#1 G.R. No.
154409 June 21, 2004  On October 16, 1997, Rosenda Tigno-Salazar and Rosita Cave-Go, sold
Spouses NOEL and JULIE ABRIGO, petitioners,
vs.
ROMANA DE VERA, respondent.
Quick Summary:
The present case involves what in legal contemplation was a double sale. On May 27,
1993, Gloria Villafania first sold the disputed property to Rosenda Tigno-Salazar and
Rosita Cave-Go, from whom petitioners, in turn, derived their right. Unknown to the
vendees, Villafania obtained a free patent over the land, and subsequently, on October
23, 1997, a second sale was executed by Villafania with Respondent Romana de Vera,
who in turn registered the sale and had a TCT issued in her name. Petitioners contend
that Gloria Villafania could not have transferred the property to Respondent De Vera
because it no longer belonged to her. They further claim that the sale could not be
validated, since respondent was not a purchaser in good faith and for value.
Who between petitioner-spouses and respondent has a better right to the property?
De Vera. Because she registered the sale under the Torrens System. Registration must
be done in the proper registry in order to bind the land. Since the property in dispute in
the present case was already registered under the Torrens system, petitioners’
registration of the sale under Act 3344 was not effective for purposes of Article 1544 of
the Civil Code. "Under Act No. 3344, registration of instruments affecting unregistered
lands is ‘without prejudice to a third party with a better right.’ Moreover, de Vera was a
purchaser in good faith as she did not have any knowledge of the prior sale to Spouses
Abrigo.
FACTS
 On May 27, 1993, Gloria Villafania sold a house and lot located at Pangasinan
covered by Tax Declaration No. 1406 to Rosenda Tigno-Salazar and Rosita
Cave-Go. The said sale became a subject of a suit for annulment of
documents between the vendor and the vendees.
 On December 7, 1993, the RTC Branch 40 of Dagupan City rendered
judgment approving the Compromise Agreement submitted by the parties. In
the said Decision, Gloria Villafania was given one year to buy back the house
and lot, and failure to do so would mean that the previous sale in favor of
Rosenda Tigno-Salazar and Rosita Cave-Go shall remain valid and binding
and the plaintiff shall voluntarily vacate the premises without need of any
demand. However, Gloria Villafania failed to buy back the house and lot, so
the vendees declared the lot in their name.
 Unknown, however to the vendees, Gloria Villafania obtained a free patent
over the parcel of land involved as evidenced by OCT No. P-30522. The said
free patent was later on cancelled by TCT No. 212598 on April 11, 1996.
the house and lot to the herein Petitioner-Spouses Noel and Julie Abrigo.
(Registered Oct. 30 1997)
 On October 23, 1997, Gloria Villafania sold the same house and lot to
Romana de Vera, who registered the sale and as a consequence, TCT No.
22515 was issued in her name.
 On November 12, 1997, Romana de Vera filed an action for Forcible Entry
and Damages against Spouses Abrigo before the MTC of Mangaldan,
Pangasinan. The parties submitted a Motion for Dismissal in view of their
agreement in the instant case that neither of them can physically take
possession of the property in question until the [instant case] is terminated.
Hence the ejectment case was dismissed.
 Thus, on November 21, 1997, petitioners filed the [instant case] with the RTC
of Dagupan City for the annulment of documents, injunction, preliminary
injunction, restraining order and damages against respondent and Gloria
Villafania.
 The lower court rendered a decision awarding the properties to
petitioners as well as damages. Moreover, Gloria Villafania was ordered to
pay petitioners and private respondent damages and attorney’s fees.
 Both parties appealed to the CA, which held that a void title could not give rise
to a valid one and hence dismissed the appeal of de Vera. Since Gloria
Villafania had already transferred ownership to Rosenda Tigno-Salazar
and Rosita Cave-Go, the subsequent sale to De Vera was deemed void.
The CA also dismissed the appeal of Petitioner-Spouses Abrigo and found no
sufficient basis to award them moral and exemplary damages and attorney’s
fees.
 On reconsideration, the CA issued its Amended Decision, finding
Respondent De Vera to be a purchaser in good faith and for value. The
appellate court ruled that she had relied in good faith on the Torrens title
of her vendor and must thus be protected. Hence, this Petition under Rule
45.
ISSUE
Who between petitioner-spouses and respondent has a better right to the property.
RULING
Respondent Romana de Vera has the better right to the property.
Article 1544 of the Civil Code provides that a double sale of immovables transfers
ownership to (1) the first registrant in good faith; (2) then, the first possessor in good
faith; and (3) finally, the buyer who in good faith presents the oldest title. There is no
ambiguity in the application of this law with respect to lands registered under the
Torrens system. This principle is in full accord with Section 51 of PD 1529, which
provides that no deed, mortgage, lease or other voluntary instrument -- except a will --
purporting to convey or affect registered land shall take effect as a conveyance or bind
the land until its registration. Thus, if the sale is not registered, it is binding only
between the seller and the buyer but it does not affect innocent third persons.
In the instant case, both Petitioners Abrigo and respondent registered the sale of the
property. Since neither petitioners nor their predecessors (Tigno-Salazar and Cave-Go)
knew that the property was covered by the Torrens system, they registered their
