1

P.D. 1529 The Property Registration Decree

There is a need to update the Land Registration Act and to codify the various
laws relative to registration of property, in order to facilitate effective
implementation of said laws. To strengthen the Torrens system, it is deemed
necessary to adopt safeguards to prevent anomalous titling of real property,
and to streamline and simplify registration proceedings and the issuance of
certificates of title. The decrees promulgated relative to the registration of
certificates of land transfer and emancipation patents issued pursuant to
Presidential Decree No. 27 to hasten the implementation of the land reform
program of the country form an integral part of the property registration
laws.
Nature of registration proceedings; jurisdiction of courts. Judicial
proceedings for the registration of lands throughout the Philippines shall be
in rem and shall be based on the generally accepted principles underlying the
Torrens system. Courts of First Instance shall have exclusive jurisdiction
over all applications for original registration of title to lands, including
improvements and interests therein, and over all petitions filed after original
registration of title, with power to hear and determine all questions arising
upon such applications or petitions. The court through its clerk of court shall
furnish the Land Registratio99n Commission with two certified copies of all
pleadings, exhibits, orders, and decisions filed or issued in applications or
petitions for land registration, with the exception of stenographic notes,
within five days from the filing or issuance thereof.
Status of other pre-existing land registration system. The system of
registration under the Spanish Mortgage Law is hereby discontinued and all
lands recorded under said system which are not yet covered by Torrens title
shall be considered as unregistered lands. Hereafter, all instruments affecting
lands originally registered under the Spanish Mortgage Law may be

recorded under Section 113 of this Decree, until the land shall have been
brought under the operation of the Torrens system. (Illustrative Case)

Republic of the Philippines Heirs of Mario Malabanan vs.

Republic of the Philippines Gr No. 179987 April 29, 2009
FACTS:
On 20 February 1998, Mario Malabanan filed an application for land
registration before the RTC of Cavite-Tagaytay, covering a parcel of land
situated in Silang Cavite, consisting of 71,324 square meters. Malabanan
claimed that he had purchased the property from Eduardo Velazco, and that
he and his predecessors-in-interest had been in open, notorious, and
continuous adverse and peaceful possession of the land for more than thirty
(30) years. Velazco testified that the property was originally belonged to a
twenty-two hectare property owned by his great-grandfather, Lino Velazco.
Lino had four sons Benedicto, Gregorio, Eduardo and Estebanthe fourth
being Aristedess grandfather. Upon Linos death, his four sons inherited
the property and divided it among themselves. But by 1966, Estebans
wife,Magdalena, had become the administrator of all the properties
inherited by the Velazco sons from their father, Lino. After the death of
Esteban and Magdalena, their son Virgilio succeeded them in administering
the properties, includingLot9864-A, which originally belonged to his uncle,
Eduardo Velazco. It was this property that was sold by Eduardo Velazco to
Malabanan.
Among the evidence presented by Malabanan during trial was a
Certification dated 11 June 2001, issued by the Community Environment &
Natural Resources Office, Department of Environment and Natural
Resources (CENRO-DENR), which stated that the subject property was
verified to be within the Alienable or Disposable land per Land
Classification Map No. 3013 established under Project No. 20-A and

approved as such under FAO 4-1656 on March 15, 1982. On 3 December

2002, the RTC approved the application for registration.
The Republic interposed an appeal to the Court of Appeals, arguing that
Malabanan had failed to prove that the property belonged to the alienable
and disposable land of the public domain, and that the RTC had erred in
finding that he had been in possession of the property in the manner and for
the length of time required by law for confirmation of imperfect title. On 23
February 2007, the Court of Appeals reversed the RTC ruling and dismissed
the appliocation of Malabanan.
ISSUES:
1. In order that an alienable and disposable land of the public domain may
be registered under Section 14(1) of Presidential Decree No. 1529,
otherwise known as the Property Registration Decree, should the land be
classified as alienable and disposable as of June 12, 1945 or is it sufficient
that such classification occur at any time prior to the filing of the applicant
for registration provided that it is established that the applicant has been in
open, continuous, exclusive and notorious possession of the land under a
bona fide claim of ownership since June 12, 1945 or earlier?
2. For purposes of Section 14(2) of the Property Registration Decree may a
parcel of land classified as alienable and disposable be deemed private land
and therefore susceptible to acquisition by prescription in accordance with
the Civil Code?
3. May a parcel of land established as agricultural in character either
because of its use or because its slope is below that of forest lands be
registrable under Section 14(2) of the Property Registration Decree in
relation to the provisions of the Civil Code on acquisitive prescription?
4. Are petitioners entitled to the registration of the subject land in their
names under Section 14(1) or Section 14(2) of the Property Registration
Decree or both?
HELD:
The Petition is denied.

(1) In connection with Section 14(1) of the Property Registration Decree,

Section 48(b) of the Public Land Act recognizes and confirms that those
who by themselves or through their predecessors in interest have been in
open, continuous, exclusive, and notorious possession and occupation of
alienable and disposable lands of the public domain, under a bona fide
claim of acquisition of ownership, since June 12, 1945 have acquired
ownership of, and registrable title to, such lands based on the length and
quality of their possession.
(a) Since Section 48(b) merely requires possession since 12 June 1945 and
does not require that the lands should have been alienable and disposable
during the entire period of possession, the possessor is entitled to secure
judicial confirmation of his title thereto as soon as it is declared alienable
and disposable, subject to the timeframe imposed by Section 47 of the Public
Land Act.
(b) The right to register granted under Section 48(b) of the Public Land Act
is further confirmed by Section 14(1) of the Property Registration Decree.
(2) In complying with Section 14(2) of the Property Registration Decree,
consider that under the Civil Code, prescription is recognized as a mode of
acquiring ownership of patrimonial property. However, public domain lands
become only patrimonial property not only with a declaration that these are
alienable or disposable. There must also be an express government
manifestation that the property is already patrimonial or no longer retained
for public service or the development of national wealth, under Article 422
of the Civil Code. And only when the property has become patrimonial can
the prescriptive period for the acquisition of property of the public dominion
begin to run.
(a) Patrimonial property is private property of the government. The person
acquires ownership of patrimonial property by prescription under the Civil
Code is entitled to secure registration thereof under Section 14(2) of the
Property Registration Decree.
(b) There are two kinds of prescription by which patrimonial property may
be acquired, one ordinary and other extraordinary. Under ordinary

acquisitive prescription, a person acquires ownership of a patrimonial

property through possession for at least ten (10) years, in good faith and
with just title. Under extraordinary acquisitive prescription, a persons
uninterrupted adverse possession of patrimonial property for at least thirty
(30) years, regardless of good faith or just title, ripens into ownership.
It is clear that the evidence of petitioners is insufficient to establish that
Malabanan has acquired ownership over the subject property under Section
48(b) of the Public Land Act. There is no substantive evidence to establish
that Malabanan or petitioners as his predecessors-in-interest have been in
possession of the property since 12 June 1945 or earlier. The earliest that
petitioners can date back their possession, according to their own
evidencethe Tax Declarations they presented in particularis to the year
1948. Thus, they cannot avail themselves of registration under Section 14(1)
of the Property Registration Decree.
Neither can petitioners properly invoke Section 14(2) as basis for
registration. While the subject property was declared as alienable or
disposable in 1982, there is no competent evidence that is no longer
intended for public use service or for the development of the national
evidence, conformably with Article 422 of the Civil Code. The classification
of the subject property as alienable and disposable land of the public
domain does not change its status as property of the public dominion under
Article 420(2) of the Civil Code. Thus, it is insusceptible to acquisition by
prescription.
Luningning P. Del Rosario-Igtiben et al vs. Republic Of The Philippines
and The Court of Appeals, G.R. No. 158449 October 22, 2004
FACTS:
On 08 January 1998, petitioners filed with the trial court an application for
registration of land under Presidential Decree (PD) No. 1529, otherwise
known as the Property Registration Decree. The application covered a

parcel of land with an area of 2,988 square meters, situated in Barangay

Malabag, Silang, Cavite, and more particularly described as Lot 5442, Cad
452-D, Silang Cadastre, Ap-04-007007 (hereinafter referred to as the
Subject Property).
Petitioners alleged that they acquired the Subject Property by purchase,
and that they, by themselves and through their predecessors-in-interest, had
been in actual, continuous, uninterrupted, open, public, and adverse
possession of the Subject Property in the concept of owner for more that 30
years.
No opposition was filed against the application and so petitioners
proceeded with the presentation of their evidence.
The State was represented in the proceedings by Assistant Provincial
Prosecutor Jose M. Velasco, Jr.
Based on the testimonial and documentary evidence presented, the trial
court traced the history of possession of the Subject Property back to 1958,
when the Subject Property was first declared for tax purposes by Justina
Hintog.
Teodoro Calanog came into possession of the Subject Property in 1968. In
the same year, the Subject Property was transferred to spouses Alfredo
Tonido and Agatona Calanog. Agatona Calanog allegedly inherited the
Subject Property from Teodoro Calanog, her father; on the other hand,
Alfredo Tonido supposedly purchased the same property also from Teodoro
Calanog, his father-in-law. Alfredo Tonido planted the Subject Property
with palay, sayote, coffee, guyabano and other fruit bearing trees. After the
demise of Agatona Calanog, the rest of the Tonido family, consisting of
Alfredo and his children, Samuel, Elizabeth, Benjamin, Imelda and Esther,
shared possession of the Subject Property.

On 21 November 1995, the Tonido family sold the Subject Property to

petitioners, as evidenced by a Deed of Absolute Sale.
The history of possession of the Subject Property, as related above, was
supported by tax declarations in the name of petitioners and their
predecessors-in-interest from 1958 to 1998.
On 15 August 2000, the trial court rendered a decision approving
petitioners application for registration of the Subject Property.
The Republic of the Philippines, represented by the Office of the Solicitor
General, appealed the decision of the trial court to the Court of Appeals.
In its appeal, the Republic alleged that the trial court erred in approving
the application for registration despite petitioners failure to prove open,
continuous, exclusive and notorious possession and occupation of the
Subject Property since 12 June 1945, or earlier, as required by Section
48(b) of Commonwealth Act No. 141, otherwise known as the Public Land
Act, as amended by PD No. 1073.
Moreover, petitioners also failed to produce muniments of title to tack their
possession to those of their predecessors-in-interest in compliance with the
prescriptive period required by law.
On 20 December 2002, the Court of Appeals rendered a decision finding
the appeal meritorious, setting aside the decision of the trial court, and
dismissing the application for registration of petitioners.
The Court of Appeals denied petitioners Motion for Reconsideration in its
resolution dated 22 May 2003.

Petitioners filed this petition for review on certiorari under Rule 45 of the
Rules of Court praying that the decision of the Court of Appeals be set aside
and that the decision of the trial court, approving petitioners application
for registration of the Subject Property, be reinstated.
ISSUE:

Whether or not the CA erred in dismissing and setting aside the

decision of the trial court on approving the petitioners application for
registration.
HELD:
In the case at bar, the Court of Appeals correctly ruled that petitioners have
failed to comply with the period of possession and occupation of the Subject
Property, as required by both the Property Registration Decree and the
Public Land Act. In its decision, the Court of Appeals held that
Indeed, the earliest period that the applicants could claim ownership over
the property is in 1958, which is the earliest date Justina Hintog, the
previous owner/occupant, declared the property for taxation purposes. This
is far later than June 12, 1945, the date prescribed by law that the
applicants possession under claim of ownership should have begun at the
latest.
Petitioners maintain, however, that RA No. 6940, enacted on 28 March
1990, has repealed by implication Section 48(b) of the Public Land Act, as
amended by PD No. 1073, and has effectively reduced the required period of
possession and occupation of the land to thirty years prior to the filing of the
application for confirmation of an imperfect or incomplete title.
Petitioners arguments are without merit. This Court has already laid down
the standard for repeals by implication, as follows
It has been the constant holding of this Court that repeals by implication are
not favored and will not be so declared unless it be manifest that the
legislature so intended. Such a doctrine goes as far back as United States v.

Reyes, a 1908 decision. It is necessary then before such a repeal is deemed

to exist, that it be shown that the statutes or statutory provisions deal with
the same subject matter and that the latter be inconsistent with the former.
There must be a showing of repugnancy clear and convincing in character.
The language used in the latter statute must be such as to render it
irreconcilable with what had been formerly enacted. An inconsistency that
falls short of that standard does not suffice. What is needed is a manifest
indication of the legislative purpose to repeal.
IN ALL:
(1) Section 44 of the Public Land Act, as amended by RA No. 6940,
which provides for a
prescriptive period of thirty (30) years possession,
applies only to applications for free patents;
(2) The case at bar is a judicial application for confirmation of an
imperfect or incomplete title
over the Subject Property covered by
Section 48(b) of the Public Land Act; and
(3) Section 48(b) of the Public Land Act requires for judicial
confirmation of an imperfect or
incomplete title the continuous
possession of the land since 12 June 1945, or earlier, which
petitioners
herein failed to comply with.
The petition is hereby DENIED for lack of merit. The Court AFFIRMS the
assailed decision of the Court of Appeals in CA-G.R. CV No. 68546, which
reversed the decision of the lower court in LRC Case No. 98-133 (LRA
Record No. N-69787) and dismissed the application for land title of
petitioners.

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PURPOSE AND MEANING TORRENS SYSTEM

A system for registration of land under which, upon the landowners
application, the court may, after appropriate proceedings, direct the issuance
of a certificate of title.
Purposes:
1. To avoid possible conflicts of title regarding real property,
2. To facilitate transactions relative thereto by giving the public the right to
rely upon the face of the Torrens certificate of title and to dispense with the
need of inquiring further.
EXCEPT when the party concerned has actual knowledge of facts and
circumstances that should imply a reasonably cautious man to make such
further inquiry.
NOTE:
Registration was never intended as a means of acquiring ownership.
Registration is not equivalent to title. Under the Torrens system, registration
only gives validity to the transfer or creates a lien upon the land. It was not
established as a means of acquiring title to the private land because it merely
confirms, but does not confer, ownership.
Lands granted under Spanish Mortgage Law which are not yet covered by
certificate of title under Torrens System are considered as unregistered
lands. (Sec. 3 P.D. 1529) (Illustrative Case)

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LEGARDA vs. SALEEBY, 31 Phil. 590

October 2, 1915
FACTS:
The plaintiffs and the defendant occupy, as owners, adjoining lots in
the district of Ermita in the city of Manila. There exists and has existed a
number of years a stone wall between the said lots. Said wall is located on
the lot of the plaintiffs. The plaintiffs, March 2, 1906, presented a petition in
the Court of Land Registration for the registration of their lot, which
decreed that the title of the plaintiffs should be registered and issued to them
the original certificate provided for under the Torrens system. Said
registration and certificate included the wall.
Later the predecessor of the defendant presented a petition in the Court of
Land Registration for the registration of the lot now occupied by him. On
March 25,1912, the court decreed the registration of said title and issued the
original certificate provided for under the Torrens system. The description
of the lot given in the petition of the defendant also included said wall.
On December 13, 1912 the plaintiffs discovered that the wall which had
been included in the certificate granted to them had also been included in
the certificate granted to the defendant .They immediately presented a
petition in the Court of Land Registration for an adjustment and correction
of the error committed by including said wall in the registered title of each
of said parties.
The lower court however, without notice to the defendant, denied said
petition upon the theory that, during the pendency of the petition for the
registration of the defendants land, they failed to make any objection to the
registration of said lot, including the wall, in the name of the defendant.

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ISSUE: Who is the owner of the wall and the land occupied by it?
HELD:
The decision of the lower court is based upon the theory that the
action for the registration of the lot of the defendant was a judicial
proceeding and that the judgment or decree was binding upon all parties
who did not appear and oppose it
Granting that theory to be correct one , then the same theory should
be applied to the defendant himself. Applying that theory to him, he had
already lost whatever right he had therein, by permitting the plaintiffs to
have the same registered in their name, more than six years before. Having
thus lost hid right, may he be permitted to regain it by simply including it in
a petition for registration?
For the difficulty involved in the present case the Act (No. 496)
provides for the registration of titles under the Torrens system affords us no
remedy. There is no provision in said Act giving the parties relief under
conditions like the present. There is nothing in the Act which indicates who
should be the owner of land which has been registered in the name of two
different persons.
We have decided, in case of double registration under the Land
Registration Act, that the owner of the earliest certificate is the owner of the
land. May this rule be applied to successive vendees of the owners of such
certificates? Suppose that one or the other of the parties, before the error is
discovered, transfers his original certificate to an innocent purchaser.
The general rule is that the vendee of land has no greater right, title, or
interest than his vendor; that he acquires the right which his vendor had,
only. Under that rule the vendee of the earlier certificate would be the owner
as against the vendee of the owner of the later certificate.

13

It would be seen to a just and equitable rule, when two persons have
acquired equal rights in the same thing, to hold that the one who acquired it
first and who has complied with all the requirements of the law should be
protected.
In view of our conclusions, above stated, the judgment of the lower
court should be and is hereby revoked. The record is hereby returned to the
court now having and exercising the jurisdiction heretofore exercised by the
land court, with direction to make such orders and decrees in the premises
as may correct the error heretofore made in including the land in the second
original certificate issued in favor of the predecessor of the appellee, as well
as in all other duplicate certificates issued.

TRADERS ROYAL BANK V CA G.R. No. 93397

March 3, 1997
FACTS:
Filriters registered owner of Central Bank Certificate of Indebtedness
(CBCI). Filriters transferred it to Philfinance by one of its officers without
authorization from the company. Subsequently, Philfinance transferred same
CBCI to Traders Royal Bank (TRB) under a repurchase agreement. When
Philfinance failed to do so, The TRB tried to register in its name in the
CBCI. The Central Bank did not want to recognize the transfer.
Docketed as Civil Case No. 83-17966 in the Regional Trial Court of
Manila, Branch 32, the action was originally filed as a Petition for
Mandamus 5 under Rule 65 of the Rules of Court, to compel the Central
Bank of the Philippines to register the transfer of the subject CBCI to
petitioner Traders Royal Bank (TRB).
DECISION OF LOWER COURTS:

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* Regional Trial Court : Transfer is null and void.

*Court of Appeals: The appellate court ruled that the subject CBCI is
not a negotiable instrument. Philfinance acquired no title or rights under
CBCI No. D891 which it could assign or transfer to Traders Royal Bank and
which the latter can register with the Central Bank. Thus, the transfer of the
instrument from Philfinance to TRB was merely an assignment, and is not
governed by the negotiable instruments law.
APPLICABLE LAWS:
Under section 1 of Act no. 2031 an instrument to be negotiable must
conform to the following requirements: (a) It must be in writing and signed
by the maker or drawer; (b) Must contain an unconditional promise or order
to pay a sum certain in money; (c) Must be payable on demand, or at a fixed
or determinable future time; (d) Must be payable to order or to bearer; and
(e) Where the instrument is addressed to a drawee, he must be named or
otherwise indicated therein with reasonable certainty.
Under section 3, Article V of Rules and Regulations Governing
Central Bank Certificates of Indebtedness states that the assignment of
registered certificates shall not be valid unless made at the office where the
same have been issued and registered or at the Securities Servicing
Department, Central Bank of the Philippines, and by the registered owner
thereof, in person or by his representative, duly authorized in writing. For
this purpose, the transferee may be designated as the representative of the
registered owner.
ISSUES:
1. Whether the CBCI is negotiable instrument or not.
2. Whether the Assignment of registered certificate is valid or null
and void.

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RULINGS:
1. NO. The CBCI is not a negotiable instrument, since the instrument
clearly stated that it was payable to Filriters, and the certificate lacked the
words of negotiability which serve as an expression of consent that the
instrument may be transferred by negotiation.
Before the instruments become negotiable instruments, the instrument
must conform to the requirements under the Negotiable Instrument Law.
Otherwise instrument shall not bind the parties.
It is null and void. Obviously the Assignment of certificate from
Filriters to Philfinance was null and void. One of officers who signed
the deed of assignment in behalf of Filriters did not have the
necessary written authorization from the Board of Directors of
Filriters. For lack of such authority the assignment is considered null
and void.
Clearly shown in the record is the fact that Philfinance's title
over CBCI is defective since it acquired the instrument from Filriters
fictitiously. Under 1409 of the Civil Code those contracts which are
absolutely simulated or fictitious are considered void and inexistent from the
beginning.
Petitioner knew that Philfinance is not registered owner of the CBCI
No. D891. The fact that a non-owner was disposing of the registered CBCI
owned by another entity was a good reason for petitioner to verify of inquire
as to the title Philfinance to dispose to the CBCI.

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BAR QUESTION
TOPIC: TORRENS SYSTEM (1990, 1991, 1994, 1998, 2001)
I Section 70 of PD 1529, concerning adverse claims on registered land,
provides a 30-day period of effectivity of an adverse claim, counted from the
date of its registration. Suppose a notice of adverse claim based upon a
contract to sell was registered on March 1, 1997 at the instance of the
BUYER, but on June 1, 1997, or after the lapse of the 30-day period, a
notice of levy on execution in favor of a JUDGMENT CREDITOR was also
registered to enforce a final judgment for money against the registered
owner. Then, on June 15, 1997 there having been no formal cancellation of
his notice of adverse claim, the BUYER pays to the seller-owner the agreed
purchase price in full and registers the corresponding deed of sale. Because
the annotation of the notice of levy is carried over to the new title in his
name, the BUYER brings an action against the JUDGMENT CREDITOR to
cancel such annotation, but the latter claims that his lien is superior because
it was annotated after the adverse claim of the BUYER had ipso facto ceased
to be effective.
Will the suit prosper? (1998)
ANSWER: The suit will prosper. While an adverse claim duly annotated at
the back of a title under Sec. 70 of PD 1529 is good only for 30 days,
cancellation thereof is still necessary to render it Ineffective, otherwise, the
inscription thereof will remain annotated as a lien on the property. While the
life of adverse claim is 30 days under PD 1529, it continuous to be effective
until it is cancelled by formal petition filed with the Register of Deeds. The
cancellation of the notice of levy is justified under Sec. 108 of PD 1529
considering that the levy on execution cannot be enforced against the buyer

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whose adverse claim against the registered owner was recorded ahead of the
notice of levy on execution.

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MODES OF ACQUIRING TITLES

1. Public grant
Based on the Public Land Acts
Obtained through issuance of Spanish Government of Royal Grants
and concessions to discoverers and settlers.
2. Reclamation
Filling up of parts of the sea for conversion to land.
The SC has ruled that only the National Government may engage in
reclamation projects.
3. Emancipation patent or grant
Based on P.D. No. 27 (CARP of 1972)
For the purpose of ameliorating the sad plight of farmers and of
releasing them from the bondage of the soil.
4. Private grant or voluntary transfer
5. Adverse possession or prescription
Adverse possession actual possession of land in opposition to all
other claimants.
Prescription possession of land for required number of years and
assertion of ownership through an interrupted actual possession of
property within the period of time prescribed by law.
6. Accretion
3 Requisites for accretion:
a) deposition of soil or sediment be gradual and imperceptible;
b) result of the action of waters of the river;

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c) land where accretion takes place is adjacent to bank of rivers or sea

coast.
Accretion does not automatically become registered. It needs new
registration.
Accretions on the bank of a lake, like Laguna de Bay, belong to the
owners of the estate to which they have been added, while accretion
on the sea bank still belongs to the public domain, and is not available
for private ownership until formally declared by the government to be
no longer needed for public use.
Registration does not protect the riparian owner against diminution of
land through accretion. If alluvium is wiped away, registration is
rendered of no effect because subject is gone.
7. Involuntary alienation
E.g. eminent domain/expropriation
8. Descent or devise
By descent, title is acquired when an heir succeeds the deceased
owner in testate or intestate.
By devise, person acquires land from one who may not be a relative,
if he is named in the deceaseds will.

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ADVERSE POSSESSION
Adverse possession is a doctrine under which a person in possession of land
owned by someone else may acquire valid title to it, so long as certain
common law requirements are met, and the adverse possessor is in
possession for a sufficient period of time, as defined by a statute of
limitations.
Typically, adverse possession, in order to ripen into title, must be:
(1) Continuous; this means continual.
(2) Hostile to the interests of the true owner; this is the adverse part of
adverse possession.
(3) Open and notorious, so as to put the true owner on notice that a
trespasser is in possession.
(4) Actual, so that the true owner has a cause of action for trespass, on which
the true owner must act within the statute of limitations.
(5) Exclusive, in order that there be no confusion as to who
acquires title once the time has run.
(Illustrative Case)

BAR NOTES

OWNERSHIP / POSSESSION
An action for reconveyance of a parcel of land based on constructive or
implied trust prescribes in 10 years reckoned from the issuance of title or
date of registration. This rule applies only when plaintiff or party enforcing

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the trust is not in possession of the property, but if he is in possession

thereof, the right to seek reconveyance, which in effect is an action to quiet
title, does not prescribe. (Cabrera vs. CA and Felicio, et al., 267 SCRA 339).
A party's failure to raise a restraining arm or a shout of dissent to another
party's possession of a parcel of land in a span of 30 years is contrary to his
claim of ownership. (Heirs of Teodoro Dela Cruz vs. CA, et al., 298 SCRA
172).
Torrens system does not vest title because it is not recognized as a mode of
acquiring ownership. While registered land under the system makes the title
thereto imprescriptible, the same may be lost by laches caused by a party's
inaction or passivity in asserting his rights over the disputed property.
(Santiago vs. CA, 278 SCRA 803).
Tax declaration and tax receipts become strong evidence of ownership
acquired by prescription when accompanied by proof of actual possession.
(Oclarit vs. CA, 233 SCRA 39).

REPUBLIC vs. COURT OF APPEALS and CORAZON NAGUIT,

GR No 144057, January 17, 2005
FACTS:
Corazon Naguit filed a petition for registration of title which seeks
judicial confirmation of her imperfect title over a parcel of land in Nabas,
Aklan. It was alleged that Naguit and her predecessors-in-interest have
occupied the land openly and in the concept of owner without any objection
from any private person or even the government until she filed her
application for registration. The MCTC rendered a decision confirming the
title in the name of Naguit upon failure of Rustico Angeles to appear during
trial after filing his formal opposition to the petition.

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The Solicitor General, representing the Republic of the Philippines,

filed a motion for reconsideration on the grounds that the property which is
in open, continuous and exclusive possession must first be alienable. Naguit
could not have maintained a bona fide claim of ownership since the subject
land was declared as alienable and disposable only on October 15, 1980.
The alienable and disposable character of the land should have already
been established since June 12, 1945 or earlier.
ISSUE:
Whether or not it is necessary under Section 14 (1) of the Property
Registration Decree that the subject land be first classified as alienable and
disposable before the applicants possession under a bona fide claim of
ownership could even start.
RULING:
Section 14 (1) merely requires that the property sought to be
registered as already alienable and disposable at the time the application
for registration of title is filed.
There are three requirements for registration of title, (1) that the
subject property is alienable and disposable; (2) that the applicants and
their predecessor-in-interest have been in open, continuous, and exclusive
possession and occupation, and; (3) that the possession is under a bona fide
claim of ownership since June 12, 1945.
There must be a positive act of the government through a statute or
proclamation stating the intention of the State to abdicate its exclusive
prerogative over the property, thus, declaring the land as alienable and
disposable. However, if there has been none, it is presumed that the
government is still reserving the right to utilize the property and the
possession of the land no matter how long would not ripen into ownership
through acquisitive prescription.

23

To follow the Solicitor Generals argument in the construction of

Section 14 (1) would render the paragraph 1 of the said provision
inoperative for it would mean that all lands of public domain which were not
declared as alienable and disposable before June 12, 1945 would not be
susceptible to original registration, no matter the length of unchallenged
possession by the occupant. In effect, it precludes the government from
enforcing the said provision as it decides to reclassify lands as alienable and
disposable.
The land in question was found to be cocal in nature, it having been
planted with coconut trees now over fifty years old. The inherent nature of
the land but confirms its certification in 1980 as alienable, hence
agricultural. There is no impediment to the application of Section 14 (1) of
the Property Registration Decree. Naguit had the right to apply for
registration owing to the continuous possession by her and her
predecessors-in-interest of the land since 1945.

BAR QUESTION
Angel filed a petition for registration of a parcel of land on June 22, 1994
claiming that he has been in actual, open, continuous and notorious
possession, in the concept of an owner over the same. It appears that he
likewise filed a foreshore lease application over the same land in 1977.
During the trial, the court ordered the LRA and the CENRO to file with it a
report on the status of the subject land. The court thereafter rendered a
decision on May 3 1995 granting the petition. The said decision became
final and executory. The Office of the Solicitor general subsequently filed a
petition for annulment of the above judgment on the ground that based on

24

the report of the LRA which was received by it on June 22, 1995, the land
applied for is foreshore land.
a) What is the nature and classification of foreshore land?
b) Will the action of the Republic through the OSG prosper?
ANSWERS:
a) NO. Foreshore land is that strip of land that lies between the high and low
water marks and is alternatively wet and dry to the flow of the tide. It is that
part of the land adjacent to the sea, which is alternatively covered and left
dry by the ordinary flow of tides. It is part of the alienable land of the public
domain and may be disposed of only by lease and not otherwise. Foreshore
land remains part of the public domain and is outside the commerce of man.
It is not capable of private appropriation.
b) YES. Even if the decision of the RTC has become final and executory, the
action for annulment of judgment should be sustained since it is impressed
with public interest. The State has to protect its interests and cannot be
bound by, or estopped from, the mistakes or negligent acts of its officials or
agents, mush more, non-suited as a result thereof. Furthermore, Angel had in
fact filed a foreshore lease application in 1977 and paid the corresponding
fees thereon. There is therefore doubt to Angels claim that he had been in
actual, open, notorious, and continuous possession in the concept of an
owner. (Republic vs Court of Appeals, GR No. 126316, June 25, 2004)

25

PRESCRIPTION
Prescription, in general, is a mode of acquiring (or losing) ownership and
other real rights through the lapse of time in the manner and under
conditions laid down by law, namely, that the possession should be in the
concept of an owner, public, peaceful, uninterrupted and adverse.
Acquisitive prescription is either ordinary or extraordinary. Ordinary
acquisitive prescription requires possession in good faith and with just title
for 10 years. Without good faith and just title, acquisitive prescription can
only be extraordinary in character which requires uninterrupted adverse
possession for 30 years.
Thus, for ordinary acquisitive prescription to set in, possession must be for
at least 10 years, in good faith and with just title. Possession is in good
faith when there is a reasonable belief that the person from whom the thing
is received has been the owner thereof and could thereby transmit his
ownership. (Art. 1127, NCC). There is just title when the adverse claimant
comes into possession of the property through any of the modes recognized
by law for the acquisition of ownership or other real rights, but the grantor is
neither the owner nor in a position to transmit the right. (Art. 1129, NCC).
(Illustrative Case)

HEIRS OF MARIO MALABANAN vs. REPUBLIC OF THE

PHILIPPINES,
GR No. 179987, April 29, 2009
FACTS:
On 20 February 1998, Mario Malabanan filed an application for land
registration before the RTC of Cavite-Tagaytay, covering a parcel of land

26

situated in Silang Cavite, consisting of 71,324 square meters. Malabanan

claimed that he had purchased the property from Eduardo Velazco, and that
he and his predecessors-in-interest had been in open, notorious, and
continuous adverse and peaceful possession of the land for more than thirty
(30) years. Velazco testified that the property was originally belonged to a
twenty-two hectare property owned by his great-grandfather, Lino Velazco.
Lino had four sons Benedicto, Gregorio, Eduardo and Estebanthe fourth
being Aristedess grandfather. Upon Linos death, his four sons inherited
the property and divided it among themselves. But by 1966, Estebans wife,
Magdalena, had become the administrator of all the properties inherited by
the Velazco sons from their father, Lino. After the death of Esteban and
Magdalena, their son Virgilio succeeded them in administering the
properties, including Lot 9864-A, which originally belonged to his uncle,
Eduardo Velazco. It was this property that was sold by Eduardo Velazco to
Malabanan.
Among the evidence presented by Malabanan during trial was a
Certification dated 11 June 2001, issued by the Community Environment &
Natural Resources Office, Department of Environment and Natural
Resources (CENRO-DENR), which stated that the subject property was
verified to be within the Alienable or Disposable land per Land
Classification Map No. 3013 established under Project No. 20-A and
approved as such under FAO 4-1656 on March 15, 1982. On 3 December
2002, the RTC approved the application for registration.
The Republic interposed an appeal to the Court of Appeals, arguing
that Malabanan had failed to prove that the property belonged to the
alienable and disposable land of the public domain, and that the RTC had
erred in finding that he had been in possession of the property in the manner
and for the length of time required by law for confirmation of imperfect title.
On 23 February 2007, the Court of Appeals reversed the RTC ruling and
dismissed the appliocation of Malabanan.

27

ISSUES:
1. In order that an alienable and disposable land of the public domain
may be registered under Section 14(1) of Presidential Decree No. 1529,
otherwise known as the Property Registration Decree, should the land be
classified as alienable and disposable as of June 12, 1945 or is it sufficient
that such classification occur at any time prior to the filing of the applicant
for registration provided that it is established that the applicant has been in
open, continuous, exclusive and notorious possession of the land under a
bona fide claim of ownership since June 12, 1945 or earlier?
2. For purposes of Section 14(2) of the Property Registration Decree
may a parcel of land classified as alienable and disposable be deemed
private land and therefore susceptible to acquisition by prescription in
accordance with the Civil Code?
3. May a parcel of land established as agricultural in character either
because of its use or because its slope is below that of forest lands be
registrable under Section 14(2) of the Property Registration Decree in
relation to the provisions of the Civil Code on acquisitive prescription?
4. Are petitioners entitled to the registration of the subject land in
their names under Section 14(1) or Section 14(2) of the Property
Registration Decree or both?
RULING:
The Petition is denied.
(1) In connection with Section 14(1) of the Property Registration
Decree, Section 48(b) of the Public Land Act recognizes and confirms that
those who by themselves or through their predecessors in interest have

28

been in open, continuous, exclusive, and notorious possession and

occupation of alienable and disposable lands of the public domain, under a
bona fide claim of acquisition of ownership, since June 12, 1945 have
acquired ownership of, and registrable title to, such lands based on the
length and quality of their possession.
(a) Since Section 48(b) merely requires possession since 12 June 1945
and does not require that the lands should have been alienable and
disposable during the entire period of possession, the possessor is entitled to
secure judicial confirmation of his title thereto as soon as it is declared
alienable and disposable, subject to the timeframe imposed by Section 47 of
the Public Land Act.
(b) The right to register granted under Section 48(b) of the Public
Land Act is further confirmed by Section 14(1) of the Property Registration
Decree.
(2) In complying with Section 14(2) of the Property Registration
Decree, consider that under the Civil Code, prescription is recognized as a
mode of acquiring ownership of patrimonial property. However, public
domain lands become only patrimonial property not only with a declaration
that these are alienable or disposable. There must also be an express
government manifestation that the property is already patrimonial or no
longer retained for public service or the development of national wealth,
under Article 422 of the Civil Code. And only when the property has become
patrimonial can the prescriptive period for the acquisition of property of the
public dominion begin to run.
(a) Patrimonial property is private property of the government. The
person acquires ownership of patrimonial property by prescription under
the Civil Code is entitled to secure registration thereof under Section 14(2)
of the Property Registration Decree.

29

(b) There are two kinds of prescription by which patrimonial property

may be acquired, one ordinary and other extraordinary. Under ordinary
acquisitive prescription, a person acquires ownership of a patrimonial
property through possession for at least ten (10) years, in good faith and
with just title. Under extraordinary acquisitive prescription, a persons
uninterrupted adverse possession of patrimonial property for at least thirty
(30) years, regardless of good faith or just title, ripens into ownership.

It is clear that the evidence of petitioners is insufficient to establish

that Malabanan has acquired ownership over the subject property under
Section 48(b) of the Public Land Act. There is no substantive evidence to
establish that Malabanan or petitioners as his predecessors-in-interest have
been in possession of the property since 12 June 1945 or earlier. The
earliest that petitioners can date back their possession, according to their
own evidencethe Tax Declarations they presented in particularis to the
year 1948. Thus, they cannot avail themselves of registration under Section
14(1) of the Property Registration Decree.
Neither can petitioners properly invoke Section 14(2) as basis for
registration. While the subject property was declared as alienable or
disposable in 1982, there is no competent evidence that is no longer
intended for public use service or for the development of the national
evidence, conformably with Article 422 of the Civil Code. The classification
of the subject property as alienable and disposable land of the public
domain does not change its status as property of the public dominion under
Article 420(2) of the Civil Code. Thus, it is insusceptible to acquisition by
prescription.

30

ACCRETION
Article 457 of the Revised Civil Code of the Philippines provides that to the
owners of lands adjoining the banks of rivers belong the accretion which
they gradually receive from the effects of the current of the waters.
Adopted from the Law of the waters which provided that the accretion
resulting from the gradual deposit by or sedimentation from the waters
belongs to the owners of the land bordering on streams, torrents, lakes, or
rivers.
Three requisites
That the deposit be gradual and imperceptible
That it be made through the effects of the current of the water
That the land where accretion takes place is adjacent to the banks of
rivers
In the absence of evidence that the change in the course of the river was
sudden or that it occurred through avulsion, the presumption is that the
change was gradual and caused by accretion and erosion.
(Illustrative Case)

31

HEIRS OF NAVARRO V. IAC,

G.R. No. 68166 February 12, 1997

FACTS:
Sinforoso Pascual sits in the midst of a land registration case. The
story begins on 1946 upon his desire to register land on the northern section
of his existing property. His current registered property is bounded on the
east by Talisay River, on the West by Bulacan River and on the North by the
Manila bay. Both rivers flow towards the Manila Bay. Because of constantly
flowing water, extra land of about 17hectares formed in the northern most
section of the property. It is this property he sought to register.
The Regional Trial Court denied the registration claiming this to be
foreshore land and part of public domain. His Motion for Reconsideration
likewise burned. In 1960, he attempted registry again, claiming that the
Talisay and Bulacan rivers deposited more silt resulting on accretion. He
claimed this land as riprarian owner. The Director of Lands, Director of
Forestry and the Fiscal opposed.
Then a new party surfaced Mr. Emiliano Navarro jumped into the fray
opposing the same application, stating the he leased part of the property
sought to be registered. He sought to protect his fishpond that rested on the
same property. Sinforoso was not amused and filed ejectment against Mr.
Navarro, claiming that Navarro used stealth force and strategy to occupy a
portion of his land. Pascual lost the case against Navarro so he appealed.
During the appeal, his original land registration case was consolidated and
tried jointly. (alas Pascual died) The heirs of Pascual took over the case.
On 1975, the court decided that the property was foreshore land and
therefore part of public domain. The RTC dismissed the complaint of

32

Pascual for ejectment against Navarro and also denied his land registration
request. Pascuals heirs appealed and the RTC was reversed by the IAC.
The Apellate court granted petition for registration! The reason? The
accretion was caused by the two rivers, not manila bay. Hence it wasnt
foreshore land. (BUT the confusion lies in the fact that the accretion formed
adjacent to Manila Bay which is sea!) Aggrieved, the Director of Forestry
moved for reconsideration (Government insists it is foreshore and hence,
public domain). The Apellate court denied all motions of the Director and
the Government.
The matter went to the SC.
ISSUE:
Whether or not the accretion taking place on property adjacent to the sea
can be registered under the Torrens system.

RULING:
It cannot be registered. This is land of Public domain. Pascual claimed
ownership under Article 457 of the Civil Code saying that the disputed 14hectare land is an accretion caused by the joint action of the Talisay and
Bulacan Rivers Art 457: Accretion as a mode of acquiring property and
requires the concurrence of the following requisites: (1) that the
accumulation of soil or sediment be gradual and imperceptible; (2) that it be
the result of the action of the waters of the river; and (3) that the land where
the accretion takes place is adjacent to the bank of the river.
Unfortunately, Pasucal and Heirs claim of ownership based on Art 457 is
misplaced. If theres any land to be claimed, it should be land ADJACENT

33

to the rivers Talisay and Bulacan. The law is clear on this. Accretion of land
along the river bank may be registered. This is not the case of accretion of
land on the property adjacent to Manila Bay.
Furthermore, Manila Bay is a sea. Accretion on a sea bank is foreshore land
and the applicable law is not Art 457 but Art 4 of the Spanish Law of Waters
of 1866. This law, while old, holds that accretion along sea shore cannot be
registered as it remains public domain unless abandoned by government for
public use and declared as private property capable of alienation.
Article 4 of the Spanish Law of Waters of August 3, 1866 provides as
follows:
Lands added to the shores by accretions and alluvial deposits caused by the
action of the sea, form part of the public domain. When they are no longer
washed by the waters of the sea and are not necessary for purposes of public
utility, or for the establishment of special industries, or for the coast-guard
service, the Government shall declare them to be the property of the owners
of the estates adjacent thereto and as increment thereof.
The IAC decision granting registration was reversed and set aside.
Registration cannot be allowed.

