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December 2009 Philippine Supreme Court Decisions on Civil Law

Tagged agency, conjugal

property, contract,corporation, damages, estoppel, foreclosure, innocent
purchaser, interest, laches, marriage, mortgage, novation,prescription, property, rescissi
on, sale, Torrens system, Torrens title, void contract, voidable contract

Here are selected December 2009 rulings of the Supreme Court of the Philippines on
civil law and related laws:
Agency; agency by estoppel. An agency by estoppel, which is similar to the doctrine of
apparent authority requires proof of reliance upon the representations, and that, in turn,
needs proof that the representations predated the action taken in reliance.
There can be no apparent authority of an agent without acts or conduct on the part of
the principal and such acts or conduct of the principal must have been known and relied
upon in good faith and as a result of the exercise of reasonable prudence by a third
person as claimant, and such must have produced a change of position to its detriment.
Such proof is lacking in this case. Yun Kwan Byung vs.Philippine Amusement Gaming
Corporation, G.R. No. 163553, December 11, 2009.
Agency; implied agency. Article 1869 of the Civil Code states that implied agency is
derived from the acts of the principal, from his silence or lack of action, or his failure to
repudiate the agency, knowing that another person is acting on his behalf without
authority. Implied agency, being an actual agency, is a fact to be proved by deductions
or inferences from other facts.
On the other hand, apparent authority is based on estoppel and can arise from two
instances. First, the principal may knowingly permit the agent to hold himself out as
having such authority, and the principal becomes estopped to claim that the agent does
not have such authority. Second, the principal may clothe the agent with the indicia of
authority as to lead a reasonably prudent person to believe that the agent actually has
such authority. In an agency by estoppel, there is no agency at all, but the one
assuming to act as agent has apparent or ostensible, although not real, authority to
represent another.
The law makes no presumption of agency and proving its existence, nature and extent
is incumbent upon the person alleging it. Whether or not an agency has been created is
a question to be determined by the fact that one represents and is acting for
another. Yun Kwan Byung vs. Philippine Amusement Gaming Corporation, G.R. No.
163553, December 11, 2009.
Agency; implied agency. The basis for agency is representation, that is, the agent acts
for and on behalf of the principal on matters within the scope of his authority and said
acts have the same legal effect as if they were personally executed by the principal. On
the part of the principal, there must be an actual intention to appoint or an intention
naturally inferable from his words or actions, while on the part of the agent, there must
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be an intention to accept the appointment and act on it. Absent such mutual intent, there
is generally no agency.
There is no implied agency in this case because PAGCOR did not hold out to the public
as the principal of ABS Corporation. PAGCORs actions did not mislead the public into
believing that an agency can be implied from the arrangement with the junket operators,
nor did it hold out ABS Corporation with any apparent authority to represent it in any
capacity. The Junket Agreement was merely a contract of lease of facilities and
services. Yun Kwan Byung vs. Philippine Amusement Gaming Corporation, G.R. No.
163553, December 11, 2009.
Contract; binding effect. A consignee, although not a signatory to the contract of
carriage between the shipper and the carrier, becomes a party to the contract by reason
of either (1) the relationship of agency between the consignee and the shipper/
consignor; (2) the unequivocal acceptance of the bill of lading delivered to the
consignee, with full knowledge of its contents or (3) availment of the stipulation pour
autrui, i.e., when the consignee, a third person, demands before the carrier the
fulfillment of the stipulation made by the consignor/shipper in the consignees favor,
specifically the delivery of the goods/cargoes shipped. MoF Company, Inc. vs. Shin
Brokerage Corporation, G.R. No. 172822, December 18, 2009.
Contract; interpretation. A compromise is a contract whereby the parties, by making
reciprocal concessions, avoid a litigation or put an end to one already commenced. It is
an agreement intended to terminate a pending suit by making reciprocal concessions.
In the construction or interpretation of a compromise agreement, the Court is guided by
the fundamental and cardinal rule that the intention of the parties is to be ascertained
from the contract and effect should be given to that intention. Likewise, it must be
construed so as to give effect to all the provisions of the contract. In essence, the
contract must be read as a whole. Adriatico Consortium, Inc. Primary Realty Corp., and
Benito Cu-Uy-Gam vs. Land Bank of the Philippines, G.R. No. 187838, December 23,
Contract; novation. Novation is the extinguishment of an obligation by the substitution or
change of the obligation by a subsequent one which extinguishes or modifies the first,
either by changing the object or principal conditions, or by substituting another in place
of the debtor, or by subrogating a third person in the rights of the creditor.
Novation may be extinctive or modificatory. It is extinctive when an old obligation is
terminated by the creation of a new one that takes the place of the former; it is merely
modificatory when the old obligation subsists to the extent that it remains compatible
with the amendatory agreement.
Novation may either be express, when the new obligation declares in unequivocal terms
that the old obligation is extinguished; or implied, when the new obligation is on every
point incompatible with the old one. The test of incompatibility is whether the two
obligations can stand together, each one with its own independent existence.
In the instant case, the Court finds that the Partial Compromise Agreement entered into
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by petitioners and Land Bank constitutes as an implied modificatory novation or

