Republic of the Philippines

SUPREME COURT
Manila
FIRST DIVISION

G.R. No. L-63046 June 21, 1990

MARIANO TORRES Y CHAVARRIA, petitioner,

vs.
THE HONORABLE COURT OF APPEALS, FRANCISCO E. FERNANDEZ and FE
FERNANDEZ, ROSARIO MOTA CUE, ERNESTO MEDINA CUE and the NATIONAL
TREASURER, as Custodian of the Assurance Fund, respondents.

Bengzon, Zarraga, Narciso, Cudala, Pecson, Azcuna & Bengzon for petitioner.

The parcel of land located at the comer of Quezon Boulevard and Raon Street (now
Gonzalo Street), and the building erected thereon known as "M. Torres Building" is owned
by Mariano Torres, the herein petitioner, as evidenced by Transfer Certificate of Title No.
53628-Manila issued in his name. As far as the records show, Torres was and still is in
possession of the realties, holding safely to his owner's duplicate certificate of title, and, at
least until 1971, paying the real estate taxes due thereon, and collecting rentals from his
tenants occupying the building.

Sometime in 1966, Francisco Fernandez, Torres' brother-in-law, filed a petition with the
Court of First Instance of Manila, docketed as LRC GLRO Cad. Rec. No. 133, where he,
misrepresenting to be the attorney-in-fact of Torres and falsely alleging that the a duplicate
copy of TCT No. 53628 was lost, succeeded in obtaining a court order for the issuance of
another copy of the certificate.

Once in possession thereof, Fernandez forged a simulated deed of sale of the realties in his
favor. Whereupon TCT No. 53628 in the name of Torres was canceled and TCT No. 86018
was issued in Fernandez' name.

Albon, Serrano & Associates for private respondents.

T.J. Sumawang & Associates for respondent Fernandezes.

MEDIALDEA, J.:

This is a petition for review of the decision of the Court of Appeals in CA-G.R. No. 62248-R
entitled "Mariano Torres Y Chavarria v. Francisco E. Fernandez, et al., etc.," which reversed
the decision of the then Court of First Instance of Manila, Branch 7, by holding that it is the
respondent Rosario Mota who is legally entitled to the disputed realties, being an innocent
mortgagee and later the highest bidder when the properties were supposedly foreclosed,
and not the petitioner Mariano Torres, the defrauded owner thereof; and of the resolution of
that Court denying Torres' motion for reconsideration.

On various dates from December, 1966 to November, 1967 Fernandez mortgaged the
realties to Rosario Mota, wife of Ernesto Cue, and also to Angela Fermin, who later
assigned her credit to the spouses Cue. The mortgages were annotated at the back of TCT
No. 86018 and so was the deed of assignment.

Torres, who up to this time still had possession of his owner's duplicate certificate of title and
who was still collecting rentals from the occupants of the subject building, upon Teaming of
the fraud committed by Fernandez, caused, on March 18, 1968, the annotation on the
latter's TCT a notice of adverse claim.

On March 30, 1968, Torres filed Civil Case No. 72494 against Fernandez to annul TCT No.
86018 as well as the proceedings in LRC GLRO Cad. Rec. No. 133. On April 2, 1968, a
notice of lis pendens was annotated at the back of Fernandez' TCT.

In the meantime, Fernandez failed to pay his various loans which prompted the Cues to
institute an extrajudicial foreclosure of the mortgage.

On August 31, 1971, the redemption period for the subject immovables having lapsed
without Fernandez nor Torres redeeming the properties, Rosario Mota was issued the
Sheriffs Deed of Sale. Thereafter, TCT No. 86018 was canceled and TCT No. 105953 was
issued in her name.

On December 7, 1971 Mota, through her lawyer, notified the tenants occupying "M. Torres
Building" that she is the new owner thereof and henceforth, payment of their rentals should
be made to her.

On February 11, 1969, Fernandez filed Civil Case No. 75643 against the spouses Cue for
the annulment of the mortgage with preliminary injunction.

After the foreclosure was enjoined, the parties entered into an amicable settlement,
approved by the court whereby it was stipulated that Fernandez acknowledged and
promised to pay his debt to the Cues for Five Hundred Sixty-Two Thousand Nine Hundred
Fifty-Five and 28/100 (P562,955.28) Pesos on or before, March 30, 1970, while the spouses
bound themselves to execute and deliver, within ten (10) days from receipt of the sum
mentioned such documents as are necessary to release the mortgages in favor of
defendants on plaintiffs' property.

Before Fernandez could pay his obligation under the settlement agreement, a decision was
rendered in Civil Case No. 72494 where it was declared that the proceedings held in LRC
GLRO Cad. Rec, No. 133 was void and that TCT No. 86018, issued in the name of
Fernandez, is without force and effect as TCT No. 53628 in the name of Torres is the true
and legal evidence of ownership of the subject immovables. Fernandez appealed from this
decision to the Court of Appeals where it was docketed as CA-G.R. No. 46386-R. The Court
of Appeals, on April 20, 1979, affirmed the decision of the trial court. There being nothing on
the records that would indicate that the judgment of the appellate court was elevated here, it
would appear that it had become final and executory.

But meanwhile, prior to the Court of Appeals' decision mentioned above, Fernandez failed to
comply with his obligation under the amicable settlement and whereupon the Cues applied
for and were granted a writ of execution. The subject realties were then levied upon and
sold at public auction where Rosario Mota was the highest bidder.

On December 17, 1971 Torres filed a complaint, which later gave rise to this petition, with
the Court of First Instance of Manila, docketed as Civil Case No. 85753, against Fernandez
and his spouse and the Cues to restrain the latter from collecting rentals and for the
declaration as void TCT No. 105953. The Cues in turn filed a cross-claim against Fernandez
spouses and a third party complaint against the National Treasurer as the custodian of the
Assurance Fund.
During the proceeding, Mariano Torres, having died sometime in 1974, was substituted by
his widow. On June 3, 1977, the trial court rendered its decision declaring TCT No. 105953
in the name of Rosario Mota nun and void as it upheld the validity of TCT No. 53628 in the
name of Torres as the true evidence of title to the disputed realties, and at the same time
dismissing the Cue's third party complaint and cross claim.

The decision was reviewed by the respondent court at the instance of the Cues which, as
aforementioned, reversed the trial court in its decision dated July 30, 1982 and the
Resolution of January 14, 1983. Hence, this petition.

There is nothing on the records which shows that Torres performed any act or omission
which could have jeopardized his peaceful dominion over his realties. The decision under
review, however, in considering Mota an innocent mortgagee protected under Section 55 of
the Land Registration Law, held that Torres was bound by the mortgage. Inevitably, it
pronounced that the foreclosure sale, where Mota was the highest bidder, also bound Torres
and concluded that the certificate of title issued in the name of Mota prevails over that of
Torres'. As correctly pointed out by Torres, however, his properties were sold on execution,
and not on foreclosure sale, and hence, the purchaser thereof was bound by his notice of
adverse claim and lis pendens annotated at the back of Fernandez' TCT. Moreover, even if

We grant Mota the status of an innocent mortgagee, the doctrine relied upon by the
appellate court that a forged instrument may become the root of a valid title, cannot be
applied where the owner still holds a valid and existing certificate of title covering the same
interest in a realty. The doctrine would apply rather when, as in the cases for example of De
la Cruz v. Fable, 35 Phil. 144 [1916], Fule v. De Legare, No. L-17951, February 28, 1963, 7
SCRA 351, and Republic v. Umali, G.R. No. 80687, April 10, 1989, the forger thru insidious
means obtains the owner's duplicate certificate of title, converts it in his name, and
subsequently sells or otherwise encumbers it to an innocent holder for value, for in such a
case the new certificate is binding upon the owner (Sec. 55, Act 496; Sec. 53, P.D. No.
1529). But if the owner holds a valid and existing certificate of title, his would be indefeasible
as against the whole world, and not that of the innocent holder's. "Prior tempore potior jure"
as We have said in Register of Deeds v. Philippine National Bank, No. L-17641, January 30,
1965, 13 SCRA 46 , citing Bank, No. L Legarda v. Saleeby, 31 Phil. 590, Roman Catholic
Bishop v. Philippine Railway, 49 Phil. 546, Reyes v. Borbon, 50 Phil. 791. in C.N. Hodges v.
Dy Buncio & Co., Inc., No. L-16096, October 30, 1962, 6 SCRA 287, 292, We laid down the
doctrine that:

The claim of indefeasibility of the petitioner's title under the Torrens land title
system would be correct if previous valid title to the same parcel of land did not exist. The
respondent had a valid title ... It never parted with it; it never handed or delivered to anyone
its owner's duplicate of the transfer certificate of title, it could not be charged with negligence
in the keeping of its duplicate certificate of title or with any act which could have brought
about the issuance of another certificate upon which a purchaser in good faith and for value
could rely. If the petitioner's contention as to indefeasibility of his title should be upheld, then
registered owners without the least fault on their part could be divested of their title and
deprived of their property. Such disastrous results which would shake and destroy the
stability of land titles had not been foreseen by those who had endowed with indefeasibility
land titles issued under the Torrens system. Veronica Bareza perpetrated the fraud by
making false representations in her petition and the title issued to her being the product of
fraud could not vest in her valid and legal title to the parcel of land in litigation. As she had
no title to the parcel of land, in the same way that a thief does not own or have title to the
stolen goods, she could not transmit title which she did not have nor possess.

We have applied this doctrine in the case of the Register of Deeds v. P.N.B., supra, where
We noted that said ruling is "a mere affirmation of the recognized principle that a certificate
is not conclusive evidence of title if it is shown that the same land had already been
registered and an earlier certificate for the same land is in existence." Again in the case of
Baltazar v. Court of Appeals, G.R. No. 78728, December 8, 1988, 168 SCRA 354, We held
that as between two persons both of whom are in good faith and both innocent of any
negligence, the law must protect and prefer the lawful holder of registered title over the
transfer of a vendor bereft of any transmissible rights.

In view of the foregoing, to hold, for the purpose of enforcing the mortgage, that Mota was
an innocent mortgagee would be futile because, as above shown, no certificate of title
covering the subject realties in derogation of Torres' certificate of title may validly be issued.
Then it becomes evident that the remaining possible remedies of the Cues are to go against
Fernandez or the Assurance Fund, as they in fact had done in the lower court by filing a
cross claim and third party complaint. The lower court dismissed the Cues' cross-claim
against Fernandez reasoning out that their remedy is to cause the final judgment
(compromise agreement) in Civil Case No. 75643 executed. This, of course, is correct since
the rights and obligations of both parties had been determined in that case.

The trial court also dismissed the Cues' third party complaint against the Treasurer of the
Philippines as custodian of the Assurance Fund after finding them negligent in protecting
their interest. The trial court recognized the principle that a person dealing with registered
lands need not go beyond the certificate of title but nevertheless pointed out that there are
circumstances in this case which should have put the Cues on guard and prompted them to
investigate the property being mortgaged to them, thus:

The property in question is a very valuable property, in fact accepted

by defendants Mota and Medina Cue as collateral for more than half a
million pesos in loans granted by them to Fernandez. Its value lies
principally in its income potential, in the form of substantial monthly
rentals. Certainly, the registered title does not yield any information as
to the amount of rentals due from the building, much less on who is
collecting them, or who is recognized by the tenants as their landlord.
Any prospective buyer or mortgagee of such a property, if prudent and
in good faith, is normally expected to inquire into all these and related
facts and circumstances.

Besides, by the course of visible dimensions of the M. Torres Building,

it should be readily obvious to any one that the area of the two lots ...
covered by TCT No. 86018 cannot accommodate the building, as in
fact it also rests upon a lot covered by TCT No. 56387, and partly
upon a lot leased by (Torres) from the City of Manila. Had (the Cues)
known of this fact would they have accepted the mortgage alone over

TCT No. 86018? The answer is obvious. And yet, to all indications,
they never bothered to look into this fact about the M. Torres Building.
xxx xxx xxx
Another thing that defendants Mota and Medina Cue must have
investigated, as any prudent buyer or mortgagee should before
consummating any transaction on real property, in the matter of
payment of taxes on the property. After all, the big value of the
property in question necessarily means that even real estate taxes on
it alone would involve big amounts of money, and if there are tax
arrearages, any buyer or subsequent owner of the property wig have
to come face to face with the tax hen attaching to the property
wherever its owner may be. ... (P. 257, Record on Appeal)

We likewise take note of the manifestation of the Office of the Solicitor General that the
Cues failed to contest the ruling of the trial court negating the liability of the Assurance
Fund. For these reasons, We hold that the Cues' remedy merely is to go against Francisco
Fernandez or rather his estate since record shows that he died sometime in 1983.
ACCORDINGLY, the decision and resolution under review are REVERSED and the decision
of the then Court of First Instance, Branch 7, Manila in Civil Case No. 85753 is
REINSTATED.
SO ORDERED.
Narvasa (Chairman), Cruz and Gancayco, JJ., concur.

Government, and the order dated April 24, 2009, denying their motion for reconsideration
filed against the first order.
Antecedents
The antecedent facts are those established in Alonso v. Cebu Country Club,1 which follow.
Petitioner Francisco M. Alonso (Francisco) was the only son and sole heir of the late
spouses Tomas N. Alonso and Asuncion Medalle. Francisco died during the pendency of
this case, and was substituted by his legal heirs, namely: his surviving spouse, Mercedes V.
Alonso, his son Tomas V. Alonso (Tomas) and his daughter Asuncion V. Alonso. 2
In 1992, Francisco discovered documents showing that his father Tomas N. Alonso had
acquired Lot No. 727 of the Banilad Friar Lands Estate from the Government in or about the
year 1911; that the original vendee of Lot No. 727 had assigned his sales certificate to
Tomas N. Alonso, who had been consequently issued Patent No. 14353; and that on March
27, 1926, the Director of Lands had executed a final deed of sale in favor of Tomas N.
Alonso, but the final deed of sale had not been registered with the Register of Deeds
because of lack of requirements, like the approval of the final deed of sale by the Secretary
of Agriculture and Natural Resources, as required by law.3
Republic of the Philippines
SUPREME COURT
Baguio City
FIRST DIVISION
G.R. No. 188471

April 20, 2010

FRANCISCO ALONSO, substituted by MERCEDES V. ALONSO, TOMAS V. ALONSO

and ASUNCION V. ALONSO, Petitioners,
vs.
CEBU COUNTRY CLUB, INC., Respondent,
REPUBLIC OF THE PHILIPPINES, represented by the OFFICE OF THE SOLICITOR
GENERAL, Public Respondent.
DECISION
BERSAMIN, J.:
By petition for review on certiorari, the petitioners appeal the order dated December 28,
2007 of the Regional Trial Court (RTC), Branch 20, in Cebu City, denying the motion for
issuance of writ of execution of the Office of the Solicitor General (OSG) in behalf of the

Francisco subsequently found that the certificate of title covering Lot No. 727-D-2 of the
Banilad Friar Lands Estate had been "administratively reconstituted from the owners
duplicate" of Transfer Certificate of Title (TCT) No. RT-1310 in the name of United Service
Country Club, Inc., the predecessor of respondent Cebu Country Club, Inc (Cebu Country
Club); and that upon the order of the court that had heard the petition for reconstitution of
the TCT, the name of the registered owner in TCT No. RT-1310 had been changed to that of
Cebu Country Club; and that the TCT stated that the reconstituted title was a transfer from
TCT No. 1021.4
It is relevant to mention at this point that the current TCT covering Lot 727-D-2 in the name
of Cebu Country Club is TCT No. 94905, which was entered in the land records of Cebu
City on August 8, 1985.5
With his discoveries, Francisco formally demanded upon Cebu Country Club to restore the
ownership and possession of Lot 727-D-2 to him. However, Cebu Country Club denied
Franciscos demand and claim of ownership, and refused to deliver the possession to him. 6
On September 25, 1992, Francisco commenced against Cebu Country Club in the RTC in
Cebu City an action for the declaration of nullity and non-existence of deed/title, the
cancellation of certificates of title, and the recovery of property. On November 5, 1992, Cebu
Country Club filed its answer with counterclaim. 7

On May 7, 1993, the RTC decided in favor of Cebu Country Club.

Both parties appealed to the Court of Appeals (CA), which ultimately affirmed the RTC on
March 31, 1997. Thus, Francisco filed a motion for reconsideration, which was denied on
October 2, 1997.8
Nothing daunted, Francisco appealed to this Court (G.R. No. 130876).
On January 31, 2002, this Court decided G.R. No. 130876, decreeing:
WHEREFORE, we DENY the petition for review. However, we SET ASIDE the decision of
the Court of Appeals and that of the Regional Trial Court, Cebu City, Branch 08.
IN LIEU THEREOF, we DISMISS the complaint and counterclaim of the parties in Civil
Cases No. CEB 12926 of the trial court. We declare that Lot No. 727 D-2 of the Banilad
Friar Lands Estate covered by Original Certificate of Title Nos. 251, 232, and 253 legally
belongs to the Government of the Philippines. 9
The petitioners sought a reconsideration. On December 5, 2003, however, the Court denied
their motion for reconsideration.10 Hence, the decision in G.R. No. 130876 became final and
executory.
In late 2004, the Government, through the OSG, filed in the RTC a motion for the issuance
of a writ of execution. 11 Cebu Country Club opposed the motion for the issuance of a writ of
execution in due course.
Later on, the proceedings on the OSGs motion for the issuance of a writ of execution at the
instance of Cebu Country Club in deference to the on-going hearings being conducted by
the Committee on Natural Resources of the House of Representatives on a proposed bill to
confirm the TCTs and reconstituted titles covering the Banilad Friar Lands Estate in Cebu
City.12 The Congress ultimately enacted a law to validate the TCTs and reconstituted titles
covering the Banilad Friar Lands Estate in Cebu City. This was Republic Act No. 9443, 13
effective on July 27, 2007.
Thereafter, both Cebu Country Club and the OSG brought the passage of R.A. No. 9443 to
the attention of the RTC for its consideration in resolving the OSGs motion for the issuance
of a writ of execution. 14 On December 28, 2007, therefore, the RTC denied the OSGs
motion for the issuance of a writ of execution through the first appealed order.15
The petitioners filed a motion for reconsideration dated February 1, 2008, questioning the
denial of the OSGs motion for the issuance of a writ of execution. 16

Upon being directed by the RTC to comment on the petitioners motion for reconsideration,
the OSG manifested in writing that the Government was no longer seeking the execution of
the decision in G.R. No. 130876, subject to its reservation to contest any other titles within
the Banilad Friar Lands Estate should clear evidence show such titles as having been
obtained through fraud.17
After the filing of the OSGs comment, the RTC issued the second appealed order, denying
the petitioners motion for reconsideration, giving the following reasons:
1. The party who had a direct interest in the execution of the decision and the
reconsideration of the denial of the motion for execution was the Government,
represented only by the OSG; hence, the petitioners had no legal standing to file
the motion for reconsideration, especially that they were not authorized by the
OSG for that purpose;
2. R.A. No. 9443 "confirms and declares as valid" all "existing" TCTs and
reconstituted titles; thereby, the State in effect waived and divested itself of
whatever title or ownership over the Banilad Friar Lands Estate in favor of the
registered owners thereof, including Lot 727 D-2; and
3. The situation of the parties had materially changed, rendering the enforcement
of the final and executory judgment unjust, inequitable, and impossible, because
Cebu Country Club was now recognized by the State itself as the absolute owner
of Lot 727 D-2.18
Hence, the petitioners appeal by petition for review on certiorari.
Contentions of the Petitioners
The petitioners challenge the orders dated December 28, 2007 and April 29, 2009, because:
1. R.A. No. 9443 did not improve Cebu Country Clubs plight, inasmuch as R.A.
No. 9443 presupposed first a sales certificate that lacked the required signature,
but Cebu Country Club did not have such sales certificate. Moreover, the
titleholders were in fact the owners of the lands covered by their respective titles,
which was not true with Cebu Country Club due to its being already adjudged
with finality to be not the owner of Lot 727-D-2. Lastly, Cebu Country Clubs title
was hopelessly defective, as found by the Supreme Court itself;
2. The doctrine of law of the case barred the application of R.A. No. 9443 to
Cebu Country Club;

3. The RTCs declaration that R.A. No. 9443 confirmed Cebu Country Club as the
absolute owner of Lot 727-D-2 despite the prior and final judgment of the
Supreme Court that Cebu Country Club was not the owner was unconstitutional,
because it virtually allowed the legislative review of the Supreme Courts decision
rendered against Cebu Country Club;
4. The use of R.A. No. 9443 as a waiver on the part of the Government vis--vis
Cebu Country Club was not only misplaced but downrightly repugnant to Act
1120, the law governing the legal disposition and alienation of Friar Lands; and
5. The petitioners had the requisite standing to question the patent errors of the
RTC, especially in the face of the unholy conspiracy between the OSG and Cebu
Country Club, on the one hand, and, on the other hand, the passage of R.A. No.
9443 and DENR Memorandum No. 16, both of which in fact made their
predecessor Tomas N. Alonsos sales certificate and patent valid. 19
Issues
The Court confronts and resolves the following issues, to wit:
1. Whether or not the petitioners were the real parties-in-interest to question the
denial by the RTC of the OSGs motion for the issuance of a writ of execution;
2. Whether or not R.A. No. 9443 gave the petitioners a legal interest to assail the
RTCs orders; and
3. Whether or not the petitioners can appeal by petition for review on certiorari in
behalf of the OSG.
Ruling
The petition for review is denied due course.
A. Preliminary Considerations:
Petitioners contravene the hierarchy of courts, and the petition is fatally defective
Before delving on the stated issues, the Court notes that the petitioners are guilty of two
violations that warrant the immediate dismissal of the petition for review on certiorari.
The first refers to the petitioners breach of the hierarchy of courts by coming directly to the
Court to appeal the assailed issuances of the RTC via petition for review on certiorari. They

should not have done so, bypassing a review by the Court of Appeals (CA), because the
hierarchy of courts is essential to the efficient functioning of the courts and to the orderly
administration of justice. Their non-observance of the hierarchy of courts has forthwith
enlarged the docket of the Court by one more case, which, though it may not seem
burdensome to the layman, is one case too much to the Court, which has to devote time
and effort in poring over the papers submitted herein, only to discover in the end that a
review should have first been made by the CA. The time and effort could have been
dedicated to other cases of importance and impact on the lives and rights of others.
The hierarchy of courts is not to be lightly regarded by litigants. The CA stands between the
RTC and the Court, and its establishment has been precisely to take over much of the work
that used to be done by the Court. Historically, the CA has been of the greatest help to the
Court in synthesizing the facts, issues, and rulings in an orderly and intelligible manner and
in identifying errors that ordinarily might escape detection. The Court has thus been freed to
better discharge its constitutional duties and perform its most important work, which, in the
words of Dean Vicente G. Sinco,20 "is less concerned with the decision of cases that begin
and end with the transient rights and obligations of particular individuals but is more
intertwined with the direction of national policies, momentous economic and social
problems, the delimitation of governmental authority and its impact upon fundamental
rights."21
The need to elevate the matter first to the CA is also underscored by the reality that
determining whether the petitioners were real parties in interest entitled to bring this appeal
against the denial by the RTC of the OSGs motion for the issuance of a writ of execution
was a mixed question of fact and law. As such, the CA was in the better position to review
and to determine. In that regard, the petitioners violate Section 1, Rule 45 of the 1997 Rules
of Civil Procedure, which demands that an appeal by petition for review on certiorari be
limited to questions of law.22
The second violation concerns the omission of a sworn certification against forum shopping
from the petition for review on certiorari. Section 4, Rule 45 of the 1997 Rules of Civil
Procedure requires that the petition for review should contain, among others, the sworn
certification on the undertakings provided in the last paragraph of Section 2, Rule 42 of the
1997 Rules of Civil Procedure, viz:
Section 2. xxx
The petitioner shall also submit together with the petition a certification under oath that he
has not theretofore commenced any other action involving the same issues in the Supreme
Court, the Court of Appeals or different divisions thereof, or any other tribunal or agency; if
there is such other action or proceeding, he must state the status of the same; and if he
should thereafter learn that a similar action or proceeding has been filed or is pending
before the Supreme Court, the Court of Appeals, or different divisions thereof, or any other
tribunal or agency, he undertakes to promptly inform the aforesaid courts and other tribunal
or agency thereof within five (5) days therefrom. (n)

Only petitioner Tomas V. Alonso has executed and signed the sworn certification against
forum shopping attached to the petition. Although neither of his co-petitioners Mercedes V.
Alonso and Asuncion V. Alonso has joined the certification, Tomas did not present any
written express authorization in his favor authorizing him to sign the certification in their
behalf. The signing of the certification by only one of the petitioners could not be presumed
to reflect the personal knowledge by his co-petitioners of the filing or non-filing of any similar
action or claim.23 Hence, the failure of Mercedes and Asuncion to sign and execute the
certification along with Tomas warranted the dismissal of their petition. 24
B. Petitioners are not proper parties to appeal and assail the order of the RTC
The petitioners are relentless in insisting that their claim to Lot No. 727-D-2 of the Banilad
Friar Lands Estate should be preferred to that of Cebu Country Club, despite the final
judgment in G.R. No. 130876 being adverse to their claim. Their insistence raises the need
to resolve once and for all whether or not the petitioners retained any legal right to assert
over Lot No. 727-D-2 following the Governments manifest desistance from the execution of
the judgment in G.R. No. 130876 against Cebu Country Club.
The above-noted defects of the petition for review notwithstanding, therefore, the Court has
now to address and resolve the stated issues on the sole basis of the results the Court
earlier reached in G.R. No. 130876. In this regard, whether or not the petitioners are the
proper parties to bring this appeal is decisive.
After careful consideration, the Court finds that the cause of the petitioners instantly fails.
In G.R. No. 130876, the Court found that the petitioners did not validly acquire ownership of
Lot No. 727-D-2, and declared that Lot No. 727 D-2 legally belonged to the Government,
thus:
The second issue is whether the Court of Appeals erred in ruling that the Cebu Country
Club, Inc. is owner of Lot No. 727.
Admittedly, neither petitioners nor their predecessor had any title to the land in
question. The most that petitioners could claim was that the Director of Lands issued a
sales patent in the name of Tomas N. Alonso. The sales patent, however, and even the
corresponding deed of sale were not registered with the Register of Deeds and no
title was ever issued in the name of the latter. This is because there were basic
requirements not complied with, the most important of which was that the deed of sale
executed by the Director of Lands was not approved by the Secretary of Agriculture
and Natural Resources. Hence, the deed of sale was void. "Approval by the Secretary of
Agriculture and Commerce is indispensable for the validity of the sale." Moreover, Cebu
Country Club, Inc. was in possession of the land since 1931, and had been paying the real
estate taxes thereon based on tax declarations in its name with the title number indicated
thereon. Tax receipts and declarations of ownership for taxation purposes are strong

evidence of ownership. This Court has ruled that although tax declarations or realty tax
payments are not conclusive evidence of ownership, nevertheless, they are good indicia of
possession in the concept of owner for no one in his right mind will be paying taxes for a
property that is not in his actual or constructive possession.
Notwithstanding this fatal defect, the Court of Appeals ruled that "there was substantial
compliance with the requirement of Act No. 1120 to validly convey title to said lot to Tomas
N. Alonso."
On this point, the Court of Appeals erred.
Under Act No. 1120, which governs the administration and disposition of friar lands, the
purchase by an actual and bona fide settler or occupant of any portion of friar land shall be
"agreed upon between the purchaser and the Director of Lands, subject to the approval of
the Secretary of Agriculture and Natural Resources (mutatis mutandis)."
In his Memorandum filed on May 25, 2001, the Solicitor General submitted to this Court
certified copies of Sale Certificate No. 734, in favor of Leoncio Alburo, and Assignment of
Sale Certificate No. 734, in favor of Tomas N. Alonso. Conspicuously, both instruments do
not bear the signature of the Director of Lands and the Secretary of the Interior. They also
do not bear the approval of the Secretary of Agriculture and Natural Resources.
Only recently, in Jesus P. Liao v. Court of Appeals, the Court has ruled categorically that
approval by the Secretary of Agriculture and Commerce of the sale of friar lands is
indispensable for its validity, hence, the absence of such approval made the sale null
and void ab-initio. Necessarily, there can be no valid titles issued on the basis of such sale
or assignment. Consequently, petitioner Franciscos father did not have any
registerable title to the land in question. Having none, he could not transmit anything
to his sole heir, petitioner Francisco Alonso or the latters heirs.
In a vain attempt at showing that he had succeeded to the estate of his father, on May 4,
1991, petitioner Francisco Alonso executed an affidavit adjudicating the entire estate to
himself (Exh. "Q"), duly published in a newspaper of general circulation in the province and
city of Cebu (Exh. "Q-1"). Such affidavit of self-adjudication is inoperative, if not void, not
only because there was nothing to adjudicate, but equally important because petitioner
Francisco did not show proof of payment of the estate tax and submit a certificate of
clearance from the Commissioner of Internal Revenue. Obviously, petitioner Francisco has
not paid the estate taxes.
Consequently, we rule that neither Tomas N. Alonso nor his son Francisco M. Alonso
or the latters heirs are the lawful owners of Lot No. 727 in dispute. xxx.25
The pronouncement in G.R. No. 130876 renders beyond dispute that the non-execution of
the judgment would not adversely affect the petitioners, who now hold no right whatsoever

in Lot No. 727-D-2. Otherwise put, they are not the proper parties to assail the questioned
orders of the RTC, because they stand to derive nothing from the execution of the judgment
against Cebu Country Club.
Every action must be prosecuted or defended in the name of the real party in interest,
unless otherwise authorized by law or the rules. 26 A real party in interest is one who stands
to be benefited or injured by the judgment in the suit, or the party entitled to the avails of the
suit.27 "Interest" within the meaning of the rule means material interest, an interest in issue
and to be affected by the decree, as distinguished from mere interest in the question
involved, or a mere incidental interest. The rule refers to a real or present substantial
interest, as distinguished from a mere expectancy; or from a future, contingent, subordinate,
or consequential interest.28 One having no right or interest to protect cannot invoke the
jurisdiction of the court as a party-plaintiff in an action. 29
Thus, an appeal, like this one, is an action to be prosecuted by a party in interest before a
higher court. In order for the appeal to prosper, the litigant must of necessity continue to
hold a real or present substantial interest that entitles him to the avails of the suit on appeal.
If he does not, the appeal, as to him, is an exercise in futility. So it is with the petitioners!
In contrast, the Government, being the legal owner of Lot No. 727-D-2, is the only party
adversely affected by the denial, and is the proper party entitled to assail the denial. 30
However, its manifest desistance from the execution of the decision effectively barred any
challenge against the denial, for its non-appeal rendered the denial final and immutable.
C. R.A. No. 9443 gives petitioners no legal interest to assail the denial of the motion
for execution
Section 1 of R.A. No. 9443 provides:
Section 1. All existing Transfer Certificates of Title and Reconstituted Certificates of
Title duly issued by the Register of Deeds of Cebu Province and/or Cebu City
covering any portion of the Banilad Friar Lands Estate, notwithstanding the lack of
signatures and/or approval of the then Secretary of Interior (later Secretary of Agriculture
and Natural Resources) and/or the then Chief of the Bureau of Public Lands (later Director
of Public Lands) in the copies of the duly executed Sale Certificates and Assignments of
Sale Certificates, as the case may be, now on file with the Community Environment and
Natural Resources Office (CENRO), Cebu City, are hereby declared as valid titles and
the registered owners recognized as absolute owners thereof.
The law expressly declares as valid "(a)ll existing Transfer Certificates of Title and
Reconstituted Certificates of Title duly issued by the Register of Deeds of Cebu Province
and/or Cebu City covering any portion of the Banilad Friar Lands Estate," and recognizes
the registered owners as absolute owners. To benefit from R.A. No. 9443, therefore, a

person must hold as a condition precedent a duly issued Transfer Certificate of Title or a
Reconstituted Certificate of Title.
Although Lot 727-D-2 was earlier declared to be owned by the Government in G.R. No.
130876, R.A. No. 9443 later validated Cebu Country Clubs registered ownership due to its
holding of TCT No. RT-1310 (T-11351) in its own name. As the OSG explained in its
manifestation in lieu of comment 31 (filed in the RTC vis--vis the petitioners motion for
reconsideration against the RTCs denial of the OSGs motion for issuance of a writ of
execution), the enactment of R.A. No. 9443 had "mooted the final and executory Decision of
the Supreme Court in "Alonso v. Cebu Country Club, Inc.," docketed as G.R. No. 130876,
which declared the Government as the owner of Lot 727-D-2 based on the absence of
signature and approval of the then Secretary of Interior;" and that the decision in G.R. No.
130876 had "ceased to have any practical effect" as the result of the enactment of R.A. No.
9443, and had thereby become "academic."32
On the other hand, the petitioners could not benefit from R.A. No. 9443 because of their
non-compliance with the express condition of holding any Transfer Certificate of Title or
Reconstituted Certificate of Title respecting Lot 727-D-2 or any portion thereof.1awph!1
The appropriate recourse for the petitioners, if they persist in the belief that the TCT of Cebu
Country Club should be nullified, is to compel the OSG through the special civil action for
mandamus to commence the action to annul on the ground that Cebu Country Club had
obtained its title to Lot 7217-D-2 through fraud. Yet, that recourse is no longer availing, for
the decision in G.R. No. 130876 explicitly found and declared that the reconstituted title of
Cebu Country Club had not been obtained through fraud. Said the Court:
On the question that TCT No. RT-1310 (T-11351) bears the same number as another title to
another land, we agree with the Court of Appeals that there is nothing fraudulent with
the fact that Cebu Country Club, Inc.s reconstituted title bears the same number as
the title of another parcel of land. This came about because under General Land
Registration Office (GLRO) Circular No. 17, dated February 19, 1947, and Republic Act No.
26 and Circular No. 6, RD 3, dated August 5, 1946, which were in force at the time the title
was reconstituted on July 26, 1948, the titles issued before the inauguration of the
Philippine Republic were numbered consecutively and the titles issued after the
inauguration were numbered also consecutively starting with No. 1, so that eventually, the
titles issued before the inauguration were duplicated by titles issued after the inauguration of
the Philippine Republic. xxx.
xxx
Petitioners next argue that the reconstituted title of Cebu Country Club, Inc. had no
lawful source to speak of; it was reconstituted through extrinsic and intrinsic fraud in
the absence of a deed of conveyance in its favor. In truth, however, reconstitution was
based on the owners duplicate of the title, hence, there was no need for the covering

deed of sale or other modes of conveyance. Cebu Country Club, Inc. was admittedly
in possession of the land since long before the Second World War, or since 1931. In
fact, the original title (TCT No. 11351) was issued to the United Service Country Club,
Inc. on November 19, 1931 as a transfer from Transfer Certificate of Title No. 1021.
More importantly, Cebu Country Club, Inc. paid the realty taxes on the land even
before the war, and tax declarations covering the property showed the number of the
TCT of the land. Cebu Country Club, Inc. produced receipts showing real estate tax
payments since 1949. On the other hand, petitioner failed to produce a single receipt of
real estate tax payment ever made by his father since the sales patent was issued to his
father on March 24, 1926. Worse, admittedly petitioner could not show any [T]orrens title
ever issued to Tomas N. Alonso, because, as said, the deed of sale executed on March 27,
1926 by the Director of Lands was not approved by the Secretary of Agriculture and Natural
Resources and could not be registered. "Under the law, it is the act of registration of the
deed of conveyance that serves as the operative act to convey the land registered under the
Torrens system. The act of registration creates constructive notice to the whole world of the
fact of such conveyance." On this point, petitioner alleges that Cebu Country Club, Inc.
obtained its title by fraud in connivance with personnel of the Register of Deeds in
1941 or in 1948, when the title was administratively reconstituted. Imputations of
fraud must be proved by clear and convincing evidence. Petitioner failed to adduce
evidence of fraud. In an action for re-conveyance based on fraud, he who charges fraud
must prove such fraud in obtaining a title. "In this jurisdiction, fraud is never presumed."
The strongest suspicion cannot sway judgment or overcome the presumption of
regularity. "The sea of suspicion has no shore, and the court that embarks upon it is
without rudder or compass." Worse, the imputation of fraud was so tardily brought,
some forty-four (44) years or sixty-one (61) years after its supposed occurrence, that
is, from the administrative reconstitution of title on July 26, 1948, or from the issuance of the
original title on November 19, 1931, that verification is rendered extremely difficult, if
not impossible, especially due to the supervening event of the second world war
during which practically all public records were lost or destroyed, or no longer
available.33
IN VIEW OF THE FOREGOING, the petition for review on certiorari is denied for lack of
merit.

Republic of the Philippines

SUPREME COURT
Manila
SECOND DIVISION
G.R. No. 163118

April 27, 2007

DORIS CHIONGBIAN-OLIVA, Petitioner,

vs.
REPUBLIC OF THE PHILIPPINES, THE DEPARTMENT OF ENVIRONMENT AND
NATURAL RESOURCES AND THE REGISTER OF DEEDS OF CEBU CITY, Respondents.
DECISION

The Court declares that Cebu Country Club, Inc. is the exclusive owner of Lot No.727-D-2
of the Banilad Friar Lands Estate, as confirmed by Republic Act No. 9443.
Costs of suit to be paid by the petitioners.
SO ORDERED.

QUISUMBING, J.:
This petition for certiorari assails (1) the Decision 1 dated August 7, 2003 of the Court of
Appeals in CA-G.R. CV. No. 74409, reversing the Decision 2 dated December 13, 2001 of
the Regional Trial Court of Cebu City, Branch 12 in SP. Proc. No. 10746-CEB, and (2) the
Resolution3 dated March 17, 2004, denying the motion for reconsideration.
The following facts are undisputed.

Petitioner Doris Chiongbian-Oliva is the registered owner of a parcel of land in Talamban,

Cebu City, as evidenced by Transfer Certificate of Title (TCT) No. 5455. 4 This title originated
from Original Certificate of Title (OCT) No. 1066 from a free patent granted on September
11, 1969 under Commonwealth Act No. 141, 5 as amended. The free patent, OCT No. 1066,
and TCT No. 5455 contained the condition that a forty-meter legal easement from the bank
of any river or stream shall be preserved as permanent timberland. 6
On October 1, 2001, petitioner filed a petition for reduction of legal easement docketed as
SP. Proc. No. 10746-CEB before the Regional Trial Court of Cebu City, Branch 12.
Petitioner alleged that the property is residential as shown by the tax declaration 7 and the
Certification8 of the Office of the City Assessor. Thus, the applicable legal easement is only
three meters pursuant to Department of Environment and Natural Resources (DENR)
Administrative Order No. 99-21,9 and not forty meters, which applies to timberlands and
forest lands. Petitioner also alleged that enforcing the forty-meter legal easement would
virtually deprive her of the use and enjoyment of the property since it consists only of 1,000
square meters.
The DENR countered that the property is inalienable. It also claimed that the applicant
agreed on the forty-meter legal easement when the free patent was applied for.
The trial court ruled in favor of petitioner. It said that there is no longer any reason for the
forty-meter legal easement because the property had been transformed into residential land
and the area where it is located has been reclassified as urban. Applying DENR A.O. No.
99-21, the applicable legal easement is only three meters. The decisions decretal portion
states:
WHEREFORE, premises considered, it is hereby ordered that the legal encumbrance of
forty (40) meters for river bank protection annotated on Petitioners Transfer Certificate of
Title No. 5455 be reduced to the applicable legal easement of three (3) meters in
accordance with law.
Accordingly, the Register of Deeds of Cebu City is hereby directed to cancel the above legal
encumbrance of forty (40) meters annotated on Petitioners Transfer Certificate of Title No.
5455 and in lieu thereof, annotate the applicable legal encumbrance of three (3) meters for
river bank protection.
SO ORDERED.10
On appeal, the Court of Appeals reversed the trial courts decision. It upheld the DENRs
claim that the property was inalienable. Accordingly, a positive act of the government was
necessary to declassify it from forest land to alienable land. Declaration of the property as
residential in the tax declaration and reclassification of the area where it is located as urban
were insufficient bases to reclassify the property. The fallo of the appellate courts decision
reads:

WHEREFORE, premises considered, the Decision dated December 13, 2001, of the
Regional Trial Court, 7th Judicial Region, Branch 12, Cebu City, in SP. PROC. NO. 10746CEB, is hereby REVERSED and SET ASIDE. No pronouncement as to costs.
SO ORDERED.11
The appellate court later denied petitioners motion for reconsideration.
Petitioner now raises the following issues:
I.
WHETHER OR NOT PETITIONERS LOT COVERED BY THE LEGAL ENCUMBRANCE IS
A PUBLIC LAND/LAND OF THE PUBLIC DOMAIN (AND THUS, CANNOT BE
RECLASSIFIED EXCEPT BY THE EXECUTIVE DEPARTMENT) OF THE GOVERNMENT,
OR A PRIVATE LAND.
II.
WHETHER OR NOT THE TRIAL COURT IS CORRECT IN TAKING JUDICIAL NOTICE OF
THE FACT THAT PETITIONERS LOT COVERED BY TCT NO. 5455 IS SITUATED IN AN
URBAN AREA AND NOT IN A FOREST AREA, AND IN THUS CONCLUDING THAT THE
LEGAL EASEMENT APPLICABLE FOR RIVER BANK PROTECTION IS THREE (3)
METERS AND NOT FORTY (40) METERS.
III.
WHETHER OR NOT SECTION 90(i) OF C.A. NO. 141 WHICH PROVIDES FOR A
UNIFORM EASEMENT OF FORTY (40) METERS FROM THE BANK ON EACH SIDE OF
ANY RIVER, AND WHICH PRESERVES THE SAID 40-METER PORTION AS
PERMANENT TIMBERLAND REGARDLESS OF WHETHER IT IS SITUATED IN A
FOREST AREA OR AN URBAN AREA, IS STILL APPLICABLE TO LOTS SITUATED IN AN
URBAN AREA IN THE LIGHT OF THE PROVISIONS OF SUBSEQUENT LEGISLATION,
SPECIFICALLY SECTION 51 OF P.D. NO. 1067.12
Simply stated, the issues are: (1) Is the property public or private land? and (2) Is the
applicable legal easement forty or three meters?
On the first issue, C.A. No. 141, as amended, provides that lands of the public domain may
be classified by the President, upon the recommendation of the Secretary of Environment
and Natural Resources, into: (1) alienable or disposable; (2) timber; and (3) mineral lands. 13
However, only alienable or disposable lands may be disposed of through any of the forms of

concession enumerated in the law.14 A free patent is one of such concessions 15 and once it
is registered and the corresponding certificate of title issued, the land covered by them
ceases to be part of the public domain and becomes private property.16
Verily, by the issuance of a free patent on September 11, 1969, and the subsequent
issuance of OCT No. 1066 and TCT No. 5455, the property in this case had become private
land. It is inconsistent for an alienable land of the public domain to be covered by a free
patent and at the same time retain its character as public land.
On the second issue, Section 90(i) of C.A. No. 141 requires that a forty-meter legal
easement from the bank of any river or stream shall be preserved as permanent timberland.
More specifically, it provides:
(i) That the applicant agrees that a strip forty meters wide starting from the bank on each
side of any river or stream that may be found on the land applied for, shall be demarcated
and preserved as permanent timberland to be planted exclusively to trees of known
economic value, and that he shall not make any clearing thereon or utilize the same for
ordinary farming purposes even after patent shall have been issued to him or a contract of
lease shall have been executed in his favor. (Emphasis supplied.)
To implement this, the DENR promulgated A.O. No. 99-21 which provides the guidelines in
the processing, verification, and approval of isolated and cadastral surveys. Pertinent to this
case are the following provisions:
2.1 Original Surveys:
2.1.a Public Lands:
All alienable and disposable (A and D) lands of the public domain shall be surveyed
pursuant to Section 1 Par. (1) of R.A. 1273 [C.A. No. 141, Section 90(i)] whereby a strip of
forty (40) meters wide starting from the banks on each side of any river or stream that may
be found on the land shall be demarcated and preserved as permanent timberland.
Likewise, to be demarcated are public lands along the banks of rivers and streams and the
shores of the seas and lakes throughout their entire length and within a zone of three (3)
meters in urban areas, twenty (20) meters in agricultural areas and forty (40) meters in
forest area, along their margins which are subject to the easement for public use in the
interest of recreation, navigation, floatage, fishing and salvage.
xxxx
2.3 Survey of Titled Lands:

2.3.1 Administratively Titled Lands:

The provisions of item 2.1.a and 2.1.b shall be observed as the above. However, when
these lands are to be subdivided, consolidated or consolidated-subdivided, the strip of three
(3) meters which falls within urban areas shall be demarcated and marked on the plan for
easement and bank protection.
The purpose of these strips of land shall be noted in the technical description and annotated
in the title.
xxxx
Running in parallel vein is the Water Code of the Philippines 17 which provides:
Art. 51. The banks of rivers and streams and the shores of the seas and lakes throughout
their entire length and within a zone of three (3) meters in urban areas, twenty (20) meters
in agricultural areas and forty (40) meters in forest areas, along their margins, are subject to
the easement of public use in the interest of recreation, navigation, floatage, fishing and
salvage. No person shall be allowed to stay in this zone longer than what is necessary for
recreation, navigation, floatage, fishing or salvage or to build structures of any kind.
Since the property in this case was originally alienable land of the public domain, the
application for free patent contained the condition that a forty-meter legal easement from the
banks on each side of any river or stream found on the land shall be demarcated and
preserved as permanent timberland. However, after the property was administratively titled,
it underwent several surveys for purposes of subdivision, consolidation, or consolidationsubdivision as evidenced by TCT No. 5455. This title provides that it is a transfer from TCT
Nos. 3975 and 436018 and describes the property as Lot 2 of the consolidation-subdivision
plan Pcs-07-002121, being a portion of Lot 6 and 7 Pcs-07-000974. 19 Thus, presently only
three meters is required to be demarcated and preserved as permanent timberland.
In this case, the trial court properly took judicial notice that Talamban, Cebu City is an urban
area. Judicial notice is the cognizance of certain facts which judges may properly take and
act on without proof because they already know them. 20 A municipal jurisdiction, whether
designated as chartered city or provincial capital, is considered as urban in its entirety if it
has a population density of at least 1,000 persons per square kilometer. 21 The City of Cebu
was created on October 20, 1934 under Commonwealth Act No. 58. 22 It is a highly
urbanized city classified as entirely urban. 23 Thus, all its barangays, including Talamban, are
considered urban.
Conformably with the foregoing considerations, the reduction of the legal easement of forty
meters on petitioners property covered by TCT No. 5455 to three meters now is in order.