34

RECLAMATION
As stated in the implementing rules and regulations (IRR) of executive order
(EO) no. 146 dated November 13, 2013 delegating to the National Economic
and Development (NEDA) board the power of the President to approve
reclamation projects.
The scope and application except for reclamation projects where contracts
/agreements had been executed between the government entity concerned
and private sector proponent/s prior to the effectivity of EO No. 146, this
IRR shall apply to all reclamation projects and reclamation components of a
development / infrastructure project, and shall specify and enumerate the
requirements and procedures for the review, evaluation and approval of all
reclamation projects and reclamation components nationwide by the NEDA
Board.
Reclamation the deliberate process of converting foreshore land,
submerged areas or bodies of water into land by filling or other means using
dredge fill and other suitable materials for specific purpose/s.
Reclamation Component refers to the reclamation activity as part of the
civil works of development or infrastructure project such as ports, airports,
power plants and other similar projects consistent with the Philippine
Development Plan (PDP) and/or the Public Investment Program (PIP) or its
equivalent local plan/program.
Reclamation Project refers to a project involving the reclamation of a
specific size of land in a specific site for a specific use/s or purpose
consistent with the PDP and/or PIP or its equivalent local plan/program.
(Illustrative Case)

35

Chavez vs. PEA AMARI

G.R. No. 133250 July 9, 2002
Facts:
On February 4, 1977, then President Ferdinand E. Marcos issued
Presidential Decree No. 1084 creating PEA. PD No. 1084 tasked PEA "to
reclaim land, including foreshore and submerged areas," and "to develop,
improve, acquire, lease and sell any and all kinds of lands." On the same
date, then President Marcos issued Presidential Decree No. 1085
transferring to PEA the "lands reclaimed in the foreshore and offshore of
the Manila Bay" under the Manila-Cavite Coastal Road and Reclamation
Project (MCCRRP).
On January 19, 1988, then President Corazon C. Aquino issued Special
Patent No. 3517, granting and transferring to PEA "the parcels of land so
reclaimed under the Manila-Cavite Coastal Road and Reclamation Project
(MCCRRP) containing a total area of one million nine hundred fifteen
thousand eight hundred ninety four (1,915,894) square meters."
Subsequently, on April 9, 1988, the Register of Deeds of the Municipality of
Paraaque issued Transfer Certificates of Title Nos. 7309, 7311, and 7312,
in the name of PEA, covering the three reclaimed islands known as the
"Freedom Islands" located at the southern portion of the Manila-Cavite
Coastal Road, Paraaque City.
PEA and AMARI entered into the JVA through negotiation without public
bidding. On April 28, 1995, the Board of Directors of PEA, in its Resolution
No. 1245, confirmed the JVA. On June 8, 1995, then President Fidel V.
Ramos, through then Executive Secretary Ruben Torres, approved the JVA.
The Senate Committees reported the results of their investigation in
Senate Committee Report No. 560 dated September 16, 1997. Among the

36

conclusions of their report are: (1) the reclaimed lands PEA seeks to
transfer to AMARI under the JVA are lands of the public domain which the
government has not classified as alienable lands and therefore PEA cannot
alienate these lands; (2) the certificates of title covering the Freedom
Islands are thus void, and (3) the JVA itself is illegal.
On December 5, 1997, then President Fidel V. Ramos issued Presidential
Administrative Order No. 365 creating a Legal Task Force to conduct a
study on the legality of the JVA in view of Senate Committee Report No. 560.
The members of the Legal Task Force were the Secretary of Justice, the
Chief Presidential Legal Counsel, and the Government Corporate Counsel.
The Legal Task Force upheld the legality of the JVA, contrary to the
conclusions reached by the Senate Committees.
On April 27, 1998, petitioner Frank I. Chavez ("Petitioner" for brevity)
as a taxpayer, filed the instant Petition for Mandamus with Prayer for the
Issuance of a Writ of Preliminary Injunction and Temporary Restraining
Order. Petitioner contends the government stands to lose billions of pesos in
the sale by PEA of the reclaimed lands to AMARI. Petitioner prays that PEA
publicly disclose the terms of any renegotiation of the JVA, invoking Section
28, Article II, and Section 7, Article III, of the 1987 Constitution on the right
of the people to information on matters of public concern.
Due to the approval of the Amended JVA by the Office of the President,
petitioner now prays that on "constitutional and statutory grounds the
renegotiated contract be declared null and void."
Issue:
The issues raised by petitioner, PEA and AMARI are as follows:
1. Whether the reliefs prayed for are moot and academic because of
subsequent events;
2. Whether the petition should be dismissed for failing to observe the
principle of governing the heirarchy of courts;

37

3. Whether the petition should be dismissed for non-exhaustion of

administrative remedies;
4. Whether petitioner has locus standi;
5. Whether the constitutional right to information includes information
on on-going neogtiations BEFORE a final agreement;
6. Whether the stipulations in the amended joint venture agreement for
the transfer to AMARI of certain lands, reclaimed and still to be reclaimed
violate the 1987 Constitution; and
7. Whether the Court has jurisdiction over the issue whether the amended
JVA is grossly disadvantageous to the government
Held:
1. We rule that the signing and of the Amended JVA by PEA and AMARI and
its approval by the President cannot operate to moot the petition and divest
the Court of its jurisdiction.
PEA and AMARI have still to implement the Amended JVA. The prayer to
enjoin the signing of the Amended JVA on constitutional grounds necessarily
includes preventing its implementation if in the meantime PEA and AMARI
have signed one in violation of the Constitution. Petitioner's principal basis
in assailing the renegotiation of the JVA is its violation of the Section 3,
Article XII of the Constitution, which prohibits the government from
alienating lands of the public domain to private corporations. The Amended
JVA is not an ordinary commercial contract but one which seeks to transfer
title and ownership to 367.5 hectares of reclaimed lands and submerged
areas of Manila Bay to a single private corporation.
Also, the instant petition is a case of first impression being a wholly
government owned corporation performing public as well as proprietary
functions. All previous decisions of the Court involving Section 3, Article XII
of the 1987 Constitution, or its counterpart provision in the 1973

38

Constitution, covered agricultural lands sold to private corporations which

acquired the lands from private parties.
Lastly, there is a need to resolve immediately the constitutional issue
raised in this petition because of the possible transfer at any time by PEA to
AMARI of title and ownership to portions of the reclaimed lands. Under the
Amended JVA, PEA is obligated to transfer to AMARI the latter's seventy
percent proportionate share in the reclaimed areas as the reclamation
progresses, The Amended JVA even allows AMARI to mortgage at any time
the entire reclaimed area to raise financing for the reclamation project.
2. The instant case, however, raises constitutional issues of
transcendental importance to the public. The Court can resolve this case
without determining any factual issue related to the case. Also, the instant
case is a petition for mandamus which falls under the original jurisdiction of
the Court under Section 5, Article VIII of the Constitution. We resolve to
exercise primary jurisdiction over the instant case.
3. PEA was under a positive legal duty to disclose to the public the terms
and conditions for the sale of its lands. The law obligated PEA make this
public disclosure even without demand from petitioner or from anyone. PEA
failed to make this public disclosure because the original JVA, like the
Amended JVA, was the result of a negotiated contract, not of a public
bidding. Considering that PEA had an affirmative statutory duty to make the
public disclosure, and was even in breach of this legal duty, petitioner had
the right to seek direct judicial intervention.
The principle of exhaustion of administrative remedies does not apply
when the issue involved is a purely legal or constitutional question. The
principal issue in the instant case is the capacity of AMARI to acquire lands
held by PEA in view of the constitutional ban prohibiting the alienation of
lands of the public domain to private corporations. We rule that the

39

principle of exhaustion of administrative remedies does not apply in the

instant case.
The petitioner has standing to bring this taxpayer's suit because the
petition seeks to compel PEA to comply with its constitutional duties. There
are two constitutional issues involved here. First is the right of citizens to
information on matters of public concern. Second is the application of a
constitutional provision intended to insure the equitable distribution of
alienable lands of the public domain among Filipino Citizens.
The thrust of the second issue is to prevent PEA from alienating hundreds of
hectares of alienable lands of the public domain in violation of the
Constitution, compelling PEA to comply with a constitutional duty to the
nation.
4. Ordinary taxpayers have a right to initiate and prosecute actions
questioning the validity of acts or orders of government agencies or
instrumentalities, if the issues raised are of 'paramount public interest,' and
if they 'immediately affect the social, economic and moral well being of the
people.'
We rule that since the instant petition, brought by a citizen, involves the
enforcement of constitutional rights to information and to the equitable
diffusion of natural resources matters of transcendental public
importance, the petitioner has the requisite locus standi.
5. The State policy of full transparency in all transactions involving
public interest reinforces the people's right to information on matters of
public concern. This State policy is expressed in Section 28, Article II of the
Constitution, thus: Subject to reasonable conditions prescribed by law, the
State adopts and implements a policy of full public disclosure of all its
transactions involving public interest."

40

Contrary to AMARI's contention, the commissioners of the 1986

Constitutional Commission understood that the right to information
"contemplates inclusion of negotiations leading to the consummation of the
transaction." Certainly, a consummated contract is not a requirement for the
exercise of the right to information. Otherwise, the people can never
exercise the right if no contract is consummated, and if one is consummated,
it may be too late for the public to expose its defects.
Requiring a consummated contract will keep the public in the dark until
the contract, which may be grossly disadvantageous to the government or
even illegal, becomes a fait accompli.
However, the right to information does not compel PEA to prepare lists,
abstracts, summaries and the like relating to the renegotiation of the JVA.
34 The right only affords access to records, documents and papers, which
means the opportunity to inspect and copy them. One who exercises the right
must copy the records, documents and papers at his expense. The exercise of
the right is also subject to reasonable regulations to protect the integrity of
the public records and to minimize disruption to government operations, like
rules specifying when and how to conduct the inspection and copying.
6. Article 339 of the Civil Code of 1889 defined property of public
dominion as follows:
"Art. 339. Property of public dominion is
1. That devoted to public use, such as roads, canals, rivers, torrents,
ports and bridges constructed by the State, riverbanks, shores, roadsteads,
and that of a similar character;
2.
That belonging exclusively to the State which, without being of
general public use, is employed in some public service, or in the
development of the national wealth, such as walls, fortresses, and other
works for the defense of the territory, and mines, until granted to private
individuals.

41

Property devoted to public use referred to property open for use by the
public. In contrast, property devoted to public service referred to property
used for some specific public service and open only to those authorized to
use the property. Property of public dominion referred not only to property
devoted to public use, but also to property not so used but employed to
develop the national wealth. This class of property constituted property of
public dominion although employed for some economic or commercial
activity to increase the national wealth.
"Art. 341.
Property of public dominion, when no longer devoted to
public use or to the defense of the territory, shall become a part of the
private property of the State." This provision, however, was not selfexecuting. The legislature, or the executive department pursuant to law,
must declare the property no longer needed for public use or territorial
defense before the government could lease or alienate the property to
private parties.
Act No. 2874 of the Philippine Legislature
Sec. 55. Any tract of land of the public domain which, being neither
timber nor mineral land, shall be classified as suitable for residential
purposes or for commercial, industrial, or other productive purposes other
than agricultural purposes, and shall be open to disposition or concession,
shall be disposed of under the provisions of this chapter, and not otherwise.
The rationale behind this State policy is obvious. Government reclaimed,
foreshore and marshy public lands for non-agricultural purposes retain
their inherent potential as areas for public service. This is the reason the
government prohibited the sale, and only allowed the lease, of these lands to
private parties. The State always reserved these lands for some future public
service.

42

However, government reclaimed and marshy lands, although subject to

classification as disposable public agricultural lands, could only be leased
and not sold to private parties because of Act No. 2874.
The 1987 Constitution continues the State policy in the 1973 Constitution
banning private corporations from acquiring any kind of alienable land of
the public domain. Like the 1973 Constitution, the 1987 Constitution allows
private corporations to hold alienable lands of the public domain only
through lease. As in the 1935 and 1973 Constitutions, the general law
governing the lease to private corporations of reclaimed, foreshore and
marshy alienable lands of the public domain is still CA No. 141.
Without the constitutional ban, individuals who already acquired the
maximum area of alienable lands of the public domain could easily set up
corporations to acquire more alienable public lands. An individual could
own as many corporations as his means would allow him. An individual
could even hide his ownership of a corporation by putting his nominees as
stockholders of the corporation. The corporation is a convenient vehicle to
circumvent the constitutional limitation on acquisition by individuals of
alienable lands of the public domain.
PD No. 1085, coupled with President Aquino's actual issuance of a
special patent covering the Freedom Islands, is equivalent to an official
proclamation classifying the Freedom Islands as alienable or disposable
lands of the public domain. Being neither timber, mineral, nor national park
lands, the reclaimed Freedom Islands necessarily fall under the
classification of agricultural lands of the public domain. Under the 1987
Constitution, agricultural lands of the public domain are the only natural
resources that the State may alienate to qualified private parties. All other
natural resources, such as the seas or bays, are "waters . . . owned by the
State" forming part of the public domain, and are inalienable pursuant to
Section 2, Article XII of the 1987 Constitution.

43

In short, DENR is vested with the power to authorize the reclamation of

areas under water, while PEA is vested with the power to undertake the
physical reclamation of areas under water whether directly or through
private contractors. DENR is also empowered to classify lands of the public
domain into alienable or disposable lands subject to the approval of the
President. On the other hand, PEA is tasked to develop, sell or lease the
reclaimed alienable lands of the public domain.
Clearly, the mere physical act of reclamation by PEA of foreshore or
submerged areas does not make the reclaimed lands alienable or disposable
lands of the public domain, much less patrimonial lands of PEA. Likewise,
the mere transfer by the National Government of lands of the public domain
to PEA does not make the lands alienable or disposable lands of the public
domain, much less patrimonial lands of PEA.
There is no express authority under either PD No. 1085 or EO No. 525
for PEA to sell its reclaimed lands. PD No. 1085 merely transferred
"ownership and administration" of lands reclaimed from Manila Bay to
PEA, while EO No. 525 declared that lands reclaimed by PEA "shall belong
to or be owned by PEA." PEA's charter, however, expressly tasks PEA "to
develop, improve, acquire, administer, deal in, subdivide, dispose, lease and
sell any and all kinds of lands . . . owned, managed, controlled and/or
operated by the government." 87 (Emphasis supplied) There is, therefore,
legislative authority granted to PEA to sell its lands, whether patrimonial or
alienable lands of the public domain. PEA may sell to private parties its
patrimonial properties in accordance with the PEA charter free from
constitutional limitations. The constitutional ban on private corporations
from acquiring alienable lands of the public domain does not apply to the
sale of PEA's patrimonial lands.

44

Moreover, under Section 79 of PD No. 1445, otherwise known as the

Government Auditing Code, the government is required to sell valuable
government property through public bidding. Section 79 of PD No. 1445
mandates that:... "In the event that the public auction fails, the property may
be sold at a private sale at such price as may be fixed by the same committee
or body concerned and approved by the Commission."
However, the original JVA dated April 25, 1995 covered not only the
Freedom Islands and the additional 250 hectares still to be reclaimed, it
also granted an option to AMARI to reclaim another 350 hectares. The
original JVA, a negotiated contract, enlarged the reclamation area to 750
hectares. The failure of public bidding on December 10, 1991, involving
only 407.84 hectares, is not a valid justification for a negotiated sale of 750
hectares, almost double the area publicly auctioned.
Jurisprudence holding that upon the grant of the patent or issuance of the
certificate of title the alienable land of the public domain automatically
becomes private land cannot apply to government units and entities like
PEA.
The grant of legislative authority to sell public lands in accordance with
Section 60 of CA No. 141 does not automatically convert alienable lands of
the public domain into private or patrimonial lands. The alienable lands of
the public domain must be transferred to qualified private parties, or to
government entities not tasked to dispose of public lands, before these lands
can become private or patrimonial lands. Otherwise, the constitutional ban
will become illusory if Congress can declare lands of the public domain as
private or patrimonial lands in the hands of a government agency tasked to
dispose of public lands.
To allow vast areas of reclaimed lands of the public domain to be
transferred to PEA as private lands will sanction a gross violation of the

45

constitutional ban on private corporations from acquiring any kind of

alienable land of the public domain. This scheme can even be applied to
alienable agricultural lands of the public domain since PEA can "acquire . .
. any and all kinds of lands."
The 157.84 hectares of reclaimed lands comprising the Freedom Islands,
now covered by certificates of title in the name of PEA, are alienable lands
of the public domain. PEA may lease these lands to private corporations but
may not sell or transfer ownership of these lands to private corporations.
7. Considering that the Amended JVA is null and void ab initio, there is
no necessity to rule on this last issue. Besides, the Court is not the trier of
facts, and this last issue involves a determination of factual matters.
WHEREFORE, the petition is GRANTED. The Public Estates Authority
and Amari Coastal Bay Development Corporation are PERMANENTLY
ENJOINED from implementing the Amended Joint Venture Agreement
which is hereby declared NULL and VOID ab initio.

46

Home Guaranty Corporation vs. La Savoie Development Corporation

G.R. No. 168616, January 28, 2015
Facts:
This is a Petition for Review on Certiorari praying that the assailed
Decision1 dated June 21, 2005 of the Court of Appeals in CA G.R. CV No.
80241 be reversed and set aside. In the alternative, it prays that certain
properties supposedly conveyed by respondent La Savoie Development
Corporation to petitioner Home Guaranty Corporation2 be excluded from
the rehabilitation plan of La Savoie Development Corporation, should its
Petition for Corporate Rehabilitation be given due course.
The assailed Decision of the Court of Appeals reversed and set aside the
Order3 dated October 1, 2003 of the Regional Trial Court, Makati City,
reinstated the Stay Order issued by the Regional Trial Court on June 4,
2003, gave due course to La Savoie's Petition for Corporate Rehabilitation,
and remanded the case to the Regional Trial Court for further proceedings.4
The Regional Trial Court's June 4, 2003 Stay Order stayed the enforcement
of all claims, monetary or otherwise, and whether in court or otherwise,
against La Savoie Development Corporation.
La Savoie Development Corporation (La Savoie) is a domestic corporation
incorporated on April 2, 1990. It is engaged in the business of "real estate
development, subdivision and brokering."5
With the onset of the Asian financial crisis in 1997, the devaluation of the
Philippine peso and due to other factors such as lack of working capital;
high interest rates, penalties, and charges; low demand for real estate
properties; and poor peace and order situations in some of its project sites,
La Savoie found itself unable to pay its obligations to its creditors. Thus, on
April 25, 2003, La Savoie filed before the Regional Trial Court, Makati

47

City6 a "petition for the declaration of state of suspension of payments with

approval of proposed rehabilitation plan"7 under the Interim Rules of
Procedure on Corporate Rehabilitation8 (Interim Rules).
The proceedings before the Regional Trial Court were initially held in
abeyance as La Savoie failed to attach to its Petition some of the
requirements under Rule 4, Section 2 of the Interim Rules.9 With La Savoie's
compliance and finding its "petition to be sufficient in form and
substance,"10 then Regional Trial Court Judge Estela Perlas-Bernabe
issued the Stay Order dated June 4, 2003 staying the enforcement of all
claims against La Savoie. The entirety of this Order reads:
ORDER
Finding the petition to be sufficient in form and substance, the enforcement
of all claims, whether for money or otherwise, and whether such
enforcement is by court action or otherwise, against petitioner La Savoie
Development Corporation, its guarantors and sureties not solidarily liable
with it, is stayed.
As a consequence of the stay order, petitioner is prohibited from selling,
encumbering, transferring, or disposing in any manner any of its properties
except in the ordinary course of business. It is further prohibited from
making any payment of its liabilities outstanding as of the date of the filing
of the petition on April 25, 2003. Its suppliers of goods or services are
likewise prohibited from withholding supply of goods and services in the
ordinary course of business for as long as it makes payments for the services
and goods supplied after the issuance of the stay order.
Petitioner is directed to pay in full all administrative expenses incurred after
the issuance of the stay order.

48

The initial hearing on the petition is set on July 22, 2003 at 8:30 o'clock in
the morning at the 3rd Floor, Gusali ng Katarungan, F. Zobel St., Makati
City.
All creditors and interested parties including the Securities and Exchange
Commission are directed to file and serve on petitioner a verified comment
on or opposition to the petition with supporting affidavits and documents,
not later than ten (10) days before the date of the initial hearing. Failure to
do so will bar them from participating in the proceedings. Copies of the
petition and its annexes may be secured from the court within such time as
to enable them to file their comment on or opposition to the petition and to
prepare for its initial hearing.
Petitioner is directed to publish this Order in a newspaper of general
circulation in the Philippines once'a week for two (2) consecutive weeks and
to file to this Court within five (5) days before the initial hearing the
publisher's affidavit shewing compliance with the publication requirements.
Mr. Rito C. Manzana with address at 26B One Lafayette Condominium cor.
Leviste and Cedeno Manor St., Salcedo Village, Makati City is appointed
Rehabilitation Receiver of Petitioner. He may discharge his duties and
functions as such after taking his oath to perform his duties and functions
faithfully and posting a bond in the amount of P100,000.00 to guarantee the
faithful discharge of his duties and obedience to the orders of the court.
Petitioner is directed to immediately serve a copy of this Order to Mr.
Manzana who is directed to manifest his acceptance or non-acceptance of
his appointment not later than ten (10) days from receipt of this order.
SO ORDERED.
Given this 4th day of June, 2003 at Makati City.

49

ESTELA PERLAS-BERNABE
[sgd.]
Judge11
Following the issuance of the June 4, 2003 Stay Order, La Savoie's creditors
Planters Development Bank, Philippine Veterans Bank, and Robinsons
Savings Bank filed their Comments and/or Oppositions.12
Home Guaranty Corporation filed an Opposition13 even though "it [was]
not a creditor of Petitioner."14It asserted that it had a "material and
beneficial interest in the . . . Petition, in relation to the interest of Philippine
Veterans Bank (PVB), Planters Development Bank (PDB), and Land Bank of
the Philippines (LBP), which are listed as creditors of Petitioner vis-a-vis
certain properties or assets that might have been taken cognizance of, and
placed under the custody of the [Regional Trial] Court and[/]or the
appointed Rehabilitation Receiver."15
Home Guaranty Corporation noted that through the "La Savoie Asset Pool
Formation and Trust Agreement"16 (Trust Agreement), La Savoie obtained
financing for some of its projects through a securitization process in which
Planters Development Bank as nominal issuer issued PI50 million in asset
participation certificates dubbed as the "La Savoie Development
Certificates"17 (LSDC certificates) to be sold to investors. The projects
financed by these certificates consisted of the development of real properties
in General Trias, Cavite; Sto. Tomas, Batangas; Los Banos, Laguna; and
Quezon City. The same properties were conveyed in trust by La Savoie, as
trustor, to Planters Development Bank, as trustee, and constituted into the
La Savoie Asset Pool (Asset Pool).18
The redemption of the LSDC certificates upon maturity and the interest
payments on them were "backed/collateralized by the assets that were
conveyed by [La Savoie] to the Trust."19 Moreover, the LSDC certificates
were covered by a guaranty extended by Home Guaranty Corporation

50

through a "Contract of Guaranty"20 entered into by Home Guaranty

Corporation with La Savoie and Planters Development Bank.
Section 17 of the Contract of Guaranty designates Home Guaranty
Corporation to "undertake financial controllerships of the Projects."21
Thus, in its Opposition, Home Guaranty Corporation noted that it was
"charged with the duty of ensuring that all funds due to the Asset Pool are
collected, and that funds are disbursed for the purposes they were intended
for."22
Home Guaranty Corporation added that in the course of its business, La
Savoie collected a total amount of P60,569,134.30 from the buyers of some
of the properties covered by the Asset Pool. This amount, however, was not
remitted by La Savoie to the trust. With La Savoie's failure to complete some
of its projects and failure to remit sales collections, the Asset Pool defaulted
in redeeming and paying interest on the LSDC certificates. Thus, La Savoie's
investors placed a call on the guaranty.23With La Savoie's failure to remit
collections, however, Home Guaranty Corporation held in abeyance the
settlement of the investors' call. This settlement was then overtaken by the
filing of La Savoie's Petition for Rehabilitation.24
Home Guaranty Corporation argued that it and the investors on the LSDC
certificates had "preferential rights"25 over the properties making up the
Asset Pool as these "were conveyed as security or collaterals for the
redemption of the [LSDC certificates]."26 Thus, they should be excluded
from the coverage of La Savoie's Petition for Rehabilitation.
On September 1, 2003, La Savoie filed a Consolidated Answer27 to the
Comments/Oppositions. It argued that the assignment of assets to the Asset
Pool was not absolute and subject to certain conditions. Specifically, it
asserted that for the assignment to take effect, Home Guaranty Corporation
had to first pay the holders of the LSDC certificates. Thus, La Savoie

51

claimed that the properties comprising the Asset Pool remained to be its
assets.28
In the interim, a Verification Report on Accuracy of Petition was filed by the
Rehabilitation Receiver.29
On October 1, 2003, the Regional Trial Court issued an Order30 denying
due course to La Savoie's Petition for Rehabilitation and lifting the June 4,
2003 Stay Order. The trial court reasoned that the "findings of sufficiency in
the form and substance of the petition for which a stay order was issued has
been flawed"31 and that "[i]t cannot countenance a situation such as this
where the petitioner files a petition on the basis of inaccurate or unverifiable
allegations and false representations."32 It noted that per the Rehabilitation
Receiver's Report, there were "various inaccuracies in the material
allegations of the petition and its annexes."33 Several documents "to verify
other material statements made therein" were also lacking.34 It added that
La Savoie "has not presented any concrete and feasible plan on how it will
be able to secure additional funds to continue with the development of its
raw land and on-going joint-venture projects."35
Aggrieved, La Savoie filed an Appeal before the Court of Appeals. It filed its
Appellant's Brief on May 5, 2004.36
In the meantime, Home Guaranty Corporation approved and processed the
call on the guaranty for the redemption of the LSDC certificates. Thus,
Home Guaranty Corporation, through Planters Development Bank, paid a
total of P128.5 million as redemption value to certificate holders. Acting on
this, Planters Development Bank executed a "Deed of Assignment and
Conveyance"37 in favor of Home Guaranty Corporation through which, in
the words of Home Guaranty Corporation, Planters Development Bank
"absolutely conveyed and assigned to [Home Guaranty Corporation] the
ownership and possession of the entire assets that formed part of the La

52

Savoie Asset Pool."38 Home Guaranty Corporation claims, in addition, that,

through the same Deed, Planters Development Bank "absolutely conveyed
and assigned to [Home Guaranty Corporation] the right to collect from [La
Savoie] cash receivables . . . representing the amount collected by [La
Savoie] from sales in the course of the development of the projects which it
failed to remit to the Trust."39
On August 18, 2004, Home Guaranty Corporation filed its Appellee's
Brief.40 It argued that all of the properties comprising the Asset Pool should
be excluded from the rehabilitation proceedings in view of the Deed of
Assignment and Conveyance executed in its favor by Planters Development
Bank.41Attached to this Brief was a copy of the Deed of Assignment and
Conveyance.42
In the Decision43 dated June 21, 2005, the Court of Appeals Special Twelfth
Division reversed and set aside the Regional Trial Court's October 1, 2003
Order, reinstated the Stay Order, gave due course to the Petition for
Rehabilitation, and remanded the case to the trial court for further
proceedings.
The Court of Appeals characterized the inaccuracies noted by the trial court
as "minor" and "trivial,"44as well as insufficient to render as "false" the
allegations made by La Savoie in its Petition for Rehabilitation. It added
that La Savoie "convincingly showed that it could undertake to market its
projects through [the] Pag-Ibig Overseas Program, sell the existing
inventories of unsold subdivision lots and use the un-remitted collections
due to HGC which will be converted as additional loan to fund its on-going
projects."45 Regarding Home Guaranty Corporation's payment of the
guaranty call, the Court of Appeals noted that it was made after the Petition
for Rehabilitation had been brought by La Savoie and after the issuance of
the Stay Order; thus, Home Guaranty Corporation had no right to make
such payment.

53

On August 12, 2005, Home Guaranty Corporation filed before this court the
present Petition for Review on Certiorari under Rule 45 of the 1997 Rules of
Civil Procedure.46
Home Guaranty Corporation asserts 'that the properties comprising the
Asset Pool should be excluded from the rehabilitation proceedings as these
have now been "removed from the oominion"47 of La Savoie and have been
conveyed and assigned to it. It underscores that the transfer made to it by
Planters Development Bank was made after the Stay Order had been lifted,
per the Regional Trial Court's October 1, 2003 Order.
Issue:
Whether the properties comprising the Asset Pool should be excluded from
the proceedings on La Savoie Development Corporation's Petition for
Rehabilitation. The resolution of this issue hinges on whether the
conveyance to Home Guaranty Corporation of the properties comprising the
Asset Pool was valid and effectual?
Held:
The disputed properties were excluded from the Fideicomiso at the outset.
Jose registered the disputed properties in his name partly as his conjugal
share and partly as his inheritance from his wife Juliana, which is the
complete reverse of the claim of the petitioner, as the new trustee, that the
properties are intended for the beneficiaries of the Fideicomiso.
Furthermore, the exclusion of the disputed properties from the Fideicomiso
was approved by the probate court and, subsequently, by the trial court
having jurisdiction over the Fideicomiso. The registration of the disputed
properties in the name of Jose was actually pursuant to a court order. The
apparent mistake in the adjudication of the disputed properties to Jose
created a mere implied trust of. the constructive variety in favor of the
beneficiaries of the Fideicomiso.110
So, too, this case falls squarely under Article 1456 of the Civil Code. Home
Guaranty Corporation acquired the properties comprising the Asset Pool by

54

mistake or through the ineffectual transfer (i.e., for being pactum

commissorium) made by the original trustee, Planters Development Bank.
Two key points are established from the preceding discussions. First, the
Court of Appeals' June 21, 2005 Decision restored La Savoie's status as a
corporation under receivership. Second, with all but a constructive trust
created between Home Guaranty Corporation and La Savoie, the properties
comprising the Asset Pool remain within the dominion of La Savoie.
On the first point, the restoration of La Savoie's status as a corporation
under receivership brings into operation the rule against preference of
creditors. On the second point, La Savoie's continuing ownership entails the
continuing competence of the court having jurisdiction over the
rehabilitation proceedings to rule on how the properties comprising the
Asset Pool shall be disposed, managed, or administered in order to satisfy
La Savoie's obligations and/or effect its rehabilitation.
The cumulative effect of these is that Home Guaranty Corporation must
submit itself, like La Savoie's other creditors, to how La Savoie's Petition for
Rehabilitation shall be resolved. As a paying guarantor, Home Guaranty
Corporation was subrogated into the rights of La Savoie's creditors and now
stands as the latter's own creditor. It remains so pending the satisfaction of
La Savoie's obligation and as the void conveyance made to it by Planters
Development Bank failed to terminate in the creditor-debtor relationship
with La Savoie.cralawred
WHEREFORE, the Petition is DENIED. The Regional. Trial Court, Branch
142, Makati City is directed to proceed with dispatch in resolving the
Petition for Rehabilitation filed by respondent La Savoie Development
Corporation.

55

BAR NOTES
Foreshore lands or submerged areas which may be reclaimed under RA 1899
by local governments are part of the public domain which could only be
subject of reclamation by the national government under PD 3-A. The
authority granted to local governments to undertake reclamation projects
was a mere grant by the sovereign which, in the exercise of police power,
may be withdrawn as shown in PD 3-A. (Republic vs. CA and Pasay City, et
al. (Cultural Center), 299 SCRA 199).

56

JUDICIAL CONFIRMATION OF IMPERFECT

TITLE UNDER CA 141
Existing law and jurisprudence provides that an applicant for judicial
confirmation of imperfect title must prove compliance with Section 14 of
Presidential Decree (P.D.) No. 1529 or the Property Registration Decree.
The pertinent portions of Section 14 provide:
SEC. 14. Who may apply.The following persons may file in the
proper Court of First Instance an application for registration of title to
land, whether personally or through their duly authorized
representatives:
(1) Those who by themselves or through their predecessors-in-interest
have been in open, continuous, exclusive and notorious possession
and occupation of alienable and disposable lands of the public domain
under a bona fide claim of ownership since June 12, 1945, or earlier.
(2) Those who have acquired ownership of private lands by prescription
under the provisions of existing laws.xxx

Oh Cho vs. Dir. Of Lands 75 Phil. 890

August 31, 1946
FACTS:
Oh Cho, a Chinese citizen, purchased from the Lagdameos a parcel of
land in Tayabas, which they openly, continuously and adversely possessed
since 1880. On January 17, 1940, Oh Cho applied for registration of this

57

land. The Solicitor General opposed on the ground that Oh Cho lacked title
to said land and also because he was an alien.
ISSUES:
1. Whether or not Oh Cho had title
2. Whether or not Oh Cho is entitled to a decree of registration

RULINGS:
Oh Cho failed to show that he has title to the lot, which may be
confirmed under the Land Registration Act.
All lands that were not acquired from the Government, either by
purchase or by grant, belong to the public domain. An exception to the rule
would be any land that should have been in the possession of an occupant
and of his predecessors in interest since time immemorial, for such
possession would justify the presumption that the land had never been part
of the public domain or that it had been a private property even before the
Spanish conquest.
The applicant does not come under the exception, for the earliest
possession of the lot by his first predecessor in interest began in 1880.
Under the Public Land Act, Oh Cho is not entitled to a decree of
registration of the lot, because he is an alien disqualified from acquiring
lands of the public domain.
Oh Cho's predecessors in interest would have been entitled to a decree of
registration had they applied for the same. The application for the
registration of the land was a condition precedent, which was not complied
with by the Lagmeos. Hence, the most they had was mere possessory right,
not title. This possessory right was what was transferred to Oh Cho, but

58

since the latter is an alien, the possessory right could never ripen to
ownership by prescription. As an alien, Oh Cho is disqualified from
acquiring title over public land by prescription.

59

CADASTRAL ACT 2259

On February 11, 1913, the Cadastral Law Act (Act 2259) was enacted for
compulsory registration of land titles with private ownership. Under this
Act, registration of titles was judicial in nature.
The Court of Land Registration exercised jurisdiction over all applicants for
the registration of titles to land or building in the Philippines, with the power
to hear and determine all questions arising upon such applications.
When, in the opinion of the Governor-General (now the President), the
public interests require that the title to any lands be titled and adjudicated, he
may to this end order the Director of Lands to make a survey and plan
thereof. (As amended by Sec. 1850, Act No. 2711.)
The Director of Lands shall, thereupon, give notice to persons claiming an
interest in the lands, and to the general public, of the day on which such
survey will begin, giving as full and accurate a description as possible of the
lands to be surveyed. Such notice shall be published in two successive issues
of the Official Gazette, and a copy of the notice in the English and Spanish
languages shall be posted in a conspicuous place on the chief municipal
building of the municipality, township or settlement in which the lands, or
any portion thereof, are situated. A copy of the notice shall also be sent to
the president of such municipality, township, or settlement, and to the
provincial board. (As amended by Sec. 1851, Act No. 2711.)
The surveyor or other employees of the Bureau of Lands in charge of the
survey shall give reasonable notice to the day on which the survey of any
portion of such lands is to begin, and shall post such notice in the usual place
on the chief municipal building of such municipality, township, or
settlement in which the lands are situated, and shall mark the boundaries of

60

the lands by monuments set up at proper places thereon. (As amended by

Sec. 1852, Act No. 2711.)
(Illustrative Case)

Salvador N. Lopez Agri-Business Corp Vs. Republic Of The

Philippines G.R. No. 178895; January 10, 2011
FACTS:
Two properties of Salvador N. Lopez Agri-Business Corp. (SNLABC) were
placed under the coverage of the Comprehensive Agrarian Reform Law
CARL). SNLABC sought exemption of their properties, arguing that due to
the ruling in the Luz Farms case, land devoted to livestock is outside the
coverage of the CARL. Upon ocular inspection, the Municipal Agrarian
Reform Officer (MARO) found that one of the parcels of land, the Lopez
land, were exempt from CARL coverage. The other parcel, the Limot land,
was not exempt. SNLABC appealed the finding with the Secretary of the
Department of Agriculture. The DAR, however, ruled that both Lopez and
Limot lands were subject to the CARL. SNLABC appealed the decision to the
Court of Appeals, which rendered the assailed decision. The CA affirmed the
findings of the MARO, that the Lopez land was exclusively used for
livestock. The MARO found that the Lopez lands were used for grazing, and
that such was its purpose even before the Luz Farms ruling. It was
sufficiently established by testimonies of the people thereabouts. Despite the
presence of coconut trees in the Lopez lands, it is still used primarily for
raising livestock. There are also structures meant for such a purpose. The
Limot lands, on the other hand, were used both for coconut and rubber
plantations. The MARO found that it was only used as an extension of
grazing land, inconsistently at best. Both the DAR and SNLABC appealed
the decision.

61

ISSUE:
Whether or not the Lopez and Limot Lands are under the coverage of CARL
HELD:
Both petitions are denied
Civil Law: The DAR argues that the tax declaration of the Lopez lands
classify it as agricultural land. Also, that the SNLABC was incorporated
after the implementation of the CARL shows that there is an attempt to
evade CARL coverage. It is, however, doctrine that tax declarations
themselves are not conclusive evidence as to the classification of land. Also,
it is the actual usage of the land, not its classification, which determines its
eligibility for CARL. As for the Lopez lands, it as inherited by the owner of
SNLABC as livestock land. Its use has been for raising livestock even before
the incorporation of SNLABC. Hence, the time of incorporation, and the tax
declaration are irillustrative.
As for the Limot lands, it is not enough that such are used as seasonal
extensions of grazing land. The livestock are not regularly situated in the
land in question, but are only brought there at times for grazing. It is land
actually devoted to coconut and rubber. Hence, it cannot be exempted.

62

Philippine Veterans Bank Vs. Bcda

G.R. No. 173085; January 19, 2011

Facts:
The facts, as found by the CA, are as follows:
Sometime in May 1972, the Agoo Breeding Station (or breeding station)
was established by the Department of Agriculture, through the Bureau of
Animal Industry (BAI), Region I, for the purpose of breeding cattle that
would be distributed to the intended beneficiaries pursuant to the livelihood
program of the national government. In support of the said project,
plaintiffs6 executed four (4) documents denominated as Deed of Donation in
favor of defendant Republic of the Philippines (or Republic) donating to
the latter four (4) parcels of land, more particularly described in the
following Tax Declarations (TD):
1. TD No. 23769 registered in the name of Federico Daclan
covering a [parcel of] land with an area of 15,170 square
meters, more or less;
2. TD No. 38240 registered in the name of Josefina Collado
covering a [parcel of] land with an area of 3,440 square
meters, more or less;
3. TD No. 27220 registered in the name of Teodoro Daclan
covering a [parcel of] land with an area of 2,464 square
meters, more or less;

63

4. TD No. 1875 registered in the name of Jose Daclan (deceased

father of plaintiff Minviluz Daclan) covering a [parcel of] land
with an area of 1,769 square meters, more or less.
These parcels of land are located at Barrio Nazareno, Agoo, La Union. The
donation was subject to the conditions that these parcels of land 1) shall be
used solely for the establishment of a breeding station, and 2) shall not be
used for any other purpose, except with the previous consent of the donors
or their heirs.
Sometime in 1991, the powers and functions of certain government agencies,
including those of the Department of Agriculture (DA), were devolved to the
local government units pursuant to Republic Act No. 7160, otherwise known
as the Local Government Code. Thus, defendant Province of La Union
(or Province) assumed the powers and functions of the DA, in the
operation of the breeding station.7
In particular, the deeds of donation8 stipulated

a. That the land herein mentioned shall be used for the establishment of
a breeding station and shall not be used for any other purpose, except
with the previous consent of the DONOR or his heirs;
xxxx
c. That in case of non-use, abandonment or cessation of the activities of
the BUREAU OF ANIMAL INDUSTRY, possession or ownership shall
automatically revert to the DONOR and all permanent improvements
existing thereon shall become the property of the DONOR; x x x9

64

All in all, the petitioners in G.R. No. 197267 Federico Daclan, Josefina
Collado, Teodoro Daclan, Jose Daclan (the Daclans) and several others
donated around 13 hectares of land to the Republic. The uniform deeds of
donation covering these parcels of land contained the same conditions,
including the above stipulations relative to exclusive purpose/use and
automatic reversion.10
Sometime after the donations were made, the La Union Medical Center
(LUMC) was constructed on a 1.5-hectare portion of the 13-hectare donated
property.11
In a September 4, 2003 Letter12 to the Secretary of the Department of
Agriculture, the Daclans and other donors demanded the return of their
donated lands on the ground that the breeding station has ceased operations
and that the land has been abandoned.
Ruling of the Regional Trial Court
On March 28, 2005, the Daclans filed Civil Case No. A-2363 for specific
performance against the Republic and the Province of La Union. The case
was assigned to Branch 32 of the RTC of Agoo, La Union (Agoo RTC). The
Daclans essentially claimed in their Amended Complaint13 that pursuant to
the automatic reversion clause in the deeds of donation, they are entitled to
a return of their donated parcels of land after the Bureau of Animal Industry
(BAI) ceased operating the breeding station, but that the Republic and the
Province failed to honor the said clause and refused to return their land.
They thus prayed that the defendants be ordered to return to them the
donated land, with all improvements existing thereon.
In its Answer,14 the Province alleged that the Daclans have no cause of
action since the breeding station was still existing although this time it is

65

being operated by the Province, pursuant to the devolution program under

the Local Government Code of 1991, and that the Daclans violated the
deeds of donation because they have occupied the donated land and have
begun fencing the same. It prayed for the dismissal of the complaint as well
as the grant of injunctive relief.
In a subsequent Manifestation,15 the Republic opted to adopt the above
Answer filed by the Province.
In their Reply,16 the Daclans claimed that the donated land cannot be
assigned by the Republic to the Province as the deeds of donation did not
include the Republics successors or assigns as intended beneficiaries; that
contrary to the Provinces claim, the breeding station is not operational and
has been abandoned, and the existing heads of cattle found therein do not
belong to the government but to former officials of the BAI; and that with the
automatic reversion clause, they are granted the immediate right to occupy
the subject land, and no injunctive relief should issue against them.
Upon motion of the parties, an ocular inspection of the premises was
conducted, and a Commissioners Report17 was prepared and issued
thereafter. The report indicated in part that

From information gathered from Ms. Cresencia Isibido, a caretaker of the

Agoo Breeding Station, the land had an original area of thirteen (13)
hectares. At present though, only eleven point five (11.5) hectares is [sic]
being occupied by the Agoo Breeding Station as 1.5 hectares was [sic]
occupied by the La Union Medical Center.
At a distance of about 200 meters from the main entrance of the breeding
station, an office is located at the south of said lot. Beside the office is a
shed where six (6) young goats (kids) are housed. Another shed where goats

66

are housed is located at the northern side of the lot, fronting a water pump
station.
It was likewise gathered that at present, the breeding station has a total
number of fifty (50) goats. Also, there are six (6) cows roaming in the
pasture land. Four (4) of these cows are pregnant. It was clarified that
these cows belong to the Cross Australian Bi-Bhraman [sic] breed.
There are four (4) caretakers in the breeding station, all of whom are
employed by the provincial government of La Union. They receive salary
from the provincial government and they likewise submit monthly reports to
the Provincial Veterinarian. These four caretakers are Cresencia Isibido,
Manuel Daclan, Ruben Daclan (son of plaintiff Federico Daclan), and Tita
Fortes.
The group left the breeding station at around 3:30pm.
Agoo, La Union, this 14th day of December, 2006.
Issue:
I.
THE HONORABLE COURT ERRED IN RULING THAT PETITIONER
VIOLATED THE PROVISIONS OF THE DEEDS OF DONATION.

II.

67

THE HONORABLE COURT OF APPEALS ERRED IN DIRECTING THE

PETITIONER TO RETURN PORTION/S OF THE PARCEL/S OF LAND
DONATED BY RESPONDENTS AND/OR THEIR FOREBEARS BASED ON
AN UNESTABLISHED INFERENCE.
Held:
The Court grants the Republics Petition in G.R. No. 197115 and denies that
of the Daclans in G.R. No. 197267.
The preponderance of evidence points to the fact that the breeding station
remained operational even after its transfer from the Republic to the
Province. The activities of the BAI did not cease even after it was dissolved
after the government adopted the policy of devolution under the Local
Government Code of 1991; these activities were merely transferred to the
Province. Thus, the witnesses for the Daclans and the Republic uniformly
declared that the breeding station remained operational even after the Local
Government Code of 1991 was put into effect. Particularly, Regional
Director Reinerio Belarmino, Jr. of the Department of Agriculture, Region 1
declared that after the breeding station was transferred to the Province, he
saw upon ocular inspection that there remained six cows and fifty goats on
the premises. Cresencia Isibido testified that as Farm Foreman, she
exercised supervision over her co-employees in the breeding station; that in
1989, there were six personnel assigned at the breeding station; that from
1974 until 1989, she received her salary from the BAI; that after devolution,
she started receiving her salary from the Province; and that even after
devolution, the operation of the Agoo Breeding Station continued, and goats,
cattle and swine were being maintained thereat. Dr. Nida Gapuz, La Union
Provincial Veterinarian, said that natural as well as artificial insemination

68

activities were being conducted at the breeding station, as well as goat

dispersal and cattle production. Atty. Mauro Cabading, La Union
Provincial Assessor, testified that he was directed by the Governor and the
Provincial Administrator to take photographs of the breeding station in
order to verify the complaint filed by the Daclans; that he then proceeded to
the Agoo Breeding Station; that he took photographs of the animals cows
and goats therein; and that the Province owned said animals at the
breeding station.
As against the bare assertions of the Daclans that the breeding station was
abandoned and became non-operational, the testimonies of the above public
officers are credible. In the absence of any controverting evidence, the
testimonies of public officers are given full faith and credence, as they are
presumed to have acted in the regular performance of their official
duties.31
Devolution cannot have any effect on the donations made by the Daclans to
the Republic. As defined, devolution refers to the act by which the national
government confers power and authority upon the various local government
units to perform specific functions and responsibilities.32 It includes the
transfer to local government units of the records, equipment, and other
assets and personnel of national agencies and offices corresponding to the
devolved powers, functions and responsibilities.33 While the breeding
station may have been transferred to the Province of La Union by the
Department of Agriculture as a consequence of devolution, it remained as
such, and continued to function as a breeding station; and the purpose for
which the donations were made remained and was carried out. Besides, the
deeds of donation did not specifically prohibit the subsequent transfer of the
donated lands by the donee Republic. The Daclans should bear in mind that
contracts take effect between the parties, their assigns and heirs, except in

69

cases where the rights and obligations arising from the contract are not
transmissible by their nature, or by stipulation or by provision of law. 34
Thus, as a general rule, rights and obligations derived from contract are
transmissible.
The Daclans lament the supposed failure of the Province to provide
agricultural extension and on-site research services and facilities as
required under the Implementing Rules and Regulations of the Local
Government Code of 1991, which failure they believe, constituted a
violation of the stipulation contained in the deeds of donation to develop and
improve the livestock industry of the country. Yet this cannot be made a
ground for the reversion of the donated lands; on the contrary, to allow such
an argument would condone undue interference by private individuals in the
operations of government. The deeds of donation merely stipulated that the
donated lands shall be used for the establishment of a breeding station and
shall not be used for any other purpose, and that in case of non-use,
abandonment or cessation of the activities of the BAI, possession or
ownership shall automatically revert to the Daclans. It was never stipulated
that they may interfere in the management and operation of the breeding
station. Even then, they could not directly participate in the operations of
the breeding station.
Thus, even if the BAI ceased to exist or was abolished as an office, its
activities continued when its functions were devolved to the local
government units such as the Province of La Union. It cannot be said that
the deeds of donation may be nullified just by the fact that the BAI became
defunct; its functions continued in the government offices/local government
units to which said functions were devolved.