amendment to the Loan/Line Agreement. As such, any provision in the Loan/Line
Agreement inconsistent with the provisions of the Partial Compromise Agreement is
deemed amended or waived by the parties.
In other words, by entering into the Partial Compromise Agreement and agreeing to
suspend all actions, Land Bank effectively waived all its rights regarding MPC Nos.
0002 and 0004. This necessarily includes its right to assign under the Loan/Line
Agreement. Adriatico Consortium, Inc. Primary Realty Corp., and Benito Cu-Uy-Gam
vs. Land Bank of the Philippines, G.R. No. 187838, December 23, 2009.
Contract; rescission. The remedy of rescission is not confined to the rescissible
contracts enumerated under Article 1381. Article 1191 of the Civil Code gives the
injured party in reciprocal obligations, such as what contracts are about, the option to
choose between fulfillment and rescission. Arturo M. Tolentino, a well-known authority
in civil law, is quick to note, however, that the equivalent of Article 1191 in the old code
actually uses the term resolution rather than the present rescission. The calibrated
meanings of these terms are distinct.
Rescission is a subsidiary action based on injury to the plaintiffs economic interests
as described in Articles 1380 and 1381. Resolution, the action referred to in Article
1191, on the other hand, is based on the defendants breach of faith, a violation of the
reciprocity between the parties. As an action based on the binding force of a written
contract, therefore, rescission (resolution) under Article 1191 prescribes in 10
years. Ten years is the period of prescription of actions based on a written contract
under Article 1144.
The distinction makes sense. Article 1191 gives the injured party an option to choose
between, first, fulfillment of the contract and, second, its rescission. An action to
enforce a written contract (fulfillment) is definitely an action upon a written contract,
which prescribes in 10 years (Article 1144). It will not be logical to make the remedy of
fulfillment prescribe in 10 years while the alternative remedy of rescission (or resolution)
is made to prescribe after only four years as provided in Article 1389 when the injury
from which the two kinds of actions derive is the same. Heirs of Sofia Quirong, etc.
vs. Development Bank of the Philippines, G.R. No. 173441, December 3, 2009.
Contract; void contract. A contract is void if one of the essential requisites of contracts
under Article 1318 of the New Civil Code is lacking.
All these elements must be present to constitute a valid contract. Consent is essential to
the existence of a contract; and where it is wanting, the contract is non-existent. In a
contract of sale, its perfection is consummated at the moment there is a meeting of the
minds upon the thing that is the object of the contract and upon the price. Consent is
manifested by the meeting of the offer and the acceptance of the thing and the cause,
which are to constitute the contract. To enter into a valid contract of sale, the parties
must have the capacity to do so. Every person is presumed to be capacitated to enter
into a contract until satisfactory proof to the contrary is presented. The burden of proof
is on the individual asserting a lack of capacity to contract, and this burden has been

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characterized as requiring for its satisfaction clear and convincing evidence.

