the actions for expropriation
(Civil Case No. 106) and reversion (Civil Case No. 6686) for the same parcels
of land; and (2) taking inconsistent positions when it conceded lack of
ownership over the parcels of land in the expropriation case but asserted
ownership of the same properties in the reversion case.

MCFC contends that the aforequoted rule does not apply in this case
where the party not joined, i.e., the owner of the property to be expropriated,
is an indispensable party.

There is no dispute that the Republic instituted reversion proceedings (Civil

Case No. 6686) for the same parcels of land subject of the instant
Expropriation Case (Civil Case No. 106). The Complaint for Cancellation of
Titles and Reversion[78] dated September 27, 2004 was filed by the Republic
with the RTC on October 13, 2004. The records, however, do not show when
the Supplemental Complaint for Expropriation[79] dated September 28, 2004
was filed with the RTC.
Apparently, the Supplemental Complaint for
Expropriation was filed after the Complaint for Cancellation of Titles and
Reversion since the Republic mentioned in the former the fact of filing of the
latter.[80]
Even then, the Verification and Certification of Non-Forum
Shopping[81] attached to the Supplemental Complaint for Expropriation did
not disclose the filing of the Complaint for Cancellation of Titles and
Reversion. Notwithstanding such non-disclosure, the Court finds that the
Republic did not commit forum shopping for filing both Complaints.

An indispensable party is a party-in-interest without whom no final

determination can be had of an action.[76]

In NBI-Microsoft Corporation v Hwang,[82] the Court laid down the

circumstances when forum shopping exists:

Now, is the owner of the property an indispensable party in an action for

expropriation? Not necessarily. Going back to Rule 67, Section 1 of the Rules
of Court, expropriation proceedings may be instituted even when title to the
property sought to be condemned appears to be in the Republic of the
Philippines, although occupied by private individuals.
The same rule
provides that a complaint for expropriation shall name as defendants all
persons owning or claiming to own, or occupying, any part thereof or
interest in the property sought to be condemned. Clearly, when the
property already appears to belong to the Republic, there is no sense in the
Republic instituting expropriation proceedings against itself. It can still,
however, file a complaint for expropriation against the private persons
occupying the property. In such an expropriation case, the owner of the
property is not an indispensable party.

Forum-shopping takes place when a litigant files multiple suits involving the
same parties, either simultaneously or successively, to secure a favorable
judgment. Thus, it exists where the elements of litis pendentia are present,
namely: (a) identity of parties, or at least such parties who represent the
same interests in both actions; (b) identity of rights asserted and relief
prayed for, the relief being founded on the same facts; and (c) the identity
with respect to the two preceding particulars in the two cases is such that
any judgment that may be rendered in the pending case, regardless of which
party is successful, would amount to res judicata in the other case. Forumshopping is an act of malpractice because it abuses court processes. x x x.

SEC. 11. Misjoinder and non-joinder of parties. Neither misjoinder nor nonjoinder of parties is ground for dismissal of an action. Parties may be dropped
or added by order of the court on motion of any party or on its own initiative
at any stage of the action and on such terms as are just. Any claim against a
misjoined party may be severed and proceeded with separately. (Emphasis
supplied.)

To recall, Presidential Proclamation No. 2239 explicitly states that the parcels
of land reserved to NSC are part of the public domain, hence, owned by the
Republic. Letter of Instructions No. 1277 recognized only the occupancy
rights of MCFC and directed NSC to institute expropriation proceedings to

Here, the elements of litis pendencia are wanting. There is no identity of

rights asserted and reliefs prayed for in Civil Case No. 106 and Civil Case No.
6686.
Civil Case No. 106 was instituted against MCFC to acquire, for a public
purpose, its possessory/occupancy rights over 322,532 square meters or
32.25 hectares of land which, at the time of the filing of the original

Complaint in 1983, was not yet covered by any certificate of title. On the
other hand, Civil Case No. 6686 sought the cancellation of OCT Nos. 0-1200
(a.f.) and 0-1201 (a.f.), which was entered into registration on December 4,
1998 in Doa Demetrias name, on the argument that the parcels of land
covered by said certificates exceeded the areas granted by the LRC to Doa
Demetria in GLRO Record Nos. 6908 and 6909, as affirmed by this Court in
the 1914 Cacho case.
Expropriation vis--vis reversion
The Republic is not engaging in contradictions when it instituted both
expropriation and reversion proceedings for the same parcels of land. The
expropriation and reversion proceedings are distinct remedies that are not
necessarily exclusionary of each other.
The filing of a complaint for reversion does not preclude the institution
of an action for expropriation. Even if the land is reverted back to the State,
the same may still be subject to expropriation as against the occupants
thereof.
Also, Rule 67, Section 1 of the Rules of Court allows the filing of a complaint
for expropriation even when the title to any property sought to be
condemned appears to be in the Republic of the Philippines, although
occupied by private individuals, or if the title is otherwise obscure or doubtful
so that the plaintiff cannot with accuracy or certainty specify who are the real
owners. Rule 67, Section 9 of the Rules of Court further provides:
SEC. 9. Uncertain ownership; conflicting claims. If the ownership of
the property taken is uncertain, or there are conflicting claims to any part
thereof, the court may order any sum or sums awarded as compensation for
the property to be paid to the court for the benefit of the person adjudged in
the same proceeding to be entitled thereto. But the judgment shall require
the payment of the sum or sums awarded to either the defendant or the court
before the plaintiff can enter upon the property, or retain it for the public use
or purpose if entry has already been made. (Emphasis supplied.)
Hence, the filing by the Republic of the Supplemental Complaint for
Expropriation impleading Teofilo, Vidal, LANDTRADE, and AZIMUTH, is not
necessarily an admission that the parcels of land sought to be expropriated
are privately owned. At most, the Republic merely acknowledged in its
Supplemental Complaint that there are private persons also claiming
ownership of the parcels of land. The Republic can still consistently assert, in
both actions for expropriation and reversion, that the subject parcels of land
are part of the public domain.
In sum, the RTC-Branch 1 erred in dismissing the original Complaint and
disallowing the Supplemental Complaint in Civil Case No. 106. The Court
reverses and sets aside the Resolutions dated July 12, 2005 and October 24,
2005 of the RTC-Branch 1 in Civil Case 106, and reinstates the Complaint for
Reversion of the Republic.
The Quieting of Title Case
(G.R. Nos. 178779 and 178894)
Essentially, in their Petitions for Review on Certiorari under Rule 45 of the
Rules of Court, LANDTRADE and Teofilo, and/or Atty. Cabildo are calling upon
this Court to determine whether the Court of Appeals, in its Decision dated
January 19, 2007 in CA-G.R. CV No. 00456, erred in (1) upholding the
jurisdiction of the RTC-Branch 3 to resolve the issues on Vidal's status,
filiation, and heirship in Civil Case No. 4452, the action for quieting of title; (2)
not holding that Vidal and AZIMUTH have neither cause of action nor legal or
equitable title or interest in the parcels of land covered by OCT Nos. 0-1200
(a.f.) and 0-1201 (a.f.); (3) finding the evidence sufficient to establish Vidals
status as Doa Demetrias granddaughter and sole surviving heir; and (4) not
holding that Civil Case No. 4452 was already barred by prescription.
In their Comment, Vidal and AZIMUTH insisted on the correctness of the Court
of Appeals Decision dated January 19, 2007, and questioned the propriety of
the Petition for Review filed by LANDTRADE as it supposedly raised only
factual issues.
The Court rules in favor of Vidal and AZIMUTH.

Petitions for review under Rule 45

A scrutiny of the issues raised, not just in the Petition for Review of
LANDTRADE, but also those in the Petition for Review of Teofilo and/or Atty.
Cabildo, reveals that they are both factual and legal.
The Court has held in a long line of cases that in a petition for
review on certiorari under Rule 45 of the Rules of Court, only questions of law
may be raised as the Supreme Court is not a trier of facts. It is settled that as
a rule, the findings of fact of the Court of Appeals especially those affirming
the trial court are final and conclusive and cannot be reviewed on appeal to
the Supreme Court. The exceptions to this rule are: (a) when the conclusion
is a finding grounded entirely on speculations, surmises or conjectures; (b)
when the inference made is manifestly mistaken, absurd or impossible; (c)
when there is grave abuse of discretion; (d) when the judgment is based on a
misapprehension of facts; (e) when the findings of fact are conflicting; (f)
when the Court of Appeals, in making its findings, went beyond the issues of
the case and the same is contrary to the admissions of both appellant and
appellee; (g) where the Court of Appeals manifestly overlooked certain
relevant facts not disputed by the parties and which, if properly considered,
would justify a different conclusion; and (h) where the findings of fact of the
Court of Appeals are contrary to those of the trial court, or are mere
conclusions without citation of specific evidence, or where the facts set forth
by the petitioner are not disputed by the respondent, or where the findings of
fact of the Court of Appeals are premised on absence of evidence but are
contradicted by the evidence on record.[83] None of these exceptions exists
in the Petitions at bar.
Be that as it may, the Court shall address in full-length all the issues
tendered in the instant Petitions for Review, even when factual, if only to
bolster the conclusions reached by the RTC-Branch 3 and the Court of
Appeals, with which the Court fully concurs.

of a law. The power to change the jurisdiction of the courts is a matter of

legislative enactment, which none but the legislature may do. Congress has
the sole power to define, prescribe and apportion the jurisdiction of the
courts.[87]

their actual joint contribution of money, property, or industry shall be owned

by them in common in proportion to their respective contributions. In this
case, the Court found that the money used to buy the subject properties all
came from Miguel.

The RTC has jurisdiction over an action for quieting of title under the
circumstances described in Section 19(2) of Batas Pambansa Blg. 129, as
amended:

The Court then proceeded to address another issue in the Agapay case, more
relevant to the one at bar:

SEC. 19. Jurisdiction in civil cases. Regional Trial Courts shall exercise
exclusive original jurisdiction:
xxxx
(2) In all civil actions which involve the title to, or possession of, real property,
or any interest therein, where the assessed value of the property involved
exceeds Twenty thousand pesos (P20,000.00) or, for civil actions in Metro
Manila, where such value exceeds Fifty thousand pesos (P50,000.00) except
actions for forcible entry into and unlawful detainer of lands or buildings,
original jurisdiction over which is conferred upon the Metropolitan Trial Courts,
Municipal Trial Courts, and Municipal Circuit Trial Courts.
Records show that the parcels of land subject of Civil Case No. 4452 have a
combined assessed value of P35,398,920.00,[88] undisputedly falling within
the jurisdiction of the RTC-Branch 3.
The RTC-Branch 3 also acquired jurisdiction over the person of Teofilo when
he filed his Answer to the Complaint of Vidal and AZIMUTH; and over the
juridical personality of LANDTRADE when the said corporation was allowed to
intervene in Civil Case No. 4452.

Jurisdiction vis--vis exercise of jurisdiction

LANDTRADE, Teofilo, and/or Atty. Cabildo argue that the RTC-Branch 3

had no jurisidiction to resolve the issues of status, filiation, and heirship in an
action for quieting of title as said issues should be ventilated and adjudicated
only in special proceedings under Rule 90, Section 1 of the Rules of Court,
pursuant to the ruling of this Court in Agapay v. Palang[84] (Agapay case)
and Heirs of Guido Yaptinchay and Isabel Yaptinchay v. Del Rosario[85]
(Yaptinchay case). Even on the assumption that the RTC-Branch 3 acquired
jurisdiction over their persons, LANDTRADE, Teofilo, and/or Atty. Cabildo
maintain that the RTC-Branch 3 erred in the exercise of its jurisdiction by
adjudicating and passing upon the issues on Vidals status, filiation, and
heirship in the Quieting of Title Case. Moreover, LANDTRADE, Teofilo, and/or
Atty. Cabildo aver that the resolution of issues regarding status, filiation, and
heirship is not merely a matter of procedure, but of jurisdiction which cannot
be waived by the parties or by the court.
The aforementioned arguments fail to persuade.
In the first place, jurisdiction is not the same as the exercise of
jurisdiction. The Court distinguished between the two, thus:
Jurisdiction is not the same as the exercise of jurisdiction. As distinguished
from the exercise of jurisdiction, jurisdiction is the authority to decide a
cause, and not the decision rendered therein. Where there is jurisdiction over
the person and the subject matter, the decision on all other questions arising
in the case is but an exercise of the jurisdiction. And the errors which the
court may commit in the exercise of jurisdiction are merely errors of
judgment which are the proper subject of an appeal.[86] (Emphasis supplied.)

Considering that the RTC-Branch 3 had jurisdiction over the subject

matter and parties in Civil Case No. 4452, then it can rule on all issues in the
case, including those on Vidals status, filiation, and heirship, in exercise of its
jurisdiction. Any alleged erroneous finding by the RTC-Branch 3 concerning
Vidals status, filiation, and heirship in Civil Case No. 4452, is merely an error
of judgment subject to the affirmation, modification, or reversal by the
appellate court when appealed.
The Agapay and Yaptinchay cases
LANDTRADE, Teofilo, and/or Atty. Cabildo cannot rely on the cases of Agapay
and Yaptinchay to support their position that declarations on Vidals status,
filiation, and heirsip, should be made in special proceedings and not in Civil
Case No. 4452.
In the Agapay case, the deceased Miguel Agapay (Miguel) contracted two
marriages. Miguel married Carlina (sometimes referred to as Cornelia) in
1949, and they had a daughter named Herminia, who was born in 1950.
Miguel left for Hawaii a few months after his wedding to Carlina. When
Miguel returned to the Philippines in 1972, he did not live with Carlina and
Herminia. He married Erlinda in 1973, with whom he had a son named
Kristopher, who was born in 1977. Miguel died in 1981. A few months after
Miguels death, Carlina and Herminia filed a complaint for recovery of
ownership and possession with damages against Erlinda over a riceland and
house and lot in Pangasinan, which were allegedly purchased by Miguel
during his cohabitation with Erlinda. The RTC dismissed the complaint,
finding little evidence that the properties pertained to the conjugal property
of Miguel and Carlina. The RTC went on to provide for the intestate shares of
the parties, particularly of Kristopher, Miguels illegitimate son. On appeal,
the Court of Appeals: (1) reversed the RTC judgment; (2) ordered Erlinda to
vacate and deliver the properties to Carlina and Herminia; and (3) ordered
the Register of Deeds to cancel the Transfer Certificates of Title (TCTs) over
the subject property in the name of Erlinda and to issue new ones in the
names of Carlina and Herminia. Erlinda filed a Petition for Review with this
Court.

Here, the RTC-Branch 3 unmistakably had jurisdiction over the subject matter
and the parties in Civil Case No. 4452.
Jurisdiction over the subject matter or nature of the action is conferred only
by the Constitution or by law. Once vested by law on a particular court or
body, the jurisdiction over the subject matter or nature of the action cannot
be dislodged by anybody other than by the legislature through the enactment

In resolving Erlindas Petition, the Court held in the Agapay case that Article
148 of the Family Code applied to Miguel and Erlinda. Article 148 specifically
governs the property relations of a man and a woman who are not
capacitated to marry each other and live exclusively with each other as
husband and wife without the benefit of marriage or under a void marriage.
Under said provision, only the properties acquired by both parties through

The second issue concerning Kristopher Palangs status and claim as an

illegitimate son and heir to Miguels estate is here resolved in favor of
respondent courts correct assessment that the trial court erred in making
pronouncements regarding Kristophers heirship and filiation inasmuch as
questions as to who are the heirs of the decedent, proof of filiation of
illegitimate children and the determination of the estate of the latter and
claims thereto should be ventilated in the proper probate court or in a special
proceeding instituted for the purpose and cannot be adjudicated in the
instant ordinary civil action which is for recovery of ownership and
possession.[89]
The Yaptinchay case involved two parcels of land in Cavite which were
supposedly owned by Guido and Isabel Yaptinchay (spouses Yaptinchay).
Upon the death of the spouses Yaptinchay, their heirs (Yaptinchay heirs)
executed an Extra-Judicial Settlement of the deceased spouses estate.
However, the Yaptinchay heirs discovered that the properties were already
covered by TCTs in the name of Golden Bay Realty Corporation (Golden Bay),
prompting the Yaptinchay heirs to file with the RTC a complaint against
Golden Bay for the annulment and/or declaration of nullity of TCT Nos.
493363 to 493367 and all their derivatives, or in the alternative, the
reconveyance of realty with a prayer for a writ of preliminary injunction
and/or restraining order with damages. The Yaptinchay heirs later filed an
amended complaint to include additional defendants to whom Golden Bay
sold portions of the subject properties. The RTC initially dismissed the
amended complaint, but acting on the motion for reconsideration of the
Yaptinchay heirs, eventually allowed the same. Golden Bay and its other codefendants presented a motion to dismiss the amended complaint, which was
granted by the RTC. The Yaptinchay heirs came before this Court via a
Petition for Certiorari.
The Court first observed in the Yaptinchay case that the Yaptinchay heirs
availed themselves of the wrong remedy. An order of dismissal is the proper
subject of an appeal, not a petition for certiorari. Next, the Court affirmed the
dismissal of the amended complaint, thus:
Neither did the respondent court commit grave abuse of discretion in issuing
the questioned Order dismissing the Second Amended Complaint of
petitioners, x x x.
xxxx
In Litam, etc., et al. v. Rivera, this court opined that the declaration of
heirship must be made in an administration proceeding, and not in an
independent civil action. This doctrine was reiterated in Solivio v. Court of
Appeals where the court held:
In Litam, et al. v. Rivera, 100 Phil. 364, where despite the pendency of the
special proceedings for the settlement of the intestate estate of the deceased
Rafael Litam, the plaintiffs-appellants filed a civil action in which they claimed
that they were the children by a previous marriage of the deceased to a
Chinese woman, hence, entitled to inherit his one-half share of the conjugal
properties acquired during his marriage to Marcosa Rivera, the trial court in
the civil case declared that the plaintiffs-appellants were not children of the
deceased, that the properties in question were paraphernal properties of his
wife, Marcosa Rivera, and that the latter was his only heir. On appeal to this
Court, we ruled that such declarations (that Marcosa Rivera was the only heir
of the decedent) is improper, in Civil Case No. 2071, it being within the
exclusive competence of the court in Special Proceedings No. 1537, in which
it is not as yet, in issue, and, will not be, ordinarily, in issue until the
presentation of the project of partition. (p. 378).
The trial court cannot make a declaration of heirship in the civil action for the
reason that such a declaration can only be made in a special proceeding.
Under Section 3, Rule 1 of the 1997 Revised Rules of Court, a civil action is
defined as one by which a party sues another for the enforcement or
protection of a right, or the prevention or redress of a wrong while a special
proceeding is a remedy by which a party seeks to establish a status, a right,
or a particular fact. It is then decisively clear that the declaration of heirship

can be made only in a special proceeding inasmuch as the petitioners here

are seeking the establishment of a status or right.[90]
LANDTRADE, Teofilo, and/or Atty. Cabildo missed one vital factual
distinction between the Agapay and Yaptinchay cases, on one hand, and the
present Petitions, on the other, by reason of which, the Court shall not apply
the prior two to the last.
The Agapay and Yaptinchay cases, as well as the cases of Litam v. Rivera[91]
and Solivio v. Court of Appeals,[92] cited in the Yaptinchay case, all arose
from actions for reconveyance; while the instant Petitions stemmed from an
action for quieting of title. The Court may have declared in previous cases
that an action for reconveyance is in the nature of an action for quieting of
title,[93] but the two are distinct remedies.
Ordinary civil action for reconveyance vis-a-vis special proceeding for
quieting of title
The action for reconveyance is based on Section 55 of Act No. 496, otherwise
known as the Land Registration Act, as amended, which states [t]hat 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.

Generally, the registered owner of a property is the proper party to bring an

action to quiet title. However, it has been held that this remedy may also be
availed of by a person other than the registered owner because, in the Article
reproduced above, title does not necessarily refer to the original or transfer
certificate of title. Thus, lack of an actual certificate of title to a property
does not necessarily bar an action to quiet title. x x x (Emphases supplied.)

In the Portugal case itself, the Court directed the trial court to already
determine petitioners status as heirs of the decedent even in an ordinary
civil action, i.e., action for annulment of title, because:
The Court pronounced in the Agapay and Yaptinchay cases that a declaration
of heirship cannot be made in an ordinary civil action such as an action for
reconveyance, but must only be made in a special proceeding, for it involves
the establishment of a status or right.
The appropriate special proceeding would have been the settlement of the
estate of the decedent. Nonetheless, an action for quieting of title is also a
special proceeding, specifically governed by Rule 63 of the Rules of Court on
declaratory relief and similar remedies.[97] Actions for declaratory relief and
other similar remedies are distinguished from ordinary civil actions because:
2.
In declaratory relief, the subject-matter is a deed, will, contract or
other written instrument, statute, executive order or regulation, or ordinance.
The issue is the validity or construction of these documents. The relief
sought is the declaration of the petitioners rights and duties thereunder.