WHEREFORE, the instant petition is GRANTED. The assailed Decision dated August 7,
2003 and Resolution dated March 17, 2004 of the Court of Appeals in CA-G.R. CV. No.
74409 are REVERSED, and the Decision dated December 13, 2001 of the Regional Trial
Court of Cebu City, Branch 12 in SP. Proc. No. 10746-CEB is REINSTATED.
SO ORDERED.

Republic of the Philippines

SUPREME COURT
Manila
FIRST DIVISION
G.R. No. 130389

February 11, 2008

THE PHILIPPINE COTTON CORPORATION, petitioner-appellant,

vs.
NARAINDAS GAGOOMAL and ENGRACIO ANG, respondents-appellees,
CHINA BANKING CORPORATION, intervenor-appellee.
DECISION
AZCUNA, J.:
This is a petition for review on certiorari1 assailing the Decision2 of the Court of Appeals (CA)
promulgated on August 29, 1997 in CA-G.R. CV No. 50332.
The facts of record would indicate that Pacific Mills, Inc. (Pacific Mills) originally owned five
parcels of land covered by Transfer Certificates of Title (TCT) Nos. 136640, 136441, 222370
and 134249. These properties were subsequently purchased by respondents on an
installment basis from Pacific Mills on July 19, 1979. 3
On June 23, 1983, petitioner filed a collection case against Pacific Mills before the Regional
Trial Court (RTC) of Pasig, Branch 162 on the ground of alleged failure to fulfill its obligation
under a contract of loan. After hearing, the trial court issued a writ of preliminary attachment
in favor of petitioner. Thereafter, on August 17, 1983, the writ of preliminary attachment was
annotated on TCT Nos. 136640, 136441, 222370 and 134249.
On December 27, 1985, the RTC of Pasig rendered a decision ordering Pacific Mills to pay
its obligation under the loan agreement plus interest, penalty charges, attorneys fees and
costs of suit. On appeal, the CA affirmed the decision of the trial court. Not satisfied with the
judgment of the appellate court, Pacific Mills filed a petition for review before this Court.
During the pendency of the appeal or on June 11, 1988, the Quezon City Hall was razed by
fire thereby destroying the records of the Registry of Deeds of Quezon City, including the
TCTs of Pacific Mills.
Sometime in 1992, Pacific Mills filed a petition for reconstitution of the burned TCTs through
administrative reconstitution, in accordance with Republic Act No. 6732. 4 On March 23,
1992, the Registry of Deeds of Quezon City issued to Pacific Mills the reconstituted TCTs,
namely: No. RT-55702 (for TCT No. 136640), No. RT-55704 (for TCT No. 134249), No. RT55703 (for TCT No. 136441) and No. RT-55705 (for TCT No. 222370). However, the
aforesaid alleged annotations of the preliminary attachment in favor of petitioner were not
incorporated in the reconstituted TCTs, but annotated therein was the sale made by Pacific
Mills to respondents and their payment in full. On even date, the reconstituted TCTs were
cancelled in favor of the respondents. Respondents were given the following clean TCT
Nos. 566835 (for RT-55703), 566846 (for RT-55702), 566857 (for RT-55704) and 566868 (for
RT-55705).

On February 8, 1993, petitioner wrote the Registry of Deeds of Quezon City requesting for
the annotation of the notice of levy, and, subsequently, the annotation of a favorable
decision of this Court rendered on August 3, 1992, on the new TCTs issued to respondents.
On February 10, 1993, Samuel C. Cleofe, the Quezon City Register of Deeds, informed
respondents that the letter-request for re-annotation of notice of levy had been entered in
the Primary Entry Book 574/Volume 24, and asked them to surrender their owners duplicate
copies of TCT Nos. 56683 to 56686.9
Immediately upon receipt of the said letter, respondents verified the original copies of titles
in the possession of the Registry of Deeds and discovered that the following annotations
were included at the back of the titles: "Request for Re-Annotation of Notice of Levy" and
"Letter Request for Annotation of Entry of Judgment of Supreme Court."
Thereafter, respondents filed on March 3, 1993, a Petition for the Cancellation of
Annotations in Land Titles before the RTC of Quezon City, Branch 100, docketed as Civil
Case No. Q-6056(93). Later on, petitioner was impleaded as an additional respondent,
while China Banking Corporation filed a complaint-in-intervention for being a mortgagee of
the real properties, together with all the improvements thereon.
On March 29, 1995, the trial court rendered judgment in favor of respondents. The
dispositive portion of the decision reads:
WHEREFORE, premises above considered, there being no justification for the
Quezon City Register of Deeds in making the annotation on petitioners original
TCT Nos. 56683 (RT-55703), 56684 (RT-55702), 56685 (RT-55748) and 56686
(RT-55705), said respondent is hereby ordered to DELETE therefrom the said
annotation "request for annotation and the annotated Supreme Court decision
against the Pacific Mills, Inc." and to desist from its request for petitioners to
submit their owners duplicate of titles to annotate such request of the Philippine
Cotton Corporation.
There being no justiciable issue in the complaint-in-intervention, let the
annotations of a mortgage executed by petitioners on December 18, 1992 in
favor of intervenor China Banking Corporation remain on petitioners subject
TCTs.
SO ORDERED.10
The trial court ratiocinated that:
Under the circumstances, respondent [the Registry of Deeds of Quezon City]
should and could have properly refused such request instead of immediately

annotating it. In the same light, "The Register of Deeds may likewise properly
refuse registration of an order attachment when it appears that the title involved
is not in the name of the defendant and there is no evidence submitted to
indicate that the said defendant has any present or future interest in the property
covered by the titles." (Gotauco vs. Register of Deeds of Tayabas, 59 Phil. 756,
1934 and Geonanga vs. Hodges, 55 O.G. p. 2891, April 21, 1958). (Underscoring
Supplied)11
Unsatisfied with the outcome of the case, petitioner filed a notice of appeal
before the CA, contending that:
"THE REGISTER OF DEEDS OF QUEZON CITY HAS THE AUTHORITY TO
RE-ANNOTATE THE NOTICE OF LEVY AND TO ANNOTATE THE ENTRY OF
JUDGMENT OF THE SUPREME COURT ON TRANSFER CERTIFICATES OF
TITLE NOS. 56683, 56684, 56685 AND 56686, ALL ISSUED IN THE NAME OF
THE PETITIONERS-APPELLEES AS A RESULT OF AN ADMINISTRATIVE
RECONSTITUTION OF TITLES."12
In its August 29, 1997 decision, the appellate court dismissed the appeal
because the issue raised by the petitioner was a pure question of law, over which
the CA had no jurisdiction.

DUPLICATE OF TITLES FOR ANNOTATION OF PETITIONER PHILIPPINE

COTTON CORPORATIONS REQUEST.13
Petitioner asserts that a cursory reading of Section 71 of Presidential Decree No. 1529
shows that it is the ministerial duty of the Register of Deeds, in the matter of an attachment
or other liens in the nature of involuntary dealing in registered land, to "send notice by mail
to a registered owner requesting him to produce his duplicate certificate so that a
memorandum of attachment or other lien may be made thereon." This provision, according
to petitioner, actually applies whenever a writ of attachment has been issued by a court of
competent jurisdiction after hearing on the issuance of the said writ. The notice of
attachment not having been dissolved, it was ministerial on the part of the Register of
Deeds to record the notice on the TCTs he issued.
Petitioner would persuade this Court that it is the ministerial duty of the Register of Deeds to
record any encumbrance or lien on respondents existing TCTs. It cites, as proof of its
supposition, Sections 10 and 71 of the Property Registration Decree (P.D. No. 1529), which
are quoted as follows:
Section 10. General functions of Registers of Deeds. The office of the Register
of Deeds constitutes a public repository of records of instruments affecting
registered or unregistered lands and chattel mortgages in the province or city
wherein such office is situated.

Hence, this petition.

Petitioner presents the following assignment of errors:
FIRST ERROR
THE LOWER COURT ERRED IN NOT SUSTAINING THE AUTHORITY OF THE
QUEZON CITY REGISTER OF DEEDS TO VALIDLY RE-ANNOTATE THE
INCUMBRANCE/LIENS AND ANNOTATE THE SUPREME COURT DECISION
ON THE ADMINISTRATIVELY RECONSTITUTED TRANSFER CERTIFICATES
OF TITLES (TCTs) IN FAVOR OF PETITIONER-APPELLANT.
SECOND ERROR
THE LOWER COURT, IN CONSEQUENCE THEREOF, LIKEWISE ERRED IN
ORDERING THE QUEZON CITY REGISTER OF DEEDS TO DELETE THE
ANNOTATION THAT READS: "REQUEST FOR ANNOTATION AND THE
ANNOTATED SUPREME COURT DECISION AGAINST PACIFIC MILLS, INC.",
FROM PETITIONERS ORIGINAL TCT NOS. 96683 [sic] (RT-55703), 56684 (RT55702), 56685 (RT-55748) AND 56686 (RT-55705) AND TO DESIST FROM
REQUESTING RESPONDENTS/APPELLEES TO SUBMIT THEIR OWNERS

It shall be the duty of the Register of Deeds to immediately register an instrument

presented for registration dealing with real or personal property which complies
with all the requisites for registration. He shall see to it that said instrument bears
the proper documentary and science stamps and that the same are properly
cancelled. If the instrument is not registrable, he shall forthwith deny registration
thereof and inform the presentor of such denial in writing, stating the ground or
reason therefor, and advising him of his right to appeal by consulta in accordance
with Section 117 of this Decree.
xxx

Section 71. Surrender of certificate in involuntary dealings. If an attachment or

other lien in the nature of involuntary dealing in registered land is registered, and
the duplicate certificate is not presented at the time of registration, the Register of
Deeds, shall, within thirty-six hours thereafter, send notice by mail to the
registered owner, stating that such paper has been registered, and requesting
him to send or produce his duplicate certificate so that a memorandum of the
attachment or other lien may be made thereon. If the owner neglects or refuses
to comply within a reasonable time, the Register of Deeds shall report the matter
to the court, and it shall, after notice, enter an order to the owner to produce his
certificate at a time and place named therein, and may enforce the order by
suitable process. (Underscoring supplied)
The Court is not in accord with the stance of petitioner. Section 10 of P.D. No. 1529 merely
involves the general functions of the Register of Deeds, while Section 71 thereof relates to
an attachment or lien in a registered land in which the duplicate certificate was not
presented at the time of the registration of the said lien or attachment.
A special law specifically deals with the procedure for the reconstitution of Torrens
certificates of title lost or destroyed. Under Section 4 of Act No. 26: 14
Liens and other encumbrances affecting a destroyed or lost certificate of title
shall be reconstituted from such of the sources hereunder enumerated as may
be available, in the following order:
(a) Annotations or memoranda appearing on the owners, co-owners,
mortgagees or lessees duplicate;
(b) Registered documents on file in the registry of deeds, or authenticated copies
thereof showing that the originals thereof had been registered; and
(c) Any other document which, in the judgment of the court, is sufficient
and proper basis for reconstituting the liens or encumbrances affecting the
property covered by the lost or destroyed certificate of title. (Underscoring
supplied)
Furthermore, Sections 8 and 11 of the same Act provide for the procedure for the notation of
an interest that did not appear in the reconstituted certificate of title, mandating that a
petition be filed before a court of competent jurisdiction:
Section 8. Any person whose right or interest was duly noted in the original of a
certificate of title, at the time it was lost or destroyed, but does not appear so
noted on the reconstituted certificate of title, which is subject to the reservation
provided in the preceding section, may, while such reservation subsists, file a
petition with the proper Court of First Instance for the annotation of such right or

interest on said reconstituted certificate of title, and the court, after notice and
hearing, shall determine the merits of the petition and render such judgment as
justice and equity may require. The petition shall state the number of the
reconstituted certificate of title and the nature, as well as a description, of the
right or interest claimed. (Underscoring supplied)
xxx
Section 11. Petitions for reconstitution of registered interests, liens and other
encumbrances, based on sources enumerated in sections 4(b) and/or 4(c) of this
Act, shall be filed, by the interested party, with the proper Court of First Instance.
The petition shall be accompanied with the necessary documents and shall state,
among other things, the number of the certificate of title and the nature as well as
a description of the interest, lien or encumbrance which is to be reconstituted,
and the court, after publication, in the manner stated in section nine of this Act,
and hearing shall determine the merits of the petition and render such judgment
as justice and equity may require. (Underscoring supplied)
Clearly, therefore, it is not the ministerial function of the Register of Deeds to record a right
or an interest that was not duly noted in the reconstituted certificate of title. As a matter of
fact, this task is not even within the ambit of the Register of Deeds job as the responsibility
is lodged by law to the proper courts. The foregoing quoted provisions of the law leave no
question nor any doubt that it is indeed the duty of the trial court to determine the merits of
the petition and render judgment as justice and equity may require.
This conclusion is bolstered by Chapter X,15 Section 108 of P.D. No. 1529, which provides:
Sec. 108. Amendment and alteration of certificates. No erasure, alteration,
or amendment shall be made upon the registration book after the entry of a
certificate of title or of a memorandum thereon and the attestation of the
same by the Register of Deeds, except by order of the proper Court of First
Instance. A registered owner or other person having an interest in registered
property, or, in proper cases, the Register of Deeds with the approval of the
Commissioner of Land Registration, may apply by petition to the court
upon the ground that the registered interests of any description, whether
vested, contingent, expectant inchoate appearing on the certificate, have
terminated and ceased; or that new interest not appearing upon the
certificate have arisen or been created; or that an omission or error was
made in entering the certificate or any memorandum thereon, or on any
duplicate certificate; or that the name of any person on the certificate has been
changed; or that the registered owner has married, or, if registered as married,
that the marriage has been terminated and no right or interest of heirs or
creditors will thereby be affected, or that a corporation which owned registered
land and has been dissolved has not yet conveyed the same within three years
after its dissolution; or upon any other reasonable ground; and the court may

hear and determine the petition after notice to all parties in interest, and
may order the entry or cancellation of a new certificate, the entry or
cancellation of a memorandum upon a certificate, or grant any other relief
upon such terms and conditions, requiring security or bond if necessary, as it
may consider proper: Provided, however, That this section shall not be construed
to give the court authority to reopen the judgment or decree of registration, and
that nothing shall be done or ordered by the court which shall impair the
title or other interest of a purchaser holding a certificate for value and in
good faith, or his heirs and assigns, without his or their written consent. Where
the owners duplicate certificate is not presented, a similar petition may be filed
as provided in the preceding section,
All petitions or motions filed under this section as well as under any other
provision of this Decree after original registration shall be filed and entitled in the
original case in which the decree or registration was entered. (Underscoring
supplied)
The courts intervention in the amendment of the registration book after the entry of a
certificate of title or of a memorandum thereon is categorically stated in the Property
Registration Decree and cannot be denied by the mere allegations of petitioner. Hence, the
contentions that the Register of Deeds may "validly re-annotate the incumbrance/liens and
annotate the Supreme Court decision on the administratively reconstituted transfer
certificates of titles (TCTs)" have no basis in law and jurisprudence.
Petitioner further submits that the issuance of the TCTs to respondents is fraudulent. It
suggests that under Sections 69 and 73 of P.D. No. 1529, any person whose interest does
not appear on a reconstituted title may file a request directly with the Register of Deeds.
As correctly observed by respondents, P.D. No. 1529 principally pertains to the registration
of property, while R.A. No. 26 is a special law on the procedure for the reconstitution of
Torrens certificates of title that were lost or destroyed. Specifically, Section 69 16 of P.D. No.
1529 refers to an attachment that arose after the issuance of a certificate of title; while
Section 7117 of the same law pertains to the registration of the order of a court of an
attachment that was continued, reduced, dissolved or otherwise affected by a judgment of
the court. Undoubtedly, the foregoing provisions find no application in the present case
since petitioner insists that its interest was annotated prior to the reconstitution of the
disputed certificates of title.
WHEREFORE, the petition is DENIED. The Decision of the Court of Appeals in CA-G.R. CV
No. 50332, dated August 29, 1997, and the Decision of the Regional Trial Court of Quezon
City, Branch 101, in Civil Case No. Q-6056(93),18 are hereby AFFIRMED.
No costs.

REMEGIA Y. FELICIANO, Substituted by the Heirs of REMEGIA Y. FELICIANO, as

represented by NILO Y. FELICIANO, petitioners,
vs.
SPOUSES AURELIO and LUZ ZALDIVAR, respondents.
DECISION
CALLEJO, SR., J.:
Before the Court is the petition for review on certiorari filed by the Heirs of Remegia Y.
Feliciano (as represented by Nilo Y. Feliciano) seeking the reversal of the Decision 1 dated
July 31, 2003 of the Court of Appeals (CA) in CA-G.R. CV No. 66511 which ordered the
dismissal of the complaint filed by Remegia Y. Feliciano 2 for declaration of nullity of title and
reconveyance of property. The assailed decision of the appellate court reversed and set
aside that of the Regional Trial Court (RTC) of Cagayan de Oro City, Branch 25 in Civil
Case No. 92-423.
The factual and procedural antecedents of the present case are as follows:
Remegia Y. Feliciano filed against the spouses Aurelio and Luz Zaldivar a complaint for
declaration of nullity of Transfer Certificate of Title (TCT) No. T-17993 and reconveyance of
the property covered therein consisting of 243 square meters of lot situated in Cagayan de
Oro City. The said title is registered in the name of Aurelio Zaldivar.
In her complaint, Remegia alleged that she was the registered owner of a parcel of land
situated in the District of Lapasan in Cagayan de Oro City with an area of 444 square
meters, covered by TCT No. T-8502. Sometime in 1974, Aurelio, allegedly through fraud,
was able to obtain TCT No. T-17993 covering the 243-sq-m portion of Remegias lot as
described in her TCT No. T-8502.

Republic of the Philippines

SUPREME COURT
Manila

According to Remegia, the 243-sq-m portion (subject lot) was originally leased from her by
Pio Dalman, Aurelios father-in-law, for P5.00 a month, later increased to P100.00 a month
in 1960. She further alleged that she was going to mortgage the subject lot to Ignacio Gil for
P100.00, which, however, did not push through because Gil took back the money without
returning the receipt she had signed as evidence of the supposed mortgage contract.
Thereafter, in 1974, Aurelio filed with the then Court of First Instance of Misamis Oriental a
petition for partial cancellation of TCT No. T-8502. It was allegedly made to appear therein
that Aurelio and his spouse Luz acquired the subject lot from Dalman who, in turn,
purchased it from Gil. The petition was granted and TCT No. T-17993 was issued in
Aurelios name.

FIRST DIVISION
G.R. No. 162593

September 26, 2006

Remegia denied that she sold the subject lot either to Gil or Dalman. She likewise impugned
as falsified the joint affidavit of confirmation of sale that she and her uncle, Narciso
Labuntog, purportedly executed before a notary public, where Remegia appears to have

confirmed the sale of the subject property to Gil. She alleged that she never parted with the
certificate of title and that it was never lost. As proof that the sale of the subject lot never
transpired, Remegia pointed out that the transaction was not annotated on TCT No. T-8502.
In their answer, the spouses Zaldivar denied the material allegations in the complaint and
raised the affirmative defense that Aurelio is the absolute owner and possessor of the
subject lot as evidenced by TCT No. 17993 and Tax Declaration No. 26864 covering the
same. Aurelio claimed that he acquired the subject lot by purchase from Dalman who, in
turn, bought the same from Gil on April 4, 1951. Gil allegedly purchased the subject lot from
Remegia and this sale was allegedly conformed and ratified by the latter and her uncle,
Narciso Labuntog, before a notary public on December 3, 1965.

The dispositive portion of the decision of the court a quo reads:

IN THE LIGHT OF THE FOREGOING, and by preponderance of evidence, judgment is
hereby rendered canceling TCT T-17993 and reconveyance of 243 square meters the title
and possession of the same, by vacating and turning over possession of the 243 square
meters of the subject property to the plaintiff [referring to Remegia] which is part of the land
absolutely owned by the plaintiff covered by [TCT] T-8502 and to solidarily pay the plaintiff
Fifty Thousand Pesos (P50,000.00) as moral damages; Ten Thousand Pesos (P10,000.00)
as exemplary damages; Fifty Thousand Pesos (P50,000.00) as attorneys fees and Ten
Thousand Pesos (P10,000.00) expenses for litigation to the plaintiff.
SO ORDERED.6

After Aurelio obtained a loan from the Government Service Insurance System (GSIS), the
spouses Zaldivar constructed their house on the subject lot. They alleged that they and their
predecessors-in-interest had been occupying the said property since 1947 openly, publicly,
adversely and continuously or for over 41 years already. Aurelio filed a petition for the
issuance of a new owners duplicate copy of TCT No. T-8502 because when he asked
Remegia about it, the latter claimed that it had been lost.
After due trial, the RTC rendered judgment in favor of Remegia. It declared that TCT No.
17993 in the name of Aurelio was null and void for having been obtained through
misrepresentation, fraud or evident bad faith by claiming in his affidavit that Remegias title
(TCT No. T-8502) had been lost, when in fact it still existed.
The court a quo explained that "the court that orders a title reconstituted when the original is
still existing has not acquired jurisdiction over the case. A judgment otherwise final may be
annulled not only on extrinsic fraud but also for lack of jurisdiction." 3 Aurelios use of a false
affidavit of loss, according to the court a quo, was similar to the use during trial of a forged
document or perjured testimony that prevented the adverse party, Remegia, from presenting
her case fully and fairly.
The RTC likewise noted that no public instrument was presented in evidence conveyancing
or transferring title to the subject lot from Remegia to Dalman, the alleged predecessor-ininterest of the spouses Zaldivar. The only evidence presented by the said spouses was a
joint affidavit of confirmation of sale purportedly signed by Remegia and her uncle, the
execution of which was denied by the latters children. The certificate of title of the spouses
Zaldivar over the subject property was characterized as irregular because it was issued in a
calculated move to deprive Remegia of dominical rights over her own property. Further, the
spouses Zaldivar could not set up the defense of indefeasibility of Torrens title since this
defense does not extend to a transferor who takes the certificate of title with notice of a flaw
therein. Registration, thus, did not vest title in favor of the spouses; neither could they rely
on their adverse or continuous possession over the subject lot for over 41 years, as this
could not prevail over the title of the registered owner pursuant to Sections 50 4 and 515 of
Act No. 496, otherwise known as The Land Registration Act.

On appeal, the CA reversed the decision of the RTC and ruled in favor of the spouses
Zaldivar. In holding that Remegia sold to Gil a 243 sq m portion of the lot covered by TCT
No. T-8502, the appellate court gave credence to Exhibit "5," the deed of sale presented by
the spouses Zaldivar to prove the transaction. The CA likewise found that Gil thereafter sold
the subject property to Dalman who took actual possession thereof. By way of a document
denominated as joint affidavit of confirmation of sale executed before notary public
Francisco Velez on December 3, 1965, Remegia and her uncle, Narciso Labuntog,
confirmed the sale by Remegia of the subject lot to Gil and its subsequent conveyance to
Dalman. Per Exhibit "6," the CA likewise found that Dalman had declared the subject lot for
taxation purposes in his name. In 1965, Dalman sold the same to the spouses Zaldivar who,
in turn, had it registered in their names for taxation purposes beginning 1974. Also in the
same year, Aurelio filed with the then CFI of Misamis Oriental a petition for the issuance of a
new owners duplicate copy of TCT No. T-8502, alleging that the owners duplicate copy
was lost; the CFI granted the petition on March 20, 1974. Shortly, Aurelio filed with the same
CFI another petition, this time for the partial cancellation of TCT No. T-8502 and for the
issuance of a new certificate of title in Aurelios name covering the subject lot. The CFI
issued an order granting the petition and, on the basis thereof, the Register of Deeds of
Cagayan de Oro City issued TCT No. T-17993 covering the subject lot in Aurelios name.
Based on the foregoing factual findings, the appellate court upheld the spouses Zaldivars
ownership of the subject lot. The CA stated that Remegias claim that she did not sell the
same to Gil was belied by Exhibit "5," a deed which showed that she transferred ownership
thereof in favor of Gil. The fact that the said transaction was not annotated on Remegias
title was not given significance by the CA since the lack of annotation would merely affect
the rights of persons who are not parties to the said contract. The CA also held that the joint
affidavit of confirmation of sale executed by Remegia and Narciso Labuntog before a notary
public was a valid instrument, and carried the evidentiary weight conferred upon it with
respect to its due execution. 7 Moreover, the CA found that the notary public (Atty. Francisco
Velez) who notarized the said document testified not only to its due execution and
authenticity but also to the truthfulness of its contents. The contradiction between the
testimonies of the children of Narciso Labuntog and the notary public (Atty. Velez),

according to the CA, casts doubt on the credibility of the former as it was ostensible that
their version of the story was concocted.8

in denying the motion for reconsideration which was filed within the fifteen-day reglementary
period in violation to the rules of court.

The CA further accorded in favor of the judge who issued the order for the issuance of the
new owners duplicate copy of TCT No. T-8502 the presumption of regularity in the
performance of his official duty. It noted that the same was issued by the CFI after due
notice and hearing.

c.

Moreover, prescription and laches or estoppel had already set in against Remegia. The
appellate court pointed out that TCT No. T-17993 in the name of Aurelio was issued on
September 10, 1974, while Remegias complaint for annulment and reconveyance of
property was filed more than 17 years thereafter or on August 10, 1992. Consequently,
Remegias action was barred by prescription because an action for reconveyance must be
filed within 10 years from the issuance of the title since such issuance operates as a
constructive notice.9 The CA also noted that the spouses Zaldivar constructed their house
on the subject lot some time in 1974-1975, including a 12-foot firewall made of hollow
blocks, and Remegia took no action to prevent the said construction.

in ruling that the court who ordered the issuance of new certificate of title despite existence
of owners duplicate copy that was never lost has jurisdiction over the case.

d.
in concluding that petitioners (Plaintiff-appellee) claim of ownership over the subject lot was
barred by estoppel or laches.

The dispositive portion of the assailed CA decision reads:

WHEREFORE, foregoing premises considered, the December 3, 1999 Decision of the
Regional Trial Court of Misamis Oriental, Cagayan de Oro City, in Civil Case No. 92-423, is
REVERSED and SET ASIDE and a new one is entered DISMISSING the said civil case.

e.
in concluding that the respondents (defendants-appellants) are the absolute owners of the
subject lot based on tct no. 17993 issued to them.
f.

SO ORDERED.10
When their motion for reconsideration was denied by the CA in the assailed Resolution
dated February 4, 2004, the heirs of Remegia (the petitioners) sought recourse to the Court.
In their petition for review, they allege that the appellate court gravely erred
A.
IN NOT DISMISSING THE APPEAL OF THE RESPONDENTS (DEFENDANTSAPELLANTS) MOTU PROPIO OR EXPUNGING THE BRIEF FOR DEFENDANTSAPPELLANTS FROM RECORD FOR FAILURE TO FILE THE REQUIRED BRIEF FOR
THE DEFENDANTS-APPELLANTS ON TIME BUT BEYOND THE LAST AND FINAL
EXTENDED PERIOD WITHIN WHICH TO FILE THE SAID BRIEF IN VIOLATION TO
Section 7 and section 12, rule 44 of the revised rules of court and in contradiction to the
ruling enunciated in catalina roxas, et al. vs. court of appeals, g.r. no. L-76549, december
10, 1987.
B.

in obviating essential and relevant facts, had it been properly appreciated, would maintain
absolute ownership of petitioner (plaintiff-appellee) over the subject lot as evidenced by
existing tct no. t-8502.11
The Court finds the petition meritorious.
It should be recalled that respondent Aurelio Zaldivar filed with the then CFI of Misamis
Oriental a petition for issuance of a new owners duplicate copy of TCT No.T-8502, alleging
that the owners duplicate copy was lost. In the Order dated March 20, 1974, the said CFI
granted the petition and consequently, a new owners duplicate copy of TCT No. T-8502
was issued.
However, as the trial court correctly held, the CFI which granted respondent Aurelios
petition for the issuance of a new owners duplicate copy of TCT No. T-8502 did not acquire
jurisdiction to issue such order. It has been consistently ruled that "when the owners
duplicate certificate of title has not been lost, but is in fact in the possession of another
person, then the reconstituted certificate is void, because the court that rendered the
decision had no jurisdiction. Reconstitution can validly be made only in case of loss of the

original certificate."12 In such a case, the decision authorizing the issuance of a new owners
duplicate certificate of title may be attacked any time. 13

attended the issuance of the title. The Torrens title does not furnish a shield for fraud." 15 As
such, a title issued based on void documents may be annulled. 16

The new owners duplicate TCT No. T-8502 issued by the CFI upon the petition filed by
respondent Aurelio is thus void. As Remegia averred during her testimony, the owners
duplicate copy of TCT No. T-8502 was never lost and was in her possession from the time it
was issued to her:

The appellate courts reliance on the joint affidavit of confirmation of sale purportedly
executed by Remegia and her uncle, Narciso Labuntog, is not proper. In the first place,
respondent Aurelio cannot rely on the joint affidavit of confirmation of sale to prove that they
had validly acquired the subject lot because, by itself, an affidavit is not a mode of acquiring
ownership.17 Moreover, the affidavit is written entirely in English in this wise:

Q A while ago, you said that you were issued a title in 1968, can you tell the Honorable
Court who was in possession of the title?
A I am the one in possession and I am the one keeping the title.

We, NARCISO LABUNTOG and REMEGIA YAPE DE FELICIANO, both of legal age,
Filipino citizens and residents of Lapasan, Cagayan de Oro City, Philippines, after being
duly sworn according to law, depose and say:

Q Even up to the present?

1. That the late FRANCISCO LABUNTOG is our common ancestor, the undersigned
NARCISO LABUNTOG being one of his sons and the undersigned REMEGIA YAPE DE
FELICIANO being the daughter of the late Emiliana Labuntog, sister of Narciso Labuntog;

A Yes, Sir.
Q Was there any instance that this title was borrowed from you?

2. That after his death, the late Francisco Labuntog left behind a parcel of land known as
Lot No. 2166 C-2 of the Cagayan Cadastre situated at Lapasan, City of Cagayan de Oro,
Philippines which is being administered by the undersigned Narciso Labuntog under Tax
Decl. No. 27633;

A No, Sir.
Q Was there any instance that this title was lost from your possession?
A No, Sir.
Q Was there any instance that this title was surrendered to the Register of Deeds of the City
of Cagayan de Oro?
A No, Sir. There never was an instance There never was an instance that this title was
surrendered to the Register of Deeds.
Q As there any instance that you petitioned to the Honorable Court for the issuance of a
new owners duplicate copy of this title in lieu of the lost copy of said title?
A No, Sir. There was never an instance because this title was never lost.

JOINT AFFIDAVIT OF CONFIRMATION OF SALE18

3. That the entire Cadastral Lot No. 2166 C-2 has been subdivided and apportioned among
the heirs of the late Francisco Labuntog, both of the undersigned affiants having
participated and shared in the said property, Remegia Yape de Feliciano having inherited
the share of her mother Emiliana Labuntog, sister of Narciso Labuntog;
4. That on April 4, 1951, Remegia Yape de Feliciano sold a portion of her share to one
Ignacio Gil and which portion is more particularly described and bounded as follows:
"On the North for 13 meters by Agustin Cabaraban;
On the South for 13 meters by Antonio Babanga;

14

Consequently, the court a quo correctly nullified TCT No. T-17993 in Aurelios name,
emanating as it did from the new owners duplicate TCT No. T-8502, which Aurelio procured
through fraud. Respondent Aurelio cannot raise the defense of indefeasibility of title
because "the principle of indefeasibility of a Torrens title does not apply where fraud

On the East for 18 meters by Clotilde Yape; and

On the West for 18meters by Agustin Cabaraban;"
5. That sometime in the year 1960, the said Ignacio Gil conveyed the same portion to Pio
Dalman, who is of legal age, Filipino citizen and likewise a resident of Lapasan, Cagayan de

Oro City and that since 1960 up to the present, the said Pio Dalman has been in
continuous, open, adverse and exclusive possession of the property acquired by him in
concept of owner;
6. That we hereby affirm, ratify and confirm the acquisition of the above described portion
acquired by Pio Dalman inasmuch as the same is being used by him as his residence and
family home and we hereby request the Office of the City Assessor to segregate this portion
from our Tax Decl. No. 27633 and that a new tax declaration be issued in the name of PIO
DALMAN embracing the area acquired and occupied by him.
IN WITNESS WHEREOF, we have hereunto affixed our signatures on this 3rd day of
December, 1965 at Cagayan de Oro City, Philippines.
(SGD.) Narciso Labuntog (SGD.)Remegia Yape de Feliciano
NARCISO LABUNTOG REMEGIA YAPE DE FELICIANO
Affiant Affiant
SUBSCRIBED & SWORN to before me this 3rd day of December, 1965 at Cagayan de Oro
City, Philippines, affiants exhibited their Residence Certificates as follows: NARCISO
LABUNTOG, A-1330509 dated Oct. 5, 1965 and REMEGIA YAPE DE FELICIANO, A1811104 dated Dec. 3, 1965 both issued at Cagayan de Oro City.
(SGD.) ILLEGIBLE
FRANCISCO X. VELEZ
Notary Public
However, based on Remegias testimony, she could not read and understand English:
COURT:
Can you read English?
A No, I cannot read and understand English.
ATTY. LEGASPI:
Q What is your highest educational attainment?

A Grade 3.
Q But you can read and understand Visayan?
A Yes, I can read Visayan, but I cannot understand well idiomatic visayan terms (laglom nga
visayan).19
On this point, Article 1332 of the Civil Code is relevant:
ART.1332. When one of the parties is unable to read, or if the contract is in a language not
understood by him, and mistake or fraud is alleged, the person enforcing the contract must
show that the terms thereof have been fully explained to the former.
The principle that a party is presumed to know the import of a document to which he affixes
his signature is modified by the foregoing article. Where a party is unable to read or when
the contract is in a language not understood by the party and mistake or fraud is alleged,
the obligation to show that the terms of the contract had been fully explained to said party
who is unable to read or understand the language of the contract devolves on the party
seeking to enforce the contract to show that the other party fully understood the contents of
the document. If he fails to discharge this burden, the presumption of mistake, if not, fraud,
stands unrebutted and controlling.20
Applying the foregoing principles, the presumption is that Remegia, considering her limited
educational attainment, did not understand the full import of the joint affidavit of confirmation
of sale and, consequently, fraud or mistake attended its execution. The burden is on
respondents, the spouses Zaldivar, to rebut this presumption. They tried to discharge this
onus by presenting Atty. Francisco Velez (later RTC Judge) who notarized the said
document. Atty. Velez testified that he "read and interpreted" the document to the affiants
and he asked them whether the contents were correct before requiring them to affix their
signatures thereon.21 The bare statement of Atty. Velez that he "read and interpreted" the
document to the affiants and that he asked them as to the correctness of its contents does
not necessarily establish that Remegia actually comprehended or understood the import of
the joint affidavit of confirmation of sale. Nowhere is it stated in the affidavit itself that its
contents were fully explained to Remegia in the language that she understood before she
signed the same. Thus, to the mind of the Court, the presumption of fraud or mistake
attending the execution of the joint affidavit of confirmation of sale was not sufficiently
overcome.
Moreover, the purported joint affidavit of confirmation of sale failed to state certain important
information. For example, it did not mention the consideration or price for the alleged sale
by Remegia of the subject lot to Ignacio Gil. Also, while it stated that the subject lot was
conveyed by Ignacio Gil to Pio Dalman, it did not say whether the conveyance was by sale,
donation or any other mode of transfer. Finally, it did not also state how the ownership of the
subject lot was transferred from Pio Dalman to respondent Aurelio or respondents.

Respondents claim that they had been occupying the subject lot since 1947 openly,
publicly, adversely and continuously or for over 41 years is unavailing. In a long line of
cases,22 the Court has consistently ruled that lands covered by a title cannot be acquired by
prescription or adverse possession. A claim of acquisitive prescription is baseless when the
land involved is a registered land following Article 1126 23 of the Civil Code in relation to
Section 46 of Act No. 496 or the Land Registration Act (now Section 47 24 of P.D. No 1529):
Appellants claim of acquisitive prescription is likewise baseless. Under Article 1126 of the
Civil Code, prescription of ownership of lands registered under the Land Registration Act
shall be governed by special laws. Correlatively, Act No. 496 provides that no title to
registered land in derogation of that of the registered owner shall be acquired by adverse
possession. Consequently, proof of possession by the defendants is both immaterial and
inconsequential.25

A We knew about that only recently.

Q When was that when you knew that the defendants were issued title over a portion of the
land you described a while ago?
A In June, 1992.
Q In what way did you discover that a portion of the land was titled in the name of the
defendants?
A I discovered that my property was titled by Mr. and Mrs. Zaldivar when I went to the
Register of Deeds for the purpose of partitioning my property among my children.

Neither can the respondents spouses Zaldivar rely on the principle of indefeasibility of TCT
No. 17793 which was issued on September 10, 1974 in favor of respondent Aurelio. As it is,
the subject lot is covered by two different titles: TCT No. T-8502 in Remegias name
covering an area of 444 sq m including therein the subject lot, and TCT No. 17793 in the
name of respondent Aurelio covering the subject lot. Aurelios title over the subject lot has
not become indefeasible, by virtue of the fact that TCT No. T-8502 in the name of Remegia
has remained valid. The following disquisition is apropos:

Q And you were surprised why it is titled in their names?

The claim of indefeasibility of the petitioners title under the Torrens land title system would
be correct if previous valid title to the same parcel of land did not exist. The respondent had
a valid title x x x It never parted with it; it never handed or delivered to anyone its owners
duplicate of the transfer certificate of title; it could not be charged with negligence in the
keeping of its duplicate certificate of title or with any act which could have brought about the
issuance of another certificate upon which a purchaser in good faith and for value could rely.
If the petitioners contention as to indefeasibility of his title should be upheld, then registered
owners without the least fault on their part could be divested of their title and deprived of
their property. Such disastrous results which would shake and destroy the stability of land
titles had not been foreseen by those who had endowed with indefeasibility land titles
issued under the Torrens system.26

A Yes. I knew that the Zaldivars built a house on the property I described a while ago, but I
did not bother because I know that I can get that property because I own that property.

Remegias TCT No. T-8502, thus, prevails over respondent Aurelios TCT No. 17793,
especially considering that, as earlier opined, the latter was correctly nullified by the RTC as
it emanated from the new owners duplicate TCT No. T-8502, which in turn, respondent
Aurelio was able to procure through fraudulent means.
Contrary to the appellate courts holding, laches has not set in against Remegia. She merely
tolerated the occupation by the respondents of the subject lot:

A Yes.
Q Is it not a fact that the defendants have constructed their house on a portion of the land
you described a while ago?

Q And the defendants constructed that house in 1974-75, am I correct?

A Yes.
Q And as a matter of fact, you have also a house very near to the house that was
constructed by the defendants in this case?
A Yes.
Q Can you tell us what is the distance between your house and the house constructed by
the defendants in 1974?
A They are very near because they constructed their house in my lot.
Q How many meters, more or less?

Q You also stated in the direct that the defendants in this case, Mr. and Mrs. Zaldivar, were
issued a title over a portion of this land which you described a while ago?

A It is very near, very close.

Q When they constructed their house, meaning the defendants, did you not stop the
defendants from the construction?

Q When did the Zaldivars construct that hollow blocks fence? After the house was finished?
A I cannot remember.