70

Lastly, the CA cannot validly order the return to the Daclans of the donated
1.5-hectare portion where the LUMC is situated, because such portion was
not donated by them. They admitted that the 1.5-hectare portion where the
LUMC is constructed does not form part of the lands they donated to the
government, but belonged to other donors who are not parties to the
instant case. As far as the
Daclans are concerned, whatever they donated remains part of the breeding
station and so long as it remains so, no right of reversion accrues to them.
Only the original owner-donor of the 1.5-hectare portion where the LUMC
is constructed is entitled to its return.

71

BAR QUESTION
In August 1950, the Republic of the Philippines filed an application with the
cadastral court claiming ownership over certain properties which covered
Lot 4329. Guillermo filed an answer claiming therein a right over Lot 4329.
Guillermo died during the pendency of the case. Gregorio, who claimed to
be the only son of Guillermo, substituted the latter, and to him, Lot 4329 was
adjudicated by the court. The decision became final and executory. On July
8, 1985, OCT No. 0-6,151 was issued in the name of Gregorio. Sometime
thereafter, the brothers and sisters of Guillermo filed a complaint for
recovery of possession with damages against Gregorio, alleging that
Guillermo died single and without issue and that Gregorio obtained title to
the property through fraud deceit and gross misrepresentation. They prayed
that Gregorios title be cancelled and the property be reconveyed to them.
After the trial, the court declared that Gregorio has not sufficiently proved
that he is the son of Guillermo but ruled that he has the right of possession of
the disputed property.
Is Gregorio entitled to the possession of the disputed property?
ANSWER:
YES. Gregorio was able to obtain a title in his name over the questioned
property after the cadastral proceedings instituted by the Republic. This
Torrens title is now a conclusive evidence of his ownership of the subject
land. After the expiration of the one-year period from the issuance of the
decree of registration, the said certificate of title became incontrovertible. In
fine, whether or not his title was obtained fraudulently is beyond the
competence of the Supreme Court to determine. The issue should have been

72

raised during the proceeding before the cadastral court. A Torrens title
cannot be collaterally attacked, the issue on the validity of title, i.e. whether
or not it was fraudulently issued can only be raised in an action expressly
instituted for that purpose. The prayer for the cancellation of Gregorios title
and the reconveyance of the same to brothers and sisters of Guillermo is
legally impossible. To sustain the said action would be inconsistent with the
rule that the act of registration is the operative act that conveys a parcel of
land to its registered owner under the Torrens system. What we are
emphasizing is that, although Gregorio has not sufficiently proved his
filiation to the late Guillermo, the fact that he has a legal title over the
subject land entitles him to possession thereof, pending the final
determination of the validity of the title issued to him in an appropriate
proceeding.

73

HOMESTEAD PATENT AND FREE PATENT

Homestead Patent and Free Patent are some of the land patents granted by
the government under the Public Land Act. While similar, they are not
exactly the same.
A Homestead Patent is one issued to: any citizen of this country; over the
age of 18 years or the head of a family; who is not the owner of more than
twenty-four (24) hectares of land in the Philippines or has not had the benefit
of any gratuitous allotment of more than twenty- four (24) hectares of land
since the occupation of the Philippines by the United States. The applicant
must show that he has complied with the residence and cultivation
requirements of the law; must have resided continuously for at least one year
in the municipality where the land is situated; and must have cultivated at
least one-fifth of the land applied for.
On the other hand, a Free Patent may be issued where the applicant is a
natural-born citizen of the Philippines; not the owner of more than twelve
(12) hectares of land; that he has continuously occupied and cultivated,
either by himself or through his predecessors-in-interests, a tract or tracts of
agricultural public lands subject to disposition for at least 30 years prior to
the effectivity of Republic Act No. 6940; and that he has paid the real taxes
thereon while the same has not been occupied by any person.
(Illustrative Case)

74

Rabaja Ranch Development Corporation Vs. Afp Retirement And

Separation Benefits System G.R. No.177181 July 7, 2009

FACTS:
Petitioner Rabaja Ranch Development Corporation is a domestic
corporation and a holder of TCT No. T-88513 covering the subject
property located at Barangay Conrazon, Bongabon, Oriental Mindoro.
Respondent Armed Forces of the Philippines Retirement and Separation
Benefits System (AFP-RSBS) is a government corporation, which
manages the pension fund of the Armed Forces of the Philippines (AFP),
and a holder of TCT No. T-51382 covering the same subject property.
On September 1, 1998, petitioner filed a Complaint for Quieting of Title
and/or Removal of Cloud from Title before the RTC. It averred that on
September 6, 1955, a Free Patent was issued in the name of Jose
Castromero, and on June 1, 1982, the Free Patent was registered, and an
OCT covering the subject property was issued in the name of the latter.
Sometime in 1982, Jose sold the subject property to Spouses Sigfriedo and
Josephine Veloso and TCT No. T-17104 was issued in favor of the
spouses. On January 17, 1997, Spouses Veloso, in turn, sold the subject
property to petitioner for the sum of P634,116.00 and TCT No. T-88513
was issued in petitioners name. Petitioner alleged that it was the lawful
owner and possessor of the subject property.
In its Answer, respondent claimed that its title over the subject property
was protected by the Torrens system, as it was a buyer in good faith and
for value, and that it had been in continuous possession of the subject
property since November 1989, way ahead of petitioner's alleged
possession in February 1997.
Respondent stated that on April 30, 1966, a Homestead Patent was issued
in the name of Charles Soguilon, and upon registration, an OCT was
issued in Charles's name, covering the same property. On October 18,

75

1982, Charles sold the subject property to JMC Farm Incorporated,

which was then issued TCT No. 18529. On August 30, 1985, JMC
obtained a loan from respondent in the amount of P7,000,000.00, with
real estate mortgage over several parcels of land including the subject
property. JMC failed to pay, hence, after extra-judicial foreclosure and
public sale, respondent, being the highest bidder, acquired the subject
property and was issued TCT No. T-51382 in its name. Respondent
contended that from the time it was issued a title, it took possession of the
subject property until petitioner disturbed respondent's possession thereof
sometime in 1997.
The RTC ruled in favor of the petitioner on the ground that petitioner's
title emanated from a title older than that of the respondent. Moreover,
the RTC held that there were substantial and numerous infirmities in the
Homestead Patent of Charles. The RTC found that there was no record in
the Bureau of Lands that Charles was a homestead applicant or a grantee
of the Homestead Patent. Thus, the RTC held that Charles's Homestead
Patent was fraudulent and spurious, and respondent could not invoke the
protection of the Torrens system, because the system does not protect one
who committed fraud or misrepresentation and holds title in bad faith.
On appeal, the Court of Appeals reversed and set aside the ruling of the
lower court. It held that Charles's Homestead Patent was earlier
registered than Jose's Free Patent. The CA held that Jose slept on his
rights, and thus, respondent had a better right over the subject property.
Petitioner filed a Motion for Reconsideration but it was denied.

ISSUES:
a. Whether or not respondent's title which originated from a fake and
spurious homestead patent, is superior to petitioner's title which
originated from a valid and existing free patent.
b. Who, between the petitioner and respondent, has a better right over the
subject property?

76

RULINGS:
a. The Supreme Court ruled that in our jurisdiction, fraud is never
presumed. Mere allegations of fraud are not enough. The intentional acts
to deceive and deprive another of his right, or in some manner, injure him
must be specifically alleged and proved. The burden of proof rests on
petitioner, and the petitioner in this case failed to discharge the burden.
Petitioner did not show that the Homestead Patent issued to Charles
Soguilon is indeed spurious. More importantly, petitioner failed to prove
that respondent took part in the alleged fraud which dated back as early
as 1966. Therefore, the petition was denied.
b. The Supreme Court held that respondent is an innocent purchaser in
good faith and for value. Thus, as far as respondent is concerned, TCT
No. 18529, shown to it by JMC, was free from any flaw or defect that
could give rise to any iota of doubt that it was fake and spurious, or that it
was derived from a fake or spurious Homestead Patent. Likewise,
respondent was not under any obligation to make an inquiry beyond the
TCT itself when, significantly, a foreclosure sale was conducted and
respondent emerged as the highest bidder.
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 and order the cancellation of the certificate. The
effect of such outright cancellation will be to impair public confidence in
the certificate of title. The sanctity of the Torrens system must be
preserved; otherwise, everyone dealing with the property registered under
the system will have to inquire in every instance as to whether the title
had been regularly or irregularly issued, contrary to the evident purpose
of the law. Every person dealing with the registered land may safely rely
on the correctness of the certificate of title issued therefor, and the law
will, in no way, oblige him to go behind the certificate to determine the
condition of the property.

77

Moreover, a Homestead Patent, once registered under the Land

Registration Act, becomes as indefeasible as a Torrens Title. Section 103
of P.D. No. 1529 mandates the registration of patents, and such
registration is the operative act to convey the land to the patentee. The
deed, grant, patent or instrument of conveyance from the Government to
the grantee shall not take effect as a conveyance or bind the land but shall
operate only as a contract between the Government and the grantee and
as evidence of authority to the Register of Deeds to make registration. It is
the act of registration that shall be the operative act to affect and convey
the land.

78

Taguinod vs Court of Appeals

G.R. No. 154654 September 14, 2007

The rights of a homestead patentee are superior to that of a tenant under

the Agrarian Reform Law.
FACTS:
President Ferdinand E. Marcos promulgated PD 27 for the emancipation
of tenant-farmers from private agricultural lands they till that are
primarily devoted to rice and corn. DAR launched Operation Land
Transfer (OLT) to implement the law. When OLT was launched, Salud
Alvarez Aguila was the registered owner of the disputed lots. The TCTs
over the two lots were issued based on homestead patents. The first TCT
was transferred to Vic Aguila (who was then 14 yrs old), and the second
TCT was transferred to Josephine Taguinod. Both lots were placed under
coverage of OLT. Salud Aguila, on behalf of Vic Aguila, filed a notice for
retention. When Vic Aguila became of age, he filed a notice for
exemption. Taguinod alsofiled a notice for exemption.
Meanwhile, the two subject lots were surveyed and a subdivision plan of
the lots parceled to the farmer-beneficiaries was prepared and approved.
The DAR Municipal Agrarian Reform Officer (MARO) recommended to
the Provincial Agrarian Reform Officer (PARO) the approval of the
applications of Salud A. Aguila/Vic A. Aguila and Josephine A. Taguinod
for retention of rights. The PARO granted the application for retention
rights. Respondents-farmer-beneficiaries opposed the decision. The RD
affirmed the PAROs decision but stated that the transfer made by Salud
Aguila to petitioners is null and void, but that Salud Aguila should be
granted the retention rights. Private respondents opposed this decision.
Taguinod also filed a motion contending that Aguila was not the real

79

owner of the land as such was by Taguinod from her biological mother
and that the same was only mortgaged to Aguila which property she had
already redeemed. The DAR Secretary affirmed the decision of the RD
and denied Taguinods motion. Upon motion for reconsideration, the
DAR Secretary ruled that Salud Aguila was disqualified in retention
rights because she owned several other properties. Petitioners appealed
to the Office of the President.
The OP ruled that the said lots, having stemmed from homestead patents,
are exempt from the coverage of PD 27. On appeal, the CA ruled in
favour of private respondents. The CA however agreed with the OP that
the rights of the homesteader and his/her heirs to own and cultivate
personally their land acquired under the "homestead laws" are superior
over those of tenants invoking the "agrarian reform laws. However, it
found that petitioners Taguinod and Aguila failed to discharge the burden
of adducing evidence to prove the identities of the original homestead
patentees and that they are the direct compulsory heirs of the original
patentees.
ISSUE:
Whether or not the subject lands are exempted from coverage of PD 27
HELD:
The petition is bereft of merit. Settled in this jurisdiction is the rule that
the rights of a holder of a homestead patent are superior over the rights
of the tenants guaranteed by the Agrarian Reform Law. We agree with the
petitioners in saying that P.D. 27 decreeing the emancipation of tenants
from the bondage of the soil and transferring to them ownership of the
land they till is a sweeping social legislation, a remedial measure
promulgated pursuant to the social justice precepts of the Constitution.
However, such contention cannot be invoked to defeat the very purpose of
the enactment of the Public Land Act or Commonwealth Act No. 141.

80

Thus, "The Homestead Act has been enacted for the welfare and
protection of the poor. The law gives a needy citizen a piece of land where
he may build a modest house for himself and family and plant what is
necessary for subsistence and for the satisfaction of lifes other needs.
The right of the citizens to their homes and to the things necessary for
their subsistence is as vital as the right to life itself. They have a right to
live with a certain degree of comfort as x x x human beings, and the State
which looks after the welfare of the peoples happiness is under a duty to
safeguard the satisfaction of this vital right." It is therefore incumbent
upon petitioners to identify substantial evidence on record to support the
OPs finding that their lots are excluded from the coverage of
Comprehensive Agrarian Reform Program. In fact, as aptly put by private
respondents, petitioners never averred before the DAR and OP that Salud
Aguila was the original homestead patentee or a direct compulsory heir
of the homestead patentee. Without any substantial evidence that would
show that petitioner Aguila or Salud Aguila was entitled to the exemption
pursuant to the homestead laws, the lot is indubitably under the coverage
of the OLT. More importantly, the records are bereft of any showing that
petitioner Taguinod had indeed repurchased or redeemed subject
property from landowner Salud Aguila. Thus, absent any evidence to the
contrary, the lot is still owned by the owner of record, Salud Aguila.

81

Justalero vs San Agustin Gonzales

G.R. No. 148111 March 5, 2007

Where there is no showing that the deceased Free Patent Applicant availed
himself of a legal remedy to assail an adverse decision, his successors-ininterest are bound by the same.
FACTS:
Noemi San Agustin and Zenaida San Agustin Gonzles, together with their
other siblings, entered into a Subdivision Agreement wherein they parted the
estate of their deceased parents. Subsequently, a Transfer Certificate Titles
were issued to Noemi and Zenaida.
After nine years, Gil Justalero and the heirs of his deceased brother, Jesus
Justalero (Jesus) filed a complaint against Zenaida and Noemi for quieting
of title and reconveyance with damages before the Regional Trial Court
(RTC) of Iloilo contending that the lots subject of the petition were falsely
claimed by Zenaida and Noemi. Gil added that Jesus in fact filed an
application for Free Patent over the subject lot. For their part, Zenaida and
Noemi aver that the lots were covered by an Original Certificate of Title
(OCT), which were owned by their deceased parent. The RTC ruled in favor
of Zenaida and Noemi. Gil and the heirs appealed to Court of Appeals which
affirmed the RTC decision.
ISSUE:
Whether or not the subject lot which is claimed by Gil and the heirs is
embraced in the transfer certificate titles of Noemi and Zenaida
HELD:

82

The basis of the issuance of Noemis title is the Consolidation and

Subdivision Plan, Pcs-06-000063 which bears a note on the lower portion
thereof reading [t]his survey is covered by Original Certificate of Title
No. 30898, 32644 and 32645 all in the name of Vicente San Agustin and
Rosario Sabella. The same plan was certified as correct by Bernan Certeza,
Geodetic Engineer, and recommended for approval by Teodoro Simpas,
Chief, Surveys Division. The Director of Lands through Regional Director
Manuel Lagunilla also approved the same. Furthermore, the Court of First
Instance of Iloilo also approved the said Subdivision Plan by Order of May
22, 1979 in In re: Petition for Approval of Consolidation and Subdivision
Plan in accordance with Section 44 of Act 496 and Act 440. Betty S.
Villanueva, Petitioner.
Moreover, almost two years before the filing of Justalero and the
heirscomplaint, the Bureau of Lands, Iloilo City rendered a Decision in the
above-stated Free Patent application filed by Jesus J. Justalero, declaring
that the subject lot, Cadastral Lot No. 2596, is identical to Lot 8, Pcs-06000063 which is now titled in the name of Noemi.
There is no showing that Gil Justalerospredecessor-in-interest, Jesus
Justalero as Free Patent applicant availed himself of any legal remedy to
assail the said decision which was adverse to him. Hence, his successors-ininterest-herein - Justalero and the heirs are bound by the decision.

83

EMANCIPATION PATENT
Emancipation Patents - a title issued to farmer-beneficiaries upon fulfillment
of all government requirements covered by Presidential Decree No 27. The
title symbolizes the tiller's full emancipation from the bondage of tenancy.
A Certificate of Land Transfer shall be issued in duplicate by the
Department of Agrarian Reform for every land brought under Operation
Land Transfer. The original shall be kept by the beneficiary, and the
duplicate in the Registry of Deeds. After the ARBs shall have fully
complied with the requirements for a grant of title under P.D. 27, an
Emancipation Patent (EP) shall be issued by DAR.
(Illustrative Case)
Alejandro Moraga vs Sps. Julian and Felicidad Somo Et Al
G.R. No. 166781 September 5, 2006
FACTS:
The property in dispute is a parcel of agricultural land consisting of 1.7467
hectares which is located in Pandayan, Meycauayan, Bulacan, and covered
under Transfer Certificate of Title (TCT) No. T-5926 in the name of
Victoriano Ipapo who died on 6 June 1976. This property was tenanted by
Alejandro Moraga, the deceased father of petitioner Enrique Moraga.
On 7 March 1973, Victoriano Ipapo sold the landholding to his daughters
Felicidad, Carmelita, and Herminigilda, and their respective spouses, Julian
Somo, Reynaldo Fernandez and Gil San Diego (respondents) for P10,000.00
per Bilihan Tuluyan of even date.
Inasmuch as an affidavit of consent of the tenant is required by the agrarian
laws in the transfer of title, Alejandro Moraga on 19 November 1979

84

executed a Sinumpaang Salaysay admitting that he had knowledge and

consent of the sale. Thus, on 19 November 1979, a new certificate of title
over the disputed land, TCT No. T-29031 (M), was issued in favor of the
respondents.
Unknown to respondents, on 22 July 1981, a Certificate of Land Transfer
(CLT) No. 0-042737 was issued in favor of Alejandro Moraga for the same
parcel of agricultural land. On the basis of such CLT, Alejandro Moraga, on
3 November 1993, filed an application for the issuance of Emancipation
Patent (EP) over the land in question before the Provincial Assessor of
Bulacan. Apparently, respondents belatedly filed a written protest of the
application since on 16 September 1993, EP No. 496453 was granted to
Alejandro Moraga, and pursuant to which TCT No. EP-108(M) was likewise
issued in his favor.
On 11 October 1993, respondents filed with the DARAB a complaint for
Cancellation of the Certificate of Land Transfer and the Emancipation
Patent and for Ejectment against Enrique and Mercedes Moraga (Moragas),
the surviving heirs of the late Alejandro Moraga who died on 25 August
1993. Mercedes Moraga is the surviving spouse of the deceased Alejandro
Moraga. The case was docketed as DARAB Case No. 567-Bul 93.
ISSUE:
Whether or not the CLT was issued in violation of respondents retention
rights and that the tenants, the Moragas violated their obligations as tenants
HELD:
YES. Emancipation patent was issued not in accordance with Presidential
Decree No. 27 and the Moragas violated their obligations as tenants of the
subject landholding.

85

While the CA-G.R. SP No. 38445 was still pending before the Court of
Appeals, petitioner and Mercedes Moraga, on 6 April 1995, filed before the
Provincial Adjudicator of Malolos, Bulacan, a complaint for Redemption
against respondents which was docketed as DARAB Case No. 927-Bul 95.
The complaint alleged that upon Alejandro Moragas death, the Moragas
succeeded Alejandro Moraga as tenants over the parcel of land that is the
subject of the controversy. It was likewise averred that the sale entered into
between Victoriano Ipapo and respondents on 7 March 1973, involving the
said property, was made without the written notice given to Alejandro
Moraga and the DAR, in violation of Section 2 of Republic Act No. 3844, as
amended by Republic Act No. 6389. Within the purview of the said
provisions of law, the Moragas were exercising their right of redemption
over the said landholding.
On the other hand, the Sixth Division of the Court of Appeals, in resolving
the sole issue in CA-G.R. SP No. 70051 on whether or not the DARAB is
correct in ordering that the heirs of Alejandro Moraga remain as tenants in
the subject landholding, ruled for the respondents. It ratiocinated that the
DARAB committed palpable error in decreeing that Alejandro Moragas heir
shall remain as tenants entitled to security of tenure considering that the
said ruling alters the already final and executory decision of the Court of
Appeals in CA-G.R. SP No. 38445, enunciating that the Moragas are not
entitled to security of tenure for violating their obligations as tenants.
As gleaned from the issues presented by petitioner, it is quite evident that
petitioner would want this Court to revisit the final and executory decisions
of the Court of Appeals in CA-G.R. SP No. 38445, where petitioners claim
of security of tenure was settled, and in CA-G.R. SP No. 63895 which
resolved petitioners complaint for redemption. However, this cannot be
done by this Court without violating the doctrine of res judicata.

86

INDEFEASIBILITY AND IMPRESCRIPTIBILITY OF TITLE

In order to establish a system of registration by which recorded title becomes
absolute, indefeasible, and imprescriptible, the legislature passed Act No.
496, which took effect on February 1, 1903. Act No. 496 placed all
registered lands in the Philippines under the Torrens system. The Torrens
system requires the government to issue a certificate of title stating that the
person named in the title is the owner of the property described therein,
subject to liens and encumbrances annotated on the title or reserved by law.
The certificate of title is indefeasible and imprescriptible and all claims to
the parcel of land are quieted upon issuance of the certificate. Presidential
Decree No. 1529, known as the Property Registration Decree, enacted on
June 11, 1978, amended and updated Act No. 496.
(Please Illustrative Case)
Yinlu Bicol Mining Corporation vs. Trans-Asia Oil And
Energy Development Corporation G.R. No. 207942, January 12, 2015
Facts:
This case involves 13 mining claims over the area located in Barrio Larap,
Municipality of Jose Panganiban, Camarines Norte, a portion of which was
owned and mined by Philippine Iron Mines, Inc. (PIMI), which ceased
operations in 1975 due to financial losses. PIMIs portion (known as the
PIMI Larap Mines) was sold in a foreclosure sale to the Manila Banking
Corporation (MBC) and Philippine Commercial and Industrial Bank (PCIB,
later Banco De Oro, or BDO).1
In 1976, the Gold Mining Development Project Team, Mining Technology
Division, The Mining Group of the Bureau of Mines prepared a so-called
Technical Feasibility Study on the Possible Re-Opening of the CPMI Project

87

of PIM (Mining Aspect) and the Exploration Program (Uranium Project) at

Larap, Jose Panganiban, Camarines Norte, which discussed in detail,
among others, an evaluation of the ore reserve and a plan of operation to
restore the mine to normal commercial mining production and budgetary
estimate should the Bureau of Mines take over and run the PIMI Larap
Mines. The Government then opened the area for exploration. In November
1978, the Benguet Corporation-Getty Oil Consortium began exploration for
uranium under an Exploration Permit of the area, but withdrew in 1982
after four years of sustained and earnest exploration.2
Trans-Asia Oil and Energy Development Corporation (Trans-Asia) then
explored the area from 1986 onwards. In 1996, it entered into an operating
agreement with Philex Mining Corporation over the area, their agreement
being duly registered by the Mining Recorder Section of Regional Office No.
V of the Department of Environment and Natural Resources (DENR). In
1997, Trans-Asia filed an application for the approval of Mineral
Production Sharing Agreement (MPSA)3 over the area in that Regional
Office of the DENR, through the Mines and Geosciences Bureau (MGB), in
Daraga, Albay. The application, which was amended in 1999, was granted
on July 28, 2007 under MPSA No. 252-2007-V, by which Trans-Asia was
given the exclusive right to explore, develop and utilize the mineral deposits
in the portion of the mineral lands.4
On August 31, 2007, Yinlu Bicol Mining Corporation (Yinlu) informed the
DENR by letter that it had acquired the mining patents of PIMI from
MBC/BDO by way of a deed of absolute sale, stating that the areas covered
by its mining patents were within the areas of Trans-Asias MPSA. Based on
the documents submitted by Yinlu, four of the six transfer certificates of title
(TCTs) it held covered four mining claims under Patent Nos. 15, 16, 17 and
18 respectively named as Busser, Superior, Bussamerand Rescue Placer
Claims, with an aggregate area of 192 hectares. The areas covered occupied
more than half of the MPSA area of Trans-Asia.5

88

On September 14, 2007, Trans-Asia informed Yinlu by letter that it would

commence exploration works in Yinlus areas pursuant to the MPSA, and
requested Yinlu to allow its personnel to access the areas for the works to be
undertaken. On September 23, 2007, Yinlu replied that Trans-Asia could
proceed with its exploration works on its own private property in the
Calambayungan area, not in the areas covered by its (Yinlu) mining
patents.6 This response of Yinlu compelled Trans-Asia to seek the
assistance of the MGB Regional Office V in resolving the issues between the
parties. It was at that point that Trans-Asia learned that the registration of
its MPSA had been put on hold because of Yinlus request to register the
deed of absolute sale in its favor.7
The matter was ultimately referred to the DENR Secretary, who directed the
MGB Regional Office V to verify the validity of the mining patents of Yinlu.
On November 29, 2007, the MGB Regional Office V informed the Office of
the DENR Secretary that there was no record on file showing the existence
of the mining patents of Yinlu. Accordingly, the parties were required to
submit their respective position papers.8
The issues presented for consideration and resolution by the DENR
Secretary were: (1) whether the mining patents held by Yinlu were issued
prior to the grant of the MPSA; and (2) whether the mining patents were still
valid and subsisting.9
On May 21, 2009, DENR Secretary Jose L. Atienza, Jr. issued his order
resolving the issues in Yinlus favor,10 finding that the mining patents had
been issued to PIMI in 1930 as evidenced by and indicated in PIMIs
certificates of title submitted by Yinlu; and that the patents were validly
transferred to and were now owned by Yinlu.11 He rejected Trans-Asias
argument that Yinlus patents had no effect and were deemed abandoned
because Yinlu had failed to register them pursuant to Section 101 of

89

Presidential Decree No. 463, as amended. He declared that the DENR did
not issue any specific order cancelling such patents. He refuted Trans-Asias
contention that there was a continuing requirement under the Philippine Bill
of 1902 for the mining patent holder to undertake improvements in order to
have the patents subsist, and that Yinlu failed to perform its obligation to
register and to undertake the improvement, observing that the requirement
was not an absolute imposition. He noted that the suspension of PIMIs
operation in 1974 due to financial losses and the foreclosure of its
mortgaged properties by the creditor banks (MBC/PCIB) constituted force
majeure that justified PIMIs failure in 1974 to comply with the registration
requirement under P.D. No. 463; that the Philippine Bill of 1902, which was
the basis for issuing the patents, allowed the private ownership of minerals,
rendering the minerals covered by the patents to be segregated from the
public domain and be considered private property; and that the Regalian
doctrine, under which the State owned all natural resources, was adopted
only by the 1935, 1973 and 1987 Constitutions.12
Consequently, DENR Secretary Atienza, Jr. ordered the amendment of
Trans-Asias MPSA by excluding therefrom the mineral lands covered by
Yinlus mining patents, to wit:

WHEREFORE, premises considered, the Mineral Production Sharing

Agreement No. 252-2007-V is hereby ordered amended, to excise therefrom
the areas covered by the mining patents of Yinlu Bicol Mining Corporation
as described and defined in the Transfer Certificates of Title concerned:
Provided, That the consequent conduct of mining operations in the said
mining patents shall be undertaken in accordance with all the pertinent
requirements of Republic Act No. 7942, the Philippine Mining Act of 1995,
and its implementing rules and regulations.

90

Issue:
The issues presented for consideration and resolution by the DENR
Secretary were: (1) whether the mining patents held by Yinlu were issued
prior to the grant of the MPSA; and (2) whether the mining patents were still
valid and subsisting.
Held:
In Republic v. Court of Appeals,59 we stated that mining rights acquired
under the Philippine Bill of 1902 and prior to the effectivity of the 1935
Constitution were vested rights that could not be impaired even by the
Government. Indeed, the mining patents of Yinlu were issued pursuant to the
Philippine Bill of 1902 and were subsisting prior to the effectivity of the
1935 Constitution. Consequently, Yinlu and its predecessors-in-interest had
acquired vested rights in the disputed mineral lands that could not and
should not be impaired even in light of their past failure to comply with the
requirement of registration and annual work obligations.
Illustratively, we advert to the DENRs finding that PIMIs failure to
register the patents in 1974 pursuant to PD No. 463 was excusable because
of its suffering financial losses at that time, which eventually led to the
foreclosure of the mortgages on its assets by the MBC and PCIB as its
creditors.60 The failure of Yinlus predecessors-in-interest to register and
perform annual work obligations did not automatically mean that they had
already abandoned their mining rights, and that such rights had already
lapsed. For one, the DENR itself declared that it had not issued any specific
order cancelling the mining patents.61 Also, the tenets of due process
required that Yinlu and its predecessors-in-interest be given written notice
of their non-compliance with PD No. 463 and the ample opportunity to
comply. If they still failed to comply despite such notice and opportunity,
then written notice must further be given informing them of the cancellation
of their mining patents. In the absence of any showing that the DENR had

91

provided the written notice and opportunity to Yinlu and its predecessors-ininterest to that effect, it would really be inequitable to consider them to have
abandoned their patents, or to consider the patents as having lapsed. Verily,
as held in McDaniel and Gold Creek, supra, a mining patent obtained under
the Philippine Bill of 1902 was a protected private property. The protection
should be basic and guaranteed, for no less than Section 1, Article III of the
1987 Constitution decrees that no person shall be deprived of property
without due process of law.
Nonetheless, we deem it significant to remind that Yinlu has been directed by
the DENR to henceforth conduct its mining operations in accordance with
Republic Act No. 7942 (Philippine Mining Act of 1995) and its implementing
rules and regulations.
WHEREFORE, we REVERSE and SET ASIDE the decision promulgated on
October 30, 2012 by the Court of Appeals; REINSTATE the decision issued
on May 4, 2010 and resolutions dated June 29, 2010 and March 31, 2011 by
the Office of the President in O.P. Case No. 09-L-638; and DIRECT the
respondents to pay the costs of suit

92

BAR QUESTION
The spouses Zulueta obtained from GSIS various loans secured by real
estate mortgages over parcels of land. The spouses Zulueta failed to pay
their loans which prompted GSIS to foreclose the real estate mortgages.
During the auction sale, some of the mortgaged properties were awarded to
GSIS. However, some lots which were covered by the mortgaged titles were
expressly excluded from the auction since those that were sold were
sufficient to pay for all the mortgage debts. This notwithstanding, GSIS
included the excluded lots when it executed on November 25, 1975 an
Affidavit of Consolidation of Ownership on the basis of which, certificates
of title over the same were issued in the name of GSIS. Zulueta thereafter
transferred his rights over the excluded lots to Eduardo in 1989 who
consequently demanded from GSIS the return of the said excluded lots.
Eduardo then filed on May 7, 1990 a complaint for reconveyance of real
estate against the GSIS.
a) Can GSIS legally claim ownership over the excluded properties on the
basis of the certificates of title over the same which were issued in its name?
b) Has the action for reconveyance prescribed?
ANSWERS:
a) NO. Even if titles over the lots had been issued in the name of the GSIS,
still it could not legally claim ownership and absolute dominion over them
because indefeasibility of title under the Torrens system does not attach to
titles secured by fraud or misrepresentation. The fraud committed by GSIS
in the form of concealment of the existence of said lots and failure to return
the same to the real owners after their exclusion from the foreclosure sale
made GSIS holders in bad faith. It is well settled that a holder in bad faith of

93

a certificate of title is not entitled to the protection of the law for the law
cannot be used as a shield for fraud.
b) NO. Article 1456 of the Civil Code provides: If the 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. An action for reconveyance based on implied or
constructive trust prescribes in ten years from the alleged fraudulent
registration or date of issuance of the certificate of title over the property.
The general rule that the discovery of fraud is deemed to have taken place
upon the registration of real property because it is considered a constructive
notice to all persons does not apply in this case. The case in point is
Samonte vs Court of Appeals where the Supreme Court reckoned the
prescriptive period for the filing of the action based on implied trust from the
actual discovery of the fraud. Santiago came know of GSIS fraudulent acts
only in 1989 and the complaint was filed in 1990. Following the Courts
pronouncement in Samonte, the institution of the action for reconveyance
was thus well within the prescriptive period. (GSIS vs Santiago, GR No.
155206, October 28, 2003)

94

THE INDIGENOUS PEOPLES RIGHT ACT

Throughout Philippine history, the political attitude towards indigenous
peoples and their rights have undergone many changes. During the colonial
period, from 1521, indigenous peoples who were not assimilated into
Christianity were then called and identified as the non-Christian or savage
tribes, and thus are the less enlightened minorities of our population.
Since the declaration of Philippine independence in 1898, it was only in the
1973 Constitution where indigenous peoples found their place in the
countrys national framework. The provision in the Philippine Constitution
was intended to authorize special treatment of those Filipinos comprising the
cultural minorities in the country. The clear intent, in the context of the
Constitution viewed in its entirety, is to create an exception to uniformity of
treatment under law mandated under the standard of equal protection of the
laws. The policy of the Government was to integrate into the mainstream
of Philippine society certain ethnic groups who seek full integration into the
larger community, and at the same time protect the rights of those who wish
to preserve their original life ways beside that larger community.
The ratification of the 1987 Constitution saw the change in government
policy from one of integration to recognition of indigenous peoples
rights. As a matter of policy, the State recognizes and promotes the rights of
indigenous cultural communities within the framework of national unity and
development. To this end, the State shall protect the rights of indigenous
cultural communities to their ancestral lands to ensure their economic, social
and cultural well-being. The recognition of IP rights are, however, subject to
national development policies and programs.
One policy that the Philippines had not changed since its 1935 Constitution
is the so-called Regalian Doctrine. Under this doctrine, all lands of the
public domains, and natural resources are owned by the State. With the
exception of agricultural lands, all other natural resources shall not be
alienated. The exploration, development, and utilization of natural resources

95

shall be under the full control and supervision of the State. This legal
doctrine recalls the time when all titles were valid only when it could be
shown that it originated from a grant or sale from the Crown, or its
conceptual heir, the State. Thus, even in those rare cases where indigenous
peoples communities have managed to secure documents of title to their
lands, they do not, by virtue of that title acquire ownership or control of the
natural resources found within the titled land. This problem is further
complicated by the fact that the governments awards of resource rights
through licenses, leases or permits, or current production sharing, jointventure or co-production agreements are given to persons, natural or
juridical, who are not residents of the area, thereby setting the stage for
social conflict at the community level. The declaration of ownership of the
State of all lands of the public domain and all natural resources, from the
1935 to the 1987 Constitution could not mean absolute ownership simply by
operation of law, as this would place such State in direct contradiction to the
guarantee of due process as against actual owners, as interpreted in Cario.
Thus, despite ancestral domains being now understood as including natural
resources, the application of the laws and the interpretation of the 1987
Constitution have limited the indigenous peoples ownership of these natural
resources to mere preferential rights to exploit, develop and use.

Cruz vs. Sec. of Environment

G.R. No. 135385December 6, 2000

FACTS:
Cruz, a noted constitutionalist, assailed the validity of the RA 8371 or the
Indigenous Peoples Rights Act on the ground that the law amount to an
unlawful deprivation of the States ownership over lands of the public
domain as well as minerals and other natural resources therein, in violation

96

of the regalian doctrine embodied in Section 2, Article XII of the

Constitution. The IPRA law basically enumerates the rights of the
indigenous peoples over ancestral domains which may include natural
resources. Cruz et al content that, by providing for an all-encompassing
definition of ancestral domains and ancestral lands which might even
include private lands found within said areas, Sections 3(a) and 3(b) of said
law violate the rights of private landowners.
ISSUE:
Whether or not the IPRA law is unconstitutional.
RULING:
The Supreme Court deliberated upon the matter. After deliberation
they voted and reached a 7-7 vote. They deliberated again and the same
result transpired. Since there was no majority vote, Cruzs petition was
dismissed and the IPRA law was sustained. Hence, ancestral domains may
include natural resources.
BAR NOTES
RA 8371 known as Indigenous Peoples Rights Act (IPRA) that grants to
indigenous cultural communities the ownership of ancestral lands and
domains held by them under native title are undisputably presumed private
lands because they have been held that way since before the Spanish
conquest or as far as memory reaches. The State by recognizing the right of
tribal Filipinos to their ancestral lands and domains has effectively upheld
their right to live in a culture distinctly their own as enunciated in Article III
of the Constitution, hence, the IPRA Law is in consonance with and not
violative of the Constitution. (Cruz vs. Sec. of DENR, et al., 347 SCRA 128)

97

RECONSTITUTION OF TORRENS TITLE

PD 1529, Section 110. Reconstitution of lost or destroyed original of Torrens
title. Original copies of certificates of title lost or destroyed in the offices of
Register of Deeds as well as liens and encumbrances affecting the lands
covered by such titles shall be reconstituted judicially in accordance with the
procedure prescribed in Republic Act No. 26 insofar as not inconsistent with
this Decree. The procedure relative to administrative reconstitution of lost or
destroyed certificate prescribed in said Act is hereby abrogated.
Notice of all hearings of the petition for judicial reconstitution shall be given
to the Register of Deeds of the place where the land is situated and to the
Commissioner of Land Registration. No order or judgment ordering the
reconstitution of a certificate of title shall become final until the lapse of thirty
days from receipt by the Register of Deeds and by the Commissioner of Land
Registration of a notice of such order or judgment without any appeal having
been filed by any of such officials.

98

MASS RECONSTITUIN OF TORRENS TITLE

Reconstitution of Lost or Destroyed Original of Torrens Title - Original

copies of certificates of titles lost or destroyed in the offices of Register of
Deeds as well as liens and encumbrances affecting the lands covered by such
titles shall be reconstituted judicially in accordance with the procedure
prescribed in Republic Act No. 26 insofar as not inconsistent with this
Decree. The procedure relative to administrative reconstitution of lost or
destroyed certificate prescribed in said Act may be availed of only in case of
substantial loss or destruction of land titles due to fire, flood or other force
majeure as determined by the Administrator of the Land Registration
Authority: Provided, That the number of certificates of titles lost or damaged
should be at least ten percent (10%) of the total number in the possession of
the Office of the Register of Deeds: Provided, further, That in no case shall
the number of certificates of titles lost or damaged be less than five hundred
(500).
"Notice of all hearings of the petition for judicial reconstitution shall be
furnished the Register of Deeds of the place where the land is situated and to
the Administrator of the Land Registration Authority. No order or judgment
ordering the reconstitution of a certificate of title shall become final until the
lapse of fifteen (15) days from receipt by the Register of Deeds and by the
Administrator of the Land Registration Authority of a notice of such order or
judgment without any appeal having been filed by any such officials."
(Please Illustrative Case)

99

Ungay Malobago Mines, Inc. vs. Republic Of The Philippines

G.R. No. 187892, January 14, 2015
Facts:
On April 16, 2004, petitioner Ungay Malobago Mines, Inc. filed with the
Regional Trial Court (RTC) of Legaspi City, a verified petition seeking the
reconstitution of Original Certificate of Title (OCT) No. 4784 of the
Cadastral Survey of Albay, pursuant to the provisions of Republic Act (RA)
26 and Presidential Decree (PD) No. 1529. The case was docketed as LRA
Case No. RT-2720 and raffled off to Branch 4. In its petition, petitioner
alleged: that it is the registered owner of a mining patent covered by OCT
No. 4784 which was issued by then President Diosdado Macapagal on July
20, 1962 and entered in the Registry of Deeds of the Province of Albay on
September 4, 1962; that sometime in April 2004, it requested for a certified
true copy of OCT No. VH-4784 from the Register of Deeds of Albay, but
despite a diligent search, the said copy could not be located by the said
office leading one to believe that the same was permanently lost or
destroyed; that the property was free from all liens and encumbrances of
any kind whatsoever and there existed no deeds or instruments affecting the
same which had been presented for or pending registration with the Register
of Deeds of Albay; and that the owner's duplicate of OCT No. VH-4784
which would serve as a basis for the reconstitution was attached thereto.
During the initial hearing, petitioner, through counsel, showed compliance
with the jurisdictional requirements. Trial thereafter ensued. The Republic
opposed the petition.
On July 17, 2006, the RTC rendered its decision dismissing the petition.
The RTC found that there was no factual and legal basis to warrant the
reconstitution of petitioner's alleged lost certificate of title. It found that

100

while petitioner submitted a purported owner's duplicate of OCT No. VH4784, the same was not signed by then Register of Deeds, Ramon Balana,
both on the face and the dorsal side thereof; that the owner's duplicate
certificate being an original duplicate, should contain the original signature
of the Register of Deeds just like the original certificate which should have
been on file with the Register of Deeds; that even if the said duplicate had
the documentary seal of the office, it was considered a scrap of paper
without any probative value since the Register of Deeds as an ex-officio
mining recorder has no signature authenticating said duplicate; and to rule
otherwise would make the signature of the Register of Deeds a useless
dispensable ceremony in a Torrens title which would open the floodgates to
fraud which would destroy the registration system. The RTC further ruled
that since petitioner is not the owner of the surface land which had already
been titled to Rapu Rapu Minerals, Inc. and petitioner is claiming only the
minerals underneath, it is not entitled to the certificate of title over its
mining patent.
Petitioner filed its appeal with the CA. After the parties had filed their
respective pleadings, the case was then submitted for decision.
On January 21, 2009, the CA issued its assailed decision, the dispositive
portion of which reads: WHEREFORE, in view of the foregoing, the 17 July
2006 decision of the Regional Trial Court of Legaspi City (Branch 4) in LRA
Case No. RT-2720 dismissing the petition of Ungay Malobago Mines, Inc.
for the reconstitution of OCT No. VH-4784 is AFFIRMED.
In so ruling, the CA found that since petitioner is not the registered owner of
the land covered by OCT No. VH-4784 and citing our earlier ruling in
Ungay Malobago Mines, Inc v. Intermediate Appellate Court (IAC) where
we declared that as a grantee of a mining patent, petitioner did not become
the owner of the land where the minerals are located, hence, it has no
personality to file for the reconstitution of lost or destroyed certificate of

101

title. The CA ruled that petitioner's mining patent did not qualify as an
interest in property as contemplated by RA No. 26 so as to give petitioner
the authority under the law to initiate a petition for the reconstitution of said
OCT. The CA affirmed the RTC's findings that the owner's duplicate of OCT
No. VH-4784 presented by petitioner was insufficient to serve as a basis for
the reconstitution of the original of said OCT because of the absence of the
signature of the Register of Deeds.
Petitioner filed a motion for reconsideration, which the CA denied in its
Resolution dated May 7, 2009.
Issues:
Whether or not the petitioner possesses legal personality to institute petition
for judicial reconstitution
Held:
In Ungay Malobago Mines, Inc. v. IAC, herein petitioner filed a complaint
for annulment and cancellation of free patents against private respondents
therein. Petitioner was claiming ownership over the surface land subject
matter of its mining patents which also included Lode Patent No. V-46
covered by OCT No. VH-4784, the title sought to be reconstituted in this
case. Petitioner did so as the Director of Lands had issued free patents on
portions of the lots covered by petitioner's mining patent. We ruled in favor
of private respondents. We found that the issuance of the lode patents on
mineral claims by the President of the Philippines in 1962 in favor of the
petitioner granted to it only the right to extract or utilize the minerals which
may be found on or under the surface of the land. On the other hand, the
issuance of the free patents by the respondent Director of Lands in 1979 in
favor of the private respondents granted to them the ownership and the right
to use the land for agricultural purposes but excluding the ownership of, and

102

the right to extract or utilize, the minerals which may be found on or under
the surface.
The above-cited case, as well as petitioner's admission in this case,
established that the surface land covered by its mining patent under OCT
No. VH-4784, which title is sought to be reconstituted, is not owned by
petitioner. Thus, not having an interest on the land amounting to a title to
the same, petitioner is not possessed of a legal personality to institute a
petition for judicial reconstitution of the alleged lost OCT No. VH-4785.