While a corporation is a juridical person, it cannot act except through its board of
directors as a collective body, which is vested with the power and responsibility to
decide whether the corporation should enter into a contract that will bind the
corporation, subject to the articles of incorporation, by-laws, or relevant provisions of
law. This grant to the board of all corporate powers is explicit under Section 23 of the
Corporation Code, stating: All corporate powers shall be exercised, and all corporate
business shall be conducted by the board of directors.
In the case under consideration, the dispute centers on the element of consent, which
FPHC claimed to be lacking since the supposed board of directors that composed the
FPHC was allegedly a dummy board of Benjamin Romualdez, the members of which
were allegedly installed after the management and control of FPHC were supposedly
fraudulently wrested from its true owners. The Sandiganbayan, however, differed. It
stood pat in its ruling that the consent by the board of directors, who had the legal
capacity to enter into said contract with a third person, was duly obtained. This Court
finds no reason to diverge from the disquisition of the anti-graft court on this
matter. First Philippine Holding Corporation vs. Trans Middle East (Phils.) Equities
Inc., G.R. No. 179505. December 4, 2009.
Contract; void contract; prescription. The sale of subject properties to petitioners are
null and void. Under Article 1410 of the Civil Code, an action or defense for the
declaration of the inexistence of a contract is imprescriptible. Hence, petitioners
contention that respondents cause of action is already barred by prescription is without
legal basis. Jesus Campos and Rosemarie Campos-Bautista vs. Nenita Buevinida
Pastrana, et al., G.R. No. 175994, December 8, 2009.
Contract; void contract; rescission. Petitioners argument that the applicable law in this
case is Article 1381(3) of the Civil Code on rescissible contracts and not Article 1409 on
void contracts is not a question of first impression. This issue had already been settled
several decades ago when we held that an action to rescind is founded upon and
presupposes the existence of a contract. A contract which is null and void is no
contract at all and hence could not be the subject of rescission.
In the instant case, the Deeds of Absolute Sale are fictitious and inexistent for being
absolutely simulated contracts. It is true that the CA cited instances that may constitute
badges of fraud under Article 1387 of the Civil Code on rescissible contracts. But there
is nothing else in the appealed decision to indicate that rescission was contemplated
under the said provision of the Civil Code. The aforementioned badges must have been
considered merely as grounds for holding that the sale is fictitious. Consequently, we
find that the CA properly applied the governing law over the matter under consideration
which is Article 1409 of the Civil Code on void or inexistent contracts. Jesus Campos
and Rosemarie Campos-Bautista vs. Nenita Buevinida Pastrana, et al., G.R. No.
175994, December 8, 2009.
Contract; void contract; gambling. Gambling is prohibited by the laws of the Philippines
Prepared by:Harold B. Lacaba

as specifically provided in Articles 195 to 199 of the Revised Penal Code, as amended.
Gambling is an act beyond the pale of good morals, and is thus prohibited and punished
to repress an evil that undermines the social, moral, and economic growth of the nation.
Presidential Decree No. 1602 (PD 1602), which modified Articles 195-199 of the
Revised Penal Code and repealed inconsistent provisions, prescribed stiffer penalties
on illegal gambling.
As a rule, all forms of gambling are illegal. The only form of gambling allowed by law is
that stipulated under Presidential Decree No. 1869, which gave PAGCOR its franchise
to maintain and operate gambling casinos. The issue then turns on whether PAGCOR
can validly share its franchise with junket operators to operate gambling casinos in the
The Junket Agreement would be valid if under Section 3(h) of PAGCORs charter,
PAGCOR could share its gambling franchise with another entity. In this case, PAGCOR,
by taking only a percentage of the earnings of ABS Corporation from its foreign
currency collection, allowed ABS Corporation to operate gaming tables in the dollar pit.
The Junket Agreement is in direct violation of PAGCORs charter and is therefore void.
Since the Junket Agreement violates PAGCORs charter, gambling between the junket
player and the junket operator under such agreement is illegal and may not be enforced
by the courts. Article 2014 of the Civil Code, which refers to illegal gambling, states that
no action can be maintained by the winner for the collection of what he has won in a
game of chance. Yun Kwan Byung vs. Philippine Amusement Gaming
Corporation, G.R. No. 163553, December 11, 2009.
Contract; voidable. Contracts where consent is given through fraud, are voidable or
annullable. These are not void ab initio since voidable or anullable contracts are
existent, valid, and binding, although they can be annulled because of want of capacity
or the vitiated consent of one of the parties. However, before such annulment, they are
considered effective and obligatory between parties.
As the complaint-in-intervention substantially alleged that the contract was voidable, the
four-year prescriptive period under Art. 1391 of the New Civil Code will apply.
FPHC, however, contends that the four-year prescriptive period should be reckoned
from 24 February 1986, the date when former President Marcos left the country, as it
was only then that the threat and intimidation against the Lopezes ceased.
This argument is unconvincing. Based on FPHCs Petition for Review and its Complaintin-Intervention, the ground relied upon by petitioner is fraud. Here, from the time the
questioned sale transaction on 24 May 1984 took place, FPHC did not deny that it had
actual knowledge of the same. Simply, petitioner was fully aware of the sale of the PCIB
shares to TMEE. Despite all this knowledge, petitioner did not question the said sale
from its inception and some time thereafter. It was only after four years and seven
months had lapsed following the knowledge or discovery of the alleged fraudulent sale
that petitioner assailed the same. By then, it was too late for petitioner to beset the
same transaction, since the prescriptive period had already come into play. First
Philippine Holding Corporation vs. Trans Middle East (Phils.) Equities Inc., G.R. No.
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179505. December 4, 2009.