A I did not bother in stopping the Zaldivars in constructing the house because I am certain
that I can get the land because I own the land.
Q Aside from not protesting to the construction, did you not bring this matter to the attention
of the barangay captain or to the police authorities?
A No, because I did not bring this matter to the barangay captain nor to the police
authorities. It is only now that we discovered that it is already titled.
Q When you said now, it is in 1992?
A Yes.
Q Is it not a fact that after the house was finished the defendants and their family resided in
that house which they constructed?
A Yes, after the house was finished, they resided in that house.
Q As a matter of fact, from that time on up to the present, the defendants are still residing in
that house which they constructed in 1974 or 1975, am I correct?
A Yes.
Q As a matter of fact also the defendants fenced the lot in which their house was
constructed with hollow blocks, am I correct?
A Yes, the house of the Zaldivars was fenced by them with hollow blocks and I did not stop
them to avoid trouble.
Q As a matter of fact, the boundary between your house and the house of Zaldivar, there
was constructed a firewall made of hollow blocks about twelve feet in height, am I correct?
A Yes.
Q Such that you cannot see their house and also the Zaldivars cannot see your house
because of that high firewall, am I correct?
A We can still see each other because the firewall serves as the wall of their house.

Q But it could be long time ago?

ATTY. VEDAD:
Q That would be repetitious. She answered she could not remember.
ATTY. LEGASPI:
Q It could be many years ago?
A I cannot remember when they constructed the fence.
Q Did you [file] any protest or complaint when the Zaldivars constructed the hollow blocks
fence?
A No.
Q Neither did you bring any action in court or with the barangay captain or the police
authorities when the Zaldivars constructed that hollow blocks fence?
A No, I did not complain the fencing by the Zaldivars. Only now that we know that we bring
this matter to the barangay captain.
Q And in the [office of the] barangay captain, you were able to meet the defendants, am I
correct?
A No. When we went to the barangay captain, the Zaldivars did not appear there; therefore,
we hired a lawyer and filed this case.27
Case law teaches that if the claimants possession of the land is merely tolerated by its
lawful owner, the latters right to recover possession is never barred by laches:
As registered owners of the lots in question, the private respondents have a right to eject
any person illegally occupying their property. This right is imprescriptible. Even if it be
supposed that they were aware of the petitioners occupation of the property, and regardless
of the length of that possession, the lawful owners have a right to demand the return of their

property at any time as long as the possession was unauthorized or merely tolerated, if at
all. This right is never barred by laches.28
Nonetheless, the Court is not unmindful of the fact that respondents had built their house on
the subject lot and, despite knowledge thereof, Remegia did not lift a finger to prevent it.
Article 453 of the Civil Code is applicable to their case:
ART. 453. If there was bad faith, not only on the part of the person who built, planted or
sowed on the land of another, but also on the part of the owner of such land, the rights of
one and the other shall be the same as though both had acted in good faith.
It is understood that there is bad faith on the part of the landowner whenever the act was
done with his knowledge and without opposition on his part.
Under the circumstances, respondents and Remegia are in mutual bad faith and, as such,
would entitle the former to the application of Article 448 of the Civil Code governing builders
in good faith:
ART. 448. The owner of the land on which anything has been built, sown or planted in good
faith, shall have the right to appropriate as his own the works, sowing or planting, after
payment of the indemnity provided for in Articles 546 29 and 548,30 or to oblige the one who
built or planted to pay the price of the land, and the one who sowed, the proper rent.
However, the builder or planter cannot be obliged to buy the land if its value is considerably
more than that of the building or trees. In such a case, he shall pay reasonable rent, if the
owner of the land does not choose to appropriate the building or trees after the proper
indemnity. The parties shall agree upon the terms of the lease and in case of disagreement,
the court shall fix the terms thereof.
Following the above provision, the owner of the land on which anything has been built, sown
or planted in good faith shall have the right to appropriate as his own the building, planting
or sowing, after payment to the builder, planter or sower of the necessary and useful
expenses, and in the proper case, expenses for pure luxury or mere pleasure. 31
The owner of the land may also oblige the builder, planter or sower to purchase and pay the
price of the land. If the owner chooses to sell his land, the builder, planter or sower must
purchase the land, otherwise the owner may remove the improvements thereon. The
builder, planter, or sower, however, is not obliged to purchase the land if its value is
considerably more than the building, planting or sowing. In such case, the builder, planter or
sower must pay rent to the owner of the land. If the parties cannot come to terms over the
conditions of the lease, the court must fix the terms thereof. 32
The right to choose between appropriating the improvement or selling the land on which the
improvement of the builder, planter or sower stands, is given to the owner of the land, 33
Remegia, in this case, who is now substituted by petitioners as her heirs.

Consequently, the petitioners are obliged to exercise either of the following options: (1) to
appropriate the improvements, including the house, built by the respondents on the subject
lot by paying the indemnity required by law, or (2) sell the subject lot to the respondents.
Petitioners cannot refuse to exercise either option and compel respondents to remove their
house from the land.34 In case petitioners choose to exercise the second option,
respondents are not obliged to purchase the subject lot if its value is considerably more than
the improvements thereon and in which case, respondents must pay rent to petitioners. If
they are unable to agree on the terms of the lease, the court shall fix the terms thereof.
In light of the foregoing disquisition, the Court finds it unnecessary to resolve the procedural
issues raised by petitioners.
WHEREFORE, the petition is GRANTED. The Decision dated July 31, 2003 and Resolution
dated February 4, 2004 of the Court of Appeals in CA-G.R. CV No. 66511 are REVERSED
and SET ASIDE. The Decision dated December 3, 1999 of the Regional Trial Court of
Cagayan de Oro City, Branch 25 in Civil Case No. 92-423 is REINSTATED with the
MODIFICATION that petitioners are likewise ordered to exercise the option under Article
448 of the Civil Code.
SO ORDERED.
Panganiban, C.J., Chairperson, Ynares-Santiago, Austria-Martinez, Chico-Nazario, J.J.,
concur.

Republic of the Philippines

SUPREME COURT
Manila
SECOND DIVISION
G.R. No. 162097

that after her parents death, her siblings partitioned the land and Lot No. 3209 was
allocated to her. She learned from the Land Registration Authority (LRA) that Decree No.
412846 was issued in the cadastral case in 1930, but the records, including those in the
Laguna RD, were destroyed during the war. She said the lot was declared for tax purposes
in her name and she had been paying taxes due on the lot, as evidenced by the Tax
Clearance dated March 2, 2000. She stated that the adjoining lot owners were Olivar
Pening on the north, Hernan Zaide on the east; and that there is a stream on the south and
west. Petitioner submitted in evidence the tracing cloth plan and technical description of Lot
No. 3209.

February 13, 2008

LOURDES A. PASCUA, petitioner,
vs.
REPUBLIC OF THE PHILIPPINES, respondent.
DECISION

VELASCO, JR., J.:

The instant petition for review under Rule 45 seeks the reversal of the July 22, 2003
Decision1 and February 10, 2004 Resolution 2 of the Court of Appeals (CA) in CA-G.R. CV
No. 74050, affirming the trial courts denial of petitioners action for reconstitution of title
covering Lot No. 3209 of the Pagsanjan, Laguna Cadastre in her name.
The Facts
Petitioner claimed that she is the owner in fee simple of Lot No. 3209, Pagsanjan, Laguna
Cadastre, having inherited it from her parents, Guillermo Abinsay and Leoncia Rivera. She
and her predecessors-in-interest had allegedly been in open, public, continuous, and
peaceful possession of the disputed lot since it was bought from Serafin Limuaco in 1956.
On December 4, 1930, the cadastral court awarded the lot to Limuaco, who sold the lot to
petitioners parents on December 24, 1956, as evidenced by a Deed of Absolute Sale. [3]

The RTC denied the petition for reconstitution for insufficiency of evidence in its October 30,
2000 Order, ruling as follows:
The certification issued by Acting Chief Alberto H. Lingayo of the Ordinary and
Cadastral Decree Division (Exh. "F") and another certification of the Chief of the
Docket Division of the Land Registration Authority (Exh. "G") speak of Decree
No. 412846 issued on December 4, 1930 covering Lot No. 3209. On the other
hand, Tax Declaration No. 5471 in the name of spouses Guillermo Abinsay and
Leoncia Rivera (Exh. "I") did not indicate any certificate of title number, cadastral
lot number or even an assessors lot number while Tax Declaration No. 1376
(Exh. "J") only indicated Assessors Lot No. 19-pt. Petitioner failed to establish
that Assessors Lot No. 19-pt and Lot No. 3209 are one and the same.
Assuming that Assessors Lot No. 19-pt refers to Lot No. 3209, still, the petition
could not be granted because there is no showing that an original certificate of
title was actually issued pursuant to Decree No. 412846. The certifications issued
by the Land Registration Authority dated October 26, 1999 and September 23,
1998 and the Report of the same office dated May 5, 2000 are bereft of any
allusion to the issuance of a title. The documents presented in evidence by
petitioner not only failed to prove the issuance of an original certificate of title but
also the name of the adjudicatee.4

Due to the ravages of World War II, however, the owners duplicate certificate of the Torrens
title covering Lot No. 3209, its original copy on file with the Laguna Register of Deeds (RD),
and other pertinent papers were lost and/or destroyed, and diligent efforts to find them were
futile. Thus, on December 8, 1999, petitioner filed a petition for judicial reconstitution of the
original certificate of title (OCT) covering Lot No. 3209 with the Sta. Cruz, Laguna, Regional
Trial Court (RTC), Branch 27. She alleged that there were no deeds or instruments covering
the disputed lot that were presented or pending registration with the RD, and that no coowners, mortgagees, or lessees duplicate of the OCT was issued by the RD.

On appeal to the CA, petitioner argued that Assessors Lot No. 19-pt and Lot No. 3209 are
the same; that she is the adjudicatee of the disputed lot; and that an OCT was issued in
accordance with Decree No. 412846. For respondent Republic of the Philippines, the
Solicitor General contended that what petitioners predecessors-in-interest bought from
Limuaco was Assesors Lot No. 19-pt, which was neither designated nor mentioned as Lot
No. 3209. Also, the Solicitor General said the property described in the documents
presented is still unregistered land of the public domain and there is no evidence that an
OCT was actually issued to Lot No. 3209. The Solicitor General added that the trial court did
not acquire jurisdiction over the petition since petitioner failed to submit proof of notices to
all adjoining lot owners.

After complying with the jurisdictional requirements, petitioner was allowed to present
evidence ex-parte. She testified that her parents bought a piece of land from Limuaco and

The July 22, 2003 Decision of the CA affirmed the trial courts order in toto. The CA held that
petitioner failed to present the documents enumerated in Section 2, Republic Act No. (RA)

26 entitled An Act Providing a Special Procedure for the Reconstitution of Torrens

Certificate of Title Lost or Destroyed, as amended by RA 6732, or any other document that
could be a sufficient basis for reconstituting title.
Petitioners motion for reconsideration was denied by the CA in its February 10, 2004
Resolution.
The Issues

(a) The owners duplicate of the certificate of title;

(b) The co-owners, mortgagees, or lessees duplicate of the certificate of title;
(c) A certified copy of the certificate of title, previously issued by the register of
deeds or by a legal custodian thereof;
(d) An authenticated copy of the decree of registration or patent, as the case may
be pursuant to which the original certificate of title was issued;

Thus, petitioner elevated the matter to us, interposing that:

I
The CA erred in holding that petitioner failed to present any of the documents
enumerated in Sec. 2 of RA 26.
II
The CA erred in holding that the certification of the LRA that Decree No. 412846
was issued over Lot 3209 cannot qualify as a proper document for reconstituting
the lost or destroyed titled because Lot 3209 is different from Lot 19-pt.
III
The CA erred in holding that the lot sold by Serafin Limuaco to the Sps. Abinsay
and Rivera is not Lot 3209 but Lot 19-pt which are different from each other.
IV
The CA erred in holding that statements in the Deed of Sale and Deed of Coowners Partition that the land is not registered under Act 496 are fatal to the
instant Petition.5
The Courts Ruling
The petition lacks merit.
Sec. 2 of RA 26 provides:
SEC. 2. Original certificates of title shall be reconstituted from such of the sources
hereunder enumerated as may be available in the following order:

(e) A document, on file in the Registry of Deeds by which the property, the
description of which is given in said document, is mortgaged, leased or
encumbered, or an authenticated copy of said document showing that its original
has been registered; and
(f) Any other document which, in the judgment of the court, is sufficient and
proper basis for reconstituting the lost or destroyed certificate of title.
Petitioner asserts that under Sec. 2(f) of RA 26, other documents may be considered by the
court as sufficient bases for the reconstitution of a lost or destroyed certificate of title. The
pertinent documents she presented before the trial court are as follows:
(1) List of lot descriptions from the Bureau of Lands which show that Limuaco is a
claimant of Lot No. 3209 covered by Survey No. Cad. 69, Case No. 5 Pagsanjan,
Laguna, which is 10,673 sq. m. in area (Exhibit "O");
(2) Certification of the LRA dated October 26, 1999, stating that based on the
Record of Book of Decrees kept at the Vault Section, Docket Division of said
office, the copy of Decree No. 412846 issued on December 4, 1930 covering Lot
No. 3209 of the Cadastral Survey of Pagsanjan, Laguna under Cadastral Case
No. 14, LRC Cadastral Record No. 211 was not among the salvaged decrees on
file with said office and that the said copy is presumed lost or destroyed during
World War II (Exhibit "F");
(3) Certification from the LRA dated September 23, 1998 that its Record of Book
of Cadastral Lots shows that Lot No. 3209 of Pagsanjan Cadastre was issued
Decree No. 412846 (Exhibit "G");
(4) Deed of Absolute Sale dated December 24, 1956, showing that Limuaco sold
to petitioners parents a parcel of land in Anibong, Pagsanjan, Laguna which
consists of 10,673 sq. m. covered by Tax Declaration No. 156 (Exhibit "E");

(5) Tax Declaration No. 5471 in the name of petitioners parents which canceled
Tax Declaration No. 156 covering a property bounded by the lot of Timoteo
Abaya on the north, a stream on the south and west, a callejon in the east
(Exhibit "J"); and
(6) Deed of Co-owners Partition dated February 5, 1968 which shows that
petitioner and her siblings divided their inheritance after the death of their
parents, and that petitioner obtained Lot No. 19-pt covered by Tax Declaration
No. 1376 situated in Anibong, Pagsanjan, Laguna consisting of 10,673 sq. m.,
bounded by Lot No. 15 pt. of Marcelo Aquino on the north, a stream on the south
and west, and a callejon in the east (Exhibit "D").6
As held in Republic v. Intermediate Appellate Court,7 when RA 26, Section 2(f) speaks of
"any other document," the reference is to similar documents previously enumerated in the
section or documents ejusdem generis as the documents earlier referred to.
The Deed of Co-owners Partition states that the subject of the instrument is Lot No. 19-pt.
The Deed of Absolute Sale between Limuaco and petitioners parents, on the other hand,
states that the land was not registered under Act No. 496. Petitioner nevertheless insists
that Lot No. 3209 is the subject of a decree of registration according to the records of the
LRA, and that between Limuacos statement and the certification from the LRA, the latter
must prevail.
We are not convinced. RA 26 presupposes that the property whose title is sought to be
reconstituted has already been brought under the provisions of the Torrens System, Act No.
496.8 Petitioners evidence itself, the Deed of Sale between Limuaco and her parents,
stated that the lot was not registered under Act No. 496 and that the parties agreed to
register it under Act No. 3344. Even the Deed of Co-owners Partition stated that the subject
lot, Lot No. 19-pt, is not registered. The other piece of evidence, the certifications from the
LRA, merely stated that Decree No. 412846 covering Lot No. 3209 was issued on
December 4, 1930, but the copy of said decree is not among the salvaged decrees on file
with said office. The said copy is presumed lost or destroyed during World War II. The LRA
neither stated that a certificate of title was actually issued nor mentioned the number of the
OCT. It cannot be determined from any of the evidence submitted by petitioner that the
adjudicatee of the purported decree was Limuaco.
In Republic v. El Gobierno de las Islas Filipinas, this Court denied the petition for
reconstitution of title despite the existence of a decree:
We also find insufficient the index of decree showing that Decree No. 365835
was issued for Lot No. 1499, as a basis for reconstitution. We noticed that the
name of the applicant as well as the date of the issuance of such decree was
illegible. While Decree No. 365835 existed in the Record Book of Cadastral Lots
in the Land Registration Authority as stated in the Report submitted by it,

however, the same report did not state the number of the original certificate of
title, which is not sufficient evidence in support of the petition for reconstitution.
The deed of extrajudicial declaration of heirs with sale executed by Aguinaldo
and Restituto Tumulak Perez and respondent on February 12, 1979 did not also
mention the number of the original certificate of title but only Tax Declaration No.
00393. As we held in Tahanan Development Corp. vs. Court of Appeals, the
absence of any document, private or official, mentioning the number of the
certificate of title and the date when the certificate of title was issued, does not
warrant the granting of such petition.9
Petitioner argues that since it is incumbent upon the Commissioner of Land Registration to
issue a certificate of title pursuant to a court decree, it can be presumed that a certificate of
title over Lot No. 3209 was indeed issued when the cadastral court ordered it so on
December 4, 1930. Petitioner relied on Rule 131, Sec. 3 of the Rules of Court which states
the presumption that official duty has been regularly performed. This presumption, however,
is merely disputable. In this case, the LRA certified that (1) a decree covering Lot No. 3209
was issued, but (2) a copy of the said decree cannot be found on the records. If in fact a
certificate of title was issued, a title number could have been mentioned by the LRA. Since
the LRA itself made no reference to any certificate of title, the conclusion is that none was
issued. More importantly, Limuaco himself stated in the Deed of Absolute Sale that the
property he was selling was not registered. Petitioners evidence, no less, disproves the
presumption she relies upon.
What further militates against petitioners arguments is the fact that the Deed of Absolute
Sale, Deed of Co-owners Partition, and Tax Declaration Nos. 5471 and 99-19-003-00022
mention Lot No. 19-pt and not Lot No. 3209, which was sold by Limuaco to her parents. "Lot
No. 3209" only appears on the Tracing Cloth Plan and the Technical Description. There is
no document that refers or designates Lot No. 19-pt as Lot No. 3209.
Petitioner points out, however, that both Lot No. 19-pt and Lot No. 3209 have the area of
10,673 sq. m., bounded by a callejon and a stream, and located in Anibong, Pagsanjan,
Laguna. Moreover, the Lot Description (Exhibit "O") and Lot Data (Exhibit "P") show that the
technical description of Lot No. 19-pt fits the technical description of Lot No. 3209. She also
asserts that Lot No. 19-pt, which was mentioned in Tax Declaration No. 99-19-003-00022
issued in her name, was the Assessors Lot Number and not the Cadastral Lot Number. 10
The Solicitor General points out, however, that Tax Declaration No. 5471 in the name of
petitioners parents did not indicate any certificate of title number or cadastral or assessors
lot number. This creates serious doubt as to the exact identity of the two lots.
Assuming that Lot Nos. 19-pt and 3209 are the same, we are still constrained to deny the
reconstitution of title mainly because there is no proof that a certificate of title was originally
issued to both lots. The Solicitor General notes that both lots are still unregistered land of
the public domain; thus, no certificate covering such property can be issued under the
instant proceeding.

In sum, we are not persuaded that petitioners pieces of evidence warrant the reconstitution
of title since she failed to prove the existence of the title in the first place. The purpose of
reconstitution of title is to have the original title reproduced in the same form it was when it
was lost or destroyed. 11 In this case, there is no title to be re-issued. The appellate and trial
courts were correct in denying Pascuas petition. We emphasize that courts must be
cautious in granting reconstitution of lost or destroyed certificates of titles. It is the duty of
the trial court to scrutinize and verify carefully all supporting documents, deeds, and
certifications. Each and every fact, circumstance, or incident which corroborates or relates
to the existence and loss of the title should be examined. 12
WHEREFORE, the CAs July 22, 2003 Decision and February 10, 2004 Resolution in CAG.R. CV No. 74050, affirming the October 30, 2000 Order of the Sta. Cruz, Laguna RTC,
Branch 27, are AFFIRMED IN TOTO. Costs against petitioner.
SO ORDERED.

ABAD, J.:
This is about a petition for reconstitution of a lost original certificate of title in which the
respondents have been unable to present evidence that such title had in fact been issued
by an appropriate land registration court.
The Facts and the Case
Respondents Apolinario Catarroja, Reynaldo Catarroja, and Rosita Catarroja-Distrito (the
Catarrojas) filed a petition for reconstitution of lost original certificate of title covering two lots
in Zapang, Ternate, Cavite, one with an area of 269,695 square meters and the other with
an area of 546,239 square meters. 1 The Catarrojas alleged that they inherited these lands
from their parents, Fermin and Sancha Catarroja, who reportedly applied for their
registration with the Court of First Instance of Cavite sometime before the last world war. 2
The Land Registration Authority (LRA) issued a certification on August 3, 1998 3 and a report
on February 4, 2002,4 confirming that the land registration court issued Decree 749932 on
May 21, 1941 covering the subject lots. A copy of this decree was, however, no longer
available in the records of the LRA. The LRA report verified as correct the plans and
technical descriptions of the subject lots which had been approved under LRA PR-19042
and LRA PR-19043.
The Catarrojas alleged that, pursuant to the decree, the Register of Deeds of Cavite issued
an original certificate of title to their parents. But, as it happened, based on a certification
issued by the Register of Deeds, the original on file with it was lost in the fire that gutted the
old Cavite capitol building on June 7, 1959. 5 The Catarrojas also claimed that the owners
duplicate copy of the title had been lost while with their parents. 6

Republic of the Philippines

SUPREME COURT
Manila
SECOND DIVISION
G.R. No. 171774

February 12, 2010

REPUBLIC OF THE PHILIPPINES, Petitioner,

vs.
APOLINARIO CATARROJA, REYNALDO CATARROJA, and ROSITA CATARROJADISTRITO, Respondents.
DECISION

Since the public prosecutor representing the government did not object to the admission of
the evidence of the Catarrojas and since he said that he had no evidence to refute their
claims, the case was submitted for decision. 7 On June 27, 2003 the Regional Trial Court
(RTC) of Cavite issued an Order, granting the petition for reconstitution of title. 8
On appeal, however, the Court of Appeals (CA) reversed the RTC decision. 9 It held that the
evidence of the Catarrojas failed to establish any of the sources for reconstitution
enumerated in Section 2 of Republic Act (R.A.) 26 (An act providing a special procedure for
reconstitution of Torrens certificate of title lost or destroyed). The Catarrojas did not have
proof that an original certificate of title had in fact been issued covering the subject lots. On
motion for reconsideration, however, the CA rendered an amended decision dated February
23, 2006, setting aside its decision dated July 12, 2005 and finding sufficient evidence to
allow reconstitution of the Catarrojas title. 10 Petitioner Republic of the Philippines challenges
that decision through this action.
The Issue Presented

The sole issue presented in this case is whether or not the CA erred in finding sufficient
evidence to grant the petition for reconstitution of title.

2. A certification issued by the LRA dated August 3, 1998, stating that, based on
official records, GLRO Record 54798, Cavite, had been issued Decree 749932
on May 21, 1941.12

The Courts Ruling

R.A. 26 governs the reconstitution of lost or destroyed Torrens certificates of title. Its Section
2 enumerates the following sources for the reconstitution of such titles:
(a) The owners duplicate of the certificate of title;
(b) The co-owners, mortgagees, or lessees duplicate of the certificate of title;
(c) A certified copy of the certificate of title, previously issued by the register of
deeds or by a legal custodian thereof;
(d) An authenticated copy of the decree of registration or patent, as the case may
be, pursuant to which the original certificate of title was issued;
(e) A document, on file in the Registry of Deeds, by which the property, the
description of which is given in said document, is mortgaged, leased or
encumbered, or an authenticated copy of said document showing that its original
had been registered; and
(f) Any other document which, in the judgment of the court, is sufficient and
proper basis for reconstituting the lost or destroyed certificate of title.
Admittedly, the Catarrojas have been unable to present any of the documents mentioned in
paragraphs (a) to (e) above. Their parents allegedly lost the owners duplicate certificate of
title. They did not have a certified copy of such certificate of title or a co-owners, a
mortgagees, or a lessees duplicate of the same. The LRA itself no longer has a copy of the
original decree or an authenticated copy of it. Likewise, the Register of Deeds did not have
any document of encumbrance on file that shows the description of the property.
The only documentary evidence the Catarrojas could produce as possible sources for the
reconstitution of the lost title are those other documents described in paragraph (f). Relying
on this, they submitted the following documents:
1. The Microfilm printouts of the Official Gazette dated February 25, 1941, Vol.
39, No. 24, Pages 542-543, showing a notice of hearing in LRC 482, GLRO
Record 54798, respecting their parents application for registration and
confirmation of their title to the subject lots. 11

3. A certification from the Register of Deeds of Cavite dated July 3, 1999, stating
that it cannot ascertain whether the land covered by Decree 749932 and GLRO
Record 54798 had been issued a certificate of title because its titles were
arranged numerically and not by lot numbers, location, or names of registered
owners. The Register of Deeds also certified that all their records were lost in the
June 7, 1959 fire.13
4. The Report of the LRA dated February 4, 2002, stating that based on their
record book of decrees, Decree 749932 had been issued on May 21, 1941
covering the subject lots under GLRO Record 54798. The report also verified as
correct the plans (Psu-111787 and Psu-111788) and technical descriptions of the
subject lots and approved under LRA PR-19042 and LRA PR-19043. 14
5. An Affidavit of Loss dated December 14, 2001, stating that the duplicate
certificate of title covering the subject lots had been lost. 15
This Court has, in Republic v. Intermediate Appellate Court, 16 applied the principle of
ejusdem generis in interpreting Section 2(f) of R.A. 26. "Any other document" refers to
reliable documents of the kind described in the preceding enumerations. This Court is not
convinced that the above documents of the Catarrojas fall in the same class as those
enumerated in paragraphs (a) to (e). None of them proves that a certificate of title had in
fact been issued in the name of their parents. In Republic v. Tuastumban, 17 the Court ruled
that the documents must come from official sources which recognize the ownership of the
owner and his predecessors-in-interest. None of the documents presented in this case fit
such description.
Moreover the Catarrojas failed to show that they exerted efforts to look for and avail of the
sources in paragraphs (a) to (e) before availing themselves of the sources in paragraph (f).
The Court said in Republic v. Holazo 18 that the documents referred to in Sec. 2(f) may be
resorted to only in the absence of the preceding documents in the list. Only if the petitioner
for reconstitution fails to show that he had, in fact, sought to secure such documents and
failed to find them, can the presentation of the "other document" as evidence in substitution
be allowed.
Further, in Republic v. Tuastumban19 the Court enumerated what needs to be shown before
the issuance of an order for reconstitution: (a) that the certificate of title had been lost or
destroyed; (b) that the documents presented by petitioner are sufficient and proper to
warrant reconstitution of the lost or destroyed certificate of title; (c) that the petitioner is the
registered owner of the property or had an interest therein; (d) that the certificate of title was
in force at the time it was lost or destroyed; and (e) that the description, area and

boundaries of the property are substantially the same as those contained in the lost or
destroyed certificate of title.
The microfilm printouts of the Official Gazette are not proof that a certificate of title was in
fact issued in the name of the Catarrojas parents. The publication in the Official Gazette
only proved that the couple took the initial step of publishing their claim to the property.
There was no showing, however, that the application had been granted and that a certificate
of title was issued to them.
Although the LRAs certification and its report confirmed the issuance of a decree, these
documents do not sufficiently prove that a title had in fact been issued to the parents of the
Catarrojas pursuant to such decree. Indeed, it remains uncertain what kind of decree the
land registration court issued in the case. Significantly, Act 496 (the 1903 Land Registration
Act) which was then in force recognized two kinds of decrees in land registration
proceedings: first, a decree issued under Section 37 that dismisses the application and,
second, a decree issued under Section 38 confirming title of ownership and its
registration.201avvphi1
SECTION 37. If in any case without adverse claim the court finds that the applicant has no
proper title for registration, a decree shall be entered dismissing the application, and such
decree may be ordered to be without prejudice x x x.
SECTION 38. If the court after hearing finds that the applicant or adverse claimant has title
as stated in his application or adverse claim and proper registration, a decree of
confirmation and registration shall be entered x x x.
Absent a clear and convincing proof that an original certificate of title had in fact been
issued to their parents in due course, the Catarrojas cannot claim that their predecessors
succeeded in acquiring title to the subject lots. The nature of reconstitution of a lost or
destroyed certificate of title denotes a restoration of the instrument in its original form and
condition. That cannot be done without proof that such certificate of title had once existed.
The procedures laid down in R.A. 26 for reconstituting a title have to be strictly followed
considering that reconstitution, if made easy, could be the source of anomalous titles. It
could also be unscrupulously availed of by some as a convenient substitute for the rigid
proceedings involved in original registration of title. 21
The Court observes that the subject property, supposedly located in Ternate, Cavite, where
the naval reservation is found, covers more than 81 hectares of land. It is hardly believable
that it has remained untouched by any documented transaction since its supposed titling in
May 1941. It is also curious that no photocopy of that title has ever been kept and preserved
in some private or public repository.
Parenthetically, the Catarrojas did not present any tax declaration covering such vast piece
of property. Although a tax declaration is not a proof of ownership, payment of realty tax is

an exercise of ownership over the property and is the payers unbroken chain of claim of
ownership over it. Furthermore, the Catarrojas procrastination of over five decades before
finally seeking reconstitution of title has allowed laches to set in.
Once again, courts must be cautious against hasty and reckless grant of petitions for
reconstitution, especially when they involve vast properties as in this case. 22
WHEREFORE, the Court GRANTS the petition, REVERSES the amended decision of the
Court of Appeals dated February 23, 2006, and REINSTATES its decision dated July 12,
2005 in CA-G.R. CV 80401 that denied the petition for reconstitution of title of respondents
Apolinario Catarroja, Reynaldo Catarroja, and Rosita Catarroja-Distrito.
SO ORDERED.

Republic of the Philippines

SUPREME COURT
Manila
THIRD DIVISION
G.R. No. 133110

March 28, 2007

BARSTOWE PHILIPPINES CORPORATION, Petitioner,
vs.
REPUBLIC OF THE PHILIPPINES, Respondent.
DECISION

CHICO-NAZARIO, J.:
Before this Court is a Petition for Review on Certiorari1 under Rule 45 of the Rules of Court
seeking the reversal and setting aside the Decision, 2 dated 8 August 1997, and Resolution, 3
dated 18 March 1998, of the Court of Appeals in CA-G.R. CV No. 47522, which in turn,
reversed and set aside the Decision, 4 dated 22 December 1992, of the Quezon City
Regional Trial Court (RTC), Branch 80 in Civil Case No. Q-92-11806.
Antecedent 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). The subject lots have a total area of 111,447 square meters, and are situated
along the northeastern perimeter boundary of the National Government Center in Payatas,
Quezon City.
BPC traces its titles to the subject lots back to Servando Accibal (Servando) who was
supposedly issued on 24 July 1974, at 3:20 p.m., Transfer Certificates of Title (TCTs) No.
200629 and 200630 over the subject lots. TCTs No. 200629 and 200630 were purportedly
signed by Nestor N. Pena, Deputy Register of Deeds of Quezon City. On 10 June 1988,
Servando executed a Deed of Absolute Sale of the subject lots to his son Antonio Accibal
(Antonio), with the concurrence of his other heirs. Despite his prior sale of the subject lots to
Antonio, Servando, by virtue of a Deed of Conveyance, dated 8 February 1989,
transferred/conveyed the subject lots to BPC in exchange for subscription of 51% of the
capital stock of BPC, such subscription supposedly amounting to P6,000,000.00.5 About a
year after the death of Servando on 3 October 1989, particularly on 10 October 1990,
Antonio executed another Deed of Conveyance of the subject lots in favor of BPC in

exchange for subscription of 2,450 shares of its capital stock, with an alleged total value of
P49,000,000.00.6 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 TCTs No.
200629 and 200630 with the Land Registration Authority (LRA). On 12 December 1990, the
LRA issued TCTs No. RT-23687 and RT-23688 (reconstituting TCTs No. 200629 and
200630, respectively), which were transmitted to the Quezon City Register of Deeds and
signed by Deputy Register of Deeds Edgardo Castro on 19 February 1991. Also on 19
February 1991, TCTs No. RT-23687 and RT-23688 were cancelled and in lieu thereof, TCTs
No. 30829, 30830, 30831, and 30832 in the name of BPC were issued. BPC then acquired
from the Housing and Land Use Regulatory Board (HLURB) a permit to develop the subject
lots into a residential subdivision. Subsequently, BPC entered into Joint Venture
Agreements with other corporations for the development of the subject lots into a
subdivision called Parthenon Hills.

Considering the plight of [BPC] and the possible irreparable damage that may be caused
against the residents in the surrounding developed subdivision, even as said corporation is
possessed of a good title, the court in the exercise of its discretion grants the motion. More
importantly, consideration of equity demands that the titled owner [BPC] herein must be able
to exercise all its dominical right bloosoming [sic] forth from its ownership of the land in suit.

Meanwhile, according to the Republic, prior to 14 November 1979, the subject lots were
owned by First Philippine Holdings Corporation (FPHC). As evidence of its title to the
subject lots, FPHC was issued TCT No. 257672, on an undetermined date, and TCT No.
275201, on 20 January 1981. Pursuant to a Deed of Sale, dated 14 November 1979, FPHC
sold one of the subject lots, covered by TCT No. 257672, to the Republic for P2,757,360.00.
Thus, on 22 January 1981, TCT No. 257672 was cancelled and TCT No. 275443 was
issued in place thereof in the name of the Republic. FPHC executed another Deed of Sale
on 25 March 1982 in which it sold the remainder of the subject lots, covered by TCT No.
275201, to the Republic for P9,575,920.00. On 31 May 1982, TCT No. 275201 was
cancelled and was replaced by TCT No. 288417 issued in the name of the Republic.
Because of the 11 June 1988 fire which razed the Quezon City Office of the Register of
Deeds and destroyed the original copies of TCTs No. 275443 and 288417, 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 of TCTs No. 200629
and 200630 which also covered the subject lots. This prompted the Republic to file before
the RTC on 26 March 1992 a petition for cancellation of title against Antonio, Servando, and
BPC, docketed as Civil Case No. Q-92-11806.

While Civil Case No. Q-92-11806 was still pending before the RTC, there were two
intervenors.

Civil Case No. Q-92-11806

Counsel for Antonio and the late Servando filed two successive Motions for extension of
time to file the proper pleading, dated 17 June 1992 and 1 July 1992, but despite the grant
thereof by the RTC, 7 no such responsive pleading on behalf of Antonio and the late
Servando was ever filed. Hence, on 31 July 1992, the RTC issued an Order 8 declaring
Antonio and the late Servando in default.
In another Order,9 also dated 31 July 1992, the RTC, upon the motion of BPC, allowed the
latter to continue with the development of the subject lots. It concluded that

WHEREFORE, under cool reflection and prescinding from the foregoing, the motion is
hereby granted. [BPC] is hereby permitted and allowed to continue with the improvement
and development of the controverted property into a residential subdivision. 10
On 12 October 1992, the Republic filed with the Quezon City Register of Deeds a Notice of
Lis Pendens requesting the recording of the pendency of Civil Case No. Q-92-11806 on
TCTs No. 30830, 30831, and 30832, all in the name of BPC.

Gloria Accibal Rettoriano (Gloria) filed with the RTC a Motion for Intervention, with a
Complaint in Intervention, both dated 1 September 1992. Gloria alleged that she was the
only child of Basilia Accibal, Servandos sister; the subject lots were inherited by Basilia,
Servando, and their other siblings from their parents Martin and Mauricia Accibal; upon her
mothers death, Gloria inherited and came into possession of a portion of the subject lots
with an area of about 2.5 hectares; Gloria had been possessing, cultivating and improving
her portion of the subject lots for the last 30 years; Servando, through fraudulent means,
was able to secure TCTs over all the subject lots, including Glorias portion therein; the
inclusion of Glorias portion in the TCTs of Servando and, later, in those of BPC, was done
through fraud and gross bad faith; and unless the TCTs of Servando and BPC are declared
null and void, Gloria will be deprived of her property without due process and just
compensation. BPC opposed Glorias intervention in Civil Case No. Q-92-11806 considering
that she had already instituted Civil Case No. Q-91-10933 before the RTC, Quezon City,
Branch 76, seeking the annulment of TCTs No. 30830, 30831, and 30832 of BPC based on
the very same grounds she raised in her present Complaint in Intervention; on 11 February
1992, Gloria entered into a Compromise Agreement with BPC in which she waived and
renounced any and all claims whatsoever which she may have over the titles of BPC in
consideration of the payment by the latter of P2,000,000.00; the RTC, Branch 76, after
finding that the said Compromise Agreement was not contrary to law, morals, good
customs, public order or public policy, approved the same, thus putting an end to Civil Case
No. Q-91-10933;11 Glorias cause of action to intervene in Civil Case No. Q-92-11806 was
already barred by prior judgment in Civil Case No. Q-91-10933 and Glorias Complaint in
Intervention is tantamount to a collateral attack against a TCT. In rejecting Glorias
intervention in Civil Case No. Q-92-11806, the RTC found as follows
The motion for intervention must be denied and the complaint in intervention therein
attached must be rejected.