103

WHO MAY APPLY FOR REGISTRATION UNDER PD 1529

1. Those who, by themselves or through their predecessors-in-interest, have
been in open, continuous, exclusive and notorious possession and occupation
of alienable and disposable lands of the public domain under a bona fide
claim of ownership since June 12, 1945, or earlier;
2. Those who have acquired ownership of private lands by prescription
under the provisions of existing laws;
3. Those who have acquired ownership of private lands or abandoned river
beds by right of accession or accretion; and
4. Those who have acquired ownership of land in any other manner provided
for by law.
NOTES:
All these persons must be natural-born Filipino Citizens. However, by
way of exception, juridical persons may apply for registration of leased
agricultural and disposable lands not exceeding 1,000 hectares in area for a
period of 25 years and renewable for not more than 25 years. (Sec. 3,
Chapter XII, 1987 Constitution)
Notwithstanding the prohibition in the 1973 and 1987 Constitutions
against private corporations holding lands of the public domain except by
lease, still a private corporation may institute confirmation proceedings
under Section 48(b) of Public Land Act if, at the time of institution of the
registration proceedings, the land was already private land.
(See related case)

104

Republic Of The Philippines Vs. Emmanuel Cortez

G.R. No. 186639 February 5,2015

Facts:
This is a petition for review on certiorari seeking to annul and set aside the
decision of CA.
February 2003, Cortez filed with RTC an application for judicial
confirmation over a parcel of land in Manila. He submitted tax declarations
from 1966 to 2005, survey plan of the property with the annotation that it is
alienable and disposable and other documents.
Cortez alleged that the tax declarations were under the name of his mother
from which he inherited the land. A testimony was also submitted saying that
the family of Cortez have in fact occupied the land for over 60 years. RTC
granted Cortez the application for registration of the title.
After its finality, RP, represented by Solicitor General appealed to the CA
alleging that RTC erred in granting the application for registration.
Pointing out that there was no evidence the Cortez were in possession of the
subject land in open, adverse and continuous possession of the property for
more than 30 years. CA dismissed the appeal and affirmed the decision of
the RTC.
Issue:
Whether CA erred in affirming the RTC?

105

Held:
Petition is meritorious.
Applicants for original registration of title to land must establish compliance
with the provisions of Section 14 of
P.D. No. 1529, which pertinently provides that: Sec. 14. Who may apply.
The following persons may file in the proper Court of First Instance an
application for registration of title to land, whether personally or through
their duly authorized representatives:
(1) Those who by themselves or through their predecessors-in interest have
been in open, continuous, exclusive and notorious possession and
occupation of alienable and disposable lands of the public domain under a
bona fide claim of ownership since June 12, 1945, or earlier.
(2) Those who have acquired ownership of private lands by prescription
under the provision of existing laws.
xxxx
After a careful scrutiny of the records of this case, the Court finds that
Cortez failed to comply with the legal requirements for the registration of
the subject property under Section 14(1) and (2) of P.D. No. 1529.
The 1st requirement was not satisfied, the survey plan does not constitute
incontrovertible evidence to overcome the presumption that the subject
property remains part of the alienable public domain. To prove that the land
subject of an application for registration is alienable, an applicant must
establish the existence of a positive act of the government such as a
presidential proclamation or an executive order, an administrative action,
investigation reports of Bureau of Lands investigators, and a legislative act

106

or statute. The applicant may also secure a certification from the

Government that the lands applied for are alienable and disposable.
The Court nevertheless emphasized that there must be an official declaration
by the State that the public dominion property is no longer intended for
public use, public service, or for the development of national wealth before
it can be acquired by prescription; that a mere declaration by government
officials that a land of the public domain is already alienable and disposable
would not suffice for purposes of registration under Section 14(2) of P.D.
No. 1529. The Court further stressed that the period of acquisitive
prescription would only begin to run from the time that the State officially
declares that the public dominion property is no longer intended for public
use, public service, or for the development of national wealth.
Note: properties classified as alienable and disposable land may be
converted into private property by reason of open, continuous and exclusive
possession of at least 30 years. Such property now falls within the
contemplation of "private lands" under Section 14(2) of PD 1529, over
which title by prescription can be acquired. Thus, under the second
paragraph of Section 14 of PD 1529, those who are in possession of
alienable and disposable land, and whose possession has been characterized
as open, continuous and exclusive for 30 years or more, may have the right
to register their title to such land despite the fact that their possession of the
land commenced only after 12 June 1945.

107

LIMITATIONS ON LAND OWNERSHIP BY CORPORATIONS

NON- REGISTRABLE PROPERTIES

1. Private Lands
a. At least 60% Filipino (Section 7, Article XII, 1987 Constitution)
b. Restricted as to extent reasonably necessary to enable it to carry out
purpose for which it was created
c. If engaged in agriculture, it is restricted to1,024 hectares.
2. Patrimonial Property of the State (Sec. 3, Article XII, 1987 Constitution)
a. Lease (CANNOT own land of the public domain) for 25 years
renewable
b. Limited to 1,000 hectares
c. Apply to both Filipinos and Foreign corporations
(See related case)

REPUBLIC OF THE PHILIPPINES VS. SOUTHSIDE HOMEOWNERS

ASSOCIATION INC., G.R. No. 156951, September 22, 2006
FACTS:
The subject matter of these proceedings for declaration of nullity of
title are parcels of land with a total area of 39.99 hectares, more or less,
known as the JUSMAG housing area in Fort Bonifacio where, military

108

officers, both in the active and retired services, and their respective families,
have been occupying housing units and facilities originally constructed by
the AFP.
Private respondent SHAI is a non-stock corporation organized mostly
by wives of AFP military officers. Records show that SHAI was able to
secure from the Registry of Deeds of the Province of Rizal a title Transfer
Certificate of Title in its name to the bulk of, if not the entire, JUSMAG area.
The Rizal Registry issued TCT No. 15084 on October 30, 1991on the
basis of a notarized Deed of Sale purportedly executed on the same date by
then Director Abelardo G. Palad, Jr. of the Lands Management Bureau
(LMB) in favor of SHAI.The total purchase price as written in the conveying
deed was P11,997,660.00 or P30.00 per square meter
It appears that in the process of the investigation conducted by the
Department of Justice on reported land scams at the FBMR, a copy of the
aforesaid October 30, 1991deed of sale surfaced and eventually referred to
the National Bureau of Investigation (NBI) for examination. The results of
the examination undertaken by NBI Document Examiner Eliodoro
Constantino reveals that the puported signatures in the document are
forgeries.
On October 16, 1993, then President Fidel V.Ramos issued
Memorandum Order No. 173 directing the Office of the Solicitor General
(OSG) to institute action towards the cancellation of TCT No. 15084 and the
title acquired by the Navy Officers Village Association (NOVA) over a
bigger parcel within the reservation. A month later, the OSG, in behalf of
the petitioner Republic, filed with the RTC of Pasig City the corresponding
nullification and cancellation of title suit against the private respondent
SHAI, purported signature thereon of Palad is a forgery; b) there are no
records with the LMB of (i) the application to purchase and (ii) the alleged
payment of the purchase price; and c) the property in question is

109

inalienable, being part of a military reservation established under

Proclamation No. 423.
On pre-trial the Republic, as plaintiff therein, marked (and later offered in
evidence)the Deed of Sale dated October 30, 1991 as its Exhibit "A,"and
TCT No. 15084 as Exhibit "B."Respondent, then defendant SHAI adopted
Exhibits "A" and B as its Exhibits "1" and 2, respectively.
During the trial, the Republic presented as expert witness NBI
Document Examiner Eliodoro Constantino who testified on NBI QDR No.
815-1093 and asserted that the signature of Palad in Exhibit A is a
forgery. For his part, Palad dismissed as forged his signature appearing in
the same document and denied ever signing the same, let alone in front of a
notary public holding office outside of the LMB premises. Pressing the
point, Palad stated that he could not have had signed the conveying deed
involving as it did a reservation area which, apart from its being outside of
the LMBs jurisdiction, is inalienable in the first place.
For its part, then defendant SHAI presented an opposing expert
witness in the person of Police Inspector Redencion Caimbon who testified
that Palads signature in Exhibit A is genuine. Mrs. Virginia Santos, then
SHAI president, likewise testified, saying that applications to purchase were
signed and then filed with the LMB by one Engr. Eugenia Balis, followed by
the payment in full of the contract price.
Eventually, in a decision dated October 7, 1997, the trial court
rendered judgment dismissing the Republics complaint as it considered the
parcels covered by the deed in question as no longer part of the FBMR.
Therefrom, the Republic went on appeal to the CA which affirmed in toto
that of the trial court.
Hence, this petition of the Republic.

110

ISSUE:
Was the JUSMAG area, during the period material, alienable or
inalienable, as the case may be, and, therefore, can or cannot be subject of a
lawful private conveyance?
RULING:
Petitioner Republic, correctly asserts the inalienable character of the
JUSMAG area, the same having not effectively been separated from the
military reservation and declared as alienable and disposable.
The President, upon the recommendation of the Secretary of
Environment and Natural Resources, may designate by proclamation any
tract or tracts of land of the public domain as reservations for the use of the
Republic or any of its branches, or for quasi-public uses or purposes. Such
tract or tracts of land thus reserved shall be non-alienable and shall not be
subject to sale or other disposition until again declared alienable.
Consistent with the foregoing postulates, jurisprudence teaches that a
military reservation, like the FBMR, or a part thereof is not open to private
appropriation or disposition and, therefore, not registrable, unless it is in
the meantime reclassified and declared as disposable and alienable public
land. And until a given parcel of land is released from its classification as
part of the military reservation zone and reclassified by law or by
presidential proclamation as disposable and alienable, its status as part of a
military reservation remains,even if incidentally it is devoted for a purpose
other than as a military camp or for defense. The same is true in this case.
There is no doubt that the JUSMAG area subject of the questioned
October 30, 1991sale formed part of the FBMR as originally established
under Proclamation No. 423. And while private respondent SHAI would
categorically say that the petitioner Republic had not presented evidence
that subject land is within military reservation,and even dared to state

111

that the JUSMAG area is the private property of the government and
therefore removed from the concept of public domain per se its own
evidence themselves belie its posture as their evidence both the TCT and the
Deed of Sale technically described the property as situated in Jusmag area
located at Fort Bonifacio which is now renamed Fort Mckinley a declared a
military reservation.
The Republic has, since the filing of its underlying complaint, invoked
Proclamation No. 423. In the process, it has invariably invited attention to
the proclamations specific area coverage to prove the nullity of TCT No.
15084, inasmuch as the title embraced a reserved area considered
inalienable, and hence, beyond the commerce of man.
The October 30, 1991 Deed of Sale purportedly executed by Palad,
assuming its authenticity, could not plausibly be the requisite classifying
medium converting the JUSMAG area into a disposable parcel. And private
respondent SHAIs unyielding stance that would have the Republic in
estoppel to question the transfer to it by the LMB Director of the JUSMAG
area is unavailing. It should have realized that the Republic is not usually
estopped by the mistake or error on the part of its officials or agents.
Since the parcels of land in question allegedly sold to the private
respondent are, or at least at the time of the supposed transaction were, still
part of the FBMR, the purported sale is necessarily void ab initio.
Moreover, Article XII, Section 3[of the 1987 Constitution forbids
private corporations from acquiring any kind of alienable land of the public
domain, except through lease for a limited period.
The interplay of compelling circumstances and inferences deducible
from the case, also cast doubt on the authenticity of such deed, if not support
a conclusion that the deed is spurious.

112

1. Palad categorically declared that his said signature on the deed is a

forgery. The NBI signature expert corroborated Palads allegation on
forgery.Respondent SHAIs expert witness from the PNP, however, disputes
the NBIs findings. In net effect, both experts from the NBI and the PNP
cancel each other out.
2.Palad signed the supposed deed of sale in Manila, possibly at the LMB
office at Plaza Cervantes, Binondo. Even if he acted in an official capacity,
Palad nonetheless proceeded on the same day to Pasig City to appear before
the notarizing officer. The deed was then brought to the Rizal Registry and
there stamped Received by the entry clerk. That same afternoon, or at
3:14 p.m. of October 30, 1991to be precise, TCT No. 15084 was issued. In
other words, the whole conveyance and registration process was done in
less than a day. The very unusual dispatch is quite surprising. Stranger still
is why a bureau head, while in the exercise of his functions as the bureaus
authorized contracting officer, has to repair to another city just to have a
deed notarized.
3. There is absolutely no record of the requisite public land application to
purchase required under Section 89 of the Public Land Act. There is also no
record of the deed of sale and of documents usually accompanying an
application to purchase, inclusive of the investigation report and the
property valuation. The Certification under the seal of the LMB bearing date
November 24, 1994 and issued/signed by Alberto Recalde, OIC, Records
Management Division of the LMB pursuant to a subpoena issued by the trial
court attest to this fact of absence of records. Atty. Alice B. Dayrit, then
Chief, Land Utilization and Disposition Division, LMB, testified having
personally looked at the bureau record book, but found no entry pertaining
to SHAI.

113

4. In its Answer as defendant a quo, respondent SHAI states that the deed
of sale specifically meritorious Official Receipt No. 6030203 as evidence of
full payment of the agreed purchase price An official receipt (O.R.) is
doubtless the best evidence to prove payment. While it kept referring to O.R.
No. 6030203 as its evidence of the required payment, it failed to present and
offer the receipt in evidence. We can thus validly presume that no such OR
exists or, if it does, that its presentation would be adverse to SHAI.
A contract of sale is void where the price, which appears in the document
as paid has, in fact, never been paid.
5. The purchase price was, according to the witnesses for SHAI, paid in full
in cash to the cashier of the LMB the corresponding amount apparently
coming in a mix of P500 and P100 denominations. Albeit plausible, SHAIs
witnesses account taxes credulity to the limit.
TCT No. 15084 of the Registry of Deeds of Rizal issued on the basis of
such Deed are declared void and cancelled.

114

CHARACTERISTICS OF TORRENS SYSTEM

Best Evidence of ownership

Notice to the whole world
Torrens title binds the whole world
The issuance of certificate of title is a constructive notice thereof to all
persons
Registration of a deed of sale in the Registry of Deeds constitute
constructive notice thereof to the whole world
No one can plead ignorance of the registration
A Torrens title bars all prior claims not registered
A Torrens certificate of title serves as evidence of an indefeasible title
to the property in favor of the person whose names appear therein
Torrens title is imprescriptible
(Illustrative Case)

115

BEST EVIDENCE OF OWNERSHIP

Lee Tek Sheng vs CA,
292 SCRA 544, July 15, 1998
FACTS:
After his mother's death Leoncio Lee Tek Sheng filed a complaint
against his father, Lee Tek Sheng to partition the conjugal properties of his
parents. Lee in his answer with counterclaim alleged that the four parcels of
land registered solely in petitioner's name under Transfer Certificate of Title
(TCT) 8278 are conjugal properties. It was registered in Leoncios name
only as a trustee since he was then the only Filipino citizen in the family.
Accordingly, Lee prayed for the dismissal of the partition case and for the
reconveyance of the lots to its rightful owner the conjugal regime.
To protect the interest of the conjugal regime during the pendency of
the case, Lee caused the annotation of a notice of lis pendens on TCT 8278.
Leoncio moved for the cancellation of said annotation which was denied by
the trial court ruling that (a) the notice was not for the purpose of molesting
or harassing petitioner and (b) also to keep the property within the power of
the court pending litigation. Leoncio appealed to CA, but to no avail.
Leoncio resort to the SC contending primarily that in the resolution of
an incidental motion for cancellation of the notice of lis pendens (a) it was
improper to thresh out the issue of ownership of the disputed lots since
ownership cannot be passed upon in a partition case, otherwise, (b) it would
amount to a collateral attack of his title obtained more than 28 years ago.
He argues that his sole ownership as shown in the TCT would be improperly
assailed in a partition case and should be done through a separate suit. On
the contrary, private respondent posits that evidence of ownership is
admissible in a partition case as this is not a probate or land registration
proceedings where the court's jurisdiction is limited.

116

ISSUE:
1.
Whether or not the notice of lis pendens on TCT 8278 would
amount to a collateral attack to the Certificate of Title.
2.
Whether the denial of motion to cancel the notice of lis pendens
is valid.
HELD:
1.
No. The court held petitioner's claim is not legally tenable.
There is no dispute that a Torrens certificate of title cannot be collaterally
attacked, but that rule is not material to this case. The annotation of a notice
of lis pendens does not in any case amount nor can it be considered as
equivalent to a collateral attack of the certificate of title for a parcel of land.
The concept of no collateral attack of title is based on Section 48 of P.D.
1529 which states that:
Certificate not Subject to Collateral attack. A certificate of title
shall not be subject to collateral attack. It cannot be altered, modified, or
cancelled except in a direct proceeding in accordance with law.
What cannot be collaterally attacked is the certificate of title and not
the title. The certificate referred to is that document issued by the Register of
Deeds known as the Transfer Certificate of Title (TCT). By title, the law
refers to ownership which is represented by that document. Ownership is
different from a certificate of title. The TCT is only the best proof of
ownership of a piece of land and cannot always be considered as conclusive
evidence of ownership. Mere issuance of the certificate of title in the name of
any person does not foreclose the possibility that the real property may be
under co-ownership with persons not named in the certificate or that the
registrant may only be a trustee or that other parties may have acquired
interest subsequent to the issuance of the certificate of title. To repeat,
registration is not the equivalent of title, but is only the best evidence
thereof. In this case petitioner's certificate of title is not being assailed by
private respondent. What the latter disputes is the former's claim of sole
ownership. Thus, although petitioner's certificate of title may have become

117

incontrovertible one year after issuance, yet contrary to his argument, it

does not bar private respondent from questioning his ownership.
2.
Yes. The court held that a notice of lis pendens may be
cancelled only on two grounds, which are: (1) if the annotation was for the
purpose of molesting the title of the adverse party, or, (2) when the
annotation is not necessary to protect the title of the party who caused it to
be recorded. Neither ground for cancellation of the notice was convincingly
shown to concur in this case. The annotation of a notice of lis pendens is
only for the purpose of announcing "to the whole world that a particular
real property is in litigation, serving as a warning that one who acquires an
interest over said property does so at his own risk, or that he gambles on the
result of the litigation over said property." The parties are still locked in a
legal battle to settle their respective claims of ownership. The lower court
allowed the annotation pending litigation only for the purpose of giving
information to the public that parcel of land is involved in a suit and that
those who deal with the property is forewarned of such fact.

118

TORRENS TITLE BINDS THE WHOLE WORLD

Egao v CA, 174 SCRA 484

G.R. No. 79787, 29 June 1989

FACTS:
The respondents filed a motion for quieting the title and recovery of
possession and ownership against the petitioners. Apparently, they claim
they are the owners of the parcel of land by virtue of the deed of sale they
entered into with Roberto Marfori to whom the petitioners allegedly sold
their land to. The Egaos acquired their land title by virtue of a free patent
and transferred their ownership in favor of Marfori by virtue of a deed of
sale. However, the Certificate of Title was not transferred in Marforis
favor. Upon purchase of the land from Marfori, the respondents introduced
improvements thereon and paid taxes for the property. However, the
petitioners illegally occupied portions of the land. Petitioner answers that
they are the true owner of the land by virtue of the Certificate of Title issued
by the Register of Deeds pursuant to their Free Patent. The lower court
ruled in favor of Egao. Upon appeal, the CA reversed the decision of the
lower court on grounds that the main issue should be whether Egao can
validly sell the land to Marfori who subsequently transferred the ownership
to the respondents. The CA holds both Egao and Marfori to be in pari
delicto for violating the 5-year restriction provided by Commonwealth 141
against encumbrance and alienation of public lands acquired thru free
patent or homestead patent. They cannot therefore obtain affirmative relief.
It also declares the respondents as innocent purchasers for value who the
obtained the duplicate of the OCT still in the name of the Egaos from
Marfori and ownership was transferred to them by physical possession of

119

the property. It thus promulgated judgment holding the respondents the

absolute owners of the land in dispute, to cancel the OCT of the petitioner
and its transfer thereof to the respondents and to surrender peaceful
possession of the land to the respondents.

ISSUE:
Whether or not the petitioners validly transferred their ownership to
Marfori to resolve the rights of the respondents over the land in dispute?
RULING:
The Supreme Court holds that based on the adduced evidence, the
Egao sold the lot to Marfori within the 5-year restriction period provided by
law on Free Patent based on the Deed of Sale entered into by the parties.
Although the petitioners denied the validity of the Deed of Sale the court
held that it was notarized and a notarial document has in its favor the
presumption of regularity. When the land was sold to the respondents, they
know that the OCT is still registered under the name of the petitioners. Thus,
they are not considered to be innocent purchaser as contrary to the ruling of
the CA. Where a purchaser neglects to make the necessary inquiries and
closes his eyes to facts which should put a reasonable man on his guard as
to the possibility of the existence of a defect in his vendor's title, and relying
on the belief that there was no defect in the title of the vendor, purchases the
property without making any further investigation, he cannot claim that he is
a purchaser in good faith for value.
A private individual cannot bring an action for reversion or any
action which would have an effect of canceling a free patent and the
certificate of title issued on the basis thereof since the land covered will form
part again of the public domain. Sec. 124 of the Public Land Act provides
that deeds of sale of patented lands, perfected within the prohibited five (5)
year period are null and void thus the Egaos have no title to pass to Marfori
and nobody can dispose that which does not belong to him. The respondents

120

are not innocent purchasers for value with no standing to question the rights
of the petitioners over the land and to file an action to quiet the title. The
petitioners remained to be the registered owners and entitled to remain in
physical possession of the disputed property. Respondents are ordered to
deliver the OCT to the petitioners without prejudice to an action for
reversion of the land to be instituted by the Solicitor General for the State.

Ching vs Malaya, 153 SCRA 412,

July 31, 1987
FACTS:
Jose Ching et al and the Spouses Cesar and Araceli Alvarado were
disputing possession over a parcel of land. Ching averred that the Alvarados
encroached upon their land. An ejectment case was filed and the MTC
(Municipal Trial Court) took cognizance thereof. The Municipal Trial Court
ruled in favor of Ching. Alvarado appealed before the RTC (Regional Trial
Court) and Judge Antonio Malaya held that the MTC has no jurisdiction
over the case because the issue between the two parties was not a mere
possession case. The two parties actually adduced evidence of ownership:
i.e. Deed of Sale presented by Ching and inheritance claims by Alvarado.
Judge Malaya ruled that MTCs have no jurisdiction over ownership cases.

ISSUE:
Whether or not Ching is the rightful owner?

HELD:

121

Municipal Trial Court do not have jurisdiction over ownership cases.

But the SC (Supreme Court) held that this particular case is not an
ownership case. The mere circumstance that proof of title, or evidence of
ownership, had been introduced during the trial before the Municipal Court
would not deprive said court of jurisdiction to rule on the question of who
had the prior physical possession. The parties just showed evidence of
ownership so as to prove possession this will not divest the MTC of its
jurisdiction.
On the other hand, the land is registered under Chings name in the Registry
of Deeds in Laguna. The land was actually sold to him by Alvarados father
in 1978. No protest was ever filed against the Deed of Sale since 1978.
Alvarado only filed an annulment case (which is a separate case) when the
ejectment case was filed. With a strong evidence to back Chings claim, the
MTCs decision was reinstated by the Supreme Court.

122

THE ISSUANCE OF CERTIFICATE OF TITLE IS A

CONSTRUCTIVE NOTICE THEREOF TO ALL PERSONS

Enriquito Serna vs. Court of Appeals, Santiago Fontanilla Rasing,

308 SCRA 527, June 18, 1999
FACTS:
The petitioner spouses and respondent spouses are first cousins in
dispute of land ownership. Apparently, their grandfather owns a 12,508
sq.m. land that was surveyed by Turner Land Surveying Co. for him which
he promised to pay for after the approval of Bureau of Lands. He failed to
pay for the costs and to elude foreclosure of the land he sold said land to his
daughter Rosa who assumed payment for the property tax. Rosa
subsequently sold the land to her nephew Santiago Fontanilla, herein
respondent, under a notarized deed of sale that was not registered to the
Register of Deeds. Fontanilla constructed a house and lived there. In 1978
they went to the US to visit their daughter. While out of the country,
petitioners Enriquito Serna applied a land registration of said lot which was
successfully registered in their name on Jan. 10, 1980. On May 27, 1981,
respondents filed an action for reconveyance and damages against
petitioners. Petitioners contend that when their grandfather failed to pay the
surveying company they took the property in question but it was redeemed
later on and sold to their father but they could not produce evidence. The
court ruled in favor to the respondents as true owners of the said lot hence
this petition to the S.C.

ISSUE:
Whether or not the lower court erred in rendering its decision and
appreciation of facts and application of law?

123

RULING:
The Supreme Court upholds the lower courts ruling declaring that
the respondents are the rightful owners of the said lot. Petitioners claim
ownership based on a deed of sale executed between their grandfather and
father which they could not produce. This is a question of facts that the SC
cannot review on appeal. Respondents however have been paying taxes and
enjoying continuous possession of the land for over 60 years tacking the
possession of its predecessor grandfather and Aunt Rosa. These are
circumstances and period sufficient for prescription. They also filed the
action for reconveyance within the prescribed 10 years period from the
issuance of Torrens title to the property for the petitioners.

124

REGISTRATION OF A DEED OF SALE IN THE REGISTRY OF

DEEDS CONSTITUTES A CONSTRUCTIVE NOTICE THEREOF
TO THE WHOLE WORLD

People vs. Arturo F. Pacificador, GR 139405,

March 13, 2001

FACTS:
On October 27, 1988, Arturo Pacificador, the Chairman of the Board
of the National Shipyard and Steel Corporation, was charged before the
Sandiganbayan with the crime of violation of RA3019 aka Anti-Graft and
Corrupt Practices Act. During the period of December 6, 1975 to January 6,
1976, together with Jose Marcelo, the President of Philippine Smelters
Corporation, he caused the sale, transfer and conveyance of the rights, titles
and interests over parcels of land owned by National Shipyard and Steel
Corporation to Jose Panganiban, Camarines Norte where Jose Panganiban
Plant is located. National Shipyard and Steel Corporation is a governmentowned corporation and received only P85,144.50 as consideration for the
sale. This caused injury to the Government because real fair market value of
the lands were P862,150.00. The Deed of Sale for was executed on
December 29, 1975. Pacificador stated that the prosecution of the crime has
already prescribed since counting from the registration of the Deed of Sale
(or execution of such), the filing of action against him should have
prescribed. He further contends that during December 29, 1975, there was a
constructive notice to the world of such registration and this should be
tantamount to concealing his crime during that day and not on May 13,
1988 when the complaint was filed by the Solicitor General with the PCGG.

125

ISSUE:
Whether or not the prescription of the offense committed by
Pacificador shall run from
the date the Deed of Sale was executed.

RULING:
YES. The date of prescription shall run from the day the crime was
committed and if
that date is unknown, the date of discovery should be used as the reckoning
point. In this case,
since the land was transferred and presumably registered on December 29,
1975 when the perpetrators are already aware of their own crimes, the
reckoning point should be that day. The
Deed of Sale when registered constitutes a notice to the whole world,
including the petitioner, of
its contents, as well as all interests, legal and equitable. All persons are

126

NO ONE CAN PLEAD IGNORANCE OF THE

REGISTRATION

Egao v CA, 174 SCRA 484

G.R. No. 79787, 29 June 1989

FACTS:
The respondents filed a motion for quieting the title and recovery of
possession and ownership against the petitioners. Apparently, they claim
they are the owners of the parcel of land by virtue of the deed of sale they
entered into with Roberto Marfori to whom the petitioners allegedly sold
their land to. The Egaos acquired their land title by virtue of a free patent
and transferred their ownership in favor of Marfori by virtue of a deed of
sale. However, the Certificate of Title was not transferred in Marforis
favor. Upon purchase of the land from Marfori, the respondents introduced
improvements thereon and paid taxes for the property. However, the
petitioners illegally occupied portions of the land. Petitioner answers that
they are the true owner of the land by virtue of the Certificate of Title issued
by the Register of Deeds pursuant to their Free Patent. The lower court
ruled in favor of Egao. Upon appeal, the CA reversed the decision of the
lower court on grounds that the main issue should be whether Egao can
validly sell the land to Marfori who subsequently transferred the ownership
to the respondents. The CA holds both Egao and Marfori to be in pari
delicto for violating the 5-year restriction provided by Commonwealth 141
against encumbrance and alienation of public lands acquired thru free
patent or homestead patent. They cannot therefore obtain affirmative relief.
It also declares the respondents as innocent purchasers for value who the
obtained the duplicate of the OCT still in the name of the Egaos from
Marfori and ownership was transferred to them by physical possession of

127

the property. It thus promulgated judgment holding the respondents the

absolute owners of the land in dispute, to cancel the OCT of the petitioner
and its transfer thereof to the respondents and to surrender peaceful
possession of the land to the respondents.

ISSUE:
Whether or not the petitioners validly transferred their ownership to
Marfori to resolve the rights of the respondents over the land in dispute?
RULING:
The Supreme Court holds that based on the adduced evidence, the
Egao sold the lot to Marfori within the 5-year restriction period provided by
law on Free Patent based on the Deed of Sale entered into by the parties.
Although the petitioners denied the validity of the Deed of Sale the court
held that it was notarized and a notarial document has in its favor the
presumption of regularity. When the land was sold to the respondents, they
know that the OCT is still registered under the name of the petitioners. Thus,
they are not considered to be innocent purchaser as contrary to the ruling of
the CA. Where a purchaser neglects to make the necessary inquiries and
closes his eyes to facts which should put a reasonable man on his guard as
to the possibility of the existence of a defect in his vendor's title, and relying
on the belief that there was no defect in the title of the vendor, purchases the
property without making any further investigation, he cannot claim that he is
a purchaser in good faith for value.
A private individual cannot bring an action for reversion or any
action which would have an effect of canceling a free patent and the
certificate of title issued on the basis thereof since the land covered will form
part again of the public domain. Sec. 124 of the Public Land Act provides
that deeds of sale of patented lands, perfected within the prohibited five (5)
year period are null and void thus the Egaos have no title to pass to Marfori
and nobody can dispose that which does not belong to him. The respondents

128

are not innocent purchasers for value with no standing to question the rights
of the petitioners over the land and to file an action to quiet the title. The
petitioners remained to be the registered owners and entitled to remain in
physical possession of the disputed property. Respondents are ordered to
deliver the OCT to the petitioners without prejudice to an action for
reversion of the land to be instituted by the Solicitor General for the State.

129

A TORRENS TITLE BARS ALL PRIOR CLAIMS NOT

REGISTERED
Heirs of Marcelino Doronio vs. Hrs. of Fortunato Doronio
G.R. No. 169454. December 27, 2007
The rules on quieting of title expressly provide that any declaration in a suit
to quiet title shall not prejudice persons who are not parties to the action.
FACTS
Spouses Simeon Doronio and Cornelia Gante deceased,were the registered
owners of a parcel of land located.
Marcelino Doronio and Fortunato Doronio, deceased, were the children of
the spouses and the parties in this case aretheir heirs.
Petitioners are the heirs of Marcelino Doronio, while respondents are the
heirs of Fortunato Doronio.
Eager to obtain the entire property, the heirs of Marcelino Doronio and
Veronica Pico filed before the RTC inUrdaneta, Pangasinana petition "For
the Registration of a Private Deed of Donation"docketed as Petition Case
No. U-920.
No respondents were named in the said petition although notices of hearing
were posted on the bulletin boards of Barangay Cabalitaan, Municipalities
of Asingan and Lingayen. During the hearings, no one interposed an
objection tothe petition. After
the RTC ordered a general default, the petition was eventually granted on
September 22, 1993.
This led to the registration of the deed of donation, cancellation of OCT No.
352 and issuance of anew TransferCertificate of Title (TCT) No. 44481 in
the names of Marcelino Doronio and Veronica Pico. Thus, the entire
property was titled in the names of petitioners predecessors.

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On April 28, 1994,the heirs of Fortunato Doronio filed a pleading

before the RTC in the form of a petition in the samePetition Case No. U-920.
The petition was for the reconsideration of the decision of the RTC that
ordered theregistration of the subject deed of donation. It was prayed in the
petition that an order be issued declaring null andvoid the registration of the
private deed of donation and that TCT No. 44481 be cancelled. However,
the petition wasdismissed on the ground that the decision in Petition Case
No. U-920 had already become final as it was not appealed.
ISSUE:
Can respondents be bound by the decision in Petition Case No. U-920 even
if they were not made parties in the said case?
HELD:
Petitioners cannot use the finality of the RTC decision in Petition Case No.
U-920 as a shield against the verification of the validity of the deed of
donation. According to petitioners, the said final decision is one for quieting
of title. In other words, it is a case for declaratory relief under Rule 64 (now
Rule 63) of the Rules of Court. Suits to quiet title are not technically suits in
rem nor are they, strictly speaking, in personam, but being against the
person in respect of the res, these proceedings are characterized as quasi in
rem. The judgment in such proceedings is conclusive only between the
parties. Thus, respondents are not bound by the decision in Petition Case
No. U-920 as they were not made parties in the said case.The rules on
quieting of title expressly provide that any declaration in a suit to quiet title
shall not prejudice persons who are not parties to the action. That
respondents filed a subsequent pleading in the same Petition Case No. U920 after the decision there had become final did not change the fact that
said decision became final without their being impleaded in the case. Said
subsequent pleading wasdismissed onthe ground of finality of the decision.

131

A TORRENS CERTIFICATE OF TITLE SERVES AS

EVIDENCE OF AN INDEFEASIBLE TITLE TO THE PROPERTY IN
FAVOR OF THE PERSON WHOSE NAME APPEAR THEREIN

ALFONSO v. OFFICE OF THE PRESIDENT

G.R. No. 150091 April 2, 2007
The essence of due process is the opportunity to explain ones side.
Duty of Register of Deeds To Require Submission of Approved Subdivision
Plan, Technical Description & Owners Duplicate Certificate of Title Before
Issuing New Titles
FACTS:
Petitioner Yolanda O. Alfonso (Alfonso), then the register of deeds of
Caloocan City, was found administratively liable for allegedly
acquiescing to the change of the date of the registration of OCT No. 994
from May 3, 1917 to April 19, 1917, and for making it appear that there
were two OCT Nos. 994. Consequently, she was dismissed from government
service for grave misconduct and dishonesty.
Alfonso was investigated by the Land Registration Authority (LRA) upon the
request of Phil-Ville Development Corporation (Phil-Ville) who purchased
some parts of the land. Phil-Villes letter-complaint led to the conduct of an
inquiry by the Senate Committees on Justice and Human Rights, and on
Urban Planning, Housing and Resettlement which finds that Alfonso acted
maliciously, fraudulently and in bad faith recommending the filing of
administrative cases against her and her conspirators. On the other hand,
LRA finds her guilty of Grave Misconduct and recommended her dismissal.
The Office of the President subsequently dismissed Alfonso. The Court of

132

Appeals affirmed the dismissal of Alfonso. Hence, this petition contending

that her right to due process was violated.
ISSUE:
Whether or not the Court of Appeals erred in upholding decision of the
Office of the President because Alfonsos right to due process was violated.

Held:
In the landmark case of Ang Tibay v. Court of Industrial Relations, this
Court laid down the cardinal primary requirements of due process in
administrative proceedings. Foremost of these requisites is the right to a
hearing, including the right to present ones case and submit evidence in
support thereof. The essence of due process in administrative proceedings is
the opportunity to explain ones side or to seek a reconsideration of the
action or ruling complained of.
As aptly observed by the CA, Alfonso was given every opportunity to explain
her side and to present evidence in her defense during the administrative
investigation conducted by the LRA. Records sufficiently show that in
compliance with the show-cause letter of the LRA Administrator, she
submitted her written explanation, and that during the pre-trial conferences,
she presented documentary evidence.
Likewise, the quantum of proof required in an administrative proceeding is
only substantial evidence or that amount of illustrative evidence that a
reasonable mind might accept as adequate to support a conclusion. The
standard of substantial evidence is satisfied when there is reasonable
ground to believe that the person indicted was responsible for the alleged
wrongdoing or misconduct. In the case at bar, Alfonso stood charged not for
changing the date of registration of OCT No. 994 but rather, she was
indicted for acquiescing to the change by (1) issuing conflicting

133

certification on the date of issuance of OCT No. 994; and (2) for making
it appear that there were two OCT Nos. 994. Thus, her protestations that she
had no hand in the alteration are unavailing.
Alfonso is thus administratively liable for serious misconduct Serious
misconduct, as a valid cause for the dismissal of an employee, is improper
or wrong conduct; the transgression of some established and definite rule of
action; a forbidden act or dereliction of duty, which is willful and
intentional neglect and not mere error in judgment. It must be grave and
aggravated in character and not merely trivial or unimportant.. In addition,
it must be directly related and/or connected to the performance of official
duties. Without question, all of these requisites are present in this case.