respective sales under Act 3344. For her part, respondent registered the
transaction under the Torrens system because, during the sale, Villafania had
presented the transfer certificate of title (TCT) covering the property.
Respondent De Vera contends that her registration under the Torrens system should
prevail over that of petitioners who recorded theirs under Act 3344. The Court agrees
with respondent. Soriano v. Heirs of Magali held that registration must be done in the
proper registry in order to bind the land. Since the property in dispute in the
present case was already registered under the Torrens system, petitioners’
registration of the sale under Act 3344 was not effective for purposes of Article
1544 of the Civil Code.
More recently, in Naawan Community Rural Bank v. Court of Appeals, the Court upheld
the right of a party who had registered the sale of land under the Property Registration
Decree, as opposed to another who had registered a deed of final conveyance under
Act 3344. In that case, the "priority in time" principle was not applied, because the
land was already covered by the Torrens system at the time the conveyance was
registered under Act 3344. For the same reason, inasmuch as the registration of the
sale to Respondent De Vera under the Torrens system was done in good faith,
this sale must be upheld over the sale registered under Act 3344 to Petitioner-
Spouses Abrigo.
Radiowealth Finance Co. v. Palileo explained the difference in the rules of registration
under Act 3344 and those under the Torrens system in this wise:
"Under Act No. 3344, registration of instruments affecting unregistered lands
is ‘without prejudice to a third party with a better right.’ The aforequoted phrase
has been held by this Court to mean that the mere registration of a sale in
one’s favor does not give him any right over the land if the vendor was not
anymore the owner of the land having previously sold the same to somebody
else even if the earlier sale was unrecorded.
Petitioners cannot validly argue that they were fraudulently misled into believing
that the property was unregistered. A Torrens title, once registered, serves as a
notice to the whole world. All persons must take notice, and no one can plead
ignorance of the registration.
The Court has consistently held that Article 1544 requires the second buyer to
acquire the immovable in good faith and to register it in good faith. Mere
registration of title is not enough; good faith must concur with the registration.
Jurisprudence teaches us that ‘(t)he governing principle is primus tempore, potior
jure (first in time, stronger in right). Knowledge gained by the first buyer of the
second sale cannot defeat the first buyer’s rights except where the second buyer
registers in good faith the second sale ahead of the first, as provided by the Civil
Code. Such knowledge of the first buyer does not bar her from availing of her rights
under the law, among them, to register first her purchase as against the second buyer.
But in converso, knowledge gained by the second buyer of the first sale defeats
his rights even if he is first to register the second sale, since such knowledge
taints his prior registration with bad faith. This is the price exacted by Article 1544
of the Civil Code for the second buyer being able to displace the first buyer; that before
the second buyer can obtain priority over the first, he must show that he acted in good
faith throughout (i.e. in ignorance of the first sale and of the first buyer’s rights) ---- from
the time of acquisition until the title is transferred to him by registration, or failing
registration, by delivery of possession.’" (Uraca v. Court of Appeals)
Equally important, under Section 44 of PD 1529, every registered owner receiving a
certificate of title pursuant to a decree of registration, and every subsequent
purchaser of registered land taking such certificate for value and in good
faith shall hold the same free from all encumbrances, except those noted and
enumerated in the certificate. Thus, a person dealing with registered land is not
required to go behind the registry to determine the condition of the property,
since such condition is noted on the face of the register or certificate of title. Following
this principle, this Court has consistently held as regards registered land that a
purchaser in good faith acquires a good title as against all the transferees thereof
whose rights are not recorded in the Registry of Deeds at the time of the sale.
Petitioners contend that their prior registration under Act 3344 is constructive notice to
respondent and negates her good faith at the time she registered the sale, however,
the Court held that constructive notice to the second buyer through registration
under Act 3344 does not apply if the property is registered under the Torrens
system, as in this case.
On Respondent’s Good Faith:
"x x x. Gloria Villafania, [Respondent] De Vera’s vendor, appears to be the registered
owner. The subject land was, and still is, registered in the name of Gloria Villafania.
There is nothing in her certificate of title and in the circumstances of the transaction or
sale which warrant [Respondent] De Vera in supposing that she need[ed] to look
beyond the title. She had no notice of the earlier sale of the land to [petitioners]. She
ascertained and verified that her vendor was the sole owner and in possession of the
subject property by examining her vendor’s title in the Registry of Deeds and actually
going to the premises. There is no evidence in the record showing that when she bought
the land on October 23, 1997, she knew or had the slightest notice that the same was