For one thing, herein movant Gloria Accibal Rettoriano, was the plaintiff in the first case
(RTC Br. 76 No. Q-91-10933) and with "eyes wide open" she entered into a compromise
agreement with [BPC], which was the basis of the 26 February 1992 decision rendered
therein and it being based on a compromise agreement, said decision became immediately
final and executory.
Whether or not the decision rendered in the first case was satisfied is of no moment in the
present case, as herein movant intervenor has all the remedies to protect her rights therein.
For another, movant intervenor Gloria Accibal Rettoriano, from her complaint in intervention
would ask for the cancellation of the titles issued to their [sic] relative Servando Accibal and
those titles duly issued and registered in the name of [BPC]. Certainly, this can not be done,
as it constitutes a collateral attack on the questioned titles which the law and settled
jurisprudence do not allow. Perforce, a separate action against the questioned titles is the
remedy available for intervenor Gloria A. Retoriano [sic].
Accordingly, the Court finds the opposition of [BPC] to be impressed with merit and the
motion for intervention does not inspire confidence.
WHEREFORE, the subject motion for intervention is denied and the complaint in
intervention attached thereto must be rejected. 12
Another intervenor in Civil Case No. Q-92-11806 was EL-VI Realty and Development
Corporation (ERDC) which filed with the RTC a Motion for Leave to Intervene, dated 1
September 1992. Subsequently, it filed an Answer in Intervention, dated 15 September
1992, in which, it alleged that it acquired interest in the subject lots after having entered into
a Joint Venture Agreement dated 16 January 1992, with BPC, for the development of the
subject lots into a residential subdivision; the action initiated by the Republic for the
cancellation of the TCTs of BPC was already barred by laches and estoppel because of the
recognition accorded upon the said TCTs by the instrumentalities of the Republic,
particularly the Register of Deeds and the HLURB, on which the ERDC relied in all good
faith when it entered into the Joint Venture Agreement with BPC; the Republic is liable to
ERDC for moral damages and attorneys fees; should the RTC find the TCTs of BPC infirm,
rendering the Joint Venture Agreement between ERDC and BPC of no force and effect, then
BPC should be held liable to ERDC, being an innocent third party, for reimbursement of all
expenses incurred by the latter in the development of the subject lots; and should the RTC
find that the TCTs of BPC are spurious, then it should be declared in bad faith when it
entered into the Joint Venture Agreement with ERDC, for which it should be liable for
exemplary damages and attorneys fees. In an Order,13 dated 27 October 1992, the RTC
granted ERDCs Motion to Intervene and admitted its Answer in Intervention.
After all the parties had submitted their respective Pre-Trial Briefs, 14 and upon motion by the
BPC,15 the RTC decided the case on 22 December 1992 on summary judgment. 16 Although

it found both the Republic and the BPC as buyers in good faith, it held that the titles of BPC
should prevail. It ratiocinated thus
3. To the third issue, we rule that the title of [BPC] must prevail over that of the [Republic].
There is no dispute that the titles of the First Philippine Holdings Corporation, predecessorin-interest of [Republic] were either issued in the year 1979 and 1981 (Exh. "A" and "B"). On
the other hand, there is likewise no dispute that the titles of defaulted defendant Servando
Accibal, and predecessor-in-interest of [BPC], were both issued and registered much earlier
on July 24, 1974 (Exhs. "F" and "G", pp. 210-213, record) and/or a difference of 5 or 6 years
in point of time.
MORE, Servando Accibal, the predecessor-in-interest of [BPC] has been in the actual and
peaceful physical possession of the lots in suit before he sold them to [BPC] on February
08, 1991. Upon registration of the same on February 19, 1991, [BPC], after having
subdivided the land into four (4) smaller lots was issued on 19 February TCT Nos. 30829,
30830, 30831, and 30832 (Exhs. 1, 2, 3 and 4).
It is true [Republic] acquired the land in suit on November 14, 1979 and for which TCT Nos.
275443 and 288417 were issued in the years 1979 and 1981, but [Republic] never took
assertive steps to take actual possession of the land sold to it by the First Philippine
Holdings Corporation. It is even of grave doubt that the latter took actual possession of the
land before the land in suit was sold to the [Republic]. So much so, that the area had been
occupied by several squatters, one of them is Servando Accibal who by the way, was able
to have the land in suit titled in his name as early as July 24, 1974, under TCT Nos. 200629
and 200630 of the land records of Quezon City. Further, [Republic] and its predecessor-ininterest were not able to discover the overlapping of their titles by the titles of Servando
Accibal for a period of eighteen (18) long years starting from July 24, 1974 to about June
10, 1992 when the LRA during a reconstitution of the titles of [Republic] was initiated, as
evidenced by a report of reconstituting officer Benjamin A. Flestado of that office (Exh. "H",
pp. 214-258, record).
Simply stated, [Republic] may be guilty of LACHES.
xxxx
Perforce, the claim of [Republic] which was probably originally VALID became a STALE
claim as the years went by. Verily, the titles of [Republic] must be cancelled and the titles of
[BPC] must be upheld and declared as good and valid titles and [BPC] is entitled to all the
rights bloosoming [sic] fourth from its dominical right of ownership.
More importantly, the predecessor-in-interest of [BPC] had been long in the actual and
physical possession of the lands in suit, while that of the predecessor-in-interest of
[Republic] was not in the actual possession of the land before the sale to [Republic]. On the

other hand, [BPC] immediately after the sale in its favor took actual, physical and peaceful
possession of the land in suit to the exclusion of all others. It has no knowledge, actual or
constructive that said parcels of land were sold to the [Republic]. When it registered the
sale, there was no inscription in the Land Registry that the same parcels of land were earlier
sold to the [Republic]. Hence, there was and is a continuing good faith on the part of
[BPC]. (Article 1544, NCC; Cruz vs Cabana, 129 SCRA 656).
In the same Decision, the RTC found certain irregularities in TCTs No. 200629 and 200630
in the name of Servando and that the said TCTs should be cancelled, without prejudice to
the rights and interests of BPC. The RTC discussed the matter in this wise
We shall now dwell on the validity of the titles TCT Nos. 200629 and 200630, issued in the
name of Servando Accibal on July 24, 1974 by the Register of Deeds of Quezon City. The
LRA report dated 10 June 1992 (Exh. H, pp. 214-258, record) is competent proof that
indeed said titles must be cancelled. In short, the LRA found after due investigation that the
said titles of Servando Accibal were issued with certain irregularities. It recommended the
cancellation therefore, of TCT Nos. 200629 and 200630, to which the court concurs, as said
report must be accorded due respect and in the absence of fraud or irregularities that
attended the investigation, which the Court finds none, the same must be persuasive, if not
conclusive. Moreover, herein defendant Servando Accibal because of his failure to answer,
despite extension of time given him, failed to file his answer. Upon motion of [Republics]
counsel, he was declared as in default and since then, he never asked the court to lift and
set aside the default order. There is no way, his title must be cancelled. For one thing, he
was not able to present evidence to controvert the recommendation of LRA to cancel his
titles. For another, Servando Accibal is deemed to have impliedly admitted the irregularities
that attended the issuance of his aforestated titles.
However, the cancellation of the titles of Servando Accibal, would not affect the rights and
interests of [BPC] as the latter is declared to be a purchaser in good faith and for value.
MORE, under the circumstances of the case, and even when the titles of Servando Accibal
are cancelled, the titles of [BPC] are still good and indefeasible titles, as it is settled rule that
good titles may be sustained even when the seller has spurious titles.
As for the intervention of ERDC, the RTC addressed the same as follows
Finally, we shall next discuss the claim of intervenor EL-VI Realty and Development
Corporation. A close reading from the Joint Venture Agreement dated January 16, 1992,
shows that in case of litigation, intervenor Realty Corporation shall have the right to suspend
all development activities and the development period of 5 years shall automatically be
suspended until such time as the said case is finally settled/decided (Exh. "5" and Annex "A"
answer in intervention pp. 109-114). Upon the signing of the said agreement the amount of
P1,500,000.00 was received by [BPC] as advance payment of the 50-50 sharing basis in
the sales proceeds. During the pre-trial conference, herein intervenor tried to enforce a
supplemental agreement dated October 15, 1992, by filing a motion for a writ of preliminary
injunction with prayer for the issuance of a restraining order. Resolution of the same was

held in abeyance to await the decision to be rendered, after [BPC] assured intervenor herein
that it will abide by and strictly comply with its commitments arising from the aforesaid
agreement, after proper accounting is made therefore. Herein intervenor admits that another
financier-developer has entered the area due to the delay of the project caused by the filing
of the present case.
MORE, due to the filing of the present case, herein intervenor was reluctant to further
finance the project because of its big exposure already made. Hence, intervenors works
and other activities in the area was suspended in accordance with their Joint Venture
Agreement.
Perforce, there is compelling necessity for a proper accounting, more particularly its
substantial exposure to the project, on a quantum meruit basis, in fairness to all concerned
and involved parties in the project, including but not limited to the present contractordeveloper of the area.
Finally, the RTC concluded that
A FORTIORARI, the environmental setting and factual scenario of the case, in relation to its
legal ambience will show that the great preponderance of evidence lies in favor of [BPC].
(Section 01, Rule 133, Revised Rules of Court), and the motion for summary judgment is
granted. The hearing as to damages, including attorneys fees shall be scheduled soonest
possible.
WHEREFORE, under cool reflection and prescinding from the foregoing, judgment is
rendered as follows:
1. Ordering the Register of Deeds of Quezon City to cancel Transfer Certificates
of Title No. 275443 and 288417 issued in the name of the [Republic] covering the
lots in suit. However, [Republic] being a purchaser in good faith, and based on
considerations of equity and justice Barstowe Philippine[s] Corporation is ordered
to re-imburse and pay [Republic], the sum of P12,333,280.00 representing the
purchase price from the vendor, First Philippine Holdings Corporation soonest
possible;
2. Ordering the Register of Deeds of Quezon City to officially and finally cancel
from his records, Transfer Certificates of Title Nos. 200629 and 200630 issued in
the name of Servando Accibal, on July 24, 1974, covering the same lots in suit
(Exh. "F" and "G", pp. 210-213, record).
3. Declaring herein defendant Barstowe Philippines Corporation as the absolute
owner in fee simple title over the lots in suit, as evidenced by Transfer
Certificates of Title Nos. 30829, 30830, 30831 and 30832 of the land records of
Quezon City, all issued on February 19, 1991 and the said titles are further more

declared valid, existing and indefeasible titles of [BPC] and as such is entitled to
all the dominical rights bloosoming [sic] forth from its ownership over the lots in
suit.
4. Ordering [BPC] to abide by and strictly comply with the terms and conditions of
the supplemental Agreement entered into by it with herein intervenor EL-VI
Realty and Development Corporation dated October 15, 1992, after proper
accounting is made;
5. Perforce, the Register of Deeds of Quezon City is likewise ordered to cancel
any and all encumbrances annotated on said titles of defendant corporation
including, but not limited to the lis pendens notice filed by the [Republic], if any;
6. The hearing as to damages, including the claim for attorneys fees shall be
scheduled soonest.
7. Considering the admissions and agreements of the parties during the pre-trial
conference, which are considered judicial admissions, this decision acquires the
nature of one based on a compromise agreement. Perforce, the Court declares
this decision to be immediately final and executory.
8. No pronouncement as to costs.
Despite the promulgation of the foregoing Decision by the RTC on 22 December 1992, the
proceedings in Q-92-11806 were still far from over; significant developments still took place
thereafter.
ERDC sought the execution of paragraph 4 of the dispositive portion of the RTC Decision
dated 22 December 1992. In an Order,17 dated 13 January 1993, the RTC issued a writ of
execution in favor of ERDC, and a notice of levy on execution was accordingly made on the
subject lots. In a dialogue held between the counsels for BPC and ERDC in the chamber of
the RTC Judge on 26 February 1993, an amicable settlement was reached whereby BPC
agreed to settle the claim of ERDC in the form of developed subdivision lots in Parthenon
Hills, subject to proper accounting.18 BPC offered to ERDC 40 developed subdivision lots in
Parthenon Hills, valued at P18,543,000.00, representing 65% of the total claims (prior to
proper accounting) of ERDC, which amounted to P28,787,306.32. However, ERDC refused
the offer of BPC and demanded that it be paid the total amount of its claims. It also brought
to the attention of the RTC that, in violation of their Joint Venture Agreement, BPC
contracted another realty developer for the development of Parthenon Hills. Thus, ERDC
opposed the lifting of the notice of levy on execution on the subject lots for the protection of
its interests. In an Order,19 dated 17 March 1993, the RTC found that BPC already
substantially complied with the terms of its agreement with ERDC and that the rights and
interests of the latter were well-protected and safeguarded. In the same Order, the RTC
lifted and set aside the notice of levy on execution on the subject lots. However, on 20 April

1993, ERDC filed a Motion for Contempt 20 against BPC and informed the RTC that BPC,
fraudulently, maliciously, and in bad faith, already sold 36 of the 40 subdivision lots it earlier
offered to ERDC by accepting downpayments thereon of only 30% of the selling price. Upon
further investigation, it discovered that of the four remaining lots, two were vacant while the
other two were reserved. ERDC subsequently filed two other motions: (1) A Motion, 21 dated
29 April 1993, to set for trial the claim of ERDC for damages. Said motion was granted, and
the RTC set the hearing on 16 September 1993, at 8:30 a.m., 22 but upon the motion of the
counsel for BPC, the hearing was reset to 7 October 1993; 23 and (2) A Motion,24 dated 6
September 1993, for the issuance of a partial writ of execution for the undisputed amount of
P18,543,000.00, representing 65% of the total claims of ERDC. Unfortunately, the records
no longer show the succeeding incidents concerning these motions.
In a Motion for Leave to Intervene 25 dated 8 March 1993, and the attached Complaint in
Intervention,26 dated 10 March 1993, Kadakilaan Estate expressed its intent to intervene in
Civil Case No. Q-92-11806. It anchored its claims on the contention that the subject lots
were already registered as private property under the Spanish Mortgage Law since 18 May
1891, and under the Torrens System of Registration since 31 August 1907, by the
predecessors-in-interest of Kadakilaan Estate. The subject lots were supposedly included in
a vast track of land covered by Titulo de la Propiedad de Terrenos No. 01-4 in the name of
Doa Petra Rodriguez, who transferred the same to her son, Don Gonzalo Yanesa y
Rodriguez. Kadakilaan Estate came into ownership and possession of the vast track of land,
including the subject lots, by virtue of its successive sales from Don Gonzalo Yanesa y
Rodriguez to Doa Lourdez Rodriguez Yanesa, and from the latter to Kadakilaan Estate.
Kadakilaan Estate further alleged that the Original Certificate of Title (OCT) No. 333, from
which the TCTs of both BPC and the Republic were ultimately derived, was null and void ab
initio, and that the TCTs of BPC and the Republic were spurious and likewise null and void
ab initio, and without any probative value. Kadakilaan Estate prayed for judgment declaring
it the owner of the subject lots; directing the other parties to respect its ownership,
possession, rights and interests over the subject lots; and ordering the other parties to pay
just compensation, damages, and attorneys fees. The RTC, in an Order 27 dated 27 April
1993, denied the Motion for Leave to Intervene and rejected the Complaint in Intervention of
Kadakilaan Estate for the following reasons
New intervenor Kadakilaan Estate alleges that the titles of the [Republic] and [Antonio,
Servando, and BPC] are all falsified, spurious in origin and null and void ab initio, as the
property in question were already registered as private properties of [Kadakilaan Estates]
predecessors-in-interest, under Spanish Mortgage law since May 18, 1891, and under the
Torrens System, Act No. 496, as amended, in Titulo dela propriedad de Terrenos No. 01-4.
If this is clearly so, then [Kadakilaan Estate] is attacking the validity of the titles of [Republic]
and [Antonio, Servando, and BPC] in this case. It is settled rule that titles registered under
the Torrens System cannot be the subject of a collateral attack. Perforce, the remedy of
[Kadakilaan Estate] is to file a separate action. For, if the intervention is allowed at this late
stage of the proceedings, then it will cause unnecessary delay in the soonest termination of
this case.

MORE, the law and the rules as well as jurisprudence on the matter, will only allow in the
courts discretion, intervention, before or during the trial. Certainly NOT after the trial and
with more reason intervention may no longer be allowed after the decision has been
rendered as in the present case.
In the meantime, on 4 January 1993, the Republic filed a Notice of Appeal 28 of the RTC
Decision, dated 22 December 1992. The RTC, in an Order,29 dated 16 February 1993,
denied the same. It reasoned that
Considering these judicial dimensions and acquiescence of the [Republic] in open court
during the hearings held and during the pre-trial conference, the court in its dispositive
portion of the questioned decision, declared it to be a judgment based on a compromise
agreement which by operation of law becomes immediately executory.
It is unfortunate that despite the above declarations of the court [Republic] failed to ask for a
clarification of the said declarations, by way of a motion for reconsideration of the decision
based on fraud, mistake or duress mandated by the rules.
The notice of appeal must be denied due course.

seeks to protect here can be amply protected in an appropriate action [Kadakilaan Estate]
may later bring.
In a Decision,32 dated 29 June 1994, the Court of Appeals granted the Republics Petition for
Certiorari and Mandamus, ruling in this wise
We rule for [Republic]. Respondent Courts conclusion lost sight of the nature of a
compromise agreement, and the circumstances under which a judgment based on a
compromise may be rendered.
xxxx
Guided by the aforecited law and jurisprudence in point, it can be safely concluded that
neither mere silence or acquiescence by the [Republic] in open court during the hearing nor
[Republics] stipulation of facts, marking of exhibits, alleged admission of Exhibit 6 which
contains [BPCs] offer of compromise during the pre-trial, be properly considered as a
compromise agreement. Had the parties really intended to enter into a compromise to end
their case, they could have executed and submitted a compromise agreement for the
approval of the trial court. But no such step was taken.

xxxx

xxxx

WHEREFORE, prescinding from the foregoing, the notice of appeal filed by plaintiff is
rejected and denied due course.

Records readily show that due to lack of an amicable settlement or any compromise
agreement, the respondent judge directed the parties to present their documentary exhibits
so as to facilitate the trial; no longer for the purpose of settling the case. Evidently, there
was no explicit agreement nor any reciprocal concession between the parties with an end in
view of terminating the litigation. Absence of these essential elements of a compromise
inevitably results in the absence of a valid compromise agreement. (Merced vs. Roman
Catholic Archbishop, L-24614, August 17, 1967, 20 SCRA 1077). Consequently, the opinion
of respondent Judge that his December 22, 1992 Decision had the nature of a judgment
based on compromise, cannot be upheld.

From the foregoing RTC Order, the Republic filed with the Court of Appeals a Petition for
Certiorari and Mandamus (with Urgent Prayer for Temporary Restraining Order and/or Writ
of Preliminary Injunction), docketed as CA-G.R. SP No. 30647. The Republic primarily
questioned the denial of its Notice of Appeal by the RTC in its Order, dated 16 February
1993, on the basis that the RTC Decision of 22 December 1992 constitutes a compromise
agreement, and is immediately final and executory. The Court of Appeals issued a writ of
preliminary injunction30 enjoining the RTC from implementing and enforcing its Order, dated
16 February 1993, during the pendency of CA-G.R. SP No. 30647 or until otherwise
directed by the appellate court. Apparently, from the denial by the RTC of its Motion for
Leave to Intervene and the rejection of its Complaint in Intervention in Civil Case No. Q-9211806, the Kadakilaan Estate again filed a Motion for Leave to Intervene in CA-G.R. SP No.
30647, which in a Resolution,31 dated 13 September 1993, the Court of Appeals also denied
on the following grounds
We find the stance of [Republic] and [BPC] well-grounded. Not only is [Kadakilaan Estate]
precluded by estoppel from filing the present motion, after failing to challenge before this
Court or the Supreme Court the trial courts denial of subject motion for intervention, on April
27, 1993; it is too late for [Kadakilaan Estate] to come in at this stage of the present
litigation. Furthermore, as aptly put by the [Republic] the alleged rights [Kadakilaan Estate]

So also, the doctrine relied on by respondents that a compromise agreement constitutes the
law between the parties and a judgment based thereon is immediately final, executory and
not appealable, is inapplicable under the premises.
xxxx
WHEREFORE, the petition is GRANTED; the questioned order dated 16 February 1993 is
SET ASIDE; and respondent court is hereby ordered to give due course to [Republics]
Notice of Appeal in Civil Case No. Q-92-11806. Costs against [BPC].

This Court, in its Resolution, dated 6 February 1995, issued in G.R. No. 117969, in effect,
sustained the afore-mentioned Decision of the Court of Appeals.
CA-G.R. CV No. 47522
Finally, the Republic was allowed to appeal the RTC Decision, dated 22 December 1992, in
Civil Case No. Q-92-11806, to the Court of Appeals, where it was docketed as CA-G.R. CV
No. 47522. In a Decision,33 dated 8 August 1997, the Court of Appeals found in favor of the
Republic, and disposed thus
WHEREFORE, premises considered, plaintiff-appellant Republic of the Philippines appeal
is GRANTED. Except for paragraph 2 of the dispositive portion of the decision appealed
from declaring TCT Nos. 200629 and 200630 in the name of Servando Accibal null and void
and ordering the Register of Deeds of Quezon City to cancel said TCT Nos. 200629 and
200630, the appealed decision is REVERSED and SET ASIDE and a new one entered:
(a) declaring and affirming the validity of TCT Nos. 288417 and 275443 of the
Registry of Deeds of Quezon City in the name of appellant Republic of the
Philippines and that appellant Republic has indefeasible title to the property
covered thereby;
(b) declaring TCT Nos. 30829, 30830, 30831 and 30832 also of the Registry of
Deeds of Quezon City in the name of Barstowe Philippines Corporation null and
void and ordering the Register of Deeds of Quezon City to cancel said titles;
(c) ordering Barstowe Philippines Corporation to surrender to the Register of
Deeds of Quezon City the owners duplicate certificates of title of TCT Nos.
30829, 30830, 30831 and 30832 for cancellation;
(d) enjoining defendant-appellee Barstowe Philippines Corporation and
intervenor EL-VI Realty Development Corporation from exercising any act of
ownership or possession of the land in question; and
(e) remanding the case to the court of origin for further proceedings for
determination of the crossclaim of intervenor EL-VI Realty and Development
Corporation against defendant-appellee Barstowe Philippines Corporation.
There is no pronouncement as to costs.
The Motion for Reconsideration filed by BPC was denied by the Court of Appeals in a
Resolution,34 dated 18 March 1998.

G.R. No. 133110

Aggrieved, BPC came before this Court via a Petition for Review on Certiorari35 under Rule
45 of the Rules of Court, dated 28 April 1998, raising the sole issue of who between BPC
and the Republic has a better title over the subject lots. BPC prays that this Court rule in its
favor, and reverse and set aside the Court of Appeals Decision, dated 8 August 1997, in CAG.R. CV No. 47522, based on the following grounds
THE HONORABLE COURT OF APPEALS COMMITTED GRAVE ERROR IN NOT
CONSIDERING THE GOOD FAITH OF [BPC] THOUGH IT WAS ADMITTED BY
[REPUBLIC] DURING THE PRE-TRIAL CONFERENCE.
THE HONORABLE COURT OF APPEALS COMMITTED GRAVE ERROR IN UPHOLDING
THE VALIDITY OF THE TITLE OF [REPUBLIC] OVER THAT OF [BPC.]
THE HONORABLE COURT OF APPEALS COMMITTED GRAVE ERROR IN ORDERING
[BPC] TO SURRENDER ITS TITLE TO THE REGISTER OF DEEDS FOR
CANCELLATION[.]
THE HONORABLE COURT OF APPEALS ERRED IN ENJOINING [BPC] FROM
EXERCISING ACTS OF OWNERSHIP OVER THE SUBJECT PARCEL OF LAND[.]
THE HONORABLE COURT OF APPEALES [sic] ERRED IN APPLYING THE CALALANG
CASE (231 SCRA 88) AS IT IS NOT APPLICABLE TO THE CASE AT BAR[.]
THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN NOT FINDING
[REPUBLIC] GUILTY OF ESTOPPEL BY LACHES[.]
After the Republic filed its Comment, dated 29 October 1998, several parties again sought
to intervene in the case.
Winnie U. Nicolas (Nicolas), through her sister and attorney-in-fact, Ditas Felicitas NicolasAgbulos (Nicolas-Agbulos), and Edgardo Q. Abesamis (Abesamis), filed their respective
Petitions for Intervention, dated 22 October 1998 and 9 December 1998, respectively.
Nicolas-Agbulos invokes the provisions of the Rules of Court on the joinder of indispensable
parties and necessary parties for the complete determination of all possible issues, not only
between the parties themselves but also as regards to other persons who may be affected
by the judgment. Nicolas-Agbulos contends that she was a buyer in good faith of Lots No.
27 and 28, Block 13, of Parthenon Hills, covered by TCTs No. 76497 and 76498,
respectively, of the Quezon City Register of Deeds, derived from TCTs No. 30830, 30831,
and 30832 in the name of BPC. Nicolas-Agbulos had already partially paid BPC for Lots No.
27 and 28 in the amount of P1,500,000.00, and the balance of P800,000.00 was already

deposited in a trust account in the name of BPC with the Far East Bank and Trust Company
(FEBTC). She bought Lots No. 27 and 28 after relying on the face of the TCTs of BPC which
were intact and subsisting in the records of the Quezon City Register of Deeds, and on the
authority granted to BPC by several government agencies, such as the HLURB, LRA, and
the Register of Deeds, for the subdivision, development, and sale of the subject lots to
private individuals. She only came to know, through her sister and attorney-in-fact, NicolasAgbulos, that the TCTs of BPC covering the subject lots, which comprised the Parthenon
Hills, were being assailed in Civil Case No. Q-92-11806 pending before the RTC. Nicolas
inquiry on the matter was answered by BPC with an assurance that despite the "bad
publicity," Parthenon Hills was an on-going project and that she should continue paying her
installments. Acting cautiously, Nicolas-Agbulos decided that instead of paying the balance
of the purchase price for Lots No. 27 and 28 directly to BPC, she would open a trust
account with FEBTC in the name of BPC where she would deposit Nicolas-Agbulos
succeeding installment payments. Nicolas-Agbulos was compelled to intervene in the
instant case because BPC made no mention of the fact that it had already sold numerous
subdivision lots in Parthenon Hills to innocent purchasers for value, either through absolute
or installment sales. She thus sought a ruling upholding the title of BPC, and recognizing
and protecting the rights of Nicolas as an innocent purchaser for value of Lots No. 27 and
28.36
Abesamis seeks to intervene in the present case as an indispensable party since no
complete and conclusive determination can be had therein, which shall be legally binding
and effective on Abesamis, unless he be allowed to intervene. Abesamis claims to have
acquired by purchase Lot No. 16, Block 4, of Parthenon Hills, for the purchase price of
P720,000.00, and evidenced by a Deed of Absolute Sale dated 9 June 1993. BPC
processed and secured TCT No. 92270 covering Lot No. 16 in Abesamis name. He only
learned that the subject lots comprising the Parthenon Hills, including his Lot No. 16, was
mired in controversy, when he attended an emergency meeting of the Homeowners
Association of Parthenon Hills. He asserts that, being a bona fide purchaser and holder of a
legitimate and indefeasible title to Lot No. 16, he had valid and enforceable rights against
both BPC and the Republic.37
A third Petition in Intervention, dated 8 February 1999, was filed by spouses Jacinto H.
Santiago, Jr. and Arlene C. Santiago (spouses Santiago). The spouses Santiago aver that,
doing business as ACS Trading, they entered into a supply agreement with Proven
International Development Corporation (PIDC), which had a construction contract with BPC,
for the development of Parthenon Hills. The spouses Santiago agreed to accept lots in
Parthenon Hills as payment for the construction materials they supplied BPC since the latter
showed them clean TCTs to the subject lots, and HLURB licenses and permits to develop
Parthenon Hills. In payment for the construction materials delivered, and financial
assistance and various other professional services rendered by the spouses Santiago to
BPC, the latter initially executed in their favor 15 Deeds of Assignment for 15 subdivision
lots in Parthenon Hills. The TCTs for the 15 subdivision lots were transferred in the name of
the spouses Santiago free from any lien or encumbrance. The spouses Santiago mortgaged
13 of the subdivision lots with the Planters Development Bank and sold the remaining two to
different buyers. Thereafter, BPC again executed in favor of the spouses Santigao 71 Deeds

of Assignment over 71 subdivision lots in Parthenon Hills. When the spouses Santiago
attempted to transfer the TCTs covering the 71 subdivision lots to their names, they
discovered that the TCTs of BPC already bore the annotation of the notice of lis pendens.
The Quezon City Register of Deeds cancelled the TCTs of BPC covering the 71 subdivision
lots and issued new ones in the names of the spouses Santiago, still bearing the annotation
of the notice of lis pendens. The spouses Santiago claim that they were unable to intervene
earlier in this case because of the pendency of the case filed by BPC against them,
docketed as Civil Case No. 93-18231, with the Quezon City RTC, Branch 84, for the
annulment of the last 71 Deeds of Assignment. This case had since been dismissed. The
spouses Santiago invoke that they have sufficient interest in the present case which would
necessarily be affected by the resolution/decision thereof, and they must necessarily
intervene herein to protect their interest. The spouses Santiago pray for this Court to
declare the assignment to them by BPC of the subdivision lots as valid, and to direct both
BPC and the Republic to recognize and respect their rights and interest. 38
BPC supports the intervention in the case by Nicolas-Agbulos and Abesamis. It explains
that its failure to mention that it has already practically sold all the subdivision lots in
Parthenon Hills was not by design, but by mere oversight. 39 However, BPC opposes the
intervention of the spouses Santiago claiming that the latter are not indispensable parties to
the case; they acquired their TCTs through fraudulent means; and Civil Case No. 93-18231
which it instituted against the spouses Santiago was dismissed by the Quezon City RTC,
Branch 84, without prejudice. According to BPC, the supply agreement for construction
materials was between the spouses Santiago and PIDC, so that it could not be enforced
against BPC. This issue, as well as the validity of the 71 Deeds of Assignment over 71
subdivision lots supposedly executed by BPC in favor of the spouses Santiago, requires the
holding of a trial, not a mere intervention. 40
The Republic opposed all efforts of other parties to intervene in the case. The legal interests
of Nicolas-Agbulos, Abesamis, and the spouses Santiago are totally dependent on the
alleged right of ownership of BPC, and the issues they raised are similar to those raised by
BPC. The fact that Nicolas-Agbulos and Abesamis are purchasers in good faith will not
render their titles valid and indefeasible. The titles of Servando from whom BPC acquired its
titles and from whom, in turn, Nicolas-Agbulos and Abesamis, derived their titles, were
found to be spurious; and the spring cannot rise higher than its source. 41
In the interim, BPC filed its Reply dated 22 January 1999, to the Comment of the Republic.
This Court, in a Resolution, dated 22 March 1999, granted the motion of the Republic for the
issuance of a temporary restraining order enjoining BPC from selling the remaining unsold
portions of the subject lots and from allowing buyers to enter and occupy portions thereof. 42
Thereafter, BPC,43 the Republic,44 spouses Santiago,45 Abesamis,46 and Nicolas-Agbulos,47
filed their respective Memoranda.

However, even before the case could be submitted for decision, Servandos heirs, namely
Virgilio V. Accibal (Virgilio), Virginia A. Macabudbod (Virginia), and Antonio, filed an Urgent
Ex Parte Motion to Defer Resolution of the same. Soon after, they filed a Petition for New
Trial, dated 23 May 2001. 48 Although Servandos heirs concede that the period allowed for
the filing of a motion to set aside the judgment and grant a new trial under Rule 37, Section
1 of the Rules of Court, had already lapsed, on grounds of justice and equity, they still move
that this Court grant their Petition. Servandos heirs were allegedly prevented from
participating in Civil Case No. Q-92-11806 before the RTC by the fraudulent
misrepresentations of Rev. Father Antonio O. Ipo (Ipo), BPC President, together with the
BPC counsel, who convinced the nave Antonio that there was no need to worry about the
case filed by the Republic against them and to hire another counsel as the BPC counsel
shall represent all of them. Unknown to Servandos heirs, the BPC counsel neither
represented them nor included them in the Answer he filed on behalf of BPC, thus,
Servandos heirs were declared in default by the RTC. Because of the extrinsic fraud
perpetrated upon them and their excusable negligence, Servandos heirs should be granted
a new trial, otherwise, they would be deprived of their constitutional right to due process of
law. According to Servandos heirs, neither BPC nor the Republic was a purchaser in good
faith who acquired clean titles to the subject lots. The BPC President Ipo, hoodwinked
Antonio into agreeing to convey the subject lots to BPC in exchange for 51% of its capital
stock. However, despite acquiring titles to the subject lots, BPC failed to transfer the
promised 51% of its capital stock. On the other hand, the TCTs of FPHC, the Republics
predecessor-in-interest, were of doubtful origin; and the Republics acquisition of the subject
lots from FPHC was anomalous in the sense that it purchased the said property through
ordinary sale when it could have easily expropriated the same.
Without formally intervening in the case at bar, Sariling Sikap Pabahay (SSP), through its
President, Elias V. Esraita, submitted to this Court a letter, 49 dated 26 August 2002, together
with other documents to disprove the validity of the titles of Servando and his heirs to the
subject lots. SSP is a cooperative formed by the urban poor to help secure for its members
award from the government of titles to the portions of the subject lots which they are
presently occupying. It presented the affidavit of a certain Edith C. Mantaring, 50 who attests
that the Accibals are still misrepresenting themselves as owners of the subject lots and
fraudulently selling portions thereof to unsuspecting buyers.
This Courts Ruling
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.

It is alleged by BPC and Servandos heirs that Servando was issued TCTs No. 200629 and
200630 on 24 July 1974. However, there is an absolute dearth of information and proof as
to how Servando acquired ownership and came into possession of the subject lots.
An investigation conducted by the LRA revealed even more irregularities which raised
serious doubts as to the validity and authenticity of TCTs No. 200629 and 200630. The LRA
Report, dated 10 June 1992, submitted by Investigator Benjamin A. Flestado (Flestado),
found the said certificates of titles spurious after a very detailed and exhaustive analysis of
the evidence available.
First, it should be noted that despite letters sent by Investigator Flestado to BPC President
Ipo, Servando, and Antonio, requesting copies of documents to support the issuance of
TCTs No. 200629 and 200630, they failed to file a reply and furnish him with the documents
requested. A certain Atty. Justino Z. Benito (Atty. Benito) appeared before Investigator
Flestado claiming to be the counsel for BPC and promising to contact Servandos heirs. Yet,
even by the time the LRA Report was finalized on 10 June 1992, Atty. Benito still failed to
submit the documents requested. Instead, he wrote letters insisting that TCTs No. 200629
and 200630 be returned to the Quezon City Register of Deeds since these certificates "were
detached and transferred to [your LRA central] office for no cogent reason or purpose;" and
his client, BPC, "is a transferee in good faith and for value, and its titles unchallenged."
Second, although the 109-D forms on which TCTs No. 200629 and 200630 were printed
appeared to be genuine, and determined to have been issued to the Quezon City Register
of Deeds on 5 July 1974, the signature therein of the Quezon City Register of Deeds Atty.
Nestor N. Pea (Atty. Pea) was forged. No less than Atty. Pea himself refuted that the
signatures on TCTs No. 200629 and 200630 were his. In his sworn statement, he noted
A. At a glance, I am definitely sure that the signatures appearing here are not mine. My
attention is invited on the loop, on the starting point of the signature. The loop should be
sharp on the last portion of my signature. The portion going-up starts from a point and is
also sharp because that represents hypen [sic] on letter n. I notice in these titles my
surname is typed as PENA and not PEA. If ever there is no in the typewriter, I used to
add hypen [sic] over the letter n. Besides, my position here is indicated as Deputy Register
of Deeds. I never signed titles as Deputy Register of Deeds, during my time; and if ever a
title was presented indicating my position as Deputy Register of Deeds, I would erase the
word Deputy. Moreso, the pen used here was a sign-pen. I never used a signpen, as
shown in the other 5 titles I identified earlier.
His employment records revealed that Atty. Pea was appointed as the Quezon City
Register of Deeds on 27 May 1968, and served as such until his retirement in August of
1980, so that at the time when he supposedly signed TCTs No. 200629 and 200630 on 24
July 1974, he was the Quezon City Register of Deeds, not the Deputy Register of Deeds.

Third, even the then incumbent Quezon City Register of Deeds Samuel Cleofe (RD Cleofe)
and Deputy Register of Deeds Edgardo Castro (DRD Castro) believed that TCTs No.
200629 and 200630 were spurious. According to RD Cleofe, the size of the area covered by
the TCTs made him highly suspicious of the same. In Quezon City, only a few people own
big tracts of land, namely, the Aranetas, Tuazons, etc. Commonly, ordinary individuals own
only 300 to 2,000 square meters of land. Both RD Cleofe and DRD Castro identified
differences in the signatures and designation of Atty. Pea appearing on the questionable
TCTs No. 200629 and 200630 compared to those on five other admittedly authentic TCTs. 51.

The NBI Questioned Documents Report No. 585-891 was even in accordance with the
finding in the LRA Report that the 109-D forms on which TCTs No. 200629 and 200630
were printed seemed to be genuine. The NBI concluded that the words "109-D" and the
serial numbers printed on the forms were not altered. The NBI did a very limited
examination of the genuineness of the forms on which TCTs No. 200629 and 200630 were
printed, but it did not look into the authenticity of Atty. Peas signature (which was the
subject of NBI Questioned Documents Report No. 636-991, dated 31 March 1992,
mentioned in the LRA Report) or the accuracy of the entries made therein.

Fourth, the National Bureau of Investigation (NBI), upon request of Investigator Flestado,
conducted an examination and issued Questioned Documents Report No. 636-991, dated
31 March 1992, wherein it noted significant differences in the handwriting characteristics
between the standard/sample signatures of Atty. Pea and those appearing on TCTs No.
200629 and 200630, i.e., in the manner of execution, direction/movement of strokes, and
other identifying details. The NBI concluded that "[t]he questioned and the standard/sample
signatures of [N]estor N. Pea were NOT WRITTEN by one and the same person."

The LRA Report, dated 10 June 1992, of Investigator Flestado was submitted as evidence
before the RTC. It must be emphasized that the LRA Report was extensive and thorough.
Its findings are sufficiently supported by independent and reliable proof. The BPC failed to
present evidence to refute the same. The LRA Report deserves great weight sufficient to
overcome the presumption that TCTs No. 200629 and 200630 were genuine, authentic, and
indefeasible.54

Finally, Investigator Flestado made inquiries with the Land Management Bureau (LMB)
regarding the consolidation-subdivision plan Pcs-2480 and plan Psu-32606 of Lots 34 and
40 (the subject lots) as described in TCTs No. 200629 and 200630. LMB Geodetic Surveys
Division Chief Privadi J.G. Dalire, in a letter, dated 29 November 1991, informed
Investigator Flestado that LMB had no records of Pcs-2480, while the original copy of Psu32606 is no longer available as it had been badly damaged. Thus, there was no record in
the LMB that Lots 34 and 40, Psu-32606, were in fact consolidated and then subdivided into
Lots 3, 4, 5, and 6 pursuant to plan Pcs-2480, as mentioned in TCTs No. 200629 and
200630.
To rebut the foregoing findings of LRA Investigator Flestado, BPC presented, in support of
the authenticity and validity of TCTs No. 200629 and 200630, the LRA Resolution, 52 dated 4
November 1991, in Consulta No. 1957, and NBI Questioned Documents Report No. 585891,53 dated 2 September 1991. A careful study of the said documents does little to support
the position of BPC.
The LRA Resolution in Consulta No. 1957 merely allowed the registration of the rescission
of a Joint Venture Agreement on TCTs No. 200629 and 200630 despite the initial adverse
finding that the said certificates were of doubtful authenticity. It did not make any categorical
finding as to the authenticity or validity of the TCTs. In fact, the last paragraph of the said
Resolution elucidated that
This resolution, however, should be understood to be limited to the issue of registrability
of the instrument sought to be registered and is without prejudice to any action, if
warranted, that may be filed in court assailing the validity or authenticity of the certificate of
titles. (Emphasis supplied.)

It having been established that TCTs No. 200629 and 200630 were forged and spurious,
their reconstitution was also attended with grave irregularities. Once more, this Court relies
on the findings in the LRA Report, dated 10 June 1992, of Investigator Flestado. Quezon
City RD Cleofe; the unnamed Chief of the LRA Micrographics and Computer Division; and
Records Officer Viterbo Cahilig of the Quezon City Register of Deeds, all confirmed that
there were no records of any applications for reconstitution of TCTs No. 200629 and 200630
in the name of Servando. It would seem that an LRA employee, Cartographer Rovil Ruiz
(Ruiz), made it appear that there were applications for reconstitution of TCTs No. 200629
and 200630 filed, and which were included in Folder 1614. When Folder 1614 was
inspected, TCTs No. 200629 and 200630 were not included in its table of contents; and
although the said folder did have 44 missing pages, the missing pages pertain to the
supporting documents of other TCTs, and there was no showing that TCTs No. 200629 and
200630 and the applications for reconstitution thereof were among these missing pages.
Ruiz undertook by himself the computation of the tie-lines of the subject lots as described in
TCTs No. 200629 and 200630, the plotting, and examination of the titles. The LRA Report
thus recommended that Ruiz be administratively charged for grave misconduct, it appearing
that he was the one who facilitated the administrative reconstitution of TCTs No. 200629
and 200630.
In contrast, the Republic was able to supply Investigator Flestado with the documents
supporting the transfer of the titles to the subject lots from FPHC to the Republic, among
which were the TCTs of FPHC, the Deeds of Sale executed by FPHC to the Republic, notice
to the real property owners within 300-meter radius from the area, receipts for payment of
registration fees, and payment order for the documentary stamp tax on the sales. TCTs No.
275443 and 288417 in the name of the Republic were included in LRA Folder No. 1976-B,
together with other certificates of title in the name of the Republic. One of the applications
filed by the Republic was docketed as Application for Reconstitution No. 41869. The Chief
of the LRA Micrographics and Computer Division confirmed that the applications for
reconstitution of TCTs No. 275443 and 288417 by the Republic were recorded in the
computerized Administrative Reconstitution System.

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. Only
Servandos heirs, in their Petition for New Trial, attempted to raise doubts as to the titles of
the Republic to the subject lots by averring that the transfer thereof from FPHC to the
Republic was highly irregular because the latter could have acquired the property by
expropriation. Such an averment is totally baseless. Expropriation as the means by which
the State can acquire private property is always the remedy of last resort. Expropriation lies
only when it is made necessary by the opposition of the owner of the property to the sale or
by the lack of any agreement as to the price. 55 There being, in the present case, valid and
subsisting contracts between the FPHC, the previous owner, and the Republic, the buyer,
for the purchase of the subject lots at an agreed price, there was no reason for the
expropriation.
In consideration of all the foregoing findings, it is indubitable that TCTs No. 275443 and
288417 of the Republic covering the subject lots are authentic and valid, while TCTs No.
200629 and 200630 of Servando covering the same property are not.
However, BPC maintains that it was a purchaser in good faith, for value and without any
inkling about any flaw from Servandos titles. It points out that it purchased the subject lots
from Servando on 8 February 1989 and registered the same on 19 February 1991, way
before the titles of Servando were declared null by the RTC on 22 December 1992. BPC
relies on this Courts ruling in Tenio-Obsequio v. Court of Appeals,56 to wit
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. In consonance with this accepted legal
definition, petitioner Consorcia Tenio-Obsequio is a purchaser in good faith. There is no
showing whatsoever nor even an allegation that herein petitioner had any participation,
voluntarily or otherwise, in the alleged forgery.
xxxx
The main purpose of the Torrens system is to avoid possible conflicts of title to real estate
and to facilitate transactions relative thereto by giving the public the right to rely upon the
face of a Torrens certificate of title and to dispense with the need of inquiring further, except
when the party concerned has actual knowledge of facts and circumstances that should
impel a reasonable cautious man to make such further inquiry. 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 total cancellation of the
certificate. The effect of such an outright cancellation would be to impair public confidence in
the certificate of title, for everyone dealing with property registered under the Torrens
system would have to inquire in every instance as to whether the title has been regularly or
irregularly issued by the court. Every person dealing with 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 beyond the certificate to determine the condition of the property.
xxxx
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 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-ininterest were found to be forged and spurious.
This Court finds in the negative.
Foremost is the fact that there seem to be two documents by which titles to the subject lots
were transferred from the Accibals to BPC: (1) A Deed of Conveyance, dated 8 February
1989, executed by Servando in favor of BPC, transferring to the latter titles to the subject
lots in exchange for 51% of its capital stock; and (2) A Deed of Conveyance, dated 10
October 1990, executed by Antonio in favor of BPC, transferring to the latter the very same
property in exchange for 2,450 shares in BPC. It should be noted that even prior to these
Deeds of Conveyance, Servando already transferred the subject lots by way of a Deed of
Absolute Sale, dated 10 June 1988, in favor of his son Antonio, with the concurrence of his
other heirs. Thus, by the time Servando executed the Deed of Conveyance over the subject
lots in favor of BPC on 8 February 1989, he no longer had any right to the said property,
having sold the same to Antonio. It was probably to rectify this mistake that a second Deed
of Conveyance was executed by Antonio on 10 October 1990. Comparing all these transfer
documents, the LRA Report, dated 10 June 1992, prepared by Investigator Flestado noted
that Servandos Tax Account Number (TAN) in the Deed of Conveyance, dated 8 February
1989, which he executed over the subject lots in favor of BPC, was "A2140-M1746-A-1;"
while in the Deed of Sale, dated 10 June 1988, which he executed over the subject lots in
favor of Antonio, his TAN was "4110-241-R." Moreover, despite being executed a year apart,
Servando had the same residence certificate (No. 5901393, issued at Quezon City, on 6
April 1988) appearing in both documents.

Furthermore, 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 No. 200629
and 200630 were burnt in the said fire. Servandos heirs sought the administrative
reconstitution of of TCTs No. 200629 and 200630 only in December 1990. The two Deeds of
Conveyance over the subject lots were executed in favor of BPC by Servando and Antonio
on 8 February 1989 and 10 October 1990, respectively, both prior to the administrative
reconstitution of TCTs No. 200629 and 200630. If BPC bought the subject lots after TCTs
No. 200629 and 200630 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 No. 200629 and
200630, or even if there were, without the original copies of the said TCTs which were
stored in the Quezon City Register of Deeds and purportedly destroyed in the fire, there
would have been no way for BPC to have verified the owners duplicate copies.
In addition, without the original copies and owners duplicate copies of TCTs No. 200629
and 200630, BPC had to rely on the reconstituted certificates, issued on 12 December
1990, bearing the following numbers: TCTs No. RT-23687 (for TCT No. 200629) and RT23688 (for TCT No. 200630). 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 No. 200629 and 200630 were
reconstituted administratively, hence, extrajudicially. In contrast to the judicial reconstitution
of a lost certificate 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. 60
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.61
What is more, BPC again invokes LRA Resolution, dated 4 November 1991, in Consulta No.
1957, and NBI Questioned Documents Report No. 585-891, dated 2 September 1991 as
proof that it did inquire or investigate into the validity and authenticity of Servandos titles.
But again, it should be noted that these documents were issued after BPC already acquired
the subject lots from Servando and Antonio.