The Court, in Heirs of Eugenio Lopez, Sr. v. Enriquez,[94] described an action

for reconveyance as follows:
An action for reconveyance is an action in personam available to a person
whose property has been wrongfully registered under the Torrens system in
anothers 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. Reconveyance is always available as long as the property has not
passed to an innocent third person for value. x x x (Emphases supplied.)
On the other hand, Article 476 of the Civil Code lays down the circumstances
when a person may institute an action for quieting of title:
ART. 476. Whenever there is a cloud on title to real property or any interest
therein, by reason of any instrument, record, claim, encumbrance or
proceeding which is apparently valid or effective but is in truth and in fact
invalid, ineffective, voidable, or unenforceable, and may be prejudicial to said
title, an action may be brought to remove such cloud or to quiet the title.
An action may also be brought to prevent a cloud from being cast upon title
to real property or any interest therein.
In Calacala v. Republic,[95] the Court elucidated on the nature of an
action to quiet title:
Regarding the nature of the action filed before the trial court, quieting
of title is a common law remedy for the removal of any cloud upon or doubt
or uncertainty with respect to title to real property. Originating in equity
jurisprudence, its purpose is to secure x x x an adjudication that a claim of
title to or an interest in property, adverse to that of the complainant, is
invalid, so that the complainant and those claiming under him may be forever
afterward free from any danger of hostile claim. In an action for quieting of
title, the competent court is tasked to determine the respective rights of the
complainant and other claimants, x x x not only to place things in their
proper place, to make the one who has no rights to said immovable respect
and not disturb the other, but also for the benefit of both, so that he who has
the right would see every cloud of doubt over the property dissipated, and he
could afterwards without fear introduce the improvements he may desire, to
use, and even to abuse the property as he deems best x x x . (Emphases
supplied.)
The Court expounded further in Spouses Portic v. Cristobal[96] that:
Suits to quiet title are characterized as proceedings quasi in rem.
Technically, they are neither in rem nor in personam. In an action quasi in
rem, an individual is named as defendant. However, unlike suits in rem, a
quasi in rem judgment is conclusive only between the parties.

longer ask for its re-opening, then an ordinary civil action can be filed for his
declaration as heir in order to bring about the annulment of the partition or
distribution or adjudication of a property or properties belonging to the estate
of the deceased.[100]

The concept of a cause of action in ordinary civil actions does not apply to
declaratory relief as this special civil action presupposes that there has been
no breach or violation of the instruments involved. Consequently, unlike
other judgments, the judgment in an action for declaratory relief does not
essentially entail any executional process as the only relief to be properly
granted therein is a declaration of the rights and duties of the parties under
the instrument, although some exceptions have been recognized under
certain situations.[98]
Civil Case No. 4452 could not be considered an action for reconveyance as it
is not based on the allegation that the two parcels of land, Lots 1 and 2, have
been wrongfully registered in another persons name. OCT Nos. 0-1200 (a.f.)
and 0-1201 (a.f.), covering the subject properties, are still in Doa Demetrias
name. Vidal and Teofilo each claims to have inherited the two parcels of land
from the late Doa Demetria as said decedents sole heir, but neither Vidal
nor Teofilo has been able to transfer registration of the said properties to
her/his name as of yet.
Instead, Civil Case No. 4452 is indisputably an action for quieting of title, a
special proceeding wherein the court is precisely tasked to determine the
rights of the parties as to a particular parcel of land, so that the complainant
and those claiming under him/her may be forever free from any danger of
hostile claim. Vidal asserted title to the two parcels of land as Doa
Demetrias sole heir. The cloud on Vidals title, which she sought to have
removed, was Teofilos adverse claim of title to the same properties, also as
Doa Demetrias only heir. For it to determine the rights of the parties in Civil
Case No. 4452, it was therefore crucial for the RTC-Branch 3 to squarely make
a finding as to the status, filiation, and heirship of Vidal in relation to those of
Teofilo. A finding that one is Doa Demetrias sole and rightful heir would
consequently exclude and extinguish the claim of the other.
Even assuming arguendo that the proscription in the Agapay and Yaptinchay
cases against making declarations of heirship in ordinary civil actions also
extends to actions for quieting of title, the same is not absolute.
In Portugal v. Portugal-Beltran[99] (Portugal case), the Court recognized
that there are instances when a declaration of heirship need not be made in a
separate special proceeding:
The common doctrine in Litam, Solivio and Guilas in which the adverse
parties are putative heirs to the estate of a decedent or parties to the special
proceedings for its settlement is that if the special proceedings are pending,
or if there are no special proceedings filed but there is, under the
circumstances of the case, a need to file one, then the determination of,
among other issues, heirship should be raised and settled in said special
proceedings. Where special proceedings had been instituted but had been
finally closed and terminated, however, or if a putative heir has lost the right
to have himself declared in the special proceedings as co-heir and he can no

It appearing x x x that in the present case the only property of the

intestate estate of Portugal is the Caloocan parcel of land, to still subject it,
under the circumstances of the case, to a special proceeding which could be
long, hence, not expeditious, just to establish the status of petitioners as
heirs is not only impractical; it is burdensome to the estate with the costs and
expenses of an administration proceeding. And it is superfluous in light of the
fact that the parties to the civil casesubject of the present case, could and
had already in fact presented evidence before the trial court which assumed
jurisdiction over the case upon the issues it defined during pre-trial.
In fine, under the circumstances of the present case, there being no
compelling reason to still subject Portugals estate to administration
proceedings since a determination of petitioners status as heirs could be
achieved in the civil case filed by petitioners, the trial court should proceed to
evaluate the evidence presented by the parties during the trial and render a
decision thereon upon the issues it defined during pre-trial, x x x.[101]
Another case, Heirs of Teofilo Gabatan v. Court of Appeals[102] (Gabatan
case), involved an action for recovery of ownership and possession of
property with the opposing parties insisting that they are the legal heirs of
the deceased. Recalling the Portugal case, the Court ruled:
Similarly, in the present case, there appears to be only one parcel of land
being claimed by the contending parties as their inheritance from Juan
Gabatan. It would be more practical to dispense with a separate special
proceeding for the determination of the status of respondent as the sole heir
of Juan Gabatan, specially in light of the fact that the parties to Civil Case No.
89-092, had voluntarily submitted the issue to the RTC and already presented
their evidence regarding the issue of heirship in these proceeding. Also the
RTC assumed jurisdiction over the same and consequently rendered judgment
thereon.
In Fidel v. Court of Appeals[103] (Fidel case), therein respondents, the
heirs of the late Vicente Espineli (Vicente) from his first marriage, instituted
an action to annul the sale of Vicentes property to therein petitioners, the
spouses Fidel. The subject property was sold to petitioners by Vicentes heirs
from his second marriage. Even though ones legitimacy can only be
questioned in a direct action seasonably filed by the proper party, the Court
held that it was necessary to pass upon respondents relationship to Vicente
in the action for annulment of sale so as to determine respondents legal
rights to the subject property. In fact, the issue of whether respondents are
Vicentes heirs was squarely raised by petitioners in their Pre-Trial Brief.
Hence, petitioners were estopped from assailing the ruling of the trial court
on respondents status.
In Civil Case No. 4452, Teofilo and/or Atty. Cabildo themselves asked the RTCBranch 3 to resolve the issue of Vidal's legal or beneficial ownership of the
two parcels of land.[104] During trial, Vidal already presented before the
RTC-Branch 3 evidence to establish her status, filiation, and heirship. There is
no showing that Doa Demetria left any other property that would have
required special administration proceedings. In the spirit of the Portugal,
Gabatan, and Fidel cases, the Court deems it more practical and expeditious
to settle the issue on Vidals status, filiation, and heirship in Civil Case No.
4452.
Title in quieting of title
LANDTRADE, Teofilo, and/or Atty. Cabildo further contend that Vidal and
AZIMUTH have no cause of action for quieting of title since Vidal has no title
to the two parcels of land. In comparison, Teofilos title to the same
properties, as Doa Demetrias only heir, was already established and
recognized by this Court in the 1997 Cacho case.
Again, the Court cannot sustain the foregoing contention of LANDTRADE,
Teofilo, and/or Atty. Cabildo.

It must be borne in mind that the concept of a cause of action in ordinary civil
actions does not apply to quieting of title. In declaratory relief, the subjectmatter is a deed, will, contract or other written instrument, statute, executive
order or regulation, or ordinance. The issue is the validity or construction of
these documents. The relief sought is the declaration of the petitioners
rights and duties thereunder. Being in the nature of declaratory relief, this
special civil action presupposes that there has yet been no breach or violation
of the instruments involved.[105]
In an action for quieting of title, the subject matter is the title sought to have
quieted. Title is not limited to the certificate of registration under the
Torrens System (i.e., OCT or TCT). Pursuant to Article 477 of the Civil Code,
the plaintiff must have legal or equitable title to, or interest in, the real
property subject of the action for quieting of title. The plaintiff need not even
be in possession of the property. If she is indeed Doa Demetrias sole heir,
Vidal already has equitable title to or interest in the two parcels of land by
right of succession, even though she has not yet secured certificates of title
to the said properties in her name.
LANDTRADE, Teofilo, and/or Atty. Cabildo mistakenly believe that the
1997 Cacho case had conclusively settled Teofilo's identity and existence as
Doa Demetrias sole heir. They failed to appreciate that the 1997 Cacho
case involved Teofilos petition for reconstitution of title, treated as a petition
for the re-issuance of Decree Nos. 10364 and 18969. The grant by the RTC of
Teofilos petition, affirmed by this Court, only conclusively established the
prior issuance and existence and the subsequent loss of the two decrees,
thus, entitling Teofilo to the re-issuance of the said decrees in their original
form and condition.
As the Court of Appeals pointed out in its assailed Decision dated January 19,
2007, the issue of Teofilos heirship was not the lis mota of the 1997 Cacho
case. It was addressed by the Court in the 1997 Cacho case for the simple
purpose of determining Teofilos legal interest in filing a petition for the reissuance of the lost decrees. The Court merely found therein that Teofilos
Affidavit of Adjudication, executed in the U.S.A. before the Philippine
Consulate General, enjoyed the presumption of regularity and, thus,
sufficiently established Teofilos legal interest.
The 1997 Cacho case,
however, did not conclusively settle that Teofilo is indeed Doa Demetrias
only heir and the present owner, by right of succession, of the subject
properties.
Factual findings of the RTC-Branch 3 and the Court of Appeals

LANDTRADE, Teofilo, and/or Atty. Cabildo additionally posit that the

evidence presented by Vidal and AZIMUTH were insufficient to prove the fact
of Vidal's filiation and heirship to Doa Demetria. LANDTRADE, Teofilo, and/or
Atty. Cabildo particularly challenged the reliance of the RTC-Branch 3 on
Vidals baptismal certificate, arguing that it has no probative value and is not
conclusive proof of filiation.
Alternative means of proving an individuals filiation have been
recognized by this Court in Heirs of Ignacio Conti v. Court of Appeals.[106]
The property in litigation in said case was co-owned by Lourdes Sampayo
(Sampayo) and Ignacio Conti, married to Rosario Cuario (collectively referred
to as the spouses Conti). Sampayo died without issue. Therein respondents,
claiming to be Sampayos collateral relatives, filed a petition for partition of
the subject property, plus damages. To prove that they were collaterally
related to Sampayo through the latters brothers and sisters, respondents
submitted photocopies of the birth certificates, certifications on the nonavailability of records of births, and certified true copies of the baptismal
certificates of Sampayos siblings.
The spouses Conti questioned the
documentary evidence of respondents filiation on the ground that these were
incompetent and inadmissible, but the Court held that:
Under Art. 172 of the Family Code, the filiation of legitimate children
shall be proved by any other means allowed by the Rules of Court and special
laws, in the absence of a record of birth or a parents admission of such
legitimate filiation in a public or private document duly signed by the parent.
Such other proof of ones filiation may be a baptismal certificate, a judicial
admission, a family Bible in which his name has been entered, common
reputation respecting his pedigree, admission by silence, the testimonies of
witnesses and other kinds of proof admissible under Rule 130 of the Rules of
Court. By analogy, this method of proving filiation may also be utilized in the
instant case.

xxxx
The admissibility of baptismal certificates offered by Lydia S. Reyes, absent
the testimony of the officiating priest or the official recorder, was settled in
People v. Ritter, citing U.S. v. de Vera (28 Phil. 105 [1914]), thus x x x the entries made in the Registry Book may be considered as entries
made in the course of the business under Section 43 of Rule 130, which is an
exception to the hearsay rule. The baptisms administered by the church are
one of its transactions in the exercise of ecclesiastical duties and recorded in
the book of the church during the course of its business.
It may be argued that baptismal certificates are evidence only of the
administration of the sacrament, but in this case, there were four (4)
baptismal certificates which, when taken together, uniformly show that
Lourdes, Josefina, Remedios and Luis had the same set of parents, as
indicated therein. Corroborated by the undisputed testimony of Adelaida
Sampayo that with the demise of Lourdes and her brothers Manuel, Luis and
sister Remedios, the only sibling left was Josefina Sampayo Reyes, such
baptismal certificates have acquired evidentiary weight to prove filiation.
[107]
Thus, Vidals baptismal certificate is not totally bereft of any probative value.
It may be appreciated, together with all the other documentary and
testimonial evidence submitted on Vidals filiation, to wit:
The first issue proposed by petitioners for resolution is whether or not
petitioner Demetria C. Vidal is the sole surviving heir of the late Doa
Demetria Cacho. To prove that, indeed, she is the sole surviving heir of the
late Doa Demetria Cacho, she testified in open court and identified the
following documentary evidence, to wit:
Exhibit A Birth Certificate of Demetria C. Vidal
Exhibit B Partida de Bautismo of Demetria C. Vidal
Exhibit C Certificate of Baptism Demetria C. Vidal
Exhibit D Cacho Family Tree
Exhibit D-1 Branch of Demetria Cacho
Exhibit F Death Certificate of Demetria Cacho.
Exhibit P Drivers license of Demetria C. Vidal.
Exhibit Q to Q5 The book entitled CACHO, the introductory page on
March 1988 when the data were compiled, page 58 on the Vidal branch of the
Cacho family, page 62 on Demetria Cacho and her descendants, page 69 on
the family member with the then latest birth day 26 March 1988, and page 77
with the picture of Demetria Cacho Vidal, Dionisio Vidal and Francisco Vidal.
[108]

In contrast, LANDTRADE, Teofilo, and/or Atty. Cabildo failed to present any

evidence at all in support of their claims. According to the RTC-Branch 3:
Landtrade was also declared to have waived its right to present evidence on
its defense and counterclaim in the above-entitled case in view of its failure
to present evidence on their scheduled trial date.
xxxx
Since respondents Teofilo Cacho and Atty. Godofredo Cabildo opted not to
adduce evidence in this case as they failed to appear during the scheduled
trial dates, the court shall decide on the basis of the evidence for the
respondents-intervenor and petitioners.[109]

Based on the evidence presented before it, the RTC-Branch 3 made the
following factual findings:
From the evidence adduced, both testimonial and documentary, the court is
convinced that petitioner Vidal is the granddaughter of Demetria Cacho Vidal,
the registered owner of the subject property covered by decree Nos. 10364 &
18969, reissued as Decrees No. 19364 and No. 16869. Such being the case,
she is an heir of Demetria Cacho Vidal.

Petitioner Vidals Certificate of Birth (Exh. A) shows that she was born on
June 3, 1941, with the name Demetria Vidal. [Her] father was Francisco Vidal
and her mother was Fidela Confesor, Francisco Vidal is the son of Dionisio
Vidal and Demetria Cacho as shown by [his] Partida de Bautismo (Baptismal
Certificate).
Moreover, it was shown in the same document that her
godmother was Demetria Cacho. By inference, this Demetria Cacho is
actually Demetria Cacho Vidal because she was married to Dionisio Vidal, the
father of Francisco Vidal.
Now then, is Demetria Cacho Vidal the same person referred to in Cacho v.
Government of the United States (28 Phil. 616 [1914])? Page 618, Vol. 28 of
the Philippine Reports would indicate that the applicant for registration was
Doa Demetria Cacho y Soriano (Exh. R-1). The Death Certificate of
Demetria Cacho Vidal shows that her mother was Candelaria Soriano (Exh.
F). Necessarily, they are one and the same person. This is further
confirmed by the fact that the husband of Demetria Cacho Vidal, Seor
Dionisio Vidal, was quoted in pp. 629-630 of the aforecited decision as the
husband of Demetria Cacho (Exh. R-3).
The book CACHO (Exhs. Q to Q-5) and the Cacho Family Tree (Exhs. D
to D-1) further strengthen the aforecited findings of this Court.
It was established by petitioner Vidals own testimony that at the time of
Doa Demetria Cacho's death, she left no heir other than petitioner Vidal.
Her husband, Don Dionisio, died even before the war, while her only child,
Francisco Cacho Vidal xxx Vidals father died during the war. Petitioners
only sibling Francisco Dionisio died at childbirth.
xxxx
The next factual issue proposed by petitioners is whether or not respondent
Teofilo Cacho is the son or heir of the late Doa Demetria Cacho. The
following facts and circumstances negate the impression that he is the son,
as he claims to be, of Doa Demetria Cacho. Thus:
a)
Doa Demetria Cacho was married to Don Dionisio Vidal, and thus her
full name was Doa Demetria Cacho Vidal. Her only child, expectedly, carried
the surname Vidal (Francisco Cacho Vidal). Had Teofilo Cacho actually been a
son of Demetria Cacho, he would and should have carried the name Teofilo
Cacho Vidal, but he did not.
b)
Teofilo Cacho admits to being married to one Elisa Valderrama in the
Special Power of Attorney he issued to Atty. Godofredo [Cabildo] (Exh. O).
Teofilo Cacho married Elisa Valderrama on 27 May 1953, in the Parish of the
Immaculate Conception, Bani, Pangasinan. The Certificate of Marriage shows
that Teofilo Cacho is the son of Agustin Cacho and Estefania Cordial, not
Demetria Cacho. In his Certificate of Baptism (Exh. G), he was born to
Agustin Cacho and Estefania Cordial on May 1930 (when Doa Demetria
Cacho was already 50 years old).
c)
The Cacho Family Tree (Exh. D) (that is, the Cacho Family to which
Doa Demetria Cacho belonged) as well as the book on the Cacho Family
(Exh. Q) are bereft of any mention of Teofilo Cacho or his wife Elisa
Valderrama, or even his real father Agustin Cacho, or mother Estefania
Cordial. They are not known to be related to the Cacho family of Doa
Demetria Cacho.
d)
Paragraph 1.11 of the Petition charges respondent Teofilo Cacho of
having falsely and fraudulently claiming to be the son and sole heir of the late
Doa Demetria Cacho. In his answer to this particular paragraph, he denied
the same for lack of knowledge or information to form a belief. He should
know whether this allegation is true or not because it concerns him. If true,
he should admit and if false, he opted to deny the charges for lack of
knowledge or information to form a belief. The Court considers his denial as
an admission of the allegation that he is falsely and fraudulently claiming to
be the son and sole heir of the late Doa Demetria Cacho.[110]
Considering the aforequoted factual findings, the RTC-Branch 3 arrived at the
following legal conclusions, quieting the titles of Vidal and AZIMUTH, viz:
The first proposed legal issue to be resolved had been amply discussed under
the first factual issue. Certainly, petitioner Vidal has hereditary rights,

interest, or title not only to a portion of the Subject Property but to the entire
property left by the late Doa Demetria Cacho Vidal, subject, however, to the
Deed of Conditional Conveyance executed by petitioner Vidal of a portion of
the Subject Property in favor of petitioner Azimuth International Development
Corporation (Exh. J) executed pursuant to their Memorandum of Agreement
(Exh. I). Consequently, it goes without saying that petitioner Azimuth
International Development Corporation has a right, interest in, or title to a
portion of the subject property.
As discussed earlier in this decision, Teofilo Cacho, not being the son, as he
claims to be, of the late Doa Demetria Cacho Vidal, has no hereditary rights
to the Subject Property left by Doa Demetria Cacho Vidal. He failed to show
any evidence that he is the son of the late Doa Demetria Cacho Vidal as he
and his co respondent, Atty. Godofredo Cabildo, even failed to appear on the
scheduled trial date.
It is, therefore, safe to conclude that respondents Teofilo Cacho and/or Atty.
Godofredo Cabildo and their transferees/assignees have no right, interest in,
or title to the subject property.
Prescinding from the finding of this Court that respondent Teofilo Cacho is not
the son of the registered owner of the Subject Property, the late Doa
Demetria Cacho Vidal, respondent Cacho committed false pretenses and
fraudulent acts in representing himself as son and sole heir of Doa Demetria
Cacho (Vidal) in his petition in court, which eventually led to the
reconstitution of the titles of Doa Demetria Cacho (Vidal). Certainly, his
misrepresentation in the reconstitution case, which apparently is the basis of
his claim to the subject property, casts clouds on [respondents'] title to the
subject property.
It is only right that petitioner Vidal should seek protection of her ownership
from acts tending to cast doubt on her title. Among the legal remedies she
could pursue, is this petition for Quieting of Title under Chapter 3, Title I, Book
II of the Civil Code, Articles 476 to 481 inclusive. x x x.[111]
The Court of Appeals affirmed in toto the judgment of the RTC-Branch 3. The
appellate court even soundly trounced Teofilos attack on the factual findings
of the trial court:

As a rule, the findings of fact of the trial court when affirmed by the Court of
Appeals are final and conclusive, and cannot be reviewed on appeal by this
Court as long as they are borne out by the record or are based on substantial
evidence. It is not the function of the Court to analyze or weigh all over again
the evidence or premises supportive of such factual determination. The
Court has consistently held that thefindings of the Court of Appeals and other
lower courts are, as a rule, accorded great weight, if not binding upon it, save
for the most compelling and cogent reasons.[113] There is no justification for
the Court to deviate from the factual findings of the RTC-Branch 3 and the
Court of Appeals which are clearly supported by the evidence on record.
Prescription
LANDTRADE finally asserts that the action for quieting of title of Vidal
and AZIMUTH already prescribed since LANDTRADE has been in possession of
the two parcels of land in question. The prescriptive period for filing said
action lapsed in 1995, ten years from the time Teofilo executed his Affidavit of
Adjudication in 1985. Yet, Vidal and AZIMUTH instituted Civil Case No. 4452
only in 1998.
It is too late in the day for LANDTRADE to raise the issue of prescription of
Civil Case No. 4452 for the first time before this Court. In this jurisdiction, the
defense of prescription cannot be raised for the first time on appeal. Such
defense may be waived, and if it was not raised as a defense in the trial
court, it cannot be considered on appeal, the general rule being that the
Appellate Court is not authorized to consider and resolve any question not
properly raised in the lower court.[114]

A real action is one where the plaintiff seeks the recovery of real property or,
as indicated in what is now Rule 4, Section 1 of the Rules of Court, a real
action is an action affecting title to or recovery of possession of real property.
[115] An action for quieting of title to real property, such as Civil Case No.
4452, is indubitably a real action.

LANDTRADE adversely possessed the subject properties no earlier than

1996, when it bought the same from Teofilo, and Civil Case No. 4452 was
already instituted two years later in 1998. LANDTRADE cannot tack its
adverse possession of the two parcels of land to that of Teofilo considering
that there is no proof that the latter, who is already residing in the U.S.A.,
adversely possessed the properties at all.

Hence, it is now too late for appellant TEOFILO to assail before Us the facts
proven during the trial, which he failed to refute in open court. Verily,
TEOFILOs lackadaisical attitude in the conduct of his defense only shows that
he has no proof to offer in refutation of the evidence advanced by appellee
VIDAL.

Nevertheless, the Court notes that Article 1411 of the Civil Code also clearly
states that the 30-year prescriptive period for real actions over immovables is
without prejudice to what is established for the acquisition of ownership and
other real rights by prescription. Thus, the Court must also look into the
acquisitive prescription periods of ownership and other real rights.

Otherwise stated, appellant TEOFILO is an impostor, a pretender and bogus

heir of DOA DEMETRIA.