under litigation in Civil Case No. D-10638 of the Regional Trial Court of Dagupan City,
Branch 40, between Gloria Villafania and [Petitioners] Abrigo. She was not even a party
to said case. x x x.”
#2 G.R. No. 171531 January 30, 2009
GUARANTEED HOMES, INC., Petitioner,
vs.
HEIRS OF MARIA P. VALDEZ, (EMILIA V. YUMUL and VICTORIA V. MOLINO),
HEIRS OF SEVERINA P. TUGADE (ILUMINADA and LEONORA P. TUGADE, HEIRS
OF ETANG P. GATMIN (LUDIVINA G. DELA CRUZ (by and through ALFONSO G.
DELA CRUZ), HILARIA G. COBERO and ALFREDO G. COBERO) and SIONY G.
TEPOL (by and through ELENA T. RIVAS and ELESIO TEPOL, JR.), AS HEIRS OF
DECEDENT PABLO PASCUA, Respondents.
Quick Summary:
Pablo Pascua owned 23.7229 ha of land in Subic covered by OCT No. 404. When he
died, he was survived by his four children, one of them being Cipriano. Cipriano
executed an "Extrajudicial Settlement of a Sole Heir and Confirmation of Sales,"
declaring himself as the only heir of Pablo and confirming the sales made by the
decedent during his lifetime, including an alleged sale of the disputed property to
spouses Rodolfo. A TCT was issued to Cipriano but it was not signed by the ROD. On
the same day, said TCT was cancelled and another TCT issued in the name of Spouses
Rodolfo. In 1969, Spouses Rodolfo sold the land to Petitioner and a new TCT was
issueud in the latter’s favor.
Cipriano’s son, Jorge Pascua, Sr., then filed a complaint seeking reconveyance of the
land (and seeking a claim against the Assurance Fund in PD 1529), which the RTC
denied, holding that petitioner was already the owner of the land. Petitioner filed a
motion to dismiss the complaint on the grounds that the action is barred by the Statute
of Limitations and that the complaint states no cause of action as it is an innocent
purchaser for value, it having relied on the clean title of the spouses Rodolfo. The RTC
agreed and granted the motion to dismiss. Respondents appealed to the CA, which
reversed the decision.
Was the RTC correct in dismissing Jorge Pascua Sr.’s action?
Yes Firstly, the complaint does not allege any defect with TCT No. T-8242. Secondly,
while the Extrajudicial Settlement of a Sole Heir and Confirmation of Sales executed by
Cipriano alone despite the existence of the other heirs of Pablo, is not binding on such
other heirs, nevertheless, it has operative effect under Section 44 of the Property
Registration Decree. Thirdly, respondents cannot make out a case for quieting of title
since OCT No. 404 had already been cancelled. Respondents have no title to anchor
their complaint on. Lastly, respondents’ claim against the Assurance Fund also cannot
prosper, because Section 101 of P.D. No. 1529 clearly provides that the Assurance
Fund shall not be liable for any loss, damage or deprivation of any right or interest in
land which may have been caused by a breach of trust, whether express, implied or
constructive. Even assuming arguendo that they are entitled to claim against the
Assurance Fund, the respondents’ claim has already prescribed.
FACTS
 Respondents, the descendants of Pablo Pascua (Pablo), filed a complaint
seeking reconveyance of a parcel of land with an area of 23.7229 hectares
situated in Subic, Zambales and covered by OCT No. 404 in the name of
Pablo. In the alternative, the respondents prayed that damages be awarded
in their favor.
 OCT No. 404 was attached as one of the annexes of the complaint, which
contained several annotations which showed that the property had already
been sold by Pablo during his lifetime to Alejandria Marquinez and Restituto
Morales. Respondents also attached copies of TCT No. T-8241, TCT No. T-
8242, TCT No. T-10863, the Extrajudicial Settlement of a Sole Heir and
Confirmation of Sales executed by Cipriano Pascua, Sr. (Cipriano), and the
Deed of Sale with Mortgage between spouses Albino Rodolfo and Fabia
Rodolfo (spouses Rodolfo) and petitioner.
 In their complaint, respondents alleged that Pablo died and was survived by
his four children, one of whom was the deceased Cipriano. In 1967, Cipriano
executed an "Extrajudicial Settlement of a Sole Heir and Confirmation of
Sales," declaring himself as the only heir of Pablo and confirming the
sales made by the decedent during his lifetime, including an alleged sale
of the disputed property to spouses Rodolfo.
 Following the sale, TCT No. T-8241 was issued in the name of Cipriano
"without OCT No. 404 having been cancelled." However, TCT No. T-8241 was
not signed by the Register of Deeds. On the same day, TCT No. T-8242 was
issued in the name of the spouses Rodolfo and TCT No. T-8241 was thereby
cancelled. Subsequently, on 31 October 1969, the spouses Rodolfo sold
the disputed property to petitioner by virtue of a Deed of Sale with
Mortgage. Consequently, on 5 November 1969, TCT No. T-8242 was
cancelled and TCT No. T-10863 was issued in the name of petitioner.
 Jorge Pascua, Sr., son of Cipriano, filed on 24 January 1997 a petition before
the RTC of Olongapo City, for the issuance of a new owner’s duplicate of OCT
No. 404, which the RTC denied, holding that petitioner was already the
owner of the land, noting that the failure to annotate the subsequent
transfer of the property to it at the back of OCT No. 404 did not affect its
title to the property.
o Petitioner filed a motion to dismiss the complaint on the grounds that
the action is barred by the Statute of Limitations, more than 28 years
having elapsed from the issuance of TCT No. T-10863 up to the filing
of the complaint, and that the complaint states no cause of action as
it is an innocent purchaser for value, it having relied on the clean title
of the spouses Rodolfo.
 o Impleaded as defendants, the heirs of Cipriano filed an answer to the