Damages; exemplary damages. Petitioner argues that assuming arguendo that
compensatory damages had been awarded, the same contravened Article 2232 of the
Civil Code which provides that in contracts or quasi-contracts, the court may award
exemplary damages only if the defendant acted in a wanton, fraudulent, reckless,
oppressive, or malevolent manner. Since, so petitioner concludes, there was no finding
that it acted in a wanton, fraudulent, reckless, oppressive, or malevolent manner, it is
not liable for exemplary damages.
The argument fails. To reiterate, petitioners liability is based not on contract or quasicontract but on quasi-delict since there is no pre-existing contractual relation between
the parties. Article 2231 of the Civil Code, which provides that in quasi-delict, exemplary
damages may be granted if the defendant acted with gross negligence, thus applies.
For gross negligence implies a want or absence of or failure to exercise even slight
care or diligence, or the entire absence of care, evincing a thoughtless disregard of
consequences without exerting any effort to avoid them. Metropolitan Bank and Trust
Company, etc. vs. BA Finance Corporation and Malayan Insurance Co, Inc., G.R. No.
179952, December 4, 2009.
Laws; retroactive application. A perusal of RA 9302 shows that nothing indeed therein
authorizes its retroactive application. In fact, its effectivity clause indicates a clear
legislative intent to the contrary: Section 28. Effectivity Clause. This Act shall take
effect fifteen (15) days following the completion of its publication in the Official Gazette
or in two (2) newspapers of general circulation.
Statutes are prospective and not retroactive in their operation, they being the
formulation of rules for the future, not the past. Hence, the legal maxim lex de futuro,
judex de praeterito the law provides for the future, the judge for the past, which is
articulated in Article 4 of the Civil Code: Laws shall have no retroactive effect, unless
the contrary is provided. The reason for the rule is the tendency of retroactive
legislation to be unjust and oppressive on account of its liability to unsettle vested rights
or disturb the legal effect of prior transactions. In Re: Petition for Assistance in the
Liquidation of Intercity Savings and Loan Bank, Inc., Philippine Deposit Insurance
Corporation vs. Stockholders of Intercity Savings and Loan Bank, Inc., G.R. No.
181556, December 14, 2009.
Marriage; disposition of conjugal property. The husbands first act of disposition of the
subject property occurred in 1963 when he executed the SPA and the Deed of Transfer
of Rights in favor of Dolores Camisura. Thus, the right of action of the petitioners
accrued in 1963, as Article 173 of the Civil Code provides that the wife may file for
annulment of a contract entered into by the husband without her consent within ten (10)
years from the transaction questioned. Petitioners filed the action for reconveyance in
1995. Even if we were to consider that their right of action arose when they learned of
the cancellation of TCT No. 107534 and the issuance of TCT No. 290121 in Melanie
Mingoas name in 1993, still, twelve (12) years have lapsed since such discovery, and
they filed the petition beyond the period allowed by law. Moreover, when Sergia
Hernandez, together with her children, filed the action for reconveyance, the conjugal
partnership of property with Hernandez, Sr. had already been terminated by virtue of the
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latters death on April 16, 1983. Clearly, therefore, petitioners action has prescribed.
The failure of Sergia Hernandez to file with the courts an action for annulment of the
contract during the marriage and within ten (10) years from the transaction necessarily
barred her from questioning the sale of the subject property to third persons. Heirs of
Domingo Hernandez Sr., et al. vs. Plaridel Mingoa, Sr., et al., G.R. No. 146548,
December 18, 2009.
Mortgage; foreclosure. Foreclosure is valid where the debtor is in default in the payment
of an obligation. The essence of a contract of mortgage indebtedness is that a property
has been identified or set apart from the mass of the property of the debtor-mortgagor
as security for the payment of money or the fulfillment of an obligation to answer the
amount of indebtedness, in case of default in payment. Foreclosure is but a necessary
consequence of non-payment of the mortgage indebtedness. In a real estate mortgage
when the principal obligation is not paid when due, the mortgagee has the right to
foreclose the mortgage and to have the property seized and sold with the view of
applying the proceeds to the payment of the obligation.
On the face of respondents clear admission that they were unable to settle their
obligations which were secured by the mortgages, EPCIB has a clear right to foreclose
the mortgages. Equitable PCI Bank, Inc. vs. Maria Letecia Fernandez, et al., G.R. No.
163117, December 18, 2009.
Obligations; corporations. A corporation is vested by law with a personality separate
and distinct from the people comprising it. Ownership by a single or small group of
stockholders of nearly all of the capital stock of the corporation is not by itself a