Acquisitive prescription of dominion and real rights may be ordinary or

extraordinary. [116]

xxxx

Ordinary acquisitive prescription requires possession of things in good faith

and with just title for the time fixed by law.[117] In the case of ownership
and other real rights over immovable property, they are acquired by ordinary
prescription through possession of 10 years.[118]

It stands on record that TEOFILO CACHO has all along even prior to executing
his Affidavit of Adjudication in 1985 in Chicago, United States of America, and
in simultaneously executing a Special Power of Attorney in favor of ATTY.
CABILDO, had remained in the United States, and not for a single moment
appeared in court except through his agents or representatives. To Our mind,
this fact alone adversely affects his pretension in claiming to be an heir of
DOA DEMETRIA.[112]

Since the ordinary acquisitive prescription period of 10 years does not

apply to LANDTRADE, then the Court turns its attention to the extraordinary
acquisitive prescription period of 30 years set by Article 1137 of the Civil
Code, which reads:
ART. 1137. Ownership and other real rights over immovables also prescribe
through uninterrupted adverse possession thereof for thirty

xxxx

Besides, it is quite unnatural and against human nature for a rightful heir, if
TEOFILO is really one, to merely stand still with folded arms, while the
accusing finger of VIDAL is right on his very nose. In all likelihood, and with
all his might and resources, a rightful heir may even be expected to cross
continents and reach distant shores to protect his interest over the subject
properties, which in this case is arguably worth more than a Kings ransom.

Furthermore, in its Complaint for Unlawful Detainer against NAPOCOR and

TRANSCO, which was docketed as Civil Case No. 11475-AF before the MTCC,
LANDTRADE itself alleged that when it bought the two parcels of land from
Teofilo, portions thereof were already occupied by the Overton Sub-station
and Agus 7 Warehouse of NAPOCOR and TRANSCO.
This is another
circumstance which should have prompted LANDTRADE to investigate or
inspect the property being sold to it. 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 dueo, 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 occupants
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.[121]

But even if the Court takes cognizance of the issue of prescription, it

will rule against LANDTRADE.

Article 1141 of the Civil Code plainly provides that real actions over
immovables prescribe after thirty years. Doa Demetria died in 1974,
transferring by succession, her title to the two parcels of land to her only heir,
Vidal. Teofilo, through Atty. Cabildo, filed a petition for reconstitution of the
certificates of title covering said properties in 1978. This is the first palpable
display of Teofilos adverse claim to the same properties, supposedly, also as
Doa Demetrias only heir. When Vidal and AZIMUTH instituted Civil Case No.
4452 in 1998, only 20 years had passed, and the prescriptive period for filing
an action for quieting of title had not yet prescribed.

[T]he material facts sought to be established by the afore-mentioned

documentary evidence corroborated by the testimony of VIDAL, whose
testimony or credibility neither TEOFILO and LANDTRADE even attempted to
impeach, only proves one thing, that she is the granddaughter of DOA
DEMETRIA and the sole heiress thereof.

Worse, LANDTRADE is not dealing directly with Teofilo, but only with the
latters attorney-in-fact, Atty. Cabildo. It is axiomatic that one who buys from
a person who is not a registered owner is not a purchaser in good faith.[120]

LANDTRADE cannot insist on the application of the 10-year ordinary

acquisitive prescription period since it cannot be considered a possessor in
good faith. The good faith of the possessor consists in the reasonable belief
that the person from whom he received the thing was the owner thereof, and
could transmit his ownership.[119]
LANDTRADE came to possession of the two parcels of land after purchasing
the same from Teofilo. The Court stresses, however, that Teofilo is not the
registered owner of the subject properties. The said properties are still
registered in Doa Demetrias name under OCT Nos. 0-1200 (a.f.) and 0-1201
(a.f.). The Affidavit of Adjudication, by which Teofilo declared himself to be
the sole heir of Doa Demetrias estate, is not even annotated on the OCTs.

Thus, the Court of Appeals did not err when it affirmed in toto the judgment
of the RTC-Branch 3 which declared, among other things, that (a) Vidal is the
sole surviving heir of Doa Demetria, who alone has rights to and interest in
the subject parcels of land; (b) AZIMUTH is Vidals successor-in-interest to
portions of the said properties in accordance with the 1998 Memorandum of
Agreement and 2004 Deed of Conditional Conveyance; (c) Teofilo is not the
son or heir of Doa Demetria; and (d) Teofilo, Atty. Cabildo, and their
transferees/assignees, including LANDTRADE, have no valid right to or
interest in the same properties.
The Ejectment or Unlawful Detainer Case
(G.R. Nos. 170505, 173355-56, and 173563-64)

The Petitions in G.R. Nos. 170505, 173355-56, and 173563-64 all

concern the execution pending appeal of the Decision dated February 17,
2004 of the MTCC in Civil Case No. 11475-AF, which ordered NAPOCOR and
TRANSCO to vacate the two parcels of land in question, as well as to pay rent
for the time they occupied said properties.
LANDTRADE filed its Petition for Review in G.R. No. 170505 when it failed to
have the MTCC Decision dated February 17, 2004 executed while Civil Case
No. 6613, the appeal of the same judgment by NAPOCOR and TRANSCO, was
still pending before the RTC-Branch 5.
NAPOCOR and TRANSCO sought recourse from this Court through their
Petitions for Certiorari and Prohibition in G.R. Nos. 173355-56 and 173563-64
after the RTC-Branch 1 (to which Civil Case No. 6613 was re-raffled) already
rendered a Decision dated December 12, 2005 in Civil Case No. 6613,
affirming the MTCC Decision dated February 17, 2004. Expectedly, NAPOCOR
and TRANSCO appealed the judgment of the RTC-Branch 1 to the Court of
Appeals. The Court of Appeals granted the motion for execution pending
appeal of LANDTRADE, and denied the application for preliminary injunction
of NAPOCOR and TRANSCO.

The requirements of posting a supersedeas bond and depositing rent to

The pivotal issue in G.R. No. 170505 is whether LANDTRADE is entitled to the
execution of the MTCC Decision dated February 17, 2004 even while said
judgment was then pending appeal before the RTC-Branch 5. The RTC-Branch
5 granted the motion for immediate execution pending appeal of LANDTRADE
because of the failure of NAPOCOR and TRANSCO to comply with the
requirements for staying the execution of the MTCC judgment, as provided in
Rule 70, Section 19 of the Rules of Court. The Court of Appeals subsequently
found grave abuse of discretion on the part of RTC-Branch 5 in issuing the
Order dated August 9, 2004 which granted execution pending appeal and the
Writ of Execution Pending Appeal dated August 10, 2004; and on the part of
Sheriff Borres, in issuing the Notices of Garnishment and Notification to
vacate, all dated August 11, 2004. According to the appellate court,
NAPOCOR and TRANSCO are exempt from the requirements of filing a
supersedeas bond and depositing rent in order to stay the execution of the
MTCC judgment.
Rule 70, Section 19 of the Rules of Court lays down the requirements for
staying the immediate execution of the MTCC judgment against the
defendant in an ejectment suit:
SEC. 19. Immediate execution of judgment; how to stay same. If judgment
is rendered against the defendant, execution shall issue immediately upon
motion, unless an appeal has been perfected and the defendant to stay
execution files a sufficient supersedeas bond, approved by the Municipal Trial
Court and executed in favor of the plaintiff to pay the rents, damages, and
costs accruing down to the time of the judgment appealed from, and unless,
during the pendency of the appeal, he deposits with the appellate court the
amount of rent due from time to time under the contract, if any, as
determined by the judgment of the Municipal Trial Court. In the absence of a
contract, he shall deposit with the Regional Trial Court the reasonable value of
the use and occupation of the premises for the preceding month or period at
the rate determined by the judgment of the lower court on or before the
tenth day of each succeeding month or period. The supersedeas bond shall
be transmitted by the Municipal Trial Court, with the other papers, to the clerk
of the Regional Trial Court to which the action is appealed.
All amounts so paid to the appellate court shall be deposited with said court
or authorized government depositary bank, and shall be held there until the
final disposition of the appeal, unless the court, by agreement of the
interested parties, or in the absence of reasonable grounds of opposition to a
motion to withdraw, or for justifiable reasons, shall decree otherwise. Should
the defendant fail to make the payments above prescribed from time to time
during the pendency of the appeal, the appellate court, upon motion of the
plaintiff, and upon proof of such failure, shall order the execution of the
judgment appealed from with respect to the restoration of possession, but
such execution shall not be a bar to the appeal taking its course until the final
disposition thereof on the merits.
After the case is decided by the Regional Trial Court, any money paid to the
court by the defendant for purposes of the stay of execution shall be disposed
of in accordance with the provisions of the judgment of the Regional Trial
Court. In any case wherein it appears that the defendant has been deprived
of the lawful possession of land or building pending the appeal by virtue of
the execution of the judgment of the Municipal Trial Court, damages for such
deprivation of possession and restoration of possession may be allowed the
defendant in the judgment of the Regional Trial Court disposing of the appeal.
(Emphases supplied.)

The Court had previously recognized the exemption of NAPOCOR from filing a
supersedeas bond.
The Court stated in Philippine Geothermal, Inc. v.
Commissioner of Internal Revenue[122] that a chronological review of the
NAPOCOR Charter will show that it has been the lawmakers intention that
said corporation be completely exempt not only from all forms of taxes, but
also from filing fees, appeal bonds, and supersedeas bonds in any court or
administrative proceedings. The Court traced the history of the NAPOCOR
Charter, thus:
Republic Act No. 6395 (10 September 1971) enumerated the details covered
by the exemptions by stating under Sec. 13 that The Corporation shall be
non-profit and shall devote all its returns from its capital investment, as well
as excess revenues from its operation, for expansionthe Corporation is

hereby declared exempt from the payment of all taxes, duties, fees, imposts,
charges, costs and service fees in any court or administrative proceedings in
which it may be a party, restrictions and duties to the Republic of the
Philippines, its provinces, cities, municipalities and other government
agencies and instrumentalities . . . Subsequently, Presidential Decree No.
380 (22 January 1974), Sec. 10 made even more specific the details of the
exemption of NPC to cover, among others, both direct and indirect taxes on
all petroleum products used in its operation. Presidential Decree No. 938 (27
May 1976), Sec. 13 amended the tax exemption by simplifying the same law
in general terms. It succinctly exempts service fees, including filing fees,
appeal bonds, supersedeas bonds, in any court or administrative
proceedings. The use of the phrase all forms of taxes demonstrate the
intention of the law to give NPC all the exemption it has been enjoying before.
The rationale for this exemption is that being non-profit, the NPC shall
devote all its return from its capital investment as well as excess revenues
from its operation, for expansion.[123] (Emphases supplied.)
As presently worded, Section 13 of Republic Act No. 6395, the NAPOCOR
Charter, as amended, reads:
SEC. 13. Non-profit Character of the Corporation; Exemption from All Taxes,
Duties, Fees, Imposts and Other Charges by the Government and
Government Instrumentalities. The Corporation shall be non-profit and shall
devote all its returns from its capital investment as well as excess revenues
from its operation, for expansion. To enable the Corporation to pay its
indebtedness and obligations and in furtherance and effective
implementation of the policy enunciated in Section One of this Act, the
Corporation, including its subsidiaries, is hereby declared exempt from the
payment of all forms of taxes, duties, fees, imposts as well as costs and
service fees including filing fees, appeal bonds, supersedeas bonds, in any
court or administrative proceedings. (Emphasis supplied.)
In A.M. No. 05-10-20-SC, captioned In Re: Exemption of the National Power
Corporation from Payment of Filing/Docket Fees, the Court addressed the
query of a Clerk of Court from the RTC of Urdaneta, Pangasinan on whether
NAPOCOR is exempt from the payment of filing fees and Sheriffs Trust Fund.
In its Resolution dated December 6, 2005, the Court, upon the
recommendation of the Court Administrator, declared that NAPOCOR is still
exempt from the payment of filing fees, appeal bonds, and supersedeas
bonds.
Consistent with the foregoing, the Court of Appeals rendered its Decision
dated November 23, 2005 in CA-G.R. SP Nos. 85714 and 85841 declaring that
NAPOCOR was exempt from filing a supersedeas bond to stay the execution
of the MTCC judgment while the same was pending appeal before the RTCBranch 5. The appellate court also held that the exemption of NAPOCOR
extended even to the requirement for periodical deposit of rent, ratiocinating
that:
On the whole, the posting of supersedeas bond and the making of the
periodical deposit are designed primarily to insure that the plaintiff would be
paid the back rentals and the compensation for the use and occupation of the
premises should the municipal trial courts decision be eventually affirmed on
appeal. Elsewise stated, both the posting of the supersedeas bond and the
payment of monthly deposit are required to accomplish one and the same
purpose, namely, to secure the performance of, or to satisfy the judgment
appealed from in case it is affirmed on appeal by the appellate court.
xxxx
Thus viewed, the inescapable conclusion is, and so We hold, that although the
term making of monthly deposit in ejectment cases is not expressly or
specifically mentioned in Section 13 of R.A. 6395, however, inasmuch as it
has the same or similar function, purpose, and essence as a supersedeas
bond, it should be deemed included in the enumeration laid down under the
said provision. This accords well with the principle of ejusdem generis which
says that where a statute uses a general word followed by an enumeration of
specific words embraced within the general word merely as examples, the
enumeration does not restrict the meaning of the general word which should
be construed to include others of the same class although not enumerated
therein; or where a general word or phrase follows an enumeration of
particular and specific words of the same class or where the latter follow the
former, the general word or phrase is to be construed to include persons,
things or cases akin to, resembling, or of the same kind or class as those
specifically mentioned.
In a nutshell, We hold that petitioner NAPOCOR enjoys exemption not only
from posting supersedeas bond in courts in appealed ejectment cases, but

also from periodically depositing the amount of the monthly rental or the
reasonable compensation of the use and occupancy of the property, as
determined in the municipal trial courts decision.[124]
The Court of Appeals further adjudged that the exemptions of NAPOCOR
similarly applied to TRANSCO since [i]t is all too obvious that the interests of
NAPOCOR and TRANSCO over the premises in litigation are so interwoven and
dependent upon each other, such that whatever is adjudged in regard to the
former, whether favorable or adverse, would ineluctably and similarly affect
the latter[;] and [c]onsequently, x x x the stay of the execution of the
appealed decision insofar as NAPOCOR is concerned necessarily extends and
inures to its co-defendant TRANSCO, not by virtue of the formers statutory
exemption privilege from filing supersedeas bond and making periodic
deposits, but by the indisputably operative fact that the rights and liabilities
in litis of BOTH defendants are so intimately interwoven, interdependent, and
indivisible.[125]
Only recently, however, the Court reversed its stance on the exemption of
NAPOCOR from filing fees, appeal bonds, and supersedeas bonds. Revisiting
A.M. No. 05-10-20-SC, the Court issued Resolutions dated October 27, 2009
and March 10, 2010, wherein it denied the request of NAPOCOR for
exemption from payment of filing fees and court fees for such request
appears to run counter to Article VIII, Section 5(5)[126] of the Constitution, on
the rule-making power of the Supreme Court over the rules on pleading,
practice and procedure in all courts, which includes the sole power to fix the
filing fees of cases in courts. The Court categorically pronounced that
NAPOCOR can no longer invoke its amended Charter as basis for exemption
from the payment of legal fees.
Nevertheless, in this case, the RTC-Branch 1 already promulgated its
Decision in Civil Case No. 6613 on December 12, 2005, denying the appeal of
NAPOCOR and TRANSCO and affirming the MTCC judgment against said
corporations. NAPOCOR and TRANSCO presently have pending appeals of the
RTC-Branch 1 judgment before the Court of Appeals.
Rule 70, Section 19 of the Rules of Court applies only when the judgment of a
Municipal Trial Court (and any same level court such as the MTCC) in an
ejectment case is pending appeal before the RTC. When the RTC had already
resolved the appeal and its judgment, in turn, is pending appeal before the
Court of Appeals, then Rule 70, Section 21 of the Rules of Court governs.
The Court already pointed out in Northcastle Properties and Estate
Corporation v. Paas[127] that Section 19 applies only to ejectment cases
pending appeal with the RTC, and Section 21 to those already decided by the
RTC. The Court again held in Uy v. Santiago[128] that:
[I]t is only execution of the Metropolitan or Municipal Trial Courts judgment
pending appeal with the Regional Trial Court which may be stayed by a
compliance with the requisites provided in Rule 70, Section 19 of the 1997
Rules on Civil Procedure. On the other hand, once the Regional Trial Court
has rendered a decision in its appellate jurisdiction, such decision shall, under
Rule 70, Section 21 of the 1997 Rules on Civil Procedure, be immediately
executory, without prejudice to an appeal, via a Petition for Review, before
the Court of Appeals and/or Supreme Court. (Emphases supplied.)
According to Rule 70, Section 21 of the Rules of Court, [t]he judgment of the
Regional Trial Court against the defendant shall be immediately executory,
without prejudice to a further appeal that may be taken therefrom. It no
longer provides for the stay of execution at such stage.
Thus, subsequent events have rendered the Petition of LANDTRADE in G.R.
No. 170505 moot and academic. It will serve no more purpose for the Court
to require NAPOCOR and TRANSCO to still comply with the requirements of
filing a supersedeas bond and depositing rent to stay execution pending
appeal of the MTCC judgment, as required by Rule 70, Section 19 of the Rules
of Court, when the appeal had since been resolved by the RTC.
Preliminary injunction to stay execution of RTC judgment against defendant in
an ejectment case
The issues raised by NAPOCOR and TRANSCO in their Petitions in G.R. Nos.
173355-56 and 173563-64 boil down to the sole issue of whether the Court of
Appeals committed grave abuse of discretion amounting to lack or excess of
jurisdiction in refusing to enjoin the execution of the Decision dated

December 12, 2005 of the RTC-Branch 1 in Civil Case No. 6613 while the
same is pending appeal before the appellate court.
The Court of Appeals granted the issuance of a writ of execution in favor of
LANDTRADE and denied the application for writ of preliminary injunction of
NAPOCOR and TRANSCO because Rule 70, Section 21 of the Rules of Court
explicitly provides that the RTC judgment in an ejectment case, which is
adverse to the defendant and pending appeal before the Court of Appeals,
shall be immediately executory and can be enforced despite further appeal.
Therefore, the execution of the RTC judgment pending appeal is the
ministerial duty of the Court of Appeals, specifically enjoined by law to be
done.
NAPOCOR and TRANSCO argue that neither the rules nor jurisprudence
explicitly declare that Rule 70, Section 21 of the Rules of Court bars the
application of Rule 58 on preliminary injunction.
Regardless of the
immediately executory character of the RTC judgment in an ejectment case,
the Court of Appeals, before which said judgment is appealed, is not deprived
of power and jurisdiction to issue a writ of preliminary injunction when
circumstances so warrant.
There is merit in the present Petitions of NAPOCOR and TRANSCO.

the Regional Trial Court and decides to appeal to a superior court. It

authorizes the RTC to immediately issue a writ of execution without prejudice
to the appeal taking its due course. It is our opinion that on appeal the
appellate court may stay the said writ should circumstances so require.
In the case of Amagan v. Marayag, we reiterated our pronouncement in Vda.
de Legaspi v. Avendao that the proceedings in an ejectment case may be
suspended in whatever stage it may be found. We further drew a fine line
between forcible entry and unlawful detainer, thus:
Where the action, therefore, is one of illegal detainer, as distinguished from
one of forcible entry, and the right of the plaintiff to recover the premises is
seriously placed in issue in a proper judicial proceeding, it is more equitable
and just and less productive of confusion and disturbance of physical
possession, with all its concomitant inconvenience and expenses. For the
Court in which the issue of legal possession, whether involving ownership or
not, is brought to restrain, should a petition for preliminary injunction be filed
with it, the effects of any order or decision in the unlawful detainer case in
order to await the final judgment in the more substantive case involving legal
possession or ownership. It is only where there has been forcible entry that
as a matter of public policy the right to physical possession should be
immediately set at rest in favor of the prior possession regardless of the fact
that the other party might ultimately be found to have superior claim to the
premises involved thereby to discourage any attempt to recover possession
thru force, strategy or stealth and without resorting to the courts.

The Court expounded on the nature of a writ of preliminary injunction in Levi

Strauss & Co. v. Clinton Apparelle, Inc. [129]:
Section 1, Rule 58 of the Rules of Court defines a preliminary injunction as an
order granted at any stage of an action prior to the judgment or final order
requiring a party or a court, agency or a person to refrain from a particular
act or acts. Injunction is accepted as the strong arm of equity or a
transcendent remedy to be used cautiously as it affects the respective rights
of the parties, and only upon full conviction on the part of the court of its
extreme necessity. An extraordinary remedy, injunction is designed to
preserve or maintain the status quo of things and is generally availed of to
prevent actual or threatened acts until the merits of the case can be heard. It
may be resorted to only by a litigant for the preservation or protection of his
rights or interests and for no other purpose during the pendency of the
principal action. It is resorted to only when there is a pressing necessity to
avoid injurious consequences, which cannot be remedied under any standard
compensation. The resolution of an application for a writ of preliminary
injunction rests upon the existence of an emergency or of a special recourse
before the main case can be heard in due course of proceedings.
Section 3, Rule 58, of the Rules of Court enumerates the grounds for the
issuance of a preliminary injunction:
SEC. 3. Grounds for issuance of preliminary injunction. A preliminary
injunction may be granted when it is established:
(a) That the applicant is entitled to the relief demanded, and the whole or
part of such relief consists in restraining the commission or continuance of
the act or acts complained of, or in requiring the performance of an act or
acts, either for a limited period or perpetually;
(b) That the commission, continuance, or non-performance of the act or acts
complained of during the litigation would probably work injustice to the
applicant; or
(c) That a party, court, agency or a person is doing, threatening, or is
attempting to do, or is procuring or suffering to be done, some act or acts
probably in violation of the rights of the applicant respecting the subject of
the action or proceeding, and tending to render the judgment ineffectual.
Under the cited provision, a clear and positive right especially calling for
judicial protection must be shown. Injunction is not a remedy to protect or
enforce contingent, abstract, or future rights; it will not issue to protect a
right not in esse and which may never arise, or to restrain an act which does
not give rise to a cause of action. There must exist an actual right. There
must be a patent showing by the complaint that there exists a right to be
protected and that the acts against which the writ is to be directed are
violative of said right.