Lastly, there are serious doubts that BPC acquired the subject lots for value. The Republic
bought the subject lots from FPHC for the combined price of P12,333,280.00. BPC, on the
other hand, supposedly acquired the subject lots from Servando on 8 February 1989 in
exchange for 51% of the capital stock of BPC, with a subscription value of P6,000,000.00.
In the LRA Report, dated 10 June 1992, Investigator Flestado pointed out that in the Articles
of Incorporation, dated 16 January 1989, of BPC, submitted to the Securities and Exchange
Commission (SEC) on 20 January 1989, BPC had an authorized capital stock of only
P1,000,000.00, which was divided into 10,000 shares, with a par value of P100.00 each;
and the amount of capital stock actually subscribed was P250,000.00. Therefore, in 1989,
fifty-one percent of the capital stock of BPC would be 5,100 shares, with an aggregate value
of only P510,000.00. BPC is not saved by the second Deed of Conveyance, executed more
than a year later by Antonio, again transferring to BPC the subject lots in exchange for
2,450 shares in the latter, with the alleged value of P49,000.000.00. Unless BPC is able to
present proof that it applied for, and the SEC approved, a substantial increase in its capital
stock, then this Court can only assume that its capital stock remained the same as the year
before, 2,450 shares in BPC, with a par value of P100.00 each, amount only to
P245,000.00. This Court cannot find a plausible explanation for the discrepancy in the value
of 2,450 shares of BPC between the P245,000.00 it has hereby computed and the
P49,000,000.00 claimed by BPC.
For the above-stated reasons, 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.
At this point, it would seem that the Republic does hold better titles to the subject lots.
Nonetheless, another level of transactions involving the subject lots was brought by
intervenors to the attention of this Court.
From the reconstituted TCTs No. RT-23687 (200629) and RT- 23688 (200630) in the name
of Servando, BPC derived and was issued by the Quezon City Register of Deeds new
certificates, TCTs No. 30829, 30830, 30831 and 30832, in its own name. It was able to
secure the necessary licenses and permits from the appropriate government agencies to
subdivide, develop, and sell the subject lots as Parthenon Hills. The Parthenon Hills project
was openly advertised and marketed, and a substantial portion of the subject lots was
already sold by BPC to the public.
Except for the spouses Santiago, BPC recognizes that the intervenors, Nicolas-Agbulos and
Abesamis, together with other legitimate homeowners in Parthenon Hills, acquired from
BPC titles to their respective subdivided lots in good faith and for value. Even the Republic
could not refute that the individuals who acquired lots in Parthenon Hills from BPC were
purchasers in good faith and for value. It insists, however, that these buyers could not
acquire better titles to the property than its predecessors-in-interest BPC, Servando, and
Antonio since the spring cannot rise higher than its source. The law must protect and
prefer the lawful holder of registered title over the transferee of a vendor bereft of any
transmissible rights.62

It is true that the general rule is that a forged deed is a nullity and conveys no title. 63 A
forged deed may be defined as an instrument which purports to have been executed by the
person or persons whose signatures appear thereon, but which, in fact, was not executed,
and the signatures thereon had been merely imitated so as to give them the deceptive
appearance of genuineness.64 In the case at bar, it was not any of the deeds of transfer or
conveyance of the subject lots which was forged, but TCTs No. 200629 and 200630
themselves. The forged TCTs, nevertheless, just as a forged deed, can make it appear that
one had title, right, or interest to the land, when in truth, he had none, to the deprivation of
the rightful owner. It has been recognized that while a forged instrument is null and void and
of no effect as between the parties, it may nevertheless be the root of a good title; so that
the title of a registered owner who has taken it bona fide and for value, is not affected by
reason of his claiming through someone, that the registration was void because it had been
procured by the presentation of a forged instrument. 65
The forged TCTs No. 200629 and 200630 were later administratively reconstituted, and
although an investigation would show that their reconstitution was also attended with
irregularities, TCTs No. RT-23687 (200629) and RT-23688 (200630) appear, on either face,
to have been duly approved by the LRA and issued by the Quezon City Register of Deeds.
With the cancellation of the reconstituted TCTs and the issuance of new ones, TCTs No.
30829, 30830, 30831, and 30832, in the name of BPC, any trace of forgery or irregularity as
to BPCs titles was eliminated. TCTs No. 30829, 30830, 30831, and 30832 were clean, at
least, until the annotation therein of the notice of lis pendens of the Republic on 21 October
1992. It is a settled doctrine that one who deals with property registered under the Torrens
system need not go beyond the same, but only has to rely on the certificates of title. He is
charged with notice only of such burdens and claims as are annotated on the certificates. 66
Herein intervenors, Nicolas-Agbulos and Abesamis, before purchasing subdivision lots in
Parthenon Hills, looked into the TCTs of BPC and found nothing on the face thereof to raise
doubts or suspicions as to their validity and authenticity. Besides, BPC was the holder of
licenses and permits to subdivide, develop, and sell the subject lots as Parthenon Hills,
issued by the appropriate government agencies, primarily HLURB.
This is definitely a situation which constitutes an exception to the general rule that estoppel
cannot lie against the government. The Republic v. Court of Appeals,67 provides an
illuminating discourse on when such an exception applies, thus
Is the immunity of the government from laches and estoppel absolute? May it still recover
the ownership of lots sold in good faith by a private developer to innocent purchasers for
value, notwithstanding its approval of the subdivision plan and its issuance of separate
individual certificates of title thereto?
xxxx
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 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.
Likewise time-settled is the doctrine that where innocent third persons, relying on the
correctness of the certificate of title, acquire rights over the property, courts cannot disregard
such rights and order the cancellation of the certificate. Such cancellation would impair
public confidence in the certificate of title, for everyone dealing with property registered
under the Torrens system would have to inquire in every instance whether the title has been
regularly issued or not. This would be contrary to the very purpose of the law, which is to
stabilize land titles. Verily, all persons dealing with registered land may safely rely on the
correctness of the certificate of title issued therefor, and the law or the courts do not oblige,
them to go behind the certificate in order to investigate again the true condition of the
property. They are only charged with notice of the lions and encumbrances on the property
that are noted on the certificate.
When private respondents-purchasers bought their lots from St. Jude, they did not have to
go behind the titles thereto to verify their contents or search for hidden defects or inchoate
rights that could defeat their rights to said lots. Although they were bound by liens and
encumbrances annotated on the titles, private respondents purchasers could not have had
notice of defects that only an inquiry beyond the face of the titles could have satisfied. The
rationale for this presumption has been stated thus:
"The main purpose of the Torrens System is to avoid possible conflicts of title to real estate
and to facilitate transactions, relative thereto by giving the public the right to rely upon the
face of a Torrens Certificate of Title and to dispense with the need of inquiring further,
except when the party concerned had actual knowledge of facts and circumstances that
should impel a reasonably cautious man to make such further inquiry (Pascua v. Capuyoc,
77 SCRA 78). Thus, where innocent third persons relying on the correctness of the
certificate thus issued, acquire rights over the property, the court cannot disregard such
rights (Director of Land v. Abache, et al., 73 Phil. 606)."

In another case, this Court further said:

"The Torrens System was adopted in this country because it was believed to be the most
effective measure to guarantee the integrity of land titles and to protect their indefeasibility
once the claim of ownership is established and recognized. If a person purchases a piece of
land on the assurance that the seller's title thereto is valid, he should not run the risk of
being told later that his acquisition was ineffectual after all. This would not only be unfair to
him. What is worse is that if this were permitted, public confidence in the system would be
eroded and land transactions would have to be attended by complicated and not necessarily
conclusive investigations and proof of ownership. The further consequence would be that
land conflicts could be even more abrasive, if not even violent. The Government,
recognizing the worthy purposes of the Torrens System, should be the first to accept the
validity of titles issued thereunder once the conditions laid down by the law are satisfied.
[Italics supplied.]

matters, best proven and established before the RTC, which could receive evidence in
support of each partys position during trial. Should the RTC find that the spouses Santiago
have indeed acquired the subdivision lots in good faith and for value, then their titles thereto
shall, likewise, be valid and indefeasible even against that of the Republic. However, in a
contrary case, should the RTC find that the spouses Santiago acquired the subdivision lots
by fraud, then titles thereto return to BPC.
Though estoppel by laches may lie against the Republic when titles to the subdivision lots
are already in the names of the respective innocent purchasers for value from BPC, it may
not be used by BPC to defeat the titles of the Republic as regards the subdivision lots which
remain unsold and the titles to which are still in the name of BPC. It must be recalled that
BPC is not a purchaser in good faith. Estoppel, being an equitable principle, may only be
invoked by one who comes to court with clean hands. 69
Pertinent provisions of the New Civil Code concerning builders in bad faith provide that

Petitioner never presented proof that the private respondents who had bought their lots from
St. Jude were buyers in bad faith. Consequently, their claim of good faith prevails. A
purchaser good faith and for value is one who buys the property of another without notice
that some other person has a right to or an interest in such property; and who pays a full
and fair price for the same at the time of such purchase or before he or she has notice of
the claims or interest of some other person. Good faith is the honest intention to abstain
from taking any unconscientious advantage of another.
It also bears to emphasize that the subject lots covered by TCTs No. 30829, 30830, 30831,
and 30832 were already subdivided, and new TCTs were issued in the names of the buyers
of each subdivision lot. To order the cancellation of all these derivative titles and the return
of the subdivision lots to the Republic shall irrefragably be unjust to the innocent purchasers
for value and shall wreak havoc on the Torrens System.
Anyway, the Republic is not without recourse. It can claim damages from BPC, found herein
not to be a buyer of the subject lots in good faith. For its loss of portions of the subdivision
lots to innocent purchasers from BPC, the Republic may recover from BPC the purchase
price it paid to FPHC corresponding to such subdivision lots, with interest at 6% per annum
from 26 March 1992 (the date when the Republic instituted its petition for the cancellation of
the TCTs of Servando, Antonio, and BPC) until finality of this Decision, and 12% per annum
thereafter until fully paid.68
Although this Court allowed in the case at bar the intervention of Nicolas-Agbulos and
Abesamis, and recognized their title to their respective subdivision lots in Parthenon Hills as
purchasers in good faith and for value from BPC, it could not do the same for the spouses
Santiago, for the reason that BPC contested their claim that they had acquired titles to the
subdivision lots in Parthenon Hills in good faith and for value, and further asserted that the
spouses Santiago acquired the said subdivision lots by fraudulent means. The allegations
by the spouses Santiago of good faith, on one hand, and by BPC of fraud, on the other, in
the acquisition by the spouses Santiago of the subdivision lots in question, are factual

ART. 449. He who builds, plants, or sows in bad faith on the land of another, loses what is
built, planted or sown without right to indemnity.
ART. 450. The owner of the land on which anything has been built, planted or sown in bad
faith may demand the demolition of the work, or that the planting or sowing be removed, in
order to replace things in their former condition at the expense of the person who built,
planted or sowed; or he may compel the builder or planter to pay the price of the land, and
the sower the proper rent.
ART. 451. In cases of the two preceding articles, the landowner is entitled to damages from
the builder, planter or sower.
ART. 452. The builder, planter or sower in bad faith is entitled to reimbursement for the
necessary expenses of preservation of the land.
Hence, as far as the subdivision lots still in the name of BPC are concerned, the Republic
has the option to either (1) recover the said lots and demand that BPC demolish whatever
improvements it has made therein, to return the lots to their former condition, at the expense
of BPC; or (2) compel BPC to pay the price of the land. The choice can only be made by the
Republic, as the rightful owner of the said subject lots. Should the Republic choose the first
option, BPC is under the obligation to return the possession of the subdivision lots to the
Republic and surrender its corresponding TCTs for cancellation and issuance of new ones
in the name of the Republic. Should the Republic select the second option, then BPC shall
pay the Republic the purchase price that the latter had paid to FPHC corresponding to such
subdivision lots, with interest at 6% per annum from 26 March 1992 until finality of this
Decision, and 12% per annum thereafter until fully paid. In either option, the Republic may
claim damages from BPC, while BPC cannot seek indemnity from the Republic for any

improvements made on the subdivision lots, except if these constitute as necessary

expenses for the preservation of the land, for which it shall still be entitled to reimbursement.
As for the Petition for New Trial filed by Servandos heirs, this Court dismisses the same for
lack of legal basis. Section 1, Rule 37 of the Rules of Court reads
SECTION 1. Grounds of and period for filing motion for new trial or reconsideration. Within
the period for taking an appeal, the aggrieved party may move the trial court to set aside the
judgment or final order and grant a new trial for one or more of the following causes
materially affecting the substantial rights of the said party:
(a) Fraud, accident, mistake or excusable negligence which ordinary prudence
could not have guarded against and by reason of which such aggrieved party has
probably been impaired in his rights; or
(b) Newly discovered evidence, which he could not, with reasonable diligence,
have discovered and produced at the trial, and which if presented would probably
alter the result.
Servandos heirs themselves admit that the period allowed for the filing of a motion to set
aside the judgment and grant a new trial under the afore-quoted provision had already
lapsed, but they still pray that this Court give due course to their Petition on the grounds of
justice and equity.
In Malipol v. Lim Tan,70 this Court ruled that
It is within the sound discretion of the court to set aside an order of default and to permit a
defendant to file his answer and to be heard on the merits even after the reglementary
period for the filing of the answer has expired, but it is not error, or an abuse of discretion,
on the part of the court to refuse to set aside its order of default and to refuse to accept the
answer where it finds no justifiable reason for the delay in the filing of the answer. In the
motions for reconsideration of an order of default, the moving parry has the burden of
showing such diligence as would justify his being excused from not filing the answer within
the reglementary period as provided by the Rules of Court, otherwise these guidelines for
an orderly and expeditious procedure would be rendered meaningless. Unless it is shown
clearly that a party has justifiable reason for the delay, the court will not ordinarily exercise
its discretion in his favor.
In the present case, the late Servando and Antonio were already declared in default by the
RTC on 31 July 1992, after their supposed counsel failed to file an answer to the Republics
petition for cancellation of title. Nothing was heard from Servandos heirs even after the
promulgation of the RTC Decision on 22 December 1992, and the Court of Appeals
Decision, dated 8 August 1997, until they filed their Petition for New Trial, dated 23 May
2001, before this Court, or nine years from the date they were declared in default.

According to Servandos heirs, due to the extrinsic fraud committed by the President and
counsel of BPC, they were prevented from participating in the proceedings before the trial
court. They allegedly relied on the assurance of the President and counsel of BPC that the
latter shall also represent them and their interests in the subject lots in the case.
This allegation of fraud by Servandos heirs has no leg to stand on. It should be recalled that
the late Servando and Antonio were represented by a counsel at the beginning of the
proceedings before the RTC. Their counsel even submitted two consecutive motions for
extension of time to file the appropriate pleadings. There was no explanation provided as to
why, despite the grant of said motions, the counsel still failed to file an answer to the
Republics petition for cancellation of title. It is also contrary to common human experience
that Servandos heirs, by the mere assurance of the President and counsel of BPC, adopted
a totally hands-off attitude in a case where they supposedly have substantial interest. There
is no showing during the nine years when they were not participating in the court
proceedings, that they, at least, inquired into or followed-up on the status of the case with
BPC. Such blind trust in the President and counsel of BPC is surely difficult to comprehend,
especially if this Court takes into account the contention of Servandos heirs that BPC failed
to deliver the shares of stock in exchange for the subject lots. What is apparent to this Court
is not the alleged fraud committed by BPC but, rather, the inexcusable negligence of
Servandos heirs when it came to protecting their titles, rights, and interests to the subject
lots, if indeed, there were still any.
Worth reproducing herein, is the conclusion 71 made by the Court of Appeals on Servandos
titles
On the strength of the LRA report, Exhibit H (Record, pp. 214-258), the court a quo found
TCT Nos. 200629 and 200630, in the name of Servando Accibal and from which the titles of
defendant-appellee Barstowe Philippines Corporation were derived, spurious, and ordered
the Register of Deeds of Quezon City "to officially and finally cancel (said titles) from his
records" (Par. 2, dispositive portion, Decision, p. 16; Rollo, p. 71). As explained by the
court a quo:
"We shall now dwell on the validity of the titles, TCT Nos. 200629 and 200630, issued in
the name of Servando Accibal on July 24, 2974 by the Register of Deeds of Quezon City.
The LRA Report dated 10 June 1992 (Exh. H, pp. 214-258, record) is competent proof that
indeed said titles must be cancelled. In short, the LRA found after due investigation that the
said titles of Servando Accibal were issued with certain irregularties (sic). It recommended
the cancellation therefore, of TCT Nos. 200629 and 200630, to which the court concurs, as
said report must be accorded due respect and in the absence of fraud or irregularties (sic)
that attended the investigation, which the Court finds none, the same must be persuasive, if
not conclusive. Moreover, herein defendant Servando Accibal because of his failure to
answer, despite extension of time given him, plaintiffs counsel, he was declared as in
default since then, he never asked the court to lift and set aside the default order. There is
no way, his title may be cancelled. For one thing, he was not able to present evidence to
controvert the recommendation of the LRA to cancel his titles. For another, Servando

Accibal is deemed to have impliedly admitted the irregularties (sic) that attended the
issuance of his aforestated titles." (Decision, pp. 14-15; Rollo, pp. 69-70)

recover from BPC the purchase price the Republic paid to FPHC for the said
portions, plus appropriate interests; and

This portion of the decision ordering the cancellation of TCT Nos. 200629 and 200630 in the
name of Servando Accibal was not appealed nor assigned as a counter-assigment of error
in the brief of Barstowe Philippines Corporation; hence, is now final.

(8) As portions of the subject lots are still unsold and their corresponding
certificates of title remain in the name of BPC, the Republic may exercise two
options: (a) It may recover the said portions and demand that BPC demolish
whatever improvements it has made therein, so as to return the said portions to
their former condition, at the expense of BPC. In such a case, certificates of title
of BPC over the said portions shall be cancelled and new ones issued in the
name of the Republic; or (b) It may surrender the said portions to BPC and just
compel BPC to reimburse the Republic for the purchase price the Republic paid
to FPHC for the said portions, plus appropriate interest.

Thus, the findings of this Court as to the rights of the parties involved in the present case
are summarized as follows
(1) The certificates of title acquired by Servando over the subject lots were forged
and spurious, and such finding made by both the RTC and Court of Appeals is
already final and binding on Servandos heirs;
(2) BPC did not acquire the subject lots in good faith and for value, and its
certificates of title cannot defeat those of the Republics;
(3) As between BPC and the Republic, the latter has better titles to the subject
lots being the purchaser thereof in good faith and for value from FPHC;
(4) However, considering that the subject lots had already been subdivided and
the certificates of title had been issued for each subdivision lot, which were
derived from the certificates of title of BPC, it is more practical, convenient, and in
consonance with the stability of the Torrens System that the certificates of title of
BPC and its derivative certificates be maintained, while those of the Republics
be cancelled;
(5) Estoppel lies against the Republic for granting BPC governmental permits
and licenses to subdivide, develop, and sell to the public the subject lots as
Parthenon Hills. Relying on the face of the certificates of title of BPC and the
licenses and permits issued to BPC by government agencies, innocent
individuals, including intervenors Nicolas-Agbulos and Abesamis, purchased
subdivision lots in good faith and for value;
(6) The claims of the intervenor spouses Santiago that they acquired portions of
the subject lots in good faith and for value still need to be proven during trial
before the court a quo. Unlike the claims of intervenors Nicolas-Agbulos and
Abesamis, which BPC admitted, the claims of the spouses Santiago were
opposed by BPC on the ground of fraud;
(7) Certificates of title over portions of the subject lots, acquired by purchasers in
good faith and for value, from BPC, are valid and indefeasible, even as against
the certificates of title of the Republic. The Republic, however, is entitled to

WHEREFORE, premises considered, the instant Petition is hereby PARTLY GRANTED.

The Decision, dated 8 August 1997, of the Court of Appeals in CA-G.R. CV No. 47522 is
hereby REVERSED and SET ASIDE and a new one is hereby entered, as follows:
(1) In view of the finding that the Transfer Certificates of Title No. 200629 and
200630 in the name of Servando Accibal are forged and spurious, the Quezon
City Register of Deeds is ORDERED to officially and finally cancel the same from
his records;
(2) In view of the finding that the respondent Republic of the Philippines was a
purchaser in good faith of the subject lots from Philippine First Holdings
Corporation, but also taking into consideration the functioning and stability of the
Torrens System, as well as the superior rights of subsequent purchasers in good
faith and for value of portions of the subject lots subdivided, developed, and
sold as Parthenon Hills from petitioner Barstowe Philippines Corporation
(a) The Quezon City Register of Deeds is ORDERED to cancel
Transfer Certificates of Title No. 275443 and 288417 in the name of
respondent Republic of the Philippines;
(b) The respondent Republic of the Philippines is ORDERED to
respect and recognize the certificates of title to the subject portions of
land in the name of purchasers of good faith and for value from
petitioner Republic of the Philippines;
(c) Petitioner Barstowe Philippines Corporation is ORDERED to pay
respondent Republic of the Philippines for the purchase price the
latter paid to First Philippine Holdings Corporation corresponding to
the portions of the subject lots which are already covered by
certificates of title in the name of purchasers in good faith and for

value from petitioner

appropriate interest;

Barstowe

Philippines

Corporation,

plus

(d) The respondent Republic of the Philippines is ORDERED to

choose one of the options available to it as regards the portions of the
subject lots which remain unsold and covered by certificates of title in
the name of petitioner Barstowe Philippines Corporation, either (i) To
recover the said portions and demand that petitioner Barstowe
Philippines Corporation demolish whatever improvements it has made
therein, so as to return the said portions to their former condition, at
the expense of the latter, or (ii) To surrender the said portions to
petitioner Barstowe Philippines Corporation and compel the latter to
reimburse the respondent Republic of the Philippines for the purchase
price it had paid to First Philippine Holdings Corporation for the said
portions, plus appropriate interest. Regardless of the option chosen by
the respondent Republic of the Philippines, it is ORDERED to
reimburse petitioner Barstowe Philippines Corporation for any
necessary expenses incurred by the latter for the said portions;
(2) In view of the finding that petitioner Barstowe Philippines Corporation is not a purchaser
and builder in good faith, and depending on the option chosen by respondent Republic of
the Philippines concerning the portions of the subject lots which remain unsold and covered
by certificates of title in the name of petitioner Barstowe Philippines Corporation, as
enumerated in paragraph 2(d) hereof
(a) In case the respondent Republic of the Philippines chooses the option under
paragraph 2(d)(i) hereof, petitioner Barstowe Philippines Corporation is
ORDERED to demolish whatever improvements it has made on the said
portions, so as to return the same to their former condition, at its own expense.
The Quezon City Register of Deeds is also ORDERED to cancel the certificates
of title of petitioner Barstowe Philippines Corporation over the said portions and
to issue in lieu thereof certificates of title in the name of respondent Republic of
the Philippines;
(b) In case the respondent Republic of the Philippines chooses the option under
paragraph 2(d)(ii) hereof, petitioner Barstowe Philippines Corporation is
ORDERED to reimburse the petitioner Republic of the Philippines for the
purchase price it had paid to First Philippine Holdings Corporation for the said
portions, plus appropriate interest;
(c) Petitioner Barstowe Philippines Corporaton is ORDERED to pay appropriate
damages to respondent Republic of the Philippines as may be determined by the
trial court;

(3) In view of the finding that intervenors Winnie U. Nicolas-Agbulos and Edgardo Q.
Abesamis are purchasers in good faith and for value of portions of the subject lots
subdivided, developed, and sold as Parthenon Hills from petitioner Barstowe Philippines
Corporation, it is DECLARED that their certificates of title are valid and indefeasible as to all
parties;
(4) In view of the finding that the Petition for New Trial filed by the heirs of Servando Accibal,
namely, Virgilio V. Accibal, Virginia A. Macabudbud, and Antonio V. Accibal, lacks merit, the
said Petition is DISMISSED; and
(5) The case is REMANDED to the court of origin for determination of the following
(a) The validity of the claims, and identification of the purchasers, in good faith
and for value, of portions of the subject lots from petitioner Barstowe Philippines
Corporation, other than intervenors Winnie U. Nicolas-Agbulos and Edgardo Q.
Abesamis, whose titles are to be declared valid and indefeasible;
(b) The identification of the portions of the subject lots in the possession and
names of purchasers in good faith and for value and those which remain with
petitioner Barstowe Philippines Corporation;
(c) The computation of the amount of the purchase price which respondent
Republic of the Philippines may recover from petitioner Barstowe Philippines
Corporation in consideration of the preceding paragraphs hereof;
(d) The types and computation of the damages recoverable by the parties; and
(e) The computation and award of the cross-claim of EL-VI Realty and
Development Corporation against petitioner Barstowe Philippines Corporation.
SO ORDERED.

____________________________
* As per September 3, 2007 raffle.
WHEREFORE, the Court hereby declares the applicant, Fermina Castro, of legal age,
single, Filipino and a resident of 1515 F. Agoncillo St., Corner J. Escoda St., Ermita, Manila,
the true and absolute owner of the land applied for situated in the Municipality of
Paraaque, Province of Rizal, with an area of 17,343 square meters and covered by plan
(LRC) Psu-964 and orders the registration of said parcel of land in her name with her
aforementioned personal circumstances.
Once this decision becomes final and executory, let the corresponding order for the
issuance of the decree be issued.
SO ORDERED.1
Republic of the Philippines
SUPREME COURT
Manila
SECOND DIVISION
G.R. No. 168661

October 26, 2007

ESTATE OF THE LATE JESUS S. YUJUICO, represented by ADMINISTRATORS

BENEDICTO V. YUJUICO and EDILBERTO V. YUJUICO; and AUGUSTO Y. CARPIO,
Petitioners,
vs.
REPUBLIC OF THE PHILIPPINES and the COURT OF APPEALS, Respondents.

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 Decree No. N-150912 was issued by the Land Registration Commission (LRC). 2
Original Certificate of Title (OCT) No. 10215 was issued in the name of Fermina Castro by
the Register of Deeds for the Province of Rizal on May 29, 1974. 3
The land was then sold to Jesus S. Yujuico, and OCT No. 10215 was cancelled. On May 31,
1974,4 Transfer Certificate of Title (TCT) No. 445863 was issued in Yujuicos name, who
subdivided the land into two lots. TCT No. 446386 5 over Lot 1 was issued in his name, while
TCT No. S-293616 over Lot 2 was issued in the name of petitioner Augusto Y. Carpio.

DECISION
VELASCO, JR., J.:

Annotations at the back of TCT No. 446386 show that Yujuico had, at one time or another,
mortgaged the lot to the Philippine Investments System Organization (PISO) and Citibank,
N.A. Annotations in the title of petitioner Carpio reveal the lot was mortgaged in favor of
Private Development Corporation (PDC), Rizal Commercial Banking Corporation (RCBC)
and then Philippine Commercial and Industrial Bank (PCIB) and the Development Bank of
the Philippines (DBP) to secure various loans.

In 1973, Fermina Castro filed an application for the registration and confirmation of her title
over a parcel of land with an area of 17,343 square meters covered by plan (LRC) Psu-964
located in the Municipality of Paraaque, Province of Rizal (now Paraaque City), in the
Pasig-Rizal Court of First Instance (CFI), Branch 22. The application was docketed LRC
Case No. N-8239. 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. Both oppositions
were stricken from the records since the opposition of Dizon was filed after the expiration of
the period given by the court, and the opposition of the Director of Lands was filed after the
entry of the order of general default. After considering the evidence, the trial court rendered
its April 26, 1974 Decision. The dispositive portion reads:

Sometime in 1977, Presidential Decree No. (PD) 1085 entitled Conveying the Land
Reclaimed in the Foreshore and Offshore of the Manila Bay (The Manila-Cavite Coastal
Road Project) as Property of the Public Estates Authority as well as Rights and Interests
with Assumptions of Obligations in the Reclamation Contract Covering Areas of the Manila
Bay between the Republic of the Philippines and the Construction and Development
Corporation of the Philippines (1977) was issued. 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. On January 13, 1989, OCT No. SP 02 was issued in favor of PEA. The
PEA also acquired ownership of other parcels of land along the Manila Bay coast, some of

which were subsequently sold to the Manila Bay Development Corporation (MBDC), which
in turn leased portions to Uniwide Holdings, Inc. 7
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.
On July 24, 1996, 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
docketed as Civil Case No. 96-0317 against the PEA. On May 15, 1998 the parties entered
into a compromise agreement approved by the trial court in a Resolution dated May 18,
1998. On June 17, 1998, the parties executed a Deed of Exchange of Real Property,
pursuant to the compromise agreement, where the PEA property with an area of 1.4007
hectares would be conveyed to Jesus Yujuico and petitioner Carpio in exchange for their
property with a combined area of 1.7343 hectares.
On July 31, 1998, the incumbent PEA General Manager, Carlos P. Doble, informed the OSG
that the new PEA board and management had reviewed the compromise agreement and
had decided to defer its implementation and hold it in abeyance following the view of the
former PEA General Manager, Atty. Arsenio Yulo, Jr., that the compromise agreement did
not reflect a condition of the previous PEA Board, requiring the approval of the Office of the
President. The new PEA management then filed a petition for relief from the resolution
approving the compromise agreement on the ground of mistake and excusable negligence.
The petition was dismissed by the trial court on the ground that it was filed out of time and
that the allegation of mistake and excusable negligence lacked basis.
The PEA fared no better in the Court of Appeals (CA), as the petition was dismissed for
failure to pay the required docket fees and for lack of merit.
The matter was raised to the Supreme Court in Public Estates Authority v. Yujuico 8 but
PEAs petition was denied, upholding the trial courts dismissal of the petition for relief for
having been filed out of time. The allegation of fraud in the titling of the subject property in
the name of Fermina Castro was not taken up by the Court.
On June 8, 2001, in a Complaint for Annulment and Cancellation of Decree No. N-150912
and its Derivative Titles, entitled Republic of the Philippines v. Fermina Castro, Jesus S.
Yujuico, August Y. Carpio and the Registry of Deeds of Paraaque City docketed as Civil
Case No. 01-0222, filed with the Paraaque City RTC, respondent Republic of the
Philippines, through the OSG, alleged that when the land registered to Castro was surveyed
by Engr. H. Obreto on August 3, 1972 and subsequently approved by the LRC on April 23,
1973, the land was still a portion of Manila Bay as evidenced by Namria Hydrographic Map
No. 4243, Surveys to 1980; 1st Ed/. January 9/61: Revised 80-11-2; that Roman Mataverde,

the then OIC of the Surveys Division, Bureau of Lands, informed the OIC of the Legal
Division that "[w]hen projected on Cadastral Maps CM 14 deg. 13 N-120 deg, 59E, Sec.2-A
of Paraaque Cadastre (Cad. 299), (LRC) Psu-964 falls inside Manila Bay, outside Cad.
299"; that then Acting Regional Lands Director Narciso V. Villapando issued a Report dated
November 15, 1973 stating that plan (LRC) Psu-964 is a portion of Manila Bay; that then
Officer-in-Charge, Assistant Director of Lands, Ernesto C. Mendiola, submitted his Comment
and Recommendation re: Application for Registration of Title of FERMINA CASTRO, LRC
Case No. N-8239, dated Dec. 1, 1977, praying that the instant registration case be
dismissed; and that Fermina Castro had no registrable rights over the property.
More significantly, 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. 9
On September 13, 2001, Yujuico and Carpio filed a Motion to Dismiss (With Cancellation of
Notice of Lis Pendens),10 on the grounds that: (1) the cause of action was barred by prior
judgment; (2) the claim had been waived, abandoned, or otherwise extinguished; (3) a
condition precedent for the filing of the complaint was not complied with; and (4) the
complaint was not verified and the certification against forum shopping was not duly
executed by the plaintiff or principal party.
On November 27, 2001, respondent Republic filed an Opposition 11 to the motion to dismiss
to which defendants filed a Reply 12 on January 14, 2002, reiterating the grounds for the
motion to dismiss.
In the August 7, 2002 Order of the RTC, 13 Civil Case No. 01-0222 was dismissed. The trial
court stated that the matter had already been decided in LRC Case No. N-8239, and that
after 28 years without being contested, the case had already become final and
executory.1wphi1 The trial court also found that the OSG had participated in the LRC case,
and could have questioned the validity of the decision but did not. Civil Case No. 01-0222
was thus found barred by prior judgment.
On appeal to the CA, in CA-G.R. CV No. 76212, respondent Republic alleged that the trial
court erred in disregarding that appellant had evidence to prove that the subject parcel of
land used to be foreshore land of the Manila Bay and that the trial court erred in dismissing
Civil Case No. 01-0222 on the ground of res judicata. 14
The CA observed 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.
The appellate court explained that rulings of the Supreme Court have made exceptions in
cases where the findings of the Director of Lands and the Department of Environment and
Natural Resources (DENR) were conflicting as to the true nature of the land in as much as
reversion efforts pertaining foreshore lands are embued with public interest.

C. RESPONDENTS REVERSION CASE SEEKS TO RETRY THE VERY SAME

FACTUAL ISSUES THAT HAVE ALREADY BEEN JUDICIALLY DETERMINED
OVER THIRTY (30) YEARS AGO.
D. THE JURISPRUDENTIAL BASES APPLIED BY THE COURT OF APPEALS
IN ITS QUESTIONED DECISION ARE MISPLACED, CONSIDERING THAT
THEY ARE ALL PREDICATED ON THE ERRONEOUS PREMISE THAT IT IS
UNDISPUTED THAT THE SUBJECT LAND IS PART OF THE PUBLIC DOMAIN.

The dispositive portion of the CA decision reads,

WHEREFORE, premises considered, the present appeal is hereby GRANTED. The
appealed Order dated August 7, 2002 of the trial court in Civil Case No. 01-0222 is hereby
REVERSED and SET ASIDE. The case is hereby REMANDED to said court for further
proceedings and a full-blown trial on the merits with utmost dispatch. 15
Hence, this petition.
The Issues
Petitioners now raise the following issues before this Court:
THE COURT OF APPEALS COMMITTED REVERSIBLE ERROR AND DECIDED A
QUESTION OF SUBSTANCE IN A WAY NOT IN ACCORDANCE WITH LAW AND THE
APPLICABLE DECISIONS OF THE HONORABLE COURT AND HAS DEPARTED FROM
THE ACCEPTED AND USUAL COURSE OF JUDICIAL PROCEEDINGS NECESSITATING
THE HONORABLE COURTS EXERCISE OF ITS POWER OF SUPERVISION
CONSIDERING THAT:
I. THE REVERSAL BY THE COURT OF APPEALS OF THE TRIAL COURTS
APPLICATION OF THE PRINCIPLE OF RES JUDICATA IN THE INSTANT CASE IS
BASED ON ITS ERRONEOUS ASSUMPTION THAT THE SUBJECT LAND IS OF PUBLIC
DOMAIN, ALLEGEDLY PART OF MANILA BAY.
A. IN THE FIRESTONE CASE, THE HONORABLE COURT APPLIED THE
PRINCIPLE OF RES JUDICATA NOTWITHSTANDING ALLEGATIONS OF LACK
OF JURISDICTION OF A LAND REGISTRATION COURT, FORECLOSING ANY
FURTHER ATTEMPT BY RESPONDENT THEREIN, AS IN THE INSTANT
CASE, TO RESURRECT A LONG-SETTLED JUDICIAL DETERMINATION OF
REGISTRABILITY OF A PARCEL OF LAND BASED ON THE SHEER
ALLEGATION THAT THE SAME IS PART OF THE PUBLIC DOMAIN.
B. THE LAND REGISTRATION COURT HAD JURISDICTION TO DETERMINE
WHETHER THE SUBJECT LAND WAS PART OF THE PUBLIC DOMAIN.

II. RESPONDENT IS BARRED BY JURISDICTIONAL ESTOPPEL AND LACHES FROM

QUESTIONING THE JURISDICTION OF THE LAND REGISTRATION COURT.
III. RELIANCE BY THE COURT OF APPEALS ON THE ISOLATED PRONOUNCEMENT
OF THE HONORABLE COURT IN THE PEA CASE IS UNWARRANTED AND
MISLEADING CONSIDERING THAT THE MATTER OF WHETHER RES JUDICATA
APPLIES WITH RESPECT TO THE LAND REGISTRATION COURTS DECISION IN 1974
WAS NOT IN ISSUE IN SAID CASE.
A. THE INSTANT REVERSION CASE IS NOT THE PROPER RECOURSE.
B. THE VALIDITY OF THE COURT-APPROVED COMPROMISE AGREEMENT
15 MAY 1998 HAS ALREADY BEEN AFFIRMED BY THE HONORABLE COURT
IN THE PEA CASE.
IV. EQUITABLE CONSIDERATIONS MANDATE THE APPLICATION OF THE RULE ON
ORDINARY ESTOPPEL AND LACHES IN THE INSTANT CASE AGAINST RESPONDENT.
V. RESPONDENT CANNOT BE GIVEN SPECIAL CONSIDERATION AND EXCUSED FOR
TRANSGRESSING RULES OF PROCEDURE.16
Essentially, the issues boil down to three: (1) Is a reversion suit proper in this case? (2) Is
the present petition estopped by laches? (3) Did the CA erroneously apply the principle of
res judicata?
An action for reversion seeks to restore public land fraudulently awarded and disposed of to
private individuals or corporations to the mass of public domain. 17 This remedy is provided
under Commonwealth Act (CA) No. 141 (Public Land Act) which became effective on
December 1, 1936. Said law recognized the power of the state to recover lands of public
domain. Section 124 of CA No. 141 reads:
SEC. 124. Any acquisition, conveyance, alienation, transfer, or other contract made or
executed in violation of any of the provisions of Sections one hundred and eighteen, one
hundred and twenty, one hundred and twenty one, one hundred and twenty-two, and one

hundred twenty-three of this Act shall be unlawful and null and void from its execution and
shall produce the effect of annulling and cancelling the grant, title, patent, or permit
originally issued, recognized or confirmed, actually or presumptively, and cause the
reversion of the property and its improvements to the State. (Emphasis supplied.)
Pursuant to Section 124 of the Public Land Act, reversion suits are proper in the following
instances, to wit:
1. Alienations of land acquired under free patent or homestead provisions in
violation of Section 118, CA No. 141;
2. Conveyances made by non-Christians in violation of Section 120, CA No. 141;
and
3. Alienations of lands acquired under CA No. 141 in favor of persons not
qualified under Sections 121, 122, and 123 of CA No. 141.
From the foregoing, an action for reversion to cancel titles derived from homestead patents
or free patents based on transfers and conveyances in violation of CA No. 141 is filed by the
OSG pursuant to its authority under the Administrative Code with the RTC. It is clear
therefore that reversion suits were originally utilized to annul titles or patents
administratively issued by the Director of the Land Management Bureau or the Secretary of
the DENR.

should have been dismissed for lack of jurisdiction. The proper court is the CA which is the
body mandated by BP Blg. 129 and prescribed by Rule 47 to handle annulment of
judgments of RTCs.
In Collado v. Court of Appeals, 18 the government, represented by the Solicitor General
pursuant to Section 9(2) of BP Blg. 129, filed a petition for annulment of judgment with the
CA. Similarly in the case of Republic v. Court of Appeals, 19 the Solicitor General correctly
filed the annulment of judgment with the said appellate court.
This was not done in this case. The Republic misfiled the reversion suit with the Paraaque
RTC. It should have been filed with the CA as required by Rule 47. Evidently, the Paraaque
RTC had no jurisdiction over the instant reversion case.
Assuming that the Paraaque RTC has jurisdiction over the reversion case, still the lapse of
almost three decades in filing the instant case, the inexplicable lack of action of the Republic
and the injury this would cause constrain us to rule for petitioners. While it may be true that
estoppel does not operate against the state or its agents, 20 deviations have been allowed. In
Manila Lodge No. 761 v. Court of Appeals, we said:

While CA No. 141 did not specify whether judicial confirmation of titles by a land registration
court can be subject of a reversion suit, the government availed of such remedy by filing
actions with the RTC to cancel titles and decrees granted in land registration applications.

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 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. 21 (Emphasis
supplied.)

The situation changed on August 14, 1981 upon effectivity of Batas Pambansa (BP) Blg.
129 which gave the Intermediate Appellate Court the exclusive original jurisdiction over
actions for annulment of judgments of RTCs.

Equitable estoppel may be 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.

When the 1997 Rules of Civil Procedure became effective on July 1, 1997, it incorporated
Rule 47 on annulment of judgments or final orders and resolutions of the RTCs. The two
grounds for annulment under Sec. 2, Rule 47 are extrinsic fraud and lack of jurisdiction. If
based on extrinsic fraud, the action must be filed within four (4) years from its discovery, and
if based on lack of jurisdiction, before it is barred by laches or estoppel as provided by
Section 3, Rule 47. Thus, effective July 1, 1997, any action for reversion of public land
instituted by the Government was already covered by Rule 47.

In Republic v. Court of Appeals, where the title of an innocent purchaser for value who relied
on the clean certificates of the title was sought to be cancelled and the excess land to be
reverted to the Government, we ruled that "[i]t is only fair and reasonable to apply the
equitable principle of estoppel by laches against the government to avoid an injustice to
innocent purchasers for value (emphasis supplied)." 22 We explained:

The instant Civil Case No. 01-0222 for annulment and cancellation of Decree No. N-150912
and its derivative titles was filed on June 8, 2001 with the Paraaque City RTC. It is clear
therefore that the reversion suit was erroneously instituted in the Paraaque RTC and

Likewise time-settled is the doctrine that where innocent third persons, relying on the
correctness of the certificate of title, acquire rights over the property, courts cannot disregard
such rights and order the cancellation of the certificate. Such cancellation would impair
public confidence in the certificate of title, for everyone dealing with property registered
under the Torrens system would have to inquire in every instance whether the title has been

regularly issued or not. This would be contrary to the very purpose of the law, which is to
stabilize land titles. Verily, all persons dealing with registered land may safely rely on the
correctness of the certificate of title issued therefore, and the law or the courts do not oblige
them to go behind the certificate in order to investigate again the true condition of the
property. They are only charged with notice of the liens and encumbrances on the property
that are noted on the certificate.23
xxxx
But in the interest of justice and equity, neither may the titleholder be made to bear the
unfavorable effect of the mistake or negligence of the States agents, in the absence of
proof of his complicity in a fraud or of manifest damage to third persons. First, the real
purpose of the Torrens system is to quiet title to land to put a stop forever to any question as
to the legality of the title, except claims that were noted in the certificate at the time of the
registration or that may arise subsequent thereto. Second, as we discussed earlier, estoppel
by laches now bars petitioner from questioning private respondents titles to the subdivision
lots. Third, it was never proven that Private Respondent St. Jude was a party to the fraud
that led to the increase in the area of the property after its subdivision. Finally, because
petitioner even failed to give sufficient proof of any error that might have been committed by
its agents who had surveyed the property, the presumption of regularity in the performance
of their functions must be respected. Otherwise, the integrity of the Torrens system, which
petitioner purportedly aims to protect by filing this case, shall forever be sullied by the
ineptitude and inefficiency of land registration officials, who are ordinarily presumed to have
regularly performed their duties.24
Republic v. Court of Appeals is reinforced by our ruling in Republic v. Umali,25 where, in a
reversion case, we held that even if the original grantee of a patent and title has obtained
the same through fraud, reversion will no longer prosper as the land had become private
land and the fraudulent acquisition cannot affect the titles of innocent purchasers for value.
Considering that innocent purchaser for value Yujuico bought the lot in 1974, and more than
27 years had elapsed before the action for reversion was filed, then said action is now
barred by laches.
While the general rule is that an action to recover lands of public domain is imprescriptible,
said right can be barred by laches or estoppel. Section 32 of PD 1592 recognized the rights
of an innocent purchaser for value over and above the interests of the government. 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.
(Emphasis supplied.)
In this petition, the LRC (now LRA), on May 30, 1974, issued Decree No. N-150912 in favor
of Fermina Castro and OCT No. 10215 was issued by the Rizal Registrar of Deeds on May
29, 1974. 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. He
was issued TCT No. 445863 on May 31, 1974. 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 x x x encumbrances which may be subsisting. 26 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.27
All told, a reversion suit will no longer be allowed at this stage.
More on the issue of laches. Laches is 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
time, warranting a presumption that the party entitled thereto has either abandoned or
declined to assert it.28
When respondent government filed the reversion case in 2001, 27 years had already
elapsed from the time the late Jesus Yujuico purchased the land from the original owner
Castro. After the issuance of OCT No. 10215 to Castro, no further action was taken by the
government to question the issuance of the title to Castro until the case of Public Estates
Authority, brought up in the oral argument before this Court on September 6, 2000. 29 We
then held that allegation of fraud in the issuance of the title was not proper for consideration
and determination at that stage of the case.

