SPOUSES ABAD v.
FIL-HOMES REALTY respondents prior to the City's possession of the lots, contrary to Section
FACTS: Respondents, co-owners of the two lots, filed a complaint for
unlawful detainer against petitioners. Respondents alleged that
petitioners, through tolerance, had occupied the subject lots since 1980
but ignored their repeated demands to vacate them. On the other hand,
petitioners countered that there is no possession by tolerance for they
have been in adverse, continuous and uninterrupted possession of the
lots for more than 30 years; and that respondent's predecessor-in-
interest, Pilipinas Development Corporation, had no title to the lots.
During the pendency of the case or on June 30, 2004, the City of
Paraaque filed expropriation proceedings covering the lots before the
Regional Trial Court of Paraaque with the intention of establishing a
socialized housing project therein for distribution to the occupants
including petitioners. A writ of possession was consequently issued and a
Certificate of Turn-over given to the City.
The MeTC rendered judgment in the unlawful detainer case against
petitioners and they were ordered to vacate and surrender the
possession of the lots to respondents.
On appeal, the RTC reversed the decision of the MeTC on the ground that
there was no tolerance, thus the unlawful detainer will not prosper. The
RTC went on to rule that the issuance of a writ of possession in favor of
the City bars the continuation of the unlawful detainer proceedings, and
since the judgment had already been rendered in the expropriation
proceedings which effectively turned over the lots to the City, the MeTC
has no jurisdiction to "disregard the . . . final judgment and writ of
possession" due to non-payment of just compensation.
On appeal to the CA, the appellate court, noting that petitioners did not
present evidence to rebut respondents' allegation of possession by
tolerance, and considering petitioners' admission that they commenced
occupation of the property without the permission of the previous owner
Pilipinas Development Corporation as indicium of tolerance by
respondents' predecessor-in-interest, ruled in favor of respondents.
ISSUE:
RULING:
In the exercise of the power of eminent domain, the State expropriates
private property for public use upon payment of just compensation. A
socialized housing project falls within the ambit of public use as it is in
furtherance of the constitutional provisions on social justice.
As a general rule, ejectment proceedings, due to its summary nature, are
not suspended or their resolution held in abeyance despite the pendency
of a civil action regarding ownership.
Section 1 of Commonwealth Act No. 538 enlightens, however:
Section 1. When the Government seeks to acquire, through purchase or
expropriation proceedings, lands belonging to any estate or
chaplaincy (cappellania), any action for ejectment against the tenants
occupying said lands shall be automatically suspended, for such time as
may be required by the expropriation proceedings or the necessary
negotiations for the purchase of the lands, in which latter case, the period
of suspension shall not exceed one year.
To avail himself of the benefits of the suspension, the tenants shall pay to
the landowner the current rents as they become due or deposit the
same with the court where the action for ejectment has been instituted.
Petitioners did not comply with any of the acts mentioned in the law to
avail of the benefits of the suspension.
Expropriation of lands consists of two stages:
The first is concerned with the determination of the authority of the
plaintiff to exercise the power of eminent domain and the propriety of its
exercise in the context of the facts involved in the suit.
The second phase of the eminent domain action is concerned with the
determination by the court of "the just compensation for the property
sought to be taken."
It is only upon the completion of these two stages that expropriation is
said to have been completed. The process is not complete until payment
of just compensation. Accordingly, the issuance of the writ of possession
in this case does not write finisto the expropriation proceedings. To
effectuate the transfer of ownership, it is necessary for the NPC to pay the
property owners the final just compensation.
In the present case, the mere issuance of a writ of possession in the
expropriation proceedings did not transfer ownership of the lots in favor
of the City. Such issuance was only the first stage in expropriation. There
is even no evidence that judicial deposit had been made in favor of
19 of the LGC.
Even if the lots are eventually transferred to the City, it is non sequitur for
petitioners to claim that they are automatically entitled to be
beneficiaries thereof. For certain requirements must be met and complied
with before they can be considered to be beneficiaries.
DBP v. BAUTISTA
FACTS: Bautista applied to the government for the sale in her favor a
parcel of land. After proper investigation, a sales patent was issued in
favor. Therafter, a certificate of title was issued in her name.