Patently, even if RTC judgments in unlawful detainer cases are immediately

executory, preliminary injunction may still be granted. There need only be
clear showing that there exists a right to be protected and that the acts
against which the writ is to be directed violate said
As in Benedicto, substantial considerations exist herein that compels
the Court to issue a writ of preliminary injunction enjoining the execution of
the February 17, 2004 Decision of the MTCC, as affirmed by the December
12, 2005 Decision of the RTC-Branch 1, until the appeal of latter judgment,
sought by NAPOCOR and TRANSCO, is finally resolved by the Court of
Appeals.
First, the two parcels of land claimed by LANDTRADE are the subject of
several other cases. In fact, Vidal and AZIMUTH, who instituted the Quieting
of Title Case against Teofilo and LANDTRADE (also presently before the Court
in G.R. Nos. 178779 and 178894) have filed a Motion For Leave to Intervene
in the instant case, thus, showing that there are other parties who, while
strangers to the ejectment case, might be greatly affected by its result and
who want to protect their interest in the subject properties. And although
cases involving title to real property, i.e., quieting of title, accion publiciana,
etc., are not prejudicial to and do not suspend an ejectment case,[131] the
existence of such cases should have already put the Court of Appeals on
guard that the title of LANDTRADE to the subject properties on which it
fundamentally based its claim of possessory right is being fiercely
contested.

The Court must emphasize though that in so far as the Ejectment Case is
concerned, it has only settled herein issues on the propriety of enjoining the
execution of the MTCC Decision dated February 17, 2004 while it was on
appeal before the RTC, and subsequently, before the Court of Appeals. The
Court of Appeals has yet to render a judgment on the appeal itself. But it
may not be amiss for the Court to also point out that in G.R. Nos. 178779 and
178894 (Quieting of Title Case), it has already found that Vidal, not Teofilo, is
the late Doa Demetrias sole heir, who alone inherits Doa Demetrias rights
to and interests in the disputed parcels of land. This conclusion of the Court
in the Quieting of Title Case will inevitably affect the Ejectment Case still
pending appeal before the Court of Appeals since LANDTRADE is basing its
right to possession in the Ejectment Case on its supposed title to the subject
properties, which it derived from Teofilo.
The Cancellation of Titles and Reversion Case
(G.R. No. 173401)
The Republic is assailing in its Petition in G.R. No. 173401 the (1) Order
dated December 13, 2005 of the RTC-Branch 4 dismissing Civil Case No.
6686, the Complaint for Cancellation of Titles and Reversion filed by the
Republic against the deceased Doa Demetria, Vidal and/or Teofilo, and
AZIMUTH and/or LANDTRADE; and (2) Order dated May 16, 2006 of the same
trial court denying the Motion for Reconsideration of the Republic, averring
that:
With due respect, the trial court decided a question of substance contrary to
law and jurisprudence in ruling:
(i)
THAT PETITIONER HAD NO CAUSE OF ACTION IN INSTITUTING THE
SUBJECT COMPLAINT FOR CANCELLATION OF OCT NOS. 0-1200 (A.F.) AND 01201 (A.F.), INCLUDING ALL DERIVATIVE TITLES, AND REVERSION.
(ii)
THAT PETITIONERS COMPLAINT FOR CANCELLATION OF OCT NOS. 01200 (A.F.) AND 0-1201 (A.F.) INCLUDING ALL DERIVATIVE TITLES, AND
REVERSION IS BARRED BY THE DECISIONS IN CACHO VS GOVERNMENT OF
THE UNITED STATES (28 PHIL. 616 [1914] AND CACHO VS COURT OF APPEALS
(269 SCRA 159 [1997].
(iii)

THAT PETITIONERS CAUSE OF ACTION HAS PRESCRIBED; AND

(iv)

THAT PETITIONER IS GUILTY OF FORUM SHOPPING.[132]

The Court finds merit in the present Petition.

Second, it is undisputed that TRANSCO and its predecessor, NAPOCOR, have
been in possession of the disputed parcels of land for more than 40 years.
Upon said properties stand the TRANSCO Overton Sub-station and Agus 7
Warehouse.
The Overton Sub-station, in particular, is a crucial facility
responsible for providing the power requirements of a large portion of Iligan
City, the two Lanao Provinces, and other nearby provinces. Without doubt,
having TRANSCO vacate its Overton Sub-station, by prematurely executing
the MTCC judgment of February 17, 2004, carries serious and irreversible
implications, primordial of which is the widespread disruption of the electrical
power supply in the aforementioned areas, contributing further to the electric
power crisis already plaguing much of Mindanao.
Lastly, allowing execution pending appeal would result in the payment of an
astronomical amount in rentals which, per Sheriff Borress computation,
already amounted to P156,000,000.00 by August 11, 2004, when he issued
the Notices of Garnishment and Notification against NAPOCOR and TRANSCO;
plus, P500,000.0 each month thereafter. Payment of such an amount may
seriously put the operation of a public utility in peril, to the detriment of its
consumers.

Benedicto v. Court of Appeals[130] sets forth the following elucidation on the

applicability of Rule 58 vis--vis Rule 70, Section 21 of the Rules of Court:
This section [Rule 70, Section 21] presupposes that the defendant in a
forcible entry or unlawful detainer case is unsatisfied with the judgment of

remedied under any standard compensation. The issuance by the Court of

Appeals of a writ of preliminary injunction is justified by the circumstances.

These circumstances altogether present a pressing necessity to avoid

injurious consequences, not just to NAPOCOR and TRANSCO, but to a
substantial fraction of the consuming public as well, which cannot be

Cause of action for reversion

The Complaint in Civil Case No. 6686 seeks the cancellation of OCT
Nos. 0-1200 (a.f.) and 0-1201 (a.f.), with all their derivative titles, and
reversion. The Complaint was dismissed by the RTC-Branch 4 in its Order
dated December 13, 2005, upon Motion of Vidal and AZIMUTH, on the ground
that the State does not have a cause of action for reversion. According to the
RTC-Branch 4, there was no showing that the late Doa Demetria committed
any wrongful act or omission in violation of any right of the Republic.
Additionally, the Regalian doctrine does not apply to Civil Case No. 6686
because said doctrine does not extend to lands beyond the public domain.
By the own judicial admission of the Republic, the two parcels of land in
question are privately owned, even before the same were registered in Doa
Demetrias name.
The Court disagrees.
Rule 2, Section 2 of the Rules of Court defines a cause of action as the
act or omission by which a party violates a right of another. Its essential
elements are the following: (1) a right in favor of the plaintiff; (2) an
obligation on the part of the named defendant to respect or not to violate
such right; and (3) such defendants act or omission that is violative of the

right of the plaintiff or constituting a breach of the obligation of the former to

the latter.[133]
In Vergara v. Court of Appeals,[145] the Court additionally explained that:
Reversion is an action where the ultimate relief sought is to revert the
land back to the government under the Regalian doctrine. Considering that
the land subject of the action originated from a grant by the government, its
cancellation is a matter between the grantor and the grantee.[134] In Estate
of the Late Jesus S. Yujuico v. Republic[135] (Yujuico case), reversion was
defined as an action which seeks to restore public land fraudulently awarded
and disposed of to private individuals or corporations to the mass of public
domain. It bears to point out, though, that the Court also allowed the resort
by the Government to actions for reversion to cancel titles that were void for
reasons other than fraud, i.e., violation by the grantee of a patent of the
conditions imposed by law;[136] and lack of jurisdiction of the Director of
Lands to grant a patent covering inalienable forest land[137] or portion of a
river, even when such grant was made through mere oversight.[138] In
Republic v. Guerrero,[139] the Court gave a more general statement that the
remedy of reversion can be availed of only in cases of fraudulent or unlawful
inclusion of the land in patents or certificates of title.
The right of the Republic to institute an action for reversion is rooted in the
Regalian doctrine. Under the Regalian doctrine, all lands of the public domain
belong to the State, and that the State is the source of any asserted right to
ownership in land and charged with the conservation of such patrimony. This
same doctrine also states that all lands not otherwise appearing to be clearly
within private ownership are presumed to belong to the State.[140] It is
incorporated in the 1987 Philippine Constitution under Article XII, Section 2
which declares [a]ll lands of the public domain, waters, minerals, coal,
petroleum, and other mineral oils, all forces of potential energy, fisheries,
forests or timber, wildlife, flora and fauna, and other natural resources are
owned by the State. x x x No public land can be acquired by private persons
without any grant, express or implied, from the government; it is
indispensable that there be a showing of the title from the State.[141]
The reversion case of the Republic in Civil Case No. 6686 rests on the main
argument that OCT Nos. 0-1200 (a.f.) and 0-1201 (a.f.), issued in Doa
Demetrias name, included parcels of lands which were not adjudicated to her
by the Court in the 1914 Cacho case. Contrary to the statement made by the
RTC-Branch 4 in its December 13, 2005 Order, the Republic does not make
any admission in its Complaint that the two parcels of land registered in Doa
Demetrias name were privately owned even prior to their registration. While
the Republic does not dispute that that two parcels of land were awarded to
Doa Demetria in the 1914 Cacho case, it alleges that these were not the
same as those covered by OCT Nos. 0-1200 (a.f.) and 0-1201 (a.f.) issued in
Doa Demetrias name 84 years later. If, indeed, the parcels of land covered
by said OCTs were not those granted to Doa Demetria in the 1914 Cacho
case, then it can be presumed, under the Regalian doctrine, that said
properties still form part of the public domain belonging to the State.
Just because OCTs were already issued in Doa Demetrias name does not bar
the Republic from instituting an action for reversion. Indeed, the Court made
it clear in Francisco v. Rodriguez[142] that Section 101 of the Public Land Act
may be invoked only when title has already vested in the individual, e.g.,
when a patent or a certificate of title has already been issued[,] for the basic
premise in an action for reversion is that the certificate of title fraudulently or
unlawfully included land of the public domain, hence, calling for the
cancellation of said certificate. It is actually the issuance of such a certificate
of title which constitutes the third element of a cause of action for reversion.
The Court further finds that the Complaint of the Republic in Civil Case No.
6686 sufficiently states a cause of action for reversion, even though it does
not allege that fraud was committed in the registration or that the Director of
Lands requested the reversion.
It is a well-settled rule that the existence of a cause of action is determined
by the allegations in the complaint. In the resolution of a motion to dismiss
based on failure to state a cause of action, only the facts alleged in the
complaint must be considered. The test in cases like these is whether a court
can render a valid judgment on the complaint based upon the facts alleged
and pursuant to the prayer therein. Hence, it has been held that a motion to
dismiss generally partakes of the nature of a demurrer which hypothetically
admits the truth of the factual allegations made in a complaint.[143] The
hypothetical admission extends to the relevant and material facts well
pleaded in the complaint and inferences fairly deducible therefrom. Hence, if
the allegations in the complaint furnish sufficient basis by which the
complaint can be maintained, the same should not be dismissed regardless of
the defense that may be assessed by the defendants.[144]

In determining whether allegations of a complaint are sufficient to support a

cause of action, it must be borne in mind that the complaint does not have to
establish or allege facts proving the existence of a cause of action at the
outset; this will have to be done at the trial on the merits of the case. To
sustain a motion to dismiss for lack of cause of action, the complaint must
show that the claim for relief does not exist, rather than that a claim has
been defectively stated, or is ambiguous, indefinite or uncertain.
The Republic meticulously presented in its Complaint the discrepancies
between the 1914 Cacho case, on one hand, which granted Doa Demetria
title to two parcels of land; and OCT Nos. 0-1200 (a.f.) and 0-1201 (a.f.), on
the other, which were supposedly issued pursuant to the said case.
In
paragraphs 9 and 16 of its Complaint, the Republic clearly alleged that OCT
Nos. 0-1200 (a.f.) and 0-1201 (a.f.) cover properties much larger than or areas
beyond those granted by the land registration court in GLRO Record Nos.
6908 and 6909. Thus, the Republic was able to satisfactorily allege the
unlawful inclusion, for lack of an explicit grant from the Government, of
parcels of public land into Doa Demetrias OCTs, which, if true, will justify the
cancellation of said certificates and the return of the properties to the
Republic.
That the Complaint in Civil Case No. 6686 does not allege that it had been
filed by the Office of the Solicitor General (OSG), at the behest of the Director
of Lands, does not call for its dismissal on the ground of failure to state a
cause of action. Section 101 of Commonwealth Act No. 141, otherwise known
as the Public Land Act, as amended, simply requires that:
SEC. 101. All actions for the reversion to the Government of lands of the
public domain or improvements thereon shall be instituted by the Solicitor
General or the officer acting in his stead, in the proper courts, in the name of
the Republic of the Philippines. (Emphasis supplied.)

Clear from the aforequoted provision that the authority to institute an action
for reversion, on behalf of the Republic, is primarily conferred upon the OSG.
While the OSG, for most of the time, will file an action for reversion upon the
request or recommendation of the Director of Lands, there is no basis for
saying that the former is absolutely bound or dependent on the latter.
RTC-Branch 4 cited Sherwill Development Corporation v. Sitio Nio Residents
Association, Inc. [146] (Sherwill case), to support its ruling that it is
absolutely necessary that an investigation and a determination of fraud
should have been made by the Director of Lands prior to the filing of a case
for reversion. The Sherwill case is not in point and does not constitute a
precedent for the case at bar. It does not even involve a reversion case. The
main issue therein was whether the trial court properly dismissed the
complaint of Sherwill Development Corporation for quieting of title to two
parcels of land, considering that a case for the declaration of nullity of its
TCTs, instituted by the Sto. Nio Residents Association, Inc., was already
pending before the Land Management Bureau (LMB). The Court recognized
therein the primary jurisdiction of the LMB over the dispute, and affirmed the
dismissal of the quieting of title case on the grounds of litis pendentia and
forum shopping.
Res judicata
Public policy and sound practice enshrine the fundamental principle upon
which the doctrine of res judicata rests that parties ought not to be permitted
to litigate the same issues more than once. It is a general rule common to all
civilized system of jurisprudence, that the solemn and deliberate sentence of
the law, pronounced by its appointed organs, upon a disputed fact or a state
of facts, should be regarded as a final and conclusive determination of the
question litigated, and should forever set the controversy at rest. Indeed, it
has been well said that this maxim is more than a mere rule of law; more
even than an important principle of public policy; and that it is not too much
to say that it is a fundamental concept in the organization of every jural
system. Public policy and sound practice demand that, at the risk of
occasional errors, judgments of courts should become final at some definite
date fixed by law. The very object for which courts were constituted was to
put an end to controversies.[147]

The doctrine of res judicata comprehends two distinct concepts - (1) bar by
former judgment, and (2) conclusiveness of judgment. For res judicata to
serve as an absolute bar to a subsequent action, the following requisites
must concur: (1) the former judgment or order must be final; (2) the
judgment or order must be on the merits; (3) it must have been rendered by
a court having jurisdiction over the subject matter and parties; and (4) there
must be between the first and second actions, identity of parties, of subject
matter, and of causes of action. When there is no identity of causes of
action, but only an identity of issues, there exists res judicata in the concept
of conclusiveness of judgment. Although it does not have the same effect as
res judicata in the form of bar by former judgment which prohibits the
prosecution of a second action upon the same claim, demand, or cause of
action, the rule on conclusiveness of judgment bars the relitigation of
particular facts or issues in another litigation between the same parties on a
different claim or cause of action.[148]
The 1914 Cacho case does not bar the Complaint for reversion in Civil Case
No. 6686 by res judicata in either of its two concepts.
There is no bar by prior judgment because the 1914 Cacho case and Civil
Case No. 6686 do not have the same causes of action and, even possibly,
they do not involve identical subject matters.
Land registration cases, such as GLRO Record Nos. 6908 and 6909, from
which the 1914 Cacho case arose, are special proceedings where the concept
of a cause of action in ordinary civil actions does not apply. In special
proceedings, the purpose is to establish a status, condition or fact; in land
registration proceedings, the ownership by a person of a parcel of land is
sought to be established.[149] Civil Case No. 6686 is an action for reversion
where the cause of action is the alleged unlawful inclusion in OCT Nos. 01200 (a.f.) and 0-1201 (a.f.) of parcels of public land that were not among
those granted to Doa Demetria in the 1914 Cacho case. Thus, Civil Case No.
6686 even rests on supposition that the parcels of land covered by the
certificates of title in Doa Demetrias name, which the Republic is seeking to
have cancelled, are different from the parcels of land that were the subject
matter of the 1914 Cacho case and adjudged to Doa Demetria.
Res judicata in the concept of conclusiveness of judgment, likewise, does not
apply as between the 1914 Cacho case and Civil Case No. 6686. A careful
study of the Complaint in Civil Case No. 6686 reveals that the Republic does
not seek to re-litigate any of the issues resolved in the 1914 Cacho case. The
Republic no longer questions in Civil Case No. 6686 that Doa Demetria was
adjudged the owner of two parcels of land in the 1914 Cacho case. The
Republic is only insisting on the strict adherence to the judgment of the Court
in the 1914 Cacho case, particularly: (1) the adjudication of a smaller parcel
of land, consisting only of the southern portion of the 37.87-hectare Lot 2
subject of Doa Demetrias application in GLRO Record No. 6909; and (2) the
submission of a new technical plan for the adjudicated southern portion of Lot
2 in GLRO Record No. 6909, and the deed executed by Datto Darondon,
husband of Alanga, renouncing all his rights to Lot 1, in GLRO Record No.
6908, in Doa Demetrias favor.[150]

Similarly, the 1997 Cacho case is not an obstacle to the institution by the
Republic of Civil Case No. 6686 on the ground of res judicata.
Bar by prior judgment does not apply for lack of identity of causes of
action between the 1997 Cacho case and Civil Case No. 6686. The 1997
Cacho case involves a petition for re-issuance of decrees of registration. In
the absence of principles and rules specific for such a petition, the Court
refers to those on reconstitution of certificates of title, being almost of the
same nature and granting closely similar reliefs.
Reconstitution denotes a restoration of the instrument which is supposed to
have been lost or destroyed in its original form or condition. The purpose of
the reconstitution of title or any document is to have the same reproduced,
after observing the procedure prescribed by law, in the same form they were
when the loss or destruction occurred.[151] Reconstitution is another special
proceeding where the concept of cause of action in an ordinary civil action
finds no application.
The Court, in the 1997 Cacho case, granted the reconstitution and reissuance of the decrees of registration considering that the NALTDRA, through
then Acting Commissioner Santiago M. Kapunan,[152] its Deputy Clerk of
Court III, the Head Geodetic Engineer, and the Chief of Registration, certified
that according to the Record Book of Decrees for Ordinary Land Registration

Case, Decree No. 18969 was issued in GLRO Record No. 6909 and Decree No.
10364 was issued in GLRO Record No. 6908[;][153] thus, leaving no doubt
that said decrees had in fact been issued.
The 1997 Cacho case only settled the issuance, existence, and
subsequent loss of Decree Nos. 10364 and 18969. Consequently, said
decrees could be re-issued in their original form or condition. The Court,
however, could not have passed upon in the 1997 Cacho case the issues on
whether Doa Demetria truly owned the parcels of land covered by the
decrees and whether the decrees and the OCTs subsequently issued pursuant
thereto are void for unlawfully including land of the public domain which were
not awarded to Doa Demetria.

Forum shopping is the filing of multiple suits involving the same parties for
the same cause of action, either simultaneously or successively, for the
purpose of obtaining a favorable judgment. A party violates the rule against
forum shopping if the elements of litis pendentia are present; or if a final
judgment in one case would amount to res judicata in the other.[156]
There is forum shopping when the following elements are present: (a)
identity of parties, or at least such parties as represent the same interests in
both actions; (b) identity of rights asserted and relief prayed for, the relief
being founded on the same facts; and (c) the identity of the two preceding
particulars, is such that any judgment rendered in the other action will,
regardless of which party is successful, amount to res judicata in the action
under consideration; said requisites are also constitutive of the requisites for
auter action pendant or lis pendens.[157]

x x x The misrepresentations of the applicant that he had been occupying

and cultivating the land and residing thereon are sufficient grounds to nullify
the grant of the patent and title under Section 91 of the Public Land Law
which provides as follows:
"The statements made in the application shall be considered as essential
conditions or parts of any concession, title or permit issued on the basis of
such application, and any false statement thereon or omission of facts,
changing, or modifying the consideration of the facts set forth in such
statement, and any subsequent modification, alteration, or change of the
material facts set forth in the application shall ipso facto produce the
cancellation of the concession, title or permit granted. x x x"

The following pronouncement of the Court in Heirs of Susana de

Guzman Tuazon v. Court of Appeals[154] is instructive:
Precisely, in both species of reconstitution under Section 109 of P.D. No. 1529
and R.A. No. 26, the nature of the action denotes a restoration of the
instrument which is supposed to have been lost or destroyed in its original
form and condition. The purpose of the action is merely to have the same
reproduced, after proper proceedings, in the same form they were when the
loss or destruction occurred, and does not pass upon the ownership of the
land covered by the lost or destroyed title. It bears stressing at this point
that ownership should not be confused with a certificate of title. Registering
land under the Torrens System does not create or vest title because
registration is not a mode of acquiring ownership. A certificate of title is
merely an evidence of ownership or title over the particular property
described therein. Corollarily, any question involving the issue of ownership
must be threshed out in a separate suit, which is exactly what the private
respondents did when they filed Civil Case No. 95-3577 before Branch 74.
The trial court will then conduct a full-blown trial wherein the parties will
present their respective evidence on the issue of ownership of the subject
properties to enable the court to resolve the said issue. x x x. (Emphases
supplied.)

Whatever findings the Court made on the issue of ownership in the

1997 Cacho case are mere obiter dictum. As the Court held in Amoroso v.
Alegre, Jr.[155]:
Petitioner claims in his petition that the 3 October 1957 Decision resolved the
issue of ownership of the lots and declared in the body of the decision that he
had sufficiently proven uncontroverted facts that he had been in possession
of the land in question since 1946 x x x [and] has been in possession of the
property with sufficient title. However, such findings made by the CFI in the
said decision are mere obiter, since the ownership of the properties, titles to
which were sought to be reconstituted, was never the issue in the
reconstitution case. Ownership is not the issue in a petition for reconstitution
of title. A reconstitution of title does not pass upon the ownership of the land
covered by the lost or destroyed title.
It may perhaps be argued that ownership of the properties was put in issue
when petitioner opposed the petition for reconstitution by claiming to be the
owner of the properties. However, any ruling that the trial court may make
on the matter is irrelevant considering the courts limited authority in
petitions for reconstitution. In a petition for reconstitution of title, the only
relief sought is the issuance of a reconstituted title because the reconstituting
officers power is limited to granting or denying a reconstituted title. As
stated earlier, the reconstitution of title does not pass upon the ownership of
the land covered by the lost or destroyed title, and any change in the
ownership of the property must be the subject of a separate suit. (Emphases
supplied.)