134

TORRENS TITLE IS IMPRESCRIPTIBLE

SANTOS vs. LUMBAO

G.R. No. 169129 March 28, 2007

Reconveyance is imprescriptible where plaintiff is in possession

An action for annulment of title/reconveyance based on fraud is
imprescriptible where the plaintiff is in possession of the property subject of
the acts.
FACTS:
Rita sold to respondents Spouses Lumbao denominated as Bilihan ng
Lupa the subject property which is a part of her share in the estate of her
deceased mother Maria. After acquiring the subject property, respondents
Spouses Lumbao took actual possession thereof and erected thereon a house
which they have been occupying as exclusive owners up to the present. As
the exclusive owners of the subject property, respondents Spouses Lumbao
made several verbal demands upon Rita, during her lifetime, and thereafter
upon herein petitioners, for them to execute the necessary documents to
effect the issuance of a separate title in favor of respondents Spouses
Lumbao insofar as the subject property is concerned.
Respondents Spouses Lumbao alleged that prior to her death, Rita informed
respondent Proserfina Lumbao she could not deliver the title to the subject
property because the entire property inherited by her and her co-heirs from
Maria had not yet been partitioned. Spouses Lumbao claimed that
petitioners, acting fraudulently and in conspiracy with one another, executed
a Deed of Extrajudicial Settlement, adjudicating and partitioning among

135

themselves and the other heirs, the estate left by Maria, which included the
subject property already sold to respondents Spouses Lumbao. Respondents
Spouses Lumbao, through counsel, sent a formal demand letter to petitioners
but despite receipt of such demand letter, petitioners still failed and refused
to reconvey the subject property to the respondents Spouses Lumbao.
Consequently, the latter filed a Complaint for Reconveyance with Damages
before the RTC of Pasig City. Petitioners filed their Answer denying the
allegations that the subject property had been soldto the respondents
Spouses Lumbao. Petitioners filed their Answer denying the allegations that
the subject property had been sold to the respondents Spouses Lumbao. They
likewise denied that the Deed of Extrajudicial Settlement had been
fraudulently executed because the same was duly published as required by
law. The RTC rendered a decision in favor of the petitioners. Aggrieved,
respondents Spouses Lumbao appealed to the Court of Appeals. Which
reversed the ruling of the trial court and ordered the reconveyance of the
property to the respondents. The petitioners questioned the decision, hence
this petition.
ISSUE:
Whether or not a co-owner can alienate, mortgage or assign his aliquot or
undivided share in the property.
HELD:
It is noteworthy that at the time of the execution of the documents
denominated as "Bilihan ng Lupa," the entire property owned by Maria, the
mother of Rita, was not yet divided among her and her co-heirs and so the
description of the entire estate is the only description because the exact
metes and bounds of the subject property sold to respondents Spouses
Lumbao could not be possibly determined at that time. Nevertheless, that
does not make the contract of sale between Rita and respondents Spouses
Lumbao invalid because both the law and jurisprudence have categorically
held that even while an estate remains undivided, co-owners have each full

136

ownership of their respective aliquots or undivided shares and may

therefore alienate, assign or mortgage them. The co-owner, however, has no
right to sell or alienate a specific or determinate part of the thing owned in
common, because such right over the thing is represented by an aliquot or
ideal portion without any physical division. In any case, the mere fact that
the deed purports to transfer a concrete portion does not per se render the
sale void. The sale is valid, but only with respect to the aliquot share of the
selling co-owner. Furthermore, the sale is subject to the results of the
partition upon the termination of the co-ownership.
In the case at bar, when the estate left by Maria had been partitioned on 2
May 1986 by virtue of a Deed of Extrajudicial Settlement, the 107- square
meter lot sold by the mother of the petitioners to respondents Spouses
Lumbao should be deducted from the total lot, inherited by them in
representation of their deceased mother, which in this case measures 467
square meters. The 107-square meter lot already sold to respondents
Spouses Lumbao can no longer be inherited by the petitioners because the
same was no longer part of their inheritance as it was already sold during
the lifetime of their mother

137

ACTIONS INVOLVING TITLES

Integrity of title not subject to collateral attack

Presumption that title is regular and valid
Reliance on title
Effect of fraudulent registration
Effect of forgery
Effect of loss
Double titles
Title from void titles are also void
Forged deed of sale
Innocent Purchaser
Quieting of title

138

INTEGRITY OF TITLE NOT SUBJECT TO COLLATERAL

ATTACK
The Torrens system was adopted in this country to guarantee the integrity of
land titles. If a person purchases a parcel of land with a torrens title that is
clean and free from all liens and encumbrances, he should be assured that
the title cannot be defeated or denied force and effect in some proceeding
not provided by law for the express purpose of attacking it.
(Illustrative Case)
SPOUSES JOSE O. GATUSLAO AND ERMILA LEONILA LIMSIACOGATUSLAO vs. LEO RAY V. YANSON G.R. No. 191540, January 21,
2015
Facts:
Petitioners spouses Jose O. Gatuslao and Ermila Leonila LimsiacoGatuslao (petitioners) are assailing the December 8, 20091 Order of the
Regional Trial Court (RTC) of Bacolod City, Branch 49 in Cad. Case No.
09-2802 which granted respondent Leo Ray2 Yansons (respondent) Ex
Parte Motion for the Issuance of Writ of Possession over the properties
being occupied by petitioners, as well as the February 26, 2010 RTC Order3
denying petitioners motion for reconsideration thereto.
Factual Antecedents
Petitioner Ermila Leonila Limsiaco-Gatuslao is the daughter of the late
Felicisimo Limsiaco (Limsiaco) who died intestate on February 7, 1989.
Limsiaco was the registered owner of two parcels of land with improvements
in the City of Bacolod described as Lots 10 and 11, Block 8 of the

139

subdivision plan Psd-38577 and covered by Transfer Certificates of Title

(TCT) Nos. T-334294 and T-24331.5
Limsiaco mortgaged the said lots along with the house standing thereon to
Philippine National Bank (PNB). Upon Limsiacos failure to pay, PNB
extrajudicially foreclosed on the mortgage and caused the properties sale
at a public auction on June 24, 1991 where it emerged as the highest bidder.
When the one-year redemption period expired without Limsiacos estate
redeeming the properties, PNB caused the consolidation of titles in its name.
Ultimately, the Registry of Deeds of Bacolod City cancelled TCT Nos. T33429 and T-24331 and in lieu thereof issued TCT Nos. T-3088186 and T3088197 in PNBs name on October 25, 2006.
On November 10, 2006, a Deed of Absolute Sale8 was executed by PNB
conveying the subject properties in favor of respondent. As a consequence
thereof, the Registry of Deeds of Bacolod City issued TCT Nos. T-3111259
and T-31112610 in respondents name in lieu of PNBs titles.
Then, as a registered owner in fee simple of the contested properties,
respondent filed with the RTC an Ex-Parte Motion for Writ of Possession11
pursuant to Section 7 of Act No. 3135,12 as amended by Act No. 4118 (Act
No. 3135, as amended),13 docketed as Cad. Case No. 09-2802.
In their Opposition,14 petitioners argued that the respondent is not entitled
to the issuance of an ex-parte writ of possession under Section 7 of Act No.
3135 since he was not the buyer of the subject properties at the public
auction sale and only purchased the same through a subsequent sale made
by PNB. Not being the purchaser at the public auction sale, respondent
cannot file and be granted an ex parte motion for a writ of possession.
Petitioners also asserted that the intestate estate of Limsiaco has already
instituted an action for annulment of foreclosure of mortgage and auction
sale affecting the contested properties.15 They argued that the existence of

140

the said civil suit bars the issuance of the writ of possession and that
whatever rights and interests respondent may have acquired from PNB by
virtue of the sale are still subject to the outcome of the said case.
Ruling of the Regional Trial Court
The RTC granted the issuance of the writ of possession in an Order16 dated
December 8, 2009. It cited the Courts pronouncement in China Banking
Corporation v. Lozada,17viz:

The Court recognizes the rights acquired by the purchaser of the foreclosed
property at the public auction sale upon the consolidation of his title when
no timely redemption of the property was made, x x x.
It is thus settled that the buyer in a foreclosure sale becomes the absolute
owner of the property purchased if it is not redeemed during the period of
one year after the registration of the sale. As such, he is entitled to the
possession of the said property and can demand it at any time following the
consolidation of ownership in his name and the issuance to him of a new
transfer certificate of title. x x x Possession of the land then becomes an
absolute right of the purchaser as confirmed owner. Upon proper
application and proof of title, the issuance of the writ of possession becomes
a ministerial duty of the court.
The purchaser, therefore, in the public auction sale of a foreclosed property
is entitled to a writ of possession x x x.18
PNB, therefore, as the absolute owner of the properties is entitled to a writ
of possession. And since respondent purchased the properties from PNB,
the former has necessarily stepped into the shoes of the latter. Otherwise

141

stated, respondent, by subrogation, has the right to pursue PNBs claims

against petitioners as though they were his own.
The dispositive portion of the above Order reads:

WHEREFORE, premises considered, the Court hereby issues a writ of

possession in favor of movant Leo Ray V. Yanson ordering Spouses Jose and
Mila Gatuslao, their heirs, assigns, successors-in-interest, agents,
representatives and/or any and all other occupants or persons claiming any
interest or title of the subject property to deliver the possession of said
property to the herein movant/ petitioner.
SO ORDERED.19
Petitioners moved for reconsideration20 which was denied in an Order21
dated February 26, 2010, thus:

WHEREFORE, the Motion for Reconsideration filed by Oppositors is hereby

DENIED. Thus, the Order dated December 8, 2009 stands.
SO ORDERED.22
Respondent on March 19, 2010 moved to execute the possessory writ23
while petitioners on April 15, 2010 filed with this Court the present Petition
for Review on Certiorari.
On September 30, 2010, the RTC issued an Order24 directing the
implementation of the writ. And per Sheriffs Return of Service,25 the same
was fully implemented on March 14, 2011.cralawred
Issues:

142

1.According to petitioners, the pending action for annulment of foreclosure

of mortgage and the corresponding sale at public auction of the subject
properties operates as a bar to the issuance of a writ of possession;
2.Claiming violation of their right to due process, petitioners likewise assert
that as they were not parties to the foreclosure and are, thus, strangers or
third parties thereto, they may not be evicted by a mere ex parte writ of
possession; and
3.Lastly, petitioners argue that respondent, a mere purchaser of the
contested properties by way of a negotiated sale between him and PNB, may
not avail of a writ of possession pursuant to Section 7 of Act No. 3135, as
amended, as he is not the purchaser at the public auction sale. Petitioners
further contend that respondent has no right to avail of the writ even by way
of subrogation.
Held:
Preliminarily, we note that petitioners direct resort to this Court from the
assailed Orders of the RTC violates the rule on hierarchy of courts. Their
remedy lies with the Court of Appeals. Considering however the length of
time this case has been pending and in view of our January 26, 2011
Resolution26 giving due course to the Petition, we deem it proper to
adjudicate the case on its merits.
The Petition is denied.
It is settled that the issuance of a Writ of
Possession may not be stayed by a pending
action for annulment of mortgage or the
foreclosure itself.

143

It is petitioners stand that the pending action for annulment of foreclosure

of mortgage and of the corresponding sale at public auction of the subject
properties operates as a bar to the issuance of a writ of possession.
The Court rules in the negative. BPI Family Savings Bank, Inc. v. Golden
Power Diesel Sales Center, Inc.27 reiterates the long-standing rule that:

[I]t is settled that a pending action for annulment of mortgage or

foreclosure sale does not stay the issuance of the writ of possession. The
trial court, where the application for a writ of possession is filed, does not
need to look into the validity of the mortgage or the manner of its
foreclosure. The purchaser is entitled to a writ of possession without
prejudice to the outcome of the pending annulment case.
This is in line with the ministerial character of the possessory writ. Thus, in
Bank of the Philippine Islands v. Tarampi,28 it was held:

To stress the ministerial character of the writ of possession, the Court has
disallowed injunction to prohibit its issuance, just as it has held that its
issuance may not be stayed by a pending action for annulment of mortgage
or the foreclosure itself.
Clearly then, until the foreclosure sale of the property in question is
annulled by a court of competent jurisdiction, the issuance of a writ of
possession remains the ministerial duty of the trial court. The same is true
with its implementation; otherwise, the writ will be a useless paper judgment
a result inimical to the mandate of Act No. 3135 to vest possession in the
purchaser immediately.29(Emphases supplied)
Clearly, petitioners argument is devoid of merit.

144

Petitioners are not strangers or third

parties to the foreclosure sale; they
were not deprived of due process.
Section 7 of Act No. 3135, as amended, sets forth the following procedure in
the availment of and issuance of a writ of possession in cases of
extrajudicial foreclosures, viz:

SECTION 7. In any sale made under the provisions of this Act, the
purchaser may petition the Court of First Instance (Regional Trial Court) of
the province or place where the property or any part thereof is situated, to
give him possession thereof during the redemption period, furnishing bond
in an amount equivalent to the use of the property for a period of twelve
months, to indemnify the debtor in case it be shown that the sale was made
without violating the mortgage or without complying with the requirements
of this Act. Such petition shall be made under oath and filed in form of an ex
parte motion in the registration or cadastral proceedings if the property is
registered, or in special proceedings in the case of property registered under
the Mortgage Law or under section one hundred and ninety-four of the
Administrative Code, or of any other real property encumbered with a
mortgage duly registered in the office of any register of deeds in accordance
with any existing law, and in each case the clerk of the court shall, upon the
filing of such petition, collect the fees specified in paragraph eleven of
section one hundred and fourteen of Act Numbered Four hundred and
ninety-six, as amended by Act Numbered Twenty-eight hundred and sixtysix, and the court shall, upon approval of the bond, order that a writ of
possession issue, addressed to the sheriff of the province in which the
property is situated, who shall execute said order immediately.

145

Although the above provision clearly pertains to a writ of possession availed

of and issued within the redemption period of the foreclosure sale, the same
procedure also applies to a situation where a purchaser is seeking
possession of the foreclosed property bought at the public auction sale after
the redemption period has expired without redemption having been made.30
The only difference is that in the latter case, no bond is required therefor, as
held in China Banking Corporation v. Lozada,31thus:

It is thus settled that the buyer in a foreclosure sale becomes the absolute
owner of the property purchased if it is not redeemed during the period of
one year after the registration of the sale. As such, he is entitled to the
possession of the said property and can demand it at any time following the
consolidation of ownership in his name and the issuance to him of a new
transfer certificate of title. The buyer can in fact demand possession of the
land even during the redemption period except that he has to post a bond in
accordance with Section 7 of Act No. 3135, as amended. No such bond is
required after the redemption period if the property is not redeemed. x x x32
(Emphasis supplied)
Upon the expiration of the period to redeem and no redemption was made,
the purchaser, as confirmed owner, has the absolute right to possess the
land and the issuance of the writ of possession becomes a ministerial duty of
the court upon proper application and proof of title.33
Nevertheless, where the extrajudicially foreclosed real property is in the
possession of a third party who is holding the same adversely to the
judgment debtor or mortgagor, the RTCs duty to issue a writ of possession
in favor of the purchaser of said real property ceases to be ministerial and,
as such, may no longer proceed ex parte.34 In such a case, the trial court
must order a hearing to determine the nature of the adverse possession.35
For this exception to apply, however, it is not enough that the property is in

146

the possession of a third party, the property must also be held by the third
partyadversely to the judgment debtor or mortgagor,36 such as a co-owner,
agricultural tenant or usufructuary.37
In this case, petitioners do not fall under any of the above examples of such
a third party holding the subject properties adversely to the mortgagor; nor
is their claim to their right of possession analogous to the foregoing
situations. Admittedly, they are the mortgagor Limsiacos heirs. It was
precisely because of Limsiacos death that petitioners obtained the right to
possess the subject properties and, as such, are considered transferees or
successors-in-interest of the right of possession of the latter. As Limsiacos
successors-in-interest, petitioners merely stepped into his shoes and are,
thus, compelled not only to acknowledge but, more importantly, to respect
the mortgage he had earlier executed in favor of respondent.38 They cannot
effectively assert that their right of possession is adverse to that of Limsiaco
as they do not have an independent right of possession other than what they
acquired from him.39 Not being third parties who have a right contrary to
that of the mortgagor, the trial court was thus justified in issuing the writ
and in ordering its implementation.
Petitioners claim that their right to due process was violated by the mere
issuance of the writ of possession must likewise fail. As explained,
petitioners were not occupying the properties adversely to the mortgagor,
hence, a writ of possession may be issued ex parte. And precisely because of
thisex parte nature of the proceedings no notice is needed to be served40
upon them. It has been stressed time and again that the ex parte nature of
the proceeding does not deny due process to the petitioners because the
issuance of the writ of possession does not prevent a separate case for
annulment of mortgage and foreclosure sale.41 Consequently, the RTC
may grant the petition even without petitioners participation. Nevertheless,
even if the proceedings in this case was supposed to be ex parte, the records
of the case would show that petitioners side on this controversy was

147

actually heard as evidenced by the numerous pleadings42 filed by them in

the lower court. In fact, in its July 27, 2009 Order,43 the RTC expressly
directed respondent, in observance of equity and fair play x x x to furnish
[petitioners] with a copy of his motion/petition and to show x x x proof of
compliance thereof x x x.44 Then and now, the Court holds that a party
cannot invoke denial of due process when he was given an opportunity to
present his side.45
Respondent is entitled to the
issuance of writ of possession.
Petitioners insist that respondent is not entitled to the issuance of the writ of
possession under Section 7 of Act No. 3135 as he is only a buyer of the
subject properties in a contract of sale subsequently executed in his favor by
the actual purchaser, PNB. To them, it is only the actual purchaser of a
property at the public auction sale who can ask the court and be granted a
writ of possession.
This argument is not tenable. Respondent, as a transferee or successor-ininterest of PNB by virtue of the contract of sale between them, is considered
to have stepped into the shoes of PNB. As such, he is necessarily entitled to
avail of the provisions of Section 7 of Act No. 3135, as amended, as if he is
PNB. This is apparent in the Deed of Absolute Sale46 between the two, viz:

1.
The Vendor hereby sells, transfer[s] and convey[s] unto[, and] in
favor of the Vendee, and the latters assigns and successors-in-interest, all
of the formers rights and title to, interests and participation in the Property
on an AS IS, WHERE IS basis. It is thus understood that the Vendee has
inspected the Property and has ascertained its condition.
xxxx

148

3.
The Vendor is selling only whatever rights and title to, interests and
participation it has acquired over the Property, and the Vendee hereby
acknowledges full knowledge of the nature and extent of the Vendors rights
and title to, [and] interests and participation in the Property.
4.
x x x The Vendee further agrees to undertake, at its/his/her expense,
the ejectment of any occupant of the Property.47 (Emphases in the original)
Verily, one of the rights that PNB acquired as purchaser of the subject
properties at the public auction sale, which it could validly convey by way of
its subsequent sale of the same to respondent, is the availment of a writ of
possession. This can be deduced from the above-quoted stipulation that
[t]he [v]endee further agrees to undertake, at xxx his expense, the
ejectment of any occupant of the [p]roperty. Accordingly, respondent filed
the contentious ex parte motion for a writ of possession to eject petitioners
therefrom and take possession of the subject properties.
Further, respondent may rightfully take possession of the subject properties
through a writ of possession, even if he was not the actual buyer thereof at
the public auction sale, in consonance with our ruling in Ermitao v.
Paglas.48 In the said case, therein respondent was petitioners lessee in a
residential property owned by the latter. During the lifetime of the lease,
respondent learned that petitioner mortgaged the subject property in favor
of Charlie Yap (Yap) who eventually foreclosed the same. Yap was the
purchaser thereof in an extrajudicial foreclosure sale. Respondent ultimately
bought the property from Yap. However, it was stipulated in the deed of sale
that the property was still subject to petitioners right of redemption.
Subsequently and despite written demands to pay the amounts
corresponding to her monthly rental of the subject property, respondent did
not anymore pay rents. Meanwhile, petitioners period to redeem the
foreclosed property expired on February 23, 2001. Several months after,
petitioner filed a case for unlawful detainer against respondent. When the
case reached this Court, it ruled that therein respondents basis for denying

149

petitioners claim for rent was insufficient as the latter, during the period for
which payment of rent was being demanded, was still the owner of the
foreclosed property. This is because at that time, the period of redemption
has not yet expired. Thus, petitioner was still entitled to the physical
possession thereof subject, however, to the purchasers right to petition the
court to give him possession and to file a bond pursuant to the provisions of
Section 7 of Act No. 3135, as amended. However, after the expiration of the
redemption period without redemption having been made by petitioner,
respondent became the owner thereof and consolidation of title becomes a
right. Being already then the owner, respondent became entitled to
possession. Consequently, petitioners ejectment suit was held to have been
rendered moot by the expiration of the period of redemption without
petitioner redeeming the properties. This is considering that petitioner
already lost his possessory right over the property after the expiration of the
said period.
Although the main issue in Ermitao was whether respondent was correct in
refusing to pay rent to petitioner on the basis of her having bought the
latters foreclosed property from whom it was mortgaged, the case is
enlightening as it acknowledged respondents right, as a subsequent buyer
of the properties from the actual purchaser of the same in the public auction
sale, to possess the property after the expiration of the period to redeem
sans any redemption. Verily, Ermitaodemonstrates the applicability of the
provisions of Section 7 of Act No. 3135 to such a subsequent purchaser like
respondent in the present case.
All told, the Court affirms the RTCs issuance of the Writ of Possession in
favor of respondent.chanrobleslaw
WHEREFORE, the Petition is hereby DENIED. The December 8, 2009 and
February 26, 2010 Orders of the Regional Trial Court of Bacolod City,
Branch 49 in Cad. Case No. 09-2802 are AFFIRMED.

150

PRESUMPTION THAT TITLE IS REGULAR AND VALID

Ching vs. Malaya,

153SCRA 412
Facts:
This petition for certiorari under Rule 65 of the Rules of Court seeks a
reversal of the decision of the respondent court nullifying the judgment of
the municipal court in a forcible entry case on the ground of lack of
jurisdiction.
The petitioners had alleged in their complaint for ejectment that the private
respondents had forced their way into the disputed premises without any
right whatsoever and had refused to vacate the same despite repeated
demands. These demands were based on the petitioners case that they were
the owners of the said property, having acquired it by virtue of a valid sale.
The private respondents, in their answer, had challenged the claimed sale,
arguing that the property belonged to them by right of inheritance. At any
rate, they had argued, as the basic question was one of ownership and not of
mere possession, the municipal court had no jurisdiction and should dismiss
the complaint.
The municipal court,* affirming its jurisdiction, proceeded to trial and
thereafter rendered judgment ordering the private respondents to vacate the
disputed property. It also required them to pay the petitioners back and
current rentals at P 1,000.00 a month until actual surrender of the premises,
as well as a P 3,000.00 attorneys fee plus the costs of the suit. 1 On appeal,
this decision was set aside by the respondent judge, who held that the
municipal court had no competence to resolve the case as it involved a

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question of ownership. 2 The petitioners, disagreeing, then came to us. At

the outset, we reject the private respondents submission that this petition is
improper because the questions involved are merely factual. Of course they
are not. What we have to decide here is whether or not, in the light of the
records of the case, and particularly the adverse assertions of ownership
over the property in issue, the municipal court had the authority to try and
decide the same in the first instance. This may be raised on certiorari.
As the original complaint was filed on January 6, 1979, the question before
us should be examined under the provisions of R.A. No. 296, as amended,
which was the law then in force. That law allowed the municipal court to
receive evidence upon the question of ownership in ejectment cases, but only
whenever it was necessary to do so for the purpose of determining the
character and extent of possession and damages for detention.
The pertinent provisions of that law read as follows:
Sec. 88. Original jurisdiction in civil cases. -In all civil actions, including
those mentioned in Rules fifty-nine and sixty-two (now Rule 57 and 60) of
the Rules of Court, arising in his municipality or city, and not exclusively
cognizable by the Court of First Instance, the justice of the peace (now
municipal judge) and the judge of a municipal court (now city court) shall
have exclusive original jurisdiction . In forcible entry and detainer
proceedings, the justice of the peace or judge of the municipal court shall
have original jurisdiction, but the said justice or judge may receive evidence
upon the question of title therein, whatever may be the value of the property,
solely for the purpose of determining the character and extent of possession
and damages for detention.
There should be no question by now that what determines the nature of an
action- and correspondingly the court which has jurisdiction over it-is the
allegation made by the plaintiff in his complaint.3 Accordingly, the present

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case being one for forcible entry, it should normally come under the
jurisdiction of the municipal court, before which it was in fact filed. There
was a complication, however, as in their respective primary pleadings, the
parties both injected the issue of ownership to support their adversary
claims to the possession of the property. This issue of ownership, in view of
the respondent court, had removed the case from the jurisdiction of the
municipal court.
It is settled that the mere assertion of ownership by the defendant in an
ejectment case will not oust the municipal court of its summary
jurisdiction.4 This has to be so, for were the principle otherwise, the ends
of justice would be frustrated by making the efficacy of this kind of actions
depend upon the defendant in all cases.5 Accordingly, we have repeatedly
held:
The mere circumstance that proof of title, or evidence of ownership, had
been introduced during the trial before the Municipal Court would not
deprive said court of jurisdiction to rule on the question of who had the
prior physical possession.6
Even where defendant in a detainer or forcible entry alleges title to the
property in his answer, it is declared in a great number of cases that the
Justice of the Peace or the Court of First Instance on appeal will not be
divested of its jurisdiction by such allegations alone.7
There is one exception, however, and that is where it appears during the
trial that, by the nature of the evidence presented, the issue of possession
cannot be decided without deciding the issue of ownership. In such a case,
the jurisdiction of the municipal court is lost and the action should be
dismissed.8 An illustration is the case of Teodoro v. Balatbat, where the
defendant claimed possession by virtue of a deed of sale allegedly executed
by the plaintiff, who in turn denied its authenticity. As there was no

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indication that the defendants claim was unfounded, the municipal court
could not continue with the case because it had lost the competence to
decide it.9
After examining the facts of this present case, the Court finds that it does not
come under the exception to the rule.
The property in question consists of a residential house and lot covered by
TCT No. T-85126 and registered in the name of petitioner Jose Ching in the
Registry of Deeds of Laguna.10 The basis of the registration is a deed of
sale executed in his favor by Felix Carpio, the former owner, who had
acquired it from Brigido Alvarado, Cesar Alvarados supposed father.11
The record does not show that such registration has been challenged since
the issuance in 1978 of the said certificate of title, which in the absence of
evidence to the contrary should be presumed valid. There is no encumbrance
on the land, and there is no adverse claim or notice of lis pendis annotated
in the certificate.12 Such registration, it may be added, is binding against
the whole world unless annulled for cause in proper cases.
It is true that petitioner Cesar Alvarado had filed a complaint in the court of
first instance of Laguna against the petitioners and several others for the
annulment of the deed of sale invoked by the petitioners.13 However, that
fact alone could not divest the municipal court of jurisdiction to continue
trying the question of possession, more so since the question of ownership
was appropriately being litigated in the annulment suit. Significantly, the
deed of sale being challenged in that action was different from the contract
involved in the exception just cited.
In the Balatbat case, the deed of sale invoked by the defendant was allegedly
executed by the plaintiff, who denied its authenticity. In other words, the
transaction in question was purportedly between the plaintiff and the
defendant as vendor and vendee. In the instant case, the private respondents

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were not a party to the contract of sale invoked by the petitioners. It was
being challenged by respondent Cesar Alvarado only as an alleged heir of
Brigido Alvarado, who had transferred it to Felix Carpio, who in turn had
sold it to the petitioners.
Without preempting any decision in that annulment case, we make the
observation that even if the private respondents should succeed therein, he
would not thereby necessarily acquire full ownership of the property in
question. Assuming the validity of the holographic will be invoke, he would
be entitled to only an indefinite portion of the testators estate as long as no
partition thereof shall have been effected. For this reason alone, the
respondents claim of ownership over the particular house and lots in
question could be dismissed as untimely and untenable.
Finally, the fact that the petitioners themselves adduced evidence of
ownership over the property in question did not, as claimed, have the effect
of divesting the municipal court of its jurisdiction. As permitted in the abovecited Section 88 of R.A. No. 296, the plaintiff in an ejectment case may
introduce such evidence for the purpose of proving the character of his
possession and the amount of damages he is claiming for unjust deprivation
of such possession.14 The petitioners were only trying to prove their right to
possession and damages by establishing their right of ownership.
WHEREFORE, the petition is GRANTED. The decision of the respondent
court dated January 5, 1981, is set aside and that of the municipal court
dated July 5, 1979, is reinstated, with costs against the private respondents.
This decision is immediately executory.

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RELIANCE ON TITLE

ERASUSTA, JR. vs. CA, G. R. No. 149231,

July 17, 2006.
FACTS:
Lucena de los Reyes (petitioner's mother) sold two lots to Fortunato
Amorin. Amorin took possession of such properties. Later, however, Pacific
Bank demanded that the Amorins vacate the properties, claiming that such
property had been foreclosed by such Bank. As it turned out De Los Reyes
was deceived by a certain Benjamin Valenzuela, to whom she entrusted the
documents evidencing her rights over the lots, the latter fraudulently
transferred the rights over the lots to his name. Valenzuela mortgaged such
properties to Pacific Bank. Respondent Bank foreclosed and bought the
properties. The Amorins filed an action for Recovery of Ownership with
Damages. CA declared respondent Bank an innocent purchaser for value
entitled to the protection of the law with a better right over the lots than the
Amorins.
ISSUE:
Whether or not the Bank is an innocent purchaser for value whose
title must be upheld.
RULING:
No. While, it is a familiar doctrine that a forged or fraudulent
document may become the root of a valid title, if the property has already
been transferred from the name of the owner to that of the forger, the same
is not true. This doctrine serves to emphasize that a person who deals with
registered property in good faith will acquire good title from a forger and be
absolutely protected by a Torrens title.

156

It cannot be overemphasized that respondent Bank, being in the

business of extending loans secured by real estate mortgage, is familiar with
rules on land registration. As such, it was, as here, expected to exercise
more care and prudence than private individuals in their dealing with
registered lands. Accordingly, given inter alia the suspicion-provoking
presence of occupants other than the owner on the land to be mortgaged, it
behooved respondent Bank to conduct a more exhaustive investigation on
the history of the mortgagor's title. That respondent Bank accepted in
mortgage the property in question notwithstanding the existence of
structures on the property and which were in actual, visible and public
possession of a person other than the mortgagor, constitutes gross
negligence amounting to bad faith.
In the absence of such inquiry, the respondent Bank cannot and
should not be regarded as a mortgagee/purchaser in good faith.

157

EFFECT OF FRAUDULENT REGISTRATION

HILDA WALSTROM, vs. FERNANDO MAPA, JR,

G.R. No. L-38387 January 29, 1990
.
FACTS:
Cacao Dianson, has a free patent application, he filed with the
District Land Office in Baguio City a letter protesting the construction in
April, 1956 by Josefa Abaya Mapa of on the parcel of land (described as
"portion A") of one of the parcels of land covered by his Free Patent
Application. The controversy was referred to Bureau of Lands Investigator
Antonio Mejia. He found that Josefa Abaya Mapa has filed a Miscellaneous
Sales Application, the same was awarded to her on May 12, 1934. The
purchase price has been paid in full in 1943 evidenced by an Official
Receipt. Cacao Dianson filed a Free Patent Application for the same parcel
of land on June 1, 1956, alleging that the said land was first occupied by his
father, Dianson, in 1884.
The regional land officer of Dagupan City decided that Free Patent
Application of Cacao
Dianson should exclude Portion "A" which is covered by the Miscellaneous
Sales Application of
Josefa Abaya Mapa.
Two years after the death of Dianson, Walstrom filed a motion for
reconsideration, claiming that Dianson is her predecessor in interest, the
motion for reconsideration resulted in setting aside the decision of the
Regional land officer. Mapa then appealed to the Department of Agriculture
and Natural Resources reinstated the decision of the Regional land officer,
then Gabriela Walstrom filed for motion for reconsideration but was denied.
While Walstrom filed for a second motion for reconsideration of the order of

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DANR, Mapa filed a motion for execution. DANR granted the motion for
execution. Walstrom then filed a petition for relief with the DANR but then
pending the petition, she died. The heirs of Mapa pursued the case. This
petition of Walstrom remained unresolved, according to petitioner Hilda
Walstrom, daughter of Gabriela Walstrom, she was compelled to file an
action in the court because the 1 year prescriptive period provided for in Sec
38 of Land Registration act was about to lapse.
ISSUE:
1. Whether or not Walstroms civil complaint against the respondents
praying for nullification of the Mapas sales patent and certificates of
title issued by the register of deeds under Section 38 of Act 496 or the
Land Registration Act is valid.
RULING:
SEC. 38 of Act 496 or the Land Registration Act provides that a
decree of registration may bereopened or reviewed by the proper Regional
Trial Court upon the concurrence of five essentialrequisites, to wit:
(a) that the petitioner has a real and a 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
for value.
An examination of the records of the case shows non-concurrence of
the essential elements enumerated above. The first element is patently not
present because the petitioner cannot allege that she has already a real and
dominical right to the piece of property in controversy since the decision of
the Regional land officer was upheld by the DANR secretary. That the

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petitioner's Free Patent Application shall exclude the disputed portion "A"
of Lot No. 1, which, instead, shall be included in the Mapas' Miscellaneous
Sales Application.
The second element is also absent, the petitioner cannot aver that she
was deprived of property because she did not have a real right over portion
"A". As to the third element, the records are bereft of any indication that
there was fraud in the issuance of the certificates of title.
The court also finds that the lower court was correct in holding that the case
does not fall under
any of the exceptions to the rule on exhaustion of administrative remedies.
Instead of invoking
Section 38, the petitioner should have pressed for the speedy resolution of
her petition with the
DANR. The petitioners fear that since the one-year prescriptive period for
seeking judicial relief
provided for in Sec. 38 of the Land Registration Act was about to lapse, she
was compelled to
file the action to nullify said patent is not correct.
The court has ruled before in Amerol vs. Bagumbaran that
notwithstanding the irrevocability of the Torrens title already issued in the
name of another person, he can still be compelled under the law to reconvey
the subject property to the rightful owner. 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. 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, or to one with a better
right.Yet, the right to seek reconveyance based on an implied or constructive
trust is not absolute nor is it imprescriptible. An action for reconveyance

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based on an implied or constructive trust must perforce prescribe in ten

years from the issuance of the Torrens title over the property. The court
upheld the decision of the trial court.

Adille vs. CA, 157 SCRA 672,

January 29, 1988
Registration is not equivalent to notice of repudiation when it is done
to defraud the others. Torrens title cannot be used as shield for fraud.
FACTS:
There was a woman who had two husband. With the first husband, she
produced the Petitioner. The second husband, the Respondents. Meanwhile,
this woman owned a land and sold the same to a third person with right of
repurchase. However, when the woman died, it was Petitioner who by
himself repurchased the land and later on he executed an affidavit of sole
ownership and registered the land unto himself alone. Eventually, the other
heirs (Respondent) learned of the registration so they filed an action to
cancel the title.
Now Petitioner claims prescription almost on similar grounds with the
previous case, i.e. the registration constituted constructive notice to the
other heirs, if not to the world.
ISSUE:
Whether or not Petitioner is correct.

RULING:

161

NO. First of all, the redemption by Petitioner benefited all so that the
ownership did not transfer to him alone. The other heirs only need to
reimburse him.
As to the notice, the registration by Petitioner cannot be considered as
notice of the repudiation because they were done in bad faith to deprive the
other co-heirs. In fact, they were done clandestinely. One of the co-heir in
fact was in possession of the land and yet he was not informed of the
pending registration nor ousted by Petitioner. Hence, should there have
been any notice, it would be during litigation when the heirs finally learned
of the registration. In that case, there is no prescription yet.

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BAR NOTES
IN CASE OF FRAUD
A title issued pursuant to a patent under administrative proceeding is as
indefeasible as a title secured in a judicial proceeding. But even after the
lapse of one year from the issuance of the patent, the government may still
initiate an action for reversion of the land to the public domain if the land is
titled through fraud or misrepresentation as when the applicant stated that
the subject land is exclusively possessed by him when in truth it overlaps the
land of an adjacent owner. (Republic of the Philippines vs. CA and Heirs of
Bullongan, 255 SCRA 335).
Generally, a forged deed is void but it can be the root of a valid title if
registered in the name of the forger then transferred to an innocent purchaser
for value absent any showing that the buyer had any part in the anomaly.
Hence, the rights of the innocent purchaser for value must be respected. The
proper recourse of the true owner is to bring an action for damages against
the party who caused the fraud. (Eduarte vs. CA, 253 SCRA 391).
A party deprived of his land by confirmation of title through actual fraud
may seek for reopening of a decree of registration within one year from the
issuance of the decree of registration. Before the expiration of the one-year
period from the entry of the decree, the court retains control of the decision
which, after hearing and actual fraud was proved to exist, may adjudicate the
land to any party entitled thereto. (Heirs of Manuel Roxas and Trinidad De
Leon vs. CA, 270 SCRA 309).
Red Notes in Civil Law Actual fraud or extrinsic fraud proceeds from the
intentional deception produced by means of misrepresentation or
concealment of a material fact. Extrinsic fraud prevents the party from

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presenting his entire case to the court. (Heirs of Manuel Roxas and Trinidad
De Leon vs. CA, 270 SCRA 309).
Fraud is extrinsic or collateral where a litigant commits acts outside of the
trial of the case the effect of which prevents a party from having a trial, a
real contest or from presenting his case to the court, or where it operates
upon matters pertaining, not to the judgment itself, but to the manner in
which it was procured so that there is no fair submission of the controversy.
Accordingly, use of forged document or perjured witness are not extrinsic
fraud as it does not preclude the participation of any party in the
proceedings. (Strait Times, Inc. vs. CA, 294 SCRA 714).
Constructive trust is created in equity in order to prevent unjust enrichment.
Thus, onewho, by fraud, duress or abuse of confidence, obtains or holds the
legal right to property which he ought not, in equity and good conscience, so
hold has no valid title to said property and therefore cannot dispose of the
same. Hence, a widower who adjudicates the entire conjugal property to
himself holds the children's share in the property in trust. (Marquez vs. CA,
300 SCRA 653).
A certificate of title cannot be used as a shield to perpetuate fraud. Any false
statement in the application for a land patent shall ipso facto produce the
cancellation of the same even after the lapse of one year from issuance of
said patent pursuant to Section 101 of the Public Land Act wherein an action
may be undertaken for the reversion of the land to the public domain.
(Francisco Baguio vs. Republic, et al., 301 SCRA 450).

164

EFFECT OF FORGERY

Torres vs CA, 186 SCRA 672

JUNE 21, 1990
FACTS:
In 1969, sisters Antonia Torres and Emeteria Baring entered into a
joint venture agreement with Manuel Torres. Under the agreement, the
sisters agreed to execute a deed of sale in favor Manuel over a parcel of
land, the sisters received no cash payment from Manuel but the promise of
profits (60% for the sisters and 40% for Manuel) said parcel of land is to
be developed as a subdivision.
Manuel then had the title of the land transferred in his name and he
subsequently mortgaged the property. He used the proceeds from the
mortgage to start building roads, curbs and gutters. Manuel also contracted
an engineering firm for the building of housing units. But due to adverse
claims in the land, prospective buyers were scared off and the subdivision
project eventually failed.
The sisters then filed a civil case against Manuel for damages
equivalent to 60% of the value of the property, which according to the
sisters, is whats due them as per the contract.
The lower court ruled in favor of Manuel and the Court of Appeals
affirmed the lower court.
The sisters then appealed before the Supreme Court where they
argued that there is no partnership between them and Manuel because the
joint venture agreement is void.

165

ISSUE:
Whether or not there exists a partnership.
RULING:
Yes. The joint venture agreement the sisters entered into with Manuel
is a partnership agreement whereby they agreed to contribute property
(their land) which was to be developed as a subdivision. While on the other
hand, though Manuel did not contribute capital, he is an industrial partner
for his contribution for general expenses and other costs. Furthermore, the
income from the said project would be divided according to the stipulated
percentage (60-40). Clearly, the contract manifested the intention of the
parties to form a partnership. Further still, the sisters cannot invoke their
right to the 60% value of the property and at the same time deny the same
contract which entitles them to it.
At any rate, the failure of the partnership cannot be blamed on the sisters,
nor can it be blamed to Manuel (the sisters on their appeal did not show
evidence as to Manuels fault in the failure of the partnership). The sisters
must then bear their loss (which is 60%). Manuel does not bear the loss of
the other 40% because as an industrial partner he is exempt from losses.

166

EFFECT OF LOSS

FLORDELIZA CABUHAT vs. CA and MERCEDES H. AREDE

G.R. No. 122425, Sept. 28, 2001
FACTS:
Mary Ann Arede was the adopted daughter of appellant Mercedes
Arede. In 1972, appellant purchased a parcel of land in Cavite, and was
registered by appellant in Mary Ann Aredes name and the corresponding
title was issued by the Register of Deeds of Cavite as TCT No. T-56225.
Later on, unknown to appellant, Mary Ann Arede obtained a
reconstituted owners duplicate of TCT No. T-56225 thru the use of a
falsified court order. Using this reconstituted title, Mary Ann Arede
mortgaged the land to Rural Bank. Upon release of the mortgage, the land
was again mortgaged by Mary Ann Aredeto appellee FlordelizaCabuhat,
which mortgage was registered by appellee on the following day at the
Register of Deeds of Cavite.
It appeared however that prior to the second mortgage, the subject lot
was sold by Mary Ann Arede to appellant Mercedes Arede as evidenced by a
Deed of Sale. Unfortunately, this sale was not registered by appellant.
Hence, upon knowledge of the mortgage to appellee Cabuhat, appellant
was prompted to commence the instant suit for annulment of title.
Judgment was rendered by the lower court against defendant Mary Ann
Arede, decreeing, among others, that the mortgage lien in favor of defendant
FlordelizaCabuhat is rendered valid and binding.

167

Mercedes appealed to the CA arguing that the mortgage lien was invalid
because: (1) the registration was procured through the presentation of a
forged owners duplicate certificate of title, in violation of Section 53 of
Presidential Decree 1529; and (2) the mortgage constituted when Mary Ann
was no longer the absolute owner of the subject property contravened
Article 2085 of the New Civil Code.
CA rendered judgment granting Mercedes appeal, reversing and setting
aside the trial courts decision upholding the mortgage lien in favor of
Flordeliza.
CA relied solely on the provisions of Article 2085 of the New Civil Code,
which states, in part, that for a mortgage to be valid, the persons
constituting the pledge or mortgage should have the free disposal of their
property, and in the absence thereof, they should be legally authorized for
the purpose. It also cited the 1954 case of Parqui v. PNB,[3] wherein the
mortgage was declared null and void since the registration thereof was
procured by the presentation of a forged deed.

ISSUE:
Whether or not the mortgage lien, in favor of Cabuhat, over the
subject property is valid.

RULING:
Yes. It is well-settled that even if the procurement of a certificate of title
was tainted with fraud and misrepresentation, such defective title may be the
source of a completely legal and valid title in the hands of an innocent
purchaser for value.

168

Just as an innocent purchaser for value may rely on what appears in the
certificate of title, a mortgagee has the right to rely on what appears in the
title presented to him, and in the absence of anything to excite suspicion, he
is under no obligation to look beyond the certificate and investigate the title
of the mortgagor appearing on the face of the said certificate. Furthermore,
it is a well-entrenched legal principle that when an innocent mortgagee who
relies upon the correctness of a certificate of title consequently acquires
rights over the mortgaged property, the courts cannot disregard such rights.
Article 2085 of the Civil Code, which requires that the mortgagor must
have free disposal of the property, or at least have legal authority to do so,
admits of exceptions. In quite a number of instances, this Court has ruled
that the said provision does not apply where the property involved is
registered under the Torrens System.
Furthermore, Section 39 of Act No. 496 provides that every person
receiving a certificate of title in pursuance of a decree of registration, and
every subsequent purchaser (or mortgagee) of registered land who takes a
certificate of title for value in good faith, shall hold the same free of all
encumbrance except those noted on said certificate.
This Court has uniformly held that when a mortgagee relies upon what
appears on the face of a Torrens title and loans money in all good faith on
the basis of the title in the name of the mortgagor, only thereafter to learn
that the latters title was defective, being thus an innocent mortgagee for
value, his or her right or lien upon the land mortgaged must be respected
and protected, even if the mortgagor obtained her title thereto through
fraud.
In the case at bar, there is no doubt that petitioner was an innocent
mortgagee for value. When Mary Ann mortgaged the subject property, she
presented to petitioner Flordeliza an owners duplicate certificate of title

169

that had been issued by the Register of Deeds. The title was neither forged
nor fake. Petitioner had every right to rely on the said title which showed on
its face that Mary Ann was the registered owner. There was no reason to
suspect that Mary Anns ownership was defective. Besides, even if there had
been a cloud of doubt, Flordeliza would have found upon verification with
the Register of Deeds that Mary Ann was the titled owner and that the
original title on file with the said office was free from any lien or
encumbrance, and that no adverse claim of ownership was annotated
thereon.
Petitioners reliance on the clean title of Mary Ann was reinforced by
the fact that the latter had previously mortgaged the same property to a bank
which accepted the property as collateral on the strength of the same
owners duplicate copy of the title presented by Mary Ann. Certainly,
petitioner Flordeliza cannot be expected or obliged to inquire whether the
said owners duplicate copy presented to her was regularly or irregularly
issued, when by its very appearance there was no reason to doubt its
validity.
The record shows that petitioner loaned the amount of P300,000.00 to
Mary Ann, proving that not only was she an innocent mortgagee for value,
but also one who in good faith relied on the clean title of Mary Ann. In
accepting such a mortgage, petitioner was not required to make further
investigation of the title presented to her to bind the property being given as
security for the loan.
The Decision of the CA is SET ASIDE, and the Decision of the RTC of
Cavite City, is REINSTATED in all aspects.

170

DOUBLE TITLES

GARCIA VS. COURT OF APPEALS

GR NO. L-48971, January 22, 1980
FACTS:
This case is about the issuance of two or more transfer certificates of
title to different persons for the same lot, or subdivisions thereof, due to the
fact that the original title was allegedly not cancelled when the first transfer
certificates of title were issued to replace the original title.
A deed of sale for lots E and G of Hacienda Maysilo and covered by OCT
No. 983 was executed in favor of Ismael Lapus, a bona fide occupant
thereof. The deed of sale was presented for registration and contained
entries showing that it was annotated on the back of the OCT. Contrary to
SOP however, the deed of sale was not annotated on the OCT and that
consequently, that title was apparently not cancelled.
As a result of the registration of the deed of sale, TCT No. 4910 (Lapus
Title) was issued to Lapus. Upon his death, the two lots were inherited by
his daughter Carolina Lapuz-Gozon, who had the land subdivided into 55
lots and sold some to her now co-respondents. Lapus and successors-ininterest have been in possession of the lands even before 1910 of more than
70 years.
In 1962, the Riveras, alleged heirs of the late Maria de la Concepcion Vidal
filed a motion in land registration cases, alleging that they were deprived of
their participation in the Hacienda Maysilo. Since per the OCT the land
seemed unencumbered, the court adjudicated the land in their favor. The
OCT was then cancelled and TCT No. 112235 (Rivera Title) was issued
to the Riveras. Lots 5 and 7 (E and G) were then assigned to Bartolome

171

Rivera to Sergio Cruz and Pacifico Garcia, and subsequent TCTs were
issued in their behalf.
Garcia had Lot 7 (G) subdivided into lots A and B, retained lot A and
assigned B to Antonio Munoz. Munoz mortgaged lot B to Associated
Banking Corp.
On the other hand, Cruz sold Lot 5 (E) to Santiago Go. Go mortgaged Lot 5
to Philippine National Bank. Both Munoz and Go did not pay their mortgage
debts, hence the two banks foreclosed the properties. PNB bought the
mortgaged Lot 5 at the auction, but notice of lis pendens was already
annotated on the title.
Riveras and their successors-in-interest have never set foot on the disputed
lots.
Gozon finally learned about the Riveras and others acquiring the land, had
her adverse claims registered on the titles of lots 5 and 7 and filed an action
to quiet title and damages.
The trial court ruled in favor of Gozon and co-plaintiffs and voided the
TCTs issued to the Riveras, others. CA affirmed the decision. Garcia and
PNB appealed.