Later on, Bautista applied for a loan with the Rehabilitation Finance
Corporation (RFC), predecessor in interest of the plaintiff-appellee
Development Bank of the Philippines (DBP), offering as security the
parcel of land. RFC approved the loan. However, Bautista failed to pay the
amortization on the loan so that the RFC took steps to foreclose the
mortgage extrajudicially. RFC acquired the property as the highest
bidder. Upon failure of Bautista to redeem the property within the one (1)
year period as provided by law, plaintiff-appellant RFC consolidated its
ownership thereon. Consequently, the certificate of title in the name of
Bautista was cancelled and a new one was issued in the name of RFC. On
or about this time, however, an action (Civil Case No. 870) was filed by
Rufino Ramos and Juan Ramos in the Court of First Instance of Nueva
Ecija against the Government of the Republic of the Philippines and the
RFC (as successor in interest of Bautista) claiming ownership of the land
in question. A decision thereon was rendered on June 27, 1955 (Exhs. G,
G-1, and G-3) whereby the aforementioned certificates of title were
declared null and void.
Thus, DBP filed a complaint against Bautista for the recovery of a sum of
money representing the unpaid mortgage indebtedness.
ISSUE: Whether the complaint should prosper.
RULING: No. The fundamental due process requirement having been
disregarded, appellee Bautista could not in any wise be made to suffer,
whether directly or indirectly, from the effects of such decision. After
appellant bank had acquired her title by such extrajudicial foreclosure
sale and thus, through its own act, seen to it that her obligation had been
satisfied, it could not thereafter, seek to revive the same on the allegation
that the title in question was subsequently annulled, considering that she
was not made a party on the occasion of such nullification.
Reinforcement to the above conclusion comes from a codal provision.
According to the Civil Code: "The vendor shall not be obliged to make
good the proper warranty, unless he is summoned in the suit for eviction
at the instance of the vendee." While not directly in point, the principle on
which the above requirement is based sustains the decision of the lower
court. In effect, appellant bank would hold appellee Bautista liable for the
warranty on her title, its annulment having the same effect as that of an
eviction. In such a case, it is wisely provided by the Civil Code that
appellee Bautista, as vendor, should have been summoned and given the
opportunity to defend herself. In view of her being denied her day in
court, it would follow, if the intent of the above codal provision were to be
respected, that she is not "obliged to make good the proper warranty."
In the suit before the lower court, the Director of Lands and the National
Treasurer of the Philippines were likewise made defendants by appellant
bank because of its belief that if no right existed as against appellee
Bautista, recovery could be had from the Assurance Fund. Such a belief
finds no support in the applicable law, which allows recovery only upon a
showing that there be no negligence on the part of the party sustaining
any loss or damage or being deprived of any land or interest therein by
the operation of the Land Registration Act This certainly is not the case
here, plaintiff-appellant being solely responsible for the plight in which it
now finds itself. Accordingly, the Director of Lands and the National
Treasurer of the Philippines are likewise exempt from any liability.
TORRES v. CA
FACTS: Mariano Torres owned a parcel of land and the building erected
thereon. 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 owners' 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 cancelled and TCT No. 86018 was issued in Fernandez' name.
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 learning of the fraud committed by
Fernandez, caused 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 extra judicial foreclosure of the
mortgage. The parties entered into an amicable settlement which was
approved by the court.
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.
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 August 31, 1971, the redemption period for the subject immovables
having lapsed without Fernandez nor Torres redeeming the properties,
Rosario Mota was issued the Sheriff's Deed of Sale. Thereafter, TCT No.
86018 was cancelled 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 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.
On June 3, 1977, the trial court rendered its decision declaring TCT No.
105953 in the name of Rosario Mota null 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. Hence, this
petition.
ISSUE:
RULING: 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 65 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. 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.
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 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, Cues' remedy merely is to go against Francisco Fernandez or rather
his estate.
CHAPTER VII
YAP v. REPUBLIC
FACTS: Consuelo Vda. de dela Cruz applied for free patent over a parcel of
land. As she could not wait for the approval of her application, she
executed a Deed of Waiver/Quitclaim in favor of Pagarigan.
Pagarigan filed his own Free Patent Application (FPA) and subsequently,
Free Patent No. (XI-I) 5133 was issued to him over said lot. Original
Certificate of Title (OCT) No. P-11182 was thereby issued in his name.