The Court concedes that the 1997 Cacho case, by reason of conclusiveness of
judgment, prevents the Republic from again raising as issues in Civil Case No.
6686 the issuance and existence of Decree Nos. 10364 and 18969, but not
the validity of said decrees, as well as the certificates of title issued pursuant
thereto.

Given the preceding disquisition of the Court that the 1914 and 1997 Cacho
cases do not constitute res judicata in Civil Case No. 6686, then the Court
also cannot sustain the dismissal by the RTC-Branch 4 of the Complaint of the
Republic in Civil Case No. 6686 for forum shopping.
Prescription
According to the RTC-Branch 4, the cause of action for reversion of the
Republic was already lost or extinguished by prescription, citing Section 32 of
the Property Registration Decree, which provides:

A certificate of title that is void may be ordered cancelled. A title will be

considered void if it is procured through fraud, as when a person applies for
registration of the land under his name although the property belongs to
another. In the case of disposable public lands, failure on the part of the
grantee to comply with the conditions imposed by law is a ground for holding
such title void. The lapse of the one year period within which a decree of title
may be reopened for fraud would not prevent the cancellation thereof, for to
hold that a title may become indefeasible by registration, even if such title
had been secured through fraud or in violation of the law, would be the height
of absurdity. Registration should not be a shield of fraud in securing title.
This doctrine was reiterated in Republic v. Mina, where Justice Relova
declared for the Court:

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

A certificate of title that is void may be ordered cancelled. And, a title will be
considered void if it is procured through fraud, as when a person applies for
registration of the land on the claim that he has been occupying and
cultivating it. In the case of disposable public lands, failure on the part of the
grantee to comply with the conditions imposed by law is a ground for holding
such title void. x x x The lapse of one (1) year period within which a decree
of title may be reopened for fraud would not prevent the cancellation thereof
for to hold that a title may become indefeasible by registration, even if such
title had been secured through fraud or in violation of the law would be the
height of absurdity. Registration should not be a shield of fraud in securing
title.
Justifying the above-quoted provision, the Court declared in Piero, Jr. v.
Director of Lands:

Upon the expiration of said period of one year, the decree of registration and
the certificate of title issued shall become incontrovertible. Any person
aggrieved by such decree of registration in any case may pursue his remedy
by action for damages against the applicant or any other persons responsible
for the fraud.
Decree No. 10364 in GLRO Record No. 6908 was issued on May 9,
1913, while Decree No. 18969 in GLRO Record No. 6909 was issued on July 8,
1915.
In the course of eight decades, the decrees were lost and
subsequently reconstituted per order of this Court in the 1997 Cacho case.
The reconstituted decrees were issued on October 15, 1998 and transcribed
on OCT Nos. 0-1200 (a.f.) and 0-1201 (a.f.). The reconstituted decrees were
finally entered into the Registration Book for Iligan City on December 4, 1998
at 10:00 a.m. Almost six years had elapsed from entry of the decrees by the
time the Republic filed its Complaint in Civil Case No. 6686 on October 13,
2004.
Nonetheless, elementary is the rule that prescription does not run against the
State and its subdivisions. When the government is the real party in interest,
and it is proceeding mainly to assert its own right to recover its own property,
there can as a rule be no defense grounded on laches or prescription. Public
land fraudulently included in patents or certificates of title may be recovered
or reverted to the State in accordance with Section 101 of the Public Land
Act. The right of reversion or reconveyance to the State is not barred by
prescription.[158]
The Court discussed lengthily in Republic v. Court of Appeals[159] the
indefeasibility of a decree of registration/certificate of title vis--vis the
remedy of reversion available to the State:

It is true that under Section 122 of the Land Registration Act, a Torrens title
issued on the basis of a free patent or a homestead patent is as indefeasible
as one judicially secured. And in repeated previous decisions of this Court
that indefeasibility has been emphasized by Our holding that not even the
Government can file an action for annulment, but at the same time, it has
been made clear that an action for reversion may be instituted by the
Solicitor General, in the name of the Republic of the Philippines. It is to the
public interest that one who succeeds in fraudulently acquiring title to a
public land should not be allowed to benefit therefrom, and the State should,
therefore, have an even existing authority, thru its duly authorized officers, to
inquire into the circumstances surrounding the issuance of any such title, to
the end that the Republic, thru the Solicitor General or any other officer who
may be authorized by law, may file the corresponding action for the reversion
of the land involved to the public domain, subject thereafter to disposal to
other qualified persons in accordance with law.
In other words, the
indefeasibility of a title over land previously public is not a bar to an
investigation by the Director of Lands as to how such title has been acquired,
if the purpose of such investigation is to determine whether or not fraud had
been committed in securing such title in order that the appropriate action for
reversion may be filed by the Government.
Private respondent PNB points out that Animas involved timberland, which is
not alienable or disposable public land, and that in Piero the issue raised
was whether the Director of Lands would be enjoined by a writ of prohibition
from investigating allegations of fraud that led to the issuance of certain free
patents. Nevertheless, we find that the doctrine above quoted is no less
controlling even if there be some factual disparities (which are not material
here), especially as it has been buttressed by subsequent jurisprudence.
In Director of Lands v. Jugado, upon which the appellate court based its
ruling, the Court declared meaningfully that:

Forum shopping
The petitioner invokes Republic v. Animas, where this Court declared that a
title founded on fraud may be cancelled notwithstanding the lapse of one
year from the issuance thereof. Thus:

There is, however, a section in the Public Land Law (Sec. 101 of
Commonwealth Act 141), which affords a remedy whereby lands of the public
domain fraudulently awarded may be recovered or reverted back to its
original owner, the Government. But the provision requires that all such
actions for reversion shall be instituted by the Solicitor General or the officer
acting in his stead, in the proper courts, in the name of the Republic of the
Philippines (See Director of Lands v. De Luna, supra). As the party in interest
in this case is the Director of Lands and not the Republic of the Philippines,
the action cannot prosper in favor of the appellant.
The reference was to the Public Land Law which authorizes the reversion suit
under its Sec. 101, thus:
Sec. 101. All actions for the reversion to the Government of lands of the
public domain or improvements thereon shall be instituted by the Solicitor
General or the officer acting in his stead, in the proper courts, in the name of
the Republic of the Philippines.

We held that "the Court below committed no error in ordering the reversion to
plaintiff of the land grant involved herein, notwithstanding the fact that the
original certificate of title based on the patent had been cancelled and
another certificate issued in the names of the grantee heirs. Thus, where a
grantee is found not entitled to hold and possess in fee simple the land, by
reason of his having violated Section 118 of the Public Land Law, the Court
may properly order its reconveyance to the grantor, although the property
has already been brought under the operation of the Torrens System. And,
this right of the government to bring an appropriate action for reconveyance
is not barred by the lapse of time: the Statute of Limitations does not run
against the State." (Italics supplied). The above ruling was reiterated in
Republic vs. Mina, 114 SCRA 945.
If the Republic is able to establish after trial and hearing of Civil Case No.
6686 that the decrees and OCTs in Doa Demetrias name are void for some
reason, then the trial court can still order the reversion of the parcels of land
covered by the same because indefeasibility cannot attach to a void decree
or certificate of title. The RTC-Branch 4 jumped the gun when it declared that
the cause of action of the Republic for reversion in Civil Case No. 6686 was
already lost or extinguished by prescription based on the Complaint alone.

This remedy was recently affirmed by the Court in Heirs of Gregorio Tengco v.
Heirs of Jose and Victoria Aliwalas, thus:
x x x Title to the property having become incontrovertible, such may no
longer be collaterally attacked. If indeed there had been any fraud or
misrepresentation in obtaining the title, an action for reversion instituted by
the Solicitor General would be the proper remedy.
It is evident from the foregoing jurisprudence that despite the lapse of one
year from the entry of a decree of registration/certificate of title, the State,
through the Solicitor General, may still institute an action for reversion when
said decree/certificate was acquired by fraud or misrepresentation.
Indefeasibility of a title does not attach to titles secured by fraud and
misrepresentation. Well-settled is the doctrine that the registration of a
patent under the Torrens system does not by itself vest title; it merely
confirms the registrants already existing one. Verily, registration under the
Torrens system is not a mode of acquiring ownership.[160]
But then again, the Court had several times in the past recognized the
right of the State to avail itself of the remedy of reversion in other instances
when the title to the land is void for reasons other than having been secured
by fraud or misrepresentation. One such case is Spouses Morandarte v. Court
of Appeals,[161] where the Bureau of Lands (BOL), by mistake and oversight,
granted a patent to the spouses Morandarte which included a portion of the
Miputak River. The Republic instituted an action for reversion 10 years after
the issuance of an OCT in the name of the spouses Morandarte. The Court
ruled:
Be that as it may, the mistake or error of the officials or agents of the BOL in
this regard cannot be invoked against the government with regard to
property of the public domain. It has been said that the State cannot be
estopped by the omission, mistake or error of its officials or agents.
It is well-recognized that if a person obtains a title under the Public Land Act
which includes, by oversight, lands which cannot be registered under the
Torrens system, or when the Director of Lands did not have jurisdiction over
the same because it is a public domain, the grantee does not, by virtue of the
said certificate of title alone, become the owner of the land or property
illegally included.
Otherwise stated, property of the public domain is
incapable of registration and its inclusion in a title nullifies that title.
Another example is the case of Republic of the Phils. v. CFI of Lanao del
Norte, Br. IV,[162] in which the homestead patent issued by the State
became null and void because of the grantees violation of the conditions for
the grant. The Court ordered the reversion even though the land subject of
the patent was already covered by an OCT and the Republic availed itself of
the said remedy more than 11 years after the cause of action accrued,
because:
There is merit in this appeal considering that the statute of limitation does
not lie against the State. Civil Case No. 1382 of the lower court for reversion
is a suit brought by the petitioner Republic of the Philippines as a sovereign
state and, by the express provision of Section 118 of Commonwealth Act No.
141, any transfer or alienation of a homestead grant within five (5) years
from the issuance of the patent is null and void and constitute a cause for
reversion of the homestead to the State. In Republic vs. Ruiz, 23 SCRA 348,

All told, the Court finds that the RTC-Branch 4 committed reversible error in
dismissing the Complaint for Cancellation of Titles and Reversion of the
Republic in Civil Case No. 6686.
Resultantly, the Court orders the
reinstatement of said Complaint. Yet, the Court also deems it opportune to
recall the following statements in Saad-Agro Industries, Inc. v. Republic[163]:
It has been held that a complaint for reversion involves a serious controversy,
involving a question of fraud and misrepresentation committed against the
government and it is aimed at the return of the disputed portion of the public
domain. It seeks to cancel the original certificate of registration, and nullify
the original certificate of title, including the transfer certificate of title of the
successors-in-interest because the same were all procured through fraud and
misrepresentation.
Thus, the State, as the party alleging the fraud and
misrepresentation that attended the application of the free patent, bears that
burden of proof. Fraud and misrepresentation, as grounds for cancellation of
patent and annulment of title, should never be presumed but must be proved
by clear and convincing evidence, mere preponderance of evidence not even
being adequate. It is but judicious to require the Government, in an action for
reversion, to show the details attending the issuance of title over the alleged
inalienable land and explain why such issuance has deprived the State of the
claimed property. (Emphasis supplied.)
It may do well for the Republic to remember that there is a prima facie
presumption of regularity in the issuance of Decree Nos. 10364 and 18969, as
well as OCT Nos. 0-1200 (a.f.) and 0-1201 (a.f.), in Doa Demetrias name,
and the burden of proof falls upon the Republic to establish by clear and
convincing evidence that said decrees and certificates of title are null and
void.
IV
DISPOSITIVE PART
WHEREFORE, premises considered, the Court renders the following
judgment in the Petitions at bar:
1)
In G.R. No. 170375 (Expropriation Case), the Court GRANTS the
Petition for Review of the Republic of the Philippines. It REVERSES and SETS
ASIDE the Resolutions dated July 12, 2005 and October 24, 2005 of the
Regional Trial Court, Branch 1 of Iligan City, Lanao del Norte. It further
ORDERS the reinstatement of the Complaint in Civil Case No. 106, the
admission of the Supplemental Complaint of the Republic, and the return of
the original record of the case to the court of origin for further proceedings.
No costs.
2)
In G.R. Nos. 178779 and 178894 (Quieting of Title Case), the
Court DENIES the consolidated Petitions for Review of Landtrade Realty
Corporation, Teofilo Cacho, and/or Atty. Godofredo Cabildo for lack of merit. It
AFFIRMS the Decision dated January 19, 2007 and Resolution dated July 4,
2007 of the Court of Appeals in CA-G.R. CV. No. 00456, affirming in toto the
Decision dated July 17, 2004 of the Regional Trial Court, Branch 3 of Iligan
City, Lanao del Norte, in Civil Case No. 4452. Costs against Landtrade Realty
Corporation, Teofilo Cacho, and Atty. Godofredo Cabildo.
3)
In G.R. No. 170505 (The Ejectment or Unlawful Detainer Case
execution pending appeal before the Regional Trial Court), the Court DENIES

the Petition for Review of Landtrade Realty Corporation for being moot and
academic given that the Regional Trial Court, Branch 1 of Iligan City, Lanao
del Norte had already rendered a Decision dated December 12, 2005 in Civil
Case No. 6613. No costs.
4)
In G.R. Nos. 173355-56 and 173563-64 (The Ejectment or
Unlawful Detainer Case execution pending appeal before the Court of
Appeals), the Court GRANTS the consolidated Petitions for Certiorari and
Prohibition of the National Power Corporation and National Transmission
Corporation. It SETS ASIDE the Resolution dated June 30, 2006 of the Court
of Appeals in CA-G.R. SP Nos. 00854 and 00889 for having been rendered
with grave abuse of discretion amounting to lack or excess of jurisdiction. It
further ORDERS the Court of Appeals to issue a writ of preliminary injunction
enjoining the execution of the Decision dated December 12, 2005 of the
Regional Trial Court, Branch 1 of Iligan City, Lanao del Norte, in Civil Case No.
6613, while the same is pending appeal before the Court of Appeals in CAG.R. SP Nos. 00854 and 00889. It finally DIRECTS the Court of Appeals to
resolve without further delay the pending appeals before it, in CA-G.R. SP
Nos. 00854 and 00889, in a manner not inconsistent with this Decision. No
costs.
5)
In G.R. No. 173401 (Cancellation of Titles and Reversion Case),
the Court GRANTS the Petition for Review of the Republic of the Philippines. It
REVERSES and SETS ASIDE the Orders dated December 13, 2005 and May 16,
2006 of the Regional Trial Court, Branch 4 of Iligan City in Civil Case No. 6686.
It further ORDERS the reinstatement of the Complaint in Civil Case No. 6686
and the return of the original record of the case to the court of origin for
further proceedings. No costs. SO ORDERED.
*QUANTUM OF PROOF*
LASQUITE VS. VICTORY HILLS, INC.
QUISUMBING, J.:
This appeal seeks to annul the Decision[1] dated November 8, 2006 of the
Court of Appeals in CA G.R. CV No. 77599. The Court of Appeals had set
aside the Decision[2] dated July 2, 2002 of the Regional Trial Court (RTC) of
San Mateo, Rizal, Branch 77 in Civil Case No. 548 which upheld Original
Certificate of Title (OCT) Nos. NP-197[3] and NP-198,[4] in the names of
petitioners Andrade and Lasquite, respectively.
The antecedent facts are as follows:
On May 4, 1971, Jose Manahan[5] executed a Deed of Quitclaim/Assignment
of Rights[6] over a parcel of land designated as Lot No. 3050 at Barrio Ampid,
San Mateo, Rizal in favor of Conrado O. Lasquite. Lasquite applied for a free
patent over the lot, and pending approval of the application, sold half of the
land to Juanito L. Andrade on January 11, 1981.[7] Upon the grant of the
patent application, OCT Nos. NP-197 and NP-198 were issued in the names of
Andrade and Lasquite, respectively, on June 18, 1981.
Thereafter, on August 22, 1983[8] and October 22, 1983,[9] Simeona,
Armentina, Herminia, Zenaida, Gloria, Yolanda and Rodolfo, all surnamed
Prescilla, filed a protest with the Bureau of Lands to question the grant of free
patent in favor of petitioners. They claimed to have been in possession in
concepto de dueno of Lot No. 3050, planting and cultivating crops thereon
since 1940. On March 8, 1989, the Prescillas also instituted a case for
reconveyance and damages against petitioners before the RTC of San Mateo,
Rizal, Branch 77 which was docketed as Civil Case No. 548-SM. They alleged
that Lasquite forged the signature of Jose M. Manahan in the Deed of
Quitclaim/Assignment of Rights since the latter has died on April 11, 1968.
[10]
It also appears that a second complaint,[11] for annulment of title,
reconveyance and damages, was filed by Roberto and Raquel Manahan,
Maria Gracia M. Natividad, the heirs of Leocadio Manahan, and the heirs of
Joaquin Manahan against petitioners on June 1, 1990.
The Manahans
asserted title over Lot No. 3050 as successors of Jose S. Manahan whom they
claimed to have died on October 12, 1947.[12] The case was docketed as
Civil Case No. 680-90-SM and raffled to Branch 76 of the San Mateo, Rizal
RTC. Upon learning of Civil Case No. 548-SM initiated by the Prescillas against
petitioners, the Manahans filed a Complaint in Intervention[13] on June 23,
1993, and Civil Case No. 680-90-SM was consolidated with Civil Case No. 548SM.
It also appears that on January 11, 1994, respondent Victory Hills, Inc.
(Victory Hills) also intervened in Civil Case No. 548-SM. Victory Hills likewise
claimed to be the owner of the subject lot. Victory Hills traced its title to Lot
No. 3050 to OCT No. 380[14] which was allegedly registered on January 4,
1937 to Jose H. Manahan by virtue of Homestead Patent No. H-19562[15]
dated December 14, 1936. According to Victory Hills, Jose H. Manahan sold
Lot No. 3050 to Rufino Hieras on May 17, 1944 to whom Transfer Certificate of
Title (TCT) No. 46219[16] was issued. Hieras then conveyed the lot to
spouses Serafin and Veronica Angeles, and Catalina Cayetano who obtained

TCT No. 85082[17] in their names. Later, the lot was transferred to Victory
Hills on September 6, 1961 under TCT No. 90816.[18]
On November 27, 1991, Victory Hills filed an Ex-Parte Motion for Relocation
Survey[19] with the Department of Environment and Natural Resources
(DENR). Upon grant of the motion, the DENR released a Narration Report of
the Relocation Survey[20] on December 9, 1993. The report noted that:
xxxx
1.
H-19562 and H-19887 had been accepted by Cad. 375-D, San Mateo
Cadastre and identical to Lot [No.] 3050 and Lot [No.] 258 respectively[;]
2. H-19562 had been issued a free patent and Original Certificate of Title No.
380 in favor [of] Jose Manahan on June 4, 1937. That said title was
transferred to Rufin[o] Hieras on May 17, 1944 with TCT [No.] 46219,
cancelling O[CT] [No.] 3[8]0. Again TCT [No.] 46219-T-237 was cancelled and
TCT [No.] [8]5082 was issued to [Spouses] Serafin Angeles and [Veronica] D.
Angeles and Catalina Cayetano [on] March 17, 1961;
3. A consolidate[d] subdivision survey of H-19562 and H-19887 had been
approved by the LRC designated as plan (LRC) Pcs [-] [1586] surveyed June 115, 1961; which was not projected in Cad. 375-D, San Mateo Cadastre;
4.
Lot [No.] 3050 which is identical to H-19562 was subdivided and
designated as plan Cad-04-002023-D, into two lots. (Emphasis supplied.)[21]
xxxx
Notwithstanding the said report, Branch 77 of the Rizal RTC, on July 2, 2002,
promulgated a Decision which upheld the title of petitioners to Lot No. 3050.
It decreed:
Accordingly, the title of defendants, Conrado Lasquite and Jose Andrade,
involving the subject parcel of land under OCT No. NP-198 and OCT No. NP197 registered on June 18, 1981, are sustained. Likewise, the title issued to
plaintiffs Prescilla, under OCT No. ON-333 involving Lot 3052 is sustained.
WHEREFORE, premises considered, judgment is hereby rendered dismissing
these cases.
No Costs.
SO ORDERED.[22]
The trial court disregarded OCT No. 380 and ruled that it was spurious as it
lacked the signature of then Secretary of Agriculture and Commerce Eulogio
Rodriguez. The RTC also ruled that the complaints for reconveyance of the
Precillas, the Manahans and Victory Hills, which were all founded on extrinsic
fraud, had prescribed since more than four (4) years have elapsed since the
land was registered before they filed cases in court.
The Prescillas, the Manahans and Victory Hills interposed an appeal to the
Court of Appeals. On November 8, 2006, the appellate court set aside the
ruling of the RTC and declared Victory Hills the absolute owner of Lot No.
3050. The appellate court ruled:
WHEREFORE, the Decision dated July 2, 2002 rendered by the Regional Trial
Court of San Mateo, Rizal, Branch 77 is ANNULLED and SET ASIDE and a new
one entered DECLARING VICTORY HILLS, INC. the absolute owner of the
parcel of land designated as Lot 3050 subject of the instant case and
ORDERING the Register of Deeds of Rizal to cancel OCT No. NP-198 and OCT
No. NP-197 in the names of defendants-appellees Conrado Lasquite and
Juanito Andrade.
SO ORDERED.[23]
Aggrieved, petitioners elevated the case to us. Petitioners contend that the
Court of Appeals erred in
I.
HOLDING THAT RESPONDENTS OCT NO. 380 AND HOMESTEAD PATENT NO.
H-19562 ARE VALIDLY ISSUED;
II.
HOLDING THAT RESPONDENT VICTORY HILLS, INC. HAS A BETTER RIGHT OF
TITLE AND OWNERSHIP OVER THE SUBJECT PROPERTY VIS-A-VIS PETITIONERS
CONRADO O. LASQUITE AND TEODORA I. ANDRADE;
III.
GIVING WEIGHT AND CREDENCE TO RESPONDENTS HOMESTEAD PATENT
NO. H-19562 DESPITE THE FACT THAT A COPY OF SAID HOMESTEAD PATENT
WAS NEVER PRESENTED DURING THE TRIAL NOR IN THE APPEAL;
IV.
HOLDING THAT OCT NO. 380 IS AN EN TOTO TRANSCRIPTION OF
HOMESTEAD PATENT NO. H-19562 NOTWITHSTANDING THE FACT THAT NO
EVIDENCE RELATIVE THERETO WAS ADDUCED IN THE LOWER COURT;
V.
NOT RESOLVING THE ISSUE THAT RESPONDENTS CLAIM HAD ALREADY
PRESCRIBED.[24]