ISSUE:
Whether or not the 1920 Lapus title prevails over the 1963 Rivera title and
subsequent titles derived from it?
RULING:
Yes, Lapus title prevails. Lapus was an innocent purchaser for value
who validly transmitted to his successors-in-interest his indefeasible title or

172

ownership over the disputed lots. That title could not be nullified or defeated
by the issuance 43 years later to other persons of another title over the same
lots due to the failure of the register of deeds to cancel the title preceding the
title issued to Lapus. This must be so considering that Lapus and his
successors-in-interest remained in possession of the disputed lots and the
rival claimants never possessed the same.
The general rule is that in the case of two certificates of title, purporting to
include the same land, the earlier in date prevails. It is settled that in this
jurisdiction the maxim prior est in tempore, potior est in jure (he who is first
in time is preferred in right) is followed in land resgistration matters.
The contention of PNB that it was a buyer in good faith has no merit
because the deed of sale in favor of Lapus and the titles issued to him and
his successors-in-interest are all a matter of public record in the registry of
deeds. When a conveyance has been properly recorded, such record is a
constructive notice of its contents and all interests, legal and equitable,
included therein. Under the rule of notice, it is presumed that the purchaser
has examined every instrument of record affecting the title. This presumption
cannot be overcome by proof of innocence and good faith otherwise the very
purpose of the law requiring a record would be destroyed. The bank should
have made an on-the-spot investigation of the lot mortgaged.
Decision affirmed.
Angeles vs Sec of Justice
G. R. No. 142549, July 29, 2005

DOCTRINE:The purpose of registration of the contract of partnership with

the SEC is to give notice to third parties. Failure to register the contract of
partnership does not affect the liability of the partnership and of the

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partners to third persons, nor does it affect the partnerships juridical

personality. A partnership may exist even if the partners do not use the
words partner or partnership.

FACTS:
Angeles spouses filed a criminal complaint for estafa against
Mercado, their brother-in-law claimed that Mercado convinced them to
enter into a contract of antichresis, to last for 5 years, covering 8 parcels of
land planted with fruit-bearing lanzones trees in Nagcarlan, Laguna and
owned by Juan Sanzo. The parties agreed that Mercado would administer
the ands and complete the necessary paperwork. After 3 years, the Angeles
spouses asked for an accounting from Mercado, and they claim that only
after this demand for an accounting did thy discover that Mercado had put
the contract of antichresis over the subject land under Mercado and his
spouses names. Mercado denied the Angeles spouses allegations claimed
that there exists an industrial partnership, colloquially known as sosyo
industrial, between him and his spouse as industrial partners and the
Angeles spouses as financiers, and that this had existed since 1991, before
the contract of antichresis over the subject land Mercado used his and his
spouses earnings as part of the capital in the business transactions which
he entered into in behalf of the Angeles spouses. It was their practice to
enter into business transactions with other people under the name of
Mercado because the Angeles spouses did not want to be identified as the
financiers
attached bank receipts showing deposits in behalf of Emerita Angeles and
contracts under his name for the Angeles spouses.
During the barangay conciliation proceedings, Oscar Angeles stated
that there was a written sosyo industrial agreement: capital would come
from the Angeles spouses while the profit would be divided evenly between

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Mercado and the Angeles spouses Provincial Prosecution Office: first

recommended the filing of a criminal information for estafa, but after
Mercado filed his counter-affidavit and moved for reconsideration, issued
an amended resolution dismissing the complaint Angeles spouses appealed
to Sec. of Justice, saying that the document evidencing the contract of
antichresis executed in the name of the Mercado spouses, instead of the
Angeles spouses, and that such document alone proves Mercados
misappropriation of their P210, 000
Secretary of Justice: dismissed the appeal
o Angeles spouses failed to show sufficient proof that Mercado
deliberately deceived them in the transaction
o Mercado satisfactorily explained that the Angeles spouses do not want
to be revealed as the financiers
o Under the circumstances, it was more likely that the Angeles spouses
knew from the very start that the questioned document was not really in
their names
o A partnership truly existed between the Angeles spouses and Mercado,
which was clear from the fact that they contributed money to a common
fund and divided the profits among themselves.
o Angeles spouses acknowledged their joint business venture in the
barangay conciliation proceedings although they assailed the manner
the business was conducted
o Although the legal formalities for the formation were not adhered to,
the partnership relationship was evident.
o There is no estafa where money is delivered by a partner to his copartner on the latters representation that the amount shall be applied
to the business of their partnership. In case of the money received, the
co-partners liability is civil in nature
ISSUES:

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1. Whether or not the Sec. of Justice committed grave abuse of discretion

in dismissing the appeal - No
2. Whether or not a partnership existed between Mercado and the
Angeles spouses - Yes
3. Whether or not there was misappropriation by Mercado No
RULING:
1. Angeles spouses fail to convince that the Secretary of Justice
committed grave abuse of discretion when he dismissed their appeal.
Moreover, they committed a procedural error when they failed to file a
motion for reconsideration of the Sec. of Justices resolution, which is
already enough reason to dismiss the case.
2. Angeles spouses allege that they had no partnership with Mercado,
relying on Arts. 1771 to 1773 of the Civil Code. The Angeles spouses
position that there is no partnership because of the lack of a public
instrument indicating the same and a lack of registration with the SEC holds
no water. The Angeles spouses contributed money to the partnership and not
immovable property. Mere failure to register the contract of partnership
with the SEC does not invalidate a contract that has the essential requisites
of a partnership. The purpose of registration is to give notice to third
parties. Failure to register does not affect the liability of the partnership and
of the partners to third persons, nor does it affect the partnerships juridical
personality. The Angeles spouses admit to facts that prove the existence of a
partnership. A contract showing a sosyo industrial or industrial partnership.
Contribution of money & industry to a common fund division of profits
between the Angeles spouses and Mercado.

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3. Mercado satisfactorily explained that the Angeles spouses do not want

to be revealed as the financiers, thus the document which was in the name of
Mercado and his spouse fail to convince that there was deceit or false
representation that induced the Angeles spouses to part with their money.
Even the RTC of Sta. Cruz, Laguna, which handled the civil case filed by the
Angeles spouses against Mercado and Leo Cerayban stated that it was the
practice to have the contracts secured in Mercados name as the Angeles
spouses fear being kidnapped by the NPA or being questioned by the BIR as
Oscar Angeles was working with the government.

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TITLES FROM VOID TITLES ARE ALSO VOID

De Santos vs IAC, 157 SCRA 295,
June 2, 1993

FACTS:
Petitioners are co-owners of a parcel of land in Barrio Wawa,
Binangonan, Rizal (area: 19,061 sq m). Petitioners allege that in October
1981, without their knowledge or consent, Lorenzo Cadiente, a private
contractor and the Provincial Engineer of Rizal constructed a road 9 meters
wide and 128.70 meters long occupying 1,165 sq m of their parcel of land.
Aside from the road, an artificial creek 23.20 meters wide and 128.69 meters
long was also constructed, occupying an area of 2,906 sq m of their
property. Constructed in a zigzag manner, the creak meandered through
their property
Petitioners files two cases which were later consolidated. Solicitor
General filed a motion to dismiss both cases several grounds, including that
both cases were in reality suits against the state which could not be
maintained without the State's consent. The lower court dismissed the
petition; petitioners elevated the case to the SC on certiorari, which referred
the cases back to the IAC. IAC ruled: the two actions cannot be maintained
because they are suits against the State without consent. Case was again
elevated to the SC on certiorari
ISSUE:
Whether or not the consolidated actions, as suits against the State,
can be maintained
RULING:

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The doctrine of governmental immunity from suit cannot serve as an

instrument for perpetrating an injustice on a citizen; it cannot serve as
defense by the State against an action for payment by the owner. The
respondent government officials executed a shortcut in appropriating
petitioners' property for public use; no expropriation proceedings had been
undertaken prior to the construction of the projects. Damages may be
awarded the petitioners in the form of legal interest on the price of the land
to be reckoned from the time of the unlawful taking. Petition granted. Civil
Cases remanded to the lower court for trial on the merits after the Republic
of the Philippines shall have been impleaded as defendant in both cases.

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FORGED DEED OF SALE

Adoracion Rosales et al. vs. Leonarda Burgos et al
G.R. No. 143573 January 30, 2009

FACTS:
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, 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 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. IThe Rufloes filed a complaint for damages
against Delos Reyes alleging that Angel Rufloe died in 1974, which was four
(4) years before the alleged sale in favor of Delos Reyes.
During the pendency of the case, Delos Reyes sold the subject property to
respondent siblings Anita, Angelina, Angelito and Amy (Burgos siblings). A
new title was then issued in their names. 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.
The trial court rendered its decision declaring that the Deed of Sale in favor
of Delos Reyes was falsified as the signatures of the spouses Rufloe had

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been forged. The trial court ruled that Delos Reyes did not acquire
ownership over the subject property. Said decision had become final and
executory. Respondents interposed an appeal to the CA. In their appeal,
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. The CA reversed and set aside the ruling of the trial
court, declaring in the process that respondents were purchasers in good
faith and for value.
ISSUE:
(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.
RULING:
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. 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.
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

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condition of the property. However, this rule admits of an unchallenged

exception: 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 and a action for damages and criminal case for estafa, filed by
the Rufloes against Delos Reyes, were both pending before the court. 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. 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. 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.
without such inquiry, the buyer can hardly be regarded as a buyer in good
faith. 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.

Heirs of Spouses Joaquin Manguardia And Susana Manalo vs. Heirs of

Simplicio Valles and Marta Valles G.R. No. 177616 August 27, 2014
FACTS:
Marta, Simplicio, Melquiades, Rustico, Visitacion and Catalina, all
surnamed Valles, were siblings. Simplicio and Marta were the registered

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owners of a 42,215-square meter property in Barrio Cudian, Ivisan, Capiz

known as Lot 835 and covered by Original Certificate of Title (OCT) No.
RO-4017.
Marta died in 1943 and was survived by her illegitimate daughter,
Encarnacion Ordas (Encarnacion). On the other hand, Simplicio died on
April 20, 1957. He was survived by his wife Villarica Ordas, who passed
away sometime in 1969, and his children, Felicisimo, Adelaida, Rosario,
Juan, and Dominica, all surnamed Valles. With the exception of Felicisimo,
all of Simplicios children died single and childless. Felicisimo was
survived by his wife, Presentacion Capapas, and his children Graciano,
Sulpicio, Teresita and Antonio (now deceased).
On October 28, 1968, a notarized Deed of Absolute Sale over Lot 835 was
executed by Simplicio and Marta in favor of their brothers, Melquiades and
Rustico; Simplicios daughter, Adelaida Valles (Adelaida); and Martas
daughter, Encarnacion. Said deed was registered in the Registry of Deeds of
Capiz, resulting in the cancellation of OCT No. RO-4017 and the issuance of
Transfer Certificate of Title (TCT) No.T-9409. the alleged buyers and new
registered owners executed a Subdivision Agreement,12 subdividing Lot 835
into four lots. Said Subdivision Agreement was also registered on the same
day in the Registry of Deeds of Capiz.
As a result of the conveyances, the registered owners of Lot 835 are:
a) Adelaida (Lot 835-A);
b) Spouses Manguardia (Lots 835-B and 835-C); and
c) Leonardo and Rebecca (Lot 835-D).
On December 13, 1999, the heirs of Simplicio and Marta commenced an
action for the Declaration of Nullity of Certificates of Title and Deeds of
Sale, Cancellation of Certificates of Title, Recovery of Possession and
Damages37 against the heirs of spouses Manguardia and the heirs of
spouses Leonardo and Rebecca (petitioners) in the RTC of Roxas City.
Respondents alleged that in September 1998 they discovered the various
documents of sale and titles covering Lot 835 when Teresita and her siblings
agreed to subdivide the lot among the heirs of Simplicio and Marta and

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searched for the title of the property in the Registry of Deeds of Capiz. They
averred that the purported Deed of Absolute Sale dated October 28, 1968 is
a forgery because Marta and Simplicio were long dead when the said
document was executed. They averred that the purported Deed of Absolute
Sale dated October 28, 1968 is a forgery because Marta and Simplicio were
long dead when the said document was executed. Consequently, all titles
emanating therefrom including the titles covering the subdivided lots of Lot
835 registered in the names of spouses Manguardia, Leonardo and Rebecca,
and Adelaida, are all null and void. Respondents, therefore, prayed that
petitioners be ordered to remove the improvements introduced on the
disputed lot and vacate the same, and that a new title be issued over Lot 835
in the names of Marta and Simplicio as owners.
In their Answer, the heirs of spouses Manguardia averred that their
predecessors-in-interest were innocent purchasers in good faith and for
value, having acquired Lots 835-B and 835-C in 1980 from their registered
owners and occupants, Pedro and Soledad. They further averred that their
parents had been in possession of the lots since they purchased them in
1980, and had since then constructed four buildings thereon for their poultry
business, without opposition from anyone, including Graciano who occupies
the adjacent Lot 835-A. They maintained that the titles in the names of the
spouses Manguardia are valid and legal. In addition, since the documents
of sale and Torrens titles were duly registered in the Registry of Deeds, and
that actual possession by the different transferees spanning a period of over
30 years were known to the respondents and their predecessors without any
complaint or opposition, the claim of respondents is barred by prescription,
estoppel and laches. The heirs of the spouses Manguardia moreover
asserted that the Complaint against them fails to allege a cause of action
and that the same was not brought by the real parties-in-interest.
ISSUE:

184

Whether the honorable court of appeals twentieth division erred in denying

the appeal of petitioners and in affirming the assailed decision of the court a
quo petitioners herein being buyers in good faith.
HELD:
The petition lacks merit.
Well entrenched is the principle that factual findings of the trial court, when
adopted and confirmed by the CA, are final and conclusive and may not be
reviewed on appeal by this Court. The Courts role in a petition under Rule
45 is limited to reviewing or reversing errors of law allegedly committed by
the appellate court. This rule, however, is not without well-defined
exceptions. Findings of fact of the trial court and the CA may be set aside
when such findings are not supported by the evidence or where the lower
courts' conclusions are based on a misapprehension of facts. Considering
the contention of petitioners that misinterpretation of facts was committed,
this Court embarked on the task of reviewing the facts of this case.

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INNOCENT PURCHASER

Florentino W. Leong And Elena Leong, Et Al. vs. Edna See

G.R. No. 194077 December 3, 2014
FACTS:
The spouses Florentino Leong and Carmelita Leong used to own the
property located at No. 53941 Z.P. De Guzman Street, Quiapo, Manila.
Petitioner Elena Leong (Elena) is Florentino's sister-in-law. She had stayed
with her in-laws on the property rental-free for over two decades until the
building they lived in was razed by fire. They then constructed makeshift
houses, and the rental-free arrangement continued.
Florentino and Carmelita immigrated to the United States and eventually
had their marriage dissolved in Illinois. A provision in their marital
settlement agreement states that Florentino shall convey and quitclaim all
of his right, title and interest in and to 540 De Guzman Street, Manila,
Philippines . . . to Carmelita.
On November 14, 1996, Carmelita sold the land to Edna. In lieu of
Florentino's signature of conformity in the deed of absolute sale, Carmelita
presented to Edna and her father, witness Ernesto See, a waiver of interest
notarized on March 11, 1996 in Illinois. In this waiver, Florentino reiterated
his quitclaim over his right, title, and interest to the land. Consequently, the
lands title, covered by TCT No. 231105, was transferred to Edna's name.
On April 1, 1997, Edna filed a complaint for recovery of possession against
Elena and the other relatives of the Leong ex-spouses. The complaint
alleged that in 1995 after the fire had razed the building on the land, Elena
erected makeshift houses on the land without Carmelitas knowledge or
consent.
On April 23, 1997, Florentino filed a complaint for declaration of nullity of
contract, title, and damages against Carmelita Leong, Edna C. See, and the

186

Manila Register of Deeds, alleging that the sale was without his consent.
The two cases were consolidated.
The Regional Trial Court, in its decision ruled in favor of Edna which was
affirmed by CA.
Thus, a petition for review was filed.
Petitioners contend that the principle of indefeasibility of Torrens titles does
not apply when fraud exists, and respondent was a buyer in bad faith.
Respondent knew at the time of the purchase that Elena had actual
possession of the property, thus, she should have made inquiries on their
right to the property.
Petitioners argue the conjugal nature of the property, evidenced by the title
in the names of Florentino and Carmelita Leong, and the waiver relied upon
by respondent. They cite Articles 3 and 15 of the Civil Code, and Articles 87
and 134of the Family Code, to support their contention that respondent
should have demanded Florentinos consent to the sale. Petitioners submit
that Florentinos waiver is void since donations between spouses are void.
Petitioners argue that respondent should bear the loss of her negligence in
purchasing the property without Florentinos consent. They cite at length
Aggabao v. Parulan, Jr. to support their argument that respondent failed to
exercise the required due diligence in the purchase of the property.
Consequently, petitioners submit that the lower courts erred in ruling that
respondent was entitled to possession of the property.
Respondent counters that only questions of law can be raised in a petition
for review on certiorari, and petitioners raise purely factual questions.
In any event, the lower courts correctly found that respondent is a purchaser
in good faith for value who exercised the necessary diligence in purchasing
the property.

187

ISSUE:
Whether or not the CA erred in its decision affirming in to the trial court's
decision granting Edna possession and ownership over the land upon
finding her to be a buyer in good faith and for value, and resolution denying
reconsideration.
RULING:
Petition lacks merit.
The Torrens system was adopted to obviate possible conflicts of title by
giving the public the right to rely upon the face of the Torrens certificate and
to dispense, as a rule, with the necessity of inquiring further.
One need not inquire beyond the four corners of the certificate of title when
dealing with registered property. Section 44 of Presidential Decree No.
1529 known as the Property Registration Decree recognizes innocent
purchasers in good faith for value and their right to rely on a clean title. An
innocent purchaser for value refers to someone 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. One claiming to be an
innocent purchaser for value has the burden of proving such status.
Generally, factual findings of lower courts are deemed conclusive and
binding upon this court. No cogent reason exists to overturn the findings of
both lower courts.
Even assuming the procurement of title was tainted with fraud and
misrepresentation, such defective title may still be the source of a
completely legal and valid title in the hands of an innocent purchaser for
value.
Respondent, an innocent purchaser in good faith and for value with title in
her name, has a better right to the property than Elena. Elenas possession
was neither adverse to nor in the concept of owner.

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Barstowe Phils vs Republic

G.R. No. 133110 Mach 28, 2007

The Republic may not go after innocent purchasers of lots of a subdivision

owner (who is guilty of securing titles fraudulently) who looked into TCTs of
developer and found nothing to raise doubts as to their validity and
authenticity.
FACTS:
This case involves the conflicting titles to the same parcels of land (subject
lots) of petitioner Barstowe Philippines Corporation (BPC) and the
respondent Republic of the Philippines (Republic). Due to the fire that
gutted the Office of the Quezon City Register of Deeds on 11 June 1988 and
destroyed many certificates of title kept therein, Antonio sought the
administrative reconstitution of the original copies and owners duplicate
copies of 2 TCTs. The Republic applied for administrative reconstitution of
the same with the LRA. It was then that the Republic came to know that
another party had applied for reconstitution which also covered the same
lots. The RTC rendered judgment declaring both BPC and Republic as
buyers in good faith. But it upheld BPCs rights over the republic since it
was registered earlier. The Ca ruled for the Republic.
ISSUE:
Who between BPC and the Republic has a better title over the subject lots?
HELD:

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Ultimately, this Court is called upon to determine which party now has
superior title to the subject lots: the Republic, BPC, the intervenors
Abesamis, Nicolas-Agbulos, and spouses Santiago, or Servandos heirs?
BPC, the intervenors Abesamis, Nicolas-Agbulos, spouses Santiago, and
Servandos heirs derived their title to the subject lots from Servandos TCTs
No. 200629 and 200630. This Court then is compelled to look into the
validity, authenticity, and existence of these two TCTs.
However, there is an absolute dearth of information and proof as to how
Servando acquired ownership and came into possession of the subject lots.
Relying on the findings of the LRA, it was established that TCTs No. 200629
and 200630 were forged and spurious, their reconstitution was also
attended with grave irregularities. BPC was unable to attack the authenticity
and validity of the titles of the Republic to the subject lots, and could only
interpose the defense that it was a buyer in good faith. It points out that it
purchased the subject lots from Servando and registered the same, way
before the titles of Servando were declared null by the RTC. Under Section
55 of the Land Registration Act, as amended by Section 53 of Presidential
Decree No. 1529, an original owner of registered land may seek the
annulment of a transfer thereof on the ground of fraud. However, such a
remedy is without prejudice to the rights of any innocent holder for value
with a certificate of title.
A purchaser in good faith and for value is one who buys the property of
another, without notice that some other person has a right to or interest in
such property, and pays a full and fair price for the same at the time of such
purchase or before he has notice of the claim or interest of some other
person in the property.
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. A deed of sale

190

executed by an impostor without the authority of the owner of the land sold
is a nullity, and registration will not validate what otherwise is an invalid
document. However, 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, the vendee
had the right to rely upon what appeared in the certificate and, in the
absence of anything to excite suspicion, was under no obligation to look
beyond the certificate and investigate the title of the vendor appearing on
the face of said certificate.
Now the question is whether BPC qualifies as an innocent purchaser for
value which acquired valid titles to the subject lots, despite the fact that the
titles of its predecessor-in-interest were found to be forged and spurious.
This Court finds in the negative.
BPC cannot really claim that it was a purchaser in good faith which relied
upon the face of Servandos titles. It should be recalled that the Quezon City
Register of Deeds caught fire on 11 June 1988. Presumably, the original
copies of TCTs were burnt in the said fire. Servandos heirs sought the
administrative reconstitution of the TCTs. If BPC bought the subject lots
after TCTs were destroyed when the Quezon City Register of Deeds burned
down, but before the said certificates were reconstituted, then on the face of
what titles did BPC rely on before deciding to proceed with the purchase of
the subject lots? There was no showing that there were surviving owners
duplicate copies of TCTs.
Without the original copies and owners duplicate copies of TCTs, BPC had
to rely on the reconstituted certificates. Under section 7 of Republic Act No.
26,57 "Reconstituted titles shall have the same validity and legal effect as
the originals thereof" unless the reconstitution was made extrajudicially.58
In this case, TCTs were reconstituted administratively, hence,
extrajudicially. In contrast to the judicial reconstitution of a lost certificate

191

of title which is in rem, the administrative reconstitution is essentially exparte and without notice.59 The reconstituted certificates of title do not
share the same indefeasible character of the original certificates of title for
the following reason
x x x the nature of a reconstituted Transfer Certificate of Title of registered
land is similar to that of a second Owner's Duplicate Transfer Certificate of
Title. Both are issued, after the proper proceedings, on the representation of
the registered owner that the original of the said TCT or the original of the
Owner's Duplicate TCT, respectively, was lost and could not be located or
found despite diligent efforts exerted for that purpose. Both, therefore, are
subsequent copies of the originals thereof. A cursory examination of these
subsequent copies would show that they are not the originals. Anyone
dealing with such copies are put on notice of such fact and thus warned to
be extra-careful. x x x.
The fact that the TCTs were reconstituted should have alerted BPC and its
officers to conduct an inquiry or investigation as might be necessary to
acquaint themselves with the defects in the titles of Servando. This Court
cannot declare BPC an innocent purchaser for value, and it acquired no
better titles to the subject lots than its predecessors-in-interest, Servando
and Antonio.

The general rule is that the State cannot be put in estoppel by the mistakes
or errors of its officials or agents. However, like all general rules, this is
also subject to exceptions, viz:
"Estoppels against the public are little favored. They should not be invoked
except in rare and unusual circumstances, and may not be invoked where
they would operate to defeat the effective operation of a policy adopted to
protect the public. They must be applied with circumspection and should be

192

applied only in those special cases where the interests of justice clearly
require it. Nevertheless, the government must not be allowed to deal
dishonorably or capriciously with its citizens, and must not play an ignoble
part or do a shabby thing; and subject to limitations x x x the doctrine of
equitable estoppel may be invoked against public authorities as well as
against private individuals."
xxxx
Significantly, the other private respondents Spouses Santos, Spouses
Calaguian, Dela Fuente and Madaya bought such "expanded" lots in good
faith, relying on the clean certificates of St. Jude, which had no notice of any
flaw in them either. It is only fair and reasonable to apply the equitable
principle of estoppel by laches against the government to avoid an injustice
to the innocent purchasers for value.
Abrigo vs. De Vera
G.R. No. 154409 June 21, 2004
FACTS:
Villafania sold a house and lot located Pangasinan and Tigno-Salazar and
Cave-Go covered by a tax declaration. Unknown, however to Tigno-Salazar
and a Cave-Go, Villafania obtained a free patent over the parcel of land
involved. The said free patent was later on cancelled by a TCT.
On Oct 16, 1997, Tigno-Salazar and Cave-Go, sold the house and lot to
the Spouses Abrigo.
On Oct 23, 1997, Villafania sold the same house and lot to de Vera. De
Vera registered the sale and as a consequence a TCT was issued in her
name.

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De Vera filed an action for Forcible Entry and Damages against Spouses
Abrigo before the MTC.
Spouses Abrigo filed a case with the RTC for the annulment of documents,
injunction, preliminary injunction, restraining order and damages
Villafania.
The parties submitted a Motion for Dismissal in view of their agreement in
the instant (RTC) case that neither of them can physically take possession of
the property in question until the instant case is terminated. Hence the
ejectment case was dismissed.
The RTC rendered judgment approving the Compromise Agreement
submitted by the parties. In the said Decision, Villafania was given one year
from the date of the Compromise Agreement to buy back the house and lot,
and failure to do so would mean that the previous sale in favor of TignoSalazar and Cave-Go shall remain valid and binding and the plaintiff shall
voluntarily vacate the premises without need of any demand. Villafania
failed to buy back the house and lot, so the [vendees] declared the lot in
their name
The RTC rendered the assailed Decision awarding the properties to
Spouses Abrigo as well as damages. Moreover, Villafania was ordered to
pay [petitioners and private respondent] damages and attorneys fees.
Not contented with the assailed Decision, both parties [appealed to the
CA].
In its original Decision, the CA held that a void title could not give rise to a
valid one and hence dismissed the appeal of Private Respondent de Vera.
Since Villafania had already transferred ownership to Rosenda TignoSalazar and Rosita Cave-Go, the subsequent sale to De Vera was deemed
void. The CA also dismissed the appeal of Petitioner-Spouses Abrigo and

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found no sufficient basis to award them moral and exemplary damages and
attorneys fees.
On reconsideration found Respondent De Vera to be a purchaser in good
faith and for value. The appellate court ruled that she had relied in good
faith on the Torrens title of her vendor and must thus be protected.
Hence, this Petition.
ISSUE:
Who between petitioner-spouses and respondent has a better right to the
property.
HELD:
The petition is denied, and the assailed decision affirmed. The present case
involves what in legal contemplation was a double sale. Gloria Villafania
first sold the disputed property to Tigno-Salazar and Cave-Go, from whom
petitioners, in turn, derived their right. Subsequently a second sale was
executed by Villafania with Respondent de Vera.
Article 1544 of the Civil Code states the law on double sale thus:
Art. 1544. If the same thing should have been sold to different vendees, the
ownership shall be transferred to the person who may have first taken
possession thereof in good faith, if it should be movable property.
Should it be immovable property, the ownership shall belong to the person
acquiring it who in good faith first recorded it in the Registry of Property.

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Should there be no inscription, the ownership shall pertain to the person

who in good faith was first in the possession; and, in the absence thereof, to
the person who presents the oldest title, provided there is good faith.
There is no ambiguity in the application of this law with respect to lands
registered under the Torrens system.
In the instant case, both Petitioners Abrigo and respondent registered the
sale of the property. Since neither petitioners nor their predecessors (TignoSalazar and Cave-Go) knew that the property was covered by the Torrens
system, they registered their respective sales under Act 3344 For her part,
respondent registered the transaction under the Torrens system because,
during the sale, Villafania had presented the transfer certificate of title
(TCT) covering the property.
Soriano v. Heirs of Magali held that registration must be done in the proper
registry in order to bind the land. Since the property in dispute in the present
case was already registered under the Torrens system, petitioners
registration of the sale under Act 3344 was not effective for purposes of
Article 1544 of the Civil Code.
More recently, in Naawan Community Rural Bank v. Court of Appeals, the
Court upheld the right of a party who had registered the sale of land under
the Property Registration Decree, as opposed to another who had registered
a deed of final conveyance under Act 3344. In that case, the priority in
time principle was not applied, because the land was already covered by
the Torrens system at the time the conveyance was registered under Act
3344. For the same reason, inasmuch as the registration of the sale to
Respondent De Vera under the Torrens system was done in good faith, this
sale must be upheld over the sale registered under Act 3344 to PetitionerSpouses Abrigo.
NOTES:

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The principle in Article 1544 of the Civil Code is in full accord with Section
51 of PD 1529 which provides that:
No deed, mortgage, lease or other voluntary instrument except a will
purporting to convey or affect registered land shall take effect as a
conveyance or bind the land until its registration. Thus, if the sale is not
registered, it is binding only between the seller and the buyer but it does not
affect innocent third persons.
Radiowealth Finance Co. v. Palileo explained the difference in the rules of
registration under Act 3344 and those under the Torrens system in this wise:
Under Act No. 3344, registration of instruments affecting unregistered
lands is without prejudice to a third party with a better right. The
aforequoted phrase has been held by this Court to mean that the mere
registration of a sale in ones favor does not give him any right over the
land if the vendor was not anymore the owner of the land having previously
sold the same to somebody else even if the earlier sale was unrecorded.
The case of Carumba vs. Court of Appeals is a case in point. It was held
therein that Article 1544 of the Civil Code has no application to land not
registered under Act No. 496. Like in the case at bar, Carumba dealt with a
double sale of the same unregistered land. The first sale was made by the
original owners and was unrecorded while the second was an execution sale
that resulted from a complaint for a sum of money filed against the said
original owners. Applying [Section 33], Rule 39 of the Revised Rules of
Court, this Court held that Article 1544 of the Civil Code cannot be invoked
to benefit the purchaser at the execution sale though the latter was a buyer
in good faith and even if this second sale was registered. It was explained
that this is because the purchaser of unregistered land at a sheriffs
execution sale only steps into the shoes of the judgment debtor, and merely
acquires the latters interest in the property sold as of the time the property
was levied upon.

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Applying this principle, x x x the execution sale of unregistered land in

favor of petitioner is of no effect because the land no longer belonged to the
judgment debtor as of the time of the said execution sale.
Good-Faith Requirement
We have consistently held that Article 1544 requires the second buyer to
acquire the immovable in good faith and to register it in good faith. Mere
registration of title is not enough; good faith must concur with the
registration. We explained the rationale in Uraca v. Court of Appeals, which
we quote:
Under the foregoing, the prior registration of the disputed property by the
second buyer does not by itself confer ownership or a better right over the
property. Article 1544 requires that such registration must be coupled with
good faith. Jurisprudence teaches us that the governing principle is primus
tempore, potior jure (first in time, stronger in right). Knowledge gained by
the first buyer of the second sale cannot defeat the first buyers rights except
where the second buyer registers in good faith the second sale ahead of the
first, as provided by the Civil Code. Such knowledge of the first buyer does
not bar her from availing of her rights under the law, among them, to
register first her purchase as against the second buyer. But in converso,
knowledge gained by the second buyer of the first sale defeats his rights even
if he is first to register the second sale, since such knowledge taints his prior
registration with bad faith. This is the price exacted by Article 1544 of the
Civil Code for the second buyer being able to displace the first buyer; that
before the second buyer can obtain priority over the first, he must show that
he acted in good faith throughout (i.e. in ignorance of the first sale and of
the first buyers rights) - from the time of acquisition until the title is
transferred to him by registration, or failing registration, by delivery of
possession.

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Equally important, under Section 44 of PD 1529, every registered owner

receiving a certificate of title pursuant to a decree of registration, and every
subsequent purchaser of registered land taking such certificate for value and
in good faith shall hold the same free from all encumbrances, except those
noted and enumerated in the certificate. Thus, a person dealing with
registered land is not required to go behind the registry to determine the
condition of the property, since such condition is noted on the face of the
register or certificate of title. Following this principle, this Court has
consistently held as regards registered land that a purchaser in good faith
acquires a good title as against all the transferees thereof whose rights are
not recorded in the Registry of Deeds at the time of the sale.

BAR NOTES
GOOD FAITH; INNOCENT PURCHASER FOR VALUE
One who deals with property covered by the Torrens system of registration
need not go beyond the title to determine the condition of the property.
(Legarda vs. CA, 280 SCRA 642).
A person dealing with registered land has the right to rely on the Torrens
certificate of title without the need of inquiring further. Hence, a purchaser
who buys property without notice that some other person has a right to or
interest in such property and pays a full fair price for the property is a buyer
in good faith. (Sandoval vs. CA, 260 SCRA 283).
A person in good faith and for value is defined as one who buys property of
another without notice that some other person has a right to, or interest in,
such property and pays a full and fair price of the time of the purchase or
before he has notice that other person has a right to, or interest in, the

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property. As a rule, he who asserts the status of a purchaser in good faith and
for value has the burden of proving said assertion. As is the common
practice in the real estate industry, an ocular inspection of the premises is a
safeguard a cautious and prudent purchaser usually takes and should he find
out that the land is occupied by anybody else other than the seller who is not
in actual possession, it is incumbent upon the purchaser to verify the extent
of the occupants' possessory rights. (Spouses Sonya Mathay and Ismael
Mathay, Jr. vs. CA, 295 SCRA 356).
An RTC court sitting as a land registration court may determine the validity
of an adverse claim. Purchaser in good faith and for value is one who buys
the property of another without notice that some other person has a right to
or interest in such property and pays a full and fair price for the same on the
time of the purchase or before he has notice of the claims or interest of some
other person in the property. (GSIS vs. CA, 240 SCRA 737).

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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.
TWO ACTIONS ARE BEING REFERRED TO IN THESE PROVISIONS
1.
2.

REMEDIALaction to remove cloud or to quiet title

PREVENTIVEaction to prevent a future cloud or doubt

EXISTENCE OF A CLOUD
The cloud on title exists because
1. Of an instrument or record or claim or encumberance or
proceeding
2. Which is apparently valid or effective
3. But is in truth and in fact, invalid, ineffective, voidable or
unenforceable or extinguished or barred by extinctive prescription
4. And may be prejudicial to the title

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RIGHT OF A PROPERTY OWNER TO HAVE CLOUDS ELIMINATED

1. That their respective rights be determined
2. 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
3. But also for the benefit of both
4. So that he who has a right would see every cloud of doubt over the
property displaced
5. And he could afterwards without fear introduce the improvements he
may desire, to use and even to abuse the property as he deems best
REASONS FOR ALLOWING THE ACTION
1. The prevention of litigation
2. The protection of the true title and possession
3. The promotion of right and justice
(Illustrative Case)

Adlawan v. Adlawan
G.R. No. 161916 January 20, 2006
FACTS:
The instant ejectment suit stemmed from the parties dispute over Lot 7226
and the house built thereon, covered by Transfer Certificate of Title No.
8842, registered in the name of the late Dominador Adlawan and located at
Barrio Lipata, Municipality of Minglanilla, Cebu. In his complaint,
petitioner claimed that he is an acknowledged illegitimate child of
Dominador without any other issue. Claiming to be the sole heir of
Dominador, he executed an affidavit adjudicating to himself Lot 7226 and

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the house built thereon. Out of respect and generosity to respondents who
are the siblings of his father, he granted their plea to occupy the subject
property provided they would vacate the same should his need for the
property arise. Sometime in January 1999, he verbally requested
respondents to vacate the house and lot, but they refused and filed instead
an action for quieting of title with the RTC. Finally, upon respondents
refusal to heed the last demand letter to vacate dated August 2, 2000,
petitioner filed the instant case on August 9, 2000.
On the other hand, respondents denied that they begged petitioner to allow
them to stay on the questioned property and stressed that they have been
occupying Lot 7226 and the house standing thereon since birth. They
alleged that Lot 7226 was originally registered in the name of their
deceased father, Ramon Adlawan and the ancestral house standing thereon
was owned by Ramon and their mother, Oligia Maacap Adlawan. The
spouses had nine children including the late Dominador and herein
surviving respondents Emeterio and Narcisa. During the lifetime of their
parents and deceased siblings, all of them lived on the said property.
Dominador and his wife, Graciana Ramas Adlawan, who died without issue,
also occupied the same. Petitioner, on the other hand, is a stranger who
never had possession of Lot 7226.
Sometime in 1961, spouses Ramon and Oligia needed to finance the
renovation of their house, they transferred ownership of the lot to son
Dominador to obtain a loan. They simulated a deed of sale. He and his wife
did not disturb respondents possession until they died.
ISSUE:
Whether or not petitioner can maintain the instant case for ejectment
HELD:

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NO. RTC lost sight of the fact that the theory of succession invoked by
petitioner would end up proving that he is not the sole owner of Lot 7226.
This is so because Dominador was survived not only by petitioner but also
by his legal wife, Graciana. By intestate succession, Graciana and petitioner
became co-owners of Lot 7226. The Court of Appeals thus correctly held
that petitioner has no authority to institute the instant action as the sole
owner of Lot 7226.
In the instant case, it is not disputed that petitioner brought the suit for
unlawful detainer in his name alone and for his own benefit to the exclusion
of the heirs of Graciana as he even executed an affidavit of selfadjudication over the disputed property. It is clear therefore that petitioner
cannot validly maintain the instant action considering that he does not
recognize the co-ownership that necessarily flows from his theory of
succession to the property of his father, Dominador.
Indeed, respondents not less than four decade actual physical possession of
the questioned ancestral house and lot deserves to be respected especially so
that petitioner failed to show that he has the requisite personality and
authority as co-owner to file the instant case. Justice dictates that
respondents who are now in the twilight years of their life be granted
possession of their ancestral property where their parents and siblings lived
during their lifetime, and where they, will probably spend the remaining
days of their life.

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Paulo Ballesteros vs Rolando Abion

G.R. No. 143361 February 9, 2006

FACTS:
The property subject of this petition is a two-door, three-story commercial
building and the 229 sq.m. parcel of land on which it stands. The property
was originally owned by Ruperto Ensano, as evidenced by TCT No. 6178.
Ownership was subsequently transferred to the Development Bank of the
Philippines (DBP) which, in turn, sold the property to Dr. Rodolfo Vargas in
a deed of absolute sale dated March 30, 1988. Despite these transfers of
ownership, however, the property was registered in the names of DBP and
Dr. Vargas (TCT Nos. 941 and 942, respectively) only on February 21,
1996.
Meanwhile, petitioner entered into a contract of lease for one door of the
building with Ronald Vargas, son of Dr. Vargas, who represented himself as
the absolute owner of the property. Dr. Vargas sold the property to
respondent, evidenced by a deed of absolute sale. TCT No. 949 in the name
of the respondent was subsequently issued. Petitioner again entered into a
new contract with Ronald Vargas extending the term of the original contract
and included the remaining door of the building. Petitioner sought to
register the contract of lease with the Register of Deeds of Iriga City.
However, the contract was entered only in the primary book because it could
not be registered for several reasons: (a) the requisite tax had not been paid
(b) the contract lacked a documentary stamp and (c) the tax declaration of
the property was not in the name of the lessor.
Petitioner received respondents letter demanding that he vacate the
property and RTC issued a writ of execution. Petitioner filed for review with

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the CA. The CA held that petitioners possession of the property from the
date of purchase by respondent was merely by tolerance. Such possession
became unlawful from the time respondent made a demand on petitioner to
vacate it.
ISSUE:
Whether or not the petitioners argument that both lease agreements were
valid therefore he cannot be held an unlawful detainer and that he did not
possess the property by mere tolerance
HELD:
NO. The first premise of petitioners argument, that both lease agreements
were valid, is erroneous. As correctly observed by the RTC and the CA,
Ronald Vargas was not the owner of the property and had no authority to let
it.
Although the lessor need not be the owner of the property being leased, he
should have a right (e.g., either as a usufructuary or a lessee) or at least an
authority (e.g., as an agent of the owner, usufructuary, or lessee) to lease it
out. Here, Ronald Vargas had neither the right nor the authority to grant
petitioner the lease of the property.
Dr. Vargas is deemed to have ratified the first lease because he never
objected to it and in fact allowed petitioner to occupy the property for five
years despite his knowledge of his son Ronalds misdeed. Thus, we consider
the first lease valid. But the same cannot be said of the second lease. Under
the principle of relativity of contracts, the sale of the property by Dr. Vargas
to respondent bound Ronald Vargas as an heir of the seller. Neither did
respondent authorize him to enter into a new lease contract with petitioner.
Thus, Ronald Vargas could not have validly executed the second lease

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agreement upon which petitioner now bases his right to the continued
possession of the property.
The river cannot rise higher than its source. Where the purported lessor is
bereft of any right or authority to lease out the property, then his supposed
lessee does not acquire any right to the possession or enjoyment of the
property.
Suffice it to say that the second lease contract was legally inexistent for lack
of an object certain. Under Arts. 1318 and 1409 (3) of the Civil Code,
contracts the cause or object of which did not exist at the time of the
transaction are inexistent and void ab initio.
Petitioners claim of good faith is of no moment. The good faith of a party in
entering into a contract is immaterial in determining whether it is valid or
not. Good faith, not being an essential element of a contract, has no bearing
on its validity. No amount of good faith can validate an agreement which is
otherwise void. A contract which the law denounces as void is necessarily no
contract at all and no effort or act of the parties to create one can bring
about a change in its legal status.