Pagarigan mortgaged the lot to Banco Davao-Davao City Development
Bank (the Bank). For failure to pay his loan, the property was foreclosed,
and was eventually sold to the Bank at public auction. These proceedings
were duly annotated in the title.
However, the land covered by OCT No. P-11182 was allegedly occupied
by Teodoro Valparaiso and Pedro Malalis (protestants). In 1990, the
protestants filed a formal protest with the Bureau of Lands (Bureau).
They prayed for the recall of the free patent issued to Pagarigan, and for
the institution of a corresponding action for reversion considering that
they have been in adverse, exclusive, and continuous occupation of the
subject property since 1945, cultivating it, and planting various
crops, nipa palms and coconut trees on said land. They also caused the
annotation of a notice of lis pendens in OCT No. P-11182.
The protest reached the Office of the Secretary of DENR and the Secretary
rendered a Decision against Pagarigan with the following findings: From
the Investigation Reports submitted by both the Department's Regional
Office involved and this Office as well as from the other pieces of evidence
available, both documentary and testimonial, it is obvious that actual
fraud and bad faith have been committed by [Pagarigan] in his subject
public land application which led to the issuance of the title. The
following facts and circumstances are uncontroverted, to wit; that the
[protestants] have been in actual occupation of the land in dispute since
1945 and have introduced improvements thereon; that [Pagarigan] never
occupied the same nor his predecessor-in-interest, Consuelo dela Cruz,
that [Pagarigan] misrepresented in his application that he was the actual
occupant and that there were no others who occupied the lot in dispute;
that the title was issued sans an actual ground survey; and that
[Pagarigan] did not post a copy of his Notice for [FPA] on both the
Bulletin Boards of Daliao and Lizardo as required by law.
Meanwhile, on November 5, 1992, without consolidating title over the
land in its name, the Bank sold the subject property to herein petitioner
Beverly Anne C. Yap (Yap) and Rosanna F. Villamor (Villamor). Upon the
execution of the deed of sale, OCT No. P-11182 was delivered to them and
Transfer Certificate of Title No. 366983 was eventually issued in the
name of Yap and Villamor.
On the other hand, in 1997, the Department of Transportation and
Communication filed a complaint for expropriation of a portion of the
subject lot before the RTC. Confronted with the issue of who among the
claimants shall be entitled to just compensation, the trial court ruled that
Villamor and Yap are the ones entitled to the payment of just
compensation for the property subject of this case.
In 2003, 2003, the respondent, through the Office of the Solicitor General
(OSG), filed the Complaint for Cancellation of Patent, Nullification of Title
and Reversion with the RTC of Davao City. The court rendered a
Decision dismissing the respondent's complaint. The court ruled that
since the subject land has already been sold to third persons, it must be
shown that the latter were part of the fraud and/or misrepresentation
committed by the original grantee, or at least were aware of it. However,
since the RTC Branch 13 already declared in its decision in Civil Case No.
25,084-97 that Yap and Villamor were purchasers in good faith and for
value of the land in question, RTC Branch 16 maintained that, as a court of
co-equal jurisdiction, it is bound by the said finding under the principle of
conclusiveness of judgment. Moreover, the fact that it took the
respondent 26 years, from the issuance of the free patent before it
instituted an action for reversion, militates against its cause.
The respondent elevated its case to the CA. On June 30, 2011, the CA
rendered the assailed Decision reversing that of the trial court. In so
ruling, the CA adopted the findings of the DENR as to the commission of
fraud by Pagarigan in his FPA, and held that neither the Bank nor Yap and
Villamor were innocent purchasers for value.
RATIO:
The decision of the CA does not run counter to the rule on conclusiveness of
judgment.
From the decision of the RTC, it shows that the question of whether or not
Yap and Villamor are innocent purchasers was not an actual issue of fact
in the case before the RTC Branch 13, and which called for said court's
adjudication. That Yap and Villamor were buyers in good faith is merely
an allegation which was not proven in court. The RTC Branch 13 did not
actually make any clear pronouncement on the matter.
Accordingly, and as similarly advanced by the OSG in its Comment, the
RTC Branch 13's pronouncement that Yap and Villamor were buyers in
good faith was, at best, a mere obiter dictum. Contrary to Yap's claim,
there was nothing final or conclusive with the decision of the RTC Branch
13 which the CA should be bound.