Condensed, the twin issues for our determination are: (1) whether respondent
Victory Hills, Inc. is entitled to reconveyance of Lot No. 3050; and (2) whether
respondents claim had prescribed.
Petitioners assail the validity of OCT No. 380 as the source of respondents
derivative title. They fault the appellate court for according weight to the
certificate of title even if it does not bear the signature of the Secretary of
Agriculture and Commerce. They stress that the Bureau of Lands has no
record of Patent No. H-19562 which respondent cited as the basis for the
issuance of its title to Lot No. 3050 and yet the appellate court still concluded
that the transcription of Patent No. H-19562 in OCT No. 380 was conclusive
proof of its due execution. Petitioners likewise call for a review of the facts in
this case owing to the conflicting findings of the RTC and the Court of
Appeals.
On the other hand, respondent relies on OCT No. 380 as evidence of the
earlier registration of Lot No. 3050 in the name of its predecessor, Jose H.
Manahan. Such recording, respondent asserts, has rendered OCT No. 380
indefeasible one year following its issuance on January 4, 1937 and has
effectively segregated Lot No. 3050 from the domain of public lands.
Respondent further justifies that the notation sgd in OCT No. 380 was
sufficient indication that the original copy of Homestead Patent No. H-19562
had been signed by then Secretary of Agriculture and Commerce Eulogio
Rodriguez. In any case, respondent invokes the presumption of regularity in
the performance of duty by the Register of Deeds in issuing OCT No. 380. It
finally argues against the issue of prescription since petitioners raised the
same only for the first time on appeal.
Often cited but rarely heeded is the rule that the Supreme Court is not a trier
of facts. In the exercise of its power of review, the Court does not normally
undertake a re-examination of the evidence presented by the contending
parties during the trial of the case considering that the findings of fact of the
Court of Appeals are conclusive and binding on the Court. However, there are
several recognized exceptions[25] in which factual issues may be resolved by
this Court. Two of these exceptions find application in the present case, to
wit: (1) when the findings of fact of the appellate court are contrary to those
of the trial court;[26] and (2) when the findings of fact are premised on the
supposed absence of evidence and contradicted by the evidence on record.
The assailed Decision of the Court of Appeals upheld OCT No. 380 as the
origin of TCT No. 90816 in the name of respondent Victory Hills. The
appellate court ruled that the homestead patent which was awarded to
respondents predecessor, Jose H. Manahan, in 1936 cannot simply be
defeated by the subsequent grant of free patent to petitioners 45 years later.
It accepted the transcript of Homestead Patent No. H-19562 in OCT No. 380
as a faithful reproduction of the original.
Also, the Court of Appeals
recognized the notation sgd in OCT No. 380 as customary to signify that the
original copy of the patent had been signed by the Secretary of Agriculture
and Commerce.
After carefully poring over all the evidence submitted in this case, we find the
petition to be impressed with merit.
The relocation survey conducted by the DENR on October 25, 1993 positively
confirmed that the mother title of respondents TCT and the OCTs of
petitioners cover the same land. We are confronted, therefore, with a case of
successive registration, in the event of which we have been constantly
guided that:
In successive registrations, where more than one certificate is issued in
respect of a particular estate or interest in land, the person claiming under
the prior certificate is entitled to the estate or interest; and the person is
deemed to hold under the prior certificate who is the holder of, or whose
claim is derived directly or indirectly from the person who was the holder of
the earliest certificate issued in respect thereof.[27]
However, we find that the circumstances attendant in this case militate
against a forthright application of this rule.
Section 105 of Act No. 2874,[28] the governing law when Homestead Patent
No. H-19562 was purportedly issued, speaks of who must sign the patents
and certificates granted pursuant to the Act:
SEC. 105. All patents or certificates for lands granted under this Act shall be
prepared in the Bureau of Lands and shall issue in the name of the
Government of the Philippine Islands under the signature of the GovernorGeneral, countersigned by the Secretary of Agriculture and Natural
Resources, but such patents or certificates shall be effective only for the
purposes defined in section one hundred and twenty-two of the Land
Registration Act; and the actual conveyance of the land shall be effected only
as provided in said section. (Emphasis supplied.)
Noteworthy, Section 47[29] of Act No. 496 or the Land Registration Act[30]
provides that a certified true copy of an original certificate of title shall be
admissible as evidence in our courts and shall be conclusive as to all matters
contained therein except as otherwise provided by the Act.
This is

complementary to the rule on the admissibility of public documents as

evidence under Section 23, Rule 132 of the Rules of Court:
SEC. 23. Public documents as evidence. -Documents consisting of entries in
public records made in the performance of a duty by a public officer are
prima facie evidence of the facts therein stated. All other public documents
are evidence, even against a third person, of the fact which gave rise to their
execution and of the date of the latter.
Thus, the evidentiary value of public documents must be sustained in the
absence of strong, complete and conclusive proof of its falsity or nullity.[31]
In the case at bar, the appellate court gave credence to the certified true
copy of OCT No. 380 as proof of ownership of respondents predecessor. Yet,
it is readily apparent from a cursory reading of said copy that OCT No. 380
was supposedly signed,[32] not by the Secretary of Agriculture and Natural
Resources, as mandated by law, but by the Secretary of Agriculture and
Commerce. Hence, it is plain to see that to give OCT No. 380 probative value
in court would be to allow variance or an evasion or circumvention of the
requirement laid down in Section 105 of Act No. 2874. We are thus warned
that any title sourced from the flawed OCT No. 380 could be void. On this
basis, we are justified to consider with great care any claims derived
therefrom.
What taints OCT No. 380 even more is the fact that the records of the
Community Environment and Natural Resources Office (CENRO) are devoid of
evidence to prove that Homestead Patent No. H-19562,[33] much less a
patent application[34] for Lot No. 3050 with the Bureau of Lands ever existed.
The certification[35] from the Bureau of Lands that Lot No. 3050 was
surveyed in the name of Jose Manahan suggests, at best, that he was a
survey claimant. Neither do we find the derivative titles of OCT No. 380 free
from any taint of irregularity. While TCT No. 46219 in the name of Hieras
indicated January 4, 1937 as the original registration date of Lot No. 3050, the
TCTs of subsequent transferees designated a different date May 17, 1944.
True, a duly-registered certificate of title is considered a public document and
the entries found in it are presumed correct, unless the party who contests its
accuracy can produce evidence establishing otherwise.[36] Even then,
records of public officers which are admissible in evidence are limited to
those matters which the public officer has authority to record.[37]
Indisputably, it was beyond the power of the Register of Deeds to register a
public land based on an invalid, much worse, a non-existent patent. To
sanction an otherwise invalid document in the guise of upholding the stability
of our land registration system would run counter to the judicial devotion
towards purging the system of illicit titles, in accordance with our base task
as the ultimate citadel of justice and legitimacy.[38]
The established legal principle in actions for annulment or reconveyance of
title is that a party seeking it should establish not merely by a preponderance
of evidence but by clear and convincing evidence that the land sought to be
reconveyed is his.[39] It is rather obvious from the foregoing disquisition that
respondent failed to dispense such burden. Indeed, the records are replete
with proof that respondent declared the lots comprising Lot No. 3050 for
taxation purposes only after it had instituted the present case in court. This
is not to say of course that tax receipts are evidence of ownership, since they
are not, albeit they are good indicia of possession in the concept of owner, for
no one would ordinarily be paying taxes for a property not in his actual or at
least constructive possession.[40]
Other than paying taxes from 1994-1997, however, respondent has not
shown that it exercised dominion over Lot No. 3050. In contrast, petitioner
Lasquite has been continuously paying taxes on the land since 1972,[41] and
has utilized the land as a farm, planted fruit trees and raised goats thereon.
Petitioners have likewise built structures and managed to entrust the
property to the care of certain individuals without any objection from
respondent.
Respondent avers that petitioner Lasquite forged the Deed of
Quitclaim/Assignment of Rights to make it appear that Jose Manahan
conveyed Lot No. 3050 to him. It must be stressed, however, that whoever
alleges forgery has the burden of proving the same. Forgery cannot be
presumed but should be substantiated with clear and convincing evidence.
[42]
Regrettably, Victory Hills was unable to establish that the Jose H. Manahan
from whom it derived its title is the same Jose Manahan from whom petitioner
Lasquite bought Lot No. 3050. During the trial of this case, several death
certificates had been proferred by the parties, albeit, inconclusive to establish
the identity of Jose Manahan as the common origin of all their titles.
Respondent Victory Hills obtained its title from Jose H. Manahan. Meanwhile,
the records disclose that the Jose S. Manahan from whom the Manahans
derived title was 54 years old and married when he died of infectious
hepatitis on October 12, 1947.[43] For their part, the Prescillas traced their
title from Jose M. Manahan, who was supposedly 68 years old and single
when he succumbed to acute myocardial infarction on April 11, 1968.[44]

This was however belied by the List of Register of Deaths in the Municipality
of San Mateo Rizal for the year 1968.[45]
Relevant to the issue of prescription, we have ruled that to determine when
the prescriptive period commenced in an action for reconveyance, the
plaintiffs possession of the disputed property is material. An action for
reconveyance based on an implied trust prescribes in 10 years.
The
reference point of the 10-year prescriptive period is the date of registration of
the deed or the issuance of the title. The prescriptive period applies only if
there is an actual need to reconvey the property as when the plaintiff is not in
possession of the property. However, if the plaintiff, as the real owner of the
property also remains in possession of the property, the prescriptive period to
recover title and possession of the property does not run against him. In
such a case, an action for reconveyance, if nonetheless filed, would be in the
nature of a suit for quieting of title, an action that is imprescriptible.[46]
The records reveal that it was only on January 11, 1994 or nearly 13 years
after OCT Nos. NP-197 and NP-198 were issued that respondent filed a Motion
for Leave to Admit Complaint in Intervention[47] and Complaint in
Intervention[48] before the RTC of Rizal. Nevertheless, respondent claimed to
be in actual possession in concepto de dueno of a sizeable portion of Lot No.
3050. Thus, the action assumed the nature of a suit to quiet title; hence,
imprescriptible.

Also stated in the Deed of Partition was the sale by the other
aforementioned legal heirs to their co-heir Castor of their aliquot shares in
the lots covered by Tax Declarations No. 7143, No. 7421, and No. 7956; thus,
making Castor the sole owner of the said properties. Similarly, the Deed of
Partition acknowledged the sale by all the legal heirs to Ulpiano Cavile of their
respective shares in the lot covered by Tax Declaration No. 5729, thus,
transferring to the latter absolute ownership of said parcel of land.
Thereafter, on 5 August 1960, Castor and Susana executed a
Confirmation of Extrajudicial Partition,[7] whereby Castor recognized and
confirmed that the lots covered by Tax Declarations No. 2039 and No. 2040
were the just and lawful shares of Susana in the properties left by their
deceased parents Bernardo and Tranquilina, and that Susana was in actual
possession of the said properties.
According to the Confirmation of
Extrajudicial Partition, the lot covered by Tax Declaration No. 2039 was
bounded on the North by Simplicio Cavile, on the East by Rio Bayawan, on
the South by Napasu-an, and on the West by Napasu-an Creek and Julian
Calibog; while the one covered by Tax Declaration No. 2040 was bounded
on the North by Hilario Navvaro (sic), on the South by Fortunato Cavile, on
the East by Silverio Yunting, and on the West by Maximino (sic) Balasabas.

issuance of title over the same. The Bureau issued free patent titles over the
subject lots in favor of petitioner Perfecta and, by virtue thereof, she was able
to secure on 9 October 1962, OCTs No. FV-4976, No. FV-4977, and No. FV4978 in her name.
Petitioner spouses asserted that the Confirmation of Extrajudicial Partition
dated 5 August 1960 involving the subject lots was a nullity since said
properties were never owned nor adjudicated in favor of Susana,
respondents predecessor-in-interest.
Castor and Susana executed the
Confirmation of Extrajudicial Partition merely to accommodate the latter who
then needed security for the loan she was trying to obtain from the Rural
Bank of Dumaguete City. Respondents would not be able to deny the said
accommodation arrangement, given that neither Susana nor respondents
actually possessed the subject lots or applied for titles thereto. Respondents
did not even know that the subject lots were divided into three lots after a
Government survey. If Susana and respondents paid realty taxes for the
subject lots, it was only to convince the Rural Bank of Dumaguete to renew
their loan from year to year, secured as it was by the mortgage on the
subject lots. Thus, petitioner spouses posited that no ownership could then
be transferred to respondents after Susanas death.
Trial in Civil Case No. 6111 thereafter ensued before the RTC.[13]

However, in our view, respondent Victory Hills has failed to show its
entitlement to a reconveyance of the land subject of the action.
WHEREFORE, the petition is GRANTED. The Decision dated November 8,
2006 of the Court of Appeals in CA G.R. CV No. 77599 is hereby REVERSED
and SET ASIDE. The Decision dated July 2, 2002 of the Regional Trial Court of
San Mateo, Rizal, Branch 77, is REINSTATED. No pronouncement as to costs.
SO ORDERED.
CAVILE VS. LITANIA- HONG, GR NO. 179540
CHICO-NAZARIO, J.:
Before us is a Petition for Review on Certiorari[1] under Rule 45 of the
Rules of Court, which seeks to reverse and set aside the Decision[2] dated 8
March 2007 and the Resolution[3] dated 3 September 2007 of the Court of
Appeals in CA-G.R. CV No. 66873. The assailed Decision of the appellate
court reversed and set aside the Decision[4] dated 29 February 2000 of the
Regional Trial Court (RTC) of Negros Oriental, Branch 35, in Civil Case No.
6111, dismissing the complaint of respondents Justina Litania-Hong, her
husband Leopoldo Hong, and her sister Genoveva Litania; and declaring
petitioner spouses Perfecta Cavile and Jose de la Cruz to be the absolute
owners of the parcels of land subjects of this case. The assailed Resolution of
the appellate court denied petitioner spouses Motion for Reconsideration of
its decision.
The factual and procedural antecedents of the case proceed as follows:
On 5 April 1937, a Deed of Partition[5] was entered into by the heirs of
the spouses Bernardo Cavile and Tranquilina Galon. Said heirs included the
legitimate children of Bernardo and Tranquilina, namely, (1) Susana Cavile,
(2) Castor Cavile, and (3) Benedicta Cavile; as well as the children of
Bernardo by his previous marriages, specifically: (4) Simplicia Cavile, (5)
Fortunato Cavile, and (6) Vevencia Cavile.[6] Subject of the Deed of Partition
were several parcels of land situated in the Municipality of Tolong, Negros
Oriental, which were then covered by Tax Declarations No. 5615, No. 5729,
No. 7143, No. 7421 and No. 7956, all under the name of Bernardo.
Of particular interest in this case are the lots covered by Tax Declarations No.
7421 and No. 7956. The lot covered by Tax Declaration No. 7421 was
described in the Deed of Partition as bounded on the North by Simplicio
Cavile antes Roman Echaves, on the East by Rio Bayawan, on the South by
Riachuelo Napasu-an, and on the West by Riachuelo Napasu-an y Julian
Calibug antes Francisco Tacang. The lot covered by Tax Declaration No.
7956 was identified to be the one bounded on the North by Hilario Navaro,
on the East by Silverio Yunting, on the South by Fortunato Cavile, and on the
West by Maximiano Balasabas.
In accordance with the Deed of Partition, the conjugal properties of Bernardo
and Tranquilina were divided into two parts. The first part, corresponding to
Bernardos share, was further divided into six equal shares and distributed
among his six heirs. The second part, corresponding to Tranquilinas share,
was subdivided only into three shares and distributed among her children
with Bernardo, i.e., Susana, Castor, and Benedicta.

The descriptions of the lots covered by Tax Declarations No. 2039 and No.
2040 in the Confirmation of Extrajudicial Partition were strikingly close to
those of the lots covered by Tax Declarations No. 7421 and No. 7956,
respectively, in the Deed of Partition.
Fourteen years after the execution of the Confirmation of Extrajudicial
Partition in 1960, respondents filed on 23 December 1974 a Complaint for
Reconveyance and Recovery of Property with Damages before the RTC
against Perfecta Cavile, the daughter of Castor, Jose de la Cruz, the husband
of Perfecta (hereinafter petitioner spouses), and the Rural Bank of Bayawan,
Inc. The Complaint was docketed as Civil Case No. 6111.[8]
Respondents averred in the Complaint that respondents Justina and
Genoveva inherited two parcels of land, covered by Tax Declarations No.
07408 and No. 07409 (subject lots),[9] from their mother Susana, who, in
turn, inherited the same from her parents Bernardo and Tranquilina.
Respondents invoked the Confirmation of Extrajudicial Partition dated 5
August 1960 wherein Castor purportedly recognized Susanas ownership of
the subject lots. Susana had enjoyed undisputed ownership and possession
of the subject lots, paying the realty taxes due and introducing improvements
thereon. Susana was even able to obtain a loan from the Rural Bank of
Dumaguete City sometime in 1960, mortgaging the subject lots as security
for the same.
After Susanas death in 1965, the subject lots were inherited by her
daughters, respondents Justina and Genoveva, who then assumed the
mortgage thereon. However, respondents alleged that Castor and petitioner
spouses eventually intruded upon and excluded respondents from the subject
lots. When Castor died in 1968, petitioner spouses continued their unlawful
occupancy of the subject lots, planting on the same and harvesting the
products. Respondents claimed that they exerted efforts to settle the matter,
but petitioner spouses stubbornly refused to accede. In 1974, prior to the
filing of the Complaint, respondents again sought an audience with petitioner
spouses, yet the latter only presented to them the Original Certificates of
Title (OCTs) No. FV-4976,[10] No. FV-4977,[11] and No. FV-4978[12] covering
the subject lots, issued by the Registry of Deeds for the Province of Negros
Oriental, on 9 October 1962, in the name of petitioner Perfecta. Respondents
were, thus, constrained to institute Civil Case No. 6111 against petitioner
spouses and the Rural Bank of Bayawan, Inc., seeking the cancellation of the
OCTs in the name of petitioner Perfecta or, alternatively, the reconveyance by
petitioner spouses of the subject lots to respondents, plus award for
damages. The Rural Bank of Bayawan, Inc. was impleaded as a defendant in
the Complaint since petitioner spouses mortgaged the subject lots in its favor
as security for a loan in the amount of P42,227.50. However, the bank was
later dropped as a party after the aforesaid loan was settled.
Petitioner spouses countered in their Answer to the Complaint that, by virtue
of the Deed of Partition dated 5 April 1937, the heirs of both Bernardo and
Tranquilina took exclusive possession of their respective shares in the
inheritance. Castor fully possessed the lots covered by Tax Declarations No.
7143, No. 7421 and No. 7956, after his co-heirs sold to him their shares
therein. In 1962, Castor sold to petitioner Perfecta the lots covered by Tax
Declarations No. 7421 and No. 7956, which corresponded to the subject lots
in the Complaint. Following the sale, petitioner Perfecta took possession of
the subject lots and filed with the Bureau of Lands an application for the

On 29 February 2000, the RTC promulgated its Decision, with the

following dispositive portion:
WHEREFORE, premises considered, judgment is hereby rendered
declaring [herein petitioner spouses] as the absolute owners over the parcels
of land in litigation. Consequently, [herein respondents] complaint is ordered
dismissed. [Respondents] counterclaim is likewise
The RTC ruled that the petitioner spouses evidence was more worthy
of credence in establishing their ownership of the subject lots. As petitioner
Perfecta testified before the RTC, Castor immediately took possession of the
subject lots after the Deed of Partition was executed in 1937. This fact was
supported by the unrebutted testimony of Luciana Navarra, petitioner
Perfectas cousin, who declared that her husband was petitioner Perfectas
tenant on the subject lots since 1947 and that respondents never actually
occupied the said properties.
The RTC observed that it was highly
questionable and contrary to human experience that respondents waited nine
long years after their ejection from the subject lots in 1965 before taking any
legal step to assert their rights over the same.
The RTC further subscribed to the testimony of Perfecta that the Confirmation
of Extrajudicial Partition was executed by Castor solely to accommodate
Susana, enabling her to obtain a bank loan using the subject lots as
collateral. It noted that Susana did not bother to apply for the issuance of
title to the subject lots in her name. Contrarily, it was Perfecta who applied
for and obtained title to the subject lots, which, surprisingly, respondents
were not even aware of. The RTC found that the contemporaneous and
subsequent acts of the parties after the execution of the Confirmation of
Extrajudicial Partition evidently demonstrated their intention to merely
accommodate Susana in her loan application. Hence, the RTC concluded that
the Confirmation of Extrajudicial Partition was a simulated contract which was
void and without any legal effect.
Without seeking a reconsideration of the above RTC Decision,
respondents challenged the same by way of appeal before the Court of
Appeals, docketed as CA-G.R. CV No. 66873.
On 8 March 2007, the Court of Appeals rendered the assailed Decision
in favor of respondents, the decretal portion of which provides:
WHEREFORE, the assailed decision is REVERSED AND SET ASIDE and a
new one entered ORDERING [herein petitioner spouses] and/or their heirs,
assigns and representatives as follows:
1.
To reconvey to [herein respondents] the possession and title to
the litigated parcels of land.
2.
Upon reconveyance of the litigated properties, the Register of
Deeds of Dumaguete City is ordered to cancel Certificate of Title No. 4877
(sic), 4976 and 4978 and to issue a new certificate to [respondents] or their
successors in interest.
3.
With costs against [petitioner spouses].[15]

respondents were also offered to the court a quo to lend support to

respondents claims of ownership.
The Court of Appeals agreed in the respondents contention that the
Confirmation of Extrajudicial Partition was not a simulated document. The
said document should be entitled to utmost respect, credence, and weight as
it was executed by and between parties who had firsthand knowledge of the
Deed of Partition of 1937. Moreover, the Confirmation of Extrajudicial
Partition constituted evidence that was of the highest probative value against
the declarant, Castor, because it was a declaration against his proprietary
interest. Other than petitioner Perfectas testimony, the appellate court
found no other proof extant in the records to establish that the Confirmation
of Extrajudicial Partition was a simulated document or that it did not express
the true intent of the parties. The Court of Appeals likewise highlighted the
fact that Castor did not attempt to have the subject lots declared in his name
during his lifetime and that petitioner Perfecta herself admitted that she only
started paying real estate taxes for the subject lots in 1993. It was Susana
and, later, her children, respondents Justina and Genoveva, who had been
paying for the realty taxes on the subject lots since 1937.
Petitioner spouses filed a Motion for Reconsideration[16] of the
foregoing Decision, but it was denied by the Court of Appeals in a
Resolution[17] dated 3 September 2007.
Petitioner spouses filed the instant Petition, raising the following issues
for the Courts consideration:
I. WHETHER [OR NOT] THE HONORABLE COURT OF APPEALS ACTED IN
ACCORDANCE WITH LAW IN RULING THAT EXTRANEOUS EVIDENCE IN THE
FORM OF AN AFFIDAVIT, THE CONFIRMATION OF EXTRAJUDICIAL PARTITION,
MAY BE ADMITTED IN EVIDENCE TO VARY THE TERMS OF A JUDICIALLY
DECLARED VALID AGREEMENT ENTITLED DEED OF PARTITION?
II. WHETHER [OR NOT] THE HONORABLE COURT OF APPEALS COMMITTED A
LEGAL ERROR IN NOT DISMISSING THE COMPLAINT ON THE GROUND OF RES
JUDICATA?