complaint denying knowledge of the existence of the extrajudicial
settlement allegedly executed by Cipriano and averring that the
latter, during his lifetime, did not execute any document transferring
ownership of the property.
o The Register of Deeds and the National Treasurer filed, through the
OSG, an answer averring that the six (6)-year period fixed in Section
102 of Presidential Decree (P.D.) No. 1529 for the filing of an action
against the Assurance Fund had long prescribed since the transfer
of ownership over the property was registered as early as 1969. They
also claimed that respondents have no cause of action against the
Assurance Fund since they were not actually deprived of ownership
over the property, as they could have recovered the property had it
not been for their inaction for over 28 years.
 The RTC granted petitioner’s motion to dismiss.
o Noting that respondents had never claimed nor established that they
have been in possession of the property and that they did not present
any evidence to show that petitioner has not been in possession of
the property either, the RTC applied the doctrine that an action to
quiet title prescribes where the plaintiff is not in possession of
the property.
o The trial court found that the complaint presented a case of implied
or constructive trust on the part of Cipriano. As the prescriptive
period for reconveyance of a fraudulently registered real property is
ten (10) years reckoned from the date of the issuance of the title, the
trial court held that the action for reconveyance had already
prescribed with the lapse of more than 28 years from the issuance
of TCT No. T-10863.The RTC added that it is an enshrined rule that
even a registered owner of property may be barred from recovering
possession of property by virtue of laches.
o The RTC further held that petitioner had the right to rely on TCT No.
T- 8242 in the name of spouses Rodolfo. Petitioner is not obliged
to go beyond the title considering that there were no
circumstances surrounding the sale sufficient to put it into
inquiry.
o Concerning the Assurance Fund, the RTC held that the claim
against it had long prescribed since Section 102 of P.D. No. 1529
provides for a six-year period within which a plaintiff may file an
action against the fund
 Undaunted, respondents appealed to the Court of Appeals, which reversed
the RTC’s decision, ruling that the averments in respondents’ complaint before
the RTC make out a case for quieting of title which has not prescribed.
The appellate court further held that the ruling of the RTC that petitioner is an
innocent purchaser for value is contrary to the allegations in respondents’
complaint. Hence, the present petition under Rule 45.
ISSUE
The sole issue before this Court revolves around the propriety of the RTC’s granting of
the motion to dismiss and conversely the tenability of the Court of Appeals’ reversal of
the RTC’s ruling.
RULING
The petition is meritorious.
Based on the standards set by this Court in relation to the factual allegations and
documentary annexes of the complaint as well as the exhibits offered at the hearing of
the motion to dismiss, the inescapable conclusion is that respondents’ complaint
does not state a cause of action against petitioner.
Firstly, the complaint does not allege any defect with TCT No. T-8242 in the name of
the spouses Rodolfo, who were petitioner’s predecessors-in-interest, or any
circumstance from which it could reasonably be inferred that petitioner had any actual
knowledge of facts that would impel it to make further inquiry into the title of the spouses
Rodolfo. It is basic that a person dealing with registered property need not go
beyond, but only has to rely on, the title of his predecessor-in-interest. Since "the
act of registration is the operative act to convey or affect the land insofar as third
persons are concerned," it follows that where there is nothing in the certificate
of title to indicate any cloud or vice in the ownership of the property, or any
encumbrance thereon, the purchaser is not required to explore farther than what
the Torrens title upon its face indicates in quest for any hidden defect or inchoate
right that may subsequently defeat his right thereto. If the rule were otherwise, the
efficacy and conclusiveness of the certificate of title which the Torrens system seeks to
insure would entirely be futile and nugatory. The public shall then be denied of its
foremost motivation for respecting and observing the Torrens system of registration. In
the end, the business community stands to be inconvenienced and prejudiced
immeasurably.
Contrary to the assertion of respondents, OCT No. 404 was expressly cancelled by
TCT No. T-8241. The alleged non-signature by the ROD does not affect its validity,
since he signed TCT No. T- 8242 and issued both titles on the same day. There is a
presumption of regularity in the performance of official duty. The presumption is
further bolstered by the fact that TCT No. T-8241 was certified to be on file with the
Registry of Deeds and registered in the name of Cipriano. It is enough that petitioner
had examined the latest certificate of title which in this case was issued in the name of
the immediate transferor, the spouses Rodolfo. The purchaser is not bound by the
original certificate but only by the certificate of title of the person from whom he
had purchased the property.
Secondly, while the Extrajudicial Settlement of a Sole Heir and Confirmation of Sales
executed by Cipriano alone despite the existence of the other heirs of Pablo, is not
binding on such other heirs, nevertheless, it has operative effect under Section 44
of the Property Registration Decree, which provides that:

SEC. 44. Statutory Liens Affecting Title. — Every registered owner receiving
a certificate of title in pursuance of a decree of registration, and 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 said certificate and any of the following encumbrances
which may be subsisting, namely: x x x.

The Court cannot give credence to respondents’ claims that the Extrajudicial
Settlement was not registered and that OCT No. 404 was not cancelled by the Register
of Deeds. The ROD of Zambales certified that the extrajudicial settlement was recorded
on 14 February 1967, per Entry No. 18590. This is in compliance with Section 56 of Act
No. 496,41 the applicable law at the time of registration.

Registration in the public registry is notice to the whole world. Every conveyance,
mortgage, lease, lien, attachment, order, judgment, instrument or entry affecting
registered land shall be, if registered, filed or entered in the Office of the Register
of Deeds of the province or city where the land to which it relates lies, be
constructive notice to all persons from the time of such registering, filing or
entering.

Thirdly, respondents cannot make out a case for quieting of title since OCT No. 404
had already been cancelled. Respondents have no title to anchor their complaint
on. Title to real property refers to that upon which ownership is based. It is the
evidence of the right of the owner or the extent of his interest, by which means
he can maintain control and, as a rule, assert right to exclusive possession and
enjoyment of the property.

The other heirs of Pablo should have filed an action for reconveyance based on implied
or constructive trust within ten (10) years from the date of registration of the deed or
the date of the issuance of the certificate of title over the property.

From the above discussion, there is no question that petitioner is an innocent

purchaser for value; hence, no cause of action for cancellation of title will lie
against it. The RTC was correct in granting petitioner’s motion to dismiss.

Lastly, respondents’ claim against the Assurance Fund also cannot prosper. Section
101 of P.D. No. 1529 clearly provides that the Assurance Fund shall not be liable
for any loss, damage or deprivation of any right or interest in land which may
have been caused by a breach of trust, whether express, implied or constructive.
Even assuming arguendo that they are entitled to claim against the Assurance Fund,
the respondents’ claim has already prescribed.

Petition GRANTED.