From the undisputed facts of the case, it is easily revealed that respondent Republic took its
sweet time to nullify Castros title, notwithstanding the easy access to ample remedies
which were readily available after OCT No. 10215 was registered in the name of Castro.
First, it could have appealed to the CA when the Pasig-Rizal CFI rendered a decision
ordering the registration of title in the name of applicant Castro on April 26, 1974. Had it
done so, it could have elevated the matter to this Court if the appellate court affirms the
decision of the land registration court. Second, when the entry of Decree No. N-150912 was
made on May 29, 1974 by the Rizal Register of Deeds, the Republic had one (1) year from
said date or up to May 28, 1975 to file a petition for the reopening and review of Decree No.
N-150912 with the Rizal CFI (now RTC) on the ground of actual fraud under section 32 of
PD 1592. Again, respondent Republic did not avail of such remedy. Third, when Jesus
Yujuico filed a complaint for Removal of Cloud and Annulment of Title with Damages against
PEA before the Paraaque RTC in Civil Case No. 96-0317, respondent could have
persevered to question and nullify Castros title. Instead, PEA undertook a compromise
agreement on which the May 18, 1998 Resolution 30 was issued. PEA in effect admitted that
the disputed land was owned by the predecessors-in-interest of petitioners and their title
legal and valid; and impliedly waived its right to contest the validity of said title; respondent
Republic even filed the petition for relief from judgment beyond the time frames allowed by
the rules, a fact even acknowledged by this Court in Public Estates Authority. Lastly,
respondent only filed the reversion suit on June 8, 2001 after the passage of 27 years from
the date the decree of registration was issued to Fermina Castro.
Such a Rip Van Winkle, coupled with the signing of the settlement with PEA,
understandably misled petitioners to believe that the government no longer had any right or
interest in the disputed lot to the extent that the two lots were even mortgaged to several
banks including a government financing institution. Any nullification of title at this stage
would unsettle and prejudice the rights and obligations of innocent parties. All told, we are
constrained to conclude that laches had set in.
Even granting arguendo that respondent Republic is not precluded by laches from
challenging the title of petitioners in the case at bar, still we find that the instant action for
reversion is already barred by res judicata.
Petitioners relying on Firestone Ceramics, Inc. v. Court of Appeals 31 as a precedent to the
case at bar contend that the instant reversion suit is now barred by res judicata.

A perusal of the facts of the Firestone case and those of the case at bar reveals that the
facts in the two (2) cases are parallel. First, in Firestone and in this case, the claimants filed
land registration applications with the CFI; both claimants obtained decrees for registration
of lots applied for and were issued OCTs. Second, in Firestone, the Republic filed a
reversion case alleging that the land covered by the OCT was still inalienable forest land at
the time of the application and hence the Land Registration Court did not acquire jurisdiction
to adjudicate the property to the claimant. In the instant case, respondent Republic contend
that the land applied for by Yujuico was within Manila Bay at the time of application and
therefore the CFI had no jurisdiction over the subject matter of the complaint. Third, in
Firestone, the validity of the title of the claimant was favorably ruled upon by this Court in
G.R. No. 109490 entitled Patrocinio E. Margolles v. CA. In the case at bar, the validity of the
compromise agreement involving the disputed lot was in effect upheld when this Court in
Public Estates Authority v. Yujuico dismissed the petition of PEA seeking to reinstate the
petition for relief from the May 18, 1998 Resolution approving said compromise agreement.
With the dismissal of the petition, the May 18, 1998 Resolution became final and executory
and herein respondent Republic through PEA was deemed to have recognized Castros title
over the disputed land as legal and valid. In Romero v. Tan,33 we ruled that "a judicial
compromise has the effect of res judicata." We also made clear that a judgment based on a
compromise agreement is a judgment on the merits, wherein the parties have validly
entered into stipulations and the evidence was duly considered by the trial court that
approved the agreement. In the instant case, the May 18, 1998 Resolution approving the
compromise agreement confirmed the favorable decision directing the registration of the lot
to Castros name in LRC Case No. N-8239. Similarly, in Firestone, the Margolles case
confirmed the decision rendered in favor of Gana in Land Registration Case No. 672
ordering the issuance of the decree to said applicant. Fourth, in Firestone, the Supreme
Court relied on the letter of then Solicitor General Francisco Chavez that the evidence of the
Bureau of Lands and the LRC was not sufficient to support an action for cancellation of OCT
No. 4216. In the instant case, both the Solicitor General and the Government Corporate
Counsel opined that the Yujuico land was not under water and that "there appears to be no
sufficient basis for the Government to institute the action for annulment." Fifth, in Firestone,
we ruled that "the Margolles case had long become final, thus the validity of OCT No. 4216
should no longer be disturbed and should be applied in the instant case (reversion suit)
based on the principle of res judicata or, otherwise, the rule on conclusiveness of
judgment."34

We agree with petitioners.

Clearly from the above, Firestone is a precedent case. The Public Estates Authority had
become final and thus the validity of OCT No. 10215 issued to Castro could no longer be
questioned.

The doctrine on precedents is expressed in the latin maximStare decisis et non quieta
movere. Follow past precedents and do not disturb what has been settled. 32 In order
however that a case can be considered as a precedent to another case which is pending
consideration, the facts of the first case should be similar or analogous to the second case.

While we said in Public Estates Authority that the court does not foreclose the right of the
Republic from pursuing the proper recourse in a separate proceedings as it may deem
warranted, the statement was obiter dictum since the inquiry on whether or not the disputed
land was still under water at the time of its registration was a non-issue in the said case.
Even granting for the sake of argument that Firestone is not squarely applicable, still we find
the reversion suit already barred by res judicata.

For res judicata to serve as an absolute bar to a subsequent action, the following requisites
must concur: (1) there must be a final judgment or order; (2) the court rendering it must
have jurisdiction over the subject matter and the parties; (3) it must be a judgment or order
on the merits; and (4) there must be between the two cases, identity of parties, subject
matter and causes of action.35
There is no question as to the first, third and last requisites. The threshold question pertains
to the second requisite, whether or not the then Pasig-Rizal CFI, Branch 22 had jurisdiction
over the subject matter in LRC Case No. N-8239. In Civil Case No. 01-0222, the Paraaque
City RTC, Branch 257 held that the CFI had jurisdiction. The CA reversed the decision of the
Paraaque City RTC based on the assertion of respondent Republic that the Pasig-Rizal
CFI had no jurisdiction over the subject matter, and that there was a need to determine the
character of the land in question.
The Paraaque City RTC Order dismissing the case for res judicata must be upheld.
The CA, in rejecting the dismissal of the reversion case by the Paraaque RTC, relied on
two cases, namely: Municipality of Antipolo v. Zapanta 36 and Republic v. Vda. De Castillo.37

[x x x x]
"Under these circumstances, the certificate of title may be ordered cancelled (Republic vs.
Animas, et al., supra), and the cancellation maybe pursued through an ordinary action
therefore. This action cannot be barred by the prior judgment of the land registration court,
since the said court had no jurisdiction over the subject matter. And if there was no such
jurisdiction, then the principle of res judicata does not apply. [x x x] Certainly, one of the
essential requisites, i.e., jurisdiction over the subject matter, is absent in this case." (Italics
supplied).38
The plain import of Municipality of Antipolo 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. This ruling needs elucidation.
Firmly entrenched is the principle that jurisdiction over the subject matter is conferred by
law.39 Consequently, the proper CFI (now the RTC) under Section 14 of PD 1529 40 (Property
Registration Decree) has jurisdiction over applications for registration of title to land.
Section 14 of PD 1592 provides:

In Municipality of Antipolo, we held that the land registration court had no jurisdiction to
entertain any land registration application if the land was public property, thus:
Since the Land Registration Court had no jurisdiction to entertain the application for
registration of public property of ANTIPOLO, its Decision adjudicating the DISPUTED
PROPERTY as of private ownership is null and void. It never attained finality, and can be
attacked at any time. It was not a bar to the action brought by ANTIPOLO for its annulment
by reason of res judicata.
"[x x x] the want of jurisdiction by a court over the subject matter renders the judgment void
and a mere nullity, and considering that a void judgment is in legal effect no judgment, by
which no rights are divested, from which no rights can be obtained, which neither binds nor
bars any one, and under which all acts performed and all claims flowing out of are void, and
considering, further, that the decision, for want of jurisdiction of the court, is not a decision in
contemplation of law, and hence, can never become executory, it follows that such a void
judgment cannot constitute a bar to another case by reason of res judicata."
xxxx
"It follows that if a person obtains a title under the Public Land Act which includes, by
oversight, lands which cannot be registered under the Torrens System, or when the Director
of Lands did not have jurisdiction over the same because it is a public forest, the grantee
does not, by virtue of the said certificate of title alone, become the owner of the land illegally
included (Republic vs. Animas, 56 SCRA 499, 503; Ledesma vs. Municipality of Iloilo, 49
Phil. 769)."

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. (Emphasis supplied.)
Conformably, the Pasig-Rizal CFI, Branch XXII has jurisdiction over the subject matter of the
land registration case filed by Fermina Castro, petitioners predecessor-in-interest, since
jurisdiction over the subject matter is determined by the allegations of the initiatory
pleadingthe application.41 Settled is the rule that "the authority to decide a case and not
the decision rendered therein is what makes up jurisdiction. When there is jurisdiction, the
decision of all questions arising in the case is but an exercise of jurisdiction." 42
In our view, it was imprecise to state in Municipality of Antipolo that the "Land Registration
Court [has] no jurisdiction to entertain the application for registration of public property x x x"
for such court precisely has the jurisdiction to entertain land registration applications since
that is conferred by PD 1529. 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 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.
Based on our ruling in Antipolo, the threshold question is whether the land covered by the
titles of petitioners is under water and forms part of Manila Bay at the time of the land
registration application in 1974. If the land was within Manila Bay, then res judicata does not
apply. Otherwise, the decision of the land registration court is a bar to the instant reversion
suit.
After a scrutiny of the case records and pleadings of the parties in LRC Case No. N-8239
and in the instant petition, we rule that the land of Fermina Castro is registrable and not part
of Manila Bay at the time of the filing of the land registration application.
The trial courts Decision in 1974 easily reveals the basis for its conclusion that the subject
matter was a dry land, thus:
On February 1, 1974, the applicant presented her evidence before the Deputy Clerk of this
Court and among the evidence presented by her were certain documents which were
marked as Exhibits D to J, inclusive. The applicant testified in her behalf and substantially
declared that: she was 62 years old, single, housekeeper and residing at 1550 J. Escoda,
Ermita, Manila; that she was born on June 3, 1911; that she first came to know of the land
applied for which is situated in the Municipality of Paraaque, province of Rizal, with an area
of 17,343 square meters and covered by plan (LRC) Psu-964 while she was still ten (10)
years old or sometime in 1921; that when she first came to know of the land applied for, the
person who was in possession and owner of said land was her father, Catalino Castro; that
during that time her father used to plant on said land various crops like pechay, mustard,
eggplant, etc.; that during that time, her father built a house on said land which was used by
her father and the other members of the family, including the applicant, as their residential
house; that the land applied for was inherited by her father from her grandfather Sergio
Castro; that Catalino Castro continuously possessed and owned the land in question from
1921 up to the time of his death in 1952; and that during that period of time nobody ever
disturbed the possession and ownership of her father over the said parcel of land; that after
the death of her father in 1952 she left the place and transferred her place of residence but
she had also occasions to visit said land twice or thrice a week and sometimes once a
week; that after she left the land in question in 1952, she still continued possessing said
land, through her caretaker Eliseo Salonga; that her possession over the land in question
from the time she inherited it up to the time of the filing of the application has been
continuous, public, adverse against the whole world and in the concept of an owner; that it
was never encumbered, mortgaged, or disposed of by her father during his lifetime and
neither did she ever encumber or sell the same; that it was declared for taxation purposes
by her father when he was still alive and her father also paid the real estate taxes due to the
government although the receipt evidencing the payment of said real estate taxes for the

property applied for have been lost and could no longer be found inspite of diligent effort
exerted to locate the same.
The other witness presented by the applicant was Emiliano de Leon, who declared that he
was 70 years old, married, farmer and residing at San Jose, Baliwag, Bulacan; that he knew
Catalino Castro, the father of the applicant because said Catalino Castro was his neighbor
in Tambo, Paraaque, Rizal, he had a house erected on the land of Catalino Castro; that he
was born in 1903 and he first came to know of the land in question when in 1918 when he
was about 18 years old; that the area of the land owned and possessed by Catalino Castro
where he constructed a residential house has an area of more than one and one-half (1 )
hectares; that the possession of Catalino Castro over the land in question was peaceful,
continuous, notorious, adverse against the whole world and in the concept of an owner; that
during the time that Catalino Castro was in possession of the land applied for he planted on
said parcel of land mango, coconut and banana, etc.; that Catalino Castro continuously
possessed and owned said parcel of land up to the year 1952 when he died; that during the
time that Catalino Castro was in possession of said land, nobody ever laid claim over the
said property; that said land is not within any military or naval reservation; that upon the
death of Catalino Castro, the applicant took possession of the land applied for and that up to
the present the applicant is in possession of said land; that he resided in the land in
question from 1918 up to the time he transferred his place of residence in Baliwag, Bulacan
in the year 1958.
On February 11, 1974, the Court, pursuant to the provision of Presidential Decree No. 230
issued by his Excellency, Ferdinand E. Marcos dated July 9, 1973 held in abeyance the
rendition of a decision in this case and directed the applicant to submit a white print copy of
plan (LRC) Psu-964 to the Director of lands who was directed by the Court to submit his
comment and recommendation thereon.
The property in question is declared for taxation purposes under Tax Declaration No. 51842
(Exhibit G) and real estate taxes due thereon have been paid up to the year 1973 (Exhibit
H).
In compliance with the Order of this Court February 11, 1974, the Director of Lands, thru
Special Attorney Saturnino A. Pacubas, submitted a report to this Court dated April 25,
1974, stating among other things, that upon ocular inspection conducted by Land Inspector
Adelino G. Gorospe and the subsequent joint ocular inspection conducted by Geodetic
Engineer Manuel A. Cervantes and Administrative Assistant Lazaro G. Berania, it was
established that the parcel of land covered by plan (LRC) Psu-964 no longer forms part of
the Manila Bay but is definitely solid and dry land.
In this connection, it should be noted that Administrative Assistant Lazaro G. Berania and
Geodetic Engineer Manuel A. Cervantes, in their report dated March 22, 1974 have also
stated that the land applied for cannot be reached by water even in the highest tide and that
the said land is occupied by squatter families who have erected makeshift shanties and a

basketball court which only prove that the same is dry and solid land away from the shores
of Manila Bay.

for respondent Republic, the bureau land inspectors attested and affirmed that the disputed
land is already dry land and not within Manila Bay.

Furthermore, Land Inspector Adelino G. Gorospe in his letter-report dated November 28,
1973 has also stated that there is a house of pre-war vintage owned by the applicant on the
land in question which in effect corroborates the testimony of the applicant and her witness
that they have lived on the land in question even prior to the outbreak of the second world
war and that the applicant has been in possession of the land in question long time ago. 43

On the other hand, the Namria Hydrographic Map No. 4243 does not reveal what portion of
Manila Bay was Castros lot located in 1974. Moreover, a hydrographic map is not the best
evidence to show the nature and location of the lot subject of a land registration application.
It is derived from a hydrographic survey which is mainly used for navigation purposes, thus:

To counter the evidence of applicant Castro, and bolster its claim that she has no valid title,
respondent Republic relies on the July 18, 1973 Office Memorandum 44 of Roman
Mataverde, OIC, Surveys Division, to the OIC, Legal Division, of the Bureau of Lands,
stating that "when projected on cadastral maps CM 14 13N - 120 59 E., Sec. 3-D and CM
14 30N - 120 59E., Sec. 2-A of Paranaque [sic] Cadastre (Cad-299), (LRC) Psu-964 falls
inside Manila Bay, outside Cad-299."45
The same conclusion was adopted in a November 15, 1973 letter of Narciso Villapando,
Acting Regional Lands Director to the Chief, Legal Division, Bureau of Lands and in the
Comment and Recommendation of Ernesto C. Mendiola, Assistant Director, also of the
Bureau of Lands.
Respondent likewise cites Namria Hydrographic Map No. 4243 Revised 80-11-2 to support
its position that Castros lot is a portion of Manila Bay.
The burden of proving these averments falls to the shoulders of respondent Republic. The
difficulty is locating the witnesses of the government. Roman Mataverde, then OIC of the
Surveys Division retired from the government service in 1982. He should by this time be in
his 90s. Moreover, Asst. Regional Director Narciso Villapando and Asst. Director Ernesto C.
Mendiola are no longer connected with the Bureau of Lands since 1986.
Assuming that OIC Roman Mataverde, Asst. Regional Director Narciso Villapando and
Assistant Director Ernesto C. Mendiola are still available as witnesses, the projections made
on the cadastral maps of the then Bureau of Lands cannot prevail over the results of the two
ocular inspections by several Bureau of Lands officials that the disputed lot is definitely "dry
and solid land" and not part of Manila Bay. Special Attorney Saturnino A. Pacubas, Land
Inspector Adelino G. Gorospe, Geodetic Engineer Manuel A. Cervantes and Administrative
Asst. Lazaro A. Berana, all officials of the Bureau of Lands, were positive that the disputed
land is solid and dry land and no longer forms part of Manila Bay. Evidence gathered from
the ocular inspection is considered direct and firsthand information entitled to great weight
and credit while the Mataverde and Villapando reports are evidence weak in probative
value, being merely based on theoretical projections "in the cadastral map or table
surveys."46 Said projections must be confirmed by the actual inspection and verification
survey by the land inspectors and geodetic engineers of the Bureau of Lands. Unfortunately

Surveys whose principal purpose is the determination of data relating to bodies of water. A
hydrographic survey may consist of the determination of one or several of the following
classes of data: depth water; configuration and nature of the bottom; directions and force of
currents; heights and times of tides and water stages; and location of fixed objects for
survey and navigation purposes.47
Juxtaposed with finding of the ocular inspection by Bureau of Lands Special Attorney
Pacubas and others that Castros lot is dry land in 1974, Namria Hydrographic Map No.
4243 is therefore inferior evidence and lacking in probative force.
Moreover, the reliability and veracity of the July 18, 1973 report of Roman Mataverde based
on the alleged projection on cadastral maps and the Villapando report dated November 15,
1973 are put to serious doubt in the face of the opinion dated October 13, 1997 of the
Government Corporate Counsel, the lawyer of the PEA, which upheld the validity of the
titles of petitioners, thus:
We maintain to agree with the findings of the court that the property of Fermina Castro was
registrable land, as based on the two (2) ocular inspections conducted on March 22, 1974
by Lands Administrative Assistant Lazaro G. Berania and Lands Geodetic Engr. Manuel
Cervantes, finding the same no longer forms part of Manila Bay but is definitely solid
land which cannot be reached by water even in the highest of tides. This BeraniaCervantes report based on ocular inspections literally overturned the findings and
recommendations of Land Director Narciso V. Villapando dated November 15, 1973, and
that of Director Ernesto C. Mendiola dated December 1, 1977, and the fact that the
Villapando-Mendiola reports were merely based on projections in the cadastral map or table
surveys.
xxxx
A. The Legal prognosis of the case is not promising in favor of PEA.
4.1 LRC Case No. N-8239 has already become final and executory and OCT No.
10215 was already issued in favor of Fermina Castro. Any and all attempts to
question its validity can only be entertained in a quo warranto proceedings (sic),
assuming that there are legal grounds (not factual grounds) to support its
nullification. Subjecting it to a collateral attack is not allowed under the Torrens

Title System. In Calalang vs. Register of Deeds of Quezon City, 208 SCRA 215,
the Supreme Court held that the present petition is not the proper remedy in
challenging the validity of certificates of titles since the judicial action required is
a direct and not a collateral attack (refer also to: Toyota Motor Philippine
Corporation vs. CA, 216 SCRA 236).
4.2 OCT No. 10215 in favor of Fermina Castro was issued pursuant to a
cadastral proceeding, hence is a rem proceedings which is translated as a
constructive notice to the whole world, as held in Adez Realty Incorporated vs.
CA, 212 SCRA 623.
4.3 From the cursory and intent reading of the decision of Judge Sison in LRC
Case No. N-8239, we cannot find any iota of fraud having been committed by the
court and the parties. In fact, due process was observed when the Office of the
Solicitor General represented ably the Bureau of Lands. In Balangcad vs.
Justices of the Court of Appeals, 206 SCRA 169, the Supreme Court held that
title to registered property becomes indefeasible after one-year from date of
registration except where there is actual fraud in which case it may be challenged
in a direct proceeding within that period. This is also the ruling in Bishop vs. CA,
208 SCRA 636, that to sustain an action for annulment of a torrens certificate for
being void ab initio, it must be shown that the registration court had not acquired
jurisdiction over the case and there was actual fraud in securing the title.
4.4 As to priority of torrens title, PEA has no defense, assuming that both PEA
and Yujuico titles are valid, as held in Metropolitan Waterworks and Sewerage
System vs. CA, 215 SCRA 783, where two (2) certificates purport to include the
same land, the earlier in date prevails.
4.5 The documents so far submitted by the parties to the court indicate that the
mother title of the Yujuico land when registered in 1974 was not underwater. This
was shown in the two (2) ocular inspections conducted by the officials of the
Land Bureau.
4.6 The provision of P.D. 239 that no decree of registration may be issued by the
court unless upon approval and recommendation of the Bureau of Lands was
substantially complied with in the Report of Lands Special Attorney Saturnino
Pacubas, submitted to the court.48
Even the counsel of respondent Republic, the OSG, arrived at the conclusion that there is
no sufficient legal basis for said respondent to institute action to annul the titles of
petitioners, thus:

It may be stated at the outset that a petition for annulment of certificate of title or
reconveyance of land may be based on fraud which attended the issuance of the decree of
registration and the corresponding certificate of title.
Based on the decision in the LRC Case No. N-8239 involving the petition for registration
and confirmation of title filed by Fermina Castro, there is no showing that fraud attended the
issuance of OCT No. 10215. it appears that the evidence presented by Fermina Castro was
sufficient for the trial court to grant her petition.
The testimony of Fermina Castro, which was corroborated by Emiliano de Leon, that she
and her predecessors-in-interest had been in possession of the land for more than thirty
(30) years sufficiently established her vested right over the property initially covered by OCT
No. 10215. The report dated April 25, 1974 which was submitted to the trial court by the
Director of Lands through Special Attorney Saturnino Pacubas showed that the parcel of
land was solid and dry land when Fermina Castros application for registration of title was
filed. It was based on the ocular inspection conducted by Land Inspector Adelino Gorospe
and the joint circular inspection conducted by Geodetic Engineer Manuel A. Cervantes and
Administrative Assistant Lazaro Berania on November 28, 1973 and March 22, 1974
respectively.
The aforesaid report must be requested unless there is a concrete proof that there was an
irregularity in the issuance thereof. In the absence of evidence to the contrary, the ocular
inspection of the parcel of land, which was made the basis of said report, is presumed to be
in order.
Based on the available records, there appears to be no sufficient basis for the Government
to institute an action for the annulment of OCT No. 10215 and its derivative titles. It is
opined that a petition for cancellation/annulment of Decree No. N-150912 and OCT No.
10215 and all its derivative titles will not prosper unless there is convincing evidence to
negate the report of the then Land Management Bureau through Special Attorney Pacubas.
Should the Government pursue the filing of such an action, the possibility of winning the
case is remote.49
More so, respondent Government, through its counsel, admits that the land applied by
Fermina Castro in 1973 was solid and dry land, negating the nebulous allegation that said
land is underwater. The only conclusion that can be derived from the admissions of the
Solicitor General and Government Corporate Counsel is that the land subject of the titles of
petitioners is alienable land beyond the reach of the reversion suit of the state.
Notably, the land in question has been the subject of a compromise agreement upheld by
this Court in Public Estates Authority.50 In that compromise agreement, among other
provisions, it was held that the property covered by TCT Nos. 446386 and S-29361, the land
subject of the instant case, would be exchanged for PEA property. The fact that PEA signed

the May 15, 1998 Compromise Agreement is already a clear admission that it recognized
petitioners as true and legal owners of the land subject of this controversy.
Moreover, PEA has waived its right to contest the legality and validity of Castros title. Such
waiver is clearly within the powers of PEA since it was created by PD 1084 as a body
corporate "which shall have the attribute of perpetual succession and possessed of the
powers of the corporations, to be exercised in conformity with the provisions of this Charter
[PD 1084]."51 It has the power "to enter into, make, perform and carry out contracts of every
class and description, including loan agreements, mortgages and other types of security
arrangements, necessary or incidental to the realization of its purposes with any person,
firm or corporation, private or public, and with any foreign government or entity." 52 It also has
the power to sue and be sued in its corporate name. 53 Thus, the Compromise Agreement
and the Deed of Exchange of Real Property signed by PEA with the petitioners are legal,
valid and binding on PEA. In the Compromise Agreement, it is provided that it "settles in full
all the claims/counterclaims of the parties against each other." 54 The waiver by PEA of its
right to question petitioners title is fortified by the manifestation by PEA in the Joint Motion
for Judgment based on Compromise Agreement that
4. The parties herein hereto waive and abandon any and all other claims and counterclaims
which they may have against each other arising from this case or related thereto. 55
Thus, there was a valid waiver of the right of respondent Republic through PEA to challenge
petitioners titles.
The recognition of petitioners legal ownership of the land is further bolstered by the
categorical and unequivocal acknowledgment made by PEA in its September 30, 2003 letter
where it stated that: "Your ownership thereof was acknowledged by PEA when it did not
object to your membership in the CBP-IA Association, in which an owner of a piece of land
in CBP-IA automatically becomes a member thereof." 56 Section 26, Rule 130 provides that
"the act, declaration or omission of a party as to a relevant fact may be given in evidence
against him." The admissions of PEA which is the real party-in-interest in this case on the
nature of the land of Fermina Castro are valid and binding on respondent Republic.
Respondents claim that the disputed land is underwater falls flat in the face of the
admissions of PEA against its interests. Hence, res judicata now effectively precludes the
relitigation of the issue of registrability of petitioners lot.
In sum, the Court finds that the reversion case should be dismissed for lack of jurisdiction
on the part of the Paraaque RTC. Even if we treat said case as a petition for annulment of
judgment under Rule 47 of the 1997 Rules of Civil Procedure, the dismissal of the case
nevertheless has to be upheld because it is already barred by laches. Even if laches is
disregarded, still the suit is already precluded by res judicata in view of the peculiar facts
and circumstances obtaining therein.

WHEREFORE, premises considered, the petition is GRANTED. The Decision of the Court
of Appeals in CA-G.R. CV No. 76212 is REVERSED and SET ASIDE, and the August 7,
2002 Order of the Paraaque City RTC, Branch 257 in Civil Case No. 01-0222 entitled
Republic of the Philippines v. Fermina Castro, et al. dismissing the complaint is AFFIRMED.

Factual findings of the lower courts are entitled to great respect, but may be reviewed if they
do not conform to law and to the evidence on record. In the case at bar, a meticulous review
of the facts compels us to modify the award granted by the Court of Appeals.
The Case
Before us is a Petition for Review 1 under Rule 45 of the Rules of Court, seeking to set aside
the November 24, 2000 Decision2 and the January 9, 2002 Resolution3 of the Court of
Appeals (CA) in CA-GR CV No. 25781. The assailed Decision disposed as follows:
"WHEREFORE, premises considered, the assailed
AFFIRMED in toto and the instant appeal DISMISSED."4

decision

is

hereby

The assailed Resolution denied reconsideration.

The Facts
The facts of the case are narrated by the appellate court as follows:

Republic of the Philippines

SUPREME COURT
Manila
FIRST DIVISION
G.R. No. 151821

April 14, 2004

BANK OF THE PHILIPPINE ISLANDS, as Successor-in-Interest of BPI Investment

Corporation, petitioner,
vs.
ALS MANAGEMENT & DEVELOPMENT CORP., respondent.

"On July 29, 1985, [petitioner] BPI Investment Corporation filed a complaint for a
Sum of Money against ALS Management and Development Corporation, alleging
inter alia that on July 22, 1983, [petitioner] and [respondent] executed at Makati,
Metro Manila a Deed of Sale for one (1) unfurnished condominium unit of the
Twin Towers Condominium located at Ayala Avenue, corner Apartment Ridge
Street, Makati, Metro Manila designated as Unit E-4A comprising of 271 squares
[sic] meters more or less, together with parking stalls identified as G022 and G63. The Condominium Certificate of Title No. 4800 of the Registry of Deeds for
Makati, Metro Manila was issued after the execution of the said Deed of Sale.
[Petitioner] advanced the amount of P26,300.45 for the expenses in causing the
issuance and registration of the Condominium Certificate of Title. Under the
penultimate paragraph of the Deed of Sale, it is stipulated that the VENDEE
[respondent] shall pay all the expenses for the preparation and registration of this
Deed of Sale and such other documents as may be necessary for the issuance
of the corresponding Condominium Certificate of Title. After the [petitioner]
complied with its obligations under the said Deed of Sale, [respondent],
notwithstanding demands made by [petitioner], failed and refused to pay
[petitioner] its legitimate advances for the expenses mentioned above without
any valid, legal or justifiable reason.

DECISION
PANGANIBAN, J.:

"In its Answer with Compulsory Counterclaim, [respondent] averred among

others that it has just and valid reasons for refusing to pay [petitioners] legal
claims. In clear and direct contravention of Section 25 of Presidential Decree No.
957 which provides that No fee except those required for the registration of the
deed of sale in the Registry of Deeds shall be collected for the issuance of such

title, the [petitioner] has jacked-up or increased the amount of its alleged
advances for the issuance and registration of the Condominium Certificate of
Title in the name of the [respondent], by including therein charges which should
not be collected from buyers of condominium units. [Petitioner] made and
disseminated brochures and other sales propaganda in and before May 1980,
which made warranties as to the facilities, improvements, infrastructures or other
forms of development of the condominium units (known as The Twin Towers) it
was offering for sale to the public, which included the following:
The Twin Towers is destined to reflect condominium living at its very
best.
While the twin tower design and its unusual height will make the
project the only one of its kind in the Philippines, the human scale and
proportion [are] carefully maintained.

3. The kitchen counter tops/splashboard suffered from cracks and

were mis-cut and misaligned;
4. The partition between living and masters bedroom was unpainted
and it had no access for maintenance due to aluminum fixed glass
cover;
5. The varifold divider, including the bar and counter top cabinet were
not installed;
6. The toilets had no tiles;
7. No closed circuit TV was installed;
8. Rainwater leaks inside or into the condominium unit." 5

To be sure, modern conveniences are available as in the installation

of an intercom system and a closed-circuit TV monitor through which
residents from their apartments can see their guests down at the
lobby call station.
Some of the features of each typical apartment unit are: x x x A bar x
x x Three toilets with baths x x x.
The penthouse units are privileged with the provision of an all-around
balcony. x x x
"[Respondent] further averred that [petitioner] represented to the [respondent]
that the condominium unit will be delivered completed and ready for occupancy
not later than December 31, 1981. [Respondent] relied solely upon the
descriptions and warranties contained in the aforementioned brochures and other
sales propaganda materials when [respondent] agreed to buy Unit E-4A of the
Twin Tower(s) for the hefty sum of P2,048,900.00 considering that the Twin
Towers was then yet to be built. In contravention of [petitioners] warranties and
of good engineering practices, the condominium unit purchased by [respondent]
suffered from the following defects and/or deficiencies:
1. The clearance in the walkway at the balcony is not sufficient for
passage;
2. The anodized aluminum used in the door and windows were
damaged;

Respondents Answer prayed that "judgment be rendered ordering [petitioner] to correct

such defects/deficiencies in the condominium unit," 6 and that the following reliefs be
granted:
"1. The sum of P40,000.00 plus legal interest thereon from the date of extrajudicial demand, representing the amount spent by the defendant for the
completion works it had undertaken on the premises.
"2. The sum of U.S.$6,678.65 (or its equivalent in the Philippine currency)
representing the unearned rental of the premises which the defendant did not
realize by reason of the late delivery to him of the condominium unit;
"3. Twenty-four percent (24%) interest per annum on the agreed one (1) year
advance rental and one (1) month deposit (totaling U.S.$15,785.00)
corresponding to the period January 1, 1982 to June 17, 1982, which [petitioner]
would have earned had he deposited the said amount in a bank;
"4. The sum of U.S.$1,214.30 per month, commencing from May 1, 1985, which
the [respondent] no longer earns as rental on the premises because the lessee
vacated the same by reason of defects and/or deficiencies;
"5. The sum of P50,000.00 plus appearance fees of P300.00 per court hearing,
as attorneys fees;
"6. Litigation expenses and costs of suit." 7

On February 6, 1990, the trial court issued this judgment:

"1. Ordering the [respondent] to pay [petitioner] the sum of P26,300.45, with legal
interest from the filing of the complaint up to full payment thereof, representing
the amount spent for the registration of the title to the condominium unit in
[respondents] name;
"2. Ordering [petitioner] to deliver, replace or correct at [petitioners] exclusive
expense/cost or appoint a licensed qualified contractor to do the same on its
behalf, the following defects/deficiencies in the condominium unit owned by the
[respondent]:
a) KITCHEN
i) The sides of the kitchen sink covered with sealants as
well as miscut marble installed as filler at the right side of
the sink;
ii) Miscut marble installed on both sides of the side wall
above the gas range;
b) FOYERS
Water marks at the parquet flooring, near the main water supply room;
c) MAIDS ROOM

i) Falling off paint layers at the bathroom wall behind the

bathtub/faucet along the passageway of the masters
bedroom;
ii) Falling off water-damaged plywood ceiling in the
masters bedroom bathroom;
iii) Grinders mark damage at the bathtub;
f) BALCONY WALKWAY
i) PVC pipes installed two (2) inches above floor level
causing water to accumulate;
ii) Cracks on level of wash out flooring;
iii) 14-inches passageway going to the open terrace not
sufficient as passageway;
iv) PVC pipe installed on the plant box water drained
directly on the balcony floor;
g) BALCONY (OPEN) TERRACE
i) Two (2) concrete cement measuring about 6 x 4 inches
with protruding live wires, purportedly lamp posts which
were not installed;

Ceiling cut off about one (1) square foot in size and left unfinished
h) BOYS BEDROOM
d) DINING ROOM
i) Water damaged parquet up to about one (1) meter from
the wall underneath the open shelves and directly behind
the plant box;

i) Water mark on the parquet flooring due to water

seepage;
ii) Asphalt plastered at the exterior wall/floor joints to
prevent water seepage;

ii) Plant box directly behind the dining room;

iii) The water damaged parquet flooring near the door of
the dining room to the passage way
e) MASTERS BEDROOM

i) ANALOC FINISH of the aluminum frames of doors and windows all

around the condominium were painted with dark gray paint to cover
dents and scratches;
j) LIVING ROOM

Intercom equipment installed without the TV monitor;

k) STORAGE FACILITIES at the ground floor

"III. Whether or not the award of damages by the Honorable Court of Appeals is
conjectural warranting a review by this Honorable Court of the factual findings
therein."13
The Courts Ruling

"3. Ordering [petitioner] to pay [respondent] the following:

a) The sum of P40,000.00 representing reimbursement for expenses
incurred for the materials/labor in installing walls/floor titles in 2
bathrooms and bar counter cabinet.
b) The sum of P136,608.75, representing unearned income for the
five-month period that the defendant had to suspend a lease contract
over the premises.
c) The sum of P27,321.75 per month for a period of twenty-one (21)
months (from May 1985 to January 1987), representing unearned
income when defendants lessee had to vacate the premises and
condominium unit remained vacant, all with legal interest from the
filing of the counterclaim until the same are fully paid." 8
Ruling of the Court of Appeals
On appeal, after "a thorough review and examination of the evidence on record," 9 the CA
found "no basis for disbelieving what the trial court found and arrived at." 10
The appellate court sustained the trial courts finding that "while [petitioner] succeeded in
proving its claim against the [respondent] for expenses incurred in the registration of [the
latters] title to the condominium unit purchased, x x x for its part [respondent] in turn
succeeded in establishing an even bigger claim under its counterclaim." 11
Hence, this Petition.12
The Issues
Petitioner raises the following issues for our consideration:
"I. Whether or not the Honorable Court of Appeals erred in not holding that the
trial court had no jurisdiction over the respondents counterclaims.
"II. Whether or not the decision of the Court of Appeals is based on
misapprehension of facts and/or manifestly mistaken warranting a review by this
Honorable Court of the factual findings therein.

The Petition is partly meritorious.

First Issue:
Jurisdiction
Contending that it was the Housing and Land Use Regulatory Board (HLURB) -- not the
RTC -- that had jurisdiction over respondents counterclaim, petitioner seeks to nullify the
award of the trial court.
Promulgated on July 12, 1976, PD No. 957 -- otherwise known as "The Subdivision and
Condominium Buyers Protective Decree" -- provides that the National Housing Authority
(NHA) shall have "exclusive authority to regulate the real estate trade and business." 14
Promulgated later on April 2, 1978, was PD No. 1344 entitled "Empowering the National
Housing Authority to Issue Writs of Execution in the Enforcement of Its Decisions Under
Presidential Decree No. 957." It expanded the jurisdiction of the NHA as follows:
"SECTION 1. In the exercise of its function to regulate the real estate trade and
business and in addition to its powers provided for in Presidential Decree No.
957, the National Housing Authority shall have exclusive jurisdiction to hear and
decide cases of the following nature:
A. Unsound real estate business practices;
B. Claims involving refund and any other claims filed by subdivision lot
or condominium unit buyer against the project owner, developer,
dealer, broker or salesman; and
C. Cases involving specific performance of contractual and statutory
obligations filed by buyers of subdivision lot or condominium unit
against the owner, developer, broker or salesman." (Italics ours.)
On February 7, 1981, by virtue of Executive Order No. 648, the regulatory functions of the
NHA were transferred to the Human Settlements Regulatory Commission (HSRC). Section
8 thereof provides:

"SECTION 8. Transfer of Functions. - The regulatory functions of the National

Housing Authority pursuant to Presidential Decree Nos. 957, 1216, 1344 and
other related laws are hereby transferred to the Commission (Human
Settlements Regulatory Commission). x x x. Among these regulatory functions
are: 1) Regulation of the real estate trade and business; x x x 11) Hear and
decide cases of unsound real estate business practices; claims involving refund
filed against project owners, developers, dealers, brokers, or salesmen; and
cases of specific performance."
Pursuant to Executive Order No. 90 dated December 17, 1986, the functions of the HSRC
were transferred to the HLURB.
As mandated by PD No. 957, the jurisdiction of the HLURB is encompassing. Hence, we
said in Estate Developers and Investors Corporation v. Sarte:15
"x x x. While PD 957 was designed to meet the need basically to protect lot
buyers from the fraudulent manipulations of unscrupulous subdivision owners,
sellers and operators, the exclusive jurisdiction vested in the NHA is broad and
general -to regulate the real estate trade and business in accordance with the
provisions of said law."
Furthermore, the jurisdiction of the HLURB over cases enumerated in Section 1 of PD No.
1344 is exclusive. Thus, we have ruled that the board has sole jurisdiction in a complaint of
specific performance for the delivery of a certificate of title to a buyer of a subdivision lot; 16
for claims of refund regardless of whether the sale is perfected or not; 17 and for determining
whether there is a perfected contract of sale. 18
In Solid Homes v. Payawal,19 we declared that the NHA had the competence to award
damages as part of the exclusive power conferred upon it -- the power to hear and decide
"claims involving refund and any other claims filed by subdivision lot or condominium unit
buyers against the project owner, developer, dealer, broker or salesman." 20
Clearly then, respondents counterclaim -- being one for specific performance (correction of
defects/deficiencies in the condominium unit) and damages -- falls under the jurisdiction of
the HLURB as provided by Section 1 of PD No. 1344.
The Applicability of Estoppel
The general rule is that any decision rendered without jurisdiction is a total nullity and may
be struck down at any time, even on appeal before this Court. 21 Indeed, the question of
jurisdiction may be raised at any time, provided that such action would not result in the
mockery of the tenets of fair play.22 As an exception to the rule, the issue may not be raised
if the party is barred by estoppel.23

In the present case, petitioner proceeded with the trial, and only after a judgment
unfavorable to it did it raise the issue of jurisdiction. Thus, it may no longer deny the trial
courts jurisdiction, for estoppel bars it from doing so. This Court cannot countenance the
inconsistent postures petitioner has adopted by attacking the jurisdiction of the regular court
to which it has voluntarily submitted.24
The Court frowns upon the undesirable practice of submitting ones case for decision, and
then accepting the judgment only if favorable, but attacking it for lack of jurisdiction if it is
not.25
We also find petitioner guilty of estoppel by laches for failing to raise the question of
jurisdiction earlier. From the time that respondent filed its counterclaim on November 8,
1985, the former could have raised such issue, but failed or neglected to do so. It was only
upon filing its appellants brief 26 with the CA on May 27, 1991, that petitioner raised the issue
of jurisdiction for the first time.
In Tijam v. Sibonghanoy,27 we declared that the failure to raise the question of jurisdiction at
an earlier stage barred the party from questioning it later. Applying the rule on estoppel by
laches, we explained as follows:
"A party may be estopped or barred from raising a question in different ways and
for different reasons. Thus, we speak of estoppel in pais, of estoppe[l] by deed or
by record, and of estoppel by laches.
"Laches, in general sense, is 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 time, warranting a presumption that the party entitled to
assert it either has abandoned it or declined to assert it.
"The doctrine of laches or of stale demands is based upon grounds of public
policy which requires, for the peace of society, the discouragement of stale
claims and, unlike the statute of limitations, is not a mere question of time but is
principally a question of the inequity or unfairness of permitting a right or claim to
be enforced or asserted."28
Thus, we struck down the defense of lack of jurisdiction, since the appellant therein failed to
raise the question at an earlier stage. It did so only after an adverse decision had been
rendered.
We further declared that if we were to sanction the said appellants conduct, "we would in
effect be declaring as useless all the proceedings had in the present case since it was
commenced x x x and compel the judgment creditors to go up their Calvary once more. The
inequity and unfairness of this is not only patent but revolting." 29

Applicable herein is our ruling in Gonzaga v. Court of Appeals,30 in which we said:

"Public policy dictates that this Court must strongly condemn any double-dealing
by parties who are disposed to trifle with the courts by deliberately taking
inconsistent positions, in utter disregard of the elementary principles of justice
and good faith. There is no denying that, in this case, petitioners never raised the
issue of jurisdiction throughout the entire proceedings in the trial court. Instead,
they voluntarily and willingly submitted themselves to the jurisdiction of said
court. It is now too late in the day for them to repudiate the jurisdiction they were
invoking all along."31
Second and Third Issues:

failed to deliver a "closed-circuit TV monitor through which residents from their apartments
can see their guests x x x."38
Storage Facilities
The trial court erred, though, in requiring petitioner to provide storage facilities on the
ground floor, as the non-delivery had not been alleged in respondents Answer with
Counterclaim.39
It is elementary that a judgment must conform to and be supported by both the pleadings
and the evidence, and that it be in accordance with the theory of the action on which the
pleadings were framed and the case was tried. 40 Indeed, issues in each case are limited to
those presented in the pleadings.41

Appreciation of Facts
It is readily apparent that petitioner is raising issues of fact that have been ruled upon by the
RTC and sustained by the CA. The factual findings of lower courts are generally binding
upon this Court and will not be disturbed on appeal, especially when both sets of findings
are the same.32 Nevertheless, this rule has certain exceptions, 33 as when those findings are
not supported by the evidence on record.
We have carefully scrutinized the records of this case and found reason to modify the award
to conform to law and the evidence. We thus address the arguments of petitioner seriatim.
Warranties and Representations in the Brochure
The brochure that was disseminated indicated features that would be provided each
condominium unit; and that, under Section 19 of PD No. 957, would form part of the sales
warranties of petitioner.34 Respondent relied on the brochure in its decision to purchase a
unit.35 Since the former failed to deliver certain items stated therein, then there was a clear
violation of its warranties and representations.
The brochure says that "[t]he particulars stated x x x as well as the details and visuals
shown x x x are intended to give a general idea of the project to be undertaken, and as
such, are not to be relied [upon] as statements or representations of fact." 36 This general
disclaimer should apply only to the general concept of the project that petitioner aptly
characterizes thus:
"x x x [D]estined to reflect condominium living at its very best and its design x x
x will make the project the only one of its kind in the Philippines." 37
This disclaimer, however, should not apply to the features and the amenities that the
brochure promised to provide each condominium unit. Petitioner was thus in breach when it

We are aware that issues not alleged in the pleadings may still be decided upon, if tried with
the parties express or implied consent. 42 Trial courts are not precluded from granting reliefs
not specifically claimed in the pleadings -- notwithstanding the absence of their amendment
-- upon the condition that evidence has been presented properly, with full opportunity on the
part of the opposing parties to support their respective contentions and to refute each
others evidence.43 This exception is not present in the case at bar.
Moreover, a cursory reading of the brochure shows that there is no promise to provide
individual storage facilities on the ground floor for each condominium unit. The brochure
reads: "Storage facilities in the apartment units and the ground floor." 44 Apparent from the
letter of petitioner dated June 18, 1982, 45 was its compliance with its promise of storage
facilities on the ground floor. In that letter, respondent was also informed that it may course
a reservation of those facilities through the building superintendent.
Damages for Delay in Delivery
It is undisputed that petitioner sent respondent a "Contract to Sell" 46 declaring that the
construction would be finished on or before December 31, 1981. 47 The former delivered the
condominium unit only in June 1982;48 thus, the latter claims that there was a delay in the
delivery.
Because of this delay, the trial court ordered petitioner to pay damages of P136,608.75
representing unearned income for the period that respondent had to suspend a lease
contract. We find a dearth of evidence to support such award.
To recover actual damages, the amount of loss must not only be capable of proof, but also
be proven with a reasonable degree of certainty. 49 The lone evidence for this award was the
self-serving testimony of respondents witness that a lease contract had indeed been
intended to commence in January 1982, instead of the actual implementation on June 18,

1982.50 Without any other evidence, we fail to see how the amount of loss was proven with
a reasonable degree of certainty.