III.WHETHER [OR NOT] THE COMPLAINT FILED BY THE RESPONDENTS SHOULD

BE DISMISSED ON THE GROUND OF FORUM-SHOPPING?
IV. WHETHER [OR NOT] THE FREE PATENT TITLES ISSUED TO THE
PETITIONERS MAY BE RECONVEYED TO THE RESPONDENTS?[18]
Essentially, the Court finds that the fundamental issue that must be
settled in this case is who, among the parties herein, have the better right to
the subject lots.
The Court notes prefatorily that in resolving the present case, an
examination of the respective evidence of the parties must necessarily be
undertaken. Although the jurisdiction of the Court in a petition for review on
certiorari under Rule 45 of the Rules of Court is limited to reviewing only
errors of law, we find that an exception[19] to this rule is present in the
instant case in that the Court of Appeals made findings of fact which were
contrary to those of the RTC.
Before proceeding, the Court further establishes as a foregone fact,
there being no issue raised on the matter, that the subject lots covered by
Tax Declarations No. 07408 and No. 07409 described in the Complaint in Civil
Case No. 6111 are the very same lots covered by Tax Declarations No. 7956
and No. 7421 included in the Deed of Partition, and by Tax Declarations No.
2040 and No. 2039 subject of the Confirmation of Extrajudicial Partition.
Respondents, as plaintiffs before the RTC in Civil Case No. 6111, sought
the reconveyance and recovery of the subject lots purportedly illegally
usurped by petitioner spouses who succeeded in having the same titled in
the name of petitioner Perfecta. Respondent Justina testified in open court
that the subject lots were inherited by her and co-respondent Genovevas
mother, Susana, from their grandparents, Bernardo and Tranquilina.[20] As
proof of Susanas ownership of the subject lots, respondents presented the
Confirmation of Extrajudicial Partition executed on 5 August 1960 by Castor
and Susana. In said document, Castor ostensibly recognized and confirmed
Susanas ownership and possession of the subject lots.[21]
Tax
declarations[22] covering the subject lots in the names of Susana and

On the other hand, to prove their entitlement to the subject lots,

petitioner spouses presented before the RTC the Deed of Partition[23] entered
into by the heirs of spouses Bernardo and Tranquilina on 5 April 1937. By
virtue thereof, Castor acquired through sale the shares of his co-heirs in the
subject lots. Petitioner Perfecta testified before the trial court that right after
the execution of said Deed, she and her father, Castor, assumed possession
of the subject lots, planting coconuts, rice, and corn thereon.[24] She
additionally testified that realty taxes on the subject lots had since been paid
by Castor and, subsequently, by her.[25] Possession of the subject lots by
Castor and petitioner spouses was corroborated by the testimony of Luciana
Navarra, who insisted that respondents never occupied the said lots.[26]
Finally, petitioner spouses presented OCTs No. FV-4976, No. FV-4977, and No.
FV-4978, covering the subject lots, issued by the Registry of Deeds for the
Province of Negros Oriental on 9 October 1962 in the name of petitioner
Perfecta.
After a careful evaluation of the evidence adduced by the parties in the
instant case, the Court rules in favor of petitioner spouses.
At this point, let it be stated that the validity and due execution of the
Deed of Partition executed in 1937 is not directly assailed in this case, thus,
the Court need not pass upon the same. Under the said Deed of Partition, the
other heirs of Bernardo and Tranquilina clearly and unequivocally sold their
shares in the subject lots to Castor, petitioner Perfectas father. What
appeared to be the clear right of ownership of Castor over the subject lots
was put in doubt by the execution of the Confirmation of Extrajudicial
Partition by Castor and his sister Susana in 1960. Respondents, children and
heirs of Susana, base their claim of ownership of the subject lots on the said
document, while petitioner spouses denounce the same to be simulated,
executed for purposes other than to transfer ownership of the subject lots,
and cannot legally alter the terms of the previously duly executed Deed of
Partition.
As held by the Court of Appeals, the Confirmation of Extrajudicial
Partition partakes of the nature of an admission against a persons
proprietary interest.[27] As such, the same may be admitted as evidence
against Castor and petitioner spouses, his successors-in-interest. The theory
under which declarations against interest are received in evidence,
notwithstanding that they are hearsay, is that the necessity of the occasion
renders the reception of such evidence advisable and, further, that the
reliability of such declaration asserts facts which are against his own
pecuniary or moral interest.[28]
Nevertheless, the Confirmation of Extrajudicial Partition is just one
piece of evidence against petitioner spouses. It must still be considered and
weighed together with respondents other evidence vis--vis petitioner
spouses evidence. In civil cases, the party having the burden of proof must
establish his case by a preponderance of evidence. Preponderance of
evidence is the weight, credit, and value of the aggregate evidence on either
side and is usually considered to be synonymous with the term greater
weight of the evidence or greater weight of the credible evidence.
Preponderance of evidence is a phrase which, in the last analysis, means
probability of the truth. It is evidence which is more convincing to the court
as worthy of belief than that which is offered in opposition thereto.[29] Rule
133, Section 1 of the Rules of Court provides the guidelines in determining
preponderance of evidence, thus:
In civil cases, the party having the burden of proof must establish his case by
a preponderance of evidence. In determining where the preponderance or
superior weight of evidence on the issues involved lies, the court may
consider all the facts and circumstances of the case, the witnesses manner
of testifying, their intelligence, their means and opportunity of knowing the
facts to which they are testifying, the nature of the facts to which they testify,
the probability or improbability of their testimony, their interest or want of
interest, and also their personal credibility so far as the same may
legitimately appear upon the trial. The court may also consider the number
of witnesses, though the preponderance is not necessarily with the greater
number.
Herein, despite the admission made by Castor in the Confirmation of
Extrajudicial Partition against his own interest, the Court is still convinced that
the evidence adduced by the petitioner spouses preponderated over that of
the respondents.

In analyzing the two vital documents in this case, the Court discerns
that while the Deed of Partition clearly explained how Castor came to fully
own the subject lots, the Confirmation of Extrajudicial Partition, even though
confirming Susanas ownership of the subject lots, failed to shed light on why
or how the said properties wholly pertained to her when her parents Bernardo
and Tranquilina clearly had other heirs who also had shares in the
inheritance.
Other than the Confirmation of Extrajudicial Partition, respondents were
only able to present as evidence of their title to the subject lots tax
declarations covering the same, previously, in the name of Susana and,
subsequently, in their own names. We find such tax declarations insufficient
to establish respondents ownership of the subject lots. That the disputed
property has been declared for taxation purposes in the name of any party
does not necessarily prove ownership. Jurisprudence is consistent that tax
declarations are not conclusive evidence of ownership of the properties
stated therein. A disclaimer is even printed on the face of such tax
declarations that they are "issued only in connection with real property
taxation [and] should not be considered as title to the property." At best, tax
declarations are indicia of possession in the concept of an owner.[30]
Conversely, non-declaration of a property for tax purposes does not
necessarily negate ownership.[31]
On the other hand, the Court is at a loss as to how the Court of Appeals
failed to give due consideration to the Torrens titles issued in the name of
petitioner Perfecta when it rendered its assailed Decision.
Sometime in 1962, petitioner Perfecta applied for and was granted by
the Bureau of Lands free patents over the subject lots. Pursuant thereto,
Original Certificates of Title No. FV-4976, No. FV-4977, and No. FV-4978,
covering the subject lots, were issued by the Registry of Deeds for the
Province of Negros Oriental, on 9 October 1962, in the name of petitioner
Perfecta. Given this crucial fact, the Court pronounces that respondents
Complaint for reconveyance of the subject lots and damages filed only on 23
December 1974 is already barred.
A Torrens title issued on the basis of the free patents become as
indefeasible as one which was judicially secured upon the expiration of one
year from date of issuance of the patent.[32] However, this indefeasibility
cannot be a bar to an investigation by the State as to how such title has been
acquired, if the purpose of the investigation is to determine whether or not
fraud has been committed in securing the title. Indeed, one who succeeds in
fraudulently acquiring title to public land should not be allowed to benefit
from it.[33]
On this matter, Section 101 of Commonwealth Act No. 141[34] provides
that all actions for the reversion to the government of lands of the public
domain or improvements thereon shall be instituted by the Solicitor General
or the officer acting in his stead, in the proper courts, in the name of the
Commonwealth [now Republic] of the Philippines. Such is the rule because
whether the grant of a free patent is in conformity with the law or not is a
question which the government may raise, but until it is so raised by the
government and set aside, another claiming party may not question it. The
legality of the grant is a question between the grantee and the government.
[35] Thus, private parties, like respondents in the instant case, cannot
challenge the validity of the patent and the corresponding title, as they had
no personality to file the suit.
Although jurisprudence recognizes an exception to this case, the
respondents may not avail themselves of the same.
Verily, an aggrieved party may still file an action for reconveyance
based on implied or constructive trust, which prescribes in 10 years from the
date of the issuance of the Certificate of Title over the property, provided that
the property has not been acquired by an innocent purchaser for value. An
action for reconveyance is one that seeks to transfer property, wrongfully or
fraudulently registered by another, to its rightful and legal owner.[36] If the
registered owner, be he the patentee or his successor-in-interest to whom the
free patent was transferred, knew that the parcel of land described in the
patent and in the Torrens title belonged to another, who together with his
predecessors-in-interest had been in possession thereof, and if the patentee
and his successor-in-interest were never in possession thereof, the true owner
may bring an action to have the ownership of or title to the land judicially
settled. The court in the exercise of its equity jurisdiction, without ordering
the cancellation of the Torrens titled issued upon the patent, may direct the

defendant, the registered owner, to reconvey the parcel of land to the plaintiff
who has been found to be the true owner thereof.[37]
In the instant case, respondents brought the action for reconveyance of
the subject lots before the RTC only on 23 December 2004, or more than 12
years after the Torrens titles were issued in favor of petitioner Perfecta on 9
October 1962. The remedy is, therefore, already time-barred.
And even if respondents Complaint was filed on time, the Court would still
rule that respondents failed to satisfactorily prove that they were in
possession of the subject lots prior to the grant of free patents and issuance
of Torrens titles over the same in favor petitioner Perfecta. The bare
testimony of respondent Justina that Susana had been in the peaceful and
undisturbed possession of the subject lots since 1937 up to the time of her
death in 1965 was entirely bereft of substantiation and details.
No
information was provided as to how said possession of the subject lots was
actually exercised or demonstrated by Susana. In contrast, the possession of
the subject lots by Castor, and later on by petitioner spouses, was established
not just by the testimony of petitioner Perfecta, but was corroborated by the
testimony of Luciana Navarra, whose husband was a tenant working on the
subject lots. Petitioner spouses possessed the subject lots by planting
thereon coconuts, rice, and corn - a claim which respondents were unable to
refute.

From the evidence submitted during the trial there is no dispute concerning
the fact relative to the Identity of the land in litigation. It is commonly known
as Lot No. 524, Pls-126 and technically described and bounded in the sketch
(Exh. "7 "). This is the very tract of land alleged by the plaintiff to have been
forcibly entered into by the defendants and which plaintiff now w&s to
recover possession thereof. It has also been proven that the same lot was
covered by two free patent applications: (l) that of defendant Liwalug
Datomanong (erroneously surnamed Amerol) which he filed on the 4th day of
September, 1953, and (2) that of Molok Bagumbaran which was filed on
December 27, 1954. There is also no question regarding the fact that as to
these two free patent applications, that of plaintiff Molok Bagumbaran was
given due course as a result of which Free Patent No. V-19050 was issued on
August 16,1955 by authority of the President of the Philippines Ramon
Magsaysay, by Jaime Ferrer, Undersecretary of Agriculture and Natural
Resources and duly registered with the office of the Register of Deeds of the
Province of Lanao (now Lanao del Sur) in the mm year whereupon Original
Certificate of Title No. P-466 was duly issued, owner's duplicate certificate
having been furnished the herein plaintiff.
This court is also inclined to believe that defendant Liwalug Datomanong had
never known of plaintiff's free patent application on the land in question nor
was he ever notified or participated in the administrative proceedings relative
to plaintiff's free patent application. In the meantime, since the date he
purchased the land from Mandal Tondo, said defendant has been and up to
the present in con. tinuous occupation and cultivation of the same. His codefendants named in the complaint are merely his tenants.

boundary land owner on the north is Hadji Abdul Gani. 3 [a.k.a.Liwalug

Datomanong(Amerol)]. 4
xxx

xxx

WHEREFORE, premises considered, the Petition for Review under Rule

45 of the Rules of Court is hereby GRANTED. The assailed Decision dated 8
March 2007 and Resolution dated 3 September 2007 of the Court of Appeals
in CA-G.R. CV No. 66873 are hereby REVERSED AND SET ASIDE. The Decision
dated 29 February 2000 of the RTC of Negros Oriental, Branch 35, in Civil
Case No. 6111 is hereby REINSTATED. No costs. SO ORDERED.
*PRESCRIPTION*
AMEROL VS. MOLOK BAGUMBARAN
SARMIENTO, J.:
This is a petition for review on certiorari of the decision 1 of the then Court of
First Instance of Lanao del Sur, Branch III, Marawi City, in Civil Case No. 1354,
entitled, "Molok Bagumbaran vs. Liwalug Amerol et al.," under Republic Act
No. 5400, "as only question of law is raised." 2
The only issue for resolution is the prescriptive period of an action for
reconveyance of real property which has been wrongfully or erroneously
registered under the Torrens System in another's name. In other words, what
is the prescriptive period for the action to reconvey the title to real property
arising from an implied or constructive trust and, corrolarily reference. The
petitioners herein, defendants in the trial court, assert that they have ten
years to bring the action, while the respondent, plaintiff in the court below,
claims the prescriptive period is four years. The trial court ruled tor the
plaintiff, now respondent.
We reverse. We hold that the prescriptive period for such an action for
reconveyance, as this case, is ten years. The point of reference is, or the tenyear prescriptive period commences to run from, the. date of the issuance of
the certificate of title over the real property.
There is no issue as to the facts, this case having been elevated to this Court,
as aforestated, on purely a question of law. Be that as it may, in order to
satisfy constitutional requirements as well as to place the question of law in
proper perspective, there is need to state the facts of the case. On this
regard, the findings of the trial court would best serve the stated purposes.
xxx

xxx

xxx

It is also incontrovertible fact that said defendant did not take appropriate
action to annul the patent and title of the plaintiff within one year from
issuance thereof and that the first step taken by him to contest said patent
and title was a formal protest (Exh. "12", p. 408, Record) dated April 24,
1964, filed before the Bureau of Lands after the lapse of Nine (9) long years
from the issuance of patent in favor of the plaintiff. The second step he took
was his counterclaim contained in his answer to the complaint in the above
entitled case, which answer was filed with this court on December 4, 1964. In
said counterclaim, defendant reiterated his stand that plaintiff secured patent
on the land by means of deceit and fraud, wherefore, defendant prayed that
said title be annulled, or, alternatively, plaintiff be ordered to reconvey the
said land to the said defendant Liwalug Datomanong.
First question to be resolved is whether or not the plaintiff is guilty of fraud or
misrepresentation in securing the Free Patent No. V-19050 covering the land
in question.

xxx

xxx

xxx

The patent of the plaintiff having been registered back in 1955 and in
contemplation of law registration thereof is notice to the whole world and yet
defendant exerted no effort whatsoever either to annul the title or institute
proceedings for reconveyance except in his counterclaim contained in his
answer to the complaint in this case at bar which answer and counter-claim
was filed on December 4, 1964, some nine long years from the date of
registration of the patent, defendant unfortunately lost his right to
reconveyance within the period of four (4) years from the date of registration
of said patent. 5
xxx

xxx

xxx

Thus, the dispositive portion of the assailed decision stated:

xxx

Furthermore, respondents allegation that petitioner Perfecta committed fraud

and breach of trust in her free patent application is specious. The fact that
the document evidencing the sale of the subject lots by Castor to petitioner
Perfecta was not presented does not automatically mean that said contract
was never in existence. Also undeserving of much consideration without
sufficient proof is respondents averment that the subject lots were private
lands which could no longer be granted to any person via free patent.
Respondents ought to remember that mere allegation of fraud is not enough.
Specific, intentional acts to deceive and deprive another party of his right, or
in some manner injure him, must be alleged and proved.[38] Also, the
issuance by Bureau of Lands of free patents over the subject property to
petitioner Perfecta enjoys the presumption of regularity.

xxx

Notwithstanding the aforequoted findings, very unequivocal to be sure, the

trial court denied the counterclaim of the defendants, now petitioners, for the
affirmative relief of reconveyance on the ground of prescription. Said the
court:

xxx

xxx

PREMISES CONSIDERED, judgment is hereby rendered as follows: (1)

declaring the herein plaintiff the registered owner of Lot No. 524, Pls-126 and
sustaining and respecting the validity of the plaintiff's Original Certificate of
Title No. P-466 covering the said land; (2) ordering the defendants to vacate
the premises of Lot No. 524; Pls-126 and deliver possession thereof to the
herein plaintiff under certain terms and conditions herein below stated; (3)
denying and hereby dismissing the counterclaim of the herein defendants
and consequently the prayer to annul the title and/or for reconveyance of the
land to said defendant Liwalug Datomanong must Likewise be denied; (4)
that before plaintiff could take possession of said premises he must
reimburse defendant Liwalug Datomanong the total sum of Six Thousand
Seven Hundred Fifty-Two Pesos and Sixty-Two Centavos (P6,752.62) which he
incurred for the necessary and useful expenses on the land in question with
the right of said defendant to retain possession of the premises if said
reimbursement be not completely made. No pronouncement as to costs.

Upon a thorough examination of the evidence, proofs are sufficient to support

defendant's contention that plaintiff is guilty of fraud and misrepresentation.
In the first place, proofs are abundant tending to show that since 1952 when
Mandal Tando transferred the land to said defendant, the latter occupied,
took possession thereof and cultivated the same continuously, publicly,
adversely against any claimant and in the concept of owner up to the
present; that said defendant had introduced considerable improvements such
as coconut and coffee plantations and other fruit trees besides his farm
house, a mosque, cassava plantation and clearing and full cultivation of the
entire area. The fact of possession on the part of said defendant has been
attested to by competent and creditable witnesses like Mandal Tando who
conveyed the land to the defendant; Hadji Sirad Gomandang, the barrio
captain of Montay, Malabang, Lanao del Sur, Hadji Rasol Maruhom and Hadji
Abdulcadir Pagayawan, both of Pialot, Malabang, Lanao del Sur who are
farmers and barrio-mates of said defendant; and also Disomnong Dimna
Macabuat, an employee in the office of the District Land Officer at Marawi
City who had officially conducted occular inspection and investigation of the
premises in connection with the protest of said defendant found thereon the
above-mentioned improvements introduced by the said defendant.

xxx

xxx

xxx

What is more, on or before filing his free patent application, plaintiff knew
that the land in question which was covered by his free patent application
was then actually occupied and cultivated by defendant Liwalug Datomanong
if not by Mandal Tando, the original occupant. Be it remembered that Mandal
Tando had transferred to defendant Liwalug Datomanong Twenty Four (24)
hectares, more than eleven hectares of which is (sic) outside the military
reservation and designated as Lot No. 524, Pls-126 and the rest which is in
the southern portion lies within the military reservation. Now, immediately
adjacent thereto on the south is the land claimed and occupied by the herein
plaintiff also consisting of Twenty Four (24) hectares but wholly within the
military reservation. It appears that plaintiff declared this Twenty four
hectares for the first time on October 24, 1950 for taxation purposes (Tax
Declaration No. 1529, Record) and stated in said tax declaration (Exhs. "8"
and "8-A," p. 414, Record) regarding the boundaries that the adjacent owner
on the north is Mandal Tando. In other words, plaintiff had expressly
recognized the fact that Mandal Tando is an adjacent land owner north of
plaintiff's property. On February 19, 1951 herein plaintiff revised the abovestated tax declaration and secured another (Tax Declaration No. 1794, Exh.
"9" and "9-A," p. 413, Record) and still plaintiff stated therein that his

Indubitably, the act of respondent in misrepresenting that he was in actual

possession and occupation of the property in question, obtaining a patent and
Original Certificate of Title No. P- 466 in his name, created an implied trust in
favor of the actual possessor of the said property. The Civil Code provides:

Hence, this petition. 7

The petitioners in their Brief 8 assign the following two errors allegedly
committed by the trial court:
I.THE COURT ERRED IN ITS CONCLUSION OF LAW TOTHE EFFECT THAT
PETITIONERS RIGHT OF ACTION FOR RECONVEYANCE FOR VIOLATION OF AN
IMPLIED TRUST PRESCRIBED AFTER FOUR YEARS FROM THE REGISTRATION
OF THE PATENT OF RESPONDENT.
II.THE COURT ERRED IN NOT REQUIRING THE INTRODUCTION OF EVIDENCE
AS BASIS IN THE ASSESSMENT OF THE FAIR MARKET VALUE OF THE
IMPROVEMENT INTRODUCED ON THE LAND IN GOOD FAITH BY PETITIONERS
INSTEAD OF BASING SUCH ASSESSMENT UPON PURE AND SIMPLE GUESS
WORKS AND WILD ESTIMATIONS.
The first assignment of error is well-taken as adverted to at the outset.