Neither the Bank, nor Yap and Villamor were purchasers in good faith and
for value. Reversion of subject lot is in order.
The fact that Pagarigan fraudulently secured his free patent was duly
established by the investigation conducted by the DENR through Senior
Special Investigator Domingo Mendez. Thus, the DENR ordered for the
institution of the present action seeking the cancellation of the certificate
of title issued in the name of Pagarigan, and for the reversion of the land
covered thereby to the government.
However, as adverted to above, Section 32 of Presidential Decree No.
1529 mandates that for a reversion case to prosper, it is not enough to
prove that the original grantee of a patent has obtained the same through
fraud; it must also be proven that the subject property has not yet been
acquired by an innocent purchaser for value, because fraudulent
acquisition cannot affect the titles of the latter.
As to the bank: It cannot be overemphasized that [the Bank], being in the
business of extending loans secured by real estate mortgage, is familiar
with rules on land registration. As such, it was, as here, expected to
exercise more care and prudence than private individuals in its dealings
with registered lands. Accordingly, given inter alia the suspicion-
provoking presence of occupants other than the owner on the land to be
mortgaged, it behooved them to conduct a more exhaustive investigation
on the history of the mortgagor's title. That appellee Bank accepted in
mortgage the property in question notwithstanding the existence of
structures on the property and which were in actual, visible, and public
possession of persons other than the mortgagor, constitutes gross
negligence amounting to bad faith.
As for Yap and Villamor: It must be emphasized that aside from the fact
that a notice of lis pendens was already annotated on OCT No. P-11182
even before Yap and Villamor purchased the subject property, it was also
established that when they did so, the said property was still registered in
the name of Pagarigan since the Bank did not consolidate its title
thereto. Stated simply, Yap and Villamor purchased the subject property
not from the registered owner.
To prove good faith, a buyer of registered and titled land need only show
that he relied on the face of the title to the property. He need not prove
that he made further inquiry for he is not obliged to explore beyond the
four corners of the title. Such degree of proof of good faith, however, is
sufficient only when the following conditions concur: first, the seller is the
registered owner of the land; second, the latter is in possession thereof;
and third, at the time of the sale, the buyer was not aware of any claim or
interest of some other person in the property, or of any defect or
restriction in the title of the seller or in his capacity to convey title to the
property.
Absent one or two of the foregoing conditions, then the law itself puts the
buyer on notice and obliges the latter to exercise a higher degree of
diligence by scrutinizing the certificate of title and examining all factual
circumstances in order to determine the seller's title and capacity to
transfer any interest in the property. Under such circumstance, it is no
longer sufficient for said buyer to merely show that he relied on the face
of the title; he must now also show that he exercised reasonable
precaution by inquiring beyond the title. Failure to exercise such degree
of precaution makes him a buyer in bad faith.
Neither estoppel nor laches lies against the respondent in the present case
In the instant case, it was established that Pagarigan's FPA was secured
on the basis of his fraudulent representations. The respondent cannot be
faulted for having been misled into believing that an applicant is legally
qualified to be granted free patent as to render it estopped from asserting
its right to recover its own property. While the action for reversion was
instituted only in 2003, the circumstances leading to the institution of the
case hardly spells inaction or neglect on the part of the respondent as to
be considered guilty of laches.
Forsooth, there was no prolonged inaction on the part of the respondent
in this case. This can be gleaned in the decision of the DENR Secretary.
Shortly after the protestants filed a formal protest with the Bureau on
October 24, 1990, the Officer-in-Charge, Regional Executive Director
(RED) of the DENR Region XI, Davao City immediately ordered an
investigation on November 15, 1990, and the same commenced on
November 19, 1990. On February 14, 1994, the RED issued a decision
dismissing the protestants' protest. Undaunted, the protestants elevated
their case to the Office of the DENR Secretary. On May 15, 1995, the DENR
Secretary set-aside the RED's decision and ordered the institution of
appropriate action for the cancellation of OCT No. P-11182, and for the
reversion of the property covered thereby to the government.