Any presumption of good faith on the part of petitioner disappeared after he

learned from the Register of Deeds that the property was already registered
in the name of another person. Possession in good faith ceases from the
moment defects in the title are made known to the possessor by extraneous
evidence or by a suit for recovery of the property by the true owner. Every
possessor in good faith becomes a possessor in bad faith from the moment
he becomes aware that what he believed to be true is not so.
When petitioner presented the second lease contract to the Register of Deeds
a day after its execution, his attention was called to the fact that the lessor

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(Ronald Vargas) whom he believed to be the owner of the property had no

authority to lease it out. From that moment, his possession ceased to be in
good faith.
Herminio M. De Guzman et la vs. Tabangao Realty Incorporated
G.R. No. 154262, February 11, 2015
Facts:
Sometime in 1980, Serafin de Guzman (Serafin) and Josefino de Guzman3
(Josefino) applied for, and were granted, authority to distribute oil and
lubricating products manufactured and marketed by Filipinas Shell
Petroleum Corporation (FSPC). In the course of their business, Serafin and
Josefino purchased on credit oil and lubricating products from FSPC, but
they eventually failed to pay for their credit purchases from FSPC. Thus,
FSPC filed before the RTC of Manila a complaint for sum of money against
Serafin and Josefino, docketed as Civil Case No. 120680. After trial, RTCManila rendered judgment ordering Serafin and Josefino to pay their
outstanding obligations to FSPC. Since Serafin and Josefino no longer
appealed, the judgment of RTC-Manila in Civil Case No. 120680 became
final and executory. RTC-Manila granted the motion of FSPC and ordered
the issuance of a writ of execution on May 3, 1983. On June 30, 1983, FSPC
levied upon a parcel of land, with an area of 74,415 square meters, situated
in Sta. Cruz de Malabon, Trece Martires City, Cavite Province (subject
property), covered by Transfer Certificate of Title (TCT) No. 3531 in the
name of spouses Serafin and Amelia de Guzman (spouses De Guzman).
According to the Sheriffs Certificate of Sale dated February 4, 1988, the
subject property was sold, after due publication and notice, at a public
auction, in favor of respondent, which gave the highest bid of P70,000.00.
The Sheriffs Certificate of Sale was annotated on TCT No. 3531 on April
13, 1988. The spouses De Guzman did not redeem the subject property

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within one year from registration of the Sherifffs Certificate of Sale on TCT
No. 3531.
On October 19, 2001, petitioners filed a Complaint for quieting of title
against respondent before RTC-Trece Martires, docketed as Civil Case No.
TM-1118. Petitioners alleged in their Complaint that:
1. They are of legal age, Filipinos and represented herein by their attorneyin-fact, [co-petitioner] HERMINIO M. DE GUZMAN x x x.
xxxx
3. [Petitioners] are the children and only heirs of the spouses Serafin and
Amelia de Guzman who died both intestate on April 23, 2001 and January
01, 1997.
4. The spouses were the owners of a parcel of land situated at Sta. Cruz de
Malabon, Trece Martires City, Cavite Province, with area of 74,415 square
meters covered by Transfer Certificate of Title No. T-3531 (T-95734), a copy
is attached as Annex A.
5. [Petitioners] inherited the property by intestate succession upon the death
of their parents. They are now therefore its owners and are the ones in
possession of the property.
6. Annotated on [petitioners] TCT No. 3531 (T-95734) in the name of their
deceased parents are the following entries of encumbrances, to wit:
a.Entry No. 8616-23 (sic) Execution - Covering the parcel of land
described in the title, as per Execution: entitled FILIPINAS SHELL
PETROLEUM [CORP.], Plaintiff vs. SERAFIN & JOSEFINO DE
GUZMAN, ET AL., Defendants, issued by the Regional Trial Court of
Manila, National Capital Judicial Region, on file in this Registry. Date of
Inscription (sic) - May 3, 1983; Date of Inscription - July 01, 1983.
b.Entry No. 8619-23 - Notice of Levy - Covering the parcel of land described
in this title, as per Notice of Levy: entitled FILIPINAS SHELL
PETROLEUM CORP. vs. SERAFIN & JOSEFINO DE GUZMAN, ET AL.,
Defendants, under Civil Case No. 120680 of the Regional Trial Court of

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Manila, Br. XX, copy on file in this Registry. Date of instrument - June 30,
1983. Date of Inscription - July 01, 1983.
c.Entry No. 1487 - Certificate of Sale - In favor of TABANGAO REALTY
INCORPORATED - Covering the parcel of land described in this title, by
virtue of the sheriffs certificate of sale exec. by Jose R. Bawalan, Clerk of
Court & Ex-Officio Sheriff of Cavite and approved by PROCESO P.
SILANGCRUZ, acting etc. Judge of Branch 23, TMC. Date of instrument Feb. 4, 1988. Date of Inscription - April 13, 1988.
d.Entry No. 1488 - BIR certification - In favor of TABANGAO REALTY
INCORPORATED - That SERAFIN DE GUZMAN as per certification
issued by the BIR. Date of instrument - April 13, 1988. Date of Inscription April 13, 1988.
7. The foregoing entries/encumbrances are apparently valid and subsisting
but in fact and in law, they are void and ineffective or otherwise had been
terminated and extinguished or barred by prescription, estoppel and laches.
8. Specifically, the Certificate of Sale, annotated on TCT No. 3531 (T95734) as Entry No. 1487, which supposedly emanated from the Execution
(Entry No. 8616-23 [sic]) and Notice of Levy (Entry No. 8619-23) is void for
the following reasons:
a. The Sheriffs Certificate of Sale dated February 4, 1988 (copy is attached
as Annex B) recites that on June 30, 1983 LEVY was made upon the
right, titles, interests and participation of defendants SERAFIN and
JOSEFINO DE GUZMAN and sold at public auction sale in front of the
Capitol Building of Cavite situated at Trece Martires City, after due
publication of the Sheriffs Sale in the Record Newsweekly, and after the
Notice of Sheriffs Sale was posted in three (3) conspicuous places and later
sold in favor of Tabangao Realty Incorporated, x x x as the highest bidder
for the amount of SEVENTY THOUSAND PESOS (P70,000) Philippine
Currency, x x x
xxxx

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The truth is there was no such Sheriffs Sale conducted on June 30, 1983
and it was legally impossible to do the levy and execution sale on the same
date.
b. Assuming an execution sale was indeed conducted on any other date the
same was void for lack of the required notice and publication.
c. Assuming an execution sale was indeed conducted with due notice and
publication, still [respondents] acquisition was void because [respondent]
was not and up to now is not capacitated to own and acquire agricultural
land and its aggregate area of landholding exceeds the retention limit fixed
by law. Being legally incapacitated to own this agricultural land the
execution of the Certificate of Sale in its favor was void and did not create
any legal effect.
9. Assuming there was a valid execution sale conducted, the Sheriffs
Certificate of Sale has lost its effectivity as it had been terminated and
extinguished by prescription, laches and estoppel, more than 13 years
having elapsed from its registration on 13 April 1988 without the buyer,
[respondent] herein, taking any step to consolidate its ownership and/or
take possession of the property. In the meantime [petitioners] and their
predecessors have introduced on the land improvements of considerable
value and are the ones paying the real property taxes and performing all the
tasks and paying all the expenses of preserving the land and protecting it
from intruders.
10. Assuming there was a valid execution sale executed, [respondent] is
guilty of fraud and bad faith in suspending indefinitely the consolidation of
title in its name. Its motive is to conceal its acquisition of the land from the
public and the government, particularly the Department of Agrarian Reform,
and project in the public records the [petitioners] title, who are otherwise
qualified under the law to retain it, and thereby evade its obligation to strip
itself of this landholding within the period required by law and thus
indefinitely keep the land away from the coverage of agrarian reform laws.
Being guilty of fraud and bad faith [respondent] cannot under the principle
of in pari delicto recover the land from the [petitioners], especially after

211

the lapse of an unreasonably long period of time. Or at the very least,

because of its guilt, [respondent] should not be allowed to deny the
[petitioners] the right to redeem the land by paying the amount of
P70,000.00 and the legal interest from its purchase.
11. No valid execution sale having been conducted within the ten[-]year
period from the finality of the judgment against Serafin and Josefino de
Guzman in the case mentioned being executed, the writ of execution (Entry
No. 8618-23) and Notice of Levy (Entry No. 8619-23) are now ineffective,
having been terminated and extinguished by [the] lapse of more than
eighteen (18) years from the date they were taken or annotated on July 1,
1983. The judgment itself sought to be executed had prescribed.
12. The existence of the Sheriffs Certificate of Sale and the continued
annotation of the above-cited encumbrances on TCT No. T-3531 (T-95734)
cast a cloud on and are prejudicial to [petitioners] title and are one of
those which the law allows to be removed in order to quiet [petitioners]
title.4
At the end of their Complaint, petitioners prayed for judgment:
a. Declaring the Sheriffs Certificate of Sale (Annex B), its entry as well
as the entries of execution and notice of levy and BIR Certification on TCT
No. T-3531 (T-95734) and all the claims of the [respondent] against the
land by virtue of these documents void or as already ineffective or
terminated and extinguished by prescription, laches and estoppel;
b. Ordering the Register of Deeds of Trece Martires City to cancel the
annotations of Entries Nos. 8618-28, 8619-23, 1487, and 1488 on TCT No.
T-3531 (T-95734).
c. Or otherwise allowing the [petitioners] to exercise their right of
redemption within a certain period and compelling the [respondent] to
accept from the [petitioners] the amount of P70,000.00 and its legal interest
since April 1988 as redemption price.
d. Granting the [petitioners] other just and equitable reliefs.5

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Respondent filed a Motion for Extension of Time to File Answer, which the
RTC granted in an Order dated January 4, 2002. However, instead of filing
an answer, respondent filed a Motion to Dismiss based on two grounds: (a)
the Complaint failed to comply with the requirements on certification
against forum shopping; and (b) the Complaint failed to state a cause of
action.
Respondent averred that the Certification against Forum Shopping attached
to the Complaint did not comply with the mandatory requirements set forth
in Rule 7, Section 5 of the 1997 Rules of Court. Assuming that all petitioners
are indeed the children and only heirs of the spouses De Guzman who
inherited the subject property by intestate succession, as alleged in the
Complaint, then all 11 petitioners should have executed the Certification
against Forum Shopping, but only Herminio signed said Certification. Since
it was not indicated in the Certification that Herminio was authorized by his
co-petitioners to execute the same on their behalf, then the said Certification
was Herminios sole act.
Respondent also argued that the Complaint did not state any cause of
action. Petitioners did not have any existing right or interest over the subject
property as to entitle them to the relief prayed for in the Complaint. The
subject property had long been levied upon and sold to respondent at an
execution sale. The only remaining right of petitioners predecessors-ininterest over the subject property was the right to redeem the same within a
period of one year from the date of registration of the Sheriffs Certificate of
Sale with the Registry of Deeds on April 13, 1988. When petitioners
predecessors-in-interest failed to redeem the subject property within the
one-year period, they were divested of their rights, title, and interest over the
subject property, which were then acquired by respondent. Respondent
further asserted that its acquisition of the subject property at the execution
sale conducted on June 30, 1983 was valid and legal; a civil action to
consolidate ownership was not necessary before title to the subject property
completely vested in respondent; the real right of respondent over the
subject property would prescribe only after thirty years; there were no legal

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and/or factual bases for petitioners contention that respondent was

incapacitated to acquire and own the subject property; and the RTC had no
jurisdiction over issues involving land reform.

Held:
The Court reiterates that all rights, title, interest, and claim of the spouses
De Guzman to the subject property was already acquired by respondent
upon the expiration of the one-year redemption period without redemption
being made. The execution of the final deed of sale and/or conveyance to
respondent is a mere formality and confirmation of the title already vested in
respondent. Rule 39, Section 33 of the 1997 Rules of Court states that [t]he
deed [of conveyance] shall be executed by the officer making the sale or by
his successor in office, who, in the present case, is the Sheriff of RTC-Trece
Martires. There is nothing in the Rules requiring the institution of a separate
action for execution of such a deed, therefore, no prescriptive period for any
action has begun to run. Respondent will only have to seek recourse from
the courts if the Sheriff refuses to execute the deed, and only then will there
be a cause of action for respondent to compel the Sheriff to execute the deed
and the prescriptive period for such an action begin to run.
Moreover, the Court, in Ching v. Family Savings Bank,15 granted the
Motion to Retrieve Records, for Issuance of Final Deed of Conveyance, to
Order the Register of Deeds of Makati City to Transfer Title and For Writ of
Possession filed by Family Savings Bank, the highest bidder, even after
more than two decades since the levy and auction sale. The Court held that:
The arguments and contentions of the Spouses Ching cannot be upheld.
First, the Spouses Ching's reliance on prescription is unavailing in the case
at bar. The Spouses Ching are implying that the RTC violated Section 6,
Rule 39 of the Rules of Court, viz.:

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Sec. 6. Execution by motion or by independent action. A final and

executory judgment or order may be executed on motion within five (5)
years from the date of its entry. After the lapse of such time, and before it is
barred by the statute of limitations, a judgment may be enforced by action.
The revived judgment may also be enforced by motion within five (5) years
from the date of its entry and thereafter by action before it is barred by the
statute of limitations.
However, it must be noted that contrary to their allegation, the summary
judgment of the RTC in Civil Case No. 142309 had in fact already been
enforced. During the pendency of the case, the subject property was already
levied upon. Subsequently, after summary judgment and while the case was
on appeal, the RTC granted the Banks motion for execution pending appeal.
Consequently, on October 10, 1983, an auction sale of the subject property
was conducted, with the Bank emerging as the highest bidder. Later, a
Certificate of Sale in its favor was executed by the Sheriff and, thereafter,
inscribed as a memorandum of encumbrance on TCT No. S-3151.
It is settled that execution is enforced by the fact of levy and sale. The result
of such execution was that title over the subject property was vested
immediately in the purchaser subject only to the Spouses Chings right to
redeem the property within the period provided for by law. The right
acquired by the purchaser at an execution sale is inchoate and does not
become absolute until after the expiration of the redemption period without
the right of redemption having been exercised. But inchoate though it be, it
is, like any other right, entitled to protection and must be respected until
extinguished by redemption. Since, the Spouses Ching failed to redeem the
subject property within the period allowed by law, they have been divested
of their rights over the property.
Verily, the Banks Motion to Retrieve Records, for Issuance of Final Deed
of Conveyance, to Order the Register of Deeds of Makati City to Transfer
Title and for Writ of Possession was merely a consequence of the execution

215

of the summary judgment as the judgment in Civil Case No. 142309 had
already been enforced when the lot was levied upon and sold at public
auction, with the Bank as the highest bidder.16
Given that neither of the two requisites for an action to quiet title could be
gleaned from the allegations in petitioners Complaint, said Complaint was
properly dismissed by RTC-Trece Martires for failure to state a cause of
action.
WHEREFORE, the Petition is DENIED and the Orders dated March 4, 2002
and May 21, 2002 of the RTC, Branch 23, Trece Martires City in Civil Case
No. TM-1118 are AFFIRMED.
Nestor Bracero vs. Rodulfo Arcelo and The Heirs Of Victoriano Monisit,
G.R. No. 212496, March 18, 2015
Facts:
Nestor Bracero filed this Petition1 for Review assailing the Court of
Appeals' (a) August 28, 2013 Decision2 affirming in toto the Regional Trial
Court Order3 denying his Urgent Motion to Vacate Order for the Issuance
of the Writ of Execution Against Defendants Spouses Nestor and Lilia
Bracero and to Furnish Copy of the Decision to their Counsel4 (Urgent
Motion to Vacate the Writ of Execution) and (b) April 14, 2014 Resolution5
denying the motion for its reconsideration.
Nestor Bracero prays that this court nullify the assailed Court of Appeals
Decision and Resolution, as well as the Regional Trial Court's February 11,
2010 Order; compel the trial court to furnish his counsel with a copy of its
Decision so he may appeal this Decision within the 15-day period from
counsel's receipt; prohibit the execution of the Regional Trial Court

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Decision; and reprimand or admonish the Regional Trial Court's Clerk of

Court for failing to send his counsel a copy of the Decision.6cralawred
The heirs of Victoriano Monisit filed a Complaint7 for Quieting of
Titles/Ownership, Recovery of Possession with Damages against Rodulfo
Arcelo and Nestor Bracero over a 48,632-square-meter parcel of land
located in Lubo, Sogod, Cebu.8cralawred
The Complaint stated that Victoriano Monisit owned the 48,632-squaremeter land.9 The heirs of Victoriano Monisit inherited this property
identified as Lot No. 4327 upon his death and declared it under their names
for tax purposes in 2002.10cralawred
During Victoriano Monisit's lifetime, 5,000 square meters of the land was
mortgaged to Rodulfo Arcelo's grandmother, Damiana Mendoza. Damiana
Mendoza's death was followed by her son's death, and Rodulfo Arcelo
inherited the right over the mortgaged portion of the property.11cralawred
Sometime in 1982, Nestor Bracero, claiming to be Rodulfo Arcelo's tenant,
cultivated this 5,000-square-meter mortgaged portion of the
property.12cralawred

Sometime in 1993, Victoriano Monisit sued Nestor Bracero for the recovery
of the property he cultivated for his failure to share the products.13 Nestor
Bracero countered that the land he cultivated belonged to Rodulfo Arcelo.14
Both complaint and counterclaim were dismissed.15cralawred
Victoriano Monisit died single on August 3, 1995, and his legal heirs extrajudicially partitioned his properties. His heirs Lourdes Menchavez, Rogelio
Ruelo, and Martiniana Apor inherited Lot No. 4327 as their share and
immediately took possession.16cralawred

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Meanwhile, Nestor Bracero expanded his occupation of the mortgaged

portion of the property to the entire 48,632 square meters. He consequently
drove out Victoriano Monisit's tenant worker Salvacion Montecillo and his
family.17 The heirs of Victoriano Monisit brought the matter to the
Barangay Captain "but no settlement was reached."18 Thus, they filed their
Complaint for Quieting of Title/Ownership, Recovery of Possession with
Damages on January 8, 2004.19cralawred
Rodulfo Arcelo filed an Answer20 denying that Nestor Bracero was his
tenant.21 He claimed he was only impleaded as respondent to help the heirs
oust Nestor Bracero from the property.22 Rodulfo Arcelo did not claim
ownership23 of the 5,000-square-meter portion.24cralawred
Nestor Bracero filed a Motion to Dismiss arguing prematurity, res judicata,
and lack of jurisdiction.25cralawred
The trial court denied Nestor Bracero's Motion to Dismiss and also denied
reconsideration.26 The Court of Appeals dismissed his Petition for
Certiorari and/or Prohibition and also denied reconsideration.27cralawred
Meanwhile, trial proceeded. On motion by the heirs of Victoriano Monisit,
the Regional Trial Court's November 18, 2004 Order declared Nestor
Bracero in default for failure to file an answer.28cralawred
On April 16, 2009, the trial court ruled in favor of the heirs of Victoriano
Monisit.29 On May 4, 2009, the trial court served Nestor Bracero with a
copy of its Decision.30cralawred
The period to appeal lapsed. The heirs of Victoriano Monisit filed a motion
for execution and furnished the counsels of Nestor Bracero and Rodulfo
Arcelo with copies. The trial court issued the Writ of Execution on October
7, 2009 without opposition.31cralawred

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Nestor Bracero received the Notice to Vacate on Execution32 dated January

8, 2010.33 On the same day, his counsel Atty. Danilo Pilapil filed the Urgent
Motion to Vacate the Writ of Execution on the ground that counsel was not
furnished a copy of the Regional Trial Court Decision.34 The heirs of
Victoriano Monisit filed their Comment.35cralawred
The Regional Trial Court, in its February 11, 2010 Order, denied Urgent
Motion to Vacate the Writ of Execution.36cralawred
The Court of Appeals, in its August 28, 2013 Decision, affirmed in toto the
Regional Trial Court Order.37 It also denied reconsideration.38cralawred
Hence, petitioner Nestor Bracero filed this Petition.
Petitioner's counsel alleges that even if the motion for execution indicated
that he was furnished a copy, he never received such copy. Respondent heirs
did not present a post office certification to prove they furnished counsel
with a copy.39cralawred
Assuming petitioner's counsel received a copy of this motion, he still could
not have filed an opposition since petitioner was declared in default and had
lost standing to file any motion. He also could not have appealed the
Regional Trial Court Decision since he was not furnished with a
copy.40cralawred
Petitioner's counsel raises that the Regional Trial Court's Clerk of Court
departed from usual procedure by sending a copy of the Decision directly to
petitioner. He explains that his client is a poor farmer who lives in the
remote mountain barangay of Lubo with no telephone connection, and these
circumstances made it easy to defeat his client's right to appeal.41cralawred
Lastly, he argues that even if he received a copy of the motion for execution,
"to require undersigned counsel to verify the existence of the cision with the

219

Regional Trial Court is to unfairly burden the undersigned counsel and to

unduly exonerate the clerk of court who was remiss in his duty in sending a
copy of the Decision to the undersigned counsel."42 He explains that the
court in Danao is 30 kilometers away from his office in
Mandaue.43cralawred
In their Comment,44 respondent heirs argue that petitioner has no legal aim
on the property.45Petitioner did not file an answer to the Complaint or a
motion to set aside the Order declaring him in default.46cralawred
Respondent heirs contend that petitioner no doubt received the Regional
Trial Court Decision on May 4, 2009.47 Petitioner insists, however, lat his
counsel was not furnished a copy, and client's receipt was not equivalent to
counsel's receipt.48cralawred
Respondent heirs submit that Barangay Lubo is along the national highway
from Sogod, has electricity, and is "accessible to all kinds of transportation
and communications."49 Thus, petitioner's counsel's claim that petitioner is
a poor farmer who is barely literate and lives in the remote barangay of
Lubo lacks merit.50 Respondent heirs submit that petitioner hired a private
counsel who had been legally assisting him since 1985.51 Also, "petitioner
could not be considered so naive not to be able to comprehend the
importance of a decision to his case for purposes of informing his counsel
immediately upon receipt thereof in the same manner that he informed his
counsel on the same day, January 8, 2010 when he was served by the Sheriff
the Writ of Execution of the decision."52cralawred
Respondent heirs contend that "[petitioner's] counsel did not categorically
say that he was not informed by his client of the decision on the date of
receipt on May 4, 2009."53 Respondent heirs quote Santiago v. Guadiz,
Jr.54 in that "petitioners cannot invoke due process on the basis of feigned
ignorance as lack of formal notice cannot prevail against the fact of actual
notice."55cralawred

220

Petitioner's counsel was also served a copy of the motion for execution on
September 11, 2009, with notice to submit the motion fDr court approval on
September 15, 2009. Thus, petitioner's counsel had actual notice of the
Decision, yet he did not file an opposition.56 Respondent heirs argue that
petitioner is now in estoppel to assail the Regional Trial Court Order dated
February 11, 2010.57cralawred
Lastly, respondent heirs add that petitioner's argument of lost standing in
court lacks merit. The trial court acted on his Urgent Motion to Vacate the
Writ of Execution when it directed plaintiffs to comment on this motion, and
they did.58cralawred
For his part, respondent Rodulfo Arcelo filed the Manifestation59 dated
September 10, 2014 waiving his right to file a Comment to the Petition.
Issue:
Thus, the issue to be resolved before this court is whether receipt of
petitioner's counsel of a copy of the motion for execution amounts to
effective official notice of the Regional Trial Court Decision dated April 16,
009 if he was not furnished a copy of the Decision.
Held:
In Ramos v. Spouses Lim,65 this court considered Atty. Estaniel's receipt of
Atty. Datukon's Manifestation informing the court that he had been formally
substituted by Atty. Estaniel as counsel66as "an alerting medium that a final
ruling has been issued by the trial court[.]"67 Atty. Datukon filed this
Manifestation after he was served a copy of the motion for execution.68
Thus, this court held that Atty. Estaniel's period to appeal the trial court
Decision commenced from his receipt of Atty. Datukon's Manifestation on
April 1, 1996, when he was put on effective official notice of the Decision:

221

The foregoing notwithstanding, the Court of Appeals ruled, and rightly so,
that although Atty. Estaniel was not officially sent a copy of the trial court's
January 31, 1996 decision, he was however, put on effective official notice
thereof on April 1, 1996. He must, therefore, be mad accountable for his
failure to seek, within the reglementary period counted from April 1, 1996, a
review of said decision. . . .
....
The foregoing disposition and the premises holding it together commend
themselves for concurrence. In particular, we agree with the designation of
April 1, 1996 as the controlling date when Atty. Estaniel is considered to
have effectively been put on notice of the trial court's decision and whence
the period of appeal should accordingly be reckoned.
There can be no quibbling that Atty. Estaniel received a copy of Atty.
Datukon's April 1, 1996 "MANIFESTATION" on the same date. Said
manifestation carried all the basic earmarks of a proper pleading or like
papers filed in court. It carried the precise case number and title. The exact
branch of the handling RTC was particularly identified, the lawyers involved
in the litigation were named and the specific subject covered by the
manifestation, i.e., motion for execution of the decision in Civil Case No.
580, was clearly discernible. Atty. Estaniel, therefore, cannot plausibly feign
ignorance as to what decision the motion for execution was about. . . .
....
In a very real sense, Atty. Datukon's "MANIFESTATION" was an alerting
medium that a final ruling has been issued by the trial court, which should
have thus prodded Atty. Estaniel and any prudent counsel for that matter
to act accordingly. Canon 18 of the Code cjf Professional Responsibility
imposes upon a lawyer the duty to "serve his client with competence and
diligence." Subsumed in this imposition, which commences from the time a

222

lawyer is retained until his effective release from the case or final
disposition of the whole subject of the litigation, is the duty to safeguard his
client's interest with the vigilance and attention of a good father of the
family. In line with his duty as defined in Canon 18 of the Code, it behooved
Atty. Estaniel, upon receipt of Atty. Datukon's manifestation, to posthaste
inquire from the trial court or even from Atty. Datukon himself, about the
status of petitioner's case since the manifestation, a copy of which he has
thus been furnished, already made specific reference to a motion for
execution filed by the counsel of his clients' adversary. Atty. Estaniel must
thus be held to task for his failure to exercise due diligence in the discharge
of his duties as counsel. Petitioners, too, must suffer the consequence of such
failure because a client is bound by the conduct, negligence or mistakes of
his counsel.69 (Emphasis m the original, citations omitted)
Petitioner's counsel was furnished a copy of the motion for execution on
September 11, 2009.70 As discussed by the Court of Appeals, this motion
categorically states that the trial court rendered its Decision on April 16,
2009, yet petitioner's counsel filed no opposition.71 At that time, he did not
file any motion asserting that he was not furnished a copy of the Decision.72
It was only on January 8, 2010 when his client informed him of the Writ of
Execution did petitioner's counsel file an Urgent Motion to Vacate the Writ
of Execution on the ground that he did not receive a copy of the Regional
Trial Court Decision.73cralawred
Jurisprudence reiterates that "[l]itigants who are represented by counsel
should not expect that all they need to do is sit back, relax and await the
outcome of their cases."74 This court has held that "equity aids the vigilant,
not those who slumber on their rights[,]"75 and a party should "periodically
keep in touch with his counsel, check with the court, and inquire about the
status of the case."76cralawred
The explanation of petitioner's counsel that his client only finished Grade 6
and lives in a remote mountain barangay77 fails to convince. Petitioner

223

immediately informed his counsel about the Notice to Vacate on Execution

on the same day he was served a copy.78 This contradicts counsel's
explanation implying difficulty in communicating with his client. This even
raises the possibility that his client did immediately inform him about the
Regional Trial Court Decision upon receiving a copy.
Equally unconvincing and disappointing is the submission of petitioner's
counsel that even if he received a copy of the motion for execution, "to
require undersigned counsel to verify the existence of the decision with the
Regional Trial Court is to unfairly burden the undersigned counsel and to
unduly exonerate the clerk of court who was remiss in his duty in sending a
copy of the Decision to the undersigned counsel,"79 and that the court in
Danao is 30 kilometers away from his office in Mandaue.80 Counsels have
the duty to serve their clients with competence and diligence.81 The distance
from counsel's office to the court should not be used as an excuse by counsel
from keeping himself updated with the status of the cases he is handling.
This court has held that "[r]elief will not be granted to a party who seeks
avoidance from the effects of the judgment when the loss of the remedy at
law was due to his own negligence."82 Petitioner, through his counsel, did
not file an answer to the Complaint. After the trial court declared petitioner
in default for failure to file an answer, his counsel did not file an opposition
to or motion to lift the Order declaring him in default. After petitioner's
counsel was furnished a copy of the motion for execution, he did not
immediately file an opposition to the motion or raise the ground that he was
not furnished a copy of the Decision.
Petitioner Nestor Bracero, through his counsel Atty. Danilo Pilapil, had
several opportunities to argue his position before the courts but failed to
take them. Petitioner should now be considered in estoppel from assailing
the Regional Trial Court Order dated February 11, 2010 denying
petitioner's Urgent Motion to Vacate the Writ of Execution, affirmed by the
Court of Appeals. Also, "[t]o frustrate the winning party's right through

224

dilatory schemes is to frustrate all the efforts, time and expenditure of the]
courts, which thereby increases the costs of litigation.

225

REMEDIES OF PERSONS AGGRIEVED IN LAND REGISTRATION

PROCEEDINGS
Francisco vs. Puno
108 SCRA 427
FACTS:
Petitioners Angelita and Preciosa are the applicants for registration of title
over the subject property. They are the heirs of spouses Amado
Buenaventura and Irene Flores (spouses Buenaventura) from whom they
acquired the subject property. The subject property was acquired by the
spouses Buenaventura from the Heirs of Lazaro de Leon, before World War
II. However, it was only on 30 January 1948 that the corresponding Deed of
Sale4 was executed in favor of the spouses Buenaventura.
An Application for Registration of Title on 5 June 2000 were filed before the
RTC of Paranaque wherein petitioners presented witnesses in order to
establish the fact that petitioners and their predecessors have acquired
vested right over the subject property in the manner and for the period
required by law; likewise, to prove the alienable and disposable character of
the property since 3 January 1968 as certified by the DENR. RTC granted
the petition.
Republic appealed to the Court of Appeals alleging that petitioners failed to
prove continuous, open, exclusive and notorious possession by their
predecessors-in-interest and by themselves. The CA reversed the trial
courts decision and declared the subject property a public land.
ISSUES:

226

I. Whether or not the Court of Appeals erred in nullifying the Decision of the
trial court confirming petitioners title over the subject property for not
being allegedly supported by substantial evidence as required by law. (YES)
II. Whether or not the Court of Appeals gravely erred in declaring the
subject property as public land and ignoring petitioners evidence of over 30
year possession in the concept of an owner and completely unmolested by
any adverse claim. (YES)
HELD:
Petitioners offered in evidence a certification from the Department of
Environment and Natural Resources, to prove that the subject property was
alienable and disposable land of the public domain. Such certification is
sufficient, in the absence of contrary evidence, to prove the character of the
land.
Furthermore, petitioners were able to prove sufficiently (through their
witnesses) that they have been in possession of the subject property for more
than 30 years, which possession is characterized as open, continuous,
exclusive, and notorious, in the concept of an owner. By this, the subject
alienable and disposable public land had been effectively converted into
private property over which petitioners have acquired ownership through
prescription to which they are entitled to have title through registration
proceedings. Petitioners right to have their title to the subject property
registered cannot be defeated simply because the possession of petitioners
commenced on a date later than 12 June 1945, for the law and
supplementing jurisprudence amply, justly and rightfully provides the
necessary remedy to what would otherwise result in an unjust and
unwarranted situation. It would be the height of injustice if petitioners
registration of title over the said property will be denied solely on that
ground.

227

Serna vs. Fontanilla

307 SCRA Villanueva
FACTS:
Petitioner Fil-Estate Properties, Inc. is the owner and developer of the
Central Park Place Tower while co-petitioner Fil-Estate Network, Inc. is its
authorized marketing agent. Respondent Spouses Conrado and Maria
Victoria Ronquillo purchased from petitioners an 82-square meter
condominium unit at Central Park Place Tower in Mandaluyong City for a
pre-selling contract price of P 5,174,000.00. On 29 August 1997,
respondents executed and signed a Reservation Application Agreement
wherein they deposited P200,000.00as reservation fee. As agreed upon,
respondents paid the full downpayment of P1,552,200.00 and had been
paying the P63,363.33 monthly amortizations until September 1998.
Upon learning that construction works had stopped, respondents likewise
stopped paying their monthly amortization. Claiming to have paid a total of
P2,198,949.96 to petitioners, respondents through two successive letters,
demanded a full refund of their payment with interest. When their demands
went unheeded, respondents were constrained to file a Complaint for Refund
and Damages before the Housing and Land Use Regulatory Board
(HLURB).
Respondents
prayed
for
reimbursement/refund
of
P2,198,949.96representing the total amortization payments, P200,000.00 as
and by way of moral damages, attorneys fees and other litigation expenses.
On 21 October 2000, the HLURB issued an Order of Default against
petitioners for failing to file their Answer within the reglementary period
despite service of summons.
Petitioners filed a motion to lift order of default and attached their position
paper attributing the delay in construction to the 1997 Asian financial crisis.

228

Petitioners denied committing fraud or misrepresentation which could

entitle respondents to an award of moral damages.
On 13 June 2002, the HLURB, rendered judgment ordering petitioners to
jointly and severally pay respondents the amount of P2,198,949.96 with
12% interest per annum to be computed from the time of the complainants
demand for refund on October 08, 1998 until fully paid, plus damages and
costs of suit.
The Arbiter considered petitioners failure to develop the condominium
project as a substantial breach of their obligation which entitles respondents
to seek for rescission with payment of damages. The Arbiter also stated that
mere economic hardship is not an excuse for contractual and legal delay.
Petitioners appealed the Arbiters Decision through a petition for review
pursuant to Rule XII of the 1996 Rules of Procedure of HLURB. On 17
February 2005, the Board of Commissioners of the HLURB denied the
petition and affirmed the Arbiters Decision. The HLURB reiterated that the
depreciation of the peso as a result of the Asian financial crisis is not a
fortuitous event which will exempt petitioners from the performance of their
contractual obligation.
Petitioners filed a motion for reconsideration but it was denied on 8 May
2006. Thereafter, petitioners filed a Notice of Appeal with the Office of the
President. On 18 April 2007, petitioners appeal was dismissed by the Office
of the President for lack of merit. Petitioners moved for a reconsideration
but their motion was denied on 26 July 2007.
Petitioners sought relief from the Court of Appeals through a petition for
review under Rule 43 containing the same arguments they raised before the
HLURB and the Office of the President:

229

On 30 July 2008, the Court of Appeals denied the petition for review for lack
of merit. The appellate court echoed the HLURB Arbiters ruling that a buyer
for a condominium/subdivision unit/lot unit which has not been developed in
accordance with the approved condominium/subdivision plan within the
time limit for complying with said developmental requirement may opt for
reimbursement under Section 20 in relation to Section 23 of Presidential
Decree (P.D.) 957. The appellate court supported the HLURB Arbiters
conclusion, which was affirmed by the HLURB Board of Commission and
the Office of the President, that petitioners failure to develop the
condominium project is tantamount to a substantial breach which warrants
a refund of the total amount paid, including interest. The appellate court
pointed out that petitioners failed to prove that the Asian financial crisis
constitutes a fortuitous event which could excuse them from the performance
of their contractual and statutory obligations. The appellate court also
affirmed the award of moral damages in light of petitioners unjustified
refusal to satisfy respondents claim and the legality of the administrative
fine, as provided in Section 20 of Presidential Decree No. 957.
Petitioners sought reconsideration but it was denied in a Resolution dated
11 December 2008 by the Court of Appeals. Aggrieved, petitioners filed the
instant petition advancing substantially the same grounds for review:
ISSUES:
Whether or not the Asian financial crisis constitute a fortuitous event which
would justify delay by petitioners in the performance of their contractual
obligation
Assuming that petitioners are liable, whether or not 12% interest was
correctly imposed on the judgment award
Whether the award of moral damages, attorneys fees and administrative fine
was proper.

230

HELD:
The Court of Appeals decision is affirmed with the modification that the
legal interest to be paid is SIX PERCENT (6%) on the amount due computed
from the time of respondents' demand for refund on 8 October 1998.
CIVIL LAW: fortuitous event as a ground for rescission of contracts
It is apparent that these issues were repeatedly raised by petitioners in all
the legal fora. The rulings were consistent that first, the Asian financial
crisis is not a fortuitous event that would excuse petitioners from performing
their contractual obligation; second, as a result of the breach committed by
petitioners, respondents are entitled to rescind the contract and to be
refunded the amount of amortizations paid including interest and damages;
and third, petitioners are likewise obligated to pay attorneys fees and the
administrative fine.
This petition did not present any justification for us to deviate from the
rulings of the HLURB, the Office of the President and the Court of Appeals.
Indeed, the non- performance of petitioners obligation entitles respondents
to rescission under Article 1191 of the New Civil Code which states: Article
1191. The power to rescind obligations is implied in reciprocal ones, in case
one of the obligors should not comply with what is incumbent upon him. The
injured party may choose between the fulfillment and the rescission of the
obligation, with payment of damages in either case. He may also seek
rescission, even after he has chosen fulfillment, if the latter should become
impossible.
More in point is Section 23 of Presidential Decree No. 957, the rule
governing the sale of condominiums, which provides: Section 23. NonForfeiture of Payments. No installment payment made by a buyer in a
subdivision or condominium project for the lot or unit he contracted to buy

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shall be forfeited in favor of the owner or developer when the buyer, after
due notice to the owner or developer, desists from further payment due to
the failure of the owner or developer to develop the subdivision or
condominium project according to the approved plans and within the time
limit for complying with the same. Such buyer may, at his option, be
reimbursed the total amount paid including amortization interests but
excluding delinquency interests, with interest thereon at the legal rate.
Conformably with these provisions of law, respondents are entitled to
rescind the contract and demand reimbursement for the payments they had
made to petitioners.
Notably, the issues had already been settled by the Court in the case of FilEstate Properties, Inc. v. Spouses Go promulgated on 17 August 2007,
where the Court stated that the Asian financial crisis is not an instance
ofcaso fortuito. Bearing the same factual milieu as the instant case, G.R. No.
165164 involves the same company, Fil-Estate, albeit about a different
condominium property. The company likewise reneged on its obligation to
respondents therein by failing to develop the condominium project despite
substantial payment of the contract price. Fil-Estate advanced the same
argument that the 1997 Asian financial crisis is a fortuitous event which
justifies the delay of the construction project. First off, the Court classified
the issue as a question of fact which may not be raised in a petition for
review considering that there was no variance in the factual findings of the
HLURB, the Office of the President and the Court of Appeals. Second, the
Court cited the previous rulings of Asian Construction and Development
Corporation v. Philippine Commercial International Bank and Mondragon
Leisure and Resorts Corporation v. Court of Appeals holding that the
1997Asian financial crisis did not constitute a valid justification to renege
on obligations. The Court expounded: Also, we cannot generalize that the
Asian financial crisis in 1997 was unforeseeable and beyond the control of a
business corporation. It is unfortunate that petitioner apparently met with

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considerable difficulty e.g. increase cost of materials and labor, even before
the scheduled commencement of its real estate project as early as 1995.
However, a real estate enterprise engaged in the pre-selling of condominium
units is concededly a master in projections on commodities and currency
movements and business risks. The fluctuating movement of the Philippine
peso in the foreign exchange market is an everyday occurrence, and
fluctuations in currency exchange rates happen everyday, thus, not an
instance of caso fortuito.
The aforementioned decision becomes a precedent to future cases in which
the facts are substantially the same, as in this case. The principle of stare
decisis, which means adherence to judicial precedents, applies.
In said case, the Court ordered the refund of the total amortizations paid by
respondents plus 6% legal interest computed from the date of demand. The
Court also awarded attorneys fees. We follow that ruling in the case before
us.
CIVIL LAW: interest rates on default
The resulting modification of the award of legal interest is, also, in line with
our recent ruling in Nacar v. Gallery Frames, embodying the amendment
introduced by the Bangko Sentral ng Pilipinas Monetary Board in BSP-MB
Circular No. 799 which pegged the interest rate at 6% regardless of the
source of obligation.
CIVIL LAW: when to award damages and attorneys fees
We likewise affirm the award of attorneys fees because respondents were
forced to litigate for 14 years and incur expenses to protect their rights and
interest by reason of the unjustified act on the part of petitioners. The
imposition of P10,000.00 administrative fine is correct pursuant to Section
38 of Presidential Decree No. 957 which reads:

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Finally, we sustain the award of moral damages. In order that moral

damages may be awarded in breach of contract cases, the defendant must
have acted in bad faith, must be found guilty of gross negligence amounting
to bad faith, or must have acted in wanton disregard of contractual
obligations. The Arbiter found petitioners to have acted in bad faith when
they breached their contract, when they failed to address respondents
grievances and when they adamantly refused to refund respondents'
payment.
In fine, we find no reversible error on the merits in the impugned Court of
Appeals' Decision and Resolution.
Mijares vs. CA
330 SCRA

FACTS:
Subject of the controversy is a portion of the 3,181.74 hectares of a vast
track of land, known as the Hacienda de Angono, in Angono, Rizal. The
entire hacienda used to be owned by one Don Buenaventura Guido y Santa
Ana upon whose death left a portion thereof, consisting of the said 3,181.74
hectares, to his two (2) sons Francisco Guido and Hermogenes Guido
Sometime in September 1911, Decreto No. 6145, covering the same
3,181.74-hectare portion of Hacienda de Angono was issued in favor of the
brothers Francisco and Hermogenes. On the basis thereof, Original
Certificate of Title (OCT) No. 633 over the same 3,181.74 hectares was
issued in the names of the two (2) brothers.

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Several years later, or on May 12, 1933, OCT No. 633 was cancelled, and,
in lieu thereof, Transfer Certificate of Title No. 23377 was issued. Nine (9)
years later, or sometime in 1942, the heirs of Francisco and Hermogenes
adjudicated among themselves the same 3,181.74 hectares and transferred
the one-half (1/2) portion thereof to Jose A. Rojas, predecessor-in-interest of
the [respondents] Rojases. Allegedly, the adjudication was formalized by the
heirs of Francisco and Hermogenes only on December 17, 1973, when they
purportedly executed an Extra-Judicial Settlement of Estate With Quitclaim.
Confusingly, some few months thereafter, or on August 20, 1974, the heirs of
Don Buenaventura Guido y Santa Ana, represented by their lawyer,
requested the then Land Registration Commission to issue the
corresponding original certificate of title based on Decreto No. 6145,
evidently because OCT No. 633 which was earlier issued on the basis of the
same Decreto was previously cancelled. The request, however, was denied
by the said office on January 8, 1976.
Meanwhile, on March 29, 1976, Alfredo Guido, Sr., representing the other
heirs, filed with the Registry of Deeds of Morong a petition for
reconstitution of TCT No. 23377, alleging that the original of the same title
could not be located in the files of the Registry of Deeds of Rizal when he
and his co-heirs sought the registration of their aforementioned [Extra]Judicial Settlement of Estate With Quitclaim. The petition was supported by
the owners duplicate copy of the title sought to be reconstituted. On the
same date that Guido, Sr. filed the petition for reconstitution, the same was
granted and a reconstituted certificate of title TCT (23377) RT-M-0002
was issued.
Eventually, in the herein assailed Decision dated September 15, [1977],
CFI Branch 10, acting as a land registration court, declared the applicant
Franciscos "the true and absolute owners of Lots 1, 2, 3 and 4 of Plan Psu04-00460.

235

ISSUES:
I. Whether or not the Honorable Court of Appeals erred in entertaining the
petition for certiorari and prohibition despite admitting that said petition
was filed exceedingly beyond the mandatory and jurisdictional 60-day
period?
HELD:
The petition is denied.
Petitioner attacks the CA in ruling that "[indeed,] the existence of a valid
title covering the land sought to be registered is the determinative factor in
this case as far as the matter of jurisdiction to entertain the application for
registration is concerned." He argues that if the CA would be followed, any
subsequent proceeding for land registration involving the Guido Estate
would be declared void, because OCT No. 633 was registered as early as
June 22, 1912.
Lastly, in disputing respondents contention that the "appropriate
proceeding" should be an action for reconveyance, petitioner states that
such action may be proper but is still not an exclusive remedy. He maintains
that actual fraud in securing a title must be proved so as to succeed in an
action for reconveyance, but the Court already held in Guido that TCT No.
23377 is authentic and genuine; hence, it is assumed that there is no
infirmity or defect therein. Also, an action for reconveyance cannot be
availed of like an application for registration of land as it would be
dismissed forthwith on the ground of prescription.