ARTICLE 1456. If property is acquired through mistake or fraud, the person

obtaining it is by force of law, considered a trustee of an implied trust for the
benefit of the person from whom the property comes.
In this case, the land in question was patented and titled in respondent's
name by and through his false pretenses. Molok Bagumbaran fraudulently
misrepresented that he was the occupant and actual possessor of the land in
question when he was not because it was Liwalug Datomanong. Bagumbaran
falsely pretended that there was no prior applicant for a free patent over the
land but there was Liwalug Datomanong. By such fraudulent acts, Molok
Bagumbaran is deemed to hold the title of the property in trust and for the
benefit of petitioner Liwalug Datomanong. Notwithstanding the irrevocability
of the Torrens title already issued in the name of respondent, he, even being
already the registered owner under the Torrens system, may still be
compelled under the law to reconvey the subject property to Liwalug

Datomanong. After all, the Torrens system was not designed to shield and
protect one who had committed fraud or misrepresentation and thus holds
title in bad faith. Further, contrary to the erroneous claim of the respondent, 9
reconveyance does not work to set aside and put under review anew the
findings of facts of the Bureau of Lands. In an action for reconveyance, the
decree of registration is respected as incontrovertible. What is sought instead
is the transfer of the property, in this case the title thereof, which has been
wrongfully or erroneously registered in another person's name, to its rightful
and legal owner, 10 or to one with a better right. That is what reconveyance
is all about.
Yet, the right to seek reconveyance based on an implied or constructive trust
is not absolute. It is subject to extinctive prescription. 11 Happily, both
parties agree on this point. The seeming impediment however, is that while
the petitioners assert that the action prescribes in ten years, the respondent
avers that it does in only four years.
In support of his submission, the respondent invokes several cases. We have
examined the invocations and find them inapplicable. For instance, the case
of Fabian vs. Fabian, 12 relied on by the respondent, does not square with the
present case. In Fabian, the party who prayed for reconveyance was not in
actual possession and occupation of the property. It was instead the party to
whom title over the property had been issued who occupied and possessed it.
Further, the litigated property had been in the adverse possession of the
registered owner for well-nigh over twenty-nine big years, hence,
reconveyance had been irretrievably lost.
Miguel vs. Court of Appeals, 13 is, likewise, inapplicable. In Miguel, the actual
occupant and possessor of the controverted parcel of land, after having been
enticed by Leonor Reyes, an ambulatory notary public, with promise of help,
engaged and retained the services of the latter to facilitate the issuance of a
patent for the said land in his (Miguel's) favor. Thus, there existed between
the parties a relationship very much akin to that of lawyer-client and which is
similarly fiduciary in character. But Reyes, inspite of his compensation of onefifth of the yearly produce of the property, still violated the trust reposed on
him and instead worked for the issuance of the patent in the name of his own
wife. So, after the demise of Leonor Reyes, the property was fraudulently
patented and titled in his widow's favor. The reconveyance of the property
was decreed by the Court based on "breach of fiduciary relations and/or
fraud." It was shown that the parties were legally bound to each other by a
bond of fiduciary trust, a bond lacking in the case at bar.
Finally, the case of Ramirez vs. Court of Appeals 14 can not be availed of
because the period of prescription was not there definitely and squarely
settled. In fact, Ramirez underscores a vacillation between the four-year and
the ten-year rule. There it was stated that "an action for relief on the ground
of fraud to which class the remedy prayed for by Paguia belong scan
only be brought within four years after accrual of the right of action, or from
the discovery of the fraud." If the decision just stayed pat on that statement,
there would be merit in the respondent's presentation. But Ramirez
continues: "(I)ndepedently, however, of the alleged fraud on the part of
Ramirez, the right to demand a reconveyance prescribes after 10 years from
accrual of the cause of action, June 22, 1944, the date of registration of the
patent and of the issuance of OCT No. 282- A in his name." 15
Significantly, the three cases cited by the respondent to buttress his position
and support the ruling of the trial court have a common denominator, so to
speak. The cause of action assailing the frauds committed and impugning the
Torrens titles issued in those cases, all accrued prior to the effectivity of the
present Civil Code. The accrual of the cause of action in Fabian was in 1928,
in Miguel, February, 1950, and in Ramirez, 1944. It must be remembered that
before August 30, 1950, the date of the effectivity of the new Civil Code, the
old Code of Civil Procedure (Act No. 190) governed prescription. It provided:
SEC. 43.
Other civil actions; how limited-Civil actions other than for the
recovery of real property can only be brought within the following periods
after the right of action accrues:
xxx

xxx

xxx

(1)

Upon a written contract;

(2)

Upon an obligation created by law;

(3)

Upon a judgment.

xxx

xxx

xxx

(Emphasis supplied)
An action for reconveyance based on an implied or constructive trust must
perforce prescribed in ten years and not otherwise. A long line of decisions of
this Court, and of very recent vintage at that, illustrates this rule.
Undoubtedly, it is now well-settled that an action for reconveyance based on
an implied or constructive trust prescribes in ten years from the issuance of
the Torrens title over the property. 16 The only discordant note, it seems, is
Balbin vs. Medalla, 17 which states that the prescriptive period for a
reconveyance action is four years. However, this variance can be explained
by the erroneous reliance on Gerona vs. de Guzman. 18 But in Gerona, the
fraud was discovered on June 25, 1948, hence Section 43(3) of Act No. 190,
was applied, the new Civil Code not coming into effect until August 30, 1950
as mentioned earlier. It must be stressed, at this juncture, that Article 1144
and Article 1456, are new provisions. They have no counterparts in the old
Civil Code or in the old Code of Civil Procedure, the latter being then resorted
to as legal basis of the four-year prescriptive period for an action for
reconveyance of title of real property acquired under false pretenses.
It is abundantly clear from all the foregoing that the action of petitioner
Datomanong for reconveyance, in the nature of a counterclaim interposed in
his Answer, filed on December 4, 1964, to the complaint for recovery of
possession instituted by the respondent, has not yet prescribed. Between
August 16, 1955, the date of reference, being the date of the issuance of the
Original Certificate of Title in the name of the respondent, and December 4,
1964, when the period of prescription was interrupted by the filing of the
Answer cum Counterclaim, is less than ten years.
The respondent also interposed as a deterrent to reconveyance the existence
of a mortgage on the property. It is claimed by the respondent that
reconveyance would not be legally possible because the property under
litigation has already been mortgaged by him to the Development Bank of
the Philippines. 19 This claim is untenable otherwise the judgment for
reconveyance could be negated at the will of the holder of the title. By the
simple expedient of constituting a mortgage or other encumbrance on the
property, the remedy of reconveyance would become illusory. In the instant
case, the respondent being doubly in bad faith for applying for and
obtaining a patent and the Original Certificate of Title therefor without being
in possession of the land and for mortgaging it to the Development Bank
knowing that his Original Certificate of Title was issued under false pretenses
must alone suffer the consequences.
Besides, given the undisputed facts, we cannot consider the mortgage
contracted by the respondent in favor of the Development Bank of the
Philippines as valid and binding against petitioner Liwalug Datomanong. It
would be most unjust to saddle him, as owner of the land, with a mortgage
lien not of his own making and from which he derived no benefit whatsoever.
The consequences of the void mortgage must be left between the mortgagor
and the mortgagee. In no small measure the Development Bank of the
Philippines might even be faulted for not making the requisite investigation
on the possession of the land mortgaged.
Premises considered, we deemed it superfluous to rule on the second
assignment of error raised by the petitioners.
WHEREFORE, the petition is GRANTED and the Decision dated June 3, 1970 of
the then Court of First Instance of Lanao del Sur in Civil Case No. 1354 is
hereby ANNULLED and SET ASIDE and a new one entered ORDERING the
respondent to RECONVEY Original Certificate of Title No. P-466 in favor of
petitioner Liwalug Datomanong, free of any encumbrance. Costs against the
respondent. SO ORDERED.

3.
Within four years: x x x An action for relief on the ground of
fraud, but the right of action in such case shall not be deemed to have
accrued until the discovery of the fraud;

DACLAG CS. MACAHILIG, GR NO. 159578

xxx

AUSTRIA-MARTINEZ, J.:

xxx

xxx

In contrast, under the present Civil Code, we find that just as an implied or
constructive trust is an offspring of the law (Art. 1456, Civil Code), so is the
corresponding obligation to reconvey the property and the title thereto in
favor of the true owner. In this context, and vis-a-vis prescription, Article 1144
of the Civil Code is applicable.
Article 1144. The following actions must be brought within ten years from the
time the right of action accrues:

Before us is petitioners' Motion for Reconsideration of our Decision dated July

28, 2008 where we affirmed the Decision dated October 17, 2001 and the
Resolution dated August 7, 2003 of the Court of Appeals (CA) in CA-G.R. CV
No. 48498.

Records show that while the land was registered in the name of petitioner
Rogelia in 1984, respondents complaint for reconveyance was filed in 1991,
which was within the 10-year prescriptive period.
We ruled that since petitioners bought the property when it was still an
unregistered land, the defense of having purchased the property in good faith
is unavailing. We affirmed the Regional Trial Court (RTC) in finding that
petitioners should pay respondents their corresponding share in the produce
of the subject land from the time they were deprived thereof until the
possession is restored to them.
In their Motion for Reconsideration, petitioners contend that the 10-year
period for reconveyance is applicable if the action is based on an implied or a
constructive trust; that since respondents' action for reconveyance was based
on fraud, the action must be filed within four years from the discovery of the
fraud, citing Gerona v. De Guzman,[1] which was reiterated in Balbin v.
Medalla.[2]
We do not agree.
In Caro v. Court of Appeals,[3] we have explicitly held that the prescriptive
period for the reconveyance of fraudulently registered real property is 10
years reckoned from the date of the issuance of the certificate of title x x
x.[4]
However, notwithstanding petitioners' unmeritorious argument, the Court
deems it necessary to make certain clarifications. We have earlier ruled that
respondents' action for reconveyance had not prescribed, since it was filed
within the 10-year prescriptive period.
However, a review of the factual antecedents of the case shows that
respondents' action for reconveyance was not even subject to prescription.
The deed of sale executed by Maxima in favor of petitioners was null and
void, since Maxima was not the owner of the land she sold to petitioners, and
the one-half northern portion of such land was owned by respondents. Being
an absolute nullity, the deed is subject to attack anytime, in accordance with
Article 1410 of the Civil Code that an action to declare the inexistence of a
void contract does not prescribe. Likewise, we have consistently ruled that
when there is a showing of such illegality, the property registered is deemed
to be simply held in trust for the real owner by the person in whose name it is
registered, and the former then has the right to sue for the reconveyance of
the property.[5] An action for reconveyance based on a void contract is
imprescriptible.[6] As long as the land wrongfully registered under the
Torrens system is still in the name of the person who caused such
registration, an action in personam will lie to compel him to reconvey the
property to the real owner.[7] In this case, title to the property is in the name
of petitioner Rogelia; thus, the trial court correctly ordered the reconveyance
of the subject land to respondents.
Petitioners next contend that they are possessors in good faith, thus, the
award of damages should not have been imposed. They further contend that
under Article 544, a possessor in good faith is entitled to the fruits received
before the possession is legally interrupted; thus, if indeed petitioners are
jointly and severally liable to respondents for the produce of the subject land,
the liability should be reckoned only for 1991 and not 1984.
We find partial merit in this argument.
Article 528 of the Civil Code provides that possession acquired in good faith
does not lose this character, except in a case and from the moment facts
exist which show that the possessor is not unaware that he possesses the
thing improperly or wrongfully. Possession in good faith ceases from the
moment defects in the title are made known to the possessors, by extraneous
evidence or by suit for recovery of the
property by the true owner. Whatever may be the cause or the fact from
which it can be deduced that the possessor has knowledge of the defects of
his title or mode of acquisition, it must be considered sufficient to show bad
faith.[8] Such interruption takes place upon service of summons.[9]

presided by Judge, now Justice, Magno Gatmaitan of the Court of Appeals.

Hence, this appeal by appellant bank.
Article 544 of the same Code provides that a possessor in good faith is
entitled to the fruits only so long as his possession is not legally interrupted.
Records show that petitioners received a summons together with
respondents' complaint on August 5, 1991;[10] thus, petitioners' good faith
ceased on the day they received the summons. Consequently, petitioners
should pay respondents 10 cavans of palay per annum beginning August 5,
1991 instead of 1984.
Finally, petitioner would like this Court to look into the finding of the RTC that
since Maxima died in October 1993, whatever charges and claims
petitioners may recover from her expired with her; and that the proper
person to be held liable for damages to be awarded to respondents should be
Maxima Divison or her estate, since she misrepresented herself to be the true
owner of the subject land.
We are not persuaded.
Notably, petitioners never raised this issue in their appellants' brief or in their
motion for reconsideration filed before the CA. In fact, they never raised this
matter before us when they filed their petition for review. Thus, petitioners
cannot raise the same in this motion for reconsideration without offending the
basic rules of fair play, justice and due process, specially since Maxima was
not substituted at all by her heirs after the promulgation of the RTC Decision.
WHEREFORE, petitioners Motion for Reconsideration is PARTLY GRANTED.
The Decision of the Court of Appeals dated July 28, 2008 is MODIFIED only
with respect to prescription as discussed in the text of herein Resolution, and
the dispositive portion of the Decision is MODIFIED to the effect that
petitioners are ordered to pay respondents 10 cavans of palay per annum
beginning August 5, 1991 instead of 1984.
SO ORDERED.
*RECOVERY FROM THE ASSURANCE FUND (SECTION 95*
DEVELOPMENT BANK OF THE PHILIPPINES VS. BAUTISTA
FERNANDO, J.:
The question this appeal from a judgment of a lower court presents is one
that possesses both novelty and significance. It is this: What is the right, if
any, of a creditor which previously satisfied its claim by foreclosing
extrajudicially on a mortgage executed by the debtor, whose title was
thereafter nullified in a judicial proceeding where she was not brought in as a
party?
As creditor, the Development Bank of the Philippines now appellant, filed a
complaint against one of its debtors, Lourdes Gaspar Bautista, now appellee,
for the recovery of a sum of money representing the unpaid mortgage
indebtedness, which previously had been wiped out with the creditor bank
acquiring the title of the mortgaged property in an extrajudicial sale.
Thereafter, the title was nullified in a judicial proceeding, the land in question
being adjudged as belonging to another claimant, without, however, such
debtor, as above noted, having been cited to appear in such court action.
The Development Bank was unsuccessful, the lower court being of the view
that with the due process requirement thus flagrantly disregarded, since she
was not a party in such action where her title was set aside, such a judgment
could in no wise be binding on her and be the source of a claim by the
appellant bank. The complaint was thus dismissed by the lower court, then

Such dismissal is in accordance with law. There is no occasion for us to

repudiate the lower court.
From the very statement of facts in the brief for appellant bank, the following
appears: "On or before May 31, 1949, the defendant-appellee, Lourdes
Gaspar Bautista, who shall hereafter be referred to as Bautista, applied to the
Government for the sale favor of a parcel of land with an area of 12 has., 44
ares, and 22 centares, located at Bo. Barbara, San Jose, Nueva Ecija. After
proper investigation, Sales Patent no. V-132 covering said property was
issued in her favor on June 1, 1949 (Exh. A-1) by the Director of Lands. Sales
Patent No. V-132 was registered in the office of the Register of Deeds of
Nueva Ecija pursuant to Section 122 of Act 496 on June 3, 1949 (Exh. A), as a
result of which Original Certificate of Title No. P-389 was issued in her favor."1
How the loan was contracted by now appellee Bautista was therein set forth.
Thus: "On July 16, 1949, Bautista applied for a loan with the Rehabilitation
Finance Corporation (RFC), predecessor in interest of the plaintiff-appellee
Development Bank of the Philippines (DBP), offering as security the parcel of
land covered by O.C.T. No. P-389. Aside from her certificate of title, Bautista
also submitted to the RFC other documents to show her ownership and
possession of the land in question, namely, Tax Declaration No. 5153 (Exh. A4) in her name and the blueprint plan of the land. On the basis of the
documents mentioned and the appraisal of the property by its appraiser, the
RFC approved a loan of P4,000.00 in favor of Bautista. On July 16, 1949,
Bautista executed the mortgage contract over the property covered by O.C.T.
No. P-389 and the promissory note for P4,000.00 in favor of RFC (Exhs. C and
C-1), after which the proceeds of the loan were released."2
The satisfaction of the mortgage debt with the acquisition of the title to such
property by appellant Bank, by virtue of an extrajudicial foreclosure sale, and
such title losing its validity in view of a court proceeding, where however,
appellee Bautista, was not made a party, was next taken up in the brief of
plaintiff-appellant. Thus: "Bautista failed to pay the amortization on the loan
so that the RFC took steps to foreclose the mortgage extra-judicially under
Act 3135, as amended. In the ensuing auction sale conducted by the sheriff of
Nueva Ecija on June 27, 1951, the RFC acquired the mortgaged property as
the highest bidder (Exh. D). On the date of the sale, the total obligation of
Bautista with the RFC was P4,858.48 (Exh. I). On July 21, 1952, upon failure of
Bautista to redeem the property within the one (1) year period as provided
bylaw, plaintiff-appellant RFC consolidated its ownership thereon (Exhs. E and
E-I). On July 26, 1952, the Register of Deeds of Nueva Ecija cancelled O.C.T.
No. P-389 and replaced it with T.C.T. No. NT-12108 in the name of the RFC
(Exhs. F and F-1). On or about this time, however, an action (Civil Case No.
870) was filed by Rufino Ramos and Juan Ramos in the Court of First Instance
of Nueva Ecija against the Government of the Republic of the Philippines and
the RFC (as successor in interest of Bautista) claiming ownership of the land
in question and seeking the annulment of T.C.T. No. 2336 in the name of the
Government, O.C.T. No. P-389 in the name of Bautista and T.C.TG. No. NT12108 in the name of the RFC. A decision thereon was rendered on June 27,
1955 (Exhs. G, G-1, and G-3) whereby the aformentioned certificates of title
were declared null and void."3
Why the complaint had to be dismissed was explained thus in the decision
now on appeal: "The Court after examining the proofs, is constrained to
sustain her on that; it will really appear that she had never been placed
within the jurisdiction of the Nueva Ecija Court; as the action there was one to
annual the title, it was an action strictly in personam, if that was the case as
it was, the judgment there could not in any way bind Lourdes who had not
acquired in said decision in any way for what only happened is that as to the
mortgage, the Bank foreclosed, and then sold unto Conrada and when the
title had been annulled, the Bank reimbursed Conrada; stated otherwise, the
annulment of Lourdes' title was a proceeding ex parte as far as she was
concerned and could not bind her at all; and her mortgage was foreclosed an
the Bank realized on it, when the Bank afterwards acquiesced in the
annulment of the title and took it upon itself to reimburse Conrada, the Bank
was acting on its own peril because it could not have by that, bound Lourdes
at all."4

As stated at the outset, the decision must be affirmed. The fundamental due
process requirement having been disregarded, appellee Bautista could not in
any wise be made to suffer, whether directly or indirectly, from the effects of
such decision. After appellant bank had acquired her title by such
extrajudicial foreclosure sale and thus, through its own act, seen to it that her
obligation had been satisfied, it could not thereafter, seek to revive the same
on the allegation that the title in question was subsequently annulled,
considering that she was not made a party on the occasion of such
nullification.
If it were otherwise, then the cardinal requirement that no party should be
made to suffer in person or property without being given a hearing would be
brushed aside. The doctrine consistently adhered to by this Court whenever
such a question arises in a series of decisions is that a denial of due process
suffices to cast on the official act taken by whatever branch of the
government the impress of nullity.5
A recent decision, Macabingkil v. Yatco,6 possesses relevance. "A 1957
decision, Cruzcosa v. Concepcion, is even more illuminating in so far as the
availability of the remedy sought is concerned. In the language of this Court,
speaking through Justice J.B.L. Reyes: 'The petition is clearly meritorious.
Petitioners were conclusively found by the Court of Appeals to be co-owners
of the building in question. Having an interest therein, they should have been
made parties to the ejectment proceedings to give them a chance to protect
their rights: and not having been made parties thereto, they are not bound
and can not be affected by the judgment rendered therein against their coowner Catalino Cruzcosa. Jr. ....' Two due process cases deal specifically with a
writ of execution that could not validly be enforced against a party who was
not given his day in court, Sicat v. Reyes, and Hamoy v. Batingoplo. According
to the former: 'The above agreement, which served as basis for the ejectment
of Alipio Sicat, cannot be binding and conclusive upon the latter, who is not a
party to the case. Indeed, that order, as well as the writ of execution, cannot
legally be enforced against Alipio Sicat for the simple reason that he was not
given his day in court.' From the latter: 'The issue raised in the motion of
Rangar is not involved in the appeal for it concerns a right which he claims
over the property which has not so far been litigated for the reason that he
was not made a party to the case either as plaintiff for a defendant. He only
came to know of the litigation when he was forced out of the property by the
sheriff, and so he filed the present motion to be heard and prove his title to
the property. This he has the right to do as the most expeditious manner to
protect his interest instead of filing a separate action which generally is long,
tedious and protracted.'"
Reinforcement to the above conclusion comes from a codal provision.
According to the Civil Code:7 "The vendor shall not be obliged to make good
the proper warranty, unless he is summoned in the suit for eviction at the
instance of the vendee. "While not directly in point, the principle on which the
above requirement is based sustains the decision of the lower court. In effect,
appellant bank would hold appellee Bautista liable for the warranty on her
title, its annullment having the same effect as that of an eviction. In such a
case, it is wisely provided by the Civil Code that appellee Bautista, as vendor,
should have been summoned and given the opportunity to defend herself. In
view of her being denied her day in court, it would to be respected, that she
is not "obliged to made good the proper warranty."
In the suit before the lower court, the Director of Lands and the National
Treasurer of the Philippines were likewise made defendants by appellant bank
because of its belief that if no right existed as against appellee Bautista,
recovery could be had from the Assurance Fund. Such a belief finds no
support in the applicable, law, which allows recovery only upon a showing
that there be no negligence on the part of the party sustaining any loss or
damage or being deprived of any land or interest therein by the operation of
the Land Registration Act.8 This certainly is not the case here, plaintiffappellant being solely responsible for the light in which it now finds itself.
Accordingly, the Director of Lands and the National Treasurer of the
Philippines are likewise exempt from any liability.
WHEREFORE, the judgment appealed from is affirmed, with costs against the
Development Bank of the Philippines.