A It is used for watering the plants and the servicing of some area[s].
Q How much measurement is made to affix the portion of watering the plants?

Condominium Defects
A Approximately .50 [m]."62
The rule is that a partys case must be established through a "preponderance of evidence." 51
By such term of evidence is meant simply evidence that is of greater weight, or is more
convincing than that which is offered in opposition to it. 52 Respondent was able to establish
through its witness testimony that the condominium unit suffered from defects. 53 This
testimony was confirmed by an inspection report 54 noted and signed by petitioners
representative, as well as by a commissioners report 55 prepared after an ocular inspection
by the clerk of court acting as a commissioner. Furthermore, this conclusion is supported by
the circumstances that occurred during the lease period, as evidenced by the complaint and
the update letters56 of respondents lessee.
Petitioners contention that the claim arising from the alleged defects has already prescribed
must fail for being raised for the first time only on appeal. 57 Well-settled is the rule that
issues not raised below cannot be resolved on review in higher courts. 58
We agree, however, that the lower courts erred in finding that there was a defect in a portion
of the balcony, which respondent alleges to be a "walkway x x x [that] is not sufficient for
passage."59 Petitioner was able to prove, however, that the specifications thereof conformed
to the building plan.
Respondent contends that this portion should have been 65 to 80 centimeters wide, so that
it would be sufficient as a passageway.60 The building plan61 had not specified the width,
however. Architect Leo Ramos of W.V. Coscolluela & Associates, the architectural firm that
prepared the building plan, testified thus:
"Q I am directing your attention xxx to a certain portion in this condominium unit x
x x it appears x x x [that] there is no measurement indicated therein, do you know
why the measurement of said portion was not indicated in the building plan?
A Normally, it is variable.
Q What do you mean by variable?
A It depends on the actual measurement of the building construction.
Q Could you please tell the Court, what x x x the purpose of the said portion of
the condominium unit [is]?

Respondent maintains that this portion should have been .80 meters (or 80 centimeters),
similar to another area in the building plan that it offered as Exhibit "2-A." 63 But an analysis
of this plan reveals that the latter area has a different width from that of the former.
It is readily apparent from the foregoing facts that the portion in controversy was not
intended to be a walkway. Thus, there was no deviation from the building plan. Because it
has not been shown that this section was insufficient to serve the purpose for which it was
intended, the lower courts erred in considering it as defective.
Reimbursement of P40,000 for Completion Work
The lower courts did not err in ordering petitioner to correct the defects in the condominium
unit, but in requiring it to reimburse respondent in the amount of P40,000 for completion
work done.
Petitioner argues that the trial courts Decision encompassed the areas beyond those
alleged in respondents Answer.64 This contention is not convincing, because the allegations
in the latter were broad enough to cover all the defects in the condominium unit. In fact,
respondent prayed that "judgment be rendered ordering [petitioner] to correct such defects x
x x in the condominium unit as may be prove[d] during the trial." 65
Petitioner further challenges the award of P40,000 as reimbursement for completion work
done by respondent, on the ground that this claim was not proven during the trial. The
latters evidence partook of a witness testimony66 and of a demand letter67 sent to petitioner
requesting reimbursement for completion work done. Petitioner argues that respondent
should have presented receipts to support the expenses. 68
We agree with petitioner. While respondent may have suffered pecuniary losses for
completion work done, it failed to establish with reasonable certainty the actual amount
spent. The award of actual damages cannot be based on the allegation of a witness without
any tangible document, such as receipts or other documentary proofs to support such
claim.69 In determining actual damages, courts cannot rely on mere assertions,
speculations, conjectures or guesswork, but must depend on competent proof and on the
best obtainable evidence of the actual amount of loss. 70
Unearned Lease Income

Respondent entered into a lease contract with Advanced Micro Device on May 18, 1982, for
the period June 18, 1982 to June 17, 1983, with option to renew. 71 The lease -- which was
for an agreed monthly rental of P17,000 -- was renewed for a period ending May 1, 1985,
when Advanced Micro Device vacated the unit. 72 On the basis of these facts, the trial court
ordered petitioner to pay damages by way of unrealized income for twenty-one months or
from May 1, 1985, until January 1987 -- when respondent decided to move into the
condominium unit, which was unoccupied by then.
Despite the defects of the condominium unit, a lessee stayed there for almost three years. 73
The damages claimed by respondent is based on the rent that it might have earned, had
Advanced Micro Device chosen to stay and renew the lease. Such claim is highly
speculative, considering that respondent failed to adduce evidence that the unit had been
offered for lease to others, but that there were no takers because of the defects therein.
Speculative damages are too remote to be included in an accurate estimate thereof. 74
Absent any credible proof of the amount of actual damage sustained, the Court cannot rely
on speculations as to its existence and amount. 75
We recognize, however, that respondent suffered damages when its lessee vacated the
condominium unit on May 1, 1985, because of the defects therein. Respondents are thus
entitled to temperate damages. 76 Under the circumstances, the amount equivalent to three
monthly rentals of P17,000 -- or a total of P51,000 -- would be reasonable.
WHEREFORE, this Petition is PARTLY GRANTED, and the assailed Decision and
Resolution of the Court of Appeals MODIFIED, as follows:
Hereby DELETED is the requirement on the part of petitioner to (1) deliver
storage facilities on the ground floor; (2) pay P136,608.75 for unearned income
for the five-month period that the lease contract was allegedly suspended; (3)
correct the alleged passageway in the balcony; (4) pay P40,000.00 as
reimbursement for completion work done by respondent; (5) pay P27,321.75 per
month for a period of twenty-one months for the alleged unearned income during
the period when the condominium unit remained vacant. Petitioner, however, is
ORDERED to pay P51,000 as temperate damages for the termination of the
lease contract because of the defects in the condominium unit. All other awards
are AFFIRMED.
No pronouncement as to costs.
SO ORDERED.

Republic of the Philippines

SUPREME COURT
Manila
SECOND DIVISION
G.R. No. 132869

October 18, 2001

GREGORIO DE VERA, JR., petitioner,

vs.
COURT OF APPEALS, Q. P. SAN DIEGO CONSTRUCTION, INC., ASIATRUST
DEVELOPMENT BANK, SECOND LAGUNA DEVELOPMENT BANK, CAPITOL CITY
DEVELOPMENT BANK, EX-OFFICIO SHERIFF OF QUEZON CITY and/or HIS DEPUTY,
respondents.
BELLOSILLO, J.:

This is a Petition for Review, under Rule 45 of the Revised Rules of Court, of the Decision
of the Court of Appeals in CA-G.R. CV No. 37281, "Gregorio de Vera, Jr. v. Court of
Appeals, QP San Diego Construction, Inc., Asiatrust Development Bank, Second Laguna
Development Bank, Capitol City Development Bank, Ex-Officio Sheriff of Quezon City
and/or his Deputy," and of its Resolution of 18 February 1998 denying petitioner's
Manifestation with Motion for Reconsideration.
Respondent Q. P. San Diego Construction, Inc. (QPSDCI), owned a parcel of land located
at 101 Panay Avenue, Quezon City, on which it built Lourdes I Condominium. On 10 June
1983, to finance its construction and development, QPSDCI entered into a Syndicate Loan
Agreement1 with respondents Asiatrust Development Bank (ASIATRUST) as lead bank, and
Second Laguna Development Bank (LAGUNA) and Capitol City Development Bank
(CAPITOL) as participating banks (hereafter collectively known as FUNDERS). QPSDCI
mortgaged to the creditor banks as security the herein mentioned Panay Avenue property
and the condominium constructed thereon. The mortgage deed was registered with the
Register of Deeds of Quezon City and annotated on the individual condominium certificates
of title (CCT) of each condominium unit.2
On 23 June 1983 petitioner Gregorio de Vera Jr. and QPSDCI, through its authorized agent
Fil-Estate Realty Corporation (FIL-ESTATE), entered into a Condominium Reservation
Agreement3 where petitioner undertook to buy Unit 211-2C of the condominium for
P325,000.00 under the following agreed terms of payment: (a) an option money of
P5,000.00 payable upon signing of the agreement to form part of the purchase price; (b) a
full downpayment of P175,675.00 broken down into the reservation fee of P5,000.00 and
three (3) equal monthly installments payable beginning the month after the signing of the
contract; and, (c) the remaining balance of P160,000.00 to be secured through petitioner's
Pag-IBIG and Open-Housing Loan. Pending release of the loan, petitioner was to avail of a
bridge financing loan with ASIATRUST or any accredited originating bank of the Pag-IBIG
program.
On 2 June 1983 petitioner paid the reservation fee of P5,000.00, and on 11 July 1983 the
balance of the downpayment of P167,000.00, thus completing the downpayment of
P175,675.00 well before the due date. As incentive, petitioner was given a full discount on
cash payment by QPSDCI to bring the total payment to P184,040.00.
Pursuant to their Condominium Reservation Agreement, petitioner submitted through FILESTATE his application for the Pag-IBIG loan. On 28 December 1983 ASIATRUST as
originating bank notified FIL-ESTATE that petitioner's Pag-IBIG loan application had been
approved.4 In a letter dated 18 January 1984 QPSDCI President Quintin P. San Diego
forwarded the letter to petitioner. However, the amount approved was only P139,100.00 and
not P160,000.00. Additional charges further reduced the amount to P117,043.33.
Petitioner De Vera Jr. approached QPSDCI to have the P12,040.00 discount credited to his
additional equity. Since the resultant net loan of P117,043.33 was insufficient to cover the
balance of the purchase price, De Vera Jr. negotiated with QPSDCI to defer payment of the

P23,916.67 deficiency until the project was completed and the unit was ready for turnover.
QPSDCI agreed.5
The condominium project was substantially completed in June 1984 and the unit was turned
over to De Vera Jr. the following month. Accordingly, petitioner paid QPSDCI the
P23,916.67 shortfall between the balance and the granted loan.
On 26 June 1984 ASIATRUST through its Vice-President Pedro V. Lucero and Manager
Nicanor T. Villanueva wrote to QPSDCI asking the unit buyers to pay in advance the costs
of the transfer of titles and registration of their Pag-IBIG loan mortgages. 6 QPSDCI
forwarded the letter to De Vera Jr. and requested that he pay the amount to QPSDCI. 7 As
ASIATRUST indicated that the amount be paid directly to it, De Vera Jr. went to the bank for
clarification. On 23 August 1983, after learning that ASIATRUST was in possession of the
certificate of title, De Vera Jr. paid the transfer expenses directly to ASIATRUST.
On 17 September 1984 ASIATRUST sent another notice of approval 8 to QPSDCI and De
Vera Jr. with the notation, "additional equity of all accounts have (sic) to be paid directly to
the Bank."
On 3 October 1984 ASIATRUST wrote another letter 9 asking QPSDCI to advise the unit
buyers, among others, to pay all additional and remaining equities on 10 October 1984; that
their Pag-IBIG loan mortgages would be registered only upon payment of those equities;
and, that loan mortgages registered after 31 October 1984 would be subject to the
increased Pag-IBIG interest rates.
On 12 October 1984 ASIATRUST also wrote a letter to petitioner and signed by its Assistant
Manager Leticia R. de la Cruz informing him that his housing loan would only be
implemented upon the following conditions: (a) Payment of the remaining equity directly to
ASIATRUST Development Bank; and (b) Signing of all Pag-IBIG documents not later than
20 October 1984, so his mortgages could be registered on or before 31 October 1984.
Mortgages registered beyond said date shall subject the Pag-IBIG loan to the increased
interest rates of the National Home Mortgage Finance Corp. (per Circular #27 dated June
21, 1984).
According to petitioner, the letter came as a total surprise to him; all the while he thought
that his loan had already been released to QPSDCI and the titles transferred to his name;
he promptly wrote ASIATRUST to seek clarification; ASIATRUST responded by informing De
Vera Jr. that the developmental loan agreement between QPSDCI and the three (3) banks,
under which the individual titles of the condominium units were mortgaged in favor of the
FUNDERS to secure the loan, shall be paid out of the net proceeds of the Pag-IBIG loans of
the buyers; that the total amount of loan from the FUNDERS was distributed among all
condominium units such that each unit had to bear a certain portion of the total loan, or a
"loan value;" that per agreement with QPSDCI, ASIATRUST would only grant the Pag-IBIGHousing Loan with the release of the mortgage liens, which could not be released unless

the buyers fully paid their respective loan values; and that petitioner's equity payments to
QPSDCI had not been remitted to the bank.
On 30 May 1985 ASIATRUST informed QPSDCI that it could no longer extend the bridge
financing loan to some of the buyers, including petitioner, for various reasons, 10 among
which was that petitioner had already exceeded the age limit, hence, he was disqualified. 11
After learning of the disapproval of his loan, petitioner wrote the president of QPSDCI to
make arrangements to settle his balance. Since petitioner had already invested a
substantial amount in remodelling and improving his unit, rescinding the sale was no longer
a viable option. Consequently, he only asked the president of QPSDCI for some assurance
that the title would be turned over to him upon full payment.
In response, QPSDCI suggested that petitioner deal directly with ASIATRUST for any matter
regarding the sale of the unit. 12 President San Diego explained that "as far as we are
concerned we have sold to you our property at a certain price and we have correspondingly
issued to your goodself, thru the Bank, a Deed of Absolute Sale for the unit we sold to you
taking into consideration that the Bank has approved your loan per their advice dated
December 28, 1983 and presumably credited us for the approved amount of loan."
As petitioner failed to obtain the housing loan, he was not able to pay the balance of the
purchase price. QPSDCI sent him a letter 13 dated 6 August 1987 presenting him with two
options: (a) to pay the remaining balance of the purchase price, with interest, which had
already ballooned to P263,751.63, on or before 15 August 1987; or, (b) to pay rent for the
use of the unit from 28 July 1984 to June 1987.
On 20 May 1988 petitioner, upon discovering that the FUNDERS had already published a
notice14 of extrajudicial foreclosure of the mortgage, filed a complaint against respondents
for damages and injunction with urgent prayer for issuance of a writ of preliminary
injunction, annulment of mortgage based on fraud, with urgent prayer for the issuance of a
writ of preliminary attachment and specific performance. The complaint was docketed as
Civil Case No. Q-53737 and subsequently raffled to Branch 107 of the Regional Trial Court
of Quezon City.
Meanwhile, QPSDCI failed to pay its obligations to the FUNDERS. On 23 May 1988
ASIATRUST extrajudicially foreclosed the mortgage on twenty-seven (27) condominium
units, including that of petitioner De Vera Jr. The units were sold at public auction, with the
FUNDERS as the highest bidder. The certificate of sale was issued and annotated on the
CCTs.
On 3 March 1992 the trial court rendered judgment "directing the defendants (herein
respondents) to pay to the plaintiff (herein petitioner) jointly and severally the sum
equivalent to the penalties and charges plus whatever amount may be necessary to redeem
Unit 211-2C from any lien and encumbrances so that the title may be released and

delivered to the plaintiff, free from any lien and encumbrances, subject only to the deduction
of his unpaid balance of P139,000.00, which the plaintiff should pay out of his own funds,
plus exemplary damages of P100,000.00 each and to pay plaintiff attorney's fees jointly and
severally x x x P50,000.00 plus the expenses of litigation." The lower court denied plaintiff's
prayer for moral damages and dismissed defendants' counterclaim against the plaintiff and
cross-claims against each other.15
The Court of Appeals affirmed the decision of the trial court with the modification that
respondents were ordered solidarily to pay petitioner P50,000.00 as nominal damages, but
the award for actual and exemplary damages was deleted.
On 9 July 1997 petitioner filed a "Compliance with Manifestation and Motion for Extension
of Time to File Motion for Reconsideration" alleging that he received the decision of the
Court of Appeals on 4 July 1997 and requesting a thirty (30)-day extension within which to
file a motion for reconsideration. The motion was denied by respondent appellate court.
On 8 August 1997 petitioner filed a "Manifestation with Motion for Reconsideration," and on
6 February 1998 a "Compliance with Motion to Resolve Manifestation with Motion for
Reconsideration," with respondent court. Reckoning the deadline of the period to file a
motion for reconsideration at 19 July 1997, the Court of Appeals denied petitioner's Motion
for Reconsideration for having been filed out of time. Hence, the instant petition for review
on certiorari.
Petitioner assails the 18 February 1998 Resolution denying his Motion for Reconsideration,
asserting that the Court of Appeals should not have denied his motion on mere technicality.
Petitioner claims that his counsel was not notified of the Court of Appeals' decision. The
Notice of Judgment16 of the decision of the Court of Appeals shows that the same was
served on petitioner Gregorio de Vera himself and not on his counsel. Petitioner asserts that
service to a party is allowed only if the party is not represented by counsel. But if he is
represented by a counsel, then service shall be made upon his counsel unless service upon
the party himself is ordered by the court. Unless so ordered, service on the party himself
who is represented by counsel is not notice in law, hence, invalid. 17
Furthermore, justice will be better served by entertaining this petition than by dismissing it
outright. It is always in the power of this Court to suspend its own rules, or to except a
particular case from its operation, whenever the purposes of justice require it. 18
The trial court found that petitioner's failure to pay the balance of the price of Unit 211-2C
was not his fault. It also found that petitioner was a real party in interest to annul the loan
agreement between QPSDCI and the FUNDERS, and that he had priority in right to the unit
over the FUNDERS. The trial court rejected QPSDCI's counterclaim against petitioner for
rentals and sustained petitioner's claim for damages against private respondents.

The Court of Appeals ruled that the regular courts had no jurisdiction over the subject matter
of the case, the proper venue being the Housing and Land Use Regulatory Board (HLURB).
However, respondents were estopped from questioning jurisdiction because they filed
counterclaims in the lower court.
As to the issue of who had superior right over the Unit 211-2C, the Court of Appeals ruled in
favor of petitioner, holding that the mortgage in favor of ASIATRUST, which was the basis for
its title, did not bind petitioner inasmuch as the same was not registered with the National
Housing Authority (NHA), contrary to the mandate of Sec. 18 of PD 957, or " The
Subdivision and Condominium Buyers' Protective Decree.''19 The appellate court further
found that QPSDCI breached its warranties as seller under Art. 1547, and also violated its
obligation to deliver to petitioner a clean title as required by Sec. 4 of PD 957. It declared
that delivery of the unit to petitioner operated to transfer ownership to him from QPSDCI.
Respondents did not appeal. Petitioner contests the decision of the Court of Appeals only
insofar as it deleted the award of actual and exemplary damages and attorney's fees. The
only issue to be addressed by this Court therefore is the propriety of the award of damages
in favor of petitioner.
In finding QPSDCI liable for damages, the trial court held
x x x it (QPSDCI) has not exerted any reasonable diligence or effort to procure
the issuance of the title to the plaintiff. All that it did was to refer the plaintiff to the
Funder(s), alleging that he (plaintiff) should transact business with them as the
matter of loan is between the plaintiff and the Funder(s), and they had nothing to
do with it. However, it collected the additional equity and never forwarded the
same to the Funder(s) nor informed the latter of plaintiff's payment thereof. Thus,
to the mind of Asiatrust, plaintiff never paid the additional equity, although per
records of the Seller, he already had.
All these show negligence on the part of the Seller to perform its obligations
under the contract to the detriment of the plaintiff, for which it should be liable
for damages under Art. 2201 of the Civil Code, for the natural and probable
consequences of the breach of the obligation which the parties, specially the
Seller, should have foreseen or could have reasonably foreseen at the time the
obligation was contracted.
As to respondent ASIATRUST, the trial court held that its failure to notify petitioner of the
required steps to be taken after the approval of the loan, of the requirement that additional
equity be paid directly to the bank and other important aspects of the bridging loan, made it
liable for damages under the general provisions on torts under Art. 2176 of the Civil Code, in
relation to Art. 2202.
In deleting the award for damages, the respondent Court of Appeals explained

As earlier found, QPSDCI failed to comply with its warranties as seller.

Unfortunately, plaintiff-appellee posits the propriety of the award of actual
damages only in the probable sense: that such award is to the amount of
interests, penalties and other charges as plaintiff may stand liable for by reason
of the non-payment of the purchase price. In other words, plaintiff-appellee
admits not having suffered damages in consequence of non-compliance of
seller's warranties. Since actual damages are predicated on such pecuniary loss
as duly proved, the award of the lower court therefor is plainly not in order x x x
(citations omitted).
We agree with the respondent Court of Appeals on this point. Petitioner did not present any
proof that he suffered any damage as a result of the breach of seller's warranty. He did not
lose possession of his condominium unit, although the same had not yet been registered in
his name. In his Consolidated Reply, petitioner came up with this feeble argument for
claiming actual damages, a rehash of his motion for reconsideration with the Court of
Appeals
Petitioner reiterates that the compensatory damages awarded is to the amount of
interests, penalties and other charges as (he) may stand liable for by reason of
the non-payment of the balance of the purchase price of Unit #211 in
consequence of the respondent's fault or negligence as evidenced by Exhs. S
and S-1. The compensation is the same amount as whatever the liability may be
and therefore merely offsets the liability x x x x
The cost of clearing the CCT of liens and encumbrances and transferring it to the
name of the petitioner are also part of the actual or compensatory damages and
are its own proof.
Article 2199 of the Civil Code provides that one is entitled to adequate compensation only
for such pecuniary loss suffered by him as is "duly proved." 20 This provision denies the grant
of speculative damages, or such damage not actually proved to have existed and to have
been caused to the party claiming the same. 21 Actual damages, to be recoverable, must not
only be capable of proof, but must actually be proved with reasonable degree of certainty.
Courts cannot simply rely on speculation, conjecture or guesswork in determining the fact
and amount of damages.22
This does not mean however that petitioner is liable to private respondents for penalties,
interests and other charges that accrued by reason of non-payment of the balance of the
purchase price. Respondent ASIATRUST had made several representations to petitioner
that his loan had been approved. The tenor of the letters sent by ASIATRUST would lead a
reasonable man to believe that there was nothing left to do but await the release of the loan.
ASIATRUST cannot hide behind the pithy excuse that the grant of the bridge financing loan
was subject to the release of the Pag-IBIG loan. The essence of bridge financing loans is to
obtain funds through an interim loan while the Pag-IBIG funds are not yet available. To await
the release of the Pag-IBIG loan would render any bridge financing nugatory. Thus, we

agree with the trial court when it said that "the conclusion is inevitable that although the
plaintiff was not able to pay, he was a victim of circumstances and his failure was not due to
his own fault."
Furthermore, Sec. 25 of PD 957 provides:
SECTION 25. Issuance of Title. The owner or developer shall deliver the title
of the lot or unit to the buyer upon full payment of the lot or unit. No fee, except
those required for the registration of the deed of sale in the Registry of Deeds,
shall be collected for the issuance of such title. In the event a mortgage over the
lot or unit is outstanding at the time of the issuance of the title to the buyer, the
owner or developer shall redeem the mortgage or the corresponding portion
thereof within six months from such issuance in order that the title over any fully
paid lot or unit may be secured and delivered to the buyer in accordance
herewith.
From the foregoing it is clear that upon full payment, the seller is duty-bound to deliver the
title of the unit to the buyer. Even with a valid mortgage over the lot, the seller is still bound
to redeem said mortgage without any cost to the buyer apart from the balance of the
purchase price and registration fees. It has been established that respondent QPSDCI had
been negligent in failing to remit petitioner's payments to ASIATRUST. If QPSDCI had not
been negligent, then even the possibility of charges, liens or penalties would not have
arisen. Therefore, as between QPSDCI and petitioner, the former should be held liable for
any charge, lien or penalty that may arise. However, it was error for the trial court to remedy
the situation in the form of an award for damages because, as discussed earlier, the basis
for the same does not appear indubitable.
Part of the confusion lies in the deficiency of the trial court's decision. It had found that
petitioner had superior right to the unit over the FUNDERS and the mortgage in favor of the
FUNDERS was contrary to Condominium laws. Therefore, the proper remedy was to annul
the mortgage foreclosure sale and the CCT issued in favor of ASIATRUST, and not merely
decree an award for damages. We held in Union Bank of the Philippines v. HLURB 23
Clearly, FRDC's act of mortgaging the condominium project to Bancom and
FEBTC, without the knowledge and consent of David as buyer of a unit therein,
and without the approval of the NHA (now HLURB) as required by P.D. No. 957,
was not only an unsound real estate business practice but also highly prejudicial
to the buyer David, (who) has a cause of action for annulment of the mortgage,
the mortgage foreclosure sale, and the condominium certificate of title that was
issued to the UBP and FEBTC as highest bidders of the sale.
These remedies were clearly within those sought for in petitioner's complaint. The trial court
should have also ordered QPSDCI to credit petitioner's payments to his outstanding balance

and deliver to petitioner a clean CCT upon full payment of the purchase price as mandated
by Sec. 25 of PD 957.
We note that petitioner, believing that he won, did not appeal the trial court's decision.
Petitioner is partly to blame for the difficult situation he is in, having filed his complaint with
the regular courts instead of the HLURB. Nevertheless, both trial court and the Court of
Appeals found that petitioner had superior rights over the condominium unit, that petitioner
was not bound by the mortgage in favor of the FUNDERS and, that QPSDCI violated its
contract with petitioner by its failure to remit the latter's payments. Such findings are
uncontested before us and provide enough ground to warrant the modification of the ruling,
so that full relief may be accorded to petitioner. The general rule that an appellate court may
only pass upon errors assigned may be waived, and the appellate court may consider
matters not assigned when consideration of which is necessary in arriving at a just decision
and complete resolution of the case or serve the interests of justice or to avoid dispensing
piecemeal justice.24
WHEREFORE, the assailed Decision of the Court of Appeals in CA-G.R. CV No. 37281 is
MODIFIED thus
(a) The mortgage over Unit 211-2C of Lourdes I Condominium covered by CCT No. 2307 as
well as its foreclosure sale is declared NULL and VOID. The Ex-Officio Sheriff of Quezon
City is ordered to cancel the certificate of sale in favor of ASIATRUST Development Bank
over the aforesaid Unit 211-2C and the Register of Deeds of Quezon City to cancel the
Annotation of the Real Estate Mortgage (Entry No. 7714) and the Annotation of the
Certificate of Sale (Entry No. 8087); and
(b) Respondents Q. P. San Diego Construction, Inc., and ASIATRUST are ordered to credit
all payments made by petitioner Gregorio de Vera Jr., to his outstanding balance, and to
deliver to petitioner the certificate of title over Unit 211-2C, Lourdes I Condominium, upon
full payment of the purchase price, free from all penalties, liens, charges, except those
accruing after finality of this Decision.
The award of nominal damages in favor of petitioner in the amount of P50,000.00 is
AFFIRMED.
SO ORDERED.
Bellosillo, Mendoza, Quisumbing, Buena, and De Leon, Jr., JJ., concur.

terms of the reservation was the execution of a contract to sell once the downpayment was
paid in full. Upon submission of the reservation, the Sadhwanis issued a check for
P50,000.00 to cover the reservation fees to Josephine Flores Guina, agent of St. Martin
Realty who issued a receipt to them.1wphi1.nt
On November 18, 1988, the Sadhwanis paid GLPI the amount of P819,531.25.
Subsequently, Bhavna Harilela signed a "Contract To Sell" 2 with GLPI, represented by its
President Emmanuel Zapanta. Ms. Guina assured them that they would be furnished with a
copy of the contract after its notarization, and that the amount, representing the balance of
the purchase price, would be included in a loan application with a bank. However, the
contract to sell was not notarized, as the private respondents were not able to supply GLPI
with a copy of their passports.
Under the contract, GLPI agreed to sell to Sadhwanis a 198.75 square meters condominium
unit particularly Unit R-84 of Southwest Tower. The contract price was P2,484,375.00,
inclusive of a reservation deposit of P50,000.00.
The Contract to Sell, Section 3, provides:
"Section 3. PURCHASE PRICE AND TERMS OF PAYMENT.
Republic of the Philippines
SUPREME COURT
Manila

"(a) The purchase price of the UNIT, exclusive of interest shall be TWO MILLION
FOUR HUNDRED EIGHTY FOUR THOUSAND THREE HUNDRED SEVENTY
FIVE (P2,484,375.00) Pesos, Philippine Currency, payable as follows:

FIRST DIVISION
G.R. No. 122088

January 26, 2001

GOLD LOOP PROPERTIES, INC. and EMMANUEL R. ZAPANTA, petitioners,

vs.
THE COURT OF APPEALS, BHAVNA HARILELA SADHWANI and RAMESH J.
SADHWANI, represented by their attorney-in-fact PURSHUTAM DIALANI, respondents.

Amount

Downpayment of 35%

Due Date

P869,531.25

PARDO, J.:
The case before the Court is an appeal via certiorari from the decision 1 of the Court of
Appeals dismissing the petition for certiorari assailing the decision of the Senior Deputy
Executive Secretary, Office of the President sustaining the ruling of the Housing Land Use
and Regulatory Board of Commissioners requiring petitioners to furnish private respondents
with copy of the contract to sell and to accept the balance of the purchase price of a
condominium unit.
On July 16, 1988, private respondents Bhavna Harilela and Ramesh Sadhwani (hereinafter
referred to as "Sadhwanis") submitted through St. Martin Realty Corporation, a realtor agent
of petitioner Gold Loop Properties, Inc. (hereinafter referred to as "GLPI"), a signed pro
forma reservation application addressed to GLPI for the purchase of one (1) condominium
unit at Gold Loop Towers residential complex, located in Ortigas Complex, Pasig. One of the

Less: Reservation

50,000.00

July 16, 1988

Net Downpayment

819,531.25

Oct. 21, 1988

Balance Payable

P1,614,843.80

May 20, 1989

107,626.25

June 20, 1989

107,626.25

July 20, 1989

107,626.25

August 20, 1989

107,626.25

September 20, 1989

107,626.25

October 20, 1989

107,626.25

November 20, 1989

107,626.25

December 20, 1989

107,626.25

January 20, 1989

107,626.25

thru the bank designated by the SELLER and subject to standard banking
requisites and approval.
"NOTE: In the event of non-approval of the loan by the bank, the BUYER
commits to adopt the "Co-Terminus Payment Plan" retroactive to the date of
scheduled downpayment as reflected above. This plan requires the payment of
non-interest bearing equal monthly installments spreads on the full balance of the
purchase price commencing 30 days after the scheduled downpayment up to
January 1990."3
GLPI informed the Sadhwanis that the bank loan accommodation which was to serve as
payment of the balance of the purchase price was disapproved, and thus, per the terms of
the Contract to Sell, the balance would become payable through the Co-terminus Payment
Plan schedule of payments, in implementation of which petitioners were informed by letter 4
dated March 15, 1989, which pertinently reads:
"Despite diligent efforts and ardent representations on our part to have the
approval of the loan in accordance with the Contract, such approval could not be
obtained for the reason that banks are not willing to extend a loan to be secured
by a still ongoing project. Accordingly, the balance of the purchase price should
now be paid in equal monthly installments until January 1990 pursuant to the
aforequoted provision. The schedule of these payments in implementation of this
Co-Terminus Payment Plan should be as follows:

"Date of Payment

March 20, 1989 (Covering the period from Nov. 21, 1989 to
March 21, 1989)

April 20, 1989

Amount

P538,281.25

107,626.25

"TOTAL

P1,614,843.80"

18 months starting December 1988 until May 1990 @ 3%

penalty for delayed amortization

3%

Penalty per month

P 2,691.41

x 3 months
By letter5 dated March 16, 1989, addressed to GLPI, the Sadhwanis offered to resell their
rights to the condominium unit they purchased. The letter contained proposals which read:
"Per our verbal agreement, this comes to formalize the earnest intention of my
clients, Spouses Ramesh and Anita Sadhwani, to sell their rights over Unit R-84
of the Gold Loop Towers, under the following terms and conditions:

"Total Penalty

P 8,074.22

P2,881,875.00

1,614,843.75

"RE-SALE:
"ACQUISITION:

198.75 SQ. M. @ 12,500 PER SQ. M.

198.75 sq. m. @ P14,500.00 per sq. m.

P2,484,375.00

Less: Balance
869,531.25

Less: 35% downpayment paid 11-15-88

P1,267,031.25
Balance

Monthly amortization payable in

1,614,843.75

Less: Interest for delayed Amortization

89,713.54

8,074.22

Net cash involved payable in 6 months

P1,258,957.03"

Petitioners rejected the offer on the resale of the rights over the condominium unit proposed
by private respondents because the offer was unreasonable, unfair and inequitable.
On March 19 and April 25, 1989, respondent Ramesh J. Sadhwani demanded a copy of the
contract to sell, noting that his wife had no official document to show that she bought a
condominium unit from GLPI and there were conditions and/or stipulations in the contract
which she could not be expected to comply with, unless a copy of the same be given to her.
By letter dated May 22, 1989 to GLPI, respondent Sadhwanis counsel made a formal
demand for the delivery to him of a copy of the contract to sell.
Spouses Sadhwanis failed to pay any of the monthly amortizations in the payment plan.
On August 7, 1989, petitioners sent a letter demanding payment of the balance amounting
to P1,614,814.80, and informed the Sadhwanis that GLPI will rescind the Contract to Sell
and automatically forfeit their down payment should they fail to pay within five (5) days from
receipt of the letter in accordance with section 8 of the contract to sell. 5
On August 14, 1990, spouses Sadhwanis filed with the Housing and Land Use Regulatory
Board (hereinafter referred to as "HLURB"), a complaint for specific performance with an
alternative prayer for refund against GLPI. Spouses Sadhwanis prayed that they be
furnished with a copy of the contract to sell and allowed them to remit the balance of the
consideration to GLPI and to deliver to them the title and possession of the condominium
unit, or to be reimbursed of the amount they paid with interest and damages. 6
On October 8, 1990, petitioners filed with the HLURB an answer to the complaint and
subsequently, the parties submitted their position papers.
On October 2, 1992, HLURB Arbiter Roberto F. Paras rendered a decision, the dispositive
portion of which provides:

"2. Ordering said respondents to deliver possession of and to effect

the transfer of title to the subject condominium unit in favor of the
complainants after full payment of the purchase price;
"In the event compliance with the above dispositive portion is no
longer possible, respondents instead are hereby ordered to jointly and
severally reimburse complainants the amount of Eight Hundred
Seventy Eight Thousand Three Hundred Sixty Six Pesos and Thirty
Five Centavos (P878,366.35) representing complainants reservation
deposit and downpayment, with legal interest from the time of the
filing of this complaint;
"3. Ordering respondents jointly and severally to pay complainants (a)
moral damages in the amount of Ten Thousand Pesos (P10,000.00),
and (b) attorney' fees in the amount of Thirty Thousand Pesos
(P30,000.00);
"4. Dismissing respondents counterclaim for lack of merit.
"IT IS SO ORDERED."7
On November 16, 1992, petitioners appealed to the HLURB Board of Commissioners,
Quezon City while private respondents interposed a partial appeal thereto.
On October 11, 1993, the HLURB Board of Commissioners rendered a decision, the
dispositive portion of which reads:
"WHEREFORE, premises considered, respondents appeal is hereby DENIED
and complainants Partial Appeal is hereby given due course and the Decision
subject of this Appeal is hereby MODIFIED by DELETING the second paragraph
of order number two. Accordingly, complainants are directed to pay the balance
of the purchase price, without interest, within 30 days from receipt hereof while
respondents are ordered to accept said payment and turn over to complainants
the unit subject of said contract to sell.
"All other aspects of the decision is hereby AFFIRMED IN TOTO.
"SO ORDERED."9

"WHEREFORE, premises considered, judgment is hereby rendered:

On January 7, 1994, petitioners elevated the case to the Office of the President.
"1. Ordering respondents Gold Loop Properties, Inc. and St. Martin to
furnish complainants with a copy of the subject Contract to Sell and to
accept complainants payment of the agreed purchase price balance
of the Condominium unit described in the said contract to Sell;

On August 24, 1994, Senior Deputy Executive Secretary Leonardo A. Quisumbing 10

rendered a decision11 dismissing petitioners appeal. He also denied petitioners motion for
reconsideration12 in a Resolution13 dated December 22, 1994.

On March 22, 1995, petitioners filed with the Supreme Court a special civil action for
certiorari assailing the decision of the Senior Deputy Executive Secretary, Office of the
President. In a resolution dated April 4, 1995, the Court referred the case to the Court of
Appeals for proper disposition.13

affirming those of the trial court, are not to be disturbed on appeal. The rationale behind this
doctrine is that review of the findings of fact of the Court of Appeals is not a function that the
Supreme Court normally undertakes. In the case at bar, we subscribe to the findings of fact
of the Court of Appeals when it held that:

On June 22, 1995, the Court of Appeals promulgated its decision dismissing the petition. 14
The court ruled that the failure of petitioners to give respondents a copy of the contract to
sell sued upon, despite repeated demands therefor, and notwithstanding the payment of
P878,366.35, was a valid ground for private respondents to suspend their payments. And
given the fact that the contract to sell was in writing, the Sadhwanis, as buyers, were
entitled to a copy. Their request for a copy sprung from their desire to comply with what was
incumbent upon them to perform thereunder. While buyers do not need a copy of the
contract to know the stipulated purchase price, the schedule of payments and the
outstanding balance, the contract to sell, being an eight pages single-spaced document,
broken down into twelve sections, spelling out the parties respective monetary and nonmonetary rights and obligations, the buyers could not be expected to recall each and every
detail of the stipulations of the contract without a copy of the contract to guide them.

"x x x Private respondents were indeed justified in suspending payment of their

monthly amortizations. The failure of petitioners to give them a copy of the
Contract to Sell sued upon, despite repeated demands therefor, and
notwithstanding the private respondents payment of P878,366.35 for the subject
condominium unit was a valid ground for private respondents to suspend their
payments. x x x
xxx
"And contrary to petitioners stance, records disclose that they were the ones
who did fraudulent acts against private respondents by entering into a Contract to
Sell with the latter and accepting their downpayment of P878,366.35, withholding
a copy thereof for no valid reason at all, and then threatening them with
rescission and forfeiture, when private respondents only suspended payment of
the balance of the purchase price while waiting for their copy of the Contract to
Sell."23

On July 14, 1995, petitioners filed with the Court of Appeals a motion for reconsideration. 16
However, the court denied the motion.17
Hence, this petition.18
Petitioners contend that private respondents are not entitled to suspend payment of their
monthly amortizations because of the alleged failure of petitioners to furnish them copy of
the contract to sell and that private respondents used the alleged failure to give them copy
of the contract as an excuse for defaulting in their contractual obligation to pay the
installments. Petitioners insist that private respondents were given copy of the contract to
sell. Petitioners pointed out that under the contract, they had the right to rescind the contract
in case private respondents breached the contract.
In their Comment19 and Memorandum,20 private respondents alleged that they have not in
fact received a copy of the contract to sell. Private respondents likewise averred that
petitioners assertion is premised on its completely wrong proposition that private
respondents had given petitioners a reason to rescind the contract to sell. What was really
in issue was that it was petitioners that gave them sufficient and well-founded cause to
suspend payment of their monthly amortizations on the condominium unit.

The private respondents are entitled to a copy of the contract to sell, otherwise they would
not be informed of their rights and obligations under the contract. When the Sadhwanis
parted with P878,366.35 or more than one third of the purchase price for the condominium
unit, the contract to sell, or what it represents is concrete proof of the purchase and sale of
the condominium unit.
WHEREFORE, the Court hereby DENIES the petition for review on certiorari, for lack of
merit. The Court AFFIRMS the decision of the Court of Appeals in CA-G. R. SP No. 36977
affirming the order for delivery of a copy of the contract to sell to private respondents and to
accept payment of the balance of the purchase price and deliver title over the condominium
unit to the private respondents upon full payment of the balance of the purchase
price.1wphi1.nt
No costs.

We agree with private respondents.

SO ORDERED.

The core issue actually boils down to the question of whether or not respondents may
suspend payment of their monthly amortizations due to failure of petitioners to furnish them
copy of the contract to sell.

Davide, Jr., Puno, Kapunan, and Ynares-Santiago, JJ., concur.