sufficient ground to disregard the separate corporate personality. Thus, obligations
incurred by corporate officers, acting as corporate agents, are direct accountabilities of
the corporation they represent.
In this case, none of these exceptional circumstances is present. In its decision, the trial
court failed to provide a clear ground why Eugene Lim was held solidarily liable with
Shrimp Specialists. The trial court merely stated that Eugene Lim signed on behalf of
the Shrimp Specialists as President without explaining the need to disregard the
separate corporate personality. The CA correctly ruled that the evidence to hold Eugene
Lim solidarily liable should be more than just signing on behalf of the corporation
because artificial entities can only act through natural persons. Thus, the CA was
correct in dismissing the case against Eugene Lim. Shrimp Specialist, Inc. vs. FujiTriumph Agri-Industrial Corporation/Fuji-Trimph Agri-Industrial Corporation vs. Shrimp
Specialist, Inc. et al., G.R. No. 168756/G.R. No. 171476, December 7, 2009.
Obligations; interest. Not being a loan or forbearance of money, the interest should
be 6% per annum computed from the date of extrajudicial demand on September 25,
1992 until finality of judgment; and 12% per annum from finality of judgment until
payment, conformably with Eastern Shipping Lines, Inc. v. Court of
Appeals. Metropolitan Bank and Trust Company, etc. vs. BA Finance Corporation and
Malayan Insurance Co, Inc., G.R. No. 179952, December 4, 2009.
Obligations; laches. Petitioners cannot find refuge in the principle of laches. It is not
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just the lapse of time or delay that constitutes laches. The essence of laches is the
failure or neglect, for an unreasonable and unexplained length of time, to do that which,
through due diligence, could or should have been done earlier, thus giving rise to a
presumption that the party entitled to assert it had earlier abandoned or declined to
assert it.
The essential elements of laches are: (a) conduct on the part of the defendant, or of one
under whom he claims, giving rise to the situation complained of; (b) delay in asserting
complainants rights after he had knowledge of defendants acts and after he has had
the opportunity to sue; (c) lack of knowledge or notice by defendant that the
complainant will assert the right on which he bases his suit and (d) injury or prejudice to
the defendant in the event the relief is accorded to the complainant.
In the instant case, the second and third elements are missing. Arsenio F. Olegario, et
al. vs. Pedro C. Mari, represented by Lilia C. Mari-Camba, G.R. No. 147951, December
14, 2009.
Property; possession. Respondents predecessor, Juan Mari, had declared the
disputed realty for tax purposes as early as 1916. The tax declarations show that he
had a two storey house on the realty. He also planted fruit bearing trees and bamboos
thereon. The records also show that the 897-square meter property had a bamboo
fence along its perimeter. All these circumstances clearly show that Juan Mari was in
possession of subject realty in the concept of owner, publicly and peacefully since 1916
or long before petitioners entered the disputed realty sometime in 1965.
Based on Article 538 of the Civil Code, the respondent is the preferred possessor
because, benefiting from his fathers tax declaration of the subject realty since 1916, he
has been in possession thereof for a longer period. On the other hand, petitioners
acquired joint possession only sometime in 1965. Arsenio F. Olegario, et al. vs. Pedro
C. Mari, represented by Lilia C. Mari-Camba, G.R. No. 147951, December 14, 2009.
Sale; contract to sell. A distinction between a contract to sell and a contract of sale is
helpful in order to determine the true intention of the parties. In a contract of sale, the
title to the property passes to the vendee upon the delivery of the thing sold; while in a
contract to sell, ownership is, by agreement, reserved for the vendor and is not to pass
to the vendee until full payment of the purchase price. In a contract of sale, nonpayment of the price is a negative resolutory condition. In a contract to sell, full payment
is a positive suspensive condition. In a contract of sale, the vendor loses and cannot
recover ownership of the thing sold until and unless the contract of sale is itself resolved
and set aside. In a contract to sell, the title remains with the vendor if the vendee does
not comply with the condition precedent of making payment at the time specified in the
contract. In a contract to sell, the payment of the purchase price is a positive suspensive
condition, the failure of which is not a breach, casual or serious, but a situation which
prevents the obligation of the vendor to convey title from acquiring an obligatory force.
In the instant case, ownership of the general purpose polystyrene products was retained
by SMP, Incorporated (SMP) until after the checks given as payment by Clothespak
Manufacturing Philippines (Clothespak) cleared. This was evidenced by a provisional
receipt issued by SMP to Clothespak. The agreement between SMP and Clothespak