The instant action does not undermine the indefeasibility of Torrens title
On this point, the Court's ruling in Republic v. Heirs of Felipe Alejaga, Sr. is
instructive:
True, once a patent is registered and the corresponding certificate of title
[is] issued, the land covered by them ceases to be part of the public
domain and becomes private property. Further, the Torrens Title issued
pursuant to the patent becomes indefeasible a year after the issuance of
the latter. However, this indefeasibility of a title does not attach to titles
secured by fraud and misrepresentation. Well-settled is the doctrine that
the registration of a patent under the Torrens System does not by itself
vest title; it merely confirms the registrant's already existing one. Verily,
registration under the Torrens System is not a mode of acquiring
ownership.
A fraudulently acquired free patent may only be assailed by the government
in an action for reversion
Nonetheless, a free patent that was fraudulently acquired, and the
certificate of title issued pursuant to the same, may only be assailed by
the government in an action for reversion, pursuant to Section 101 of
the Public Land Act. In other words, the indefeasibility of a title over land
previously public is not a bar to an investigation by the Director of Lands
as to how such title has been acquired, if the purpose of such
investigation is to determine whether or not fraud had been committed in
securing such title in order that the appropriate action for reversion may
be filed by the Government.
ALONZO v. CCC
FACTS: 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.
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.
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 owner's 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.
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.
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 Francisco's demand and claim of
ownership, and refused to deliver the possession to him.
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.
The RTC decided in favor of Cebu Country Club, and this was affirmed by
the CA. However, on appeal to the Supreme Court (GR No. 130876), the
Court dismissed the complaint and counterclaim of the parties in the civil
case. They declared 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. This decision 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. Cebu Country Club opposed
the motion for the issuance of a writ of execution in due course.
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, 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 OSG's motion for the issuance of a writ of execution. On
December 28, 2007, therefore, the RTC denied the OSG's motion for the
issuance of a writ of execution through the first appealed order.
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.
After the filing of the OSG's 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 themotion 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.
ISSUES:
1. Whether or not the petitioners were the real parties-in-interest to
question the denial by the RTC of the OSG's motion for the issuance of a
writ of execution; and
2. Whether or not R.A. No. 9443 gave the petitioners a legal interest to
assail the RTC's orders.
RULING:
I. No. 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.
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.
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 Francisco's 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 latter's heirs.
Consequently, we rule that neither Tomas N. Alonso nor his son
Francisco M. Alonso or the latter's heirs are the lawful owners of Lot
No. 727 in dispute.
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.
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. 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.
II. No. RA 9443 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 Club's 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, 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."
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.
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.
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 owner's 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.
EGAO v. CA
FACTS: This is a land dispute which culminated in the filing by private
respondents Severo Dignos and Severo Bontilao of a verified complaint
for Quieting of Title and/or Recovery of Possession and Ownership
against petitioners Apolonio and Beatriz Egao.
Private respondents' complaint alleged that they are the legitimate
owners and possessors of two (2) parcels of land per deed of absolute
sale.
Allegedly, upon purchase of Lot No. 662 from Roberto Marfori,
improvements were introduced and taxes paid by private respondents.
Sometime in June 1983, herein petitioners allegedly occupied illegally
portions of the land.
Petitioners' answer to the complaint asserted that Apolonio Egao is the
registered owner of the parcel of land known as Lot No. 662; that he
(Apolonio Egao) and his family have been in actual, physical, adverse,
open and continuous possession thereof even before the issuance to him
of the free patent; and that the land has never been sold by reason of the
prohibition against alienation under Commonwealth Act No. 141 (Public
Land Law).
The judge ruled in favor of the Egaos, herein petitioners,ordering
respondent Severo Bontilao to immediately deliver to the Egaos the
owner's duplicate copy of Original Certificate of Title No. P-3559. The
judge held that private respondents herein miserably failed to present or
show any title to Lot No. 662.
On appeal to the CA, the latter reversed the RTC decision. Marfori and
Egao were both held by the Court of Appeals in pari delicto for violating
the five (5) year restriction under Sec. 118,Commonwealth Act No. 141 as
amended by Act No. 496 against encumbrance or alienation of lands
acquired under a free patent or homestead; hence, they cannot, according
to the appellate court, seek affirmative relief, but respondents on the
other hand were declared innocent purchasers for value who obtained
the owner's duplicate copy of the OCT (still in the name of the Egaos)
from Marfori who transferred to them (respondents) physical possession
of the property.