Time and again, the Court had occasion to reiterate the well-established rule that findings of
fact of the Court of Appeals are conclusive on the parties and are not generally reviewable
by this Court.21 We find no compelling reason to disturb the factual findings of the Court of
Appeals, in the absence of showing that the present case falls within the exceptions to this
rule.22 When supported by sufficient evidence, the findings of fact of the Court of Appeals

G.R. No. 118822 July 28, 1997

G.O.A.L., INC., petitioner,
vs.
COURT OF APPEALS, OFFICE OF THE PRESIDENT LEGAL AFFAIRS, HOUSING AND
LAND USE REGULATORY BOARD, RIZALINO SIMBILLO, WILLIAM ONG, HERMINIA
MESINA, SELFA MARTINEZ, FILOMENO TENG, RAFAEL JAVIER, FERNANDO DEL
MUNDO, MILDRED PAREJA, REMEDIOS LASQUETE, GEORGE CABIGAN and
ARCADIO SAMPANG, respondents.

BELLOSILLO, J.:
G.O.A.L., INC., (GOAL), in this petition for review on certiorari, seeks to set aside part of the
decision
of
the
Court
of
Appeals
dated
28
September
1994 1 which affirmed the decision of the Office of the President Legal Affairs (OPLA) that
earlier likewise affirmed the decision of the Housing and Land Use Regulatory Board
(HLURB). Petitioner confines its petition to the construction of the fifth floor of Gemin I
Condominium and all works related thereto, including the issuance of title to private
respondent Teng and providing free parking spaces for the condominium units. 2
On 23 May 1983 GOAL and the National Housing Authority (NHA) entered into an
agreement whereby NHA extended to GOAL a loan of P4.425 million for the construction of
Gemin I Condominium at 941 Gonzales St., Ermita, Manila. Sometime in 1984 a "Contract
Agreement" was entered into between GOAL and Matson International Corporation for the
construction of the condominium within one (1) year at the cost of P4.2 million. However, in
the later part of 1984, the contractor abandoned the project with only 60% of it finished. In
1985 GOAL offered the condominium units for sale with private respondents among its
buyers. To remedy the situation brought about by the abandonment of the project by the first
contractor, GOAL subsequently pursued the construction of the fifth floor with NHA granting
additional funding on the condition that it would hold on to the condominium certificates of
title of private respondents.

Republic of the Philippines

SUPREME COURT
Manila
FIRST DIVISION

In August 1989 private respondents filed with the Housing and Land Use Regulatory Board
(HLURB), Office of Appeals, Adjudication and Legal Affairs (OAALA), a complaint against
GOAL. Among the issues raised were the illegal construction of the fifth floor of Gemin I
Condominium, the failure to deliver the title of private respondent Filomeno Teng despite his
repeated demands, and the failure to provide adequate parking spaces for the unit owners.
On 31 March 1989 OAALA rendered its decision ordering GOAL, inter alia, (a) to stop the
construction of the fifth floor, (b) to deliver the title of private respondent Teng, and (c) to
provide adequate parking space for the unit owners. 3

On appeal to the Office of the President Legal Affairs (OPLA) and subsequently to the Court
of Appeals, the decision rendered by the HLURB-OAALA was affirmed in toto. Petitioner's
motion for reconsideration was denied. Hence this petition.
Petitioner imputes error to the Court of Appeal in not finding the true facts of the case that
greatly affected its decision, and its decision being contrary to law.
GOAL contends that the Court of Appeals failed to appreciate the fact that the construction
of the fifth floor was with the written approval of public respondent HLURB as required by
Sec. 22 of P.D. 957 which provides
Sec. 22. Alteration of Plans. No owner or developer shall change or alter the
roads, open spaces, infrastructures, facilities for public use and/or other form of
subdivision development as contained in the approved subdivision plan and/or
represented in its advertisements, without the permission of the Authority and the
written conformity or consent of the duly organized homeowners association, or
in the absence of the latter, by majority of the lot buyers in the subdivision
(emphasis supplied).
The above provision is clear. We do not have to tussle with legal hermeneutics in the
interpretation of Sec. 22 of P.D. 957. The written approval of the National Housing Authority
alone is not sufficient. It must be coupled with the written conformity or consent of the duly
organized homeowners association of the majority of the lot buyers. Failing in this, the
construction of the fifth floor is violative of the decree invoked. The Court of Appeals simply
applied the law, and correctly so.
Petitioner likewise contends that it should not have been faulted for failing to deliver the title
to private respondent Teng as the proximate cause thereof was the abandonment of the
construction project by the first contractor, hence, due to force majeure. 4
We cannot sustain petitioner. There is no one else to blame but itself. Upon full payment of
the agreed price, petitioner is mandated by law to deliver the title of the lot or unit to the
buyer. Both the "Contract to Sell" of petitioner and private respondents, and Sec. 25 of P.D.
957 state
Sec. III (Contract to Sell). Title and Ownership of Unit. Upon full payment by
the vendees of the full amount of the purchase price stipulated under Sec. III
hereof, the assessments and expenses under Sec. IV and otherwise upon
compliance by the VENDEES of all obligations therein, the VENDOR will convey
to the VENDEE all rights and interests of the former and to the Unit, subject
hereof together with the interest in the common area in the Condominium
Corporation
appurtenant
to
such
unit . . .

Sec. 25, P.D. 957 Issuance of Title. The owner or developer shall deliver
the title of the lot or unit to the buyer upon full payment of the lot or unit . . . In the
event a mortgage over the lot or unit is outstanding at the time of the issuance of
the title to the buyer, the owner or developer shall redeem the mortgage or the
corresponding portion thereof within six months from such issuance in order that
the title over any paid lot or unit may be secured and delivered to the buyer in
accordance herewith.
Petitioner also attempts to justify its failure to deliver the certificate of title of private
respondent Teng by claiming that it used the title as part collateral for the additional loan
NHA had extended for the construction of the fifth floor.
The Court observes the frequent allusion of petitioner to its predicament brought about by
the abandonment of the project by the first contractor. But such is irrelevant in light of Sec.
25 of P.D. 957 as well as the Contract to Sell of the parties. While we empathize with
petitioner in its financial dilemma we cannot make innocent parties suffer the consequences
of the former's lack of business acumen. Upon full payment of a unit, petitioner loses all its
right and interests to the unit in favor of the buyer. Consequently, it has no right to use the
certificate of title of respondent Teng as collateral for a new loan. The title of Teng must be
released to him as provided by law.
With respect to the second issue, petitioner contends that the decision of the Court of
Appeals is contrary to law considering that under Sec. 12-D, No. 2, Rule V of the
Implementing Rules of P.D. 957, what should be given for free are only "off-street" parking
spaces and not indoor parking areas.
Petitioner is wrong. It has for purposes of its own construed "off-street" to mean "not
including indoor." On the other hand, the law does not exclude "indoor parking." What it
specifically excludes is "street parking." Therefore, parking may be in the basement or, in
the absence thereof, in the first floor.
Furthermore, at this point, a definition of terms may be necessary. In a condominium,
common areas and facilities are "portions of the condominium property not included in the
units," whereas, a unit is "a part of the condominium property which is to be subject to
private ownership." 5 Inversely, that which is not considered a unit should fall under common
areas and facilities.
Hence, the parking spaces not being subject to private ownership form part of the common
area over which the condominium unit owners hold undivided interest. As such, petitioner
cannot invoke Sec. I, Art. III, of the Bill of Rights which provides that "No person shall be
deprived of life, liberty or property without due process of law." Petitioner alone does not
own the parking area. The parking space is owned in common by the developer and the unit
owners. Private respondents must be allowed to use the parking area.

Finally, petitioner contends that the payment of P10,000.00 as moral damages and
P5,000.00 as exemplary damages plus P5,000.00 as attorney's fees is too much of a
penalty. However, the Court of Appeals upheld these awards holding that
In the light of the foregoing premises, we sense no error in the award of
attorney's fees, moral and exemplary damages, and administrative fine against
petitioner. This is allowed by the provisions of civil law and under Secs. 38 and
39 of P.D. 957:
Republic of the Philippines
SUPREME COURT
Manila

Sec. 38. Administrative Fines The Authority may prescribe and impose fines
not exceeding ten thousand pesos for violations of the provisions of this Decree
or any rule or regulation thereunder. Fines shall be payable to the Authority and
enforceable through writs of execution in accordance with the provisions of the
Rules of Court.
Sec. 39. Penalties Any person who shall violate any of the provisions of this
Decree and/or any rule or regulation that may be issued pursuant to this Decree
shall, upon conviction, be punished by a fine of not more than twenty thousand
(P20,000.00) pesos and/or imprisonment of not more than ten years: Provided,
that in the case of corporations, partnership, cooperatives, or associations, the
President, manager, or Administrator or the person who has charge of the
administration of the business shall be criminally responsible for any violation of
this Decree and/or the rules and regulations promulgated pursuant thereto. 6
Petitioner can hardly be excused for its failure to comply with the provisions of P.D. 957 by
claiming ignorance of the requirements of the decree and that a "mistake upon a doubtful or
difficult question of law may be the basis of good faith." Being engaged in a business
affected by P.D. 957, petitioner should be aware of its provisions and its mandates which, as
can be readily perceived, are clear, simple and unmistakable. 7
WHEREFORE, finding no error in the Decision sought to be reviewed, the petition is
DENIED. Costs against petitioner.
SO ORDERED.

FIRST DIVISION
G.R. No. 151298

November 17, 2004

SPOUSES MINIANO and LETA DELA CRUZ, petitioners,

vs.
HON. COURT OF APPEALS and SPOUSES ARCHIMEDES and MARLYN AGUILA,
respondents.

DECISION

QUISUMBING, J.:
This is a petition for review on certiorari which seeks to reverse the Decision 1 dated
September 28, 2001 in CA-G.R. SP No. 59505, of the Court of Appeals, Sixteenth Division,
and its Resolution2 dated December 11, 2001. The Court of Appeals reversed the Decision 3
dated July 12, 1999, of the Regional Trial Court (RTC) of Antipolo City, Branch 73, which
upheld the validity of the compromise agreement of the parties and ordered the issuance of
a writ of execution.4

Padilla, Vitug and Kapunan, JJ., concur.

The facts as culled from the records are as follows:
Hermosisima, Jr., J., is on leave.
On November 24, 1997, petitioners Miniano and Leta dela Cruz and respondents
Archimedes and Marlyn Aguila entered into a Contract to Sell of a house on a 171-sq.m.
portion of a 347-sq.m. lot covered by TCT No. 305339, located along Cypress Street, Town
and Country Executive Village, Antipolo, Rizal. 5
The parties agreed to the following terms and conditions in the contract:

a) The price of the house and lot is P3.3 million payable by installments, the first
of which is P1.5 million.
b) The P1.8 million shall then be payable in five years with an interest of 20% per
annum, paid through a monthly amortization of P50,000.
c) There shall be an additional interest of 5% on the amount due if there is failure
to pay any installment when it falls due.
d) When the contract price is fully paid, the parties shall execute the absolute
deed of sale.
e) Failure to pay three or more installments shall be a basis for the sellers to
either cancel the contract or consider the whole balance due and demandable. 6
Upon payment of the initial amount by respondents, petitioners delivered the keys to the
house. Whereupon respondents entered and occupied the property.7 But, on January 13,
1999, petitioners filed a Complaint docketed as Civil Case No. 99-5123 in the RTC of
Antipolo City, Branch 73, for cancellation of the contract to sell, with penalties and damages.
Petitioners claimed that despite the delivery of the keys and TCT of the property to the
respondents and countless demands to pay the installments, respondents failed to make
the subsequent monthly payments. Hence, petitioners sought the cancellation of the
contract, the forfeiture of the downpayment, and the payment of the accumulated interests
and penalties including attorneys fees and cost of suit. 8
Respondents asked for an extension of time to file their Answer, which the trial court
granted. But on March 2, 1999, both parties filed a Compromise Agreement 9 instead. The
agreement provided:

5. That Defendants also promised that once they shall have updated their
account on or before April 30, 1999, but fail to pay succeeding amortization, the
Contract to Sell shall likewise be cancelled. If such event happens, the
Defendants shall have sixty (60) days from notice to vacate to surrender
possession of the house and lot, subject matter of the Compromise Agreement,
with same effect as stated in paragraph 4 thereof.
On this basis, the trial court ruled as follows:
Finding the compromise agreement not to be contrary to law, good morals, good
customs, public order or public policy, the Court with the terms and conditions of
said agreement, enjoin[s] the parties to comply with the provisions thereof
faithfully and in good faith. Without pronouncement as to costs.
SO ORDERED.10
On January 10, 2000, the petitioners filed a Motion for Execution. 11 They alleged that from
the time the Compromise Agreement was signed and approved by the court, the
respondents had been grossly violating the terms of the Compromise Agreement. They had
not paid the agreed amount nor delivered any acceptable property in satisfaction of the
balance of the purchase price.
On January 28, 2000, the respondents countered with a Motion to Dismiss. They alleged
that the Housing and Land Use Regulatory Board (HLURB) has exclusive jurisdiction over
the case under Presidential Decree No. 957. 12 On February 1, 2000, they filed with the
HLURB an action for the recovery of the downpayment and the cancellation of the
contract.13
On February 18, 2000, the trial court issued an Order denying the motion to dismiss, to wit:

1. That Defendants, upon receipt of the Summons and copy of the Complaint,
personally visited Plaintiffs in their residence and explained their financial
problem and their inability to pay their obligation. During said visit, Defendants
showed to Plaintiffs an incomplete and unsigned xerox copy of a supposed Free
Patent being processed, xerox copy of which is herein attached as Annex A and
made part hereof.
2. That Defendants promised Plaintiffs that they will surrender and apply the
above Free Patent once completed, as partial payment to their obligation.
3. That Defendants admit the correctness of the allegations in the Complaint and
they promised to update their obligation not later than April 30, 1999 and make
monthly payment as stipulated in the Contract to Sell until the price is fully paid.
4. That Defendants promised and agreed, that once they fail to update their
account on or before April 30, 1999, the Contract to Sell shall be considered
cancelled and all past payments forfeited in favor of the Plaintiffs.

Under the Rules, a motion to dismiss may be filed within the time but before filing
the answer to the complaint or pleading asserting the claim. A motion to
dismiss after the judgment has become final is highly inappropriate. The case
has already been decided and disposed of and there is no more action to be
dismissed. For this reason, the defendants Motion to Dismiss is hereby DENIED.
The Compromise Agreement is plain and clear. It was voluntarily and knowingly
signed by the parties stipulating that upon failure of the defendants to update
their account on or before April 30, 1999 and to pay succeeding amortizations,
the Contract to Sell shall be cancelled; the subject property shall be vacated,
[and] possession thereof to be surrendered to the plaintiffs. This Court, sees no
reason why, after the failure of the defendant to comply with it, a motion for
execution should not be GRANTED.
Wherefore, let a writ of execution be issued immediately.14

The respondents filed a Motion for Reconsideration, which the trial court denied. Hence,
they filed a Petition for Certiorari and Prohibition with the Court of Appeals. The appellate
court ruled in favor of herein respondents. It granted the respondents petition, thus:
WHEREFORE, the petition is GRANTED and the assailed Order dated June 19,
2000 and the Decision dated July 12, 1999 are NULLIFIED and SET ASIDE. No
pronouncement as to costs.
SO ORDERED.15
The Court of Appeals ruled that the contract is a conditional sale of real estate on
installment payment and the applicable laws are Sections 3 and 4 of Republic Act 6552. 16
The first installment of P1.5 million should be deemed equivalent to 30 monthly installments
or a period of two years and six months worth of installment payments. 17
According to the Court of Appeals, the contract and the Compromise Agreement were void.
It said the respondents should have been given a grace period of at least two months to pay
the remaining installments, without additional interest. Furthermore, respondents were
entitled by law to a refund of 50% of their total payments in the event the contract is
cancelled. Since these were not followed both in the contract and in the Compromise
Agreement, the judgment based on these is necessarily null and void as well. 18
The petitioners filed a Motion for Reconsideration which was denied, thus:
[I]t appearing that the arguments raised in the motion have already been
sufficiently discussed and passed upon in the decision sought to be
reconsidered, without the respondents having been able to point out any new
matter of substance and weight that would justify a modification or reversal of the
said decision, the motion is DENIED for lack of merit. 19
In this petition for review by petitioners, the following errors are attributed to the appellate
court:
i. THE COURT OF APPEALS COMMITTED GRAVE ABUSE OF DISCRETION
AND IGNORANCE OF LAW IN ENTERTAINING AND RESOLVING AN
IMPERFECT APPEAL BY CERTIORARI UNDER RULE 65, REVISED RULES
OF COURT AND ESTABLISHED JURISPRUDENCE.
ii. THE RESPONDENT COURT OF APPEALS, WITH DUE RESPECT,
COMMITTED GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OR
EXCESS OF ITS JURISDICTION, WHEN IT STRUCK DOWN THE JUDICIAL
COMPROMISE AGREEMENT DESPITE THE ABSENCE OR LACK OF ANY OF
THE GROUNDS FOR NULLITY ENUMERATED IN ART. 2038 OF THE CIVIL
CODE.
iii. THE RESPONDENT COURT OF APPEALS, WITH DUE RESPECT,
COMMITTED GRAVE ABUSE OF DISCRETION AMOUNTING TO [LACK] OR

EXCESS OF ITS JURISDICTION WHEN IT SET ASIDE THE JUDICIAL

COMPROMISE AGREEMENT DESPITE THE FACT THAT THE SAME HAS THE
FORCE OF RES JUDICATA BETWEEN THE PARTIES AND IS FINAL AND
IMMEDIATELY EXECUTORY.
iv. THE COURT OF APPEALS, COMMITTED GRAVE ABUSE OF DISCRETION
TANTAMOUNT TO LACK OF JURISDICTION IN RESOLVING THAT THE
HOUSING AND LAND USE REGULATORY BOARD HAD AUTHORITY TO
DECLARE AS NULL AND VOID THE JUDICIAL COMPROMISE AGREEMENT
WHICH HAS BECOME FINAL AND EXECUTORY.
v. THE COURT OF APPEALS, COMMITTED GRAVE ABUSE OF DISCRETION
TANTAMOUNT TO LACK OF JURISDICTION IN RESOLVING THAT THE
HOUSING AND LAND USE REGULATORY BOARD HAD JURISDICTION
[OVER] THE PETITIONERS AND THE SUBJECT MATTER, CONTRARY TO
LAW AND ESTABLISHED JURISPRUDENCE.20
Briefly we find two issues for resolution: (1) Does the HLURB have jurisdiction over the
case? (2) Was the Court of Appeals correct in nullifying the Compromise Agreement?
Petitioners spouses dela Cruz contend that the HLURB does not have jurisdiction. They
aver that the HLURB has exclusive jurisdiction only where a party is an owner, developer,
dealer, broker or salesman of subdivision lots or condominium units. Petitioners add that
they do not belong to any of those classifications. They are ordinary property owners of
eleven subdivision lots located in Town and Country Homes Executive Village (TCHEV).
These were subdivided by Pasig Properties, Inc., and titled in their behalf by Town and
Country Executive Village Homeowners Association, Inc. (TCEVHAI). 21
Respondents spouses Aguila refute petitioners assertions. They maintain that the contract
to sell involved the purchase on installment of a subdivision house and lot under Rep. Act
No. 6552 and P.D. No. 957. Respondents claim that by definition, petitioners are
landowners and developers of a subdivision project. Consequently, the trial court had no
power to hear the complaint, since jurisdiction lies exclusively with the HLURB. They assert
that petitioners also violated numerous provisions of P.D. No. 957, such as the requirement
to first secure a license to sell from the HLURB before engaging in the sale of properties. 22
According to P.D. No. 1344,23 the National Housing Authority (now the HLURB) shall have
exclusive jurisdiction to hear and decide cases of the following nature:
a) Unsound real estate business practices;
b) Claims involving refund and any other claims filed by subdivision lot or
condominium unit buyer against the project owner, developer, dealer, broker or
salesman; and
c) Cases involving specific performance of contractual and statutory obligations
filed by buyers of subdivision lot or condominium unit against the owner,
developer, dealer, broker or salesman.24

P.D. No. 957 provides that a subdivision owner "shall refer to the registered owner of the
land subject of a subdivision or a condominium project." Also, a subdivision developer "shall
mean the person who develops or improves the subdivision project or condominium project
for and in behalf of the owner thereof." 25
Respondents stress that the petitioners own a huge parcel of land in TCHEV which they
subdivided. Furthermore, the property sold to them is one of these subdivided lots on which
a house was erected by the petitioners. Hence, petitioners are owners and developers of a
subdivision property.
We find in favor of petitioners on the issue of jurisdiction. Respondents contention on this
point is erroneous and untenable.
The law clearly defines who is considered a subdivision owner or developer, and the
petitioners are neither. They are merely owners of a number of lots within the subdivision
owned and developed by Pasig Properties, Inc. But even if petitioners were subdivision
owners or developers, this would not bar them from seeking redress from the courts. As
aptly explained in Roxas v. Court of Appeals:
[T]he mere relationship between the parties, i.e., that of being subdivision
owner/developer and subdivision lot buyer, does not automatically vest
jurisdiction in the HLURB. For an action to fall within the exclusive jurisdiction of
the HLURB, the decisive element is the nature of the action as enumerated in
Section 1 of P.D. 1344. On this matter, we have consistently held that the
concerned administrative agency, the National Housing Authority (NHA) before
and now the HLURB, has jurisdiction over complaints aimed at compelling the
subdivision developer to comply with its contractual and statutory obligations.
...
Note particularly pars. (b) and (c) as worded, where the HLURBs jurisdiction
concerns cases commenced by subdivision lot or condominium unit buyers. As to
par. (a), concerning "unsound real estate practices," it would appear that the
logical complainant would be the buyers and customers against the sellers
(subdivision owners and developers or condominium builders and realtors ), and
not vice versa.26
Moreover, the rule is well settled that the jurisdiction of the court or agency is determined by
the allegations in the complaint. It cannot be made to depend on the defenses made by the
defendant in his Answer or Motion to Dismiss. If such were the rule, the question of
jurisdiction would depend almost entirely on the defendant. 27 The complaint rests its cause
of action on the failure of the respondents to pay the stipulated installments in the contract
of the parties. As relief, the complaint sought the cancellation of the contract and the
payment of interest, penalties and deficient installments. Clearly, the complaint is well within
the jurisdiction of the trial court.
In Philippine Aluminum Wheels, Inc. v. FASGI Enterprises, Inc., 28 this Court ruled that a
party should not, after its opportunity to enjoy the benefits of an agreement, be allowed to
later disown the arrangement when the terms thereof ultimately would prove to operate

against its hopeful expectations. It was error on the part of the Court of Appeals to rule that
Rep. Act No. 6552 applied to the present case, because, according to petitioners, said law
applies only when the buyer defaults in the payment of succeeding installments. Petitioners
insist that the respondents did not pay any installments at all after the initial downpayment
of P1.5 million,29 after respondents had taken possession and occupancy of the house and
lot in question.
Respondents claim that the Compromise Agreement is null and void because it contains
stipulations that are against Rep. Act No. 6552. These stipulations are the automatic
cancellation of the contract without giving any grace period to the buyer and the forfeiture of
all installments in favor of the seller.30 Pursuant to Article 1409,31 specifically paragraphs 1
and 7, of the Civil Code, the Compromise Agreement should have been declared void by
the trial court,32 according to respondents.
Again, on this point, we rule in favor of the petitioners.
A compromise is an agreement between two or more persons who, aiming to prevent or put
an end to a lawsuit, adjust their respective positions by mutual consent. Reciprocal
concessions are the very heart and life of every compromise agreement. Each party
approximates and concedes a point in the hope of gaining, balanced by the danger of
losing, its own advantage. It is, in essence, a contract. It is binding and has the force of law
between the parties unless it is a void contract under Article 1409 of the Civil Code, or
unless the consent of a party is vitiated (such as by mistake, fraud, violence, intimidation or
undue influence) or when there is forgery, or if the terms of the settlement are so palpably
unconscionable.33 It has upon the parties the effect and authority of res judicata, 34 and when
the court renders a judgment based on the compromise agreement, the judgment becomes
immediately executory, there being an implied waiver of the parties right to appeal from the
decision.35
The contract between the parties is a contract to sell real property. As reflected in the
records, the respondents as buyers paid to the petitioners as sellers one installment of
P50,000 after the initial downpayment of P1.5 million. 36 But it is not a contract involving a
subdivision owner or developer but only between two couples i.e., the original houseowners (petitioners) and the subsequent buyers of the house and lot (respondents).
Nevertheless, even if we apply Rep. Act No. 6552 in this instance, still the Court of Appeals
erred in ordering that the downpayment be considered 30 months worth of installment
payments. The last paragraph of Section 3, Rep. Act No. 6552, 37 states that downpayments,
deposits or options on the contract shall be included in the computation of the total number
of installment payments made. Section 3 applies when at least two years of installments
have been paid by the buyer. However, in the instant case, only one installment was made,
making Section 438 the applicable provision. Section 4 is distinct from Section 3 of Rep. Act
No. 6552. Neither does Section 4 give to the buyer the right to a fifty percent refund of the
payments made as in Section 339 of the law.
Under the contract, respondents were obliged to pay a monthly installment beginning
January 7, 1998.40 They failed in that commitment. Petitioners repeatedly demanded for
payment. Respondents then made a written promise to pay the entire deficiency within 60
days.41 But respondents paid only P50,000 on May 19, 1998 42 after which no other
installment payments were made. The complaint by petitioners was filed before the trial

court on January 13, 1999, or eight months after the cited installment payment was due,
way beyond the 60-day grace period required by the law.
Here, we find that it was not necessary for the petitioners to demand the cancellation of the
contract by a notarial act. In Olympia Housing, Inc. v. Panasiatic Travel Corporation, 43 we
ruled that a seller is not precluded from going to the court to demand judicial rescission in
lieu of a notarial act of rescission. In the same vein, it would be superfluous for the
petitioners to have demanded the cancellation of the contract via a notarial act, when they
have already judicially sought for its cancellation thru the institution of the complaint.
WHEREFORE, the Decision dated September 28, 2001 and the Resolution dated
December 11, 2001 of the Court of Appeals in CA-G.R. SP No. 59505, are REVERSED and
SET ASIDE. The Compromise Agreement between the parties is valid and binding. The
Decision dated July 12, 1999 and Order dated June 19, 2000 of the Regional Trial Court of
Antipolo City, Branch 73, are hereby REINSTATED. Costs against respondents.

Republic of the Philippines

SUPREME COURT
Manila
FIRST DIVISION

SO ORDERED.
Davide, Jr., C.J., (Chairman), Ynares-Santiago, Carpio, and Azcuna, JJ., concur.

G.R. No. 148190

August 16, 2004

JESSIE DELA CRUZ, petitioner,

vs.
PEOPLE OF THE PHILIPPINES and THE COURT OF APPEALS, respondents.

DECISION

QUISUMBING, J.:
In its September 10, 1998, Decision 1 in Criminal Case No. Br. 19-1134, the Regional Trial
Court (RTC) of Cauayan, Isabela, Branch 19, adjudged petitioner Jessie dela Cruz and her
co-accused Oscar Galvizo 2 guilty of violating Presidential Decree No. 583, 3 as amended.
The judgment sentencing them to imprisonment of eight (8) years and one (1) day as
minimum to ten (10) years of prision mayor as maximum was affirmed on August 7, 2000,
by the Court of Appeals in CA-G.R. CR No. 22637. Petitioner now seeks the reversal of the
Court of Appeals' Decision,4 as well as the Resolution denying the motion for
reconsideration.
The factual antecedents of this case, as summarized by the Court of Appeals, are as
follows:
Claro Ignacio was the owner of a parcel of irrigated riceland with an area of around three
hectares situated in Barangay Buyon, San Mateo, Isabela. On June 6, 1976, Ignacio
entered into a leasehold contract over the land with Valentin 5 Sarmiento. As lessee, Valentin

bound himself to pay Claro 45 cavans of palay every cropping. Valentin's only son, Julian
"Bugtong" Sarmiento, assisted him in tilling the land.
Upon Valentin's death in 1981, Julian Sarmiento succeeded to the leasehold. Meanwhile,
Claro migrated to the U.S.A. and his daughter, herein petitioner Jessie dela Cruz, continued
collecting rent from Sarmiento until 1991, when dela Cruz refused to accept any more rent.
On May 28, 1996, one Norberto de Guzman informed Sarmiento that someone had entered
his land. Sarmiento went to the farm, saw and heard petitioner and Oscar Galvizo giving
instructions to some laborers who were armed with bolos locally known as "tabas."
Sarmiento reported the incident to Barangay Captain Charlie Bartolome, who with other
barangay officials, proceeded to the farm the next day. Sarmiento was then advised to
report the matter to higher authorities.
On May 31, 1996, Sarmiento filed Criminal Case No. 5664 with the Municipal Trial Court of
San Mateo, Isabela, charging petitioner and a "John Doe" with violation of P.D. No. 583.
On June 3, 1996, Sarmiento also filed a Complaint with the Department of Agrarian Reform
Adjudication Board (DARAB) against petitioner to restrain her from disturbing his
possession of the subject property. The administrative case was docketed as DARAB Case
No. II-571-ISA '96.6
Petitioner, for her part, filed with the RTC of Cauayan, Isabela, on June 4, 1996, a case
against Sarmiento for declaratory relief, recovery of possession, collection of rentals,
irrigation fees, damages, and injunction with prayer for temporary restraining order,
docketed as Special Civil Case No. Br. 20-66. At the pre-trial conference in the said civil
suit, the parties made the following stipulation of facts:
a) That the father of the defendant Vicente Sarmiento was a tenant of the land in
question with an area of 3.5 hectares until his death;
b) That after the death of Vicente Sarmiento, the defendant Julian Sarmiento
cultivated the land in question;
c) That defendant delivered the owner's share but the plaintiffs refused to receive
so defendant deposited the money with the bank. Through counsel, plaintiffs
withdrew the P91,000.00.7
On June 28, 1996, the criminal complaint before the MTC was dismissed as it had no
jurisdiction. Sarmiento subsequently filed before the RTC, a new case for violation of the
same P.D. No. 583, this time including Oscar Galvizo as another accused. The indictment in
said case, docketed as Criminal Case No. 19-1134, reads:
That on or about the 28 th day of May 1996, in the municipality of San Mateo,
province of Isabela, Philippines, and within the jurisdiction of this Honorable
Court, the accused Jessie dela Cruz, representing Claro Ignacio who is the
landlord of tenant/farmer Julian Sarmiento, together with Oscar Galvi[z]o and

several Does, whose identification are still to be determined, conspiring,

confederating together and helping one another, by means of force, scheme,
strategy and intimidation, did then and there, willfully, unlawfully and feloniously
eject, exclude, remove and oust and cause the ouster, exclusion, removal and
ejectment of the said tenant/farmer, Julian Sarmiento from his landholding over a
parcel of land containing an area of 30,000.00 square meters and belonging to
the said Claro Ignacio situated at Brgy. Buyon, in said municipality, to the
damage and prejudice of the said Julian Sarmiento.
CONTRARY TO LAW.8
When arraigned, petitioner and Galvizo, assisted by counsel de parte, pleaded not guilty to
the charge.
At the trial, Sarmiento's testimony on the alleged entry made by petitioner into the subject
property was corroborated by Modesto Agpaoa, a former barangay kagawad of Tandul,
Cabatuan, Isabela, and Rey Galindez, son-in-law of Sarmiento.
In her defense, petitioner averred that despite repeated demands, from April 1992 to 1996,
Sarmiento continuously failed to pay his lease rentals for about nine croppings. Petitioner's
lawyer sent him a demand letter, but got no reply. She went to his home, but he would not
face her. Eventually, Sarmiento verbally agreed that if he again does not pay the rent due on
April 1996, she would repossess the land. Since Sarmiento made no payments from May
1996 to date, she took over the land. She admitted being at the farm on May 28, 1996, to
supervise her farm helpers and laborers, but denied employing force, intimidation and
coercion to eject Sarmiento. According to her, Sarmiento was even there on June 2 or 3,
1996, watching her laborers planting, but nary a protest came from him.
For his part, petitioner's co-accused, Galvizo, declared that dela Cruz did inform him that the
land was contested because Sarmiento had not paid rent. Galvizo said that sometime in
May 1996 at about 8:30 a.m., he visited dela Cruz at her residence in Tandul, Cabatuan,
Isabela. On dela Cruz's invitation, they went to the farm, which at that time was being tilled
by her farm helpers. He left after three hours.
On September 10, 1998, the RTC adjudged petitioner and Galvizo guilty of unlawfully
dispossessing Sarmiento of the land. The trial court ruled:
WHEREFORE, in view of the foregoing considerations and finding both accused
guilty beyond reasonable doubt of the crime charged in the information, judgment
is hereby rendered sentencing them to suffer an imprisonment of eight (8) years
and one (1) day as minimum to ten (10) years of prision mayor as maximum, and
further ordering them, jointly and severally, to vacate the land in question and to
deliver the possession thereof to Julian alias Bugtong Sarmiento.
Costs against the accused.
SO ORDERED.9

Aggrieved, petitioner and Galvizo filed an appeal, docketed as CA-G.R. CR No. 22637, with
the Court of Appeals.
On August 7, 2000, the appellate court upheld the trial court's judgment in toto.10 The motion
for reconsideration having been denied in the appellate court's Resolution of May 28,
2001,11 petitioner filed the instant appeal based on the following assigned errors:

For the respondent, the Office of the Solicitor General (OSG) counters that Sarmiento as a
tenant-farmer is entitled to security of tenure under Section 7 13 of Republic Act No. 3844. 14
According to the OSG, petitioner breached Sarmiento's legal rights when she ejected him
from the land. The OSG asks this Court to affirm in toto the assailed decision of the Court of
Appeals.15
We sustain the conviction.

I.
RESPONDENT COURT OF APPEALS COMMITTED GRAVE ABUSE OF
DISCRETION IN RULING THAT PETITIONER JESSIE DELA CRUZ IS GUILTY
OF VIOLATION OF SECTION 4 OF p.d. no. 583 as amended by P.D. NO. 815,
IN THE ABSENCE OF PROOF BEYOND REASONABLE DOUBT;

By express provision of Rep. Act No. 3844, the law governing leasehold relations, the
leasehold relation between the original agricultural tenant, Valentin Sarmiento, and the
agricultural lessor, Claro Ignacio, did not cease to exist when Valentin died. Section 9 16 of
this law substituted into the leasehold relation Julian Sarmiento, the only direct descendant
capable of personally cultivating the land. As tenant, Julian Sarmiento had the right to
security of tenure under Section 7.17 This right entitled him to continue working on his
landholding until the leasehold relation is terminated or until his eviction is authorized by the
DARAB in a judgment that is final and executory. Only in the instances stated in Section 8 18
and 2819 of the law and Article 1275 20 of the New Civil Code (merger of the character of the
lessor and the lessee) can the leasehold relation be terminated, and only through a final and
executory order of the DARAB authorizing dispossession on the grounds specified under
Section 3621 may the lessor eject the tenant.

II.
RESPONDENT COURT OF APPEALS COMMITTED GRAVE ABUSE OF
DISCRETION IN RULING THAT THERE WAS CONSPIRACY UNDER THE
PREMISES;
III.
ASSUMING ARGUENDO THAT PETITIONER IS GUILTY OF THE OFFENSE
CHARGED, RESPONDENT COURT OF APPEALS COMMITTED GRAVE
ABUSE OF DISCRETION IN IMPOSING THE PENALTY OF EIGHT (8) YEARS
AND ONE (1) DAY AS MINIMUM TO TEN (10) YEARS OF PRISION MAYOR AS
MAXIMUM
DESPITE
THE
ABSENCE
OF
ANY
AGGRAVATING
CIRCUMSTANCE.12

Petitioner has failed to prove adequately any ground for which the leasehold relation can be
terminated. That Julian Sarmiento immediately reported to barangay officials petitioner's
intrusion into his landholding, charged petitioner with violation of P.D. No. 583 only three
days after the intrusion, and commenced a forcible entry case in the DARAB three days
after filing the charge negates petitioner's claim of voluntary surrender. Thus, by admittedly
re-possessing the land on May 28, 1996, without a final and executory judgment from the
DARAB authorizing the dispossession,22 during the existence of the leasehold relation,
petitioner violated Julian Sarmiento's right to security of tenure. She is liable under Section
4, P.D. No. 583, which provides,

The issues for our resolution are (1) the sufficiency of the evidence to prove petitioner's guilt
with moral certainty; (2) the sufficiency of proof to establish conspiracy between petitioner
and Galvizo; and (3) the correctness of the penalty.

SEC. 4. Subject to the studies on zoning of the Human Settlements Commission

and unless previously authorized by the Secretary of Agrarian Reform, any
landowner, landholder, agricultural-lessor or anybody acting for and in their
behalf, who converts his tenanted land primarily devoted to rice and corn into any
non-agricultural use or to the production of any other crop as a means to avoid
the application of the land reform laws or decrees to his landholdings and to
dispossess his tenant-farmers of the land tilled by them shall, upon conviction,
suffer the penalty of prision mayor or a fine ranging from P5,000.00 to
P10,000.00, or both, at the discretion of the court.

On the issue of sufficiency of evidence, petitioner contends that the appellate court erred in
finding her guilty of the crime charged considering that the element of stealth, threat or
intimidation was not proven. Petitioner also maintains that she is not guilty of unlawfully
dispossessing Sarmiento of the land because the oral agreement between the two of them
authorized her to recover possession of the land if Sarmiento continues to fail to pay rent.

The same penalty shall be imposed on a landowner, landholder, agriculturallessor, or anybody acting for and in their behalf, who by any other act, scheme or
strategy shall eject, exclude, remove or oust and/or cause the ouster, exclusion,
removal or ejectment of a tenant-farmer from his farmholding in contravention of
decrees, laws, and other orders on land reform. 23
The alleged oral agreement between petitioner and Sarmiento, even if it were proven,
cannot justify petitioner's action. Not only is an agreement limiting the period of tenancy
prejudicial to the tenant's right to security of tenure, and therefore expressly prohibited by

Section 1624 of Rep. Act No. 3844, Section 31 25 in relation to Section 36 also makes
unlawful any act of dispossession based on those agreements. As we held in Datu v. Hon.
Cabagon,26 Section 49 of the Agricultural Tenancy Act,27 from which the present provisions
of Section 36 of Rep. Act No. 3844 were taken, does not allow the parties to stipulate at
what future time the tenant will leave or surrender the landholding he cultivates.
That the tenant, Julian Sarmiento, has not been paying rentals for nine croppings also does
not exonerate petitioner, contrary to her contentions. Nonpayment of rentals only entitles a
lessor to seek a judgment of eviction against the tenant. Before dispossession based on
nonpayment of rentals can be validly made, it is essential that (1) the fact of nonpayment be
first established after hearing, and that (2) the judgment authorizing dispossession under
that ground has become final and executory.28 The tenant's failure to pay rentals does not,
of itself, give the lessor any right to eject the tenant upon the lessor's own volition as it is
clear from Sections 31 and 36, the idea being to give to tenants some security of tenure of
their landholding so that they may enjoy the same peacefully for their benefit and that of
their family. The language of the provisions of Sections 31 and 36 is definite and
unmistakable as to the spirit, intent and purpose of the lawmakers that under no
circumstance may a tenant or lessee be deprived or dispossessed of his landholding
without a final and executory judgment of ejectment rendered after proper hearing where,
understandably, the tenant or lessee has been given an opportunity to be heard. 29
Further, use of violence, threat, force, or intimidation is not an element of the crime, contrary
to petitioner's contention. Section 4 of P.D. No. 583, penalizes any unlawful ouster of a
tenant-farmer by any act, scheme or strategy in contravention of decrees, laws, and other
orders on land reform. Hence, it is sufficient for conviction if the prosecution establishes, as
it has in this case (1) the existence of a leasehold relationship; (2) the fact of dispossession
of the tenant by the landowner, landholder, agricultural-lessor, or anybody acting in their
behalf; and (3) the absence of a final and executory judgment authorizing such
dispossession.
Petitioner's argument that she must be acquitted in view of the DARAB's finding that
Sarmiento forfeited his security of tenure by his failure to pay rent is untenable. The DARAB
issued its decision on September 3, 1998, while the eviction took place on May 28, 1996.
The DARAB decision could not cure the criminal liability that already attached upon the
actual unauthorized dispossession. In Valino v. Muoz,30 we declared that even a
subsequent or independent finding of the Court of Agrarian Relations (now the DARAB) 31
that the ejectment may be authorized under Section 36 cannot cure the criminal liability that
already attaches upon the actual dispossession without previous court authority.
All told, we find that the Court of Appeals committed no reversible error when it sustained
the RTC and found petitioner and Galvizo liable for violation of P.D. No. 583.

On the issue of conspiracy, the evidence on record shows that petitioner and Galvizo
conspired to oust Sarmiento from his landholding. No less than two witnesses corroborated
Sarmiento's account. Prosecution witness Rey Galindez testified that he saw Galvizo
working on the land when he went there to spray the seedbeds. Another witness, Modesto
Agpaoa, attested that upon receiving Sarmiento's complaint, barangay officials and he went
to the premises the following day, and found petitioner and Galvizo in the sublot along with
other unidentified men. From these testimonies, we are convinced that Galvizo and
petitioner had planned the ejectment of Sarmiento. The Court of Appeals did not err in
concluding that petitioner and Galvizo were co-conspirators against Sarmiento.
Anent the penalty, the trial court sentenced petitioner and Galvizo to suffer imprisonment of
eight (8) years and one (1) day of prision mayor as a minimum to ten (10) years of prision
mayor as maximum. Said penalty was affirmed by the Court of Appeals, as it conforms with
Section 4 of P.D. No. 583, which provides for the penalty of prision mayor or a fine ranging
from P5,000 to P10,000, or both, at the discretion of the Court.
The law provides that an illegal ouster of a tenant-farmer may be penalized by imprisonment
or a fine or both. Under the facts of this case, we find the penalty of imprisonment too harsh.
Petitioner and Galvizo do not have any record of prior conviction, we are convinced that in
lieu of imprisonment, a fine in the amount of P7,000 is appropriate following our
pronouncement in Vaca v. Court of Appeals,32 to wit:
It would best serve the ends of criminal justice if in fixing the penalty within the
range of discretion allowed by 1, par. 1, the same philosophy underlying the
Indeterminate Sentence Law is observed, namely, that of redeeming valuable
human material and preventing unnecessary deprivation of personal liberty and
economic usefulness with due regard to the protection of the social order....
Conformably with Section 11(a)33 of Rule 122 of the Rules of Court, petitioner's co-accused,
Oscar Galvizo, shall likewise pay a fine of P7,000 in lieu of imprisonment.
WHEREFORE, the petition is DENIED and the Decision dated August 7, 2000 of the Court
of Appeals in CA-G.R. CR No. 22637, as well as its Resolution dated May 28, 2001, is
hereby AFFIRMED with the MODIFICATION that in lieu of imprisonment, JESSIE DELA
CRUZ and OSCAR GALVIZO shall instead PAY a fine of P7,000.00 each.
SO ORDERED.
Davide, Jr., (Chairman), Ynares-Santiago, Carpio, and Azcuna, JJ., concur.