Prepared by:Harold B. Lacaba

involved a contract to sell defined under Article 1478 of the Civil Code.
On the other hand, the stipulation that the loss or destruction of the products during
transit is on the account of Clothespak, as buyer of the products, is of no moment. This
does not alter the nature of the contract as a contract to sell. The free on board
stipulation on the contract can coexist with the contract to sell. Otherwise stated, the
provisions or stipulations in the contract for the reservation of the ownership of a
thing until full payment of the purchase price and for the loss or destruction of the thing
would be on account of the buyer are valid and can exist in conjunction with the
other. Bank of the Philippine Islands as successor-in-interest of Far East Bank and
Trust Company vs. SMP, Inc., G.R. No. 175466, December 23, 2009.
Special laws
Innocent purchaser for value; financial institutions. While we agree with petitioners that
GSIS, as a financial institution, is bound to exercise more than just ordinary diligence in
the conduct of its financial dealings, we nevertheless find no law or jurisprudence
supporting petitioners claim that financial institutions are not protected when they are
innocent purchasers for value. When financial institutions exercise extraordinary
diligence in determining the validity of the certificates of title to properties being sold or
mortgaged to them and still fail to find any defect or encumbrance upon the subject
properties after said inquiry, such financial institutions should be protected like any other
innocent purchaser for value if they paid a full and fair price at the time of the purchase
or before having notice of some other persons claim on or interest in the
property. Alejandro B. Ty and International Realty Corporation vs. Queens Row
Subdivision, Inc., et al., G.R. No. 173158, December 4, 2009.
Land registration; possession. In Director, Land Management Bureau v. Court of
Appeals, we explained that x x x The phrase adverse, continuous, open, public,
peaceful and in concept of owner, by which characteristics private respondent
describes his possession and that of his parents, are mere conclusions of law requiring
evidentiary support and substantiation. The burden of proof is on the private
respondent, as applicant, to prove by clear, positive and convincing evidence that the
alleged possession of his parents was of the nature and duration required by law. His
bare allegations without more, do not amount to preponderant evidence that would shift
the burden of proof to the oppositor.
Here, we find that petitioners possession of the lot has not been of the character and
length of time required by law Josephine Wee vs. Republic of the Philippines, G.R. No.
177384, December 8, 2009.
Registered land; buyer in good faith. While every person dealing with registered land
can 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, one will not be permitted to benefit from this general rule if there exist
important facts which create suspicion to call for an investigation of the real condition of
the land. One who deliberately ignores a significant fact which would naturally generate
wariness is not an innocent purchaser for value. Vicente N. Luna, Jr. vs. Nario Cabales,
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Oscar Pabalan, et al., G.R. No. 173533, December 14, 2009.

Registered land; non-owner. The registration of a property in ones name, whether by
mistake or fraud, the real owner being another, impresses upon the title so acquired the
character of a constructive trust for the real owner. The person in whose name the land
is registered holds it as a mere trustee, and the real owner is entitled to file an action for
reconveyance of the property. The Torrens system does not protect a usurper from the
true owner. Vicente N. Luna, Jr. vs. Nario Cabales, Oscar Pabalan, et al., G.R. No.
173533, December 14, 2009.
Registered owner; laches. This Court has, on several occasions, already ruled that
even a registered owner of a property may be barred from recovering possession of the
same by virtue of laches. Laches is the failure or neglect, for an unreasonable and
unexplained length of time, to do that which by exerting due diligence could or should
have been done earlier. The law serves those who are vigilant and diligent, and not
those who sleep when the law requires them to act. Alejandro B. Ty and International
Realty Corporation vs. Queens Row Subdivision, Inc., et al., G.R. No. 173158,
December 4, 2009.
Torrens title; registration by non-owner. The fact that petitioners were able to secure
titles in their names did not operate to vest upon them ownership over the subject
properties. That act has never been recognized as a mode of acquiring ownership. The
Torrens system does not create or vest title. It only confirms and records title already
existing and vested. It does not protect a usurper from the tr

Prepared by:Harold B. Lacaba