ISSUE: Validity of the Deeds of Sale executed between Marfori (as
purchaser) and the petitioners (as sellers).
RULING: It is undisputed that Free Patent No. 298112 was issued to
petitioner Apolonio Egao over Lot No. 662. Sec. 118 of Commonwealth
Act No. 141, as amended, prohibits the alienation or encumbrance, within
a period of five (5) years from the date of issuance of the patent, of lands
acquired under free patent or homestead. Assuming, arguendo, the
authenticity of the Deeds of Sale executed by the Egaos in favor of Marfori
over portions of Lot No. 662 (the land in question), dated 7 May 1964, 14
January and 6 October 1965, it clearly appears that all deeds were
executed within the prohibited period of five (5) years.
Petitioners deny the authenticity and due execution of the notarized
deeds of sale in favor of Marfori, asserting continued ownership over the
land by virtue of a Torrens Certificate of Title issued in their name. While
the Court is not satisfied with respondents' explanation of their failure to
present the notaries public (who were residents of a neighboring
province) to affirm their participation in the preparation of the Deeds, the
Court also finds as insufficient the mere denials by petitioners as to due
execution and authenticity of said Deeds of Sale. A notarial document is
evidence of the facts in clear unequivocal manner therein expressed. It
has in its favor the presumption of regularity. To contradict all these,
there must be evidence that is clear, convincing and more than merely
preponderant. The question of authenticity being one of fact, the Court
win not disturb the conclusions of the Court of Appeals on the matter.
Original Certificate of Title No. P-3559 over the land in dispute was issued
on 1 March 1966, a few months after the execution by the Egaos of the
last Deed of Sale in favor of Marfori. The OCT is registered in the name of
the Egaos, herein petitioners.
A Torrens title, once registered, cannot be defeated, even by adverse open
and notorious possession. A registered title under the Torrens system
cannot be defeated by prescription. The title, once registered, is notice to
the world. All persons must take notice. No one can plead ignorance of the
registration.
Contrary to the appellate court's conclusion, respondents are not
innocent purchasers for value. Where a purchaser neglects to make the
necessary inquiries and closes his eyes to facts which should put a
reasonable man on his guard as to the possibility of the existence of a
defect in his vendor's title, and relying on the belief that there was no
defect in the title of the vendor, purchases the property without making
any further investigation, he cannot claim that he is a purchaser in good
faith for value.
Furthermore, a private individual may not bring an action for reversion
or any action which would have the effect of cancelling a free patent and
the corresponding certificate of title issued on the basis thereof, with the
result that the land covered thereby will again form part of the public
domain, as only the Solicitor General or the officer acting in his stead may
do so.
The rule of pari delicto non oritur actio (where two persons are equally at
fault neither party may be entitled to relief under the law), admits of
exceptions and does not apply to an inexistent contract, such as, a sale
void ab initio under the Public Land Act, when its enforcement or
application runs counter to the public policy of preserving the grantee's
right to the land under the homestead law.
Sec. 51, par. 2 of the Property Registration Decree (PD 1529), formerly
Sec. 50 of the Land Registration Act (Act No. 496) expressly provides that
the registration of the Deed is the operative act that binds or affects the
land insofar as third persons are concerned. The law requires a higher
degree of prudence from one who buys from a person who is not the
registered owner, when the land object of the transaction is registered
land. While one who buys from the registered owner need not look
behind the certificate of title, one who buys from another who is not the
registered owner is expected to examine not only the certificate of title
but all factual circumstances necessary for him to determine if there are
any flaws in the title of the transferor, or in his capacity to transfer the
land. Failing to exercise caution of any kind whatsoever is tantamount to
bad faith.
Deeds of sale of patented lands, perfected within the prohibited five (5)
year period are null and void (Sec. 124, Public Land Act). No title passed
from the Egaos to Marfori which could be validly transferred to herein
respondents Bontilao and Dignos.
While the government has not taken steps to assert its title, by reversion,
to a homestead sold in violation of the Public Land Act, the vendor or his
heirs is better entitled to the possession of the land, the vendee being in
no better situation than any intruder.
Accordingly, respondents who are not innocent purchasers for value have
no standing to question petitioners' right to the land and to file an action
for quieting of title.