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VOLUNTARY AND INVOLUNTARY DEALINGS

VOLUNTARY DEALINGS Deeds, instruments, documents which are the
results of free and voluntary acts of parties thereto.
INVOLUNTARY DEALINGS Writ, order, or process issued by the court
of record affecting registered land, also other instruments which are not
willful acts of the registered owner, executed without his knowledge or
consent.
(Illustrative Case)
Spouses Chu v. Benelda Estate Development Corp
G.R. No. 142313. March 1, 2001
FACTS:
The petitioners spouses Manuel Chu, Sr. and Catalina Chu were the
registered owners of five (5) parcels of land situated in Barrio Saguin, San
Fernando, Pampanga. They executed a deed of sale on Sept. 30, 1986 with
assumption of mortgage in favor of Trinidad N. Cunanan. It was made to
appear in the deed of sale that the total consideration had been fully paid to
enable Cunanan to have the parcels of land registered in her name so that
she could mortgage the same to secure a loan and thereupon pay from the
proceeds of the loan.
Their agreement, however, was that the ownership of the properties shall
remain with the petitioners until full payment of the balance of the total
purchase price.
Cunanan failed to pay the balance of the total purchase price to the
petitioners. Without the knowledge of the petitioners, Cunanan sold the three

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(3) parcels of land to Cool Town Realty and Development Corporation, and
the two (2) other parcels of land to the spouses Amado and Gloria Carlos.
The spouses Carlos, in turn, sold these two (2) properties to the respondent
Benelda Estate Development Corporation.
Petitioners commenced civil case before the Regional Trial Court of
Pampanga against Trinidad N. Cunanan, Cool Town Realty and
Development Corporation and the Register of Deeds of Pampanga. The
petitioners amended their complaint to include respondent Benelda Estate
Development Corporation as a defendant.
The respondent filed its answer with a motion to dismiss on the ground that
the amended complaint states no cause of action against respondent. It
alleged that respondent corporation, through its officers, acted in good faith
in buying the properties inasmuch as it exerted all efforts to verify the
authenticity of the titles and that no defect was found.
After the petitioner filed an opposition to the motion to dismiss, the trial
court rendered a decision denying the motion to dismiss.
The respondent filed a petition for certiorari under Rule 65 of the Rules of
Court before the Court of Appeals alleging that the trial court committed
grave abuse of discretion in denying its motion to dismiss the amended
complaint. The Court of Appeals reversed the order of the trial court and
dismissed the case as against the respondent on the ground of lack of cause
of action and for failure of the petitioners to include the spouses Carlos as
indispensable parties in the complaint.
ISSUES:
a) Whether the spouses Amado E. Carlos and Gloria A. Carlos (sellers of
the subject titled parcels of land to respondent) are real and indispensable
parties in the case at bar.

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b) Whether or not the respondent corporation is an innocent purchaser for

value.
RULING:
A cause of action is defined as an act or omission by which a party violates
a right of another. The test of the sufficiency of the facts found in a petition
as constituting a cause of action is whether or not, admitting the facts
alleged, the court can render a valid judgment upon the same in accordance
with the prayer thereof.
In land title cases, the court held that a person dealing with registered land
may safely rely on the correctness of the certificate of title issued and the
law will in no way oblige him to go behind the certificate to determine the
condition of the property.
A person is considered in law as an innocent purchaser for value who is
defined as one who buys the property of another, without notice that some
other person has a right or interest in such property and pays a full price for
the same, at the time of such purchase or before he has notice of the claims
or interest of some other person in the property. In this connection, Section
53 of Presidential Decree No. 1529, otherwise known as the Property
Registration Decree, provides that:
The production of the owners duplicate certificate, whenever any voluntary
instrument is presented for registration, shall be conclusive authority from
the registered owner to the Register of Deeds to enter a new certificate or to
make a memorandum of registration in accordance with such instrument,
and the new certificate or memorandum shall be binding upon the registered
owner and upon all persons claiming under him, in favor of every purchaser
for value and in good faith.

239

Thus, a title procured through fraud and misrepresentation can still be the
source of a completely legal and valid title if the same is in the hands of an
innocent purchaser for value.
In a case for annulment of title, therefore, the complaint must allege that the
purchaser was aware of the defect in the title so that the cause of action
against him will be sufficient. Failure to do so, as in the case at bar, is fatal
for the reason that the court cannot render a valid judgment against the
purchaser who is presumed to be in good faith in acquiring the said
property. Failure to prove, much less impute, bad faith on said purchaser
who has acquired a title in his favor would make it impossible for the court
to render a valid judgment thereon due to the indefeasibility and
conclusiveness of his title.
What is important is that when respondent bought the subject properties, it
was not aware of any defect in the covering certificates of title thereto at the
time of such purchase. There is no allegation to the contrary in the amended
complaint. Therefore, the title of respondent, being that of an innocent
purchaser for value, remains valid.
By allowing the cancellation of their certificates of title and the issuance of
new ones in lieu thereof in the name of Trinidad N. Cunanan despite alleged
non-payment of the full purchase price for their subject two (2) parcels of
land, the petitioners took the risk of losing their titles on the said properties
inasmuch as the subject deed of sale with assumption of mortgage
constitutes their consent and announcement to the whole world that
Cunanan was indeed the legal owner of the properties by virtue of the said
deed which is a public document.
The appellate court therefore was correct in entertaining the petition for the
reason that the trial court committed a grave abuse of discretion when it
refused to dismiss the case against the respondent, despite the obvious

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insufficiency of the amended complaint against the corporation respondent.

To implead the respondent in the case at bar, absent an allegation of bad
faith on its part, is to undermine a well-settled rule protecting innocent
purchasers for value and the indefeasibility and conclusiveness of
certificates of title issued under the Torrens System.
The petition is DENIED for lack of cause of action.
SAJONAS VS. CA, G.R. No. 102377
July 5, 1996

FACTS:
The Sajonas couple are before us, on a Petition for Review on
Certiorari, praying inter alia to set aside the CAs decision, and to reinstate
that of the RTC
On September 22, 1983, spouses Uychocde agreed to sell a parcel of
residential land located in Antipolo, Rizal to the spouses Sajonas on
installment basis as evidenced by a Contract to Sell dated September 22,
1983. The property was registered in the names of the Uychocde spouses
under TCT No. N-79073 of the Register of Deeds of Marikina, Rizal.
On August 27, 1984, the Sajonas couple caused the annotation of an
adverse claim based on the said Contract to Sell on the title of the subject
property, which was inscribed as Entry No. 116017. Upon full payment of
the purchase price, the Uychocdes executed a Deed of Sale involving the
property in question in favor of the Sajonas couple on September 4, 1984.
The deed of absolute sale was registered almost a year after, or on August
28, 1985.

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Meanwhile, it appears that Pilares (defendant-appellant) filed a Civil

Case for collection of sum of money against Ernesto Uychocde. On June
1980, a Compromise Agreement was entered into by the parties in the said
case under which Uychocde acknowledged his monetary obligation to
Pilares amounting to P27,800 and agreed to pay the same in two years.
When Uychocde failed to comply with his undertaking in the compromise
agreement, Pilares moved for the issuance of a writ of execution to enforce
the decision based on the compromise agreement, which the court granted in
its order dated August 3, 1982. Accordingly, a writ of execution was issued
on August 12, 1982 by the CFI of Quezon City. Pursuant to the order of
execution a notice of levy on execution was issued on February 12, 1985. On
the same date, defendant sheriff Garcia of Quezon City presented said
notice of levy on execution before the Register of Deeds of Marikina and the
same was annotated at the back of the TCT of the subject land.
When the deed of absolute sale dated September 4, 1984 was
registered on August 28, 1985, TCT No. N-79073 was cancelled and in lieu
thereof, TCT No. N-109417 was issued in the name of the Sajonas couple.
The notice of levy on execution annotated by defendant sheriff was carried
over to the new title. On October 21, 1985, the Sajonas couple filed a Third
Party Claim with the sheriff of Quezon City, hence the auction sale of the
subject property did not push through as scheduled.
On January 1986, the Sajonas spouses demanded the cancellation of
the notice of levy on execution upon Pilares, through a letter to their lawyer.
Despite said demand, defendant-appellant Pilares refused to cause the
cancellation of said annotation. In view thereof, plaintiffs-appellees filed a
complaint in the RTC of Rizal, against Pilares, the judgment creditor of the
Uychocdes. The trial court rendered its decision in favor of the Sajonas
couple, and ordered the cancellation of the Notice of Levy from TCT No. N109417. The court a quo stated, thus:

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It is a well settled rule in this jurisdiction that actual notice of an

adverse claim is equivalent to registration and the subsequent registration of
the Notice of Levy could not have any legal effect in any respect on account
of prior inscription of the adverse claim annotated on the title of the
Uychocdes.
On the issue of whether or not plaintiffs (Sajonas) are buyers in good
faith of the property of the spouses Uychocde even notwithstanding the claim
of the defendant that said sale executed by the spouses was made in fraud of
creditors, the Court finds that the evidence in this instance is bare of any
indication that said plaintiffs as purchasers had notice beforehand of the
claim of the defendant over said property or that the same is involved in a
litigation between said spouses and the defendant. Good faith is the opposite
of fraud and bad faith, and the existence of any bad faith must be established
by competent proof.
Dissatisfied, Pilares appealed to the CA assigning errors on the part
of the lower court. The appellate court reversed the lower courts decision,
and upheld the annotation of the levy on execution on the certificate of title.
The respondent appellate court upheld private respondents theory when it
ruled:
The above staled conclusion of the lower court is based on the
premise that the adverse claim filed by plaintiffs-appellees is still effective
despite the lapse of 30 days from the date of registration. However, under
the provisions of Section 70 of P.D. 1529, an adverse claim shall be effective
only for a period of 30 days from the date of its registration.
Hence this petition.
ISSUE:
1. THE LOWER COURT ERRED IN HOLDING THAT THE RULE
ON THE 30-DAY PERIOD FOR ADVERSE CLAIM UNDER SECTION 70

243

OF P.D. NO. 1529 IS ABSOLUTE INASMUCH AS IT FAILED TO READ

OR CONSTRUE THE PROVISION IN ITS ENTIRETY AND TO
RECONCILE THE APPARENT INCONSISTENCY WITHIN THE
PROVISION IN ORDER TO GIVE EFFECT TO IT AS A WHOLE.
RULING:
ACCORDINGLY, the assailed decision of the respondent CA dated
October 17, 1991 is hereby REVERSED and SET ASIDE. The decision of the
RTC finding for the cancellation of the notice of levy on execution from
Transfer Certificate of Title No. N-109417 is hereby REINSTATED. The
inscription of the notice of levy on execution on TCT No. N-109417 is hereby
CANCELLED.
The question may be posed, was the adverse claim inscribed in the
TCT still in force when private respondent caused the notice of levy on
execution to be registered and annotated in the said title, considering that
more than thirty days had already lapsed since it was annotated (Pilares
argues that the adverse claim ceases to have any legal force and effect (30)
days after August 27, 1984 pursuant to Section 70 of P.D. 1529)
In construing the law aforesaid, care should be taken that every part
thereof be given effect and a construction that could render a provision
inoperative should be avoided, and inconsistent provisions should be
reconciled whenever possible as parts of a harmonious whole. For taken in
solitude, a word or phrase might easily convey a meaning quite different
from the one actually intended and evident when a word or phrase is
considered with those with which it is associated. In ascertaining the period
of effectivity of an inscription of adverse claim, we must read the law in its
entirety. Sentence three, paragraph two of Section 70 of P.D. 1529 provides:
The adverse claim shall be effective for a period of thirty days from
the date of registration.

244

At first blush, the provision in question would seem to restrict the

effectivity of the adverse claim to thirty days. But the above provision cannot
and should not be treated separately, but should be read in relation to the
sentence following, which reads:
After the lapse of said period, the annotation of adverse claim may be
cancelled upon filing of a verified petition therefor by the party in interest.
If the rationale of the law was for the adverse claim to ipso facto lose
force and effect after the lapse of thirty days, then it would not have been
necessary to include the foregoing caveat to clarify and complete the rule.
For then, no adverse claim need be cancelled. If it has been automatically
terminated by mere lapse of time, the law would not have required the party
in interest to do a useless act. The law, taken together, simply means that the
cancellation of the adverse claim is still necessary to render it ineffective,
otherwise, the inscription will remain annotated and shall continue as a lien
upon the property.
To hold otherwise would be to deprive petitioners of their property,
who waited a long time to complete payments on their property, convinced
that their interest was amply protected by the inscribed adverse claim.
In sum, the disputed inscription of an adverse claim on the TCT No.
N-79073 was still in effect on February 12, 1985 when Quezon City Sheriff
Roberto Garcia annotated the notice of levy on execution thereto.
Consequently, he is charged with knowledge that the property sought to be
levied upon the execution was encumbered by an interest the same as or
better than that of the registered owner thereof. Such notice of levy cannot
prevail over the existing adverse claim inscribed on the certificate of title in
favor of the petitioners

245

WRIT OF ATTACHMENT PROCEEDINGS

An order of attachment may be issued either ex parte or upon motion with
notice and hearing by the court in which the action is pending, or by the
Court of Appeals or the Supreme Court, and must require the sheriff of the
court to attach so much of the property in the Philippines of the party against
whom it is issued, not exempt from execution, as may be sufficient to satisfy
the applicant's demand, unless such party makes deposit or gives a bond as
hereinafter provided in an amount equal to that fixed in the order, which
may be the amount sufficient to satisfy the applicant's demand or the value
of the property to be attached as stated by the applicant, exclusive of costs.
Several writs may be issued at the same time to the sheriffs of the courts of
different judicial regions.
Sec. 3. Affidavit and bond required.
An order of attachment shall be granted only when it appears by the affidavit
of the applicant, or of some other person who personally knows the facts,
that a sufficient cause of action exists, that the case is one of those
mentioned in section 1 hereof, that there is no other sufficient security for
the claim sought to be enforced by the action, and that the amount due to the
applicant, or the value of the property the possession of which he is entitled
to recover, is as much as the sum for which the order is granted above all
legal counterclaims. The affidavit, and the bond required by the next
succeeding section, must be duly filed with the court before the order issues.
Sec. 4. Condition of applicant's bond.
The party applying for the order must thereafter give a bond executed to the
adverse party in the amount fixed by the court in its order granting the

246

issuance of the writ, conditioned that the latter will pay all the costs which
may be adjudged to the adverse party and all damages which he may sustain
by reason of the attachment, if the court shall finally adjudged that hte
applicant was not entitled there to.
Sec. 5. Manner of attaching property.
(See relevant cases)
Leticia P. Ligon vs.The Regional Trial Court of Makati
G.R. No. 190028 February 26, 2014

FACTS:
In her complaint, Ligon alleged, that Rosario Baladjay enticed her to extend
a shortterm loan in the amount of P3,000,000.00, payable in a months
time and secured by an Allied Bank postdated check for the same amount.
Ligon likewise claimed that Rosario, as further enticement for the loan
extension, represented that she and her husband Saturnino were in the
process of selling their property in Ayala Alabang Village, Muntinlupa City,
covered by a clean title, i.e., TCT No. 8502 and that the proceeds of the said
sale could easily payoff the loan. Allied Bank check was dishonored upon
presentment and, despite assurances to replace it with cash, Rosario failed
to do so. Moreover, Ligon discovered that the subject property had already
been transferred to Polished Arrow, alleged to be a dummy corporation of
Sps. Baladjay and the individual defendants . As a result, TCT No. 8502 was
cancelled and replaced on October 11, 2002 by TCT No. 9273 in the name
of Polished Arrow. Thus, Ligon prayed that all defendants be held solidarily
liable to pay her the amount of P3,000,000.00, with interest due, as well as

247

P1,000,000.00 as attorneys fees and another P1,000,000.00 by way of

moral and exemplary damages. Asserting that the transfer of the subject
property to Polished Arrow was made in fraud of Sps. Baladjays creditors,
Ligon also prayed that the said transfer be nullified, and that a writ of
preliminary attachment be issued in the interim against defendants assets,
including the subject property. An Amended Writ of Preliminary Attachment
was issued on November 26, 2002, and annotated on the dorsal portion of
TCT No. 9273.
On February 18, 2003, a similar complaint for collection of sum of money,
damages, and cancellation of title with prayer for issuance of a writ of
preliminary attachment was lodged before the Makati City RTC by Spouses
Cecilia and Gil Vicente against Sps. Baladjay, Polished Arrow, and other
corporations. In that case, it was established that Sps. Baladjay solicited
millions of pesos in investments from Sps. Vicente using conduit companies
that were controlled by Rosario, as President and Chairperson. During the
proceedings therein, a writ of preliminary attachment also against the
subject property was issued and annotated on the dorsal portion of TCT No.
9273. Thereafter, the Makati City RTC rendered a Decision rescinding the
transfer of the subject property from Sps. Baladjay to Polished Arrow upon
a finding that the same was made in fraud of creditors.Consequently, the
Makati City RTC directed the Register of Deeds of Muntinlupa City to: (a)
cancel TCT No. 9273 in the name of Polished Arrow; and (b) restore TCT
No. 8502 in its previous condition in the name of Rosario Baladjay,
married to Saturnino Baladjay.
Meanwhile, in the pending Quezon City Case, Polished Arrow and the
individual defendants (with the exception of Marasigan) were successively
after it was established that they had no ownership over the property. The

248

Quezon City Case proceeded only against Sps. Baladjay and Marasigan
and, after due proceedings, the Quezon City RTC rendered a decision
directing Sps. Baladjay to pay Ligon the amount of P3,000,000.00 with
interest, as well as attorneys fees and costs of suit.
Decision of the Quezon City RTC became final and executory. However,
when Ligon sought its execution, she discovered that the December 3, 2002
attachment annotation had been deleted from TCT No. 9273 when the
subject property was sold by way of public auction on September 9, 2005 to
the highest bidder, respondent Ting, for the amount of P9,000,000.00 during
the execution proceedings in the Makati City Case, as evidenced by the
Officers Final Deed of Sale issued by Sheriff Alejo. In this regard, Ligon
learned that the Makati City RTC had issued its first assailed order directing
Atty. Garing, as the Register of Deeds of Muntinlupa City, to: (a) register
the Officers Final Deed of Sale on the official Record Book of the Register
of Deeds of Muntinlupa City; and (b) cancel TCT No. 8502 in the name of
Sps. Baladjay and issue a new title in the name of Ting, free from any liens
and encumbrances.
Atty. Garing manifested before the Makati City RTC that it submitted the
matter en consulta to the Land Registration Authority (LRA) as he was
uncertain whether the annotations on TCT No. 9273 should be carried over
to TCT No. 8502. In response to the manifestation, the Makati City RTC
issued its second assailed order directing Atty. Garing to comply with the
First Assailed Order under pain of contempt. It explained that it could not
allow the LRA to carry over all annotations previously annotated on TCT
No. 9273 in the name of Polished Arrow as said course of action would run
counter to its decision which specifically ordered the cancellation of said
TCT and the restoration of TCT No. 8502 in its previous condition.

249

Based on the foregoing, it pronounced that it was Atty. Garings ministerial

duty to promptly cancel TCT No. 8502/T44 in the name of defendant
spouses Baladjay and to issue a new Transfer Certificate of Title in the
name of the highest bidder, Leonardo J. Ting.
Separately, Ting filed a motion before the Makati City RTC on account of
Atty. Garings letter requiring him to comply with certain documentary
requirements and to pay the appropriate fees before a new title could be
issued in his name. In its third assailed order the Makati City RTC directed
Ting to pay the aforesaid taxes and ordered Atty. Garing to immediately
cancel TCT No. 8502 and issue a new title in the formers name.
In June 7, 2007, Atty. Garing issued TCT No. 19756 in the name of Ting,
free from any liens and encumbrances. Later, Ting sold the subject property
to respondent Benito G. Techico (Techico), resulting in the cancellation of
TCT No. 19756 and the issuance of TCT No. 31001 in Techicos name.
Ligon filed a certiorari petition against respondent Presiding Judge
Reynaldo Laigo, Sheriff Alejo, Atty. Garing, Ting, and Techico
(respondents), alleging, among others, that the Makati City RTC committed
grave abuse of discretion in issuing the Assailed Orders. In this relation, she
prayed that the said orders be declared null and void for having been issued
in violation of her right to due process, and resulting in (a) the deletion of
the December 3, 2002 attachment annotation on TCT No. 9273 which
evidences her prior attachment lien over the subject property, and (b) the
issuance of new titles in the names of Ting and Techico.
ISSUES:

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(a) whether or not the CA erred in ruling that the Makati City RTC did
not gravely abuse its discretion in issuing the Assailed Orders; and
(b) whether or not Judge Laigo should be cited in contempt and penalized
administratively.
HELD:
Petition is partially granted.
The Court finds that the CA erred in holding that the RTC did not gravely
abuse its discretion in issuing the Assailed Orders as these issuances
essentially disregarded, inter alia, Ligons prior attachment lien over the
subject property patently anathema to the nature of attachment proceedings
which is wellestablished in law and jurisprudence.
The Court finds that Ligon failed to sufficiently show how the acts of each of
the respondents, or more specifically, Judge Laigo, constituted any of the
acts punishable under the foregoing section tending towards a willful
disregard or disobedience of a public authority. In issuing the Assailed
Orders, Judge Laigo merely performed his judicial functions pursuant to the
decision in the Makati City Case which had already attained finality. Thus,
without Ligons proper substantiation, considering too that Judge Laigos
official acts are accorded with the presumption of regularity, the Court is
constrained to dismiss the indirect contempt charges in this case.

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NOTICE OF LIS PENDENS

Notice of lis pendens is proper in the following cases:
1. to recover possession of real estate
2. to quiet title thereto
3. to remove clouds upon the title thereof
4. for partition, and
5. any other proceeding of any kind in court directly affecting the title to the
land or the use of occupation thereof or the building thereon.
When notice of lis pendens inapplicable:
1. proceedings for the recovery of money judgments
2. attachments
3. proceedings on the probate of wills
4. administration of the estate of deceased persons
5. levies on execution
6. Foreclosure
NOTE: notice of lis pendens may be cancelled in the following cases before
final judgment upon order of the court:
1. when it is shown that the notice is for the purpose of molesting the
adverse party
2. when it is shown that it is not necessary to protect the right of the party
who caused the registration thereof
3. where the evidence so far presented by the plaintiff does not bear out the
main allegations of the complaint
4. where the continuances of the trial are unnecessarily delaying the
determination of the case to the prejudice of the defendant

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5. upon verified petition of the party who caused the registration thereof
6. it is deemed cancelled after final judgment in favor of defendant, or other
disposition of the action such as to terminate all rights of the plaintiff to
property involved.
(Illustrative Case)

Homeowners Savings and Loan Bank vs. Asuncion P. Felonia and Lydia
C. De Guzman G.R. No. 189477 February 26, 2014

FACTS:
Felonia and De Guzman were the registered owners of a parcel of land
consisting of 532 square meters with a five-bedroom house, covered by
Transfer of Certificate of Title (TCT) No. T-402 issued by the register of
deeds of Las Pias City.
Sometime in June 1990, Felonia and De Guzman mortgaged the property to
Delgado to secure the loan in the amount of P1,655,000.00. However,
instead of a real estate mortgage, the parties executed a Deed of Absolute
Sale with an Option to Repurchase.
Felonia and De Guzman filed an action for Reformation of Contract before
the RTC of Manila. On the findings that it is very apparent that the
transaction had between the parties is one of a mortgage and not a deed of
sale with right to repurchase,5 the RTC granted the petition.

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Delgado elevated the case to the CA where it affirmed the RTC decision. CA
decision became final and executory.
Inspite of the pendency of the Reformation case in which she was the
defendant, Delgado filed a Petition for Consolidation of Ownership of
Property Sold with an Option to Repurchase and Issuance of a New
Certificate of Title in the RTC of Las Pias and the latter ordered the
issuance of a new title under Delagados name.
Delagado subsequently transferred the title to her name.
Felonia and De Guzman elevated the case to the CA through a Petition for
Annulment of Judgment.
Delgado mortgaged the subject property to Homeowners Savings and Loan
Bank (HSLB) using her newly registered title. Three (3) days later, or on 5
June 1995, HSLB caused the annotation of the mortgage.
Felonia and De Guzman caused the annotation of a Notice of Lis Pendens
on Delgados title
HSLB foreclosed the subject property and later consolidated ownership in
its favor, causing the issuance of a new title in its name.
CA annulled and set aside the decision of the RTC, Las Pias City in the
Consolidation case. The decision of the CA, declaring Felonia and De
Guzman as the absolute owners of the subject property and ordering the
cancellation of Delgados title, became final and executor
HSLB asserted that Felonia and De Guzman are barred from laches as they
had slept on their rights to timely annotate, by way of Notice of Lis Pendens,
the pendency of the Reformation case. HSLB also claimed that it should not

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be bound by the decisions of the CA in the Reformation and Consolidation

cases because it was not a party therein. Finally, HSLB asserted that it was
a mortgagee in good faith because the mortgage between Delgado and
HSLB was annotated on the title on 5 June 1995, whereas the Notice of Lis
Pendens was annotated only on 14 September 1995.
RTC ruled in favor of Felonia and De Guzman as the absolute owners of the
subject property.
CA affirmed with modifications the trial court decision.
ISSUE:
Whether or not HSLB is a purchaser in good faith.
RULING:
Petition lacks merit.
When the property was mortgaged to HSLB, the registered owner of the
subject property was Delgado who had in her name TCT No. 44848. Thus,
HSLB cannot be faulted in relying on the face of Delgados title. The
records indicate that Delgado was at the time of the mortgage in possession
of the subject property and Delgados title did not contain any annotation
that would arouse HSLBs suspicion. HSLB, as a mortgagee, had a right to
rely in good faith on Delgados title, and in the absence of any sign that
might arouse suspicion, HSLB had no obligation to undertake further
investigation.
However, in the case at bar, HSLB utterly failed to take the necessary
precautions. At the time the subject property was mortgaged, there was yet
no annotated Notice of Lis Pendens. However, at the time HSLB purchased

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the subject property, the Notice of Lis Pendens was already annotated on the
title.
Insofar as the HSLB is concerned, there is no longer any public interest in
upholding the indefeasibility of the certificate of title of its mortgagor,
Delgado. Such title has been nullified in a decision that had become final
and executory. Its own title, derived from the foreclosure of Delgados
mortgage in its favor, has likewise been nullified in the very same decision
that restored the certificate of title in respondents name. There is absolutely
no reason that can support the prayer of HSLB to have its mortgage lien
carried over and into the restored certificate of title of respondents

Spouses Rodolfo Berot and Lilia Berot vs.

Felipe C. Siapno

FACTS:
On May 23, 2002, Macaria Berot (Macaria) and spouses Rodolfo A. Berot
(appellant) and Lilia P. Berot (Lilia) obtained a loan from Felipe C. Siapno
(appellee) in the sum of P250,000.00, payable within one year together with
interest thereon at the rate of 2% per annum from that date until fully paid.
As security for the loan, Macaria, appellant and Lilia (mortgagors)
collectively mortgaged to appellee a portion, consisting of 147 square
meters (contested property), of that parcel of land with an area of 718
square meters, situated in Banaoang, Calasiao, Pangasinan and covered by

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Tax Declaration No. 1123 in the names of Macaria and her husband Pedro
Berot (or "Pedro"), deceased. On June 23, 2003, Macaria died.
Because of the mortgagors default, appellee filed an action against them for
foreclosure of mortgage and damages on July 15, 2004 in the Regional Trial
Court of Dagupan City (Branch 42). The action was anchored on the
averment that the mortgagors failed and refused to pay the abovementioned
sum of P250,000.00 plus the stipulated interest of 2% per month despite
lapse of one year from May 23, 2002.
In answer, appellant and Lilia alleged that the contested property was the
inheritance of the former from his deceased father, Pedro; that on said
property is their family home; that the mortgage is void as it was constituted
over the family home without the consent of their children, who are the
beneficiaries thereof; that their obligation is only joint; and that the lower
court has no jurisdiction over Macaria for the reason that no summons was
served on her as she was already dead.
With leave of court, the complaint was amended by substituting the estate of
Macaria in her stead. Thus, the defendants named in the amended complaint
are now the estate of Macaria, represented by the appellant and Lilia.
After trial, the lower court rendered a decision: WHEREFORE, the Court
hereby renders judgment allowing the foreclosure of the subject mortgage.
Accordingly, the defendants are hereby ordered to pay to the plaintiff within
ninety (90) days from notice of this Decision the amount of P250,000.00
representing the principal loan, with interest at two (2%) percent monthly
from February, 2004 the month when they stopped paying the agreed
interest up to satisfaction of the claim and 30% of the amount to be collected
as and for attorneys fees. Defendants are also assessed to pay the sum of

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P20,000.00 as litigation expenses and another sum of P10,000.00 as

exemplary damages for their refusal to pay their afore stated loan
obligation. If within the afore stated 90-day period the defendants fail to pay
plaintiff the above-mentioned amounts, the sale of the property subject of the
mortgage shall be made and the proceeds of the sale to be delivered to the
plaintiff to cover the debt and charges mentioned above, and after such
payments the excess, if any shall be delivered to the defendants.
Appellant filed a motion for reconsideration of the decision but it was denied
per order dated September 8, 2006. Hence, this appeal interposed by
appellant imputing errors to the lower court in:
1. Substituting as defendant the estate of Macaria Berot which has no
personality to sue and to be sued;
2. Appointing Rodolfo Berot as a representative of the estate of the deceased
Macaria Berot to the prejudice of the other heirs, granting for the sake of
argument that the estate of Macaria Berot has a personality to sue and be
sued;
3. Not finding the mortgage null and void, which was entered into without
the written consent of the beneficiaries of the family home who were of legal
age;
4. Making defendants liable for the entire obligation of Php250,000.00,
when the obligation is only joint;
5. Imposing attorneys fee(s) in the dispositive portion without making a
finding of the basis thereof in the body; and
6. Imposing exemplary damages and litigation expenses.

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Appellant contends that the substitution of the estate of Macaria for her is
improper as the estate has no legal personality to be sued.
Petitioners moved for the reconsideration of the CA Decision, but their
motion was denied through a Resolution dated 9 July 2009. Aggrieved by the
denial of their Motion for Reconsideration, they now come to us through a
Petition for Review on Certiorari under Rule 45, proffering purely questions
of law.
ISSUES:
Whether the Court of Appeals erred in:
1. Holding that the intestate estate of Macaria Berot could be a proper party
by waiver expressly or impliedly by voluntary appearance;
2. Not holding that the obligation is joint
HELD:
The Petition lacks merit.
Petitioners were correct that upon Macaria Berots death her legal
personality ceased, and she could no longer be impleaded as respondent in
the foreclosure suit. It is also true that her death opened to her heirs the
succession of her estate, which in this case was an intestate succession. The
CA, in fact, sustained petitioners position that a deceased persons estate
has no legal personality to be sued and does not have such legal entity as is
necessary to bring action so much so that a motion to substitute cannot lie
and should be denied by the court. An action begun by a decedents estate
cannot be said to have been begun by a legal person, since an estate is not a
legal entity; such an action is a nullity and a motion to amend the party

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plaintiff will not, likewise, lie, there being nothing before the court to amend.
Considering that capacity to be sued is a correlative of the capacity to sue,
to the same extent, a decedent does not have the capacity to be sued and may
not be named a party defendant in a court action.
Indeed, the defense of lack of jurisdiction over the person of the defendant is
one that may be waived by a party to a case. In order to avail of that
defense, one must timely raise an objection before the court. Further, the
lack of jurisdiction over the person of the defendant may be waived either
expressly or impliedly. When a defendant voluntarily appears, he is deemed
to have submitted himself to the jurisdiction of the court. If he does not wish
to waive this defense, he must do so seasonably by motion, and object
thereto.
Since respondents failed to correct their error (they did not amend the
erroneous caption of their complaint to include the real parties-in interest),
they cannot be insulated from the confusion which it engendered in the
proceedings below. But at any rate, notwithstanding the erroneous caption
and the absence of a formal substitution of parties, jurisdiction was acquired
over the heirs of Avelino and Pedro who voluntarily participated in the
proceedings below. This Court has ruled that formal substitution of parties
is not necessary when the heirs themselves voluntarily appeared,
participated, and presented evidence during the proceedings.
On the second issue it rules that its joint.
Under Article 1207 of the Civil Code of the Philippines, the general rule is
that when there is a concurrence of two or more debtors under a single
obligation, the obligation is presumed to be joint: The concurrence of two or
more creditors or of two or more debtors in one and the same obligation

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does not imply that each one of the former has a right to demand, or that
each one of the latter is bound to render, entire compliance with the
prestations. There is a solidary liability only when the obligation expressly
so states, or when the law or the nature of the obligation requires solidarity.
A solidary obligation is one in which each of the debtors is liable for the
entire obligation, and each of the creditors is entitled to demand the
satisfaction of the whole obligation from any or all of the debtors. On the
other hand, a joint obligation is one in which each debtors is liable only for
a proportionate part of the debt, and the creditor is entitled to demand only
a proportionate part of the credit from each debtor. The well entrenched
rule is that solidary obligations cannot be inferred lightly. They must be
positively and clearly expressed. A liability is solidary "only when the
obligation expressly so states, when the law so provides or when the nature
of the obligation so requires."
The trial court expressly ruled that the nature of petitioners obligation to
respondent was solidary. It scrutinized the real estate mortgage and arrived
at the conclusion that petitioners had bound themselves to secure their loan
obligation by way of a real estate mortgage in the event that they failed to
settle it. But such pronouncement was not expressly stated in its 30 June
2006 Decision. This was probably the reason why, when the trial court
Decision was appealed to it, the CA did not squarely address the issue when
the latter ruled that:
It is noteworthy that the appealed decision makes no pronouncement that the
obligation of the mortgagors is solidary; and that said decision has not been
modified by the trial court. Hence, it is unnecessary for US to make a
declaration on the nature of the obligation of the mortgagors. However, a

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closer scrutiny of the records would reveal that the RTC expressly
pronounced that the obligation of petitioners to the respondent was solidary.
The trial court categorically ruled that: Defendants obligation with plaintiff
is solidary. A careful scrutiny of the Real Estate Mortgage will show that all
the defendants, for a single loan, bind themselves to cede, transfer, and
convey by way of real estate mortgage all their rights, interest and
participation in the subject parcel of land including the improvements
thereon in favor of the plaintiff, and warrant the same to be free from liens
and encumbrances, and that should they fail to perform their obligation the
mortgage will be foreclosed. From this it can be gleaned that each of the
defendants obligated himself/herself to perform the said solidary obligation
with the plaintiff. We do not agree with this finding by the trial court.
The CA properly upheld respondent's course of action as an availment of the
second remedy provided under Section 7, Rule 86 of the 1997 Revised Rules
of Court. Under the said provision for claims against an estate, a mortgagee
has the legal option to institute a foreclosure suit and to recover upon the
security, which is the mortgaged property.
WHEREFORE, the CA Decision in CA-G.R. CV No. 87995 sustaining the
RTC Decision in Civil Case No. 2004-0246-D is hereby AFFIRMED with
the MODIFICATION that the obligation of petitioners and the estate of
Macaria Berot is declared as joint in nature.

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LACHES
Laches is defined as the "failure or neglect for an unreasonable and
unexplained length of time, to do that which, by exercising due diligence,
could or should have been done earlier, it is negligence or omission to assert
a right within a reasonable length of time, warranting a presumption that the
party entitled to assert it either has abandoned it or declined to assert it.

Estate of The Late Jesus S. Yujuico vs. Republic

G.R. No. 168661 October 26, 2007
An action to recover lands of the public domain is imprescriptible. Such
right however can be barred by laches/estoppel under Sec. 32 of P.D. 1529
which recognizes the rights of innocent purchasers for value above the
interests of the government.
FACTS:
In 1973, Fermina Castro filed an application for the registration and
confirmation of her title over a parcel of land with anarea of 17,343 square
meters covered by plan (LRC) Psu-964 located in Paraaque City, in the
Pasig-Rizal Court of First Instance (CFI).The application was opposed by
the Office of the Solicitor General (OSG) on behalf of the Director of Lands,
and by Mercedes Dizon, a private party. Trial court ruled in favor of
Castro.2. The Director of Lands and Mercedes Dizon did not appeal from
the adverse decision of the Pasig-Rizal CFI. Thus, the order for the issuance
of a decree of registration became final, and a Decree was issued by the
Land Registration Commission (LRC).An Original Certificate of Title was
issued in the name of Fermina Castro by the Register of Deeds.

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Land was then sold to Jesus Yujuico. The OCT of Castro was cancelled and
a TCT was issued in Yujuicos name over Lot1 while another TCT was
issued in favor of herein co-petitioner Augusto Carpio. Meanwhile, PD no.
1085 was issued and asserts that Land reclaimed in the foreshore and
offshore areas of Manila Bay became the properties of the Public Estates
Authority (PEA), a government corporation that undertook the reclamation
of lands or the acquisition of reclaimed lands. Thus, an OCT was issued in
favor of PEA. The PEA also acquired ownership of other parcels of land
along the Manila Bay coast which were subsequently sold to the Manila Bay
Development Corporation (MBDC). The PEA undertook the construction of
the Manila Coastal Road. As this was being planned, Yujuico and Carpio
discovered that a verification survey they commissioned showed that the
road directly overlapped their property, and that they owned a portion of the
land sold by the PEA to the MBDC.6. Yujuico and Carpio filed before the
Paraaque City Regional Trial Court (RTC), a complaint for the Removal of
Cloud and Annulment of Title with Damages.7. Respondent Republic argued
that, first, since the subject land was still underwater, it could not be
registered in the name of Fermina Castro. Second, the land registration
court did not have jurisdiction to adjudicate inalienable lands, thus the
decision adjudicating the subject parcel of land to Fermina Castro was void.
And third, the titles of Yujuico and Carpio, being derived from a void title,
were likewise void.8. Trial Court ruled in favor of the petitioner and states
that after 28 years without being contested, the case had already become
final and executory. The trial court also found that the OSG had
participated in the LRC case, and could havequestioned the validity of the
decision but did not.9. On appeal, reversed the decision of the lower court
asserting that shores are properties of the public domain intended for public
use and, therefore, not registrable and their inclusion in a certificate of title
does not convert the same into properties of private ownership or confer title
upon the registrant. Further, according to the appellate court res judicata
does not apply to lands of public domain, nor does possession of the land
automatically divest the land of its public character.

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ISSUE:
Whether CAs decision was correct.
HELD:
PETITION GRANTED.
While it may be true that estoppel does not operate against the state or its
agents, however, Equitable estoppel maybe invoked against public
authorities when as in this case, the lot was already alienated to innocent
buyers for value and the government did not undertake any act to contest the
title for an unreasonable length of time.
Section 32 provides:
SEC. 32. Review of decree of registration; Innocent purchaser for value.

The decree of registration shall not be reopened or revised by reason of

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

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In this petition, the LRA, issued Decree No. N-150912 in favor of Fermina
Castro and OCT No. 10215 was issued by the Rizal Registrar of Deeds.
OCT No. 10215 does not show any annotation, lien, or encumbrance on its
face. Relying on the clean title, Yujuico bought the same in good faith and
for value from her. There is no allegation that Yujuico was a buyer in bad
faith, nor did he acquire the land fraudulently.
He thus had the protection of the Torrens System that every subsequent
purchaser of registered land taking a certificate of title for value and in
good faith shall hold the same free from all encumbrances except those
noted on the certificate and any of the encumbrances which may be
subsisting. The same legal shield redounds to his successors-in-interest, the
Yujuicos and Carpio, more particularly the latter since Carpio bought the
lot from Jesus Y. Yujuico for value and in good faith. Likewise protected are
the rights of innocent mortgagees for value, the PISO, Citibank, N.A., PDC,
RCBC, PCIB, and DBP. Even if the mortgagors title was proved fraudulent
and the title declared null and void, such declaration cannot nullify the
mortgage rights of a mortgagee in good faith. Another contention of the
respondent Republic:
The plain import of Municipality of Antipolo vs Zapanta is that a land
registration court, the RTC at present, has no jurisdiction over the subject
matter of the application which respondent Republic claims is public land.
Firmly entrenched is the principle that jurisdiction over the subject matter is
conferred by law. Consequently, the proper CFI (now the RTC) under
Section 14 of PD 1529 (Property Registration Decree) has jurisdiction over
applications for registration of title to land.
The applicant in a land registration case usually claims the land subject
matter of the application as his/her private property, as in the case of the
application of Castro. Thus, the conclusion of the CA that the Pasig-Rizal

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CFI has no jurisdiction over the subject matter of the application of Castro
has no legal mooring.
The land registration court initially has jurisdiction over the land applied
for at the time of the filing of the application. After trial, the court, in the
exercise of its jurisdiction, can determine whether the title to the land
applied for is registrable and can be confirmed. In the event that the subject
matter of the application turns out to be inalienable public land, then it has
no jurisdiction to order the registration of the land and perforce must
dismiss the application.

BAR QUESTION
TOPIC: PRESCRIPTION AND LACHES (1990, 1998, 2000, 2002, 2003)
(I) Louie, before leaving the country to train as a chef in a fivestar hotel in
New York, USA, entrusted to his first-degree cousin Dewey an application
for registration, under the Land Registration Act, of a parcel of land located
in Bacolod City. A year later, Louie returned to the Philippines and
discovered that Dewey registered the land and obtained an Original
Certificate of Title over the property in his (Deweys) name. Compounding
the matter, Dewey sold the land to Huey, an innocent purchaser for value.
Louie promptly filed an action for reconveyance of the parcel of land against
Huey.
A. Is the action pursued by Louie the proper remedy?
B. Assuming that reconveyance is the proper remedy, will the action prosper
if the case was filed beyond one year, but within ten years, from the entry of
the decree of registration?

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ANSWERS:
A. An action for reconveyance against Huey is not the proper remedy,
because Huey is an innocent purchaser for value. The proper recourse is for
Louie to go after Dewey for damages by reason of the fraudulent registration
and subsequent sale of the land. If Dewey is insolvent, Louie may file a
claim against the Assurance Fund (Heirs of Pedro Lopez vs. De Castro 324
SCRA 591 [2000] citing Sps. Eduarte vs. CA, 323 Phil 462 [1996]).
B. Yes, the remedy will prosper because the action prescribes in ten (10)
years, not within one (1) year when a petition for the reopening of the
registration decree may be filed. The action for reconveyance is distinct
from the petition to reopen the decree of registration (Grey Alba vs. Dela
Cruz, 17 Phil 49 [1910]). There is no need to reopen the registration
proceedings, but the property should just be reconveyed to the real owner.
The action for reconveyance is based on implied or constructive trust, which
prescribes in ten (10) years from the date of issuance of the original
certificate of title. This rule assumes that the defendant is in possession of
the land. Where it is the plaintiff who is in possession of the land, the action
for reconveyance would be in the nature of a suit for quieting of title which
action is imprescriptible (David vs. Malay, 318 SCRA 711 [1999]).